TaxTMI 
TaxTMI 
2023 (8) TMI 1079
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.... September 2013 declaring "nil" income under regular provisions of the Act on account of losses. Petitioner paid tax on book profit under Section 115JB of the Act. In the computation of income filed alongwith return of income, petitioner claimed deduction under Section 35 of the Act amounting to Rs .2,26,96,494/-. In the ITR Form 6 (the said form), petitioner, in Part A-P & L, Item 38 "Other expenses (specify nature and amount)" disclosed R&D expenses of Rs. 47,11,129/- and loss on sale of asset Rs. 8,73,445/- and in Item 40 disclosed provision for bad and doubtful debts for Rs. 15,64,902/-. In Part B, Schedule BP, in Item 26 of the said Form, petitioner claimed a sum of Rs .2,26,96,494/- being deduction under Section 35 of the Act in excess of the amount debited to P&L account. In Schedule ESR, relating to deduction under Section 35 of the Act, petitioner disclosed its claim of deduction under Section 35 of the Act amounting to Rs. 2,74,07,623/- and disclosed that out of the said expenses, expenses amounting to Rs. 47,11,129/- were debited to the P&L account. In Schedule MAT, petitioner disclosed computation of Minimum Alternate Tax payable under 4. Petitioner's income was select....
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...., trade receivable was disclosed at Rs. 60,13,54,109/- and the breakup of that was disclosed in Note 14. 6. Thereafter, respondent no. 1 passed an assessment order dated 25th February 2016 under Section 143(3) of the Act assessing petitioner's income at Rs. 8,74,57,101/- under Section 115JB of the Act. On 23rd March 2021, petitioner was served with a notice under Section 148 of the Act alleging that there are reasons to believe that income for Assessment Year 2013-2014 has escaped assessment within the meaning of Section 147 of the Act. Petitioner was also provided with reasons for such belief. Briefly the alleged reasons state that while computing book profit under section 115JB of the Act, provision for bad doubtful debts of Rs. 15,64,902/- accounted under Note 24 "Other Expenses" of audited accounts has not been added back, which needs to be added. The reasons further state that claim of deduction under Section 35(2AB) of the Act amounting to Rs. 94,22,258/- is not supported by Form 3CL and, therefore, there is excess deduction of 100% of actual expenditure of Rs. 47,11,129/-. The reasons further state that loss on sale of assets Rs. 8,73,445/- has not been added back in comput....
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....assessment proceedings and, therefore, the impugned notice is based on change of opinion which is not authorised by the Act; (c) the issues sought to be agitated in the impugned proceedings are covered by binding decisions and, therefore, the pre-condition of "reason to believe" for initiating reassessment proceedings is not satisfied; (d) there is no tangible material, having come into existence post regular assessment proceedings, so as to confer jurisdiction on respondents for initiating the reassessment proceedings; (e) the approval obtained is without due application of mind and, therefore, violative of Section 151 of the Act; (f) there is no escapement of income nor is there an iota of material suggesting the same and hence, the jurisdictional conditions are not satisfied for issuing the notice under Section 148 of the Act; (g) as regards provision for doubtful debts, in ITR Form 6 filed under Section 139(1) of the Act in clause 40 of Part A - P&L account sum of Rs. 15,64,902/- was disclosed as provision for doubtful debts and in Schedule relating to MAT, petitioner disclosed the working of book profit of Rs. 8,74,57,101/-. Petitioner, in Note No. 24 to the acc....
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....ngible material on record. Under Rule 6(7A), the Department of Scientific and Industrial Research is required to submit its report to the Income Tax Authorities in Form 3CL. There is no requirement of the assessee to file the said form, but Form No. 3CL is required to be submitted by the Department of Scientific and Industrial Research to the Income Tax Authorities. Therefore, the allegation of failure to file the said form cannot be attributed to petitioner. Therefore, the impugned proceedings are wholly without jurisdiction, illegal and bad in law; (i) as regards loss on sale of asset of Rs. 8,73,445/-, the loss on sale of asset has been disclosed in Note No. 24 of the P&L account. The Audited Accounts were filed by petitioner vide letter dated 17th December 2015. The said amount is also disclosed in ITR-6 form at Item 38 of Part A. Respondent no. 1 had called for details of depreciation claimed on the assets vide letter dated 1st December 2015. Respondent no. 1 vide letter dated 28th December 2015 called for details of other expenses which contained loss on sale of asset. Respondent no. 1, after perusing the details filed, made an assessment under Section 143(3) of the Act wh....
