Action taken u/s 147 of the Income Tax Act, is there being no escapement of any income, conditions of section 147 were not fulfilled

Court :
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ NEW DELHI)

Brief :
The brief facts of the case are that the assessee is a company which filed return on 22.10.2003 and the return was processed u/s 143(1) of the Act on 12.1.2004. The case of the assessee was reopened u/s 147 and notice 148 of the Act was issued to the assessee on 10.3.2010. The assessee replied to notice that its return as already filed on 22.10.2003 may be treated as return filed in response to notice u/s 148 of the Act. The Assessing Officer noted that assessee had claimed a loss of `.3,13,950/- in respect of surrender of industrial plot allotted to it by Haryana Urban Development Authority (HUDA). The assessee was asked to explain as to why the loss due to surrender of plot may not be treated as capital loss. In reply to that, the assessee submitted that plot was being purchased for business purposes. Before it could be acquired, the same was surrendered and 5% of allotment amount as deducted by HUDA was necessarily a business expenditure as no capital asset had come into existence and capital; loss occurs only when the fixed asset is sold. The Assessing Officer did not accept the contention of assessee and made an addition of `.3,13,950/- on account of disallowance being loss suffered by assessee as of capital nature. The assessee filed an appeal before ld CIT(A) :- Imp Observations - 1. assessment of the assessee was completed u/s 143(1). The memo sent by audit party was a fresh material and Assessing Officer was within his rights to initiate proceedings u/s 147/148 especially keeping in view the ratio set by Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Broker Pvt. Ltd. 291 ITR 500 (SC). 2. As regards disallowance on account of capital loss, it is clear that intention of the appellant was to acquire plot which was a capital asset. Held - Appeal filed by the assessee is dismissed.

Citation :
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. No.1809/Del/2011 Assessment year: 2003-4 M/s Payal International Ltd., F-29, South Extension, Part-II, New Delhi-110049. (Appellant) Vs ACIT, Circle-14 (1), New Delhi. (Respondent) Appellant by: Shri Prem Nath Monga, Advocate. Respondent by: Smt. Veena Joshi, Sr. DR.