TMI Blog2014 (3) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... x had escaped assessment - such ground was also brought to her notice by the audit party and that by itself would not mean that she was acting at the instance of the audit party – Relying upon Commissioner of Income Tax v. P.V.S Beedies Private Limited[1997 (10) TMI 5 - SUPREME Court] – if a particular issue is brought to the notice of the AO by the audit party and the AO of his/her application of mind finds that the ground is valid, reopening of assessment cannot be quashed merely because such ground was brought to the notice of the AO by the audit party - thus, the notice cannot be quashed – Decided against Assessee. - Special Civil Application No. 24743 of 2006 - - - Dated:- 11-3-2014 - Akil Kureshi And Sonia Gokani,JJ. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined u/s. 143 (3)]. 3. It is seen from the P L account for F.Y 200001 attached with the return that the company had paid interest to others of Rs. 2,10,876/- and to bank and financial institution Rs. 7,14,237/-. After adjustment of interest received of Rs. 5,27,260/- net interest paid on loan borrowed debited to P L account of Rs. 3,97,853/-. On the other hand, it had granted interest free unsecured loan of Rs. 652.63 lacs to the company under the same management. The loanee company s net worth was negative and there was no stipulation of repayment. Since, the company had obtained interest bearing loan and given interest free loan to another company under the same management which cannot be said to have been used for business purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt arising out of the proviso to Section 147 of the Act of the income escaping the assessment due to failure on the part of the assessee to disclose truly and fully all material facts would not arise. It is also not a case of the petitioner that any of the grounds on which the reopening is based was scrutinized in the original assessment, and that therefore, the Assessing Officer could be stated to have formed an opinion on any of these controversial issues. The main contention of the petitioner, however, was that the Assessing Officer had acted at the behest of the audit party and that the reopening of the assessment was not based on independent reason to believe held by the Assessing Officer. In this context, we had perused the original f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted interest free unsecured loan of Rs. 952.63 lakhs to the companies under the same management. The loanee company s networth was negative and there was no stipulation of repayment. Since the assessee company had obtained interest bearing loan and given interest free loan to the company under the same management, which obviously not used for business purpose. Therefore, interest of Rs. 3,97,853/- debited to the P L A/c. requires to be disallowed u/s. 36 (1)(iii) which resulted in short levy of tax of Rs. 1,57,350/-. (c) The assessee company has put plant and machinery and office equipment worth Rs. 2,02,129/- after 01/10/2000 on which depreciation @ 12.5% works out to Rs. 25,266/-. The assessee company has worked out the depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to tax has escaped assessment on these two counts. Had this being the sold reason for issuing notice for reopening, we would have perhaps allowed the petition and quashed the notice. In the present case, however, the Assessing Officer was convinced that on third ground recorded in the reasons, income chargeable to tax had escaped assessment. It is true that such ground was also brought to her notice by the audit party and that by itself would not mean that she was acting at the instance of the audit party. As held by the Supreme Court in case of Commissioner of IncomeTax v. P.V.S Beedies Private Limited, reported in [1999] 237 ITR 13 (SC), if a particular issue is brought to the notice of the Assessing Officer by the audit party and the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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