ACIT, Chandigarh V. Sh. Anil Nagpal, Chandigarh

ITA 494/CHANDI/2015

• Counselvise Citation: 49421514 RSA 2015
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: AMRINDER SINGH
• Keywords: Reopening of assessment; Business income; Proportionate interest; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 147; 148; 54; 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.494/CHD/2015 (ASSESSMENT YEAR : 2007-08) THE A.C.I.T., VS. SH.ANIL NAGPAL, CIRCLE 5(1), SCO 31, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: AAHPN4284C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL, DR RESPONDENT BY : SHRI AMRINDER SINGH DATE OF HEARING : 01.09.2015 DATE OF PRONOUNCEMENT : 03.09.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH DATED 19.2.2015 FOR ASSESSM ENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT IN THIS CASE WAS ORIGINALLY COMPLETED UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDE R DATED 14.12.2009. THE ASSESSMENT PROCEEDINGS WERE INITI ATED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 5.10.2011. 2 THE REASONS FOR ISSUE OF NOTICE UNDER SECTION 148 O F THE ACT ARE AS FOLLOWS : PERUSAL OF THE BALANCE-SHEET OF THE CONCERN M/S ALL IANCE FORMULATIONS, OF WHICH THE ASSESSEE IS THE PROP., SHO WS CAPITAL WORK IN PROGRESS OF PLANT-LL AT RS. 65,88,844/- . EVIDENT LY THE ASSETS OF PLANT-LL, WHICH WAS STILL UNDER CONSTRUCTIO N DURING THE YEAR, WERE NOT PUT TO USE DURING THE PREVIOUS YEAR. T HE ASSESSEE HAS PAID BANK INTEREST OF RS. 18,89,028/- IN THIS CONC ERN ON THE BORROWED FUNDS OF RS. 2,28,26,459/-. THUS, INTEREST N EEDS TO BE 'DISALLOWED AS PER PROVISO TO SECTION 36(1)(II). THE ASSESSEE HAS ALSO CLAIMED INTEREST EXPENSES OF RS . 6,03,655/- AGAINST THE INTEREST INCOME OF RS. 1,31,99 2/- WHICH IS APPARENTLY NOT ALLOWABLE. AT THE MOST INTEREST EXPE NSES OF RS. 1,31,992/- CAN BE CONSIDERED TO BE GENUINELY INCURRED TO EARN INTEREST INCOME OF RS. 1,31,992/-. THUS BALANCE INTE REST EXPENSES OF RS. 4,71,663/- WERE REQUIRED TO BE DISALLOWED, U/S 57. THE ASSESSEE HAS ALSO CLAIMED EXEMPTION OF RS. 10,85 ,422/- U/S 54F AGAINST THE HOUSE PROPERTY PURCHASED BY HIM BY INVESTING THE LTCG OF RS. 31,92,419/-. ON VERIFICATION OF THE RECORD, IT IS FOUND THAT THE ASSESSEE HAS PURCHASED TWO RESIDENTI AL HOUSE PROPERTIES WITHIN A SPECIFIED PERIOD WHEREAS HE SHOUL D HAVE PURCHASED ONE RESIDENTIAL HOUSE PROPERTY ONLY TO CLAIM EXEMPTION U/S 54 F. THUS THE EXEMPTION CLAIMED U/S 54F AMOUNTI NG TO RS. 10,85,422/- NEEDS TO BE DISALLOWED. THE ASSESSEE HAS ALSO CLAIMED EXCESS DEDUCTION U/S 801 C, WHICH NEEDS TO BE DISALLOWED. IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIEVE TH AT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 24,47,746/-. NOTICE U/S 148 OF THE L.T. ACT, 1961 IS THEREFORE ISSUED. 