TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 1237
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....ndia Undertaking engaged in the business of rural infrastructure development and institutional development of the Co-operative Bank and Regional Rural Banks (RRB). The assessee also works as a Nodal Agency on behalf of the Government of India. As stated by the Assessing Officer in the original assessment order, the assessee is an Autonomous Body created in the year 1982 by an Act of Parliament. It was established for providing credit and other support services for promotion and development of agricultural and allied activities, Small Scale Industries, village, cottage and rural industries, industries in de-centralized sector, handicrafts, rural crafts, etc. For the assessment year under consideration, the assessee filed its return of income on 30th October 2004, declaring total income of ` 1047,12,43,630. The Assessing Officer in the course of original assessment proceedings, noticed that in the course of carrying out activities of rural development on behalf of Government of India as a Nodal Agency, the assessee apart from having its own income earned from activities of advancing loans to State Government and other entities has also received aid at subsidized rates / grants from v....
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....ion of the learned Commissioner (Appeals), no further appeal was preferred by the Department. 5. When the matter stood thus the Assessing Officer on 18th February 2009 re-opened the assessment under section 147 of the Act by issuing notice under section 148 on the reasons recorded that on scrutiny of Profit & Loss account, it was observed that assessee has separately shown expenditure on developmental activities amounting to ` 17,40,60,876. He further noted, as per the income and expenditure account for the period ended 31st March 2004, this expenditure has been added back to the profit after being debited to the Profit & Loss account. He, therefore, formed an opinion that income to the extent of ` 17,14,60,876 has escaped assessment. After complying to the notice issued under section 148, the assessee objected to the re-opening of the assessment by stating that no income has escaped assessment. The assessee challenged re-opening of assessment raising various issues one amongst them being, the assessment order passed originally on identical has already merged with the order of the first appellate authority. The Assessing Officer, however, rejecting the objections of the assessee u....
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....therefore, the order passed is invalid. In this context, the learned Authorised Representative relied upon the following decision:- i) KSS Petron Pvt. Ltd. v/s ACIT, ITA no.224/2014, dated 3.10.2016 (Bom.); and ii) PCCIT v/s Tupperware India P. Ltd., 165 taxmann.com 17; iii) Abhayam Trading Ltd. v/s DCIT, ITA no.410 and 411/Mds./ 2016, dated 15th July 2016. 9. Learned Authorised Representative submitted, even otherwise also, at the time of original assessment, the assessee had furnished full particulars of its receipts from various activities including the donations / grants received from Government / donor agencies. He submitted, the assessee had also furnished full particulars of expenditure incurred during the original assessment proceedings. The Assessing Officer after verifying the receipts as well as expenditure incurred by the assessee had disallowed an amount of ` 4,70,33,540 under section 14A. He submitted, in proceedings before the first appellate authority, the said addition was deleted by the learned Commissioner (Appeals) while holding that all the expenditures claimed by the assessee are allowable. He, therefore, submitted the entire issue relating to receipt a....
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....d that all expenses claimed by the assessee are allowable and accordingly deleted the addition. It is evident from the order passed under section 143(3) r/w section 147, during the re-assessment proceedings, the assessee had raised objections against the re-opening of assessment bringing all these facts to the notice of the Assessing Officer. However, it is manifest that the Assessing Officer without disposing of the objection of the assessee had completed the assessment by making the addition. The Hon'ble Jurisdictional High Court in KSS Petron Pvt. Ltd. (supra), after following the decision of the Hon'ble Supreme Court in GKN Drive Shafts India Ltd. v/s ITO & Ors., 259 ITR 019 (SC), held that where the Assessing Officer did not follow the law laid down in the decision of GKN Drive Shafts India Ltd. (supra), the matter need not be restored to the file of the Assessing Officer to pass a further / fresh order. The observations of the Hon'ble Supreme Court in this context are extracted hereunder for convenience. "5. The regular assessment for the assessment year 2003-04 was completed on 10th January 2006 under section 143(3) of the Act, determining the respondent assess....
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.... it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the assessee by reviving stale / old matters. 11. The Hon'ble Delhi High Court in Tupperware India Pvt. Ltd. (supra) quashed the re-assessment observing as under:- 5. Apparently, the Assessee did raise an objection to the order of the AO reopening the assessment. In the order dated 28th January 2011 allowing the Assessee's appeal, the Commissioner of Income Tax (Appeals) ['CIT (A)'] noted that the Assessee had indeed filed objections to the reopening of the assessment by its letter dated 9th August 2006. In the remand report dated 20th December 2010, the AO quoted a paragraph from the order sheet which stated that the aforementioned letter dated 9th August 2006 had been handed over to the AO and that the AO had sought some more information which the Assessee had not filed. The CIT (A) accordingly held that by stating that no objections had been filed, the AO had "very conveniently disregarded the guidelines" laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19/[2002] 125 Taxman 963....
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....diture incurred by the assessee are allowable. While doing so, the learned Commissioner (Appeals) followed his decision in the case of same assessee for the assessment year 2002-03. Undisputedly, the aforesaid decision of the learned Commissioner (Appeals) on the issue has attained finality. Thus, as could be seen, the issue relating to claim of expenditure was not only examined by the Assessing Officer during the original assessment proceedings, but also by the learned Commissioner (Appeals) and the learned Commissioner (Appeals) categorically held that all expenditures claimed by the assessee are allowable. That being the case, the quantum of expenditure whether ` 4,70,33,540 or ` 17,40,60,876 is irrelevant. Moreover, this issue having already merged with the order of the learned Commissioner (Appeals) cannot be a subject matter of re-opening. Further, it is evident from the reasons recorded that the re-opening of assessment is on the basis of audited account of the assessee which were not only available at the time of original assessment but the Assessing Officer in the course of original assessment proceedings, had examined the accounts of the assessee and the nature of receipt....