Gujarat Growth Centres Devlopment Corporation Ltd., V. The Dy. CIT., Circle-1(1),

ITA 434/AHD/2004

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6836 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-03-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 17-02-2004
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Business income; Depreciation; Revenue expenditure
• Section: 143(1); 147; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.434/AHD/2004 [ASSTT. YEAR : 1998-1999] AND ITA NO.2244, 2245 AND 2246/AHD/2006 [ASSTT. YEAR : 1999-2000, 2000-2001 AND 2001-2002] GUJARAT GROWTH CENTRES DEVELOPMENT CORPORATION LTD. BLOCK NO.5, 4 TH FLOOR, UDYOG BHAVAN, GANDHINAGAR. VS. DCIT, CIR.1(1) GANDHINAGAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.C. SHAH REVENUE BY : SHRI K. MADHUSUDAN O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THESE ARE RECALLED MATTERS VIDE ITAT ORDER DATED 26.6.2009 IN MA NOS.2 43, 244, 245 AND 246/AHD/2007 FOR THE LIMITED FOR PURPOSE OF DE NOVO HEARING OF GROUND NO.3 WHICH IS COMMON IN ALL THESE APPEALS. ACCORDI NGLY, FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF ALL THESE APPEALS BY THI S COMMON ORDER. 2. THE FACTS OF ALL THE YEARS ARE IDENTICAL THEREFO RE WE SHALL HEREINBELOW DISCUSS THE FACTS RELATING TO THE ASSES SMENT YEAR 1998-99. 3. THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING IN W HICH 70% SHARES ARE HELD BY THE CENTRAL GOVERNMENT AND 30% BY THE S TATE GOVERNMENT. THE COMPANY WAS INCORPORATED ON 11-12-1992 FOR ESTA BLISHING INFRASTRUCTURE FACILITIES FOR NEW INDUSTRIES AND OT HER COMMERCIAL AND SOCIAL AMENITIES AS PER THE GUIDELINES ISSUED BY TH E GOVERNMENT OF INDIA IN THE CASE OF GROWTH CENTRE AND INTEGRATED INFRAST RUCTURE DEVELOPMENT CENTRE. FOR ASSESSMENT YEAR 1998-99, THE ASSESSEE FILED THE RETURN ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -2- DISCLOSING INCOME OF RS.2,20,860/- ON 1-12-1998. I N THE NOTE NO.5 OF SCHEDULE-K (NOTES ON ACCOUNTS) ANNEXED WITH THE RET URN OF INCOME, THE ASSESSEE HAS MENTIONED AS UNDER: THE MAIN OBJECTS OF THE CORPORATION IS TO DEVELOP INFRASTRUCTURE AND GROWTH CENTRES FOR INDUSTRIES WHICH IS YE TO CO MMENCE OPERATIONS ON COMMERCIAL BASIS. IN VIEW OF THE ABO VE FACTS, 70% OF THE EXPENSES RELATABLE TO THE PROJECTS, HAVE BEE N CAPITLAISED AND SHOWN UNDER FIXED ASSETS SCHEDULED AS EXPENSES PEND ING ALLOCATIONS, BALANCE EXPENSES CHARGED TO CURRENT YE AR PROFIT AND LOSS ACCOUNT. THIS IS JUSTIFIABLE AS GUJARAT INDUS TRIAL DEVELOPMENT CORPORATION HAS EARMARKED 100 HECTARES LAND FOR GUJ ARAT GROWTH CENTRES DEVELOPMENT CORPORATION LIMITED IN VAGRA IN WHICH THE ROADS ARE DEVELOPED. WATER SUPPLY IS BROUGHT NEARE ST TO THE SITE WHICH WOULD BE CLASSIFIED AS CAPITAL WORKS. 4. ON THE BASIS OF THE ABOVE NOTE AND CONSIDERING T HE FACTS OF THE CASE, THE ASSESSING OFFICER FORMED AN OPINION THAT THE BU SINESS OF THE ASSESSEE WAS NOT COMMENCED DURING THE ACCOUNTING YEAR RELEVA NT TO THE ASSESSMENT UNDER CONSIDERATION. HE THEREFORE FOLLO WING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF TUTICORIN ALK ALI CHEMICALS & FERTI. LTD. VS. CIT, 227 ITR 172 (SC) ASSESSED THE INTEREST INCOME AMOUNTING TO RS.14,22,469/- AS INCOME FROM OTHER SO URCES. ON THE OTHER HAND, THE ASSESSEE HAS CLAIMED INTEREST INCOME AS B USINESS INCOME AND AGAINST SUCH INCOME THE FOLLOWING EXPENDITURE WAS C LAIMED. CONSULTANCY EXPS. RS. 80,275 ADMN. EXPS. RS.1,64,222 SALARY TO DIRECTORS RS.1,98,802 DEPRECIATION RS.6,51,443 PRELIMINARY EXP. W/O RS.3,03,722 RS.13,98,464/- ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -3- 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) VIDE ORDER DATED 3-11-2003 UPHELD THE ORDER OF THE AO. THE ASSESSEE FILED APPEAL BEFORE THE ITAT. HOWEVER, THE ITAT VI DE ORDER DATED 16- 11-2007 IN ITA NO.434/AHD/2004 DISMISSED THE ASSESS EES APPEAL. THE ASSESSEE DID NOT FILE ANY FURTHER APPEAL TO THE HON BLE HIGH COURT, ON THE OTHER HAND, FILED MISC. APPLICATION BEFORE THE ITAT . IN THE MISC. APPLICATION THE ASSESSEE HAS CHALLENGED THE FINDING S OF THE ITAT AND CLAIMED THAT THE BUSINESS OF THE ASSESSEE HAD COMME NCED. IT WAS ALSO CLAIMED THAT THE ITAT OMITTED TO ADJUDICATE GROUND NO3 OF THE APPEAL RAISED BEFORE THE ITAT. THE ITAT VIDE ORDER DATED 26-6-2009 IN MA NO.243, 244, 245 AND 246/AHD/2007 REJECTED THE ASSE SSEES FIRST CONTENTION AND HELD AS UNDER: 4. FROM THE ABOVE FINDINGS OF THE TRIBUNAL, IT IS CLEAR THAT THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE ARGUMENT S OF ASSESSEES COUNSEL AS WELL AS THE DECISIONS REFERRE D TO IN PARA 3 OF THE M.AS. BY WAY OF PRESENT APPLICATIONS, THE ASSE SSEE WANTS THAT THE TRIBUNAL SHOULD EXERCISE THE POWER OF REVIEW AN D RECALL THE ORDER WHO WHICH IS NOT PERMISSIBLE UNDER THE INCOME -TAX LAW. IT IS WELL SETTLED LAW THAT IN EXERCISE OF POWERS OF RECT IFICATION U/S.254(2) OF THE ACT WHAT CAN BE CORRECTED IS AN A PPARENT ERROR AND NOT TO DEAL WITH MERITS AND TO RECALL THE ORDER ON THE BASIS OF TAKING A SECOND OPINION ON THE MERITS, WHICH IS NOT THE SCOPE OF RECTIFICATION. NORMALLY, RECTIFICATION ONLY MEANS TO CORRECT AND ERROR WHICH IS APPARENT ON THE FACE OF THE RECORD A ND NOT TO DECIDE THE MATTER OVER AGAIN ON THE MERITS. THUS, CONSIDE RING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE DO NOT SEE ANY MERIT IN THESE MISCELLANEOUS APPLICATIONS TO THIS E XTENT. HOWEVER, THE ITAT ACCEPTED THE ASSESSEES SECOND CO NTENTION THAT THE GROUND NO.3 OF THE ASSESSEES APPEAL REMAINED TO BE ADJUDICATED. THEREFORE, THE REGISTRY WAS DIRECTED TO FIX THE APP EAL FOR THE LIMITED ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -4- PURPOSE OF DECIDING GROUND NO.3 OF THE APPEAL. TH E GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UNDER: 3. THE LD.CIT(A) HAS ERRED IN IGNORING THE FACT TH AT THE LEARNED AO ACCEPTED THE CLAIM OF COMMENCEMENT OF BUSINESS D URING AY 1995-1996 ON THE GROUND THAT THE PRINCIPLE OF RES J UDICATA IS NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS INASMUCH A S ONE HAD TO FIND OUT AT WHAT POINT OF TIME THE BUSINESS IS SET HAVE BEEN SET UP AND THAT THE ASSESSEE SET UP THE BUSINESSES IN JUNE , 1993. 6. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT IN THE ASSESSMENT ORDER FOR A.Y.1995-96 PASSED UNDER SECTION 143(3), THE REVENUE HAS ACCEPTED THAT THE ASSESSEE- COMPANY IS ENGAGED IN CARRYING OUT THE BUSINESS OF IMPLEMENTATION OF I NTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE. THUS, WHEN AS A MATTER OF FACT , THE REVENUE HAS ACCEPTED IN A.Y.1995-96 THAT THE BUSINESS OF THE AS SESSEE HAS COMMENCED, IT CANNOT TAKE A DIFFERENT VIEW IN SUBSE QUENT YEAR. HE FURTHER SUBMITTED IN A.Y.1996-97 AS WELL AS IN 1997 -98 ALSO THE REVENUE ACCEPTED THE ASSESSEES CONTENTION THAT THE BUSINES S OF THE ASSESSEE WAS COMMENCED. IT IS ONLY IN THE ASSESSMENT ORDER FOR A.Y.1998-98 THE REVENUE HAS TAKEN A DIFFERENT STAND AND HELD THAT T HE BUSINESS HAS NOT COMMENCED. IT IS A SETTLED LAW THAT WHEN AN ISSUE IS DECIDED ONE WAY OR OTHER, IN ONE YEAR AND THE PARTIES HAVE ACCEPTED T HAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NO T BE APPROPRIATE TO ALLOW THE DECISION TO BE CHANGED IN THE SUBSEQUENT YEAR. IT IS STATED BY THE LEARNED COUNSEL THAT THE REVENUE HAS NOT REOPEN ED THE ASSESSMENT ORDER OF 1995-96 EITHER UNDER SECTION 147 OR UNDER SECTION 263. THUS, THE REVENUE HAS ALLOWED THE POSITION TAKEN IN A.Y.1 995-96 TO BE SUSTAINED. THEREFORE, AS PER THE DECISION OF THE H ONBLE APEX COURT IN THE CASE OF RADHASOAMI SATSANT VS. CIT, 193 ITR 321 IT WOULD BE ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -5- INAPPROPRIATE TO ALLOW THE REVENUE TO TAKE A DIFFER ENT STAND. HE ALSO RELIED UPON THE DECISION OF THE HONBLE PATNA HIGH COURT IN THE CASE OF DR.NARENDRA PRASAD AND OTHERS VS. CIT, 322 ITR 171. THE ASSESSEE HAS ALSO FILED WRITTEN SUBMISSIONS. 7. THE LEARNED DR, ON THE OTHER HAND, STATED THAT I N A.Y.1995-96, THE ASSESSING OFFICER ONLY MENTIONED ABOUT THE ACTIVITI ES OF THE ASSESSEE. THERE IS NO CONSCIOUS FINDING BY THE ASSESSING OFFI CER WITH REGARD TO COMMENCEMENT OF BUSINESS. THE ASSESSING OFFICER DI D NOT MAKE ANY INQUIRY, DID NOT ASK FOR ANY DETAILS FROM THE ASSES SEE WITH REGARD TO THE COMMENCEMENT OF THE BUSINESS. THIS FACT IS EVIDENT FROM THE ORDER-SHEET OF A.Y.1995-96 THAT NO INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER IN THIS REGARD. HE THEREFORE SUBMITTED THAT THERE IS NO FINDING IN THE ORDER FOR A.Y.1995-96 WITH REGARD TO THE COMMENCEMENT OF THE BUSINESS BY THE ASSESSEE. WHAT IS MENTIONED BY THE AO IN THE ORDER IS THE NATURE OF THE BUSINESS OF THE ASSESSEE. HE ALSO STATED THAT IN T HE ACCOUNTS, THE ASSESSEE ITSELF HAS TREATED THAT THE BUSINESS HAS NOT COMMEN CED. THIS FACT IS EVIDENT FROM THE NOTE GIVEN BY THE ASSESSEE ALONG W ITH THE ACCOUNTS. IN