TMI Blog2005 (6) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... facie adjustment. Lastly, the assessee claimed deduction of a sum being prior period expenses. The Assessing Officer made the adjustment for the reasons only that the assessee was following mercantile system of accounting. In the order u/s 154 the Assessing Officer stated that before regular assessment it was not possible to verify whether or not these expenses had been claimed in the earlier years as well. Thus, from the observations of the Assessing Officer himself in the order u/s 154, it is clear that the expenditure was made without taking into consideration all the facts of the case. Such adjustment cannot be called prima facie adjustment. In the result, we are satisfied that the CIT(A) rightly deleted the adjustments made by the Assessing Officer u/s 143(1)(a) as not being in the nature of prima facie adjustments. Hence, Revenue's appeal is dismissed. Assessment order u/s143(3) - disclosed sale/deletion of plant and machinery - In our view the Ld. CIT(A) rightly held that the stand taken by the Ld. Assessing Officer was self-contradictory in as much as after having assessed the sum u/s 68 the Assessing Officer had once again assessed short-term capital gain. However, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 4 of the Tribunal order for assessment year 1984-85 we find that the amount had gone out of the coffer of the assessee when it furnished the bank guarantee. On that basis the deduction was claimed for assessment year 1984-85. The assessee's contention was turned down by the Tribunal on the basis that payment to the bank for furnishing bank guarantee was not payment within the meaning of section 43B of the Act. That being so, the date of payment has to be considered to be 17th July, 1995 falling in assessment year 1996-97. The Ld. CIT(A) erred in applying first proviso to section 43B because the liability does not pertain to assessment year 1995-96, but assessment year 1984-85. We, therefore, hold that the assessee can claim deduction of these amounts only in assessment year 1996-97 and not in assessment year 1995-96. Accordingly, we allow Revenue's appeal on this ground. In the result, while Revenue's appeal in ITA in relation to intimation u/s 143(1)(a) is dismissed the Revenue's appeal in ITA in relation to assessment order u/s 143(3) is partly allowed. - HON'BLE K.C. SINGHAL, JUDICIAL MEMBER AND S.C. TIWARI, ACCOUNTANT MEMBER For the Appellant : S.K. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed it was neither the year of accrual nor the year of payment. On assessee's appeal, the Ld. CIT(A) held the view that it was a contentious issue and, therefore adjustment of Rs. 33,58,722/- could not be called as prima facie adjustment. In other words, such adjustment could not be made under the provisions of section 143(1)(a). On consideration of the matter, we find ourselves in agreement with this finding of the ld. CIT(A). 4. The ground of appeal Nos. 2, 3, and 4 relates to the Ld. CIT(A) deleting the adjustment of Rs. 2,38,883/-, Rs. 67,840/- and Rs. 1,55,094/- on the same ground that the adjustments were not permissible within the limited Scope of section 143(1)(a). Facts of the case in relation to other adjustments briefly are that in relation to deductions claimed by the assessee in respect of Provident Fund, ESI, UP Trade Tax, etc. the Ld. Assessing Officer found that during the year the assessee had carried forward additional sum of Rs. 1,55,094/- in the balance sheet. He added the same purportedly acting under section 43B on the ground that the amounts had actually not been paid. On consideration of the matter, we agree with the Ld. CIT(A). The assessee did not claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt to the extent of Rs. 35 lakhs. During the course of assessment proceedings the assessee submitted that the written down value of the boiler sold for Rs. 20 lakhs was only Rs. 42,350/- in accordance with depreciation allowed to the assessee under Income- tax Act. The Ld. Assessing Officer, therefore, directed the assessee to produce M/s. A.S. Engineering Works, Khatoli the alleged buyer of the boiler in question for the sum of Rs. 20 lakhs. The inspector in his report stated that there was no such concern at the given address. The Ld. Assessing Officer gave further opportunity to the assessee to produce M/s. A.S. Engineering Works. The assessee in its letter dated 3rd March, 1998 stated that present whereabouts of the buyer were not known. The payment received by the assessee was through cheques. On further inquiries the Assessing Officer found that in the account of A.S. Engineering Works with Canara Bank, the only entries were in relation to the dealings with the assessee-company. No other transactions had been made in that bank account. In these circumstances, the Ld. Assessing Officer held that the so-called receipt of Rs. 20 lakhs by way of sale of machinery to M/s. A.S. En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as short-term capital gain. The ld. AR of the assessee strongly relied upon the judgment of the Hon'ble Bombay High Court in the case of CIT v. Surat Cotton Spg. Wvg. Mills (P.) Ltd. [1993] 202 ITR 932 that the same income cannot be assessed under two different heads. 