9911796707
TMI Blog2019 (11) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... r (AO) under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act) concerning AY 2008-09. 2. The assessee has challenged the disallowance of prior period expenses of Rs. 8,36,34,000/- in the captioned appeal arising from reassessment order framed under s.147 of the Act. 3. The assessee has also moved an application for admission of additional ground of appeal vide its application dated 29.07.2019 whereby it seeks to challenge the order of the Revenue authorities on a purported legal ground towards validity of reopening notice issued under s.148(2) of the Act as well as re-assessment proceedings carried out under s.147 of the Act in the absence of any escapement of income. We find that the additional ground raised by the assessee go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands at Rs. 113.10 Crores. It was submitted that after passing the aforesaid assessment order under s.143(3) of the Act, a notice under s.148(2) of the Act was issued on 27.03.2012 for AY 2008-09 in question. As a consequence of the aforesaid re-assessment notice, a reassessment order under s.143(3) r.w.s. 147 of the Act dated 22.01.2013 was passed. Adverting to the issue, the learned AR adverted to the computational part of the re-assessment order and pointed out that despite disallowance of prior period expenses of Rs. 8.36 Crore, the assessed total income continue to stand at Rs.Nil whereas deemed income under s.115JB of the Act stands at Rs. 113.09 Crores. It was submitted that in the background of these facts, where the tax liability u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Act, a completed assessment can be reopened even where excessive loss or excessive allowance has been claimed or where income chargeable to tax has been under-assessed de hors the ultimate assessed income. It was submitted that as per categorical legislative intent, reopening of assessment is not dependent upon the ultimate tax liability but is dependent upon escapement of chargeable income from taxation. The learned DR submitted that the assessee has claimed prior period expenses which is not eligible under s.37(1) of the Act or other provisions of the Act. The assessee has thus claimed extra expenditure and consequently, understated the assessed income. In this scenario, the case of the assessee clearly falls within the sweep o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "11. Insofar as the second contention raised on behalf of the petitioner is concerned, the controversy stands squarely concluded by the decision of this court in the case of India Gelatine and Chemicals Ltd. (supra) wherein, the court in a case where the assessee had declared a loss of Rs. 1.44 crores under the normal computation and the assessment was framed on book profit of Rs. 2.89, had held that even if the expenditure of Rs. 116.86 lakhs is disallowed, there would be no resultant change in the petitioner's tax liability since the petitioner had already paid much higher tax and had allowed the petition. It appears that the revenue has accepted the said decision and has not challenged the same before the higher forum. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order having regard to legislative fiat by way of Explanation 2 to Section 147 of the Act referred to and relied upon. Needless to say, Article 141 of the Constitution embodies the rule of precedent. All the subordinate courts are bound by judgment of the High Courts. Thus, governed by the decision of the Hon'ble Gujarat High Court as noted above, we find merit in the plea raised by the assessee by way of its additional grounds of appeal. The re-assessment notice is accordingly quashed and re-assessment order is declared null and void. 10. As the assessee has succeeded on additional ground of legal nature itself, we do not seek to delineate on the merits of the disallowance of prior period expenses, nor the same has been addressed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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