1990 (6) TMI 26 - HC - Income Tax

High Court rules against assessee on sec 80J relief, emphasizes conditions must be met for deduction

Amolakchand Kewalchand Versus Commissioner Of Income-Tax

Amolakchand Kewalchand Versus Commissioner Of Income-Tax - [1991] 188 ITR 127, 106 CTR 118 Issues:Interpretation of Section 80J of the Income-tax Act, 1961 regarding deduction eligibility.Validity of rectification proceedings under Section 154 of the Act for relief under Section 80J.Analysis:The judgment by the High Court of Madhya Pradesh involved a case where the Tribunal was directed to state a case under section 256(2) of the Income-tax Act, 1961, regarding the grant of relief to an assessee under section 80J. The assessee had not initially claimed deduction under section 80J during assessment years 1969-70 to 1972-73. Subsequently, the Income-tax Officer rectified the assessment orders to allow the deductions claimed by the assessee. However, the Commissioner of Income-tax contended that as there was no initial claim by the assessee, there was no mistake apparent from the records justifying rectification under section 154. The Tribunal upheld this view, stating that the assessee did not provide sufficient evidence to satisfy the conditions of section 80J(4) in their returns. The High Court agreed, emphasizing that unless the conditions under section 80J(4) are fulfilled, an assessee is not entitled to any deduction under section 80J.The High Court noted that the assessee had made a claim for deduction under section 80J but failed to furnish details regarding the fulfillment of conditions specified in section 80J(4). The court agreed with the Tribunal that the profit and loss accounts and balance-sheets did not demonstrate compliance with the requisite conditions. The court rejected the argument that the Income-tax Officer should have requested the necessary details from the assessee, emphasizing that the onus was on the assessee to provide such information. It was concluded that the failure of the Income-tax Officer to call for the requisite details did not constitute an error justifying rectification under section 154. The rectification orders were found to proceed on the assumption that all conditions under section 80J(4) were met by the assessee, without proper verification.In light of the above analysis, the High Court ruled in favor of the Revenue and against the assessee, stating that the Income-tax Officer was not correct in law in granting relief to the assessee under section 80J in the rectification proceedings under section 154. The court made no order as to the costs of the reference, concluding the judgment.