TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 916
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....ration is of AY 2013-14. Petitioner is a 100% subsidiary of P & O Ports (Chennai) Limited, Mauritius which in turn is now held by D.P. World Limited, Dubai. The business income of Petitioner comprises only of income from port facility and thus, deduction is claimed and allowed in respect of the entire business income. 4. A ship operated by one Mercantile Lines damaged a wharf of Petitioner during the previous year, relevant to AY 2011-12. Petitioner received compensation from Mercantile Lines during AY 2011-12 and AY 2012-13 partly on capital account and the balance on revenue account. Petitioner claimed deduction under Section 80-IA of the Act. Respondent rejected the said deduction for AY 2011-12 which order was upheld by the Commissioner of Income-Tax (Appeals) [CIT (A)]. An appeal against the CIT(A)'s order is presently pending before the Income-Tax Appellate Tribunal ("ITAT"). 5. Petitioner filed its return of income for AY 2013-14 on 29th November 2013 claiming a deduction of its entire business income of Rs. 34,09,31,179/- under Section 80-IA of the Act. Notice dated 4th September 2014 initiating a scrutiny assessment under Section 143(2) of the Act was issued by Responden....
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....AO has not clarified the basis on which he concluded that material facts were not disclosed by assessee. vi. The AO has not obtained satisfaction from the sanctioning authority as required by Section 151 of the Act. vii. The reasons to believe are to be recorded by the AO prior to issuing notice under Section 148 of the Act. The notice was issued on 23rd March 2021 while the reasons provided to Petitioner are dated 13th May 2021. Thus, jurisdictional preconditions in Section 148 of the Act are not fulfilled. 9. Mr. Nitesh Joshi draws our attention to the documents and information submitted by Petitioner including the financial statements of Petitioner. The financial statements of the relevant year under the head "3.15-Other Income" shows compensation income for loss of profit and damages to wharf to be Rs. 15.43 Millions (Rs. 1.54 Crores). Furthermore, the AO, in the reasons to believe escapement of income, has specifically stated "On perusal of the assessment records for the year under consideration, i.e., AY 2013-14, it is seen that the assessee credited to P&L Rs. 1.54 crore as compensation income for loss of profit and damages to wharf under head "3.15-Other Income"." P....
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....of the Act, the reassessment initiated by following due procedure and after taking due approvals from the appropriate authorities is justified. He further submits that the crux of the issue is in relation to the inadmissible claim of deduction under Section 80-IA of the Act which is flagged by the Revenue audit. 13. Mr. Joshi, however, rebuts the contention of Mr. Suresh Kumar pertaining to audit objections by saying that they were never part of the reasons to believe notice. Moreover, the decision to reopen the assessment must be on the basis of the belief formed by the AO. It may be open for the audit party to bring the relevant aspect to the notice of the AO, but thereafter it must be the independent decision of the AO to reopen the assessment upon formation of belief that income chargeable to tax had escaped assessment. He relies upon the decision of this Court in the matter of Voltas Limited v. Assistant Commissioner of Income Tax Circle-8(3)(1), Mumbai and Ors. Writ Petition No. 1180 of 2022 decided on April 05,2022. (Unreported). 14. Having heard the parties and gone through the documents, we did not go into the merits of the rival contentions of the parties pertaining to ....
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....hether in consequence of the law which has come to his notice he can reasonably believe that income had escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, add to or colour the significance of such law. Therefore, the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income tax Officer." 15. A Division Bench of this Court in the case of Sesa Goa Limited v. Joint CIT [2008] 168 Taxman 281 has held as follows: "The power to reopen an assessment is not unbridled or unrestricted. The power is subject to the proviso embodied in the section itself. The proviso prescribes restrictions on the power of reopening the assessment by limiting the time period to four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of failure on the part of the assessee..... to disclose fully and truly all material facts necessary for the assessment of the income for that assessment year"........ section 147 of the Act is the source of power of the....