9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 423 - HC - Income TaxReopening of assessment - notice under section 148 of the Act on the basis of audit objection - Held that - On appreciation of evidence on record and relevant case law on the point, it has been categorically recorded by the Tribunal that the audit party had raised an objection that certain expenses which pertained to earlier years had been claimed in the current assessment year. Reliance was placed on the judgment of the Apex Court in CIT vs. P.V.S.Beedies Pvt. Limited, (1997 (10) TMI 5 - SUPREME Court ) holding that reopening on the basis of audit objection could be done if some factual error was pointed out by the audit party which had been overlooked by the Assessing Officer but no reopening on the basis of audit objection could be done if the objection pertained to some interpretation of law. The error pointed out by the audit party in the present case was held to be factual. Detailed reasons had been recorded by the CIT(A) justifying reopening on the basis of the audit objection. While concurring with the findings recorded by the CIT(A), it was concluded by the Tribunal reopening on the basis of audit objection is as per law in the given facts and circumstances of the case and the learned CIT(Appeals) has very aptly analyzed the validity of notice under section 148 of the Act and we do not find any infirmity in the findings recorded by the learned CIT(Appeals). - Decided against assessee
Issues:
1. Validity of notice under section 148 of the Income Tax Act, 1961 based on audit objection. 2. Justification for reopening of assessment under section 148 of the Income Tax Act, 1961. 3. Addition of Rs. 17,55,845/- on account of prior period expenses. 4. Legality of the order passed by the Income Tax Appellate Tribunal. Issue 1: Validity of notice under section 148 based on audit objection The primary issue in the case was the validity of the notice under section 148 of the Income Tax Act, 1961 based on an audit objection. The Tribunal concluded that reopening on the basis of an audit objection is permissible if it points out a factual error overlooked by the Assessing Officer. The Tribunal referenced legal precedents to support this conclusion, emphasizing that reopening cannot be based on an interpretation of law. The audit party's objection in this case was deemed factual, justifying the reopening. The Tribunal upheld the order of the Commissioner of Income Tax (Appeals) on this matter, finding no infirmity in the decision. Issue 2: Justification for reopening of assessment The Assessing Officer reopened the assessment under section 148 of the Income Tax Act, 1961 based on the claim of expenses for a previous year in the current assessment year. The Tribunal noted that the audit party's objection provided grounds for forming a belief that income had escaped assessment, considering it a factual error rather than an interpretation of law. The Tribunal upheld the reopening as per law, citing relevant legal judgments and the detailed reasoning provided by the Commissioner of Income Tax (Appeals). Issue 3: Addition of Rs. 17,55,845/- on account of prior period expenses The Assessing Officer made an addition of Rs. 17,55,845/- on account of prior period expenses in the assessment. The Commissioner of Income Tax (Appeals) partially allowed the appeal, directing the Assessing Officer to verify and grant relief for expenses incurred during the relevant year. The Tribunal found no error in the Commissioner's findings and upheld the decision, stating that the expenses claimed were disallowable as prior period expenses under section 37(1) of the Act. Issue 4: Legality of the order passed by the Income Tax Appellate Tribunal After considering the arguments presented by both parties and reviewing the lower authorities' findings, the High Court found no error in the Tribunal's decision. The Court concluded that no substantial question of law arose from the case, leading to the dismissal of the appeal by the appellant-assessee. The order passed by the Income Tax Appellate Tribunal was deemed legally sound and justified based on the evidence and applicable laws.
|
