Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 6900 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-04-2011
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
01-04-2011
Assessment Year
2000-2001
Appeal Filed On
12-05-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1560/AHD/2010 A. Y.: 2000-01 SHRI VIJAY KUMAR GUPTA, 8, PRATIMA SOCIETY, NEAR DADASAHEB NA PAGLA, NAVRANGPURA, AHMEDABAD VS THE COMMISSIONER OF INCOME TAX, CENTRAL-I, AAYAKAR BHAVAN, AHMEDABAD PA NO. AANPG 7703 R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI TUSHAR P. HEMANI, AR RESPONDENT BY SHRI R. K. DHANISTA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME TAX-I, AHMEDABAD DATED 22-03-2010 FOR ASSESSMENT YE AR 2000-01, CHALLENGING THE ORDER U/S 263 OF THE IT ACT ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT HAS GROSSLY ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION BEYOND THE PERMISSIBLE TIME LIMIT AS THE SO CALLED ERRONEOUS ORDER SOUGHT TO BE REVISED WAS PASSED ON 02/05/2001 AND THEREFORE COULD NOT HAVE BEEN REVISED U/S 263 OF THE ACT. 2. THE LEARNED CIT HAS GROSSLY ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION AT THE INSTANCE OF T HE ASSESSING OFFICER WITHOUT APPRECIATING THAT FOR THE PURPOSE OF ASSUMING THE JURISDICTION U/S 263 OF THE ACT, IT IS THE COMMISSIONER WHO HAS TO CONSIDER ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 2 THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THE LEARNED CIT HAS GROSSLY ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION U/S 263 OF THE ACT O N THE ERRONEOUS GROUND THAT THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. LD. CIT GROSSLY ERRED IN NOT APPRECIATING THAT I N ORDER TO INVOKE S. 263, TWO CONDITIONS MUST BE FULFILLED VIZ. THE IMPUGNED ASSESSMENT ORDER MUST BE ERRONEOUS AND THAT ERROR MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, L D AO EITHER EXAMINED THE ISSUE AT THE ORIGINAL ASSESSMENT STAGE OR HIS VIEW WAS ONE OF THE POSSIBLE VIEWS AND THEREFORE THERE WAS NO ERROR IN THE IMPUGNED ASSESSMENT ORDER SO AS TO JUSTIFY ACTION U/S 263 OF THE ACT. UNDER THE CIRCUMSTANCES, THE VERY ASSUMPTION OF POWER U/S 263 OF THE ACT IS UNJUSTIFIED AND BAD IN LAW AND THEREFORE, ORDER U/S 263 OF THE ACT IS UNJUSTIFIED AND BAD IN LAW AND THEREFORE, ORDER U/S 263 OF THE ACT DESERVED TO BE QUASHED. 5. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE GROUN DS RAISED HEREINABOVE, ON MERITS, LD. CIT HAS ERRED IN HOLDING THAT INTEREST BEARING FUNDS HAVE BEEN USED FOR NON-BUSINESS PURPOSES. 6. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE GROUN DS RAISED HEREINABOVE, ON MERITS, LD CIT HAS ERRED IN HOLDING THAT CLOSING STOCK OF SHARES HAVE NOT BEEN SHOWN AT FAIR MARKET VALUE ON THE DATE OF CONVERSION OF THE SAME INTO STOCK IN TRADE FROM INVESTMENT. 7. LD. CIT ERRED IN NOT CONSIDERING VARIOUS FACTS; SUBMISSIONS, EXPLANATIONS AND CLARIFICATIONS AS ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 3 GIVEN BY THE APPELLANT AND FURTHER ERRED IN NOT APPRECIATING TH4EFACTS AND LAW IN THEIR PROPER PERSPECTIVE. 2. THE FACTS OF THE CASE ARE THAT IN THIS CASE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 31-03-2000 DECLARING A LOSS OF RS.4,07,46,217/-. THE SAME WAS PROCESSED U/S 143(1) OF THE IT ACT ON 02-05-2001 ACCEPTING THE SAME. LATER ON THE ASSE SSMENT WAS REOPENED U/S 147 OF THE IT ACT AND REASSESSED AT A LOSS OF RS.3,87,04,430/- U/S 143(3) READ WITH SECTION 147 O F THE IT ACT ON 28-12-2007. ON 12-03-2010, THE DCIT, CENTRAL CIRCLE -1 (1), AHMEDABAD HAS SUBMITTED A PROPOSAL U/S 263 OF THE I T ACT THROUGH HIS ADDL. CIT, CENTRAL RANGE-1, AHMEDABAD STATING T HAT THE ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 147 O F THE IT ACT DATED 28-12-2007 WAS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF REVENUE FOR THE REASONS GIVEN AS UNDER: (1) ACCORDING TO THE ASSESSING OFFICER THE BALANCE SHEET OF THE RELEVANT ASSESSMENT YEAR REVEALS THAT THE ASSESSEES CAPITAL ACCOUNT SHOWS A DEBIT BALANCE OF RS.4,38,82,105/-. IT WAS FURTHER SEEN THAT THE ASSE SSEE WAS SHOWING LOANS AND DEPOSIT OF RS.23,26,61,071/- FOR WHICH A TOTAL INTEREST OF RS.89,27,765/- WAS DEBITE D TO THE PROFIT AND LOSS ACCOUNT. IT IS FURTHER SUBMITTED BY THE ASSESSING OFFICER THAT SINCE A DEBIT BALANCE OF CAP ITAL ACCOUNT IS LIKE AN INTEREST FREE LOAN AND ADVANCE T O THE ASSESSEE WHO IS THE PROPRIETOR OF THE BUSINESS, AN ADDITIONAL FINANCIAL BURDEN OF LOANS AND DEPOSITS W AS PUT ON THE BUSINESS. THE DIVERSION OF INTEREST BEARING FUNDS TO NON-BUSINESS PURPOSES ATTRACTS THE PROVISIONS OF SE CTION 36 (1) (III) OF THE ACT AND PROPORTIONATE DISALLOWA NCE OF INTEREST SHOULD HAVE BEEN MADE. SINCE THIS WAS NOT DONE IT RESULTED IN AN UNDER ASSESSMENT OF INCOME OF RS.16,83,861/- AND A SHORT LEVY OF TAX OF RS.5,05,1 58/-. ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 4 (2) SECONDLY, THE ASSESSEE CONVERTED INVESTMENT IN SHARES OF M/S. GUJARAT AMBUJA EXPORTS LIMITED AND O THER SHARES AMOUNTING TO RS.1,75,50,634/- INTO STOCK IN TRADE DURING THE RELEVANT FINANCIAL YEAR. AS PER SECTION 45 (2) OF THE ACT, FOR THE PURPOSE OF COMPUTING CAPITAL GAIN IN THE CASE OF CONVERSION OF CAPITAL ASSETS INTO STOCK IN TRADE, THE FAIR MARKET VALUE OF THE CAPITAL ASSETS ON THE DATE ON WHICH IT WAS CONVERTED, WILL BE DEEMED TO BE FULL V ALUE OF CONSIDERATION RECEIVED ON TRANSFER. HOWEVER, THE Y EAR OF TAXABILITY WILL BE THE YEAR IN WHICH SUCH CONVERTED STOCK IN TRADE IS SOLD OR OTHERWISE TRANSFERRED. THUS, IN TH E YEAR OF SALE SUCH STOCK IN TRADE WILL ATTRACT CAPITAL GAINS U/S 45(2) OF THE ACT. THE ABOVE MENTIONED CONVERSION HAS TO B E TREATED AS TRANSFER U/ 2 (47) OF THE ACT IN THE REL EVANT ASSESSMENT YEAR SINCE THE SAID STOCK WAS SOLD SUBSEQUENTLY IN A. YR. 2005-06. THE ASSESSEE HAS OMITTED TO DISCLOSE THE CLOSING STOCK OF SHARES AT FAIR MARKET VALUE ON THE DATE OF CONVERSION. ON THE OTH ER HAND THE ASSESSING OFFICER HAS FAILED TO TAKE NOTE OF IT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN RESPONSE TO THE SHOW CAUSE NOTICE ON ABOVE LINES DATED 12-03-2010, THE ASSESSEE WAS REPRESENTED BY AUTHORI ZED REPRESENTATIVE WHO ATTENDED ON 19-03-2010 AND SUBMI TTED A WRITTEN SUBMISSION ON BEHALF OF THE ASSESSEE WHICH IS PLACE D ON RECORD. THE FACTS OF THE CASE WERE ALSO DISCUSSED WITH HIM. WIT H RESPECT TO UTILIZATION OF INTEREST BEARING FUNDS FOR NON-BUSIN ESS PURPOSES, THE WRITTEN SUBMISSION STATES THAT THE OPENING BALANCE OF THE CAPITAL ACCOUNT AS ON 01-04-1999 WAS RS.24,04,098/- AND DUR ING THE YEAR THE ASSESSEE RECEIVED AN INCOME OF RS.43,15,061/- W HICH CONVERTED THE OPENING DEBIT BALANCE TO A CREDIT BALANCE. THE ASSESSEE ALSO MADE WITHDRAWALS DURING THE YEAR OF RS.8,76,895/- F OR PERSONAL PURPOSES. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THIS MAKES IT APPARENT THAT THE BORROWED AMOUNTS WERE UT ILIZED FOR THE ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 5 PURPOSE OF BUSINESS. FURTHER, IT IS SUBMITTED THAT THE CLOSING HUGE DEBIT BALANCE OF CAPITAL IS PURELY DUE TO BUSINESS LOSSES DURING THE YEAR. REGARDING CONVERSION OF INVESTMENT OF SHARES INTO STOCK IN TRADE, IT IS SUBMITTED ON BEHALF OF THE ASSESSEE TH AT DURING THE RELEVANT YEAR THERE ARE NO PROFITS AND LOSSES ON SA LE OF SHARES AND THEREFORE PROVISIONS OF SECTION 45(2) R. W. S. SECT ION 2 (47) OF THE ACT ARE NOT RELEVANT FOR THE PRESENT ASSESSMENT YEAR. IN VIEW OF THE EXPLANATION PUT FORTH ABOVE, THE WRITTEN SUBMISSION DATED 19-03-2010 STATES THAT THE ASSESSING OFFICER HAD TAKEN A JUDIC IAL VIEW IN HIS ASSESSMENT ORDERS SO FAR AND HIS ASSESSMENT ORDER D ATED 28-12-2007 CANNOT BE TREATED AS ERRONEOUS OR PREJUD ICIAL TO INTERESTS OF REVENUE. ACCORDING TO THE LEARNED COUNSEL FOR TH E ASSESSEE THE TIME LIMIT FOR REVISION U/S 263 HAS EXPIRED BECAUSE THE CIT(A) THROUGH HIS APPELLATE ORDER DATED 13-11-2009 HAS ALREADY DE CIDED THE APPEAL AGAINST ORDER DATED 28-12-2007. LASTLY, THE ABOVE M ENTIONED WRITTEN SUBMISSION DATED 19-03-2000 GIVES A LARGE NUMBER OF JUDICIAL PRONOUNCEMENTS WHICH STATES THAT WHERE THE ASSESSIN G OFFICER HAS MADE RELEVANT INQUIRIES AND THE ASSESSEE HAS FILED REPLIES AND THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICE R THEREAFTER, AND EVEN THOUGH, THERE IS NO DISCUSSION IN THE ASSE SSMENT ORDER REGARDING THE INQUIRY MADE, SUCH ASSESSMENT CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. SECONDLY, IF TWO POSSIBLE VIEWS CAN BE TAKEN AND THE ASSESSING OFFIC ER HAS ADOPTED ONE SUCH VIEW, PROVISIONS OF SECTION 263 CANNOT BE INVOKED. 3. THE LEARNED COMMISSIONER OF INCOME TAX ACT HOWE VER, SET ASIDE THE ASSESSMENT ORDER DATED 28-12-2007 ON BOTH THE ABOVE ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 6 POINTS AND DIRECTED THE AO TO COMPLETE FRESH ASSESS MENT AS PER GUIDELINES DISCUSSED IN THE ORDER. THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX ARE REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS PLACED ON RECORD ON BEHALF OF THE ASSESSEE AND GIVEN IN TH E PRECEDING PARAGRAPHS. I HAVE FURTHER CAREFULLY PERUSED THE CASE RECORD FOR THE RELEVANT ASSESSMENT YEAR. FROM A PERUSAL OF ALL THIS I FIND THAT IN THE ASSESSMENT ORDER DATED 28.12.2007, THE ONLY ADDITIO N MADE BY THE ASSESSING OFFICER WAS TO THE TUNE OF RS.20,41,793/- UNDER SECTION 2 (22) OF THE ACT WHIC H WAS DELETED BY THE CIT(A) THROUGH HIS ORDER DATED 13.11.2009. THE ISSUES RAISED BY THE ASSESSING OFFICER IN HIS PROPOSAL UNDER SECTION 263 DATED 12.03.2010 WERE NOWHERE MENTIONED DURING THE COURSE OF EARLIER ASSESSMENT PROCEEDINGS EITHER DIRECTLY OR INDIRECTLY BY THE ASSESSING OFFICER OF THE ASSESSEE. THE QUERIES MADE BY THE ASSESSING OFFICER AND THE REPLIES SUBMITTED BY THE ASSESSEE DURING TH E COURSE OF EARLIER ASSESSMENT PROCEEDINGS ARE TOTALL Y SILENT ON THESE TWO ASPECTS NOW BEING RAISED BEFORE ME. HENCE, ALL THE CASE LAWS SUBMITTED BY SHRI PRAMOD DAD IN HIS WRITTEN SUBMISSION DATED 19.03.2010 ARE CLEARLY DISTINGUISHABLE AS NOT BEING APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE PRESENT ASSESSING OFFICER HAS PRIMA FACIE MADE OUT A CREDIBLE CASE IN HIS PROPOSAL U/S 263 DATED 12.03.2010. OF COURSE, THE EXPLANATION GIVEN BY SHR I DAD ON PAGE 1, 2, 3 AND 4 OF HIS WRITTEN SUBMISSION DATED 19.03.2010 THAT THE HUGE CLOSING DEBIT BALANC E OF CAPITAL DUE TO BUSINESS LOSSES DURING THE YEAR REQUIRES A CLOSE AND DETAILED SCRUTINY BEFORE THE SAME IS EITHER ACCEPTED OR REJECTED. LIKEWISE, SHRI DAD HAS NOT GIVEN A DIRECT REPLY TO THE QUERY REGARDING ASSESSEES FAILURE TO OMIT DISCLOSING THE CLOSING STOCK OF SHARES AT FAIR MARKET VALUE ON THE DATE OF CONVERSIONS. ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 7 IN VIEW OF THE DISCUSSION IN THE IMMEDIATELY PRECEDING PARAGRAPH, I AM OF THE CONSIDERED OPINION THAT PRIMA FACIE A CREDIBLE CASE EXISTS TO GIVE CREDENCE THAT THE ASSESSMENT ORDER DATED 28.12.2007 WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. FURTHER, SINCE DETAILED ENQUIRIES ON THE ABOVESAID TWO POINTS BY THE ASSESSING OFFICER ARE CONSIDERED ESSENTIAL , THE SAID ASSESSMENT ORDER DATED 28.12.2007 IS SET ASIDE TO BE COMPLETED AFRES H ALONG THE GUIDELINES DISCUSSED ABOVE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO PB-32 WHICH IS SHOW CAUSE NOTICE U/S 263 OF THE IT ACT WH ICH WAS ISSUED ON THE TWO POINTS/ISSUES MENTIONED ABOVE WITH REGARD T O DISALLOWANCE OF INTEREST AND CONVERSION OF INVESTMENT IN SHARES AS STOCK IN TRADE DURING THE RELEVANT FINANCIAL YEAR. HE HAS SUBMITTE D THAT REASSESSMENT PROCEEDINGS WERE INITIATED WITH REGARD TO THE ISSUE OF DEEMED DIVIDEND U/S 2 (22) (E) OF THE IT ACT AND RE FERRED TO THE REASONS RECORDED U/S 147/148 OF THE IT ACT FILED AT PB-62 TO 65 OF THE PAPER BOOK. HE HAS SUBMITTED THAT THE AO HAS PASSED THE REASSESSMENT ORDER DATED 28-12-2007 MAKING ADDITION S U/S 2 (22) (E) OF THE IT ACT AND ABOVE TWO ISSUES IN QUESTION WAS NOT TAKEN IN TO CONSIDERATION AND THE REASSESSMENT PROCEEDINGS WOUL D SHOW THAT THE COMMISSIONER OF INCOME TAX INITIATED THE PROCEE DINGS U/S 263 OF THE IT ACT AGAINST THE ASSESSMENT FRAMED U/S 143(1) OF THE IT ACT DATED 02-05-2001. HE HAS, THEREFORE, SUBMITTED THAT THE COMMISSIONER OF INCOME TAX EXERCISED HIS REVISIONAL JURISDICTION AGAINST THE ORDER OF THE ASSESSMENT U/S 143(1) OF T HE IT ACT ONLY IN RELATION TO THE ABOVE TWO ITEMS I.E. DISALLOWANCE O F INTEREST AND ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 8 CONVERSION OF INVESTMENT IN TO STOCK IN TRADE WHICH WERE NOT THE SUBJECT MATTER OF REASSESSMENT PROCEEDINGS U/S 143( 3)/147 OF THE IT ACT, THE PERIOD OF LIMITATION PROVIDED FOR IN SUB S ECTION (2) OF SECTION 263 OF THE ACT WOULD BEGINNING TO RUN FROM THE DATE OF ORDER OF ASSESSMENT U/S 143 (1) OF THE IT ACT DATED 02-05-20 01 AND NOT FROM THE DATE OF THE ORDER OF REASSESSMENT U/S 143(3)/14 7 OF THE IT ACT DATED 28-12-2007. HE HAS, THEREFORE, SUBMITTED THAT THE IMPUGNED ORDER U/S 263 OF THE IT ACT IS CLEARLY TIME BARRED. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS ALAGENDRAN FINANCE LTD. 293 ITR 1 IN WHICH IT WAS HELD AS UNDER: ASSESSMENTS FOR THE ASSESSMENT YEARS 1994- 95, 1995-96 AND 1996-97 ON THE ASSESSEE WERE COMPLETED IN 1997 AND 1998. IN THE ORDERS OF ASSESSMENT, THE ASSESSEES CLAIM RELATING TO LEASE EQUALISATION FUND WAS ACCEPTED. THEREAFTER ORDERS OF REASSESSMENT WERE INITIATED IN RESPECT OF THREE OTHER ITEMS BUT NOT THE ITEM RELATING TO LEASE EQUALISATION FUND AND REASSESSMENTS WERE MADE. THEREAFTER, THE COMMISSIONER, BY AN ORDER DATED MARCH 29, 2004, INITIATED REVISION PROCEEDINGS ONLY IN RELATION TO THE ITEM LEASE EQUALISATION FUND. THE APPELLATE TRIBUNAL HELD THAT THE REVISION PROCEEDIN GS WERE BARRED BY LIMITATION AS THEY WERE INITIATED MO RE THAN FOUR YEARS AFTER THE ORIGINAL ASSESSMENTS; AND THE HIGH COURT DISMISSED THE APPEAL THEREFROM. THE DEPARTMENT APPEALED TO THE SUPREME COURT: HELD, AFFIRMING THE DECISION OF THE HIGH COURT, THAT THE COMMISSIONER HAD SOUGHT TO REVISE ONLY THA T PART OF THE ORDER OF ASSESSMENT WHICH RELATED TO LEASE EQUALISATION FUND; BUT THE PROCEEDINGS