THE BOOKS OF ACCOUNTS, THE ASSESSEE ITSELF HAS CAPI TALIZED 70% OF THE EXPENSES. THAT FOR A.Y.1998-99, THE AO AFTER DETAI LED DISCUSSION HAS ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAS NOT COMMENCED THE BUSINESS. THIS FACTUAL FINDING OF THE ASSESSING OF FICER IS UPHELD BY THE CIT(A) AS WELL AS ITAT. THAT THE ASSESSEE HAS ACCE PTED THE DECISION OF THE ITAT AND DID NOT FILE ANY APPEAL BEFORE THE HON BLE COURT. ON THESE FACTS AND THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD NOT BE APPLICABLE. HE ALSO STATED THAT THE F ACTS IN ABOVE CASE, RELIED UPON BY THE LEARNED COUNSEL WERE ALTOGETHER DIFFERENT. HE FURTHER STATED THAT EVEN IF IT IS HELD THAT BY MISTAKE, THE ASSESSING OFFICER ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -6- ACCEPTED THE ASSESSEE CONTENTION IN A.Y.1995-96, T HE SAME CAN BE CORRECTED IN THE SUBSEQUENT YEAR. THERE IS NO HERO ISM IN PERPETUATING THE ERROR. IN SUPPORT OF THIS CONTENTION, HE RELIED UP ON THE FOLLOWING DECISIONS: I) DISTRIBUTORS (BARODA) P. LTD. VS. UNION OF INDIA & ORS., 155 ITR 120 (SC); II) CIT VS. BRITISH PAINTS INDIA LTD., 188 ITR 44 (SC); THE LEARNED DR ALSO FILED WRITTEN SUBMISSIONS. 8. IN THE REJOINDER, IT WAS POINTED OUT BY THE LEAR NED COUNSEL THAT FROM THE ORDER SHEET OF A.Y.1995-96, IT IS CLEAR THAT TH E ASSESSING OFFICER IN THE ORDER-SHEET ALSO MENTIONED THAT THE ASSESSEE HA S COMMENCED BUSINESS. THUS IN A.Y.1995-96, THE ASSESSING OFFICER RECORDED FINDING IN THE ORDER SHEET AS WELL AS IN THE ASSESSMENT ORDER WITH REGAR D TO THE COMMENCEMENT OF THE BUSINESS. 9. WE HAVE CAREFULLY CONSIDERED ARGUMENTS OF BOTH T HE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING WRI TTEN SUBMISSIONS OF BOTH THE PARTIES. THE LIMITED PURPOSE FOR WHICH TH ESE APPEALS HAVE BEEN FIXED IS FOR ADJUDICATING GROUND NO.3 OF THE ASSESS EES APPEAL. SO FAR AS THE MERIT IS CONCERNED, THE ASSESSING OFFICERS VIE W THAT THE BUSINESS HAS NOT BEEN COMMENCED IN THE YEAR UNDER CONSIDERATION IS UPHELD BY THE CIT(A) AS WELL AS THE ITAT. THE ASSESSEES MISC. A PPLICATION ON THIS ASPECT HAS ALSO BEEN REJECTED BY THE ITAT. THE ASS ESSEE HAS NOT FILED ANY APPEAL BEFORE THE HONBLE HIGH COURT EITHER AGAINST THE ORDER OF THE ITAT IN APPEAL OR IN MISC. APPLICATION. THEREFORE, ON MERIT, THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT COMMENCED ITS BUSINESS DURING THE ACCOUNTING YEAR RELEVANT TO THE A.Y.1998 -99 HAS BECOME FINAL. ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -7- 10. NOW THE ONLY QUESTION IS WHETHER IN VIEW OF THE FINDINGS IN THE ASSESSMENT ORDER IN A.Y.1995-96, THE ASSESSING OFFI CER WAS PERMITTED TO HOLD IN A.Y.1998-99 THAT THE ASSESSEE HAS NOT COMME NCED BUSINESS. IN THE ASSESSMENT ORDER FOR A.Y.1995-96, THE ASSESSING OFFICER HAS RECORDED THE FOLLOWING FINDINGS: 8. THE ASSESSEE CO. IS ENGAGED IN CARRYING OUT THE WORK OF IMPLEMENTATION OF INTEGRATED INFRASTRUCTURE DEVELOP MENT CENTRES