TaxTMI 
TaxTMI 
2014 (9) TMI 1185
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng salary paid to Mrs. Rashmi Sharma. 2) b)That the Ld. CIT(A) has grossly erred in law in not considering the contention of the Appellant that the Ld. Assessing officer has not complied with the conditions required for invoking provisions of section 40A(2)(b) of the Act. 2)c) That the Ld. CIT has grossly erred in law in rejecting the contention of the Appellant that Principle of Consistency is require to be followed before disallowing the salary paid to Mrs. Rashmi Sharma by the Appellant. 3) That on the facts and circumstances of the case, Ld. CIT(A) has grossly erred in confirming addition of Rs. 2,77,632/- on account of alleged difference in the accounts of following parties. Party Amount(Rs.) M/s Glass Palace 1,53,746 M/s Healthy way 1,23,886 Total 2,77,632 The aforesaid addition cannot be made sinceamount due from these parties is more in the Appellant's books of accounts as compared to the balance in the books of accounts of the aforesaid parties. 4) That on the fact and circumstances of the case, Ld. CIT(A) has grossly erred in confirming addition of Rs. 23,500/- made by the Ld. Assessing officer by invoking provisions of section 40A(3) of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me more than Rs. 10 Lacs. 3. It has also been decided that in all the cases which are picked up for scrutiny only on the basis of AIR information, the notice u/s 143(2) of Income Tax Act should clearly be stamped with "AIR Case". This should be immediately brought to the notice of all the officers working in your region. Yours faithfully Sd/- (Ajay Goayal) Director (ITA.II) Telefax: 23092151" 6. The contents of the above letter show that these are internal instructions and could not be construed as circular. The Ld. CIT(A) has dealt this issue vide para 2.3, which is as under:- "2.3 I have considered the submission of the Ld. Counsels for the appellant and have gone through the assessment records of the case. The first notice u/s 143(2) in this case was issued on 02.09.2009 and in this notice, it was clearly stated that this case has been selected through CASS. The instruction dated 08.09.2010 quoted by the Ld. Counsels could not have been followed by the Assessing Officer, since notice u/s 143(2) had been issued on 02.09.2009. Moreover , the appellant never objected before the Assessing Officer when he was conveyed about the AIR information vide questionnai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Botany and the expression "technical or professional qualification" do not necessary connote a qualification by recognized university and it must be given a vide meaning. Further, the salary has been allowed in the earlier years. 11. After examining the submissions, Ld. CIT(A) did not find force in the same. He observed that there is no force in the contention that no such disallowance was made in the earlier years because assessments in those cases might have been completed without scrutiny. In any case there is no res judicata in the income tax proceedings. He further observed that in view of the provisions of section 64(1)(ii) of the Act, the requirement of specific professional qualification is there and in the absence of the same, the expenditure was not allowable and confirmed the action of the Assessing Officer. 12. Before us Ld. counsel for the assessee submitted that Mrs. Rashmi Sharma is MSC Botany and was doing the work of copy writing in English. The expression "technical or professional qualification" do not necessary connote a qualification by a degree of a recognized university and the expression should be given a wider meaning. In this regard, he referred to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and experience. The requirement of technical or professional qualification is not general in terms. It must relate to the post which he or she occupied and, secondly, the salary or fees must be attributable to the application of his or her technical or professional knowledge. If these two conditions are fulfilled, the income must be considered to be of that person and should be assessed accordingly. If the job is of a technical nature requiring a degree or diploma, the holding of such degree or diploma would be essential. The nature of professional qualifications, however, varies from profession to profession. Likewise, the nature of technical qualifications also differs depending on the nature of the job. It is not each and every qualification, academic or otherwise, which can bring the spouse within the scope of the proviso so as to enable him or her to take the income out of the clubbing provision. If the spouse possesses technical or professional qualifications necessary to undertake the particular technical job or carry on the profession to which the income is attributed, that will meet the requirement of the first part of the proviso. But even if the first part of the proviso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....can be taken for the reference made by Assessing Officer to section 40A(2)(b). 19. One more contention was raised by ld. counsel of the assessee that the similar expenditure has been allowed in the earlier years even under the scrutiny assessment completed for assessment year 2007-08. We are unable to agree with this contention because Hon'ble Supreme Court in the case of CIT v British Paints India Ltd in 188 ITR 44 (SC) has clearly observed at page 53 as under;- "It is not only the right but the duty of the Assessing Officer to consider whether or not the books disclose the true state of accounts and the correct income can be deduced therefrom. It is incorrect to say, as contended on behalf of the assessee, that the officer is bound to accept the system of accounting regularly employed by the assessee the correctness of which had not been questioned in the past. There is no estoppel in these matters and the officer is not bound by the method followed in the earlier years." 20. The above clearly shows that there cannot be any estoppel if earlier a wrong proposition was accepted by the Assessing Officer against the clear provision of law. This is so because an error cannot b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oks was Rs. 6,61,849/- whereas that party was showing less credit, therefore, no adverse inference can be taken particularly when no entry for cash is there in the books. In any case the difference is on account of rebate because M/s Healthway has debited rebate amounting to Rs. 18,37,300/- whereas assessee party has allowed rebate of Rs. 16,45,653/-. The Ld. CIT(A) did not find force in these submissions and decided the issue against the assessee vide para 5.2 of his order, which is as under:- "5.2 I have considered the submission of the Ld. Counsels for the appellant. When the appellant was asked to reconcile the discrepancies appearing in the accounts of M/s Glass Palace and M/s Healthyway, he could not make the reconciliation. It is seen that the appellant had purchased furniture from M/s Glass Palace and these entries have been shown as rebate by M/s Glass Palace in its books of accounts. Regarding closing balance difference in the account of M/s Healthyway, the appellant explains that it was on account of rebates allowed, but the fact remains that there is a difference in closing balance as on the last date of the financial year. In view of this discussion, it is held that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the income of the assessee. 30. On appeal, the submissions made before the Assessing Officer was reiterated. The Ld. CIT(A) did not find force in the same and observed that even if the payment was made in installments, the same was covered by the provisions of section 40A(3). 31. Before us, Ld. counsel for the assessee submitted that the sum of Rs. 23,500/- was paid in installments of Rs. 3,500/- and Rs. 20,000/-, therefore, the same is not in violation provisions of section 40A(3) of the Act particularly in views of the decision of Hon'ble Orrisa High Court in the case of CIT v Aloo Supply Co. 121 ITR 680 (Orissa) and CIT(A) Vs. Triveniprasad Pannalal 228 ITR 680 M.P.). He further submitted that parliament has amended the law by Finance Act 2008 and w.e.f. 1.4.2009, the aggregate payment have to be considered for the purpose of disallowance u/s 40A(3) and the amendment is not applicable in the relevant year. 32. On the other hand, Ld. DR strongly supported the order of CIT(A). 33. After considering the rival submissions we find that before 31.3.2008, the disallowance of interest u/s 40A(3) could be made for any payment in cash in excess of Rs. 20,000/-. However, the provis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee with the Chandigarh State Cooperative Bank Limited, Sector 22-B, Chandigarh. Thereafter, information was called from the bank u/s 133(6). The bank vide letter No. 3725 dated 15.9.2010 supplied a copy of the account maintained by Shri Anoop Sharma i.e. the assessee. Perusal of this saving bank account No.1967 revealed that a large amount of cash was deposited. The assessee was asked to explain the sources of deposit in this account but no source was given. The Assessing Officer further verified the books of account of the proprietorship concern M/s Pecific Ads and also of the partnership firm and M/s Alfa Advertising and Marketing Services and partnership firm where assessee was partner and found that no such cash was withdrawn. He further noted that as per AIR information the deposit was shown at Rs. 15,01,1000/- but as per the bank account total deposit was of Rs. 19,50,644/- and detail of the deposits has been extracted by the Assessing Officer vide para 5.2 of this order. In view of these facts the Assessing Officer added Rs. 19,50,644/- u/s 68 of the Act of the income of the assessee. 36. On appeal, it was mainly submitted that bank pass book would not constitute ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee that section 68 could not be invoked. The Ld. CIT(A) has decided this issue vide para 7.3 and 7.3.1 which are as under:- "7.3 I have considered the submission of the Ld. Counsels for the appellant. Cash has been deposited on several dates in the savings bank account of the appellant with the Chandigarh State Co-op Bank., Sector 22-B, Chandigarh. Out of the total addition made of Rs. 19,50,644/-, only Rs. 18,56,644/- pertains to the financial year 2007-08. The appellant had not given any explanation before the Assessing Officer regarding source of the cash introduced and the cash entries do not reconcile with the accounts of any of the business concerns of the appellant. A perusal of the cash deposits, reproduced in para 5.2 of the assessment order reveals that in all, there are 53 entries of cash deposits in the financial year 2007-08 and most of the deposits are of Rs. 40,000/-. Maximum deposit entry is of Rs. 49,000/-. A summary of the 53 credit entries is as under: Total Amount i) 38 entries Rs. 40,000/- 15,20,000/- ii) 1 entry Rs. 49,000/- 49,000/- iii) 2 entries Rs. 45,000/- 90,000/- iv) 2 entries Rs. 35,000/- &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urn of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 42. The above provision clearly shows that assessment even if made under the wrong provision is protected by this provision. The Ld. Counsel before us had relied on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT(A) Vs. Norton Motors (supra). In that case the assessee firm was constituted on April 2, 1973. There were changes in its constitution in 1976 and 1978. Registration was granted to the firm. The firm filed its return for the assessment year 1978-79. The Assessing Officer determined the income of the firm. Subsequently the Commissioner issued notice to the assessee requiring it to show cause as to why the registration may not be withdrawn on the ground that the newly inducted partners had been wrongly allowed shares in the profits for the whole of the year. After hearing the representative of the assessee, the Commissioner held that distribution of profits for the entire year made by the firm amongst five partners was not in accordance with the law. Accordingly, he directed the Income-tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e can do whatever can be done by the Assessing Officer. The Ld. CIT(A) under these powers has correctly upheld the addition under the correct provisions. The Ld. Counsel had relied on the decision of full Bench of the Hon'ble Delhi High Court in the case of CIT v Sardari Lower and Co. 251 ITR 864 (Del). In that case it was observed as under:- "In CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) the matter relatd to provisions of the Indian Income-tax Act, 1922. It was held, inter alia, that in an appeal filed by the assessee, the Appellate Assistant Commissioner has no power to enhance the assessment by discovering a new source of income not considered by the Income-tax Officer in the order appealed against. A similar view was expressed in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC). That also related to a case under section 31(3) of the old Act. It was held that the power of enhancement under section 31(3) of the old Act was restricted to the subject matter of the assessment or the source of income, which had been considered expressly or by clear implication by the Assessing Officer from the point of view of taxability and that the Appellate A....