The Salem Starch & Sago Manufacuturers', Salem V. ACIT, Salem

ITA 1126/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0740 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-02-2013
• Assessment Year: misc
• Appeal Filed On: 22-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T VASUDEVAN
• Keywords: Opportunity of being heard
• Section: 143(3); 263; 63

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NOS.1126, 1127, 1128, 1129 AND 1130/MDS/2012 ASSESSMENT YEARS : 1988-89, 2004-05, 05-06, 07-08 A ND 08-09 THE SALEM STARCH & SAGO MANUFACTURERS SERVICE INDUSTRIAL CO-OPERATIVE SOCIETY LTD., JAGIRAMMAPALAYAM, OMALUR MAIN ROAD, SALEM 636 302. [PAN:AAAAS2151B] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL.CIT DATE OF HEARING : 07.02.2013 DATE OF PRONOUNCEMENT : 14.02.2013 ORDER PER BENCH THESE FIVE APPEALS PERTAINING TO SAME ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOM E TAX, SALEM DATED 30.03.2012 IN C.NO.9544/1 TO 5)/2011-2012/SLM FOR T HE ASSESSMENT YEARS 1988-99, 2004-05, 05-06, 07-08 AND 08-09 RESPECTIVE LY; PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 1961 [IN SHORT TH E ACT]. SINCE THE ISSUES INVOLVED ARE IDENTICAL IN ALL CASES, WE TAKE UP I.T .A. NO. 1126/MDS/2012 AS THE LEAD CASE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 2 2. FACTS APROPOS ARE THAT THE ASSESSEE IS AN INDUS TRIAL COOPERATIVE SOCIETY WITHIN THE MEANING OF THE TAMIL NADU COOPER ATIVE SOCIETIES RULES, 1988 FRAMED UNDER THE TAMIL NADU COOPERATIVE SOCIET IES ACT 53 OF 1961. THE DEPUTY DIRECTOR OF INDUSTRIES AND COMMERCE (IND USTRIAL COOPERATIVES) ISSUED A REGISTRATION CERTIFICATE TO THE ASSESSEE O N 21.07.1981. AS PER THE RECORDS AVAILABLE BEFORE US, AN INDUSTRIAL SOCIET Y UNDER THE PROVISIONS OF TAMIL NADU COOPERATIVE SOCIETIES RULE, 1988, IS THE ONE WHOSE PRINCIPLE OBJECT IS PRODUCTION OF ARTICLES OR FINISHED GOODS THROUGH OR WITH THE HELP OF ITS MEMBERS. BOTH PARTIES HAVE POINTED OUT BEFORE U S THAT AFTER REGISTRATION/CERTIFICATION TILL THE IMPUGNED ASSESS MENT YEAR 1988-89, IT DID NOT DISCLOSE ANY PROFIT. THEREFORE, THE IMPUGNED ASSESS MENT YEAR IS THE FIRST YEAR OF ASSESSEES SHOWING PROFIT, WHICH HAS CULMIN ATED TO THE INSTANT PROCEEDINGS. 3. ON 31.03.1989, THE ASSESSEE HAD FILED ITS RETU RN DISCLOSING INTEREST INCOME FROM ITS MEMBERS AND MERCHANTS TO THE TUNE O F ` .59,38,770/-. IT HAD SOUGHT SET OFF OF INTEREST PAYMENT TO BANK AND GOVE RNMENT AS ` .35,64,246/- AND CLAIMED EXEMPTION FOR THE BALANCE AMOUNT OF ` .23,74,524/-. QUA THIS AMOUNT, IT PRAYED FOR DEDUCTION UNDER SECTION 80P(2 )(A)(I) OF THE ACT BY PLEADING THAT ITS BUSINESS WAS OF PROVIDING BANKING AND CREDIT FACILITIES TO ITS MEMBERS. SIMILARLY, IN ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD ALSO RAISED CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) O F THE ACT QUA INCOME BY I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 3 WAY OF INTEREST DERIVED BY A COOPERATIVE SOCIETY AN D RE ITS INVESTMENT