COMMISSIONER OF INCOME-TAX VS SHANKAR TRADING CO. (P.) LTD
1993 P T D 1482
[200 I T R 534]
[Delhi High Court (India)]
Before B.N. Kirpal and P.K Bahri, JJ
COMMISSIONER OF INCOME-TAX
Versus
SHANKAR TRADING CO. (P.) LTD
I.T.R. No. 197 of 1982, decided on 03/11/1992.
Income-tax---
----Reference---Academic question cannot be -answered---CIT cancelling assessment and directing ITO to make fresh assessment after making enquiry about two items of cash credits---Reference of question whether order of the ITO had merged with order of CIT (Appeals) and so whether CIT could revise the order of ITO under S.263---Subsequent decision of CIT (Appeals) that the two items of cash credits not assessable accepted by Revenue---Question referred has become academic---Indian Income Tax Act, 1961, S.256.
A question referred which has become academic cannot be answered.
Held, that, in the instant case, the order of the Commissioner of Income-tax (Appeals) had been accepted by the Income-tax Department and the result was that the two items of cash credits which were sought to be added to the income of the assessee in view of the order of the Commissioner under section 263 of the Income Tax Act, 1961, from which order this reference arose, now stood deleted. The question referred had been rendered academic and could not be answered
J.K. Synthetics Ltd. v. Addl. CIT (1976) 105 ITR 344 (All.) ref.
Mr. Rajendra and R.K. Chaufla for the Commissioner.
S.K, Aggarwal for the Assessee.
JUDGMENT
In respect of the assessment year 1975-76, the Income-tax Appellate Tribunal has stated the case and referred the following two questions to this Court:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in setting aside the order passed under section 263 by the Commissioner of Income-tax?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the order of the Income-tax Officer had got merged with the order of Commissioner (Appeals) and, therefore,, the Commissioner has no jurisdiction to revise the said assessment order?"
Briefly stated, the facts are as follows:
The Commissioner of Income-tax noted on going through the records of assessment that the assessee had introduced cash credits in the names of Bansidhar Ram Gopal and Kishan Lal Prehlad Rai Saraf who had been doing Hawala business. The Income-tax Officer had made the assessment without making detailed 'investigations into the genuineness of these loans. The assessee filed affidavits before the Commissioner confirming these loans. The Commissioner, in a very short order, observed that in spite of the explanation offered by the assessee's counsel and the affidavits filed before him, he was of the opinion that the genuineness of the loans needed to be established through detailed enquiries and investigations. The order of the Income-tax Officer was, in the opinion of the Commissioner of Income-tax, erroneous and prejudicial to the interest of the Revenue. He, accordingly, cancelled the order with the direction that the Income-tax Officer should reframe the assessment after making detailed enquiries in respect of these cash credits and other matters.
This order was challenged before the Tribunal. The Tribunal noted that the assessment order had been the subject-matter of appeal before the Commissioner of Income-tax and the Tribunal, though on a different point. However, the Tribunal followed the Allahabad High Court ruling in the case of J.K. Synthetics Ltd. (1976) 105 ITR 344) and held that the order of the Income-tax Officer had got merged in the order of the Commissioner (Appeals) and, therefore, could not be made the subject-matter of revision under section 263.
At the instance of the Department, the aforesaid two questions of law had been referred.
It is not necessary for as to decide the said questions because the same have really become academic. Mr. Aggarwal, learned counsel for the assessee, has informed us that after the decision of the Income-tax Appellate Tribunal, the Income-tax Officer initiated proceedings under section 147 of the Act and the assessment of the assessee was reopened and the Income-tax Officer, vide his assessment order, dated March 27, 1986, accepted the explanation of the assessee relating to the cash credit of Bansidhar Ram Gopal. Thereafter, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) with regard to the loan alleged to have been taken from M/s. Kishan Lai Prehlad Rai amounting to Rs.1,05,000. The Commissioner of Income-tax (Appeals), vide his order, dated March 11,1987, accepted the assessee's appeal and has deleted the addition of Rs.1,05,000 and the interest thereon.
Mr. Aggarwal, learned counsel for the assessee, informs us at the Bar that the said order of the Commissioner of Income-tax (Appeals) has been accepted by the Department and the result is that the two items which were sought to be added to the income of the assessee which was the subject-matter of thenow stand deleted.
This being so, the present reference has become academic and is returned unanswered.
M.B.A./2397/T Order accordingly.