TMI Blog2014 (5) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner (Appeals) and as such has no independent existence and therefore the assessment could not be reopened in respect of the items – the reopening of assessment apart from being based on a factually erroneous premise, is also based upon a mere change of opinion without there being any tangible material to come to the conclusion that there is escapement of income from assessment – Relying upon Commissioner of Income-tax v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - the condition precedent for reopening of assessment has not been fulfilled and as such, the assumption of jurisdiction u/s 147 of the Act is not valid – thus, the notice issued u/s 148 of the Act is set aside – Decided against Revenue. - Tax Appeal No. 338 of 2014 - - - Dated:- 28-4-2014 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mr. Nitin K. Mehta, Advocate For the Respondent : Mr. B. S. Soparkar, Advocate ORDER (Per : Honourable Mr. Justice Akil Kureshi) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad { Tribunal for short} raising following questions for our consideration : {A} Whether the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted that in the earlier year, similar additions were made by the Assessing Officer, which were deleted by the CIT [Appeals]. However, the Revenue had not accepted such decision of CIT [A] and the appeal was pending before the Tribunal on this point. He, therefore, concluded as under : .. considering the above facts and circumstances, the claim of assessee company for deduction of Rs. 21,62,45,670/- as revenue expenditure is rejected and these expenditures are capitalized to the cause of assets. The assessee company will, however, be entitled to claim depreciation when the new project is set up and machinery is actually put to use and started commercial production. Like in the earlier year, in the present case also, the assessee carried the issue before the CIT [A]. In the appellate order dated 17th October 2000, CIT [A] allowed the assessee s appeal on this count and deleted the disallowance, accepting the assessee s contention that the expenditure was revenue in nature. Thereupon, the Assessing Officer issued a notice for reopening, recording his reasons as under : In the F.Y 1996097, the assessee company had come out with the issue of Secured Premium Notes. The terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment, the Assessing Officer had taxed the income. He had held that the entire expenditure of Rs. 5.37 Crores being the interest on SPN was a capital expenditure. That being the position, the basic requirement of reassessment of escaped income flowing from Section 147 of the Act was not satisfied. In short, he quashed the reassessment as being invalid, without examining the merit of the additions made. It is this order, which the Tribunal confirmed in appeal filed by the Revenue. Making detailed reference to the order passed by the CIT [Appeals], the Tribunal concluded as under : 7. From the above paragraphs of the order of learned CIT (A), we find that the clear finding is given by the learned CIT (A) that as far as the question of escapement of income of Rs. 5,37,10,639/- is concerned, as considered by the A.O., the same has already been taxed by the Assessing Officer in the order under Section 143. This finding of learned CIT (A) could not be controverted by learned D.R of the Revenue. Hence, we do not find any reason to interfere in the order of learned CIT (A) because if the income which is alleged to have been escaped the assessment, had already been taxed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer on this point, however, to keep the issue alive; since the order of CIT [A] was carried in appeal before the Tribunal, he taxed the income accordingly. CIT [A], like in the previous year, deleted the addition holding that the expenditure was revenue in nature. It was at that stage that the notice for reopening came to be issued. Reasons recorded demonstrate that the same was founded on the Assessing Officer s belief that the liability was a contingent liability and not accrued during the period relevant to the A.Y 1997-98. Thus, he proceeded on the premise that the expenditure was revenue in nature. We are of the view that the CIT [A] and the Tribunal committed no error in quashing the reassessment proceedings. This is mainly for two reasons. When the Revenue had carried the issue in appeal and the same was pending before the Tribunal, it would reflect the Revenue s opinion that the expenditure was capital and not revenue in nature. If that be so, the Assessing Officer s premise that the same was required to be taxed as an expenditure not accrued during the relevant period would be incongruent. His entire belief that the income chargeable to tax had escaped asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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