Shri Suhash V. Lakhani, JAMNAGAR V. The Income Tax Officer, Ward-2 (3), PORBANDAR

ITA 4/RJT/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0090 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Principle of natural justice; Source of fund; Proportionate interest; Difference of opinion; Condonation of delay; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 04/RJT/2016 / ASSESSMENT YEAR : 2009-10 SHRI SUHASH V. LAKHANI, ALANKAR SUPER MARKET, KEDARESHWAR ROAD, DIST. PORBANDAR PAN : AAUPL 1524 E VS INCOME TAX OFFICER, WARD 2 (3), PORBANDAR ./ ITA NO. 05/RJT/2016 / ASSESSMENT YEAR : 2009-10 SHRI RAJESH V. LAKHANI, ALANKAR SUPER MARKET, KEDARESHWAR ROAD, DIST. PORBANDAR PAN : AAUPL 2104 L VS INCOME TAX OFFICER, WARD 2 (3), PORBANDAR ./ ITA NO. 06/RJT/2016 / ASSESSMENT YEAR : 2009-10 SHRI RAKESH V. LAKHANI, ALANKAR SUPER MARKET, KEDARESHWAR ROAD, DIST. PORBANDAR PAN : AATPL 0099 F VS INCOME TAX OFFICER, WARD 2 (3), PORBANDAR ./ ITA NO. 07/RJT/2016 / ASSESSMENT YEAR : 2009-10 SHRI SANJAY V. LAKHANI, ALANKAR SUPER MARKET, KEDARESHWAR ROAD, DIST. PORBANDAR PAN : AAOPL 2425 L VS INCOME TAX OFFICER, WARD 2 (3), PORBANDAR / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : NONE REVENUE BY : SMT. USHA N. SHORTE, SR DR ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 2 / DATE OF HEARING : 11/11/2016 / DATE OF PRONOUNCEMENT: 23/11/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THESE FOUR APPEALS FILED BY DIFFERENT ASSESSEES ARE PREFERRED AGAINST SEPARATE ORDERS OF THE LD. CIT(A), JAMNAGAR OF EVEN DATED 18.09.2015 FOR ASSESSMENT YEAR 2009-10. SINCE THE PARTIES ARE CON NECTED AND ISSUES COMMON, THESE ARE DISPOSED OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. COMMON GROUND RAISED IN THE APPEALS IS : LD. CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING T HE VALIDITY OF REASSESSMENT PROCEEDINGS U/S 147 IGNORING HONBLE S UPREME COURT JUDGMENT IN THE CASE OF CIT V KELVINATOR OF INDIA LTD. 320 I TR 56. THE REOPENING IS MERELY ON CHANGE OF OPINION AS THE ORIGINAL ASSESSM ENT WAS MADE U/S 143(3). 2. ON 09.11.2016, SHRI CHETAN AGARWAL, AR, APPEARED FOR THE ASSESSEE(S), FILED AN APPLICATION FOR CONDONATION OF DELAY OF 5 DAYS IN FILING THESE APPEALS BEFORE ITAT DUE TO E FILING PROCEDURE DIFFI CULTIES. THE DELAY OF FIVE DAYS IS CONDONED ON THE BASIS OF SUBMISSIONS IN THE CONDONATION PETITION AFTER HEARING BOTH THE PARTIES. IT IS HELD THAT THE ASSESSEE(S) WAS PREVENTED BY SUFFICIENT CAUSE IN 5 DAYS OF FILING THE APPEALS . THEREAFTER, THESE APPEALS WERE PARTLY HEARD AS LD. COUNSEL FOR THE ASSESSEE R EQUESTED FOR THE ADMISSION OF ADDITIONAL GROUND ABOUT THE MERITS. IT IS CONTENDED THAT MERITS WERE HAVE BEEN ADJUDICATED BY LD. CIT(A). HOWEVER D UE TO INADVERTENCE THE GROUND CHALLENGING ADDITIONS ON MERITS WERE NOT TAK EN IN FORM NO 36. IT IS URGED THAT ALL THE FACTS IN THIS BEHALF ARE AVAILAB LE ON RECORD AND THERE IS NO REQUIREMENT OF VERIFICATION OF FACTS. RELIANCE IS P LACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF NTPC, REPORTED IN 229 ITR 283, FOR ADMISSION OF ADDITIONAL GROUND. IT IS CONTENDED THA T NON ADMISSION WILL RESULT IN DENIAL OF NATURAL JUSTICE AND IRREPARABLE LOSS TO ASSESSEES. AFTER ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 3 HEARING THE PARTIES WE ARE INCLINED TO ADMIT THE AD DITIONAL GROUND OF DECIDING THE ISSUE ON MERITS. 3. HOWEVER, AT THIS JUNCTURE THE VIDEO LINK CREATED PROBLEMS AND LD. COUNSEL FOR THE ASSESSEE REQUESTED FOR ADJOURNMENT TO 11.11.2016 WHICH WAS GRANTED. ON THIS DATE, NOBODY APPEARED ON BEHALF O F THE ASSESSEE(S), HOWEVER, AN ADJOURNMENT APPLICATION WAS FILED CONTE NDING THAT THE MATTER MAY BE FURTHER ADJOURNED AS SOME PR. COMMISSIONER O F INCOME-TAX IS VISITING JAMNAGAR AND HAS INVITED BAR MEMBERS AT 12 .30 PM WHICH THE COUNSEL HAS TO ATTEND. THE REASON GIVEN IN ADJOURN MENT APPLICATION IS UNSATISFACTORY AS THE E-COURT AT RAJKOT BENCH WORKS FROM 2.30 PM ONWARDS AND THE MEETING WAS SUPPOSED TO BE AT 12.30 PM. BE SIDES, THE JUDICIAL PART- HEARD PROCEEDINGS, WHICH ARE AGREED TO BE TAKEN ON 11.11.2016, CANNOT BE ABANDONED MERELY BECAUSE SOME PRI. CIT INTENDED TO CONDUCT A MEETING WITH THE BAR. THEREFORE, THE ADJOURNMENT APPLICATI ON IS REJECTED AND THE PRESENT APPEALS ARE DECIDED EX-PARTE QUA THE APPELLANT-ASSESSEE(S) AFTER CONSIDERING THE CONDO NATION, ADMISSION OF ADDITION AL GROUND AND PART ARGUMENTS OF ASSESSEES COUNSEL: SUBMISSIONS OF THE LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 4. THE BRIEF FACTS ARE A PROPERTY KNOWN AS CRYS TAL MALL AT RAJKOT WAS PURCHASED BY EIGHT PARTNERS ON 17.06.2008 FOR A CONSIDERATION OF RS.2.62 CRORES. THEREAFTER, FOLLOWING LOANS WERE RAISED AGA INST PROPERTY:- I) ICICI BANK, RAJKOT - RS.1.26 CRORES II) HDFC BANK - RS. 90 LAKHS ON THESE LOANS, THE CORRESPONDING INTEREST WAS CHAR GED BY THE BANK AS UNDER:- I) ICICI BANK - RS.14,06,160/- II) HDFC BANK - RS. 2,08,968/- TOTAL - RS. 16,15,128/- ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 4 5. IN ORIGINAL ASSESSMENTS OF THESE ASSESSEES FRAM ED U/S 143(3) THE HOUSE PROPERTY INCOME AS SHOWN WAS ACCEPTED. SUBSEQ UENTLY THE ASSESSING OFFICER FOUND THAT THE SAID PROPERTY WAS LET OUT TO THE EXTENT OF 1% AND NO RENT INCOME WAS