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2016 (6) TMI 478

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..... ts. In view of this, the proceedings initiated u/s. 147 are bad in law. Moreover, as rightly pointed out by the ITAT in earlier year, those issues were also confirmed by CIT(A) and ITAT in earlier years. Therefore, AO cannot differ from those findings. In view of this, to the extent of reopening of the assessment, we are agreeing with the Ld. CIT(A) and hold that the reopening of assessment is bad in law. Consequently, the order u/s. 143(3) gets restored. AO is directed to examine the order u/s. 143(3), whether the same is in tune with the directions/findings given in AY. 2005-06 and AY. 2006-07. With reference to quantification of financial leases after adjusting the so called claim of depreciation, in case the order u/s. 143(3) is on s .....

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..... rther disallowed the interest payments disallowed u/s. 40(a)(ia) at ₹ 16,45,102/- and depreciation at ₹ 39,35,902/, originally disallowed by the AO in the order u/s. 143(3), thereby determined the total income at ₹ 1,91,91,941/-. Assessee contested the same before the Ld. CIT(A). 2.1. Ground No.1 raised before Ld.CIT(A) was with reference to the adoption of the income at the returned figure as against the income returned on the basis of the assessment completed u/s. 143 dt. 29-12-2009. Following orders of the ITAT on similar facts in AY. 2006-07, Ld. CIT(A) directed to adopt income as retuned by assessee, but he wrongly mentioned the amount at ₹ 58,45,750/- instead of ₹ 74,90,853/- originally assessed. He fu .....

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..... finance charge income at (29,87,268/- and reduction of lease rentals admitted at fl,46,88,356/- from the total income, has resulted in under assessment of income. This method was adopted by the Assessing Officer in the original assessment u/s 143(3), read with section 144A, dated 29.12.2008. However, as the income estimated [before disallowing depreciation and 40(a)(ia)] was well below the income already admitted by the appellant, the present Assessing Officer opined that there is escapement of income. It is also when the appellant admitted the income adopting the same method as followed by the Assessing Officer in the 143(3) order, the Assessing Officer rejected the same and adopted the income originally admitted by the appellant in its re .....

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..... icular method in the Assessment year 2005-06 is coming below the income admitted by the appellant for the subject Assessment year 2006-07 following the same method (without additions). However, here the Assessing Officer had lost sight of the effect of the method adopted on the other claims. If the receipts of the assessee are treated as finance receipts, the appellant would not be eligible to claim depreciation and this in any way leads to higher income than what the appellant had admitted in the original return. As such, there is no escapement of income in the order passed u/s 143(3), read with section 144A. In this context, relevant portion of the decision of the Apex court referred to supra is reproduced hereunder: As a result of .....

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..... the Assessing Officer thanking that this method has the effect of bring down the income below the admitted income for the subject Assessment year, reopened the case and reversed the treatment given in the original order. This change of opinion by the Assessing Officer, without validly demonstrating how the income has been under-assessed in the original order, cannot redo the assessment. 5.5 Accordingly, the reassessment order passed u/s 143(3) read with section 147 is not sustainable in the eyes of law and the Assessing Officer is directed to restore the income determined consequent to giving effect to the order of my predecessor dated 09.04.2010 against the original assessment order passed u/s 143(3) rws 144A . 4. Thus, as can be .....

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..... earlier year, those issues were also confirmed by CIT(A) and ITAT in earlier years. Therefore, AO cannot differ from those findings. In view of this, to the extent of reopening of the assessment, we are agreeing with the Ld. CIT(A) and hold that the reopening of assessment is bad in law. Consequently, the order u/s. 143(3) gets restored. 5. We also notice that Ld. CIT(A) adjudicated the issues which does not arise in the order u/s. 147 and arose originally in an order u/s. 143. Consequently, his directions on Ground Nos. 3 4 in the appellate order on the two disallowance made by AO in 143 order cannot be upheld. Therefore, the directions of CIT(A) on the issues contested in Ground Nos. 3 4 are accordingly allowed. 6. However, AO .....

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