9911796707
TMI Blog2019 (1) TMI 1537X X X X Extracts X X X X X X X X Extracts X X X X ..... the first proviso to Section 147 of the Act in the present case is not satisfied. During the year under consideration, as per assessee's submission, project was abandoned and no income on this account has been generated, despite the fact that construction of such assets was carried out by the assessee. It cannot be accepted that no income even on account of scrap sale or debris has been generated. Once the construction work was started, then it must have been sold to other persons. It is a fact that entire expenditure was incurred on capital account. Now assessee's claim as revenue expenditure treating it as a write off when entire expenditure were in the nature of capital, cannot be accepted and treated as revenue expenditure. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the parties for final disposal of the petition. 2. Petitioner a private limited company has challenged notice of reopening of assessment issued by the respondent No.1Assessing Officer on 30th March, 2018. This challenge arises in following background. 3. For the assessment year 2011-12, the petitioner had filed a return of income on 30th November, 2011 declaring loss of ₹ 27.69 crores (rounded off). This included debit of ₹ 14.68 crores (rounded off) of Tangible Assets written off. In turn, this amount of ₹ 14.68 crores included a settlement amount of ₹ 7.30 crores (rounded off) duly shown by the assessee in computation of income. 3. The return in question was taken in scrutiny by the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been filed by the assessee. 5. The various facts discussed above clearly imply that the assessee individual has consciously and deliberately evaded paying taxes on an income amounting to ₹ 7,30,68,000/. Thus, there is clear failure on part of the assessee to make full and true disclosure while filing return of income. Hence, I have reason to believe that income amounting to ₹ 7,30,68,000/has escaped assessment due to failure on part of the assessee. 6. By not offering this amount to tax at the time of filing return of income or during the assessment proceeding u/s 143(3) of the Income Tax Act, the assessee company has failed to discharge his duties under the Income Tax Act, 1961 which has resulted in escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting provision of explanation 1 of section 147 of the Act. 8.1 It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the course of regular assessment. This fact is corroborated from the contents of notices issued by the AO u/s 143(2)/142(1) and order sheet entries. It is important to highlight here that material facts relevant for the assessment on issue under consideration were not filed during the course of assessment proceeding and the same may be embedded in the documents and books of account in such a manner that it would require due diligence by the AO to extract these information. For aforesaid reasons, it is not a case of change of opinion by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of ₹ 7.30 crores as having been debited to profit and loss account without the evidence furnished by the assessee concerning the allowability of such sum by way of expenses. In this context, the learned counsel for the assessee would point out that the said sum of ₹ 7.30 crores was part of the assessee s larger claim of ₹ 14.68 crores. This claim was examined by the Assessing Officer during the original assessment proceedings. The assessee had made a detailed representation why such claim was valid. In successive communications dated 10th February, 2014 and 13th February, 2014 the petitioner had outlined the reasons why the entire claim of ₹ 14.68 crores and a part of it of ₹ 7.30 crores was allowable. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture was incurred on capital account. Now assessee's claim as revenue expenditure treating it as a write off when entire expenditure were in the nature of capital, cannot be accepted and treated as revenue expenditure. Further, genuineness of the expenses is also not proved because assessee has paid huge amount on account of rent, which is almost 50% of the total expenses. The genuineness was not brought into question in earlier years as the assessee was capitalizing all project expenses. Now the assessee is claiming to write off entire expenditure. The assessee failed to justify rent payment which was paid arbitrarily without any comparative rate with market. A vacant piece of land cannot be charged so much high rent. Assessee&# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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