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2022 (6) TMI 1057 - AT - Income TaxValidity of Reassessment proceedings u/s 147 - proceedings initiated after four years from the end of relevant assessment year - disallowance in respect of expenditure incurred on long term incentive plan under section 40A(9) as well as under section 37(1) as against the Appellant’s contention that the said amount is deductible under section 37(1) - HELD THAT:- Since all the materials/facts were available on record with regard to the expenses claimed in the return of income filed for the captioned AY, a presumption can be raised that such an order based on return filed with true and full disclosure of the facts has been passed on application of mind by the concerned AO - AO has no power to review his own order; he has the power to re-assess only. But re-assessment has to be based on fulfilment of certain preconditions. Change of opinion or borrowed belief is not permissible as in this case, re-opening has been done based on audit query. The reasons for the notice under section 148 of the Act nowhere mentioned that the Revenue came up with any other fresh material, not disclosed by the assessee warranting re-opening of assessment. The primary function of audit in relation to assessments and refunds is the consideration whether the internal procedures are adequate and sufficient, it is not intended that the purpose of audit should go any further. Audit party performs essentially administrative or executives functions and cannot be attributed the powers of judicial supervision over the quasi judicial acts of the Income tax Authorities i.e. AO. The Income Tax Act does not contemplate such powers in any internal audit party of the Income Tax Department but only in those authorities who are specifically authorize to exercise adjudicatory functions. There was no failure to disclose material facts and failure to place a version favourable to the Revenue cannot be a reason to reopen the assessment in the light of the undisputed factual material referred by us extensively it is apparent that the re-opening was fully impermissible in law. The facts which are taken from the Auditor’s report, computation of income and return filed itself would indicate that the assessee had disclosed what was relevant and necessary for the purpose of making assessment. The assessee did not hold back any document nor failed to supply any information. In the circumstances, this is a clear case of change of opinion and based on which the reassessment is proposed which is impermissible in law. - Decided in favour of assessee.
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