TMI Blog2015 (7) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly as a result of “change of opinion” and cannot be approved in the light of decision of Hon’ble Bombay High Court in the case of GKN Sinter Metals Ltd. vs. ACIT (2015 (1) TMI 832 - BOMBAY HIGH COURT ). Accordingly, accepting the arguments of Ld. AR that reassessment proceedings were not validly initiated - Decided in favour of assessee. - ITA No. 2014/MUM/2013 - - - Dated:- 3-7-2015 - Shri I.P. Bansal and Shri B.R.Baskaran, JJ. For the Petitioner : Shri Jitendra Jain For the Respondent : Asghar Zain ORDER PER I.P.BANSAL, JM: This is an appeal filed by the assessee and it is directed against order passed by Ld. CIT(A)-35, Mumbai dated 20/12/2012 for assessment year 2005-06 Grounds of appeal read as under: 1. The Commissioner of income Tax (Appeals)-35 [herein referred to as CIT(A)] erred in upholding the reopening of assessment by the AO u/s. 147 and issuing notice u/s.148 of the I.T. Act. 2. The CIT(A) erred in confirming the disallowance of compensation charges of ₹ 11,00,000/- paid to Bhairav metals considering that the same is not an expense of current year and holding that the same could be an advance or debit. Yours ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply and evidences filed by the assessee the AO did not make addition of ₹ 11.00 lacs and completed the assessment under section 143(3) of the Act on 26/12/2007, copy of which is also filed along with the appeal papers. To further support the aforementioned arguments Ld. AR submitted that copy of notice issued by the AO during the course of original assessment proceedings is filed at page 49 to 53 of the paper book, which is a notice dated 9/1/2007. It was submitted that various queries were raised including the impugned addition and reference of this was made to query raised as per Sl.No.22, where the assessee was asked to explain the allowability or otherwise of the expenses debited to P L Account. Query raised at sl.No.22(K) of the aforementioned notice read as under: 22. Details of the following expenses debited: a. Rent rates taxes ₹ 1,48,825/- with copies of the receipts in support of such expenses. b. Electricity chgs. with copies of all the receipts. c. Telephone expenses with copies of all the bills. d. Month wise conveyance expenses with a notice on these expenses. e. Salary ₹ 7,38,000/- with names of the employees, tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te described in the aforementioned paper read as under: Note on Compensation Charges paid of Rs.l1,OO,OOOl- As explained earlier, the assessee mainly derives his income being consultancy charges from Metal Scrap Trading Company Ltd (MSTC) Kolkata, a Public Sector Company attached to Ministry of Steel carrying on business of imports of industrial inputs for Public and Private Sector. During the year under consideration the assessee has introduced a client. M/s. Bhairav Metals to MSTC for supply of 50 MTs of Silicon Metal. M/s. Bhairav Metals deposited ₹ 25,00,000/- as advance against purchase of 50 Mf s of silicon metal. The MSTC in turn asked Reliance Silicon India Pvt. Ltd. (Reliance Silicon) for the supply of requisite material to Bhairav Metals and appropriated ₹ 25,00,000/- received by Bhairav Metal against old outstanding dues from Reliance Silicon. The Reliance Silicon failed to supply the goods to Bhairav Metals and as a consequence Bhairav Metals demanded refund the advance ofRs.25,00,000 given to MSTC. The assessee being a consultant, tried his best to persuade the MSTC to refund the advances to Bhairav Metal as it was his moral as well commercial obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iency means everything that serves to promote commerce and includes every means suitable to that end. Under these circumstances it is submitted that the compensation charges paid of ₹ 11 lacs shall be allowed as a deductible revenue expenditure. 3.2 Referring to the aforementioned documents it was submitted by Ld. AR that not only the detailed explanation was given but relevant evidences were also filed and upon consideration thereof the AO did not make any addition on the impugned issues. 3.3 Referring to the reasons which have already been reproduced in the above part of this order, it was submitted by Ld. AR that reasons to reopen are based only on the letter written by the assessee dated 7/7/2003 which was addressed to M/s. MSTC Ltd., copy of which was also filed before AO during the course of original assessment proceedings. Thus, it was submitted by Ld. AR that it is a case where initiation of reassessment proceedings is based on mere change of opinion . It was submitted that it is now an accepted proposition of law that if there is material on record to show that certain issues were required to be explained during the course of original assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses and the explanation offered by the Petitioner was found to be satisfactory. This is evident from query dated 27th December, 2004 and the Petitioner's response to the same on 25th January, 2005 explaining the manner of distribution of common expenses for delaying the process of claiming deduction under Section 80IA/IB of the Act. All this would indicate that Assessing Officer had formed an opinion while passing the order dated 9th March, 2005. This Court in Aroni Commercials Ltd. v Is. Assistant Commissioner of Income Tax 367 ITR 405 had occasion to consider somewhat similar submission made by the Revenue and negatived the same by holding that when a query has been raised with regard to a particular issue during the regular assessment proceedings, it must follow that the Assessing Officer had applied his mind and taken a view in the matter as is reflected in the Assessment Order. Besides, the manner in which an Assessing Officer would draft/ frame his order is not within the control of an assessee. Moreover, if every contention raised by the assessee which even if accepted is to be reflected in the assessment order, then as observed by the Gujarat High Court in CIT vs. N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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