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2016 (5) TMI 1261 - ITAT KOLKATA

2016 (5) TMI 1261 - ITAT KOLKATA - TMI - Reopening of assessment - Held that:- We find that the assessee is having a sugar mill factory and for which it purchased new machinery. It has also leased out its plant & machinery to M/s. Eastern Sugar & Industries Ltd. During the re-assessment proceedings the AO did not find any new material, which could suggest to make any addition u/s. 147 of the Act. The AO did not bring any new material for reopening the assessment u/s. 147 of the Act.

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see. - I.T.A No. 2074/Kol/2010, C.O Nos.181 & 182/Kol/2010 - Dated:- 27-5-2016 - Shri P. M. Jagtap , Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member For the Appellant : Shri Rajat Kr. Kureel, JCIT, ld.Sr.DR For the Respondent : Shri S.K. Tulsiyan, Advocate, ld.AR ORDER Shri S. S. Viswanethra Ravi, JM The appeal of the revenue and cross objection of the assessee for A.Y 2003-04 are arising out of the order of the Learned CIT(A),Central-I, Kolkata. ITA No. 2074/Kol/2010 2. In th .....

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ssessee. C.O No.181/Kol/2010 (ITA No. 2074/Kol/2010 A.Y 2003-04) 3. In this C.O the assessee has raised following ground effective:- 1. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly correct and justified in cancelling the re-assessment proceeding u/s 147 of the I. T Act, 1961 initiated by the A.O for the A.Y 2003-04 on a mere change of opinion beyond the prescribed time limit laid down in the Act as invalid and without jurisdiction in view of the full and .....

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) are declared valid by the Hon'ble Tribunal, the Ld. CIT(A) may be directed to take up the other grounds of the assessee's appeal i.e Ground Nos. 5 to 9 filed before the Ld. CIT(A) relating to the issue of depreciation and sundry creditors but left undecided by him as academic because of annullment of the whole re- assessment order. 4. Appeal in ITA No. 2074/Kol/2010 and C.O No.181/Kol/2010 involved identical issue relating to reopening of assessment u/sec 147 of the Act. Since the Ld.A .....

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003 showing loss of ₹ 1,34,13,790/-. The assessment u/s. 143(3) of the Act was completed on 31-03-2006 and income was assessed at loss of ₹ 57,15,235/-. Subsequently, it was noticed by the AO that income had escaped assessment and notice u/s. 148 of the Act was issued and served upon the assessee. The assessee filed return of income. Notice u/s. 143(2) of the Act was issued and served upon the assessee. In response to which the ld.AR of the assessee appeared and filed written submiss .....

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.AR of the assessee submitted that the income has been shown from lease out of the machinery. Having not satisfied with the said submissions, the AO was of the view that the assessee claimed excess depreciation to the tune of ₹ 34,41,221/- and added the same to the total income of the assessee. 7. The AO further noticed in the Schedule D as reflected therein that an amount of ₹ 9,15,56,659/- standing under the head Sundry Creditors to balance sheet as on 31-03-03. The assessee has sh .....

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In respect of Schedule-G of the Balance Sheet, the AO observed that balance of ₹ 10,01,11,386/- shown towards M/s. Eastern Sugar & Industries Ltd as Sundry Debtor of the assessee. The assessee submitted that after adjustment of credit balance with the debit balance, net balance of ₹ 4,73,96,268/- remained due from M/s. Eastern Sugar & Industries Ltd. as on 31-03-2003 relevant to AY 2003-04. M/s. Eastern Sugar & Industries Ltd was a debtor of the assessee as on 31-03-2003. .....

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essment proceedings u/s. 147 of the Act by issuing notice u/s. 148 of the Act basing on same set of facts and material as available with him during the normal proceedings completed u/s. 143(3) of the Act. The ld. CIT(A) after considering the various submissions of the assessee including the various case laws as relied on by the assessee before him disposed of the appeal by observing as under:- 3.1 I have carefully considered the submission of the L.d A.r . In this case order under section 143(3) .....

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was duly considered in the original assessment proceedings. Hence it cannot be said that the material facts were not fully and truly disclosed by the assessee. 3.2 Further there is no whisper in the reasons recorded by the A.O that income escaped assessment by reason of assessee's failure to make a full and true disclosure of all material facts necessary for assessment. Hence the issue regarding admissibility of depreciation duly considered in the original assessment and reopening of assessm .....

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or seeking initiation of reassessment proceedings under section 147/148. 3.3. Moreover the Hon 'ble Supreme court in the case of Kelvinator of India {2010} 320 ITR 561(SC) has held that reassessment even within the four-year limit , cannot be done without fresh information . Reopening on mere change of opinion on matters, which are already on record ,where original assessment has been made under section 143(3) is not permissible. 3.4. In view of above position of fact and Law, and the submis .....

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acted wholly without jurisdiction in issuing notice u/s. 148 beyond four years period mentioned in S. 147. Hence the order of assessment passed under section 147/143(3) is annulled. 10. Aggrieved, the revenue is in appeal before us by raising respective grounds before us while the assessee has also filed C.O. 11. During the course of hearing before us the ld. Counsel for the assessee submitted that the ld. CIT(A) was fully correct and justified in cancelling the reassessment proceedings u/s. 147 .....

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u/s. 147 of the Act was not justified as there was no new material brought on record against assessee to show that the income of the assessee escaped income. The ld. Counsel for the assessee has also stated that the issue of depreciation and sundry creditors were left undecided before the ld.CIT(A) in view of annulment of re-assessment order. However, the case of the assessee is fully covered in favour of the assessee by the Judgment of the Hon ble Delhi High Court in the case of Pr. CIT Vs. Tup .....

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d.CIT(A) in annulling the same was not correct and not justified in accordance with the provisions of the I.T Act. 13. Heard the rival submissions and perused the material available on record. The question before us is as to whether the re-assessment made u/s.147 of the Act is justified in the circumstances of the case. We find that the assessee is having a sugar mill factory and for which it purchased new machinery. It has also leased out its plant & machinery to M/s. Eastern Sugar & In .....

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et it requires to be factually noticed that the reopening order of the AO only refers to the report of Statutory Auditor under Section 44AB of the Act which report was already enclosed with the return filed by the Assessee. Therefore, factually, there was no new material that the AO came across so as to have reasons to believe that the income had escaped assessment. 14. The facts in the aforesaid decision are that the assessee's return of income was processed under section 143(1) at the retu .....

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material available with the Assessing Officer to form the requisite belief regarding escapement of income, the reopening of the assessment made under section 143(1) was bad in law. The Hon Ble High Court held that the reopening order of the Assessing Officer only refers to the report of statutory auditor under section 44AB which report was already enclosed with the return filed by the assessee and there was no new material that the Assessing Officer came across so as to have 'reasons to beli .....

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