Vinay Kumar Pandey, Balrampur V. Income Tax officer , GONDA

ITA 287/LKW/2013

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6590 (ITAT-LUCKNOW)
• Duration Of Justice: 5 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S MINHAS
• Assessee Lawyers: P K KAPOOR
• Keywords: Revision of order; Opportunity of being heard; Retrospective amendment
• Section: 80C; 143(3); 260A; 133(6); 145; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 287/LKW/2013 ASSESSMENT YEAR: 2008 - 09 VINAY KUMAR PANDEY TULSI PARK BALRAMPUR V. I NCOME TAX OFFICER FAIZABAD T AN /PAN : ACMPP6867A (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI P. K. KAPOOR, C.A. RESPONDENT BY: SHRI J.S. MINHAS, CIT (DR) DATE OF HEARING: 31 0 5 201 8 DATE OF PRONOUNCEMENT: 01 06 201 8 O R D E R PER P ARTHA SARATHI CH AUDHURY, J.M : THIS APPEAL HAS COME BEFORE US IN VIEW OF THE DIRECTION FROM THE HON'BLE JURISDICTIONAL HIGH COURT IN THE MATTER OF THE ASSESSEE. 2 . ON PERUSAL OF THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT, THE CAUSE TITLE REFLECTS THAT THE ASSESSEE BE GS FOR LEAVE TO FILE PRESENT APPEAL UNDER SECTION 260A OF THE ACT AGAINST THE ORDER DATED 27/2/2015 PASSED BY THE ITAT LUCKNOW BENCH IN ITA NO.287/LKW/2013. THE FACTS ENSHRINED IN THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT ARE AS UNDER: - THIS APP EAL UNDER SECTION 260A OF INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS, 'ACT, 1961') HAS ARISEN FROM THE JUDGMENT AND ORDER DATED 27.02.2015 PASSED BY INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH, LUCKNOW (HEREINAFTER REFERRED TO AS, 'TRIBUNAL') IN ITA NO. 287/L/2013, RELATING TO ASSESSMENT YEAR (HEREINAFTER REFERRED TO AS 'A.Y.') 2008 - 09 AND THE ORDER ITA NO.287/LKW/2013 PAGE 2 OF 14 DATED 23.06.2015 PASSED BY TRIBUNAL, REJECTING APPELLANT'S MISC. APPLICATION NO. 58/LKW/2015. 3. FOLLOWING SUBSTANTIAL QUESTIONS OF LAW HAVE ARISEN IN TH IS APPEAL: ' '(I) WHETHER, ON A TRUE AND CORRECT INTERPRETATION OF LAW, HAVING REGARD TO CLAUSE (C) OF EXPLANATION 1 TO SUB - SECTION 1 OF SECTION 263, AS ALSO, IN VIEW OF THE DOCTRINE OF MERGER, THE ID. TRIBUNAL HAS NOT, COMMITTED MANIFEST ERROR OF LAW, IN APPROVING THE ORDER OF CIT - FAIZABAD, WHICH IS OSTENSIBLY HIT BY AND MADE AGAINST THE JURISDICTIONAL BARRIER, SET - UP UNDER THE SAID PROVISION; WITHOUT AVERTING TO THE ORDER OF THE CIT (APPEALS) - II, LUCKNOW DT. 27.06,2011 IN THE CASE OF THE ASSESSES FOR THE CONCERNED ASSESSMENT YEAR? (II) WHETHER, ON A TRUE AND CORRECT INTERPRETATION OF LAW, EXERCISE OF JURISDICTION BY THE COMMISSIONER OF INCOME TAX - FAIZABAD U/S 263 OF THE ACT, IS NOT EXCESSIVE BUT PROPER; WHENCE A LEGALLY PERMISSIBLE VIEW WAS GATHERED B Y THE ASSESSING OFFICER, AFTER DUE APPLICATION OF MIND AND HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX IS JUSTIFIED AND NOT PRECLUDED, IN THE SUBSTITUTION OF SUCH VIEW BY HIS OWN; AND THAT, THE JUDGMENT OF THE H ON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V JAIN CONSTRUCTION WAS RIGHTLY DISTINGUISHED, BY THE TRIBUNAL ? (III) WHETHER, WITHOUT PREJUDICE TO ABOVE, ON A TRUE AND CORRECT INTERPRETATION OF LAW, THE ORDER PASSED BY THE CIT AND APPROVED BY TRIBUNAL, SU FFERS FROM INHERENT JURISDICTIONAL ERROR, PARTICULARLY AS THE IMPUGNED ORDER DO NOT DEMONSTRATE AS TO HOW THE TWIN CONDITIONS, STIPULATED UNDER SECTION 263, NAMELY, THAT THE ORDER OF ASSESSMENT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE , STOOD SATISFIED IN THE CASE AND THAT, THE SUBSTANTIAL ISSUE OF DETERMINATION OF INCOME FROM TOLL CONTRACT @ 4% OF ITA NO.287/LKW/2013 PAGE 3 OF 14 RECEIPTS WAS ERRONEOUS/ PREJUDICIAL TO THE INTEREST OF REVENUE? (IV) WHETHER, ON A TRUE AND CORRECT INTERPRETATION OF LAW, THE ORDER PASSED BY THE LD. ITAT APPROVING THE ORDER OF THE CIT, IS LAWFUL; THE REVISIONAL ORDER PASSED BY THE CIT - FAIZABAD, U/S 263, IS PROPOSING REVISION OF THE ORDER OF ASSESSMENT ON ISSUES THAT WERE BEYOND THE AMBIT OF THE SHOW - CAUSE - NOTICE, U/S 263 ? (V) WHETHER THE O RDER PASSED BY THE TRIBUNAL IS UNSUSTAINABLE IN LAW BEING PERVERSE, EXTREMELY CRYPTIC, NON - SPEAKING AND MADE IN A SLIP - SHOD MANNER PARTICULARLY WHEN PITTED WHILE DISLODGING THE DETAILED OBSERVATIONS MADE BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND WITH OUT EVEN AVERTING TO THE ISSUES RAISED/ DISCUSSED BY THE ASSESSING OFFICER AND PLEADINGS/MATERIAL PLACED BY THE ASSESSES ON RECORD ? 4. THE FACTS IN BRIEF GIVING RISE TO THE PRESENT APPEAL ARE STATED AS UNDER: 5. ASSESSEE, SHRI VINAY KU MAR PANDEY WAS ENGAG ED IN THE BUSINESS OF CIVIL CONSTRUCTION. FOR THE A.Y. 2008 - 09, RETURN OF INCOME WAS FILED BY ASSESSEE ON 30.09.2008 DECLARING TOTAL INCOME RS. 3,86,878 / - AND AGRICULTURAL INCOME AT RS. 1,07,840 / - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTIO N 143(2) OF ACT, 1961 DATED 25.09.2009 WAS ISSUED, FIXING 29.09.2009. DURING COURSE OF HEARING BEFORE THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS, 'A.O.'), ASSESSEE FILED AUDIT REPORT REQUIRED UNDER SECTION 44AB OF ACT, 1961 DATED 26.09.2008 ALONG WI TH BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. ASSESSEE HAD SHOWN TOTAL RECEIPT AT RS. 3,77,78,178.96 / - AS TOLL TAX WHEREUPON NET PROFIT OF RS. 4,86,878 / - WAS DISCLOSED. ASSESSEE COMPUTED HIS INCOME AS UNDER: ITA NO.287/LKW/2013 PAGE 4 OF 14 INCOME FROM BUSINESS 4,86,878 LESS: U /S 80C 1,00,000 3,86,878 ADD. AGRICULTURE INCOME 1,07,840 TOTAL INCOME 4,94,718 6. DURING THE COURSE OF PROCEEDINGS, A.O. FOUND DISCREPANCY IN RESPECT TO THE INCOME SHOWN FROM INTE REST AND THIS HAS BEEN DISCUSSED BY A.O. IN THE ASSESSMENT ORDER AS UNDER: 'IT IS STATED BY THE ASSESSEE THAT TOTAL AMOUNT OF INTEREST EARNED AS PER P & L A/C IS AT RS. 6,45,736/ - THE DETAILS OF WHICH HAS ALSO BEEN FURNISHED DURING THE COURSE OF PROCEEDING S. IN