3. DURING THE RE-ASSESSMENT PROCEEDINGS, THE ASSES SEE FILED OBJECTIONS TO THE VALIDITY OF REASONS SO RECO RDED BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT ONLY ON THE PERUSAL OF THE ASSESSMENT RECORDS AND ON THE CHANGE OF OPIN ION, THE RE-OPENING HAS BEEN INITIATED. IT WAS ALSO SUBMIT TED THAT THE STATUTE DOES NOT PROVIDE FOR INITIATION OF PROCEEDI NGS UNDER SECTION 147 OF THE ACT ON MERE CHANGE OF OPINION PA RTICULARLY 3 WHEN THE SAME IS BASED ON INFORMATION AND DETAILS A LREADY AVAILABLE ON RECORD. ALL THE ISSUES ON WHICH THE RE-OPENING WAS MADE WERE DULY EXAMINED BY THE ASSESSING OFFICE R DURING THE COURSE OF ASSESSMENT AND WERE ACCEPTED BY HIM I N THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT. REL IANCE WAS PLACED ON A NUMBER OF JUDGMENTS ALSO. FURTHER SUBM ISSIONS ON THE MERITS OF THE ISSUES WERE ALSO MADE. HOWEV ER, THE ASSESSING OFFICER REJECTED THE OBJECTIONS SO RAISED BY THE ASSESSEE AND PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, MAKING A TOTAL ADDITION OF RS.57,00,413 /- ON THE ISSUE RAISED IN THE REASONS RECORDED FOR RE-OPENING . 4. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND MADE SUBMISSIONS AGAINST RE-OPENING O F ASSESSMENT UNDER SECTION 147 OF THE ACT AS WELL AS ON THE MERITS OF THE ISSUES IN QUESTION. THE LEARNED CIT (APPEALS) MADE A DETAILED ANALYSIS OF ALL THE FOUR REASONS ON THE BASIS OF WHICH RE-OPENING WAS MADE AND THE ASSESSMENT WAS FRAMED UNDER SECTION 147 OF THE ACT. THE FINDINGS OF THE LEARNED CIT (APPEALS) ARE RECORDED AT PAGE 2 ONWARDS OF HIS ORD ER, WHICH ARE REPRODUCED AS UNDER : 5. I HAVE CONSIDERED FACTS OF THE ISSUE. THE FIR ST REASON FOR WHICH THE ASSESSMENT WAS REOPENED IS REGARDING DISAL LOWANCE OF INTEREST U/S 36(L)(III) ON CAPITAL WORK IN PROGRESS. THE APPE LLANT HAS CLAIMED THAT PROPORTIONATE INTEREST PERTAINING TO PURCHASE OF CA PITAL GOODS WAS DULY CAPITALIZED AND THE RELEVANT DETAILS IN THIS REGARD WERE FILED IN ORIGINAL ASSESSMENT PROCEEDINGS. A PERUSAL OF THE ASSESSMENT RECORDS REVEALS THAT THE ASSESSING OFFICER HAD ASKED FOR DETAILS OF CAPI TAL WORK IN PROGRESS IN THE VERY FIRST QUESTIONNAIRE DATED 26.05.2009, IN R EFERENCE TO WHICH THE APPELLANT HAD FILED DETAILS OF INTEREST IN WHICH IT WAS, INTER-ALIA, MENTIONED 4 THAT INTEREST OF RS. 33,904/- ON LOAN WAS INCLUDED IN CWIP. THUS, THE APPELLANT HAD HIMSELF CAPITALIZED THE INTEREST OF R S. 33,904/-. THE AMOUNT OF INTEREST TO BE CAPITALIZED WAS LOW BECAUS E THE RELATED ASSETS WERE BOUGHT AT THE FAG END OF THE YEAR. THE ASSESSI NG OFFICER HAD EXAMINED AND THEREAFTER DECIDED NOT TO MAKE ANY ADD ITION ON THE ISSUE. THEREFORE, REOPENING THE ASSESSMENT NOW IS CHANGE O F OPINION. 