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TMI Blog2012 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet of the unit EOU claiming exemption of income u/s 10B and to furnish the same along with the detail of sales/purchases, other income and major expenses to which assessee replied furnishing complete break up of the profit and loss accounts, as per schedule-VI of the Companies Act, showing separately for EOU and other units, thus the assessment order is sought not to be reopened though within the period of four year as it is case of change of opinion - order of quashing the reassessment proceedings - in favour of assessee. - I.T.A. No. 4564/Ahd/2007 - - - Dated:- 6-7-2012 - D. K. Tyagi And A. Mohan Alankamony, JJ. Department by : B. L. Yadav, Sr. D.R. Assessee by : Milin Mehta, A.R. ORDER Per : D. K. Tyagi, Judicial Member These Revenue s appeal and assessee s C.O. are against the order of ld.CIT(A)-1,Baroda dated 25.09.2007 passed in appeal No.CAB/1-327/06-07. 2. The Revenue has taken following grounds of appeal:- 1(a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in quashing the assessment made u/s 147 r.w.s. 143(3) on 27.11.2006 merely on the ground that, in the original ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(1)(a) on 23.11.2002 resulting in refund of ₹ 2,93,32,621/-. Thereafter assessment u/s 143(3) was completed on 30.03.2004. Subsequently, a notice u/s 148 of the Act was issued on 29.03.2006. On the assessee s request, the reasons for reopening were intimated, the same are reproduced as under:- In this case the assessee filed the return of income for A.Y. 2001-02. It is noticed that the assessee has not apportioned the depreciation on residential building, motor cars and data processing machines between its DTA and EOU in the ratio of their turnover for the purpose of computation of benefit u/s 10B and the entire amount has been charged to the DTA only and the assessee has charged depreciation on data processing machines of ₹ 10,528/- only in respect of its EOU. The amount of depreciation on residential building ₹ 2,92,645/-, the depreciation on motor car is ₹ 7,16,656/- and the depreciation on data processing machines is ₹ 50,21,626/-. It is also noticed that the assessee has claimed the entire amount of ₹ 84.85 lakhs on account of advertising expenses to the DTA unit only. During the course of assessment proceedings for A.Y. 2003-04, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the P L account of the EOU had been furnished giving the allocation of common expenses along with the basis of the allocation. The A.O. examined the issue and considered the assessee s claim at the time of original assessment and after application of his mind took a decision not to make adjustments to the profits of the EOU unit. It was further argued that for the reopening of this assessment the A.O. has relied upon only the assessment record and the return of income furnished by the assessee during the course of regular assessment proceedings sowing that it is merely a reappreciation of the same evidence available with him on record. Thus it was argued before ld. CIT(A) that it amounts to a change of opinion. Placing reliance on various case laws it was argued that reopening of assessment has been cancelled under similar circumstances involving change of opinion on the same set of fact and material available on record. The assessee particularly relied upon the decision of the Delhi High Court in the case of Techspan India P. Ltd. v. ITO 283 ITO 212 (Del) stating that the facts in this case are almost identical. Reliance was also placed on the following decisions:- (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a speaking order, that he had finalized the assessment proceedings after going through the case records and on the basis of details placed on the records. It is a matter of record that the Assessing Officer accepted the appellant's claim of allocation of expenses for the EOU unit. That being so there is no material brought on record to show that the relevant details and all the necessary information were not available on record. It is obvious that the Assessing Officer applied his mind to the facts and other material available before him and allowed the appellant's claim u/s.lOB of the Act in respect of the EOU. The Assessing Officer has thus clearly changed his opinion with regard to the same set of facts and materials, on which he had already applied his mind, when he issued notice u/s. 148 of the Act and resorted to the re-allocation of expenses between the EOU and DTA in the ratio of their turnover. In this context, the strong reliance of the appellant on the decision of the Delhi High Court in the case of Techspan India P. Ltd. (supra) appears very apt and logical. The Hon'ble Delhi High Court recorded the following facts and held as under: The undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment has rightly been done which may kindly be upheld. Placing reliance on the decision of Hon ble Apex Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers P. Ltd reported in 291 ITR 500 (SC) ld. D.R. argued that for formation of belief that assessee s income has escape assessment, the principle of change of opinion will not come in its way and therefore, he prayed for setting aside the order passed by ld. CIT(A) and restore that of the A.O. on the issue of reopening of assessment u/s 147 of the Act. 8. Ld. counsel of the assessee, on the other hand, reiterating the same submissions as made before ld. CIT(A) further submitted that it is a case of change of opinion on the part of the A.O. as in the original assessment after taking into consideration the detailed reply of the assessee the A.O. decided not to make any adjustment to the profits of EOU. For making this submission reliance was placed by him on pages 67, 76 and 78 to 80 of the paper book and on the following case laws:- (i) Startronic Investment Consultants Pvt Ltd v. DCIT, ITAT, Ahd (ITA No.2196/A/2002) (ii) Garden Silk Mills (P) Ltd v. DCIT 237 ITR 668 (Guj) (iii) CIT v. Kelvinator of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the reopening is that in as much as the A.O. had, during the course of original assessment proceedings, examined the matter and if the second view is taken now, it is case of change of opinion and therefore impermissible. After going through the paper book we find force in the contention of the assessee that on the basis of same material the A.O. cannot reopen the assessment even within the period of four years. 10. In the case of CIT Vs. Kelvinator of India Ltd. reported in 320 ITR 561 (SC) Hon ble Supreme Court has held as under:- The concept of change of opinion on the part of the Assessing Officer to reopen an assessment does not stand obliterated after the substitution of section 147 of the Income-tax Act, 1961, by the Direct Tax Laws (Amendment) Acts, 1987 and 1989. After the amendment, the Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion. The concept of change of opinion must be treated as an inbuilt test to check the abuse of power. Hence after April 1, 1989, the Assessing Officer has power to reopen an assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Gujarat High Court in the case of Garden Silk Mills (P) Ltd. Vs. DCIT [151 CTR 533] wherein the Court quashed the reopening where in the original assessment, the assessee s claim was accepted. In that case, it seems that the Assessing Officer has accepted the claim of the assessee after considering the decision rendered by the Gujarat High Court in another case and thereafter the assessment was reopened as the claim was not rightly allowed. In view of this fact, the CIT(A) concluded that the Assessing Officer consciously applied his mind in the original assessment and that was the reason for quashing the reassessment. But in the present case, according to him, the assessee had furnished information about the impugned payment before the Assessing Officer (without giving any reasons regarding its allowability as revenue expenditure) and considers that after conscious application of mind, the Assessing Officer has accepted the claim. The Court in the case of Garden Silk Mills (P) Ltd. (supra) clearly stated that the consistent view is that even after amendment of Sec. 147 mere change of opinion does not confer jurisdiction on the ITO to initiate proceedings for reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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