9911796707
TMI Blog2016 (11) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... eously. Since we have already recorded that there is no error in the order of the Assessing Officer, the Commissioner of Income Tax cannot assume jurisdiction under section 263 of the Act. Accordingly, we quash the order of the Commissioner of Income Tax passed under section 263 of the Act. - Decided in favour of assessee. - ITA No. 525/Chd/2014 - - - Dated:- 13-4-2016 - Shri Sanjay Garg, Judicial Member And Ms. Rano Jain, Accountant Member For the Appellant : Shri Ashwani Kumar For the Respondent : Shri Sushil Kumar ORDER Per Rano Jain, A.M. The appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax(Central), Gurgaon dated 27.3.2014 for assessment year 2010-11, passed under section 263 of the Income Tax Act, 1961 (in short 'the Act'). 2. Briefly, the facts of the case are that the assessee filed return of income for the relevant assessment year declaring total income of ₹ 6,79,273/-. The assessment under section 143(3) of the Act was completed as on 23.12.2011. Later on, on perusal of the record, the Commissioner of Income Tax formed an opinion that the order passed by the Assessing Officer is erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Mrs.Promila Jain Vs. DCIT in ia.1449/Chd/2010 dated 25.9.2012 and Liberty Plywood Pvt. Ltd. Vs. ACIT in ITA No.727/Chd/2012 dated 17.12.2012. The Commissioner of Income Tax further distinguished the judgment of Karnataka High Court in the case of CIT Vs. S.K. Srigiri Bros. (2008) 298 ITR 13 (Kar). Reliance was placed by the assessee on this judgment stating that in the said judgment, the finding of fact was recorded that the assessee received additional income from business only and, therefore, it was entitled to deduction on account of remuneration paid to the partners. The Commissioner of Income Tax was of the view that in the present case no such finding has been recorded and no evidence was furnished before the Assessing Officer in support of the claim that the surrendered income partake the character of business income. In view of all this, he held the assessment order passed under section 143(3) dated 23.12.2011 to be erroneous and prejudicial to the interest of the Revenue in so far as the issue of allowability of remuneration to partners out of surrendered income is concerned. He further directed the Assessing Officer to recompute the remuneration to the partners by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our letter is reproduced as under:- Due to some loose papers, hooks etc found and difference in stocks found during the course of survey, I am unable to reconcile the issue at this moment, I hereby surrender ₹ 16 lacs which was siphoned out of business on account of discrepancies in the stocks and other unexplained documents and to cover others etc on behalf of the firm In this regard, please furnish the following information. (i) Please furnish details of total disclosure made by you. Document wise/assets wise/investment wise. (ii) Please furnish details of total disclosure made by you in your individual hand and in the hand of firm/company/trust in which you are a partner/director/member. (iii) Please substantiate the manner in which the additional undisclosed was earned by you. (iv) Please mention amount of the taxes paid on additional undisclosed income. 6. The reply of the said questionnaire was given by the assessee vide its letter dated 15.11.2011, whereby at Point No.10(c) it was clarified that the income surrendered in the hands of the firm was earned out of business of the assessee only. In another letter dated 19.12.2011 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings, we are of the view that the Assessing Officer has applied his mind to the issue in question and only then he decided to treat the surrendered income as business income. Time and again in the letters submitted by the assessee before the Assessing Officer, it stuck to the stand that the surrendered income was its business income. The Assessing Officer was aware of this stand of the assessee and only then he allowed it the deduction available out of business income. With these plethora of evi dences on record, we cannot just brush aside the fact that the Assessing Officer without applyi ng his mind has allo wed the assessee deduction under secti on 40(b) of the Act. Further, we see that the Commissioner of Income Tax while holding the order of the Assessing Officer to be erroneous and prejudicial to the interest of the Revenue, has placed heavy reliance on the judgment of the Gujarat High Court in the case of Fakir Mohmmed Haji Hasan (supra). Reliance was placed by him for the proposition that the nature of incomes assessed under sections 69, 69A, 69B and 69C of the Act are to be treated as deemed incomes and no benefit, which is available out of business income ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains of business or profession, or capital gains, nor is it income from other sources because the provisions of Sections 69, 69A, 69B and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head Income from other sources . Therefore, the corresponding deductions which are applicable to the incomes under any of these various heads, will not be attracted in the case of deemed incomes which are covered under the provisions of Sections 69, 69A, 69B and 69C of the Act in view of the scheme of those provisions. 9. On reading of the very first paragraph of the judgment of Gujarat High Court, we see that the very first impression of the Hon'ble High Court as regards the nature of income under sections 69, 69A, 69B and 69C of the Act is that the moment when a satisfactory explanation is given about the nature and source of these incomes, source would stand disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act of the surrendered income being business income, specifically in his order, we understand that the Assessing Officer was satisfied to the effect that the income surrendered pertained to the business of the assessee. In view of this, we see that the Assessing Officer had made detailed enquiries and formed an opinion which was not illegal and his opinion is based on material and evidences on record. This is not the case of any error having crept in the order of the Assessing Officer, therefore, the Commissioner of Income Tax was not right in holding the order of the Assessing Officer to be erroneous. For assuming jurisdiction under section 263 of the Act, twin conditions of the order being erroneous as well prejudicial to the interest of the Revenue are to be applied simultaneously. Since we have already recorded that there is no error in the order of the Assessing Officer, the Commissioner of Income Tax cannot assume jurisdiction under section 263 of the Act. Accordingly, we quash the order of the Commissioner of Income Tax passed under section 263 of the Act. 11. Before parting, we would like to deal with the case laws relied on by the learned D.R. The first order of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
