Haryana Financial Corporation, Chandigarh V. DCIT, Panchkula

ITA 388/CHANDI/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6168 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-06-2014
• Assessment Year: misc
• Appeal Filed On: 15-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTADR
• Assessee Lawyers: B K NOHRIA
• Keywords: Rectification of order; Period of limitation; Difference of opinion; Assessment record; Capital receipt; Reason to believe; Change of opinion; Revenue expenditure
• Section: 143(3); 244A; 147; 148; 54; 263; 144; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.353, 411 & 412/CHD/2011 ASSESSMENT YEAR .: 1981-82 TO 1983-84 THE DY. COMMISSIONER OF VS HARYANA FINANCIAL CORPO RATION, INCOME TAX, BAY NO. 17-19, CIRCLE, SECTOR 2, SECTOR 17-A, PANCHKULA. CHANDIGARH. PAN : AAACH4685B & ITA NOS.388,416 & 417/CHD/2011 ASSESSMENT YEAR .: 1981-82 TO 1983-84 HARYANA FINANCIAL CORPORATION, VS THE DY. CO MMISSIONER OF BAY NO. 17-19, INCOME TAX, SECTOR 17-A, CIRCLE, SECTOR 2, CHANDIGARH. PANCHKULA. PAN : AAACH4685B & ITA NOS.1200 & 1201/CHD/2011 ASSESSMENT YEAR : 2003- 04 & 2004-05 HARYANA FINANCIAL CORPORATION, VS THE DY. CO MMISSIONER OF BAY NO. 17-19, INCOME TAX, SECTOR 17-A, CIRCLE, SECTOR 2, CHANDIGARH.. PANCHKULA. PAN : AAACH4685B (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI AKHILESH GUPTA,DR ASSESSEE BY : SHRI B.K.NOHRIA DATE OF HEARING : 03.06.2014 DATE OF PRONOUNCEMENT : 25.07.2014 O R D E R PER SUSHMA CHOWLA, JM OUT OF THIS BUNCH OF EIGHT APPEALS, THREE CROSS APP EALS ARE FILED BOTH BY THE ASSESSEE AND THE REVENUE AGAI NST ORDERS OF 2 THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 27.0 1.2011, 02.02.2011 & 15.02.2011 RELATING TO ASSESSMENT YEAR 1981-82 TO 1983-84. FURTHER, THE ASSESSEE IS IN APPEAL AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.09.2011 RELATING TO ASSESSMENT YEARS 2003-04 A GAINST THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. THE ASSESSEE HAS ALSO FILED AN APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.0 9.2011 RELATING TO ASSESSMENT YEAR 2004-05 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE ACT. 2. ALL THE APPEALS RELATING TO THE SAME ASSESSEE ON DIFFERENT GROUNDS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE RELATING TO ASSESSMENT YEARS 1981-82 TO 1983-84 ARE ON IDENTICAL ISSUE. HOWEVER, WE PROCEED TO TAKE UP THE FACTS IN ASSESSMENT YEAR 1981-82 TO ADJUDICATE THE ISSUE RAISED BY THE ASSESSEE. 4. THE ASSESSEE DURING THE COURSE OF HEARING HA D FILED REVISED GROUNDS OF APPEAL WHICH ARE AS UNDER : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED C1T(A) PANCHKULA HAS ERRED IN REJECTING THE APPEAL OF THE ASSESSEE THAT THE ORDER OF THE LEARNED AO IS BARRED BY LIMIT ATION AS NO ORDER UNDER SECTION 154 CAN BE PASSED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE ORDER HAS B EEN PASSED. THE SAID ORDER WAS PASSED ON 25.08.1988. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN CANC ELLING THE ORDER DATED 31.03.2010 AGAINST THE APPEAL OF THE ASSESSEE THAT THE LEARNED AO HAS ERRED IN ADDING RS.27,45,447/- WITHOUT PROVI DING ANY EVIDENCE AND FOR THE ADDITION OF RS.27,45,447/- IS A PART OF RS.65,64,213/- AS THE ONUS IS ON THE LEARNED A O TO PROVE THE SAME. SIMPL Y STATING SO IS NO EVIDENCE FOR THE ADDITION. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN CANC ELLING THE ORDER DATED 31.03.2010 AGAINST THE APPEAL OF THE ASSESSEE THAT THE LEARNED AO HAS ERRED IN TAKING THE APPEAL EFFECT ORDER DATE D 28.03.2006 3 AGAINST THE RECTIFICATION ORDER 25.08.1988 BEING BA RRED BY LIMITATION AND BE DECLARED THAT THE APPEAL EFFECT ORDER DATED 28.03.2006 IS ACTUALLY AGAINST THE ORDER DATED 16.07.1999 ONLY AN D HAS NO LINKAGE WITH THE ORDER DATED 25.08.1988 AT THIS STAGE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT (A) PANCHKULA HAS ERRED IN LAW AND FACTS IN CAN CELLING THE ORDER DATED 31.03.2010 AND NOT PASSING ANY ORDER AGAINST THE APPEAL OF THE ASSESSEE THAT THE LEARNED AO HAS CHARGED INTEREST A MOUNTING TO RS.13,66,209/- UNDER SECTION 234D WRONGLY WHEN SECT ION 234D HAS BEEN INSERTED W.E.F. 01.06.2003 AND IS APPLICABLE F ROM ASSESSMENT YEAR 2004-05. 5. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN CANCELLING THE ORDER U/S 250(6) DATED 28.03.2006?' 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CANCELLING THE ORDER U/S 154 DATED 31. 03.2010 DESPITE THE FACT THAT WHEN AN ERROR HAS OCCURRED AND CAME TO TH E KNOWLEDGE OF THE DEPARTMENT, THE SAME HAS BEEN RECTIFIED ?' 6. THE ISSUE RAISED IN THE PRESENT SET OF CROSS-APP EALS IS AGAINST THE ORDER PASSED UNDER SECTION 154 OF THE A CT DATED 31.03.2010. 7. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THIS CASE WAS COMPLETED U/S 144 DATED 17.12.1983 AT AN I NCOME OF RS.1,53,02,120/-, AS AGAINST RETURNED INCOME OF RS. 84,40,000/-. AT THE TIME OF ASSESSMENT AN ADDITION OF RS.65,64,2 13/-WAS MADE DISALLOWING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF INTEREST CREDITED IN SUSPENSE ACCOUNT. THE CASE WAS REOPENED U/S 146 AND THEREAFTER INCOME WAS ASSESSED AT RS.1,00,47,620/- VIDE ORDER DATED 13.01.1986 AND NO ADDITION ON ACCOUNT OF INTE REST CREDITED TO SUSPENSE ACCOUNT OF RS.65,64,213/- WAS MADE IN T HIS ORDER. AN ORDER U/S 263(1) DATED 11.2.1987 WAS PASSED AND INCOME WA S ENHANCED BY RS.65,64,213/- AND THE TOTAL INCOME WAS ASSESSED AT RS.1,66,11,830/-. THE ENHANCEMENT WAS MADE ON ACCOU NT OF THE INTEREST OF RS.65,64,213/- CREDITED TO THE SUSPENSE ACCOUNT. LATER ON, THE ORDER U/S 263 DATED 11.03.87 WAS RECT IFIED ON 4 12.03.1987 AND INCOME WAS DETERMINED AT RS.1,50,04, 210/-. THE RELIEF ALLOWED TO THE ASSESSEE UNDER THIS RECTIFICA TION ORDER WAS A FURTHER DEDUCTION U/S 36(L)(VIII) AS PER THE PROVIS IONS OF THE LAW I.E. 40% OF THE NET INCOME. FURTHER, WITH REFERENCE TO THE ORDER DATED 12.03.1987, ORDER U/S 154 DATED 25.8.1988 WAS PASSED ON APPLICATION OF THE ASSESSEE. THE ASSESSEE WAS ALLOW ED DEDUCTION OF RS.27,45,447/- ON ACCOUNT OF INTEREST CREDITED T O SUSPENSE ACCOUNT, WHICH WAS STATED BY THE ASSESSEE TO BE THE INTEREST INCOME TAXED IN EARLIER YEARS ON ACCRUAL BASIS. AS PER ORDER DATED 25.08.1988, THE INCOME WAS DETERMINED AT RS.1,22,58 ,760/-. ON AN APPEAL BY THE APPELLANT, THE TRIBUNAL VIDE ITA NO. 238/CHANDI/87 DATED 12.08.1993 WHILE UPHOLDING THE COMMISSIONER O F INCOME TAX'S ORDER U/S 263 CANCELLED THE ASSESSMENT FRAMED VIDE ORDER DATED 12.03.1987 AND RESTORED THE ISSUE TO THE FILE OF THE AO FOR FRESH DETERMINATION OF INCOME KEEPING IN VIEW, THE ORDERS OF THE TRIBUNAL. THE ASSESSING OFFICER VIDE ORDER DATED 28 .02.1996 DETERMINED THE INCOME AT RS.1,22,58,760/- AS DETERM INED VIDE ORDER U/S 154 DATED 25.08.1988. AS THE ORDER DATED 28.02.1996 WAS SET ASIDE BY THE CIT(A), A FRESH ASSESSMENT WAS MADE VIDE ORDER DATED 16.07.1999 AND THE INCOME WAS DETERMINE D WITH REFERENCE TO THE INCOME DETERMINED VIDE ORDER U/S 154 DATED 25.08.1988. IN ALL THESE ORDERS, THE AMOUNT DEBITED IN INTEREST SUSPENSE ACCOUNT WAS TREATED AS TAXABLE ON ACCRUAL BASIS. ON AN APPEAL BY THE APPELLANT, THE ISSUE WAS RESTORED TO THE ASSESSING OFFICER WITH SPECIFIC DIRECTIONS BY THE TRIBUNAL. 