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TMI Blog2018 (7) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was based on a mere change of opinion by the AO which, under law, he was not entitled to do. Admittedly, the reopening is within 4 years, however, the issue is squarely covered in favour of the assessee by the judgment of the Hon’ble Apex Court in the case of CIT vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA). Reopening was bad in law in view of no tangible material having come in possession of the AO subsequent to the original assessment proceedings and relating to the prior period income. Thus, it is a case of mere change of opinion by the AO which amounts to review of his earlier order and the same cannot be upheld. Therefore, the order of the CIT (A) is set aside and the reassessment proceedings u/s 147/148 of the Act are quashed as being void ab initio - Decided in favour of assessee. - ITA No. 4717/Del/2014 And C.O. No. 189/Del/2017 - - - Dated:- 4-7-2018 - SH. G.D. AGRAWAL, PRESIDENT AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Asessee : Sh. Sandeep Sapra, Adv., Sh. Kamal Khanna, CA For The Revenue : Sh. Amit Jain, Sr. DR. ORDER PER BENCH : This appeal is filed by the department against order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. That the appellant craves leave to add, alter, amend or forgo any ground(s) of the appeal either before or at the time of hearing of the appeal. C.O. No. 189/Del/2017 (Assessee s CO): 1. That the Ld. CIT(A) ought to have quashed/annulled the impugned reassessment order passed u/s 147/143(3) of I.T. Act as reassessment proceedings initiated u/s 147/148 of I.T. Act after completion of the original assessment order passed u/s 143(3) dated 16/12/2008 was illegal inter alia because: (i) Reasons have been recorded on the basis of audit objection and not on the basis of any fresh tangible material. (ii) Reasons have been recorded merely on change of opinion which is not permissible under the law. (iii) AO has not applied his mind so as to come to an independent satisfaction that he had reason to believe that income has escaped assessment as Reasons have been recorded on borrowed satisfaction without making any independent enquiries. (iv) The reasons recorded indicate that the AO has acted on mere surmises and suspicion for making fishing and roving enquires. The requirement of law is reason to believe and not reason to suspect . (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income and further details and documentary evidences regarding the same were also filed before the AO during the course of original assessment proceedings. It was submitted that there was no fresh tangible material which had come in possession of the Assessing Officer in this regard so as to justify the invocation of powers u/s 147 of the Act. The Ld. Authorised Representative also argued that the reasons for reopening were based on a mere change of opinion and, therefore, the re-assessment was bad in law and had been wrongly upheld by the Ld. CIT (A). Reliance was placed on the judgment of the Hon ble Delhi High Court in the case of CIT vs. Kelvinator of India Ltd. (Delhi) reported in 256 ITR 1 (Delhi) which was affirmed by the Hon ble Apex Court and reported in 320 ITR 561 (SC) wherein the Hon ble Apex Court had held that the AO has the power to reopen a completed assessment provided there is tangible material to come to the conclusion that there is escapement of income. Reliance was also placed on another judgment of the Hon ble Delhi High Court in the case of CIT vs. Usha International Ltd. reported in 348 ITR 485 for the proposition that assessment cannot be validly re-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit / loss for the year had been considered only before the claim of previous year expenses, no disallowance was needed in the assessment proceedings. This reply of the assessee is placed at pages 213 to 219 of the paper book. We also note that the prior period adjustment has also been disclosed by way of a Note to the audited balance sheet and the same appears at Sl. No. 20 in the notes on accounts attached to the balance sheet of the company. This note reads as under:- The Company is entitled to defer its liability to pay Sales Tax in respect of its Chennai unit. During the year, the company has changed the method of accounting of sales tax defer liability from historical cost basis to Net Present Value basis. The liability under the scheme as on 31st March, 2006 on the basis of Net Present Value is ₹ 838.58 lacs (Previous Year ₹ 569.81 lacs) as per historical cost basis, as on 31st March, 2006 the liability aggregates to ₹ 1612.56 lacs (Previous Year ₹ 1148.57 lacs). On change in the method of accounting, the difference between the historical cost basis and Net Present Value method amounting to ₹ 204.17 lacs for the year has been considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief . 6.3 Thus, the Hon ble Apex Court has laid down that there is a complete difference between the power to review and power to reassess and, further, although, the AO has the power to reassess, he has no power to review. Similarly, The Hon ble Delhi High Court in the case of CIT vs. Usha International Ltd. reported in 348 ITR 485 (Delhi) has also held that reopening will not be valid if the assessee has disclosed full and true particulars at the time of original assessment with reference to the income alleged to have escaped assessment if the original assessment was made u/s 143(3) of the Act. The relevant observations of the Hon ble Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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