TaxTMI 
TaxTMI 
2014 (10) TMI 654
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.... recognition can be adopted. So based on the accounting standards, the petitioner was entitled to the claim. This judgment was rendered by the Apex Court only on 05-05-2014 and the copy of the income tax report reporting this case was received only on 07-06-2014. According to the assessee, the delay occurred due to reasons beyond assessee's control and there was no willful latches or omissions or neglect on the part of the assessee in filing the appeal within the due date. The assessee pleaded that if the delay was not condoned and the appeal not admitted, it would cause serious and irreparable hardship and monetary loss to the assessee. 3. The Ld. DR has not raised any serious objection for condonation of delay in filing the appeal by the assessee. 4. We have heard both the parties and perused the record. We find that there exists reasonable cause for not filing the appeal in time and the reasons advanced by the assessee for the delay are bona fide. Being so, we condone the delay in filing the appeal by the assessee and admit the appeal for adjudication. 5. Regarding the first issue relating to re-opening of assessment, the Ld. AR submitted that the only reason recorded is ....
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....n of facts that the sale of Kumarakam property was disclosed in the P&L account, being so, the notice was liable to be quashed in view of the judgment of the Rajasthan High Court in the case of Khem Singh Sankhla vs. Union of India (266 ITR 485) wherein it was held that reasons based on wrong assumption of facts that certain income were disclosed amounts, and other alleged reasons which appear to have been interpolated without the initial of any officer could not be accepted as valid reasons for issuance of notice under section 148 and the impugned notice was quashed. According to the CIT(A), the notice under section 148 was also liable to be quashed also in view of the judgment of the Bombay High Court in the case of Siemens Information System Ltd. vs. ACIT (2007) (293 ITR 548) holding that when notice under section 148 is issued based on a non-existing reasons and had been issued under the mistaken belief, notice was not valid since there was total non application of mind and notice was based on that reasons would amount to non application of mind. 9. The Ld. AR submitted that the case of AO was only that the law does not require AO to limit himself to only the ground on which a....
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.... Court in the case of 9 SCC 496, a summary of which is given by the Punjab and Haryana High Court in the case of ATM Forgings vs. CIT (359 ITR 314) wherein it was held that all these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered which is important for sustaining litigants' faith in the justice delivery system. The insistence on reason is a requirement for both judicial accountability and transparency. The reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or rubber stamp reasons is not to be equated with a valid decision-making process and the judgment of the Supreme Court in the case of Tamil Nadu Mercantile Bank Ltd. vs. State reported in 2013 (4) KLT S.N. 143(SC) wherein it was held that reason would mean a justifying reason, or more simple a justification for a decision is a consideration, in a non-arbitrary ways in favour of making or accepting that decision. If there is no justification in support of a decision, such a decision is without any reason or justifying reason. He further relied on the judgment of the Kerala High Court in the case of 2012 (4)K....
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....credited to the P&L a/c (clause ii to explanation to section 115JB). Since the assessee had credited only Rs. 5,228 under other income, this alone can be subtracted. 13. Now the contention of the assessee is that when the reassessment proceedings are initiated, the AO need to limit himself to the ground on which the assessment was reopened and he cannot travel beyond the reasons recorded. For this, he relied on various judgments. As per provisions of sec. 147, once the assessment is reopened, for bringing to tax any income that has escaped assessment, in terms of sec. 148 to 153, then the AO has to assess or reassess such income and also any other income chargeable to tax which has escaped assessment. The purpose of this provision is that if in the process of reassessment initiated under section 147 to bring to tax any item of escaped income it comes to the notice of the AO that any other income has also escaped assessment, then the Assessing officer has to bring to tax such income also. The procedure for income that has escaped assessment under section 147 is contained in section 148 whereunder sub-section (2) makes it mandatory for the Assessing officer to record reasons before ....
