TaxTMI 
TaxTMI 
2022 (2) TMI 1096
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....y petitioner under a slump sale agreement with all assets and liabilities to subsidiary of petitioner. The transfer of liabilities also included the loan taken by petitioner from various banks in connection with the business of the said unit. 2. Petitioner received a consideration of Rs. 46.49 crore for transferring the fabric business factoring in the liabilities transferred by petitioner. The slump sale agreement was approved by the Corporate Debt Restructuring Committee in F.Y.-2014-2015 and thereafter an agreement was entered into by E-Land Fashion, the transferee, with various banks for taking over the liabilities payable to banks. The assets and liabilities including the interest payable to banks and interest converted into a loan ....
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....ay 2021. As per the reasons recorded, the deduction of interest paid of Rs. 28,59,25,817/- on loan or borrowing from Public / State / Industrial financial institution as claimed by petitioner should not have been allowed because after slump sale, assets and liabilities belonged to the transferee and it was the transferee who paid the interest to these financial institutions in a subsequent Financial Year. Therefore, income of Rs. 28,25,35,180/- which was the total loss that was assessed, has escaped assessment within the meaning of Section 147 of the Act. 6. In our view, the reasons expressly state that the Assessing Officer, who passed the original assessment order, had allowed this deduction of Rs. 28,59,25,817/- and, therefore, reopen....
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....y produced its books of account or other evidence during the course of the assessment proceedings on the basis of which material evidence could have been deduced by the Assessing Officer with the exercise of due diligence. Petitioner, under Section 139 of the Act had a mandatory obligation to furnish with its return of income the report of audit. Petitioner fulfilled its obligation. Paragraphs 14 and 15 of 3i Infotech Ltd. (supra) read as under: 14. The third ground on which the assessment has been sought to be reopened is that from Annexure 2, clauses 20 and 22(b), of Form 3CD an amount of Rs. 31.32 lakhs is found to be debited to the profit and loss account on account of prior period expenses. This according to the Assessing Offi....
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.... Similarly, the assessee has clarified that excess/short of provision of an earlier year and income and expenditure crystallized during the year, though shown in the statement, have not been considered as prior period items. The assessee, as the material on record would show, therefore brought to bear the attention of the Assessing Officer to this facet while submitting the tax audit report as a part of its return of income. This is not a case where the assessee can be regarded as having merely produced its books of account or other evidence during the course of the assessment proceedings on the basis of which material evidence could have been deduced by the Assessing Officer with the exercise of due diligence. Under Section 139 the assesse....
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....egoing proviso." However, we do not see as to how Mr Maratha could place reliance on the said Explanation. Insofar as all the purported reasons other than the reason pertaining to club expenses are concerned, specific queries had been raised and the Assessing Officer had considered the material placed by the petitioner before him. As regards club expenses, Mr Maratha states that since no specific query had been raised, Explanation 1 would get triggered. We do not agree with this submission. This is so because the club expenses were specifically mentioned at serial No. 17(d) of the tax audit report in Form No. 3CD which was annexed along with the return. This was a clear statutory disclosure on the part of the assessee with regard t....