TMI Blog2021 (10) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... -opened and the assessment of the subsequent AY is based on the inferences drawn from certain facts which cannot be construed as tangible material. The reasons mentioned in the notice for re-assessment are based on mere change of opinion and therefore, the re-opening of the assessment proceeding is not permissible in the facts and circumstances of the case. The aforesaid finding cannot be said to be perverse - Decided in favour of assessee. - I.T.A. NO.542 OF 2016 - - - Dated:- 17-8-2021 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE HEMANT CHANDANGOUDAR APPELLANTS (BY MR. K.V. ARAVIND, ADV.,) RESPONDENT (BY MR. SURYANARAYANA T A/W MISS. MAHIMA GOUD, ADVS.) JUDGMENT ALOK ARADHE J., This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee against the order dated 31.10.2014 passed by Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The subject matter of the appeal pertains to the Assessment year 1999-00. The appeal was admitted by a bench of this Court on the following substantial questions of law: (i) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice for reopening assessment on the ground that the same was based on a mere change of opinion. The Assessing Officer passed an order of re-assessment under Section 143(3) read with Section 147 of the Act disallowing the deduction claimed by the assessee towards sales commission to the tune of ₹ 16,93,91,847/- and added the same to the total income of the assessee. 4. The assessee thereupon preferred an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 01.08.2014 dismissed the appeal preferred by the assessee and upheld the order of re assessment. The assessee thereupon preferred an appeal before the tribunal. The tribunal by an order dated 10.02.2016 inter alia held that the proceeding for re-assessment were initiated on the same set of information which was called for by the Assessing Officer and was looked into at the time of original assessment and therefore, the order of re-assessment was based on change of opinion, which is not a valid ground for re opening the assessment. In the aforesaid factual background, this appeal has been filed. 5. Learned counsel for the revenue submitted that proceeding for re-assessment were initiated u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INATOR OF INDIA LTD.', (2010) 187 TAXMAN 312 (SC), 'NYK LINE (INDIA) LTD. VS. DCIT', (2012) 28 TAXMANN.COM 229 (BOM.), 'CIT VS. USHA INTERNATIONAL LTD.', (2012) 25 TAXMANN.COM 200 (DELHI) (FB) AND 'ACIT VS. MARICO LTD.', (2020) 117 TAXMANN.COM 244 (SC). 7. We have considered the rival submissions made on both sides and have perused the record. The Supreme Court in KALYANJI MAVJI CO. supra held as under: 13. On a combined review of the decisions of this Court the following tests and principles would apply to determine the applicability of Section 34(1)(b) to the following categories of cases: (1) Where the information is as to the true and correct state of the law derived from relevant judicial decisions; (2) Where in the original assessment the income liable to tax has escaped assessment due to oversight, inadvertence or a mistake committed by the Income Tax Officer. This is obviously based on the principle that the tax- payer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority; (3) Where the information is derived from an external source of any kind. Such external source wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chakraborthy does not lay down correct position law to the extent to which it follows what is held in clause (2) of paragraph 13 of the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra). The second question will have to be answered in the affirmative. In view of the consistent decisions of the Apex Court holding that reason to believe in the context of Section 147 of the Income Tax cannot be based on mere change of opinion of the Assessing Officer, the third question will have to be answered in the negative. In fact, in view of settled law, framing of question No.3 was not warranted at all. 9. The Assessing Officer has recorded the following reasons for re-opening the assessment. The assessee filed return of income for the Assessment Year 2005-06 on 31.10.2005 declaring an income of ₹ 28,94,18,182/-. Assessment in this case was completed under Section 143(3) on 31.12.2008 determining a total income of ₹ 31,04,68,388/-. In this case a survey under Section 133A was conducted on 5.11.2009 and during the course of survey, along with other issues, expenses debited to the p L a/c were verified and it was found that the assessee has inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment within the meaning of Section 147 of the Income-Tax Act, 1961 for the A.Y.2005-06. 10. During the course of original assessment proceeding, details pertaining to expenditure incurred by the assessee towards sales commission were furnished. Thus, the assessee had furnished all primary facts before the Assessing Officer and the Assessing Officer on the basis of facts available with him had passed an original order of assessment without making any disallowance of the aforesaid expenditure. The re-assessment proceeding are based on the basis of same information which was available with the Assessing Officer at the time of original order of assessment and inferences drawn by the Assessing Officer on the same set of facts cannot be said to be tangible material. It is also noteworthy that mere fact that expenses were huge in the opinion of the Assessing Officer cannot be a ground for re-opening the assessment and necessity of incurring expenditure cannot be gone into by the Assessing Officer. 11. It is pertinent to mention that no material was gathered in the survey proceeding to suggest that expenditure incurred towards sales commission is not an allowable expenditure an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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