THIS REGARD NOTICES U/S 133(6) WERE ISSUED TO THE ABOVE BANKS/FIRMS. IN RESPECT OF ALLAHABAD BANKS IT WAS INFORMED BY THE BANK THAT THE INTEREST TO THE TUNE OF ONLY RS. 3,51,091/ - WAS CREDITED THE RELEVANT PERIOD. HOWEVER, INFORM NO.L6A ISSUED BY THE BANK SHOWED TOTAL AMOUNT OF INTEREST AT RS. 4,8 0 ,387/ - . WHEN ASKED FOR THE DISCREPANCY, THE BANK OFFERED NO CLARIFICATION. THE ASSESSEE ALSO COULD NOT CLARIFY THE DISCREPANCY BUT INTEREST OF RS. 1,49,930/ - ONLY HAS BEEN SHOWN BY THE ASSESSEE FROM THIS BANK. T HEREFORE, THE DIFFERENCE OF RS. 3,30,457/ - WILL BE TREATED AS INCOM E OF THE ASSESSEE FROM OTHER SOURCE AND ADDED TO THE TOTAL INCOME. IN RESPECT OF M/S VIKRAM ASSOCIATES, VARANASI WHICH SHOWED INTEREST INCOME TO THE ASSESSEE AT RS. 3,96,000/ - AS PER 26AS REPORT, THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATION. THEREFORE, THIS WILL BE TREATED AS INCOME OF THE ASSESSEE FROM OTHER SOURCES. SIMILARLY, NO SATISFACTORY EXPLANATION WAS GIVEN IN RESPECT OF RS. 51,587/ - AS INTEREST FROM. BANK OF INDIA, SA ME WILL BE TREATED AS INCOME OF THE ASSESSEE FROM OTHER SOURCES. ITA NO.287/LKW/2013 PAGE 5 OF 14 THUS, TOTAL INCOME FROM OTHER SOURCES WORKS OUT TO RS.7,78,044/ - WHICH WILL BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE.' 7. A.O. ULTIMATELY REJECTED BOOK OF ACCOUNTS OF ASSESSEE UNDER SECTI ON 145 AND APPLIED NET PROFIT RATE OF 4% ON THE DISCLOSED TURNOVER OF RS. 3,77,78,180/ - AND WORKED OUT INCOME FROM BUSINESS AT RS. 15,11,127/ - . IT COMPUTED TOTAL INCOME OF ASSESSEE IN THE ASSESSMENT ORDER DATED 29.12.2010 AT RS. 29,43,930/ - . DETAILS WHEREO F ARE AS UNDER: (1) INCOME FROM BUSINESS AS DISCUSSED ABOVE. : 15,11,127 (2) INCOME DECLARED IN THE RETURN FILED AT VARANASI: 1,08630 (3) INCOME FROM OTHER SOURCES AS DISCUSSED ABOVE. : 7,78,044 (4) INTEREST INCOME DISCLOSED BY THE ASSESSEE : 6,46,125 (645736 + 389) IN HIS P & L A/C TOTAL : 30,43,930 LESS : DEDUCTION U/S 80C 1,00,000 NET TAXABLE INCOME 29,43,930 (5) AGRICULTURE INCOME FOR RATE PURPOSE 1,07,840 8. ASSESSEE PREFERRED APPEAL BEFORE COMMISSIONER OF .IN COME TAX (APPEAL) - II, LUCKNOW (HEREINAFTER REFERRED TO AS, 'CIT - A') REGISTERED AS APPEAL NO. 112/110/ITO/GONDA/08 - 09. APPELLATE AUTHORITY DECIDED APPEAL VIDE ORDER DATED 27.06.2011. IT PARTLY ALLOWED THE APPEAL. WITH RESPECT TO THE ADDITIONS MADE BY A.O. T OWARDS INCOME FROM INTEREST, CIT - A UPHELD ADDITION OF RS.3,30,457 / - AS INTEREST RECEI VED FROM ALLAHABAD BANK AND RS. 3,96,000/ - AS INTEREST FROM M/S. VIKRAM ASSOCIATES, BUT WITH RESPECT TO THE INTEREST OF BANK OF INDIA, ADDITION OF RS. 51,587 / - BY A.O. WAS HELD INCORRECT AND THAT WAS DIRECTED TO BE DELETED. THEREFORE, RELIEF OF RS. 51,587 / - TOWARDS INCOME OF INTEREST WAS ITA NO.287/LKW/2013 PAGE 6 OF 14 ALLOWED TO ASSESEE BY CIT - A. WITH RESPECT TO ADDITION OF RS. 15,11,127 / - APPLYING - PROFIT AT THE RATE OF 4% ON THE AMOUNT OF TOLL TAX RECEIPT S, CIT - A ALLOWED RELIEF AND REDUCED THE SAID AMOUNT TO RS. 14,22,085 / - . BESIDES, ALSO ALLOWED BENEFIT WITH RESPECT TO SELF MADE VOUCHERS AND ACCOUNTS REJECTED BY AO AND THE AMOUNT OF RS.15,11,127/ - WAS REDUCED BY RS. 4,86,878/ - AND RS. 50,000/ - . 