Commissioner of Income Tax vs Mangilal Didwania

Rajesh Balia, J.—Heard learned Counsel for the parties.

The application has been moved u/s 256(2) of the Income Tax Act, 1961, by the Revenue seeking a direction to the Tribunal to state the case and refer the following question as question of law arising from the order dated May 26, 1997, of the Tribunal passed in I. T. A. No. 1343/JP/95 relating to the assessment year 1990-91:

Whether, on the facts and in the circumstances of the case, the hon''ble Income Tax Appellate Tribunal was justified in law in quashing the order u/s 263 of the Income Tax Act passed by the Commissioner of Income Tax ?

The Assessing Officer had passed the assessment order on December 30, 1992. The Commissioner of Income Tax, considering that the assessment order has been passed without following proper enquiry which has resulted in an erroneous assessment order and prejudicial to the interests of the Revenue, issued notice u/s 263 of the Income Tax Act, 1961, in exercise of his revisional jurisdiction. After notice, a detailed reply has been submitted by the assessee. The Commissioner of Income Tax concluded that:

In view of the foregoing discussion, it is clear beyond any doubt that the assessment was completed in undue haste and without making proper investigation by the Assessing Officer, who is a Revenue Officer was bound to do.

On this finding, he held that the assessment made u/s 143(3) by the Assessing Officer on December 30, 1992, is erroneous and prejudicial to the interests of the Revenue and, therefore, the same was set aside with a direction to the Assessing Officer to make a fresh assessment order after enquiry.

On appeal, the Tribunal recorded a finding after considering the material on record as under:

Thus, considering the facts and circumstances of the case, as also the material on record, we are quite convinced that the Assessing Officer did enquire into the various aspects of the case before framing the assessment and hence there was no justification for the Commissioner of Income Tax to hold it as erroneous and prejudicial to the interests of the Revenue, and thereby invoking jurisdiction u/s 263.

It also found that the assessment cannot be said to have been completed in undue haste.

We are of the opinion, that these are the findings of fact whether the Assessing Officer has made proper enquiry with due application of mind or not.

Undoubtedly, if proper enquiry has not been held, the Assessing Officer''s order is liable to be revised u/s 263, by the Commissioner of Income Tax, inter alia, on the ground that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue having been made without proper enquiry. However, when the inquiry has been made, to what extent it can be said to be inadequate are questions of fact depending on the facts and circumstances of each case.

The Tribunal after considering the material available on record was satisfied that proper enquiry was made by the Assessing Officer before passing the assessment order and he has applied his mind to the relevant material which was brought on record. It does not give rise to any question of law.

Consequently, the order of the Tribunal rejecting the application u/s 256(1) by holding that the order of the Tribunal does not give rise to any question of law is not erroneous and, therefore, the application u/s 256(2) must fail. The same is hereby dismissed.

No costs.