ACIT, Lucknow v. Sahara India Saving & Investment Corp., Lucknow

ITA 1634/LKW/1996 | 1993-1994
Pronouncement Date: 12-03-2010 | Result: Dismissed

Appeal Details

RSA Number 163420114 RSA 1996
Bench Delhi
Appeal Number ITA 1634/LKW/1996
Duration Of Justice 13 year(s) 5 month(s) 26 day(s)
Appellant ACIT, Lucknow
Respondent Sahara India Saving & Investment Corp., Lucknow
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 12-03-2010
Date Of Final Hearing 12-01-2010
Next Hearing Date 12-01-2010
Assessment Year 1993-1994
Appeal Filed On 16-09-1996
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) SHRI G.E. VEERABHADRAPPA VICE PRESIDENT AND SHRI R.P. TOLANI JUDICIAL MEMBER ITA NO.1634/DEL./1996 (ASSESSMENT YEAR : 1993-94) ACIT CENTRAL CIRCLE III VS. SAHARA INDIA SAVINGS & INVESTMENT LUCKNOW. CORPORATION LIMITED (NOW SAHARA INDIA FINANCIAL CORPORATION LIMITED) 1 KAPOORTHALA COMPLEX ALIGANJ LUCKNOW. ITA NO.625/DEL./2000 (ASSESSMENT YEAR : 1995-96) SAHARA INDIA SAVINGS & INVESTMENT VS. ACIT CENTR AL CIRCLE I CORPORATION LIMITED LUCKNOW. (NOW SAHARA INDIA FINANCIAL CORPORATION LIMITED) 1 KAPOORTHALA COMPLEX ALIGANJ LUCKNOW. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PERCY PARDIWALA ADVOCATE AND S/SHRI J.J. MEHROTRA & D.R. RAJAN REVENUE BY : SHRI ASHOK PANDEY CIT DR ORDER PER R.P. TOLANI JUDICIAL MEMBER : REVENUES APPEAL IN ITA NO.1634/DEL/1996 RAISES THE FOLLOWING GROUNDS : 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE IN DIRECTING THE A.O. NOT TO MAKE THE SUBSTANT IVE ADDITION OF RS.19 67 27 025/- WHICH THE A.O. PROPOSED TO MAK E FOR ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 2 SERVICE CHARGES COLLECTED FOR THE ASSESSEE BY THE A GENT M/S. SAHARA INDIA (A SISTER CONCERN) RELYING ON THE RESO LUTION MADE IN THE MEETING OF THE BOARD OF DIRECTORS HELD ON 30.3. 92 WITHOUT APPRECIATING THE FACT THAT NO COPY OF SUCH RESOLUTI ON WAS FOUND IN THE OFFICE OF THE REGISTRAR OF COMPANIES WHICH CLEARLY SUGGESTS THAT THE RESOLUTION WAS AN AFTER THOUGHT M ADE POSSIBLE BY THE CONNIVANCE OF THE BOARD OF DIRECTORS OF THE COMPANY AND THE PARTNERS OF THE SISTER CONCERN FIRM SOME O F WHICH ARE COMMON. 2. THE. LD . CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.10 17 75 99 6/- WHICH WAS ADDED BY THE A.O. AS REIMBURSEMENT OF EXPENSES BY C OMPANY TO THE AGENT FIRM M/S SAHARA INDIA. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.36 40 358/- AS INTEREST ACCRUED ON RUNNING ACCOUNT WITH M/S SAHARA INDIA WITHOUT APPRECIATING THE ASSESSEE'S OWN AUDITORS' REPORT POINTING OUT THIS S HORT CHARGE OF INTEREST AND WITHOUT GIVING DUE IMPORTANCE TO THE F ACT THAT THE ASSESSEE IS A RESIDUARY NON BANKING COMPANY MAKING IT LIABLE TO PAY INTEREST TO THE DEPOSITORS FROM THE D ATE OF COLLECTION ITSELF WHEREAS THE BENEFIT OF KEEPING F UNDS FOR TWO MONTHS WITHOUT INTEREST IS ENJOYED BY THE SISTER FI RM WHILE IT DEPRIVES THE COMPANY OF ITS RESULTED BENEFITS FROM THE INVESTMENT WHEREAS LIABILITY GETS INCURRED EVERY MO NTH. 4. THE LD. CIT (A) HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASEIN DELETING THE ADDITION OF RS.2 00 91 702/ - BEING DISALLOWANCE OF INVESTMENT CONSULTANCY CHARGES PAID BY THE COMPANY TO M/S. SAHARA INDIA AGENT AND SISTER CONCE RN COMPLETELY IGNORING THE FACTS THAT THE RETURN ON IN VESTMENT TO 17% OF THE FUND DEPLOYED DOES NOT JUSTIFY THE EXPEN SE AS IN THE A.Y. 90-91 THE RETURN WAS 12.69% IN A.Y. 91-92 IT W AS 16.03% WITHOUT PAYING ANY SUCH CHARGES TO M/S SAHARA INDIA . 