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2019 (8) TMI 409

..... ITAT has in the impugned order noted that for AY 2004-2005 there was no material in possession of the AO other than the observation of the Revenue audit to proceed against the Assessee u/s 147 - CIT (A) noted that the case fell squarely within the realm of ‘change of opinion’ which was impermissible as a basis for re-opening of assessments after a lapse of four years. The CIT (A) expressly annulled the re-assessment proceedings ITAT noted that this was not challenged by the Revenue. It only challenged the deletion of the addition on merits. In the absence of any challenge to the quashing of the re-assessment proceedings by the Revenue, the ITAT found no ground to interfere. Revenue sought to contend that the ITAT adopted the tec .....

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..... s justified. The Court is unable to find any error having been committed in the ITAT in this regard. No substantial question of law arises on this issue as well. Penalty u/s 271(1) (c) - Defective notice - ITAT followed the decision of CIT v. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows [201 .....

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..... 2011 and ITA No. 429/2019 is directed against an order passed by the ITAT in ITA No. 3509/Del/2013 for AY 2004-2005 respectively. 5. One common issue sought to be urged by the Revenue in all these appeals is whether the ITAT was justified in upholding the order of the Commissioner of Income Tax (Appeals) [ CIT (A) ] accepting the Respondent/Assessee s revised computation of income in terms of Section 44 read with First Schedule to the Act? There are certain other incidental questions urged which will be discussed hereafter. 6. The facts as far as AY 2004-2005 is concerned, are that the Respondent, which is carrying on life insurance business, filed its return of income which was picked up for scrutiny. Initially the assessment was completed .....

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..... scrutiny and statutory notices were issued by the AO to the Respondent. After making some additions and disallowances under Sections 28 and 43B of the Income Tax Act, 1961 (hereafter Act ), the AO computed the income under the head Business at an assessed loss of ₹ 5,48,20,431/-. 10. Subsequently, the AO claimed to have noted that the Respondent had claimed excessive deductions/allowances. In its appeal against this assessment order before the CIT (A), the Respondent raised an additional ground that its income from the insurance business had to be computed in terms of Section 44 of the Act which was applicable exclusively to income derived from such insurance business. Accordingly, it also furnished a revised computation of loss at &# .....

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..... Revenue filed appeals for the above AYs before the ITAT. One appeal of the Respondent pertaining to AY 2007-2008 was dismissed by the CIT (A) who upheld the imposition of penalty upon the Assessee under Section 271 (1) (c) of the Act. Against this, the Respondent filed an appeal before the ITAT. 15. The ITAT has in the impugned order noted that for AY 2004-2005 there was no material in possession of the AO other than the observation of the Revenue audit to proceed against the Assessee under Section 147 of the Act. The CIT (A) noted that the case fell squarely within the realm of change of opinion which was impermissible as a basis for re-opening of assessments after a lapse of four years. The CIT (A) expressly annulled the re-assessment pro .....

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..... he Act read with First Schedule thereof deals exclusively with the computation of Profit and Gains from life insurance business. These provisions, which begin with non-obstante clauses, override other provisions of the Act. There was no option but to compute income for insurance business in terms thereof. Therefore, the Respondent was justified in filing the revised computation under Section 44 of the Act and claiming this as an additional ground before the CIT (A). In the circumstances, the direction given by the CIT (A) to the AO to compute income in terms of Section 44 of the Act was justified. 20. The Court is unable to find any error having been committed in the ITAT in this regard. No substantial question of law arises on this issue a .....

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