5.1 THE SECOND REASON FOR WHICH THE ASSESSMENT HAS BEEN REOPENED IS THAT INTEREST EXPENSES HAD BEEN SET-OFF AGAINST INT EREST INCOME AND THE SET- OFF OF INTEREST EXPENSES OF RS. 4,71,663/- WAS REQU IRED TO BE DISALLOWED U/ S 57 OF THE ACT. THE CLAIM OF THE APPELLANT IS THAT HE H AD DULY REPLIED TO THE QUERY OF THE ASSESSING OFFICER AT THE TIME OF ORIGI NAL ASSESSMENT PROCEEDINGS VIDE REPLY DATED 05.12.2009. A PERUSAL OF THE ASSES SMENT RECORD REVEALS THAT THE APPELLANT HAD FILED A REPLY DATED 05.12.20 09 BEFORE THE ASSESSING OFFICER ON 07.12.2009. RELEVANT PORTION OF THIS REP LY IS EXTRACTED BELOW: 'AS REGARDS EXPENSES ON INTEREST PAID, THE CLAIM UN DER THE HEAD INCOME FROM OTHER SOURCES, IT IS SUBMITTED THAT THE ASSESSEE HAD RAISED A HOME LOAN AND INVESTED IT IN THE FIRM TOWA RDS IT CAPITAL AS THE BUSINESS WARRANTED SUCH INVESTMENT. IT MAY BE MENTIONED HERE THAT SIMILAR INTEREST ON T HIS WAS CLAIMED LAST YEAR ALSO AND THE SAME WAS ACCEPTED BY MAKING THE A SSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT. THE COPY OF T HE COMPUTATION OF INCOME FOR THE A.Y. 2006-07 IS ATTACHED.' IN FACT, BEFORE THE ABOVE REPLY, THE APPELLANT HAD DELIBERATED THE ISSUE VIDE REPLY DATED 12.10.2009, RELEVANT PORTION OF WH ICH IS ALSO REPRODUCED BELOW: AS REGARDS CLAIM OF INTEREST AGAINST INTEREST INCOM E, IT IS SUBMITTED THAT THE ASSESSEE HAD RAISED PERSONAL LOAN AGAINST PAYMENT AND INVESTED IN THE FIRM. HOWEVER, THE SAME HAS BEEN DE BITED AGAINST THE INCOME FROM OTHER SOURCES. IT WAS CLAIMED UNDER THE SAME HEAD LAST YEAR ALSO AND THE SAME WAS ALLOWED. THOUGH IT SHOUL D HAVE BEEN CLAIMED AGAINST BUSINESS INCOME. SINCE IT DOES NOT EFFECT THE NET INCOME, IT IS BEING CLAIMED AGAINST INCOME FROM OTHER SOURC ES AND IS BEING ALLOWED, '(SIC) 5.1.1 AFTER CONSIDERING THE ABOVE REPLY, NO ADDITION WAS MADE AT THE TIME OF ORIGINAL ASSESSMENT, WHICH MEANS THAT THE A SSESSING OFFICER HAD ACCEPTED THE EXPLANATION OF THE APPELLA NT. THEREFORE, REOPENING OF THE ASSESSMENT ON THE ABOVE ISSUE IS C ERTAINLY TO BE HELD AS CHANGE OF OPINION. 5.2 THE THIRD REASON FOR WHICH ASSESSMENT WAS REOPENED IS FOR DISALLOWANCE OF DEDUCTION U/S 54F OF RS. 10,85,422/ -. THE APPELLANT 5 HAS SUBMITTED THAT QUERY IN THIS REGARD WAS MADE BY THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT AND THE APPELLANT HAD DULY REPLIED TO THE QUERY VIDE SUBMISSION DATED 12. 10.2009. A PERUSAL OF THE ASSESSMENT RECORD REVEALS THAT THE A SSESSING OFFICER HAD MADE A QUERY ON THIS ISSUE VIDE ORDER SHEET ENT RY DATED 16.09.2009. THE SUBMISSION OF THE APPELLANT DATED 1 2.10.2009 IS LYING ON THE FILE. RELEVANT PORTION OF THIS SUBMISS ION IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 'THAT THERE WAS NO CAPITAL GAIN, ON THE SALE OF IND USTRIAL BUILDING SITUATED AT VILLAGE SAIDAMAJRA (PUNJAB) WHICH WAS A LLOTTED BY PUNJAB FINANCIAL CORPORATION ON 22.11.1996 AS PER AGREEMEN T TO SELL. THIS PROPERTY WAS ALLOTTED FOR A SUM OF RS. 42 LACS AND AFTER ADDING BACK THE COST OF STAMP PAPERS AND OTHER THINGS, ITS VALUE CA ME TO RS. 43,91,000/-. IT MAY BE MENTIONED HERE THAT NO DEPRE CIATION WHATSOEVER WAS CLAIMED ON THIS PROPERTY. THIS PROPE RTY WAS SOLD FOR A SUM OF RS. 1 CRORE AND THE CAPITAL GAINS EARNED THE REON WAS INVESTED IN THE FLAT AT BADDI. THE COPIES OF THE RELEVANT DOCUM ENTS ARE ATTACHED. THE ASSESSEE HAD PURCHASED RESIDENTIAL FLAT NO. FR- 3 & FR 4, BLOCK NO. 22 (NAINA APARTMENTS, BADDI) ON FOURTH FLOOR ME ASURING 2384 SQ. FT. IT IS A SINGLE FLAT COMPRISING OF TWO ADJACENT FLATS WHICH WERE CONVERTED INTO ONE BY THE SELLER A DOOR WAS OPENED BY MAKING TWO FLATS AS A SINGLE UNIT AND USED AS ONE UNIT. IN THIS CONNECTION YOUR KIND ATTENTION TO LETTER DA TED 06.09.2007 ISSUED BY MOUNTVIEW GROUP HOUSING CO. BADDI IN WHICH IT HAS B EEN POINTED OUT THAT 'THIS HAS REFERENCE TO YOUR REQUEST FOR ALLOTMENT O F FLAT MEASURING ABOUT 2384 SQ. FT. & BOOKING OF PAYMENT OF RS. 34,00,000/ - (THIRTY FOUR LAC) RECEIVED BY US ON 1ST MAY 2007. WE CONFIRM THAT THI S IS TOWARDS FULL AND FINAL PAYMENT OF THE SAID FLAT, THE ALLOTMENT OF WH ICH SHALL BE MADE IN DUE COURSE. * SINCE IT IS A SINGLE UNIT AND ACCORDINGLY DEDUCTION UNDER SECTION 54/54F HAS RIGHTLY BEEN CLAIMED AS THE ENTIRE AMOUNT HAS B EEN SPENT ON THE RESIDENTIAL HOUSE WHICH IS ONE UNIT.' 5.2.1 AFTER CONSIDERING THE ABOVE SUBMISSI ON OF THE APPELLANT, THE ASSESSING OFFICER ALLOWED DEDUCTION U/S 54F OF RS.10,85,422/- OUT OF THE AMOUNT CLAIMED OF RS.31,92,419/- VIDE PARA 5 OF THE ORIGINAL ASSESSMENT ORDER AND THE ASSESSMENT HAS NOW BEEN, R EOPENED TO DISALLOW THIS DEDUCTION OF RS.10,85,422/- U/S 54F, WHICH WAS DULY ALLOWED BY THE ASSESSING OFFICER AT THE TIME OF ORI GINAL ASSESSMENT. IT IS, THEREFORE, EVIDENT THAT REOPENING OF ASSESSM ENT ON THIS ISSUE IS CLEARLY A CHANGE OF OPINION. 5.3 THE LAST ISSUE ON WHICH THE ASSESSMENT HAS BEE N REOPENED IS THAT THE APPELLANT HAD CLAIMED EXCESS DEDUCTION U/S 80IC, WHICH NEEDED TO BE DISALLOWED. THE APPELLANT SUBMITS THAT THE ISSUE HAD BEEN 6 CONSIDERED BY THE THEN ASSESSING OFFICER AT THE TIM E OF ORIGINAL ASSESSMENT AND THE QUERY IN THIS REGARD WAS DULY RE PLIED BY THE APPELLANT VIDE SUBMISSION DATED 05.12.2009. A PERUS AL OF THE. ASSESSMENT RECORD REVEALS THAT THE CONTENTION OF TH E APPELLANT IN THIS REGARD IS CORRECT. THE ASSESSING OFFICER HAD ASKED THE APPELLANT TO SUBSTANTIATE HIS CLAIM OF DEDUCTION U/S 80IC VIDE O RDER SHEET ENTRY DATED 16.09.2009 AND 25.11.2009. THE APPELLANT HAD DULY REPLIED TO THE QUERY REGARDING DEDUCTION U/S 80IC VIDE REPLY D ATED 05.12.2009, RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 'AS EXPLAINED TO YOUR GOODSELF THAT ALL THE CONDITI ONS CONTAINED IN SECTION 80IA THAT DEDUCTION HAS BEEN CLAIMED ONLY O N ELIGIBLE BUSINESS AND THIS IS ONLY SOURCE OF INCOME FROM WHICH THE DE DUCTION HAS BEEN CLAIMED. NO GOODS OR SERVICES HELD FOR THE PURPOSES OF ELIGIBLE BUSINESS WERE TRANSFERRED TO ANY OTHER BUSINESS CARRIED ON B Y THE ASSESSEE AND THE ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED BY T HE C.A. WITHIN THE MEANING OF SECTION 288(2) WHICH WERE FURNISHED BEFO RE YOU ALONGWITH FORM NO. 10 CCB. THE ASSESSE HAS NOT CLAIMED SUCH E XPENSES IN ANY OTHER PROVISIONS OF THE ACT.' 5.3.1 AFTER CONSIDERING THE REPLY OF THE APPELLANT, THE ASSESSING OFFICER ACCEPTED THE EXPLANATION OF THE APPELLANT AND DID N OT MAKE ANY DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IC OF THE A CT. THEREFORE, REOPENING THE ASSESSMENT SUBSEQUENTLY ON THIS ISSUE IS MERELY CHANGE OF OPINION. 5.4 IN VIEW OF THE ABOVE, IT IS EVIDENT THAT AL L THE AFORESAID FOUR ISSUES HAD BEEN DULY CONSIDERED BY THE ASSESSING OFFICER A T THE TIME OF ORIGINAL ASSESSMENT AND ASSESSMENT WAS FRAMED AFTER CONSIDER ING THE SUBMISSION OF THE APPELLANT. REOPENING OF ASSESSMENT SUBSEQUENTLY , ON THE SAME ISSUES AMOUNTS TO CHANGE OF OPINION. REOPENING IN SUCH A S ITUATION IS NOT ALLOWED AS HELD BY HONBLE SUPREME COURT IN THE CAS E OF M/S KELVINATOR OF INDIA LTD (320 ITR 561). THEREFORE, REOPENING TH E ASSESSMENT IS BAD IN LAW AND THE REASSESSMENT MADE IS NULL AND VOID. HENCE, REASSESSMENT MADE IS HEREBY ANNULLED. GROUNDS OF A PPEAL NO.3 & 4 ARE ALLOWED. AS THE REASSESSMENT ORDER HAS BEEN ANNULL ED, THE OTHER GROUNDS OF APPEAL BECOME INFRUCTUOUS. 5. IN VIEW OF THE ABOVE, THE LEARNED CIT (APPEALS) ANNULLED THE REASSESSMENT ORDER MADE BY THE ASSESSI NG OFFICER. 7 6. NOW, THE DEPARTMENT HAS COME UP IN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE RE-AS SESSMENT MADE U/S 143(3)READ WITH SECTION 147, AS BAD IN LAW AND IN HOLDING THE RE-ASSESSMENT AS NULL AND VOID, WITHOUT CONTROV ERTING THE FACTS GIVEN IN THE REASONS RECORDED BY THE ASSESSIN G OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ANNULLING THE RE -ASSESSMENT MADE U/S 143 READ WITH SECTION 147 OF THE INCOME TAX ACT , 1961 ON GROUND THAT RE-OPENING OF THE ASSESSMENT AMOUNTED TO CHANG E OF OPINION, IGNORING THE EXPLANATION 1 AND 2(C) TO THE SECTION 147 OF THE INCOME TAX ACT, PARTICULARLY WHEN THE NOTICE FOR REASSESSM ENT WAS ISSUED BEFORE THE EXPIRY OF FOUR YEARS FROM END OF THE REL EVANT ASSESSMENT YEAR. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OF F. 6. THE LEARNED D.R. WHILE ARGUING THE CASE SUBMITT ED THAT RE-OPENING MADE BY THE ASSESSING OFFICER IS AS PER LAW. ACCORDING TO HIM, THE ASSESSING OFFICER HAD RECORDE D THE DETAILED REASONS FOR RE-OPENING WHICH ARE ALSO SUST AINABLE ON MERITS. IN VIEW OF THE SAME, IT WAS PRAYED THAT T HE ORDER OF THE LEARNED CIT (APPEALS) MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE UPHELD. 7. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED REL IANCE ON THE ORDER OF THE LEARNED CIT (APPEALS) AND SUBMI TTED THAT 8 EACH AND EVERY ISSUE ON THE BASIS OF WHICH RE-OPENI NG HAS BEEN MADE WERE SUBJECT MATTER IN THE PROCEEDINGS UN DER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER HAD MADE SPECIFIC QUERY REGARDING THE SAID ISSUES IN ORIGINA L ASSESSMENT AND HAD ALSO GIVEN FINDINGS REGARDING TH E SAME IN HIS ORDER. THEREFORE, RE-OPENING HAS BEEN MADE ON MERE CHANGE OF OPINION SINCE THE ASSESSING OFFICER HAS N OT RECEIVED ANY TANGIBLE MATERIAL AFTER THE ORIGINAL ASSESSMENT AND IN THE ABSENCE OF ANY SUCH TANGIBLE MATERIAL, IT WAS PRAYE D THAT RE- OPENING SO MADE BE HELD AS ILLEGAL. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F KELVINATOR OF INDIA LTD., 320 ITR 561 (SC). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE IN FULL A GREEMENT WITH THE DECISION GIVEN BY THE LEARNED CIT (APPEALS ) IN THIS CASE. 9. THE FIRST REASON IN WHICH THE ASSESSMENT WAS RE - OPENED IS REGARDING DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) OF THE ACT ON CAPITAL WORK IN PROGRESS. AS STATED BY THE LEARNED CIT (APPEALS) IN HIS ORDER, THE ASSESSI NG OFFICER IN ORIGINAL PROCEEDINGS HAD ASKED THE ASSESSEE FOR DET AILS OF CAPITAL WORK IN PROGRESS IN THE VERY FIRST QUESTION NAIRE, WHICH THE ASSESSEE HAD DULY REPLIED. THE ASSESSEE HIMSEL F HAD CAPITALIZED THE INTEREST OF RS.33,904/-. THE AMOUN T OF INTEREST TO BE CAPITALIZED WAS CLARIFIED TO BE LOW BECAUSE THE RELATED ASSETS WERE BOUGHT AT THE FAG END OF THE YE AR. THE ASSESSING OFFICER IN ORIGINAL PROCEEDINGS HAD EXAMI NED THIS 9 ISSUE AND BY APPLYING HIS MIND DID NOT MAKE ANY ADD ITION ON THE SAME. 10. THE SECOND REASON ON THE BASIS OF WHICH THE ASSESSMENT HAS BEEN RE-OPENED, IS THAT THE INTEREST EXPENSES HAD BEEN SET OFF AGAINST INTEREST INCOME AND THE SE T OFF OF INTEREST EXPENSES OF RS.4,71,663/- WAS REQUIRED TO BE DISALLOWED. AS STATED BY THE LEARNED CIT (APPEALS ) IN HIS ORDER, IT IS QUITE EVIDENT THAT DURING THE ORIGINAL PROCEEDINGS, VARIOUS CORRESPONDENCES BETWEEN THE ASSESSING OFFIC ER AND THE ASSESSEE EXCHANGED IN THIS REGARD. THE LEARNE D CIT (APPEALS) HAS IN FACT, REPRODUCED THE RELEVANT PORT ION OF THE VARIOUS REPLIES MADE BY THE ASSESSEE IN THIS REGARD . IN THE SAID CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSE SSING OFFICER WAS NOT OPEN TO THE ISSUE IN ORIGINAL ASSES SMENT PROCEEDINGS. IN FACT, AFTER APPLYING HIS MIND TO THE SAID ISSUE, HE DID NOT MAKE ANY ADDITION IN THIS REGARD IN THE ORIGINAL ASSESSMENT. 11. THE THIRD REASON FOR RE-OPENING IS THE DISALLO WANCE OF DEDUCTION UNDER SECTION 54F OF THE ACT. IN THI S REGARD ALSO, VARIOUS QUERIES WERE RAISED BY THE ASSESSING OFFICER, WHICH WERE DULY REPLIED BY THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THE LEARNED CIT (APPEALS) IN HIS ORDER HAS TAKEN PAINS TO REPRODUCE THE SAID REPLIES . THEREFORE, THE ASSESSING OFFICER IN ORIGINAL PROCEE DINGS HAS ALLOWED DEDUCTION UNDER SECTION 54F OF THE ACT AFTE R CONSIDERING ALL THESE REPLIES OF THE ASSESSEE. 10 12. THE LAST ISSUE ON WHICH THE ASSESSMENT HAS BEE N RE- OPENED IS THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT. EVEN THIS ISSUE WAS DELIBERATED UPON BY THE ASSESSING OFFICER. IN ORIGINAL ASSESSMENT PROCEEDINGS, SPEC IFIC QUERIES WERE RAISED AND REPLIES WERE GIVEN BY THE ASSESSEE. THE LEARNED CIT (APPEALS) HAS QUOTED THE PORTION OF REP LIES SO MADE BY THE ASSESSEE. THEREFORE, THIS IS ALSO ONE OF THE ISSUES ON WHICH THE ASSESSING OFFICER HAS APPLIED H IS MIND DURING THE COURSE OF ORIGINAL PROCEEDINGS. 13. ON THE BASIS OF THE ABOVE ANALYSIS, IT IS QUIT E EVIDENT THAT ALL THE FOUR ISSUES ON THE BASIS OF WH ICH THE ASSESSING OFFICER HAS RE-OPENED THE ASSESSMENT WERE QUITE OPENED TO HIM AT THE TIME OF ORIGINAL PROCEEDINGS. THE ASSESSING OFFICER HAS APPLIED HIS MIND TO ALL THE I SSUES AND DECIDED NOT TO MAKE ANY ADDITION OR DISALLOWANCE. IT IS A TRITE LAW THAT RE-OPENING CANNOT BE MADE FOR MAKING ROVIN G ENQUIRIES. THE ASSESSING OFFICER HAS TO COME IN CO NTACT WITH SOME TANGIBLE MATERIAL TO FORM A BELIEF TO RE-OPEN THE CASES ON THE ISSUES WHICH WERE DEALT WITH BY HIM IN THE ORIG INAL PROCEEDINGS. ON THE PERUSAL OF MATERIAL ON RECORD , WE HAVE NOT COME ACROSS ANY SUCH TANGIBLE MATERIAL COMING T O THE ASSESSING OFFICER, EVEN THE LEARNED D.R. COULD NOT OFFER US ANY SUCH MATERIAL WHICH CAN BE THE BASIS FOR THE ASSESS ING OFFICER TO FORM BELIEF TO RE-OPEN THE CASE AFTER THE ORIGIN AL ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT . IN VIEW OF THE SAME, HAVING GUIDED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. 11 (SUPRA), WE HEREBY HOLD THE RE-OPENING TO BE BAD IN LAW AND CONFIRM THE ORDER OF THE LEARNED CIT (APPEALS). 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF SEPTEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 3 RD SEPTEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH