TMI Blog2017 (10) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... to support the instant reopening. - Decided in favour of assessee. - ITA No. 5994/DEL/2015 And CO No. 243/DEL/2016 - - - Dated:- 16-10-2017 - SHRI B.P. JAIN, ACCOUNTANT MEMBER For The Assessee : Shri Kapil Goel, Adv For The Revenue : Shri T. Vasanthan Sr. DR ORDER This appeal of the Revenue and cross objection of the assessee arises from the order of the ld. CIT(A) 14, New Delhi vide order dated 10.08.2015 for A.Y 2009-10. 2. The Revenue is challenging the order passed by Commissioner of income tax appeals-14, New Delhi, deleting the additions made by the assessing officer in his order, vide order dated 10/08/2015 passed in appeal number 432/14-15/IT/DEL/15-16. On legal point the Revenue is challenging assumption of jurisdiction under section 148, assessee respondent has filed cross objection, which is objected by revenue to be belated and time-barred. Further, the revenue s grounds challenge deletion of addition made by the commission of income tax appeals. During the previous hearings revenue was called upon to file amended and proper grounds which are there on the case file. Both the sides have advanced their arguments on both the legal and merits o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al reopening ground. This application filed under rule 27 to support the order of Commissioner of income tax appeals is also taken on records which could not be seriously repudiated and contested by the Ld. departmental representative. 5. Firstly, legal grounds are taken which are raised by the assessee in her cross objection and rule 27 application. Assessee has prayed in these cross objections that reopening under section 148 as affirmed by Commissioner of income tax appeals may please be quashed being invalid. Likewise in rule 27 application, following has been prayed: Application under rule 27 of income tax appellate tribunal rules (out of abundant caution) to support the order of Commissioner of income tax appeals on ground of section 148 that is validity of reopening proceedings initiated under section 148 of the income tax act On basis of right given to the respondent under aforesaid rule assessee/respondent seeks your honour permission to raise the legal ground of challenging the proceedings under section 148 which was duly raised before Commissioner of income tax appeals white ground No. 1 (B) and (C) which is also adjudicated by the commission of income tax appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction about the correctness or otherwise of the finding given by the Hon'ble Tribunal. What is recorded by the Assessing Officer as his reasons to believe is nothing but reproduction of a portion of order of Hon'ble Tribunal. The Hon'ble Apex Court in Chhugamal Rajpal [1971] 79 ITR 603 held that the submission of a report is not the same as recording of reasons to believe for issuing a notice. 11. The Assessing Officer has clearly substituted form for the substance and, therefore, the action of the respondent falls foul of the law laid down by the Supreme Court in Chhugamal Rajpal [1971] 79 ITR 603 , which is clearly applicable to the facts of this case. Therefore, the reassessment proceedings cannot be upheld as the condition precedent for exercise of jurisdiction u/s. 147 of the Act is not fulfilled. On basis of aforesaid decision which is squarely applicable to present facts will request your honour to accept our application under rule 27 and decide the legal ground of reopening in the favour of the assessee/respondent as reasons recorded without any application of mind. 6. On careful consideration of rival contentions on tenability of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been made in earlier year cannot give carte blanche in favour of revenue to reopen the other years, unless in reasons appropriate nexus and correlation is established between the findings relied in the order of Commissioner of income tax appeals and facts prevalent in present case. It is surprising that although said order of Commissioner of income tax appeals is the main heart of the reasons but that heart has left the assessment order when assessing officer has made the final addition. It is surprising as to how when the final addition is made the basis of the reopening being order passed by Commissioner of income tax appeals can be abandoned and aborted like this . As rightly contended by ld. AR before me that there is no fresh tangible material having live nexus so as to support the instant reopening. Reliance was placed by the assessee on Hon ble Supreme Court decision in case of Lakhmani Mewal Dass reported at 103 ITR 437 is well founded. Further, reliance was placed on recent Hon ble Delhi High Court decision in case of Meenakshi oversees reported in 395 ITR 577 is also apposite in present facts. Further it cannot be doubted that information contained in the order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -facie erroneous and rightly interfered by Commissioner of income tax appeals. 10. Regarding this issue, elaborate and detailed finding contained in order passed by CIT-Appeals is reproduced below for ready reference: I have considered the submissions of the appellant as well as the findings of the Ld.AO. keeping into consideration the various case laws of the higher appellate authorities and the Hon ble Courts held relied on by the Ld.AR and the following facts and circumstances of the appellant s case. I incline to agree with the contention of the appellant that the Ld. AO is not justified in making addition on account of disallowance of interest expenses incurred to generate the income of FDRs amounting to ₹ 33,47,778/- and other expenses of ₹ 48,024/-. ( i) On perusal of the documentary evidences filed by the Ld.AR during the course of assessment as well as appellate proceedings, it is evident that the loan of ₹ 2.50 crores taken from ICICI Bank is not home loan and is loan against the property. The words Home Loan mentioned over the Loan Agreement is as per the Categorization System of the bank. This can be made more clear by the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dexation, which is available when such assets are shown under the head investment. So the Assessee has loose such benefit of indexation for conducting the business and this conduct clearly reveals the intension of Assessee to purchase such assets for business and profession. ( v) It was held by Delhi High Court in the case of CIT vs Smt. Radha Bhai (2005) 272 ITR 264 that the period for retaining of immovable property does not determine the nature but the intension of purchase of such property determined the status and nature of such property. It was further held by Punjab Haryana High Court in the case of CIT Vs. Sushila Devi Jain (2001) 259 ITR 671 that it was necessary to determine the intention of assessee at the time of purchase of land and property should be considered. Therefore, keeping in view, the ratio of judgements of various courts law of higher authorities and Hon ble Courts I incline to agree with the contention of Ld.AR and delete the addition of ₹ 33,47,778/- made on account of disallowance of interest and other expenses. Hence, the ground of appeal is allowed 11. In view of above revenue s first ground of appeal is dismissed. 12. Now turnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in my humble view, on the issue of addition of ₹ 8 lakhs, then there is no income which could be said to have escaped assessment. The reliance placed by assessee s counsel on Hon ble Delhi High Court decision in case of Ranbaxy 336 ITR 136 is well founded wherein it is held that said explanation to section 147 cannot be applied to cover other issues once issue on which reopening was made, no addition could have been made on the reasons recorded as held in paragraph 09,10,11 above and accordingly entire reopening shall fail. Accordingly the deletion of addition made by Commissioner of income tax appeals is confirmed for the reasons given above. I do not find it necessary to adjudicate on merits of this addition. Assessee succeeds in its legal ground raised during arguments on rule 27 application that said addition is unlawful and non-meritorious. 14. Last addition on which revenue is aggrieved is ₹ 2,45,000/-, on account of income from undisclosed sources, where also on basis of the reasoning given in paragraph 12 above since reasons and reopening itself is held to be bad and no addition could have been made on the reasons recorded as held in paragraph 09,10,11 abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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