2018 (6) TMI 1510 - AT - Income Tax

Reopening of assessment - assessee argued that the issuance of notice u/s.148 is not valid as the same was based on change of opinion - Held that - In the instant case, no opinion was formed earlier by the Assessing Officer as no assessment was made and, therefore, it cannot be alleged that there was any change of opinion. We, therefore, do not find any merits in the arguments of the assessee. Accordingly, the cross objections filed by the assessee are dismissed. Computation of MAT - Addition on debenture redemption reserve fund - treatment as a known liability - AO added back the amount which was debited in the profit and loss account under the head debenture redemption reserve fund and computed the book profit u/s. 115JA - CIT-A deleted the addition - Held that - D.R. could not point out any specific error in the order of the CIT(A), which was passed following the order of the Tribunal in the case of assessee itself for the assessment year 2003-04 wherein held that the amount set aside to redeem debentures must be treated as a known liability and cannot be considered to be a reserve. Further, it is clear that such amount set aside towards debentures redemption is not an unascertained liability. Ground of appeal is accordingly allowed Penalty u/s.271(1)(c) - write back of provision for contingencies of 24,60,00,000/- in computing the Book Profits under Section 115JB - Held that - Assessee had furnished all the details of its expenditure as well as Income In Its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on Its part. It was up to did authorities to accept its claim in the return pinot. Merely because the assessee had claimed the expenditure, which claim not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c), That is clearly not the Intendment of the Legislature - Decided against revenue

Summary

Issues Involved:
1. Validity of issuance of notice under Section 148 of the Income Tax Act.
2. Deletion of additions related to debenture redemption reserve fund.
3. Deletion of penalty imposed under Section 271(1)(c) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of Issuance of Notice under Section 148:
- The assessee challenged the validity of the notice issued under Section 148, arguing it was based on a change of opinion. The Tribunal noted that the original return of income was accepted under Section 143(1) without any assessment under Section 143(3). Therefore, no opinion was formed earlier by the Assessing Officer. Consequently, the Tribunal found no merit in the assessee's argument and upheld the issuance of notice under Section 148, dismissing the cross-objections filed by the assessee.

2. Deletion of Additions Related to Debenture Redemption Reserve Fund:
- The revenue was aggrieved by the deletion of amounts added back by the Assessing Officer under the head "debenture redemption reserve fund" while computing the book profit under Section 115JA. The CIT(A) deleted these additions, observing that the amount set aside for the redemption of debentures is a known liability and does not fall within the meaning of reserves or unascertained liabilities as per the Supreme Court decision in National Rayon Corporation Ltd. The Tribunal upheld the CIT(A)'s order, noting that the revenue failed to point out any specific error or bring any material on record to show that the Tribunal's earlier order was not applicable or varied by a higher authority. Thus, the ground of revenue for both assessment years was dismissed.

3. Deletion of Penalty Imposed under Section 271(1)(c):
- The revenue appealed against the deletion of a penalty of ?94,07,400 imposed under Section 271(1)(c) for the assessment year 2002-03. The CIT(A) deleted the penalty, noting that the assessee had made adequate disclosures and had not concealed any particulars of income or furnished inaccurate particulars. The Tribunal observed that the CIT(A)'s order was in line with the Supreme Court's decision in CIT vs. Nalwa Sons Investment Ltd., where it was held that penalty under Section 271(1)(c) could not be imposed when tax payable under normal provisions is less than the tax payable under MAT provisions. The Tribunal confirmed the CIT(A)'s order, dismissing the revenue's appeal and upholding the deletion of the penalty.

Conclusion:
- The Tribunal upheld the validity of the notice issued under Section 148, dismissed the revenue's appeals regarding the debenture redemption reserve fund, and confirmed the deletion of the penalty imposed under Section 271(1)(c). The appeals filed by the revenue were dismissed, and the orders of the CIT(A) were affirmed.