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TMI Blog2018 (4) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... nts to re–opening of assessment on a mere change of opinion resulting in review of the decision taken by the AO in the original assessment year is beyond the scope of section 147 - the impugned assessment order passed under section 143(3) r/w section 147 deserves to be quashed. Relying upon the tax audit report, AO has concluded that the amount of 10,50,058 is in the nature of penalty paid to the BMC. However, on a perusal of the tax audit report submitted in the paper book we have noticed that the amount of 10,50,058 has been shown as Octroi payment to BMC and an amount of 11,18,335, has been shown as penalty. Admittedly, the assessee itself has disallowed the penalty of 11,18,335, in its computation of income. Therefore, the material on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has challenged the re-opening of assessment under section 147 of the Income Tax Act, 1961 (for short "the Act"). 3. Brief facts are, for the assessment year under dispute, assessee filed its return of income originally on 29th November 2008, declaring total income of ₹ 5,67,77,820. Assessment in case of the assessee was completed under section 143(3) of the Act vide order dated 21st December 2010, accepting the returned income. Subsequently, the Assessing Officer on verifying the tax audit report was of the view that while completing the original assessment the Assessing Officer has not disallowed an amount of ₹ 10,50,058 being penalty paid to BMC towards Octroi. Thus, the Assessing Officer being of the opinion that due to non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) after considering the submissions of the assessee and verifying the material on record upheld the re-opening of the assessment since the re-opening was within a period of four years and the Assessing Officer has recorded reasons with regard to escapement of income. As regards the merits of the issue relating to disallowance of ₹ 10,50,058, the Commissioner (Appeals) after verifying the tax audit report filed by the assessee found that the assessee has disallowed an amount of ₹ 12,76,591, on account of penalty paid which does not include the amount of ₹ 10,50,058. He observed, as per the submissions of the assessee the amount of ₹ 10,50,058 represents Octroi duty for the earlier years which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic part of the audit report referred to by the Departmental Authorities submitted that nowhere in the audit report the amount of ₹ 10,50,058, has been shown as penalty. He submitted that the amount of ₹ 11,18,335, shown as penalty has been disallowed by the assessee itself. As regards the observations of the learned Commissioner (Appeals) that the payment of Octroi pertains to earlier year and the assessee has already claimed deduction of the said amount, the learned Authorised Representative submitted, though, the Octroi duty in question related to purchases made in the earlier, however, the Octroi agent through whom such payment was intended to be made committed forgery and without actually making payment to the BMC furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reveals that post the original assessment no fresh tangible material has come to the possession of the Assessing Officer to indicate escapement of income. On the contrary, the Assessing Officer has merely relied upon the tax audit report to form a belief that deduction of an amount of ₹ 10,50,058, being in the nature of penalty has been wrongly allowed. Except the tax audit report, the Assessing Officer has not referred to any other material indicating escapement of income. Undisputedly, the tax audit report was available before the Assessing Officer at the time of original assessment and there is no reason to infer that the Assessing Officer has not examined the tax audit report at the time of original assessment considering the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment to BMC and an amount of ₹ 11,18,335, has been shown as penalty. Admittedly, the assessee itself has disallowed the penalty of ₹ 11,18,335, in its computation of income. Therefore, the material on record clearly establish that the amount of ₹ 10,50,058 claimed as deduction by the assessee is not in the nature of penalty. As regards the observations of the learned Commissioner (Appeals) that the payment pertains to earlier period and secondly assessee in the earlier year has debited the amount to its Profit & Loss account, in our opinion such finding of the learned Commissioner (Appeals) is irrelevant for the impugned assessment year. When the assessee has brought material on record to demonstrate that the demand fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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