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2015 (4) TMI 397 - AT - Income TaxReopening of the assessment - beyond 4 years but within 6 years after the original assessment under section 143(3) was completed - additions made on account of interest on the Non Performing Assets under the provisions contained in section 43D read with Rule 6EB - Held that - Nowhere in the reasons do we find that in the reopened proceedings, the AO had unearthed anything which was materially concealed by the assessee. The ground for reopening after four years and after completion of regular assessment u/s 143(3), the department has to prove that in the intervening period, they were able to generate something, which was not described by the assessee either in its return or explanation. This fact has not been broken by the revenue authorities. Hon ble Bombay High Court in the case of Sitara Dramond Pvt Ltd vs ITO, 2013 (9) TMI 571 - BOMBAY HIGH COURT held that the department has to bring out something to prove that any particular of income was concealed. In fact, we find that even in the accounts, as submitted along with the ROI, all details had been disclosed. Thus the reassessment proceedings are bad in law. We, therefore, cancel the notice u/s 148 dated 02.03.2011 and as a consequence, all consequential proceeding are annulled. - Decided in favour of assessee Additions made on account of expenditure incurred by way of interest under section 14A - Held that - In the case of the assessee in preceding year, we are of the opinion, that a consistent view taken by the revenue authorities on the submissions made by the assessee involving the factual aspects. We, therefore, set aside the order of the CIT(A) and restore the issue to the AO to ascertain the fact, as to when the investments were made and whether any investments, giving tax free income in assessment year 2008-09 and with a direction to verify and examine the necessary facts. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Reopening of assessment without fresh material. 2. Reopening of assessment beyond four years. 3. Additions on account of interest on Non-Performing Assets (NPA). 4. Disallowance of expenditure under section 14A in relation to exempt income. Issue-wise Detailed Analysis: 1. Reopening of assessment without fresh material: The appellant challenged the reopening of the assessment by the Assessing Officer (AO) on the grounds that no fresh material was brought on record. The Tribunal noted that the AO had reopened the assessment based on the same issue that was previously scrutinized and accepted during the original assessment proceedings. The Tribunal emphasized that the AO did not find any new material or evidence that was not disclosed by the assessee earlier. Citing the Hon'ble Delhi High Court in CIT vs Kelvinator of India and the Hon'ble Supreme Court, the Tribunal concluded that the reopening was merely a "change of opinion," which is not permissible under the law. Consequently, the reassessment proceedings were deemed invalid. 2. Reopening of assessment beyond four years: The Tribunal addressed the issue of reopening the assessment beyond four years but within six years. It was highlighted that for reopening beyond four years, the department must demonstrate that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The Tribunal found that the AO failed to provide any evidence of material facts being concealed by the assessee. The Tribunal referenced the Hon'ble Bombay High Court in Sitara Dramond Pvt Ltd vs ITO, which requires the department to prove that any particular income was concealed. Since no such evidence was presented, the Tribunal ruled that the reassessment proceedings were invalid. 3. Additions on account of interest on Non-Performing Assets (NPA): The Tribunal noted that the AO made additions based on interest on NPAs under section 43D read with Rule 6EB. However, since the reassessment proceedings themselves were declared invalid, the Tribunal did not need to address the merits of these additions. As a result, this issue became academic and was not further deliberated upon. 4. Disallowance of expenditure under section 14A in relation to exempt income: In the appeal for the assessment year 2009-10, the AO had disallowed Rs. 1,13,18,201/- under section 14A, attributing it to expenses related to exempt income. The assessee argued that the investments were made from surplus funds and not borrowed funds. The CIT(A) upheld the AO's decision, applying Rule 8D. The Tribunal, however, found that the issue required a detailed factual examination, particularly regarding the source of funds used for the investments. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the AO for verification of the facts. Conclusion: The Tribunal allowed the appeals for the assessment years 2004-05 and 2005-06, declaring the reassessment proceedings invalid. For the assessment year 2009-10, the Tribunal remanded the matter back to the AO for a detailed factual examination regarding the disallowance under section 14A. Summary of Orders: - Assessee's appeal in ITA 6795 of 2012 stands allowed. - Assessee's appeal in ITA 6796 of 2012 stands allowed. - Assessee's appeal in ITA 6797 of 2012 stands allowed for statistical purposes. (Order pronounced in the open Court on 13.02.2015)
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