JUDGMENT
1. These references relate to the assessment years 1968-69 to 1972-73. The questions referred to us for recommendation are as follows :
” 1. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the assessment orders, having been passed by the Income-tax Officer after necessary enquiries in pursuance of the scheme ‘ to help the new taxpayers in the small income groups ‘ launched by the Government, were not erroneous as to enable the Commissioner of Income-tax to assume jurisdiction under Section 263(1) of the Income-tax Act, 1961 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the impugned order of the Commissioner of Income-tax is based upon mere surmises and conjectures and is, therefore, not valid ?
3. Whether, in view of the decision of the Income-tax Appellate Tribunal, Patna, in the case of Smt. Rambha Devi v. ITO (I.T.A. Nos. 1713 to 1715 of 1974-75), the Tribunal has rightly held that the Commissioner of Income-tax, acting under Section 263(1) of the Income-tax Act, 1961, could not legally set aside an order of assessment made under Section 143(1) in pursuance of the scheme ‘ to help the new taxpayers in the small income groups ‘ evolved by the Government ?
4. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly cancelled the consolidated order passed by the Commissioner of Income-tax under Section 263(1) of the Income-tax Act, 1961, for the assessment years 1968-69 to 1972-73 ? ”
2. These references must be decided on the ratio of the two decisions of this court in CIT v. Pushpa Devi [1987] 164 ITR 639 and CAT v. Rambha Devi [1987] 164 ITR 658. The facts are that pursuant to a scheme to help small assessees, the assessee in the instant case was assessed by the Income-tax Officer. In the Scheme, at paragraph 4, it was stated that ” Returns of income filed in the names of minors and ladies should not, however, be accepted without inquiry”. Despite this specification in respect of minors arid ladies, without adequate inquiry, the assessee was assessed in terms of Section 143(1) of the Income-tax Act. The Commissioner applied his mind to the matter in terms of Section 263(1) of the Income-tax Act. He held that the scheme did not apply to a person like the present assessee and, therefore, the order of assessment was erroneous. In his view, the erroneous order was prejudicial to the Revenue. He, therefore, set aside the order of assessment. The assessee, being aggrieved by the order of the Commissioner, appealed to the Tribunal. The Tribunal set aside the order of the Commissioner holding that the scheme applied to persons like the assessee and the Commissioner had no jurisdiction to set aside the assessment. The Tribunal, therefore, retained the assessment of the Income-tax Officer and cancelled that of the Commissioner. The Revenue, being aggrieved by the order of the Tribunal, has moved this court and referred the questions mentioned above for our opinion. Questions similar to those were referred to us earlier, which were the subject-matter of reference before this court in CIT v. Pushpa Devi [1987] 164 ITR 639. In that case, we held that the Income-tax Officer had not carried out the necessary enquiry enjoined by Section 143(1). Since that was our opinion in regard to the power of the Income-tax Officer, we held that the Commissioner was within his powers in acting in terms of Section 263(1) of the Income-tax Act. The position is the same in the present case as well. In accordance with that view, we hold that the Tribunal was not right in setting aside the order of the Commissioner. The first question, therefore, referred to us in the present references also must be answered in favour of the Revenue and against the assessee.
3. The second question referred to us is whether the Tribunal was right in holding that the impugned order of the Commissioner was based upon mere surmises and conjectures and was, therefore, not valid. This question was question No. 3 in the case of Pushpa Devi [1987] 164 ITR 639. It was held in that case that the order of the Commissioner was not based upon surmises and conjectures. The so-called inquiry report in this case also is word for word the same as in the case of Pushpa Devi [1987] 164 ITR 639. In that case, the Tribunal had cancelled the order of the Commissioner on the footing that the order was based upon surmises and conjectures and there was nothing on record to show that the sums invested or returned belonged to the husband of the assessee. We rejected that observation of the Tribunal. We held that the view of the Commissioner was not a surmise or conjecture but was an application of common sense. We held that the assessee had failed to show the source of initial capital investment. It was, therefore, held that the order of the Commissioner was not based on conjectures and surmises. The same is our view in regard to question No. 2 in these references.
4. Question No. 3, in these references, is ancillary to questions Nos. 1 and 2. Since questions Nos. 1 and 2 have been answered in favour of the Revenue, question No. 3 also must be answered in favour of the Revenue.
5. So far as question No. 4 goes, there can be no escape from the position that the Tribunal was not right in cancelling the consolidated order passed by the Commissioner of Income-tax under Section 263(1) of the Income-tax Act. In that view of the matter, all the four questions referred to this court must be answered in favour of the Revenue and against the assessee. However, there will be no order as to costs.
6. Let a copy of this order be transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, Patna, in terms of Section 260 of the Income-tax Act.