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Case Laws
Showing 81 to 90 of 90 Records
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1971 (1) TMI 10
Reopening of assessment - assessee had disclosed the material facts to the department, it was under no obligation to inform the department about the possible inferences because it was for the department to raise such an inference - revenue's appeal dismissed
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1971 (1) TMI 9
Issues:
Validity of notice under section 148 of the Income-tax Act, 1961
Analysis:
The Supreme Court heard an appeal by an assessee against the judgment of the High Court of Patna. The assessee, a partnership firm with construction contracts under Railways and Government, challenged the validity of a notice issued by the Income-tax Officer under section 148 of the Income-tax Act, 1961. The notice was issued for the assessment year 1960-61, alleging that income had escaped assessment. The Court focused on whether the notice complied with the requirements of section 151(2) of the Act. The notice was issued after four years but before eight years of the original assessment, as per the statutory provisions.
The Court examined the provisions of sections 148, 151(2), and 139(2) of the Income-tax Act, 1961. Section 148 mandates that the Income-tax Officer must serve a notice on the assessee before making any assessment, reassessment, or recomputation under section 147. Additionally, the Officer must record reasons before issuing any notice under section 148. Section 151(2) sets a time limit for issuing notices under section 148 and requires the Commissioner's satisfaction for the issuance of such notices.
The Court scrutinized the report submitted by the Income-tax Officer to the Commissioner and found it vague and lacking specific reasons for initiating proceedings under section 147. The report mentioned alleged name-lenders and bogus transactions without concrete evidence. The Court emphasized that the Officer must have prima facie grounds before issuing a notice under section 148. It concluded that the Officer did not have sufficient material to satisfy the requirements of section 147, rendering the notice invalid.
The Court criticized the Commissioner for mechanically approving the notice without proper assessment of the case. Both the Income-tax Officer and the Commissioner were reprimanded for not adhering to the safeguards provided in sections 147 and 151 of the Act. The Court held that the notice was invalid and quashed it, ruling in favor of the appellant. The Court directed the respondent to bear the costs of the appeal.
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1971 (1) TMI 8
Dissolution of a firm - assets were revalued and one of the two partners received from the other, value of his share in the asset - whether it amounts to sale or transfer of capital assets - arrangement between the partners amounted to distribution of assets on the dissolution of the firm, there was no sale or exchange of the assessee's share in the capital assets
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1971 (1) TMI 7
Sale transaction as well as the business of manufacturing sugar constituted the same business within the meaning of s. 24(2) of Indian Income-tax Act, 1922. Therefore, the assessee can set off the unabsorbed loss in the sale of shares against its other business income - Assessee's appeal allowed
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1971 (1) TMI 6
It is not for the assessee to satisfy the Income-tax Officer that there was no concealment, it was for the department to establish that the assessee had failed to disclose truly and fully material facts when the assessee had intimated about the receipt - department cannot commence proceedings for reassessment under s. 34(1)(a) - Revenue's appeal dismissed
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1971 (1) TMI 5
Registration of a firm under the Partnership Act takes place only when the necessary entry was made in the register of firm under s. 59 of Partnership Act - If the firm was registered under the Partnership Act after the application under the Income-tax Act was made, the application for registration under s. 26A of Income-tax Act will be treated filed out of time - Revenue's appeal allowed
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1971 (1) TMI 4
Possession of licence in FormFL II does not preclude the holder from entering into a partnership, it is only provided that the licence should not be sub-let or transferred. Since, there was no prohibition in the licence against the holder entering into a partnership, the partnership was legal
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1971 (1) TMI 3
Payments made by the assessee as taxes under s. 18(3B) of Indian Income-tax Act, 1922 and which it could not recover from the non-resident cannot be treated as a bad debt under s. 10(2)(xi) of Indian Income-tax Act, 1922. The payment made under a statutory obligation because the assessee was in default does not amount to an expenditure laid out for the purposes of assessee's business - assessee's appeal dismissed
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1971 (1) TMI 2
Issues:
Admissibility of assessment orders in evidence for determining partnership liability based on pronotes.
Analysis:
The Supreme Court heard appeals from the Orissa High Court regarding five suits filed on different pronotes. The main issue was the admissibility of assessment orders to establish the contesting defendants' partnership in a firm. The trial judge decreed all suits, finding the transactions genuine and the defendants liable as partners. The High Court considered the admissibility of assessment orders crucial in determining the partnership. The court examined Section 54 of the Income-tax Act, 1922, which prohibited disclosure of certain documents by income tax officials. The High Court concluded that if an assessee waived privilege and produced a copy of the assessment order, it could be admissible in evidence.
The interpretation of Section 54 was central to the case. It created a bar on officials from producing specific documents and mandated confidentiality. The question arose whether assessment orders, though confidential, could be tendered as evidence if produced by the assessee or their representative-in-interest. Various High Courts had differing views on this matter. The Madras High Court held that income tax returns could not be used in court, while the Calcutta High Court found it problematic for joint assessees to use confidential assessment orders against each other. However, the Madras High Court's Full Bench allowed an assessee to use a return as evidence if desired.
The Supreme Court, relying on precedents like Emperor v. Osman Chotani, affirmed the admissibility of assessment orders produced by the assessee or their representative-in-interest. They emphasized the importance of the assessee's right to produce such documents for evidentiary purposes. The court rejected the argument that Section 54's confidentiality provisions precluded such admissibility. Referring to the Charu Chandra Kundu case, the court clarified that the prohibition under Section 54 did not prevent an assessee from presenting assessment orders as evidence.
In conclusion, the Supreme Court dismissed the appeals, upholding the High Court's decision on the admissibility of assessment orders. The court affirmed the right of an assessee or their representative-in-interest to produce such documents as evidence in legal proceedings, even if they were otherwise confidential.
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1971 (1) TMI 1
Issues:
Assessment of income-tax for the assessment year 1943-44, imposition of penalty under section 28(1)(c) of the Indian Income-tax Act, refusal of the Tribunal to refer a question under section 66(1) of the Act, jurisdiction of the Tribunal to arrive at a different conclusion in penalty levy proceedings compared to assessment proceedings.
Analysis:
The judgment pertains to four appeals with common facts, focusing on one appeal (Civil Appeal No. 631 of 1967) concerning income-tax assessment for the year 1943-44. The Income-tax Officer made additions to the declared income of the assessee due to inflation in purchase, spurious cash credits, diversion of sales, and bogus speculation losses, resulting in a revised taxable income of Rs. 1,43,433. This decision was upheld by the Appellate Assistant Commissioner and the Tribunal. Additionally, a penalty of Rs. 24,500 was imposed under section 28(1)(c) of the Act, which was later reduced to Rs. 2,000 by the Tribunal based on concealment of cash credits and sales suppression. The Commissioner sought a reference under section 66(1) on concealment of income, which was declined by the Tribunal and High Court, leading to an appeal in the Supreme Court.
The Supreme Court held that the question raised for reference was factual, and if the Tribunal's conclusion indicated no suppression of sales, no legal issue arose for reference under section 66(1). The Court emphasized that the Tribunal's findings were based on the evidence presented, and no question of law warranted a reference to the High Court. The appellant's argument regarding the Tribunal's jurisdiction to differ from its assessment findings in penalty proceedings was dismissed as it was not raised in the initial reference application under section 66(1). The Court clarified that the question submitted for reference did not encompass the jurisdictional issue raised by the appellant, leading to the dismissal of the appeals with costs.
In summary, the judgment revolves around the assessment of income-tax, imposition of penalty, and the Tribunal's refusal to refer a question on concealment of income. The Court emphasized the factual nature of the issue, highlighting that no legal question arose for reference under section 66(1) based on the Tribunal's findings. The appellant's argument regarding the Tribunal's jurisdictional aspect was deemed invalid as it was not part of the initial reference application. Consequently, the appeals were dismissed by the Supreme Court.
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