Income Tax Appellate Tribunal - Jabalpur
Nirmal Kumar Sheel Kumar Jain vs Ito on 13 January, 2000
Equivalent citations: (2001)71TTJ(JAB)494
ORDER
Proper enquiries made by assessing officer Catch Note:
During course of survey, it was found that there was excess. stock and assessee had surrendered a sum of Rs. 50,000 towards excess stock and Rs. 65,000 for unexplained investment in the construction of godown--Assessing officer was fully aware about surrender made during course of survey and also the fact that such surrendered income was not offered in return of income--Commissioner, set aside assessment under section 263 on the ground that assessing officer did not make proper enquiry with regard to difference in stock found as a result of survey and investment with regard to construction of godown--Whether order of assessing officer was erroneous and prejudicial to interest of revenue--No, therefore, assessment cannot be said to have been completed in haste or undue hurry or without examining the material on record.
Held:
In his assessment order, the assessing officer has discussed that during the course of survey in the statement of one partner, had surrendered the excess stock of Rs. 50,000 and unexplained investment in the godown to the extent of Rs. 65,000. He has also recorded that no such income has been shown while furnishing the return of income. Thus, the assessing officer was fully aware about the surrender made during the course of survey and also the factum that such surrendered income was not offered in the return of income. In his order, the assessing officer has discussed about the assessee's explanation with regard to excess stock. The assessee has explained that the difference during the course of survey in stock was because of receipt of certain goods, which were taken from the transporter, but which were remained to be entered in the regular books. Thus, there was no difference in the stock. It was also explained that the godown was constructed by and not by the assessee-firm. Therefore, the investment in the godown has to be considered in the case of such partner. Therefore, the assessment cannot be said to have been completed in haste or undue hurry or without examining the material on record.
Case Law Analysis:
CIT v. Ratlam Coal Ash Co. (1988) 171 ITR 141 (MP) applied.
Application:
Also to current assessment year.
Decision:
In favour of assessee.
Income Tax Act 1961 s.263 In the ITAT, Jabalpur Bench G.D. Agrawal, A.M. ORDER G.D. Agrawal, A.M. This appeal by the assessee is directed against the order of CIT, Gwalior, passed under section 263 of Income Tax Act, 1961.
2. At the time of hearing before me, it is stated by the learned counsel for the assessee that CIT, Gwalior, has set aside the assessment under section 263 on the ground that the assessing officer did not make proper enquiry with regard to the difference in stock found as a result of survey and the investment with regard to construction of godown. He stated that on both these grounds, the assessing officer examined the facts of the case and he being satisfied with the explanation of the assessee did not make the addition. Thus, when the assessing officer has considered both these aspects, it cannot be said that the assessment was either erroneous or prejudicial to the interests of revenue . In. support of this contention, he relied upon the decision of Hon'ble jurisdictional High Court in the case of CIT v. Ratlam Coal Ash Co. (1988) 171 ITR 141 (MP).
3. The learned Departmental Representative relied upon the order of Commissioner passed under section 263 of the Act and he stated that during the course of survey, it was found that there was excess. stock. The assessee had surrendered the sum of Rs. 50,000 towards excess stock and Rs. 65,000 for unexplained investment in the construction of godown. In the return of income, the assessee did not offer these two income and the assessing officer accepted the assessee's return without making proper verification. Therefore, the CIT was fully justified in setting aside the assessment and directing the assessing officer to make the assessment de novo after making the proper enquiries on these two points. He stated that the order of the CIT should be sustained.
4. I have carefully considered the arguments of both the sides and have perused the material placed before me. The assessing officer completed the assessment under section 143(3) vide order dated 25-3-1996, in page 1, para 1 of assessment order. He has discussed that during the course of survey in the statement of one partner, Shri Devendra Kumar Jain had surrendered the excess stock of Rs. 50,000 and unexplained investment in the godown to the extent of Rs. 65,000. He has also recorded that no such income has been shown while furnishing the return of income. Thus, the assessing officer was fully aware about the surrender made during the course of survey and also the factum that such surrendered income was not offered in the return of income. In para 2, he has discussed about the assessee's explanation with regard to excess stock. The assessee has explained that the difference during the course of survey in stock was because of receipt of certain goods, which were taken from the transporter, but which were remained to be entered in the regular books. Thus, there was no difference in the stock. It was also explained that the godown was constructed by Shri Mukesh Kumar and not by the assessee-firm. Therefore, the investment in the godown has to be considered in the case of Mukesh Kumar. Thus, the assessing officer has accepted the assessee's explanation after due verification and it cannot be said that the assessing officer did not consider the material found at the time of survey or the statement recorded at the time of survey. Therefore, I am of the opinion that the assessment cannot be said to have been completed in haste or undue hurry or without examining the material on record. The Honble M.P. High Court in the case of Ratlam Coal Ash Co. (supra) has held as under :
"In the instant case, however, the Tribunal has found that the assessee had furnished all the requisite information and that the Income Tax Officer, considering all the facts, had completed the assessment. The Tribunal further held that on the circumstances of the case, it could not be held that the Income Tax Officer had made the assessment without making proper enquiries. In view of these findings, the Tribunal in our opinion, was justified in law in reversing the order passed by the Commissioner."
5. The facts of the case under appeal are identical to the facts in the case of Ratlam Coal Ash Co. above. Therefore, respectfully following the decision of Honble jurisdictional High Court, I hold that the assessing officer made the assessment after considering all the facts and, therefore, the assessment order cannot be said to be erroneous. I accordingly quash the order passed under section 263 and restore the assessment order, dated 25-3-1996.
6. In the result, the assessee's appeal is allowed.