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2015 (6) TMI 847 - AT - Income TaxReopening of the assessment u/s. 147 - addition being interest income accrued on fixed deposits and addition being expenditure on capital spares consumed being capital in nature - Held that - AO has no fresh material to form his opinion regarding escapement of assessment and he has also ot found any tangible material to record the reasons for reopening of the assessment of the assessee. It is merely a change of opinion which is not permissible under the law as well as according to the various decisions rendered by the Hon ble Supreme Court of India in the case of CIT vs. Kelvinator of India Limited 2010 (1) TMI 11 - SUPREME COURT OF INDIA and in the case of CIT vs. Foramer France (2003 (1) TMI 101 - SUPREME Court) and Sita World Travels (India) Ltd. vs. CIT (2004 (5) TMI 23 - DELHI High Court ) - Decided in favour of assessee.
Issues:
1. Reopening of assessment under section 147 of the Income Tax Act. 2. Validity of additions made by the Assessing Officer. 3. Jurisdictional aspects of the case. Issue 1: Reopening of assessment under section 147 of the Income Tax Act: The Appeals were filed by the Revenue against the orders passed by the Commissioner of Income Tax (Appeals) challenging the reopening of the assessment under section 147 of the Income Tax Act. The Assessing Officer reopened the case based on the belief that taxable income had escaped assessment. The AO issued a notice under section 148 of the Act after recording reasons to believe that income had escaped assessment. The assessee objected to the reassessment proceedings, but the objections were rejected. The Ld. CIT(A) allowed the appeals, holding that the reopening of the assessment was incorrect and invalid. The Tribunal upheld the decision, emphasizing that the AO had no fresh material to form an opinion regarding escapement of assessment, and it was merely a change of opinion, which is impermissible under the law. Issue 2: Validity of additions made by the Assessing Officer: The Assessing Officer observed that the assessee had claimed excess amounts under various heads, including interest on fixed deposits, technical assistance fee, and expenditure on capital spares consumed. The AO believed that income had escaped assessment due to these claims and made additions to the taxable income. However, the Ld. CIT(A) found that the additions were not justified and deleted them. The Tribunal did not adjudicate on the merits of these additions as it upheld the decision that the reopening of the assessment was incorrect and invalid. Issue 3: Jurisdictional aspects of the case: The Tribunal considered the legal issue of whether the AO had valid reasons to believe that income had escaped assessment, as required under section 147 of the Income Tax Act. The Ld. CIT(A) based his decision on the absence of tangible material for reopening the assessment, citing relevant case laws. The Tribunal agreed with the Ld. CIT(A) that the AO's actions amounted to a change of opinion, not supported by fresh material, and therefore, held the reopening of the assessment to be incorrect and invalid. Consequently, the Tribunal dismissed the appeals filed by the Revenue. In conclusion, the Tribunal upheld the decision of the Ld. CIT(A) that the reopening of the assessment was incorrect and invalid, leading to the dismissal of the Revenue's appeals. The case highlights the importance of having valid reasons and tangible material to support the reopening of assessments under the Income Tax Act, as mere change of opinion is not permissible under the law.
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