AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 469
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....he facts and circumstances of the case and in law, the learned CIT(A) was right in annulling the assessment when the reasons for reopening has been recorded properly before issuing the notice u/s 14B. 2. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in not appreciating the fact that deficit arises out of expenditure out of income on which exemption has already been claimed and allowing of set off of deficit of earlier year against the income of current year will result in double deduction nwhich is contrary to the ratio laid down by the Hon'ble Supreme Court in Escorts Ltd. v/s Union of India, 199 ITR 43 and J.K. Synthetics Ltd. v/s Union of India, (1992) 65 Taxman 40." 2. Facts in brief:- The as....
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....). Further, the assessee trust has offered Rs. 51,29,452 as deemed income under section 11(3) and the Assessing Officer allowed expenditure towards object of the trust for the year as application instead of treating the entire amount of as deemed income. I have therefore, reason to believe that the cause of escapement of income within the meaning of section 147 of the Income Tax Act, 1961, is failure on the part of the assessee trust to make full and true disclosure of the material facts as far as both the above issues is concerned. The sanction u/s 1511) of the Income Tax Act, 1961, is solicited for issuance of notice u/s 148 of the Act, from the DIT (Exemption) as the assessment for the year under consideration has been finalized u/s 1....
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....ioner (Appeals) in his conclusion agreed with the contention of the assessee and held that the Assessing Officer has not pointed out any failure on the part of the assessee to disclose any material which is important for the computation of total income and also held that the re-opening is based on "change of opinion" because there is no tangible material to come to the conclusion that there is any escapement of income. He further held that insofar as the issue of depreciation on fixed assets while computing the income under section 11 is concerned, the same is covered by the decision of the Jurisdictional High Court in CIT v/s Institute of Banking, [2003] 264 ITR 110 (Bom.). Thus, he held that the re-assessment made by the Assessing Officer....
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....under section 143(3) or 147, after the expiry of four years from the end of the relevant assessment year. Such a bar of limitation for re-opening the case beyond the period of four years, in such a case, is relaxed only under twin conditions, firstly, by the reason of the failure on the part of the assessee to make a return of income under section 139 or in response to the notice issued under section 142(1) / 148 and, secondly, failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment year. Except for these two conditions, the assessment completed under section 143(3), cannot be re-opened after the expiry of four years. 7. Now, on a perusal of the "reasons recorded", in the present cas....
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....hich has not been disclosed by the assessee, which had lead to the escapement of the income. It is from the "reasons recorded" alone that the Assessing Officer can to assume the jurisdiction under section 147, for re-opening the case and, therefore, the "reasons recorded" should be such, that it should provide a live link nexus between the material brought on record and the income escaping assessment. In the present case, the claim of depreciation on the assets, has been completely set out in the balance sheet and in the income and expenditure account filed by the assessee along with the return of income, which has also been examined by the Assessing Officer in scrutiny proceedings. Thus, we do not find any failure on the part of the assess....
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....nd truly all material facts necessary for its assessment. However, merely making this bald assertion is not enough. It is now well settled that the reasons which are recorded by the Assessing Officer for re-opening the assessment, are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. The reasons recorded should be clear and unambiguous and should not suffer from any vegueness. The reasons are the manifestation of the mind of the Assessing Officer and therefore, should be self-explanatory and should not keep the Assessing assessee guessing for the reasons. The reasons provide the link between t....