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TMI Blog2017 (8) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to the amount received by the assessee’s transfer of various assets including human resources and customer relationship was not only examined by the A.O. during the original assessment proceeding, but the A.O. also formed an opinion while accepting the assessee’s claim of non taxability of the said amount. Therefore, the A.O. having formed an opinion during the original assessment proceeding, it cannot be a subject matter of review in the garb of reassessment proceeding u/s. 147 of the Act. Therefore, we hold that the initiation of proceeding u/s. 147 of the Act in the present case is invalid. Accordingly, we quash the impugned assessment order passed u/s. 143(3) r/w s. 147 of the Act - Decided in favour of assessee. - I.T.A. No. 7036/Mum/2014 - - - Dated:- 30-6-2017 - SHRI RAJENDRA, AM AND SHRI SAKTIJIT DEY, JM For The Appellant : Shri P. J. Pardiwala For The Respondent : Shri B. S. Bist ORDER Per Saktijit Dey, J. M.: This is an appeal by the assessee against the order dated 17.9.2014 of Commissioner of Income Tax (Appeals)-22, Mumbai ( CIT(A) for short) for the assessment year (A.Y.) 2007-08. 2. In ground no. 1 along with its sub grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions of the assessee and proceeded to complete the assessment by treating the amount of ₹ 1.94 crores received by the assessee on account of transfer of customer data base and human resource as in the nature of revenue receipt and added it to the income of the assessee. 4. Being aggrieved of the assessment order so passed, the assessee preferred an appeal before the ld. CIT(A), inter alia , on the ground that the reopening of assessment is invalid. 5. The ld. CIT(A), however, rejecting the grounds raised by the assessee confirmed the assessment order. 6. The ld. Authorized Representative (AR) submitted before us, in the computation of total income filed along with the return of income the assessee has specifically stated that the amounts received from transfer of human resources and customer relationship value is in the nature of capital receipt, hence not taxable. Alternatively, it was also stated that since the cost of acquisition of these assets are unascertained, as per the decision of Hon ble Supreme Court in the case of CIT vs. B. C. Srinivasa Shetty 128 ITR 294, the computation of capital gain cannot be made. He submitted, in a separate note attached to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Metals Ltd. v. Ms. Ramapriya Raghavan, ACIT [ 2015] 371 ITR 225 (Bom) 7. The ld. Departmental Representative (DR) submitted, in case of the assessee reopening of assessment u/s. 147 of the Act was made within a period of four years from the end of the relevant previous year, therefore, the proviso to section 147 is not applicable. On the other hand, Explanation 1 to section 147 would apply. He submitted, perusal of the original assessment order clearly reveals that the A.O. has neither examined nor applied his mind to the materials available on record as far as it relates to the amount received on transfer of human resource and customer relations value. He submitted, though it may be a fact that the assessee in the return of income and in the course of original assessment proceeding has furnished information/material relating to the transfer of assets to another company, however, the A.O. has not examined those materials in proper prospective to determine the nature and character of the receipt. He submitted, when the A.O. in the original assessment proceeding has neither enquired into nor examined the issue relating to the nature and charac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee also furnished valuation report in respect of assets transferred along with the working of capital gain. Thus, from the afore-said facts and material brought on record, it is clearly proved that during the original assessment proceeding, the A.O. has examined all issues relating to the transfer of assets to UPS SCS (India) P. Ltd., including the transfer of human resource and customer relationship. In the backdrop of the aforesaid facts emerging from the record, let us examine the reasons on which the A.O. has reopened the assessment u/s. 147 of the Act, which is as under: No. ITO10(3)(3)/DO/2012-13 Date: 11.12.2012 Principal Officer UPS Freight Services India Pvt Ltd 901, Alpha Matn Street, Hiranandani Garden, Powai Mumbai-400 076 Sir, Sub: Reopening u/s. 147 in your case - A.Y. 2007-08 - regarding Please find the reasons recorded for reopening the assessment in your case for A.Y. 2007-08 as under: The assessment records reveal that the assessee has received an amount of 1.94 crore on account of transfer of customer database and human resource. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of assessment cannot be made on the basis of mere change of opinion. The Hon ble Supreme Court observed, once an opinion was formed by the A.O. while completing the original assessment, it cannot be reviewed by taking recourse of section 147 of the Act. Same view has been expressed in other decisions cited before us by ld. AR. In fact, in case of GKN Sinter Metals Ltd. (supra), the Hon ble Bombay High Court while dealing with similar issue held as under: 14. Mr. Chhotrary, learned Counsel appearing for the Revenue submits that there has been no formation of opinion on allocation of expenditure amongst the three manufacturing units by the Assessing Officer as the Assessment Order dated 9th March, 2005 passed under Section 143(3) of the Act contains no discussion on the same. According to the Revenue, it could only be when the assessment order contains discussion with regard to particular claim can it be said that the Assessing Officer had formed an opinion with regard to the claim made by the assessee. This Court in Idea Cellular Ltd. v Dy. CIT [2008] 301 ITR 407 has expressly negatived on identical contention on behalf of the Revenue. The Court held that once all the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Assessing Officer to complete all the assessments which have to under gone scrutiny at its hand. In the above view, it is clear that once a query has been raised during the assessment proceedings and the Petitioner has responded to the query to the satisfaction of the Assessing Officer as is evident from the fact that the Assessment Order dated 9th March, 2005 accepts the Petitioner's claim for deduction under Section 80IAIIB of the Act. It must follow that there is due application of mind by the Assessing Officer to the issue raised. 15. Therefore, as there is a change of opinion in issuing the impugned notice having regard to the opinion formed while passing the assessment order under Section 143(3) of the Act, the Assessing Officer would cease to have any reason to believe as held by the Supreme Court in Kelvinator of India Ltd. (supra). Moreover, the power to re-assess under Section 147/148 of the Act is not a power to review an order of assessment passed under Section 143(3) of the Act . 11. Thus law is fairly well settled that in the absence of any tangible material, the assessment cannot be reopened merely on a change of opinion. Though, it is not necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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