TaxTMI 
TaxTMI 
2011 (10) TMI 460
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....9 of 2005 1998-99 M/s Varinder Agro Chemicals In ITA No. 53 of 2003, the following substantial question of law arises for consideration: 1. "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting the disallowance of Rs. 17,62,622/- made on account of interest on interest free advances given to the sister concerns for nonbusiness purposes?" 2. "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that this issue of disallowance of interest had already attained finality in the original assessment order and thus could not be reagitated in the reassessment proceedings." The identical question No 1 arises in all other cases as well. In ITA Nos. 53 of 2003, 246, 247 and 669 of 2005, the Commissioner of Income Tax (Appeals) has set aside the order passed by the Assessing Officer deleting the disallowance of the amount on account of interest on interest free advances given to the sister concerns for non-business purposes where as in ITA Nos 52 and 53 of 2004, it is the Tribunal who has deleted the disallowance of the....
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....issues on which assessment has been reopened. It is the said order which is the subject matter of challenge at the instance of revenue in the present appeal. Firstly, we will take up the question No 2 raised by the revenue for the decision of this Court in ITA No 53 of 2003. It has been vehemently argued by the assessee that there was no concealment on behalf of the assessee before the Assessing Officer passed an order under Section 143(3) of the Act. In such proceedings, the amount of interest to the extent of interest accrued on the loan advanced to M/s Ganpati International (P) Ltd alone was disallowed. The assessee has disclosed the name of all creditors and debtors, therefore, the Assessing Officer could not initiate the proceedings for reassessment merely on account of change of opinion. Reliance is placed upon a judgment of this Court reported as 180 ITR 144, CIT vs. Amritsar Swadeshi Woolen Mills. We do not find any merit in the said argument. Section 147 has been amended by the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1.4.1989 and also Explanation 3 inserted vide the Finance Act No. 2 of 2009 with retrospective effect from 1.4.1989. On the basis of the amended provi....
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....d. In another judgment reported as Commissioner of Income Tax vs. Kelvinator of India Ltd, 320 ITR 561, the Supreme Court draw distinction between change of opinion and power to reassess. It held 6. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in Section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between pow....
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.... order passed in Commissioner of Income Tax-I Ludhiana vs. M/s Abhishek Industries Limited Ludhiana (2006) 286 ITR 1(P&H). Therefore, once the question of law has been answered in favour of the revenue, for the same reasons the appeal should be accepted. To controvert the said argument, learned counsel for the assessee points out that the judgment in Abhishek Industries Limited (surpa) is the subject matter of appeal before the Hon'ble Supreme Court, wherein leave has been granted and Civil Appeal No. 244 of 2007 is pending consideration. Therefore, such judgment cannot be taken into consideration for deciding the said question of law against the assessee. Learned counsel for the assessee also relies upon another judgment of Hon'ble the Supreme Court in S.A.Builders Ltd vs. Commissioner of Income Tax (Appeals) and another (2007) 288 ITR 1SC wherein, it has been held that the transfer of borrowed funds to a sister concern is to be examined from the point of view of commercial expediency and not from the point of view whether the amount of advance was for earning profits. It is contended that the question whether the amount was advanced by the assessee as a commercial trans....