- (1.) petitioner has sought to challenge in these proceedings a notice issued under Section 148 of the Income Tax Act, 1961 seeking to reopen an assessment for A.Y. 2007-08. Since the notice was issued on 31 March 2014, the reopening in the present case is admittedly beyond the period of four years of the end of the relevant assessment year.
(2.) The original assessment in the present case was completed under Section 143(3) by an order dated 16 March 2009 of the Assessing Officer. The order of the Assessing Officer indicates that the assessee had duly disclosed that during the course of the assessment year in question, it had closed its manufacturing activities and had entered into a lease agreement in respect of the land and building and for plant and machinery. Against the receipts therefrom, the assessee had claimed various expenses including administrative expenses, repair and maintenance, financial charges and depreciation. The Assessing Officer made a partial disallowance while computing the income under Section 115 JB.
(3.) For convenience of reference, the order of the Assessing Officer, insofar as is material, is extracted hereinbelow. : "The assessee is a Private Limited company and upto the immediate previous Financial Year relevant to the Assessment Year 2006-07 the assessee was doing the manufacturing of Refined Oil, Vanaspati and Hand made soap but during the year under consideration, it closed the manufacturing activity and has given its unit on lease to M/s Agro Tech Foods Ltd. The income on account of lease received from M/s Agro Tech Foods Ltd. has been shown as Income from Other Sources by the assessee. A perusal of the lease agreement as filed during the assessment proceedings, shows that the assessee has received an amount of Rs. 5 lacs per month as leased amount from M/s Agro Tech Foods Ltd. Out of the total amount, Rs. 1 lac has been received towards land & building and Rs.4 lacs have been received towards plant & machinery. Against these receipts, the assessee has claimed various expenses under the head Administrative Expenses, Repair & Maintenance, Financial Charges and depreciation. It was submitted that the expenses have been incurred towards the maintenance of its unit as according to the lease agreement, the assessee has to bear the cost of maintenance of the unit. The assessee also furnished the details of these expenses. A perusal of the details furnished in respect of Repairs & Maintenance shows that the assessee had claimed a number of such expenses which are not fully verifiable. Particularly the expenses towards the repairs and maintenance of electricity amounting to Rs. 2,09,764/- are not supported by proper bills or vouchers. The specific details and purpose of these expenses could also not be explained convincingly. In view of this, an amount of Rs.1,25,000/- would be disallowed out of the Repair & Maintenance Expenses to cover up the expenses which are not verifiable. This would result in an addition of this amount to the total income.";