11. We have carefully considered the rival submissions. In our view the Ld. CIT(A) rightly held that the stand taken by the Ld. Assessing Officer was self-contradictory in as much as after having assessed the sum of Rs. 35 lakhs under section 68 the Assessing Officer had once again assessed short-term capital gain of Rs. 11,00,562/-. However, for that reason alone, the CIT(A) could not resort to deleting the higher addition of Rs. 35 lakhs. As the first appellate authority vested with obligations to make inquiries and arrive at true facts in accordance with the provisions of section 250(4), the Ld. CIT (A) could not rely upon any mistake committed by the Assessing Officer. 12. In the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC), the Hon'ble Supreme Court have held that the first appellate authority can do what the Assessing Officer could do and can also direct the latter to do what the latter h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpreted as shall . The powers conferred upon the CIT(A) under section 250(4) are not merely decorative or cosmetic. They cast upon the CIT(A) an obligation and duty to carry out such further inquiry as is necessary to arrive at a decision on merits on the facts of the case. In the instant case before us the CIT(A) has deleted the addition of the higher amount of Rs. 35 lakhs or the short reason that the Assessing Officer had made an assessment of Rs. 11,00,562/- also. It was incumbent upon him to arrive at a positive finding as to which of these two additions to the declared income were really called for. We see no merit in the contention of the Ld. CIT(A) that as the amounts had been alleged by the assessee as the sale proceeds of fixed assets, the Assessing Officer was precluded from applying the provisions of section 68 of the Act. For arriving at that view it was first necessary to come to the conclusion that there was indeed sale of plant and machinery to M/s. A.S. Engineering Works as alleged by the assessee. The Ld. CIT(A) has not addressed himself to that issue at all. We, therefore, consider it necessary to restore this issue to the file of the Ld. CIT(A) for decision af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 139(1) of the Act. During the course of hearing before us, the Ld. DR argued that the liability pertained to the distant past. As far as assessment year 1995-96 was concerned it was neither the year of accrual of liability nor the year of payment. The Ld. CIT(A), therefore, erred in applying the provisions of first proviso to section 43B of the Act. 16. We have carefully considered the rival submissions. The issue-first arose in the case of the assessee for assessment years 1984-85 and 1985-86. In relation to assessment year 1984-85 ITAT Delhi Bench 'B' as per its order dated 27th October, 1995 in ITA No. 662/Del/1991 held as under:- 4.1 Shri Malik then contended in the alternative that deduction of the disputed amount be directed to be allowed in the year in which it was actually paid. Even the DR had no objection to this submission. We, therefore, direct that the deduction of amount under reference be allowed in the year in which it was actually paid. 17. We find that in this case the assessee had furnished bank guarantee. From the facts given in para 4 of the Tribunal order for assessment year 1984-85 we find that the amount had gone out of the coffer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee for assessment year 1988-89 and OAT Delhi Bench 'G' Delhi as per its order dated 30th January, 2003 decided the issue in favour of the assessee. 21. We have carefully considered the rival submissions. It is true that the fact of the matter is that ultimately no liability to pay interest has been fastened on the assessee. At the same time the principle of consistency demand that we do not disturb the view taken in the case of the assessee in the earlier assessment years. We, therefore, reject this ground of appeal taken by the Revenue. 22. The ground of appeal No. 4 is directed against disallowance of Rs. 44,923/- made under section 40A(3) of the Act. During the course of assessment proceedings the Ld. Assessing Officer made the disallowance of Rs. 64,923/- under the provisions of section 40A(3) as per details given at page 9 of the assessment order. On assessee's appeal the CIT(A) allowed deduction in relation to 3 items that pertained to the payments made to the employees. The Ld. DR pointed out that disallowance of Rs. 12,250/- in relation to payment made to M.P. Verma was not deleted by the CIT(A) and there is error in the ground of appeal to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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