TaxTMI 
TaxTMI 
2017 (12) TMI 991
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 16044214/-. The assessment under section 143 (3) was completed at Rs. 160835700/- on 9/12/2009. 4. Subsequently the Ld. assessing officer has noted that assessee has debited a sum of Rs. 1.82 crore under the head repairs to plant and machinery and Rs. 34.67 lacs as repairs - others which is also machinery. The Ld. assessing officer was of the opinion that these expenditure are capital in nature which is fortified by the decision of the Hon‟ble Supreme Court in case of CIT versus Saravana spinning Mills private limited. Further more on the perusal of the depreciation chart the Ld. assessing officer noted that the value of assets under the head plant and machinery is of Rs. 6.59 crore and the amount of expenses on repairs is at Rs. 2.17 crores. Therefore it was noted that by its nature in volume the amount spent is for the purpose of bringing into existence new assets and also obtaining an enduring advantage. Hence he was of the opinion that expenditure of Rs. 2.17 crores though capital in nature and was required to be capitalised but has been debited to the profit and loss account by claiming as revenue expenditure . Thus according to him the income of Rs. 2.17 crores ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Ld. CIT (A) has preferred an appeal before us as per grounds of appeal stated hereinabove. 7. The Ld. departmental representative vehemently contested the order of the Ld. CIT (A) and submitted that it is not the change of the opinion but the Ld. assessing officer has given sufficient reason why reopening is valid by disposing of the objections filed by the assessee. He further supported the orders of the Ld. assessing officer. 8. The Ld. authorised representative vehemently supported the order of the Ld. CIT (A) and submitted that it is the change of opinion by the Ld. assessing officer on the appreciation of the same set of facts. He further referred to page No. 64 - 70 where the approval of the Commissioner of income tax was obtained. He further referred to the page No. 68 of his paper book which is the audit objection, he submitted that the reopening has been made on the basis of the audit objection. He further referred to the reasons recorded by the Ld. assessing officer which does not show that there is any failure on part of the assessee to disclose the material facts. He submitted that the reopening has been done after the passing of 4 years from the end of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has only done a review on the same set of documents and facts thus leading to the "review of assessment order" already passed. 6. The issues on which the additions have been made now, were raised by the AO and answered by the assessee in the original assessment proceedings and the assessing officer did not make any addition after examining the issue on account of his complete satisfaction with the appellant's reply. In such a situation, the reassessment proceeding are invalid because the AO had formed an opinion in the original assessment proceedings after considering all the relevant facts. In view of this and in the background of the principle of law as has been approved by the judicial authorities on this issue, the reassessment proceedings initiated against the appellant are based on 'change of opinion' are liable to be quashed. 7. The appellant having already disclosed all the facts during the assessment stage, there could not be any allegation that there was any failure on its part to furnish any material documents and hence the precondition to the provisio to section 147 of the act is not being fulfilled. Thus, the reassessment proceedings were....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenses on building repairs & others. Show cause why it should not be capitalized. iv) Nature of expenses on Plant & Machinery repair of 1.82 cr. Show Cause why it should not be capitalized. e. The appellant vide letter dated 01.12.2009, filed its reply tothe show cause on why the repair exp. should not be capitalized. f. Vide the order entry sheet 01.12.2009, the Assessing officer again asked for the head wise broad classification for Building Repair & Maint. and store ledger with regards to store consumption exp. and repair plant, building and others routed through stores. g. The appellant vide its letter 08.12.2009 submitted both the above details. The Assessing officer passed an order u/s 143(3) dated 09.12.2009 after considering the expenditure amounting to Rs. 4,36,000/- claimed under the head "Repair & Maint. Building" as of capital in nature. After allowing the depreciation the net addition was for Rs. 3,92,490/- i) The Appellant instituted an appeal before CIT(A), Faridabad against the addition of Rs. 3,92,490/- on 05.01.2010. j) The Learned CIT(A) deleted the addition in total, vide the order„dated 25.02.20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....blished as a fact that such escapement has been occasioned by either assessee failure to make return u/s 139 etc.,or by reason of failure on part of assessee to disclose fully and truly all material facts necessary for his assessment. The same has been explained in detail by the territorial High court in the case of Duilichand Singhania Vs ACIT 269 ITR 192 (P&H) Similar view was taken by Hon'ble Delhi High Court In Case of Suren International Pyt. Ltd. 357 ITR 24. 13. The section essentially deals with income escaping assessment. It empowers the AO to reopen the proceedings if he has reason to believe that the whole income or part of the income has not been taken into consideration during assessment proceedings. The section identifies two essentials to the reopening of assessment proceedings. The AO must have "sufficient reason to believe" thatthe income had escaped assessment and, secondly, there may be income which has come to his notice subsequently after the assessment proceedings have been closed. 14. An important issue central to many of the litigations related to re-opening of the cases u/s 147/148 pertain to the word "opinion" of the AO. The change of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7.11.2009 to furnish the details of Plant & Machinery Repair amounting to Rs. 1.8 Cr. and asked the assessee to show cause why the same should not be capitalized. (This is evident from the copy of the order sheet furnished by the appellant, obtained by the appellant after taking an inspection of the assessment folder of the AO) c) The appellant replied to his show cause of the AO vide letter dated 01.12.2009 and 08.12.2009 d) The AO passed the assessment order u/s 143(3) on 09.12.2009 wherein an addition was made under the head "Repairs and Maintenance of Building" and no addition was made by him under the head "Repair and Maintenance of Machinery" e) From the above it is absolutely clear that this issue was examined by the AO during the course of original assessment proceedings and being satisfied with the appellant's contention, no addition was made on this issue. f) Perusal of the reasons recorded u/s 147 clearly show that the case has been reopened on this very issue i.e. "Repair & Maintenance" of Rs. 1.82 Cr. on Plant & Machinery. This amounts to re appraisal and review of the same facts and reopening of assessment u/s 147 is not permiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Having examined the facts of the case it shall not be out of place to examine the various judicial decisions relevant to these facts. 19. I find that Hon'ble Gujarat high court in case of Vishwanath Engineers vs ACIT 354 ITR211 has examined similar issue and held nature of expenditure examined in original assessment proceeding and expenses treated as business expenses. Reopening assessment to disallow such expenditure is impermissible. For sake of convenience the relevant part of judgment is being reproduced as under "in the present case, we may recall that the assessee made full disclosure about expenditure in question. The assessing Officer called upon the assessee to explain all the expenses . The sum Qf Rs. 751771/- was a sizable expenditure, which the assessee claimed by way of business expenditure. He gave detailed reply to queries raised by the AO in this respect. He pointed out that the assessee had received various deposits from co- operative societies. Such deposits were retained without paying any interest. Against that the assessee had the responsibility to meet with part of maintenance expenditure of the society . The expenses which were the pet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat since the AO did not have any tangible material and the reason recorded refer to the same basis which was present during original assessment, what the AO intended was arising out of a mere change of opinion in the absence of any new material/information and hence the notice of reassessment should be quashed. Similarly in the case of Sanand Properties (P.) Ltd Vs JCIT reported in 343 ITR 388, the Bombay High Court has held that in the absence of any valid or tangible material to substantiate the initiation of reassessment the AO was merely acting upon a change in his opinion which does not validate the reassessment proceedings. The Court noted that the documents upon which the AO was relying to initiate reassessment was already present at the time of the original assessment and accordingly there was no tangible material in possession of the AO to justify initiation of reassessment. 23. Reliance may further be placed upon the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Jagson International Ltd. reported in 321 ITR 544 where the ratio has been followed that if no new information/material had come to the AO after completing the original assessment t....