Income Tax Appellate Tribunal - Pune
J.P. Sethi vs Ito on 1 January, 1800
Equivalent citations: (1989)33TTJ(PUNE)576
ORDER
--Adequacy of enquiry. Ratio:
Confirmation of loan taken accepted provisionally and necessary evidence produced in subsequent year's assessment, revision not justified.
Held:
Though the Commissioner has given directions to make enquiry, he has completely ignored or was quite oblivious of the enquiry already made by the assessing officer and material already brought on record. It is not fair and just to ignore the material already brought on record by the assessing officer regarding genuineness of the cash credits under consideration. Failure to conduct enquiry would make assessment orders erroneous, but in the absence of any other material, it could not be said that the orders passed were prejudicial to the interest of revenue. In these facts and circumstances of the case, the Commissioner has not made out a case to show that the orders passed by the assessing officer were prejudicial to the interests of revenue so as to invoke his jurisdiction under section 263.
Application:
Also to current assessment years.
Income Tax Act 1961 s.263 Income from undisclosed sources--ADDITION UNDER S. 68--Discretionary or mandatory provision.
Ratio :
Language in section 68 uses the word "May" and not "Shall", provision therefore discretionary.
Held :
Section 68 user the word `may' and not the word `shall' as it was contained in the Bill introduced in the Parliament. At the instance of the Select Committee, the word `may' has been introduced in the place of `shall'. According to the Select Committee, if there was evidence to show that the amount belongs to some other person, the Income Tax Officer should have power to assess that person. It is for this reason that the Select Committee observed that the fact that the explanation offered by the assessee is not satisfatory should not invariably force the Income Tax Officer to treat it as income of the assessee. In other words, the use of the word `may' gives discretion to the assessing authority to consider all the circumstances and to decide whether or not the particular cash credit in question is the income of the assessee. Thus, the provisions of section 68 are not mandatory in nature but discretionary.
Application :
Also to current assessment years.
Income Tax Act 1961 s.68 Revision under s. 263--ERRONEOUS AND PREJUDICIAL ORDER--Inadequacy of enquiry.
Ratio :
Without considering findings of enquiry made by assessing officer assessment order could not be constituted as erroneous and prejudicial to the interest of revenue where no fresh material was brought on record by Commissioner.
Held :
Though the Commissioner of Income Tax has given directions to make enquiry, he has completely ignored or was quite oblivious of the enquiry already made by the Income Tax Officer and materials already brought on record. It is not fair and just to ignore the material already brought on record by the Income Tax Officer regarding genuinness of the cash credits under consideration. If the directions of the Commissioner of Income Tax were to be implemented it would be nothing but exercise in futility unless there should be further evidence brought on record or some other material is pointed out so as to constitute the assessments made by the Income Tax Officer erroneous and also prejudicial to the interest of revenue. Failure to conduct enquiry would make assessment orders erroreous, but in the absence of any other material, it could not be said that the orders passed were prejudicial to the interest of revenue. In these facts and circumstances of the case, the Commissioner of Income Tax has not made out a case to show that the orders passed by the Income Tax Officer were prejudicial to the interest of revenue so as to invoke his jurisdiction under section 263.
Application :
Also to current assessment years.
Income Tax Act 1961 s.263 Revision under s. 263--ERRONEOUS AND PREJUDICIAL ORDER--Provisionally accepted transaction proved in subsequent year's assessment.
Ratio:
Where confirmation of loan taken accepted provisionally but necessary evidence were produced in subsequent year's assessment, revision under section 263 was not justified.
Held:
Though the Commissioner has given directions to make enquiry, he has completely ignored or was quite oblivious of the enquiry already made by the assessing officer and materials already brought on record. It is not fair and just to ignore the material already brought on record by the assessing officer regarding genuinness of the cash credits under consideration. If the directions of the Commissioner were to be implemented it would be nothing but exercise in futility unless there should be further evidence brought on record or some other material is pointed out so as to constitute the assessments made by the assessing officer erroneous and also prejudicial to the interest of revenue. Failure to conduct enquiry would make assessment orders erroneous, but in the absence of any other material, it could not be said that the orders passed were prejudicial to the interest of revenue. In these facts and circumstances of the case, the Commissioner has not made out a case to show that the orders passed by the assessing officer were prejudicial to the interests of revenue so as to invoke his jurisdiction under section 263.
Application:
Also to current assessment years.
Income Tax Act 1961 s.263