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Rajasthan High Court · body

2007 DIGILAW 953 (RAJ)

Renu Gupta v. Commissioner of Income

2007-05-07

DINESH MAHESHWARI, P.B.MAJMUDAR

body2007
JUDGMENT 1. Heard learned counsel for the parties. 2. By filing this appeal, the appellant-assessee has challenged the order dated March 24, 2005, passed by the Commissioner of Income-tax, Bikaner, by which the Commissioner, while exercising the revisional jurisdiction under section 263 of the Income-tax Act, has found that the order passed by the Assessing Officer is against the interests of the Revenue. The Commissioner, accordingly, set aside the order and remanded the matter back for fresh enquiry by giving opportunity to the appellant-assessee to lead evidence in connection with the facts in issue. The order of the Commissioner was taken further by way of appeal before the Tribunal. The Tribunal also found that the Commissioner has exercised the revisional jurisdiction in a proper manner and accordingly the said order was confirmed by the Income-tax Appellate Tribunal, Jodhpur. The orders passed by the Commissioner and the Tribunal are impugned in this appeal. While admitting this appeal, this court has formulated the following question : "Whether, on the facts and circumstances of the case, the Com missioner having issued show-cause notice under section 263, giving the details of certain items in respect of which enquiry was not con ducted by the Assessing Officer, but on receipt of reply from the respondents and finding enquiry in those matters were conducted without holding that the conclusions arrived at by the Assessing Officer on the basis of enquiry conducted by the Assessing Officer is erroneous, was the Commissioner justified in exercise of jurisdiction under section 263 by merely opining that proper enquiry has not been conducted ?" 3. The learned advocate Mr. Ojha appearing for the appellant submitted that there was no justification on the part of the Commissioner to exercise the revisional jurisdiction as no reasons are given by the Commissioner in his order as to why it is necessary to exercise such jurisdiction nor the Commissioner has held that the conclusions arrived at by the Assessing Officer are erroneous. He submitted that there is nothing on record to show that the order passed by the Assessing Officer is against the interests of the Revenue. He, therefore, submitted that the Commissioner could not have exercised the revisional jurisdiction against the just decision of the Assessing Officer. Learned counsel submitted that the Commissioner as well as the Tribunal both have erred and the matter was not required to be sent back for further scrutiny. He, therefore, submitted that the Commissioner could not have exercised the revisional jurisdiction against the just decision of the Assessing Officer. Learned counsel submitted that the Commissioner as well as the Tribunal both have erred and the matter was not required to be sent back for further scrutiny. 4. We have gone through the record. In our view, the Tribunal, while disposing of the appeal of the appellant, has considered all the relevant aspects of the matter. It is required to be noted that the cogent reasons have been given by the Commissioner in his order as to why the order of the Assessing Officer is required to be interfered with. While exercising the revisional jurisdiction, the Commissioner has found that the matter was required to be sent back for further scrutiny. The Commissioner also found that the assessee was required to furnish the details of expenses debited to income and expenditure account under the various heads. In paragraphs 5 and 5.1 of the order, the Commissioner has observed as under : "5. The assessee has shown the net profit of Rs. 2,46,226 against the commission receipt of Rs. 6,79,787. The expenses against the commission receipts were claimed to the tune of Rs. 4,33.561. In regard to the expenses claimed against the receipts of commission the assessee was required to furnish the details of expenses debited to income and expenditure account under the various heads as per paragraph 6 of the Assessing Officer's letter dated December 31, 2002, placed at file page No. 37. Similarly, the details and evidence of the commission paid to various persons along with their age, school ing, experience in the service rendered, mode of payment, relation ship, etc., was required as per paragraph 7 of letter dated December 31, 2002, placed at file pages Nos. 36 and 37. In compliance with the requisition the assessee filed his reply vide letter dated February 21, 2003, placed at file pages Nos. 210, 211 and 212. The reply so filed is found incomplete because of the fact that the evidence/details such as age, schooling, experience, mode of payment are neither given by the assessee nor the investigation/enquiry was carried out by the Assessing Officer to ascertain the genuineness of the claim. The assessment was completed by making the trading addition of Rs. 10,000 besides the disallowance of 20 per cent. The assessment was completed by making the trading