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TMI Blog2014 (8) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 providing any evidence and for the addition of Rs. 27,45,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 fresh determination of income keeping in view, the orders of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 31.3.2010 is well within the four years of the date of passing of the order dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 the income of the appellant. The appellant was accordingly given any opportunity dated 27.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 order. 20. In order to adjudicate the issue, it is necessary to refer to some of the orders passed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse 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 suspense account of Rs. 27,45,447/-. Further deduction under section 36(1)(vii) of the Act of Rs. 56,26,644/- was allowed to the assessee. After passing of the order of the Tribunal, the Assessing Officer while giving effect to the order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary 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 passed under section 154 of the Act dated 31.3.2010 the income of the assessee has correctly been rectified and determined and in view thereof, we find no merit in the order of the CIT (Appeals) in canceling the order passed under section 154 of the Act. The gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 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 to the issue raised by the Revenue in ITA No.388/Chd/2011 and our decision in ITA No.388/Chd/2011 shall apply mutatis mutandis to the issues raised in ITA Nos.416 & 417/Chd/2011. 37. In assessment years 1982 -83 and 1983 -84 the assessee has raised an additional ground of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 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 next fixed, the counsel for the assessee insisted that the information as asked for vide letter dated 27.05.2009 be supplied to him. Vide the said communication, the assessee was aggrieved by the issue of notice under section 148 of the Act which, as per the assessee was beyond the period of limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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. The ld. AR for the assessee furnished the order of the Tribunal relating to assessment year 2002 -03 and pointed out that the issue was decided against the assessee. 44 The ld. DR for the revenue placed reliance on the orders of the authorities below. 45. We have heard the rival contentions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 thereof, it cannot be said that the re -assessment proceedings were a case of change of opinion and we find merit in the order of Assessing Officer in this regard and uphold the same. 48. The next plea raised by the assessee was that the order of the re-assessment was not correct as the Assessing Officer had fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 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 assessment for that assessment year. In absence of such findings, the CIT(A) was not justified in holding that the notice issued u/s 148 was barred by limitation. In view of the above, we allow this ground of appeal. 50. In view of our holding that the Assessing Officer had validly initiated re -assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the said amount was first not contributed to a recognized pension scheme and was also not contributed to the P.F. scheme. However, the assessee during the year under consideration had made actual payments of pension to some of the employees who had retired during the period under consideration and the said amounts being paid to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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) TOTAL 4,63,04,330.51 B) I BANK BALANCE AS ON 31.03.2003 278971.00 + 3000.00 2,81,971.00 II VARIOUS PAYMENTS MADE TO PENSIONERS DURING THE YEAR ENDED ON 31.03.2003 6,33,188.00 III ICICI BONDS OF RS 1.15 CRORE 1,15,00,000.00 IV BALANCE OUTSTANDING LESS : CH.NO 315360 29168142.51 (-)278971.00 DATED 28.3.2003 2,88,89,171.51 ISSUED ON 1.4.2003 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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