TaxTMI 
TaxTMI 
2014 (6) TMI 633
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....t u/s 147 of the Act., and completing the assessment, commenced under invalid exercise of power u/s 147 despite the fact that assessment u/s 143(3) was framed in the case of Appellant on 31.03.2004. 2. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of AO in reopening the assessment based on change of opinion which is not valid under law. 3. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of AO in disallowing expenditure incurred on moulds & dies amounting to Rs. 1,97,360/- on the ground that the same are capital expenditure. 4. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of AO....
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....count of change of opinion despite the fact that reopening is done within the period of 4 years from the end of relevant assessment year. 6. Ld. CIT(A) however confirmed the action of AO 7. Before us learned counsel of the assessee submitted that assessment was reopened on account of following two reasons: "(a) As per schedule 2 on credit provision, there is unpaid liability of sales tax of Rs. 6,181/-. No evidence to show that the same has been paid before filing the return of income u/s. 139(1) is available on record as per the reasons recorded for re-opening of the assessment by the AO. (b) The assessee has debited Rs. 2,19,534/- towards tools and spares which inter alia includes moulds and dies of Rs. 1,97,360/-. This is a c....
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....uthorities. 8. After hearing both the parties and perusing the record, we find that during the assessment proceedings AO vide its notice dated 18th July, 2006 raised following query at serial no. 10 of this notice: "10. You have debited in the profit and loss account a sum of Rs. 2,19,534/- towards tools and spares. Please show cause why the said expenditure should not be treated as a capital expenditure. Please offer your comments." Assessee replied to this query vide its reply dated 26-08-2004 as under:- "11. In respect to tools and spares, we submit that we are involved in the business of highly mechanical product. We need tools and spares for the manufacturing of product. Life of these tools are very short and therefore the ....
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....ransfer or transaction. But in the present, in our opinion, is not a one of that type. Here, the Assessing Officer has specifically asked for the details and the assessee has submitted the details of payments and only thereafter the assessment has been completed. In these circumstances, to say that there was no conscious decision has been taken in the assessment order may not be proper. The case, in our opinion, would fall within the garb of another decision of Gujarat High Court in the case of Garden Silk (P) Ltd Vs. DCIT [151 CTR 533] wherein the Court quashed the reopening where in the original assessment, the assessee's claim was accepted. In that case, it seems that the Assessing Officer has accepted the claim of the assessee after....