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Facts
For AY 2013-14, the assessee's case, originally assessed under Section 143(3), was reopened under Section 147/148 to disallow interest expenditure of Rs 13,44,924/- on a factory building loan, alleging the factory was not in use. The assessee contested the validity of reopening and the disallowance, claiming full disclosure and change of opinion, also citing various documents to prove the factory's use.
Held
The Tribunal found that the CIT(A)'s order lacked proper points of determination and detailed adjudication as required by Section 250(6) of the Act. Therefore, the appeal was restored to the CIT(A)/NFAC for fresh adjudication, ensuring the appellant is granted three effective opportunities of hearing.
Key Issues
Whether the reassessment proceedings initiated under Section 147/148 were valid given the alleged full disclosure and change of opinion. The correctness of the disallowance of interest expenditure on a factory building loan. The adequacy of the CIT(A)'s adjudication in compliance with Section 250(6).
Sections Cited
147, 148, 143(3), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Satbeer Singh Godara
ORDER This assessee’s appeal for Assessment Year 2013-14, arises against the CIT(A)/NFAC, Delhi’s DIN & Order No. ITBA/NFAC/S/250/2024-25/1069718218(1) dated 17.10.2024, in proceedings u/s 147/143(3) of the Income Tax Act, 1961 (in short “the Act”).
Case called twice. None appears at the assessee’s behest. He is accordingly proceeded ex-parte.
The assessee raises the following substantive grounds: “1. The return of the income for the assessment year 2013-14 was filed on31/03/2014 declaring income of Rs 3,62,640/-. The case was selected for scrutiny under CASS and was completed on 08/03/2016 at an income of Rs 4,04,430/-after disallowing expenditure being personal nature under the head Car Maintenance, Telephone & Travelling Expenses to the tune of Rs 41,790/-. Later on, notice under section 148 of the Act was issued for reopening of the case by recording reason u/s 147 and 2 taking permission of the Pr. Commissioner of Income Tax- 20 New Delhi. The reason was that during the assessment proceedings for the AY 2014-15, it came to notice that assessee has claimed interest expenditure on the loan taken for the construction of the factory building. This factory was not put to use till date, therefore the same was not allowed and added to the income of the assessee. The AO applied the same reason to the year under question and reopened the case. Whereas all the facts pertaining to interest of Rs 13,44,924/- were fully disclosed at the initial assessment done under section 143(3) which was completed on 08/03/2016 and no addition was made on this account in the original assessment order. Therefore, initiation of reassessment proceedings under section 147 is not valid and moreover approval given by the Pr. Commissioner of Income Tax-20 New Delhi is also not valid as it is based on change in opinion which can not be base for reopening of the assessment proceedings as pronounced by various judgements.
2. The Learned Commissioner of Income Tax (A)-NFAC has erred in law and facts by confirming the disallowance of Rs 13,44,924/- towards interest on the loan taken for the construction of factory building by alleging that factory land building was still under construction and was not put to use during the year under reference and thereby completely ignoring the various documents like VAT registration certificate, electricity bills for the connection installed at the premise, architect certificate submitted during the course of hearing substantiating the use of factory building. The action of the Learned Commissioner of Income Tax (A)-NFAC is arbitrary. unjustified and against the