TMI Blog2019 (1) TMI 1814X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-1-2019 - SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For the Revenue : Shri Awungshi Gimson, DR For the Assessee : Ms. Aarti Vissanji, AR ORDER Per Rajesh Kumar, AM: This appeal by Revenue arises out of the order of the CIT(A) 12, Mumbai, dated 05.05.2017, which in turn has arisen out of the order passed by the Assessing Officer u/s. 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to A.Y. 2008-2009. The assessee has also filed cross objection. 2. First, we shall decide the cross objection of the assessee i.e. CO No.334/Mum/2018, wherein the assessee has raised the following grounds :- The Respondent submits the following cross-objections are independent, separate / alternative and without prejudice to one another: 1. Reopening of the assessment is bad in law On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals)-12, Mumbai ['CIT(A)'] erred in holding that all the pre-conditions necessary for assuming jurisdiction under section 147 of the Income-tax Act, 1961, had been satisfied. 2. Reopening of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r account shall be computed as insurance income u/s 44 of IT Act and income from Share Holder account is computed as per normal provision of the Act. Further, it was noticed that the Assessee had mentioned against the point 4 of ntoes to computation that the income has been computed after the considering expenses amount of ₹ 12,77,50,343/- incurred prior to date of registration (i. e. December 19,2007) with IRDA. Since, the expenditure was incurred prior to the commencement of business, the same should have been amortized and aIlowed ₹ 2,55,50,068/- as deduction of an amount equal to one-fifth of ₹ 12,77,50,343/- for each of the five successive previous years as per section 350 of the IT Act. However, during the assessment the assessing officer had not amortized and allowed the whole expenditure. This had resulted in under assessment of income of ₹ 10,22,00,275/- and consequent allowance of carry forward of loss to that extent. The notional tax effect on this account works out to ₹ 3,47,37,873/- In view of the above facts case is reopened u / s 147 of the Act. Sd/- (Saravana Kumaran), DCIT Cir.6(1), Mumbai Thereafter the AO completed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, reopening on the basis of audit objection is without application of mind as issuing notice u/s.148 of the Act in a mechanical manner is bad in law and, therefore, reassessment proceedings should be annulled and quashed. 7. In defence of her argument, ld. AR relied on the decision of Hon ble Delhi High Court in the case of Xerox Modicorp Ltd. Vs. DCIT, [2013] 350 ITR 308 (Delhi). Ld.AR also submitted that the facts of claim of expenses against the income has duly been stated in para 4 of the computation of total income and it was also before the AO at the time of assessment proceedings which culminated u/s.143(3) of the Act, and, thus, the AO has accepted the claim of assessee after due application of mind. Even on this count, the reassessment proceedings are bad in law as the same are based upon the change of opinion which is not permissible under law. Finally, ld. AR submitted that the reassessment proceedings may kindly be quashed in view of the above stated facts and position of law. 9. Per Contra, Ld. DR before the bench submitted that the case of the assessee was reopened within four years from the end of relevant assessment year and, therefore, if the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture was incurred prior to the commencement of business, the same should have been amortized and aIlowed ₹ 2,55,50,068/- as deduction of an amount equal to one-fifth of ₹ 12,77,50,343/- for each of the five successive previous years as per section 350 of the IT Act. However, during the assessment the assessing officer had not amortized and allowed the whole expenditure. This had resulted in under assessment of income of ₹ 10,22,00,275/- and consequent allowance of carry forward of loss to that extent. The notional tax effect on this account works out to ₹ 3,47,37,873/- It is clear from the reasons recorded by the audit party that para 3 has been reproduced verbatim and based on that the assessment has been reopened u/s.147 of the Act as is clear from the conjoint reading of audit objection and reasoning recorded for reopening of the assessment in the foregoing paras. Thus, it is abundantly clear that the assessment was reopened on the basis of audit objection by audit party and there is no application of mind by the AO on this issue. We find merit in the arguments of ld. AR that the there is no satisfaction by the AO and there is no application of min ..... X X X X Extracts X X X X X X X X Extracts X X X X
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