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TMI Blog2014 (3) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessment Year 2001-2002. Such assessment was originally framed after scrutiny. At the request of the petitioner, the Assessing Officer supplied the reasons recorded for issuing such notice. Such reasons read as under : " In this case, return of income for A.Y 2001-02 was filed on 31.10.2001 declaring therein total loss of Rs. 32,36,408/- which was finalized u/s. 143 (3) on 30.03.2004 on a total loss of Rs. 26,12,838/-. 2. On perusal of audit report furnished alongwith the return of income it was noticed at Sr. 12B that "the company had given loan amounting to Rs. 660.62 lakhs and the same is considered doubtful and therefore, interest was not charged". As per the mercantile accounting system accrued interest has to be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Company has put to use plant and machinery and office equipment worth Rs. 2,02,129/- after 1.10.2000 on which depreciation at the rate of 12.5% works out to be Rs. 25,266/-. The assessee company has wrongly worked out depreciation on W.D.V of Rs. 4,26,080/- at the rate of 12.5% at Rs. 53,260/- claiming excess depreciation of Rs. 27,994/- which requires to be withdrawn. 5. Considering the above facts, I have reason to believe that there is an escapement of income within the meaning of Section 147 (c) of the Incometax Act, 1961. Issue notice u/s. 148 of the I.T Act." Petitioner raised objection to the notice for reopening under communication dated 27th February 2006. Such objections were, however, rejected by the Assessing Officer by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9th August 2005 written by the Assessing Officer to the Commissioner of Income. Relevant portion thereof reads as under: "3. The Revenue Audit party has raised the following audit objections : (a) It was noticed from the audit report that the company had given loan amounting to Rs. 660.62 lakhs and the same was considered doubtful, therefore, interest was not charged. As per the mercantile accounting system accrued interest was to be considered as income. The interest worked out at the time of 18% comes to Rs. 1,18,91,160/-. This amount has not been reflected in P&L Account by the assessee company and also this point was not considered at the time of assessment proceedings, which resulted in under assessment of income of Rs. 92,67,322/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is not materialized. Issue arose in the audit is fully covered by the findings of the Apex Court. Also in the case of Godhara Electricity Company Limited v. Commissioner of IncomeTax [225 ITR 746] Hon. Supreme Court has held hypothetical income cannot be brought to tax unless it is accrued. 5. However, the following remedial actions are available in this case : Sr.No. Remedial Action Time Limitation 1 U/s. 263 31/03/2006 2 U/s. 147 31/03/2006 Remedial action u/s. 154 is available only for the objection raised in para 3 (c) of the Act. However, this point can be considered at the time of action u/s. 263 or u/s. 147 as the case may be. With respect to the first of the two reasons recorded by the Assessing Officer therefore it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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