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TMI Blog2010 (8) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and Investments Ltd - The appellant on facts could not establish the said expenditure as business expenditure - this ground is allowed for statistical purposes Condonation of delay - 5 days was to be reckoned with reference to notice dated 6-7-1998 and not with reference to reply dated 29-9-1998 - He, accordingly, dismissed the assessee’s appeal - In the result, appeal filed by the assessee is partly allowed for statistical purposes X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. This matter has not been looked into by the ld. Assessing Officer. We would accordingly hold that the assessee would be entitled to deduction of the expenses added under section 69C provided such expenses were otherwise allowable. The matter is accordingly restored to the file of the Assessing Officer. The assessee should be given good and sufficient opportunity to substantiate its claim that the cash payments were made for purchase of land which were subsequently sold. Assessee's claim shall be considered in the light of other provisions of the Act including the provisions contained in section 40A(3) which prohibits/limits deduction for payments made in cash. This matter accordingly stands restored to the file of the Assessing Officer subject to our remarks above." 3. The Assessing Officer had also noted that at page 7 of Annexure 7 that there was a letter dated 9-7-1994 from Charishma Shelters Pvt. Ltd., regarding interest-free loan of Rs. 50 lakhs given by the assessee to the said company. He noted that the assessee had paid interest at the rate of 18 per cent on the loans received by him. Therefore, by applying rate of interest at the rate of 18 per cent he disallowed Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der :-- "1.On the facts of the case and in law, the ld. ACIT 23(3) Mumbai has erred in passing the order on 18-5-2007 i.e., beyond the period of limitation provided under section153 of the Act. 2. On the facts of the case and in law, the ld. ACIT, 23(3) Mumbai has erred in not allowing the deduction under section 37(1) of Rs. 32,92,196 from the income of the block period as directed by the ITAT in spite of the facts : (a) that the relief was already granted by the ITAT and that it was only for a very limited purpose of verification of certain facts that the matter was restored to the file of the Assessing Officer. (b) that the ITAT as the last fact-finding authority delegated a limited assignment to him for the purpose of granting, and not denying the appellant the relevant relief. 3. On the facts of the case and in law, the ld. ACIT 23(3) Mumbai has erred in not allowing the deduction of Rs. 3,85,000 under the principle of telescoping from the income of the block period as directed by the ITAT. 4. On the facts of the case and in law, the ld. ACIT 23(3) Mumbai has erred in levying interest under section158BFA(1) at Rs. 6,62,923." 5. The first and second grounds of appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue, we have to examine the Tribunal's observations and the context in which they were rendered in order to arrive at a proper conclusion as to whether the same amounts to setting aside the assessment order and passing a fresh assessment or in effect the Tribunal had given the findings/directions and had restored the matter to the file of the Assessing Officer to examine certain details in order to give effect to its findings/directions. In order to properly appreciate the controversy, we reproduce here-in-below the relevant provisions of section 153(2A) and 153(3)(ii), which read as under :-- Section 153(2A) : "(2A) Notwithstanding anything contained in sub-sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment under section 146 or in pursuance of an order under section 250, section 254, section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed by the Assessing Officer or the order under section 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led, the entire demand also consequently get cancelled but when only on certain issues, the matter is restored back to the file of the Assessing Officer with certain directions then the entire demand is not cancelled. In the first case, the department has to take action within the limitation but when only the effect is to be given to the directions of the appellate authority then the same limitation could not be prescribed because order per se does not get obliterated. This aspect is further clear from the phrases used 'subject to the provisions of sub-section (2A) of section 153'. Thus, when assessment contemplated under section 153(3)(ii) results in fresh assessment then the limitation as laid down under section153(2A) would apply. This would cover the cases where the assessment has been set aside or cancelled entirely in order to give effect to the findings and consequent directions of the appellate authority. In this context, we may also refer to the Explanation (2) and Explanation (3) to section 153, which read as under : "Explanation 2.--Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of the assessee for an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings. In this regard, we may also refer to the decision of Vishakhapatnam Bench of the Tribunal in the case of Raghava Health Care Ltd. v. Dy. CIT [2008] 307 ITR (AT) 133, wherein also, the Tribunal has, inter alia, taken the view that the fresh assessment under section 153(2A) would mean a situation where the earlier assessment as a whole is set aside or cancelled. When several additions have been made by the Assessing Officer and the appellate authority sets aside one or some of the issues to the file of the Assessing Officer, that situation would not give rise to a "fresh assessment" and in that case section 153(3)(ii) of the Act would apply. In view of above discussion, we, respectfully do not agree with the view taken by the Agra Bench of the Tribunal in the case of Pooran Singh v ACIT (supra). As far as the decision in the case of W.C. Shaw (P) Ltd. (supra) is concerned, the same has been rendered in entirely different context. There, the main issue was that since no time limit has been prescribed in Chapter XIV-B for making fresh block assessment in pursuance of order under section 250, 254, 263 or 264, the limitation contemplated in section 153 would apply or not. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to expenditure for the purchase of land. And since the appellant was a dealer in lands, the entire expenditure paid to whosoever he or she might have been, once the name had appeared in the seized document was, as though, an allowable expenditure. As though, by being a businessman engaged in the dealings of lands, the appellant had been precluded from spending for any personal reasons. As though, in his hands, no capital expenditure could have been made. As though, he could not have advanced the said amounts as loans or advances. As though, he could not have made illegal and disallowable payments. The appellant had made the claim of business expenditure. Hence, the onus was on him to establish the same." 14. Ld. Counsel referred to Memorandum Possession Receipt contained at page 57 onwards and pointed out that the person from whom, the assessee had purchased lands from land owners mentioned in this memorandum and thereafter the land was sold to Godrej Properties and Investments Ltd. He submitted that the vouchers found in the course of search pertained to payments made to those parties. He submitted that on the vouchers, the relevant details are available regarding survey No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly, 1998 as notice under section 158BC of the Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that provisions of section 292B of the Income-tax Act were applicable to the present case? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in not allowing deduction under section 37 of Rs. 3,85,196 just because the vouchers of the said expenditure were undated and despite the incontrovertible fact that the said expenditure related to the transactions undertaking and concluded earlier?" In para 51, the Hon'ble High Court has observed as under :-- "51. So far as the last submission made by Mr Sathe in respect of disallowance of deduction of Rs. 36,77,196 is concerned, disallowance is based on the findings of fact based on the material evidence available on reord which was appreciated by the authorities below. The additions were confirmed by the CIT(A) as well as by the Tribunal. The concurrent findings of fact are recorded by both the authorities below. The appellant on facts could not establish the said expenditure as business expenditure. Since this question revol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to file the return within 15 days which period could be extended only upto 45 days. It was pointed out that since 71 days have already been completed, the assessee is required to pay interest as well as penalty for non filing of the return. The assessee, in its reply dated 28-9-1998, pointed out that he had not received notice dated 6-7-1998 but on receipt of letter dated 17-9-1998, filed the block return within 45 days from this letter. It was pointed out that the assessee was required to obtain copies of records seized during the course of action under section 132. However, interest under section 158BFA amounting to Rs. 6,62,923 was imposed as per order dated 18-5-2007. The CIT(A) noticed that the Assessing Officer in his assessment order dated 30-6-2000 had stated that notice under section 158BC on 6-7-1998 was served upon the assessee on 21-7-1998 and the return was filed on 2-11-1998 declaring total undisclosed income at Rs. 1,01,33,700. The CIT(A) also noticed that after ITAT held the validity of the original notice under section158BC dated 6-7-1998, the issue had been agitated before the Hon'ble High Court and the Court in their order reported in 203 CTR 623, held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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