TaxTMI 
TaxTMI 
2015 (7) TMI 845
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....(1) of the Act. Therefore the AO proceeded to complete the assessment under section 144A of the Act whereby the income of the assessee was determined at Nil. 3. Similarly, in A.Y. 2006-07 assessee declared loss of Rs. 2,71,93,700/-. Assessment was completed under section 144 of the Act wherein the expenses claimed by the assessee were disallowed and determined the loss at Nil; in other words the total income of the assessee was determined at Nil. 4. It may be noticed that the assessee received a sum of Rs. 5,17,74,750/- and Rs. 2,02,97,000/- for the assessment years 2005-06 and 2006-07 respectively as entrance fees from the members. According to the assessee company the amount received from the Members as entrance fees is a capital receipt and, therefore, not liable to tax since it is a onetime payment made by the members. It was also submitted that the entrance fees is accounted for in the year in which the members are elected and the same is credited to the general Reserve; hence it does not have the character of revenue receipt. In Form 3CD, annexed to the return of income, the auditors have mentioned that the assessee treated it as capital receipt. During the course of procee....
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....allowed as unexplained investments, undisclosed receipts and the assessment order is also erroneous in so far as prejudicial to the interest of revenue on this account. (ii) Further, even though the assessee did not comply with the notices issued by the department, there has been no inquiry on the part of AO independently for verification of various expenses and claims of assessee. The expenses claimed are to the extent of Rs. 44,78,73,6961- as per P & L A/c. Such lack of inquiry also made the assessment order erroneous in so far as prejudicial to the interest of revenue. (iii) In the assessment order, the AO mentioned that all the expenses except those pertaining to computation of Fringe Benefit Tax are disallowed. The expenses claimed as per P & L A/c are Rs. 44,78,73,696/-. Out of these expenses only Rs. 1,29,15,512/- pertain to computation of Fringe Benefit Tax. However, the final assessed income is nil. Therefore, the expenses claimed have not been disallowed in the computation, except to the extent of returned loss. (iv) In the schedule 2 of the return, the assessee has set off long term capital loss against short term capital gains. No verification of these claims have....
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....the appeals were taken up by the learned CIT(A) for hearing. It deserves to be noticed that by the time the matter was taken up for hearing the original assessment order was set aside by the Revisional Authority in exercise of the powers vested in him under section 263 of the Act. Though in the orders passed under section 144 of the Act there is no addition referable to entrance fees received from members, the learned CIT(A) made brief mention about it while disposing of the appeals. Therefore the assessee preferred appeals against the orders passed by the AO under section 144 contending, inter alia, that during the course of assessment proceedings under section 144 of the Act the AO having not added any amount on account of annual subscription, etc. it is not the subject matter of appeal and thus the CIT(A) is not justified in making a mention about the issues arising out of the orders passed under section 143(3) r.w.s. 263 of the Act. In the opinion of the assessee the assessments made under section 144 of the Act no longer survive since the assessments were set aside by the CIT and there is no need for the CIT(A) to make any mention with regard to the additions made under sectio....
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....ifically dealt with by the learned Commissioner upon putting it up to the assessee; in short the order passed by the AO outside the ambit of the issues mentioned in the show cause notice, deserve to be considered as illegal and bad in law. In other words before a Commissioner passes an order he should give the assessee an opportunity of being heard and thereafter record, prima facie, that the assessment order is erroneous in so far as it is prejudicial to the interests of the Revenue. The requirement of giving the assessee an opportunity of being heard is for the simple reason that the assessee may be able to refute, prima facie, the plea of the Commissioner which might have been formed on examination of the record. When the Commissioner's powers are limited to the issues which were put to the assessee, the AO, under guise of framing fresh assessment, cannot enlarge the scope of revisionery proceedings. In other words, the AO, while making assessment under section 143(3) r.w.s. 263 of the Act, should exercise the powers in relation to the items forming part of the show cause notice issued by the Commissioner and considered in the proceedings under section 263 of the Act. 12. In th....
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....as no jurisdiction to touch upon a fresh issue which does not emanate from the notice issued by the Commissioner under section 263 of the Act, while making assessment under section 143(3) r.w.s. 263 of the Act. In the instant case the AO had not treated the entrance fees as revenue receipt despite the fact that the assessee, in the audit report annexed to the return of income, furnished the details with regard to the receipt of entrance fees from members of the club and the mode of recording the same in the books of account. Such being the case it could not have been considered in the proceedings under section 143(3) r.w.s. 263 of the Act. We, therefore, hold that the addition, towards entrance fees, made by the AO, in the proceedings under section 143(3) r.w.s. 263, is beyond the jurisdiction of the AO and therefore deserves to be deleted and we direct the AO accordingly. Though the learned CIT(A) has disposed of the appeals on merits, by following the decision of the Hon'ble Bombay High Court in the case of Diners Business Services P. Ltd. 263 ITR 1, we need not have to go into the nature of the entrance fees at this stage since the same cannot be subject matter of considerat....