2022 (6) TMI 347

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.... facts and circumstances of the case the Learned Assistant Commissioner of Income Tax erred in re-opening the assessment completed u/s.143(3) and making additions to the assessed income. Assessment was completed u/s.143(3) on 31.03.2016 by accepting the returned income and subsequently was re-opened by issuing a notice u/s. 148 on 23.03.2018, with out recording reasons for re-opening. On a protest for reopening of the assessment by the appellant on 4.10.2018, the reasons for re-opening was let known to the appellant on 23.10.2018. 2. In the written submission before the Commissioner of Income Tax (Appeals), this fact was highlighted and prayed for quashing the assessment redone. Appellant relied on the following judicial pronouncem....

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....mpany is engaged in the business of engineering products has filed its return of income for the assessment year 2013-14 on 18.09.2013 declaring total loss of Rs.2,27,51,993/-. The assessment has been completed u/s.143(3) of the Income Tax Act, 1961, on 31.03.2016 and accepted returned income. The case has been subsequently reopened for the reasons recorded, as per which income chargeable to tax had been escaped assessment on account of non-capitalization of interest paid on loans borrowed for acquisition of asset in light of proviso to section 36(1)(iii) of the Act, and also claiming deduction towards exceptional items. The assessment has been completed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961, and determined total loss at Rs.29,90....

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....ot permissible under the law. The learned A.R for the assessee further submitted that as regards additions made towards disallowance of proportionate interest, it was explained to the Assessing Officer that when borrowing cost needs to be capitalized in terms of Accounting Standard 16, then asset should be qualified asset. However, in this case, the assessee has abandoned project due to various reasons and thus, interest paid on loans borrowed from banks needs to be allowed as deduction. 5. The learned D.R, on the other hand, supporting order of the learned CIT(A) submitted that although, the assessee has shown huge amount in work in progress account, but failed to capitalize interest component, even though, borrowed funds have been util....

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....ssues which come to his knowledge during the course of assessment proceedings. In this case, the counsel for the assessee himself has conceded fact that there is escapement of income on the issue of deduction towards exceptional items. Therefore, once it is proved that there is escapement of income, then additions made by the Assessing Officer towards other issues being disallowance of interest expenses also in accordance with law. Therefore, we are of the considered view that reopening of assessment u/s.147 of the Act, is valid in the given facts & circumstances of the case and thus, arguments of the assessee are rejected. 8. As regards, disallowance of interest expenses u/s.36(1)(iii) of the Income Tax Act, 1961, it was argument of the....