TaxTMI 
TaxTMI 
2026 (8) TMI 1725
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....reassessment thereon. This is a legal issue and hence taken up first for adjudication. 3. We have heard the rival submissions and perused the materials available on record. The assessment for the assessment year 2005-06 was sought to be reopened by the Learned AO vide issuance of notice under section 148 of the Act dated 30-3-2011. This notice is enclosed in page 41 of the paper book. We find that the Learned AO had sent the proposal in the prescribed proforma for seeking approval in terms of section 151 of the Act on 31-3-2011 for reopening the assessment. This is enclosed in page 44 of the paper book. The Learned Additional Commissioner of Income Tax had forwarded the proposal letter of the Learned AO to Learned Commissioner of Income Tax Delhi-VI, New Delhi, vide letter dated 31-3- 2011. This is enclosed in page 43 of the paper book. The Learned AO sends a letter addressed to Learned CIT Delhi-VI, New Delhi through proper channel, vide letter dated 31-3-2011 sending the reasons recorded for reopening the assessment along with the proposal. This is enclosed in page 42 of the paper book. All these documents clearly prove that even the proposal for reopening the assessment and a....
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....n the business of manufacturing and sale of sponge iron, MS ingots and rerolled products and other trading activities. The Learned AO noted in the reasons recorded that there is a difference of Rs. 21,78,503 in net profit as figures are compared between the return of income and copy of provisional balance sheet found during the search operation. The assessee was specifically asked to explain the above said difference in net profit. The assessee filed the submission dated 28-01-2013. Submission of the assessee was duly considered and not found satisfactory by the Learned AO which lead to the addition of Rs. 21,78,503 on account of difference in net profit in the reassessment completed under section 143(3) read with section 148 of the Act dated 28-03-2013. This issue was subject matter of reasons recorded for reopening the assessment by the Learned AO. 8. The Learned AO in the reasons recorded observed that as per the impounded provisional balance sheet and profit and loss account, the turnover declared by the assessee was Rs 148,38,72,269, whereas the sales reflected in the return of income for assessment year 2007-08 was Rs 124,97,08,104. Accordingly, the difference figure of Rs....
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....the Learned AR on the recent Third Member Decision of Delhi Tribunal in the case of Mahesh Kumar vs ITO in ITA No. 2650/Del/2024 dated 06-08-2025. For the sake of convenience, the entire third member order is reproduced below:- "This reference under Section 255(4) of the Income Tax Act, 1961 ('Act' for short) arises on account of difference of opinion between two learned Members of the Division Bench. By an order dated 14.02.2025, the following question has been formulated for being decided by the Third Member : "Whether, in the given facts and circumstances of the case, the reopening under Section 147 read with Section 148 of the Act is valid or not where the Assessing Officer made addition independently of other income which does not form the subject matter of reopening and where addition made by the Assessing Officer on the basis of reasons recorded for reopening were deleted by the CIT(A) and no addition of that income on the basis of reasons recorded survives which has reason to believe had escaped assessment and which formed the basis of reopening." 2. The brief facts are that the assessee was an employee with the Municipal Corporation of De....
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....he law because the additions made on the basis of reasons recorded for reopening were deleted by Ld. CIT(A) and thus, no additions on the basis of reasons recorded for reopening survives in case of assessee." The difference of opinion between the learned Members has arisen in the context of the aforesaid ground. 5. The learned Vice President (Judicial Member) placing reliance on the decision of Bombay High Court in CIT vs Jet Airways (I) Ltd., 331 ITR 236 (Bom) and jurisdictional Delhi High Court decision in ATS Infrastructure Ltd. vs ACIT, 473 ITR 595 (Delhi) has found that once the addition made on account of original reasons recorded (in this case, the addition on account of alleged bogus LTCG is deleted, the other two additions, which were not part of original reasons recorded, cannot be sustained. The learned Accountant Member, by his dissenting order, has found that the decision in Jet Airways (I) Ltd. (supra) and ATS Infrastructure Ltd. (supra) are distinguishable on facts and cannot be called into aid to delete the balance additions. 6. It is submitted by the learned counsel for assessee that once the addition made by the Assessing Officer relying....