SCHEMED BY GOVT. OF INDIA AS WELL AS GOVT. OF GUJAR AT. SIMILAR FINDING WAS RECORDED IN THE ORDER SHEET ALS O. HOWEVER FROM THE ORDER SHEET, IT APPEARS THAT NO QUERY WAS RAISED BY THE AO IN THIS REGARD AND NO EXPLANATION WAS SOUGHT FROM THE ASSESSEE. T HUS, IT IS EVIDENT THAT NO INQUIRY WAS MADE BY THE AO IN THIS MATTER. THER EFORE, IT APPEARS THAT THE AO RECORDED THE ABOVE FINDING BY ACCEPTING THE ASSESSEES CONTENTION IN THE RETURN WITHOUT ANY INQUIRY OR INVESTIGATION. THE ASSESSMENT FOR A.Y.1996-97 AND 1997-908 WERE COMPLETED UNDER SECTI ON 143(1) I.E. WITHOUT ANY SCRUTINY. THEREFORE, NOW QUESTION IS W HETHER ON THESE FACTS, THE DECISION OF THE HONBLE APEX COURT IN THE CASE RADHASOAMI SATSANT (SUPRA) RELIED UPON BY THE LEARNED COUNSEL WOULD DE BAR THE ASSESSING OFFICER FROM TAKING THE VIEW IN A.Y.1998-99 THAT TH E ASSESSEE HAS NOT COMMENCED THE BUSINESS ? THE HONBLE APEX COURT IN THE CASE OF RADHASOAMI SATSANT (SUPRA) HELD AT PAGE NO.329 OF T HE ITR 193 AS UNDER: WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, R ES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH AS SESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT A PPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERME ATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL A PPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YE AR. ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -8- ON THESE REASONINGS, IN THE ABSENCE OF ANY MATERIA L CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER AND, IF THERE WAS NO CHANGE, IT WAS IN SUPPORT OF THE ASSES SEE-WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CO NTRARY TO WHAT HAD BEEN DECIDED BY THE COMMISSIONER OF INCOME-TAX IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SH OULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THAT THESE AP PEALS SHOULD BE ALLOWED AND THE QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE, NAMELY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG WAS ENTITLED TO E XEMPTION UNDER SECTIONS 11 AND 12 OF THE INCOME-TAX ACT OF 1 961. COUNSEL FOR THE REVENUE HAD TOLD US THAT THE FACTS OF THIS CASE BEING VERY SPECIAL, NOTHING SHOULD BE SAID IN A MAN NER WHICH WOULD HAVE GENERAL APPLICATION. WE ARE INCLINED TO ACCEPT THIS SUBMISSION AND WOULD LIKE TO STATE IN CLEAR TERMS T HAT THE DECISION IS CONFINED TO THE FACTS OF THE CASE AND MAY NOT BE TREATED AS AN AUTHORITY ON ASPECTS WHICH HAVE BEEN DECIDED FOR GE NERAL APPLICATION. (EMPHASIS ADDED) 11. FROM THE ABOVE IT IS EVIDENT THAT IN THE ABOVEM ENTIONED CASE, THEIR LORDSHIP OF HONBLE APEX COURT HAVE CLARIFIED THAT THE ABOVE DECISION IS CONFINED TO THE FACTS OF THE CASE AND SHOULD NOT BE TREATED AS AUTHORITY FOR GENERAL APPLICATION. MOREOVER, WE FIND THAT THE FA CTS IN THE CASE OF THE ASSESSEE ARE DIFFERENT THAN THE FACTS BEFORE THE HO NBLE APEX COURT IN THE CASE OF THE RADHASOAMI SATSANT (SUPRA). IN THAT CA SE THEIR LORDSHIP OF