TMI Blog2018 (5) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the close of the relevant financial year - Held that:- CIT(A) merely deleted the addition because of the amendment in Section 40(a)(ia) of the I.T. Act without considering the issue on merit and even without considering the findings of the A.O. that assessee admitted that there was a default for TDS on the payment of ₹ 12,41,447/-. Even for other deposits of TDS, no details have been brought on record as to when tax was deducted and deposited. The matter, therefore, requires reconsideration at the level of the Ld. CIT(A). We, accordingly, set aside the order of the Ld. CIT(A) and restore this issue to his file with a direction to redecide this issue in accordance with law, by giving reasons for decision on merit in the appellate order, by giving reasonable, sufficient opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes. Addition made on account of interest earned on earmarked funds - treatment given to liability for earmarked funds being treated as income of the assessee - Held that:- in earlier year, C & AG of India has directed that interest earned during the year on unspent earmarked fund should be credited to the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Court held that there is no provisions under the Income Tax Act to make amendment in the return of income. 4. The assessee challenged the action of the A.O. before the Ld. CIT(A) in disregarding the loss worked-out by special auditor (appointed by Income Tax Department) and assessing at the returned positive income following the decision of the Hon ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT 284 ITR 323 (SC). The assessee submitted before Ld. CIT(A) that since A.Y. 2004-2005, assessee s accounts are regularly being audited by the special auditor appointed by the Revenue Department. From the A.Ys. 2004-2005 to 2008-2009, the assessment orders have been framed as per the profit and loss derived by the special auditor irrespective of profit/loss disclosed by the assessee in its return of income. In the instant case, the Revenue, without narrating any plausible reason or without rejecting the special audit report, summarily choose the tentative profit as disclosed by the assessee in the return of income and treated it as actual real income and accordingly taxed the whole tentative income. The tentative income is not a real income and not earned by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) in para 4.1 of the order are reproduced as under : 4.1 The facts on this issue, the findings of Id. AO and the averments of Id. AR have been carefully perused. Right at the outset, it needs to be mentioned that the case of Goetze India Ltd. (Supra) does not apply here because there is no claim of deduction made otherwise through a revised return (as happened in that case). Secondly, the Appellant was totally in the dark about his exact income (or loss) since they have been filing a tentative profit and loss account for the past several years and exclusively depending on the Special Auditors report to arrive at some specified figure of profit or loss. This fact and circumstance would prevent the Appellant from filing any revised return even if he wanted to. Thus on the basis of these two grounds the case of Goetze India Ltd. (Supra) is not applicable in the present appeal. Also this practice is seen to have been followed for past several years. However, what is worthy of concern is that all along, for past several years, the ld. AO has been adopting the figure of profit worked out by the Special Auditor to compute the taxable income of this Appellant, but when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The special auditor was appointed by the A.O. and as such, its report is binding on the A.O. Therefore, the A.O. should have adopted the base figure of loss to work-out the taxable income of assessee. The decision of the Hon ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (supra) is, therefore, distinguishable on facts. Further, the Hon ble Delhi High Court in the case of CIT vs. Jai Parabolic Springs Ltd., (2008) 306 ITR 42 (Del.) considering the decision of Hon ble Supreme Court in the case of National Thermal Power Company Ltd., vs. CIT (supra) and Goetze (India) Ltd. vs. CIT (supra), held there is no prohibition on the power of the Tribunal to entertain additional ground, which, according to the Tribunal arise in the matter for the just decision of the case. The Ld. CIT(A) being an Appellate Authority has correctly came to the conclusion that loss determined by the special auditor appointed by the Department shall have to be accepted by the A.O. as against tentative figure given by the assessee. No infirmity have been pointed out in the order of the Ld. CIT(A). Ground No.1 of appeal of the Department is accordingly dismissed. 6. Ground No.2 reads as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, assessee submitted that tax was deposited within the due date of filing of the return. However, no details have been mentioned in the assessment order. Similarly, before the Ld. CIT(A) no such details have been mentioned in the written submissions or in the findings of the Ld. CIT(A). The order of the Ld. CIT(A) is not a speaking one and did not discuss anything on merit. The Ld. CIT(A) merely deleted the addition because of the amendment in Section 40(a)(ia) of the I.T. Act without considering the issue on merit and even without considering the findings of the A.O. that assessee admitted that there was a default for TDS on the payment of ₹ 12,41,447/-. Even for other deposits of TDS, no details have been brought on record as to when tax was deducted and deposited. The matter, therefore, requires reconsideration at the level of the Ld. CIT(A). We, accordingly, set aside the order of the Ld. CIT(A) and restore this issue to his file with a direction to redecide this issue in accordance with law, by giving reasons for decision on merit in the appellate order, by giving reasonable, sufficient opportunity of being heard to the assessee. Ground No.2 of appeal of the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the issue in favour of the assessee. The Ld. CIT(A) following the order for A.Y. 2010-2011 deleted the addition. 11. After considering the submissions of the Ld. D.R, we do not find any merit in this ground of appeal of the Department. The assessee being a Government Company, its accounts are compulsorily audited by C AG of India. In earlier year, C AG of India has directed that interest earned during the year on unspent earmarked fund should be credited to the same earmarked fund. Assessee is bound to follow the directions of C AG of India. The assessee, therefore, correctly taken the interest to such fund and rightly contended that it has no authority to use, expend or utilise the interest earned for its own purposes. Therefore, when interest on earmarked fund is not related to the assessee and shall have to be spent for specific purpose, it could not be treated as income of the assessee. The Ld. CIT(A), correctly, deleted the addition. Ground No.3 of the appeal of the Department is dismissed. 12. Ground No.4 reads as under: 4. Ld. CIT(A) has erred in law and on facts of the case in deleting the addition made on account of Disallowance under section 14A wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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