COMMISSIONER OF INCOME TAX Vs. SAHARA INDIA

JUDGEMENT

(1.) The present appeal is filed under section 260A of the Income-tax Act, 1961, against the order dated December 9, 2004, passed by the Income-tax Appellate Tribunal, Lucknow, in I.T.A. No. 189/Alld/2000; I.T.A. No. 254/Alld/2000 and CO No. 17/Luc/2003 for the assessment year 1996-97 whereby, the Tribunal vide its impugned order has admitted the following additional ground and allowed relief to the assessee accordingly :

(2.) Being aggrieved, the Department has filed the present appeal raising the following substantial question of law :

(3.) The brief facts of the case are that, in the instant case, the original return of income was filed on January 31, 1997, declaring the total income of Rs. 6,97,59,206. Thereafter, the assessee filed a revised return on March 30, 1998, declaring the loss of Rs. 74,97,579 in which expenses amounting to Rs. 8,14,55,626 were further claimed and in respect of the said claim, the assessee, vide letter dated March 30, 1998, clarified that the necessity of revising the return has arisen as during the course of finalization of return for the assessment year 1997-98, it transpired that the expenses totalling to Rs. 8,14,55,626 relating to and which accrued for the previous year relevant to the assessment year 1996-97, have been paid and accounted for in the subsequent year and as per the mercantile system of accounting, the same are allowable in the assessment year 1996-97 and, as such, the claim thereof has been made in the revised return. The revised return was processed under section 143(1)(a) of the Act on December 14, 1998, on a total income of Rs. 9,86,85,952 by treating the status of the assessee as an association of persons under section 185 and also making certain prima facie adjustment in the return of negative income.