TaxTMI 
TaxTMI 
2014 (9) TMI 1185
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..../section 37(1) of the Income Tax Act, 1961('the Act'). being 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 addi....
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...., a case may be taken up for wider scrutiny with the approval of the administrative Commissioner, where it is felt that apart from the AIR information there is a potential escapement of income 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....
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....Then he referred to various provisions of the Act and ultimately disallowed the salary in view of the clubbing provisions of section 64(1) of the Act. 10. On appeal before CIT(A), it was mainly submitted that Mrs Rashmi Sharma is M.Sc. 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....
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....or professional knowledge and experience. The proviso contemplates two conditions : (i) the spouse must possess technical or professional qualifications; and (ii) income derived by him or her must be attributable to the application of such technical or professional knowledge 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 sp....
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....net effect would be to the increase in the income of assessee. Further the Ld. CIT(A) has finally confirmed the disallowance by way of clubbing u/s 64(1)(ii) and we are concerned with the impugned order where reference has been made to section 64(i)(ii) of the Act and no cognizance 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 t....
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....the end of the year. Further, the amount of rebate amounting to Rs. 1,53,746/- include a sum of Rs. 25,000/- towards adjustment of furniture and debit on account of furniture has been duly recorded in the books of the assessee. In respect of M/s Healthway, it was pointed out that amount due from that party as per assessee's books 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....
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....ring both the parties we find that during assessment proceedings it was noticed that assessee had made cash payment of Rs. 23,500/-. On an enquiry, it was submitted that payments were made in various installments for purchase of festival gifts but Assessing Officer did not find force in these submissions and added the sum of Rs. 23,500/- to 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 disall....
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....opinion that this disallowance is not justified and accordingly we set aside the order of Ld. CIT(A) and delete the addition. 35. Ground Nos. 5 & 6: After hearing both the parties we find that from AIR information it was noted that assessee has deposited cash in excess of Rs. 10 lakhs in the year under consideration . The cash was deposited in the bank account of 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,....
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.... DR relied on the order of CIT(A). 40. We have considered the rival submissions carefully and do not agree with the same. In the case before us clearly the assessee had deposited cash in a bank account for which assessee has not been able to give any source and correctly the income has been added. Now the question is whether section 68 could be invoked. The Ld. CIT(A) agreed with the contention of the 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 ....
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....ads as under:- "Return of income, etc., not to be invalid on certain grounds.--No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return 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 fi....
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.... in was observed as under:- "The Appellate Assistant Commissioner has plenary powers in disposing of an appeal. The scope of his powers is conterminous with that of the Income-tax Officer. He can do what the Income-tax Officer can do and can also direct him to do what he has failed to do. 46. From the above, it become absolutely clear that CIT(A) has plenary powers and the scope of the powers has been held by the Hon'ble Supreme Court to be co-terminus with that of Income Tax officer. Therefore, he 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 b....