GOVIND MATHUR,J. - (1.) By this judgment we are deciding two appeals being absolutely inter-related. It would be appropriate to first deal with D.B. Income Tax Appeal No.54/2003. This appeal under Section 260(A) of the Income Tax Act, 1961 is before us to question correctness of order dated 28.3.2003 passed by the Income Tax Appellate Tribunal, Jodhpur on the basis of the following substantial questions of law :- "1. Whether in the facts and circumstances of the case, the interest earned on Fixed Deposit receipts used by the assessee as borrowing margin money for funds for setting up the industry can be termed as inextricably linked with the process of setting up of industry so as to be considered as capital receipt and not revenue income ? 2. Whether in the facts and circumstances of the case the Tribunal was justified in law in holding that the enquiry conducted by the Assessing Officer before the assessment order was passed was proper and adequate enquiry so as not to render the assessment order erroneous and prejudicial to the interest of the revenue, as held by the CIT in his order under section 263 of the I.T. Act ?"
(2.) In brief facts of the case are that the respondent-assessee filed return with no income, hence, that was selected under scrutiny and a notice as per provisions of Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act of 1961') was issued. The Assessing Officer considering the explanation given by the assessee arrived at the conclusion that since no expenditure or depreciation claimed by the assessee, the addition sought to be made is set off and the returned income be treated as nil. The Commissioner of Income Tax on subsequent examination of record found the order passed by the Assessing Officer erroneous and prejudicial to the interest of revenue inasmuch as the interest earned on Fixed Deposit Receipts (FDRs) amounting to Rs.9,31,572/- had not been brought to tax/wrongly set off and further that the Assessing Officer failed to make due and proper enquiry as required in the facts and circumstances of the case. A show-cause notice under Section 263 of the Act of 1961, thus, was issued. The Commissioner of Income Tax after considering all facts and circumstances and the law applicable, arrived at the conclusion that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue and, therefore, set aside the order of assessment with a direction that the same should be made afresh after making due and proper enquiry in accordance with the provisions of law laid down by Hon'ble the Supreme Court in 227 ITR 172(SC). A challenge was given to the order passed by the Commissioner of Income Tax invoking powers under Section 263 of the Act of 1961 by way of filing an appeal before the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur. The Tribunal by its order dated 28.3.2003 accepted the appeal and set aside the order passed under Section 263 of the Act of 1961.
(3.) To challenge the order passed by the Income Tax Appellate Tribunal this appeal is before us with the contention that the interest earned by the assessee on Fixed Deposits is not business income but from other sources and, therefore, is liable to be taxed. It is also stated that the Assessing Officer passed order of assessment without proper and adequate enquiry and that was erroneous and prejudicial to the interest of revenue, as such, the Income Tax Appellate Tribunal erred while setting aside the order under Section 263 of the Act of 1961.;