TaxTMI 
TaxTMI 
2026 (7) TMI 1883
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....ITBA/NFAC/S/250/2025-26/1082992479[1] passed under section 250 of Income Tax Act, 1961 by the Honourable CIT[A], National Faceless Appeal Centre, Delhi is excessive, unreasonable, arbitrary, against the provisions of Income Tax Act, 1961 and therefore liable to be quashed. 2. On facts and circumstances of the case and in law, the Honourable C.I.T.(A) has erred in confirming the addition of Rs. 18,19,51,875/- made by the Assessing Officer on account of unexplained investments under section 69 of Income Tax Act, 1961, in respect of revaluation of assets which is just notional entry book entry. 3. On facts and circumstances of the case and in law, the Honourable C.I.T.(A) erred in not adjudicating the fact that, the assessmen....
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....ation of the said premises since the year 1984 and has been carrying on its business from the same location. 4. During the year under consideration, the assessee revalued its existing tenancy/leasehold rights based on a valuation report issued by a Government-approved valuer. The said valuation was carried out purely by way of a book entry by debiting the fixed asset account and crediting the partners' capital accounts. It is important to mention here that no new asset was acquired, no funds were introduced, no consideration was paid to any third party, and no depreciation was ever claimed by the assessee on the revalued amount. However, the AO treated the revaluation amount of Rs. 18,19,51,875 as unexplained investment under Section....
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....olding as under: The reason is plain. Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a "hypothetical income", which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of in....
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.... the meaning of Section 2(47) of the Act. On the contrary, the AO travelled beyond the scope of the show-cause notice, rendering the addition legally unsustainable. 9. We are also of the view that simple revaluation of assets does not give rise to the incidence of capital gains inasmuch as the revaluation is made by the assessee by writing up the value of the assets in the books. Accordingly, it cannot be said that mere revaluation of the assets of the firm would result in any liability under the Act. [Well Pack Packaging vs. Dy. CIT [2003] 130 Taxman 215 (Mag.) (Ahd.)]. Revaluation of assets by book entries does not involve any sale or transfer. [ITO v. Suresh Sood [1990] 33 ITD 62 (Chd.)]. It has been held that mere valuation of stock ....
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....se to taxable income. Now turning to the question regarding giving up of the commission, the assessee was maintaining its accounts on the basis of the mercantile system. Its accounting year was the financial year. It gave up the commission after the end of the financial year. No due date was fixed for the payment of the commission under the managing agency agreement. The commission receivable could have been ascertained only after the managed company made up its accounts. The assessee had given up the commission even before the managed company made up its accounts. Hence, the mere fact that the assessee-company was maintaining its accounts on the basis of the mercantile system could not lead to the conclusion that the commission ha....
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....the closing stock the assessee had earned potential profit out of itself inasmuch as the stock-in-trade remained with the assessee at the close of the accounting year. Secondly, putting the stock at the market value did not and could not bring in any real profit which was necessary for taxing the income under the Act as is held in Chainrup Sampatram's case (supra) and CIT v. Hind Construction Ltd. [1972] 83 ITR 211. Thirdly, it is a settled principle of the Income-tax Law that it is the real income which is taxable under the Act. This proposition was enunciated in CIT v. Birla Gwalior (P.) Ltd. [1973] 89 ITR 266 (SC), which was pronounced in CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC). [Para 18]. (iii) CIT v. Hind Construc....