TMI Blog2019 (12) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of calculation of tax liability of the assessee. Admittedly, the capital receipts in the current year are less than the capital expenditure and that is why the assessee wants to set off against surplus in the revenue account. In view of above, we see no reason to interfere with the order of the CIT(A) in confirming the addition made by the AO. Validity of reopening of assessment - AY 2008- 09 - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of CIT Vs. Kelvinator India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein newly substituted provision of section 147 of the Act with effect from 01.04.1989 is interpreted by observing, that section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the Assessing Officer to initiate reassessment proceeding upon his mere change of opinion. Further, if 'reason to believe' of the Assessing Officer is founded on an information which might have been received by the Assessing Officer after the completion of assessment, it may be a sound foundation for exercising the power under section 147 r.w.s. 148 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The facts of the case are that the assessee is a Development Authority constituted under the Odisha Development Authorities Act, 1982. The assessee filed its return of income for the assessment year 2005-06 on 31.10.2005 declaring loss of ₹ 29,02,540/-. The Assessing Officer completed the assessment on 26.11.2009 u/s.144/147 of the Act, inter alia, adding ₹ 83,90,492/- to the total income of the assessee which was shown by the assessee as excess of capital expenditure over capital receipt and ₹ 31,18,535/- which was the receipt of the assessee from sale of shop rooms. The assessee carried the matter in appeal upto ITAT and the matter was restored to the file of the AO by the Tribunal dated 12.9.2011 in ITA No.299/CTK/2011 in the light of the fact that the CIT(A) rightly noted that the application of funds were on account of revenue for claiming application of funds of income exempt under the provisions of section 11 of the Act. The Tribunal also observed that it is imperative whether the assessee has preferred to apply for seeking registration u/s.12A or not. In pursuance to the Tribunal order (supra), the Assessing officer pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice issued to the assessee u/s 148 of the Act. Ld DR further submitted that when the assessee is not filing any return of income in response to notice u/s.148 of the Act nor submitting any request to the AO that his earlier return filed u/s.139 of the Act may be treated as returned filed in response to notice u/s.148 of the Act, then the assessee cannot raise any objection towards service of notice u/s.143(2) of the Act alleging the reassessment order as bad in law. 8. On careful consideration of the rival submission, we are of the considered opinion that on being asked by the Bench, ld counsel for the assessee, at Bar, in all fairness, accepted that the assessee has not filed any return of income in response to notice issued u/s.148 of the Act. However, in para 3 of the reassessment order dated 26.11.2009, the Assessing Officer has mentioned that notice u/s 143(2) of the Act and notice u/s.142(1) of the Act was served on the assessee on 26.5.2009. In absence of any return or response to the notice u/s.148 of the Act, the assessee cannot raise any objection or ground regarding service of notice. Therefore, the additional ground of the assessee being devoid of merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, wherein, capital and revenue receipts and expenditure was clubbed together and surplus or deficit thereon was to be considered for the purpose of taxation. Ld counsel lastly submitted that if the rule of consistency is applied, it is clearly discernible from the income and expenditure account that there was deficit/loss of ₹ 29,02,540/- and, therefore, no addition is called for in this regard. 11. Replying to above, ld DR strongly supported the order of the AO as well as the CIT(A) and submitted that since the assessee is not registered u/s.12A of the Act and not claiming any exemption u/s.11 of the Act, therefore, the general principle of accountancy has to be applied to the case of the assessee. Ld D.R. submitted that the revenue and capital account cannot be mixed and the amount of surplus on revenue receipts over the revenue expenditure has to be taxed in the hands of the assessee in the capacity of ordinary assessee or an AOP. 12. On careful consideration of the rival submissions, we are of the considered opinion that undisputedly, the assessee is not registered u/s.12A of the Act and hence, it is not claiming any exemption u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar is less than the capital expenditure and that is why the appellant has a loss and wants to be set off against its surplus in the revenue account. However, clearly this capital expenditure are either straight away capital expenditure on account of the appellant(as in the case of construction of shops) or are in the nature of expenditure in respect of assets not owned by the appellant. In the latter case, the appellant gets suitable grants/money to incur the expenditure. In either case, such expenses are neither allowable expenditure relating to the revenue account of the appellant nor such credits in the capital account which can as is clear from the grounds of appeal be loans be taken as revenue receipt. Therefore, in a year, if the appellant receives a loan or an advance from any authority say the Government or Berhampur Municipality to undertake a project and its relatable expenditure is either negligible or very less during a particular year then it will be equally unfair to tax the surplus in the capital account in the hands of the appellant. Applying this logic any deficit in the capital account also cannot be considered for the purpose of determining the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 55,50,620/- made by the AO. Accordingly, the sole ground on merits of the addition is dismissed. 16. In the result, appeal of the assessee is dismissed. ITA No.366/CTK/2014: A.Y. 2008-09 17. The assessee has raised additional grounds. Ground No.1 of assessee is as under: 1. For that on the facts and in the circumstances, the assessment as initiated u/s.147 and as completed u/s.144/147 is arbitrary and unjustified insofar as no new materials were available for initiation or completion of proceedings u/s.147. 18. At the time of hearing, ld counsel for the assessee submitted before us that this specific ground was omitted to be taken through oversight and that it was taken on 16.3.2018. It was pleaded that assessee may be permitted to raise the additional ground which goes to the root of the matter and clearly transpires from the proceedings before the lower authorities with complete facts on record. 19. Replying to above, the learned departmental representative opposed to the admission of the above ground. 20. After conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee had claimed FBT of ₹ 18,823/- in the income and expenditure account of revenue account, which is not an allowable expense under the I.T.Act. Thus, an amount of ₹ 5,09,58,000/-(₹ 5,08,68,906/- plus ₹ 70,270/- plus ₹ 18,823/-) in the above manner chargeable to tax had escaped assessment within the meaning of section 147 of the I.T.Act, 1961. 22. Ld counsel submitted that since no return of income was filed in response to said notice, again another notice on 11.7.2013 was issued as called for u/s.148 of the Act on or before 23.7.2013 failing which the assessment would be completed exparte to the best of judgment. Ld counsel submitted that there was no new tangible material available with the Assessing Officer while resorting to section 147/148 of the Act, more specifically, while framing original assessment u/s 143(3) of the Act, there was full disclosure of material facts by the assessee and on the basis of those facts, assessment was completed u/s 143(3) of the Act. For this proposition, he relied on the decision of Hon ble Supreme Court in the case of CIT Vs. Kelvinator India Ltd. (2010) 310 ITR 561 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only because in the assessment order, detailed reasons have not been recorded, an analysis of the materials on the record by itself may be justifying the Assessing Officer to initiate a proceeding u/s. 147 of the Act. When a regular order of assessment is passed u/s 143(3) of the Act, the presumption can be raised that such an order has been passed on application of mind. 26. We find that in the case of Usha International Ltd (supra), it has been held as under: In view of the above observations we must add one caveat. There may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc, because the aspect or question may be too apparent and obvious. To hold that the assessing officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing Officer and answers given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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