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Before: SHRI R. S. SYAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 03/12/2012 passed by CIT(A)-V, New Delhi. 2. The grounds of appeal are as follows:-
“1. Whether the Ld.CIT(A) has erred on facts and in law in cancelling the assessment order passed u/ 148/143(3) of the IT Act ignoring the fact that: (a) The time has not elapsed as per Section 149(1) (b) “not more than six years have elapsed from the end of the relevant assessment year. (b) the ld has ignored various judicial pronouncements reliance by the A.O discussed in the assessment order, wherein it was held that Audit report regarding omission by A.O-subsequent correspondence with assessee and reopening of the case u/s 147 of the IT Act is valid.
Whether the ld has erred on facts and in law in deleting the disallowance made on account of Billing & Software expenses amounting to Rs.54464480/- ignoring the fact that the case was re-visited after CAG audit objection on the issue of Billing & Software expenses being capital in nature.
The return of income for assessment year 2002-03 declaring ‘Nil’ income was filed on 30/10/2002 and the same was assessed at Rs.7,14,81,708/- under normal provisions of Income Tax Act and at book profit of Rs.105,53,29,112/- u/s 115JB of the Income-tax Act vide order u/s 143(3) of the Income-tax Act, 1961 dated 31/3/2005. The Assessing Officer observed from the record that an amount of Rs.5,54,64,418/- debited to the profit and loss account and on account of dealing and software expenses under the head administrative and other expenditure. The Assessing Officer observed that the software expenses being capital in nature should have been capitalized after allowing 60% depreciation since the amount of Rs.5,44,64,480/- on account of software expenses has escaped assessment and this issue was not in focus during the course of assessment proceedings for Assessment Year 2002-03. Notice u/s 148 of the Act was issued on 2/3/2009 after duly recording the reasons therewith u/s 147 of the Act. Notice u/s 143(2) of the Act was also issued. In response to the above notice the assessee’s representative attended the reassessment proceedings and filed reply dated 17/11/2009 wherein it has been stated that on the similar issue in assessee’s case for Assessment Year 1997-98 the ITAT vide order in dated 8/8/2008 held these expenditure revenue in nature. The AR contended before the Assessing Officer observed that:-
……..the issue has been considered by the Learned A.O while framing the assessment order u/s 143(3) dated 31/3/2005 and that a mere change of opinion by the Learned A.O is not a valid ground for reopening of assessment u/s 147/148 of the Act. WE draw your reference to the Full Bnech decision of the Hon’ble Delhi High Court reported in 256 ITR 1 as CIT(A) Vs. Kelvinator of India Ltd. The AR of the assessee company also relied upon the judgment in the case of Jindal Photo Films Ltd. Vs. DCIT 234 ITR 170 and Garden Silk Mills Ltd. Vs. DCIT (Gujrat) 222 ITR 6…….
After considering the reply of the assessee company, Assessing Officer held that the order mentioned by the assessee that of Tribunal was challenged before the Hon'ble High Court of Delhi which is still pending for adjudication, and therefore, treated the said expenditure as capital expenditure.
The assessee went in appeal before the CIT(A). The CIT(A) set aside the order of the Assessing Officer and held that there is change of opinion and time barring of Section 148 notice.
The Ld. DR submitted that the Assessing Officer rightly rejected the contention of the assessee as the order passed by ITAT is challenged before the Hon'ble High Court. When the query was put up as to whether the matter is pending or finalized, the Ld. DR was not in a position to reply the same.
The Ld. AR submitted that the said order is purely a change of opinion as Question No. 13 specifically discussed about the expenses and it was properly replied with documentary proves at the relevant assessment proceeding. Thus, the CIT(A) is rightly arrived at the conclusion.
We have perused all the records and heard both the parties. It is clear that the ITAT in assessese’s own case has confirmed the same expenses as revenue receipt for the earlier assessment year. Question No. 13 in the original assessment proceedings has clearly indicated earlier before raising it in the re-assessment proceedings. At the relevant time during the original assessment proceedings, the assessee supplied the documents and there was nothing contrary which was supplied or in addition thereto during the re-assessment proceedings. Therefore, in our view this is clearly a change of opinion which is not permissible under the provisions of re- assessment. The CIT(A) has rightly allowed the appeal of the assessee.
In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open court on 11th of August, 2016.