TMI Blog2014 (2) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order dt. 19th Dec, 2008; and it was sought to be suggested as to what was meant by a 'known liability' and as to whether the provision made on the basis of the quotations would qualify for liability or not. If was suggested that this amount, being not an expenditure, should have been added to the total income. It was further suggested that ₹ 33,48,915 was debited to the registration and stamp charges and sale of plot though registration charges are generally borne by the purchaser and not by the seller. Hence, according to the AO, these expenses were wrongly claimed by the assessee. Evidently, all the observations by the successor AO were only of the expression of another opinion on the same set of facts. In the given circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 31st Oct., 2006 declaring an income of ₹ 87,24,190 which was processed on 28th March, 2007. Assessment under s. 143(3) of the Act was completed on 19th Dec, 2008 at returned income- On perusal of the assessment record it was noticed that the assessee had debited ₹ 87,35,400 on account of development expenses in P L a/c for the year under consideration. However, only ₹ 52,35,400 was incurred during the year and ₹ 35 lacs was taken to balance-sheet as provisions for project development. In the order of assessment, the AO allowed the provision as a known liability on the ground that assessee had submited the details of development expenses incurred in subsequent assessment year. The assessment of AO that provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,400 was actually incurred and the rest amount of ₹ 35,00,000 was taken as provision, which could not have been allowed. With these observations. The AO disallowed the said amount of ₹ 35,00,000 and added the same to the income. 4. Aggrieved of the reassessment order so made on 29th Dec., 2011. the assessee preferred an appeal which was considered and dismissed by the Commissioner of Income-tax (Appeals), Jodhpur ['the CIT(A)'], on 16th Jan., 2013, while holding that the AO was justified in disallowing the claim of expenditure of ₹ 35,00,000, being the provision for development. 5. In further appeal, the Tribunal, however, found the approach of the AO and CIT(A) unjustified. The Tribunal held that all the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts necessary for the assessee were fully and truly disclosed by the assessee so the AO is not entitled to change opinion to commence proceedings for reassessment. Both the grounds taken as reasons for reopening amount to shear and mere change of opinion and nothing more. In this regard, the ratio decidendi of the case of the Hon'ble apex Court rendered in the case of CIT v. Kelvinator of India Ltd. [2010] 228 CTR (SC) 488 : [2010] 34 DTR (SC) 49 : [2010] 320 ITR 561 (SC) would apply mutatis mutandis. Accordingly, we hold that the reassessment based on change of opinion cannot survive and has to be quashed. We quash the reassessment order as all initio void and allow the appeal in this legal ground. Having taken the decision as above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the scheme. In Praful Chunilal Patel (supra), the Hon'ble Court observed that if a particular item though reflected on record was not subjected to assessment, the AO could initiate reassessment proceedings and the cases of non-assessment of an item would warrant formation of requisite belief. In the said case, the assessee and other co-owner had converted a property from capital asset to stock-in-trade and sold it to a firm and the amount of capital gains remained to be taxed. The said cases, essentially of the writ jurisdiction and proceedings on their own facts, could hardly be considered having application to the present case. 9. In the present case, apparent it is that all the facts relating to the debited expenses of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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