S.S Mehra, J.M:— Appellant assessee by these two appeals challenges two separate orders of the learned CIT(A), New Delhi passed under s. 263 of the IT Act, 1961, on identical ground as under:

“That on the facts and in the circumstances of the case the CIT had erred in law and on facts in setting aside the order of the ITO and asking him to make a fresh assessment, the Commissioner had no jurisdiction in law to cancel the assessment.”

2. Since facts, circumstances, issues and parties are common, for the sake of convenience we propose to dispose of both the matters by a single order.

3. To start with we take up assessee's ITA No. 2504 (Del) 86 for the asst. yr. 1982–83. Assessee by status is a registered firm and returns of income were filed on 15th July, 1972 for both the periods, i.e, from 1st April, 1981 to 18th Nov., 1981 and 19th Nov., 1981 to 31st March, 1982, showing income of Rs. 54,303 and Rs. 44,534, respectively. The assessment order was framed on 16th Dec., 1983 under s. 143(3) of the Act at an income of Rs. 55,603 for the first period and at Rs. 41,734 for the second period. Thus aggregate income for both the periods was of Rs. 97,337.

4. The assessment record for this year was subsequently the subject-matter of examination by the learned CIT, New Delhi. It was noticed by him that the learned ITO did not examine the materials seized during the course of search operations conducted oh 24th May, 1983. According to the learned CIT, at the time of search two papers bearing revenue stamps without signature were found and seized. One of those papers showed that on Chait Sudi 8, Samvat 2039, a sum of Rs. 3,19,448 was due to the firm from Smt. Hem Lata. According to the learned CIT the learned ITO did not examine these papers. The learned ITO was not seen to have made any enquiries regarding the resources out of which the above amount was advanced by the assessee. Thus the assessment order framed by the learned ITO was considered as erroneous and prejudicial to the interests of Revenue. A show-cause notice dt. 24th Feb., 1986 was sent to the assessee incorporating the learned CIT's intention and requiring the assessee to show cause as to why contemplated action should not be taken. A copy of that notice is seen at page 26 of the assessee's paper book. The said notice was replied by the assessee as per copy placed at pages 27 and 28 of the paper book. According to assessee's reply all notices issued by the learned ITO were duly complied with and whatever material was needed was furnished also. According to the assessee there was no error and much less prejudice in the present situation. According to the assessee the provision of s. 263 was inapplicable in the present case. Reliance was also placed on the ratio in the case of Ocm Ltd. (London) v. Addl. CIT, (1982) 29 CTR (All) 295 : (1982) 138 ITR 689 (All). The learned CIT after considering the assessee's reply and submissions, set aside the assessment and ordered to the ITO to make fresh assessment after, proper enquiry and examination in accordance with law with the following observation:

“4. I have considered the submissions made on behalf of the assessee. In the case of OCM Ltd. (London) v. CIT (supra), the High Court was dealing with the issues of revisional jurisdiction of Commissioner under s. 264 of the IT Act. In this case the paper bearing revenue stamps showed that the firm had advanced loan amounting to Rs. 3,19,448 to Smt. Hem Lata. This paper on which the name of the firm is printed was found at the residence of Smt. Hem Lata, one of the partners. That the paper is unsigned is immaterial. The ITO should have examined the seized material including this paper before framing the assessment. He should have examined the partners of the firm as well as Smt. Hem Lata regarding the transaction recorded in this paper. He should have also enquired about the sources of the fund utilised for giving this advance. The want of such enquiry and examination resulted in prejudice to the interests of the Revenue. The ITO committed an error in making the assessment of the asses see firm without making proper anq detailed examination and enquiry as referred to above. The order of assessment as framed by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue. The order of assessment is, therefore, set aside with a direction to the ITO to make a fresh assessment after proper enquiry and examination and in accordance with law. Before making fresh assess ment, the ITO will afford adequate opportunity of being heard to the assessee.”

5. The present appeal by [the assessee before us on the ground mentioned hereinabove is against that finding. Shri K.P Bhatnagar the learned advocate on behalf of the assessee took us through various pages of the paper book especially pages 1 to 21, 24, 26, 27, 31 and 32. According to him whatever was required during the assessment proceedings was supplied to the learned ITO and-notices were duly complied with. He contended that papers made mention of by the learned CIT since were not before the learned ITO at the time of framing the assessment, their non-discussion by him could not render the assessment order erroneous and prejudicial to the interests of Revenue and thus the learned CIT was not justified to operate s. 263 on the basis of two papers which did not constitute the part on the assessment record. Shri Bhatnagar submitted that s. 263 could not be the answer to the situation an at the most s. 148 of the Act could be looked into. According to him the learned CIT did not examine the ‘record’ which was before the learned ITO It was also pointed out that the receipts were not on record. It was also sub mitted that the said papers had no evidentiary value either being unsigned. He also invited our attention to the copies of the capital accounts of the partners and statement of Mrs. Hem Lata.

6. The learned counsel also made mention of the following ITRs:

1. Ganga Properties v. ITO, (1979) 118 ITR. 447 (Cal);

2. Bennett Coleman & Co. Ltd. v. ITO, (1983) 34 CTR (Bom) 19 : (1983) 141 ITR 239 (Bom);

3. 67 Taxman 3 (sic);

4. Behari Lal Chatterjee v. CIT, (1934) 2 ITR 377 (All);

5. Commissioner Of Income-Tax v. Old Village Industries P. Ltd., (1987) 165 ITR 88 (Del);

6. Uma Shankar Misra v. CIT, (1982) 29 CTR (MP) 71 : (1982) 136 ITR 330 (MP);

7. ITO v. Veni Lal's Export House (P) Ltd., (1982) 2 ITD 552 (Bom);

8. CIT v. Ratlam Coal Ash Co., (1987) 65 CTR (MP) 305 : (1988) 171 ITR 141 (MP);

9. CIT v. Shantilal Agarwal, (1983) 35 CTR (Pat) 304 : (1983) 142 ITR 778 (Pat);

10. Mohd. Mehboob Ali Sahab v. IAC, (1978) 113 ITR 167 (AP);

11. Commissioner Of Income-Tax v. Mahindra Sintered Products Ltd., (1986) 161 ITR 693 (Bom);

12. CIT v. Kashi Nath & Co., (1988) 170 ITR 28 (All);

13. P.K Syam v. State of Assam, (1978) 112 ITR 447 (Gau);

14. Additional Commissioner Of Income-Tax v. Sunder Lal Banwari Lal, (1974) 96 ITR 310 (All);

15. CIT v. Trustees Ofanupam Charitable Trust, (1987) 65 CTR (Raj) 130 : (1987) 167 ITR 129 (Raj).

7. On examination of the ratios it was discovered that by and large the same dealt with merit of the issue which the learned CIT in the present case has not gone into. We thus leave these ratios at that. The assertion of the learned counsel was that action of the learned CIT being erroneous should be vacated and a correct assessment order should be kept intact.

8. On behalf of the Revenue the learned Departmental Representative Shri B.K Haider supported the order under challenge and mentioned further that 2 receipts made mention of in the order under challenge were found at the time of search and seized accordingly and thus constituted the part of the seized material and according to him the learned ITO was under a legal obligation to look into the seized material at the time of framing the assessment. On the basis of pages 1 to 4 of the Revenue's paper book it was pointed out by the learned Departmental Representative that the existence of the seized material was in the knowledge of the learned ITO concerned and non-discussion thereof constituted an error rendering the assessment order erroneous and, therefore, prejudicial. According to Shri Haider the seized material constituted the assessment record which the learned ITO was under a legal Obligation to peruse before finalising the assessment. The learned Departmental Representative contended that the assessment was framed without proper enquiry by the learned ITO and thus was erroneous and prejudicial authorising the learned CIT to operate s. 263. In this connection reliance by the learned Departmental Representative was placed on the ratio in the ease of Gee Vee Enterprises (supra).

9. It was further pointed out by the learned Departmental Representative that the case laws made mention of by the learned counsel since dealt with the issues not discussed and decided by the learned CIT, were off the point and need no consideration. It was also explained that the merit of the papers mentioned by the learned CIT will be looked into by the learned ITO only while framing the fresh assessment and thus the learned CIT could not be considered as under legal obligation to comment upon the merits of the papers.

10. Rival submissions have been heard and considered. The search was conducted on 24th May, 1983 on the assessee's premises. Material was taken into possession including the two papers made mention of by the learned GIT. Thus those papers were, in our view, the parts of the assessment record. It is further seen from the Revenue's paper book that the learned ITO had the knowledge about the raid and the papers. In these circumstances it was the learned ITO's legal duty to examine the seized materialincluding the papers before framing the assessment for the year under consideration. For this con clusion we derive full support from the ratio in the case of Gee Vee Enterprises (supra). It is observed by the Lordships of the Delhi High Court in the above case that absence of proper enquiry by the ITO at the assessment stage justify the operation of s. 263 by the learned CIT subse quently. This exactly has happened in the present case and, in our view, the jurisdiction was correctly assumed and rightly exercised. We thus see no scope for interference.

11. Next we take up assessee's ITA No. 3336 (Del) 86 for-the asst. yr. 1983–84. The facts and circumstances for this year are similar to those of asst. yr. 1982–83. In fact common submissions were made by the contesting parties for both the years. For the detailed reasons discussed for the asst. yr. 1982–83 we confirm the order under challenge for the year under consideration., also.

12. The paper books filed by the parties have been perused and the case law looked into.

13. In the result the appeals are dismissed.

27th Jan., 1989

P.T Goradia, A.M:— Though these appeals are filed against two separate undated orders, passed by the CIT assuming jurisdiction under s. 263 of the Act, the ground raised is common to both the appeals and the same read's as under:

“That on the facts and in the circumstances of the case the CIT had erred in law and on facts in setting aside the order of the ITO and asking him to make a fresh assessment, the Commissioner had no jurisdiction in law to cancel the assessment.”

15. For the purpose of the order, I would refer to the facts in respect of the asst. yr. 1982–93 except whenever reference is made to the facts in respect of asst yr. 1983–84.

16. The assessee is a registered partnership firm regularly assessed to tax. The assessment was completed under s. 143(3) of the Act vide order dt. 16th Dec., 1983. The CIT assuming jurisdiction under s. 263 of the Act, issued show-cause notice on the following lines:

“The examination of the assessment to records shows that the ITO completed the assessment under s. 143(3) of the IT Act without examining the materials seized during the course of the search. During the course of search, a paper bearing revenue stamps without signature was found and seized. This paper showed that on Chaitsudi 8, Sambat 2039, a sum of Rs. 3,19,448 was due to the firm from Smt. Hem Lata. The ITO has not examined this paper. He did not make any enquiry regarding the sources out of which the sum of Rs. 3,19,448 could be advanced by the assessee-firm.”

16.2 The assessee replied in writing, the relevant portion of written submissions is reproduced below for the purpose of appreciating the facts and controversy correctly:

“With reference to the above notice we submit that we have nothing to do with the paper bearing revenue stamps without signature, which stated that on Chaitsudi 8, 2039, a sum of Rs. 3,19,448 was due to the firm from Smt. Hemlata. No paper of that nature was recovered or seized from our shop and therefore, we have absolutely no knowledge of the same. Moreover, the paper does not contain any signature of any partner of the firm and therefore, it has no veracity, authority or authenticity about it at all. Anybody inimical to us, would concoct such an unproved, unidentified and evidenceless paper against us just to harass, intimidate and trouble lis. Our books of account does not show this loan. Our books of account are duly closed, all purchases and sales are fully vouched and stock details tallied to the last article, as have been duly accepted by the income-tax department year after year. If, as alleged, an amount of Rs. 3,19,448 had been advanced by the firm, it is for the department to bring in cogent material and evidence on records pointing out to any serious omission in the books of account, relating the same to the said advanced loan. On the basis of the impugned paper there is no case for the department to cancel the assessment, which had been made after examination of all the books of account and vouchers including vouchers for expenses incurred in the course of the day-to-day business, which are fully vouched. Further at the time the assessment was made, the so-called paper was not available with the department and, therefore, it cannot be said that the assessment made was erroneous and unless and until the assessment order is en oheous it can't be said to be prejudicial. Therefore, on the basis of this paper alone, which is not owned either by the firm or Mrs. Hemlata (Her certificate enclosed), there is no warrant in law to cancel the assessment.”

16.3 However, the CIT passed the order setting aside the assessment with a direction to redo the assessment. The relevant portion of the order is already reproduced in paragraph 4 of the order passed by the learned Judicial Member.

