TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 11
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....ed in holding that requirement of proviso 1 to Section 147 of the Act was not complied with though no opinion was formed by the Assessing Officer in the original assessment order on the issues on which case was reopened?" 2. The facts leading to the filing of the present appeal, in nutshell, are as under; 3. That the assessee filed return of his income under Section 143(3) of the IT Act(hereinafter referred to as 'the Act'). That the regular assessment under Section 143(3) of the Act was completed on 26.12.2007, determining the total income of the assessee at Rs.90,06,460/-, after making additions of Rs. 33,90,267/-, on account of disallowance of commission / brokerage and Rs.79,358/- out of the administrative expenses. Subsequently, a ratification order was passed under Section 154 of the Act on 23.01.2008, disallowing the interest on unsecured loans to the extent of Rs.5,86,907/-. That the matter traveled till the Tribunal and the Tribunal deleted the addition on account of disallowance of commission to the extent of Rs.31,63,732/- and the interest on unsecured loans of Rs.5,86,907/-. Thereafter, the AO reopened the case under Section 147 of the Act and issued a notice under Se....
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....ebited to P & L Accoun. However, the tax required to be deducted at source as per provisions of section 1941 was not deducted and paid into the Government Account. Tax was deducted and paid to the extent of Rs.7.03 lacs on payment of commission and interest as show at sr.no. 27 of form 3 CD. The liability on this account was also not reflected in the balance sheet it proves that no tax was deducted at source from payment of rent. This resulted into non-deduction of tax at source of Rs.1.82 lacs including interest and penalty of Rs.1.60 lacs. In view of the above facts, I am satisfied that there is certainly under assessment of income and escaped assessment of income within the provisions of section 147 of the I.T. Act 1961 and this is fit for reopening." 4. That the assessee appeared before the AO in the re-assessment proceedings and furnished the necessary details. That, thereafter, AO passed the re-assessment order and considered the income of the assessee at Rs.1,10,31,811/- and further passed an order to issue demand notice under Section 156 of the Act as well as issued notice under Section 274 read with Section 271(1) (c) of the Act. 5. That feeling aggrieved and dissatisfi....
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....me Court that when the primary facts necessary for assessment are fully and ruly disclosed, the ITO will not be entitled on change of opinion to commence proceedings for the assessment. Similarly, if he has raised wrong legal inference from the facts disclosed, he will not, on that account, be competent to commence reassessment proceedings. Similarly, in the case of ITO Vs. Nawab Mir Barkat Ali Khan Bahadur (97 ITR 239), Hon'ble Supreme Court held that having second thoughts on the same material, and omission to draw the correct legal presumption during original assessment do not warrant the initiation of proceedings u/s. 147 of I.T. Act. However, from the facts of this case, it can be seen that the AO was not having any new factual information in his possession to form the opinion that there is any escapement of income. He has merely formed his opinion on the basis of facts available on record in the return of income of appellant. For a long time the facts of the case remained accepted by AO and suddenly after almost five years, AO changes his opinion that the interest and rental expenses are not allowable. Such change of opinion cannot be held valid in the light of aforesaid deci....
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....ng is possible only if income has escaped assessment because of failure on the part of the assessee to disclose fully truly all material facts. The assessee had submitted a paper-book containing 79 pages but since the same was submitted late only on 10.09.2013 and the hearing was fixed on 12/09/2013, we do not consider any other document in the paper-book except the reasons for reopening of the assessment available on page Nos. 8 & 9 of the paper-book because the same are available in assessment records also. As per the reasons recorded by the AO for reopening of the assessment, it is seen that it is noted by the AO in the reasons that the reasons are on the basis of perusal of the assessment records and there is no allegation that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In the present case, it is established that the requirement of first proviso to Section 147 are not being complied with and therefore, the re-opening after four years is not valid. Therefore we uphold the findings of the ld.CIT(A) regarding annulment of the assessment. 4. Since, the assessment itself is annulled by the ld.CIT(A)....