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TMI Blog2011 (8) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... oking the provisions of section 147 r.w.s.148 of the I.T. Act, 1961 ( the Act ). 2. The ld CIT(A) erred in confirming the action of the AO whereby the AO treated the technical know-how fees of ₹ 11,82,730/-, paid to M/s. Nordiska Kardan AB ( M/s.N.K) a capital in nature. 3. Ground No. 1 regarding validity of reopening of the assessment. The original assessment was completed u/s.143(3) on 19.03.2004. Subsequently the case was reopened by issuing a notice u/s.148 on 06.03.2006 and reassessment order was passed on 30.10.2006 whereby the technical know-how fees was disallowed by the AO by treating the same as capital in nature and depreciation at the rate of 25% was allowed. The assessee challenged the validity of reassessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e miscellaneous expenses which contains item of technical know-how fee. Thus the ld AR has submitted that while passing the original assessment u/s.143(3) the AO applied his mind on the issue of expenditure regarding technical know-how fee claimed by the assessee and allowed the same. When the AO has taken a view and allowed the claim of the assessee then the reopening on this issue is purely on the basis of change in opinion and in the absence of any new material and information come to the knowledge of the AO, the reopening of the assessment is not sustainable and liable to be set aside. He has relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Kelvinator of India (256 ITR 1) which has been upheld by the Hon ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s.148 has been issued by the D.C.I.T. therefore no such approval or satisfaction is required on the reasons recorded by the AO for issuing the notice u/s.148 as provided u/s.151. In view of the above fact we did not find any substances or merit in the first contention of the ld AR. 8. As regards the objection to the reopening based on change of opinion is concerned we note that as per the questionnaire issued by the AO being Annexure to section 142(1) of the I.T. Act, the AO asked the assessee to furnish complete details regarding each and every item of expenditure debited to the P L A/c. Question No.21 of the said questionnaire as under: Furnish the complete details (month wise and party wise) of expenses debited under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3). It is settled proposition of law that reassessment u/s.143 r.w.s. 147 cannot be initiated merely on change of opinion. The Hon ble Full Bench of Delhi High Court in the case of CIT vs. Kelvinator (supra) has observed at page 19 20 as under: Another aspect of the matter also cannot be lost sight of. A statute conferring an arbitrary power may be held to be ultra vires article 14 of the Constitution of India. If two interpretations are possible, the interpretation which upholds constitutionality, it is trite, should be favoured. In the event it is held that by reason of section 147 if the Income Tax Officer exercises his jurisdiction for initiating a proceeding for reassessment only upon a mere change of opinion, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasijudicial function to take benefit of its own wrong. 10. The Hon ble High Court has held that the order passed u/s.143(3) may be presumed as passed on application of mind. The Hon ble Supreme Court 320 ITR 561 while upholding the decision of the Hon ble Delhi Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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