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Dy. Commissioner of Income Tax Circle 3 (1) , Mumbai Versus M/s. Tata Steel International (India) Ltd. (Formerly known as Corus International India Pvt. Ltd.) and Vica-Versa

2016 (3) TMI 40 - ITAT MUMBAI

Reopening of assessment u/s 115WG - change of opinion - reason to believe that value of fringe benefits had escaped assessment - Held that:- We find from the records, orders of authorities below that the issue of contribution to superannuation fund was duly considered by the AO at the time of framing the assessment u/s 115WE(3) of the Act by raising specific query which was replied vide letter dated 25-09-2008

AO has reopened already completed assessment qua fringe benefit on the basi .....

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ed against revenue - I.T.A. No 1790/Mum/2013, C.O. No 104/Mum/2014 - Dated:- 22-1-2016 - SHRI SAKTIJIT DEY, JM AND SHRI RAJESH KUMAR, AM For The Appellant by : Shri J. Saravanan For The Respondent : Shri Nishit Gandhi ORDER PER RAJESH KUMAR, A. M: This appeal by the revenue is directed against the order dated 16/01/2013 of Commissioner of Income Tax (Appeals)-7, Mumbai (Hereinafter called as the CIT(A)) for assessment year 2006-07. The assessee has raised the following grounds of appeal: 1. Whet .....

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cer be restored. 2. The only issue raised in the ground no.1 is against the annulling the reopening of assessment u/s 115WG of the IT Act on the ground of change of opinion by ignoring the reason to believe that value of fringe benefits of ₹ 2,66,000/- had escaped assessment. The brief facts of the case are that the assessee company filed its return of Fringe Benefit Tax (FBT) on 22/11/2006 showing taxable value of the fringe benefit at ₹ 14,10,695/-. The case of the assessee was sel .....

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01.12.2008, assessing the total value of Fringe Benefits at ₹ 14,10,695/- On perusal of the records, it is observed that the assessee has claimed deduction of ₹ 2,66,000/- being contributions towards superannuation fund of employees. However, the FBT has not been paid on the said amount by the assessee. During assessment proceedings also, the Assessing Officer did not charge FBT on the said amount. In this regard, it is pertinent to mention here that as per Sec.115wb(1)(c), Fringe Be .....

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corporated at para 04 of the assessment order and the assessment was framed u/s 115WE(3) r.w.s. 115WG of the I.T. Act vide order dated 30.03.2011 by adding contribution towards superannuation fund of ₹ 2,66,000/- thereby determining the value of fringe benefits at ₹ 16,76,695/-. 4. The ld. CIT(A) allowed the appeal of the assessee by holding as under: 4.4 Having considered the AO's order as well as the appellant AR's submission, I find that the reopening of the assessment by .....

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urity Techtextile Pvt. Ltd. Vs. ACIT reported in 325 ITR 459 has held that the reopening of the assessment based on the audit objection cannot be held to be justified. Secondly, I find that the fringe benefit tax on the said contribution towards superannuation fund has been paid by the appellant company in the A.Y. 2007-08 on actual payment and hence there are no encashment of fringe benefits which have escaped assessment. In addition to this, I also take note of the observation made by the juri .....

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y a review of the assessment order already passed. The Supreme Court in the matter of the Commissioner of Income tax v. Kelvinator (India) Ltd., reported in 320 ITR Page 561 has observed that the power to reassess is conceptually different from a power to review. The Assessing Officer under the said Act has only power to reassess on fulfillment of certain precondition namely, he must have reason to believe that income has escaped assessment and that there must be tangible material to come to the .....

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not be on account of mere change of opinion. Therefore, where facts have been viewed during the original proceeding and an assessment order has been passed then in such cases, reopening of an assessment on the same facts without anything more would be a review and not permitted under the garb of reassessment. This would be a mere change of opinion in the absence of any tangible material and is not sufficient to assume jurisdiction to issue the impugned notice. In fact, our court in the matter o .....

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r at the time of original assessment and he passes an assessment order under section 143(3) of the Act a presumption can be raised that he applied his mind to all the facts involved in. the assessment." 4.5. Taking note of all the facts available on record, I have no hesitation to hold that the reopening the assessment was completely incorrect and hence the reopening of the assessment by the AO is held to be bad in law. Accordingly, the reassessment order passed by AO is annulled. Hence, ap .....

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to believe that fringe benefit had escaped the assessment. The ld. Counsel further submitted that though powers conferred u/s. 115WG of the Act (which is pari materia to section 147 of the Act) which could not be exercised mechanically or arbitrarily. 6. The ld. Counsel further argued that at the time of original assessment the ld. AO after considering all the material on record and explanations/replies of the assessee came to final conclusion that contribution towards superannuation fund was no .....

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s to the Accounts - 5 - Managerial Remuneration, Tax Audit Report - Appendix IV. Specific query was also raised by the AO vide question no 10 of the FBT Annexure to furnish the details of contribution made during the year on behalf of all the employees towards superannuation fund and also ask to provide the details in respect of employees for whom contribution was made towards approved superannuation fund which was replied vide letter dated 25-09-2008. The ld. Counsel relied on the following dec .....

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mately, prayed for upholding the order of the first appellate authority which was perfect and as per law. 7. We have heard the rival submissions and perused the material on record. We find from the records, orders of authorities below that the issue of contribution to superannuation fund was duly considered by the AO at the time of framing the assessment u/s 115WE(3) of the Act by raising specific query which was replied vide letter dated 25-09-2008 which is reproduced as under: In reply to the .....

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