ACIT, V. M/s Vijeta Projects & Infrastructure Ltd.,

ITA 258/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0311 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A RAKSHIT
• Assessee Lawyers: A K RASTOGI; C
• Keywords: Depreciation; Principle of natural justice; Proportionate interest
• Section: 69C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: CIRCUIT BENCH : RANCHI [BEFORE HONBLE S/SHRI N. S. SAINI, AM AND GEORGE M ATHAN, JM] ITA NO.258, 277 & 290/RAN/2014 AYS. 2010-11, 2008-09 & 2009-10 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3, ROOM NO.302, CENTRAL REVENUE BUILDING (ANNEXE), MAIN ROAD, RANCHI 834001. VS M/S. VIJETA PROJECTS & INFRASTRUCTURE LTD., WEST MORABADI, MORABADI, RANCHI 834 008 PAN: AAACV 6054G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A. RAKSHIT, DR RESPONDENT BY SHRI A. K. RA STOGI, ADVOCATE & C.S. PANDEY, ADVOCATE DATE OF HEARING: 05-11-2015 DATE OF PRONOUNCEMENT: 05-11-2015 O R D E R PER GEORGE MATHAN, JM: ITA NO.258/RAN/2014 IS AN APPEAL FILED BY THE ASSES SEE AGAINST THE ORDER OF THE LEARNED CIT (A), RANCHI IN APPEAL NO.81/RAN/CO/12- 13 DATED 29-04-2014, FOR ASSESSMENT YEAR 2010-11, I TA NO.277/RAN/2014 IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER OF THE LEARNED CIT(A), RANCHI IN APPEAL NO.220/RAN/ OTH/10-11 DATED 11-06-2014, FOR THE ASSESSMENT YEAR 2008-09 AND ITA NO.290/RAN/2014 IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER OF THE LEARNED CIT(A), RANCHI IN APPEAL NO.112/RAN/ OTH/11-12 DATED 28-07-2014, FOR THE ASSESSMENT YEAR 2009-10. ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 2 2. SHRI A. RAKSHIT, LEARNED DR REPRESENTED ON BEHAL F OF THE REVENUE AND SHRI A. K. RASTOGI, ADVOCATE REPRESENTE D ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR ON BEHALF OF THE REVENUE THAT THE ISSUES IN ALL THE THREE APPEALS ARE SUBSTA NTIALLY COMMON. IT WAS A SUBMISSION THAT THERE WERE BASICALLY THREE IS SUES, THE FIRST ISSUE BEING AGAINST THE ACTION OF THE LEARNED CIT (A) IN DELETING THE ADDITION MADE BY DISALLOWANCE OF INTEREST PAID BY THE ASSESS EE ON ACCOUNT OF ADVANCEMENT OF NON-INTEREST BEARING LOAN TO M/S. MO TIRAJ DEVI TRUST, WHICH WAS A TRUST IN WHICH THE DIRECTORS OF THE ASS ESSEE COMPANY WERE TRUSTEES. THE SECOND ISSUE WAS AGAINST THE ACT ION OF THE LEARNED CIT (A) IN DELETING THE ADDITION REPRESENTING A DIS ALLOWANCE OF ONE FOURTH OF THE GROSS AGRICULTURAL RECEIPT AS EXPENDI TURE INCURRED FOR THE PURPOSE OF EARNING SUCH AGRICULTURAL INCOME. IT WAS A SUBMISSION THAT THE THIRD ISSUE WHICH WAS RELATABLE ONLY TO ASSESSM ENT YEAR 2010-11 WAS AGAINST THE ACTION OF THE LEARNED CIT(A) IN DEL ETING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF THE EXPEN DITURE UNDER THE HEAD MEMBERSHIP AND SUBSCRIPTION. 