ORDER, VALIDITY OF–Short and cryptic order
Ratio :
Appellate order disposing of substantial issues on merits in four five lines is liable to be set aside.
Held :
The Income Tax Officer made an addition of Rs. 2,90,289 under section 40A(3) and Rs. 2,77,688 under section 68, apart from the addition of Rs. 42,098. True, the Income Tax Officer might have dealt with the points at length and exhaustively but it is equally incumbent on the part of the first appellate authority to deal with the matter properly with more attention it deserved, particularly when substantial grounds have been raised in which various points of controversy are very much at large. Thus, since the order of the Commissioner (Appeals) is so short and cryptic, this part of the order of the Commissioner (Appeals) dealing with the merits of the case is set aside for fresh disposal by him.
Application :
Also to current assessment years.
Income Tax Act 1961 s.250
Appeal (CIT(A)–JURISDICTION OF COMMISSIONER (APPEALS)–Jurisdiction to entertain.
Ratio & Held :
Where income of assessee in the revised return exceeds Rs. 1 lakh, Commissioner (Appeals) has to entertain assessee’s contention regarding the jurisdiction, even though such claim was not raised before the assessing officer.
Application :
Also to current assessment years.
Income Tax Act 1961 s.246
Assessment–AMNESTY SCHEME–Filing of return thereunder, effect of
Ratio :
Filing of return under the amnesty scheme would not automatically give rise to amnesty to the assessee against enquiries or verification of those facts.
Held :
Filing of return under the Amnesty Scheme would not automatically give rise to amnesty to the assessee against enquiries or verification of those facts. There was nothing in section 24 of the Finance (No.2) Act, 1965, which prevented the Income Tax Officer, if he was not satisfied with explanation of the assessee about the genuineness or source of the amount found credited in its books, although the same had already been made subject to declaration by the creditor and taxed under the Amnesty Scheme, to ascertain true nature and source of credit.
Application :
Also to current assessment years
Income Tax Act 1961 s.143
CBDT Circular–AMNESTY SCHEME-Benefit thereof.
Ratio :
Mere filing of a return under Amnesty Scheme would not automatically give rise to amnesty to assessee against enquiries/verification of facts.
Facts :
for the relevant assessment year the original assessment was made on 30-9-1965 under the summary assessment scheme. After this, the assessing officer with the approval of Inspecting Assistant Commissioner reopened the assessment under section 143(2)(b) and issued notice to the assessee asking to furnish explanation about the nature and the source of certain entries found in the books. The assessee produced cash books, ledger accounts, etc. These books were subsequently impounded by the Income Tax Officer under section 131 on the ground that certain cash purchases were not entered in the books on the date of such purchases. Thereafter assessee filed a revised return under the Amnesty Scheme disclosing income exceeding Rs. 1 lakh besides the income disclosed in original return. The assessing officer found that in total the payments as per the cash memos were in excess of that disclosed by the assessee and therefore, added the difference under section 69C.
Held :
The assessee filed the revised return suo motu and voluntarily under the above scheme. It could not be said that impounding of the books and filing of revised return was filed as a consequence of the impounding of the books. The books impounded continued to be retained by the assessing officer even at the time when the revised return was filed. Thus, it could not be said that the assessee had wrongly relied upon the answers given by the Board to question No. 19 of Circular No. 451. That apart, filing of return under the Amnesty Scheme would not automatically give rise to amnesty to the assessee against enquiries or verfication of those facts. Accordingly, the Commissioner was directed to deal with the various aspects of the matter in accordance with law and after giving the assessee reasonble opportunity of being heard.
Application :
Amnesty Scheme had been withdrawn.
Case Law Analysis :
Poineer Trading Syndicate v. CIT (1979) 120 ITR 5 (All) (FB) and Manilal Gafarbhai Shah v. CIT (1974) 95 ITR 624 (Guj) followed.
Income Tax Act 1961 s.119
Income–ASSESSING OFFICER–Jurisdiction
Ratio :
Income shown in original return filed by assessee to determine competence and jurisdiction not to be judged on the basis of revised return.
