2012 (4) TMI 597 - AT - Income Tax

Tribunal upholds CIT (A)'s orders, dismisses Revenue's appeals for multiple assessment years. Reassessment and disallowances found invalid.

The Tribunal dismissed the Revenue's appeals for the assessment years 2000-01, 2002-03, 2003-04, and 2004-05, upholding the CIT (A)'s orders. The ... - Issues Involved:1. Validity of reopening assessment u/s 148.2. Disallowance u/s 35D.3. Disallowance u/s 14A.Summary:Issue 1: Validity of Reopening Assessment u/s 148- The Revenue filed an appeal against the order of the CIT (A) for the assessment year 2000-01, challenging the reopening of assessment finalized on 31.3.2003.- The Assessing Officer issued a notice u/s 148 on 31.3.2005 for reasons including changes in accounting methods, deductions u/s 35D, calculation of deduction u/s 80HHF, and verification of dividend payment.- The CIT (A) set aside the reassessment order, finding that no income had escaped assessment, the reopening was based on audit objections, proceedings u/s 263 had been dropped, and there was no reason to believe for reopening.- The Tribunal upheld the CIT (A)'s order, stating that reopening based on audit objections is impermissible and constitutes a mere change of opinion without fresh material.Issue 2: Disallowance u/s 35D- For the assessment year 2002-03, the Assessing Officer disallowed expenses u/s 35D, citing that the expenditure was incurred after the commencement of business.- The CIT (A) deleted the disallowance, stating that the claim pertained to earlier assessment years and not the year under consideration.- The Tribunal agreed with the CIT (A), noting that once a claim is accepted u/s 35D, it cannot be withdrawn in later years, and the case law cited by the Revenue was not applicable.Issue 3: Disallowance u/s 14A- The Assessing Officer disallowed interest u/s 14A, attributing part of the borrowed funds to investment in shares.- The CIT (A) deleted the disallowance, finding no expenditure relatable to exempt income for the year under consideration.- The Tribunal upheld the CIT (A)'s decision, noting that investments were made before accepting deposits, and the Revenue failed to provide material to counter the CIT (A)'s findings.Conclusion:- The Tribunal dismissed the Revenue's appeals for the assessment years 2000-01, 2002-03, 2003-04, and 2004-05, upholding the CIT (A)'s orders on all issues.