TMI Blog2023 (2) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... h income after due verification. However, later on, he realised that the assessee had recorded income at a lower level which amounted to escapement of income. In our considered opinion, it is only change of opinion of the AO de hors any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Depreciation of leased properties - difference between finance and operating leasing with reference to the accounting standards - AO observed in the reasons that it was a case of under-reporting of income by claiming excess depreciation - HELD THAT:- As can be seen from the assessee s Income and Expenditure account that the total amount of depreciation has been reflected on the face of it at Rs.8.74 crore. Such depreciation includes depreciation of leased properties amounting to Rs.7.15 crore. Here again, the AO changed his opinion from the original assessment in allowing deduction for the depreciation as claimed to now pointing out that the claim of depreciation was not permissible. There is no reference to any tangible material taken note of by the AO in concluding that the income escaped assessment. AO has nowhere brought out as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als one by the assessee and the other by the Revenue assail the correctness of the order passed by the ld. Commissioner of Income-tax (Appeals)-10, Pune on 08-01-2018 in relation to the assessment year 2006-07. 2. The first issue raised by the assessee in its appeal is against the initiation of reassessment proceedings. 3. Briefly stated, the facts of the case are that the assessee is an institution set up by the State Government for providing housing facilities, promoting townships within the area of jurisdiction as directed by the Govt. of Maharastra. The assessee was enjoying the benefit of exemption u/s.10(20A) of the Income-tax Act, 1961 (hereinafter referred to as `the Act ) up to A.Y. 2002-03. Return for the year was filed declaring total income of Rs.20,12,10,721/-. No benefit of exemption either u/s.10 or section 11 was claimed because the application for registration u/s.12A was pending at that point of time. The assessment was completed u/s.143(3) on 12-12-2008 determining total income at Rs.21,84,62,230/-. Thereafter, a notice u/s.148 dated 28-03-2013 was issued on certain grounds, which we will advert to a little later. Eventually, the assessment was completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observing that the assessee recognized Revenue on sale of plots at Rs.10,48,99,770/-, as against 10% of the amount realised from leasing of plots of land during the year which ought to have been considered. This, in the opinion of the AO, led to escapement of income. Similarly for Transfer Premium of Rs.5.31 crore, the AO observed that the assessee recognized only Rs.7,18,220/- for taxation, which led to escapement of income. Similar is the position anent to the item Rent accrued which in the opinion of the AO ought to have been offered at a higher level. 7. We have examined the assessee s Income and Expenditure account, whose copy has been placed at page 8 of the Departmental paper book. It is apparent that the above referred three items, as noticed by the AO totalling to Rs.33.94 crore and odd, were promptly disclosed on the credit side. There is nothing in the reasons to indicate that the assessee did not disclose fully and truly all material facts necessary for assessment on this count. Such details were already before the AO when the return was filed and the original assessment u/s.143(3) was completed. At that time, the AO accepted such income after due verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot reflected. 11. Here again, we find that the AO erred in initiating the reassessment proceedings on this score, primarily for the reason that the assessee did not claim any exemption u/s.11 in the return filed originally because the income was offered for taxation without claiming benefit of any exemption. Further, the AO referred only to the Audit report filed by the assessee itself indicating certain amounts as Capital receipts not offered for taxation . By no standard, claim by the assessee of certain amounts as capital receipt in the annual accounts, can be construed as failure of the assessee to disclose fully and truly all material facts necessary for assessment, more so, when the case of the AO in the reasons is based on the assessee claiming exemption u/s.11, which is actually not the position. The next connecting point about change of method as a reason for reassessment has also no legs to stand. Income and Expenditure account was drawn as per the changed method of accounting. It was on that basis only that the AO completed the assessment u/s.143(3). Having done so, the AO cannot turn around to claim that the change of method by the assessee was not bona fide, more ..... X X X X Extracts X X X X X X X X Extracts X X X X
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