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2023 (3) TMI 202 - AT - Income TaxReopening of assessment u/s 147 - Notice beyond period of four years - HELD THAT - As gone through the orders of authorities below including notes of arguments and case law relied upon. In the return of income, the assessee had shown the receipt of interest income from M/s. Elnet Technologies Ltd. and M/s. Elnet Technologies Ltd. deducted TDS in the interest component and the entire amount was shown under other liabilities in the return. The assessee has not explained what other liabilities is by showing it under Notes of accounts. Therefore, it cannot be said that the assessee has disclosed fully and truly all the details before the Assessing Officer. Thus, in our opinion the Assessing Officer rightly reopened the assessment under section 147 of the Act. We are of the opinion that it is a clear case of escapement of interest income from taxation and therefore, the Assessing Officer by issuing notice under section 148 of the Act reopened the assessment under section 147 of the Act on the ground that there is an escapement of income from taxation which is in accordance with law. Whether there is no failure on the part of the assessee to disclose the entire income? - As we find that in the return of income, the assessee has not made full and true disclosure. It was only shown as under other liabilities and he has not filed Notes on account before the Assessing Officer. Therefore, AO was not able to assess correct income of the assessee while concluding the assessment under section 143(3) of the Act. Further, we find that the case law relied on by the assessee has no application to the facts of the present case as the facts are entirely different. In view of the above, the issue raised by the assessee in ground Nos. 2 3 are dismissed. Assessee has received the interest amount from M/s. Elnet Technologies Ltd. - The assessee has submitted that it is not income of the assessee and it is income of Government of Tamil Nadu. We find that if the amount received by the assessee from M/s. Elnet Technologies Ltd. is not income of the assessee and if at all it had paid to the Government of Tamil Nadu, the assessee should been remitted through banking channels only. If at all the assessee paid this amount, it can show its bank account before the Assessing Officer or before the ld. CIT(A) or even before the ITAT. Admittedly, the assessee was not able to file any proof for the payment made to the Government of Tamil Nadu. Under these facts and circumstances of the case, we are of the opinion that the amount received from M/s. Elnet Technologies Ltd. by the assessee is income of the assessee and the Assessing Officer has correctly taxed. We also find that the ld. CIT(A) has rightly decided the issue and no interference is warranted. Accordingly, the issue raised by the assessee in ground Nos. 4 5 are dismissed. Reopening of assessment u/s 147 - Depreciation claim - assessee has claimed depreciation on a property wrongly and the same was withdrawn and therefore, similar depreciation was claimed by the assessee in the assessment year 2003- 04 for which the assessee is not entitled to - HELD THAT - We find that it is a clear case of escapement of assessment for taxation and the Assessing Officer by considering the entire facts, issued the notice under section 148 of the Act on the ground that there is an escapement of income as per section 147 of the Act, which was confirmed by the ld. CIT(A). Thus, we also find that the reopening of assessment under section 147 of the Act is valid and accordingly, ground Nos. 2 3 raised by the assessee are dismissed. Depreciation on the property at Nandanam in the computation of taxable total income - AO has ascertained that the property at MHU Complex was allotted to the assessee by Tamil Nadu Housing Board during September, 1994 for a consideration of ₹.1,67 crores. The sale consideration was @ ₹.1,300/- per sq. ft. The property allotted consisted of 12,802 sq. ft. of built up area and 3,463 sq. ft. of undivided portion of land. The assessee incurred substantial expenditure towards construction of interiors and partitions. The assessee also paid subsequently towards garage and car parking area. From the details filed, it is noted that the total purchase consideration paid to TNHB for purchase of the property was ₹.1,81,18,712/-. Out of this figure, the land value of ₹.28,08,493/- adopted in the assessment order for the assessment year 2006-07 was found to be quite reasonable and no further modification was required. Accordingly, depreciation claimed on this land value @ 10% was disallowed and added to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer. We have gone through the assessment order and also appellate order and find that the Assessing Officer has perfectly decided the issue and the ld. CIT(A) has confirmed the same. We find no infirmity in the order passed by the ld. CIT(A). Accordingly, ground Nos. 4 5 raised by the assessee are dismissed. Interest on term loan due from Joint Venture Companies - HELD THAT - The arguments of assessee is that the interest income is not recoverable from the joint venture companies on the ground that the debt is already bad. In the assessment order, the Assessing Officer has noted that the assessee has not written off the loans in its books of account and the same figure is continuing even in subsequent assessment years. Moreover, the assessee itself treated the loan amount as unsecured considered good and interest due on the same. In view of the above, it cannot be said that the unsecured loan became bad debt and even the assessee company has not written off in the books of account and therefore, it cannot be allowed as bad debt. Thus, the ground raised by the assessee is dismissed.
Issues Involved:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961. 2. Taxability of interest income received from M/s. Elnet Technologies Ltd. 3. Disallowance of depreciation on property. 4. Accrual of interest income on unsecured loans to joint venture companies. Issue-wise Detailed Analysis: 1. Reopening of Assessment under Section 147 of the Income Tax Act, 1961: - Assessment Year 2001-02: The assessee argued that the notice under section 148 was issued beyond four years without failure on their part to disclose fully and truly all material facts. The Tribunal held that the assessee did not fully disclose the details as the interest income was shown under "other liabilities" without proper explanation. Hence, the reopening of the assessment was valid. - Assessment Year 2003-04: The reopening was based on information obtained during the scrutiny assessment for AY 2006-07, where it was found that depreciation on undivided share of land was wrongly claimed. The Tribunal upheld the reopening as valid, noting it was a clear case of income escapement. 2. Taxability of Interest Income Received from M/s. Elnet Technologies Ltd.: - Assessment Year 2001-02: The assessee received interest income from M/s. Elnet Technologies Ltd. and showed it under "other liabilities," claiming it was payable to the Government of Tamil Nadu. The Tribunal found no proof of payment to the government and upheld the addition of the interest income to the assessee's taxable income. - Assessment Year 2003-04: Similar to AY 2001-02, the assessee's claim that the interest income was not theirs but the government's was rejected due to lack of proof. The Tribunal upheld the addition of the interest income to the assessee's taxable income. 3. Disallowance of Depreciation on Property: - Assessment Year 2003-04: The assessee claimed depreciation on a property, including undivided share of land. The Assessing Officer disallowed depreciation on the land value, which was upheld by the Tribunal. The Tribunal found the Assessing Officer's valuation and disallowance reasonable and confirmed the decision. 4. Accrual of Interest Income on Unsecured Loans to Joint Venture Companies: - Assessment Year 2003-04: The assessee did not include interest on term loans to joint venture companies in their profit and loss account, claiming the loans were non-performing assets (NPAs). The Tribunal held that as long as the loans were shown as "unsecured considered good" and not written off, the interest income accrued and was taxable. The Tribunal upheld the addition of the interest income to the assessee's taxable income. Conclusion: The Tribunal dismissed the appeals for both assessment years, upholding the reopening of assessments, the addition of interest income from M/s. Elnet Technologies Ltd., the disallowance of depreciation on property, and the accrual of interest income on unsecured loans to joint venture companies. The Tribunal emphasized the necessity for full and true disclosure of all material facts by the assessee and the importance of proper documentation and proof for claims made in tax filings.
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