2. APROPOS GROUND NO.1 LEARNED DR RELIED ON THE ORD ER OF THE ASSESSING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ISSUE IN FIRST GROUND IS COVERED IN FAVOUR OF THE ASSESSEE AND ITA T VIDE ORDER DATED ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 3 13.9.2005 IN ITA NO.198/ALLD/1999 FOR ASSESSMENT YE AR 1994-95 UPHELD THE ORDER OF THE CIT (APPEALS). THE EXPENDITURE REPRES ENTS COMMISSION PAID TO SISTER CONCERN M/S. SAHARA INDIA FOR COLLECTING THE DEPOSITS. IT HAS BEEN ADMITTED BY THE ASSESSING OFFICER THAT THE SISTER C ONCERN HAS CREDITED THAT AMOUNT IN ITS PROFIT AND LOSS ACCOUNT. CIT (A) FOL LOWING THE ORDER IN ASSESSMENT YEAR 1994-95 DELETED THE ADDITION. THE TRIBUNAL MADE DETAILED OBSERVATIONS WHICH ARE AS UNDER : 37. IN GROUND NO.4 OF THE APPEAL TAKEN BY THE DEPA RTMENT IS AS UNDER:- 'THAT THE LD. C.I.T (A) HAS ERRED IN DELETING THE A DDITION OF RS.16 97 63 800/- MADE BY THE A.O. ON ACCOUNT OF COLLECTION OF SERVICE CHARGES MADE FROM THE DEPOSIT ORS NOT CREDITED IN THE PROFIT & LOSS ACCOUNT WITHOUT APPRECIATING THE FINDING OF THE A.O. FURTHER ON ID ENTICAL ISSUES THE DEPARTMENT HAS FILED THE SECOND APPEAL I N ASSESSMENT YEAR 1993-94 BEFORE THE I.T.A.T. 38. THE A.O. HAS MADE THE ABOVE ADDITION OF RS.16 97 63 800/- ON THE GROUND THAT THE ASSESSEE H AD CHARGED SERVICE CHARGES IN THE PRECEDING ASSESSMENT YEARS. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAD STOPPED PRACTICE OF COLLECTING SERVICE CHARGES. THE A.O. STATED THAT THE ASSESSEE HAD ADOPTED THE SAME PRACTICE IN ASSESSMENT YEAR UNDER CONSIDERATION AND HAD COLLECTED SERVICE CHARGES FROM THE DEPOSITORS IN THE SAME WAY AS IN THE ASSESSMENT YEAR 1993- 94. SINCE THE ASSESSEE HAD COLLECTED DEPOSITS AGGR EGATING RS.1 69 76 38 010/- IN THE ASSESSMENT YEAR UNDER CO NSIDERATION. THE A.O. CONSIDERED THE SERVICE CHARGES @ 10% AND M ADE ADDITION OF RS.16 97 63 800/- TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE FI RST APPELLATE AUTHORITY. . ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 4 39. IT WAS CONTENDED THAT UPTO ASSESSMENT YEAR 199 2-93 THE ASSESSEE PERMITTED ITS AGENT TO COLLECT SERVICE CHA RGES FROM THE DEPOSITORS BUT THE SAID PRACTICE WAS DISCONTINUED B Y A BOARD RESOLUTION DATED 30.3.1992. IT WAS CONTENDED THAT S IMILAR ADDITION ON HYPOTHETICAL BASIS WAS MADE BY THE A.O. FOR ASSESSMENT YEAR 1993-94 AND THE LD. C.I.T (A) VIDE HIS ORDER DATED 14.5.1996 DELETED THE SAID ADDITION. IT WAS A LSO CONTENDED THAT THE RESERVE BANK OF INDIA VIDE NOTIFICATION NO .DEL(CPC)- 68-ED{S93) DATED 10.4.1993 HAS ALSO PROHIBITED THIS PRACTICE ~F COLLECTING SERVICE CHARGES. IN VIEW OF THE ABOVE THE LD. C.I.T (A) DELETED THE SAID ADDITION OF RS.16 97 63 800/- MADE BY THE A.O. AND STATED THAT THE WHOLE APPROACH OF THE A.O. WAS BASED ON SUSPICION CONJECTURES AND SURMISES AND NO ADDIT ION COULD BE SUSTAINED. HENCE THE DEPARTMENT IS IN FURTHER APPEA L BEFORE THE TRIBUNAL. 40. DURING THE COURSE OF HEARING THE LD. D.R. REL IED ON THE ORDER OF THE A.O. 41. ON THE OTHER HAND THE LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE MADE HIS SUBMISSIONS ON THE LINES OF THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED TH AT THE SAID ADDITION WAS MADE BY THE A.O. BASED ON THE ADDITION S IN THE EARLIER YEARS. HE SUBMITTED THAT THE ASSESSEE DID NOT COLLECT ANY SERVICE CHARGE FROM ITS DEPOSITORS IN VIEW OF RBI D IRECTION. 42. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITI ES BELOW AND SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE P ARTIES. WE OBSERVED THAT THE A.O. HAS NOT BROUGHT OUT ANY FACT S ON RECORD THAT THE ASSESSEE HAD COLLECTED ANY SERVICE CHARGE FROM ITS DEPOSITORS IN THE ASSESSMENT YEAR UNDER CONSIDERATI ON. WE OBSERVE THAT THE A.O. MADE ADDITIONS THAT THE ASSES SEE MUST HAVE COLLECTED SERVICE CHARGES @ 10% OF THE TOTAL D EPOSITS RAISED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. SINCE IN THE PRECEDING ASSESSMENT YE AR VIZ. ASSESSMENT YEAR 1993-94 SIMILAR ADDITION MADE BY TH E A.O. HAS ALREADY BEEN DELETED BY THE ID. C.I.T (A) WE DO NO T FIND ANY JUSTIFICATION IN THE ORDER OF THE A.O. TO MAKE ABOV E ADDITION AS THE SAME IS BASED ON PRESUMPTIONS AND SURMISES. THE DEPARTMENT HAS NOT DISPUTED THE FACT THAT RESERVE B ANK OF INDIA VIDE ITS NOTIFICATION DATED 10.4.1993 HAS PROHIBITE D TO CHARGE ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 5 ANY SERVICE CHARGE FROM THE DEPOSITORS. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. C.I.T (A ) IN DELETING THE SAID ADDITION OF RS.16 97 63 800/- MADE BY THE A.O. HENCE GROUND NO.4 OF THE APPEAL TAKEN BY THE DEPARTMENT I S REJECTED. 3. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IN OUR VIEW THE ISSUE IS SQUARELY COVERED IN FAVOU R OF THE ASSESSEE BY ITAT ORDER IN ASSESSMENT YEAR 1994-95. THE RELEVANT PAR T OF THE ITAT ORDER IS REPRODUCED ABOVE. RESPECTFULLY FOLLOWING THE SAME THIS GROUND OF REVENUES APPEAL IS DISMISSED. 4. APROPOS GROUND NO.2 LEARNED DR RELIED ON THE ORD ER OF A.O. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS AS UNDER : SIMILAR ADDITION MADE IN ASSESSMENT ORDER 1994-95 HAS BEEN DELETED BY ITAT VIDE ITS ORDER DATED 13.09.200 5 IN APPEAL NO.ITA NO.198/ALLD/1999 (PARA 12-23 PAGE 6-10). AL SO ASSESSING OFFICER HIMSELF IN ASSESSMENT YEAR 1992-9 3 DELETED SIMILAR ADDITION MADE ON ACCOUNT OF REIMBURSEMENT O F EXPENSES TO AGENT AT PAGE 8 OF THE ORDER U/S 143(3)/254/148 DATED 15.03.2002 AND DISALLOWED 35% OF EXPENSES BEING CONSEQUENTIAL TO ADDITION OF 35% OF DEPOSITS AS UNE XPLAINED. IN ASSESSMENT YEAR 1992-93 THE ITAT IN CASE OF SIST ER CONCERNS M/S. SAHARA INDIA MUTUAL BENEFIT CO. LIMIT ED IN APPEAL NO.99/LKO/01 DATED 31.05.2005 ON SIMILAR FAC TS & CIRCUMSTANCES DELETED THE ADDITION MADE REFERRING T HE ORDER OF ASSESSEE CO. IN ASSESSMENT YEAR 1992-03 [PASSED BY ASSESSING OFFICER U/S 143(3)/254/148 DATED 15.03.2002. 5. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. THIS AMOUNT OF REIMBURSEMENT OF EXPENSES WAS PAID B Y THE ASSESSEE TO M/S. ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 6 SAHARA INDIA WHICH HAVE BEEN DULY ACCOUNTED FOR BY BOTH THE CONCERNS. ASSESSING OFFICER FIXED AN AMOUNT OF 3% AND REST WA S DISALLOWED AS FOR NON-BUSINESS CONSIDERATION. CIT (A) FOLLOWING THE ORDER OF M/S. SAHARA INDIA FOR ASSESSMENT YEAR 1992-93 DELETED THE DISA LLOWANCE. ITAT IN ASSESSMENT YEAR 1994-95 CONFIRMED THE DELETION OF T HIS DISALLOWANCE BY OBSERVING AS UNDER : 22. ON THE OTHER HAND THE LD. AUTHORIZED REPRESEN TATIVE OF THE ASSESSEE STATED THAT THE ISSUE OF EXPENSES HAS BEEN AGITATED IN THE EAR1IER YEARS ALSO WHEREIN THE TRIBUNAL HAS ALL OWED EXPENDITURE. HE ARGUED THAT WHEN THE A.O. ASKED THE ASSESSEE TO FILE DETAILS OF SUCH EXPENSES A REPLY WAS SUBMI TTED. THE ENTIRE DETAILS WERE FURNISHED. THIS ISSUE OF EXPEND ITURE WAS ALSO CONSIDERED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 1 996-97. VIDE THIS ORDER DATED 20.5.2003 THE TRIBUNAL HAS A LLOWED THE CLAIM OF EXPENDITURE. HE ALSO ARGUED THAT WHILE DIS ALLOWING EXPENDITURE THE A.O. WAS OF THE OPINION THAT THE G OVERNMENT DEPARTMENTS LIKE POST OFFICE UTI LIC WERE INCURRI NG EXPENDITURE TO THE EXTENT OF 1 % OF THE DEPOSIT. BU T FROM THE BALANCE SHEET OF THE LIC IT TRANSPIRED THAT THE EX PENDITURE CLAIMED IN THEIR CASES WAS MUCH MORE THAN THE PERCE NTAGE OF THE EXPENSES CLAIMED BY THE ASSESSEE. THE LD. AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE STATED THAT THE LD . CIT (A) HAS DEALT WITH EACH AND EVERY HEAD OF EXPENDITURE AND F OUND THE SAME TO BE REASONABLE. NO INTERFERENCE IN HIS ORDER IS THEREFORE CALLED FOR. 23. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITI ES BELOW AND SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE P ARTIES. IT APPEARS THAT WHILE MAKING DISALLOWANCE THE A.O. HA D LEAD AWAY BY HIS OBSERVATION THAT IN THE GOVERNMENT THE EXPENDITURE TO THE EXTENT OF 1 % OF THE COLLECTION WAS CONSIDER ED REASONABLE. FOR THIS PURPOSE HE HAS GIVEN EXAMPLE OF LIC BUT THE VERY FACTS ON RECORD WHICH IS BROUGHT OUT OF TH E BALANCE SHEET OF THE LIC IT IS CLEAR THAT EXPENDITURE INCU RRED BY THE GOVERNMENT DEPARTMENT WAS MUCH MORE THAN WHAT HAS B EEN ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 7 CLAIMED BY THE ASSESSEE. WE ALSO FIND THAT THE ISSU E OF EXPENDITURE WAS CONSIDERED BY THE TRIBUNAL EARLIER WHEREIN EXPENDITURE CLAIMED BY THE ASSESSEE WAS ALLOWED AS DEDUCTION. WE HAVE GONE THROUGH THE ORDER OF THE LD. C.I.T (A) IN DETAIL AND FIND THAT HE HAS DEALT WITH THE EXPENDITURE AND EACH AND EVERY HEAD AND ENLIGHTENED THE SAME WITH THE FACTS. AS HIS ORDER IS IN ACCORDANCE WITH THE ORDER OF THE TRIBUN AL AS WELL AS THE FACTS ON RECORD WE DO NOT FIND ANY INFIRMITY I N THE SAME AND WHILE UPHOLDING HIS FINDING WE REJECT GROUND N O.2 OF APPEAL RAISED BY THE DEPARTMENT. WE SEE NO INFIRMITY IN THE ORDER OF CIT (A). THE A .O. HAS APPLIED A PARTICULAR PERCENTAGE ON AD HOC BASIS AND HELD THAT THE REIMBURSEMENT EXPENDITURE IS NOT FOR BUSINESS CONSIDERATION. IN OUR VIEW WHEN THE ASSESSEE FILED ALL THE DETAILS THIS AD HOC APPROACH WAS RIGHTLY REJECTED BY THE CIT (A). THIS GROUND OF REVENUES APPEAL IS DISM ISSED. 