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2024 (5) TMI 646 - BOMBAY HIGH COURTReopening of Assessment u/s 147 - investment in NCDs unexplained - difference between accrual of income and receipt of income - reopening after the expiry of four years - Petitioner is a tax resident of Cyprus - Petitioner’s objection to reopening that under the DTAA, interest income can be taxed only when the same was received by the payee under the provisions of Article 11, has not been controverted in the order rejecting the objections - HELD THAT:- During the course of original assessment proceedings, Petitioner was issued a notice u/s 142 (1) - Petitioner was called upon to give details of income from sources other than that of capital gain and also details of interest income accrued on security held during the last four financial years. By its Chartered Accountant’s letter, Petitioner replied to the notice and stated that it had not received any income during AY 2015-2016. During the course of discussion that Petitioner’s Chartered Accountant had with the AO, Petitioner was called upon to furnish details of the statement showing closing stock of NCDs - Petitioner furnished a statement showing closing stock of NCDs as also a statement giving details of investment in NCDs during the year. The opening stock and the closing stock were unchanged. Thereafter, the assessment order dated 30th August 2017 came to be passed. In the assessment order, it is accepted that Petitioner is the resident of Cyprus and its nature of business is to act as investment holding company. In our view, since Petitioner was called upon and Petitioner supplied the details of investment in NCDs during the year, the issue of holdings in the NCDs and the interest on the NCDs was certainly a subject of consideration of the AO. Discussion in the assessment order or not? - As decided in Aroni Commercials Limited [2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. AO must have certainly considered the aspects during the assessment proceedings because specific queries were raised regarding the NCDs and the details were made available which disclosed that there was no change in the opening and closing stock of the NCDs. Decided in favour of assessee.
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