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TMI Blog2025 (1) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... formed earlier by him was an incorrect opinion, the reopening is not warranted.
Though the statutory power has been given in the hands of the ITO to reopen the final decision made against the Revenue in respect of the question that directly arose from the decisions in earlier proceeding, the same is required to be exercised sparingly upon due application of mind, otherwise it would result in placing an unrestricted and unguided power of review in the hands of the assessing authorities depending on their changing moods.
Thus, we find that in the absence of new material facts brought on record by the Revenue reopening of assessment beyond the period of 4 years from the end of the assessment year in the present facts and circumstances of the case is found to be not sustainable in the eye of law and order of quashing the same by the CIT(A) with the same observation is found to be just and proper so as to warrant interference. Revenue's appeal is found to be devoid of any merit and hence, dismissed.
Instant reopening and consequent addition sought to be made by the AO is nothing other than a mere change of opinion. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 27.02.2015. The assessee claimed expenses to the extent of Rs. 1,27,92,992/- on account of duties and taxes out of which a sum of Rs. 62,92,692/- pertained to claim of expenses on account of VAT payment. In fact, the assessee paid VAT of Rs. 5,31,615/- by 31.03.2008. The balance amount remained unpaid and was shown as outstanding liability as on 31.03.2008 and the said amount of Rs. 57,61,077/ was also not paid before the due date of filing of return. 3.2 The assessee contended that it has debited VAT Tax expenses account by Rs. 62,92,692/ out of which Rs. 5,31,615/- was paid during the year. The remaining amount has been debited in VAT expense account as this was on account of VAT tax paid on various inputs purchases shown as current asset instead of debiting expense at that time. The amount was shown as input credit receivable on the bona-fide belief that the said input on VAT on purchases would be available for set-off against future liability. Since, the said amount was shown as current asset, subsequently on discussion with the Sales-tax consultant, the assessee came to know that the said input VAT credit would not be admissible and therefore the company transferred the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [81 taxmann.com) and Manan Exports (P) Ltd [78 taxmann.com 225), wherein it was held that reassessment on account of change of opinion is bad in law. 3.7 Aggrieved by the order of the Ld. CIT(A), the Department filed appeal before the Appellate Tribunal. The ITAT has rejected the appeal of the Revenue by confirming the order of the CIT (A). 3.8 The Appellate Tribunal in its impugned judgment and order has held that the precondition for initiation of proceeding u/s 147 of the Act by recording reasons of income, escaping assessment is not reflecting from the said order of reopening due to the failure on the part of the assessee. Therefore, the same is not found to be sustainable and hence liable to be set aside. Neither any allegation has been levelled against the assessee by the AO while reopening assessment under section 148 of the Act in failing to disclose fully or truly all material facts necessary for assessment which admittedly goes against such reopening of assessment by the department. The Appellate Tribunal relied on the judgment of the Hon'ble Apex Court in the case of L&T Limited, reported in 113 taxmann.com 48, wherein SLP filed by the Revenue was dismissed as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Sales-tax of Rs. 57,61,077/- is not allowable. This fact brought out by the Assessing Officer which was not considered at the time of original assessment proceedings u/s 143 (3) of the I.T. Act and hence this case is covered by the first proviso to Section 147 of the I.T. Act and also Explanation-1 to Section 147 of the I.T.Act. However, while allowing the appeal of the assessee on technical ground, the Appellate Tribunal has not considered the above facts. 5. Learned Counsel Mr. Manish Shah for the respondent-Assessee has submitted that as the assessee had already filed return of income under Section 139 (1) of the Act, it is to be seen as to whether the assessee failed to disclose truly and fully all material facts necessary for the purpose of making the assessment. No such recording of satisfaction is available that escapement of income has arisen due to failure on the part of the Assessee and in the absence of fulfillment of proviso to Section 147 of the Act, reopening after 4 years from the end of the relevant assessment year is bad in law and liable to be quashed. In view of the above submissions, Mr. Shah, learned advocate submitted that no case was made out for admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us including the notice dated 27.02.2015 issued by the Ld. CIT(A), Baroda, wherein no recording of reasons of the fact of failure on the part of the appellant in submitting material facts for the purpose of making assessment truly and fully at the time of original assessment is reflecting for initiation of such re-assessment proceeding. Once, upon considering the documents, the claim of the assessee decided and accepted by not making any addition during the course of regular assessment issuing notice under Section 148 of the Act on the same issue by successor AO amongst to assumption of revisionary power which is not valid as per law. When the Assessing Officer attempts to reopen an assessment on the count the opinion formed earlier by him was an incorrect opinion, the reopening is not warranted. Further that, though the statutory power has been given in the hands of the ITO to reopen the final decision made against the Revenue in respect of the question that directly arose from the decisions in earlier proceeding, the same is required to be exercised sparingly upon due application of mind, otherwise it would result in placing an unrestricted and unguided power of review in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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