TMI Blog2008 (10) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... e had filed returns for the respective assessment years, and such returns were processed initially under section 143(1)( a ) of the Income-tax Act, 1961 (in short the Act ). It had returned a loss of Rs. 11,69,216 for assessment year 1994-95, Rs. 16,59,034 for assessment year 1995-96 and Rs. 5,29,200 for assessment year 1996-97. Assessments for all the three years were re-opened under section 148 of the Act by the issue of notice on 16-2-2000, which was served on the assessee on 22-2-2000. Assessee again filed returns in response to these notices declaring the same loss that he had returned in the original returns. For re-opening of the assessment, the reasons given by the Assessing Officer were identical for all the three years except for amounts mentioned and these run as under : "During the course of the assessment proceedings for assessment year 1997-98 it was found that interest bearing funds have been utilised by the assessee for investment in firms and companies of the Lok Group in which the assessee is not a director. Therefore, it amounts to utilizing the business funds for two purposes namely business purposes, the income from which will be taxed under the head Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) was not impressed since according to him the loss had resulted out of interest which was rightly brought under the head Income from other sources and therefore, no carry forward could be allowed. Assessee then moved in appeal before the Tribunal and one of the grounds raised therein was that notice under section 143(2) was not issued within the time stipulated in that section. Tribunal accepted this contention and quashed the reassessments for all the three years. Department thereupon filed Miscellaneous Petitions for all the three years whereby pointed out that consequent to amendments in section 148 of the Act whereby two provisos were inserted by Finance Act, 2006 with retrospective effect, notice under section 143(2) even though not issued within 12 months from the end of the month in which returns were filed, reassessment would still be valid. It is to be noted that when the Tribunal originally gave the decision quashing reassessments, the above mentioned provisos were not available in the statute. Miscellaneous Applications were allowed in view of the retrospective amendments to section 148 mentioned ( supra ) and the appeals listed for hearing again. 5. Now befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Tribunal in support of the contentions. 7. Replying to the above, the Ld. A.R submitted assessee was not challenging the re-opening based on any change of opinion but on the basis that there was no reason to believe. According to him when the loss computed remained the same, there was no cause of excessive loss claimed and question of carry forward of loss was not germane in determining whether there was reason to believe that any income chargeable to tax had escaped assessment. 8. We have perused the orders and heard the rival contentions. There is no dispute to the fact that assessee had shown expenses on account of interest in respective years in its profit and loss account and net loss under the head of business income. Notice under section 147 was issued for the reason that such interest expenses which resulted in the loss declared by the assessee in the respective assessment years had to be bifurcated between business loss and loss under the head Income from other sources and that it made substantial material difference. According to the Assessing Officer, loss under the head Income from other sources was not to be carried forward and therefore there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is, whether assessee having declared its loss under the head Profits and gains of business or profession , just for the purpose of bifurcation of the interest expenses, if the Assessing Officer chooses to issue notices under section 147 of the Act, would it be reason to believe or suppose that income had escaped assessment. As the assessee rightly pointed out, bifurcation of interest expenses would not result in any excess claim or loss. In our opinion, assessee had not claimed any excessive loss nor had it computed any excessive loss. Assessing Officer stated in the reasons given in the assessment order that the basis for re-opening assessment was to bifurcate the interest expenses and such bifurcation would make a substantial material difference to the loss declared by the assessee in these years. However, we find that there is no difference at all in the loss declared by the assessee in any of these years but the only result is that the loss shown by the assessee under the head Income from business/profession , consequent to the bifurcation of interest, got bifurcated between that head and the head Income from other sources . Applicability of carry forward provisions regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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