4. AT THE OUTSET, WHEN THE QUESTION OF AGRICULTURAL INCOME WAS QUESTIONED BY THE BENCH AND AS THE BENCH WAS A TOUR ING BENCH, IT WAS SUGGESTED THAT THIS APPEALS BE HEARD AT THE NEXT DA TE OF HEARING. TO THIS, THE LEARNED COUNSEL RAISED SERIOUS OBJECTION AND SUBMITTED THAT THE ASSESSEE IS INCURRING SUBSTANTIAL EXPENSES IN T HE NATURE OF LEGAL FEE, TRAVELING AND STAY EXPENSES ETC. CONCEDING TO THE LEARNED COUNSELS REQUEST, THE BENCH AGREED TO HEAR THE MAT TER. ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 3 5. AFTER HEARING, THE ORDER WAS BEING DICTATED IN O PEN COURT. AS THE LEARNED AR WAS CONTINUOUSLY DISTURBING THE DICTATIO N AND INTERFERING IN THE DICTATION, THE BALANCE OF THIS ORDER WAS DICTAT ED IN CHAMBER. 6. IN REGARD TO THE FIRST ISSUE RAISED BY THE LEARN ED COUNSEL WAS DISALLOWANCE FROM THE AGRICULTURAL INCOME WHICH HAD BEEN DELETED BY THE LEARNED CIT (A). IT WAS SUBMITTED BY THE LEARNE D AR THAT THE ADDITION HAS BEEN MADE BY INVOKING THE PROVISIONS O F SECTION 69C OF THE ACT. IT WAS A SUBMISSION THAT THE LEDGERS WERE PRODUCED TO SHOW THE EXPENSES AND THE INCOME FROM AGRICULTURAL. THE LEARNED AR DREW OUR ATTENTION TO PAGE 3 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-09. IT WAS A SUBMISSION THAT THE AO HAS D ISALLOWED THE EXPENDITURE TO AN EXTENT OF ONE FOURTH OF THE GROSS AGRICULTURAL RECEIPTS ON THE GROUND THAT THE EXPENDITURE RELATIN G TO EARNING OF THE AGRICULTURAL INCOME WAS NOT DISCLOSED BY THE ASSESS EE. IT WAS A SUBMISSION THAT IN THE PROFIT & LOSS ACCOUNT, THE A GRICULTURAL INCOME SHOWN WAS IN FACT ONLY THE NET AGRICULTURAL INCOME. ON A SPECIFIC QUERY FROM THE BENCH AS TO WHAT WAS THE AREA OF THE AGRIC ULTURAL LAND HELD AND WHAT WAS THE CROPS GROWN BY THE ASSESSEE, IT WA S SUBMITTED THAT THE ASSESSEE OWNED AROUND 7000 DECIMALS OF AGRICULT URAL LAND NEAR RANCHI AND THE ASSESSEE WAS GROWING CASH CROPS AND THE SAME WERE BEING SOLD TO LOCAL PERSONS. ON BEING ASKED BY THE BENCH AS TO THE DETAILS OF THE RECEIPTS AND PAYMENTS OR VOUCHERS IN RESPECT OF THE AGRICULTURAL INCOME, IT WAS SUBMITTED BY THE LEARNE D AR THAT THIS ISSUE WAS NOT BEFORE THE TRIBUNAL. IT WAS A SUBMISSION TH AT THE LEDGERS IN RESPECT OF AGRICULTURAL INCOME HAD BEEN PRODUCED BE FORE THE AO. THE LEARNED AR DREW OUR ATTENTION TO PAGE 3 PARA2 OF TH E ASSESSMENT ORDER. IT WAS A SUBMISSION THAT ALL THE SOURCES ARE DISCLOSED IN THE BOOKS. IT WAS A SUBMISSION THAT THERE WAS NO DISALL OWANCE OF ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 4 AGRICULTURAL EXPENDITURE IN THE EARLIER YEARS AND N O IRREGULARITY HAS BEEN FOUND AND CONSISTENCY WAS LIABLE TO BE FOLLOWE D. IT WAS SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD ON THIS ISSUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE ASSESSMENT ORDER. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS ASKED FOR THE DETAILS OF THE EXPENS ES INCURRED FOR EARNING AGRICULTURAL INCOME. THE ASSESSEE HAS ONLY PRODUCED A LEDGER SHOWING THE VARIOUS EXPENSES. THE AO HAS ALSO RECOR DED ON PAGE 4 OF THE ASSESSMENT ORDER THAT ON EXAMINATION OF THE LED GER COPIES, THE EXPENSES INCURRED FOR AGRICULTURAL PURPOSES ARE ON CASH BASIS BEING WITH NO NAME OF ANY PERSON OR ADDRESS FROM WHOM VER IFICATION IN THIS REGARD CAN BE MADE. THE LEARNED AO HAS ALSO TAKEN I NTO CONSIDERATION THE POSSIBLE PER ACRE PRODUCTION OF AGRICULTURAL IN COME WHEN ESTIMATING THE POSSIBLE EXPENDITURE WHICH HE CLAIMS IS NOT RECORDED OR IS NOT DEBITED FROM GROSS RECEIPTS. ON PERUSAL OF T HE ORDER OF THE LEARNED CIT(A) SHOWS THAT THE LEARNED CIT(A) HAS DE LETED THE ADDITION MADE BY THE AO ONLY ON THE GROUND THAT THE ASSESSEE IS MAINTAINING ANOTHER AGRICULTURAL INCOME ACCOUNT AND THE NET BAL ANCE WHICH HAS BEEN TAKEN INTO THE PROFIT & LOSS ACCOUNT WAS ARRIV ED AT AFTER DEDUCTING THE EXPENSES. THE LEARNED CIT (A) DOES NO T GIVE ANY FINDING IN REGARD TO THE FACTUAL FINDING GIVEN BY THE AO TH AT EVEN IN THE LEDGER OF THE EXPENSES INCURRED FOR AGRICULTURAL PURPOSES SUBMITTED BY THE ASSESSEE, IT WAS SEEN THAT ALL THE DETAILS ARE OF C ASH BASIS AND THERE WAS NO NAME OF ANY PERSON OR ADDRESS FROM WHOM VERI FICATION IN THIS REGARD CAN BE MADE. THE TRIBUNAL, BEING THE HIGHEST FACT FINDING BODY HAS SPECIFICALLY ASKED FOR THE DETAILS OF THE AREA OF LAND HELD BY THE ASSESSEE, IN WHOSE NAME THE LAND IS HELD, WHAT IS T HE NATURE OF THE ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 5 AGRICULTURAL PRODUCE, WHERE THE AGRICULTURAL PRODUC ES HAVE BEEN SOLD AND HOW, WHAT IS THE NATURE OF EXPENDITURE INCURRED AND THE DETAILS THEREIN. EVEN THOUGH, THESE DETAILS WERE ASKED FOR, THE LEARNED AR ON BEHALF OF THE ASSESSEE DID NOT PRODUCE BEFORE US AN Y DETAILS, MUCH LESS EVEN THE SAID LEDGER ACCOUNT. THIS BEING SO, A S ALL THE FACTS RELATING TO THIS DISALLOWANCE HAS NOT BEEN PLACED B EFORE US, NOR HAS IT COME OUT OF THE ORDER OF THE AO OR THE LEARNED CIT (A), WE ARE OF THE VIEW THAT THE ISSUE OF AGRICULTURAL INCOME WOULD HA VE TO BE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION DE NOVO ON ALL ISSUES AND WE DO SO. 8. COMING TO THE SECOND ISSUE BEING ADDITION REPRES ENTING THE DISALLOWANCE OUT OF THE INTEREST PAID ON ACCOUNT OF NON-INTEREST BEARING FUNDS LENT TO M/S. MOTIRAJ DEVI TRUST, THE LEARNED AR SUBMITTED THAT THE INTEREST-FREE LOAN EXTENDED TO M/S. MOTIRA J DEVI TRUST WAS TO THE EXTENT OF RS.22.88 CRORES FOR THE ASSESSMENT YE AR ENDED AS ON 31-03-2008 WHICH REDUCED TO RS.3.88 CRORES FOR THE YEAR ENDED AS ON 31-03-2009 AND RS.3.88 CROREES FOR THE YEAR ENDED A S ON 31-03-2010. IT WAS A SUBMISSION THAT THE ASSESSEE HAD SUBSTANTI AL PROFITS RUNNING INTO CRORES OF RUPEES DURING THE RELEVANT ASSESSMEN T YEARS AS ALSO RESERVES AND SURPLUS RUNNING INTO CRORES OF RUPEES. IT WAS THE SUBMISSION THAT THIS ADVANCE TO M/S. MOTIRAJ DEVI T RUST CAME FROM THE EARLIER YEARS. FOR THIS, HE DREW OUR ATTENTION TO S CHEDULE 3 OF THE ACCOUNTS FOR THE YEAR 2007-08, WHERE THE AMOUNT IS SHOWN AT RS.31.88 CRORES. IT WAS A SUBMISSION THAT THERE WAS NO