TMI Blog2014 (6) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, assessment cannot be reopened merely on the basis of audit objection as it constitutes mere an opinion by some other agency. The issue is about wage revision (arrears) and is duly considered during the course of assessment by way of specific query which was replied by the assessee – AO being satisfied allowed the claim during regular assessment u/s 143(3) - Based on the audit objection AO proposed section 154 and again required the assessee for explanation which was provided – section 154 proceedings were also dropped - the assessment was again reopened u/s 147 – the AO in order to tow the line of audit objection and to avoid any ramification therefrom reopened the assessment u/s 147 without valid reason - Once the issue was examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not rest here as, thereafter, again the assessing officer reopened the assessment u/s 147 and made the impugned additions. 2.2. Aggrieved, assessee preferred first appeal, where the validity of reopening as well as merits of additions were challenged. The ld. CIT(A) allowed the assessee s appeal holding the reopening to be bad in law by following observations: After careful consideration of the AO's order and written submission and paper book it is noted that in this case original assessment was completed u/s 143(3) on 31.12.2007 by ACIT, Circle - 3, Kolkata and case was reopened on 17.02.2011 u/s 148 on account of claim of wage revision (arrears) for an amount of Rs.317.29 crores after taking approval If CIT-1, Kolkata in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling in PSU as it became due in the financial year and liability crystallized in the financial year. The assessee- company merged with Steel Authority of India (SAIL) w.e.f 01st April 2005 after an approval by Parliament and accordingly its employees were eligible for the same pay scales as that of SAIL. The AIR relied upon judgment of M/s Calcutta Co. Ltd. (37ITR1 SC) in support of its claim that in mercantile system of accounting accrued liability cannot be equated with contingent liability. Keeping in view above factual matrix wage provision due wage revision of 01.04.1997 to 31.03.2005 according to OPE guidelines is allowable on basis of accrual and ground 3.1 is allowed. Regarding, re-opening after four years u/s 148 the AIR relied th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Consequent to the reply, assessing officer proposed to rectify assessment u/s 154. On assessee s objection assessing officer found merit in the objection and dropped the proceedings. In order to willy nilly bring the amount to tax the assessing officer again issued 148 notice which is against the well settled propositions of reopening in this behalf. It has not been disputed that assessee is a government loss making company and in this year as it turned into huge profit, it was decided to revise the wages and give the arrears to employees which is being sought to be reassessed. Ld. CIT(A) has rightly relied on Hon ble Supreme Court judgment in the case of Kelvinator India Ltd. 320 ITR 561 (SC) as to hold that reassessment c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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