Parkar Medical Foundation, Ratnagiri V. Dy. CIT, Ratnagiri Circle, Ratnagiri

ITA 799/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8494 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 04-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Keywords: Capital asset; Depreciation; Search and seizure; Charitable institution; Opportunity of being heard; Principle of natural justice; Question of law; Assessment record; Benefit of exemption; Documents seized; Capital expenditure
• Section: 263; 132; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS. 798,799 & 800/PN/2013 (ASST. YEARS 2004-05, 2005-06 & 2008-09) PARKAR MEDICAL FOUNDATION, 828 PARKAR HOSPITAL, SHIVAJINAGAR, RATNAGIRI-415639 PAN NO.AAATP4632P .. APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, RATNAGIRI CIRCLE, RATNAGIRI .. RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SMT. M.S. VERMA DATE OF HEARING : 01-08-2014 DATE OF PRONOUNCEMENT : 20-08-2014 ORDER PER R.K. PANDA, AM : THE ABOVE 3 APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THE SEPARATE ORDERS DATED 26-03-2013 PASSED U/S.263 OF THE I.T. ACT, 1961 BY THE CIT-II, KOLHAPUR FOR ASSESSMENT YEARS 2004-05, 2005-06 AND 2008- 09 RESPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN ALL THESE APPEALS, THEREFORE, FOR THE SAKE OF CO NVENIENCE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER. ITA NO.798/PN/2013 (A.Y. 2004-05) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A TRUST AND DERIVES INCOME FROM RUNNING A HOSPITAL AT RATNAGIRI . IT FILED ITS RETURN OF INCOME ON 31-10-2004 DECLARING NIL INCOME AFTER AVA ILING BENEFIT OF EXEMPTION U/S.11 OF THE ACT TO THE EXTENT OF RS.55, 76,623/-. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT ACCEPTING THE R ETURNED INCOME. 2 SUBSEQUENTLY, IT WAS NOTICED BY THE AO THAT ASSESSE E HAS DIVERTED THE TRUST FUND TO THE TRUSTEES AND FAMILY MEMBERS WITHO UT REASONABLE CONSIDERATION, THEREBY ATTRACTING THE PROVISIONS OF SECTION 13(1)(C) OF THE I.T. ACT. THE AO, THEREFORE, ISSUED NOTICE U/S.148 OF THE I.T. ACT. DATED 09-03-2010. SUBSEQUENTLY, THE AO COMPLETED THE ASS ESSMENT U/S.143(3) R.W.S.147 VIDE ORDER DATED 31-12-2010 DETERMINING T HE INCOME OF THE ASSESSEE AT RS.15,08,339/-. 2.1 SUBSEQUENTLY, THE LD.CIT, ON PERUSAL OF THE REC ORDS, NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD INCURRED EXPENDITURE OF RS.30,35,565/- TOWARDS PURCHASE OF C APITAL ASSETS AND THE ENTIRE AMOUNT WAS CLAIMED AS DEDUCTION AS IT WAS AP PLIED FOR CHARITABLE PURPOSE. HE NOTED THAT THE ASSESSEE HAS ALSO CLAIM ED DEPRECIATION OF RS.3,58,156/- ON THE ASSETS PURCHASED DURING THE YE AR AS WELL AS ON THE WRITTEN DOWN VALUE OF THE ASSETS ON WHICH 100% DEDU CTION WAS CLAIMED IN THE PREVIOUS ASSESSMENT YEAR ON ACCOUNT OF APPLI CATION FOR CHARITABLE PURPOSES. ACCORDING TO LD.CIT, THIS CLAIM OF DEPRE CIATION, WHICH WAS ALLOWED BY THE AO DURING THE ASSESSMENT, TANTAMOUNT ED TO DOUBLE DEDUCTION. SINCE THE AO HAD FAILED TO DISALLOW THE CLAIM OF DEPRECIATION OF RS.3,56,156/-, THE LD.CIT WAS OF THE VIEW THAT T HE ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE I.T. ACT. HE, TH EREFORE, ISSUED A NOTICE U/S.263 TO THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ORDER PASSED BY THE AO U/S.143(3)/147 SHOULD NOT BE SET-ASIDE UNDER THE PROVISIONS OF SECTION 263 OF THE I.T ACT. 2.2 THE ASSESSEE OBJECTED TO THE PROPOSED ACTION U/ S.263(1) OF THE I.T. ACT STATING THAT IT IS ENTITLED TO CLAIM DEPRECIATI ON ON ITS ASSETS AND THE 3 COST OF THE ASSETS HAS TO BE CONSIDERED AS APPLICAT ION OF INCOME U/S.11 OF THE I.T. ACT. THE DECISION OF THE HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELE CTION REPORTED IN 264 ITR 110 AND THE DECISION OF HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT VS. MARKET COMMITTEE, PIPLI REPORTE D IN 330 ITR 16 WERE BROUGHT TO THE NOTICE OF THE CIT FOR THE ABOVE PROPOSITION. IT WAS ACCORDINGLY REQUESTED THAT THE PROCEEDINGS U/S.263 SHOULD BE DROPPED AS THE ASSESSMENT CANNOT BE CONSIDERED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. HOWEVER, THE LD.CIT WAS NOT SATISFIED WITH THE E XPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE HAD SP ENT AN AMOUNT OF RS.30,35,565/- FOR PURCHASE OF VARIOUS CAPITAL ASSE TS. APART FROM THIS, THE ASSESSEE HAS ALSO PURCHASED FIXED ASSETS PRIOR TO THE YEAR PRESENTLY UNDER CONSIDERATION. THE INCOME CORRESPONDING TO T HESE ASSETS HAS BEEN CLAIMED AS DEDUCTION U/S.11 OF THE I.T. ACT AS IT W AS APPLIED FOR CHARITABLE PURPOSES. THE ASSESSEE HAS ALSO WORKED OUT THE DEPRECIATION ON THE ABOVE ASSETS AS WELL AS THAT PURCHASED PRIOR TO THE COMMENCEMENT OF THE FINANCIAL YEAR. THE ASSESSEE, THEREFORE, HA S CLAIMED DOUBLE DEDUCTION IN RESPECT OF THE SAME AMOUNT FOR WHICH T HE DEDUCTION HAS ALREADY BEEN ALLOWED. THERE IS NOTHING ON RECORDS BY WAY OF QUESTIONNAIRE OR BY WAY OF SUBMISSION BY THE ASSESS EE DURING ASSESSMENT PROCEEDINGS TO SUGGEST THAT THIS ASPECT OF THE ISSU E HAS BEEN CONSIDERED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. ACCOR DING TO HIM, THIS ASPECT NEEDED DEEPER VERIFICATION AND ALLOWABILITY OF CLAIM OF DEPRECIATION HAS TO BE DETERMINED. 