The Commissioner Of Income Tax-1 v. M/S. B.g.chitale

ASN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 2140 OF 2011 The Commissioner of Income Tax-1. ..Appellant. v. M/s. B.G.Chitale...Respondent. Mr.Vimal Gupta,Senior Advocate with Ms. Padma Divakar for the Appellant.None for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 22nd March, 2013. PC: In this appeal by the revenue for assessment year 2001-02, following re-framed questions of law have been raised for our consideration. a)Whether on the facts and in the circumstances of the case and in law the Tribunal was right in holding that re-assessment proceedings after four years from the relevant assessment year were bad in law as the assessee had not defaulted in giving full and true disclosure of facts even though the assessee had wrongly included interest income in “Business Profits” and not in “Income from other sources” while computing Book Profits for the purpose of Section 40(b) of the Income Tax Act,1961? b)Whether on the facts and in the circumstances of the case and in law the Tribunal was right in holding that interest income is not to be excluded from the next profit declared by the assessee for computing book profit for the purpose of determining the allowable deduction of remuneration payable to the partners under Section 40(b) of the Income Tax Act,1961? 2)The Assessing officer by a notice dated 26/3/2008 issued under Section 148 of the Income Tax Act, 1961 sought to reopen the assessment for assessment year 2001-02 on the ground that interest receipts were not excluded by the Assessing officer from the net profit for determining the allowable deduction under Section 40(b) of the Income Tax Act, 1961 (“the Act”). Thus, interest income not having been excluded, there was excess remuneration allowed resulting in income escaping assessment. 3)In appeal CIT(A) allowed the respondents appeal holding that reopening of assessment being beyond four years from the end of the relevant assessment year 2001-02 was bad in law. On further appeal by the revenue, the Tribunal by the impugned order has held that as there was no failure on the part of the respondent-assessee to make full and true disclosure of all material facts necessary for the purposes of assessment, the reopening of the assessment beyond four years was without jurisdiction. The impugned order while upholding the order of CIT(A) holds that the method of computation adopted as well as the element of income on which remuneration was computed were disclosed in the return and the documents and copies of accounts enclosed along with the return of income. In the above view of the matter, the Tribunal concluded that the notice under Section 148 of the Act being beyond the period of four years from the end of the relevant assessment year was without jurisdiction. As the decision of the Tribunal is based on a finding of fact, we see no reason to entertain the proposed question (a). 4)So far as question (b) is concerned, the same becomes academic in view of our not admitting question (a) for consideration. Therefore, we see no reason to entertain question becomes academic in view of our not admitting question (a) for consideration. Therefore, we see no reason to entertain question (b). 5)Accordingly, the appeal is dismissed with no order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)