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1991 (11) TMI 129
Whether the Magistrate has power to drop proceedings against an accused in a summons-case after process is issued?
Held that:- It is important to state that for a Magistrate to take cognizance of the offence as against the Chief Editor, there must be positive averments in the complaint of knowledge of the objectionable character of the matter. The complaint in the instant case does not contain any such allegation. In the absence of such allegation, the Magistrate was justified in directing that the complaint so far as it relates to the Chief Editor could not be proceeded with. To ask the Chief Editor to undergo me trial of the case merely on the ground of the issue of process would be oppressive. No person should be tried without a prima facie case. The view taken by the High Court is untenable. The appeal is accordingly allowed
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1991 (11) TMI 128
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... ... ..... e family, it could not be said that the particulars of any gift had been concealed or that any inaccurate particulars whatsoever had been furnished deliberately. The learned Commissioner(A) was right in observing that the assessee could be under a bona fide belief that the amounts in question did not represent gifts. In fact, as already held by this Bench in its order dt. 20th Nov., 1990 in ITA No. 443/Jp/90 in the case of Harshvardhan Chemicals and Minerals Ltd., Jaipur, if an arguable, contestible or a debatable question is involved, the claim of the assessee could not be said to be false because if this were not so, it would become impossible for any assessee to raise any claims or contentions which are debatable. Therefore, on facts, we are of the view that the penalty was rightly cancelled by the learned CIT(A). The same is upheld. 16. In the result GTA No. 13/Jp/88 filed by the Department fails and is dismissed, whereas GTA No. 14/Jp/88 filed by the assessee is allowed.
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1991 (11) TMI 126
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... ... ..... count, the sales may be estimated at Rs. 12,25,000 and gross profit rate at 1.60 per cent may be applied against 1.54 per cent disclosed by the assessee last year and 2 per cent applied by the Assessing Officer on estimated sales of Rs. 16,00,000. In the Onion account, since the assessee has itself shown a much higher turnover and a better gross profit rate than last year, no interference need be done. In the Garlic account, we find that the Assessing Officer is justified in the estimate of turnover as well as in application of gross profit rate and hence his estimate need not be interfered with. This would result in a relief of Rs. 15,490 to the assessee. 18. The last Ground of Appeal is regarding charging of interest under s. 217. The learned counsel requested that consequential relief may be given to the assessee. We find his request reasonable. The Assessing Officer is directed to allow consequential relief to the assessee. 19. In the result, the appeal is partly allowed.
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1991 (11) TMI 124
Assessment Notice, Reassessment Notice, Transfer Of Case ... ... ... ... ..... not assist the Department because it refers to the jurisdiction of an ITO within the limits of the area assigned to him, in respect of any person carrying on any business or profession. We are, therefore, of the view that the learned AAC was right in holding that the transfer from one ITO to the other belonging to two different charges of the CIT and in spite of objections raised by the assessee could be made only by the CBDT and is, therefore, bad in law. 7. The assessee had also filed cross objections, in which the grounds of the cross objections had not been specified. When we asked the learned counsel for the assessee about the grounds, he moved an application saying that the cross objections had been submitted to uphold the decision of the AAC and may be treated as not pressed or withdrawn. Therefore, they do not servive for our consideration. 8. In the result the appeals filed by the Department as well as the cross objections filed by the assessee are dismissed as above
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1991 (11) TMI 123
Issues Involved:
1. Addition based on "Sahi Bahi" or Signatures Book (Annexure C-28).
2. Addition based on another "Sahi Bahi" or Signatures Book (Annexure C-26).
3. Additions related to alleged investments and profits from undisclosed potato sales (Annexure C-1/46).
4. Notional income addition based on supposed sale proceeds.
5. Charging of interest u/s 217(1A) of the IT Act.
Summary:
Issue 1: Addition based on "Sahi Bahi" or Signatures Book (Annexure C-28)
The Assessing Officer added Rs. 4,60,290 to the assessee's income based on entries in a seized document (C-28), presumed to belong to the assessee firm. The assessee argued that these transactions were conducted by partner Shri Kishanchand in his individual capacity, supported by his affidavit. The Tribunal held that the presumption u/s 132(4A) was rebutted by the evidence provided by the assessee, and the addition of Rs. 4,60,290 was deleted.