8. FURTHER, WHILE GIVING EFFECT TO THE ORDER OF TR IBUNAL IN ITA NO. 711/CHANDI/2000 DATED 24.11.2004, THE ASSESSING OFFICER VIDE ORDER DATED 28.03.2006 REDUCED THE AMOUNT OF I NTEREST OF 5 RS.65,64,213/- CREDITED TO SUSPENSE ACCOUNT FROM RS.1,22,58,760/- AND ADDED THE AMOUNT OF INTEREST O F RS.2,01,047/- CHARGEABLE TO TAX IN VIEW OF DIRECTIO NS OF TRIBUNAL. 9. THE AO NOTED THAT THOUGH IT IS APPARENT FROM PER USAL OF ASSESSMENT RECORDS THAT VIDE ORDER DATED 25.08.1988 , AN AMOUNT OF RS.27,45,447/- ON ACCOUNT OF INTEREST CREDITED TO T HE SUSPENSE ACCOUNT WAS ALREADY REDUCED. BUT WHILE GIVING APPEA L EFFECT VIDE ORDER DATED 28.03.2006, THE ASSESSING OFFICER DID N OT CONSIDER THIS FACT THAT OUT OF THE TOTAL AMOUNT OF RS.65,64, 213/- TO BE REDUCED IN PURSUANCE OF TRIBUNALS ORDER, AN AMOUNT OF RS.27,45,447/- HAD ALREADY BEEN REDUCED FROM THE TO TAL INCOME VIDE ORDER DATED 25.08.1988 AND ONLY THE BALANCE AM OUNT OF RS.38,18,766/- WAS REQUIRED TO BE REDUCED FROM THE INCOME OF RS.1,22,58,760/-. THEREFORE, TOTAL INCOME WAS TO BE COMPUTED AT RS.86,41,047/- AS AGAINST RS.58,95,600/- COMPUTE D VIDE APPEAL EFFECT ORDER DATED 28.03.2006. 10. IN VIEW OF THE ABOVE FACTS, THE AO OBSERVED T HAT WHILE GIVING APPEAL EFFECT, AN ERROR HAS OCCURRED TO AN E XTENT THAT THE DOUBLE RELIEF HAS BEEN GIVEN FOR INTEREST INCOME OF RS.27,45,47/-, WHILE COMPUTING THE TOTAL INCOME. A NOTICE U/S 154/ 155 OF THE IT. ACT, 1961 WAS ACCORDINGLY ISSUED TO THE ASSESSEE ON 19.03.2010, POINTING OUT THAT A DOUBLE RELIEF HAS BEEN GIVEN ON ACCOUNT OF INTEREST, WHICH HAS RESULTED IN ASSESSMENT OF INCOM E BELOW RETURNED INCOME. THE COUNSEL FOR THE APPELLANT SUBM ITTED THAT THE RELIEF ALLOWED IS AS PER RECORDS. THE ASSESSING OFF ICER AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THERE BEING A MISTAKE APPARENT FROM THE RECORD, RECTIFIED THE ORDER U/S 154 AND ADDED BACK RS.27,45,447/- TO THE INCOME OF THE 6 APPELLANT. 11. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSEE CHALLENGED THE VALIDITY OF THE ORDER PASSE D UNDER SECTION 154 OF THE ACT STATING THAT IT WAS BARRED BY LIMITA TION SINCE NO ORDER UNDER SECTION 154 COULD BE PASSED AFTER THE E XPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH ORDER HAD BEEN PASSED. AS PER ASSESSEE, THE ORDER UNDER SECTION 1 54 OF THE ACT WAS PASSED WITH REFERENCE TO ORDER PASSED ON 25.08. 1988 AND HENCE, THE SAME BEING PASSED ON 31.03.2010 WAS BARR ED BY LIMITATION. 12. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE P ARA 6.1 REJECTED THE CLAIM OF THE ASSESSEE OBSERVING AS UND ER : 6.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND HAVE GONE THROUGH THE DETAILS ON RECORD. IT IS SEEN THAT THE ORDER U/S 154 DATED 31.03.2010 HAS BEEN PASSED IN R EFERENCE TO ORDER U/S 250(6) DATED 28.03.2006 PASSED IN CONSEQUENCE T O ITATS ORDER NO. 711/CHDNDI/2000 DATED 24.11.2004. HENCE, THE OR DER PASSED UNDER SECTION 154 DATED 31.3.2010 IS WELL WITHIN THE FOUR YEARS OF THE DATE OF PASSING OF THE ORDER DATED 28.03.2006. THUS, THERE IS NO MERIT IN THE APPELLANTS CONTENTION AND THE GROUND OF APPEAL IS DISMISSED. 13. THE SECOND ISSUE RAISED BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL) WAS AGAINST THE QUASHING OF THE ORDER PASSED UNDER SECTION 154 OF THE ACT. THE ASSESSEE HAD FURNISHED WRITTEN SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX ( APPEALS) WHICH ARE INCORPORATED UNDER PARA 7 AT PAGES 6 & 7 OF THE APPELLATE ORDER. THE COMMISSIONER OF INCOME TAX (A PPEALS) VIDE PARA 7.6 AT PAGES 10-11 AFTER DELIBERATING UPON THE SEQUENCE OF EVENTS AND THE VARIOUS ORDERS PASSED AGAINST THE AS SESSEE HELD THAT THEREFORE, ON CAREFUL PERUSAL OF THE FACTS AND THE HISTORY OF THE CASE, IT IS OBSERVED THAT THE ASSESSING OFFICER WHILE PASSING 7 THE ORDER UNDER SECTION 143(3) DATED 16.07.99 AND W HILE GIVING APPEAL EFFECT VIDE ORDER DATED 28.03.2006 WRONGLY T OOK THE FIGURE OF ASSESSED INCOME AT RS. 1,22,58,760/-. THEREFORE , THE ORDER UNDER SECTION 250(6) DATED 28.03.2006 NEEDS TO BE C ORRECTED. IN VIEW OF THE ABOVE FACTS, THE ORDER UNDER SECTION 25 0(6) IS CANCELLED WITH THE DIRECTIONS TO THE ASSESSING OFFI CER TO PASS IT AFRESH KEEPING IN VIEW THE ABOVE OBSERVATIONS. FURTHER DIRECTIONS WERE GIVEN BY THE COMMISSIONER OF INCOM E TAX (APPEALS) VIDE PARA 7.7 AND 7.8 WHICH ARE AS UNDER : 7.7 FURTHER, A PERUSAL OF THE FACTS AS BROUGHT OU T BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S REVEAL THAT CERTAIN AMOUNT WHICH WAS OFFERED FOR TAX BY TH E APPELLANT ON RECEIPT BASIS HAD IN FACT ALREADY BEEN TAXED ON ACCRUAL BASIS IN THE EARLIER YEARS. THEREFORE, IN THE INTER EST OF JUSTICE, IT IS FELT THAT THE APPELLANT'S CLAIM IN THIS REGAR D NEEDS TO BE EXAMINED AFRESH AND NECESSARY RELIEF IF ADMISSIBLE NEEDS TO BE GIVEN. THE AO IS THEREFORE DIRECTED TO EXAMINE THE CLAIM OF THE APPELLANT THAT THE RETURNED INCOME INCLUDED AN INCOME OF RS.27,45,447/- WHICH HAD ALREADY BEEN TAXED ON ACCR UAL BASIS AND TAKE NECESSARY ACTION ACCORDINGLY. THE AP PELLANT IS DIRECTED TO MAKE AVAILABLE ALL THE DETAILS TO THE A SSESSING OFFICER WITH REFERENCE TO HIS CLAIM. AS REGARDS THE ORDER U/S 154 AGAINST WHICH THE APPELLANT IS IN APPEAL, THE S AME IS ALSO CANCELLED IN VIEW OF THE DIRECTIONS GIVEN ABOVE. 7.8 AS REGARDS, APPELLANT'S CONTENTION THAT THE ORDER DATED 28,03.2006 UNDER SECTION 250(6) IS WITH REFER ENCE TO ORDER DATED 16.07.99 WHICH DOES NOT HAVE ANY REFERE NCE TO ORDER U/S 154 DATED 25.08.88, THE SAME IS FOUND TO BE INCORRECT, A PERUSAL OF THE -ORDER U/S 143(3) DATED 16.07.99 CLEARLY SHOW THAT THE INCOME DETERMINED VIDE ORDER DATED 25.08,88 U/S 154 HAS BEEN TAKEN AS THE ASSESSED INC OME. THE GROUND OF APPEAL NO. 4 IS DISMISSED. 14. ANOTHER GROUND OF APPEAL RAISED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS AGAINST CH ARGING OF INTEREST UNDER SECTION 234D OF THE ACT WHICH WERE N OT ADJUDICATED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN VIEW OF THE FACT THAT THE ORDER UNDER SECTION 154 OF THE ACT HAD BEE N CANCELLED. 8 15. THE LAST ISSUE RAISED BY THE ASSESSEE BEFORE TH E COMMISSIONER OF INCOME TAX (APPEALS) WAS AGAINST TH E CONSEQUENTIAL DEDUCTION ALLOWABLE UNDER SECTION 36( 1)(VII) OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE PARA 8.2 HELD AS UNDER : 8.2 HOWEVER, IT IS SEEN FROM THE DETAILS FILED THAT THE ASSESSING OFFICER WHILE PASSING ORDER DATED 28.03.2006 GIVING EFFECT TO ITATS ORDER DATED 24.11.2004 OMITTED TO WITHDRAW DEDUCTIO N U/S 36(L)(VIII) ON RS.65,65,213/- WHICH WAS REDUCED FROM THE INCOME OF THE APPELLANT. THE APPELLANT WAS ACCORDINGLY GIVEN ANY OPPORTUNITY DATED 27.01.2011 TO EXPLAIN AS TO WHY THE SAME BE N OT WITHDRAWN. THE APPELLANT VIDE HIS WRITTEN SUBMISSION DATED 24.1.20 11 FILED NO OBJECTION IN THIS REGARD. AS PER THE CALCULATION SH EET FILED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S, THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 36(L)(VIII) AMOUNTING TO RS.46,08,904/- AS AGAINST RS.56,26,664/- ALLOWED VIDE ORDER DATED 13.03.87. THUS, THE APPELLANT HAS ADMITTED THAT DEDUCTION U/S 36(L)(VII I) AMOUNTING TO RS.10,17,760/- NEEDS TO BE WITHDRAWN. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO RECALCULATE THE DEDUCTION U/S 36(L)(VIII) AND WITHDRAW THE EXCESS DEDUCTION ALLOWED TO THE APPELL ANT WHILE PASSING THE ORDER U/S 250(6) OF THE I.T.ACT. 16. BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BECAU SE OF THE RELIEFS/ADDITIONS MADE BY THE COMMISSIONER OF INCOM E TAX (APPEALS). 17. THE GRIEVANCE OF THE REVENUE IS TWO-FOLD I.E. A GAINST THE CANCELLATION OF THE ORDER UNDER SECTION 250(6) DATE D 28.03.2006 AND ALSO AGAINST THE CANCELLATION OF ORDER PASSED U NDER SECTION 154 DATED 31.3.2010. THE ASSESSEE BY WAY OF REVISE D GROUNDS OF APPEAL HAS RAISED THE FOLLOWING ISSUES : A) REJECTION OF THE CLAIM OF THE ASSESSEE THAT TH E ORDER PASSED UNDER SECTION 154 WAS BARRED BY LIMITATION. B) CANCELLATION OF THE ORDER PASSED UNDER SECTION 154 OF THE ACT DATED 31.3.2010 IN WHICH ASSESSING OFFIC ER HAD ERRED IN ADDING RS.27,45,447/- AND ALSO IN NOT ADJUDICATING THE APPEAL EFFECT ORDER DATED 28.03.20 06 AS AGAINST THE RECTIFICATION ORDER DATED 25.08.1988. 9 C) THE COMMISSIONER OF INCOME TAX (APPEALS) HAVING NOT ADJUDICATED THE ISSUE OF NON-CHARGING OF INTERE ST UNDER SECTION 234D OF THE ACT AS THE SAID SECTION H AS BEEN INSERTED W.E.F. 01.06.2003 WHICH WAS APPLICABL E FROM ASSESSMENT YEAR 2004-05. IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DIRECTING T HE ASSESSING OFFICER TO AMEND ORDER UNDER SECTION 154 OF THE ACT AGAINST THE APPEAL EFFECT ORDER DATED 28.03 .2006 IN WHICH NO DEDUCTION UNDER SECTION 36(1)(VII) WAS ALLOWED. 18. SHRI B.K.NOHRIA APPEARED FOR THE ASSESSEE AND S HRI AKHILESH GUPTA APPEARED FOR THE REVENUE AND PUT FOR WARD THEIR CONTENTIONS. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. AS POINTED OUT IN THE PARAS HEREINABOVE, THERE WERE PROCEEDINGS AGAINST THE ASSESSEE WITH THE START OF ASSESSMENT F RAMED UNDER SECTION 144 WHICH WAS REOPENED UNDER SECTION 146 AN D THEREAFTER THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT AT TOTAL INCOME OF RS. 1,00,47,620/- VIDE ORDER DATED 13.01.1986. THEREAFTER, VARIOUS ORDERS WERE PASSED AGAINST THE ASSESSEE UNDER SECTION 154 OF THE ACT AND ALSO ORDER WAS PASSED UN DER SECTION 263 OF THE ACT. IN RESPECT OF VARIOUS ORDERS PASSE D, THE ASSESSEE APPEALED AGAINST THE SAID ORDER BEFORE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO BEFORE THE TRIBUNAL. CONSEQ UENT ORDERS TO THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 AND THE TRIBUNAL WERE ALSO PASSED. IN ORDER TO ADJUDICATE THE ISSUE, IT IS NECESSARY TO MAKE A REF ERENCE TO THE VARIOUS ORDERS PASSED DAY-TO-DAY AGAINST THE ASSESS EE. THE TABULATED DETAILS OF THE ORDERS PASSED AGAINST THE ASSESSEE ON DIFFERENT DATES AND THE BREAK-UP OF THE INCOME COMPUTED IN THE 10 HANDS OF THE ASSESSEE VIDE DIFFERENT ORDERS PASSED GIVING EFFECT TO THE ORDER OF COMMISSIONER OF INCOME TAX UNDER SE CTION 263 OR THE TRIBUNAL ARE ANNEXED AS ANNEXURE-A TO THIS ORDE R. 20. IN ORDER TO ADJUDICATE THE ISSUE, IT IS NECESSA RY TO REFER TO SOME OF THE ORDERS PASSED BY THE ASSESSING OFFICER WHICH PROVIDES A LINK TO DETERMINATION OF INCOME IN THE H ANDS OF THE ASSESSEE. THE FIRST SUCH ORDER IS AT S.NO. 4. THE PERUSAL OF THE SAID DETAILS REFLECT THAT THE ASSESSMENT ORDER DATE D 13.01.1983 WAS PASSED BY THE ASSESSING OFFICER DETERMINING THE INCOME AS UNDER : S.NO. 4 GROSS INCOME RS. 140,66,660/- DEDUCTION UNDER RS. 40,19,045/- SECTION 36(1)(VIII) NET INCOME RS.100,47,620/- 21. THE SECOND DOCUMENT TO BE CONSIDERED IS AT SR.N O. 7 I.E. THE ORDER PASSED UNDER SECTION 154 OF THE ACT AND A LSO GIVING EFFECT TO ORDER UNDER SECTION 263 & 154 OF THE ACT, DETAILS OF THE INCOME ARE AS UNDER: SR. NO. 7 INCOME AS PICKED UP RS. 140,66,660/- FROM SR.NO. 4 ADD : ON ACCOUNT OF THE RS. 65,64,213/- INTEREST IN SUSPENSE ACCOUNT --------------------- NET INCOME RS.206,30,873/- DEDUCT : UNDER SECTION RS. 56,26,664/- 36(1)(VIII) NET INCOME(BALANCE) RS.150,04,210/- 11 22. THE NEXT ORDER TO BE REFERRED TO IS THE ORDER P ASSED UNDER SECTION 154 OF THE ACT DATED 25.08.1988 AT S.NO. 10 : SR. NO.10 NET INCOME PICKED UP RS. 206,30,873/- FROM SR.NO. 7 LESS: RELIEF ON ACCOUNT OF A) INTEREST INCOME (-) RS. 27,45, 447/- B)DEDUCTION UNDER SECTION (-) RA. 56,26,664/- 36(1)(VIII) NET INCOME RS.128,58,762/- 23. THE NEXT ORDER IS THE ORDER PASSED UNDER SECTIO N 250(6) GIVING EFFECT TO THE ORDER OF THE INCOME TAX APPELL ATE TRIBUNAL DATED 28.03.2006 I.E. THE DETAILS AT SR.NO. 18 : INCOME AS PER ORDER RS. 122,58,762/- DT. 16.07.1999 LESS : INTEREST CREDIT (-) RS. 65,64,213/- TO SUSPENSE ACCOUNT ACCOUNT ADD :AMOUNT CHARGEABLE (+) RS.201,047/- TO TAX AS PER ITAT RS. NET INCOME : RS.5895,596/- 24. THEREAFTER THE ORDER PASSED UNDER SECTION 154 O F THE ACT DATED 31.03.2010 AS PER SR.NO. 19 I.E. THE ORDER U NDER APPEAL WHEREIN THE NET INCOME WAS DETERMINED AS UNDER : NET INCOME (AS PER ORDER RS. 58,95,596/- DT. 28.3.2006 ADD : INTEREST DEDUCTED VIDE RS. 27,45,447/- ORDER DT. 25.08.1988 TO BE REVERSED TOTAL : RS. 86,41,047/- 25. AFTER CONSIDERING VARIOUS ORDERS PASSED AGAINST THE ASSESSEE WHEREIN THE INCOME IN THE HANDS OF THE ASS ESSEE HAD 12 BEEN ASSESSED FROM TIME