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2007 (7) TMI 341 - ITAT DELHI-CReopening of assessment u/s 148 after four years on the basis of change of opinion - disallowance on previous year expenses - copy of vouchers filed at the time of regular assessment u/s 143(3)/147 - HELD THAT:- In view of the legal position the reassessment made in this case after the expiry of four years from the end of the relevant assessment year cannot be justified in law because the department has not been able to bring out any material to show that there was any failure on the part of the assessee to disclose material facts truly and fully to the Assessing Officer during the assessment proceedings. Thus in view of the proviso to section 147 the reopening of the assessment cannot be justified and consequently the notice issued u/s 148 is held to be invalid. The entire reassessment proceedings are, therefore, found to be null and void and on this basis the assessment order is liable to be quashed. We, therefore, cancel the assessment on this ground and allow ground Nos. 1 and 2 in favour of the assessee. Although we have cancelled the reassessment by allowing ground Nos. 1 and 2 in favour of the assessee and by holding that the reassessment made in the case of the present assessee was null and void, however, we proceed to decide the issue relating to the sustenance of disallowance on merits also. We have already set out relevant details and submissions of the parties in this regard in earlier part of this order. We have pointed out that in assessment year 1988-89, a similar issue relating to disallowance in respect of previous year's expenses was allowed in favour of the assessee by the ITAT. The relevant observations of the ITAT has also been reproduced by us. In that case the Tribunal had examined the method of accounting followed by the assessee and held that since the bills were received subsequent to the finalization of the appellant's preceding year's accounts, the said expenses have been booked under prior period expenses and that there was no justification for disallowing the claim of prior period expenses. In assessment year 1985-86 also the issue was decided in favour of the assessee. In the year under consideration also the assessee has clarified the position by pointing out that the bills were received after the close of the year i.e., after the close of the accounting year and, therefore, they were accounted for in the subsequent year. This explanation of the assessee, therefore, is fully acceptable. On going through the details furnished by the assessee in the tax audit report, statement of expenses and by following post orders in the case of the assessee, there is no justification for disallowing the previous year's expenses. Hence, even on merits, we hold that the disallowance was not justified and consequently we delete the disallowance on merits also. In the result, the appeal is allowed.
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