SOHANRAJ MEHTA v. INCOME TAX OFFICER
[Citation -1986-LL-1109]

Citation 1986-LL-1109
Appellant Name SOHANRAJ MEHTA
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 09/11/1986
Assessment Year 1978-79 , 1979-80
Judgment View Judgment
Bot Summary: These are two appeals by the assessee and one by the Department in respect of the same assessee for three assessment years and therefore, are disposed off by a common order as the issues involved are common. In the assessee's appeal the issues involved are that the Department had considered the same material which were on record on the basis of which they have reopened the assessment and concluded the assessment which is bad in law. The argument of the counsel for the assessee was that a person who earns an income of Rs. 20,000 as per the Boards circular would be entitled to deduction to the tune of Rs. 6,000 while the assessee is earning a commission of Rs. 60,000 and he is allowed a deduction of Rs. 10,000 which is absolutely insufficient and improper and therefore on this basis on the merits the Department should not have reopened the assessment. For the Department the argument was that the assessee is relying on the Boards circular and as per the Boards circular the amount that could be allowed cannot exceed Rs. 10,000 for which purposes books of accounts necessarily has to be maintained. In the Departmental appeal they submitted the AAC has cancelled the assessment on legal grounds but in that year the assessee did maintain accounts which cannot be said to be proper in every respect. We have carefully considered the arguments of the parties concerned and w e find that there is considerable force in the argument of the counsel for the assessee as regards the reopening of the assessment and referring to the Board's circular which has been filed, the limitation of Rs. 10,000 would apply to cases where proper books of accounts have not been maintained. As far as the third year is concerned, since there is no denial to the fact that the assessee did maintain books of accounts and as per the circular he is entitled to deduction more than Rs. 10,000 The action of the ITO is improper in limiting the deduction to Rs. 10,000.


These are two appeals by assessee and one by Department in respect of same assessee for three assessment years and therefore, are disposed off by common order as issues involved are common. In assessee's appeal issues involved are that Department had considered same material which were on record on basis of which they have reopened assessment and concluded assessment which is bad in law. On merits it was submitted that in these two years assessee who is agent of Life Insurance Corporation did not have proper books of accounts so that he could have claimed deduction of expenditure in accordance with books. In original assessment expenses that were allowed were Rs.18,196 and Rs. 21,374. Now these have been restricted to Rs. 10,000. argument of counsel for assessee was that person who earns income of Rs. 20,000 as per Boards circular would be entitled to deduction to tune of Rs. 6,000 while assessee is earning commission of Rs. 60,000 and he is allowed deduction of Rs. 10,000 which is absolutely insufficient and improper and therefore on this basis on merits Department should not have reopened assessment. for Department argument was that assessee is relying on Boards circular and as per Boards circular amount that could be allowed cannot exceed Rs. 10,000 for which purposes books of accounts necessarily has to be maintained. In Departmental appeal they submitted AAC has cancelled assessment on legal grounds but in that year assessee did maintain accounts which cannot be said to be proper in every respect. We have carefully considered arguments of parties concerned and w e find that there is considerable force in argument of counsel for assessee as regards reopening of assessment and referring to Board's circular which has been filed, limitation of Rs. 10,000 would apply to cases where proper books of accounts have not been maintained. On this issue for first two years argument of counsel for assessee appears to be quite reasonable as for mere reason that he had not been able to maintain proper records. Considering quantum of his income deduction of Rs.10,000 is too low and perhaps on this basis assessment was completed at original time. Therefore, considering merits of case re- assessment is unjustified and has been rightly quashed. As far as third year is concerned, since there is no denial to fact that assessee did maintain books of accounts and as per circular he is entitled to deduction more than Rs. 10,000 action of ITO is improper in limiting deduction to Rs. 10,000. In result appeals by assessee for two years are partly allowed while that of Department is dismissed. *** SOHANRAJ MEHTA v. INCOME TAX OFFICER
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