Shri Arvind Laxmidas Kabrawala(HUF), Bharuch V. The CIT-III, Baroda

ITA 2423/AHD/2005

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6746 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-03-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 23-11-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: MRS URVASHI SHODHAN
• Keywords: Capital asset; Depreciation; Cost of acquisition; Bad and doubtful debts; Valuation report; Capital receipt; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 6; 263; 63; 139

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI D.K. TYAGI, JM AND D.C.AGRAWAL, AM ARVIND LAXMIDAS KABRAWALA (HUF), 21-A, PRITAM SOCIETY NO.1, BHARUCH -392 002. VS. ASSTT. CIT, BHARUCH CIRCLE, BHARUCH. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- MRS. URVASHI SHODHAN, AR RESPONDENT BY:- MR. SHELLEY JINDAL, CIT, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- (1) THE LD. CIT HAS GROSSLY ERRED IN LAW AND ON FACTS I N ASSUMING JURISDICTION U/S 263 OF THE ACT ON THE ERRONEOUS GR OUND THAT THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. (2) LD. CIT GROSSLY ERRED IN NOT APPRECIATING THAT IN O RDER TO INVOKE S.263 TWO CONDITIONS MUST BE FULFILLED VIZ., THE IM PUGNED ASSESSMENT ORDER MUST BE ERRONEOUS AND THAT ERROR M UST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, LD. AO HAS ACCEPTED THE CLAIM OF THE APPELLANT IN TREAT ING THE SURPLUS AS LONG TERM CAPITAL GAIN AFTER DETAILED IN VESTIGATIONS AND SCRUTINY OF VARIOUS DETAILS IN A LEGALLY PERMIS SIBLE MANNER AND THEREFORE THERE WAS NO ERROR IN THE IMPUGNED AS SESSMENT ORDER SO AS TO JUSTIFY ACTION U/S 263 OF THE ACT. U NDER THE CIRCUMSTANCES THE VERY ASSUMPTION OF POWER U/S 263 OF THE ACT ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 2 IS UNJUSTIFIED AND BAD IN LAW AND THEREFORE, ORDER U/S 263 OF THE ACT DESERVED TO BE QUASHED. (3) LD. CIT GROSSLY ERRED IN REVISING THE IMPUGNED REAS SESSMENT ORDER WHICH ITSELF IS SUBJECT MATTER OF CHALLENGE B OTH ON MERITS AS WELL AS ON JURISDICTION U/S 147 OF THE ACT BEFOR E CIT(A) AND THEREFORE THE ACTION OF CIT IN REVISING AN ORDER UN DER APPEAL IS ERRONEOUS AND UNLAWFUL. IN ANY CASE IF THE APPEAL B EFORE THE CIT(A) REOPENING IS HELD TO BE WITHOUT JURISDICTION THE IMPUGNED ORDER U/S 263 REVISING SUCH ORDER ITSELF B ECOMES INFRACTUOUS AND NON-EST. (4) ALTERNATIVELY AND WITHOUT PREJUDICE TO THE GROUNDS RAISED HEREINABOVE ON MERITS, LD. CIT HAS ERRED IN ARTIFIC IALLY BIFURCATING THE SALES CONSIDERATION BETWEEN THE LAN D AND BUILDING WITHOUT THERE BEING ANY BASIS FOR THE SAME . LD. CIT FURTHER ERRED IN TREATING RS.17,61,205/- AS GROSS S HORT TERM CAPITAL RECEIPT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ENTIRE CAPITAL GAIN OUGHT TO HAVE BEEN TREATED AS LONG TERM CAPITAL GAIN. (5) ALTERNATIVELY AND WITHOUT PREJUDICE, THE APPORTIONM ENT OF SALES CONSIDERATION TOWARDS COST OF BUILDING IS HIGHLY EX CESSIVE AND UNREASONABLY HIGH. (6) LD. CIT ERRED IN LAW IN LEVYING INTEREST U/S 234A/B OF THE ACT ON THE TOTAL INCOME OF THE APPELLANT WHICH IS MAINL Y UNDER THE HEAD CAPITAL GAINS. THE LEVY OF INTEREST, BEING PAT ENTLY UNLAWFUL AND ILLEGAL, DESERVES TO BE QUASHED. (7) LD. CIT HAS ERRED IN NOT CONSIDERING VARIOUS FACTS, SUBMISSIONS, EXPLANATIONS AND CLARIFICATIONS AS GIVEN BY THE APP ELLANT AND FURTHER ERRED IN NOT APPRECIATING THE FACTS AND LAW IN THEIR PROPER PERSPECTIVE. IN ADDITION TO THIS ASSESSEE HAS RAISED ADDITIONAL GROUND AS UNDER :- (1) THE LD. CIT HAS ERRED IN LAW IN PASSING ORDER U/S 2 63 OF THE ACT WHICH IS BARRED BY LIMITATION AS THE ORDER REVISED BY HIM WAS ORIGINAL ORDER PASSED U/S 143(3) AND NOT THE REOPEN ED ORDER U/S 147 OF THE ACT. THE IMPUGNED ORDER THEREFORE, IS BA D, ILLEGAL, WITHOUT JURISDICTION AND THEREFORE REQUIRES TO BE Q UASHED. ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 3 2. REGARDING ADMISSION OF ADDITIONAL GROUND WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VIEW IT IS PURELY A LEGA L GROUND. THE SAME IS, THEREFORE, ADMITTED FOR ADJUDICATION. THE ONLY ISSU E AGITATED IN THE ADDITIONAL GROUND WHICH ACCORDING TO THE LD. AR GOE S TO THE ROOT OF THE CASE IS THAT ACTION OF THE LD. CIT U/S 263 IS BARRE D BY LIMITATION. 3. THE FACTS RELATING TO THIS ISSUE RAISED IN THE A DDITIONAL GROUND ARE THAT ASSESSMENT ORDER FOR ASST. YEAR 1997-98 WAS PA SSED U/S 143(3) ON 6 TH MARCH, 2000. AGAINST RETURNED INCOME OF RS.14,43,47 0/-, ASSESSMENT WAS MADE ON A TOTAL INCOME OF RS.14,83,466/-. THE COMPU TATION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 6/3/2000 IS AS UND ER :- 1. INCOME FROM HOUSE PROPERTY AS PER STATEMENT OF TOTAL INCOME RS.15,660/- 2. INCOME FROM LONG TERM CAPITAL GAIN AS PER STATEMENT RS.14,55,213/- 3. INCOME FROM OTHER SOURCES RS.26,682/- GROSS TOTAL INCOME RS.14,97,555/- LESS: DEDUCTION U/S 80L RS.14,089/- TOTAL INCOME RS.14,83,466/- I.E. RS. 14,83,466/- THEREAFTER THE AO REOPENED THE ASSESSMENT U/S 147 F OR WHICH REASONS RECORDED BY HIM ARE MENTIONED IN THE ORDER U/S 147/ 143(3) DATED 14.2.2005 (WHICH IS SUBJECT MATTER OF REVISION U/S 263) AS UNDER :- FOR THE YEAR UNDER CONSIDERATION, LONG TERM CAPITA L GAIN HAS BEEN SHOWN BY THE ASSESSEE AT RS.14,55,213/-. THE ABOVE COMPRISED LONG TERM CAPITAL GAIN OF RS.40,863/- ON ACCOUNT OF COMPULSOR Y ACQUISITION OF LAND BY SURAT MUNICIPAL CORPORATION AND LONG TERM CAPITA L GAIN OF RS.14,14,350/- ON ACCOUNT OF SALE OF A PART OF IMMO VABLE PROPERTY. THE GROSS CONSIDERATION ON SALE OF THE PART OF IMMO VABLE PROPERTY IN UPPER GROUND FLOOR HAS BEEN SHOWN AT RS.19,40,000/- . THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.38,800/- BY WAY OF BROKERAG E AND ALSO TAKEN AN AMOUNT OF RS.4,86,850/- AS INDEXED COST OF ACQUISIT ION. THESE TWO ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 4 AMOUNTS HAVE BEEN DEDUCTED FROM THE GROSS SALE CONS IDERATION IN ORDER TO ARRIVE AT LONG TERM CAPITAL GAIN ON THE SALE OF THE PART OF IMMOVABLE PROPERTY AT RS.14,14,350/-. THE SUBJECT PROPERTY WHICH HAS BEEN SOLD DURING THE YEAR LEADING UPTO RECEIPT OF LONG TERM CAPITAL GAIN IS THE UPPER GROU ND FLOOR CONSTRUCTION IN A PROPERTY SR. NO.194, PAIKEE AND SR.NO.150 OF WARD NO.11, BHAGA TALAV, SURAT. THE VALUATION REPORT FOR VALUING THE PROPERTY AS ON 1/4/1981 IN TERMS OF SECTION 55(2)(A) HAS BEEN MADE BY CENTRAL CIRCLE GANDHI & CO. THE REPORT OF THE VALUERS ANNEXED TO T HE RETURN SHOWS THAT THE SUPER BUILT UP AREA OF THE UPPER GROUND FLOOR M EASURING 850 SFT. HAS BEEN VALUED AT RS.45,458/- (ON ACCOUNT OF THE VALUE OF THE LAND) AND RS.3,48,303/- (BY WAY OF CONSTRUCTION). FROM THE RECORDS, IT IS REVEALED THAT THE BILL OF C ONSTRUCTION RAISED BY MANISH BUILDERS FOR THE SAID PROPERTY SHOWS THAT TH E COST OF CONSTRUCTION ON THE BHAGA TALAV PROPERTY DURING ASST. YEAR 1997- 98 TOTALLING RS.5,74,176/- IS THE SUM OF THE FOLLOWING AMOUNTS I NCURRED FOR DIFFERENT PARTS OF THE PROPERTY AS UNDER :- TERRACE RS.65,813/- 3 RD FLOOR RS.82,111/- 2 ND FLOOR RS.87,120/- 1 ST FLOOR RS.84,806/- UPPER GROUND FLOOR RS.74,752/- LOWER GROUND FLOOR RS.1,79,574/- THEREFORE, KEEPING IN VIEW OF THE ABOVE, IT IS CRYS TAL CLEAR THAT THE ASSESSEE HAS CLAIMED EXCESS COST OF CONSTRUCTION WH ICH HAS EVENTUALLY RESULTED INTO UNDER ASSESSMENT OF INCOME OF RS.2,73 ,551/- (RS.3,48,303/- (-) RS.74,752/-). I HAVE THEREFORE, REASONS TO BELI EVE THAT THE INCOME OF RS.2,73,551/- OF THE ASSESSEE HAS BEEN ESCAPED THE ASSESSMENT U/S 147 OF THE IT ACT. ON THE BASIS OF ABOVE REASONS NOTICE UNDER SECTION 148 WAS ISSUED ON 11.7.2003. THUS THE AO CONSIDERED THAT ASSESSEE HAS INCORRECTLY SHOWN COST OF CONSTRUCTION OF UPPER GROUND FLOOR AT RS.3, 48,303/- AS AGAINST ACTUAL COST OF CONSTRUCTION AT RS.74,752/-. THIS H AS LED TO INCORRECT COMPUTATION