I.T.As. Nos. 176/IB to 178/IB of 2001-2002, decided on 17th February, 2005. VS I.T.As. Nos. 176/IB to 178/IB of 2001-2002, decided on 17th February, 2005.
2006 P T D (Trib.) 1225
[Income-tax Appellate Tribunal Pakistan]
Before Khawaja Farooq Saeed, Chairperson and Ehsan-ul-Haq, Accountant Member
I.T.As. Nos. 176/IB to 178/IB of 2001-2002, decided on 17/02/2005.
(a) Income Tax Ordinance (XXXI of 1979)---
---S. 66-K---Powers --Powersof Inspecting Additional Commissioner to revise Deputy Commissioner's order---Non-filing of audit statements was neither erroneous nor prejudicial to the interest of Revenue.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Prejudicial to the interest of revenue---Where paid up capital was less than the threshold prescribed for the purpose which was 3 million rupees, filing of audited statement was not requirement of law---If it was not on record of the department, it did create a very strong doubt with regard to the genuineness of the declared income, however it was not causing any prejudice to the interest of revenue.
(c) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Erroneous assessment---Doubt be that of any strength does not make an assessment erroneous---Word "erroneous" could not be extended to the estimates, gossip or poor quality of assessment etc.
(d) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A & Third Schedule---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Depreciation allowance on building constructed for purpose of sale---Validity---Assessee dealt in the business of construction and sale of property---Building was his stock in trade---Third Schedule to the Income Tax Ordinance, 1979 related to allowance of depreciation on building owned by an assessee and used for the purpose of business---Building had not been used for business all, rather was never intended either---Allowance of depreciation was erroneous on the face of it and the same had caused prejudice to the interest of revenue.
2000 PTD (Trib.) 277 and 2000 PTD 1201 distinguished.
(e) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Poor quality of assessment or inexperience of Assessing Officer at the time of making assessment do not fall within the definition of error.
(f) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A --Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Poor quality of assessment was never a good base for considering an order to be as erroneous and prejudicial to the interest of revenue.
(g) Income Tax Ordinance (XXXI of 1979)---
----S. 62---Assessment on production of books of accounts, etc.---Non production of books of accounts---Finalization of assessment under S.62 of the Income Tax Ordinance, 1979---Effect---Doubt was very strong that no books were produced to the Assessing Officer which made the order under S.62 of the Income Tax Ordinance, 1979 to be without jurisdiction---In absence of books of accounts assessment under S.62 of the Income Tax Ordinance, 1979 was legally not valid---Assessing Officer's action of finalizing the assessment in disregard to the legal provision made the order without proper jurisdiction.
(h) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Assessment erroneous and prejudicial to the interest of revenue---Cancellation of assessment on the ground that books of accounts; list of creditors and bank, statement was not furnished before the Assessing Officer while passing order under S.62 of the Income Tax Ordinance, 1979---Validity---While giving reply to Inspecting Additional Commissioner regarding non-furnishing of list of creditors and bank statement, assessee stated that the same had intentionally been removed from the record---Case was not that of street grocer where such a list could not have been produced---Action of assessee in not coming out straight with the books and copy of the list of creditors accelerated the doubts which had turned into belief that the things had been intentionally manipulated---Assessing Officer was a quasi-judicial officer equipped with the duty to assess the actual income of an assessee as well as to protect the revenue as its representative---Assessing Officer's ignorance or intentional overlooking the details statedly provided at the time of assessment without satisfying himself to the correctness of the advances, was undoubtedly an action that had made the order erroneous---List of creditors who had advanced in multi millions had neither been probed nor was put to scrutiny---Whether the entire amount was in relation to intending purchasers or there were other creditors also, had not been looked into---Facts coupled with the urgency and the short order assessing only the sale of property ignoring all other factors smacked of mala fide---Such an order automatically became erroneous as well as prejudicial to the interest of revenue---Assessee had not produced books of accounts before the Assessing Officer at the time of original assessment---Assessment under S.62 of the Income Tax Ordinance, 1979 was not legally correct assessment---Order should have been passed under S.63 of the Income Tax Ordinance, 1979---Assessee at no stage of the proceedings, divulged information about, his actual state of business---Assessment had been framed in total disregard to the legal norms and procedural practices for making a normal legal assessment---Order was erroneous and prejudicial to the interest of revenue in circumstances.
Geevee Enterprises v. Additional Commissioner of Income Tax Delhi and others 1975 ITR 375; Rampyari Devi Saragoi v. Commissioner of Income Tax; 1990 PTD 526 rel.
2002 PTD (Trib.) 1583; 2000 PTD (Trib.) 277; 2000 PTD 1821; 2000 PTD 1201; 1999 PTD 700 and 1999 PTD 3229 distinguished.
(i) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Order erroneous and prejudicial to the interest of revenue---Presumption of truth and sanctity attached to the order was not to be disturbed by presumptions or reasons to suspect-If however, there were reasons to believe that the procedure and practices had intentionally been ignored, one could definitely invoke the .provisions of S.66-A of the Income Tax Ordinance, 1979.
1990 PTD 935 distinguished.
(j) Income Tax Ordinance (XXXI of 1979)---
----S. 66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Order erroneous and prejudicial to the interest of revenue---Role of Assessing Officer---Assessing Officer had never satisfied himself with tangible effort that the list of creditors provided or books examination in a potential case was unnecessary---Role of Assessing Officer as representative of department was completely missing---Department could, claim infringement of its right of natural justice in circumstances---General concept of justice ,was applicable on both the parties---If Assessing Officer had not played the role assigned to him as representative of the department in addition to his judicial functions same casts doubt---Action to totally ignore the rights of the department and non-playing the role of its representative could also make an order erroneous and prejudicial to the interest of revenue.
(k) Income Tax Ordinance (XXXI of 1979)---
----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Order erroneous and prejudicial to the interest of revenue---Assessing Officer's ignorance not to challenge or comment or scrutinize without being satisfied that it was unnecessary under the particular circumstances of a case, made an order erroneous and prejudicial to the interest of revenue.
Shahid Pervez Jami and C.A. Habib, F.C.A. for Appellant.
Rafaqat Ali Syed, D.R. for Respondent.
Date of hearing: 17th February, 2005.
ORDER
These appeals filed on behalf of the assessee are directed against the order of the IAC finalized under section 66A of the Income Tax Ordinance, 1979. The issues in all the appeals are mostly common hence the same are taken up jointly.
2. The brief facts that give rise to the above appeals are that the assessee a private limited company derives income from construction and sale of residential apartments. The assessee filed returns in respect of all the years in time, which were accompanied with audited accounts in almost all the years. The income declared was loss subject, however for 1998-99 when some income was declared. In all the assessments the declared sales of the assessee in respect of flats etc., has been accepted as statedly, the same was supported by the registered sale deed. During the assessment year 1999-2000 said sales were 'found to be as supported by Survey conducted by the Army Survey Team also. However, in all years one factor common was non-discussion of the amounts received from customers in detail and the some were mostly accepted as declared. The assessments for all the years were finalized under section 62 while as per IAC the books were not examined. On inspection of record of assessments the IAC found following defects in the assessment orders:
Assessment Year 1996-97
(i) Audited accounts not filed. No mention of production of books of accounts. Bank statement not available on record.
(ii) Depreciation at building allowed without obtaining documentary evidence.
(iii) Work in progress not examined.
No probe made regarding value of work.
Cost of construction not compared with parallel cases.
Supplies not probed with the view to invoke section 24(c).
In the absence of registered sale deed the acceptance of declared sales is not understandable.
(iv) Sources of investment not probed regarding shop's purchased from District Administration, Rawalpindi.
(v) Detail of advances not available on record.
Genuineness has not been inquired.
The assessee in its reply challenged all of them. His arguments were that audited accounts were submitted as is evident from the assessment order itself wherein while discussing the filing of return, the Assessing Officer has accepted the availability of the same on the record. The fact stands further supported from the mentioning of the availability of bank statements on record of the presence. The comments of the assessment, however, is that either the same has been misplaced or have deliberately been removed from the record.
3. Regarding second objection the assessee replied that as per Third Schedule, depreciation allowed is @ 10% and there was no need of filing additional documents as no addition was made during the year. Regarding work in progress the assessee's claim was that he has not sold any land and sale deed in respect of flats have been furnished. It was also contended that 'work in progress includes land and building material and other cost relating to construction business of this assessee. Further that section 24(d) had no relevance to the issue in hand.
4. Regarding source of investment for shops purchased for District Administration it was contended that the same stood duly reflected in the balance sheet hence there was no question of separate declaration or any probe etc. Similarly detail of advances stood explained which is recognized by the Assessing Officer in line 7 of page-2 of the assessment order.
5. Regarding objection that as per return assessee declared income of Rs.133,611 while the Assessing Officer had considered the same as loss of Rs.88,611. It was replied that the same was a mistake. The loss declared by the assessee was after audit of the books in the revised return. Further objection of the IAC for 1997-98 with regard to addition of vehicles and probe of the source of the acquisition of the same was that the credit side fully explained the situation thereof. The notice issued by the IAC was detailed and covered many factors, however, the reply was also particular and to the point. The IAC found same parts to be unsatisfactory and cancelled the assessment earlier made in all the three relevant assessment years.
6. The AR has come before us with very detailed arguments challenging the above order which we need not to reproduce. However, for brevity the relevant part therefrom is referred. It was contended that audit statements and bank statements were duly filed. However, if the same are not available on record, it cannot be said that the order is erroneous and prejudicial to the interest of revenue. The requirement under section 32A is that for the three years under reference only those companies are subject to compulsory audit which have a paid-up capital of above 3 millions. This company, therefore, was not obliged to do so. Regarding depreciation it is argued that the decision is contrary to the notice issued with regard thereto, while even otherwise the matter is covered within the purview of section 156 hence invocation of section 66A was not justified. In this regard the AR has referred 2002 PTD (Trib.) 1583 as well as 2000 PTD (Trib.) 277. It was also argued that in the present case even if excessive allowance of depreciation is considered as an error it shall still not prejudice the interest of revenue as it is a case of application of section 80D. The rectification would result in the same revenue as calculated in the case of original assessment being a case of application of section 80D. There is no prejudice to the interest of revenue. 2000 PTD 1821.
7. So far as the above two issues discussed by the learned AR are concerned non-filing of audit statements is neither erroneous nor prejudicial to the interest of revenue. In a case like this where the paid-up capital is less than the threshold prescribed for the purpose which is 3 million rupees filing of audited statement was no requirement of law. If it is not on record of the department, it does create a very strong doubt with regard to the genuineness of the declared income, however, it is not causing any prejudice to the interest of revenue. This Tribunal has in number of judgments held that doubt be that of any strength does not make an assessment erroneous. The word erroneous cannot be extended upon the estimates, gossip or poor quality of assessment etc.
8. Regarding depreciation the Department does have some case. In this regard however, even the IAC has some misconception in his mind. The fact that depreciation has incorrectly been allowed is not only conceded impliedly but has been argued to be a matter covered within section 156. This in fact is not a case of a building used for business, so as to apply the Third Schedule of the Income Tax Ordinance, 1979. The assessee deals in the business of construction and sale of property. The building under discussion, therefore, is his stock in trade. The Third Schedule speaks of allowance of depreciation on building owned by an assessee and used for the purpose of business. This building had not been used for business at all and rather was never intended either. The allowance of depreciation, therefore, is erroneous on the face of it and the same has caused prejudice to the interest of revenue. In this regard the argument of the learned AR referring 2000 PTD 1201 as well as 2000 PTD (Trib.) 277 shall not come into picture.
9. This Tribunal has is dozen of cases disagreed with the department that poor quality of assessment or inexperience of Assessing Officer at the time of making said assessment are not covered within the definition of error. It has always been found as favourable to the assessee for the reasons that a senior officer like an IAC is more experienced and more knowledgeable than the Assessing Officer. Not only does he has the experience of the assessment of over a decade normally but also by having inter action with higher courts and attending courses they attain maturity. Their expertise obviously cannot be equated with the Assessing Officer. This Tribunal, therefore, has always come for the rescue of the taxpayers in such like situation. The poor quality of assessment has never been considered to be a good base for considering an order to be as erroneous and prejudicial to the interest of revenue. This situation, however, does not appear in this case. The assessment order speaks of same hurry in the mind of the Assessing Officer. The assessment orders in this case comprises of two/three pages each and the same have assessed the figures involving in multi million. The assessee had received an amount of Rs.40,74,52,254 as credit in 1996. This figure has not been properly looked into. Neither the list of the same has been obtained nor people advancing money have been asked to confirm the said figure.
The matter does not end here. When assessee was asked to explain as to why there is no mentioning of presentation of books of account in the order and how came the assessment orders is under section 62 in the absence of books no reply was given. There is a strong belief that no books have been produced before the Assessing Officer as the same have not been produced even subsequently during proceedings under section 62A. It is a case of a private limited company in which statedly audited statement has been filed before the Assessing Officer but at no stage of the proceedings either before Assessing Officer, IAC or before us the books of accounts have been produced. Even during the course of proceedings when specifically pointed out why could the assessee not produce books before the IAC, no reply was given. Obviously, if the books had been produced before the Assessing Officer the same could be presented to the IAC and for that matter before the Tribunal. The doubt, therefore, is very strong that no such books were produced to the Assessing Officer which also makes the order under section 62 to be without jurisdiction. In the absence of books of accounts assessment under section 62 is legally not valid. The Assessing Officer's action of finalising the assessment in disregard to the legal provisions makes the order without proper jurisdiction.
10. The other factor which support our aforementioned view is that the assessee while giving reply to the IAC regarding non-furnishing of list of creditors and bank statement replied that the same has intentionally been removed from the record. Obviously, it is not a case of street grocer where such a list could not have been reproduced. The assessee should have been very prompt in producing another copy of the list as well as such other documents either before the IAC or the Tribunal. The action of the assessee of not coming out straight with books, copy of the list etc. also accelerates the doubts which now have entered into the belief that the things have been intentionally manipulated. Above facts remind us the judgments in the case of Geevee Enterprises v. Additional Commissioner of Income Tax Delhi and others reported as 1975 ITR 375. Learned High Court, Delhi while discussion similar issue found that the assessment made in undue hurry and not making inquiries to satisfy himself with regard 'to various investments therein had prejudiced the interest of revenue. Obviously, if somebody has intentionally not asked for production of proof with regard to the investment statedly made by various persons who had advanced for purchase of property amounting to Rs.40,42,80,447 up to 30-6-1996, Rs.46,20,64,319 upto 30-6-1997 and Rs.47,92,89,254 on 30-6-1998. The suspicion grows and becomes a belief. This is what has been considered as bad for the assessment and prejudicial to the interest of revenue in the aforementioned judgment. In Rampyari Devi Saragoi v. Commissioner of Income Tax, the Income Tax Officer accepted the return of the assessee in respect of the initial capital, the gift received and the sale of jewellery, the income from business, etc., without any inquiry or evidence whatsoever. For the reasons the Commissioner held the order to be erroneous. In revision, he cancelled the order and ordered the Income Tax Officer to make a fresh assessment. In his order the Commissioner had used certain new grounds which had not been disclosed to the assessee in the notice given to him to show cause why the order of the Income Tax Officer should not be revised. But, apart from these new grounds, the Supreme Court observed at page 88 of the report that:
"There was amply material to show that the Income Tax Officer made the assessments in undue hurry...the assessee made a declaration giving the facts regarding initial capital, the ornaments and presents received at the time of marriage, other gifts received from her father-in-law, etc., which should have put any Income Tax Officer on his guard. But the Income Tax Officer without making any inquiries to satisfy himself passed the assessment order.... A short stereotyped assessment order was made for each assessment year.... No evidence whatsoever was produced in respect of the money-lending business done... No names were given as to the parties to whom the loans were advanced..."
In Tara Devi Aggarwal v. Commissioner of Income-tax" v. the Income-tax Officer, Howrah, while remarking that the source of income of the assessee was income from speculation and interest on investments stated that neither the assessee was able to produce the details and vouchers of the speculative transactions made during the accounting year nor was there evidence regarding the interest received by the assessee from different parties on her investments. Notwithstanding these defects the Income Tax Officer did not investigate into the various sources but assessed the assessee on the total income of Rs.9,037. The inquiries made by the Commissioner revealed that the assessee did no reside or carry on business at the address given in the return. The Commissioner was also of the view that the Income Tax Officer was not justified in accepting the initial capital, the sale of ornaments, the income from business, the investments, etc., without any inquiry or evidence whatsoever and that the order of assessment was erroneous and prejudicial to interests of the revenue. The High Court held that there were materials to justify the Commissioner's finding that the order of assessment was erroneous in so far as it was pre-judicial to the interests of the revenue. Shri Sharma tried to distinguish this decision on the ground that the address of the assessee in that case was given incorrectly. The decision of the High Court and that of the Supreme Court were not however, based on the ground at all. On the contrary, the Supreme Court followed their previous decision in Rampyari Devi's case, and upheld the decision of the High Court precisely on the same grounds. These two decisions show that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income Tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income Tax Officer should have made further inquiries before accepting the statements made by the assessee in his return.
The reason is obvious. The position and function of the Income Tax Officer is very different from that of a civil Court. The statements made in a pleading proved by the minimum amount of 'evidence may be accepted by a civil Court in the absence of any rebuttal. The civil Court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income Tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct.
The company and the partnership in this case were formed in the same year with many members common in both. The fact that the company purchased the land but handed over construction work to the partnership even though the object -of the company was to make such constructions should naturally provoke a query as to why this was done. The partnership was required to be in existence as a genuine firm in the previous year before it could be registered under section 185 of the Act. Such registration gives a substantial advantage to it for the purpose of taxation. In the very first assessment of the company and the firm, that the advantage of the registered was given to the firm. The question would naturally arise whether the firm was formed merely for the purpose of getting a tax advantage. Shri Sharma argued that there is nothing wrong if a legitimate advantage is sought by them genuinely. It cannot be said that the Commissioner could not be reasonably of the opinion that the order of the Income Tax Officer was erroneous because previous inquiries were not made by the Income Tax Officer. Nor can it be said that it was necessary for the Commissioner himself to make such inquiry before cancelling the order of assessment. In view of decisions of the Supreme Court in Rampyari Devi and Tara Devi Aggarwal, the challenge of the petitioners to the jurisdiction of the Commissioner exercised under section 263 fails and the writ petitions do not qualify for admission on the ground of the impugned orders being without jurisdiction.
In the aforementioned paras the situation , and duties of the Assessing Officer have been discussed in detail. There is no cavil about the two positions of the Assessing Officer. He is a qasi-judicial officer equipped with the duty to assess the actual income of an assessee as well as to protect the revenue as its representative. Assessing Officer's ignorance or intentional overlooking the details statedly provided at the time of assessment without satisfying himself to the correctness of the advances is undoubtedly an action that has made the order as erroneous. No assessing officer , may be of any calibre can be ignorant of the procedures and practices prevalent for making assessment under such circumstances. This list of creditors who had advanced in multi millions has neither been probed nor been put to scrutiny. Whether the entire amount was in relation to intending purchaser or there was other creditors also has not been looked into. These facts coupled with the urgency and the short order assessing only the sale of property ignoring all other factors smacks of mala fide. Such an order automatically becomes erroneous as well as prejudicial to the interest of revenue.
11. We have full respect for the various judgments referred by my learned colleague and in fact I have given my observation indirectly with regard to above discussion. However, I would just like to add that in view of the peculiar circumstances of this case the judgments referred as 2001 PTD (Trib.) 1059, 1999 PTD 700, 2000 PTD 1820, 2000 PTD (Trib.) 277, 1999 PTD 3229 etc. cannot come for the rescue. We have already held that poor quality of assessment, hypothetical presumptions or non-efficiency of the assessing officer etc: is no reason for cancellation of the order of the ITO. However, exception can be drawn for the reasons of the circumstances of this case. Non-production of the documents before IAC and insisting that the same have been removed makes all the above referred judgments as distinguishable. In this regard we will respectfully add again a small part from aforementioned judgment quoted as 1975 ITR 375 which speaks as follows:-
"An order based on extraneous considerations passed with an ulterior motive would smacks of mala fides. In so far as such objection is probable only by investigation of facts it is the appellate authorities who are better equipped to consider it inasmuch as they have jurisdiction over question of fact as well as of law."
Similarly there cannot be any cavil about the judgment reported as 1990 PTD 526 that the assessment record being in the custody of assessing officer he is equally responsible for any tampering or removal, of the documents. However, why the same could not be reproduced, does not satisfy the common sense. Regarding similar other judgments like 1990 PTD 935; that presumption of truth is attached to the assessments finalized under normal course of assessment, the facts being distinguishable these also are ignored. The presumption of truth and sanctity attached to the order obviously is not to be disturbed by presumptions or reasons to suspect. However, if there are reasons to believe that the procedure and practices have intentionally been ignored, one can definitely invoke the provisions of Section 66(A).
12. The assessing officer has never satisfied himself with the tangible effort that the list provided or books examination in a potential case like this was unnecessary. His role as representative of the department is completely missing in this case. Apparently this is the where the department can claim infringement of its right of natural justice. The general concept of justice is applicable on both the parties. If the assessing officer has not played the role assigned to him as representative of the department in addition to his judicial functions, casts off with doubt. It is a case of total ignorance of the departmental rights. The action to totally ignore the said rights of the department and non-playing the role as its representative can also make and order erroneous and prejudicial to the interest of revenue. Unlike a Civil Judge or any other senior person in the said hierarchy where litigants are always represented by separate representative in Income tax the assessing officer as already said represents department. The judge if ignores a statement of one side having not been challenged by the other side it cannot be taken as a mistake. However, the assessing officers' ignorance to not challenge or comment or scrutinize without being satisfied that it was unnecessary under the particular circumstances of a case like this makes an order erroneous and prejudicial to the interest of revenue.
13. The matter does not end here. The attitude of the taxpayer towards income tax proceedings remained non-cooperative till the 'end. It may not directly relevant for the issue with regard to cancellation of this order, however, it does convey the mind set of the assessee besides it further proves that the books of accounts have either not been maintained or its production before the tax authority is not being considered as in the interest of the assessee. The relevant paras from the subsequent order of the assessing officer finalized in reassessment proceedings speak as follows:-
"You may appreciate that the above estimations, and based on the same estimations the mode and manner of assessment, have been necessitated for the reason that you have, till date, opted not to provide any supporting documents/evidence/details requested by his office. You are however, afforded a final opportunity to defend the above-proposed action by putting in a reply supported by any/all details/documents/evidences, which you may consider necessary to rebut the above proposed action"
"Once again the Authorized Representative of the assessee instead of filing any details or replies pertaining to the charge years under consideration filed the details of assessment years 1999-2000 and onwards. The Assessee Company has been totally non-cooperative and has resisted all efforts to produce the relevant books of accounts. Under the provisions of section 32 of the Income Tax Ordinance, 1979, it is mandatory for the taxpayers to maintain and keep the books of accounts. The assessee Company is not a small time operator. It is engaged in huge projects in which all transactions and activities have to be recorded. It is a corporate entity and must maintain the books of accounts. Failure to provide the accounts books can lead to the only conclusion that the Assessee Company is not willing to divulge its true business activities. Under the circumstances the declared version remains totally unreliable and the assessments are to be finalized as confronted to the Assessee Company vide notices referred to above and which were properly served as the attendance of the Authorized Representative on each due date proves. Assessments are finalized as under."
14. As already mentioned above para has been reproduce only to reemphasize our belief that the assessee had not produced books of accounts before the assessing officer at the time of original assessment. The assessment under section 62 therefore was not legally correct assessment. The order should have been passed under section 63. The action of the assessee in the above para so far as its spirit is concerned are also relevant for the earlier proceedings. The assessee at no stage of the proceedings divulged information about his actual state of business. In such like circumstances therefore the ratio of the judgments of the ITAT as well as the other authorities loses its force. In other words the facts are totally distinguishable as the assessment has been framed in total disregard to the legal norms and procedural practices for making a normal law assessment. We in fact have refrained from using strong words like malice which is apparent from the style of investment, however, we leave this for the Central Board of Revenue to determine as to what prompted the assessing officer to frame an assessment like this. We, therefore, without any doubt hold that it is an erroneous order and prejudicial to the interest of revenue also.
15. The action of the IAC of cancellation of the same is hereby confirmed and the appeal filed by the assessee is dismissed.
C.M.A./514/Tax (Trib.)Appeal dismissed.