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Assessee represented by Shri Biren Shah, AR Department represented by Shri Vinod Kumar, Sr. DR Date of hearing 25/04/2023 Date of pronouncement 25/04/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat (in short, the ld. CIT(A)) dated 04/08/2022 for the Assessment Year (AY) 2012-13. The assessee has raised following grounds of appeal: “1. In law and in the facts and circumstances of the assessee’s case, the Ld. CIT(A) has erred in confirming the assessment order u/s 143(3) r.w.s. 147 of the I.T. Act, 1961 passed by the ACIT-Central Circle-3, Surat which is void and deserves to be quashed. 2. in law and in the facts and circumstances of the assessee’s case, the ld. CIT(A) has erred in confirming the action of Assessing Officer while making addition of Rs. 4,42,416/- under Section 14A of the Act.
3. In law, on the facts and circumstances of the case, the ld. CIT(A) has grossly erred in confirming the action of A.O. in levying interest u/s 234A, 234B, 234C and 234D and when no such interest is chargeable. It may be deleted.
4. In law and in the facts and circumstances of the assessee’s case, the ld. CIT(A) has grossly erred in dismissing ground No. 2 of the assessee’s appeal before him challenging initiation of penalty proceedings u/s 271(1)(c) on the ground that it was premature. He ought to have appreciated, inter alia, that in the peculiar facts and circumstances of the assessee’s case, there being absolutely no Shri Gordhanbhai R. Asodaria Vs ACIT warrant/justification for initiating the penalty proceedings, he ought to have ordered for their being dropped, thereby saving both the assesse and the department from long drawn unnecessary litigation. 5. The assessee craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”
2. Brief facts of the case are that the assessment in the case of assessee was completed under Section 143(3) of the Act on 28/03/2014. Subsequently, the case of assessee was reopened under Section 147 of the Act. Notice under Section 148 dated 31/03/2019 was served upon the assessee to furnish return of income. In response to notice under Section 148, the assessee filed return of income on 29/09/2019 declaring income of Rs. 2,27,260/- which was declared initially while filing return of income under Section 139(1) of the Act. The case of assessee was reopened by the Assessing Officer by recording reasons that on perusal of record, it was noticed that during the year under consideration, the assessee has shown profit received from firm Raghuvir Developers & Builders of Rs. 27,34,928/- and also claimed interest expenses of Rs. 1,70,691/-. The assessee also claimed profit received from firm as exempt income under Section 10(2A) of Rs. 27,34,928/-. Therefore, as per Section 14A of the Act, the interest expenses of Rs. 1,70,691/- should be disallowed. The Assessing Officer recorded that he has reason to believe that income of assessee to the extent of Rs. 1,70,691/- for A.Y. 2012-13 has escaped assessment on failure on the part of assessee in disclosing fully and truly all materials. The assessee filed his objection against reopening on 04/10/2019. The objection of assessee was rejected/disposed off vide 2 Shri Gordhanbhai R. Asodaria Vs ACIT speaking order dated 04/11/2019. The Assessing Officer after rejecting the objected, proceeded for assessment. On verification of details, the Assessing Officer noted that the assessee has shown interest expenditure of Rs. 1,70,691/- against exempt income of Rs. 27,34,928/- and agriculture income of Rs. 3,21,544/-. The assessee claimed the above interest expenditure which is not part of total income. The assessee was issued show cause notice on 17/11/2019. The Assessing Officer recorded that no reply was filed by assessee. The Assessing Officer disallowed various expenses aggregating of Rs. 4,42,416/- consisting interest expenses of Rs. 1,70,691/-, insurance expenses of Rs. 13,612/- depreciation expenses of Rs. 86,702/-, bank charges of Rs. 5,961/- and processing fee of Rs. 1,65,450/-.
3. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). The appeal of assessee was dismissed by the ld. CIT(A) and confirmed the additions/disallowances under Section 14A of Rs. 4,42,416/-. The ld. CIT(A) held that such expenses were incurred for earning exempt income claimed by assessee. Further aggrieved, the assesse has filed present appeal before the Tribunal.
The ld. AR of the assessee submits that he has raised a ground against the validity of reopening, which goes to the root of the matter. Reopening under section 147 was made beyond four years from the end of the relevant assessment year, thus, the first Proviso to Section 147 is Shri Gordhanbhai R. Asodaria Vs ACIT applicable in the present case. The Assessing Officer has not recorded that any new tangible material came to his notice. The Assessing officer made reopening on the basis of material already available on record during the assessment. The ld. AR of the assessee submits that copy of computation of total income is filed as per page No. 3 of the paper book. In computation of income, the assessee clearly has shown as remuneration and profit from Raghuvir Developers & Builders. The assessee has also shown all expenses including interest expenses of Rs. 1,70,691/-. The Assessing Officer by taking all such figures, recorded reasons. The Assessing Officer in the reasons recorded which is mentioned otherwise extracted in para 3 of assessment order and nowhere recorded that any new material or tangible material has come to the notice of Assessing Officer. All such details were available during the original assessment. Thus, the reopening is nothing but a change of opinion. The ld. AR of the assessee submits that the Hon'ble Jurisdictional High Court in Jivraj Tea Ltd. Vs ACIT (2020) 116 taxmann.com 27 (Guj) has held that where Assessing Officer completed assessment under Section 143(3) and later reopened same for reason that income during year had escaped assessment and issued notice under Section 148 beyond period of four years from the end of the relevant assessment year, since in facts of the case, there was hardly anything on record to indicate that there was failure on part of assessee to disclose fully and truly all material facts and no tangible material Shri Gordhanbhai R. Asodaria Vs ACIT available for the purpose of issuing notice for reopening beyond period of four years, notice under Section 148 required to be quashed. 5. On the other hand, the ld. Sr. DR for the revenue submits that the assessee has not raised any such ground of appeal
before the ld. CIT(A). Since there is no finding of ld. CIT(A) on legal issue, therefore, the assessee is estopped from raising such ground of appeal at this stage. The ld. Sr. DR for the revenue submits that the assessee should not be allowed to agitate such ground of appeal which was not the part of grounds of appeal raised before the ld. CIT(A). There was no true and correct disclosure by assessee. The Assessing Officer has not made any suo moto disallowance under Section 14A of the Act despite the fact that the assessee has claimed exempt income during the relevant period.
6. In short rejoinder, the ld. AR of the assessee submits that the issue of reopening is a legal issue and goes to the root of case and can be agitated at any stage. Even otherwise the assessee is hesitating this legal issue from beginning by filing objection before assessing officer. All the fast for adjudication of legal grounds is emanating from the order of assessing officer.
7. I have considered the submissions of both the parties and have perused the orders of the lower authorities carefully. There is no dispute that the scrutiny assessment under Section 143(3) was completed in case of assessee on 28/03/2014 for A.Y. 2012-13. Notice under Section 148 of the