Panasonic Energy India Co.Ltd, Baroda v. The Income tax Officer,Ward-4(1),, Baroda

ITA 1507/AHD/2010 | 1997-1998
Pronouncement Date: 24-04-2014 | Result: Allowed

Appeal Details

RSA Number 150720514 RSA 2010
Assessee PAN AAACL3332K
Bench Ahmedabad
Appeal Number ITA 1507/AHD/2010
Duration Of Justice 3 year(s) 11 month(s) 17 day(s)
Appellant Panasonic Energy India Co.Ltd, Baroda
Respondent The Income tax Officer,Ward-4(1),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 24-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 24-04-2014
Date Of Final Hearing 15-04-2014
Next Hearing Date 15-04-2014
Assessment Year 1997-1998
Appeal Filed On 07-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMADABAD BEFORE SHRI D.K.TYAGI JUDICIAL MEMBER AND .. SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ! '#$% & ' ( ' ( ' ( ' ( ITA NOS. 1506 & 1507/AHD/2010 ASSESSMENT YEAR :1995-06 & 1997-98 M/S. PANASONIC ENERGY INDIA CO. LTD GIDC MAKARPURA VADODARA V/S . INCOME TAX OFFICER WARD 4 (1) BARODA PAN NO. AAACL3332K (APPELLANT) .. (RESPONDENT) )* + / BY APPELLANT SRI MILIN MEHTA A.R. -)* + /BY RESPONDENT SHRI K. C. MATHEWS SR.D.R $!. + #& /DATE OF HEARING 15.04.2014 /01 + #& /DATE OF PRONOUNCEMENT 24.04.2014 O R D E R PER : SHRI D.K. TYAGI JUDICIAL MEMBER THESE ARE ASSESSEES APPEALS AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-III BARODA DATED. 30-12-2009 & 31-12-2009. 2. SINCE FACTS IN BOTH THE YEARS ARE SIMILAR BOTH WERE HEARD AND ARE BEING DISPOSED OFF BY PASSING A CONSOLIDATED ORDER BY TAKING THE FACTS FOR ASSESSMENT YEAR 1995-96. THE ASSESSEE HAS TAKEN F OLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO O F REOPENING ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 2 THE ASSESSMENT BY INVOKING THE PROVISIONS OF SECTIO N 147 OF THE INCOME TAX ACT 1961 AND COMPLETING THE ASSESSM ENT COMMENCED UNDER INVALID EXERCISE OF POWERS U/S 147 OF THE ACT DESPITE THE FACT THAT ASSESSMENT U/S 143(3) WAS FRAMED IN THE CASE OF APPELLANT ON 16.02.1998. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION O F AO IN REOPENING THE ASSESSMENT ON THE BASIS OF CHANGE IN OPINION RELYING ON THE PAPERS ALREADY FILED WITH THE RETURN OF INCOME AND AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT U/ S 143(3). IT MAY BE MENTIONED THAT REOPENING OF ASSESSMENT BASED ON CHANGE OF OPINION IS INVALID. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION O F AO IN ALLOCATING INDIRECT EXPENSES OF RS. 20 98 86 000/- INSTEAD EXPENSES OF RS. 4 66 81 001/- TO EXPORT OF TRADING GOODS AS DONE BY THE APPELLANT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80HHC OF THE INCOME TAX ACT 1961. 4. THE LEARNED COMMISSIONER OF INCOME (APPEAL) ERRE D IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN CHARGING INTEREST U/S. 234B OF THE INCOME TAX ACT 1961. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN RECOVERING INTEREST U/S. 244A OF THE INCOME TAX ACT 1961. 3. FIRST TWO GROUNDS RELATE TO REOPENING OF THE ASS ESSMENT BY THE AO. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT U/S. 143(3) OF THE ACT WAS FINALIZED ON 16-02-1998 AND INCOME WAS DETERMIN ED AT RS. 7 08 79 848/-. THEREAFTER A NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 29- 03-2000. IN RESPONSE THE ASSESSEE REQUESTED TO TR EAT ITS RETURN OF INCOME FILED U/S. 139(2) IN COMPLIANCE OF NOTICE U/ S. 148 OF THE ACT. THE ASSESSEE OBJECTED TO THE REOPENING OF THE CASE. TH E AO DISMISSED THE OBJECTION OF THE ASSESSEE ON THE GROUND THAT WHILE COMPUTING THE DEDUCTION U/S. 80HHC ON THE EXPORT OF TRADING GOODS THE ASSESSEE HAS NOT ALLOCATED THE ENTIRE INDIRECT COST OF BUSINESS FOR THE PURPOSE OF WORKING ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 3 OUT DEDUCTION U/S. 80HHC. INSTEAD THE ASSESSEE HA D ALLOCATED ONLY THE COST OF BARODA UNIT ON THE PLEA THAT THE ENTIRE EXP ORT ACTIVITY OF TRADING GOODS WAS CARRIED OUT FROM BARODA. THE AO FOUND TH E SUBMISSION OF THE ASSESSEE NOT SATISFACTORY AND REDUCED THE ASSESSEE S CLAIM OF DEDUCTION U/S. 80HHC FROM RS. 39 60 973/- TO RS. 20 99 054/-. 5. BEFORE LD. CIT(A) THE ASSESSEES CONTENTION WAS THAT RE-OPENING OF THE ASSESSMENT U/S. 147 OF THE ACT WAS NOT PROPER S INCE AO HAD ALREADY FRAMED REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. IT WAS FURTHER SUBMITTED THAT THE REOPENING WAS DONE ON THE ISSUES WHICH WER E ALREADY CONSIDERED AT THE TIME OF FINALIZING REGULAR ASSESSMENT U/S. 1 43(3) OF THE ACT. TO SUBSTANTIATE HIS CLAIM ATTENTION OF THE LD. CIT(A) WAS DRAWN TO THE FACT THAT THE ISSUE OF ALLOCATION OF INDIRECT COST TO EXPORT OF TRADING COST WAS ELABORATELY CONSIDERED AT THE TIME OF FRAMING OF AS SESSMENT FINALIZED U/S. 143(3) OF THE ACT. LENGTHY DISCUSSION HAD TAKEN PL ACE AND ASSESSEE HAD ALSO FILED WRITTEN REPLY CLARIFYING ITS CLAIM OF DE PRECIATION. THE AO DELIBERATED UPON THE ISSUE OF ALLOCATION OF INDIREC T COST TO EXPORT OF TRADING GOODS FOR THE PURPOSE OF WORKING OUT THE ADMISSIBLE DEDUCTION U/S. 80HHC. SINCE THE ISSUE RAISED BY THE AO IN REASSES SMENT PROCEEDINGS WAS THE SAME AS CONSIDERED BY HIM AT THE TIME OF FI NALIZING THE ORIGINAL ASSESSMENT IT AMOUNTS TO CHANGE OF OPINION ONLY. THEREFORE PLACING RELIANCE ON THE FOLLOWING DECISIONS:- - STARTRONIC INVESTMENT CONSULTANTS PVT. LTD VS. DC IT (ITA NO. 2196/A/2002) ITAT AHD - ASTEROIDS TRADING AND INVESTMENTS (P) LTD. V. DC IT 308 ITR 190 (BOM) - GARDEN SILK MILLS (P) LTD V DCIT & ANR. 237 ITR 668 (GUJ) - DY. CIT V. SMITHKLINE BEECHAM CONSUMER BRANDS LT D. 126 TAXMAN 104 (CHD) (MAG) - M P RAJYA VAN VIKAS NIGAM V. DY. CIT 70 TTJ 927 (IND.) ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 4 - GRUH FINANCE LTD. V. JOINT CIT(ASSESSMENT) 243 I TR 482 (GUJ) - TECHSPAN INDIA PVT. LTD V. ITO 283 ITR 1 (DEL) - CIT V. KELVINATOR OF INDIA LTD. 256 ITR 1 (DEL). (FB) IT WAS SUBMITTED THAT REOPENING IN THIS CASE HAS WR ONGLY BEEN DONE AND THE SAME SHOULD BE HELD TO BE ABINITIO VOID. 6. LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF THE A O BY OBSERVING AS UNDER:- 4.2 I HAVE CONSIDERED THE FACTS OF THE CASE SUBMI SSIONS MADE AND THE PROVISIONS OF LAW. THE CASE WAS REOPENED BY THE AO ON THE GROUND THAT THE EXCESS ALLOWANCE UNDER SECTION 80 HHC ON A CCOUNT: OF INCORRECT WORKING OF INDIRECT COST WAS GIVEN IN THE ORIGINAL ASSESSMENT. FROM THE RECORDS IT IS APPARENT THAT THE AO HAD EXAMINED THIS ISSUE AT THE TIME OF ASSESSMENT AND APPELLANT'S CONTENTION T HAT THE AO HAD ALLOWED THE DEDUCTION AFTER LOOKING INTO THE ISSUE IS CORRECT. FROM THE REASONS RECORDED IT IS ALSO SEEN THAT AT THE TIME OF REOPENING THE CASE THE AO DID NOT HAVE THE BENEFIT OF ANY FRESH INFORM ATION. THUS THERE WAS DIFFERENCE OF OPINION REGARDING THE INTERPRETAT ION OF LAW AND FACTS. IT IS ON THIS BASIS THAT THE APPELLANT HAS OBJECTED TO REOPENING STATING THAT REOPENING WAS BASED ON MERELY CHANGE OF OPINIO N. THE APPELLANT HAS RELIED UPON VARIOUS CASE LAWS TO THE EFFECT THA T A MERE CHANGE OF OPINION IS NOT SUFFICIENT FOR REOPENING OF AN ASSES SMENT. THUS THE QUESTION INVOLVED HERE IS WHETH ER THE REOPENING IS BASED MERELY ON SOME FANCIFUL CHA NGE OF OPINION OR THERE IS SOME THING MORE TO IT. IN THIS CASE THE A O HAS REOPENED THE CASE ON THE GROUND THAT EXCESS RELIEF WAS AL LOWED UNDER SECTION 80HHC. THIS IS AS PER SECTION 147 EXPLANATION 2(C )(III) WHICH READS AS FOLLOWS: ' C .............. (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT; OR ............... ' A BARE READING OF THE ABOVE WOULD SHOW THAT THIS CL AUSE COVERS THE SITUATION WHERE EXCESS RELIEF HAS BEEN ALLOWED AFTER SCRUTINY ASSESSMENT. THAT IS IF AFTER PASSING OF THE ORDER U/S 143(3) THE AO HAS REASON TO BELIEVE THAT EXCESS RELIEF HAS BEEN A LLOWED HE CAN REOPEN THE CASE. IN OTHER WORDS EVEN AFTER APPLICA TION OF MIND (THE SCRUTINY ASSESSMENT PRESUPPOSES APPLICATION OF MIND ) EXCESS RELIEF IS ALLOWED THE SAME CAN BE REOPENED. TO PUT IT DIFFER ENTLY THE LEGISLATURE HAS ENVISAGED A SITUATION WHERE EVEN AFTER APPLICAT ION OF MIND THERE IS ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 5 POSSIBILITY OF AN UNDER ASSESSMENT. TO PLUG THIS T HE ABOVE REFERRED PROVISION OF LAW WAS BROUGHT TO STATUTE BOOK. THERE IS NO DOUBT THAT SUCH SITUATION TO A LARGE EXTENT INVOLVES DIFFERENC E OF OPINION. THUS A REOPENING CANNOT BE HELD INVALID ONLY BECAUSE THERE HAS BEEN DIFFERENCE OF OPINION PROVIDED THE DIFFERENCE OF O PINION IS BONA FIDE. IN OTHER WARDS REOPENING CANNOT BE STRUCK DOWN BY MERE LY SAYING THAT THERE IS A ' CHANGE OF OPINION'. THIS IS NOT A MAGI C WARD. ONE HAS TO BE VERY CAREFUL AND IF CHANGE OF OPINION IS BASED ON B ONA FIDE BELIEF OF THE AO REOPENING HAS TO BE HELD TO BE VALID EVEN IF AT A LATER STAGE ADDITIONS MADE ON SUCH REOPENING MAY NOT BE SUSTAIN ED. THE ARGUMENT THAT IF EXCESS RELIEF HAS BEEN ALLOWED AFT ER SCRUTINY THE SAME CANNOT BE REOPENED AS IT IS ALWAYS BASED ON CH ANGE OF OPINION IS AGAINST THE EXPRESS PROVISIONS OF LAW. FURTHER THE ARGUMENT THAT UNDER ASSESSMENT DUE TO EXCESS