4 3.1 FROM THE ASSESSMENT RECORDS AND THE ASSESSMENT ORDER, HE NOTED THAT THE AO HAS NOT AT ALL CONSIDERED THESE ASPECTS WHILE FINALIZING THE ASSESSMENT PROCEEDINGS AND HAS SIMPLY ACCEPTED THE ASSESSEES CLAIM OF DEPRECIATION MADE IN THE RETURN OF INCOME. THE AO HAD NOT ISSUED EVEN A SINGLE SHOW CAUSE NOTICE IN THIS MATTER. THIS, A CCORDING TO THE LD.CIT, SHOWS THAT THE ISSUE HAD SLIPPED BELOW THE EYES OF THE AO AND HE DID NOT HAVE ANY OCCASION TO CONSIDER AS TO WHETHER THE AMO UNT ALLOWED AS EXPENSES ON ACCOUNT OF APPLICATION OF INCOME IS STI LL BE AMENABLE TO CLAIM SUCH DEPRECIATION. THE AO HAD MECHANICALLY CO MPLETED THE ASSESSMENT ON THE ERRONEOUS ASSUMPTION OF THE CORRE CTNESS OF THE ASSESSEES CLAIM OF EXEMPTION AND DEDUCTION. REFER RING TO THE DECISION OF THE HONBLE DELHI COURT IN THE CASE OF GEE VEE E NTERPRISES VS. ADDL.CIT REPORTED IN 99 ITR 375 AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COM PANY LTD. VS. CIT REPORTED IN 109 TAXMANN 66 HE HELD THAT THE ORDER P ASSED BY THE AO HAS BECOME ERRONEOUS. ACCORDING TO THE LD.CIT THE VIEW TAKEN BY THE AO WITHOUT MAKING REQUISITE ENQUIRIES OR EXAMINING THE CLAIM OF THE ASSESSEE WILL PER SE BE AN ERRONEOUS VIEW AND HENCE WILL BE AMENABLE TO REVISIONAL JURISDICTION U/S.263 OF THE I.T. ACT. 3.2 HE FURTHER NOTED THAT TAKING ONE VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE ALSO NECESSARILY IMPORTS THE REQUIREMENT O F ANALYZING THE FACTS IN THE LIGHT OF APPLICABLE LAW. ACCORDING TO HIM, PROPER EXAMINATION OF FACTS IN THE LIGHT OF RELEVANT LAW IS A NECESSARY R EQUIREMENT IN ORDER TO SAY THAT THE AO HAS ADOPTED A PERMISSIBLE COURSE OF LAW OR TAKEN A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IT IS ONLY A FTER SUCH PROPER EXAMINATION AND EVALUATION HAS BEEN DONE BY THE AO THAT HE CAN COME 5 TO A CONCLUSION AS TO WHAT ARE THE PERMISSIBLE COUR SES AVAILABLE IN LAW OR WHAT ARE THE POSSIBLE VIEWS ON THE ISSUE BEFORE HIM . HE OBSERVED THAT IN THE INSTANT CASE, THE AO HAS NOT AT ALL EXAMINED AS TO WHETHER ONLY ONE VIEW WAS POSSIBLE OR TWO OR MORE VIEWS WERE POSSIBL E AND THEREFORE, THE QUESTION OF HIS ADOPTING OR CHOOSING ONE VIEW IN PR EFERENCE TO THE OTHER DOES NOT ARISE. ACCORDING TO THE LD.CIT, AN ORDER PASSED ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATIO N OF MIND OR WITHOUT MAKING REQUISITE ENQUIRIES WILL SATISFY THE REQUIRE MENT OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE WITHIN THE MEANING OF SECTION 263 OF THE I.T. ACT. 3.3 SO FAR AS THE DECISIONS RELIED ON BY THE ASSESS EE ARE CONCERNED HE NOTED THAT SINCE THE ASSESSEE COULD NOT SUBSTANTIAT E THAT THE ISSUES IN QUESTION WERE CONSIDERED BY THE AO IN THE LIGHT OF THE FACTS NARRATED BY HIM THAT THE ORDER PASSED IS AFTER DUE AND PROPER A PPLICATION OF FACTS AND AFTER DUE APPLICATION OF MIND, THEREFORE, HE DECLIN ED TO GO INTO THE MERIT OF THE CASE AS BEING PREMATURE AND UNSUBSTANTIATED. HE ACCORDINGLY SET- ASIDE THE ASSESSMENT ORDER TO THE FILE OF THE AO WI TH A DIRECTION TO RE- EXAMINE THE ISSUE OF CLAIM OF DEPRECIATION ON FIXED ASSETS CLAIMED BY THE ASSESSEE TO THE EXTENT PERMISSIBLE UNDER THE ACT AF TER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WHILE DOING SO, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF RAMPYARI DEVI SARAOGI VS. CIT REPORTED IN 67 ITR 84 WHEREIN IT IS HELD THAT SINCE THE ASSESSEE IS GETTING AN OPPORTUNITY OF BEING HEARD N O PREJUDICE IS CAUSED TO THE ASSESSEE IF THE ORDER IS SET-ASIDE. 6 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ASSUMPT ION/EXERCISE OF REVISIONAL JURISDICTION U/S.263 OF THE I.T. ACT 196 1 BY THE LD.CIT, THE IMPUGNED REVISION ORDER PASSED BY THE LD.CIT IS BAD IN LAW, PATENTLY ILLEGAL, VOID AB-INITIO AND BEING WITHOUT JURISDICTI ON THE SAME MAY PLEASE BE VACATED/QUASHED. 2. THE APPELLANT MAY PLEASE BE AWARDED COST U/S.254(2 B) OF THE I.T. ACT 1961 FOR ARBITRARY, PERVERSE AND MALICIOUS EXERCI SE OF JUDICIAL POWERS BY THE LD.CIT IN SHEER DISREGARD TO THE DECISION OF TH E JURISDICTIONAL BOMBAY HIGH COURT. 3. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL , IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECT ED TO THE ORDER PASSED BY THE CIT. REFERRING TO THE DECISION OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANK ING PERSONNEL SECTION REPORTED IN 264 ITR 110 HE SUBMITTED THAT THE HONB LE HIGH COURT IN THE SAID DECISION HAS CLEARLY HELD THAT DEPRECIATION IS ALLOWABLE ON THE ASSETS THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICA TION OF INCOME U/S.11 IN PAST YEARS. THE HONBLE BOMBAY HIGH COURT HAS F OLLOWED ITS EARLIER DECISION IN THE CASE OF DIT (EXEMPTIONS) VS. FRAMJE E CAWASJEE INSTITUTE REPORTED IN 109 CTR 463. IN THE SAID DECISION, IT WAS HELD THAT DEPRECIATION ON DEPRECIABLE ASSETS HAD TO BE TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF TRUST ALTHOUGH THE AMOUNT S PENT ON ACQUIRING SUCH ASSETS HAD BEEN TREATED AS APPLICATION OF INCO ME OF THE TRUST IN THE YEAR IN WHICH SUCH ASSETS WERE ACQUIRED. 5.1 REFERRING TO THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MARKET COMMITTEE, PIPL I HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HEL D THAT DEPRECIATION IS ALLOWABLE ON CAPITAL ASSETS FROM THE INCOME OF CHAR ITABLE TRUST FOR 7 DETERMINING THE QUANTUM OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSES OF TRUST AND IN TERMS OF SECTION 11 OF THE I.T. ACT. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN T HE CASE OF ITO VS. RAJASTHANI AND GUJARATHI CHARITABLE FOUNDATION POON A HOSPITAL AND RESEARCH CENTRE VIDE ITA NO.467/PN/2010 ORDER DATED 30-11-2011 FOR A.Y. 2006-07 HE SUBMITTED THAT THE TRIBUNAL, FOLLOW ING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTIT UTE OF BANKING PERSONNEL SECTION (SUPRA), UPHELD THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF DEPRECIATION ON IMMOVABLE PROPERTY TO THE EXTENT OF RS.1,08,86,330/- OVER AND ABOVE THE CAPITAL EXPENDI TURE ON THE CONCERNED ASSETS CLAIMED BY THE ASSESSEE. HE SUBMI TTED THAT THE REVENUE CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT DISMISSED THE APPE AL FILED BY THE REVENUE. 5.2 REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAJASHTANI AND GUJARATI CHARITA BLE FOUNDATION POONA HOSPITAL AND RESEARCH CENTRE VIDE INCOME TAX APPEAL NO.1562 OF 2012 ORDER DATED 28-01-2013 (COPY FILED), HE DREW THE AT TENTION OF THE BENCH TO THE QUESTION FORMULATED BY THE REVENUE AND THE D ECISION OF THE HONBLE HIGH COURT WHICH READS AS UNDER : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME TAX APPELLATE TRIBUNAL IS JUSTIFIED IN HOLDING THAT THE DEPRECIATION IN RESPECT OF COST OF THE ASSETS ALLOWED TO THE ASSESSEE AS EXPENDITURE IS ALLOWABLE AS IT GIVES RISE TO DOUBLE DED UCTION THOUGH SUCH DEDUCTION IS NOT SPECIFICALLY PROVIDED IN THE INCOME TAX ACT, 1961? 2. COUNSEL FOR THE REVENUE FAIRLY STATES THAT THE ISSUE STANDS COVERED BY THE DECISION OF THIS COURT IN THE MATTER OF CIT VS. INSTITUTE OF BANKING REPORTED IN (2003) 264 ITR 110 (BOM.). WE NOTE THA T THE TRIBUNAL HAS FOLLOWED THE DECISION OF THIS COURT IN THE INSTITUTE O F BANKING (SUPRA). IN THE CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE PR ESENT APPEAL. ACCORDINGLY, THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 8 5.3 HE SUBMITTED THAT IN VIEW OF THESE DECISIONS, I T IS CLEAR THAT THE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE ABOVE DECISION OF THE JURISDICTIONAL HIGH COURT HAS NOT BEEN CHALLENGED BY THE REVENUE. THEREFORE, IT IS BINDIN G ON THE DEPARTMENT. HE SUBMITTED THAT EVEN THOUGH THESE DECISIONS WERE BROUGHT TO THE NOTICE OF THE LD.CIT, HE, INSTEAD OF DROPPING THE 263 PROC EEDINGS, SET-ASIDE THE MATTER TO THE FILE OF THE AO WHICH WAS NOT PROPER. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT BEING BAD IN LA W, PATENTLY ILLEGAL AND VOID AB-INITIO AND BEING WITHOUT JURISDICTION SHOUL D BE VACATED/QUASHED. 5.4 REFERRING TO GROUND OF APPEAL NO.2 HE SUBMITTED THAT THE ASSESSEE SHOULD BE AWARDED COSTS U/S.254(2B) OF THE I.T. ACT FOR THE ARBITRARY, PERVERSE AND MALICIOUS EXERCISE OF JUDICIAL POWERS BY THE LD. CIT IN SHEER DISREGARD TO THE DECISION OF THE JURISDICTION AL HIGH COURT. HE SUBMITTED THAT THE ACTION OF THE CIT IN NOT DECIDI NG THE ISSUE IN FAVOUR OF THE ASSESSEE HAS CAUSED IRREPARABLE LOSS TO THE ASSESSEE BOTH FINANCIALLY AND MENTALLY. RELYING ON THE FOLLOWING DECISIONS, WHERE COST HAS BEEN LEVIED BY THE TRIBUNAL/HONBLE HIGH COURT/ HONBLE SUPREME COURT, HE REQUESTED THAT COST SHOULD BE AWARDED TO THE ASSESSEE U/S.254(2B) OF THE I.T. ACT, 1961 : 1. SHRI SHANTARAM R. PATIL VS. ITO VIDE ITA NOS.308 A ND 309/PN/2003 ORDER DATED 30-06-2004 FOR A.YRS. 195-96 AND 1996-97. 2. SHRAMJIVI NAGARI SAHAKARI PAT SANSTHA VS. ADDL.CIT VIDE ITA NO.477/PN/2010 ORDER DATED 08-06-2011 FOR A.Y. 2006 -07. 