16.4 At the time of hearing on behalf of the assessee submissions were made contending that:

(i). The papers sought to be made basis for assuming jurisdiction were not with the Assessing Officer at the time of assessment,

(ii) No cognizance could be taken of unsigned paper because the CIT was required to give his own finding,

(iii) There was no error either of fact or law.

16.5 Relevant judicial pronouncements were cited and they are stated in the order passed by the learned Judicial Member.

16.6 The Departmental Representative placed before us some papers on the basis of which it was sought to be added that Assessing Officer was aware that there was a search. Therefore, it was the duty of the Assessing Officer to make the appropriate inquiries.

16.7 In my opinion, the CIT has no jurisdiction legally. From the order passed by the CIT it is clear that papers were found from the residence of Smt. Hem Lata, i.e, one of the partners. Therefore, it cannot be said the papers found formed part of assessment record, that would be only in the case of Smt. Hem Lata. Partner is a different entity other than the partnership firm. It cannot, therefore, be said that these papers formed part of the assessment records at the time of assessment.

16.8 On perusal of the papers submitted by the Departmental Representative, I find that the papers are in connection with retention of documents seized from the residential premises of Rama Nath Goel C/o Rama Nath Goel & Co. I do not know how this advances the case of the Revenue. On the contrary, I find from the papers placed before us in the Paper Book filed by the assessee that even in February, 1984 the inquiries were going on in connection with the papers lying with Asstt. Director of Inspection (Investigation). I also see on page 33 that the Asstt. Director of Inspection, Mayur Bhavan, New Delhi, issued summons under s. 131 asking the assessee to produce books of accounts for the years 1981–82 and 1982–83. In June, 1987 the assessee had requested the Assessing Officer for the inspection of the records relating to the communication, if any, received by him from the Asstt. Director of Inspection. As against this, when a reference is made to the assessment order for the asst. yr. 1983–84 in the assessee's own case, it is mentioned that there was survey operation under s. 133A on the business premises of the assessee on 11th Nov., 1982 when the case was found to be in order. This assessment order was passed on 30th Feb., 1984. It is, therefore, apparent that the impugned papers were lying with Asstt. Director of Inspection (Intelligence Wing) and not with the Assessing Officer and again the same were in relation to altogether different identity. Therefore, the decision in the case of Ganga Properties at 118 ITR 447 (Cal) is directly applicable.

16.9 Again from the assessment orders we find that proper inquiries were made. Considering the type of evidence sought to be made the basis of assumption of jurisdiction, it cannot be said that no inquiries were made by the Assessing Officer. Therefore, the orders are not erroneous either.

16.10 We have no dispute with the ratio laid down in the case of Gee Vee Enterprises (supra) but the circumstances should warrant and the basis should be found existing before holding that no inquiries were made by the Assessing Officer.

16.11 In my opinion, therefore, the order passed by the CIT is required to be cancelled and that passed by the Assessing Officer is required to be restored.

17. In respect of the asst. yr. 1983–84 for want of time it was submitted that the decision taken for asst. yr. 1982–83 be applied to the subsequent assessment year also. Therefore, the Commissioner's order under s. 263 is cancelled so as to restore that of the Assessing Officer.

18. I have passed a separate order because I could not agree with my learned brother on the decision he has taken, nor could he agree with my decision.

19. In the result, both the appeals are allowed.

16th May, 1990

Ch. G. Krishnamurthy, President:— This case has come to me as a Third Member to express my opinion on the following point of difference that arose between the Members of Delhi Bench ‘B’, who heard this appeal originally:

“Whether, on the facts and in the circumstances of the case, the orders passed by the CIT, assuming jurisdiction under s. 263 of the IT Act. 1961, are required to be upheld?”

