TaxTMI 
TaxTMI 
2023 (8) TMI 678
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....ted to add, alter, amend or withdraw any ground of appeal on or before final hearing of the appeal." 3. Further, the assessee has also taken the following additional ground of appeal before us: "1. The notice issued u/s. 148 and consequential reassessment order passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 dated 31.03.2014 are bad in law for the want of valid jurisdiction to issue notice u/s. 148 of the Act. 2. The challenge to the reassessment notice and reassessment order being a jurisdictional challenge is being taken up before the Hon'ble ITAT on the basis of the well laid down ratio by the Hon'ble Jurisdictional High Court in the case of P.V. Doshi vs. CIT - (1978) 113 ITR 22 (Guj). The appellant reserves it right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing." 4. The brief facts of the case are that the assessee filed return of income under Section 139(1) of the Act declaring total income of Rs. 4,50,177/-. The case was selected for scrutiny and assessment order under Section 143(3) of the Act was passed on 30-12-2011, determining the total income at Rs. 10,39,054/-. After the assessment, it wa....
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.... year. Therefore, the sundry creditors of Rs. 1,63,03,871/- are held to be unexplained and the order of the Assessing Officer in this regard is upheld. The assessee fails on these grounds of appeal." 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) confirming the additions. Before us, the counsel for the assessee submitted that the re-assessment proceedings are liable to be set aside on the ground that the same amounts to "change of opinion", since the issue of sundry creditors, on the basis of which additions have been made in the re-assessment proceedings, was raised and discussed in detail during the course of the original assessment proceedings. The counsel for the assessee drew our attention to notice dated 06-09-2011 issued by the assessing officer during the course of assessment proceedings, in which the issue regarding "sundry creditors" was raised during the course of original assessment proceedings. The counsel for the assessee then drew our attention to reply of the assessee dated 8th November 2011, which was the response filed by the assessee against the aforesaid notice issued by the assessing officer. Further, the counsel ....
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.... the relevant extracts of the original assessment order for reference:- "3. On perusal of balance sheet it is seen that the assessee has shown Rs. 16303871/- under the head "Sundry Creditor". To verify the genuineness of the balances as reflected against the name of the party the assessee vide questionnaire dated 07/07/2011 at point No. 2 (vii) was asked to furnish complete address of the sundry creditors. The authorized representative has submitted the name and address of the sundry creditors. The notices u/s 133(6) of the IT Act were issued to the following parties: 1) India Sales Rs 2033928 2) Jolex Traders Rs 2666444 3) Mahakali Enterprises Rs 1449078 4) Mahalaxmi Trading Co. Rs 951056 5) Maruti Enterprises Rs 2267163 6) Sahil Enterprise Rs 2872579 7) Shree Ganesh Steel Traders Rs 2807906 8) Umiya Sales Rs 1250717 Rs 16298871 9) Bharat M. Swami Rs 5000 Rs 16303871 3.1 All the notices issued u/s. 133(6) were returned back unserved with the remarks 'not known' or 'left'. The assessee vide show cause notice dated 06/09/2011 was asked to explain that as to why the closing balance show....
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.... in respect of value. On the identical facts huge disallowance was made by the assessing officer in the case of Sun Steels which was dealing in the similar kind of items taking gross profit at 3.36%. The Hon'ble ITAT after appreciating the facts of the case retained addition of Rs. 50,000/- only as there was no evidence on the records of the AO that the parties from whom the material has been purchased and to whom the money was paid came back to the assessee and as such it a wrong to assume the assessee was beneficiary of such funds. In view of this, I request your honour not to proceed with making of addition at the rate of 5% of the sale turnover but request you to restrict the sale at the rate of 2% of sales turnover less income disclosed in the return of income. 3.9 The submission of the assessee has been duly considered and not tenable. As discussed in the foregoing that since the issuance of notice u/s. 142(1) dated 02/08/2011 the assessee is non co-operative with the departmental proceedings. The assessee was requested at Point No. 3(iv) of the questionnaire to produce books of accounts along with bills and vouchers for the expenses debited to P&L account and cash bo....
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....he very same ground/issue for consideration, which has been considered and enquired into detail during the course of original assessment proceedings and which formed the basis of framing of original assessment order. 9. In the case of Kelvinator India Ltd. 187 taxmann 312, the Hon'ble Supreme Court has categorically held that "change of opinion" is an in-built test to check abuse of power by the Assessing Officer. Hence, for the purpose of re-opening of assessment, there has to be some fresh tangible material which was not available with the Assessing Officer at the time of original assessment proceedings. In absence of any such fresh tangible material, the re-opening cannot be resorted to since the same would amount to "mere change of opinion". Further, the Supreme Court held that "mere change of opinion" cannot be per se "reason to reopen" the assessment proceedings which have already been concluded. The Hon'ble Supreme Court made the following observations on this issue: "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 basi....
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....ssue or query is raised and answered by assessee in original assessment proceedings and Assessing Officer does not make any addition in 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, though he had not recorded his reasons." 11. The assessee further relied upon the decision of the Hon'ble High Court of Madras in the case of ITO vs. Shivsu Canadian Clear Waters Ltd 133 taxmann.com 280 (Madras). While passing the order the Hon'ble Madras High Court observed as under:- "...reassessment was initiated on ground that assessee had issued preference shares of face value of Rs. 10 each at premium of Rs. 488 per share but market value of each share was Rs. 25.20 only and consideration received from issue of shares which exceeded face value of such shares was required to be assessed to tax under Section 56(2)(viib). However, no tangible material or fresh material had come to notice of Assessing Officer, and ....