TMI Blog2011 (5) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities to follow the correct application of law to determine the actual taxable income of the assessee. Thus the lower authorities, are not expected, to say that merely because the assessee has returned income which is higher than the income determined in accordance with legal principles such returned income can be treated as lawfully assessed. An assessee is liable to pay tax only upon the taxable income. The law imposed by AO to assess the income according to law and determined the tax payable thereon but cannot assess the income of the assessee an amount which is not taxable as per law though shown by the assessee in the return. In the case of Charanjit Jawa (2004 (2) TMI 22 - PUNJAB AND HARYANA High Court) relied upon by assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment should not have taken advantage of the appellant's ignorance and the Central Board of Direct Tax's Circular No. 14(XL-35), dated April 11, 1955 is binding on the Assessing Officer. 4. For that without prejudice to ground No. 2 above, the appellant's claim of splitting up interest should have been allowed following the ratio of the Apex Court's decision in the case of CIT v. T. N. K. Govindarajulu Chetty [1987] 165 ITR 231 (SC). 5. For that in any event, as the reason for reopening of the case was never communicated, the proceedings were void and bad in law and therefore a nullity and the orders passed by the authorities below are liable to be set aside. 6. For that merely because the appellant has wrongly shown capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with statement of taxable income of different years and the assessee also claimed for relief under section 89(1) of the Act. In the assessment proceedings after giving opportunity to the assessee to attend the hearing the Assessing Officer recomputed the taxable income at Rs. 8,86,500 restricting the relief under section 89(1) of the Act at Rs. 65,817. The assessee was under impression that the interest received as per the order of the High Court was taxable hence the assessee offered for tax a sum of Rs. 2,53,730. The assessee later learnt from other sources that the interest received as a result of the order of the hon'ble High Court is a non-statutory interest and in the form of damages/compensation and hence the same was not liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority of law if a tax cannot be imposed, the same cannot be collected merely because the assessee has paid the same. It is submitted that it is unconstitutional to collect tax without authority of law. He referred to article 265 which states that "No tax shall be levied or collected except by authority of law". Merely because the assessee under wrong understanding of law offers amount to tax, the same will not be a reason to tax the said amount unless it is lawful to tax the same. For this proposition he relied on the following case law : (i) CIT v. Bhaskar Mitter [1994] 73 Taxman 437 (Cal.); (ii) Maynak Poddar (HUF) v. WTO [2003] 262 ITR 633/130 Taxman 500; and (iii) Sail DSP VR Employees Association 1998 v. Union of India [2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is open to the assessee to contend the same before the higher authorities to follow the correct application of law to determine the actual taxable income of the assessee. In our considered view, the lower authorities, are not expected, to say that merely because the assessee has returned income which is higher than the income determined in accordance with legal principles such returned income can be treated as lawfully assessed. An assessee is liable to pay tax only upon the taxable income. The law imposed by the Assessing Officer to assess the income according to law and determined the tax payable thereon. In doing so, the Assessing Officer cannot assess the income of the assessee an amount which is not taxable as per law though shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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