TMI Blog2019 (6) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... t High Court in the case of Sagar Enterprises [ 2001 (12) TMI 18 - GUJARAT HIGH COURT] to contend that in such a situation also, the recording of reasons is untenable. The Hon'ble Gujarat High Court noted that once there was a factually incorrect basis about the formation of belief about escapement of income, such reasons could not be taken to be valid even if the alternate reasons relied upon may be correct. As per the Hon'ble High Court, in such a situation it could not be said with certainty as to which factor weighed with the Assessing Officer to form a belief about escapement of income. Thus,recording of reasons is based on an incorrect assumption of fact, the same invalidates the formation of belief envisaged under Section 147/148 of the Act. As a consequence thereof, the assumption of jurisdiction under Section 147/148 of the Act is untenable and is liable to be set-aside - assumption of jurisdiction under Section 147/148 of the Act is untenable and is liable to be set-aside. Appeal of the assessee is allowed. - ITA NO.421/MUM/2016 - - - Dated:- 28-6-2019 - Hon ble Justice Shri P.P. Bhatt, President And Shri G.S. Pannu, Vice President For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t seriously oppose the admission of Additional Grounds, but submitted that these Grounds were not raised before any of the lower authorities. 6. We have heard the rival submissions and perused the record of the case. We find that the Additional Grounds raised by the assessee involve a point of law where the relevant facts are on record, and go to the root of the matter and, therefore, in view of the decision of Hon ble Supreme Court in the case of National Thermal Power Corporation (supra) and in the interest of substantial justice, we admit the Additional Grounds of appeal and the parties were allowed to argue the appeal on merits of the case. 7. Ld. Authorised Representative of the assessee first of all argued that the reopening of assessment under section 147 of the Act is bad in law and invalid. 8. The facts of the case are that the assessee belongs to Harshad Mehta Group and was notified under the Special Court (Trial of offences relating to transactions in Securities) Act, 1962. The Assessing officer observed that the assessee did not file the return of income in time for the year under consideration as provided u/s.139(1) of the Act. Therefore, the Assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not offer interest income of ₹ 6,06,29,340/-, which was offered in the return of income. The Assessing Officer noted that the assessee had shown business loss of ₹ 1,75,23,793/-, after claiming various expenses, including interest payable to Canfina amounting to ₹ 1,75,00,000/- and demat charges of ₹ 21,391/-. The Assessing Officer observed that the loan in respect of which interest of ₹ 1,75,00,000/- is payable to Canfina had been utilized by the assessee for purchase of shares and securities and that during the year, the assessee had earned dividend income exempt from tax amounting to ₹ 49,07,089/- on such investments. Therefore, he disallowed the entire expenditure of ₹ 1,75,00,000/-, in terms of the provisions of Sec.14A read with Rule 8D(i). Further, the Assessing Officer disallowed de-mat charges of ₹ 21,391/- also u/s.14A, in view of dividend income claimed exempt. Thus, the Assessing Officer assessed the business loss at ₹ 45,184/-, as against ₹ 1,75,23,793/-claimed by the assessee. Further, the Assessing Officer noted that in the Income Expenditure Account, the assessee has shown the interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot filed its return could not be sustained even on the basis of alternative reason since it could not be said with certainty as to which factor weighed with the concerned officer when he issued the impugned notice and when the assessing authority was himself unsure, the formation of belief about escapement of income was not justified. 13. He also relied on the decision of Hon ble Bombay High Court in the case of General Electoral Trust vs ITO in Writ Petition No.1155 of 2016 order dated 20.7.2016, wherein, it is held that mere non-filing of return of income does not give jurisdiction to the Assessing Officer to reopen the assessment unless the person concerned has total income which is assessable under the Act exceeding maximum amount which is not chargeable to Income tax Act. He also relied on the decision of Hon ble Gujrat High Court in the case of Mumtaz Haji Mohmad Memon vs ITO, in Special Civil Application No.21030 of 2017 dated 21.3.2018, wherein, it is held that the assessee had actually filed the return of income and offered to tax but the Assessing officer cannot dispute the fact the assessee did file the return, and in such a situation assuming jurisdiction on a wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
