P.K. Tiwari, New Delhi V. ACIT, New Delhi

CO 260/DEL/2010

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3696 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 7 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 20-07-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 23-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Deemed to accrue or arise in india; Deemed dividend; Reason to believe; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2903/DEL /2010 ASSESSMENT YEAR: 2001-02 ACIT, CIRCLE 3(1), NEW DELHI. VS SHRI P.K. TIWARI, C-67, FRIENDS COLONY (EAST), NEW DELHI. (PAN: AAGPT4272N) (APPELLANT) (RESPONDENT) C.O. NO. 260/DEL/2010 (IN ITA NO. 2903/DEL /2010) ASSESSMENT YEAR: 2001-02 SHRI P.K. TIWARI, C-67, FRIENDS COLONY (EAST), NEW DELHI. (PAN: AAGPT4272N) VS ACIT, CIRCLE 3(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATIQ AHMAD, SR. DR RESPONDENT BY: NONE DATE OF HEARING: 15.01.2018 DATE OF PRONOUNCEMENT : 06.04.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AG AINST THE ORDER DATED 31.03.2010 PASSED BY THE LD. COMMIS SIONER OF ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 2 INCOME TAX (APPEALS)-IV {CIT (A)}, NEW DELHI WHEREI N VIDE THE IMPUGNED ORDER, THE LD. COMMISSIONER OF INCOME TAX (A) HAS PARTLY ALLOWED THE ASSESSEES APPEAL AND HAS QUASHE D THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER (AO) U/S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CA LLED 'THE ACT'). THE CROSS OBJECTION (CO) HAS BEEN FILED BY THE ASSE SSEE AND CHALLENGES UPHOLDING OF CERTAIN ADDITIONS BY THE LD . COMMISSIONER OF INCOME TAX (A). 2. THE FACTS, IN BRIEF, THAT THE ORIGINAL RETURN WA S FILED DECLARING AN INCOME OF RS. 14,40,000/- ON 28.03.200 2. NOTICE U/S 148 OF THE ACT WAS ISSUED ON 26.04.2005 AND IN REPLY THEREOF, THE ASSESSEE SUBMITTED THAT THE ORIGINAL R ETURN FILED MAY BE TREATED AS RETURN FILED U/S 148. THE REASON FOR RE-OPENING WAS THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAD SOLD SHARES AMOUNTING TO RS. 1 CRORE AND THE ASSESSEE HA D ALSO RECEIVED AN AMOUNT OF RS. 60 LAKH AS LOAN FROM M/S THIRD EYE COMMUNICATION PVT. LTD. HOWEVER, THE REASSESSMENT P ROCEEDINGS WERE COMPLETED AT AN INCOME OF RS. 21,90,000/- VIDE ORDER DATED 10.06.2005 AFTER MAKING AN ADDITION OF RS. 2,50,000 /- UNDER THE HEAD INCOME FROM OTHER SOURCES AND ANOTHER ADDITI ON OF RS. ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 3 5,00,000/- ON ACCOUNT OF EXPENSES ALLEGED TO HAVE B EEN INCURRED OVER AND ABOVE THE AVAILABLE CASH. 2.1 SUBSEQUENT TO THE PASSING OF THE REASSESSMENT O RDER, THE ASSESSING OFFICER NOTED THAT DURING THE REASSESSMEN T PROCEEDINGS IN THE CASE OF ASSESSEE FOR THE ASSESSM ENT YEAR 2002-03, THE TOTAL EQUITY SHARES IN THE COMPANIES H ELD BY THE ASSESSEE WERE EXAMINED AND BASED ON THE DECLARATION OF THE SHARES BY THE ASSESSEE, SOME DISCREPANCY WAS OBSERV ED AND, THEREFORE, ANOTHER NOTICE U/S 148 OF THE ACT WAS IS SUED. THEREAFTER, THE REASSESSMENT WAS COMPLETED AT AN IN COME OF RS. 96,99,370/- AFTER MAKING AN ADDITION OF RS. 70,77,0 00/- AS DEEMED INCOME U/S 69B AND AN ADDITION OF RS. 4,32,3 74/- AS DEEMED DIVIDEND. 2.2 AGGRIEVED, THE ASSESSEE APPROACHED THE FIRST AP PELLATE AUTHORITY AND CHALLENGED THE INITIATION OF THE REAS SESSMENT PROCEEDINGS FOR THE SECOND TIME. THE ASSESSEE ALSO CHALLENGED THE ADDITION ON MERITS. THE LD. COMMISSIONER OF IN COME TAX (A) HELD THE REASSESSMENT PROCEEDINGS TO BE INVALID AND ANNULLED THE REASSESSMENT. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX (A) DELETED THE ADDITION OF RS. 70,77,000/- ON ACCO UNT OF ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 4 UNEXPLAINED INVESTMENT TREATED AS DEEMED INCOME U/S 69B OF THE ACT BUT RETAINED THE ADDITION OF RS. 7,50,000/- ON ACCOUNT OF UNACCOUNTED INCOME UNDER THE HEAD INCOME FROM OTHE R SOURCES/EXPENSES ALLEGED TO HAVE BEEN INCURRED OVE R AND ABOVE THE CASH AVAILABLE. THE LD. COMMISSIONER OF INCOME TAX (A) ALSO UPHELD THE ADDITION OF RS. 4,23,374 MADE U/S 2(22)( E) OF THE ACT. 2.3 NOW, AGGRIEVED THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL (ITAT) AND THE ASSESSEE HAS PREFERRED THE CO. 2.4 THE GROUNDS RAISED BY DEPARTMENT ARE AS UNDER:- THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT REOPENING OF TH E CASE U/S 147/148 WAS NOT JUSTIFIED AND QUASHING THE ASSESSMENT PARTICULARLY IN VIEW OF THE DECISION OF THE HONBLE DELHI IN THE CASE OF SHRI RAKESH AGGARWAL V S. ACIT(225 ITR 496} 2. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS.70,77,0 00/- AS UNEXPLAINED INVESTMENT TREATED AS DEEMED INCOME U/S 69B OF THE L.T.ACT, 1961. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2.5 THE GROUNDS RAISED IN THE CO ARE AS UNDER: 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT REOPENING OF THE CASE U/S 147/148 WAS NOT JUS TIFIED ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 5 IN QUASHING THE ASSESSMENT PARTICULARLY IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF SHRI RAKESH AGGARWAL VS. ACIT(225 ITR 496). 2. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS.7077000/- AS UNEXPLAINED INVESTMENT TREATED AS DEEMED INCOME U/S 69B OF THE I.T.ACT, 19 61. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE/RESPO NDENT WHEN THE APPEAL WAS CALLED OUT FOR HEARING. A PERU SAL OF THE ORDER SHEET ENTRIES SHOWS THAT THIS APPEAL WAS LIST ED FOR HEARING FOR THE FIRST TIME ON 11.8.2010 AND AN ADJOURNMENT WAS SOUGHT BY THE THEN LD. AUTHORISED REPRESENTATIVE (AR). SU BSEQUENTLY, THE APPEAL WAS ADJOURNED ON 23.11.2011, 9.10.2012, 12.6.2013 AT THE REQUEST OF THE THEN LD. AR FOR THE ASSESSEE. SUBSEQUENTLY, ON 21.10.2014, THE LD. AR WITHDREW HIS POWER OF ATT ORNEY AND THE CASE WAS ADJOURNED WITH THE DIRECTION TO THE DE PARTMENT TO SERVE THE NOTICE ON THE ASSESSEE THROUGH ITS GOOD O FFICES. THEREAFTER, FROM 26.3.2015 TILL TODAY, THE CASE WAS ADJOURNED ON EIGHT OCCASIONS AND THE ASSESSEE/RESPONDENT WAS NOT REPRESENTED ON ANY OCCASION. DIRECTION WAS AGAIN G IVEN TO THE DEPARTMENT TO GET THE NOTICE SERVED AND, VIDE LETTE R DATED 11.07.2017, THE DCIT CIRCLE 3(1), NEW DELHI HAS INF ORMED THE ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 6 REGISTRAR OF THE ITAT THAT THE NOTICE HAD BEEN AFFI XED AT THE ADDRESS OF THE ASSESSEE AS AVAILABLE IN THE RECORD OF THE DEPARTMENT AND A COPY OF THE AFFIXTURE REPORT WAS A LSO ENCLOSED ALONG WITH THE LETTER. HOWEVER, NONE IS PRESENT ON BEHALF OF THE ASSESSEE/RESPONDENT EVEN AFTER THE NOTICE WAS SERVE D THROUGH AFFIXTURE. THEREFORE, LOOKING INTO THE SEQUENCE OF EVENTS, IT IS VERY MUCH EVIDENT THAT THE ASSESSEE IS NOT INTERESTED IN CONTESTING THE APPEAL FILED BY THE DEPARTMENT AND IS ALSO NOT INTE RESTED IN PROSECUTING THE CROSS OBJECTION FILED BY HIM. THER EFORE, IN LIGHT OF THE CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO P ROCEED EX PARTE QUA THE ASSESSEE/RESPONDENT. 4. THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE (SR. DR) READ OUT RELEVANT PORTIONS FROM THE ASSESSMENT ORDER AND SUBMITTED THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAD ERR ED IN QUASHING THE REASSESSMENT PROCEEDINGS AS THE REOPEN ING WAS VERY MUCH JUSTIFIED ON THE FACTS OF THE CASE WHICH HAD BEEN ELABORATED AT GREAT LENGTH BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE LD. SR. DR FURTHER ARGUED T HAT THE LD. COMMISSIONER OF INCOME TAX (A) HAD ERRED IN DELETIN G THE ADDITION OF RS. 70,77,000/- ADDED TO THE INCOME OF THE ASSESSEE ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 7 AS UNEXPLAINED INVESTMENT WITHOUT CONSIDERING THE R EMAND REPORT OF THE ASSESSING OFFICER IN THIS REGARD. 5. WE HAVE HEARD THE LD. SR. DR AND HAVE ALSO PERUS ED THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE VARIOUS ORDERS PASSED BY THE LOWER AUTHORITIES. AS FAR AS GROUND NO. 1 O F THE DEPARTMENTS APPEAL CHALLENGING THE QUASHING OF REA SSESSMENT PROCEEDINGS IS CONCERNED, IT IS SEEN THAT THE LD. C OMMISSIONER OF INCOME TAX(A) HAS MADE THE FOLLOWING OBSERVATIONS I N RESPECT TO THIS ISSUE ON PAGES 8 AND 9 OF THE IMPUGNED ORDER A ND ARE CONTAINED IN PARAGRAPHS A, B & C. THESE ARE BEING REPRODUCED HEREUNDER FOR READY REFERENCE:- A) ON GOING THROUGH THE ASSESSMENT ORDER IT IS OBSE RVED THAT THE ASSESSING OFFICER HAS STATED THAT FOR ASSE SSMENT YEAR 2001-02 THE TOTAL ISSUED, PAID UP AND SUBSCRIB ED CAPITAL OF THE COMPANY WAS DECLARED ONLY TO THE EXT ENT OF RS.75,00,000/-. THE ASSESSING OFFICER HOWEVER CAME TO THE CONCLUSION THAT ON THE BASIS OF THIS DISCREPANC Y, THERE WAS ADEQUATE REASON TO BELIEVE THAT INCOME CHARGEAB LE TO TAX HAD ESCAPED ASSESSMENT AND ACCORDINGLY ACTION U /S 147/148 WAS JUSTIFIED. THE ASSESSING OFFICER HOWEVE R HAS NOT SPECIFICALLY MENTIONED THE DISCREPANCIES AN D HAS ALSO IGNORED THE FACT THAT THE ASSESSMENT FOR ASSES SMENT YEAR 2001-02 HAD BEEN COMPLETED U/S 148/143(3) OF T HE INCOME TAX ACT. IT IS ALSO PERTINENT TO NOTE THAT D URING THE COURSE OF THE EARLIER ASSESSMENT COMPLETED U/S 148/143(3), THE THEN ASSESSING OFFICER HAD EXAMINED THIS ISSUE RELATING TO THE SHARES HELD BY THE APPELLANT AND HAD ALSO TAKEN THE STATEMENT OF THE BROKER TO WHICH THE SE SHARES HAD BEEN PURCHASED, A COPY OF STATEMENT OF S H. ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 8 DALIP KUMAR SINGHAL WAS ALSO PRODUCED BEFORE ME WHEREIN IT HAS BEEN MENTIONED THAT THE BOOKS OF ACC OUNTS WERE PRODUCED FOR VERIFICATION AND THE ASSESSING OF FICER BY CONSIDERING THE MATTER IN DEPTH. SUBSEQUENT TO T HIS INVESTIGATION ON ENQUIRING THE ASSESSING OFFICER HA D ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND COMPLE TED THE ASSESSMENT U/S 148/143(3). IT IS PERTINENT TO N OTE THAT ON THE SAME ISSUE SINCE A DETAILED ENQUIRY HAD ALSO BEEN CONDUCTED BY THE ASSESSING OFFICER EARLIER AND THERE WAS NO ADDITIONAL INFORMATION OR FRESH FACTS WHICH COULD LEAD THE ASSESSING OFFICER TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THERE DOE S NOT APPEAR TO BE VALID REASON FOR RE-OPENING THE ASSESSMENT U/S 148 ON A SECOND OCCASION ON SIMILAR GROUNDS. B) THE AR HAS ALSO STRONGLY ARGUED ON THE BASIS OF VARIOUS JUDICIAL PRONOUNCEMENTS THAT SINCE THE ASSE SSEE HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR ASSESSMENT AND THE ASSESSING OFFICER HAS NOT BR OUGHT OUT ANY DISCREPANCY FOR INVOKING THE PROVISIONS U/S 148, THIS ACTION OF THE ASSESSING OFFICER DOES NOT APPEA R TO BE JUSTIFIED. THE AR HAS STRONGLY ARGUED THAT EVEN THE PROCEDURE FOLLOWED FOR RE-OPENING OF THE ASSESSMENT HAS NOT BEEN FOLLOWED PROPERLY AND ON INSPECTION IT HAS BEEN FOUND THAT PROPER REASONS HAD NOT BEEN RECORDED AND ADEQUATE MIND HAS NOT BEEN APPLIED BEFORE RE-OPENIN G OF THE ASSESSMENT. THE AR HAS RELIED UPON THE DECISION OF UNITED ELECTRICALS CO. (P) LTD. (DEL) (SUPRA). C) THE AR HAS FURTHER ARGUED THAT THE ASSESSEE HAD RAISED BEYOND THE OBJECTIONS TO THE REASONS RECORDE D BY THE ASSESSING OFFICER, BUT THESE OBJECTIONS HAVE NO T BEEN DISPOSED OF BY THE ASSESSING OFFICER BEFORE PROCEED INGS WITH THE ACTION U/S 147/148 OF THE INCOME TAX ACT. IN THIS REGARD THE AR HAS RELIED UPON THE DECISION OF GKN DRIVESHAFTS (INDIA) LTD. 259 ITR (SC). CONSIDERING THESE STRONG ARGUMENTS OF THE AR OF THE APPELLANT IT IS C LEAR THAT PROPER PROCEDURE HAS ALSO NOT BEEN FOLLOWED BY THE ASSESSING OFFICER BY RECORDING THE REASONS FOR RE-O PENING OF THE ASSESSMENT AND AT THE SAME TIME THE OBJECTIO NS FILED BY THE APPELLANT WITH REGARD TO REASONS FOR R E- ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 9 OPENING U/S 148 HAVE NOT BEEN DISPOSED OF. THE ASSESSING OFFICER HAS NOT LOGICALLY FOLLOWED THE PR OVISIONS OF SECTION 148 OF THE INCOME TAX ACT AND THEREFORE THIS ACTION OF THE ASSESSING OFFICER DESERVES TO BE QUAS HED. 5.1 ON PERUSAL OF ABOVE, IT IS SEEN THAT THE LD. CO MMISSIONER OF INCOME TAX (A) HAS TAKEN DUE