9911796707
TMI Blog2012 (10) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment. The notices for reopening the assessments beyond a period of four years, from the end of the relevant assessment years, must fail on that ground alone – in favor of assessee - 4549 and 4551 of 2002 - - - Dated:- 16-3-2012 - HARSHA DEVANI MS., AKIL KURESHI, BELA TRIVEDI MS., JJ. JUDGMENT Ms. Harsha Devani J.- 1. Both these petitions challenge the notices dated March 11, 2002, issued by the respondent under section 148 of the Income-tax Act, 1961 ("the Act"), reopening the petitioner's assessment for the assessment years 1996-97 and 1995-96 respectively. 2. Since common questions of fact and law are involved in both these petitions and the parties are also common, the same were taken up for hearing together and are decided by this common judgment. The facts relating to Special Civil Application No. 4549 of 2002 are that the petitioner, an individual, filed his return of income on November 29, 1996, for the assessment year 1996-97, inter alia, claiming deduction of interest expenditure of Rs. 51,33,658 from income from other sources under section 57(iii) of the Act, which came to be allowed by the Assessing Officer while framing assessment under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961, was completed on December 23, 1998. In the return of income filed, the assessee has claimed interest expenses of Rs. 51,33,658 from 'Income from other sources' under section 57(iii) of the Income-tax Act, 1961. The assessee did not submit any information as to how the interest expenditure claim under section 57(iii) is laid out or expended wholly and exclusively for the purpose of making or earning dividend and interest income taxable in other sources head. During the course of the assessment proceedings also, the assessee only submitted that the borrowing were made for either repaying the earlier loan or for making investments in shares of Mastek Ltd. The assessee claimed that since investments were made in shares, which are generating dividend income and, therefore, interest expenditure is allowable under section 57(iii) of the Income-tax Act. The assessee did not submit the details relating to his controlling interest or his total holding in Mastek Ltd. The assessee is a director in Mastek Ltd. and increase in the shareholding in Mastek Ltd. is not for the purpose of earning dividend but for acquiring controlling stake in the company (Mastek Ltd.). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 147, such excess allowance of interest is deemed to be the income which has escaped assessment. The assessee has not submitted the following information/details relevant to decide the purpose of making investments in the shares of Mastek Ltd. The balance-sheet and capital account of the assessee was not filed along with the return or during the assessment proceedings. In the absence of the balance-sheet, the details of investment, source of investment, application of fund for the purpose of making investments in shares, etc., have not been disclosed by the assessee. How much percentage of shares, the assessee and his group was holding in Mastek Ltd. was not submitted by the assessee. This is very relevant in the light of the Gujarat High Court's judgment discussed above. Details of total borrowings and their use for making investments in shares have not been submitted by the assessee. The details of loans taken with date and amount and investments made with copy of accounts of the persons and also to linking up of the loans taken for investments, etc., and interest paid during the year, has been furnished. The assessee has not submitted the details of loans taken n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment within the meaning of Explanation 2(c)(i) and (iv) of section 147 of the Income-tax Act, 1961. (3) Legal aspects of reopening the assessment : For reopening an assessment completed under section 143(3) of the Income-tax Act, 1961, beyond four years, the following conditions need to be satisfied : (i) The Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment. (ii) The escapement of income should be by reasons of failure on the part of the assessee who disclosed fully and truly all material facts necessary for that assessment year. (iii) More than six years have not lapsed from the end of the relevant assessment year. (iv) The income escaped is likely to amount to Rs. 1 lakh or more. In the assessee's case, all the above four conditions, required for issue of notice under section 148 are satisfied as under : (i) In view of the foregoing paras, the assessee has claimed deduction of interest on funds borrowings for the purpose of making investments in the shares of Mastek Ltd., which is not allowable under section 57(iii) of the Income-tax Act, 1961, considering the factual and legal position discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d interest payments of Rs. 51,33,658 on the borrowed (capital) fund for acquiring the shares of the company Mastek Ltd., in which the assessee is a managing director (for the assessment year 1995-96 the words used are promoter/director). The assessee has no intention to earn income by investing the borrowed capital for the purchase of shares of the company in which the assessee is a promoter director. Thus, the assessee has borrowed the money for the investment purpose and, hence, the interest paid is not allowable as expense under section 57(iii) of the Income-tax Act, 1961. In view of the above, I am of the firm belief that substantial income has escaped assessment within the meaning of section 147, for which assessments need to be reopened." 10. In reply to the affidavits-in-reply, the petitioner has filed affidavits-in- rejoinder in both the petitions placing on record various documents produced by the petitioner during the course of the assessment proceedings before the Assessing Officer. The respondent has not filed any reply to the rejoinder rebutting the averments made therein. Thus, it is an accepted position that the documents annexed with the rejoinder affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner and had also submitted the statement of account for the relevant period. Referring to the statements of total income submitted along with the return of income, it was pointed out that for the assessment year 1996-97 the petitioner had clearly stated that the petitioner had dividend income of Rs. 15,81,906 and that the petitioner had claimed deduction of interest expenditure of Rs. 51,33,658 and that for the assessment year 1995-96, it had been stated that the petitioner had dividend income of Rs. 16,75,157 and had claimed interest expenditure of Rs. 39,01,689. It was submitted that the petitioner had, in the statements of income also, categorically stated the dividend income derived from his shareholdings in Mastek Ltd. and as such, all primary facts necessary for the purpose of assessment of the petitioner had been produced before the Assessing Officer. 12. In relation to the claim for deduction under section 57(iii) of the Act, Mr.Soparkar for the petitioner submitted that the question in the present case is whether the interest can be allowed against the dividend income. Referring to the decision of the Supreme Court in the case of CIT v. Rajendra Prasad Moody [1978] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not submitted by the petitioner. That at best, this is a case of perception of the Assessing Officer vis-a-vis perception of the petitioner. It was submitted that in so far as the petitioner's holding in the company, viz., M/s. Mastek Ltd. is concerned ; there is no requirement under law that the petitioner should disclose his holding in the said company. Reliance was placed upon the decision of this High Court in the case of CIT v. Akbarali Jummabhai [1992] 198 ITR 69 (Guj), for the proposition that the duty to disclose material facts necessarily postulates existence of a thing or material. If a material is not in existence or if a material is such of which the assessee had no knowledge or of which he cannot be attributed with any knowledge, there would be no duty to disclose such material. It was, accordingly, submitted that when the petitioner was not maintaining balance-sheets or capital accounts, such material not being in existence, there was no obligation cast upon the petitioner to produce such documents. According to the learned counsel, in case the Assessing Officer, during the course of assessment, found it difficult to make the assessment in the absence of such document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich ended on March 31, 1969, the assessee paid by way of interest Rs. 6,05,291 to the shareholders from whom it had pur- chased shares. It received Rs. 3,18,195 as interest from KPPL for the unpaid price of the shares which it had sold to KPPL. Thus, despite the fact that by that time it had already acquired more than 90 per cent. shares, which would have satisfied its object of earning more income by possessing more shares, the assessee sold the shares for the reason that it was not able to get 100 per cent. control by purchasing all the remaining shares. The asses- see claimed net deficiency in the interest account calculated on the basis of interest paid by the assessee to the shareholders of SOML on the unpaid purchase price and interest received on unpaid sale price by KPPL as a deduction in computing its income from other sources. It was in the back- ground of the aforesaid facts that the court held that the dominant purpose for which the expenditure was incurred was not for earning income and at the highest, it was a mixed purpose. It was submitted that the said decision was rendered in a totally different set of facts and would not be applicable to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent, emphatically argued that the petitioner had invested amounts taken by way of loans in shares of Mastek Ltd. in which he had considerable holding. For the purpose of claiming deduction on interest expenditure under section 57(iii) of the Act, the petitioner should have expended the amount wholly and exclusively for the purpose of earning such income. In the facts of the present case, the Assessing Officer while making assessment in the case of Mastek Ltd. had noticed the percentage of shares held by the petitioner which led him to deduce that the petitioner had acquired shares for the purpose of gaining a con- trolling stake in the company and not solely for the purpose of earning dividend income. In the circumstances, when the petitioner had purchased shares for the purpose of gaining controlling stake in Mastek Ltd., he was bound to inform the Assessing Officer about the Mastek Ltd.'s total share holding as well as the percentage of shares held by him as that would be necessary to determine as to whether the petitioner was entitled to deduction under section 57(iii) of the Act. It was submitted that a fact which was necessary for arriving at a decision as regards adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... percentage holding of the petitioner in Mastek Ltd. was a material fact, which had a bearing on the assessment of the petitioner inasmuch as, if the said fact had been disclosed to the Assessing Officer while framing the original assessment, the petitioner would not have been allowed deduction under section 57(iii) of the Act in respect of the shares purchased by it to gain controlling stake in Mastek Ltd. It was submitted that in the circumstances, non-disclosure of the petitioner's holding in Mastek Ltd. amounts to failure on the part of the petitioner to disclose fully and truly all material facts and as such, the Assessing Officer was justified in reopening the assessment after a period of four years from the end of the relevant assessment year. 22. Reliance was also placed on the decision of the Bombay High Court in the case of Dr. Amin's Pathology Laboratory v. P. N. Prasad, Joint CIT (No. 1) [2001] 252 ITR 673 (Bom), for the proposition that mere production of balance-sheet, profit and loss account or account books will not necessarily amount to disclosure within the meaning of the proviso to section 147 of the Act. It was submitted that the case of the Department i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the petitioner had the holding of shares of not less than 10 per cent. of the voting power, which could either bring the payment within the mischief of clause 2(22) of the Act, by treating the same as deemed dividend, or could keep such payment out of the said provision, was never disclosed by the assessee in the return of income and that by simply stating that the petitioner company holds certain shares in SDBL, the duty to truly and fully disclose all material facts necessary for assessment of the income, was not discharged. It was submitted that the facts of the present case are similar to the facts of the said case inasmuch as, the petitioner had not disclosed his controlling stake in Mastek Ltd., and as such, the petitioner had failed to disclose fully and truly all material facts necessary for the assessment of his income. 25. In conclusion it was submitted by the learned counsel that the Assessing Officer was fully justified in reopening the assessment under section 147 of the Act by issuing the impugned notices and that the petitioner having failed to disclose fully and truly all material facts necessary for his assessment for the assessment years under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Even on this aspect of law, the position is well settled. The duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Once he has done that, his duty ends. It is for the Assessing Officer to draw correct inference from those primary facts. It is not the responsibility of the assessee to advise the Assessing Officer with regard to the inference which he should draw from the primary facts. If the Assessing Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reassessment. The words "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year" postulate a duty to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. But once those primary facts are disclosed, and all the facts which would help the Assessing Officer in coming to the correct conclusion are brought to his notice, the assessee's duty ends. From these primary facts and the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income chargeable to tax has escaped assessment, the Assessing Officer has recorded that the assessee had claimed interest expendi- ture on funds borrowed for the purpose of making investments in shares of Mastek Ltd. to the tune of Rs. 51,33.658 and Rs. 39,01,689 respectively. Relying upon the decisions of this High Court in the case of Smt. Virmati Ram- krishna v. CIT [1981] 131 ITR 659 (Guj) (Appendix), Sarabhai Sons (P.) Ltd. v. CIT [1993] 201 ITR 464 (Guj), as well as the decision of the Supreme Court in the case of Smt. Padmavati Jaikrishna v. Addl. CIT [1987] 166 ITR 176 (SC), etc., the Assessing Officer has recorded that if interest expenditure is not solely for the purpose of dividend income the same is not allowable as an expense under section 57(iii) of the Act. According to the Assessing Officer, prima facie, the assessee had invested in shares to acquire the controlling stake in the company and his investment was not apparently for the purpose of earning dividend income. Therefore, the assessee had been allowed excess claim of interest to the extent noted hereinabove. 