CIT Vs. DELHI INDUSTRIES AND ENTERPRISES

JUDGEMENT

(1.) THE Revenue claims to be aggrieved by the common order of the Income Tax Appellate Tribunal (ITAT) dated 31.10.2011 for the Assessment Years 2002-03 and ITA No. 2303/Del/2010 of the Revenue for the Assessment Year 2005-06. The question of law sought to be urged is as to the:

(2.) THE facts of the case briefly are that the assessee is a firm comprised of two partners which was allotted an industrial plot in Mohan Cooperative Industrial Estate (MCIE), Mathura Road, New Delhi and had constructed a building which was completed in the financial year 2000-01; it started getting rent for that assessment year 2001-02. It had obtained a term loan of Rs.4.33 crores from Canara Bank for 1997-98, for construction on the plot. The loan balance with the bank as on 31.03.2001 was Rs.1.89 crores. Its return of income was processed under Section 143(1) for assessment year 2002-03. Subsequently, under reassessment proceedings, the interest amount claimed for property tax paid were disallowed on the ground that no evidence was forthcoming. A similar approach was adopted for the assessment year 2003-04. The assessee's appeal was allowed by the Commissioner(Appeals) on 14.08.2003. Consequential order was allowed by order dated 27.02.2004, even otherwise subject matter of rectification proceedings. Finally on 03.05.2006, the Assessing Officer (AO) passed orders. Yet later, on 28.03.2007, notice under Section 148 was issued, proposing to reopen the assessment. The assessee questioned the notice for assessment years 2002-03 and 2003-04, contending that all the materials and the reasoning had been extensively examined and considered in the previous orders, including rectification order and there was no valid "reasons to believe" that could have been recorded by the AO in the case. The assessee's contention on this were further turned down by the ITAT. However, the Tribunal proceeded to consider the merits of the claim for interest.

(3.) LEARNED counsel for the Revenue contended that the reasoning of the Tribunal is valid and sought to rely upon the order of the CIT (A), stating, interalia that there was no material ­ as concluded by the AO and confirmed by the CIT(A) - on the record suggesting that the unsecured loans obtained by the assessee or its partners were in fact utilized for payment of loans on the existing Canara Bank liability. In this regard, learned counsel highlighted that a current loan had been obtained from Vysya Bank which was not utilized for the purpose of construction. It was submitted that the reasoning of the Tribunal is not sound as it has not adjudicated on the basis of the relevant material.