TMI Blog2016 (12) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, in view of the aforesaid ground alone, the impugned notice cannot be sustained and the same deserves to be quashed and set-aside. A speaking order came to be passed by the Assessing Officer in paragraph 4 of the assessment order granting deduction under Section 35 of the Act post August 2010. In that view of the matter, the subsequent re-assessment proceedings initiated by another Assessing Officer can be said to be a change of opinion, and therefore, on a mere change of opinion, the re-assessment proceedings cannot be sustained. - Decided in favour of assessee - Special Civil Application No. 13612 of 2016 - - - Dated:- 21-11-2016 - M. R. Shah And B. N. Karia, JJ. Mr Manish J Shah, Advocate for the Petitioner Mr KM Parikh, Advocate for the Respondent JUDGMENT ( Per : Honourable Mr. Justice M. R. Shah ) 1. Rule. Shri K.M Parikh, learned counsel appears and waives service of notice of rule for and on behalf of the respondent-Revenue. 2. In the facts and circumstances of the case and with the consent of the respective parties, the present petition is taken up for final hearing today. 3. By way of this petition preferred under Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w full year deduction instead of deduction after 3rd August 2010 [ie., DSIR approval letter date]. Simultaneously, the assessee also furnished the details of deduction claimed under Section 35 of the Act, bifurcating the claim before August 2010 and after August 2010 also. That thereafter, while passing the assessment order, the Assessing Officer did not accept the claim of the assessee for grant of deduction under Section 35 of the Act for the entire year ie., full year deductions and granted the deduction claimed under Section 35 of the Act post August 2010 [ie., after DSIR approval letter month]. A specific order came to be passed by the Assessing Officer with reasons for granting deduction under Section 35 of the Act post August 2010 [para 4]. That thereafter, by impugned notice issued under Section 148 of the Act, the assessment for A.Y 2011- 2012 is sought to be reopened [Annexure-S]. That, on a request made by the assessee, the Assessing Officer has supplied copy of reasons recorded for re-opening vide letter/communication dated 1st April 2016, which reads as under :- It was seen that the assessee claimed deduction under section 35 [2AB] of IT Act of ₹ 3,39,35,325 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner has vehemently submitted that the initiation of the reassessment proceedings for the Assessment Year under consideration is absolutely illegal and bad in law. It is submitted that as such the reassessment proceedings have been initiated solely on the audit objections raised by the audit party, and therefore, the same is colourable exercise of jurisdiction by the Assessing Officer. It is submitted that as such the re-assessment proceedings cannot be initiated merely on the basis of the audit objections, more particularly, when the Assessing Officer has no subjective satisfaction. Relying upon a decision of the Division Bench of this Court in the case of Commissioner of Income-tax, Ahmedabad IV vs. Shilp Gravuers Limited, reported in [2013] 40 Taxmann 309 (Gujarat) and in the case of Vodafone West Limited vs. Assistant Commissioner of Income-tax, reported in [2013] 37 Taxmann 158 (Gujarat), it is requested to allow the present Special Civil Application and quash and setaside the re-assessment proceedings. 5.1 Shri Shah, learned advocate for the petitioner has further submitted that even otherwise the impugned reassessment proceedings initiated by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has legitimately claimed deduction under Section 35 [2AB] of the Act. 7. In view of the aforesaid facts and circumstances of the case and considering the decisions of this Court in case of Commissioner of Income-tax, Ahmedabad- IV vs. Shilp Gravures Limited [Supra]; Vodafone West Limited v. Assistant Commissioner of Income-tax [Supra] and another decision of Division Bench of this Court in case of P.C Patel Company vs. Deputy Commissioner of Income-Tax, [2015] 379 ITR 151 (Guj) on the aforesaid ground alone, the impugned Notice and the re-assessment proceedings deserve to be quashed by holding that re-assessment proceedings are initiated solely at the instance of audit party. 8. As observed herein above, in fact to the query raised by the audit party, the Assessing Officer had even opined to drop audit query by observing that the assessee was entitled to deduction claimed under Section 35 [2AB] of the Act. Under the circumstances, in view of the aforesaid ground alone, the impugned notice cannot be sustained and the same deserves to be quashed and set-aside. 9. Even on the other ground also, the impugned notice/reassessment proceedings deserves to be quashed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording reasons in the assessment order, such an assessment could not have been subjected to the process of reopening. This is not to suggest that the Revenue would be rendered without any remedy even in a case where the Assessing Officer committed a gross error in under-assessing income chargeable to tax. 11. Section 263 of the Act, of course, when the requirements laid down in the provisions are satisfied, empowers the Commissioner to take such an order in revision. However, the succeeding Assessing Officer cannot doubt the legality of a conclusion recorded by the earlier Assessing Officer in his assessment order, which was framed after scrutiny. In same what similar circumstance, we had in our judgment dated 16.4.2013 passed in S.C.A. No. 357 of 2013 in case of Transwind Infrastructure Pvt. Lid. Vs. Income Tax Officer, made following observations :- 10. From the above, it can be seen that the Assessing Officer was acutely conscious about the petitioner not having deducted tax on labour payment charges of ₹ 3.05 crores and the petitioners contention that it was so done because provision for TDS was not applicable. He was not convinced by such explanation. He, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words reason to believe, Parliament re-introduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the Assessing Officer. 12. If the Revenue was of the opinion that the Assessing Officer erroneously and to the prejudice of the interest of the Revenue allowed certain claim, in a given situation, it would have been open for the appropriate authority to exercise revisional powers. However, once the claim was fully examined, power of reopening was simply not available. 12. Such observations would apply in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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