Tribunal directs CIT(A) to admit appeal, imposes cost on assessee for filing both appeal and revision simultaneously.

The Tribunal set aside the CIT(A)'s decision, directing the CIT(A) to admit the appeal and decide on the merits of the issues. The Tribunal imposed a cost of Rs. 40,000 on the assessee for filing both an appeal and a revision application simultaneously. The appeal was partly allowed for statistical purposes, with the assessee instructed to cooperate during the appellate proceedings and provide required documentation.

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Issues Involved:
1. Validity of the assessment order under section 143(3).
2. The merger of the assessment order with the order of the CIT under section 264.
3. Competency of the CIT(A) to adjudicate the appeal after the order under section 264.
4. Applicability of section 264(4)(a) and its interpretation by the CIT(A).
5. Taxation in respect of the transfer of capital assets.
6. Specific disallowances and additions made by the AO.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order under Section 143(3):
The assessee challenged the assessment order dated 31st December 2007 under section 143(3) of the Income Tax Act, which included certain additions and disallowances to the total income. The appeal was filed before the CIT(A) on 29th January 2008.

2. Merger of the Assessment Order with the Order of the CIT under Section 264:
The CIT(A) dismissed the appeal on the grounds that the assessment order had merged with the order of the CIT under section 264, dated 30th March 2010. The CIT(A) held that he could not adjudicate the appeal as the order had already been revised by the CIT under section 264.

3. Competency of the CIT(A) to Adjudicate the Appeal After the Order under Section 264:
The CIT(A) reasoned that the appeal was incompetent because the assessment order could not be adjudicated after it had merged with the order under section 264. The CIT(A) stated that the only course of action available was to agitate grounds that were not subject to the section 264 proceedings.

4. Applicability of Section 264(4)(a) and Its Interpretation by the CIT(A):
The assessee argued that section 264(4)(a) prohibits the CIT from revising an order if an appeal lies to the CIT(A) and the right of appeal has not been waived. The CIT(A) misapplied this provision by stating that it prohibited him from adjudicating the appeal. The Tribunal found that the CIT under section 264 had no power to pass the order once the appeal had been preferred before the CIT(A), as per section 264(4)(c).

5. Taxation in Respect of the Transfer of Capital Assets:
The appellant contended that it should not have been taxed for the transfer of capital assets, including land and depreciable assets, to OCM India Limited, as the transfer was part of a Scheme of Arrangement approved by the High Courts. This issue was not adjudicated by the CIT(A) due to the dismissal of the appeal on procedural grounds.

6. Specific Disallowances and Additions Made by the AO:
The CIT(A) did not decide on the merits of the following disallowances and additions made by the AO:
- Rs. 60,66,537/- under section 43B for payments made out of pre-existing liabilities.
- Rs. 14,36,449/- under section 40A(2)(a) out of interest.
- Rs. 12,14,759/- out of Repairs to Plant & Machinery, considered as capital expenditure.
- Rs. 3,00,000/- on a lump sum basis out of various business expenses.
- Rs. 8,80,800/- out of Long Term Capital Loss on the sale of land at Joka, Kolkata.

Tribunal's Findings:
The Tribunal held that the order passed by the CIT under section 264 was invalid as it was against the provisions of the law, given that the appeal was already pending before the CIT(A). The Tribunal cited the judgment of the Hon’ble Allahabad High Court in the case of Yogendra Parsad Santosh Kumar, which supported the view that the CIT under section 264 cannot revise an order if an appeal is pending before the CIT(A).

Conclusion:
The Tribunal set aside the CIT(A)'s finding and directed the CIT(A) to admit the appeal and decide the issues on merit. The Tribunal imposed a cost of Rs. 40,000 on the assessee for its negligent approach of simultaneously filing an appeal and a revision application. The appeal was partly allowed for statistical purposes, with the assessee directed to cooperate during the appellate proceedings and provide necessary supporting documents.

Order Pronounced:
The order was pronounced in Open Court on 18/03/2020.

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