TMI Blog2014 (5) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... Dastur O R D E R PER P.M. JAGTAP,AM: This appeal is preferred by the Revenue against the order of ld. CIT(A)-9, Mumbai, dated 16.9.2009 whereby he cancelled the assessment made u/s 143(3) read with section 147 of the Income Tax Act, 1961 (the Act) treating the same as bad in law. 2. The assessee in the present case is a company incorporated on 25.4.1991 with the main object to carry on business as merchants of general items. It acquired a plot of land admeasuring about 780 sq mtrs of area with FSI 523 sq.mtrs in the prime locality and constructed a show room thereon. The said show room was let out by the assessee to its sister concern M/s M/s Popley Gold Plaza from 1.4.1999 and in the return of income originally filed on 31.10.2001, the compensation (rent) received from the sister concern was declared by the assessee company as its business income after claiming various expenses against the same thereby declaring the loss of ₹ 11,85,250/-. In the original assessment completed u/s 143(3) vide order dated 12.3.2003, the loss so declared was accepted by the AO. Subsequently, he found from the material available on record that the assessee had discontinued its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was preferred by the assessee before the ld. CIT(A) challenging the validity of the assessment made by the AO u/s 143(3) r.w.s.147 as well as disputing the addition made therein under the head income from house property . During the course of appellate proceedings, the validity of assessment u/s 143(3) r.w.s. 147 was challenged by the assessee mainly on two grounds by making the following submissions : 1. There is no Failure to disclose fully and truly all material facts In the course of the original assessment proceedings/ the AO vide letter dated 12 November 2002 had asked the Appellant to give a brief note on the nature and modus operandi of the business conducted by the Appellant. Vide letter dated 15th November 2002, the Appellant replied that it had let out the premises owned by it along with furniture fixtures and that it had no other activity. The notice issued by the AO and the Appellant s reply thereto are enclosed herewith and marked Annexure A1 and A2 . The original assessment proceedings were completed under section 143(3) of the Act. Thereafter, the impugned notice under section 148 dated 6th December 2007 was Your Honour's attention is invited to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to believe The Appellant submits that it is well settled that a mere change in opinion does not constitute ''reason to believe that income has escaped assessment. It has been repeatedly laid down that section 147 does not permit fresh application of mind to the same issue so as to enable the Assessing Officer to correct or revise his own or his predecessor's error of judgment. The Assessing Officer cannot take action under this section merely because he happens to change his opinion or to hold an opinion different from that of his own or that of his predecessor on the same set of facts. In the assessment order dated 12th March 2003 passed under section 143(3) of the Act the AO had accepted the appellant s claim of treating the income as business income. The reassessment proceedings are based on a mere :change of opinion that the income should be regarded as falling under the head income from house property . In this connection reliance is placed on the following decisions of the Bombay High Court wherein it has been held that a different View taken by the officer subsequent to completion of the assessment proceedings would amount to a change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 (2007) 291 ITR 500 (SC), Central Provinces Manganese Ore Co. Ltd. vs. ITO (1991) 98 CTR (SC) 161: (1991) 191 ITR 662(SC), ITO vs. Selected Dalurband Coal Co. (P) Ltd. (1996) 132 CTR(SC) 162: (1996) 217 ITR 597 (SC), Raymond Woollen Mills Ltd. vs. ITO (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34(SC). 2.8 Under the circumstances and facts of the case, I hold that the assessee had disclosed truly and fully all material facts along with the return of income filed. The AO had all primary facts and information necessary for the purpose of the assessment of the Appellant's return of income. In fact the assessment has been reopened based on the information contained in the return of income and not on the basis of any information which came in the possession of the AO subsequently, or due to any change in facts of law. Considering the totality of the facts, the reassessment order deserves to be cancelled 5. Keeping in view his decision on the preliminary issue cancelling the assessment made by the AO u/s 143(3) r.w.section 147 of the Act, the ld. CIT(A) did not go in to the merits of the other issues raised by the assessee relating to the addition made by the AO in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically mentioned in the said agreement, a copy of which was filed during the course of original assessment proceeding before the AO. He also took up through the copies of various written submissions filed by the assessee during the course of original assessment proceeding to point out that all the material facts necessary for the assessment were brought on record by the assessee before the assessing officer and the assessment was completed by the AO originally u/s 143(3) by applying his mind to all these facts. He reiterated that there was no tangible material that had come to the possession of the AO after completion of the original assessment and since the assessment was reopened by the AO on the basis of same facts and material which were available at the time of completion of original assessment, the reopening was itself bad in law as it was based merely on change of opinion . In support of this contention, he relied on the following decisions : a) Asian Paints Ltd V/s DCIT (2009) 308 ITR 195 (Bom); b) Rabo India Finance Limited V/s DCIT (2012) 346 ITR 528 (Bom) c) Asteroids Trading and investment P Ltd V/s DCIT (2009) 308 ITR 190(Bom); d) Hindustan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 or so. The loan advanced by the director is also continuing from A.y. 2001-02 for which no interest is claimed nor paid all these years. Obviously, the amount of compensation received by the assessee is an insignificant sum as compared with the total book value of the leased premised which is more than ₹ 10 crores.lt is obvious from the details on record that because of the close nexus between the lessor -assessee and the lessee-partnership firm, no interest is charged on the whopping amount of ₹ 16.07 crores. If interest is charged, say at the rate of 12%, the interest amount will be about ₹ 1.93 crores which would have been payable by the assessee per annum, whereas the assessee received only a very meagre amount of ₹ 3 lac stated to be compensation, obviously for the reason that interest ( otherwise) payable by the assessee is forgone by the relative of partner(s) of the lessee-firm. In other words, the usufructus of the loan received requires to be treated as consideration for the user of the leased property and accordingly annual value of the leased property needs to be re-worked out. Reference in this regard may also be made to the decision of hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment and this position clearly evident from the reasons recorded by the AO has not been disputed even by ld. DR. The ld. Counsel for the assessee, on the other hand, has taken us through the submissions made by the assessee in writing during the course of assessment proceedings u/s 143(3) to show that all the necessary facts and material were brought on record by the assessee and the assessment was completed by the AO u/s 143(3) by applying his mind to the said facts and material. In the case of Asteroids Trading and Investment P Ltd (supra) cited by the ld. counsel for the assessee, the assessee had made full disclosure necessary for claiming deduction u/s 80M and the AO after applying his mind to the relevant record had made a specific order allowing the said deduction. Subsequently, the assessment was reopened by the AO because, according to him, deduction u/s 80M was wrongly allowed. The said reopening, however, was not based on any new material or any new information that had come to the possession of the AO after completion of the original assessment. There was no change of law and the reopening was based merely on fresh application of mind by the AO to the same set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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