Hitech Analytical Services Vs. Pr. CIT (Gujarat High Court)
Assessee claimed Audit fees Rs. 28,090, Bank Charges Rs. 3,091, Car Loan interest Rs. 1,04,814, Depreciation Rs. 6,12,567, Petrol expenses Rs. 1,03,396, Traveling expenses Rs. 2,18,150 Totalling to Rs. 10,70,108 in her individual return.
AO disallowed the expenses on the ground that assessee’s share of the profit of the firm was exempt from payment of tax and thus, the expenditure claimed was for the purpose of earning exempt income and therefore, not allowable under section 14A. The assessment of firm was pending.
Assessee submitted revised computation of firm and her individual return and claimed all the expenses in firm. However, AO ignored that computation and made assessment without taking into account those expenses. Assessee filed revision petition before CIT. CIT disposed of revision petitions in case of the partner, it confirmed the view of AO that the expenditure was in relation to earning exempt income and therefore, not allowable deduction.
In case of the firm, the Commissioner was of the opinion that the expenditure cannot be allowed since assessee firm had not revised the return and merely presented the revision of statement and there was no evidence to establish that the expenditure was incurred by the partner wholly for earning the business income and the claim of the firm was against the principle of accountancy since the accounts of the firm did not reflect the expenditure and therefore, cannot be granted.
The non-filing of the revised return by the firm could not have been the ground for rejection of the claim. Even if the powers of the assessing officer could be seen to be restricted in absence of any revised return, nothing prevented the Commissioner from examining the issue and if need be to have further inquiries made. In case of C. Parikh & Co. v. CIT, Baroda 122 ITR 610, the Division Bench of this Court considered the scope of the powers of the Commissioner under section 264 of the Act. In the said case, after the assessment was completed, the assessee discovered that a mistake had been committed in its books of account in totaling the purchases as a result of which the assessee had under- totaled the purchases and on account of this, the gross profit of the assessee had gone-up. When the Commissioner refused to allow the assessee to correct such mistake, the issue reached the High Court. The Court observed that the powers are very wide. Subject to the limitation prescribed in the section itself, the Commissioner in exercise of his revisional powers could pass such order as he thinks fit which is not prejudicial to the assessee. It was further observed that there is nothing in section 264 placing any restriction on the Commissioner’s revisional powers to give relief to the assessee in a case where the assessee detects mistakes on account of which he was over assessed, after the assessment was completed even where such over-assessment was due to a mistake detected by the assessee after completion of the assessment. The Commissioner could entertain even a new ground not urged before the lower authorities while exercising such revisional powers.
