TMI Blog2022 (4) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted. The original assessment, the Ld. AO had asked the assessee to clarify the issue of large sundry creditors and furnish the details. It is true that in the order of assessment u/s 143(3) of the Act, the Ld. AO had not elaborated much on this aspect but had not made any disallowance or addition in the hands of the assessee which would not by itself mean that the same was not scrutinized or that the Ld. AO had not formed an opinion with respect to the same. We refer to decision in the case of Gujarat Power Corpn. Ltd.[ 2012 (9) TMI 69 - GUJARAT HIGH COURT ] which observed that if after detailed scrutiny during the assessment, the AO examines a claim but does not reject the claim of the assessee which had come up for scrutiny, would not enable the Revenue to argue that the AO had not formed any opinion on such issue and, therefore, reopening of the assessment would be permissible without there being any new or additional material available to the AO. In the judgment of Hon'ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised the following grounds: i. The order of the learned CIT(A) is bad in law and contrary to the facts of the case. ii. The learned CIT(A) had failed to consider the decision of the Hon ble High Court of Delhi in the case of the CIT Vs. M/s. Usha International Limited (2012) 348 ITR 485. iii. The learned CIT(A) had erred in not considering the decision of the Supreme Court in the case of KalyanjiMavji Company Vs. Commissioner of Income Tax 102 ITR 287(SC)(1976) wherein it is held that there is no change of opinion if the assessment is reopened on new facts which came to notice subsequently, even though they are already on record. 4. Brief facts of the case are that the Assessee, Smt. Ramanathan Vasantha Priya is the proprietrix of Sri Ganesan Stores and Sri Ganesan Stores and Readymade located at No.35, N.S.B. Road, Trichy who filed her return of income for the Assessment Year 2013-14 on 01.10.2013 reporting a total income of ₹ 8,22,760/-. The case was selected for complete scrutiny for the reason large amount of sundry creditors . Assessment u/s.143(3) of the Act was completed on 02.02.2016 by making estimated addition at the rate of 6% of ₹ 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ify creditors and this CASS reason has been specifically mentioned by the AO in para-1,page-1 and hence this cannot be any reopening on the same ground. 4. AR also furnished copies of ledger accounts of sundry creditors of Shri Ganesan Store Ready mades and Shri Ganesan Stores to show that fresh credits appearing in the books only on account of purchases made were ₹ 48.25 lakhs for Ganesan Stores Ready mades and ₹ 47.64 lakhs for Ganesan Stores and that in any case the opening balances of credits cannot be added by the AO as has been done in this case. 7. Ld. CIT(A) found merits in the submission made by the assessee that the trade creditors have already been verified by the AO in the original assessment and are forming part of purchases in the P L account and have been used to determine book profit. By placing reliance on the judicial precedents and keeping in view the fact that the original assessment was made specifically to verify the creditors, Ld. CIT(A) held in favor of the assessee by stating that AO cannot turn around and reopen the case for the same issue on which inquiry has been made earlier and in absence of any new information which clearly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors and nexus of unsecured loan during the course of original assessment proceeding itself. Ld. Counsel pointed out from the impugned reassessment order that the case was originally selected for complete scrutiny for the reason large amount of sundry creditors . A typeset of papers was submitted during the course of hearing containing fourteen sheets which are placed on record. From page 2 to 4 of these papers, Ld. Counsel referred to the two submissions at dated 20.07.2015 and 29.01.2016 made in the course of original assessment proceedings u/s 143(3) pointing out the details furnished. Ld. Counsel further pointed from the order u/s 143(3) dated 02.02.20216placed at page 5 to demonstrate that Ld. AO had examined the issue under consideration. Relevant extracts from page 2 of the assessment order u/s 143(3) are reproduced as under The representative appeared from time to time with all the details called for. During the course of hearing, for claim of creditors, the assessee s representative has stated that the purchase of material/goods from the sellers was always only on credit basis, thus, the assessee has shown huge amount of sundry creditors in the balance sheet. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch inquiry have been made earlier and in absence of any new information this will clearly amount to a change of opinion. 12. We have heard the rival contentions, gone through the material on record and have given thoughtful consideration to the issue in hand which relates to change of opinion by the Ld. AO while initiating the proceedings u/s 148 rws 147 of the Act. On the perusal of reasons to believe recorded (reproduced supra), we note that these have been recorded by the Ld. AO on the basis of assessment records available with him. In the facts and circumstances of the case before us, to deal with the jurisdictional issue, we are required to examine whether there was any fresh tangible material in the possession of the AO at the time of recording of the 'reasons to believe'. 12.1 In the present case, it is noticed by us that the case of the assessee is that there was no fresh tangible material in the possession of Ld. AO at the time of recording of impugned reasons which starts with On examination of the financial statements annexed to the Income tax return along with submissions filed by the assessee for the AY 2013-14, the following issues emerge- [empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the assessment would be permissible without there being any new or additional material available to the Assessing Office. 12.4 To examine the issue of change of opinion before us under the present facts and circumstances we refer and look at the settled position of law wherein it has been held in various judgments by various courts that availability of fresh tangible material in the possession of AO at the time of recording of impugned reasons is a sine qua none, before AO can record reasons for reopening of the case. In the judgment of Hon'ble Supreme Court in the case of CIT v. Kelvinator India Ltd. [2010] 320 ITR 561 it is laid down that for reopening of the assessment, the AO should have in his possession 'tangible material'. The term 'tangible material' has been understood and explained by various courts subsequently. There has been unanimity of the courts on this issue that in absence of fresh material indicating escaped income, the AO cannot assume jurisdiction to reopen already concluded assessment. Relevant extracts from the said judgment of Hon ble Supreme Court (supra) are as under 4. On going through the changes, quoted above, made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to believe' in Section 147.--A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same. 5. For the afore-stated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs. 12.5 Hon'ble Jurisdictional High Court of Madras in the case of Bapalal Co. Exports v. Jt. CIT [2007] 289 ITR 37held that in the absence of any new material, the AO is not empowered to reopen an assessment irrespective of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid discussion, we hold that the Ld. CIT(A) has rightly appreciated the contentions raised by the assessee in respect of legal ground taken by the assessee on the validity of reopening of the completed assessment and has rightly held the action of the Ld. AO to be bad in law. 13. In respect of reliance placed by Ld. Sr. DR on the decision of Cognizant Technology Solutions India P. Ltd. v. ACIT (LTU) Chennai (supra), having gone through it carefully, it is noted that the said decision relates to writ petition by the assessee on the order disposing the objections filed by the assessee on the initiation of proceedings u/s 148 of the Act on the reasons to believe recorded for reopening of the assessment. Present case before this Tribunal is an appeal against the assessment order passed by Ld. AO u/s 147 of the Act. Disposal of objections submitted by the assessee on the reasons furnished cannot be compared with the final assessment / reassessment orders passed after complete adjudication of disputed facts and the material available on record. Thus, a clear distinction can be drawn in this regard and the reliance placed on the decision by the Ld. Sr. DR goes in vain. Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on KalyanjiMavji Co. v. Commissioner of Income Tax, where a Bench of two learned Judges of this Court observed that a case where income had escaped assessment due to the oversight, inadvertence or mistake of the Income Tax officer must fall within section 34(1) (b) of the Indian Income Tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Income Tax officer discovers that he has committed an error in consequence of which income has escaped assessment it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and not more) does not give him that power. That was the view taken by this Court in Maharaj Kamal Singh v. Commissioner of Income Tax (supra), Commissioner of Income Tax v. Raman and Company (supra) and Bankipur Club Ltd. v. Commissioner of Income Tax. and we do not believe that the law has since taken a different c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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