Commissioner of Income-tax Vs. Dcm Ltd. - Court Judgment

Excerpt:
- - in the reasons so recorded for reopening the assessment, there is no allegation of the assessing officer that assessee has failed to file his return under section 139 or in response to notice under section 142(1) or 148 of the act, nor there is any allegation by the assessing officer that the assessee has failed to disclose fully and truly all material facts in its return of income. nothing was brought on record to controvert this finding of the cit (appeals). we, therefore, do not find any infirmity in the order of the cit (appeals) both on account of legal issue of reopening as well as on merit of deletion of disallowance on account of interest notionally calculated.1. this appeal at the instance of the revenue pertains to the assessment year 1996-97. the issue involved in this appeal centres around the question of reopening of the assessment proceedings of the assessee in respect of the said assessment year.2. the original assessment was completed under section 143(3) of the income-tax act, 1961 and after an expiry of four years from the end of the assessment year in question, the assessing officer reopened the assessment by invoking the provisions of section 147. the reasons indicated by the assessing officer for reopening the assessment had a reference to allotment and sale and purchase of certain shares of dcm estate and infrastructure ltd. but, in the reasons recorded there is no allegation with regard to the purchase and sale of shares of dcm estate & infrastructure ltd. (deil) by the assessee-company. the allegation only pertains to some of the promoters of the assessee-company and subsidiary companies/trusts. the assessing officer upon reassessment did not make any addition in pursuance of these reasons recorded by him. instead, he made an addition on account of interest notionally calculated by him on the amount of advances given to subsidiary companies/trusts.3. being aggrieved by the reassessment order that was framed by the assessing officer, the assessee preferred an appeal before the commissioner of income-tax (appeals) who allowed the said appeal. the commissioner of income-tax (appeals) recorded a finding that the initiation of proceedings under section 147 were itself invalid. he also recorded a finding that in any event the addition on account of notional interest was also not made out on merits, inasmuch as the assessee-company had more interest-free funds than the amount of the loans/advances said to have been given to the subsidiary companies/trusts.4. in the appeal before the tribunal, it was urged on behalf of the revenue that the proceedings under section 147 were valid and that the addition made by the assessing officer ought to be restored. the tribunal after considering the arguments advanced by the parties and examining the purported reasons recorded for reopening the assessment came to the conclusion that the proceedings initiated purportedly under section 147 of the said act were invalid. the tribunal also examined the finding on merits recorded by the cit (appeals) and on both counts the tribunal agreed with the cit (appeals). the tribunal's findings are as under:in the reasons so recorded for reopening the assessment, there is no allegation of the assessing officer that assessee has failed to file his return under section 139 or in response to notice under section 142(1) or 148 of the act, nor there is any allegation by the assessing officer that the assessee has failed to disclose fully and truly all material facts in its return of income. we have carefully gone through the reasons recorded for reopening and found that while recording the reasons. assessing officer has nowhere referred any material which has come to her possession after passing the original order and also on the point that reasons recorded had any nexus and reference to the case. in the reasons so recorded, reference has been made to the allotment and sale and purchase of certain shares of deil. however, there is no allegation with regard to the purchase and sale of share of deil by the assessee-company, furthermore, simple purchase or sale of shares cannot result in escapement of income unless there is information to the effect that some shares were sold and profits arising therefrom had not been declared in the income-tax returns. there was no mention of any particular material on the basis of which belief can be found that any income thereof has escaped assessment. in the reasons recorded, there is not even allegation regarding escapement of income in the case of assessee's company, dcm ltd. the name of the deil referred to in the reasons was a separate and independent company. we also found that in the reassessment order framed, there is no addition in pursuance of the reasons recorded by the assessing officer, the only addition has been made on account of interest notionally calculated by the assessing officer on the amount of advances given to the subsidiary company/trust. in this respect, the cit (appeals) has recorded a finding that the assessee-company was having much more interest-free funds than the amount of the loan. nothing was brought on record to controvert this finding of the cit (appeals). we, therefore, do not find any infirmity in the order of the cit (appeals) both on account of legal issue of reopening as well as on merit of deletion of disallowance on account of interest notionally calculated.in the result, revenue's appeal in the assessment year 1996-97 is dismissed.there is nothing which has been placed before us to enable us to take a different view from that of the tribunal. no substantial question of law arises for our consideration. the appeal is dismissed.