Kalpesh Classes

Question 1 (ID 01) (Revision ​​ / Home work)

Case A : In the assessment made on a firm, the Assessing Officer made two specific additions, namely (i)​​ Unexplained Cash Credit of Rs. 1 Lakh and (ii) Disallowance u/s 43B. The assessee filed an appeal before the CIT (Appeals) contesting the addition of cash credit and being unsuccessful, filed a further appeal before the Appellate Tribunal. In respect of the disallowance u/s 43B, it did not file any appeal, but made a revision petition u/s 264, to the CIT who dismissed it on the ground ​​ that the assessment was not subject matter of an appeal to the Appellate Tribunal. The assessee relied on a Board’s circular under which the CIT was empowered to accept such a petition. Discuss the correctness of the view taken by the CIT.

Case B : ​​ The Commissioner of Income Tax can revise an order during the pendency of an appeal before the First Appellate Authority.

Case C​​ : An assessee is aggrieved by the order of the Assessing Officer and requests you to contest the same by filing an appeal before the Commissioner of Income-tax (Appeals) as well as by filing a revision petition before the Commissioner u/s 264 of the Act. Can the assessee invoke both the remedies against the order of the Assessing Officer simultaneously?

Case D : An appeal was preferred by the assessee to the CIT (Appeals) against the order of assessment made by the Assessing Officer. The appeal was allowed​​ by the CIT (Appeals). The assessee later found that he was entitled to a certain deduction, which was neither claimed by him nor allowed by the Assessing Officer in the course of assessment. The issue of deduction was not raised by the assessee in the appeal before the CIT (Appeals) and was not considered by the CIT (Appeals). Examine the power of the CIT to revise under section 264 the order of assessment in order to allow such deduction on an application by the assessee. ​​ 

Question 2 (ID 03)

An order of​​ assessment was made by a Deputy Commissioner of Income Tax on 20.3.2018, disallowing, among others, the following claims of an assessee :

The assessee filed an appeal to the Commissioner of Income Tax (Appeals) against disallowances mentioned against​​ items (i), (ii) and (iii) above.

In the course of the appeal proceedings, it was ascertained that the assessee had paid totally Rs. 16,80,000 as technical fees under a collaboration agreement, but the Assessing Officer after examining the evidence produced, decided that 50% of the payment was capital expenditure. The assessee, in appeal, claimed that the interpretation placed by the Assessing Officer on the agreement was wrong and that the entire payment must be allowed as a deduction. Commissioner (Appeals) accepted this argument and deleted the addition of Rs. 8,40,000 made by the Assessing Officer. He also allowed in full the claim against item no. (ii) and upheld the disallowance of the claim against item No. (iii) above.

Commissioner of Income Tax issued a notice u/s 263 on 20.04.2020 of the Income Tax Act proposing to review the order of the assessment made by DCIT., in regard to the claim of technical fees. He felt that the Assessing Officer must have concluded that the entire payment of technical fees was capital expenditure and to that extent, therefore, the order of assessment was prejudicial to the revenue.

Was the CIT justified in this action? Give reasons for your answer.

Question 3 (ID 04) (Revision ​​ / Home work)

The assessment of Ashok for Asst Year 2007-08 was completed u/s 143(3) on 15.1.2009. The CIT acting u/s 263 directed the Assessing Officer to add certain amount appearing in the Balance Sheet in Total Income of Ashok. Ashok did not challenge the order of the CIT u/s 263 by filing appeal​​ to the Tribunal. The Assessing Officer passed a fresh assessment order on 1.10.2009 including the said amount in Total Income of Ashok pursuant to the order of the CIT.

Ashok disputed the fresh Assessment Order in appeal to CIT (Appeals) u/s 246A. The CIT​​ (Appeals) dismissed the appeal on the ground that the Assessing Officer only complied with direction of the CIT u/s 263, which was not disputed by Ashok in appeal to Tribunal. Examine the correctness of the stand taken by the CIT (Appeals).

Question 4 (ID 05) (Revision ​​ / Home work)

An assessee disclosed, Inter alia, the value of a property sold by him for an apparent consideration of Rs. 5 lakhs and the resultant capital gains at Rs. 1 lakh. This was accepted by the Assessing Officer u/s 143(3) without​​ making any enquiry with the parties to the transaction. The Commissioner of Income Tax acting u/s 263, set aside the assessment with a direction to enquire into the correct sale value in order to arrive at the capital gains chargeable to tax. Discuss the principle under which jurisdiction u/s 263 can be assumed by the CIT in the circumstances of the case.

Question 5 (ID 06)

The return of Income filed by Mr. Kishore has been accepted under the provisions of Sec 143(1) of the Income Tax Act. Can the Commissioner of Income Tax interfere under his revisional powers and modify the assessment it –

• In a case where intimation is served u/s 143(1),

• In a case where no intimation is served.

Question 6 (ID 07)

Assessment was completed as per section 143(3) considering​​ the various claims so made by the assessee on. Subsequently, this was reopened u/s 147 after 3 years on certain issues, but excluding the claim of the assessee as to “Lease Equalization Fund”. The order of reassessment was passed. The Commissioner within​​ the powers vested u/s 263 passed an order rejecting the claim of assessee as to “Lease Equalization Fund”. The assessee challenges that the action of the CIT is not sustainable.​​ 

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Question 7 (ID 08) (Revision ​​ / Home work)

The assessment of Shah Ltd for the assessment year 1997-98 was completed under section 143(3) on 30.6.99. There was an audit objection that interest on borrowals ought to have been disallowed partly as there was diversion of borrowed funds to sister concerns without charge of interest. Shah Ltd did not accept the audit objection. On these facts.

• • What are the options open to revenue to deal with audit objection.

  • Can the assessment be re-opened.

Question 8 (ID 10) (Revision ​​ / Home work)

An assessee is aggrieved by the order of the​​ Assessing Officer and requests you to contest the same by filing an appeal before the Commissioner of Income-tax (Appeals) as well as by filing a revision petition before the Commissioner under section 264 of the Act. Can the assessee invoke both the remedies against the order of the Assessing Officer simultaneously.​​ 

Question 9 (ID 11) (Revision / Home work)

​​ (a)​​  J filed a return of income, in due time disclosing a total income of Rs.4 lakhs. The taxes due on the income were covered by taxes deducted at​​ source, advance tax and self-assessment tax. The return was taken for scrutiny by the assessing officer, who made large additions to the income disclosed by J. On appeal, the High Court set aside the order of assessment and directed a fresh assessment to​​ be made after hearing the parties. The court order had become final since neither party had preferred an appeal against it. The assessing officer did not make any fresh assessment with the result that the ​​ assessment became barred by time. J has filed a petition that since no assessment of his income had been made by the assessing officer, the entire taxes paid, including the pre-assessment payments, must be refunded to him. Is he justified in making this claim ? Discuss.​​ 

(b) ​​ An assessment was completed by the Assessing Officer under section 143(3) on the basis of return submitted and other information furnished by the assessee. The Assessing Officer accepted the cost of the land after waiting for a reasonable period for report of the valuation officer to​​ whom a reference was made. Subsequent to receiving the report from the valuer, it revealed that there was a variation by about Rs.3.00 lacs. On the basis of this valuation report, the Commissioner issued notice under section 263 to set aside the completed​​ assessment. Justify the action of the Commissioner.  

(c)​​  M filed return of income for claiming a refund of Rs.45,000. The said refund was granted and paid to the assessee on 1st March, AY after processing the return under section 143(1). Later on, the case was taken up for regular assessment by issue of notice under section 143(2) and the said assessment was​​ completed on 16th August, resulting in demand of Rs. 2500. Is the assessee liable to pay interest on the amount of refund already granted to him and​​ if so, what is the amount of such interest ?  ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​​​     ​​ ​​ ​​ ​​​​ 

(d)​​  A search was initiated in the premises of an assessee on 11th November, and it was concluded on 14th November. What is the period of limitation for issue of notice for making assessment of​​ preceding six assessment years ? In case assessment under Section 143(3) for one year back and appeal before CIT(A) for assessment year 4 years back are pending on 11th November, ​​ what would be the fate of such pending assessment and appeal ?  ​​ 

Question​​ 10 (ID 12)

An assessee who had been served with an order of assessment passed under section 143(3) on 1.1.2015 had filed an application against this order before the CIT as per section 264 on 11.1.2015. However, the CIT refused to entertain the application on the pretext of premature application. Assessee seeks your opinion.

Question 11 (ID 13)

The Commissioner of Income-tax issued notice to revise the order passed by an Assessing Officer under section 143. During the pendency of proceedings before the Commissioner, on the basis of material gathered during survey under section 133A after issue of the first notice, the Commissioner of Income-tax issued a second notice, the contents of which were different from the contents of the first notice. State with reasoning whether the action of the Commissioner is justified as to the second notice.​​ 

List of Important Question to be glanced for Revision before exam.

Wishing You all the best for exams.​​