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TMI Blog1994 (2) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... eopened by issue of notice under section 148 sometime in February 1992. In the said reasons the Assessing Officer mentioned that for assessment year 1987-88, the income from property falling to the assessee's share was Rs. 1,34,124 and since the returned income was almost the same, in the earlier years and the deduction on account of interest and other allowances was also almost the same, the income from property for assessment year 1985-86 had escaped assessment to the extent of Rs. 83,301 representing the difference between Rs. 1,35,000 and Rs. 51,690 (as originally assessed). 3. For assessment year 1986-87 also the original assessment had been made under section 143(1) of the Act on 30-6-1987 and for similar reasons proceedings under section 148 were initiated. 4. For assessment years 1988-89, 1989-90 and 1990-91 original assessments had been made under section 143(3) of the Act. Later on, the Assessing Officer learnt that the assessee had shown only 20% share in the rental income of property known as SCO Nos. 57, 58 and 59 in Sector 17-A, Chandigarh whereas, in fact, the assessee's share was 25%. He accordingly reopened the proceedings for these three assessment years by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat reassessment proceedings on the basis of a mere change of opinion were invalid. It was vehemently argued that no new information had come into possession of the Assessing Officer which would clothe him with the powers to reopen the assessments particularly for assessment years 1985-86 and 1986-87. 9. Another argument raised by the learned Counsel for the assessee only with reference to assessment year 1985-86 was that the originally assessed income for that year was Rs. 48,190 and the reassessed income was of the order of Rs. 72,120. The submission was that the difference between the originally assessed income and the finally assessed income was less than Rs. 25,000 and hence the Assessing Officer could not reopen proceedings for assessment year 1985-86 in view of the clear provisions of section 149(1)(b)(ii) of the Act. 10. The learned D.R. on the other hand, contended that the assessee had shown one composite figure of interest claimed as a deduction on the loans borrowed but it had not been specifically pointed out by the assessee that the figure included interest on interest as well. It was also submitted that for assessment years 1985-86 and 1986-87, original assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n obviously the Assessing Officer had accepted the income as returned without making any enquiry or investigation. There is, therefore, no question of change of opinion for those years. Moreover the assessee in the computation of income nowhere stated that the interest which was being claimed as a deduction from the property income, in fact, represented interest on interest and not simple interest. This was a material fact necessary for making the assessment which had not been disclosed by the assessee in the original proceedings for all the years. For assessment years 1988-89 to 1990-91, the assessee in the original assessments had shown only 20 per cent share from property in question whereas she, in fact, enjoyed 25 per cent share in the said property. So in these years, this further primary fact had also been suppressed by the assessee. The Assessing Officer came to know about the correct state of affairs while finalising the assessments for subsequent years. There was no change of opinion and the Assessing Officer was, therefore, justified in resorting to action under section 148. We hold accordingly. 13. As regards the additional argument for assessment year 1985-86, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purposes of any business, profession or vocation carried on by him the profits of which are assessable to tax, subject to the following allowances, namely :---- (i) ........................................................................................................ (ii)........................................................................................................ (iii) ........................................................................................................ (iv) where the property is subject to a mortgage or other capital charge, the amount of any interest on such mortgage or charge; where the property is subject to an annual charge not being a capital charge, the amount of such charge; where the property is subject to a ground rent, the amount of such ground rent; and where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital: " The relevant provisions under the Income-tax Act, 1961 are as under :----- "24.( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was a manufacturer and seller of sugar. It had to pay certain arrears of cess. As these were not paid within the prescribed period, the assessee had to pay interest on the cess. The Supreme Court held that interest was not penalty but was in the nature of compensation which was allowable as a deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922. 19. From these facts, it is clear that the issue before the Supreme Court was different and the matter before us in the instant proceedings is quite different and the facts of both the cases are distinguishable. 20. The learned Counsel for the assessee also relied on the Punjab and Haryana High Court decision in the case of Kalyan Rice General Mills v. ITO [1989] 180 ITR 41. This decision is not found relevant to the present controversy and it is not understood as to how the learned Counsel for the assessee placed reliance on this decision. 21. The learned Counsel for the assessee also placed reliance on the Punjab and Haryana High Court decision in the case of CIT v. Amritsar Sugar Mills Co. Ltd. [1988] 174 ITR 367. In that case, the Punjab and Haryana High Court followed the decision of the Supreme Court in Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged and not the additional interest which because of his failure to pay the interest on the due date had been considered as a part of the loan and in fact the real capital charge was that which was originally due. As regards the Andhra Pradesh High Court decision in CIT v. Rajah Dhanrajgiriji [1985] 154 ITR 719 on which reliance was placed by the learned Counsel for the assessee, the learned D. R. submitted that the facts in that case were different and in that case, the charge had been created either by the pressure of a court sale or under an obligation to create an equitable mortgage and hence the charge was not created by the assessee 'voluntarily'. 26. After carefully considering the rival submissions, we are of the opinion that the matter stands settled by the decision of the Supreme Court in the case of Shew Kissen Bhatter in which it has been held that "the real capital charge is that which was originally due". Interest on interest had to be paid by the assessee because of the default or the omission by the assessee to pay the instalment of the borrowed amount to the bank in time. This was a creation of the assessee herself. This action of the assessee was purely vol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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