TMI Blog2024 (2) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... lf, it has been admitted that Assessee had filed a copy of audited Profit and Loss Account and Balance-sheet along with return of income where information/ material was disclosed. Reason to believe does not, however, disclose the fact that these two items mentioned in the reason to believe, i.e., the debit under the head Employee Benefit Expenses and the break-up of income from arbitrage business shown under the head Other Operating Revenues on account of delivery based purchase and sale of shares were subject of consideration during the assessment proceedings. Petitioner had received a communication dated 11th January 2016 calling upon Petitioner to produce the accounts and/or documents specified in the annexure to said notice. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EME COURT] that in every case, the Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice, he can reasonably believe that income has escaped assessment - the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. Therefore, the AO cannot reopen the assessment relying on audit objections. Moreover, there is nothing on record to indicate that the AO had applied his mind afresh without being influenced by the audit objections. The reason to believe should be of the AO and he cannot be acting on the dictates of other parties. Decided in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 declaring total income at Rs. 31,19,01,830/-. Further, the assessment proceedings u/s 143(3) was completed on 29.02.2016 assessing total income at Rs. 70,19,81,330/-. 2. The assessee had debited an amount of Rs. 1,87,92,029/- under the head Employee benefit expenses on account of reimbursement of proportionate expenses paid to the ultimate holding company, JM Financial Ltd, for ESOP granted to the assessee s employees. In this case, the ESOP granted to the assessee employees pertained to the scheme floated by its holding company ie JM Financial Ltd. The assessee had claimed expenses pertaining to ESOP as revenue expenses. However as per P L account of the ultimate holding company, JM Financial Ltd., revealed that the amount recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason to believe itself, it has been admitted that Assessee had filed a copy of audited Profit and Loss Account and Balance-sheet along with return of income where information/ material was disclosed. Reason to believe does not, however, disclose the fact that these two items mentioned in the reason to believe, i.e., the debit of Rs. 1,87,92,029/- under the head Employee Benefit Expenses and the break-up of income from arbitrage business shown under the head Other Operating Revenues on account of delivery based purchase and sale of shares were subject of consideration during the assessment proceedings. Petitioner had received a communication dated 11th January 2016 calling upon Petitioner to produce the accounts and/or documents s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other Current Liab (Note 6) Employee Benefit Payable Kindly provide details of this liability. Provide documents and data in relation to this liability. Provide allowability of expenses under Sec 37(1) as per IT Act. Employee Gratuity Employee-Compensated Absence Kindly provide details of this liability. Provide documents and data in relation to this liability. Provide allowability of expenses under Sec 37(1) as per IT Act. 5. Petitioner replied by its letters dated 9th February 2016 and 16th February 2016. Copies of the explanation are annexed to the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r during the course of assessment proceedings and that change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Since both the issues raised in the reason to believe for reopening the assessment have been subject matter of consideration during the assessment proceedings, it can be based only on change of opinion which is not permissible. 8. Mr. Suresh Kumar submitted that the reopening was based on audit objections. It is settled law as laid down in Indian Eastern Newspaper Society v. CIT (1979) 2 Taxman 197., that in every case, the Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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