TaxTMI 
TaxTMI 
2024 (2) TMI 467
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....ued after the expiry of more than 4 years of the relevant assessment year and assessment order under Section 143(3) having been passed, the proviso to Section 147 would apply, in as much as, only if there was failure on the part of assessee to truly and fully disclose all material facts. 5. The reasons to reopen the assessment reads as under: "1. The assessee is engaged in the business of real estate development and filed its return of income on 28/09/2013 declaring total income of Rs. 13,87,170/-. The assessment u/s 143(3) of the Act was completed on 29/02/2016 by accepting the returned income declared by the assessee. 2. Thereafter, it is noticed that the assessee has claimed to incur the interest expense of Rs. 27,07,38,079/- on secured loans, other interest of Rs. 37,45,311/- and finance cost of Rs. 5,30,80,669/- totaling to Rs. 32,75,64,059/-. Further, the assessee has also earned interest income of Rs. 5,61,89,376/- on loans and advances. On perusal of the assessment records, it is seen that the assessee instead of offering the said interest income of Rs. 5,61,89,376/- under the head "Income from Other Sources" has treated the said interest income as its capital receipt....
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....ely required is taxable by following the decision of M/s Tuticorin Alkali Chemicals & Fertilizers Ltd vs CIT. Further, the assessee has also failed to establish that those interest receipts were inextricably connected with the construction activities which is its primary business activity, therefore, the same are required to be taxed under the head "Income from Other Sources" rather to be reduced from its total WIP. Therefore, the said interest income of Rs. 5,61,89,376/- has escaped the assessment as the said interest receipt should have been offered for taxation under the head " Income from Other Sources" instead of capitalizing it to the WIP. 3. Further, on perusal of the assessment records, it is seen that the during the course of assessment proceedings, the assessee has not submitted anything on record suggesting that the said interest income of Rs. 5,61,89,376/- is capital in nature and is its business receipts and therefore can be netted of against the interest expense. In the absence of any material on record; it is clear that the assessee has failed to bring any cogent evidence suggesting that accounting of the said interest income is correct. Therefore, considering the....
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.... Sec. 151(1) of the Income tax Act 1961, permission of the Principal Commissioner of Income tax, Central-3, Mumbai is hereby sought to re-open the case of the assessee for A.Y. 2013-14 by issue of notice u/s. 148 of the Income tax Act 1961." 6. A bare perusal of the reasons recorded indicates that all details mentioned therein have been picked up from the assessment records. In paragraph 2 of the reasons, it is recorded, "Thereafter, it is noticed that the assessee has claimed to incur the interest expense of Rs. 27,07,38,079/- on secured loans, other interest of Rs. 37,45,311/- and finance cost of Rs. 5,30,80,669/- totaling to Rs. 32,75,64,059/-. Further, the assessee has also earned interest income of Rs. 5,61,89,376/- on loans and advances. On perusal of the assessment records, it is seen that the assessee instead of offering the said interest income of Rs. 5,61,89,376/- under the head "income from Other Sources" has treated the said interest income as its capital receipts and accordingly netted off the said interest income against the interest expense of Rs. 33,06,72,763/- and the balance interest expense of Rs. 27,44,83,087/- was capitalized to its WIP. The treatment of the ....
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....d contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The only requirement is that the AO ought to have considered, the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the original assessment proceedings. In the case at hand, the AO having raised a query and the petitioner having replied to it, it follows that the query raised was subject of consideration of the AO while passing the assessment order dated 29th February 2016. In our view, the re-opening of assessment by the impugned notice is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Paragraph 14 of the Aroni Commercials Ltd. (Supra) reads as under: 14) We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessme....