TMI Blog2021 (9) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... e loans, etc. With regard to the hire purchase interest, AO noted that the same was not disallowed in the earlier years under Section 43(B) of the Act and as such, when it was waived, it became income of the assessee since the same was allowed in the earlier years as trading liability. Accordingly, a sum was assessed to tax under Section 41(1) of the Act. The issue, which appears to be the reason for reopening, was, in fact, discussed by the AO in the original assessment and it was completed. If such is the factual position, unless and until the AO has fresh tangible material brought on record while recording the reasons for reopening, the reopening of assessment, if permitted, would amount to review of the earlier decision, which is imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d truly all material facts, the reassessment proceedings were without authority of law. It was further contended that one of the reasons for reopening, as mentioned in the counter affidavit filed in the said writ petition by the second respondent, was that the mere production before the Assessing Officer the books of accounts or other evidence, from which, material evidence could, with due diligence, have been discovered by the Assessing Officer would not necessarily amount to disclosure mentioned in the First Proviso. 5. The appellant assessee also contended that the issue of taxability of the benefit derived from one time settlement (OTS) was discussed and accepted in the original assessment order dated 27.7.2009. Therefore, the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and more particularly with regard to the benefit derived from the OTS and as to how it was discussed in the original assessment, there was no denial by the second respondent and the averment in paragraph 9 only touched upon the said issue, which, in fact, was a verbatim extract of the reasons for reopening. The reasons for reopening were extracted by the Assessing Officer in the order dated 02.3.2015, which was impugned in the said writ petition. 9. A perusal of the reasons clearly show that there was no reference to fresh tangible material, which came to the notice of the Assessing Officer to justify reopening. With the above pleadings by the parties and the legal contentions raised by the assessee and the Department, the said w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm loans from financial institutions and banks for the purchase of machinery and acquired capital asset, that those loans were not in the nature of trading liability, but were in the nature of capital liability and that the waiver of loan liability was not the waiver of any trading liability and the waiver of capital liability would not become income under Section 41(1) of the Act on the ground of remission or cessation thereof. 13. The assessee placed reliance on the decision of the Bombay High Court in the case of Mahindra Mahindra Ltd. Vs. CIT [reported in (2003) 261 ITR 501], which held the field at the relevant time. The assessee further contended that the waiver amount of term loan availed by the assessee did not partake the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the submissions and in the assessment order dated 27.7.2009 under Section 143(3) of the Act, there was a discussion in respect of the OTS and the loans, etc. With regard to the hire purchase interest, the Assessing Officer noted that the same was not disallowed in the earlier years under Section 43(B) of the Act and as such, when it was waived, it became income of the assessee since the same was allowed in the earlier years as trading liability. Accordingly, a sum of ₹ 40,75,340/- was assessed to tax under Section 41(1) of the Act. 16. Thus, it is clear that the issue, which appears to be the reason for reopening, was, in fact, discussed by the Assessing Officer in the original assessment and it was completed. If such is the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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