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TMI Blog2008 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the Commissioner's order u/s 263 without reversing the Commissioner's finding that the Income-tax Officer had failed to enquire into the source of deposits / investments made during the relevant accounting period and hence the assessment order was erroneous and prejudicial to the interests of revenue? 2. Whether, on the facts and in the circumstances of the case, it was permissible to the Tribunal to hold for the first time that the assessee possessed Rs. 2,40,000/- on 31.3.1981 and that the deposits / investments made by the assessee and its partners during the accounting period relevant to assessment year 1982-83 cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take any action and did not assess the said amount which was seized during the search operations in the hands of the firm. According to the Commissioner, the assessment order was erroneous and as such was prejudicial to the interest of the revenue. Consequently, a notice under Section 263 of the said Act was issued. A written reply was submitted by the assessee through its advocates on 13.12.1986. In the said letter dated 13.12.1986, it was contended by the assessee that the action under Section 263 of the said Act was without jurisdiction as the basic conditions specified therein were not satisfied. The assessee's plea was that an application had been moved before the Settlement Commission wherein a certain amount of cash, FDRs, etc. belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 06.02.1985 that the total investments to the tune of Rs 1,40,000/- in the year under consideration were made out of the accumulated come out of the undisclosed sources of the firm as on 31.03.1981. It was also stated in the said letter that this fact had been disclosed before the Settlement Commission and the same amount had been considered for tax in the previous years. It was also stated that except these investments, there were no fresh investments in the partners' accounts / names in the year under consideration. 5. The Commissioner noted in his order that a perusal of the assessment record shows that the Income-tax Officer accepted this contention of the assessee, prima facie, without verifying or investigating or making any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same equally over the assessment years 1976-77 to 1981-82 (both inclusive), i.e. an additional amount of Rs.40,000/- be assessed in the hands of the assessee firm, in each of the above mentioned assessment years, over and above the income disclosed by the books of accounts. Further, that the provisions of Section 245E of the Act be invoked so far as the assessment years 1976-77 to 1979-80 (both inclusive) are concerned, so as to give effect to the aforesaid proposal. iii) That it be accepted that the cash amounts available as on 31.03.1981, as detailed in Annexure I hereto, were available for making investment advances in the period subsequent to 31.3.1981. iv) That it be accepted that the assessee firm did not own as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80,000 3) Loan to Navin Jain Metal Udyog on 9.2.82 20,000 1,05,000 b) Sri Prince Mohan. 1) Loan to Navin Jain Metal Udyog on 11.2.82 25,000 25,000 c) Shri Dinesh Kumar F.D.R. Dt. 20.11.81 10,000 10,000 1,50,000/- 2,31,000/- Rounded off to Rs. 2,40,000/-" 8. After considering the said offer for settlement before the Settlement Commission and the other surrounding circumstances, the Tribunal came to the following conclusion:- "5. In view of the question, about of facts, admitted by the assessee as to undisclosed income of the assessee firm for the year upto and including the year ending on 31.3.1981 about the said amount of Rs.2,40,000/- and also further the assessee that the said sum of Rs.2,40,000/- was availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sures before the Settlement Commission as also Annexure-I to the said application for settlement. The said annexure clearly reflects the FDRs, bank deposits and loans mentioned in the letter dated 06.02.1985 issued by the assessee to the Income-tax Officer. It is in this context that the Tribunal came to the conclusion that in view of the contents of Annexure-I, no further examination was required by the Income-tax Officer. The obvious conclusion is that the Tribunal was satisfied that there was a nexus between the undeclared income which had been disclosed before the Settlement Commission and the investments made in the names of the partners during the accounting period relevant to the assessment year under consideration. It is apparent th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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