9. COMMISSIO NER OF INCOME TAX, FAIZABAD (HEREINAFTER REFERRED TO AS, CIT, FAIZABAD'), HOWEVER, FORMED AN OPINION THAT ORDER PASSED BY A.O. COMPUTING ASSESSMENT ORDER DATED 29.12.2010 FOR THE ASSESSMENT YEAR 2008 - 09 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVEN UE, ISSUED A SHOW CAUSE NOTICE DATED 19.02.2013 ON SIX GROUNDS UNDER SECTION 263 OF ACT, 1961. THIS NOTICE IS ON PAGE - 37 OF THE PAPER BOOK AND GROUNDS MENTIONED THEREIN READ AS UNDER: '(I) IT WAS NOTICED THAT THE ASSESSEE CLAIMED TO HAVE PAID TOLL TAX AT R S. 3,24,90,045/ - BUT AS PER AGREEMENT THE TOTAL TOLL TAX WAS TO BE DEPOSITED AT RS. 2,64,81,000/ - ONLY. THUS, THERE WAS ACCESS CLAIM OF PAYMENT OF RS.50,09,048/ - . THEREFORE, YOU ARE REQUESTED TO EXPLAIN THE SAME. (II) AGAINST - TH E CLAIM OF STAMP CHARGES OF RS. 26,53,530/ - , THE ASSESSEE FURNISHED EVIDENCE ONLY FOR RS. 16,25,000/ - PERTAINING TO THE TOLL TAX AGREEMENT FOR SITAPUR - HARDOI ROUTE. THE REMAINING CLAIM WAS NOT VERIFIED IN THE ASSESSMENT PROCEEDINGS. THEREFORE, YOU ARE RE QUESTED TO EXPLAIN THE SAME. (I II) THE ASSESSEE CLAIMED ACQUISITION OF TWO VEHICLES DURING THE YEAR BUT THE SOURCE OF PAYMENT OTHER THAN THAT OF BANK LOAN WAS NOT VERIFIED IN THE ASSESSMENT PROCEEDINGS. THEREFORE, YOU ARE REQUESTED TO EXPLAIN THE SAME. (IV) IT WAS NOTICED IN THE BALANCE SHEET THAT THE ASSESSEE GAVE SUBSTANTIAL LOANS TO SHRI G. SHARMA & CO., VINEET ITA NO.287/LKW/2013 PAGE 7 OF 14 KUMDR PANDEY, UTOL AND YOGENDRA SINGH BUT IN THE DETAILS FURNISHED DURING THE ASSESSMENT PROCEEDINGS WERE VAGUE AND DID NOT GIVE ANY INFORMATION ABOUT THE PURPOSE OF THESE TRAN SACTIONS. THEREFORE, YOU ARE REQUESTED TO EXPLAIN THE SAME. (V) IT WAS FURTHER NOTICED FROM THE TOLL COLLECTION LEDGER FURNISHED DURING THE ASSESSMENT PROCEEDINGS THAT THE COLLECTION WAS MADE THROUGH ACCOUNT PAYEE CHEQUES, HOWEVER, IN THE PRACTICE, MOST OF TOLL TAX COLLECTION IS MADE IN CASH OR THROUGH DEBIT CARDS. THEREFORE, YOU ARE REQUESTED TO FURNISH YOUR EXPLANATION ON THIS ISSUE. (VI) THE ISSUE OF INTEREST ACCRUED ON INVESTMENT INCLUDING NSC, FDRS WAS NOT EXAMINED BY THE AO IN THE ASSESSMENT PROCEEDIN GS, THEREFORE, YOU ARE REQUESTED TO FURNISH DETAILS OF INTEREST ACCRUED FROM BANKS AND OTHER PARTIES AND ALSO DETAILS OF INTEREST PAID TO EACH PARTY ABOVE RS. 10, 000 / - ALONGWITH DETAILS REGARDING USE OF THESE INTEREST BEARING FUNDS.' 10. ASSESSEE SUBMIT TED ITS REPLY, THEREAFTER GIT, FAIZABAD PASSED ORDE R DATED 15.03.2013 HOLDING ASSESSMENT ORDER DATED 29.12.2010, ERRONEOUS AND PREJUDICIAL ON ALL THE SIX GROUNDS AND SETTING ASIDE THE SAME, CIT FAIZABAD DIRECTED A.O. TO PASS FRESH ASSESSMENT ORDER AFTER GI VING OPPORTUNITY TO ASSESSEE. 