TaxTMI 
TaxTMI 
2010 (1) TMI 730
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....ng for the appellant and Sri. P. Balakrishnan, counsel appearing for the respondent-assessee. 2. The respondent-assessee's returns filed for the assessment year 2001-02 was first processed under Section 143(1)(a) and thereafter a regular assessment was completed under Section 143(3) of the Act. However, the assessing officer on further scrutiny of the accounts noticed that the assessee from out of borrowed funds invested Rs. 84,12,500/- in various sister concerns as interest free loans. The total deduction towards interest paid was Rs. 308.36 lakhs and the entire claim was allowed as a deduction under Section 36(1)(iii) of the Act. The assessing officer noticed that in view of the diversion of interest bearing loan to sister conce....
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....nder section 143(3) which assessment is an order in few lines without any discussion and so much so the assessee's claim for deduction wherein the alleged excess relief under Section 36(1)(iii) is stated to be allowed, is not discussed or considered by the assessing officer. On the other hand, deduction was allowed in terms of the claim made in the return and so much so we have to hold that change of opinion which is found to be the basis for cancelling the re-assessment does not apply because the matter was not considered in details in the regular assessment and no opinion was expressed by the assessing officer. The question therefore to be considered is whether, when assessment is completed under Section 143(3), there is a presumption tha....
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....se to a notice issued under sub- section (1) of Section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Explanation 1:- Production before the Assessing Officer of account books or other evidece from which material evidence could with due diligence have been discovered by the assessing officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2:- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment; namely:- (a) where no return of income has been furnished by the assessee although his total income or the tot....
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....e Court has held that if ingredients of Section 147 are fulfilled, then the assessing officer is free to initiate proceedings under Section 147. We have to therefore examine whether the Section applies to the facts of this case. 5. Here again, we have to clarify that the Tribunal has wrongly assumed that reassessment was completed beyond four years from the end of the relevant assessment year and there is no failure on the part of the assessee to make full and true disclosure of material facts necessary for assessment as referred to in the first proviso to the Section. Standing counsel pointed out that reassessment proceedings under Section 147 was initiated within the four year period from the end of the relevant assessment year ....
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....i) then certainly it is a case of income escaping squarely covered by Explanation 2 to Section 147 of the Act. Even though counsel for the assessee submitted that when the claim was allowed in the original assessment any proposal for subsequent disallowance of relief granted originally in the assessment either fully or partially should be taken as on account of change of opinion, we are unable to accept the same because in the first place the assessing officer has not discussed the matter in the regular assessment but allowed deduction in terms of the claim made in the returns. There is no embargo in Section 147 against the assessing officer reexamining the assessment file and reappreciating the evidence, and accounts in support of the clai....