Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 422 - AT - Income TaxReopening of assessment - disallowance of loss claimed - non commencement of business - Held that:- The assessment in this case has been completed u/s 143(3) and as seen from the order of the AO, he has examined various expenditure claims and disallowed two of the items, which would not have come to the knowledge but for the verification of the expenditure claims. Not only that, annual report and other documents placed on record indicate that assessee has correctly claimed the revenue expenditure. The issue of commencement of business is necessary to examine for allowing expenditure. It is the first year of business commencement and the AO will certainly examine the commencement of business before allowing loss or profit of the year. Therefore, it cannot be said that AO has not applied his mind when he allowed the loss as claimed with certain disallowances. The very basis of earlier opinion being reviewed by the AO in the reassessment proceedings will certainly come into the domain of the ‘review of the order’ by the successive officer. Review of the order cannot be done in the form of reopening of assessment without there being any tangible material to form a different opinion, when the assessment is reopened within the four years from the end of the assessment year. It cannot be stated that assessee has not commenced business during the impugned AY. This is a fact on record that assessee commenced its lab facility, which is its main activity on 8th February, 2006 i.e. almost 50 days prior to the close of the accounting year. Not only there is an evidence that employees have been recruited and paid salaries to them, but also orders for procurement of raw material have been placed and some of the raw material purchased and utilized during the year and Assessee’s claim of depreciation was allowed by the AO in the original assessment. Assessee has commenced its business activity during the year under consideration and on merits, assets have been put to use. Thus reopening of assessment is bad in law - Decided in favour of assessee.
|