TaxTMI 
TaxTMI 
2022 (11) TMI 79
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....hether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of reassessment under Section 148 of the Assessing Officer on a mere change of opinion? 2. Whether in view of the accounting policy followed by the appellant, the liability having been incurred by the appellant, (though to be quantified at a future date) during the year of account, a provision made on scientific basis could be disallowed in the hands of the appellant?" 4. From the above, it is seen that first question assails reopening of assessment under Section 148 of the Act by the Assessing Officer on the ground that such reopening was on the basis of mere change of opinion. 5. The second question proposed is that the liability on account of the warrantee having been incurred by the appellant based on the accounting policy followed by the appellant, though to be quantified at a later date, whether the same could have been disallowed by the Assessing Officer and affirmed by the lower appellate authorities. 6. We deal with the first question at the outset. 7. Assessing Officer passed the assessment order for the assessment year under consid....
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....already on record and hence it is a mere change of opinion. In our considered opinion the contention of the learned counsel is misconceived. Section 147 of the Income Tax Act had undergone drastic changes w.e.f. 1-4-89 and as per Explanation - 2 to Section 147 of the income chargeable to tax has been under assessed or excessive allowance under this Act has been computed, it would be deemed to be a case where income chargeable to tax has been escaped assessment. In fact in the instant case though the material was on record, the AO had no occasion to examine the correctness of the claim since the return of income was processed under Section 143(1) of the Act. As rightly contended by the learned DR merely because the AO has not exercised the power of issuing a notice under Section 143(2) of the Act to convert a case into scrutiny he is not debarred from reopening the assessment under Section 147 of the Act. Identical issue has come up before the ITAT - B - Bench Hyderabad in the case of Elegant Chemicals Enterprises Pivate Limited wherein we have taken a view that it is not necessary for the AO to exhaust a remedy of issuing a notice under Section 143(2) of the Act before taking recou....
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....unt of Rs.49,18,400.00 to the profit and loss account being provision for warranty. This was disallowed i.e., not allowed as a deduction by the Assessing Officer in the assessment order dated 29.09.2013 on the ground that appellant had not incurred any amount / expenditure on account of warranty during the assessment year under consideration. It was further held that the amount of Rs.49,18,400.00 which was debited by the appellant being the provision for warranty was nothing but a contingent liability. The same was not an expenditure incurred by the appellant in the assessment year under consideration. Therefore, Assessing Officer held that the subject amount was not allowable as a deduction and accordingly added the same to the total income of the appellant while determining the income of the appellant under the Act. 15. CIT(A) also considered this aspect of the matter. Concurring with the view taken by the Assessing Officer, the first appellate authority held that claim of warranty expenses were not actually incurred while making the provision against the claim of warranty. The claim is not carried out as well, as it was not certain. Therefore Assessing Officer was justified i....
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....e concerned accounting year the assessee-company has installed the product. In the year under consideration the assessee has undertaken to give warranty to the products sold only w.e.f. 01.01.2001. In other words, in this year the assessee decided to provide for warranty only on the sales made in the last quarter of the year. Thus looking at from any angle, the quantification of the liability has not been proved to be based on any scientific analysis. Under these circumstances the case law relied upon by he learned counsel for the assessee are distinguishable on facts. On the contrary the decision of the Apex Court in the case of Bharat Earth Movers, far from supporting the stand of the assessee, helps the plea of the revenue inasmuch as the material on record suggests that the assessee could not estimate the liability with reasonable certainty which is evidenced from the fact that 90% of the provision was written back in the next year. Under these circumstances, we affirm the order of the learned CIT(A) and dismiss the appeal filed by the assessee. 18. Learned counsel for the appellant has referred to a decision of the Supreme Court in the case of Bharat Earth Movers Vs. Commis....