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1995 (8) TMI 66
The petitioner sought a writ for refund of excise duty. The court directed the authorities to decide the refund application within two months. The petition was finally disposed of.
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1995 (8) TMI 65
Issues:
1. Challenge against the order of the Tribunal refusing to waive the deposit required under Section 129-E of the Customs Act, 1962.
2. Interpretation of Section 129(E) of the Customs Act regarding waiver of deposit.
3. Consideration of undue hardship and interests of revenue by the Appellate Tribunal in waiving the deposit.
4. Application of judicial discretion by the Appellate Authority in deciding on the waiver of deposit.
5. Examination of whether failure to provide an opportunity for personal hearing renders the order of the Collector of Customs a nullity.
Analysis:
1. The appellant challenged the Tribunal's order refusing to waive the deposit under Section 129-E of the Customs Act, claiming that no opportunity for personal hearing was provided. The appellant argued that Section 124 of the Customs Act mandates a show cause notice and a reasonable opportunity for being heard. The Tribunal reduced the deposit from Rs. 20 lakhs to Rs. 5 lakhs, considering the circumstances of the case and the appellant's failure to reply to the show cause notice.
2. The Tribunal's decision centered on the discretion provided under the proviso to Section 129(E) of the Customs Act, which allows for waiver of the deposit in cases of undue hardship. The Tribunal must balance the undue hardship to the appellant with safeguarding the interests of revenue. The appellant contended that the Tribunal should consider whether there is a prima facie case in their favor before deciding on the waiver of deposit, citing a Supreme Court judgment emphasizing the need for exercising judicial discretion objectively.
3. The Supreme Court judgment highlighted that the Appellate Authority must exercise its discretion based on relevant materials and in good faith. While a prima facie case is a relevant factor, it is not the sole determinant for waiving the deposit. The Tribunal in this case found that the appellant did not make out a prima facie case and had not replied to the show cause notice, showing disrespect to the process.
4. The Tribunal considered all relevant factors, including the appellant's financial hardship, before deciding to reduce the deposit to Rs. 5 lakhs. The Tribunal's decision was based on the balance of convenience and was deemed just in the circumstances of the case. The Single Judge upheld the Tribunal's decision, emphasizing that it was a matter of discretion for the Appellate Tribunal to decide on the waiver of deposit.
5. The argument that the order of the Collector of Customs was a nullity due to the lack of a personal hearing was dismissed. The Court held that even if the appellant was not personally heard by the Collector, the order's validity depended on the overall facts and circumstances, especially considering the appellant's failure to reply to the show cause notice. The Court concluded that the Tribunal's decision was justified, and the appeal challenging the refusal to waive the deposit was dismissed.
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1995 (8) TMI 64
Issues:
1. Auction of abandoned goods at Port of Madras.
2. Repeated rejection of petitioner's bid.
3. Authority to confirm sale and reject offers.
4. Lien over property under Indian Customs Act.
5. Petitioner's entitlement to release of goods.
6. Reasonableness of rejection of petitioner's offer.
7. Impact of repeated auction postponements on Port Trust.
Analysis:
1. The petitioner participated in an auction held by the first respondent for abandoned goods at the Port of Madras. The petitioner emerged as the successful bidder for lot No. 560/90 with a bid of Rs. 10.50 lakhs.
2. Despite the petitioner's successful bid, the first respondent received higher offers from a non-existent entity, Amith Enterprises, leading to the cancellation of the auction multiple times. The petitioner filed a writ petition seeking to quash the proceedings of the Port Trust dated 24-11-1994 and requested the release of the goods upon payment of Rs. 12 lakhs.
3. The first respondent contended that the third respondent, appointed as auctioneer, had no authority to confirm the sale, and the first respondent had the exclusive right to accept or reject offers. The approval of the third respondent depended on satisfying the charges due to them, and the petitioner's offer had not been accepted by the first respondent.
4. The third respondent, while not confirming the sale, highlighted their lien over the property under Section 150(2)(c) of the Indian Customs Act. They clarified that they were recommending authorities, and the ultimate acceptance or refusal of offers rested with the first respondent.
5. The main issue was whether the proceedings dated 24-11-1994 should be set aside, and whether the petitioner was entitled to the release of goods based on the confirmation passed by the third respondent.
6. The petitioner argued that the repeated rejection of their bids, despite being the highest bidder on multiple occasions, was unjustified. They questioned the validity of the offers from Amith Enterprises, a non-existent firm, and emphasized that the first respondent should have accepted their bid.
7. The first respondent defended their right to reject offers without providing reasons, citing the tender conditions. However, the court scrutinized the history of auctions and price reductions, questioning the reasonableness of continuously lowering the upset price, leading to losses for the Port Trust.
8. The court emphasized the need for reasonableness in exercising auction powers, especially considering the impact of repeated auction postponements on the value of goods. Despite acknowledging the first respondent's discretion to reject offers, the court condemned the arbitrary rejection of the petitioner's bid and dismissed the writ petition without costs.
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1995 (8) TMI 63
The Supreme Court of India in 1995 (8) TMI 63 - SC Order stated that the Tribunal failed to recognize central excise licenses of primary and secondary manufacturers. The court advised the appellant to present the information to the Tribunal for further consideration. The appeals were disposed of with this directive.
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1995 (8) TMI 62
Issues:
1. Department's application under section 256(2) of the Income-tax Act, 1961 for direction to submit the statement of the case and refer questions of law.
2. Tribunal's refusal to refer questions of law to the High Court regarding assessment year 1985-86.
3. Dispute over the treatment of subsidy as a revenue receipt for taxation purposes.
4. Disallowance of advertisement expenses for recruitment of personnel under section 37(3A) read with section 37(3B) of the Act.
5. Tribunal's rejection of the Department's reference application under section 256(1) of the Act.
Analysis:
The High Court dealt with an application under section 256(2) of the Income-tax Act, 1961, where the Department sought a direction for the respondent to submit the statement of the case and refer questions of law to the High Court. The Tribunal had previously refused to make such a reference for the assessment year 1985-86, stating that no question of law arose from their findings. The respondent-assessee, a company, had initially filed a return showing a loss, which was later revised twice, claiming deductions based on changes in income classification. The Tribunal had allowed certain deductions, notably excluding a subsidy from taxable income, considering it a capital receipt. Additionally, the Tribunal directed the exclusion of specific advertisement expenses while making disallowances under relevant sections of the Act.
The primary issue revolved around the treatment of the subsidy received by the assessee as a revenue receipt for tax purposes. The Tribunal categorized the subsidy as a grant or gift from the State, not subject to taxation, emphasizing its purpose to aid industrial growth. This decision led to the exclusion of a substantial amount from the assessee's total income. Furthermore, the Tribunal directed the exclusion of specific advertisement expenses related to personnel recruitment during disallowance proceedings. These directions were based on the Tribunal's interpretation of relevant sections of the Income-tax Act.
The Department, dissatisfied with the Tribunal's decision, filed a reference application under section 256(1) of the Act, seeking a statement of the case and reference of legal questions to the High Court. However, the Tribunal rejected this application, asserting that their findings were factual and did not raise any legal issues. The High Court concurred with the Tribunal's assessment, finding no grounds to overturn the decision. Consequently, the Department's petition was dismissed, and no costs were awarded considering the circumstances of the case.
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1995 (8) TMI 61
Issues Involved:
1. Whether the assessee discharged the onus under section 68 of the Income-tax Act, 1961, regarding cash credits in the names of Smt. Nirupama Mohanty, Shri Biswajit Mohanty, and Shri Satyajit Mohanty.
Issue-wise Detailed Analysis:
Issue 1: Discharge of Onus under Section 68 of the Income-tax Act, 1961
Facts:
For the assessment year 1979-80, the assessee showed cash credits of Rs. 40,000 each in the names of his minor sons, Biswajit Mohanty and Satyajit Mohanty. For the assessment year 1981-82, a cash credit of Rs. 20,000 was shown in the name of Smt. Nirupama Mohanty, the wife of the assessee. These amounts were added to the assessee's income by the Income-tax Officer. However, the Commissioner of Income-tax (Appeals) held that the cash credits were proved and deleted the additions. The Income-tax Appellate Tribunal confirmed this order.
