2003 (8) TMI 466 - AT - Income Tax

Summary

Issues Involved:
1. Compliance of CIT(A)'s order with ITAT directions.
2. Justification of CIT(A)'s reduction of addition from Rs. 10,82,803 to Rs. 92,163.

Issue-wise Detailed Analysis:

1. Compliance of CIT(A)'s order with ITAT directions:

The primary issue was whether the CIT(A)'s order dated 29-8-1996 complied with the ITAT's directions from the order dated 20-2-1996. The ITAT had directed the CIT(A) to ensure that the addition of Rs. 7,43,779 was not made twice-once as the sale of paddy and again as the resultant profit from milling the paddy. The CIT(A) recalculated the profit from the husked paddy, associating the Assessing Officer in the process, and arrived at an additional income of Rs. 92,163 from the sale of paddy husked, computing the total income at Rs. 1,57,781. The CIT(A) allowed the benefit of Rs. 7,43,779 credited on account of the sale of paddy, ensuring it was not added separately again.

2. Justification of CIT(A)'s reduction of addition from Rs. 10,82,803 to Rs. 92,163:

The Assessing Officer initially added Rs. 7,43,779 under section 68/69A for bogus paddy sales and Rs. 3,39,024 for suppressed yield, totaling Rs. 10,82,803. The CIT(A) deleted the addition of Rs. 3,39,024 and sustained Rs. 7,43,779. The ITAT remanded the matter, directing the CIT(A) to ensure no double addition. The CIT(A) recalculated the profit from milling the paddy, resulting in an additional income of Rs. 92,163. The Revenue challenged this, but the Accountant Member upheld the CIT(A)'s order, finding no error in the approach and noting that the addition for suppressed yield and purchase of kinki already stood deleted by the Tribunal.

The Judicial Member disagreed, arguing that the CIT(A) exceeded jurisdiction by computing the total income and should have determined it at Rs. 9,01,559 (Rs. 7,43,779 plus Rs. 1,57,780). However, the Third Member found that the CIT(A) was within jurisdiction as per ITAT's directions to work out the total income, and no double addition of Rs. 7,43,779 was confirmed by the Tribunal under section 68/69A.

Conclusion:

The Third Member resolved the difference by agreeing with the Accountant Member, confirming that the CIT(A)'s order complied with ITAT's directions and the reduction of addition was justified. The matter was referred back to the regular Bench for final disposal.