THE HONBLE APEX COURT HAS HELD THAT WHERE A FUNDAM ENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS H AS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NO T BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. HOWEVER, IN THE CASE OF THE ASSESSEE WE DID NOT FIND ANY SUCH F UNDAMENTAL FINDING BY THE ASSESSING OFFICER, IN THE ASSESSMENT YEAR 1995- 96. HE HAS NOT EXAMINED ANY FACT, DID NOT CONDUCT ANY ENQUIRY. IT APPEARS THAT HE SIMPLY ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -9- MENTIONED IN WHAT BUSINESS THE ASSESSEE WAS ENGAGED . IN OUR OPINION, HE HAS NOT RECORDED ANY CONCRETE FINDING THAT THE BUSI NESS HAS COMMENCED. HE HAS NOT EXAMINED FROM WHICH DATE THE BUSINESS HA S COMMENCED AND IN WHAT MANNER. RETURN FOR A.Y.1996-97 AND 1997-98 WERE ACCEPTED UNDER SECTION 143(1) I.E. WITHOUT ANY SCRUTINY. ON THE OTHER HAND, THE ASSESSEE ITSELF HAS STATED IN THE NOTE ANNEXED WITH ITS ACCOUNTS IN A.Y.1998-99 THAT THE BUSINESS HAS NOT COMMENCED. T HE SAME NOTE IS REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER AND HAS ALSO BEEN REPRODUCED BY US IN PARA-3 ABOVE. IN THIS NOT E, THE ASSESSEE HAS MENTIONED THAT SINCE THE BUSINESS IS NOT COMMENCED, 70% OF THE EXPENDITURE IS CAPITALIZED TO THE PROJECT AND ONLY 30% IS BEING CLAIMED AS REVENUE EXPENDITURE. THUS, EVEN AS PER THE ASSESSE E THE BUSINESS WAS NOT COMMENCED TILL THE ASSESSMENT YEAR 1998-99. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED OUT BY THE LEARNED DR THA T THE BUSINESS WAS COMMENCED DURING THE ACCOUNTING YEAR RELEVANT TO TH E ASSESSMENT YEAR 2004-2005 AND THEREAFTER ON REGULAR BASIS EXPENSES HAVE BEEN ALLOWED WHILE COMPUTING THE BUSINESS INCOME. CONSIDERING T HE ABOVE FACTUAL POSITION AS WELL AS OBSERVATIONS OF THEIR LORDSHIPS IN THE CASE OF RADHASOAMI SATSANT (SUPRA), WE HOLD THAT THE AO WAS NOT DEBARRED FROM TAKING THE VIEW IN A.Y.1998-99 THAT THE ASSESSEE HA D NOT COMMENCED BUSINESS TILL THE END OF THE ACCOUNTING YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LEARNED COUNSEL FOR THE ASSESSEE HAD ALSO RELIED UPON THE DECISION OF THE HONBLE PATNA HIGH COURT IN THECASE OF DR.NARENDRA PRASAD AND OTHERS (SUPRA). HOWEVER, WE FIND THAT THE FACTS IN THAT CASE WERE ALSO ALTOGETHER DIFFERENT THAN TH E FACTS IN THE CASE OF THE ASSESSEE. IN THAT CASE FOR A.Y.1982-83 TO 1985-86, THE SETTLEMENT COMMISSION CAME TO THE CONCLUSION THAT THE RENTAL I NCOME AND OTHER INCOME EARNED FROM THE NURSING HOME SHOULD BE ASSES SED IN THE HANDS OF ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -10- THE ASSESSEE AND HIS WIFE IN EQUAL PROPORTION. THI S POSITION WAS ACCEPTED BY THE REVENUE TILL A.Y.1994-95. HOWEVER, FOR A.Y. 1995-96 AND 1997- 98 THE REVENUE CAME TO THE CONCLUSION THAT THE VENT URE CONSTITUTED AN ASSOCIATION OF PERSONS. EVEN AFTER 1997-98, THE IN COME WAS ASSESSED IN THE HANDS OF THE ASSESSEE AND HIS WIFE. ON THIS FA CT, THEIR LORDSHIP OF PATNA HIGH COURT HELD AS UNDER: HELD, ALLOWING THE APPEALS, THAT CONSISTENCY IS TH E HALL-MARK OF THE LAW AND JUSTICE AND INDIVIDUALS ARE ENTITLED TO ORGANISE THEIR AFFAIRS IN A MANNER THEY PERCEIVE TO HAVE BEEN ACCE PTED BY THE AUTHORITIES FOR A LONG LENGTH OF TIME. NO CHANGE OF CIRCUMSTANCE WAS DISCERNIBLE IN THE TWO PERIODS IN QUESTION. THE AUTHORITIES UNDER THE ACT HAD NEITHER COME ACROSS NEW FACTS OR CIRCUMSTANCES NOR SUPPRESSION OF FACT. THIS WAS A CASE OF TAKING DIFFERENT VIEW ON THE SAME FACTS AS OBTAINED BEFORE THE SETTLEMENT CO MMISSION. THE VIEW TAKEN BY THE SETTLEMENT COMMISSION HAD BEEN FO LLOWED BY THE AUTHORITIES UNDER THE ACT FOR LATER PERIODS APART F ROM THE PRECEDING PERIODS. THEREFORE, THE NURSING HOME COULD NOT BE T REATED AS AN ASSOCIATION OF PERSONS OF THE TWO ASSESSEES. THE FACTS IN THE CASE OF THE ASSESSEE ARE TOGETHER DIFFERENT. IN THE CASE OF THE ASSESSEE IN A.Y.1995-96, THE ASSESSING OFFICER MADE CERTAIN OBSERVATION IN THE ASSESSMENT ORDER WITHOUT EXAMINI NG ANY FACTS. IN A.Y.1998-99 I.E. ORDER UNDER APPEAL, THE ASSESSEE I TSELF IN THE NOTE ANNEXED ALONG WITH THE ACCOUNTS MENTIONED THAT THE ASSESSEE HAS NOT COMMENCED THE BUSINESS AND ON THAT BASIS CAPITALIZE D MAJOR PART OF THE EXPENDITURE INCURRED DURING THE YEAR UNDER CONSIDER ATION. THE ASSESSING OFFICER EXAMINED THE FACTS IN DETAIL AND CAME TO TH E CONCLUSION THAT THE ASSESSEE HAD NOT COMMENCED THE BUSINESS. THE FINDI NG RECORDED BY THE AO WAS UPHELD BY THE CIT(A) AS WELL THE ITAT. THE ASSESSEE ALSO ACCEPTED THE ORDER OF THE ITAT BY NOT FILING ANY AP PEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. ON THESE FACTS, IN OUR OPINION, THE ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -11- DECISION OF THE HONBLE PATNA HIGH COURT RELIED UPO N BY THE LEARNED COUNSEL WOULD NOT BE APPLICABLE. 12. THE LEARNED DR HAS RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF DISTRIBUTORS (BARODA) PVT. LTD . (SUPRA) TO SUPPORT HIS CONTENTION THAT EVEN IF THE ASSESSING OFFICER COMMI TTED A MISTAKE IN A.Y.1995-96, IT IS NOT NECESSARY THAT SUCH MISTAKE SHOULD BE PERPETUATED. THE HONBLE APEX COURT IN THE CASE OF DISTRIBUTORS (BARODA) P. LTD. (SUPRA) HELD THAT TO PERPETUATE AN ERROR IS NOT HER OISM. HE ALSO POINTED OUT THAT THIS DECISION BY THE HONBLE APEX COURT WA S BY THE BENCH CONSISTING OF FIVE JUDGES AND THEREFORE WOULD HAVE GREATER FORCE THAN THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF R ADHASOAMI SATSANT (SUPRA) WHICH WAS BY A BENCH CONSISTING OF TWO JUDG ES. WE FIND THAT THE HONBLE APEX COURT IN THE CASE OF DISTRIBUTORS (BARODA) P. LTD., HAS CONSIDERED SIMILAR ISSUE AT LENGTH AND MADE THE FOL LOWING OBSERVATIONS AT PAGE NO.140 OF THE ITR 155. BUT, EVEN IF, IN OUR VIEW, THE DECISION IN CLOTH TR ADERS' CASE IS ERRONEOUS, THE QUESTION STILL REMAINS WHETHER WE SH OULD OVERTURN IT. ORDINARILY, WE WOULD BE RELUCTANT TO OVERTURN A DECISION GIVEN BY A BENCH OF THIS COURT, BECAUSE IT IS ESSENTIAL T HAT THERE SHOULD BE CONTINUITY AND CONSISTENCY IN JUDICIAL DECISIONS AN D LAW SHOULD BE CERTAIN AND DEFINITE. IT IS ALMOST AS IMPORTANT THA T THE LAW SHOULD BE SETTLED PERMANENTLY AS THAT IT SHOULD BE SETTLED CORRECTLY. BUT THERE MAY BE CIRCUMSTANCES WHERE PUBLIC INTEREST DE MANDS THAT THE PREVIOUS DECISION BE REVIEWED AND RECONSIDERED. THE DOCTRINE OF STARE DECISIS SHOULD NOT DETER THE COURT FROM OVERR ULING AN EARLIER DECISION, IF IT IS SATISFIED THAT SUCH DECISION IS MANIFESTLY WRONG OR ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -12- PROCEEDS UPON A MISTAKEN ASSUMPTION IN REGARD TO TH E EXISTENCE OR CONTINUANCE OF A STATUTORY PROVISION OR IS CONTRARY TO ANOTHER DECISION OF THE COURT. IT WAS JACKSON J., WHO SAID IN HIS DISSENTING OPINION IN MASSACHUSETTS V. UNITED STATES (333 US 6 11): ' I SEE NO REASON WHY I SHOULD BE CONSCIOUSLY WRONG TODAY BECA USE I WAS UNCONSCIOUSLY WRONG YESTERDAY '. LORD DENNING ALSO SAID TO THE SAME EFFECT WHEN HE OBSERVED IN OSTIME V. AUSTRALIA N MUTUAL PROVIDENT SOCIETY [1960] AC 459, 480 -: ' THE DOCTR INE OF PRECEDENT DOES NOT COMPEL YOUR LORDSHIPS TO FOLLOW THE WRONG PATH UNTIL YOU FALL OVER THE EDGE OF THE CLIFF. ' H ERE WE FIND THAT THERE ARE OVERRIDING CONSIDERATIONS WHICH COMPEL US TO RECONSIDER AND REVIEW THE DECISION IN CLOTH TRADERS' CASE. FROM THE ABOVE, IT IS EVIDENT THAT THEIR LORDSHIP B Y REPRODUCING THE OPINION OF A US COURT OBSERVED THAT I SEE NO REASON WHY I SHOULD BE CONSCIOUSLY WRONG TODAY BECAUSE I WAS UNCONSCIOUSLY WRONG YESTERDAY . THE ABOVE OBSERVATION WOULD SQUARELY FIT TO THE FAC TS OF THE ASSESSEES CASE. IF THE AO MADE CERTAIN OBSERVATION, WITHOUT EXAMINING ANY FACTS, IN A.Y.1995-96 AND SUBSEQUENTLY IT IS FOUND THAT SU CH OBSERVATION WAS FACTUALLY INCORRECT, IT DOES NOT MEAN THAT REVENUE CANNOT CORRECT SUCH MISTAKE. IT WOULD AMOUNT TO TAKING CONSCIOUSLY WRO NG DECISION IN A.Y.1998-99, MERELY BECAUSE UNCONSCIOUSLY THE AO MA DE SOME WRONG OBSERVATION IN A.Y.1995-96. THEREFORE, WE HOLD THA T ON FACTS OF THE ASSESSEES CASE DECISION OF HONBLE APEX COURT IN T HE CASE OF DISTRIBUTOR (BARODA) P. LTD. (SUPRA) WOULD BE APPLICABLE AND NO T THE DECISION OF RADHASOAMI SATSANG. CONSIDERING THE TOTALITY OF TH E FACTS AS WELL AS LEGAL POSITION, WE FIND NO MERIT IN THE GROUND NO.3 OF TH E ASSESSEES APPEAL, THE SAME IS REJECTED. ITA NO.434/AHD/2004 AND ITA NO.2244, 2245 AND 2246/AHD/2006 -13- 13. ADMITTEDLY THE FACTS OF A.Y.1999-2000 AND 2000- 2001 AND 2001- 02 ARE IDENTICAL TO THE FACTS FOR A.Y.1998-99 THERE FORE OUR FINDING FOR A.Y.1998-99 WOULD HOLD GOOD FOR THESE YEARS ALSO. WE THEREFORE REJECT GROUND NO.3 OF THE ASSESSEES APPEAL FOR ALL THE YE ARS UNDER APPEAL. 14. IN THE RESULT, GROUND NO.3 OF THE ASSESSEES AP PEALS IS REJECTED. ORDER PRONOUNCED IN OPEN COURT ON 15 TH APRIL, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 15-04-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD