Tribunal dismisses department's appeal, upholds decision in favor of assessee due to quashed order.

The Tribunal dismissed the department's appeal as infructuous due to the quashing of the order under section 263 for share application money. This decision rendered the basis for the addition made by the Assessing Officer no longer valid, leading to the Tribunal upholding the decision in favor of the assessee.

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Issues involved: Appeal by department against order of ld. CIT (A) relating to assessment year 1997-98.

Issue 1: Infructuous nature of department's appeal

The ld. Counsel of the assessee contended that the appeal of the department is infructuous as proceedings u/s 263 were initiated and ld. CIT directed the Assessing Officer to reconsider deposits and share application money. The Tribunal partly confirmed the initiation proceedings u/s 263, holding that ld. CIT was justified in setting aside the order regarding various deposits. However, concerning share application money, the Tribunal found no reason for initiating proceedings u/s 263. The Assessing Officer made additions for both deposits and share application money separately. The appeal against deposits is pending, but regarding share application money, ld. CIT decided in favor of the assessee. The Tribunal quashed the order u/s 263 for share application money, making the department's appeal infructuous.

Issue 2: Quashing of order under section 263

After reviewing the orders of the Assessing Officer and ld. CIT (A), and considering submissions from both sides, the Tribunal found the department's appeal to be infructuous. The Tribunal held that once the order u/s 263 was quashed for share application money, the Assessing Officer's reassessment action cannot be upheld. Ld. CIT (A) was justified in favoring the assessee even on merit. Since the order u/s 263 was quashed for share application money, the Tribunal dismissed the department's appeal as infructuous.

In conclusion, the Tribunal dismissed the department's appeal as infructuous due to the quashing of the order u/s 263 for share application money, which rendered the basis for the addition made by the Assessing Officer no longer valid.

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