TMI Blog2005 (1) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... a partnership firm and it obtained licence for the sale of arrack for 128 shops in Hyderabad and Secunderabad, for the Excise year 1990-91, i.e., 1st October, 1990 to 30th September, 1991. Originally, the licence for sale of arrack was obtained by 9 partners, viz., (1) M. Raj Kumar, (2) Balanarasaiah, (3) D.P. Narayana Swamy, (4) R. Srinivas, (5) M. Narayana Goud, (6) M. Srinivas, (7) A. Rajender Reddy, (8) T. Ashok Kumar and (9) M. Ravinder Goud, under the name and style of M/s. Raj Kumar Others. Later on, three financing partners were included, viz., (1) T. Subhash Goud, (2) S. Manohar and (3) K. Venkatesh. These twelve persons formed a partnership under the name and style of M/s. Sri Ranganatha Traders, under partnership deed executed on 27-11-1990. This firm filed its return of income for the assessment year 1991-92 on 30-3-1992 declaring taxable income of Rs. 9,07,920. The Assessing Officer applied the provisions of section 44AC of the Income-tax Act, 1961, and determined the taxable income at Rs. 89,78,800 in the assessment made on 30-3-1994 under section 143(3) of the Act. The Assessing Officer also granted registration to the assessee firm under section 185(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been taken on the same in the original assessment proceedings, was not called for. The assessee further argued that the direction of the ITAT to the Assessing Officer was to determine the income as per the provisions of sections 28 to 43C of the Act, that this direction is specific and that the Assessing Officer should not rake up other issues, which had attained finality in the original assessment order. The assessee relied on a number of decisions in support of its arguments. The Assessing Officer relied on the decision of the Hon'ble Rajasthan High Court in the case of Rambilas Chandram v. CIT [1985] 156 ITR 344. In that case, reliance was placed on the decision of the Hon'ble Allahabad High Court in J.K. Cotton Spg. Wvg. Mills Co. Ltd. v. CIT [1963] 47 ITR 906, wherein it was held that there were no restrictions at all on the powers of the ITO when he proceeds to re-assess the income, subject to the directions given by the AAC and that the ITO is not bound or restricted by anything that had happened either when he made the original assessment or when the appeal was heard by the AAC, that he is not bound by his own findings arrived at in the original assessment; they do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the directions given by the ITAT were specific directions and there was no scope for the Assessing Officer to travel beyond those directions. He held that the Assessing Officer travelled beyond the limits for adding the cash credits and that she should have determined the income of the firm as per the provisions of sections 28 to 43C. He relied on the following case laws: Orissa Ceramic Sales v. ITO [1984] 145 ITR 464 (Ori.) CIT v. Kamla Town Trust [1992] 198 ITR 191 (All.) Smt. Meenakshi Khosla v. ITO [1991] 36 ITD 400 (Delhi) and other decisions. Aggrieved by the order of the CIT(A), the Revenue is in appeal. 7. Shri K.V. Chowdary, learned departmental representative (CIT), submitted that section 143(3) does not restrict the power of the Assessing Officer while doing a fresh assessment. He took this Bench through the order of the Tribunal dated 12-8-1996 and submitted that the judgment of the Hon'ble Supreme Court in the case of A. Sanyasi Rao was applied by the Bench arid the Assessing Officer was directed to recomputed the income in accordance with sections 28 to 43C of the Act. He submitted that this direction cannot be considered as a specific direction and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y treated as members of the AOP, had confirmed the investment by way of a letter, as well as the mode of remittance of the money. He took this Bench through each of the papers to submit that account copies as appearing in the books of the partners were filed before the Assessing Officer and the assessment details etc. were also placed on record. He submitted that all the partners who had contributed capital are assessed to tax and the Assessing Officer in the original assessment proceedings had, based on these detailed documents, come to the conclusion that no addition was called for under section 68 of the Act, while estimating the income of the assessee under section 44AC. He specifically drew the attention of the Bench to the wording in the original assessment order, i.e., "Capital investment of partners filed considered" and submitted that on consideration the Assessing Officer had decided that no addition was called for under section 68 of the Act. He drew the attention of the Bench to the order of the ITAT dated 12-8-1996 and submitted that a specific direction was given to the Assessing Officer for determining the income as per the provisions of sections 28 to 43C of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were given and there is no scope whatsoever for the Assessing Officer to travel beyond such jurisdiction. 12. The learned counsel supported the order of the first appellate authority and reiterated his contention that the capitals introduced by the partners were accepted in the original assessment and they were never subject-matter of appeal either before the first appellate authority or before the second appellate authority. He submitted that in case the Revenue was of the opinion that an erroneous decision had been taken by the Assessing Officer while making the original assessment order, then remedy lay by way of invocation of powers under section 263 or reopening of assessment under section 147 and not otherwise. He reiterated that the judgment of the Hon'ble Rajasthan High Court in the case of Rambilas Chandram states that if the remand is subject to directions, then the Assessing Officer is bound by such directions. He relied on the following case laws:- Pulipati Subbarao Co. v. AAC [1959] 35 ITR 673 (AP); CIT v. Bandaru Sanyasi Raju [1981] 127 ITR 453 (AP); Katihar jute Mills (P.) Ltd. v. CIT [1979] 120 ITR 861 (Cal.); S.P. Kochhar v. ITO [1984] 145 ITR 255 (All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is a case of application of provisions of section 44AC of the I.T. Act and income is fixed at Rs. 89,78,000 which is 4096 of the purchase price admitted by the assessee. The assessment is finalized accordingly." We now deal with the case laws relied upon by both the parties. 15. In the case of CIT v. J.K. Cotton Spg. Wvg. Mills Co. Ltd [1963] 47 ITR 906, Hon'ble Allahabad High Court held that there are no restrictions at all on the powers of the Income-tax Officer when he proceeds to make a fresh assessment, for the fresh assessment is nothing but a second assessment in substitution of the one set aside. He has to proceed as if he were making an original assessment under section 23 (of the I.I.T. Act, 1922). He is not bound or restricted by anything that had happened either when he made the original assessment or when the appeal was heard. He is not bound by his own findings arrived at in the original assessment. Nor is he confined to those materials which existed on the date of the original assessment order. He is free to take into consideration any relevant material that came into existence for the first time after the original assessment order was made by him. In that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provisions under section 143(3) and not with reference to any observations made by the Appellate Assistant Commissioner in his order or with reference to the scope of the appeal before the Appellate Assistant Commissioner". The Court followed the judgment of Hon'ble Allahabad High Court in the case of J.K. Cotton Spg. Wvg. Mills Co. Ltd and distinguished the judgment of the Hon'ble Andhra Pradesh High Court in the case of Pulipati Subbarao Co. 18. In the case of CIT v. Buildwell Assam (P.) Ltd. [1982] 133 ITR 736, Hon'ble Gauhati High Court upheld the action of the ITO of disallowing wholly the claim of the assessee under sections 80-I and 80J in the fresh assessment, which had been partly allowed in the original assessment order. It was held that the deductions under sections 80-I and 80J were only considered but never finally decided by the AAC, and in the absence of a positive decision, the ITO was entitled to go into the issue while making the fresh assessment. In other words, it was held that the issue had not attained finality through the order of the AAC and hence the ITO had jurisdiction to consider and decide the question when the matter was sent to him for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner. In that case, the assessment was set aside by the AAC with a direction to make a fresh assessment. The decision in the case of J.K. Cotton Spg. Wvg. Mills Co. Ltd. was applied and the Hon'ble High Court held that where a case is sent back to the ITO without any restrictions, there are no restrictions at all on the powers of the ITO when he proceeds to make the fresh assessment in substitution of the one set aside. 21. In the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297, Hon'ble Supreme Court was dealing with the scope of re-assessment and not the case of a set aside assessment. It held that it was not open for the assessee to seek review of concluded items unconnected with the escapement of assessment for the purpose of computation of income in the reassessment. 22. In the case of CIT v. D. Veerappan [1995] 215 ITR 533, Hon'ble Madras High Court followed the judgment in the case of Seth Manicklal Fomra and held that once an assessment is set aside, it is open to the ITO to consider the entire matter afresh, notwithstanding the terms of the first appellate authority. In this case, the Tribunal had directed the ITO not to increase the income beyond w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem explaining the sources. Therefore, the action of the present Assessing Officer, once again taking up examination of these credits is not justified, since the ITAT has given a clear direction to determine the income of the appellant as per the provisions of sections 28 to 43C." We agree with this finding for the reason that the quality of evidence produced before the Assessing Officer in the original assessment proceedings, as already stated, is such that it included income-tax details of the parties in whose names the credits had been made in the books of account along with their confirmations, account statements etc. It is well settled that the power of review is not available to the Assessing Officer, On the same set of facts and information, without any new material being brought on record, it is not open for the Assessing Officer to take a different view. If it were the case of the Revenue that the Assessing Officer in the original assessment proceedings had made a mistake, then, it would be a case for reopening the assessment under section 147 or for invoking of the powers of the Commissioner of Income-tax under section 263, on the ground that the decision was erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken.' These observations were made in a case where taxation was in issue. This court in Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 at p. 10 stated: 'At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity.' Assessments are certainly quasi-judicial and these observations equally apply." 27. Thus, we uphold the order of the learned CIT(A) by applying the judgments in the case of S.P. Kochhar and Radhasoami Satsang and we feel it is not right at this length of time to accede to the request of the learned departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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