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2016 (9) TMI 200 - ITAT DELHI

2016 (9) TMI 200 - ITAT DELHI - TMI - Reopening of assessment - addition u/s 41 - Held that:- From the copy of notice u/s 154 of the Act available it is amply clear that the A.O on 31.3.2010, issued notice to the assessee showing his intention to convert head of income from business income to income from other sources pertaining to impugned amount of ₹ 15 lakhs comprising loans written off of Pearl Global Limited and the assessee had also filed reply on 20.4.2010 explaining that the loan w .....

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income whereas the A.O noted that income to the tune of ₹ 50 lakhs has escaped assessment. We may also point out that the main dispute was regarding charging of the said amount as in the original assessment proceedings the A.O taxed the same as business income whereas in the reassessment proceedings the A.O has shown his intention to tax the same as income from other sources and we may also point out that the rectification proceedings u/s 154 of the Act initiated by the A.O earlier were d .....

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ble and consequently, legal Ground is allowed in favour of assessee. - ITA No. 184/DEL/2014 - Dated:- 29-7-2016 - SHRI G.D. AGRAWAL. VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For The Assessee : Shri Pradeep Dinodia, FCA, Shri R.K.Kapoor, FCA For The Department : Shri Amrit Lal, Sr-DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal has been filed by the assessee against the order of the ld. CIT(A)- XVII, Delhi dated 21.10.2013 in first appeal No. 355/11-12 pertaining t .....

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denied the benefits of set off of brought forwarded losses of earlier year against this income by holding " Income from Other Sources " 3. That on the facts and in the circumstances of the case and in law, the learned CIT (A) is erred in holding that loans written off by creditors company should be assessed as "Income from other sources" instead of a business income. 4. That the Learned CIT (A) has not properly appreciated the submission made before her in on letter dated 06 .....

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amendment, modification, rectification and/ or withdraw any or all the above grounds of appeal before the disposal of the same to protect the substantial rights of the appellant assessee. Ground No. 1 3. Apropos Ground No. 1, we have heard the rival contentions and have perused the relevant material on record. Besides several allegations mentioned in the written synopsis dated 12.5.2016 of the assessee, the main contention of the ld. AR is that no action u/s 147 of the Income-tax Act, 1961 [her .....

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Act. The ld. AR contended that no notice can be issued u/s 148 of the Act if all the facts were already available on record and had also been examined at the stage of original assessment framed u/s 143(3) of the Act that would tantamount to mere change of opinion which is not permissible in law. The ld. AR narrating the facts of the case submitted that the assessee filed original return of income dated 13.10.2004 declaring an income of ₹ 1,45,56,809/- which income had been adjusted agains .....

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e to explain or interpret the law and legal inference from the said material facts has to be drawn by the assessee from the facts disclosed by the assessee during the assessment proceedings. The ld. AR lastly contended that from the reasons recorded, it is clear that the A.O mentioned that the amount of ₹ 50 lakhs needs to be disallowed which the assessee had returned back during the year and treated the same as business income of the assessee. The ld. AR further pointed out that the amoun .....

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ning, based on erroneous facts, is illegal and bad in law. 4. Per contra, the ld. CIT-DR strongly supported the action of the A.O and vehemently contended that from the assessment record, it was revealed that income during the relevant previous years comprised of loans written off of Pearl Global Ltd of ₹ 50 lakhs which is covered under income from other sources, therefore, the A.O had reason to believe that income to the tune of ₹ 50 lakhs has escaped assessment within the meaning o .....

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, as per mandate of provisions of section 147 of the Act, no action could have been taken under this provision after expiry of four years from the end of the relevant A.Y unless any income chargeable to tax has escaped assessment for such A.Y for the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that A.Y. In the present case, the A.O recorded the following reasons for initiation of reassessment proceedings: Return of inc .....

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IT Act, 1961. I am also satisfied that on account of failure on the part of the assessee to disclose truly and fully all the material facts necessary for assessment for the above assessment year, the income chargeable to tax to the tune of ₹ 50,00,000/- has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. In view of the above, the main thrust of the A.O is that the amount of ₹ 50 lakhs loans written off pertaining to Pearl Global Ltd is covered under the h .....

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s been allowed. We also are in agreement with the contention of the ld. AR that the amount written back as loan has been carefully assed by the A.O as business income. Therefore, it cannot be alleged against the assessee that the assessee had not disclosed fully and truly all material facts regarding this issue during the assessment proceedings. We may also point out that the ld. counsel of the Revenue could not controvert this fact and another important aspect pertaining to the issue as contend .....

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isions of section 147/148 of the Act, the A.O changed his opinion which was taken at the stage of original assessment but also during rectification proceedings which were initiated and dropped by him. From the copy of notice u/s 154 of the Act available at pages 21 to 23 of the assessee s paper book, it is amply clear that the A.O on 31.3.2010, issued notice to the assessee showing his intention to convert head of income from business income to income from other sources pertaining to impugned am .....

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