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Case of the revenue is that the intention of the donor apart from the gift deed not to be seen for concluding that it was a corpus donation. On the other hand, case of the assessee is that if discussion between the donor and the donee in the shape of correspondence etc. is seen then it would reveal that donation was made by the donor in order to establish an engineering and a management college in the name of his grand-father. The donor has specifically mentioned in this connection.
In terms of the proviso to Section 147of the said Act the jurisdiction to reopen assessments already completed under Section 143(3) of the said Act, after the period of four years from the end of the relevant assessment year can only be exercised on the cumulative satisfaction of two conditions precedent as under: 1. There must be a reasonable belief on the part of the officer that income has escaped assessment; and 2. That there must be a failure on the part of the petitioner to fully and truly disclose all material facts necessary for assessment.
We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In the case under consideration it stands established that the issue resulting in the determination of higher income u/s 143(3) was clearly debatable. Respectfully following the ratio of the above judgments which have held that penalty is not imposable on debatable issues or claims/deductions disallowed on account of varying legal interpretations it is held that penalty u/s 271(1)(c) is not imposable in the present case. Accordingly the penalty order u/s 271(1)(c) dated 29.01.2009 imposing the penalty of Rs. 520969/- is quashed.
It appears that all facts were available on record and according to the respondents was only erroneously granted. This is a clear case of review of an order. The application of law or interpretation of a statue leading to a particular conclusion cannot lead to a conclusion that tax has escaped assessment for this would then certainly amount to review of an order which is not permitted unless so specified in a statue.
At the outset, what is evident is that a perusal of the order of the ld.CIT(A) shows that the ld. CIT(A) has accepted the balance sheet as filed before the bank whose finding of the ld. CIT(A) has not been challenged by the assessee. Obviously the finding of ld. CIT(A) and the balance sheet filed with the bank stands good. Once the difference found with the balance sheet filed before the bank authorities and the reconciliation of the same with the books of accounts would have to be done. How the assessee has arrived at the figures as shown in the balance sheet with the bank would have to be reconciled with the bank as maintained by the assessee. For this purpose we are of the view that the issue in this appeal must be restored to the file of AO for re-adjudication. The AO shall give assessee adequate opportunity to reconcile the difference. It is further directed that just because there is a difference addition should not be made if there are positive difference or negative which can be considered also. In the circumstances and with this direction in this appeal this issue is restored to the file of AO for re-adjudication after granting an opportunity to substantiate its claim.
Under section 254(2), the appellate Tribunal may, ‘with a view to rectify any mistake apparent from the record’, amend any order passed by it under sub-section (1) within the time prescribed therein. It is an accepted position that the appellate Tribunal does not have any power to review its own orders under the provisions of the Act.
By Finance Act of 2001, the Parliament enacted section 14A of the Income-tax Act, 1961 with retrospective effect from 1.04.1962. Prior to insertion of sec. 14A, the Revenue had sought to disallow expenditure incurred in relation to exempt income. However, the Hon’ble Supreme Court in the case of Rajasthan State Warehousing Corporation vs. CIT, 242 ITR 450, held that where there was one indivisible business giving rise to taxable income as well as exempt income, the entire expenditure incurred in relation to that business would have to e allowed even if a part of income earned from the business was exempt.
Delhi High Court held that whether the prior period expenses were shown separately or not, the assessee would nevertheless be entitled to have the adjustment of the prior period expenses in the matter of computing the net profit of the assessee. Thus on mere fact that the assessee had shown its prior period expenses in the extraordinary items separately, did not mean the net profit was arrived at de hors these items. The Delhi High Court further pointed out that the assessee had not claimed any deduction with the net profit on the basis of any clauses given in the Explanation to section 115JA(2). Consequently the question was answered in favour of the assessee. The view expressed by the Delhi High Court is agreed with and is applied to the instant case.
The Tribunal ignored that the role of the assessee with regard to the goods supplied by supplier was only that of a bailee and so the value of goods cannot constitute income in its hands. The entire contention of the revenue rested on the wrong premise that the payment had been made by the owner NSTL, a fact which was totally against the agreed terms of the contract between the assessee and NSTL.
Hon’ble Bombay High Court in the case of Prashant S Joshi (supra) has also noted the omission of section 47(ii) of the Act and insertion of section 45(4) of the Act with effect from 1.4.1988. Considering the entirety of the legal position, it has been affirmed by the Hon’ble High Court that amounts received by the partner on his retirement, are exempt from capital gains tax.
