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2015 (10) TMI 313 - ITAT CHENNAI

2015 (10) TMI 313 - ITAT CHENNAI - TMI - Reopening of the assessment - Held that:- Section 147 clearly says that if the Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment for any assessment year, he may issue notice under Section 148 of the Act to assess or reassess such income.

Explanation 2(b) to Section 147 of the Act clearly says that understating of income or claiming excess loss, deduction, allowance or relief in the return is also .....

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or business purpose and whether the assessee claimed excess deduction. The Assessing Officer has not formed any opinion that the assessee claimed excess deduction thereby the income otherwise chargeable to tax escaped assessment. This Tribunal is of the considered opinion that to verify or to consider whether the assessee claimed excess deduction or borrowed loan for business purpose, the concluded assessment cannot be reopened. In view of the language employed by the Parliament in Section 147 o .....

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allowed. - Decided in favour of assessee. - ITA Nos.232 & 233/Mds/2004, C.O. Nos.14 & 15/Mds/2008 - Dated:- 4-8-2015 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER Appellant by : Shri A.V. Sreekanth, JCIT Respondent by : Sh. N. Devanathan, Advocate ORDER Both the appeals of the Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-III, Chennai, dated 19.09.2003 and pertain to assessment years 1998-99 and 1999-2000. The assessee has also filed cross-objections against the ve .....

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s Pvt. Ltd., Haresh Chand, Shyam G. Duseja, Gee Gee Hire Purchase and Leasing P. Ltd. and S n S Exports India Ltd. According to the Ld. D.R., other than Karnataka Bank and Indian Bank, all other parties are related to the assessee and the assessee is also Director in the companies. Referring to the assessment order, the Ld. D.R. pointed out that the claim of the assessee that he was carrying on money lending business was not substantiated before the Assessing Officer. The Assessing Officer found .....

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ead income from other sources and not under the head business . The Ld. D.R. placed his reliance on the judgment of the Apex Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. (1997) 227 ITR 172. Referring to the reason recorded by the Assessing Officer for reopening, the Ld. D.R. pointed out that the assessee disclosed loss in the regular return. In order to verify whether borrowed funds were for the business purposes or not, the Assessing Officer reopened the assessment under Section 147 .....

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he Tribunal was received on 28.01.2004 and the same was handed over to the assessee s auditor, M/s B.P. Jain & Co. The cross4 objections ought to have filed on or before 26.02.2004. However, in fact, there was a delay of 1389 days in filing the cross-objections. 4. The Ld.counsel for the assessee further submitted that this Tribunal, by an order dated 11.05.2007, allowed the appeals of the Revenue. After that, the assessee changed his representative and engaged the present counsel. According .....

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limitation, therefore, there is no reason to condone the delay of 1389 days in filing the crossobjections. 6. I have considered the rival submissions on either side and perused the relevant material on record. The assessee filed the cross-objections along with application for condonation of delay of 1389 days. The fact that the assessee engaged M/s B.P. Jain & Co., a firm of Chartered Accountants, for defending the appeals filed by the Revenue is not in dispute. It is also not in dispute th .....

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not filing the cross-objections within the period of limitation. Accordingly, the delay in filing the cross-objections to the extent of 1389 days is hereby condoned and the cross-objections are admitted. 7. Now coming to the merit of the cross-objections, the only claim of the assessee is with regard to reopening of the assessment. Referring to the reason for reopening the assessment, the Ld.counsel for the assessee submitted that the Assessing Officer reopened the assessment to verify whether t .....

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as any excess deduction, the assessment cannot be reopened. Referring to Section 147 of the Act, the Ld.counsel submitted that the Assessing Officer has to express his opinion where the assessee has claimed excess allowance or deduction in the return of income. In this case, it is not the case of the Assessing Officer that the assessee has claimed excess deduction. Therefore, reopening of the assessment under Section 147 of the Act is not justified. 8. On the contrary, the Ld. D.R. submitted tha .....

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r rightly reopened the assessment. 9. I have considered the rival submissions on either side and perused the relevant material on record. The Assessing Officer reopened the assessment by recording his reason as follows:- The assessee has been claiming huge loss under business. Net result: Loss 31839/- for the assessment year 1999-2000. Whether the whole borrowal was for business purpose, to consider excess deduction, income escaped assessment. Issue notice under Section 148. Therefore, from the .....

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ssue notice under Section 148 of the Act to assess or reassess such income. Explanation 2(b) to Section 147 of the Act clearly says that understating of income or claiming excess loss, deduction, allowance or relief in the return is also deemed to be escapement of income. What is necessary is that the Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment. Therefore, it is obligatory on the part of the Assessing Officer to record his reason which made hi .....

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