Issue 2: Addition based on another "Sahi Bahi" or Signatures Book (Annexure C-26)
The Assessing Officer added Rs. 68,597 under section 69 of the IT Act for transactions not verifiable from regular books. The CIT(A) sustained an addition of Rs. 24,000. The Tribunal found that the transactions were recorded in the "Sahi Bahi," which was a regular book of account maintained by the assessee. Since the assessee satisfactorily explained the entries and the transactions were part of the regular business, the addition of Rs. 24,000 was deleted.
Issue 3: Additions related to alleged investments and profits from undisclosed potato sales (Annexure C-1/46)
The Assessing Officer made additions totaling Rs. 13,31,507 based on documents (C-1/46) presumed to belong to the assessee. The CIT(A) substituted this with an addition of Rs. 6,87,240. The assessee contended that these documents were found at the premises of a sister concern, M/s Shobhraj Cold Storage. The Tribunal found no evidence to prove that the documents were recovered from the assessee's premises and held that the presumption u/s 132(4A) could not be applied. The addition of Rs. 6,87,240 was deleted.
Issue 4: Notional income addition based on supposed sale proceeds
The CIT(A) sustained an addition of Rs. 1,00,000 as notional income based on the sale proceeds of potatoes. Since the Tribunal deleted the addition of Rs. 6,87,240, the basis for the notional income addition was nullified, and the addition of Rs. 1,00,000 was deleted.
Issue 5: Charging of interest u/s 217(1A) of the IT Act
The assessee objected to the charging of interest u/s 217(1A). The Tribunal agreed with the assessee, citing the decision of the Hon'ble Rajasthan High Court in CIT v. Multi Metals Ltd. [1991] 188 ITR 151, and directed that no interest should be charged u/s 217(1A). Additionally, since all additions were deleted, there was no basis for charging interest.
Conclusion:
The appeal filed by the assessee was allowed, and all additions made by the Assessing Officer were deleted.
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1991 (11) TMI 122
A Firm, Standard Deduction ... ... ... ... ..... t only a mode of distribution of profits of the firm thirdly, since the relationship between the firm and its partner cannot be that of an employer and an employee, the payment of salary by the firm to its partner does not come within the purview of section 15 of the Income-tax Act and hence is not chargeable under the head Salaries , of the IT Act, 1961, and fourthly since the salary paid by a firm to the partner is not chargeable under the head Salaries , it is not entitled to deduction under section 16(i) of the Income-tax Act. 10. Taking all these facts and the aforesaid decisions into account, we hold that salary paid by firm to its partner is not eligible for standard deduction under section 16(i) of the Income-tax Act. In view of the above discussion and the cases referred to above the assessee cannot derive any benefit out of the decisions of Jaipur and Bombay Benches referred to by Sh. Ranka. 11 to 12. These paras are not reproduced here, as they involve minor issue
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1991 (11) TMI 121
Issues Involved:
The issues involved in this case include the department's objection to the decision of the Commissioner of Income-tax (Appeals) regarding the addition made due to shortage in stocks, the conduct of survey under section 133A, discrepancies in stocks, and the deletion of the addition by the CIT (Appeals) based on the method of estimation rather than actual weighment.
Summary:
Issue 1: Conduct of Survey and Discrepancies in Stocks
The Department conducted a survey under section 133A at the business premises of the assessee, during which discrepancies in stocks were pointed out but actual weighment of commodities was not done. The shortage in stocks was estimated and agreed upon by one of the partners of the firm present during the survey. The IAC issued directions under section 144A(1) and the ITO made additions to the income based on the estimated shortages.
Issue 2: Deletion of Addition by CIT (Appeals)
The CIT (Appeals) deleted the entire addition, stating that the shortage was not detected in reality as actual weighment was not conducted, and the stocks were not maintained properly. He opined that no addition for the shortage could be made and suggested either adding profits earned on sales or applying "proviso to section 145(2)" instead of making the addition.
Issue 3: Arguments and Decision
The Departmental Representative argued that the estimation of weights was agreed upon by the partner and there was no objection raised during or after the survey. He contended that the CIT (Appeals) erred in deleting the addition and should have restored the entire amount. The counsel for the assessee argued that the stocks were at multiple places within the premises, and the value of certain commodities was low compared to others. He also mentioned the prohibition on export of products due to drought conditions.
Judgment:
After considering the arguments and evidence, the Tribunal disagreed with the CIT (Appeals) and reversed the decision to delete the addition. The Tribunal emphasized the importance of survey operations to verify the accuracy of accounts and found that the shortage detected during the survey was more reliable than discrepancies based solely on account books. The Tribunal reinstated the addition of Rs. 1,15,737, allowing the appeal filed by the revenue.
In conclusion, the Tribunal upheld the department's objection and restored the addition made due to shortages in stocks, emphasizing the significance of survey operations in verifying the accuracy of accounts.
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1991 (11) TMI 120
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... ... ..... rcumstances held that interest was not chargeable. 11. Learned Departmental Representative argued that interest was rightly charged. Learned counsel for the assessee supported the order of the CIT(A). 12. We have heard the rival submissions. The learned CIT(A) noted that the assessee was not liable to interest charged as it was not liable to file any estimate under s. 209A(1)(i)/209A(2), the total income assessed in earlier years being loss. He further noted that on the date when the first instalment of advance-tax was due, neither the income assessed for the latest year was a positive figure nor any payment under s. 140A was made in respect of the return filed upto that date. These facts are not controverted. Therefore, the CIT(A) was right in deleting the interest charged, as in the circumstances of the case, provision of s. 217(1A) are not attracted. We uphold the order of the learned CIT(A). This appeal is also dismissed. 13. In the result, both the appeals are dismissed.
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1991 (11) TMI 119
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... ... ..... We have heard the rival submissions. Once the assessment having been framed under s. 143(1), the Assessing Officer could assume legitimate jurisdiction under s. 143(2)(b) only after obtaining prior approval of the IAC for issue of notice requiring the presence of the assessee or the production of evidence to verify the correctness and completeness of the return. It has not been shown to us that such prior approval was fought or obtained by the Assessing Officer inspite of sufficient time allowed. We, therefore, agree with the learned counsel for the assessee that the assessment framed under s. 143(3) on 30th March, 1986 by the Assessing Officer was without jurisdiction and, therefore, deserves to be cancelled. Since we have cancelled the assessment, we do not think it necessary to go into the other grounds of appeal. 5. In the light of our above order, we dismiss the departmental appeals. 6. In the result, the assessee s appeal is allowed and departmental appeal is dismissed.
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1991 (11) TMI 118
Accounting Year, Bad Debt, Revised Return ... ... ... ... ..... d he is obliged to return the said form to the assessee giving 30 days time for rectification of the defects found out. If this procedure had been adopted in this case, then the assessee-firm would have come with a petition for condonation if necessary and the ITO would have decided whether there is condonable delay or not. Since the Form No. 12 was not returned there was no scope for the assessee to file any delay excuse petition in filing Form No. 12. In any view of the matter the order of the ITO rejecting continuation of registration on the ground that Form No. 12 was filed late cannot be supported in view of the categorical CBDT Circular quoted above. Hence the cancellation of the ITO s order by the learned CIT(A) is quite justified and the direction given to the ITO by the learned CIT(A) is also fully justified. Hence there is no substance in the departmental appeal for assessment year 1984-85 and it is dismissed. 7. In the result, the departmental appeals are dismissed
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1991 (11) TMI 117
Res Judicata ... ... ... ... ..... s pointed out that there is no difference between these two Acts in principle, scope and object except that the words hitherto assessed occurring in section 171 of the Income-tax Act do not appear in the Wealth-tax Act and that omission had a different connotation and consequence but not the consequence to hold that a partition held to have taken place under the Income-tax Act has not taken place under the Wealth-tax Act. 20. For these reasons, we are of the opinion that the views expressed by the earlier Benches do not require any re-consideration and they are correctly expressed on the facts obtaining in the case and we approve of them and hold that DC(Appeals) was right in these appeals to hold that there was a partition of the joint family and that the joint family ceased to exist on the relevant valuation dates and that the assessments made on the joint family for these two assessment years were to be cancelled. Approving his order, we dismiss these departmental appeals.
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1991 (11) TMI 116
Reference Application ... ... ... ... ..... ned, cannot be covered by a single reference application, because in that case, several appeals might have been disposed of by one appellate order, but the operative orders would be different in respect of different cases. So also, there may be different cases for different assessment years in relation to the same assessee. In that cases also, the assessment orders being different, the operative orders in appeal would also be different for different assessment years and it would not be possible to say that the ultimate operative order is only one order although it has been pronounced after hearing two or more appeals. Thus, an assessee or the Commissioner has to file a separate application for reference for each assessment year even though there is a common order under section 254 for one assessment year or more than one assessment year. We are, therefore, of the view that the single reference application under section 256(1) is not maintainable and, therefore, it is rejected
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1991 (11) TMI 115
Right To Receive ... ... ... ... ..... efits for several years. It is submitted that the expenditure was capital and the learned Dy. CIT (Appeals) made a mistake in deleting the same. The learned counsel for the assessee, on the other hand, resists the submission made on behalf of the revenue. In fact, the submissions made before the learned Dv. CIT (Appeals) are reiterated before us also. 13. I have looked into the various facts available before me and it is seen that expenditure was, for gap filling that is for planting of new tea crop in gap place of diseased tea or useless old bush in the area planted by the assessee. In such filling expenses cannot be considered to be capital though it make have brought enduring benefit to the assessee. In fact, the planting is only replacement of such original but defective or diseased plant. In view of this matter, the order of the learned Dy. CIT (Appeals) required no in reference from the Appellate Tribunal. In the result, the appeal by the revenue is dismissed on merits.
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1991 (11) TMI 114
Closing Stock ... ... ... ... ..... e assessee s method of accounting for this year. This does not involve any gross or wilful neglect on the part of the assessee much less any fraud on her part in returning her correct income for the year under appeal, within the meaning of the Explanation to section 271(1)(c) of the Act. It is a case of one estimate against another of the profit of the assessee by the various authorities including the Tribunal, rejecting the assessee s method of accounting for this year. I, therefore, hold that the assessee has discharged the burden of proof under the Explanation to section 271(1)(c) of the Act. Hence, it follows that no penalty is exigible for this estimated addition sustained to the profit from her own business. Accordingly, I cancel the penalty of Rs. 63,000 levied by the departmental authorities and direct that the said amount of penalty shall be refunded, if already collected from the appellant. 16. to 18. These paras are not reproduced here as they involve minor issues
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1991 (11) TMI 113
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... ... ..... thened by the fact that the ITO brought on record neither the cost value nor market value of the goods sold. There is in fact no basis of his estimating the profit of the assessee at Rs. 20,600. In view of this specific lacuna of absence of requisite evidence in the case theMadrasdecision was not at all applicable to the facts of this case. For all these reasons, we feel inclined to deleted the addition of Rs. 20,600. 6. The next grievance of the assessee relates to disallowance of Rs. 1,039 being 1/4th of car expenses out of total expenses or Rs. 4,156. The assessee firm comprised of 4 partners and the use of the car by them for non-business purposes cannot be altogether ruled out. The disallowance is in order and is in order is sustained. 7. The next grievance regarding 1/4th disallowance (Rs. 1,000) out of car depreciation claimed at Rs. 15,467 is consequential upon the above ground and is accordingly sustained and confirmed. 8. In the result, the appeal is partly allowed.
