TMI Blog2017 (9) TMI 1412X X X X Extracts X X X X X X X X Extracts X X X X ..... e the claim of the expenditure being incurred wholly for the purpose of the partnership business was not verified, cannot be the ground for rejecting the claim. The occasion arose before both the Assessing Officers, that of the partner as well as of the firm to examine the veracity of the expenditure and the claim of the petitioners that it was expended wholly for the purpose of the business of the firm. In case of the partner the claim was rejected not on the ground that the expenditure was not wholly for the purpose of business of the firm but on entirely different ground. In case of the firm the claim was not even examined, despite which, if the Commissioner desired to examine it or have it examined, it was always open for him to call for a remand report or place the issue back before the Assessing Officer for passing an appropriate order. Last objection of the Commissioner was that the expenditure was not shown in the account of the firm and therefore allowing the expenditure would run counter to the accountancy principle. The Act proceeds on the fundamental principle of taxing real income. The accounts cannot change taxability or non-taxability of a certain receipt which de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total ₹ 10,70,108/- 2. According to her, these expenditures were incurred for the partnership business. The Assessing Officer was, however, of the opinion that the petitioner's share of the profit of the partnership was exempt from payment of tax. The expenditure she had claimed was thus for the purpose of earning exempt income and therefore, not allowable under section 14A of the Act. The Assessing Officer, therefore, issued a show-cause notice to the partner on 20.10.2014 why such expenditure should not be disallowed. In this notice itself, he had observed that she could claim certain expenses like travelling expenses, car depreciation, car petrol etc in the firm. 3. The petitioner replied to such notice under a communication dated 31.10.2014 justifying the claim. The petitioner wrote yet another letter to the Assessing Officer in which, she took an alternative stand pointing out to the Assessing Officer's suggestion that the expenditure could be claimed in the hands of the partnership firm. In the said further communication, she conveyed as under: However you are of the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been allowed either in the hands of the partner or in the hands of the firm. Special Civil Applications No. 12766 and 12768 of 2017 are filed by partnership and the partner respectively involving identical facts which are therefore not recorded separately. The Commissioner disposed of the four revision petitions by separate orders on 09.03.2017 which are challenged in these petitions. In case of the partners, the Commissioner confirmed the view of the Assessing Officer that the expenditure was in relation to earning exempt income and therefore, not allowable deduction. In case of the firm, the Commissioner was of the opinion that the expenditure cannot be allowed for three reasons viz.(i) That the assessee firm had not revised the return and merely presented the revision of statement. This cannot form the basis of a new claim. The expenditure could not have been claimed without filing the revised return. (ii) There was no evidence to establish that the expenditure was incurred by the partner wholly for earning the business income. The claim was not verified. The expenses incurred by the assessee firm and its partners being distinct, the expenditure by the partner cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of this, the gross profit of the assessee had gone-up. When the Commissioner refused to allow the assessee to correct such mistake, the issue reached the High Court. The Court observed that the powers are very wide. Subject to the limitation prescribed in the section itself, the Commissioner in exercise of his revisional powers could pass such order as he thinks fit which is not prejudicial to the assessee. It was further observed that there is nothing in section 264 placing any restriction on the Commissioner's revisional powers to give relief to the assessee in a case where the assessee detects mistakes on account of which he was overassessed, after the assessment was completed even where such over-assessment was due to a mistake detected by the assessee after completion of the assessment. The Commissioner could entertain even a new ground not urged before the lower authorities while exercising such revisional powers. 9. In case of Parekh Brothers vs. Commissioner of Income Tax, Kerala-II Ernakulam and ors reported in 150 ITR 105 , the Division Bench of Kerala High Court, referring to and relying upon the judgement of this Court in case of C.Parikh C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 264 cannot be restricted to such erroneous orders which have become erroneous as as result of some error committed by the Income tax Officer while passing the orders. Independently of any decision or absence of any decision on the part of the Income tax Officer, the order of assessment can be challenged as erroneous if, for example, some provision was overlooked not only by the assessee but also by the Income tax Officer. Even in such a case, the order of assessment can be challenged by filing a revision application before the Commissioner. Therefore, even this contention raised on behalf of the Revenue deserves to be rejected. 11. In case of Vijay Gupta vs. Commissioner of Income Tax and anr reported in 386 ITR 643 , the Division Bench of Delhi High Court observed that the powers conferred upon a Commissioner under section 264 are very wide. The Commissioner is bound to apply his mind to the question whether the assessee was taxable on a particular income. Section 264 uses the expression 'any order'. It would imply that the section does not limit the power to correct errors committed by the subordinate authorities but could even be exercised where error ..... X X X X Extracts X X X X X X X X Extracts X X X X
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