INCOME TAX ACT, 1961

Section 147

Reassessment - Reason to believe - Change of opinion -

AO reopened assessment on the reasoning that compensation paid to plot owners by assessee-builder was liable to be capitalized and could not be allowed as revenue expenditure as was done originally during section 143(3) proceedings. Assessee's case was that there was not fresh tangible material with AO so as to reopen assessment.Held: On perusal of reasons recorded by AO as to reopening, it was evident that material and inforamtion on the basis of which he formed the belief that income had escaped assessment was the assessment records. The case was originally selected for scrutiny and a detailed questionnaire was issued along with notice under section 142(1). AO asked specific queries with regard to subject compensation debited in P&L Acount. After considering reply of assessee, no compensation was allowed as revenue expenditure. It was, therefore, clearly a case of change of opinion where on the same facts and material on record, AO desired to take a different view than that already taken by his predecessor and such change of opinion could not be a basis for reopening as AO has the power to reassess but no power to review his or his predecessor order.

Followed:CIT v. M/s. Kelvinator of India Ltd. (2010) 187 Taxman 312 (SC) : 2010 TaxPub(DT) 1335 (SC), CIT v. M/s. Hindustan Zinc Ltd. (2016) 70 Taxmann.com 262 (Raj) : 2016 TaxPub(DT) 3051 (Raj-HC) and CIT v. Multiplex Trading & Industrial Co. Ltd. (2015) 378 ITR 351 (Del) : 2015 TaxPub(DT) 3915 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

SUBSCRIBE FOR FULL CONTENT