TMI Blog2019 (8) TMI 1816X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the Assessing Officer prior to the issuance of notice u/s 148 and even in the reasons, the Assessing Officer has duly stated that the issue came to light after the assessment records were examined and it was found that as per Schedule 10 of the balance sheet, certain amount of provision was made which should have been disallowed and added back to the income of the assessee. Thus, it is a clear case where the Assessing Officer has had a change of opinion on the issue since the Assessing Officer had raised a specific query regarding fall in gross profit and it had been submitted that the reason for the fall in gross profit, amongst other reasons, was also rent of A Barracks. It follows by implication that the issue was duly considered by the Assessing Officer at the time of original assessment itself. Secondly, even the proceedings u/s 154 which were initiated on the same issue were subsequently dropped by the Assessing Officer. Therefore, on the facts of the case, we are prima facie of the view that the Assessing Officer has by necessary implication allowed the assessee s claim in the original assessment proceedings itself. It is also an accepted position that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 Subsequently, the Assessing Officer issued notice u/s 154 vide notice dated 6.9.2010 intending to rectify the assessment order by proposing a disallowance of Rs. 11,88,14,381/- being alleged ad hoc provision made for liability on account of rent. The assessee gave a detailed reply to the Assessing Officer and submitted that the proposed disallowance of Rs. 11,88,14,381/- already stood offered for taxation in the return of income filed by the assessee and, therefore, there was no cause for any further proceedings in the matter. The Assessing Officer dropped the proceedings u/s 154 of the Act. 2.2 Subsequently, on 30.03.2012, the Assessing Officer issued notice u/s 148 proposing to reassess the income of the assessee. On request of the assessee, the reasons for reopening the case were supplied to the assessee which are reproduced hereunder:- The assessee filed return showing income of Rs. 14,55,85,510/- on 30.10.2007. The assessment was completed on 25,09,2009 on total income of Rs. 145949410/-. The assessment records were examined found that as per Schedule 10 of Balance Sheet, a provision of Rs. 171432333/- was made on account of Other Provisions . The provision b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be valid in the admitted absence of any fresh material in the subject case; 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the re-assessment order dated 30.11.2012 on erroneous and extraneous reasonings; 3. On the facts and in the circumstances of the case and in law the CIT (A) erred in confirming the re-assessment order dated 30.11.2012, which is clearly based on a change of opinion; 4. On the facts and in the circumstances of the case and in law the CIT (A) has erred in disallowing the rent payable to Directorate of Estates in a sum of Rs. 4,19,42,469/-, erroneously holding it to be a contingent liability. All the above actions, being fallacious and against law, merit to be quashed, with directions for appropriate relief to the appellant. The appellant craves leave to add, delete, modify and/or forego all or any of the above grounds of appeal. 3.0 The learned Authorised Representative (Ld. AR) submitted that a perusal of the reasons recorded (as have been reproduced in the earlier part of the order) would demonstrate that the reasons are completely cryptic and a reading of the reasons would not enable any perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response thereto, the assessee had submitted that the rate of GP had fallen because an amount of Rs. 4.19542/- crore on account of rent of A Barracks was debited to the profit and loss account. It was submitted that, thus, even at the time of assessment, the Assessing Officer was aware that the impugned amount pertained to liability of rent for the premises at A Barracks Janpath for the period 16.10.1999 to 10.10.2001. It was also submitted that even during the course of assessment proceedings u/s 154, the Assessing Officer was duly made aware of the said liability of rent. 3.3 It was submitted that reliance was being placed on the judgment of the Hon ble Bombay High Court in the case of State Bank of India vs. ACIT reported in (2018) 96 Taxmann.com 77 (Bombay) wherein the Hon ble Bombay High Court had held that when a claim is accepted in the documents which was fundamental to assessment under the Income Tax Act, it must necessarily be inferred that the Assessing Officer had applied his mind to such claim at the passing of the assessment order. It was submitted that since the claim of the assessee had been accepted earlier u/s 143(3) and subsequently u/s 154 of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 taxmann.com 409 (Delhi)/(2017) 392 ITR 444 (Delhi) vi) Indu Lata Rangwala Vs DCIT (2017) 80 taxmann.com102(Delhi)(2016) 384 ITR 337 (Delhi)/(2016) 286 CTR 474 (Delhi) vii) Thakorbhai Maganbhai Patel Vs ITO (2017) 78 taxmann.com 201 (SC)/(2017) 245 Taxman 333 (SC) viii) Thakorbhai Maganbhai Patel Vs ITO (2017) 79 taxmann.com 409 (Delhi)/(2017) 392 ITR 444 (Delhi) ix) Aravali Infrapower Ltd. Vs PCIT (2017-TIQL-42-SC-IT) x) Aravali Infrapower Ltd. Vs DCIT (2017) 77 taxmann.com 322 (Delhi)/(2017) 390 ITR 456 (Delhi) xi) Yogendrakumar Gupta Vs ITO (51 taxmann.com 383) (SC)/(2014) 227 Taxman 374 (SC) xii) Raymond Woollen Mills Ltd. v. ITO And Others (236 ITR 34) xiii) R.K. Malhotra ITO Vs Kasturbhai Lalbhai (1977) 109 ITR 537 (SC) xiv) CIT Vs P.V.S. Beedies (P.) Ltd. (1999) 103 Taxman 294 (SC)/(1999) 237 ITR 13 (SC/(1999) 155 CTR 538 (SC) xv) ACIT Vs Rajesh Jhaveri Stock Brokers (P.) Ltd (2007) 161 Taxman 316 (SC)/(2007) 291 ITR 500 (SC)/(2007) 210 CTR 30 (SC) xvi) Yuvraj v. Union of India (315 ITR 84) (SC) xvii) Ankit Financial Services Ltd. Vs DCIT (2017) 78 taxmann.com 58 (Gujarat) 4.2 It was prayed that assessee s appeal be dismissed. 5.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as well as the reasons would also indicate that there was no fresh material which had come in possession of the Assessing Officer prior to the issuance of notice u/s 148 and even in the reasons, the Assessing Officer has duly stated that the issue came to light after the assessment records were examined and it was found that as per Schedule 10 of the balance sheet, certain amount of provision was made which should have been disallowed and added back to the income of the assessee. Thus, it is a clear case where the Assessing Officer has had a change of opinion on the issue since the Assessing Officer had raised a specific query regarding fall in gross profit and it had been submitted that the reason for the fall in gross profit, amongst other reasons, was also rent of A Barracks. It follows by implication that the issue was duly considered by the Assessing Officer at the time of original assessment itself. Secondly, even the proceedings u/s 154 which were initiated on the same issue were subsequently dropped by the Assessing Officer. Therefore, on the facts of the case, we are prima facie of the view that the Assessing Officer has by necessary implication allowed the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere change of opinion , which cannot be per se reason to re-open. One must also keep in mind the conceptual difference between power to review and power to re-assess. The AO has no power to review; he has the power to reassess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1.4.1989, the AO has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. This is supported by Circular No.549 dated 31.10.1989 which clarified that the words reason to believe did not mean a change of opinion. 5.5 Although the Department has also cited a number of judicial precedents in its favour, we are afraid that they do not help the cause of the revenue as the factual matrix in those cases are entirely different and the assessee s case is akin to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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