2. The fact gathered from the order of the CIT are that this relates to the asst. yr. 1982–83 and in this case, the assessment was completed on a total income of Rs. 97,337. There was a search operation conducted on 24th May, 1983 on the premises of Smt. Hem Lata a partner in the assessee firm when certain material were seized in which two papers bearing revenue stamps without signatures were found. One of these papers showed that on Chait Sudi 8, Samvat 2039, a sum of Rs. 3,19,448 was due to the assessee firm from Smt. Hem Lata (one of the partners). According to the CIT, the ITO did not examine this paper nor made any enquiries regarding the source out of which the said sum of Rs. 3,19,448 was advanced by the assessee firm to said Hem Lata. From this he inferred that the order of assessment framed by the ITO was erroneous in so far as it was prejudicial to the interests of the Revenue. Thereafter a notice under s. 263 was issued to the assessee to show cause why an order should not be passed setting aside the assessment, with a direction to the ITO to make a fresh assessmeut after proper examination of the eized material. In response to the said notice, it was represented on behalf of the assessee that since the paper on which the transaction of loan of Rs. 3,19,448 was recorded, was not signed, it was not authenticated and in any case Hem Lata had denied having received any advance from the assessee firm. It was further submitted that the provisions of s. 263 were not applicable in this case because the search that was conducted was not on the premises of the assessee firm but it was on the premises of Smt. Hem Lata who was a partner. Even if Smt, Hem Lata happened to be a partner, the search conducted at her house could not be equated to a search conducted on the premises of the assessee much worse the documents seized in the course of the search were not forwarded to the ITO making the assessment of the firm. Thus, when the ITO was not aware of what happened in the search that took place in the premises of Hem Lata, the ITO could not be held to have committed an error in making the assessment causing prejudice to the interests of the Revenue. Reliance was placed upon the decision of the Allahabad High Court in the case of O.C.M Ltd. (London) v. CIT, (1982) 29 CTR (All) 295 : (1982) 138 ITR 689 (All). The CIT held that the case cited by the assessee was inapplicable as it related to the interpretation of the provisions of s. 264 of the IT Act and not to s. 263. Coming to the facts-of this case, the CIT held that the paper bearing revenue stamp showed that the firm had advanced loan amountingto Rs. 3,19,448 to Smt Hem Lata. The paper on which the name of the firm was printed was found at the residencer of Smt. Hem Lata, though the paper was unsigned. Since it contained name of the firm, the ITO. should have examined the seized material before making the assessment. By this the inference was that the ITO was in possession of the seized material and it formed part of the record of the firm. He should have examined the partners of the firm as well as Smt. Hem Lata regarding this transaction. He should have enquired into the source of the funds from which this advance emanated and since no such enquiry was made, the assessment made resulted in a prejudice to the interests of the Revenue. He, therefore, disagreeing with the contentions advanced on behalf of the assessee, set aside the order passed by the ITO with a direction to him to make a fresh assessment, after proper enquiry and examination.

3. It was to this order that objection was taken and an appeal was filed before the Tribunal. The same contentions as were raised before the CIT were reiterated. In particular, it was pointed out that when the seized material was not before the ITO, it was not proper for the CIT to say that the seized material constituted the recored of the assessee firm and, therefore, the non-enquiry to that material resulted in causing prejudice to the interests of the Revenue. The Departmental Representative, however, pointed out that the seized material was conveyed to the ITO long before the date of assessment and it was the fault of the ITO in not having discussed this seized material and, therefore, that non-discussion caused prejudice to the interests of the Revenue, inasmuch as the relevant papers from the seized material constituted the record of the assessment of the firm. The ITO was under legal obligation to peruse those records before finalising assessment and he having failed to consider it, the GIT was justified in setting aside the assessment. The learned Judicial Member was of the opinion that the said papers said to have been conveyed to the ITO long before the assessment was made, constituted record of the assessment of the firm, that the ITO had knowledge of those papers and the ITO having the knowledge of those papers and also about the raid, should have examined the seized material before framing the assessment and any assessment made without making a proper enquiry was erroneous in law and could be set aside. For this proposition, he relied upon, the ratio of the decision of the Delhi High Court in the case of Gee Vee Enterprise…Petitioner v. Additional Commissioner Of Income Tax…, (1975) 99 ITR 375 (Del). But the learned Accountant Member was of a different opinion. He pointed out that the asses see was registered partnership firm regularly assessed to tax, that the assess ment in this case was completed on 16th Dec, 1983 under s. 143(3), that the search had taken place not in the premises of the assessee firm but in the premises of the partner Hem Lata where such papers must have been found, that those papers found although said to be oh the letterhead of the assessee firm did not contain any signatures of any partner of the firm and, there fore, they had no veracity, authority and authenticity of it, that it was possible that the partner herself could have utilised the letterhead of the firm to make certain entries not relating to the firm and that by itself did not con stitute any material to hold that the money was advanced by the assessee firm, that the books of accounts of the firm did not show any such loan, that the ITO making the assessment of the firm had no knowledge of those papers before making the assesssment, that if at all any income was held to have escaped assessment, the proper course would have been to reopen the assessment of the firm under s. 147 but not to set aside the assessment under s. 263 for which the requirements of law were totally different from the requirements of law needed to reopen the assessment under s. 147. Referring to the papers submitted by the Departmental Representative, based upon which he submitted that the ITO assessing the firm was given the papers and, therefore, those papers constituted the assessment record of the firm, the learned Accountant Member pointed out that even in February, 1984 the Asstt. Director of Inspection (Investigation) in whose custody the seized papers were lying was making enquiries as to which ITO the papers should be sent for making proper assessment which showed that the seized material could not have been with the ITO. Further, those papers related to the documents seized from the residential premises of Rama Nath Goel, C/o Rama Nath Goel Co., who is different from either Hem Lata or the assessee firm. Thus, there was not only non-communication of the papers to the concerned ITO and even otherwise the communication was with reference to a different party and that could not constitute the assessment record of the assessee firm and, therefore, the CIT was not justified in observing that the Assessing Officer knew about the search operations, the seized material and the paper containing the figure of Rs. 3,19,448 said to have been the money advanced by the assessee firm to the said Hem Lata. Thus he could not agree with the view expressed by the learned Judicial Member and held that the order passed by the CIT was not proper and deserves to be cancelled. It was thus the above difference of opinion arose and the matter was referred to me as third Member.

