TaxTMI 
TaxTMI 
2025 (7) TMI 976
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.... had paid interest on Rs. 56,61,461/-. Assessee had also received interest income up to 30.11.2006, upon conversion of the capital account of assessee after allotment of share had become unsecured loan. For this unsecured loan, no interest was received from the company. Assessee was found to have debited interest expenses to the tune of Rs. 26,52,520/- in the profit and loss account. All these were considered by the Assessing Officer and assessment order dated 22.04.2008, as noted above, came to be passed. 4. Assessee thereafter received notice dated 25.03.2010 under Section 148 of the Act, to which reply dated 22.04.2010 was filed. Thereafter, assessee's representative appeared before the Assessing Officer and made oral submissions. Assessment order dated 23.12.2010 under Section 143(3) read with Section 147 of the Act came to be passed, by which assessee was called upon to pay additional tax plus interest. This was challenged by the assessee by way of an appeal before the CIT (A). The appeal came to be dismissed vide an order dated 25.06.2013. Aggrieved, assessee preferred an appeal before the Income Tax Appellate Tribunal, which came to be dismissed vide an order pronounc....
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....to the purpose of any business activity. It is true that the assessee has made investments to the tune of Rs. 12 crores in shares. But, he has not admitted any dividend income from such shares. Hence, the claim of interest paid is not related to investments in any business activity or in any income generating assets or activity. Thus, in the return furnished and as per the enclosures, the assessee has claimed an item of expenditure which is not allowable under law and thus the assessee's income has been made the subject of excessive relief under the Act as provided in sub-clause (c) of explanation 2 to Sec.147. Hence, I have reason to believe that income chargeable to tax has escaped assessment." 8. The assessee's stand, apart from on merits, is that the reopening itself was not permissible. Shri Dinesh submitted that even though the reopening was within four years from the end of the relevant assessment year, the reopening is purely based on change of opinion and all materials available for assessment had already been available with the Assessing Officer before he passed the original assessment order. 9. Relying on CIT vs. Kelvinator of India Ltd [2010] 320 ITR 561, ....
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....should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. 14. Shri Mahalingam's submissions were more on merits. Of course, he also submitted that the claim of interest paid is not reflected as investment in any business activities or in any income generating expenses and hence, there was excessive relief claimed by the assessee in the form of interest payments. The original assessment order does not reflect any application of mind by the Assessing Officer to the claim of interest payment. Mere production before the Assessing Officer of account books or other evidence from which material facts could with due diligence has been discovered by the Assessing Officer, will not necessarily amount to disclosure within the meaning of the Section 147 of the Act. 15. Shri Mahalingam also submitted that had the assessee disclosed the interest payment bifurcation to the Assessing Officer at the time of the original assessment, then it could have been said that the assessee has done his duty and it is for the Assessing Officer to draw any inference on the facts placed before him. But the assessee has not done so and therefore, there was a ....
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....rowed were utilised to make investments in the firm. As held in Calcutta Discount Ltd (supra), which was followed by a Division Bench of the Bombay High Court in Ananta Landmark (P) Ltd vs. Deputy Commissioner of Income Tax, Central Circle 5(3), Mumbai [2021] (131) taxmann.com 52 (Bombay), while the duty of the assessee is to disclose fully and truly all primary relevant facts, it does not extend beyond that. 18. Paragraph 13 of Ananta Landmark (P) Ltd (supra) reads as under: "13. As regards ground nos.(iv) to (vi) that the disclosure of material facts with respect to the setting off of the interest expenses under Section 57 of the Act might be full but it cannot be considered as true and hence, it is failure on the part of the assessee, mere production of books of accounts or other documents are not enough in view of explanation 1 to Section 147 etc., these can be dealt with together. The Apex Court in Calcutta Discount Co. Ltd. vs. Income Tax Officer [1961] 41 ITR 191, relied upon by Mr. Pardiwalla, has held that there can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the a....
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....o disclose material facts, as mentioned in the section, it is necessary to examine the precise scope of disclosure which the section demands. The words used are " omission or failure to disclose fully and truly all material facts necessary for his assessment for that year ". It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his Possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise-the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. Thus, when a question arises whether ce....
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....ences have ultimately to be drawn. It is not for somebody else-far less the assessee--to tell the assessing authority what inferences-whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences-whether of facts or law-he would draw from the primary facts. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn? It may be pointed out that the Explanation to the sub- section has nothing to do with " inferences " and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Income-tax Officer could have discovered them from the facts actually disclosed. The Explanation has not the effect of enlarging the section, by casting a du....
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.... manner in which an assessment order is to be drafted is the sole domain of the Assessing Officer and it is not open to an assessee to insist that the assessment order must record all the questions raised and the satisfaction in respect thereof of the Assessing Officer. The only requirement is that the Assessing Officer 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". Paragraph 14 of the order 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 assessment proceedings on a specific query made by the Assessing Officer, the petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No.4/2007 dated 15 June 2007. (The reasons for reopening furnishe....