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TMI Blog2021 (12) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... ings undertaken by AO on the basis of change of opinion not tenable under law. 2) Ld. CIT(A) erred in law and on facts in confirming disallowance by AO of Rs. 3,79,128/- interest expense incurred on loan funds obtained in earlier years while assessing income earned thereon ignoring direct nexus with borrowed funds. 3) Ld. CIT(A) erred in law and on facts to confirm disallowance of genuine interest expenses holding that there were neither loan funds nor current liabilities during the year ignoring documentary evidence. 4) Levy of interest u/s. 234A, 234B & 234C of the Act is unjustified. 5) Initiation of penalty proceedings u/s. 271(1)(c) of the Act is unjustified. 3. The assessee is in the financing business and filed return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer had the reason to believe and was satisfied that it is a fit case for reopening of the assessment. Accordingly, the reasons dated 09.11.2017 was recorded with the prior approval of the Range Additional Commissioner of Income Tax and the case was reopened by issuing notice under section 148 of the Act dated 22.08.2017. The reasons for reopening the assessment under Section 147 of the Act dated 09.11.2017 is reproduced herein below:- "No. ITO-Wd-3/AND/Reason/l 47/2016-17 Date: 09/11/2017 To, Shri Bharat Dhirajlal Shah HIMDIP, Nr. Radhakrishnan Statue, Opp. Brahmkumari, Sardar Gunj, Anand. Sir, Sub: Reason for reopening the assessment u/s. 147 of the I.T. Act- Please refer to your letter dated 02.11.2017 on the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onse to the notice under section 148 of the Act on 06.11.2017 declaring return of income at Rs. 10,54,060/-. The reason for reopening the assessment was also sent to the assessee vide letter dated 09.11.2017. Notice under section 143(2) of the Act was issued on 13.12.2017. A notice under section 142(1) of the Act was issued on 13.12.2017 requesting the assessee to show cause as to why the assessee's claim of deduction under interest expenditure amounting to Rs. 3,79,128/- in the computation of business income be disallowed and added to the taxable income of the assessee. As the assessee has shown nil loan fund and there were no current liabilities during the financial year relevant to the Assessment Year 2014-15, the assessee filed repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concept of change of opinion continuous to apply as long as certain claim made by the assessee was examined by the Assessing Officer, whether the Assessing Officer raised correct queries and came to the correct conclusion or not, in the context of reopening of assessment would be of no consequence. There is vital difference between a conclusion of the Assessing Officer after scrutiny which may appear to the Revenue to be erroneous and a situation where the Assessing Officer during the scrutiny assessment does not examine a particular claim of the assessee altogether. The later will follow within the purview of reopening of assessment, particularly when the notice is issued within a period of 4 years but the former may not. 7. As regards me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income has not mentioned the amount regarding loan funds. The Ld. AR pointed out page no.80 dated 26.06.2015 and there is no mention of loan fund before the earlier Assessing Officer. As regards notice under section 142(1) of the Act dated 09.10.2015, the Assessing Officer has specifically asked query that copy of the interest expenses and interest income during the year should be produced. The assessee vide letter dated 28.10.2015 has given the details regarding the interest income but the details lack the mention of loan fund. As per Section 147, Explanation-3 for the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issues which are escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, the Assessing Officer in assessment under Section 143(3) of the Act has not noticed that there is escapement of certain issues in the Assessment Order/assessment proceedings. Thus, explanation of section 147, to be specific Explanation-3, will come into picture and it will not amount to change of opinion. Thus, ground no.1 of assessee's appeal is dismissed. 10. As regards merits of the case are concerned, the assessee has explained before the Assessing Officer that the loan fund was mentioned in the return of income filed in response to notice under Section 148 of the Act and thus the assessee has made valid claim of interest expenses on borrowed fund. The same should have been allowed by the Assessing Officer. Hence, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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