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....nt proceedings, the Assessing Officer made two other additions - Rs. 15,40,000/- under Section 68 of the Act on account of deposit of cash/cheques which went unexplained and Rs. 20,62,375/- being unexplained expenditure on purchase of property under Section 69 of the Act. The learned CIT(A) has deleted the addition on account of the alleged bogus LTCG which was the original basis of the reopening. However, the learned CIT(A) has sustained the other two additions. The question is whether the reassessment can be sustained in such circumstances. 10. I have carefully gone through the differing orders passed by the learned Members of the Bench. While the learned Judicial Member has placed reliance on the decision, viz. ATS Infrastructure Ltd. (supra), B.P. Poddar Foundation for Education (supra) and Jet Airways (I) Ltd. (supra), the learned Accountant Member has found that the decisions in the case of ATS Infrastructure Ltd. (supra) and Jet Airways (I) Ltd. (supra) are distinguishable on the ground that in those cases the Assessing Officer himself had not made any addition on the basis of the reasons recorded for reopening. In other words, the learned Accountant Member has made....
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.... do so, afresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee." 13. Thus, the distinction sought to be made out by the learned Accountant Member, in my considered opinion, cannot be accepted. 14. The learned Accountant Member in para 3.4 of his order has found that the case of B.P. Poddar Foundation for Education (supra) decided by the Kolkata Bench involves identical facts. Incidentally, the decision in the said case has been confirmed by the Calcutta High Court. This aspect has been considered by the learned Accountant Member in para 5 onwards of his order. Before the Calcutta High Court, the Revenue had raised the following substantial question of law :- (i) Whether on the facts and circumstances as well as in law the Income-tax Appellate Tribunal was correct in law in holding that the other additions made in the order under section 147/143(3) of the Income-tax act, 1961, which were not part of the reasons recorded for reopening the assessment were not sustainable in the eyes of law even after insertion of Explanation 3 to section 147 of the Act by Finance Act, 2009 when ad....
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....(I) Ltd. (supra) and of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra)." 16. In my considered view, once the learned Accountant Member had found that the facts in the case of B.P. Poddar Foundation for Education (supra) were identical, it was not open to express any contrary view. That being an order of the co-ordinate Bench was binding. 17. The learned Accountant Member has also reproduced in para 3.2 of the order the observations of learned CIT(A) while deleting the addition in respect to bogus LTCG. The learned Accountant Member found that the findings are "a little abrupt". Although the reasons given by the learned CIT(A) could have been more specific and clear, the said ITA NO.2650/DEL/2024 (A.Y.2012-13) aspect cannot be gone into for the reason that ultimately the learned CIT(A) has partly allowed the appeal and deleted the addition and that order has not been challenged by the Revenue and has thus attained finality. 18. In the result, Ground no. 3 as raised by the assessee deserves to be allowed and the impugned addition cannot be sustained. The question as referred to is answered accordingly, holding that the ....
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.... - Rs 39,889. 17. The aforesaid interest of Rs 82,218 was disallowed by the learned AO on the ground that the same partakes the character of taxes and since payment of taxes are not allowed as deduction, the interest paid on delayed payment of such tax was sought to be disallowed. This action of the learned AO was upheld by the learned CITA. 18. At the outset, there is a big difference between direct tax and indirect tax. All the aforesaid payments were made only on account of interest on delayed payment of indirect taxes. While the payment of direct tax such as income tax, gift tax, wealth tax shall not be allowed as deduction in terms of section 40(a)(ii) of the Act, the payment of indirect tax such as excise duty, service tax, customs duty, VAT, octroi, etc. would be allowed as deduction and would not be covered by section 40(a)(ii) of the Act. Hence, interest paid on delayed payment of indirect taxes would only be compensatory in nature and would be allowed as deduction. This issue is no longer res integra in view of the decision of the Hon'ble Supreme Court in the case of Lachman Das Mathura Das vs CIT reported in 254 ITR 799 (SC) wherein it was held that interest on arr....