2020 (12) TMI 975 - AT - Income Tax

Reopening of assessment u/s 147 - assessee did not produce any evidence to claimed expenses towards the production cost incurred during the years under consideration and failed to substantiate the difference in the production cost adopted in the return of income filed and Form 52A filed in spite of opportunity of being heard granted to assessee - HELD THAT - We note that section 285B requires any person carrying on production of cinematographic film during the whole or any part of the financial year to file the statement before Ld. AO within 30 days from the end of such financial year or within 30 days from the date of completion of the production of the film whichever is earlier. The statement is necessarily to contain the payments that exceeds ₹ 50,000/- in the aggregate made by such person to eat such person engaged by him in such production. Form 52 relevant for financial year 2005-06 and 2006-07 relevant to assessment year under consideration was filed by assessee before Ld. AO on 09/01/2008 being the year in which the production of the film was completed. We therefore, do not find any infirmity in the observations of Ld. CIT(A), as the reassessment was initiated based on change of opinion. On merits we note that, there is no dispute regarding compliance under section 285B, within the relevant period. It is an admitted position that, production cost claimed by assessee for assessment year 2006-07 is remanded by this Tribunal to Ld. AO for fresh consideration. Assessee placed the copy of the order passed by this Tribunal for assessment year 2006-07 - For assessment year 2007-08, we note that, assessee has not claimed production cost as expenditure which is clear from page 82 of paper book. We note that production cost has been considered as work in progress. - Decided against revenue.

Summary

Issues involved:
Appeal against quashing of reassessment proceedings by Ld. CIT(A) based on change of opinion.

Analysis:

Issue 1: Quashing of reassessment proceedings
The revenue challenged the quashing of reassessment proceedings by Ld. CIT(A) for both years under consideration, citing the failure of the assessee to provide evidence for claimed expenses towards production costs and the difference in production costs declared in the income tax return and Form 52A. The Ld. CIT(A) observed that the AO reopened the assessment based on a change of opinion, which was not sustainable in the first appeal. The reassessment proceedings were quashed, and the merits of the case were not further examined.

Issue 2: Original assessment and reassessment
The original assessment for the relevant years was completed by the Ld. AO, and notices under section 148 were subsequently issued. The Ld. AO made additions based on the difference in production costs between the income tax return and Form 52A. The Ld. CIT(A) found no failure on the part of the assessee to disclose material facts for the original assessment and held that the reassessment was initiated on the basis of a change of opinion.

Issue 3: Compliance with Form 52A requirements
The Ld. CIT(A) noted that Form 52A is a mandatory requirement for filing statements regarding payments made in the production of cinematograph films exceeding a specified amount. The reassessment was challenged by the revenue on the grounds that the AO did not express any opinion during the original assessment. However, the Ld. AR argued that the reassessment was rightly quashed as the details in Form 52A were already subsumed in the expenditure claimed in the profit and loss account.

Issue 4: Discrepancy in production costs
The audit objection highlighted a significant variation in the production costs declared by the assessee in the income tax return and Form 52A. The Ld. AR presented evidence showing that the production costs were considered as work in progress for the relevant years. The Tribunal found no infirmity in the Ld. CIT(A)'s observations, as the reassessment was based on a change of opinion and there was no dispute regarding compliance with the relevant provisions.

In conclusion, the Tribunal dismissed the appeals filed by the revenue, upholding the quashing of reassessment proceedings by the Ld. CIT(A) based on the change of opinion and finding no merit in the revenue's grounds.