WITH OTHER COOPERATIVE SOCIETY; THE WHOLE OF SUCH INCOME . PER ASSESSEE, THE SAID INCOME HAD BEEN DERIVED FROM LETTING OFF ITS GODOWN , WAREHOUSES AS WELL AS SERVICE CHARGES FROM ITS MEMBERS IN LIEU OF USAGE O F GODOWN. THE PAPER BOOKS FILED BY THE ASSESSEE AND REVENUE BEFORE US R EVEAL THAT THIS IS SECOND ROUND OF LITIGATION. IN THE FIRST ROUND, THE ASSESSMENT REACHED UPTO THE TRIBUNAL [ASSESSEES APPEAL] WHICH WAS DECIDE D ON 12.06.2001 AS UNDER: 4. FOR THE ASSESSMENT YEAR 1988-89 THERE ARE TWO ISSUES WITH REFERENCE TO DEDUCTION UNDER SEC. 80P OF THE ACT. T HE FIRST OF THE ISSUES REFERS TO CLAIM OF DEDUCTION UNDER SEC.80P(2) (A) ( I) OF THE ACT. THIS RELATES TO INCOME OF CO-OPERATIVE SOCIETIES THAT IS ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACI LITIES TO ITS MEMBERS. THE CLAIM OF THE ASSESSEE IS WITH REFERENCE TO THE EXTENT OF DEDUCTION PERMISSIBLE TO IT. THE INTEREST THAT THE ASSESSEE E ARNED WARE FROM MEMBERS AND FROM MERCHANTS. THE TOTAL OF SUCH AMOUN T WAS RS. 59,38,770. THE ASSESSEE SOUGHT SET OFF OF INTEREST PAYMENTS TO BANKS AND GOVERNMENT TO THE TUNE OF RS. 35,64,246 AND CLAIMED EXEMPTION OF THE NET AMOUNT OF RS.23,74,524. THE CIT(A) NOTED THAT T HE INTEREST WAS RECEIVED FROM MEMBERS AND FROM MERCHANTS. WITH REFE RENCE TO THE INTEREST THAT WAS RECEIVED FROM MERCHANTS THE CIT(A ) NOTED THAT THE ASSESSEE SOCIETY IN ADDITION TO PROVIDING FINANCE F ACILITIES ALSO ARRANGES SALE OF GOODS BELONGING TO ITS MEMBERS ON THE PLEDG E OF SAGO AND STARCH THAT ARE DEPOSITED BY ITS MEMBERS IN ITS GODOWN. TH E ASSESSEE CLAIMS THAT THESE LOANS ARE IN THE NATURE OF SIMPLE CASH C REDITS. IN ADDITION TO PROVIDING THESE FACILITIES THE ASSESSEE ALSO ARRANG ES SALE OR GOODS OWNED BY THE MEMBERS TO THE MERCHANTS. THOUGH THE C ONTRACT IS BETWEEN THE MEMBERS AND THE MERCHANTS, ON FAILURE OF THE ME RCHANTS TO REPAY SALE AMOUNTS WITHIN THE STIPULATED DATE THE, ASSESS EE RECOVERS INTEREST AT A RATE THAT IS MORE THAN WHAT IS GIVEN TO THE MEMBE R BECAUSE THE ENTIRE TRANSACTIONS ARE ROUTED THROUGH THE SOCIETY. HOWEVE R, THE CIT(A) HAS NOTED THAT THESE ARE RECOVERIES FROM THE MERCHANTS. HE ACCORDINGLY REFUSED TO TREAT IT AS INTEREST EARNED FROM THE MEM BERS. IN OUR VIEW THIS REQUIRED EXAMINATION OF THE FACTS BECAUSE THERE ARE CONTRADICTIONS BETWEEN WHAT THE ASSESSEE SAYS AND WHAT IS OBSERVED BY THE CIT(A). IN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 4 THE EVENT OF WHAT THE ASSESSEE CLAIMS IS CORRECT TH AT IT IS ONLY TO FACILITATE ITS MEMBERS THAT THE TRANSACTIONS ARE ROUTED THROUG H THE SOCIETY AND THAT IT IS ON BEHALF OF THE MEMBERS THAT THE RESPONSIBIL ITY IS TAKEN BY THE SOCIETY, THERE IS SOME JUSTIFICATION IN THE CLAIM M ADE BY THE ASSESSEE. WE, THEREFORE, REMAND THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, FOR FRESH EXAMINATION OF THESE FACTS AFTER GIVING T HE ASSESSEE SUFFICIENT OPPORTUNITY OF BEING HEARD. 