Bombay High Court
Commissioner Of Income Tax vs Khetani Textile Industries P. Ltd. on 21 August, 1990
Equivalent citations: [1992]197ITR593(BOM)
Author: Sujata V. Manohar
Bench: Sujata V. Manohar
JUDGMENT T.D. Sugla, J.
1. By this application under s. 256(2) of the IT Act, 1961 the Department has contended that the Tribunal ought to have referred one question suggested by it as the question of law. The question reads as under :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that this was a case of change of opinion regarding the same material on the record and as such reopening under s. 147(b) of the Act was without justification for asst. yr. 1974-75 ?"
2. The assessment was originally completed under s. 143(3) r/w s. 144B of the IT Act on 17th August, 1977. One of the items allowed as a deduction was of Rs. 80,519 paid as interest on the mortgage of immovable property. This amount was disallowed out of the claim as business income being allowed as deduction against the property.
Subsequently the ITO sought to reopen the assessment. The reasons recorded by him (ITO) for reopening of the assessment are as under :
"It is seen from the records that while computing the income under the head "House Property", the assessee was allowed a deduction of Rs. 80,519 being interest paid on mortgage of the property. However, it is seen that the loan so obtained was neither utilised by the assessee for acquiring, repairing, renovating, constructing renewing or reconstructing the property under consideration. Hence, the interest so paid is not allowable as a deduction under s. 24(1)(vi) of the IT Act, 1961, thereby the income of the assessee has escaped assessment to the extent of Rs. 80,519 for the asst. yr. 1974-75".
3. It is pertinent to mention that the assessee had not claimed the deduction of the above amount under any of the clauses of sub-s. (1) of s. 24 of the Act. The deduction was claimed against business income. Deduction was allowed under s. 24 of the Act. The deduction was claimed against business income. Deduction was allowed under s. 24 by the ITO himself. Further, the Commissioner (A) had decided the assessee's appeals for asst. yrs. 1971-72, 1972-73 and 1975-76 sometime in January 1980. But that order cannot constitute information within the meaning of s. 147(b) as -
(i) the assessments herein were reopened in the year 1979, i.e., before the appellate order was passed; and
(ii) the Commissioner (A) had allowed the deduction.
4. The Tribunal was, therefore, justified in holding that it was a clear case of the ITO's changing opinion on the same set of facts. One of the conditions precedent for assumption of jurisdiction under s. 147(b), admittedly, is that the reason to believe that income has escaped assessment is formed by the ITO in consequence of information received after the assessment is completed. This requirement is not satisfied. There is, thus, no valid assumption of jurisdiction. The application was rightly dismissed by the Tribunal.
5. Accordingly, rule is discharged with no order as to costs.