[aaykarbhavan] Fw: [Gzb_CA Group -CA. VINAY MITTAL] Delhi high court approving ITAT order where revenue's plea to set aside the matter lacking foundational basis was rejected; Calcutta high court reversing ITAT order on cash credit explaining assessee's onus to substantial the explanations; Commission expense; Madras high court holding 12AA rightly rejected for limited purview of trust's activities; set aside assessment in WRit

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From: Kapil Goel <advocatekapilgoel@gmail.com>
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Sent: Sunday, 5 May 2013 8:23 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Delhi high court approving ITAT order where revenue's plea to set aside the matter lacking foundational basis was rejected; Calcutta high court reversing ITAT order on cash credit explaining assessee's onus to substantial the explanations; Commission expense; Madras high court holding 12AA rightly rejected for limited purview of trust's activities; set aside assessment in WRit

 

Included in this update:

 

a)      Calcutta High Court in case of Arati Janaga (Section 68 Rev Fav Duty of assessee/taxpayer to substantiate ORAL plea in matter of "on behalf money possessed by assessee" etc;

b)      Madras High Court in case of Gowri Ashram being dedicated for a particular community (rev fav order)  ITAT rightly held assessee is not having charitable purpose (section 2(15))

c)      Madras high court "Writ assessment without giving assessee proper notice : SET aside;

d)      Delhi High Court boundary and territory of ITAT to visit the area left untouched by AO (held not there as ITAT cannot give finding in revenue's appeal on a plea lacking foundational basis) SC NTPC distinguished

e)      Calcutta high Court ass fav commission expense ass fav order section 37 & explanation thereto

 

 

IN THE HIGH COURT AT CALCU TTA SMT. ARATI JANAGA No. 2088 of 2012

ITAT No. 186 of 2012 The questions for consideration are :

(a) Whether the decision to delete addition of a sum of Rs.4,74,681/- is perverse ?

(b) Whether the decision to delete addition of a sum of Rs.42,78,717/- is  perverse ? Both the questions have common factual background in the sense that the

assessee sought to explain that the sum of Rs.42,78,717/- appearing to be receivable by

her is really receivable by her for and on account of suppliers of fish also known as

trawler owners and the sum of Rs.4,74,681/- appearing to have been advanced by the

assessee was really advanced by the Paikers, namely, the buyers of the fish. Both the

explanations were held unsatisfactory by the Assessing Officer. The assessee in the present case was directed to explain as to why should the

sum of Rs.42,78,717/- and the sum of Rs.4,74,681/- be not added to her income. The

assessee contented herself by furnishing a list indicating names of sellers and buyers

who, according to her, had made the investment. She did not, however, produce any

supporting material in favour thereof. The learned Advocate for the assessee contended

that the Assessing Officer should have called upon those persons to verify the statement of the assessee. We are unable to accept this submission. It is for the assessee even

according to the judgment noticed above to produce all relevant materials in support of

the claims and contentions put forward by it. Until prima facie evidence in support of the

claim or contention is adduced, the onus does not shift to the Assessing Officer to

disprove the same. The assessee, by merely furnishing a list, did not discharge her

burden. Acceding to the contention of the learned counsel would amount to laying down

a rule that it is for the Revenue to find out whether the assessee has or may have an

explanation to offer. When an explanation is called for from the assessee, he or she must

take care to substantiate her explanation by such supporting evidence as may be in his

or her power to produce. Who are the buyers; how or in what circumstances did they

advance the sum of Rs.4,74,681/- and who are the sellers ? How and in what

circumstances did the sum of Rs.42,78,717/- become payable to them was in the

special knowledge of the assessee. It was, therefore, her obligation to disclose cogent

evidence in that regard. She claims to be a commission agent. The column 5 of GTI-1

provides for deduction of commission. Therefore it should not have been difficult for the

assessee to disclose the relevant evidence about the transactions allegedly made by the

assessee on behalf of suppliers of fish or the trawler owners. Her failure to do so even

prima facie amounts to no explanation at all. Reference in this regard may be made to

the judgment in the case of Collector of Customs vs. D. Bhoormal, reported in 1974(2)

SCC 544 wherein the Apex Court opined that "The other cardinal principle having an

important bearing on the incidence of burden of proof is that efficiency and weight of the

evidence is to be considered according to the proof which it was in the power of one side

to prove, and in the power of other to have contradicted." Can it be said that it was not

in the power of the assessee to prove the aforesaid facts? The situation before us

is only consistent with the hypothesis that money was not payable to any one nor was

the money receivable on account of others, and therefore, the assessee did not maintain

any books of accounts with regard thereto. We are, as such, of the opinion that the learned Tribunal erred in not realizing that the assessee had offered no explanation at all. Both the questions formulated above  are as such answered in the affirmative. The appeal is allowed in favour of the Revenue

 

 

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:     29.04.2013 Gowri Ashram T.C.(A) No.91 of 2013

 

 

Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal is right in law in coming to the conclusion that the Appellant Society is not entitled for Registration under Section 12AA of the Income Tax Act?

 

. Learned counsel for the revenue took us through Clause 18 of the Scheme award and submitted that the objects of the assessee society is to provide accommodation and facility for performance of marriage functions of the members of a particular community and similar auspicious functions by other Hindus and the said activity cannot be said to be charitable purpose within the meaning of Section 2(15) of the Act and the Tribunal rightly dismissed the Appeal.  9. Both Commissioner of Income-tax as well as the Tribunal recorded a concurrent finding that the objects and activities of the assessee society  to provide accommodation and facilities for purpose of marriages and other auspicious functions of a particular community  is not covered by the definition of charitable purpose within the meaning of Section 2(15) of the Income-tax Act.

10. The contention of the appellant is that the Tribunal erroneously noted Clause 18 in the Scheme Award, which relates to the running of the Choultry alone and erroneously reached the conclusion that the objects are targeted towards a particular choultry alone. There is no merit in the contention of the appellant that Clause 18 of the Scheme award relates only to use of the choultry. As pointed out earlier, in paragraph No.6, as per clause 1 and 2(1) of the Scheme award, the word choultry,wherever it occurs in the Scheme shall mean and include the choultry known as Gowri Ashram.i.e., Choultry and assessee Gowri Ashram are one and the same and therefore it cannot be said that the Tribunal erred in referring to Clause 18 in the Scheme award.

 

12. In the result, the appeal is dismissed. However, it is open to the assessee society to renew its application as and when its expanded objects of the Society are approved by the competent Court.

 

 

 

M/s.Green Power Realtors Private Ltd., IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.4.2013

 

 

8. From the facts pleaded and on a perusal of the abovesaid written instructions, it is clear that as there was no timely service of notice, dated 7.3.2013 about the hearing dated 14.3.2013 and due to over-sight, it was stated to have been despatched only on 16.3.2013 by the respondent, i.e. after the date of hearing, and therefore, there was denial of opportunity of hearing to the petitioner before passing the impugned order, resulting in violation of principles of natural justice. It requires under law that the assessee should be heard in the matter before concluding the proceedings and therefore, the authority is bound to afford an opportunity of hearing to the assessee in accordance with law, before proceeding to pass an order. Hence, the impugned order passed by the respondent cannot be sustained and the same is liable to be set aside and the matter should be remanded back to the respondent for fresh consideration

 

RAJARANI EXPORTS PVT. LTD. IN THE HIGH COURT AT CALCUTTA ITAT No. 49 of 2013 Date : 24th April, 2013 The question suggested by the Revenue is as follows:

" Whether on the facts and in the circumstances of the case the Tribunal was

justified in law to dismiss the appeal of the revenue by confirming the order of the

CIT(A) on account of disallowing the commission payments in view of Explanation to

Section 37(1) of the said Act." Aggrieved by the order of the CIT(A), the Revenue preferred an appeal

before the Tribunal. The Tribunal dismissed the appeal holding, inter alia, as follows:

" The assessee has made payment for commission and has been rendered services in consideration of the same. As a matter of fact, it is not even revenue's case that no services have been rendered at all. The fact that services have been rendered by a party other than the agent to whom commission is paid is wholly immaterial so far as deductibility in the hands of the assessee is concerned. As for the position that the payment was highly excessive vis-à-vis the local

costs, even if that be so, that aspect of the matter does not affect the deductibility in the

hands of the assessee either. The assessee is concerned with commercial expediency

of the said payment and not with what are the actual costs incurred in rendering the

services for which the payment is made. As we have seen earlier in this order, from the

extracts of the Volker Committee report itself, it was absolutely necessary for the

assessee to make the impugned payments and, in any event, the commercial expediency of these payments has not even been called into question by the Assessing Officer. The case of the revenue is confined to invoking the Explanation to Section 37(1).

