TaxTMI 
TaxTMI 
2003 (11) TMI 273
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....e time of hearing, none was present on behalf of the assessee nor any application for adjournment was received. Under these circumstances, assessee's appeals are decided ex parte on merits after hearing the learned Departmental Representative who has supported the orders of the CIT(A). 5. So far as ITA Nos. 63 & 64 of 1997 are concerned, since the assessee has objected to the initiation of proceedings under s. 147 of IT Act, itself, I consider it necessary, first to deal with the issue because if the assessee succeeds then there is no necessity of deciding the appeals on merits. 6. The facts relating to the issue w.r.t. initiation of proceedings under s. 147 as has been from the record/assessment order for asst. yr. 1989-90 are that r....
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....ank. 8. On appeal by the assessee, the CIT(A) confirmed disallowance of interest payable to the bank and at the same time gave directions to the AO that interest payable to UP Financial Corp. Ltd. may also be disallowed by involving the provisions of s. 43B(d) of IT Act. The assessee is in appeal against the aforesaid finding of the CIT(A). 9. So far as assessee's objection against validity of proceedings under s. 147 is concerned, learned Departmental Representative has supported the order of CIT(A). 10. Having considered the facts and circumstances of the case and the orders of the Revenue authorities, I am of the opinion that proceedings under s. 147 of the IT Act for asst. yrs. 1989-90 and 1990-91 were initiated only on the bas....
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.... not make out, why, it cannot be said that there was material on record for having reasons to belief that income had escaped assessment. Mere suspicion or necessity of making inquiry cannot make the AO to have reasons to believe as required under s. 147 of IT Act and the proceedings initiated only on the basis of suspicion cannot be sustained. 11. So far as the present cases are concerned, it is revealed that the reassessment proceedings under s. 147 were initiated only on the basis of suspicion that loan from the bank was more than Rs. 20 lakhs and stock was only about Rs. 2 lakhs. According to the AO, this information has resulted in escapement of income which the assessee should have otherwise declared by way of more value of the clos....
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....king the provisions of s. 43B(d) of IT Act as per paras 9 and 10 of its orders which read as under: "9. I have carefully considered the submissions made. It is an admitted fact that there is a dispute between the bank and the appellant. Once the appellant is admitting that he has to pay at least 6 per cent of interest to the bank, irrespective of the decision of the Hon'ble civil Court, it is not understood then why he is not discharging his liabilities by paying this amount to the bank. Therefore, he cannot have his cake and eat it too because he claims this deduction in income-tax for the purposes of not payment the tax on this amount simultaneously does not pay this amount to the bank on the pretext that here is a dispute. For this pu....
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....interests are much higher than this amount specially in the overdraft accounts. Therefore, I hold that this is a contingent liability which is yet to be determined hence is not allowable as deduction from the income. Thus, the addition made on this account is confirmed subject to my remarks as above. The AO would also explain the split up of Rs. 1,91,654 and find out whether the appellant has paid to UPFC interest of Rs. 1,26,173 otherwise resort to provisions of s. 43B and disallow the correct amount of interest unpaid to UPFC and also disallow the full interest shown payable to bank for the asst. yr. 1989-90. For the next two years the addition of Rs. 1,37,584 in the year 1990-91 and Rs. 1,37,584 in the year 1991-92 claimed as bank intere....