TaxTMI 
TaxTMI 
2023 (1) TMI 329
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....nies Act, 1956 and was engaged in the business of manufacturing and trading of yarn and fabric during the assessment year under consideration. 3.2) For the Assessment Year 2012-2013, the petitioner filed return of income on 28.09.2012 declaring total income of Rs.1,58,22,100/- after claiming deduction of Rs. 27,62,980/- in respect of key man insurance premium. 3.3) The assessee company Shahlon Industries Pvt. Ltd merged with the petitioner herein i.e. Shahlon Silk Industries Pvt. Ltd vide order dated 27.08.2014 passed by this Court. 3.4) Case of the petitioner was selected for scrutiny assessment under section 143(3) of the Act. Various details were called for by the Assessment Officer. The petitioner furnished such details vide letter dated 7.02.2015. 3.5) The Assessing Officer issued show cause notice dated 9.03.2015 calling upon the petitioner assessee to show cause as to why disallowance under section 14A of the Act should not be made. 3.6) The assessee vide letter dated 12.03.2015 gave justification to the Assessing Officer as to why disallowance under section 14A of the Act is unwarranted in case of the petitioner. 3.7) The Assessing Officer after examining variou....
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....ut to balance sheet under the head Long Term Loan and Advances - Keyman Insurance Premium. Assessee however claimed this expenditure as business expenditure in its computation of tax and the same was allowed by assessing officer. It was however noticed from submission of assessee that insurance premium (including service tax) of Rs. 27,62,980/- was paid on insurance Policy named Max Life Maker Unit Linked Investment Plan- Risk Element, HDFC Life Insurance SL Pro Growth Flexi Death benefit and HDFC Sampoom Samirdhi Death Benefit in favour of Nitin Raichand Shah, Mahendra Raichandra Shah, Avani Arvind Shah and Dipan Jayantilal Shah. It was noticed from broachers of Max Life Insurance Company and HDFC Life Insurance Company available on their respective websites that these policies are not term policies in the nature of pure life insurance policies but also having investment plans. As such, these policies are not Keyman Insurance Policy as per IRDA and as per ratio applied by ITAT Amritsar Bench in case of F.C. Sonani & Company (India) Pvt. Limited v. DCIT [TS-243-ITAT-2014(ASR)]. As such claim of assessee in this respect was required to be disallowed. 2.1. Further, on perusal of B....
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.... It was submitted that in the reasons recorded, it has been observed by the Assessing Officer that assessee claimed deduction of insurance premium of Rs. 27,62,980/- on account of Keyman Insurance Policy in the computation of total income which was wrongly allowed by the Assessing Officer as the policies on which the premium were paid were not Keyman Insurance policy and further in the reasons recorded by the Assessing Officer, it was observed that there is a mistake in computation of disallowance made under section 14A which actually worked out at Rs. 4,29,678/-.It was submitted that the claim of the petitioner for payment of Keyman insurance premium of Rs. 27,62,980/- appeared in the computation of income, Keyman insurance premium also appeared in the audited accounts under the head Long Term Loans and Advances and details of Keyman insurance policy along with receipts for payments made during the year under consideration were also furnished vide letter dated 07.02.2015. It was further submitted that insofar as disallowance of Rs. 4,29,678/- under section 14A of the Act is concerned, the petitioner had produced the investments and assets in the balance sheet and a specific show c....
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....ment of income. It was further submitted that the Assessing Officer had minutely scrutinized all the materials available on record while framing assessment under section 143(3) of the Act and now the respondent Assessing Officer is attempting to reopen the very same issue which is nothing but change of opinion which is not permissible in eye of law. 4.5) Learned Senior Advocate Mr.Hemani further submitted that there is no new information or fresh evidence which has come into the possession of the respondent which was not already there when original assessment was framed and therefore, reopening of the assessment is merely a change of opinion and therefore, impugned notice is required to be quashed and set aside. 4.6) In support of his contentions, reliance was placed on the following decisions : 1) Judgment of this Court in case of Dharmnath Shares & Services (P) Ltd. v. Assistant Commissioner of Income-tax, Cen. Cir1(2) reported in (2018) 94 taxmann.com 458 (Gujarat). 2) Decision of Apex Court in case of Assistant Commissioner of Income-Tax (Central) Circular1(2) v. Dharmnath Shares & Services (P) Ltd reported in (2018) 100 taxmann.com 416(SC). 3) Decision of Apex Court ....
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....ot tenable in eye of law. 5.5) It was further submitted that if the Assessing Officer had reason to believe that if any issue has been left out to verify, the assessment can be reopened under section 147 of the Act by issuing notice under section 148 of the Act. 5.6) Learned advocate Mr. Raval submitted that the Assessing Officer made an addition under section 14A of the Act while framing assessment under section 143(3) of the Act and while computing the disallowance has not taken into account the shares of Shahlon Ind. Infra(P) Ltd., Fairdeal Textiles Pvt. Ltd., Fairdeal Eco Infra Pvt. Ltd., Uday Yarn Twisters (P) Ltd. and Sanket Fiance & Leasing Pvt. Ltd. which resulted into less disallowance to the tune of Rs.9,73,772/-. 5.7) Relying upon the judgment of Calcutta High Court in case of Somdutt Builders (P) Ltd. v. DCIT reported in 98 ITD 78, it was submitted that reopening of assessment by the Assessing Officer was valid. Similarly, relying upon judgment of Delhi High Court in case of Consolidated Photo & Finvest Ltd. v. ACIT reported in 281 ITR 294, it was submitted that in cases where the order passed by a statutory authority is silent as to the reasons for the conclusion....
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....- in respect of Keyman Insurance premium which was debited to the Profit and Loss account and reflected in the balance sheet under the head Long Term Loans and Advances. Balance of Keyman Insurance premium appearing under the head Long Term loans and advances as on 31.03.2012 was Rs. 68.89 lakh as against Rs. 41.26 lakhs as on 31.03.2011 and therefore, there was increase of Rs. 27.63 lakh during the year under consideration as is evident from the audited annual accounts. Further, it appears from the record that claim of Keyman insurance premium of Rs.27,62,980/- appeared in computation of income and also in audited annual accounts under the head Long term loans and advances and details of Keyman insurance policy along with receipts for payments made during the year under consideration were also furnished before the Assessing Officer. 9.Insofar as disallowance of Rs. 4,29,678/- under section 14A of the Act, the case of the respondent is that there was an error in computation of the average value of investments, as adopted at the original assessment stage, whereby certain investments yielding exempt income were not considered. From the record, it appears that investments and assets ....
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.... 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted....