TMI Blog1985 (12) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... e association of B.C. Kochar. The interest, however, has not been earned during the assessment year 1978-79 from B.C. Cochar whereas interest was payable to Hazareemull Heeralal and, accordingly, a sum of Rs. 63,801.81 was claimed as interest paid or payable to Hazareemull Heeralal. It was stated in course of the argument that some flats were sold in the earlier years but no flat was sold during the year under appeal and the financial position of the association of B.C. Kochar was such that they did not pay interest to the lady. 2. It was also claimed that a partition took place between the widow Smt. Sudha Devi Rampuria and her mother-in-law Smt. Gulab Devi Rampuria and the liability pertaining to Hazareemull Heeralal was assigned to Smt. Sudha Devi Rampuria. 3. Smt. Sudha Devi Rampuria filed her return for the assessment year 1978-79 showing the following income : Rs. Rs. Rs. "1. Income from House Property 1. Gross rent received from premises No. 86, Biplabi Rash Behari Basu Rd., Cal. 1,47,394.51 Less : Corporation tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (---) 81,765.42 (---) 59,545.63 ---------------- Total Income 6,032.34 Less admissible deductions under section 80C 1,810.00 ---------------- 4,222.34 Rounded off to Rs. 4,220" The return was filed on 30-3-1981 and the assessment was completed by the ITO under section 143(1) of the Act on the total income of Rs. 4,220 on 2-9-1981. 4. The Commissioner took action on perusal of the record under section 263 on the ground that the assessee should not have been allowed interest of Rs. 63,801.81. The ITO did not properl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263. Even otherwise, since the assessment was completed in a summary manner when the facts of the case demanded proper scrutiny, the assessment deserved to be set aside for being made afresh. The assessment is accordingly set aside and the ITO is directed to redo the same in the light of the above discussion." 5. Dr. Pal who appeared along with Shri S.P. Choudhury on behalf of the assessee, attacked the order of the Commissioner and urged that the Commissioner was not justified in passing the order under section 263 when the ITO completed the assessment under the summary scheme. He referred particularly to the show-cause notice issued by the Commissioner dated 25-1-1981 and urged that the Commissioner was not justified to set aside the assessment on other grounds than the grounds indicated in the show-cause notice. The assessment cannot be set aside simply because it was made under section 143(1). No other ground has been taken by the Commissioner and, therefore, he stated that in view of the Calcutta High Court decision in Luxmi Devi Chowkhani v. CWT 1983 Tax. LR 843 (Gauhati), the order of the Commissioner may be set aside. Dr. Pal further stated that on merits the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced above, Shri Choudhury, the counsel of the assessee, in answer to the specific question indicated that along with the return the assessee filed the profit and loss account, balance sheet and the computation of total income. The assessee in the computation of total income apart from other things claimed the interest payment of Rs. 63,801.81 paid or payable to Hazareemull Heeralal. This did not relate to the existing business of the assessee. The assessee succeeded to the business left by her husband. A copy of the agreement indicating the partition among the family has been filed. The same is appearing on page 17 of the paper book. This agreement has been concluded on 15-8-1982. On the basis of this agreement it has been claimed that the loan pertaining to Hazareemull Heeralal was assigned to the assessee. The surprising fact is that the return was filed in the present case on 30-3-1981. The assessment was completed on 2-9-1981. The assessee's counsel has made a statement that only profit and loss account, balance sheet and computation of income were filed along with the return. Therefore, the claim of the assignment which was made on the basis of the agreement of 1982 cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the ITO has not investigated properly into the facts before he completed the assessment under section 143(1). 8. The other ground of Dr. Pal was that in view of the decision in Madhav Prasad Jatia's case on merit the interest claimed by the assessee for Hazareemull Heeralal was an allowable expenditure and, therefore, on merit the order passed by the ITO could not be said to be erroneous and prejudicial to the interests of the revenue. The argument made by Dr. Pal may not be correct. The ITO has not been given the agreement between Shri Rampuria and B.C. Kochar, the agreement between the assessee and B.C. Kochar, the letters indicating the inability of B.C. Kochar to pay interest, and the memorandum of alleged partition of 1982 by which the loan was assigned to the lady. If these were not before the ITO and unless these facts are looked into and proper investigation is done, it would be difficult to accept the argument of Dr. Pal that the interest claimed by the assessee was an allowable expenditure. Under the said circumstances, after considering the arguments of both the sides, the case laws and the paper book filed by the assessee, it is concluded that the finding recorded b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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