CIT vs Hukam Chand and Sons

Ajay Kumar Mittal, J.—This order shall dispose of a bunch of following nine appeals as according to the learned counsel for the assessee, common questions of law are involved therein:

However, in order to understand the controversy fully, the facts are being extracted from IT Appeal No. 133 of 2007. This appeal has been preferred by the revenue under s. 260A of the IT Act, 1961 (in short "the Act") against the order dt. 28-4-2006 passed by the income tax Appellate Tribunal, Delhi Bench "F", New Delhi (hereinafter referred to as "the Tribunal") in ITA No. 813/Del/1999, relating to the asst. yr. 1987-88. The appeal was admitted on 30-4-2007 for determination of the following substantial questions of law:

(i) On the facts and circumstances of the case, whether the Hon''ble Tribunal was right in upholding the order of the CIT(A) deleting the additions on account of unexplained investment of Rs. 9,31,827 made by the assessee in money-lending business as per the seized documents?

(ii) Without prejudice to ground No. (i) above, whether the Hon''ble Tribunal is right in holding that addition on account of investments would tantamount to double addition without specifying as to how this interest income has been taxed earlier?

Briefly stated, the facts necessary for adjudication as narrated in the appeal are that in February, 1988, a search under s. 132(1) of the Act was conducted in the case of the assessee simultaneously with the other group cases. Subsequent to the search, the assessee HUF who is engaged in the business of money lending filed its return of income for the asst. yrs. 1979-80 to 1989-90. The assessments were completed by the AO making several additions in each year. The CIT(A) set aside the said assessments being made on estimate basis and directed the AO to make the assessments afresh on the basis of material available on record. The AO repeated the additions as made originally and the same were set aside by the CIT(A) with the similar direction as given earlier. The AO, however, again framed the fresh assessments on the same lines against which the appeals were preferred before the CIT(A). During the pendency of the appeals before the CIT(A), the Government announced Kar Vivad Samadhan Scheme (KVSS) and the assessee opted the said scheme by moving an application and settled the dispute for the asst. yrs. 1979-80 to 1985-86. The AO vide order dt. 26-3-1993 had made an addition of Rs. 9,31,827 for the asst. yr. 1987-88 on account of unexplained investment in money lending business. On appeal, the CIT (A) deleted the said addition vide order dt. 15-12-1998 holding that it would tantamount to double addition. Feeling aggrieved, the Department took the matter in appeal before the Tribunal, who vide order dt. 28-4-2006 dismissed the appeal and upheld the order of the CIT(A). Hence, the present appeal by the revenue.

Learned counsel for the revenue submitted that the CIT(A) as well as the Tribunal while setting aside the order of the AO had adjudicated the matter by relying upon certain documents and calculations which were produced by the assessee before the said appellate authority without affording any opportunity or asking for remand report from the AO. The attention of the court was drawn to the observations made in para 33 of the order of the Tribunal where it was noted that certain details had been furnished by the assessee to show that notional income from interest had accrued to the assessee for the years in which the assessee had taken the benefit of KVSS. According to the learned counsel, as there was no amount of notional interest under the KVSS during the year the benefit of which was available to the assessee for adjustment in the years in question, the CIT(A) as well as the Tribunal had erred in holding that addition of the amounts as made by the AO would amount to double taxation.

We have given our thoughtful consideration to the submissions of learned counsel for the revenue. The CIT(A) as well as the Tribunal had adjudicated the appeal by holding that the assessee accepted the amounts for the earlier years under the KVSS on account of notional interest and the same were available for adjustment in the years in question. However, the details of the material which was produced by the assessee had not been referred to. In the absence of any specific discussion with regard to the material in the order of KVSS passed by the designated authority there under, it is considered appropriate to allow these appeals and remand the matter to the CIT(A) to decide the same afresh after referring to the relevant material for coming to the conclusion that addition which had been made by the AO would amount to double taxation. The appeals stand disposed of accordingly.