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TMI Blog2022 (1) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... terest should be charged at 12% per annum on loan given to sister concern totaling to ₹ 4,17,04,380/- and therefore income chargeable to tax has been under assessed by the said amount. According to the JAO this interest income of ₹ 4,17,04,380/- has escaped assessment. We find it rather strange that such an opinion is formed by the JAO. It is an accepted position that petitioner has in fact not received any interest in respect of the loans/advances given to seven of its group companies in the assessment order 2017-18. When no income is received there is no question of paying any tax on income which respondent think should have been received but was in fact not received. Income which accrues to a person is taxable in his hands but we have not seen any provision of law which says that income which he could have earned but he has not earned is taxable as income accrued to him. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment.Even if the Assessing Officer, who passed the assessment order, may have raised too many legal inferences from the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has the power to reassess. The reassessment has to be based on the fulfillment of certain conditions. It is settled law that if the concept of change of opinion is removed, then in the guise of reopening the assessment, the review would take place. The concept of change of opinion has been built in the statute to check abuse of power by the Assessing Officer. The Assessing Officer has the power to reopen only when there is tangible material to come to the conclusion that there is escapement of income from the original assessment. The test of tangible material has been enunciated in a judgment of the Supreme Court in CIT v. Kelvinator of India Ltd. held thus (page 564): ... 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 can-not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the reply dated 14th November, 2019 at Item No.4, petitioner has provided party wise details alongwith address of the parties to whom loans and advances were given, interest received on such loans and the nature of the loans/advances. The list includes all the names given in paragraph no.3 of the reasons for re-opening. These have been considered in the assessment order because in the assessment order there is reference to five notices issued under Section 142(1) of the Act and it is also noted that the assessee has filed details through ITBA Module in response to the notices issued from time to time which are placed on record. 5. Mr. Suresh Kumar submits that these cannot be said to have been subject of consideration of the Assessing Officer because the assessment order does not contain reference and/or discussion. We will have to reject the submissions of Mr. Suresh Kumar since this court has time and again held that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not even necessary that an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced to M/s. C. R. Developers (P) Ltd. a sum of ₹ 15 lakhs purporting to be an advance for the purpose of construction of a hotel. The advance is in the nature of a loan and no interest is being charged on this account. The respondents contend that the assessee-company should have received an interest income worth approximately income worth approximately ₹ 3 lakhs if interest had been charged on this advance. Hence, this interest income of approximately ₹ 3 lakhs has escaped assessment. Once again the reason which is recorded is beyond the scope of section 147. It is an accepted position that the assessee-company has in fact not received any interest in respect of this advance from M/s. C. R. Developers (P) Ltd. in the assessment year 1988-89. When no income is received there is no question of paying any tax on income which the respondents think, should have been received but was in fact not received. In the case of CIT v. A. Raman and Co. [1968] 67 ITR 11, the Supreme Court said that the law does not oblige a trader to make the maximum profit that he can out of his trading transactions. Income which accrues to a trader is taxable in his hands. Income which he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to tax, we do not see as to how the impugned orders passed by the Commissioner of Income Tax can be sustained. 9. As held by the Apex Court in the case of Indian Eastern Newspaper Society, New Delhi vs. Commissioner of Income Tax, New Delhi 119 ITR 996 (SC), even if it is an error that the Assessing Officer discovered, still an error discovered on a re-consideration of the same material does not given him power to re-open. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Even if the Assessing Officer, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the Assessing Officer, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. 10. In the circumstances, petition is allowed. The impugned notice dated 30th March, 2021 issued und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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