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III. Direct Taxes Case Laws:
1. CIT Vs. MGF Automobile Ltd., I.T.A. No. 13/2014, Date of Order: 13.08.2015, Delhi High Court
Pursuant
to search, in absence of any incriminating document whether the AO was
correct in disallowing the set off of the losses of amalgamated co.
against the business income of the amalgamated co. on two grounds. One,
neither the amalgamated co. nor the amalgamating co. was an „industrial
undertaking‟ within the meaning of Section 72 A (7) (aa) of the Act.
Secondly, the amalgamated co. failed to retain three-fourths of the
book value of the fixed assets as required by Section 72 A (2) (b) (i)
of the Act.
Held No.
The ITAT
has by the impugned order dated 28th June 2013 allowed the Assessee‟s
appeals. Relying on the decision of this Court in CIT v. Anil Kumar Bhatia (2013) 352 ITR493 (Del) and of the Rajasthan High Court in Jai Steel (India) Jodhpur v. Asst. Commissioner of Income Tax (2013) 36
taxmann.com 523 (Raj), the ITAT came to the conclusion that the
additions could have been made by the AO “only if some incriminating
document was found during search.” The ITAT recorded in its order that:
“In the present case it is apparent that on the date of search on
12/09/07, the assessments for assessment year 2004-05 & 2005-06 were
already completed. There was no incriminating material found during
search for these years as is apparent from arguments of Ld. AR and from
records and Ld. Departmental Representative did not bring to our notice
regarding any incriminating material having been found during search.”
The ITAT
also noted: “During proceedings before us the bench had asked a
question to Ld. AR as to whether any statement u/s 132 (4) was recorded
during search to which the Ld. AR replied in negative and Ld.
Departmental Representative also showed his ignorance about such
statement. This question was asked because the view of the Bench is that
if during course of search some statement is recorded u/s 132(4) and in
that statement certain facts are recorded from the interpretation of
which Assessing Officer could conclude that there was some undisclosed
income then that statement can be considered as incriminating material.”
High court upheld the order of Tribunal.
(Please click here for judgment)
2. CIT Vs. Divine Infracon Pvt. Ltd., I.T.A. No. 771/2014, Date of Order: 13.08.2015, Delhi High Court
Whether
the Revenue could assail the finding returned by the CIT(A) in favour
of the Assessee in an appeal preferred by the Assessee before the
Tribunal, limited to the issue decided by the CIT(A) against the
Assessee, where Revenue did not appeal against the decision of CIT(A).
Held No.
Before
the Tribunal the scope of the subject matter of the Appeal was limited
to the finding of the CIT(A) with regard to the merits of the addition
made; the issue whether the same was beyond the scope of Section 153A of
the Act was not the subject matter before the Tribunal and, thus, the
Tribunal could not have entertained any plea in that regard.
Indisputably, the Revenue could also not take recourse to Rule 27 of the
Income Tax (Appellate Tribunal) Rules, 1963. By virtue of the said
Rule, a respondent before the Tribunal can support the decision appealed
against not only on the grounds decided in favour of the respondent but
also on grounds decided against it. However, Rule 27 of the said Rules
would not extend to permitting the respondent to expand the scope of an
appeal and assail the decision on issues, which are not subject matter
of the appeal. In CIT vs. Edward Keventer (Successors) Pvt. Ltd (supra),
this court had reiterated that “it would not be open to a respondent to
travel outside the scope of the subject matter of the appeal under the
guise of invoking r 27”.
(Please click here for judgment)
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