M/S. LIBERTY GROUP MARKETING DN,KARNAL vs. ACIT, KARNAL

The grounds of appeal are as under:-

The return declaring income of Rs.6,65,14,310/- was filed on 26.10.2005. The original Assessment was finalized at an income of Rs.6,68,52,420/- per assessment order dated 20.11.2007. Later on, the AO initiated proceedings u/s 147 per issue of notice u/s 148 of the Act on 22.03.2010, in response to which, the appellant filed return declaring income of Rs.6,68,52,420/-, i.e., the income assessed per assessment order dated 20.11.2007. During the assessment proceedings, the assessee objected to reopening of the assessment on the ground that reassessment proceedings on the basis of audit objection is bad in law. It was further submitted that the notice had been issued for the same reason for which rectification proceedings had earlier been initiated but dropped and hence notice issued for reassessment was not valid, and placed reliance on the decision of the Calcutta High Court in the case of M/s Berger Paints India Ltd, 322 ITR 369 (Cal.). The AO considered the submissions of the assessee but the same was not found tenable. The AO noted that there is no provision in the Act, which bars the initiation of proceedings u/s 147 of the Act where proceedings initiated earlier u/s 154 has been dropped. The AO further noted in his order that the assessment was not reopened merely on the basis of the objection of the Audit Party but he was having reasons to believe that the income chargeable to tax had escaped assessment/under assessed. The AO, therefore, held that proceedings u/s 147 had righty been initiated.

The assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

Being aggrieved by this order, the assessee is before us.

The Ld. AR submitted that reasons recorded for re-opening u/s 148 and reasons u/s 154 was one and the same relating to Rs.10,03,551/- for repair and building transfer of Liberty Shoes Ltd. on 30/9/2004. The Ld. AR relied upon the judgment of the Hon’ble Apex Court in case of ACIT Vs. Shareyas Gramin Bank 2012 25 Taxman.com 282 Hon'ble Supreme Court wherein it is held that once a regular assessment is completed in terms of Section 143(3) a presumption can be raised that this order was passed by the Assessing Officer on a proper application of mind. In the said decision the Hon’ble Apex Court also observed that a bland statement at the end of the reasons that the assessee failed to truly disclose the particular material and not pointed out specific material in particular whereby disclosed in the course of original assessment by the assessee. The Hon’ble Apex Court held that the reason for re-opening the assessment is based merely on a change of opinion and not on intangible material warranting re-opening of the assessment u/s 147/148. The Ld. AR further submitted that in the earlier Assessment Year 2004-05 similar expenses and clause 6 G of the agreement has been taken into account and benefit of the same has been given to the assessee.

The Ld. DR submitted that the proceedings u/s 147 are just and proper and proceedings u/s 154 was merely passed by mistake.

We have heard both the parties and perused the material available on record. It is pertinent to note that Section 143(3) assessment was completed and at the relevant time the assessee has given all the documents pertaining to his assessment and complied with the provisions of the Income Tax Act, 1961. Once an individual/assessee complies with the provisions of any particular statute, it is the obligation on the part of statutory authorities i.e. revenue department in this case to pass orders as per the statutory provisions provided to them. Simply because there is a change of opinion in the minds of Assessing Officer or of the higher authorities, the case cannot be re-opened. There has to be reasons and in particular the tangible material to support those reasons while re-opening u/s 147 and proceedings u/s 154 has to be complied with by the Assessing Officer. In this case, both the authorities have failed to do so and, therefore, the Revenue cannot simply change its opinion from its earlier orders which is finalized.

In the result, the appeal of the assessee is allowed.