Income Tax Appellate Tribunal - Ahmedabad
Deputy Commissioner Of Income Tax vs Walker Anjaria & Sons Pvt. Ltd. (Also ... on 31 July, 1995
Equivalent citations: (1996)54TTJ(AHD)64
ORDER
B. M. KOTHARI, A. M. :
All these appeals relate to the same assessee and pertain to the same asst. yr. 1986-87. Hence, these appeals are being disposed of by this common order.
ITA Nos. 4267 & 4339/Ahd/1990
2. The above two cross appeals (ITA Nos. 4267 & 4339/Ahd/1990) are directed against the order passed by the CIT(A) on 13th Sept. 1990 in relation to assessment made under s. 143(3) of the Act for asst. yr. 1986-87. After decision of the appeal by the CIT(A) on 13th Sept., 1990, the assessee submitted a miscellaneous application (application for rectification under s. 154) stating that an addition of Rs. 26,04,372 made under s. 41(1) has wrongly been confirmed by the CIT(A). The CIT(A) vide order under s. 154 passed just after three months of the original appellate order passed by him, deleted the said addition of Rs. 26,04,372. The Revenue has preferred a further appeal against the said order under s. 154 by the CIT(A) before us and that appeal is marked as ITA No. 1363/Ahd/1991.
3. We will first deal with the assessees appeal (ITA No. 4339/Ahd/1990) and the Revenues appeal against the order under s. 154 passed by the CIT(A) being ITA No. 1363/Ahd/1991 in which the main point requiring our consideration relates to an addition of Rs. 26,04,372 made by the ITO under s. 41(1) in respect of cessation of liability for repaying the refund of custom duty received by the assessee.
4. The facts relating to the aforesaid matter are briefly as under :
(A) The assessee exported some consignments of wool describing it as Indian Scoured Wool during the year 1973-74 and paid under protest export duty under Tariff Item No. 12 - Raw Wool - of Second Schedule to the Act, 1934. The amount of duty including cess paid under protest amounted to Rs. 26,04,372.
(B) Thereafter the assessee applied for refund of the aforesaid duty to the Asstt. Collector, Jamnagar who passed refund orders in the months of August, September, and November, 1974.
(C) Thereafter the Superintendent of Customs, Jamnagar issued notices/demand notices under s. 28 of the Custom s Act, 1962 on 26th April, 1975 requiring the assessee to repay back in full the amount of duty refunded to the assessee. The assessee challenged the validity of these notices recalling the amount of refund by Special Civil Application No. 1498 of 1975. The Honble Gujarat High Court granted an ad interim stay in September, 1975 and subsequently passed final stay order restraining the Customs Department from taking any steps and actions in implementation or furtherance of their above referred orders or from recovering export duty of customs on export of scoured wool on the ground that it was raw wool.
(D) The Honble Gujarat High Court finally decided the issue vide its judgment dt. 8th Dec., 1975. It was held that the impugned notices respectively dt. 26th April, 1975, 28th April, 1975 and 18th June, 1975 recalling the amount of refund are in fact not show cause notices but such notices fully and finally and once for all adjudicated upon the assessee the said liability and such orders were passed without complying with the mandatory requirements of s. 28 of the Act. The Honble High Court held that all these impugned notices are bad in law and, therefore, inoperative and the respondents were restrained from taking any action on their strength.
(E) The Superintendent of Customs, Jamnagar thereafter submitted an application for leave to appeal to the Supreme Court on 21st June, 1976. The Honble High Court vide order dt. 27th Jan., 1977 passed order refusing leave to appeal.
(F) The Superintendent of Customs, Jamnagar thereafter presented a petition for special leave to appeal on 28th March, 1977 before the Honble Supreme Court. The Honble Supreme Court vide order dt. 12th Oct., 1977 granted SLP.
(G) The Honble Supreme Court vide judgment dt. 10th Jan., 1991 dismissed the said SLP and also imposed cost.
