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TMI Blog2019 (3) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... four years, it is the duty of the AO to bring on record the failure on the part of the assessee, as held in the case of Tecumseh Products India Pvt. Ltd. Vs. ACIT and Anr.[2014 (4) TMI 239 - ANDHRA PRADESH HIGH COURT]. We notice that AO has not recorded any reasons of failure on the part of the assessee. Hence, the reopening itself is illegal. Therefore, in our considered view, the reopening was bad in law and therefore, the same is hereby quashed. Accordingly, we allow the grounds raised by the assessee in this regard. Penalty u/s 271(1) - HELD THAT:- As the reopening of assessments made by the AO u/s 147 of the Act were quashed by us in these appeals, penalty levied u/s 271(1) on such assessments were null and avoid - 120/H/10, 273/H/15, 113/H/10, 272/H/15, 118/H/10, 271/H/15, 111/H/10 And 274/H/15 - - - Dated:- 28-2-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri K.C. Devdas For the Revenue : Smt. Matta Padma ORDER PER BENCH: Appeals in ITA Nos. 111, 113, 118 and 120/Hyd/2010 are directed against the orders of ld. CIT(A) I, Hyderabad, all dated, 6th November, 2009 and appeals i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in concluding that there was a conversion from investment to stock in trade merely because the investment was treated as inventory for considering the diminution in its value in books of account. In the statement of fact, the assessee submitted that in course of its investment activity, the appellant had invested an amount of ₹ 1,12,00,000/- by way of shares of Gland Pharma Ltd. The investment was made for acquisition of 2,80,000 shares of the said company at a price of ₹ 40/- per share. However, on the Balance Sheet date i.e. 31-3-2001, the assessee valued its investment at their face value (Rs.10 each) and treated them as inventory considering the diminution in the value of investment. The assessee stated that while doing so, the assessee has followed the accounting standard issued by ICAI. 6. After considering the submissions of the assessee, the CIT(A) observed that the AO has duly dealt with the issue and has rejected the contention of the assessee on the ground that unquoted shares of the unlisted companies cannot be treated as stock in trade as they are not tradable in the open market and that the same should be treated as investments to be valued at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the assessee to disclose fully and truly all material facts necessary for its assessment. He brought to our notice that the subject matter of reopening was already considered by the AO in the original assessment. The relevant queries about the investment in shares, valuation of shares were raised by the AO and the assessee has also replied and submitted before the AO. The relevant information is filed at pages 401 to 424 of paper book II. He submitted that all the material facts were disclosed in the return of income and there is no failure on the part of the assessee. For this proposition, he relied on the following case law: i) Anne Venkata Vishnu Vara Prasad Vs. ACIT, [2018] 405 ITR 491 (AP) ii) Tecumseh Products India Pvt. Ltd. Vs. ACIT, 361 ITR 429 9. Ld. DR submitted that AO has followed the due process to reopen the assessment, he brought to our notice the findings of ld. CIT(A) in para 4 of his order and relied on the following cases: i) Gruh Finance Ltd. Vs. JCIT, 123 Taxman 196 (Guj.) ii) ITO Vs. Tech Span India Pvt. Ltd Anr., 255 Taxman 152 (SC) 10. Considered the rival submissions and perused the material on record. We notice that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the re-assessment proceedings. 10.2 Therefore, the material submitted before us by ld. AR suggest that AO has already applied his mind and formed an opinion. By applying the above ratio, it can be construed as change of opinion . It is settled precedent that AO cannot reopen the assessment merely on change of his opinion. Further, we notice that AO recorded the reasons for reopening, in which, he has not recorded anywhere that there is failure on the part of the assessee. Since, the assessment was reopened after four years, it is the duty of the AO to bring on record the failure on the part of the assessee, as held by the Hon ble AP High Court in the case of Tecumseh Products India Pvt. Ltd. Vs. ACIT and Anr., [2014] 361 ITR 429 (AP). In the said case the Hon ble Court has held as under: Before any notice is issued after expiry of four years, the officer concerned must be satisfied that there has been an escapement in assessment of income, which is chargeable to tax and that this is because of failure on part of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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