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TMI Blog2019 (10) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) and the Assessing Officer by considering the same, assessment was completed on 31/12/2010. Thus, the notice issued u/sec. 148 dated 19/03/2015 is invalid and subsequent order passed u/sec. 143(3) r.w.s. 148, dated 11/03/2016 is bad in law. Therefore, we quash the assessment order passed u/sec. 143(3) r.w.s. 148 dated 11/03/2016 and partly allow the appeal of the assessee. - ITA No. 394/VIZ/2017 - - - Dated:- 4-10-2019 - Shri V. Durga Rao, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Assessee : Shri S. Rama Rao, Adv. For the Department : Shri T.S.N. Murthy, Sr.DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Vijayawada, dated 28/02/2017 for the Assessment Year 2008-09. 2. Facts of the case, in brief, are that the assessee-Vijayawada Guntur Tenali Mangalagiri Urban Development Authority, now known as APCRDA is a statutory authority constituted u/sec.3 of Andhra Pradesh Urban Areas Development Act, 1975. It is non-profit orien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. However, the Assessing Officer not agreed with the explanation of the assessee and observed that as per section 147 it is clear that there should a reason and belief and such reasons must be recorded. The assessee must have disclosed fully and truly all material facts necessary for his assessment for that assessment year. Here in the case on hand, the then Assessing Officer has rightly recorded his reasons believed. Basing on the material evidence that was cropped up during the subsequent assessment years (A.Y. 2011-12 2012-13) i.e. claim of unincurred sinking fund in the profit loss account. The same issue is also there in the year under scrutiny. The Assessing Officer in his reasons has clearly mentioned that an amount of ₹ 19,27,95,540/- is debited to the profit loss account which is not maintainable. For the A.Y. 2008-09, the assessee credited amounts to the extent of ₹ 3,40,22,738/- instead of actual income of ₹ 22,68,18,283/-. However, after netting of the expenditure towards sinking fund at ₹ 19,27,95,540/- only ₹ 3,40,22,738/- was credited. Therefore, there is a valid reason to believe. Accordingly, the objections raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is engaged in the development of projects in the area of VGTM UDA working under the control of Government of Andhra Pradesh. During the course of assessment proceedings, the Assessing Officer has issued a notice u/sec. 142(1) dated 16/12/2010 where the Assessing Officer has specifically asked about the sinking funds of ₹ 19,27,95,540/- debited to profit loss account and called for explanation from the assessee, which is at page No.133 of the paper book. For the sake of convenience, the notice issued by the Assessing Officer u/sec. 142(1) dated 16/12/2010 is extracted verbatim as under: Notice U/S 142(1) OF THE I.T.ACT, 1961. Office of the Asst. Commissioner of Income Tax, Circle-2(1), Vijayawada. Date :- 16/12/2010 To The VGTM Urban Development Authority, UDA Complex, Lenin Centre, Governorpet, Vijayawada-2 1) During the course of assessment proceedings for the A.Y. 2008-09 and the information furnished by you authorized representative, it is observed that the following amounts were kept under the hedd Other Liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture as Furnished in the P L account are as follows:- Sl. No. Nature of Expenditure Amount Administrative Expenditure/ Development Expenditure 1 Salaries to Staff Officers (UDA Staff) 3,01,37,107.90 Administrative Expenses 2 Pay Allowances (LA Wing) 505874.00 -do- 3 Travelling Allowance 659321.00 -do- 4 Office Expenses 3702797.00 -do- 5 Vehicle Maintenance 1254639.00 -do- 6 Advocate / Legal Fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding liability within the balance sheet as claimed. 6) The Hon'ble ITAT vide order ITA No. 321/H/07, dated 24/08/2007 held as under:- As regards the plea taken by the learned counsel for the assessee that the said transfer to development fund account is allowable under section 36(1)(xii) of the Act we find that under section 36(1)(xii) expression any expenditure incurred means that it should have been incurred in the accounting year. Since the assessee vide his letter dated 13th August, 2004 admittedly stated that he was unable to utilize the funds transferred to development fund account during the year under consideration, therefore, we do not find any merit in the plea of the learned counsel for the assessee that the same is allowable under section 36(1)(xii) of the I.T. Act. 7) As can be seen from the para No.3, the expenditure towards the On the basis of the findings given by the Hon'ble ITAT, Hyderabad, why the entire amounts kept under the head Other Liabilities in the balance sheet amounting to ₹ 50,05,58,456/- after giving set off of ₹ 3,39,59,439.5/- incurred as expenditure in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/sec. 143(3) on 31/12/2010. From the above, it is clear that the Assessing Officer has asked the assessee about the sinking funds of ₹ 19,27,95,540/-. The assessee has replied and furnished books of account before the Assessing Officer. The Assessing Officer after examining all the details, assessment is completed. From the above facts and circumstances of the case, it cannot be said that the assessee has failed to disclose all the material facts fully and truly to complete the assessment. Notice u/sec. 148 is issued after 04 years of the relevant assessment and as per proviso to section 147, to reopen the assessment on the ground of escapement of income, the Assessing Officer has to establish that the assessee has failed to disclose the fully and truly of the material facts to complete the assessment. In the present case, the assessee has disclosed all the facts in respect to the notice issued by the Assessing Officer u/sec. 142(1) dated 16/12/2010. For the sake of convenience, the 1st proviso to section 147 is reproduced as under:- Provided that where an assessment under sub-section (3) of section 143 or this section has been made for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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