OFFERED. IT WAS FURTHER OBSERVED T HAT, THOUGH THE HOUSE PROPERTY INCOME WAS SHOWN IN THE HANDS OF EIGHT PAR TNERS, THE INTEREST CHARGED BY BANKS AS MENTIONED ABOVE WAS CLAIMED AS DEDUCTION AGAINST HOUSE PROPERTY FOR ONLY FOUR PARTNERS WHO ARE UNDER APPEAL. CONSEQUENTLY BY RECORDING APPROPRIATE REASONS, NOTICE U/S 148 WA S ISSUED REOPENING THE ASSESSMENTS. NOTICE U/S 143(2) IN THIS BEHALF WAS I SSUED TO ALL THESE ASSESSEES PROPOSING THAT THE AGGREGATE INTEREST SHO ULD HAVE BEEN ALLOCATED AMONG ALL THE 8 CO OWNERS AND THE APPELLANT-FOUR PA RTNERS HAVE CLAIMED EXCESS DEDUCTION. THE ASSESSEE(S) FILED REPLY DATE D 10.11.2014 AND 05.12.2014 AS UNDER:- 1. I ADMIT THAT THE PROPERTY AT CRYSTAL MALL WAS PURCHASED BY TOTAL 8 PERSONS INCLUDING MYSELF AND MY SHARE IN THE PRO PERTY WAS 12.50%. 2. FOR PURCHASE OF PROPERTY AT CRYSTAL MALL POT OF THE 8 PERSONS, 4 PERSONS [I.E. (1) LLABEN RAJESH LAKHANI, (2) SHRITI RAKESH LAKHANI, (3) SHILPA SANJAY LAKHANI AND (4) SITA SUBHASH LAKHANI] HAD THEIR OWN SOURCE OF FUNDS BY WAY OF LOAN TAKEN FROM ICICI BANK LTD. AND THEREFORE TH EY HAVE MADE PAYMENT TOWARDS THEIR CONTRIBUTION FOR PURCHASE OF PROPERTY FROM THEIR OWN SOURCES AND HAD NO LOAN PARTICIPATION FOR PURCHASE OF PROPE RTY WHICH IS REFERRED BY YOU IN YOUR NOTICE 3. IN FACT OUT OF 8 BUYERS TWO GROUP OF 4 PERSONS EACH HAD APPLIED FOR LOAN AND THERE WERE TWO LOANS WERE SANCTIONED IN THE GRO UP OF 4 PERSONS EACH. ONE LOAN FOR RS. 126.00 LACS BY ICICI BANK LTD. AND OTHER LOAN FOR RS.123.92 LACS ALSO BY ICICI BANK LTD. THUS TOTAL C ONSIDERATION PAID BY BOTH THE GROUP OF 4 PERSONS EACH HAD APPLIED FOR LO AN FOR GIVING PROPERTY ON RENT. 4. WE 4 PERSONS HAD NO FUNDS AVAILABLE AT THE TIME OF PURCHASE OF PROPERTY WE JOINTLY HAD APPLIED FOR LOAN FROM ICICI BANK LTD . WHICH WAS SANCTIONED BY THE BANK IN THE NAME OF US (I.E. 4 PERSONS). 5. THUS I HAD SHARE IN THE PROPERTY FOR 12.50% WHER EAS I HAD SHARE IN LOAN FOR 25% REFERRED BY YOU IN YOUR NOTICE. ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 5 6. AS WE FOUR PERSONS WERE THE BORROWERS AND WE HA D USED THE FUNDS WE WERE THE PERSONS LIABLE FOR REPAYMENT OF LOAN AND P AYMENT OF INTEREST. THIS IS THE REASON WHY INTEREST IS DEBITED IN 4 PERSONS INS TEAD OF 8 PERSONS. 7. THE BANK HAD GIVEN TWO LOANS TO DIFFERENT GROUP S OF 4 PERSONS EACH. CO- OWNERS FALLING UNDER THAT PARTICULAR GROUP WERE LIA BLE FOR REPAYMENT OF LOAN AMOUNT ALONGWITH INTEREST. 8. IN SUPPORT OF OUR CLAIM I HAVE ENCLOSED COPY OF LOAN SANCTION FOR BOTH THE LOANS SANCTIONED WHICH WILL CLEAR THE WHOLE PICTURE . 9. LIKE WISE LOAN TAKEN FROM HDFC BANK LTD. FOR RS. 90.00 WAS ALSO USED BY WE 4 PERSONS ONLY AND THEREFORE INTEREST IS CLAIMED BY US ONLY AND NOT BY ENTIRE 8 PERSONS AS THOSE 4 PERSONS HAVE NEV ER UTILIZED THIS FUND. 10. UNDER THE RULE OF NATURAL JUSTICE ALSO THE PERSON UTILIZING FUND IS ONLY LIABLE FOR PAYMENT OF INTEREST AND INSTALLMENT AND THEREFORE HE SHOULD ONLY BE ALLOWED TO TAKE DEDUCTION UNDER THE INCOME-TAX ACT. 11. AS PER THE FINANCIAL LAWS APPLICABLE IN IND IA THE PERSONS THOUGH THEY ARE NOT BORROWERS AGAINST SECURITY OF ANY PARTICULA R PROPERTY, BUT IF SOMEBODY IS TAKING LOAN AGAINST THAT PROPERTY HE/SH E IS REQUIRED TO STAND AS GUARANTOR. IN THE LOANS FOR WHICH DEDUCTION OF INTE REST IS CLAIMED BY US WE FOUR PERSONS WERE THE ACTUAL USERS OF FUNDS AND OTH ER 4 PERSONS WERE GUARANTORS ONLY IN THE LOANS MENTIONED IN YOUR NOTI CE AND NOT THE BORROWERS. 12. THE ENTIRE PROPERTY AT CRYSTAL! MALL WAS LE T OUT TO M/S. NILKAMAL LTD. AND LEASE AGREEMENT WAS ALSO EXECUTED. HOWEVER, THE PARTY HAD NOT OCCUPIED PROPERTY DURING THE YEAR AND THEREFORE RENT IS NOT RECEIVED AND ALSO NOT SHOWN AS INCOME. IN THE LIGHT OF FOREGOING CLARIFICATION AND SUPPORT ING ATTACHED HEREWITH I HEREBY REQUEST YOU ALLOW MY CLAIM OF DEDUCTION FOR INTEREST IN FULL. 5.1 THE AO, HOWEVER, ON VERIFICATION OF THE RECORD HELD THAT THE ASSESSEE(S) CONTENTION WAS NOT CORRECT AND HE ACCO RDINGLY DISALLOWED THE EXCESS CLAIM OF INTEREST BY FOLLOWING OBSERVATIONS: - .. A) IT IS PERUSED FROM THE RECORDS THAT THE ASSESSEE HAS OBTAINED THE LOAN THE LOAN OF RS.1.26 CRORES ALONGWITH THE SEVEN CO-APPLI CANT FROM THE ICICI HOME FINANCE. THE LOAN SANCTION LETTER SUBMITTED BY THE ASSESSEE CLEARLY REVEALS THAT THE ASSESSEE HAD APPLIED FOR THE LOAN UNDER AP PLICATION NO.7790104833 AND VIDE LETTER DATED 15.05.2008, ICICI BANK HAS CO MMUNICATED THE TERMS & ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 6 CONDITION FOR THE LOAN A/C NO. (LAN) NHRAJ000007316 02. THEREAFTER, VIDE LETTER DATED 22.05.2008, M/S. ICICI HOME FINANCE HA S SANCTIONED THE LOAN OF RS.1.26 CRORE IN THE NAMES OF RAMESH VINODCHANDRA L AKHANI, RAJESH LAKHANI, SANJAY LAKHANI, SUHASH LAKHANI, SHILPA LAK HANI, ILA LAKHANI, SHRITI LAKHANI AND SITA LAKHANI. ICICI HOME FINANCE HAS CLEARLY MENTIONED ALL THE EIGHT NAMES OF THE APPLICANT IN WHOSE NAMES THE LOAN OF RS.1.26 CRORE SANCTIONED BY IT ON TOP OF THE SAID LOAN SANCTION L ETTER. . FROM THE ABOVE FACTS, IT IS CRYSTAL CLEAR THAT THE BOTH THE LOAN OBTAINED BY THE ASSESSEE ALONGWITH SEVEN CO-OWNERS AND NOT THE SO-CALLED GROUP OF FOUR PERSONS AS CLAIMED BY THE ASSESSEE. IT CAN BE SEEN THAT THE ASSESSEE HAS CLAIMED THE BANK LOAN INTEREST EXPENSES OF RS.3,51, 540/- ON ICICI BANK LOAN AND RS.2,08,968/- ON HDFC BANK. THESE LOAN INTEREST EXPENSES CLAIMED BY THE ASSESSEE BEING ONE OF THE CO-APPLICANT OF LOAN AMONGST FOUR PERSON OF GROUP. ACCORDINGLY, THE TOTAL INTEREST EXPENSES COM ES TO RS.14,06,160/- (RS.3,51,540 X 4) ON ICICI BANK AND RS.8,35,872/- ( RS.2,08,968 X 4). THUS, TOTAL INTEREST EXPENSES OF BOTH THE LOANS COMES TO RS.22,42,032/-. SINCE, THE BOTH LOANS SANCTIONED IN THE NAMES OF EIGHT PERSONS , THE INTEREST EXPENSES ARE ALSO REQUIRED TO BE DIVIDED INTO EIGHT PERSONS. ACC ORDINGLY, THE LOAN INTEREST EXPENSES ON BOTH LOANS COMES TO RS.2,80,254/- FOR E ACH PERSON. AS AGAINST THIS, THE ASSESSEE HAS CLAIMED THE LOAN INTEREST EX PENSES OF RS.5,60,508/-, WHICH IS CLAIMED EXCESS BY RS.2,80,254/- AND HENCE, THE SAID LOAN INTEREST EXPENSES OF RS.2,80,254/- IS HEREBY DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME BY CLAIMING EXCESS LOAN INTEREST EXPENSES AN D THEREBY, HAS EVADED THE TAX, PENALTY PROCEEDINGS U/S.271(L)(C) OF THE ACT I S INITIATED SEPARATELY. 6. AGGRIEVED, THE ASSESSEE(S) PREFERRED FIRST APPEA L, WHEREIN THE LD. CIT(A) DISMISSED THE GROUND CHALLENGING VALIDITY OR REASSESSMENT AND GAVE PART RELIEF TO THE ASSESSEE(S) BY FOLLOWING OBSERVA TIONS:- 6.2 SO FAR AS GROUND OF APPEAL REGARDING DISALLOWA NCE OF INTEREST IS CONCERNED, AS PER PROVISIONS OF LAW THE INTEREST PA ID IS ALLOWED AS DEDUCTION ON THE LOAN WHICH IS UTILIZED FOR PURCHASE OF PROPE RTY FROM WHICH RENTAL INCOME IS EARNED. IN THE PRESENT CASE THE INTEREST WHICH HAS BEEN CLAIMED AS DEDUCTION, IS ON THAT AMOUNT OF LOAN WHICH IS OVER & ABOVE WHAT HAS REALLY BEEN UTILISED FOR PURCHASE OF THE PROPERTY. HENCE, DURING THE APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED TO GIVE FOLLOWI NG DETAILS WHICH WERE SUBMITTED (AS REPRODUCED IN PARA 5):- ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 7 (1) THE AMOUNT OF LOAN TAKEN BY ME GROUP OF FOU R MALE MEMBERS, VIZ. (I) RAJESH V. UKHANI, (II.) RAKESH V. LAKHANI, (III) SA NJAY V LAKHANI & (IV) SUHAS V. LAKHANI (2) THE LOAN AMOUNT UTILIZED FOR INVESTMENT IN T HE SAID PROPERTY NAMELY CRYSTAL MAIL. AS PER THE CALCULATION CHART SUBMITTED BY THE APPEL LANT IT IS CLEAR THAT THE APPELLANT HAS ACTUALLY INVESTED RS.32,58,138/- BEIN G 1/8 TH OF TOTAL PURCHASE VALUE OF RS. 2,60,65,100/- BECAUSE THE APPELLANT HA S 1/8 TH SHARE IN THE PROPERTY. THIS GROUP OF FOUR MEMBERS HAS TAKEN LOAN OF RS.2,1 6,00,000/- ON WHICH TOTAL INTEREST OF RS.22,42,038/- HAS BEEN PAID. HOW EVER, OUT OF RS.2,16,00,000/- ONLY RS. 1,30,32,550/- CAN BE SAID TO BE UTILIZED BY THIS GROUP FOR INVESTMENT IN RENTED PROPERTY BECAUSE, ON LY IS OWNED BY THIS GROUP. THE PROPORTIONATE INTEREST ON RS. 1,30,32,55 0/- COMES TO RS. 13,52,754/- AND 1/4 TH OF THIS INTEREST I.E. RS.3,38,188/- IS ALLOWABLE A S DEDUCTION U/S.24(B) IN THE APPELLANT'S CASE. ALLOWABLE DEDUCTION HAS BEEN WRONGLY CALCULATED BY THE AO WITHOUT GOING INTO DETAILS OF APPLICATION OF LOAN AMOUNT. THE APP LICANT HAS CLAIMED RS.5,60,508/- AS DEDUCTION WHILE ALLOWABLE AS COMPU TED ABOVE COMES TO RS.3,38,188/-. HENCE THE BALANCE I.E. RS.2,22,320/ - (RS.5,60,508/- - RS.3,38,188/-) REQUIRES TO BE ADDED TO THE TOTAL IN COME. HENCE THE DISALLOWANCE IS RESTRICTED TO RS.2,22,320/- INSTEAD OF RS.2,80,254/-. APPELLANTS GROUNDS ON THIS ISSUE ARE PARTLY ALLOWE D. 7. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE(S) ARE IN APPEAL BEFORE US. 8. ON THE FIRST DAY OF HEARING, LD. COUNSEL FOR THE ASSESSEE(S) CHALLENGED REOPENING OF ASSESSMENTS AS THEY ARE BASED ON MERE CHANGE OF OPINION ON ORIGINAL ASSESSMENTS PASSED U/S 143(30. LD. CIT(A) HAS SUMMARILY DISMISSED THE GROUND CHALLENGING REOPENING BY FOLLO WING OBSERVATIONS:- 6.1 SO FAR AS GROUND OF APPEAL REGARDING RE-OPENIN G OF THE ASSESSMENT IS CONCERNED, I AM OF THE CONSIDERED VIEW THAT THE AO HAS ACTED WELL WITHIN THE BOUNDARY OF PROVISIONS OF LAW AS HE DID HAVE INFORM ATION WHICH MADE HIM TO FORM A REASONABLE BELIEF THAT THE INCOME HAS ESCAPE D ASSESSMENT. HENCE, THIS GROUND OF APPEAL IS DISMISSED. ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 8 9. LD. COUNSEL FOR THE ASSESSEE(S) CONTENDED THAT T HE ORIGINAL ASSESSMENT WAS MADE BY LD. AO VIDE SCRUTINY ASSESSMENT U/S 143 (3), THOUGH THERE IS NO DIRECT REFERENCE OF THE ALLOWABILITY OF INTEREST IN QUESTION; HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, RELEVANT QUER IES WERE ASKED IN THIS BEHALF WHICH WAS REPLIED BY THE ASSESSEE(S). SINCE THE ISSUE STANDS ALREADY ADJUDICATED BY AO ON THIS ISSUE, IN VIEW OF THE HON BLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD, REPORTED IN 320 ITR 561 (SC), THE ACTION OF AO REOPENING THE ASSESSMENTS AM OUNTS TO CHANGE OF OPINION. THEREFORE, THE ASSESSMENT IN QUESTION BEI NG PASSED ON CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE IN LAW THE RE-ASS ESSMENTS ARE BAD IN LAW. 10. ON MERITS, IT WAS CONTENDED THAT THE BORROWED A MOUNT IN QUESTION WAS UTILIZED ONLY BY FOUR PARTNERS AND NOT BY OTHER S. AS PER THE SETTLED MERCANTILE AND ACCOUNTING PRINCIPLES, THE CLAIM OF ALLOWABILITY OF INTEREST IS AVAILABLE TO THE PERSON WHO ACTUALLY USED THE CAPIT AL. SINCE THE CAPITAL HAS BEEN USED BY FOUR PERSONS, THEY HAVE VALIDLY CLAIME D THE EXPENDITURE. FURTHER ARGUMENTS WERE TO BE MADE THEREAFTER. 11. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, CONTENDED THAT THE ISSUE ABOUT ALLOWABILITY OF INTEREST OR EXCESS CLAIM OF EXPENDITURE NEVER CAME UP BEFORE THE AO WHICH IS EVIDENT FROM THE ASS ESSMENT ORDERS; THEREFORE, NO OPINION WAS FORMED THEREON. CONSEQUE NTLY, THE ISSUE OF CHANGE OF OPINION DOES NOT ARISE AT ALL. IN VIEW T HEREOF, THE LD. CIT(A) HAS RIGHTLY DISMISSED THE GROUND ABOUT VALIDITY OF RE-O PENING OF ASSESSMENT. 12. APROPOS MERITS, LD. DR CONTENDS THAT AFTER CARE FUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, PROPER RELIEF HAS BEEN GIVEN BY THE LD. CIT(A). HIS ORDER IS RELIED ON. 13. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN OUR ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 9 CONSIDERED VIEW, LD. CIT(A) OUGHT TO HAVE DECIDED T HE ISSUE ABOUT THE REOPENING OF ASSESSMENT BY A SPEAKING ORDER AND NOT BY MERELY HOLDING THAT THE ACTION OF AO WAS BASED ON A REASONABLE BEL IEF AND WAS WITHIN THE BOUNDARY OF PROVISIONS OF LAW. IN OUR CONSIDERED V IEW, THESE FINDINGS OF THE LD. CIT(A) REGARDING VALIDITY OF REASSESSMENTS ARE GENERAL IN NATURE. IT IS SETTLED LAW THAT WHEN THE ASSESSEE(S) RAISES A S PECIFIC PLEA, A PROPER FINDING THEREON HAS TO BE GIVEN AND THE SAME CANNOT BE DISPOSED OF BY A GENERALIZED STATEMENT/FINDING LIKE THE ONE ARRIVED AT BY THE LD. CIT(A). ON MERITS ALSO, THE ASSESSEE(S) DID NOT COMPLETE HIS A RGUMENTS AND AVOIDED THE HEARING ON THE BASIS OF AN ADJOURNMENT APPLICATION WHICH WE DO NOT FIND ACCEPTABLE AS FOR THE REASONS MENTIONED ABOVE. IN THE PAPER-BOOK ALSO, COPIES OF ACCOUNTS OF ALL THE PARTNERS/ CO OWNERS A ND ANY AGREEMENT BETWEEN THE ALLEGED NON-BORROWERS AND BORROWERS IS NOT BEEN PRODUCED. KEEPING IN VIEW ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO SET ASIDE THE MATTER BACK TO THE FILE O F THE LD. CIT(A) TO DECIDE THE SAME AFRESH AFTER GIVING THE ASSESSEE(S) AN OPPORTU NITY OF BEING HEARD AND CALLING FOR THE REMAND REPORT FROM THE AO. WE MAY REITERATE THAT THE LD. CIT(A) SHOULD DECIDE THE ASSESSEE(S) GROUND CHALLE NGING THE VALIDITY OF RE- OPENING OF PROCEEDINGS BEING BASED ON CHANGE OF OPI NION IN SPEAKING TERMS. 14. IN THE RESULT, ALL FOUR APPEALS OF THE ASSESSEE (S) ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 23 RD NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 23/11/2016 *BIJU T., SR. PS ITA NOS. 4 TO 7/RJT/2016 ASSESSEES: SUHASH V. LAKHANI & OTHERS AY : 2009-10 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, RAJKOT 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, RAJKOT