9911796707
TMI Blog2001 (6) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) has further erred in holding that the assessee is maintaining its accounts on the basis of mixed system of accounting and it has correctly considered the interest income in the year of receipt and the Assessing Officer was not justified in assessing the interest income on accrual basis. 3.The ld. CIT(A) has also erred in holding that the interest earned from bank and allocated to the members is not the income of the assessee and it is allowable as deduction out of interest income earned by the assessee society. 4.The ld. CIT(A) has also erred in holding that the assessee society is entitled to claim expenses against the income from other source i.e., the interest income. 5.The ld. CIT(A) has also erred in not treating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 148 of the Income-tax Act, on 23-7-1992. 3. It is recorded in the assessment order that assessee did not submit return in response to above notice. The assessee further failed to comply with the notices issued under section 142(1) of the Income-tax Act. The details of such notices are recorded by the Assessing Officer as also by ld. CIT(A). It is recorded by the Assessing Officer that ultimately returns were filed on 11-11-1992 declaring nil or nominal income. The returns were also accompanied by balance sheets and audit reports. 4. The Assessing Officer in the light of his findings that a assessee failed to comply with the notices issued under section 142(1) and 143(2) of the Act, proceeded to make ex parte assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to come from Delhi. This reasonable request was turned down and ex parte proceedings taken although the order was passed only on 29-12-1992. 7. The assessee further stated that it was following receipt system in respect of interest received from bank and had accounted the same in the books of account on receipt basis. This was evident from the accounts filed before the Assessing Officer. The interest was claimed to be further not income of the housing society as the same was liable to be paid to its members under the rules of the society and the agreements. 8. The ld. CIT(A) after considering the facts and circumstances of the case, did not decide the issue whether ex parte proceedings under section 144 were justified or not. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e returns were filed only at the fag end on 11-11-1992. In spite of repeated opportunities evidence in support of the returns was not produced. The ld. CIT(A) was in error in holding that the assessee was following mixed system of accounting and interest being accounted for on receipt basis. There was no evidence to support such a finding. The Assessing Officer had rightly held that interest was to be taxed on mercantile/accrual basis. The interest allegedly paid to the members could not be allowed as a deduction in the absence of books of account. In fact, no deduction could be allowed when books were not produced. In the alternative, she submitted that in case ex parte assessments under section 144 were bad in law, the ld. CIT(A) should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest received on FDR and assessed by the Assessing Officer is as under : Asstt. Shown by Taken by AO Allocated to Year assessee on accrual Members basis 1988-89 42914.71 2,56,722 6,00,000 1989-90 636950.71 4,85,430 6,00,000 1991-92 503766.00 3,23,540 4,96,220 It is quite evident from the above figures that the assessee was showing interest income on receipt basis and that was the method of accounting shown to be regularly followed by the assessee in the three years under consideration. The assessee had even shown more interest on receipt ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest allocated to members and other expenditure were to be allowed and if those expenses are taken into account, there is no positive income in the hands of the assessee. On the basis of facts and material available on record, I do not see any legal infirmity in the impugned order of the ld. CIT(A). I confirm the same. 13. Before closing, it may be stated that it is not the case of the Revenue that the CIT(A) took additional evidence in violation of rule 46A of the Income-tax Rules and, therefore, her order was vitiated. No such ground has been raised in the name of appeal or in submissions advanced before me during the course of hearing. With the above observations, I agree with the ld. CIT(A) and confirm her action. 14. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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