TMI Blog2005 (8) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment were part of the abkari income and they cannot have independent existence when the income from it was estimated in the reassessment. 3. The CIT(A) ought to have cancelled the order as there was no apparent mistake, but only of a change of opinion. 3. The facts relating to the controversy before us are that the assessee is a firm, which was running arrack shop. The assessee filed its original return of income declaring a loss of Rs. 2,266. Along with the original return of income, the assessee-firm had filed audited statement of accounts along with the Tax Audit Report under section 44AB of the Income-tax Act. The assessee's case was taken up for scrutiny under section 143(2). The Assessing Officer was of the opinion that for determining the income of the assessee-firm from the arrack business, section 44AC of the Act, as tl1en it was, was applicable. As per the provisions of section 44 AC, the income is to be computed on the basis of the purchases. The assessee took objection for computing the income by the Assessing Officer under section 44AC of the Act by contending that purchases were not made by way of permits granted by the Excise authorities and hence th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal. The assessee had also filed appeal for the assessment year 1991-92. The Tribunal disposed of both the appeals, being ITA Nos. 248/Coch./94 and 515/Coch./95 for the assessment years 1991-92 and 1992-93 vide order dated 19-3-1998. The Tribunal held that in view of the judgment of the Hon'ble Supreme Court in the case of Union of India v. Sanyasi Rao [1996] 219 ITR 330 the income of the assessee from liquor business should be computed as per the provisions of sections 28 to 43C of the Income-tax Act, 1961 and in accordance with the books of account, if any, maintained by the assessee for his business. If no books of account are maintained, the Assessing Officer is at liberty to resort to estimate of profit. The Tribunal gave direction to the Assessing Officer to compute the profit of the assessee's arrack business as per the provisions of sections 28 to 43C of the Act and on the basis of the books of account, if any, maintained by the assessee. 5. As per the directions of the Tribunal, the second assessment order for the assessment year 1992-93 was passed by the Assessing Officer under section 143(3), read with section 154 of the Income-tax Act. When the case was posted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital account originally assessed under section 68 was not challenged by the assessee at any stage. The estimation of the income made in the reassessment was clearly in respect of the business based on their turnover. Therefore, the income estimated is the income generated from business, the income estimated under section 68 is the credit introduced as initial capital. This has got no bearing on the income generated. This objection is, therefore, overruled. The second objection is that the amount has been telescoped with the estimated income. This is also not acceptable for the reason that the credit was introduced before the commencement of the business. The third objection is that the total income assessed is the total income of the firm and not the income for a separate head, this objection is also not relevant since this is a cash credit. In view of the above, the mistakes explained is a mistake apparent from records and I am convinced that the order dated 30-3-2000 requires to be rectified under section 154 of the Income-tax Act." 7. The assessee challenged the order of the Assessing Officer passed under section 154 of the Act dated 9-4-2002 by filing appeal to the CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee as he failed to satisfy the Assessing Officer in respect of the loan taken which were credited on 1-4-1991 from one Shri C. Krishan. The ld. DR further submitted that the issue of addition of Rs. 2lakhs was never before the Hon'ble Tribunal and the correct issue before the Tribunal was in respect of the computation of the profit on the arrack business of the assessee. He further submitted that from the order of the Tribunal it is very clear that the assessee had never challenged the addition made by the Assessing Officer under section 68 of the Act. The ld. DR taken us to the order of the Tribunal and submitted that the issue before the Tribunal was only restricted regarding the applicability of section 44AC for computing the profit of the assessee and no other issues were before the Tribunal and it is very clear from the observations of the Hon'ble Tribunal. 10. The learned DR further vehemently submitted that provisions of section 68 are totally different. Whatever was computed under section 68 had nothing to do with sections 28 to 43C. The Hon'ble Tribunal has given the directions to compute the profit of the assessee under sections 28 to 43C, but there is no mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 44AC was before the Tribunal. There is substance in the argument of the ld. DR also that what the Tribunal has considered was computation of the income of the assessee's business under the provisions of sections 28 to 43C and there is no mention of section 68. Moreover, the provisions of section 68 are independent provisions totally different from sections 28 to 43C. In our considered opinion, the entire assessment was never set aside by the Tribunal, but what was set aside was the issue regarding the computation of the profit of the assessee's arrack business without applying section 44AC. Hence, there is no force in the argument of the ld. counsel that the entire assessment was set aside. We have also carefully considered the observations of the CIT(A). The CIT(Appeals) has made the following observations: "5. The original assessment, where addition of Rs. 2 lakhs under section 68 was made was on agreed basis and it was not agitated before the CIT(A)/ITAT and rightly say the assessee has agreed for accepting this addition made by the Assessing Officer. The ITAT's direction covers only the computation of the income under section 143(3) pertaining to business income which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections of the Tribunal were in respect of the limited issue and due to oversight or mistake the addition made in the original assessment was remained to be added. He, therefore, submitted that from a perusal of the order of this Tribunal it is clear that only limited issue of computation of profit from arrack business was before the Hon'ble Tribunal. He further vehemently submitted that there is no substance in the argument of the learned counsel that the entire original order was set aside de novo. The ld. DR submitted that the second assessment order was passed for complying with the directions of the Hon'ble Tribunal and to that extent the directions were carried out. But due to mistakes the correct addition made in the original assessment was remained to be added, which was never the subject-matter of any dispute before the Hon'ble Tribunal. The ld. DR, therefore, submitted that it is a well settled proposition of law that mistake which is apparent on the face of the record can be rectified by invoking the provisions of section 154 of the Act. Hence he submitted that the CIT(Appeals) has rightly upheld the action of the Assessing Officer and the order of the CIT(Appeals) may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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