TaxTMI 
TaxTMI 
2013 (8) TMI 81
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....f the Act on 27.12.2010. 3.2. During such scrutiny assessment, Assessing Officer examined the requirement of tax deduction at source on a total labour charge payment of Rs.16.09 cores (rounded off), on which no tax was so deducted. Assessing Officer, after putting the petitioner to notice in the order of assessment, disallowed a sum of Rs.3.21 crores (rounded off), out of the above­noted total labour payment charges. 3.3. The order of assessment was carried in appeal by the petitioner. One of the ground in such appeal was in respect of disallowance of said sum of Rs. 3.21 crores (rounded off). CIT (Appeals) passed the appellate order on 02.07.2012 and allowed the assessees objection to the disallowance of Rs. 3.21 crores (rounded off) made by the Assessing Officer. It is stated that such order of CIT (Appeals) is pending before the Tribunal, under an appeal filed by the Revenue. 3.4. On 24.08.2012 the respondent­ Assessing Officer issued a notice of re­opening the assessment for the said Assessment Year 2008­-09. At the request of the petitioner, he supplied the reasons recorded for issuing of such notice, which reads as under:­ &nb....
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....etitioner raised following contentions in support of the prayers; (i) That the entire issue of non-­deduction of tax at source on the total labour payment charges of Rs.16.09 crores was examined by the Assessing Officer at length in the original order of assessment. He further stated that the extent to which he desired to disallow the expenditure is shown in the assessment order itself. In such order, he was of the opinion that 20% tax disallowance was justified. Thus, the Assessing Officer, having scrutinized the claim in the order of assessment, any attempt on behalf of the respondent to re­open of assessement on such basis, would be a mere change of opinion. (ii) The counsel for the petitioner contended that the petitioner had, even to the limited extent of disallowance made by the Assessing Officer, carried the matter in Appeal. CIT (Appeals) had deleted the entire disallowance, after admitting additional evidence on record by virtue of third proviso to Section 147 of the Act and on the principle of merger, it would be wholly impermissible for the Assessing Officer to re­examine the entire issue when the CIT (A....
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.... IT Act. The disallowance comes to Rs.3,21,84,435." (b) It is this claim, which the Assessing Officer now seeks to re­examine by issuance of notice for re­opening of the assessment. The reasons recorded by him clearly bring about this aspect. 8. In the reason, he concluded that the Assessing Officer made disallowance at the rate of 20 per cent. However, the entire amount should have been disallowed and therefore, the disallowance of expenditure required to be made comes to Rs.12,87,33,740/­ Therefore, he recorded that he had reason to believe that the income to the above extent chargeable to tax had escaped assessment. 9. It thus clearly emerges from the record that the Assessing Officer now wishes to re­-examine the petitioner's claim of deduction on the premise that the earlier Assessing Officer made an error in limiting such allowance to 20% of the total expenditure. In his opinion, 100% disallowance was called for. To the extent that the Assessing Officer, in the scrutiny assessment, did not disallow 80% of the expenditure and limited the disallowance to 20%, had committed an error. 10. We are not examining the validity of th....
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....nal scrutiny assessment. Any reexamination of such a question at this stage would only amount to change of opinion. Remedy of reopening the assessment, therefore, was simply not available. In the decision of the Supreme Court in case of Commissioner of Income Tax Vs. Kelvinator of India Ltd. reported in [2010] 320 ITR 561 (SC) the Apex Court observed as under: "On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re­opening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go­by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post­ 1st April, 1989, power to re­open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitra....