2016 (12) TMI 1567 - AT - Income Tax

Cancellation of registration u/s.12AA(3) - violation of provisions of section 13(d)(i) by investing in shares of cooperative banks and also by making certain advances and deposits not permitted u/s.11(5) - assessment u/s.153C - Held that:- The assessee has never challenged for non issue of notice u/s.153C either before the Assessing Officer or before the CIT(A). Since after the search took place at the residence of Shri M.N. Navale, the assessee had voluntarily filed its return of income on 0401-2007 and has revised the same on 13-08-2007 stating that the same is filed in response to notice u/s.153C, a statement made by the Ld. Departmental Representative at the Bar and not controverted by the Ld. Counsel for the assessee, therefore, we find no merit in the additional ground raised by the assessee on this issue. Further, we do not find any prejudice that has been caused to the assessee for non issue of notice u/s.153C when he has filed the revised return stating that the same has been filed in response to notice u/s.153C. In this view of the matter, the first additional ground raised by the assessee is dismissed.

Jurisdiction of the Assessing Officer - Held that:- Notice u/s.143(2) was issued to the assessee on 31-03-2007. The assessee filed return of income for the year under consideration along with the returns for other years covered u/s.153C on 13-08-2007. Thereafter notice u/s.143(2) was issued to the assessee on 30-06-2008 which was duly served on the assessee on 01-07-2008. Further notice u/s.142(1) for the A.Y.2006-07 was issued on 07-09-2007. Notice u/s.143(2) was issued on 11-10-2007. The assessment order was passed on 07-08-2008. Till the completion of the assessment, the assessee had never raised the issue of jurisdiction of the Assessing Officer. Therefore, in view of the clear provisions of section 124(3), the assessee now cannot call in question the jurisdiction of the Assessing Officer. The various decisions relied on by the Ld. Counsel for the assessee are distinguishable and are not at all applicable to the facts of the present case. In view of the above discussion, the additional ground No.2 filed by the assessee is dismissed.

Denial of exemption of entire income for contravention of provisions of section 13(1)(c) and 13(1)(d) - Held that:- Whenever there is violation of section 11(5) and 13(1)(d) of the I.T. Act, exemption cannot be withdrawn for the entire income and income which is the subject matter of violation only can be brought to tax.

Calculation of fair rent of the property - Held that:- In the instant case the assessee had filed certain details before the CIT(A) for calculation of fair rent of the property which has been ignored by him. Under these circumstances and in the interest of justice, we deem it proper to restore this issue to the file of the CIT(A) with a direction to adjudicate this issue in the light of facts and submissions made and the additional evidences filed before him. The CIT(A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly.

Assessee has not violated the provisions of section 13(1)(d) by investing in shares of cooperative banks from which it had taken loans.

Disallowance u/s.40(a)(ia) can be made where the income is assessable under the head “profits and gains from business and profession” and it cannot be made since assessee’s income is assessed/assessable under the head “income from other sources”.

Disallowance u/s.40A(3) - Held that:- We deem it proper to restore this issue to the file of the AO with a direction to verify the payments made to different persons. In case there is no payment exceeding ₹ 20,000/- at a time to any of the parties as stated by the Ld. Counsel for the assessee at the Bar, then provisions of section 40A(3) cannot be invoked. The Assessing Officer shall accordingly decide the issue as per fact and law after giving due opportunity of being heard to the assessee.

Disallowance u/s.36(1)(va) on account of delayed payment of PF - Held that:- We restore this issue to the file of the AO with the direction to verify the details of payment made to the Government treasury. In case the deposit has been made prior to the date of filing of the return, then in that case no disallowance is called for. The Assessing Officer shall decide the issue as per facts and law after giving due opportunity of being heard to the assessee.

Disallowance of prior period expenses - Held that:- We deem it proper to restore the issue to the file of the Assessing Officer with a direction to decide the issue afresh in the light of the decisions cited above. Needless to say the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per law