2015 (6) TMI 1070 - AT - Income Tax

Reopening of assessment under section 147 - Held that - In this case, the issue of reopening was done by the Assessing Officer under section 148 of the Act is justified for the reason that as per Explanation 2 (c) to section 148, where the income chargeable to tax are under assessed, it shall be deemed to have been income chargeable to tax has been escaped assessment. Therefore, in our opinion, the Assessing Officer, while passing the original assessment order under section 143(3) has not expressed any opinion as he has only considered the details filed by the assessee. Therefore, the notice issued under section 148 to rectify the mistake on which he has not given any opinion. Thus, it is not amounting to any change of opinion. Accordingly, the case law relied on by the ld. Counsel for the assessee in the case of CIT v. Kelvinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) has no application. CIT(A) has rightly held that the disallowance of interest expenses for the purpose of computation of disallowance under section 14A in the reassessment proceedings is not legally correct since the income escaped with respect to disallowance of expenditure under section 14A to the extent of the arithmetic mistake committed in the original assessment was correctly done by the Assessing Officer as per the law. Therefore, we find no infirmity in the order passed by the ld. CIT(A) and accordingly, the ground raised by the assessee is dismissed. Disallowance of expenses u/s 14A read with 80 of the IT Rules in view of the specific findings given by the ld. CIT(A) that no specific books of accounts were maintained for the investment in relation to exempt income and also non exempt income. In view of the above, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed So far as the claim of the assessee in respect of estate expenses the assessee has not able to produce any details i.e. bills and vouchers, etc. neither before the Assessing Officer nor before the ld. CIT(A) or even before the Tribunal. In view of the above facts and circumstances, this ground of appeal raised by the assessee is dismissed.

Summary

Issues:
1. Reopening of assessment under section 147 of the Act for the assessment years 2008-09 and 2010-11.
2. Disallowance of expenses under section 14A read with Rule 8D of the IT Rules.
3. Lease rental income issue.
4. Disallowance of specific expenses of the assessee.

Analysis:

Reopening of Assessment (2008-09):
The assessee challenged the reopening of assessment under section 147, arguing it amounted to a change of opinion, citing the case of CIT v. Kelvinator India Ltd. The Assessing Officer (AO) reopened the assessment within four years, rectifying a mistake in the original assessment regarding the total value of assets for disallowance under section 14A r.w.Rule 8D. The Commissioner upheld the reopening, noting the mistake was rectified within the permissible time frame. The Tribunal dismissed the appeal, stating the AO did not express any opinion in the original assessment, justifying the reopening.

Disallowance of Expenses (2008-09):
Regarding the disallowance under Rule 8D(ii), the AO correctly disallowed interest expenses for the purpose of computation under section 14A. The Tribunal affirmed the decision, stating the AO's action was legally correct in rectifying the arithmetic mistake made in the original assessment.

Lease Rental Income (2010-11):
The issue was dismissed based on a previous judgment by the Jurisdictional High Court in the assessee's case, covering the lease rental income matter.

Disallowance of Specific Expenses:
The AO disallowed expenses of &8377; 1,65,280 under section 14A read with Rule 8D. The Commissioner upheld the disallowance, noting the appellant failed to provide sufficient evidence to challenge the decision. Additionally, the claim for estate expenses of &8377; 7,88,123 was dismissed due to lack of supporting details. The Tribunal affirmed the Commissioner's orders on both issues.

In conclusion, all appeals filed by the assessee were dismissed, with the Tribunal upholding the decisions of the lower authorities on various issues related to the assessment years 2008-09 and 2010-11. The judgments were pronounced on June 30, 2015, in Chennai.