The reversal of provision during the year cannot be once again added to the income

Last updated: 10 August 2013

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Briefly stated the facts of the case are that the appellant is a company engaged in the business of manufacturing of auto catalyst. For assessment year 2005-06, the appellant filed its return of income on 31.10.2005, declaring a total income of Rs.12,54,72,645/-. The case of the appellant was selected for scrutiny and an assessment order u/s 143(3) of the Act dated 28.12.2007 was passed wherein the returned income of 12,54,72,645/- was accepted as the assessed income of the appellant. The AO had made a reference under section 92CA of the Act to the Transfer Pricing Officer, who had duly accepted the value of international transactions reported by the company and had passed transfer pricing order under section 92CA (3) of the Act. Thereafter, the AO issued a notice dated 02.02.2010 under section 148 of the Act proposing to re-assess the income for the year under consideration and asking the appellant to file its return of income for the year under consideration. The reasons recorded for issue of notice u/s 148 to the company is reproduced hereunder: “Assessment in this case was completed under section 143(3) on 18.12.2008 at an income of Rs.12,54,72,650/- at the returned income of Rs.12,54,72,650/-. Scrutiny of income tax assessment records revealed that in the computation of income the assessee had deducted Rs.2,00,84,000 on account of stock written off in earlier years, sold during the year. As the said amount has already been written off in accounts in earlier years the same should not be deducted from the net income of the year. The mistake resulted in under assessment of income of Rs.2,00,84,000.

Citation :
Circle 4 (1), Room No.407, C.R. Building, I.P. Estate New Delhi. (APPELLANT) Vs.Johnson Matthey India Pvt. Ltd. 103, Ashoka Estate, Barakhamba Road New Delhi.-110001 PAN: AAACJ2919A (RESPONDENT)