5. IN REGARD TO THE SECOND ITEM, THE DEDUCTION THA T IS CLAIMED IS WITH REFERENCE TO SECTION 80P(2)(E),WHICH IS INCOME DERI VED BY THE CO- OPERATIVE SOCIETY FROM THE LETTING OF GODOWNS, WARE HOUSES ETC. THE ASSESSEE IN ADDITION TO LETTING OUT GODOWNS HAS STA TED THAT IT RECEIVED SERVICE CHARGES FROM THE MEMBERS FOR THE USE OF GOD OWNS. THIS APPARENTLY IS INDICATIVE THAT THE ASSESSEE HAS PROV IDED OR IS HAVING FACILITY OF SOME LABOUR FOR THE LOADING, UNLOADING MOVEMENT OF GOODS OUT OF THE GODOWNS TO FACILITATE ITS MEMBERS FOR WH ICH SERVICE CHARGES AT THE RATE OF RS.2.90 PER BAG OR SAGO AND RS.2 PER BA G OF STARCH IS BEING COLLECTED. THIS OBVIOUSLY CANNOT BE EQUAL TO INCOME FROM LETTING OUT GODOWNS. THE CIT(A) JUSTIFIABLY HAS BEEN ABLE TO BR ING ABOUT THE CLEAR FACTS AND WE, THEREFORE, SEE NO REASON TO INTERFERE WITH HIS FINDING ON THIS ISSUE. WE UPHOLD THE SAME. 6. IN THE RESULT THE APPEAL BY THE ASSESSEE FOR TH E ASSESSMENT YEAR 1988-89 IS ALLOWED AND THAT OF THE ASSESSMENT YEAR 1993-94 IS DISMISSED. IN THIS MANNER, THE ISSUE OF DEDUCTION UNDER SECTI ON 80P(2)(A)(I) STOOD RESTORED TO THE ASSESSING OFFICER, WHEREAS, SO FAR AS THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) IS CONCERNED, THE COORDINATE BENCH HELD THAT THE INCOME OF THE ASSESSEE TO THE TUNE OF ` .2.90 PER SAGO AND ` .2.00 PER BAG OF STARCH COULD NOT BE CALLED AS INCOME FRO M LETTING OUT GODOWN. 4. IN CONSEQUENTIAL PROCEEDINGS, WHEN THE ASSESSIN G OFFICER PUT A NOTICE TO THE ASSESSEE, WE FIND THAT IN ITS REPLY, IT CONT ENDED ON 19.10.2010/11.01.2005 THAT ITS NET INCOME FROM THE ACTIVITY OF PROVIDING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 5 CREDIT FACILITIES TO THE MEMBERS WAS OF ` .12,66,014/-. THEREAFTER, THE ASSESSING OFFICER PASSED ASSESSMENT ORDER DATED 28. 12.2010 AND FINALIZED THE ASSESSMENT AS UNDER: THE ABOVE SUBMISSIONS ARE CONSIDERED. ACCORDINGLY, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. THE INCOME IS DETERMINED AS UNDER: TOTAL INCOME AS PER ORDER U/S 143(3) DATED 27.03.19 91 ` .27,30,375 LESS: DEDUCTION U/S 80P(2)(A)(I) RESTRICTED ` .27,30,375 TAXABLE INCOME NIL ___ TAX THEREON NIL 5. AS IT IS EVIDENT FROM THE ORDER UNDER CHALLENGE PASSED BY THE CIT ON 30.03.2012, A NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO THE ASSESSEE TERMING THE ASSESSMENT FINALIZED AS ABOVE CAUSING PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLLOWING REASONS: '......... ON GOING THROUGH THE RECORDS, I FIND THA T THE ASSESSMENT COMPLETED BY THE ASSISTANT COMMISSIONER OF INCOME-T AX, CIRCLE-II SALEM IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTEREST OF REVENUE FOR THE FOLLOWING REASONS:- I. DEDUCTION U/S. 80P(2)(A)(I):- AS PER SECTION 80P(2)( A)(I), THE MAIN ACTIVITY OF THE SOCIETY MUST BE PROVIDING CREDIT FACILITIES TO ITS MEMBERS I.E. PROVIDING LOANS OR OTHER CREDIT FACILITIES 10 MEMBERS. IT DOES NOT INC LUDE ANY SOCIETY WHOSE PRIMARY OBJECT IS SOMETHING OTHER THAN PROVIS ION OF LOANS OR OTHER FACILITIES. HOWEVER, IN THIS CASE, THE OBJECT OF THE ASSESSEE I S MARKETING THE PRODUCE