9911796707
TMI Blog2014 (1) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration, the land was taken to Balance Sheet towards the assets side without routing through the P&L A/c. As per the accounting principles, the land cost purchased should be debited in the P&L Account and the unsold i.e. total land should be shown as closing stock in credit side. In the assessee's case, the land (stock-in-trade was directly taken to the balance sheet without routing through P&L A/c. Therefore, the Assessing Officer was of the view that this can be construed that the cost of land was deemed to have been debited to the P&L A/c and then taken to the balance sheet as closing stock. Hence, the Assessing Officer held that as per the provisions of section 40A(3) of the Act, 20% of the expenditure incurred for the purchase of land held as stock-in-trade by way of cash has to be disallowed and accordingly he disallowed. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 4. Before the CIT(A), the assessee contended with regard to initiation of proceedings u/s 147 of the IT Act, that the notice u/s 148 was issued on 19/10/2011 after a period of four years from the end of the assessment year. For the assessment year under consideration, the assessee fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. Usha International Ltd., vide ITA No. 2026/2010 judgement dated 21st September, 2012, wherein the relevant findings of the Hon'ble High Court as follows: "++ for reopening an assessment made u/s 143(3) of the Act, the following conditions are required to be satisfied:- (i) The Assessing Officer must form a tentative or prima facie opinion on the basis of material that there is under-assessment or escapement of income; (ii) He must record the prima facie opinion into writing; (iii) The opinion formed is subjective but the reasons recorded or the information available on record must show that the opinion is not a mere suspicion. (iv) Reasons recorded and/or the documents available on record must show a nexus or that in fact they are germane and relevant to the subjective opinion formed by the Assessing Officer regarding escapement of income. (v) In cases where the first proviso applies, there is an additional requirement that there should be failure or omission on the part of the assessee in disclosing full and true material facts. Explanation to the Section stipulates that mere production of books of accounts or other documents from which the Assessing Officer c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons; ++ in the second and third situation, the Revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the Revenue, they are entitled to and can invoke power u/s 263 of the Act. Thus where an Assessing Officer incorrectly or erroneously applies law or comes to a wrong conclusion and income chargeable to tax has escaped assessment, resort to Section 263 of the Act is available and should be resorted to. But initiation of reassessment proceedings will be invalid on the ground of change of opinion; ++ a distinction must be drawn between erroneous application/ interpretation/ understanding of law and cases where fresh or new factual information comes to the knowledge of the Assessing Officer subsequent to the passing of the assessment order. If new facts, material or information comes to the knowledge of the Assessing Officer, which was not on record and available at the time of the assessment order, the principle of 'change of opinion' will not apply. The reason is that 'opinion' is form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material on record. This, the Revenue had propounded, would show non application of mind by the assessing officer. It was held that the said submission was fallacious. Full Bench explained that when an assessment order was passed u/s 143(3), a presumption could be raised that the order was passed after application of mind. Reference was made to clause (e) to Section 114 of the Indian Evidence Act, 1872. The contention if accepted would give premium to the authority exercising quasijudicial function to take benefit of its own wrong i.e. failure to discuss or record reasons in the assessment order. The aforesaid observations have been made in the context and for explaining the principle of 'change of opinion'. The said principle would apply even when there is no discussion in the assessment order but where the Assessing Officer had applied his mind. A wrong decision, wrong understanding of law or failure to draw proper inferences from the material facts already on record and examined, cannot be rectified or corrected by recourse to reassessment proceedings. Assessee is required to disclose full and true material facts and need not explain and interpret law. Legal inference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f change of opinion shall not be available and will be rejected; ++ if a subject matter, entry or claim/deduction is not examined by an Assessing Officer, it cannot be presumed that he must have examined the claim/deduction or the entry, and therefore, it is the case of 'change of opinion'. When at the first instance, in the original assessment proceedings, no opinion is formed, principle of 'change of opinion' cannot and does not apply. There is a difference between change of opinion and failure Or omission of the Assessing Officer to form an opinion on a subject matter, entry, claim, deduction. When the Assessing Officer fails to examine a subject matter, entry, claim or deduction, he forms no opinion. It is a case of no opinion; ++ producing voluminous record before the Assessing Officer does not absolve the assessee and the assessee cannot be heard to say that if the Assessing Officer were to conduct a further inquiry, he would have come into possession of material evidence with the exercise of due diligence. Assessments can be complex and require examination of several subject matter, claims, entries or deductions. The Assessing Officer inspite of best effo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether 'change of opinion' can justify reopening of assessing. The Supreme Court has not stated or made any observation with reference to Section 114 of the Evidence Act. The doctrine of merger, if applied, would require that we accept and apply the reasoning and ratio given by the Supreme Court. By applying the 'doctrine of merqer', it cannot be held that the reasoning or the ratio given by the Supreme court is the reasoning given by the High Court. Supreme court in the present case has given detailed reasons and ratio why 'change of opinion' cannot be a ground to reopen assessment. The said reasoning or ratio are the binding precedent; ++ there may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc, because the aspect or question may be too apparent and obvious. To hold that the assessing officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
