Prem Manohar Gupta, Kanpur V. Dy. Commissioner of Income Tax-2, Kanpur

ITA 512/LKW/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3414 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARE AS UNDER I T A NO LKW THAT
• Keywords: Business income; Principle of natural justice; Commercial expediency
• Section: 143(3); 54F; 143(1); 154

Judgement Text

I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 SHRI PREM MANOHAR GUPTA, 77, FACTORY AREA, FAZALGANJ, KANPUR. PAN:ACDPG 9412 D VS. DY.C.I.T.-2, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER BENCH: THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A), BOTH DATED 09/05 /2017. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: I.T.A. NO.511/LKW/2017 1. THAT THE LD.CIT(A) HAS ERRED IN DISMISSING THE APPEAL FILED AGAINST THE ORDER OF AO PASSED U/S 251/143(3) OF THE IT ACT, 1961 ON THE ISSUE AND APPLICABILITY OF SECTION 36(1)(III) OF THE IT ACT, 1961 AND ADDITION WORKED OUT AT RS.38,8 9,062/-. 2. THAT THE LD.CIT(A) HAS ERRED IN NOT TAKING THE C OGNIZANCE OF THE FACT THAT THE ID.AO HAS NOT GONE INTO THE AP PLICABILITY OF SECTION 36(1)(III) ON THE FACTS OF THE CASE AND HAS WORKED OUT THE DISALLOWANCE ERRONEOUSLY WITHOUT APPLICATION OF MIND. 3. THAT THE LD.CIT(A) HAS ERRED IN NOT TAKING THE C OGNIZANCE OF THE SUBMISSION MADE BEFORE HIM THAT THE FINDING IN ID.CIT(A) APPELLANT BY SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY S HRI SUSHIL KUMAR MADHUK, CIT (D.R.) DATE OF HEARING 24/04/2019 DATE OF PRONOUNCEMENT 03 / 0 5 /201 9 I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 2 ORDER AGAINST THE ASSESSMENT ORDER U/S 143(3) ON TH E ISSUE OF SECTION 36(1)(III) IS ERRONEOUS AND DOESN'T RELATE TO APPELLATE PROCEEDING CARRIED BY THE LD.CIT(A) AND FACTS OF TH E CASE AS WELL AS SUBMISSION MADE BEFORE HIM. 4. THAT THE LD.CIT(A) HAS ERRED IN GIVING FINDING T HAT THE APPELLANT HAS NOT ACCEPTED THE ORDER AND FILED APPE AL BEFORE THE HON'BLE ITAT, WHEREAS THE APPEAL WAS FILED ONLY TO THE EXTENT OF ADDITION SUSTAINED AND NOT ON THE ISSUE O F SECTION 36(1)(III) WHICH WAS INDEPENDENT FROM THE APPEAL FI LED. 5. THAT THE LD.CIT(A) HAS ERRED IN DIRECTING THE AO TO WORK OUT THE DISALLOWANCE U/S 36(1)(III) IN CASE OF NON RELATIVE DEPOSITORS, WHEREAS THE AO ERRED IN WORKING OUT DIS ALLOWANCE IN CASE OF RELATIVE WITHOUT APPLICATION OF MIND. I.T.A. NO.512/LKW/2017 1. THAT THE LD.CIT(A) HAS ERRED IN NOT RECTIFYING THE MISTAKE APPARENT ON RECORD IN THE APPELLATE ORDER U/S 154 O F THE IT ACT, 1961. 