TMI Blog2014 (9) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 64(1)- AO observed that assessee was engaged in the advertising business and there was no evidence or any material on record to show that wife of the assessee was engaged in the English Copy writing and preparing the advertisement brochures - HELD THAT:- Assessing Officer has referred to the provision of section 40A(2)((b) initially but finally disallowance has been made u/s 64(1)(ii). This has been done because the assessee is running a business in his individual capacity and any remuneration paid to the wife is required to be clubbed with his income. Whether the income is clubbed or the expenditure is disallowed would amount to the same thing because net effect would be to the increase in the income of assessee. Further the Ld. CIT(A) has finally confirmed the disallowance by way of clubbing u/s 64(1)(ii) and we are concerned with the impugned order where reference has been made to section 64(i)(ii) of the Act and no cognizance can be taken for the reference made by Assessing Officer to section 40A(2)(b). Contention as raised by the assessee that the similar expenditure has been allowed in the earlier years even under the scrutiny assessment completed for assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was later changed to ₹ 20,000/-) then provisions of section 40A(3) was not attracted. Addition u/s 68 or 69A - assessee deposited cash in excess of ₹ 10 lakhs in the year under consideration - as per CIT-A addition could not made u/s 68 and made the addition u/s 69A - HELD THAT:- Assessing Officer had information that assessee had deposited certain sums in a bank account and assessee was duly confronted with this information but assessee had no explanation and that is why the addition was made. Merely because the bank pass book cannot be treated as books of account on the basis of certain decisions does not mean that addition is not protected u/s 292B and has been rightly confirmed by the Ld. CIT(A) u/s 69A of the Act. CIT(A) has plenary powers and the scope of the powers to be co-terminus with that of Income Tax officer. Therefore, he can do whatever can be done by the Assessing Officer. The Ld. CIT(A) under these powers has correctly upheld the addition under the correct provisions. Assessing Officer clearly found that assessee had deposited cash for which assessee had no explanation and that is why addition was made. CIT(A) has not discovered anything new e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the aforesaid parties. 4) That on the fact and circumstances of the case, Ld. CIT(A) has grossly erred in confirming addition of ₹ 23,500/- made by the Ld. Assessing officer by invoking provisions of section 40A(3) of the Act. 5) That the Ld. CIT(A) has grossly erred in law in treating the addition made under section 68 by the Ld. AO as unexplained investment under section 69A by applying provisions of section 292B of the Act. even after accepting the Appellant s contention that bank pass books are not books of accounts of appellant attracting section 68 of the Act. 6) That the Ld. CIT(A) has grossly erred in law in confirming addition of ₹ 1856644/- being alleged deposits in Chandigarh State Cooperative Bank, Sector 22 B, Chandigarh, Addition confirmed is illegal and bad in law. 3. Ground No. 1: The Ld. Counsel for the assessee referred to the Circular of the Board, copy of which is available at page 54 of the paper book. He pointed out that as per this circular if a case was selected only on the basis of AIR information then scrutiny was required to be limited only to that issue and the scope of scrutiny could not be expanded without permission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 08.09.2010 quoted by the Ld. Counsels could not have been followed by the Assessing Officer, since notice u/s 143(2) had been issued on 02.09.2009. Moreover , the appellant never objected before the Assessing Officer when he was conveyed about the AIR information vide questionnaire dated 06.09.2010. In any case, this was an administrative matter and if the appellant had any grievance, he should have approached the Commissioner of Income Tax for remedy. Ground of appeal No. 1 is dismissed. 7. In our opinion the Ld. CIT(A) has correctly adjudicated the issue because in this case the case was selected on the basis of CASS which is also known as Computer Assisted Scrutiny System. Moreover, the case was selected for security on 2.9.2009 when a notice u/s 143(2) was issued whereas the instructions have been issued on 8.9.2010 and, therefore, they cannot apply to the earlier period. Once the case is selected for scrutiny under the CASS and notice is issued u/s 143(2) then whole of assessment is open for scrutiny. In any case the Ld. CIT(A) has correctly observed that this is an administrative matter and could have been objected to before the Commissioner in administrative capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rashmi Sharma is MSC Botany and was doing the work of copy writing in English. The expression technical or professional qualification do not necessary connote a qualification by a degree of a recognized university and the expression should be given a wider meaning. In this regard, he referred to the following decisions:- a) Ashaben Rohitbhai and others v CIT 237 ITR 561 (Guj.) b) CIT v Smt. R. Bharathi 240 ITR 697 (Madras) c) CIT v R. Jayalakshmi 240 ITR 773 (Madras) He also contended that provisions of section 64(1) could not be invoked if the expenses were not allowable u/s 37 or 40A(2)(a). Further the similar expenditure was allowed in earlier years and in few of those earlier years the assessment was framed u/s 143(3) and in this regard he referred to pages 117 to 121 which is copy of the assessment order. 