TaxTMI 
TaxTMI 
2024 (3) TMI 729
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....notice dated 27th March 2021 issued under Section 148 of the Act and order dated 21st December 2021 passed by the Income Tax Department rejecting the objections of Petitioner in the present petition. Petitioner is a company incorporated under the Companies Act, 1956 engaged in the business of manufacture and distribution of lubricating oils, greases, brake fluids and specialty products. 4. During the Assessment Year 2016-17, Petitioner incurred expenses of Rs. 10,54,06,706/- towards Corporate Social Responsibility ("CSR") under Section 135 of the Companies Act, 2013. The return of income of Petitioner for the relevant assessment year, as revised from time to time, declared total income of Rs. 1051,29,97,660/-. A dis-allowance was made for the amount of CSR in the return of income in consonance with the Explanation 2 to Section 37 of the Act. Petitioner also claimed deduction of Rs. 1,79,41,595/- (being 50% of the aggregate donation) under Section 80G of the Act as permissible in law. 5. Petitioner's return of income was selected for scrutiny. Pursuant to initiation of assessment proceedings, a notice dated 14th September 2019 was issued under Section 142(1) of the Act seeking....
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....ture by way of CSR and deduction under Section 80G of the Act is made in the annual accounts, the tax audit report, the computation of income which was already considered by the AO while passing the original assessment order. Deduction under Section 80G of the Act was specifically mentioned in the computation sheet which formed the part of the assessment order. (v) The satisfaction of the Sanctioning Authority has not been provided to Petitioner which indicates that there is no such approval. Mr. Pardiwalla thus, contends that the impugned notice and order is unreasonable and discloses an arbitrary exercise of power. He, thus, urges the Court to set aside and quash the same. 7. Mr. Suresh Kumar, learned counsel appears for the Revenue and justifies the impugned order by contending that since the deduction of CSR expenses are specifically disallowed under Section 37(1) read with Explanation 2 of the Act, the same cannot be allowed under Section 80G of the Act. While candidly admitting the audit objection, he however, asserts that the same itself is a source of information and constitutes 'fresh tangible material'. Mr. Suresh Kumar further points out that although an a....
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....o believe itself is based on verification of the profit and loss account and computation of income showing the amount of CSR expenses debited under the head 'other expenses' and the said amount being added back and claimed as deduction under Chapter VA as donation. The notice further goes on to say that during the course of original assessment proceedings, neither the AO has asked for any details and information on this issue from Assessee nor has Assessee volunteered any details. The relevant portion of the notice providing the reasons to believe escapement of income reads thus: "2. On verification of profit and loss account and computation of income, it is seen that an amount of Rs. 10,54,06,706/- was debited on account of CSR expense in Other expenses head. Further, the aforesaid amount was added back by the assessee in its computation of income as CSR Expenses and again claimed as deduction as donation of Rs. 1,79,41,595/- under chapter VA as donation. In this connection, it is submitted that as per the amendment made vide Finance Act, 2014, CSR expenses is not allowable as business expenditure. Hence, the same is required to be disallowed and added to the tot....
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....h the formation of the belief............." 15. As held by this Court in Aroni Commercials Limited v. Deputy Commissioner of Income Tax-2(1) (2014) 44 taxmann.com 304 (Bombay). once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. Paragraph 14 of Aroni Commercials Limited (supra) reads as under: "14. We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course o....
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....e no doubt in the present facts as evidenced by a letter dated 8 September 2012 the very issue of taxability of sale of shares under the head capital gain or the head profits and gains from business was a subject matter of consideration by the Assessing Officer during the original assessment proceedings leading to an order dated 12 October 2010. It would therefore, follow that the reopening of the assessment by impugned notice dated 28 March 2013 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceeding leading to the order dated 12 October 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment." 16. We have also noted the contents of the impugned order rejecting the objections of Petitioner. An identical and common place assertion is seen in various such orders rejecting the objections of Assessees. The Department routinely relies upon an observation of the Supreme Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2008) 14 SCC 208., which reads as follows: "....