DEPUTY COMMISSIONER OF INCOME TAX, SANJAY PLACE vs. LALKANT MILK DAIRY, ETAH

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (DB) BENCH, AGRA BEFORE: SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 423/Agr/2025 Assessment Year: 2014-15 DCIT, Aaykar Bhawan, Vs. Lalkant Milk Dairy, Agra Road, Etah- Sanjay Place, Agra- 207001 282002 PAN : AADFL1944R (Appellant) (Respondent) Assessee by Shri Anurag Sinha, Adv. Department by Shri Sukesh Kumar Jain, PCIT DR Date of hearing 19.02.2026 Date of pronouncement 21.04.2026 ORDER

PER: SUNIL KUMAR SINGH, JM. This appeal has been preferred by the appellant revenue against the impugned order dated 04.06.2025 passed in Appeal No NFAC/2013- 14/10134444 by the ld Commissioner of Income Tax/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act), for the A.Y. 2014-15, wherein ld CIT(A) has allowed assessee’s appeal deleting the addition of Rs. 8,39,06,087/- on account of suppression of sales. 2. The brief facts state that the assessee is the partnership firm engaged in the business of procurement of milk from small milk suppliers of

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nearby places and supplies the same immediately to milk processing units i.e. V.R.S Foods Ltd, Sterling Agro Industries Ltd, Hardayal Milk Products, Bhole Baba Milk Food Industries Ltd etc. The original return for A.Y. 2014- 15 was filed on 25.09.2014, declaring income of Rs. 19,07,464/-. The original assessment was completed u/s. 143(3) of the Act on 09.11.2016, assessing total income at Rs. 21,07,470/- by making lump sum addition of Rs. 2,00,000/- on account of cash payments made for vehicle running and mess/food expenses. Subsequently, appellant’s case was reopened u/s. 147 of the Act on the ground that there was suppression of sales. Notice u/s. 148 of the Act was issued on 30.03.2021 by the jurisdictional assessing officer. Assessee firm e-filed the return of income on 29.12.2021 in response to the notice issued u/s. 148 of the Act, showing the same returned income as declared in original return filed u/s. 139 of the Act on 25.09.2014. The reassessment order was passed u/s. 147 r.w.s 144 r.ws 144B of the Act on 30.03.2022, determining assessee’s total income at Rs. 8,60,13,560/- by making an addition of Rs. 8,39,06,087/- on account of suppression of sales. 3. Aggrieved, assessee preferred an appeal before the ld CIT(A), who found that the reopening of the assessment was based on “change of opinion” and quashed the assessment dated 30.03.2022.

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holding that the assessment was passed on the change of opinion, ignoring the revenue’s concern as alleged in the appeal grounds noted hereinabove. 7. Ld PCIT DR for the appellant revenue has argued that ld CIT(A) has wrongly assumed that the assessing officer has examined and verified the sale price and sales in the original assessment dated 09.11.2016 and wrongly held the reopening invalid by treating it as a “change of opinion” without appreciating the fact that no opinion of suppression of sales was ever formed during the original assessment. Ld PCIT, thus, supports the reassessment order and prays to quash the impugned order. 8. Ld representative for the respondent assessee has argued that the ld CIT(A) has rightly quashed the reassessment proceedings, which were based on the “change of opinion”, prayed to dismiss revenue’s appeal. 9. The perusal of records transpires that the original assessment for the assessment year 2014-15 was completed on 09.11.2016 u/s. 143(3) of the Act. According to the assessing officer, the case was reopened u/s. 147 of the Act by issuance of a notice u/s. 148 of the Act dated 30.03.2021, on account of suppression of sales of milk to the extent of Rs. 23,36,52,396/-, stating that the issue of reopening was not considered during the original assessment proceedings. 10. The reasons for reopening were mentioned that the unit rate of milk as on 01.04.2013 was Rs. 33.08/- (Rs. 312830/9455) and as on 31.03.2014 4 | P a g e

