9911796707
TMI Blog2022 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one. The liability would be in - praesenti though it may have to be discharged at a future date. In the present case, no liability had arisen in the assessment year under consideration. All that the assessee had done was to make a provision for warranty that might accrue in future. There was no certainty of incurring the expenditure. No reason to answer the second question in favour of the appellant. Consequently this question is also answered against the appellant and in favour of the revenue. - ITTA.No.443 of 2005 - - - Dated:- 26-10-2022 - The Honourable The Chief Justice Ujjal Bhuyan,The Honourable Sri Justice C.V. Bhaskar Reddy For the Petitioner : S Ravi For the Respondent : B Narasimha Sarma JUDGMENT: PER THE HON BLE THE CHIEF JUSTICE UJJAL BHUYAN Heard Mr. Naga Deepak, learned counsel for the appellant and Mr. B.Narasimha Sarma, learned Standing counsel for Income Tax Department appearing on behalf of the respondent. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowable deduction, a view was taken that the aforesaid amount was an income chargeable to tax but had escaped assessment. Thereafter, notice under Section 148 of the Act was issued. Following reassessment proceedings, assessment order dated 29.09.2003 was passed by the Assessing Officer under Section 143(3) r/w Section 148 of the Act. 8. From a perusal of the assessment order, we do not find that appellant had questioned the competence of the Assessing Officer in initiating reassessment proceedings on the ground that the same was done on the basis of a mere change of opinion. 9. None the less, before the Commissioner of Income Tax (Appeals) II, Hyderabad (briefly CIT(A) hereinafter), appellant raised the ground that Assessing Officer had erred in assuming jurisdiction under Section 148 of the Act on mere change of opinion. First appellate authority i.e., the CIT(A) noticed that the assessment was reopened within 4 years from the end of the financial year relevant to the assessment order under consideration. On that basis, first appellate authority declined to entertain the above ground of the appellant. 10. Before the Tribunal, this was taken up as an additional groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. Though the materials in the form of profit and loss account was on record, Assessing Officer had no occasion to examine the correctness of the claim since only intimation was issued under sub-section (1) of Section 143 of the Act. Tribunal concurred with the stand taken by the revenue that merely because the Assessing Officer had not exercised the power of issuing notice under Section 143(2) of the Act to make it a case of scrutiny assessment, he would not be debarred from re-opening the assessment under Section 147 of the Act. Therefore, when the return was processed under Section 143(1) of the Act without making due scrutiny, it could not be said that the Assessing Officer had applied his mind and taken a particular view; thus issuance of notice under Section 148 would tantamount to a change of opinion. Accordingly, Tribunal rejected the above ground urged by the appellant. 12. We agree with the view taken by the Tribunal on this aspect. We are fortified in our view when we refer to Explanation (1) to Section 147 of the Act, as it existed at the relevant point of time as per which production before the Assessing Officer the account books or other evidence from whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual quantification may not be possible; (iii) The quantification should be based upon the prudence . (iv) The notification issued prescribing accounting standards in exercise of powers under Section 145(2) of the Act, should also be taken into consideration. 17. Thereafter, Tribunal negatived the claim of the appellant as under: 20. In the instant case, it is not in dispute that this is the first year in which the assessee has undertaken to provide warranty and thus it cannot be said that the quantification is based upon the past experience of the assessee. No doubt the assessee claimed that it is based upon the past experience of the holding company but there is nothing on record to suggest as to what is the percentage of expenditure incurred by the holding company upon sale of similar products with warranty. 21. On the other hand, report of the standing committee dated 13.02.2001, which is very much available before the end of the accounting relevant to the assessment year under consideration, shows that the performance of the units installed in India are good, indicating that the provision made towards warranty liability is excessive. There is also hug ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