3. CIT VS. SRIRANG DEVELOPERS & PROMOTERS PVT. LTD. VI DE ITA NO.2603/2011 ORDER DATED 28-04-2014 (BOMBAY HIGH CO URT). 4. UNION OF INDIA AND ANOTHER VS. RAJA MOHAMMED AMIR MOHAMMAD KHAN REPORTED IN 2005-(SC4)-GJX-0815-SC. 5. URBAN IMPROVEMENT TRUST, BIKANER VS. MOHANLAL REPO RTED IN 2009-(SC2)-GJX-1653-SC. 9 6. CIT VS.M/S. LARSEN AND TOUBRO LTD. VIDE ITA NOS. 424 , 425 AND 483 /2012 ORDER DATED 10-07-2014. 7. ITO VS. M/S. GROWEL ENERGY CO. LTD. VIDE ITA NO.33 8/MUM/2011 ORDER DATED 13-06-2014. 8. CHARANJILAL TAK SHYAM PARWANI & PARTY VS. UNION O F INDIA AND OTHERS REPORTED IN 252 ITR 333 5.5 REFERRING TO THE ABOVE DECISIONS HE SUBMITTED T HAT VARIOUS COURTS HAVE AWARDED COST TO THE ASSESSEE DUE TO UNDUE HARA SSMENT CAUSED TO THE ASSESSEE BY THE ACTION OF THE DEPARTMENT. HE SUBMI TTED THAT IN VIEW OF THE ABOVE DECISIONS, APPROPRIATE COST SHOULD BE LEV IED ON THE DEPARTMENT WHICH WILL ACT AS DETERRENT FOR ANY MALICIOUS, ARBI TRARY AND PERVERSE EXERCISE OF POWERS BY THE REVENUE AUTHORITIES. 5.6 THE LD. COUNSEL FOR THE ASSESSEE HOWEVER FAIRLY CITED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIRE CTOR OF INCOME TAX (EXEMPTIONS) VS. CHARANJIV CHARITABLE TRUST WHEREIN THE HONBLE HIGH COURT HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ESCORTS LTD. VS. UNION OF INDIA. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONGLY RELIED ON THE ORDER OF THE CIT. REFERRING TO THE C OPY OF THE ASSESSMENT ORDER SHE SUBMITTED THAT THE AO HAS NOT AT ALL MADE ANY ENQUIRY NOR THE ASSESSEE SUBMITTED ANY EXPLANATION REGARDING THE CL AIM OF DEPRECIATION OF THE ASSETS, THE COST OF WHICH HAS ALREADY BEEN C LAIMED AS DEDUCTION U/S.11 OF THE I.T. ACT BY TREATING THE SAME AS APPL IED FOR CHARITABLE PURPOSES. NO ENQUIRY WHATSOEVER WAS MADE BY THE AO . THERE WAS COMPLETE NON APPLICATION OF MIND BY THE AO. THEREF ORE, THE LD.CIT WAS 10 FULLY JUSTIFIED IN RESTORING THE ISSUE TO THE FILE OF THE AO FOR RE- EXAMINATION OF THE ISSUE OF CLAIM OF DEPRECIATION O F FIXED ASSETS. 6.1 SO FAR AS THE DECISIONS OF THE HONBLE BOMBAY H IGH COURT RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE CONCERNE D SHE SUBMITTED THAT THE HONBLE HIGH COURT IN THE CASE OF CHARANJIV CHA RITABLE TRUST (SUPRA) FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) HAS HELD THAT ALLOWING DEPRECI ATION IN RESPECT OF ASSETS, THE COST OF WHICH WAS EARLIER ALLOWED AS DE DUCTION AS APPLICATION OF INCOME OF THE TRUST WOULD ACTUALLY AMOUNT TO DOU BLE DEDUCTION. SHE SUBMITTED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE HONBLE BOMBAY HIGH COURT. THEREFORE, THE LD.CIT WAS FULLY JUSTIFIED IN NOT ACCEPTING THE DECISION OF THE HONBLE BOMBAY HIGH C OURT. SHE SUBMITTED THAT ALTHOUGH THE LD.CIT HAS NOT MENTIONE D IN CLEAR TERMS REGARDING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA), HOWEVER, THE DECISION OF THE HONBLE SUPREME COURT BEING BINDING THE ISSUE HAS TO BE DECIDED AGA INST THE ASSESSEE. 6.2 REFERRING TO THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS. CIT REPORTE D IN (2012) 24 TAXMANN.COM 9 (KERALA) SHE SUBMITTED THAT THE HONB LE HIGH COURT IN THE SAID DECISION HAS HELD THAT WHERE THE ASSESSEE TREATS EXPENDITURE ON ACQUISITION OF ASSETS AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES U/S.11(1)(A) OF THE I.T. ACT, THE ASSESSEE CANNOT C LAIM DEPRECIATION ON VALUE OF SUCH ASSETS. SHE ALSO RELIED ON THE DECIS ION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS . VISHWA JAGRITI MISSION VIDE ITA NO.140/2012 ORDER DATED 29-03-2012 . 11 6.3 SO FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR T HE ASSESSEE THAT THE CLAIM OF DEPRECIATION BY THE AO WAS NOT ERRONEOUS I N VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT AND THERE FORE THE PROCEEDINGS U/S.263 SHOULD BE DROPPED, THE LD. DEPARTMENTAL REP RESENTATIVE REFERRING TO VARIOUS DECISIONS SUBMITTED THAT ANY D EDUCTION OR ALLOWANCE BY THE AO WITHOUT EXAMINING THE CORRECTNESS THEREOF LEADS TO ERROR IN THE ASSESSMENT ORDER. UNDER THESE CIRCUMSTANCES, THE C IT WAS FULLY JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 TO SET AS IDE SUCH ERRONEOUS ORDER WITH A DIRECTION TO THE AO TO EXAMINE THE ALL OWABILITY OF SUCH EXPENSES CLAIMED. FOR THIS PROPOSITION, SHE RELIED ON THE FOLLOWING DECISIONS : 1. SMT. SEEMA HEMANT SHIRALI VS. ITO REPORTED IN (20 12) 141 TTJ 351 (PUNE) 2. RANKA JEWELLERS VS. ADDL.CIT REPORTED IN 36 SOT 11 (PUNE) 3. AMBIKA AGRO SUPPLIERS VS. ITO REPORTED IN 95 ITD 3 26 (PUNE) 4. NAGNATH HANUMANTRAO JALKOTE VS. ACIT REPORTED IN 110 ITR 549 (PUNE) 5. NINESTAR ENTERPRISES (P) LTD. VS. ACIT REPORTED IN ( 2013) 30 TAXMANN.COM 57 (HYD.) 6. GEE VEE ENTERPRISES VS. ADDL.CIT REPORTED IN 99 IT R 375 (DELHI) 7. HINDUSTAN TIN WORKS VS. JCIT REPORTED IN 92 ITD 101 (DELHI) 6.4 SO FAR AS LEVY OF COST ON THE DEPARTMENT IS CON CERNED, SHE SUBMITTED THAT THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE SHOULD BE REJECTED OUTRIGHT. SHE SUBMITTED THAT THE LD.CIT W HILE EXERCISING HIS QUASI JUDICIAL AUTHORITY HAS ONLY SET ASIDE THE ISS UE TO THE FILE OF THE AO AND THE ASSESSEE HAS BEEN GIVEN AN OPPORTUNITY. WH ILE DOING SO, HE HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SARAOGI VS. CIT REPORTED IN 67 ITR 84 (SC) WHERE IT IS 12 HELD THAT NO PREJUDICE IS CAUSED TO THE ASSESSEE IF THE ORDER IS SET ASIDE SINCE THE ASSESSEE IS GETTING AN OPPORTUNITY OF BEI NG HEARD. 7. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F UNION OF INDIA AND OTHERS VS. KAUMUDINI NARAYANAN DALAL AND ANOTHER RE PORTED IN 249 ITR 219 DREW THE ATTENTION OF THE BENCH TO THE FOLLOWIN G OBSERVATIONS OF THE HONBLE SUPREME COURT : IF THE REVENUE DID NOT ACCEPT THE CORRECTNESS OF THE JUDGMENT IN THE CASE OF PRADIP RAMANLAL SHETH (1993) 204 ITR 866 (GUJ.), IT SHOULD HAVE PREFERRED AN APPEAL THEREAGAINST AND INSTRUCTED COUNSE L AS TO WHAT THE FATE OF THAT APPEAL WAS OR WHY NO APPEAL WAS FILED. IT IS NOT OPEN TO THE REVENUE TO ACCEPT THAT JUDGMENT IN THE CASE OF THE A SSESSEE IN THAT CASE AND CHALLENGE ITS CORRECTNESS IN THE CASE OF OTHER ASSESSEE S WITHOUT JUST CAUSE. FOR THIS REASON, WE DECLINE TO CONSIDER THE CO RRECTNESS OF THE DECISION OF THE HIGH COURT IN THIS MATTER AND DISMISS TH E CIVIL APPEAL. NO ORDER AS TO COSTS. 7.1 REFERRING TO THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF NATIONAL TEXTILE CORPORATION L TD. VS. CIT REPORTED IN 216 CTR (MP) 153 HE SUBMITTED THAT THE HONBLE H IGH COURT IN THE SAID DECISION HAS HELD THAT THE DECISION OF THE JUR ISDICTIONAL HIGH COURT IS OF BINDING NATURE AND ALL COURTS/TRIBUNALS FUNCTION ING IN A STATE ARE BOUND BY THE LAW LAID DOWN BY THE STATE HIGH COURT. IT IS NOT PERMISSIBLE FOR THE TRIBUNAL TO COMMENT UPON THE MA NNER IN WHICH A PARTICULAR DECISION WAS RENDERED BY THE SUPREME COU RT/HIGH COURT. IT IS ALSO NOT PERMISSIBLE FOR THE TRIBUNAL TO SIDE TRACK AND/OR IGNORE THE DECISION OF THE HONBLE HIGH COURT ON THE GROUND TH AT IT DID NOT TAKE INTO CONSIDERATION A PARTICULAR PROVISION OF LAW. THE T RIBUNAL BEING SUBORDINATE TO HIGH COURT HAS TO FOLLOW THE DECISIO N OF THE JURISDICTIONAL HIGH COURT WITHOUT MAKING ANY COMMENT UPON THE SAID DECISION. 13 HOWEVER, THE TRIBUNAL HAS FULL AUTHORITY/JURISDICTI ON TO DISTINGUISH THE DECISION CITED BY ANY PARTY BY POINTING OUT ITS DIS TINGUISHING FEATURES BOTH ON FACTS AND ON LAW INVOLVED IN THE SAID DECIS ION. IN SUCH CASES, THE REASONS AS TO WHY THE DECISION CITED BY ANY PARTY H AS NO APPLICATION AND THE DISTINGUISHING FEATURE HAVE TO BE SPECIFICALLY STATED IN THE ORDER. 7.2 REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. VISHWA JAGRITI MISSION VIDE ITA NO. 140/2012 ORDER DATED 29-03-2012 THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT IN THE SAID CASE THE LD.CIT(A) FOLLOWING THE DECISION OF T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUP RA) AND FRAMJEE AND CAWASJEE INSTITUTE (SUPRA) ALLOWED THE CLAIM OF DEP RECIATION ON ASSETS WHICH WERE CLAIMED AS EXEMPTION U/S.11 OF THE I.T. ACT. THE TRIBUNAL UPHELD THE ORDER OF THE CIT(A) AND ON FURTHER APPEA L BY THE REVENUE THE HONBLE HIGH COURT DISMISSED THE APPEAL FILED BY TH E REVENUE. WHILE DOING SO, THE HONBLE HIGH COURT HAS DISTINGUISHED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. ( SUPRA) AND HAS OBSERVED AS UNDER : 13. THE JUDGMENT OF THE SUPREME COURT IN ESCORTS LIM ITED VS. UNION OF INDIA (SUPRA) HAS BEEN RIGHTLY HELD TO BE INAPPLICABL E TO THE PRESENT CASE. THERE ARE TWO REASONS AS TO WHY THE JUDGMENT CANNOT BE APPLIED TO THE PRESENT CASE. FIRSTLY, THE SUPREME COURT WAS NOT CONCE RNED WITH THE CASE OF A CHARITABLE TRUST/INSTITUTION INVOLVING THE QUESTI ON AS TO WHETHER ITS INCOME SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLES IN ORDER TO DETERMINE THE AMOUNT OF INCOME AVAILABLE FOR APPLIC ATION TO CHARITABLE PURPOSES. IT WAS A CASE WHERE THE ASSESSEE WAS CARRYING O N BUSINESS AND THE STATUTORY COMPUTATION PROVISIONS OF CHAPTER IV-D O F THE ACT WERE APPLICABLE. IN THE PRESENT CASE, WE ARE NOT CONCERNED WITH THE APPLICABILITY OF THESE PROVISIONS. WE ARE CONCERNED ON LY WITH THE CONCEPT OF COMMERCIAL INCOME AS UNDERSTOOD FROM THE ACCOUNTIN G POINT OF VIEW. EVEN UNDER NORMAL COMMERCIAL ACCOUNTING PRINCIPLES, THERE IS AUTHORITY FOR THE PROPOSITION THAT DEPRECIATION IS A NECESSARY C HARGE IN COMPUTING THE NET INCOME. SECONDLY, THE SUPREME COURT WAS CONC ERNED WITH THE CASE WHERE THE ASSESSEE HAD CLAIMED DEDUCTION OF THE COST OF THE ASSET UNDER SECTION 35(1) OF THE ACT, WHICH ALLOWED DEDUC TION FOR CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH. THE QUE STION WAS WHETHER AFTER CLAIMING DEDUCTION IN RESPECT OF THE COST OF TH E ASSET UNDER SECTION 35(1), CAN THE ASSESSEE AGAIN CLAIM DEDUCTION ON ACCOUN T OF DEPRECIATION 14 IN RESPECT OF THE SAME ASSET. THE SUPREME COURT RULED T HAT, UNDER GENERAL PRINCIPLES OF TAXATION, DOUBLE DEDUCTION IN REGARD TO THE SAME BUSINESS OUTGOING IS NOT INTENDED UNLESS CLEARLY EXPRESSED. THE PRESENT CASE IS NOT ONE OF THIS TYPE, AS RIGHTLY DISTINGUISHED BY THE CIT(APPEALS). 14. HAVING REGARD TO THE CONSENSUS OF JUDICIAL OPINION ON THE PRECISE QUESTION THAT HAS ARISEN IN THE PRESENT APPEAL, WE ARE NOT INCLINED TO ADMIT THE APPEAL AND FRAME ANY SUBSTANTIAL QUESTION OF LAW. THERE DOES NOT APPEAR TO BE ANY CONTRARY VIEW PLAUSIBLE ON THE QUESTION RAISED BEFORE US AND AT ANY RATE NO JUDGMENT TAKING A CONTR ARY VIEW HAS BEEN BROUGHT TO OUR NOTICE. IN THE CIRCUMSTANCES, WE DECLI NE TO ADMIT THE PRESENT APPEAL AND DISMISS THE SAME WITH NO ORDER AS TO COSTS. 7.3 REFERRING TO THE REPORT NO.20/2013 (PERFORMANCE AUDIT) HE DREW THE ATTENTION OF THE BENCH TO THE OBSERVATIONS OF T HE CAG ACCORDING TO WHICH THE INCOME TAX DEPARTMENT HAS NOT TAKEN UNIFO RM STAND IN ALLOWANCE/DISALLOWANCE OF THE DEPRECIATION TO TRUST S AND ALLOWED IRREGULAR DEPRECIATION. HE SUBMITTED THAT THE CAG IN THE SAID REPORT HAS STATED THAT THE SUPREME COURT IN THE CASE OF ESCORT S LTD. (SUPRA) HAS HELD THAT WHERE FULL DEDUCTION HAS BEEN ALLOWED IN RELAT ION TO CAPITAL ASSET (UNDER SECTION RELATED TO EXEMPTIONS), NO DEPRECIAT ION HAS TO BE ALLOWED U/S.32 ON THE SAME ASSET. THERE IS A FUNDAMENTAL A XIOM THAT THE DOUBLE DEDUCTION IS NOT INTENDED UNLESS THERE IS A STATUTO RY INDICATION TO THE CONTRARY. THE HONBLE KERALA HIGH COURT IN THE CAS E OF CIT VS. MATHA AMRITHANANDA MAYI MATH ALSO SUPPORTED TO THE ABOVE VIEW. HOWEVER, THE INCOME TAX DEPARTMENT IS ALLOWING DEPRECIATION AND WHEN IT WAS POINTED OUT TO THE MINISTRY, THE MINISTRY STATED TH AT THE ISSUE RAISED BY THE AUDIT WILL BE EXAMINED. THE AUDIT IS OF THE VI EW THAT THE MINISTRY MAY TAKE A DECISION IN PRINCIPLE WHETHER DEPRECIATI ON IS TO BE ALLOWED OR NOT TO REMOVE INCONSISTENCIES IN ALLOWANCE DUE TO D IVERGENT VIEWS EXPRESSED BY DIFFERENT COURTS. HE SUBMITTED THAT S INCE THE ISSUE OF ALLOWING DEPRECIATION ON ASSETS WHICH WERE CLAIMED AS DEDUCTION ON ACCOUNT OF APPLICATION FOR CHARITABLE PURPOSES IS A DEBATABLE ISSUE, 15 THEREFORE, THE LD.CIT WAS NOT AT ALL JUSTIFIED IN I NVOKING THE PROVISIONS OF SECTION 263. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ONL Y ISSUE ON WHICH THE LD.CIT INVOKED JURISDICTION U/S.263 IS THAT THE AO WHILE FRAMING THE ASSESSMENT U/S.143(3)/147 HAS NOT EXAMINED THE CLAI M OF DEPRECIATION MADE BY THE ASSESSEE ON ASSETS, THE ENTIRE AMOUNT O F WHICH WAS CLAIMED AS DEDUCTION ON ACCOUNT OF APPLICATION FOR CHARITAB LE PURPOSES. 8.1 FROM THE COPY OF THE ASSESSMENT ORDER AS WELL A S THE SUBMISSION OF THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, WE FIND THE AO HAS NOT AT ALL EXAMINED THE ISSUE OF CLAIM OF DEPRECIATION ON ACCOUNT OF SUCH ASSETS THE COST OF WHICH HAS BEE N CLAIMED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSE. UNDE R SUCH CIRCUMSTANCES, THE CIT WAS JUSTIFIED IN ISSUING THE NOTICE U/S.263 TO THE ASSESSEE ASKING IT TO EXPLAIN AS TO WHY THE ORDER SHOULD NOT BE SET ASIDE UNDER THE PROVISIONS OF SECTION 263 OF THE I.T. ACT. HOWEVER , WHEN THE ASSESSEE CITED THE DECISION OF THE HONBLE HIGH COURT ON THE SAME ISSUE AND SINCE THE DEPARTMENT HAS NOT CHALLENGED THE ABOVE DECISIO N OF THE HONBLE BOMBAY HIGH COURT BEFORE THE HONBLE SUPREME COURT ( AS STATED BY THE LD. COUNSEL FOR THE ASSESSEE AND NOT CONTROVERTED B Y THE LD. DEPARTMENTAL REPRESENTATIVE), THE LD.CIT IN ALL FAI RNESS SHOULD HAVE DECIDED THE ISSUE THEN AND THERE AND SHOULD HAVE DR OPPED THE 263 PROCEEDINGS. 16 8.2 SO FAR AS THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF ESCORTS LTD. (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE HONBL E BOMBAY HIGH COURT, THE SAME IN OUR OPINION CANNOT BE A GROUND T O DENY THE BENEFIT TO THE ASSESSEE ESPECIALLY WHEN THE SAME HAS NOT BEEN CHALLENGED BY THE REVENUE BEFORE HONBLE SUPREME COURT. FURTHER, WHE N THE DECISION OF THE JURISDICTIONAL HIGH COURT IS IN FAVOUR OF THE A SSESSEE, THE DECISION OF A NON-JURISDICTIONAL HIGH COURT IS NOT BINDING ON T HE TRIBUNAL FUNCTIONING UNDER THE JURISDICTIONAL HIGH COURT. S INCE THE INCOME RELATING TO CLAIM OF DEPRECIATION ON ASSETS, THE EN TIRE AMOUNT OF WHICH WAS CLAIMED AS DEDUCTION ON ACCOUNT OF APPLICATION FOR CHARITABLE PURPOSES IS DECIDED IN FAVOUR OF THE ASSESSEE BY TH E TWO DECISIONS OF THE HONBLE BOMBAY HIGH COURT CITED (SUPRA), THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, IT HAS TO BE HELD TH AT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON ASSETS, THE ENTIRE AMOU NT OF WHICH WAS CLAIMED AS DEDUCTION ON ACCOUNT OF APPLICATION FOR CHARITABLE PURPOSES. IN VIEW OF THE ABOVE, THE ORDER PASSED U/S.263 PASS ED BY THE LD.CIT IS SET ASIDE AND THE FIRST GROUND RAISED BY THE ASSESS EE IS ALLOWED. 9. IN GROUND OF APPEAL NO.2 THE ASSESSEE HAS REQUES TED TO AWARD COST ON THE DEPARTMENT U/S.254(2B) OF THE I.T. ACT. 9.1 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. NO DOUBT, IN THE INSTANT CASE, THE ASSESSEE HAS REL IED ON TWO DECISION OF THE HONBLE BOMBAY HIGH COURT AND THE LD.CIT INSTEA D OF DECIDING THE ISSUE HIMSELF RESTORED THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO RE-EXAMINE THE ISSUE OF CLAIM OF DEPRECIATION ON FI XED ASSETS CLAIMED BY 17 THE ASSESSEE TO THE EXTENT PERMISSIBLE UNDER THE AC T. WHILE DOING SO, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SAROGI (SUPRA) WHERE IT HAS BEEN HELD THAT SINCE THE ASSESSEE IS GETTING AN OPPORTUNITY OF BEING HEARD, NO PREJUDICE IS CAUSED TO THE ASSESSEE IF THE ORDER IS SET-ASIDE. NOW THE ASSESSEE HAS COME UP BEFORE US FOR AWARDING COST U/S.254(2B) OF THE I.T. ACT. WE FIND IDENTICAL GROUND WAS TAKEN BY THE ASSESSEE VIDE ITA NO.861 AND 1423/PN/2012. WE FIND THE TRIBUNAL VIDE ORDER DATE D 31-07-2014 (WHERE BOTH OF US ARE PARTIES) HAS REJECTED THE CLA IM OF AWARD OF COST BY OBSERVING AS UNDER : 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES. IN OUR OPINION THE LD.CIT HAS PASSED AN ORDER U/S.12AA (3) OF THE ACT DURING THE COURSE OF DISCHARGE OF HER DUTY AS CIT. WH ILE DISCHARGING HER DUTY, HER ACTION MIGHT HAVE CAUSED SOME HARDSHIP TO THE ASSESSEE DUE TO ERROR OF JUDGEMENT BUT THAT IN OUR OPINION DOES N OT WARRANT LEVY OF COST ON THE DEPARTMENT. THE HONBLE SUPREME COURT I N THE CASE OF POORAN MAL VS. DIRECTOR OF INSPECTION (INVESTIGATION), INCOME TAX, NEW DELHI AND OTHERS REPORTED IN 93 ITR 505, WHILE ADJU DICATING RELIEF CLAIMED IN RESPECT OF ACTION TAKEN U/S.132 OF THE I.T . ACT HAS OBSERVED AS UNDER (AT PAGE 518 AND 519) : WE ARE, THEREFORE, TO SEE WHAT ARE THE INBUILT SAFE GUARDS IN SECTION 132 OF THE INCOME TAX ACT. IN THE FIRST PLACE, IT MUST BE NOTED THAT THE POWER TO ORDER SEARCH AND SEIZURE IS VESTED IN THE HIGHEST OFFICE RS OF THE DEPARTMENT. SECONDLY, THE EXERCISE OF THIS POWER CAN ONLY FOLLOW A REASONABLE BELIEF ENTERTAINED BY SUCH OFFICER THAT AN Y OF THE THREE CONDITIONS MENTIONED IN SECTION 132(1) (A), (B) AND ( C) EXISTS. IN THIS CONNECTION IT MAY BE FURTHER POINTED OUT THAT UNDER SUB RULE (2) OF RULE 112, THE DIRECTOR OF INSPECTION OR THE COMMISSIONER, A S THE CASE MAY BE, HAS TO RECORD HIS REASONS BEFORE THE AUTHORISATION IS ISSUE D TO THE OFFICERS MENTIONED IN SUB SECTION (1). THIRDLY, THE AUTHORISATI ON FOR THE SEARCH CANNOT BE IN FAVOUR OF ANY OFFICER BELOW THE RANK O F AN INCOME TAX OFFICER. FOURTHLY, THE AUTHORISATION IS FOR SPECIFIC PURPOSES ENU MERATED IN (I) TO (V) IN SUB SECTION (1), ALL OF WHICH ARE STRICTLY LIMI TED TO THE OBJECT OF THE SEARCH. FIFTHLY, WHEN MONEY, BULLION, ETC., IS SEIZED THE INCOME TAX OFFICER IS TO MAKE A SUMMARY ENQUIRY WITH A VIEW TO DETERMINE HOW MUCH OF WHAT IS SEIZED WILL BE RETAINED BY HIM TO COVER THE E STIMATED TAX LIABILITY AND HOW MUCH WILL HAVE TO BE RETURNED FORTHWITH. TH E OBJECT OF THE ENQUIRY UNDER SUB SECTION (5) IS TO REDUCE THE INCONVE NIENCE TO THE ASSESSEE AS MUCH AS POSSIBLE SO THAT WITHIN A REASONABLE TIME WHAT IS ESTIMATED DUE TO THE GOVERNMENT MAY BE RETAINED AND WHAT SHOULD BE RETURNED TO THE ASSESSEE MAY BE IMMEDIATELY RETURNED TO HIM. EVEN WITH REGARD TO THE BOOKS OF ACCOUNT AND DOCUMENTS SEIZED, T HEIR RETURN IS GUARANTEED AFTER A REASONABLE TIME. IN THE MEANTIME THE PERSON FROM WHOSE CUSTODY THEY ARE SEIZED IS PERMITTED TO MAKE COPI ES AND TAKE EXTRACTS. SIXTHLY, WHERE MONEY, BULLION, ETC., IS SEIZ ED, IT CAN ALSO BE IMMEDIATELY RETURNED TO THE PERSON CONCERNED AFTER H E MAKES 18 APPROPRIATE PROVISION FOR THE PAYMENT OF THE ESTIMATE D TAX DUES UNDER SUB SECTION (5), AND, LASTLY, AND THIS IS MOST IMPORTANT, THE PROVISIONS OF THE CRIMINAL PROCEDURE CODE RELATING TO SEARCH AND SE IZURE APPLY, AS FAR AS THEY MAY BE, TO ALL SEARCHES AND SEIZURES UNDER SECTIO N 132. RULE 112 PROVIDES FOR THE ACTUAL SEARCH AND SEIZURE BEING MADE AFTER OBSERVING NORMAL DECENCIES OF BEHAVIOUR. THE PERSON IN CHARGE O F THE PREMISES SEARCHED IS IMMEDIATELY GIVEN A COPY OF THE LIST OF AR TICLES SEIZED. ONE COPY IS FORWARDED TO THE AUTHORISING OFFICER. PROVISIO N FOR THE SAFE CUSTODY OF THE ARTICLES AFTER SEIZURE IS ALSO MADE IN RU LE 112. IN OUR OPINION, THE SAFEGUARDS ARE ADEQUATE TO RENDER THE P ROVISIONS OF SEARCH AND SEIZURE AS LESS ONEROUS AND RESTRICTIVE AS IS POSSIBLE UN DER THE CIRCUMSTANCES. THE PROVISIONS, THEREFORE, RELATING TO SE ARCH AND SEIZURE IN SECTION 132 AND RULE 112 CANNOT BE REGARDED AS VIO LATIVE OF ARTICLES 19(1)(F) AND (G). A MINOR POINT WAS URGED IN SUPPORT OF THE ABOVE CONT ENTION THAT SECTION 132 CONTAINS PROVISIONS WHICH ARE LIKELY TO AFFECT EVE N INNOCENT PERSONS. FOR EXAMPLE, IT WAS SUBMITTED, AN INNOCENT PERSON WHO IS MERELY IN CUSTODY OF CASH, BULLION OR OTHER VALUABLES, ETC., NOT KNOWING THAT IT WAS CONCEALED INCOME IS LIKELY TO BE HARASSED BY A RAID F OR THE PURPOSES OF SEARCH AND SEIZURE. THAT CANNOT BE HELPED. SINCE THE OBJECT OF THE SEARCH IS TO GET AT CONCEALED INCOMES, ANY PERSON, WHO IS IN C USTODY WITHOUT ENQUIRING ABOUT ITS TRUE NATURE, EXPOSES HIMSELF TO SEAR CH. SUB SECTION (4) OF SECTION 132 SHOWS THE WAY HOW SUCH AN INNOCENT PERSO N CAN MAKE THE IMPACT OF THE SEARCH ON HIM BEARABLE. ALL THAT HE HA S TO DO IS TO TELL THE TRUE FACTS TO THE SEARCHING OFFICER EXPLAINING ON WHO SE BEHALF HE HELD THE CUSTODY OF THE VALUABLES. IT WILL BE THEN FOR THE INC OME TAX OFFICER TO ASCERTAIN THE PERSON CONCERNED UNDER SUB SECTION (5). 13.1 IN THAT CASE, IT WAS OBSERVED THAT IT CAUSES SERIOU S INVASION OF THE PRIVACY OF A PERSON. STILL THE HONBLE COURT HELD T HAT EVEN THOUGH THE INNOCENT IS LIKELY TO BE HARASSED BY A RAID FOR THE PU RPOSE OF SEARCH AND SEIZURE THAT CANNOT BE HELPED. IN THE INSTANT CASE, T HERE IS NO SUCH ACTION OF SEARCH AND SEIZURE WHICH CAUSES SERIOUS INVASION IN THE PRIVACY OF THE PERSON. THE COMMISSIONER WAS DISCHARGING HER QUASI-JUDI CIAL DUTY. FURTHER, THERE IS NOTHING ON RECORD TO SUGGEST THAT T HE ACTION OF THE CIT WAS MALAFIDE. THEREFORE, WE DO NOT FIND ANY MERIT I N THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE TO AWARD COST FOR THE AC TION OF THE COMMISSIONER CANCELLING THE REGISTRATION GRANTED EARLI ER U/S.12AA OF THE ACT. 13.2 THE TWO SUPREME COURT DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO TH E FACTS OF THE CASE. THOSE CASES WERE RELATED TO PROPERTY DISPUTE FOR WHICH COST WAS AWARDED FOR DERELICTION OF DUTY BY GOVT. OFFICERS IN THEIR ADMINISTRATIVE CAPACITY. HOWEVER, IN THE INSTANT CASE THE OFFICER W AS DISCHARGING HER DUTY IN A QUASI-JUDICIAL MATTER. SO FAR AS THE DECI SION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHARANJILAL TAK SHYAM PARWANI & PARTY (SUPRA) IS CONCERNED, THERE ALSO FACTS WERE DIFF ERENT. IN THAT CASE, THE RESPONDENT ITO ISSUED ILLEGAL NOTICE TO THE PETIT IONER AND LATER WITHDREW THE SAME. UNDER THESE CIRCUMSTANCES, THE COUR T DIRECTED THE RESPONDENT TO PAY FOR THE ADVOCATE FEE AND LITIGATIO N EXPENSES INCURRED BY THE PETITIONER IN PROSECUTING WRIT PROCEEDINGS. H OWEVER, IN THE INSTANT CASE, THERE IS NO PRIMA-FACIE ILLEGALITY IN ISSU ING THE NOTICE. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE TO AWARD COST. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 19 9.2 THE VARIOUS DECISIONS RELIED ON BY THE LD. COUN SEL FOR THE ASSESSEE RELATE TO LEVY OF COST BY THE COURTS AGAINST ADMINI STRATIVE ORDERS AND NOT AGAINST JUDICIAL/QUASI JUDICIAL ORDERS. IN THIS VI EW OF THE MATTER AND FOLLOWING OUR ORDER IN ASSESSEES OWN CASE (CITED S UPRA) THE GROUND OF APPEAL NO.2 BY THE ASSESSEE IS DISMISSED. 10. GROUND OF APPEAL NO.3 BY THE ASSESSEE BEING GEN ERAL IN NATURE IS DISMISSED. ITA NO.799/PN/2013 (A.Y. 2005-06) : ITA NO.800/PN/2013 (A.Y. 2008-09) : 11. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE ASSESSEE IN THE ABOVE TWO APPEALS ARE IDENTICAL TO GROUNDS OF APPEAL IN ITA NO.798/PN/2013. WE HAVE ALREADY DECIDED THE IS SUES AND THE GROUND OF APPEAL NO.1 BY THE ASSESSEE HAS BEEN ALLO WED WHEREAS GROUNDS OF APPEAL NO.2 & 3 BY THE ASSESSEE HAVE BEEN DISMIS SED. FOLLOWING THE SAME RATIO, THE GROUND OF APPEAL NO.1 IN BOTH THE A PPEALS ARE ALLOWED AND GROUNDS OF APPEAL NO. 2 & 3 IN THE ABOVE TWO AP PEALS ARE DISMISSED. 12. IN THE RESULT, ALL THE 3 APPEALS FILED BY THE A SSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20-08-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 20 TH AUGUST, 2014 SATISH 20 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT-II, KOLHAPUR 4. THE D.R, A PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE