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TMI Blog2016 (9) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... d in confirming the order u/s 147/ 143(3) of the Income Tax Act, 1961 passed by DCIT, Circle 14 (1), New Delhi vide order dated 16/02/2011. 2. That on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in not considering the waiver of loan written off as business income under 41(1) of incomes tax act 1961 and thus denied the benefits of set off of brought forwarded losses of earlier year against this income by holding " Income from Other Sources " 3. That on the facts and in the circumstances of the case and in law, the learned CIT (A) is erred in holding that loans written off by creditors company should be assessed as "Income from other sources" instead of a business income. 4. That the Learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings u/s 147 of the Act and for issuing notice u/s 148 of the Act. The ld. AR contended that no notice can be issued u/s 148 of the Act if all the facts were already available on record and had also been examined at the stage of original assessment framed u/s 143(3) of the Act that would tantamount to mere change of opinion which is not permissible in law. The ld. AR narrating the facts of the case submitted that the assessee filed original return of income dated 13.10.2004 declaring an income of Rs. 1,45,56,809/- which income had been adjusted against brought forward assessed loss and the A.O passed assessment order u/s 143(3) of the Act dated 8.12.2006 after detailed enquiries and investigations on various issues and returned inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was revealed that income during the relevant previous years comprised of loans written off of Pearl Global Ltd of Rs. 50 lakhs which is covered under income from other sources, therefore, the A.O had reason to believe that income to the tune of Rs. 50 lakhs has escaped assessment within the meaning of section 147 of the Act. Therefore, the A.O was quite correct and justified in initiating reassessment proceedings and issuing notice u/s 147/148 of the Act. 5. On careful consideration of the above rival submissions, first of all, we may point out that the undisputedly and admittedly, original return was filed on 30.10.2004 for A.Y 2004-05 and the impugned reasons and notice for initiation of reassessment proceedings was recorded and issued o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining to Pearl Global Ltd is covered under the head income from other sources and thereafter, the A.O proceeded to allege that he is satisfied that on account of failure on the part of the A.O to disclose truly and fully all material facts in this regard. In the present case, original assessment has been framed u/s 143(3) of the Act after due scrutiny and after all details were filed before the A.O. We also observe that income written back amount has been assessed as business income and claim for brought forward losses of the earlier years has been allowed. We also are in agreement with the contention of the ld. AR that the amount written back as loan has been carefully assed by the A.O as business income. Therefore, it cannot be alleged ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written off was treated as profit u/s 41(1) of the Act Therefore, in the original assessment order, the A.O rightly treated the same as business income and consequently it was adjusted against brought forward business losses. In view of the above, we are satisfied that the A.O initiated reassessment proceedings beyond four years passed on erroneous facts that the impugned amount had already been offered for tax by the assessee as business income whereas the A.O noted that income to the tune of Rs. 50 lakhs has escaped assessment. We may also point out that the main dispute was regarding charging of the said amount as in the original assessment proceedings the A.O taxed the same as business income whereas in the reassessment proceedings the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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