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TMI Blog1998 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... putation of total income along with the revised return. In the said recomputations the petitioner added to the total income of the original return a sum of Rs. 18,76,126 which it had claimed by way of deduction for the assessment year 1985-86 which was the component of the valuation of the closing stock for that year by way of adjustment as a result of operation of section 43B of the Income-tax Act and was allowed for that year. As the aforesaid amount as component of the closing stock for the assessment year 1985-86 had been allowed as deduction for that year, to make necessary adjustment in the computation of total income for the assessment year 1986-87, the said amount was sought to be added in the total income of the assessment year 1986-87. The second modification which was sought through the revised return was for adjusting the value of closing stock for that year by excluding the component of customs duty as a consequence of its treatment under section 43B of the Income-tax Act. Thus, the revised return was in respect of adjusting the value of opening stock as well as closing stock by giving effect to adjustments already made in the previous year in the light of provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of mind. The claim of the assessee was supported by a Bench decision of this court in Lakhanpal's case [1986] 162 ITR 240. That decision has not been reversed or overruled in any other decision. In fact, this court recently in CIT v. Cadila Chemicals Pvt. Ltd. [19981 230 ITR 885 has reiterated that the issue decided in Lakhanpal's case [1986] 162 ITR 240 does not require reconsideration when a similar question was again sought to be raised by way of reference application under section 256(2) in Cadila Chemicals' case [1998] 230 ITR 885 (Guj). This being a case of mere change of opinion it was not open to the Assessing Officer to have recourse to section 147. Section 147 does not confer any jurisdiction on the Assessing Officer to review his own order on a mere change of opinion. Learned counsel for the Revenue has urged that the Income-tax Officer, for reasons recorded in writing, had reason to believe that income of the assessee had escaped assessment which is attributable to underassessment as a result of wrong allowance of deduction by way of adjustment of the value of closing stock of the customs duty payable on that stock and once that conclusion is reached, no f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct." The fact that the present case relates to like adjustment of the customs duty and not the excise duty will make no difference. The question was again discussed at some length by another Division Bench of this court in Praful Chunilal Patel v. M. J. Makwana, Asst. CIT [1999] 236 ITR 832. It was a case in which notice under section 147 had been issued. Recording of reasons disclosed that a part of item of income though disclosed as per information submitted by the assessee, had remained to be considered for assessment and, therefore, the income has been underassessed. It was submitted on behalf of the assessee that all facts were correctly disclosed and were on record during the assessment proceedings relevant to the assessment year 1991-92 and the order was made by the Assessing Officer after seeking details. It should be assumed that he has consciously not taxed the income which is now sought to be looked into by him. It was emphasised that it should be assumed that the Assessing Officer had formed an opinion that there was no transfer and hence, no capital gains accrued. The case of the Revenue had been, on the other hand, that the facts about the valuation of bungal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of opinion for the first time about the erroneous nature of assessment resulting in escapement". The court, while considering the earlier decisions of this court in Garden Silk Mills Ltd. v. Deputy CIT (Asst.) (No. 1) [1996] 222 ITR 27 and of the same assessee in another case reported in the same volume at page 68 (Garden Silk Mills Ltd. v. Deputy CIT (No. 2) [1996] 222 ITR 68), said (at page 844 of [1999] 236 ITR) : "Even the decision of this court in Garden Silk kills Ltd. v. Deputy CIT (Asst.) (No. 1) [1996] 222 ITR 27 cannot assist the petitioner because in that case it was held that the Assessing Officer was aware about the investment and fluctuations in the exchange rate and depreciation had been allowed after considering the material on record and further that the notice was issued after four years and there was no failure on the part of the assessee to disclose material facts necessary for assessment. Reliance placed on the case of that very assessee, reported in the same volume at page 68-Garden Silk Mills Ltd. v. Deputy CIT (No. 2) [1996] 222 ITR 68 (Guj), also cannot help the petitioner, because in that case the court found that in the first assessment the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of mind on the part of the Assessing Officer, particularly in view of the fact noticed in the reasons that the claim of the assessee was founded on a decision of this court and the allowance was in accordance with it. The reasons recorded by the Assessing Officer which led to the belief about the escapement of assessment disclose that the present case is nothing but mere change of opinion on the facts which were already before the Assessing Officer while making the first assessment to which conscious application of mind is reflected from the proceedings, and allowed in the computation and which has not been disputed by the Revenue. The claim of the assessee has been accepted after considering in the light of the decision rendered by this court. The reasons do not even disclose that the Assessing Officer issuing notice even entertained doubt about the applicability of the ratio of Lakhanpal's case [1986] 162 ITR 240 (Guj) to the facts of the case, nor it entertained any belief that the decision has since ceased to be operative. The reference to a later decision of the Supreme Court in CIT v. British Paints India Ltd. [1991] 188 ITR 44, in our opinion, has no relevance or beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by not disclosing the audited profit and loss account the assessee laid a claim de hors his account books. As noticed while narrating the facts, the assessee has sought adjustment in the valuation of stock-in-trade as disclosed in the audited books of account on the ground of applicability of section 43B of the Income-tax Act as the assessee is maintaining his books of account on the mercantile system. It is on that premise the enquiry was made and claim was investigated and allowed. Camouflaging language of framing reasons the Assessing Officer cannot confer upon himself jurisdiction which does not exist. The consistent view of this court is that even after the amendment of section 147 mere change of opinion does not confer jurisdiction on the Income-tax Officer to initiate proceedings for reassessment merely by resorting to Explanation 1 on the basis of change of opinion. On the facts of this case the reasons recorded by the Assessing Officer disclose no more than a mere change of opinion. As a result, these petitions succeed. The impugned notices in each case for initiating reassessment proceedings for the assessment year 1986-87 are quashed. Rule is made absolute in each c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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