Tribunal quashes reassessment order due to impermissible change of opinion. Disallowance of compensation charges not addressed.

The Tribunal allowed the appeal, quashing the reassessment order. It held that the reassessment was invalid as it was based on a change of opinion, which is impermissible under the law. Since the reassessment was deemed invalid, the issue of disallowance of compensation charges was not addressed on merit. The order was pronounced on 03/07/2015.

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Issues Involved:
1. Validity of reopening the assessment under Section 147 and issuance of notice under Section 148 of the Income Tax Act.
2. Disallowance of compensation charges of Rs. 11,00,000/- paid to Bhairav Metals.

Issue-wise Detailed Analysis:

1. Validity of Reopening the Assessment:
The primary issue revolves around whether the reopening of the assessment under Section 147 and the issuance of notice under Section 148 were justified. The assessee argued that the initiation of reassessment proceedings was based on a "change of opinion," which is not permissible under the law. The original assessment was completed under Section 143(3) on 26/12/2007, where the Assessing Officer (AO) had already raised queries regarding the impugned addition of Rs. 11,00,000/- and the assessee had provided detailed replies and evidence. The AO did not make any addition on this issue in the original assessment.

The assessee's representative cited the case of GKN Sinter Metals Ltd. vs. ACIT, where the Bombay High Court held that if the AO had raised queries and was satisfied with the assessee's explanations during the original assessment, reopening the assessment on the same grounds would amount to a change of opinion. The court emphasized that the power to reassess is not a power to review the original assessment.

The Tribunal agreed with the assessee's argument, noting that the AO had indeed formed an opinion during the original assessment and that the reassessment proceedings were initiated based on the same evidence already considered. Therefore, the reassessment proceedings were deemed invalid due to the change of opinion, and Ground No.1 filed by the assessee was allowed, quashing the impugned assessment order.

2. Disallowance of Compensation Charges:
Since the reassessment proceedings were held to be invalid, the Tribunal did not need to address the second issue regarding the disallowance of compensation charges on merit. The Tribunal stated that Ground No.2 does not survive as the reassessment itself was invalid.

Conclusion:
The appeal filed by the assessee was allowed, and the reassessment order was quashed. The Tribunal concluded that the reassessment proceedings were initiated based on a change of opinion, which is not permissible under the law. Consequently, the issue of disallowance of compensation charges was not addressed on merit. The order was pronounced on 03/07/2015.

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