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2021 (4) TMI 1171 - HC - Income TaxReopening of assessment u/s 147 - petitioner had declared the loss of income from business - HELD THAT:- In the assessment order dated 30.03.2006 passed under Section 143(3) of the Income Tax Act, 1961, it has been merely stated that the petitioner company had been leased out to M/s.Paharpur Industries Ltd. and a lease rent charges has been treated as conversion charges and that the assessment was completed treating the conversion charges as rent and the expenditure relating to the manufacturing activity was reimbursed by M/s.Paharpur Industries Ltd. Thus, the focus was only on the income derived from the said company. It was not on the method of computation of the income. There is no discussion on the issues relating to the computation of the loss. The said order aslo does not indicate as to whether there was any discussion regarding the reasons given for reopening of the assessment in a communication dated 30.06.2010 while passing the aforesaid assessment order. Correctness of the computation of net loss for the purpose of arriving at the book loss and for the purpose of Minimum Alternate Tax in contrast with the returns filed under Section 139 of the Income Tax Act in a refund cannot be tested under Article 226 of the Constitution of India. Scope of enquiry under Article 226 of the Constitution of India is limited. It is best left to the Assessing Officer/Authorities in the hierarchy prescribed under the provisions of the Income Tax Act, 1961 to look into it. Mere declaration in the Auditors Report to the shareholders of the petitioner that as on 03.09.2003, the secured loans and the losses of the company have been understated to the extent of interest written back and the balance sheet and the profit and loss account dealt with in the said report were in compliance with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956 is not sufficient to conclude that there was true and full disclosure by the petitioner at the time of filing of income tax returns for the purpose of assessment. The computation of income as per the Companies Act, 1956 seems to indicate that the petitioner had a whooping loss of ₹ 13,99,07,652/- which was carried forward into the Assessment Year 2002-03 apart from the loss incurred during the financial year 2001-02 amounting to ₹ 3,33,28,163/-. Therefore, it is not clear as to how the petitioner is aggrieved by the impugned re-opening of the assessment vide notice dated 17.03.2010 and the impugned speaking order dated 03.09.2010. Even according to the petitioner, the entire exercise was an academic exercise and a harassment as no additional tax was to be paid by the petitioner. It is therefore not clear why the petitioner is fighting shy from participating in the aforesaid proceedings. After all, the speaking order merely shows a prima facie view of the Income Tax Department to justify the re-opening of the assessment. It is not conclusive and it is open for the petitioner to meet of the points before the respondent by participating in the proceeding and persuade the respondent Income Tax Officer to drop the proceedings.
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