2022 (10) TMI 990

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....l filed by the Revenue.   2. The Respondent-Company is an assessee under the provisions of the Act and the relevant assessment year is 2008-2009. 3. The Respondent-Company had filed its return of income for the relevant assessment year on 6th October, 2008 declaring a total income of Rs.46,33,63,270/-, which was processed under Section 143(1) of the Act. Thereafter there was a scrutiny assessment. The assessment was completed under Section 143 (3) of the Act on 27th December, 2010 assessing the total income at Rs. 46,52,72,576/-. 4. The case of the assessee was subsequently re-opened pursuant to issuance of notice under Section 148 of the Act dated 28th March, 2013 i.e. within four years for the following reasons : "U....

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....compensation provided for by the Respondent-Company in its books. The Assessing Officer observed that the assessee/Respondent-Company had debited an amount of Rs. 6,50,00,000/- towards the claim for compensation paid/provided to the profit and loss account (P&L Account). He noted that on perusal of notes to account, it was seen that the provision for compensation pending settlement as on the closing date of the financial year was at Rs. 13,10,00,000/-, which was not added back to the total income. The Assessing Officer observed that the provisioning was purely contingent in nature depending upon the happening or not happening of an event and that this provisioning could not therefore be treated as expenditure for the year under consideratio....

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....y issued, as there was no new, fresh tangible material or any new information which could suggest escapement of income as the issue under consideration was well within the knowledge of the original Assessing Officer at the time of the scrutiny assessment. With respect to the dis-allowance of the claim of compensation of Rs. 6,50,00,000/-, it was observed that the dis-allowance was not made on any sound ground or with any legal authority and the CIT(A) went on to delete the dis-allowance of expenditure of the said amount. 9. Aggrieved by the said order, the Revenue filed an Appeal before the ITAT. The ITAT confirmed the order of the CIT(A) holding that since there was no fresh tangible material in the possession of the Assessing Officer o....

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....ment within the meaning of sub-clause (a) to Explanation 2 of section 147 of the Incometax Act, 1961? C. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in holding that the reassessment proceeding u/s. 147/148 of the Income-tax Act, 1961 is bad in law, by holding it to be based on a change of opinion without appreciating the fact that no informed decision was taken by the A.O. due to failure on part of the assessee to disclose truly and fully all material facts for making the assessment? D. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in allowing the compensation of Rs. 6.50 crores holding that the same to be an ascertained liability, withou....

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....pting the order dated 19th October, 1997 and receipt of advance of Rs. 20 lacs. Pursuant to a litigation filed in the High Court of Bombay, the assessee was under a obligation to make the provision of actual liability. 14. It is recorded that the actual working has been given by Senior Legal Manager vide his letter dated 30th March, 2008 and that the entire amount of Rs. 6,50,00,000/- has been found to be based on actual occurrence of financial incidence purely related to business activities, which remains uncontroverted by the Revenue. 15. When the assessee's case was taken up for scrutiny, during the assessment proceedings under Section 143(3) of the Act, the aforesaid facts were considered and have been relied upon in the order of ....

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....fficer in the original assessment proceedings under Section 143(3). We, therefore, observe that there does not appear to be any fresh tangible material that has come into the possession of the Assessing Officer before recording the reasons for re-opening the assessment. Even in the recorded reasons, the Assessing Officer clearly states that his observations are based "on a perusal of records" but no fresh or new tangible material has been referred to or brought on record. 17. The re-opening is within a period of four years from the end of the relevant assessment year. Therefore, it is important that the officer reopening a assessment has reason to believe based on tangible material that income has escaped assessment. What we observe from....