TMI Blog2016 (10) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the very same material considered at the time of original assessment amounts to re–opening on a mere change of opinion, hence, invalid. Further, from the office note available in the assessment order it appears that the assessment was re–opened only due to the revenue audit objection. Therefore, there is also lack of application of mind by the Assessing Officer while recording reasons for re–opening of assessment and on this count also, the re–assessment is invalid. Thus, no reason to interfere with the order of the learned Commissioner (Appeals) on the issue. - decided against revenue - ITA no.4964/Mum./2014, C.O. no.17/Mum./2016 - - - Dated:- 28-10-2016 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For the Appellant : Shri Ketal Ved a/w, Shri V.J. Asrani For the Respondent : Shri K.C. Kanojia ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeal of the Department and the cross objection by the assessee are against common order dated 1st May 2014, passed by the learned Commissioner (Appeals) 4, Mumbai, for the assessment year 2004 05. ITA no.4964/Mum./2014 Revenue s Appeal 2. The grounds raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income because they are meant for carrying out various tasks assigned to the assessee and also various programs which are to be implemented by the Government of India. The Assessing Officer after considering the submissions of the assessee came to the conclusion that the activities carried out by eh assessee is as a trustee. He, therefore, was of the view that the funds received by the assessee are in the nature of income exempt from tax, hence, proposed to invoke the provisions of section 14A. In this context, the Assessing Officer also asked the assessee to furnish the details of establishment and other operating expenses relating to execution of the projects. Ultimately, the Assessing Officer rejecting the contention of the assessee disallowed an amount of ` 4,70,33,540 under section 14A of the Act. Being aggrieved of such disallowance, assessee preferred appeal before the learned Commissioner (Appeals). 4. The learned Commissioner (Appeals) after considering the submissions of the assessee observed that in the assessment year 2002 03, he had allowed the expenditures holding that keeping in view the provisions of section 36(1)(xii) and the objects of the assessee, the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings and assessee had preferred appeal before the learned Commissioner (Appeals) and the learned Commissioner (Appeals) after dealing with the issue has allowed assessee s claim of expenditure. Therefore, the issue having already been considered in the original assessment order and thereafter by the first appellate authority it cannot be subject matter of re opening. He further observed, during the original assessment proceedings, the assessee having disclosed full particulars about the expenditure and all other relevant issues connected therewith, the re opening of assessment is only on the basis of change of opinion, hence, not valid; and iii) The assessment having been re opened merely on the basis of an audit objection is not valid. 7. Learned Departmental Representative relying upon the reasons recorded by the Assessing Officer at the time of re opening submitted the assessee, though, had debited certain expenditure to the Profit Loss account, however, it added back the said amount to the income, therefore, the Assessing Officer was justified in assessing the amount. 8. The learned Authorised Representative on the other hand submitted, after receiving the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, submitted, the order passed by the learned Commissioner (Appeals) needs no interference. 10. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. Undisputedly, in assessee s case, the original assessment was completed under section 143(3). On a perusal of the original assessment order dated 25th October 2005, it is evident that the Assessing Officer has examined in detail the activities carried on by the assessee the nature of receipts available to the assessee as well as the expenditure claimed by the assessee. It is pertinent to observe, the Assessing Officer after examining various details has given a categorical finding that the activities of rural development is carried out by the assessee on behalf of the Government of India as well as donor agencies and are not the activities of the assessee per se, but, carried out only as a trustee. It is also evident, the Assessing Officer after examining in detail the expenditures incurred by the assessee in carrying out such activities including details of establishment and other operating expenditure, though, accepted the genuineness of such e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (Appeals) [CIT(A)}. By an order dated 6th July 2011, the CIT(A) dismissed the appeal. Thus, confirming the order dated 14th December 2009 of the Assessing Officer, passed without disposing of the appellant s objection for re opening of assessment. 7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court s decision in GKN Driveshafts (India) Ltd. v/s ITO, 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer were quashed and set aside. However, after having set aside the orders, it restored the assessment to the Assessing Officer to pass fresh order after disposing of the objections to re opening notice dated 28th March 2008, in accordance with law. 8. We note that once the impugned order finds the assessment order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a failure by the AO to comply with the mandatory requirement of disposing of the objections of the Assessee to the reopening in terms of the law explained by the Supreme Court in GKN Driveshafts (India) Ltd. (supra) as well as on account of the failure of the Revenue to challenge before the ITAT the order of the CIT (A) deleting on merits the disallowance made by the AO of the management service fee consequent upon reopening of the assessment, there appears to be no need to examine the issue projected by the Revenue in this appeal viz., the justification for re-opening the assessment under Section 147/148 of the Act. 12. The Tribunal, Chennai Bench, in Abhayam Trading Ltd. v/s DCIT, ITA no.410 411/Mds./2016, order dated 15th July 2016, also expressed similar view following the decision of the Hon'ble Supreme Court in GKN Drive Shafts India Ltd. (supra). Therefore, the Assessing Officer before completing the assessment having not disposed off the objections of the assessee, the impugned assessment order is invalid. Moreover, we have noted that during the original assessment proceedings, the assessee in response to the query raised by the Assessing Officer had furnished fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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