TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 820
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....7, if any, passed thereafter. (B) Pending admission, hearing and disposal of this petition, ad interim relief be granted and the respondent be ordered to restrain from enforcing compliance with the impugned notice dated March 12, 2012, under section 148 of the Income-tax Act, 1961, annexed hereto at annexure F along with the preliminary order dated February 25, 2013, annexed hereto at annexure K, notice at annexure L for reassessment proceedings and reassessment order under section 143(3) read with section 147 ; if any, passed thereafter. (C) Pending admission, hearing and till final disposal of this petition, stay the implementation/operation of the notice and orders to restrain the respondent from taking any further proceedings pursuant to the impugned notice dated March 12, 2012, under section 148 of the Income-tax Act, 1961, annexed hereto at annexure F along with the preliminary order dated February 25, 2013, annexed hereto at annexure K, notice at annexure L for reassessment proceedings and reassessment order under section 143(3) read with section 147 ; if any, passed the....
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....aluation prescribed under section 145A, and the impact thereof on the profit and loss. Sl. No. Particulars [Rupees] Increase in profit (Rupees) Decrease in Profit 1 Increase in cost of opening stock on inclusion of excise duty on which MODVAT credit is available/availed. 2,75,72,291 2 Increase in closing stock of materials on inclusion of excise duty 6,86,87,139 3 Increase in purchase cost of materials on inclusion of excise duty 25,31,08,556 4 Accounting of Modvat credit availed of and utilized on raw materials consumed in payment of excise duty on finished goods accounted on the basis of raw materials consumed. 21,19,93,708 Total 28,06,80,847 28,06,80,847 2.4 The Assessing Officer, at the time of assessment, framed under section 143(3) of the Act on December 27, 2010, calculated the income of the assessee at Rs. 15,07,96,240 ; permitting disallowances worth Rs. 7,90,75,045, after discussing at length in the body of the assessment various details. 2.5 It needs to be mentioned that the query raised in respect of the accounting method followed by the assessee not reflecting the profit of ....
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....osed of the same, vide order dated February 25, 2013, by rejecting the grounds raised in the communication. 6. Being aggrieved by such non-acceptance of the objection and the process of reopening, the present petition is preferred requesting for the aforementioned prayers. 6.1 The principal ground raised by the petitioner in this petition is that as per section 145A of the Income-tax Act, 1961, the method of accounting should be inclusive and the petitioner has been following the exclusive method and due to mere change in the method, income cannot escape the assessment. It is the say of the petitioner that one method of accounting of excise duty is inclusive method under which purchases recorded include the excise duty. Likewise, the sales and the closing stock also, when are recorded, it is always taking into account the excise duty. However, the assessee had followed the exclusive method of accounting for the excise duty. There would be no entry in respect of the excise duty found in the trading as well as in the profit and loss account in respect of the purchases. 7. On issuance of the notice, the respondents appeared and filed affidavit- in-reply, inter alia, contending that....
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....ings. She further urged that no opinion has been formed by the Assessing Officer. On the ground of the audit objection also, she has contended that it is incorrect to suggest that only on the basis of the audit objection, such notice of reopening has been issued without independent examination of material. 9. Upon thus hearing both the sides and on examination of the material on the record, for the reasons to follow hereinafter, we are of the opinion that the notice of reopening issued under section 148 of the Act is neither valid nor sustainable. 10. As could be noticed from the material on record, the Assessing Officer at the time of original assessment had taken the return of the assessee in the scrutiny assessment. It had particularly raised a query with regard to the exclusive method of accounting for CENVAT followed by the assessee. According to the Assessing Officer, there was non-compliance with the provisions of section 145A which mentions the inclusive method of accounting and the profit was determined without considering the amount of unutilized CENVAT credit. The Assessing Officer also called for details from the assessee in this regard. Such details were already furn....
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.... 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-April 1, 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 arbitrary powers to the Assessing Officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after April 1, 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come....
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....he assessee company followed mercantile system of accounting. Purchase, sales and closing stock were accounted net of excise duty and CA's report in Form 3CD disclosed the details of cenvat credit availed on raw materials and utilized by the company during the previous year relevant to the assessment year 2006-07, showing that the assessee had opening balance of cenvat credit on raw material amount to Rs. 3,95,18,316 and the unutilized cenvat credit as on March 31, 2006 was to the tune of Rs. 6,87,99,812 as reflected in the balance sheet as on March 31, 2006, as loans and advances. According to the Assessing Officer, the unutilized cenvat credit on raw material pertaining to the assessment year 2006-07 was to the tune of Rs. 2,92,81,496. We find that the Assessing Officer took into consideration the fact that as the assessee followed the exclusive method of accounting in respect of the excise duty, the cenvat credit was not shown as closing stock in profit and loss account and, thereby, understated the profit to the extent of unutilized credit. According to the Assessing Officer, there was non-compliance with the provisions of section 145A, which mandates inclusive method of ....
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....the view canvassed by the assessee, then merely because he did not express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. On the other hand, if the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessee should be made to suffer the consequences of that lapse. In so far as the present appeal is concerned, we find that the assessee had placed all the material before the Assessing Officer and where there was a doubt, even that was clarified by the assessee in its letter dated November 8, 1995. If the Assessing Officer, while passing the original assessment order, chose not to give any finding in this regard, that cannot give him or his successor in office a reason to reopen the assessment of the assessee or to contend that because the facts were not considered in the assessment order, a full and true dis closure was not made. Since the facts were before the Assessing Officer at the time of framing the original assessment, and later a different view was taken by him or his successor on the same facts, it clearly amo....
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.... were in error in holding that the information given by the internal audit party could not be treated as information within the meaning of section 147(b) of the Act. The Supreme Court took the view that the audit party merely pointed out the facts which were overlooked by the Income-tax Officer in the assessment. The Supreme Court also noticed the fact that recognition granted to the charitable trust had expired on September 22, 1972, and this fact was overlooked by the Income-tax Officer. Allowing the appeal of the Revenue, the Supreme Court held that the case was not one of information on a question of law and saying so, the Supreme Court held that the audit party is entitled to point out factual error or omission in the assessment and reopening of the case on the basis of the factual error pointed out by the audit party is permissible under law. Thus, the facts of PVS Beedies Private Ltd. (supra) were altogether different and in the peculiar facts of the case, the Supreme Court held that reopening of the case on the basis of factual error pointed out by the audit party is permissible under section 147(b) of the Act. Trying to derive analogy of the principle of PVS Beedies Priva....
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.... relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub- section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.' It was in context with section 147(b) that the Supreme Court held that reopening of the case on the basis of information provided by the audit party as regards the factual error is permissible under law. A decision is available as a precedent only if it decides a question of law. The respondent is, therefore, not entitled to rely upon a decision of the Supreme Court rendered in peculiar facts of the case not laying down any absolute proposition of law which can be termed as a binding precedent. We may profitably quote what the Supreme Court has observed in the case of Mehboob Dawood Shaikh v. State of Maharashtra reported in [2004] 2 SCC 362. In paragraph 12 of the said judgm....
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.... Asst. CIT [2013] 350 ITR 266 (Guj), also had an occasion to consider a similar question of law where the reopening of the assessment on the very same claim was made on the basis of the same material which was held a mere change of opinion and impermissible. 10.4 For the purpose of the present petition, the relevant findings of the said decision are being reproduced hereunder (page 295 of 350 ITR) : "Bearing in mind these conflicting interests, if we revert back to central issue in debate, it can hardly be disputed that once the Assessing Officer notices a certain claim made by the assessee in the return filed, has some doubt about eligibility of such a claim and therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control whatsoever. Whether the Assessing Officer allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persua....