Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2022 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (4) TMI 974 - HC - Income TaxReopening of assessment u/s 147 - accumulation of income under Section 11(2) - unlawful claim of accumulation/deemed application of income and hence, there has been an escapement of income - HELD THAT:- Petitioner received a show cause notice dated 9th November 2018 specifically calling upon petitioner as to why petitioner’s explanation should not be rejected. In the show cause notice, it is mentioned that the details on record show that the Trust has been accumulating continuously as per provisions of Section 11(2) of the Act and it is also noticed that the accumulated amount is not utilised for the purposes specified of accumulation. It is also stated in the show cause notice that from the audit report filed in Form 10B it is seen that an amount of ₹ 70,00,000/- has been accumulated as per Explanation 2 to Section 11(1) of the Act and there is no accumulation under Section 11(2) of the Act. Instead of filing Form 9A, the Trust had filed Form 10 with no specific purposes as required mandatorily. Petitioner was called upon to show cause why the application be not denied since necessary requirements have not been fulfilled. Petitioner replied to the show cause notice vide its Chartered Accountants’ letter dated 14th November 2018 and showed cause as to why petitioner’s claim to accumulation should be allowed. Petitioner explained that while mentioning in Form 10B, it was inadvertently mentioned against 11(1) and also in the return as the same software generates all three form, viz., 10B, 10 and ITR-7. This explanation was accepted and no further query was raised and the accumulation under Section 11 of the Act of ₹ 70,00,000/- was factored in while computing the income. Therefore, it is quite clear that this issue was under active consideration during the assessment proceedings. Infact in the affidavit in reply at paragraph 6.13 respondents admit the fact that the amount of ₹ 70,00,000/- was inadvertently shown as deemed application of income and after a show cause notice was issued and an explanation was received, the Income Tax Officer accepted the claim of accumulation of ₹ 70,00,000/- under Section 11(2) of the Act and finalised the assessment under Section 143(3) of the Act on 5th December 2018. As regards the allegation in the reasons recorded that it is not ascertainable whether the amount is accumulation of income under Section 11(2) or deemed application of income as per clause (2) of Explanation to Section 11(1) of the Act, at paragraph 6.17 of the affidavit in reply, respondents have accepted that there is an error in the reasons recorded. Respondents have stated in the affidavit in reply that “therefore, the question in reason recorded that it is not ascertainable whether the amount of ₹ 70,00,000/- is accumulation of income u/s 11(2) or deemed application of income as per clause (2) of Explanation to section 11(1) of the Act as shown in return of income does not arise”. In the circumstances, it is quite clear that the entire reopening is based on change of opinion. Consequently, the mere formation of another view in the course of assessment proceedings for subsequent years would not justify the Revenue in reopening the assessment for Assessment Year 2016-2017. Therefore, in the present case, there was no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment of subsequent years which can justify the reopening of the Assessment Year 2016-2017 - Decided in favour of assessee.
|