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2019 (1) TMI 1537 - HC - Income TaxReopening of assessment - assessment done beyond the period of 4 years from the end of relevant assessment year - disallowance of write off entire expenditure as project was abandoned - Held that:- Reasons recorded by the AO for issuing the impugned notice neither record nor point out that there was any failure on part of the assessee to disclose truly and fully all material facts necessary for assessment. Infact, the reasons proceed on the perusal of the case recorded by the Assessing Officer. Thus, clearly the mandatory requirement for reopening of assessment beyond 4 years flowing from the first proviso to Section 147 of the Act in the present case is not satisfied. During the year under consideration, as per assessee's submission, project was abandoned and no income on this account has been generated, despite the fact that construction of such assets was carried out by the assessee. It cannot be accepted that no income even on account of scrap sale or debris has been generated. Once the construction work was started, then it must have been sold to other persons. It is a fact that entire expenditure was incurred on capital account. Now assessee's claim as revenue expenditure treating it as a write off when entire expenditure were in the nature of capital, cannot be accepted and treated as revenue expenditure. Further, genuineness of the expenses is also not proved because assessee has paid huge amount on account of rent, which is almost 50% of the total expenses. The genuineness was not brought into question in earlier years as the assessee was capitalizing all project expenses. Now the assessee is claiming to write off entire expenditure. The assessee failed to justify rent payment which was paid arbitrarily without any comparative rate with market. A vacant piece of land cannot be charged so much high rent. Assessee's claim that project was abandoned due to recession is also contrary to the facts because when assessee has started the project, condition of air catering market were more or less same from start to end of the assessee's project. This fact can be verified from the receipt of the assessee because revenue receipt is almost remains the same between F.Y. 2008-09 to 2010-11. As against this order of assessment, the petitioner filed appeal. It can thus be seen that the Assessing Officer had occasion to examine the claim and infact in the order of assessment, he had disallowed the same. In the context of such sum, therefore, it cannot be stated the income chargeable to tax has escaped assessment. - Decided in favour of assessee.
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