OF COST OF ACQUISITION BY RS.2,73,55/- AND HENCE INCORRECT ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 5 COMPUTATION OF CAPITAL GAINS. IN OTHER WORDS, ACCOR DING TO THE AO THE ASSESSEE HAS WORKED OUT LONG TERM CAPITAL GAINS AT RS.14,51,213/- BY TAKING THE INDEXED COST AT RS.4,86,850/- AND IT CAL CULATED THE CAPITAL GAINS IN THE ORIGINAL RETURN AS UNDER :- A. ON LAND ACQUIRED BY CORPORATION COMPENSATION RECEIVED AFTER 15.12.96 RS.2,41,919/- LESS: INDEXED COST COST AS ON 1.4.81 RS.65,920/- INDEX 3.05, HENCE INDEX COST RS.2,01,056/- LONG TERM CAPITAL GAINS (A) RS.40,863/- B. ON SALE OF UPPER GROUND FLOOR SALE PROCEEDS (SALE AFTER 15.12.96) RS.19,40,000/- LESS: BROKERAGE PAID 2% RS.38,800/- RS.19,01,200/- LESS: INDEXED COST AS PER VALUATION REPORT (1,38,647 + 3,48,203) RS.4,86,850/- LONG TERM CAPITAL GAINS (B) RS.14,14,350/- TOTAL (A) + (B) RS.14,55,350/- AS AGAINST ABOVE, INDEXED COST SHOULD BE ONLY RS.2, 13,399/-. THE REVISED CAPITAL GAINS WAS WORKED AS UNDER :- ON SALE OF UPPER GROUND FLOOR SALE PROCEEDS RS.19,40,000 LESS: BROKERAGE PAID @ 2% RS.38,800/- RS.19,01,200/- LESS: INDEXED COST - (I) COST OF LAND RS.1,38,647/- (II) COST OF CONSTRUCTION RS.74,752/- RS.2,13,399/- RS.16,87,801/- ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 6 THE WORKING WAS DONE LIKE THIS. EARLIER IN THE ORIG INAL ORDER INDEXED COST IS TAKEN AT RS.4,86,850/-. THIS COMPRISED OF COST O F LAND AT RS.1,38,647/- LEAVING THE BALANCE SUM OF RS.3,48,203/- FOR SUPER STRUCTURE OF UPPER GROUND FLOOD SOLD BY THE ASSESSEE. ITS COST WAS LAT ER FOUND AT RS.74,752/- AS RECORDED IN THE REASONS ABOVE, WHICH RESULTED IN SHOWING HIGHER COST OF THE CONSTRUCTION OF THE UPPER GROUND FLOOR BY RS .2,43,451/- (TAKEN BY THE AO AT RS.2,73,551/- APPARENTLY BY MISTAKE). ASS ESSMENT U/S 147/143(3) WAS COMPLETED ON 14.02.2005. THE LD. CIT CONSIDERED THAT THIS ORDER OF THE AO DATED 14.2.2005 IS ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDIN GLY HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE UNDER SECTION 263 AS U NDER :- TO SHRI ARVINDLAL LAMIDAS KABRAWALA (HUF), 21-A, PRITAM SOCIETY NO.1, BHARUCH-392 002. SIR, SUB: NOTICE UNDER SECTION 263(1) OF INCOME-TAX ACT, 1961 ASST. YEAR 1997-98 REGARDING. THE RECORD OF THE INCOME-TAX ASSESSMENT PROCEEDINGS LEADING TO PASSING OF ASSESSMENT ORDER U/S143(3) R.W.S. 147 ON 14.2.2005 FOR THE ASSESSMENT YEAR 1997-98 IN YOUR CASE WAS CALLED FOR AND EXAMINED. 2. IT IS SEEN THAT THE A.O RIGHTLY ASSUMED JURISDIC TION UNDER THE PROVISO TO SECTION 147 R.W. EXPLANATION 1 THERETO T O BRING TO TAX THE ESCAPED AMOUNT OF CAPITAL GAINS FROM THE SALE OF A SHOP ON THE UPPER GROUND FLOOR OF THE BUILDING LAXMI PALACE, WHICH HA D ESCAPED ASSESSMENT IN THE ORIGINAL ASSESSMENT ORDER U/S 143 (3) DATED 6.3.2000, WHEREBY, THE CAPITAL GAINS OFFERED TO TAX IN THE RE TURN WAS ACCEPTED AS SUCH. THIS ESCAPEMENT WAS BY REASON OF FAILURE ON YOUR PART TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT INASMUCH AS IN THE RETURN OF INCOME THE COST OF THE SAID SHO P WAS CLAIMED AT ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 7 RS.3,48,203/- WHEREAS THIS SHOP WAS CONSTRUCTED BY INCURRING RS.74,752/- ONLY WHICH MATERIAL FACT WAS NOT DISCLOSED EITHER I N THE RETURN OR IN THE COURSE OF ASSESSMENT PROCEEDINGS. MERE FILING OF B ILLS OF THE CONTRACTOR DID NOT AMOUNT TO SUCH DISCLOSURE BY VIRTUE OF THE AFORESAID EXPLANATION 1 TO SECTION 147. HOWEVER, AFTER CORRECTLY ASSUMING J URISDICTION, INSTEAD OF COMPUTING SHORT TERM CAPITAL GAINS, THE AO ERRED IN COMPUTING LONG TERM CAPITAL GAINS FROM THE SALE OF THE AFORESAID SHOP E VEN THOUGH THE SAME WAS CONSTRUCTED DURING THE RELEVANT PREVIOUS YEAR I TSELF. 