(H) After being unsuccessful before the Honble Gujarat High Court in Special CA No. 1948 of 1974 decided on 8th Dec., 1975, the Collector of Customs and Central Excise, Jamnagar issued a show cause notice under s. 130 of the Customs Act, 1962 on 4th Feb., 1976. In para 7 of the said show cause notice it has been mentioned that proper procedure was not followed by the Superintendent of Customs, Jamnagar in demanding repayment of the duty erroneously refunded and, therefore, on their filing a writ petition in Gujarat High Court in the matter Spl. C. A. No. 1498 of 1974 on 8th Dec., 1975, the High Court quashed the notices of demands issued by the Superintendent of Customs, Jamnagar. By this show cause notice issued under s. 130 the assessee was required to show cause why the above referred orders of refund of Asstt. Collector of Customs, Jamanagar should not be set aside and why an appropriate order in review should not be passed directing recovery of Rs. 26,04,372 which appears to have been erroneously refunded.
(I) The Collector, Customs and Central Excise vide order dt. 20th July, 1976 set aside the aforesaid improper and erroneous orders of refund passed by the Asstt. Collector of Customs, Jamnagar and directed the assessee exporter to pay back forthwith the aforesaid amount of Rs. 26,04,372 which was refunded by the Asstt. Collector of Customs, Jamnagar.
(J) Against this order passed under s. 130 of the Customs Act, 1962, the assessee submitted revision application under s. 131 before the Commissioner (Revision Applications), Ministry of Finance (Deptt. of Revenue & Banking), Govt. of India, New Delhi.
(K) The order dt. 16th Sept., 1978 was passed by the Addl. Secretary to the Govt. of India, Ministry of Finance, Department of Revenue, holding that there was a denial of natural justice while passing the impugned order dt. 20th July, 1970 in review. The concerned authority was directed to decide the matter afresh within three months after full opportunity to the assessee.
(L) The Collector of Customs, Bombay appointed as Collector of Customs, Ahmedabad for the adjudication of this case, by order dt. 30th May, 1985 dropped the proceedings initiated under s. 130. The date of this order 30th May, 1985 falls in the relevant asst. yr. 1986-87 under consideration. The previous year relevant to asst. yr. 1986-87 ended on 31st Aug., 1985.
(M) The Assessing Officer held that since the proceedings initiated under s. 130 of the Customs Act, 1962 were finally dropped vide order dt. 30th May, 1985 which falls during the relevant accounting year, the liability for paying back the amount of refund finally ceased to exist in the assessment year under consideration and, therefore, the said amount of Rs. 26,04,372 is clearly liable to tax as deemed income taxable under s. 41(1). He accordingly made the said addition.
5. The learned CIT(A) in the original appellate order passed by him on 13th Sept., 1990 has elaborately discussed and considered this point in paras 3 to 5 of the said order. In para 3 he has duly noted the entire facts relating to the issue of demand notices under s. 28 recalling the amount of refund, the judgment of the Gujarat High Court by which those notices were cancelled. The CIT(A) also took note of the proceedings initiated under s. 130 of the Customs Act. All these facts have been briefly narrated in para 3 of his order. In para 4 the CIT(A) has considered various judgments reported in E. D. Sasoon & Co. Ltd. vs. CIT (1954) 26 ITR 27 (SC), Topan Das Kundan Mal vs. CIT (1978) 114 ITR 237 (Guj), CIT vs. Hindustan Housing & Land Dev. Trust Ltd. (1987) 161 ITR 524 (SC) and J. K. Synthetics Ltd. vs. O. S. Bajpai, ITO & Anr. (1976) 105 ITR 864 (All) relating to the question of "remission or cessation" of said liability within the meaning of s. 41(1). In para 5 the CIT(A) held that after very carefully considering the rival submissions and after taking into consideration the observations and discussions made by the ITO in the assessment order and the written submissions submitted on behalf of the assessee and after considering the above cited case laws, he is of the view that since order under s. 130 was passed on 4th June, 1985 (correct date should be 30th May, 1985) which falls in the accounting year relevant to asst. yr. 1986-87, the refund in question of Rs. 26,04,372 has become final and as such the provisions of s. 41(1) are clearly attracted to the facts of the case. He accordingly confirmed the order of the Assessing Officer in which the aforesaid amount was added as income under s. 41(1) of the Act.
