CIT vs. RAY BAN SUN OPTICS LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . 21.03.2011 . Present: Ms. Rashmi Chopra, Advocate for the Revenue. Mr. V.P. Gupta, Advocate with Mr. Basant Kumar, Advocate for the respondent. . + ITA 532/2011 . The assessee had filed return pertaining to assessment year 2001-02 which was processed by the AO under Section 143 (3) of the Income-Tax Act (hereinafter referred to as ?the Act?) and assessment orders were passed on 28th March, 2003 accepting the return as it is declaring the loss of ` 25,29,290/-. However, after a lapse of more than four years, notice under Section 148/147 of the Act was issued to the respondent/assessee seeking to reassess the return, inasmuch as, as per the AO, on following two aspects the income had escaped assessment, as pointed out above by the audit report:- ?(2) The revenue Audit pointed out that a sum of ` 22.33 lacs on account of advance written off has been debited to P and L Account. This being an expenditure of capital nature and treating it as a revenue loss was not in order which resulted in under assessment of income by ` 22.33 lacs. . (3) The Revenue Audit pointed out that a sum of ` 576.97 lacs was debited in P and L account as exceptional expenditure out of which a sum of ` 399.09 lacs was treated as revenue expenditure which resulted, in under assessment of income by ` 399.09 lacs.? . It resulted in passing the reassessment order vide which the AO disallowed both the aforesaid expenditure. The assessee preferred appeal thereagainst before the CIT in which it was successful, inasmuch as, vide orders . . dated 27th February, 2009 the appeal was allowed quashing the proceedings initiated under Section 147 of the Act as without jurisdiction holding that it was based on mere change of opinion. The CIT (A), inter alia, held that action was initiated only on the basis of Audit objection which was impermissible. Even on merits, the CIT (A) took the view that entire claim of expenditure was duly examined and considered in the original assessment proceedings and order under Section 147 of the Act was based on mere change of opinion. The appeal of the Department against the order of the CIT (A) has been dismissed by the Tribunal vide impugned order dated 14th May, 2010 thereby affirming the order of the CIT (A). The admitted facts are that the action of reassessment was taken after the expiry of four years from the end of the relevant assessment year. However, it was not even stated in the notice or Reasons to Believe that the assessee had either concealed certain facts or had not given full disclosure. On the contrary, the complete facts were before the AO who applied his mind and took a particular view thereby allowing the expenditure under both the heads mentioned above. In these circumstances, we are agree with the authorities below that it was merely a case of change of opinion which could not be the basis of initiating reassessment proceedings, that too, after the expiry of four years from the end of the relevant assessment year. . Because of this reason, it is not necessary to examine as to whether the notice for reassessment could be issued on the basis of audit report or not. We do not find any error in the impugned order. No question of law arises and this appeal is accordingly dismissed. . . A.K. SIKRI, J. . M.L.MEHTA, J. MARCH 21, 2011 skb . . 37#