TMI Blog2004 (1) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... b initio. 2. The CIT(A) erred on the facts of the case and in law in not holding that the reassessment was based on the satisfaction of the CIT, and/or on mere change of opinion, etc. 3. (a) The CIT(A) erred on the facts of the case and in law in upholding the order of the AO under reference in not allowing deduction under s. 80HH of the Act in respect of interest on inter-corporate deposits and on temporary deposit of surplus funds on the ground that the same was not profits and gains derived from/of Unit II of the appellant situated at Bhawani Mandi. (b) the CIT(A) erred on facts of the case and in law in upholding the order of the AO in not allowing deductions under ss. 80HH and 80-I of the Act in respect of interest on inter-corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment which was furnished to the assessee. Thereafter, the assessee filed detailed submission to challenge the validity of the reassessment proceedings. It was specifically alleged that the reasons recorded for reopening of the assessment were based on the change of opinion and, therefore, reassessment proceedings under s. 147 cannot be initiated on mere change of opinion. The assessee had placed reliance on some of judicial decisions. The AO rejected the claim of the assessee by following his order for asst. yrs. 1994-95 and 1995-96. In support of this, he also placed reliance on several decisions which have been cited in the assessment order. 4. The assessee challenged the validity of the assessment proceedings before the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which is available at p. 15 of the paper book. 7. Learned counsel also pointed out that the assessee filed a reply dt.26th March, 1997, to the show-cause notice under s. 263 and after this reply no further action was taken by the CIT under s. 263. He thus pointed out that a notice under s. 148 dt.31st March, 1997, was issued by the Asstt. CIT for asst. yr. 1992-93 against which a reply dt.19th April, 1997and another reply dt.10th March, 1998, was filed. The assessee also filed written submissions on20th March, 1997. Copies of these documents have been placed on record and are available in the paper book. 8. Learned counsel specifically pointed out that the notice under s. 148 was issued for asst. yr. 1992-93 on the direction of CIT, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further since no new facts came on record prior to the initiation of reassessment proceedings, the reopening of the assessment was not justified. 11. Learned counsel also pointed out that reassessment proceedings initiated under s. 147 of the Act on mere change of opinion to review the earlier concluded assessment is not legal and void ab initio. In support of this contention, reliance has been placed on the following decisions: 12. Learned Departmental Representative, on the other hand, supported the order of the CIT(A). 13. We have considered the entire material on record and find sufficient force in the submissions made by the learned counsel for the assessee. On perusal of the record, it is found that in the case of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was conferred by the legislature not with the intention to enable the ITO to reopen the final decision made against the Revenue in respect of questions that directly arose for decision in earlier proceedings. If that were not the legal position it would result in placing an unrestricted power of review in the hands of the assessing authorities depending on their changing moods. If an expenditure or deduction was wrongly allowed while computing the taxable income of the assessee, the same could not be brought to tax by reopening the assessment merely on account of the AO subsequently forming an opinion that earlier he had erred in allowing the expenditure or the deduction. If a notice under s. 148 of the IT Act, 1961 has been issued without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO may exercise his jurisdiction for initiating a proceeding for reassessment only upon a mere change of opinion, the same may be held to be unconstitutional." In view of the above, ground Nos. 1 and 2 are allowed in favour of the assessee. 16. In regard to ground Nos. 3(a) and 3(b), the AO had computed deduction under ss. 80HH and 80-I in respect of Unit Nos. II and III at Bhawani Mandi, for asst. yr. 1992-93 by excluding rent, interest and miscellaneous income. 17. On appeal, the CIT(A) held that the assessee is entitled to deduction of all the incomes except the interest on inter-corporate deposits, interest on surplus fund in respect of Unit No. II and interest on inter-corporate deposits and profit on sale of dyes in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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