COMMISSIONER OF INCOMETAX Vs. V P AGARWAL

JUDGEMENT

(1.) BOTH these cases relate to the income-tax assessment of an assessee for the same year, i.e., the asst. yr. 1972-73. They were heard together and are disposed of by this common order.

(2.) THE assessee-respondent is doing business under the name of Agarwal Scientific. Glass Industries, Agra, dealing in manufacture and sale of scientific laboratory equipment. He filed return of income-tax for the asst. yr. 1972-73, the accounting for which had ended on 31st March, 1972. An income of Rs. 29,407 was returned. The balance sheet filed in support of the return of income- tax showed there creditors as follows : In the books of account the assessee had shown purchases of Rs. 85,773, Rs.44,949 and Rs. 36,151 from the aforesaid parties, respectively. The assessee had also filed copies of accounts of Rs.

(3.) THE CIT initiated action under S. 263 as in his view by not making addition in respect of the fictitious transactions, in the names of three parties referred to above, the AO had made an assessment order that was erroneous and prejudicial to the interests of the Revenue. The CIT, therefore, issued a show-cause notice to the assessee and after examining the matter he set aside the assessment observing that there was no evidence to show that the close relatives of the assessee had actually lent any money to him and the AO had erred in accepting the assessee's contention without analysing the facts of the case in the light of the relevant provisions of law. The CIT observed that since the matter has not been properly examined by the ITO, it would be in the interest of justice to restore the matter to him for further examination and for making an assessment de novo after allowing the assessee an opportunity of being heard.