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2017 (5) TMI 1682 - HC - Income TaxDisallowance of prior period expenses - assessee following mercantile system of accounting - ITAT deleted the addition - HELD THAT:- Issue is covered by the decision of this Court in Chambal Fertilizers and also decision of Delhi High Court in case of SMCC Construction India Ltd. vs. Assistant Commissioner of Income Tax [2013 (10) TMI 1227 - DELHI HIGH COURT] prior period expenses had crystallized/settled in the year. The reasons to believe recorded do not show as to on what basis the Assessing Officer has formed a reasonable belief that the said expenditure had not crystallized during the year relevant to the assessment year. It is apparent the Assessing Officer suspects that the income has escaped assessment. But mere suspicion is not enough. The reasons to believe must record reasons, the reading of which should demonstrate, that such a reasonable belief could be formed on some basis/foundation and was in fact formed by the Assessing Officer that income has escaped assessment. - Decided in favour of assessee.
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