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TMI Blog2022 (4) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of assessment. Thus the reasons recorded for reopening of assessments is bad in law. Appeal of assessee allowed. - I.T.A. Nos. 2114 & 2115/KOL/2019 (Assessment Years: 2007-2008 & 2008-2009) - - - Dated:- 22-3-2022 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Girish Agrawal, Accountant Member Sri Soumitra Choudhury, Advocate, appeared on behalf of the assessee Shri Divakar Chakraborty, Addl. CIT, appeared on behalf of the Revenue ORDER Per Rajpal Yadav, Vice-President (KZ):- The present two appeals are directed at the instance of the assessee against the separate orders of ld. Commissioner of Income Tax (Appeals)20, Kolkata dated 18.06.2019 passed in A.Ys. 2007-08 and 2008-09. The assessee has taken 16 grounds of appeal in each year. But the ld. counsel for the assessee at the very outset submitted that the first issue involved in both the years relates to a jurisdictional issue, wherein the assessee has contended that reopening of the assessment in both the years is bad in the eyes of law. 2. With the assistance of ld. representatives, we have gone through the record carefully. It emerges that the facts on all vital points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts, he took us through the reasons recorded in A.Y. 2005-06, the copy of such reasons have been placed on page no. 30 of the paper book. 4. We have gone through these reasons and found that these are similar to the reasons recorded for these two years. Ld. Counsel for the assessee thereafter took us through the order of the Tribunal in A.Ys. 2005-06 and 2006-07 and pointed out that the reasons for those years have been reproduced in paragraph no. 6 of the impugned order. Ld. Counsel for the assessee in this way demonstrated the parity on facts in both these years. On the other hand, ld. D.R. relied upon the orders of revenue authorities. 5. On due consideration of the above facts, we find that long back there was some civil dispute of the assessee on account of that it had received an arbitration award, who directed payment of interest also. The dispute arose with regard to year of taxability of the interest income. Ld. Assessing Officer has taxed that amount in the year of receipt, whereas first appellate authority has held that it is to be taxed on accrual basis, because the assessee was following mercantile system of accounting. Taking a clue from the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no tax mechanism or provision can ever allow an income to escape assessment and that since the present case falls outside the period from which the amendment to section 145A was effective, the same was to be dealt with on merits. According to the A.O. the assessee s claim to receive principal and interest had accrued only when the favourable Court verdict was delivered on 17.04.2008 and the assessee could not have accounted for receipt of interest prior to the Court verdict because the right to receive interest came into being only with passing of the Court order. The A.O. further stated that interest was not an item of compensation for the period 28.11.1998 to 31.03.2008, i.e., for the period of delay in payment from the date when the original Award was awarded nor was it in consideration for the work done by the assessee. Payment of interest was provided by the Court on account of delay in payment of compensation by HSCL. Therefore, he was of the view that the interest income got crystallized in the hands of the assessee only during the year under appeal, hence, that amount also was taxable in the year under appeal. According to the A.O., the facts of the present case ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT has issued Circular No. 05/2010 dated 3rd June, 2010, wherein Para 46 it has in Para 46.4 clarified: This amendment has been made applicable with effect from 1st April, 2010, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. Following the above referred to judgements as well as the amendment of Sec. 145A and the CBDT s Circular, it is amply clear that the interest on delayed payment of Arbitration Award amount cannot be assessed to income-tax in one lump-sum in the year under appeal in which the same was received, rather it is to be assessed in the respective years in which the same had accrued. Hence, the A.O. is directed to delete the addition of ₹ 10,58,25,030/- made by him. Grounds No.2, 3 and 4 are, thus, allowed. 6.2. We do not find any directions in this order of the ld. CIT(A). Only the issue of year of taxability of interest income was decided. 6.3. The issue is whether the reopening of assessments for both the assessment years is legally valid on the facts and circumstances of the case, based on the deletion of an addition of ₹10,58,25,030/- by the ld. CIT(A) in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of B was an incidental finding only and it was not a finding necessary for the disposal of the case pertaining to A. Here, we have noticed the language of Clause (a) of Subsection (1) of Section 251, which empowers the AAC to set aside the assessment and refer the case back to the ITO for making a fresh assessment in accordance with the direction given by the AAC. This power must be limited to the assessment year in question. In view of the categorical ratio of the Supreme Court in the aforesaid decision, in our opinion, the Tribunal having already held that the AAC had no jurisdiction to direct the ITO to bring the amount to tax in the correct assessment year, the Tribunal was in error in declining to delete the direction, because the ITO, according to the Tribunal, had the same power under Section 153(3) of the Act. Whether the AAC has the power under that section is another matter but if the authority holds that the AAC had no jurisdiction to come to a finding that the income could be taxed in a particular year, then whether that amount could be brought to tax by resort to some other provisions, irrespective of the finding of the AAC is, in our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3 of the assessee's appeal. 6.6. In the case of Sri Biswajit Chatterjee (supra) the Kolkata C Bench of the Tribunal held as follows: 11. Now the Revenue has agitated before us that Ld. CIT(A) erred in not giving direction to reopen the case of earlier years of the assessee in which investments were made. In this regard, we find that Ld. CIT(A) has been given power u/s. 251 of the Act to confirm the order of AO reduce, enhance or annul assessment order under the provision of Act there is no power available to Ld. CIT(A) to give direction to AO for reopening the case of other years. The Income Tax Act provides different schemes wherein the AO is empowered to assess or re-assess the income which has escaped assessment. So at the most, if the Revenue wishes to tax the escapement of income then it has followed the scheme provided under the Act. The relevant provisions for taxing the escape income are given u/s 147/263 of the Act. In holding so, we find support and guidance from the judgment of Hon'ble Supreme Court in the case of ITO vs. Murlidhar Bhaghubabu reported in 52 ITR 335 (SC). The relevant extract of the judgment is reproduced below:- Sec ..... 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