2019 (3) TMI 166

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....or tangible material but re-appreciation of the existing material which was available in the course of the original scrutiny assessment. 2. The assessee is into the hospitality business. During the relevant assessment year it had filed a return on 30.09.2011 declaring Rs. 76,94,77,310/- as losses. Its case was selected for scrutiny under Section 143(3) and the assessment framed on 17.02.2014. The AO accepted the total losses of Rs. 76,94,77,310/-. During the course of the scrutiny assessment, queries were addressed to the assessee with respect to certain amounts claimed towards misappropriation and alleged losses, which was sought to be adjusted in the taxable income. The AO issued these letters on 15.05.2013, which was replied on 06.09.....

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....t record it came to the notice of the undersigned that the assessee in its P&L A/c has made a provision of Rs. 4221.29 lakh (Rs. 1675.50 lakh relating to fixed assets, Rs. 2113.39 lakh relating to loan and advances and Rs. 432.40 lakh relating to overstatement of expenditure) on account of misappropriation. However, the assessee has adjusted the amount of Rs. 432.40 lakh for taxation under income from other source on a/c of overstatement of expenses. However, the balance provision for Rs. 37,38,89.000/- (Rs.42,21,29,000-43240000) has not been offered for taxation. Since the provision was an unascertained liability as well as capital expenses, the same should have been disallowed and added back to the total income of the assessee, being inad....

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....d not properly applied his mind to the circumstances. The AO, therefore, acted within its rights in concluding that the assessee had not offered the amounts in question [Rs.42.21 crore] for taxation and in these circumstances, the reassessment notice should not be interfered with. 6. It is far too well settled that any notice under Section 147/148 is to be premised on fresh or tangible material - made available with the Revenue within the time granted or within the extended time under Section 147. The only other circumstance when it can seek recourse to the reassessment power is if material documents, having significance on the reassessment, are withheld or improperly disclosed. The duty of the AO, it has been repeatedly emphasised from ....