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TMI Blog2020 (7) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... edings and hence the reassessment proceedings are void ab initio. 2. On the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in making a finding that the issue of CSR expenses (Corporate Social Responsibility) of Rs. 7,04,01,602/- was examined during the initial assessment proceedings. As the issue was not examined by the AO in the initial assessment proceedings, the findings of CIT(A) regarding change of opinion is wrong and factually incorrect. 3. On the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in referring to the ITAT order against sec. 263 order for subsequent assessment year 2007-08 that two opinion are possible whereas in the present AY 2006-07 no opinion was formed by the AO. 4. On the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in not mentioning the relevance of 83 case laws mentioned in his appellate order. 5. On the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in not considering the Prior period expenses of Rs. 21,10,799/-. 6. On the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in not considering the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s 148 was issued on 25.03.2013, therefore, the proviso to section 147 is applicable in the present appeal. In this background, the appellant has challenged the reopening of the assessment in ground no. 1 of the appeal. 4.1 The reasons recorded for reopening of the assessment communicated to the appellant vide letter dated 06.12.2013 of the AO are reproduced herein under:- "25.03.2013 In this case assessment u/s 143(3) was done on 30.12.2008 assessing the total income at Rs. 295,387,54,390/- it is further seen that: 1. The assessee had debited prior expenditure/income of Rs. 76,35,90,980/- ( expenditure debited to P & L 72,17.19,893/- + income debited to P & L : 4.18,71,083/- out of which only Rs. 75,17.57,115/- (net) was added back to the income of the assessee at the time of scrutiny. Since the total amount of prior period expenditure was Rs. 76,36,90,980/-, the balance amount of Rs. 1,18,33,565/- should also have been added back to the income of the assessee. 2. The assessee had debited Rs. 7,04,01,602/- for "Corporate Social Responsibility (CSR)" under the head of "other expenses" which got allowed without being examined. 3. Employees' contribution of Rs. 2.33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kar) 56 DTR 227 & Kalyanji Mavji & Co. Vs CIT(SC) 102 ITR 287. Besides in the decisions ACIT Vs Kanga & Co. 2010-TIOL-464-ITAT-MUM with respect to reopening u/s 148 it is held that " Tangible material " need not be from outside the returned income . In this case in the details under the head " Other expenses" filed during the assessment proceedings an amount of Rs. 7.04,01,602/- was mentioned against the account head 'CSR expenses'. The exact nature of this expenditure could not be deciphered from the mere words 'CSR expenses'. This was not explained by the assessee in detail to allow an opinion to be formed w.r.t. its admissibility as deductible expenditure as wholly and exclusively for business purpose or otherwise. Nor there has been any other detail filed by the assessee to know the exact nature of expenditure claimed. This has also not been discussed in the assessment order. The arguments against other grounds of reopening submitted by the assessee also are devoid of merit. The objections of the assessee in view of the above are dismissed. " 4.3 From a perusal of the above, it is apparent that the AO has not dealt with the specific objections raised by the appellant vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishes that this was an issue on which two views were possible and, therefore, the CIT did not have jurisdiction u/s 263 on this issue. That brings the reopening on this issue within the definition of change of opinion. Moreover, there has been no non-disclosure of material facts. Therefore, the reopening does not survive on the said issue as well. 4.5 As regards the calculation mistake under rule 8D, the said issue falls under the domain of section 154 and not 148.There was no failure on the part of the appellant to disclose any material fact in respect of the said issue as well. Therefore, the reopening cannot be justified on the said issue as well. That leaves us with the second last issue of prior period expenses. The appellant had debited prior period expenses of Rs. 76,35,90,980/- and credited an amount of Rs. 1,18,33,865/-. The credit was on account of reversal of excess expenditure in earlier years and some was net debit of Rs. 75,17,57,115/- (76,35,90,980 - 1,18,33,865/-) . The AO added Rs. 75,17,57,115/- in the original assessment order. The reopening was done to add further amount of Rs. 1,18,33,865/-. In the appellate order dated 17.12.2010 of the CIT(A) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod expenditure was Rs. 76,36,90,980, the balance amount of Rs. 1,18,33,565 should also have been added back to the income of the assessee. The mistake resulted in underassessment of income of Rs. 1,18,33,565 consequent short levy of tax of Rs. 5297627 including interest. Under assessment of income 11833565 Tax @30% 3550070 Surcharge @ 10% 355007 Total 3905076 Add Edu cess @ 2% 78102 Total 3983178 Interest u/s 234B for 33 months 1314449 Total tax effect 5297627 The audit observation was communicated to the Department vide audit memo no. 75 dated 01.09.2009. Reply awaited." 