6. It will be worthwhile to state that Shri K. C. Patel, Advocate, Shri R. M. Sanghvi, Shri J. K. Anjaria and Shri Ajay Anjaria were present on behalf of the assessee during the course of hearing of appeal which was decided vide order dt. 13th Sept., 1990. The written submissions were also submitted prior to decision of the said appeal.
7. Thereafter, the assessee presented some miscellaneous petition presumably under s. 154 of the Act before the same CIT(A) Shri K. Subba Rao, who originally decided the matter vide his order dt. 13th Sept., 1990. The CIT(A) passed order under s. 154 on 10th Dec., 1990, i.e., about three months of the original appellate order passed by him. In the opening para of order under s. 154 passed by the CIT(A) on 10th Dec., 1990, he has reproduced paras 1 to 5 of the said application. In para 2 he has observed that the assessee made written submissions in support of its contention that the appellate order dt. 13th Sept., 1990 suffered from mistake apparent on record inasmuch as the pendency of the proceedings under s. 28 of the Customs Act was not considered in deciding whether the liability has ceased to exist to attract the provisions of s. 41(1). It is not known who represented the assessee in the course of such proceedings under s. 154 considered and decided by the CIT(A). In paras 3 to 7 of the order passed by the CIT(A) he has recorded his findings in respect of the aforesaid rectification application submitted on behalf of the assessee. In the concluding para 7 the CIT(A) has observed that the liability was not created or claimed and allowed as deduction on the basis of notices under s. 28. The refund of duty in that case ought to have been subjected to tax in the year of its receipt, i.e., asst. yr. 1976-77 in view of the fact that notices and order under s. 130 were received later, i.e., in asst. yr. 1977-78. He, therefore, held in the said order passed under s. 154 that the liability has not ceased to exist in asst. yr. 1986-87 and, therefore, the amount of Rs. 26,04,372 cannot be brought to tax under s. 41(1) in the year under appeal. He accordingly amended the order passed by him on 13th Sept., 1990 and thus deleted the addition of Rs. 26,04,372.
8. The assessee filed an appeal on 20th Nov., 1990 against the original appellate order passed by the CIT(A) on 13th Sept., 1990. The Revenue has filed an appeal on 15th March, 1991 against the order under s. 154 passed by the CIT(A) on 10th Dec., 1990.
9. The learned counsel for the assessee argued that the notices issued by the Customs Department in the months of April, 1975 and June, 1975 recalling the amount of refund granted to the assessee were not merely show cause notices but those notices created a demand resulting into creation of liability against the assessee. This would be evident from the judgment of the Gujarat High Court in which it was held that such notices are not show cause notices but are the orders demanding payment. The High Court has held that these impugned notices are orders creating such liability and held those orders as illegal. However, the Customs Department submitted SLP before the Supreme Court and such leave was granted by the Supreme Court. Therefore, the proceedings initiated under s. 28 were still pending in asst. yr. 1986-87. The Supreme Court finally decided the matter vide judgment dt. 10th Jan., 1991 and, therefore, the liability finally ceased to exist only when the Supreme Court had finally decided the said matter which falls in asst. yr. 1991-92. The Department has included the aforesaid amount of Rs. 26,04,372 as liable to tax in asst. yr. 1991-92. However, such addition in asst. yr. 1991-92 was made without prejudice to the stand of the Department taken in asst. yr. 1986-87. The learned counsel submitted that the liability did not cease to exist in the asst. yr. 1986-87 in view of the pendency of the said matter before the Supreme Court in that year.
