INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Assessee pleaded change of opinion by AO - Concerned issue not examine by AO during original assessment

AO reopened assessment by issuing section 148 notice and made addition holding that amount received for termination of manufacturing agreement was in the nature of a non-compete fee which fells under the purview of section 28(va)(a). Assessee challenged validity of reassessment framed by AO pleading change of opinion by AO on the same issue. Held: Perusal of assessment order passed under section 143(3) revealed that there was no discussion of whatsoever in the assessment order regarding issue of compensation received for termination of contract. Further, assessee also failed to file any evidence to prove that it had furnished necessary details about receipt of compensation to AO. In absence of any evidence to prove that all materials necessary for completion of assessment were placed before AO, it could not be said that AO had considered the issue and formed an opinion on the issue. Unless, AO has formed an opinion on the issue on the basis of materials furnished by the assessee, then it could not be said that the assessment has been reopened on mere change of opinion. Therefore, reopening was valid.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2007-08

INCOME TAX ACT, 1961

Section 28(va)(a)

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