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Issues involved: Application u/s 265(2) of the Income-tax Act, 1961 for direction to draw up a statement of the case and refer questions to the High Court. Jurisdiction of the Commissioner of Income-tax u/s 263 to set aside assessment order. Dispute regarding genuineness of gifts received by partners of the assessee-firm.
Application u/s 265(2) of the Income-tax Act, 1961: The Commissioner of Income-tax filed an application u/s 265(2) seeking direction for the Income-tax Appellate Tribunal to draw up a statement of the case and refer up to three questions. The application was made in relation to the assessment year 1981-82. Jurisdiction of the Commissioner u/s 263: The Commissioner of Income-tax, u/s 263, set aside the assessment order for the year 1981-82 as erroneous and prejudicial to the Revenue's interests. The reason cited was the lack of inquiry by the Income-tax Officer into the genuineness of the gifts received by the partners of the assessee-firm. Dispute regarding genuineness of gifts: The Tribunal noted that the donors from Bombay had filed gift-tax returns and paid gift-tax on the gifts. It was observed that the amounts were received by cheques from the Bombay parties. The Tribunal concluded that since the sources of the amounts were disclosed, no action could be taken against the firm. If the gifts were found to be not genuine, the amounts could be added in the hands of the partners. Conclusion: The High Court held that no question of law arose from the Tribunal's order. The genuineness of the gifts in the hands of the donors was not doubted as they had been assessed and no steps were taken to disturb those assessments. Therefore, the amounts credited to the partners from the donors were considered genuine. The application was dismissed, and no costs were awarded.
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