Held :
There is no express term or necessary implication to say that if a revised return is filed by the assessee in course of an assessment proceeding and income disclosed therein exceeded the amount fixed for jurisdiction of the Income Tax Officer concerned, the jurisdiction would no longer lie with that original Income Tax Officer. In the absence of such express provision it is not safe to presume that in the instant case the jurisdiction of making the assessment by the Income Tax Officer, B-Ward, was void ab initio as in the revised return the income shown by the assessee was more than Rs. 1,00,000 as contended by the assessee earlier. The claim of the assessee to the effect that the jurisdiction of the Income Tax Officer, B-Ward, would change in view of the filing of the revised return showing higher amount is not tenable. In fact, section 143 or the clauses thereunder do not suggest such change of jurisdiction, the Income Tax Officer, B-Ward, who made the original assessment and initiated the proceedings would continue to hold the same jurisdiction.
Application :
Also to current assessment years.
Income Tax Act 1961 s.124
Income–ASSESSMENT–Jurisdiction of assessing officer
Ratio :
Income shown in original return filed by assessee to determine competence and jurisdiction not to be judged on the basis of revised return.
Held :
There is no express terms of necessary implication to say that if a revised return is filed by the assessee in course of an assessment proceeding and income disclosed therein exceeded the amount fixed for jurisdiction of the Income Tax Officer concerned, the jursdiction would no longer lie with that original Income Tax Officer. In the absence of such express provision it is not safe to presume that in the instant case the jurisdiction of making the assessment by the Income Tax Officer, B-Ward, was void ab initio as in the revised return the income shown by the assessee was more than Rs. 1,00,000 as contended by the assessee earlier. The claim of the assessee to the effect that the jurisdication of the Income Tax Officer, B-Ward, would change in view of the filing of the revised return showing higher amount is not tenable. In fact, section 143 or the clauses there under do not susggest such change of jurisdiction. Even assuming that there could be a change of jurisdiction the Income Tax Officer, B-Ward who made the original assessment and initiated the proceedings would continue to hold the same jurisdiction.
Appalication :
Also to current assessment year.
Income Tax Act 1961 s.124
Income Tax Act 1961 s.143
ORDER
Egbert Singh, Accountant Member
1. The appeal is by the assessee in which various grounds have been raised.
2. The first six grounds relate to the claim of the assessee that the CIT (Appeals) erred in holding that re-opening of the assessment under Section 143(2) was valid ignoring the fact that the original assessment was made under the summary assessment scheme. The assessee also, amongst other points, raised a contention that the CIT (Appeals) erred in not giving sufficient reasons for his conclusion and was influenced by the assessee’s non-appearance for hearing which was contrary to the provisions of Section 250(6).
3. From the assessment order, it is seen that the assessment was made originally under Section 143(1) on 30-9-1985. Thereafter the 1TO as per Section 143(2)(b) with the approval of the IAC concerned, re-opened the said summary assessment. He issued, notice under Section 143(2) to the assessee asking the assessee to produce papers, books of account, etc., with which the assessee did not comply. The ITO gave the assessee sufficient time to produce materials and accounts. In course of his examination of the accounts which he made partly, the ITO asked the assessee to furnish explanation under Section 69 about the nature and the source of certain entries found in the books and also to furnish explanation why the payments made in cash of Rs. 2,500 should not be disallowed. The assessee produced cash-book, ledger account, local purchase file, etc. These books were impounded by the ITO under Section 131 after recording the reasons that on test check he noticed certain cash purchases made on different dates from M/s. New Auto Store, Mawlonghat, Shillong have not been entered in the books on the date or dates of such purchases. The ITO wanted to make close scrutiny for determination of income. The ITO mentioned that after impounding of the accounts, the assessee filed revised return under the Amnesty Scheme on 31-3-1986 disclosing income from other sources, to the extent of Rs. 1,50,000 besides the income shown in the original return of Rs. 8,520.
4. The ITO mentioned that the assessee did not comply with the requirements called from the assessee along with the details, particulars, etc. The assessee sent letters seeking for adjournment for furnishing other information. The ITO has made copies of those correspondence as part of the assessment order. He allowed the assessee to make inspection of the accounts impounded by him to enable the assessee to meet the requirements. Amongst other things, the assessee drew attention of the ITO saying that the revised return showing higher income was filed on 29-3-1986 voluntarily and on good faith under the said scheme. The amount was stated to be the source of the payments against the cash memos issued by M/s. New Auto Stores, Shillong. The assessee contended that any further enquiry as to the basis of such income, would be contrary to the spirit of the Amnesty Scheme enunciated by the Board and by the Finance Minister as per circular noted in the assessment order itself. The assessee, therefore, requested the ITO to accept the revised return filed under the Scheme. The ITO considered the different submissions made by the assessee as mentioned briefly above. He noted that the revised return filed voluntarily under the said scheme was filed on 31-3-1986 and not 29-3-1986. The ITO wanted to know whether the said sum of Rs. 1,50,000 was sufficient to make the total payments of Rs. 1,92,098 to M/s. New Auto Stores. The ITO also wanted to know the basis for the disclosed amount to ascertain that the same was correct. The assessee contended that the said sum of Rs. 1,50,000 disclosed in the revised return was sufficient to cover the total payment of Rs. 1,92,098 to M/s. New Auto Stores. The ITO observed. that the payments made against the cash memo to the above party on different dates were considered and the assessee was asked to establish the details of the payments and the sources thereof. The ITO then went on to note that the assessee made different purchases in cash and cash memos were produced before him. He found that there were no withdrawals from the books of account for payments of those purchases on the dates noted in the cash memos. He made a detailed note of those payments vis-a-vis the cash memo Nos., dates, etc., in the assessment order itself. He also found that the withdrawals from the books of account were made subsequent to the dates of issue of cash memos by the seller. The ITO, therefore, inferred that the payments were made from undisclosed sources. He discussed these points in the assessment order, which we need not reproduce here in detail. He found that in total the payments as per cash memos came to Rs. 1,92,098. The assessee had disclosed only to the extent of Rs. 1,50,000 under the said scheme. Thus, the difference of Rs. 42,098 was added back under Section 69C as the assessee had not been able to explain the source in spite of specific opportunities were given.
5. The assessee went up to the CIT (Appeals) in appeal. The CIT (Appeals) fixed the case for hearing on various dates and the assessee sent request for adjournment. The CIT (Appeals) allowed the adjournments on different occasions. Ultimately, the CIT (Appeals) allowed the last adjournment and noted that no further adjournment would be allowed. From the order of the CIT (Appeals), it is seen that one Shri D.C. Goyal, father of Shri N.K. Goyal, partner appeared. But any way, the CIT (Appeals) observed that since sufficient opportunities were given to the assessee and the assessee was not serious with the appeal, he proceeded to dispose of the appeal ex parte on the basis of materials on record.
6. The CIT (Appeals) considered the grounds of appeal and noted the facts mentioned by us above. According to the CIT (Appeals), the ITO was justified in initiating proceedings under Section 143(2)(5) to add back unpaid sales tax under Section 43B. He found no merit in the contention of the assessee that the ITO should have resorted to action under Section 154 only. The CIT (Appeals) pointed out that the assessment has been re-opened after obtaining the concerned IAC’s approval which was in accordance with law and was not vitiated. According to the CIT (Appeals) if the ITO acted wrongly in making enquiries and impounded the books of the assessee after return has been filed under the Amnesty Scheme, the assessee should have complained the matter to the IAC concerned or the Commissioner of Income-tax and this ground cannot be taken in appeal. He observed that the assessee did not challenge the jurisdiction of the ITO, B-ward, Shillong, during the course of the assessment proceedings. Under the circumstances, this claim was not entertained. He also observed that the assessee has not been able to show as to how the ITO was not justified in making the addition under Section 690. On reasons recorded by the ITO and the facts available in the assessment order, the CIT (Appeals) concluded that the addition made under Section 69C was proper. The CIT (Appeals) also sustained the addition under Section 40A(3) and under Section 68 which points have been raised in the grounds of appeal on merits.
7. Prom the brief narration above, it can be seen that as mentioned earlier the first six grounds of appeal by the assessee relate to the jurisdiction of the ITO to re-open the assessment under Section 143(2)(6) and also against the order of the CIT (Appeals) in passing the order ex parte.
8. After preliminary discussion of the issues at the time of hearing, we have indicated to the parties that we shall deal with this aspect of the matter at the first instance and that grounds relating to the merits or otherwise of the additions will be taken up later on, if founded needed.
9. According to the assessee’s learned counsel, the CIT (Appeals) was not justified in upholding the re-opening of the assessment, under the above section, ignoring the fact that the original assessment was made under the summary assessment scheme. It is also submitted that primarily the ITO re-opened the assessment to include Sales tax liability allowed wrongly which should be disallowed under Section 43B, which could be done by resorting to Section 154. It is stressed before us that in the circumstances of the case, re-opening of the assessee and reaching at a different conclusion was not permissible at all particularly when the original return was only at Rs. 8,520. At this stage, the assessee’s learned counsel argues that on the basis of the return filed originally, the ITO, B-Ward, Shillong had jurisdiction over the assessee. It is argued that under the said Amnesty Scheme, the assessee filed a return showing an additional income of Rs. 1,50,000 and on that ground alone, the ITO, B-Ward, Shillong would cease to have jurisdiction over the case of the assessee as the income as per revised return exceeded Rs. 1,00,000. It is pointed out that in such case of having income return of Rs. 1,00,000 or more, the ITO, A-Ward, Shillong only would have proper jurisdiction vide order passed by the Commissioner of Income-tax under Section 124, copies of which are placed in our file. It is stressed by the assessee’s learned counsel that on the basis of the order dated 6-6-1985, the case of the assessee subsequent to the filing of the revised return no longer lie with the ITO, B-Ward, Shillong and, therefore, the assessment made by the ITO, B-Ward, Shillong in the present context was bad and vitiated. It is also contended by the assessee’s learned counsel that the CIT (Appeals) was not justified in holding that before the ITO, B-Ward, Shillong, the assessee did not raise the point of jurisdiction in course of the assessment proceedings.
10. It is also submitted by the assessee’s learned counsel that in pursuance of the said scheme, the Board issued Circular No. 451 dated 17-2-1986 in which queries were given with answers for the information of all concerned. The assessee heavily relies on the answer given to question No. 19 in which the Board were asked to clarify the expression “before detection by the department.” The answer given by the Board was that if the ITO has already found material to show that there has been concealment that would mean the department has detected the concealment and if the ITO only had prima facie belief, that would not mean concealment has been detected. It is seen that the Chairman, CBDT has clarified this point in some interview. Accordingly, the assessee submits that in view of these directives given by the Board, it was highly improper for the ITO to make roving enquiries from the assessee, the way he did and as detailed in the assessment order itself. It is vehemently urged that the ITO apart from having no jurisdiction as mentioned earlier, also had no jurisdiction to make enquiries or investigation regarding payments, etc., of Rs. 1,50,000 which was disclosed by the assessee under the Scheme. It is urged, therefore, that the CIT (Appeals) completely went off the track and without appreciating the facts properly in the correct perspectives. According to the assessee’s learned counsel, the assessment was bad in law as the CIT (Appeals) erred in holding that the assessee has failed to show how the assessment was bad, particularly when the assessee has taken a pointed ground No. 3 in the appeal before the CIT (Appeals). It is the assessee’s case that it was not correct to say that the assessee did not challenge the ITO, B-Ward’s jurisdiction during the assessment proceedings.
11. It is also submitted by the assessee’s learned counsel that the CIT (Appeals) erred in deciding the case ex parte which was vitiated as the assessee had not been given sufficient opportunity for the appearance. It is clarified by the assessee’s learned counsel that the CIT (Appeals) did fix the case from time to time for which the assessee asked adjournment from time to time due to necessity and compelling circumstances. It is also pointed out that when the case was fixed for the last time, Shri D.C. Goyal, father of one of the partners did appear for obtaining adjournment before the CIT (Appeals) and not for participating in hearing . as such. It is clarified that the CIT (Appeals) has noted in the top of the order that Shri D.C. Goyal appeared, but yet the CIT (Appeals) in latter part of the order noted that since sufficient opportunities were given to the assessee, he would proceed to dispose of the case on merits and on the details available on record. It is urged that on this ground alone, the impugned order of the CIT (Appeals) are vitiated and requires to be set aside.
12. The learned Departmental Representative, on the other hand, supports the order of the CIT (Appeals). Various submissions were made to show that the ITO did give more than adequate opportunities to the assessee to explain the position vis-a-vis the credits, cash memos, etc., and that the ITO has fully brought out the facts which the learned Departmental Representative is fully supporting. It is urged that the CIT (Appeals) has properly appreciated the facts and the background of the case and has rightly disagreed with the various contentions of the assessee on this point. It is urged, therefore, that the appeal by the assessee may be dismissed.
