2012 (10) TMI 1171 - AT - Income Tax

Reopening of assessment - Held that - It is not the case of change of opinion which has resulted in initiation of proceedings under section 147 and 148. Therefore we uphold the findings of the CIT(A) and dismiss this ground of appeal of the assessee.

Summary

Issues Involved:
1. Reopening of assessment under Section 147 of the Income Tax Act.
2. Disallowance of the difference in additional special privilege fee payable by the assessee.
3. Adoption of two different rates by the CIT(A) as opposed to the proportionate rate by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 147:
The assessee challenged the reopening of assessments for the years 2004-05, 2005-06, and 2006-07 under Section 147 of the Income Tax Act. The Assessing Officer (AO) had reopened the assessments on the grounds that the assessee claimed additional Vend Fee, including enhanced liability towards Special Privilege Fee based on a Government Order (G.O.) passed retrospectively after the financial year had closed. The assessee argued that the reopening was invalid as it was done beyond four years from the relevant assessment year and was merely a change of opinion since all material documents were furnished at the time of filing the return. The AO, however, contended that no opinion was formed on the issue during the original assessment.

The Tribunal upheld the CIT(A)'s findings that the AO had not called for details regarding the Special Privilege Fee during the original assessment proceedings, and thus, it was not a case of change of opinion. Therefore, the Tribunal dismissed the assessee's ground of appeal regarding the reopening of the assessment.

2. Disallowance of Difference in Additional Special Privilege Fee:
The assessee contested the disallowance of the difference in additional special privilege fee payable under the Tamil Nadu Indian Made Foreign Spirit (Supply by Wholesale) Rules, 1983. The Tribunal noted that the issue was previously adjudicated by a coordinate Bench of the Tribunal in the assessee's own case for the assessment years 2007-08 and 2008-09. The Tribunal observed that the Tamil Nadu Government had the authority to impose fees and levies with retrospective effect under the Prohibition Act and the 1983 Rules. The Tribunal concluded that the special privilege fee was neither a statutory liability nor a contractual liability but quasi-statutory in nature. It held that the liability incurred by the assessee due to retrospective G.O.s was allowable and followed the principle of consistency.

3. Adoption of Two Different Rates by the CIT(A):
The Revenue appealed against the CIT(A)'s direction to the AO to adopt two different rates as per the G.O.s passed during the respective financial years instead of the proportionate rate adopted by the AO. The Tribunal found that similar G.O.s enhancing the levy of duty from a retrospective date had been passed by the State Government for the relevant assessment years. The Tribunal referred to its previous decision, which established that the rates prescribed by the State Government should be followed. Consequently, the Tribunal dismissed the Revenue's grounds of appeal and allowed the assessee's appeal on this issue.

Conclusion:
The Tribunal partly allowed the assessee's appeals and dismissed the Revenue's appeals. The reopening of assessments under Section 147 was upheld, but the disallowance of the difference in additional special privilege fee was overturned. The CIT(A)'s adoption of two different rates as per the G.O.s was also upheld. The stay petitions filed by the assessee were dismissed as they had become infructuous. The order was pronounced in the open court on October 30, 2012, at Chennai.