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TMI Blog2013 (8) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... tter view is suitable to the revenue; those would squarely be change in opinion. Perhaps, in given fact situations, they can be legitimate grounds for revising an order of assessment under Section 263; but not for re-opening it, under proviso to Section 147 - assessee cannot be held to have failed to disclose truly and fully all the material facts. It is also not a case where fresh tangible material has come to the knowledge of the Assessing Officer. The Assessing Officer, at the time of original assessment, clearly formed an opinion on both the issues and a notice under Section 148 seeking to reopen the assessment is clearly an instance of change of opinion, which is impressible in law - Following decision of MOSER BAER INDIA LIMITED Versus DEPUTY COMMISSIONER OF INCOME TAX & ORS [2012 (12) TMI 456 - DELHI HIGH COURT] - Decided in favour of assessee. - WP(C) 1004/2013 - - - Dated:- 22-8-2013 - Sanjiv Khanna and Sanjeev Sachdeva, JJ. For the Appellants : Mr Ajay Vohra, Ms Kavita Jha and Mr Vaibhav Kulkarni, Advs. For the Respondent : Mr Kamal Sawhney, Adv. JUDGEMENT:- PER : Sanjeev Sachdeva The petitioner by way of the present petition has challenged the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. c. Disallowing royalty of Rs.11,50,83,837 being 25% of Rs.46,03,35,350 as against actual expenditure on royalty of Rs.37,73,17,928 claimed by the Petitioner in the P L account. d. Disallowing expenses of Rs.9,33,27,335 alleging the same to be incurred for earning exempt dividend income invoking provisions of section 14A read with Rule 8D of the Income-tax Rules, 1962. 7. On 27.05.2009, the Assessing Officer passed an order under Section 154 of the Act rectifying the Assessment Order dated 31.12.2008 and reduced the claim of deduction under Section 10B of the Act to Rs.25,24,21,751/- as against deduction of Rs.25,42,43,918/- allowed in the earlier assessment order. 8. On 04.05.2011, the Deputy Commissioner of Income Tax issued a notice to the petitioner under Section 148 proposing to re-assess the income of the petitioner. The reasons to believe recorded for the said notice are as under:- "Return of income was filed on 30.10.2005 declaring loss of Rs.1,65,43,08,282/-. Assessment under Section 143(3) was completed on 31.12.2008 at Rs.95,47,60,410/- subsequently, rectified under Section 154 on 27.05.2009 at an income of Rs.87,31,23,193/. Perusal of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 148 seeking to reopen the assessment was based on change of opinion as no fresh information or tangible material had come to the knowledge of the Assessing Officer. 10. Vide the impugned order dated 01.02.2013, the Deputy Commissioner of Income Tax disposed of the objections raised by the petitioner by rejecting on the grounds raised by the petitioner. Aggrieved by the disposal of the objections vide order dated 01.02.2013 and the issuance of notice under Section 148 proposing to reopen the assessment, the petitioner has filed the present petition. 11. In terms of the proviso to Section 147, any reassessment sought to be done after the lapse of a period of four years from the end of the relevant assessment year, is permissible only if:- " ..any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 .. or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." 12. The relevant assessment year in the present case is 2005-06 and in terms of proviso to Section 147, the reassessment notice issued after the expiry of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit is registered as a 100% Export Oriented Unit (on November 28, 2001) and is accordingly eligible for claiming tax-holiday benefits u/s 10B of the Act. No deduction u/s 10B of the Act has been claimed in view of a loss situation. The required Report in Form 56G in respect of the said unit is enclosed. For computing the profits of the above undertaking, certain expenses/income debited/credited in the head office have been allocated to such units in the ratio of turnover." 16. Vide annexures dated 31.10.2007, 01.10.2008 and 14.11.2008, specific queries were raised by the Assessing Officer with regard to the units eligible for deduction under Section 10B, which queries were replied to and detailed explanations rendered. After appreciating the response of the petitioner on the said issue of deductions under Section 10B of the Act, in respect of the respective units, the Assessing Officer allowed the deduction at Rs.25,42,43,918/- as against the deduction claimed of Rs.29,08,16,451/-. It is pertinent to note that even the allowed deduction of Rs.25,45,43,918 was subsequently rectified under Section 154 of the Act to Rs.25,24,21,751/-. The original assessment disallowing the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deferred revenue expenditure relating to the technical know-how fee. 19. The fact that the petitioner disclosed the deduction of deferred revenue expenditure on account of payment of technical know-how fee in the notes appended to the return of income and that a specific query was raised and responded to by the petitioner demonstrates that the petitioner has made true and full disclosure of all material facts. The original assessment framed after receiving the response to the questionnaire specifically dealing with the said issue further establishes that the Assessing Officer had formed an opinion on the said claim of the petitioner. 20. The reasons to believe recorded by the Deputy Collector, Commissioner of Income Tax do not suggest that any fresh or further tangible material had come to the knowledge of the Assessing Officer whereby a reasonable bonafide belief could or was formed that income had escaped assessment on account of failure of the assessee to disclose truly and fully the material facts. 21. There appears to be an intensive examination in the first instance in respect of the said issues which are now sought to be made the basis for reopening of the assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligibility of the units for deduction u/s 10A/10B; approval letters regarding all three units were submitted. 18. In the above background of facts, when there was intensive examination in the first instance in respect of the issue, which was the basis for re-opening of assessment, it was necessary for the AO to indicate, what other material, or objective facts, constituted reasons to believe that the assessee had failed to disclose a material fact, necessitating reassessment proceedings. That is precisely the "tangible material" which have to exist on the record for the "reasons" (to believe" bearing a "live link with the formation of the belief" as spelt out in Kelvinator. When the assessment is completed, as in the present instance, under Section 143 (3), after the AO goes through all the necessary steps of inquiring into the same issue, the reasons for concluding that reassessment is necessary, have to be strong, compelling, and in all cases objective tangible material. This court discerns no such tangible materials which have a live link that can validate a legitimate formation of opinion, in this case. It is not enough that the AO in the previous instance followed a view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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