AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 242
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Indian lenders of DPC under the aegis of the Empowered Group of Ministers constituted by the Government of India. GPICL is registered with Reserve Bank of India as Non Banking Finance Company. It is treated as a Government Company in terms of Sec. 619B of the Companies Act, 1956. GPICL filed return of income on 7.11.2006 declaring loss of Rs. 30,93,56/-. The assessment was completed on 29.12.2008 u/s. 143(3) of the Act accepting the loss returned by the assessee. Subsequently, notice u/s. 148 was issued on 24.10.2011 and the reassessment was completed on 8.12.2011 u/s. 143(3) r.w. Sec. 147 of the Act. While completing the reassessment, the Assessing Officer disallowed expenses of Rs. 13,07,890/- treating it as capital expenditure, disallowance u/s. 43B(e) in respect of interest to financial institutions and disallowance u/s. 40A(ia) for non deduction of TDS. 3.1. The assessee contended before the AO that the reopening is bad in law and the additions and disallowances made in the reassessment order are not justified. However, rejecting the contention of the assessee, the AO framed the assessment u/s. 147 of the Act making the above said disallowances. 4. The assessee filed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r placing reliance on the decision of Hon'ble Supreme Court in the case of India Cements Ltd Vs CIT (60 ITR 52) submits that amount spent towards stamp duty, registration fees etc., in obtaining loan is not capital expenditure but it was only business expenses laid out wholly and exclusively for the purpose of business. Therefore, he submits that there is no question of reopening the assessment. 5.2. Placing reliance on the decision of the Punjab & Haryana High Court in the case of CIT Vs Sukhjit Starch & Chemicals Ltd. (326 ITR 29) the Ld. Counsel submits that expenditure on issue of debentures is deductible. Placing reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs Prima Paper and Engineering Industry (364 ITR 222) he submits that this is a case of reopening of assessment within a period of four years where in the course of assessment proceedings, the issue of deduction u/s. 80-IA was raised by the AO to which the assessee has responded by filing its submissions and which was accepted originally. It was held by the Hon'ble Bombay High Court that reopening of assessment on premise that deduction was wrongly allowed and that issue not disc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on record for coming to the conclusion that there is an escapement of income. It is also pertinent to note that in the course of original assessment proceedings, the assessee was required to furnish details in respect of franking charges and stamp duty by letter dated 6.11.2008 and the assessee furnished details by letter dated 21.11.2008. The explanation was accepted by the AO in the original assessment proceedings. Now the reopening was made solely on the basis of materials already available on record at the time of original assessment. Even for the other additions which were made in the reassessment order, there is no tangible material which has come on record subsequent to completion of assessment or at the time of recording reasons for reopening. 7.2. On a reading of the reassessment order, it is clear that the disallowances were made based on the materials already available on record at the time of completion of assessment. More or less an identical issue come up in Mumbai Tribunal in the case of Motilal R. Todi (supra), the Co-ordinate Bench after considering various case laws held that if there are no tangible materials available on record then there would be no reason to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the courts on this issue that in absence of fresh material indicating escaped income, the AO cannot assume jurisdiction to reopen already concluded assessment. Recently, Hon'ble Delhi High Court in the case of Pr. CIT vs Tupperware India Pvt. Ltd., in its order dt 10-8-15 (ITA no 415/2015) got an occasion to analyse latest position of law on this issue. After discussing many judgments on this issue, it was held that even in the case of original assessment order having been passed u/s 143(1), it is mandatory for the AO to have in its possession, fresh tangible material before reopening of the case. In the case of Bombay Stock Exchange Ltd. (writ petition no.2468 dt. 12.06.2014) (89 CCH 118), Hon'ble Bombay High Court observed as under: "It is pertinent to note that Respondent No.1 has not set out in the reasons which fact or other material was not disclosed by the Petitioner that led to income escaping assessment. In fact, on going through the reasons, we find that Respondent No.1 has come to the conclusion/belief that income had escaped assessment on the basis of the material already before him and no new tangible material has been relied upon by Respondent No.1 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt case note forming part of return clearly mentioned and described nature of the receipt under a non-compete agreement-Reasons for issuance of notice u/s 147 nowhere mentioned that revenue came up with any other fresh material warranting reopening of assessment-Mere conclusion of proceedings u/s 143(1) ipso facto does not bring invocation of powers for reopening assessment-Reopening of assessment was unjustified-Revenue's appeal dismissed." Further reliance can be placed on the detailed judgment in the case of Madhukar Khosla vs. ACIT 367 ITR 165 (Delhi), wherein it has been held that the reopening is not permitted under the law unless it is based on fresh tangible material and that if The "reasons to believe" are not based on new, "tangible materials", the reopening amounts to an impermissible review. It has been further observed that : "The foundation of the AO's jurisdiction and the raison d'etre of a reassessment notice are the "reasons to believe". Now this should have a relation or a link with an objective fact, in the form of information or facts external to the materials on the record. Such external facts or material constitute the driver, or the key which e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it has already been discussed that admitted facts are that there was no fresh material coming into the possession of the AO, at the time of recording of the 'Reasons'. These facts have not been rebutted by Ld DR also. The case law relied upon by Ld DR in the case of Dr. Amin's Pathology, supra is not applicable on the issue being decided here. The issue that in absence of any fresh material, whether AO can proceed to record Reasons, was not before Hon'ble High Court, therefore Hon'ble High court had decided the issue of Change of opinion in that case. In the case before us, as discussed above, we are not going into that issue. In our considered opinion, at this stage, we need not go into the other aspect i.e. whether there was change of opinion or not. This issue has been aptly clarified by Hon'ble High Court in the case of Madhukar Khosla, (supra), wherein it has been held by their lordships that external facts or material constitute the driver, or the key which enables the AO to 18 Motilal R. Todi legitimately reopen the completed assessment and in absence of this objective "trigger", the AO does not possess jurisdiction to reopen the assessment. Further,....