TMI Blog2010 (1) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... caped assessment. Under sub-clause (iii) of clause (c) of Explanation 2, if income has been made the subject of excessive relief under the Act, then the same is one of the circumstances of income escaping assessment. Therefore if excessive deduction of interest is allowed under Section 36(1)(iii) then certainly it is a case of income escaping squarely covered by Explanation 2 to Section 147 of the Act. - While deciding the issue in favor of revenue, matter remanded back to tribunal. - ITA No. 1628 of 2009 - - - Dated:- 7-1-2010 - C.N. Ramachandran Nair, V.K. Mohanan, JJ. Jose Joseph, SC for Income Tax for the Petitioner P. Balakrishnan for the Respondent JUDGEMENT Ramachandran Nair, J:- 1. This is an appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 is invalid. The second appeal filed by the revenue before the Tribunal was rejected by the Tribunal without going into merits of the case but by holding that the CIT (Appeals) is justified in cancelling reassessment completed under Section 147 as the same is only on account of change of opinion of the assessing officer on the entitlement of deduction of interest claimed and allowed in the original assessment. 3. Standing counsel appearing for the revenue referred to the Tribunal's order and contended that the Tribunal has dismissed the departmental appeal just by following the decision of a Full Bench of the Delhi High Court in CIT v. Kelvinator of India Ltd., 256 I.T.R. 1, which according to him, stands overruled by later deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year. Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed; or (ii) such income has been assessed to too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. Before proceeding to consider the applicability of the Section to the facts of this case, we have to observe that the finding of the Full Bench of the Delhi High Court in the above referred decision on the scope of Section 147 after the amendment by Finance Act 1987 with effect from 1.4.1989 is exactly contrary to the finding of the Supreme Court in the later judgment above referred in as much as the Supreme Court has held that the amendment introduced with effect from 1.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome has escaped assessment. In this case the assessing officer on reexamination of the accounts noticed that assessee which has paid Rs.3 crores towards interest on borrowings in the accounting year relevant for the assessment year advanced above Rs. 84 lakhs as interest free loans to sister concerns and so much so the entire borrowings was not for business purposes and hence deduction of interest allowed under Section 36(1)(iii) is excessive relief granted in assessment. In this context Explanation 2 to Section 147 has to be referred to which exhaustively states certain cases where income chargeable to tax has escaped assessment. Under sub-clause (iii) of clause (c) of Explanation 2, if income has been made the subject of excessive relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of Section 147 of the Act. When the scope of the Section after amendment is large enough to cover situations whereby deductions have bee wrongly or excessively granted, the Tribunal has no authority to restrict the powers of the Assessing Officer by holding that change of opinion is not a ground to reopen the assessment under Section 147 of the Act. Even though assessee's counsel submitted that the decision of the Supreme Court referred to does not apply to this case, in as much as assessment involved in this case is under Section 143(1), whereas the assessment involved in the Supreme Court case is regular assessment, we do not think there is any difference between the proceedings completed under Section 143(1) and the regular assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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