TMI Blog2013 (12) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... was no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment - The material condition for reopening the case is lacking. The solitary basis for the initiation of reassessment is the audit report furnished by the assessee along with the return of income indicating that the amount representing recoveries was credited to the P&L Account - Such audit report was available with the AO at the time of framing assessment - The AO did ask about the details of the such amount debited to the P&L account, which amount is `net’ of the recoveries - When such details were furnished and no addition was made, it has to be presumed that the AO got convinced with such details - There is no fresh mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits. 3. Firstly, we are espousing the challenge to the initiation of reassessment proceedings. From the facts recorded above, it is apparent that the original assessment in this case was completed u/s 143(3) on 28.3.2006. Reassessment was initiated by way of notice u/s 148 dt. 26.8.2010 giving the following reasons: - REASONS FOR REOPENING THE CASE U/S 148 IN THE CASE OF M/S CITICORP MARUTI FINANCE LTD. for the AY 2003-04 The return in this case for the AY 2003-04 was filed on 02.12.2003 declaring an income of Rs.62317930/- which was processed u/s 143(1) of the IT Act, 1961 on 15.03.2004. The case was selected for scrutiny and the asstt. was completed u/s 143(3) of the Act on 28.03.2006 at an income of Rs.77954410/-. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 41(1) of the Act in respect of amount recovered against recoverable written off. It can be seen from the reasons that this fact about the recovery against recoverable written off emanated from the audit report furnished by the assessee in Form No. 3CD along with the return of income. We have gone through the audit report, a copy of which has been placed on page 29 onwards of the paper book. Clause 20 of the audit report in Form 3CD talks off: `Any amount of profit chargeable to tax u/s 41 and computation thereof . Against this column, the auditor has mentioned: Refer to Annexure 5 . A copy of said Annexure 5 is available on page 47 of the paper book which reads as under: Sl. no. Description Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets written off (Net) . The detail of Rs.5.83 crore, being Net of non-performing assets is available on pages 253 to 255 of the paper book. From such branch-wise details, it can be observed that these are balances on `Net basis with the overall debit of Rs.5.83 crore. When we read Note nos. 1 2 in Annexure 5 to tax audit report, it becomes apparent that a sum of Rs.5.56 crore represents recoveries made against recoverable written off which has been shown in the P L a/c by way of adjustment against the excess debits thereby resulting in the overall net debit at Rs.5.83 crore. The above position emerges from the relevant material which was already available on record in the shape of audit report and financial statements of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of four years from the end of the relevant assessment year completed on 31.3.2008. The AO issued notice dated 26.8.2010 u/s 148 of the Act. These facts indicate that the initiation was done after the expiry of four years from the end of the relevant AY. The reassessment in the present case could have been initiated only on some failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. 9. When we consider the facts of the case, it transpires that the auditor mentioned that the assessee made recoveries against recoverable written off to the tune of Rs.5.56 crore, which was credited to the Profit and loss account. In other words, there was a mention of the amount `credited to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st recoverable written off to the tune of Rs.5.56 crore, which formed the bedrock for the initiation of present reassessment proceedings, the reassessment could not have been ventured. We therefore, strike down such initiation of reassessment and the present proceedings flowing there from. 10. There is another dimension to this case. It is noticed that the solitary basis for the initiation of reassessment is the audit report furnished by the assessee along with the return of income indicating that the amount representing recoveries was credited to the P L Account. Such audit report was available with the AO at the time of framing assessment. In fact, the AO did ask about the details of the such amount debited to the P L account, which amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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