NOTE OF THE FACT THAT DURING THE COURSE OF THE FIRST RE-ASSESSMENT COMPLETED U/S 148 /143(3) OF THE INCOME TAX ACT, 1961, THE THEN ASSESSING OFFICE R HAD EXAMINED THIS ISSUE RELATING TO THE SHARES HELD BY THE ASSESSEE AND HAD ALSO RECORDED THE STATEMENT OF THE BROKER T HROUGH WHOM THE SHARES HAD BEEN PURCHASED. IT HAS BEEN FURTHER NOTED BY THE LD. COMMISSIONER OF INCOME TAX (A) THAT SUBSEQUENT TO THE INVESTIGATION, THE ASSESSING OFFICER HAD ACCEPTED T HE CONTENTIONS OF THE ASSESSEE AND HAD COMPLETED THE ASSESSMENT U/ S 148/143(3). IT HAS ALSO BEEN NOTED BY THE LD. CIT (A) THAT THERE WAS NO ADDITIONAL INFORMATION OR FRESH FACTS WHICH COULD LEAD THE ASSESSING OFFICER TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND, THUS, THERE WAS NO VALID RE ASON FOR REOPENING OF THE ASSESSMENT AND THE OBJECTIONS FILE D BY THE ASSESSEE WITH REGARD TO THE REASONS FOR REOPENING W ERE ALSO NOT DISPOSED OF. ALTHOUGH THE LD. SR. DR HAS ASSAILED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A), HE HAS NOT BEEN ABLE TO CONTROVERT THE FINDING OF FACT AS RECORDED BY THE L D. ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 10 COMMISSIONER OF INCOME TAX (A) BY LEADING ANY COGEN T EVIDENCE TO THE CONTRARY. AFTER GOING THROUGH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A), IT IS VERY MUCH APP ARENT THAT THE REOPENING WAS DONE ON THE SAME ISSUE WHICH HAD EARLIER BEEN THOROUGHLY INVESTIGATED BY THE ASSESSING OFFICER AN D NO ADVERSE INFERENCE HAD BEEN DRAWN. THERE IS ALSO NO FRESH M ATERIAL OR ADDITIONAL INFORMATION ON RECORD WHICH COULD LEAD T HE ASSESSING OFFICER TO BELIEVE THAT INCOME CHARGEABLE TO TAX HA D ESCAPED ASSESSMENT. THUS, THERE WAS NO VALID REASON FOR RE OPENING THE ASSESSMENT U/S 148 OF THE ACT ON A SECOND OCCASION ON SIMILAR GROUND. A PERUSAL OF THE SECOND RE-ASSESSMENT ORDE R SHOWS THAT THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY FACTS WHICH WOULD CLEARLY INDICATE THAT THE ASSESSEE HAD NOT DISCLOSE D FULL MATERIAL FACTS ON THE EARLIER OCCASION. THEREFORE, ON OVERA LL FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE FINDI NGS OF THE LD. COMMISSIONER OF INCOME TAX (A), WHICH COULD NOT BE NEGATED BEFORE US, WE ARE INCLINED TO AGREE WITH THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (A) IN QUASHING THE REAS SESSMENT PROCEEDINGS. ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (A) ON THIS ISSUE THAT T HE ACTION OF THE ASSESSING OFFICER WITH REGARD TO THE REOPENING OF THE CASE U/S ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 11 147/148 WAS NOT JUSTIFIED AND THE RE-ASSESSMENT, TH EREFORE, DESERVED TO BE ANNULLED. ACCORDINGLY, WE DISMISS G ROUND NO. 1 RAISED BY THE DEPARTMENT. 5.2 GROUND NO. 2 CHALLENGES THE ACTION OF THE LD. C OMMISSIONER OF INCOME TAX (A) IN DELETING THE ADDITION OF RS. 7 0,77,000/- AS UNEXPLAINED INVESTMENT TREATED AS DEEMED INCOME U/S 69B OF THE ACT. SINCE WE HAVE ALREADY HELD THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (A) IN ANNULLING THE REA SSESSMENT PROCEEDINGS AS VALID, THIS GROUND RAISED BY THE DEP ARTMENT BECOMES IN FRUCTUOUS AND THE SAME IS DISMISSED AS HAVING BECOME IN FRUCTUOUS . 5.3 ACCORDINGLY, THE APPEAL FILED BY THE DEPARTMENT STANDS DISMISSED. 6. THE CO OF THE ASSESSEE CHALLENGES THE UPHOLDING OF ADDITION OF RS. 4,23,334/- IN THE HANDS OF THE ASSESSEE AS D EEMED DIVIDEND U/S 2(22)(E) OF THE ACT. IT IS SEEN THAT THIS ADDITION WAS MADE FOR THE FIRST TIME DURING THE COURSE OF THE SE COND REASSESSMENT PROCEEDINGS WHICH WERE ANNULLED BY THE LD. CIT (A) AND WHICH ANNULMENT, WE HAVE ALREADY HELD TO BE JUS TIFIED. UNDER THE CIRCUMSTANCES, THIS ADDITION DOES NOT HAV E ANY FEET TO ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 12 STAND. ACCORDINGLY, IT IS OUR CONSIDERED OPINION TH AT IN VIEW OF THE REASSESSMENT PROCEEDINGS ITSELF HAVING BEEN ANN ULLED, NO ADDITION EMANATING FROM THIS ORDER COULD BE SUSTAIN ED. ACCORDINGLY, GROUND NOS. 1, 2 AND 3 RAISED BY THE A SSESSEE IN HIS CO ARE ALLOWED. 6.1 GROUND NO. 4 IN THE CO CHALLENGES THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (A) IN UPHOLDING THE TRE ATMENT OF AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES AN D GROUND NO. 5 CHALLENGES THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (A) IN UPHOLDING THE ADDITION OF RS. 5 LAKH ON ACCO UNT OF ALLEGED PERSONAL EXPENSES. IT IS SEEN THAT BOTH THESE ADDI TIONS WERE MADE IN THE ORIGINAL REASSESSMENT ORDER DATED 10.6. 2015 AGAINST WHICH THE ASSESSEE HAD NOT PREFERRED ANY APPEAL BEF ORE THE HIGHER FORUM/S AND THESE ADDITIONS HAVE ATTAINED FI NALITY AS SUCH. DURING THE SECOND REASSESSMENT PROCEEDINGS, THESE ADDITIONS WERE SIMPLY REPEATED. THUS, THESE TWO AD DITIONS DO NOT PERTAIN TO THE SECOND REASSESSMENT PROCEEDINGS BUT TO FIRST REASSESSMENT PROCEEDINGS. HOWEVER, AS PER THE DOCT RINE OF MERGER, THE EARLIER ASSESSMENT ORDER GETS MERGED WI TH THE SUBSEQUENT ASSESSMENT ORDER AND, ACCORDINGLY, THE F IRST ASSESSMENT ORDER DATED 10.06.2005 MERGES WITH THE S ECOND RE- ITA NO. 2903/DEL/2010 CO 260/DEL/2010 ASSESSMENT YEAR 2001-02 13 ASSESSMENT ORDER WHICH HAS BEEN ANNULLED. SINCE THE SECOND REASSESSMENT ORDER HAS BEEN ANNULLED, THE FIRST REA SSESSMENT ORDER DATED 10.06.2005 GETS AND ATTAINS FINALITY. THEREFORE, SINCE THE ASSESSEE HAD EARLIER ACCEPTED THESE TWO ADDITIO NS MADE IN THE FIRST RE-ASSESSMENT ORDER, WE ARE AFRAID WE CAN NOT ADJUDICATE ON THE APPROPRIATENESS OF THESE TWO ADDITIONS AT TH IS STAGE. ACCORDINGLY, WE DISMISS GROUND NOS. 4 AND 5 RAISED BY THE ASSESSEE IN HIS CO. 6.2 THUS, THE CO OF THE ASSESSEE STANDS PARTLY ALLO WED. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT STAN DS DISMISSED WHEREAS CO OF THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6.4.2018. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 6 TH APRIL, 2018 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT 5. DR ASSTT. REGISTRAR