3 . THE ARGUMENTS OF TH E LD. A.R. OF THE ASSESSEE BEFORE THE HON'BLE HIGH COURT ARE AS FOLLOWS: - 11. LEARNED COUNSEL FOR APPELLANT CONTENDED THAT ASSESSMENT ORDER DATED 29.12.2010 WAS CONSIDERED BY CIT - A IN THE APPEAL DECIDED VI DE ORDER DATED 27.06.2011 AND IT HAS CONFIRMED ASSESSMENT ORDER IN RESPECT TO THE INCOME OF TOLL TAX AND INTEREST. HENCE, ASSESSMENT ORDER IN ITS ENTIRETY COULD NOT BE SET ASIDE BY CIT, FAIZABAD. TO THE EXTENT ASSESSMENT ORDER MERGED IN THE APPELLATE ORDER DATED 27.06.2011, CIT, FAIZABAD HAD NO ITA NO.287/LKW/2013 PAGE 8 OF 14 JURISDICTION TO REVISE UNDER SECTION 263 OF ACT 1961 AND WITHOUT CONSIDERING THIS ASPECT, CIT, FAIZABAD, IN SETTING ASIDE ENTIRE ASSESSMENT ORDER HAS ERRED IN LAW. IT IS CONTENDED THAT REVISIONAL ORDER PASSED BY CIT, FAIZABAD ON 15.03.2013, SETTING ASIDE ENTIRE ASSESSMENT ORDER IS ILLEGAL AND CANNOT BE SUSTAINED. HE SUBMITTED THAT ASSESSMENT ORDER MERGED WITH THE APPELLATE ORDER OF CIT - A AND IT WAS NOT OPEN TO CIT, FAIZABAD TO EXAMINE CORRECTNESS OF ASSESSMENT ORDER D ATED 29.12.2010 ONCE CIT - A HAS ALREADY EXAMINED THE SAME AND DECIDED THE APPEAL VIDE JUDGMENT AND ORDER DATED 27.06.2011. 4 . THE RELEVANT PORTION OF THE ORDER OF THE HON'BLE HIGH COURT AND OBSERVATION ARE AS UNDER: - 12. WE HAVE TO EXAMINE SCOPE OF SECTION 2 63(2) AND ALSO APPLICATION OF DOCTRINE OF MERGER VIS. - A - VIS POWER OF REVISION UNDER SECTION 263. 13. ORDINARILY WHEN A JUDICIAL OR QUASI JUDICIAL ORDER BECOMES SUBJECT MATTER OF APPEAL AND IS CONFIRMED BY APPELLATE COURT OR BODY, AS THE CASE MAY BE, ORDER OF COURT BELOW/ AUTHORITY MERGES WITH THE ORDER PASSED IN APPEAL. 14. THE ABOVE GENERAL CONCEPT OF 'MERGER' IN RESPECT TO JUDICIAL AND QUASI - JUDICIAL ORDERS HAS BEEN CONSIDERED AND RECOGNIZED TIME AND AGAIN. 15. IN CHANDI PRASAD AND OTHERS VS. JAGDIS H PRASAD AND OTHERS [2004 (8) SCC 724], COURT SAID : 'IT IS TRITE THAT WHEN AN APPELLATE COURT PASSES A DECREE, THE DECREE OF THE TRIAL COURT MERGES WITH THE DECREE OF THE APPELLATE COURT AND EVEN IF AND SUBJECT TO ANY MODIFICATION THAT MAY BE MADE IN THE APPELLATE DECREE, THE DECREE OF THE APPELLATE COURT SUPERSEDES THE DECREE OF THE TRIAL COURT. IN OTHER WORDS, MERGER OF A DECREE TAKES PLACE IRRESPECTIVE OF THE FACT AS TO WHETHER THE APPELLATE COURT ITA NO.287/LKW/2013 PAGE 9 OF 14 AFFIRMS, MODIFIES OR REVERSES THE DECREE PASSED BY THE T RIAL COURT.' (EMPHASIS ADDED) 16. IN GANGADHARA PALO VS. THE REVENUE DIVISIONAL OFFICER & ANOTHER [2011 (4) SCC 602), COURT SAID : 'ACCORDING TO THE DOCTRINE OF MERGER, THE JUDGMENT OF THE LOWER COURT MERGES INTO THE JUDGMENT OF THE HIGHER COURT. HENCE, IF SOME REASONS, HOWEVER MEAGRE, ARE GIVEN BY THIS COURT WHILE DISMISSING THE SPECIAL LEAVE PETITION, THEN BY THE DOCTRINE OF MERGER, THE JUDGMENT OF THE HIGH COURT MERGES INTO THE JUDGMENT OF