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Income Tax - Case Laws
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2005 (12) TMI 204 - ITAT AHMEDABAD-B
Penalty levied u/s 271B - delay of four months and 27 days in obtaining the audit report - onus to prove - difference of opinion - Third Member Order - Whether, the ld. CIT(A) was justified in cancelling the penalty levied u/s 271B, holding that there was a 'reasonable cause' within the meaning of section 273B of the Act? - HELD THAT:- Accountant Member - The onus to establish reasonable cause lies squarely on the assessee. However, we find that in the present case the assessee has completely failed to furnish any evidence apart from the seizure of its records in August, 1992, which it got back in December 1992. However, how could, the dislocation, or complete suspension, even if we were to presume so, by four months (August 1992 to November 1992), require 21 (twenty one) months [and not 24, i.e., from December 1992 to (now) September 1994 (and not November 1994) the accounts of financial year 1992-93 being only finalized thereat] to be finalized is difficult to accept, specially with no material brought-forth to establish the same. Secondly, a further period of six months (October 1994 to March 1995) to obtain the audit report of accounts for 12 months (previous year 1993-94) and which was held up only for want of correct carry forward of opening balances, and which became available latest by (now) September 1994, and knowing that the matter stand already delayed, for the second year in running, is again, difficult to understand. Finally, the non-submission of the audit report dated 27-3-1995 immediately thereafter or upon the amendment in law, making the furnishing of the report mandatory, is nothing but a conscious disregard of its statutory obligations.
In conclusion, we uphold the levy of penalty and the order of the CIT(A) is dismissed - In result, the appellant succeeds.
Judicial Member - It is also not the case of revenue that the assessee has committed default of non-furnishing audit report as per amended provisions of section 44AB which stood amended by Finance Act, 1995 with effect from 1st July, 1995 as revenue did not base its penalty under amended provisions. Moreover, it will be a point of debate that whether the said provision is applicable for assessment year 1994-95 and in case of debatable point benefit of doubt, as per well-settled law, should go in the favour of assessee particularly in the case of levy of penalty. Therefore, on this ground also levy of penalty cannot be held justified.
Thus, ld. CIT(A) has rightly deleted the penalty and his order should be upheld. The departmental appeal is, therefore, liable to be dismissed and is dismissed.
Third Member Order - It is also to be kept in mind that after the audit of the earlier year's accounts on 29-10-1994, the assessee took about 4 to 5 months in getting the accounts audited for the year under consideration on 27-3-1995. This period also cannot be said lo be unreasonable as the audit for the whole year's account generally takes this much time and that is probably the reason of allowing seven month period for getting the accounts audited after the close of the year, namely, the accounts are closed on 31st March of a particular year and the audit is required to be done on 31st October of that year. In my opinion, it would also not be advisable to comment on the action of the auditor and attempt lo find reasons as to why he has taken that much time, particularly when the Legislature itself provides for a time-limit of 7 months in obtaining the audit after the close of the accounts at the end of the accounting year.
In the case of Rajasthan Rajya Vidyut Prasaran Nigam[2003 (3) TMI 76 - RAJASTHAN HIGH COURT] the assessee had received the audit report for assessment year 1989-90 on August 28, 1990. It took time to adjust accounts of the assessment year 1990-91 in conformity with the audit report received for the assessment year 1989-90 and submitted the accounts of assessment year 1990-91 for audit for on 29-12-1990 and obtained the audit report on 20-1-1992. This period of 4 months in submission of the accounts for audit of assessment year 1990-91 and almost 1 year thereafter in obtaining the audit report was held to be reasonable. The court held that the assessee had a reasonable cause for the delay in submission of the report for assessment year 1990-91 and for similar reasons also for assessment year 1991-92.
The penalty has been levied by the Assessing Officer under the pre-amended provisions. At that time, the requirement was to obtain the report on or before the specified date. Therefore, any delay in furnishing the same as is made a requirement under the amended provisions with effect from 1-7-1995 by the Finance Act, 1995 would not be of any consideration. Thus, this is not a fit case for levying the penalty.
In view of the majority opinion, the order of the CIT(A) is upheld and, accordingly, the levy of penalty is deleted.
In the result, the Revenue's appeal is dismissed.
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2005 (12) TMI 203 - ITAT AHMEDABAD-B
Business Expenditure ... ... ... ... ..... form. will bear ownership of the firm, however lots not conforming to the specifi- cations will be returned to the farmers by the firm.------------------------------------------------------------ Note 1. The description in the case is in respect of production of Certified Seed only. It seems the Pilibhit Pantnagar Beej Ltd. might not be producing Labelled Seeds. However same procedure have to be and is being followed by M/s. New Nandi Seed Corporation in respect of production of Labelled Seed. The only difference is the role of inspecting authority i.e. Seed Certification Agency, which is strictly followed by the Firm, observing the same standards prescribed in the Act. 2. The procedure for and processing (treatment with poisonous pesticides etc.) of seed is prescribed by Central Seed Certification Board (Statutory Body of Central Government). Hence applicable equally to all seed producers throughout the country. The appellant is not an exception. So have to follow the same.
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2005 (12) TMI 202 - ITAT AHMEDABAD-A
Prima Facie Adjustment ... ... ... ... ..... correct. In these circumstances, neither the Supreme Court decision, Rajasthan High Court, Gujarat High Court and the Special Bench would be of any help to the Revenue in resolving the controversy. In the present cases, the power of the Assessing Officer are to be judged with reference to the provisions of section 143(1) as it is the intimation issued there-under that is being sought to be rectified by invoking the provisions of section 154. In such a situation when the Assessing Officer has no power to tinker with the returned income of an assessee under section 143(1) he cannot do that by resorting to the provisions of section 154 seeking rectification of such intimation under section 143. We, therefore vacate the orders of CIT(A) as well as of the Assessing Officer in these three years. 16. In view of the above, we need not discuss other issues relating to the debatable nature thereof raised in these appeals. 17. In the result, both the appeals of the assessee are allowed.
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2005 (12) TMI 201 - ITAT AHMEDABAD
Delay In Filing Return ... ... ... ... ..... fide impression that since the income is being disclosed under s. 44AD, the audited account is not required to be furnished. In our opinion, the assessee cannot be penalized under s. 271B. The above bona fide impression of the assessee s counsel would constitute reasonable cause The bona fides of the assessee are also proved from the fact that the income disclosed by the assessee as per s. 44AD was more than the income as determined in the audited P and L a/c. Apart from there being reasonable cause for assessee s failure, default committed by the assessee is only a technical/venial breach because the audited statement has not been relied upon either by the assessee or by the Revenue for determining the income of the assessee. In the above circumstances, in our opinion, for such technical or venial default, it would not be justified to levy the penalty under s. 271B. We, therefore, cancel the penalty sustained by the CIT(A). 6. In the result, the assessee s appeal is allowed.
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2005 (12) TMI 90 - ALLAHABAD HIGH COURT
Change In Constitution Of Firm ... ... ... ... ..... . From the records, we find that the earlier firm was carrying on the business of aarhat and plying of a truck. The new firm indulged in the business of aarhat only as the only truck held by the firm was allotted to one of the partner Sri Raj Kripal, who with the wife of his grandson, started the business in partnership of plying of the truck. Thus, if upon dissolution of the earlier firm, some business was given to one of the partners, but the firm carried on with the remaining business, it cannot be contended that a change in the constitution of the firm had not taken place and it was a case of succession of one firm by another so as to be governed by the provisions of section 188 of the 1961 Act. We are, therefore, unable to accept this contention of the learned senior counsel appearing for the assessee. In view of the foregoing discussion, we answer the question of law in the negative in favour of the Revenue and against the assessee. There shall be no order as to costs.
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2005 (12) TMI 89 - ALLAHABAD HIGH COURT
Books Of Accounts
... ... ... ... ..... e-company was also inspected by the officials of the excise department. Looking into the facts and circumstances of the case, there is no material on record for rejecting the account books of the assessee-company. The percentage of wastage, has been found to be reasonable by the Tribunal, which is essentially a finding of fact based on the material available on the record. So far as the question of reliance as placed by the Tribunal upon certificate dated March 21, 1975, we find no illegality therein, as it was within the domain of the power of the Tribunal to appreciate the evidence. Apart from above, learned standing counsel could not place any material to take a different view of the matter. We therefore, answer questions Nos. 1 and 2 in the affirmative, that is, against he Department and in favour of the assessee. In view of our answer given to questions Nos. 1 and 2, question No. 3 does not require any answer. Question No. 3 is returned unanswered. No order as to costs.
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2005 (12) TMI 88 - KERALA HIGH COURT
... ... ... ... ..... sions was also with reference to assessed income. Above all, if there is any justifying circumstance for non-filing or belated filing of return or for non-payment or short-payment of advance tax, the Chief Commissioner of Income-tax is vested with powers under the circular issued by the Central Board of Direct Taxes to waive interest under section 234A and section 234B of the Act. Therefore, I do not find the retrospective effect of the amendment is any way arbitrary or oppressive as the levy is not absolute and is subject to cancellation or reduction by the Chief Commissioner of Income-tax based on waiver applications which the petitioners or any assessee can file. I am also in agreement with the decision above referred to of the Punjab and Haryana High Court wherein the Division Bench held that the amendment is calculated to clarify the ambiguity that was felt in the original provisions. In the circumstances, the original petitions are devoid of any merit and are dismissed.
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2005 (12) TMI 87 - MADRAS HIGH COURT
... ... ... ... ..... d while completing the assessment on March 31, 1983. Before even the said letter was filed by the respondent-assessee, there was enquiry relating to the genuineness of the loan of Rs. 5,000 standing in the name of Mrs. Girija Pakriswamy and the Assessment Officer did not proceed further. After the completion of the assessment, the Officer cannot rely on the fact that they have omitted to consider the said letter which was kept in a different file. We are of the view that the information pertaining to the cash credit of Rs. 5,000 was already with the Assessing Officer at the time he made the original assessment and there is no fresh information available with the Assessing Officer enabling him to invoke the provision under section 147(b) and as such, the reopening of assessment under section 147 was unjustified. In view of the said factual position, we have answered the above question in favour of the assessee and the above tax case filed by the Revenue is dismissed. No costs.
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2005 (12) TMI 86 - DELHI HIGH COURT
... ... ... ... ..... ssee by issue of debentures as is the position in the instant case. If that be so, it is difficult to see how the Revenue can still argue that since the case in hand refers to issue of debentures for expansion of an existing business, the expenditure incurred on the same must be amortised. Since the circular instructions are binding, the Revenue would not be entitled to urge any such contention. To set the controversy at rest, the circular specifically states that expenditure incurred on the issue of debentures will be a permissible deduction notwithstanding the introduction of section 35D. There is, after those instructions, no room for any further debate on the issue. The Tribunal was, in that view, perfectly justified in holding that the expenditure was a permissible deduction and accordingly deleting the additions made by the Assessing Officer. This appeal does not raise any substantial question of law for our consideration. It, accordingly, fails and is hereby dismissed.
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2005 (12) TMI 85 - MADRAS HIGH COURT
... ... ... ... ..... ided family and her son. In respect of question No.4 that the authorities below rightly pointed out that it is not so probable that the entire income was earned by the assessee-respondent at a particular assessment year or assessment years. A reasonable conclusion was made that the income had been earned over a period of time. Therefore, we are of the view that the view taken by the authority below was correct and also there is no basis or materials/for the Revenue to estimate the interest income for the period relevant to the concerned assessment year. We are also of the view that the authorities below had taken a correct view that there is no justification in levying interest under section 139(8) and section 217 of the Income-tax Act. Hence, there is no substantial question of law arising out of the order of the Tribunal, in respect of question No.5. Accordingly, the tax appeal filed by the Revenue is dismissed. Consequently, the connected T. C. M. Ps. are closed. No costs.
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2005 (12) TMI 84 - ALLAHABAD HIGH COURT
... ... ... ... ..... , namely, dearness allowance, city compensatory allowance, house rent allowance, leave encashment, etc., are taxable as income, which arose from a judgment of our court in the case of All India Defence Accounts Association, In re 1989 175 ITR 494 being besides the point need no detailed consideration. Learned standing counsel could not point out any relevancy of these cases with regard to the questions referred by the Tribunal for consideration. We have carefully examined these cases and we find that there is not even a whisper in any of these cases with respect to the provision of section 10(16) of the Act, which is presently involved. In view of our discussion as above, we find that the order of the Tribunal is perfectly justified in law and the view taken by the Tribunal is in conformity with section 10(16) of the Act. We answer the question referred in both the references in the affirmative, i.e., in favour of the assessee and against the Department. No order as to costs.
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2005 (12) TMI 83 - RAJASTHAN HIGH COURT
Penalty levied u/s 271(1)(c) - concealment of particulars Or furnished inaccurate particulars of income - HELD THAT:- The expression used in clause (2) of Explanation 5 is not confined to physical possession but extends to type of possession which is capable of being held. In case the property is an actionable claim it can be possessed by way of possessing the right to recover such asset by exercise of such right. When such loan is represented by promissory note, it could give rise to presumption that money represented by promissory notes belong to the person as held by the person in whose favour the promissory note has been executed. If on that basis the assessee could be held owner of the debt represented by the promissory notes he cannot be deemed to be in possession of such actionable claim, an asset of the assessee.
Thus, the view propounded by the Assessing Officer and now pursued by the Revenue by drawing distinction between possession of tangible and intangible assets is unsustainable.
In fact it was never the case of the Revenue that the assessee had not complied with the requirement of Explanation 5 to section 271, except that no statement about undisclosed income could be made u/s 132(4), it applies only to the declaration of undisclosed tangible assets. This clearly was erroneous in view of a combined reading of section 132(4) and Explanation 5 to section 271. Hence, the conclusion of the Tribunal cannot be said to be erroneous.
Thus, CIT (A) and the Tribunal were justified that the penalty was not for concealment of particulars and no penalty is leviable in view of specific Explanation 5 to section 271(1)(c) of the Act and cannot be interfered.
It may also be noticed that in the case of Amarchand Soni the same view was expressed. Amarchand Soni had also resorted to K.V.S. Scheme, 1998, that has further strengthened his case and the appeal of the Revenue in his case was dismissed.
We do not find any force in this appeal and the same is hereby dismissed.
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2005 (12) TMI 81 - MADHYA PRADESH HIGH COURT
... ... ... ... ..... in the prescribed manner setting forth such other particulars as may be prescribed. In the present case, admittedly, the appellant had filed a return under section 139(1) of the Act and, therefore, the provision of section 142(1)(i) of the Act was not applicable. The notice served under section 142(1) of the Act on the appellant was in compliance with the direction of the Commissioner of Income-tax (Appeals) in the appellate order dated July 24, 1992, annulling the original assessment for the assessment year 1990-91 and requiring him to give a notice and opportunity of being heard for assessment of association of persons. Hence, the decision of the Special Bench of the Tribunal in the case of Motorola Inc. 2005 96 ITJ 1 (Delhi) cited by learned senior counsel for the appellant does not apply and no substantial question of law arises in this case as to whether notice under section 142(1)(i) of the Act was not barred by time. For the aforesaid reasons, we dismiss this appeal.
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2005 (12) TMI 80 - MADRAS HIGH COURT
Recovery of tax - Petition filed by the applicant/plaintiff (GVFL) challenging the order of the Tax Recovery Officer (TRO) under rule 39 of the Income-tax (Certificate Proceedings) Rules, 1962 ("ITCP Rules"), and to issue a writ of prohibition restraining the Income-tax Department from interfering with the possession of GVFL Ltd. - whether the order of the Tax Recovery Officer on the applicability of rule 39 suffers from any fundamental flaws.
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2005 (12) TMI 79 - GUJARAT HIGH COURT
Section 32(1) - "Whether Tribunal was right in holding that the third proviso to section 32(1), would not be applicable in respect of the plant and machinery which cost below Rs. 5,000 since such assets are covered specifically under the first proviso, and that the entire cost is to be allowed by way of deduction?" - in the absence of any infirmity in the impugned order of the Tribunal, the question has to be answered in the affirmative namely, in the case of plant and machinery whose cost does not exceed Rs. 5,000, the third proviso to section 32(1)(ii) of the Act would not be applicable since such assets are covered specifically under the first proviso to the said section and the entire actual cost has to be allowed as a deduction, subject to the assessee fulfilling all other requisite conditions - The question is accordingly answered in the affirmative, i.e., in favour of the assessee
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2005 (12) TMI 78 - MADRAS HIGH COURT
Applicability of Interest Tax Act, 1974 – appellant, a co-operative thrift and credit society did not file a return of chargeable interest under the Interest-tax Act of 1974 - AO held that the interest accrued to the appellant-assessee should be brought to tax under the provisions of the Interest-tax Act by holding that the appellant society is a credit institution within the meaning of section 2(5A) of the Interest-tax Act and holding that the appellant society is engaged in banking within the purview of the said section - Tribunal is right in law in holding that the activities of borrowing money and lending money to the members of the petitioner is similar to the one that is carried on by bankers, which accepts deposits from the depositors and lends money to various borrowers - Tribunal is right in confirming the demand without considering whether the appellant carries on the business of banking after satisfying the various norms laid down in the Banking Regulation Act - Tribunal is right in law in holding that the Interest-tax Act would be applicable to the petitioner
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2005 (12) TMI 77 - PUNJAB AND HARYANA HIGH COURT
Depreciation - "Whether, Tribunal was right in law in separately allowing depreciation to the assessee when the net profit rate at 8 per cent. was adopted thereby deeming that the deductions under sections 30 to 38 have already been given full effect?" – only issue before the Tribunal was that when a net profit rate is applied because of non-maintenance of proper books of account, the assessee is still entitled to claim other business expenses, like salary, interest and depreciation, etc. – since it has been specifically noted that the audit accounts along with the audit report, balance-sheet, profit and loss account, fixed assets and depreciation chart, as prescribed, had been filed with the Department, no question of law, much less a substantial question of law, survives for our consideration. – revenue’s appeal dismissed
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2005 (12) TMI 76 - MADRAS HIGH COURT
Exemption under section 80P(2)(a)(i) - object for which the assessee has been created, which is a sugar mill, and the object clause or/and the business activities of the assessee mill as stated at (x) of page No. 33 of the typed set of papers is also granting loans and advances to the members at such rates as may be prescribed by the Committee - Tribunal was right in law in holding that the assessee is entitled to exemption under section 80P(2)(a)(i) of the Income-tax Act in respect of interest received from the members of the society - Tribunal is right in law in holding that the incentive subsidy received by the assessee is a capital receipt and cannot be included in the total income
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2005 (12) TMI 75 - MADRAS HIGH COURT
Penalty u/s 271(1)(c) - "Whether, Tribunal was right in holding that the Commissioner of Income-tax (Appeals) was justified in cancelling the penalty u/s 271(1)(c) even though the assessee was not entitled to the immunity provided u/s 132(4) read with Explanation 5 to section 271(1)(c), since the disclosure made was not full and true?" – CIT (A) allowed assessee appeal on ground that Clause (2) of Explanation 5 to section 271(1)(c) categorically states that the statements made during the course of search by the assessee can be taken note of and by such a statement, the explanation offered by the assessee, in the opinion of the officer, is acceptable and there is no question of imposition of penalty. – no infirmity in Tribunal’s or CIT (A)’s order - there is no question of law, much less, substantial question of law in this appeal, which requires reconsideration
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2005 (12) TMI 74 - DELHI HIGH COURT
Deduction under section 80-I on the amount of duty drawback - Assessing Officer denied the deduction on the said amount of duty drawback on the ground that the same did not constitute income of the assessee derived from industrial undertaking. - Tribunal was not correct in law in allowing any deduction under section 80-I to the assessee on the amount of duty drawback
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