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2016 (7) TMI 190 - ITAT AHMEDABAD

2016 (7) TMI 190 - ITAT AHMEDABAD - TMI - Reopening of assessment - reasons to believe - Held that:- AO had issued a detailed questionnaire which was duly replied by the assessee. It has furnished statutory audit accounts under the Companies Act as well as audit report in Form No.3CA and 3CD along with return. The assessee has submitted all other details called for by the AO. In the reasons recorded by the AO to reopen the assessment, nowhere it has been alleged that the assessee has failed to d .....

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d by the AO. Therefore, the ld.CIT(A) has rightly quashed the re-assessment order. - Decided against revenue - ITA. No. 1154/Ahd/2012 - Dated:- 4-7-2016 - Shri Rajpal Yadav, Judicial Member For the Revenue : Shri Prasoon Kabra, CIT-DR For the Assessee : Ms. Urvashi Shodhan ORDER The Revenue is in appeal before Tribunal against the order of the ld.CIT(A)-XI, Ahmedabad dated 28.03.2012 passed for the Asstt.Year 2003-04. 2. Sole grievance of the Revenue is that the ld.CIT(A) has erred in quashing r .....

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which was disallowed by the AO, and such disallowance was worked out at ₹ 2,89,42,468/-. On appeal, the ld.CIT(A) deleted this disallowance. The AO, thereafter, recorded reasons and issued notice under section 148 on 22.3.2010. He was of the opinion that assessee has made payment of interest to a non-resident without deducting TDS, and therefore, it is not eligible for interest expenditure. 4. It emerges out from the record that the assessee-company imported certain machineries from Barmag .....

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assessment. The reasons recorded by the AO read as under: REASONS FOR RE-OPENING ASSESSMENT U/s.147 OF THE I.T. ACT, 1961 Reg.: NOVA PETROCHEMICALS LTD. A.Y.: 2003-04 The assesses company had filed return on 29.11.2003 showing loss at ₹ 10,39,752. The assessment u/s. 143(3) was finalized on 08.03.2006, determining total-income at ₹ 1,85,44,720/-. 2. It is seen that the interest expenses claimed by assessee include interest payment to LBBW, amounting to ₹ 63,58,012/-, which has .....

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lace: Ahmedabad. Designation : DCIT.Circle-5, Date: 22.03.2010 Ahmedabad. 5. The ld.AO has passed re-assessment order on 18.11.2010 under section 143(3) r.w.s. 147. He made disallowance of ₹ 63,58,012/-. Apart from this, he made certain small disallowances also. 6. On appeal, the ld.CIT(A) has held that the assessee did not fail to disclose all material facts fully and truly in respect of assessment of its income. Therefore, proviso appended to section 147 of the Income Tax would denude th .....

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t. Ltd. Vs. ACIT passed in ITA No.2195/Ahd/2009 had made a lucid enunciation of the scope of section 147. I cannot do better than extracting the discussion made by the Tribunal in this regard. It reads as under: 7. We have considered the rival submissions and perused the material on record. In our considered view the reopening of the assessment is bad in law. For the sake of convenience we reproduce section 147 and proviso thereto:- 147. If the Assessing Officer has reason to believe that any in .....

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s 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in respons .....

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income chargeable to tax has escaped assessment; (3) If four years have expired from the end of the relevant Asst. Year then such escapement was due to failure on the part of the assessee- (i) to file a return u/s 139; (ii) to file a return in response to notice u/s 142(1) or section 148; (iii) to disclose fully and truly all material facts necessary for the assessment. All these aspects must come in the reasonings recorded by the AO. The reasons recorded by the AO should reflect - (i) assessee .....

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s any the failure of the assessee to disclose material facts fully and truly necessary for the assessment for that assessment year. (viii) if assessment is done u/s 143(1), then whether the provision of section 149 are applicable. 8. If reasons recorded did not reflect these ingredients then reopening cannot be sustained. On the aspect of necessity to mention the failure of the assessee to disclose truly and fully all material facts necessary for assessment Hon. Allahabad High Court in CIT vs. P .....

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der subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. From the perusal of the reason recorded it is apparent that no case has been made out that the assesses had failed to disclose fully and truly all material facts necessary for his assessment and no observation has been made in this regard, On the basis of the same material which was available on record, the assessing authority was of the view t .....

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pages 33 to 35 of the paper book. This finding of the Tribunal has not been disputed by raising any question and during the course of the argument by the learned counsel for the appellant. Therefore, we are of the view that on the facts and circumstances, no substantial question of law arises for consideration by this court. Learned counsel for the appellant cited a decision of the Bombay High Court in the ease of Dr. Amin's Pathology Laboratory v. P. M. Prosad, Joint CIT [2001] 252 ITR 673 .....

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t case, complete details were furnished along with the return and during the course of the assessment proceedings and after an application of mind, the deduction under section 36(1)(viii) of the Act was allowed. In the reason recorded no case has been made out that there was failure to disclose any material particular on the part of the assessee. Therefore, limitation beyond the period of four years was not available to the assessing authority. Admittedly, the notice was issued after four years, .....

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essment was sought to be reopened after expiry of four years on the ground that the claim of deduction u/s 80IB(10) included ineligible items of other income such as society deposits, street parking charges, sundry balances, etc. Hon. Bombay High Court in the case of Bhavesh Developers vs. A.O. & Others (supra) observed as under :- Held, allowing the petition, that ex facie, the reasons which had been disclosed to the assessee would show that the inference that the income had escaped assessm .....

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ntain a finding to the effect that there was a failure to fully and truly disclose all necessary facts, necessary for the purpose of assessment. In these circumstances, the condition precedent to a valid exercise of the power to reopen the assessment, after a lapse of four years from the relevant assessment year, was absent in the present case. The notice was not valid and was liable to be quashed. Hon. Supreme Court in the case of ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) held that whe .....

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lose fully and truly all material facts. Even though Court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be initiated for reopening of the assessment, but at the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far fetched, which would warrant the formation of the belief relating to escapement of the income of the asses .....

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l fact to reopen the assessment, power u/s 147 cannot be validly exercised. 9. In the present case there is a clear case of change of opinion. Even though reliance has been placed on the decision of Hon. Supreme Court in Ballimal Navalkishore and others vs. CIT (supra), that judgment existed at the time when the AO took the decision u/s 143(3) and held the expenditure as current repairs allowable in the profit and loss account under section 143(3). Without there being material on record and an a .....

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Bom) also held that when there is no material on record and without there being any allegation of failure of the assessee to disclose such material fact, assessment cannot be reopened after four years. Hon. Gujarat High Court in Inducto Ispat Alloys Ltd. vs. ACIT (2010) 320 ITR 458 (Guj) and Nikhil K. Kotak vs. Mahesh Kumar (2009) 319 ITR 445 (Guj) also held that where the period of four years has expired from the end of relevant Asst. Year the proviso to section 147 would come into play. It sti .....

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