TaxTMI 
TaxTMI 
2022 (5) TMI 1381
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....86 by disclosing of loss of ~. 15,76,880/- (Rupees Fifteen lakhs seventy-six Thousand Eight Hundred and Eight Only). The loss was arrived at after making provision for liabilities incurred, taking into accounts amounts receivable but not received. So, the method of computation of income was based on the actual amounts received by the appellant. (Cash basis method of computation of income). 28.03.1998 Ld. Assessing Officer passed the assessment order holding the appellant was. doing business and therefore Section 11(4} was applicable. The AO also held that the method of accounting is not proper as it does not reflect the true state of affairs and the actual income cannot be properly deducted therefrom. Therefore, by adopting first proviso of section 145 of the Act, the A determined taxable Income as ~.15,49,580 (Rupees Fifteen' Lakhs Forty-nine Thousand Five Hundred and Eighty only). A sum of ~.30,91,093 (Thirty Lakhs Ninety-One Thousand and Ninety-Three only) which represented the amount receivable from sundry debtors was added to figure of loss disclosed. ' I Subsequently, on the basis of aforementioned order, AO passed similar order qua the assessment years of 19....
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....gistered the same as Civil Appeal No. 153/1993 and stayed the Assessment proceedings and incidental recovery proceedings to tax. 26.04.1996 Hon'ble Supreme Court disposed-off the civil Appeal by giving directions to both parties upon their consent. The appellant was directed to file Application under 256(1) 01 the Act for the reference against the order dated 19.01.1990 and similarly Revenue was directed to file Application under 256(1) of the act of issues which were never pleaded by either of the parties and without hearing parties on those issues. Therefore the appellant filed an Application under section 254(2) of the act for the rectification of the order dt.19.01.1990 alleging that certain mistakes have crept in the said order which is apparent from the record and the same requires rectification for the reference against the order dated; 13.12.1990 and 10.05.1991, within 60 days of the order. Upon Applications of the parties, ITAT referred-the matter to High Court under 256(2) for opinion on 3 questions: 1. Whether on facts and circumstances of the case, the Tribune justified in holding that the assessee is not entitled to exempt under section 11 of the Act....
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....nd 1993-94 u/s 271(1)(c) of the act. 16.10.2006 Upon Appeal by the appellant, the Ld. CIT (A) confirmed the order dated 28.03.2006 and held that Hybrid System of accounting adopted by the assessee is arbitrary as income cannot be computed properly and further denied exemption to the appellant under section 11 for assessment year 1985-86. 18.10.2006 Similar orders were passed in respect of the Assessment Year 1989-90 and 1993-94 there by directing the appellant to pay tax on computed income of Rs.26,89,070/- and Rs.29,72,250/respectively. 31.03.2008 The Ld. ACIT, Circle-2(1), Cuttack, held that the appellant has violated the statutory norms u/s 271(1) (c) and has concealed the particulars of income by following a faulty method of computation and has furnished inaccurate particulars of income. Therefore, the ACIT imposed a heavy penalty of~. 18,85,565/-on the appellant in respect of AY 1985-86. Similarly, the Ld. ACIT imposed penalty of Rs.16, 34,168/- in respect of AY 1989-90 and a penalty of Rs.13,17,953/- in respect of AY 1993-94 through separate orders. 05.05.2008 The appellant preferred an appeal against: the orders dated 16.10.2008 and 18.10.2008. During the c....
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....gned judgment baldly affirmed to the findings of the ITAT without discussing its legality and righteousness. The Hon'ble High Court has dealt issues without presenting any finding upon them, thus rendering the judgement against the principles of natural justice. 10.02.2022 The appellant went to the Hon'ble Supreme Court against the orders of Hon'ble High Court and the Hon'ble Supreme Court had set aside the matter to the Hon'ble "ITAT with the following observations and directions at para no. 16-18; 16. As the facts on record show, after the matter was remanded to the Tribunal, it called for information in terms of which direction, affidavit was filed on behalf of the assessee .and a note was submitted on behalf of the revenue. The affidavit made the position clear and in the entirety of the process including framing of second question, the challenge with regard to the method of accounting was quite apparent. The submission advanced on behalf of the assessee was therefore required to be dealt with on merits. However, neither the affidavit nor the note referred to by the Tribunal. The conclusions arrived at by the Tribunal were not thus consistent with t....
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....reciate the basic fact, that the notional income computed on mercantile system can never be physically spent by the trust assessee and the consistent refusal to appreciate the same has resulted in gross miscarriage of justice, therefore, the assessment order deserves to be quashed on this ground alone. 5. For that the appellant craves leave to amend/modify/add to the above ground, before or at the time of hearing of appeal. 6. At the outset, ld. AR submitted that the issue raised by the assessee in ground Nos.2 & 3 has already been decided by the Hon'ble Jurisdictional High Court in assessee's own case reported in (2003) 264 ITR 160 (Ori) in favour of the assessee. Therefore, this ground may be allowed as per the decision of the Hon'ble Jurisdictional High Court (supra). 7. With regard to ground No.4, ld. AR submitted before us that the notional income computed on mercantile system can never be physically spent by the trust assessee and the consistent refusal to appreciate the same has resulted in gross miscarriage of justice. In this regard, ld. AR has filed his written submission, which was placed before us during the course of hearing, wherein the ld. AR in page 3....
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....thout affording opportunity to the assessee, has been decided by the Hon'ble Jurisdictional High Court in favour of the assessee. With respect to the other grounds raised by the assessee, ld. Sr.DR submitted that the assessee has been following Hybrid system of account instead of mercantile system of accounting. It was also submitted by the ld. Sr.DR that there can be no doubt that in the case of the institution which exists for public benefit, there is justification in applying rigorous standard for ascertaining the motive behind any change in the method of account. Therefore, both the authorities below have taken a plausible view in not accepting the claim of the assessee. Accordingly, ld. Sr.DR submitted that the orders of the authorities below in this regard should be upheld. 11. We have heard rival contentions of the parties and perused the material available on record. At the outset, we consider the submissions of both the parties with regard to the ground Nos.2 & 3, wherein the issue raised by the assessee has already been decided by the Hon'ble Jurisdictional High Court vide order dated 15.01.2003 in favour of the assessee and against the revenue . As observed by Hon'ble....
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....nal High Court's order in assessee's own case, we allow this ground of the assessee. The other two questions remanded back by the Hon'ble High Court to the tribunal for adjudication are as under: 1. Whether on facts and circumstances of the case, the Tribunal is justified in holding that the assessee is not entitled to exemption under Section 11 of the Act? 2. Whether on facts and circumstances of the case, the Tribunal was right in rejecting the method of computation of income followed by the assessee? 12. first we are considering question no two remanded back by the Honble high Court having same issue raised in ground No.4 of the appellant assessee, on perusal of the assessment order, we find that the AO declined to grant exemption due to change in accounting system by the assessee rejecting the books of accounts of the assessee. The CIT(A) also went with the view taken by the AO. During the course of hearing, ld.AR submitted that from the assessment year 1985-86, the assessee changed the method of accounting from cash system to hybrid system, which had been rejected by the AO and affirmed by the CIT (A) and ITAT in different stage of appeals. Now, the que....