TMI Blog2013 (6) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... orded prior to the issuance of the notice under Section 148 pertained only to the issue of bad debts. The other purported reasons pertaining to the issues of unabsorbed depreciation and disallowance under Section 14A admittedly, recorded after the issuance of notice under Section 148. Thus Tribunal was right in concluding that the proceedings under Section 147/148 were itself bad - in favour of assessee. - ITA 168/2013 - - - Dated:- 26-4-2013 - Badar Durrez Ahmed And Vibhu Bakhru,JJ. For the Appellant : Mr N. P. Sahni, Advocate For the Respondent : Mr. Salil Aggarwal and Mr R. P. Mall, Advocates JUDGMENT Badar Durrez Ahmed, J (Oral) 1. This appeal by the revenue under Section 260A of the Income Tax Act, 1961 is directed against the order passed by the Income Tax Appellate Tribunal on 01.08.2012 in ITA No. 4406/Del/11 relating to the assessment year 2006-07. 2. The facts of the case are that the assessee had filed its return of income on 29.11.2006. The assessment order was framed by the Assessing Officer under Section 143(3) of the said Act on 26.12.2008. On 19.01.2010 a notice under Section 148 of the said Act was issued by the Assessing Officer seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer had disallowed Rs. 16,23,073/- in relating to expenditure under section 14A related to exempt dividend income of Rs. 3,54,28,042/- instead of correct figure of Rs. 3,17,48,567/- as per the provisions of section 14A read with Rule 8D. The mistake resulted in under assessment of income of Rs. 3,02,90,115/- involving tax effect of Rs. 1,28,33,604/-. 02 In view of the above, I have reasons to believe that the income of Rs. 6,85,19,358/- and Rs. 3,02,90,115/- aggregating to Rs. 9,88,09,473/- chargeable to tax has escaped assessment within the meaning of section 147/148 of the Income Tax Act, 1961. 5. Thereafter, the respondent/assessee submitted its objections which were rejected by virtue of an order dated 26.11.2010 and thereafter the assessment order under Section 147/143(3) of the said Act was passed on 08.12.2010. 6. While it is clear that the reasons which were recorded on 19.01.2010 only referred to the issue of doubtful debts, the additional reasons which were allegedly recorded subsequent to the issuance of the notice under section 148 of the said Act included the issues of unabsorbed depreciation and disallowance under section 14A of the said Act. As per the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have already noticed above that the purported reasons recorded on 19.01.2010 only contain the issue with regard to bad debts. It is only subsequently that, sometime in October 2010, additional reasons were recorded with regard to the issue pertaining to unabsorbed depreciation and the disallowance under Section 14A of the said Act. In our view, the additional reasons could not have been recorded. The notice under Section 148 would stand or fall depending upon the reasons prior to the issuance of the notice. In the present case, according to the learned counsel for the respondent/assessee, no notice under Section 148 of the said Act has been issued pertaining to the purported additional reasons which were allegedly recorded sometime in October 2010 and served upon the assessee on 29.10.2010. Therefore, the additional reasons cannot be looked into for the purposes of determining the validity of the proceedings initiated under the notice dated 19.01.2010 issued under Section 148 of the said Act. 10. That being the position, the only thing that has to be seen is whether the reasons recorded on 19.01.2010 could, at all, form the basis of reopening of an assessment under Section 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment by exercising jurisdiction u/s 147 but there should be some material for assuming the jurisdiction and in recording the reasons there should be some reason to believe and that reason to believe can be based on any material. From the record of the assessment completed originally no where it is coming out that assessee had claimed any deduction on account of provision for bad debt. Therefore, in our considered view the Assessing Officer assumed jurisdiction without any material and therefore it cannot be said that the Assessing Officer has assumed valid jurisdiction. Accordingly, we hold that there was no valid jurisdiction for recording reasons and accordingly we quash the assessment. For the sake of clarification before issuing notice u/s 148, the reasons recorded by Assessing Officer were on account of only for provision of bad debt, copy of which is placed at page 78 of the paper book. Other additional reasons were recorded during assessment proceedings. Since we have already held that assumption of jurisdiction, recording of reasons originally were not valid, therefore, entire assessment is quashed. 12. The Tribunal also noted that the respondent/assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(3) on 26.12.2008 at an income of Rs. 16,73,26,015/- as against the returned income of Rs. 16,67,22,015/-. Scrutiny of income tax assessment records revealed that in computation of income of the assessee had deducted Rs. 1,87,41,755/- on account of provision for doubtful debts no longer required written back but in the P L account this amount was not added to the other income. This mistake resulted in under assessment of income by Rs. 1,87,41,755/- involving tax effect of Rs. 63,08,473/-. In view of the above, I have reasons to believe that the income of Rs. 1,87,41,755/- chargeable to tax has escaped assessment within the meaning of section 147/148 of the Income Tax Act, 1961. (b) Assessee had long term capital gain of Rs. 14,34,71,150/-, therefore, balance unabsorbed depreciation of Rs. 6,85,19,358/- (Rs. 8,95,82,795/- minus Rs. 2,10,63,437/-) should also have been set off from long term capital gain. But the same amount was not set off from the long term capital gain. The mistake resulted in excess carry forward of unabsorbed depreciation of Rs. 6,85,19,358/- involving potential tax effect of Rs. 76,87,873/-. (c) The Assessing Officer had disallowed Rs. 16,23 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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