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06-09-2019, Larsen & Toubro, Section 147, 148, 10A, Tribunal Mumbai

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1 week 1 day ago #10734 by amit
Section - 147, 148, 10A
Order Date - 06-09-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - DCIT
Respondent - Larsen & Toubro Limited
Justice - SAKTIJIT DEY JM & G.MANJUNATHA AM
Citation - 919Taxpundit63
Appeal No. - ITA No.262/Mum/2016
Asstt. Year - 2005-06

Order

PER : G.MANJUNATHA (A.M):

This appeal filed by the revenue is directed against the order of the Commissioner of Income Tax (Appeals)–5, Mumbai, dated 27/10/2015 and it pertains to the Assessment Year 2005-06.

2. The revenue has raised the following grounds of appeal:-

1. The Order of the CIT (A) is opposed to law and facts of the case.

2. The Order of the CIT (A) is opposed to law and facts of the case.

3. On the facts and in the circumstances of the caser the CIT(A) has erred in holding that the assessment reopened u/s 147 Is invalid and deleting the addition made by the AO on account of product warranty.

4. On the facts and in the circumstances of the case, the CIT (A) has not appreciated Explanation 1 to Section 147 which states that production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily to disclosure within the meaning of foregoing proviso,

5. On the facts and in the circumstances of the case, the CIT (A) has erred in holding that this was a mere change of opinion, when in fact the issue had not been considered at all and there was no application of mind on the part of the AO at any stage in the original assessment, so as to justify the inference of any change of opinion, so as to discredit re-opening and reassessment.

3. The brief facts of the case are that the assessee company is engaged in providing Engineering and related services, filed its return of income for AY 2005-06 on 28/10/2005, declaring total income at Rs. 729,06,67,610/-. The assessment has been completed u/s 143(3) of the I.T.Act, 1961,vide order dated 29/12/2008 and determined total income at Rs. 946,83,63,380/-. Subsequently, the assessment has been reopened u/s 147 of the I.T.Act, 1961, for the reasons recorded, as per which income chargeable to ax had been escaped assessment on account of various issues, including allowance of ineligible expenditure of a sum of Rs. 10.47 crores, on account of provision for product warranty. Accordingly, notice u/s 148 of the I.T.Act, 1961, dated 19/03/2012 was issued and duly served upon the assessee. Thereafter, the case has been selected for scrutiny and the assessment has been completed u/s 143(3) r.w.s. 147 of the I.T.Act, 1961 and determined total income of Rs. 963,93,21,530/- by making additions towards disallowance on warranty expenses of Rs. 10.47 crores, on the ground that warranty provisions has been created on estimation basis, rather than on any scientific basic.

4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before, the Ld.CIT(A), the assessee has challenged reopening of assessment u/s 147 on two grounds. The first arguments of the assessee before the Ld.CIT(A) was that the assessment has been reopened on change of opinion without there being any tangible material, which is evident from reasons recorded for reopening of assessment, where the Ld.AO has referred to assessment reco ds without any fresh material in his possession to establish escapement of income. The assesee has also challenged reopening of assessment, in light of proviso to section 147 of the I.T.Act, 1961 and argued that unless, the AO shows that there is failure on the part of assessee to disclose fully and truly, all material facts necessary for assessment, the assessment cannot be reopened after a period of four years from the end of relevant assessment years, if such assessment has been completed u/s 143(3) of the I.T.Act, 1961.

5. The Ld.CIT(A), after considering relevant submissions of the assessee and also by relied upon the decision of Hon’ble Supreme

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