2011 (2) TMI 1184 - HC - Income Tax

Reassessment - a sum of Rs.107.70 lakhs was shown as taxable income u/s 41 but only Rs. 9.23 lakhs has been shown under the head "Other income" in the profit and loss account, resulting in Rs. 98.46 lakhs escaping assessment & petitioner had earned free dividend income of Rs. 188.73 lakhs on the long-term non-trade investment exempt u/s 10(33) but various administrative expenses for earning the dividend income were claimed and allowed as an expenditure. Expenses relating to earning of tax-free dividend income were not allowable as expenditure and accordingly income has escaped assessment

Held that:- As in the tax audit report, Rs.1,07,69,936 has been mentioned as the amount written back and chargeable to tax under section 41. A note to the tax audit report further states that the above amounts have been credited to the profit and loss account. The contention of the petitioner that Rs. 9,23,471 was specifically added back in the profit and loss account under the heading "Other income" and the balance amount of Rs. 98.46 lakhs was added back under different heads but was not separately indicated. It is not necessary for an assessee to add back the amounts mentioned in section 41 under a separate heading. Thus the contention of the petitioner that ground for reassessment is factually incorrect.

Though there has been a serious lapse and failure on the part of the petitioner to raise a specific and clear cut objection with details before the Assessing Officer and even in the writ petition. However, we are not dwelling further into this aspect as we feel that the notice of reassessment can be sustained on ground No. 2.

Rectification proceeding objected - Held that:- Rectification of a mistake apparent from the record cannot be equated with the power of reopening under sections 147 and 148 of the Act, which is conferred on the Assessing Officer to reopen cases underassessment when conditions mentioned in the said section are satisfied - Assessing Officer could not have resorted to section 154 proceedings to disallow expenditure under section 14A of the Act - Appeal is dismissed