9911796707
TMI Blog2014 (6) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... t having provided for interest on the advances and the loans given to the company under the same management and to the relatives of the directors, respectively. The audit report also suggested that the company had not disclosed the accrued interest and, hence, that resulted into underassessment. The objections against such reasons had been raised, vide communication dated March 2, 2006, by stating that on interest-free advances, there is no provision for charging interest. From the inception of the loans, advances were given interest-free and on the borrowings from where advances were given, no interest was charged by the company. In the mercantile system of accounting, as further contended, there was no question of charging interest. It was also contended that this very issue was already discussed in the original assessment and, therefore, the reasons recorded were nothing but a change of opinion on the part of the Assessing Officer. The objections were, however, rejected by a detailed order. Therefore, the reopening of assessments have been challenged by way of present petitions on the ground of jurisdiction itself. Affidavit-in-reply is filed justifying the issuance of such no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his/her notice by the audit party and seek to reopen the assessment, provided it is the Assessing Officer's independent belief that income chargeable to tax has escaped assessment. Reference in this respect may be made to the decision of the Supreme Court in the case of CIT v. P. V. S. Beedies Pvt. Ltd. reported in [1999] 237 ITR 13 (SC). However, it is equally well settled by several decisions particularly by a Division Bench of this court in the case of Adani Exports [1999] 240 ITR 224 (Guj) that though the audit objection may serve as information, the basis of which the Income-tax Officer can act, the ultimate action must depend directly and solely on the formation of belief by the Incometax Officer on his own where such information passed on to him by the audit that income has escaped assessment. In the said decision, the court had referred to and relied upon the decision of the Supreme Court in the case of Indian and Eastern Newspaper Society v. CIT reported in [1979] 119 ITR 996 (SC). The court observed (page 230 of 240 ITR) : "In the present case, by scrupulously analysing the audit objection in great detail, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to question existence of such belief on the ground that what has been stated is not the correct state of affairs existing on record. Undoubtedly, in the face of record, the burden lies, and heavily lies, on the petitioner who challenges it. If the petitioner is able to demonstrate that in fact the Assessing Officer did not have any reason to believe or did not hold such belief in good faith or the belief which is projected in papers is not belief held by him in fact, the exercise of authority conferred on such person would be ultra vires the provisions of law and would be an abuse of such authority. As the aforesaid decision of the Supreme Court indicates that though audit objection may serve as information on the basis of which the Income-tax Officer can act, ultimate action must depend directly and solely on the formation of belief by the Income-tax Officer on his own where such information passed on to him by the audit that income has escaped assessment." Considering the averments raised before us, at our request, the learned counsel for the Revenue for our perusal produced the original file to consider whether in fact the Assessing Officer has any reason for belief while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. In no uncertain terms, the Assessing Officer has stated that the objections raised by the audit are not acceptable by citing the decisions of the apex court in the case of CIT v. Shoorji Vallabhdas [1962] 46 ITR 144 (SC) wherein it has been held that if the income in fact does not arise at all there cannot be tax, even though in books an entry was made about "hypothetical income". She also referred to the case of Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746 (SC) reiterating the decision on the issue that "hypothetical income" cannot be brought to tax unless it is accrued. She opined that no interest was accrued in the instant case and the issue as raised by the audit had not arisen at all, adding also further that the objections raised were fully covered by the above referred decisions. She has of course mentioned that if at all any remedial action is required to be taken, it is revision of the assessment under section 263 of the Act where the limitation would expire on March 31, 2006, and noting another alternative, she stated that assessment could be reopened, limitation for which would expire on March 31, 2008, for which she solicited the advise of the higher au ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
