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2021 (3) TMI 56 - GUJARAT HIGH COURTReopening of assessment u/s 147 - disallowance u/s 14A - Reopening after four years - HELD THAT:- All the material facts relating to Section 14(A) of the Act were before the Assessing Officer during the course of the original assessment and now, he could not reopen the assessment after 4 years where there is no failure on the part of the assessee to disclose fully and truly all the facts necessary for assessment. It is settled by the Apex Court in the case of CIT Delhi Vs. Kelvinator of India Limited. [2010 (1) TMI 11 - SUPREME COURT] that the existence of tangible material is essential to safeguard against the arbitrarily exercised of power. Therefore, as discussed above, at the time of recording the reasons, there were no fresh materials on which the Assessing Officer could have formed a requisite belief with regard to the escapement of the assessment. The record further indicates that, the assessee had disclosed all materials fully and truly before the respondent at the time of original assessment. Even on merits, it is settled that, disallowance under Section 14A of the Act cannot exceed the exempt income of the assessee. Thus, the twin conditions as provided under Section 147 of the Act, which are condition precedent for reopening of the assessment made after 4 years are not satisfied. As proposed amount is exceed the exempt income of the assessee. In that view of the matter on merits, invoking the provisions for reopening of the assessment under Section 147 of the Act is bad in law. There was no basis or jurisdiction for assessing officer to form a belief that, any income of the assessee chargeable to tax for the year under consideration had escaped assessment within the meaning of Section 147 of the Act and the reasons recorded could not have led to formation of any belief that income had escaped assessment within the meaning of the aforesaid provision. - Decided in favour of assessee.
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