ORDER--Non-consideration of seized material and following the decision of higher authority.
An order of assessing officer could not be said erroneous and prejudicial where he followed the decision of Settlement Commission which was made in his presence and after considering seized materials.
In this case what happened was that as soon as the assessee made a petition to the Commissioner for settlement, the Commissioner held several meetings with the Income Tax Officer. The assessee filed explanation to the various additions proposed in the order under section 132(5) supported by materials. This explanation was sent to the Income Tax Officer for his comments. It was only after getting the explanations offered by the assessee examined by the Income Tax Officer and it is only after receiving his comments on them and that too through the Inspecting Assistant Commissioner that the final settlement was reached.
The Income Tax Officer was also present and a party to this settlement.
It cannot, therefore, be said that the Income Tax Officer did not make any enquiry with regard to the seized material. This observation of the Commissioner, in the circumstances of this case, is factually incorrect. The Commissioner was not, therefore, justified in revising the orders passed by the Income Tax Officer.
Russell Properties (P) Ltd. v. A. Chowdhury, Addl. CIT (1977) 109 ITR 229 (Cal-Trib) relied on.
Revision under s. 263--ERRONEOUS AND PREJUDICIAL ORDER--Order passed pursuant to decision at higher authority.
Assessment order passed pursuant to decision of higher authority cannot be said to be erroneous and prejudicial to interest of revenue.
1. These cases have a chequered history. The assessee Khandani Shafakhana is a registered firm engaged in the manufacture of Unani medicines. On 20-11-1981 the business premises of the firm and rssidential premises of its partners were searched by the ITOs under Section 132 of the Income-tax Act, 1961 ('the Act'). During the course of the search certain documents and undisclosed assets were found, on the basis of which an order was passed by the ITO under Section 132(5) making an addition of Rs. 11,86,394 made up of the following items: 1. Unexplained cash of Rs. 8,477 out of cash of Rs. 66,000 seized from the business premises of the firm.
2. Concealed income of Rs. 6,07,847 on account of notings made by Shri Hakim Hari Kishan Lal, managing partner in his handwriting in the loose papers seized from the business premises of the firm--pages 31 to 35 of Annexure D-1. This includes division of Rs. 3,60,424 between three persons, namely, Shri Hakim Hari Kishan Lal, Vijay Abbot and Rajinder Abbot.
3. Undisclosed income of Rs. 4,48,000 on account of notings made on pages 30 and 43 of Annexue D-l.
4. Undisclosed income of Rs. 1,22,070 on account of notings made at page 34 of Annexure D-l.
This order was passed on 17-2-1982. Subsequently, the assessee filed objections under Section 132(11) before the notified authority, who happened to be in this case the Commissioner, against the order under Section 132(5). Pursuant thereto various meetings were held at the instance of the Commissioner, when evidence against the additions was produced and considered. Eventually, the assessee filed a petition under Section 273A of the Act before the Commissioner of stating that they would agree for an addition of Rs. 75,000 to be spread over three assessment years with a view to purchase peace and avoid multiplicity of proceedings, making it clear that the assessee was not agreeing that there was any concealment of income. Thereafter the Commissioner called for a report from the ITO and again various meetings were held between the assessee's representative and the Commissioner, the IAC and the ITO. On 29-4-1982 a settlement was reached between the assessees and the Income-tax Department, which was recorded by way of minutes which we consider it necessary for the purpose of decision of this case to reproduce in detail: TO CONSIDER THE SETTLEMENT PETITIONS OF KH and ANI SHAFAKHANA, SHRI HAKIM HARI KISHAN LAL, SMT. RAJ DEVI, DR. RAJINDER ABBOT and DR. HAR PARKASH ABBOT FOR THE ASSESSMENT YEARS 1980-81 TO 1982-83: A detailed discussion was held in the room of Commissioner Delhi-VIII, New Delhi on 28-4-1982 and 29-4-1982. The following persons were present: The issues involved were discussed with reference to the orders under Section 132(5) of the Income-tax Act, 1961 and petitions moved by the assessee under Section 132(1) and also the report of the ITO Doctor Circle dated 28-4-1982 forwarded by the IAC, Range II(i), New Delhi. The issues involved were discussed thread bare in which the assessee's authorised representative also participated. The concensus of the discussion was as under: 1. That the undisclosed income in the hands of Dr. Har Parkash Abbot, Dr. Rajinder Abbot, Shri Hakim Hari Kishan Lal, Smt. Raj Devi while making orders under Section 132(5) were not called for as they stood explained satisfactorily in view of the evidence produced by the assessee.
2. That the assessee was not in a position to explain the notings in the case of the firm Khandani Shafakhana in respect of sales which are seized during the search operations under Section 132 on 20-11-1981. Through the detailed scrutiny of these notings with reference to the regular books of account, it was noticed that in some cases the figures of sales as mentioned in the seized documents was more than the figures of sales as reflected in the books of account of the firm. Although in some cases it was the other way round, i.e., the figures of sales reflected in the books of account were more than the figures mentioned in the seized documents. It was also noticed that certain slips/documents seized during operation under Section 132 provided the details only of some sample cases and on the basis of those papers it is very difficult to determine the exact figure of sales which has been suppressed by the firm and as such the understatement of income by the firm cannot be determined correctly. As such in view of the discrepancies in the figures of sales in the seized documents and as reflected in the books of account after examining the information in detail and after detailed discussion it was agreed by the parties concerned that it would be proper if the Understatement of the income on account of suppressed sales for all the three assessment years are taken at Rs. 75,000.
The assessees and the authorised representatives have also agreed to the said estimate.
3. It was further pleaded on behalf of the assessee-firm that it is only to avoid multiplicity of the proceedings and prolonged litigation that the assessee came forward for settlement and that if the penalty proceedings, etc., are initiated and levied on the basis of additions of Rs. 25,000 in each of the assessment years from the assessment years 1980-81 to 1982-83 as discussed above, a real hardship would be caused to the assessees. It was further pleaded that the assessees be allowed to pay the additional demand raised in instalments. However, this was not agreed to and it was decided that the additional demands raised would be adjusted out of the seized assets retained under Section 132(5). The assessees have agreed to this but have vehemently prayed for waiver of penalties under Section 273A(4) of the Act on the grounds that all the conditions mentioned in Section 273A. After detailed discussions the following decisions were arrived at: (a) Addition of Rs. 25,000 will be made in each of the assessment years, namely, 1980-81 to 1982-83.
(b) That no other addition as per discussion was found proper on account of the seized material in the possession of the department.
(d) That since the conditions laid down under Section 273A(4) are satisfied no penalty shall be levied either under Section 271 or under Section 273 of the Act in respect of the additions agreed to by the assessees.
(e) That the books of account and other documents seized by the department shall be released after finalisation of relevant assessment years.
(f) That the seized assets shall be released after the whole outstanding demands including the demands for these assessment years are paid by the assessees.
(g) That the assessees will not go in appeal before the appellate authorities against the order of assessment.Sd/- S.S. Pushkarna Sd/- Ranbir ChandraITO, Dr. dr., Commissioner of Income-taxNew Delhi.
Delhi-VIII, New Delhi.Sd/- S.L. BatraChartered Accountant Sd/- J.S. Gill Inspecting Assistant Com- Thereafter the ITO pursuant to these agreements completed the assessments by adding Rs. 25,000 in the hands of the assessee-firm. It is also pertinent to note the narration given by the ITO in support of this addition: Addition on account of understatement of income (as decided by the Commissioner, Delhi-VIII, New Delhi) on the basis of the information gathered from the material/documents seized during operation under Section 132 of the Income-tax Act, 1961 Rs. 25,000.
Similarly while making the assessments of the partners of the assessee-firm, who are appellants before us in IT Appeal Nos. 5565 to 5570 (Delhi) ofl984 no additions were made by referring to the agreement reached with the Commissioner in which it was agreed upon that no additions were called for in these cases of the partners. The ITO, thus, gave effect to the settlement reached with the Commissioner and completed the assessments of the assessee by adding Rs. 25,000 and the assessments of the partners without adding anything but by making reference to the settlement reached.
2. Subsequently on 12-12-1983 the Commissioner gave notice under Section 263 of the Act proposing to cancel these assessments stating that the ITO had not properly considered, appreciated the seized material and overlooked certain material aspects. The assessees contended before the Commissioner that it is highly improper on the facts of this case to say that the ITO while making the assessments committed an error so as to cause prejudice to the interests of the revenue. On the failure of the Commissioner to withdraw these notices the assessee filed a writ petition in the Delhi High Court on 11-1-1984 but the Delhi High Court by its judgment dated 19-7-1984 dismissed the writ petition in limine without considering the questions involved in the matter. The assessee then moved the Hon'ble Supreme Court under article 136 of the Constitution. By its order on 19-9-1984 the Hon'ble Supreme Court passed the following order: We do not consider it appropriate to interfere with these proceedings at this stage. However, the petitioner will be at liberty to contend either before the Commissioner or the Appellate Tribunal in any proceedings which may be brought to this Court that the notice which was issued under Section 263 of the Income-tax Act was without jurisdiction. If such a contention is raised before the Commissioner or the Appellate Tribunal, he will decide it without reference to the judgment of the High Court. With these observations, the special leave petition is dismissed.
Thereafter the Commissioner gave the assessees further opportunities to present their cases. The assessees contended that the assessment orders having been passed on the basis of the report of the ITO with the concurrence of the IAC and the Commissioner, it could not be said that there was any prejudice caused to the interests of the revenue by the ITO by passing such orders. It was further pointed out that in coming to this conclusion all the seized material was considered very thoroughly and only then the above decisions were reached and that it is not proper for the Commissioner to say that certain important seized material was omitted or ignored by the Commissioner or the ITO, as the case may be, while making the assessments. The Commissioner, however, observed that under Section 263 of the Act, he had the requisite power to cancel any order passed by the ITO if it is erroneous insofar as it is prejudicial to the interests of the revenue and that the orders passed by the ITO caused prejudice to the interests of the revenue because it ignored the material evidence on record. What weighed in the mind of the Commissioner was that when the ITO while passing the order under Section 132(5) estimated the concealed income at Rs. 11,86,394 on the basis of the scrutiny of the Seized documents, the assessments were made on a paltry sum of Rs. 25,000 that too for each of the assessment years. Since there was nothing in the assessment order to show that the seized material was duly considered, he held that the ITO did not make any enquiry before making the assessment under Section 143(3) of the Act. In other words, he felt that even though the ITO had obeyed the instructions of the Commissioner, the ITO should have again conducted an independent enquiry, discussed the entire seized material in the assessment order before coming to any conclusion as to the quantum of addition to be made and that the non-discussion of the material caused prejudice to the interests of the revenue and vested jurisdiction in him to invoke the provisions of Section 263. In support of the assumption of jurisdiction under Section 263, he placed strong reliance on the decision of the Delhi High Court in the case of Gee Vee Enterprises v. Addl. CIT  99 ITR 375. He cancelled the assessments made by the ITO on these assessees for these two years and directed him to make fresh assessments after making necessary investigations. To put it simply, the fault or the error that was said to have been committed by the ITO while making these assessments was non-enquiry with reference to the addition proposed in the order passed under Section 132(5). He also referred to the following five items which according to him the ITO had not considered at all although that was a part of the seized material: (a) Renovation of residential premises by Shri Rajinder Abbot (vide notings on pages 36 to 41).
(b) Renovation of the flat during April 1981 (vide notings on page 50) Rs. 6,380.
(c) Booking of 14 scooters in the names of wives and children of partners of the firm during January 1981 (vide notings on pages 16 to 29) Rs. 7,000.
(d) Booking of a truck with Supreme Motors (vide notings on pages 44 to 49) Rs. 20,000.
(e) Investments in National Savings Certificates, Fixed Deposit, etc., by Dr. Rajinder Abbot in his own name and in the names of his wife and children during financial years 1978-79 to 1980-81 relevant to the assessment years 1979-80 to 1981-82.
3. The assessee is aggrieved by these orders passed by the Commissioner under Section 263 and filed these appeals before us. The chief contentions of the learned counsel for the assessee is that on the facts of this case, it is not possible at all even to remotely suggest that the ITO committed an error when he only obeyed and followed the instructions given to him by the Commissioner under whose jurisdiction he functions. Placing strong reliance on the provisions of Section 119(3) of the Act the learned advocate Shri G.C. Sharma pointed out that every ITO employed in the execution of the Act shall observe and follow the instructions given to him for his guidance by the Director of Inspection or by the Commissioner or by the IAC within whose jurisdiction he performs his functions. Any deviation from this mandatory provision would mean defiance of law and the ITO would not only be guilty of disobedience but he would be committing contempt for which he is punishable. It is open under the Act, as it now stands, to compel an ITO to observe and follow the instructions given by the Commissioner, requirement of law being that the ITO should perform his functions within the jurisdiction of that Commissioner. The present Commissioner, who acted under Section 263 in cancelling those assessments committed an error when he said that the ITO obeyed the instructions of the then Commissioner, under whom he worked, made an erroneous assessment. Virtually this leads to a situation where the ITOs could with impunity disobey the instructions of the Commissioner thereby create an anarchy in the administration of the Act. The Commissioner should have seen that the entire seized material was considered by the Commissioner and the IAC and the ITO concerned and only then a conclusion was reached to make the addition of Rs. 75,000 spread over a period of three assessment years. The minutes recorded show that the entire material was considered. It is not as if the settlement was reached in a haste. Several meetings were held between the assessees, his representatives and the Commissioner in the presence of the IAC. If after a mature and exhaustive consideration of the seized material the Commissioner, who is an appellate authority under Section 132(11) comes to a conclusion that the additions proposed in the order passed under Section 132(5) were incorrect, baseless and arrives at a figure to be added as concealed income of the assessee and gives directions to that effect to the ITO, who following those instructions completes an assessment, how can it be said, the learned advocate asked, that the seized material was not considered by the ITO and the additions were made in disregard of that seized material.
Merely because there was no discussion in the assessment order about the explanations offered by the assessee in regard to the seized material, does it follow that the earlier proceedings were all non est in law. Could the Commissioner ignore those proceedings, ignore the conclusions reached therein and then say that the ITO committed an error because he did not refer to that material It is not as if the ITO was not aware of that seized material. The proceedings that have taken place till the time the assessments came to be made were as consideration of that material. It was taking into account all this material and making references to them wherever needed and by observing and following the directions of the Commissioner, which he was bound to follow under the Act, the ITO completed the assessments. It is now very wrong on the part of the present Commissioner to say that merely because there was no discussion in the assessment order about the seized material, the assessments made by the ITO were such as to cause prejudice to the interests of the revenue. It only amounts to turning a blind eye to all those proceedings that have taken place before they culminated into the assessment. Thus, proceeded the arguments of the learned counsel for the assessee. We were also taken through the entire material on record that culminated into the assessments. Finally it was urged that the assessments made by the ITO did not suffer from any error nor any prejudice was caused to the interests of the revenue and the Commissioner was not justified in cancelling the assessments.
4. On the other hand, Shri R.N. Bara appearing for the revenue contended that in a case like this the ITO had a far more greater responsibility to make a proper assessment. He should show in the assessment order how he dealt with the seized material. He would not say nor even suggest that the ITO should disobey the instructions given to him by the Commissioner but he would certainly emphasise the responsibility of the ITO to show in the assessment order or at least in the assessment record all the seized material had been disposed of.
In other orders, the ITO should reconcile the figure arrived at as concealed income in the order passed under Section 132(5) with the eventual amounts that were proposed for addition in the assessment order. If there is a failure in this reconciliation, it is certainly an assessment made causing prejudice to the interests of the revenue and the Commissioner, as the authority in charge of protection of the revenue, could interfere to set right this mistake. All that he said was that the ITO should investigate into the matter and then arrive at a proper conclusion. He did not suggest that the addition should be made in a particular way or that the addition should be confined to the amount mentioned in the order passed under Section 132(5). The minutes recorded by the Commissioner, on which so much reliance was placed by the assessee, as if they are sacrosanct are really not legal orders.
The Commissioner or for that matter the IAC has no power under the Act to agree for any settlement more particularly on a petition filed under Section 273A under which section the power of the Commissioner is confined only to reduce or waive the penalty in certain cases and not to deal with any income much less settlement of income. It is, therefore, very incorrect for the assessee to suggest that the orders passed by the Commissioner have got any legal sanction behind them. In a case of this nature, the ITO must be said to have failed in his duty to show how he has considered the various additions proposed in Section 132(5) as not worthy of adding in the final assessment made under Section 143(3). That apart the Commissioner found certain other items mentioned in paragraph No. 3 of his order. There is no reference in the order of the ITO that these items were considered. There is as pointed out by the Commissioner nothing in the minutes also. If any one of those items was not considered by the ITO, that is enough to give the Commissioner the necessary jurisdiction to invoke the provisions of Section 263. He also made a reference to the order passed by the Delhi High Court on the writ petition filed by the assessee where the Delhi High Court observed that the question in the writ was with regard to the interpretation of Section 273A of the ITO and that the only power of the Commissioner under that section was with regard to penalty and not regarding the quantum of income. This, according to him, must set at rest the various arguments advanced by the assessee founded on the legality of the minutes of the Commissioner. Proceedings on these lines, the learned departmental representative supported the order of the Commissioner.
5. We have carefully considered the relevant record and given our due consideration to the arguments addressed to us. The issues in this case are not many and are not far to seek. The simple question is whether the ITO committed any error while making assessments, which caused prejudice to the interests of the revenue. Arising in its wake is the question whether the ITO could be said to have acted erroneously when he observed and followed the directions given to him by the Commissioner, under whom he performed his functions. This leads us to the further question whether it is open to the ITO to question the legality or otherwise of the directions given by the Commissioner without amounting to defiance disobedience or insubordination. The second question incidental to this is whether in reality and truth any enquiry was made into the seized material either by the Commissioner or by the IAC or by the ITO or by all of them put together at any stage and whether there were any flaws, omissions grave or otherwise in those enquiries. If all or any one of them are present, then the Commissioner will have jurisdiction to interfere under Section 263. Let us see whether the ITO had committed any error. He only followed the instructions given to him by the Commissioner which he is bound to do under the provisions of Section 119(3). We do not think that at this stage it is open to him to question the directions given by the Commissioner. It may be open to an ITO to point out to the Commissioner any mistakes or omissions committed by him. We do not think any Commissioner should take exception to this or be offended by it. On the contrary they should appreciate the alertness of such an ITO. But in a case where the Commissioner sends to the ITO for his report on the explanations given by the assessee and the proposals made by him, it is certainly open to the ITO to express his opinion whether the explanations offered could be accepted or not and whether the proposals made could be acted upon or not and make counter suggestions in order to protect the interests of the revenue. This does not mean defiance.
On the other hand, this means only compliance. But in this case what happened was, as soon as the assessee made a petition to the Commissioner for settlement, the Commissioner held several meetings with the ITO. That was on record. The assessee filed explanation to the various additions proposed in the order under Section 132(5) supported by materials. This explanation was sent to the ITO for his comments. It was only after getting the explanations offered by the assessee examined by the ITO and it is only after receiving his comments on them and that too through the IAC the final settlement was reached. It is note worthy that the ITO was also present and a party to this settlement. The opening paragraph of this minutes duly and unequivocally show that the issues involved were discussed with reference to the orders under Section 132(5) and the report of the ITO dated 28-4-1982 forwarded by the IAC, Range II, New Delhi. [Emphasis supplied] This further points out that the issues involved were discussed with threadbare. Does it not mean that everything that was to be considered with reference to the orders under Section 132(5) were considered to the fullest extent by all concerned including the ITO Is there anything left from consideration Thereafter the conclusions reached were that there was no undisclosed income to be added in the hands of the partners of the assessee-firm Dr. Rajinder Abbot, Dr. Har Parkash Abbot, Shri Hakim Hari Kishan Lal and Smt. Raj Devi not on any ground of concession but on the ground that they were all explained satisfactorily with evidence. The Commissioner now is not able to show that this conclusion was erroneous by pointing out any omission in the consideration of the seized material. When he says that the ITO has not shown any material in the assessment order, he was ignoring the entire proceedings that took place before the assessment was made. This, in our opinion, is neither proper nor called for nor open to him. If the Commissioner is able to point out any particular omission of the seized material which has a bearing on the computation of income, then he can say that there was some escapement of income but it was not the case here at all. On the other hand the opening paragraph of the settlement shows to repeat that the ITO had considered every material with reference to the orders under Section 132(5) and then arrived at the conclusion that no addition was to be made in the hands of the partners. Then the discussion took place as to the discrepancies found with regard to the seized material and the account books of the assessee and after discussion again with the seized material an addition of Rs. 75,000 was proposed to be made. How can it, therefore, be said that the ITO did not make any enquiry with regard to the seized material. This observation of the Commissioner, in the circumstances of this case, is in our considered opinion factually incorrect. The seized material was duly considered and only then the conclusions were reached which led to the addition of Rs. 75,000 spread over three years.
