Per K.P.T. Thangal, Vice President: These appeals are by assessee and revenue, pertaining to block period 1-4-1987 to 15-11-1997. IT(SS) No. 225/Mum./2001 2. Assessee originally had taken eight grounds of appeal. Thereafter assessee filed redrafted grounds of appeal, which read as under:- 'The learned CIT (Appeals) was not justified in: 1. holding that block assessment order was not barred by time. He should have held that since recourse to section 142(2A) was not valid, block assessment order was barred by time. 2. not accepting opening balance of Rs. 4,50,000 which had been received by appellant in 1982 as compensation for vacating tenanted premises. 3. without prejudice to Ground No. 2 above, confirming addition of Rs. 1,90,000 in respect of opening balance, which had been invested prior to commencement of block period. 4. confirming addition of Rs. 1,20,000 in respect of gifts received by appellant from various relatives. 5. confirming addition of Rs. 1,10,000 on account of alleged low withdrawals. 6. confirming addition of amount of Rs. 2,50,000 under section 41(1) of Act. 7. confirming action of learned Assessing Officer that amount received on transfer of right to development was taxable, ignoring project completion method followed by appellant. 8. confirming inclusion of income from 'New Saurashtra Diamond Hall' as income of appellant.' 3. Coming to first ground of objection by assessee, contending parties conceded that if this issue is decided in assessee's favour, then all other grounds are academic. 4. fact leading to dispute, briefly, is as under:- There was action under section 132 in case of Shri Rajendra C. Singh (assessee) and Shri Chandrama Singh by warrant dated 5-10-1997. search action was completed on 15-11-1997. Notice under section 158BC was issued and in response to above notice, assessee filed block return on 10-9- 1998, offering undisclosed income only for four assessment years out of block period, i.e., assessment years 1992-93 to 1995-96. 5. Vide Para 3 of his order Assessing Officer records circumstances under which audit under section 142(2A) was got done from M/s. Chokshi & Chokshi, CAs. It reads as under:- '3. As recommended by ADI in his Appraisal Report, audit under section 142(2A) of Income-tax Act, 1961 was gone done from M/s. Chokshi & Chokshi, CAs. assessee was asked to have his case audited under section 142(2A) of Income-tax Act, 1961 by this office letter No. JCIT/SR- 43/40-M/99-2000, dated 5-5-1999 which was duly served on assessee on 7- 5-1999. assessee went on asking for extension of period for completing his audit from M/s. Chokshi & Chokshi. By letter dated 5-5-1999, assessee was asked to get case audited within 60 days on receipt of that letter directing him to get his case audited under section 142(2A). Before end of this stipulated period of 60 days, assessee applied for extension of period of audit by two months by his letter dated 5-7-1999 which was granted by this office letter dated 5-7-1999. assessee again asked for further extension of two months by his letter dated 26-8-1999 which was also granted on same date. Thus, period of audit was spread over span of 180 days from 7-5-1999. In normal circumstance, block assessment should have been completed by 20-11-1999. However, considering Explanation (1) of section 158BE, period gets extended up to 31-5-2000.' 6. Challenging very legality of block assessment, assessee approached first appellate authority. CIT(A) decided this point against assessee and proceeded to decide issue on merit on other points. 7. contention taken before CIT(A) and finding is briefly narrated below:- first objection of assessee was that assessment order has not been passed within prescribed time limit. Assessing Officer passed order based on appraisal report of ADIT, ignoring evidence produced by assessee, it was contended. It was further contended that block assessment itself is illegal as copy of appraisal report of ADI was not furnished to assessee. Assessee relied upon following decisions in support of above contention:- (1) Sirpur Paper Mill Ltd. v. CWT [1970] 77 ITR 6 (SC). (2) Jeewanlal (1929) Ltd. v. Addl. CIT [1977] 108 ITR 407 (Cal.). (3) Smt. Rajeshwari Birla v. WTO [1979] 119 ITR 629 (Cal.). (4) CIT v. T.R. Rajakumari [1974] 96 ITR 78 (Mad.). (5) Sheo Narain Jaiswal v. ITO [1989] 176 ITR 352 (Pat.). (6) ITO v. Eastern Scales (P.) Ltd. [1978] 115 ITR 323 (Cal.). (7) T.S. Kumarasamy v. Asstt. CIT [1998] 65 ITD 188 (Mad.). (8) Peerless General Finance & Investment Co. Ltd. v. Dy. CIT [1999] 236 ITR 671 (Cal.). 