9911796707
TMI Blog2017 (3) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... y the company and interest charged thereon and which was allowed by the Assessing Officer in Assessment Order u/s. 143(3) dated 20/02/2006 by mentioning that "the assessee furnished the details called for. The case was discussed with him." 2. The CIT(Appeals) ought to have followed the decision of Income-Tax Appellate Tribunal, Ahmedabad Bench "B" In ITA No. 2195/Ahd/2009 for Asst. Year 2001-02 in appellant's own case. 3. With prejudice to the above, the CIT(Appeals) erred in disallowing interest of Rs. 52,22,886/-ignoring the reply to notice u/s.148 dated 30/04/2010." 3. From going through the above grounds, we find that assessee has raised two issues; firstly, challenging the reassessment proceedings u/s 147 of the Act and secondly, relating to addition on merits for disallowance of interest of Rs. 55,22,886/-. 4. We will first take up Ground No.1, challenging the reassessment proceedings. 5. Briefly stated facts relating to this ground are that the assessee being a limited company filed its return of income on 30.11.2003 declaring total loss of Rs. 1,37,56,622/-. The case was selected for scrutiny assessment and the necessary details, as called for, were duly furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest paid including rate of interest. Assessee replied to the notice u/s 142(1) of the Act dated 02.09.2005 vide letter dated 03.10.2005 placed at page 6-9 of the paper-book and in para 8 of this letter, reply was furnished along with Annexures F & G showing loans and advances given above Rs. 1 lakh and details of interest charged. It was also submitted that all these details were duly examined by ld. Assessing Officer and full application of mind was made on the alleged issue. Ld. AR, referring to the decision of Co-ordinate Bench in assessee's own case for AY 2001-02, added that similar issue was adjudicated and reopening of the assessment was held to be bad in law. 8. On the other hand, ld. Departmental Representative supported the orders of the lower authorities. 9. We have heard the rival contentions and perused the record placed before us. Through this ground, assessee has challenged the reassessment proceedings taken up by Revenue on the basis of information of the ld. Assessing Officer that the assessment proceedings under Section 143(3) of the Act were completed without examining the details of diversion of interest bearing funds towards interest free loans and advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year; [Provided further that the AO may assess or reassess such income other than the income involving matters which are the subject matters of any appeal, reference or revision which is chargeable to tax and has escaped assessment]. The requirements of the section are as under :- (1) The AO has reason to believe; (2) That an income chargeable to tax has escaped assessment; (3) If four years have expired from the end of the relevant Asst. Year then such escapement was due to failure on the part of the assessee - (i) to file a return u/s 139; (ii) to file a return in response to notice u/s 142(1) or section 148; (iii) to disclose fully and truly all material facts necessary for the assessment. All these aspects must come in the reasonings recorded by the AO. The reasons recorded by the AO should reflect - (i) assessee in respect of whom assessment is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book and also computation of income filed along with return, a copy of which is placed at pages 33 to 35 of the paper book. This finding of the Tribunal has not been disputed by raising any question and during the course of the argument by the learned counsel for the appellant. Therefore, we are of the view that on the facts and circumstances, no substantial question of law arises for consideration by this court. Learned counsel for the appellant cited a decision of the Bombay High Court in the ease of Dr. Amin's Pathology Laboratory v. P. M. Prosad, Joint CIT [2001] 252 ITR 673 ; [2002] 172 CTR 696. We have gone through the decision of the Bombay High Court. We are of the view that the said decision is not applicable to the facts of the present case. In the said case, the Bombay High Court has held that the assessing authority has overlooked the disputed item which he has noticed subsequently and at the time of passing the original order of assessment, he could not be said to have opined on the above item. Therefore, there was no change of opinion. While in the present case, complete details were furnished along with the return and during the course of the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is sought to be reopened after expiry of four years reasons for belief must show live link between the material and belief. There should be a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of the belief that there is an escapement of income of the assessee for that particular year because of his failure to disclose fully and truly all material facts. Even though Court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be initiated for reopening of the assessment, but at the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. Hon. Supreme Court in the case of CIT vs. Kelvinator India Ltd. (2010) 320 ITR 561(SC), while dismissing the legislation of section 147, held that expression "reasons to believe" n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure nor the AO has brought any material on record to suggest escapement of income then it is only a change of opinion and therefore assessment cannot be reopened after expiry of four years. Under these circumstances, we allow the ground Nos.1 & 2 of the assessee and accordingly quash the assessment. Other grounds became infructuous and hence not separately discussed. As a result, the appeal filed by the assessee is allowed." 12. Now, in order to adjudicate the facts in the light of decision of Coordinate Bench referred above, we find that on 02.09.2005 notice under Section 142(1) was issued calling as many as 25 information from the assessee and in this notice, at question no. 8, following information was called for by the ld. Assessing Officer, which reads as under:- "8. With reference to loans and advances above Rs. 1 lac given by the company, give details regarding the name and address of the parties to whom the same has been advanced. Give party-wise details of interest received and interest paid including rate of interest. In case, interest has not been charged or charged at lower rate by you on certain loans and advances explain why corresponding interest on borrowed funds ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
