TMI Blog2017 (8) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... s nature in possession of the Assessing Officer against the assessee. It is in these circumstances that the Tribunal concluded, and essentially in the peculiar facts of the case of the assessee, that the assessee has not incurred any expenditure for any purpose which is an offence or which is prohibited by law. The essential ingredients of explanation below Sub-Section 1 of Section 37, therefore, were not attracted to the Assessee's payment made to M/s. Galala & Company in Jordon. This is a finding of fact and based on the material placed before the Tribunal. We do not think that the Tribunal committed any error of law apparent on the face on record in reversing the view of the Assessing Officer and the order of the first Appellate Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original return as return in response to the notice under Section 148 and in the same letter asked for the reasons for reopening. The Assessing Officer vide letter dated 07th June 2007 met the objections raised by the assessee. The assessee thereafter, preferred a Writ Petition, but was unsuccessful. Hence, the proceedings initiated by the Assessing Officer under Section 148 of the Income Tax Act continued. 6 The understanding of the Assessing Officer is that consequent to the Gulf War, United States imposed trade sanctions against Iraq. The United Nations initiated Oil for Food programme as per UN Resolution 986, whereby Iraq was given choice to decide the countries to whom it sold its oil. In this programme, the countries would pursue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain levies were imposed. These levies were imposed and demanded by Iraq Government from the suppliers and in later years. That is how, Iraq Government raised millions of US Dollars and in the garb of participating in programme and scheme for OilforFood. 9 It is relying upon the findings of this report that the assessment of the assessee before us was reopened. 10 The Tribunal in the context of the challenge to the Assessing Officer's findings and conclusions and as confirmed by the first Appellate Authority held as under: 1. As pointed out, the regular assessment was framed on 30.04.2002. In the course of the assessment proceedings, the AO made detailed enquiry with regard to commission payment made to M/s Galala Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO further held, It is by now settled law that a mistake of not only on facts but also under law, if not examined with due application of mind by the AO, such cases also would properly fall in the scope of section 147 of the Act. Hence, the proceedings under section 148. 3. We take up the merits first, i.e. ground no.2, on account of disallowance of ₹ 2.88 crores paid to Galala under section 37 (1), read with Explanation. 4. As pointed out earlier, the assessee company paid ₹ 2,88,22,428/as commission to M/s. Galala Company, a company in Jordon to look after the commercial interests of the assessee for its supplies made under oil for food programme under the aegis of the UN. 11 The specific stand of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure. 14 The sum and substance of the lengthy discussion in the Tribunal's order is that even if what is alleged by the Assessing Officer and relying upon the report is taken as true and correct, still, the participation of the assessee was not established and proved. The assessee was not found to have made any kickbacks or payment of that nature which reached the Iraq Government and through the channels indicated in the Volcker Committee Report. There was no material of this nature in possession of the Assessing Officer against the assessee. It is in these circumstances that the Tribunal concluded, and essentially in the peculiar facts of the case of the assessee, that the assessee has not incurred any expenditure for any purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the distinction between law and morality and limits which separate morals from legislation. Bentham in his Theory of Legislation, Chapter XII, page 60 said: Morality in general is the art of directing the actions of men in such a way as to produce the greatest possible sum of good. Legislation ought to have precisely the same object. But although these two arts, or rather sciences, have the same end, they differ greatly in extent. All actions, whether public or private, fall under the jurisdiction of morals. It is a guide which leads the individual, as it were, by the hand through all the details of his life, all his relations with his fellows. Legislation cannot do this; and, if it could, it ought not to exercise a continual int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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