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2016 (8) TMI 360 - ITAT CHENNAI

2016 (8) TMI 360 - ITAT CHENNAI - TMI - Reopening of assessment - reasons to believe - excessive claim of the assessee - depreciation set-off - Held that:- The reasons recorded by the Assessing Officer clearly speak for the under assessment of tax hence, the conditions laid above stand fulfilled in so far as re-assessment proceedings are concerned. - In the present case, on framing the assessment order of Maheswari Sugars Ltd. for the assessment year 2006-07 vide order dated 25.03.2008, it c .....

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ad escaped assessment. The assessee has not produced anything before the Commissioner of Income Tax (Appeals) to show as to how this fact was fully and truly disclosed before the assessing authority and that there was not failure on the part of assessee. Hence, the Commissioner of Income Tax (Appeals) wrongly cancelled the assessment order. It is fully covered by the provisions of Explanation 1 to Section 147 of the Income Tax Act - It is possible that with due diligence the Assessing Office .....

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VVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Coimbatore, dated 26.05.2015 relevant to the assessment year 2007-08. The grievance of the Revenue in this appeal is with regard to quashing of reassessment order by the ld. CIT(A) by observing that there was no tangible fresh material in the hands of the Assessing Officer to believe that the income has escaped assessment and reopening is bad in law. .....

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algamated with M/s. Bannari Amman Sugars Limited, the assessee, herein, pursuant trot he order issued by the High Court of Judicature at Madras which was effective from 01.01.2007. In this background, the Assessing Officer issued a notice under section 148 of the Act on 21.03.2013 by recording reasons for reopening of assessment as follows: Hence, it needs to be verified whether as losses amalgamating company has been taken into account for the purpose of valuation. It needs verification whether .....

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d whether, it was actually carried on in its account for the financial year 2006-07. According to the Assessing Officer, in the assessment order dated 25.03.2008 in the case of Maheswara Sugars Limited for the assessment year 2006-07, it was limited to the statement that the assessee was not in operation for five years before taking over by Bannari Amman Group on 07.02. 2006. In the assessment order under section 143(3) of the Act dated 29.12.2009 in the case of Bannari Amman Sugars Ltd. for the .....

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pleted under section 143(3) r.w.s. 147 on 31.03.2014 in the case of Maheswara Sugars Ltd. for the assessment year 2006-07 the depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to ₹.6,98,05,670/- out of total brought forward losses amounting to ₹.23,73,98,026/- that was brought forward for set off against the assessment year 2006-07 was disallowed for the following reasons: a. The assessee themselves conceded that the company was not in operation for the pre .....

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arently legal mistake is found to have been committed by the Assessing Officer, reopening of assessment is legally permissible . In the light of the above decision of the Apex Court of the land, the slew of decisions cited by the assessee becomes irrelevant. 4. Accordingly, while framing the assessment order, the books of account of M/s. Maheswara Sugars Ltd. and the assessee company and the Annual Reports for the relevant years were examined and found that the conditions stipulated in section 7 .....

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ent years 2002-03 to 2004-05 amounting to ₹.6,98,05,670/- would be reduced as determined in the assessment order in the case of Maheswara Sugar Mills Ltd. for assessment year 2006-07 and only losses amounting to ₹.16,10,19,160/- are allowed to be carried forward for set off against the assessee s current income. 5. Against this, the assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) placed judgement in the case of Usha International Ltd. 348 ITR 485 (Del)(FB) .....

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ent order itself and he should have given findings on merits. The ld. DR relied on the assessment order and also judgement of the Hon ble Supreme Court in the case of CIT v. PVS Beedies Pvt. Ltd. (supra). According to him, while going through the reassessment order of Maheswara Sugars Ltd. for the assessment year 2006-07, it came to know that depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to ₹.6,98,05,670/-, out of total brought forward losses amounting to  .....

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tted that since the Assessing Officer made use of the material in the form of the assessment order of Maheswara Sugars Limited for the assessment year 2006-07 to reopen the assessment and it cannot be used since that assessment order is bad in law. The ld. AR has further relied on the decision of the Hon ble Delhi High Court in the case of SPIC Infotainment Ltd. v. CIT 247 CTR 500. According to the ld. AR, the reopening of assessment is bad in law since in this case, there is no fresh tangible m .....

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. AR is that notice for reassessment has been issued beyond four years from the end of relevant assessment year and against the assessee had brought all material facts in the return filed, the reopening on the basis of same set of facts is bad in law and it is only change of opinion. It is a settled law that on the basis of material, prima facie, available before the Assessing Officer, he was of the opinion that income chargeable to tax has escaped assessment can be formed. The word reason in th .....

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ssing Officer based on objective material evidence. In the given case, original assessment was completed on 29.12.2009. The reason was recorded as discussed above. The argument of the ld.AR is that u/s 147, in case the assessment order is completed u/s 143(3), as has been done in this case, no action could be taken after the expiry of four years from the end of the relevant assessment year unless the assessee has failed to disclose fully and truly all material facts necessary for the assessment .....

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or re-assess but for taking action thereunder, he has to record reasons that income chargeable to tax has escaped assessment . It is also mandated by section 148(2) to record reasons in writing. The reassessment proceedings u/s 147 are further subject to sections 148,149,150,151,152 and 153. But in the present case, we are required to decide the limited issue regarding the validity of proceedings undertaken after four years of the assessment year in question. The Assessing Officer is required to .....

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Act. The reasons recorded by the Assessing Officer clearly speak for the under assessment of tax hence, the conditions laid above stand fulfilled in so far as re-assessment proceedings are concerned. In so far as the reasons recorded, extracted in the above portion of this order, we are satisfied that the Assessing Officer has reason to believe that income has escaped assessment. This fact confers jurisdiction on him to reopen the assessment. The power to re-assess post 1st April, 1989 are much .....

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er at all to review the assessment. The reassessment, as stated above, has to be based on fulfillment of certain pre-conditions but the concept change of opinion has to be taken into consideration otherwise it may give unbridled power to an Assessing Officer to reopen any and every assessment order which would simply amount to a review. The concept change of opinion is an in-built test to check the abuse of power by the Assessing Officer. So, now only when the Assessing Officer has a tangible ma .....

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taken u/s 147 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 the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. There are two other conditions which are not relevant for deciding the legal issue under appeal. We have to see as to what failure of the assessee to disclose fully an .....

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g assessment for that year. This law was laid down by the Hon'ble Supreme Court in the case of Sri Krishna Pvt. Ltd etc vs ITO & Others, 221 ITR 538. The words omission or failure to disclose fully and truly all material facts necessary for assessment for that year postulates a failure of the assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. The material should not only .....

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t case, on framing the assessment order of Maheswari Sugars Ltd. for the assessment year 2006-07 vide order dated 25.03.2008, it came to the knowledge of the Assessing Officer that the depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to ₹.6,98,05,670/- was already set off out of total brought forward loss amounting to ₹.23,73,98,026/- and the balance amount of ₹.16,10,19,160/- could be carried forward for set off against the assessee s current income .....

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