FOR REASSESSMENT HAD NOTHING TO DO WITH THAT ITEM OF ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 9 INCOME. THE DOCTRINE OF MERGER DID NOT APPLY IN A CASE OF THIS NATURE: THE PERIOD OF LIMITATION COMMENCED FROM THE DATES OF THE ORIGINAL ASSESSMENTS AND NOT FROM THE REASSESSMENTS SINCE THE LATTER HAD NOT HAD ANYTHING TO DO WITH THE LEAS E EQUALISATION FUND. THIS WAS NOT A CASE WHERE THE SUBJECT-MATTER OF REASSESSMENT AND THE SUBJECT- MATTER OF THE ASSESSMENT WERE THE SAME. CIT V. SHRI ARBUDA MILLS LTD. [1998] 231 ITR 50 (SC ) RELIED ON.. CWT V. A. K. THANGA PILLAI [2001] 252 ITR 260 (MAD) APPROVED. THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ONCE AN ORDER OF ASSESSMENT IS REOPENED, THE PREVIOUS UNDER-ASSESSMENT WILL BE HELD TO BE SET ASIDE AND THE WHOLE PROCEEDINGS WOULD START AFRESH, BUT THAT WOULD NOT MEAN THAT EVEN WHEN THE SUBJECT- MATTER OF REASSESSMENT IS DISTINCT AND DIFFERENT, T HE ENTIRE PROCEEDINGS WOULD BE DEEMED TO HAVE BEEN REOPENED. EXPLANATION ( C ) APPENDED TO SUB-SECTION (1) OF SECTION 263 OF THE INCOME-TAX ACT, 1961, WHICH DEAL S WITH THE POWER OF THE COMMISSIONER IN REVISION, IS CLEAR AND UNAMBIGUOUS, AS IN TERMS THEREOF THE DOCTRINE OF MERGER APPLIED ONLY IN RESPECT OF SUCH ITEMS WHICH WERE THE SUBJECT-MATTER OF APPEAL AND NOT IN RESPECT OF THOSE WHICH WERE NOT. 4.1 HE HAS ALSO RELIED UPON THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF ASHOKA BUILDCON LTD. VS A CIT AND ANOTHER 325 ITR 574 IN WHICH IT WAS HELD AS UNDER: HELD, ALLOWING THE PETITION, THAT THE ORIGINAL ORDER OF ASSESSMENT UNDER SECTION 143(3) WAS REOPENED SOLELY ON THE BASIS THAT THE BENEFIT OF SECTION 72A WAS WRONGLY ALLOWED TO THE ASSESSEE. IN THE ORDER OF REASSESSMENT THAT WAS PASSED THEREUPON UNDER SECTION 143(3) ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 10 READ WITH SECTION 147 THE CLAIM MADE BY THE ASSESSEE WITH REFERENCE TO THE PROVISIONS OF SECTION 72A WAS DISALLOWED. WHILE SEEKING TO EXERCISE HIS JURISDICTION UNDER SECTION 263, THE COMMISSIONER DID NOT FIND ANY ERROR IN THE ORDER OF REASSESSMENT DATED DECEMBER 27, 2007 AS REGARDS THE DISALLOWANCE CLAIMED BY THE ASSESSEE ON THE BASIS OF THE PROVISIONS OF SECTION 72A. THE NOTICE DATED APRIL 30, 2009, ADVERTED TO ISSUES WHICH DID NOT FORM EITHER THE SUBJECT-MATTER OF THE NOTICE THAT WAS ISSUED UNDER SECTION 148 ON MACH 6, 2007 NOR OF THE ORDER OF REASSESSMENT THEREUPON WHICH WAS PASSED ON DECEMBER, 2007. THE JURISDICTION UNDER SECTION 263 WAS SOUGHT TO BE EXERCISED WITH REFERENCE TO ISSUES WHICH WERE UNRELATED TO THE GROUNDS ON WHICH THE ORIGINAL ASSESSMENT WAS REOPENED AND REASSESSED. THE PERIOD OF TWO YEARS UNDER SECTION 263 (2) HAD EXPIRED ON MARCH 31, 2009. HENCE, THE EXERCISE OF REVISIONAL JURISDICTION IN RESPECT OF THE ORIGINAL ORDER OF REASSESSMENT WAS BARRED BY LIMITATION. THUS, THE NOTICE OF REVISION WAS SET ASIDE. 4.2 THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT THE INTIMATION/ASSESSMENT U/S 143(1) OF THE IT ACT IS AN ORDER OF ASSESSMENT AND COMMISSIONER CAN REVISE SUCH AN ORDE R U/S 263 OF THE IT ACT AND IN SUPPORT OF HIS SUBMISSIONS HE REL IED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS ANDERSON MARINE AND SONS PVT. LTD. 266 ITR 694 AND THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS CHIDAMBARAM CONSTRUCTION CO. 261 ITR 754. 4.3 THE LEARNED COUNSEL FOR THE ASSESSEE ON MERIT R EITERATED THE SUBMISSIONS AND WITH REGARD TO DISALLOWANCE OF INTE REST SUBMITTED ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 11 THAT DEBIT BALANCE OF THE CAPITAL WAS PURELY DUE TO BUSINESS LOSSES AND WITH REGARD TO CONVERSION OF INVESTMENT OF SHAR ES INTO STOCK IN TRADE, HE HAS SUBMITTED THAT THERE WAS NO PROFIT OR LOSS ON SALE OF SHARES HELD AS INVESTMENT/TRANSFER AS STOCK IN TRAD E, THEREFORE, PROVISIONS OF SECTION 45(2) OF THE IT ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. HE HAS SUBMITTED THAT EVEN OTHERWISE ACCORDING TO THE PROVISIONS OF SECTION 45(2) OF THE IT ACT THE CAPIT AL GAIN ON SUCH TRANSACTION WOULD ARISE ON THE INCOME OF THE PREVIO US YEAR IN WHICH STOCK IN TRADE IS SOLD OR OTHERWISE TRANSFERRED. TH E LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT SINCE T WO VIEWS WERE POSSIBLE ON THE MATTER IN ISSUE AND THE AO ACCEPTED THE RETURN OF THE ASSESSEE U/S 143(1) OF THE IT ACT BY APPLYING HIS M IND TO THE MATERIAL ON RECORD, THEREFORE, THE SAME SHOULD NOT BE THE SU BJECT MATTER OF REVISION U/S 263 OF THE IT ACT. HE HAS SUBMITTED TH AT NOTHING HAS PREVENTED THE AO FROM APPLYING HIS MIND EVEN AT THE REASSESSMENT STAGE. THE LEARNED COMMISSIONER OF INCOME TAX CONSI DERED ALL MATERIAL ON RECORD. NO NEW INVESTMENT IS MADE IN TH E YEAR. HE HAS RELIED UPON THE WRITTEN SUBMISSION FILED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX FILED AT PAGES 1 TO 5 OF THE PAPER BOOK AND ALSO RELIED UPON THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 IN W HICH IT WAS HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTER ESTS OF THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T IT IS NOT A CASE OF LACK OF INQUIRY BECAUSE WHILE ISSUING ORDER U/S 143 (1) OF THE IT ACT DATED 02-05-2001; THE AO APPLIED HIS MIND AND ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 12 ACCEPTED THE CLAIM OF THE ASSESSEE. THEREFORE, IT I S NOT A CASE OF LACK OF INQUIRY ON THE PART OF THE AO. HE HAS RELIED UPO N THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASES OF CIT VS VIKASH POLYMERS 194 TAXMAN 57 AND IN THE CASE OF CIT VS SUNBEAM A UTO LTD. 189 TAXMAN 436. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE ALTERNATE CONTENTION SUBMITTED THAT SINCE THE COMMISSIONER OF INCOME TAX HAS GIVEN SOME OBSERVATIONS AGAINST THE ASSESSEE IN THE IMPUGNED ORDER AND IN CASE THE IMPUGNED ORDER IS CONFIRMED, THE AO MAY BE DIRECTED TO DECIDE THE ISSUE AS PER LAW. HOWEVER, HE HAS ADM ITTED THAT THE AO HAS ALREADY PASSED ORDER DATED 29-12-2010 U/S 143(3 )/147/263 OF THE IT ACT IN PURSUANCE OF THE IMPUGNED ORDER UNDER APPEAL AND SUBMITTED COPY OF THE SAME IN WHICH THE AO MADE ADD ITIONS U/S 36 (1) (III) OF THE IT ACT BY DISALLOWING INTEREST, RS .16,83,861/- AND ADDITION OF RS.1,29,87,469/- HAS BEEN MADE ON ACCOU NT OF UNDERVALUATION OF CLOSING STOCK. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E IMPUGNED ORDER AND SUBMITTED THAT IN THE PROCEEDINGS U/S 143 (1) OF THE IT ACT THE AO HAS LIMITED POWER AND ONLY INTIMATION CAN BE ISSUED AND ONLY REFUND OR DUE TAXES CAN BE ASKED FOR. THE AO CANNOT DO ANYTHING FURTHER; THEREFORE, THERE IS NO QUESTION OF APPLYIN G HIS MIND AT THE STAGE OF PROCESSING OF THE RETURN U/S 143(1) OF THE IT ACT. HE HAS, THEREFORE, SUBMITTED THAT SINCE NO OPINION IS HELD BY THE AO AT THE STAGE OF PROCESSING OF THE RETURN U/S 143(1) OF THE IT ACT, THEREFORE, NO VIEW IS TAKEN BY THE AO, HENCE THERE IS NO QUEST ION OF TWO VIEWS POSSIBLE ON THE MATTER IN ISSUE AS IS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE. HE HAS SUBMITTED THAT THE COMMISS IONER OF INCOME ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 13 TAX CAN TAKE ACTION IN THE MATTER IF THE ORDER IS E RRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE HAS SUBMITTED THAT THE COMMISSIONER OF INCOME TAX HAS NOT EXERCISED JURISD ICTION U/S 263 OF THE IT ACT AGAINST PROCESSING OF THE RETURN U/S 143 (1) OF THE IT ACT DATED 02-05-2001, THEREFORE, THE IMPUGNED ORDER IS PASSED WITHIN THE PERIOD OF LIMITATION BECAUSE THE COMMISSIONER OF IN COME TAX HAS CONSIDERED THE ORDER U/S 143(3)/147 OF THE IT ACT D ATED 28-12-2007 AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERE STS OF THE REVENUE. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS PVT. L TD. 291 ITR 500. THE LEARNED DR FURTHER SUBMITTED THAT ONCE PROCEEDI NGS U/S 147 OF THE IT ACT HAVE BEEN INITIATED, ALL ISSUES HAVE TO BE CONSIDERED ON MERIT ON WHICH INCOME ESCAPED ASSESSMENT. HE HAS SU BMITTED THAT THE AO HAS NOT CONDUCTED ANY INQUIRY ON BOTH THE IS SUES AT THE REASSESSMENT STAGE AND NO NOTICE WAS ISSUED TO THE ASSESSEE ON THESE ISSUES AT THE REASSESSMENT STAGE, THEREFORE, NO MIND WAS APPLIED BY THE AO AT THE REASSESSMENT STAGE ON BOTH THE ITEMS. THEREFORE, THE ORDER OF THE AO IS ERRONEOUS IN SO F AR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREF ORE, THE LEARNED COMMISSIONER OF INCOME TAX HAS CORRECTLY EXERCISED JURISDICTION U/S 263 OF THE IT ACT. THE LEARNED DR FURTHER SUBMITTE D THAT THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR TH E ASSESSEE PERTAIN TO THE ORIGINAL ASSESSMENT FRAMED U/S 143 ( 3) OF THE IT ACT, THEREFORE, THESE DECISION WOULD BE CLEARLY DISTINGU ISHABLE BECAUSE IN THE CASE OF THE ASSESSEE ORIGINAL RETURN WAS PROCES SED U/S 143 (1) OF THE IT ACT ONLY. ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 14 6. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE REJO INDER MAINLY REITERATED THE SAME SUBMISSIONS AND HAS AGREED TO T HE PROPOSITION THAT ONCE AN ORDER OF ASSESSMENT IS REOPENED THE PR EVIOUS UNDER- ASSESSMENT WILL BE HELD TO BE SET ASIDE AND THE WHO LE PROCEEDINGS WOULD START AFRESH U/S 147/148 OF THE IT ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE. IT IS NOT IN DISPUTE THAT THE ORIGINAL RETURN OF INCOME WAS P ROCESSED U/S 143 (1) OF THE IT ACT ON 02-05-2001 ACCEPTING THE RETUR N OF INCOME OF THE ASSESSEE AS IT IS. THE PROVISIONS OF SECTION 143 (1 ) OF THE IT ACT AS APPLICABLE TO THE ASSESSMENT UNDER APPEAL READS AS UNDER: [ASSESSMENT 143. (1) WHERE A RETURN HAS BEEN MADE UNDER SECTION 139 , OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 , (I) IF ANY TAX OR INTEREST IS FOUND DUE ON THE BASI S OF SUCH RETURN, AFTER ADJUSTMENT OF ANY TAX DEDUCTED A T SOURCE, ANY ADVANCE TAX PAID, ANY TAX PAID ON SELF- ASSESSMENT AND ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST, THEN, WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (2), AN INTIMATION SHALL BE SENT TO THE ASSESSEE SPECIFYING THE SUM SO PAYABLE, AND SUCH INTIMATION SHALL BE DEEMED TO BE A NOTICE OF DEMAND ISSUED UNDER SECTION 156 AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY; AND (II) IF ANY REFUND IS DUE ON THE BASIS OF SUCH RETU RN, IT SHALL BE GRANTED TO THE ASSESSEE AND AN INTIMATION TO THIS EFFECT SHALL BE SENT TO THE ASSESSEE: ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 15 PROVIDED THAT EXCEPT AS OTHERWISE PROVIDED IN THIS SUB- SECTION, THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER THIS SUB-SECTION W HERE EITHER NO SUM IS PAYABLE BY THE ASSESSEE OR NO REFU ND IS DUE TO HIM: PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB-SECTION SHALL BE SENT AFTER THE EXPIRY OF TWO YEARS FROM TH E END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE]. 7.1 THE HONBLE SUPREME COURT IN THE CASE OF ACIT V S RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500 CONSIDE RING THE ABOVE PROVISIONS HELD AS UNDER: UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED SECTION 143(1), WITH EFFECT FROM JUNE 1, 1999, EXCEPT AS PROVIDED IN THE PROVISION ITSELF, THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER SECTION 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B) NO REFUND IS DUE TO HIM. IT IS SIGNIFICANT THAT THE ACKNOWLEDGEMENT IS NOT DONE BY ANY ASSESSING OFFICER, BUT MOSTLY BY MINISTERIAL STAFF. IT CANNOT THEREFORE BE SAID THAT AN ASSESSMENT IS DONE BY THEM. THE INTIMATION UNDER SECTION 143(1) (A) WAS DEEMED TO BE A NOTICE OF DEMAND UNDER SECTION 156 FOR THE APPARENT PURPOSE OF MAKING MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDICATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISIONS. THEREFORE, THERE BEING NO ASSESSMENT UNDER SECTION 143(1) (A), THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 16 7.2 ACCORDING TO SECTION 147 OF THE IT ACT, THE AO WHILE FRAMING REASSESSMENT WOULD ALSO ASSESS OR REASSESS ANY OTHE R INCOME ALSO CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS U/ S 147 OF THE IT ACT. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO ADMI TTED DURING THE COURSE OF ARGUMENT THAT ONCE REASSESSMENT PROCEEDIN GS ARE INITIATED, THE PREVIOUS ASSESSMENTS WILL BE HELD TO BE SET ASIDE AND THE WHOLE PROCEEDINGS WOULD START AFRESH. THEREFORE , THE MATTER IN ISSUE SHOULD HAVE BEEN CONSIDERED BY THE AO IN THE REASSESSMENT PROCEEDINGS. 7.3 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 HELD AS UND ER: IN THE PROCEEDINGS UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961, THE INCOME-TAX OFFICER MAY BRING TO CHARGE ITEMS OF INCOME WHICH HAD ESCAPED ASSESSMENT OTHER THAN OR IN ADDITION TO THE ITEM OR ITEMS WHICH LED TO THE ISSUANCE OF A NOTICE UNDER SECTION 148 AND WHERE REASSESSMENT IS MADE UNDER SECTION 147 IN RESPECT OF INCOME WHICH HAD ESCAPED TAX, THE INCOME-TAX OFFICERS JURISDICTION IS CONFINED ONLY TO SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDERASSESSED AND DOES NOT EXTEND TO REVISION, REOPENING OR RECONSIDERING THE WHOLE ASSESSMENT OR PERMITTING THE ASSESSEE TO REAGITATE QUESTIONS WHICH HAD BEEN DECIDED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IT IS ONLY THE UNDERASSESSMENT WHICH IS SET ASIDE. 7.4 ITAT DELHI SPECIAL BENCH INN THE CASE OF SIMBHA OLI INDUSTRIES PVT. LTD. VS DCIT (ASSTT.) 251 ITR (AT) 35 HELD AS UNDER: ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 17 SCOPE OF THE ORDER UNDER SECTION 143(1) (A) IS LIMITED ASSESSING OFFICER CAN MAKE PRIMA FACIE ADJUSTMENTS ON ACCOUNT OF ARITHMETICAL ERRORS CIT CANNOT ENLARGE SCOPE OF SECTION 143(1) (A) INCOME-TAX ACT, 1961, SS 143, 263 CIRCULAR NO.176, DATED 26-8-1987. 7.5 THE HONBLE JURISDICTIONAL GUJARAT HIGH COURT I N THE CASE OF CIT VS VIKRANT CRIMPERS 282 ITR 503 HELD AS UNDER: THE CENTRAL BOARD OF DIRECT TAXES HAS BY CIRCULAR NO.RA/86-87/DIT DATED AUGUST 26, 1987, DIRECTED THAT NO REMEDIAL ACTION IS NECESSARY IN SUMMARY CASES. THE COMMISSIONER BEING BOUND BY THE DIRECTIONS OF THE CENTRAL BOARD OF DIRECT TAXES CANNOT EXERCISE POWERS UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961, IN THE CASE OF SUMMARY ASSESSMENT. 