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TMI Blog2013 (8) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with and have been adjudicated upon by the Assessing Officer during the original assessment proceedings. There is change of opinion without bringing on record any new facts or evidences. The reassessment proceedings initiated based on change of opinion are bad in law. 3. The Learned Assessing Officer has issued notice based on audit objections raised by the audit party. The appellant submits that reassessment proceeding based on audit objections are bad in law. 4. The Learned Commissioner of Income Tax(Appeals) has erred in confirming the disallowance of the claim of depreciation of Rs.69,22,568/-in respect of residential properties. On the facts and circumstances of the case the appellant submits that the disallowance of depreciation of Rs.69,22,568/- is not justified and the said disallowance may be deleted. 5. The Learned Commissioner of Income Tax(Appeals) has erred in invoking provisions of Section 14A read with Rule 8D and confirming the disallowance as per the rule. The appellant prays that the disallowances confirmed as per Rule 8D is not justified and is bad in law and be deleted. 6. Without prejudice to Ground No. 5. the appellant prays that on the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assessed u/s 143(3) of the Act on 25.02.2005.AO determined the total income of the assessee at Rs.90,48,86,939/-under the normal provisions and at Rs. 85,99,59,539/- u/s.115JB of the Act.While passing order u/s 143(3) of the Act, AO made the following additions to the total income of the assessee:- Particulars Addition under normal provisions of Act. Addition for the purpose of book profit u/s. 115JB Payments to clubs 7,94,443/- -nil- Depreciation on leasing transactions 21,22,23,544/- -nil- Lease equalisation reserve 113,73,83,896/- -nil- Deduction u/s.35D 19,22,953/- -nil- Provision for non-performing assets -nil- 5,18,49,391 Provision for investment valuation -nil- 4,58,35,875 From the above it is clear that the amount of leasing equalisation reserve was added by him to the total income of the assessee, while computing the income under the normal provisions of the Act, but while computing the book profit u/s 115JB of the Act,he did not add the said amount. Similarly, provision for investment valuation was considered by the AO for computing income as per the provisions of section 115JB of the Act, but same was not considered for computing income under norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same for computing book profit as per the provisions of section 115JB, that similarly the matter of investment revaluation AO had considered the same for disallowance for computing income u/s 115JB,but he did not consider it for computing income under normal provisions of the Act, that the AO in the original assessment order had formed an opinion that these two items were of disallowable nature, that inadvertently both the items were left to be considered either under the provisions of section 115JB or as per the normal provisions of levying tax,that the AO had not formed his belief only receipt of audit objection, that in the case under consideration such belief was already formed while passing the original assessment orders, that the audit note acted as a reminder to the AO,that in the reassessment proceedings there was no change of opinion,that the opinion already formed during the original assessment proceedings was given effect in re- assessment proceedings. Relying upon the order of Rajesh Jhaveri Stock Brokers P. Ltd.(291 ITR 500-SC), Jai Bharat Maruti Ltd.(180 Taxman 192-Delhi High Court),he held that in the case under consideration,the AO was in possession of some ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of validity of re-assessment proceedings has to be decided, as it goes to the very roots of the assessment itself. 5. We have heard the rival submissions and perused the material.In this case original assessment was completed u/s.143(3)of the Act and AO had reopened the assessment as he was of the opinion that income had escaped assessment. Reopening of a completed assessment, is governed by certain principles. One of the settled principles, in this regard, is that the assessing authority cannot keep improving his case from time to time and that the reassessment proceedings have to stand or fall on the basis of what is stated in the reasons recorded u/s.148(2) and nothing more. Secondly it can hardly be disputed that once the AO notices a certain claim made by the assessee in the return filed has some doubt about eligibility of such a claim and, therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control whatsoever. Whether the AO allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 650),has held that when an assessment is sought to be reopened within a period of four years from the end of the relevant assessment year,the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, hypotheti -cal or a matter of conjecture. Something which is tangible need not be something which is new. Thus,the most important factor to issue notice u/s.148 of the Act is existence of tangible material. Referring to the judgment of Hon'ble apex court delivered in the case of Kelvinator of India Ltd. (supra),it was held that where the assessment was sought to be reopened within a period of four years from the end of the relevant assessment year, the governing test has been formulated in the said judgment of the Supreme Court.Hon'ble Bombay High Court relied upon the following portion of the order of the Kelvinator of India Ltd. (supra) : "Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' falling which, we are afraid, section 147 would give arbitrary powers to the AO to reopen assessments on the basis of 'mere change of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO. We find that while passing the original assessment order ,AO had called for the details about lease equalisation reserve as well as about the writing off of non- performing assets. Question No. 16 & 18 of the questionnaire issued by the AO on 16.11.2004 is about these two issues.We further find that after considering the submissions of the assessee AO decided that lease equalisation reserve and provision of diminution in investment has to be given particular treatment. As stated earlier one of the items was taxed under normal provisions and not under MAT provisions, whereas the other item was considered for MAT provisions and not for computation under normal provisions of the Act. Thus an informed decision was taken by the AO about both the items. In these circumstances, if AO decided to issue a fresh notice for reopening the completed assessment it has to be treated as change of opinion. It can also be said that the order of assessment that was passed by the AO under section 143(3) is not silent in respect of points on the basis of which the assessment was sought to be reopened. There is merit in the contention which has been urged on behalf of the assessee that querie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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