Arguments by Revenue:
Mr. A. K. Ray, representing the Revenue, argued that whether the assessee discharged the onus under section 68 is a question of law. He contended that the Tribunal's appreciation of facts is open to scrutiny by the High Court. He emphasized that merely establishing the identity of the creditor is insufficient; the genuineness of the loan must also be proved. He relied on precedents such as CIT v. S. Kamaraja Pandian and CIT v. Biju Patnaik to argue that the Tribunal's findings could be erroneous in law if they misdirected themselves or reached perverse conclusions.
Arguments by Assessee:
Mr. Ratho, representing the assessee, argued that the questions relate to facts and that the High Court should not interfere as it does not act as an appellate authority under sections 256 or 257 of the Income-tax Act. He cited the Supreme Court decision in CIT v. S. P. Jain to argue that the High Court should only intervene if the Tribunal's findings are based on no evidence, irrelevant evidence, or are arbitrary or perverse. He also argued that the income in question had already been assessed in the hands of the creditors and could not be taxed twice, citing Dayabai (Smt.) v. CIT and Sri Krishna Das v. Town Area Committee.
Court's Analysis:
The court examined section 68 of the Income-tax Act, which requires the assessee to satisfactorily explain the nature and source of any sum credited in their books. The explanation must satisfy the Assessing Officer. In this case, the Commissioner of Income-tax (Appeals) and the Tribunal found that the assessee had successfully discharged this onus. The court noted that both findings were based on facts and could not be re-evaluated in a reference under section 256 of the Income-tax Act.
The court referred to CIT v. S. P. Jain, where the Supreme Court held that the High Court could intervene if the Tribunal misunderstood statutory language, made findings based on no evidence, or acted on irrelevant or contradictory evidence. However, the court found that the Tribunal's findings in this case were reasonable and based on relevant facts.
Conclusion:
The court concluded that the Tribunal's findings regarding the genuineness of the transactions were not perverse and were based on a proper appreciation of facts. Therefore, the court answered the questions in the affirmative, in favor of the assessee and against the Revenue. The S. J. Cs. were disposed of accordingly.
Separate Judgments:
D. M. Patnaik J. concurred with the judgment.
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1995 (8) TMI 60
The High Court of Allahabad ruled in favor of the assessee, a charitable institution, stating that its income should not be taxed under sections 12 and 13 of the Income-tax Act, 1961. The court also held that the assessment itself was invalid, and interest charged for non-payment of tax was deemed incorrect. The Tribunal's decision was upheld, and the reference was answered in favor of the assessee and against the Revenue.
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1995 (8) TMI 59
Issues:
1. Jurisdiction of the court to quash penalty notice under section 271(1)(c) of the Income-tax Act, 1961.
2. Legality of issuing multiple penalty notices for the same assessment year.
3. Refusal to stay penalty proceedings by the Tribunal.
Detailed Analysis:
1. The petitioner sought to quash a penalty notice dated November 12, 1992, under section 271(1)(c) of the Income-tax Act, 1961, and an order dated April 15, 1993, by the Tribunal refusing to stay proceedings. The petitioner contended that the notice was illegal and without jurisdiction as no assessment proceedings were pending before the issuing authority. The court highlighted that the jurisdiction under article 226 of the Constitution is discretionary and extraordinary, emphasizing the importance of exhausting statutory remedies before seeking prerogative writs. However, it was noted that the issuing authority did have the power to issue notices under section 271 but questioned the justification for issuing a notice when proceedings were already initiated by another authority for the same assessment year.
2. The petitioner argued that issuing two parallel notices for the same assessment year amounted to double jeopardy. The court acknowledged the discretionary power of the Tribunal to stay proceedings and emphasized that the exercise of such power is discretionary and must consider settled norms. It was clarified that the refusal to stay proceedings, if based on established norms, does not indicate a legal infirmity or jurisdictional error. The court opined that the impugned order refusing to stay proceedings could not be considered without jurisdiction warranting interference in the discretionary writ jurisdiction.
