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Income Tax - Case Laws
Showing 301 to 320 of 695 Records
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2012 (11) TMI 749 - ITAT DELHI
Deemed dividend - Addition u/s 2(22)(e) of the Income Tax Act - assessee company received a sum of Rs. 2,08,50,000/- from M/s. Dugar Growth Funds (P) Ltd. for investment - Held that:- Since the assessee is not shareholder in this case therefore in view of the jurisdictional high Court’s decision addition is not called for in the hands of the assessee. Therefore action of Ld. CIT(A) deleting the impugned addition is upheld and appeal of the revenue is dismissed. However AO is expected and directed to take necessary steps so that income could not escape assessment as it is to be treated as deemed dividend u/s 2(22)(e) in the hands of the said concerned person.
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2012 (11) TMI 748 - ITAT AHMEDABAD
Addition due to Loss on Investment – purchase of mutual funds / units in the name of director - Board's Resolution authorizing investment in the names of various directors - held that:- Assessee has shown the mutual funds as its investment. Therefore, there was no suppression of the fact with respect to investment as doubted by A.O. Further, there is no bar for the assessee company to make investments in the name of the directors due to certain strategic reasons. The assessee has submitted the Board’s resolution duly certified by one of the directors of the company granting such permission for investing in mutual funds in the names of the directors of the company which cannot be simply brushed aside - addition made by. A.O. on account of loss claimed by the assessee for Rs.80,77,500/- is not justifiable and therefore same is deleted - Ground of appeal is allowed.
Diversion of Interest bearing funds – held that:- Interest bearing funds are not diverted for making investments in mutual funds, proper cash flow statements have to be prepared before such diversion of funds and examined. Further, from examination of the balance-sheet, it is evident that the assessee does not have own funds to make such investments because the share capital and reserves of the assessee as shown on 31.03.2000 in the balance-sheet of the company is only Rs.1,35,000/- and Rs.97,185/- respectively. Therefore, it is evident that the assessee has diverted the interest bearing funds for making such investments. Further the working of. AO that interest to the extent of Rs.17,32,449/- is attributable to interest on funds diverted is not disputed by the assessee’s A.R - CIT(A) is justified in confirming the addition. Order of AO and CIT(A) on this issue is confirmed - Ground of appeal is dismissed - In the result, appeal of the assessee is partly allowed.
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2012 (11) TMI 747 - ITAT AHMEDABAD
Penalty u/s 271D and 271E of the IT Act – alleged that as per details in the tax audit report, the assessee had accepted the loans and repaid the loans otherwise than by a crossed cheques or demand draft, contravening the provisions of Section 269SS and 269T of the IT Act - assessee submitted that all the receipts are through account payee cheques and adjustment rectification entries and later on journal entries have been passed – Held that:- Assessee furnished complete details of the transactions with the sister concern before the authorities below and explained that either the payments are made through account payee cheques or these are rectification journal entries in respect of wrong payments received from customers which pertained to the sister concern - assessee also filed complete entries of the accounts of both the concerns in support of the contentions on which remand report was called for and virtually the AO accepted the claim of the assessee in the remand report regarding journal entries between sister concern and entries of purchases and sales through account payee transactions - penalty is not leviable in the matter – in favor of assessee
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2012 (11) TMI 746 - ITAT AHMEDABAD
Undisclosed Income – Whether the Appellate Tribunal is right in law and on facts in holding that only the net profit rate can be applied in respect of admitted sales of goods outside the books of account. - Held that:- Since these issues are in litigation for a long period and travelled couple of times before the appellate authorities and considering the submissions of the ld. A.R. that the assessees are not inclined to prolong the litigation process and the Bench may arrive at any appropriate profit as it may deem fit and just, we are of the considered opinion, in the interest of justice and fairness to adopt the rate of 3% profit on the suppressed turnover for both the assessees in all the assessment years concerned. - In the result, appeals of the Revenue are partly allowed.
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2012 (11) TMI 745 - ITAT INDORE
Addition in respect of share capital received from subscribers, denying deduction u/s 80IA - assessee has received share application money in cash – alleged that names of the persons are not genuine and it is the unexplained money of the assessee – Held that:- Assessee has discharged its onus by proving the identity of subscribers - once the existence of the investor/share subscribers is proved, onus shifts on the revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee company itself. Once the confirmation letters are filed, no addition can be made on account of share application money in the hands of the company – In favor of assessee
Interest u/s 234B – nature – Held that:- No specific section has been mentioned for charging of interest and merely it has been mentioned that charge interest if any, as per law. However, since the issue of share application has been decided in favour of the assessee and the addition made u/s 68 of the Act has been deleted, therefore, charging of interest is consequential in nature, meaning thereby that it is not leviable/chargeable - if the Assessing Officer was apprehensive of any mala fide on the part of share applicant, he was at liberty to reopen their individual assessments, therefore, there is no justification to make the addition in the hands of the assessee – In favor of assessee
Disallowance of Rs. 6,000/- out of telephone and communication expenses, Rs. 5,000/- out of vehicle repair and maintenance expenses, Rs. 3,000/- out of vehicle running expenses and Rs. 6,000/- out of travelling expenses – Held that:- Disallowances were made by the Assessing Officer as necessary bills and vouchers were not filed by the assessee, therefore, expenses were not fully verifiable - no evidence was filed in support of its claim – disallowance deleted
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2012 (11) TMI 744 - ITAT INDORE
Interest on FDR from Reserve Fund - AO found that assessee claimed exemption of interest of Rs.38,69,627/- received on the funds deposited with the bank for the purpose of pension, gratuity and other retirement benefits of the employees – Held that:- Fund was not a superannuation fund - assessee did not press his claim u/ss 10(25) and 36(1)(xii) of the IT Act before the Tribunal as was the claim made before the authorities below therefore, the claim of the assessee could not be considered under those provisions - assessee received interest on the funds deposited with the bank in this regard. Since the reserve funds remained with the assessee therefore, interest earned on such funds shall be income of the assessee – Against assessee
Contribution made for meeting the future liability on account of pension, gratuity etc. – Held that:- Assessee is admittedly maintaining cash system of accounting – Held that:- Authorities below has however not considered the rule referred to by ld. Counsel for assessee in his arguments and have also not given any finding if the assessee spent any actual amount on this hand under the year appeal because on provision basis this year, the assessee might have made claim in earlier year for which, the amount could have been spent by the assessee - issue requires reconsideration at the level of the AO – matter remanded to AO
Disallowance on statutory payments paid under the Mandi Act - assessee claimed the above amount as deduction in the income and expenditure account in the form of board fees – alleged that it was a transfer of fund to the mother concern – Held that:- Assessee paid the election amount as per the requirements of the Act as noted above as well as per the directions of the Board, therefore, it was a statutory payment made by the assessee for the purpose of running of the activity of the assessee - assessee has debited Rs.10 lacs under the head election expenses which is also mentioned in the income and expenditure account. Therefore, the authorities below were not justified in disallowing the aforesaid expenditure which his paid by the assessee out of the market committee funds. Since the amount is incurred for the purpose of running the activity of the assessee, therefore, it was allowable deduction - Assessing Officer directed to allow the deduction
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2012 (11) TMI 722 - BOMBAY HIGH COURT
Deletion of Disallowance of Interest u/s 43B - payment of interest to a cooperative bank – held that:- Sec 43B of the Act is applicable only in respect of any amount paid as interest to a scheduled bank. A scheduled bank as defined in Explanation 4 to Section 43B of the Act would have the same meaning as contained in the Explanation to Section 11(5) (iii) of the Act. Shree Mahalaxmi Mercantile Cooperative Bank limited is not included within the meaning of a Scheduled Bank. Sub Clause (iii) of sub section 5 of Section 11 speaks about the deposit of any amount in a scheduled bank or co-operative Society engaged in banking but the same is of no consequence - Therefore, no fault can be found with the order of the Tribunal dated 26/10/.2009 - in favour of respondent- assessee and against appellant-revenue.
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2012 (11) TMI 721 - PUNJAB AND HARYANA HIGH COURT
Settlement of Case - the objections of the petitioner to the admissibility of the applications are turned down and the Settlement Commission has decided to proceed with the consideration of those applications on merits. - held that:- It is clear from the above that at this stage only a prima facie view is expressed by the Settlement Commission and rightly so because of the reason that the applications are yet to be considered on their merits. At this stage, it is still open to the Income Tax Department to raise objections, which are available under the law, opposing the said applications. It is only after the applications are considered on merits in the light of submissions made by applicants (respondents herein) and the opposition of the department on the merits of these applications that Settlement Commission would arrive at a final conclusion whether to accept the applications of the respondents or not and even if these are to be accepted on what terms.
In exercise of extraordinary jurisdiction under Article 226 of the Constitution of India, it is not necessary to go into the validity of the impugned order at this stage. - petition dismissed.
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2012 (11) TMI 720 - GUJARAT HIGH COURT
Rejection of Revision u/s 264 – Penalty - CIT stated that revision proceedings are contemplated only to mitigate the situation faced by the assessee who are unable to approach the appellate authority for relief. The Commissioner noted that the assessee had already exercised his right of appeal before the appellate authorities. He cannot claim relief under section 264 of the Act. - held that:- The fact that the assessee had preferred appeal against quantum additions would not therefore, take away his right to file revision application against the order of penalty. - Commissioner was wholly misguided in his approach.
With respect to the Commissioner's stand that deletion of quantum additions not having achieved finality, the revision should be dismissed, also not in agreement.- The penalty was based on certain quantum additions. Such additions came to be deleted by the Commissioner(Appeals). Further appeal by Revenue before the Tribunal was rejected. When the Commissioner was deciding the revision petition of the assessee, what was prevailing was the order of the Tribunal. It may be that further appeal by the Revenue against such decision of the Tribunal was pending before High Court.
Mere pendency of appeal before High Court or even admission would not annul the order of the Tribunal or even of course in absence of stay, keep it in abeyance. - Matter remanded back to CIT for fresh consideration.
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2012 (11) TMI 719 - MADRAS HIGH COURT
Business loss or capital loss - Loss arising on redemption of units as business loss - held that:- Going by the decision of the Apex Court in G.Venkataswami Naidu & Co. V. Commissioner of Income-Tax [1958 (11) TMI 5 - SUPREME COURT] that ultimately the intention and the circumstances alone have to have a bearing on the question as to whether the transaction is only of investment or in the nature of trade, since the question as to whether the income earned as an income from investment or an income arising from a nature of adventure in the nature of trade has to rest on a finding of fact, particularly with reference to the intention of the party herein and the surrounding circumstances, in the absence of any such finding of the Tribunal, matter remanded back to tribunal.
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2012 (11) TMI 718 - PUNJAB AND HARYANA HIGH COURT
Writ petition - Challenging Insertion of Conditions in third and forth provisos to Section 80 HHC (3) of the Act by amendment of Taxation Laws (Second Amendment) Act, 2005 - held that:- Supreme Court had transferred all the matters to Gujarat High Court in order to avoid confusion and difficulties in enforcement of conflicting judgments of different High Courts, it would be appropriate in these writ petitions to follow the judgment of the Gujarat High Court - Writ Petitions, other than the first four Writ Petitions, are disposed of in the terms of the order and judgment of the Gujarat High Court. The first four writ petitions, in any event, stand disposed of by the order and judgment of the Gujarat High Court.
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2012 (11) TMI 717 - ITAT CHENNAI
Transfer pricing - ALP - selection of comparable - incremental adjustment of Rs. 5.84 crores to the income returned by the assessee as Arm's Length Price (ALP) adjustment. - held that:- transfer pricing analysis has been made by the assessee as well as the authorities below only on the basis of internal comparables. At the same time, there is no case that instances of external comparables are unavailable. External comparables are available in the industry carried on by the assessee company.
In an environment where sufficient number of external comparables are available, it is imperative to examine those external comparables also alongwith internal comparables so as to come to a balanced finding on the matters relating to deciding of ALP and consequential adjustment called for, if any - matter remanded back.
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2012 (11) TMI 716 - ITAT MUMBAI
Computation of Short term and long term capital gains - Cost of acquisition u/s 48 - Difference between actual sale price and market price at the time of sale - There is no allegation either by the Assessing Officer in the remand report or by the Commissioner of Income Tax (Appeals) that the assessee understated sale consideration; but addition has been made by taking into consideration the market price of the shares.
Held that:- section 48 does not have any reference to the market value of the asset; but it refers only to the consideration received or accruing as agreed between the parties to the transaction. - market price of the shares cannot be taken as full value consideration for the purpose of computation of capital gain as per sec. 48 when there is no under statement of sale consideration - Decided in favor of assessee.
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2012 (11) TMI 715 - ITAT HYDERABAD
Unexplained Addition on account of capital introduced by partners out of Agricultural Income – Held that:-In the case of Veeraiah,considering the smallness of the amount ie Rs.1 lakh and the fact that he was having some agricultural Lnad holding the genuineness of the source for credit in the capital account is not to be doubted and hence delete the same.
With respect of M.Srikanth - Held that:- As the assessee has produced documents for land holdings only to the extent of 3.66 acres, which are in his father’s name,it is reasonable to restrict the addition in respect of credit entry in the account of M. Srikant to Rs. 4,00,000/- by allowing credit for the agricultural income of this partner as against the addition of Rs. 7,00,000/- made by the Assessing Officer and confirmed by the CIT(A).
With respect to G Venkata Rao – Held that:- As the assessee furnished the details of holding of 11.3 acres ,the probability of earning agricultural income could not be ruled out. However, he had not appeared before the AO for personal examination due to his health condition and, therefore, we find it reasonable to restrict the addition to Rs. 4,00,000/- as against Rs. 7,00,000/- made by the Assessing Officer and confirmed by the CIT(A).
Interest on Capital u/s 40(b) - With respect to the plea of the Counsel that the CIT(A) has not justified confirming the additions reading the interest of above three credits, AO noticed that the assessee had claimed interest of Rs.11,26,527/- on the capital account of the partners computed at the rate of 18% p.a. since the provisions of Sec.40(b)(iv) of Act permits interest on partners’ capital account @ 12%, the AO disallowed the balance excess amount of Rs.3,75,509/. with respect to additions u/s.68 of the Act is restricted and the addition in the case of B. Veeraiah has been deleted,issue is set aside to the AO to rework the interest after taking into consideration the additions sustained in the case of M. Srikant and G. Venkata Rao - In the result the appeal of the assessee is partly allowed for statistical purposes.
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2012 (11) TMI 714 - ITAT HYDERABAD
Disallowance of Interest Paid - Assessment after search and seizure - AO observed that the assessee failed to prove with evidence like books of account and bank statement about the nexus between he interest claim and interest received. He also observed that assessee’s claim that interest paid on loans were utilized for earning income is not acceptable in the absence of evidence. - held that:- In the present case, there is no incriminating material found during the course of search to frame assessment u/s 143(3) read with section 153C of the Act. The determination of undisclosed income consequent to search action and framing assessment under section 153C of the Act is different from regular assessment or it is not substitute for regular assessment. Being so, the AO shall frame assessment on the basis of incriminating material found during the course of search action under sec. 153C of the Act. The Assessing Officer was not justified in making additions by way of disallowance of interest without any specific incriminating material on hand. - Decided in favor of assessee.
Decision case of Vijaybhai N. Chandrani Vs. ACIT [2010 (3) TMI 770 - GUJARAT HIGH COURT], followed.
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2012 (11) TMI 713 - ITAT HYDERABAD
Conversion of investments into stock in trade - Capital gain v/s Business income - reopening of assessment - Held that:- The provisions of section 45(2) cannot be made inapplicable to the instant case merely for the reason that the assessee, the owner of the capital asset, has neither converted into nor treated the impugned investment as the stock in trade voluntarily. In denial of the same to the assessee, the Revenue authorities have adopted the principle of ‘literal interpretation’ which must not have been done by the revenue in order to avoid the absurdity of interpretation as in view of the ratio of the Apex Court in the case of K P Verghese [1981 (9) TMI 1 - SUPREME COURT]. Therefore, AO is duty bound to make the assessment in accordance with the provisions of the Act including the provisions of section 45(2).
Date of conversion for the shares sold in AY 2006-07 - Held that:- It is trite law that every assessment year is an unit of an assessment. Any transaction can be accounted by applying accounting entries, arriving at the cost of acquisition of shares or market price or their fair market value is not impossible considering the availability of material on record. So far as the capital gain relatable to the capital asset so converted for the assessment year 2006-07, 1.4.2005 has to be taken as the date of conversion, which cannot be altered in respect of the capital assets sold in the relevant previous year. If any other assets are sold in the preceding assessment year 2005-06, assessment for which is allegedly reopened, about which there is no clarity before us, the date of conversion would be 1.4.2004.
As there is need for data for determining the assessable capital gains upto the date of conversion and the business income upto the date of sale of the impugned capital asset for arriving at proper taxable ‘capital gains’ and the ‘business income’ within the meaning of the said provisions restore the matter to the file of the AO for computation - partly in favour of assessee.
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2012 (11) TMI 712 - ITAT HYDERABAD
Telecommunication Charges - reduction from the export turnover - held that:- expenses excluded from export turnover should also be excluded from the total turnover - Decision in ITO Vs Saksoft Ltd [2009 (3) TMI 243 - ITAT MADRAS-D] followed. - Decided in favor of assessee.
Disallowance u/s 40(a) – Non deduction of TDS - Held that:- Legislative intent is clear that only the outstanding amount or the provision for expense (and not the amount already paid) is liable for disallowance if TDS is not deducted. Also, s. 40(a)(ia) creates a legal fiction by virtue of which even genuine and admissible expenses can be disallowed for want of TDS. Sec 40(a)(ia) can apply only to expenditure which is “payable” as of 31st March and does not apply to expenditure which has been already paid during the year.” - Order of the CIT(A) is set aside and restore this issue to the file of the Assessing Officer to decide the same - decided in favor of assessee.
Decision in M/s Merilyn Shipping Transport & Others [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] [(SB)(Vizag)], followed.
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2012 (11) TMI 711 - ITAT HYDERABAD
Administrative Expenditure - Director’s Remuneration - commercial expediency - In case of [CIT Vs. New Savan Sugar and Gur Refining Co. Ltd., 1989 (4) TMI 12 - CALCUTTA HIGH COURT] high court has held that even if a particular expenditure is un-remunerative, such expenditure is nonetheless is proper deduction, if such expenditure is made wholly and exclusively for the purpose of making or earning such income.
Director’s Remuneration - Conscious selection of a director, who has to be paid extraordinary remuneration in order to avail of his services has been made by the company as a policy decision. The expenditure is for the purpose of earning income the amount paid as remuneration is deductible. Therefore, order of the CIT(A) is set aside and deleted the addition of Rs. 49,66,499/- made by the Assessing Officer on account of remuneration paid to director and administrative expenses - In the result, appeal of the assessee is allowed.
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2012 (11) TMI 710 - ITAT AHMEDABAD
Addition on account of interest payments to non genuine cash creditors - Held that:- Most of the repayments were made either during the periods when the assessment proceedings were going on or thereafter. In such circumstances, it was expected of the assessee to at least have the correct address at the time of repaying the amounts, especially when assessee had not filed any confirmation in respect of these deposits. Thus, majority of the addition is liable to be confirmed except where summons were served or where summons were not received as unserved - out of these two additions the assessee was given a relief of Rs.2.91 lakh in respect of unexplained credits and Rs.85,751/- in respect of interest thereon and balance addition was confirmed
Addition u/s. 69B of the Income-tax Act - assessee is engaged in the cheque discounting business – Held that:- Transaction had been recorded on the next working day when the payment was made on earlier working day after the business hours - assessee had submitted the explanation which is rightly accepted by Ld. CIT(A) since the assessee had given the cash after the business hours or on Saturday and accordingly the transactions have been entered on the next working day. The explanation has been substantiated from various documents submitted by the assessee - addition deleted
Addition made by estimating the commission income u/s. 145 of the Income-tax Act - assessee had shown the cash payment to various parties against cheque discounting - Assessing Officer was of the view that it is not possible for him to deduce accurate income and therefore on show-cause given to the assessee he rejected the books of account u/s 145(3) of the Act – Held that:- In addition to the specific addition made and to meet the ends of justice the AO made presumption that the assessee had understated commission income of such transaction and accordingly estimated the income of Rs.5 lakh over and above the commission declared by the assessee – CIT in his order by accepting the explanation of the assessee deleted the addition
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2012 (11) TMI 709 - ITAT AHMEDABAD
Addition on account of cash found at the time of search – Held that:- Assessing Officer after giving credit of business cash of Rs.44,213/- as determined by him on page-9 of the assessment order made an addition of Rs.4,49,558/- as undisclosed income of the assessee-company being unexplained cash - explanation of the assessee that the cash found for which the additions have been made was cash-in-hand available with other family members is without any cogent explanation or any evidence – addition upheld – In favor of revenue
Addition - unaccounted sales – Held that:- Assessee has already debited all the purchases and expenses in the regular books of account. Thus sales found outside the books of account are nothing but undisclosed income of the assessee and therefore cannot be given the credit for purchases and the expenses and therefore gross profit addition cannot be made – against assessee
Addition - unaccounted sales – Held that:- Sales shown by the assessee in the regular books of account tallies with the sales determined by the Sales Tax Department in the sales tax assessment order. The sales declared in the books of account are higher than sales found noted in loose paper – addition deleted – in favor of assessee
Addition - unaccounted sales to customers - addition has been made by the Assessing Officer on the basis of notings in various loose papers – Held that:- Assessee has not issued any bill for cash sales and no record except the total amount of sales made during the day is kept and that the bills are issued only for credit sales and the sales made to franchises - in the absence of any expenditure brought on record outside the books by the assessee, the assessee cannot be given the benefit for application of gross profit – In favor of revenue
Unaccounted Investment in valuables – alleged that assets are in the name of Shri Meenu M Agarwal and have not attempted to verify the source of the income from which the investment have been made. It is also a fact that Shri Manoj D Agarwal has made a disclosure of Rs.90,000/- as household goods and valuables under VDIS filed by him – Held that:- Source of income in case of the Director is not in his individual capacity but the income shown by the assessee-company and accordingly keeping in view the totality of such circumstances - source of investment in the said assets would logically be the undisclosed income of the assessee-company - AO was directed to treat the investment in question of Rs.60,000/- as made out of undisclosed income of the assessee company and no separate addition was directed to be made – in favor of revenue
Addition on account of expenditure incurred in cash – alleged that Shri Kumbharam Jhat could not properly explain how the papers on which details regarding cash payment are made in his handwriting were found and seized from the residential premises of the Director at Rasranjan Complex – Held that:- Shri Kumbharam Jhat in his statement given the name of the parties to whom he has supplied the labour to which the said notings are pertaining, addition cannot be made in the hands of the assessee-company as unaccounted expenditure. The Director of the assessee-company has also explained as to how by mistake the said loose paper has been carried to his residence from factory and as a result, it was found from his residence – addition deleted – In favor of assessee
Addition - unaccounted salary to Shri Kiritkumar S Shah – Held that:- In the absence of any incriminating documents found during the course of search and also the Assessing Officer having not given any opportunity to the assessee for cross examination of the person concerned – addition deleted- in favor of assessee
Interest u/s.158BFA(1) - assessee contended that Xerox copies of loose papers were made available to the assessee at a very later stage during the assessment proceedings and therefore there was a delay in filing of the return of income – Held that:- Provisos attached to Section 158BFA(2) of the Act have not been considered by the authorities - relief has been granted at the two stages of appeal, hence, that effect ought to have been given while redetermining the quantum of penalty u/s 158BFA(2) of the Act considering the applicable provisions of the said section involved - appeal of assessee is allowed for statistical purposes
Refund of the penalty paid – penalty set aside – Held that:- In the case of penalties the burden to show that the penalty has been passed on to another person is on the department and not on the assessee as in the case of duty - penal liability can never be passed on to another person who has not committed the offence - department has to prove that unjust enrichment would mean that some extra effort is required in addition to merely looking at the balance sheet or profit & loss account on the part of the department – In favor of assessee
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