TMI Blog2012 (8) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of prior period expenses has been held by it to be bad in law, the ground had become infructuous. The brief facts necessary for deciding the appeal are that the assessment of the assessee for the assessment year 2004-05 was reopened for three reasons, which were recorded by the Assessing Officer as follows: - On verification of the case records it has been observed that: - (I) The assessee has debited ₹ 60099.42 lacs to profit and loss account on account of demurrages. The expenditure being a penalty was inadmissible and should have been disallowed and added back; (II) The assessee has debited ₹ 2,70.58 lacs on account of purchase of unconnected wagons which was of capital nature and should have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the merits of the disallowance of the prior period expenses, the Tribunal in para 14 of its order held that since the Assessing Officer did not validly assumed jurisdiction to reopen the assessment on this point, the Revenue s ground has become infructuous and accordingly dismissed the same. The Revenue urges on the strength of the judgment of the Supreme Court in V. Jagmohan Rao and Others v. Commissioner of Income-Tax and Excess Profits Tax, Andhra Pradesh, (1970) 75 ITR 373 that once an assessment is reopened on a particular ground, it is open to the Assessing Officer to rope in all items of income that have escaped assessment and the reassessment proceedings are not confined to the ground or the reason for which the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd this Court, this Court is of the opinion that the Tribunal fell into error in not examining the Revenue s appeal on merits so far as prior period expenses are concerned. The Tribunal failed to appreciate that since the reopening of the assessment on the other two grounds has been held by it to be valid, the Assessing Officer was not precluded from examining the allowability of the prior period expenses, even if the reopening cannot be upheld on the ground of prior period expenses. Accordingly, the appeal of the Revenue is allowed to this extent. The Tribunal is directed to consider and decide the appeal of the Revenue on merits with regard to the issue of prior period expenses. The question of law framed is answered in favour of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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