3. The court directed that if the appeal pending before the Tribunal was not decided on the merits, it should be expedited and preferably resolved within two months from the date of the court's order. The petition was ultimately disposed of, and any existing stay order was vacated. The court ordered the issuance of a copy of the judgment to the respective counsels upon payment of charges within two days.
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1995 (8) TMI 58
The High Court of Allahabad heard an application under section 256(2) of the Income-tax Act, 1961. The court directed the Income-tax Appellate Tribunal to refer a question of law regarding the assessment made under section 147 for the first time. The question pertained to whether this assessment can be considered a regular assessment for certain purposes under the Income-tax Act.
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1995 (8) TMI 57
The High Court of Allahabad heard an application under section 256(2) of the Income-tax Act, 1961. The court directed the Tribunal to refer the question of law regarding the completion of construction of shops and the taxability of unexplained investment of one lakh rupees in the assessment year 1986-87. (Case Citation: 1995 (8) TMI 57 - Allahabad High Court)
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1995 (8) TMI 56
The High Court of Allahabad heard an application under section 256(2) of the Income-tax Act, 1961. The court found that questions of law arose from the Tribunal's order regarding interest payment, revision order on salary, depreciation, and loss on sale of a vehicle, and consideration on empty bottles. The Tribunal was directed to refer these questions to the court. (Case citation: 1995 (8) TMI 56 - Allahabad High Court)
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1995 (8) TMI 55
Issues Involved:
1. Whether penalty is exigible under section 271(1)(c) of the Income-tax Act for the assessment year 1973-74.
2. Whether there was a valid reference by the Income-tax Officer under section 274(2) to the Inspecting Assistant Commissioner.
3. Whether the Inspecting Assistant Commissioner has jurisdiction to impose penalty.
4. Whether the Tribunal was correct in holding that the capital gains should be computed in accordance with the provisions of section 80T and section 48.
5. Whether the Tribunal should first set off the capital loss of Rs. 8,355 relating to the assessment year 1972-73 against the capital gains for the assessment year 1973-74.
Detailed Analysis:
1. Penalty Exigibility under Section 271(1)(c):
The Tribunal held that penalty was exigible because the assessee had not disclosed the gains arising from the sale of property in the return. The Tribunal found that the assessee had concealed an income of Rs. 68,185 in the return of income, and the minimum penalty imposable was Rs. 68,185. This conclusion was based on the fact that the assessee did not disclose the transaction at all and did not offer any explanation for the omission. The Tribunal's finding that the assessee had concealed income was a conclusion of fact, and the court declined to interfere with this finding.
2. Validity of Reference under Section 274(2):
The Division Bench observed that the validity of the reference depends on the reference made by the Income-tax Officer and the terms of the letter he had written to the Inspecting Assistant Commissioner on March 31, 1976. The Tribunal was directed to produce the letter, but it was found that neither the Revenue nor the assessee could furnish the letter. The Tribunal noted that the letter was received by the Inspecting Assistant Commissioner on April 1, 1976, and thus there was no valid reference. The Full Bench decision in CIT v. P. I. Issac was cited, which held that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty after April 1, 1976. The court concluded that there was no valid reference by the Income-tax Officer to the Inspecting Assistant Commissioner under section 274(2).
3. Jurisdiction of the Inspecting Assistant Commissioner:
The Supreme Court in CIT v. Dhadi Sahu held that the Inspecting Assistant Commissioner would have jurisdiction to pass the order of penalty if the reference was made before April 1, 1971. The court distinguished this case from the present one, noting that the reference in the present case was invalid as there was no valid reference. The court held that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty after April 1, 1976, as per the Full Bench decision in CIT v. P. I. Issac.
4. Computation of Capital Gains under Section 80T and Section 48:
The Tribunal held that the assessee could be said to have concealed only that income which he should have disclosed in the return, namely, capital gains arising from the transaction computed in accordance with the provisions of section 80T and section 48. The Tribunal's decision was based on the interpretation of these sections, and the court declined to interfere with this finding.
5. Set-off of Capital Loss:
The Tribunal held that the capital loss of Rs. 8,355 relating to the assessment year 1972-73 should not be set off against the capital gains for the assessment year 1973-74. The court noted that the Supreme Court in H. H. Sir Rama Varma v. CIT held that long-term capital losses brought forward from earlier assessment years have to be first set off against the long-term capital gains of the current assessment year before the deduction contemplated by section 80T is allowed. The court concluded that the Tribunal's decision was erroneous and held that the deductions under section 80T could be allowed only after setting off the capital loss.
Conclusion:
The court answered the second question of law framed at the instance of the assessee and the third question at the instance of the Revenue in the negative and in favor of the assessee. The other questions raised, both at the instance of the assessee and the Revenue, were declined to be answered by the court.
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1995 (8) TMI 54
The High Court reviewed a case involving Gift-tax Act violations by shareholders transferring shares to investment companies to avoid wealth-tax. The court advised the petitioner to appeal the decision within the specified timeframe to avoid limitations. The writ petition was summarily rejected, and the petitioner was instructed to pay urgent costs for a copy of the order.
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1995 (8) TMI 53
Issues:
1. Whether the assessee has discharged its onus under Explanation to section 271(1)(c) of the Income-tax Act.
2. Whether penalty is exigible under section 271(1)(c) of the Income-tax Act, 1961 based on the facts and circumstances of the case.
3. Whether the Tribunal was justified in deciding the appeal without considering the applicability of Explanation to section 271(1)(c) to the assessee's case.
Analysis:
The judgment delivered by the High Court of Allahabad pertains to a case where the Income-tax Appellate Tribunal referred certain questions for the court's opinion regarding the application of section 271(1)(c) of the Income-tax Act, 1961. The case involved the assessment year 1969-70, where the assessee initially declared an income of Rs. 18,139, but the income was finally determined to be Rs. 55,767, resulting in a penalty of Rs. 38,000 imposed by the Inspecting Assistant Commissioner under the Explanation to section 271(1)(c) of the Act. The Tribunal allowed the assessee's appeal, stating that the Revenue failed to disprove the assessee's case and establish by material on record that the addition as sustained is the assessee's income from concealed sources.
The Explanation to section 271(1)(c) of the Act states that if the total income returned by a person is less than 80% of the correct income assessed, the person shall be deemed to have concealed income unless it is proved that the failure to return the correct income did not arise from fraud or neglect. The Revenue relied on Supreme Court judgments to shift the burden of proof to the assessee in such cases. However, the High Court observed that the Tribunal did not discuss the effect or applicability of the Explanation in its order, despite its prima facie applicability due to the income discrepancy.
The court noted that the Tribunal wrongly placed the burden of proof on the Revenue without determining the applicability of the Explanation to the case. The court referred to precedents and held that the Tribunal's order was not legally justified. Consequently, the court set aside the Tribunal's order and directed it to redecide the appeal considering the applicability of the Explanation to section 271(1)(c) of the Act to the assessee's case. As a result, the court found questions 1 and 2 redundant and did not address them. The parties were directed to bear their own costs in the reference.
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1995 (8) TMI 52
Issues:
1. Interpretation of section 64(1)(iii) of the Income-tax Act, 1961 regarding interest derived by minors from investments made with a partnership.
2. Bifurcation of interest earned by minors into initial deposits and accumulated profits for tax purposes.
3. Correctness of deleting specific interest amounts from the hands of minors.
Issue 1: Interpretation of section 64(1)(iii) of the Income-tax Act, 1961
The case involved minors admitted to a partnership firm and receiving interest on their investments. The Income-tax Officer included this interest in the father's income under section 64(1)(iii). The Appellate Assistant Commissioner ruled that only interest on initial deposits should be included. The Income-tax Appellate Tribunal upheld this decision, emphasizing that the minors' investments were not obligatory contributions and the interest did not necessarily indicate a capital contribution. The Tribunal cited precedents to support its conclusion that interest on accumulated profits from the partnership should be included in the father's income. The court agreed with the Tribunal, holding that the interest arose from the minors' admission to the partnership benefits and should be included in the father's income under section 64(1)(iii).
Issue 2: Bifurcation of interest earned by minors
The Tribunal also bifurcated the interest earned by the minors into two parts: on initial deposits and on accumulated profits. The Appellate Assistant Commissioner's decision to include only interest on initial deposits was upheld by the Tribunal. The court concurred with this decision, stating that all interest earned by the minors should be excluded from their income since it was taxable in the father's hands. Therefore, the court answered question 2 in the negative, indicating that the entire interest amounts should be excluded from the minors' income.
Issue 3: Deletion of specific interest amounts from minors' income
The Tribunal had deleted specific interest amounts from the minors' income. However, the court held that all interest credited to the minors should be excluded from their income, not just the specific amounts mentioned in the Tribunal's decision. Therefore, the court answered question 3 in accordance with this interpretation.
In conclusion, the court ruled in favor of the Revenue, holding that the interest derived by the minors on their investments with the partnership should be included in the father's income under section 64(1)(iii). The court also directed that all interest amounts credited to the minors should be excluded from their income.
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1995 (8) TMI 51
Issues:
Validity of partial partition in a Hindu undivided family under the Income-tax Act.
Analysis:
The judgment addresses the validity of a partial partition in a Hindu undivided family under the Income-tax Act. The case involved a dispute regarding the partition of assets within a Hindu undivided family consisting of the father, mother, and son. The Income-tax Officer rejected the claim of partial partition, while the Appellate Assistant Commissioner accepted it. The Income-tax Appellate Tribunal overturned the Appellate Assistant Commissioner's decision, stating that the alleged partition was not genuine and had no legal effect. The Tribunal emphasized that under Hindu law, the division of coparcenary property automatically severs joint ownership between coparceners, and it is not possible for the mother to remain joint with the son after the father's separation. The Tribunal found that the partition deed was an artificial device and directed a reevaluation of the controversy.
The Tribunal's decision was based on the premise that the mother and son could not form a smaller Hindu undivided family to the exclusion of the father. The Tribunal highlighted that a joint Hindu family is a legal creation, and family units cannot be arbitrarily altered. The judgment also referenced a previous case to support the argument that the wife of the karta, being a family member, was entitled to a share in a partition between the father and son. The Tribunal criticized the misdirection in the Tribunal's findings regarding the ability of the mother and son to constitute another Hindu undivided family.
The judgment emphasized that the Tribunal failed to consider the conditions of a valid partition as defined in the Income-tax Act. It stated that the question of whether the mother and son could form a separate Hindu undivided family for tax purposes was irrelevant to the validity of the partition. The court directed the Income-tax Appellate Tribunal to reevaluate the controversy in accordance with the law, setting aside the previous decision. The judgment concluded by awarding costs to the assessee and highlighting the need for a proper determination of the partition's genuineness and validity.
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1995 (8) TMI 50
The High Court of Allahabad heard an application under section 256(2) of the Income-tax Act, 1961. The court identified two questions of law arising from the order passed by the Income-tax Appellate Tribunal related to deductions for interest on excess levy sugar price and addition of funds in Molasses Storage and Maintenance Fund account. The Tribunal was directed to refer these questions to the court.
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1995 (8) TMI 49
The High Court of Allahabad heard an application under section 27(3) of the Wealth-tax Act, 1957. The court directed the Tribunal to refer the question of law regarding the justification of holding protective assessment as substantive when a related case was still pending.
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1995 (8) TMI 48
The High Court of Allahabad rejected an application under section 256(2) of the Income-tax Act, 1961 as no question of law arose from the Tribunal's order. The assessee's claim regarding false chungi receipts was not substantiated, leading to unexplained purchases and additions to the total amount. The Court concluded that the reference could be decided based on the available record materials. The application was rejected.
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1995 (8) TMI 47
The High Court of Allahabad heard a case regarding the admission of a reference application under section 256(2) of the Income-tax Act, 1961. The court directed the Income-tax Appellate Tribunal to refer a question of law regarding the genuineness of a trust created as a colorable device to avoid tax, in light of the decision in McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148.
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