GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (9) TMI 1140 - ITAT AHMEDABAD

2016 (9) TMI 1140 - ITAT AHMEDABAD - TMI - Reopening of assessment - addition on account of low gp - Held that:- In order to reopen the assessment, where the scrutiny assessment has already undertaken, even before the end of the four years, the AO should possess some fresh tangible material, which came to the possession of the AO after the conclusion of the assessment. A bare perusal of questionnaire and the particular question raised at serial no.11, it is of the view that the AO has already go .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evances revolve around two substantial issues, viz. the ld.CIT(A) has erred in confirming reopening of assessment and addition of ₹ 14,50,980/- which was added by the AO on account of low GP. 3. Brief facts of the case are that the assessee has filed its return of income on 1.11.2004 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 11.10.2004 which was duly served upon the assessee. The ld.AO has pass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rbor a belief that the income was escaped assessment or not. The reasons read as under: ANNEXURE ( recording the reasons for initiating proceedings u/s.148 ) In this case, the assessee filed its return of income on 01.11.2004 declaring income of Rs.Nil and assessment u/s.143(3) of the Act was completed on 16.11.2006 at total income of ₹ 282076/- 2. It is seen that there is drastic fall in sales compared to previous year whereas there is steep rise in consumption of raw material and power/f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ne in sales Y O Y basis by 20% and the GP declared is down by 58% as compared to immediate previous year. It is evidentiary and abundantly clear from above data that the expenses are not commensurate with the sales shown, the auditor, in Form 3CD (item 'No'.2) has observed that record of raw materials are not maintained systematically and the assessee should maintain quantiative value records of all the raw materials, packing materials, consumable, stores & spares by systematic sway .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Income Tax Officer, Wd-4(4) Baroda. The ld.AO has passed the assessment order on 24.12.2009 and determined the taxable income at ₹ 17,33,060/-. The ld.AO has made addition of ₹ 14,50,980/- on account of fall in GP. 4. Appeal to the CIT(A) did not bring any relief to the assessee. 5. The ld.counsel for the assessee, while impugning the order of the ld.CIT(A) contended that during the course of original assessment proceedings, the ld.AO has issued a questionnaire under section 142(2) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ereof. 6. According to the ld.counsel for the assessee, there is no fresh tangible material came to the possession of the AO exhibiting the fact that income has escaped the assessment. The ld.AO has reappraised himself with the material already made available by the assessee during the scrutiny assessment. Thus, according to the ld.counsel for the assessee, the assessment has been reopened on the basis of change of opinion, which is not sustainable in the eyes of law. For buttressing the content .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

into consideration the decision of the Hon ble Supreme Court in the case of Kelvinator India Ltd. (supra). She drew our attention towards para 4.1.4 of the order, and contended that if on appraisal of the material available with the AO, it came out that income has escaped assessment, then, the AO would be justified to form a belief that assessment required to be reopened by issuance of notice under section 148 of the Income Tax Act. 8. I have duly considered rival contentions and gone through t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Patel (supra). This decision of the Hon ble Delhi High Court has been upheld by the Hon ble Supreme Court, meaning thereby, impliedly, view taken by the Hon ble Gujarat High Court in the case of Praful Chunilal Patel (supra) was not approved by the Hon ble Supreme Court. Recently, Hon ble Delhi High Court has considered all these aspects in the case of Indu Lata Rangwala Vs. DCIT in Writ Petition No.1393 of 2002 decided on 18.5.2016, wherein the Hon ble Delhi High Court has considered the decisi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

there is no occasion for the AO to form an opinion after examining the documents enclosed with the return whether in the form of balance sheet, audited accounts, tax audit report etc. 35.2 The first proviso to Section 147 of the Act applies only (i) where the initial assessment is under Section 143 (3) of the Act and (ii) where such reopening is sought to be done after the expiry of four years from the end of the relevant assessment year. In other words, the requirement in the first proviso to S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

47 states that for the purposes of Section 147, where a return of income has been furnished by the Assessee but no assessment has been made and it is noticed by the AO that the Assessee has understated the income and claimed excessive loss, deduction, allowance and relief in the return then that "shall also be deemed to be a case where the income chargeable to tax has escaped assessment". 35.5 As explained by the Supreme Court in Rajesh Jhaveri Stock Brokers P. Ltd. (supra) and reitera .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

income has escaped assessment on some fresh tangible material that provides the nexus or link to the formation of such belief. In a case where the initial return is processed under Section 143 (1) of the Act and an intimation is sent to the Assessee, the reopening of such assessment no doubt requires the AO to form reasons to believe that income has escaped assessment, but such reasons do not require any fresh tangible material. 35.7 In other words, where reopening is sought of an assessment in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version