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2018 (10) TMI 1184 - AT - Income TaxReopening of assessment u/s 147 - arbitrary power upon the Assessing Officer to reopen the proceedings - validity of reasons to believe - advertisement expenses disallowance - Held that:- AO during the course of original assessment proceedings, had made specific queries to which the assessee not only gave specific replies, but the reply of the assessee was well supported by the evidences/details. If the action of the AO is accepted, then it would confer arbitrary power upon the Assessing Officer to reopen the proceedings on the slightest pretext. Mere change in the opinion would not confer jurisdiction upon the Assessing Officer to initiate a proceeding u/s 147. A perusal of the reasons for reopening shows that there was no new tangible material evidence which prompted the AO to issue notice for reopening of the assessment. Kelvinator of India Ltd [2010 (1) TMI 11 - SUPREME COURT OF INDIA] to be followed. In his reasons for reopening the assessment AO had observed that the assessee had claimed and allowed advertisement expenses of ₹ 23.31 crores out of which the assessee was reimbursed ₹ 10.97 crores and balance of ₹ 11.50 crores has been shown under the head “Loan and Advance” recovered towards reimbursement. This observation of the AO for reopening the assessment is factually incorrect. Advertisement and Publicity expenses are at ₹ 10.66 crores and selling and distribution expenses are at ₹ 24.76 crores. The balance of advertisement and publicity expenses is covered by financial support of ₹ 10.97 crores received from AE Yamaha Motor Company, Japan. It appears that the AO has taken the figure from the balance sheet. Exhibit 56, Schedules to the Accounts Schedule 5 “Loans and Advances” showing ₹ 1339.90 lakhs, the details of the same and in the bifurcation, the assessee has to receive ₹ 11.50 crores from Yamaha Motor Company, Japan as amount recovered towards reimbursement of advertisement expenses and other financial support provided by Yamaha Motor Company, Japan. This amount has never been claimed as expenditure by the assessee. Thus, it can be seen that the Assessing Officer had proceeded to reopen the assessment on wrong assumption of facts in so far as claim of advertisement expenditure are concerned and wrong assumption of law in so far as claim of depreciation is concerned. Thus reopening is bad in law. - Decided in favour of assessee.
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