Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Tuesday, 11 August 2015 12:11

Section 148 - Reassessment - Change of opinion, Reasons not supplied, Audit query examined & Allowability of Interest u/s 43B

Written by
  • font size decrease font size increase font size
  • Print
  • Email
  • Be the first to comment!
Rate this item
(0 votes)


A. Reassessment is justified in the following circumstances -

  1. When there is no discussion worth in the assessment order and did not form opinion in the original assessment proceedings
  2. When the assessee was promptly supplied the reasons recorded for initiation of reassessment proceedings
  3. If the audit objection constituted an ‘information’ about escapement of income

B. Deduction u/s 43B can not be allowed if interest is not actually been paid by the assessee


  1. Assessment was completed u/s 143(3)
  2. On the basis of an audit query regarding deduction u/s 43B reassessment proceedings have been started and notice u/s 148 issued
  3. CIT(A) confirmed the additions
  4. Assessee moved to the Tribunal
  5. Tribunal dismissed the appeal and rejected all grounds raised by the assessee.


  1. Validity of Reassessment Proceedings u/s 148

  1. On Change of opinion : the facts of the instant case, w find that there is no discussion worth the name in the original assessment order about the deduct bility of interest of Rs.2.45 crore out of unpaid interest which was transferred to a wholly owned subsidiary company u/s 43B of the Act. In our considered opinion, it is farfetched to argue that the AO formed opinion on this issue during the course of original assessment proceedings and, hence, his hands are tied for initiating re-assessment proceedings. Since the AO did not form any opinion on the deductibility of such interest in the original assessment proceedings, the contention of the ld. AR about the change of opinion falls flat on the ground. The same is ergo repelled.

2. On Reasons not supplied : The sequence of events amply demonstrates that the assessee attempted to distort the actual reasons with the ulterior motive of playing foul with the CIT(A). This completely belies the contention of the ld. AR that the assessee was not supplied with the reasons. Leaving this issue at this stage only, it suffices to say that the assessee was promptly supplied the reasons leading to the initiation of reassessment proceedings. This contention is, therefore, rejected.

3. On Audit objection : It is, therefore, held that the audit objection in the instant case constituted an `information’ about the escapement of income to the AO, thereby justifying the initiation of reassessment.

B. On Section 43B : The interest payable to banks and other financial institutions can be allowed as deduction only ‘if such interest has been actually paid’ and second is that where such interest ‘has been converted into loan or borrowing/advance, (it) shall not be deemed to have been actually paid.’ In the light of the main provisions of section 43B read with Explanations 3C and 3D, it is crystal clear that deduction of interest u/s 43B cannot be allowed in the present case because such interest has not been actually paid by the assessee to the banks/financial institutions.

Cases Referred to

ACIT vs. Rajesh Jhaveri Stock Brokers (2007) 291 ITR 500 (SC)

DCIT vs. Zuari Asset Development and Investment Company Ltd., (2015) 373 ITR 661 (SC).

CIT vs. Usha International Ltd., (2012) 348 ITR 485 (Del)

GKN Driveshafts (India) Ltd. Vs. ITO and Ors. (2003) 259 ITR 90 (SC)

Indian and Eastern Newspaper Society vs. CIT (1979)119 ITR 996 (SC)

CIT vs. PVS Beedis Pvt. Ltd. (1999) 237 ITR 13 (SC)

CIT vs. Lucas T.V.S. Ltd. (1998) 249 ITR 306 (SC)

CIT vs. First Leasing Co. of India Ltd. (2000) 241 ITR 248 (Mad)

W.T. Suren & Company Ltd. vs. CIT (1998) 230 ITR 643 (SC)










Additional Info

Read 13628 times Last modified on Saturday, 13 February 2016 16:43

Founder & CEO with over 20 years of total professional experience spread across Internal Audit, IT Audit, Enterprise Risk Management, Financial statement audit & Business Finance Management. | This email address is being protected from spambots. You need JavaScript enabled to view it.

Leave a comment

Thank you for reading! We welcome and appreciate your comments, but at the same time, make sure you are adding something valuable to this article. If you have any serious queries, suggestions or anything related to this article, feel free to share them, we really appreciate that.

If you want to give us any feedback or report any errors, you can email your concerns on and we'll revert back soon.

Most Popular Case Summary

Recommended Articles


Have you done Analysis of any Case? Tell Us About It.


All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.


Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar