9911796707
TMI Blog2011 (6) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... r scrutiny. During the course of assessment proceedings, it was noticed that the assessee-company had a gross deficit of ₹ 54.28 crores in the policyholders account whereas in the shareholders account it had surplus of ₹ 5.15 crores. In his opinion surplus generated on investor s funds should not be adjusted against loss reflected in the policyholders account and accordingly he issued show-cause notice calling upon the assessee to explain as to why the same should not be brought to tax. In reply thereto the assessee filed detailed explanation on 20.11.2006 wherein it was submitted as under :- 7. Surplus generated from investment activity of shareholders fund is nothing but part of life insurance business and is also governe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from the profits of any other business. Therefore, the net result of the current year s computation even by this argument will be a deficit of ₹ 48,76,31,000/- which is declared in the return of income and claimed as business loss, eligible for carry forward. 3. Vide order dated 19.12.2006 the Assessing Officer accepted the net loss as declared by the assessee. In other words, though prima-facie he entertained a view that set off of is not permissible, having regard to the circumstances of the case he did not choose to make any addition. As is the usual practice, since plea of the assessee was accepted, the Assessing Officer completed the assessment without mentioning reasons for acceptance of claim of the assessee. 3.1 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontending before learned CIT(A) that in the light of the decision of Hon'ble Apex Court in the case of Kelvinator of India Ltd., 320 ITR 561 reassessment proceedings are bad in law. Without prejudice to the issue concerning jurisdiction of the reassessment proceedings, it was also contended that even on merits there is no case for making the impugned addition. 5. Having regard to the circumstances of the case, learned CIT(A) held that the reassessment proceedings are bad in law. In this regard he observed at para 7 as under : 7. I have perused the facts of the case. I noticed that in the original assessment proceedings the issue of surplus in the shareholders account and its taxability had been raised by the Assessing Officer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Appeal Nos. 2009-2011 of 2003 with 2520 of 2008 in order dated January 18th 2010 and they have held that Assessing Officer has the power to reopen assessment provided there is tangible material to come to the conclusion that there is escapement of income. According to learned Representative of appellant, nothing has changed since the passing of the original order of assessment. There is no new material before Assessing Officer, at least nothing has been brought to the knowledge of the appellant, based on which Assessing Officer could formulate his reason to believe that income had escaped assessment. It is the same set of facts, same set of documents and same issue which has been raised again by Assessing Officer and assessment has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to furnish explanation as to why surplus of ₹ 5.15 crores should not be brought to tax, merely because the Assessing Officer has not specifically mentioned, in the original assessment proceedings, the reasons for acceptance of the explanation or merely because the Assessing Officer has not applied his mind properly it would not enable the Assessing Officer to reopen the assessment proceedings on the same set of facts as it would amount to giving premium to an authority exercising quasijudicial function to take benefit of its own wrong. Apart from relying upon the decision in the case of Kelvinator of India Ltd. (supra) he had also relied upon the following decisions wherein on identical circumstances Jurisdictional High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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