TO TIME PURSUANT TO THE VAR IOUS DIRECTIONS AND ALSO RECTIFICATION ORDERS PASSED UND ER SECTION 154 OF THE ACT, THE FOLLOWING PICTURE EMERGES : I) ORIGINAL INCOME ASSESSED RS. 140,66,660/- UNDER SECTION 143(3) II) ADD : ADDITION ON ACCOUNT OF (+) RS. 65,64,213/- INTEREST IN SUSPENSE ACCOUNT III) TOTAL INCOME RS.206,30,873/- IV) DEDUCT : RELIEF ALLOWED ON (-) RS. 27,45,447/- ACCOUNT OF INTEREST TAXED EARLIER BUT NOT DEDUCTED OUT OF SUSPENSE ACCOUNT V) DEDUCT : DEDUCTION U/S (-) RS. 56,26,644/- 36(1)(VIII) VI) BALANCE INCOME RS.122,58,762/- VII) DEDUCT :INTEREST IN (-) RS. 65,64,213/- SUSPENSE ACCOUNT VIII) ADD : INTEREST AS PER DIRECTIONS OF ITAT (+) RS. 201,047/- IX) BALANCE INCOME RS. 58,95,596/- X) ADD BACK THE RELIEF RS. 27,45,447/- ALLOWED TO THE ASSESSEE ON ACCOUNT OF INTEREST INCOME (TAXED TWICE) XI) BALANCE INCOME AFTER RS. 86,41,047/- DEDUCTION UNDER SECTION 36(1)(VII) XII) TAXABLE INCOME RS. 86,41,047/- 26. THE PERUSAL OF THE SERIATUM ORDERS PASSED AGAIN ST THE ASSESSEE REFLECT THAT AFTER MAKING ADDITION ON ACCO UNT OF INTEREST IN SUSPENSE ACCOUNT OF RS. 65,64,213/-, RELIEF WAS ALLOWED TO THE ASSESSEE ON ACCOUNT OF INTEREST TAXED EARLIER BUT N OT DEDUCTED OUT OF SUSPENSE ACCOUNT OF RS. 27,45,447/-. FURTHER DE DUCTION UNDER SECTION 36(1)(VII) OF THE ACT OF RS. 56,26,644/- WA S ALLOWED TO THE ASSESSEE. AFTER PASSING OF THE ORDER OF THE TR IBUNAL, THE 13 ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL DELETED THE ADDITION MADE ON ACCOUNT OF INTEREST IN SUSPENSE ACCOUNT OF RS. 65,64,213/- WITHOUT TAKING INTO CONS IDERATION THE RELIEF ALLOWED ON ACCOUNT OF INTEREST TAXED EARLIER , BUT NOT DEDUCTED OUT OF SUSPENSE ACCOUNT AT RS. 27,45,447/- . THE ASSESSING OFFICER VIDE ORDER PASSED UNDER SECTION 1 54 OF THE ACT AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US H AS ONLY REDUCED THE SAID SUM OF RS. 27,45,447/- AND WE CONF IRM THE SAID ORDER PASSED IN THE HANDS OF THE ASSESSEE. NOW WE PROCEED TO DEAL WITH VARIOUS ISSUES RAISED BOTH BY THE ASSESSE E AND THE REVENUE BY THE RESPECTIVE GROUNDS OF APPEAL. 27. THE ISSUE RAISED VIDE GROUND NO.1 BY THE REVENU E IS AGAINST CANCELLATION OF ORDER UNDER SECTION 250(6) DATED 28 .3.2006. THE CIT (APPEALS) VIDE PARA 7.6 HAD CANCELLED THE ORDER PASSED UNDER SECTION 250(6) OF THE ACT DATED 28.3.2006. HOWEV ER, IN PARA 1 OF THE APPELLATE ORDER THE CIT (APPEALS) HAD OBSERV ED THAT THE APPEAL ARISES FROM THE ORDER OF THE D.C.I.T., PANCH KULA UNDER SECTION 154 OF THE ACT VIDE ORDER DATED 31.3.2010 M EANING THEREBY THAT THE APPEAL WAS FILED BEFORE THE CIT (A PPEALS) AGAINST THE ORDER PASSED UNDER SECTION 154 OF THE ACT WHICH WAS DATED 31.3.2010. WHILE DECIDING THE SAID APPEAL THE CIT (APPEALS) HAD REFERRED TO THE ORDER PASSED UNDER SECTION 250(6) O F THE ACT DATED 28.3.2006, AGAINST WHICH THE ASSESSEE IS NOT IN APP EAL. THUS THE CIT (APPEALS) HAS ERRED IN CANCELING THE SAID ORDER DATED 28.3.2006 WHILE DECIDING THE APPEAL AGAINST THE ORD ER PASSED UNDER SECTION 154 OF THE ACT DATED 31.3.2010. ACC ORDINGLY, WE REVERSE THE ORDER OF THE CIT (APPEALS) IN CANCELING THE ORDER 14 PASSED UNDER SECTION 250(6) OF THE ACT DATED 28.3.2 006. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS THUS ALLOWED. 28. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (APPEALS) IN CANCELING THE ORDER U NDER SECTION 154 DATED 31.3.2010. ON THE PERUSAL OF THE APPELL ATE ORDER WE FIND THAT THE CIT (APPEALS) VIDE PARA 7.7 HAS OBSER VED AS UNDER: 7.7 FURTHER, A PERUSAL OF THE FACTS AS BROUGHT OU T BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S REVEAL THAT CERTAIN AMOUNT WHICH WAS OFFERED FOR TAX BY TH E APPELLANT ON RECEIPT BASIS HAD IN FACT ALREADY BEEN TAXED ON ACCRUAL BASIS IN THE EARLIER YEARS. THEREFORE, IN THE INTER EST OF JUSTICE, IT IS FELT THAT THE APPELLANT'S CLAIM IN THIS REGAR D NEEDS TO BE EXAMINED AFRESH AND NECESSARY RELIEF IF ADMISSIBLE NEEDS TO BE GIVEN. THE AO IS THEREFORE DIRECTED TO EXAMINE THE CLAIM OF THE APPELLANT THAT THE RETURNED INCOME INCLUDED AN INCOME OF RS.27,45,447/- WHICH HAD ALREADY BEEN TAXED ON ACCR UAL BASIS AND TAKE NECESSARY ACTION ACCORDINGLY. THE AP PELLANT IS DIRECTED TO MAKE AVAILABLE ALL THE DETAILS TO THE A SSESSING OFFICER WITH REFERENCE TO HIS CLAIM. AS REGARDS THE ORDER U/S 154 AGAINST WHICH THE APPELLANT IS IN APPEAL, THE S AME IS ALSO CANCELLED IN VIEW OF THE DIRECTIONS GIVEN ABOVE. 29. THE CIT (APPEALS) WAS OF THE VIEW THAT THE CLAI M OF THE ASSESSEE THAT RETURNED INCOME INCLUDED SUM OF RS.27 ,45,447/- HAD ALREADY BEEN TAXED ON ACCRUAL BASIS AND THE ASSESSI NG OFFICER WAS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE. IN VIEW THEREOF, THE ORDER PASSED UNDER SECTION 154 OF THE ACT, AGAI NST WHICH THE ASSESSEE WAS IN APPEAL WAS ALSO CANCELLED. 30. WE HAVE NOTED IN THE PARAS HEREINABOVE THAT VID E ORDER PASSED UNDER SECTION 154 OF THE ACT DATED 31.3.2010 THE INCOME OF THE ASSESSEE HAS CORRECTLY BEEN RECTIFIED AND DE TERMINED AND IN VIEW THEREOF, WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN CANCELING THE ORDER PASSED UNDER SECTION 154 OF THE ACT. THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS ALLO WED. 15 31. NOW COMING TO THE REVISED GROUNDS OF APPEAL RAI SED BY THE ASSESSEE. THE FIRST ISSUE ARISING IN THE APPEAL F ILED BY THE ASSESSEE IS AGAINST THE REJECTION OF THE CLAIM OF T HE ASSESSEE THAT THE ORDER PASSED UNDER SECTION 154 OF THE ACT WAS B ARRED BY LIMITATION. IN SEQUENCE OF EVENTS WE HAVE CONSIDE RED HAT THE TRIBUNAL VIDE ORDER DATED 24.11.2004 HAD GIVEN CERT AIN DIRECTIONS TO THE ASSESSING OFFICER, CONSEQUENT TO WHICH THE A SSESSING OFFICER PASSED AN ORDER UNDER SECTION 250(6) OF THE ACT GIVING EFFECT TO THE ORDER OF THE TRIBUNAL, WHICH IS DATED 28.3.2006. THE PRESENT ORDER PASSED UNDER SECTION 154 WHICH IS DATED 31.3.2010 IS CORRECTING THE MISTAKE WHICH HAD ARISE N IN THE ORDER PASSED UNDER SECTION 250(6) OF THE ACT DATED 28.3.2 006. THE PRESENT ORDER WHICH IS UNDER APPEAL WHICH WAS PASSE D UNDER SECTION 154 OF THE ACT IS DATED 31.3.2010 AND IS AG AINST THE ORDER PASSED ON 28.3.2006 AND IS WITHIN THE PERIOD OF FOU R YEARS PRESCRIBED UNDER SECTION 154 OF THE ACT. ACCORDI NGLY, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE THAT THE ORDER PASSED UNDER SECTION 154 OF THE ACT WAS BARRED BY LIMITATION. 