2002 (10) TMI 260 - AT - Income Tax

Summary

Issues:
1. Appeal against order of Commissioner of Income-tax (CIT) under section 263 of the Income-tax Act, 1961.
2. Appeal based on proceedings initiated after direction of CIT under section 263.
3. Appeal against penalty imposition for wrong estimate of advance tax.
4. Nature of receipt of US Dollars one lakh and value of imported car.

Analysis:

Issue 1: Appeal against CIT's order under section 263
The appellant contended that the US Dollars one lakh was received as a gift from the American company and not as income. The appellant argued that the amount was paid out of personal esteem and goodwill, not as remuneration for services rendered. However, the CIT found the assessment to be erroneous and prejudicial to revenue due to lack of scrutiny. The ITAT upheld the CIT's decision, setting aside the assessment for redone after providing the assessee a reasonable opportunity of hearing.

Issue 2: Proceedings initiated after CIT's direction under section 263
The facts revealed that the US $ 1,00,000 and the Benz car were given to the assessee for representing the American company in India. The assessee acknowledged being the honorary representative and receiving the car for past services. The ITAT concluded that the amount and the car were rightfully treated as income for the respective assessment years, upholding the lower authorities' decisions and dismissing the appeals.

Issue 3: Penalty imposition for wrong estimate of advance tax
The appellant had submitted an estimate of income related to the US $ 1,00,000 deposit with a bank, attributing it to goodwill and esteem. However, the CIT found the assessment to be erroneous due to lack of scrutiny. The ITAT agreed with the CIT's decision, emphasizing the need for proper examination before framing assessments and upheld the penalty imposition.

In summary, the ITAT upheld the CIT's decision to set aside the assessment for redone after scrutiny, treated the US $ 1,00,000 and the Benz car as income, and upheld the penalty imposition for the wrong estimate of advance tax.