Law:

Section:

NOVEMBER 22, 2011 Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 2004-05 - During relevant assessment year, assessee entered into an agreement with a Swiss company for early repayment of loan taken from that company - Under agreement assessee paid lesser amount against outstanding principal amount in full and final settlement of dues - Balance amount was written back by assessee to profit and loss account but was not considered as income relying upon decision in CIT v. Chetan Chemicals (P.) Ltd. [2004] 267 ITR 770/ 139 Taxman 301 (Guj.) - During assessment proceedings, Assessing Officer called upon assessee to submit details in respect of loan written back and after considering all details and assessee's explanation completed assessment - On 25-3-2011, a notice under section 148 was issued to assessee on ground that aforesaid amount of loan written back had escaped assessment - Whether when assessee had disclosed all primary facts for making claim before Assessing Officer during assessment proceedings, reopening of assessment after four years from end of relevant assessment year was justified - Held, no [In favour of assessee] FACTS The assessee had in 2001 obtained a loan of Swiss Franc one million from a Swiss company for the purpose of financing the acquisition of plant and machinery. It entered into an agreement for early repayment of the loan during the relevant assessment year under which it was to make a repayment of a lesser amount against the outstanding principal amount in full and final settlement of the dues had shown the amount of Rs. 1.10 crores as sundry credit balances written back to the profit and loss account but not considered same as income. In the course of the assessment proceedings, the Assessing Officer called upon the assessee to submit details, inter alia in respect of the loan write back in the amount of Rs. 1.10 crores. The assessee furnished requisite detail and contended that the writing back of a loan did not amount to the income in view of the decision of Gujarat High Court in the case ofCIT v. Chetan Chemicals (P.) Ltd. [2004] 267 ITR 770/ 139 Taxman 301.…

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