2006 (10) TMI 502 - HC - Income Tax

Assessing authority overstepped jurisdiction by reopening Tribunal's decision, High Court dismisses appeals.

The High Court dismissed both appeals, emphasizing that the assessing authority's inquiry should have been limited to verifying the genuineness of the ... - Issues involved: Appeal u/s 260A of the Income-tax Act, 1961 for assessment years 1974-75 and 1977-78 regarding disallowance of incentive bonus claimed by the assessee.Summary:Issue 1: Disallowance of incentive bonus claimed by the assesseeThe assessing authority disallowed the claim of expenditure in respect of incentive bonus. The Tribunal directed the assessing authority to examine the genuineness of the payments made by the assessee. The Deputy Commissioner of Income-tax found the payments to be genuine but disallowed the claim under section 36(1)(ii) of the Act. The Commissioner of Income-tax (Appeals) allowed the appeal and upheld the deduction claim. The Tribunal affirmed that the assessing authority's inquiry should focus solely on verifying whether the payments were actually made by the assessee. The High Court held that the assessing authority exceeded its jurisdiction by reopening the matter decided in favor of the assessee by the Tribunal. It was concluded that no substantial question of law arose from the Tribunal's order, leading to the dismissal of both appeals.In conclusion, the High Court dismissed both appeals, emphasizing that the assessing authority's inquiry should have been limited to verifying the genuineness of the payments made by the assessee, as directed by the Tribunal.