ITO, Coy. Ward-11(4),, v. Indslonal Investment & Fin Ltd.,,

ITA 2713/DEL/2005 | 1995-1996
Pronouncement Date: 09-07-2010 | Result: Dismissed

Appeal Details

RSA Number 271320114 RSA 2005
Bench Delhi
Appeal Number ITA 2713/DEL/2005
Duration Of Justice 5 year(s) 1 month(s) 6 day(s)
Appellant ITO, Coy. Ward-11(4),,
Respondent Indslonal Investment & Fin Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 09-07-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 1995-1996
Appeal Filed On 03-06-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F : NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A.NOS.2713 & 2714/DEL/2005 ASSESSMENT YEAR : 1995-96 INCOME-TAX OFFICER M/S. INDGLONAL INVESTMNET & COY. WARD 11(4) NEW DELHI. VS. FINANCE LTD. C/O S H. S.K. JAIN 32A DDA FLATS VIJAY MANDAL ENCLAVE HAUZ KHAS NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. LAL SR. DR. RESPONDENT BY : SHRI SAL IL AGGARWAL ADVOCATE. O R D E R PER C.L. SETHI JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST TWO SEPARATE ORDER S BOTH DATED 17.03.2005 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SECTION 144 OF THE INCOME-TAX ACT 1961 (THE ACT) AND THE PENALTY LEVIED UNDER SEC. 27 1(1)(C) OF THE ACT BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 1995-96. 2. WE SHALL FIRST TAKE UP THE APPEAL ARISING FROM T HE ASSESSMENT ORDER MADE UNDER SECTION 144 OF THE ACT BY THE ASSESSING OFFICER. 2 ITA NO.2713/DEL/2005 3. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOWI NG GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION ON AC COUNT OF DISALLOWANCE OF DEPRECIATION WITHOUT CONSIDERING TH E FINDING OF THE AO THAT THE PURCHASE OF BEER KEGS HAS NOT BEEN ESTABLISHED TO BE GENUINE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW T HE ADJUSTMENT OF LOSSES OF COMPANIES CLAIMED TO BE AMA LGAMATED WITH THE ASSESSEE IN SPITE OF THE FACT THAT A) REPEATED OPPORTUNITIES TO FURNISH EVIDENCE IN SU PPORT THEREOF WERE PROVIDED AT THE TIME OF SCRUTINY PROCE EDINGS BY AO BUT THE ASSESSEE FAILED TO SUBMIT THE SAME. B) IN THE APPELLATE PROCEEDINGS THE PROVISION OF RU LE 46(A)(1) & 46(A(2) OF THE I.T. RULES 1962 HAVE NOT BEEN COM PLIED WITH. 4. WITH REGARD TO THE DISALLOWANCE OF DEPRECIATION ON PURCHASE OF BEER KEGS WE FIND THAT THE SAME HAS BEEN DISALLOWED BY THE AO FOR THE REASON THAT NO EVIDENCE OF PURCHASE OF ASSETS HAS BEEN BRO UGHT ON RECORD BY THE ASSESSEE. 5. WITH REGARD TO SET OFF OF LOSS ON AMALGAMATED CO MPANIES THE AO HAS STATED THAT NO DOCUMENTARY EVIDENCE HAS BEEN FURNIS HED BY THE ASSESSEE. 6. BEING AGGRIEVED THE ASSESSEE PREFERRED APPEAL B EFORE THE LEARNED CIT(A). 3 7. BEFORE THE LEARNED CIT(A) THE ASSESSEE FURNISHE D ADDITIONAL EVIDENCES TO ESTABLISH THE PURCHASE OF ASSETS AND ACCORDINGLY THE BILL OF M/S. ASIAN CONSOLIDATED INDUSTRIES WAS PRODUCED BEF ORE THE LEARNED CIT(A). AS THE ADDITIONAL EVIDENCES WERE FILED BY THE ASSES SEE BEFORE THE LEARNED CIT(A) THE LEARNED CIT(A) CALLED FOR A REMAND REPO RT ON THE ADDITIONAL EVIDENCES FROM THE AO VIDE HIS LETTER DATED 10.12.2 004. THE AO THEN SUBMITTED HIS REMAND REPORT VIDE LETTER DATED 27.1. 2005 WHICH HAS BEEN DISCUSSED BY THE LEARNED CIT(A) IN PARA 5.3.1 OF HI S ORDER WHICH READS AS UNDER:- 5.3.1 THE A.O. SUBMITTED THE REMAND REPORT VIDE H IS LETTER DATED 27.01.2005. IN THE REMAND REPORT IT W AS SUBMITTED BY THE A.O THE AR OF THE ASSESSEE FILED COPIES OF PURCHASE BILL OF LEASED OUT ASSETS AND CARTAGE BULTIES/CHALLANS F ROM TRUCK OPERATORS UNION BAWAL (HARYANA) IN SUPPORT OF CART AGE OF BEER KEGS FROM THE PREMISES OF ASIAN CONSOLIDATED LTD. 96KM DELHI JAIPUR HIGHWAY SHAHJANPUR DISTRICT ALWAR. T HE INSPECTOR CONDUCTED ENQUIRY FROM THE TRUCK OPERATOR UNION AND REPORTED THAT THE TRUCK NUMBERS GIVEN BY THE ASSESS EE ARE NOT REGISTERED WITH THE TRUCK OPERATOR UNION BAWAL AND NO BEER KEGS WERE LOADED IN THE TRUCKS REGISTERED WITH THE TRUCK OPERATORS UNION FROM THE PREMISES OF ACL TO RBI SH AHJANPUR DISTRICT ALWAR. AS PER INSPECTOR REPORT THERE WAS NO TRANSPORTATION OF KEGS FROM M/S. ASIAN CONSOLIDATED INDUSTRIES LTD. TO M/S. RAJASTHAN BREWERIES LTD. ON 16/03/1995 . COPY OF STATEMENT ENCLOSED AS ANNEXURE `A. IN REPLY TO QU ERY REGARDING PAYMENT OF CARTAGE TO TRUCK OPERATORS SHR I CHAUDHARY TOLD THAT THE ACL PAID CARTAGE AND DEBITED ASSESSEE S ACCOUNT BY THIS AMOUNT WHICH IS INCLUDED IN PURCHASE BILL. THE ASSESSEE HAS NOT SHOWN ANY EVIDENCE FOR PAYMENT OF PURCHASE COST OF KEGS EXCEPT FILLING THE LEDGER ACCOUNT OF M/S. ASIA N CONSOLIDATED INDUSTRIES LTD. IN HIS BOOKS. THE ANAL YSIS OF THE 4 LEDGER ACCOUNT OF M/S. ACL IN ASSESSEES VERSION SH OW THAT THE ACCOUNT HAS BEEN CREDITED WITH PURCHASE PRICE OF RS.2 99 87 490 AND DEBITED WITH DIVIDEND RECEIVED F ROM M/S. ASIAN CONSOLIDATED INDUSTRIES LTD. AND RECEIVABLE L EASE RENT FROM M/S. RAJASTHAN BREWERIES LTD. RECEIVED IN ADVA NCE. BUT THE ASSESSEE COULD NOT FILE THE EVIDENCE IN RESPECT OF DIVIDEND RECEIVED FROM M/S. ACL SO FAR AS LEASE RENT RECEIV ABLE FROM M/S. RBI THE LEDGER A/C OF M/S. INDGLONAL INVESTMEN T & FIN. LTD. HAS BEEN OBTAINED WHICH ALSO SHOW THAT ONLY A DJUSTMENT ENTRIES HAVE BEEN PASSED AND NO PAYMENT OF LEASE RE NT HAS BEEN MADE. THE INSPECTOR ALSO VISITED THE PREMISES OF M /S. ASIAN CONSOLIDATED INDUSTRIES LTD. AND M/S. RAJASTHAN BRE WERIES LTD. ON THE ADDRESS OF BOTH THE PREMISES GIVEN BY THE AS SESSEE HIMSELF. THE INSPECTOR REPORTED ASIAN CONSOLIDATED INDUSTRIES LTD. IS BEING LOOKED AFTER BY THE LIQUIDATOR APPOIN TED BY THE HONBLE HIGH COURT. HE MET SHRI RAM KISHAN CARETAK ER OF M/S. ASIAN CONSOLIDATED INDUSTRIES LTD. WHO WAS UNA BLE TO GIVE INFORMATION. REGARDING M/S. RAJASTHAN BREWERIES LT D. THE ITI REPORTED THAT THIS PREMISES WAS LOCKED 2-3 YEARS