DISALLOWANCE IN THE EARLIER YEARS AND CONSEQUENTLY, NO DISALLOWANCE IS LIABLE TO BE CALLED FOR DURING THE RELEVANT ASSESSMENT YEAR ALSO . TO A SPECIFIC QUERY FROM THE BENCH, AS TO WHETHER THIS AMOUNT OF LOAN W AS GIVEN FROM THE CURRENT ACCOUNT OR LOAN ACCOUNT AND WHETHER THE ASS ESSEE WAS ABLE TO ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 6 SHOW FROM WHERE THIS AMOUNT OF INTEREST-FREE LOAN H AS BEEN GRANTED, IT WAS SUBMITTED BY THE LEARNED AR THAT IT WAS FOR THE AO TO ESTABLISH THAT THE BORROWED FUNDS WERE GIVEN FROM THE NON-INT EREST BEARING FUNDS. IT WAS SUBMITTED THAT THERE WAS NO SUCH FIND INGS IN THE ASSESSEES CASE. HE PLACED RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS MOTOR GENERA L FINANCE LTD. REPORTED IN 272 ITR 550 AS ALSO THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADICO KHAITAN LT D. REPORTED IN 272 ITR 354 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. REPORTED IN 313 ITR 340. IT WAS A SUBMISSION THAT THE AO HAS DISALLOWED THE INTEREST ONLY BECAUSE NO INTEREST WAS CHARGED FROM THE SAID TRUST. IT WAS TH E FURTHER SUBMISSION BY THE LEARNED AR THAT THE ONUS IS ON TH E AO TO PROVE THAT THE ASSESSEE HAS USED THE INTEREST BEARING FUNDS FO R GRANTING INTEREST- FREE LOANS AND THE TRIBUNAL CANNOT SUBSTITUTE THE F INDINGS OF THE AO. ON A SPECIFIC QUERY FROM THE BENCH AS TO THE DATE O N WHICH THE LOAN WAS GIVEN AND WHETHER ON SUCH DATE THE ASSESSEE HAD NON-INTEREST BEARING FUNDS AVAILABLE FOR GIVING THE LOAN AND AS TO WHETHER THE ADVANCE HAS BEEN GIVEN FROM THE O. D. ACCOUNT OR SA VINGS ACCOUNT OR CURRENT ACCOUNT OF THE ASSESSEE, THE LEARNED AR WAS UNABLE TO GIVE ANY INFORMATION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION. ADMITTE DLY, THIS AMOUNT OF ADVANCE GIVEN TO M/S. MOTIRAJ DEVI TRUST, DOES NOT RELATE TO THE ASSESSMENT YEARS UNDER APPEAL. THESE ADVANCES A RE FROM EARLIER YEARS. HOWEVER, THE FACTS RELATING TO THE ADVANCES MORE SO, FROM WHAT ACCOUNT THE ADVANCES HAVE BEEN GIVEN BEING A CRUCIA L FACT REQUIRED FOR ADJUDICATING THE ISSUE, HAS NOT BEEN PLACED BEFORE US. A PERUSAL OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF MOTOR GENERAL ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 7 FINANCE, REFERRED SUPRA, IT CLEARLY SHOWS THAT THE HONBLE DELHI HIGH COURT HAS CATEGORICALLY GIVEN A FINDING THAT THE TR IBUNAL OUGHT TO HAVE EXAMINED THE ISSUES IN DETAILS IN VIEW OF THE EVIDE NCES WHICH WERE PLACED BEFORE IT AND IT WAS FOR THE TRIBUNAL TO CON SIDER THE SAME OR THE TRIBUNAL OUGHT TO HAVE GIVEN A DIRECTION TO THE AO AND THEREAFTER EXAMINED THE MATTER AND RECORD THE FINDING. FURTHER A PERUSAL OF THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RADICO KHAITAN LTD., REFERRED TO SUPRA, SHOWS THAT IN THAT CASE AT PAGE 366 IN PARA 36 IT IS HELD THAT IT IS ON THE BASIS OF THE F INDINGS RECORDED BY THE TRIBUNAL THAT WHEN THE ASSESSEE COMPANY HAD SUFFICI ENT FUNDS OTHER THAN BORROWED MONEY, IT WAS HELD THAT THE TRIBUNAL HAD RIGHTLY DELETED THE DISALLOWANCE OF THE PROPORTIONATE INTEREST DISA LLOWANCE. ON PERUSAL OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD., REFERRED SUPRA, AGAIN SHOWS THAT IN THE ORDER OF THE APPELLATE TRIBUNAL, A CLEAR FINDIN G IS RECORDED THAT THE ASSESSEE HAD INTEREST-FREE FUNDS OF ITS OWN WHICH H AVE BEEN GENERATED IN THE COURSE OF THE YEAR COMMENCING FROM 01-04-199 9. HERE, A PERUSAL OF ALL THE ABOVE DECISIONS SHOWS THAT IT IS FOR THE TRIBUNAL TO GIVE A FINAL FINDING OF FACT AND FOR GIVING THIS FI NDING OF FACT; THE TRIBUNAL MUST HAVE SOME EVIDENCES BEFORE IT. ADMITT EDLY, THESE ADVANCES RELATE TO EARLIER YEARS, NO EVIDENCE WITH REGARD TO THE DATES IN RESPECT OF GRANTING THE LOANS, FROM WHAT SOURCE, THE LOANS HAD BEEN GIVEN IN THAT YEAR, WHAT IS THE BUSINESS EXIGENCY F OR GRANTING THAT LOAN TO M/S. MOTIRAJ DEVI TRUST, NOTHING IS AVAILABLE. T HOUGH, THE BALANCE SHEET OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2008 -09, 2009-10 AND 2010-11 ARE PLACED BEFORE THE TRIBUNAL, THESE WOULD , IN NO WAY, HELP IN THE FINDING OF FACTS OF THE FUNDS IN SO FAR AS, THE LOANS DID NOT RELATE TO THESE YEARS. EVEN OTHERWISE, A PERUSAL OF THE BA LANCE SHEET FOR THE YEAR ENDED AS ON 31-03-2008 SHOWS THAT THE ASSESSEE HAS NEARLY ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 8 RS.28.7 CRORES IN THE FORM OF SHAREHOLDERS FUNDS; W HEREAS, THE FIXED ASSETS ITSELF IS IN THE RANGE OF RS.54.62 CRORES. F OR THE YEAR ENDED AS ON 31-03-2009, THE SHAREHOLDERS FUNDS MORE SO, NON- INTEREST BEARING FUNDS IS AT RS.36.5 CRORES; WHEREAS THE FIXED ASSET S AFTER DEPRECIATION IS AT RS.52.75 CROES AND THE BLOCK HAS GONE UP FROM RS.51 CRORES TO RS.66.98 CRORES THEREBY REPRESENTING AN ADDITION OF NEARLY RS.15 CRORES; WHEREAS THE PROFIT FOR THE RELEVANT YEAR EN DED AS ON 31-03- 2009 AFTER TAXES IS ONLY RS.6.48 CRORES. FOR THE YE AR ENDED AS ON 31- 03-2010, THE SHAREHOLDERS FUNDS IS RS.54.01 CRORES; WHEREAS THE FIXED ASSETS IS AT RS.48.34 CRORES AND INVENTORIES AT RS. 30.76 CRORES TOTALING TO NEARLY RS.79 CRORES. THE FIXED ASSETS GROSS BLOC K INCREASED FROM RS.52.75 CRORES FOR THE YEAR ENDED AS ON 31-03-2009 TO RS.67.09 CRORES THEREBY SHOWING AN INCREASE OF NEARLY RS.15 CRORES; WHEREAS THE PROFIT FOR THE YEAR ENDED AS ON 31-03-2009 AFTE R TAX WAS ONLY RS.8.01 CRORES. THIS WOULD CLEARLY SHOW THAT DURING THE RELEVANT THREE YEARS, THE ASSESSEE DID NOT HAVE ANY SURPLUS NON-IN TEREST BEARING FUNDS FOR GIVING ANY INTEREST-FREE LOANS. HOWEVER, AS THE ADVANCE TO M/S. MOTIRAJ DEVI TRUST DOES NOT RELATE TO ANY OF T HE THREE ASSESSMENT YEARS BUT THE EARLIER YEARS WHICH THE LEARNED AR IS UNABLE TO EXPLAIN; WE ARE OF THE VIEW THAT THIS ISSUE MUST BE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER ASCERTAINING ALL THE F ACTS THAT LED TO GRANTING OF THE INTEREST-FREE LOAN, THE YEAR IN WHI CH THE LOAN WAS GIVEN, WHETHER IT WAS FOR BUSINESS PURPOSES ETC. IN THE CIRCUMSTANCES, THIS ISSUE IS RESTORED TO THE FILE OF THE AO FOR RE -ADJUDICATION DE NOVO IN ITS ENTIRETY. 