The objections to the said commission payments are, therefore, not sustainable in law, so far as deductibility under section 39(1) is concerned." The department has come up in appeal. Mrs. Smita Das De, learned advocate appearing in support of the appeal, could not satisfy us as to why were the  Aggrieved by the order of the CIT(A), the Revenue preferred an appeal

before the Tribunal. The Tribunal dismissed the appeal holding, inter alia, as follows:

" The assessee has made payment for commission and has been

rendered services in consideration of the same. As a matter of fact, it is not even

revenue's case that no services have been rendered at all. The fact that services have

been rendered by a party other than the agent to whom commission is paid is wholly

immaterial so far as deductibility in the hands of the assessee is concerned.

As for the position that the payment was highly excessive vis-à-vis the local

costs, even if that be so, that aspect of the matter does not affect the deductibility in the

hands of the assessee either. The assessee is concerned with commercial expediency

of the said payment and not with what are the actual costs incurred in rendering the

services for which the payment is made. As we have seen earlier in this order, from the

extracts of the Volker Committee report itself, it was absolutely necessary for the

assessee to make the impugned payments and, in any event, the commercial

expediency of these payments has not even been called into question by the Assessing

Officer. The case of the revenue is confined to invoking the Explanation to Section

37(1). The objections to the said commission payments are, therefore, not

sustainable in law, so far as deductibility under section 39(1) is concerned."

The department has come up in appeal. Mrs. Smita Das De, learned advocate appearing in support of the appeal, could not satisfy us as to why were the  findings indicated above as recorded by the CIT(A) and the Tribunal incorrect either on fact or in law. There is, as such, no reason why the appeal should be entertained.

 

 

 

 

THE HIGH COURT OF DELHI AT NEWDELHI

% Judgment delivered on: 30.04.2013

+ ITA 198/2013NIRMAL BANSAL Mr Sabharwal, the learned counsel appearing on behalf of the

appellant / revenue submitted that the Tribunal had misdirected itself in law

in not considering the question as to whether the land was agricultural in

nature or not. He submitted that the issue before the Tribunal was with

regard to the addition of Rs. 2,34,70,697/- which had been made by the

assessing officer on account of short term capital gain in respect of sale of

different plots of land at village Hayatpur, district Gurgaon, by the

respondent/assessee. The Commissioner of Income Tax (Appeals), had

deleted the said addition. It may be pointed out that in the assessing

officer's order the only reason as to why the assessing officer had not

granted the exemption to the respondents on account of the provisions of

section 2 (14)(iii) of the Income-tax Act, 1961, was because the assessing

officer had taken the view that the possibility of there being some other

'shortest distance' between the area where the plots of land  were situated

and the municipal limits of Gurgaon so as to rule out the possibility that the

lands were situated beyond 8 kms from the municipal limits. The Income Tax Appellate Tribunal dismissed the appeals filed by

the revenue and upheld the deletion made by the Commissioner of Income

Tax (Appeals). The Tribunal held that the view taken by the CIT (Appeals)

that the lands in question were situated beyond 8 kms from the outer limits

of the municipal corporation of Gurgaon, could not be faulted. Mr Sabharwal submitted that while

the departmental representative had raised the issue with regard to the lands

not being agricultural in nature, the Tribunal had not gone into this aspect

of the matter at all and, therefore, to that extent the twin conditions

stipulated in section 2(14)(iii) had not been satisfied. The point to be noted is

that the question of law which could be raised before the Tribunal would

have to arise from the facts as found by the income-tax authorities. In other

words, there must be some factual basis on which the question of law is

raised before the Tribunal. The relevant facts must be on record. In the

present case the assessing officer had not doubted the fact that the lands in

question were agricultural in nature. There is no foundational fact that lands were not agricultural in nature. As such the plea raised by the

departmental representative before the Tribunal could not be gone into by

the Tribunal as there was no foundational basis for the same. Clearly, the

decision in NTPC Ltd. (supra) would be of no avail to the revenue in the

facts of the present case.

 

 

 

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