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TMI Blog1997 (8) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 1,39,033 by the proceedings dt. 28th Feb., 1991. The assessee then took up the matter in appeal before the CIT(A). The appellate authority found that there was a rectification order passed by the Tribunal later on 15th Feb., 1991 in MP No. 31/Coch/90 and that the AO had not given effect to that order. It was noted that on the basis of the working given by the assessee's representative, the total addition towards unexplained investment in the hospital building for the asst. yrs. 1983-84 to 1986-87 would be Rs. 5,97,936 in addition to the investment in medical equipment and that the assessee would get substantial reduction in the quantum added for the four asst. yrs. 1983-84 to 1986-87. The CIT(A) accordingly directed the AO to modify the assessment for the asst. yr. 1986-87 after giving effect to the order of the Tribunal in MP No. 31/Coch/90 dt. 15th Feb., 1991. The AO issued revised proceedings on 7th Feb., 1992 in accordance with the direction of the CIT(A) and restricted the addition towards unexplained investment to Rs. 1,14,552. This was again reduced substantially in another order passed by the AO on 29th Nov., 1995 to give effect to a later order passed by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1988 in respect of the asst. yr. 1983-84. Page 33 of the paper book contains a copy of the order dt. 20th Sept., 1988 in respect of the asst. yr. 1983-84. The learned representative submitted that though in the original assessment order for the asst. yr. 1983-84 the AO intended to spread the unexplained investment in the building over a period of four years (1983-84 to 1986-87), in the subsequent proceedings dt. 20th Sept., 1988 the AO decided that the unexplained investment was to be distributed over three years only (1983-84 to 1985-86). Shri Rajagopal submitted that the assessment order for the asst. yr. 1986-87 was passed on 17th March, 1989 after the AO made the decision in the order for the asst. yr. 1983-84 that the spread over of the unexplained investment was to be effected over a period of three years only and that was why there was no addition made in the assessment order for 1986-87 towards unexplained investment. It was stated that the decision taken by the AO regarding the spread over of the unexplained investment in the proceedings dt. 20th Sept., 1988 for the asst. yr. 1983-84 was in accordance with the finding of the Tribunal (order in ITA Nos. 975 to 977/Coch/87 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Tribunal in respect of the asst. yrs. 1983-84 to 1985-86 as clarified by the subsequent order in MP No. 1/Coch/89 dt. 8th May, 1989 gave no room for doubt that the Tribunal had upheld the finding of the AO (and the CIT(A)) that there was unexplained investment in the building and that the investment should be spread over a period of fours years including the asst. yr. 1986-87. The learned Departmental Representative stated that in the assessment order for 1983-84 the AO had considered the investment of Rs. 53,86,020 as shown by the assessee as not adequate and then he proceeded to determine the investment at Rs. 76,42,000 and arrived at the unexplained investment at Rs. 22,56,000. From para 21 of the assessment order dt. 23rd Dec., 1986, the learned Departmental Representative pointed out that the decision of the AO was to assess the unexplained investment of Rs. 22,56,000 in four assessment years from 1983-84 to 1986-87 and that the addition for the asst. yr. 1986-87 would be Rs. 5,18,200. Shri Kuruvilla submitted that in the assessment order for the asst. yr. 1986-87 passed subsequently it was true that no addition was made towards the investment in the building. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction. He submitted that the CIT(A) gave the direction to the AO to revise the order in accordance with the later decision of the Tribunal giving further reduction in the quantum of unexplained investment and that in compliance the AO had subsequently passed the order on 29th Nov., 1995, to reduce the addition to Rs. 93,209. Shri Kuruvilla submitted that in the light of the latest order of the AO allowing substantial reduction in the addition on account of unexplained investment the assessee is not entitled to further relief on this account. 5. We have considered the rival submissions and verified the facts of the case. The assessee filed the return of income for the asst. yr. 1986-87 declaring a total income of Rs. 20,69,750, which included Rs. 8,86,000 as income under the head "other sources". The narration given by the assessee against the income of Rs. 8,86,000 is "unexplained investment offered for assessment".The nature of the investment was not made clear. In the assessment order passed on 17th March, 1989, the total income was determined at Rs. 24,55,780, which included addition of Rs. 11,67,000. It can be seen from the assessment order that the sum of Rs. 8,86,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asst. yr. Unexplained investment . Rs. 1983-84 1,65,188 1984-85 5,18,170 1985-86 10,54,441 1986-87 5,18,201 Total 22,56,000 When the assessment order for 1983-84 was passed on 23rd Dec., 1986 the assessee had not filed the return of income for the asst. yr. 1986-87. The return was filed only later on 7th Oct., 1987. The AO scrutinised the return and made the assessment under s. 143(3) on 17th March, 1989. The case of the Department is that as could be seen from the assessment order for the asst. yr. 1983-84 the AO wanted to make addition towards unexplained investment for various years including the asst. yr. 1986-87, but then, by mistake, no addition was made in the assessment order for asst. yr. 1986-87. The learned Departmental Representative relied on the decisions reported in (1986)162 ITR 114 (Pat) and (1967) 64 ITR 501 (Cal) to contend that for the purpose of s. 154 "record" did not mean the record of the relevant assessment year alone and that it comprised of all the proceedings on which the assessment order was based. In the case of Maharana Mills (P) Ltd. vs. ITO (1959) 36 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spital building, though there was separate addition of Rs. 11,67,000 on account of cash, promissory notes, bank deposits, etc., seized during the search operation. It can be seen from the assessment order that the reason why no addition was made towards the unexplained investment in the hospital building was that in giving effect to the order of the Tribunal earlier there was the finding that the unexplained investment was to be distributed over three assessment years only. It appears that the decision to make the distribution over three assessment years was on a wrong understanding of the order of the Tribunal. The Tribunal then passed the order in the miscellaneous petition filed by the Department clarifying the position as under, vide para 10 of the order in MP No. 1/Coch/1989, dt. 8th May, 1989: "10. This objection is based on a wrong assumption that the Tribunal gave a finding that construction was completed by 1984-85 accounting year (assessable in 1985-86). The finding of the CIT regarding the work done in the front block is contained in para 8 of his order. He says "in the year 1985-86, the 5th, 6th and 7th floors and the installation of the elevator would be taken as ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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