BA CK AND NO RESPONSIBLE PERSON WAS THERE AND ONLY A SECURITY GU ARD WAS FOUND. A COPY OF REMAND REPORT WAS GIVEN TO THE ASSESSEE. THE ASSESSEE THEN SUBMITTED A REJOINDER TO THE REMAND REPORT VIDE LET TER DATED 15.02.2005 WHICH HAS BEEN SUMMARIZED BY THE LEARNED CIT(A) IN PARA 5.3.2 WHICH READS AS UNDER:- (I) IN FACT IT WOULD BE SEEN FROM THE VERY FIRST QUESTION OF THE STATEMENT RECORDED OF SHRI RAM CHANDER THE PRE SIDENT OF THE UNION STATED THAT HE IS PRESIDENT OF THE UNION ONLY SINCE 2004. IT HAS BEEN FURTHER STATED THAT IN THE RELE VANT PERIOD IN 1995 THERE USED TO BE ANOTHER UNION NAMELY BAWAL TR UCK UNION WHICH WAS DISSOLVED IN 1997. THUS IT IS EV IDENT THAT THE PERSON ON WHOSE STATEMENT RELIANCE HAS BEEN PLACED HAS NO RELEVANCE EITHER TO THE PLACE OR TIME OF KNOWLEDGE OF THE CASE. IN ANY CASE EVEN OTHERWISE IT WOULD BE SEEN THAT S UCH PERSON 5 HAS OTHERWISE AFFIRMED THE TRANSACTION IN SECOND QU ESTION ON PAGE 2. (III) THE LD. AO SHOULD NOT HAVE DRAWN ADVERSE INFE RENCE AGAINST THE ASSESSEE THE MINIMUM THAT WAS REQUIRED OF THE LEARNED ASSESSING OFFICER WAS TO PERMIT THE ASSESS EE TO CROSS- EXAMINE THE PERSON ON THE BASIS OF WHOSE STATEMENT THE LEARNED OFFICER HAS PROCEEDED TO MAKE AN ADDITION WHICH IS IN UTTER VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND HAS TO BE DISCARDED AS SUCH. IN FACT IDENTICAL CIRCUMSTANCE S HAD ARISEN BEFORE HONBLE SUPREME COURT IN THE CASE OF KISHINC HAND CHELLARAM VS. CIT BOMBAY CITY-II REPORTED IN 125 I TR 713 WHEREIN THEIR LORDSHIPS OF HONBLE SUPREME COURT N EGATIVED THE VIEW TAKEN BY THE HONBLE HIGH COURT AND HELD T HAT NEW EVIDENCE WHICH AHS NEVER SEEN THE LIGHT OF THE DAY COULD NOT BE TAKEN INTO CONSIDERATION SO AS TO WARRANT AN ADDITI ON. (IV) THE APPELLANT ALSO SEEKS TO PLACE RELIANCE ON THE DECISION OF THE HONBLE TRIBUNAL IN THE CASE OF THE APPELLAN T FOR A.Y. 1993-94 WHEREIN SIMILAR DISALLOWANCE HAD BEEN DELE TED. (V) THE APPELLANT ALSO PLACED RELIANCE ON THE DECIS ION OF THE ITAT IN THE CASE OF DWARIKA PRASAD VS. ITO REPORTED IN 63 ITD 1 IT HAS BEEN HELD THAT WHEN FRESH EVIDENCE IS AVAILABLE AND THE ASSESSEE IS IN A POSITION TO PRODUCE THE SA ME THERE IS NO REASON WHY THE AAC SHOULD NOT EXAMINE IT ON MERITS AND PASS APPROPRIATE ORDERS. UNLESS THE AAC IS SATISFIED TH AT HE REQUEST FOR PERMISSION TO PRODUCE THE ADDITIONAL EVIDENCE L ACKS BONA FIDES AND IS MADE WITH A VIEW TO CAUSE DELAY IN THE PROCEEDINGS. 8. THE LEARNED CIT(A) THEN FURTHER ASKED THE AO TO MAKE FURTHER ENQUIRY AND OUTCOME OF THE FURTHER ENQUIRY AND THE REMAND REPORT OF THE AO DATED 1 ST MARCH 2005 HAS BEEN DISCUSSED BY THE CIT(A) AS UN DER:- 5.3.3 ON GOING THROUGH THE STATEMENT ANNEXED WITH THE REMAND REPORT BY THE A.O. OF SHRI RAM CHANDER WHOSE STATEMENT WAS RECORDED AND RELIED UPON BY THE A.O. THE FOLLOWING POINTS EMERGES: 6 (A) HE IS THE PRESIDENT OF JALIWAS TRUCK