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TMI Blog2015 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal provisions and book profit of Rs. 2,84,13,526 u/s 115JB of the Act. Originally, assessment in case of assessee was completed u/s 143(3) of the Act vide order dated 24/12/2010 determining total income at Rs. 1,54,00,464 under normal provisions and at Rs. 2,87,33,056 after disallowing part of unabsorbed depreciation loss. Subsequently, AO alleged that due to non-disclosure of full particulars relating to its income, income chargeable to tax has escaped assessment. Accordingly, AO initiated action u/s 147 of the Act by issuing a notice u/s 148 of the Act to assessee calling upon it to furnish its return of income. In response to the said notice, assessee filed a letter requesting to treat the return originally filed to be a return in response to notice u/s 148. Though, assessee objected to initiation of proceeding u/s 147 of the Act, but, AO completed the assessment u/s 143(3) read with section 147 of the Act vide order dated 21/11/2013 by determining total income at Rs. 3,76,19,525 after making the following additions: 5. Being aggrieved of the assessment order so passed assessee preferred appeal before ld. CIT(A) both on the validity of the initiation of proceeding u/s 147 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after completed the assessment, reopening of the assessment on the basis of the very same material would amount to change of opinion. In support of such contention, he relied upon the decision of ITAT, Hyderabad Bench in case of M/s Gayatri Sugars Ltd. Vs. ACIT in ITA Nos. 1728 to 1731/Hyd/2011 dated 26/11/2014. Ld. AR submitted, only on the basis of objections raised by internal audit party, assessment cannot be reopened u/s 147. For this proposition, ld. AR relied upon the following two decisions of ITAT, Hyderabad Bench: 1. DCIT Vs. Lee Pharma Pvt. Ltd., ITA No. 1236/Hyd/2010, dt. 08/06/2012 2. DCIT Vs. M/s Vicky Realtors, ITA No. 146/Hyd/2014, dtd. 10/04/15. 7. Ld. DR, on the other hand, relying upon the observations of ld. CIT(A), submitted before us, while completing the original assessment, AO has failed to look into or apply his mind to certain issues, as a result of which, income chargeable to tax has escaped assessment. Therefore, reopening of assessment u/s 147 is valid. He submitted, only because the materials on the basis of which AO reopened assessment are available on record when original assessment was made that will not lead to the conclusion that AO while compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it is very much clear that AO was not having in his possession any fresh tangible material which could demonstrate escapement of income. Only on revisiting/reviewing the materials/informations already available on record at the time of original assessment and on reappraisal of the same, AO has formed belief that income has escaped assessment. Therefore, reopening of assessment on re-appreciation or reappraisal of the materials/informations available on record on the basis of which original assessment was completed is legally invalid as it amounts to change of opinion. The ITAT, Hyderabad Bench while considering the issue of identical nature, in case of Gayatri Sugars Ltd Vs. ACIT (supra) after following the decisions of Hon'ble Supreme Court in case of CIT Vs. Kelvinator of India Ltd., 320 ITR 561 (SC) and the Hon'ble Delhi High Court in case of CIT Vs. Usha International Ltd., 348 ITR 485 (FB) (Del.), held as under: "Reasons recorded also do not refer to any other tangible material, apart from the note appended to annual report which remains similar for all assessment years. Hence, it can be inferred that no tangible material has come to the possession, AO after completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case." 17. Applying the tests laid down in case of CIT Vs. Usha International Ltd. to the facts of the present case, it can be seen that assessee in all these assessment years has disclosed full particulars relating to debiting of interest to interest suspense account. Evidences brought on record, at least in some of the assessment years also make it clear that AO after examining the issue and due application of mind to the issue has completed the assessment, though there may not be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is very much evident that assessment was reopened u/s 147 of the Act purely on the basis of objections raised by the internal audit party. AO has merely followed the dictat of the internal audit party without independently applying his mind to know whether income has escaped assessment. In our view, for this reason also, initiation of proceeding u/s 147 of the Act is incorrect. In this context, we refer to the decisions of the coordinate bench in case of DCIT Vs. Lee Pharma Pvt. Ltd.(supra). As far as the decisions relied upon by the ld. DR are concerned, we are of the view that they are not applicable to the facts of the present case. Thus, on overall consideration of facts and circumstances of the case, we are of the view that there is no valid reasons for AO to initiate proceeding u/s 147 of the Act in absence of tangible materials. Accordingly, we quash the assessment order passed by AO u/s 147 of the Act. Grounds raised by assessee on the legal issue are therefore allowed. 9. In view of our decision hereinabove, we do not consider it necessary to deal with the merits of various additions/disallowances made by AO which have been raised by assessee in ground nos. 7 to 12 as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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