TaxTMI 
TaxTMI 
2025 (2) TMI 1917
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....cted issues are involved in both these appeals and C.O., for the sake of convenience, these were heard together and are being disposed off by this common order. ITA No. 36/Hyd/2024 2. The revenue has raised the following grounds : 1. "Whether on the facts and circumstance of the case and in law, the CIT(A) ought have appreciated the action of AO u/s.147 based on the valid reasons to believe that there is an escapement of income on account of wrong claim made by the assessee .? " 2. "Whether on the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the action of AO is based on the provisions of Section 147 that the incorrect deduction of interest income chargeable to tax had escaped assessment by wrong claim of interest deduction against the income from other sources .? " 3. "Whether on the facts and circumstance of the case and in law, the CIT(A) failed to appreciate the fact of wrong claim of interest deduction has come to the notice of AC during the proceedings before him. 4. "Whether on the facts and circumstance of the case and in law, the CIT(A) erred in law and facts that the assessee has disclosed ful....
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....e Ld. AO formed a view that the interest expenses on borrowed funds needs to be capitalised and was not eligible for deduction against the interest income on bank FDRs and treated interest claim of Rs. 28,86,53,896/- as escaped income and issued final show cause notice to the assessee. The assessee responded to the final show cause notice of the Ld. AO, but did not file any supporting documentary evidences. Finally, the Ld. AO completed the assessment u/s.147 r.w.s. 144 of the Act on 23.09.2021 disallowing the claim of Rs. 28,86,53,896/- on account of expenditure and added the same as income in the hands of the assessee. 4. Aggrieved by the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). Before the Ld. CIT(A), the argument of the Ld. AR was in two folds. The first argument of the Ld. AR was that, as the assessment was already completed u/s.143(3) of the Act and no such material was brought on record by the Ld. AO, the initiation of reassessment proceedings u/s.147 of the Act is change of opinion on the part of the Ld. AO and therefore, it is bad in law. 4.1 The alternate argument of the assessee before the Ld. CIT(A) was that, when the proceedings u/s.147 of....
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....sing Officer and the entire basis of the reasons to believe was founded on the original assessment proceedings. 5.1.2 In view of discussion as above, the action of the A.O. to re-open the case u/s 148 is not justified and not according to law. Therefore, I direct the A.O. to delete the addition of Rs. 28,86,53,896/-,as the initiation of 148 is bad in law. Here it is seen that the twin condition i.e. existence of new tangible material and failure on the part of the assessee to disclose all material facts (truly and fully), does not exist. Thus, jurisdiction under section 148 cannot be exercised. However, the correct course of action is application of review proceedings u/s 263, as per law. Accordingly, the matter is decided against revenue. 5. Aggrieved with the order of Ld. CIT(A), the revenue is in appeal before us. The Learned Department Representative ("Ld. DR") submitted that although in the first occasion, the assessment of the assessee was done u/s.143(3) of the Act, but it was a case of limited scrutiny. The case of the assessee was selected for scrutiny for limited purpose, for verification of large share application of money pending for more than one year and u....
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...., when the same issue was not the subject matter of limited scrutiny u/s.143(3) of the Act. Therefore, in our considered opinion, there was no change of opinion on the part of the Ld. AO qua initiation of proceedings u/s.147 of the Act. Accordingly, we set aside the order of Ld. CIT(A) qua this issue. 7.1 However, it has been brought to our notice by the Ld. AR that, the NCLT has passed the order under IBC in the case of the assessee and accordingly, the demand notice is required to be revised u/s.156A of the Act in accordance with the order of NCLT. Therefore, we make a direction to the Ld. AO to verify the order of NCLT and modify the demand notice in accordance with the provisions of section 156A of the Act. 7.2 In the result, the appeal of revenue is allowed for statistical purposes. C.O. No. 8/Hyd/2024 8. The grounds raised by the assessee are as under : "1. On the facts and circumstances of the case as well as in Law, the Ld. CIT(A) has erred in holding that the Ld. AO was correct in initiating the reassessment proceedings during Corporate Insolvency Resolution Process (CIPR) period. 2. The respondent craves leave to add, amend, alter or delete t....
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....any proceedings under the Act except enforcement of claim for recovery or levy of interest on the tax due during the period of moratorium. Respectfully following the decision of Hon'ble Supreme Court in the case of Sundaresh Bhatt (supra), we reject the contention of the assessee that the initiation of proceedings u/s.147 of the Act after commencement of CIRP is not valid. Accordingly, we dismiss the C.O. of the assessee. ITA No. 539/Hyd/2024 10. The brief facts relevant to this appeal are that, subsequent to completion of order for A.Y. 2016-17 u/s.147 r.w.s. 144 of the Act dated 23.09.2021, the Ld. PCIT invoked proceedings u/s.263 of the Act for the reason that the Ld. AO did not make any enquiry with regard to the share transaction of the assessee with M/s. Ind Bharat Sun Energy Private Limited. Accordingly, the PCIT passed the order u/s.263(1) of the Act on 30.03.2024 making a direction to Ld. AO to pass a fresh assessment order in accordance with law. 10.1 Aggrieved with the order of Ld. PCIT, the assessee is in appeal before us. The Ld. AR submitted that, order u/s.143(3) of the Act was passed by the Ld. AO on 22.12.2018 and in accordance with the provisions cont....
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....f the Act was completed on 23.09.2021. d) the Ld. PCIT invoked proceedings u/s.263 of the Act for the reason that the Ld. AO did not make any enquiry with regard to the sales transaction of the assessee with M/s. Ind Bharat Sun Energy Pvt. Ltd., which was not a subject matter for proceedings u/s.147 of the Act. 10.5 Thus it is clear that the issue taken for initiating the proceedings u/s.263 of the Act was not a subject matter of reassessment proceedings and order passed u/s. 147 of the Act on 23.09.2021. We have gone through the decision of Hon'ble Supreme Court in the case of CIT Vs. Alagendran Finance Limited (supra), the relevant part in para no. 15 is reproduced as under : "15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income Tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under Sub-section (2) of Section 263 of the Act would begin to run from the date o....