The Income Tax Officer, Amritsar. V. M/s. Sachdeva & sons, Amritsar.

CO 45/ASR/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9322 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-03-2014
• Assessment Year: misc
• Appeal Filed On: 23-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: PADAM BAHL
• Keywords: Business income; Opportunity of being heard; Audit objection; Difference of opinion; Revised return; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 147; 246; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.484(ASR)/2013 ASSESSMENT YEAR:1987-88 PAN : INCOME TAX OFFICER, VS. M/S. SACHDEV & SONS, WARD 5(4), AMRITSAR. 17, CANTT, AMRITSAR. (APPELLANT) (RESPONDENT) C.O.NO.45(ASR)/2013 (ARISING OUT OF I.T.A. NO.484(ASR)/2013) ASSESSMENT YEAR:1987-88 PAN : M/S. SACHDEV & SONS, VS. INCOME TAX OFFICER, 17, CANTT, AMRITSAR. WARD 5(4), AMRITSAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH.AMRIK CHAND, DR ASSESSEE BY:SH.PADAM BAHL, CA DATE OF HEARING: 06/03/2014 DATE OF PRONOUNCEMENT:18/03/2014 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM ORDER OF TH E CIT(A), AMRITSAR, DATED 04.04.2013 FOR THE ASSESSMENT YEAR 1987-88. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION. IN THE APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 2 1. WHETHER THE LD. CIT(A) IS CORRECT IN LAW IN HOL DING THAT THE PENALTY U/S 271(1)(C) IMPOSED BY THE A.O. VIDE ORDE R DATED 20.02.2006 WAS BARRED BY TIME LIMITATION ON THE BAS IS THAT THE RELEVANT ISSUES WERE FINALIZED VIDE ITATS ORDERS P ASSED IN ITA NO.846(ASR)/1993 DATED 20.03.1998. WHEREAS THE ISSU E OF LEGALITY AD VALIDITY OF WHOLE OF THE REASSESSMENT O RDER WAS ACTUALLY FINALIZED BY THE ITAT, ON APPEAL OF THE AS SESSEE, VIDE ITA NO.170(ASR)/2002 DATED 19.09.2005. 2. WHETHER THE LD. CIT(A) IS CORRECT IN LAW IN NOT APPRECIATING THE FACT THAT ONCE THE ASSESSEE HAD CHALLENGED THE LEGA LITY OF ASSESSMENT PROCEEDINGS AS VOID BEING BARRED BY THE LIMITATION, TIME LIMITATION FOR PASSING THE PENALTY ORDER WAS C ORRECTLY TAKEN BY THE AO FROM THE FINALIZATION OF ISSUE OF TIME LI MITATION BY THE ITATS ORDER DATED 19.09.2005. 3. THAT THE APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF APPEAL. 2. IN THE C.O. THE ASSESSEE HAS RAISED FOLLOWING GR OUNDS: 1. THAT THE PENALTY ORDER PASSED BY THE ITO WARD 5 (4) AMRITSAR IS WITHOUT JURISDICTION. 2. THAT BOTH CIT(A) AMRITSAR AND INCOME TAX OFFICER , WARD 5(4), AMRITSAR HAVE FAILED TO APPRECIATE THAT THE CLAIM U /S 80HHC MADE BY ASSESSEE WAS MADE BONAFIDE BASED ON COURT D ECISION AND SAME DID NOT AMOUNT TO CONCEALMENT OF INCOME. 3. THAT BOTH CIT(A) AMRITSAR AND INCOME TAX OFFICER , WARD 5(4), AMRITSAR HAVE GROSSLY ERRED IN NOT FOLLOWING DECISI ONS OF PUNJAB HIGH COURT REPORTED AT 275 ITR 206 (P&H). 3. THE BRIEF FACTS OF THE CASE AS ARISING FROM THE ORDER OF THE LD. CIT(A) ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : 4. BRIEFLY, THE FACTS ARE IN THIS CASE, THE ASSESS EE FIRM DERIVES BUSINESS INCOME BY RUNNING A RICE SHELLER AND FROM EXPORTING OF RICE. ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 3 RETURN DECLARING INCOME OF RS.7,09,080/- WAS FILED ON 31.8.87. REVISED RETURN WAS FILED ON 10.03.88 DECLARING TOTA L INCOME AT RS.1,73,370/- WHICH WAS NECESSITATED TO ENFORCE CLA IM U/S 80HHC AT HIGHER FIGURE. THE ASSESSMENT WAS COMPLETED U/S 143 (1) ON TOTAL INCOME OF RS.1,73,370/- VIDE ORDER DATED 22.4.88. H OWEVER, IT WAS NOTICED BY THE AO THAT IN THIS CASE, FIRSTLY THE DE DUCTION U/S 80HHC HAS BEEN EXCESSIVELY CLAIMED AT RS.26,78,540/- AS A GAINST RS.18,19,410/- AND ALSO DEDUCTION U/S 32AB HAS BEEN WRONGLY BEEN CLAIMED AND ALLOWED ON RENTAL INCOME OF RS.1,07,174 /- ON A/C OF LEASING OF ASSETS AND AS SUCH ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, THUS NOT FORMING PART OF ASSESSEES BUSINESS INCOME, AS THE SAME HAS NOTHING TO DO WITH THE BUSINESS INC OME OF THE ASSESSEE, ON WHICH DEDUCTIONS U/S 32AB/80HHC ARE NO T ADMISSIBLE IN THIS CASE. AFTER CORRECTLY WORKING OUT THE ADMISSIB LE DEDUCTION U/S 32AB AT RS.6,91,986/- AND DEDUCTION U/S 80HHC AT RS .18,91,410/-, RE-ASSESSMENT WAS FINALIZED AND FRAMED DETERMINING NET TAXABLE INCOME AT RS.10,53,935/- BY WORKING OUT DEDUCTIONS U/S 32AB AND U/S 80HHC AS UNDER: DEDUCTION U/S 32AB DEDUCTION U/S 80HHC TOTAL PROFITS 35,67,100 LESS:RENTAL INCOME 1,07,174 BAL.BUSINESS PROFITS 34,59,932 DEC.U/S 32AB @ 20% 6,91,986/- PROFITS X EXPORT TURNOVER/TTO1459932X103651426 197111967 = 1818410 PENALTY PROCEEDINGS U/S 271(1)(C) WERE SEPARATELY I NITIATED ON A/C OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY I SSUANCE OF SHOW CAUSE PENALTY NOTICE U/S 274 R/W SEC. 271 WHICH WAS SERVED ON 12.2.93. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) ON THE ISSUE OF INITIATION OF ACTION U/S 147 & CALCULATION OF DEDUCTION 32AB A ND U/S 80HHC O THE ACT. THE CIT(A) ANNULLED THE REASSESSMENT ORDER ACCEPTING ASSESSEES PLEA THAT THE REASSESSMENT PROCEEDINGS U /S 148 WERE INITIATED DUE TO CHANGE OF OPINION AND NOT BASED ON THE SATISFACTION OF THE AO BUT BASED ON AUDIT OBJECTION. VIDE CONSOLIDATED APPELLATE ORDER DT. 22.3.93 IN BO TH DEPARTMENTALS APPEALS IN ITA NO.S846 & 466(ASR)/1993-94 FOR THE A .Y. 1987-88 & ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 4 1998-89 IN APPELLANTS OWN CASE, THERE WERE TWO ISS UES UNDER ADJUDICATION WITH THE ITAT, AMRITSAR, FIRST ADMISSI BILITY OF DEDUCTION U/S 32AB & 80HHC OF THE RENTAL INCOME AND SECOND IS SUE ABOUT THE VALIDITY OF REASSESSMENT PROCEEDINGS U/S 147(B) OF THE ACT. AS FAR AS THE IST ISSUE IS CONCERNED, THE ITAT BY FOLLOWING T HEIR OWN EARLIER ORDER DT. 17.11.1997 IN ASSESSEES CASE FOR THE A.Y . 1988-89 RESTORED BACK THE MATTER TO THE FILE OF THE AO TO TAKE FRES H ACTION ON THE CLAIM U/S 32AB ON THE RENTAL INCOME. AS FAR AS THE 2 ND ISSUE ABOUT THE VALIDITY OF RE-ASSTT. PROCEEDINGS U/S 147(B) IS CON CERNED, THE ITAT HAVE UPHELD THE AOS ACTION U/S 147(B) BECAUSE ACCO RDING TO THE IT APPELLATE TRIBUNAL, IF THE INCOME HAS BEEN MADE SUB JECT TO EXCESSIVE RELIEF THEN ACCORDING TO EXPLANATION1(C) INCOME WI LL BE DEEMED TO HAVE ESCAPED ASSTT. AND THEREFORE, FOUND NO INFIRMI TY OR ILLEGALITY IN REOPENING THE CASE U/S 147 OF THE ACT. CONSEQUENTLY , THE AO PASSED ASSTT. ORDER DT. 25.01.2001 U/S 143(3)/147 DT. 1.2. 1991 TO THE EFFECT THAT RENTAL INCOME CANNOT PARTAKES THE CHARACTER/ NATURE OF BUSINESS INCOME & CANNOT THEREFORE, BE CONSIDERED FOR CALCU LATING DEDUCTIONS US/ 32AB & 80HHC OF THE ACT. VIDE THIS FRESH ASSTT. ORDER DT. 25.1.01, PENALTY PROCEEDINGS U/S 271(1)(C) WERE SEPARATELY I NITIATED AFRESH. THEREAFTER, FOLLOWING DEVELOPMENT IN THIS CASE TOOK PLACED: ASSESSEES FIRST APPEAL NO.4288/00-01 FOR AY 87-88 BEFOR THE CIT(A) AMRITSAR WAS PARTLY ALLOWED VIDE ORDER DT. 18.02.02 WHEREIN BY FOLLOWING THE BINDING DECISION OF JURISDICTIONAL HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SH. ISHAR DASS MAHAJAN & SONS, REPORTED AT 253 ITR 284(PB.) HELD THAT THE RE NTAL INCOME SHOWN BY THE ASSESSEE IS IN THE NATURE OF BUSINESS INCOME AND THE AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM U/S 32AB 7 80HHC IN RESPECT OF THE RENTAL INCOME. AS REGARDS THE OTHER GROUND INVOLVING ISSUE OF AOS ACTION OF RESTRICTING THE DEDUCTION U /S 80HHC TO RS.18,19,410/- AND ADOPTING THE FIGURE OF TOTAL TUR NOVER AT RS.19,71,11,967/- INSTEAD OF RS.139274148/- IN ORIG INAL ASSTT. ORDER U/S 143(3)/147, IT WAS HELD THAT THE SAME IS NON-E ST AS NEITHER IT AROSE EITHER FROM THE AOS ORDER U/S 143(3) NOR FROM ITAT S ORDER, AS NEITHER THE ISSUE WAS RESTORED BACK TO THE FILE OF THE AO, NOR THE ISSUE WAS DEALT WITH BY THE AO, AS A RESULT. ON THE ISSUE OF VALIDITY OF ACTION TAKEN BY THE AO U/S 147, THE CIT(A), AMRITSAR, HEL D THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY ITAT, AMRITSAR, IN APPE AL ORDER DATED 20.03.1998. ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 5 RELEVANT PARA 7 OF THE CONSOLIDATED APPELLATE ORDER DATED 20.03.1998 OF THE ITAT, ASR FOR THE AYS. 19987-88 & 1988-89 IN DEPARTMENTS APPEAL IN ITA NO.846(ASR)/1993 & ITA NO.466(ASR)/19 94 IN ASSESSEES OWN CASE IS REPRODUCED HEREUNDER: 7. WE ARE, THEREFORE, OF THE OPINION THAT SEC. 147 (B) OF THE ACT IS ATTRACTED TO THE FACTS & CIRCUMSTANCES OF TH E CASE. IN FACT, U/S 147(B) PRIOR TO AMENDMENT THERE WERE STRICT INT ERPRETATION FOR REASONS TO BELIEVE REQUIRED APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IF INCOME HAS BEEN MADE SUBJECT TO EXCESSIVE RELIEF THEN ACCORDING TO EXPLANATION 1(C) , INCOME WILL BE DEEMED TO HAVE ESCAPED THE ASSESSMENT. IN THE CA SE OF THE AMENDED PROVISIONS, EXPLANATION (C)(III) WILL HAVE SUFFICIENT POWER TO THE AO TO INVOKE SECTION 147 OF THE ACT. WE ARE, THEREFORE, OF THE OPINION THAT THERE IS NO INFIRMIT Y OR ILLEGALITY IN REOPENING THE CASE U/S 147 OF THE ACT. HOWEVER, REG ARDING NATURE OF THE RENTAL INCOME, WHETHER SAME IS TO BE TAXED AS INCOME FROM HOUSE PROPERTY OR SAME IS TO BE TAXED A S INCOME FROM BUSINESS, THE MATTER IS REFERRED BACK TO THE F ILE OF THE A.O. TO DECIDE THE NATURE OF THE INCOME, ALLOWABILITY OF CLAIM U/S 32AB & U/S 80HHC OF THE ACT. THE AO WILL ALLOW OPPO RTUNITY OF BEING HEARD TO THE APPELLANT BEFORE DECIDING THE ISSUE IN ACCORDANCE WITH THE LAW. AGAIN WHEN APPEAL WAS FILED BEFORE THE ITAT, AMRITS AR BY THE ASSESSEE ON THE ISSUE OF RESTRICTING THE DEDUCTION U/S 80HHC TO RS.18,19,410/- AND FOR TAKING THE TURNOVER AT RS.19 ,71,11,967/- INSTEAD OF RS.13,92,74,148/-, THE ITAT AMRITSAR VID E ITS ORDER DATED 19.9.2005 HELD THAT THESE ISSUES DID NOT ARISE FROM THE ORDER OF ITAT ON WHICH THE ASSESSMENT WAS RESTORED. AS THE BELATE D MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE AGAINST THE ORDER DATED 20.3.1998 IN ITA NO.846(ASR)/1993 WAS DISMISSED VIDE TRIBUNALS ORDER DATED 21.02.2005 IN MA NO.88(ASR)/2003 FOR THE A.Y. 1987- 88 ON THE GROUND RELATING TO SUSTAINING THE ACTION OF THE AO IN NOT REDUCING THE AMOUNT OF RS.9,41,041/- BEING THE VALUE OF IMPORT L ICENSES FROM THE TOTAL TURNOVER, THE ITAT HELD THAT THE COMPUTATION OF DEDUCTION WAS NOT THE SUBJECT MATTER OF SET ASIDE VIDE ITS ORDER DATED 20.3.1998 AND CONFIRM THE ORDER OF THE CIT(A) WHO HAD DECLINED TO INTERFERE WITH THE ORDER OF THE A.O. ON THIS ISSUE. ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 6 PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE I NITIATED VIDE AOS LETTER DT. 22.11.2005. AFTER GOING THROUGH ASSESSEE S SUBMISSIONS, THE AO CONCLUDED THAT THE ASSESSEE INTENTIONALLY MADE A WRONG CALCULATION OF DEDUCTION ALLOWABLE U/S 80HHC TO EVA DE THE ACTUAL TAX PAYABLE AND BY APPLYING THE RATIO OF JURISDICTIONA L HIGH COURT IN THE CASE OF S.D.RICE MILLS, LEVIED PENALTY @ 300% AT R S.12,04,155/- ON 20.02.2006 CIT(A), AMRITSAR, VIDE ORDER DATED 03.11 .2008 REDUCED THE PENALTY FROM 300% TO 100% OF THE TAX SOUGHT TO BE EVADED. DIS- SATISFIED WITH ORDER OF CIT(A) BATHINDA, THE APPELL ANT WENT IN APPEAL BEFORE THE ITAT, AMRITSAR. THE ITAT, AMRITSAR VIDE ITS ORDER DATED 16.04.2009 SET ASIDE THE ORDER TO THE FILE OF THE C IT(A) FOR PASSING SPEAKING ORDER. 4. BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE SUB MISSIONS, WHICH WERE SENT TO THE AO AND REMAND REPORT OF THE A.O. WAS TAKEN. THE RELEVANT EXTRACT OF AOS REMAND REPORT IS REPRODUCED BY THE LD. CIT(A) AS UNDER: THE MAIN ISSUE TAKEN BY THE ASSESSEE IS THAT THE P ENALTY ORDER U/S 271(1)(C) IS TIME BARRED. THIS IS NOT CORRECT AS PE R RECORD. IN THIS CONNECTION, IT IS SUBMITTED THAT: 1) THAT ASSESSMENT U/S 143(3) R.W.S. 250 OF THE ACT WA S PASSED BY THE TNEN AO VIDE ORDER DT. 25.1.2001. 2) THE ASSESSEE FILED AN APPEAL AGAINST THIS ORDER WIT H THE CIT(A). 3) VIDE ORDER DT. 18.3.2002 IN APPEAL NO.4288/2001, TH E LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4) AGAINST THIS ORDER DATED 18.3.2002, THE ASSESSEE FI LED A MISC. PETITION U/S 154 BEFORE THE AO. HOWEVER, THIS PETIT ION WAS DISMISSED VIDE ORDER DT. 3.7.2008 IN APPEAL NO.A204 /2002-03. 5) THE ITAT VIDE ORDER DATED 19.9.2002. ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 7 FROM THE ABOVE FACT, IT IS CLEAR THAT THEN AO PASSE D ORDER U/S 143(3) /250 OF THE ACT ON 25.1.2001. FIRST APPEAL WAS DECI DED BY THE CIT(A) ON 7.3.2002 AND THE ITAT DISMISSED THE SECOND APPEA L OF THE ASSESSEE VIDE ORDER DATED 19.9.2005. PRIOR TO AMENDMENT, IN THE PROVISIONS OF SECTION 275 OF THE ACT BEFORE 1.6.2003 PENALTY PRO CEEDINGS WERE OUGHT TO BE DECIDED AS UNDER SECTION 275(1)(A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE 8 COMMISSIONER (APPEALS) UNDER SECTION 246 [OR SECTION 246A ] OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 , AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHI CH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPL ETED 83 , OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR C OMMISSIONER, WHICHEVER PERIOD EXPIRES LATER.: IN VIEW OF THE ABOVE PROVISIONS OF SECTION 275 OF T HE I.T.ACT, 1961, THE PENALTY PROCEEDINGS U/S 271(1)(C) HAD NOT BECOME TI ME BARRED. IN THIS CASE, THE ORDER OF THE APPELLATE TRIBUNAL WAS RECEI VED IN THE OFFICE OF THE CIT ON 26.9.2005 AND THE PENALTY PROCEEDINGS HA VE TO BE COMPLETED BY 28.2.2006 I.E. SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS RECEIVED BY THE COMMISSIONER. THE PENALTY ORDER U/S 271(1)(C) WAS PASSED ON 20.3.2006 AND THU S WAS WITHIN THE STIPULATED PERIOD AND HAD NOT TIME BARRED. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE AND REMAND REPORT OF THE AO, CANCELLED THE PENALTY BEIN G TIME BARRED, AS THE DECISION TAKEN BY THE A.O. U/S 271(1)(C) OF THE ACT . THE LD. CIT(A) DID NOT DECIDE THE ISSUE ON MERIT AND HELD THAT THE PENALTY BEING TIME BARRED IS ANNULLED/CANCELLED BEING VOID AB INITIO. ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 8 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , CA ARGUED AND RELIED MAINLY ON THE ORDER OF THE LD. CIT(A) AS REG ARDS TO THE CANCELLATION OF PENALTY BEING TIME BARRED AND PRAYED TO UPHOLD THE ORDER OF THE CIT(A). ALTERNATIVELY, HE ARGUED THAT THE LD. CIT(A) HAS NO T DECIDED THE ISSUE ON MERIT AND IN CASE THE ASSESSEE DOES NOT SUCCEED ON LEGAL ISSUE, THE MATTER MAY BE SET ASIDE TO THE FILE OF THE LD. CIT(A) TO D ECIDE THE ISSUE ON MERIT. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE A.O. PASSED U/S 271(1)(C) OF THE ACT AND THE REMAND REPO RT OF THE A.O. TAKEN BY THE LD. CIT(A) AND IS REPRODUCED HEREINABOVE AND PR AYED TO REVERSE THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ORDER U/S 271(1)(C) OF THE ACT WAS PASSED BY T HE ITO WARD 5(4), AMRITSAR ON 20.02.2006 WHEREAS THE ORDER OF THE ITA T, AMRITSAR BENCH IN THE CASE OF THE ASSESSEE FOR THE IMPUGNED YEAR WAS PASSED IN ITA NO.170(ASR)/2002, VIDE ORDER DATED 19.09.2005, COPY PLACED AT PB 28 TO 34. THE RELEVANT PART OF THE ORDER OF ITAT, AMRITSAR BE NCH IN ITA NO.170(ASR)/2002 DATED 19.09.2005 IN PARA 11 IS REP RODUCED AS UNDER: ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 9 11. HAVING CONSIDERED THE RIVAL CONTENTIONS, WE FI ND NO MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. FROM THE FAC TS DISCUSSED ABOVE, IT IS OBVIOUS THAT THE TRIBUNAL HAD RESTORED THE IS SUES REGARDING DEDUCTIONS U/S 80HHC & 32AB FOR A LIMITED PURPOSE T O SEE WHETHER RENTAL INCOME FORMED PART AND PANEL OF BUSINESS INC OME. THE COMPUTATION OF DEDUCTIONS WAS NOT THE SUBJECT MATTE R OF SET ASIDE PROCEEDING AS THIS WAS NOT RESTORED TO THE FILE OF AO. IT HAS ALREADY BEEN HELD BY THE TRIBUNAL VIDE ITS ORDERS DATED 7.9 .2005 IN ITA NOS. 226 & 138(ASR)/2003 FOR THE A.YS. 1998-99 AND 1989- 90 THAT ONCE THE ORDER IS RESTORED TO THE FILE OF LOWER AUTHORITIES, THE SCOPE OF POWERS OF AO/CIT(A) IS CONFINED ONLY TO THOSE ISSUES WHICH WERE RESTORED BY THE TRIBUNAL. THE AO CANNOT TRAVEL BEYOND THE DIREC TIONS GIVEN BY THE TRIBUNAL. IT IS NOT IN DISPUTE THAT DEDUCTION U/S 8 0HHC WAS COMPUTED IN THE SAME MANNER BY INCLUDING THE VALUE OF IMPORT LICENCES IN THE TOTAL TURNOVER AT THE TIME OF COMPLETING THE FIRST REOPENED ASSESSMENT. THEREFORE, THE CAUSE FOR ACTION AROSE IN THE FIRST ROUND OF APPEAL AND THE PROPER COURSE OF ACTION WAS TO FILE A MISC. APP LICATION BEFORE THE TRIBUNAL IN TIME OR TO TAKE THE MATTER IN APPEAL BE FORE THE HIGH COURT. SINCE THERE WAS NO DIRECTIONS GIVEN BY THE TRIBUNAL WHILE SETTING ASIDE THE ASSESSMENT, THE LD. CIT(A) RIGHTLY DECLIN ED TO INTERFERE WITH THE ORDER OF THE A.O. ON THE ISSUE. WE CONFIRM HIS ORDER AND REJECT THIS GROUND OF APPEAL. 8.1. FROM THE PERUSAL OF THE SAID ORDER OF THE TRIB UNAL DATED 19.09.2005, THERE CANNOT BE ANY DISPUTE THAT THE MATTER RELATIN G TO DEDUCTION U/S 80HHC HAS BEEN CONCLUDED ORDER DATED 19.09.2005 OF THE TR IBUNAL AND NOT VIDE ORDER DATED 20.03.1998 PLACED AT PB 13 TO 16 WHERE THE MATTER WAS RESTORED BACK TO THE FILE OF THE A.O. TO DECIDE THE NATURE O F INCOME AND CONSEQUENTLY, THE EFFECT OF THE NATURE OF INCOME ON ALLOWABILITY OF CLAIM UNDER SECTIONS 32AB & 80HHC OF THE ACT AND ACCORDINGLY, AO PASSED THE ORDER IN VIEW OF THE ORDER OF THE TRIBUNAL DATED 20.03.1998 AND THE MATTER WAS TRAVELED TO THE ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 10 TRIBUNAL IN THE SECOND ROUND, WHICH ORDER PASSED BY THE TRIBUNAL VIDE ITS ORDER DATED 19.09.2005 IN ITA NO.170(ASR)/2002 AND THE RELEVANT PART OF THE SAME HAS BEEN REPRODUCED HEREINABOVE.. THEREFORE, T HE LD. CIT(A) IS NOT JUSTIFIED IN TAKING THE FIRST ORDER DATED 20.03.199 8 AS THE FINAL ORDER. BUT IN FACT, IT IS THE ORDER DATED 19.09.2005 PASSED BY TH E TRIBUNAL IN ITA NO.170(ASR)/2002 WHICH HAS DECIDED THE ISSUE U/S 80 HHC OF THE ACT AND THEREFORE, THE PENALTY PROCEEDINGS U/S 275(1)(A) OF THE ACT, HAS TO BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR I.E. UPTO 31.03.2006 AND PENALTY ORDER HAS BEEN PASSED ON 20.02.2006, WHICH IS VERY MUCH W ITHIN THE LIMITATION AS PRESCRIBED UNDER SECTION 275(1)(A) OF THE ACT. THER EFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE A.O. WHICH IS WELL W ITHIN THE TIME. ACCORDINGLY, THE LD. CIT(A) IS NOT JUSTIFIED IN ANN ULLING OR CANCELING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, PASSED BY T HE AO. THE LD. CIT(A) IS FURTHER NOT JUSTIFIED IN TREATING THE ORDER OF THE AO AS VOID AB INITIO. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS REVERS ED AND THAT OF THE A.O. IS RESTORED. 8.2. FURTHER, THE LD. CIT(A) HAS NOT DECIDED THE IS SUE ON MERIT AND THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER I S SET ASIDE TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTIONS TO DECIDE THE ISSUE ON M ERIT AFTER PROVIDING ITA NO.484(ASR)/2013 CO NO.45(ASR)/2013 11 ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ACCORDINGLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PU RPOSES AND C.O. OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.484(ASR)/2013 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND C.O.NO. 45(ASR)/2013 OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH MARCH, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18TH MARCH, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SACHDEVA & SONS, AMRITSAR. 2. THE ITO WARD 5(4), ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR