ORDER--Finding of fact not challenged.
Ratio :
The finding of Tribunal on the basis of material on record that the order of CIT under s. 263 was not justified in law, having not been challenged by revenue, the said question cannot be referred.
Held :
Question is whether the CIT has rightly exercised his power in remanding the case back to the assessing authority with a direction to make the assessment de novo after examining the genuineness of the gifts. The Tribunal has recorded a finding against the order passed by the CIT under s. 263 that `the ld.
CIT himself has not made any enquiry to come to the conclusion that gifts were not genuine. He neither had anything before him documentary nor oral statement of somebody, which could prove that some of the gifts were not genuine. A mere report of DDI (Inv.) suggesting that some of the gifts may be non-genuine and that too not confronted to the assessee, was not sufficient to conclude that the gifts were not genuine'. The question in this case is whether the CIT had power to remand the case as contended on behalf of the revenue and also whether the finding recorded by the Tribunal has been challenged. These findings not being challenged by the revenue, the question sought for reference does not arise from the facts and circumstances of this case.
Application :
Also to current assessment years.
Income Tax Act 1961 s.256(2) JUDGMENT A.P. Misra, J.
1. The present application is under Section 256(2) of the Income-tax Act, 1961. The Revenue has sought for the following question to be referred to this court :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that on the basis of material placed on record, the order passed under Section 263 was not justified in the eye of law ?"
2. The facts of the case are that the return of income was filed by the assessee on March 23, 1989, in compliance with the notice under Section 148 showing an income of Rs. 51,050. The assessment was completed on March 31, 1989, on an income of Rs. 68,370. While completing the assessment, the Assistant Commissioner gave an office note in the assessment order stating that during the year the assessee had received gifts worth Rs. 5,62,016 from different persons on the occasion of her marriage. The assessee filed a list of donors along with their P. A. account G. I. R. No. showing the place of their assessment. The Assistant Commissioner in his note further stated that the assessment was being completed subject to further enquiry to be made at Madras for verification of alleged gifts and if necessary suitable action will be taken subsequently.
3. Thereafter, on furnishing full particulars of the alleged donors to the Deputy Director (Intelligence), Madras, it was gathered that most of the donors did not know anything about the assessee and they denied having made such gifts. Thereafter, he suggested that most of the gifts were not genuine. In these circumstances, action under Section 263 was taken as the order of the Assistant Commissioner was found to be erroneous and prejudicial to the interests of the Revenue. The Assistant Commissioner completed the assessment within eight days of the filing of the return under a mistaken belief that the assessment was going to become barred by limitation on March 31, 1989, as a result of which he hurriedly completed the assessment without making any prior enquiry into the alleged gifts shown to have been received by the assessee during the previous year.
4. During the course of proceedings under Section 263, the assessee advanced arguments that the case was covered by the rulings of the Allahabad High Court in the case of CIT v. Goyal Private Family Specific Trust [1988] 171 ITR 698. After careful consideration and bringing out the distinguishing facts of the instant case with the cases relied on by the assessee, an order was passed under Section 263 cancelling the assessment made by the Assistant Commissioner of Income-tax.
5. The order passed by the Commissioner of Income-tax under Section 263 was set aside by the Income-tax Appellate Tribunal, vide its order dated August 28, 1991. The Tribunal held that the Commissioner of Income-tax in haste, without proper and adequate enquiry, had passed the said order and hence it is illegal. On behalf of the Revenue reliance had been placed on the cases of Swamp Vegetable Products industries Ltd. (No, 1) v. CIT [1991] 187 ITR 412 (All); CIT v. Geeta Devi Agarwal [1988] 174 ITR 601 (Patna) and CIT v. Smt. Pushpa Devi [1988] 173 ITR 445 (Patna). Further reliance has been placed on the fact that the order of the Commissioner of Income-tax under Section 263 was upheld on the ground that the assessing authority has not made proper enquiry and committed an error, hence the Commissioner has rightly exercised his power. The contention is that similar is the situation in the present case. In the case of CIT v. Smt. Pushpa Devi [1988] 173 ITR 445 (Patna), the following observation has been made (headnote) :
"When an inquiry is launched under Section 143(3), the finding will not depend only upon presumption. The onus of proof could not be cast entirely upon the Revenue. The question of onus would devolve on the Revenue only if the assessee produced some material to show that what he or she states may be correct."
6. The contention raised on behalf of the Revenue does not fall under any of the aforesaid authorities. Admittedly, the assessing authority while accepting the return of the assessee has recorded a finding that "the assessment is completed but further enquiry will be made at Madras because gifts exceeding Rs. 1,100 are made by such persons who are residing at Madras. If anything adverse is found necessary action will be taken against the assessee within the ambit of the 1961 Act. Thereafter an enquiry was conducted and the Commissioner of Income-tax exercised his power under Section 263. The question is whether the Commissioner of Income-tax has rightly exercised his power in remanding the case back to the assessing authority with a direction to make the assessment de novo after examining the genuineness, of the gifts. The Income-tax Appellate Tribunal has recorded a finding against the order passed by the Commissioner of Income-tax under Section 263 that "the learned Commissioner of Income-tax himself has not made any enquiry to come to the conclusion that the gifts were not genuine. He neither had anything before him, documentary nor the oral statement of somebody, which could prove that some of the gifts were not genuine. A mere report of the Deputy Director (Intelligence), Madras, suggesting that some of the gifts may be non-genuine and that too not confronted to the assessee, in our opinion, was not sufficient to conclude that the gifts were not genuine." The question in this case is whether the Commissioner of Income-tax had power to remand the case as contended on behalf of the Revenue and also whether the finding recorded by the Tribunal has been challenged. We find that the Revenue has not challenged this finding. Once the Tribunal has recorded its finding as aforesaid, upsetting the finding of the Commissioner of Income-tax by holding :
". . . . the learned Commissioner of Income-tax has himself not made enquiry to come to the conclusion that the gifts were not genuine. He neither had anything before him, documentary or oral .... mere report of the Deputy Director (Intelligence), Madras, suggesting some of the gifts may be non-genuine and that too not confronted to the assessee was not sufficient to conclude that the gifts were not genuine."
and these findings, not being challenged by the Revenue, the question sought for reference does not arise from the facts and circumstances of this case.
7. Accordingly, the present application is devoid of merit and is accordingly rejected.