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2020 (1) TMI 562 - HC - Income TaxReopening of assessment u/s 147 - contention of the assessee is that the matters were plain and obvious and adequate information was available to the assessing officer at the time of the initial order u/s 143 and the impugned notice here and the accompanying reasons would tantamount to a change of opinion rather than the new discovery of material that could not have been reasonably noticed at the time of the scrutiny - HELD THAT:- The accounts are somewhat convoluted as regards royalty. While it is possible that it may be difficult for the assessee to immediately discover the persons entitled to receive the royalty on account of the licence fees earned by the assessee or the quantum of royalty payable to such persons, it is evident that the provision made to carry forward a certain amount during a financial year almost invariably substantially exceeds the pay-out during the following year. Indeed, the provision must necessarily be in excess of the pay-out; but the difference between the quantum of provision and the extent of pay-out may be of some consequence. The notice does not pertain to such aspect of the matter and the recorded reasons reveal that the assessing officer may have mixed up between the royalties paid or payable by the assessee for its sound recordings and the royalty paid or payable by the assessee in respect of the licence fees earned. As to the provision part of the accounts pertaining to royalty in respect of licence fees, there was a specific note in the accounts and schedule 28 to the accounts was quite clear. If the accounts were before the assessing officer and several queries were raised pertaining even to the royalty and matters connected therewith, it is difficult to accept that the additional income representing the excess of the amount earmarked as provision and the amount actually paid out would not have been noticed. If such matter had been noticed, as it ought to have been, and disregarded, the issuance of the impugned notice would amount to a change of opinion and not discovery of any new material revealing income escaping assessment. Prima facie, that appears to be the position from the reasons recorded in support of the decision to reopen the assessment for the relevant financial year. As a consequence, the impugned notice dated March 28, 2019 will remain stayed pending disposal of the petition before the court of the first instance. The order impugned is modified accordingly.
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