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TMI Blog2011 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the matter may be heard and disposed of on the basis of the paper book filed by the petitioner. 2. The petitioner is engaged in operating inbound tour business. It specializes in package tours and tailor made holidays for foreign tourists. The petitioner contends that it arranges for complete itinerary for visiting tourists including boarding, lodging, transportation, sight seeing, etc. The petitioner bills for the gross amount, which include payment to be made to third parties towards boarding, lodging and sight seeing etc. 3. For the assessment year 2006-07, the petitioner had filed return declaring total income of Rs.8,55,11,040/-. The case came up under scrutiny and an assessment order under Section 143(3) dated 26th December, 2008 was passed, assessing the total taxable income of Rs.8,55,51,563/-. We are not concerned with the additions made in the assessment order. 4. Notice dated 17th February, 2010, under Section 148 of the Income Tax Act, 1961 (Act, for short) for reopening of the assessment was issued and the petitioner filed copy of their original return of income on 17th March, 2010, and requested Respondent No. 2, Deputy Commissioner of Income Tax, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- chargeable to tax has escaped assessment within the meaning of section 147/148 of the Income tax Act, 1961. 9. In the objections filed before the Assessing Officer, the petitioner had stated as under:- 1) Income on Tours is accounted after netting off all direct expenses relating thereto. It comprises of the margin earned on services provided for tour arrangements i.e. billing less all direct costs incurred in operating the Tour. Every tour comprises direct costs like : hotel, transport, guides, air fare, rail fare, monuments entrance fees etc. These costs are directly matched with Revenue earned on every tour and balance being the margin earned is transferred to Income from Tours A/c. 2) The method of accounting is standard accounting practice followed by the travel industry. The scheme of accounting entries followed for a specific tour can be explained with the help of following example: Invoice raised on Foreign Tour Operator Rs.1,00,000/- Bills received from various Hotels Rs. 50,000/- Bills received from various Hotels Rs. 10,000/- Air fare charges for this tour Rs. 20,000/- Guide charges for this tour Rs. 4,000/- The accounting entries passed would be as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opted by the petitioner vide their letter dated 31st October, 2008. Copy of the said letter has been filed before us as Annexure-H to the writ petition. It is stated that this letter/explanation was issued in response to the notice/ order dated 21st January, 2008 issued by the Assessing Officer in the original assessment proceedings to give a note on justification of the returned income/returned loss. The relevant portion of the said letter reads as under:- TOUR INCOME Le passage to India Tours Travels Pvt. Limited is engaged in operating inbound tour business. With its‟ head-quarter in New Delhi and network of branch offices in India. Le Passage to India specializes in package tours and tailor made holidays for foreign tourists visiting India, Nepal, Bhutan and Sri Lanka. Tours operated by Le Passage comprises of mainly foreign tourists which comes from entire global mainly covers countries such as Italy, France, Germany, Switzerland, USA and USSR. During the assessment year 2006-07, Le Passage to India has been able to generate foreign exchange amounting to Rs.1,29,79,20,362. Income from tours comprises of margin kept by Le Passage to India on the total costs incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons raised by the assessee, and the plea taken for dropping proceedings u/s 147 of the I.T. Act are devoid of merit. 12. The aforesaid reasoning is laconic and sketchy and it does not deal with the contentions and the issue raised by the petitioner namely that there is no material to justify reopening and secondly this aspect was examined and considered at the time of the original assessment and therefore reopening is bad in law on the ground of change of opinion. There is no cavil and doubt that change of opinion, when a matter has been examined and considered at the time of original assessment, cannot be a ground for reopening of assessment even under the amended Section 147 of the Act. The observation of the Delhi High Court in Kelvinator of India Limited vs. CIT 1994(3) AD (Delhi) 1533, stand affirmed by the Supreme Court in Commissioner of Income Tax vs. Kelvinator of India Ltd. (2010) 2 SCC 723. The Supreme Court has held:- 5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer during the course of the original assessment proceedings would have not reflected and considered the method of accounting adopted by the petitioner. This is not possible as the Assessing Officer at the very first instance was required to examine the said aspect. The method of accounting adopted by the petitioner was set out in clear terms and explained by the petitioner in their letter dated 31st October, 2008, which has been quoted above. The petitioner has stated that they have always and continue to follow the said method of accounting. This is not a case where explanation 1 to Section 147 is applicable. The question relates to the very method and manner of accounting, which will be apparent and clear to any person when scrutiny of the return and accounts is undertaken. The reopening is, therefore, bad for want of jurisdictional pre-condition under Section 147 of the Act. It is a case of change of opinion and the ratio in the case of Kelvinator (supra) is applicable. 14. With the aforesaid position, Mr. N.P. Sahni, learned standing counsel for the Revenue has submitted that the Assessing Officer in the original assessment proceedings had not examined and gone into ..... X X X X Extracts X X X X X X X X Extracts X X X X
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