8. CIT(A), however, did not accept assessee's contention. He held that Assessing Officer has offered sufficient opportunity to assessee of being heard and considered all evidences and materials found during course of action under section 132. Assessment order, CIT(A) held, is not based on appraisal report of ADI. Appraisal report, CIT(A) held, is not essentially to be supplied to assessee as it is confidential document. He further held that Assessing Officer applied his mind while invoking provisions of section 142(2A), i.e., special audit. Assessing Officer has taken prior permission of CIT while referring matter for special audit. Since special audit was done in accordance with law, CIT(A) held, assessment was completed within time prescribed under section 158BE of Act. Aggrieved by above order, assessee is in appeal before Tribunal. 9. Since this is jurisdictional ground, we proceed to decide issue first. 10. Learned counsel for assessee especially brought our attention to Para 3 of assessment order, which is reproduced hereinabove vide Para 5 of o u r order. Learned counsel emphasized on very first sentence of assessment order, which reads: 'as recommended by ADI in his Appraisal Report, audit under section 142(2A) of Income-tax Act, 1961 was got done from M/s. Chokshi & Chokshi, CAs'. Learned counsel submitted, three dates are very crucial to appraise legal implications properly. search commenced on 5-10-1997. Even according to Assessing Officer, in normal circumstances, block assessment should have been completed by 30-11- 1999. However, according to Assessing Officer, considering Explanation 1 to section 158BE, period gets extended up to 31-5-2000. On very same day assessment order was passed. He further submitted, audit ordered under section 142(2A) is improper and it has no legal sanctity. As such, stand of Assessing Officer that he got validly extended time to pass order is incorrect. Learned counsel submitted, Assessing Officer has not passed order directing audit under section 142(2A). He merely endorses recommendation of ADI. ADI is not competent authority to direct audit. Particularly he brought our attention to letter dated 25-2-1999 of Assessing Officer addressed to CIT, with regard to audit under section 142(2A). First he reproduced material portion of appraisal report in this letter, which reads as under:- 'In fact, all business activities are being undertaken without keeping any sort of records except rough accounts in diaries and loose papers. It is suggested, therefore, that Assessing Officer may get statutory audit done under section 144A before completing assessments of family members.' After reproducing above vide Para 3 of his letter, Assessing Officer requests CIT: 'the proposal of ADI in appraisal report mentioned hereinbefore for getting accounts of assessee audited under section 142(2A) of Income-tax Act, 1961 may be approved and also reputed firm of Chartered Accountants may be assigned job of completing audit under section 142(2A) of Income-tax Act, 1961'. Learned counsel submitted, Assessing Officer in fact is forwarding recommendation of ADI and he is not applying his mind at any time of proceedings before him as contemplated under sub-section (2A) of section 142. Hence, learned counsel submitted, finding of CIT(A) that Assessing Officer gets extended time to pass block assessment order, is devoid of merit. Learned counsel also relied upon following decisions:- (1) Jeewanlal (1929) Ltd.'s case (supra) (2) Smt. Rajeshwari Birla's case (supra) (3) T.R. Rajakumari's case (supra) (4) CIT v. Smt. Nagarathnamma [1970] 76 ITR 352 (Mys.). 11. On other hand, learned Departmental Representative supported order of CIT(A). Learned DR submitted that Assessing Officer applied h i s mind and he has gone through letter of ADI. Assessing Officer recommended audit under section 142(2A) after applying his mind. Mere quoting of some portion of letter of ADI does not mean that Assessing Officer had not applied his mind. In view of above, learned DR submitted, contention of assessee on this point is liable to be rejected. 12. Considering rival submissions, going through decisions relied upon by assessee and relevant sections, we are of view that order of Assessing Officer is beyond time as contemplated under section 158BE. 13. Section 142(2A) reads as under:- '142(2A). If, at any stage of proceedings before him, Assessing Officer, having regard to nature and complexity of accounts of assessee and interests of revenue, is of opinion that it is necessary so to do, he may, with previous approval of Chief Commissioner or Commissioner, direct assessee to get accounts audited by accountant, as defined in Explanation below sub-section (2) of section 288, nominated by Chief Commissioner or Commissioner in this behalf and to furnish report of such audit in prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as Assessing Officer may require.' Reading of above section makes it clear that recommendation should come from Assessing Officer. wording 'if, at any stage of proceedings before him, Assessing Officer, having regard to nature and complexity of accounts of assessee and interests of revenue, is of opinion that it is necessary to do so' clearly indicates that initiation has to come from Assessing Officer while at some stage of assessment proceedings. He has to form opinion having regard to nature and complexity of accounts and also keeping in mind interests of revenue that special audit is required. If he comes to such opinion, then he has to seek previous approval of CCIT or CIT to get accounts audited. 14. In instant case of assessee, it is clear that initiation was done by ADI. Assessing Officer is merely endorsing above letter. It is all more clear from Para 3 of letter dated 25-2-1999 from Assessing Officer to CIT, which has been reproduced below:- '3. It is, therefore, requested that proposal of ADI in appraisal report mentioned herein before for getting accounts of assessee audited under section 142(2A) of Income-tax Act, 1961 may be approved and also reputed firm of Chartered Accountants may be assigned job of completing audit under section 142(2A) of Income-tax Act, 1961.' [Emphasis supplied] underlined portion of letter of Assessing Officer makes it very clear that he is requesting CIT to accept proposal of ADI in appraisal report. Assessing Officer is not applying his mind. He is not making recommendation after application of his mind with regard to nature and complexity of accounts of assessee in interests of revenue. In fact, only ADI had applied his mind with regard to nature and complexity of accounts of assessee. Assessing Officer's opinion cannot be substituted by another Officer's opinion. 15. Hence, we are of view that finding of CIT(A) that assessment order was passed within time, is finding devoid of merit. order should have been passed by Assessing Officer on or before 30-11-1999 as he himself has held that in normal circumstances that was last date for passing order. appeal by assessee on this ground is allowed. 16. Consequently, it is not necessary for us to decide other grounds on merit since we have already held that assessment order passed by Assessing Officer is beyond time. IT (SS) No: 294/Mum./2001 17. grounds urged by revenue read as under:- ' (1) learned CIT(A) erred in law and fact in deleting addition of Rs. 60,000 out of Rs. 1,80,000 being unexplained cash gift added under section 68 during assessment years 1993-94 and 1994-95 for block assessment year holding that in view of family of close relative and source of income it can b e reasonably held that donors were capable gifting Rs. 10,000 each to assessee, ignoring that donors had no capacity to make gift. (2) CIT(A) has erred in setting aside addition of Rs. 21,64,784 being addition on account of sale of development rights to M/s. Atul Construction and Housing Pvt. Ltd. and directing Assessing Officer to examine claim o f assessee incurring expenditure on acquisition and improvement of land after verification, ignoring that there was no obligation cast on assessee to incur such expenditure in view of fact that as per agreement entered into by assessee with M/s. Atul Construction and Housing Pvt. Ltd. there is no stipulation that assessee should fill land in question and no proof to this was adduced before Assessing Officer in assessment proceedings. (3) learned CIT(A) erred in law and fact in holding that surplus gained by assessee by sale of two plots has to be assessed under head 'Capital gains' on ground that assessee has purchased land in 1987 and sold it in 1993 after gap of 5 or 6 years ignoring that land is developed by company in which assessee is Director and in ignoring that assessee has not only purchased land measuring 5112.25 sq. yds. but also purchased another land measuring 3810 sq. yds. from Krishna Rama Patil and other and also ignoring that land purchased is developed and converted into plots.' 18. Since we have already held that assessment itself is without jurisdiction, revenue's appeal is liable to be dismissed. It is dismissed. 19. In result, appeal by assessee stands allowed and appeal by revenue stands dismissed. *** RAJENDRA C. SINGH v. JOINT COMMISSIONER OF INCOME TAX