32. THE SECOND ISSUE RAISED BY THE ASSESSEE IS AGAI NST THE ORDER OF CIT (APPEALS) IN CANCELING THE ORDER PASSED UNDE R SECTION 154 OF THE ACT DATED 31.3.2010 UNDER WHICH IT WAS HELD THAT THE ASSESSING OFFICER HAD ERRED IN ADDING RS.27,45,447/ -. WE HAVE ALREADY ADJUDICATED THE ISSUE AT LENGTH AND ALLOWED THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IN THIS REGARD AN D THIS ISSUE IS LINKED TO THE ISSUE RAISED BY THE REVENUE AND WE FI ND NO MERIT IN THIS ISSUE AND THE SAME IS DISMISSED. 33. THE LAST ISSUE RAISED BY THE ASSESSEE IS THAT T HE CIT (APPEALS) HAD NOT ADJUDICATED THE ISSUE OF NON-CHAR GING OF 16 INTEREST UNDER SECTION 234D OF THE ACT. WE FIND T HAT THE CIT (APPEALS) VIDE PARA 8 HAS OBSERVED THAT BOTH THE GR OUNDS OF APPEAL CHARGING OF INTEREST UNDER SECTION 234D AND INTEREST UNDER SECTION 244A OF THE ACT ARE NOT BEING ADJUDICATED I N VIEW OF THE FACT THAT THE ORDER UNDER SECTION 154 OF THE ACT HA S BEEN CANCELLED. IN VIEW THEREOF, THERE IS NO MERIT IN THE PLEA RAISED BY THE ASSESSEE THAT THE CIT (APPEALS) HAD NOT ADJU DICATED THE SAID ISSUE. HOWEVER, IN VIEW OF OUR UPHOLDING THE ORDER PASSED UNDER SECTION 154 OF THE ACT DATED 31.3.2010, WE PR OCEED TO DECIDE THE CHARGING OF INTEREST UNDER SECTION 234D OF THE ACT. 34. WE FIND MERIT IN THE PLEA OF THE ASSESSEE THAT THE SAID INTEREST IS CHARGEABLE W.E.F. ASSESSMENT YEAR 2004- 05 AS THE SAID PROVISIONS HAD BEEN INSERTED W.E.F. 1.6.2003 AND TH E SAID PROVISIONS ARE NOT APPLICABLE RETROSPECTIVELY. IN VIEW THEREOF, WE ALLOW THE CLAIM OF THE ASSESSEE WITH REGARD CHAR GING OF INTEREST UNDER SECTION 234D OF THE ACT. HOWEVER, CHARGING OF INTEREST UNDER SECTION 234A OF THE ACT IS CONSEQUE NTIAL IN NATURE. ITA NO.411 & 412/CHD/2011 :: REVENUES APPEAL ASSESSMENT YEARS : 1982-83 & 1983-84 35. THE ISSUES RAISED IN ITA NOS.411 & 412/CHD/2011 ARE IDENTICAL TO THE ISSUES RAISED BY THE REVENUE IN IT A NO.353/CHD/2011 AND OUR DECISION IN ITA NO.353/CHD/ 2011 SHALL APPLY MUTATIS MUTANDIS TO THE ISSUES RAISED IN ITA NOS.411 & 412/CHD/2011. ITA NO.416 & 417/CHD/2011 :: ASSESSEES APPEAL ASSESSMENT YEARS : 1982-83 & 1983-84 36. THE ISSUES RAISED IN ITA NOS.416 & 417/CHD/2011 ARE SIMILAR TO THE ISSUE RAISED BY THE REVENUE IN ITA 17 NO.388/CHD/2011 AND OUR DECISION IN ITA NO.388/CHD/ 2011 SHALL APPLY MUTATIS MUTANDIS TO THE ISSUES RAISED IN ITA NOS.416 & 417/CHD/2011. 37. IN ASSESSMENT YEARS 1982-83 AND 1983-84 THE ASS ESSEE HAS RAISED AN ADDITIONAL GROUND OF APPEAL NO.6 WHICH RE ADS AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND ON FA CTS IN DIRECTING THE LEARNED A O TO AMEND THE ORDER PASSED U/S 154 DATED 31.03.2010 AGAINST APPEAL EFFECT ORDER DA TED 28.03.2006 IN WHICH NO DEDUCTION WAS REDUCED FOR TH E AMOUNT ALLOWABLE U/S 36(L)(VIII) OF THE ACT THOUGH THE NO OBJECTION FROM THE COUNSEL WAS TAKEN UNDER PRESSURE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE APPEAL EFFECT ORDER DATED 28.03.2006. 38. THE PERUSAL OF THE ADDITIONAL GROUND OF APPEAL ITSELF REFLECTS THAT THE ASSESSEE HAD GIVEN NO OBJECTION WHILE RECT IFICATION UNDER SECTION 154 OF THE ACT WAS CARRIED OUT VIDE ORDER D ATED 31.3.2010. IN VIEW OF THE ADMISSION OF THE ASSESSEE WE FIND NO MERIT IN THE GROUND OF APPEAL NO.6 RAISED BY THE ASSESSEE. ITA NO. 1200/CHD/2011 : ASSESSEE'S APPEAL :: 2003-04 39. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) PANCHKULA HAS ERRED IN LAW AND FACTS IN DISMISSING THE GROUND OF APPEAL REGARDING NO REASONS RECORDED UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 HAS BEEN SUPPLIED TO THE CORPORATION BY NOT PA SSING A SPEAKING ORDER. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN DISMISSING THE GROUND OF APPEAL REGARDING CHANGE OF OPINION AS NO ADDITION WAS MADE IN THE ORIGINAL ASSESSMENT AND THERE IS NO DECLARATION AS TO HOW TH E ASSESSEE HAS NOT DISCLOSED THE ADDITION MADE IN THE RETURN OF INCOME BY NOT PASSING A SPEAKING ORDER. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN DISM ISSING THE GROUND OF APPEAL REGARDING NOTICE U/S 148 HAS BEEN ISSUED AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YE AR AS THE ORIGINAL ASSESSMENT HAS BEEN FRAMED U/S 143(3) OF T HE INCOME TAX ACT, 1961. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED C1T(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN DISM ISSING THE 18 GROUND OF APPEAL REGARDING THE LEARNED A O HAS FAIL ED TO REMOVE THE PRELIMINARY OBJECTIONS RAISED BY THE ASSESSEE. 40. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAIN ST THE INVOKING OF JURISDICTION UNDER SECTION 147 OF THE I NCOME TAX ACT. 41. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGIN AL ASSESSMENT IN THE CASE WAS COMPLETED VIDE ORDER PASSED UNDER S ECTION 143(3) OF THE ACT DATED 10.10.2005. THEREAFTER, REASONS W ERE RECORDED UNDER SECTION 147 OF THE ACT FOR ISSUE OF NOTICE UN DER SECTION 148 OF THE ACT. THE REASONS RECORDED ARE REPRODUCED AT PAGE 2 & 3 OF THE ASSESSMENT ORDER. IN RESPONSE TO THE SAID NOTIC E UNDER SECTION 148 OF THE ACT, THE ASSESSEE FURNISHED RETURN OF IN COME DECLARING NET LOSS OF RS. 2.13 CR. HOWEVER, IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD DECLARED LOSS AT RS.3.32 C R. THE ASSESSEE VIDE LETTER DATED 27.05.2009 SOUGHT THE RE ASONS TO BELIEVE FOR RE-ASSESSMENT AND ALSO SOUGHT CERTAIN I NFORMATION. THE ASSESSING OFFICER VIDE LETTER DATED 22.07.2010 SUPPLIED THE COPY OF REASONS FOR THE ISSUE OF NOTICE UNDER SECTI ON 148 OF THE ACT, TO THE ASSESSEE. ON THE DATE OF HEARING NEXT FIXED, THE COUNSEL FOR THE ASSESSEE INSISTED THAT THE INFORMAT ION AS ASKED FOR VIDE LETTER DATED 27.05.2009 BE SUPPLIED TO HIM. V IDE THE SAID COMMUNICATION, THE ASSESSEE WAS AGGRIEVED BY THE IS SUE OF NOTICE UNDER SECTION 148 OF THE ACT WHICH, AS PER THE ASSE SSEE WAS BEYOND THE PERIOD OF LIMITATION. ANOTHER COMMUNICA TION WAS FILED BY THE ASSESSEE CHALLENGING THE RE-OPENING WH ICH IS REPRODUCED AT PAGES 4 TO 11 OF THE ASSESSMENT ORDER . AS PER THE ASSESSEE, NO REASONS WERE RECORDED UNDER SECTION 14 7 OF THE ACT AND HENCE, THE ISSUE OF NOTICE UNDER SECTION 148 WA S BAD IN LAW. THE ASSESSING OFFICER VIDE PARA 7 OBSERVED THAT NO REASONS WERE 19 TO BE RECORDED UNDER SECTION 147 OF THE ACT BUT IT WAS SUB- SECTION 2 OF SECTION 148 OF THE ACT WHICH MANDATES THAT BEFORE ISSUING NOTICE UNDER THE SAID SECTION, THE ASSESSIN G OFFICER SHALL RECORD REASONS FOR DOING SO. AS PER THE ASSESSING OFFICER, SECTIONS 147 AND 148 OF THE ACT HAD TO BE READ TOGE THER. AS PER SECTION 147, IF THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT ANY INCOME HAD ESCAPED ASSESSMENT, THEN HE MAY ASSE SS OR REASSESS SUCH INCOME AND UNDER SECTION 148 OF THE A CT, BEFORE MAKING SUCH ASSESSMENT OR RE-ASSESSMENT, THE ASSESS ING OFFICER HAD TO SERVE NOTICE ON THE ASSESSEE AND BEFORE ISSU ING SUCH NOTICE, HE HAD TO RECORD REASONS FOR DOING SO. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE REASONS WERE DULY RECORDED AND HAD BEEN SUPPLIED TO THE ASSESSEE IN THE CASE. REG ARDING THE SECOND CONTENTION OF THE ASSESSEE THAT WHETHER THE ESCAPEMENT OF INCOME WAS TO EXCEED RS.1,00,000/-, THE ASSESSING O FFICER VIDE PARA 8 OBSERVED THAT THE AMOUNT ON ACCOUNT OF FORFE ITURE OF SHARES HAD ESCAPED ASSESSMENT ON ACCOUNT OF ASSESSE E'S FAILURE TO FULLY DISCLOSE THE MATERIAL FACTS AS THE SAID AM OUNT WAS DECLARED UNDER THE HEAD LIABILITY IN THE BALANCE SHEET. SINCE THE AMOUNT INVOLVED WAS MORE THAN RS. 1 LAC, THE PR OCEEDINGS WERE VALIDLY INITIATED. FURTHER, NO ENQUIRY IN THI S REGARD WAS MADE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. T HEREFORE, NO OPINION ON THIS ISSUE HAD BEEN FORMED BY ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT AND THUS, IT COULD NOT BE SAID THAT THERE WAS CHANGE OF OPINION. THE ASSESSING OFFICER PLACED RELIANCE ON VARIOUS CASE LAWS FOR THE SAID PROPOSIT ION. IT WAS FURTHER CLARIFIED TO THE ASSESSEE THAT THE SAID ASS ESSMENT PROCEEDINGS HAD BEEN REOPENED UNDER SECTION 147 OF THE ACT AS PER THE PROVISIONS OF SECTION 149(1)(B) OF THE ACT AFTER OBTAINING 20 THE APPROVAL OF COMMISSIONER OF INCOME TAX, PANCHKU LA AND ONLY THEREAFTER, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE SA ID NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED DURING THE TIME A LLOWED UNDER THE PROVISIONS OF SECTION 149(1)(B) OF THE INCOME T AX ACT, AS PER WHICH, NOTICE UNDER SECTION 148 OF THE ACT COULD BE ISSUED WITHIN SIX YEARS FROM THE END OF THE ASSESSMENT YEAR IF TH E INCOME ESCAPED IS LIKELY TO AMOUNT TO RS. 1,00,000/- OR MO RE. IN VIEW OF THE ABOVESAID, THE ASSESSING OFFICER OBSERVED THAT THE RE- ASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED. FURTHER ADDITION OF SUM OF RS. 3,89,000/- ON ACCOUNT OF FOR FEITURE OF SHARES WAS MADE HOLDING THE SAME TO BE REVENUE RECE IPT. 42. THE COMMISSIONER OF INCOME TAX (APPEALS) DISMIS SED THE GROUND OF APPEAL RAISED BY THE ASSESSEE AS HE APPRO VED THE REASONING GIVEN BY THE ASSESSING OFFICER AND ALSO A S PER THE COMMISSIONER OF INCOME TAX (APPEALS), THE ISSUE OF TIME LIMITATION HAD BECOME ACADEMIC SINCE THE MATTER WAS ALREADY DECIDED ON MERITS BY HOLDING THE SAID FORFEITURE OF SHARES TO BE CAPITAL RECEIPT. 43. THE LD. AR FOR THE ASSESSEE FURNISHED THE ORDER OF THE TRIBUNAL RELATING TO ASSESSMENT YEAR 2002-03 AND PO INTED OUT THAT THE ISSUE WAS DECIDED AGAINST THE ASSESSEE. 44 THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW. 45. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL B UT THE ISSUE RAISED IN ALL THE GROUNDS OF APPEAL RELATE TO THE I NITIATION OF RE- 21 ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT AND ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSMEN T IN THE CASE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF TH E ACT VIDE ORDER DATED 10.10.2005. THEREAFTER, THE PROCEEDING S UNDER SECTION 147 OF THE ACT WERE INITIATED BY ISSUE OF N OTICE UNDER SECTION 148 OF THE ACT DATED 30.04.2009. THE FIRST PLEA OF THE ASSESSEE BEFORE US WAS THAT THE SAID REASONS FOR RE -OPENING ASSESSMENT UNDER SECTION 147/148 OF THE ACT WERE NO T SUPPLIED TO THE CORPORATION. FURTHER, THE ASSESSEE IS AGGRIEVE D BY THE ISSUE OF NOTICE AFTER EXPIRY OF FOUR YEARS FROM THE END O F THE ASSESSMENT YEAR AS THE ORIGINAL ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) OF THE ACT. THE NEXT OBJECTION RAIS ED BY THE ASSESSEE WAS THAT THERE WAS NO MERIT IN THE SAID RE -ASSESSMENT PROCEEDINGS AS THE SAME AMOUNTED TO CHANGE OF OPINI ON. FURTHER, THE ASSESSING OFFICER HAD FAILED TO REMOVE THE PREL IMINARY OBJECTIONS RAISED BY THE ASSESSEE AND HENCE, THE OR DER PASSED WAS INCORRECT. 46. AS REFERRED TO BY US IN THE PARAS HEREIN ABOVE, THE ASSESSEE HAD SOUGHT THE REASONS FOR RE-OPENING VIDE LETTER D ATED 27.05.2009 AND THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE SAID REASONS WERE SUPPLIED TO THE ASSESSEE VIDE LETTER D ATED 22.07.2010. HENCE, THERE IS NO MERIT IN THE FIRST C ONTENTION OF THE ASSESSEE WITH REGARD TO RE-OPENING OF ASSESSMENT UN DER SECTION 148 OF THE ACT THAT REASONS WERE NOT SUPPLIED TO TH E ASSESSEE. FURTHER, CERTAIN INFORMATION WAS ASKED BY THE ASSES SEE VIDE LETTER DATED 27.05.2009 WHICH IS REPRODUCED UNDER PARA 4 A T PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS RAISED FIVE ISSUES AND HAD MADE ELABORATE SUBMISSIONS IN RESPECT THEREOF. THE ASSESSING 22 OFFICER VIDE PARA 7, 8 TO 11 OF THE ASSESSMENT ORDE R HAD INDIVIDUALLY DEALT WITH EACH OF THE OBJECTIONS RAIS ED BY THE ASSESSEE AND HAD DISPOSED OF THE OBJECTIONS RAISED BY THE ASSESSEE. IN VIEW THEREOF, WE FIND NO MERIT IN THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE THAT NO REASONS WERE RECORDED UNDER SECTION 147 OF THE ACT OR THE SAME HAS NOT BE EN SUPPLIED TO THE ASSESSEE BY PASSING A SPEAKING ORDER. 47. FURTHER, THERE IS NO MERIT IN ANOTHER PLEA OF T HE ASSESSEE THAT THE SAID RE-OPENING WAS BAD IN LAW AS NOTICE UNDER SECTION 148 HAD BEEN ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. UNDER THE PROVISIONS OF SECTI ON 149(1)(B) OF THE INCOME TAX ACT, NOTICE COULD BE ISSUED WITHIN S IX YEARS FROM THE END OF THE ASSESSMENT YEAR WHEREIN THE INCOME E SCAPED IS LIKELY TO EXCEED AN AMOUNT OF RS. 1,00,000/- OR MOR E. IN THE FACTS OF PRESENT CASE, THE ESCAPEMENT OF INCOME WAS RS. 3 89,000/- AND HENCE THE PROCEEDINGS FOR RE-ASSESSMENT WERE VALIDL Y INITIATED WITHIN THE PRESCRIBED PERIOD. 48. THE NEXT ISSUE RAISED BY THE ASSESSEE IS THAT T HE SAID RECORDING OF REASONS FOR RE-ASSESSMENT AMOUNTED TO CHANGE OF OPINION. HOWEVER, THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE ASSESSEE HAD DECLARED THE AMOUNT ON ACCOUNT OF FORFEITURE OF SHARES UNDER THE HEAD LIABILITY IN THE BALANCE SH EET AND THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEE DINGS HAD NOT CONSIDERED THE SAME. IN VIEW THEREOF, IT CANNOT BE SAID THAT THE RE-ASSESSMENT PROCEEDINGS WERE A CASE OF CHANGE OF OPINION AND WE FIND MERIT IN THE ORDER OF ASSESSING OFFICER IN THIS REGARD AND UPHOLD THE SAME. 23 48. THE NEXT PLEA RAISED BY THE ASSESSEE WAS THAT THE ORDER OF THE RE-ASSESSMENT WAS NOT CORRECT AS THE ASSESSING OFFICER HAD FAILED TO REMOVE THE PRELIMINARY OBJECTIONS. WE FI ND NO MERIT IN THE SAID PLEA OF THE ASSESSEE WHERE THE ASSESSING O FFICER HAS ELABORATELY CONSIDERED THE REPLY OF THE ASSESSEE AN D HAD INDIVIDUALLY MET THE OBJECTIONS RAISED BY THE ASSES SEE IN PARAS 7 TO 11 OF THE ASSESSMENT ORDER. ACCORDINGLY, WE REJ ECT THE SAME. 49. FURTHER, WE ALSO FIND THAT SIMILAR ISSUE OF RE -OPENING OF ASSESSMENT ON ACCOUNT OF FORFEITURE OF SHARES AROSE BEFORE THE TRIBUNAL IN ITA NO. 751/CHD/2011 AND VIDE ORDER DAT ED 20.04.2012 IN THE APPEAL FILED BY THE REVENUE, THE TRIBUNAL HELD THAT THE RE-ASSESSMENT PROCEEDINGS INITIATED IN THE CASE WERE COVERED BY THE PROVISIONS OF SECTION 149(1)(B) OF T HE ACT. IT MAY BE PLACED ON RECORD THAT IN THE ASSESSMENT YEAR 200 2-03 ALSO, THE ASSESSING OFFICER HAD RECORDED THE REASONS FOR RE-O PENING AS REASON TO BELIEVE THAT THE AMOUNT ON ACCOUNT OF FOR FEITURE OF SHARES HAD ESCAPED ASSESSMENT AS THE ASSESSEE HAD F AILED TO FULLY DISCLOSE THE MATERIAL FACTS AS THE SAID SUM WAS DEC LARED UNDER THE HEAD LIABILITY IN THE BALANCE SHEET. THE RELEVAN T FINDINGS OF THE TRIBUNAL ARE AS UNDER: 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AN D HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. IN VIEW OF THE PROVISO TO SECTION 147, NO ACTION CAN BE TAKEN U/S 147 BEYOND THE PERIOD OF FOUR YEARS IF THE CASE DOES NOT FALL WITH IN THE EXCEPTION OF THE PROVISO MENTIONED IN THE PROVISO ITSELF, NAM ELY, IF THERE IS NO CASE OF FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH ARE NECESSARY FOR HI S ASSESSMENT, FOR THAT ASSESSMENT YEAR. THE SECOND PART OF THE PR OVISO IS THAT IF THE CASE FALLS UNDER THE EXCEPTION MENTIONED IN THE PROVISO TO SECTION 147, NAMELY, THERE IS FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH A RE NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR, THEN ACTI ON CAN BE TAKEN BEYOND FOUR YEARS SUBJECT TO THE ISSUE OF NOTICE U/ S 148 WITHIN THE LIMITATION PROVIDED U/S 149. SECTION 149 (L)(B) OF THE ACT PROVIDES TIME LIMIT FOR NOTICE. BOTH SECTIONS 147 & !49 OF T HE ACT ARE TO BE 24 READ TOGETHER. IN THE INSTANT CASE, THE CIT(A) WITH OUT APPRECIATING THE PROVISIONS OF PROVISO TO SECTION 1 47 HELD THAT NOTICE U/S 148 ISSUED BY THE ASSESSING OFFICER WAS BARRED BY TIME. IN THE INSTANT CASE, THE CASE OF THE REVENUE FALLS UNDER THE EXCEPTION MENTIONED IN THE PROVISO TO SECTION 147 N AMELY THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH WERE NECESSARY FOR HIS ASS ESSMENT, FOR THAT ASSESSMENT YEAR. IN THE REASONS RECORDED FOR R EOPENING OF THE ASSESSMENT, THE ASSESSING OFFICER CATEGORICALLY STATED THAT 'I HAVE REASONS TO BELIEVE THAT RS. 2,25,87,000/- HAS ESCAPED ASSESSMENT ON ACCOUNT OF ASSESSEE'S FAILURE TO DISC LOSE FULLY THE MATERIAL FACTS OF HIS INCOME AS IT WAS CLUBBED UNDE R THE HEAD 'LIABILITIES' IN THE BALANCE SHEET. THE CASE, THEREFORE, BE REOPENED WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961'. THE CIT(A) HAS NOT GIVEN ANY FINDINGS TO THIS EFFECT THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESS EE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE UNDER SUB SECTION TO SECTION |42 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT AS SESSMENT YEAR. IN ABSENCE OF SUCH FINDINGS, THE CIT(A) WAS NOT JUS TIFIED IN HOLDING THAT THE NOTICE ISSUED U/S 148 WAS BARRED BY LIMITATION. IN VIEW OF THE ABOVE, WE ALLOW THIS GROUND OF APPEA L. 50. IN VIEW OF OUR HOLDING THAT THE ASSESSING OFFIC ER HAD VALIDLY INITIATED RE-ASSESSMENT PROCEEDINGS BY RECO RDING REASONS AND THEREAFTER ISSUING NOTICE UNDER SECTION 147/148 OF THE ACT WHICH HAD BEEN RECORDED WITHIN THE PRESCRIBED PERIO D UNDER SECTION 149(1)(B) OF THE ACT AND THERE BEING NO CAS E OF CHANGE IN OPINION, WE UPHOLD THE ORDERS OF THE AUTHORITIES BE LOW IN THIS REGARD. FURTHER, THE ISSUE RAISED IN THE PRESENT C ASE IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN THE EARL IER YEAR IN THE APPEAL FILED BY THE REVENUE AND IN VIEW OF THE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE, WE FIND NO MERIT IN THE GROUNDS OF APPEAL NOS. 1 TO 4 RAISED BY THE ASSESSEE WITH R EGARD TO RE- ASSESSMENT OF ASSESSMENT UNDER SECTION 148 OF THE A CT. IN ANY CASE, THE SAID ISSUE OF RE-OPENING OF ASSESSMENT UN DER SECTION 147/148 OF THE ACT HAS BECOME ACADEMIC AS THE COMMI SSIONER OF INCOME TAX (APPEALS) IN THE YEAR UNDER APPEAL AND T HE TRIBUNAL IN ASSESSMENT YEAR 2002-03 HAD HELD THAT THE AMOUNT RECEIVED ON 25 ACCOUNT OF FORFEITURE OF SHARES WAS A CAPITAL RECEI PT. WE ACCORDINGLY, DISMISS GROUNDS OF APPEAL RAISED BY TH E ASSESSEE. ITA NO. 1201/CHD/2011 : ASSESSEE'S APPEAL :: 2004-05 51. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PANCHKULA HAS ERRED IN LAW AND FACTS IN DISALLOWING THE ACTUAL PAYMENT OF PENSION OUT OF PENSION FUND BEING UNRECOGNIZED AS PER THE DIREC TIONS OF THE HON'BLE ITAT CHANDIGARH BENCH B TO ADJUDICATE THE I SSUE AFRESH. 52. THE LD. AR FOR THE ASSESSEE, AT THE OUTSET PO INTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED B Y THE ORDER OF TRIBUNAL IN ASSESSEE'S OWN CASE RELATING TO ASSESS MENT YEAR 2002-03 AND 2003-04. 53. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL I S IN RELATION TO THE CLAIM OF EXPENDITURE ON ACCOUNT OF ACTUAL PAYME NT OF PENSION OUT OF PENSION FUND WHICH WAS UN-RECOGNIZED. THE T RIBUNAL IN ITA NO. 785 AND 945/CHD/2011 RELATING TO ASSESSMENT YEAR 2002-03 AND 2003-04 IN APPEALS FILED BY ASSESSEE VI DE ORDER DATED 27.03.2014 HAD DELIBERATED UPON THE SAID ISSUE AND HELD AS UNDER : 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IN THE FIRST ROUND OF APPEAL BEFORE THE TRIBUNAL WAS AGGRIEVED BY THE ORDER OF THE AUTHORIT IES BELOW IN UPHOLDING THE ADDITION REGARDING THE AMOUN T CONTRIBUTED TO PENSION FUND MAINTAINED FOR THE EMPL OYEES. THE SAID CONTRIBUTION TO PENSION FUND WAS NOT ALLOW ED AS DEDUCTION IN THE HANDS OF THE ASSESSEE AS THE PENSI ON FUND WAS NOT RECOGNIZED. THE TRIBUNAL IN ITA NOS.56 & 369/CHD/2006 RELATING TO ASSESSMENT YEAR 2002-03 AN D 2003-04 VIDE ORDER DATED 30.9.2008 VIDE PARAS 4 AND 5 OBSERVED THAT THE CONTRIBUTION MADE BY THE ASSESSEE TO ITS PF SCHEME WAS ALLOWABLE EXPENDITURE. HOWEVER, AS T HE PENSION SCHEME HAD BEEN SCRAPPED AND THE AMOUNT HAD BEEN PAID OVER TO P.F. SCHEME,, THE IMPLICATION THEREOF WAS REQUIRED TO BE VIEWED AND AS THE SAID ASPECT HAS NO T BEEN CONSIDERED BY EITHER OF THE AUTHORITIES BELOW, THE MATTER WAS REMITTED BACK TO THE ASSESSING OFFICER TO EXAMI NE THE 26 CLAIM OF THE ASSESSEE AFRESH AND TO PASS AN ORDER I N ACCORDANCE WITH LAW. 12. THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER IN THE SECOND ROUND OF PROCEEDINGS WAS THAT THE SAI D AMOUNT WAS FIRST NOT CONTRIBUTED TO A RECOGNIZED PENSION S CHEME AND WAS ALSO NOT CONTRIBUTED TO THE P.F. SCHEME. H OWEVER, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HA D MADE ACTUAL PAYMENTS OF PENSION TO SOME OF THE EMPLOYEES WHO HAD RETIRED DURING THE PERIOD UNDER CONSIDERATION A ND THE SAID AMOUNTS BEING PAID TO THE EMPLOYEES SHOULD BE ALLOWED AS A DEDUCTION IN THE HANDS OF THE ASSESSEE AND THE DETAILS IN RESPECT THEREOF WERE AVAILABLE IN THE AUDIT REPO RT. THE ASSESSING OFFICER AND THE CIT (APPEALS), HOWEVER, R EJECTED THE CLAIM OF THE ASSESSEE ON THE PLEA THAT THE ASSE SSEE HAD FAILED TO MAKE CONTRIBUTION TO RECOGNIZED PENSION F UND. WE FIND NO MERIT IN THE ORDERS OF THE AUTHORITIES BELO W SPECIALLY IN CASE WHERE THE MATTER HAS BEEN REMITTE D BACK TO THE ASSESSING OFFICER TO CULL OUT THE FACTS OF THE CASE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. IT IS AN ADMITTED POSITION THAT THE PENSION FUND OF THE ASSESSEE WAS NOT RECOGNIZED AND SUCH FUND SCHEME WAS SCRAPPED AS NO RECOGNITION WAS GIVEN BY THE STATE GOVERNMENT. HOW EVER, THE ASSESSEE MADE AN ALTERNATE PLEA THAT THE AMOUNT WOULD BE CONTRIBUTED TO THE P.F. SCHEME AND IN THE ABSENC E OF THE SAID PENSION SCHEME, ANOTHER PLEA WAS RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT THE AMOU NT EQUIVALENT TO THE PAYMENT BEING MADE ON ACCOUNT OF PENSION TO THE RESPECTIVE EMPLOYEES RETIRING DURING THE YEA R BE ALLOWED AS DEDUCTION. THE REQUISITE DETAILS OF TH E PENSION FUND BALANCE SHEET WERE FILED ALONG WITH AUDITORS REPORT DATED 22.10.2003 WHICH ARE PLACED AT PAGES 40 TO 49 OF THE PAPER BOOK. THE PERUSAL OF THE SAID PENSION FUND B ALANCE SHEET REFLECTS THAT FOR THE YEAR ENDING 31.3.2002 T HE STATUS WAS AS UNDER: (RS.) 1. OPENING OF ACC0UNT-CA-1193 3,000,00 ADMN = HFC EMPLOYEES PENSION FUND 2. OPENING BALANCE 1,41,80,523.51 3. PENSION CONTERIBUTION 1,21,97, 699.00 (AS PER ANANEXUEE-I) 4. ICIC1 BONDS OF RS=1 , 15 CEORES 1,15,00,000.00 5. INTEREST RECEIVED ON ICICI 15,39,795. 00 BONDS OF RS.1.15 CRORES. (AS PER ANNEXURE-111) 6. RECOVERY-COMMUTED PENSIONER 3 ,90,511.00 (AS PER ANNEXURE--11 ) 7. INTEREST CHARGED ON PENSION 15,04,795,00 27 FUND FOR THE YEAR ENDED ON 31.3.2002. (AS PER ANNEXURE -IV) ------------------ TOTAL : 4,13,16,323.51 ( B ) 1. VARIOUS PAYMENTS MADE TO 22,89,137,00 PENSIONERS DURING THE YEAR ENDED ON 31.3.2002 AS PER ANNEXURES-V, VI & VII ATTACHED. 2. BANK BALANCE 3,000.00 3. BALANCE OUTSTANDING ,75,24,186.51 4. ICICI BONDS OF RS. 1.15 CRORES 1,15,00,000.00 TOTAL 4,13,16,323.51 13. SIMILARLY IN ASSESSMENT YEAR 2003-04 THE PENSIO N FUND BALANCE SHEET WAS FILED ON RECORD AND THE STATUS AS ON 31.3.2003 WAS AS UNDER: (RS.) A) I OPENING BALANCE- CA-02100011938 3,000.00 ADMN HFC EMPLOYEES PENSION FUND II OPENING BALANCE 2,75,24,1 86.51 III PENSION CONTRIBUTION 32,07,989. 00 (ANNEX-I) IV ICICI BONDS OF RS 1.15 CRORE 1,15,00,000.00 V RECOVERY - COMMUTED PENSION 5,07,841.00 (ANNEX-II) VI INTEREST RECEIVED ON ICICI BONDS 10,58,402.00 OF RS 1.15 CRORES (ANNEX-III) VII INTEREST CHARGED ON PENSION FUND 25,02,912.00 FOR THE YEAR ENDED ON 31.03.2003 (ANNEX-IV) ------------------ TOTAL 4,63,04,330.51 B ) I BANK BALANCE 278971.00 AS ON 31.03.2003 + 3000.00 ------------- 2,81,971.00 II VARIOUS PAYMENTS MADE TO PENS I ON ERS 6,33,188. 00 DURING THE YEAR ENDED ON 31.03.2003 ( ANNEX-V & VI) III ICICI BONDS OF RS 1.15 CRORE 1,15 ,00,000.00 IV BALANCE OUTSTANDING 29168142 .51 LESS : CH.NO 315360 (-)27897 1.00 DATED 28.3.2003 ---------------- 2, 88,89 ,171.51 ISSUED ON 1.4.2003 28 REALISED ON 2.4.2003 ----------------- TOTAL 4,63,04,330.51 14. ON PERUSAL OF THE ABOVE SAID BALANCE SHEET FOR PENSION FUND REFLECTS THAT THE PENSION CONTRIBUTION FOR THE ASSESSMENT YEAR 2002-03 WAS RS.1,21,97,699/- AND TH E PAYMENTS MADE TO THE PENSIONERS AS PER ANNEXURES-V, VI AND VII TOTALED TO RS.22,89,137/-. IN ASSESSMENT YEAR 2003-04, THE TOTAL CONTRIBUTION TO THE PENSION FUND WAS RS.32,07,989/- AND THE PAYMENTS MADE TO THE PENSION ERS AS PER ANNEXUREV AND VI TOTALED TO RS.56,33,188/-. WE FIND MERIT IN THE CLAIM OF THE ASSESSEE THAT THE EXPENDI TURE INCURRED ON PAYMENTS BEING MADE TO THE PENSIONERS I S ALLOWABLE IN THE HANDS OF THE ASSESSEE AS REVENUE EXPENDITURE. IN ASSESSMENT YEAR 2002-03 THE TOTAL CONTRIBUTION TO THE PENSION FUND DURING THE YEAR WA S RS.1.22 CRORES OUT OF WHICH RS.22,89,137/- WERE ACT UALLY DISBURSED TO THE PENSIONERS AND HENCE THE SAID EXPE NDITURE OF RS.22,89,137/- IS ALLOWABLE AS AN EXPENDITURE IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YEAR 2002-03. IN ASSESSMENT YEAR 2003-04 THE TOTAL CONTRIBUTION TO T HE PENSION FUND WAS RS.32,07,989/-. HOWEVER, THE PAYM ENTS MADE TO THE PENSIONERS TOTALED TO RS.56,33,188/-. WE RESTRICT THE ALLOWANCE OF THE EXPENDITURE IN THE HA NDS OF THE ASSESSEE TO THE EXTENT OF PENSION CONTRIBUTION I.E. RS.32,07,989/- IN ASSESSMENT YEAR 2003-04. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE AND THE EXPENDITURE OF RS.22,89,137/- IS ALLOWED IN ASSESSMENT YEAR 2002-0 3 AND EXPENDITURE OF RS.32,07,989/- S ALLOWED IN ASSESSME NT YEAR 2003-04. THE GROUND OF APPEAL RAISED BY THE ASSESS EE IN ITA NO.785/CHD/2011 IS ALLOWED AND IN ITA NO.945/CHD/2011 IS PARTLY ALLOWED. 54. THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE RAISED IN THE EARLIER YEARS AND FOLLOWING THE SAME PARITY OF REASONING, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF EXPENDITURE INCURRED ON PAYMENTS BEING MAD E TO THE PENSIONERS AS REVENUE EXPENDITURE. DURING THE YEAR UNDER CONSIDERATION, THE TOTAL CONTRIBUTION TO THE PENSIO N FUND WAS RS. 34,09,048/- OUT OF RS. 56,33,188/- WERE ACTUALLY DI SBURSED TO THE PENSIONERS. IN VIEW THEREOF, WE RESTRICT THE ALLOW ANCE OF EXPENDITURE IN THE HANDS OF THE ASSESSEE OF RS. 34, 09,048/-. THE ASSESSING OFFICER SHALL VERIFY THE FIGURES WHILE GI VING APPEAL 29 EFFECT. THE GROUND OF APPEAL RAISED BY THE ASSESSE E IS THUS, PARTLY ALLOWED. 55. IN THE RESULT, I) THE APPEALS OF THE REVENUE IN ITA NOS.353, 411 & 412/CHD/2011 ARE ALLOWED. II) THE APPEALS OF THE ASSESSEE IN ITA NOS.388, 416 & 417/CHD/2011 ARE PARTLY ALLOWED. III) THE APPEALS OF THE ASSESSEE IN ITA NOS.1200 & 1201 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: .25 TH JULY, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITA T,CHD.