TaxTMI 
TaxTMI 
2016 (1) TMI 948
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....he petitioner filed its return of income which was scrutinised by the Assessing Officer who passed the assessment order under section 143(3) of the Income Tax Act, 1961 ("the Act" for short) on 31.1.2013. 3. To reopen such assessment, the Assessing Officer issued impugned noticed. Upon the request of the petitioner, he also supplied the reasons recorded by him for issuing notice for reopening. Such reasons read as under : "3.1 As per clause 11(a) of the 3CD Report, the assessee is following mercantile system of accounting. On perusal of notes on account of assessee in the audit report for financial year 200910 (Asst. Year 201011) read as "provision of Rs. 76 crore for milk purchase/ sale account for milk pool price receivable from Gujarat Cooperative Milk Marketing Federation Ltd has been made by union and the same has been credited to respective primary cooperative societies. To this extent, trading, profit and loss account and balance sheet show provisional figures." It was noticed, that no such provision existed in the Balance Sheet. As assessee was following mercantile system of accounting, milk pool price receivable from Gujarat Cooperative Milk Marketing Federation Ltd sho....
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....f the above facts. the assessee was not eligible for deduction of any amount u/s.80P(2)(d) of the Act of Rs. 2,29,17,577/ 5.1 On further perusal of Tax Audit Report in Form No.3CD, note forming part of income furnished by assessee and computation of income, it was noticed that though the assessee in the note forming part of income tax return has stated that an amount of Rs. 14,68,985/( net) expenditure under the head "Prior period income/expenses is debited to Profit & Loss a/c". It was however noticed from the 3CD report that Chartered Accountant has reported prior period income (net) of Rs. 21,34,590/against clause 22(b) of the Tax Audit Report. It was further noticed that while computing total taxable income, prior period expenditure of Rs. 14,68,985/- as reported by assessee itself. 5.2 As per section 37(1) of the act, any expenditure not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". As per clause 22(b) of the 3cd report, the ca has to fu....
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....ment was invalid. 2) Regarding second ground it was contended that the entire issue of deduction of interest income under section 80P(2)(d) of the Act was examined by the Assessing Officer during the original assessment for which written queries were raised and replies were given by the assessee. Any reexamination of such issue would only be on the basis of change of opinion not permissible even within period of four years from the end of relevant assessment year. 3) Regarding the ground no.3, counsel contended that sum of Rs. 14.68 lacs did not represent the assessee's prior period expenditure. It was in fact, income which was offered to tax by reducing the expenditure for the period under consideration and thereby increasing the income chargeable to tax. The Assessing Officer thus proceeded on entirely erroneous footing on this count. 7. On the other hand, learned counsel Shri K.M. Parikh for the Revenue opposed the petition contending that the impugned notice has been issued within a period of four years from the end of relevant assessment year. The additional requirement under proviso to section 147 that income chargeable to tax had escaped assessment due to failure on....
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.... sum of Rs. 76 crores was a provisional figure for milk purchases and sales account receivable from GCMMFL. In fact, it clarifies that such sum has been reflected in the trading, profit and loss account and balance sheet on the basis of provisional figures. The Assessing Officer's assertion therefore, that the said sum was not reflected under the profit and loss account is not correct. This ground for reopening therefore, must fail. 11. Coming to the ground no.2 for reopening, we may recall that it pertained to the claim of deduction of interest of Rs. 2.29 crores under section 80P(2)(d) of the Act. In this context, the Assessing Officer during the assessment proceedings had raised the following queries in writing : "9. Please furnish detailed interest account(s) for all sorts of interest paid/payable and received/receivable. 29. Justify your claim of deduction u/s.80G, 80P(2)(d) and 80(P)(2)(e) with cogent and sufficient evidences." 12. To these queries, the petitioner had replied as under : "5. Point No.9: Details of interest paid or payable and details of interest received or receivable are enclosed herewith as per Annexure C and Annexure D respectively. 9(b) Deduc....
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....wn fund, the assessee was entitled to full deduction under section 80P(2)(d) of the Act. It was further clarified that such interest was earned on short term deposits with the cooperative banks or from Cooperative societies. It was stated that no expenditure in the form of interest was incurred for earning such interest. The assessee also submitted that the expenditure of interest has no nexus with the income of the interest earned during the year. The assessee relied on decisions in its own case for earlier years pointing out that on this very ground, the assessee has succeeded before the appellate Tribunal. 14. It can thus be safely concluded that the Assessing Officer had examined this issue during the original assessment proceedings. Being satisfied that the claim of the assessee was justified, no disallowance was made. If the Assessing Officer had any doubt, it was always open to raise further queries or to squeeze the assessee further on this issue. However, having accepted the detail explanation of the assessee on the question of deduction of interest, the Assessing Officer cannot be allowed to reopen the issue on a mere rethinking. Though in the context of notice for reope....