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Dy. Commissioner of Income Tax Circle–2 (2) , Mumbai Versus M/s. James Mackintosh & Co. Pvt. Ltd.

2017 (11) TMI 957 - ITAT MUMBAI

Reopening of assessment - addition of bonus/commission paid to the directors - reopening simply on the basis of audit report in Form no.3CD - non independent application of minD by AO - Held that:- Undisputedly, in case of assessee, assessment was originally completed under section 143(3) of the Act on 30th November 2007. - Assessing Officer has passed a detailed order after verifying all facts and materials brought on record and in the process has made a number of disallowances. Thus, it is .....

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essment was simply on the basis of audit report in Form no.3CD filed by the assessee along with the return of income and was available before the Assessing Officer at the time of original assessment proceedings under section 143(3) of the Act. Thus, it is very much clear that after completion of original assessment proceedings, no fresh and tangible material has come to the possession of the Assessing Officer revealing escapement of income. - Formation of belief on the basis of materials al .....

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by the learned Commissioner (Appeals)-5, Mumbai, for the assessment year 2005-06. 2. Brief facts are, the assessee a resident company is engaged in the business of shipping agents. For the assessment year under consideration, the assessee had originally filed its return of income on 28th Oct 2005, declaring total income of ₹ 37,76,040. The return of income filed by the assessee was selected for scrutiny and the Assessing Officer completed the assessment under section 143(3) of the Act vid .....

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ons for re-opening and thereafter, as it appears, also objected to the re-opening of assessment. However, the Assessing Officer ultimately completed the assessment under section 143(3) / 147 of the Act by disallowing bonus and commission paid of ₹ 1.50 crore to directors by invoking provisions of section 40A(2)(b) of the Act. The assessee challenged the assessment order by filing the appeal before the learned Commissioner (Appeals), inter-alia, challenging the validity of re-opening of ass .....

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ent proceedings under section 143(3) of the Act. He, therefore, held that re-opening of assessment was not on the basis of any tangible material but on a mere change of opinion. Further, the learned Commissioner (Appeals) found that re-opening of assessment under section 147 of the Act was made by the Assessing Officer on 29th March 2012, which is after expiry of four years from the end of the relevant assessment year in dispute. Therefore, as per the provisions of section 147 of the Act, such r .....

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nt under section 147 as void. Being aggrieved of the aforesaid decision of the learned Commissioner (Appeals), Revenue is in appeal before us. 4. The Learned Departmental Representative submitted, the Assessing Officer at the time of original assessment proceedings has completely overlooked the reasonableness of bonus and commission paid to the directors keeping in view the provisions of section 40(A)(2)(b) of the Act. Therefore, it cannot be said that in the original assessment proceedings, the .....

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of the Act was valid. 5. Learned Authorised Representative strongly relied upon the finding of the first appellate authority. 6. We have heard rival contentions and perused the material available on record. Undisputedly, in case of assessee, assessment was originally completed under section 143(3) of the Act on 30th November 2007. A perusal of the original assessment order, a copy of which is placed in Page-3 of the paper book, would reveal that the Assessing Officer has passed a detailed order .....

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xcessive, hence, the entire amount is not allowable. Thus, as could be seen from the reasons recorded, the re-opening of assessment was simply on the basis of audit report in Form no.3CD filed by the assessee along with the return of income and was available before the Assessing Officer at the time of original assessment proceedings under section 143(3) of the Act. Thus, it is very much clear that after completion of original assessment proceedings, no fresh and tangible material has come to the .....

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amounts to change of opinion, hence, impermissible. Moreover, it is a fact on record that the Assessing Officer initiated action under section 147 of the Act on 29th March 2012, which is after expiry of four years from the end of the relevant assessment year i.e., 2005-06. 7. In fact, the Assessing Officer issued notice under section 147 of the Act on 29th March 2012 which is almost at the fag end of six years from the assessment year 2005-06, when the re-opening under section 147 even under no .....

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