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TMI Blog2011 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... iled return declaring total income of Rs.8,55,11,040/-. The case came up under scrutiny and an assessment order under Section 143(3) dated 26th December, 2008 was passed, assessing the total taxable income of Rs.8,55,51,563/-. We are not concerned with the additions made in the assessment order. 4. Notice dated 17th February, 2010, under Section 148 of the Income Tax Act, 1961 (Act, for short) for reopening of the assessment was issued and the petitioner filed copy of their original return of income on 17th March, 2010, and requested Respondent No. 2, Deputy Commissioner of Income Tax, the Assessing Officer, to furnish the reasons recorded under Section 147 of the Act. Thereafter there was hiatus and no further proceedings took place for some time. 5. On 28th October, 2010, the petitioner filed objections to the reopening of the assessment. It was stated that the reasons recorded for reopening were without any substance and basis and this was a case of mere change of opinion. In terms of the law declared by the Supreme Court in GKN Driveshafts India Limited vs. ITO,(2003) 259 ITR 19(SC), the Assessing Officer dismissed the objections by the impugned order dated 1st November, 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue earned on every tour and balance being the margin earned is transferred to "Income from Tours A/c." 2) The method of accounting is standard accounting practice followed by the travel industry. The scheme of accounting entries followed for a specific tour can be explained with the help of following example: Invoice raised on Foreign Tour Operator Rs.1,00,000/- Bills received from various Hotels Rs. 50,000/- Bills received from various Hotels Rs. 10,000/- Air fare charges for this tour Rs. 20,000/- Guide charges for this tour Rs. 4,000/- The accounting entries passed would be as follows:- i) For invoice raised on the foreign Tour operator Debit/Credit A/c Particulars Amount(Rs.) Debit Foreign Tour Operator 1,00,000 Credit Tour ABC A/c. 1,00,000 ___________________________________________ ii) Various entries passed for booking the direct expenses for this particular tour can be summarized as below: Debit/Credit A/c Particulars Amount(Rs.) Debit Tour ABC A/c. 84,000 Credit Various Hotel A/c 50,000 Credit Various Transporters A/c 10,000 Credit Airline A/c. 20,000 Credit Guide A/c 4,000 iii) The balance in this specific tour account of Rs.16,000/- is the margi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ‟ head-quarter in New Delhi and network of branch offices in India. Le Passage to India specializes in package tours and tailor made holidays for foreign tourists visiting India, Nepal, Bhutan and Sri Lanka. Tours operated by Le Passage comprises of mainly foreign tourists which comes from entire global mainly covers countries such as Italy, France, Germany, Switzerland, USA and USSR. During the assessment year 2006-07, Le Passage to India has been able to generate foreign exchange amounting to Rs.1,29,79,20,362. Income from tours comprises of margin kept by Le Passage to India on the total costs incurred for operating the tours. Every tour comprises of direct costs such as Hotels, Transport, Guide, monument entrances and other directly costs. These costs are directly matched with revenue earned on tours operated and balance amount is income from tours. Summarized value of Income from tours handled / operated during the assessment year 2006-07 is as follows: Billing 1,31,10,67,825.00 Costs 1,14,29,03,442.00 Margin 16,81,64,383.00 % Margin 12.83% In order to recognize revenue for a particular period le passage to India has adopted a policy of recognizing revenue on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of original assessment, cannot be a ground for reopening of assessment even under the amended Section 147 of the Act. The observation of the Delhi High Court in Kelvinator of India Limited vs. CIT 1994(3) AD (Delhi) 1533, stand affirmed by the Supreme Court in Commissioner of Income Tax vs. Kelvinator of India Ltd. (2010) 2 SCC 723. The Supreme Court has held:- " 5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where explanation 1 to Section 147 is applicable. The question relates to the very method and manner of accounting, which will be apparent and clear to any person when scrutiny of the return and accounts is undertaken. The reopening is, therefore, bad for want of jurisdictional pre-condition under Section 147 of the Act. It is a case of change of opinion and the ratio in the case of Kelvinator (supra) is applicable. 14. With the aforesaid position, Mr. N.P. Sahni, learned standing counsel for the Revenue has submitted that the Assessing Officer in the original assessment proceedings had not examined and gone into the direct expenditure/costs incurred of Rs.1,14,29,03,442/- and, therefore, the reopening of assessment is justified. It is pointed out that this is not the reason for reopening mentioned by the Assessing Officer. The reasons for reopening have to stand on their legs and cannot be substantiated for reasons and grounds which are not mentioned therein. 15. Faced with the above difficulty, Mr. N.P. Sahni has submitted that liberty may be granted to the Assessing Officer to reopen the assessment after recording fresh reasons. We will only state that this order does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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