4. I have heard Shri K.P Bhatnagar alongwith Sh. S. Rama Nand Aiyar for the assessee and Shri D.V Srivastava for the Department. After going through the papers, I am of the opinion that it is not correct to say that the seized material was conveyed to the ITO so that it could be said that he ignored or bypassed it before making the assessment. In the paper book filed by the department on which reliance was placed by the Judicial Member to come to the view that the seized material was put before the ITO assessing the assessee firm, there were only four papers. The first paper related to a letter written by the ITO, Distt. III. B(2), New Delhi to the CIT seeking permission to retain documents seized from the residential premises of Shri Prem Nath Goel, partner of M/s Prem Nath Goel & Co., Naya Bazar, Delhi on 24th May, 1983. This does not relate to the assessee firm even though wife of Prem Nath Goel happens to be a partner in the assessee firm but the documents seized related to Prem Nath Goel, partner of Prem Nath Goel & Co. but not to the wife of Prem Nath Goel who happens to be a partner in the assessee firm. This document cannot, therefore, be said to have any relation to the affairs of the assessee firm. The second paper is a proposal to the CIT for the retention of the documents seized under s. 132(8) of the IT Act, 1961. The third document is again related to the documents seized from the premises of Prem Nath Goel, Pahar Gurij, Delhi. It is no doubt true that there is a reference in this list to Annexure ‘K’ in which it was mentioned that a transaction containing an amount of Rs. 2,45,000 in mandi language on the letterhead of Manoharlal Munshilal, Khari Baoli, Delhi, i.e, the assessee herein, without date and with two revenue stamps affixed and unsigned was made. There was also a reference to the transaction of Rs. 3,19,448 again in mandi language on the letter-head of M/s Manoharlal Munshilal, Khari Baoli, Delhi on 1st April, 1982 with two unsigned revenue stamps affixed. These documents were sent to the ITO, Distt. III. B(2) by the Asstt. Director of Inspection to seek permission of the CIT to retain those documents for more than 180 days. The purpose of this communication is to seek retention of the documents in the posession of Asstt. Director of Inspection beyond the period of 180 days. These documents must have been sent by the ITO to the CIT with the proposal for grant of permission to retain the documents beyond 180 days. How can the reference be construed as a reference as to form part of the record of the assessee firm. The Asstt. Director of Inspection was by then still seized of the matter.

