J.V. GOKAL & CO., MUMBAI v. ACIT 12(3), MUMBAI

ITA 9108/MUM/2010 | 2004-2005
Pronouncement Date: 21-11-2014 | Result: Allowed

Appeal Details

RSA Number 910819914 RSA 2010
Assessee PAN AAAFJ1733H
Bench Mumbai
Appeal Number ITA 9108/MUM/2010
Duration Of Justice 3 year(s) 10 month(s) 23 day(s)
Appellant J.V. GOKAL & CO., MUMBAI
Respondent ACIT 12(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted L
Tribunal Order Date 21-11-2014
Date Of Final Hearing 19-11-2014
Next Hearing Date 19-11-2014
Assessment Year 2004-2005
Appeal Filed On 28-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'L' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER ITA NO. 9108/MUM/2010 (ASSESSMENT YEAR: 2004-05) M/S. J.V. GOKAL & CO. VS. ASSISTANT COMMISSIONER OF KASTURI BUILDING 171/172 J. TATA ROAD CHRUCHGATE MUMBAI 400020 INCOME TAX 12(3) MUMBAI PAN - AAAFJ1733H APPELLANT RESPONDENT APPELLANT BY: SHRI S.C. TIWARI RESPONDENT BY: SHRI VIVEK A. PERAMPURNA DATE OF HEARING: 19.11.2014 DATE OF PRONOUNCEMENT: 21.11.2014 O R D E R PER D. MANMOHAN V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSE SSEE-FIRM AND IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-23 MUMBAI. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. THE ASSESSEE-FIRM IS BASICALLY AN EXPORTER OF TEA. IN R ESPECT OF PREVIOUS YEAR RELEVANT TO AY 2004-05 IT DECLARED TOTAL INCOME OF ` 4.63 CRORES. ALONGWITH THE RETURN IT FILED AUDITED BALANCE SHEET PROFIT & LOSS ACCOUNT AND TAX AUDIT REPORT UNDER SECTION 44AB ALONGWITH ITS ANNEX URES. ASSESSEE MADE THE FOLLOWING PAYMENTS TO NON-RESIDENT COMPANY I.E . M/S. J.V. OVERSEAS TRADING LTD.: I) ADVERTISEMENT EXPENSES ` 1 25 47 870/- II) COMMISSION PAID ` 1 00 82 080/- 3. IN THE ANNEXURE TO TAX AUDIT REPORT IT WAS STATED A S UNDER: CLAUSE 17(III)(F): AMOUNTS INADMISSIBLE UNDER SECT ION 40(A) NIL ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 2 NOTE: ADVERTISEMENT EXPENSES OF RS.1 25 47 870/- IS PAID TO M/S. JV OVERSEAS TRADING LIMITED BRITISH VIRGIN ISLANDS FOR ADVERTISEMENT OF TEAS ON KAZAKHSTAN TELEVISION. NO TAX IS CONSIDE RED AS DEDUCTIBLE AND PAYABLE THEREON AS THE ADVERTISEMENT HAS BEEN E FFECTED OUTSIDE INDIA BY M/S. JV OVERSEAS TRADING LIMITED ON OUR BE HALF. COMMISSION OF RS.1 00 82 080/- IS PAID TO M/S. JV O VERSEAS TRADING LIMITED BRITISH VIRGIN ISLAND. NO TAX IS CONSIDERE D AS DEDUCTIBLE AND PAYABLE THEREON AS M/S. OVERSEAS TRADING LIMITED HA S ACTED AS SELLING AGENTS OUTSIDE INDIA AND HAVE NO BUSINESS I N INDIA. RELIANCE IS PLACED ON SUPREME COURTS DECISION IN T HE CASE OF C.I.T. V/S. TOSHOKU LTD. 124-ITR-525. 4. DURING THE COURSE OF SCRUTINY PROCEEDINGS THE AUTHO RISED REPRESENTATIVE OF THE ASSESSEE REPRESENTED FROM TIM E TO TIME AND FURNISHED THE DETAILS AS CALLED FOR. DURING THE COURSE OF EXA MINATION OF BOOKS OF ACCOUNT THE AO NOTICED THAT DURING THE PREVIOUS YEA R RELEVANT TO AY 2003- 04 ONWARDS THE ASSESSEE STARTED EXPORTING OTHER TRA DITIONAL AND NON- TRADITIONAL ITEMS ALSO. HE ALSO OBSERVED THAT THE C OMPARATIVE GP RATIO SHOWS A DECLINE IN THE OVERALL PERFORMANCE OF THE ASSESSE E; THE GP IS SHOWN AT 16.92% FOR AY 2003-04 WHEREAS FOR THIS YEAR IT WAS 10.78%. ASSESSEE WAS ASKED TO EXPLAIN THE DROP IN GP RATIO TO WHICH IT W AS EXPLAINED THAT DUE TO SHIFT IN DEMAND FROM PACKET TEA TO BULK TEA THERE W AS A FALL IN THE PRICE AND RESULTANT PROFIT. THE AO EXAMINED VARIOUS DETAILS O F EXPENDITURE AND NOTED THAT THE ASSESSEE HAS BUSINESS CONNECTION WITH FORE IGN CLIENTS. HAVING REGARD TO THE OVERALL CIRCUMSTANCES HE MADE CERTAIN DISALLOWANCES UNDER THE HEADS VEHICLE EXPENSES TELEPHONE EXPENSES FOREIGN TRAVEL EXPENSES ETC. HE COMPLETED THE ASSESSMENT ON A TOT AL INCOME OF ` 4.71 CRORES. 5. THOUGH THE ORDER DATED 26.12.2006 WAS PASSED BY THE AO AFTER THOROUGH SCRUTINY OF THE DETAILS FILED ALONGWITH RE TURN OF INCOME THE NEW INCUMBENT AO SOUGHT TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE INCURRED ADVERTISEMENT EXPENSES AND PAID C OMMISSION TO M/S. JV OVERSEAS TRADING LTD. BRITISH VIRGIN ISLAND AND NO TAX HAS BEEN DEDUCTED WHEREBY SECTION 40(A)(I) GETS ATTRACTED AND THEREFO RE ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 21.03.2009. IN RESPONSE T HERETO THE ASSESSEE SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS MADE AFT ER CONSIDERING ALL ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 3 PERTINENT ISSUES AND HENCE A RELOOK ON THE SAME ISS UES IS UNWARRANTED. IT WAS ALSO CONTENDED THAT IN ORDER TO REOPEN THE ASSE SSMENT MERE CHANGE OF OPINION IS NOT SUFFICIENT; THERE SHOULD BE REASON TO BELIEVE WHICH CANNOT BE EQUATED TO SUBJECTIVE SATISFACTION ON THE PART OF THE AO. 6. IT WAS CONTENDED THAT M/S. J.V. OVERSEAS TRADING LT D. HAS ACTED AS SELLING AGENT OUTSIDE INDIA AND HAS NO BUSINESS OPE RATIONS IN INDIA. THEY HAVE NOT RENDERED SERVICES IN INDIA AND HENCE THE P AYMENTS MADE WERE EARNED BY THE NON-RESIDENT FOR THE SERVICES RENDERE D OUTSIDE INDIA AND CANNOT BE DEEMED TO BE INCOME WHICH HAD ACCRUED IN INDIA. 7. THE AO WAS HOWEVER OF THE OPINION THAT EVEN IF TH E SAME IS PAYABLE OUTSIDE INDIA SINCE IT IS IN THE FORM OF PAYMENT M ADE TO A NON-RESIDENT THERE IS AN OBLIGATION ON THE PAYER TO DEDUCT TAX A T SOURCE AND FAILURE TO DEDUCT TAX WOULD ATTRACT PROVISIONS OF SECTION 40(A )(I) OF THE ACT. HE ACCORDINGLY COMPLETED THE ASSESSMENT ON A TOTAL INC OME OF ` 6.95 CRORES. 8. AGGRIEVED ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE AO HAS NOT ESTABLISHED THAT HE HAS REASON TO BELIEVE THAT THE ORIGINAL ASSESSMENT WAS MADE DUE TO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH ARE NECESSARY FO R THE ASSESSMENT. IT WAS ALSO CONTENDED THAT REOPENING OF ASSESSMENT UNDER S ECTION 147 IS VOID ABINITIO SINCE THE ORIGINAL ASSESSMENT WAS FRAMED D ULY CONSIDERING THE MERITS OF ALL THE RELEVANT FACTS AND ISSUES AND ON MERE CHANGE OF OPINION THE AO IS NOT ENTITLED TO REOPEN THE ASSESSMENT EVEN WI THIN FOUR YEARS PERIOD. 9. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSE SSEE CONTENDED BEFORE THE CIT(A) THAT THE EXPRESSION REASON TO BE LIEVE DOES NOT MEAN PURELY SUBJECTIVE SATISFACTION ON THE PART OF THE A O. IN OTHER WORDS REOPENING IS NOT VALID ON MERE CHANGE OF OPINION EV EN UNDER THE AMENDED SECTION 147. IF ALL THE MATERIAL PARTICULARS ARE AV AILABLE ON RECORD AND THEY ARE IN THE KNOWLEDGE OF THE AO AT THE TIME OF MAKIN G THE ORIGINAL ASSESSMENT AND THE AO DOES NOT MAKE ANY ADDITION ON ACCOUNT THEREOF THEN IT HAS TO BE PRESUMED THAT THE AO HAS REACHED A CON CLUSION THAT NO ADDITION IS REQUIRED TO BE MADE AND THE NEW INCUMBENT AO CAN NOT SUBSTITUTE HIS ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 4 VIEW ON THE MATTER BY ISSUING A NOTICE UNDER SECTIO N 148 OF THE ACT. IT WAS ALSO STATED THAT ALL THE DETAILS RELATED TO THESE P AYMENTS HAVE BEEN DISCLOSED VIDE ANNEXURE-9 AND ON THE BASIS OF MATERIAL THAT W AS PRODUCED THE AO ACCEPTED THE PAYMENTS AND HENCE THE AO IS NOT JUSTI FIED IN INITIATING PROCEEDINGS UNDER SECTION 147. IT WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A) THAT THE AO REOPENED ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM AUDIT PARTY WHICH IMPLIES THAT HE HAS NO REASO N TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 10. THE LEARNED CIT(A) HOWEVER OBSERVED THAT SECTION 147 WAS AMENDED W.E.F. 01.04.1989 WHEREBY THE SCOPE OF REASSESSMENT HAS BEEN WIDENED AND THE ONLY RESTRICTION IN THIS SECTION IS THAT THE AO HAS TO PROVE THAT HE HAS REASON TO BELIEVE THAT THE INCOME ESCAPED ASSESSM ENT. UNDER EXPLANATION 1 TO THE PROVISO MERE PRODUCTION OF BALANCE SHEET O R ACCOUNT BOOKS WOULD NOT AMOUNT TO DISCLOSURE OF MATERIAL FACTS. THUS TH E AO IS ENTITLED TO MAKE A PRELIMINARY ENQUIRY EVEN DURING THE REASSESSMENT PR OCEEDINGS SO LONG AS THE PROCEEDINGS ARE INITIATED WITHIN FOUR YEARS. HE RELIED UPON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GR UH FINANCE LTD. 243 ITR 482 TO CONCLUDE THAT AFTER THE AMENDMENT EVEN CHANGE OF OPINION CAN RESULT IN REOPENING OF ASSESSMENT WITHIN FOUR YEARS . HE THUS UPHELD THE REASSESSMENT PROCEEDINGS AND EVEN ON MERITS HE OB SERVED UTILISATION OF SERVICES IN INDIA IS ENOUGH TO ATTRACT ITS TAXABILI TY IN INDIA AND THUS THE ASSESSEE IS DUTY BOUND TO DEDUCT TAX AT SOURCE AS O THERWISE PROVISIONS OF SECTION 40(A) ARE LIABLE TO BE ATTRACTED. 11. FURTHER AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTENTION TO PAGE 128 OF THE PAPER BOOK (ANNEXURE 9 TO TAX AUDIT REPORT) TO SUBMIT THA T THE FACTUM OF INCURRING EXPENDITURE TOWARDS ADVERTISEMENT AND COM MISSION AND THE REASONS THEREOF WERE HIGHLIGHTED AND ALSO RELIED UP ON THE DECISION OF THE APEX COURT IN THE CASE OF TOSHOKU LTD. (SUPRA) TO C LAIM THAT COMMISSION PAID TO M/S. J.V. OVERSEAS TRADING LTD. BRITISH VI RGIN ISLAND AS WELL AS THE ADVERTISEMENT EXPENDITURE ARE NOT HIT BY THE PROVIS IONS OF SECTION 40(A) SINCE ADVERTISEMENT EXPENDITURE WAS EFFECTED OUTSID E INDIA AND COMMISSION ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 5 WAS PAID TO A PERSON WHO HAS NO BUSINESS OPERATIONS IN INDIA. THE LEARNED COUNSEL ALSO ADVERTED OUR ATTENTION TO PAGE 161 OF THE PAPER BOOK (ORIGINAL ASSESSMENT ORDER) TO SUBMIT THAT THE AO HAD GONE TH ROUGH ALL THE DETAILS CAREFULLY AND ALSO RECORDED THE FINDING THAT THE AS SESSEE HAD BUSINESS CONNECTION WITH ITS FOREIGN BRANCH WHILE COMPLE TING THE ASSESSMENT AND THUS THE AO IS DEEMED TO HAVE TAKEN INTO CONSIDERAT ION THE FACTUM OF PAYMENT AND THE REASONS THEREOF AND CHOSE NOT TO IN VOKE PROVISIONS OF SECTION 40(A) OF THE ACT IN WHICH EVENT THE NEW INC UMBENT AO CANNOT ARBITRARILY INVOKE PROVISIONS OF SECTION 148 OF THE ACT ON A MERE CHANGE OF OPINION IN THE ABSENCE OF ANY FRESH MATERIAL ON RE CORD. IN THIS REGARD HE RELIED UPON THE DECISION IN THE CASE OF PRAFUL CHUN ILAL PATEL 123 TAXMAN 433 WHEREIN THE FULL BENCH OF THE HON'BLE DELHI HIG H COURT HELD THAT INITIATION OF PROCEEDINGS FOR REASSESSMENT ONLY UPO N MERE CHANGE OF OPINION IS BAD IN LAW EVEN UNDER THE AMENDED PROVISIONS OF SECTION 147. IN THIS REGARD THE COURT HIGHLIGHTED THAT WHAT CANNOT BE DO NE DIRECTLY CANNOT BE DONE INDIRECTLY I.E. THE AO HAS NO JURISDICTION TO REVIEW THE ORDER AND THUS THE EXPRESSION REASON TO BELIEVE READ IN THAT PE RSPECTIVE WOULD NOT GIVE ARBITRARY POWERS TO REOPEN THE PAST ASSESSMENT ON M ERE CHANGE OF OPINION. IN PARA 12 AND 13 OF ITS ORDER THE FULL BENCH OF TH E HON'BLE DELHI COURT REFERRED TO THE DIVISION BENCH JUDGEMENT OF THE HON 'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL 236 ITR 832 AN D OBSERVED THAT THEY ARE UNABLE TO SUBSCRIBE TO THE VIEW TAKEN BY THE HON'BL E GUJARAT HIGH COURT; IT DESERVES TO BE NOTICED HERE THAT THE LEARNED CIT(A) FOLLOWED THE VIEW TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE REPOR TED IN 243 ITR 482 WHICH IN TURN WAS PASSED ON THE STRENGTH OF THE VIE W TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL P ATEL. THE LEARNED COUNSEL ALSO RELIED UPON THE FOLLOWING OBSERVATIONS OF THE HON'BLE DELHI HIGH COURT IN SUPPORT OF HIS CONTENTION THAT WHEN A REGULAR A SSESSMENT ORDER IS PASSED UPON VERIFYING THE MATERIAL ON RECORD A PRES UMPTION HAS TO BE RAISED THAT ALL THE FACTS WERE PROPERLY TAKEN ON RECORD IN WHICH EVENT REOPENING ON THE SAME SET OF MATERIAL WOULD AMOUNT TO CHANGE OF OPINION: - 23. WE ALSO CANNOT ACCEPT SUBMISSION OF MR. JOLLY TO THE EFFECT THAT ONLY BECAUSE IN THE ASSESSMENT ORDER DETAILED REAS ONS HAVE NOT BEEN ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 6 RECORDED ON ANALYSIS OF THE MATERIALS ON THE RECORD BY ITSELF MAY JUSTIFY THE AO TO INITIATE A PROCEEDING UNDER S. 14 7 OF THE ACT. THE SAID SUBMISSION IS FALLACIOUS. AN ORDER OF ASSESSMENT CA N BE PASSED EITHER IN TERMS OF SUB-S. (1) OF S. 143 OR SUB-S. (3) OF S . 143. WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF THE SAID- SUB-S. (3) OF S. 143 A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUM PTION CAN ALSO BE RAISED TO THE EFFECT THAT IN TERMS OF CL. (E) OF S. 114 OF THE INDIAN EVIDENCE ACT THE JUDICIAL AND OFFICIAL ACTS HAVE BE EN REGULARLY PERFORMED. IF IT BE HELD THAT AN ORDER WHICH HAS BE EN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSEL F CONFER JURISDICTION UPON THE AO TO REOPEN THE PROCEEDING WITHOUT ANYTHI NG FURTHER THE SAME WOULD AMOUNT TO GIVING PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN WRONG. 12. THE LEARNED COUNSEL ALSO SUBMITTED THAT THE FULL BE NCH DECISION OF THE HON'BLE DELHI HIGH COURT WAS AFFIRMED BY THE HO N'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. [SEE 320 ITR 5 61 (SC)] WHEREIN THEIR LORDSHIPS EXPLAINED THE EXPRESSION CHANGE OF OPINI ON AS UNDER: - 4. ......... HOWEVER ONE NEEDS TO GIVE A SCHEMAT IC INTERPRETATION TO THE WORDS REASON TO BELIEVE FALLING WHICH WE ARE AFR AID S. 147 WOULD GIVE ARBITRARY POWERS TO THE AO TO REOPEN ASSESSMEN TS ON THE BASIS OF MERE CHANGE OF OPINION WHICH CANNOT BE PER SE RE ASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BE TWEEN POWER TO REVIEW AND POWER TO REASSESS. THE AO HAS NO POWER T O REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE B ASED ON FULFILMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF CH ANGE OF OPINION IS REMOVED AS CONTENDED ON BEHALF OF THE DEPARTMENT THEN IN THE GRAB OF REOPENING THE ASSESSMENT REVIEW WOULD TAKE PLAC E. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN INBUILT TE ST TO CHECK ABUSE OF POWER BY THE AO. HENCE AFTER 1 ST APRIL 1989 AO HAS POWER TO REOPEN PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO TH E CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REAS ONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. 13. HE ALSO EMPHASISED THAT OMISSION OF THE WORDS REAS ON TO BELIEVE IN SECTION 147 AND SUBSTITUTION BY OPINION WAS OBJEC TED AND VARIOUS REPRESENTATIONS WERE MADE ON THE GROUND THAT IT WOU LD GIVE ARBITRARY POWERS TO THE AO TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION AND TO ALLEVIATE THESE FEARS THE WORDS REASON TO BELIEVE ARE REINTRODUCED IN SECTION 147 IN THE PLACE OF FOR REASONS TO BE RECORDED BY HIM IN WRITING IS OF THE OPINION AND THUS IN THE ABSENCE OF ANY TANGIBLE MA TERIAL COMING TO THE NOTICE OF THE AO FOR THE FIRST TIME MERE CHANGE OF OPINION WOULD NOT ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 7 EMPOWER THE AO TO REOPEN THE ASSESSMENT. THE LEARNE D COUNSEL ALSO RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF OHM STOCK BROKERS PVT. LTD. (PG 62 OF THE PAPER BOOK) A ND REFERRED TO PARA 13 TO SUBMIT THAT THE AO IS NOT CONFERRED WITH THE POWER TO REVIEW AN ASSESSMENT AND HE CANNOT REOPEN THE ASSESSMENT ONLY BECAUSE OF A MERE CHANGE OF OPINION. HE THUS SUBMITTED THAT IF THE ASSESSEE HAS FURNISHED TO THE AO ALL PRIMARY FACTS IT HAS TO BE ASSUMED THAT THE AO HAD TAKEN ON RECORD ALL THE MATERIAL PARTICULARS WHILE MAKING THE REGULAR ASSES SMENT AND HENCE A NEW INCUMBENT AO CANNOT REOPEN THE ASSESSMENT BASED ON FRESH OPINION ARRIVED AT BY HIM ON THE SAME SUBJECT MATTER. HE THUS STRON GLY OBJECTED THE REASSESSMENT PROCEEDINGS. 