In the present instance, the AO apparently had the books and all the relevant information pertaining to the share applicants. CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195 directs that whilst the initial onus to prove the identity of a third party,
Notice u/s 143 (2) is a right of assessee to be heard before any income tax authority. Statutory notices are the first step to initiate any proceeding under income-tax act. Therefore, failure in issuance of notice u/s 143 (2) is enough to hold assessment bad-in-law.
Whether interest income earned on amount in Escrow Account can be treated as Income from other sources instead of income from business.
Section 41 (1) of the act provides treating of trading liability on cessation as deemed profit in business or profession. But section has to apply when there is benefit upon such cessation in form of any remission.
S. 40(a)(ia) can be invoked only when the two conditions, namely, that tax is deductible at source and such tax has not been deducted is satisfied. Where tax is deducted by the assessee under a wrong provision of TDS and there is a shortfall, s.40 (a) (ia) disallowance cannot be made.
Interest free loan given by the assessee society to another society with identical object cannot be treated as investment or deposit in which event there is no violation of section 13(1)(d) row’s. 11(5) of the Act.
Issuing notice is a statutory requirement of initiating of penalty as to intimate the assessee about such initiation and to give him an opportunity of being heard. Under the act power are conferred on income-tax authorities to initiate any proceeding and to initiate notice.
It is a trite law as per provision of section and various judicial pronouncement that AO must record satisfaction regarding to non-correctness of the claim of the assessee u/s 14 A. He must ensure that there is an error in calculation of expenditure relating to the income which relates to the exempted income.
The contention of the assessee was that the AO framed the assessment arbitrarily on the basis of assessment order for the assessment year 2002-03 which was set aside by the ITAT in ITA No. 326/Del./2007 vide order dated 25.7.2008.
After hearing the rival contentions, ITAT held that that the disallowance made by the assessee, is in excess to the disallowance with the working under 14 A r.w.s.8 D which amounts to Rs 1,32,913. ITAT upheld the contentions of the assessee and deleted the addition.
