The ACIT, Baroda Circle -4,, Baroda v. Shilchar Electronics Ltd.,, Baroda

ITA 1332/AHD/2005 | 1996-1997
Pronouncement Date: 26-02-2010 | Result: Dismissed

Appeal Details

RSA Number 133220514 RSA 2005
Bench Ahmedabad
Appeal Number ITA 1332/AHD/2005
Duration Of Justice 4 year(s) 9 month(s) 20 day(s)
Appellant The ACIT, Baroda Circle -4,, Baroda
Respondent Shilchar Electronics Ltd.,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 26-02-2010
Date Of Final Hearing 16-02-2010
Next Hearing Date 16-02-2010
Assessment Year 1996-1997
Appeal Filed On 06-05-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' (BEFORE S/SHRI BHAVNESH SAINI AND N S SAINI) ITA NO.1332/AHD/2005 (ASSESSMENT YEAR:- 1996-97) THE ASSISTANT COMMISSIONER OF INCOME-TAX BARODA CIRCLE-4 BARODA V/S SHILCHAR ELECTRONICS LIMITED BILL ROAD BILL DISTRICT: BARODA [APPELLANT] [RESPONDENT] ITA NOS.1434 AND 1435/AHD/2005 (ASSESSMENT YEARS:-1996-97 AND 1997-98) SHILCHAR ELECTRONICS LIMITED BILL ROAD BILL DISTRICT: BARODA V/S THE INCOME-TAX OFFICER WARD-4(3) BARODA [APPELLANT] [RESPONDENT] DEPARTMENT BY :- SHRI GOVIND SINGHAL SR. DR ASSESSEE BY:- SHRI J P SHAH ADVOCATE O R D E R PER N S SAINI (ACCOUNTANT MEMBER) : THE FIRST APPEAL [ITA NO.1332/AHD/2005] HAS BEEN FILED BY THE REVENUE AGA INST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DATED 24-02- 2005 FOR ASSESSMENT YEAR 1996-97. 2 THE NEXT TWO APPEALS [ITA NOS.1434 AND 1435/AHD/2 005] HAVE BEEN FILED BY THE ASSESSEE AGAINST TWO SEPARATE ORD ERS DATED 24-02- 2005 AND 04-03-2005 FOR ASSESSMENT YEARS 1996-97 AN D 1997-98. 3 IN THESE TWO APPEALS FILED BY THE ASSESSEE THE F IRST COMMON GROUND IS AS UNDER: 2 THE CIT(A) ERRED IN UPHOLDING THE VALIDITY OF REOP ENING OF THE ASSESSMENT UNDER SECTION 147 BEYOND A PERIOD OF 4 YEARS IN RES PECT OF SECTION 143(3) ASSESSMENT ON THE BASIS OF AUDIT OBJECTION. 4 SINCE FACTS AND ISSUE INVOLVED IN BOTH THE APPEAL S ARE COMMON WE ARE CONSIDERING THE FACTS FOR THE ASSESSMENT YEA R 1996-97 FOR DECIDING THESE TWO APPEALS. 5 THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY IS ENGAGED IN MANUFACTURING OF TRANSFORMERS. ITS ASSOCIATE CON CERN NAMELY SHILCHAR CORE LTD. WAS MANUFACTURING CORES WHICH I S AN IMPORT PART OF THE PRODUCT OF THE COMPANY. DURING THE PREVIOUS YEAR THE SILCHAR CORE LTD. WAS AMALGAMATED WITH THE ASSESSEE COMPANY AND A PUBLIC ISSUE WAS BROUGHT OUT BY THE ASSESSEE COMPANY. 6 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME O N 30-11-1996 DECLARING TOTAL INCOME AT RS.66 12 296/-. THE CASE WAS SELECTED FOR SCRUTINY AND AN ORDER U/S 143(3) WAS PASSED ON 26-0 2-1999. LATER ON IT WAS FOUND THAT ASSESSMENT WAS ESCAPED ASSESSMENT THEREFORE A NOTICE U/S 148 OF THE INCOME-TAX ACT 1961 [THE AC T] WAS ISSUED ON 20-03-2003. THE ASSESSEE COMPANY VIDE LETTER DATED 04-08-2003 HAS REQUESTED TO CONSIDER THE TOTAL INCOME AT RS.1 21 3 1 527/- AS INCOME DECLARED IN RETURN FILED U/S 148 SUBJECT TO OUTCOME OF ITS APPEAL PENDING BEFORE THE TRIBUNAL. THE TOTAL INCOME OF RS .1 21 31 527/- IS RESULT OF ORDER GIVING EFFECT TO THE ORDER OF THE C IT(A) WHICH IS SUBJECT MATTER OF APPEAL PENDING BEFORE THE TRIBUNA L. THE ASSESSEE COMPANY ALSO REQUESTED FOR REASONS RECORDED BEFORE ISSUING THE NOTICE U/S 148 OF THE ACT AND THE SAME WERE PROVIDE D. 7 IN APPEAL BEFORE THE CIT(A) AS REGARDS TO THE VA LIDITY OF ASSESSMENT U/S. 147 THE ASSESSEE HAS SUBMITTED THA T FOUR YEARS HAD ALREADY ELAPSED FROM THE END OF THE ASSESSMENT YEAR 1996-97 FOR ISSUE OF NOTICE U/S. 147. NOTICE CAN BE ISSUED SUBS EQUENTLY AS PER PROVISO TO SECTION 147 WHERE IT IS STATED THAT AFT ER ASSESSMENT U/S. 143(3) AND THE LAPSE OF FOUR YEARS FROM THE END OF THE RELEVANT YEAR 3 NO ACTION CAN BE TAKEN UNLESS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S. 139/142(1) OR 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT AS SESSMENT YEAR. THE ASSESSEE'S CONTENTION WAS THAT IT HAD ALREADY DISCL OSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT AND THAT THE SAME HAD ALREADY BEEN CONSIDERED WHILE COMPLETING T HE ASSESSMENT U/S. 143(3). THE ASSESSING OFFICER INITIATING REASS ESSMENT HAD NO NEW SPECIFIC INFORMATION OR FACT OF HIS OWN AND ALL THE NECESSARY FACTS WERE ALREADY IN THE POSSESSION OF THE DEPARTM ENT. REFERENCE WAS MADE TO THE DETAILS ALREADY FILED DURING THE OR IGINAL ASSESSMENT TO STATE THAT THEY HAD BEEN CONSIDERED AND DECISION TAKEN IN FAVOUR OF THE ASSESSEE. HENCE THE PRESENT REASSESSMENT IS ONLY DUE TO OPINION OF THE AUDIT DEPARTMENT WHICH CANNOT BE UTI LIZED AGAINST THE ASSESSEE WHEN THE RELEVANT FACTS HAD BEEN SUBMITTE D DURING THE ORIGINAL ASSESSMENT. BEFORE THE CIT(A) IT WAS ALSO SUBMITTED THAT THE DETAILS OF PUBLIC ISSUE EXPENSES WERE SUBMITTED AT THE TIME OF ORIGINAL ASSESSMENT ENCLOSED WITH LETTER DATED 18-1 2-98 IN WHICH ITEM 3(I) SHOWS THE DETAILS OF PRELIMINARY EXPENSES DEFERRED REVENUE EXPENSES AND PUBLIC ISSUE EXPENSES WRITTEN OFF. SE CONDLY THE DETAILS OF OTHER EXPENSES WHICH ARE SUPPOSED TO CON TAIN CERTAIN EXPENSES RELATING TO PUBLIC ISSUE WERE ALSO SUBMITT ED ALONG WITH THE SAME LETTER. THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT HAS HIMSELF DISALLOWED RS.13 275/- BEING FILING FEES PA ID TO THE ROC FOR INCREASE IN CAPITAL. THIS INDICATES THAT THE ASSESS ING OFFICER HAD VERIFIED VARIOUS EXPENSES TO ASCERTAIN WHETHER THEY WERE OF CAPITAL IN NATURE AND IF HE DID NOT DISALLOW OTHERS IT WAS AFTER APPLICATION OF MIND. THE FACT THAT PUBLIC ISSUE EXPENSES WERE NOT DISCUSSED IN THE ORIGINAL ASSESSMENT ORDER DOES NOT MEAN THAT THE SA ME WAS NOT CONSIDERED BY THE ASSESSING OFFICER. 8 AS REGARDS AMALGAMATION EXPENSES IT WAS STATED B EFORE THE CIT(A) THAT THE DETAILS OF ALL THE EXPENSES FROM WH ICH THE 4 AMALGAMATION EXPENSES HAVE BEEN SEGREGATED WERE ALR EADY AVAILABLE WITH THE ASSESSING OFFICER AND THE ASSESSING OFFICE R HAS EVEN DISCUSSED THE AMALGAMATION IN PARA-4 OF THE ASSESSM ENT ORDER. HENCE ASSESSING OFFICER WAS AWARE OF THE AMALGAMAT ION AND COULD VERIFY INDIVIDUAL EXPENSES AS REGARDS THEIR ALLOWAB ILITY AND YET HE MADE NO DISALLOWANCE. HENCE THE PRESENT ADDITION I S RECONSIDERED. 9 AS REGARDS EXCISE DUTY ON CLOSING STOCK OF A FINI SHED GOODS IT WAS CLEARLY INDICATED IN NOTE-5 OF SCHEDULE-Q OF TH E FINAL ACCOUNTS WHICH DEALS WITH ACCOUNTING POLICY REGARDING VALUAT ION OF CLOSING STOCK OF FINISHED GOODS EXCLUDING EXCISE DUTY PAYAB LE THEREON AT THE TIME OF SALE. THEREFORE THE DETAILS WERE ALREADY A VAILABLE AND THERE SHOULD BE NO CASE FOR DISALLOWANCE. THE LAW REGARDI NG INCLUSION OF SUCH DUTIES IN SECTION 145A WAS ENACTED MUCH LATER AND SHOULD NOT BE APPLIED TO COMPLETED ASSESSMENTS OF EARLIER YEAR S. FURTHER THE SAME ISSUE HAS BEEN ALLOWED IN FAVOUR OF THE ASSESS EE FOR ASSESSMENT YEAR 1997-98. 10 NUMEROUS JUDGMENTS HAVE BEEN CITED TO SHOW THAT SUCH REASSESSMENTS HAVE BEEN QUASHED. (I) RAJ AT LEASING & FINANCE CORPN. 129 CTR 377 (GU J.) (II) CIT V. ORISSA STATE FIANANCE CORPN. 99 ITR 32 4 (III) G.N. SHAW (WINE) P.LTD. 183 CTR 528 (IV) S.R. CONSTRUCTION 172 CTR 458 MOST OF THESE CASES HAVE REFERRED TO THE EARLIER SU PREME COURT DECISIONS IN THE CASE OF GANGA SARAN & SONS P.LTD. 22 CTR 112 AND INDIAN AND EASTERN NEWS PAPER SOCIETY. 12 CTR 190 ( 119 ITR ). 11 AFTER CONSIDERING THE AFORESAID SUBMISSIONS OF T HE ASSESSEE THE LEARNED CIT(A) HELD THAT THE ASSESSMENT HAS COR RECTLY BEEN REOPENED BY OBSERVING AS UNDER: 8 ON GOING THROUGH THE RECORDS I FIND THAT THE AP PELLANT'S CONTENTION IS CORRECT IN AS MUCH AS FOUR YEARS ARE OVER AND TH E NOTICE HAS BEEN ISSUED WELL AFTER THAT PERIOD. I ALSO FIND IN THE RECORD T HAT THE ITEM OF EXCISE DUTY IS 5 CLEARLY MENTIONED IN THE BALANCE SHEET FILED ALONG WITH RETURN OF INCOME. HOWEVER I FIND THAT THE APPELLANT HAD SUPPLIED DET AILS OF VARIOUS EXPENSES INCLUDING PRELIMINARY EXPENSES VIDE ITS LETTER DATE D 18-12-98 MENTIONED ABOVE. HOWEVER THE ITEM REFERRED TO THE DETAILS OF PRELIMINARY EXPENSES DEFERRED REVENUE EXPENSES AND PUBLIC ISSUE EXPENSE S WRITTEN OFF. IN BRIEF SUCH EXPENSES RELATED TO ITEMS WRITTEN OFF BUT NO S PECIAL CATEGORY REGARDING PRELIMINARY EXPENSES PUBLIC ISSUE EXPENSES OR AMAL GAMATION EXPENSES WERE SEPARATELY SUBMITTED. ON CROSS VERIFICATION WI TH THE AUDIT OBJECTION ALSO I FIND THAT THE DETAILS REQUIRED WERE APPAREN TLY NOT AVAILABLE AS THE OBJECTION HAS MERELY INDICATED THAT THE PRELIMINARY AND PUBLIC ISSUE EXPENSES AND AMALGAMATION EXPENSES SHOULD BE DISALL OWED AND THE ELEMENT OF EXCISE DUTY ADDED TO THE CLOSING STOCK OF FINISH ED GOOD BUT HAVE MENTIONED NO FIGURES WHICH IF AVAILABLE WOULD CERTA INLY HAVE BEEN QUOTED BY THE AUDIT PARTY. IN THE PROPOSAL FOR REASSESSMEN T ALSO I FIND THAT THE ASSESSING OFFICER HAS ALSO MENTIONED THAT EXPENSES