9911796707
TMI Blog2010 (3) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 6,01,69,818/- for line / bay charges as against capital expenditure instead of Revenue expenditure. 3. That the Ld. CIT(A) has erred in law by confirming the action of the Ld. Assessing Officer for charging u/s 234B of the Income Tax Act on the amount of difference between tax liability determined on reassessment and amount of taxes pre-paid by the assessee instead of difference between tax liability determined on reassessment and assessment u/s 143(3). 3. The issue in ground No.1 raised by the assessee is against the invoking of jurisdiction by the Assessing Officer u/s 147 of the Act. 4. The brief facts of the case are that the assessee had filed its original return of income on 31.10.2007 declaring total income of ₹ 1,36,28,61,170/-. The revised return was furnished by the assessee on 25.3.2009 declaring income of ₹ 1,37,10,52,040/-. The assessment in the case was completed u/s 143(3) of the Income Tax Act vide order dated 30.12.2009. The copy of the assessment order is placed on record. The Assessing Officer recorded reasons for reopening the assessment u/s 147 of the Act and issued notice u/s 148 of the Act. During the course of reassessment proceedings, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal proceedings, a reply was filed by the assessee regarding bay line charges, which is placed at pages 1 to 4 of the paper book. It was further pointed out that similar expenses was claimed by the assessee in assessment year 1992-93 which was allowed by CIT(A) and no ground of appeal against the same was raised by the Revenue in the appeal filed against the order of CIT(A) relating to assessment year 1992-93. The copy of the order of CIT(A) is placed at pages 5 to 7 of the paper book alongwith copy of form No. 36 and ground of appeal raised by the Revenue at pages 8 & 9 of the paper book. The Ld. AR further pointed out that similar expenses were allowed in assessment year 2004-05 and as is evident from the computation of income placed at pages 10 & 11 of the paper book, query in respect of which was raised during the course of assessment proceedings relating to assessment year 2004-05. Our attention was drawn to the queries raised during the assessment year 2004-05 placed at pages 12 to 14 of the paper book, reply of the assessee at pages 15 to 17 of the paper book and assessment order relating to assessment year placed at pages 18 to 20 of the paper book. The Ld. AR further point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue expenditure, which is not charged to the profit and loss account in the books of account of the assessee company. It was further stated that the said amount was neither a security deposit nor refundable at any stage. Further, the ownership of the asset created was claimed to be vesting with MPEB. The amount was further claimed to have been expanded solely out of commercial expediency with a motive of augmenting the business activity of the assessee company and reliance was placed on a series of Judgments in this regard including CIT Vs. Panbari P. Company Ltd [151 ITR 726 (P&H)]. The said notes are placed at pages 66 to 67 of the paper book. The assessee further claims that during the course of assessment proceedings in reply to the query raised by the Assessing Officer vide letter dated 27.11.2009, the nature of expenditure regarding line bay charges was explained and the copy of the said reply is placed at pages 1 to 4 of the paper book. The Assessing Officer while framing the assessment under section 143(3) of the Income Tax Act vide order dated 30.12.2009 has allowed the claim of the assessee. The copy of the assessment order is placed at pages 25 to 62 of the paper book. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther observed that the notices u/s 148 was issued within a period of four years and hence the reopening of the assessment was upheld. 10. Their Lordships of Hon'ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 (SC) have held that in order to invoke the provisions of Section 147 of the Act, if the Assessing Officer for whatever reason has 'reason to believe' that income has escaped assessment, then jurisdiction is conferred on the Assessing Officer to reopen the assessment. It has been further held as under :- "…………Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any Assessment Year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to Section 147. …………" (underline provided by us). 11. The Hon'ble Supreme Court in Raymond Woolen Mills Vs. ITO [(1999) 236 ITR 34 (SC)] held that "what is required to be seen in a case such as this is whether prima facie there was some material before the Assessing Officer on the basis of which he could reopen the case of the assessee. The sufficiency or correctness of the material is not to be considered because it is open to the assessee to prove that the facts assumed by the Assessing Officer in the notice were erroneous". 12. The Hon'ble Supreme Court in CIT Vs. M/s Kelvinator of India Ltd. {320 ITR 561 (SC)} held as under:- "On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act (with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. Toallay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." 13. The Apex Court had laid down the proposition in CIT Vs. M/s Kelvinator of India Ltd (supra) that though post the amendment by Direct Tax Laws Amendment Act, 1987 w.e.f. Ist April, 1989, power to reopen was much wider but the section 147 does not give arbitrary power to the Assessing Officer to reopen the assessment on mere 'change of opinion'. The Hon'ble Supreme Court further held that there was conceptual difference between 'power to review' and 'power to reassess'. It was thus held "the Assessing Officer has no power to review; he has the power to reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book against which no appeal was filed by the Revenue as is evident from the documents furnished at pages 8 to 9 of the paper book being the appeal form submitted by the Revenue. In assessment year 2004-05, the assessee claimed similar expenditure and queries were raised during the course of assessment proceedings which are placed at pages 12 to 14 of the paper book along with reply of the assessee at pages 15 to 17 of the paper book and the claim was allowed vide order passed u/s 143(3) placed at pages 18 to 20 of the paper book. In the year under appeal also, the claim of the assessee was before the Assessing Officer during the original assessment proceedings and a query in this regard was raised by the Assessing Officer to which the reply was filed, which has been referred to by us in the paras hereinabove. The said claim was allowed by the Assessing Officer vide order passed u/s 143(3) of the Act. While reopening the assessment, admittedly within period of fours years of the completion of the original assessment proceedings, the issue raised by the Assessing Officer was in connection with the allowability of expenditure in connection with bay line charges, which had been ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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