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2016 (8) TMI 275
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....or short 'the Act') on 4.11.2011 computing the petitioner's total income at Rs. 52.61 lacs. To reopen such assessment, the Assessing Officer issued the impugned notice. For issuing such a notice, Assessing Officer had recorded the following reasons : "REASONS FOR ISSUE OF NOTICE U/S.148 OF THE IT ACT,1961. The assessee had filed its return of income for the assessment year 2009-10 on 11.9.2009 declaring total business loss at Rs. 62,18,088/- and long term capital loss at Rs. 33,97,340/-. The assessment was completed u/s.143(3) of the Income-Tax Act,1961 on 4.11.2011 determining total income at Rs. 52,61,12200/- and long term capital loss at Rs. 33,97,340/-. 2.i) On examination it was found that the assessee is assessed as company. As per provision of Section 114JF(4) every company is required to furnish a report in the prescribed from 29B. It is observed that the assessee company failed to compute book profit and failed to furnish report in prescribed form 29B from the chartered accountant. The book profit of the assessee worked out to Rs. 51,85,10,000/- and MAT liability works out to Rs. 5,71,91,653/-. Since the tax liability the assessee as per income assessed under norm....
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....e notice for reopening under a letter dated 20.8.2014. Such objections were, however, rejected by the Assessing Officer by an order dated 11.12.2014. 5. From the record it can be seen that the impugned notice has been issued within a period of 4 years from the end of relevant assessment year. With this background in mind referring to the reasons recorded by the Assessing Officer, learned counsel for the petitioner raised the following contentions ; (i) Regarding the first ground mentioned in the reasons, namely, a possibility MAT liability, learned counsel submitted that the petitioner is not a company and therefore, not subjected to provisions of Section 115JB of the Act. In any case, mere possibility that MAT provisions would apply, would not be a ground to hold that income chargeable to tax has escaped the assessment for which reopening is necessary. (ii) With respect to Ground Nos.2 and 3 as mentioned in the reasons recorded, learned counsel submitted that these issues were scrutinized by the Assessing Officer during the original assessment. The Assessing Officer made no disallowance in the order of assessment. Any attempt on his part to reopen the assessment therefore....
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.... the assessee has challenged such additions and disallowances. If these additions and disallowances are set aside, the net income of the assessee would dip below, the minimum prescribed for a company and therefore, the assessee would be covered under the MAT regime. In the original assessment, no computation of MAT was carried out. In short, the apprehension of the Assessing Officer is that if the appeal by the assessee in connection with the assessment order in question is allowed, there may arise the question of applying MAT formula. 5. For various reasons, reopening of assessment cannot be permitted on such ground. Firstly even as per the Assessing Officer, presently there is no escapement of income chargeable to tax. Secondly, and equally importantly, if the assessee succeeds in appeal, by virtue of which, the normal tax computation comes to below the prescribed limit so as to kickin MAT provisions, the same can always be applied as a consequence of the appellate order or by way of giving effect to the order in appeal. To this, even learned counsel for the petitioner raised no dispute, of course, except for contending that whether the MAT provision applies to the petitioner ....
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....nary course of the business of money-lending which is carried on by NDDB as Public Financial Institution. Accordingly the amount written off is rightly allowed as deduction in the regular assessment. In view of these facts, since NDDB has written off the amount in the books of accounts the bad debt write off has been correctly allowed. As per NDDB it is entitled to deduction of Rs. 2.62 crores of interest which was not recovered and was written off against the provision, though not claimed in the return nor assessment." 11. In the additional documents provided today, the petitioner has produced a statement of bad debts written off during the said year which contains the following information : "Statement of Bad Debts Written Off Particulars Principal Amt. (Rs.) Interest Amt.(Rs.) Balance Outstanding 111881781 111324442 Adjustment of amount received in One Time Settlement - 85100000 Net Balance 111881781 26224442 12. As per the case of the petitioner, the principal sum of the loan was Rs. 11.18 crores and there was accumulated unpaid interest of Rs. 11.13 crores on such loan. Thus, when the debtor paid Rs. 8.51 crores, he discharged....