9.1 In the alternative it was submitted that even if these impugned notices are held to be mere show cause notices, the appellant company which maintains its accounts on mercantile basis is entitled to claim deduction for the said liability in view of the following judgments :
(i) CIT vs. Century Enka Ltd. (1981) 130 ITR 260 (Cal) : 6 Taxman 64 (Cal);
(ii) CIT vs. Tata Chemicals Ltd. (1986) 162 ITR 556 (Bom);
(iii) CIT vs. Kesoram Industries & Cotton Mills Ltd. (1992) 196 ITR 569 (Cal); and
(iv) CIT vs. National Insulated Cable Co. (1993) 200 ITR 266 (Cal) The learned counsel submitted that if it is the contention of the ITO that said notices did not create any liability, the proper course for the Department is to disallow liability in the year in which it was provided in the books of accounts, i.e., in asst. yr. 1975-76. So far as the liability referred to in the said notices in question is concerned, nothing has happened during the year under appeal which would justify invoking of provisions of s. 41(1). The learned counsel further submitted that the contention of the ITO that the liability was created on the order passed by the Collector of Customs and Central Excise, is not correct. He tried to support the contention by giving sequence of events in chronological order as stated at page 4 of the compilation submitted by him. It was pointed out that the liability was claimed and allowed in previous year relating to asst. yr. 1976-77 on the basis of demand by the Customs Department through the notice under s. 28 of the Customs Act. The liability was never accounted, claimed and allowed on the basis of notices under s. 130. Therefore, the dropping of the proceedings under s. 130 cannot give rise to remission of the liability. He further submitted that the provisions of ss. 28 and 130 of the said Act are separate and independent of each other. Sec. 28 is a specific provision which empowers the Asstt. Collector of Customs after following the prescribed procedure to recover duty which has not been levied or has been erroneously refunded. Sec. 130, on the other hand, gives a general power to the Collector to revise an order of a subordinate. Since both these provisions are different and the proceedings thereunder independent of each other, it cannot be said that dropping of the proceedings under s. 130 brings to an end the matter regarding refund of export duty, particularly when the same subject-matter is pending for a decision before the highest Court of the land. The learned counsel, therefore, submitted that the proceedings under s. 130 were dropped by order dt. 30th May, 1985 in view of the fact that the Collector of Customs found that the notices dt. 4th Feb., 1976 under s. 130 were beyond the time limit of six months laid down in s. 28. The learned counsel thus strongly submitted that the original appellate order passed by the CIT(A) confirming the addition in question was patently wrong and suffered from glaring mistakes and further submitted that the subsequent order passed by the CIT(A) under s. 154 deleting the said addition is perfectly valid and justified.
10. The learned Departmental Representative submitted that the liability for repaying back of refund of duty received by the assessee finally ceased to exist when the proceedings initiated under s. 130 were dropped in the year under consideration. He placed heavy reliance on the elaborate reasons mentioned in the assessment order and as well as in the original appellate order passed by the CIT(A). It was pointed out that the amount in question has been added in asst. yr. 1991-92 on a protective basis. It has been clearly mentioned in the assessment order for asst. yr. 1991-92 that the said addition is being made without prejudice to the stand taken by the Department that the said amount is rightly assessable as income under s. 41(1) in asst. yr. 1986-87.
10.1 The learned Departmental Representative submitted that the order passed by the CIT(A) under s. 154 is clearly beyond the scope of s. 154. The CIT(A) has reviewed his earlier order which is not permissible as per s. 154. No apparent mistake of law or fact existed in the original appellate order passed by the CIT(A) and, therefore, the said order under s. 154 passed by the CIT(A) is patently wrong and invalid and without jurisdiction.
11. We have carefully considered the submissions made by the learned representatives of the parties and have also gone through the orders of the learned Departmental authorities. We have also gone through various decisions cited by the learned representatives of the parties including those which have been mentioned in the written submissions submitted on behalf of the assessee. At the outset we consider it our duty to point out that the CIT(A) has grossly erred in deleting the aforesaid addition of Rs. 26,04,372 by passing an order under s. 154 which is after three months of the original appellate order passed by him in which said addition was confirmed after carefully considering all the relevant facts, material and decisions referred to in the original order passed by him. A perusal of the original appellate order passed by the CIT(A) clearly reveals that he had duly considered all the facts and different proceedings initiated under s. 28 of the Customs Act and was also aware about the entire facts relating to initiation and conclusion of proceedings under s. 130 of the said Act. After considering the entire material relating to so called two distinct and independent proceedings under ss. 28 and 130 and after giving his deep and thoughtful consideration to the submissions made by the learned representatives who appeared before him in the course of original appellate proceedings, came to the conclusion that the amount of Rs. 26,04,372 has rightly been taxed under s. 41(1) in the year under consideration. It is indeed surprising that a senior officer of the level of CIT(A) has deleted the said addition of more than Rs. 26 lacs by passing an order under s. 154 merely on the basis of review and reappraisal of the same facts, which had duly been considered by him before passing the original appellate order. Such an order passed under s. 154 is glaring instance of rectification order passed in flagrant and deliberate disregard of the provisions of law. We are, therefore, of the considered opinion that the order passed by the CIT(A) under s. 154 deleting the addition of Rs. 26,04,372 is patently invalid and deserves to be quashed. We accordingly set aside and cancel the said order passed by the CIT(A) under s. 154 on 10th Dec., 1990.
