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2022 (9) TMI 1039 - Income Tax
Validity of Reopening of assessment u/s 147 - disallowance of deduction on reversal of provision - AO disallowed the claim made under Section 10(23G) - HELD THAT:- Undisputed facts of the case are, before passing the Assessment Order on 16.11.2011 under Section 143(3) of the Act, the AO had sent a questionnaire vide his communication dated 04.05.2011 calling for explanation from the assessee. In response, the assessee submitted its reply on 04.07.2011 and 05.10.2011 and explained that provisions were created with regard to the technical fees for the A.Y.2003-04 to 2007-08 and had not deducted the tax during the respective years and the same was disallowed under Section 40(a) of the Act. Further, assessee did not make any payment and reversed the provision during the year ending March 31, 2008. In substance, assessee's case is, the original provision was not allowed as deduction and therefore reversal of the same cannot be taxed again.
Revenue is not without remedy and it can invoke power under Section 263 of the Act where an AO incorrectly applies the law or comes to a wrong conclusion and income chargeable to tax had escaped assessment - initiation of reassessment proceedings will be invalid on the ground of change of opinion.
A careful perusal of the re-assessment order and the orders passed by the CIT(A) and the ITAT shows that the same are contrary to the law laid down by the Apex Court as the re-assessment is based on 'change of opinion'. Admittedly, the AO has stated that the issue was 'inadvertently' allowed by him without verifying the reversal of provision. This view amounts to change of opinion and therefore, the reassessment proceedings are invalid. Hence, this appeal merits consideration.