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TMI Blog2014 (12) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... nscious application of mind has chosen not to make any disallowance - the AO has applied his mind regarding the nature of payment and chosen not to make any disallowance. Validity of reopening of assessment u/s 147 – change of opinion – Held that:- No new fact has come to the notice of AO for reopening the issue of payment to M/s. Paramount Film (India) Ltd. - The nature of payments, licencee agreement made with the party were all available with the AO in the original assessment u/s 143(3) of the Act - AO consciously made a decision not to make any disallowance in this regard - Hence on the same issue when the reopening is done and the AO changes his opinion and comes to the decision that the assessee should have been deducted TDS u/s 195 of the Act, it is clearly a change of opinion - It is a fresh application of mind on the same set of facts which is impressible - thus it is not open for the officer to reopen the assessment just because he does not agree to the decision of the previous officer - reopening on mere change of opinion between two officers is not legally permissible. Relying upon CIT vs Kelvinator of India Ltd [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The residential status of M/s.Paramount Films of India Ltd. is Non-resident and it is a Foreign Company and is incorporated in USA. Under the provisions of Section 195 of the I.T.Act, 1961, a person responsible for paying to non-resident or to a foreign company shall deduct income-tax thereon at the rate in force. As such the assessee was required to deduct tax on gross basis while making payment to M/s.Paramount Films of India Ltd., a non-resident and foreign company, as required u/s 195 of the I.T.Act, 1961. But the assessee has failed to do so. The assessee was, therefore, asked to show cause as to why the amount of ₹ 42,81,332/- should not be disallowed and added back to her total income for the assessment year 2006-07 u/s 40(a)(i) of the I.T.Act, 1961, for non-deduction of tax at source. The assessee contended that section 195(1) of the Act does not apply. However AO was not satisfied. He referred to the confirmation received from AO, International Taxation, Mumbai having jurisdiction over M/s.Paramount Films of India Ltd. and proceeded to hold as under :- In view of the above, M/s. Paramount Films of India Ltd., to whom the assessee has paid ₹ 42,81,33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot reopen the assessment to make further addition on fresh application of mind. In this regard the ld. Counsel of the assessee also contended that all material facts were disclosed before the AO and no material has come to the possession of the AO. Hence he submitted that reopening is clearly bad. In this regard the ld. Counsel of the assessee referred to the decision of the Hon ble Calcutta High Court in ITAT NO.108 of 2012, GA No.1510 of 2012 in the case of CIT vs M/s.Kanoi Industries (P)Ltd. order dated 15th June, 2012 wherein it has held as under :- When on the same set of fact and materials Assessing Officer takes bona fide decision, it is not open for the subsequent officer to reopen the same just because he does not agree to the decision of the previous officer. In this case the Tribunal has recorded that a mere change of opinion between two officers in reopening of the assessment and it is not legally permissible. We, therefore, do not find any infirmity and illegality in the impugned judgment and order dated 12th January, 2012 passed by the learned Tribunal. 5.1. The ld. Counsel of the assessee further placed reliance upon the decision of the Hon ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,071 Paramount Film (India) Pvt. Ltd. 10,59,716 TOTAL 5,33,823 Therefore, based on the above facts the total disallowance u/s 41(1) is ₹ 5,33,823/- . 7.1. From the above we note that the AO has duly considered the payment to M./s. Paramount Film (India) Pvt. Ltd. The ld. Counsel of the assessee has submitted that the agreement under which payment was made to M/s.Paramount Film (India)Ltd. was also submitted before the AO. He was also aware of the payments and balance outstanding in the name of the said company. Hence it cannot be said that the AO was not aware of the nature of payments made to the said party. AO has also considered and chosen not to make any addition u/s 41(1) of the Act in the name of the said party, despite noting that the Inspector has reported that payment made during the year to the said party was ₹ 55,54,177/-. Thus AO after conscious application of mind has chosen not to make any disallowance. Hence it is clear that the AO has applied his mind regarding the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain preconditions and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening 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 Assessing Officer. 7.4. Similar was expounded by the Hon ble Apex Court in the case of CIT vs Foramer France 264 ITR 566. It was held that reassessment cannot be done on the basis of mere change of opinion. It was held that law in this regard was same before and after the amendment by Direct Tax Law amendment 1987. 7.5. Thus the decisions referred to the above supports the case of the assessee. If the AO has considered the payment and nature of the payment to M/s.Paramount (India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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