3. IT IS NOTICED THAT NEWLY CONSTRUCTED UPPER GROUN D FLOOR OF THE SAID PROPERTY WAS SOLD FOR RS.19,40,000/- VIDE SALE DEED DATED 27.3.1997 TO K.M. BHAJIYAWALA AND OTHERS AND AS PER THE NARRATIO N IN THE SALE DEED AT PAGES 9 10 THE OLD BUILDING ON R.N. 194 WAS DEMOL ISHED ON ACCOUNT OF ROAD WIDENING EXERCISE BY SURAT MUNICIPAL CORPORATI ON AND A NEW BUILDING WAS CONSTRUCTED AFTER OBTAINING MUNICIPAL PERMISSION VIDE THEIR LETTER NO.E.NO/361/CENTRAL ZONE/OUTWARD/13 DATED 10 .4.96. THIS CLEARLY REFUTES YOUR CLAIM IN THE LETTER DATED 29.2.2000 TH AT THE PROPERTY WAS ACQUIRED BY PREVIOUS OWNER PRIOR TO 1 ST DAY OF APRIL, 1981. IN VIEW OF THIS, IT IS EVIDENT THAT THE SALE OF THIS PROPERTY GAVE R ISE TO SHORT TERM CAPITAL GAINS. 4. THE PROPERTY SOLD AS PER SCHEDULE TO THE SALE DE ED DATED 27.3.1997 WAS (1) THE SHOP ON THE UPPER GROUND FLOOR, (2) 1/5 TH PORTION OF THE OPEN UNDIVIDED LAND IN PLOT NO.194, AND (3) PARKING RIGH T IN THE OPEN PARKING SPACE OF PLOT NO.150. OUT OF THE ABOVE, THE SALE CO NSIDERATION ATTRIBUTABLE TO THE SHOP ON THE UPPER GROUND FLOOR GAVE RISE TO SHORT TERM CAPITAL GAINS WHICH WAS WRONGLY ASSESSED BY THE AO IN HIS ORDER U/S 147 R.W.S. 143(3) DATED 14.2.2005 AS LONG TERM CAPITAL GAINS. IT WAS DESPITE THE FACT THAT IN CASE OF COMPOSITE SALE OF OLD LAND AND NEW BUILDING, IT IS SETTLED THAT THE PROPORTIONATE AMOUNT OF CAPITAL GA IN ATTRIBUTABLE TO SALE OF LAND GIVES RISE TO LONG TERM CAPITAL GAINS WHERE AS THE CAPITAL GAINS ATTRIBUTABLE TO THE SALE OF BUILDING GIVES RISE TO SHORT TERM CAPITAL GAINS. REFERENCE IN THIS REGARD MAY BE MADE TO CIT VS. DR. D.L.RAMCHANDRA RAO 236 ITR 51 (MAD) AND CIT VS. VIMAL CHAND HIRWAT 201 ITR 442 (RAJ). THUS, THE NET OF THE AO OF ASSESSING THE ENT IRE CAPITAL GAINS AS LONG TERM CAPITAL GAINS HAS RESULTED INTO THE ASSESSMENT ORDER BEING ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263(1) OF THE ACT. 5. IN THE CIRCUMSTANCES, YOU ARE HEREBY GIVEN AN OP PORTUNITY OF BEING HEARD AND SHOW CAUSE AS TO WHY THE ASSESSMENT MADE BY THE AO IN YOUR CASE ON 14.2.2005 FOR THE ASST. YEAR 1997-98 SHOULD NOT BE ENHANCED TO INCORPORATE CORRECT AMOUNT OF CAPITAL GAINS UNDER T HE CORRECT HEAD ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 8 (SHORT-TERM CAPITAL GAINS) OR BE CANCELLED WITH A D IRECTION TO THE AO TO MAKE A FRESH ASSESSMENT IN ACCORDANCE WITH LAW. 6. YOU ARE REQUESTED TO APPEAR BEFORE THE UNDERSIGN ED EITHER PERSONALLY OR THROUGH YOUR AUTHORISED REPRESENTATIV E ON 3.0.8.2005 AT 10.30 A.M. AT MY OFFICE, IN ROOM NO.215, 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA, ALONG WITH ALL THE RELEVANT EVIDENCES ON WHICH YOU WISH TO RELY UPON IN THIS REGARD. YOU MAY, IN P ARTICULAR, FURNISH THE WORKING WITH SUPPORTING MATERIAL OF THE COST OF THR EE ITEMS SOLD AND THE PROPORTIONATE AMOUNT OF SALE CONSIDERATION ATTRIBUT ABLE TO THE SALE OF THESE ITEMS I.E. THE SHOP, THE 1/5 TH PORTION OF THE OPEN UNDIVIDED LAND AND THE PARKING RIGHT IN THE OPEN PARKING SPACE RESPECT IVELY. IN CASE OF NON- COMPLIANCE, THE MATTER WILL BE DECIDED ON MERITS. THE GIST OF THE REASONS FOR ISSUING THIS SHOW CAUSE NOTICE WAS THAT SALE CONSIDERATION ATTRIBUTABLE TO UPPER GROUND FLOOR WO ULD GIVE RISE TO ONLY SHORT-TERM CAPITAL GAINS WHICH HAS BEEN ASSESSED BY THE AO IN HIS ORDER U/S 147 R.W.S. SECTION 143(3) DATED 14.2.2005 AS LO NG TERM CAPITAL GAINS. THE LD. CIT NOTIFIED TO THE ASSESSEE THAT CONSIDERA TION ATTRIBUTABLE TO SALE OF LAND WOULD GIVE RISE TO LONG TERM CAPITAL GAINS WHEREAS PROFIT ON SALE OF SUPER STRUCTURE OF UPPER GROUND FLOOR WHICH WAS CONSTRUCTED DURING FY RELEVANT TO ASST. YEAR 1997-98 AND SOLD ON 27.3.199 7 AS SHORT TERM CAPITAL GAINS. 4. IN RESPONSE TO THE SHOW CAUSE NOTICE ASSESSEE FU RNISHED A REPLY ON 23 RD SEPTEMBER, 2005. THE REPLY SUBMITTED BY THE ASSESS EE IS ENCLOSED ON PAGES 58 TO 63 OF THE ASSESSEES PAPER BOOK. THE GI ST OF THE REPLY IS AS UNDER :- (1) REASSESSMENT PROCEEDINGS U/S 147/148 ARE NOT VA LID AS AO HAS NOT POINTED OUT WITH CLINCHING EVIDENCES THAT ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT TO THE ASSESSMENT. (2) RETURN OF INCOME HAS BEEN ACCEPTED BY THE AO AF TER CARRYING OUT NECESSARY ENQUIRIES. ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 9 (3) ASSESSMENT HAS BEEN REOPENED AFTER EXPIRY OF FO UR YEARS FROM THE RELEVANT ASST. YEAR AND IN THAT ORDER DATED 14.2.20 05 AO HAS SUBSTITUTED COST OF RS.74,752/- AS AGAINST COST SHOWN AT RS.3,4 8,203/-. ASSESSEE HAD COMPLETE BILLS AND PAYMENT DETAILS AND THE AO HAD C ORRECTLY CALCULATED LONG TERM CAPITAL GAINS AND HE HAS ALSO ACCEPTED TH E WORKING OF THE VLUE OF THE LAND AS COMPUTED BY THE ASSESSEE. (4) THE ASSESSEE OWNED OLD STRUCTURE WHICH HAD GROU ND AND 3 UPPER FLOORS. IT WAS DEMOLISHED IN 1995 AND NEW RCC STRUC TURE WAS CONSTRUCTED IN THE YEAR 1996-97. THIS WAS NECESSITATED ON ACCOU NT OF NOTICE ISSUED BY SURAT MUNICIPAL CORPORATION FOR CARRYING OUT RENOVA TION AND IMPROVEMENT. SINCE IT WAS ONLY RENOVATION AND IMPRO VEMENT IT WOULD GIVE RISE TO LONG TERM CAPITAL GAINS ONLY. (5) THE ASSESSEE HAS WORKED OUT THE COST OF CONSTRU CTION AT RS.409.65 PER SFT. AND IT HAS SOLD AN AREA OF 850 SFT. RESULT ING IN COST OF CONSTRUCTION OF THE PORTION SOLD AT RS.3,48,203/-. THE TOTAL COS T OF CONSTRUCTION OF 4582 SFT IS RS.18,77,000/- WHICH IS ON THE BASIS OF BILL S RAISED BY M/S MANISH BUILDDERS. THE COPY OF THE VALUATION REPORT ETC. HA VE BEEN SUBMITTED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S. 5. THE LD. CIT, HOWEVER, DID NOT ACCEPT THE ABOVE E XPLANATION OF THE ASSESSEE AND HELD THAT ORDER OF THE AO DATED.14.2.2 005 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLL OWING REASONS:- (1) OLD STRUCTURE WAS ENTIRELY DEMOLISHED AND THE L AND WAS AVAILABLE FOR NEW CONSTRUCTION. PERMISSION BY MUNICIPAL AUTHO RITIES WAS GRANTED ON 10.4.1996 FOR NEW CONSTRUCTION. (2) THE LAW IS CLEAR ON THE POINT THAT CAPITAL GAIN S IN RESPECT OF LAND AND IN RESPECT OF SUPER STRUCTURE CAN BE WORKED OUT SEPARATELY. ON LAND IT CAN BE LONG TERM CAPITAL GAINS AND ON SUPER STRUCTU RE IT CAN BE SHORT TERM CAPITAL GAINS. (3) THE COST OF CONSTRUCTION OF THE PORTION SOLD AS PER MANISH BUILDERS WAS RS.74,753/-. SINCE CONSTRUCTION WAS CARRIED OUT IN FY 1996-97 AS PER MISSION FOR NEW CONSTRUCTION WAS GRANTED ON 10.4.19 96 AND THE UPPER GROUND FLOOR WAS SOLD ON 27.3.1997 IT WOULD GIVE RI SE TO THE SHORT TERM CAPITAL GAINS. ON SALE OF LAND LD. CIT CATEGORICALL Y STATED THAT IT WILL GIVE RISE TO LONG TERM CAPITAL GAINS THOUGH HE HAD MADE SOME CALCULATION ACCORDING TO WHICH SALE CONSIDERATION OF THE LAND S OLD WOULD BE ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 10 RS.1,78,795/- AND INDEXED COST OF THE LAND WOULD BE RS.1,38,531/- WHICH WOULD RESULT INTO LONG TERM CAPITAL GAINS. 6. AGAINST, THE LD. AR SUBMITTED THAT - (1) THE REOPENING OF THE ASSESSMENT U/S 147 HAS BEE N CHALLENGED BY THE ASSESSEE BEFORE LD. CIT(A) BY FILING THE APPEAL ON 27 TH MARCH, 2005. IT IS NOT YET DECIDED BY HIM. THEREFORE, IF PROCEEDING S U/S 147 ARE QUASHED THEN ORDER OF LD. CIT U/S 263 WILL NOT SURVIVE. (2) NOTWITHSTANDING THE ACTION OF LD. CIT U/S 263 I S TIME BARRED. ACCORDING TO HER ONE QUESTION WHETHER SALE OF LAND OF SUPER STRUCTURE OF UPPER GROUND FLOOR WILL GIVE RISE TO LONG TERM CAPI TAL GAIN OR SHORT-TERM CAPITAL GAINS WAS CONSIDERED BY THE AO IN THE ORIGI NAL ASSESSMENT ORDER DATED 6.3.2000 AND ONCE HE HAS CARRIED OUT FULL ENQ UIRIES THEREIN THEN THE SAME CANNOT BE SUBJECTED TO REVISION BY LD. CIT. (3) THE ISSUE WHETHER SALE OF SUPER STRUCTURE AND L AND WILL GIVE RISE TO SHORT TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS WAS NOT THE SUBJECT MATTER OF RE-ASSESSMENT IN THE ORDER DATED 14.2.200 5 U/S 147/143(3). THEREFORE, LIMITATION FOR REVISING THE ORDER U/S 26 3 CANNOT BE RECKONED FROM 14.2.2005. SINCE THIS ISSUE WAS ORIGINALLY DIS CUSSED AND CONSIDERED IN THE ASSESSMENT ORDER