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2020 (11) TMI 343 - HC - Income TaxReopening of assessment - Bid loss disallowance - assessee claimed loss on bidding as deduction - As per revenue such Bid Loss pertains to period beyond the accounting period relevant to the assessment year under consideration and the same should not have been allowed for the sake of consistency? - HELD THAT - The tribunal has not taken note of the fact that the AO had recorded reasons and has held that a statement of income from assessment has taken place due to failure to disclose fully and truly all material facts necessary on the part of the assessee.Tribunal has further held that it has not been disputed before the tribunal that proviso to Section 147 is not applicable to the fact situation of the case. The contention of the assessee that the Assessing Officer has not recorded the finding that the assessee has failed to disclose fully and truly all material facts necessary for assessment does not deserve acceptance, which is evident from the satisfaction recorded by the Assessing Officer. Similarly, the question whether or not the Assessing Officer has recorded satisfaction in consonance with the requirements of Section 147 of the Act, has to be dealt with in the facts of each case. Therefore, the contention that the issue involved in this appeal is squarely covered by decision of the Supreme Court in NEW DELHI TELEVISION 2020 (4) TMI 133 - SUPREME COURT cannot be accepted. For the aforementioned reasons, the second substantial question of law is answered in favour of the revenue.
Issues Involved:
1. Justification of bid loss allowance by the Tribunal. 2. Legality of reopening assessment under Section 147 of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Justification of Bid Loss Allowance by the Tribunal The primary issue was whether the Tribunal was justified in law in allowing the bid loss claimed by the assessee. The assessee, engaged in the business of conducting chits, claimed bid loss as a deduction. The Assessing Officer disallowed the bid loss claimed for the period beyond the relevant assessment year, adding ?7,20,32,155 to the income. The Commissioner of Income Tax (Appeals) deleted this addition, but the Tribunal dismissed the revenue's appeal, relying on its previous order for the assessee's Assessment Year 2005-06. The Tribunal held that the re-assessment proceeding was invalid. However, the High Court noted that the Tribunal did not independently examine whether the reasoning assigned by the Assessing Officer was in accordance with Section 147 of the Act. The High Court emphasized that the Tribunal should have considered the reasons recorded by the Assessing Officer, which indicated that the assessee had failed to disclose fully and truly all material facts necessary for assessment. 2. Legality of Reopening Assessment under Section 147 The second issue was whether the Tribunal was justified in holding that the reopening under Section 147 was bad in law. The Assessing Officer issued a notice under Section 148, stating that the assessee claimed the same bid loss amount twice, resulting in income escaping assessment. The Tribunal annulled the reassessment, stating that the Assessing Officer did not allege that income chargeable to tax had escaped assessment due to the assessee's failure to disclose fully and truly all material facts. The High Court disagreed, noting that the Assessing Officer had indeed recorded reasons indicating such a failure. The Court cited the proviso to Section 147, which allows reopening if the assessee failed to disclose necessary facts. The High Court found that the Tribunal had not considered the satisfaction recorded by the Assessing Officer and erroneously relied on a decision in the case of DHFL Vysya Housing Ltd., which had been set aside by the High Court. Conclusion The High Court quashed the Tribunal's order dated 14.08.2013 and remitted the matter to the Tribunal for fresh consideration in accordance with the law. The Court held that the Assessing Officer had validly recorded reasons for reopening the assessment under Section 147, and the Tribunal failed to independently verify these reasons. The second substantial question of law was answered in favor of the revenue, making it unnecessary to address the first substantial question of law. The appeal was thus disposed of, directing the Tribunal to reassess the case.
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