TaxTMI 
TaxTMI 
2020 (8) TMI 595
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the case and in law, the Learned CIT(A) erred in upholding the action of the Assistant Commissioner Of Income-tax - 5(1), Mumbai ('the AO') that the reopening of assessment under section 147 of the Act was justified and in accordance with the provisions of the law. 2. The Appellant prays that it be held that the reopening of assessment under section 147 of the Act is void ab-initio and/or otherwise bad-in-law." 3. Briefly stated facts are that the assessee filed its e-return of income on 30.10.2007. The case of the assessee was selected for scrutiny assessment by issuing notice under section 143(2) of the Act and assessment was completed originally under section 143(3) of the Act vide order dated 21.12.2009. Subsequently, the Assessing Officer issued notice under section 148 of the Act on 03.09.2010, which was served on the assessee on 21.09.2010. This notice u/s 148 of the Act is within four years from the end of relevant assessment year. For issuance of notice under section 148 of the Act, the Assessing Officer recorded the following reasons: - "Reasons recorded for issue of Notice under section 148 of the IT Act The records of the Assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or initiation of reassessment proceedings under section 147 of the Act. It is also not disputed that such reasons recorded before the issue of notice under section 148 of the Act was communicated to the appellant. On similar facts, Hon'ble Supreme Court in the case of Indo Aden Salt Manufacturing and Trading Co. P Ltd. (1986) 159 ITR 624 (SC) held that the Assessing Officer could reasonably be said to have material to form the belief that there was under assessment owing to failure from an omission on the part of the assessee to disclose fully and truly all material facts necessary for the assessment within the meaning of section 147(a) of the Act [now proviso to section 147 of the Act]. The present appeal is a better case for revenue because in the preceding case, it was after more than 4 years; whereas the present appeal involves notice issued within 4 years from the relevant assessment year. After the amendment of section of the Act w.e.f. 1.04.1989, wide power has been given to the Assessing Officer to reopen the assessment even in the case where the assessee had fully disclosed the material facts. The only condition is that the Assessing Officer should have reason....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. Hon'ble Supreme Court held that it was a case of escapement on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment within the meaning of sec.147 (a) of the Act. Admittedly, in the present case notice u/s.148 was issued on 28/3/2011 which was within four years from the end of the relevant A.Y 2006-07. The case laws cited by the LAP are distinguishable on the facts. 5.2.5 Thirdly, the LAO had disposed off objections to the issuance of notice under section 148 of the Act during the reassessment proceedings. Having regard to the facts and circumstances of the case and in the light of Apex Courts decisions in the case of Phoolchand Bajraglal, Raymond Woolen Mills Ltd. Vs. ITO (supra), Indo Adden Salt manufacturing and Trading Co. pvt. Ltd. (1986) 159 ITR 624 (SC) and Hon'ble Supreme Court in the decision of CIT Vs. PVS Beedees Pvt. Ltd. (supra). Ground of appeal No. I is dismissed." Aggrieved, assessee preferred appeal before Tribunal. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted from the arguments of learned Counsel for the assessee the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied on the order of CIT(A). 9. We noted that the assessee during the course of assessment proceedings before the AO assessee made full and true disclosure in respect of the interest expense in its audited financial statement, ROI and the Original Assessment proceedings. This is explained by the assessee before us in the following paragraphs: (a) Schedule 9 to the Audited Financial Statements disclosed the total interest expenditure and interest income accrued to the assessee; (b) Note 6 (IV) to the Audited Financial Statements discloses the fact of sale of the Idea Shares to "Holding Co. ABNL" ; (c) The Computation of Income showed the deduction claimed under section 57 of the Act in respect of interest expenditure against interest income; (d) By letter dated October 6, 2009, the assessee had submitted the Demat Account with the Depository in which the fact of purchase and sale of the Idea Shares was reflected; (e) By letter dated October 23, 2009, the assessee submitted the Loan Confirmation from Aditya Birla Nuvo Limited, Transwork Information Services Limited, Birla Global Finance Co. Limited, etc. which companies had taken ICDs; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alf of the company at a price of Rs.40.50/- per share on 20.06.2006 and has instructed Depository Participant viz. Citi bank NA to transfer the shares to the company. Copy of the letter received from Birla TMT is attached as Annexure 4. Vide letter dated 08.11.2006 Birla TMT informed the company that it has received on behalf of the company Gross interest Rs.24,670,808/- less TDS Rs.55,36,130/-, net interest being Rs.19,134,678/- from Citi Bank by deploying Rs.686,33,13,870/- with Citi Bank in an interest bearing account from the date it received funds from the company and till the date those funds got utilized to pay Tata Group for acquiring shares of Idea. Birla TMT had incurred some expenses on purchase of said shares and therefore remitted Rs.18,000,000/- as on account part payment. Copy of the letter received from Birla TMT is attached as Annexure 5. Vide letter dated 22.11.2006, Birla TMT Rs. 8,42,503/- in respect of acquisition of Rs. 16,94,64,540/- shares of Idea and after adjusting the said expense amount against the net interest received Rs. 19,134,678/- remitted the balance amount Rs. 2,92,175/-. Copy of the letter is attached as Annexure 6. Vi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r income. interest paid X Average Investment Average of Assets. 5,05,09,945 X 61,60,633 = 29,22,035/- 10,64,91,974 13. Further the AO in the computation of income has particularly considered the interest expenses of Rs.4,64,92,579/- as under: - 3. Interest Income 2,78,37,789 Less: Interest expenses 4,64,92,579 (1,86,54790) Gross Total Income (1,80,57,265) Less: Loss under the head "Income from other" 1,80,57,265 Total Income NIL In view of the above facts it is clear that in the original assessment proceedings AO has considered the aspect interest expenses and considered in the body of assessment order as well as in the computation of income specifically and after considering the same, the AO allowed the interest expenses. It means that the AO has applied his mind and formed an opinion for allowance of this interest expenses while framing original assessment. Now, reopening on the very same issue tantamount to change of opinion which is not permissible in law. Let's discuss the case laws relied on by both the sides. 14. We have taken not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eedings would amount to change of opinion of the AO as it was merely a fresh application of mind by the AO to the same set of facts and that since the AO had failed to apply his mind to the relevant material while framing the assessment order under section 143(3), he could not take advantage of his own wrong and reopen the assessment under section 147 of the Act. This was the case where the AO had reopened the assessment within four years from the end of the Assessment Year under appeal. Even in the case of in the case of Legato Systems (India) Pvt. Ltd. vs. DCIT [2010] 187 Taxman 294 (Delhi), Hon'ble Delhi High Court has held that proceedings under section 147/148 of the Act vis-à-vis completed assessments cannot be reopened, on a mere change of opinion i.e. on the basis of the same set of facts and material which were in the knowledge of the AO, and that the proceedings for reopening of assessment on the ground of income escaping assessment is an exception to the finality of the proceedings arrived at under Section 143(3) of the Act during the regular assessment proceedings of the assessment years. 17. In the case of Asteriods Trading & Investments Pvt. Ltd. vs. DCI....