TMI Blog2016 (2) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AR is having no merit. The assessment was not completed as per return of income filed by the assessee, whereas it is completed on the income admitted by the assessee on its own admission as the assessee has made various claim u/s.10B, 80IA etc. which appears to be merely to offset the excess income booked in the window dressed profit & loss account. The disallowances u/s.43B were taken care of while making own admission by the assessee that the income is ₹ 3 lakhs. Being so, the assessment was reopened to consider the disallowance of ₹ 7,02,87,355/- u/s.43B of the Act. In our opinion, the provisions of sec.43B are applicable on this amount and there is no dispute and the same to be added in the reassessment order, which is confirmed - Decided against assessee - ITA No. 924/Mds/2014 - - - Dated:- 20-1-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri R. Venkatesh, FCA For The Respondent : Dr. B. Nischal, JCIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the assessee is directed against the order of the Commissioner of Income-tax(Appeals) dated 12.12.2013 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company is a listed company, filed its return of income on 30.11.1996 admitting the income of ₹ 2,96,120/-. The assessee company since 2001 is not engaged in any business. An assessment u/s.143(3) was made on 12.11.2001 after consideration of Special Audit Report u/s.142(2)(A) by which the loss was determined at ₹ 2,30,17,865/-. It is seen that while determining the loss, the then AO among many other additions had disallowed ₹ 13,29,74,324/- u/s. 43B relating to interest debited in the P L account towards financial institutions and banks. The additions in the said assessment were based on the findings in the Special Audit report u/s.142(2A). dated 20.09.2001. While not allowing the determined loss to be carried forward, the taxable income of the assessee was taken by the AO at ₹ 3,00,000/- as declared in the return of income filed. It is stated by the assessee and seen from the proceedings that this order was not available with the assessee and copy of the order upon request of the assessee was given by the AO on 21.11.2011 after the passing of the impugned Assessment order on 11.11.2011. There is no material to show that assessee has preferred a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notings that interest of ₹ 8,42,38,418 was debited to the P L account as payable to financial institutions remained unpaid and after deducting ₹ 1,39,51,063, being interest disallowed u/s 43B in the earlier year paid during the year, the balance is disallowed u/s 438 for AY 1998-99. The CIT (Appeals) further observed that when the block assessment was passed in, May 2001, the then Assessing Officer did not have the Special Audit Report u/s 142(2A). The additions u/s 43B made in the block assessment were from the seized materials and other materials with the AO. In the Original assessment u/s 143(3) made on 12.11.2001, the then AO had the full audited details of the interest unpaid on all loans as on 31.03.1998 from the Special Audit Report dated 20.09.2001. According to the CIT(Appeals) even though the AR of the assessee has objected for reopening the assessment and made an addition of ₹ 7,02,87,355/- on account of unpaid interest u/s 43B to Financial Institutions, the Assessing Officer is justified in reopening the assessment following the directions given by the Tribunal view its order in ITA No.70/Mds/2004 passed in the block assessment, made an observation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act prescribes time limit for issue of notice u/s.148 of the Act. This section was amended by the Finance Act, 2001 w.e.f. 1.6.2001 describing different time limits than those prescribed prior to the said date. Different time limits have been prescribed depending upon the amount, income chargeable to tax that has escaped assessment. Sec.150 makes provision for cases where an assessment made in pursuance of an order on appeal, reference or revision or an order of a Court in any proceeding under any other law. Subsec.( 1) of sec.150 says that the time limits prescribed in s.149 will not apply, which means that a notice u/s.148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in any order passed under the Act by way of appeal, reference or revision or by a Court in any proceedings under any other law. Having thus removed the time limits for issuing notice u/s.148 in such cases, sub-sec.(2) of sec.150 hastens to add that where any appeal, reference or revision or an order of a Court in any proceedings under any other law is sought to be made in respect of an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sec.43B, but the same cannot be treated as false because the expenditure have already due and were recorded in the books of account as per the Accounting Standard, as the assessee is following the mercantile method of accounting. As such the expenditure, which became due and were recorded in the books of account, may not be allowable as per the provisions of the I.T.Act. 9. The question for consideration is whether 30.5.2001, the date on which the block assessment was framed, the AO could have taken action by issue of notice u/s.149(1)(b)(iii) of the Act for the A.Y. 1998-99. As it stood on 30.5.2001, no notice u/s.148 shall be issued for the relevant assessment year, if seven years but not more than ten years from the end of the relevant assessment year. Thus, on 30.5.2001, the AO could have issued notice u/s.148 in respect of assessment year 1998-99. Therefore, the AO could have validly issued notice u/s.148 on 31.3.2011 taking advantage of the direction issued by the Tribunal in the appeal for the block assessment. Such a notice is saved by sub-sec.(1) of sec.150 and the provisions of subsec.( 2) of sec.150 are not applicable. The contention of the ld. AR is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in another assessment year to which assessment year it is related. 10. Being so, when the Tribunal deleted the addition in the block assessment period and observed that it cannot be added in the block assessment, the AO has rightly brought to tax the same in the assessment year 1998-99. This view of our is supported by the judgment of the Karnataka High Court in the case of Dy CIT vs. Spences Hotel (P) Ltd. (208 CTR 224), wherein it was held that Notice under s. 148 for asst. year 1976- 77 issued on 17th Nov., 1998, on the basis of the finding of the Tribunal in its order for asst. year 1980-81 that certain income was assessable in asst. year 1976-77 was not barred by limitation under s. 149 in view of overriding provisions of s. 150(1). It was observed: The Tribunal in its order dt. 26th June, 1998 held that the escaped tax shall be assessed for the year 1976-77. That order has become final and the same was within the knowledge of the appellant. On the basis of this finding of the Tribunal in its order regarding escaped income of the assesse, notice under s. 148 was issued on 17th Nov., 1998. The provision of s. 150(1) begins with the words notwithstanding anything c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer computed the income as per return of income by adding this amount as follows : 6.1 Therefore, the income assessable is determined as under : Loss as per P L A/c ₹ 47,64,96,893/- (i) Addl. Sales as per Sales Tax Order ₹ 26,84,26,432/- (ii) Disallowance u/s 43B ₹ 13,29,74,324/- (iii) Deferred Revenue Expenditure Added back ₹ 1,21,32,210/- (iv) NCD Issue expenses added back ₹ 12,00,000/- (v) Share Issue expenses added back ₹ 32,36,000/- (vi) Lease rentals added back ₹ 3,14,36,899/- (vii) Scientific Research Development Expenses disallowed ₹ 18,06,000/- (v) Disallowance u/s 43B ₹ 4,78,834/- (vi) Provision towards Gratuity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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