RELATING TO AMALGAMATION AND INCREASE IN PAID UP CAPITAL REQUIR ED TO BE DISALLOWED BUT THE RELEVANT FACTS HAD NOT BEEN DISCLOSED IN THE RE TURN OF INCOME. ON GOING THROUGH THE RECORDS ITSELF I HAVE NOT FOUND ANY SU CH DETAILS AVAILABLE. HENCE I WOULD HOLD THAT THE DETAILS RELATING TO TH ESE TWO ITEMS HAD CERTAINLY NOT BEEN FILED BEFORE THE ASSESSING OFFIC ER. THE FACT THAT HE HAS MENTIONED IN THE ASSESSMENT ORDER THAT AN AMALGAMAT ION HAD TAKEN PLACED IS NOT SUFFICIENT TO PROVE THAT HE HAD CONSIDERED A LL THE RELEVANT FACTS OR EVEN THAT THE FACTS WERE IN HIS POSSESSION AND THAT HE HAD CONSCIOUSLY MADE NO DISALLOWANCE. 9 IT IS A WELL STATED POSITION OF LAW THAT IT IS NO T SUFFICIENT FOR THE APPELLANT TO SUBMIT DETAILS OF VARIOUS ITEMS SEPARA TELY FROM WHICH THE ASSESSING OFFICER COULD POSSIBLY HAVE DRAWN OUT THE NECESSARY INFORMATION BY PIECING IT TOGETHER. THE ASSESSING OFFICER IS NO T EXPECTED TO BE ABLE TO CO-RELATE FROM EACH ACCOUNT OF EXPENDITURE AS TO TH E NATURE OF THE ITEMS WHICH SHOULD BE CONSIDERED FOR DISALLOWANCE UNDER T HAT HEAD. IF THE APPELLANT HAS NOT INDICATED THE NATURE OF EXPENSES THEN IT HAS TO BE HELD THAT THE APPELLANT HAS NOT DISCLOSED FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR ASSESSMENT (RAKESH AGARWAL V. ACIT 221 ITR 492 (DEL.)). WHILE THE ITEM OF EXCISE DUTY ON CLOSING STOCK IS CLEARLY MEN TIONED THE OTHER TWO ITEMS HAVE NOT BEEN MENTIONED ESPECIALLY AMALGAMAT ION EXPENSES AND IT IS NOT POSSIBLE FOR ANY ASSESSING AUTHORITY TO OBTA IN AND COMPILE RELEVANT INFORMATION FROM THE VOLUMINOUS DETAILS OF OTHER EX PENSES: I WOULD THEREFORE HOLD THAT INFORMATION IN RESPECT OF THES E TWO ITEMS WAS CERTAINLY NOT AVAILABLE ON RECORD AND SHOULD HAVE BEEN PROVI DED IN VIEW OF THE FACT THAT DURING THE YEAR THE ASSESSEE HAS GONE IN FOR AN AMALGAMATION AND ALSO A PUBLIC ISSUE. THEREFORE THE ASSESSEE HAD CLEARLY FAILED TO DISCLOSE ALL THE NECESSARY MATERIAL FACTS FOR ASSESSMENT. HENCE THE ASSESSMENT HAS CORRECTLY BEEN REOPENED. AS REGARDS THE CASE LAW CI TED BY THE APPELLANT THEY APPLY TO CASES OF RECONSIDERATION AND NOT WH ERE THE RELEVANT INFORMATION IS NOT AVAILABLE ON RECORD. 6 12 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 13 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 14 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE ASSESSMENTS FOR THE ASSESSMENT YEARS 1996-97 AND 1997-98 WERE ORIGINALLY COMPLETED U/S 143(3) OF THE ACT. THEREAFTER THE ASSESSMENTS WERE REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT. IT IS NOT IN DISPUTE THAT SUCH NOTICES WERE IS SUED AFTER A LAPSE OF MORE THAN FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. THE REASONS RECORDED FOR REOPENING OF THE ASSESSMEN T FOR THE ASSESSMENT YEAR 1996-97 WERE THAT EXPENSES RELATING TO AMALGAMATION AND INCREASE IN PAID UP CAPITAL REQUIR ED TO BE DISALLOWED BUT THE RELEVANT FACTS HAD NOT BEEN DISC LOSED