THIS COURT AND AFTER MERGER THERE IS NO JUDGMENT OF THE HIGH C OURT. HENCE, OBVIOUSLY, THERE CAN BE NO REVIEW OF A JUDGMENT WHICH DOES NOT EVEN EXIST.' (EMPHASIS ADDED) 17. HOWEVER, IN TAXING STATUTES LIKE ACT, 1961, LEGISLATURE HAS NOT THOUGHT IT FIT TO APPLY GENERAL 'DOCTRINE OF MERGER', BUT 'DOCTRINE OF 'PARTIAL ME RGER' HAS BEEN ADOPTED. ONCE THE ISSUE OF MERGER IS GOVERNED BY STATUTORY PROVISIONS, THEN, OBVIOUSLY, IT IS THE STATUTE WHICH SHALL PREVAIL OVER GENERAL DOCTRINE OF 'MERGER'. HEREIN GENERAL DOCTRINE OF PARTIAL MERGER' AND TO THE EXTENT IT WOULD APPLY FOR THE PURPOSE OF SECTION 263 OF ACT, 1961, WE FIND RELEVANT PROVISIONS IN EXPLANATION 'C OF SECTION 263(1) OF ACT, 1961. 18. EXPLANATION TO SECTION 263(1) OF ACT, 1961, HAVING SUB CLAUSES (A) AND (B) WAS INSERTED BY TAXATION LAWS (AMENDMENT ACT, 1984) WITH EFFECT FROM 01.10.1984. THEREAFTER, ENTIRE EXPLANATION WAS SUBSTITUTED BY FINANCE ACT, 1988 WITH EFFECT FROM 01.06.1988, WHICH HAD CLAUSE (C) ALSO. SOME MINOR AMENDMENTS CAME TO BE MADE IN EXPLANATION (C) BY FINANCE ACT, 1989, WHICH WAS GIVEN EFFECT FROM 0 1.06.1988. SECTION 263(1) WITH EXPLANATION AS IT STANDS AFTER AFORESAID AMENDMENTS, READ AS UNDER: '263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THIS ACT, AND IF HE ITA NO.287/LKW/2013 PAGE 10 OF 14 CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AS SESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT (EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THI S SUB - SECTION, - (A) AN ORDER PASSED [ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988] BY THE ASSESSING OFFICER SHALL INCLUDE - (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME - TAX OFFICER ON THE BASIS OF T HE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR D IRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BO,ARD IN THIS BEHALF UNDER SECTION 120; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PRO CEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 2ST DAY OF JU NE, 1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUB SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO ITA NO.287/LKW/2013 PAGE 11 OF 14 HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL' 19. WORDS 'FILED ON OR BEFORE OR AFTER 1ST DAY OF JUNE, 1988' AN D FURTHER WORDS 'AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED' CAME TO BE INSERTED IN CLAUSE (C) BY FINANCE ACT, 1989, WHICH WAS GIVEN EFFECT FROM 01.06.1988. 20. AMENDED EXPLANATION INITIALLY CAME UP BEFORE A THREE JUDGES' BENCH IN GIT VS. SRI ARBUDA MILLS LTD. [(1998) 231 ITR 50 (SC)]. THEREIN FOR THE A.Y. 1975 - 76, ENDING ON 31ST DECEMBER, 1974, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 144B OF ACT, 1961, ON 31ST MARCH, 1978. THE NET BUSINESS LOSS COMPUTED AT RS.3,61,086/ - AND INCOME UNDER HEAD 'CAPITAL GAINS' AT RS.38,844/ - . A.O. MADE CERTAIN ADDITIONS AND DENIED TWO DEDUCTIONS AND