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Megatrends Inc Versus Commissioner of Income Tax, Appeals-4 And Assistant Commissoner of Income Tax

2016 (5) TMI 141 - MADRAS HIGH COURT

Show cause notice for enhancement of assessment - Held that:- In the show cause notice dated 6.11.2015, the respondent had called upon the petitioner to show cause as to why the amount of ₹ 96,60,000/- may not be disallowed as expenditure and added back to the petitioner's taxable income for the relevant year, which is under consideration. By the impugned show cause notice, the respondent had called upon the petitioner to submit his explanation on or before 18.11.2015. Since the petitioner .....

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d to the query, raised in the impugned show cause notice dated 06.11.2015. After receiving the explanation and hearing the submissions on behalf of the petitioner, the CIT (Appeals) is directed to pass orders, on merits and in accordance with law. - W.P. NO. 37072 of 2015 And M.P. No. 1 of 2015 - Dated:- 11-2-2016 - Mr. M. DURAISWAMY, J For the Petitioner : M/s T.C.A. Sangeetha For the Respondents : Mr.T. Pramod Kumar Chopda ORDER The petitioner has filed the above writ petition to issue a Writ .....

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-2013 on 29.09.2012, admitting a total income of ₹ 1,74,36,050. The Reutrn of Income was processed under Sec.143(1) of the Income Tax Act, 1961 and selected for scrutiny. Many details were called for and after considering the details, submitted and explanations given, the Assessment Order under Sec.143(3) of the Income Tax Act, 1961, was passed on 30.03.2015 by the second respondent. The second respondent disallowed donations made under Section 35(1)(ii) of the Income Tax Act, 1961 to the .....

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mitting the reply and other submissions. However, the first respondent rejected the request on 3.11.2015 and posted the hearinig again on 6.11.2015. Again, this Notice was received by the petitioner only on 5.11.2015. The petitioner again submitted that the appeal be posted for hearing in the fourth week of November 2015. 4. The first respondent again rejected the request of the petitioner and issued the impugned Notice on 6.11.2015, posting the appeal for hearing on 18.11.2015. The Notice was r .....

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firms, which is an accepted practice in law. The petitionier has quantified the investment and the remuneration, to be received by each of the partners in the Annexure to the Partnership Deed dated 1.4.2011. Further, according to the petitioner, the perusal of the assessment orders of the petitioner in the previous years will show that the respondents have accepted the constitution of the firm. 6. According to the first respondent, under Sec.11(2) of the Companies Act, 1956, no Company, Associat .....

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x partners and M/s DCP Trading Co., also having six partners were the 14th and 15th partners in the petitioner firm, consisting of 16 partners. The first respondent further submitted that since all the partners in both the above firms were not representing in the petitioner firm and only one of the partners each represented their respective firm, and therefore, the petitioner cannot be considered to be a valid partnership firm, as per the law laid down by the Hon'ble Supreme Court of India i .....

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ded that the impugned show cause notices were issued under Sec.251(1)(a) and Sec.251(1)(a) sets out various powers, which can be exercised by the appellate authority in appeal against different orders. Under the said section, the appellate authority while deciding an appeal, is clothed with very wide power so as to do justice to the assessee and also in the interest of the Revenue. Further, according to the first respondent, the impugned notices are well within the four corners of law and theref .....

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ioner-company but also expressed the view that the petitioner is not a company and the petitioner has been incorrectly and unlawfully assessed in the status of a company. We are of the view that the CIT (Appeals), by expressing the reasoning, indicates that CIT (Appeals) has predetermined the matter that the petitioner-CCL is not a company, had committed a serious error and exceeded jurisdiction in upsetting the settled status of the petitioner-company." 9. Mr.T. Pramod Kumar Chopda, learne .....

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, we accept the position that under the proviso to rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957, the first assessing authority is invested with the power to allow further time for filing C forms. We do not, however, accept the implication in the Government Pleader's further contention that an appellate authority cannot be brought within the meaning of the expression "assessing authority". In one sense, an appeal may be different from an assessment. Bu .....

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extent, as the assessing authority has, in the first instance. If this were not the position, no appellate authority can effectively function while hearing and determining an appeal from an assessment. Under the scheme of section 9 of the Central Sales Tax Act, appeals from Central sales tax assessments will have to be dealt with in the same manner and under the same procedure as provided for under the general sales tax law of the concerned State. The jurisdiction of an appellate authority under .....

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the Tamil Nadu General Sales Tax Act, 1959. The provisions show clearly that the power of the appellate authority concerning an assessment under appeal is no different, and not less wide, than the power of the assessing authority to make the assessment in the first instance. Besides, such power as the appellate authority is empowered to exercise in relation to an assessment under appeal, has got to be exercised only in the same manner and subject to the same conditions, if any, which govern the .....

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e same task under the fiscal statute as that of the assessing authority must also be possessed to like powers as those of the assessing authority. It is implicit in the very nature of the appellate jurisdiction, as well as the purposes for which that jurisdiction is created by the statute, that the appellate authority will have to function, in the very image of the assessing authority. Appellate proceedings are often truly described as an extension of the assessment proceedings, or as a continua .....

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is intended to be, exercised by the assessing authority named in the particular provision concerned. But, it does not mean that the appellate authority and any other fiscal authority who are in seisin of the assessment, either in appeal, or in revision or in any other proceeding, cannot exercise a like power. The fact that the appellate authority is not expressly mentioned in the provision conferring the enabling power, does not mean that the legislature intended to exclude that authority from t .....

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be rejected and also directed the petitioner Company to show the status of the petitioner as a Company. When the petitioner Company therein were enjoying the status of the Company over several decades, on such circumstances, the Jharkhand High Court held that the CIT (Appeals) is not justified in raising doubt about the status of the petitioner Company and the respondent therein cannot contend that the show cause notice has been issued as only for verification exercise. 11. Since the CIT (Appeal .....

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