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was Rs. 39.17(Rs. 229368/5855), resulting in average rate per litre of milk at Rs. 36.13 as average rate. The total sale value of milk of the average rate was computed at Rs. 921436758/-(36.13x25503370/-) as against the sales of Rs. 687784362/- shown by the assessee. The working of average milk prices as per above mentioned reasons, along with the difference in sale value on applying this average rate, is mentioned in the tabulated form at page 2 of the assessment order and at page 4 of the impugned order. 11. The assessee made elaborate written submissions before the first appellate authority which find mention at pages 05 to 20 of the impugned order. The assessee objected before the first appellate authority mainly on three counts as regards the validity of the assessment (i) The A.O did not follow procedure laid down in newly introduced section 144B of the Act. (ii) reasons recorded did not mention date and (iii) there was change of ‘opinion’. Ld CIT(A), proceeded to examine on the third count, i.e. as to whether there is any “change of opinion” in the case in hand. It was noted by the ld CIT(A) that appellant submitted all the requisite details i.e. month wise purchase/sales, list of sundry debtors and sundry creditors, bank statements and gross profit comparison chart along with books of accounts. All these details were duly verified by the ld assessing officer, while finalizing assessment in the original assessment proceedings and no adverse findings were recorded. Ld CIT (A) has accepted assessee’s 5 | P a g e

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arguments that the issue regarding business results, whether it was purchase price or sale price, was already considered during the original assessment proceedings. Ld CIT(A) has observed that assessee’s case was selected for limited scrutiny to examine the aspect of (i) low net profit or loss shown from large gross receipts and mismatch in amount paid to related persons u/s. 40A(2)(b) of the Act. Assessee’s reply filed during the assessment proceeding to this effect is made part of the impugned order depicted at page 24 to 27. It was noticed that, assessee produced books of accounts which were examined on test check basis and nothing adverse was found. The comparative figures of gross profit ratio and net profit ratio of last two years have also been depicted in the impugned order as under: A.Y. Gross turnover Gross Profit Net Profit G.P% N.P% 2013-14 38,76,35,507/- 96,06,724/- 8,69,963/- 2.48% 0.22 2014-15 68,77,84,362/- 2,29,18,334/- 19,07,646 3.33% 0.28

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assessing officer who was fully satisfied with the trading results of the assessee firm. Since the details of month wise summary of purchases/sales, contained purchase price/ sale price hence, it is easily presumed that at the time of original assessment proceedings, these details were gone through by the ld A.O. and after satisfying with the sale price and sales shown by the assessee, he accepted the trading results. 13. The complete information regarding purchase price and the sale price was available with the assessing officer at the time of original assessment. According to the first appellate authority, the reopening of the assessment on the basis of aforesaid reasons alone amounted to “change of opinion”. Ld CIT(A), while holding as such, took strength from Maharaj Kumar Kamal Singh v. CIT[1959] 35 ITR 1 (SC), Anderton and Halstead Ltd v. Birrell [1932] 1 K.B. 271, CIT v. Sir Mahomed Yusuf Ismail[1944] 12 ITR 8(Bom.) etc. 14. Ld CIT(A) has further referred CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312(SC) [affirming CIT v. Kelvinator of India Ltd[2002] 256 ITR 1/123 Taxman 433 (Delhi) (FB)], wherein it was held that the concept of “change of opinion” must be treated as an inbuilt test to check abuse of power by the assessing officer and that the reasons must have a live link with formation of belief. The relevant part of the aforesaid judgment was referred as under: 7 | P a g e

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“However, one needs to give a schematic interpretation to the words 'reason to believe', failing which section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. One must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess, but the reassessment has to be based on fulfillment of certain pre-conditions and if the concept of 'change of opinion' is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, the Assessing Officer has power to reopen, provided there is 'tangible material to come to conclusion that there is escapement of income from assessment. Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in section 147. However, on receipt of representations from the companies against omission of the words 'reason to believe', the Parliament re-introduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer." 15. The aforesaid discussions make it clear that in the instant case, the assessee had furnished full and true particulars during the original assessment proceedings with respect to the income alleged to have escaped assessment. Ld CIT(A) has elaborately passed the speaking and well reasoned order and has rightly held that the details regarding purchase and sales of milk were filed by the assessee during the course of original assessment proceedings completed u/s. 143(3) vide original assessment order dated 09.11.2016. No addition on account of suppression of sales was made by the assessing officer in the original assessment order. It can rightly be presumed that the re-opening of the assessment in the present a case is surely a ‘change of opinion” which is not fact permissible under the law. We do not find any error of fact or law in the conclusion arrived at by

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the ld CIT(A), while passing impugned order. The aforesaid point is accordingly determined in negative against the appellant revenue and in favour of the respondent assessee. The appeal is liable to be dismissed. 16. In the result, the revenue’s appeal is dismissed.

Order pronounced on – 21 .04.2026

Sd- Sd- (S RIFAUR RAHMAN) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 21.04.2026 *Aamir Siddiqui, PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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