2016 (3) TMI 1282

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....er that the issue of allowance of expenditure of Rs. 2.07 Cr had been discussed in the original assessment at length and there was no fresh information to warrant issue of notice under section 148 of the Income Tax Act. The Assessing Officer, however, proceeded with the re- opening differing with the assessee on the issue and vide assessment order dated 26.03.2013 made the addition of Rs. 2.07 Cr by disallowing the amount of rent under section 40 (a)(ia) of the Income Tax Act. The assessee challenged the re-opening of the assessment as well as above addition before ld. CIT(Appeals) and written submission of the assessee is reproduced in the appellate order in which assessee briefly explained that the case was reopened merely on the basis of audit objection against which assessee has also filed reply. The Assessing Officer was having no new information available with him to reopen the assessment. The assessee relied upon several decisions before ld. CIT(Appeals) on the point that on mere audit objection, re-opening of the assessment is not justified. It was also explained that assessment was reopened on mere change of opinion. The ld. CIT(Appeals), however, did not accept content....

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....fficer and details submitted in the Paper Book in support of the contention that re-opening of the assessment is wholly unjustified in the matter and addition on merit is also unjustified. 4 (i) On the other hand, ld. DR relied upon orders of the authorities below and submitted that vouchers were stated to have lost which were not produced before Assessing Officer. Therefore, there is a failure on the part of the assessee to produce all facts and material truly and correctly at assessment stage. He has submitted that on audit objection, re-opening of the assessment is justified and relied upon decisions of the Hon'ble Supreme Court in the case of CIT Vs P.V.S. Beedies P.Ltd. 237 ITR 13. He has submitted that since assessee did not produce the details, therefore, it could not be verified that the rent paid of board were less than Rs. 1,20,000/-. He submitted that there is no change of opinion in this case and assessee failed to deduct TDS on rent paid, therefore, addition on merit is also justified. 5. We have considered rival submissions and material on record. The validity of re-opening of the assessment shall have to be tested on the basis of the reasons recorded for re....

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....he Assessing Officer also verified this fact of loss of the documents from the SHO concerned by writing a letter dated 05.10.2009, copy of which is filed at page 24 of the Paper Book. The Assessing Officer, therefore, considered the issue of earning of rent by assessee and rent paid of boards at original assessment stage. 5 (ii) PB-2 is audit report in which assessee explained to have been in the business and profession of advertisement (Hoardings). PB-10 is Income & Expenditure account for year under consideration showing the rent received and rent paid of boards. PB-12 to 16 are various replies filed before Assessing Officer at original assessment stage explaining the same facts that source of income of assessee is on account of business of advertising and marketing and assessee confirmed that he has not made any such payment exceeding Rs. 20,000/- in each case which could be verified from the books of account. It was also explained that expenditure is not excessive on account of rent of board as compared to earlier years. It was also explained that hoardings were arranged for various clients at various sites and hoardings were allotted to the clients on agreed charges. The....

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.... as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of or to the payee does not exceed Rs. one hundred and twenty thousand rupees. The assessee in this case has explained before Assessing Officer at assessment stage that each payment does not exceed Rs. 1,20,000/- each party. Thus, the assessee disclosed all the primary facts at assessment stage before Assessing Officer and Assessing Officer after examining the same, was satisfied with the explanation of the assessee that provisions of Section 194I of the Income Tax Act would not apply to the case of the assessee. It is well settled law that mere change of opinion of the Assessing Officer cannot be a ground for re-assessment and that amendment of Section 147 w.e.f. 01.04.1989 has not altered the position. We rely upon decision of Hon'ble Full Bench of Delhi High Court in the case of Kelvinator of India Ltd. 256 ITR 1 which is confirmed by Hon'ble Supreme Court in the case of Kelvinator of India 320 ITR 561. We also rely upon decision of the Gujrat High Court in the case of Garden Silk Mills Pvt. Lt....

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.... petition, (i) that during the proceedings for section 143(3) assessment, all information, documents and other records relating to the assessee for the relevant assessment year were before the Assessing Officer. The reasons which were advanced showed discovery of new facts from the existing records. So the Assessing Officer wanted to change his opinion regarding the assessment and to reopen it. Therefore, it could not be said that there was escapement of income or that there were reasons for believing that there was escapement of income." 7 (iii) Hon'ble Delhi High Court in the case of Techman Buildwell P. Ltd. V ACIT 370 ITR 771 held as under : Held, allowing the petition, that the "reasons to believe" nowhere highlighted what, if at all, was the material which the Assessing Officer came upon or became aware of subsequent to the original assessment. In other words, what triggered the Assessing Officer's curiosity to impel him to re- examine the files and documents pertaining to a completed assessment was unknown. Nor did the materials placed in the assessment show that the assessee had unjustifiably suppressed valid or relevant information which was otherwise avai....

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.... of CIT Vs Atul UMAR SWAMI 362 ITR 693 held as under : A valid reopening of assessment has to be based only on tangible material to justify the conclusion that there is escapement of income. Held accordingly, dismissing the appeal, that the note forming part of the return filed for the assessment year 1999- 2000 clearly mentioned and described the nature of the receipt under a non-compete agreement. The reasons/or the notice under section 147 of the Income-tax Act, 1961, nowhere mentioned that the Revenue came up with any other fresh material warrant ing reopening of assessment. Therefore, mere conclusion of the proceedings under section 143(1) ipso facto did not permit invocation of powers for reopening the assessment." 7 (vi) Hon'ble Gujrat High Court in the case of Shree Ram Builders Vs ACIT 377 ITR 631 held as under : Reassessment proceedings initiated merely and solely at the instance of the audit party are not valid. Held, that when the Assessing Officer tried to justify the assessment order and requested the audit party to drop the objections and there was no independent application of mind by the Assessing Officer with respect to the subjective satisfacti....