RELIEF CANNOT BE COR RECTED UNDER SECTION 147 OF THE ACT UNLESS NEW FACTS OR OUTSIDE INFORMATION IS RECEIVED IS ALSO TO BE REJECTED. COURTS HAVE HELD T HAT A MERE CHANGE OF OPINION WITHOUT ANY BASIS WOULD NOT BE SUFFICIENT T O INVOKE THE PROVISIONS OF SECTION 147 OF THE ACT. THIS IS TO SA FEGUARD AGAINST THE REVIEW OF THE CASE WITHOUT ANY BASIS. THE COURTS HA VE NOT APPROVED A CHANGE OF OPINION WHEN IT IS FOR THE PURPOSE OF REV IEW. BUT ION THE PRESENT CASE REOPENING IS NOT FOR THE PURPOSE OF R EVIEW BUT THE AO HAD COME TO A BONA FIDE BELIEF REGARDING EXACT AMOU NT OF ASSESSMENT. THESE SAFEGUARDS LAID DOWN BY THE COURTS SHOULD NOT BE USED TO REFRAME THE PROVISIONS OF LAW ITSELF. IF CHANGE IN THE OPINION THAT THERE IS UNDER ASSESSMENT IS BONA FIDE THEN REOPENING HA S TO BE HELD TO BE VALID.'. IN THE PRESENT CASE THE AO HAS RECORDED T HE REASONS AS FOLLOWS: REASONS RECORFDED FOR THE ISSUE OF NOTICE UNDER SECTION 148 OF THE IT ACT. IN THE INSTANT CASE ASSESSMENT IS COMPLETED UNDER SECTION 143(3) ON 16.02.1998 ON A TOTAL INCOME-OF RS.7 08 79 848/-. ON VERIFICATION OF THE CASE RECORDS IT IS SEEN THA T THE ASSESSEE HAS BEEN GRANTED EXCESS DEDUCTION UNDER SECTION 80HHC T O THE EXTENT OF RS.10 04 848/-. DEDUCTION UNDER SECTION 80HHC IN RE SPECT OF GOODS EXPORTED OUT OF INDIA IS ALLOWABLE IN RESPECT OF TR ADING GOODS EXPORTED AND MANUFACTURED GOODS EXPORTED. AS REGARD TRADING GOODS EXPORT THE PROFIT DERIVED FROM SUCH EXPORT MEANS THE EXPORT TU RN OVER OF TRADING GOODS AS REDUCTED BY THE DIRECT AND INDIRECT COST A TTRIBUTABLE TO EXPORT OF SUCH TRADING FOODS FOR THIS PURPOSE DIRECT COST MEANS COST DIRECTLY ATTRIBUTABLE TO THE TRADING GOODS EXPORTED OUT OF I NDIA INCLUDING THE PURCHASE PRICE OF SUCH GOODS AND INDIRECT COST MEAN S COST NOT BEING DIRECT COST ALLOCATED IN THE RATIO OF THE EXPORT TU RN OVER IN RESPECT OF TRADING GOODS TO THE TOTAL TURN OVER. IT HAS NOT BE EN DONE IN THE CASE OF THE ASSESSEE AT THE TIME OF ASSESSMENT. FROM THE DE TAILS OF EXPENDITURE INCURRED BY THE ASSESSEE DURING THE R R ELEVANT YEAR THAT THE INDIRECT EXPENDITURE WHICH WERE ALLOCABLE PROPO RTIONATELY TO EXPORT ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 6 OF TRADING GOODS TOTAL UPTO RS. 18 89 97 000. THE E XCESS DEDUCTION ALLOWED TO THE ASSESSEE IS WORKED OUT AS UNDER: TOTAL TURN OVER AS PER AO RS.1 60 98 86 603 TOTAL EXPORT TURNOVER OF TRADING GOODS RS. 1 20 58 519 TOTAL DIRECT OF RS. 92 26 547 TOTAL INDIRECT COST 188997000 X 12058519 1509886603 RS. 15 08 285 THUS TOTAL DIRECT AND INDIRECT COST ALLOCABLE TO EXPORT OF TRADING GOODS WOULD BE (9226547 + 1508285) RS 1 07 34 832 TOTAL TRADING GOODS EXPORT RS1 20 58 519/- LESS: COST. RS 1 07 34 832 DEDUCTION ADMISSIBLE RS 13 23 687 LESS: DEDUCTION ALLOWED. RS23 28 535 EXCESS DEDUCTION ALLOWED RS. 10 04 848 ON THE BASIS OF ABOVE METHOD OF WORKING THE ASSESS EE HAS BEEN GRANTED EXCESS DEDUCTION UNDER SECTION 80HHC TO THE EXTENT OF RS.10 04 848/- WHICH RESULTED IN UNDER ASSESSMENT TO THIS EXTENT. I HAVE THEREFORE REASON TO BELIEVE THAT AN AMOUNT OF RS.10 04 848/- IS EXCE SS ALLOWED TO THE ASSESSEE AND THE SAME REQUIRED TO BE WITHDRAWN. THE MATTER WAS REFERRED TO THE CIT BARODA VIDE THIS OFFICE LETTER NO. DCIT(A)/SR.2/REV.AUDIT/98-99 DATED 19.01.1999. THE CIT BARODA HAS APPROVED ACTION U/S 147 VIDE LETTER NO. BRD/DC(JUD) /185-3(1218)799- 2000 DATED 22.03.2000. IN THE LIGHT OF THE ABOVE ISSUE NOTICE UNDER SECTIO N 148 OF THE ACT FOR A.Y.1995-96. ' FROM THE ABOVE IT IS APPARENT THAT THE AO HAD COME TO A BONA FIDE BELIEF THAT THE INCOME WAS UNDER ASSESSED . HE HAS WORKED OUT SPECIFIC AMOUNT OF EXCESS ALLOWANCE. ONE MAY OR MAY NOT AGREE WITH HIM BUT IT CANNOT BE SAID THAT HE DID NOT HAVE A BO NA FIDE BELIEF THAT INCOME WAS UNDER ASSESSED. AND THIS IS THE ONLY REQ UIREMENT UNDER THE LAW TO SEE WHETHER REOPENING IS VALID OR NOT. I N VIEW OF THE ABOVE DISCUSSION IT HAS TO BE HELD THAT THE CASE WAS VAL IDLY REOPENED. THEREFORE THIS GROUND OF APPEAL IS REJECTED. THE ID. COUNSEL HAS RELIED UPON VARIOUS DECISIONS I N SUPPORT OF THE CONTENTION THAT REOPENING IS NOT VALID ON MERE CHANGE SUPPORT OF THE CONTENTION THAT REOPENING IS NOT VALID ON MERE CHANGE OF OPINION. THE LEARNED CIT(A) IN HIS ORDER DATED 26.11.2002 HA S DISCUSSED SOME OF THE DECISIONS AND FOUND THEM NOT RELEVANT TO TH E FACTS OF THIS CASE. IN ANY CASE IT HAS ALREADY BEEN HELD AS ABOVE THAT IN THE INSTANT CASE IT WAS NOT MERELY A CHANGE OF OPINION. ON THE OTHER HAND THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF I NDUCTOTHERM (INDIA) ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 7 PVT LTD. VS. JAMES KURIAN ACIT (294 ITR 341) HAD AN OCCASION TO EXAMINE A CASE WHERE IN THE ORIGINAL ASSESSMENT ORD ER EXCESS RELIEF UNDER SECTION 80HHC WAS ALLOWED. LATER THE AO REOPE NED THE CASE ON THE GROUND THAT EXCESSIVE DEDUCTION WAS ALLOWED UND ER SECTION 80HHC IN THE ORIGINAL ASSESSMENT. ON IDENTICAL FACT S IT WAS OBSERVED BY THE HON'BLE COURT AS FOLLOWS. ' THE AO HAS CATEGORICALLY FOUND FROM THE RECORD TH AT IN PLACE OF DISALLOWANCE OF RS.1 44 038/- IN THE ORIGINAL ASSE SSMENT ORDER .ONLY ON AMOUNT OF RS.3 544 HAS BEEN DISALLOWED AND IN CALCULATION FOR ALLOWANCE UNDER SECTION 80HHC RS.50 37 685/- WERE ALLOWED IN THE ORIGINAL ASSESSMENT ORDER. IN F ACT IT SHOULD BE RS.49 75 667/-. FOR THE PURPOSE OF ALLOWANCE UNDER SECTION 80HHC SO ME TYPE OF INCOME HAS ALSO NOT BEEN EXCLUDED WHICH IS REFERRE D IN THE REASONS RECORDED/. RS.2 59 521/- WERE ALSO REQUIRED TO BE D ISALLOWED UNDER SECTION 43B AND IN SOME MATTERS LIKE UNPAID SALES C OMMISSION AND PROVISIONS FOR EXPENSES AND ALSO WHERE THE AMOUNT O F MORE THAN RS.L CRORE DEBT BECAME REALLY BAD. IT REQUIRES VERIFICAT ION BUT THAT HAS NOT BEEN DONE BY THE AO. THEREFORE CONSIDERING THE REA SONS GIVEN FOR REOPENING OF THE ASSESSMENT IT CANNOT BE SAID THAT AO HAS NO REASON TO BELIEVE THAT SOME INCOME HAS ESCAPED ASSESSMENT BEFORE ISSUANCE OF NOTICE UNDER SECTION 148. THE HONORABLE HIGH COURT FURTHER QUOTED WITH APPROV AL OBSERVATIONS MADE IN ITS EARLIER DECISIONS IN THE CASE OF PRAFUL CHUNILAL PATEL (236 ITR 832) (GUJ) WHICH NEEDS REPRODUCTION: ' ..ON A PROPER INTERPRETATION OF SEC.147 OF THE AC T IT WOULD APPEAR THAT THE POWER TO MAKE ASSESSMENT OR REASSES SMENT WITHIN FOUR YEARS OF THE END OF THE RELEVANT ASSESS MENT YEAR WOULD BE ATTRACTED EVEN IN CASES WHERE THERE HAS BE EN A COMPLETE DISCLOSURE OF ALL RELEVANT FACTS UPON WHIC H A CORRECT ASSESSMENT MIGHT HAVE BEEN BASED IN THE FIRST INSTA NCE AND WHETHER IT IS AN ERROR OF FACT OF LAW THAT HAS BEEN DISCOVERED OR FOUND OUT JUSTIFYING THE BELIEF REQUIRED TO INITIAT E THE PROCEEDINGS IN OUR VIEW THE WORDS ' ESCAPED ASSESSMENT' WHERE THE RETURN IS FILED ARE APT TO COVER THE CASE OF A DISCOVERY OF A MISTAKE IN THE ASSESSMENT CAUSED BY EITHER AN ERRONEOUS CONSTRUCTI ON OF THE TRANSACTION OR DUE TO ITS NON CONSIDERATION OR CAUS ED BY A MISTAKE OF LAW APPLICABLE TO SUCH TRANSFER OR TRANS ACTION EVEN WHERE THERE HAS BEEN A COMPLETE DISCLOSURE OF ALL R ELEVANT FACT UPON WHICH A CORRECT ASSESSMENT COULD HAVE BEEN BAS ED '. AS NOTED ABOVE THE PROVISION OF SEC. 147 REQUIRE S THAT THE AO SHOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT. THE WORD ' REASON' IN THE P HRASE ' ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 8 REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATIO N. IF THE AO HAS A CAUSE OR JUSTIFICATION TO THINK OR SUPPOSE TH AT INCOME HAD ESCAPED ASSESSMENT HE CAN BE SAID TO HAVE A REASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. TH E WORDS ' REASON TO BELIEVE' CANNOT MEAN THAT THE AO SHOULD H AVE FINALLY ASCERTAINED THE FACTS BY LEGAL EVIDENCE. THEY ONLY MEAN THAT HE FORMS A BELIEF FROM THE EXAMINATION HE MAKES AND IF HE LIKES FROM ANY INFORMATION THAT HE RECEIVES. IF HE DISCOV ERS OR FINDS OR SATISFIES HIMSELF THAT THE TAXABLE INCOME HAS ESCAP ED ASSESSMENT IT WOULD AMOUNT TO SAYING THAT HE HAD R EASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. TH E JUSTIFICATION OF HIS BELIEF IS NOT TO BE JUDGED FRO M THE STANDARDS OF PROOF REQUIRED FOR COMING TO A FINAL DECISION. A BE LIEF IS NOT TO BE JUDGED FROM THE STANDARDS OF PROOF REQUIRED FOR COM ING TO A FINAL DECISION. A BELIEF THOUGH JUSTIFIED FOR THE PURPOSE OF INITIATION OF THE PROCEEDINGS UNDER SECTION 147 MAY ULTIMATELY ST AND ALTERED AFTER THE HEARING AND WHILE REACHING THE FINAL CONC LUSION ON THE BASIS OF INTERVENING ENQUIRY. AT THE STAGE WHERE HE FINDS A CAUSE OR JUSTIFICATION TO BELIEVE THAT SUCH INCOME HAS ESCAPED ASSESSMENT. THE AO IS NOT REQUIRED TO BASE HIS BELI EF ON ANY FINAL ADJUDICATION OF THE MATER. ' ANOTHER DECISION ON IDENTICAL FACT WHICH BEAR MENTI ON IS THE HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF CONSOLIDAT ED PHOTO & FINVEST LTD VS. ACIT (281 ITR 394) (DELHI) IN THIS CASE I T WAS HELD AS FOLLOWS: THE AO HAD NOT RECEIVED ANY ADDITIONAL INFORMATION FROM ANY OUTSIDE SOURCE OR QUARTER BUT THE FACT THAT THERE W AS NO SUCH