2. THAT THE LD.CIT(A) HAS ERRED IN NOT TAKING COGNI ZANCE OF THE FACTS AND SUBMISSION MADE BEFORE HIM THAT THE F INDING MADE BY THE LD.CIT(A) IN HIS ORDER IS ERRONEOUS AND DOES NOT RELATE THE APPELLANTS CASE AND APPELLATE PROCEEDING S. 3. THAT THE LD.CIT(A) HAS ERRED IN RECORDING THE FI NDING OF THE FACT THAT APPELLANT HAS ADMITTED LENDING DOES N OT HAVE COMMERCIAL EXPEDIENCY, WHEREAS THE APPELLANT NEITHE R DURING APPELLATE PROCEEDING NOR AT ANY STAGE ADMITTED THIS FACT. 4. THAT THE LD.CIT(A) HAS ERRED IN NOT PROVIDING AP PROPRIATE RELIEF BY RECTIFYING THE ORDER BY CORRECTING THE FA CTS OF THE CASE AND FINDING UPON IT, WHICH HAS LEAD TO ERRONEOUS AD DITION MADE BY THE AO ON RELIANCE TO ORDER OF CIT(A). 2. THESE APPEALS ARE INTERCONNECTED AND WERE HEARD TOGETHER THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDAT ED ORDER IS BEING PASSED. 3. THE FACTS, IN BRIEF ARE THAT ASSESSMENT OF THE A SSESSEE WAS COMPLETED U/S 143(3) OF THE ACT AND VARIOUS DISALLOWANCES WER E MADE. AGAINST THE I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 3 ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A) WHO UPHELD THE ORDER OF THE ASSESSING OFFICE R. BESIDES UPHOLDING THE ORDER OF THE ASSESSING OFFICER, HE FURTHER DIRE CTED THE ASSESSING OFFICER TO MAKE A FURTHER DISALLOWANCE U/S. 36(1(II) OF THE ACT. THE ASSESSEE FILED APPEAL BEFORE THE HON'BLE I.T.A.T. AND THE HON'BLE I.T.A.T. VIDE ORDER DT 7/12/2016 PARTLY ALLOWED RELIEF TO THE ASSESSEE. T HE ASSESSEE HAD CHALLENGED THE ADDITIONS SUSTAINED BY THE LEARNED C IT(A) BEFORE THE HON'BLE I.T.A.T. BUT HAD NOT CHALLENGED THE DIRECTIONS OF T HE LEARNED CIT(A) WITH REGARD TO ADDITION U/S. 36(1)(III) OF THE ACT. IN THE MEANTIME, IN VIEW OF THE LEARNED CIT(A)S DIRECTIONS, THE ASSESSING OFFICER , VIDE ORDER DATED 31/08/2016, PASSED A CONSEQUENTIAL ORDER AND FURTHE R MADE A DISALLOWANCE OF RS.38,89,062/- U/S 36(1)(III) OF THE ACT. AGAINS T SUCH ORDER OF THE ASSESSING OFFICER THE ASSESSEE FILED APPEAL BEFORE LEARNED CIT(A) BUT LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AND THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US IN ITA NO.511/LKW/2 017. THE ASSESSEE ALSO FILED RECTIFICATION APPLICATION BEFORE THE LEARNED CIT(A) WHICH AGAIN WAS DISMISSED AND AGAINST WHICH THE ASSESSEE AGAIN FILE D APPEAL BEFORE THIS TRIBUNAL WHICH IS IN THE FORM OF I.T.A. NO.512. 3. AT THE OUTSET, LEARNED A. R. INVITED OUR ATTENTI ON TO ADDITIONAL GROUND OF APPEAL WHICH WAS FILED BY THE ASSESSEE ON 30/05/ 2018 AND IT WAS ARGUED THAT SINCE THE GROUND OF APPEAL TAKEN BY THE ASSESS EE IS LEGAL IN NATURE THEREFORE, THE SAME MAY BE ADMITTED AND RELIANCE IN THIS RESPECT WAS PLACED ON A NUMBER OF CASE LAWS INCLUDING THE SUPREME COUR T DECISION IN THE CASE OF NTPC LIMITED. WE NOTED THAT THE ADDITIONAL GROUN D TAKEN BY THE ASSESSEE WAS THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS EN HANCED THE INCOME OF THE ASSESSEE WITHOUT ISSUING NOTICE OF ENHANCEMENT TO THE ASSESSEE. THE ADDITIONAL GROUND OF APPEAL TAKEN BY THE ASSESSEE R EADS AS UNDER: THAT THE LEARNED CIT(A) HAS ERRED IN GIVING FINDIN G IN THE FORM OF DIRECTION TO THE ASSESSING OFFICER UNDER SECTION 36(1)(III) O F THE I.T. ACT RESULTING IN ENHANCEMENT OF INCOME WITHOUT ISSUING NOTICE OF ENH ANCEMENT TO THE APPELLANT. I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 4 3.1 LEARNED D. R. HAD NO OBJECTION TO ADMISSION OF ADDITIONAL GROUND AND THE GROUND BEING LEGAL IN NATURE, THE SAME WAS ADMI TTED AND ASSESSEE WAS ASKED TO PROCEED WITH HIS ARGUMENTS. 4. LEARNED A. R. IN THIS RESPECT INVITED OUR ATTENT ION TO THE ASSESSMENT ORDER PLACED AT PAGES 31 TO 34 OF THE PAPER BOOK AN D SUBMITTED THAT VIDE ORDER DATED 27/02/2015, BESIDES OTHER ADDITIONS, TH E ASSESSING OFFICER HAD MADE ADDITION OF RS.12,47,183/- U/S 40A(2)(B) OF TH E ACT. IT WAS SUBMITTED THAT AGAINST THE ASSESSMENT ORDER THE ASSESSEE FILE D APPEAL BEFORE CIT(A). THE LEARNED CIT(A), VIDE ORDER DATED 29/06/2016 PLA CED AT PAGES 20 TO 26 OF THE PAPER BOOK, NOT ONLY UPHELD THE DISALLOWANCE U/S 40A(2)(B) BUT ALSO DIRECTED THE ASSESSING OFFICER TO FURTHER MAKE THE DISALLOWANCE U/S 36(1)(III) OF THE ACT. LEARNED A. R. SUBMITTED THAT THE CIT(A ) HAS IN FACT ENHANCED THE INCOME OF THE ASSESSEE WITHOUT GIVING NOTICE TO THE ASSESSEE WHICH IS IN VIOLATION OF THE PROVISIONS OF LAW AND THEREFORE, T HE ORDER OF LEARNED CIT(A) DIRECTING THE ASSESSING OFFICER TO MAKE FURTHER DIS ALLOWANCE IS NULL AND VOID KEEPING IN VIEW THE DECISION OF HON'BLE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NARESH SUNDERLAL CHUG VS. INCOME TAX OFFICE R [2018] 171 ITD 116 (PUNE TRIB.) AND FURTHER RELIANCE WAS PLACED ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BIKRAM SINGH VS. DCI T [2016] 48 ITR (T) 689 (DELHI TRIB.). THEREFORE, IT WAS PRAYED THAT ORDER OF LEARNED CIT(A) TO THIS EXTENT BE HELD AS NULL AND VOID. 5. LEARNED D. R., ON THE OTHER HAND, HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IN THE ASSESSMENT O RDER COMPLETED U/S 143(3), THE ASSESSING OFFICER HAD MADE DISALLOWANCE OUT OF INTEREST EXPENSES AMOUNTING TO RS.12,47,183/- ON ACCOUNT OF DISALLOWANCE U/S I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 5 40A(2)(B). BESIDES THE ABOVE DISALLOWANCE, CERTAIN OTHER DISALLOWANCES WERE MADE. THE ASSESSEE FILED APPEAL BEFORE CIT(A) , WHO VIDE ORDER DATED 29/06/2016 PARTLY ALLOWED THE APPEAL OF THE ASSESSE E BUT UPHELD THE DISALLOWANCE U/S 40A(2)(B) OF THE ACT. BESIDES UPH OLDING THE DISALLOWANCE, THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER T O MAKE FURTHER DISALLOWANCE U/S 36(1)(III) OF THE ACT. THE ASSESS EE AGAINST THE ORDER OF LEARNED CIT(A), FILED APPEAL BEFORE THE TRIBUNAL AN D TRIBUNAL VIDE ORDER DATED 07/12/2016 ALLOWED RELIEF TO THE ASSESSEE ON ACCOUNT OF DISALLOWANCE U/S 40A(2)(B). HOWEVER, THE GRIEVANCE OF THE ASSES SEE REGARDING DIRECTION TO