9911796707
TMI Blog1983 (8) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Act and also imposed penalty against the assessee under section 273(c) of the Act. Against the same, the assessee moved an application on 24-5-1980 before the Commissioner for waiver. That application was rejected on 15-10-1981 after obtaining reports dated 29-7-1980, 23-7-1981 and 17-8-1981 of the ITO after the ITO had obtained the written statement dated 10-8-1981 of the truck purchaser Shri Munni Lal aforesaid and had examined him on 14-8-1981. The Commissioner issued a notice dated 26-2-1982 to the assessee under section 263 to the effect that for the following reasons, it prima facie, appeared to him that the assessment order passed on 17-3-1980 was erroneous insofar as it was prejudicial to the interests of revenue: "1. That the ITO initially wanted to scrutinise the case to examine the extent of investment made in the purchase of truck and the source thereof. But he completed the assessment without making any enquiry on any of these points. 2. That the ITO did not examine the source of deposits made by the assessee in his bank account. 3. That the ITO did not call for the copy of the three accounts/pass books which the assessee had in different banks in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the case. He, therefore, held that the assessment order passed by the ITO was erroneous insofar as it was prejudicial to the interests of the revenue. Accordingly, he set it aside and restored the matter to the file of the ITO for framing the assessment afresh after giving proper opportunity to the assessee of being heard and after making due and proper enquiries into the facts of the case. 4. The assessee being aggrieved, has come up in appeal before us. Shri V.B. Upadhyay, the learned counsel for the assessee, submitted that the ITO who wanted to verify the source of investment in the purchase of the new truck, had verified the sources of investments in detail by having the Vijaya Bank statement, the financier, the balance paid by the assessee with its sources, which were in the statements filed with the return and the reply dated 17-3-1980 and, therefore, it could not be said that the ITO had not verified the sources of investment. He pointed out that in the past also, the practice followed was to have the copies of the bank accounts and the same was done for the assessment year in question also. Next, he submitted that the ITO had accepted the sale price of truck No. UP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account and all bank pass books for the year under consideration. He also relied upon the following note dated 23-8-1977 on the assessee's return in the handwriting of the ITO : "Investment in new truck No. UTY 355 to be looked into to be fixed." He pointed out that even after this note, the ITO did not make enquiries which supported the inference of the learned Commissioner that the assessment order had been passed in undue haste and without making proper enquiries. He submitted that if the return was revised, the penalty for concealment of income could be imposed in a given case. Relying upon the decision of the Hon'ble Delhi High Court in Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375, he submitted that the Commissioner could regard the order as erroneous on the ground that in the circumstances of the case, the ITO should have made further enquiries before accepting the statements made by the assessee in his return. He pointed out that the ITO was not only an adjudicator but also an investigator and he could not remain passive in the face of a return which was apparently in order but which called for further enquiry. Elaborating on this submission further, he sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and that he could only have the record of the proceedings which was before the ITO and to examine it in order to consider whether, on the basis of the materials which were before the ITO and formed part of the record, the order passed by the ITO was erroneous and prejudicial to the interests of the revenue. The assessment order was passed on 17-3-1980 and, therefore, the material on the record of the ITO up to that date has to be looked into. Shri S.N. Srivastava, ITO, had filed a counter-affidavit before the Hon'ble High Court on 23-2-1983 not only after the assessment order but even after the passing of the order under section 263 by the learned Commissioner and the filing of the present appeal before us. It is, therefore, not entitled to be looked into for purposes of examining whether the order passed by the ITO was erroneous and prejudicial to the interests of the revenue. The facts appearing from it may be seen only for purposes of narration of complete facts. For the same reason, waiver application of the assessee dated 24-5-1980, the reports of the ITO and the statements, etc., of Shri Munni Lal and the order of the Commissioner dated 15-10-1981 cannot be taken into consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new truck as well as the expenditure incurred in the construction of the body thereof. The learned Commissioner was also right in pointing out that since the copy of the assessee's bank account with Vijaya Bank Ltd., showed a number of deposits, some of which were by transfer from other accounts, the ITO should have obtained the copies of the accounts with other banks and should have examined the nature and source thereof. In the assessment order no mention is made whether penalty proceedings under section 271(1)(c) were to be initiated. The assessee could say that because the ITO had mentioned the issue of penalty notices under section 273(c) and not under section 271(1)(c) and, therefore, he had consciously omitted to do so. But in the view which we have taken, namely, that due and proper enquiries were not made by the ITO before completing the assessment, it would amount to an omission on the part of the ITO to take notice of facts and make proper enquiry on the basis of which only the ITO could have been in a position to have a prima facie satisfaction whether or not to initiate proceedings under section 271(1)(c). This is the very aspect which was emphasised by the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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