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....r in question. The only dispute is whether it is an ascertained liability or not. 15. The Ld. AR submitted that in the P&L account, the provisions for sales tax of Rs. 2,36,99,808/- was made and the above provision relates to the assessment years 1982-83 to 1999- 2000. According to the Ld. AR, just because the appeals are pending, that does not make it unascertained liability not to be provided for. The Ld. AR relied on the judgment of the Kerala High Court in the case of CIT vs. Kumaran and Co. (194 ITR 85) and the judgment of Apex Court in the case of CIT vs. Apollo Tyres Ltd. (255 ITR 273). Moreover the issue was covered by judgment of the Delhi High Court in the case of CIT vs. Khetan Chemicals and Fertilizers Ltd. (307 ITR 150) and the latest judgment of the Apex Court in the case of CIT vs. Punjab Stainless Steel Industries & Ors. (364 ITR 144). 16. The Ld. AR relied on the judgment of Kerala High Court in the case of M/s. Abad Fisheries vs. CIT reported in 1995 TAX L.R. 571. However consequent to subsequent appellate orders, the assessee got refund of Rs. 2,53,49.742/- for assessment year 2012-13 which was credited in the P&L account and offered for assessment. The Ld. AR ....
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....ITR 85) which has been relied upon by the assessee. According to the Ld. DR, in this case, the assessee is an abkari contractor who incurred a liability to pay licence fee and the assessee paid a part of it and made a provision in the accounts towards rest of the account and interest thereon. Later a court decision came that ended the liability for which the provision was made. Accordingly, the Ld. DR submitted that the Assessing officer and the CIT(A) disallowed the provision and the ITAT and the High Court allowed it. 19. According to the Ld. DR, the issue is not whether prior period items can be allowed while computing tax u/s. 115JB. The issue is whether the prior period item involved is an ascertained liability or not. The assessee has received the refund of sales tax of Rs. 2,53,49,742/-. For the assessment year 2005-06, the provision for sales tax liability of Rs. 2,36,99,808/- was made which was treated by the Assessing officer as unascertained liability and added back both in regular computation and u/s. 115JB. According to the Ld. DR, in retrospect, it is now amply clear that it is not only that the liability was unascertained but rather, non- existent which means that t....
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....rly when it has an impact on the book profit. There cannot be any dispute that it is the responsibility of the assessee to substantiate the legality of any item of expenditure/income found debited/credited in the profit and loss account by drawing support from any document or business practices or accounting requirements. 23. With regard to the claim of prior period charges/credits in the Profit and Loss account, the assessee's explanation is that it was crystallized in this assessment year. From the explanations furnished by the assessee, it was evident that the assessee had passed the entry for prior period credits/charges in the assessment year only to ensure that the final book profit (surplus) was to be reduced. On making careful observations of the facts of the case, the said intention of the assessee was very much apparent and glaring. Besides, the assessee also could not substantiate the said claim with a legally tenable explanation. It was also not shown that the booking of such kind of entries are permitted under the accounting principles. 24. The question that would arise, thereafter, was whether the Assessing officer was still debarred from making any adjustment t....
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....return on 24-01-2006 and the order was passed under section 147 and not under section 147 read with section 143(3) which may be due to non issuance of notice under section 143(2). The Ld. AR submitted that in view of judgments of the Calcutta High Court in the case of Indian Aluminium Co. Ltd. vs. Union of India & Ors. (271 ITR 73), Jodhpur Bench of the Tribunal in the case of Smt. Mansukhi Devi Bihani Jan Hitkari Trust vs. CIT (94 ITD 1) and the Apex Court judgment in the case of L.N. Hota & Company vs. CIT (301 ITR 184), the order passed is without authority. 27. The Ld. DR submitted that this issue cannot be adjudicated at this stage as there is no such issue raised before the lower authorities and there is no petition for admission of additional ground. 28. We have heard both the parties and perused the record. In this case, the assessee had continuously appeared before the assessing authority as well as before the CIT(A) and participated in all the re-assessment proceedings, answered all queries raised by the Assessing officer. It is not the case of the assessee that no proper opportunity was given in this case. The only contention is that there was no notice u/s. 143(2) bef....