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....rial produced and the circumstances in which it was produced assumes some significance. 11. In our view, the law as laid down in Indian Hume Pipe (Supra) is there for everyone to see. In that case, the Court came to the conclusion that the assessee had not made true and full disclosure because the assessee, in that case, in the return of income that was originally filed, submitted a computation of taxable long term capital gains. After computing the long term capital gains at Rs. 23.19 Crores, the assessee sought to deduct therefrom an amount of Rs. 23.24 Crores invested under Section 54EC of the Act. The statement, however, was silent about the date on which the amounts were invested. During the course of assessment proceedings, the Assessing Officer raised a query calling upon the assessee to give various details including detailed working of capital gains arising out of the sale of the property. The assessee did not, in the return of income or in the disclosure that were made in response to the query of the Assessing Officer, make any reference to the dates on which the amounts were invested in bonds of the National Highway Authority of India, Rural Electrification Corporation ....
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....hat was the tangible material to come to the conclusion that there is an escapement of income from assessment and that there has been a failure to fully and truly disclose material fact. After a period of four years even if the Assessing Officer has some tangible material to come to the conclusion that there is an escapement of income from assessment, he cannot exercise the power to reopen unless he discloses what was the material fact which was not truly and fully disclosed by the assessee. If we consider the reasons for reopening, as regards provision for doubtful debts, we would first of all observe that the Assessing Officer records "Since the provision is made on account of bad and doubtful debts which is not an ascertained liability as per section 115JB of the Act, the same need to be added which the assessee has failed to do so." This indicates non application of mind by the Assessing Officer while recording the reasons and also by the approving authority which granted approval under Section 151 of the Act. Further, in ITR Form 6 filed under Section 139(1) of the Act in clause 40 of Part A - P&L account sum of Rs. 15,64,902/- was disclosed as provision for doubtful debts and....
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....eedings, the same was allowed in the assessment order. The impugned proceedings would amount to review of the earlier order without any fresh tangible material on record and, therefore, the impugned proceedings are wholly without jurisdiction, illegal and bad in law. Under Rule 6(7A), the Department of Scientific and Industrial Research is required to submit its report to the Income Tax Authorities in Form 3CL. There is no requirement of the assessee to file the said form, but Form No. 3CL is required to be submitted by the Department of Scientific and Industrial Research to the Income Tax Authorities. Therefore, the allegation of failure to file the said form cannot be attributed to petitioner. 16. Dealing with similar situation, the Gujarat High Court in Commissioner of Income Tax, Vadodara - 2 V/s. Sun Pharmaceutical Industries Ltd. (2017) 85 taxmann.com 80 (Gujarat) held that one of the main grounds which appealed to the Commissioner was that the prescribed authority had not sent the intimation in Form 3CL to the Revenue, in absence of which, according to the Commissioner, claim could not have been accepted. The Gujarat High Court in paragraph 5 held that the communication in ....
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....n materials filed in the course of regular assessment proceedings. Inasmuch as petitioner has disclosed all the primary facts necessary for the assessment and the reasons do not disclose what facts which petitioner was obliged to disclose have not been disclosed, the impugned notice dated 23rd March 2021 is barred by first proviso to Section 147 of the Act. In an unreported judgment of this Court in First Source Solutions Ltd. V/s. Assistant Commissioner of Income Tax Writ Petition No. 2762 of 2019 dated 31.8.2021, the Court held that a general statement that the escapement of income is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment is not enough. The Assessing Officer should indicate what was the material fact that was not truly and fully disclosed to him. In the affidavit in reply, it is stated that the reassessment proceedings was based on audit objections. In Jainam Investments V/s. Assistant Commissioner of Income Tax Writ Petition No. 2760 of 2019 dated 24.8.2021 it is held that the reasons for reopening an assessment should be that of the Assessing Officer alone who is issuing the notice and he....