Rakesh Garg, J. - (1.) THIS judgment will dispose of IT Ref. Nos. 51 and 52 of 1987 arising out of ITA Nos. 240 and 241/Asr/1983 for the asst. yrs. 1976 -77 and 1977 -78.
(2.) THE Tribunal, Amritsar Bench, Amritsar, vide its order dt. 24th Oct., 1986 referred the following single comprehensive question to seek the opinion of this Court in the case of applicant assessee for the asst. yrs. 1976 -77 and 1977 -78 which is stated to be arising out of the order of the Tribunal, Amritsar: Whether on the facts and in the circumstances of the case, the Tribunal is right in law in upholding the action of the C1T(A) to set aside the assessments of asst. yrs. 1976 -77 and 1977 -78 with a direction to the ITO to make them afresh and not annulling these. 2. Briefly stated the relevant facts are that the assessee is a firm and the proceedings relate to its asst. yrs. 1976 -77 and 1977 -78 for which the relevant previous years are financial years 1975 -76 and 1976 -77 i.e. from 1st April, 1975 to 31st March, 1976 and from 1st April, 1976 to 31st March, 1977. The business premises of the assessee firm as well as the residential premises of its partners were searched by the IT Department on 31st Aug., 1976 and all its books including one heap of registers were seized. In spite of issuing notice under Section 139(2) for the two years on 3rd Aug., 1976 and 7th Sept., 1977, returns of income were not filed. Eventually the ITO completed ex parte assessments under Section 144 on 29th March, 1978 and 22nd April, 1978 computing the total income at Rs. 2,59,913 and Rs. 2,69,750 respectively. The assessee filed application under Section 146 which was rejected. However, the appeals for these years were allowed by the CIT(A) vide a consolidated order dt. 31st Dec, 1978 and the ITO was thereby directed to make fresh assessments. The CIT(A) had, inter alia, recorded in the order that the assessee had agreed to complete inspection of its account books and other documents in the presence of the Department on 20 working days from 1st April, 1979 and file its return of income for the two years within a week thereafter. The CIT(A) accepted the assessee's submissions that it was not given an opportunity to inspect the reference (sic -records) and this according to him was a denial of natural justice and for this reason he set aside the assessment for the asst. yr. 1976 -77 directing the AC) to verify various facts and figures and allow opportunity to assessee before making fresh assessment. For the asst. yr. 1977 - 78 also the CIT(A) has held that the assessee was not given proper opportunity to scrutinize the books of account and the material on the basis of (which) the additions were made to the declared trading result. Observing that the assessee was prepared to get the various books of accounts and documents copied at his own cost, the ITO's refusal to the assessee to get copies thereof, according to him, resulted in denial of proper opportunity and natural justice to the assessee which vitiated the assessment proceedings. For these and other reasons recorded in para 10 of his order, he set aside the order of assessment for asst. yr. 1977 -78 as well with a direction to the AO to make a fresh assessment order after giving the proper opportunity to the assessee.
(3.) AGGRIEVED against the above orders of the CIT(A), the assessee filed an appeal before the Tribunal and, inter alia, raised a common ground namely that the CIT(A) having found that the assessment orders were passed without affording the proper opportunity which meant denial of principles of natural justice, he should not have merely set aside the orders of the assessment but should have annulled the assessments. The Tribunal vide its order dt. 29th Jan., 1986 dismissed both the appeals filed by the assessee. The assessee filed Review Appln. Nos. 67 and 68/ Asr/1986 by raising various questions of law as stated in the reference application, however, the Tribunal vide its order dt. 24th Oct., 1986 referred the single comprehensive question for the opinion of this Court as referred in para No. 1 of the judgment above.;