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TMI Blog2006 (5) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in setting aside of a finding recorded by the Commissioner of Income-tax in section 263 proceedings by deleting a sum of Rs. 6,83,304 in relation to penalty imposed upon the assessee under the sales tax law ? 2. Whether benefit of deletion amounting to Rs. 6,83,304 granted to the assessee by the Tribunal can be said to be justified and is an allowable deduction and if so under what head ?" 2. The dispute pertains to the assessment year 1989-90. It is in relation to a deduction claimed by the assessee (respondent herein) amounting to Rs. 6,83,304 paid towards penalty under the sales tax law. In the assessment year in question, the question arose as to whether the assessee can be granted benefit of this sum (Rs. 6,83,304) for claiming deduction from computation of their gross income. According to the assessee, they were so entitled to claim its benefit because it formed part of a total sum of Rs. 55 lakhs which they had voluntarily surrendered to the Department for being taxed in their hands during the assessment year in question. In other words, the contention of the assessee before the Assessing Officer was that since in the year in question, the assessee has volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso prejudicial to the interests of the Revenue within the meaning of section 263 ibid, and hence, cannot be sustained. It was accordingly, set aside by giving consequential direction to make fresh assessment in the light of the observations made in the order by adding the said sum in the total gross amount of the assessee's income. 5. The assessee felt aggrieved filed appeal to the Tribunal. By order, dated September 24, 1998, the Tribunal dismissed the appeal in so far as it related to this issue. Rather, the Tribunal went into the issue more in detail and finding no merit in it, upheld the order of the Commissioner. This is what the Tribunal held in paragraph 9 of the order: "9. As to the revision of the assessment order on the issue of sales tax penalty, the letter dated April 19, 1990, of the assessee filed during the assessment proceedings makes it abundantly clear that the assessee had made false claim of deduction in the return, as the amount(s) of sales tax penalty had been claimed and allowed in earlier years. It was in this back-drop that the assessee had requested the Assessing Officer to increase the returned income by the amount of sales tax penalty of Rs. 6,83, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er pursuant to the order of Commissioner. It is against this order of the Tribunal, the Commissioner of Income-tax (Revenue) has felt aggrieved and filed this appeal. As stated supra, the appeal was admitted for final hearing on the aforementioned substantial questions of law. 8. Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant (Revenue) and Shri Vijay Asudani, learned counsel for the respondent (assessee). 9. Shri Jain, learned counsel for the appellant (Revenue) while assailing the legality and propriety of the impugned order, contended that the Tribunal was in error in deleting the addition made by the Assessing Officer pursuant to the order of the Commissioner passed in section 263 proceedings. It was his contention that the issue regarding addition/deletion of Rs. 6,83,304 had already attained finality when the order of the Commissioner, dated March 30, 1994, was upheld by the Tribunal by order dated September 24, 1998. He, therefore, urged that once the issue attained finality against the assessee then in such event, the Tribunal had no jurisdiction in the same proceedings arising out of consequential order of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem in the same year against any party, then it could not be allowed to be reagitated in collateral proceedings arising in the same year by any party. 13. In our considered opinion, the Tribunal was bound by the finding recorded by the Tribunal in its earlier order, dated September 24, 1998, quoted supra. It is not in dispute that the Commissioner had jurisdiction to invoke the powers conferred under section 263 ibid for recalling of the order passed by the Assessing Officer on the ground of its being erroneous and prejudicial to the interests of the Revenue. It is also not in dispute that the Commissioner did find that these two grounds did exist in the order of the Assessing Officer and accordingly, recalled the same. It is also not in dispute that the Tribunal too concurred with the finding of the Commissioner when it proceeded to dismiss the appeal filed by the assessee. It is also not in dispute that the assessee though had the opportunity to challenge the appellate order of the Tribunal in further appeal under section 260A ibid but for the reasons best known to them, they did not prefer to challenge and accepted the appellate order of the Tribunal. 14. In a situation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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