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TMI Blog2014 (11) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income tax (hereinafter referred to S "THE Assessing Officer") in reopening the assessment under section 148. The appellant submits that the order passed under section 143(3) r.w.s. 147 of the Act is illegal, null and void and bad in law as the appellant has filed full, correct and complete particulars of its income along with the return of income as well as during the course of assessment proceedings. The appellant submits that the reopening is illegal and contrary to provisions of the Act as the appellant has not concealed the particulars of its income nor filed any inaccurate particulars thereof. The Ld.CIT(A) erred in upholding the action of the Assessing Officer in disallowing a sum of Rs. 2,16,00,000/- under section 43B being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.10.2005 declaring 'Nil' income. Subsequently a revised return was filed on 19.10.2006, offering tax on income tax refund during the year. This income was however set off against brought forward business loss and the income was again shown at 'Nil' income. The said return of income was subjected to scrutiny and assessment was completed u/s 143(3), vide order dated 31.12.2007 at 'Nil' income. Thereafter the assessee's case was reopened u/s 147, vide issuance of notice u/s 148 dated 19.11.2009. In response, the assessee sought "reasons recorded" which was made available by the AO vide letter dated 03.06.2009, vide which following "reasons" were communicated for reopening the case u/s 147. "On verification of the assessment records of A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was required to settle the set liabilities by paying:-(a) 100% outstanding principal amount of Rs. 2128.28 lakhs; (b) 50% simple interest of Rs. 433 lakhs; Out of the interest component, Rs. 217 lakhs to be paid along with the entire principal amount and the balance interest of Rs. 216 lakhs was to be converted into equity shares of Rs. 10/- per share of the assessee's company. During the relevant previous year, the assessee claim deduction of Rs. 4,33,00,000/- u/s 43B, being interest paid to IDBI Bank under OTS. He submitted that from the perusal of the "reasons" it can be seen that, first of all, no tangible material has become into record so as to suggest that any income chargeable to tax has escaped assessment. The AO is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be reckoned with the actual amount paid and not any conversion of equity shares. He thus submitted that reopening u/s 147 on such 'reasons recorded' has rightly been done and also strongly relied upon the order of the AO and Ld.CIT(A). 5. We have heard the rival submissions qua the issue of validity of reopening the assessment u/s 147 as raised in ground no. 1. As per the terms of OTS, the interest liability on loan of 4.33 crores has been discharged by making the payment of Rs. 2.17 crores and the balance sum of Rs. 2.16 crores have been discharged by allotting equity shares with face value of Rs. 10/-. The discharge of this interest liability has been made during the previous year relevant to the A.Y. 2005-06 which has been claimed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest liability and claiming of deduction thereof, by converting the payment through allotment of shares, then how the assessing officer sans any legal provision or any judicial authority could have entertained "reason to be believe" that such a deduction is not allowable. On these facts we are of the opinion that the "reasons" as recorded by the AO, do not clothe him with the jurisdiction u/s 147 to reopen the completed assessment. No legal provision or legal proposition has been brought to our notice in support the ground raised by the assessing officer in the "reasons recorded" for reopening the case. Thus on such "reasons", we hold that the reopening u/s 147 cannot be validly initiated, as prima facie there is no 'reason to believe' that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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