TaxTMI 
TaxTMI 
2014 (8) TMI 235
X X X X Extracts X X X X
X X X X Extracts X X X X
....eals relating to the same assessee on different grounds were heard together and are being disposed of by the consolidated order for the sake of convenience. 3. The cross appeals filed by the assessee and the revenue relating to assessment years 1981 -82 to 1983 -84 are on identical issue. However, we proceed to take up the facts in assessment year 1981 -82 to adjudicate the issue raised by the assessee. 4. The assessee during the course of hearing had filed revised grounds of appeal which are as under : 1. That on the facts and in the circumstances of the case the Learned C1T(A) Panchkula has erred in rejecting the appeal of the assessee that the order of the learned AO is barred by limitation as no order under Section 154 can be passed after the expiry of four years from the end of the assessment year in which the order has been passed. The said order was passed on 25.08.1988. 2. That on the facts and in the circumstances of the case the learned CIT(A) Panchkula has erred in law and facts in cancelling the order dated 31.03.2010 against the appeal of the assessee that the learned AO has erred in adding Rs. 27,45,447/-without provid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 11.2.1987 was passed and income was enhanced by Rs. 65,64,213/ -and the total income was assessed at Rs. 1,66,11,830/ -. The enhancement was made on account of the interest of Rs. 65,64,213/ -credited to the suspense account. Later on, the order u/s 263 dated 11.03.87 was rectified on 12.03.1987 and income was determined at Rs. 1,50,04,210/ -. The relief allowed to the assessee under this rectification order was a further deduction u/s 36(1)(viii) as per the provisions of the law i.e. 40% of the net income. Further, with reference to the order dated 12.03.1987, order u/s 154 dated 25.8.1988 was passed on application of the assessee. The assessee was allowed deduction of Rs. 27,45,447/ -on account of interest credited to suspense account, which was stated by the assessee to be the interest income taxed in earlier years on accrual basis. As per order dated 25.08.1988, the income was determined at Rs. 1,22,58,760/ -. On an appeal by the appellant, the Tribunal vide ITA No. 238/Chandi/87 dated 12.08.1993 while upholding the Commissioner of Income Tax 's order u/s 263 cancelled the assessment framed vide order dated 12.03.1987 and restored the issue to the file of the AO for fre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the facts and circumstances of the case and there being a mistake apparent from the record, rectified the order u/s 154 and added back Rs. 27,45,447/- to the income of the appellant. 11. Before the Commissioner of Income Tax (Appeals), the assessee challenged the validity of the order passed under section 154 of the Act stating that it was barred by limitation since no order under section 154 could be passed after the expiry of four years from the end of the assessment year in which order had been passed. As per assessee, the order under section 154 of the Act was passed with reference to order passed on 25.08.1988 and hence, the same being passed on 31.03.2010 was barred by limitation. 12. The Commissioner of Income Tax (Appeals) vide para 6.1 rejected the claim of the assessee observing as under : "6.1 I have carefully considered the submission made by the appellant and have gone through the details on record. It is seen that the order u/s 154 dated 31.03.2010 has been passed in reference to order u/s 250(6) dated 28.03.2006 passed in consequence to ITAT's order No. 711/Chdndi/2000 dated 24.11.2004. Hence, the order passed under section 154 dated 31.3.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 250(6) is with reference to order dated 16.07.99 which does not have any reference to order u/s 154 dated 25.08.88, the same is found to be incorrect, A perusal of the -order u/s 143(3) dated 16.07.99 clearly show that the income determined vide order dated 25.08,88 u/s 154 has been taken as the assessed income. The ground of appeal No. 4 is dismissed." 14. Another ground of appeal raised by the assessee before the Commissioner of Income Tax (Appeals) was against charging of interest under section 234D of the Act which were not adjudicated by the Commissioner of Income Tax (Appeals) in view of the fact that the order under section 154 of the Act had been cancelled. 15. The last issue raised by the assessee before the Commissioner of Income Tax (Appeals) was against the consequential deduction allowable under section 36(1)(vii) of the Act. The Commissioner of Income Tax (Appeals) vide para 8.2 held as under : 8.2 However, it is seen from the details filed that the Assessing Officer while passing order dated 28.03.2006 giving effect to ITATs order dated 24.11.2004 omitted to withdraw deduction u/s 36(1)(viii) on Rs. 65,65,213/-which was reduced from t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the record. As pointed out in the paras hereinabove, there were proceedings against the assessee with the start of assessment framed under section 144 which was reopened under section 146 and thereafter the assessment was completed under section 143(3) of the Act at total income of Rs. 1,00,47,620/- vide order dated 13.01.1986. Thereafter, various orders were passed against the assessee under section 154 of the Act and also order was passed under section 263 of the Act. In respect of various orders passed, the assessee appealed against the said order before Commissioner of Income Tax (Appeals) and also before the Tribunal. Consequent orders to