ACIT, New Delhi v. M/s Telecommunications Consultants India Ltd., New Delhi

ITA 3481/DEL/2011 | 2002-2003
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 348120114 RSA 2011
Assessee PAN AAACT0061H
Bench Delhi
Appeal Number ITA 3481/DEL/2011
Duration Of Justice 5 year(s) 3 month(s) 13 day(s)
Appellant ACIT, New Delhi
Respondent M/s Telecommunications Consultants India Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-10-2016
Date Of Final Hearing 19-10-2016
Next Hearing Date 19-10-2016
Assessment Year 2002-2003
Appeal Filed On 08-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE JUDICIAL MEMBER ITA NOS.3481 & 3818/DEL/2011 ASSESSMENT YEAR : 2002-03 & 2003-04 ACIT CIRCLE-16(1) NEW DELHI. VS. TELECOMMUNICATIONS CONSULTANTS INDIA LTD. TCIL BHAWAN GREATER KAILASH PART I NEW DELHI. PAN: AAACT0061H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY KUMAR MANGLAN & SHRI SUJASH SINHA DEPARTMENT BY : SHRI UMESH CHAND DUBEY SR. DR DATE OF HEARING : 20.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 ORDER PER R.S. SYAL AM: THESE TWO APPEALS BY THE REVENUE RELATE TO A.YS. 2 002-03 AND 2003-04. SINCE COMMON ISSUES ARE RAISED IN THESE A PPEALS WE ARE ITA NOS.3481 & 3818 /DEL/2011 2 THEREFORE PROCEEDING TO DISPOSE THEM BY THIS CONSO LIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2002-03 2. THE FIRST GROUND TAKEN BY THE REVENUE IS AGAINST THE DIRECTION OF THE LD. CIT(A) IN QUASHING THE ASSESSMENT BY HOLDIN G THAT THE INITIATION OF RE-ASSESSMENT PROCEEDINGS WAS VOID AB INITIO. 3. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE FILED ITS RETURN ON 29.1.2002 DECLARING TOTAL INCOME OF RS.27 .01 CRORE UNDER THE NORMAL PROVISIONS OF THE INCOME-TAX ACT 1961 (HERE INAFTER ALSO CALLED `THE ACT) AND BOOK-PROFIT OF RS.62.71 CRORE U/S 11 5JB OF THE ACT. SUCH RETURN WAS REVISED ON 26.2.2013 DECLARING TOTAL INC OME OF RS.26.71 CRORE UNDER THE NORMAL PROVISIONS AND THE SAME AMOUNT AS EARLIER DECLARED U/S 115JB OF THE ACT. THE CASE WAS SELECTED FOR SCRUTI NY AND THE ASSESSMENT ORDER WAS PASSED U/S 143(3) ON 28.2.2005 ASSESSING THE TOTAL INCOME AT RS.26.71 CRORE UNDER THE NORMAL PROVISIONS AND RS.6 4.39 CRORE U/S 115JB OF THE ACT. THEREAFTER NOTICE U/S 148 WAS I SSUED WHICH WAS SERVED UPON THE ASSESSEE ON 24.7.2008 ON THE GROUND THAT PRIOR PERIOD ITA NOS.3481 & 3818 /DEL/2011 3 EXPENSES AMOUNTING TO RS.1 32 81 705/- WERE CLAIM ED BY THE ASSESSEE WHICH WERE NOT DEDUCTIBLE. THE ASSESSMENT WAS COMP LETED U/S 147 READ WITH SECTION 143(3) DETERMINING TOTAL INCOME AT RS. 28.54 CRORE. THE ASSESSEE CHALLENGED THE INITIATION OF REASSESSMENT BEFORE THE LD. CIT(A) WHO HELD SUCH PROCEEDINGS TO BE VOID AB INITIO INTER ALIA ON THE GROUND THAT THERE WAS NO FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT IN TERMS OF PROVISO TO SECTION 147. THE REVENUE IS AGGRIEVED AGAINST T HE QUASHING OF THE REASSESSMENT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT HAS BEEN NOTICED ABOVE THAT THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) OF THE ACT AND NOTI CE U/S 148 WAS SERVED UPON THE ASSESSEE ON 24.7.2008. THE ASSESSMENT YEA R UNDER CONSIDERATION IS 2002-03. ADMITTEDLY THIS NOTICE U/S 148 WAS ISSUED BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE R ELEVANT ASSESSMENT YEAR. PROVISO TO SECTION 147 WHICH IS MATERIAL FO R OUR PURPOSE READS AS UNDER :- ITA NOS.3481 & 3818 /DEL/2011 4 `PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR: 5. A BARE PERUSAL OF THIS PROVISO TO THE EXTENT IT IS APPLICABLE TO THE FACTUAL SCENARIO UNDER CONSIDERATION INDICATES THA T WHERE AN ASSESSMENT WAS MADE U/S 143(3) NO ACTION SHALL BE TAKEN U/S 1 47 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS AN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR THE ASSESSMENT. THIS INDICATES THAT IN THE ABSENCE OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT NO ACTION U/S 147 CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. ITA NOS.3481 & 3818 /DEL/2011 5 6. AT THIS JUNCTURE IT IS RELEVANT TO NOTE THE REASONS RECORDED BY THE AO WHICH HAVE BEEN REPRODUCED AT PAGE 2 OF THE ASSE SSMENT ORDER AS UNDER:- 'M/S. TELECOMMUNICATIONS CONSULTANT INDIA LTD. ASSE SSED TO TAX WITH CIRCLE- 16(1) NEW DELHI HAD FILED ITS RETURN OF IN COME FOR AY 2002-03 ON 29.12.2002 DECLARING AN INCOME OF RS. 27 01 13 3 70/- UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF RS. 62 71 26 625/- UNDER SECTION 115JB. THE REVISED RETURN WAS FILED BY THE ASSESSEE ON 26.02.2003 DECLARING AN INCOME OF RS.26 71 33 870/- UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF RS.62 71 2 6 625 U/S 115JB WHICH WAS PROCESSED U/S. 143(1) ON 21.02.2003. THE CASE WAS ALSO DONE UNDER SECTION 143(3) AND ON ORDER PASSED ON 28.02.2 005. AFTER GOING THROUGH THE CASE RECORDS AND 3 CD REPOR T THE ASSESSEE HAS DEBITED RS. 1 32 81 705/- TO P&L ACCOUNT ON ACCOUNT OF PRIOR PERIOD EXPENSES. AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING THE EXPENSES WHICH WERE NOT RELEVANT TO PREVIOUS YEAR WERE REQUIRED TO BE DISALLOWED. THEREFORE I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS BEEN UNDER-ASSESSED BY 1 32 81 705/- INVOLVING SHORT LEVY OF TAX OF RS.47 41 569/-. 7. A CAREFUL PERUSAL OF THE REASONS RECORDED BY T HE AO DIVULGES THAT IN HIS OPINION THERE WAS AN UNDER-ASSESSMENT OF INCOME BY RS.1.32 CRORE ON ACCOUNT OF THE ASSESSEE DEBITING THE PRIOR PERI OD EXPENSES TO ITS PROFIT & LOSS ACCOUNT AS WAS REVEALED FROM THE AUDI T REPORT IN FORM NO. 3CD. IT CLEARLY EMERGES FROM THE ABOVE THAT TH E ASSESSEE DEBITED A SUM OF RS.1.32 CRORE IN ITS PROFIT & LOSS ACCOUNT W HICH BECAME THE ITA NOS.3481 & 3818 /DEL/2011 6 SUBJECT MATTER OF NOTICE U/S 148. WE FIND THAT APA RT FROM DEBITING THIS AMOUNT TO THE PROFIT & LOSS ACCOUNT THE ASSESSEE A LSO APPENDED ITEM NO. 19 IN THE NOTES TO ACCOUNTS FORMING PART OF THE ANNUAL FINANCIAL STATEMENTS READING AS UNDER:- SL.NO. DESCRIPTION 2001-02 1. INCOME PROJECT/OTHER INCOME 1 53 11 981 1 53 11 981 2. EXPENSES (A) STORES & SPARES AND LOOSE TOOLS CONSUMED (B) SUB CONTRACTOR (C) EMPLOYEE REMUNERATION & BENEFITS (D) OTHER EXPENSES 22 27 547 3 56 801 19 26 916 87 70 441 TOTAL-II 1 32 81 705 NET ADJUSTMENT(I-II) 20 30 276 3. EXTRA ORDINARY INCOME (WAR CLAIM FROM UNO) 3 19 22 221 8. IT IS THUS MANIFEST FROM THE ABOVE ITEM NO .19 IN THE NOTES TO ACCOUNTS THAT THE ASSESSEE COMPUTED PRIOR PERIOD EX PENSES AT RS.1 32 81 705/- WHICH WERE CLAIMED AS DEDUCTION IN THE PROFIT & LOSS ACCOUNT. FURTHER AS THE AO HAS HIMSELF RECORDED IN THE REASONS THAT AUDIT REPORT IN FORM NO.3CD REVEALED THAT THE ASSES SEE CLAIMED DEDUCTION FOR PRIOR PERIOD EXPENSES TO THIS EXTENT. IN VIEW OF THE ABOVE ITA NOS.3481 & 3818 /DEL/2011 7 DISCLOSURES MADE BY THE ASSESSEE IN ITS RETURN OF I NCOME AND THE ACCOMPANYING DOCUMENTS QUESTION ARISES AS TO WHET HER SUCH DISCLOSURE CAN BE TERMED AS A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE LD. DR STRONGLY RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. VS. DCIT (2012) 340 ITR 53 (DEL) IN WHICH THE NOTICE ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR CONTAINING REASONS TO BELIEVE THAT THE ASSESSEE DID NOT OFFER ANY DISALLOWANCE OF EXPENSES IN RESPECT OF EXEMPT INCOM E HAS BEEN HELD TO HAVE BEEN RIGHTLY ISSUED. THE LD. DR FURTHER SUBMI TTED THAT THE SLP FILED AGAINST THIS JUDGMENT HAS BEEN DISMISSED BY T HE HONBLE SUPREME COURT IN (2012) 340 ITR 64 (SC) . WHEN WE LOOK AT THE FACTS AND CIRCUMSTANCES AS PREVAILING IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. (SUPRA) IT BECOMES PATENT THAT THE ASSESSEE IN TH AT CASE EARNED TAX FREE DIVIDEND INCOME EXEMPT U/S 10(33) AND DID NOT OFFER ANY DISALLOWANCE U/S 14A OF THE ACT. THE HONBLE HIGH COURT UPHOLDING THE INITIATION OF REASSESSMENT PROCEEDINGS HELD TH AT THE TERM FAILURE ON THE PART OF THE ASSESSEE IS NOT RESTRICTED ONLY TO THE RETURN OR TAX AUDIT ITA NOS.3481 & 3818 /DEL/2011 8 REPORT BUT ALSO COVERS THE STAGE OF ASSESSMENT PRO CEEDINGS. THE HONBLE HIGH COURT FURTHER HELD THAT IT INCLUDES OM ISSION AND FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y MATERIAL FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS IT IS CLEAR THAT THE HONBLE HIGH COURT UPHELD THE INITIATION OF REASSESSMENT PR OCEEDINGS WHEN THE ASSESSEE DID NOT OFFER ANY DISALLOWANCE U/S 14A OF THE ACT WHICH OUGHT TO HAVE BEEN DONE. AU CONTRAIRE WE FIND THAT THERE IS A SIGNIFICANT DIFFERENCE IN THE FACTUAL SCENARIO OBTAINING IN THE INSTANT CASE. THE ASSESSEE IN QUESTION CLAIMED DEDUCTION FOR PRIOR PE RIOD EXPENSES IN THE PROFIT & LOSS ACCOUNT; INDICATED THE CALCULATION BY MEANS OF ITEM NO. 19 IN NOTES TO ACCOUNTS; AND ALSO MENTIONED THIS FA CT IN THE AUDIT REPORT IN FORM NO.3CD. IN CONTRAST THE ASSESSEE I N HONDA SIEL POWER PRODUCTS LTD. (SUPRA) DID NOT WORK OUT ANY DISALLOWANCE OF EXPENSES IN TERMS OF SECTION 14A FAR AWAY FROM DISCLOSING THE SAME IN THE RETURN OF INCOME OR OTHER ACCOMPANYING DOCUMENTS. THAT BEING THE POSITION THE JUDGMENT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. (SUPRA) IS DISTINGUISHABLE ON FACTS. WE FURTHER FIND THAT THE HONBLE DELHI HIGH COURT IN NTPC LTD. VS. DCIT (2014) 360 ITR 380 (DEL) AND CIT VS. ITA NOS.3481 & 3818 /DEL/2011 9 INDIAN FARMERS FERTILIZERS CO.(2008) 171 TAXMANN 37 9 (DEL) HAS HELD THAT THE ISSUANCE OF NOTICE U/S 148 FOR REOPENING O F ASSESSMENT AS UNJUSTIFIED WHERE THE ASSESSEE MADE TRUE AND FULL D ISCLOSURE OF ALL PARTICULARS NECESSARY FOR HIS ASSESSMENT. IN VIEW OF THE ABOVE DISCUSSION IT IS CLEAR THAT THERE WAS NO FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR THE ASSESSMENT IN TERMS OF DEDUCTION FOR PRIOR PERIOD EXPENSES. TH IS LEGAL ISSUE BEING COVERED BY THE AFORENOTED TWO JUDGMENTS OF THE HON BLE DELHI HIGH COURT IS HEREBY HELD TO HAVE BEEN RIGHTLY DECIDED BY THE LD. CIT(A) IN ASSESSEES FAVOUR. 