IN THE RETURN OF INCOME FILED. THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) ON THE ABOVE GROUND HELD THAT THE REOPENING OF ASSE SSMENT WAS VALID. FOR THE ASSESSMENT YEAR 1997-98 REOPENING WAS MADE TO DISALLOW CONSEQUENTIAL DEDUCTION ALLOWED U/S 35D RELATING TO PUBLIC ISSUE EXPENSES. WE FIND THAT IT IS NOT IN DISPUTE THAT TH E FACT OF AMALGAMATION WAS DULY DISCLOSED TO THE LEARNED ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN FAC T THE LEARNED ASSESSING OFFICER HIMSELF HAS STATED IN THE ORDER P ASSED U/S 143(3) ABOUT THE AMALGAMATION IN DETAIL AT PAGE 2 PARA 4 O F THE ORDER DATED 26-02-1999. THUS IN OUR CONSIDERED OPINION IT CAN NOT BE HELD THAT THE RELEVANT FACT OF AMALGAMATION WAS NOT DISCLOSED BY THE ASSESSEE ON THE MERE GROUND THAT SEPARATE FIGURES OF PRELIMI NARY EXPENSES AMALGAMATION EXPENSES AND PUBLIC ISSUE EXPENSES WER E NOT STATED. IT IS FURTHER OBSERVED THAT IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) THE LEARNED ASSESSING OFFICER HAS DISALLOWED RS.13 275/- 7 BEING FEES PAID TO REGISTRAR OF COMPANIES FOR INCRE ASE IN SHARE CAPITAL. FURTHER THE LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF THE OR IGINAL ASSESSMENT PROCEEDINGS THE LEARNED ASSESSING OFFICER ASKED FO R THE DETAILS OF PRELIMINARY EXPENSES DEFERRED REVENUE EXPENSES AND PUBLIC ISSUE EXPENSES WRITTEN OFF WHICH WAS DULY FURNISHED BY TH E ASSESSEE VIDE ITS LETTER DATED 12-11-1998 COPY OF ASSESSEES LETT ER DATED 12-11-98 IS PLACED AT PAGE NOS.11 TO 12 OF THE PAPER BOOK. O N THE ABOVE FACTS IN OUR CONSIDERED OPINION IT CANNOT BE HELD THAT T HE ASSESSEE HAS NOT DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS EI THER THE FACT OF AMALGAMATION OR THE FACT OF PUBLIC ISSUE OF SHARES MADE BY IT AND THEREFORE OF INCURRING EXPENDITURE IN CONNECTION TH EREWITH. WE FIND THAT NO NEW MATERIAL WHICH WAS NOT IN THE POSSESSIO N OF THE LEARNED ASSESSING OFFICER AT THE TIME OF COMPLETION OF ORIG INAL ASSESSMENT PROCEEDINGS WAS NOTICED BY THE LEARNED ASSESSING OF FICER BEFORE ISSUANCE OF NOTICE U/S 148 OF THE ACT. ON THE ABOVE FACTS WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE ASSESS MENT IN THE INSTANT CASE WAS REOPENED ONLY ON RE-APPRECIATION OF MATERI ALS WHICH WERE ALREADY ON RECORD AT THE TIME OF THE COMPLETION OF THE ORIGINAL ASSESSMENT AND THEREFORE ON A REVIEW OR RELOOK OF T HE INFORMATION AVAILABLE ON RECORD I.E. ON MERE CHANGE OF OPINION. IN OUR CONSIDERED OPINION REOPENING OF AN ASSESSMENT ON A MERE CHANG E OF OPINION IS NOT SUSTAINABLE AS RECENTLY HELD BY THE HON'BLE SUP REME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC). WE FIND THAT THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF RAKESH AGARWAL VS. ACIT 221 ITR 492 (DELHI) ARE ENTIRELY ON DIFFERENT FACTS INASMUCH AS IN THAT CASE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OF SUBSEQUENT ASSESSMENT YEA R THE LEARNED ASSESSING