INFORMATION DID NOT MAKE ANY MATERIAL DIFFERENCE. A CTION UNDER SECTION 147 WAS PERMISSIBLE EVEN IF THE AO GATHERED HIS REASONS TO BELIEVE FROM THE VERY SAME RECORD AS HAD BEEN THE SUBJECT MATTER OF THE COMPLETED ASSESSMENT PROCEEDI NGS. THE PROVISO TO SEC. 147 ENVISAGES ACTION IN THE ORDINAR Y COURSE WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE R ELEVANT ASSESSMENT YEAR THAT LIMITATION DOES NOT HOWEVER APPLY TO CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT ON ACCOUNT INTER ALIA OF THE FAILURE OF THE ASSESSE E TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THE ARGUMENT T HAT PRODUCTION OF THE ACCOUNT BOOKS AND OTHER DOCUMENTARY EVIDENCE RE LEVANT FOR ASSESSMENT MUST APPLY A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS MUST BE REJECTED OUT OF HAND IN THE LIGHT OF THE PROVISIONS OF EXPLANATION.1 ACCORDING TO WHICH MERE PRODUCTION OF THE BOOKS OF ACCOUNT OR OTHER EVIDENCE FROM WHICH THE AO COUL D HAVE WITH DUE DILIGENCE DISCOVERED THE MATERIAL EVIDENCE DOE S NOT NECESSARILY AMOUNT TO A DISCLOSURE WITHIN THE MEANI NG OF THE PROVISION. ' ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 9 THE ABOVE DECISIONS HAVE CONSIDERED THE ALLEGATIO N OF CHANGE OF OPINION IN PROPER LEGAL PERSPECTIVE. 7. AGGRIEVED BY THIS ORDER OF LD CIT(A) NOW THE ASS ESSEE IS IN APPEAL BEFORE US. 8. AT THE TIME OF HEARING LEARNED COUNSEL OF THE AS SESSEE REITERATED THE SUBMISSION MADE BEFORE THE LD. CIT(A) PLACING R ELIANCE ON THE FOLLOWING DECISIONS:- - ACIT V FAG BEARINGS INDIA LTD ITA NO. 4564/AHD/20 07 - CIT V. M/S. USHA INTERNATIONAL LTD [2002] 348 ITR 485 (DELHI) (FB) - GUJARAT POWER CORPORATION LTD V. ACIT (2002) 26 T AXNABB COM 51 (GUJ) LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF LO WER AUTHORITIES AND THE FOLLOWING CASE LAWS: I) GALA GYMKHANA (P) LTD VS. ACIT [2012] 27 TAXMANN .COM 294 (GUJ) II) SUN PHARMACEUTICAL INDUSTRIES LTD VS. DCIT [201 2] 25 TAXMANN.COM 509 (GUJ) III) SUN PHARMACEUTICAL INDUSTRIES LTD VS. DCIT [20 13] 29 TAXMANN.COM 262 (GUJ) IV) JEANS KNIT (P) LTD VS. DCIT [2013] 38 TAXMANN. COM 112(KARNATAKA) V) SRI SAKTHI TEXTILES LTD VS. JCIT [2010] 193 TAXM AN 216 (MAD) VI) EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LT D VS. ACIT [2013] 30 TAXMANN.COM 211(BOMBAY) VII) CIT VS. USHA INTERNATIONAL LTD [2012] 25 TAXMA NN.COM 200 (DELHI) (FB) VIII) BHARAT V. PATEL VS. UNION OF INDIA [2004] 134 TAXMAN 178 (GUJ) ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 10 IX) JCIT VS. S.C. CHEMICALS [2006] ITD 41 (AHD). X) JAWAND SONS VS. CIT(A)-II [2010] TAXMAN 144 (PUN J. & HAR) 9. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THERE IS NO DISPUTE THAT REOPENING OF ASSESSMENT IN THIS CASE HAS BEEN DONE WITHIN 4 YEARS. WE FURTHER FIND THAT AO WHILE ALLOWING CLAIM OF THE ASSESSEE U/S. 80HHC AMOUNTING TO RS. 23 28 535/- ON TRADED GOODS HAS OBSERVED AS UNDER WHILE PASSING HIS ORIGINAL OR DER:- 15. DEDUCTION U/S. 80HHC : ASSESSEE COMPANY HAS CLAIMED THE DEDUCTION U/S. 80H HC OF RS. 39 60 973/- IN RESPECT OF EXPORT OF TRADED GOOD S AND EXPORT OF GOODS MANUFACTURED BY ITSELF. BOTH THE DEDUCTIONS ARE WORKED OUT SEPARATELY AFTER CONSIDERING THE FOLLOWING: (A) DEDUCTION U/S. 80HHC ON TRADED GOODS TO CALCULATE THE PROFIT EARNED ON EXPORT OF TRADING GOODS ASSESSEE HAS EXCLUDED INDIRECT EXPENSES SUCH AS FAC TORY OVERHEADS NON-RECEIVABLES SALES-TAX ADVERTISEMENT SALES PROMOTION DISCOUNT FREIGHT OUTWARDS AND ROYALTY O N DOMESTIC SALES. IT WAS CONTENDED BY THE ASSESSEE THAT AS THESE EXPE NSES PERTAIN TO DOMESTIC SALES THEY SHOULD BE EXCLUDED FROM INDIRE CT EXPENSED FOR WORKING OUT THE DEDUCTION U/S. 80HHC ON TRADING GOO DS EXPORTS. ASSESSEE WAS ASKED TO EXPLAIN WHY ALL THE OTHER EXP ENSES WHICH WERE NOT DIRECTLY ATTRIBUTABLE TO EXPORT OF TRADING GOODS SHOULD NOT BE CONSIDERED AS INDIRECT COST AND BE APPORTIONED A CCORDINGLY. IN ITS REPLY DATED 9-2-98 ASSESSEE STATED THAT ENT IRE EXPORT OF TRADING GOODS WERE CARRIED OUT FROM BARODA OFFICE O NLY AND AS PER SUB-SECTION 3 OF SECTION 80HHC THE PROFIT DERIVED FROM SUCH EXPORT SHALL BE EXPORT TURNOVER IN RESPECT OF SUCH TRADING GOODS AS REDUCED BY THE DIRECT COSTS AND INDIRECT COSTS ATTRIBUTABLE TO SUCH EXPORTS. IT CAN ALSO ARGUED BY THE ASSESSEE THAT IT WAS CLEARLY ABLE TO CORRELATE AND IDENTIFY THE TRADING GOODS EXPORTED FROM BARODA AS AGAINST PITHAMPUR OFFICE AND DEPOT OFFICE EXPENSES. ASSESS EES CONTENTIONS ARE VERIFIED IN DEPTH AND IT IS FOUND T O BE CORRECT IN VIEW OF THE FACT THAT ASSESSEE IS ABLE TO IDENTIFY AND C ORRELATE EVERY EXPORT WITH SPECIFIC PURCHASES MADE FROM BARODA OFF ICE. IN VIEW OF ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 11 THESE FACTS ASSESSEES CLAIM U/S. 80HHC AMOUNTING T O RS. 23 28 535/- ON EXPORT OF TRADING GOODS IS HEREBY AL LOWED. IT IS CLEAR FROM THE ABOVE THAT WHILE ALLOWING THE CLAIM OF THE ASSESSEE U/S. 80HHC DETAILED INQUIRY WAS MADE AS TO WHY ALL THE O THER EXPENSES WHICH WERE NOT DIRECTLY ATTRIBUTABLE TO EXPORT OF TRADIN G GOODS SHOULD NOT BE CONSIDERED AS INDIRECT COST AND BE APPORTIONED ACCO RDINGLY AND ONLY AFTER VERIFYING THE ASSESSEES CONTENTION WHICH WAS FOUND TO BE CORRECT AS THE ASSESSEE WAS ABLE TO IDENTIFY AND CO-RELATE EVERY E XPORT WITH SPECIFIC PURCHASES MADE FROM BARODA OFFICE AO ALLOWED THE C LAIM OF THE ASSESSEE. IN VIEW OF THESE UNDISPUTED FACTS OF THI S CASE WE ARE OF THE CONSIDERED OPINION THAT REOPENING OF THE ASSESSMENT ON THE PART OF THE AO WAS NOTHING BUT A CASE OF CHANGE OF OPINION WHICH I S NOT SUSTAINABLE IN LAW. THIS VIEW OF OURS GET SUPPORT FROM JUDGMENT O F HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT POWER CORPORATION LTD VS. ACIT WHEREIN ON SIMILAR FACTS HONBLE COURT HELD AS UNDER: 51. IN OUR OPINION ANY SUCH REOPENING WOULD BE BA SED ON A MERE CHANGE OF OPINION. IN THE REASONS THE ASSESSI NG OFFICER STARTED WITH THE WORDS 'FROM THE RECORDS IT CAN BE SEEN THAT .....'. ENTIRE INFORMATION AND THE MATERIAL THAT TH E ASSESSING OFFICER THEREFORE HAD AT HIS COMMAND WAS REFLECTE D FROM THE RECORD ITSELF. THIS COUPLED WITH THE FACT THAT IN T HE ORIGINAL ASSESSMENT THE ASSESSING OFFICER EXAMINED SUCH CLA IMS IN DETAIL WOULD CONVINCE US THAT ANY REOPENING OF THE ASSESSMENT OF SAME CLAIMS ON THE BASIS OF SAME MATERIAL AMOUNT S TO A MERE CHANGE OF OPINION. THE FACT THAT THE ASSESSING OFFICER DID NOT RECORD REASONS FOR MAKING NO DISALLOWANCE ON SU CH CLAIM OF EXEMPTION WOULD HE OF NO CONSEQUENCE. 52. IN THE RESULT WE ARE OF THE OPINION THAT THE N OTICE WAS ISSUED WITHOUT JURISDICTION. THE SAME THEREFORE R EQUIRES TO BE AND IS HEREBY QUASHED. RULE IS MADE ABSOLUTE ACCORD INGLY WITH NO ORDER AS TO COSTS. ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 12 AND THE DECISION OF ITAT AHMEDAD IN ITA NO. 4564/A HD/2007 IN THE CASE OF ACIT VS M/S FAG BEARING INDIA LTD DATED 06-07-20 12 IN WHICH ON SIMILAR FACTS HONBLE ITAT HAS FOUND RE-OPENING OF THE ASSESSMENT AS BAD IN LAW BY PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE BY OBSERVING AS UNDER:- 9. HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND TRADING OF BALL AND ROLLERS BEARING HAVING TWO UNITS; ONE WHICH IS IN EXISTENCE SINCE 1962 AND THE OTHER UNIT SET UP AS 100% EXPORT ORIENTED U NIT IN 1966-67. THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE A.O. WITHO UT MAKING ANY ADJUSTMENT IN THE PROFIT OF EOU. THIS ASSESSMENT HA S BEEN REOPENED AFTER RECORDING THE REASONS TO THE EFFECT THAT DURI NG THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2003-04 IT WAS FOUN D THAT ALLOCATION OF EXPENSES BETWEEN THE DTA AND EOU UNIT HAS NOT BEEN PROPERLY DONE AND EXPENSES ARE TO BE CHARGED TO THE EOU ALSO AND IN ORDER TO COMPUTE THE BENEFIT U/S 10B IN THE RATIO OF TURN OVER OF EO U AND THE DTA BECAUSE THESE EXPENSES ARE RELATABLE TO THE EOU ALSO. THE A SSESSEE'S CASE IS THAT THE QUESTION OF SUCH CLAIM WAS SUBJECT MATTER OF ENQUIRY AT THE STAGE OF ORIGINAL ASSESSMENT PROCEEDINGS WITH A QUESTIONN AIRE DATED 18.03.2004 IN WHICH VIDE PARA 13 OF THIS LETTER THE A.O. SPECIFICALLY REQUIRED THE ASSESSEE TO FURNISH CERTIFIED COPY OF THE PROFIT AND LOSS ACCOUNTS AND THE BALANCE SHEET OF THE UNIT EOU CLAI MING EXEMPTION OF INCOME U/S 10B OF THE ACT AND TO FURNISH THE SAME A LONG WITH THE DETAIL OF SALES/PURCHASES OTHER INCOME AND MAJOR EXPENSES. I N CASE OF FAILURE IT WAS PROPOSED TO DISALLOW THE CLAIM AND CONSIDER THE SAME AS TAXABLE INCOME OF THE ASSESSEE (PAGE 67 OF THE PAPER BOOK). THE ASSESSEE VIDE ITS LETTER DATED 25.03.2004 FURNISHED THE DETAIL AT PARA 11 BY STATING THAT REQUIRED DETAILS ARE ENCLOSED ALONG WITH WORKING OF PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDING 31.03.2001 FOR EOU UNI T. THESE DETAILS ALSO INCLUDED ALLOCATION OF COMMON EXPENSES ALONG WITH T HE BASIS OF ALLOCATION INCURRED FOR THE SAID EOU. COMPLETE BREAK UP OF THE PROFIT AND LOSS ACCOUNTS AS PER SCHEDULE-VI OF THE COMPANIES ACT SHOWING SEPARATELY FOR EOU AND OTHER UNITS WAS ALSO FURNISHED. THESE D ETAILS ARE AVAILABLE AT PAGES 76 AND 78 TO 80 OF ASSESSEE'S PAPER BOOK. AFT ER CONSIDERING THESE DETAILED SUBMISSIONS OF THE ASSESSEE THE A.O. HAD A CCEPTED THE ASSESSEE'S CLAIM THOUGH THIS FACT WAS NOT RECORDED IN THE BODY OF THE ASSESSMENT PROCEEDINGS. SINCE THE ASSESSMENT ORDER IS SOUGHT TO BE REOPENED WITHIN THE PERIOD OF FOUR YEARS THE ONLY GROUND ON WHICH THE ASSESSEE HAS CHALLENGED THE REOPENING IS THAT IN AS MUCH AS THE A.O. HAD DURING THE COURSE OF ORIGINAL ASSESSMENT PROCE EDINGS EXAMINED THE MATTER AND IF THE SECOND VIEW IS TAKEN NOW IT IS C ASE OF CHANGE OF OPINION AND THEREFORE IMPERMISSIBLE. AFTER GOING THROUGH TH E PAPER BOOK WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT ON THE BASIS OF SAME MATERIAL THE A.O. CANNOT REOPEN THE ASSESSMENT EVEN WITHIN T HE PERIOD OF FOUR YEARS. ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 13 10. IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561 (SC) HON'BLE SUPREME COURT HAS HELD AS UNDER:- 'THE CONCEPT OF 'CHANGE OF OPINION' ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLI TERATED AFTER THE SUBSTITUTION OF SECTION 147 OF THE INCOME-TAX A CT 1961 BY THE DIRECT TAX LAWS (AMENDMENT) ACTS 1987 AND 1989. AF TER THE AMENDMENT THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BUT THIS DOES N OT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON M ERE CHANGE OF OPINION. THE CONCEPT OF 'CHANGE OF OPINION' MUST BE TREATED AS AN INBUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL L 1989 THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT PROVIDED THERE IS 'TANGIBLE MATERIAL'' TO COME TO T HE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REA SON MUST HAVE A LINK WITH THE FORMATION OF THE BELIEF.' 11. THE FACT THAT IN THE BODY OF ORIGINAL ASSESSMEN T ORDER THE A.O. DID NOT GIVE ANY SPECIFIC FINDING ACCEPTING THE CLAIM OF TH E CLAIM OF THE ASSESSEE MAKES NO DIFFERENCE IF THE ISSUE WAS PROCESSED AT T HE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. IT IS WELL SETTLED THAT IF THE ENTIRE MATERIAL HAS BEEN PLACED BY THE ASSESSEE BEFORE THE A.O. AT THE TIME WHEN THE ORIGINAL ASSESSMENT WAS MADE AND THE A.O. APPLIED HIS MIND T O THAT MATERIAL AND ACCEPTED THE VIEW TAKEN BY THE ASSESSEE. MERELY BEC AUSE HE DID NOT EXPRESS THIS IN THE ASSESSMENT ORDER THAT BY ITSELF WOULD NOT COME AS A GROUND TO A CONCLUDE THAT ASSESSEE HAS ESCAPED ASSE SSMENT AND THEREFORE THE ASSESSMENT NEEDED TO BE REOPENED. ON THE OTHER HAND IF THE A.O. DID NOT APPLY HIS MIND AND OMITTED A LAPSE THERE IS NO REASON WHY THE ASSESSEE SHOULD BE MADE TO SUFFER THE CONSE QUENCE OF THAT LAPSE. IN THE CASE OF M/S STARTRONIC INVESTMENT CON SULTANTS PVT. LTD. VS. ITO IN ITA NO.2196/AHD/2002 ON IDENTICAL FACTS HON 'BLE ITAT AHMEDABAD PLACING RELIANCE ON THE DECISION OF JURIS DICTIONAL HIGH COURT HAS HELD AS UNDER:- 'WE HAVE HEARD THE PARTIES AND CONSIDERED THE SUBMI SSIONS. IT IS TRUE THAT THE ASSESSMENT HAS BEEN REOPENED WITHIN F OUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND IN VIEW OF THE D ECISION OF THE GUJARAT HIGH COURT IN THE CASE OF PRAFFUL CHUNILAL PATE! [236 ITR 832] WHEREIN IT WAS HELD THAT ASSESSMENT CAN BE REO PENED EVEN IN CASES WHERE THERE HAS BEEN COMPLETE DISCLOSURE OF A LL THE RELEVANT FACTS NECESSARY FOR ASSESSMENT AND THE WORDS 'ESCAP ED ASSESSMENT' ARE APT TO COVER THE CASE OF DISCOVERY OF A MISTAKE IN THE ASSESSMENT CAUSED BY EITHER AN ERRONEOUS CONSTR UCTION OF THE TRANSACTION OR DUE TO ITS NON-CONSIDERATION OR CAUS ED BY A MISTAKE OF LAW APPLICABLE TO SUCH TRANSFER OR TRANSACTION. BUT IN THE PRESENT IN OUR OPINION IS NOT A ONE OF THAT TYPE. HERE TH E ASSESSING OFFICER HAS SPECIFICALLY ASKED FOR THE DETAILS AND THE ASSE SSEE HAD SUBMITTED THE DETAILS OF PAYMENTS AND ONLY THEREAFT ER THE ASSESSMENT HAS BEEN COMPLETED IN THESE CIRCUMSTANCE S TO SAY THAT THERE WAS NO CONSCIOUS DECISION HAS BEEN TAKEN IN THE ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 14 ASSESSMENT ORDER MAY NOT BE PROPER. THE CASE IN OU R OPINION WOULD FALL WITHIN THE GARB OF ANOTHER DECISION OF G UJARAT HIGH COURT IN THE CASE OF GARDEN SILK MILLS (P) LTD. VS. DCIT (151 CTR 533] WHEREIN THE COURT QUASHED THE REOPENING WHERE IN TH E ORIGINAL ASSESSMENT THE ASSESSEE'S CLAIM WAS ACCEPTED. IN T HAT CASE IT SEEMS THAT THE ASSESSING OFFICER HAS ACCEPTED THE C LAIM OF THE ASSESSEE AFTER CONSIDERING THE DECISION RENDERED BY THE GUJARAT HIGH COURT IN ANOTHER CASE AND THEREAFTER THE ASSES SMENT WAS REOPENED AS THE CLAIM WAS NOT RIGHTLY ALLOWED. IN V IEW OF THIS FACT THE CIT(A) CONCLUDED THAT THE ASSESSING OFFICER CON SCIOUSLY APPLIED HIS MIND IN THE ORIGINAL ASSESSMENT AND THA T WAS THE REASON FOR QUASHING THE REASSESSMENT. BUT IN THE PR ESENT CASE ACCORDING TO HIM THE ASSESSEE HAD FURNISHED INFORM ATION ABOUT THE IMPUGNED PAYMENT BEFORE THE ASSESSING OFFICER (WITH OUT GIVING ANY REASONS REGARDING ITS ALLOW/ABILITY AS REVENUE EXPENDITURE) AND CONSIDERS THAT AFTER CONSCIOUS APPLICATION OF MIND THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM. THE COURT IN THE CA SE OF GARDEN SILK MILLS (P) LTD. (SUPRA) CLEARLY STATED THAT 'TH E CONSISTENT VIEW IS THAT EVEN AFTER AMENDMENT OF SEC. 147 MERE CHANGE O F OPINION DOES NOT CONFER JURISDICTION ON THE ITO TO INITIATE PROCEEDINGS FOR REASSESSMENT MERELY BY RESORTING TO EXPLANATION 1 O N THE BASIS OF CHANGE OF OPINION. THE ASSESSING OFFICER MADE INQUI RY ABOUT THE CLAIM OF THE ASSESSEE AND ASKED FOR THE DETAILS WH ICH WERE FURNISHED. THEREFORE IN THESE CIRCUMSTANCES IN OU R OPINION IT CANNOT BE STATED THAT IT WAS NOT A CONSCIOUS DECISI ON OF THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSE E. SIMILARLY THE DELHI HIGH COURT IN THE CASE OF JINDAL PHOTO FILMS LTD VS. DCIT [234 ITR 170] HELD THAT WHERE A CLAIM HAS BEEN CONS IDERED IN THE ORIGINAL ASSESSMENT WITHOUT ANY FURTHER MATERIAL ON RECORD. IT CANNOT BE REOPENED AND IT WOULD AMOUNT TO CHANGE OF OPINION WHICH IS NOT PERMISSIBLE EVEN AFTER THE AMENDMENT A ND THE CASE FALLS WITHIN THE FOUR YEARS TIME LIMIT. WE THEREFO RE HOLD THAT REOPENING WAS NOT PROPER AND QUASH THE SAME. EVEN O THERWISE WE FIND THAT THE EXPENDITURE ON MEMBERSHIP FEES PAI D TO VADODARA STOCK EXCHANGE IS COVERED BY THE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. VENKATASUBRAMANIAM [207 CTR (MAD) 88] WHEREIN THE COURT HELD THAT THE PAYMENT OF ADMISSION FEES A S WELL AS CONTRIBUTION TO INFRASTRUCTURE DEVELOPMENT FUND TO ACQUIRE THE MEMBERSHIP OF COIMBATORE STOCK EXCHANGE AND TO CARR Y ON THE BUSINESS AT THE TERMINAL OF THE STOCK EXCHANGE IS R EVENUE EXPENDITURE. IN VIEW OF THIS ALSO THE REOPENING DOE S NOT SEEM TO BE JUSTIFIED. WE ACCORDINGLY HOLD THAT REOPENING OF ASSESSMENT WAS INVALID AND CANCEL THE ASSESSMENT.' 12. THE CASE LAW OF HON'BLE APEX COURT RELIED UPON BY THE REVENUE IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THIS CASE BECAUSE IN THA T CASE NO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS DONE IN THE FI RST PLACE AND THE RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S 143( L)(A) OF THE ACT AND IN ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 15 VIEW OF THIS REASSESSMENT PROCEEDINGS U/S 147 OF TH E ACT WERE HELD TO BE VALID BY THE HON'BLE APEX COURT. INTERESTINGLY JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF USHA INTERNATIONAL LTD RELIED BY THE DR ALSO SUPPORT THE CASE OF ASSESSEE AS IN THIS CASE HONBLE COURT HELD THAT REASSESSMENT PROC EEDINGS WILL BE INVALID IN CASE ISSUE OR QUERY IS RAISED AND ANSWERED BY AS SESSEE IN ORIGINAL ASSESSMENT PROCEEDINGS AND AO DOES NOT MAKE ANY ADD ITION IN ASSESSMENT ORDER. 9.1 IN NONE OF THE CASE LAWS RELIED BY REVENUE AO M ADE SUCH INQUIRIES AS HAS BEEN DONE IN THIS CASE IN THE ORIGINAL ASSES SMENT PROCEEDINGS AND ALLOWED THE CLAIM OF ASSESSEE BY GIVING CLEAR FINDI NG IN ASSESSEES FAAVOUR IN RESPECT OF THE ISSUE WHICH WAS THE SUBJE CT MATTER OF REOPENING OF ASSESSMENT. FACTS BEING ENTIRELY DIFFERENT IN THOSE CASES THE HONBLE COURTS HELD IN THOSE CASES THAT IT CANNOT BE SAID T HAT AO FORM ANY OPINION IN THE ORIGINAL PROCEEDINGS AND THEREFORE REOPENING WAS HELD TO BE VALID 9.2 IN VIEW OF THE ABOVE DISCUSSION ORDER PASSED BY AO U/S. 143(3) READ WITH SECTION 147 IS NOT SUSTAINABLE IN LAW AND THE SAME IS HEREBY QUASHED. 10. IN THE RESULT BOTH THESE GROUNDS OF ASSESSEE A RE ALLOWED. 11. IN VIEW OF OUR ABOVE DECISION QUASHING THE ASSE SSMENT ORDER PASSED BY AO OTHER GROUNDS TAKEN BY THE ASSESSEE D O NOT REQUIRE ANY ADJUDICATION. ITA NOS. 1506 &1507/AHD/2010 A.Y. 1995-96 & 1 997-98 M/S. PANASONIC ENERGY INDIA CO. LTD VS. ITO PAGE 16 12. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 24 .04.2014 SD/- SD/- (ANIL CHATURVEDI) (D.K.TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER A.K. 2 2 2 2 + ++ + -#3 -#3 -#3 -#3 431# 431# 431# 431# / COPY OF ORDER FORWARDED TO:- 1. )* / APPELLANT 2. -)* / RESPONDENT 3. # $8 / CONCERNED CIT 4. $8- / CIT (A) 5. 3< -#! / DR ITAT AHMEDABAD 6. > ?@ / GUARD FILE. BY ORDER/ 2 A/ C (