Another important thing to be noted in this context is that one of the decisions reached was that no other addition as per discussion was found proper on account of the seized material in the possession of the department. What does this mean and show It means that the entire seized material in the possession of the department was considered and then it was found that no addition other than the addition of Rs. 75,000 could be made. The Commissioner now is not showing that this decision was wrong. Except stating that the material as not considered and that the assessment order does not show any consideration of this material, which is now found to be factually incorrect, he does not say that any particular addition was omitted to be made. On these facts what is to be seen is not the validity or the competence of the Commissioner in making an order under Section 273A or in arriving at the settlement but what is relevant is whether the Commissioner now is justified in saying that no enquiry was made by the ITO while making the assessment with reference to the seized material and with reference to the order passed under Section 132(5). There is enough evidence on record to show that the seized material was considered by the ITO. Not only that it was processed by the IAC, Range II and ultimately considered by the Commissioner. Nothing more is required than this to show that the seized material was considered very thoroughly by competent persons. This is, therefore, not a case where the seized material was not considered. Merely because the ITO does not refer to these enquiries in the assessment order that would not nullify the enquiries made which were on record and the explanations offered by the assessee, which again were on the record. That enquiry is not a nihilism. This discussion shows that the ITO neither committed any error nor failed to make proper enquiry with reference to the order passed under Section 132(5) and the seized material. The arguments addressed by the learned departmental representative cannot, therefore, be accepted as tenable. At this stage we would like to deal with the items that the Commissioner has mentioned in paragraph No. 3 of his order. We repeatedly asked in the Court as to whether these items were considered and it was pointed out to us that these items were also considered. In any case the non-consideration of these items would not make the assessment made on the firm an assessment causing prejudice to the interests of the revenue. They may at worst be considered in the hands of the partners because none of those items relate to the firm, the assessee before us in which the main proceedings were initiated, following which the assessments made in the hands of the partners were also cancelled. The point to be noted here is that the ITO after considering the seized material with reference to the order under Section 132(5) came to the conclusion before the assessee and his superior officers, namely, the IAC and the Commissioner that no addition need be made in the hands of the partners. There is, therefore, no question of the ITO not considering these materials also.
Thus, the Commissioner does not seem to be factually correct even here.
It is for these reasons we are unable to agree with the contentions advanced on behalf of the department and agree with the view taken by the Commissioner that the ITO for not having mentioned in the assessment order the enquiries conducted by him, he committed an error as to cause prejudice to the interests of the revenue. Here we may pointed out a decision of the Calcutta High Court in Russell Properties (P.) Ltd. v. A. Chowdhury, Addl, CIT  109 ITR 229. Quoting from the head-note the principle laid down by the Calcutta High Court is: The power of revision under Section 263 of the Income-tax Act, 1961, can be exercised only if the following conditions are satisfied--firstly, the Commissioner must call for and examine the records of the proceedings under the Act and, secondly, the Commissioner must consider the order passed by the Income-tax Officer to be erroneous in so far as it is prejudicial to the interests of the revenue. However, where there is a decision of a higher appellate authority the subordinate authority is bound to follow such decision. Hence, an order passed by the Income-tax Officer following the decision of the Appellate Tribunal cannot be held to be erroneous and such an order cannot be revised. (p. 229) Thus, we are fortified in the view that we are taking that when there is a decision of a higher authority, which the ITO is bound to follow under the Act, an order passed by the ITO following such decision could not be held to be erroneous and such an order could not be revised under Section 263. More or less this is also the view expressed by the Calcutta High Court in another case Jeewanlal (1929) Ltd. v. CIT[\911] 106 ITR 33, though not directly on the issue. The Madhya Pradesh High Court in the case of H.H. Maharaja Raja Power Dewas v. CIT  138 ITR 518 pointed out that even if the order passed by the ITO is erroneous but if it is not prejudicial to the interests of the revenue, the Commissioner cannot exercise revisional jurisdiction under Section 263. In other words, prejudice to the interests of the revenue unless shown which is a condition precedent, no jurisdiction under Section 263(1) can be assumed. In our view the Commissioner in this case has not been able to show any prejudice to the interests of the revenue even though the ITO, for the sake of argument, might be said to have committed an error in not discussing the entire seized material with reference to the order passed under Section 132(5) in the final assessment order passed under Section 143(3). For these reasons, we are of the opinion that the Commissioner has not properly exercised his revisional jurisdiction under Section 263 in this case. We are able to come to this conclusion without going into the question whether the Commissioner has power while acting under Section 273A in deciding the quantum of income for assessment. Although the observations made by the Delhi High Court in the writ petition do support the department's contention. Legality or otherwise, it is on the facts of this case that issue became, if we may say so, a non-issue in the sense that what is to be seen is whether the ITO has made proper enquiry and whether he has come to the proper conclusion or not. That apart the minutes recorded by the Commissioner and such settlements reached between the heads ofdepartment like the Commissioners and the assessees, to which the concerned ITOs are made parties from whom reports are called for and which are made the basis of settlements, if doubted and thrown aside like this, the faith of the people in the administration will be severely shaken and will jeopardise the process and course of justice.
That there was a thorough enquiry made by the ITO is proved by the fact that it was recorded in the minutes. The proof that there was no mistake in such a consideration is established by the fact that the present Commissioner is not able to show any omissions of any such consideration.