From the record, it appears that as on March 31, 2003, the figure of Rs. 1 crore was appearing in schedule IV, under the head unsecured loan” in the balance-sheet. In the earlier year it was appearing as 1. Unsecured loan Rs. 60 lakhs. 2. Share application money Rs. 40 lakhs. During the assessment year under consideration, the same was shown as Rs. 1 crore consolidated. The Assessing Officer has not pointed out as to what happened to Rs. 40 lakhs which were earlier appearing in the balance-sheet.
The assessee disclosed capital gain and claimed exemption under section 54F on the ground that entire sale proceeds were invested in construction of house property. In the original assessment proceedings, the Assessing Officer, denied exemption on ground that construction of house property was complete before the date of transfer of shares.
In the present case the Tribunal found that the DVO’s report is based on his opinion, and not on any material, which could form the basis of reopening of the cases, and thus it can at best be treated as an information, which will not be sufficient material for recording ‘reason to believe’ to proceed in the matter. The opinion of the DVO, as to what would be reasonable percentage of architects fees and the supervision charges by the Directors, would not constitute tangible material for exercising powers of reopening the assessment.
Where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the Income-tax Act.
It is not in dispute that the aforesaid two amounts have been deposited by the two partners in their capital account. The partners are income tax payee. They have explained the source as having received gift from various persons, who have also filed their Income Tax Returns and have been assessed accordingly. Merely because, the donors are weavers and they own only one loom would not make any difference. They have filed their Income Tax Returns and have also filed the return under the Gift Tax Act. They have paid the gift tax also. Assessment under the Gift Tax Act has also been made, though the assessments made were summary in nature. In the case of Anil Rice Mills (supra), this Court has held that the assessee can not be asked to prove the source of source or the origin of origin.
Learned counsel for the appellant submitted that in the facts and circumstances of the case no penalty was leviable as the appellant itself had surrendered the said amount representing the difference in the sundry creditors in order to buy peace. He, thus, submitted that there was no concealment of income so as to warrant levy of penalty under Section 271(1)(c) of the Act.
The CIT (A) after considering entire evidence of record found that purchase and sale transactions were proved. He further found that payment of the sale price was made to the assessee through bank channel and not in cash as such the transactions are actual transactions and not a fictitious accommodation entries. The sale transactions cannot be disbelieved only for the reason that the assessee could not give the identity of the purchasers.
The Hon’ble Apex Court while dismissing the Civil Appeal No.2791 of 2005 preferred by the department vide judgment and order dated 21.7.2010, upheld the findings recorded by the Tribunal that reversal of 8% under 57 CC is not applicable as ‘Bagassee’ is not a final product, but it is a waste. It is worthwhile to mention here that in the judgment dated 22.11.2004 of Tribunal, it was specifically referred in para 2 that the appeal filed by the Commissioner, Central Excise in the case of CCE v. Kicha Sugar Co. Ltd. was dismissed by Hon’ble Supreme Court on 20.2.2004.
With the insertion of the Explanation-I to Section 32 w.e.f. 1.4.1998 there is no doubt that where the assessee is the lessee of the building in which he carries on business which is not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee of any structure or doing of any work in or in relation to by way of renovation, extension or for improvement to the building, then the provisions of the Income Tax Act, will apply as if the said structure or work is a building owned by the assessee.
In the present case by an unilateral act of the assessee in writing back the amount of gratuity of Rs. 32,39,929/- which was allowed as expenditure in the Assessment Year 1972-73 would not be treated as remission or cessation of the trading liability so as to attract the provisions of Section 41(1) of the Act and the principles laid down by the Apex Court in the case Sugauli Sugar Works (P.) Ltd. (supra) are squarely applicable.
