Decided on June 04,2014



D.MANMOHAN,VP. - (1.) THIS appeal by the assessee company is directed against the order dated 05.09.2013 passed by the CIT (A) -20, Mumbai and it pertains to A.Y. 2008 -09.
(2.) ASSESSMENT made under section 147 r.w.s. 143(3) of the Act and consequent determination of income at '3,06,159/ - is the subject matter of dispute before this Bench.
(3.) THE learned counsel for the assessee challenged the validity of reopening of assessment. In this regard he submitted that the return of income was filed on 29.09.2008 declaring loss of '11,01,077/ - which was originally processed under section 143(1) of the Act but later on taken up for scrutiny wherein a questionnaire was issued calling upon the assessee to furnish details justifying the loss declared in the return. Vide letter dated 24.06.2010 the assessee was called upon to furnish copy of the audited Balance Sheet, P & L Account alongwith annexures and comparative figures of earlier years and also to file copy of the report under section 44AB, if applicable. The assessee was also called upon to furnish a detailed note on the nature of business activities carried on in the previous year. In response thereto, vide letter dated 06.07.2010, assessee furnished copies of the audited Balance Sheet, P&L Account alongwith relevant annexures and comparative figures of earlier years. Though the books were audited under Companies Act it appears that it was not subjected to tax audit. In this regard the assessee submitted that he was not liable to tax audit under section 44AB for the financial year 2007 -08 as the gross income was below '40 lakhs. It was further submitted that the main business activity of the company is that of dealing in CNG and LPG kits for three wheeler and four wheeler vehicles. With regard to computation under section 115JB it was stated that there was book loss during the relevant financial year and hence computation under section 115JB is not applicable. Based on the above details the assessment was completed under section 143(3) of the Act by admitting the returned income. Subsequent thereto the AO sought to reopen the assessment on the ground that as per section 44AF of the Act the assessee is supposed to declare profit of '79,679/ - being 5% of the total trading turnover whereas the assessee declared loss, which is contrary to the law and, therefore, issued a notice on 15.05.2012 and despite the objections raised by the assessee with regard to reopening of assessment the AO proceeded to complete the assessment by rejecting the loss declared by the assessee and estimated the income. He has also made certain disallowances under section 43B of the Act. Assessee challenged the order of the AO before the CIT(A) on the preliminary issue, i.e. validity of reopening of assessment but the plea of the assessee was rejected by the learned CIT(A) and thus a second appeal was preferred before the Tribunal.;

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