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TMI Blog2023 (3) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... cts has dismissed the ground relating to the initiation of penalty proceedings under section 271(l)(c) of the I T Act. 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the charging of interest under section 234B of the Income Tax Act, 1961. 4.0 The appellant craves leave to add to, alter, delete or modify the ground of appeal either before or at the time of hearing of this appeal." 3. The assessee has also raised the following grounds of appeal:- "1. That the learned Commissioner of Income-tax (Appeals) has grievously erred in law and on facts in not holding that the re-opening of assessment is invalid and void ab-initio. 2. That, on facts and in law it ought to have been held that since original assessment is u/s. 143(3), re-opening beyond four years from end of relevant A.Y. is time-barred and not permissible in law." 4. Before us, at the outset, the counsel for the assessee has challenged the validity of reassessment proceedings on the ground that the reassessment proceedings were initiated after four year from the end of the relevant assessment year and the same are time barred and not valid under law. The counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs (Schedule G-Annexure to clause 22(b) of 3CD). However, it was noticed that the assessee itself added back in computation of income an amount of Rs.1724.37 lakhs only instead of Rs.3327.35 lakhs resulting into under assessment of income of Rs.1602.98 lakhs (3377.35 lakhs 1724.37 lakhs) which resulted into potential tax effect of Rs. 544.5 lakhs" Therefore, in view of the above, I have reason to believe that the assessee did not reflect true and correct state of affair. Hence, income of more than 1 lac had escaped assessment for this year." During the re-assessment proceedings, the Assessing Officer after taking the submissions of the assessee on record, made an addition of Rs. 16,02,98,000/- on account of prior period expenses being claimed by the assessee during the impugned assessment year. 4.2 The assessee filed appeal against the aforesaid order before ld. CIT(A) and submitted Firstly, that all payments and expenses were specifically and categorically disclosed in the audited annual accounts as well as tax audit report of the company for the year under consideration. Secondly, the issue relating to prior period expenses was discussed and verified during the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana Pvt. Ltd. Vs. ACIT (2012) 27 taxmann.com 294 (Guj.), the Hon'ble High Court has held that when the Assessing Officer simply called for the details of membership fees etc and question of taxability of such receipt was not examined by him during the course of original assessment proceedings, it cannot be said that the Assessing Officer had formed an opinion with regard to non-taxability of such receipt and therefore, such receipt can be taxed subsequently by Issue of notice u/s. 148. In view of the above discussion and legal position, thus, 1 am of the considered view, that the Assessing Officer has rightly issued notice u/s. 148 and hence Ground No. 1 is dismissed." 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). Before us, the counsel for the assessee submitted that in the instant case proceedings u/s. 147 of the Act were initiated after four years from the end of the assessment year and it is a settled law that if assessment has been completed u/s. 143(3) then no further action can be taken u/s. 147 after expiry of four years from the end of relevant assessment year unless income chargeable to tax has escaped assessment due to fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under assessment of Rs. 1602.98 lacs (i.e. 3387.35 lacs minus Rs. 1724.37 lacs. In view of the above, please show cause as to why Rs. 1602.98 lacs should not be added to your total income." 7.1 A perusal of the show cause notice shows that evidently nothing on record has been placed on record by the Department to establish that there was any failure on the part of the assessee to disclose fully and truly all materials facts necessary for assessment for the assessment year under consideration. The Department has initiated proceedings only on the basis of material available on record i.e. the profit and loss account of the company and clause 22(b) of form 3CD (tax audit report) and the computation of income filed with the original return of income. The entire basis of initiating reassessment proceedings is that the assessee has claimed prior period expenses in the return of income which are not allowable under the Act. However, we observe that the assessee already added back a sum of Rs. 7.24 crores as prior period expenses in the computation of income filed with the return of income. Further, Schedule 29 of the Profit and Loss Account for the year ended 31st March, 2008 expli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 taxmann.com 179 (Madras), the Assessing Officer completed original assessment of assessee under section 143(3) of the Act. Later Assessing Officer having noticed that an advance of Rs. 1.05 crores received by assessee had not been credited to profit and loss account but to software development account and income on software development had not been offered on accrual basis, reopened assessment of assessee. The Tribunal held that Assessing Officer while framing original assessment was aware of recovery of said amount and when there was no fresh material available with Assessing Officer for harbouring a doubt that income had escaped assessment, reopening of assessment was purely based on change of opinion. In the case of Revolution Forver Marketing (P.) Ltd. [2019] 104 taxmann.com 61 (Delhi), the High Court held that where assessee was engaged in multi-level marketing business model and Assessing Officer framed assessment of assessee under section 143(3) and subsequently he reopened said assessment for reason that substantial cash transactions were carried out with banks, which were not verified, since duty of assessee was to disclose bank statements for relevant year, which it d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee, Assessing Officer had come to conclusion that income had escaped assessment, same was not permissible under section 147 as it was clearly a change of opinion. Therefore, order re-opining assessment was not permissible. In the case of Azim Premji Trustee Company (P.) Ltd. [2022] 141 taxmann.com 451 (Karnataka), the High Court held that where impugned notice under section 148 was issued to assessee alleging escapement of income on ground that shares received by assessee as a gift were disclosed, but neither book value nor market value of shares was disclosed in Balance Sheet, however, fact that all material facts necessary for assessment were disclosed and market value of share was clearly discernible from returns and documents, mere non-mentioning of market value of shares was neither relevant nor germane for purpose of invoking proviso to section 147 and consequently, impugned notice and reasons deserved to be quashed. In the case of Godrej & Boyce Mfg. Co. Ltd. [2022] 140 taxmann.com 345 (Bombay), the High Court held that where Assessing Officer completed original assessment under section 143(3) and subsequently he issued notice seeking to reopen such assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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