ITO, Bangalore V. Shri P. Anandkumar, Bangalore

ITA 628/BANG/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0707 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-10-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 09-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V S SREELEKHA
• Keywords: Depreciation; Principle of natural justice; Reasonable cause; Condonation of delay; Revised return; Reassessment proceedings; TDS; Set aside
• Section: 143(3); 244A; 234B; 143(1); 264; 246A; 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.628/BANG/2008 ASSESSMENT YEAR : 2002-03 THE INCOME TAX OFFICER, WARD 8(2), BANGALORE. : APPELLANT VS. P. ANANDKUMAR, PROP. M/S. PALIATH ENTERPRISES, NO.307, THIMMAIAH ROAD, BENSON TOWN, BANGALORE 560 046. : RESPONDENT C.O. NO.76/BANG/2008 (ARISING OUT OF ITA NO.628/BANG/2008) ASSESSMENT YEAR : 2002-03 P. ANANDKUMAR, PROP. M/S. PALIATH ENTERPRISES, NO.307, THIMMAIAH ROAD, BENSON TOWN, BANGALORE 560 046. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 8(2), BANGALORE. : RESPONDENT ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 2 OF 17 ITA NO.981 & 982/BANG/2008 ASSESSMENT YEARS : 2003-04 & 2004-05 P. ANANDKUMAR, PROP. M/S. PALIATH ENTERPRISES, NO.307, THIMMAIAH ROAD, BENSON TOWN, BANGALORE 560 046. : APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), BANGALORE. : RESPONDENT ASSESSEE BY : SHRI V. CHANDRASHEKAR SHRI NARENDRA SHARMA RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THESE ARE FOUR APPEALS (I) THE REVENUES APPEAL (ITA 628) & (II) CROSS OBJECTION BY THE ASSESSEE ( CO 76) FOR THE AY 2002-03 AND (III) & (IV) ASSESSEES APPEALS FOR THE AYS 2003-04 AND 2004-05 - ALL ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-II, BANGALORE. AS THESE APPEALS ARE INTER-CONNECTED AND PERTAIN TO THE SAME ASSESSEE, FOR THE SAKE CONVENIENCE AND CLARITY, THEY ARE CONS IDERED TOGETHER AND DISPOSED OFF IN THIS COMMON ORDER. ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 3 OF 17 ITA NO: 628/2008 AY 2002-03 [BY REVENUE]: 2. THERE WAS A SLIGHT DELAY IN PREFERRING THIS APPE AL BY THE REVENUE. THE REVENUE HAD FURNISHED AN AFFIDAVIT, IN ORIGINAL , WHEREIN IT HAS BEEN CLAIMED THAT THERE WAS AN INADVERTENT ERROR CREPT I N, IN THE OFFICE OF THE CIT, B-IV, BANGALORE, IN NOTING THE DATE OF LIMITATION F OR FILING THE APPEAL WHICH HAD RESULTED IN FILING THE APPEAL BELATEDLY. AS TH E REVENUE WAS PREVENTED BY A REASONABLE CAUSE, IT WAS PLEADED THAT THE DELA Y MAY BE CONDONED. 3. AFTER DUE CONSIDERATION OF THE REASONS PUT-FORT H BY THE REVENUE, THE DELAY IN FILING THIS APPEAL BY THE REVENUE IS CONDO NED AND THE REGISTRY WAS DIRECTED TO TAKE THE APPEAL ON RECORD. 4. DURING THE COURSE OF HEARING BEFORE US, THE LD. D.R SUBMITTED THAT THE GROUND NOS: 1 AND 2 RAISED IN THE GROUNDS OF AP PEAL WERE NOT PRESSED AND, THEREFORE, THEY WERE DISMISSED AS NOT PRESSED. 5. AS THE FOURTH GROUND RAISED WAS GENERAL AND NOT SPECIFIC, IT TOO WAS DISMISSED AS NON-CONSEQUENTIAL IN NATURE. THUS, TH E LONE GROUND OF THE REVENUE WHICH SURVIVED FOR ADJUDICATION IS REFORMUL ATED AS UNDER THE CIT(A) ERRED TO SEE THE REASON THAT AS PER S.2 34B(3) WHERE, AS A RESULT OF AN ORDER OF REASSESSMENT OR RE-COMPUTAT ION U/S 147/153A, THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB- SEC.(1) IS INCREASED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 1% FOR EVERY MONTH FROM THE DATE OF REGULAR ASSESSMENT AND ENDING ON THE DATE OF REASSESSMENT O R RE- COMPUTATION U/S 147 OR U/S 1543A OF THE ACT. 6. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AN D ALSO PERUSED THE RELEVANT RECORDS. THE CIT(A), AFTER DELIBERATING T HE ISSUE AT LENGTH, HAS OBSERVED THAT ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 4 OF 17 8.5..IN THE ASSESSMENT FOR THE ASSESSMENT Y EAR 2002-03, THE AO HAS ASSESSED THE CONTRACT RECEIPTS AMOUNTING TO RS.12151444/- [WHICH WAS ACCOUNTED IN THE SUBSEQUEN T YEAR BY THE APPELLANT] AND THIS AMOUNT ALSO WAS SUBJECTED TO TD S. UNDER THE CIRCUMSTANCES, IT IS SEEN THAT THE APPELLANT WAS NO T LIABLE TO PAY ADVANCE TAX. WHEN SUCH A LIABILITY IS NOT THERE, Q UESTION OF CHARGING INTEREST U/S 234B DOES NOT ARISE. THE SHO RTFALL IN THE PAYMENT OF TDS DURING THE YEAR AS PER THE REASSESSM ENT ORDER IS MAINLY DUE TO THE FACT THAT THE APPELLANT HAD IN HI S ORIGINAL RETURN OF INCOME CLAIMED CREDIT FOR TDS ON THE SAID AMOUNT OF RS.12151444/- IN THE RETURN FOR THE ASSESSMENT YEAR 2003-04 WHERE ORIGINALLY HE HAD DECLARED THE SAID RECEIPTS. IN VIEW OF THE ABO VE DISCUSSION, I AM CONVINCED THAT INTEREST U/S 234B IS NOT CHARGEAB LE IN THE CASE OF THE APPELLANT. HOWEVER, WHILE GIVING EFFECT TO THIS ORDER, THE AO IS DIRECTED TO ASCERTAIN AND VERIFY THE ABOVE FACTS RE GARDING TDS, THE INCOME RETURNED IN THE ORIGINAL RETURN AND THE CLAI M FOR TDS MADE THEREIN AND INCOME ORIGINALLY ASSESSED U/S 143(3). 7. AT THE OUT-SET, WE WOULD LIKE TO POINT OUT THAT AS PER THE S.251(1)(A) OF THE ACT, THE POWER OF THE LD.CIT(A) IN REMITTING BACK ANY ISSUE TO THE AO FOR FRESH CONSIDERATION/VERIFICATION ETC., HAS BEEN DISPENSED WITH BY THE FINANCE ACT, 2001, W.E.F. 1/6/2001. HOWEVER, THE CIT(A) HAD RAISED AN ISSUE, ACCORDING TO WHICH, THE ASSESSEE WAS NOT LIABLE TO PAY ANY ADVANCE TAX AND THUS, THE ASSESSEES CASE DOESNT FALL WITHIN THE AMBIT OF S.234B TO CHARGE I NTEREST. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AO SH OULD LOOK INTO THIS ASPECT WHETHER THE ASSESSEE WERE LIABLE TO BE CHARG ED INTEREST U/S 234B OF THE ACT. IF SO, THE REVENUES ARGUMENT THAT THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 1% FOR EVERY MON TH FROM THE DATE OF REGULAR ASSESSMENT AND ENDING ON THE DATE OF REASSE SSMENT OR RE- COMPUTATION U/S 147 OR U/S 1543A OF THE ACT IS FIND ING SOLACE FROM THE RULING OF THE HONBLE ITAT, MUMBAI I BENCH IN THE CASE OF ACIT V. RONALD ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 5 OF 17 NARDI REPORTED IN (2007) 14 SOT 24, WHEREIN THE HON BLE TRIBUNAL HAS OBSERVED THUS ONCE AN ORDER OF REASSESSMENT IS PASSED UNDER S.14 3(3)/148, THE ORIGINAL ORDER DETERMINING THE TOTAL INCOME UNDER S .143(1) OR 143(3) OR 144 GETS MERGED WITH THE ORDER OF REASSES SMENT FOR THE SIMPLE REASON THAT TWO ORDERS DETERMINING THE TOTAL INCOME CANNOT STAND TOGETHER. IT THEREFORE LOGICALLY FOLLOWS THA T THE FIGURES OF TOTAL INCOME DETERMINED AND TAX, INTEREST ETC., THEREON H AVE TO BE INCORPORATED IN THE REASSESSMENT ORDER PASSED UNDER S.143(3)/147 AND IN THE COMPUTATION SHEET ACCOMPANYING THEREWITH . IF THE AO HAD NOT FOLLOWED THE AFORESAID COURSE OF ACTION, TH E TOTAL INCOME ORIGINALLY DETERMINED UNDER S.143(1) OR 143(3) OR 1 44 AND TAX, INTEREST, ETC., THEREON WOULD HAVE ESCAPED TAXATION . THE ASSESSEE DID NOT CHALLENGE THE LEVY OF INTEREST UNDER S.234B (1) AS PER THE INTIMATION ORIGINALLY ISSUED UNDER S.143(1). THE A O IS, THEREFORE, JUSTIFIED IN INCORPORATING THE SAID FIGURE OF INTER EST ORIGINALLY CHARGED UNDER S.234B (1) AS PER THE INTIMATION ISSU ED UNDER S.143(1), IN THE COMPUTATION SHEET ACCOMPANYING THE ORDER OF REASSESSMENT PASSED UNDER S.143(3)/147. THIS POSIT ION IS QUITE CLEAR, OBVIOUS AND PATENT ON BARE PERUSAL OF THE ST ATUTORY PROVISIONS AND THEREFORE DOES NOT ADMIT OF ANY DEBATE. THE A CTION OF THE AO IN INCORPORATING THE