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1991 (11) TMI 112
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... ... ..... ounts that are in dispute in the appeal pending before it, but there is no authority to support the learned counsel s contention that the Tribunal can also stay the recovery of amounts that are in involved in appeals pending before the first appellate authority. Like this Tribunal, the first appellate authority too has inherent jurisdiction to stay the recovery of amounts which are in dispute before it and even if this Tribunal has any such power, we would not like to exercise it in a manner that interferes with the exercise of a similar power by the first appellate authority before whom the matter is actually pending. The assessee s has admittedly not approached the first appellate authority for staying the demand. We, therefore, do not find any good reason for making an order in favour of the assessee to stay the recovery of demand of penalties when those matter are not pending before it but are pending the first appellate authority. The application is accordingly rejected.
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1991 (11) TMI 111
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... ... ..... rials before the CIT(A) to the effect that it was a capital expenditure justifying his request for enhancement by way of disallowance. The onus lies always on the person who makes the allegation. In this case, it is the ITO who alleges that it is capital expenditure at the stage of the appeal after having allowed such an expenditure as a revenue expenditure. Therefore, it is for him to adduce supporting materials before the CIT(A). In our considered opinion, it is too late in the day for him to find fault with the CIT(A) in his conclusions. The fact that the car is an old one has not been controverted before us. Moreover, no useful purpose will be served by restoring the issue to the ITO after a lapse of nearly a decade in order to find out whether the petrol engine that was substituted was in a serviceable condition or not at the time of its substitution in 1981. In the circumstances, we uphold the order of the CIT(A). 10. In the result, the Revenue s appeals are dismissed.
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1991 (11) TMI 110
Partnership Deed ... ... ... ... ..... ental representative argued that by payment of salary, the profit sharing proportion had changed and was not in accordance with that stated in the deed. We are not persuaded to his point of view. Net profit is ascertained only after the payment of salary and other out-goings and, therefore, payment of salary to one of the partners for services rendered, though not provided for in the deed, will not amount to a change in the profit sharing ratio of the partners. It has been stated before us that Sri Mohammed Shareef was daily attending to the business of the firm for a period of six months for which he was remunerated by the consent of other partners. Therefore, it cannot be held that merely because some temporary remuneration was paid to one of the partners for services rendered to the firm it will result in a change in the profit sharing ratio. Registration cannot be refused on that score. 6. In the light of our discussions above, the assessee succeeds. The appeal is allowed
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1991 (11) TMI 109
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... ... ..... ifts. Even this ground does not stand to scrutiny because in the cases of the donors assessments have been found accepting the gifts as valid as would be clear from pages 51 to 55 of the paper book. 10. We are aware that when a question arises whether a firm is genuinely constituted or not, we have to take all the facts and circumstances of the case into consideration as observed by their Lordships of the Punjab and Haryana High Court in the case of CIT vs. Kanhaya Lal Ram Chand 1977 CTR (P and H) 103 (1979) 119 ITR 377 (P and H) applying this test, we find that when all the facts and circumstances of the case are taken into consideration, there could be no doubt that the firm as constituted in the previous year relevant to the assessment year under appeal deserved registration under the Act. We direct that the registration application be entertained by the ITO and registration granted for the year under appeal. We set aside the orders of the authorities. 11. Appeal allowed.
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1991 (11) TMI 108
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... ... ..... Thereafter, in penalty proceedings, the competent authority has to probe into and decide whether there has been any concealment of income. But, where there is a dispute as to whether such income allegedly concealed would be assessed in the hands of X or Y unless the determination is made by the ITO, no charge of concealment can be made against the person in whose hands the income is added on protective basis. He is liable only if it is his income which has been concealed. In other words, a person upon whom a substantive assessment is made would only be liable for penalty provided the conditions precedent for the imposition of the penalty are satisfied. The Guwahati High Court has also held in the case of Metal Stores vs. CIT (1990) 89 CTR (Gau) 132 that protective penalties cannot be levied or sustained. We, therefore, hold that the assessee was not liable for any penalty under ss. 271(1)(b), 273 or 171(1)(c) of the IT Act, 1961. 9. In the result, the appeals are dismissed.
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9911796707
