S. 260A: Appeal – High Court –Restoration of appeal- Low Tax Effect Circular-Very strange request by the Dept is an attempt to get over the binding Circulars. We shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue-Appeal of revenue was dismissed .[ S.119 ]
S. 68: Cash credits- Accommodation entries- Peak credit-In order to avail of the theory of “peak credit”, the assessee has to make a clean breast of all facts. He has to explain each of the sources of the deposits and the corresponding destination of the payment without squaring them off. The ITAT cannot proceed merely on the basis of accountancy and overlook the settled legal position-Addition of peak credit under S.68 is held to be justified. .[ S.145 ]
S.37(1):Business expenditure-real income theory-application of income-diversion of income by overriding title- Distributable Surplus paid is application of income and not allowable as business expenditure- Payment made did not amount to “diversion of income at source by overriding title” – Income from business of manufacture and sale of Liquor will be taxable in the hands of the Assessee by applying the principle of real income theory-Appeal of revenue was allowed . [ S.4, 28(i), 29,145 ]
Co-operative Housing Society -A co-operative housing Society is not expected to indulge into profiteering business from its members. Transfer fees cannot be charged under the pretext of “voluntary donation”.-Amount which is accepted above permissible limits towards transfer fee is illegal and taxable as income in the hands of the society- Amount collected was directed to be returned with simple interest @ 8%.
S. 276C : Offences and prosecutions – Wilful attempt to evade tax – Pendency of appeal before CIT(A)-Stay – Alleged bogus purchases -During pendency of stay the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceeded.[S.246 ]
S. 272A : Penalty – Failure to answer questions – Sign statements – Furnish information –When conduct of the assessee is not bonafide , levy of penalty for non compliance of S.131(IA) is held to be valid.[S. 131(1), 131(IA), 133(6)]
S. 271(1)(c) Penalty- Concealment-Appeal-If appeals with reference to the quantum proceedings have been admitted by the Court on substantial questions of law, it means that there were debatable and arguable questions raised and levy of penalty is not justified . Penalty also cannot be levied if the claim was as per judicial precedents prevalent at the time of filing the ROI. Also, there must be a finding that the details supplied by the assessee in its return were incorrect or erroneous or false.
S. 263 : Commissioner – Revision of orders prejudicial to revenue Deduction at source – Commission or brokerage -The incentive paid by the dealers to sub-dealers cannot be equated with commission – Not liable to deduct tax at source- Revision is held to be bad in law .[ S.194H ]
S. 263 : Commissioner – Revision of orders prejudicial to revenue –It is obligates the CIT to give the assessee an opportunity of being heard before passing of order-While the CIT is entitled to consider a point which is not stated in the show-cause notice, he cannot pass the revision order unless the assessee is given the opportunity of being heard- Such an order is untenable in the eyes of law .
S. 206C : Collection at source – Trading -Limitation-Order passed beyond limit of four years is bad in law -Though Section does not impose any limitation period for the AO to hold the assessee to be in default for collection of tax at source, a reasonable time limit of four years has to be read into the statute- Orders passed after this period are beyond the limitation and are void-The fact that the Dept became aware of the default later is irrelevant. The fact that the assessee admitted his liability is also irrelevant- Assessment is held to be bad in law .[ S.191, 201 ]