INTEREST ORIGINALLY CHARGED UN DER S.234B(1) AS PER INTIMATION, IN THE COMPUTATION SHEET ACCOMPANYI NG THE REASSESSMENT ORDER IS, THEREFORE, CORRECT. THUS, THE AO IS DIRECTED TO VERIFY WHETHER INTEREST U/S 234B CAN BE CHARGED IN THE CASE OF THE ASSESSEE AND IF SO, THE AO SHALL BE WITHIN HIS DOMAIN TO INCORPORATE THE INTEREST LEVIED U/S 234B(1) AND IN ADDITION SHOULD LEVY INTEREST U/S 234B(3) FOR EVERY MONTH FROM OR PART O F MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY FOLLOWING THE DATE OF DETERMINATION OF TOTAL INCOME U/S 143(1) AND ENDING ON THE DATE OF REASSES SMENT UNDER SECTION 143(3)/147 ON THE AMOUNT BY WHICH THE TAX ON THE TO TAL INCOME DETERMINED ON THE BASIS OF THE REASSESSMENT EXCEEDED THE TAX O N THE TOTAL INCOME DETERMINED U/S 143(1). IT IS ORDERED ACCORDINGLY. ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 6 OF 17 CO NO: 76/2008 AY 2002-03 [BY THE ASSESSEE]: 8. THE ASSESSEE HAS RAISED NINE EXHAUSTIVE GROUNDS IN HIS CROSS OBJECTION. HOWEVER, DURING THE COURSE OF HEARING, THE LD. A.R. SUBMITTED THAT GROUND NOS:1,2,3,4 WERE NOT PRESSED AND, ACCOR DINGLY, THEY ARE DISMISSED AS NOT PRESSED. 9. ON A PERUSAL OF THE REMAINING GROUNDS, WE FIND T HAT GROUND NOS:6, 7, 8 AND 9 WERE GENERAL IN NATURE AND NO SPECIFIC ISSU ES INVOLVED AND, THEREFORE, THEY ARE DISMISSED AS NON-CONSEQUENTIAL. 10. THE LONE GROUND SURVIVES FOR ADJUDICATION WAS T HAT - THE AUTHORITIES BELOW WERE NOT JUSTIFIED THAT THE INCOME OF RS.1,43,27,626/- [ I.E., RS.12151444 + 217652 (SIC) 2176182] WAS RELATING TO THE AY 2003-04 AS ADMITTED BY THE ASSES SEE WHICH WAS ASSESSED FOR THE AY.03-04 AND TAXING THE SAME FOR T HE AY 2002-03 AMOUNTS TO DOUBLE TAXATION. THE HISTORY OF THE CASE, IN BRIEF, IS THAT THE ASSE SSEE HAD FURNISHED HIS ROI ADMITTING AN INCOME OF RS.546400/- WHICH WAS PROCES SED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS CONCLUDED U/ S 143(3) OF THE ACT, DETERMINING THE TOTAL INCOME AT RS.6.47 LAKHS WHICH WAS SET ASIDE BY THE CIT, B-IV DIRECTING THE AO TO VERIFY THE ASSESSEE S CONTENTION OF CONTRACT RECEIPT OF RS.44.18 LAKHS REPRESENTING ADVANCES ONL Y ON WHICH TDS WAS EFFECTED AND ALSO DIRECTED NOT TO GIVE CREDIT ON TD S ON ADVANCES WHICH HAD NOT BEEN INCLUDED IN THE TURNOVER DECLARED IN T HE P & L ACCOUNT. WHILE VERIFYING THE CONTRACT RECEIPTS AND THE BALANCE SHE ET, THE AO STUMBLED UPON THE FACT THAT RS.1.24 CRORES WAS CLAIMED TO H AVE BEEN RECEIVED FROM M/S.PRESTIGE LEISURE RESORTS (P) LTD AS ADVANCE FOR WORK. ON VERIFICATION ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 7 OF 17 OF THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE SAID COMPANY, THE CLOSING BALANCE AS ON 31.3.02 WAS NIL DUE TO TH E FACT THAT THE ASSESSEE GOT THE FINAL PAYMENT OF RS.1.20 CRORES ON 31.12. 01, THE RECEIPT OF WHICH SHOULD HAVE BEEN DECLARED AS CONTRACT RECEIPT. 11. THE ASSESSEES PREMISE WAS SUBJECTED TO A SURVE Y ON 8.8.05. CONSEQUENT UPON THE SURVEY, THE FOLLOWING CONTRACT WORKS EXECUTED BY THE ASSESSEE WERE UNEARTHED: (I) PRESTIGE LEISURE RESORTS (P) LTD. BILLS SETTLED ON 4.12.01 RS.1,60,00,000 (II) MILLENIUM DEVELOPERS 21,76,182 COMPLYING WITH THE NOTICE U/S 148, THE ASSESSEE CA ME UP WITH A REVISED ROI ADMITTING A TOTAL INCOME OF RS.8058140/-. AFTE R DELIBERATING THE ISSUE AT A GREATER LENGTH AND ALSO CORROBORATING THE ASS ESSEES ADMISSION RECORDED ON OATH ON 8/8/2005, THE AO HAD WORKED OUT THE RECEIPTS AS UNDER: M/S.PRESTIGE LEISURE RESORTS (P) LTD : BILL SETTLED FOR RS.1,60,00,000 AMOUNTS ALREADY ACCOUNTED FOR - FY 99.00 RS.20 39250 FY 00-01 1200000 S.T. @ 4% 609306 38,48,5566 1,21,51,444 M/S.TALISMA CORPORATION LTD: COMPLETED THE WORK FOR RS.34.94 LAKHS FOR THE PERIO D ENDED 31.3.2001 BUT WAS NOT ACCOUNTED IN THE SALES. THE ASSESSEE ON OATH, HAD ADMITTED AND AGREED TO CONSIDER THIS AS SALES FOR THE FY 00-01 AND, ACCORDINGLY, CO NSIDERED BY THE AO FOR THE PURPOSE OF ARRIVING AT THE PROFIT. THUS, THE AO CONCLUDED THE ASSESSMENT IN TAKING INT O ACCOUNT THESE AMOUNTS, AGGREGATING TO RS.1,43,27,626/- [12151444 + 2176182] AND ARRIVED AT THE TAXABLE INCOME AT RS.8159540/-. THIS HAS BEEN DONE BY THE ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 8 OF 17 AO ON THE BASIS OF THE ASSESSEES ASSERTION ON OATH ON 24/8/2005 AND THE REVISED RETURN FURNISHED ON 16.11.2005 WHEREIN THE ASSESSEE HIMSELF HAD ARRIVED AT THE TOTAL INCOME AT RS.8058140. 12. HOWEVER, THE ASSESSEE TOOK UP THE ISSUE BEFORE THE CIT(A) WITH AN ARGUMENT THAT THE RECEIPTS WHICH HAVE BEEN ASSESSED IN THE REASS ESSMENTS SHOULD HAVE BEEN CONSIDERED IN THE ASSESSMENT YEARS FOR WHICH HE HAD DECLARED THEM AS THE ACCOUNTS MAINTAINED BY THE APP ELLANT WERE SYSTEMATIC AND THE MERE CLAIM FOR A RECEIPT DOES NOT RESULT IN ACCRUAL OF INCOME UNLESS THE COUNTERPART OF THE APPELLANT HAD ACCEPTED THE S AME. AFTER DUE CONSIDERATION OF THE ARGUMENT PUT-FORTH B Y THE ASSESSEE AND PLACING RELIANCE ON THE FOLLOWING CASE LAWS: (I) RAMESHCHANDRA & CO. V. CIT (1987) 168 ITR 375 (BOM) ; (II) NARAYAN BHAGAWANTRAO GOSAVI BALAJIWALE V. GOPAL VIN AYAK GOSAVI & OTHERS [AIR 1960 SC P.100 (V 47 C 18) ]; & (III) PULLENGODE RUBBER PRODUCE CO V. STATE OF KERALA & ANR. [91 ITR 18 SC ] THE LD.CIT (A) BRUSHED ASIDE THE CONTENTIONS AND WE NT AHEAD WITH THE OBSERVATIONS THAT 6. ... ON A CAREFUL CONSIDERATION OF THE ASSES SMENT ORDER AND THE SWORN STATEMENT RECORDED ON 8/8/2005 DURING THE COURSE OF SURVEY, IT IS CLEAR THAT THE APPELLANT HAS IN FACT RECEIVED THE SUM AND ALSO COMPLETED THE WORK DURING THE ASSESSMENT YEARS IN WHICH THE AO HAS REASSESSED THEM AND NOT IN THE ASSESSMENT YE AR IN WHICH THEY WERE OFFERED BY THE APPELLANT. FURTHER, THE T RANSACTIONS IN THOSE CASES WERE COMPLETE IN ALL RESPECTS AS ADMITT ED BY THE APPELLANT IN ANSWER TO QUESTION NO.14 OF HIS SWORN STATEMENT. IT IS ALSO SEEN FROM QUESTIONS NO.15 TO 17 AND THE APPELL ANTS ANSWER TO THEM IN THE SWORN STATEMENT THAT THE APPELLANTS TR ANSACTIONS IN RESPECT OF CONTRACT WORKS WITH THE CLIENTS WERE COM PLETED AND FINAL BILL WAS SETTLED WITH THE AMOUNTS RECEIVED BY THE A PPELLANT, BUT THE SAME WERE NOT ACCOUNTED FOR IN THE RELEVANT ACCOUNT ING YEARS, IN SPITE OF THE FACT THAT THEY WERE SETTLED MUCH BEFOR E THE END OF THE ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 9 OF 17 FINANCIAL YEARS. FROM THESE FACTS, IT IS CLEAR THA T THE APPELLANTS CONTENTION AS MENTIONED ABOVE IS NOT JUSTIFIED AND CANNOT BE ENTERTAINED. . SINCE, THE ASSESSEE HIMSELF HAD COME FORWARD TO OFF ER THESE AMOUNTS AGGREGATING TO RS.1.43 CRORES FOR TAXATION IN THE A SSESSMENT YEAR 2002.03 BY FURNISHING A REVISED RETURN, HE CANNOT HIMSELF R ESCIND NOW. HAD HE OFFERED THE SAID SUMS FOR TAXATION FOR THE AY 2003- 04 TOO AS CLAIMED BY HIM, THE ASSESSEE SHALL BE AT LIBERTY TO APPROACH T HE AO FOR REDRESSAL BY WAY OF AN APPLICATION UNDER SECTION 154 OF THE ACT. ITA NO: 981/2008 AY 2003-04 [BY THE ASSESSEE]: 13. THERE WAS A CONSIDERABLE DELAY IN PREFERRING TH IS APPEAL. THE LD. A R OF THE ASSESSEE VIDE APPLICATION DATED: 17/7/2008 [ACCOMPANIED BY AN AFFIDAVIT OF THE ASSESSEE IN ORIGINAL] SUBMITTED TH AT THE ENTIRE FILE PERTAINING TO THE AY IN QUESTION WAS WITH THE ASSESSEES PREVI OUS AR WHO WAS INSTRUCTED TO TAKE FURTHER ACTION ON RECEIPT OF THE ORDER OF THE FIRST APPELLATE AUTHORITY. HOWEVER, THE THEN AR WAS OF THE VIEW TH AT THERE WAS NO CASE FOR FURTHER APPEAL AND AS SUCH NO APPEAL COULD BE PREFE RRED WITHIN THE STIPULATED TIME. ON THE ADVICE OF THE PRESENT COUN SEL, THIS APPEAL WAS FILED WHICH CAUSED A CONSIDERABLE DELAY IN DOING SO. IT WAS PLEADED THAT SINCE THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE IN FILING THE APPEAL IN TIME, THE DELAY CAUSED MAY BE CONDONED AND THE APPE AL BE ADMITTED FOR ADJUDICATION. 14. ON THE OTHER HAND, THE LD.D.R HAD VEHEMENTLY O PPOSED IN CONDONING THE DELAY AND ACCEDING TO THE ASSESSEES REQUEST. TO DRIVE ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 10 OF 17 HOME HER POINT, SHE HAD PLACED RELIANCE IN THE CASE OF SURINDER KUMAR BOVEJA V. CWT REPORTED IN (2006) 287 ITR 52 (DELHI) . 15. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS. WITH DUE RESPECTS, WE HAVE PERUSED THE CASE LAW ON WHICH THE REVENUE H AD PLACED RELIANCE. IN THAT CASE, THE ASSESSEE GOT PART RELIEF GRANTED BY THE FIRST APPELLATE AUTHORITY, BUT PREFERRED NOT TO APPEAL AGAINST IT. HE HAD, HOWEVER, APPEALED AGAINST THE ORDER OF THE CWT(A) AFTER AN I NORDINATE DELAY ONLY AFTER THE TRIBUNAL MADE SOME OBSERVATION IN HIS FAV OUR PREFERRED BY THE REVENUE. WHEREAS IN THE PRESENT CASE, THE CIT (A) HAD DISMISSED THE ASSESSEES APPEAL IN TOTO AND EVEN THOUGH HE WAS AG GRIEVED, HE HAD NOT PREFERRED AN APPEAL, OSTENSIBLY, ON THE ADVISE OF H IS PREVIOUS AR. THUS, THE ASSESSEES CASE IS ON THE DIFFERENT FOOTING AND THE CASE LAW RELIED ON BY THE D.R, IN OUR CONSIDERED VIEW, IS DISTINGUISHA BLE. IN THE INTEREST OF NATURAL JUSTICE AND EQUITY AND ALSO THE ASSESSEE WA S PREVENTED BY A REASONABLE CAUSE, THE DELAY IS CONDONED AND THE APP EAL IS ADMITTED. 16. THE ASSESSEE HAS RAISED NINE (SIC) SEVEN GROUN DS, OUT OF WHICH, GROUND NOS:1,6 AND 7 ARE GENERAL AND NO SPECIFIC IS SUES INVOLVED AND, THEREFORE, THEY ARE DISMISSED AS NON-CONSEQUENTIAL. WITH REGARD TO THE CONDONATION OF DELAY IN FILING THE APPEAL [GROUND N O.5] HAS ALREADY BEEN ADDRESSED TO. 17. IN THE REMAINING GROUNDS, THE CRUX OF THE ISSUE IS LARGELY CONFINED TO: THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DROPPIN G THE PROCEEDINGS PUT IN MOTION U/S 147 OF THE ACT AFTER HAVING TAXED THE INCOME OF THE ASSESSEE IN THE PRECEDING YEAR WHICH HAS RESULTED I N TAXING THE SAME AMOUNT TWICE. ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 11 OF 17 BRIEFLY, THE ISSUE IS THAT FOR THE AY IN QUESTION, THE ASSESSEE HAD ORIGINALLY ADMITTED AN INCOME OF RS.1439906/- WHICH WAS PROCES SED U/S 143(1) OF THE ACT. CONSEQUENT TO SURVEY OPERATION IN THE ASS ESSEES PREMISE AND IN COMPLIANCE WITH THE NOTICE U/S 148 OF THE ACT, THE ASSESSEE HAD FURNISHED A REVISED RETURN ON 16/11/2005, DECLARING A LOSS OF RS.71.82 LAKHS. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, AFTER MAKIN G PRIMA FACIE ADJUSTMENTS AND TAKING INTO ACCOUNT THE INCOME OTHE R THAN THE INCOME FROM BUSINESS OF RS.2.22 LAKHS AND THE PROPOSED DISALLOW ANCE OF RS.1.32 LAKHS, THE AO FOUND THAT THE RE-ASSESSMENT IN QUESTION WIL L RESULT IN A LOSS OF RS.70.5 LAKHS AND ALSO REFUND OF RS.4.73 LAKHS PLUS INTEREST U/S 244A OF THE ACT. 18. FOR HAVING INITIATED THE PROCEEDINGS U/S 147 OF THE ACT, IF RE- ASSESSMENT WERE TO BE CONCLUDED IN THE INSTANT CASE , IT WOULD RESULT IN LOSS AS AGAINST THE INCOME ARRIVED AT BY PROCESSING THE ORIGINAL ROI U/S 143(1) OF THE ACT AND DRAWING STRENGTH FROM THE RULING OF THE HONBLE APEX COURT IN THE CASE OF CIT V. SUN ENGINEERING WORKS (P) LTD. R EPORTED IN (1992) 198 ITR 297, THE AO HAD DROPPED THE PROCEEDINGS INITIAT ED U/S 147 OF THE ACT. 19. AGITATED, THE ASSESSEE TOOK UP THE ISSUE BEFOR E THE CIT (A) WHO AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE, H AS OBSERVED THUS 5.1..THE AO HAS ELABORATELY DISCUSSED THE R EASONS FOR DROPPING THE REASSESSMENT PROCEEDINGS AND HAS A LSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE C ASE OF SUN ENGG CITED ABOVE. IT IS MY CONSIDERED OPINION THAT THE APPEAL FILED AGAINST THE ORDER DROPPING THE REASSESSMENT PROCEED INGS IS NOT MAINTAINABLE. SECTION 246A GIVES THE LIST OF ORDER S WHICH ARE APPEALABLE BEFORE THE CIT(A) IN WHICH AN ORDER OF T HE AO DROPPING THE PROCEEDINGS U/S 147 IS NOT INCLUDED. ACCORDING TO SECTION 246A(1)(B), AN ORDER OF ASSESSMENT, REASSESSMENT OR RE-COMPUTATION UNDER SECTION 147 IS ONE OF THE APPEALABLE ORDERS . HOWEVER, IN ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 12 OF 17 THE CASE OF THE APPELLANT, THE AO HAS NEITHER MADE AN ASSESSMENT/RE-ASSESSMENT NOR HAS HE MADE A RE-COMPU TATION UNDER THE SAID SECTION. HENCE, THE APPEAL IS NOT MAINTAI NABLE. THE ASSESSMENTS ARE REOPENED UNDER SECTION 147 FOR BRIN GING TO TAX THE ESCAPED INCOME. FURTHER, IN THE APPELLANTS CASE, THE AO HAS REOPENED THE ASSESSMENT BY ISSUE OF A NOTICE U/S 14 8 AND HAVING FOUND THAT THERE WAS NO ESCAPEMENT OF INCOME, HE HA S DROPPED THE REASSESSMENT PROCEEDINGS SO INITIATED. ONCE, THE P ROCEEDINGS UNDER SECTION 147 ARE DROPPED, THE POSITION REVERTS TO TH E INCOME ORIGINALLY RETURNED BY THE APPELLANT OR ASSESSED FO R THE SAID YEAR AND, THEREFORE, THERE IS NO PREJUDICE OR AN ADDITIO NAL LIABILITY CREATED. THEREFORE, THERE IS NO CAUSE OF ACTION. IN THE PRESENT APPEAL, THE APPELLANT IS SEEKING A REDUCTION IN THE INCOME RETURNED AND THIS NOT A POWER GRANTED TO THE CIT(APPEALS). THE ASSESSEE IS FREE TO PURSUE THE ALTERNATIVE REMEDIES AVAILABLE U NDER SECTION 264/154 AS THE CASE MAY BE. 20. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEAL. ON VERIFICATION OF THE RELEVANT RECORDS, WE FIND THAT CONSEQUENT ON THE SURVEY OPERATION, THE ASSESSEE, IN HIS STATEMENT DATED 24. 8.2005 ON OATH, ANSWERING TO QUESTION NO.6, HAD AFFIRMED THAT SINCE THE WIP WAS ONLY AN ESTIMATED FIGURE, I HAVE NO OBJECTION FOR ADOPTING THE VALUE OF WORK IN PROGRESS OF RS.28,00,000/- AS ON 31.3.2003 AND FOR COMPUTING INCOME ACCORDINGLY. HOWEVER, IN THE RETURN FILED EARLIER, THE ASSESSEE HAD SHOWN THE WORK-IN-PROGRESS ONLY AT RS.26 LAKHS. IN THE O PINION (BELIEF) OF THE AO THAT THERE WAS AN ESCAPEMENT OF INCOME TO THE EXTEN T OF RS.2 LAKHS [RS.2800000 2600000] AND ACCORDINGLY ISSUED A NOT ICE U/S 148 OF THE ACT. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS AND AFTER TAKING INTO ACCOUNT THE REVISED RETURN FURNISHED BY THE ASSESSE E - ADMITTING A LOSS OF RS.71.82 LAKHS THE AO FOUND THAT THE RE-ASSESSMEN T WOULD RESULT IN A LOSS OF RS.70.50 LAKHS. THUS, THE AO, TAKING REFUGE IN THE VERDICT OF THE HONBLE SUPREME COURT REFERRED SUPRA, HE DROPPED TH E PROCEEDINGS INITIATED U/S 147 OF THE ACT. ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 13 OF 17 21. WITH DUE RESPECTS, WE HAVE PERUSED THE OBSERVAT IONS OF THE HIGHEST JUDICIARY OF THE LAND REFERRED SUPRA. FOR READY RE FERENCE, THE RELEVANT PORTION OF THE HONBLE COURTS OBSERVATION IS REPRO DUCED AS UNDER: WE FIND THAT, IN PROCEEDINGS UNDER SECTION 147 OF THE ACT, THE INCOME-TAX OFFICER MAY BRING TO CHARGE ITEMS OF INC OME WHICH HAD ESCAPED ASSESSMENT OTHER THAN OR IN ADDITION TO THA T ITEM OR ITEMS WHICH HAVE LED TO THE ISSUANCE OF THE NOTICE UNDER SECTION 148 AND WHERE REASSESSMENT IS MADE UNDER SECTION 147 IN RES PECT OF INCOME WHICH HAS ESCAPED TAX, THE INCOME-TAX OFFICER'S JUR ISDICTION IS CONFINED TO ONLY SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDER-ASSESSED AND DOES NOT EXTEND TO REVISING, REO PENING OR RECONSIDERING THE WHOLE ASSESSMENT OR PERMITTING TH E ASSESSEE TO RE- AGITATE QUESTIONS WHICH HAD BEEN DECIDED IN THE ORI GINAL ASSESSMENT PROCEEDINGS. IT IS ONLY THE UNDERASSESSMENT WHICH I S SET ASIDE AND NOT THE ENTIRE ASSESSMENT WHEN REASSESSMENT PROCEED INGS ARE INITIATED. THE INCOME-TAX OFFICER CANNOT MAKE AN OR DER OF REASSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER O F ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT MATTER OF PROCEEDINGS UNDER SECTION 147. AN ASSESSEE CANNOT RESIST VALIDLY INITIATED REASSESSMENT PROCEEDINGS UNDER THIS SECTION MERELY BY SHOWING THAT OTHER INCOME WHICH HAD BEEN ASSESSED ORIGINALL Y WAS AT TOO HIGH A FIGURE EXCEPT IN CASES UNDER SECTION 152(2). THE WORDS SUCH INCOME IN SECTION 147 CLEARLY REFERS TO THE INCOME WHICH IS CHARGEABLE TO TAX BUT HAS ESCAPED ASSESSMENT AND THE INCOME- TAX OFFICER'S JURISDICTION UNDER THE SECTION IS CON FINED ONLY TO SUCH INCOME WHICH HAS ESCAPED ASSESSMENT. IT DOES NOT EX TEND TO RECONSIDERING GENERALLY THE CONCLUDED EARLIER ASSES SMENT. CLAIMS WHICH HAVE BEEN DISALLOWED IN THE ORIGINAL ASSESSME NT PROCEEDING CANNOT BE PERMITTED TO BE RE-AGITATED ON THE ASSESS MENT BEING REOPENED FOR BRINGING TO TAX CERTAIN INCOME WHICH H AD ESCAPED ASSESSMENT BECAUSE THE CONTROVERSY ON REASSESSMENT IS CONFINED TO MATTERS WHICH ARE RELEVANT ONLY IN RESPECT OF THE I NCOME WHICH HAD NOT BEEN BROUGHT TO TAX DURING THE COURSE OF THE OR IGINAL ASSESSMENT. A MATTER NOT AGITATED IN THE CONCLUDED ORIGINAL ASSESSMENT PROCEEDINGS ALSO CANNOT BE PERMITTED TO BE AGITATED IN THE REASSESSMENT PROCEEDINGS UNLESS RELATABLE TO TH E ITEM SOUGHT TO BE TAXED AS ESCAPED INCOME '. INDEED, IN THE REASS ESSMENT PROCEEDINGS FOR BRINGING TO TAX ITEMS WHICH HAD ESC APED ASSESSMENT, IT WOULD BE OPEN TO AN ASSESSEE TO PUT FORWARD CLAIMS FOR DEDUCTION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON-TAXABILITY OF THE ITEMS AT ALL. KEEPING IN VIEW THE OBJECT AND ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 14 OF 17 PURPOSE OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WHICH ARE FOR THE BENEFIT OF THE REVENUE AND NOT AN ASSESSEE, AN ASSESSEE CANNOT BE PERMITTED TO CONVERT THE REASSESSMENT PRO CEEDINGS AS HIS APPEAL OR REVISION, IN DISGUISE, AND SEEK RELIEF IN RESPECT OF ITEMS EARLIER REJECTED OR CLAIM RELIEF IN RESPECT OF ITEM S NOT CLAIMED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, UNLESS RELATABLE T O ESCAPED INCOME ', AND RE-AGITATE THE CONCLUDED MATTERS. EVE N IN CASES WHERE THE CLAIMS OF THE ASSESSEE DURING THE COURSE OF REA SSESSMENT PROCEEDINGS RELATING TO THE ESCAPED ASSESSMENT ARE ACCEPTED, STILL THE ALLOWANCE OF SUCH CLAIMS HAS TO BE LIMITED TO T HE EXTENT TO WHICH THEY REDUCE THE INCOME TO THAT ORIGINALLY ASSESSED. THE INCOME FOR PURPOSES OF REASSESSMENT' CANNOT BE REDUCED BEYOND THE INCOME ORIGINALLY ASSESSED ON A CAREFUL READING OF THE OBSERVATIONS OF THE HON BLE COURT, WE ARE OF THE UNANIMOUS VIEW THAT THE AO WAS WITHIN HIS DOMAIN TO DROP THE PROCEEDINGS INITIATED U/S 147 OF THE ACT. 22. BEFORE PARTING WITH, WE WOULD LIKE TO MAKE IT C LEAR THAT IF THE APPREHENSION OF THE ASSESSEE THAT THE SAME INCOME IN TWO CONSECUTIVE YEARS WERE SUBJECTED TO DOUBLE TAXATION, THE ASSESS EE SHALL BE AT LIBERTY TO APPROACH THE APPROPRIATE AUTHORITIES FOR REDRESSAL UNDER SECTION 264 OR 154 OF THE ACT, AS THE CASE MAY BE. ITA NO: 982/2008 AY 2004-05 [BY THE ASSESSEE]: 23. FOR THIS ASSESSMENT YEAR, THE ASSESSEE HAS RAIS ED NINE EXHAUSTIVE GROUNDS. ON A PERUSAL, WE FIND THAT THE GROUND NOS :1,2,3,4, 8 AND 9 ARE GENERAL IN NATURE AND NO SPECIFIC ISSUES INVOLVED A ND, THEREFORE, THEY ARE DISMISSED AS NON-CONSEQUENTIAL. 