TMI Blog2012 (11) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion was made by the A.O. in course of original assessment proceedings on the basis of queries and its reply and no new material has been indicated which has come to the notice of the A.O. for reopening. FBT which cannot be the ground for issuing notice u/s 148 because for issuing notice in respect of escaping of FBT, there is a separate section 115 WG in the I.T. Act and therefore, no notice can be issued u/s 148 of the I.T. Act - Hence, in the facts of the present case, the reopening is on the basis of mere change of opinion which is not permissible as per law - against revenue. - I.T.A. Nos. 1713 & 1714/Ahd/2012 - - - Dated:- 5-10-2012 - Shri A.K. Garodia, And Shri Kul Bharat, JJ. Department by: Shri Rahul Kumar, Sr. D.R. Assessee by: Shri Gaurav Nahta, A.R. ORDER PER : A.K. Garodia, Accountant Member Both these appeals are filed by the Revenue which are directed against two separate orders of Ld. CIT(A)-XI, Ahmedabad dated 11.05.2012 for A.Y. 2007-08 and dated 15.05.2012 for A.Y. 2008-09. Both these appeals were heard together and are being disposed of by this common order for the sake of convenience. 2. First we take up the appeal of A.Y. 2007- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tocks inventory only. Average utilization of overdraft limit was Rs.20 Crore approximately, which means that even debtors and inventory were also finance by our own funds. As per norms and CMA, Bank allows limit only for working capital purpose i.e. debtors stock etc. and not for making investment, which we solely used for day to day business activity only and investment in mutual fund and other securities were made out of profit, reserve and surplus and capital. We have purchased the UTI Bonds in the year 2004-05 against redemption of Tata Mutual Income Fund on 12.02.2005 for Rs.10431944.85 and HDFC Income Fund on 25.07.2009 for Rs.2,50,00,000. Further profit/gain on sale of mutual fund units for Rs.11070179 has no connection with interest because with extra ordinary gain is due to increase in sale unit price due to appreciation in portfolio and uptrend in share market. Exemption claimed for long term gain on sale of mutual fund under section 10(33) as provided in Income Tax act. 3.2 The case was discussed. The submission of the assessee is considered. However, the same is not acceptable for the reason that the assessee had earned exempt income of rs.1,38,24,412 from divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch more than the amount of investment. He also pointed out that ld. CIT(A) has followed the judgment of Hon ble Bombay High Court rendered in the case of Reliance Utilities and Power Ltd. reported in 319 ITR 340 in which it is held that if the assessee is having mixed funds and own funds are more than investment then it should be accepted that the entire investment is out of own funds and no disallowance of interest is called for u/s 14A. He also submitted that in the present year, Rule 8D is not applicable and hence, order of ld. CIT(A) should be confirmed. 6. We have considered the rival submissions, perused the material available on record and gone through the order of the authorities below. We find that ld. CIT(A) has dealt the issue in para 3.4 and 3.5 of his order and for the sake of ready reference, the same are reproduced below:- 3.4 During the appellate proceedings, the appellant was asked to prepare availability of interest free funds and the quantum of investments in earlier years. The appellant had submitted relevant details and same are reproduced as under:- PG FOILS LIMITED STATEMENT OF INVESTMENT MADE OUT OF CAPITAL RESERVE AND S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administrative expenses incurred to earn this income cannot be ruled out. In my considered view the end of the justice will meet if a disallowance of Rs.20,000/- is made in respect of administrative expenses. 3.5 In view of above discussion, disallowance u/sJ4A to the extent of Rs.20,000/- is confirmed. The appellant will get a relief of Rs.35,64,595/- (Rs. 35,84,595 - Rs/20,000). These ground of appeals are partly allowed. 7. In view of this factual position that own funds were many times more than the amount of investment and in view of the judgment of Hon ble Bombay High Court rendered in the case of Reliane Utilities and Power Ltd. (supra) and also in view of the fact that Rule 8D is not applicable in the present year, we are of the considered opinion that no interference is called for in the order of ld. CIT(A) on this issue. 8. In the result, the appeal of the Revenue is dismissed. 9. Now we take up the appeal for A.Y. 2008-09 i.e. I.T.A. No.1714/Ahd/2012. The grounds raised by the Revenue in this year are as under:- i) The ld. CIT(A) has erred in law and on facts in holding that the notice issued u/s 148 of the Act after proper recording of reasons, was invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the A.O. is not a valid objection for issuing notice to the assessee u/s 148. He also submitted that in the facts of the present case, the notice issued by the A.O. u/s 148 is on a mere change of opinion and therefore, the same is not valid. He submitted that under these facts, the issue involved in the present case is squarely covered in favour of the assessee by the Tribunal s decision cited by him. 11. We have considered the rival submissions, perused the material available on record and gone through the order of the authorities below. We find that the reasons recorded by the A.O. for issuing notice to the assessee u/s 148 are available on page No.11 of the paper book and for the sake of ready reference, the same are reproduced below:- REASONS FOR RE-OPENING ASSESSMENT U/s 147 OF THE I.T. ACT, 1961 Reg.: M/s P.G. FOILS LTD. A.Y. 2008-09 The assessee company was engaged in the business of manufacture, lamination and trading of aluminum foils, wires, rods, ingots, etc. and filed its return of income on 18.09.2008, declaring total income of Rs.11,47,01,730/-. The assessment was finalized u/s 143(3) of the Act on 26.03.2010 determining total income at Rs.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the A.O. which are available in the paper book and to which, our attention was drawn by ld. A.R. of the assessee, we find that out of (3) objections of the A.O. as noticed in the reasons recorded by the A.O., as reproduced above, proper queries were made by the A.O. in course of original assessment proceedings and its reply were also submitted to the A.O. by the assessee as per various notices and its reply available in the paper book to which our attention was drawn by ld. A.R. of the assessee. Now, in the light of these facts, we examine the applicability of the Tribunal s decision cited by ld. A.R. of the assessee. The relevant paras of the Tribunal decision are para No.5.1 to 5.5 and para 6 and the same are reproduced below for the sake of ready reference:- 5.1 However, while completing assessment the AO has allowed deduction u/s 80HHC on the amount of stock and advances receivable of Rs.51,75,000/- disclosed u/s 133A of the Act. Such stock and receivable cannot be said to be derived from the business to be included in the profit of business for the purpose of deduction u/s.80HHC for the following reasons. (a) In any case where income is disclosed u/s.133A of the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee based on the judicial pronunciation of judicial referring in the cases of Bhanhji Lavji (1971) 79 ITR 582 (HC) and Sirpur Paper Mills (1978) 114 ITR 404 (AP) is that on account of a mere change in opinion will not empower the Assessing Officer to reopen the assessment. 5.3 I have carefully gone through the arguments made by the assessee regarding re-opening the assessment which are not acceptable as per the facts of the case as well as on merits. It is to be stated that the completed assessment can be opened either when there is omission or failure on the part of the assessee to disclose fully and truly all material and relevant fact or even if there is no omission or failure on the part of the assessee but the income is deemed to have been escaped as per the provisions of section 147 of the Act. Reliance is placed on the decision of Phoolchand Bajrang Lal Vs. ITO 2O3 ITR 4S6 wherein the Hon'ble Supreme Court has held that since for the purpose of reopening the belief is that of the ITO, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that there in fact existed no belief or that belief was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the disclosed amount of Rs.51,75,000/-. On perusal of the assessment order made u/s 143(3) of the Act, dated 22/1/2003, P L A/c., of the assessee and facts of the case and finding of the survey team, the assessee itself has taken the disclosure amount of Rs.51,75,OOO/- separately under the head income from other sources as reflected in the P L A/c., because the income disclosed partakes the character of undisclosed income. In view of the discussion made above, the income disclosed during the course of survey operation u/s 133A, is having does not partakes the character of income generated during the regular course of business and cannot be considered as business income within the meaning of section 80HHC of the Act. Thus the deduction claimed by the assessee and allowed u/s 80HHC while passing the order u/s 143(3) dated 22-1-2003, requires to be recalculated and to be allowed only on the profit of Rs.52,35,022/-, excluding the disclosure made of Rs.51,75,OOO/-, out of the profit disclosed by the assessee in the P L Account of Rs.1,04,10,022/-." 13. From the above paras of the Tribunal s decision, we find that in that case it was held by the Tribunal that if no fresh fact has co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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