TMI Blog2023 (1) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is filed on record by Ld. CIT-DR for the revenue. Considering the fact that on similar set of fact, the re-assessment order has been quashed by Hon'ble High Court in [ 2015 (7) TMI 297 - GUJARAT HIGH COURT ] therefore respectfully following the same, we affirm the order of Ld. CIT(A). Appeal of the Revenue is dismissed. - ITA No. 237/SRT/2020 - - - Dated:- 1-7-2022 - SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER For thr Assessee : Shri Akshay Modi, CA For the Revenue : Shri H.P.Meena, CIT-DR Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of ld. Commissioner of Income tax (Appeals)-1,Surat [for short to as CIT(A) ] dated 28.08.2020 for assessment year (AY) 2008-09, which in turn arise out assessment order passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 28.12.2015. The Revenue has raised the following grounds of appeal:- 1 On the facts and in circumstances of the case and in law, the CIT(A) has fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 above. 7 It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that the order of the AO be restored. N.A 8 The appellant craves to add, modify or alter any grounds during the course of appeal proceedings. N.A Total tax effect 8,30,81,920/- 2. At the outset of hearing, Ld. Authorized Representative (AR) for the assessee submits that the grounds of appeal raised by Revenue is covered by the decision of Hon'ble jurisdictional High Court in assessee s own case for assessment year(s) 2009-10 and 2010-11 respectively. The Ld. AR for the assessee further submits that the case for assessment year(s) 2009-10 2010-11 was also re-opened by the Assessing Officer on similar grounds/ reasons of re-opening. The validity of re-assessment was also challenged by various other co-operative sugar mills, whose cases were also re-opened, including assessee before Hon'ble Jurisdictional High Court, wherein the re-opening was quashed vide order dated 12.06.2015. The assessee s case was registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the ground that the assessee has paid more price than the price determined / declared by the Government and therefore, the same is nothing but distribution of profits and/or passing of profits on the basis of the decision of the Hon'ble Supreme Court in the case of Shri Satpuda Tapi Parishar SSK Ltd. (Supra). However it is required to be noted that once at the time of original assessment under Section 143(3) of the Act the Assessing Officer after applying the mind accepted the return, thereafter reopening of the assessment can be said to be on mere change of opinion of the Assessing Officer and as per the catena of decisions of the Hon'ble Supreme Court as well as this Court mere on change of opinion of the Assessing Officer, reassessment proceedings are not permissible. [9.1] If any decisions are required to be referred to on the point, they are the decision of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (Supra), decisions of this Court in the case of Cliantha Research Ltd. (Supra), Sarla Raj Verma (Supra) and Niko Resources Ltd. (Supra). In the case of Kelvinator of India Ltd. (Supra), the Hon'ble Supreme Court in para. 6 has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduce the expression reason 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 the meaning of die expression, 'reason to believe' had been explained in a number of court rulings in the past and was welt 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. [9.2] Even otherwise it is required to be noted that the reasons to believe must necessarily show, indicate and communicate why and on what grounds/ cause any income has escaped assessment. Reasons recorded must be germane, prudent and disclose prima facie belief that income has escaped assessment. Even for formation of the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould constitute an expenditure under Section 37 of the Act and whether such differential payment would, applying the real income theory, constitute an expenditure or distribution of profits, the Assessing Officer is required to take into account the manner in which the business works, resolutions of the State Government, the modalities and the manner in which SAP and SMP are decided, the timing difference which will arise on account of the difference in the accounting years etc. Therefore, while considering the aforesaid question, number of questions are required to be examined by the Assessing Officer, before even forming an opinion and/or a reason to believe that: the income chargeable to tax has escaped assessment. Mere payment of any amount of cane price / purchase price in excess to SAP / SMP per se cannot be said to be distribution of profits. For which a detailed inquiry is required to be conducted by the Assessing Officer. In the present case no such inquiry has been done and/or conducted by the Assessing Officer before having a reasonable belief and/or forming an opinion that the income chargeable to tax has escaped assessment on the aforesaid ground. [9.3] At this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional price determined under sub-clause (2) or sub-clause (3) as the case may be: of Clause 5A. Therefore, even in the Control Order itself there is a reference to the additional purchase price which can be more than, the purchase price fixed under clause (3). However, as observed hereinabove, in a given case after holding inquiry if it is found that the purchase price paid in excess to the SMP is so exorbitant and/or unreasonable it can be said to be distributing the profits and/or passing of the profits. However, for that purpose there must be some further inquiry and/or tangible material with the Assessing Officer. [9.5] Under the circumstances, the impugned notices under Section 148 of the Act to reopen the proceedings beyond 4 years and within 4 years on the aforesaid ground i.e. on the ground that the payment of purchase price in excess to the SMP has escaped the assessment cannot be sustained and the same deserves to be quashed and set aside. [10.0] Now, so far as the reopening of the assessment on other grounds viz. 1) unabsorbed depredation permitted to be carried forward beyond a period of 8 years raised in Special Civil Application Nos, 17870/2014 and 2638/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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