24. WITH REGARD TO THE SUBMISSION OF THE ASSESSEE TO CONDONE THE DELAY IN FILING THE APPEAL [GROUND NO.7], WE WOULD LIKE TO POINT OUT THAT THE REASONS SET-OUT BY US IN THE FORE-GOING PARAGRAPH F OR THE IMMEDIATE ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 15 OF 17 PRECEDING ASSESSMENT YEAR HOLD GOOD FOR THIS ASSESS MENT YEAR TOO. THUS, THE DELAY IN PREFERRING THIS APPEAL IS CONDONED AND THE APPEAL IS ADMITTED FOR ADJUDICATION. 25. THE REMAINING TWO GROUNDS (GROUND NOS: 5 AND 6 ) SURVIVED FOR CONSIDERATION ARE REFORMULATED AS UNDER: (I) THE AUTHORITIES BELOW ERRED IN DISALLOWING DEPRECIA TION OF RS.117263/- ON THE GROUND THAT FOR THE AY 03-04 THE RE WAS NO LOSS AS PER THE RETURN FILED ON 1.2.03 AND THAT THE PROC EEDINGS INITIATED U/S 148 OF THE ACT WAS DROPPED AND NO ASSESSMENT WA S MADE; & (II) THE AUTHORITIES ERRED IN ASSESSING THE INCOME ON TH E BASIS OF THE ASSESSEES CONSENT WHICH IS AGAINST THE SPIRIT OF THE RULING OF THE APEX COURT REPORTED IN 91 ITR 18. ON A CURSORY PERUSAL OF THE IMPUGNED ORDER OF THE A O, WE FIND THAT THE AO STATED THUS, 3. WHILE FILING THE REVISED RETURN OF INCOME AND A RRIVING AT THE INCOME AS PER THE P & L ACCOUNT AS ABOVE, THE ASSES SEE HAD DEBITED DEPRECIATION OF RS.117263/- WHICH WAS NOT ENTITLED AS PER THE RETURN OF INCOME FILED FOR THE AY 2003-04 ON 1.12.2001. AS NO DETAILS WERE AVAILABLE ON THE RECORDS TO ASCERTAIN THE DETAILS O F DEPRECIATION CLAIMED BY THE ASSESSEE AND DISALLOWED BY THE AO, IN THE INTER EST OF NATURAL JUSTICE AND FAIR-PLAY, THIS ISSUE IS REMITTED BACK ON THE F ILE OF THE AO TO LOOK INTO THE GRIEVANCE OF THE ASSESSEE AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND RULES. WHILE DO ING SO, THE AO SHALL AFFORD A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEARING HEARD. IT IS ORDERED ACCORDINGLY. ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 16 OF 17 26. THE OTHER GRIEVANCE OF THE ASSESSEE IS THAT THE AUTHORITIES ERRED IN ASSESSING THE INCOME ON THE BASIS OF THE ASSESSEES CONSENT WHICH IS AGAINST THE SPIRIT OF THE RULING OF THE APEX COURT REPORTED IN 91 ITR 18. WITH DUE RESPECTS, WE HAVE PERUSED THE RULING OF TH E APEX COURT REFERRED SUPRA. THE HIGHEST JUDICIARY OF THE LAND HAD OBSER VED THAT AN ADMISSION IS AN IMPORTANT PIECE OF EVIDENCE. BUT IT IS NOT CONCL USIVE. IT IS OPEN TO THE ASSESSEE TO SHOW THAT IT IS INCORRECT AND THE ASSES SEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT THE ACCOUNT BOOKS D ID NOT DISCLOSE THE CORRECT FACTS. IN THE ISSUE ON HAND, WE FIND THAT THE ASSESSEES ADMISSION OF ADDITIONAL INCOME WAS VOLUNTARY WHICH HAD NOT BE EN PROVED BY THE ASSESSEE TO BE ERRONEOUS. IN THESE CIRCUMSTANCES, THE RELIANCE PLACED ON THE ABOVE REFERRED CASE LAW IS DISTINGUISHABLE AND NOT DIRECTLY APPLICABLE TO THE FACTS OF THE CASE ON HAND. IN THE RESULT: (I) THE REVENUES APPEAL FOR THE AY 2002-03 IN ITA 628/08 IS TREATED AS PARTLY ALLOWED FOR THE STATISTICAL PURPOSE; (II) THE ASSESSEES CROSS OBJECTION FOR THE AY 2002-03 I N CO NO.76/08 IS DISMISSED; (III) THE ASSESSEES APPEAL FOR THE AY 2003-04 IN ITA NO.981/08 IS DISMISSED ; (IV) THE ASSESSEES APPEAL FOR THE AY 2004-05 IN IT A NO.982/08 IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. ITA NOS.628, 981 & 982, CO 76 OF 2008 PAGE 17 OF 17 PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2009. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE, DATED, THE 30 TH NOVEMBER, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.