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2019 (10) TMI 295

..... :- It cannot be said that the assessee has failed to disclose all the material facts fully and truly to complete the assessment. Notice u/sec. 148 is issued after 04 years of the relevant assessment and as per proviso to section 147, to reopen the assessment on the ground of escapement of income, the AO has to establish that the assessee has failed to disclose the fully and truly of the material facts to complete the assessment. In the present case, the assessee has disclosed all the facts in respect to the notice issued by the Assessing Officer u/sec. 142(1) dated 16/12/2010. By considering the above proviso to section 147 and also by considering the facts of the case we find that the assessee has disclosed all the material facts truly and fully before passing the assessment order u/sec. 143(3) and the Assessing Officer by considering the same, assessment was completed on 31/12/2010. Thus, the notice issued u/sec. 148 dated 19/03/2015 is invalid and subsequent order passed u/sec. 143(3) r.w.s. 148, dated 11/03/2016 is bad in law. Therefore, we quash the assessment order passed u/sec. 143(3) r.w.s. 148 dated 11/03/2016 and partly allow the appeal of the assessee. - ITA No. 394/VIZ/ .....

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..... mitted all the relevant information and assessment was completed without any addition on the matters referred in the notice. Later basing on the internal audit objection of the Income-tax Department, the case was reopened without any additional evidence or information. It was submitted that this is nothing but a mere change of opinion and also submitted that the issue was examined by the Assessing Officer and did not find any reason to make addition hence, reopening is not warranted. Even during the course of assessment proceedings also, the assessee strongly objected for reopening of the assessment. However, the Assessing Officer not agreed with the explanation of the assessee and observed that as per section 147 it is clear that there should a reason and belief and such reasons must be recorded. The assessee must have disclosed fully and truly all material facts necessary for his assessment for that assessment year. Here in the case on hand, the then Assessing Officer has rightly recorded his reasons believed. Basing on the material evidence that was cropped up during the subsequent assessment years (A.Y. 2011-12 & 2012-13) i.e. claim of unincurred sinking fund in the profit .....

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..... e reply filed by the assessee and also books of account, assessment is completed u/sec. 143(3) dated 31/12/2010. It was further submitted that the very same assessment is reopened by issuing notice u/sec. 148 and assessment is completed on 11/03/2016 which is invalid and not correct according to law. 7. On the other hand, ld.DR strongly supported the orders of the authorities below. 8. We have heard both the sides, perused the material available on record and orders of the authorities below. 9. The assessee is engaged in the development of projects in the area of VGTM UDA working under the control of Government of Andhra Pradesh. During the course of assessment proceedings, the Assessing Officer has issued a notice u/sec. 142(1) dated 16/12/2010 where the Assessing Officer has specifically asked about the sinking funds of ₹ 19,27,95,540/- debited to profit & loss account and called for explanation from the assessee, which is at page No.133 of the paper book. For the sake of convenience, the notice issued by the Assessing Officer u/sec. 142(1) dated 16/12/2010 is extracted verbatim as under: Notice U/S 142(1) OF THE I.T.ACT, 1961. Office of the Asst. Commissioner of Income .....

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..... do- 6 Advocate / Legal Fees 435428.00 -do- 7 Demolition Charges (Net) 128893.00 -do- 8 Audit Fee (Internal) 17980.00 -do- 9 Uniform to Drivers & Attenders 11346.00 -do- 10 Provisions for Depreciation Reserve 22,04,007.36 -do- 11 Rent for Project Office, Guntur. 60500.00 -do- 12 Cremation Charges 10000.00 -do- 13 Telecharges and Postal Charges 686504.00 -do- 14 Expenditure for developmental Works (Works in progress) 30749344.50 Master Plan Expense 15 Sorts & Games 44453.00 -do- 16 Advertisement charges 32,10,095 -do- 4) As could be seen from the above Income & Expenditure, the assessee incurred Expenditure of ₹ 7,38,18,289.76 during the current assessment year, includes an amount of ₹ 3,40,03,892.5/- expenditure towards Development Expenditure as qualified to be in the Master Plan Expense and an amount of ₹ 3,98,14,397.76/- expenditure towards the Administration & Other Maintenance Expense. 5) As can be seen in paragraph No.1, the various heads numbered from 1 to 6 are in the nature of revenue receipts and should be treated as Income received during the year, instead of treating it as capital receipt and placing it as outstanding liability within th .....

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..... cted as under:- During the previous year the assessee has received Development charges (Net) ₹ 17,19,94,857/-, Compounding Fees ₹ 41,28,117/-, Application fees ₹ 1,06,64,493/-, Open space charges ₹ 2,21,53,592/-, Road development charges ₹ 13,90,016/-, Recommendation fees ₹ 14,91,030/-, Conversion fees ₹ 1,30,69,953/-, Impact fees ₹ 19,26,225/-, resulting to a total of ₹ 22.68 crores. In view of the statutory obligation as per GoMS No. 530, dated 28/09/1998, 85% of these development charges i.e. 19.28 crores is to be utilized for development activities. As the authority is not able to utilize the same in the current year, the same is transferred to development or sinking fund a/c and will be utilized in the coming years. 11. The Assessing Officer after considering the explanation of the assessee, assessment was completed u/sec. 143(3) on 31/12/2010. From the above, it is clear that the Assessing Officer has asked the assessee about the sinking funds of ₹ 19,27,95,540/-. The assessee has replied and furnished books of account before the Assessing Officer. The Assessing Officer after examining all the details, assessment is .....

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