13. On the other hand, Ld. DR strongly supported the order of CIT(A). 14. After considering the rival submissions we find that Mrs Rashmi Sharma is holding a Post Graduate degree i.e. M.Sc in Botany which has nothing to do with the copy writing or advertising business, therefore, it cannot be said that she was having any professional or technical qualific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the clubbing provision. If the spouse possesses technical or professional qualifications necessary to undertake the particular technical job or carry on the profession to which the income is attributed, that will meet the requirement of the first part of the proviso. But even if the first part of the proviso is complied with, it must further be shown that the payment made to the spouse is attributable to the application of such technical or professional knowledge and experience falling under the latter part thereof. 15. The highlighted portion clearly shows that if a job is of a technical nature then such technical qualification would be essential. The job of a copy writer is definitively a technical job and cannot be described as a general administrative job. By no stretch of imagination, M.Sc. (Botany) will have anything to do with the job of copy writing. 16. Similarly, in the case of CIT v Smt. R. Bharathi 240 ITR 697 (Madras), the salary was paid to the husband of the assessee. The lady was doing business of jewellery and her husband was having experience of valuation of jewellery. The valuation of jewellery is an integral part of the jewellery business and that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... past. There is no estoppel in these matters and the officer is not bound by the method followed in the earlier years. 20. The above clearly shows that there cannot be any estoppel if earlier a wrong proposition was accepted by the Assessing Officer against the clear provision of law. This is so because an error cannot be allowed to be perpetuate forever. 21. In view of the above observation, we find nothing wrong with the order of Ld. CIT(A) and we confirm the same. 22. Ground No. 3 : After hearing both the parties we find that during assessment proceedings Assessing Officer conducted enquiries by calling information us/ 133(6) form certain parties. Certain discrepancies were noted in the account of M/s Glass Palace and assessee was asked to reconcile the discrepancies. According to Assessing Officer M/s Glass Palace had made an entry of ₹ 1,53,746/- on 31.3.2008 with a narration rebate on bills of M/s Pecific Ads credited in this voucher for billing for financial year 2007-08 as per verbal settlement of account . No such entry was found in the books of the assessee. He also noted that M/s Glass Place had made the following entries:- 30.03.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econcile the discrepancies appearing in the accounts of M/s Glass Palace and M/s Healthyway, he could not make the reconciliation. It is seen that the appellant had purchased furniture from M/s Glass Palace and these entries have been shown as rebate by M/s Glass Palace in its books of accounts. Regarding closing balance difference in the account of M/s Healthyway, the appellant explains that it was on account of rebates allowed, but the fact remains that there is a difference in closing balance as on the last date of the financial year. In view of this discussion, it is held that the Assessing Officer has rightly made the addition on account of difference in closing balances of these two parties and the same is upheld. Ground of appeal No. 5 is dismissed. 26. Before us, Ld. counsel for the assessee mainly reiterated the submissions made before the first appellate authority and also referred to the copies of various accounts and pointed out that if rebate was properly considered then there was no difference. 27. On the other hand, Ld. DR strongly supported the order of CIT(A). 28. After considering the rival submissions we find force in the submissions of Ld. Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT v Aloo Supply Co. 121 ITR 680 (Orissa) and CIT(A) Vs. Triveniprasad Pannalal 228 ITR 680 M.P.). He further submitted that parliament has amended the law by Finance Act 2008 and w.e.f. 1.4.2009, the aggregate payment have to be considered for the purpose of disallowance u/s 40A(3) and the amendment is not applicable in the relevant year. 32. On the other hand, Ld. DR strongly supported the order of CIT(A). 33. After considering the rival submissions we find that before 31.3.2008, the disallowance of interest u/s 40A(3) could be made for any payment in cash in excess of ₹ 20,000/-. However, the provision did not contain the expression aggregate of payment and Hon'ble Orissa High Court has held that in the case of CIT v Aloo Supply Co. (supra) that if payments were made at various points of time in a particular day but less than ₹ 2,500/- (as applicable in the relevant year which was later changed to ₹ 20,000/-) then provisions of section 40A(3) was not attracted. The relevant observations of the Orissa High Court are as under:- The word sum has no statutory definition and must have the common parlance meaning. While le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of the proprietorship concern M/s Pecific Ads and also of the partnership firm and M/s Alfa Advertising and Marketing Services and partnership firm where assessee was partner and found that no such cash was withdrawn. He further noted that as per AIR information the deposit was shown at ₹ 15,01,1000/- but as per the bank account total deposit was of ₹ 19,50,644/- and detail of the deposits has been extracted by the Assessing Officer vide para 5.2 of this order. In view of these facts the Assessing Officer added ₹ 19,50,644/- u/s 68 of the Act of the income of the assessee. 36. On appeal, it was mainly submitted that bank pass book would not constitute the books of the assessee and, therefore, section 68 was not attracted. In this regard, reliance was placed on the following case laws:- a) COMMISSIONER OF INCOME TAX vs. BHAICHAND H. GANDHI HIGH COURT OF BOMBAY SOURCE : ( 1983) 141 ITR 67 (BOM) b) JAWAHAR LAL OSWAL vs. ASSISTANT COMMISSIONER OF INCOME TAX* ITAT, CHANDIGARH BENCH 71 ITD 324 (Chd) c) ANAND RAM RAITANI vs. COMMISSIONER OF INCOME TAX HIGH COURT OF GAUHAT (1997) 139 CTR (Gau) 235 : 223 ITR 544 (Gau) d) MS. MAYAWATI vs. DEPUTY COMMIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had not given any explanation before the Assessing Officer regarding source of the cash introduced and the cash entries do not reconcile with the accounts of any of the business concerns of the appellant. A perusal of the cash deposits, reproduced in para 5.2 of the assessment order reveals that in all, there are 53 entries of cash deposits in the financial year 2007-08 and most of the deposits are of ₹ 40,000/-. Maximum deposit entry is of ₹ 49,000/-. A summary of the 53 credit entries is as under: Total Amount i) 38 entries ₹ 40,000/- 15,20,000/- ii) 1 entry ₹ 49,000/- 49,000/- iii) 2 entries ₹ 45,000/- 90,000/- iv) 2 entries ₹ 35,000/- 70,000/- v) 3 entries ₹ 30,000/- 90,000/- vi) small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 42. The above provision clearly shows that assessment even if made under the wrong provision is protected by this provision. The Ld. Counsel before us had relied on the decision of Hon'ble Punjab Haryana High Court in the case of CIT(A) Vs. Norton Motors (supra). In that case the assessee firm was constituted on April 2, 1973. There were changes in its constitution in 1976 and 1978. Registration was granted to the firm. The firm filed its return for the assessment year 1978-79. The Assessing Officer determined the income of the firm. Subsequently the Commissioner issued notice to the assessee requiring it to show cause as to why the registration may not be withdrawn on the ground that the newly inducted partners had been wrongly allowed shares in the profits for the whole of the year. After hearing the representative of the assessee, the Commissioner held that distribution of profits for the entire year made by the firm amongst five partners was not in accordance with the law. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus with that of Income Tax officer. Therefore, he can do whatever can be done by the Assessing Officer. The Ld. CIT(A) under these powers has correctly upheld the addition under the correct provisions. The Ld. Counsel had relied on the decision of full Bench of the Hon'ble Delhi High Court in the case of CIT v Sardari Lower and Co. 251 ITR 864 (Del). In that case it was observed as under:- In CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) the matter relatd to provisions of the Indian Income-tax Act, 1922. It was held, inter alia, that in an appeal filed by the assessee, the Appellate Assistant Commissioner has no power to enhance the assessment by discovering a new source of income not considered by the Income-tax Officer in the order appealed against. A similar view was expressed in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC). That also related to a case under section 31(3) of the old Act. It was held that the power of enhancement under section 31(3) of the old Act was restricted to the subject matter of the assessment or the source of income, which had been considered expressly or by clear implication by the Assessing Officer from the po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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