2018 (8) TMI 1424

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....iety concern and is engaged in the business of constructing residential building. For the assessment year 2012-2013, the petitioner filed return of income declaring total income of Rs. 7.44 lacs (rounded off) on 28.9.2012. Return was taken in scrutiny. The Assessing Officer passed order under section 143(3) of the Act on 24.3.2015 making minor additions to the returned income. Substantial portion of the assessee's income was deducted under section 80IB(10) of the Income Tax Act. To reopen such assessment, the Assessing Officer issued the impugned notice. Reasons recorded for issuing notice read as under : "On verification of the Profit & Loss Account, Balance Sheet, computation of income and further details available on record, it is....

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....as on 31.03.2011 (as per ITR 4 for AY 2011-12) 41,86,55,266 (C) Average value of total assets 52,70,88,133 Disallowance u/s.14A read with rule 8D 0 (ii) (Interest expenditure x Average value of investments) Average value of total assets (A+B/C) 22,147 (iii) 0.5% of Average Investment (0.5% of Rs. 15,29,63,231) 18,63,617 Disallowable as per audit u/s. 14A read with rule 8D(i)(ii)(iii) 18,85,764 Disallowed by assessee u/s.14A read with rule 8D 0 Total disallowable 18,85,764 (i) Direct Expense (Tax Free income generate) 0 (A) Interest expenses debited in the P&L Account 31,319 Value of investment as on 31.03.2012 (as per balance sheet of AY 2012-13 includes) 42,21,78,590 Value o....

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....not claimed any interest expenditure for his investments in partnership firm. Section 14A of the Act, therefore, did not apply. 5. On the other hand, learned counsel for the Revenue opposed the petition contending that the Assessing Officer had recorded proper reasons and thereafter issued notice for reopening of assessment. 6. Undoubtedly, notice for reopening has been issued beyond a period of four years from the end of relevant assessment year. Original assessment having been framed after scrutiny, the question of failure of the assessee to make full and true disclosures becomes relevant. In this context, we may notice that the Assessing Officer had two objections to the assessee's return. First was that the assessee had claime....