DATED 6.3.2000 THEN LIMITAT ION FOR REVISING THE ORDER U/S 263 WILL HAVE TO BE RECKONED FROM 6.2.200 0. IF LIMITATION IS, THEREFORE, COUNTED FROM 6.3.2000 THEN ORDER OF LD. CIT U/S 263 PASSED ON 29.6.2005 IS BARRED BY LIMITATION. THE LD. AR RELIED ON THE DECISION OF HON. BOMBAY HI GH COURT IN ASHOK BUILDCON LTD. VS. ACIT 325 ITR 574 FOR THE PROPOSIT ION THAT LIMITATION FOR REVISING THE ORDER U/S 263 CANNOT BE RECKONED F ROM THE DATE OF THE ORDER PASSED U/S 147/143(3) IF THE ISSUES ON WHICH ORDER IS SOUGHT TO BE ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 11 REVISED WERE NOT THE SUBJECT MATTER OF RE-ASSESSMEN T. SIMILAR VIEW WAS TAKEN BY HON. SUPREME COURT IN CIT VS. ALAGENDRAN F INANCE LTD.(2007) 293 ITR 1 (SC) WHEREIN IT IS HELD THAT IF AN ISSUE IN A RE-ASSESSMENT ORDER SOUGHT TO BE REVISED U/S 263 WAS NOT THE SUBJECT MA TTER OF RE-ASSESSMENT PROCEEDINGS THEN SAME CANNOT BE SAID TO HAVE MERGED IN THE RE- ASSESSMENT ORDER AND THEREON LIMITATION OF TWO YEAR S U/S 263 WILL HAVE TO BE RECKONED FROM THE DATE OF ORIGINAL ASSESSMENTORD ER. 7. THE LD. AR FURTHER REFERRED TO A DECISION OF HON . GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT FORGING (P) LT D. IN ITR NO.42/1996 DATED 2.7.2008 WHEREIN ALSO SIMILAR PROPOSITION WAS HELD. 8. AGAINST THIS, LD. DR SUBMITTED THAT - (1) THE ISSUE OR THE SUBJECT MATTER IN THE REASSESS MENT PROCEEDINGS IS THE SAME I.E. THE CAPITAL GAINS. IT CANNOT BE FURTH ER SUBDIVIDED INTO LONG TERM CAPITAL GAINS OR SHORT TERM CAPITAL GAINS FOR FINDING OUT AS TO WHICH OF THE TWO WAS NOT THE SUBJECT MATTER OF RE-ASSESSM ENT. ONCE COMPUTATION OF CAPITAL GAINS IS THE SUBJECT MATTER OF RE-ASSESS MENT THEN THE AO WAS DUTY BOUND TO WORK OUT WHETHER IT SHOULD BE SHORT T ERM OR LONG TERM AND IF HE HAS FAILED TO DO SO THEN LD. CIT WILL HAVE TH E JURISDICTION TO REVISE HIS ORDER. IT IS NOT A CASE THAT SUBJECT MATTER OF RE-ASSESSMENT WAS ENTIRELY DIFFERENT. (2) HE SUBMITTED THAT IN ASHOK BUILDCON LTD. (SUPRA ) RE-ASSESSMENT U/S 147 WAS DONE IN RESPECT OF ISSUE U/S 72A WHEREA S LD. CIT SOUGHT TO REVISE THIS RE-ASSESSMENT ORDER U/S 263 ON THE ISSU ES RELATING TO (I) SECTION 40A(2)(B), (II) ON THE ISSUE RELATING TO U/S 36(1)( III), (III) ON THE ISSUES RELATING TO SECTION 68, (IV) ON THE ISSUE RELATING TO DEPRECIATION AND (V) ISSUES RELATING TO SHARE SUSPENSE ACCOUNTS ETC. THE SE ISSUES WERE DIFFERENT ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 12 THAN THE ISSUE RELATING TO SECTION 72A. HE SUBMITTE D THAT IN THE CASE OF CIT VS. ALAGENDRAN FIANCE LTD. (SUPRA), SUBJECT MAT TER FOR RE-ASSESSMENT WAS SHARE ISSUE EXPENSES, BAD AND DOUBTFUL DEBTS AN D EXCESS DEPRECIATION ON GAS CYLINDERS WHEREAS THE LD. CIT SOUGHT TO REVI SE U/S 263 ORDER OF REASSESSMENT ON THE SUBJECT MATTER OF LEASE EQUALIZ ATION FUNDS. IN THE CASE OF GUJARAT FORGING (P) LTD.(SUPRA) THE AO HAD ORIGINALLY GRANTED DEDUCTION U/S 35B AND DEDUCTION U/S 80J. THIS ORDER WAS REVISED BY LD. CIT U/S 263 WHEREIN WEIGHTED DEDUCTION U/S 35B WAS DIRECTED TO BE WITHDRAWN. THE AO PURSUANT TO ABOVE ORDER OF LD. CI T PASSED A FRESH ORDER ON 24.8.84 WHERE DEDUCTION U/S 80J WAS NOT TO UCHED BUT WITHDREW DEDUCTION U/S 35B AS DIRECTED BY LD. CIT. SUBSEQUEN TLY THE LD. CIT SOUGHT TO REVISE THIS ORDER DATED 24.8.1984 WITH RE SPECT TO DEDUCTION U/S 80J VIDE HIS ORDER DATED 6.1.1987. HON. GUJARAT HIG H COURT HELD THAT LIMITATION FOR REVISING THE ORDER ON THE ISSUE OF S ECTION 80J CANNOT BE COUNTED FROM THE ORDER OF THE AO DATED 24.8.84 AS T HIS ISSUE WAS NOT TOUCHED BY HIM BUT WAS ONLY CONSIDERED IN THE ORIGI NAL ORDER DATED 26.3.1981. THUS THE SUBJECT MATTER OF FURTHER REVIS ION BY LD. CIT U/S 263 VIDE HIS ORDER DATED 6.1.87 WAS DIFFERENT AND, THER EFORE, HIS ORDER WAS CONSIDERED BARRED BY LIMITATION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THERE IS NO DISPUTE WITH THE PROPOSITION LAID DOWN BY THE HON. BOMBAY HIGH COURT IN ASHOK BUILDCON LTD. (SUPRA), B Y HON. SUPREME COURT IN ALAGENDRAN FIANCE LTD. (SUPRA) AND BY HON. GUJARAT HIGH COURT IN GUJARAT FORGING (P) LTD. (SUPRA). IF THE SUBJECT MATTER OF REVISION U/S 263 WAS NOT CONSIDERED IN THE RE-ASSESSMENT ORDER O R WAS NOT THE SUBJECT MATTER OF RE-ASSESSMENT THEN LIMITATION AVAILABLE T O THE LD. CIT FOR TAKING ACTION U/S 263 CANNOT BE COUNTED FROM THAT ORDER OF RE-ASSESSMENT BUT IT ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 13 WILL GO BACK TO ORIGINAL ASSESSMENT WHERE THE SUBJE CT MATTER WAS NOT AT ALL CONSIDERED. IN OTHER WORDS AS PER DOCTRINE OF MERGE R ONLY THAT SUBJECT MATTER WILL MERGE IN THE RE-ASSESSMENT WHICH HAS BE EN SUBJECT MATTER OF RE-ASSESSMENT. THE LIMITATION FOR REVISING SUCH SUB JECT MATTER WHICH WAS CONSIDERED IN THE RE-ASSESSMENT ORDER WOULD BE RECK ONED FROM THE DATE OF RE-ASSESSMENT ORDER BUT LIMITATION FOR TAKING ACTIO N U/S 263 ON SUBJECT MATTERS WHICH DID NOT FORM PART OF THE RE-ASSESSMEN T ORDER WILL BE RECKONED FROM THE ORIGINAL ORDER. 10. NOW THE QUESTION IS WHETHER ASSESSMENT AS SHORT -TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS IS A SUBJECT MATTER OTHE R THAN CAPITAL GAINS OR IT WOULD BE INTEGRAL PART OF CAPITAL GAINS AND, THEREF ORE, WOULD BE SUBJECT MATTER CONSIDERED IN THE RE-ASSESSMENT ORDER. IN OU R CONSIDERED VIEW COMPUTATION OF CAPITAL GAINS IS PROVIDED BETWEEN SE CTION 45 TO SECTION 55A OF THE IT ACT. NONE OF THE SECTIONS OR SUB-SECT IONS CONTAINED IN CHAPTER IV UNDER THE HEAD CAPITAL GAINS REFER TO SH ORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAINS BUT THE SAME IS PROVIDED ON LY IN SECTION 2(29B) AND SECTION 2(42B). THEREFORE, WHAT IS SHORT TERM C APITAL OR LONG TERM CAPITAL GAINS ARE PART OF THE DEFINITIONS AND NOT O F THE CHARGING SECTIONS. DEFINITIONS CANNOT FORM A SUBJECT MATTER OF ASSESSM ENT BUT IT IS ONLY THE CHARGING SECTION WHICH CAN FORM OR CREATE A SUBJECT MATTER. FOR THE SAKE OF CONVENIENCE WE REPRODUCE SECTION 2(29B) AND SECT ION 2(42B) AS UNDER:- SEC. 2(29B) LONG TERM CAPITAL GAIN MEANS CAPITA L GAIN ARISING FROM THE TRANSFER OF A LONG TERM CAPITAL ASSET. SEC. 2(42B) SHORT TERM CAPITAL GAIN MEANS CAPIT AL GAIN ARISING FROM THE TRANSFER OF A SHORT TERM CAPITAL ASSET. ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 14 IN OUR CONSIDERED VIEW TAXABILITY OF DIFFERENT ITEM S UNDER DIFFERENT SECTIONS OR DEDUCTION AVAILABLE TO THE ASSESSEE UND ER DIFFERENT SECTIONS WOULD CONSTITUTE DIFFERENT SUBJECT MATTER BUT THE M ACHINERY PROVISIONS WHICH ENABLE THE COMPUTATION OF INCOME OR DEDUCTION CANNOT CONSTITUTE DIFFERENT SUBJECT MATTERS. THUS WHAT ITEM IS TAXABL E OR WHAT DEDUCTION IS ALLOWABLE TO AN ASSESSEE IS ONE SEPARATE INDEPENDEN T SUBJECT MATTER BUT THEN HOW INCOME WHICH IS OTHERWISE TAXABLE IS COMPU TED OR HOW THE DEDUCTION IS CALCULATED CANNOT BE A DIFFERENT SUBJE CT. IN ANY CASE WHEN AO CONSIDERS A CERTAIN AMOUNT AS CHARGEABLE TO CAPI TAL GAINS HE IS DUTY BOUND TO CONSIDER WHETHER IT SHOULD BE LONG TERM CA PITAL GAINS OR SHORT TERM CAPITAL GAINS. 11. FURTHER WE ARE OF THE CONSIDERED VIEW THAT SECT ION 147 ALSO ENABLES THE AO TO CONSIDER AN ITEM WHICH HE DISCOVERS AFTER REOPENING OF THE ASSESSMENT AS HAVING ESCAPED ASSESSMENT. THEN HE IS DUTY BOUND TO TAX SUCH ADDITIONAL ITEM TO TAX IN THE RE-ASSESSMENT OR DER. IN OTHER WORDS SECTION 147 HAS TWO PARTS ONE IS JURISDICTIONAL PAR T WHICH RELATES TO ACQUISITION OF JURISDICTION BY THE AO ON AN ITEM OF INCOME WHICH HAS ESCAPED ASSESSMENT AND THE OTHER IS MACHINERY PART I.E. TO ALSO TAX AN ITEM OF INCOME WHICH COMES TO HIS NOTICE DURING RE-ASSES SMENT AND WHICH HAS ALSO ESCAPED ASSESSMENT. THUS THE AO IS REQUIRED TO MAKE ADDITION IN RESPECT OF BOTH ITEMS (1) ON THE BASIS OF WHICH HE HAS REOPENED THE ASSESSMENT AND WHICH IS NOT FOUND SATISFACTORILY EX PLAINED DURING RE- ASSESSMENT AND (2) THE OTHER WHICH HE DISCOVERS DUR ING RE-ASSESSMENT PROCEEDINGS AND WHICH IS ALSO NOT FOUND SATISFACTOR ILY EXPLAINED. FOR THE SAKE OF CONVENIENCE WE REPRODUCE SECTION 147 AS UND ER :- ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 15 [INCOME ESCAPING ASSESSMENT. 