Tribunal rules in favor of assessee, deems reassessment after 4 years unjustified.

M/s Mansi Finance (Chennai) Ltd. Versus The Deputy Commissioner of Income Tax, Corporate Circle – 4 (1), Chennai

M/s Mansi Finance (Chennai) Ltd. Versus The Deputy Commissioner of Income Tax, Corporate Circle – 4 (1), Chennai - TMI Issues: Reopening of assessment under Section 147 after four years from original assessment under Section 143(3) - Disallowance under Section 14A of the Act - Negligence of assessee in furnishing material facts.

Reopening of Assessment under Section 147 after Four Years:
The appeal pertained to the reopening of the assessment under Section 147 of the Income-tax Act after four years from the original assessment under Section 143(3). The counsel for the assessee argued that as per the proviso to Section 147, the assessment cannot be reopened after four years unless there was negligence on the part of the assessee in furnishing full material facts. The dispute centered around the computation of expenditure for earning exempted income, specifically the disallowance under Section 14A of the Act. The Assessing Officer reopened the assessment based on a different clause of Rule 8D(2) of the Income-tax Rules, claiming negligence on the part of the assessee. However, the tribunal held that since the assessee had provided all necessary details, the reopening of the assessment was not justified.

Disallowance under Section 14A of the Act:
The main issue revolved around the disallowance under Section 14A of the Act concerning exempted income earned by the assessee. The Assessing Officer initially computed the disallowance under one clause of Rule 8D(2) but later claimed it should have been under a different clause. The tribunal observed that the assessee had indeed furnished all details of investments and exempted income, leaving it to the Assessing Officer to apply the appropriate provisions and compute the disallowance. The tribunal noted that the Assessing Officer's change in opinion indicated a lack of negligence on the part of the assessee in providing necessary material for assessment, leading to the decision to delete the disallowance made by the Assessing Officer.

Conclusion:
After considering the arguments from both sides and examining the material on record, the tribunal concluded that there was no negligence on the part of the assessee in furnishing relevant details for assessment. The tribunal found that the Assessing Officer's decision to reopen the assessment after four years and change the basis of disallowance under Section 14A was not justified. Therefore, the tribunal set aside the orders of the authorities below and allowed the appeal filed by the assessee, ultimately deleting the disallowance made by the Assessing Officer.