THE ASSESSING OFFICER FOR FURTHER DISALLOWANCE U /S 36(1)(III) WAS NOT TAKEN TO THE TRIBUNAL. IN THE MEANTIME, THE ASSESSING OF FICER PASSED A CONSEQUENTIAL ORDER DATED 31/08/2016 AND THEREBY MA DE A DISALLOWANCE OF INTEREST U/S 36(1)(III) AMOUNTING TO RS.38,89,062/- . THE LEARNED CIT(A) DISMISSED THE APPEAL OF ASSESSEE SIMPLY BY SAYING T HAT ASSESSING OFFICER HAD COMPLIED WITH THE DIRECTIONS OF LEARNED CIT(A) AND THEREFORE, THE ASSESSEE HAS FILED APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE VIDE ADDITIONAL GROUND OF APPEAL HAS CHALLENGED THE ACTION OF LEARN ED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO MAKE FURTHER DISALLOWANCE U/S 36(1)(III) ON THE BASIS THAT NO NOTICE FOR ENHANCEMENT WAS GIVEN TO THE ASS ESSEE. IN THIS RESPECT WE FIND THAT SECTION 251 DEALS WITH THE POWERS OF C IT(A) WHEREBY HE CAN ALLOW THE APPEAL OR CAN ENHANCE THE APPEAL OR CAN A NNUL THE ASSESSMENT. HOWEVER, SUB CLAUSE (2) OF SECTION 251 STATES THAT CIT(A) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWI NG CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. IN THE PRESENT CASE, IT IS APPARENT FROM THE ORDER OF LEARNED CIT(A) THAT NO SUCH OPPORTUNITY WA S GIVEN TO THE ASSESSEE NOR WAS LEARNED D. R. ABLE TO DEMONSTRATE THAT OPPO RTUNITY WAS GIVEN TO THE ASSESSEE. THEREFORE, THERE IS VIOLATION OF PRI NCIPLES OF NATURAL JUSTICE. HON'BLE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF N ARESH SUNDERLAL CHUG VS. INCOME TAX OFFICER [2018] 171 ITD 116 (PUNE TRIB.), VIDE ORDER DATED I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 6 12/04/2018 HAS HELD THAT CIT(A) CANNOT ENHANCE THE ASSESSMENT WITHOUT GIVING AN OPPORTUNITY OR SHOW CAUSE NOTICE OF ENHAN CEMENT TO THE ASSESSEE. THE FINDINGS OF HON'BLE TRIBUNAL, AS CONTAINED IN P ARA 14 & 15, ARE REPRODUCED BELOW: 14. THE CIT (A) AFTER RECEIVING THE SUBMISSION OF ASSESSEE, REMAND REPORT OF ASSESSING OFFICER AND COMMENT OF A SSESSEE, WENT ON TO DECIDE THE ISSUE AS TO ASSESSIBILITY OF GAIN ARISING ON TRANSFER OF DEVELOPMENT RIGHTS. IT MAY BE POINTED O UT HEREIN ITSELF, THE SAID ISSUE OF ASSESSIBILITY OF CAPITAL GAIN WAS COMPLETED BEFORE THE ASSESSING OFFICER WHO ACCEPTED THE STAND OF ASSESSEE THAT THE SAID GAIN WAS TO BE ASSESSED A S INCOME FROM CAPITAL GAINS. THERE WAS NO DISPUTE ABOUT THE ASSESSIBILITY OF GAINS AS INCOME FROM LONG TERM CAPITAL GAIN. THE ONLY DISPUTE WAS THAT WHETHER AGAINST SUCH GAINS, THE AS SESSEE COULD CLAIM DEDUCTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF INVESTMENT IN NEW ASSET. IN THIS REGARD, ACTION OF THE CIT (A) IN HOLDING THAT THE SAID INCOME ON SALE OF DEVELOPM ENT RIGHTS WAS TO BE TREATED AS ADVENTURE IN THE NATURE OF TRA DE/ BUSINESS INCOME, WAS NOT CORRECT AS PER PROVISIONS OF THE AC T. THE POWERS OF CIT (A) ARE COTERMINOUS WITH THE POWER OF ASSESSING OFFICER. IN OTHER WORDS, THE CIT (A) HAS WIDE POWER WHILE DECIDING THE APPEAL. HOWEVER, AS PER CLAUSE (2) OF SECTION 251 OF THE ACT, IT IS PROVIDED THAT THE CIT(A) SHALL NO T ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REF UND, UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF S HOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. THE EX PLANATION TALKS ABOUT THE POWER OF CIT(A) IN DECIDING THE APP EAL AND STRESSES THAT HE MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAI NST WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RA ISED BEFORE THE CIT (A) BY THE APPELLANT. IN VIEW OF THE SAID P ROVISIONS, THE CIT (A) HAS POWER TO DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS BUT THE SAID POWER HAS TO BE EXERCISED AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO SHOW CAUS E AGAINST SUCH ENHANCEMENT OR REDUCTION. THE CIT (A) WAS NOT ONLY CHANGING THE HEAD OF INCOME BUT WAS ALSO ENHANCING THE ASSESSMENT, SINCE INCOME WHICH IS ASSESSED IN THE H ANDS OF ASSESSEE AS PER. DIRECTION OF CIT (A) HAD WORKED OU T AT RS.49,41,225/- AS AGAINST INCOME ASSESSED BY THE AS SESSING OFFICER UNDER THE HEAD LONG TERM CAPITAL GAIN AT RS.48,75,610/-. THE SECOND ASPECT IS RATE OF TAX. I N CASE INCOME IS ASSESSED UNDER THE HEAD LONG TERM CAPITAL GAIN, THE I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 7 RATE OF TAX IS LOWER THAN THE RATE APPLIED WHEN THE INCOME IS BEING ASSESSED AS BUSINESS INCOME. IN VIEW THEREOF IN NOT GIVING AN OPPORTUNITY OR ANY SHOW CAUSE NOTICE OF E NHANCEMENT AS REQUIRED UNDER SECTION 251(2) OF THE ACT, THE OR DER OF CIT (A) SUFFERS FROM INFIRMITY AND THE SAME CANNOT BE S USTAINED. 15. ANOTHER POINT TO BE NOTED HERE IS THAT WHEN INCOME WAS ASSESSED UNDER THE HEAD LONG TERM CAPITAL GAIN, THE N RATE OF TAX WAS LOWER THAN THE RATE APPLIED WHEN THE INCOME WAS BEING ASSESSED AS BUSINESS INCOME. REGARDING SECOND ASPEC T, THE LD. DR FOR THE REVENUE SUBMITTED THAT WHERE ISSUE OF DI FFERENT HEAD OF INCOME HAD ARISEN, ASSESSIBILITY WAS DONE B Y THE ASSESSING OFFICER, THEN NOTICE HAD TO BE ISSUED BY ASSESSING OFFICER, WHEN REMAND REPORT WAS CALLED FOR HIS COMM ENTS. IT MAY BE POINTED OUT HEREIN IN ITSELF THAT AFTER ASSE SSING INCOME AS LONG TERM CAPITAL GAIN, ASSESSING OFFICER PROPOS ED TO ASSESS INCOME AS INCOME FROM OTHER SOURCES, AS PER HIS COMMENT IN THE REMAND REPORT, WHICH WAS CONFRONTED TO THE ASSESSEE; BUT WHEN THE INCOME WAS ASSESSED AS BUSIN ESS INCOME, NO NOTICE WHATSOEVER, WAS GIVEN BY CIT (A). ACCORDINGLY, WE HOLD THAT THE ENHANCEMENT MADE BY C IT (A) DOES NOT SURVIVE. THUS, WE REVERSE THE ORDER OF CIT (A). THE INCOME WAS ASSESSED IN THE HANDS OF ASSESSEE AS INC OME FROM LONG TERM CAPITAL GAIN. THE CIT (A) VIDE PARA 15 AN D 16 HAS DECIDED THE ISSUE OF ENTITLEMENT OF CLAIM UNDER SEC TION 54F OF THE ACT AND HELD THE ASSESSEE TO BE ELIGIBLE FOR SA ID CLAIM. THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER OF CIT ( A). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALL OW CLAIM OF ASSESSEE UNDER SECTION 54F OF THE ACT. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED. SIMILARLY, HON'BLE DELHI TRIBUNAL IN THE CASE OF BI KRAM SINGH VS. DCIT [2016] 48 ITR (T) 689 (DELHI TRIB.), VIDE ORDER DATED 13/0 3/2016 HAS HELD THAT CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT AR ISE FROM THE ORDER OF ASSESSMENT AND WAS OUTSIDE SCOPE OF ASSESSMENT. TH E RELEVANT FINDINGS, AS CONTAINED IN PARA 11, ARE REPRODUCED BELOW: 11. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH THE COUNSELS, IT IS PERTINENT TO KNOW THAT THE ASSESSIN G OFFICER HAS NOT DEALT THE REPLY AND THE ENCLOSURES/DOCUMENTS GI VEN ON THE DATE OF ASSESSMENT ORDER I.E. 19/11/2011, THE SAME WAS NOT TESTIFIED BEFORE THE CIT(A). THE CIT(A) SHOULD HAVE TAKEN COGNIZANCE OF ALL THOSE RECORDS AND THE LETTERS. TH IS SHOWS THAT I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 8 THE CIT (A) HAS TOTALLY IGNORED THIS LETTER ALONG W ITH THE ENCLOSURES/DOCUMENTS AND PASSED THE ORDER ACCORDING LY WHICH IS NOT TENABLE UNDER THE LAW. THE APPROPRIATE OPPOR TUNITY WAS NOT GIVEN TO THE ASSESSEE. THE A.O HAS PROCEEDED TO COMPUTE INCOME OF THE ASSESSEE ON THE BASIS OF THE INCOME A S PER INTIMATION U/S 143(1) OF THE ACT; WHEREAS THE A.O W AS REQUIRED TO COMPUTE THE INCOME OF THE ASSESSEE ON THE BASIS OF INCOME RETURNED. THIS WAS A GROUND RAISED BEFORE THE CIT(A ) AND IS A PART OF GROUND OF APPEALS IN THE PRESENT APPEAL. IT BEING WHOLLY LEGAL GROUND OF THE APPEAL DESERVES TO BE ADJUDICAT ED. THE ASSESSING OFFICER HAS ACTED BEYOND THE JURISDICTION BY COMPUTING INCOME OF THE ASSESSEE ON THE BASIS OF TH E INCOME AS PER SECTION 143(3) WHERE AS THE INTIMATION WAS U /S 143(1). THE CIT(A) ACTED BEYOND ITS POWER BY DIRECTING THE ASSESSING OFFICER TO TAX THE CAPITAL GAINS IN RESPECT OF SALE OF LAND AT GURGAON, THOUGH, THERE WAS NO ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THAT RESPECT. CA PITAL GAIN IS AN INDEPENDENT AND DIFFERENT SOURCE OF INCOME AND W AS NOT THE SUBJECT MATTER OF APPEAL BEFORE HIM NOR WAS THE ISS UE CONSIDERED BY THE ASSESSING OFFICER BY FRAMING AN A SSESSMENT ORDER. INSTEAD, THE ASSESSING OFFICER TERMED THE SA ME AS COMMISSION ON THE SALE OF LAND. THE LD. AR HAS RELI ED ON THE VARIOUS CASE LAWS MORE PRECIOUSLY THAT OF SHAPOORJI PATTONJI MISTRY V. CIT [1958] 34 ITR 342 (BOM.) (CONFIRMED B Y THE APEX COURT IN CIT V. SHAPOORJI PATTONJI MISTRY [1962] 44 ITR 891 (SC) WHEREIN THE HON'BLE BOMBAY HIGH COURT WHILE DEALING WITH THE POWERS OF THE CIT(A) HELD THAT CIT(A) WAS NOT EMPOW ER