TaxTMI 
TaxTMI 
2019 (6) TMI 1564
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....icer under Section 143(3) r.w.s 147 of the Income Tax Act, 1961 (in short 'the Act') dated 27.3.2014. 2. The assessee has raised the following ground of appeal: "1. The Ld. Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming assessment order passed u/s. 143(3) r.w.s. 147 of the Act dated 27.03.2014. 2. The Ld. Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the disallowance of interest expenditure amounting to Rs. 11,75,62,498/-. 3. The Ld. Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the estimated addition on account of personal household expenses at Rs. 3,00,000/-. 4. The Ld. Commissioner of Income-Tax (....
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....al submissions and perused the record of the case. We find that the Additional Grounds raised by the assessee involve a point of law where the relevant facts are on record, and go to the root of the matter and, therefore, in view of the decision of Hon'ble Supreme Court in the case of National Thermal Power Corporation (supra) and in the interest of substantial justice, we admit the Additional Grounds of appeal and the parties were allowed to argue the appeal on merits of the case. 7. Ld. Authorised Representative of the assessee first of all argued that the reopening of assessment under section 147 of the Act is bad in law and invalid. 8. The facts of the case are that the assessee belongs to Harshad Mehta Group and was notified unde....
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....ing the return, despite having taxable income since last few years and the income tax department had to resort to section 148 to tax this escaped income. I, therefore have a reason to believe within the meaning of the section 147 of the Income Tax Act, 1961 that the assessee has not filed his return of income to avoid the additions made in the past, which might be of the recurring nature. Therefore- there is 'income chargeable to tax' escaping assessment to that extent. The default lies on the part of the assessee because he has not filed his return of income. In order to assess the correct income of the assessee, action under section 147 is being taken and the assessee is directed to file his return within the pre....
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....ssee. Further, the Assessing Officer noted that in the Income & Expenditure Account, the assessee has shown the interest income on Term Deposits/Fixed Deposits at Rs,2,07,51,162/- and interest on loan receivable at Rs. 6,06,29,340/- {totaling to Rs. 8,13,80,502/-) and has claimed interest expenditure of Rs. 6,39,29,064/- against the same. He disallowed assessee's claim of deduction for interest on loans amounting to Rs. 6,39,29,064/-, payable to group concerns, observing that the liability was only a contingent liability. Accordingly, he assessed the entire interest income of Rs. 8,13,80,502/-. Besides, the Assessing Officer also added an of Rs. 12,00,000/- u/s. 69C of the Act, towards personal household expenses. Finally, the Assessing....
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....tative relied on the decision of the Hon'ble Gujarat High Court in the case of Sagar Enterprises vs. ACIT (2002) 257 ITR 335 (Guj) wherein, it was held that a notice issued under section 148 on a factually incorrect basis that the assessee had not filed its return could not be sustained even on the basis of alternative reason since it could not be said with certainty as to which factor weighed with the concerned officer when he issued the impugned notice and when the assessing authority was himself unsure, the formation of belief about escapement of income was not justified. 13. He also relied on the decision of Hon'ble Bombay High Court in the case of General Electoral Trust vs ITO in Writ Petition No.1155 of 2016 order dated 20.7.2....
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....stified. 16. We have heard the rival submissions and perused the record of the case. We find that the first reason for reopening of the assessment is that the assessee has not filed his return of income for the year under consideration. However, on perusal of Paper Book placed at page-3, we find that the assessee has filed the return of income on 31.3.2011, i.e. prior to recording of reasons by the Assessing Officer. In this background, what has been sought to be pointed out is that the reasons recorded for formation of belief of escapement of income are based on an incorrect fact. The incorrect fact being the return not having been filed by the assessee. It has also been pointed out that even if it is accepted that incorrect noting a....