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TMI Blog2014 (11) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... ness connection with certain foreign clients and some expenditure was also incurred in that connection. Thus mere subjective satisfaction of the AO, on the basis of the same set of material, would amount to change of opinion and cannot be equated to the expression "reasons to believe", in which event the reassessment proceedings, in our humble opinion, deserve to be treated as void abinitio. Having regard to the facts and circumstances of the case before us we respectfully follow the decision of the Hon'ble Apex Court in the case of Kelvinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) to hold that the AO sought to reopen the assessment on mere change of opinion which is not permissible and hence we conclude that the notice issued under section 148 of the Act is not in accordance with law. Consequently we quash the reassessment proceedings - Decided in favour of assessee. - IT Appeal No. 9108 (MuM.) of 2010 - - - Dated:- 21-11-2014 - D. Manmohan, VICE-PRESIDENT AND N.K. BILLAIYA, ACCOUNTANT MEMBER S.C. Tiwari for the Appellant. Vivek A. Perampurna for the Respondent. ORDER D. Manmohan, Vice-President - This is an appeal filed at the instance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he made certain disallowances under the heads 'Vehicle Expenses', 'Telephone Expenses', 'Foreign Travel Expenses' etc. he completed the assessment on a total income of ₹ 4.71 crores. 5. Though the order dated 26.12.2006 was passed by the AO after thorough scrutiny of the details filed alongwith return of income, the new incumbent AO sought to reopen the assessment on the ground that the assessee incurred advertisement expenses and paid commission to M/s. JV Overseas Trading Ltd., British Virgin Island and no tax has been deducted whereby section 40(a)(i) gets attracted and therefore issued notice under section 148 of the Act on 21.03.2009. In response thereto the assessee submitted that the original assessment was made after considering all pertinent issues and hence a relook on the same issues is unwarranted. It was also contended that in order to reopen the assessment 'mere change of opinion' is not sufficient; there should be 'reason to believe' which cannot be equated to 'subjective satisfaction on the part of the AO'. 6. It was contended that M/s. J.V. Overseas Trading Ltd. has acted as selling agent outside India an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. 10. The learned CIT(A), however, observed that section 147 was amended w.e.f. 01.04.1989 whereby the scope of reassessment has been widened and the only restriction in this section is that the AO has to prove that he has reason to believe that the income escaped assessment. Under Explanation 1 to the proviso mere production of Balance Sheet or account books would not amount to disclosure of material facts. Thus the AO is entitled to make a preliminary enquiry even during the reassessment proceedings so long as the proceedings are initiated within four years. He relied upon the decision of the Hon'ble Gujarat High Court in the case of Gruh Finance Ltd. v. Jt. CIT [2000] 243 ITR 482/[2002] 123 Taxman 196 to conclude that after the amendment, even change of opinion can result in reopening of assessment within four years. He thus upheld the reassessment proceedings and, even on merits, he observed, utilisation of services in India is enough to attract its taxability in India and thus the assessee is duty bound to deduct tax at source as otherwise provisions of section 40(a) are liable to be attracted. 11. Further aggrieved, assessee is in appeal before us. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jarat High Court in the case of Gruh Finance Ltd. (supra) which in turn was passed on the strength of the view taken by the Hon'ble Gujarat High Court in the case of Praful Chunilal Patel (supra) The learned counsel also relied upon the following observations of the Hon'ble Delhi High Court in support of his contention that when a regular assessment order is passed upon verifying the material on record a presumption has to be raised that all the facts were properly taken on record in which event reopening on the same set of material would amount to change of opinion: - 23. We also cannot accept submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded on analysis of the materials on the record by itself may justify the AO to initiate a proceeding under s. 147 of the Act. The said submission is fallacious. An order of assessment can be passed either in terms of sub-s. (1) of s. 143 or sub-s. (3) of s. 143. When a regular order of assessment is passed in terms of the said-sub-s. (3) of s. 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not empower the AO to reopen the assessment. The learned counsel also relied upon the decision of the Hon'ble Bombay High Court in the case of OHM Stock Brokers (P.) Ltd. v. CIT [2013] 351 ITR 443/31 taxmann.com 354 (pg 62 of the paper book) and referred to para 13 to submit that the AO is not conferred with the power to review an assessment and he cannot reopen the assessment only because of a mere change of opinion. He thus submitted that if the assessee has furnished to the AO all primary facts it has to be assumed that the AO had taken on record all the material particulars while making the regular assessment and hence a new incumbent AO cannot reopen the assessment based on fresh opinion arrived at by him on the same subject matter. He thus strongly objected the reassessment proceedings. 14. On the other hand, the learned D.R. strongly relied upon the order passed by the learned CIT(A) and submitted that the amended section 147/148 of the Act empowers the AO to reopen the assessment, within four years from the date of making the original assessment, on the same set of material which is already available on record provided he is satisfied that income assessable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to believe , in which event the reassessment proceedings, in our humble opinion, deserve to be treated as void abinitio. 16. In the case of OHM Stock Brokers (P.) Ltd. (supra) the Hon'ble Bombay High Court had taken a similar view wherein the assessment was sought to be reopened on the basis of audit objection. In this regard the court observed that the AO is not conferred with the power to review an assessment on a mere change of opinion and, in order to invoke provisions of section 147/148, there must be tangible material to hold that there is escapement of income. 17. In the case before us it is not in dispute that the facts were present before the AO; more particularly, Annexure-9 to the Tax Audit Report and it could not have been overlooked by the AO at the time of making original assessment, since the AO had taken note of the fact that the assessee had business connection with certain foreign clients and some expenditure was also incurred in that connection. It is also not out of place to mention that the learned CIT(A) relied upon the decision of the Hon'ble Gujarat High Court in the case of Gruh Finance Ltd. (supra) wherein the previous decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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