TaxTMI 
TaxTMI 
1986 (6) TMI 92
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....ted to examination of the draft assessment order vis-a-vis the objections raised by the assessee and he is to give such directions as he deems fit in respect of matters, which are objected to by the assessee. It is only by invoking of provisions of section 144A of the Act that the IAC could suo motu after giving an assessee an opportunity to issue such directions in respect of matters not considered under section 144B. In the present case, the IAC did not invoke section 144A and, therefore, his directions which are given under section 144B is clearly indicative that he has overstepped his jurisdiction and also enhanced the addition proposed to be made by the ITO which is invalid. 4. On this issue, the learned senior departmental representative Mr. Koolwal referred to the order of the Delhi High Court in the case of Sudhir Sarin v. ITO [1981] 128 ITR 445. Referring to this ruling, he submitted that it was held that under section 144B, the IAC has powers to enhance the assessment but he can do so only after giving an opportunity to the assessee. In the present case, the IAC has complied with this, as the assessee was given the opportunity after which only he had given such direction....
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....he objections of an assessee to the proposed assessment order, the IAC wants to enhance the assessment still further. He must give an additional opportunity of being heard to the assessee'. Their Lordships came to this conclusion after reading the provisions of section 144B(4). In the absence of any other contrary decision, this ruling would be the law of land as ruled by the Bombay High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589. We respectfully follow the said ruling of the Delhi High Court and dismiss this particular ground of the assessee for both the years. 6. In the departmental appeals, the common issue is in respect of the Commissioner (Appeals) view that all income received from investments whether they are from shares, securities, properties or otherwise would be relatable to the banking business and thereby the investment of the reserve funds/building funds, bad and doubtful debt funds, etc., are all in the nature of banking business and, thus, they are exempt under section 80P(2)(a)(i) of the Act. 7. On behalf of the department, the learned senior departmental representative Mr. Koolwal submitted that the IAC had disallowed this issue exten....
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....ajasthan State Co-operative Societies Act, there is no such similar provision. He referred to section 55(2) where it was provided that investments would have to be made in the modes prescribed under section 63 of the said Act. In that section also where is no provision which says that the sanction of the Registrar of the societies either prior to or after the assessment is necessary. It was further argued that the society is carrying on the business of banking and has been granted a licence for such business. The identical issue, he submitted, was considered in the case of Union Co-operative Bank which was heard by this Bench a few days back where it was expressed that the Bench has already taken a view on this matter in another assessee's case and held the activities to be relatable to the banking business. He referred to the Board's circular, which is on file for the proposition that the entire income earned by different sources from out of investments are all arising out of the banking business and, therefore, exempt under section 80P(2)(a)(i). Referring to this circular, Mr. Ghiya submitted that the identical objection was taken by the department in the case of UP Co-operative ....
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....n was arrived at after referring to the Banking Regulation Act, section 42 of the Reserve Bank of India Act, 1934, which subscribed for investments in a particular manner in proportion to the various liabilities. It was further observed that the Banking Regulation Act requires investments in various securities as defined in section 20 of the Indian Trusts Act, 1982 and the various Government securities are treated as approved securities and investment in them is a banking business as defined in section 6 of the Banking Regulation Act. In view of these various facts, we have come to the conclusion that the interest on various securities is relatable to the banking business and, therefore, would be exempt under section 80P(2)(a)(i). Since the situation of a case before us is identical, we follow the earlier decision in the case of Rajasthan State Co-operative Bank Ltd. and upheld the order of the Commissioner (Appeals) on this issue. This disposes of the common issue of the department, which is dismissed. 9. The other common issue in the assessee's appeal for the two years is in respect of income from commission, interest on advances to staff, miscellaneous income on sale of newspap....