TaxTMI 
TaxTMI 
2020 (8) TMI 896
X X X X Extracts X X X X
X X X X Extracts X X X X
....determining the total income at Rs. 29,24,68,540/- after making addition of Rs. 3,53,838/- and Rs. 2,02,195/- on account of disallowance of depreciation and disallowance of expenditure incurred for increase of capital respectively. Subsequently, the AO reopened the assessment after issuing notice u/s 148 of the Act. The assessment was reopened on the ground that during the year relevant to the assessment under consideration, the assessee had made payment amounting to Rs. 5,11,22,956/- to Sh. Anand Nair towards astrological fees without availing any corresponding services and the assessee failed to disclose fully and truly all material facts necessary before the AO for assessment. Accordingly, the AO after hearing the assessee made various additions and determined the total income of the assessee at Rs. 34,78,42,420/- under normal provisions of the Act and Rs. 32,90,18,510/- under section 115JB of the Act. In the first appeal the Ld. CIT(A) partly allowed the appeal of the assessee. Still aggrieved, the assessee is in appeal before this Tribunal. 3. The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- "1. the ld. CIT (A) er....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions of Section 36(1)(iii) of the Act and making further enhancement of Rs. 1,87,83,274/- without appreciating that:- The advance were for business purpose The advance were subsequently paid back. The entire advances were given out of own funds and no advances were given out of borrowed funds. The advance to subsidiary M/s Prag Distilleries Pvt. Ltd. was out of commercial expediency. 8. The Ld. CIT (A) erred in upholding the disallowance of rental charges amounting to Rs. 26,96,640/- on the alleged ground that the expenses were not for purpose of business. The ld. CIT (A) failed to appreciate that such sums were incurred for genuine business expediencies. 9. The Ld. CIT (A) erred in upholding the disallowance of housekeeping charges amounting to Rs. 26,96,640/- on the alleged ground that the expenses were not for the purpose of business. The Ld. CIT (A) failed to appreciate that such sums were incurred for genuine business expediencies." 4. During pendency of this appeal, the assessee filed revised grounds of appeal contending that the original grounds of appeal are lengthy, argumentative and contain case law. The revised grounds filed by the assessee are as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has upheld the reopening by the AO on the basis of change of opinion which is not permitted under law. The Ld. counsel further submitted that once the AO had passed the assessment order after examining and verifying each and every detail furnished by the assessee during assessment proceedings, it had no jurisdiction to reopen the assessment on the basis of the same material. In order to exercise jurisdiction u/s 147 of the Act, the AO must have some tangible material for forming the belief that the income of the assessee has escaped assessment. The Ld. counsel further submitted that original assessment was completed on 07.12.2011. A survey u/s 133A was carried out on 13.03.2013 by investigation wing Pune and based on the outcome of survey, AO recorded the reasons for reopening. The Ld. counsel further contended that since the AO had passed the original assessment order after examining the material furnished by the assessee in response to the notices issued by him, he had no jurisdiction to reopen the assessment passed u/s 143(3) of the Act after changing his opinion. The Ld. counsel placing reliance on the judgments of the Hon'ble Supreme Court in the case of CIT vs. Kelvinator of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upporting the order passed by the Ld. CIT(A) submitted that since, the AO had recorded the reasons for reopening on the basis of the material recovered during survey, the Ld. CIT(A) has rightly upheld the reopening of the assessment by the assessee. The Ld. DR further submitted that since the AO had not dealt with the issue regarding payments to Sh. Nair, no question of change of opinion does arise. The Ld. DR invited our attention to page 255 of the paper book, which contains reply to question No. 27 asked while recording statement u/s 133A of the Act to substantiate his contention. 9. We have heard the rival contentions of the parties and perused the material on record including the cases relied upon by the authorities below and the cases referred and relied by the Ld. counsel. Admittedly, in the present case the AO passed assessment order u/s 143(3) of the Act. As per the settled law, AO has power to reopen the assessment under section 147 of the Act if he has a tangible material to form a belief that the income of the assessee has escarped assessment and the reasons recorded for reopening must have live link with formation of belief that the income of the assessee has escaped ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n safely be concluded that the AO has passed the original assessment order after taking into consideration each and every detail/explanation furnished by the assessee in response to the notice issued or query raised by him during the course of assessment proceedings. It can further be concluded that the AO had no tangible material for forming the belief that the income of the assessee has escaped assessment. Hence, in our considered opinion since the AO has initiated the reassessment proceedings on the basis of the material already placed on record by the assessee during assessment proceedings, the action of the AO amounts to change of opinion which is not permissible under law. In the case of CIT vs. Kelvinator of India Ltd. (supra), the Hon'ble Supreme Court has held that post 01-04-1989, power of AO to reopen u/s 147 is much wider, however, the AO has no jurisdiction to reopen assessment on the basis of mere change of opinion. Powers u/s 147 of the Act can be exercised by the AO provided there is tangible material to come to the conclusion that there is escapement of income from assessment. In our considered view, the AO had no tangible material to come to the conclusion that in....