IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 18.07.2008 CORAM: THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case Appeal Nos.963 and 964 of 2008 The Commissioner of Income-tax Tamil Nadu-I, Madras .. Appellant in both vs. M/s.Tube Investments of India Ltd., chennai-1. .. Respondent in both ----- PRAYER: Tax Case appeals filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal “C” Bench Madras dt.31.10.07 in ITA No.11 & 817/MDS/2006 dated against the order of the Commissioner of Income Tax (Appeals) Madras dated 21.11.05 under in ITA Tr No.226/04-05, ITA No.213/04-05 against the order of the Asst.Commissioner of Income Tax, company Circle III (2), Chennai-34 in PAN/GIR No.32001 dt.25.3.2004. For appellant : Mr.J.Naresh Kumar ----- J U D G M E N T (Judgment of the Court was made by K.RAVIRAJA PANDIAN, J.) The Revenue has preferred the above appeals against the order of the Income Tax Appellate Tribunal, Chennai, dated 31.10.2007 made in ITA Nos.11 & 817 of 2006 for the assessment year 1997-1998. 2. The material facts culled out from the statement of facts stated in the memorandum of appeals are as follows:- The assessee, a manufacturing company, filed its return of income for the assessment year 1997-98 on 28.11.1997 admitting a total income of Rs.3,58,47,450/= under normal method of computation https://hcservices.ecourts.gov.in/hcservices/ and a sum of Rs.6,17,98,693/= under the provisions of Section 115JA. The return was processed under Section 143(1)(a) accepting the return of income. The assessment was completed under Section 143(3) on 27.3.2000. Subsequently, the case was reopened under Section 147 of the Income Tax Act by issuing notice under Section 148 on 27.1.2003. The assessing officer computed the income of the assessee on various heads and completed the assessment. While doing so, the assessing officer rejected the claim of the assessee for deduction of interest amount in a sum of Rs.378.06 lakhs on revenue account, which has been originally accepted while framing the original assessment and disallowed the same by considering it as a capital expenditure. The assessee carried the matter on appeal to the Commissioner of Income- tax (Appeals), inter alia contending that the re-opening of the assessment is not in accordance with Section 147 of the Income-tax Act. The Commissioner of Income-tax (Appeals) rejected the plea of the assessee with regard to the re-opening of the assessment and confirmed the order of the assessing officer. On further appeal to the Income-tax Appellate Tribunal, the Tribunal allowed the appeal on the premise that the reopening of the assessment under Section 147 was based only on change of opinion. The said order is assailed before this Court by filing the appeal by the revenue by formulating the following questions of law: "a) Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the notice issued for re-opening of the assessment after the expiry of four years of the completion of the original assessment is beyond time limit provided in the priviso to Section 147 of the Income-tax Act? and b) Whether on the facts and circumstances of the case, the, the Income Tax Appellate Tribunal was right in setting aside the order of the Commissioner of Income-tax (Appeals) and annulled the assessment proceedings without going into the merits of the case?" 3. At the time of arguments, the learned counsel representing the appellant Department submitted that the question of law framed as above, has to be read as follows:- "Whether the re-opening of the assessment after the expiry of four years would come within the exception stated in the proviso to Section 147 of the Income-tax Act, in the facts and circumstances of the case? 4. Heard the arguments of the learned counsel for the appellant and perused the materials placed on record. https://hcservices.ecourts.gov.in/hcservices/ 5. On a reading of the order passed by the Tribunal, which is impugned in the appeals, we are of the view that we cannot find fault with the reasoning given by the Tribunal in non-suiting the Revenue for re-opening the assessment. After extracting the relevant provision, viz., Section 147 of the I.T. Act and the proviso thereto, the Tribunal has recorded a clear finding to the effect that the assessee has truly and fairly disclosed the facts regarding interest vide item No.3 in the note forming part of the return. Further, the Tribunal found that it was clear from the letters of the Assessing Officer that queries were raised in respect of interest claimed by the Assessee amounting to Rs.378.06 lakhs on capital work in progress and capital gains arising from M/s.Rolmor Chain Division. The Tribunal has further recorded a factual finding that these facts were very much within the knowledge of the Assessing Officer when he was framing the original assessment. The Tribunal has also recorded a finding to the effect that the re-opening of the assessment is merely based on a change of opinion because while concluding the original assessment, the Assessing Officer has formed the opinion only after considering the facts duly disclosed by the assessee. 6. Having recorded the above findings, the Tribunal had also referred to the judgment of this Court in the case of Apollo Hospitals Enterprises Limited Vs. ACIT (287 ITR 25) to sustain their view point. The findings so recorded are also fortified by the revisional order wherein in para.4 of the assessment order, the Assessing Officer has stated as follows:- "Assessee has claimed this interest as revenue for income tax purpose. For the assessment year 1996-1997, the interest amount was disallowed as it is in capital nature. The decision for assessment year 1996-1997 has not become final. Applying the same ratio, the interest income of Rs.378.06 lakhs is disallowed and added to total income." 7. From the above, it is manifestly clear that particulars about the claim of interest amount are very much available before the Assessing Officer while he framing the original assessment, and after taking into consideration the claim on interest in respect of the above said amount, the original assessment was framed. The subsequent re-opening of the assessment is nothing but in our considered view also a mere change of opinion to follow the earlier year assessment order, which is not the reason for reopening of the assessment under Section 147 of the Income-tax Act. Further, the re- opening of the assessment cannot also be brought within the exemption stated therein for reopening after the period of four years. https://hcservices.ecourts.gov.in/hcservices/ 8. Hence, the appeals are dismissed as no question of law, much less, a substantial question of law has to be decided by this Court. No costs. Consequently, M.P.No.1 of 2008 is closed. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. gs. To 1. The Income Tax Appellate Tribunal, Rajaji Bhavan III Floor, Besant Nagar, Chennai. 2. The Commissioner of Income-tax (Appeals), Chennai. 3. The Assessing Officer/Assistant Commissioner of Income-tax, Company Circle III (2), Chennai-34 4. The Commissioner of Income Tax, Tamil Nadu-I Madras. + 1 CC To M/s.Pushpa Sivaraman, Advocate SR NO.38595 Tax Case Appeal Nos. 963 and 964 of 2008 RSM {CO} TP/1.8.08 https://hcservices.ecourts.gov.in/hcservices/