TaxTMI 
TaxTMI 
2025 (2) TMI 1863
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....arned Commissioner of Income Tax (Appeals), Income Tax Dept., National Faceless Assessment Centre (hereinafter referred to as Ld. CIT(A) erred in upholding the reopening of assessment made by the Assessing Officer u/s. 147 of the Income Tax Act, 1961. Your appellant submits that on the facts and circumstances of the case and in law, reopening of the assessment is not justified and ought to be quashed. 2. The Ld. CIT(A) erred in upholding the addition made on account of disallowance of the entire expenses Rs. 10,39,257/- including claim for depreciation, without taking into consideration all the facts and circumstances of the case, including the nature of expenses incurred. Your appellants submit that the entire expenditure aggregating to Rs. 10,39,257/- has been incurred wholly and exclusively for the purpose of business and ought to be allowed." 4. In its appeal, the assessee has challenged the validity of the reopening of the assessment under section 147 of the Act and has also raised the grounds on merits challenged the additions made by the Assessing Officer ("AO"). Since the ground challenging the reopening of assessment under section 147 of the A....
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.... second round of proceedings, the AO vide order dated 29/12/2017 passed under section 143(3) read with section 254 of the Act rejected the assessee's submission against the reopening of assessment under section 148 of the Act on the basis that there was no direction by the Tribunal to look afresh on the issue of re-assessment. As regards the issue of treating the license fees as "Income from Other Sources", the AO following the decision of the Tribunal in the assessee's own case for the assessment year 2001-02 held that the license fees received by the assessee are assessable under the head "Business Income". Further, the AO only allowed the lease rent expenses of INR 2,88,000 and disallowed the remaining expenditure claimed by the assessee in the absence of any documentary evidence to prove the genuineness of expenses claimed by the assessee. Further, the interest income on fixed deposits was treated and taxed under the head "Income from Other Sources". Accordingly, the AO assessed the total income of the assessee at INR 14,81,970. 7. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee both on jurisdiction as well as the merits of the additio....
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....the year relevant to A.Y. 1999-2000, this income is taxable under the head "Income from Other Sources". Hence, the licence fees income has escaped the assessment." 12. From the perusal of the aforesaid reasons, it is evident that on the basis that the assessee has not filed its return of income for the year under consideration and the license fees received by the assessee have been offered for taxation under the head "Business Income" instead of "Income from Other Sources", as assessed in the assessment year 2003-04, the AO alleged that the income chargeable to tax has escaped assessment. 13. However, from the perusal of the assessment order dated 27/09/2006 passed under section 144 of the Act, we find that the AO agreed in para-1.2 of the order that the return of income for the year under consideration was filed by the assessee on 28/02/2020 in the office of Assistant Commissioner of Income Tax, Circle-3(3), Mumbai, declaring a total income of INR 70,797. The contents of para-1.2 of the assessment order dated 27/09/2006 are reproduced as follows for ready reference: - "1.2 The return of income for A.Y. 1999-2000 was received on transfer from the Office of the Income....
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....rest on fixed deposits, vide its order dated 29/12/2017. In this regard, the following observations of the Hon'ble Jurisdictional High Court in Jet Airways India Ltd (supra) become relevant: - "16. ........Section 147 has this effect that the Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language ....
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....Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced." (emphasis supplied) 18. In view of our aforesaid findings and respectfully following the decisions of the Hon'ble Jurisdictional High Court cited supra, we are of the considered opinion that in the present case, the AO had no jurisdiction to make the addition under section 147 of the Act. Accordingly, the additions made by ....
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....Y. 2003-04, the licence fees income has been taxed under the head "Income from Other Sources" and the various expenses claimed by the assessee against this income have been disallowed. During the year relevant to A.Y. 2000-2001, this income is taxable under the head "Income from Other Sources". Hence, the licence fees income has escaped the assessment." 22. We further find that in this assessment year also the AO vide its order dated 27/09/2006 passed under section 144 of the Act, forming part of the paper book from pages 19-22, agreed that the assessee filed its return of income on 30/11/2000 in the office of Assistant Commissioner of Income Tax, Circle-3(3), Mumbai, declaring a total income of INR 40,915. Further, vide its order passed under section 143(3) read with section 254 of the Act, the AO following the decision of the coordinate bench of the Tribunal in the assessee's own case for the assessment year 2001-02 held that license fee earned by the assessee is assessable under the head "Business Income". However, the AO proceeded to make the disallowance of expenditure claimed by the assessee, except the lease rent paid by the assessee, and the interest on fixed deposits. T....