7.5.1 THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS KARTAR SINGH AND CO. P. LTD. 300 ITR 440 HELD A S UNDER: THE OMISSION OF THE EXPRESSION INTIMATION FROM SECTION 263 OF THE INCOME-TAX ACT, 1961, ESTABLISHES THE INTENTION OF PARLIAMENT TO LIMIT THE POWER OF REVISION OF A COMMISSIONER ONLY TO CASES WHERE AN ORDER HAS BEEN PASSED. A PERUSAL OF SECTION 263 BRINGS OUT THAT THE LEGISLATURE NEVER INTENDED TO CLOTHE THE COMMISSIONER WITH THE POWER OF REVISION IN SUMMARY CASES WHERE INTIMATION AND ACKNOWLEDGMENT HAD BEEN SENT TO THE ASSESSEE AFTER FILING OF THE RETURN. 7.6 CONSIDERING THE ABOVE PROVISIONS OF LAW AND THE DECISIONS NOTED ABOVE, IT IS CLEAR THAT WHEN RETURN OF INCOME IS PROCESSED U/S 143(1) OF THE IT ACT, THE ACKNOWLEDGMENT OF THE RET URN SHALL BE ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 18 DEEMED TO BE AN INTIMATION U/S 143(1) AND INTIMATIO N SHALL BE SENT TO THE ASSESSEE FOR ANY SUM PAYABLE OR ANY REFUND DUE THEREOF. THEREFORE, SUCH WAS NOT CONSIDERED AS AN ASSESSMENT U/S 143(1) OF THE IT ACT BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA). THE AO HAS NO POWER TO MAKE ANY ADJUSTMENT. HIS POWERS ARE VERY LIMITED AS PROVIDED U/S 143(1) OF THE IT ACT. HE NEEDS NOT TO APPLY MIND ON ANY ISSUE. 7.7 THE HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS VIKRANT CRIMPERS (SUPRA) DISMISSED THE DEPARTMENTAL APPEAL IN WHICH THE AO MADE THE ASSESSMENT U/S 143(1) OF THE IT ACT AND THE COMMISSIONER OF INCOME TAX EXERCISED JURISDICTION U /S 263 OF THE IT ACT CONSIDERING THE SAME TO BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE, HOWEVER, THE TRIBUNAL HAS FOUND AS A MATTER OF FACT THAT BOARD HAS ISSUED CIRCULAR DIRECTING TH AT NO REMEDIAL ACTION IS NECESSARY IN SUMMARY CASES. ACCORDINGLY, IT WAS HELD BY THE TRIBUNAL THAT COMMISSIONER OF INCOME TAX SHOULD NOT HAVE EXERCISED REVISIONAL POWER U/S 263 OF THE IT ACT. THE HONBLE JURISDICTIONAL HIGH COURT DISMISSED THE DEPARTMENTAL APPEAL AS NOTED AB OVE. 7.8 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS ALAGENDRAN FINANCE LTD. (SUPRA) ALSO NOTED THAT THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ONCE THE ORDER OF ASSESSMENT IS REOPEN ED, PREVIOUS UNDER-STATEMENT WILL BE HELD TO BE SET ASIDE AND TH E WHOLE PROCEEDINGS WOULD START AFRESH, BUT THE SAME WOULD NOT MEAN THAT EVEN WHEN THE SUBJECT MATTER OF REASSESSMENT IS DIS TINCT AND DIFFERENT, THE ENTIRE PROCEEDINGS OF ASSESSMENT WOU LD BE DEEMED TO ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 19 HAVE BEEN REOPENED. IN THIS CASE, WHEN THE MATTER C AME UP FOR CONSIDERATION BEFORE THE TRIBUNAL, IT WAS FINDING O F FACT THAT THE CLAIM OF LEASE EQUALIZATION FUND, IF AT ALL ACCEPTED, THE RE WAS AN ERROR COMMITTED BY THE AO IN HIS ORDER PASSED U/S 143(3) OF THE IT ACT FOR THE ASSESSMENT YEARS 1994-95, 1995-96 AND 1996-97. ON SUCH FACTS IT WAS HELD THAT DOCTRINE OF MERGER DO NOT APPLY IN A CASE OF THIS NATURE, THE PERIOD OF LIMITATION COMMENCE FROM THE DATE OF ORIGINAL ASSESSMENT U/S 143(3) AND NOT FROM THE REASSESSMENT SINCE LATTER ORDER HAD NOTHING TO DO WITH THE LEASE EQUALIZATION FUND. IT WAS NOT THE SUBJECT MATTER OF THE REASSESSMENT PROCEEDINGS. IT WAS, THEREFORE, HELD THAT PERIOD OF LIMITATION U/S 263(2 ) OF THE IT ACT WOULD BEGIN TO RUN FROM THE DATE OF THE ORDER OF ASSESSME NT U/S 143(3) OF THE IT ACT AND NOT FROM THE DATE OF REASSESSMENT OR DER. SIMILARLY, IN THE CASE DECIDED BY THE HONBLE BOMBAY HIGH COURT I N THE CASE OF ASHOKA BUILDCON LTD. VS ACIT AND ANOTHER (SUPRA) OR IGINAL ORDER WAS PASSED U/S 143(3) OF THE IT ACT. THEREFORE, IN BOTH THE CASES RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE; THE E XERCISE OF REVISIONAL JURISDICTION WAS IN RESPECT OF THE ORIGI NAL ORDER OF ASSESSMENT, WAS HELD TO BE BARRED BY LIMITATION. 8. HOWEVER, CONSIDERING THE FACTS OF THE CASE IN TH E LIGHT OF THE ABOVE DISCUSSIONS IT IS CLEAR THAT IN THE PRESENT C ASE THE ORIGINAL INTIMATION/ASSESSMENT ORDER ISSUED U/S 143(1) OF TH E IT ACT ON WHICH THE AO HAS NOT APPLIED HIS MIND AT ALL AND RETURN W AS PROCESSED AS IT IS ACCEPTING THE RETURNED INCOME. THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT VS VIKRANT CRIMPERS (SUPRA ) HELD THAT THE ORDER U/S 143(1) OF THE IT ACT (SUMMARY ASSESSMENT) CANNOT BE ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 20 REVISED U/S 263 OF THE IT ACT. THEREFORE, THE DECIS IONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE CLEARLY DI STINGUISHABLE AND CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT AND THE HONBLE MADRA S HIGH COURT CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE IN TH E CASE OF CIT VS ANDERSON MARINE AND SONS PVT. LTD. (SUPRA) AND