OF ITS MEMBERS (SAGO AND STARCH) AND IN THA T PROCESS, IT ADVANCES LOAN TO AN EXTENT OF 70% OF THE STOCK PLED GED BY A MEMBER FOR SALE TO MERCHANTS SUBSEQUENTLY. IN FACT, PROVIDING CREDIT FACILITIES TO MEMBERS IS INCIDENTAL TO THE S ALE OF THE PRODUCE OF THE MEMBER WHICH IS ALSO CLEAR FROM THE FACT THA T THE INTEREST I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 6 ON THE LOAN IS RECOVERED FROM THE MERCHANT AFTER A CERTAIN PERIOD AND NOT THE MEMBERS ALONE. SO PROVIDING CREDIT FACI LITY IS NOT EVEN AN INDEPENDENT ACTIVITY OF THE ASSESSEE SOCIETY. TH OUGH PROVIDING CREDIT FACILITY IS NOT EVEN AN INDEPENDENT ACTIVITY , THE ASSESSEE SOCIETY HAS OFFERED INCOME AND HAS CLAIMED ENTIRE I NCOME AS DEDUCTION U1S. 80P(2)(A)(I). THE ASSESSING OFFICER HAS NOT LOOKED INTO THIS ASPE CT. II. DEDUCTION U/S. 80P(2)(E):- AS PER SECTION 80P(2)(E), THE WHOLE OF THE INCOME D ERIVED BY A CO- OPERATIVE SOCIETY FROM THE LETTING OF GOD OWNS OR W AREHOUSES FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING O F COMMODITIES IS DEDUCTIBLE U1S. 80(P)(2)(E). HOWEVER, IF THE GOD OWN OR WAREHOUSE IS LET FOR A PURPOSE OTHER THAN STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES, THE INCO ME DERIVED THERE FROM BY A CO-OPERATIVE SOCIETY WOULD NOT BE D EDUCTIBLE U/S.80P. HOWEVER, IN THIS CASE, APART FROM INCOME FROM GOD O WN RENT FROM MEMBERS AND GODOWN RENT FROM TRADERS, THE ASSESSEE HAS ALSO OFFERED INCOME FROM SALE OF WASTE SWEEPING, MARKETI NG CHARGES RECOVERED, WEIGHBRIDGE CHARGES ETC. THE ASSESSEE HA S ALSO CLAIMED DEDUCTION U/S. 80P(2)(E) FOR THE ENTIRE INC OME. THE INCOME DERIVED FROM THE AFORESAID ACTIVITIES DOES N OT RELATE TO STORAGE, PROCESSING OR FACILITATING THE MARKETING O F COMMODITIES. THE ASSESSING OFFICER HAS NOT LOOKED INTO THIS ASPE CT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER HAS NOT MADE EFFORTS TO VERIFY THE AFORESAI D DETAILS. THEREFORE, THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAS COMPLETED THE ASSESSMENT IN A MANNER CONTRARY T O THE PROVISIONS OF LAW. IN THE PROCESS, AN ORDER HAS BEEN PASSED WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. I PROPOSE T O PASS APPROPRIATE ORDER THEREON U/S. 263 AS THE CIRCUMSTANCES OF THE CASE JUSTIFY AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS DEEMED NECESSARY. YOU ARE HEREBY GIVEN AN OPPORTUNITY TO REPRESENT YOUR C ASE AND STATE YOUR OBJECTIONS, IF ANY TO THE PROPOSED ACTION.' 4. THE CASE IS POSTED FOR HEARING ON 27.03.2012 AT 3.00 P.M.. YOU ARE REQUESTED TO APPEAR BEFORE ME ALONG WITH RELEVANT D ETAILS EITHER IN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 7 PERSON OR THROUGH AUTHORISED REPRESENTATIVE ON THE SAID DATE. '.................. 