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TMI Blog2016 (1) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... Soumen Adak, Advocate, for the assessee Shri Niraj Kumar, CIT, D.R., for the Department O R D E R Per Shri P.M. Jagtap:- These two appeals, one filed by the assessee being ITA No. 398/KOL/2008 and the other filed by the Revenue being ITA No. 537/KOL/2008, are cross appeals, which are directed against the order of the ld. Commissioner of Income Tax (Appeals)-XI, Kolkata dated 25.01.2008. 2. The assessee in the present case is a Company, which is engaged in the business of manufacture and sale of calcined petroleum coke and graphite electrodes. It is also engaged in the business of generation of power, which is consumed captively in the manufacture of Graphite Electrodes and Anodes as well as sold to outside customers. The return of income for the year under consideration was filed by it on 29.11.2000 declaring total income at NIL after claiming deduction, inter alia, under section 80IA and 80HHC. In the assessment originally completed under section 143(3) vide an order dated 31.03.2003, the total income of the assessee was determined by the Assessing Officer at Rs.3,26,30,395/- after allowing the claim of the assessee for deduction under section 80IA to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Perusal of the assessment records shows that no queries were raised on the above issue. It was also never examined by the AO in any of the years of the assessee prior to passing order u/s 143(3) for this year. This issue was examined for the first time for AY 2003-04 in assessment order dated 282-2006, and in ITAT decision for AY 1999-2000 and 2001-02 dated 06-12-2007 in orders made by the same AO but after the original order in this case. It is noteworthy that the CIT(A) and ITAT in above referred orders gave a finding that the price of power used for captive consumption should be at prices charged by the State Electricity Board (SEB) less the element of tax/duty element, which comes to Rs 0.20 paise per unit. It may or may not be acceptable by Revenue, but nothing turns on its acceptance. Since the assessee did not disclose the above facts in the annual accounts and return of income that the transfer price adopted for captive consumption of power included an element of duty/tax which it in fact did not pay or bear, the same was overstated at least to this extent. Perusal of the assessment order Para 17 shows the total number of units of power for captive use at 4,97,95,700 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llocation of interest expenditure for Rs.3,24,00,000/- to the power undertaking without appreciating the fact that the appellant maintains separate books of account for both the power units as well as for other units and interest expenditure attributable to the power units has already been considered in the said accounts. 3(b) That on the facts and in the circumstances of the case, and without prejudice to ground no. 3(a) taken here-in-above, the Ld. CIT(Appeals) erred in quantifying relief granted for Rs.2.10 crore instead of relief actually granted for Rs.3.24 crore thereby resulting in excess disallowance of Rs.1,14,00,000/-. 4.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in confirming further allocation of common expenditure to the tune of Rs.37,17,127/- to the power undertaking without appreciating the fact that the said expenditure are not related to power units. 5(a) That on the facts and circumstances of the case, Ld. CIT(Appeals) was not justified and erred in holding that DEPB receipts which falls under section 28(iv) also needs to be reduced from the Profit of the Business in terms of Explanation (baa) to section 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of assessment made by the Assessing Officer under section 143(3) read with section 147, the ld. Counsel for the assessee invited our attention to the copy of reasons recorded by the Assessing Officer as placed at page 71 of his paper book and pointed out that the assessment originally completed by the Assessing Officer under section 143(3) was reopened by the Assessing Officer on the basis of the same records as were available while completing the assessment originally under section 143(3). He contended that no new fact or new material had come to the possession of the Assessing Officer after completing the assessment originally under section 143(3), which formed the basis of reopening and thus the reopening of assessment by the Assessing Officer was clearly based on a mere change of opinion. As regards the observation made by the ld. CIT(Appeals) in his impugned order while upholding the validity of reopening that the issue relating to the assessee s claim for deduction under section 80IA was not examined by the Assessing Officer in the original assessment, the ld. Counsel for the assessee invited our attention to the relevant audit certificate placed at page 1 of his paper boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted by the Assessing Officer in allowing excessive deduction to the assessee under section 80IA resulting in to escapement of income. He contended that there was thus a valid reason to believe that the income of the assessee had escaped assessment, which fully justified the reopening of assessment under section 147 read with section 148. Relying on the decision of the Hon ble Supreme Court in the case of Kalyanji Mavji Co. vs.- CIT reported in 102 ITR 287, he contended that the tax payer cannot take advantage of the mistakes committed by the authority. He, therefore, strongly relied on the impugned order of the ld. CIT(Appeals) upholding the validity of assessment made by the Assessing Officer under section 143(3) read with section 147 and read out the reasons given by the ld. CIT(Appeals) in paragraphs no. 5 to 7 of his impugned order for upholding the validity of the order of the Assessing Officer. 7. In his rejoinder, the ld. Counsel for the assessee submitted that the scope and requirement of section 147/ 148 are specific and every mistake committed by the Assessing Officer cannot be corrected by recourse of the said provision. 8. We have considered the rival subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn case for A.Ys. 1999-2000 and 2001-02 wherein the similar issue relating to the assessee s claim for deduction under section 80IA was decided against the assessee on merit. However, as rightly pointed out by the ld. Counsel for the assessee, assessment order for A.Y. 2003-04 was passed on 28.02.2006, while the ITAT s order for A.Ys. 1999-2000 and 2001-02 was passed on 06.12.2007 and the benefit of the same, therefore, was not available to the Assessing Officer while recording the reasons on 24.03.2005. The said order thus constituted exterior material that was not even available to the Assessing Officer at the time of recording the reasons for reopening and we find merit in the contention of the ld. Counsel for the assessee that the same could not be relied upon to uphold the validity of reopening of assessment made earlier on 24.03.2005. 9. While rejecting the contention raised on behalf of the assessee while challenging the validity of reopening on the ground that the same was based on a mere change of opinion, the ld. CIT(Appeals) in his impugned order has observed that the perusal of assessment records shows that no queries were raised by the Assessing Officer during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was reopened by the Assessing Officer merely on the basis of change of opinion, which was not permissible in law. 12. As already noted by us, there was no new material that had come to the possession of the Assessing Officer and since the assessment originally completed under section 143(3) was reopened by him on the basis of same material, which was available at the time of completion of original assessment under section 143(3), we are of the view that the reopening of assessment made by the Assessing Officer merely on the basis of change of opinion was bad in law. As regards the decision of the Hon ble Supreme Court in the case of Kalyanji Mavji Co. (supra) cited by the ld. D.R., we find that the same actually supports the case of the assessee as it was finally held therein by the Hon ble Supreme Court that where the Income Tax Officer gets no subsequent information but merely proceeds to reopen the original assessment without any fresh fact or material, the reopening would bad in law . As such taking into consideration the relevant facts of the case as well as the legal position emanating from the judicial pronouncements discussed above, we are of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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