5. In the 4th paper which is the last paper of the paper book filed by the department, there was a letter written by Asstt. Director of Inspection (Inv.) on 5th Nov., 1983 addressed by the ITO, Distt. III. B(2) which again related to Prem Nath Goel, partner of M/s Prem Nath Gael & Co.,. Lajpat Nagar, New. Delhi, It was mentioned in this letter that action under s. 132(1) was taken on 24th May, 1983 at the residential premises of Shri Prem Nath Goel at 7715, Ram Nagar, Pahargunj, and certain records, were seized as per annexures C, D, F, K. & L and also a Panchnama was recorded on that date and a request was made to obtain the necessary permission of the CIT well in time for the retention of those documents beyond the period of 180 days and it was no doubt true that Panchnama and annexures A to Q which must have included annexure ‘K’ must have been forwarded to the ITO. Here again this is only in connection with the search conducted on the premises of Prem Nath Goel. There was nothing in this letter to indicate that the assessee firm was involved in any manner. It is only an inference to be drawn because annexure ‘K’ referred to the transactions of Rs. 2,45,000 and Rs. 3,19,448 on the letterhead of the assessee firm and it must be supposed to have been sent to the ITO assessing the firm and thus the ITO assessing the firm must have had the knowledge of the seized material. But the record of the Assessing Officer does not show these annexures. The learned Departmental Representative submitted at this stage that in the course of the search at the premises of Smt. Hem Lata, a statement was recorded from her and in that statement, there, was a reference to these two transactions and this statement was submitted to the ITO assessing the firm on 7th Nov., 1983 and since he made the assessment on 16th Dec, 1983 without making any enquiry, prejudice was caused to the interests of the Revenue by the non-enquiry of the ITO into his efforts. But here again the statement said to have been forwarded was not made available to me. Assuming it was so, still the CIT, in the notice given under s. 263 before passing the order, did not refer to any of these documents. In the notice that he sent to the party, he categorically stated that the examination of the assessment record showed that the ITO completed the assessment under s. 143(3) of the IT Act without examining the materials seized during the course of the search. It was further pointed out in the notice that the seized papers showed an advance of Rs. 3,19,448 by the assessee to Hem Lata and that the ITO did not examine this paper. Actually such a paper did not exist and the paper that existed was in the name of Prem Nath Goel, partner of Prem Nath Goel & Co. and no reference was made to those papers in the show-cause notice issued by the CIT under s. 263. In other words, a proper charge was not made available to the assessee to allow him the opportunity of rebutting the same. Unless the charge is specific, it cannot be said that the assessee was given a proper opportunity of meeting it. If the papers were really available with the file, nothing prevented the CIT from making a reference to Prem Nath Goel; partner of Prem Nath Goel & Co. and to the papers seized in the search on the premises of Prem Nath Goel and to refer to these transactions. There is also nothing to suggest from the records that the statement recorded from Hem lata was forwarded to the concerned ITO on 7th Nov., 1983 but on the other hand, there was evidence to show that even after the assessment was made, the Asstt. Director of Inspection (Inv.), Mayur Bhavan, was enquiring as to whom the seized material was to be sent for making the assessment, which shows that the Asstt. Director of Inspection was in the custody of the material and he had not sent the papers to the concerned ITO. It is, therefore, very difficult to agree that the ITO was in possession of the seized material before making the assessment. Though it can be said he might had the knowledge but is that record (sic). May be that after having a look into the combined records of the assessee firm and its partners it may be possible to draw a conclusion that the transactions of the assessee firm as reflected in the seized papers in the raids conducted at the premises of the partners was not properly enquired into before making the assessment on the assessee firm but the records of the partners do not constitute the records of the assessee firm. It is, therefore, in my opinion incorrect to state that the record of the assessee firm showed these transactions into which the ITO had not made any enquiry before making the assessment. I am, therefore, inclined to agree with the view expressed by the learned Accountant Member and hold that these papers could not be said to be constituting the record of the assessee firm before making the assessment. May be true that the ITO might have knowledge of a search being conducted in the premises of the partners of the assessee firm, I do not think that that knowledge is enough to hold that the assessment made on the firm is such as to be called erroneous and prejudicial to the interests of the Revenue unless the seized material was communicated to the ITO to be enquired into. Without going into the merits of other contentions raised before me, I hold in my limited capacity of a Third Member that the view taken by the learned Accountant Member appears to be correct and justified and I agree with him. The learned Judicial Member had not enquired into the nature of the documents that formed part the of the department's paper book and construed them as relating to the assessee-firm which it was not.

6. Now the matter will go before the regular Bench to dispose of the appeal in accordance with opinion of the majority.