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TMI Blog2022 (11) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... e reopened the assessment for AY 2010-11. We quash the reassessment proceedings and the grounds raised by the assessee on this issue are allowed. - ITA Nos. 1622, 1623 , 624/Hyd/2017 - - - Dated:- 31-10-2022 - Shri Rama Kanta Panda , Accountant Member And Shri Laliet Kumar , Judicial Member Assessee by : Shri K. C. Devdas , CA Revenue by : Shri Kumar Aditya , Sr. AR ORDER Per Shri Rama Kanta Panda , AM The above three appeals filed by the respective assessees are directed against the separate orders dated 09.06.2017 of the Learned Commissioner of Income Tax (Appeals)-1, Hyderabad relating to AY 2010-11. Since identical grounds have been raised by the assessee in all these three appeals, therefore, all these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (four Wheelers) at the rate of 50% instead of admissible rate of 15%. This resulted in excess claim of depreciation of Rs. 5,59,911/-. iii) During the financial year relevant to the AY 2010-11 the assessee firm claimed an expenditure of Rs. 10,39,571/- towards renovation of office building. As the expenditure is capital in nature the same is disallowed. iv) The assessee has not submitted the proof for deduction of tax at source of expenditure u/s. 40(a)(ia) of Rs. 6,00,000/- towards office rent. v) The assessee firm did not offer any interest income from, the FDR of Rs. 1,50,000/-. vi) The assessee firm has shown a rent advance (old New) of Rs. 10,00,000/- under current assets/debtors. But not offered any rental income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey operation. He observed that the disclosure made during the course of survey operation is on account of certain discrepancies pointed out and the same is in addition to the normal income. According to the AO, the inclusion of additional income offered to the closing stock is against the quantum disclosure made during the course of survey operation and reduces the tax effect to the extent of disclosure thereby resulting in regularization of survey operation without any outcome as envisaged. He, therefore did not accept the submission of the assessee and made addition of Rs. 35 lakhs. 6. Before ld. CIT(A), the assessee apart from challenging the addition on merit challenged the validity of the reassessment proceedings. However, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d additional income of Rs. 35,00,000/- which is offered to cover up the discrepancy. Hence, it attracts penalty proceedings u/s. 271(1) of I.T. Act, 1961. 8. He submitted that the closing stock of FY 2008-09 has been taken as the opening stock of FY 2009-10 and therefore, in absence of any tangible material before the AO, he could not have reopened the assessment. Referring to a series of decisions, he submitted that in absence of any tangible material before the AO, he cannot reopen the assessment, especially when there is no other discrepancy or addition on account of which the case was reopened. He submitted that when the closing stock of FY 2008-09 has been shown as the opening stock of FY 2009-10, there is absolutely no error for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO in the instant case reopened the assessment u/s. 147 of the I.T. Act recording the reasons which have been reproduced in the preceding paragraph. We find the ld. CIT(A) upheld the validity of the reassessment proceedings by observing as under:- 6.1 The appellant has referred that notice u/s. 148 was issued after audit objection, hence cannot be a ground for reopening the assessment. Before me, the appellant submitted that there is no material evidence or fresh facts to show that there was an escapement of income for AY 2010-11 An audit objection only the reason for reopening of assessment. Appellant relied on the case of DCIT Vs. Naroda Enviro Projects Ltd., ITA No. 931/Ahd./2011 (ITAT, Ahmedabad). The following case Is not applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find the Hon'ble Delhi High Court in the case of CIT vs. Atul Kumar Swami reported in 362 ITR 693 has held that the reassessment notice must be based on tangible material. The relevant observation of Hon'ble Delhi High Court at para 5 of the order reads as under:- 5. As to what constitutes valid reasons to believe is no longer a matter of debate. So long as the law declared in Kelvinator (supra) stands, a valid reopening of assessment has to be based only on tangible material to justify the conclusion that there is escapement of income. In the present case the note forming part of the return clearly mentioned and described the nature of the receipt under a non-compete agreement. The reasons for the notice under section 147 n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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