14. ON THE OTHER HAND THE LEARNED D.R. STRONGLY RELIED UPON THE ORDER PASSED BY THE LEARNED CIT(A) AND SUBMITTED THAT THE AMENDED SECTION 147/148 OF THE ACT EMPOWERS THE AO TO REOPEN THE AS SESSMENT WITHIN FOUR YEARS FROM THE DATE OF MAKING THE ORIGINAL ASSESSME NT ON THE SAME SET OF MATERIAL WHICH IS ALREADY AVAILABLE ON RECORD PROVI DED HE IS SATISFIED THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. HE ALSO REFERRED TO THE ORDER PASSED BY THE AO AS WELL AS THE LEARNED CIT(A ) TO SUBMIT THAT UPON PAYMENTS MADE TO NON-RESIDENTS ASSESSEE IS DUTY BOU ND TO DEDUCT TAX AT SOURCE; IF ASSESSEE DOES NOT OBTAIN AN ORDER UNDER SECTION 195(2) OF THE ACT IT IS NOT OPEN TO THE ASSESSEE TO ARGUE THAT THE PA YMENT HAS NOT RESULTED IN TAXABLE INCOME IN THE HANDS OF THE NON-RESIDENT REC IPIENT. THUS IN THE EVENT OF NON-PAYMENT OF TAX AT SOURCE UNDER SECTION 195 PROVISIONS OF SECTION 40(1)(I) OF THE ACT ARE APPLICABLE. HE SUBMITTED TH AT THE AO IN THE ORIGINAL ASSESSMENT HAS NOT AT ALL CONSIDERED THIS ASPECT A ND HENCE THE NEW INCUMBENT AO IS JUSTIFIED IN REOPENING THE ASSESSME NT. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE CAS E LAW RELIED UPON BY THE LEARNED COUNSEL. IT IS NOT IN DISPUTE THAT DURING T HE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED ALL T HE REQUIRED DETAILS WITH REGARD TO ADVERTISEMENT EXPENDITURE INCURRED AND TH E COMMISSION PAID TO NON-RESIDENT. THE REASON AS TO WHY SECTION 40(A) IS NOT APPLICABLE WAS ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 8 ALSO MENTIONED BY TAKING SUPPORT FROM THE DECISION OF THE APEX COURT IN THE CASE OF TOSHOKU LTD. AS CAN BE NOTICED FROM THE ORI GINAL ASSESSMENT ORDER THE AO HAS THOROUGHLY EXAMINED THE FACTS OF THE CAS E AND HAD ALSO NOTED THAT THE ASSESSEE IS HAVING TRANSACTIONS WITH NON-R ESIDENT WHICH IMPLIES THAT THE AO HAD TAKEN NOTE OF ANNEXURE-9 TO TAX AUD IT REPORT. AS RIGHTLY OBSERVED BY THE HON'BLE DELHI HIGH COURT (SUPRA) WHICH IS AFFIRMED BY THE HON'BLE APEX COURT WHEN A REGULAR ASSESSMENT IS M ADE IN TERMS OF SECTION 143(3) OF THE ACT A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED BY APPLICATION OF MIND SINCE JUDICIAL AND OF FICIAL ACTS ARE DEEMED TO HAVE BEEN REGULARLY PERFORMED. IN SUCH AN EVENT OF THE MATTER MERELY BECAUSE A NEW INCUMBENT AO HAS A DIFFERENT VIEW TH E REVENUE CANNOT TAKE BENEFIT OF ITS OWN WRONG AND ARBITRARILY ASSUME THA T THERE IS ESCAPEMENT OF INCOME WITHOUT BRINGING ON RECORD ANY FRESH TANGIB LE MATERIAL TO SHOW THAT THERE IS JUSTIFICATION FOR FORMING AN OPINION THAT ASSESSEES INCOME ESCAPED ASSESSMENT. IN OTHER WORDS MERE SUBJECTIVE SATISFA CTION OF THE AO ON THE BASIS OF THE SAME SET OF MATERIAL WOULD AMOUNT TO CHANGE OF OPINION AND CANNOT BE EQUATED TO THE EXPRESSION REASONS TO BEL IEVE IN WHICH EVENT THE REASSESSMENT PROCEEDINGS IN OUR HUMBLE OPINION DE SERVE TO BE TREATED AS VOID ABINITIO. 