OFFICER NOTICED THAT THE ACTUAL RENT RECE IVED BY THE ASSESSEE WAS MUCH LESSER THAN THE RATEABLE VALUE OF THE PROPERTY AND THIS FACT WAS NOT DISCLOSED IN THE ORIGINAL ASSESSM ENT PROCEEDINGS. IN CONTRA-DISTINCTION TO THE FACT IN THE INSTANT CASE NO SUCH NEW INFORMATION CAME TO THE KNOWLEDGE OF THE LEARNED AS SESSING OFFICER 8 SUBSEQUENT TO THE COMPLETION OF ORIGINAL ASSESSMENT PROCEEDINGS. IN THE CIRCUMSTANCES IN OUR CONSIDERED OPINION THE R EOPENING OF THE ASSESSMENT FOR BOTH THE YEARS UNDER CONSIDERATION W ERE MERELY ON THE BASIS CHANGE OF OPINION AND NOT BECAUSE OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY RELEVANT MATER IAL FACT RELEVANT TO THE ASSESSMENT OF THESE YEARS. THEREFORE IN OUR CO NSIDERED OPINION THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WA S NOT JUSTIFIED IN UPHOLDING THE VALIDITY OF INITIATION OF REASSESS MENT PROCEEDINGS IN THE INSTANT CASE FOR THE YEARS UNDER CONSIDERATION. WE THEREFORE CANCEL THE RE-ASSESSMENT ORDERS FRAMED IN PURSUANCE TO SUCH REOPENING OF THE ASSESSMENT. THUS THIS GROUND OF A PPEAL IS ALLOWED FOR BOTH THE YEARS UNDER APPEAL. 15 THE ONLY GROUND OF APPEAL TAKEN BY THE REVENUE I N THE ASSESSMENT YEAR 1996-97 IN ITA NO.1332/AHD/2005 REA DS AS UNDER:- ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF EXCISE DUTY OF RS.5 15 208/- TO THE VALUE OF CLOSING STOCK OF FINI SHED GOODS. 16 GROUND NOS.2 AND 3 IN THE APPEAL FILED BY THE AS SESSEE [ITA NO.1434/AHD/05 FOR ASSESSMENT YEAR 1996-97] READS A S UNDER:- 2 THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE O F AMALGAMATION EXPENSES OF RS.70 520/- AS CAPITAL EXPENDITURE. 3 THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF THE CLAIM OF DEDUCTION UNDER SECTION 35D BEING 1/10 TH IN RESPECT OF THE PUBLIC ISSUE EXPENSES OF RS.31 85 105/-. 17 GROUND NO.2 IN THE APPEAL OF THE ASSESSEE IN ITA NO.1435/AHD/2005 FOR ASSESSMENT YEAR 1997-98 READS AS UNDER:- 2 THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE O F THE CLAIM OF DEDUCTION UNDER SECTION 35D BEING 1/10 TH IN RESPECT OF THE PUBLIC ISSUE EXPENSES OF RS.31 85 105/-. 9 18 IN VIEW OF OUR ABOVE DECISION THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN THE ASSESSMENT YEARS 1996- 97 AND 1997-98 AND THE GROUND OF APPEAL TAKEN BY THE REVENUE IN AS SESSMENT YEAR 1996-97 HAVE BECOME INFRUCTUOUS AND REQUIRE NO SEPA RATE ADJUDICATION BY US. 19 IN THE RESULT THE APPEALS OF THE ASSESSEE FOR T HE ASSESSMENT YEARS 1996-97 AND 1997-98 ARE ALLOWED AND THE APPEA L OF THE REVENUE FOR THE ASSESSMENT YEAR 1996-97 IS DISMISSE D. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 26-02-2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 26-02-2010 COPY OF THE ORDER FORWARDED TO : 1. SHILCHAR ELECTRONICS LIMITED BILL ROAD BILL D ISTRICT: BARODA 2. THE ACIT CIRCLE-4 BARODA 3. CIT CONCERNED 4. CIT(A)-I BARODA 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD