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2014 (4) TMI 1248

..... e instant case for A.Y 2006-07, the very issue has been raised, though concluded not only in the earlier years, but also, in the original assessment on due scrutiny. In absence of any new tangible material available with the Assessing Officer, on the basis of which he could form his belief that income chargeable to tax has escaped assessment, it is not open to the AO to change his opinion by issuing the notice of re-assessment for the same being impermissible under the law. Revenue could not point out as to in what manner, there has been a failure on the part of the assessee to disclose such material facts noted hereinabove. The reasons recorded itself also clearly indicates that from the verification of the record and on perusal of balance-sheet, details of exchange difference have been noted, leading to form a belief of escapement of income. From the very material available and in wake of this discussion, we hold that the belief formed by the Assessing Officer is from the very record of the case, and therefore, the very assumption of the jurisdiction on the part of the AO in this case, where the notice had been issued on expiry of four years' period is not sustainable, and th .....

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..... rovisions contained in Section 30 to Section 43D of the Act. Deduction is not admissible on expenditure of capital nature for arriving at the profit and gain of the business. Perusal of Balance sheet revealed that following amount was shown as provision under Schedule E : Current liabilities and provisions being exchange difference debited to profit and loss account on PCFC loan. (1) Provision for Exchange Difference PCFC loan ₹ 34,56,215/= Provision for Exchange Difference PSCFC Loan (-) ₹ 27,04,871/= Hence, net for Exchange Difference PCFC loan comes to ₹ 7,51,334/=. As the above expenses of ₹ 7,51,344/= being of capital nature, ie., towards repayment/liabilities of loan amount deduction was not admissible under any of the provisions of the Act for arriving at the profit and gains of the business. The said expenses required to be disallowed and added to income for the purpose of income tax which was not done. This resulted in under-assessment of income of ₹ 7,51,344/= and total short levy of income tax of ₹ 3,36,358/= [I.T 2,52,901 + Interest u/s. 234B of ₹ 83,457/=]. Therefore, I have reason to believe that there is escapement of income .....

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..... rd March 2013; (e) Provide for cost of this petition; (f) Pass any other order(s) as this Hon'ble Court may deem to be fit and more appropriate in order to grant interim relief to the petitioner." 6. On issuance of notice, Revenue appeared and filed affidavit-in-reply contending inter alia that the assessee had not furnished details during the assessment proceedings to prove that the loan taken by it on PSCFC and PCFC was not capital in nature and it is only for revenue expenditure purpose, and therefore, there was no true and full disclosure of all material facts necessary for assessment before the Assessing Officer concerned. It is further contended that in case of the assessee, all that transpired for the assessment years 2004-05 and 2005-06, those details would not be applicable in the present case. In absence of any specific details furnished by the assessee, stand is taken by the Revenue that proceedings of reopening was not solely on the ground of the audit party objection but Assessing Officer had applied his mind and thereafter such notice has been issued. 7. We have heard learned counsel Shri Tej Shah for the petitioner. It was fervently submitted before us by hi .....

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..... tinized and also at the end of four years from the relevant assessment year. 10. As provided under the law, the essential requirement for such reopening on completion of four years period from the end of the relevant assessment year in scrutiny assessment would be that the assessee fails to disclose fully and truly all material facts necessary for the purpose of assessment and that the income chargeable to tax escaped the assessment, as non filing of return u/s. 139 as in response to notice under sub-section (1) of Section 142 of the Income-tax Act is not the case here which are the material facts shall need to be regarded from the facts of each case. Assessing Officer can reassess the income chargeable to tax if has escaped the assessment for any assessment years, if it comes to his notice from any new tangible material. No action although can be taken on expiry of four years period unless the income has escaped assessment on account of assessee's failure to disclose fully and truly all material facts. 11. Such being the requirement, the reasons recorded by the Assessing Officer for issuance of such notice shall need to be regarded at this stage. Reasons supplied to the petiti .....

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..... eady mentioned in the balance-sheet of the petitioner. It was also held and observed that the specific query was raised with regard to these items, which were duly replied to alongwith necessary evidence by the assessee, and therefore, the Court was of the opinion that initiation of such proceedings of reassessment was only a change of opinion on the part of the Assessing Officer. 15. We notice that in the instant case also for A.Y 2006-07, the very issue has been raised, though concluded not only in the earlier years, but also, in the original assessment on due scrutiny. In absence of any new tangible material available with the Assessing Officer, on the basis of which he could form his belief that income chargeable to tax has escaped assessment, it is not open to the Assessing Officer to change his opinion by issuing the notice of re-assessment for the same being impermissible under the law. 16. The respondent-Revenue could not point out as to in what manner, there has been a failure on the part of the assessee to disclose such material facts noted hereinabove. The reasons recorded itself also clearly indicates that from the verification of the record and on perusal of balance-sh .....

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