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TMI Blog2022 (5) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent reason based on possession of tangible material/information with the Ld. AO having live nexus and close link with the formation of belief that the income has escaped assessment; and 1.3 that the reassessment proceedings were based on change of opinion on the same set of facts which were existing and considered at the time of original assessment concluded under section 143(3) of the Act. 2. Without prejudice to the above grounds, the Ld. CIT(A) on the facts and in |he circumstances of the case and in law, erred in confirming the addition of prior period expenses amounting to INR 1,08,63,174 in the computation of book profits made by the the Ld. AO, without appreciating that profits as shown in the profit and loss account for the relevant assessment year prepared in accordance with the provisions of Companies Act, 1956 is to be considered while computing the 'book profits' as per Explanation 1 to section 115JB of the Act and the said expense was shown separately in the profit and loss account only due to specific requirement of the Accounting Standards prescribed by the Institute of Chartered Accountants of India. 3. On the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the Paper book). In respect to the same, the Appellant filed a submission dated March 30, 2017 before the Ld. AO whereby it submitted that the computation of the book profits under section 115JB of the Act was correct and the Appellant has also obtained and submitted the certificate from Chartered Accountant i.e. Form 29B in this regard. 7. Thereafter, notice dated 31 .03. 2017 u/s 148 of the Act and a subsequent clarification letter dated May 1, 2017 (notice u/ s 148 along with letter, page 2 to 3 PB), was issued to the Appellant requiring the Appellant to file its return of income, which was duly complied by the Appellant. 8. Further, the Appellant was provided reasons recorded for initiation of reassessment proceedings under section 147/148 of the Act, in respect of which the Appellant filed its objections vide letter dated July 7, 2017 against the initiation of reassessment proceedings. The said objections were disposed of by the AO vide order dated October 24, 2017. Subsequently, a detailed submission on merits of the case was filed by the Appellant vide submission dated November 9, 2017 . 9. Thereafter, the AO passed the assessment order under section 147 /143(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33,614 /-. 14. With reference to the reopening, the provisions Section 147 are as under: " Income escaping assessment. 147.If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re- compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3 .- For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub- section (2) of section 148. Explanation 4.- For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012." In the present case, the return of income has been filed on 30.09 .2010.The P& L account for the year ending March 2010 disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of Income including the MAT ('Minimum Alternative Tax') computation under section 115JB of the Act along with Form 29B for AY 2010-11 depicts that the Company had disallowed the prior period expense of Rs.1,08,63,174 /- in the normal computation of income. Further, the same is not disallowed in the MAT computation in line with Form 29B for the subject year. The said documents been duly furnished before the AO vide Annexure-2 and Annexure-3A of the submission dated May 30, 2013 (copy of submission dated May 30, 2013 along with relevant extract of the annexures - page 87 to 100 of the PB). 18. Thus, in the present case, there is no failure on the part of the Appellant to file its Return of Income. Further, the Appellant has disclosed fully and truly all material facts necessary for his assessment. The facts have been duly disclosed in the Tax Audit Report and vide the Profit and Loss Account. Hence keeping in view the proviso to the section 147, the reassessment proceedings initiated under section 147 of the Income Tax Act 1961 beyond a period of four years are bad in law and deserve to be quashed. 19. In the result, the appeal of the assessee is allowed. Order Pronounced i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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