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TMI Blog2023 (1) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... essment under section 143(3) of the Act dated 21.12.2016 by assessing the income of the assessee at Rs..2,23,38,137/-. 3. Subsequently, since the Assessing Officer believed that the income chargeable to tax has escaped assessment within the meaning of section 147 of the Act, a notice under section 148 of the Act dated 30.03.2019 has been issued to the assessee. Notice under section 143(2) of the Act dated 12.06.2019 was issued and served on the assessee on 17.06.2019. The assessee has requested for reason for reopening and the same was issued to the assessee. The Assessing Officer requested the assessee to substantiate reason for advancing interest free loan of Rs..5 crores to M/s. Prince Foundations Ltd. with supporting evidences. After considering the reply of the assessee, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 06.12.2019 by making disallowance of Rs..64,01,313/- towards proportionate interest burden on the deposit made with M/s. Prince Foundations Ltd. On appeal, the ld. CIT(A) (NAFC) confirmed the assessment order passed under section 143(3) r.w.s. 147 of the Act and dismissed the appeal of the assessee. 4. On bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember requested the Department to verify the assessment records on whether the assessee had indeed furnished the agreement copy between the assessee and M/s Prince Foundations during the original assessment proceeding. Accordingly, the assessment records were called for and the factual position verified. It is seen that no such copy of the agreement, entered between the assessee and Mis Prince Foundations for advancement of deposit, was submitted during the course of original assessment. The copy was submitted on 25/11/2019 during the course of reopened assessment proceeding. Thus the statement of the counsel on this fact is not correct and the fact mentioned in the reasons recorded is found right. Secondly, the counsel stated that the issue for which the case was re-opened was already dealt in the original scrutiny proceeding and hence it amounts to review and change of opinion. On perusal of the records, it is evident that the focus of the Assessing Officer was only on verification of genuineness of the loans taken during the year. At no given point of time did the Assessing Officer even attempt to verify or seek through a specific question on how the loans taken was applied an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es-AY-2014-15 and the same cannot be clubbed as same case. The Honourable Supreme Court has not envisaged such conclusion. Even if one is to stretch the logic that two independent assessment years would remain a single case on account of the taxpayer in both the cases being the same, still in the assessee case, the reopening was done within four years from the end of the assessment year. The mandatory requirement to record the reasons of the failure on the part of the assessee to make true disclosure, as mentioned in the proviso to section 14 7 is needed only where such reopening is envisaged beyond four years. Even if one is to consider such recording mandatory for all years, irrespective of the years for which reopened, even then the Assessing Officer in his recording of reasons has clearly brought out the failure on the part of the assessee to make true disclosure of all facts. It was the bounden duty under the law to furnish all material facts with supporting documents that the assessee relied upon while preparation of the return of income when a notice is served u/s 143(2) of the Act. Service of notice u/s 143(2) is not a ritual requirement just to inform the date of hearing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble material to re-open the assessment. (d) That the Appellant didn't voluntarily file details in response to notice u/s.143(2). (e) That the case squarely falls under sub-clause(c) of clause (iii) to Explanation 2 to Sec.147. 2.2. It is submitted that the plea that the re-opening was based on new fact viz., earlier year's ROI is wrong. The AO during the course of original assessment proceedings itself vide notice u/s.142(1) dated 14.06.2016 sought for a specific query only on comparison with the preceding year data extracted below; "4. Explain why large deduction claimed under Chapter VI-A, explain why large increase of unsecured loans during the year and explain why large increase in sundry creditors against reduction in business income as compared to preceding year". Again it was called for along with the agreement vide notice u/s.142(1) dated 08.12.2016. In response, the Appellant explained in detail on the security deposit of 5 Crore. The AO having applied his mind and came to a conclusion that the same doesn't warrant addition thereby proceeded to frame the original assessment order disallowing claim u/s.80IA alone. 2.3. Even in the reassessment order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also submitted that the revenue now cannot take shelter under Explanation 2 to Section 147 for the sole reason that there being no fresh tangible material based on which the case is re-opened as stated above. 3. It is submitted that if the department was of the view that there was a lack of enquiry, revisionary proceedings u/s.263 could have been initiated. Having left the bus, the AO is wrong in re-opening the assessment based on the very same material/details that were available during the course of original proceedings. In view of the above, it is prayed that the reopening be quashed and the appeal be allowed." 7. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. In this case, the original assessment was completed under section 143(3) of the Act dated 21.12.2016. During the course of assessment proceedings, vide notice under section 142(1) of the Act dated 14.06.2016, the Assessing Officer has called for the following details to be furnished: To be furnished: 1. Natures of business with residential address, business address and telephone number. 2. Copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property purchased is attached. 7) Details of Debtors with Address is attached. Further, in response to the notice dated 08.12.2016 calling for various details including copies of agreement relating to maintaining and operating of Industrial Park at S. No. 3 as well as explanation towards large increase of unsecured loans during the year, vide letter dated 16.12.2016, the assessee filed detailed reply and the same are reproduced as under: 1. Copy of Petition & Case - Approval of Industrial Park: a. We are enclosing the copies of Petition/ Appeal filed against the Rejection of our application by Ministry of Industry & Commerce. b. In this regard, we request your good selves to consider our case favourably on merits and facts. We would be obliged if our plea is accepted on receipt of favourable judgement at a letter date. 2. Nature of Business Prince Property Management Services is a Partnership firm carrying on business of operation and Maintenance of Industrial & Software Technology Parks. a. The company was appointed to operate and maintain Software Technology Parks developed by Prince Foundations Ltd. The main activity under this business are as detailed below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement Services. We hope that above explanations will suffice for completion of assessment. We shall be glad to provide further details if required. After considering the above details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act. 9. Subsequently, the Assessing Officer reopened the assessment for the following reasons: On further verification of records, it is noticed from the Profit and Loss account that, the assessee has made interest payment of Rs.1,23,85,886/- on the unsecured loan of Rs.9,30,10,218/-. From a perusal of Balance sheet it is noticed that the total unsecured loan is Rs.9,30,10,218 and capital is Rs.28,74,467/-. In the asset side of the Balance sheet, it is noticed that the assessee has made deposit of Rs.4,80,60,915/- in M/s. Prince Foundation Limited and no interest on the same has been received by the assessee. From the details filed, it is seen that the assessee has submitted that a deposit of Rs.5 crores has been made by the assessee with M/s. Prince Foundations Limited for provision of Administrative services to the occupants of the software technology park. Copy of agreement between a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... focus of the Assessing Officer was only on verification of genuineness of the loans taken during the year. At no given point of time did the Assessing Officer even attempt to verify or seek through a specific question on how the loans taken was applied and whether such application of borrowed money was for business compulsion/need appears to be incorrect for the reason that during the course of original assessment proceedings, vide notice under section 142(1) dated 14.06.2016 & 08.12.2016, the Assessing Officer has called for details towards increase in unsecured loans on comparison with the preceding year which itself clarifies the position that the Assessing Officer had gone into the sudden increase in unsecured loan, its utilization, viz., the business exigency and for the sake of brevity, the submissions of the assessee were reproduced hereinabove. 12. Further, the Department has claimed that the previous year data would be a tangible material to reopen the assessment. Vide notice under section 142(1) of the Act dated 14.06.2016, the Assessing Officer has called for copy of return of income, computation of total income, P & L a/c, balance sheet, tax audit report, if any for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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