TMI Blog2022 (9) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 263 of the Act where an AO incorrectly applies the law or comes to a wrong conclusion and income chargeable to tax had escaped assessment - initiation of reassessment proceedings will be invalid on the ground of change of opinion. 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 was 'inadvertently' allowed by him without verifying the reversal of provision. This view amounts to change of opinion and therefore, the reassessment proceedings are invalid. Hence, this appeal merits consideration. - I.T.A NO.71 OF 2017 C/W I.T.A NO.785 OF 2017 - - - Dated:- 9-9-2022 - HON BLE MR. JUSTICE P.S. DINESH KUMAR AND HON BLE MRS. JUSTICE M.G. UMA Appellants (By Shri. K.V. Aravind, Advocate) (By Shri. T. Suryanarayana, Senior Advocate For Smt. Tanmayee Rajkumar, Advocate) Respondent (By Shri. T. Suryanarayana, Senior Advocate For Smt. Tanmayee Rajkumar, Advocate) (By Shri. K.V. Aravind, Advocate) JUDGMENT P.S. DINESH KUMAR J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessing Officer also proceeded to bring to tax Rs.5,27,67,000/- and Rs.79,12,000/-, which were provisions created and disallowed in the earlier years for non-deduction of tax at source under Section 40(a) of the Act and which were reversed in A.Y. 2008-09, on the ground that the tax in respect of the said amounts were not deducted and paid to the Government. 8. Assessee challenged AO's order in ITA No.45/JCIT-LTU/CIT(A)LTU 13-14 and the CIT(A), vide order dated 30.05.2014, allowed the appeal in part on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 14; Assistant Commissioner of Income-tax. Vs. Marico Ltd [2020] 117 taxmann.com 244 (SC); and Dell India (P) Ltd. Vs. Joint Commissioner of Income Tax, LTU, Bangalore [2021]123 taxmann.com 468 (Karnataka) - Para 12 to 14. 13. Shri K.V.Aravind, learned Senior Standing Counsel for the Revenue argued opposing the appeal. He submitted that the AO has recorded that an incorrect claim was made in the computation of income. After verifying the books of accounts, P L account and Tax Audit Report, the AO came to the conclusion that no reversal had taken place and hence, he has rightly disallowed the deduction and added back the amount. 14. We have carefully considered rival submissions and perused the records. 15. Undisputed facts of the case are, before passing the Assessment Order on 16.11.2011 under Section 143(3) of the Act, the AO had 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 duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 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. Suryanarayana relied upon Marico Ltd. In that case, Revenue's SLP was dismissed by upholding the view taken by the High Court that non-rejection of the explanation in the assessment order would amount to, the AO accepting the view of the assessee. On the same proposition, Shri. Suryanarayana also cited Usha International Ltd. (paras 13, 14 and 15), wherein, it is held as follows: 13. It is, therefore, clear from the aforesaid position that: (1) xxxxx (2) xxxxx (3) Re-assessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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