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....claim of expenditure under the head of 'Professional Services and Legal Fees'. According to him, the sum of Rs. 75,000/- expended under this was in the nature of personal expenditure and further sum of Rs. 93.55 lacs was in the nature of expenditure relatable to other assessee. In this respect, in the objections raised by the petitioner, following averments were made : "C. Legal Fees : In the assessment proceedings under section 143(3), the AO had asked to furnish the details regarding claim of legal fees vide point 3 of the notice dated 25.7.2011. We had vide our letter dated 25.8.2011 given our reply enlisting in detail the nature and purpose of various expenditures incurred on legal fees vide Annexure-B1 (relevant invoices page 202 to 206). We had also enclosed the copy of the invoices in respect of all the expenses. The AO was satisfied with our explanations and considering the said reply, did not make any disallowance regarding the same while completing assessment u/s.143(3)." C. Legal fees : In order to help the Salt Farmers, NDDB initiated in forming Sabarmati Salt Farmer Society. As per the Memorandum of Association of the Society, Chairman of NDDB shall be the ....
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....e." 19. In response to such queries, the petitioner under a letter dated 25.8.2011provided the details as under : "a. Communication charges of Rs. 1,00,000/- and above - Annexure-B b. Legal fee of Rs. 50,000/- and above - Annex B1 c. Professional fee of Rs. 1,00,000/- and above - Annex B2." 20. The Annexures-B1 and B2 referred to in the said reply dated 25.8.2011 have been supplied along with the additional documents today. Part of Annexure-B1 is payment of sum of Rs. 75,000/- to Advocate Mr.Nagewswara Rao. In Annexure- B2, we find as part of the details of professional fees in excess of Rs. 1 lacs, the following details : Party's name Communication Address PAN Amount TDS Remarks Mother Dairy Fruit and Vegetable Patparganj, Delhi 110092 AACC M3174 A 80,92,880/- Not Applicable Amount reimbursed to MDFVPL since they have engaged the services of SBI Capital Markets Ltd. (AAACS7914E), Mumbai (Rs.67,44,560) and Mott McDonald Pvt. (AAACD2029F) Ltd., Mumbai (Rs.13,48,320) on behalf of NDDB. Applicable TDS has been deducted by MDFVPL. No. service charges has been charged by MDFVPL. Accordingly, no TDS has been deducted for the reimbu....
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....nsiderable hardship to the assessee. The assessment gets reopened not only qua those grounds which are recorded in the reasons, but also with respect to entire original assessment, of course at the hands of the revenue. This obviously would lead to considerable hardship and uncertainty. It is precisely for this reason that even while recognizing such powers, in special requirements of the statute, certain safeguards are provided by the statute which are zealously guarded by the courts. Interpreting such statutory provisions courts upon courts have held that an assessment previously framed cannot be reopened on a mere change of opinion. It is stated that power to reopening cannot be equated with review. 42. Bearing in mind these conflicting interests, if we revert back to central issue in debate, it can hardly be disputed that once the Assessing Officer notices a certain claim made by the assessee in the return filed, has some doubt about eligibility of such a claim and therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control what....
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....al institutions which was debited against the interest income. According to the Assessing Officer, this expenditure was in the nature of capital expenditure and could not have been claimed deduction by way of revenue expenditure. In this respect, learned counsel for the petitioner drew our attention to audited accounts of the petitioner in which the sum of Rs. 4.38 crores of premium was amortised and added back to the income of the assessee. With the aid of the additional documents produced today, he drew our attention to the statement of premium amortised during the financial year 2008-09 in which the following break up has been given : "Statement of Premium Amortised during FY2008-09 Particulars Amt.(Rs.) Due to Policy Change National Housing Bank 2218256 Indian Railway Finance Corporation 25,222910 Nuclear Power Corporation of India Ltd. 504062 Power Finance Corporation Ltd. 2345744 Punjab National Bank 1,303019 Shown in note no.6 sub total (a) 31593991 Pertaining to current financial year National Housing Bank 592292 Indian Railway Finance Corporation 4360294 Nuclear Power Corporation of India....