addition of Rs. 10,000 besides the disallowance of 20 per cent. of the vehicle expenses and depreciation for personal use. It is surprising to note that at one place the Assessing Officer suggested deep investigation while selecting the case for scrutiny whereas on the other hand the submissions of the assessee is accepted without obtaining the details as required as per the letter dated December 31, 2002, without considering further enquiry/investigation which shows that the assessment has been completed in routine manner without applying his mind. 5.1 During the course of proceedings under section 263 of the Income-tax Act, 1961, learned counsel for the assessee has con tended, vide letter dated March 24, 2005, that the Assessing Officer has thoroughly examined, investigated and verified the issue and thereafter an addition of Rs. 10,000 was made. It is further stated that the expenses claimed were duly verified by the Assessing Officer during the course of assessment proceedings and the order passed on such basis is not erroneous and prejudicial to the Revenue. As mentioned above, in paragraph 5 that the Assessing Officer has accepted the submission of the assessee without obtaining the details required and without making enquiry as suggested by him while selecting the case for scrutiny. Examination of record reveals that the photocopies of self-made vouchers in respect of payment of salary, commission, etc., has been filed but neither the assessee has given the detailed particulars like their age, experience, educational qualification, nature of service rendered, etc., as especially required vide letter dated December 31, 2002, nor the investigation was carried out on this score by the Assessing Officer. On going through the record, it is observed that the assessment proceedings were effectively commenced on February 21, 2003, and concluded on March 21, 2003. The order sheet shows that after February 21, 2003, neither any enquiry on any point was taken up nor any requisition was made from the asses see, it proves that the assessment proceedings were virtually concluded on the date when it was commenced, i.e., February 21, 2003, therefore, the assessment is completed in a hasty manner without applying his mind and without conducting enquiry and as such the order passed by the Assessing Officer is improper which is held erroneous inasmuch as prejudicial to the interests of the Revenue. Further, it is not out of place to mention here that mere filing of copy of account without supporting evidence do not prove that the expenditure has been incurred for the purpose of business and in this respect a reference is invited on the decision of the hon'ble Punjab and Haryana High Court in the case of CIT v. Export House, (2002) 256 ITR 603 . " 5. The Commissioner of Income-tax also found that the assessee was required to give details of the properties with source of investment and details of renovation with source of investment, but such details were not furnished on the ground that the assessee was not in possession of the same. It has also been found that the Assessing Officer has accepted the submission of the assessee though he showed his inability to furnish the details as required. The Commissioner of Income-tax in view of the decision of the hon'ble Income-tax Appellate Tribunal Mumbai Bench in the case of Schenectady Beck India Ltd. v. Deputy CIT, (No. 1) (2005) 272 ITR (AT) 103 found that when the law prescribes conditions for the allowability of a claim and the claim was not tested on the touchstone of such conditions, it amounts to an error. This error could be said to be prejudicial to the interests of the Revenue. 6. The Commissioner also took into consideration the judgment of the apex court in the case of Smt. Tara Devi Aggarwal v. CIT, (1973) 88 ITR 323 wherein it has been held that the Commissioner may consider an order of the Assessing Officer to be erroneous not only if there is some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereotyped order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case. It is not necessary for the Commissioner to make further enquiries before cancelling the assessment order of the Assessing Officer. 7. Considering the aforesaid aspects, in our view, the impugned order of the Commissioner, which is confirmed by the Tribunal, is not required to be interfered with by this court. 8. It is not necessary for the Commissioner to make further enquiries before cancelling the assessment order of the Assessing Officer. 7. Considering the aforesaid aspects, in our view, the impugned order of the Commissioner, which is confirmed by the Tribunal, is not required to be interfered with by this court. 8. We may clarify that it will be open to the assessee to lead evidence before the Assessing Officer in view of the remand order passed by the Commissioner and on the merits of the issue, we have not given any finding as it is for the Assessing Officer to give final decision in view of the orders in question. 9. Accordingly, the present Income-tax appeal stands dismissed. No order as to costs. *******