12. We will now consider the assessees appeal against the original appellate order passed by the CIT(A) on 13th Sept., 1990 in which the addition of Rs. 26,04,372 made under s. 41(1) of the Act was confirmed.
13. The amount of duty on export paid by the assessee on export of wool and describing it as Indian Scoured Wool paid under protest in the financial year 1973-74 was refunded to the assessee in the months of August, September, and November, 1974 which falls in asst. yr. 1976-77. The previous year adopted by the assessee ended on 31st Aug., 1985 relating to asst. yr. 1986-87. It is, therefore, clear that the assessees accounting year ended on 31st August every year.
13.1 This refund received in previous year relevant to asst. yr. 1976-77 was not accounted for by the assessee as income but it was carried over as a liability in view of the fact that in that very accounting year notice under s. 28 of the Customs Act, 1962 was issued in the months of April and June, 1975. In view of the issuance of such notices which have been held to be the orders demanding repayment of refund issued by the Customs authorities, the refund already received by the assessee was in jeopardy.
13.2 The said notices were issued under s. 28 of the Customs Act and were challenged before the High Court and the High Court vide its judgment dt. 8th Dec., 1975 held that such notices are bad in law and, therefore, inoperative and the Customs Department was restrained from taking any action on the strength of such demand notices issued in the months of April, 1975 and June, 1975. This date of judgment of the High Court, i.e., 8th Dec., 1975 falls in asst. yr. 1977-78. Before the close of the relevant accounting year on 31st Aug., 1976, the Customs Department once again issued a show cause notice under s. 130 of the Act, 1962 on 4th Feb., 1976. With the issuance of said notice under s. 130 the dispute relating to repaying the amount of refund already received by the assessee continued to exist and the refund so received remained in uncertainty and jeopardy. Both these events, viz., the judgment of the High Court quashing the notices under s. 28 and the issue of fresh notice under s. 130 of the Customs Act, 1962 fall in the previous year relevant to asst. yr. 1977-78.
13.3 Thereafter important sequence of events which took place in the subsequent years are that the Supreme Court admitted SLP filed by the Customs Department against the judgment of the Gujarat High Court dt. 8th Dec., 1975 on 12th Oct., 1977. The Supreme Court dismissed the said civil appeal filed by the Customs Department on 10th Jan., 1991. It will be worthwhile to state that the time when SLP was admitted by the Supreme Court, the respondent assessee was not even required to furnish any undertaking or guarantee or security in favour of the Customs Department that in the event of Customs Department or the Union of India succeeding in this case against the assessee, the exporter assessee will be liable to pay back the amount of refund already received.
14. At this stage, it will be worthwhile to examine as to whether Customs Department after quashing of the notices under s. 28 by the Gujarat High Court vide order dt. 8th Dec., 1975 considering further proceedings to be taken before the Supreme Court as a real and substantial nature of proceedings or they merely wanted to keep the matter alive by persuading the matter relating to SLP and in the meantime they wanted to examine as to under which other provisions of the Customs Act, the Department can take more effective proceedings for ensuring recovery of the amount alleged to have been erroneously refunded to the assessee. With these observations the Department issued a show cause notice under s. 130 on 4th Feb., 1976. It will be worthwhile to reproduce paras 7 to 10 of the said show cause notice dt. 4th Feb., 1976 :
" (7) And whereas it appears that proper procedure was not followed by Superintendent, Customs, Jamnagar in demanding repayment of the duties erroneously refunded as aforesaid and, therefore, on their filing a writ petition in the Gujarat High Court in the matter Spl. C. A. No. 1498/75 of 15th Sept., 1975, the High Court quashed the notices of demands issued by the Superintendent, Customs, Jamnagar.
(8) And whereas it appears that M/s Walker Anjaria & Sons (P), Jamnagar are liable to pay the duty on digreased scoured wool amounting to Rs. 26,04,372.79 leviable on the consignments exported during the months of August, September, October., and December, 1973 and January, February, and March, 1974;
(9) Now, therefore, the undersigned by virtue of the powers vested on me under s. 130 of the Customs Act, 1962 r/w Notification No. 101/64 dt. 1st July, 1964 calls upon M/s Walker Anjaria & Sons (P) Ltd., Jamnagar to show cause to the undersigned as to why the aforesaid decision of the Asstt. Collector which appears to be improper should not be reviewed and why the aforesaid duty erroneously refunded should not be recovered from them.
(10) Now, therefore, the aforesaid M/s Walker Anjaria & Sons (P) Ltd., Jamnagar are further directed to show cause to the undersigned as to why the aforesaid orders of refund of the Asstt. Collector of Customs, Jamnagar should not be set aside and why an appropriate order in review should not be passed directing recovery of Rs. 26,04,372.79 which appears to have been erroneously refunded."
15. The aforesaid contents of the show cause notice clearly indicate that the authorities of the Customs Department were of the view that proper procedure was not followed by the Superintendent, Customs, Jamnagar in demanding repayment of the duty erroneously refunded which were quashed by the High Court and, therefore, the Department initiated action for review in revisional proceedings under s. 130. As discussed herein before the matter relating to proceedings under s. 130 travelled before different authorities and the said proceedings initiated under s. 130 were finally dropped by the order dt. 30th May, 1985 by which the proceedings were dropped to put an end to any real possibility of recovery of the amount from the assessee which is alleged to have been erroneously refunded to the assessee. The refund already received by the assessee in the accounting year relevant to asst. yr. 1976-77 became final with the dropping of such proceedings under s. 130 on 30th May, 1985.
16. It will be worthwhile to reproduce certain observations made by the Supreme Court in the case of CIT vs. Hindustan Housing & Land Development Trust Ltd. (supra) which was cited on behalf of the assessee before the CIT(A) and which has been referred to in the original appellate order passed by the CIT(A) in para 4 of his order. At page 527 of the report it has been observed as under :
"Indeed, the dispute was regarded by the Court as real and substantial, because the assessee was not permitted to withdraw the sum of Rs. 7,36,691 deposited by the State Government on 25th April, 1956, without furnishing a security bond for refunding the amount in the event of the appeal being allowed. There was no absolute right to receive the amount at that stage."
The fact that the Gujarat High Court had quashed the demand notices issued under s. 28 vide judgment dt. 8th Dec., 1975 coupled with the fact that while admitting SLP of the Customs Department, the Supreme Court did not require the assessee to furnish any security, bond, guarantee or any type of undertaking to repay the amount of refund alleged to have been erroneously refunded to the assessee, the Supreme Court finally dismissed the appeal with costs, and the fact that the Customs Department itself in the aforesaid so called notices under s. 130 on 4th Feb., 1976 regarded the demand notices as improper and wrong proceedings taken by the Department, prove beyond doubt that the pendency of the SLP did not involve any real or substantial dispute in relation to assessees alleged liability for the refund of amount already received. The amount of refund already received by the assessee several years ago can with certainty be treated as having become absolutely final when the Customs Department itself dropped the proceedings under s. 130.
17. We are, therefore, of the considered opinion that the liability to repay the amount of refund already received by the assessee finally ceased to exist when the proceedings under s. 130 were dropped by the competent authority of the Customs Department vide order dt. 30th May, 1985. Such an event took place in the asst. yr. 1986-87 which is presently under consideration. The AO was, therefore, fully justified in treating the said amount of Rs. 26,04,372 as income liable to tax under s. 41(1) in the year under consideration. Such a view is also fortified by the judgment of the Gujarat High Court in the case of the Bharat Iron & Steel Industries (1993) 199 ITR 67 (Guj) (FB). At page 342 of 105 CTR and 82 of 199 ITR the Honble High Court has observed as under :
"It was only when the review or revisional proceedings were dropped on 30th April, 1976, that the assessee became finally entitled to claim refund of Rs. 1,81,427. The payment of Rs. 1,8,427 which the assessee had received on 8th Aug., 1975, was subject to the decision in the review or revisional proceedings. Having regard to the facts and circumstances stated above, in our opinion, the assessee obtained the refund of the excise duty amount only on 30th April, 1976, the date on which the review or revisional proceedings were dropped."
In view of the aforesaid facts and discussions and in view of the reasons given by the CIT(A) in the original appellate order dt. 13th Sept., 1990, we hold that the amount of Rs. 26,04,372 was rightly added as income liable to tax under s. 41(1) in the year under consideration. It will be worthwhile to observe that if and when the addition of aforesaid amount of Rs. 26,04,372 added under s. 41(1) confirmed by us becomes final, it will be duty of the AO to delete the addition of similar amount made in asst. yr. 1991-92 as the same amount of income cannot be taxed in more than one year.
18. The second ground of assessees appeal (ITA No. 4339/Ahd/1990) relates to disallowance of Rs. 46,194 made in respect of sales-tax liability in view of s. 43B. The CIT(A) vide para 7 of the original appellate order directed the AO to verify the payments in respect of last quarter of the accounting year under consideration and recompute the amount of disallowance of sales-tax liability under s. 43B. We hold that restoring back this issue to the AO would be incomplete without clearly stating that in case payments of outstanding sales-tax liability have been made in the next year before the time prescribed under s. 139(1), no disallowance should be made. We, therefore, direct the AO to decide the issue afresh according to the decision of the Gujarat High Court in the case of CIT vs. Chandulal Venichand (1994) 209 ITR 7 (Guj).
19. The last ground (Ground No. III) in assessees appeal relates to addition of Rs. 3,82,387. The CIT(A) has set aside the order and restored back the issue to the ITO for deciding the same in accordance with the guidelines given by him and in accordance with the provisions of law.
19.1 No submissions were made on behalf of the assessee in relation to this ground at the time of hearing. After perusal of the order passed by the CIT(A) we are of the view that he has rightly restored back the issue relating to disallowance out of interest to the AO for examination of all the facts and then decide the matter afresh in accordance with the provisions of law. We find no justification in interfering with the order of the CIT(A).
20. We will now consider the Revenues appeal for asst. yr. 1986-87 against the original appellate order passed by the CIT(A) on 13th Sept., 1990, i.e., ITA No. 4267/Ahd/1990.
20.1 The first ground raised by the Revenue relates to directions given by the CIT(A) to allow unpaid sales-tax liability pertaining to the last quarter after verification. This ground is clearly covered in favour of the assessee by the decision of the Gujarat High Court in the case of Chandulal Venichand (supra).
21. The next ground of Revenues appeal is that the CIT(A) has erred in setting aside the addition of Rs. 3,82,387 on account of interest. The CIT(A) has dealt with this point in paras 10 to 12 of the original appellate order passed by him. The disallowance out of interest expenditure was made by the ITO in view of the discussions made in paras 18 to 20 of the assessment order. The AO came to the conclusion that the assessee-company had advanced interest free loans to firms in which the directors of the company or their relatives were interested and the funds borrowed on interest have been diverted for non-business purpose. The CIT(A) had restored back this issue on the ground that the assessments for asst. yrs. 1982-83 to 1985-86 have been reopened by the AO on similar footing. He, therefore, considered it just and proper to set aside this issue so that the matter may be decided in a proper manner after providing reasonable opportunity to the assessee. In our view the Revenue should have no grievance against such findings given by the CIT(A). In our view there is no justification in interfering with the findings given by the CIT(A) in relation to this ground.
22. In the result, the Revenues appeal ITA No. 1363/Ahd/1991 directed against the order under s. 154 passed by the CIT(A) on 10th Dec., 1990 is allowed. The assessees appeal (ITA No. 4339/Ahd/1990) against the original appellate order passed by the CIT(A) on 13th Sept., 1990 is partly allowed. The Revenues appeal (ITA No. 4267/Ahd/1990) against the original order of the CIT(A) is dismissed.