TMI Blog2023 (5) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... ion . As observed by the CIT(Appeals) and, rightly so, as the amounts in question were advanced by the assessee firm in the normal course of its business, therefore, no part of the same could have been disallowed by triggering the provisions of Section 36(1)(iii) of the Act. Decided against revenue. - ITA No. 235/RPR/2017 - - - Dated:- 28-4-2023 - Shri Ravish Sood, Judicial Member For the Assessee : None For the Revenue : Shri Piyush Tripathi, Sr. DR ORDER PER RAVISH SOOD, JM The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income-Tax (Appeals)-1, Raipur dated 15.05.2017, which in turn arises from the order passed by the A.O under Sec. 147 of the Income-tax Act, 1961 (in short the Act ) dated 26.03.2015 for the assessment year 2008-09. The revenue has assailed the impugned order on the following grounds of appeal: 1. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance of Rs. 14,99,670/- made by the AO on account of interest on interest free advances given to the sister concern/relatives for non-business purpose? 2. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby violating the provision on law under Rule 46A of I T Rules.? 9. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record, as the Id CIT(A) has accepted the submission of the assessee which is factually incorrect, thereby rendering the decision, which is perverse? 10. The order of Ld. CIT(A) is erroneous both in law and on facts . 11. Any other ground that may be adduced at the time of hearing . 2. Succinctly stated, the assessee firm had e-filed its return of income for A.Y.2008-09 on 30.09.2008, declaring an income of Rs.9,63,120/-. Original assessment was thereafter framed by the A.O vide his order passed u/s.143(3) of the Act dated 30.12.2010, determining its total income at Rs.10,38,120/-. 3. As is discernible from record, the A.O on the basis of further verifications carried out after culmination of the original assessment, had observed, that the assessee firm had diverted its interest bearing funds for advancing interest free loans to certain concerns. The A.O holding a conviction that proportionate interest of Rs.14,99,670/- pertaining to the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding favour with the claim of the assessee that no adverse inferences as regards the allowability of claim for deduction of interest expenditure u/s. 36(1)(iii) of the Act was called for in its hand, thus, vacated the said disallowances. 5. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal. As the assessee respondent despite having been intimated about the hearing of appeal had failed to put up an appearance, therefore, I am constrained to proceed with and dispose off the appeal as per Rule 25 of the Appellate Tribunal Rules, 1963, i.e, after hearing the appellant revenue and perusing the orders of the lower authorities. 6. As is discernible from the order of the CIT(Appeals), it transpires that he had after taking cognizance of the fact that the A.O had reopened the concluded assessment on the basis of mere change of opinion, thus, concluded that the reopening proceedings were initiated on the basis of invalid assumption of jurisdiction. For the sake of clarity the relevant observations of the CIT(Appeals) are culled out as under: 2.3 Facts being as above, two issues are to be decided in appeal. First is whether the AO wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the Act had been deliberated upon by the A.O while framing the original assessment vide his order passed u/s.143(3) dated 30.12.2010, then in absence of any fresh material having been placed on record after culmination of the said assessment the assessee s case could not have been validly reopened u/s.147 of the Act. I am in agreement with the view taken by the CIT(Appeals) that reopening of a concluded assessment that is merely prompted by a change of opinion of the successor A.O as against that taken by his predecessor can by no means be held to be justified. The aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India (2010) 320 ITR 561 (SC). The Hon ble Apex Court in its aforesaid order, had held, that the case of an assessee cannot be reopened on the basis of a mere change of opinion by observing as under:- On going through the changes, quoted above, made to s. 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt rulings in the past and was well settled and its omission from s. 147 would give arbitrary powers to the AO to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended s. 147 to reintroduce the expression has reason to believe in place of the words for reasons to be recorded by him in writing, is of the opinion. Other provisions of the new s. 147, however, remain the same. 7. Adverting to the observations of the CIT(Appeals) as regards the merits of the case, I find that he had therein observed that as the assessee had advanced the aforesaid respective amounts in question to the aforementioned parties in the normal course of its business, therefore, no part of interest expenditure corresponding to the said respective amounts was liable to be disallowed u/s.36(1)(iii) of the Act. For the sake of clarity the relevant observations of the CIT(Appeals) are culled out as under: Coming to the merit of addition, the advances of Rs. 18029000/- was given, for getting land and constructing hotel thereon. The other two advances of Rs.1441780/- and Rs. 2075000/-also related to the same purpose. As the amounts are business adva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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