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Join our free webinar on July 7 at 5 PM for insights into 10 recent High Court income tax judgments favoring assessees. Expert analysis by CA Dipak Dama.
At the outset, it is clear that as it is in the judgment of the Division Bench, which arose almost under similar circumstances, wherein the learned judge has abruptly dismissed the application for injunction on the ground that the company court has no jurisdiction to pass an interlocutory order or injunction or direction, except to safeguard the interest of the creditors.
t is settled position of law that the AO must have tangible material on the basis of which he can have a reason to believe that income has escaped assessment. In the present case, it is submitted that there was a total absence of any tangible material to form a belief. Rather the findings of the ITAT in wealth tax proceedings for the AYs 2001-02 to 2006-07 contradict the reasons recorded by the AO before issuing notice u/s 148 of the Act on 31.3.2011.
Regarding the applicability of the provision of section 2(24)(iv) of the Act, we find that the same is discussed at length in the order of this Tribunal in the case of Ashok W. Phansalkar (supra) it is the finding of the Tribunal that the similar concessions offered to the Director attract such provisions. The facts of the said case are that the assessee-Director purchased a flat from the company for Rs. 10 lakhs against the market value of Rs. 3.85 crores.
On a query put by the Court, learned counsel for the assessee accepts if the recourse to Section 143(3) would have been barred by time, there would have been no restriction to initiate the re-assessment proceeding under Section 147 of the Act. We may add that there is nothing on the plain language of Section 143 of the Act which may suggest that the recourse to Section 147 can be had only when the period of limitation to complete assessment proceeding has expired or the Assessing Authority should wait for the expiry of the said period. The said argument is ridiculous and not acceptable.
In our opinion the Scheme of the Act does not authorize the Assessing Officer to make a disallowance according to his wishes, rather it provide that he should first point out the defects in the accounts of the assessee. In the finding extracted (Supra) it nowhere reveals what was the total amount of expenditure claimed by the assessee, which specific vouchers was not in accordance with law. In a just sweeping statement, the ld. AO observed that on verification, some of the expenses were found to be unverifiable, but what were those expenses, he should make out in the assessment order, only then he can disallow them. This is more important when in a row in the last 4-5 years, similar disallowances were made by him but deleted by the ld. CIT (A) as well as ITAT.
In yet another case of Shri Ramchandra D Keluskar in ITA No.668/PN/10, the Pune Bench of this Tribunal found that when there are no books of account, the question of its audit does not arise. Therefore, this Tribunal is of the considered opinion that when the books of account was not maintained and the penalty levied u/s 271A was deleted, this Tribunal is of the considered opinion that there is no justification for levying penalty u/s 271B of the Act for not getting the books of account audited.
Undoubtedly, the RBI Guidelines are Guidelines for the banks, issued for FEMA purposes. Clause 2.3 (supra) of these Guidelines refers to Regulation 10B (2) of the Foreign Exchange Management (Approval or Issue of Security By a Person Resident Outside India) Regulations, 2000. The very opening paragraph of these Guidelines (APB-III) shows that they are addressed to ‘Authorised Dealer (AD) Banks’.
Since the present case did not suffer from non-disclosure or omission to disclose ‘fully and truly’ the facts by the assessee, the Assessing Officer could not have been held, and was rightly not held by the learned Tribunal, to have had the jurisdiction to re-open the assessment and make assessment as in the present case.In the present case all the material facts, which were necessary for making a correct assessment, had been furnished, in the case at hand, to the Assessing Officer and when the Assessing Officer had failed to make correct assessment, the Revenue cannot blame the assessee and take recourse to the proviso to Section 147 for the purpose of re-opening the assessment.
Assessing Officer while making certain additions by restricting 90% of the receipts by applying clause (baa) of Explanation to sec. 80HHC has travelled beyond his jurisdiction and scope of enquiry as directed by the Commissioner of Income Tax (Appeals) because it was not the subject matter of remand proceedings. Since the Assessing Officer was lacking the jurisdiction in the remand proceedings to go into the issue other than directed to be re-examined, the Commissioner of Income Tax (Appeals), in the appeal proceedings against the order giving effect also has no jurisdiction to go into the said issue because under the provisions of sec. 251, the Commissioner of Income Tax (Appeals) can exercise his jurisdiction on the issue on which the Assessing Officer could have exercised but did not do so.
We have heard the rival contentions. and perused the material on record as no controverting material has been brought on record by the revenue as to why the deduction u/s.80-IC be denied to the assessee merely because the auditor in a report u/s.44AB in Col. deduction under Chapter VIIA has observed NIL. This being a technical non-disclosure appropriately was supported by the auditor by claiming deduction u/s.80-IC which he had certified therefore cannot be subjected to denial to the assessee being purely of technical nature. We may as a passing reference also mention that the case law cited regarding refund of excise duty was held in favour of the assessee by the jurisdictional High Court for deduction u/s.80-IC.
