DCIT, CIR.-11(1), KOLKATA, KOLKATA vs. M/S BHARAT BHARI UDYOG NIGAM LTD., KOLKATA

The sole ground of appeal of Revenue is directed against the action of Ld. CIT(A) in annulling proceedings of AO u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

We have heard rival submissions and gone through the facts and circumstances of the case. We note that the original assessment in assessee’s case was completed u/s. 143(3) of the Act on 29.12.2010. Thereafter, the AO sought to reopen the assessment on the ground that disallowance under section 14A read with Rule 8D has not been made in the original assessment and thereafter notice u/s. 148 of the Act was issued proposing to reopen the assessment and thereafter has made the impugned reassessment. On appeal, the assessee brought to the notice of the Ld. CIT(A) that the AO himself has acknowledged the fact that the assessee voluntarily offered a sum of Rs.25,700/- as expenses attributable to earning dividend income in the return of income and, therefore, the AO after going through the return of income and computation of income has accepted the claim of the assessee. Therefore, according to assessee, without any tangible material to suggest escapement of income, the AO’s action is akin to change of opinion which is not permissible in law because AO does not enjoy power to review his own order. We note that the assessee in its audit report had clearly shown Rs.25,700/- as amount of deduction inadmissible in terms of section 14A of the Act in respect of the expenditure incurred in relation to income which does not form part of the total income. The AO during scrutiny assessment has taken note of the claim of the assessee and has accepted the fact that the assessee had suo-moto disallowed Rs.25,700/- as expenses attributable to earning the exempt dividend income. Therefore, we note that the purpose of reopening was to make disallowance as per Rule 8D is, therefore, akin to review of his own action which not permissible as per law because AO does not have power to review his own order. In the aforesaid facts and circumstances, the action of the AO is nothing but change of opinion which is not permissible as held by the Hon’ble Supreme Court in CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) wherein Hon’ble Apex Court has held as under:

In the result, the appeal of Revenue is dismissed.