TMI Blog2016 (10) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... no opinion formed in the original assessment proceedings on the issue of claim of examination of tax free interest u/s 10(23G) of the Act. Therefore, we hold that initiation of re-assessment proceedings u/s 147 is valid in law. Additions u/s 40(a)(ia) for non deduction of TDS - provision for royalty, fees for technical service etc - reversal of provision for contractor and professional fee etc. - claim of the assessee-company that these amounts were disallowed u/s 40a(ia) suo motu for non-deduction of tax at source - Held that:- In the year under consider consideration, the very provision created was reversed and therefore the same should be allowed as a deduction. There is no quarrel on this proposition but the claim can be allowed only on satisfying the AO that the provision was reversed out of amount disallowed earlier. The CIT(A) has recorded a categorical finding that the assessee has failed to link provision reversed with the amount of provision originally created and disallowed. The CIT(A) also observed that the assesseecompany had expressed its helplessness to establish the link between original provision and reversal provision during the year under consideration. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, professional fees, rent, etc. respectively. 3.2. The CIT-A erred in holding that reversal of provision is not the correct procedure for claiming the deduction u/s 40(a) and hence, the deduction will be allowed in subsequent years on payment of taxes only. 4. Initiation of penalty proceedings under section 271(1)(c) of the Act, 4.1 On the facts and in the circumstances of the case, the Ld. CIT-(A) erredin not directing the AO to drop the initiation of penalty proceedings when there is no concealment of income or filing of inaccurate particulars. The Appellant craves leave to add to or alter, by deletion, substitution or therwise, the above grounds of appeal, at any time before or during the hearing of the appeal. The Appellant submits that the above grounds are independent and without prejudice to one another. 3. Briefly facts of the case are as under: The appellantassessee is a company duly incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacture and sale of various electrical and engineering equipments. It filed return of income for the assessment year 2008-09 on 28/9/2008 declaring a total income of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961) (41 ITR 191) CIT vs Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) CIT vs SR Construction (2002) 257 ITR 502 (MP) Techno craft industries and Others vs JC shan, Second Income-tax Officer and Others (186 ITR 514) (Bom-HC) Rallis India Ltd. vs ACIT (2010) (TIOL 173 HC Mum IT) Aventis Pharma Ltd. vs ACIT ACIT (2010) 323 ITR 570 (Bom) Asteroids Trading and Investments Pvt. Ltd. vs DCIT (2009) 308 ITR 190 (Bom) The above submissions have been negative by the CIT(A) by holding that there was no opinion formed by the AO at the time of framing original assessment and therefore the re-assessment proceedings are not vitiated by change of opinion and thereby confirmed the validity of the re-assessment proceedings. As regards the disallowance of claim for exemption u/s 10(23G) was confirmed by the CIT(A). The CIT(A), while dealing with disallowance of deduction on reverse of provisions observed as follows: 6.4 I have examined the appellant's arguments as above but am unable to agree with them since the suo-moto disallowance of the provision by the assessee in the year when the provision was made was not a disallowance of contingent liability u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT vs. Kelvinator of India Ltd., (320 ITR 561) re-assessment proceedings should be declared as null and void. He placed reliance on the decision of this Tribunal in the case of Fibres Fabrics International Pvt. Ltd. vs. DCIT in ITA No.1352/Bang/2014 dated 10/2/2016 for the proposition that an erroneous order passed by the original AO does not give jurisdiction for re-assessment proceedings. Thus, he submitted that the very re-assessment proceedings are not valid in law. Without prejudice to this, learned counsel for assessee-company submitted that that the claim for deduction of provision of written back was allowable as in the year in which provision was created the same was offered to tax as no tax had been deducted at source under the provisions of section 40a(ia) of the Act. 5.2 On the other hand, learned CIT(DR) vehemently contested that re-assessment proceedings are valid initiated as the AO had come to know that during the course of assessment proceedings for assessment year 2009-10 that exemption was wrongly allowed u/s 10(23G) of the Act which was no longer in vogue. The fact that the provisions of section 10(23G) of the Act omitted bny the Finance Act, 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese amounts were disallowed u/s 40a(ia) suo motu for non-deduction of tax at source. In the year under consider consideration, the very provision created was reversed and therefore the same should be allowed as a deduction. There is no quarrel on this proposition but the claim can be allowed only on satisfying the AO that the provision was reversed out of amount disallowed earlier. The CIT(A) has recorded a categorical finding that the assessee has failed to link provision reversed with the amount of provision originally created and disallowed. The CIT(A) also observed that the assesseecompany had expressed its helplessness to establish the link between original provision and reversal provision during the year under consideration. In the circumstances, the CIT(A) has confirmed the addition. Even before us, assessee-company had not made any attempt to prove nexus between amount of provision created which was disallowed in earlier years and the amount of provision reversed during the year under consideration. The onus of proving the claim always lies with the assessee. The Hon ble Supreme Court in the case of CIT vs. Imperial Chemical Industries (India) Ltd., (74 ITR 17)(SC) has un ..... 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