TMI Blog2022 (10) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... ce we have quashed the reassessment on reopening, we need not to go into the merits of the case. Decided in favour of assessee. - ITA No. 2784/CHNY/2019 - - - Dated:- 19-9-2022 - SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER Appellant by : Shri R. Vijayaraghavan , Advocate Respondent by : Shri P. Sajit Kumar , JCIT ORDER PER MAHAVIR SINGH , VICE PRESIDENT : This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-8, Chennai in ITA No. 69/18-19 dated 16.07.2019. The re-assessment was framed by the ACIT, Company Circle 4(1), Chennai for the assessment year 2011-12 u/s. 143(3) r.w.s. 147 of the Income-Tax Act, 1961 (hereinafter the 'Act') ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, income has escaped assessment within the meaning of section 147 and hence, notice u/s. 148 of the Act was issued. Accordingly, reassessment was completed vide order dated 30.12.2018 u/s. 143(3) r.w.s. 147 of the Act. Aggrieved, assessee preferred appeal before CIT(A). 3.1. The CIT(A), despite the fact that ground was raised by assessee that reopening of assessment in view of proviso to section 147 of the Act that there is failure on the part of the assessee to disclose fully and truly all material facts for framing of assessment for the relevant assessment year, he adjudicated the issue under the wrong presumption that there is change of opinion. He adjudicated the issue vide para 5 as under:- Other than the above, no other dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 which are enclosed at assessee's paper-book pages 162 to 177 and the relevant are at page 174, which reads as under:- 12. Nature of expenditure for which provisions which provisions were made for doubtful debts and returned rights a. Details of provisions made for doubtful debts have already been discussed under point no. 4. b. We submit that the provision for return rights is created on account of the goods that could be returned by the distributors on account of the following reasons; damages or obsolescence or when the books do not have any sale value. The provision is created at the rate of 5% on the value of sales made during the last six months and corroborates to the industry norms in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account, the assessee company has debited a sum of Rs. 1,23,76,000/- towards provision for return rights. Further as per Balance Sheet vide Schedule-1, un the head, Provisions an amount of Rs. 3,66,83,000/- [P.Y. 2,43,08,000] has shown as provision for return rights. The assessee has only made a mere provision towards return rights and not actually incurred. 4) Hence, I have every reason to believe that the income chargeable to tax has escaped assessment under the provisions of section 147 of the Income-tax Act, 1961. 4.1. From the above reasons, it is clear that the assessee in first impugned assessment i.e., original assessment has filed complete details in regard to the provisions made for other expenses, i.e., provision for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving heard learned counsel for the parties, we are of the view that these petitions deserve to be allowed. 15. It may be mentioned that a new Section substituted Section 147 of the Income-tax Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The relevant part of the new Section 147 is as follows : 147. If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO [2000] 242 ITR 612. 18. In our opinion, we have to see the law prevailing on the date of issue of the notice under Section 148, i.e., November 20, 1998. Admittedly, by that date, the new Section 147 has come into force and, hence, in our opinion, it is the new Section 147 which will apply to the facts of the present case. In the present case, there was admittedly no failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. Hence, the proviso to the new Section 147 squarely applies, and the impugned notices were barred by limitation mentioned in the proviso. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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