AI Drafter 
TaxTMI 
TaxTMI 
2021 (10) TMI 1216
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....The background facts are that the Petitioner is a partnership firm. It filed its return for the AY in question on 16th November 2009 disclosing a total income of Rs. 15,30,110/-. The return was picked up for scrutiny. In response to the notices under Sections 142 (1) and 143 (2) of the Act, the Petitioner appeared before the Assistant Commissioner, Income Tax (ACIT) [hereafter the Assessing Officer (AO)], Berhampur Circle, Berhampur and produced its books of account including cashbook ledger, audit report, balance sheet and profit and loss (P & L) account. The AO, after examining the documents, issued on 19th October 2011 a detailed questionnaire to the Assessee which again the Assessee responded to. On 5th December 2011, the AO passed the assessment order under Section 143 (3) of the Act determining the total taxable income as Rs. 18,43,708/-. Accordingly, the tax payable was determined as Rs. 1,39,054/-. In the assessment order, the AO disallowed Rs. 3,13,600/- on account of sundry creditors. 4. The appeal filed by the Assessee against the aforementioned assessment order was allowed by the Commissioner of Income Tax (Appeals) (CITA) by order dated 17th July, 2013. The aforemen....
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....zed succinctly by the Supreme Court of India in Commissioner of Income Tax, Delhi v. Kelvinator of India Limited (2010) 2 SCC 723 as under: "6. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in Section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to re-open 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 re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing....
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....of opinion" as contended by the Assessee or was there new material which could not have been examined earlier and which justified the reopening of the assessment. 10. Mr. Satapathy, learned Senior Sanding Counsel for the Department has relied on the following observation of the Gujarat High Court in Gruh Finance Ltd. v. Joint Commissioner of Income Tax (2000) 243 ITR 482 Guj: "If conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making assessment and again different or divergent view is sought, it would tantamount to "change of opinion", whereas, in the case of existing material, no conscious attempt has been made, it would tantamount to mistake in not considering the relevant point or proposition and it would not be a "change of opinion"." 11. Reliance is also placed on the decision of the Delhi High Court in Consolidated Photo and Finvest Ltd. v. Asst. Commissioner of Income Tax (2006) 281 ITR 394 (Delhi) wherein it has been held as under: "19. In the light of the authoritative pronouncements of the Supreme Court referred to above, which are binding upon us and the obse....
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....e assessing officer either generally or in the form of a reply to the questionnaire served upon the assessed. What is important is whether the assessing officer had based on the material available to him taken a view. If he had not done so, the proposed reopening cannot be assailed on the ground that the same is based only on a change of opinion." 12. However, as against the aforementioned judgments of the two High Courts, pronounced in 2000 and 2006, it is the later judgment of Supreme Court in Kelvinator of India Limited pronounced in 2010 that holds the field. That judgment requires that there has to be some new material to justify the re-opening of the assessment. It cannot be based on a mere change of opinion on the basis of the same materials. 13. In the present case, the reasons for reopening the assessment do not point to any new material that was available with the Department. What appears to have happened is that the same material viz., the accounts produced by the Assessee were reexamined and a fresh opinion was arrived at by the Opposite Party No.1 regarding the claim of the deduction of Rs. 48,183/- on account of the loss of sale of assets. This had already been ....