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Bell Granito Ceramics Ltd. Versus The DCIT, Baroda

Reopening of assessment based upon revenue auditor party’s objections - reasons to believe - Held that:- The assessee’s first argument seeks to quash the impugned reopening by quoting his ‘request’ to revenue audit party hereinabove. He himself makes it clear in the end of the reassessment that the impugned reopening/reassessment has been completed in view of the audit objection. We observe in these peculiar facts and circumstances that this reopening is not based on a judicious approach formed .....

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We accordingly accept assessee’s first legal argument challenging validity of reopening. We hold the present case to be the one containing Assessing Officer’s failure in recording due independent satisfaction by reiterating that triggering point of a reopening is a judicious belief based on reasons formed in view of tangible material pointing out escapement of taxable income. We accordingly quash the impugned reopening on this score alone. The assessee’s other grounds/arguments on change of opin .....

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n 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee raises following substantive grounds:- 1] The Ld. CIT(A) has graviously erred on facts and in law in dismissing the Ground no.l agitating the reassessment order passed u/s. 147 of the IT. Act as bad in law and void abinitio. 1.1 ] Equally the Id. CIT(A) was completely in error on facts and in law in holding contrary to the contention and submission of the Appellant that the reopening of the completed assessment was bad in l .....

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ssed u/s. 147 was bad in law in view of the facts and all the decisions relied upon by the Appellant instead of the inapplicable decision relied upon by him. 1.4) Under the facts and circumstances of the case, the order of the Id. CIT(A) on this ground may kindly be set aside and the appeal of the Appellant kindly be allowed. 2) The Id. CIT(A) has further erred on facts and in law for the alternate ground raised without prejudice on merits for holding that out of the sum of ₹ 157.07 lakhs, .....

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om other sources. 2.2 ] Under the facts and circumstances of the case, the order of the Id. CIT(A) on this ground may kindly be set aside and the appeal of the Appellant kindly be allowed. 3] The Id. CIT(A) has further erred on facts and in law in confirming the addition of ₹ 11,80,184/-without allowing it to be set off against prior period exps. 3.1 ] The Id. CIT(A) in view of the facts and circumstances and submissions made before the lower authorities, ought to have accepted that the im .....

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es. It filed return on 16-12-2006 stating loss of ₹ 39,92,991/-. The same was processed. The Assessing Officer took up scrutiny. He completed a regular assessment on 30-12-2008 inter alia disallowing/adding fall in GP, bad debts, repairs and maintenance, unsecured loans, sacrifice fee paid to IDBI, increase in share capital, section 43B deduction and directors remuneration of ₹ 12,93,12,000/-, ₹ 3,11,000/- ₹ 17,90,595/-, ₹ 2,49,77,000/-, ₹ 1,01,04,000/-, ͅ .....

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due to its failure in deducting TDS inter alia on rent, auditors remuneration and interest sums paid aggregating to ₹ 4,17,36,000/-. He framed reassessment on 24-12-2009 disallowing a gross figure of ₹ 3,13,90,679/- by invoking section 40(a)(ia) of the Act. The assessee s taxable income stood computed as ₹ 27,90,49,721/- against set off against even amount of brought forward depreciation and loss leaving behind nil income. This followed CIT s order dated 5-03-2010 in section 26 .....

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section 148 notice dated 15-03-2011. The assessee filed return on 20-04-2011 and sought for reopening reasons. The Assessing Officer furnished the same on 11-10-2011 reading as under:- The reasons for reopening were as under: In this case the assessment u/s. 143(3) of the act was completed on 30.12.2008 resulted into a total income of ₹ 24,76,59,042/-. P/L a/c was charged with an amount of ₹ 8,18,923/- being net of prior period expenses, instead of ₹ 19,99,107/-. The total und .....

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ssessment within the meaning of section 147 of the I.T. Act, 1961. 6. The assessee filed its objection petition dated 20-10- 2011against the impugned reopening inter alia pleading the same to be not based on any fresh tangible material and amounting to change of opinion already formed. The Assessing Officer rejected the same in his separate order dated 31-10-2011. He thereafter framed the impugned reassessment on 11-11-2011 treating assessee s income of ₹ 157.07 lacs as the one from other .....

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correctness of prior period expenditure disallowance. The CIT(A) has partly accepted second and third substantive ground in accepting ₹ 38.53 lacs out of ₹ 157.07 lacs to be treated as business income thereby directing the Assessing Officer to grant the assessee depreciation relief as per special bench decision in DCIT vs. Times Guarantee Ltd. (2010) 131 TTJ 257 (Mum) propounding a set off principles on the issue. He has rejected assessee s all other contentions. 8. Learned authorize .....

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ance of the audit party and solely on the ground of audit objections, we called upon Shri Patel, learned Advocate appearing on behalf of the Respondent-Revenue, to provide the original file from the AO and Shri Patel has produced the relevant files from the office of the AO. On a perusal of the files, the noting made therein and the relevant documents, it appears that the assessment is sought to be reopened at the instance of the audit party, solely on the ground of audit objections. It is also .....

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taken that if the reassessment proceedings are initiated merely and solely at the instance of the audit party and when the Assessing Officer tried to justify the Assessment Orders and requested the audit party to drop the objections and there was no independent application of mind by the Assessing Officer with respect to subjective satisfaction for initiation of the reassessment proceedings, the impugned reassessment proceedings cannot be sustained and the same deserves to be quashed and set as .....

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on the aforesaid one ground only. Rule is made absolute. In the facts and circumstances of the case, there shall be no order as to costs. 9. The assessee s second argument is that it had placed on record all necessary details by way of replies to Assessing Officer s queries at pages nos. 26 and 30 of the paper book during the course of scrutiny. It refers to page 26 para 2 comprising of prior period expenditure details. Its case is that the Assessing Officer accepted the same and also included .....

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