10. COMING TO THE THIRD ISSUE WHICH RELATES ONLY TO THE ASSESSMENT YEAR 2010-11, WHICH IS AGAINST THE ACTION OF THE LE ARNED CIT(A) IN DELETING THE DISALLOWANCE MADE UNDER THE HEAD MEMB ERSHIP AND ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 9 SUBSCRIPTION, IT WAS SUBMITTED BY THE LEARNED AR T HAT THESE WERE EXPENDITURE IN RELATION TO THE CORPORATE MEMBERSHIP WITH RANCHI GYMKHANA CLUB AND LIONS CLUB. IT WAS HOWEVER, FAIRL Y ADMITTED THAT THE LIONS CLUB MEMBERSHIP WAS IN THE PERSONAL NAME OF ONE OF THE DIRECTORS. IT WAS A SUBMISSION THAT THE SAID EXPEND ITURE WAS TO BE LOOKED UPON FROM THE BUSINESSMANS POINT OF VIEW. I T WAS A SUBMISSION THAT THE EXPENDITURE WAS INCURRED FOR ME ETING CLIENTS AND BUSINESS DISCUSSIONS. IT WAS A SUBMISSION THAT THER E WAS NO DISALLOWANCE IN THE EARLIER YEARS. IT WAS A SUBMISS ION THAT THE ORDER OF THE LEARNED CIT (A) WAS LIABLE TO BE SUSTAINED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE ALSO PERUSED THE ASSESSMENT ORDER. THE FACT THAT THE LEARNED AR HIMSELF HAS CONCEDED THAT THE PAYMENT OF LIONS CLUB DOES NOT RE LATE TO THE COMPANY BUT TO ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY, THE EXPENDITURE TO SUCH EXTENT WOULD HAVE TO BE CONFIRM ED. 12. COMING TO THE ISSUE OF PAYMENT TO RACHI GYMKHAN A CLUB TOWARDS MEMBERSHIP SUBSCRIPTION, IT IS NOTICED THAT THE AO HAS SPECIFICALLY STATED THAT THE EXPENDITURE HAS NO REL EVANCE WITH THE BUSINESS OF THE ASSESSEE. HOWEVER, IN THE INTEREST OF NATURAL JUSTICE, THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE AO F OR RE-ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBST ANTIATE ITS CASE AND TO PRODUCE THE DETAILS OF BILLS ALONG WITH DETA ILS OF THE EXPENDITURE AND WHAT WAS THE BUSINESS EXIGENCY WHICH RESULTED I N THIS EXPENDITURE HAVING BEEN INCURRED. 13. BEFORE PARTING, IT MUST BE MENTIONED HERE THAT ONE OF THE MAIN THRUST OF THE LEARNED AR WAS THAT THE ADDITIONS AND DISALLOWANCES AS HAD BEEN MADE BY THE AO AND DELETED BY THE LEARNED CIT (A) WERE NOT ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 10 MADE FOR ANY OF THE EARLIER ASSESSMENT YEARS. THIS ARGUMENT IS BEING SUPPORTED WITH THE CLAIM OF CONSISTENCY. HOWEVER, T HE SAID ARGUMENT WOULD NOT HOLD WATER IN SO FAR AS EACH ASSESSMENT Y EAR IS A SEPARATE ASSESSMENT AND THE PRINCIPLES OF RES-JUDICATA WILL NOT APPLY TO A FISCAL STATUTE. FURTHER, THE AO IN THE COURSE OF ASSESSMEN T FOR ANY EARLIER OR LATER ASSESSMENT YEAR MIGHT MISS OUT OR ON ACCOUNT OF WRONG UNDERSTANDING OF THE FACTS OR ON ACCOUNT OF OMISSIO NS NOT ADJUDICATE ON ANY ISSUE WHICH IN ANOTHER ASSESSMENT YEAR MIGHT COME TO HIS ATTENTION. JUST BECAUSE OF THE NON-ASSESSMENT OF TH E ISSUE IN EARLIER ASSESSMENT YEAR, WOULD NOT DEBAR THE AO FROM INVEST IGATING AND ADJUDICATING ON SUCH ISSUE AND TAKING APPROPRIATE A CTION AS NECESSARY. IF, THE ARGUMENT OF THE LEARNED AR ON THIS GROUND I S ACCEPTED IT MIGHT AS WELL BE PUTTING THE PROVISIONS OF SECTION 147 AN D 263 OTIOSE. SIMILARLY, IF ASSESSMENTS HAVE BEEN DONE ACCEPTING THE RETURNED INCOME IN EARLIER YEARS, THEN THE SUBSEQUENT YEARS GET ABSOLUTE PROTECTION. THIS IS NOT WHAT THE FISCAL STATUTE PRO VIDE FOR. 14. IN THE RESULT, THE ORDERS OF THE LEARNED CIT (A ) ON THIS THREE ISSUES ARE REVERSED AND THE ISSUES ARE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUAT E OPPORTUNITY TO EXPLAIN ITS CASE. HERE, IT MUST BE MENTIONED THAT T HE LEARNED AR HAS PLACED COPIES OF THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF S. A. BUILDERS LTD. VS CIT 288 ITR 1, COPY OF TH E DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS SUN DARAM INDUSTRIES LTD., 240 ITR 0335, DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS SAMTEL COLOR LTD., 326 ITR 0425, DEC ISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SM T. GODAVARIDEVI SARAF, 113 ITR 0589, DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SMT. NIRMALABAI K. DAREKAR, 186 ITR 0242 AS ALSO THE ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 11 DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS MAGANLAL PANCHAL (HUF), 210 ITR 0580. NO REFERENCE HAS BEEN DRAWN TO ANY OF THE DECISIONS NOR HAS IT BEEN INFORMED AS TO FOR WHAT REASONS THESE DECISIONS HAVE BEEN PLACED. CONSEQUENTLY, THE SE DECISIONS ARE NOT BEING CONSIDERED AS THEY HAVE NOT BEEN REFERRED TO BY THE LEARNED AR. NO OTHER ISSUES HAVE BEEN ARGUED BY EITHER SIDE . WRITTEN SUBMISSIONS HAVE BEEN FILED BEFORE US, BUT COPIES O F THE SAME WERE NOT GIVEN TO THE LEARNED DR. CONSEQUENTLY, ONLY THE ARGUMENTS AS MADE BY THE LEARNED AR, IS ADJUDICATED. 15. IN THE RESULT, ALL THE THREE APPEALS OF THE REV ENUE I.E. ITA NO.258/RAN/2014, FOR THE ASSESSMENT YEAR 2010-11, I TA NO.277/RAN/2014, FOR THE ASSESSMENT YEAR 2008-09 AN D ITA NO.290/RAN/2014, FOR THE ASSESSMENT YEAR 2009-10, A RE PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT AT THE CLOSE OF HEARING ON 05-11-2015. SD/- SD/- ( N .S. SAINI ) ACCOUNTANT MEMBER (GEORGE MATHAN ) JUDICIAL MEMBER DATE : 05-11-2015 L LL LK DEKA/SR.PS K DEKA/SR.PS K DEKA/SR.PS K DEKA/SR.PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER ITA NO. 258, 277 & 290/R/2014 (AYS: 2010-11, 2008-09 & 2009-10) 12 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT S ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 05.11.15 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05.11.15 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05.11.15 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05.11. 15 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05.11.15 S R.PS 6. DATE OF PRONOUNCEMENT 05.11.15 SR.PS 7. FILE SENT TO THE BENCH CLERK ` 05 .11.15 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER