TMI Blog2018 (6) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... - I.T.A./596/Mum/2008 - - - Dated:- 30-5-2018 - Shri Rajendra,Accountant Member And Sandeep Gosain,Judicial Member For The Revenue : Shri V. Justin-DR For The Assessee : Shri J. D. Mistry Order u/s. 254(1)of the Income- tax Act, 1961(Act) PER RAJENDRA, AM Challenging the order dated 03. 02. 2007 of the CIT(A)-XXIX, Mumbai, the assessee has filed the present appeal. Assessee-company, a joint venture between SHRM Group of France and Radhakrishna Group engaged in the line of institutional Food Services, filed its return of income on 27/10/2004, declaring total income at Rs. NIL. The Assessing Officer(AO) complet -ed the assessment on 28/12/2006, u/s. 143(3)r. s. 147 of the Act, determining its total income at ₹ 15. 77 lakhs. 2. First Ground of appeal, is about validity of re-opening of assessment as per the provisions of section 148 of the Act. Originally, the return of income was processed u/s. 143(1)of the Act, on 29. 03. 2005. Later on. the AO issued a notice under section 148 of the Act, as he was of the opinion that the taxable income had escaped assessment. The reasons recorded for reopening read as under :- The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in adding ₹ 5. 04 lakhs to the income of the assessee computed u/s. 115JB of the Act, that as per the amended provisions of section 115JB unascertained liabilities were to be added to its MAT-income. 4. During the course of hearing before us, referring to the order, dated 25. 02. 2008, giving effect to the Appellate order of the FAA, the Authorised Representative (AR), stated that in the computation of income same income was assesseed that was appearing in the original assessment i. e. in the intimation passed u/s. 143(1)of the Act, that the carry forward of the loss was identical to the carry forward of the intimation, that the AO had initiated re-opening proceedings on two counts, that in the earlier years the interest income was assessed as business income by the AO. s, while passing order u/s. 143(3)of the Act(Pg. 45 of the PB), that while deciding the appeal for the year 2001-02 the then FAA had decided both the issues in favour of the assessee, that amended provisions of section 115JB were applicable from AY. 2009, that same were not effective for the year under appeal. He relied upon the cases of Indo Swiss Jewels Ltd(284ITR389);Paramount Premises(P. )Ltd. (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY. s. On the same facts and circumstances, he changed the head of income for the year under appeal without bringing on record the distinguishing features as compared to earlier year. One of the reason was that during the year under consideration the assessee had not carried out any business. But, it is a fact in the subsequent two AY. s. , the assessee had shown ₹ 4. 66 crores and ₹ 9. 57 crores as compared to the income for the AY. s. 2002-03 and 2003-04 at ₹ 2. 19 and ₹ 1. 12 crores respectively. In these circumstances, it has to be held that there was lull in the business for the year under appeal. But, such a phenomenon is not an uncommon thing in the business world. Temporary lull in business should not have been used as a tool to change the head of the income. From AY. 1997-98 to AY. 2003-04, the assessee was showing interest income under the head business income and the AO had accepted the claim made by the assessee. As stated earlier, at least four assessments for earlier years were passed u/s. 143(3)of the Act and the interest income was never assessed as income from other sources. So, in our opinion, there was no justification for changing the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n seeking to reopen the assessment must be determined with reference to the reasons which are found in support of the reopening of the assessment. These reasons cannot be allowed to be supplemented on a basis which was not present to the mind of the officer and could not have been so present on the date on which the power to reopen the assessment was exercised. In the case before us, no tangible material was existing before the AO that could prove that interest income assessed as business income in earlier years should be taxed under the head income from other sources. 5. 2. Now, we would take up the issue of computation of income under the provisions of section 115JB of the Act. The Hon ble Apex Court in the matter of Apollo Tyres Limited (255 ITR 273)has held that while working out the book profit u/s. 115JB of the Act, the AO has no power to disturb the figures shown in the P L a/c. prepared in accordance with Part II and III of the Schedule VI of the Companies Act. The assessee had made the provisions for the debts that were doubtful of recovery. The AO has not brought on record facts proving that provision were for unascertained liability. At the time of filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew and as a matter of fact the correct view to take in view of the decision of the Supreme Court in . It is well-settled that the law laid down by the Supreme Court is declaratory of the position as it always stood. In any event, the view of the Assessing Officer was supported by the interpretation placed even contemporaneously in the judgment of the court in and in the judgments of the Delhi High Court In the circumstances, there was no warrant for reopening the assessment in exercise of the power conferred under section 147. Considering the above, we hold that there was no justification for issuing a notice u/s. 148 of the Act to the assessee for reassessing the income as per the provisions of section 115 of the Act also. 5. 3. We have also noticed that income of the assessee after giving effect to the order of the FAA would remain same. Therefore, the ratio of Tarak L. Gandhi(supra)would be applicable to the fact of the case. After considering the peculiar facts and circumstances of the case, we have arrived at the conclusion that the order passed by the AO u/s. 143(3)r. w. s. 147 of the Act was bad in law. So, reversing the order of the FAA, we hold that the ..... 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