ONE LOSS, AS DISCLOSED BY ASSESSEE. ASSESSEE PREFERRED APPEAL TO THE EXTENT A.O. MADE ADDITIONS AND DISALLOWANCE AND REFUSED TO ACCEPT INCOME AND LOSS DIS CLOSED BY ASSESSEE. APPEAL WAS DECIDED BY COMMISSIONER (A) ON 15TH DECEMBER, 1979. IN RESPECT OF THREE ITEMS WHICH THE ASSESSEE DECLARED AND WERE ACCEPTED BY ASSESSING OFFICER, SUBSTANTIALLY THERE WAS NO APPEAL SINCE FINDING WITH RESPECT TO THOSE ITEMS WAS IN FAVOUR OF ASSESSEE. IT IS IN RESPECT OF THESE THREE ITEMS, COMMISSIONER SOUGHT TO EXERCISE REVISIONAL POWER UNDER SECTION 263 OF ACT, 1961. AN ARGUMENT WAS ADVANCED FIRSTLY, THAT AMENDMENT HAS - COME INTO FORCE W.E.F. 01.06.1988, THEREFORE, WOULD NOT AP PLY TO ASSESSMENT ORDER AND ORDER OF APPEAL, FINALISED LONG BACK. SECONDLY, THAT AFTER MERGER OF ORDER OF ASSESSMENT IN THE APPELLATE ORDER, SECTION 263 CANNOT BE INVOKED. RELYING .ON EXPLANATION CLAUSE (C) AND HOLDING THAT IT WILL COVER ALL EARLIER MATTER S, COURT, IN CIT VS. SRI ARBUDA MILLS LTD. (SUPRA), SAID AS UNDER : 'THE CONSEQUENCE OF THE SAID AMENDMENT MADE WITH RETROSPECTIVE EFFECT IS THAT THE POWERS UNDER SECTION 263 OF THE COMMISSIONER SHALL EXTEND AND SHALL BE DEEMED ITA NO.287/LKW/2013 PAGE 12 OF 14 ALWAYS TO HAVE EXTENDED TO S UCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN AN APPEAL ACCORDINGLY, EVEN IN RESPECT OF THE AFORESAID THREE ITEMS, THE POWERS OF THE COMMISSIONER UNDER SECTION 263 SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO THEM BECAUSE THE SAME HA D NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL FILED BY THE ASSESSEE. THIS IS SUFFICIENT TO ANSWER THE QUESTION WHICH HAS BEEN REFERRED.' (EMPHASIS ADDED) 21. MATTER AGAIN CAME TO BE CONSIDERED IN CIT VS. JAI KUMAR B. PATIL [(1999) 236 ITR 469 (SC)], THE TWO QUESTIONS UP FOR CONSIDERATION BEFORE THE COURT WERE AS UNDER : - THE REVENUE SOUGHT THE REFERENCE OF THE FOLLOWING TWO QUESTIONS: ( 1 ) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW, IN HOLDING THAT THE COMMISSION ER OF INCOME - TAX HAD NO JURISDICTION AND POWERS TO INITIATE PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 19614 IN RESPECT OF ISSUES NOT TOUCHED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) IN HIS APPELLATE ORDER? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT NOT ONLY THE ISSUES DEALT WITH IN THE ASSESSMENT ORDER BUT ALSO THE OTHER ISSUES WERE MERGED IN THE COMMISSIONER OF INCOME - TAX (APPEALS)'S ORDER IGNORING THE PROVISIONS CONTAINED IN CLAUSE (C) OF EXPLANATION TO SUB - SECTION (1) OF SECTION 263 OF THE INCOME - TAX ACT, 1961?' 22. RELYING ON CIT .VS. ABUDA MILLS LTD. (SUPRA), COURT ANSWERED BOTH THE AFORESAID QUESTIONS IN NEGATIVE I.E. IN FAVOUR OF REVENUE AND AGAINST ASSESSEE. 