9911796707
TMI Blog2003 (9) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... aced before us at pages 1 to 4 of the compilation), worked out as follows : "Salaries From Life Insurance Corporation of India (as per certificate attached) 11,16,871 Less : Bonus commission considered separately 7,30,635 3,86,236 Less : Exempt u/s 10(14) Conveyance Allowance 2,75,508 Less : Deduction u/s 16 Standard Deduction u/s 16(i) 15,000 Profession tax u/s 16(iii) 820 15,820 94,908 Add : Commission Income from LIC Bonus Commission received 7,30,635 Less : Expenses incurred 2,92,254 4,38,381 Income 5,33,289." After taking into account income taxable under other heads, and permissible deductions under Chapter VI-A of the Act, total income (including long term capital gains of Rs. 6,113) was returned at Rs. 5,86,830. It was in the course of the processing of the above income-tax return that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le'. Therefore, a deduction being inadmissible per se is not enough but the deduction should be such as is 'prima facie' admissible. 6. The question that arises as to what precisely is the scope of expression 'prima facie inadmissible' and how is it distinct from a deduction being inadmissible simpliciter. 7. This question has come up before several High Courts from time to time and the school of thought emerging from their judgments is that only such items can be said to be 'prima facie inadmissible' as are, on the basis of income-tax return and accompanying documents itself, conclusively admissible. Therefore, it is not the absence of a positive finding regarding admissibility of a claim that can be a sufficient cause of action for invoking section 143(1)(a) but, on the contrary, a negative finding about conclusive inadmissibility is sine qua non for invoking the aforesaid section. In effect, the bonus is therefore on the revenue to show that based on the material on record, it can be conclusively established that the deduction is inadmissible. 8. In the case of Khatau Junkar Ltd. v. K.S. Pathania, Dy. CIT [1992] 196 ITR 55. Their Lordships of Hon'ble jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such return, accounts or documents, the deduction allowance or relief claimed is prima facie inadmissible. The conclusion that the claim of the assessee is inadmissible must, in other words, flow from the return as filed. No power is given to the Income-tax Officer to disallow a claim for the reason that there is no proof in support of the claim made by the assessee. In a way the said clause (iii) of the proviso is analogous to section 154 of the Act. Where it is evident from the return as filed, along with the documents in support thereof, that claim of the assessee is inadmissible, only then an adjustment under the said proviso can be made. If proof in support of the claim is not furnished by an assessee, then for the lack of proof, no disallowance or an adjustment can be made. [Emphasis supplied] The only option which is open to the Income-tax Officer, in such a case, is that he can require the assessee to furnish proof in which case he will presumable have to issue notice under section 143(2). This is also evident from the fact that, except for the documents specified, the assessee is not required to file the entire books of account or other documents along with the return. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial available to the Assessing Officer, these deductions could not be said to be conclusively admissible. In view of the discussions in the preceding paragraphs, in the former case, the impugned adjustments will be covered by the scope of section 143(1)(a) whereas, in the later case, it would at best be a fit starting point for Assessing Officer to issue notices under section 143(2) to requisition further details. 13. As regards the first item of prima facie adjustment i.e. bonus commission of Rs. 7,30,635, against deletion of which revenue is in appeal, we have noted that the assessee's claim for deduction was only Rs. 2,92,254 whereas the adjustment is made in respect of entire receipt of Rs. 7,30,635 a part of which i.e. Rs. 4,38,381 was admittedly offered for tax by the assessee. The prima facie adjustment made by the Assessing Officer was thus clearly without application of mind. In any event, so far as availability of deduction of expenses out of bonus commission, is concerned, it is not in dispute that there were conflicting decisions by various High Courts and the Hon'ble Bombay High Court's judgment, in the case of CIT v. Gopal Krishna Suri [2001] 248 ITR 819, deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce : "In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (14)(i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as may be prescribed to the extent to which such expenses are actually incurred for that purpose." [Emphasis supplied] It would thus follow that the allowances covered by section 10(14 )(i), which beyond dispute assessee's claim was, are exempt to the extent to which such expenses are actually incurred for that purpose but then the assessee is not under any statutory obligation to file evidence, along with the income-tax return, in support of the factum of such expenditure. It is open to the Assessing Officer to issue notices under section 143(2) of the Act and requisition such information as he may deem fit and examine the question whether or not the expenses are actually incurred. The assessee is also not under any obligation to file any such evid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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