IN T HE CASE OF CIT VS CHIDAMBARAM CONSTRUCTION CO. (SUPRA) CANNOT BE G IVEN PREFERENCE AS AGAINST THE DECISION OF THE HONBLE J URISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF CIT VS VIKRANT CR IMPERS (SUPRA). SINCE, THE LEARNED COMMISSIONER OF INCOME TAX PASSE D THE IMPUGNED ORDER U/S 263 OF THE IT ACT AGAINST THE RE GULAR ASSESSMENT ORDER PASSED U/S 143(3)/147 OF THE IT ACT DATED 28- 12-2007, THEREFORE, THE IMPUGNED ORDER IS CLEARLY PASSED WIT HIN THE PERIOD OF LIMITATION AS PROVIDED U/S 263(2) OF THE IT ACT. TH E LEARNED COMMISSIONER OF INCOME TAX CANNOT REVISE THE SUMMAR Y ASSESSMENT U/S 143(1) OF THE IT ACT AS PER THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS VIKRANT CRIMPERS (SUPRA). THEREFORE, THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT LIMITATION IS TO BE COUNTED F ROM 02-05-2001 WHEN THE RETURN WAS PROCESSED U/S 143(1) OF THE IT ACT HAS NO FORCE AND IS REJECTED. 8.1 NOW, COMING ON MERITS, IT IS CLEAR THAT ON BOTH THE ABOVE ISSUES UNDER REFERENCE U/S 263 OF THE IT ACT, THE AO WAS E MPOWERED TO CONSIDER THE SAME ISSUES IN THE REASSESSMENT PROCEE DINGS EVEN IF THE SAME WERE NOT NOTED IN THE REASONS FOR REOPENIN G OF THE ASSESSMENT BECAUSE THE AO COULD ALSO TAKE NOTE OF S UCH FACTS ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 21 SUBSEQUENTLY IN THE COURSE OF THE REASSESSMENT PROC EEDINGS, IF ANY OTHER INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT. THE LEARNED COUNSEL FOR THE ASSESSEE AS NOTED ABOVE ALS O DID NOT HAVE DISPUTED TO SUCH LEGAL PROPOSITION. HOWEVER, THE RE CORD REVEAL THAT THE AO HAS FAILED TO MAKE ANY INQUIRY ON BOTH THE I SSUES IN THE REASSESSMENT PROCEEDINGS DESPITE SPECIFIC MATERIAL WAS AVAILABLE ON RECORD TO PROVE PRIMA FACIE THAT INCOME ESCAPED ASS ESSMENT ON BOTH THE ISSUES. THE AO HAS THUS FAILED TO MAKE ANY INQU IRIES ON BOTH THE ISSUES AT THE REASSESSMENT PROCEEDINGS. HE HAS NOT ISSUED ANY NOTICE TO THE ASSESSEE RAISING QUERY ON BOTH THE IT EMS. THE AO HAS NOT APPLIED HIS MIND ON BOTH THE ITEMS IN REASSESSM ENT STAGE AND THUS, HE HAS FAILED TO MAKE ANY INQUIRY ON BOTH THE ITEMS. IT IS SETTLED LAW THAT FAILURE BY THE AO TO MAKE INQUIRY IS ALSO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE RELY UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS ADDL. CIT AND OTHERS 99 ITR 375, DECISION OF THE HO NBLE GAUHATI HIGH COURT IN THE CASE OF TORAJAN TEA CO. PVT. LTD. VS CIT 205 ITR 45 AND THE DECISION OF THE HONBLE MADRAS HIGH COUR T IN THE CASE OF RAMASWAMY CHETTIAR (K.A.) VS CIT 220 ITR 657. SINCE THE AO HAS NOT APPLIED HIS MIND ON BOTH THE ISSUES AT THE REAS SESSMENT STAGE, THEREFORE, THERE IS NO QUESTION OF HAVING TAKEN ONE VIEW ON THE MATTER OR TAKING TWO DIFFERENT VIEWS BY THE AO OR BY THE L EARNED COMMISSIONER OF INCOME TAX. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT POINTED OUT ANY MATERIAL TO SHOW IF THE AO MADE ANY INQUIRY ON BOTH THE ISSUES AT THE REASSESSMENT STAGE. FURTH ER, THE AO IN THE ORDER U/S 143(3) READ WITH SECTION 263 OF THE IT AC T DATED 29-12-2010 MADE ADDITIONS ON BOTH THE ISSUES AFTER MAKING INQU IRIES. THEREFORE, ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 22 DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSE SSEE WOULD NOT APPLY TO THIS CASE. CONSIDERING THE ABOVE DISCUSSIO NS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE SAME I S LIABLE TO BE DISMISSED. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE ALTERNATIVE CONTENTION SUBMITTED THAT IN CASE THE IMPUGNED ORDE R IS CONFIRMED, THE AO MAY BE DIRECTED TO PASS AN ORDER AS PER LAW SO THAT HE MAY NOT BE INFLUENCED BY THE OBSERVATION OF THE LEARNED COMMISSIONER OF INCOME TAX IN THE IMPUGNED ORDER. HOWEVER, WE FIND THAT THE LEARNED COMMISSIONER HAS NOT GIVEN ANY SPECIFIC DIRECTION T O THE AO AS TO HOW HE HAS TO FRAME REASSESSMENT. THE LEARNED COMMI SSIONER OF INCOME TAX HAS NOTED THAT IN THE ABSENCE OF DETAILE D INQUIRY ON BOTH THE ITEMS, THE MATTER REQUIRED FRESH CONSIDERATION BY THE AO. ACCORDINGLY, ASSESSMENT ORDER WAS SET ASIDE. FURTHE R, THE LEARNED COUNSEL FOR THE ASSESSEE ADMITTED THAT THE AO HAS A LREADY FRAMED FRESH ASSESSMENT IN VIEW OF THE IMPUGNED ORDER PASS ED U/S 263 OF THE IT ACT. THEREFORE, NO FURTHER DIRECTIONS ARE RE QUIRED IN THE MATTER. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE NOTED ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF TH E ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-04-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 08-04-2011 LAKSHMIKANT/- ITA NO.1560/AHD/2010 SHRI VIJAY KUMAR GUPTA VS CIT, CENTRAL-I, AHMEDABAD 23 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD
