TaxTMI 
TaxTMI 
2013 (11) TMI 161
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....of reasons - as held by the Apex Court in the case of Raymond Wollen Mills Ltd Vrs. ITO 1999 [236 ITR 34) (SC). 2. In the facts and circumstances of the case the Ld.CIT(A) erred in relying upon the judgment of the Hon'ble High Court of Orissa in the case of M/s.B.C.Nayak vrs. CIT [W.P.(C) N:797 of 2012] as in the amended provision of section 147 of the I.T.Act,1961 w.e.f. A/Y:1989-90 has not put any restrictions on the AO so as to exclude the application of reopening of any completed assessment proceeding even if made u/s.143(3). Also in the instant case since no opinion was ever formed, question of changing of such opinion does not arise at all in the proceeding u/s. 147 of the I.T.Act, 1961. 3. In the original assessment made u/s. 143(3) dated 28.09.2007, the AO has made disallowance I) Disallowance of Rs.17,186 ii) Low withdrawal by partners of Rs. 1,32,310. It is clearly evident from the record that AO had not examined the statutory application of provisions of section 40(a)(ia) of the I.T.Act,1961 in respect of various payments on transportation charges to 10 persons amounting to Rs.33,86,803 debited in the P&L account. ....
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....the Ld. CIT (A) in the appellate order is squarely applicable to the assessee. We are grossly disagree with the contention of the revenue that only 'has reason to believe' plays an important role. All the conditions of Sec. 147 plays an important role. Besides the same additional condition of section 147 in case assessment is reopened after the expiry of 4 years from the end of the relevant assessment plays a important role. Section 147 empowers the Assessing Officer to reopen an assessment if the conditions prescribed therein are satisfied. The conditions are: i) The Assessing Officer has to record the reason for taking action under section 147. It is on the basis of such reasons recorded in the file that the validity of the order reopening a assessment has to be decided. Recorded reasons must have a live link with the formation of the belief. ii) The Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. iii) The jurisdictional condition under section 147 is the fo....
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....O has tangible material to come to the conclusion that there is escapement of income. The A.O has agreed as per the Assessment order u/s 147 that Re-assessment proceedings in this case was initiated on the basis of the material which is on record (Point no.(i) of pg. no.3 of the assessment order u/s147). There is no new or fresh materials have been brought to the record by the A.O. If there was no reference to any undisclosed fact or any fresh material or fresh evidence . Thus, it is a case of change of opinion (CIT vs. Kelvinator of India Ltd., (2002) 256 ITR 1,(Del) = (2003-TII-19-HC-DEL-INTL-LB) (CIT vs. Kelvinator of India Ltd., (2010) 2 SCC 723). Honorable Delhi High Court has held in the case of BLB Limited Vs. ACIT(2011) that legal misinterpretation by Assessing Officer in framing original assessment cannot be the basis of initiation of Assessment Proceeding u/s 147. The Honorable Delhi High Court held that the same cannot be a valid ground for reopening assessment u/s 147. So the Assessment is on valid u/s147. i. It was based on the audit objection and without independent....
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....oes not have power to review. If such a change of opinion were to be permitted as a ground of reassessment then it would amount to granting a license to the assessing officer to review his decision, which he does not have under the provision of section 147. D. T. & T. D. C. Ltd. vs. CIT (2010) 324 ITR 234 (Del.). The belief u/s 147 that income has escaped assessment has to be the reasonable belief of the AO himself and cannot be an opinion and/or belief of some other authority. The AO cannot blindly follow the opinion of an audit authority for the purpose of arriving at a belief that income has escaped assessment. On facts, the recorded reasons are identical to the objection of the audit authority. The reasons do not rely upon any tangible material in the audit report but merely upon an opinion and the existing material already on record. This itself indicates that there was no independent application of mind by the AO before he issued the s. 148 notice (India Eastern Newspaper Society 119 ITR 996 (SC) followed). As per the proviso to sec 147 where an assessment under sub-section (3) of section 143 or u/s 147....
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.... from the end of the assessment year is arbitrary, unjustified, illegal on the facts & circumstances of the case and the same should be deleted in full. Therefore the learned CIT (A) has rightly deleted the disallowance of Rs. 33,86,803. 5.3. With respect to Third Grounds of Appeal of the Revenue, the learned Counsel for the assessee submitted: Sec.40(a)(ia) is not applicable in the present case. There is no amount outstanding as on 31.03.2005 which attracts TDS provision U/s 194 C. The amount which has already been paid, but TDS has not been deducted or not deposited after deduction, shall not be covered u/s 40(a)(ia). The said section is as under Sec. 40. Amounts not deductible: Notwithstanding anything to the contrary in ss. 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession',- (a) in the case of any assessee- (i)............... (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident,....
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....een already paid during the year. (Merilyn Shipping & Transports - Special Bench (SB) of the Vishakhapatnam, ITA No. 477/M/2008) dated 9 April 2012) Therefore CIT (A) has rightly deleted the disallowance of Rs. 33,86,803. 6. We have heard the rival contentions and perused the material available on record. On consideration of the facts and circumstances of the case, we are inclined to uphold the order of the learned CIT(A) insofar as after considering the legal issue with respect to validity of reassessment u/s.147 he has also considered the deletion of the amount brought on record by the Assessing Officer in the reassessment proceedings when the Assessing Officer has categorically given a finding that the amount of expenditure were incurred for transportation carriage expenses of Rs.33,86,803 and hire charges Rs.42,33,728 which were to be disallowed u/s.40(a)(ia) as no TDS has been deducted u/s.194C. He added the same to the income which was assessed by him u/s.143(3). Therefore, it is clear that the Assessing Officer brought on record material which was not escapement of income but was opinion based in the disallowance u/s.40(a)(ia) when ....