9911796707
TMI Blog2003 (5) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... r 31, 2000, has been dismissed. The assessee-firm is engaged in the business of trading of "saria" on wholesale basis. For the assessment year 1998-99, the assessee filed its return on October 29, 1998, declaring a loss of Rs. 1,97,707. This return was initially processed under section 143(1)(a) of the Act on March 16, 2000, and, thereafter, notices under sections 143(2) and 142(1) of the Act were issued for making regular assessment. Ultimately, assessment under section 143(3) of the Act was framed by the Assessing Officer on March 31, 2000, who determined the total loss at Rs. 1,27,011. Subsequently, the assessee received a notice dated October 12, 2000, under section 263(1) of the Act to show cause as to why remedial steps may not be taken as the assessment order dated March 31, 2000, in the opinion of the Commissioner, was erroneous and prejudicial to the interests of the Revenue. This opinion had been formed by the Commissioner on the ground that the Assessing Officer, while framing the assessment, had not examined the following points: "(i) During the course of survey operation under section 133A an amount of Rs. 10,50,000 was surrendered by you but in the return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Income-tax Act, 1961. The Assessing Officer is, therefore, directed to frame the assessment afresh as per law after allowing reasonable opportunity of being heard to the assessee." The assessee preferred an appeal before the Tribunal challenging the order of the Commissioner of Income-tax on legal grounds as well as on the merits. The Tribunal has rejected all the contentions of the assessee and dismissed the appeal vide the impugned order dated July 20, 2001. Shri P.C. Jain, learned counsel for the appellant, contended that the order of the Commissioner was based on an erroneous premise that the Assessing Officer had not properly examined the issue about surrender of Rs. 10,50,000 by the assessee at the time of surveyor that proper investigations from the parties concerned were not made to ascertain the genuineness of the purchases. He contended that a detailed reply had been filed before the Commissioner in which the details of inquiries conducted by the Assessing Officer had been given. He also referred to the order-sheet entries made from time to time and also to various notices issued by the Assessing Officer and the replies filed in response thereto by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stock worth Rs. 9,78,742 which had been received prior to the date of survey had not been taken into consideration while working out the stock as per books. The Assessing Officer had duly raised this issue in the notices dated October 6, 1999, and January 10, 2000, whereby he had required the assessee to produce the relevant books and bills for his verification. The record also shows that the contention of the assessee was found to be correct on verification and, therefore, the Assessing Officer had accepted the contention of the assessee that surrender of Rs. 10 lakhs had been made due to a bona fide mistake in calculation of stock as per books and that in fact there was no discrepancy in stock. In fact, in the assessment order itself, the Assessing Officer has given the following office note to explain as to why the addition of Rs. 10 lakhs was not being made: "In this case survey under section 133A was carried out on November 27, 1997, and physical verification of the stock was made. The total value of the stock at the business premises was worked out at Rs. 52,25,483 as per physical verification as against stock of Rs. 43,21,882 as per books. Against this excess stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. He has not discussed even a single contention raised therein. We have referred to the assessment record and find that the Assessing Officer had issued various notices on these points and had satisfied himself that the addition of Rs. 10 lakhs on account of discrepancy in stock was not called for as there was no discrepancy in stock. The Tribunal has done no better. The case of the assessee on the merits has been dealt with in para. 12, which reads as under: "12. On the merits of the case as to whether the surrender was improperly made and the same could be retracted at the assessment stage on the basis of evidence, I need not say anything at this stage since the matter is now before the Assessing Officer pursuant to set aside by the Commissioner of Income-tax under section 263. All that I would like to observe is that the Assessing Officer did raise some queries and the assessee filed replies, but not a single sentence is mentioned in the assessment order. The Assessing Officer chooses to deal with the surrender of cash amounting to Rs. 50,000, but does not say anything about the excess stock of Rs. 10,00,000." A perusal of the above shows that the Tribunal has base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression "record" has also been defined in clause (b) of the Explanation so as to include all records relating to any proceedings available at the time of examination by the Commissioner. Thus, it is not only the assessment order but the entire record which has to be examined before arriving at a conclusion as to whether the Assessing Officer had examined any issue or not. The assessee has no control over the way an assessment order is drafted. The assessee on its part had produced enough material on record to show that the matter had been discussed in detail by the Assessing Officer. The least that the Tribunal could have done was to refer to the assessment record to verify the contentions of the assessee. Instead of doing that, the Tribunal has merely been swayed by the fact that the Assessing Officer has not mentioned anything in the assessment order. During the course of assessment proceedings, the Assessing Officer examines numerous issues. Generally, the issues which are accepted do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/disallowances are made. As already observed, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27, 1997, was retained by him for going through the same and the Commissioner of Income-tax said that the same shall be returned along with the approval draft orders, but the same has not been returned so far. Since the assessment for the assessment year 1998-99 completed under section 143(3) on March 31,2000, has been set aside by the Commissioner of Income-tax, Rohtak, vide order dated October 31, 2000, which is pending, it is requested that the same may kindly be returned at the earliest. Yours faithfully (Sd.) Ranjit Singh, Deputy Commissioner of Income-tax, (Investigation) Circle, Gurgaon. Encls: As above." Similarly, in para. 2 of his letter No. DCIT/GGN/1583, dated May 30, 2001, to the Commissioner, the Assessing Officer has observed as under: "2. As already submitted from time to time, the above case was selected for Commissioner of Income-tax's monitoring as per Commissioner of Income-tax, Rohtak's letter F.No. CIT/Tech/CIT's monitor/DCIT/GGN 1999-2000/8266, dated October 4/5, 1999. The case was discussed with the then Commissioner of Income-tax, Rohtak, from time to time and after his approval, the order was passed on March 31,2000, under section 143(3). T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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