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TMI Blog2022 (9) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... /2017 by Revenue are presented challenging order dated August 26, 2016 in ITA No.1124/Bang/2014 passed by the ITAT (Income Tax Appellate Tribunal), Bengaluru. 2. Assessee's appeal has been admitted to consider following questions of law: "(a) the Hon'ble Tribunal was justified in upholding the validity of the re-assessment order insofar as it brings to tax Rs.5,27,66,779/- and Rs.79,12,181/- on reversal of provisions, which was an issue which was already examined by the Assessing Officer in the original assessment proceedings? (b) the Hon'ble Tribunal was justified in upholding the 1st Respondent's action in bringing to tax the aforesaid amounts on account of reversal of provisions on the ground that the Appellant had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny under Section 143(3) of the Act. On November 16, 2011, the Assessing Officer passed his order under Section 143(3) of the Act. 6. Subsequently, the AO (Assessing Officer) reopened the assessment for the year 2008-09 under Section 147 of the Act on the premise that during the assessment proceedings for A.Y. 2009-10, assessee had claimed exemption in respect of the Nuclear Power Corporation Limited Tax free bonds under Section 10(23G) of the Act and the said Section was omitted by Finance Act, 2006 with effect from April 1, 2007. 7. On consideration of assessee's reply to the notice under Section 148 of the Act, the AO, vide order dated 19.12.2013 disallowed the claim made under Section 10(23G) of the Act. In addition, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The AO has noticed the said reply in the assessment order. However, the AO has disallowed deduction and added back the amount on the ground that it was 'inadvertently' allowed by the AO without verifying the reversal of provision; * that the assessment was made under Section 143(3) of the Act on 16.11.2011. The AO had called upon for information vide communication dated 04.05.2011 and the same was promptly submitted by the assessee on 05.10.2011. The said explanation has been accepted by the AO while passing the assessment order on 16.11.2011. Therefore, the reason recorded by the AO in the assessment order under Section 147 of the Act dated 19.12.2013 on the ground that deduction was allowed inadvertently is not sustainable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent a questionnaire vide his communication dated 04.05.2011 calling for explanation from the assessee. In response, the assessee submitted its reply on 04.07.2011 and 05.10.2011 and explained that provisions were created with regard to the technical fees for the A.Y.2003-04 to 2007-08 and had not deducted the tax during the respective years and the same was disallowed under Section 40(a) of the Act. Further, assessee did not make any payment and reversed the provision during the year ending March 31, 2008. In substance, assessee's case is, the original provision was not allowed as deduction and therefore reversal of the same cannot be taxed again. 16. Shri. Suryanarayana contended that this explanation was accepted by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be base on fulfilment of certain pre-condition and if he 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 Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment." (Emphasis Supplied) 18. With regard to acceptance of assessee's explanation, Shri. Suryanara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows: "15. Hence, Apex Court expressly held that the law laid down by a Bench of two Hon'ble Judges of the Apex Court in the case of Kalyanji Mavji & Co. (supra) was not correct. The Apex Court after noticing the view taken in its earlier decision in the case of Kalyanji Mavji & Co. (supra) expressly held that an error discovered on reconsideration of the same material does not give the Income-tax Officer the power to reopen a concluded assessment." 21. A careful perusal of the re-assessment order and the orders passed by the CIT(A) and the ITAT shows that the same are contrary to the law laid down by the Apex Court as the re-assessment is based on 'change of opinion'. Admittedly, the AO has stated that the issue w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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