4.6 From a perusal of the above, the appellant's contention gets further strengthened that there was no failure on its part to disclose fully and truly all the material facts as the audit raised is on the basis of facts available on record. In view of the same, the invocation of section 148 in respect of this issue also cannot be justified. 4.7 The last issue pertain to late payment of employee's contribution to Provident/Pension Fund. The facts related to this addition were also disclosed before the AO at the time of original assessment proceedings. The said issue, even otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxman 11 (Del) 38. Atma Ram Properties Pvt. Ltd. 343 ITR 141 (DEL) 39. Satnam Overseas. 228 CTR 121 (Del) 40. Ashok Mittal, 224 Taxman 55 (Del) 41. Orient Craft Ltd. 354 ITR 536 (Del) 42. Sheo Nath Singh. 82 ITR 148 (SC) 43. Ganga Saran & Sons (P) Ltd, 130 ITR 1. 11 (SC) 44. Birla VXL, 217 ITR 1 (Gujrat) 45. Multiscreen Media (P) Ltd. 324 ITR 54 (Bombay) 46. Garden Finance Limited, 268 ITR 48(Guj) 47. Kamlesh Sharma, 287 ITR 337 (Del) 48. Allana Cold Storage Ltd.. Vs. ITO 287 ITR 1 (Bom) 49. Asian Paints Limited, 296 ITR 90 (Bom) 50. Keshav Shares and Stocks Ltd, 326 ITR 553(Del) 51. Vishwanath Engineers, 354 ITR211(Guj) 52. Aroni Commercials Ltd, 362 ITR 403 (Bom) 53. Torrent Power SEC Ltd, 45 Taxman.com 443(Guj) 54. Lakhmani Mewal Das. 103 ITR 437.448(SC) 55. Arjun Singh, 246 ITR 363, 405(MP) 56. Seth Brothers. 251 ITR 270 (Guj) 57. Bombay Pharma Products, 237 ITR 614 (MP) 58. Lokendra Singh Rathore, 155 ITR 629 (MP) 59. United Electrical Co. (P) Limited, 258 ITR 317 (Del) 60. Foramer France 364 ITR 566 (SC) 61. Purolator India Ltd. 343 ITR 155 (Del) 62. Motor & General Fiance, 184 Taxman 465 (Del) 63. Titanor Components Ltd. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, time limit of this order as provided in the proviso to section 147 do not apply but reopening could have been done only within four years. He submitted that this was the ground of appeal before the ld CIT (A). The ld CIT (A) held that there is no non-disclosure of facts in the original return and therefore, the extended time limit of this order do not apply to the facts of the case. He submitted that the ld CIT (A) has decided the ground before him only. He also supported the order of the ld CIT (A). 9. We have carefully considered the rival contentions. The reasons recorded by the ld AO for reopening of the assessment dated 25.03.2013 are reproduced by the ld CIT (A) in para No. 4.1 of his order. The first proviso to s 147 provides that no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year in cases where the original assessment was under s 143(3), unless the escapement is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Department, in cases under the proviso, must prove that the assessee failed to disclose fully and truly all m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the regular assessment proceedings. With respect to the employee's contribution fund the ld AO refers to the information already available with the return of income. The disallowance u/s 14A was merely to correct the incorrect computation in the original assessment proceedings. With respect to the deprecation on computer software, the ld AO has changed his opinion with respect to the rate of depreciation. He merely applies 25% rate of depreciation instead of 60% as applied in original assessment proceedings. In view of this, from all the above facts it is apparent that the ld AO has not pointed out that what facts were not disclosed by the assessee. The ld AO also not brought on record any specific information, which the assessee has failed to disclose in the original return. In view of this, we do not find any infirmity in the order of the ld CIT (A) in stating that reopening is barred by limitation and the period of six years for reopening is not available to the assessee. The ld CIT (A) is also correct in deciding that in absence of any failure on part of the assessee, extended limitation period of six years cannot be available to the ld AO; therefore, the reassessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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