Sahara India Saving & Investment Corp., Lucknow V. ACIT, Lucknow

ITA 625/ALLD/2000

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0242 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 1995-1996
• Appeal Filed On: 26-05-2000
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REENA S PURI
• Assessee Lawyers: P J PARDIWALA; D R RAJAN
• Keywords: Valuation report; Assessment record
• Section: 68; 263; 144

Judgement Text

ITA NO. 625/ALLD/2000 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 625/ALLD/2000 A.Y. : 1995-96 SAHARA INDIA SAVINGS & INVESTMENT CORPORATION LIMITED, 1-KAPOORTHALA COMPLEX, ALIGANJ, LUCKNOW (PAN/GIR NO. : 102-S/CC-I/LKO) VS. COMMISSIONER OF INCOME TAX (CENTRAL), 7/81-B, TILAK NAGAR, KANPUR (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. P.J. PARDIWALA, ADV. & D.R. RAJAN DEPARTMENT BY : MS. REENA S. PURI, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (CENTRAL) DATED 22.3. 2000PERTAINING TO ASSESSMENT YEAR 1995-96. 2. IN THE VARIOUS GROUNDS THE ASSESSEE CHALLENGES E XERCISE OF JURISDICTION U/S 263 BY THE LD. COMMISSIONER OF INCO ME TAX. 3. IN THIS CASE NOTICE U/S 263 OF THE ACT WAS ISSUE D WITH REGARD TO THE FOLLOWING:- THE ASSESSING OFFICER MADE AN ASSESSMENT IN THIS C ASE U/S 144 OF THE INCOME TAX ACT, 1961 ON 12.3.98 ON A TOTAL INCOME OF ` ITA NO. 625/ALLD/2000 2 274,43,58,630/-. ON EXAMINATION OF THE ASSESSMENT RECORDS, IT WAS SEEN THAT THE ASSESSEE COMPANY MOBILIZED DEPOSIT S UNDER VARIOUS SCHEMES DURING THE ACCOUNTING PERIOD RELEVA NT TO A.Y. 1995-96 IN ALL AMOUNTING TO ` 508,60,55,784/-. THE ASSESSEE HAD BEEN ASKED TO FURNISH LIST OF DEPOSITORS WHO MADE D EPOSITS OVER ` 20,000/- BUT THERE WAS NO COMPLIANCE, DESPITE NUMER OUS OPPORTUNITIES. THE ASSESSING OFFICER MADE AN ATT EMPT TO OBTAIN THE DETAILS DIRECTLY BUT LEFT IT HALF WAY THROUGH A ND DID NOT GIVE ANY FINDING ON THIS ISSUE, WHICH WAS ERRONEOUS IN A S MUCH AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS ALSO FOUND THAT THE ASSESSEE HAD PROVIDED INTEREST OF ` 28,85,89,289/- WHICH WAS DEBITED TO THE P&L ACCOUN T. THIS INTEREST WAS CLAIMED ON AN AVERAGE BASIS BY PASSING MONTHLY ENTRIES IN THE INTEREST ACCOUNT WITHOUT CREDITING I T TO INDIVIDUAL ACCOUNTS OF THE DEPOSITORS. THE ASSESSING OFFICER DID NOT LOOK INTO THESE DETAILS AND ALLOWED THE INTEREST ERRONEO USLY WHICH WAS NOT DUE AND WAS ONLY A CONTINGENT LIABILITY. IT WAS ALSO FOUND THAT DURING THE ACCOUNTING PERIO D UNDER REFERENCE, THE ASSESSEE COMPANY HAD MADE INVESTMENT I N PURCHASE / RENOVATION OF THE PROPERTIES BUT THE ASS ESSING OFFICER DID NOT LOOK INTO EITHER THE QUANTUM OR THE SOURCES OF INVESTMENT