9911796707
TMI Blog2015 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... der. The assessee company is a 100% Export Oriented Unit (EOU) engaged in manufacture of steel castings. It is stated that the assessee company is exporting its 100% of production to USA through another EOU. The assessee's assessment for the A.Y. 2007-08 has been completed u/s. 143(3) of the Act vide assessment order dated 24-12-2009. The assessee had claimed the deduction u/s. 10B of Rs. 4,26,30,184/- which was allowed in the scrutiny assessment passed u/s. 143(3) of the Act. In the regular assessment u/s. 143(3), the Assessing Officer has observed that the assessee has made direct exports of Rs. 40,53,728/- and exports to EOU to the extent of Rs. 10,12,61,099/- and the assessee has claimed the deduction u/s. 10B of Rs. 4,26,30,184/- which is in respect of sale to the another EOU. During the regular assessment proceedings it was claimed by the assessee that the sales by an EOU to another EOU are deemed to be exports as per Chapter 8 of the Foreign Trade Policy. The Assessing Officer allowed the assessee's claimed. Subsequently, the Assessing Officer initiated the proceedings u/s. 147 of the Act and issued the notice u/s. 148 of the Act. The Assessing Officer has recorded the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,26,30,184/- u/s. 10B which was earlier allowed while completing the regular assessment u/s. 143(3) of the Act. The assessee challenged the reassessment proceedings before the Ld. CIT(A) by taking the plea that the entire reassessment is vitiated as the proceedings are initiated u/s. 147 merely on the change of the opinion. The assessee pleaded before the Ld. CIT(A) that while completing the regular assessment u/s. 143 of the Act. The Assessing Officer has considered the claim of the assessee after examining the foreign trade policy. It was pleaded by the assessee that the Assessing Officer while passing the revised assessment order dated 07-12-2011 re-applied his mind to the same issue which amounts to be merely change of opinion and which is not permissible for initiating proceedings u/s. 147 of the Act. The assessee also relied on the following decisions before Ld. CIT(A): i. CIT Vs. Kelvinator of India Ltd. 320 ITR 561 (SC). ii. CIT Vs. Eicher Ltd. 294 ITR 310 (Del). iii. Replika Press Private Limited and ANR Vs. ACIT (Writ Petition No. (C) 13838/2009) (Del). iv. Metal Alloys Corporation Vs. ACIT 77 DTR (Guj). v. Siemens Information System Ltd. Vs. ACIT & Ors. 214 CTR (Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll and true particulars were furnished by the assessee which were examined, or presumed to be examined, by him. The observations of the Supreme Court are a protection against abuse of power; they also protect the revenue which can, in the light of subsequent coming into light of facts or law, reopen the assessment. 3.5. In the present case, we are dealing with the post 1.4.1989 amended sec. 147. What is to be seen is whether the conditions under sec. 147 read with the proviso to sec. 147 are met. The assessment year involved is 2007-08. The assessment was reopened vide issue of notice u/s 148 on 23.11.2011 and duly served on the appellant, which is well within four years from the end of the relevant assessment year, which is 31.3.2012. Therefore, even if there was no failure on the part of the appellant to disclose all material facts necessary for assessment, the Assessing Officer under the proviso to section 147, was competent to reopen the assessment concluded u/s 143(3), provided there was "tangible material" or "reasons to believe" that income had escaped assessment. 3.6. From the reasons recorded, it is clear that the Assessing Officer had reason to believe that the income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amended provisions of section 147 is sufficiently elastic to cover all cases of non-assessment or underassessment of income chargeable to tax and the only condition for reopening or initiating an assessment under section 147 is reasonable belief of the Assessing Officer on escapement of income chargeable to tax. [Para 7] In the instant case, admittedly, income chargeable to tax, under section 45(2) has escaped regular assessment for the assessment year 1995-96 because neither the assessee filed return of income taxable under the said provision nor the officer assessed liability under the said section. The audit party only brought to the notice of the Assessing Officer that income chargeable to tax under section 45(2) has not been assessed for the assessment year 1995-96 because in the previous year relevant to the assessment year the assessee had sold major portion of the land and building thereon held by it as converted stock-in-trade, which was originally capital asset transferred or converted into stock-in-trade in the year 1992-93 leading to a good amount of profit to the assessee. Reopening of regular assessment, therefore, is for thei reason that at the time of regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer has discussed this issue, applied his mind considering all the facts and then allowed the deduction to the assessee. He referred to the reasons recorded by the Assessing Officer and submits that the Assessing Officer himself has observed that deduction was allowed to the assessee relying on the decision of the ITAT, Ahmedabad in the case of ITO Vs. Anita Synthetics (P) Ltd. 100 TTR (Ahd) 277. He further submits that there is a reference of the ITAT, Bangalore in the case of Tata Elxsi Ltd. Vs. ACIT and as noted by the Assessing Officer in the reasons for reopening the Assessing Officer was not aware of the said decision which was against the assessee. 6. The Ld. Counsel referred to Sec. 147 and submits that the provisions of Sec. 147 has come for the judicial scrutiny in the plethora of decisions. As per the interpretation given to provision of Sec. 147 by the different High Courts and as well as Hon'ble Supreme Court, there is a unanimity on the legal principles laid down that reassessment proceedings cannot be initiated merely on the change of the opinion. He refers to the impugned order of the Ld. CIT(A) and submits that even if amended Sec. 147 brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer has examined the issue, considered all the facts and examined the issue applied his mind, thus merely because there is some contrary decision of the another Coordinate Bench of the ITAT that cannot be the reasons to use Sec. 147 for withdrawing the legitimate deduction. On perusal of the reasons recorded by the Assessing Officer there is no quarrel in respect of the fact that while completing the assessment there was a decision of the ITAT, Ahmedabad which was considered by the Assessing Officer in the case of Anita Synthetics (P) Ltd. (supra). It appears that there was also contrary decision by the ITAT, Bangalore in the case of Tata Elxsi Ltd. (supra). The only reason for initiating the proceedings u/s. 147 is that there were two contrary decisions, one is in favour of the assessee and another is against the assessee and the decision which is against the assessee was not aware of the same while framing assessment u/s. 143(3) of the Act. 9. The relevant part of Sec. 147 of the Act reads as under: 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment8 for any assessment year, he may, subject to the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents was only erroneously granted. This is a clear case of review of an order. The application of law or interpretation of a statue leading to a particular conclusion cannot lead to a conclusion that tax has escaped assessment for this would then certainly amount to review of an order which is not permitted unless so specified in a statue. The order dated 14.11.2011 disposing of the Petitioner's objection to initiation of proceedings under Section 147 of the said Act also proceeds on the view that there has been non application of mind during the original proceedings for assessment. This is unsustainable and as held this court in Asian Paints Ltd. v. Dy. C.I.T. 308 ITR 195 a fresh application of mind by the Assessing officer on the same set of facts amounts to a change of opinion and does not warrant reopening. In fact our court followed the Full Bench decision of the Delhi High Court in the matter of Kelvinator (supra) wherein it has been held as under: "We also cannot accept the submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded an analysis of the materials on the record by itself may justify the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessment is untrammelled. Even within a period of four years, it is now a settled principle of law that an assessment cannot be reopened on the basis of a mere change of opinion. The Supreme Court has emphasized that the AO has no power to review, but his power is a power to reassess. If a mere change of opinion cannot furnish a ground for reopening of an assessment, then, under the garb of reopening an assessment, a review would not equally be permissible. Consequently, the test is that there should be tangible material to come to a conclusion that there is an escapement of income from assessment. 13. These principles have been emphasized in the judgment of the Supreme Court in CIT vs. Kelvinator of India Ltd. (2010) 228 CTR (SC) 488 : (2010) 34 DTR (SC) 49 : (2010) 320 ITR 561 (SC). The Supreme Court has observed as follows : "6. ........... Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' failing which, we are afraid, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was obtained by the Revenue in the assessment proceedings of a subsequent year. Consequently, the reopening of the assessment was held to be valid. The point to be emphasized is, therefore, that where in the case of assessment proceedings for a subsequent year certain additional information is obtained by the Revenue which was not available to it in the course of an assessment for an earlier year, that may legitimately be utilized as a ground for reopening an assessment of the earlier year. Where the reopening has taken place within four years that may legitimately give rise to an inference of escapement of income. The new information which has come to the knowledge of the Revenue would, therefore, constitute tangible material. 16. The judgment of the Division Bench of this Court in Multiscreen Media (P) Ltd. vs. Union of India (2010) 38 DTR (Bom) 14 : (2010) 324 ITR 54 (Bom) adverts to a decision of the Supreme Court in Ess Kay Engineering Co. (P) Ltd. vs. CIT (2001) 166 CTR (SC) 396 : (2001) 247 ITR 818 (SC) as laying down the principle that merely because the case of the assessee was accepted as correct in the original assessment for the assessment year in question that would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied his mind when all material was placed by the petitioner before him." 18. Consequently and in this background the mere fact that the AO for asst. yr. 2007-08 had come to a different conclusion would not justify the reopening of the assessment for asst. yr. 2006-07. In order to establish that the reopening of the assessment for asst. yr. 2006-07 is not a mere change of opinion, the Revenue must demonstrate before the Court that during the course of the assessment proceedings for the subsequent year i.e. asst. yr. 2007- 08 some new information or material had been brought on record which was not available when the assessment order was passed for asst. yr. 2006-07. That indeed is not the case of the Revenue. All material which was relevant to the determination was available when the assessment was completed for asst. yr. 2006-07. Consequently, the mere formation of another view in the course of assessment proceedings for asst. yr. 2007-08 would not justify the Revenue in reopening the assessment for asst. yr. 2006-07 though the reopening of the assessment has taken place within a period of four years. The power to reopen assessments is structured by law. The guiding principles ..... X X X X Extracts X X X X X X X X Extracts X X X X
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