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2019 (3) TMI 811

u/s 143(3) - nexus between the expense of course fees and the relevance of the same wholly and exclusively for business purpose - change of opinion - HELD THAT:- From the facts as emerging from the record, it is evident that at the time of scrutiny assessment the Assessing Officer had duly considered this issue in detail and upon being satisfied with regard to the nexus between the expenses incurred by the petitioner for the management training of its Director and the business of the petitioner, had allowed such expenditure. - AO now seeks to reopen the assessment on the very same ground, which is clearly, nothing but a mere change of opinion. AO cannot sit in appeal over the opinion expressed by his predecessor in the assessment order. In the present case, as recorded by the respondent in the reasons recorded, the predecessor of the respondent had gone into the issue and therefore, in effect and substance, the respondent seeks to sit in appeal over the opinion expressed by his predecessor, and, therefore, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act, which is based on a mere change of opinion, is invalid - Decided in favour .....

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r received the impugned notice dated 31.3.2018 under section 148 of the Act proposing to reopen the assessment of the petitioner for assessment year 2013-14. In response thereto, the petitioner submitted its reply dated 9.4.2018, informing the Assessing Officer regarding having filed its e-return on 7.4.2014 and further requesting the respondent to supply the reasons recorded for reopening the assessment. Such reasons came to be furnished by a letter dated 12.7.2018. Thereafter, the petitioner by a communication dated 27.8.2018 filed its objections. By an order dated 29.8.2018, the respondent disposed of the objections against the notice issued under section 148, by rejecting the same. 7. Mr. Manish Shah, learned advocate for the petitioner invited the attention of the court to the reasons recorded for reopening the assessment to point out that the Assessing Officer seeks to reopen the assessment on the ground that the assessee had debited ₹ 30,10,000/- on account of management training expenses incurred for post-graduate programme in management by Indian School of Business, Hyderabad, of Shri Swar Digant Shah, Director of the company, on the ground that such expenditure is o .....

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having gone through all the details on this issue at the time of scrutiny assessment and having accepted the same, the reopening of assessment in respect of the same issue is, therefore, nothing but a mere change of opinion and therefore, impermissible in law. In support of his submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC). 7.2 In conclusion, it was submitted that, in the aforesaid premises, the reopening of the assessment by the Assessing Officer is without authority of law and as such the impugned notice as well as the assessment order passed pursuant thereto, deserves to be quashed and set aside. 8. On the other hand, Mrs. Mauna Bhatt, learned Senior Standing Counsel for the respondent has placed reliance upon the averments made in the affidavit-in-reply filed on behalf of the respondent to submit that the reopening is not based on a mere change of opinion, inasmuch as, the petitioner has failed to furnish evidence to prove that the expenses incurred for the post-graduate programme is wholly and exclusively for business purpose. 9. In the aforesaid backdrop, reference .....

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e of regular assessment proceedings, the assessee had submitted details of expenses, however, it had not submitted any details proving the nexus between the expense of course fees and the relevance of the same wholly and exclusively for the business purpose. 11. In this regard, a perusal of the record of the case clearly shows that during the course of scrutiny assessment, the Assessing Officer called for various details from the petitioner, which had been furnished from time to time. Vide communications dated 19.2.2016 and 26.2.2016, the petitioner had furnished details in connection with expense of ₹ 30,10,000/- incurred towards management training expenses of the Director. In paragraphs 4 and 5 of the communication dated 26.2.2016, the petitioner stated thus: 4. Shri Swar Digant Shah came in April 2013 after undergoing the training at ISB, Hyderabad and also after under going the practical training in Germany. He is working for the company so nice that the turnover of the company has increased considerably because of his hard efforts as can be seen from the figures of turnover given in the following table: Assessment Year Rs. in lacs 2013-2014 857 2014-2015 980 2015-2016 1 .....

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eopen the assessment on the very same ground, which is clearly, nothing but a mere change of opinion. It is, by now, well settled that the Assessing Officer cannot sit in appeal over the opinion expressed by his predecessor in the assessment order. In the present case, as recorded by the respondent in the reasons recorded, the predecessor of the respondent had gone into the issue and therefore, in effect and substance, the respondent seeks to sit in appeal over the opinion expressed by his predecessor, and, therefore, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act, which is based on a mere change of opinion, is invalid and without authority of law. The impugned notice as well as the impugned assessment order, therefore, cannot be sustained. 16. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned notice dated 31.3.2018 as well as the assessment order dated 23.10.2018 passed under section 144 read with section 147 of the Act are hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs. ORDER ON CIVIL APPLICATION 17. In the light of the order passed in the main peti .....

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