ITA NO. 625/ALLD/2000 3 ALTHOUGH A REFERENCE FOR VALUATION OF THESE PROPERT IES HAD BEEN MADE AS FAR AS BACK AS IN AUGUST, 1996. THIS WAS ERR ONEOUS IN AS MUCH AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENU E. THE VALUATION REPORT RECEIVED SUBSEQUENTLY IN APRIL 199 9 REVEALS SIGNIFICANT DIFFERENCE BETWEEN THE INVESTMENT WORK ED OUT BY THE DISTRICT VALUATION OFFICER (DVO) AND THE INVESTMENT S HOWN BY THE ASSESSEE, WHICH WAS OBVIOUSLY UNEXPLAINED. 4. THE MATER HAD EARLIER TRAVELLED TO THE TRIBUNAL AND THE TRIBUNAL IN ITA NO. 625/DEL/2000 VIDE ORDER DATED 12.3.2010 HELD AS UNDER:- WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. THE ASSESSMENT IS MADE U/S 144 THOUGH THE AS SESSING OFFICER ASKED QUESTIONS ABOUT DEPOSITORS IN EXCESS OF ` 20,000/-. SATISFACTORY REPLY HAS NOT BEEN GIVEN. SIMILARLY, I N RESPECT OF INTEREST, ASSESSING OFFICER ALLOWED THE SAME WITHO UT MAKING PROPER ENQUIRIES IN RESPECT OF VALUATION OF PROPER TY, THERE IS NO REFERENCE TO PROPOSAL TO DVO. IN OUR VIEW, THESE DI SCREPANCIES MAKE THE ORDER OF ASSESSING OFFICER ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE. HOWEVER, WE HASTEN TO ADD THAT LD. COMMISSIONER OF INCOME TAX SHOULD NOT HAVE SET ASIDE THE ENTIRE ASSESSMENT BUT RESTRICTED THE SETTING ASIDE ON THES E THREE ASPECTS AS THESE ARE THE ERRORS FOUND BY HIM. IN VIE W THEREOF, WE ITA NO. 625/ALLD/2000 4 UPHOLD THE ACTION U/S 263 BUT RESTRICT ITS SCOPE TO THE ERRORS POINTED OUT BY C.I.T. AND NOT THE ENTIRE ASSESSMENT ORDER. APROPOS THE CONTENTION ABOUT MERITS, THE ASSESSMENT HAS BEEN SET ASIDE TO ABOVE EXTENT. THE ASSESSING OFFICER WILL TAKE INTO CONSIDERATION THE ASPECT OF MERITS WHILE REFRAMING HI S ORDER ON THESE ISSUES. ASSESSEES APPEAL IS DISMISSED SUBJECT TO ABOVE DIRECTIONS ABOUT RESTRICTING THE SCOPE OF SECTION 2 63. 5. SUBSEQUENTLY, THE ORDER WAS RECALLED VIDE MISC. APPLICATION NO. 172/DEL/2010 VIDE ORDER DATED 23.7.2010. THE TRIBU NAL HAD CONCLUDED AS UNDER:- WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND MERI T IN THE ARGUMENTS OF LD. COUNSEL FOR THE ASSESSEE. THE I SSUE ABOUT MERGER OF ASSESSING OFFICERS ORDER INTO LD. COMMISSI ONER OF INCOME TAX (APPEALS)S ORDER WAS RAISED BY THE LD. COUNSEL AND ITS SUPPORT ITATS ORDER IN ASSESSEES OWN CASE FO R ASSESSMENT YEAR 1994-95 WAS RELIED ON. THOUGH THIS CONTENTIO N IS MENTIONED IN THE ORDER, BY INADVERTENT MISTAKE IT REM AINED TO BE DECIDED. SIMILARLY, THE ASPECT OF VALUATION ALSO C AME UP BEFORE THE ITAT FOR ASSESSMENT YEAR 1994-95 AND HAS BEEN D ECIDED WHICH HAS NOT BEEN CONSIDERED AS MENTIONED ABOVE. I N OUR VIEW, NON CONSIDERATION OF ITATS ORDER IN ASSESSEES OWN CASE FOR ITA NO. 625/ALLD/2000 5 PRECEDING ASSESSMENT YEAR WHICH HAS BEEN CITED BY TH E ASSESSEE, AMOUNTS TO MISTAKE APPARENT FROM RECORD WHI CH DESERVES TO BE CORRECTED. IN VIEW THEREOF, WE ALLOW THE ASSESSEES MISCELLANEOUS APPLICATION AND RECALL OUR ORDER DATED 12.3.2010. 