TO ENHANCE AN INCOME ON AN ISSUE WHICH WAS NOT THE SUB JECT MATTER OF THE ASSESSMENT. THE RATIO LAID DOWN IN TH E JUDGMENT OF FULL BENCH OF DELHI HIGH COURT IN THE CASE OF SA RDARI LAL & CO. (SUPRA) IS ALSO RELEVANT IN ASSESSEE'S CASE THAT TH E CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT ARISE FRO M THE ORDER OF THE ASSESSMENT AND WAS OUTSIDE THE SCOPE OF THE ORDER OF THE ASSESSMENT. THE ORDER OF THE CIT(A) DOES NOT SU STAIN. 6.1 IN THE PRESENT CASE, WE FIND THAT THOUGH ASSESS EE HAD NOT AGITATED BEFORE HON'BLE TRIBUNAL THE ISSUE OF DIRECTIONS GIVEN BY L EARNED CIT(A) WHEN HE FIRST AGITATED THE ORDER OF THE CIT(A) BUT WHEN THE ASSESSING OFFICER PASSED THE ORDER FOR MAKING COMPLIANCE OF THE DIREC TIONS, ONLY THEN THE ASSESSEE CHALLENGED THE DIRECTIONS AS AN ADDITIONAL GROUND. THOUGH THE EARLIER ORDER OF THE LEARNED CIT(A) DATED 29.06.201 6 MERGED WITH THE ORDER OF HON'BLE TRIBUNAL DATED 07.12.2016 AND WHEREIN TH E DIRECTIONS OF LEARNED I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 9 CIT(A) WERE NEITHER CHALLENGED NOR ADJUDICATED AND THEREFORE THE ORDER OF THE HON'BLE TRIBUNAL HAD ATTAINED FINALITY BUT IN T HE PRESENT CASE THE CAUSE OF ACTION AGAINST THE DIRECTIONS OF LEARNED CIT(A) SURVIVE TO THE ASSESSEE WHEN VIDE ORDER DATED 31.08.2016 THE ASSESSING OFFI CER COMPLIED WITH THE DIRECTIONS AND MADE THE ADDITION AS PER THE DIRECTI ONS. THEREFORE, THE ACTION OF ASSESSEE CHALLENGING THE POWER OF GIVING DIRECTI ONS BY LEARNED CIT(A) WITHOUT GIVING NOTICE TO THE ASSESSEE IS JUSTIFIED. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE WAS NOT PROVIDED AN OPPORTUN ITY BEFORE MAKING DIRECTION TO ASSESSING OFFICER FOR MAKING FURTHER D ISALLOWANCE U/S 36(1)(III) OF THE ACT. MOREOVER, WE FIND THAT SUBJECT MATTER OF THE APPEAL BEFORE LEARNED CIT(A) WAS NOT RELATING TO DISALLOWANCE U/S 36(1)(III). THE ASSESSEE HAD ONLY AGITATED THE DISALLOWANCE U/S 40A(2)(B) AN D THEREFORE, ALSO THE LEARNED CIT(A) WAS NOT EMPOWERED TO TOUCH UPON AN I SSUE WHICH WAS NOT IN THE ASSESSMENT ORDER. THEREFORE, KEEPING IN VIEW T HE ABOVE FACTS AND CIRCUMSTANCES AND JUDICIAL PRECEDENT WE ALLOW THE A PPEAL OF THE ASSESSEE IN I.T.A. NO.511/LKW/2017. 7. THE APPEAL IN I.T.A. NO.512/LKW/2017 IS AGAINST THE DISMISSAL OF APPLICATION U/S 154 OF THE ACT, FILED WITH THE CIT( A) ON THE SAME ISSUE WHICH, DUE TO OUR DECISION IN I.T.A. NO.511 HAS BEC OME INFRUCTUOUS THEREFORE, THE SAME IS DISMISSED AS INFRUCTUOUS. 8. IN THE RESULT, APPEAL IN I.T.A. NO.511 IS ALLOWE D WHEREAS APPEAL IN I.T.A. NO.512 IS DISMISSED AS INFRUCTUOUS. (ORDER PRONOUNCED IN THE OPEN COURT ON 03/05/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:03/05/2019 *SINGH I.T.A. NO.511 & 512/LKW/2017 ASSESSMENT YEAR:2012-13 10 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW