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TMI Blog2011 (5) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) On facts and in circumstance of the case and in law the learned CIT (Appeals) erred in upholding the expenses on machinery repairs of ₹ 3500103/- as capital expenditure despite the fact that the appellant company is a textile processing unit and that expenditure incurred throughout the year is on small parts and that no capital asset has come into existence. (4) On facts and circumstances of the case and in law the learned CIT (A) ought to have appreciated that neither Statutory Auditor nor Tax Auditor have treated the expenditure on machinery' repairs as capital expenditure and qualified the report accordingly. (5) On facts and in circumstances of the case and in law the learned CIT (Appeals) XI erred in upholding the expenses on other repairs like furniture etc. of ₹ 1029107/- on capital expenditure based on quantum of expenses and without assigning any reason of treating the same as capital expenditure. (6) The Learned CIT (Appeals) failed to appreciate the ratio laid down by Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. v/s CIT (SC) 124 ITR 2 laying down that By the purchase of loom hours no new asset was created and there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it is held that where cost on replaced parts or repairs constituted substantial value of old machinery, building etc. the expenditure required to be capitalized. Thus the expenditure so claimed should have been disallowed as capital expenditure. 4. In respect of the issue of reopening of assessment the ld. CIT(A) summarily confirmed the reopening by observing as under :- 2. With regard to the first ground of appeal, it is submitted by the A.R. that the AO is not justified to reopen the assessment which only can be called as a change of opinion. The submissions made by the AR have been taken into consideration. It is seen that the AO has followed the due procedure for reopening of the assessment. Therefore, the objections raised by the AR cannot be accepted. Hence, this ground of appeal is dismissed. 5. Before us, the ld. AR for the assessee submitted that reopening is bad in law because assessment has been reopened after expiry of four years from the end of relevant Asst. Year and there is no charge of any failure on the part of the assessee to disclose material facts necessary for assessment. There is only a change of view. Earlier the expenditure was treated as rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have expired from the end of the relevant Asst. Year then such escapement was due to failure on the part of the assessee - (i) to file a return u/s 139; (ii) to file a return in response to notice u/s 142(1) or section 148; (iii) to disclose fully and truly all material facts necessary for the assessment. All these aspects must come in the reasonings recorded by the AO. The reasons recorded by the AO should reflect - (i) assessee in respect of whom assessment is sought to be reopened; (ii) assessment year as sought to be reopened; (iii) amount of income which has escaped assessment; (iv) how the original assessment has been done whether u/s 143(1) or u/s 143(3) or sec.147/148; (v) what is the reason of escapement of assessment; (vi) whether there is any failure as mentioned in the proviso if assessment is sought to be reopened after four years from the end of the relevant Asst. Year; (vii) in particular, whether there is any the failure of the assessee to disclose material facts fully and truly necessary for the assessment for that assessment year. (viii) if assessment is done u/s 143(1), then whether the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the view that the said decision is not applicable to the facts of the present case. In the said case, the Bombay High Court has held that the assessing authority has overlooked the disputed item which he has noticed subsequently and at the time of passing the original order of assessment, he could not be said to have opined on the above item. Therefore, there was no change of opinion. While in the present case, complete details were furnished along with the return and during the course of the assessment proceedings and after an application of mind, the deduction under section 36(1)(viii) of the Act was allowed. In the reason recorded no case has been made out that there was failure to disclose any material particular on the part of the assessee. Therefore, limitation beyond the period of four years was not available to the assessing authority. Admittedly, the notice was issued after four years, therefore, the proceeding was barred by time and the Tribunal has rightly held so. For the reasons stated above, the appeal fails and is dismissed. Hon. Bombay High Court, in the case of Bhavesh Developers vs. A.O. Others (2010) 329 ITR 249 (Bom), noted that the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the point as to whether action should be initiated for reopening of the assessment, but at the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. Hon. Supreme Court in the case of CIT vs. Kelvinator India Ltd. (2010) 320 ITR 561(SC), while dismissing the legislation of section 147, held that expression reasons to believe needs to be given schematic interpretation in order to ensure against an arbitrary exercise of power by the AO. The power to reopen the assessment is not akin to power to review the assessment and mere change of opinion would not justify the course of action u/s 147. Unless the AO has tangible material fact to reopen the assessment, power u/s 147 cannot be validly exercised. 9. In the present case there is a clear case of change of opinion. Even though reliance has been placed on the decision of Hon. Supreme Court in Ballimal Navalkishore and others vs. CIT (supra), that judgment existed at the time when the AO took the decision u/s 143(3) an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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