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TMI Blog2023 (1) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of unsecured loans during the year assessee filed detailed reply and the same were reproduced hereinabove. Having applied his mind, the AO came to a conclusion that the same does not addition thereby proceeded to frame the original assessment by disallowing the claim made under section 80IA of the Act alone. Thus, the interest disallowance proposed in the reasons for reopening of assessment is nothing but change of opinion. Thus we are of the considered opinion that the Assessing Officer reopened the assessment, which is mere change of opinion, which is not permissible as per the law laid down in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein, it was held that an assessment cannot be reopened on a mere change of opinion; reason to believe that the income chargeable to tax has escaped assessment is one of the conditions precedent for invoking the jurisdiction of the Assessing Officer to reopen the assessment under section 147 - Assessing Officer had power to re-assess but no power to review. If the concept of change of opinion is removed, review would take place in the garb of reopening of assessment. In the instant case, since no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate interest burden on the deposit made with M/s. Prince Foundations Ltd. On appeal, the ld. CIT(A) (NAFC) confirmed the assessment order passed under section 143(3) r.w.s. 147 of the Act and dismissed the appeal of the assessee. 4. On being aggrieved, the assessee is in appeal before the Tribunal and challenged the reopening of assessment under section 147 of the Act. The ld. Counsel for the assessee has submitted that there was no fresh tangible material brought on record to show any escapement of income. It was further submission that during the course of original assessment proceedings, against the notice dated 08.12.2016 calling for furnishing agreement copies relating to maintaining and operating of Industrial Park at S.No. 3 as well as to explain why large increase of unsecured loans during the year, vide letter dated 16.12.2016, the assessee has furnished detailed explanation, which was duly accepted by the Assessing Officer. Again for the same reasons, the assessment was reopened under section 147 of the Act is a mere change of opinion, which is not permissible in law as laid down by the Hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. 320 ITR 561 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cus of the Assessing Officer was only on verification of genuineness of the loans taken during the year. At no given point of time did the Assessing Officer even attempt to verify or seek through a specific question on how the loans taken was applied and whether such application of borrowed money was for business compulsion/need. These are two different facets and under no stretch of imagination can be considered as a single issue. Just because the assessee in its reply had, sue-motu made a casual mention that the assessee was required to maintain a deposit ofRs.5 crores with Prince Foundations, that too in a vague manner, without reference to whether it was interest bearing deposit or not, cannot be concluded that the assessee had made full and true disclosure of all facts before the assessing officer during the course of original assessment. Hence, it is not a change in opinion on an issue that was originally under scrutiny. One can consider change in opinion if the reopening was by recording that some of the unsecured loan proof submitted where found nongenuine on account of inadequate or false submission. This is not the case here. The reopening was carried out on totally a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll material facts with supporting documents that the assessee relied upon while preparation of the return of income when a notice is served u/s 143(2) of the Act. Service of notice u/s 143(2) is not a ritual requirement just to inform the date of hearing or inform of selection of case for scrutiny. It is at this stage a taxpayer given an opportunity to submit voluntarily all material facts in support of it claims made in the return. In this case, the assessee did not voluntarily submit even a shred of material in response to the notice served u/s 143(2) dated 25/09/2015. It submitted very limited material even in response to the first notice u/s 142(1) dated 14/06/2016. Even under subsequent hearings, while casually replying to the Assessing Officer that it had deposited the amount of Rs.5 crore as advance, while replying to the queries raised on unsecured loan, it did not substantiate its statement by submitting the document evidence. From this action of the assessee it is clear that it was on the knowledge that giving of advance of Rs.5 Crore was not the subject matter of scrutiny by the assessing Officer. Hence, now taking the plea that the issue was scrutinized in the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant explained in detail on the security deposit of 5 Crore. The AO having applied his mind and came to a conclusion that the same doesn't warrant addition thereby proceeded to frame the original assessment order disallowing claim u/s.80IA alone. 2.3. Even in the reassessment order, what the AO questions about is the business expediency for such security deposit. Even after seeing the agreement, the AO didn't say that the agreement in anyway supports the disallowance. In this regard, the Ld. DR at Para 3 of his written submissions states as under: ... At no given point of time did the Assessing officer even attempt to verify or seek through a specific question on how the loans taken was applied and whether such application of borrowed money was for business compulsion/need . The above statement springs out from an incorrect appreciation of facts. The contention of the Ld. DR is that this specific aspect of application of money for business compulsion wasn't gone into during the original assessment for the sole reason that the agreement wasn't produced. It is pertinent to note that the AO during the course of original assessment proceedings u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 21.12.2016. During the course of assessment proceedings, vide notice under section 142(1) of the Act dated 14.06.2016, the Assessing Officer has called for the following details to be furnished: To be furnished: 1. Natures of business with residential address, business address and telephone number. 2. Copy of return of income, Computation of total income, P L a/c, Balance Sheet, tax audit report if any, for A.Y. 2014-15 A.Y. 2013- 14. 3. Copies of Service Tax return for the A.Y. 2014-15(from 01.04.2013 to 31.03.2014). 4 Explain why large deduction claimed under Capital VI-A, explain why large increase of unsecured loans during the year and explain why large increase in Sundry Creditors against reduction in business income as compared to preceding year. 5. Copy of bank statement for the A.Y. 2014-15 (from 01.04.2013 to 1.03.2014). 6. Details of immovable properties owned or acquired by you. 7. Debtors Address. 8. Books of Accounts and Documents. 8. In response to the notice under section 142(1) of the Act, vide letter dated 12.07.2016, besides furnishing the details of nature of business, address of the partners, etc., the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble judgement at a letter date. 2. Nature of Business Prince Property Management Services is a Partnership firm carrying on business of operation and Maintenance of Industrial Software Technology Parks. a. The company was appointed to operate and maintain Software Technology Parks developed by Prince Foundations Ltd. The main activity under this business are as detailed below: i. Operating and maintaining STP plant involving operation of Sewage Treatment Plant, Removal of Garbage and waste etc., ii. Operating and Maintaining Power Generators and supply of uninterrupted Power to all the occupants of the Software Technology Parks. iii. Power management as per TANGEDCO rules and regulations of power cuts, Restriction of usage as per Peak Hour/Normal Hours of usage, etc. iv. Raising of invoices of EB Consumption based on sub-meters and sharing of common area EB Consumption. v. Provision of Centralised Security System for the entire Software Technology Park. vi. Operating and Maintaining Lifts in the Software Technology Parks. vii. Housekeeping and maintenance of common area and Toilets of the Software Technology Park. viii. Maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance sheet, it is noticed that the assessee has made deposit of Rs.4,80,60,915/- in M/s. Prince Foundation Limited and no interest on the same has been received by the assessee. From the details filed, it is seen that the assessee has submitted that a deposit of Rs.5 crores has been made by the assessee with M/s. Prince Foundations Limited for provision of Administrative services to the occupants of the software technology park. Copy of agreement between assessee and M/s. Prince foundation limited has not been filed by the assessee indicating the statutory obligation on the part of the assessee to place a deposit of Rs.5 crores. Also, it is noticed that for the A.Y.2013-14, the assessee has been in the same business of wind energy and power management. But no such deposit has been made by the assessee during the previous year relevant to assessment year 2013-14. Thus it is clear that there was no business exigency for the assessee to maintain a deposit of Rs.5 crores with M/s. Prince foundations ltd. Hence the proportionate interest claimed on Rs.4,80,69,915/out of borrowed funds to the extent of Rs.64,01,313/- should be disallowed u/s.36(i)(iii) as funds have been diverte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, its utilization, viz., the business exigency and for the sake of brevity, the submissions of the assessee were reproduced hereinabove. 12. Further, the Department has claimed that the previous year data would be a tangible material to reopen the assessment. Vide notice under section 142(1) of the Act dated 14.06.2016, the Assessing Officer has called for copy of return of income, computation of total income, P L a/c, balance sheet, tax audit report, if any for the assessment years 2013- 14 and 2014-15, which were duly furnished by the assessee vide his letter dated 12.07.2016 with detailed explanations. After examining all these details, the Assessing Officer has completed the assessment under section 143(3) of the Act. Now again, with the same material, the assessment cannot be reopened which tantamount to review of earlier order. 13. Under the above facts and circumstances of the case, we are of the considered opinion that the Assessing Officer reopened the assessment, which is mere change of opinion, which is not permissible as per the law laid down by the Hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. (supra), wherein, it was held that an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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