TMI Blog2018 (6) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice u/s 263 raises new issues, which are not subject matter of the re-assessment proceedings, then the two year period contemplated under 263(2) would begin to run from the date of assessment and not from the date of re-assessment - hence reckoning date of the impugned notice for the purpose of Section 263(2) is not the date of re-assessment being 30.12.2016, but the date of scrutinizing the assessment i.e, 25.02.2015 - hence the impugned notice issued by the Revenue dated 16.08.2017 is set aside as being hit by limitation u/s 263(2) - therefore the notice is quashed. - W.A.No.1092 of 2017 & C.M.P.No.15224 of 2017 - - - Dated:- 14-6-2018 - Ms. Indira Banerjee, CJ And M. Sundar, JJ. For the Appellant : Mr.R.Vijaya Narayan for Mr.M.V.Swaroop For the Respondent : Mr.J.Narayana Swamy JUDGMENT M. Sundar. J. This intra-court appeal is directed against an order dated 28.08.2017, wherein and whereby a learned single Judge of this Court had dismissed a writ petition in which a notice dated 16.08.2017, issued by the Commissioner of Income Tax, under Section 263 of Income Tax Act, 1961, was assailed. To be noted, order of the learned single Judge is a common or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contention of the IT Department that Assessee had diverted the loan taken from the Bank to its partners and therefore, the interest paid on such loan cannot be treated as expenditure by the Assessee in its returns. 2(viii) Most importantly, Assessee accepted the above position. On Assessee accepting the above position, a re-assessment order came to be passed on 30.12.2016 and such re-assessment order was passed under Section 143(3) read with Section 147 of the IT Act. 2(ix) In and by the aforesaid re-assessment order, the interest component paid by the Assessee to the Bank was disallowed. Most importantly, Assessee paid the entire tax post such re-assessment on 04.01.2017 and this position is not disputed by the Revenue. 2(x) When things stood as above, Revenue issued the impugned notice. 2(xi) Pleading that the Assessee is aggrieved by the impugned notice, the above said writ petition being W.P.No.22978 of 2017 was filed by the Assessee. 2(xii) At the admission stage itself, the Revenue was present before the Court and after hearing the Revenue, a learned single Judge of this Court dismissed the writ petition negativing the grounds urged by the Assessee. 2(xii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 30.12.2016 under Section 143(3) of the IT Act reveals that the only point qua reassessment is dis-allowance of interest paid to the Bank by the Assessee in the light of the loans on which the interest was paid being diverted to partners of the Assessee firm. To be noted, this is the lone point on which the reassessment was done or in other words, this is the lone point on which the entire re-assessment exercise was carried out. 3(vii) However, a perusal of the impugned order now reveals that it raises other issues such as bad debts written off to the tune of ₹ 33.06 lakhs and administrative, selling and distribution expenses claimed by the Assessee to the tune of ₹ 3.23 crores. 3(viii) Some other issues have also been raised in the impugned notice under Section 263. 3(ix)The Principle of law is, it can be construed to be 'Change of Opinion' only when the same issue dealt with in reassessment is raised again in proceedings under Section 263. This is clearly articulated in Sat Pal Aggarwal's case itself. On facts, it would be seen that in Sat Pal Aggarwal's case, reassessment proceedings and thereafter invocation of jurisdiction by Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 would begin to run from the date of assessment and not from the date of re-assessment. In other words, the ratio laid down in Alagendran Finance case, particularly as elucidated in Paragraph 15 of the Alagendran Finance case, is to the effect that the two year limitation period stipulated under Section 263(2) will run from the date of assessment only and not from the date of re-assessment when the Section 263 notice does not deal with the same subject as in assessment and when it deals with other issues which are not subject matter of reassessment proceedings. 3 (xvi) In the instant case, we have already noticed that while the original issue (in the reassessment proceedings) was with regard to disallowance of interest paid by the Assessee, as the loan amount has been diverted to the partners, the issue now raised in the impugned notice under Section 263 is not restricted to the disallowance of interest on loan alone. It deals with other aspects such as claims of the assessee regarding administrative, selling and distribution expenses made by the Assessee to the tune of ₹ 3.23 crores and claim of bad debts written off to the tune of ₹ 33.06 lakhs etc., 3(xvii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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