23. I N EIMCO K.C.P. LTD. VS. C.L.T. [(2000) 242 ITR 659 (SC)], A QUESTION AROSE WHETHER COMMISSIONER CAN EXERCISE POWER UNDER ITA NO.287/LKW/2013 PAGE 13 OF 14 SECTION 263 OF ACT, 1961. WHILE AGREEING WITH THE ORDER OF ASSESSMENT AGAINST WHICH APPEAL WAS PENDING BEFORE COMMISSIONER (A), INVOLVI NG THE POINT UPON WHICH NOTICE UNDER SECTION 263 IS ISSUED, COURT UPHELD NOTICE ISSUED UNDER SECTION 263 AND HELD THAT SUCH NOTICE CAN BE ISSUED. 24. DECISION IN CIT VS. ABUDA MILLS LTD. (SUPRA) HAS ALSO BEEN FOLLOWED BY THIS COURT IN CIT VS. DHAMPUR SUGAR MILLS CO. LTD. [(2004) 270 ITR 576 (ALL)], CIT VS. INDO PERSIAN RUGS [(2008) 299 ITR 300 (ALL)] AND CIT VS. SPAN INTERNATIONAL [(2004) 270 ITR 538 (ALL)]. 25. IN CIT VS. AMRIT BANASPATI CO. LTD. [(2005) 277 ITR 559(ALL)], COURT HELD THAT IN RESPECT OF ITEMS WHICH HAVE NOT BEEN CONSIDERED IN APPEAL, POWER OF COMMISSIONER UNDER SECTION 263(1) SHALL BE EXTENDED TO THAT EXTENT. 26. LOOKING TO THE FACTS OF PRESENT CASE AND IN THE LIGHT - OF EXPOSITION OF LAW DISCUSSED ABOVE, WE FIND THAT OUT OF SIX GROUNDS, ON WHICH NOTICE UNDER SECTION 263 OF THE ACT, 1961 WAS ISSUED BY GIT, FAIZABAD, WITH RESPECT TO VERIFICATION OF TOLL COLLECTION AND INTEREST ACCRUED FROM THE BANK AND OTHER PARTIES, THE MATTER WAS EXAMINED IN APPEAL BY CIT - A, WHILE OTHER GROUNDS WERE AS SU CH, WHICH WE DO NOT FIND TO HAVE BEEN ADDRESSED BY CIT - A. THEREFORE, PROCEEDINGS UNDER SECTION 263 OF ACT, 1961 COULD HAVE BEEN INITIATED BY CIT, FAIZABAD ONLY IN RESPECT OF THE ISSUES WHICH WERE NOT CONSIDERED AND DECIDED BY CIT - A. 27. IN THE PRESENT CASE , CIT, FAIZABAD HAS SET ASIDE THE ENTIRE ASSESSMENT ORDER DATED 29.12.2010, THOUGH TO SOME EXTENT ISSUES WERE ALREADY CONFIRMED BY CIT - A. THEREFORE, APPROACH ON THE PART OF CIT, FAIZABAD TO THIS EXTENT CANNOT BE UPHELD. 28. IN VIEW OF ABOVE DISCUSSION, WE ANSWER QUESTIONS 1, 2 AND 4 IN FAVOUR' OF APPELLANT, AND IN VIEW THEREOF, SET ASIDE IMPUGNED JUDGMENT AND ORDER DATED 27.02.2015 PASSED BY TRIBUNAL AS ALSO THE ORDER DATED 15.03.2013 PASSED BY CIT, FAIZABAD UNDER ITA NO.287/LKW/2013 PAGE 14 OF 14 SECTION 263(1). WE REMAND THE MATTER TO CIT , FAIZABAD TO RECONSIDER AND PASS FRESH ORDER UNDER SECTION 263(1) OF ACT, 1961 IN THE LIGHT OF ABOVE DISCUSSIONS. 29. APPEAL IS ALLOWED TO THE EXTENT AND IN THE MANNER AS ABOVE. 5 . WE HAVE PERUSED THE CASE RECORDS AND WE FIND THAT THE ENTIRE MATTER HAS BEEN REMANDED BACK TO THE CIT, FAIZABAD BY THE HON'BLE JURISDICTIONAL HIGH COURT TO RECONSIDER AND PASS FRESH ORDER UNDER SECTION 263(1) OF THE ACT IN VIEW OF THE FINDINGS RECORDED BY THE HON'BLE HIGH COURT. RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE HIG H COURT, WE SET ASIDE THE ORDER OF THE LD. CIT AND REMAND THE MATTER BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME - TAX, FAIZABAD FOR PASSING CONSEQUENTIAL ORDER FOLLOWING THE HON'BLE HIGH COURT DIRECTION. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01 / 0 6 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST JUNE , 201 8 JJ: 3105 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR