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TMI Blog2019 (9) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... change of opinion by the Assessing Authority. Reassessment under the provisions of Sections 147 and 148 is not permissible on a mere change of opinion. The Assessing Authority, in order to invoke the reassessment proceedings under Section 147/148, has to record reasons to believe about escapement of income in the hands of the Assessee. The parameters of powers under Section 147/148 have been discussed by the Apex Court and various High Courts in a large number of decisions and the latest in the series being in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT ] which has been relied upon by the learned Tribunal to quash the reassessment in the present case - reassessment in the circumstances of the case was done merely based on a change of opinion at a subsequent stage and it was not permissible and set aside the same - Decided in favour of assessee. - Dr. Justice Vineet Kothari And Mr. Justice C. Saravanan For the Appellant : Mr.T.Ravikumar Senior Standing Counsel For the Respondent : Mr.Vikram Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan JUDGMENT DR.VINEET KOTHARI, J. The Revenue has filed this Tax Case (Appeal) under Section 260- A of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d purchases. It is for this reason that the AO has come to the conclusion for issuance of notice under s.148 that the assesseefirm had suppressed an income to the extent of ₹ 6,70,758. Under Expln.1 to the proviso, mere production of account books from which material evidence could have been discovered by the AO will not necessarily amount to disclosure within the meaning of the proviso. Therefore, mere production of the balance sheet P L a/c or account books will not necessarily amount to disclosure within the meaning of the proviso. In the present case, the facts show that the AO overlooked the aforestated item. That, he noticed it subsequently. That, at the time of passing the original order of assessment, he could not be said to have opined on the above item. Therefore, there was no change of opinion. Therefore, in the present case, the impugned notice is sustained. 5. On the other hand, the learned counsel for the Assessee Mr.Vikram Vijayaraghavan submitted that it is wrong to contend that on behalf of the Revenue the issue regarding payment of Technical Know-How Fee was not considered by the Assessing Authority in the Scrutiny Assessment under Section 143(3) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant portion of the order passed by the Tribunal is quoted below for ready reference:- 5. We have considered the rival submissions. A perusal of the assessment order clearly shows that the original assessment had been completed u/s 143(3) of the Income Tax Act, 1961 on 17.3.2006. It is also noticed that the assessee has challenged the reopening. It is further noticed that the AO has overruled the assessee's objection regarding the validity of the reopening on the ground that the issue of the payment of royalty and technical know fees being treated as a capital expenditure had not been dealt with in the original assessment order and the reopening had been done within 4 years and consequently the proviso to section 147 was not applicable. A perusal of the order of the learned CIT(A) clearly shows that the details pertaining to the lump sum payment of technical know fees, the copy of the agreement etc. were already submitted in the course of the original assessment proceedings on 26.12.2005 . The fact that the AO in the course of the original assessment has called for the said details and has examined them and has accepted the claim of the assessee in the course of the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion that in the present facts and circumstances of the case, the judgments relied upon by the learned Senior Standing Counsel for the Revenue are not applicable. It is not the case of the Assessee of mere production of Books of Accounts and relevant information to the Assessing Authority, but, they have been given active and conscious consideration by the Assessing Authority. As far as the amount of payment of Technical Know-How Fee of ₹ 9,63,81,500/- is concerned, it is clear from the records that the said issue was considered not only by the Assessing Authority but, by the Transfer Pricing Officer also alongwith other expenditure incurred by the Assessee and it was found that it falls within the domain of international transactions as found by the Transfer Pricing Officer and the T.P. Adjustment of a sum of ₹ 18,34,295/- was arrived by the Transfer Pricing Officer which was included by the Assessing Authority while passing the Assessment Order under Section 143(3) of the Act. 10. Therefore, the reassessment proceedings undertaken by the Assessing Authority to disallow the said expenditure fully by holding it to be only adding as intangible asset falling falling wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eview 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 . Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147 of the Act . However, on receipt of representations from the Companies against omission of the words reason to believe , Parliament re-introduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular No.549 dated 31st October, 1989 ((1990) 82 CTR (St) 1), which reads as follows: 7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A number of representations were recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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