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TMI Blog2024 (7) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure for the assessment years 2007-08 and onwards, as held in CIT v. Essar Teleholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT ] An assessee has the obligation to provide full material disclosures at the time of filing of the return. The nexus between expenditure disallowed and earning of exempt income is required to be established. In the present cases, the petitioner had obtained loans and invested in his new Company and earned income and claimed the interest paid by him on the said loans obtained as expenditure. Such expenditure is not exempt under the provisions of Section 14A read with Rule 8D. If the assessments concluded are not in accordance with the law, it is not change of opinion, but it is a valid reason for reopening the assessments. The assessing officer has ignored the mandatory provision of Section 14A and Circular No.5/14 while completing the assessments, which got re-opened. We, do not find that the assessing officer has committed any error of law or jurisdiction, which requires this Court to interfere with the present writ petitions. Therefore, these writ petitions are hereby dismissed. If the re-assessment proceedings are already complete and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was required to deliver within 30 days from service of the notices, returns in the prescribed form in respect of the assessment years 2013-14 and 2014-15. Notices under Section 142(1) in respect of the aforesaid assessment years came to be issued on 24.1.2022, (Exts.P3 and P5, respectively) directing the petitioner to furnish documents mentioned in the notices on or before 3.2.2022. The petitioner filed objections, (Exts.P4 and P6, respectively) to the notices under Section 148 requesting to provide the reasons for re-opening of the assessments. 5. The assessing officer vide Exts.P5 and P7 communications dated 23.2.2022 addressed to the petitioner furnished the reasons for re-opening of the assessments. The reasons as intimated to the petitioner would disclose that the assessee had debited interest paid by him on loans availed from Banks as business expenditure. The petitioner had claimed deduction of interest paid to the Kotak Mahindra Bank on property loan at Rs.11,10,815/- for the assessment year 2013-14. For the assessment year 2014-15 also, he claimed total deduction of Rs.37,06,094/- towards the interest paid to Kotak Mahindra Bank. The said amount includes the interest pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that the petitioner had made true and full disclosure of the material facts and the assessing authority, after considering the provisions of law and books of accounts, held that Section 14A of the Act would not be applicable in the case of the petitioner. The reason disclosed for re-opening the assessment orders is nothing, but change of opinion regarding the applicability of Section 14A in the case of the petitioner. Therefore, the impugned assessment orders in Exts.P9 and P12 become bad in law and are liable to be set aside. 8. In support of the contentions, learned counsel for the petitioner has placed reliance on the Full Bench judgment of the Delhi High Court in the case of Commissioner of Income Tax v. Usha International Ltd. [(2012) 348 ITR 485 (Delhi) : 2012 SCC OnLine Del 5645] and the Supreme Court judgment in the case of Assistant Commissioner of Income Tax and Others v. Marico Limited [(2020) 16 SCC 354 : (2020) 190 DTR 0190 (SC)]. 9. On the other hand, Smt.Susie B.Varghese, learned Senior Standing Counsel for the Income Tax Department submits that before the original assessment proceedings got completed, CBDT had issued Circular No.5/2014 dated 11.2.2014 in exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t whether the reasons supplied by the assessing officer for re-opening the assessment of the petitioner are change of opinion?, and whether the assessment orders passed in pursuance to the returns filed in response to the notices issued under Section 148 of the Act can be challenged before this Court on the ground that the assessment orders are bad in law as the re-opening itself was not in accordance with the provisions of the Act?. 13. Under the provisions of Section 147 of the Act, a mere change of opinion, ipso facto, would not confer or empower the assessing officer to embark upon reassessment exercise. Notwithstanding that, the power to make assessment or reassessment within the four years of the end of the relevant assessment year, would be effected even in cases where there has been complete disclosure of all facts upon which the assessment might have been based at the first instance, but for, in case of mistake, as is provided under Section 147 of the Act. 14. The expression reason to believe in Section 147 of the Act would mean some cause or justification of the competent authority. If the competent authority has a ground or some justification that the income had escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income under the Act. 17. Rule 8D of the Income Tax Rules, 1962, prescribing the methodology for determining the amount of the expenditure in addition to income not includible in total income, was inserted with effect from 24.3.2008 to implement sub-Sections (2) and (3) of Section 14A. It is a clear indicator that a new method for computing the expenditure was brought in by the Rules, which was to be utilised for computing the expenditure for the assessment years 2007-08 and onwards, as held in CIT v. Essar Teleholdings Ltd. [(2018) 401 ITR 445 (SC)]. 18. An assessee has the obligation to provide full material disclosures at the time of filing of the return. The nexus between expenditure disallowed and earning of exempt income is required to be established. 19. In the present cases, the petitioner had obtained loans and invested in his new Company and earned income and claimed the interest paid by him on the said loans obtained as expenditure. Such expenditure is not exempt under the provisions of Section 14A read with Rule 8D. 20. If the assessments concluded are not in accordance with the law, it is not change of opinion, but it is a valid reason for reopening the assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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