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2018 (12) TMI 626 - ITAT KOLKATAValidity of re-opening proceedings u/s 147 - addition towards interest income on loan advanced to Six Sigma Gases Pvt. Ltd. on notional basis - Held that:- When a regular assessment u/s 143(3) has been made earlier, a presumption can be raised that such an order has been passed on due application of mind. It is well known that a presumption can also be raised to the effect that in terms of section 114(e) of the Indian Evidence Act and judicial and official acts have been regularly performed. In the case of Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] had held in similar circumstance that if it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceedings without anything further, the same would amount to giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong. The necessary ingredients of section 147 in the form of tangible material post completion of assessment proceedings are conspicuously absent. Hence the reopening of assessment does not survive. The assessee was not able to realize interest income offered by it on amount advanced to Six Sigma Gases Pvt. Ltd. in the earlier two assessment years. During the year under consideration, the assessee had duly taken note of the poor financial condition of Six Sigma Gases Pvt. Ltd. and had taken a conscious call of not recognizing the interest income on accrual basis and had even further taken a call for not charging any interest on the said loan for which a separate Board Resolution had also been passed. The poor financial condition of Six Sigma Gases Pvt Ltd had not been disputed by the revenue. The poor financial condition of Six Sigma Gases Pvt Ltd had not been disputed by the revenue. It would not serve any purpose by the assessee having unnecessarily fastened with a tax liability on notional interest income which would never be realized and in future eventually result in claim of bad debt. We hereby quash the reassessment proceedings framed by the ld. AO both on law as well as on facts. - Decided in favour of assessee.
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