TaxTMI 
TaxTMI 
1993 (8) TMI 141
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....119 ITR 996. Even on merits the interest payment was claimed to be admissible as a deduction. 2. The assessee is a limited company and the assessment year involved is 1981-82 for which the accounting year ended on 31-3-1981. In the course of the original assessment proceedings, the assessee furnished details including particulars of interest paid and interest received. One of the items of interest payment related to the remittance to the Government on completion of assessment which amounted to Rs. 81,653. This claim was allowed as a deduction in the original assessment order dated 31-8-1984 made under section 143(3). 3. The assessment was reopened on the basis of the reasons recorded in the file which reads as under : " There is information on record that disallowances of interest paid to Income-tax Department and disallowance under section 40A(8) were not made in the assessment for this year. Therefore, I have reason to believe that income assessable has escaped taxation for this year, viz., within the meaning of section 147(b). Issue Notice under section 148. Sd. 20-3-1986 " In the reassessment made under section 143(3) read with section 147(b) the interest unde....
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....der section 148 was issued on 21-3-1986. The reassessment was completed on 10-10-1986. 6. The CIT (A) extracted the relevant portion of the judgment of their Lordships of the Supreme Court in the case of Indian & Eastern Newspaper Society pertaining to "information" appearing at page 1001 of report and the powers of the internal and revenue receipt audit appearing at page 1003 and concluded that the Audit has not instructed the Assessing Officer about the state of the law or given an opinion as to what the law is in regard to this issue. According to him, the Audit has merely provided instruction or knowledge concerning the fact that the assessee had paid interest under sections 139(8) and 215 (sic), which is verifiable from the past records and that these payments have not been added back in the computation of income. In other words, he held that the Audit had merely drawn the attention of the Assessing Officer to these facts and brought to his notice the fact that income had been underassessed as a consequence. Therefore, he was of the opinion that the ratio of the decision of the Supreme Court in the case of Indian & Eastern Newspaper Society could not be applied. Further, th....
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....s communicated inference of law which was not warranted in the light of the judgment of the Supreme Court in Indian & Eastern Newspaper Society's case. 10. We have duly considered the rival submissions and the orders of the authorities. At the outset it has to be stated that both the parties have not filed any documents or statements beyond what is contained in the assessment order and in the appellate order as well as in the grounds of appeal, etc., which constitute the record. Therefore, we proceed to decide the issue involved in this appeal with reference to the record and the arguments advanced. There is no controversy and there could also be no controversy regarding the fact that the assessee has furnished details of interest payments. During the course of argument, it was stated by the learned counsel for the assessee that there was a draft assessment order proposed by the Assessing Officer followed by the directions of the IAC before regular assessment was made for the assessment year 1981-82. Therefore, the contention of the assessee was that the particulars of payment of interest were subjected to scrutiny by the authorities while making the original assessment. Therefo....
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.... Assessing Officer for issuing notice under section 148 show that there was information on record to indicate that disallowance of interest paid to the Income-tax Department was not made. We have indicated earlier that though the Assessing Officer proposed to disallow interest under section 40A(8), in the reasons recorded, he has not disallowed same in the reassessment. Therefore it was mere pretence only. The reasons recorded by the Assessing Officer contained in para 1 of the CIT (A)'s order clearly show that there is information on record that disallowances of interest paid to the Income-tax Department were not made. Therefore, the contentions of the revenue and the reasons given by the CIT (A) that information furnished by the assessee did not specify the exact category of payment, have no force at all. On the contrary, the reasons recorded reflected the objections raised by the Special Audit Party or such objection is echoed in the reasons recorded by the Assessing Officer. 12. It is relevant to refer to the judgment of the Supreme Court in the case of A.L.A. Firm v. CIT [1991] 189 ITR 285 wherein a catena of case laws on this issue has been discussed. A relevant portion of....