2018 (9) TMI 340 - AT - Income Tax

Appellate Tribunal Validates Assessment Reopening, Partial Allowance of Loss, Disallowance of Interest

Shri Mahaveer Babulal Jain Versus The Deputy Commissioner of Income Tax, Chennai

Shri Mahaveer Babulal Jain Versus The Deputy Commissioner of Income Tax, Chennai - [2018] 66 ITR (Trib) 403 Issues:1. Validity of reopening assessment under section 147 of the Income Tax Act for assessment years 2008-09 and 2009-10.2. Disallowance of loss on account of mutilated notes claimed as expenditure under section 37(1) of the Act for both assessment years.3. Disallowance of interest for want of TDS under section 40(a)(ia) of the Act for assessment year 2008-09.Issue 1: Validity of Reopening Assessment under Section 147:The appellant challenged the reopening of assessment under section 147 of the Income Tax Act for the assessment year 2008-09, citing lack of cogent material evidence and claiming it to be a mere change of opinion. The Appellate Tribunal noted that the original assessment was completed on 30.12.2010, and after the appellant's appeal, the Assessing Officer reopened the assessment under section 147 based on underassessment of income chargeable to tax. The Tribunal found the reopening valid under Explanation 2 to section 147, as the underassessed income was brought to tax, independent of the appellate order, leading to the dismissal of the appellant's challenge.Issue 2: Disallowance of Loss on Mutilated Notes:The appellant claimed deduction for loss on mutilated notes under section 37(1) of the Act for both assessment years. The Assessing Officer disallowed a portion of the claim, leading to an appeal. In the assessment year 2008-09, the appellant agreed to the disallowance of 80% of the claim, which prevented further appeal. For the assessment year 2009-10, the Assessing Officer disallowed the entire claim due to lack of proper explanation. The Tribunal directed the Assessing Officer to allow 20% of the claim for both years, considering the nature of the appellant's business and RBI guidelines on counterfeit notes.Issue 3: Disallowance of Interest for Want of TDS:The appellant's disallowance of interest for want of TDS under section 40(a)(ia) of the Act for the assessment year 2008-09 was confirmed by the ld. CIT(A) based on a Supreme Court decision. The Tribunal upheld this decision, citing the interpretation that the term 'payable' in the section covers cases where the amount has been paid without TDS deduction. Consequently, the ground raised by the appellant was dismissed for the assessment year 2008-09.In conclusion, the Appellate Tribunal dismissed the appeal for the assessment year 2008-09 and partly allowed it for statistical purposes for the assessment year 2009-10, based on the detailed analysis of the validity of reopening assessment, disallowance of loss on mutilated notes, and disallowance of interest for want of TDS.