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TMI Blog2022 (12) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... ns no business income/activity, the expenditure is not allowed to be set of against income computed under other heads. We are of the considered opinion that the original assessment under section 143(3) of the Act was concluded after noticing all the relevant facts which forms basis for issuance of the notice under section 148 of the Act, and, therefore, the opinion formed by the learned Assessing Officer on subsequent perusal of the record is nothing but change of opinion and in view of the decisions of the Hon ble Apex Court in the cases of Kelvinator of India Ltd ( 2010 (1) TMI 11 - SUPREME COURT] and Techspan India ( 2018 (4) TMI 1376 - SUPREME COURT] such a course is impermissible. - Decided against revenue. - ITA No. 22/Hyd/2020, C.O. No. 14/Hyd/2022 (Arising out of ITA Nos. 22/Hyd/2020) - - - Dated:- 28-12-2022 - Shri Inturi Rama Rao, Accountant Member And Shri K.Narasimha Chary, Judicial Member For the Assessee : Shri A.V.Raghuram, AR For the Revenue : Shri Rajendra Kumar, CIT-DR ORDER PER K. NARASIMHA CHARY, JM: Challenging the order dated 9/10/2019 passed by the learned Commissioner of Income Tax (Appeals)-4, Hyderabad ( Ld. CIT(A) ), in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the learned Assessing Officer an amount of Rs. 8,17,02,757/- escaped assessment. Learned Assessing Officer, therefore, reopen the proceedings under section 147 of the Income Tax Act, 1961 (for short the Act ). By order dated 28/12/2018 learned Assessing Officer made an addition of Rs. 8,17,02,507/- to the income of the assessee as the proportionate interest attributable to the interest free advances made by the assessee to its related parties. 6. Assessee preferred appeal before the learned CIT(A) and contended that the original assessment was complete under section 143(3) of the Act and, therefore, the assessment can be done only where there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. 7. Learned CIT(A) agreed with the assessee and reached a factual conclusion that the learned Assessing Officer without bringing any new material on record to show that there was an escapement of income justifying the reopening of the assessment under section 147 of the Act, reopen the concluded assessment and since it amounts to change of opinion, the same is impermissible under law. Learned CIT(A), therefore, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res and paid interest thereon at Rs. 19.66 crores. It is observed that the assessee has advanced interest free advances to related parties to the tune of Rs. 104.77 crores. It had deducted entire interest pertaining to borrowings against the house property income which is admissible to the extent of borrowings used for the purpose of house property. The excess claim of interest relating to interest free advances to related party works out to Rs. 8,17,02,507/-. 11. The above reasons recorded by the learned Assessing Officer, proposing to reopen the concluded assessment clearly show that such proposed re-opening is not based on any tangible material that was brought on record. It is only on reading the material available on record at the time of the original assessment proceedings. For that matter, our attention is invited to page No. 21 of the paper book containing the copy of the notice dated 14/07/2015 where under vide Sr. No. 5, the learned Assessing Officer directed the assessee to furnish the information relating to the loans and advances where no interest was charged or chargeable and also the purpose of such loan and advance and to the reply of the assessee to be found a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989 , Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987 , Parliament not only deleted the words reason to believe but also inserted the word opinion in section 147 of the Act. However, on receipt of representations from the Companies against omission of the words reason to believe , Parliament re-introduced the said expression and deleted the word opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 9. Section 147 of the IT Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review. 10. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The word change of opinion implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 11. It is well settled and held by this court in a catena of judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer made a basis to reopen the concluded assessment were available with the learned Assessing Officer at the time of original assessment itself. From the record is also evident that the learned Assessing Officer noticed from the P L Account and Balance Sheet that during the year the assessee incurred interest expenditure on long-term borrowings and the amount of interest free advances to related parties, by specifically asking the assessee to furnish the information relating to the loans and advances where no interest was charged/chargeable. It is only after the assessee furnished the information, the assessment was complete after scrutiny considering the income only under house property and other sources , and loss from business was not allowed observing that as there remains no business income/activity, the expenditure is not allowed to be set of against income computed under other heads. 16. In these circumstances, we are of the considered opinion that the original assessment under section 143(3) of the Act was concluded after noticing all the relevant facts which forms basis for issuance of the notice under section 148 of the Act, and, therefore, the opinion formed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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