16. IN THE CASE OF OHM STOCK BROKERS PVT. LTD. (SUPRA) THE HON'BLE BOMBAY HIGH COURT HAD TAKEN A SIMILAR VIEW WHEREIN THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE BASIS OF AUDIT OBJECTI ON. IN THIS REGARD THE COURT OBSERVED THAT THE AO IS NOT CONFERRED WITH TH E POWER TO REVIEW AN ASSESSMENT ON A MERE CHANGE OF OPINION AND IN ORDE R TO INVOKE PROVISIONS OF SECTION 147/148 THERE MUST BE TANGIBLE MATERIAL TO HOLD THAT THERE IS ESCAPEMENT OF INCOME. 17. IN THE CASE BEFORE US IT IS NOT IN DISPUTE THAT THE FACTS WERE PRESENT BEFORE THE AO; MORE PARTICULARLY ANNEXURE-9 TO THE TAX AUDIT REPORT AND IT COULD NOT HAVE BEEN OVERLOOKED BY THE AO AT THE TIM E OF MAKING ORIGINAL ASSESSMENT SINCE THE AO HAD TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAD BUSINESS CONNECTION WITH CERTAIN FOREIGN CLIENTS AN D SOME EXPENDITURE WAS ALSO INCURRED IN THAT CONNECTION. IT IS ALSO NOT OU T OF PLACE TO MENTION THAT ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 9 THE LEARNED CIT(A) RELIED UPON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GRUH FINANCE LTD. (SUPRA) WHER EIN THE PREVIOUS DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF PR AFUL CHUNILAL PATEL WAS RELIED UPON WHEREAS THE FULL BENCH OF HON'BLE DELHI HIGH COURT DISSENTED FROM THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL AND THIS VIEW OF THE HON'BLE DELHI H IGH COURT WAS AFFIRMED BY THE HON'BLE SUPREME COURT. IN SUBSTANCE THE VIEW T AKEN BY THE LEARNED CIT(A) THAT CHANGE OF OPINION CAN RESULT IN REOPEN ING OF ASSESSMENT WITHIN FOUR YEARS IS HELD TO BE NOT IN CONSONANCE WITH TH E SPIRIT OF PROVISIONS OF SECTION 147/148 OF THE ACT. 18. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US WE RESPECTFULLY FOLLOW THE DECISION OF THE HON'BLE APE X COURT IN THE CASE OF KELVINATOR INDIA LTD. (SUPRA) TO HOLD THAT THE AO S OUGHT TO REOPEN THE ASSESSMENT ON MERE CHANGE OF OPINION WHICH IS NOT P ERMISSIBLE AND HENCE WE CONCLUDE THAT THE NOTICE ISSUED UNDER SECTION 14 8 OF THE ACT IS NOT IN ACCORDANCE WITH LAW. CONSEQUENTLY WE QUASH THE REAS SESSMENT PROCEEDINGS THEREBY ALLOWING GROUND NO. 1 OF THE ASSESSEE-FIRM. SINCE REASSESSMENT PROCEEDINGS ARE HELD TO BE INVALID IN LAW THE ISSUE URGED IN GROUND NO. 2 IS ACADEMIC IN NATURE AND HENCE NOT CONSIDERED. 19. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER 2014. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATED: 21 ST NOVEMBER 2014 ITA NO. 9108/MUM/2010 M/S. J.V. GOKAL & CO. 10 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 23 MUMBAI 4. THE CIT XII MUMBAI CITY 5. THE DR L BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.