TMI Blog1995 (9) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the present case disclose that notice has been issued by the Assessing Officer without application of mind to the facts before him for arriving at a satisfaction to have reason to believe that income chargeable to tax under the Act has escaped assessment and it also discloses that it is a case of mere change of opinion which does not confer jurisdiction on the Assessing Officer to take action under section 148 of the Income-tax Act. In reply to this contention of the petitioner, Mr. Shelat, learned counsel for the Revenue, urged that as it appears from the assessment order for the assessment year 1991-92, that while considering deduction under section 80P(2)(d), the Assessing Officer has not taken into consideration the provisions of section 80AB and, therefore, the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment which cannot be said to be a mere change of opinion and the action has been initiated with due application of mind. The sufficiency of the material or the final conclusion about the escapement being erroneous or not are not the relevant considerations for examining the validity of notice issued under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Assessing Officer on the basis of the provisions of section 80P(2)(d) read with section 80AB. The fact that no reference has been made to section 80AB is of little consequence. That conclusion of the Assessing Officer was not accepted in appeal by recording the finding as under : " The 11th ground of appeal is in regard to the deduction under section 80P(2)(d). The Assessing Officer considered this claim in paragraph 7 of the assessment order. It was noticed by the Assessing Officer that the appellant had paid huge amount of Rs. 1,81,15,962 by way of interest on short-term and long-term loans on current accounts. Since the deduction under section 80P(2)(d) is only allowable on the net surplus of interest, the Assessing Officer held that since the net interest income is a negative figure, no deduction under this section is admissible to the appellant. The plea of the appellant that interest is earned only on the deposits with the bank on call money for two or three days, was not accepted by the Assessing Officer. Before me the arguments made before the Assessing Officer are reiterated. It is stated that whenever there are realisation of sale receipts, which the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before them. For the assessment year 1991-92 also, the period in consideration in this petition, notice was issued to the assessee on December 16, 1992, for providing information or clarification in respect of deduction claimed under section 80P(2)(d) along with seeking other information. A reply to the notice in this regard was submitted on January 4, 1993. This was followed by furnishing a detailed statement of interest from investment showing availability of funds for deposits without the aid of borrowed capital. It is only after this enquiry that the assessment order was made on March 28, 1994, including the entire, claim of the assessee under section 80P(2)(d) in the computation of permissible deduction under Chapter VI-A which was ultimately restricted to gross total income arrived at by the Assessing Officer before allowing such deduction. The fact that reference has not been made to section 80AB does not detract from the obvious that deduction under section 80P(2)(d) was considered by the Assessing Officer by taking into account the relevant provisions of the Act. On February 23, 1995, the impugned notice was issued for reopening the assessment for the assessment year 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no interest has been paid on borrowings for earning interest on investment. The same was the position in 1991-92 after getting the details about the interest income and the break-up of the investment from time to time from which interest was earned, the very Assessing Officer after issuing the impugned notice on February 23, 1995, barely after one month in pending assessment raising the same issue has again come to the conclusion that interest paid by the assessee is not adjustable against the interest earned on investment allowable for deduction under section 80P(2)(d). In these circumstances, we are of the opinion that the impugned notices have been issued without due application of mind to the material before it for holding the belief about the escapement of income from tax which is sine qua non while assuming jurisdiction to act under section 147 read with section 148. No doubt, the belief which the Assessing Officer is required to hold rests upon his subjective satisfaction and the sufficiency or adequacy of material or the seemingly erroneous view does not furnish a ground for judicial review of the action taken by the Assessing Officer, but such subjective satisfaction m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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