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2015 (6) TMI 878 - ITAT DELHI

2015 (6) TMI 878 - ITAT DELHI - TMI - Reopening of assessment - Addition on account of provision for doubtful debt - while calculating income u/s 115JB, total amount of provision for doubtful debt was not added back by the assessee for calculation of its book profit - CIT(A) deleted the addition - Held that:- In the reasons recorded, the AO merely stated that though assessee while computing the income under the normal provisions of the Act, added back the provision for bad and doubtful debts but .....

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opinion, which is impermissible for initiating proceedings u/s 148. We find that this issue is squarely covered by the decision of Sun Investment Pvt. Ltd. (2012 (2) TMI 193 - DELHI HIGH COURT ), wherein under identical facts the reassessments were held to be without jurisdiction. The Hon’ble Delhi High Court also considered the insertion by Finance (No. 2) Act, 2009 with retrospective effect from 1-4-2001 and after considering the merit of each amendment held that reassessment proceedings were .....

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. CIT(A) has erred in deleting the addition of ₹ 14,25,38,173/- made on account of provision for doubtful debt." 2. Brief fact are that the assessee company in the relevant assessment year was engaged in the business of generation of power and executing trunkey projects. It filed its return of income declaring loss of ₹ 2,72,31,272/- and the book profit was shown u/s 115JB at ₹ 7,03,23,450/-. The assessment u/s 143(3) was completed at NIL income as against the loss returne .....

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see debited a provision for bad and doubtful debts to its P&L A/c and the same was added back by the assessee in its computation of income under normal provisions. However, while calculating income u/s 115JB, the above amount i.e. ₹ 14,25,38,173/- was not added back by the assessee for calculation of its book profit. The above amount was required to be added back to income under special provisions since it was for an unascertained liability. The Assessee failed to discharge his duties .....

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for the AY 2004-05." 2.1. After considering the assessee s submissions, the AO added the provision for bad and doubtful debts for determining the book profits. 2.2. Before ld. CIT(A) the assessee had, inter alia, submitted that during the course of assessment proceedings u/s 143(3), the AO vide questionnaire dated 3-6- 2006 at sl. No. 9 had sought explanation/ verification regarding details of provisions made during the year. The assessee had filed detailed note with regard to provision for .....

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t order dated 11-12-2006, holding that provision for doubtful debts is not required to be added back while computing "book profit" u/s 115JB of the Act. Further, this vie was subsequently confirmed by the Hon ble Supreme Court in the case of CIT Vs. HCL Comnet 305 ITR 409. The assessee also relied upon following decisions: - E.I. Dupont India Ltd. 169 Taxman 184 (Del.); - JCIT Vs. Usha Martin Industries Ltd. & Ors. 288 ITR 63 (AT)(Cal.)(SB). 2.3. Thus, in sum and substance the asse .....

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dingly, the reopening of the assessment and re-computation of book profit u/s 115JB was based on mere change of opinion of the AO. He relied on following decisions: - CIT Vs. Kelvinator of India Ltd. 320 ITR 561; - Sita World Travels (India) Ltd. Vs. CIT 274 ITR 186 (Del.); - Asteroids Trading and Investments (P) Ltd. Vs. DCIT (2009) 308 ITR 190 (Bom.) - Sun Investment Pvt. Ltd. Vs. ACIT 18 Taxmann.com 218 (Delhi). - CIT Vs. K. Mohan & Co. (Exports) (Regd.) 349 ITR 653. - Voltas Ltd. Vs. ACI .....

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proviso to section 147 was attracted in assessee s case. In view of the mandate of proviso there has to be failure to disclose all material facts fully and truly on the part of the assessee and then only reassessment proceedings could be justified after 4 years. However, in the reasons recorded, the AO merely stated that though assessee while computing the income under the normal provisions of the Act, added back the provision for bad and doubtful debts but while computing/ calculating income u/ .....

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tiating proceedings u/s 148. We find that this issue is squarely covered by the decision of Hon ble Delhi High court in the case of Sun Investment Pvt. Ltd. (supra), wherein under identical facts the reassessments were held to be without jurisdiction, observing as under: "IT : Where reassessment notice issued to assessee for reopening assessment on ground that provisions for diminution in value of investment was not added back while arriving at book profit under section 115JB held to be not .....

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n of Assessing Officer had been drawn to Note No.3 of Schedule H appended to balance sheet - Said note explained entry made in profit and loss account on account 'of provision for diminution in value of investment - Assessing Officer thereafter passed an order under section 143(3) computing total income at nil - On 19-5-2008, he issued a notice under section 148 to assessee for reopening assessment - Assessing Officer was of view that provision made for diminution in value of investment was .....

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e of investment was debatable and it was only after clause (i) to Explanation 1 below section 115JB was inserted by Finance (No 2) Act, 2009 with retrospective effect from 1-4.-2001 that said controversy was resolved - Whether-since at time of completing original assessment under section 143(3), Assessing Officer had before him not only profit and loss account and balance sheet along with schedules and notes on account, but also had before him, statement of total income filed by assessee, which .....

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