TaxTMI 
TaxTMI 
2015 (11) TMI 643
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....ssment was made u/s 143(3) of the Act dated 19.10.2009 at an income of Rs. 11,30,51,720/-. After recording the reasons for re-opening, a notice u/s 148 of the Act was issued on 16.01.2012. In response to the said notice, the assessee filed return of income dated 01.03.2012 at Rs. 6,26,47,430/-. Further, the assessee requested for copy of reasons recorded for reopening the assessment which was provided to the assessee on 21.12.2012. Subsequently, the assessee filed its reply dated 07.01.2013 raising objections against reopening of the assessment. The objections raised by the assessee were considered and was found not acceptable by the AO. . Subsequently, notice u/s 143 (2) was issued and, the AO made an addition of Rs. 2,07,22,855/- and completed the reassessment on total income of Rs. 8,33,70,290/-. 3.2 Aggrieved, the assessee filed an appeal before the first appellate authority challenging the jurisdiction of the AO to reopen u/s 147/148 of the Act. The CIT (A) allowed the appeal and quashed the assessment u/s 147/148 of the Act by holding as under :- "I have perused the facts stated in the assessment order as well as the facts stated by the assessee in his submissions. The retu....
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.... audit could not constitute tangible material for reassessment under section 147/148 of the Income Tax Act. In this respect the decision of the Delhi high Court in the case of Xerox Modicorp Ltd. vs Deputy Commissioner of Income-tax 350 ITR page 308. The Delhi High Court held that- "The audit objection was an inference that the royalty payment resulted in a capital benefit; such an opinion expressed by the audit could not constitute tangible material on the basis of which the assessment could be reopened. Therefore, the notice within the period of four years from the end of the assessment year 2004-05 was not valid." It is apparent that the appellant has truly and completely disclosed all material facts relating to all the expenses at the time of scrutiny assessment proceedings itself. The assessee has filed the complete details of expenses on the basis of which the assessment was made. The expenses related to the agricultural activities were not claimed. The expenses on trading were claimed and in this respect the assessee has filed the detailed statement of accounts showing the expenses claimed and income assessed. These expenses relates to non agricultural activities and duly....
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....sitive in the present case. The test is as to whether the assessee had furnished to the AO all the primary facts on the basis of which a deduction was claimed in respect of the commission that was paid to the two directors for services rendered. The record indicates that the assessee had specifically placed before the AO by its letter dt. 4th Sept., 2009, copies of the agreement dt. 16th June, 2005between the assessee and its directors in pursuance of which remuneration was paid to them for the relevant year which included the payment of commission. The attention of the AO was clearly and specifically drawn to the quantum of the fixed monthly remuneration and in addition to the payment of commission which is computed at a stipulated proportion of the net profits. The assessee explained the basis on which a decision was taken to make the payment of commission at a fixed monthly remuneration and the rest at a proportion of the net profit. According to the assessee, this decision was based on the volatility of the stock market and having regard to the fact that the income of the assessee from share business had reduced and in fact, it was Rs. 35.51 crores in comparison to the income o....
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.... the assessment was valid in the eyes of law and so the order of the ld. CIT (A) be reversed and the matter may be remanded back to the ld. CIT (A) to be decided on merits. 6. On the other hand, ld. AR for the assessee reiterated the submissions made before the CIT (A) and submitted that it was incumbent on the AO to dispose off the objections before completing the reassessment. He submitted that the AO had not disposed off the objections of the assessee by a speaking order and had completed the assessment u/s 147/143(3). He further submitted that the AO simply mentioned that, "the submission of the assessee had been considered properly and found not acceptable. The submission of the assessee is considered carefully and it is seen that the provisions are in the nature of unascertained liability whereas the provisions of IT Act 1961 deals with ascertained liability." Relying on the judgment of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO - 259 ITR 19, he submitted that without disposing the objections of the assessee by a speaking order, the assessment framed by the AO is bad in law. He further submitted that when the assessee had not claimed the liabil....
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....ich were also before the AO at the time of original assessment, hence, no escapement could have been attributed to the assessee. We take note that the reopening was done u/s 147 of the Act subsequent to the four-year period stipulated in the proviso to Section 147 and, consequently, the same could only be initiated, if any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice under Section 142(1) or Section 148 or "to disclose fully and truly all material facts necessary for his assessment" for that assessment year. We take note of the fact that all the information had been furnished before the AO at the time of completion of the original assessment u/s 143(3) of the Act, therefore, the reopening of the assessment is not legally permitted; and the internal audit objection could not be constituted as a tangible material for reopening and thereafter reassessment u/s 147/148 of the Act. In this regard, we find that the CIT (A) has rightly relied upon the order of the Xerox Modicorp Ltd. vs. DCIT (supra) for forming such an opinion. We find that the assessee has truly and comple....