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TMI Blog2024 (2) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 (9) TMI 876 - DELHI HIGH COURT ] and Jai Parabolic Springs Ltd.'s case [ 2008 (4) TMI 3 - DELHI HIGH COURT ] that, even if, the claim made by the assessee company does not form part of the original return or even the revised return, it could still be considered, if, the relevant material was available on record, either by the appellate authorities, (which includes both the CIT (A) and the Tribunal) by themselves, or on remand, by the AO. In the instant case, the Tribunal, on perusal of the record, found that the relevant material qua the claim made by the assessee company u/s 80 IB (10) of the Act was placed on record by the assessee company during the assessment proceedings and therefore, it deemed it fit to direct its re-examination by the Assessing Officer. We uphold the order of CIT(A) and dismiss this appeal of Revenue. Validity of Reopening of assessment - notice beyond period of four years - CIT(A) quashing the reassessment proceedings as there was no omission on the part of the assessee to disclose any material fact necessary relating to the assessment of this assessment year during the original assessment proceedings completed u/s. 143(3) of the Act and assessee s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framed by the Assistant Commissioner of Income Tax, Company Circle I(3), Chennai for the assessment years 2008-09 2010-11 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the Act ) vide orders dated 31.12.2010 27.03.2013 respectively and by the Deputy Commissioner of Income Tax for the assessment year 2009-10 u/s. 143(3) r.w.s.147 of the Act vide order dated 15.03.2016 ITA No.207/CHNY/2020, Assessment year 2008-09 2. The only issue in this appeal of Revenue is as regards to the order of CIT(A) allowing the claim of assessee i.e., increase in computation of capital loss, claimed at assessment stage only by way of filing a letter instead of revised return of income. For this, Revenue has raised the following ground Nos.2 to 5:- 2. The learned CIT(A) erred in allowing assessee's appeal without appreciating the fact that the assessee's claim is not regarding any omission of claiming deduction, whose relevent particulars are already disclosed in original/ revised ROI but the assessee's claim is regarding increase in computation of capital loss which has been claimed in assessment stage only which can not be allowed without filing revised ROI as per the provisions of IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was ultimately sold to Ramani Hotels Ltd., for a consideration of Rs. 63 crores. In aggregate, the total sale value was Rs. 314,11,72,802/-. The AO during the course of scrutiny assessment proceedings noted that the assessee has admitted loss in the return of income at Rs. 105,99,78,952/- for future carry forward and set off against long term capital gains. Further, the assessee filed revised computation of income during the course of assessment proceedings, filed documents in proof of sale value adopted in it, the value of indexed cost of acquisition of the asset including interest cost and other indirect costs and therefore, the long term capital loss by way of this revised computation claimed at Rs. 173,59,69,695/-. But the AO noted that this loss i.e., enhanced loss is not claimed through revised return of income and hence, following the decision of Hon ble Supreme Court in the case of Goetze (India) Ltd., vs. CIT reported in 284 ITR 323 (SC) allowed the claim to the extent of Rs. 105,99,78,952/- for future carry forward and set off as the same has been claimed in the return of income. Aggrieved, assessee preferred appeal before the CIT(A). 4. The CIT(A) noted the fact that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Ltd., supra and stated that the issue as to whether claim for deduction could be made by way of letter before the AO, if, it did not form part of the original return, the Hon ble Supreme Court ruled that while doing so, the AO did not have the power to entertain the claim for deduction made after the return was filed otherwise than by filing of revised return. The ld.CIT-DR stated that the CIT(A) should not have entertained this new claim but when Bench put a query to him, whether all the facts relating to sale and purchase of hotel property and commercial complex by IFCI ICICI Bank was available before the AO, he should have computed the aggregate income of the assessee as held by the Hon ble Supreme Court in the case of CIT vs. Kanpur Coal Syndicate reported in (1964) 53 ITR 225, that the scope of power of the appellate authority i.e., of CIT(A) is co-terminus with that of the AO and he can do what the AO can do and also direct him to do what he has failed to do. 6. On the other hand, the ld.counsel for the assessee supported the order of CIT(A) and also filed copy of decision of Hon ble Madras High Court in the case of Abhinitha Foundation Pvt. Ltd., reported in (2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Tribunal under s.254 of the IT Act, 1961. There shall be no order as to costs. 7.1 We also noted that the Division Bench of Bombay high Court in the case of CIT vs. Pruthvi Brokers Shareholders P. Ltd., reported in [2012] 349 ITR 336 has considered an identical issue and held as under:- ''14. A long line of authorities establish clearly that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims to wit claims not made in the return filed by it. It is necessary for us to refer to some of these decisions only to deal with two submissions on behalf of the department. The first is with respect to an observation of the Supreme Court in Jute Corporation of India Limited v. Commissioner of Income Tax, 1991 Supp (2) SCC 744 = (1991) 187 ITR 688. The second submission is based on a judgment of the Supreme Court in Goetze (India) Limited v. Commissioner of Income Tax, (2006) 157 Taxman 1. (A). In Jute Corporation of India Limited v. CIT, for the assessment year 1974-75 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us with that of the Income Tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the statutory provisions. In the absence of any statutory provision the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer. [emphasis supplied]'' (B) It is clear, therefore, that an assessee is entitled to raise not merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceeding by holding that reassessment proceeding was change of opinion but not regarding any factual finding or information, whereas in this assessee's case, based on RAP objection the case was reopened and new material fact brought on record that the assessee has claimed Bad debt as expenses which was not allowable in accordance with 36(1)(Vii) ? 3. Whether on fact and circumstances of the case and in law, the Ld. CIT(A) was right in quashing the reassessment proceeding by holding that reassessment proceeding was change of opinion but not regarding any factual finding or information, without appreciating the fact that as per explanation 1 to the provided clause of section 147 - 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 ? 4. Whether on fact and circumstances of the case, the Ld.CIT(A) was right in quashing the reassessment proceeding in light of the decision of the Hon'ble Supreme Court, in the case of M/s P. V.S. Beedies (P.) Ltd VS CIT, in CA No. 1564-65 of 1987 dated October 1st , 1997, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as return filed in response to notice u/s. 148 of the Act. The assessment for assessment year 2009-10 was reopened u/s. 147 of the Act, since there was reason to believe that the assessee has claimed bad debt of Rs. 55,92,38,563/- despite the fact that there was no business carried out by the assessee during the relevant assessment year and income shown as exceptional item of Rs. 32,65,14,574/- was not offered to tax in the profit loss account. Accordingly, reassessment was framed u/s. 143(3) r.w.s. 147 of the Act vide order dated 15.03.2016. The assessee required the reasons recorded for reopening of assessment which was supplied by the Revenue vide letter dated 29.09.2015 for reopening of assessment, which reads as under:- On verification of Balance sheet the profits as per the Profit and loss Accounts were not adopted for computation. The in terest income received from RSEB and on Deposits - Rs. 1,61, 16,262 and interest on working capital from Corporation Bank (Not disallowed u/s 43B in respective years) written back on account of OTS - Rs. 4, 19,11,786 was offered as income and a sum of Rs. 56,00,61,915, which included the bad debts written off Rs. 55,92,38,563 was clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of original assessment proceedings and he relied on the decision of Hon ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd., reported in 320 ITR 561. The AO rejected the objections by a speaking order, which is part of assessment order para 3 and main crux of AO for rejecting the objection is that the assessee s case does not fall under the proviso to section 147 of the Act, as the assessee has not disclosed fully and truly material fact necessary for its assessment. But, the AO has not pointed out that what is the failure of the assessee and which information was not submitted by assessee. The relevant sub-para 4.3 4.4 of para 3 reads as under:- 4.3 The argument of the assessee that the proviso of section 147 prohibits the re-assessment is totally a misconception by the assessee and cannot be accepted. The proviso comes to the rescue of the assessee only when the assessee has disclosed fully and truly all material facts necessary for the assessment for the respective assessment year. In the present case the assessee has not submitted all the relevant material which enables the Assessing Officer to decide whether the Bad debt was allowable expenditure though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the AO's predecessor and therefore the reopening could be said to be based on change of opinion which cannot be the reason for reopening of an validly completed assessment u/s 143(3) as held by various courts including the Apex Court in the case of Kelvinator of India Ltd. (320 ITR 561), followed by the decision of the jurisdictional Madras High Court in the case of M/s. Schwing Stetter India (P) Ltd. in TCA No. 217 of 2015 dated 02.06.2015 among others. Accordingly, the CIT(A) quashed the reopening. Aggrieved, Revenue is in appeal before the Tribunal. 13. The ld.CIT-DR mainly relied on the reasons cited by the AO rejecting the objections. He argued that the burden to make full and true disclosure is on the taxpayer and there can be failure or omission on the part of the taxpayer even at the time of assessment proceedings, as in the present case, the assessee was aware that the bad debts was claimed without offering any business income and even income shown as exceptional item was not offered to tax. He argued that the claim of assessee that the business has been carried out is also factually incorrect and according to him, it is ascertained from profit loss account subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raming of assessment and assessment was completed originally u/s. 143(3) of the Act and admittedly the reopening is beyond 4 years because notice u/s. 148 of the Act was issued on 29.03.2019, no re-opening is possible. This view of ours is supported by the decision of Hon ble Supreme Court in the case of CIT vs. Foramer France, (2003) 264 ITR 566, wherein the Supreme Court has affirmed the decision of Hon ble Allahabad High Court in the case of Foramer France vs. CIT, (2001) 247 ITR 436 by observing as under:- 14. Having heard learned counsel for the parties, we are of the view that these petitions deserve to be allowed. 15. It may be mentioned that a new Section substituted Section 147 of the Income-tax Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The relevant part of the new Section 147 is as follows : 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment was framed u/s. 143(3) of the Act, the Revenue could not establish any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment, the reopening in present case is bad in law. Hence, reopening is quashed and this jurisdictional issue is allowed in favour of assessee. 14.1 From the reasons recorded in the present case, we could not comprehend what is the failure of the assessee, as there is no mention by the AO in the reasons recorded of any failure of the assessee to disclose fully and truly all material facts for framing of assessment for the relevant assessment year of escaped income. Once this is the position, we are of the view that the assessee s case is fully covered by the proviso to section 147 of the Act and the decision of Hon ble Supreme Court in the case of Foarmer France, supra squarely applies. We uphold the order of CIT(A) and dismiss this appeal of Revenue. ITA No.209/CHNY/2020, Assessment year 2010-11 15. The only issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by the AO of business income of Rs. 2 crores being advance and deposits written off. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o recover the amount. The assessee furnished breakup of advances, deposits written off and advances given during the course of business which remained unfulfilled for the reason that the parties failed to perform their part as agreed and also failed to repay the amount. The AO noted that the expenditure relates to advances written off and deposits written off with regard to trade advance. According to him, since there is no business, the advances written off relating to trade cannot be allowed. Therefore, he disallowed the claim of advances / deposits written off for an amount of Rs. 7,06,61,470/-. Aggrieved, assessee preferred appeal before CIT(A). 17. Apart from other issue of allowances of trade advances / deposits written off, the assessee has challenged before CIT(A), the classification of Rs. 2 crores received on capital receipt held as business income by the AO. The assessee before CIT(A) vide letter dated 05.12.2012, which was addressed to the AO during the course of assessment proceedings, it was explained that a sum of Rs. 2 crores in connection with the sale of hotel assets was considered as part of business income whereas this amount represent sale consideration against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to be deleted. This ground is therefore allowed. Aggrieved, Revenue is in appeal before the Tribunal. 18. We have heard rival contentions and gone through facts and circumstances of the case. When it was pointed out at the time of hearing, the ld.CIT-DR could not explain what was the new evidence filed before CIT(A) by the assessee which lead to violation of Rule 46A of the Rules. The ld.CIT-DR was appraised that the explanation of this sum of Rs. 2 crores received in connection with sale of hotel assets was before the AO vide letter dated 05.12.2012 and vide letter dated 20.03.2013. Firstly, this information is available before the AO there cannot be any violation of Rule 46A of the Rules. Secondly, it is a fact that this Rs. 2 crores received on account of capital receipt and it cannot be treated as business asset because the amount was received in connection with sale of hotel assets but inadvertently declared by assessee as business income. Since, such amount represents sale consideration against sale of capital asset, it should be adjusted against capital work in progress and it cannot be held as business income. The CIT(A) has rightly deleted the addition. Hence, we con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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