UNION DIS TT. REWARI SINCE 2004. (B) THERE WAS A TRUCK UNION IN BANIPUR FROM 1992 TO 1997 AND ITS PRESIDENT WAS SH. RAJINDER SINGH UPTO 1977. (C) THE TRUCK UNION JALIAWAS CAME INTO EXISTENCE IN PLACE OF TRUCK UNION BANIPUR BAWAL SINCE 1997. SHRI NARESH KUMAR AND SHRI SOM DUTT WERE THE PRESIDENT FROM 199 7 TO 2004. (D) OF THE 19 BILTIES DATED 16-03-95 SHOWN NO TRUCK IS OWNED BY SHRI RAM CHANDER MENTIONED IN THEM. IT HAS BEEN FURTHER CLARIFIED BY SH. RAM CHANDER THE TRUCKS MEN TIONED ARE OLD AND MIGHT HAVE BEEN SOLD AND BEER KEGS MIGH T HAVE BEEN LOADED IN 1995 BY THE UNION. AS THE SUBMISSIONS MADE IN THE REMAND REPORT FORWAR DED BY THE AO WERE CONTRARY TO THE STATEMENT OF SH. RAM CHANDE R AND NO WHERE HELPED IN DECIDING THE MATTER THE A.O. WAS DI RECTED TO VERIFY THE SAME FROM THE UNION EXISTING IN 1995. 5.3.4 THE A.O. IN ITS REMAND REPORT DATED 1 ST MARCH 2005 SUBMITTED THAT AN ENQUIRY WAS MADE THROUGH THE A.O. REWARI. THE A.O. WARD-2 REWARI HAS SENT HIS REPO RT VIDE HIS LETTER NO.2120 DATED 22/02/2005 STATING THEREIN THA T THE TRUCK OPERATOR UNION AT BAWAL HAS ALREADY BEEN CLOSED SIN CE 1997-98 AS PER THE REPORT OF ITI OF HIS OFFICE. HE HAS FUR THER STATED THAT AS THE FIRM HAS ALREADY BEEN CLOSED IT IS NOT POSS IBLE TO VERIFY THE GENUINENESS OF THE BILTIES SENT TO HIS OFFICE. ENQUIRIES MADE FROM TRUCK OPERATORS UNION AT JALIAWAS REVEALED THA T THE TRUCK NUMBERS MENTIONED IN BILTIES ARE NOT RUNNING AT PRE SENT AND THE TRUCK OPERATORS UNION BAWAL SHIFTED TO TRUCK OPERA TORS UNION JALIAWAS. AS THE UNION HAD SINCE BEEN CLOSED IN 19 97-98 AT BAWAL IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THESE BILTIES. THE CASHIER OF THE TRUCK OPERATOR UNION JALIAWAS ALSO TOLD THE ITI REWARI THAT THESE TRUCKS ARE NOT RUNN ING UNDER THEIR UNION. THE INCHARGE OF THE MUNICIPAL COMMITTEE BA WAL DISTT. REWARI HAS REPORTED THAT M/S. ASIAN CONSOLIDATED LT D. IS OUT OF 7 LIMITS OF MUNICIPAL COMMITTEE BAWAL AND THE ABOVE FACTORY FALLS IN PANCHAYAT AND PANCHAYAT DO NOT LEVY THE OC TROI TAX (COPY ENCLOSED) 9. AFTER TAKING INTO ACCOUNT THE REPORT OF THE AO INDEPENDENT VERIFICATION REGARDING THE PURCHASE OF BEER KEGS AN D ASSESSEES SUBMISSIONS THE LEARNED CIT(A) DECIDED THE ISSUE BY OBSERVING A ND HOLDING AS UNDER:- 5.3.5 TAKING INTO CONSIDERATION THE ABOVE REPORT OF A.O. REWARI THE INDEPENDENT VERIFICATION REGARDING THE PURCHASE OF BEER KEGS BY THE APPELLANT THROUGH VERIFICATION WHE THER THE SAME HAS BEEN TRANSPORTED OR NOT IS NOT POSSIBLE DU E TO LARGE TIME GAP. THE TRUCK UNION THEN EXISTING IS NO MORE EXISTING AND ITS BOOKS WHICH ARE NOW MORE THAN 10 YEARS OLD ARE ALSO NOT AVAILABLE FOR VERIFICATION WHETHER THE BEER KEGS WE RE ACTUALLY TRANSPORTED OR NOT. IN VIEW OF THE ABOVE FACTS TH E ISSUE IS TO BE DECIDED ON WHATEVER EVIDENCE PLACED BY THE APPELLAN T ON RECORD. THE APPELLANT HAS PLACED ON RECORD