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TMI Blog2023 (8) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of material on record, one view is conclusively taken by the A.O., it would not be open to reopen the assessment based on the very same material with a view to take another view. As held by the Division Bench of this court in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] it is not necessary that the assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Admittedly, as recorded in the assessment order petitioner s case was selected for scrutiny under CASS and accordingly notice dated 19th September 2018 u/s 143(2) of the Act and further notice dated 14th November 2018 under Section 142(1) of the Act alongwith questionnaire were issued and served on assessee. Petitioner was asked to furnish details from time to time. Petitioner has submitted all the details and also attended personal hearing. In the assessment order petitioner s submission regarding ESOP was rejected. The fact that the Assessment Order does not contain any reference or discussion relating to depreciation claimed by petitioner on the goodwill that it had paid while applying the shares of ETPL would mean that the query ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,889 was claimed by the assessee @25% treating it as intangible asset. Keeping in view the above mentioned provisions, the depreciation so claimed was not allowable. Further it was relevant to be mentioned that in a similar case of M/s Johnson and Johnson Ltd. for AY 2015-16, the depreciation on Goodwill had been disallowed concluding that purchase consideration paid for buying the shares were high and subsequent amalgamation was towards creating spurious goodwill in the books of the assessee. Hence from the point of consistency also it was required to be disallowed, which was not done in the assessment. This resulted in under assessment to the same extent. 2.1 Therefore I am of the view that income to the extent of amount of Rs. 38,15,17,889/- as explained above, has escaped assessment. 3. Petitioner had during Financial Year 2015-16 acquired the entire paid up share capital of one Elitecore Technologies Pvt. Ltd. (ETPL) from third party seller with discharge of fair value consideration. Thereafter, petitioner applied for amalgamating ETPL with itself vide a scheme of amalgamation which was sanctioned by the Hon ble Gujarat High Court and High Court Bombay vide order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of assets acquired pursuant to the amalgamation including goodwill and claim for depreciation thereon. This was further reply to the notice dated 14th November 2018 and petitioner also cited decisions of the Hon ble Apex Court as well as the Bombay High Court. 7. During hearing on 6th December 2018, it is stated in the petition, Respondent No. 1 specifically asked petitioner to justify its claim for depreciation on goodwill arisen as a result of the amalgamation of ETPL with itself. A letter dated 13th December 2018 recording what transpired during the earlier hearing was also submitted. As there were certain further queries raised, petitioner submitted another letter dated 13th December 2018 providing further details. In short a detailed enquiry was conducted into by Respondent No. 1 before the Assessment Order dated 21st December 2018 came to be passed. 8. During the assessment proceedings another issue which caught the Assessing Officer (A.O.) s attention was the Employee Stock Option Expenses of Rs. 13.46 Crores which petitioner had claimed. Petitioner was called upon to explain why that should not be disallowed as was done in earlier years. In the Assessment Order th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the power to reopen can be exercised. The reason to believe means a cause or justification. At the stage when the A.O. reopens an assessment, it is not necessary that the material before the court should conclusively prove or establish that income has escaped assessment. A reason to believe at the stage of reopening is all that is relevant. Mr. Sharma also submitted that Division Bench of this court in Export Credit Guarantee Corporation of India Ltd. (supra) has held that the test to be applied is whether there is tangible material when an assessment is sought to be reopened within a period of four years of the end of the relevant assessment year, what is tangible material is something which is not illusory, hypothetical or a matter of conjecture. There is nothing to indicate that what has been raised is illusory or hypothetical or a matter of conjecture. Mr. Sharma also submitted that in this case there is no change of opinion as there is no discussion on the issue in the Assessment Order and only the primary details were filed by assessee on the issue, no finding either positive or negative can be said to have been arrived at during the course of original assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say that para 18 of the petition pertains to objection in the form of reasons raised by audit party during revenue audit. In this case, the objections raised by the Audit was duly examined by the Assessing Officer with reference to the particular filed during the assessment proceedings. The Assessing Officer has formed his own opinion and only after being satisfied that income chargeable to tax has escaped assessment, the Assessing Officer recommended for reopening the assessment. It is only after being satisfied, the reasons for reopening of assessment was recorded and belief was formed that income to that extent has escaped assessment. 16. Further in the objections to the proposed reopening filed vide communication dated 15th December 2021, petitioner in Paragraph No. 5.5 states as under : 5.5 The present reassessment proceeding is initiated pursuant to audit objection which has been responded by the then learned AO in favour of the Assessee. Considering the same, the Assessee submits that audit objection cannot be considered as the valid ground for initiating reassessment proceedings and initiation should be based on the independent assessment of the assessing officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, may have raised too many legal inferences from the facts disclosed, on that account the Assessing Officer, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the vary same material with a view to take another view. 19. As held by the Hon ble Apex Court in case of Indian Eastern Newspaper Society (supra), even if it is an error that the A.O. discovered, still the error discovered on a reconsideration of the same material does not give him power to reopen the assessment. Though the primary facts necessary for assessment are fully and truly disclosed, the A.O. is not entitled on change of opinion to commence proceedings for reassessment. Even if the A.O. who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the A.O., who has decided to reopen the assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the A.O., it would not be open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear viz. that there must have been a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment during the original assessment proceedings. Thus the primary requirement to reopen any assessment is a reason to believe that income chargeable to tax has escaped assessment. However, as observed by the Supreme Court in the case of CIT vs. Kelvinator India Limited [2010] 320 ITR 561/187 Taxman 312 in the context of Sections 147/148 of the Act that reason to believe found therein does not give arbitrary powers to reopen an assessment. The concept of change of opinion is excluded/omitted from the words reason to believe. Thus a change of opinion would not be reason to believe that income chargeable to tax has escaped assessment. Besides the power to reassess is not a power to review. Further reopening must be on the basis of tangible material. 12) Therefore the power to reassess cannot be exercised on the basis of mere change of opinion i.e. if all facts are available on record and a particular opinion is formed, then merely because there is change of opinion on the part of the Assessing Officer notice under Section 147/148 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice dated 28 March 2013 seeks to reopen the assessment for assessment year 2008-09 was considered by the Assessing Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to reopen assessment for A.Y. 2008- 09 is based on mere change of opinion. However, according to Mr. Chhotaray, learned Counsel for the revenue the aforesaid issue now raised has not been considered earlier as the same is not referred to in the assessment order dated 12 October 2010 passed for A.Y. 2008-09. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the judgment of the Full Bench in the case of CIT v/s. Usha International Ltd. (2012) 348 ITR 485 (Delhi) as also the said decision runs counter to the Full Bench decision of the Hon ble Delhi High Court in the case of CIT v/s. Kelvinator India Limited (2002) 256 ITR 1 which has also been approved by the Hon ble Supreme Court in (2010) 320 ITR 561(SC). 23. There is no denial by respondents. Hence, the petition is 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 any other writ order or direction under Article 226/227 of the Constitution of India calling for the records of the case leading to the issue of the Impugned Notice dated March 27, 2021 (Exhibit R), issuance of Impugned Scrutiny Notice dated 7 December 2021 (Exhibit W) and passing of the Impugned Order dated 24 January 2022 (Exhibit Y) and after going through the same and examining the question of legality thereof quash, cancel and set aside the Impugned Notice dated March 27, 2021 (Exhibit R), Impugned Scrutiny Notice dated 7 December 2021 (Exhibit W) and Impugned Order dated 24 January 2022 (Exhibit Y); 24. Petitio ..... 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