Punjab-Haryana High Court
Commissioner Of Income Tax vs Rajesh Mahajan on 1 February, 2011
Author: Ajay Kumar Mittal
Bench: Adarsh Kumar Goel, Ajay Kumar Mittal
Income Tax Appeal No. 383 of 2006 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
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Income Tax Appeal No. 383 of 2006
Date of decision: 01-02-2011
Commissioner of Income Tax
Karnal
--- Appellant
Versus
Rajesh Mahajan
--- Respondent
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CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
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Present: Mr. Yogesh Putney, Senior Standing Counsel
for the appellant-Revenue.
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AJAY KUMAR MITTAL, J.
The paper-books of Income Tax Appeal Nos. 383 and 384 of 2006, which are being disposed of by a single order as similar questions of law have been raised therein, have not been received from the concerned Branch as the same are said to have been burnt in the fire incident that took place in the premises of this Court on the night of 30th January, 2011. Learned counsel for the appellant has Income Tax Appeal No. 383 of 2006 2 made available two copies of paper-book of each appeal to the Court for reconstruction of the files. The said copies are taken on record and the files of the appeals are treated as having been reconstructed. For facility of reference, the facts are being taken from Income Tax Appeal No. 383 of 2006.
This appeal under Section 260A of the Income-Tax Act, 1961 (for short "the Act") has been filed by the Revenue against the order dated 30.11.2005, passed by the Income Tax Appellate Tribunal New Delhi Bench 'C' (in short "the Tribunal") in IT/S&S/A No. 259/DEL/2005, relating to the block period from 1.4.1990 to 10.11.2000.
The following substantial question of law has been claimed for determination by this Court:
"Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in cancelling the order passed by the CIT under section 263 setting aside the assessment framed by the A.O. by holding that the same was erroneous in so far as it was prejudicial to the interest of revenue and having been framed without application of mind by the AO as held by the Hon'ble Supreme Court of India in the case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83(SC)."
The facts, in brief, necessary for adjudication as narrated in the appeal, are that the respondent-assessee is an individual and a partner in the firms M/s. Mahajan Exports and M/s. Masper, both of Panipat and has also been deriving income from salary and house Income Tax Appeal No. 383 of 2006 3 property. A search under Section 132(1) was carried out on 29.8.2000 at the residential as well as business premises of the aforesaid firms which concluded on 10.11.2000. The Commissioner of Income Tax (in short "the CIT") transferred the matter vide order passed under Section 127 of the Act, to the Deputy Commissioner Income Tax, Central Circle, New Delhi, but the assessee challenged the said order before this Court and succeeded. Resultantly, the period during which the matter remained pending before the wrong forum, i.e. from September 2001 to 31.7.2002, was excluded from the statutory period for completion of assessment proceedings under Section 158BC of the Act. Later on a notice under Section 158BC was issued and served on the assessee on 5.2.2003. The assessee in compliance thereto filed return of income for the block assessment period declaring undisclosed income at NIL, on 20.2.2003. The Block Assessment Proceedings were completed on undisclosed income at NIL, vide order dated 3.9.2003 by the Assistant Commissioner, Circle, Panipat.
The CIT, Karnal cancelled the assessment order dated 3.9.2003 by order dated 3.3.2005 passed under Section 263 of the Act and directed de novo assessment in respect of certain points indicated in his order.
Dissatisfied by the order of the CIT, the assessee preferred appeal before the Tribunal. The Tribunal allowed the appeal and set aside the order of the CIT and restored that of the assessing officer, vide the order under appeal.
Income Tax Appeal No. 383 of 2006 4
We have heard learned counsel for the appellant-Revenue and have perused the record.
The issue that arises for consideration in this appeal is, whether the order passed by the assessing officer on 3.9.2003 was erroneous, insofar as it was prejudicial to the interest of the Revenue and, therefore, the Commissioner of Income Tax, Karnal, was justified in taking recourse to action under Section 263 of the Act?
A perusal of the order of CIT clearly shows that the assessment had been finalised without making enquires relating to following matters:
(a) cash found at the premises of the assessee at Panipat House;
(b) cash found at Delhi House;
(c) unsecured loans; and
(d) fresh investment The order of the assessing officer was held to be erroneous in so far as it was prejudicial to the interest of the revenue.
The Tribunal while allowing the appeal had failed to appreciate the reasons given by the CIT for resorting to the action against the appellant under the provisions of Section 263 of the Act. Nothing has been referred by the Tribunal which may justify passing of block assessment order by the assessing officer under reference. A reading of the assessment order spells out that the assessing officer had mechanically accepted the returned income without scrutinising or referring to any material examined during block assessment proceedings.
Income Tax Appeal No. 383 of 2006 5
In view of the above, the question of law is answered in favour of the Revenue and it is held that resort to action under Section 263 of the Act by the CIT was justified. The appeals are accordingly allowed.
(AJAY KUMAR MITTAL)
JUDGE
(ADARSH KUMAR GOEL)
February 01, 2011 JUDGE
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