2017 (5) TMI 170 - HC - Income Tax

High Court clarifies Section 142A interpretation for 2003-04 AY

Commissioner of Income Tax Versus M/s Avadh Educational Society

Commissioner of Income Tax Versus M/s Avadh Educational Society - TMI Issues:1. Interpretation of Section 142A of the Income Tax Act, 19612. Validity of invoking reference under sections 131(1)(a) and 142(2)(a) of the Act3. Contravention of provisions of section 13(1)(c) and 13(3) of the Income Tax Act, 1961Interpretation of Section 142A of the Income Tax Act, 1961:The High Court considered the appeal arising from a judgment passed by the Income Tax Appellate Tribunal for the Assessment Year 2003-04. The primary issue revolved around the interpretation of Section 142A of the Income Tax Act, 1961. The appellant contended that the Tribunal erred in not appreciating the provisions of Section 142A correctly, specifically regarding the preconditions for invoking the section. The appellant argued that there were no stipulated preconditions, such as the Assessing Officer having to invoke Section 145 for a reference to be made to the Valuation Officer. However, the Court did not delve into this issue further as the appeal was pressed only in relation to an additional substantial question of law.Validity of invoking reference under sections 131(1)(a) and 142(2)(a) of the Act:The appellant raised a question regarding the validity of dismissing the appeal of the revenue based on the grounds that the Assessing Officer must first reject the books of accounts of the assessee before invoking reference under sections 131(1)(a) and 142(2)(a) of the Act. The appellant argued that the Tribunal's order was erroneous as it referred to a non-existent section of the Income Tax Act, i.e., 142(2)(a). However, the Court did not address this issue extensively as the appeal was primarily focused on a different question.Contravention of provisions of section 13(1)(c) and 13(3) of the Income Tax Act, 1961:The appellant emphasized the contravention of provisions of section 13(1)(c) and 13(3) of the Income Tax Act, 1961, specifically concerning a loan given without interest to a person referred to in section 13(3). The appellant argued that this act contravened section 13(2)(a) of the Income Tax Act, 1961. The Court considered this issue and referred to a previous judgment where a similar question for a different assessment year was answered in favor of the Revenue and against the Assessee. The Court, following the previous decision, held that the facts and circumstances were identical, and therefore, answered the additional question in favor of the appellant and against the Assessee, ultimately allowing the appeal to that extent.