TMI Blog2013 (8) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... B/2010 without appreciating the fact that the issue has not reached finality and the appeal of the Department on the same issue in the case of the assessee for the AY 2005-06 is pending before the Hon ble High Court of Karnataka. 4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored. 5. The appellant craves leave to add, alter, amend and / or delete any of the grounds mentioned above. 3. The assessee is a company which is engaged in the business of conducting chits. While completing the assessment for the A.Y. 2008-09, the AO held that the bid loss claimed in the memo of income cannot be allowed as a deduction. The Assessee is in the business of conducting chits. The Assessee on its own bids at the auction. When the Assessee succeeds in his bid, the difference between the value of the chit and the amount at which the Assessee bids at the auction is booked as a loss. The remaining tenure of the chit in respect of which the assessee is a successful bidder might extend beyond the previous year. The Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-07. With respect to AY: 07-08, the addition made by the AO was deleted by the CIT(A), against which order the department did not file any second appeal before the ITAT. In view of the written submissions of the appellant on this issue, and on a review of the facts of the case, I find that the appellant s claim has merit. The treatment given to the bid loss over the years has been consistent. In the circumstances, I hold that the appellant is entitled to succeed in this point and the AO is directed to allow the sum of ₹ 50,43,043/- as Bid Loss as a deduction in computing the total income. 5. As can be seen from the grounds of appeal, the only grievance of the revenue is that the decision of the Tribunal has not been accepted and an appeal has been preferred by the revenue before the Hon ble High Court. We are of the view that the decision of the coordinate Bench of the Tribunal on an identical issue has to be followed. In the event of any decision by the Hon ble High Court supporting the view taken by the revenue, the revenue is at liberty to take appropriate steps. Pendency of an appeal before the High Court cannot be a ground not to following the earlier order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For all these and other grounds which may be urged at the time of the hearing of this appeal, the appellant prays that its appeal be allowed. 11. It can be seen that the assessee has challenged the validity of initiation of reassessment proceedings u/s. 147 of the Act. The facts which are material for deciding the issue raised by the assessee in its appeal are as follows: 12. The assessee filed return of income for the A.Y. 2003-04 on 28.11.2003 and an order was passed on 28.02.2006 u/s. 143(3) of the Act. This order of assessment was sought to be reopened by issue of a notice u/s. 148 of the Act dated 22.03.2010. It can be seen that the assessment is sought to be reopened after a period of four years from the end of the relevant assessment year. As per the proviso to section 147 of the Act, where an assessment has already been made u/s. 143(3) of the Act and such assessment is sought to be reopened by issue of a notice u/s. 148 of the Act, then the further condition to be satisfied is that escapement of income should have arisen by the reason of assessee s failure to disclose fully and truly all material facts for its assessment for that assessment year. In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment u/s 260A, the Hon ble High Court of Karnataka, vide order dated 17.11.2009 for A.Y. 1998-99, differed from the decision of Apex Court in M/s Bilahari Investments and set aside the matter to the file of the Assessing Officer. The Hon ble High Court of Karnataka accepted the arguments of the revenue, that Notification No.69E dated 25-1-1996 and S.145(2) had not been brought to the notice of the Hon ble Supreme Court and there was no occasion for the Supreme Court to consider the effect of the notification and amendment to S 145(2) and stated that the Hon ble Supreme Court confined its decisions to assessment years in appeal. Because of this decision of High Court of Karnataka, the judgement of Bilahari case is not applicable. Hence, the action of the assessee of debiting the bid loss in P L a/c and claiming again in the computation statement, results in excess claim. For these reasons, I have reasons to believe that the mistake in computation of income has resulted in escapement of income from assessment to the extent to the extent of ₹ 7,1476,103 (Bid Loss ) and ₹ 20,632/- (Income from House Property omitted to be included. 13. It can be seen that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The law is well settled that validity of initiation of reassessment proceedings have to be judged on the basis of reasons recorded by the AO and it is not possible to substitute, delete or add anything to such reasons recorded by the AO. It is also not possible to draw any inference based on the reasons not recorded. In the light of the law as laid down in the aforesaid decisions, we are of the view that initiation of reassessment proceedings by the AO in the present case is not in accordance with the law. The order of reassessment is therefore liable to be annulled and the same is hereby annulled. 15. In view of the decision on the validity of initiation of reassessment proceedings, the other issues raised by the assessee on merits do not require any consideration. Consequently, the appeal of the assessee is allowed. 16. In the result, the appeal of the assessee is allowed. 17. The above reasoning adopted by the Tribunal will apply to the present case. In the reasons recorded, no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the relevant assessment year has been alleged. In such circumstances, we are of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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