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TMI Blog2017 (2) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in making disclosure fully and truly all material facts necessary for the assessment, which is a condition precedent for exercising jurisdiction u/s 147 of the Act. From the contents of the reasons recorded aforesaid it cannot be inferred that there was any failure on the part of the assessee in disclosing full and true material facts necessary for his assessment for the assessment year under consideration. Hence, we find merit in the contention of the assessee that since there is no failure on the part of the assessee in disclosing all material facts fully and truly, the reopening is bad in law. We, therefore, hold that the action of reopening in this case is not in accordance with the expressed provisions of the Act. AO has not followed the law laid down by the Hon ble Supreme Court in GKN Driveshaft India Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] the reassessment order cannot be passed without passing speaking order on objection filed by the assessee - We notice that the assessee after receiving copy of reasons recorded filed return of income as well as objection of initiation of reassessment proceeding vide letter dated 25.04.2013. But the AO without passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ENDRA, AM AND SHRI RAM LAL NEGI, JM Appellant by : Shri.Rajesh Kumar Yadav Respondent by : Shri. Dharshan Ghandhi O R D E R PER RAM LAL NEGI, JM These are the appeal and cross objection filed by the revenue and the assessee respectively against impugned order dated 23/07/2014 passed by the Ld CIT(Appeals)-34, Mumbai for the assessment year 2006-07, whereby the Ld. CIT(A) partly allowed the appeal filed by the assesses against the assessment order dated 26/03/2014 passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short the Act ). 2. Brief facts of the case are that the assessee filed its return of income for the assessment year 2006-07 on 31.10.2006, declaring the total income of Rs. 10,20,41,920/- after claiming deduction u/s 80IB(10) of Rs. 25,94,15,537/-. The assessment was completed u/s 143(3) of the Act, determining the total income of Rs. 11,12,30,910/-. After the expiry of four years AO initiated re-assessment proceeding u/s 147 of the Act and notice u/s 148 of the Act was issued on 28.02.2013. The assessee after receiving the copy of reasons recorded, filed return of income and also filed objections against the initiation of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order on the following effective grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition of Rs. 11,00,000/- made u/s 40(a)(ia) of the Act for the payment made to M/s. Chitnis Vaithya Comp. ignoring the fact that the assessee has not furnished the required evidences before the A.O at the assessment stage. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition of Rs. 8,39,475/- made u/s 40(a)(ia) of the Act for the payment made to M/s. M.R. Patil Consulting ignoring the fact that the assessee has not furnished the required evidences before the A.O at the assessment stage. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O to allow deduction claimed u/s 80IB of Rs. 25,94,15,537/- ignoring the fact that the assessee was neither the owner of the land nor any occupancy certificate was issued by the local authority for claiming the said deduction. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O to allow deduction claimed u/s 80IB(10) of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further argued that reopening proceeding cannot be initiated on the basis of audit objection by the revenue team. Under section 147 of the Act the AO can reopen the assessment if he has reason to believe that any income has escaped assessment for any assessment year. So in order to exercise the jurisdiction under this section subjective satisfaction of the AO is essential. 7. On the other hand the Learned Departmental Representative (DR) relying on the findings of Ld. CIT (A) on the legal grounds raised, submitted that since the AO had reason to believe that income chargeable to tax in this case has escaped assessment, AO had rightly initiated proceedings u/s 147 of the Act and Ld. CIT (A) has rightly confirmed the action of the AO. Therefore, there is no reason to interfere with the findings of the Ld. CIT(A) so far as the legal grounds raised by the assessee are concerned. 8. We have heard the rival submissions and also perused the documents placed on record. It is an admitted fact that proceedings under section 147 of the Act, in this case has been done after the expiry of four years from the end of the relevant assessment year. As per section 147, if the AO has reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue material facts necessary for his assessment for the assessment year under consideration. Hence, we find merit in the contention of the assessee that since there is no failure on the part of the assessee in disclosing all material facts fully and truly, the reopening is bad in law. We, therefore, hold that the action of reopening in this case is not in accordance with the expressed provisions of the Act. 11. The second issue raised by the Ld. Counsel for the assessee is that the AO has not followed the law laid down by the Hon ble Supreme Court in GKN Driveshaft India Ltd. (supra) the reassessment order cannot be passed without passing speaking order on objection filed by the assessee. We notice that the assessee after receiving copy of reasons recorded filed return of income as well as objection of initiation of reassessment proceeding vide letter dated 25.04.2013. But the AO without passing any speaking order on objection filed by the assessee, proceeded further and passed order u/s 143 (3) r.w.s. 147 of the Act. So it is apparent that the AO has not followed the law laid down by the Hon ble Supreme Court in the aforesaid case. 12. The third issue raised by the Ld. Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initiated to review the earlier opinion. It is well settled law that when deduction u/s 80 IB (10) was allowed in original assessment after considering all the facts the same cannot be withdrawn by invoking section 147 of the Act. In this case, the AO had allowed the deduction in question in original assessment after considering all the facts and details submitted by the assessee. So far as Fees paid to Chitnis Vaithy Co is concerned we notice that the assessee vide letter 18.03.2014 submitted the certificate dated 18.01.2001 issued by the said company TDS Ledger Account, Bank Payment voucher etc. to prove that the said company had provided solicitor for the project of the assessee company, it cannot be said that no tax has been deducted at source. As regards payment of Rs. 8,39,475/- made to M. R. Patil Consulting Engineering Ltd. there is merit in the assessee s contention of the Ld. counsel that expenditure is allowable in the current year as the assessee has been following the project completion method and since it was allowed in the earlier year the AO cannot change his stand by exercising powers u/s 147 of the Act. As per the settled law assessment cannot be reopened only ..... 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