32. As to what was the nature of non-disclosure on the part of the petitioner, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement and balance-sheet of his wife, Rupa Mehta, as on March 31, 1995, March 31, 1993, and March 31, 1994, bank statement of the petitioner, details of other advances/deposits, dividend warrants, Form No. 16 under rule 31(1)(a) of the Rules, proof of payment of interest on loan taken by the petitioner, certificates of interest charged on the loans, certificates evidencing repayment, proof regarding purchase of shares, etc. In the circumstances, in so far as the assessment year 1995-96 is concerned, the reasons recorded to the extent the same state that the petitioner had not submitted the balance-sheet along with the return of income or during the course of assessment proceedings and that the petitioner had not produced details of total borrowings and their use for making investments in shares do not appear to be factually correct. 35. From the reasons recorded, it appears that failure to disclose fully and truly all material facts on the part of the petitioner has been attributed on the ground of non-furnishing of balance-sheet, capital account, details of loans with date and amount of investments made with a copy of the accounts as well as the extent of the petitioner's hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o submitted copies of dividend warrants and confirmation letters of the persons from whom the petitioner had obtained loans. For the assessment year 1995-96, the assessment order framed under section 143(3) of the Act indicates that the Assessing Officer after duly applying his mind to the facts of the case and the documents furnished during the course of assessment proceedings, had allowed the interest expenditure except to the extent of Rs. 2,02,149 in respect of Nirma Detergent as confirmation had not been received in respect of the said party. The Assessing Officer, during the course of assessment proceedings for the assessment year 1995-96, had before him all relevant details of the loans obtained by the petitioner and the investments made by the petitioner from the amounts obtained by way of loans as well as interest expenditure claimed in respect thereof. It was after examining all the said documents, that the Assessing Officer had assessed the petitioner under section 143(3) of the Act. At no point of time, does it appear that the Assessing Officer had called upon the petitioner to furnish the percentage of his holding in Mastek Ltd. 37. In relation to the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, therefore, be against the assessee. We are unable to acquiesce in this argument. It is indubitably true that the Tribunal has stated that the purchase of these shares by the company has served the purpose of giving facility or con- venience to two interested parties. It is equally true that the Tribunal has used the word 'purpose' in recording this finding. Evidently there is here the use of an expression which has more than one meaning. 'Purpose' may, in some context, suggest object ; and purpose may sometimes suggest motive for a transaction. But, under section 12, we have to read the word 'purpose' in its legal sense to be gathered from the context in which it appears. We have to find out the meaning as far as possible from the language of the section itself and without attributing to the Legislature a precise appreciation of the technical appropriateness of its own. But whatever way we read the word 'purpose' it cannot certainly mean a motive for a transaction. Much less can it mean the ulterior motive or the ultimate object of purchasing the shares by the company. The only possible way to read what Mr. Joshi has described as the express and explicit finding of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation. Of course, we are not concerned with any equitable consideration or any consideration of fair- ness while interpreting the provisions of the Act and if the language of section 12(2) compelled us to take the view urged on behalf of the Department, we would certainly take that view though not without some reluctance. It would appear from the foregoing discussion that there was no material before the respondent on the basis of which he could have reasonably come to the conclusion that there was omission or failure on the part of the petitioner to disclose fully and truly all material facts in the course of the original assessment. This is a case in which all the primary facts were disclosed by the petitioner in the course of its original assessment proceedings. On the basis of those facts, the Income-tax Officer who completed those proceedings arrived at certain decisions. The respondent appears to have initiated reassess- ment proceedings principally because he thinks that certain items of expenditure were 'wrongly allowed'. This, therefore, is a case in which reassessment has been undertaken merely on a change of opinion. Besides, the affidavit-in-reply filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on loans taken to purchase the shares or to discharge the earlier loans. If at all he had harboured any doubt as regards the intention to purchase the shares not being exclusively for the purpose of earning dividend income but for gaining controlling stake, the Assessing Officer could have called upon the petitioner to state the extent of his shareholding. In so far as the petitioner is concerned, he had claimed deduction under section 57(iii) of the Act on the ground that he had purchased the shares for the purpose of earning dividend income, which is the requirement of section 57(iii). It could not, therefore, be said that there was any omission on the part of the petitioner to disclose fully and truly all material facts which resulted in escapement of income. All that seems to have happened is that the respondent while making assessment in the case of Mastek Ltd. has upon perusal of the shareholding pattern found that the petitioner had in all, over the years purchased 9,16,150 shares out of the total authorized capital of 50,00,000 shares and total issued and subscribed paid-up capital of 30,56,200 shares, which, according to him, was a pointer to the fact that the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt had laid down various propositions of law on an analysis of the provisions of section 57(iii) of the Act. The relevant proposition of law for the purpose of the present petition, as laid down in the said decision, is that the distinction between purpose and motive must always be borne in mind in this connection, for, what is relevant is the manifest and immediate purpose and not the motive or personal considerations weighing in the mind of the assessee in incurring the expenditure. In the present case, the respondent has mixed up the purpose of purchase of the shares with the motive and by imputing motive to the petitioner for purchasing the shares, has come to the conclusion that the petitioner had not purchased the shares for the purpose of earning dividend income. 43. Clause (iii) of section 57 of the Act speaks of any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income. The words "wholly and exclusively used for the purpose of making or earning such income" mean that the expenditure should be wholly incurred for the purpose of earning such income, that is to say, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the said case, the assessee had purchased the shares with the clear purpose or object of getting 100 per cent. control over SOML. In the facts of the said case, the assessee was the managing agent. The shares of SOML were held by the assessee along with two other groups of shareholders, viz., Kastur- bhai group and Patel group. The assessee held 11,264 shares, the Kastur- bhai group held 24,975 shares and the Patel group held 12,737 shares. The assessee was also the managing agent of SOML. It was agreed amongst the shareholders that the assessee should purchase all the shares in order to improve the business of SOML by holding 100 per cent. shares of SOML, which would have enabled it to implement the expansion projects. This decision was taken in September, 1967. The assessee agreed to purchase the shares at the rate of Rs. 197.5 per share. Payment of the price was spread over a period of two years. Ten per cent. of the price was to be paid on the date of purchase and the balance amount was to be paid in instalments ranging from twelve to twenty four months with interest at nine per cent. to be paid on the outstanding amount. The assessee met with some difficulties in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner has purchased the shares only for the purpose of gaining controlling stake in the said company. Moreover, in the light of the decision of the Bombay High Court in the case of Ormerods (India) Pvt. Ltd. v. CIT [1959] 36 ITR 329 (Bom), it is apparent that once it is shown that the purpose of buying the shares is to earn the dividend income, even if there is a motive behind the same, if the amounts have been invested for the sole purpose of earning dividend income, merely because there is a different motive, the same would not disentitle the assessee from claiming interest expenditure under section 57(iii) of the Act. 45. In so far as the reliance placed upon the decision of this High Court in the case of Dishman Pharmaceuticals and Chemicals Ltd. v. Deputy CIT (OSD) (No. 1) [2012] 346 ITR 228 (Guj) is concerned, section 2(22)(e) of the Act lays down that "dividend" includes any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erate in different fields. Section 2(22)(e) of the Act creates a deeming fiction whereby a loan is deemed to be dividend income. Under section 57(iii) of the Act, an assessee is entitled to deduction in respect of expenditure incurred wholly and exclusively for the purpose of earning income, which in the facts of the present case is dividend income. In a case under section 57(iii) of the Act if the income is in the nature of dividend income, it would be actual dividend income and not dividend by virtue of a deeming fiction as contemplated under section 2(22)(e) of the Act. In the circumstances, the said decision would have no applicability to the facts of the present case. 46. The decision of the Andhra Pradesh High Court in the case of KCP Ltd.v. ITO [1984] 146 ITR 285 (AP) also would not be applicable to the facts of the present case inasmuch as, in the facts of the present case, there was no obligation on the petitioner to disclose his shareholdings in Mastek Ltd. as the same was not a material fact necessary for his assessment for the purpose of deciding his claim for deduction under section 57(iii) of the Act. 47. The decision of the Madras High Court in the case of Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopen the petitioner's assessment for the assessment years 1995-96 and 1996-97, on the ground of being bad, illegal, contrary to law and without jurisdiction. 53. The short facts giving rise to the present petitions are that the petitioner had filed his return of income for the assessment year 1995-96 on March 29, 1996, declaring total loss of Rs. 7,45,759 and for the assessment year 1996-97 on November 29, 1996, declaring his total income of Rs. nil. For the sake of convenience, the facts from Special Civil Application No. 4549 of 2002 are referred to. From annexure B annexed to the said petition, it appears that the return of income for the assessment year 1996-97 filed by the petitioner was processed under section 143(1)(a) of the said Act on May 14, 1997, and in response to the notice under section 143(2) of the Act, the chartered accountant of the petitioner had attended the case. There- after, the Deputy Commissioner of Income-tax, Circle-4, Ahmedabad, had determined the total income of the petitioner at Rs. nil, as per the assessment order dated December 23, 1998, passed under section 143(3) of the said Act. The petitioner, thereafter, received the impugned notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion filed under article 226 of the Constitution of India, when such notice is based upon the reasons recorded in detail, by the Assessing Officer demonstrating his belief as to how legally and factually the income of the petitioner-assessee chargeable to tax had escaped assessment, and as to how such escapement was on account of the failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment for the relevant assessment years 1995-96 and 1996-97 ?" 57. The learned senior advocate, Mr. S. N. Soparkar, for the petitioner and the learned senior standing counsel, Mr. M. R. Bhatt, for the respondent have made their respective submissions at length, relying upon various decisions of the hon'ble Supreme Court, of this court as well as the other courts in support of their respective contentions. However, before adverting to the said submissions, it would be necessary to advert to the contentions raised by the respondent in his reply about the alternative remedy being available to the petitioner and about the petition having been filed at a very premature stage. The court is alive to the legal position to the effect that once the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said notice and also requested the respondent to furnish the reasons, the petitioner, without waiting for a reasonable time to enable the respondent to furnish the reasons, rushed to this court by filing the present petition. The petitioner had an ample opportunity to file objections before the respondent after obtaining the reasons from him, which the petitioner did not avail of and, hence, the present petition challenging the notice under section 148 of the Act is required to be held as having been filed at a premature stage. 60. So far as the existence of the alternative remedy is concerned, it is pertinent to note that Chapter XX of the Income-tax Act provides for the appeals and revisions to be filed before the appropriate forums. The order of assessment or reassessment passed by the Assessing Officer under section 147 of the Act is also appealable before the appellate officer and the order of the appellate officer is further appealable before the Appellate Tribunal. The aggrieved assessee or the Commissioner, as the case may be, could also require the Appellate Tribunal to refer to the High Court any question of law arising from such orders. Hence, when the judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne and bypass the statutory authorities, expressing lack of confidence in such authorities, in whom the Legislature itself has put the confidence. 62. The present petitions are such which involve a number of disputed questions of facts as regards non-disclosure of material facts and escapement of income chargeable to tax, as shall be demonstrated hereinafter, and, therefore, it could not be said that the impugned notices under section 148 of the Act are per se without jurisdiction or bad in law. The petitioner having filed the petitions without exhausting the statutory remedies avail- able under the said Act, the same deserve to be dismissed on that ground alone. However, since the petitions have been admitted in 2002 and heard finally in 2011 on all the issues raised by the learned advocates for the parties, they are being decided on the merits also. 63. As stated earlier, the present petitions have been filed challenging the validity of the impugned notices issued by the respondent under section 148 of the Act, proposing to reopen the assessment after the expiry of four years from the end of the relevant assessment years. The impugned notice dated March 11, 2002, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the return of income filed, the assessee has claimed interest expenses of Rs. 51,33,658 from 'income from other sources' under section 57(iii) of the Income-tax Act, 1961. The assessee did not submit any information as to how the interest expenditure claim under section 57(iii) is laid out or expended wholly and exclusively for the purpose of making or earning dividend and interest income taxable in other sources head. During the course of the assessment proceedings also, the assessee only submitted that the borrowing were made for either repaying the earlier loan or for making investments in shares of Mastek Ltd. The assessee claimed that since investments were made in shares, which are generating dividend income and, therefore, interest expenditure is allowable under section 57(iii) of the Income-tax Act. The assessee did not submit the details relating to his controlling interest or his total holding in Mastek Ltd. The assessee is a director in Mastek Ltd. and increase in the shareholding in Mastek Ltd. is not for the purpose of earning dividend but for acquiring controlling stake in the company (Mastek Ltd.). To determine the clear purpose for making investments in these sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inking up of the loans taken for investments, etc., and interest paid during the year, has to been furnished. The assessee has not submitted the details of loans taken nor the copies of accounts from all the parties were furnished. Thus, the assessee has not discharged the primary onus of giving details of loans taken, interest paid and linking the same with the investments made in shares. The assessee nowhere submitted the investments in the shares of Mastek Ltd. The approximate shareholding pattern for the assessment year from the details of the return are as follows : Assessment year 1995-96 1996-97 Total number of shares held in the MASTEK 8,83,350 9,16,150 Authorized capital 50,00,000 50,00,000 Issued subscribed and paid up capital 30,00,000 30,56,200 The above data has been culled from and the comparison has been derived from the details of the income-tax returns of the company Mastek Ltd. in which the abovenamed assessee is a director and it can be safely deduced that the shares were purchased with clear purpose of object of getting controlling interest over the company and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not have been allowed to the assessee. It is, therefore, clear that the substantial income has escaped assessment by reasons of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In view of this, the second condition is also satisfied in the assessee's case. (iii) Assessment can be reopened up to six years from the end of the relevant assessment year. For the assessment year 1996-97, six years period will end on March 31, 2003, therefore, this assessment can be legally reopened by March 31, 2003. (iv) The income likely to have escaped assessment should be Rs. 1 lakh or more in this case more than Rs. 51.33 lakhs have escaped assessment from the above, it is clear that all the conditions required for reopening the assessment are satisfied in the assessee's case." 67. The respondent, after considering the relevant judicial decisions, recorded the following conclusions : "5. Conclusion It can be seen from the return of the income that the assessee has claimed interest payments of Rs. 51,33,658 on the borrowed (capital) fund for acquiring the shares of the company Mastek Ltd., in which the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662 (SC), for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. P. Ltd. [1996] 217 ITR 597 (SC) ; Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC))." 70. From the above observations made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason. 72. There could not be any disagreement to the above submission made by Mr. Soparkar on the limited powers of the Assessing Officer to reopen the assessment, more particularly in view of the decision of the hon'ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC), in which the hon'ble Supreme Court while giving a schematic interpretation to the words "reason to believe", examined the scope of reopening of the assessment and held as under (page 564) : "Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of 'change of opinion' is removed, as contended on behalf of the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had considered the fresh and tangible material, which had not been considered earlier by the then Assessing Officer at the time of framing original assessment, and that the said material had also the link with the formation of the belief that the income had escaped assessment during the relevant assessment years. It is not disputed that the details of income-tax returns of the Mastek Company and the details of shareholdings of the petitioner in the said company were not there with the concerned Assessing Officer and not considered by him at the time of framing original assessment. Therefore, when the present respondent on having received fresh material, has sought to reopen the assessment, on his forming a belief that the income of the petitioner charge- able to tax had escaped assessment, it could not be said that the respondent was reviewing the earlier assessment or was seeking to reopen the assessment on the basis of "mere change of opinion". As rightly submitted by Mr.Bhatt, once the reasonable nexus between fresh material and the formation of the belief is established in the reasons recorded by the Assessing Officer, the court should not go into the sufficiency or adequacy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his holdings in Mastek Company, etc., were never called for by the then Assessing Officer during the course of the entire original assessment proceedings, and then, in the very next paragraph of the said affidavit-in-rejoinder, it has been stated that the petitioner had filed all necessary documents (annexure E) along with the return of income. Now, if the documents collectively marked as annexure E to the affidavit-in-rejoinder filed in Special Civil Application No. 4551 of 2002 are seen, there are copies of balance-sheets as on March 31, 1995, of the petitioner and his wife, along with other details of the expenses/income and the investments in shares. If the said documents, balance sheets and capital accounts were subsequently prepared and furnished during the course of original assessment, as sought to be submitted by Mr. Soparkar, on the instructions of the petitioner, the petitioner would not have stated on oath in the rejoinder that the said information or details were never called for by the then Assessing Officer. Further, if the said documents were not in existence and were not maintained by the petitioner, the same would not have been produced by the petitioner along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Act. Further, as per the provisions of section 143(3), as prevailing at the relevant time, the Assessing Officer could only make the assessment of the total income or the loss of the assessee, and determine sum payable by him on the basis of such assessment. The Assessing Officer at the relevant time, had no such powers to adjudicate upon the claim either to allow or reject, as powers are now there under section 143(3) of the Act. In the circumstances, the submission of Mr. Soparkar that the then Assessing Officer could have called for the material or evidence from the petitioner for adjudicating upon the claim of the petitioner as regards deduction under section 57(iii) of the Act, does not merit acceptance. 78. Heavy reliance was placed upon the judgment of the hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) by Mr. Soparkar, and also in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC), in the case of CIT v. Bhanji Lavji [1971] 79 ITR 582 (SC), to submit that the only duty which is cast upon the assessee under the Act, is to make true and full disclosure of all primary facts at the time of origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king true and full disclosure of material facts required for such claim. According to Mr. Bhatt, had the petitioner disclosed fully and truly about his investments and shareholdings in Mastek Ltd. in which he was the promoter and director, during the course of original assessment proceedings, it would have been found out by the then Assessing Officer that the expenditure claimed as deduction under section 57(iii) of the Act by way of payment of interest on loans taken for the purchase of shares, and by way of interest on loans taken for repayment of loans taken for the purchase of shares of Mastek company, was not incurred wholly and exclusively for the purpose of earning the dividend income from the said shares, but the said expenditure was incurred for the purpose of getting the controlling interest in Mastek Company, as has been found by the present respondent now. Mr. Bhatt submitted that the said material fact being very primary, non- furnishing of the same by the petitioner at the time of process of original assessment had resulted into failure on the part of the petitioner to disclose truly and fully all material facts necessary for his assessment and therefore, the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income-tax Officer might have discovered, the Legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example-'I have produced the account books and the documents : You, the Assessing Officer, examine them, and find out the facts necessary for your purpose : My duty is done with disclosing these account books and the documents'. His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, will amount to 'omission to disclose fully and truly all material facts necessary for his assessment'. Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h could have a material bearing on the question of under assessments that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notices under section 34. Whether these grounds were adequate or not for arriving at the conclusion that there was a non-disclosure of material facts would not be open for the court's investigation. In other words, all that is necessary to give this special jurisdiction is that the Income- tax Officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some non-disclosure of material facts." 81. It would be further relevant to reproduce the observations made by the hon'ble Supreme Court in the case of Indo-Aden Salt Mfg. and Trading Co. Pvt. Ltd. v. CIT [1986] 159 ITR 624 (SC), as under (page 628) : ". . . mere production of evidence before the Income-tax Officer was not enough, that there may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the Revenue could not have uncovered but did not, then, it is the duty of the assessee to bring it to the notice of the assessing authority. The assessee knows all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for getting controlling interest over the company, which was not permissible under section 57(iii) of the Act. He has also stated that the petitioner had not disclosed fully and truly all material facts relating to his investments and shareholdings and details of assets and liabilities to link the borrowings with the investments, which had resulted in the excess allowance of interest. The respondent had, after recording the factual and legal matrix, arrived at a belief that substantial income had escaped assessment due to the failure on the part of the petitioner to disclose fully and truly all material facts and, therefore, the assessment needed to be reopened. Conside- ring the said reasons recorded by the Assessing Officer, supported by the legal position, it could not be said that the belief of the respondent that there was failure on the part of the petitioner to disclose fully and truly material facts, was not well founded or was erroneous. As held by the hon'ble Supreme Court in the case of Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC), the expression "reason to believe" in section 147 cannot be read to mean that the Assessing Officer should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to disclose full and true material facts. 86. From the bare reading of section 57(iii) of the Act, it transpires that the expenditure must have been incurred wholly and exclusively for the purpose of earning income for which the expenditure was incurred. As such, there cannot be any disagreement with the ratios of judgments cited by Mr. Soparkar and Mr. Bhatt, as in all these cases, the crux of the decisions is, inter alia, that the expenditure must have been incurred wholly and exclusively for the purpose of earning income, and it is immaterial whether the income was in fact earned or not. However, it is pertinent to note that in section 57(iii), the emphasis is on the expression "wholly and exclusively" which precedes the words "for the purpose of making or earning such income". Therefore, for claiming deduction under section 57(iii) of the Act, the expenditure must not be expended for the purpose other than the purpose of earning income or for the mixed purpose of earning income and other extraneous purpose. In the instant cases, the respondent had deduced a belief from the fresh tangible material that the expenditure incurred by the petitioner was not expended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has the opportunity to file objections against the reasons recorded by the Assessing Officer and the Assessing Officer is bound to pass a speaking order thereon. 88. For the reasons stated above, it is held that in the instant cases, when the foundation or the substratum is laid by the respondent in the reasons, considering all factual and legal position demonstrating his belief that the income chargeable to tax of the petitioner had escaped assessment, and that such escapement was by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment for the relevant assessment years, it could not be said that the assumption of jurisdiction exercised by the respondent under section 147 of the Act after expiry of four years from the end of the relevant assessment years was bad, illegal or invalid. There being no infirmity or illegality in the impugned notices issued by the respondent under section 148 of the Act proposing to reopen the assessment for the assessment years 1995-96 and 1996-97, it does not warrant any interference of this court exercising extraordinary writ jurisdiction under article 226 of the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return at item No. IV, income from the other sources, the assessee wrote "as per note 6". 96. At note 6, the assessee described his income from other sources as under : Rs. (6). Income from other sources : Dividend 16,75,157 Bank interest 15,691 Interest on IT refund 1,010 16,91,858 Less : Interest paid to loans 39,01,689 -22,09,831 97. At item No. V to the schedule, the assessee described interests paid on various loans to different creditors. The total interest paid comes to Rs. 39,01,689. At the bottom of such item No. V, the assessee had stated, "this claim against dividend income from Mastek Ltd." Such claim was not disturbed by the Assessing Officer in his scrutiny assessment, of course without any elaborate discussion in the assessment order and the assessment was taken in scrutiny. The Assessing Officer framed assessment on March 31, 1998, assessing a total loss of Rs. 3,53,622. During the assessment, the Assessing Officer had raised certain queries. The petitioner replied to such queries under communication dated February 15, 1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholding pattern of the assessee. He was of the opinion that from the details of the income-tax return of the Mastek Ltd. in which the assessee was a director, it can be deduced that the shares were purchased with clear purpose of acquiring controlling interest of the company and not of the sole or even the dominant purpose of earning dividend income. The Assessing Officer was of the opinion that the said income had escaped assessment and that such escapement was due to the reason of the asses- see failing to disclose truly and fully all material facts necessary for such assessment. 101. In Special Civil Application No. 4549 of 2002, the petitioner has challenged a notice dated March 11, 2002, issued by the Assessing Officer seeking to reopen assessment previously framed after scrutiny for the assessment year 1996-97. For the said assessment year, the assessee had filed his return of income on November 29, 1996, declaring total income nil. The case of the petitioner was taken in scrutiny. During the assessment, the Assessing Officer raised certain queries. The assessee replied to such questions of the Assessing Officer under his communication dated December 14, 1998, in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount obtained by loans had been invested by the petitioner for purchasing the shares. No part of the amount was used for any other purpose. Such amount, therefore, had been used wholly and exclusively for the purpose of purchase of the shares which yield income taxable under the head "Income from other sources". She, therefore, held as under : "In the aforesaid premises, even if any motive were to be attributed to the petitioner, the same would not be relevant for the purpose of section 57(iii) of the Act, inasmuch as, the entire amount had been used for the purpose of buying shares which had yielded dividend income. In the circumstances, the very basis for reopening the assessment is misconceived." 107. In short, she held in favour of the petitioner on both counts, viz., that there was no failure on the part of the assessee to disclose truly and fully all material facts and, therefore, assessment previously framed after scrutiny could not be reopened beyond the period of four years from the end of the relevant assessment year. She also held that the claim of deduction under section 57(iii) of the Act was valid and that, therefore, the very basis for reopening the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x return of the assessee was sought to be reopened by the Department on the ground that the income of the minor taxable in the hands of the father had escaped assessment. In that case, the apex court did not permit reopening beyond a period of four years, on the ground that there was an obligation on the part of the Income-tax Officer to compute the income individually, including the income of the minor son and thereby no obligation was imposed on the taxpayer to disclose the income liable to be included under such head. (2) Reliance was also placed on a decision of the apex court in the case of ITO v. Radheshyam Ladia [1987] 166 ITR 134 (SC), wherein the decision in the case of V. D. M. Rm. M. Rm. Muthia Chettiar [1970] 74 ITR 183 (SC), came up for consideration before the apex court. The apex court did not find it necessary to refer the issue to the larger Bench. (3) The learned counsel also relied on a decision in the case of Ormerods (India) Pvt. Ltd. v. CIT [1959] 36 ITR 329 (Bom), wherein the claim of the assessee for deduction of interest paid on the borrowed funds for investment for the purpose of earning income came to be disallowed by the Tribunal. The Bombay High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e form of the return prescribed by rule 12 of the Income-tax Rules, 1962, which was in force during the relevant assessment year did not contain any separate column for showing the income of the spouse and minor child liable to be included in the total income of the assessee, but it did contain a note stating that if the income of any other person is includible in the total income of the assessee under the provisions, inter alia, of section 64, such income should also be shown in the return under the appropriate head. This note clearly required the assessee to show in the return under the appropriate head of income, namely, "Profits and gains of business or profession" the amounts representing the shares of the husband and minor daughter of the assessee in the profits of the two partnership firms. The assessee, however, failed to disclose these amounts in the return submitted by her and there was, plainly and manifestly a breach of the obligation imposed by section 139, sub-section (1), requiring the assessee to furnish a return of her income in the prescribed form. To accept the contention that despite the note the assessee was still not liable to show in the return the amounts re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Such petitions were admitted and were pending before this court for a number of years. I am of the opinion that such petitions cannot be dismissed merely on the ground of availability of alternative remedy. Firstly, the petitioner relied on facts and material already on record, which were undisputed or indisputable. His contention that there was true and full disclosure of material facts on his part, needs to be examined in these petitions. Whether the assessee satisfied such requirements, and, therefore, can validly contend that the reopening of assessments beyond a period of four years was invalid, is to be judged on the basis of material on record. If the assessee had discharged his primary duty, obviously, the Assessing Officer would, thereafter, have no jurisdiction to reopen the assessment beyond a period of four years. 116. Such question would go to the root of the matter and strike at the very jurisdiction of the Assessing Officer to reopen the assessment. Only upon jurisdictional facts being established that the Assessing Officer can proceed to reopen the assessment. It is well-settled through a series of decisions of this court as well as of the apex court that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the GKN case [2003] 259 ITR 19 is not to whittle down the principle laid down by the Constitution Bench of the apex court in Calcutta Discount's case [1961] 41 ITR 191 but to require the assessee first to lodge preliminary objections before the Assessing Officer who is bound to decide the preliminary objections to issuance of the reassessment notice by passing a speaking order and, therefore, if such order on the preliminary objections is still against the assessee, the assessee will get an opportunity to challenge the same by filing a writ petition so that he does not have to wait till completion of the reassessment proceedings which would have entailed the liability to pay tax and interest on reassessment and also to go through the gamut of appeal, second appeal before the Income-tax Appellate Tribunal and then reference/ tax appeal to the High Court. Viewed in this light, it appears to me that the rigour of availing of the alternative remedy before the Assessing Officer for objecting to the reassessment notice under section 148 has been considerably softened by the apex court in the GKN case in the year 2003. In my view, therefore, the GKN case does not run counter to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Chemicals Ltd. v. Deputy CIT (OSD) (No. 1) reported in [2012] 346 ITR 228 (Guj) ; [2011] 2 GLH 699 , which reads as under (page 240 of 346 ITR) : "From the above judicial pronouncements, the following principles can be culled out : (i) To confer jurisdiction to the Assessing Officer to reopen the assessment under section 147 of the Income-tax Act beyond four years from the end of the assessment year, the following two conditions must be satisfied (a) that the Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment ; and (b) that the same was occasioned, on account of either failure on the part of the assessee to make a return of his income for that assessment year, or to disclose fully and truly all material facts necessary for assessment of that year ; (ii) both the above conditions are conditions precedent and must be satisfied simultaneously before the Income-tax Officer can assume jurisdiction to reopen the assessment beyond four years of the end of the assessment year ; (iii) such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case. 122. In the present case, the assessee filed his return for the assessment year 1995-96. In the return, he had disclosed that he had paid interest on various loans totalling to Rs. 39,01,689. This was adjusted against dividend income from Mastek Ltd. He, further, disclosed that he had received dividend of Rs. 16,75,157, against which he claimed deduction towards interest paid on various loans. Thus, the fact that the assessee had paid interest on the loans and such interest he claimed as deduction under the dividend income from Mastek Ltd. was very much within the knowledge of the Assessing Officer in the original return, itself. Moreover, in response to the queries raised by the Assessing Officer, the assessee filed further documents. Vide letter dated February 15, 1998, the assessee made further disclosures in which in the first paragraph itself he stated that he had worked for two years with NOCIL after which he cofunded Mastek Ltd. He was currently the director of Mastek Ltd. He gave details of various investments made by him in shares. He supplied the details at schedule A to the letter. After taking into account such material, the Assessing Officer, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out or expended wholly and exclusively for the purpose of making or earning such income." 126. The issue which is being raised by the Assessing Officer through reopening of the assessment is that the assessee was not entitled to any deductions for the interest paid for borrowings, which he utilized for purchase of shares in Mastek Ltd. The case of the Assessing Officer in brief is that such investments were not made for the purpose of earning dividend, but, for the purpose of acquiring controlling shares in Mastek Ltd. and recorded the reasons for the same. He, therefore, opined that the assessee was not entitled to deduction under section 57(iii) of the Act since such expenditure cannot be held to have been incurred exclusively for the purpose of earning such income. 127. Whether the Assessing Officer is justified in holding such, prima facie, belief is not an issue, on which I need to make any conclusive statement. The question is whether did the assessee fail in his duty to disclose fully and truly all primary facts. This question is important since the Assessing Officer sought reopening of the assessment beyond a period of four years from the end of the relevant assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, the primary onus to provide such details even if not disclosed cannot be shifted on the assessee. 131. Under the circumstances, if the assessment was sought to be reopened within a period of four years from the end of the relevant assessment year, the situation may have been different. It was perhaps open for the Revenue to contend that, since there was no opinion formed by the Assessing Officer on the original assessment, on such an issue, reopening of assessment cannot be stated to be based on mere change of opinion. However, the present case is related to reopening of assessment beyond a period of four years. Reopening notice must, therefore, be quashed. 132. I am, however, unable to concur with the view of the hon'ble Justice Devani when she holds that even on the merits, no additions could have been made. She examined the nature of interest paid by the assessee, the nature of investment made in purchase of shares of Mastek Ltd. and came to the conclusion that the interest paid on borrowed funds, which were utilized for the purpose of shares for earning dividend would fall within the parameters of section 57(iii) of the Act. 133. With profound respect, I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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