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TMI Blog2017 (4) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was in the nature of contingent liability winch should have been disallowed. The mistake resulted in under assessment of income of Rs. 50,34,277/- involving tax effect of Rs. 24,02,043/-. Further scrutiny of assessment records revealed that the assessee had residential building and received rental income on it. Depreciation on the same was claimed at Rs. 6,60,095/-. As it was not used for the purpose of business, depreciation was not allowable on the same. The mistake resulted in aider assessment of Rs. 6,60,095/- involving tax effect of Rs. 3,14,956/-. In view of the above, I have reasons to believe that the income of Rs. 50,34,277/- and Rs. 6,60,095/- aggregating to Rs. 56,94,372/- chargeable to tax has escaped assessment within the meaning of section 147/148 of the Income Tax Act, 1961. 2.1 Further, reasons were recorded on 29.03.2011 as under: - Assessment in this case was completed under section 143(3) of the Income Tax Act, 1961 on 18.12.2006 at an income of Rs. 17,84,13,464/-. As per the information received from Investigation Wing, Income Tax Department, New Delhi regarding list of Accommodation Entries, the above mentioned assessee was found to have tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 are bad in the eye of law and are contrary to the facts. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned A.O. are bad in law as the same are based on reasons which are vague. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the notice issued under Section 147 read with Section 148 of the Act is bad in law and barred by limitation as the same has been issued after a period of four years from the end of the relevant assessment year despite the fact that the original assessment proceedings were completed under Section 143(3) of the Act. 5. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the order passed by learned A.O. is bad both in the eye of law and on facts as the same has been reopened on the basis of reasons without there being any whisper that the income has escaped due to the failure on part of the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R submitted that, in response, the assessee had clarified that the amount of guarantee charges of Rs. 50,34,277/- had not been claimed in the year under consideration i.e. assessment year 2004-05 but had been claimed in assessment year 2003-04. Thus, no addition on this account could have been made. It was also submitted by the ld. AR that the assessee had submitted before the Assessing Officer that depreciation of Rs. 6,60,095/- had not been claimed by the assessee during the year and, therefore, this proposed addition was also not tenable. Ld. AR submitted that the Assessing Officer himself accepted these facts in Para 4.1 and 5 of the reassessment order that the initiation of proceedings on these two issues were not justified. 3.1 Ld. AR further submitted that the Assessing Officer recorded another set of reasons on 29.03.2011 regarding accommodation entries of Rs. 20 lakh on account of unsecured loans and that too, without issuance of any further notice u/s 148 and thereafter made an addition of Rs. 20 lakh alleging that the assessee was not able to prove the identity, genuineness and creditworthiness of the unsecured loans. Ld. AR relied on the case of the Northern Exim Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer did not reflect independent application of mind to the information so received. 3.5 It was also submitted that the notice u/s 148 of the Act issued on 3.5.2010 was beyond the period of four years from the end of the relevant assessment year and, therefore, as per proviso to section 147 of the Act, the reassessment proceedings could not be reopened after the expiry of four years unless income chargeable to tax had escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts and in the present case as all the facts relevant to the case were already available on record. Ld. AR submitted that in the reasons recorded (dated 29.3.11) regarding accommodation entry of Rs. 20 lakh, there was no allegation whatsoever that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the computation of income. 3.6 Ld. AR also submitted that the assessment was reopened on a notice issued u/s 148 on 3.5.2010 on two issues, first being guarantee fee and second being depreciation. However, no addition was made by the Assessing Officer on these counts and accordingly no further addition could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade Private Ltd. (2009) 308 ITR 22 (Del.) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania (2004) 269 ITR 192 that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer u/s 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated March 29, 2004, u/s 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated March 2, 2005, are without jurisdiction as no action u/s 147 could be taken beyond the four year's period in the circumstances narrated above." 5.1 A perusal of the reasons recorded in the instant case also shows that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eve, on the basis of which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under Section 148. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under Section 80 HH and 80-1 as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under Section 80HH and 80-1 and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under Section 80 HH and 80-1 which as per ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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