Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2016 (6) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 337 - HC - Income TaxReopening of assessment - payment of interest to the partners on the capital investment and the remuneration to the working partners - as opined by AO by not providing for either of these two payments, the firm had artificially increased its profit which was otherwise exempt under Section 80(IA) - Held that:- To begin with, we fail to see how even if such facts are established, it can be said that income chargeable to the tax of the assessee had escaped assessment. The artificially inflated profit and what in the opinion of the Assessing Officer would be the correct profit; both were fully exempt under Section 80(IA) of the Act. Quite apart from these prima facie observations, we notice that it is not observed by the Assessing Officer in his reasons recorded for issuance of the notice that there was any failure on the part of the assessee to disclose true and full material facts. In fact, in the reasons recorded itself, he himself has stated “subsequently on verification of the case record and material available on record, it is found that.”. This would clearly demonstrate that all necessary facts were already on record and it was only on the basis of the case record that Assessing Officer formed the reason to believe that income chargeable to tax had escaped assessment. Thus we cannot uphold the notice for re-opening which was issued beyond period of four years without there being even remote element of failure on the part of the assessee to disclose true and full facts necessary for assessment - Decided in favour of assessee.
|