147 . IF THE (ASSESSING) OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTION 148 TO 15 3 ASSESSEE OR RE-ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THIS SECTION, OR RECOMP UTED THE LOSS, OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE FOR THE ASSESSMENT YEAR CONCERNED THEREAFTER IN THIS SE CTION AND IN SECTION 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT Y EAR; PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 14393) OR THIS SECTION HAS BEEN MADE FOR THE RELEVA NT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB SECTION (1 ) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR; PROVIDED FURTHER THAT THE AO MAY ASSESSEE OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE T HE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEA BLE TO TAX AND HAS ESCAPED ASSESSMENT.] 12. WHEN WE EXAMINE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT IT IS CLEAR THAT CONSTRUCTION OF THE BUI LDING WAS MADE DURING FY 1996-97 AND SALE WAS ALSO MADE DURING THAT FY. I T WAS NOT THE CASE THAT AO HAD TO CARRY OUT INVESTIGATION TO DISCOVER THE FACTS RELATING TO TIME OF CONSTRUCTION AND TIME OF SALE. THEY WERE B OTH AVAILABLE IN THE REASONS RECORDED ITSELF. AT LEAST THE PERIOD OF CON STRUCTION IS SHOWN AS ASST. YEAR 1997-98 WHICH WOULD CLEARLY GIVE RISE TO SHORT TERM CAPITAL GAINS. THESE FACTS ARE STEERING AT THE FACE OF THE AO AND IF THEY ESCAPE HIS NOTICE OR HE IGNORES THEM THEN CERTAINLY THE ORDER OF AO BECOMES ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. HE HAS NOT CARRIED ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 16 OUT THE DUTY CAST ON HIM TO INCLUDE OTHER ITEM OF E SCAPED INCOME I.E. WHETHER IT IS SHORT TERM OR LONG TERM CAPITAL GAINS , IF WE CONSIDER THE ISSUE OF SHORT TERM OR LONG TERM CAPITAL GAINS AS DIFFERE NT ISSUES EVEN THOUGH, AS WE HAVE OBSERVED EARLIER THE TWO ARE NOT DIFFERENT ISSUES BUT ARE THE SAME BEING INTEGRAL PART OF CHARGING SECTIONS OF CAPITAL GAINS. 13. NOW IT IS SETTLED LAW IF A DUTY CAST ON THE AO EITHER TO ENQUIRE OR TO ASSESS A PARTICULAR ITEM OF INCOME, AND IF HE FAIL S TO CARRY OUT HIS DUTY THEN HIS ORDER WOULD BE ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. IN OUR CONSIDERED VIEW THE PERIOD OF CONST RUCTION AND SALE IS AVAILABLE TO THE AO. AS A RESULT, A DUTY IS COST ON HIM AND TO CONSIDER WHETHER CAPITAL GAINS CHARGEABLE WOULD BE SHORT TER M OR LONG TERM CAPITAL GAINS. IT IS THE SAME SUBJECT MATTER AND SECTION 14 7 ALSO EMPOWERS TO CONSIDER THE SAME. OUR VIEW THAT WHERE AO DOES NOT CARRY OUT THE DUTY CAST ON HIM, HIS ORDER WOULD BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IS SUPPORTED BY FOLLOWING A UTHORITIES: (1) MALABAR INDUSTRIAL CO. LTD. VS. CIT (2008) 243 ITR 83 (SC) (2) RAJIV AGNIHOTRI VS. CIT (2009) 23 DTR 476 (DEL) (ITAT) (3) CIT VS. DEEPAK KUMAR (2008) 299 ITR 435 (M.P.) (4) DUGGAL & CO. VS. CIT (1996) 220 ITR 458 (DEL) (5) ADDL. CIT VS. MUKUR CORPN. (1978) 111 ITR 312 ( GUJ) (6) GEE VEE ENTERPRISES VS. ADDL. CIT (1975) 99 ITR 375 (DEL) 14. THUS ON THE BASIS OF FACTS AVAILABLE BEFORE US, THE ORDER OF LD. CIT U/S 263 IS UPHELD. AS A RESULT APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. ITA NO.2423/AHD/2005 ASST. YEAR 1997-98 17 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 6/5/11. SD/- SD/- (D. K. TYAGI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 6/5/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 1/4/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 11/4/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..