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TMI Blog2025 (1) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and no failure on the part of the assessee in furnishing material facts fully and truly for the assessment without considering the fact that the assessee has not disclosed true and correct facts regarding the payment of VAT of Rs. 57,61,077/- during the assessment proceedings and, therefore, the reason recorded for reopening the assessment u/s 147 of the I.T. Act and notice issued u/s 148 of the I.T. Act was based on new material facts that the assessee did not show the balance outstanding amount of Rs. 57,61,077/- as liability in the Balance-sheet at the year end? (ii) Whether the Ld. Appellate Tribunal was justified in quashing the notice u/s 148 for reopening of assessment, by erroneously holding that reopening of assessment under section 147 is only the change of opinion without appreciating that the issue-in-hand was neither examined by the assessing officer during original assessment proceedings nor the assessing officer formed any opinion on the issue ? 3. The brief facts of the case are as under:- 3.1 The assessee e-filed its Return of Income declaring total income Rs. 2,67,91,420/-, which was initially assessed u/s 143 (3) of the Act dated 29.11.2011. The assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce unpaid VAT amounting to Rs. 57,61,077/-u/s 143 (3) r.w.s. 144C(3) of the Act. As per provision of Section 43B of the Act, the claim of unpaid expenses of VAT/Sales Tax of the impugned amount was found to be not allowable and accordingly, an addition was made to the total income of the assessee. 3.4 Aggrieved, the assessee filed an appeal before the Ld. CIT(A) challenging both the grounds of reopening of assessment and the above addition made by the AO. 3.5 The assessee preferred appeal mainly on the issue of disallowance of VAT expenses to the tune of Rs. 57,61,077/- u/s 43B of the Act. During appellate proceedings, the assessee raised additional grounds challenging the reopening of its case without satisfying conditions mentioned in the proviso to section 147, especially when there were regular assessment framed u/s 143 (3) read with Section 144C of the Act on 02.08.2013. The assessee contended that notice u/s 148 of the Act was issued beyond the period of 4 years from the end of the relevant assessment year was error in fact and law and also there was change of opinion since papers relied upon were already filed with the return of income and were available at the time of or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 148 of the Act on the same issue by successor AO amongst to assumption of revisionary power which is not valid as per law. Thus, in the absence of new material facts brought on record by Revenue reopening of assessment beyond the period of 4 years from the end of the assessment year in the present facts and circumstances of the case is found to be not sustainable in the eye of law and order of quashing the same by the Ld. CIT(A) with the same observation is found to be just and proper so as to warrant interference. Accordingly, the Appellate Tribunal dismissed the appeal of Revenue as devoid of any merit. 4. Learned Senior Standing Counsel Mr. Nikunt Raval on behalf of the Department has submitted that the Tribunal has erred in dismissing the appeal of the Revenue on technical grounds. 4.1 Learned Senior Standing Counsel Mr. Raval further submitted that in the instant case, the assessee has not disclosed true and correct facts regarding the payment of VAT of Rs. 57,61,077/- during the assessment proceedings and, therefore, the reason recorded for reopening the assessment u/s 147 of the I.T. Act and notice issued u/s 148 of the I.T. Act was based on new material facts that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we have further considered the judgment passed by Hon'ble Apex Court in the case of L&T Ltd., reported in 113 taxmann.com 48, wherein SLP filed by the Revenue was dismissed as there was no failure on the part of the appellant to disclose material facts fully and truly was found. The reassessment was, thus, at the best made on change of opinion. 15. We have further considered the judgment passed by the Jurisdictional High Court in the case of ALPS Technologies (P) Ltd., reported in 81 taxmann.com holding that when the material facts were truly and fully discussed at the time of original assessment, initiation of proceedings to reopen on the same set of facts held to be invalid. We further find from the records that during original assessment the Ld. AO asked for the details of duties and taxes and again initiated re-assessment proceeding on the very same issue without bringing any new material facts on records. On this aspect, we further considered the order passed by the Jurisdictional High Court in the case of Micro Inks (P.) Ltd. vs. ACIT, reported in [2017] 79 taxmann.com 153 (Guj) as relied upon by the Ld. AR wherein expenditure incurred towards interest and finance char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is nothing other than a mere change of opinion. The Hon'ble Apex Court in the case of Commissioner of Income tax vs. Kelvinator of India Ltd. reported in (2010) 320 ITR 561 (SC) has held as under:- "6. ...prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to re-open is much wider, However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion". 8. We are therefore of the opinion that the appeal is devoid of merits and that no questions of law much less any substantial questions of law arise from the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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