2017 (8) TMI 283 - HC - Income Tax

Nature or receipt - subsidy received from the ASIDE Scheme from Government of India - revenue or capital - best judgement assessment u/s 144 - Held that - In the present case, the assessee could not appear before the Assessing Officer and furnish details of the books of account. The assessee had furnished plausible explanation for its non-appearance before the Assessing Officer as is discernible from the perusal of para 3 of the order of CIT(A). Further, on the issues raised by the assessee before the CIT(A) and the Tribunal, the findings are required to be recorded by examining the books of account in detail. Therefore, in the facts and circumstances of the case in hand, it would be appropriate to remand the matter back to the Assessing Officer to decide it afresh after affording an opportunity to produce the books of account who shall thereupon after examining them record his findings afresh thereon.

Issues:
1. Delay in refiling the appeal condoned.
2. Appeal under Section 260A of the Income Tax Act, 1961 against the ITAT order for the assessment year 2006-07.
3. Deletion of addition of subsidy received from the ASIDE Scheme.
4. Deletion of addition of interest income received from banks.
5. Assessing the nature of income received by the society.
6. Application of the principle of mutuality.
7. Discrepancies in the treatment of interest income.
8. Best judgment assessment under Section 144 of the Act.
9. Partial allowance of appeals by CIT(A) and Tribunal.
10. Remand of the matter back to the Assessing Officer for fresh decision.

Analysis:
1. The delay in refiling the appeal was condoned by the High Court. The appellant-revenue filed an appeal under Section 260A of the Income Tax Act against the ITAT order for the assessment year 2006-07. The substantial questions of law raised included the deletion of additions made by the Assessing Officer regarding subsidy received from the ASIDE Scheme and interest income from banks.

2. The Assessing Officer had made additions to the income of the society based on grants received and interest income from banks. The society, registered under the Societies Registration Act, did not provide sufficient information during the assessment proceedings. The Assessing Officer held that the society did not qualify for the doctrine of mutuality, leading to the additions in income.

3. The CIT(A) upheld certain additions while deleting others, citing the absence of the mention of the principle of mutuality in the income tax return. The Tribunal, however, found that the society was a cooperative society with the principle of mutuality applicable. The Tribunal also noted discrepancies in the treatment of interest income by the CIT(A).

4. The High Court observed that the society could not appear before the Assessing Officer to furnish details of the books of account. Considering the issues raised by the society, the Court remanded the matter back to the Assessing Officer for a fresh decision after examining the books of account in detail. The impugned order of the Tribunal was set aside, and the appeal was disposed of accordingly.

5. The High Court clarified that the observations made in the order should not be construed as an expression of opinion on the facts and circumstances of the case. The matter was remanded to the Assessing Officer for a fresh decision, emphasizing the importance of affording the society an opportunity to present its case and produce relevant documents for examination.

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