TMI Blog2013 (7) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... alid and illegal and should be cancelled. Accordingly the notice issued under section 148 of the Income Tax Act is quashed and accordingly the order passed under section 147/143(3) is annulled –decided against revenue - I.T.A No. 1947/Kol/2010 - - - Dated:- 15-7-2013 - Shri K. K. Gupta AND Shri Mahavir Singh, JJ. For the Appellant: Shri L. K. S. Dehiya, CIT(DR) For the Respondent: Shri S. K. Tulsiyan, Advocate ORDER Per Mahavir Singh, JM: This appeal by revenue and Cross Objection by assessee are arising out of order of CIT(A) IV, Kolkata in Appeal No. 227/CIT(A)-IV/08-09 dated 23.11.2009. Assessment was framed by ITO, Ward-4(3), Kolkata u/s. 148/143(3)/144A of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 2001-02 vide his order dated 30.11.2006. 2. At the outset, it is noticed that this appeal by revenue is time barred by 9 days and revenue has filed condonation petition supported by affidavit. When this petition was confronted to Ld. counsel for the assessee, he fairly conceded that the assessee is not interest in agitating condonation petition. Since the Ld. counsel for the assessee conceded the position, we admit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement. It was in consequence of this out of court settlement that the excess liability provided in the books of accounts on account of interest in earlier years have been written back in the accounts for the accounting year ended March, 2001. It is noticed that the gross total income of the assessee for the relevant year does not consist mainly of income chargeable under the heads Income from House Property , Capital Gains , Interest on Securities and Income from Other Sources . The assessee is not a banking company or a company engaged in the business of granting of loans and advances. In view of explanation to sec. 73 of the I. T. Act the assesse cannot set off the share trading loss of Rs.1,06,74,050/against the amount written back u/s. 41(1) or against any other item of income of the assessee. In the above perspective, I have reasons to believe that income of the assessee has escaped assessment for Assessment Year 2001-02. Issue notice u/s. 148 of the I. T. Act. AO i.e. ITO, Ward-4(3), Kolkata completed assessment u/s. 143(3)/148/144A of the Act vide his order dated 30.11.2006. The assessee filed appeal before CIT(A) and he disposed of the same vide his order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in the return f led and the A.O. was aware of the same. The A.O. then narrated the facts relating to income of Rs.1,29,56,883/against Liabilities Written Back which has no relation to re-opening of assessment as the same does not relate to Share Trading Loss. In the Third paragraph the A.O. gives his view that share trading loss cannot be set off against other income and in the last paragraph, he comes to the conclusion that in the above perspective, he has reasons to believe that income has escaped assessment. Therefore, in the reasons recorded, there is no mention of any new facts whatsoever coming to the notice of A.O. after issue of Intimation u/s.143(1). The A.O. had the option to look into the point now raised in reasons recorded by way of issue of notice u/s. 143(2) earlier. But that has not been done by the A.O. It is to be noted that when notice u/s.148 was issued on 31.3.05, the notice period for issue of notice u/s.143(2) had expired. The A.O. could have made particular assessment by issue of notice u/s. 143(2) within the period allowed under law on receipt of return. Therefore, the A.O. now cannot proceed in the guise of section 147. This section cannot be used as a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitted by him in the reasons recorded at the time of passing order u/s.143(1), Therefore proceedings initiated by the A.O. u/s.148 are illegal on the basis of the judgement also. In the case of ACIT VSO. P.Chawla (2008) 306 ITR (AT) 328 (Delhi) (T) , it has been held that even where assessment had been made u/s.143(1) re-opening was not valid tn absence of new material. Admittedly, in the present case also no new facts were received by the A.O. after assessment had been made u/s.143(1) and therefore this case also support the case of the appellant. 7. In view of the facts of the case including reasons recorded by the A.O. and on consideration, of the case laws relied upon by the A.R, as mentioned in the written submissions some of which have been discussed by me in earlier paragraph, I hold that the reassessment proceedings initiated by the A.O. u/s. 147 by issue of notice dated 31.3.05 are illegal and without jurisdiction and therefore the assessment made consequent to such reassessment proceedings is cancelled. Aggrieved, now revenue is in appeal before us. 6. Before us Ld. CIT(DR) Shri L. K. S. Dehiya argued on behalf of revenue. He also filed written submission consisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions: It can also be seen that even if more detailed reasoning is required it is apparent that even with Business Loss brought forward of Rs.61,07,862/and Unabsorbed Depreciation of Rs. 11,26,614/= the GTI of the assessee mainly remains that from Business Profession. This is so because as per section 72(3) of the I.T. Act, the brought forward business loss is to be first adjusted from the current year s business incomes and the balance is to be carried forward further. Therefore even if the whole of the income of the assessee is adjusted by b/f loss, the assessee still has a business loss to be carried forward of Rs. 40,79,322/(Rs.20,28,540 -61,07,862/-). This means that the negative income is still larger than the positive Income from Other Sources. Further as per Section 32(2) and section 72(3) the Unabsorbed depreciation becomes part of the current depreciation and gets to be carried forward further. Thus the A.O. was perfectly within his rights to reopen the assessment u/s 147 and all the conditions of section 147 were duly met. In view of the above facts Ld. CIT, DR stated that the assessee filed return of income on 22.10.2007 which was simply processed u/s. 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortant is whether such material was considered by the Assessing Officer or not. But according to him, when the issue was not considered on merits, re-opening is valid. Ld. CITDR also referred to various case laws, which are already discussed in the Full Bench decision of Hon ble Delhi High Court in the case of Usha International Ltd. (supra). 8. On the other hand, Ld. Counsel for the assessee field written submission consisting of pages 1 to 6 and relied on the decision of Hon ble Delhi High Court in the case of CIT v. Orient Craft Limited (2013) 29 taxman 392 (Del). He only drew our attention to the very first line of reasons recorded, which reads as under:- A summary of the profit loss account of the assessee for the relevant assessment is as follows:- And narrated the facts qua the reasons recorded. 9. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that this case is not covered by the proviso to Section 147 of the Act. The Assessing Officer only carried out processing us. 143(1) of the Act and no regular assessment was framed as admitted by both the sides. We find that there is no issue of change of opinion , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the disclosure of the interest paid to M/s. Binani Cement Ltd was very much on record and the same was duly considered by the A.O while passing the assessment order under section 143(3) of the Act. There is no new material in the possession of the A.O as evident from the reason recorded, which could lead to the conclusion that the income has escaped assessment. Now it is a settle law that AO deemed to have applied his mind if facts are on record and reopening u/s 147 on change of opinion is not permissible even within 4 years. The Hon ble Supreme Court C.I.T. vs. Kelvinator (I) Ltd. 320 ITR 651has confirmed the finding of the full Bench decision of the Hon ble Delhi High Court that on the basis of same facts and materials (and no more) disclosed at the time of original assessment made under section 143(3) of the I. T. Act, by mere change of opinion, the assessment cannot be re-opened u/s.147 of the I. T. Act, 1961. 3.2. In CIT vs. Kelvinator of India Ltd. 256 ITR 1 the Full Bench of the Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the assessment year. The Court held that when a regular order of assessment is passed in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 148 of the Income Tax Act is quashed and accordingly the order passed under section 147/143(3) is annulled. 10. Further, the direct decision on the issue is that of Hon ble Delhi High Court in the case of Orient Craft Limited (supra) wherein it is held as under:- In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income on going through the return of income filed by the assessee after he accepted the return under Section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in CIT vs. Kelvinator (supra). The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words reason to believe vis- -vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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