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TMI Blog2012 (10) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment made by the DCIT, Cir-5(1), Hyderabad is unsustainable both in facts and in law. 2. The ld. CIT (A) failed to note that the entire reassessment proceedings u/s 147 which is beyond the period of four years from the end of the assessment year is bad in law as the appellant had furnished full and complete particulars in respect of its claim u/s 80HHC of the Income-tax Act, 1961. 3. The ld. CIT (A) failed to note that the entire reopening of assessment was on account of change of opinion, on wrong foundation of reasoning, on a fundamental misconception of facts and therefore the CIT (A) ought to have held that the entire reopening of assessment is bad in law and much so he assessment made. 4. The ld. CIT (A) failed to note that the satisfaction of CIT (A) to accord permission to the reassessment proceedings has been given in a mechanical manner and therefore ought to have held that the reassessment proceedings are bad in law and therefore ought to have quashed the order passed by the DCIT, Hyderabad. 5. The order of the ld. CIT (A) in restricting the claim for deduction u/s 80HHC at Rs.4,77,099/- as against Rs.18,27,687 claimed by the assessee is unsustainable in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed 1/4th of the motor car expenses for personal used but similar disallowance was not made while claiming depreciation. v) In response to the notice issued u/s 148, the assessee submitted its reply challenging the validity of the proceedings on the ground that the assessee having disclosed all material facts fully and truly, reopening of the assessment should not have been made on a mere change of opinion that too beyond four years. The AO however rejecting the objection raised by the assessee, completed the assesmsent u/s 147 by holding that the assessee is not entitled to claim deduction u/s 80HHC(3)(b) which is applicable to trader, since the assessee is manufacturer of gold ornaments which are exported. The AO also disallowed expenditure claimed towards interest payment of Rs.22,10,408 and also 1/4th for depreciation on the motor car for personal use of the assessee. 6. The assessee being aggrieved of the assessment order, filed an appeal before the CIT (A). Before CIT (A) also, the assessee challenged the validity of proceedings initiated u/s 147. The CIT (A) negated assessee s contention on the validity of reassessment proceedings on the ground that the AO while comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the AO having completed the assessment u/s 143(2) after proper application of mind and considering all materials placed before him, reopening of assessment on the basis of reasons recorded is only a change of opinion. The learned AR further contended that no new material has come on the basis of which assessment could have been reopened u/s 147. The learned AR further contended that the CIT has also sanctioned for re-opening of assessment in a mechanical manner without applying his mind. The learned AR contended that the department having accepted the petitioner s claim as trader u/s 80HHC (3)(b) for earlier assessment years consistently, it cannot take a different view for the assessment year under consideration. 8. The learned DR while supporting the orders passed by the CIT (A) contended that the assessment u/s 143(3) having completed without proper application of mind and there being failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, the reopening of assessment beyond four years was justified. 9. We have heard rival contentions of the parties and perused the material available on record. Before dealing with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared from time to time in course of assessment proceedings and filed information and after examination of the same, the assessment was completed by the AO. The Hon ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd., vs. ITO (106 ITR page 1) held that the duty of the assessee in any case does not extend beyond making a true and full disclosure of primary fact. It is for the Assessing Officer to draw correct inference from the primary facts. It is not the responsibility of the assessee to advise the AO with regard to inference which he should draw from the primary fact. If the AO draws an inference which appears to be erroneous, subsequently mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. In case of CIT vs. Kelvinatgor of India 320 ITR 561, the Hon ble Supreme Court held that there must be some new and tangible material before the AO to come to a conclusion that there is escapement of income from assessment. Otherwise, it will amount to change of opinion. 11. In case of GB Brothers Konda Rajagopala Chetty Beedi Factory Pvt. Ltd. Vs. ITO (267 ITR 774), the Hon ble High Court of A.P held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 ITR 431 also held in similar manner. From the facts on record, it is clear that the assessee had disclosed fully and truly all material facts necessary for the purpose of assessment and the AO has completed the assessment u/s 143(3) after considering those materials are available before him. It is also a fact that no new material has come into the possession of the AO on the basis of which the reopening was made. Re-opening has been made on the self same materials which are already available on record at the time of assessment u/s 143(3). Therefore, reopening of assessment made on the basis of very same material amounts to change of opinion. That besides in our considered opinion, the assessee has disclosed all material facts fully and truly, therefore reopening of assessment could not have been made beyond four years from the end of the assessment year in dispute i.e., 2004-05. We therefore hold that the assessment order as has been passed in pursuance to notice issued after end of four years from the end of assessment year is invalid in law and therefore legally unsustainable. We therefore allow grounds raised by the assessee. In view of our decision on legal issue, the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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