6. IN REPLY, THE ASSESSEE FILED DETAIL SUBMISSIONS DEFENDING THE ASSESSMENT AS WELL AS ITS ENTITLEMENT FOR THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) AS WELL AS 80P(2)(E) OF THE A CT. HOWEVER, VIDE IMPUGNED ORDER, THE CIT HAS DIRECTED THE ASSESSING OFFICER TO PROCEED AFRESH AND RE-FINALIZE THE ASSESSMENT AS UNDER: (A) THOUGH THERE ARE NO PROCEEDINGS PENDING U/S. 2 63 BEFORE THE UNDERSIGNED FOR AYS 1989-90 AND 2003-04, THE COURSE OF EVENTS IN THOSE TWO YEARS IS GIVEN BELOW AS IT HAS A BEARING ON THE PRESENT PROCEEDINGS U/S. 263 FOR OTHER YEARS. THE ASSESSMENT MADE FOR AY 1989-90 IS NOW IN HIGH C OURT AWAITING THE DISPOSAL OF DEPARTMENT'S APPEAL ON ALLOWING THE SE DEDUCTIONS U/S 80P(2)(A)(I) AND 80P(2)(E). THE ASSESSMENT MADE FOR A.Y. 2003-04, HAS BEEN SET ASIDE BY THE HON'BLE HIGH COURT AND THE MATTER HAS BEEN REMITTED BACK TO THE TRIBUNAL FOR FRESH CONSIDERATION FOLLOWING THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS M/S PONNI SUGAR S AND CHEMICALS LTD (306 ITR 392) (B) COMING TO THE PRESENT ASSESSMENT ORDERS UNDER CONSIDERATION, THE HON'BLE ITAT HAD GIVEN CERTAIN SPECIFIC DIRECTI ONS FOR AY 1988-89 AS IT FOUND A VARIATION BETWEEN WHAT THE ASSESSEE W AS CLAIMING AND WHAT THE CIT(A) HAD GIVEN AS A FINDING OF FACTS. TH ESE TWO WERE TO BE RECONCILED. THE AO HOWEVER HAD NOT DONE SO AND HAD SIMPLY TAKEN A NOTE FROM THE ASSESSEE AND HAD ALLOWED THE DEDUCTIO N WITHOUT ACTUALLY VERIFYING AND CARRYING OUT THE DIRECTIONS OF THE IT AT. (C) THE HON'BLE ITAT WHILE DISPOSING THE APPEALS F OR AY 2004-05 AND AY 2005-06 HAD DIRECTED THE AO TO EXAMINE THE M ATTER IN LIGHT OF THE GUIDELINES DIRECTIONS OF THE HON'BLE SUPREME CO URT IN THE CASE OF M/S PONNI SUGARS. THE AO HAD PASSED THE ORDER ALLOW ING THE CLAIM OF DEDUCTIONS IN FULL. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 8 (D) THE ASSESSING OFFICERS THEREAFTER MERELY FOLLO WED THESE ORDERS AND AGAIN ALLOWED THE CLAIMS OF DEDUCTIONS IN FULL FOR A Y 2007-08 AND A Y 2008-09. THERE WAS NO INDEPENDENT APPLICATION O F MIND. 7. THEREFORE, THE ASSESSEE IS IN APPEAL AND ITS GR OUNDS RAISED READ AS FOLLOWS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX PASSED UNDER SEC. 263 OF THE ACT IS OPPOSED TO LAW AND FAC TS OF THE CASE. 2. THE TWIN CONDITIONS REQUIRED FOR INVOKING THE P ROVISIONS OF SEC. 263 OF THE ACT VIZ. (1) THE ORDER OF THE ASSESSING OFFICER SHOULD BE ERRONEOUS AND (2) IT SHOULD ALSO BE PREJUDICIAL TO THE INTERESTS OF REVENUE ARE NOT SATISFIED IN THIS CASE. IN FACT, TH ERE IS NO FINDING EITHER WAY TO THAT EFFECT FOUND IN THE ORDER PASSED UNDER SEC. 263 OF THE ACT. THE NOTICE ISSUED TOO DOES NOT CONTAIN ANY INDEPEND ENT FINDING THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS, ALTHOU GH IT SAYS IT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. 3. THE ISSUE REGARDING EXEMPTION OF INTEREST RECEI VED FROM MEMBERS HAD ALREADY BECOME FINAL AND CANNOT BE CONS IDERED NOW. WITH REGARD TO INTEREST SAID TO BE RECEIVED FROM ME RCHANTS, IT IS ALSO RECEIVED ON BEHALF OF THE MEMBERS AND THE ASSESSING OFFICER PASSED THE PRESENT ASSESSMENT ORDER AFTER DUE SCRUTINY AS PER THE DIRECTIONS OF THE HON'BLE TRIBUNAL AND AFTER CALLING FOR THE DETAILS FROM THE APPELLANT SOCIETY. THIS IS EVIDENT FROM THE AO'S OBSERVATION IN THE ASSESSMENT ORDER THAT 'THE ABOVE SUBMISSIONS ARE CONSIDERED, A CCORDINGLY, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT'. SUCH AN ORDER PASSED AFTER DETAILED SCRUTINY IS NOT AMENABL E TO COMMISSIONER'S JURISDICTION UNDER SEC. 263 OF THE ACT. 4. THE SELF SAME DIRECTIONS WERE ISSUED BY THE INC OME-TAX APPELLATE TRIBUNAL CONSEQUENT TO WHICH THE ASSESSIN G OFFICER HAD PASSED THE ASSESSMENT ORDER. HENCE, THE PRESENT DIR ECTIONS OF THE COMMISSIONER OF INCOMETAX UNDER SEC. 263 OF THE ACT ARE NOT CAPABLE OF BEING CARRIED OUT. 5. THE FACT THAT THE COMMISSIONER HAD MERELY SET A SIDE THE ASSESSMENT ORDER WOULD CLEARLY SHOW THAT THERE WAS NO PREJUDICE TO THE INTEREST OF REVENUE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 9 6. BY SETTING ASIDE THE ASSESSMENT ORDER PASSED AS PER THE DIRECTIONS OF THE HON'BLE INCOMETAX APPELLATE TRIBU NAL, THE LEARNED COMMISSIONER'S ORDER MIGHT UNINTENTIONALLY INFLUENC E THE ASSESSING OFFICER TO TAKE AN ADVERSE DECISION AGAINST THE APP ELLANT AND THIS IS NOT PERMISSIBLE UNDER THE LAW. 7. IT IS WELL SETTLED THAT THE LEARNED COMMISSIONE R OF INCOMETAX CANNOT EXERCISE HIS JURISDICTION UNDER SEC. 263 OF THE ACT MERELY BECAUSE HIS VIEW IS DIFFERENT FROM THAT OF THE ASSE SSING OFFICER. 8. THE LEARNED COMMISSIONER HAD ALSO EXCEEDED HIS JURISDICTION IN DIRECTING THE ASSESSING OFFICER TO COMPLETE THE ASS ESSMENT WITH THE APPROVAL OF THE OF THE ADDL. COMMISSIONER OF LNCOME TAX. 9. FOR THE ABOVE AND SUCH OTHER GROUNDS AS MAY BE ADDUCED WITH THE PERMISSION OF THE HON'BLE TRIBUNAL, IT IS PRAYE D THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX MAY BE CANCELLED AND JUSTICE RENDERED. 8. REITERATING THE GROUNDS ABOVE SAID, THE AR CONT ENDED THAT THE CIT HAS WRONGLY DIRECTED THE ASSESSING OFFICER TO RE-FI NALIZE THE ASSESSMENT WITHOUT ANY FINDINGS THAT THE SAME SUFFERS FROM ERR OR CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. HE HAS ALSO FILED A PAPER BOOK CONTAINING ALL DETAILS AND PRAYS THAT THE ASSESSMENT ORDER HAD BEEN VALIDL Y PASSED, WHICH HAS BEEN WRONGLY SET ASIDE BY THE CIT UNDER SECTION 263 OF THE ACT. ACCORDINGLY HE PRAYS FOR THE ACCEPTANCE OF THE APPE AL. 9. PER CONTRA, THE REVENUE HAS FILED ITS WRITTEN S UBMISSIONS ACCOMPANIED BY A VOLUMINOUS PAPER BOOK. IN THE LIGH T THERE OF, IT CONTENDS THAT SINCE THE ASSESSING OFFICER DID NOT RECORD ANY FINDING OR SATISFACTION QUA ASSESSEES CLAIM, THE CIT HAD RIGHTLY DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT. IN ADDITION TO THIS, IT STRONGLY SU PPORT THE ORDER OF THE CIT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 10 AND PRAYS FOR REJECTION OF APPEAL. 10. WE HAVE HEARD BOTH PARTIES, PERUSED THE ASSESS MENT ORDER, CITS ORDER AS WELL AS PAPER BOOK FILED BY BOTH PARTIES. ADMITTED FACTS ARE THAT AFTER REMAND OF THE ASSESSMENT BY THE TRIBUNAL (S UPRA), THE ASSESSING OFFICER HAS RE-FINALIZED THE ASSESSMENT BY WAY OF O RDER DATED 28.12.2010. IN THE SAID PROCEEDINGS, WE FIND FROM THE RECORD THAT THE ASSESSEE HAD RAISED CLAIM QUA INCOME FROM CREDIT FACILITIES OF ` .12,66,014/-. WHEREAS, IN THE ASSESSMENT ORDER, WITHOUT RECORDING ANY SATISFACTIO N QUA ASSESSEES CLAIM, THE ASSESSING OFFICER RESTRICTED THE DEDUCTION UNDE R SECTION 80P(2)(A)(I) OF THE ACT TO ` .27,30,375/-. AS ALREADY REPRODUCED HEREINABOVE, NE ITHER THERE IS ANY DISCUSSION ON ASSESSING OFFICERS PART WHILS T ENHANCING THE CLAIM OF ASSESSEE FROM ` .12,66,014/- TO ` .27,30,375/- NOR THERE IS ANY REASONING QUA THE ENTITLEMENT OF ASSESSEES CLAIM RAISED UNDER SE CTION 80P(2)(A)(I) OF THE ACT. THIS, IN OUR OPINION IS NOT SUBSTANTIVE COMP LIANCE OF THE ORDER DATED 10.10.2003 (SUPRA) PASSED BY THE COORDINATE BENCH. SO FAR AS ASSESSEES ARGUMENT THAT THE ASSESSING OFFICER HAD FORMED ONE OF THE POSSIBLE OPINION WHICH CANNOT BE SUBJECTED TO RIGOR OF REVISION PROV ISION UNDER SECTION 263 OF THE ACT, WE EXPRESS OUR INABILITY TO CONCUR WITH THE SAME. IN OUR CONSIDERED OPINION, A TOTALLY NON-SPEAKING ASSESSMENT ORDER WI THOUT DISCUSSING THE MATERIAL ON RECORD CAN HARDLY BE CALLED ONE OF THE POSSIBLE OPINION. THEREFORE, IT CAN BE EXIGIBLE TO PROCEEDINGS UNDER SECTION 263 OF THE ACT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 11 WE ARE ALSO AWARE OF LATEST CASE LAW [2012] 343 ITR 329 (DEL), WHEREIN THEIR LORDSHIPS HAVE HELD THAT NO ENQUIRY BY THE ASSESSIN G OFFICER IN ASSESSMENT PROCEEDINGS LEADING TO NON-SPEAKING ASSESSMENT IS I TSELF ERRONEOUS CAUSING PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE DEEM IT PROPER TO REPRODUCE THE RELEVANT PARA OF JUDGMENT AS UNDER: 19. IN THE PRESENT CASE, THE FINDINGS RECORDED BY THE TRIBUNAL ARE CORRECT AS THE CIT HAS NOT GONE INTO AND HAS NOT GI VEN ANY REASON FOR OBSERVING THAT THE ORDER PASSED BY THE ASSESSING OF FICER WAS ERRONEOUS. THE FINDING RECORDED BY THE CIT IS THAT 'ORDER PASSED BY THE ASSESSING OFFICER MAY BE ERRONEOUS'. THE CIT HAD DO UBTS ABOUT THE VALUATION AND SALE CONSIDERATION RECEIVED BUT THE C IT SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AND GIVEN A FINDIN G THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. HE C AME TO THE CONCLUSION AND FINDING THAT THE ASSESSING OFFICER H AD EXAMINED THE SAID ASPECT AND ACCEPTED THE RESPONDENT S COMPUTATI ON FIGURES BUT HE HAD RESERVATIONS. THE CIT IN THE ORDER HAS RECORDED THAT THE CONSIDERATION RECEIVABLE WAS EXAMINED BY THE ASSESS ING OFFICER BUT WAS NOT PROPERLY EXAMINED AND THEREFORE THE ASSESSM ENT ORDER IS 'ERRONEOUS'. THE SAID FINDING WILL BE CORRECT, IF T HE CIT HAD EXAMINED AND VERIFIED THE SAID TRANSACTION HIMSELF AND GIVEN A FINDING ON MERITS. AS HELD ABOVE, A DISTINCTION MUST BE DRAWN IN THE C ASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY; AS L ACK OF ENQUIRY BY ITSELF RENDERS THE ORDER BEING ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE AND CASES WHERE THE ASSESSING OFFICE R CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN LATTER CASES, THE CIT HAS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER ON ME RITS OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON MERITS AND THEN H OLD AND FORM AN OPINION ON MERITS THAT THE ORDER PASSED BY THE ASSE SSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IN THE SECOND SET OF CASES, CIT CANNOT DIRECT THE ASSESSING OFFIC ER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHETHER THE ORDER PA SSED IS ERRONEOUS OR NOT. FURTHER, THE RECORD BEFORE US ALSO CLARIFIES THAT ALL THE ASSESSMENT SINCE 1988-89 ARE STILL PENDING BEFORE THE ASSESSIN G OFFICER IN FURTHERANCE TO I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 12 THE PROCEEDINGS UNDER SECTION 263 AND OTHER ORDERS PASSED BY THE TRIBUNAL PERTAINING TO VARIOUS ASSESSMENT ORDERS. THEREFORE, IN ORDER TO MAINTAIN CONSISTENCY AS WELL FOR THE REASON SAID ABOVE, WE A RE OF THE VIEW THAT THE CIT HAS NOT ERRED IN INVOKING JURISDICTION UNDER SE CTION 263 OF THE ACT. HENCE, WE SEE NO REASON TO INTERFERE. I.T.A. NO. 1127 TO 1128/MDS/2012 11. QUA THESE APPEALS, BOTH PARTIES HAVE EXPRESSED AGREEMENT THAT QUA THE ASSESSMENT YEAR 2004-05 AND 05-06, THE TRIBUNA L IN ASSESSEES APPEAL HAD REMITTED THE MATTER BACK TO THE ASSESSING OFFIC ER TO RE-FINALIZE ASSESSMENT. IN SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER HAS PASSED NON- SPEAKING ORDER IN THIS CASE AS WELL QUA ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) AND 80P(2)(E) OF THE ACT. T HE CIT HAS DIRECTED THE ASSESSING OFFICER TO RE-FINALIZE THE ASSESSMENT. A FTER GOING THROUGH THE CASE, WE FIND THAT THE STATEMENTS ABOVE SAID TO BE ARE CORRECT. ACCORDINGLY, KEEPING IN MIND THE ISSUE INVOLVED AND CONSCIOUS OF THE FACT THAT WHILE ACCEPTING ASSESSEES CLAIM, THE ASSESSING OFFICER N EITHER CONDUCTED ANY DETAILED ENQUIRY NOR HE GAVE ANY REASONING IN THE A SSESSMENT ORDER, WE DO NOT FIND ANY REASON TO INTERFERE WITH CITS ORDER. I.T.A. NO. 1129 TO 1130/MDS/2012 12. IN THESE APPEALS, THE ONLY DIFFERENCE AS POINT ED OUT BY BOTH PARTIES IN THE COURSE OF HEARING IS THAT THE ASSESSMENTS HAVE BEEN FINALIZED UNDER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1126 TO 1130 1126 TO 1130 1126 TO 1130 1126 TO 1130/M/ /M/ /M/ /M/12 1212 12 13 SECTION 143(3) OF THE ACT AND THIS IS FIRST ROUND OF LITIGATION. WE HAVE PERUSED THE ASSESSMENT ORDER AND FIND THAT IN THESE CASES AS WELL, THE ASSESSING OFFICER HAS ACCEPTED ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80P WITHOUT CONDUCTING ANY DETAILED ENQUIRY AND WITHOUT GIVING ANY REASON IN THE ASSESSMENT ORDERS. THEREFORE, IN VIEW OF OUR FINDINGS HEREINABOVE, WE ALSO UPHOLD THE COMMON ORDER OF THE CIT PASSED UNDER SECTION 263 OF THE ACT DIRECTING THE ASSESSING OF FICER TO RE-FINALIZE THE ASSESSMENTS. THEREFORE, THE CITS ORDER IS AFFIRMED . 14. CONSEQUENTLY, THE APPEALS IN I.T.A. NOS. 1126 TO 1130/MDS/2012 FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 14 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 14.02.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.