TMI Blog2010 (12) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... t with these issues at the time of framing original assessment - Decided against the assessee - CWP No. 10390 of 2010 - - - Dated:- 2-12-2010 - MR. JUSTICE ADARSH KUMAR GOEL, MR. JUSTICE AJAY KUMAR MITTAL, JJ. Mr. Ashim Aggarwal, Advocate for the petitioner. Mr. I.P. Singh, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. This order shall dispose of Civil Writ Petition Nos. 10390, 10391 and 10392 of 2010 relating to the assessment years 2003-04, 2004-05 and 2005-06, respectively as according to learned counsel for the parties common questions of law and facts are involved therein. For brevity, the facts are being taken from CWP No. 10390 of 2010 in which Civil Miscellaneous No.12673 of 2010 had been filed for amendment of the writ petition. 2. In the amended petition filed under Articles 226/227 of the Constitution of India, the petitioner seeks issuance of writ of certiorari for quashing the impugned notice dated 3.3.2010 (Annexure P-1) issued under Section 148 of the Income Tax Act, 1961 (in short the Act ), notice dated 11.5.2010 (Annexure P-2) issued under Section 143(2) of the Act and order dated 23.8.2010 (Annexure P-3) passed by the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of Rs.35,34,06,759/- on which interest amounting to Rs.3,54,79,130/- was charged to its P/L account. The assessee has invested its interest bearing funds in non-trade investment as mentioned above, the income of which is exempted from tax and does not form part of total income. Hence, the provision of section 14A of IT Act are applicable in this case and interest attributable to this investment is liable to be added in the declared income. Keeping in view the facts, as stated above, I have reasons to believe that the income to the extent of interest attributable to Rs.2,50,00,000/- which comes to Rs.2,51,050/- (taken on average base) has escaped assessment. It has also been noticed that the company has given an interest free advance/loan to Sh. Arun Kapoor amounting to Rs.8,00,75,723/-. Sh. Arun Kapoor is a related person under the provision of the IT Act. The interest attributable on the loan given to Sh. Kapoor comes to Rs.80,41,210/- (taken on average base) is liable to be disallowed, since the company has paid its interest on borrowed funds. Hence, I have reasons to believe that interest of Rs.82,92,260/- debited to P/L account attributable to the investment made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). (ii) Mahavir Spinning Mill Ltd. v. CIT, [2004] 270 ITR 290 (P H) (iii) Haryana Acrylic Manufacturing Pvt. Ltd. v. CIT, [2009] 308 ITR 38 (Del). (iv) JSRS Udyog Ltd. v. ITO, [2009] 313 ITR 321 (Del). (v) D.T. and T.D.C. Ltd. v. ACIT, [2010] 324 ITR 234 (Del). 6. He further submitted that all primary facts had been disclosed in the return filed and the petitioner had specifically claimed deduction under Section 36(1)(iii) of the Act. According to learned counsel in view of Apex Court decision in Calcutta Discount Co. Ltd. v. CIT, [1960] 41 ITR 191 (SC), the reopening was not justified. 7. The notice for assessment was sought to be challenged by placing reliance on the judgment of this Court in CIT v. Hero Cycles Ltd. 31 DTR 301 (P H) on the ground that Section 14A was not attracted to the present case. Mere change of opinion and no new material has come to light after framing of original assessment under Section 143(3) of the Act were the other grounds of challenge to the reassessment proceedings. Further where an assessment is made under Section 143(3) of the Act, the presumption is that every issue arising in the assessment proceedings has been considered. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue, on the other hand, submitted that after transposition of Explanation 2 as Explanation I to Section 147 by Taxation Laws (Amendment) Act, 1987 w.e.f. 1.4.1989, since there was no discussion in the assessment order passed by the Assessing Officer relating to the grounds for reopening, it could not be said that there was true and full disclosure made by the assessee. It would not amount to either change of opinion or mere suspicion or lack of application of mind as argued by learned counsel for the assessee. Learned counsel for the revenue has placed reliance upon the judgment of Allahabad High Court in EMA India Ltd. v. Assistant Commissioner of Income Tax [2009] 226 CTR (All) 65 and a recent judgment of this court in CWP No. 13806 of 2010 (R.N. Gupta Co. Ltd. v. ACIT) decided on 30.11.2010 in support of his submissions. He further submitted that the judgments relied upon by the learned counsel for the assessee has no relevancy with respect to the controversy as Explanation I to Section 147 of the Act was not under consideration in any of those judgments. 12. We have heard learned counsel for the parties. 13. The primary issue in these petitions is whether in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponse to a notice issued under sub-s. (1) of s. 142 or s. 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Explanation 1- Production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure within the meaning of the foregoing proviso. 11. Section 147 of the Act empowers the Assessing Officer to assess or reassess income chargeable to tax where he has reason to believe that income for any assessment year has escaped assessment. However, the said provision does not authorize the Assessing Officer to take recourse to reassessment proceedings where after having adopted a particular opinion during original assessment proceedings, on second thought, he wishes to conclude otherwise. In other words, change of opinion is no ground for initiating reassessment proceedings. According to the explanation, the duty cast upon assessee to disclose truly and fully all material facts does not get discharged by mere production of the account books or other documents. Even where, the Assessing Officer could have with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records despite due diligence and the case would attract application of the said Expln. 1 to hold that mere production of the books of account or the documents, etc. without pointing out the relevant entries therein, does not amount to disclosure within the meaning of s. 147(a) of the Act [See, Rakesh Aggarwal vs. Asstt. CIT (1997) 137 CTR (Del) 65: (1996) 221 ITR 492 (Del) 499]. 3.5 The assessee does not discharge his duty by merely producing the books of account or other evidence. He has to further bring to the notice of the AO particular items in the books of account or portions of document which are relevant. Even if it is assumed that, from the books produced, the AO could have found out the truth, he is not on that account precluded from exercising the power to reassess the escaped income [see, Kantamani Venkata Narayana Sons vs. Addl. ITO (1967) 63 ITR 638 (SC); Sowdagar Ahmed Khan vs. ITO (1968) 70 ITR 79 (SC); ITO Ors. vs. Lakhmani Mewal Das 1976 CTR (SC) 220: (1976) 103 ITR 437 (SC), 445]. 3.6. The fact that the AO could have found out the correct position by further probing the matter does not exonerate the assessee from the duty to make a full and true disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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