the directions of the Commissioner of Income Tax under section 263 and the Tribunal were also passed. In order to adjudicate the issue, it is necessary to make a reference to the various orders passed day-to -day against the assessee. The tabulated details of the orders passed against the assessee on different dates and the break -up of the income computed in the hands of the assessee vide different orders passed giving effect to the order of Commissioner of Income Tax under section 263 or the Tribunal are annexed as Annexure -A to this orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation orders passed under section 154 of the Act, the following picture emerges : i) Original income assessed under section 143(3) Rs. 140,66,660/- ii) Add : Addition on account of Interest in suspense account Rs. 65,64,213/- iii) Total income Rs.206,30,873/- iv) Deduct : relief allowed on account of interest taxed earlier but not deducted out of suspense account (-) Rs. 27,45,447/- v) Deduct : Deduction u/s 36(1)(viii) (-) Rs. 56,26,644/- vi) Balance income Rs.122,58,762/- vii) Deduct : Interest in Suspense account (-) Rs. 65,64,213/- viii) Add : Interest as per directions of ITAT (+) Rs. 201,047/- ix) Balance income Rs. 58,95,596/- x) Add back the relief allowed to the assessee on account of interest income (taxed twice) Rs. 27,45,447/- xi) Balance income after Deduction under section 36(1)(vii) Rs. 86,41,047/- xii) Taxable income Rs. 86,41,047/- 26. The perusal of the seriatum orders passed against the assessee reflect that after making addition on account of interest in suspense account of Rs. 65,64,213/-, relief was allowed to the assessee on account of interest taxed earlier but not deducted out of su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich was offered for tax by the appellant on receipt basis had in fact already been taxed on accrual basis in the earlier years. Therefore, in the interest of justice, it is felt that the appellant's claim in this regard needs to be examined afresh and necessary relief if admissible needs to be given. The AO is therefore directed to examine the claim of the appellant that the returned income included an income of Rs. 27,45,447/-which had already been taxed on accrual basis and take necessary action accordingly. The appellant is directed to make available all the details to the Assessing Officer with reference to his claim. As regards the order u/s 154 against which the appellant is in appeal, the same is also cancelled in view of the directions given above. 29. The CIT (Appeals) was of the view that the claim of the assessee that returned income included sum of Rs. 27,45,447/- had already been taxed on accrual basis and the Assessing Officer was directed to examine the claim of the assessee. In view thereof, the order passed under section 154 of the Act, against which the assessee was in appeal was also cancelled. 30. We have noted in the paras hereinabove that vide order....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the plea raised by the assessee that the CIT (Appeals) had not adjudicated the said issue. However, in view of our upholding the order passed under section 154 of the Act dated 31.3.2010, we proceed to decide the charging of interest under section 234D of the Act. 34. We find merit in the plea of the assessee that the said interest is chargeable w.e.f. assessment year 2004 -05 as the said provisions had been inserted w.e.f. 1.6.2003 and the said provisions are not applicable retrospectively. In view thereof, we allow the claim of the assessee with regard charging of interest under section 234D of the Act. However, charging of interest under section 234A of the Act is consequential in nature. ITA No.411 & 412/Chd/2011 :: Revenue 's Appeal Assessment Years : 1982 -83 & 1983 -84 35. The issues raised in ITA Nos.411 & 412/Chd/2011 are identical to the issues raised by the Revenue in ITA No.353/Chd/2011 and our decision in ITA No.353/Chd/2011 shall apply mutatis mutandis to the issues raised in ITA Nos.411 & 412/Chd/2011. ITA No.416 & 417/Chd/2011 :: Assessee 's Appeal Assessment Years : 1982 -83 & 1983 -84 36. The issues raised in ITA Nos.416 & 417/Chd/2011 are similar ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case the learned C1T(A) Panchkula has erred in law and facts in dismissing the ground of appeal regarding the learned A O has failed to remove the preliminary objections raised by the assessee. 40. The issue raised in the present appeal is against the invoking of jurisdiction under section 147 of the Income Tax Act. 41. The brief facts of the case are that the original assessment in the case was completed vide order passed under section 143(3) of the Act dated 10.10.2005. Thereafter, reasons were recorded under section 147 of the Act for issue of notice under section 148 of the Act. The reasons recorded are reproduced at page 2 & 3 of the assessment order. In response to the said notice under section 148 of the Act, the assessee furnished return of income declaring net loss of Rs. 2.13 Cr. However, in the original return of income, the assessee had declared loss at Rs. 3.32 Cr. The assessee vide letter dated 27.05.2009 sought the reasons to believe for re-assessment and also sought certain information. The Assessing Officer vide letter dated 22.07.2010 supplied the copy of reasons for the issue of notice under section 148 of the Act, to the assessee. On the date of hearing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the provisions of section 149(1)(b) of the Act after obtaining the approval of Commissioner of Income Tax, Panchkula and only thereafter, notice under section 148 of the Act was issued. Further, the Assessing Officer observed that the said notice under section 148 of the Act was issued during the time allowed under the provisions of section 149(1)(b) of the Income Tax Act, as per which, notice under section 148 of the Act could be issued within six years from the end of the assessment year if the income escaped is likely to amount to Rs. 1,00,000/- or more. In view of the abovesaid, the Assessing Officer observed that the re -assessment proceedings had been validly initiated. Further addition of sum of Rs. 3,89,000/- on account of forfeiture of shares was made holding the same to be revenue receipt. 42. The Commissioner of Income Tax (Appeals) dismissed the ground of appeal raised by the assessee as he approved the reasoning given by the Assessing Officer and also as per the Commissioner of Income Tax (Appeals), the issue of time limitation had become academic since the matter was already decided on merits by holding the said forfeiture of shares to be capital receipt. 43. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal No. 1 raised by the assessee that no reasons were recorded under section 147 of the Act or the same has not been supplied to the assessee by passing a speaking order. 47. Further, there is no merit in another plea of the assessee that the said re -opening was bad in law as notice under section 148 had been issued after the expiry of four years from the end of the assessment year. Under the provisions of section 149(1)(b) of the Income Tax Act, notice could be issued within six years from the end of the assessment year wherein the income escaped is likely to exceed an amount of Rs. 1,00,000/- or more. In the facts of present case, the escapement of income was Rs. 389,000/- and hence the proceedings for re -assessment were validly initiated within the prescribed period. 48. The next issue raised by the assessee is that the said recording of reasons for re-assessment amounted to change of opinion. However, the Assessing Officer has given a finding that the assessee had declared the amount on account of forfeiture of shares under the head 'liability' in the balance sheet and the Assessing Officer in the original assessment proceedings had not considered the same. In view ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... !49 of the Act are to be read together. In the instant case, the CIT(A) without appreciating the provisions of proviso to section 147 held that notice u/s 148 issued by the Assessing Officer was barred by time. In the instant case, the case of the Revenue falls under the exception mentioned in the proviso to section 147 namely there was failure on the part of the assessee to disclose fully and truly all material facts which were necessary for his assessment, for that assessment year. In the reasons recorded for reopening of the assessment, the Assessing Officer categorically stated that "I have reasons to believe that Rs. 2,25,87,000/-has escaped assessment on account of assessee's failure to disclose fully the material facts of his income as it was clubbed under the head 'liabilities' in the balance sheet. The case, therefore, be reopened within the meaning of section 147 of the Income Tax Act, 1961". The CIT(A) has not given any findings to this effect that there was no failure on the part of the assessee to make a return u/s 139 or in response to a notice under sub section to section |42 or section 148 or to disclose fully and truly all material facts necessary for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issue and held as under: 11. We have heard the rival contentions and perused the record. The assessee in the first round of appeal before the Tribunal was aggrieved by the order of the authorities below in upholding the addition regarding the amount contributed to pension fund maintained for the employees. The said contribution to pension fund was not allowed as deduction in the hands of the assessee as the pension fund was not recognized. The Tribunal in ITA Nos.56 & 369/Chd/2006 relating to assessment year 2002 -03 and 2003 -04 vide order dated 30.9.2008 vide paras 4 and 5 observed that the contribution made by the assessee to its PF scheme was allowable expenditure. However, as the pension scheme had been scrapped and the amount had been paid over to P.F. scheme,, the implication thereof was required to be viewed and as the said aspect has not been considered by either of the authorities below, the matter was remitted back to the Assessing Officer to examine the claim of the assessee afresh and to pass an order in accordance with law. 12. The claim of the assessee before the Assessing Officer in the second round of proceedings was that....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (B) 1. VARIOUS PAYMENTS MADE TO PENSIONERS DURING THE YEAR ENDED ON 31.3.2002 AS PER ANNEXURES-V, VI & VII ATTACHED. 22,89,137,00 2. BANK BALANCE 3,000.00 3. BALANCE OUTSTANDING ,75,24,186.51 4. ICICI BONDS OF Rs. 1.15 CRORES 1,15,00,000.00 TOTAL 4,13,16,323.51 13. Similarly in assessment year 2003-04 the pension fund balance Sheet was filed on record and the status as on 31.3.2003 was as under: A) (RS.) I OPENING BALANCE- CA-02100011938 ADMN HFC EMPLOYEES PENSION FUND 3,000.00 II OPENING BALANCE 2,75,24,186.51 III PENSION CONTRIBUTION (ANNEX-I) 32,07,989.00 IV ICICI BONDS OF RS 1.15 CRORE 1,15,00,000.00 V RECOVERY - COMMUTED PENSION (ANNEX-II) 5,07,841.00 VI INTEREST RECEIVED ON ICICI BONDS OF RS 1.15 CRORES (ANNEX-III) 10,58,402.00 VII INTEREST CHARGED ON PENSION FUND FOR THE YEAR ENDED ON 31.03.2003 (ANNEX-IV) ....