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TMI Blog2005 (11) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... lments received by the appellant, for working out the total investment made in moneylending business. The AO is, therefore, directed to give allowance to the payment of instalments received while working out the total investment. For this purpose peak credit should be worked out, due allowance to be given for the past savings of the appellant, which has been estimated by the AO at Rs. 100,000. As mentioned in the preceding para that for the purpose of working out the interest income from moneylending average rate of 24 per cent should be applied and the business expenditure for earning such income should be deducted to work out the net income from interest. The AO should therefore, work out the interest income only after the total investment is worked out in the manner given above." 3. In respect of ground No.9 taken by the assessee, which relates to the estimation of income from pawning business, the CIT(A) held as under in para 6.1 of its order: "From the above it is observed that during the search operation the locker sealed was not opened and no evidence for pawning business was collected by the Department. Further it is stated that the business was being done by his nephew, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the financial year in which the order of the CIT(A) was received by the Chief CIT or CIT. In this case, the order of the CIT(A), dt. 1st June, 1989 would have been received within two months and thereby the assessments must nave been completed by 31st March, 1992. The provisions of s. 153(2A) were clearly applicable as the CIT(A) has restored the matter back to the file of the AO in respect of the two issues relating to the quantum of the undisclosed investment in moneylending business as well as to ascertain whether the pawning business belonged to the assessee. These issues arise out of ground Nos. 7, 8 and 9 taken by the assessee before the CIT(A) against the original assessment framed on 21st March, 1988. This case does not fall under s. 153(3). The order was not passed in consequence of any finding or direction. These orders were passed as these issues were got set aside and went back to the file of AO. The word "set aside" has been defined in Webster's Dictionary to mean, "To put to one side, discard, to set apart for a purpose, overrule." The CIT(A) has set apart the decision of the AO on these two points, i.e. for the computation of unexplained investment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f s. 153(2A) that when the assessment is fully set aside, the AO gets two years for the completion, but in case it is restored on some points, the unlimited time is given to the AO although there are executive instructions being issued from time to time that the appeal effect should be given within a fortnight. The filing of appeal before the Tribunal will not extend the limitation, for which reliance was place on the case of Smt. Maina Devi Nahata vs. ITO (1995) 52 ITD 668 (Cal). Where the limitation has been provided under the law, it cannot be extended by anyone and for this reliance has been placed on the decision of Jain Cloth House again. In respect of the judgments relied upon by the CIT(A), it was submitted that these judgments cited by the CIT(A) relate to the period when s. 153(2A) was not brought in the statute. These judgments are: (a) Khalsa Provisions vs. CIT (1981) 25 CTR (Del) 248 : (1982) 135 ITR 817 (Del) (b) CIT vs. Chitranjali (1986) 50 CTR (Cal) 226 : (1986) 159 ITR 801 (Cal) (c) R.K. Sawhney, Executor of the Estate of Late R.B. Nathuram vs. CIT (1987) 63 CTR (Del) 45 : (1987) 166 ITR 128 (Del) (d) Hope (India) Ltd. vs. CIT (1993) 203 ITR 118 (Cal) 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under s. 250 or s. 254 or s. 263 or s. 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under s. 250 or s. 254 is received by the Chief CIT or CIT or, as the case may be, the order under s. 263 or s. 264 is passed by the Chief CIT or CIT: Provided that where the order under s. 250 or s. 254 is received by the Chief CIT or CIT or, as the case may be, the order under s. 263 or s. 264 is passed by the Chief CIT or CIT, on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such an order of fresh assessment may be made at any time upto the 31st day of March, 2002." "(3) The provisions of sub-ss. (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the provisions of sub-s. (2A) be completed at any time-............. (ii) Where the assessment, reassessment or recomputation is made on the assessee or any person in consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given that the interest income should be worked out only after working out the total investment. These directions are not the ones which can be followed by the AO without calling the assessee and without appreciating the various evidences/documents which are required for working out instalments received by the assessee, peak credit, computation of total investment, working out the expenditure incurred for by the AO by applying its mind. This will also tantamount to restoring the issue to the file of the AO to be decided afresh after giving the hearing to the party and following the direction of the CIT(A). This also implies that the assessment relating to these issues stand set aside and to be decided afresh in accordance with the directions of the CIT(A). 13. The various case laws cited before us are being dealt with as under: a. CIT vs. Kamla Devi: In this case the assessments completed by the AO for the asst. yrs. 1971-72 and 1972-73 were set aside under s. 263 by the CIT vide order dt. 27th Dec., 1973. The fresh assessments were completed by AO on 26th March, 1977. On reference, Hon'ble High Court held that the Tribunal was justified in holding that the assessments were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. On a reference, it was held that the basic order setting aside the assessments for the years 1964-65 to 1974-75 was passed by the CIT(A) on 14th Sept., 1979. No effect thereto was given by the AO till expiry of four years from the end of the financial year in which the said order under s. 23 was passed by the CIT(A). There was no challenge before the Tribunal that the order of the CIT(A) setting aside the assessment order was wrong. The challenge of the assessee before the Tribunal was only limited to the mode of valuation of the asset to be done by the AO in compliance with the order of the CIT(A) setting aside the assessment. The period of limitation was to be computed from the date of the order of the CIT(A) and if that be so then the reassessment for the asst. yrs. 1964-65 to 1974-75 was barred by limitation. The case is applicable to the extent that the Revenue has not gone into appeal before the Tribunal against the finding of the CIT(A) relating to the ground Nos. 7, 8 and 9 and accordingly the limitation if applicable will apply from the date when the order of the CIT(A) was received by the Chief CIT or CIT. d. Gulab Chand Motilal vs. CIT : In this case the AO made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken simultaneously or separately but should be taken within the time prescribed under s. 153. Since ITO failed to determine the tax payable on assessed income within prescribed time i.e. demand notice not being served within prescribed time, though assessment order is so served, assessment became time-barred. The issue involved in this case is different; therefore, this case is not applicable to the facts of the case before us. g. Jain Cloth House vs. ITO ITA Nos. 274 & 275/D/1992: The issue involved in this case relates to the imposition of the penalty under s. 271(1)(a). In this case it was held that penalty under s. 271(1)(a) was tax based in the relevant period. The assessed tax has to be determined with reference to assessment order. If part of assessment has been set aside then assessment has to be completed first and then the question of levy of penalty examined with reference to assessed tax. There has to be tax and complete assessment. This case in our opinion is not applicable to the facts of the case before us. It does not lay down the proposition that the limitation under s. 153(2A) will apply even if the assessment has been set aside in respect of some of the issues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y limitation as the limitation as laid down under s.153(2A) will apply to the facts of the case before us. Accordingly, we quash the orders dt. 30th Aug., 1995 passed by the AO for the asst. yrs. 1984-85 to 1986-87. Since the orders passed by the AO stand quashed, the other grounds taken by the assessee on merit do not survive. ITA No. 639/1998 15. This appeal has been filed by the assessee against the order of the CIT(A) dt. 21st Sept., 1998 by which CIT(A) has partly sustained the order of the AO of imposing the penalty on the assessee holding that the appellant has concealed the particulars of the income. 16. We have carefully considered the rival submissions and have gone through the order of the authorities below. We find that the additions were made in the returned income of the assessee merely on estimate basis. The additions in respect of which the penalty stand sustained does not survive in view of our order in ITA No. 638/1998 as this order dt. 30th Aug., 1995 has already been quashed by which the additions were made by the AO on estimate basis, therefore, the penalty imposed under s. 271(1)(c) cannot be sustained. We, therefore, allow the appeal of the assessee and se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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