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M/s Baba Brick Industries Versus Income Tax Officer, Range II (1) , Lucknow

2015 (10) TMI 1468 - ITAT LUCKNOW

Validity of reopening of assessment - Held that:- Now the settled position of law is that once the Assessing Officer is failed to make an addition on an issue on which assessment was reopened, he cannot assess or reassess other income which escaped assessment and came to his notice during the course of hearing. In the instant case, undisputedly no income was assessed on the capital gain which was considered to be escaped assessment while reopening the assessment. Therefore, addition made on othe .....

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(A), inter alia, on the following grounds:- (1) That 148 has been issued which is reproduced as under :- 'A filed return of income on 29.09.2011, declaring total income of ₹ 103220/- in the Status of Firm. During the relevant year, fixed assets figure has been shown at ₹ 331571/-, whereas during the immediately preceding previous year i.e. A. Y. 2010-11, the fixed assets were shown at ₹ 14,39,283/-. This fact, shows that 'A' has sold fixed assets to the tune of S .....

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) erred on facts and in law in confirming the addition of ₹ 13,82,679/- being Cartage of Bricks made by A. O. u/s 69C of the I. T. Act, which is not applicable in the present sets of facts and circumstances. (3) The Ld. C.I.T. (Appeals) did not appreciated that when the books of accounts were rejected and sales were estimated, no disallowance should be made under section 37/40A(2)(b) of I. T. Act and section 40(a)(ia) of I.T. Act. (4) The Ld. C.I.T. (Appeals) erred on facts and in law in c .....

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sued a notice for reopening of assessment under section 147 of the Income-tax Act, 1961 (hereinafter called in short the Act") after forming a belief that the capital gain on sale of fixed assets has escaped assessment, but while completing the assessment, no addition was made under this head. Therefore, the assessment framed consequent to the aforesaid reopening is not sustainable in the eyes of law. In support of his contention, the ld. counsel for the assessee has invited our attention t .....

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). 3. CIT vs. Mohd. Juned Dadani, 85 DTR 12 (Guj.). 4. Ranbaxy Laboratories Ltd. vs. CIT, 336 ITR 136 (Delhi). 5. CIT vs. Banwari Lal Banshidhar, 229 ITR 229 (Alld.). 6. R.V. Constructions, Kanpur vs. Income Tax Officer, Kanpur in I.T.A. No. 834/LKW/2014 (Lucknow Bench). 7. CIT vs. Gobind Ram, 48 taxmann.com 14 (P&H). 8. CIT vs. Hindustan Equipment (P) Ltd., 30 taxmann.com 295 (MP). 9. Teja Construction vs. ACIT, 39 SOT 13 (Hyd) (URO). 3. The ld. D.R., on the other hand, has placed reliance .....

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on the issue on which assessment was reopened, no addition was made. In this regard, our attention was invited to a series of judgments in which it has been held that once reopening of the assessment is held to be valid and addition is made on the issue on which it was reopened, the Assessing Officer may examine other issues and to make addition thereon. 5. In the case of CIT vs. Mohd. Juned Dadani (supra), the Hon'ble Gujarat High Court held that Section 147 of the Act, even without the aid .....

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de that if the reason on which the assessment is reopened fails, the Assessing Officer still can proceed to assess some other income which according to him had escaped assessment and which came to his light during the course of the assessment. Their Lordships have further clarified that the explanation was meant to be clarificatory in nature and to put the issue beyond any legal controversy. Explanation 3 to Section 147 of the Act thus does not in any manner, even purport to expand the powers of .....

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