2015 (10) TMI 159

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....r u/s. 143(3)/147 of the I.T. Act while holding invalid the reopening u/s. 147, ignoring that also as per decision of Hon'ble Supreme Court in CIT(A) vs. PVS Beadies Private Limited 237 ITR 13, the factual information provided by the internal auditor is to be treated as information for the purpose of reopening of assessment. Reliance is also placed on the following decisions:- i) Phoolchand Bajrang Lal vs. CIT (1993) 203 ITR 456 (SC) ii) Ram Prasad vs. ITO (1995) 82 Taxman 199 (All.) iii) Consolidated Photo and Finvest Limited vs. ACIT (2006) 281 ITR 394 (Del.) iv) KLM Royal Dutch Airlines vs. ADIT (2007) 292 ITR 49 (Del) v) ACIT vs. Rajesh Jhaveri Stock Brokers Pvt Ltd. (2007) 161 Taxman 316 (SC) vi) Praful Chunilal Patel vs. Makwana....

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....regarding reopening of the assessment on change of opinion and based on audit objection was rejected and decided the case on merit and assessed at income of Rs. 91,19,606/- vide his order 30.11.2009 passed under section 147 r.w.s. 143(3) of the I.T. Act, 1961. 4. Against the above order of the Assessing Officer, assessee appealed before the Ld. First Appellate Authority, who vide impugned order dated 2.7.2010 allowed the appeal of the assessee by holding as under vide Para no. 1.3 at page 2 and 3 of his order. "1.3 I have carefully considered the submissions of the Ld. AR and have gone through the assessment order. While explaining the reasons for reopening of the case in the assessment order, the Assessing Officer has referred to the rec....

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....ment has to be based on fulfillment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening 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. Looking into the facts of the present, case, I find that the Assessing Officer was not justified in reopening the assessment u/s. 147 of the Act and the same is held to be void-ab-inito. Consequently, the order u/s. 143(3) read with section 147 stands annulled." 5. Against the above order of the Ld. CIT(A), Revenue is in appeal before us. 6. Ld. D.R. relied upon the contention raised in the grou....

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....on the basis of change of opinion which is not permissible in view of the decision in the case of CIT vs. Kelvinator Ltd. (Supra). He further stated that the AO has reopened the reassessment without any fresh material on the record. There must be extraordinary material to reopen the assessment. 7. We have heard both the counsel and perused the records. It is an admitted fact that decision of the Hon'ble Supreme Court in the case of Sourthern Switchgear Ltd. v. CIT 232 ITR 359 was very much available at the time of assessment. The decision of the Hon'ble Supreme Court of India is a Law of Land in which it is clearly held that royalty expenditure is not allowable expenditure. But the AO has escaped overlook the aforesaid judgments and has no....