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TMI Blog2017 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ILLAI, JUDICIAL MEMBER For The Assessee : Shri Ved Jain, Mrs. Rano Jain, Adv For The Revenue : Shri Atiq Ahmed, Sr. DR Shri Ashish Chadha, CA ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-XVIII, New Delhi dated 20.06.2014 for Assessment Year 2007-08. 2. The assessee has raised the following grounds of appeal:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the initiation of the proceedings under Section 147, read with Section 148 and the reassessment order passed in consequent thereto. 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the initiation of proceedings under section 147 was bad in the eye of law as neither the conditions have been satisfied nor the procedure prescribed under the statute have been complied with. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147 of the Act was passed wherein the AO made an addition of ₹ 4096000/- u/s 115JB of the Act and directed to levy tax @30% and not @10%. The first reason of the AO is that since the assessee has filed return of income declaring income of ₹ 4096000/- and hence, same should be chargeable to tax @30%. The Assessee preferred appeal before the ld CIT(A) who dismissed the appeal of the assessee holding that it is u/s 115JB but the above income should be taxed at normal @30%. Therefore, the assessee is in appeal before us. Before us the assessee has challenged the above addition on several counts and the ld AR has submitted his submission as under:- 1. This is an appeal filed by the assessee against the order dated 20.06.2014 passed by the Ld. CIT(A), whereby the Ld. CIT(A) has upheld the reopening of assessment and has dismissed the appeal of assessee on merits as well. 2. The assessee company filed its return of income on 29.03.2009, declaring an income of ₹ 40,96,000/- under the provisions of section 115JB of the Act (computation of income enclosed at PB 2). Thereafter, the case of assessee company was selected for scrutiny, and after examining the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ready reference:] The entire interest income is taxable under the head income from other sources‟ at normal rate applicable for the relevant assessment year. Hence, amount of ₹ 2,72,27,000/- requires to be added back to the total income of the assessee as interest income. In view of the above, I am satisfied having reason to believe that the income to the extent of ₹ 2,72,27,000/- has escaped assessment within the meaning of section 147. It is a fit case for issue of notice u/s 148 of the IT Act, 1961. 9. It is pertinent to mention here that the AO, however, has completed the reassessment proceedings vide order dated 06.03.2013, wherein he has accepted the returned income of the assessee of ₹ 40,96,000/-. The AO, while deciding the issue of taxability of entire interest income, has held as under: The above submissions of the assessee has been duly considered and in view of the various court decisions quoted by the assessee company the contention of the assessee company to deducted the interest income from the cost incurred during the construction of the plant as the same being capital in nature is accepted 10. A perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the subject matter of the reasons to believe for issuance of the notice under section 148 of the Act. 8. The issue urged by the Revenue stands covered in favour of the assessee by the decision of this court in Ranbaxy Laboratories Ltd. v. CIT [2011] 336 ITR 136 (Delhi) which has been followed in CIT v. Software Consultants [2012] 341 ITR 240 (Delhi). In sum, if no addition is made on the basis of the reasons to believe recorded by the Assessing Officer for reopening the assessment under section 148 of the Act, resort cannot be had to Explanation 3 to section 147 of the Act to make an addition on any other issue not included in the reasons to believe for reopening the assessment. No substantial question of law arises. The appeal is dismissed. 12. Further reliance in this regard is placed on the following judgments: Delhi High Court in the case of CIT v. Software Consultants [2012] 341 ITR 240 As the AO did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation Form attached along with the assessment order passed u/s 143(3), the AO has accepted the fact that the income of ₹ 40,96,000/- is to be assessed u/s 115JB of the Act. 16. Thereafter, in the intimation received by the assessee u/s 143(1) of the Act, again the AO has computed the tax at the rate of 10% only, as per the provisions of section 115JB of the Act. It is important to mention here that after receiving the intimation u/s 143(1) of the Act, the assessee company filed various letters / reminder letters on 16.06.2009, 05.10.2009, 15.06.2010 and 02.08.2010, addressed to the AO, for rectification of the intimation / order passed by the AO, as the AO had not given the assessee the credit of full amount of TDS deducted of ₹ 76,05,482/-. In reply to the various letters filed by the assessee, the AO passed a rectification order on 26.03.2011, wherein the credit of the whole amount of TDS was given to the assessee. In the said rectification order as well, the tax was computed by the AO at the rate of 10% only, as per the provisions of MAT. 17. Therefore, a perusal of the above facts clearly show that the AO had applied his mind, not only one, but many ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession reason to believe' in Section 147.-A number of representations were received against the omission of the words reason to believe' from Section 147 and their substitution by the opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression has reason to believe' in place of the words for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same. For the afore-stated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs. 18. Further reliance in this regard is placed on the recent judgment of Hon‟ble Jurisdictional High Court in the case of Technico Agri Sciences Ltd. v. ACIT in Writ Petition No. 11658/2016 dated 07.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement, he appears to have been satisfied with the above detailed reply of the Assessee explaining the nature of the agreement. Merely because the AO did not ask for the copy of the agreement to be produced cannot lead to the inference that he had no occasion to form an opinion thereon. Such a conclusion drawn by the IT AT is belied by the above specific query raised by the AO on the agreement and the detailed explanation offered by the Assessee in response thereto. This Court is satisfied that there was occasion for the AO in the original assessment proceedings, to form an opinion on the question of the nature of the agreement between the Assessee and the MM. The AO did form an opinion thereon and after raising a specific query and examining the reply thereto of the Assessee. The original assessment was completed after accepting the explanation offered by the Assessee. The reasons to believe did not refer to any fresh tangible material that came to the notice of the AO after the passing of the original assessment order. It may be recalled that the assessment proceeding under Section 143 (3) of the Act was completed after scrutinizing the documents produced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute a reason for re-opening the assessment. Reopening quashed - Decided in favour of assessee 20. Therefore, in view of the facts of assessee‟s case as well as the above judicial pronouncements, it is clearly evident that the case of the assessee company has been reopened by the AO merely on the basis of change of opinion, and thus, the said action of the AO is bad in law and the order passed by the AO and sustained by the Ld. CIT(A) should be quashed as such. 4. The ld DR relied upon the orders of the lower authorities. 5. We have carefully perused the reasons of the reopening wherein it is stated that reopening has been made on perusal of the schedule P under the head other income. The original assessment u/s 143(3) of the Act was completed on 15.10.2009 at an income of ₹ 4096000/- in the original return of income. The assessee has shown the total income of ₹ 31323000/- and out of which ₹ 27227000/- as transfer of IEDC and ₹ 4096000/- was offer for taxes @ 10%. The claim of the Revenue is that the assessee should have offered the entire sum of ₹ 2727272000/- as total income of the assessee as interest income. However, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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