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Dhanraj Mills Pvt. Ltd. C/o R.G. and Sons Pvt. Ltd. Versus Dy. Commissioner of Income Tax OSD–II, Range–7, Mumbai

2015 (6) TMI 176 - ITAT MUMBAI

Reopening of assessment - addition of claim of write–off of loans and advances due to non–recovery of amounts - Held that:- As relying on CIT v/s Jet Speed Audio Pvt. Ltd. [2015 (2) TMI 766 - BOMBAY HIGH COURT] wherein held Tribunal has rendered a finding of fact on the basis of material before it, in particular the fact that during original assessment proceedings a query was made with regard to the same issue which was responded to by the respondent - Assessee and on satisfaction of the same, t .....

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I R.C. SHARMA AND SHRI VIJAYPAL RAO, JJ. For the Appellant : Shri Vijay C. Kothari For the Respondent : Dr. P. Daniel ORDER PER VIJAYPAL RAO, JUDICIAL MEMBER The present appeal by the assessee is directed against the impugned order dated 28th February 2013, passed by the Commissioner (Appeals)-40, Mumbai, for the assessment year 2005- 06. The grounds raised by the assessee are as under:- 1. The learned CIT(A) has erred in passing the order without giving proper opportunity to the appellant. 2. T .....

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re-opening of the assessment under section 147 of the Income Tax Act, 1961 (for short "the Act"), which goes to the root of the matter, therefore, we shall first proceed to adjudicate ground no.2 of the assessee s appeal. 3. The original assessment was completed under section 144 of the Act, on 31st December 2007. Subsequently, the Assessing Officer re-opened the assessment by issuing a notice dated 22nd March 2010 under section 148 of the Act. The assessee, vide its letter dated 8th .....

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urt in DCIT v/s Kalvinator of India Ltd., [2002] 75 TTJ 966 (Del), which has been confirmed by the Hon'ble Supreme Court. The Assessing Officer completed the re-assessment and made the disallowance on account of the business loss of 35,25,000. 4. The assessee challenged the action of the Assessing Officer before the learned CIT(A) and also raised the objection of validity of re-opening of the assessment but could not succeed. 5. Before us, the learned Counsel for the assessee submitted that .....

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ness loss of 35,25,000, but disallowed the claim of the loss on account of investment in shares. Thus, the Assessing Officer, while completing the assessment under section 144, has considered the issue of disallowance of investment written-off after considering the reply of the assessee and no disallowance was made in respect of 35,25,000, claimed as business loss as explained by the assessee in the same reply. Thus, the Assessing Officer has considered the said reply of the assessee dated 26th .....

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rned Departmental Representative relied upon the orders of the authorities below and submitted that this issue has been considered by the Assessing Officer and the learned Commissioner (Appeals) for the assessment year 2004-05 and the disallowance has been confirmed by the learned CIT(A) for the assessment year 2004-05, therefore, the claim of the assessee is not permissible as it was also decided for the assessment year 2004-05. He has further contended that the re-opening is within four years .....

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rned loss of 1,16,29,290. During the verification of case records, it is seen that the assessee claimed loans written off amounting to 35.25 lakhs and debited the same to the Profit & Loss account. This is in the nature of capital loss and cannot be treated as revenue expenditure. This has remained to be disallowed. In view of the facts and circumstances, I have no reasons to belief that the income of 35.25 lakhs has escaped assessment and this is a fit case for issue of notice u/s 148 of th .....

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the said issue as under:- The assessee has written off investment of 6000000. He was asked to file the details. He has filed the details stating as under. For the investment written off he has stated that he had suffered a business loss of 6000000 companies has forfeited the shares on account of non-payment of allotment money. He has filed the list of such companies. However, he has not filed any other documentary evidence or proof in support of his contention. Hence, the contention of assessee .....

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ee has given the explanation regarding the claim of business loss of 35,25,000, written-off. Therefore, while completing the assessment on 31st December 2007, the Assessing Officer considered the letter dated 26th December 2007 and, thereafter, the claim of the assessee in respect of the business loss of 35,25,000, was allowed. As it is clear from the reasons recorded by the Assessing Officer for re-opening of the assessment that no fresh material or information came to the notice / knowledge of .....

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business loss is not based on any tangible material came to the knowledge of the Assessing Officer subsequent to the original assessment but the said belief is based on the record already available with the Assessing Officer at the time of the assessment. It is clear that the re-opening is based on change of opinion. The Hon'ble Jurisdictional High Court in Jet Speed Audio Pvt. Ltd. (supra), while considering identical issue, has held in Para-9 to 13 as under:- 9. We find that the impugned .....

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e tangible material being urged before us by Mr.Chhotaray, is the audit objections received by the Assessing Officer. However, as would be clear from the reasons reproduced hereinabove, there is no mention of any tangible material in the reasons recorded for issuing reopening notice under Section 148 of the Act. Thus, we find no fault with the findings of the Tribunal that there is no tangible material mentioned in the reasons recorded by the Revenue which would warrant a different opinion being .....

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ately brought to tax as capital loss. We pointed out to Mr.Chhotaray, learned Counsel for the Revenue that the scope of the present proceedings is only with regard to reopening notice under Section 148 of the Act and we are not dealing with the merits of the assessibility of the income alleged to have escaped assessment. On this Mr.Chhotaray submitted that the issue which he seeks to urge is that merely because the Assessing Officer has been careless in bringing to tax a particular amount which .....

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ted by the Supreme Court in the case CIT Vs. Kelvinator of India Ltd., [(2002) 256 ITR 1 (Delhi)(FB)] that the concept of 'change of opinion' brought in so as to have in built test to check abuse of power. In view of the above, we find no substance in the submissions raised by Mr.Chhotaray. 11. The decisions cited by Mr.Chhotaray, learned Counsel on behalf of the Revenue in support of his submissions that oversight in passing assessment order will give Assessing Officer jurisdiction to i .....

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n by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The revenue contends that it is open to him to do so, and on that basis to reopen the assessment under s.147(b). Reliance is placed on Kalyanji Mavji & Co. V. CIT (1976) 102 ITR 287 (SC), where a Bench of two learned Judges of this court observed that a case where income had escaped assessment due to the oversight, inadvertence or mistake of the ITO must fall .....

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the same material (and no more) does not give him that power. That was the view taken by this Court in Maharaj Kumar Kamal Singh V. CIT (1959)35 ITR 1 (SC), CIT V. A.Raman and Co. (1968)67 ITR 11 (SC) and Bankipur Club Ltd. V. CIT (1971) 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji & Co. V. CIT (1976) 102 ITR 287(SC) suggesting the contrary do not, we say with respect, lay down the correct law. (emphasis supplied). .....

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High Court in the following words represents, in our view the correct position in law (at p.620 of 102 ITR) : The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income tax Officer subsequent to the original assessment. If the income Tax Officer had considered and formed an opinion on the said m .....

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