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2015 (9) TMI 1166 - ITAT HYDERABAD

2015 (9) TMI 1166 - ITAT HYDERABAD - TMI - Validity of Re-opening of assessment u/s. 147 - after the end of four years from the assessment year when scrutiny assessment has been completed on the addition u/s. 41(1) of interest waived by the banks - Held that:- There is no merit in Revenue's appeal. First of all as rightly pointed out by the Ld.CIT(A), the AO has examined this issue of 'interest waiver' by the bank and show caused assessee, why it shall not be taxed u/s. 41/28/56 vide letter dt. .....

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rial facts. Therefore, we are of the opinion that reopening of the assessment after four years from the end of the assessment year cannot be justified. - Decided against revenue. - ITA No. 288/Hyd/2014 - Dated:- 30-6-2015 - B. Ramakotaiah, AM And Asha Vijayaraghavan, JM, JJ. For the Appellant : Shri B V Gopinath, DR For the Respondent : Shri KA Sai Prasad, AR ORDER Per B. Ramakotaiah, AM This is an appeal by Revenue against the order of the Commissioner of Income Tax (Appeals)-V, Hyderabad dated .....

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eclaring loss of ₹ 96,63,190/-. Assessing Officer (AO) completed the assessment originally on 31-12-2007 determining loss of ₹ 69,51,466/-. The AO subsequently, noticed that assessee has credited an amount of ₹ 11.58 Crores as prior period item and this amount has not been disclosed fully and truly as cessation of payment under One Time Settlement Scheme for this assessment year and came to a conclusion that income as escaped assessment. A notice u/s. 148 was issued on 07-02-20 .....

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nt. b. As there is no failure on the part of assessee, reopening after four years from the end of the assessment year is bad in law. With reference to the addition u/s. 41(1), it was submitted that assessee has never claimed any interest as there were no returns filed in earlier years and even if returns were to be filed, the amounts could have been disallowed u/s. 43B. Therefore, there should not be any satisfaction to be recorded before reopening the assessment. Ld.CIT(A) after giving due oppo .....

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there is no 'tangible material' available with the A.O. to reopen the assessment. I am, therefore, of the considered opinion that the initiation of proceedings u/s. 147, in the facts and circumstances of the case, is not correct and the consequent assessment made u/s. 143(3) rws 147 is therefore not sustainable in law and quashed". 4. Coming to the merits, he has examined the issue with reference to Remand Report called from the AO and concluded as under: "6.5 I have carefully .....

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has been maintaining its books of account does not mean that the deduction has been allowed under the Income Tax Act. There is no bar on the appellant to maintain its accounts. Therefore, taxing the waiver of this interest in the current year is not valid as the same was never allowed as a deduction to the appellant………" 6.6 I do not find any difference between the facts and circumstances of the case for the assessment year now under appeal, i.e., AY. 2005-06 and the AY .....

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in earlier years and then follow the view taken by the Tribunal in their orders in (i) Order dt. 17-2-2012 in M/s. Vista Pharmaceuticals, Hyderabad and (ii) Order dt. 4-5-2012 in the case of M/s. Sanghi Spinners India Ltd. The view taken in these orders by the Appellate Tribunal is that 'when this impugned interest is not actually allowed as deduction in earlier years while computing the book profit, the same cannot be brought to tax in this assessment year while computing the book profit u .....

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n merits of the addition made by the AO which stands deleted by the CIT(A). 6. After considering the rival contentions, we are of the opinion that there is no merit in Revenue's appeal. First of all as rightly pointed out by the Ld.CIT(A), the AO has examined this issue of 'interest waiver' by the bank and show caused assessee, why it shall not be taxed u/s. 41/28/56 vide letter dt. 07-03-2007. Therefore, the waiver of interest by IDBI/ICICI Bank is very much within the knowledge of .....

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m the end of the assessment year cannot be justified. 7. Even on merits, there is no dispute with reference to the fact that assessee has not claimed any interest in earlier year and therefore, treating the same as 'cessation of liability' to be taxed u/s. 41(1) of the IT Act does not arise. Question of allowing such an interest would not have arisen even if claim was made by assessee in earlier assessment year in view of embargo in Section 43B. In view of this, there could not be any sa .....

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