9. THE LD. CIT(A) GAVE ONE MORE COGENT REASON FOR Q UASHING THE REASSESSMENT. THIS REASON WAS THAT THE REASONS REC ORDED BY THE AO DID NOT TALK OF FAILURE OF THE ASSESSEE TO DISCLOSE SUC H MATERIAL FACTS LEADING TO UNDER-STATEMENT OF INCOME. THIS IN HIS OPINION WAS ALSO SUFFICIENT FOR SETTING ASIDE THE ASSESSMENT. IN REACHING THIS CONCLUSION HE RELIED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN HINDUSTAN LEVER LTD. VS. R.V. WADKAR ACIT (2004) 268 ITR 363 (BOM ) . COUNTERING THIS ITA NOS.3481 & 3818 /DEL/2011 10 JUDGMENT THE LD. DR RELIED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN I.P. PATEL & CO. VS. DCIT (2012) 346 ITR 247 (GUJ) IN WHICH IT HAS BEEN HELD THAT THE NOTICE NEED NOT SPE CIFY INSTANCES OF FAILURE AND IT WAS SUFFICIENT IF THE FAILURE ON THE PART OF THE ASSESSEE COULD BE INFERRED. 10. HAVING HEARD THE RIVAL SUBMISSIONS AND PERU SED THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD. (SUPRA) HAS CATEGORICALLY HELD THAT WHERE A NOTICE IS ISSUED AFTER EXPIRY OF FOUR YEARS THE RE ASONS RECORDED BY THE AO MUST STATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. IT IS TRUE THAT THE HONBLE GUJARAT HIGH COURT IN I.P. PATEL & CO. (SUPRA) HAS HELD THAT IT WAS SUFFICIENT IF SUCH FAILURE COULD B E INFERRED. NOTWITHSTANDING THE ABOVE POSITION WE FIND THAT TH ERE IS A DIRECT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N HARYANA ACRYLIC MANUFACTURING CO. VS. CIT AND ANOTHER (2009) 308 IT R 38 (DEL) IN WHICH IT HAS BEEN HELD THAT: IN THE REASONS SUPPLI ED TO THE PETITIONER ITA NOS.3481 & 3818 /DEL/2011 11 THERE IS NO WHISPER WHAT TO SPEAK OF ALLEGATION TH AT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE H AS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. IT IS ON THIS GROUND THAT THE HONBLE HIGH COURT SET ASIDE THE PROCEEDINGS FLOWING FROM NOTICE U/S 148 ISSUED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WHEN WE CONSIDER THE ABOVE EXTRACTED REASONS RECORDED BY TH E AO IN JUXTAPOSITION TO THE JUDGMENT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. (SUPRA) IT BECOMES OVERT THAT THERE IS NO ALLEGATION BY THE AO IN THE REASONS THAT THERE WAS ESCAPEMENT OF INCOME CHARGEABLE TO TAX BECAUSE OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. IN OUR CONSIDERED OPINION THE LD. CIT(A) WAS JUSTIFIE D IN QUASHING THE ASSESSMENT ON THIS SCORE AS WELL. THIS GROUND IS THEREFORE NOT ALLOWED. 11. IN VIEW OF THE FACT THAT THE INITIATION OF RE ASSESSMENT PROCEEDINGS ITSELF HAS BEEN SET ASIDE THERE IS NO NEED TO DEAL WITH THE GROUNDS ON MERITS. ITA NOS.3481 & 3818 /DEL/2011 12 ASSESSMENT YEAR 2003-04 12. FOR THIS YEAR ALSO THE AO INITIATED REASS ESSMENT PROCEEDINGS AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR HAVING ORIGINALLY COMPLETED U/S 143(3) OF THE ACT. THE ASSESSMENT WAS REOPENED BY RECORDING THE FOLLOWING REASONS:- 'M/S. TELECOMMUNICATIONS CONSULTANT INDIA PVT LTD. ASSESSED TO TAX WITH CIRCLE- 16(1) NEW DELHI HAD FILED ITS RETURN OF INCOME FOR AY 2003-04 ON 28.11.2003 DECLARING AN INCOME OF RS. 24 99 14 140/- UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF RS . 51 35 90 223/- UNDER SECTION 115JB WHICH WAS PROCESSED U/S. 143(1) ON 17.06.2005. THE CASE WAS ALSO DONE UNDER SECTION 143(3) AND ON ORDER PASSED ON 30.12.2005. AFTER GOING THROUGH THE CASE RECORDS AND 3 CD REPOR T THE ASSESSEE HAS DEBITED RS. 594.2 LAKHS TO P&L ACCOUNT ON ACCOUNT O F PRIOR PERIOD EXPENSES. AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING THE EXPENSES WHICH WERE NOT RELEVANT TO PREVIOUS YEAR WERE REQUIRED TO BE DISALLOWED. THEREFORE I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS BEEN UNDER-ASSESSED BY R S. 594.25 LAKHS INVOLVING SHORT LEVY OF TAX OF RS. 293.18 LAKHS. AFTER GOING THROUGH THE CASE RECORDS AND 3 CD REPOR T THE ASSESSEE HAS DEBITED PRIOR PERIOD EXPENDITURE OF RS. 57.53 LAKHS IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD EMPLOYEES REMUNERATION AND BENEFITS AND OTHER EXPENSES'. AS THE EXPENSES RELATES TO PRIOR PERIOD SAME SHOULD HAVE BEEN DISALLOWED. THEREFORE I HAVE REASON TO BELIEV E THAT THE INCOME OF THE ASSESSEE HAS BEEN UNDER-ASSESSED BY RS. 57.53 L AKHS INVOLVING SHORT LEVY OF TAX RS.28.38 LAKHS. ITA NOS.3481 & 3818 /DEL/2011 13 AFTER GOING THROUGH THE CASE RECORDS AND 3 CD AUDIT REPORT THE ASSESSEE HAS MADE PROVISION FOR WARRANTY PERIOD EXPENSES OF RS.155.51 LAKHS IN P & L ACCOUNT. AS THE AMOUNT WAS MERELY A PROVISION IT SHOULD HAVE BEEN ADDED BACK. THE MISTAKE RESULTED IN UNDER ASSE SSMENT IN INCOME OF RS.155.51 LAKHS INVOLVING TAX EFFECT OF RS. 76.72 I NCLUDING INTEREST. THEREFORE CONSIDERING THE ABOVE GROUNDS I HAVE RE ASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS BEEN UNDER-ASSESSED BY RS. 807.29 1AKHS AND TAX EFFECT OF RS.398.28.' 13. THE LD. CIT(A) QUASHED THE ASSESSMENT BY FOLLOW ING THE REASONING GIVEN BY HIM IN HIS ORDER FOR THE A.Y. 20 02-03 WHICH WE HAVE APPROVED HEREINABOVE. 14. APART FROM THE ITEM OF PRIOR PERIOD EXPENSES THE AO IN THE REASONS FOR REASSESSMENT HAS ALSO TAKEN ONE MORE ITEM BEING PROVISION FOR WARRANTY PERIOD EXPENSES AMOUNTING TO RS.1.55 C RORE WHICH OUGHT TO HAVE BEEN DISALLOWED. THIS ITEM ALSO APPEARED I N THE AUDIT REPORT IN FORM NO. 3CD. WE FIND THAT THE REASONING GIVEN BY US FOR THE IMMEDIATELY PRECEDING YEAR IN APPROVING THE SETTING ASIDE OF THE INITIATION OF REASSESSMENT ON ACCOUNT OF `PRIOR PER IOD EXPENSES WHICH WERE DISCLOSED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT AND ALSO PROMPTLY REPORTED IN TAX AUDIT REPORT APPLIES WITH FULL FORCE IN SO FAR ITA NOS.3481 & 3818 /DEL/2011 14 AS ADDITIONAL ISSUE OF PROVISION FOR WARRANTY PERIO D EXPENSE OF RS.1.55 CRORE IS CONCERNED. THIS ITEM WAS ALSO REPORTED IN FORM NO. 3CD. WITHOUT MAKING ANY FRESH SUBMISSIONS BOTH THE SIDE S HAVE ADOPTED THE ARGUMENTS ADVANCED BY THEM FOR THE IMMEDIATELY PREC EDING ASSESSMENT YEAR WHICH WE HAVE DEALT WITH ABOVE. FOLLOWING TH E VIEW TAKEN FOR THE A.Y. 2002-03 WE APPROVE THE ACTION OF THE LD. CIT( A) IN QUASHING THE REASSESSMENT FOR THIS YEAR AS WELL. 15. HERE AGAIN THERE IS NO NEED TO DISPOSE OF T HE GROUNDS ON MERITS BECAUSE OF THE UPHOLDING OF THE SETTING ASIDE OF TH E INITIATION OF RE- ASSESSMENT PROCEEDINGS. 16. IN THE RESULT BOTH THE APPEALS ARE DISMISSE D. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.201 6. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 21 ST OCTOBER 2016. DK ITA NOS.3481 & 3818 /DEL/2011 15 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT AR ITAT NEW DELHI.