6. CONSEQUENT TO THE AFORESAID RECALL, THE APPEAL W AS HEARD BY US. THE ASSESSEE ASSAILED THE ORDER OF THE C.I.T. ON VA RIOUS GROUNDS WHICH ARE SUMMARIZED AS UNDER:- (1) THE ACTION OF THE COMMISSIONER OF INCOME-TAX IN REVISING THE ASSESSMENT IN SO FOR AS THE ISSUE WITH REGARD TO THE DEPOSITS MOBILISED AND THE INTEREST PROVIDED IS CONCERNED, IS WITHOUT JURISDICTION INASM UCH AS ON BOTH THESE ISSUES THE ORDER OF THE ASSESSING OFFICER DATED 12TH MARCH, 1998 HAS MERGED INTO THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 15TH MARCH, 1999 AND, HENCE, THE COMMISSIONER OF INCOME-TAX DID NOT HAVE. JURISDICTION TO REVISE T HE ORDER ON 22ND MARCH, 2000; (2) BY SETTING ASIDE THE ISSUE OF DEPOSITS AND I NTEREST WHAT THE COMMISSIONER OF INCOME-TAX IS SEEKING TO DO IS TO REVISE THE ORDER OF THE COMMISSIONER OF INCOME- ITA NO. 625/ALLD/2000 6 TAX (APPEALS) BY WHICH ORDER THE ADDITION OF RS.203 .5 CRORES AS WELL AS THE DISALLOWANCE OF RS. 25.54 CRO RES WAS DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) WHICH ACTION OF THE COMMISSIONER OF INCOME-TAX IS PATENTLY ILLEGAL; (3) THE ISSUE WHICH HAS BEEN CONSIDERED AND DECIDED IN THE APPEAL IS THE ISSUE WITH REGARD TO WHETHER ANY PART OF THE - DEPOSITS MOBILIZED BY THE APPELLANT CAN BE ADDED BY THE ASSESSING OFFICER AND WHETHER ANY PART OF THE INTER EST PROVIDED IN THE ACCOUNTS OF THE APPELLANT CAN BE DI SALLOWED BY THE ASSESSING OFFICER. THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING THE ADDITION OR THE DISALLOWANCE, AS THE CASE MAY BE, AND THE REASONS GI VEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) FOR DELETING OR CONFIRMING SUCH ADDITIONS/DISALLOWANCE, ARE NOT RELE VANT TO THE ISSUE OF DETERMINING WHETHER THERE IS A MERGER O F THE ORDER OF THE ASSESSING OFFICER INTO THE ORDER OF TH E COMMISSIONER OF INCOME-TAX (APPEALS); (4) IN THIS REGARD RELIANCE IS PLACED ON THE ORDER OF THE TRIBUNAL IN THE APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 1994-95, A COPY WHEREOF IS TO BE FOUND AT PP. 81 TO 116 OF ITA NO. 625/ALLD/2000 7 THE PAPER BOOK. SPECIFIC REFERENCE IS MADE TO PARAG RAPHS 44 TO 77 WHERE THE ISSUE REGARDING MERGER HAS BEEN DISCUSSED. RELIANCE IS ALSO PLACED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SAHARA INDIA MUTUAL BENEFIT CO. LTD V /S ACIT 74 TT J P.67 WHERE A SIMILAR ISSUE WAS CONSI DERED. RELIANCE IS ALSO PLACED ON THE RATIO OF THE JUDGMENT OF THE CALCUTTA HIGH COURT IN OIL INDIA LTD. V/S CIT 138 I TR 836 AND IN CIT VS. GOODRICKE GROUP LTD. 116 ITR 625 OF THE BOMBAY HIGH COURT IN REMEX CONSTRUCTIONS V /S ITO 166 ITR 1 8 AS WELL DECISIONS OF THE TRIBUNAL IN HILL PROPERTIES LT D. V /S ACIT; SUJATA GROVER V /S DEPUTY CIT 74 TT J 347 AND SIEMENS LTD. DATED 21 ST JULY, 1999 [THE UNREPORTED DECISIONS OF THE TRIBUNAL ARE REFERRED IN THE APPEL LANT'S ORDER FOR THE ASSESSMENT YEAR 1994-95 AS WELL AS IN THE ORDER IN THE CASE OF SAHARA INDIA MUTUAL BENEFIT CO . (SUPRA); (5) IN THE ORDER FOR ASSESSMENT YEAR 1994-95 THE TR IBUNAL HAS TAKEN THE VIEW THAT THERE WAS NO MERGER IN RESP ECT OF THE ISSUE WITH REGARD TO THE DISALLOWANCE OF INTERE ST IN THE ASSESSMENT FRAMED FOR 1994-95 BUT THE FACTS IN THAT YEAR WERE DIFFERENT INASMUCH AS NO DISALLOWANCE WAS MADE ON ACCOUNT OF INTEREST ON LAPSED/IRREGULAR OR MATURED A CCOUNTS, ITA NO. 625/ALLD/2000 8 AS IN THE CASE IN THE PRESENT YEAR WHERE A DISALLOW ANCE OF RS.9.49 CRORES IS MADE. IT IS SUBMITTED THAT AS IN ASSESSMENT YEAR 1995-96 A SPECIFIC DISALLOWANCE FOR THIS REASON IS MADE AND THE CORRECTNESS OF THE DISALLOWAN CE ADJUDICATED UPON BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THE DOCTRINE OF MERGER WOULD BE CLEARLY APPLICABLE; (6) IT IS NOW WELL SETTLED BY THE JUDGMENT OF THE SU PREME COURT IN MALABAR INDUSTRIES LTD. V /S COMMISSIONER O F INCOME-TAX 243 ITR 83 THAT BEFORE THE COMMISSIONER O F INCOME-TAX CAN ASSUME JURISDICTION UNDER SECTION 263 OF THE ACT, TWO PRECONDITIONS HAVE TO BE SATISFIED, VIZ., (0) THAT THE ORDER, SOUGHT TO BE REVISED, IS ERRONEOUS; AND (B) IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS S UBMITTED THAT BOTH THESE CONDITIONS ARE NOT SATISFIED IN THE PRESENT CASE AS WAS EXPLAINED IN THE COURSE OF THE HEARING AND, HENCE, ON THAT GROUND ALSO THE ACTION OF THE COMMISS IONER OF INCOME-TAX CANNOT BE SUSTAINED; (7) IT IS SUBMITTED THAT THE COMMISSIONER OF INCOME-TA X HAS PROCEEDED ON THE FOOTING THAT THE ASSESSING OFFICER MADE ENQUIRIES WITH REGARD TO THE GENUINENESS OF THE DEP OSITS BUT ITA NO. 625/ALLD/2000 9 THEREAFTER DID NOT CARRY SUCH ENQUIRIES TO THEIR LO GICAL CONCLUSION AND DID NOT MAKE ANY ADDITION UNDER SECT ION 68 OF THE ACT. THIS ASSERTION OF THE COMMISSIONER OF IN COME-TAX IS CONTRARY TO THE TENOR OF THE ASSESSMENT ORDER IN VIEW OF THE SPECIFIC REFERENCE TO THIS ASPECT OF THE MATTER AS NARRATED HEREINBEFORE; (8) ASSUMING THE REVENUE IS RIGHT IN ITS CONTENTION THAT IN SO FAR AS THE ADDITION ON RECORD OF DEPOSIT IS CONC ERNED THE FACTS FOR THE ASSESSMENT YEAR 199596 ARE IDENTICAL TO THE FACTS FOR ASSESSMENT YEAR 1994-95 THEN, IN THAT EVE NT, THE ISSUE IS SQUARELY CONCLUDED BY PARAGRAPHS 29 TO 43 OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 1994-95 WH ERE THE TRIBUNAL HAS HELD THAT THE FAILURE TO MAKE ANY A DDITION ON ACCOUNT OF THE GENUINENESS OF THE DEPOSITS AFTER MAKING ENQUIRIES IN THIS REGARD DOES NOT RENDER THE ORDER ERRONEOUS. (9) IN ANY EVENT, IT IS NOT THE CASE OF THE COMMISSIO NER OF INCOME-TAX THAT THE ASSESSING OFFICER DID NOT MAKE THE NECESSARY ENQUIRIES. IF SO, THEN, BY VIRTUE OF THE JUDGMENTS OF THE DELHI HIGH COURT IN CIT V /S SUN BEAM AUTO LTD . 189 TAXMANN 436 AND IN CIT V /S VIKAS POLYMERS 194 TAXMAN N ITA NO. 625/ALLD/2000 10 57, THE ORDER CANNOT BE REGARDED AS ERRONEOUS MERELY BECAUSE ADEQUATE ENQUIRIES WERE NOT CARRIED OUT. (10) ACCORDING TO THE COMMISSIONER OF INCOME-TAX, THE ORDER WAS ERRONEOUS BECAUSE THE ASSESSING OFFICER H AS MADE AN ADDITION OUT OF THE DEPOSITS MOBILIZED FOR ON E REASON AND NOT FOR ANOTHER. IT IS SUBMITTED THAT ME RELY BECAUSE THE COMMISSIONER OF INCOME-TAX FEELS THAT THE ADDITION SHOULD HAVE BEEN MADE FOR SOME OTHER REASO NS, DOES NOT RESULT IN THE ORDER BEING REGARDED AS ERRO NEOUS [SEE EFT V /S GABRIEFFNDIA LTD. 203 ITR 108]. (11) AS REGARDS THE ISSUE OF DISALLOWANCE OF INTERE ST IS CONCERNED, THE COMMISSIONER HAS HELD THAT THE ORDER W AS ERRONEOUS BECAUSE THE ASSESSING OFFICER HAS NOT DETERMINED WHAT PORTION OF THE AMOUNT WAS ACTUALLY D UE. IT IS SUBMITTED THAT THIS IS CONTRARY TO THE FINDINGS GIVEN IN THE ASSESSMENT ORDER AS DETAILED HEREINBEFORE. (12) IN ANY EVENT, THERE IS NO PREJUDICE THAT IS CAU SED TO THE REVENUE INASMUCH AS THE SPECIAL AUDITOR APPOINTED B Y THE ASSESSING OFFICER TO CARRY OUT AN AUDIT OF THE ACCO UNTS AS OF 31 SF MARCH, 1999, HAS FOUND, AS A MATTER OF FACT, T HAT THE OVERALL PROVISION MADE IN THE ACCOUNTS UPTO 31.03.19 98, FOR ITA NO. 625/ALLD/2000 11 THE INTEREST PAYABLE, WAS LOWER THAN THE ACTUAL LIA BILITY OF THE APPELLANT. IF THAT BE SO, IT WOULD BE CLEAR THA T THE SECOND CONDITION OF THE ORDER, BEING PREJUDICIAL, IS NOT C OMPLIED WITH. IN THIS REGARD RELIANCE IS PLACED ON THE ORDE R OF THE TRIBUNAL FOR ASSESSMENT YEAR 1994-95 IN ITA NO. 667/LUCK/2002 A COPY WHEREOF WAS HANDED OVER IN THE COURSE OF THE HEARING WHERE THE TRIBUNAL WAS PLEASE D TO DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER IN THE ORDER PASSED TO GIVE EFFECT TO THE ORDER OF THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 1994-95 FOR THIS REASON ALON E. (13) AS REGARDS THE THIRD ISSUE VIZ., THE FAILURE T O CONSIDER THE VALUATION REPORT IT IS SUBMITTED THAT THE ORDER CANNOT BE ERRONEOUS OR PREJUDICIAL BECAUSE THE