2015 (1) TMI 785 - AT - Income Tax

Enhancement of income - no notice issued - Powers of CIT(A)- Held that - Ld CIT(A) has proposed the enhancement by way of order sheet noting dated 06.11.2003 by asking various details. Further it is not the case of the assessee that the Ld CIT(A) has not given reasonable opportunity of being heard of showing cause against such enhancement as contemplated in sec. 251(2) of the Act. Hence, we do not find any merit in the said contention and accordingly reject the same. - Decided against assessee. Income recognition - power of enhancement of Ld CIT(A) - whether the income due from M/s India Value Investment Ltd is a separate source of income - income due from M/s India value investment fund also relates to Investment Advisory fees - Held that - According to Ld A.R, the assessee has reached settlement with M/s India Value Investment Ltd with regard to the Investment Advisory fee received from them on 09-04-2009 and the amount due from them was settled at GBP 12,14,022. According to Ld A.R, the assessee has offered the rupee equivalent of the above said amount in AY 2010-11. Since the assessee has settled the amount at GBP 12,14,022, we are of the view, of course subject to verification, that the income that should be considered in the hands of the assessee should not exceed the rupee equivalent of GBP 12,14,022 as per the Settlement agreement. As already noticed that the Ld CIT(A) took the view to assess the entire amount of income in AY 2009-10 only for the reason that the assessee has failed to furnish the details. The submissions of the assessee that the settlement was reached on 09-04-2009 and it has offered the entire amount of rupee equivalent of GBP 12,14,022 in AY 2010-11 are new facts that were not available before Ld CIT(A). Hence, in our view, the questions of year of accrual and/or year of assessment are to be considered afresh at the end of the Ld CIT(A) in the light of new facts brought on record by the assessee. Thus set aside the order of Ld CIT(A) with regard to the assessment of GBP 14,78,484 or as the case may be GBP 12,14,022 and restore the same to his file with the direction to examine about the assessability of the same afresh, i.e., year of accrual and/or year of assessment, in the light of the facts surrounding the same and accordingly decide the issue in accordance with the law. - Decided in favour of assessee for statistical puposes. Penalty u/s 271(1)(c) - Held that - As we have restored the matters relating to the year of accrual and/or assessment of the income due from M/s India Value Investment Ltd to the file of the Ld CIT(A). Hence we are of the view that the issue relating to the penalty also requires to be set aside to his file.- Decided in favour of assessee for statistical puposes.

Summary

Issues Involved:

1. Enhancement of income by Ld CIT(A).
2. Assessment of Investment Advisory Fees due from M/s India Value Investment Ltd.
3. Year of accrual and/or assessment of income.
4. Imposition of penalty under section 271(1)(c) of the Act.

Detailed Analysis:

1. Enhancement of Income by Ld CIT(A):

The assessee contested the enhancement of income by Ld CIT(A) without giving notice of enhancement. It was argued that the enhancement was proposed via order sheet noting dated 06.11.2003, and the assessee was given a reasonable opportunity to be heard as per section 251(2) of the Act. The Tribunal found no merit in the assessee's contention and rejected it.

2. Assessment of Investment Advisory Fees Due from M/s India Value Investment Ltd:

The Ld CIT(A) enhanced the income by GBP 14,78,484 (Rs. 10.07 crores) based on Note no.16 in the Annual report, which the assessee had not recognized due to a dispute. The Tribunal examined whether the Ld CIT(A) could enhance income by considering a new source of income not examined by the assessing officer. The Tribunal concluded that the income from M/s India Value Investment Ltd was not a separate source but part of the "Investment Advisory Fees" already considered by the assessing officer. Thus, the Ld CIT(A) was within his power to enhance the income.

3. Year of Accrual and/or Assessment of Income:

The assessee argued that the settlement with M/s India Value Investment Ltd was reached on 09.04.2009, reducing the amount to GBP 12,14,022, which was offered as income in AY 2010-11. The Tribunal noted that these facts were not available before Ld CIT(A) and required fresh consideration. The Tribunal set aside the order of Ld CIT(A) and directed him to re-examine the year of accrual and/or assessment of the income in light of new facts and decide accordingly.

4. Imposition of Penalty under Section 271(1)(c) of the Act:

The assessee contended that the penalty should be deleted as there was no concealment or furnishing of inaccurate particulars, and the income was offered in AY 2010-11. The Tribunal, having restored the issue of the year of accrual/assessment to Ld CIT(A), also set aside the penalty order. The Tribunal directed Ld CIT(A) to reconsider the penalty afresh based on the submissions and case law presented by the assessee.

Conclusion:

The Tribunal set aside the orders of Ld CIT(A) regarding the enhancement of income and penalty imposition, directing a fresh examination of the year of accrual and/or assessment of the income due from M/s India Value Investment Ltd. All appeals were treated as allowed for statistical purposes.