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TMI Blog2022 (2) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... se of E-land Apparel Limited, the said interest and property tax liability was disallowed u/s 43B of the Income Tax Act 1961 and was remaining unpaid as at the end of the previous year 13-14. As held by this court in 3i Infotech Ltd. vs. Assistant Commissioner of Income Tax [ 2010 (6) TMI 372 - BOMBAY HIGH COURT] petitioner had brought to the attention of the Assessing Officer this facet while submitting the tax audit report as a part of its return of income. This is not a case where petitioner can be regarded as having merely produced its books of account or other evidence during the course of the assessment proceedings on the basis of which material evidence could have been deduced by the Assessing Officer with the exercise of due diligence. Petitioner, u/s 139 of the Act had a mandatory obligation to furnish with its return of income the report of audit. Petitioner fulfilled its obligation. In the case at hand, the reopening is proposed after the expiry of 4 years after the end of relevant assessment year and assessment has been completed under Section 143(3) of the Act. Therefore, the proviso to Section 147 would apply and the onus is on respondents to show that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed on 30th November 2015, petitioner declared the total income at Nil. Subsequently, case was selected for scrutiny and assessment order under Section 143 (3) of the Act was passed on 28th December 2017, with assessed loss of ₹ 28,25,35,180/- after making various additions. In the assessment year, the assessed loss also included deduction as interest paid on ₹ 28,59,25,817/- on loss or borrowing from Public / State / Industrial financial institution as claimed by the assessee vide Income Tax Return. This is an admitted position, as could be seen in the reasons recorded for reopening. 5. Thereafter, petitioner received a notice dated 31st March 2021 under Section 148 of the Act from respondent no.1 stating that there were reasons to believe that petitioner s income chargeable to tax for A.Y.-2015-2016 has escaped assessment. Petitioner was provided the reasons recorded for reopening vide communication dated 14th May 2021. As per the reasons recorded, the deduction of interest paid of ₹ 28,59,25,817/- on loan or borrowing from Public / State / Industrial financial institution as claimed by petitioner should not have been allowed because after slump sale, asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 and 15 of 3i Infotech Ltd. (supra) read as under: 14. The third ground on which the assessment has been sought to be reopened is that from Annexure 2, clauses 20 and 22(b), of Form 3CD an amount of ₹ 31.32 lakhs is found to be debited to the profit and loss account on account of prior period expenses. This according to the Assessing Officer is not allowable under the Act and should be added back. To this extent, the Assessing Officer has found that there was an escapement of income. During the course of the submissions, the attention of the Court has been drawn by the learned counsel appearing on behalf of the assessee to the particulars of income and expenditure of the prior period, credited or debited to the account. Appended to the statement are the following notes : (1) Based on the recommendations of the Institute of Chartered Accountant of India in its publication Guidance note on tax audit under Section 44AB of Income Tax Act, 1961 at para 44.2 of edition September 1999, expenditure of earlier years means expenditure which arose or accrued in any earlier year and which excludes any expenditure of any earlier year for which the liability to pay has cryst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular information or material fact had not been disclosed by the assessee at the time of the original assessment proceedings. He only sought to place reliance on Explanation 1 to Section 147 which reads as under:- Explanation 1: Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. However, we do not see as to how Mr Maratha could place reliance on the said Explanation. Insofar as all the purported reasons other than the reason pertaining to club expenses are concerned, specific queries had been raised and the Assessing Officer had considered the material placed by the petitioner before him. As regards club expenses, Mr Maratha states that since no specific query had been raised, Explanation 1 would get triggered. We do not agree with this submission. This is so because the club expenses were specifically mentioned at serial No. 17(d) of the tax audit report in Form No. 3CD which was annexed along with the return. This was a clear statutory disclosure on the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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