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2015 (6) TMI 176 - AT - Income TaxReopening of assessment - addition of claim of write off of loans and advances due to non recovery of amounts - Held that - As relying on CIT v/s Jet Speed Audio Pvt. Ltd. 2015 (2) TMI 766 - BOMBAY HIGH COURT wherein held Tribunal has rendered a finding of fact on the basis of material before it, in particular the fact that during original assessment proceedings a query was made with regard to the same issue which was responded to by the respondent - Assessee and on satisfaction of the same, the Assessing Officer had passed an assessment order. Therefore, reopening of assessment on an issue in respect of which a query was raised and responded to by the assessee would amount to a change of opinion. No mention of any tangible material in the reasons recorded for issuing reopening notice under Section 148 of the Act. we set aside the re opening of the assessment and consequent re assessment in present case - Decided in favour of assesse.
Issues Involved:
1. Validity of re-opening of assessment under section 147 of the Income Tax Act, 1961. 2. Confirmation of addition of Rs. 35,25,000 being claim of write-off of loans and advances due to non-recovery. 3. Confirmation of interest under sections 234C, 234B, and 234C of the Act. 4. Confirmation of initiation of penalty proceedings under section 271(1)(c) of the Act. Issue-wise Detailed Analysis: 1. Validity of Re-opening of Assessment under Section 147: The primary issue addressed was the validity of the re-opening of the assessment under section 147 of the Income Tax Act, 1961. The original assessment was completed under section 144 on 31st December 2007, and the Assessing Officer (AO) re-opened the assessment by issuing a notice dated 22nd March 2010 under section 148. The assessee objected to the re-opening, arguing that the complete details of the write-off were provided during the original assessment and were accepted by the AO. The re-opening was contested as being based on a change of opinion, which is not permissible as per the judgment in DCIT v/s Kalvinator of India Ltd. The Tribunal found that no fresh material or information came to the AO's knowledge after the original assessment, and the re-opening was indeed based on a change of opinion. The Tribunal cited the Hon'ble Jurisdictional High Court's decision in CIT v/s Jet Speed Audio Pvt. Ltd., which held that re-opening based on the same material considered during the original assessment constitutes a change of opinion and is not permissible. Consequently, the re-opening of the assessment was set aside. 2. Confirmation of Addition of Rs. 35,25,000: The assessee claimed a write-off of Rs. 35,25,000 as a business loss, which was originally allowed by the AO. However, during the re-assessment, the AO disallowed this claim, treating it as a capital loss rather than a revenue expenditure. The Tribunal noted that the AO had already considered the assessee's explanation and allowed the claim during the original assessment. Since no new information or material was brought to light in the re-assessment, the Tribunal concluded that the re-opening was merely a change of opinion. Therefore, the addition of Rs. 35,25,000 was not justified. 3. Confirmation of Interest under Sections 234C, 234B, and 234C: Given that the re-assessment was quashed, the issue of confirming interest under sections 234C, 234B, and 234C became infructuous. The Tribunal did not need to adjudicate this issue separately as it was contingent on the validity of the re-assessment. 4. Confirmation of Initiation of Penalty Proceedings under Section 271(1)(c): Similarly, the initiation of penalty proceedings under section 271(1)(c) was also rendered moot following the quashing of the re-assessment. Since the basis for the penalty was the re-assessment, which was set aside, the penalty proceedings could not be sustained. Conclusion: The Tribunal allowed the assessee's appeal, setting aside the re-opening of the assessment and the consequent re-assessment. As a result, the other grounds raised by the assessee became infructuous and did not require further adjudication. The order was pronounced in the open Court on 29.5.2015.
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