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....ere initiated, and notice under section 148 of the Act was issued to the assessee on 13/12/2005. Thereafter, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. The assessee, vide letter dated 16/06/2006, raised the objections against the reopening of assessment for the year under consideration, which were disposed of vide order dated 28/08/2006. In response to the statutory notices, the Authorised Representative of the assessee sought adjournment. Thereafter, various opportunities were granted to the assessee to furnish the details as called for. However, the assessee failed to cooperate in the scrutiny proceedings. Accordingly, the assessment in the case of the assessee was completed ex parte on the best judgment based on the material available on record. Vide order dated 27/09/2006 passed under section 144 of the Act, the Assessing Officer ("AO"), assessed the total income of the assessee at INR 22,55,480. In further appeal against the order passed by the learned CIT(A), the coordinate bench of the Tribunal vide its order dated 18/11/2016 set aside the assessment order and the order passed by the learned CIT(A) and restore....
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....any has filed its return of income or 22.05.2003,: claiming the loss of Rs. 1,98,277/-. On perusal of Profit & Loss Account, it is seen that the assessee has shown licence fees income, interest on bank deposits and car rental under the head "Business Income" against which it had climed various business expenses. on scrutiny assessment for A.Y. 2003-04, i is found that during the F. Y. 2002-03 the assessee has shown to have received the licence fees of Rs. 18,97,248/-. It is seen that the assessee had treated this income as "Business: Income" against which it had claimed various business expenses. In the assessment order for A.Y. 2003-04, the licence fees income has been taxed under the head "Income from Other Sources" and the various expenses claimed by the assessee digatrist this income have been disallowed. Thus, the licence fees income, bank interest & car rental are the Income from Other Sources and by claiming various expenses, these incomes have escaped assessment. During the course of assessment proceedings for A. Y. 2003-04, it is seen ? that though the project was under construction and the assessee has not obtained possession of the flat, it has claimed depreciat....
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.... assessee. In ACIT v/s Rajesh Jhaveri Stock Brokers (P.) Ltd., reported in [2007] 291 ITR 500 (SC), the Hon'ble Supreme Court held that if there is relevant material on the basis of which a reasonable person can form a requisite belief that income chargeable to tax has escaped assessment, then proceedings under section 147 of the Act can be validly initiated. Further, it is also well settled that the sufficiency or correctness of the material is not a thing to be considered at the stage of recording the reasons. As a result, we find no infirmity in the reassessment proceedings initiated by the AO under section 147 of the Act. Accordingly, ground no.1 raised in assessee's appeal is dismissed. 31. As regards ground no.2, raised in assessee's appeal, during the hearing, the learned AR wishes not to press the disallowance on account of depreciation and interest expenditure. As regards the administrative and other expenses amounting to INR 15,59,716, the learned AR provided the details of each item of expenditure and suo moto offered for disallowance an amount of INR 7,21,149. The learned AR submitted that the present appeal pertains to the assessment year 2002-03, and therefore, it ....
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.... to the details submitted by the assessee. After perusing the aforesaid details, the learned DR agreed with the submission of the assessee since the assessment year under consideration is very old and also the fact that it is a second round of proceedings. 33. Having considered the submissions of both sides and perused the details filed by the learned AR with respect to administrative and other expenses, we are of the view that the disallowance offered by the learned AR is reasonable and would put a quietus to this issue, which is under consideration before us for the second time. As a result, the AO is directed to restrict the disallowance to INR 7,21,149 with respect to administrative and other expenses. Further, the disallowance on account of depreciation and interest expenditure is upheld in view of the submissions of the learned AR as noted in the foregoing paragraph. As a result, ground no.2 raised in the assessee's appeal is partly allowed. 34. In the result, the appeal by the assessee for the assessment year 2002-03 is partly allowed. ITA No. 1913/Mum/2024 Assessee's appeal : A.Y. 2003-04 35. In this appeal, the assessee has raised the following grounds: - ....