1992 (11) TMI 145 - AT - Income Tax

A Firm, Benefit Or Perquisite Arising From Business, Business Income, Income From House Property, Rent-free Accommodation

Summary

Issues Involved:
1. Validity of reopening under section 147(a).
2. Sustainability of the addition of Rs. 12,000 as perquisite derived by the assessee partner under section 28(iv).
3. Levy of interest under sections 215 and 139(8).

Detailed Analysis:

1. Validity of Reopening Under Section 147(a):

The appeals for assessment years 1974-75, 1976-77, and 1977-78 revolve around the validity of reopening under section 147(a). The assessee argued that section 147(a) is not applicable to debatable issues, citing the Kerala High Court decision in CIT v. C. L. Anand and other cases. The assessee contended that there was no omission or failure to disclose any income and that the perquisite value of free residence was not taxable in his hands, as supported by the Delhi High Court decision in CIT v. Rajinder Kumar Rajgarhia. The Tribunal, however, upheld the validity of reopening under section 147(a), referencing the Supreme Court decision in Indo-Aden Salt Mfg. & Trading Co. (P.) Ltd. v. CIT, which states that omission to disclose material facts, even if inadvertent, justifies reopening.

2. Sustainability of the Addition of Rs. 12,000 as Perquisite Under Section 28(iv):

The Income-tax Officer added Rs. 12,000 per year as the value of the perquisite for rent-free accommodation provided to the assessee by the firm. The Appellate Assistant Commissioner upheld this addition, following the Tribunal's earlier orders. The assessee argued that the building was treated as house property by the firm, and its income was already taxed in the firm's hands, making the addition of the perquisite value in the assessee's hands a case of double taxation. The Tribunal agreed with the assessee, referencing the Delhi High Court decision, and held that the perquisite value could not be added under section 28(iv) since it would result in double taxation. Therefore, the Tribunal deleted the addition of Rs. 12,000 for each assessment year.

3. Levy of Interest Under Sections 215 and 139(8):

The Tribunal addressed the common ground regarding the levy of interest under sections 215 and 139(8) in reassessment orders. Citing the High Court decision in CIT v. Padma Timber Depot, the Tribunal held that interest under these sections could not be imposed in reassessment orders as it is permissible only in regular assessments. Consequently, the levy of interest was deemed unauthorized, and the assessee succeeded on this point.

Separate Judgment for Assessment Year 1978-79:

For the assessment year 1978-79, the Income-tax Officer added Rs. 8,637 towards income from dividends. The Appellate Assistant Commissioner rejected the ground without providing detailed reasons. The Tribunal set aside this decision, directing the first appellate authority to reconsider the facts and provide a reasoned order according to law.

Conclusion:

The appeals for the assessment years 1974-75, 1976-77, and 1977-78 were allowed in full, with the Tribunal upholding the validity of reopening under section 147(a) but deleting the addition of Rs. 12,000 as perquisite under section 28(iv) and disallowing the levy of interest under sections 215 and 139(8). The appeal for the assessment year 1978-79 was allowed for statistical purposes, with a directive for the first appellate authority to re-evaluate the facts regarding the dividend income.