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TMI Blog2013 (8) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... g the completed assessment it has to be treated as change of opinion - order of assessment that was passed by the AO under section 143(3) is not silent in respect of points on the basis of which the assessment was sought to be reopened - reopening was result of change of opinion. Fact that the AO did not record reasons for computing income under normal/MAT provisions, would be of no consequence - Decided in favour of assessee. Role of the Audit parties to point out of the factual mistakes and not to advise the AO on legal matters. Therefore if an AO, reopens the assessment on the legal advice of the audit party it cannot be held forming of an independent opinion. - ITA No.167and 223/Mum/2010 - - - Dated:- 3-7-2013 - Sh. B. R. Mittal And Rajendra,JJ. For the Appellant : Mr. P. V. Lakhani For the Respondent : Mr. Giraja Dayal CIT (DR) ORDER Per Rajendra, A.M. Cross appeals have been by the assessee and the Assessing Officer (AO) challenging the order dt.30-10-2009 of CIT(A)-10,Mumbai,raising following Grounds of Appeal: Grounds of appeal filed by the assessee read as under :- The Learned Commissioner of Income-Tax(Appeals) has erred in concluding that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case the appellant denies the liability for payment of interest u/s. 2348. 8. The appellant craves the permission to add, alter or amend the grounds of appeal at the time of hearing. AO has filed following grounds of appeal : 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the provisions of Section 234D are applicable w.e.L AY 2004-05 onwards without appreciating that a. the section was introduced w.e.f. 01.06.2003 and hence was applicable in all the cases where on the said date, intimation u/s 143(1) was already issued but regular assessment was pending; b. the said section provided to levy interest in every case where refund was issued u/s 143(1) of the Act and on regular assessment, either there was a demand or the amount of refund had reduced from the amount of refund as per intimation u/s.143(1) of the Act; 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 113.73 crores, made to the Book Profit u/s 1 15JB in respect of the lease equalization reserve, ignoring the fact that as per clause (b) of Explanation to Section 1 15JB, the net profit as per P L a/c has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the explanation of the assessee for allowing additions/disallowances were made in the assessment order passed u/s 143(3) r.w. section 147 of the Act. a. Income from house property Rs. 85,90,888/- b. Depreciation on house property Rs. 69,22,568/- c. Amortization of lease hold land Rs. 26,99,594/- d. Amount set aside for investment valuation Rs. 4,24,35,875/- e. Disallowance u/s. 14A Rs. 67,28,54,440/- f. Disallowance u/s. 40A(3) Rs. 1,37,400/- g. Lease equalization (addition only for the purpose of u/s.115JB Rs. 113,73,83,896/- 3. Assessee preferred an appeal before the First Appellate Authority (FAA).After considering the submissions of the assessee and the re-assessment order,he held that AO had in his possession documents/information about escapement of income by the assessee, that documents/piece of information could be received by him from any source i.e. from person inside/outside the department or from any other agency,that the requirement of the Act was that AO should apply his mind on the information available, that in the case under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrav- ention of Sec.40(A)(3) of the Act,that while recording the reasons for re-opening AO had mentioned these three issues, that at the time of original assessment,AO had made queries about lease equalisation,that after applying his mind and considering the submissions made by the AO assessee was that under normal provisions and not under the provisions of section 115JB,that on the basis of objection raised by the audit party he changed his opinion, he referred to page No. 35 and 16 of the paper book.With regard to provision for investment valuation amounting to Rs.4. 58 Crores,he referred to page No.17 of the paper book and submitted that amount in question was added to the income of the assessee under MAT provisions,that no fresh material was available with the AO for invoking section 147.He further submitted that Rs. 6.87 lacs paid in cash by the assessee were related court fees paid in cash, that matter was pending before the Hon'ble High Court of Madras,that in the Tax Audit Report in para-17(h) the amount was shown as paid in cash,that in the reasons recorded the AO had referred to the Tax Audit Report, that there was change of opinion,that 147-poroceedings were not valid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve a large number of complex claims voluminous material numerous exemptions and deductions. If the AO is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the AO on his own for reasons best known to him chooses not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, it can hardly be stated by the Revenue that the AO cannot be seen to have formed any opinion on such a claim. Such a contention, in our opinion, would be devoid of merits. If a claim made by the assessee in the return is not rejected, it stands allowed. If such a claim is scrutinised by the AO during assessment it means he was convinced about the validity of the claim. His formation of opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, the AO has power to reopen, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words 'reason to believe' but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the companies against omission of the words 'reason to believe', Parliament reintroduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the AO." From the above discussion it is clear that the AO even within a period of four years cannot reopen an assessment merely on the basis of a change of opinion.The AO has no power to review an assessment which has been concluded. But,where he has tangible material to come to the conclusion that there is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and not to advise the AO on legal matters. Therefore if an AO, reopens the assessment on the legal advice of the audit party it cannot be held forming of an independent opinion. Whether a particular item has to be added or not while computing the income under normal provisions or MAT provisions is an issue to be decided by the AO. He is the only person to interpret the law pertaining to computation of income as per the provisions of section 115 JB of the Act. It is not the case that AO had not called for any details from the assessee in this regard. He analysed the pieces of information supplied by the assessee about both the issues and later on decided to assess the income in a particular manner. It is noteworthy that order was passed by a senior officer of the department i.e. by Additional CIT in the case under consideration an experienced officer has taken a view after considering the relevant facts and law. He has not initiated reassessment proceedings on his own. As stated earlier, 148 notice was issued after receiving objection from audit party. It is true that, while initiating 147 proceedings, he has not mentioned that reason for reopening was not the audit objections. B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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