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TMI Blog2017 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention of the assessee that the initiation of proceedings under section 147 was bad in the eye of law as neither the conditions have been satisfied nor the procedure prescribed under the statute have been complied with. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the reopening of assessment completed under section 143(3) on the basis of return of income filed by the assessee without there being any external information and without any failure on the part of the assessee to disclose fully and truly all material facts necessary for the computation of income. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reopening of assessment is bad in law and liable to be quashed as the same has been done on the basis of change of opinion, which amounts to review of order, not permissible under the law. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the income of Rs. 40,96,000 be taxed at the rate of 30% under normal provision as against of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of section 115JB of the Act (computation of income enclosed at PB 2). Thereafter, the case of assessee company was selected for scrutiny, and after examining the details filed by the assessee during the course of assessment, the returned income of the assessee was accepted, and the assessment was completed u/s 143(3) of the Act vide order dated 15.10.2009 (enclosed at PB 44). 3. Subsequently, a notice u/s 148 of the Act was issued to the assessee company on 30.03.2012 (enclosed at PB 45), recording reasons in this regard that an income of Rs. 2,72,27,000/- had escaped assessment (copy of reasons recorded are enclosed at PB 47). 4. The AO completed the reassessment proceedings at the income of Rs. 40,96,000/- only, however, he held that the said income is to be taxed at the rate of 30% under the normal provisions of the Act and not at the rate of 10%, as offered by the assessee u/s 115JB of the Act. The AO has given his findings in this regard at the last page of the assessment order. 5. The Ld. CIT(A) has further held the reassessment proceedings to be valid by stating that the same was in accordance with law and has also supported the order of the AO th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred during the construction of the plant as the same being capital in nature is accepted 10. A perusal of the above extract of AO‟s order would show that the AO has accepted the fact that the assessee has rightly deducted the interest income of Rs. 2,72,27,000/- from the cost incurred during the construction of the plant. It is a settled law that if after issuing a notice under section 148, the AO accepts the contention of the assessee and holds that the income, which he has initially formed reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him to independently assess some other income. Reliance in this regard is placed on the judgment of Hon‟ble Jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. v. CIT [2011] 336 ITR 136, wherein the Court has held as under: "Section 147 has this effect that the Assessing Officer has to assessee or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x in his order under Section 263 of the Act. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under Section 263 of the Act - Decided against the Revenue. * Delhi High Court in the case of CIT v. Adhunik Niryat Ispat Ltd. in ITA No. 2090 of 2010 dated 28.07.2011 Since the grounds for reopening the reassessment do not exist any longer and no additions were ultimately made on that account, the additions in respect of other items which were not part of "reasons to believe" cannot be made. - Decided in favor of assessee. * ITAT Delhi in the case of Shanker Gas and Mfg. Co. Pvt. Ltd. v. ITO in ITA No. 4429/Del/2013 dated 25.05.2016 Reopening of assessment - accommodation entries receipt - Held that:- No addition has been made in respect of the accommodation entry from M/s. Zigma Telecom Private Limited and the additions made are in respect of the parties, which are not mentioned in reasons recorded by the Assessing Officer. Thus, respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y one, but many times to the facts of assessee‟s case. The action of the AO in raising the additional demand on the assessee company by adopting a rate of 30% on the said income of Rs. 40,96,000/- is merely a change of opinion. It is a settled law that mere change of opinion of the AO cannot form the basis for issuing of a notice under Section 147 / 148 of the Act. This issue is covered by the judgment of Apex Court in the case of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561, wherein the Supreme Court has held as under: "One needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re¬assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re¬ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligibility to claim exemption under Section 10 - Held that:- The assessee has placed on record the replies made to the queries on each of the aspects as well as the documentary evidence spanning several Annexures to the letter. It is quite evident that the AOs, upon proper inquiry and investigation into these materials, were satisfied as to the nature of the petitioners activities and it was eligible to claim exemption under Section 10 of the Act. It has been repeatedly held in several decisions, both before and after the ruling of the Supreme Court in Commissioner of Income Tax v. Kelvinator of India Ltd (2010 (1) TMI 11 - SUPREME COURT OF INDIA) that a notice for re-opening the assessment is permissible only when it: (i) does not amount to "change of opinion"; (ii) is based on tangible material/evidence but is not opposed to the existing record and (Hi) points to suppression of material facts by the assessee in the original return. In the present case, none of these elements ex facie exist to justify the impugned notice. It is therefore quashed as are all proceedings emanating from the impugned notice. - Decided in favor of assessee." 19. Further reliance in placed on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee‟‟ * Delhi High Court in the case of Unitech Holdings Ltd. v. DCIT in Writ Petition No. 12325/2015 dated 04.05.2016 "Reopening of assessment - purchase of shares - Held that:- The transaction dated 31st March, 2010 relating to transfer of investments in the three companies aggregating to Rs. 41,15,79,320/- was a subject matter of enquiry by the AO. The AO having enquired into the transaction of sale and purchase, and having examined the values at which the transactions had taken place had not raised any further issue with regard to the transactions in question. It plainly follows from the above that AO had satisfied himself as to the entire transaction of purchase of shares including the consideration thereof which was duly reflected in the statement furnished by the Assessee. Although the working relating to the books value of the shares - assuming that that is relevant - is not available, it must be presumed that the AO had satisfied himself as to the value of the transaction and also that the same were held as investments by the Assessee. This is so because the transaction itself had been enquired into and the value at which the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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