13. We have heard both the sides at length and we have gone through the orders of the authorities below for our consideration along with other papers placed in our file. It is seen that Section 143(2)(b) authorises the ITO to serve a notice on the assessee requiring him to produce evidence, details, etc., in support of the return, in respect of an assessment which have been made under Section 143(1), if the ITO considers necessary to verify the correctness or fitness of the return. Of course, in the present case, the ITO had obtained prior approval of the IAC concerned. The case of the assessee is that although in the return filed originally on which assessment was made summarily under Section 143(1), the income shown was only at Rs. 8,520 and as such the ITO, B-Ward, Shillong, had jurisdiction and actually completed the assessment under Section 143(1), but the fact of filing of revised return after the re-opening under Section 143(2)(b) the jurisdiction over the case of the assessee has gone out of the ITO, B-Ward, Shillong, as the revised returned income was more than a lakh of Rupees over which only the ITO, A-Ward, Shillong would have the jurisdiction. The assessee argues this time on the basis of the jurisdiction order passed by the Commissioner of Income-tax under Section 124(1), as mentioned earlier dated 6-6-1985. The assessment order was passed by the ITO under Section 143(3) read with Section 143(2)(b) was made on 31-7-1986. Thus, it can be seen in the present case that the ITO, B-Ward, Shillong, had the jurisdiction originally for the year under consideration as the income returned was only at Rs. 8,520 on which the ITO made the assessments summarily under Section 143(1). There is no dispute about this point. There is also no dispute that the ITO, B-Ward, Shillong has rightly re-opened the assessment under Section 143(2)(b). In other words, the ITO, B-Ward, continued to have jurisdiction over the case of the assessee. Of course, the assessee has argued that the ITO on the background of the case, could take action under Section 154 to disallow or otherwise liability on account of Sales tax in view of Section 43B but would not warrant action under Section 143(2)(b) as done by the ITO and wrongly sustained by the CIT (Appeals). We have gone through the relevant sections and sub-clauses in order to appreciate the assessee’s point of view. It is seen that primarily the ITO could have reopened the assessee made summarily under Section 143(1) as he found that certain disallowances had not been made. It cannot be said automatically that Section 154 would have to be taken mechanically as the ITO would have to call for the details and other materials before he make the disallowance and in such circumstances, Section 154 cannot legally or strictly be invoked. As such, this cannot be said to be a mistake apparent on record in view of the decision of the Hon’ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50. So, this contention of the assessee cannot be entertained.
14. We have also to see whether in the present context, the ITO B-Ward, who had the jurisdiction originally as mentioned earlier would continue to have that jurisdiction which will culminate in passing of an order under Section 143(3) read with Section 143(3)(b). In our opinion, since the re-opening made under Section 143(2)(b) in the present case was valid and the provisions in this regard are procedural in character, the ITO, B-Ward, Shillong was not divested of his jurisdiction on the ground that the revised return filed by the assessee under the said Scheme was more than Rs. 1,00,000. We have to see whether originally the ITO, B-Ward, Shillong, had jurisdiction. We have indicated above that the ITO, B-Ward, had jurisdiction to assess the assessee and, therefore, the other development in the course of procedural stages would only be a consequential effect to be observed. At the time of hearing, neither side has brought to our notice any decisions or authority on the point either way.
15. In this context, we should also mention that the CIT (Appeals) rejected to entertain the claim of the assessee regarding jurisdiction matter, as according to him the assessee did not agitate this point before the ITO, B-Ward, Shillong in the assessment proceedings stage. In our opinion, the CIT (Appeals) on this point was absolutely wrong. Jurisdiction matter would go to the root of the dispute and, therefore, it can be said to be a question of law and being a question of law it can be raised at any stage. Even if a point of jurisdiction has not been raised before the ITO, the CIT (Appeals) should have entertained the issue. Even this point of law can be raised before the Appellate Tribunal which would go to the root of the., jurisdiction of the assessment and can be allowed to be taken at the Tribunal stage also, although the same was not taken earlier either before the ITO or before the CIT (Appeals). For this proposition, we may refer to the decision of the Hon’ble Bombay High Court in the case of CIT v. Belapur Sugar & Allied Industries Ltd. [1983] 141ITR 404. In view of this position and in view of what we have discussed in the preceding paragraphs, we are taking up this point for our consideration.
16. We have noted earlier that the ITO, B-Ward, had jurisdiction initially and would continue to exercise that jurisdiction despite the fact of disclosing a higher income by way of a revised return filed by the assessee in the course of assessment proceedings. In the slightly different context in the penalty matters, the ITO could initiate penalty proceedings under Section 271(l)(c) and the requirements of the law as it stood at the relevant time, the ITO would have to refer the matter to the IAC concerned if the minimum penalty would exceed Rs. 1,000. After some time there was a change or amendment in the procedural law, i.e., to say the ITO, has to refer such penalty proceedings to the IAC concerned for his passing a final order, if minimum amount of penalty would be Rs. 25,000. In such a situation, it was held by the various courts that the IAC concerned to whom reference was made by the ITO under Section 274(2) would continue to have jurisdiction to pass a final penalty order notwithstanding the amendment. Reference may be made to the decision of the Hon’ble Gujarat High Court in the case of CIT v. Balabhai & Co. [1980] 122 ITR 301, as also as decided by the Hon’ble Punjab and Haryana High Court in the case of CIT v. Ram Nath Prem Kumar [1980] 124 ITR 404. Similar view was expressed by the Hon’ble Calcutta High Court in the case of CIT v. Eastern Development Corpn. [1982] 135 ITR 516 and also as reported in the case of CIT v. Mohinder Lal [1987] 168 ITR 101 (Punj. & Har.)(FB). The Hon’ble Karnataka High Court in the case of Addl. CIT v. M.Y. Chandragi [1981] 128 ITR 256 has expressed a similar view and it was held on the facts of that case that question of determining quantum of penalty payable by an assessee with reference to the date of concealment of income had no bearing on the question of competence of the authority to impose penalty and the latter had to be determined with reference to the date when the penalty was imposed, and the ITO, therefore, had jurisdiction to impose the penalty under Section 27l(l)(c). Thus, in our opinion, the date on which the assessee has filed the original return showing an income of Rs. 8,520 would determine the competence of the ITO, B-Ward, who made the assessment. At that time when the original return was filed, the ITO, B-Ward, admittedly had the jurisdiction. It is seen that in the present case, the return was filed by the assessee on 30-7-1985.
17. An assessee has vested right in the procedural law so far as the substance is concerned and if the substantive question of jurisdiction is to be affected by a new amendment, the Legislature must have said either in express terms or by necessary implication. In the present case before us, we could not find any express terms or necessary implication to say that if a revised return is filed by the assessee in course of an assessment proceedings exceeded the amount fixed for jurisdiction of the ITO concerned, the jurisdiction would no longer lie with that original ITO. In the absence of such express provision it is not safe for us to presume that in the instant case the jurisdiction of making the assessment by the ITO, B-Ward, was void ab inilio as in the revised return the income shown by the assessee was more than Rs. 1,00,000 as contended by the assessee earlier. At this juncture, we may refer to another decision of Hon’ble Gujarat High Court in the case of CIT v. Manu Engg. Works [1980] 122 ITR 306.
18. Of course, there are other decisions of High Courts which took a different view. The Hon’ble Allahabad High Court in the case of Mohd. Oais & Co.v. CIT [1983] 142 ITR 104 following his earlier order as in CIT v. Om Sons [1979] 116 ITR 215 and Ganesh Dass Ram Gopal v. IAC [1983] 142 ITR 101, held that the IAC in such situation ceased to have jurisdiction in view of the amendment of Section 274. Similar is the view of the Hon’ble Madhya Pradesh High Court in the case of CIT v. Ram Prakash Saraf [1986] 160 ITR 860. In this connection, it is seen that the Hon’ble Punjab and Haryana High Court (Full Bench) in the case of Mohinder Lal {supra) has taken a view that the IAC had jurisdiction to levy the penalty in similar circumstances. It was also observed that other decisions, namely Om Sons’ case (supra), Ganesh Dass Ram Gopal’s case (supra) and Radheshyam Agarwalla v. CIT [1978] 113 ITR 196 (Ori.) were cited before it, but as none of the Supreme Court decisions supports the view that the judicial authority, once seized of the matter, would be divested of the same by the later amendment of the law taking away its jurisdiction, such decisions of other High Courts would have to be dissented from. In the case of CIT v. S. Sardar Singh [1978] 113 1TR 541, the Hon’ble Gauhati High Court on the facts of that case noted that the ITO being satisfied, can initiate proceedings and exercise all powers vested in him for levy of penalty, but when the penalty exceeds Rs. 1,000 Section 274(2) takes away his power to levy penalty and the ITO as to make a reference to the IAC who will continue the proceedings as conferred by him.
19. Thus in matters of jurisdiction over penalty there is an express provision of Section 274(2) and jurisdiction of the Officer concerned ordinarily vested with, would continue to do so unless specifically provided for by the statute and otherwise the same authority would continue to hold the jurisdiction. In the case of Mohinder Lal (supra), the decision of the Hon’ble Supreme Court in the case of New India Insurance Co. Ltd. v. Smt. Shanti Misra AIR 1976 SO 237 was taken into account in which on the facts of that case it was held that suits which has been instituted prior to the constitution of claims, the Tribunal remained uneffected and had to proceed for disposal of the matter. Thus, in our opinion, change of jurisdiction or divesting of jurisdiction can be effected only by a provision of law and not by act of parties. As repeatedly mentioned earlier, the ITO, B-Ward, had the jurisdiction originally and had, in fact completed the assessment summarily under Section 143(1). It is also an admitted fact that the ITO, B-Ward, Shillong who initiated the proceedings under Section 143(2)(b), but thereafter the assessee filed a revised return showing income of more than Rs. 1,00,000. This fact of filing a revised return of higher amount would not, in our opinion, divest the ITO, B-Ward, Shillong of his jurisdiction to continue and complete the assessment as was done in the present case although by a general power under Section 124(1) jurisdiction of ITO, B-Ward, was limited to cases of having income of below Rs. 1,00,000. Thus, this contention of the assessee cannot be accepted.
20. We have gone through the various clauses of Section 143 and we do not find any aspect to support the claim of the assessee to the effect that the jurisdiction of the ITO, B-Ward, would change in view of the filing of the revised return showing higher amount. In fact, the section or the clauses thereunder do not suggest such change of jurisdiction. Even assuming that there could be a change of jurisdiction, the ITO, B-Ward, who made the original assessment and initiated the proceedings would continue to hold the same jurisdiction keeping in view the ratio of the various decisions cited by us while we discuss the issue regarding penalty matters under Section 274 vis-a-vis the change regarding jurisdiction of IAC qua the ITO.
21. Coming now to another point of agitation raised by the assessee regarding the claim that the ITO ignored the instruction of the Board for re-opening of such assessments, by making enquiries although such authorisation was not given to the ITO under the Amnesty Scheme. According to the assessee, the revised return was filed in pursuance of the said scheme in which, amongst other thing*, the ITO was debarred from making enquiries of certain facts or details. In particular, the assessee’s learned counsel draws our attention to the answer given to question No. 19 as given in the Circular No. 451 mentioned earlier. In the present case, we have noted earlier, revised return was filed by the assessee showing higher income after the ITO had impounded the books of account in course of the proceedings made under Section 143(2)(6). This finding of the CIT (Appeals) also remains undisturbed. We could not trace out any fact on the basis of which we can hold that the assessee filed the revised return suo motu and voluntarily under the above scheme. It cannot be said that impounding of the books and filing of revised return were only a matter of co-incidence. It appears to us that the revised return was filed as a consequence of the impounding of the books. It may be observed that the books impounded continued to be retained by . the ITO even at the time when the revised return was filed. It was not, therefore, clear as to what basis the assessee has filed the revised return as such, in the absence of the accounts as could be seen from the sequence narrated by the ITO in the assessment order itself. Thus, in our opinion, it could be seen that the assessee has wrongly relied on the answers given by the Board to question No. 19 of Circular No. 451 relied on before us. That apart filing of return under the Amnesty Scheme would not automatically give rise to amnesty to the assessee against enquiries or verification of those facts. Of course, the ITO did ask the assessee to produce materials and other papers to support the quantum of amount disclosed in the revised return in view of the fact that the ITO noticed that such bogus credits or payments totalled to Rs. 1,92,098. Ultimately, the ITO accepted the amount disclosed at Rs. 1,50,000 and added the same in the computation. In addition, he found no cogent material or proof regarding the balance which he had added in the assessment which he found to have not been explained by the assessee. In this connection, we may refer to a decision of the Hon’ble Delhi High Court in the case of Ratlan Lal v, ITO [1975] 98 ITR 681, in which it was held that it was not permissible for the department to go into the question of the nature and source of the amount declared in a voluntary disclosure under Section 24 of the Finance (No. 2) Act, 1965 and to say that the amount did not represent income or declarant. But this decision was overruled by the Hon’ble Supreme Court in another case in Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244, which was also taken into account by the Hon’ble Gauhati High Court in the case of Radheshyam Tibrewall v. CIT [1980] 125 ITR .393, in which the decision of the Hon’ble Allahabad High Court at Pioneer Trading Syndicate v. CIT [1979] 120 ITR 5 (FB) and Manilal Gafoorbhai Shah v. CIT [1974] 95 ITR 624 (Guj.) was followed. Amongst other things, the Hon’ble Supreme Court in the case of Jamnaprasad Kanhaiyalal (supra) has held that there was nothing’ in Section 24 of Finance (No. 2) Act, 1965, which prevented the ITO, if he was not satisfied with explanation of the assessee about the genuineness or source of the amount found credited in its books, although the same had already been made subject to declaration by the creditbr and taxed under the Amnesty Scheme, to ascertain true nature and source of credit.
22. In the instant case, although the CIT (Appeals) did not deal with the issue exhaustively, we have to deal with the various pleas taken up by the assessee’s learned counsel before us at the time of hearing and we have given our opinion above.
23. As indicated before, the contention of the assessee is also that the CIT (Appeals)’s order was vitiated for not giving sufficient reasons and was influenced by the assessee’s non-appearance, and was violative of provisions of Section 250(6), which requires that the CIT (Appeals) for that matter should give reasons and a speaking order while disposing of an appeal before him. In the instant case, the CIT (Appeals) after dealing with the preliminary points dealt with by us already earlier in the preceding paragraphs, took up the issue on merits. In his very short order, the CIT (Appeals) mentioned that in the facts and circumstances of the case and for the reasons mentioned in details in the assessment order of the ITO, B-Ward, Shillong, he held that the ITO was justified in making the additions of Rs. 42,000 etc. under Section 69C and under Section 68. The appeal was accordingly dismissed. Thus, within four or five lines the CIT (Appeals) has disposed of the issue raised by the assessee on merits involving substantial amounts under different sections. The ITO made an addition of Rs. 2,90,289 under Section 40A(3) and Rs. 2,77,688 under Section 68, apart from the addition of Rs. 42,098. We find force in the contention raised by the assessee in the subsequent grounds of appeal, True, the ITO might have dealt with the points at length and exhaustively, but it is equally incumbent on the part of the first appellate authority to deal with the matter properly with more attention, it deserved particularly when substantial grounds have been raised in which varipus points of controversy are very much at large. Thus, since the order of the CIT (Appeals) is so-short and cryptic, we deem it fit to set aside this part of the order of the CIT (Appeals) dealing with the merits of the case, for fresh disposal by him. It would be helpful to keep in mind that it was because of those additions made in the assessment order that the assessee took up the matter before the CIT (Appeals) and it would not be appropriate to say in view of what has been narrated in the assessment order that there is no case for the assessee in appeal before the CIT (Appeals), otherwise the scheme of having the first appellate authority would be frustrated. We, therefore, direct the CIT (Appeals) to take up the points of appeal by the assessee on merits promptly and to deal with the various aspect of the matter in accordance with law and after giving the assessee reasonable opportunity of being heard. Since the issue relate to the old year, i.e., 1984-85 and the amount involved is very substantial and the fact that the Appellate Tribunal has granted a conditional stay, it would be appropriate even administratively that the CIT (Appeals) should take up the matter for prompt disposal within 5 (five) months of receipt of this order and the assessee should extend all co-operation needed for disposal of the appeal. Accordingly, we direct so.
24. In the result, the appeal by the assessee is treated as allowed for statistical purposes.