PREMSUKH CINEMA vs COMMISSIONER OF INCOME TAX.

G. G. Sohani, J. - By this reference under s. 256(1) of the IT Act, 1961 (hereinafter referred to as the Act), the ITAT, Indore Bench has referred the following question of law to this Court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the reopening of the assessees assessment for the asst. yr. 1975-76 by the ITO under s. 147(b) was valid ?"

The material facts giving rise to this reference, briefly, are as follows :

The assessee is a firm registered under Act. The assessment year in question is 1975-76, the accounting year for which ended on 31-3-1975. During the assessment year in question, the assessee had disclosed that it had incurred an expenditure of Rs. 6,71,692 in the construction of a cinema building. The ITO made a reference to the Valuation Officer but before receiving the report, he framed assessment on 17-3-1978 under s. 143(3) of the Act. Subsequently, on receipt of the report of the Valuation Officer estimating the costs of construction at Rs. 7,28,247, the ITO reopened the assessment under the provisions of s. 147(b) of the Act. The assessee thereupon preferred an appeal before the AAC, who allowed the appeal holding that the reopening of the assessment was bad in law. The Revenue thereupon preferred an appeal before the Tribunal. The Tribunal set aside the order passed by the AAC and held that the assessment could be reopened under s. 147(b) of the Act and the Tribunal directed the AAC to decide the appeal preferred by the assessee on merits. Aggrieved by the order passed by the Tribunal, the assessee sought a reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.

At the time of hearing, Shri Chaphekar, the ld. counsel for the assessee, stated that when the matter went back before the AAC for deciding the appeal on merits, the AAC found that the Additions made by the ITO after reopening the assessment were not justified and that aggrieved by that order, the Revenue had preferred an appeal before the Tribunal, which was dismissed. Shri Mukati, ld. counsel for the Revenue, stated that on enquiry being made, he has been informed that aggrieved by the order passed by the Tribunal, the Revenue has not sought any reference. Under the circumstances, as the assessee has succeeded on merits before the Tribunal, the answer to the question referred to this Court would be academic. We, therefore, decline to answer the question referred to this Court.

The reference is disposed of accordingly. In the circumstances of the case, parties shall bear their own costs of this reference.