The Tax Publishers2021 TaxPub(DT) 0083 (Del-Trib)

INCOME TAX ACT, 1961

Section 148

Where AO not only initiated the reassessment proceedings, but also made an addition of this amount under the notion that assessee had claimed a deduction in this year, although this was not any deduction but only a rectification entry for writing back the amount which pertained to assessment year 2005-06 and apparently this rectification was tax neutral and no addition/disallowance was warranted for the reason that this amount was never claimed or allowed as a deduction in the earlier year, therefore, reassessment notice issued under section 148 was quashed.

Reassessment - Reason to believe - Deduction of amount pertaining to property tax relating to rectification entry of assessment year 2005-06 -

A notice under section 148 was issued to tax the income in respect of house property tax which had allegedly escaped assessment. In response to notice under section 148, assessee stated that the return filed by it earlier may be treated as return filed in response to notice issued under section 148. Reasons for reopening were that assessee while computing taxable income, claimed and was allowed deduction of an amount pertaining to property tax relating to rectification entry of assessment year 2005-06 and the same should not have been claimed in computation for the assessment year 2006-07. Therefore, AO had reason to believe that by reason of failure on the part of the assessee to disclose all material facts truly and fully. Held: AO not only initiated the reassessment proceedings, but also made an addition of this amount under the notion that assessee had claimed a deduction in this year although, this was not any deduction but only a rectification entry for writing back the amount which pertained to assessment year 2005-06. Thus, apparently this rectification was tax neutral and no addition/disallowance was warranted for reason that this amount was never claimed or allowed as a deduction in the earlier year. CIT(A) dismissed the assessee's appeal on an altogether mis-appreciation of the facts of the case as well as law. Thus, reassessment notice was quashed.

Relied:Asstt. CIT v. Johnson Matthey India (P) Ltd. ITA No. 4397/Del/2011, dated 3-7-2013 : 2014 TaxPub(DT) 2165 (Del-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-07



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