THAT IT HAD PURCHASED BEER KEGS FROM M/S. ASIAN CONSOLIDATED IN DUSTRIES LTD. AND HAVE LEASED THE SAME TO M/S. RAJASTHAN BRE WERIES LTD. WHO HAVE ALSO CONFIRMED THE TRANSACTION IN REFERENC E TO THE INDEPENDENT ENQUIRY MADE BY THE A.O. ON REMANDING T HE PROCEEDINGS. IT IS ALSO A FACT THAT THE APPELLANT HAS ALSO SHOWN LEASE INCOME FROM LEASING OUT THESE KEGS DURING THE YEAR OF RS.1 88 63 823/. IT IS ALSO A FACT THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THE ITAT IN A.Y. 93-9 4 IN WHICH ALSO THE PURCHASE OF BEER KEGS FROM M/S. ASIAN CONS OLIDATED INDUSTRIES LTD. WAS DOUBTED. THEREFORE TAKING INT O CONSIDERATION THE TOTALITY OF THE FACTS AS ON DATE AS THE APPELLANT HAS PRODUCED THE NECESSARY EVIDENCE IN REGARD OF TH E PURCHASE OF THE BEER KEGS ON THE BASIS OF SUSPICION NO DISA LLOWANCE CAN BE MADE AND THE DEPRECIATION DISALLOWED BY THE A.O. IS DELETED. THE A.O. IS ALSO DIRECTED TO CORRECT THE FIGURE OF THE DEPRECIATION AFTER VERIFICATION OF THE RECORD. THI S GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 8 10. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDER OF THE CIT(A) INCLUDING HIS DISCUSSION WITH R EGARD TO THE REMAND REPORT SUBMITTED BY THE AO AS WELL AS THE VARIOUS E VIDENCES FILED BY THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE F URNISHED A BILL FOR PURCHASE OF BEER KEGS FROM M/S. ASIAN CONSOLIDATED INDUSTRIES L TD. THE SAID BILL IS NOT FOUND TO BE FALSE OR FAKE. NO MATERIAL CONTRARY TO THE BILL OF M/S. ASIAN CONSOLIDATED INDUSTRIES LTD. HAS BEEN BROUGHT ON RE CORD. IT IS ALSO ESTABLISHED THAT THE ASSESSEE LEASED BEER KEGS TO M /S. RAJASTHAN BREWERIES LTD. WHO HAVE CONFIRMED THE TRANSACTION IN THE COUR SE OF INDEPENDENT ENQUIRY MADE BY THE ASSESSING OFFICER DURING THE AS SESSMENT PROCEEDINGS. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS SHOWN LEASE INCOME FROM LEASING OUT THESE BEER KEGS DURING THE YEAR AT RS.1 88 63 8 23/- AND HAS BEEN ASSESSED BY THE AO ALSO. THE PURCHASE OF BEER KEGS FROM M/S. ASIAN CONSOLIDATED INDUSTRIES LTD. DURING THE FINANCIAL Y EAR 1993-94 WAS ALSO DOUBTED BY THE AO BUT THE SAME WAS FOUND TO BE GENU INE BY THE TRIBUNAL AS WOULD BE CLEAR FROM THE TRIBUNALS ORDER FOR THE A. Y. 1993-94. THEREFORE IN THE LIGHT OF THE DETAILED ENQUIRY CONDUCTED BY T HE CIT(A) AND IN THE LIGHT OF VARIOUS EVIDENCES EXAMINED AND VERIFIED BY THE L EARNED CIT(A) AND IN ABSENCE OF ANY MATERIAL REBUTTING THE FINDINGS OF T HE LEARNED CIT(A) WE DO NOT FIND ANY JUSTIFIABLE REASON TO TAKE A VIEW CONT RARY TO THE VIEW TAKEN BY 9 THE LEARNED CIT(A) ON THIS ISSUE. WE THEREFORE U PHELD THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO ALLOW DEPRECIATION AF TER CORRECTING THE FIGURE OF DEPRECIATION ON VERIFICATION OF THE RECORD. THU S THIS GROUND RAISED BY THE REVENUE IS REJECTED. 11. WITH REGARD TO THE SET OFF OF LOSS OF THE AMALG AMATED COMPANIES WE FIND THAT THE LEARNED CIT(A) HAS DECIDED THIS ISSUE IN THE LIGHT OF THE ORDER OF THE HONBLE HIGH COURT OF DELHI WHEREBY AMALGAMATIO N WAS APPROVED VIDE ORDER DATED 22.10.1995 WITH EFFECT FROM 31.3.1993. THE AO IN THE REMAND REPORT HAS ALSO ACCEPTED THAT THERE WAS AMALGAMATIO N OF VARIOUS COMPANIES WITH THE ASSESSEE COMPANY AS PER THE ORDER OF THE H ONBLE DELHI HIGH COURT COPY OF WHICH WAS PLACED BEFORE THE AO. IN VIEW OF THIS REMAND REPORT BY THE AO THE LEARNED CIT(A) DIRECTED THE AO TO ALLOW LOSSES OF AMALGAMATED COMPANIES AS THE CLAIM WAS FOUND TO BE IN ORDER AS PER THE DECISION OF HONBLE DELHI HIGH COURT. A COPY OF THE HONBLE DE LHI HIGH COURTS ORDER FILED BEFORE THE CIT(A) WAS DULY FORWARDED TO THE A O AND ON RECEIPT THEREOF THE AO ALSO SUBMITTED HIS REMAND REPORT DA TED 27 TH JANUARY 2005 AND IN THE LIGHT OF THIS BACKGROUND IT CAN BE SAID THAT THERE IS NO VIOLATION OF PROVISIONS OF RULE 46A OF THE INCOME-TAX RULES AS S O AGITATED BY THE REVENUE IN THE GROUND OF APPEAL. ON THIS ASPECT OF THE MATTER THE ORDER OF THE LEARNED CIT(A) IS UPHELD. 10 12. IN THE COURSE OF HEARING THE LEARNED COUNSEL F OR THE ASSESSEE ALSO RAISED A LEGAL GROUND THAT THE AO HAS NO JURISDICTI ON TO COMPLETE THE ASSESSMENT BUT IN THE LIGHT OF THE VIEW WE HAVE TAK EN ABOVE WHEREBY THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE OF DEPRECIATION AND IN ALLOWING THE SET OFF OF LOSS OF AMALGAMATED COMPANI ES IS UPHELD THIS GROUND RAISED BY THE ASSESSEE HAS BECOME PURELY ACADEMIC A ND HENCE IT IS NOT ADJUDICATED UPON. 13. IN THE RESULT THIS APPEAL FILED ON THE QUANTUM BY THE REVENUE IS DISMISSED. ITA NO.2714/DEL/2005 14. NOW WE COME TO ITA NO.2714/DEL/2005 ARISING FR OM THE PENALTY ORDER LEVYING PENALTY UNDER SECTION 271(1)( C) OF T HE ACT BY THE AO FOR THE ASSESSMENT YEAR 1995-96. 15. THE ASSESSING OFFICER HAD LEVIED PENALTY IN THE LIGHT OF THE ADDITION MADE BY HIM ON ACCOUNT OF DISALLOWANCE OF DEPRECIAT ION AND REJECTING THE CLAIM OF SET OFF OF LOSS OF THE AMALGAMATED COMPANI ES. A PENALTY LEVIED BY THE AO UNDER SEC. 271(1)(C) HAS BEEN CANCELLED BY T HE LEARNED CIT(A) AS WHOLE OF THE ADDITIONS HAVE BEEN DELETED IN THE QU ANTUM APPEAL BY HIM. IN THE LIGHT OF OUR ORDER IN THE QUANTUM APPEAL UPHOLD ING THE ORDER OF THE LEARNED CIT(A) WHEREBY THE LEARNED CIT(A) DELETED T HE ADDITIONS WE ARE 11 INCLINED TO UPHOLD THE ORDER OF THE CIT(A) IN CANCE LLING THE PENALTY LEVIED BY THE AO INASMUCH AS THE BASIS TO LEVY THE PENALTY DOES NOT SURVIVE ANY MORE. 16. IN THE RESULT THE APPEAL FILED BY THE REVENUE ON PENALTY ISSUE IS ALSO DISMISSED. 17. TO SUM UP BOTH THE APPEALS FILED BY THE REVENU E ARE DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 9 TH JULY 2010. SD/- SD/- (A.K. GARODIA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH JULY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.