TaxTMI 
TaxTMI 
2015 (12) TMI 34
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....ady offered to tax in the earlier years. 1.2 That the ld. CIT (A) has erred in law and facts in ignoring the fact that the ld. AO added back the said amount treating it as capital in nature. 2.Wrongful addition on account of Depreciation 2.1. The learned CIT(A) has erred in confirming the action of the Assessing Officer by allowing depreciation @ 15% instead of 25% on cables laid down for running of machinery 2.2 That ld. CIT(A), admitting that the cables were laid down in factory, has failed to draw distinction between electrical installation and electrical fittings. 3. Re-opening of Assessment 3.1 That the CIT(A) erred on facts and in law in confirming the action of assessing officer in initiating the re-assessment proceedings under section 147 of the Act on the basis of mere change of opinion without any new material fact or information coming to the possession of the assessing officer subsequently and the reassessment order was, therefore, without jurisdiction and bad in law. 3.2 That the ld. CIT(A) has erred on facts and in law in mentioning that there is no discussion of any of the issues in original assessment." ....
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....nd 24 relevant details ask for in original assessment. He also drew our attention that vide letter dated September 06, 2006 assessee has submitted replies of those notices giving complete details. Therefore he submitted that while framing original assessment u/s 143(3) dated 26th December, 2006, AO has applied his mind on the detail submitted and has formed an opinion about those items. He submitted that in original assessment proceedings, no additions have been made regarding these items. Further, he submitted that there is no material coming into possession of the assessing officer after completion of assessment proceedings on which reopening can be based upon. Therefore, he submitted that reopening proceedings are initiated on mere change of opinion for this he relied on several decisions of Hon'ble Delhi High Court and primarily on decision of Hon'ble Supreme Court in case of CIT vs. Kelvinator of India Ltd. 320 ITR 561. He further submitted that as no new material came into the possession of Assessing Officer, reopening is based on material already on record, it is not permitted. He relied on the decision of Hon'ble Delhi High Court in case of Madhukar Khosla v. AC....
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....AR of the assessee could not produce any evidence before us that the reopening has been initiated at the behest of audit party. Therefore, in absence of any evidence we are afraid we cannot appreciate this proposition and hence, reject it. 10. Second proposition raised by the AR is that there is no new material coming in to the possession of AO after completing assessment based on which reopening proceedings are initiated. For this, we have perused the reasons recorded by AO for reopening of assessment, which is placed at page no 10 of the paper book submitted by assessee. At the beginning of the reasons, AO has mentioned that information gathered by him is on verification of case records. On further reading, we could not find that there is any new material based on which AO was of the view that there is an escapement of income. On reading of assessment order, also we did not find that there is any new material available with Ao at the time of recording of reasons as all the additions have been made on the same material available before AO at the time of original assessment. Ld. DR also could not point out before us any new material coming in to the possession of AO before recor....
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....t of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. " 10. This Court recollects that even in case of an assessment completed under Section 143 (1), the requirement of recording "reasons to believe" are mandatory - as the text of Section 147 indicates. Rejecting an argument by the Revenue to the contrary, this Court in Orient Craft Ltd.'s case (supra) held that: "The assumption of the Revenue that somehow the words "reason to believe" have to be understood in a liberal manner where the finality of an intimation under Section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in Section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore it is not permissible to adopt different standar....
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.... are fulfilled" an intimation issued under section 143(1) can be subjected to proceedings for reopening. The court also emphasised that the only requirement for disturbing the finality of an intimation is that the assessing officer should have "reason to believe" that income chargeable to tax has escaped assessment. In our opinion, the said expression should apply to an intimation in the same manner and subject to the same interpretation as it would have applied to an assessment made under section 143(3). The argument of the revenue that an intimation cannot be equated to an assessment, relying upon certain observations of the Supreme Court in Rajesh Jhaveri (supra) would also appear to be self-defeating, because if an "intimation" is not an "assessment" then it can never be subjected to section 147 proceedings, for, that section covers only an "assessment" and we wonder if the revenue would be prepared to concede that position. It is nobody's case that an "intimation" cannot be subjected to section 147 proceedings; all that is contended by the assessee, and quite rightly, is that if the revenue wants to invoke section 147 it should play by the rules of that section and cannot ....
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....O. 12. Reliance placed by Ld. DR on GRUH Finance Ltd. v. Jt. CIT [2000] 243 ITR 4821, a judgment of the Gujarat High Court, is misplaced and distinguishable. The said case is prior to the decision of Delhi High Court and the Supreme Court in the case of Kelvinator of India Ltd. (supra). The Gujarat High Court has recorded a specific finding that at the time of the original assessment, there was no conscious consideration of material and a mistake was made. It has been observed that conscious application of mind to the material and the issue in question is required. Change of opinion necessarily means examination on an earlier occasion. In the present case before us, there is a specific application of mind. 13. Therefore respectfully following the decision of Honourable Delhi high court in Madhukar kholsa V CIT ( Supra) we are of the opinion that impugned reassessment proceedings initiated are sustainable, therefore same is quashed. 14. Alternatively, also on the ground of change of opinion assessee's appeal deserves to succeed because in the original assessment proceedings vide notice dated 18/08/2008 AO has asked for all the details recorded in reason. Assessee submit....
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....ed in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of 'change of opinion'. (iii) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations, it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer, had formed an opinion in the original assessment, whether or not he had recorded his reasons in the assessment order. 16. In this case, an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer did not make any addition in the assessment order. Respectfully following Honourable Delhi high court in CIT V Usha International (FB) (Supra) in such situations, it should be accepted that the issue was examined but the Assessing Officer, did not find any ground or reason to make additi....