VALUATION REPO RT WAS NOT AVAILABLE AT THE TIME WHEN THE ORDER WAS PASSED . (14) IN ANY EVENT, ALTHOUGH THE VALUATION OFFICER H AS GIVEN A VALUATION REPORT FOR THE ASSESSMENT YEARS 1992-93 TI LL 1997-98 IN RESPECT OF THE NOIDA PROPERTY AND FOR TH E ASSESSMENT YEARS 1993-94 TO 1997 -98 IN RESPECT OF THE LUCKNOW PROPERTY ACTION HAS BEEN TAKEN BY THE REVEN UE BASED ON THE SAID VALUATION REPORTS ONLY FOR TWO YE ARS VIZ. ITA NO. 625/ALLD/2000 12 ASSESSMENT YEAR 1994-95 AND 1995-96. IN SO FAR AS T HE ADDITION THAT WAS MADE IN THE RE-ASSESSMENT FRAMED F OR ASSESSMENT YEAR 1994-95 IS CONCERNED, THE ADDITIONS STANDS DELETED BY VIRTUE OF THE ORDER OF THE TRIBUN AL IN ITA NO. 1696/DE1/2008 & 1649/DE1/2008, A COPY WHEREOF W AS HANDED OVER IN THE COURSE OF THE HEARING. IN THESE CIRCUMSTANCES IT IS SUBMITTED THAT THE ORDER CANNOT B E SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN RESPECT OF THIS ISSUE; (15) BEFORE ANY ADDITION CAN BE MADE FOR A DIFFERENC E BETWEEN THE MARKET VALUE OF A PROPERTY THAT IS CONST RUCTED AND THE ACTUAL COST OF CONSTRUCTION REFLECTED IN TH E BOOKS OF ACCOUNTS, THE REVENUE HAS TO ESTABLISH THAT IN FACT THE ASSESSEE HAS EXPENDED SOMETHING WHICH IS NOT REFLECT ED IN THE BOOKS OF ACCOUNTS. A MERE DIFFERENCE IN THE VAL UES IS NOT SUFFICIENT FOR THE PURPOSE OF MAKING THE ADDITIO N. IT WAS NOT THE CASE OF THE ASSESSING OFFICER IN THE ORIGIN AL PROCEEDINGS THAT THERE WAS ANY SUCH EVIDENCE OR MATE RIAL WHICH WOULD SUGGEST THAT THE APPELLANT HAD INCURRED A COST THAT WAS NOT REFLECTED IN ITS ACCOUNTS. IT IS NOT E VEN THE CASE OF THE COMMISSIONER OF INCOME-TAX IN THE IMPUGNED ORD ER ITA NO. 625/ALLD/2000 13 UNDER SECTION 263 OF THE ACT, THAT SUCH IS THE POSI TION. IN THE ABSENCE THEREOF, THE MERE FAILURE, TO OBTAIN AND CO NSIDER THE REPORT, CANNOT MAKE THE ORDER ERRONEOUS, AS HEL D BY THE COMMISSIONER OF INCOME-TAX. 6. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAN D SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT ISSUE WITH REGARD TO MOBILIZATION OF DEPO SITS AS WELL AS DISALLOWANCE, THE ORDER OF THE ASSESSING OFFICER HAS MERGED INTO THE APPELLATE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IN THESE CIRCUMSTANCES, LD. COMMISSIONER OF INCOME TAX CANNOT HAVE ANY JURISDICTION TO EXERCISE HIS POWERS THEREON. T HE ASSESSING OFFICERS ORDER CANNOT BE SAID TO BE ERRONEOUS NOR PREJUDIC IAL TO THE INTEREST OF THE REVENUE IN RESPECT OF THE ISSUES WHICH THE LD . COMMISSIONER OF INCOME TAX HAD DETAILED IN THE ORDER DATED 22.3.20 00. IN THIS REGARD, THE DECISION OF THE TRIBUNAL IN A.Y. 94-95 IN ITA NO. 510/ALL/99 WHEREIN THE TRIBUNAL, ON SIMILAR FACTS HAD ACCEPTED THAT THE ORDER OF THE ASSESSING OFFICER HAD MERGED INTO THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) INSOFAR AS THE ISSUE OF MOBIL IZATION OF DEPOSITS WAS CONCERNED AND HAD ALSO ACCEPTED THE FACT THAT T HE ORDER OF THE ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUD ICIAL TO THE INTEREST OF THE REVENUE IN SO FAR AS THIS ISSUE WAS CONCERN ED. 8. AS REGARDS THE MATTER OF DISALLOWANCE OF INTEREST WAS CONCERNED, IT IS NOTED THAT SUBSEQUENTLY THE TRIBUNAL WHILE DI SPOSING OF THE APPEAL FILED BY THE REVENUE FROM THE ORDER GIVING EFFECT TO THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX PASSED U/S 263 FOR A.Y. 1994-95 BY ITS ITA NO. 625/ALLD/2000 14 ORDER DATED 12.10.2007 IN ITA NO. 667/LUCK/2002 HAD CATEGORICALLY HELD THAT THE INTEREST THAT WAS PROVIDED FOR BY THE APPLICANT IN ITS ACCOUNTS WHICH WAS CLAIMED AND ALLOWED AS A DEDUCTI ON IN THE ORIGINAL ASSESSMENT PROCEEDINGS WAS LESS THAN THE AMOUNT OF L IABILITY, ACTUALLY INCURRED AS WAS DEMONSTRATED BY THE AUDIT REPORT OF THE SPECIAL AUDITORS APPOINTED U/S 142(2A) FOR THE ASSESSMENT YEAR 98-99. IN LIGHT OF THE CATEGORICAL FINDING OF THE SPECIAL AU DITORS WHICH HAS BEEN TAKEN INTO CONSIDERATION BY THE TRIBUNAL FOR COMING TO THE CONCLUSION THAT THE PROVISION FOR INTEREST WAS PROPER, THE OR DER OF THE ASSESSING OFFICER CANNOT BE REGARDED AS ERRONEOUS OR PREJUDI CIAL TO THE INTEREST OF THE REVENUE AS THE DEDUCTION THAT WAS ALLOWED B Y HIM WAS LESS THAN WHAT WAS ULTIMATELY FOUND TO BE PAYABLE. 9. AS REGARDS THE ADDITION ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN PROPERTIES, IT IS NOTED THAT SIMILAR ADDITION BASED ON THE SAME VALUATION REPORT WAS MADE FOR THE ASSESSMENT YEAR 94-95 BY THE ASSESSING OFFICER WHICH ADDITION WAS DELETED BY TH E DIVISION BENCH OF THE TRIBUNAL IN THEIR ORDER DATED 30.11.2009 IN ITA NO. 1696/DEL/08 AND ITA NO. 1649/DEL/2008. THE TRIBUNAL HELD THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY DEFECT OR FALSITY IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE AND THE ADDITION MADE BAY THE ASSESSING OFFICER ON THE BASIS OF AN ESTIMATION MADE BY TH E DISTRICT VALUATION OFFICER IN RESPECT OF THE COST OF CONSTRUCTION WAS NOT SUSTAINABLE. MOREOVER, THE QUESTION FOR CONSIDERATION OF THE VAL UATION REPORT DOES NOT ARISE AS THE VALUATION REPORT WAS PREPARED AT T HE TIME OF THE ORDER WAS PASSED. WE ARE SUMMING UP THE ISSUES AS UNDER:- (I) THE ACTION OF THE C.I.T. IN REVISING THE ASSESS MENT IN SO FAR AS THE ISSUE WITH REGARD TO DEPOSITS MOBILIZED AND T HE ITA NO. 625/ALLD/2000 15 INTEREST PROVIDED IS CONCERNED, IS WITHOUT JURISDIC TION IN AS MUCH AS ON BOTH THESE ISSUES THE ORDER OF THE ASSESS ING OFFICER DATED 12.3.1998 HAS MERGED INTO THE ORDER O F THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 15.3.1 999 AND, HENCE, THE C.I.T. DID NOT HAVE JURISDICTION TO REVISED THE ORDER ON 22.3.2000. (II) FURTHER, WE FIND CONSIDERABLE COGENCY IN THE A SSESSEES CONTENTION THAT LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS PROCEED ON THE FOOTING THAT ASSESSING OFFICER MAD E ENQUIRIES WITH REGARD TO THE GENUINENESS OF THE DEPOSITS BUT THEREAFTER DID NOT CARRY SUCH ENQUIRIES TO THEIR LOGICAL CONCLUS ION AND DID NOT MAKE ANY ADDITION UNDER SECTION 68 OF THE IT ACT. MO REOVER, IT IS NOT THE CASE OF THE LD. COMMISSIONER OF INCOME TAX I S THAT ASSESSING OFFICER DID NOT MAKE THE NECESSARY ENQUIRI ES. IN THAT EVENT, BY VIRTUE OF HONBLE DELHI HIGH COURT DECISI ON IN THE CASE OF C.I.T. V SUN BEAM AUTO LTD. 189 TAXMANN 436 AND IN C.I.T. VS. VIKAS POLYMERS 194 TAXMANN 57, THE ORDER CANNOT BE REG ARDED AS ERRONEOUS MERELY BECAUSE ADEQUATE ENQUIRIES WERE NOT CARRIED OUT. (III) FURTHER, AS REGARDS THE DISALLOWANCE OF INTERE ST C.I.T. HELD THAT THE ORDER WAS ERRONEOUS BECAUSE THE ASSESSING OFFICER HAS NOT DETERMINED WHAT PORTION OF THE AMOUNT WAS ACTUALL Y DUE. ITA NO. 625/ALLD/2000 16 THE LD. COMMISSIONER OF INCOME TAXS ASSERTION IS CO NTRARY TO THE FINDING GIVEN IN THE ASSESSMENT ORDER. MOREOVE R, THE ASSESSEES SUBMISSION IS FURTHER COGENT THAT NO PRE JUDICE IS CAUSED TO THE REVENUE IN AS MUCH AS THE SPECIAL AUD ITOR APPOINTED BY THE ASSESSING OFFICER TO CARRY OUT AN AUDIT OF THE ACCOUNTS AS ON 31.3.1999, THE OVERALL PROVISION MA DE IN THE ACCOUNTS UPTO 31.3.98, FOR THE INTEREST PAYABLE, WA S LOWER THAN THE ACTUAL LIABILITY OF THE ASSESSEE. IT IS FURT HER NOTED THAT FOR ASSESSMENT YEAR 94-95 IN ITA NO. 667/LUCK/2002 THE TRIBUNAL HAD DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER IN THE ORDER PASSED TO GIVE EFFECT TO THE ORDER OF THE C. I.T. U/S 263 OF THE ACT FOR THE ASSESSMENT YEAR 94-95 FOR THIS REAS ON ALONE. (IV) AS REGARDS THE LAST ISSUE OF FAILURE TO CONSID ER THE VALUATION REPORT IT IS NOTED THAT ASSESSING OFFICER HAS PASS ED THE ORDER IN MARCH, 1998 WHILE THE REPORT OF THE DVO HAD COME IN 19 99, A REFERENCE FOR WHICH WAS MADE ON 27.8.1996. HENCE, ON THIS ACCOUNT IT CANNOT BE SAID THAT ORDER OF THE ASSESSI NG OFFICER IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REV ENUE. 10. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO. 625/ALLD/2000 17 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/3/2011. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 11/3/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES