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2006 (6) TMI 142 - AT - Income TaxIncome Escaping Assessment - initiation of assessment proceedings u/s 147 - notice issued u/s 148 - HELD THAT- In the instant case on the reasons recorded it is apparent that the learned Assessing Officer entertained an honest belief that assessee's income chargeable to tax had escaped assessment. The belief was based on application of mind on relevant facts. I, therefore, see no merit in grounds of appeal Nos. 1 and 2 taken by the assessee. The same are rejected. In the appeals before me the dispute relates to the assessment of a sum for assessment year 1997-98 and assessment year 1998-99 assessed by the Assessing Officer on account of interest income of the assessee on fixed deposits with the bank. It is seen that interest income earned by an assessee on surplus funds of a mutual society deposited with a banking institution are covered by the principle of mutuality, as held by Hon'ble Delhi High Court in their judgment in the case of DIT v. All India Oriental Bank of Commerce Welfare Society [2003 (1) TMI 704 - DELHI HIGH COURT]. In my opinion the authorities below have erred in distinguishing the E aforesaid judgment of Hon'ble Delhi High Court on the ground that the assessee is a co-operative housing society whose income was not exempt u/s 11. Hence, respectfully following the judgment of Hon'ble Delhi High Court above mentioned, I direct deletion of the additions made in orders u/s 147 read with section 143(3) for both assessment years 1997-98 and 1998-99. In the result, these two appeals are partly allowed.
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