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TMI Blog2022 (1) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the petition have to be quashed and set aside. 3. Admittedly, this is a case where the notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of the relevant assessment year and assessment under Section 143(3) of the Act has also been completed. Hence, proviso to Section 147 of the Act shall apply. Respondents have to show that there was failure on the part of petitioner to truly and fully disclose material facts relevant for the assessment. We have considered the reasons recorded for reopening the assessment and we have no doubt in concluding that respondents have failed in discharging its onus to show that petitioner has failed to disclose truly and fully all material facts. From the reasons itself as well as the documents annexed to the petition, it is quiet clear that there has been full disclosure by petitioner. Jurisdictional Assessment Officer (JAO) has raised 4 heads, under which he feels that income chargeable to tax has escaped assessment. The same for ease of reference are reproduced from the reasons which reads as under: "Brief details of the information collected/received by the A.O.:- (1) It is found that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supposed to do. It is settled law that the assessment cannot be reopened on account of change of opinion. 5. As regards item (1), this is based on audit objections. After completion of assessment under Section 143(3) of the Act respondents had issued a communication to petitioner mentioning about the various objections raised by the audit department and one of that relates to this amount of Rs. 29,30,000/- towards interest expenditure. Petitioner by its letter dated 14th January 2019 explained to respondents that the amount of Rs. 29,30,000/- was not debited towards security deposit but was debited towards interest paid on security deposit. In their reply, petitioner has explained that the amount of Rs. 29,30,000/- being debited under the head of other income in the profit and loss account and is reduced from interest income represents interest expenditure incurred for security deposits. It was also brought to the notice of respondents that the interest on security deposit has been inadvertently considered as security deposits in the audit findings and, therefore, the amount of Rs. 29,30,000/- representing interest expenditure is deductible as a revenue expenditure and not capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee following mercantile system of accounting, the statutory liability relates back to the year in which base event giving rise to such statutory liability takes place and the fact that the assessee has disputed the liability in appeal or that no entries were made in the books of account would not result in cessation of such liability. Therefore, these tax demands although not debited to the profit and loss account should be deductible in the A.Y.-2012-2013 being the year of payment. It will be useful at this stage to quote the following paragraph from the judgment of the Apex Court in Kedarnath Jute Mgf. Co. Ltd. Vs. Commissioner of Income Tax (1971) 82 ITR 363 (SC). "In Commissioner of Income-tax v. Royal Boot House [(1970) 75 ITR 507 (Cal.)] it was held that where the assessee followed the mercantile system of accounting and, without disputing the liability to pay the Sales Tax had made a provision for its payment in its account even though he had not actually paid the tax over to the authorities, the assessee was entitled to deduction in respect of the provision for sales tax from his income under Section 10(2)(xv) of the Act. It was, pointed out that under the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no difficulty in holding that the, assessee had incurred an enforceable legal liability on and from the date on which he received the Collector's demand for payment and that his endeavor to get out of that liability by preferring appeals could not in any way detract from or retard the efficacy of the liability which had been imposed upon him by the competent excise authority. In our judgment, the above decision lays down the law correctly." 8. In the circumstances, the entire basis for reopening is change of opinion and as held in various judgments an Assessing Officer cannot reopen an assessment even within a period of 4 years merely on the basis of a change of opinion (Jainam Investments Vs. ACIT Central Circle-8(1) Mumbai & Anr. (2021) 131 taxmann.com 327). 9. Therefore, we are holding that the petition has to be allowed in terms of prayer clause (a) which reads as under: "(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the petitioner's case and after examining the legality and validity th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that the income chargeable to tax for the relevant assessment year had escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts. The Income tax officer had all the material facts before him when he made the original assessment. He cannot now take recourse to Section 147 (a) to remedy the error resulting from his own oversight." Mr. Thakkar states that though JAO cannot take recourse to reopen to remedy the error resulting from his own oversight, petitioner in fairness is ready and willing to pay the amount as mentioned earlier provided it is not construed as an admission of liability and no penalty proceedings for this are initiated. 11. Mr. Walve states that the court may pass such directions as it deems fit. 12. Petitioner is therefore, directed to pay the amount of Rs. 30,54,398/- as mentioned in the revenue audit objections. Respondents are directed to raise the demand on petitioner for this amount and petitioner shall pay the amount within time prescribed in the demand. We are making it clear that as noted earlier, the entire 148 notice is quashed and set aside and we have held that assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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