TMI Blog2020 (12) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... arently this rectification was tax neutral and no addition/disallowance was warranted for the reason that this amount was never claimed or allowed as a deduction in the earlier year. CIT (A) dismissed the assessee s appeal on an altogether mis-appreciation of the facts of the case as well as law - He went on to observe that if a liability was wrongly provided in a particular Assessment Year, the assessee should have filed revised return for that year. The Ld. CIT (A) also observed that the assessee did not substantiate the working of this amount of ₹ 15,41,18,249/-. In our considered opinion, the Ld. CIT (A) has entirely misdirected himself by making observations which were entirely out of context and leading to an incorrect conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturned filed in response to notice issued u/s 148/-. The assessee also asked for a copy of reasons which was duly supplied to the assessee. The reasons for reopening were as under: During the year under consideration, the assessee while computing the taxable income, claimed and was allowed deduction of an amount of ₹ 15,41,18,249/- pertaining to property tax relating to rectification entry of Assessment Year 2005-06. Since the said amount pertained to Assessment Year 2005-06, the same should not have been claimed in the computation for the Assessment Year 2006-07. I have, therefore, reason to believe that by reason of failure on the part of the assessee to disclose all material facts truly and fully, the income on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Section 148 of the Act, ignoring the fact that the same was bad in the eyes of law, as the conditions and procedures prescribed under the statute have not been satisfied and complied with. (ii) On the facts and circumstances of the case, the learned CIT (A) has erred in confirming the order passed by AO as the reassessment proceedings initiated by the learned AO are bad in the eyes of law, as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. 4. (i) On the facts and circumstances of the case, the reassessment proceedings initiated by the AO and upheld by the learned CIT (A) are bad in the eyes of law, as the reasons recorded for the issue of notice under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of his contention that the reopening itself was invalid void ab initio . 3.1 On the merits of the case, the Ld. Authorized Representative (AR) submitted that during the year under consideration, the assessee, while computing the taxable income, had claimed and was allowed deduction of an amount of ₹ 15,41,18,249/- pertaining to property tax relating to rectification entry of Assessment Year 2005-06. Since the said amount pertained to Assessment Year 2005-06, the same had no bearing on the taxable income of Assessment Year 2006-07. He drew our attention to the following charts: Annexure of Tax Audit Report for Assessment Year 2005-06 at Paper Book Pg.244: Liability Amount incurred during F.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not affect any tax liability of the assessee as same amount had been disallowed in one year and had been allowed in the present assessment year for rectification purpose. The Ld. AR submitted that the AO reopened the case merely on the ground that in the computation of income, the assessee had claimed deduction of an amount of ₹ 15,41,18,249/- pertaining to property tax relating to rectification entry of Assessment Year 2005-06 without appreciating the fact that the assessee had not incurred any liability for property tax i.e. neither in Assessment Year 2005-06 and nor in Assessment Year 2006-07. It was submitted that the AO had misunderstood the fact that the assessee had claimed a deduction but it was only a rectification entry pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n i.e. Assessment Year 2006-07 it was realized by the auditor that a mistake had been committed and that this amount has been wrongly shown as a liability whereas no such liability existed for Assessment Year 2005-06. The Auditor rectified this mistake by writing back this amount in Assessment Year 2006-07. The Assessing Officer, not only initiated the reassessment proceedings, but also made an addition of this amount under the notion that assessee had claimed a deduction in this year although, this was not any deduction but only a rectification entry for writing back the impugned amount which pertained to Assessment Year 2005-06. Thus, apparently this rectification was tax neutral and no addition/disallowance was warranted for the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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