6. APROPOS GROUND NO.3 LEARNED DR RELIED ON THE ORD ER OF A.O. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS AS UNDER : SIMILAR ADDITION MADE HAS BEEN DELETED BY ITAT IN FOLLOWING ORDERS : IN COMBINED ORDER FOR ASSESSMENT YEAR 1989-90 1991 -92 & 1992-93 DATED 30.06.1998 IN APPEAL NO.ITA NO.372 3 73 & 374 (ALLD) OF 1996 AT PARA 43-46 PAGE 30-31 & AT PARA 75 PAGE 47. ORDER FOR ASSESSMENT YEAR 1994-95 IN APPEAL NO.ITA NO.198/ALLD/1999 DATED 13.09.2005 PARA/PAGE 25-36/1 1-14 ORDER FOR ASSESSMENT YEAR 1996-97 FOR ASSESSMENT YE AR 1996-97 IN APPEAL NO.ITA NO.747/ALLD/2000 DATED 26.05.2003 AT PARA 72-74 PAGE 47-48. ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 8 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. THIS ISSUE ALSO AROSE IN ASSESSMENT YEARS 1989-90 1991-92 AND 1992-93 AND THE ITAT CONSIDERED THE ISSUE AND UPHELD THE DELETI ON OF ADDITION BY FOLLOWING OBSERVATIONS : 44. THE ASSESSEE PLACED RELIANCE ON AN ORDER DATED 26TH AUGUST 1996 RENDERED BY THE TRIBUNAL IN THE CASE O F THEIR SISTER CONCERN M/S SAHARA INVESTMENT INDIA LTD. LUCKNOW FOR THE ASSESSMENT YEARS 1987-88 TO 1989-90 WHERE SIMILAR I SSUE AROSE. THE MOU DATED 17TH AUGUST 1987 REFERRED TO HEREINB EFORE MORE THAN ONCE IS QUITE SILENT ON THE POINT. IN THE SISTER CONCERN'S CASE REFERRED TO SUPRA THE FIRST APPELLA TE AUTHORITY HAD TAKEN THE VIEW THAT IN THE ABSENCE OF ANY AGREEMENT TO CHARGE INTEREST THE ASSESSEE COMPANY COULD NOT BE COMPELLE D TO CHARGE IT FROM ITS SISTER CONCERN. THIS VIEW WAS UPHELD BY THE TRIBUNAL TO WHICH BOTH OF US ARE A PARTY. 45. FURTHER ON FACTS THE ASSESSING OFFICER AS IS EVIDENT FROM PAGE 77 OF THE PAPER BOOK INFORMED THE ASSESSEE THA T THE INTEREST WAS NOT CHARGED BY THEM ON THE BALANCE WIT H THE FIRM FOR AN INITIAL PERIOD OF 2 MONTHS IN RESPECT OF EAC H AMOUNT. TO THIS THE ASSESSEE TOOK THE STAND THAT THE AMOUNT T O REACH FROM THE COLLECTION STAGE TO THE PRINCIPALS WAS TO PASS THROUGH VARIOUS LEVELS SUCH AS BRANCH SECTOR REGION ZON E AND HEAD OFFICE AND WOULD TAKE TWO MONTHS PERIOD FOR WHICH N O INTEREST WAS BEING CHARGED. THE A.O. HOWEVER ALLOWED ONE MON TH PERIOD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THEY COULD NOT BE CHARGED WITH ANY NOTIONAL INTEREST. TH E LEARNED SENIOR STANDING COUNSEL SUPPORTED THE VIEW TAKEN BY THE REVENUE AUTHORITIES. 46. HAVING CONSIDERED THE MATTER CAREFULLY WE FEE L THAT THERE IS NO LEGAL JUSTIFICATION FOR DISTURBING THE SYSTEM BEING FOLLOWED. THE RETICENCE OF THE MOU THE VIEW TAKEN BY THE TRIBUNAL IN A SISTER CONCERN'S CASE REFERRED TO SUP RA AND THE LIKELIHOOD OF THE ASSESSEES STAND ABOUT THE REACHI NG OF THE COLLECTED AMOUNT TO THE PRINCIPALS IN A SPAN OF 2 M ONTHS NOT BEING VERY UNUSUAL IMPEL US TO REVERSE THE APPROACH ACCORDED TO ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 9 THE ISSUE BY THE AUTHORITIES BELOW. IN THE RESULT THE ADDITION OF RS.76 14 468/- IS DELETED. THIS ISSUE WAS AGAIN CONSIDERED IN ASSESSMENT YEAR 1994-95 AND THE ITAT UPHELD THE ORDER OF CIT (APPEALS) BY OBSERVING AS U NDER : 31. IN RESPECT OF DISALLOWANCE OF RS.1.32 CRORES C OMPUTED ON FLOATING FUND WITH M/S. SAHARA INDIA (FIRM) THE AS SESSEE CONTENDED THAT THE ASSESSEE'S AGENT IS MANAGING BUS INESS OF RUNNING VARIOUS DEPOSIT SCHEMES. THE AGENTS NOT ONL Y COLLECT THE DEPOSITS ON BEHALF OF THE ASSESSEE BUT ALSO MEE TS MATURITIES PRE-MATURITIES ETC FOR AND ON BEHALF OF THE ASSESSE E AND IN ORDER TO MEET THE CONTINGENCY THE ASSESSEE HAD GIVEN FLO ATING FUND TO ITS AGENT. IT WAS STATED THAT THE SAID FLOATING FUN D REPRESENTED ROUGHLY FOR A PERIOD OF TWO DAYS OF COLLECTIONS UND ER THE VARIOUS DEPOSIT SCHEMES AND IS FULLY JUSTIFIABLE LO OKING TO THE COMMERCIAL AND BUSINESS EXPEDIENCE OF THE ASSESSEE. 32. IN REGARD TO DISALLOWANCE OF RS.L 56 74 781/- IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT ALL THE OU TSTANDING IN RESPECT OF WHICH THE A.O. COMPUTED THE ABOVE INTERE ST DID NOT REPRESENT ANY ADVANCE OR LOAN OR BORROWINGS. IT RE PRESENTED MOSTLY RENT RECOVERABLE OR AN AMOUNT OUTSTANDING A S IN THE CASE OF M/S SAHARA INDIA MUTUAL BENEFIT CO. LTD. ON ACCO UNT OF SALE OF SECURITIES. IN NO CASE ANY LOAN HAD BEEN GIVEN TO ANY OF THE CONCERN. THERE WAS A MERE RELATIONSHIP OF DEBTOR AND CREDITOR AND IT DID NOT GIVE RISE TO ANY LIABILITY ON WHICH INTEREST HAD TO BE FINALLY COMPUTED. 33. THE ID. C.I.T (A) ACCEPTED THE CONTENTION OF T HE ASSESSEE AND DELETED THE DISALLOWANCE OF RS.38 07 337/-; R.S .1.32 CRORES AND RS.L 56 74 781/- VIDE PARAS 100 TO 102 OF HIS O RDER. HENCE THE DEPARTMENT IS IN FURTHER APPEAL BEFORE THE TRIB UNAL. 34. DURING THE COURSE OF HEARING. THE LD. D.R. SUP PORTED THE ORDER OF THE A.O. 35. ON THE OTHER HAND THE LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE SUBMITTED THAT THE SAME VERY ISSUE IS COVE RED IN THE ASSESSEE'S OWN CASE BY THE EARLIER ORDER OF THE TRI BUNAL DATED ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 10 30.6.1998 FOR ASSESSMENT YEARS 1989-90 1991-92 AND 1992-93 IN L.T.A.NOS.372 373 AND 374/ALLD/I996. HE FURTHER SUBMITTED THAT THE SAID ISSUE HAD AGAIN BEEN CONSIDERED BY TH E TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 1996-97 IN I.T.A.NO. 747/AILD/2000 VIDE ORDER DATED 26.5.2003 IN FAVOUR OF THE ASSESSEE AND THE DISALLOWANCE OF NOTIONAL IN TEREST MADE BY THE A.O. WAS NOT JUSTIFIABLE. THE LD. D.R. HAS N OT DISPUTED THE ABOVE CONTENTION OF THE LD. AUTHORIZED REPRESEN TATIVE OF THE ASSESSEE. 36. IN VIEW OF THE ABOVE SUBMISSION OF THE LD. AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE AND THE FACT THAT TH E SAID ISSUE IS COVERED BY THE EARLIER ORDERS OF THE TRIBUNAL IN TH E ASSESSEE'S OWN CASE (CITED SUPRA). WE RESPECTFULLY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL CONFIRM THE ORDER OF THE LD. C.I.T (A) AND REJECT GROUND NO.3 OF THE APPEAL TAKEN BY THE DEPAR TMENT. IN VIEW OF THE FOREGOING WE SEE NO INFIRMITY IN TH E ORDER OF CIT (A) WHICH IS UPHELD. THIS GROUND OF REVENUE IS DISMISSED. 8. APROPOS GROUND NO.4 LEARNED COUNSEL FOR THE ASSE SSEE CONTENDS AS UNDER : ASSESSING OFFICER ON THE SIMILAR FACTS OF CIRCUMS TANCES ALLOWED EXPENSES IN RESPECT OF INVESTMENT CONSULTAN CY CHARGES IN THE CASE OF SISTER CONCERNS M/S SAHARA INDIA MUT UAL BENEFIT COMPANY LIMITED IN ASSESSMENT ORDER FOR ASSESSMENT YEAR 1993-94 U/S 143(3)/251 DATED 29.01.1999. FURTHER I N ASSESSMENT YEAR 1992-93 IN THE CASE OF SAHARA INDIA MUTUAL BENEFIT CO. LIMITED PARA 21/PAGE 7 IN ITA NO.99/LUC /01 DATED 31.05.2005 SET ASIDE THIS ISSUE HOWEVER NO FRESH OR DER PASSED BY THE ASSESSING OFFICER (WHICH STAND BARRED BY TIM E NOW). 9. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IN VIEW OF THE ABOVE BOTH THE PARTIES AGREED THAT THI S ISSUE MAY BE SET ASIDE AND RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS. ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 11 ACCEDING TO THE REQUEST OF BOTH THE PARTIES THIS I SSUE IS SET ASIDE AND RESTORED BACK TO THE FILE OF A.O. TO DECIDE THE SAM E AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WITH SIM ILAR DIRECTIONS. 10. IN THE RESULT THE REVENUES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 11. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN ITA NO.625/DEL/2000 WHICH ONLY CHALLENGE EXERCISE OF JURISDICTION U/S 2 63 BY CIT (CENTRAL) KANPUR. 12. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE IMPUGNED ORDER U/S 263 HAS BEEN PASSED SETTING ASIDE THE ASSESSMENT BY FOLLOWING OBSERVATIONS : 15. IT IS THEREFORE SEEN THAT THE ORDER OF THE A .O. IS ERRONEOUS AT LEAST ON THESE THREE MAJOR ISSUES IN A S MUCH AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE HENCE IT DE SERVES TO BE SET- ASIDE WITH THE DIRECTION THAT THE RE-ASSESSMENT SHO ULD BE MADE DENOVO AFTER CONSIDERING ALL THE FACTS AND CIRCUMST ANCES OF THE CASE AS MAY OBTAIN AT THE TIME OF RE-ASSESSMENT BUT EXCLUDING THOSE AMOUNTS OF INTEREST ON WHICH THE LEARNED CIT (A) HAS GIVEN HIS DECISION. IT WAS CONTENDED THAT THE ASSESSMENT IN QUESTION WA S FRAMED ON 12.3.1998. CIT HELD THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF JUSTICE AS A.O. FAILED TO CARRY OUT PRO PER ENQUIRIES IN FOLLOWING ASPECTS : ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 12 (I) LIST OF DEPOSITORS WHO MADE DEPOSITS OVER RS.20 000/-. IT IS ALLEGED THAT A.O. MADE AN ATTEMPT TO OBTAIN THE DET AILS DIRECTLY BUT LEFT IT HALF-WAY AND DID NOT GIVE FINDINGS ON T HIS ISSUE; (II) ASSESSEE PROVIDED INTEREST OF RS.28 85 89 289/ - IN THE P&L ACCOUNT WHICH WAS CLAIMED BY THE ASSESSEE ON AVERAG E BASIS BY PASSING MONTHLY ENTRIES IN THE INTEREST ACCOUNT WIT HOUT CREDITS IT TO INDIVIDUAL ACCOUNT OF DEPOSITORS. THE CLAIM OF INTEREST WAS ERRONEOUSLY ALLOWED. (III) IN RESPECT OF PROPERTIES REFERRED FOR VALUATI ON TO DVO IN AUGUST 1996 WHICH WAS RECEIVED IN APRIL 1999 HAS NOT BEEN CONSIDERED BY A.O. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE FOR FOLL OWING REASONS : 1. THE ORDER PASSED U/S 263 BY THE COMMISSIONER OF INCOME TAX (CENTRAL) KANPUR IS WITHOUT JURISDICTION AS TH E COMMISSIONER OF INCOME TAX (CENTRAL) FAILED TO APPR ECIATE THAT THE ORDER OF ASSESSMENT DATED 12.3.98 HAD MERGED WI TH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) F OR THE ASSESSMENT YEAR 1995-96 AND THAT THE ORDER U/S 263 PASSED BY THE C.IT. WAS CONTRARY TO THE PROVISIONS OF SECTION 263 EXPLANATION CLAUSE (C) OF THE INCOME TAX ACT 1961 AND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE APP ELLATE ORDER FOR A.Y. 1995-96 HAD CONSIDERED THE MATTERS I N RESPECT OF WHICH THE ORDER U/S 263 HAS BEEN PASSED AS ISSUES OF DEPOSITS AS WELL AS INTEREST PAYABLE ON THEM WAS SUBJECT MAT TER OF APPEAL BEFORE THE CIT(A) AND CONSEQUENTLY THE CIT (CENTRAL ) HAD NO JURISDICTION U/S 263 FOR REVISING THE ASSESSMENT OR DER ON THAT ISSUE. 2. THE COMMISSIONER OF INCOME TAX WHILE PASSING THE ORDER U/S 263 FAILED TO APPRECIATE THAT THE ADDITIO N WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF DEPOSITS COLLE CTED BY THE APPELLANT AFTER DUE AND PROPER EXAMINATION AND CONS IDERATION OF BOTH FACTS AND LAW AND AFTER SEVERAL HEARING TO THE TUNE OF RS.508.60 CRORES. ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 13 3. THE COMMISSIONER OF INCOME TAX HAS ERRED AGAINST LAW AND FACTS ON RECORD IN FRAMING THE ORDER U/S 263 SE TTING ASIDE THE ORDER OF ASSESSMENT FOR THE PURPOSE OF VERIFYIN G THE GENUINENESS OF THE DEPOSITS U/S 68 OF THE INCOME TA X ACT AND IS NOT JUSTIFIED IN PRESUMING THAT THE ASSESSING OFFIC ER DID NOT REACH TO ANY FINAL FINDING OR CONCLUSION IN RESPECT TO INGENUINE AND UNVERIFIED DEPOSITS. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL)'S PRESUMPTION THAT SINCE NO ADDITION WAS MADE UNDER SECTION 68 THE ASSESSING OFFICER DID NOT REACH ANY FINAL FINDING OR CONCLUSION IS ALSO ERRONEOUS BECAUSE THE ASSESSI NG OFFICER HAS NOT INDICATED ANY WHERE IN THE ASSESSMENT ORDER HIS INTENTION OR PROPOSAL TO MAKE ANY SUCH ADDITION. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS EVEN IF I T IS PRESUMED THAT THE ASSESSING OFFICER WANTED TO MAKE AN ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT BUT OMITTED TO DO SO THEN ALSO THE OBSERVATION OF THE LEARNED COMM ISSIONER OF INCOME TAX (CENTRAL) THAT THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION UNDER SECTION 68 IS INCORRECT BECAUSE THE ADDITION @ 15% OF THE OPENING BALANCE AND 30% OF THE DEPOSIT S COLLECTED DURING THE YEAR WHICH OTHERWISE COULD NO T BE A REVENUE RECEIPT IS DEEMED TO BE ADDITION UNDER SEC TION 68 OF THE INCOME TAX ACT. 6. THE DIRECTION OF THE LEARNED COMMISSIONER OF INC OME TAX (CENTRAL) IN SETTING ASIDE THE ASSESSMENT IN TH E GARB OF VERIFICATION AND GENUINENESS OF DEPOSITS IS A CLEAR -CUT CASE OF INFLUENCING THE MIND OF THE ASSESSING OFFICER BECAU SE THE OBSERVATIONS 'THE LEARNED CIT(A) HAS NOT GIVEN ANY FINDING ON THE GENUINENESS OF THESE DEPOSITS AND HAS HIMSELF O BSERVED THAT THE ASSESSING OFFICER LEFT THE INVESTIGATION MIDWAY THEREFORE IT IS VERY CLEAR THAT THE ASSESSMENT ORDER OF THE A SSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE. IT IS ALSO CLEAR THAT BY VIRTUE OF CLAUSE (C) OF SE C.263(L) OF THE ACT ORDER CAN BE SET ASIDE EVEN THOUGH IT HAS BEEN A SUBJECT MATTER OF APPEAL BECAUSE ON THIS ISSUE THERE' IS NO DECISION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)' ( LAST SIX LINES OF PARAGRAPH 13 OF THE ORDER UNDER SEC.263 CL EARLY LEADS TO PROVE THAT THE ASSESSMENT WAS BEING SET ASIDE FOR T HE PURPOSE OF ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 14 MAKING ADDITION UNDER SECTION 68 AND NOT TO THE EXT ENT OF MAKING ENQUIRIES). 7. THAT THE COMMISSIONER OF INCOME TAX (CENTRAL) I S NOT JUSTIFIED IN CONCLUDING THAT THE LIABILITY ON ACCOU NT OF INTEREST PAYABLE ON DEPOSITS UNDER 'OPTION-II' UNDER THE VAR IOUS SCHEMES WAS A CONTINGENT LIABILITY OR AS STATED BY THE C.LT. NOT EVEN A CONTINGENT LIABILITY. 8. THAT THE COMMISSIONER ERRED IN LAW AND FACTS I N PRESUMING THAT THE ASSESSING OFFICER DID NOT INVEST IGATE THE ISSUES RELATING TO THE CORRECTNESS OF THE LIABILITY PROVIDED ON ACCOUNT OF INTEREST PAYABLE ON DEPOSITS UNDER THE V ARIOUS SCHEMES AND THE ALLOWABILITY OF SUCH LIABILITY ON A CCRUAL BASIS. 9. THAT THE COMMISSIONER OF INCOME TAX (CENTRAL) H AS ERRED IN HOLDING THAT THE LIABILITY ON ACCOUNT OF I NTEREST PAYABLE ON DEPOSITS UNDER THE VARIOUS SCHEMES COULD BE DETE RMINATIVE OR ASCERTAINABLE ONLY IF INDIVIDUAL ACCOUNTS OF DEP OSITORS WERE CREDITED. 10. THAT THE COMMISSIONER OF INCOME TAX (CENTRAL) WAS NOT JUSTIFIED IN CONSIDERING THE ASSESSMENT ORDER AS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHOUT POIN TING OUT AS TO HOW THE ACTION OF THE ASSESSING OFFICER ALLOWING TH E LIABILITY ON ACCOUNT OF PROVISION OF INTEREST PAYABLE ON DEPOSIT S UNDER THE VARIOUS SCHEMES HAS RENDERED THE ASSESSMENT ORDER A S ERRONEOUS AND PREJUDICIAL 11. THE COMMISSIONER OF INCOME TAX (CENTRAL) WHILE FRAMING THE ORDER U/S 263 HAS FAILED TO APPRECIATE CORRECTLY THE FACTS AND CIRCUMSTANCES OF THE CASE WITH RESPECT TO PROVISIONS OF INTEREST ON DEPOSITS AND HAS ERRED AGAINST LAW AND FACTS ON RECORD IN SETTING ASIDE THE ORDER OF ASSESSMENT MAD E BY THE ASSESSING OFFICER FOR THE PURPOSE OF CONSIDERING TH E ALLOWANCE TO DISALLOWANCE OF THE INTEREST. 12. THAT THE LEARNED COMMISSIONER OF INCOME TAX (CE NTRAL) IS NOT JUSTIFIED IN OBSERVING THAT THE ASSESSING OF FICER HAD MADE REFERENCE TO THE VALUATION CELL AND HAS FAILED TO O BTAIN AND CONSIDER THE TECHNICAL REPORT OF THE D.V.O. WHILE F RAMING THE ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 15 ASSESSMENT IN AS MUCH AS THE ASSESSING OFFICER HAD NOT MADE ANY REFERENCE TO THE VALUATION CELL IN RESPECT OF T HE PREVIOUS YEAR UNDER ASSESSMENT I.E. ASSESSMENT YEAR 1995-96. 13. THAT THE LEARNED COMMISSIONER OF INCOME TAX (CE NTRAL) HAS FAILED TO APPRECIATE THAT REFERENCE WAS MADE TO THE D.V.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF EARL IER YEAR AND THAT THE REPORT OF THE D.V.O. IS MERELY IN THE NATU RE OF OPINION AND THAT THE ENTIRE BOOK OF ACCOUNT OF THE APPELLAN T WERE DULY EXAMINED BY THE ASSESSING OFFICER BEFORE PASSING OF THE ASSESSMENT ORDER AND THEREFORE THERE WAS NO ERROR OR PREJUDICE CAUSED TO THE INTEREST OF THE REVENUE. 14. THAT WITHOUT PREJUDICE THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL) IS NOT JUSTIFIED IN OBSERVING THAT THE ASSESSING OFFICER HAS FAILED TO OBTAIN AND CONSIDER THE TECHNICAL REPORT IN AS MUCH AS THE REPORT OF THE VALUATION OF FICER WAS RECEIVED IN THE SUBSEQUENT YEAR WHOSE PROCEEDINGS W ERE IN PROGRESS AND THE DEPARTMENT HAD SUFFICIENT TIME TO TAKE DUE COGNIZANCE THEREOF AND THE FACT THAT NO REFERENCE W AS MADE FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1995- 96 AND THE PRINCIPLES OF RESJUDICATA ARE NOT APPLICABLE TO INC OME-TAX PROCEEDINGS. 15. THAT WITHOUT PREJUDICE THE COMMISSIONER OF INC OME TAX (CENTRAL) IS NOT JUSTIFIED IN SETTING ASIDE THE ENT IRE ORDER AND GIVING DIRECTIONS THAT THE RE-ASSESSMENT SHOULD BE MADE DENOVO AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES O F THE CASE AS MAY OBTAIN AT THE TIME OF RE-ASSESSMENT. 16. THAT WITHOUT PREJUDICE THE SETTING ASIDE OF TH E ENTIRE ORDER UNDER THE DISGUISE OF PROVISIONS OF SEC.263 I S NOTHING ELSE BUT ONLY A CHANGE OF OPINION AND TANTAMOUNT TO ALLO WING A SECOND INNINGS TO THE DEPARTMENT WHICH IS NOT ENVIS AGED BY THE PROVISIONS OF SEC.263 OF THE INCOME TAX ACT. 13. LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTEN DS THAT THE ISSUE IN QUESTION IS COVERED IN EARLIER YEARS BESIDES THE AD DITION ON ACCOUNT OF VALUATION OF PROPERTY HAS BEEN DELETED IN ASSESSMEN T YEAR 1994-95 AS IT HAS ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 16 BEEN FOUND THAT THE ASSESSEES COST OF CONSTRUCTION WAS MARGINALLY LESS BY ABOUT 1% TO THAT OF DVO. THEREFORE ON MERITS ALSO THERE IS NO JUSTIFICATION ON THIS ISSUE. 14. LEARNED DR ON THE OTHER HAND CONTENDS THAT TH E ASSESSMENT IN QUESTION HAS BEEN FRAMED U/S 144 THOUGH THE ASSESSE E FILED AN APPEAL IN RESPECT OF OTHER ADDITIONS THE FACT REMAINS THAT TH E ASSESSEE DID NOT COMPLY WITH VARIOUS QUERIES RAISED BY A.O. THOUGH SOME EN QUIRES WERE CONDUCTED IN RESPECT OF DEPOSITORS THEY WERE NOT BROUGHT TO L OGICAL CONCLUSION AND THE ISSUE ABOUT ALLOWABILITY OF INTEREST REMAINS LARGEL Y UNANSWERED MORE SO WHEN THE INTEREST HAS NOT BEEN CREDITED TO THE ACCO UNT OF DEPOSITORS. IN RESPECT OF COST OF CONSTRUCTION ISSUE IT WAS CONTE NDED THAT THE PROPOSAL FOR VALUATION OF PROPERTY CONSTRUCTED BY THE ASSESSEE M ADE ON 22.8.1996 A.O. BEING A QUASI-JUDICIAL AUTHORITY SHOULD HAVE KEPT A TRACK OF SUCH AN IMPORTANT PROPOSAL AND TAKE NECESSARY STEPS TO SAFE GUARD THE INTEREST OF REVENUE SINCE THE A.O. FAILED TO TAKE NECESSARY ENQ UIRIES IN THIS BEHALF. THE ABOVE DISCREPANCIES POINTED OUT BY CIT MAKE THE ORD ER OF A.O. ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE AC TION OF CIT IS REQUIRED TO BE SET ASIDE. 15. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ASSESSMENT IS MADE U/S 144 THOUGH THE A.O. ASKE D QUESTIONS ABOUT ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 17 DEPOSITORS IN EXCESS OF RS.20 000/-. SATISFACTORY REPLY HAS NOT BEEN GIVEN. SIMILARLY IN RESPECT OF INTEREST A.O. ALLOWED THE SAME WITHOUT MAKING PROPER ENQUIRIES IN RESPECT OF VALUATION OF PROPERT Y THERE IS NO REFERENCE TO PROPOSAL TO DVO. IN OUR VIEW THESE DISCREPANCIES MAKE THE ORDER OF A.O. ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. HOWEVER WE HASTEN TO ADD THAT CIT(A) SHOULD NOT HAVE SET ASIDE THE ENTIR E ASSESSMENT BUT RESTRICTED THE SETTING ASIDE ON THESE THREE ASPECTS AS THESE ARE THE ERRORS FOUND BY HIM. IN VIEW THEREOF WE UPHOLD THE ACTION U/S 263 BUT RESTRICT ITS SCOPE TO THE ERRORS POINTED OUT BY CIT AND NOT THE ENTIRE ASSESSMENT ORDER. APROPOS THE CONTENTION ABOUT MERITS THE ASSESSMENT HAS BEEN SET ASIDE TO ABOVE EXTENT. THE A.O. WILL TAKE INTO CONSIDERATIO N THE ASPECT OF MERITS WHILE REFRAMING HIS ORDER ON THESE ISSUES. ASSESSE ES APPEAL IS DISMISSED SUBJECT TO ABOVE DIRECTIONS ABOUT RESTRICTING THE S COPE OF SECTION 263. 16. IN THE RESULT THE APPEALS OF THE ASSESSEE AND REVENUE ARE DISPOSED OFF AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF MARCH 2010. SD/- SD/- (G.E. VEERABHADRAPPA) (R.P. TOLANI) VICE PRESIDENT JUDICIAL MEMBER DATED THE 12 TH DAY OF MARCH 2010 TS ITA NO.1634/DEL./1996 ITA NO.625/DEL./2000 18 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A) LUCKNOW. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.