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TMI Blog2016 (7) TMI 1592X X X X Extracts X X X X X X X X Extracts X X X X ..... leted under Section 143(3). This is not a case of normal assessment, which has gone on in a routine manner, without any suspicion in the eyes of the AO. This is a case where a scrutiny assessment was made, after which, a search and seizure operation was conducted and, thereafter, the assessment was again completed under Section 143(3) r/w Section 153A. In a third round of attack AO claimed that as per the annual report of the Directors for the previous year 2003-2004, an amount was identified to the assets acquired, from out of the total interest paid to another Company. The Directors report forms part and parcel of the records available for scrutiny. The Department could have taken refuge under Explanation-I, if there had been a processing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of which, proceedings were initiated under Section 153A. The assessment was completed under Section 143(3) r/w Section 153A. After completion of the assessment, the Assessing Officer reopened the assessment under Section 147 by issuing a notice under Section 148, on 31.03.2011. 5. The reason for reopening of the assessment was that while initiating proceedings under Section 147, an amount of ₹ 4,73,75,000/- was identified to the assets acquired, which had been capatilized. Therefore, after the total payment of interest to the tune of ₹ 6,99,76,000/-, a balance of ₹ 2,26,01,000/- had been charged to P & L account as an extraordinary item. 6. After reopening, the Assessing Officer passed an order on 26.12.2011. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capitalized against the assets, without appreciating that the assessee wrongly calculated the interest payable on the share application money refunded and that the interest incurred, related to assets acquired, was capitalized and therefore, cannot be allowed as revenue expenditure? 9. Though the third question of law revolves around the issue of revenue expenditure, the same is actually on the merits of the case. It is only if we answer the questions of law 1 and 2 revolving around the validity of reopening of the assessment in favour of the Department, the 3rd question of law would arise for consideration. Therefore, let us first take up the first two questions of law for consideration. 10. Admittedly, the case on hand is one, where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. If we look at the case on hand, it is seen that the original assessment was completed under Section 143(1), after the assessee filed a return of income on 29.10.2014. Thereafter, there was a search and seizure operation under Section 132, leading to the proceedings being initiated under Section 153A. Thereafter, the assessment was again completed under Section 143(3). 14. Therefore, this is not a case of normal assessment, which has gone on in a routine manner, without any suspicion in the eyes of the Assessing Officer. This is a case where a scrutiny assessment was made, after which, a search and seizure operation was conducted and, thereafter, the assessment was again completed under Section 143(3) r/w Section 153A. 15. In a third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the details placed before him cannot confer a justification for reopening the assessment, long after the period of four years had expired. On the facts of this case, it is clear that the escapement of income if any on this account is not on account of any failure on the assessee's part to disclose the material facts fully and truly. The notice issued by the AO in exercise of his power under Section 147, therefore, cannot be sustained. 17. In Assistant Commissioner of Income Tax Vs. ICICI Securities Primary Dealership Limited , the Supreme Court pointed out that when all details with respect to the stocks and shares and the income derived therefrom are disclosed in the return, a dispute as to whether the loss incurred was a business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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