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COMMISSIONER OF INCOME TAX AHMEDABAD IV Versus BABULAL K DAGA

2016 (7) TMI 968 - GUJARAT HIGH COURT

Revision u/s 263 - expenditure out of undisclosed source allowed to be set off against the business expenditure by AO - ITAT setting aside the order u/s 263 on the ground that the said order of CIT(A) is a change of opinion - Held that:- Assessing Officer while making the addition as disclosed by the assessee essentially taxed the profit element where as the Revenue desired that it should be the entire amount which should be taxed. By now it is well settled that even in case of unaccounted recei .....

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r of revision under section 263 of the Act. - Decided in favour of assessee. - TAX APPEAL NO. 859 of 2012 - Dated:- 19-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE APPELLANT : MR.VARUN K.PATEL, ADVOCATE FOR THE OPPONENT : MR SN DIVATIA, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against judgement of the Income Tax Appellate Tribunal dated 31.7.2012 raising following question for our consideration : Whether, in the facts and circumstances .....

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edings during which he had admitted an expenditure of ₹ 77.01 lacs out of undisclosed source. In the return filed by the assessee for the assessment year 2006-2007, the Assessing Officer though took note of such income, allowed set off against the business expenditure which order was taken in revision by the Commissioner. He was of the opinion that such expenditure would be covered under section 69C of the Act and by virtue of judgement in case of Fakir Mohmmed Haji Hasan v. CIT reported i .....

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nt of outstanding liability from unaccounted income u/s 69C of the IT Act. The CIT has passed the order u/s 263 on the basis of liability of ₹ 1,03,24,530/- has been shown as unpaid freight as on 31.3.2006 and liability paid ₹ 77,01,958/- during the FY 0506 which has been considered by the Assessing Officer. The ld. CIT has framed different opinion on similar facts considered by the Assessing Officer in assessment order. Therefore, the CIT order u/s 263 is a change of opinion. Accord .....

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e business which can be taxed and not the entire amount. In other words, if the assessee can point out that even on unaccounted receipts, expenditure was also incurred for the purpose of business, it would be only the reasonable profit on such receipts which should be taxed. 4. In view of this, we do not see any error in the view of the Tribunal particularly considering the fact that the commissioner was exercising limited power of revision under section 263 of the Act. Decision in case of Fakir .....

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me and that therefore, treating such undisclosed income from other source was not justified. In the case of Deputy CIT v. Radhe Developers India Ltd., (2010) 329 ITR 1(Guj.), this Court while distinguishing the decision in the case of Fakir Mohmed Haji Hasan (supra), observed as under: The decisions of this Court in the case of Fakir Mohmed Haji Hasan (supra) and Krishna Textiles (supra) are neither relevant nor germane to the issue considering the fact that in none of the decisions the Legislat .....

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epeat the same. Suffice it to state that the Act does not envisage taxing any income under any head not specified in section 14 of the Act. In the circumstances, there is no question of trying to read any conflict in the two judgments of this Court as submitted by the learned Counsel for the Revenue. In any case, we are convinced that the Tribunal was correct in holding that even if two views are possible, powers under section 263 of the Act could not and ought not to have been exercised. The Ap .....

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