AJAY KUMAR MITTAL, J. - (1.) THIS appeal under S. 260A of the IT Act, 1961 (for short "the Act") has been filed by the Revenue against the order dt. 16th Jan., 2007, passed by the Income-tax Appellate Tribunal Delhi Bench-I, Delhi (in short "the Tribunal") whereby six appeals, i.e. ITA Nos. 2602 to 2607 of 2005, relating to the asst. yrs. 1994-95 to 1999-2000 were disposed by a common order.
(2.) THE appeal was admitted by this Court for determination of the following substantial question of law : "Whether, on the facts and circumstances of the case, the order passed by the CIT, Faridabad, under s. 154 of the IT Act, 1961, subsequent to the order under S. 263, was not within the provisions of S. 154, in view of apex Court's judgment in the case of M.K. Venkatachalam, ITO and Anr. vs. Bombay Dyeing and Manufacturing Co. Ltd. (1958) 34 ITR 143 (SC) ?" The facts, in brief, necessary for adjudication as narrated in the appeal, are that the dispute herein relates to six assessment years, i.e., 1994-95 to 1999-2000, in respect of an individual. In response to notice issued under S. 148 of the Act, the assessee filed his returns relating to the aforesaid assessment years wherein he had calculated interest received on the amount of enhanced compensation, on accrual basis. The returns were, however, later on revised by taking the said interest on receipt basis. Assessments for all the abovesaid assessment years were completed by a common order dt. 22nd March, 2002 and the income as returned by the assessee was accepted except for asst. yr. 1999-2000 in which agricultural income was taken at Rs. 30,000 against nil agricultural income declared by the assessee. In the wake of the passing of the said order, an order under S. 154 of the Act was passed on 28th March, 2002, whereby an amount of Rs. 9,01,153 was determined to be refundable to the assessee. Thereafter, the Commissioner of Income-tax, Faridabad (for short "the CIT"), having observed that the orders dt. 22nd March, 2002 and 28th March, 2002 passed by the AO were erroneous and prejudicial to the interests of the Revenue, cancelled the same vide order dt. 23rd March, 2004 in exercise of its power under S. 263 of the Act. The order dt. 23rd March, 2004 was further rectified by the CIT by order dt. 31st March, 2005 and a direction was issued to the AO to pass assessment orders in respect of the interest payable on the amount of enhanced compensation, on actual receipt basis in the year of receipt from HUDA. The relevant observations are as under : "It has been brought to my notice that during the course of proceedings before the AO consequent upon the order under S. 263 it came to light that the assessee had received total amount of interest of Rs. 1,15,31,770 pertaining to the period from 15th March, 1989 to 15th Aug., 1998 relevant to the asst. yr. 1989-90 to 1999-2000 as against the total interest on enhanced compensation shown at Rs. 9,37,888 (i.e. 1/5th of interest of Rs. 46,89,444). When the total amount of interest of Rs. 1,15,31,770 is proposed to be bifurcated on year to year basis it is seen that the interest of Rs. 50,88,357 pertaining to the asst. yr. 1989-90 to 1993-94 remained untaxed in view of the fact that the assessee has not filed returns of income for the asst. yrs. 1990-91 to 1999-2000 on year to year accrual basis. The order under S. 263 was passed based on the facts on the date of order available on record but as of now keeping the interest income of Rs. 1,15,31,770 in view, it is apparent from the records that the assessee has not made a full and true disclosure of his income. Considering these facts and the judicial pronouncements, the income needs to be assessed on actual receipt basis and not on accrual basis. With a view to amend the order under S. 263, a notice under S. 154 was given to the assessee on 31st March, 2005. In response to which Shri Raj Karan Jakhar, chartered accountant along with Shri Y.P. Bahl, chartered accountant and Shri Madan Mohan son of assessee appeared and filed the written reply which is placed on record. In the said reply, the counsel for the assessee has submitted that the assessments of the assessee should be completed on accrual basis only as the assessee has declared the whole amount of interest received on enhanced compensation without any concealment. As already stated, the assessee has declared the sum of Rs. 9,37,888 for the asst. yrs. 1994-95 to 1999-2000 against the actual receipt of Rs. 1,15,31,770 on account of interest of delayed payment of enhanced compensation. The contention of the assessee is, therefore, found to be incorrect as the assessee has not made a full and true disclosure of his income in the assessment years i.e. 1990-91 to 1999-2000 in keeping with the concept of accrual on year to year basis. It is important to rely on the judgment of the Hon'ble Madras High Court in the case of T.N.K. Govindarajulu Chetty vs. CIT (1973) 87 ITR 22 (Mad) wherein it was held by the said High Court and subsequently approved by the Hon'ble Supreme Court in CIT vs. T.N.K. Govindarajulu Chetty (1987) 61 CTR (SC) 335 : (1987) 165 ITR 231 (SC) that the assessibility of income on accrual basis or on receipt would depend on the basis of the method of accounting employed by the assessee and therefore, the interest on enhanced compensation is taxable on receipt basis in case where the assessee maintained no regular books of account and the same is taxable on accrual where the assessee maintained his accounts on mercantile basis. The assessee is agriculturist and during the relevant period did not employ any method of account. Considering the facts and circumstances mentioned above, the AO is directed to pass the assessment orders in respect of the interest on enhanced compensation on actual receipt basis in the year of receipt of interest from the HUDA. The order passed under S. 263 on 23rd March, 2004 stands amended to this extent."
(3.) ASSESSMENT under S. 143(3) of the Act in respect of the above assessment years was completed by the AO on 31st March, 2005 at an income of Rs. 68,43,803 and Rs. 47,67,968 for the asst. yrs. 1995-96 and 1999-2000 respectively, and at nil plus agricultural income relating to remaining four assessment years, keeping in view the directions of the CIT in the orders passed under ss. 263 and 154 of the Act.;