Hyderabad Study Circle, Hyderabad V. DIT, Hyderabad

ITA 1468/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3339 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 26-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: M V R PRASAD
• Keywords: Reopening of assessment; Capital asset; Depreciation; Charitable institution; Cost of acquisition; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 234B; 12A; 10B; 147; 148; 28; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NOS.1468/H/2010 ASSESSMENT YEAR: 2004- 05 M/S HYDERABAD STUDY CIRCLE, HYDERABAD PAN AAATT 1873 G VS THE ADIT (EXEMPTIONS)-I, HYDERABAD. APPELLANT RESPONDENT ITA NO.5/HYD/2011 ASSESSMENT YEAR: 2004-05 THE ADIT (EXEMPTIONS)-I, HYDERABAD VS M/S HYDERABAD STUDY CIRCLE, HYDERABAD PAN AAATT 1873 G APPELLANT RESPONDENT APPELLANT BY : SHRI M.V.R. PRASAD RESPONDENT BY : SHRI K.E. SUNIL BABU ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS PREFERRED BY THE AS SESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDERS PASSED BY THE CIT(A) IV, HYDERABAD DATED 30.9.2010 AND PERTAIN S TO THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL IN ITA NO.1468/HYD/2010: 1. THE CIT(A) OUGHT TO HAVE NOTICED THAT THE ORIGINAL ASSESSMENT IN QUESTION WAS MADE U/S 143(3) AND AS SUCH, THE REOPENING OF THE A SSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSME NT YEAR IS INVALID AND WITHOUT JURISDICTION IN TERMS OF THE FIRST PROVISO TO SECTION 147 OF THE IT ACT. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE SO CIETY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT Y EAR AND AS SUCH, THE REOPENING IS ILLEGAL. 2. THE CIT(A) OUGHT TO HAVE NOTICED THAT THE SOCIETY H AS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT AND ONCE THE REGISTRATION IS GRA NTED BY THE CIT, THE ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 2 ASSESSING OFFICER IS PROHIBITED FROM PROBING FURTHE R INTO THE OBEJECTS OF THE SOCIETY, AS HELD BY THE APEX COURT IN ACIT VS. SURA T CITY ZYMKHANA (300 ITR 214). 3. THE CIT(A) ERRED IN HOLDING THAT THE OBJECTS OF THE SOCIETY ARE NOT CHARITABLE WITHIN THE SCOPE OF SECTION 2(15) OF THE ACT. THEY ARE OF AN EDUCATIONAL NATURE OR IN THE ALTERNATIVE, FOR THE ADVANCEMENT O F OBJECT OF GENERAL PUBLIC UTILITY AND AS SUCH, ARE CHARITABLE. 4. THE CIT(A) OUGHT TO HAVE HELD THAT THE GROSS RECEIP TS OF THE SOCIETY CANNOT BE BROUGHT TO TAX AND A DEDUCTION HAS TO BE GIVEN FOR AT LEAST THE REVENUE EXPENDITURE INCURRED BY IT. 5. THE CIT(A) OUGHT TO HAVE HELD THAT THE CLAIM OF DEP RECIATION OF RS.3,63,962/- WAS IN ORDER AS THE COST OF THE RELEVANT CAPITAL AS SETS WAS NOT WRITTEN OFF TO THE PROFIT AND LOSS ACCOUNT IN THE FIRST YEAR AS ALLEGE D BY THE ASSESSING OFFICER. THE CIT(A) ALSO OUGHT TO HAVE REALISED THAT TREATING TH E CAPITAL EXPENDITURE AS APPLICATION OF INCOME IS ALTOGETHER DIFFERENT FROM ALLOWANCE OF DEPRECIATION AND DOES NOT AMOUNT TO DOUBLE ALLOWANCE. AT ANY RATE, WHEN THE EXEMPTION U/S 11 IS NOT ALLOWED, THERE IS NO QUESTION OF THE COST OF ACQUISITION OF THE CAPITAL ASSET BEING TREATED AS APPLICATION OF INCOME. 3. LATER, THE ASSESSEE HAS MODIFIED ITS GROUNDS AS FOLLOWS: 1. GROUND NO.2 MAY BE SUBSTITUTED BY THE FOLLOWING GROUN D: THE ASSESSING OFFICER HAD NO REASON TO BELIEVE THAT A NY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AS THE ASSES SEE WAS GRANTED REGISTRATION U/S 12A OF THE IT ACT, AND, AS SUCH, IS A CHARITABLE ORGANISATION WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AND ITS INCOME IS EXEMPT U/S 11 OF THE IT ACT. 2. THE WORDS DEPRECIATION OF RS.3,63,962 FIGURING IN G ROUND NO.6 MAY BE SUBSTITUTED BY THE WORDS DEPRECIATION OF RS.62,804. 3. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUND AS IT WAS INADVERTENTLY OMITTED WHILE FILING THE APPEAL: THE CIT(A) ERRED IN NOT GRANTING DEDUCTION TO THE AMOUN T OF RS.10 LAKHS TRANSFERRED TO THE BUILDING RESERVE FUND A S THE ASSESSEE SOCIETY HAD INDEED NOTIFIED THE ASSESSING OFF ICER BY WAY OF FORM NO.10 AND ALSO INVESTED THE SAID AMOUNT IN DEPO SITS WITH THE PUBLIC SECTOR BANKS WHICH IS ONE OF THE MODES SPE CIFIED U/S 11(5) OF THE ACT. 4. ON THE OTHER HAND, THE REVENUE RAISED THE FOL LOWING GROUNDS IN ITS APPEAL IN ITA NO.5/HYD/2011: ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 3 1. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS E NTITLED TO CLAIM OF DEPRECIATION OF RS.3,01,159/- FOR THE ASSESSMENT YEAR 2004-05 2. THE CIT(A) OUGHT TO HAVE SUSTAINED THE DISALLOWANCE IN THE LIGHT OF DECISION OF THE SUPREME COURT IN THE CASE OF ESCORTS LTD. AND ANOTH ER VS. UNION OF INDIA. 3. THE CIT(A) ERRED IN HOLDING THAT THE DECISION OF TH E APEX COURT LIMITED, IS NOT APPLICABLE TO TRUSTS AS THE INCOME IS NOT REQUIRED TO BE COMPUTED IN TERMS OF SECTION 28 TO 44 OF THE IT ACT, BUT IS REQUIRED TO BE COMPLETE D IN ACCORDANCE WITH SECTION 11 TO 33 OF THE IT ACT. 5. SINCE THE ASSESSEE HAS RAISED THE GROUND RELAT ING TO VALIDITY OF REOPENING OF THE ASSESSMENT WHICH IS GOING INTO THE ROUTE OF THE CASE, WE ARE INCLINED TO TAKE UP THE APPEAL OF THE ASSESS EE FIRST. 6. BRIEF FACTS RELATING TO REOPENING OF THE ASS ESSMENT ARE THAT THE ASSESSEE-SOCIETY IS A PUBLIC CHARITABLE INSTITU TION REGISTERED IN THE YEAR 1976 UNDER THE SOCIETIES REGISTRATION ACT, AND ALSO REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 IN THE YEAR 1978. THE ORIGINAL ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 WAS COMP LETED VIDE ORDER DATED 28.9.2006, PASSED U/S 143(3) OF THE IT ACT. SUBSEQUENTLY, BASED ON THE OBSERVATIONS MADE BY THE REVENUE AUDIT PARTY , WHEREIN THE REVENUE AUDIT PARTY HAS OBSERVED THAT THE ASSESSEE IS NOT A CHARITABLE INSTITUTION U/S 2(15) OF THE ACT, A NOTICE U/S 148 WAS ISSUED ON 4.3.2009 AND IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE IN ITIALLY FILED A LETTER DATED 17.3.2009 STATING THAT TO THE BEST OF THEIR K NOWLEDGE AND BONA FIDE BELIEF, NO INCOME HAS ESCAPED ASSESSMENT AND THAT T HE ORIGINAL RETURN FILED BY THEM MAY BE TREATED AS RETURN FILED IN RES PONSE TO THE SAID NOTICE. DURING THE COURSE OF REASSESSMENT PROCEEDI NGS, THE ASSESSEE HAS STATED THAT THE REOPENING OF THE ASSESSMENT IS ONLY ON THE BASIS OF MERE CHANGE OF OPINION ON THE PART OF THE ASSESSING OFF ICER BASED ON THE VERY SAME SET OF FACTS EXAMINED IN THE ORIGINAL ASSESSME NT AND STATED THAT THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT ON T HE BASIS OF THE REVENUE AUDIT PARTYS OBSERVATIONS. THE ASSESSING OFFICER HAS NOT AGREED ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 4 WITH THE CONTENTIONS OF THE ASSESSEE AND HE OBSERVE D THAT THE ASSESSEE SOCIETY IS A MERE COACHING CENTRE COACHING STUDEN TS FOR A PARTICULAR COMPETITIVE EXAMINATION/S WHICH IN HER OPINION, DOE S NOT PARTAKE THE NATURE OF IMPARTING EDUCATION AND SO IT IS NOT A CH ARITABLE INSTITUTION U/S 2(15) OF THE ACT, AND THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. ACCORDINGLY, SHE HAS MA DE AN ADDITION OF RS.27,82,415/- BEING THE GROSS FEE COLLECTIONS FR OM STUDENTS APPEARING FOR VARIOUS COMPETITIVE EXAMINATIONS, BUT DID NOT B OTHER TO DEDUCT THE RELEVANT EXPENDITURE INCURRED BY THE ASSESSEE SOCIE TY. THE ASSESSING OFFICER HAS ALSO NOT EXAMINED THE ISSUE RELATING TO ALLOWABILITY OF EXEMPTION U/S 11 THOUGH THE ASSESSEE WAS DULY REGIS TERED U/S 12A OF THE IT ACT, AND HAS FULFILLED ALL THE RELEVANT CONDITIO NS INCLUDING FURNISHING OF AUDIT REPORT U/S 12A(B) OF THE ACT, IN FORM 10B AN D THEREBY COMPLYING THE PROVISIONS OF SECTION 2(15) OF THE ACT. THE AS SESSING OFFICER HAS ALSO DISALLOWED THE CLAIM OF THE ASSESSEE RELATING TO DE PRECIATION AMOUNTING TO RS.3,63,962/- ON THE GROUND THAT THE CAPITAL ASSET WHOSE ENTIRE COST OF ACQUISITION IS EITHER WRITTEN OFF IN THE FIRST YEAR ITSELF OR THE COST OF ACQUISITION IS TREATED AS APPLICATION OF INCOME, IN SPITE OF THE FACT THAT THE ASSESSEE DID NEITHER OF THEM, I.E., NEITHER TH E COST OF ACQUISITION OF CAPITAL ASSET WAS WRITTEN OFF IN THE FIRST YEAR ITS ELF NOR THE ENTIRE COST OF ACQUISITION WAS DEBITED TO THE INCOME AND EXPENDITU RE ACCOUNT, BUT MERELY DEBITED THE ALLOWABLE DEPRECIATION TO THE IN COME AND EXPENDITURE ACCOUNT. THE ASSESSING OFFICER HAS ALSO DISALLOWED THE TRANSFER OF RS.10 LAKHS TO THE BUILDING RESERVE FUND BY DEBITING THE SAID AMOUNT TO INCOME AND EXPENDITURE ACCOUNT STATING THE REASON THAT TH E SAID AMOUNT WAS DIVERTED TO BUILDING FUND IS TREATED AS INVESTED IN UNSPECIFIED MODE, THOUGH IT WAS INVESTED IN ONE OF THE SPECIFIED MODE S BY WAY OF DEPOSITS IN THE SCHEDULED BANK, UNDER INTIMATION IN FORM 10 TO THE DEPARTMENT BEFORE THE DUE DATE. THE ASSESSING OFFICER HAS ALS O CHARGED INTEREST U/S 234B OF THE ACT. AGAINST THIS, THE ASSESSEE WENT I N APPEAL BEFORE THE ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 5 CIT(A). THE CIT(A) UPHELD THE REOPENING OF THE ASS ESSMENT PLACING RELIANCE IN THE CASE OF CIT VS, P.V.S. BEEDIES PVT LTD. (237 ITR 13) (SC) WHEREIN OBSERVED THAT REOPENING OF THE ASSESSMENT O N THE BASIS OF POSITION OF LAW POINTED OUT BY THE AUDIT PARTY IS V ALID. THE HONBLE SUPREME COURT IN THAT CASE OBSERVED THAT REOPENING OF THE ASSESSMENT IN VIEW OF THE FACTUAL INFORMATION GIVEN BY THE INTERN AL AUDIT PARTY IS VALID IN LAW. IN THE INSTANT CASE, THE CIT(A) HAS OBSERVED THAT THE ASSESSMENT WAS REOPENED ON THE BASIS OF OBJECTION BY THE REVEN UE AUDIT PARTY, THE SAME CAN BE CONSIDERED AS BRINGING TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT CERTAIN FACTUAL INFORMATION REGARDING THE CLAIMING IN THE RETURN OF INCOME. FURTHER, THE CIT(A) HAS OBSERVED THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE I.E. COACHING CLASSES, T O THE CANDIDATES APPEARING FOR COMPETITIVE EXAMINATIONS CONDUCTED BY GOVT. CANNOT BE EQUATED WITH THE TERM EDUCATION AS ENUMERATED U/S 2(15) OF THE ACT. ACCORDINGLY, HE HELD THAT THE ASSESSEE IS NOT ENTIT LED FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. HE GRANTED THE DEDUCTIO N OF DEPRECIATION OF RS.3,01,159/-. HOWEVER, HE OBSERVED THAT AN AMOUNT OF RS.10 LAKHS HAD BEEN TRANSFERRED TO THE BUILDING FUNDS WHICH IS A P ART OF THE EXPENSES OF RS.28,60,357/-CLAIMED IN RESPECT OF COACHING ACTIVI TIES. AS SUCH, THE ASSESSEE IS NOT ENTITLED TO GET ANY BENEFIT OF APPL ICATION OF SUCH INCOME, AS THE VERY ACTIVITY HAS BEEN CONSIDERED AS NOT ELI GIBLE FOR EXEMPTION U/S 10(23C)(IIIAD). AGAINST THESE FINDINGS BOTH ARE IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY PERUSE D THE MATERIAL REGARDING THE VALIDITY OF REOPENING OF THE ASSESSME NT. U/S 147 OF THE INCOME TAX ACT, 1961, COMPLETED ASSESSMENT CANNOT B E REOPENED ON MERE CHANGE OF OPINION I.E., ON THE BASIS OF SAME S ET OF FACTS AND MATERIAL WHICH WERE IN THE KNOWLEDGE OF THE ASSESSING OFFICE R. THE ASSESSING OFFICER CANNOT ISSUE NOTICE U/S 148 MERELY BECAUSE IT FELT THAT A DECISION ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 6 WHICH HAS BEEN TAKEN EARLIER IS NOT CORRECT AND NEE DS TO BE CORRECTED. THE ASSESSING OFFICER HAVING APPLIED HIS MIND TO TH E ISSUE OF ALLOWABILITY OF EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT, AFTER THE ASSESSEE FURNISHED SPECIFIC DETAILS THEREOF AND THE ASSESSEE HAS BEEN ALLOWED EXEMPTION IN REGULAR ASSESSMENT, THE IMPUGNED NOTICE U/S 148 ISS UED ON THE BASIS OF OBJECTION FROM THE REVENUE AUDIT PARTY IS NOT CORRE CT AND WITHDRAWING OF EXEMPTION U/S 10(23C) (IIIAD) BY MERELY RELYING UPO N THE EXISTING RECORDS ARE NOT VALID. THE ASSESSING OFFICER HAVING MADE T HE ASSESSMENT AFTER OBTAINING THE EXPLANATION REGARDING THE EXEMPTION C LAIMED BY THE ASSESSEE, REOPENING OF ASSESSMENT ON THE SAME SET O F FACTS AND IN THE ABSENCE OF ANY TANGIBLE MATERIAL WHICH IS NOTHING B UT MERE CHANGE OF OPINION AND THEREFORE, IN OUR OPINION, WHICH CANNOT BE SUSTAINED. BEFORE ISSUING A NOTICE U/S 148 OF THE IT ACT, THE ASSESSI NG OFFICER MUST HAVE EITHER REASONS TO BELIEVE THAT BY REASON OF THE OMI SSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR OR ALTERNATIVELY, NOTWITHS TANDING THERE HAS BEEN NO OMISSION OR FAILURE AS MENTION ABOVE ON THE PART OF THE ASSESSEE, THE ASSESSING OFFICER HAS IN CONSEQUENCE OF INFORMATION , IN HER POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR. THUS, IT IS CLEAR THAT A COMPLETED ASSESSMENT CAN ONLY BE REOPENED EITHER IF THERE WAS OMISSION O R FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL AND RELEVANT FACTS AND THE ASSESSING OFFICER MUST HAVE IN HER POSSESSION B EFORE SHE ISSUES NOTICE, SOME MATERIAL FROM WHICH SHE CAN REASONABL Y FORM A BELIEF THAT THERE HAS BEEN SOME ESCAPEMENT OF INCOME DUE TO SOM E FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FU LLY AND TRULY ALL RELEVANT AND MATERIAL FACTS. NOTWITHSTANDING, THAT THERE WA S NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS ON THE PART OF THE ASSESSEE, THE ASSESSING OFFICER CAN REOPEN THE ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 7 ASSESSMENT, IN CONSEQUENCE OF INFORMATION IN HER PO SSESSION, SUBSEQUENT TO THE FIRST ASSESSMENT HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE , AS SEEN FROM THE RECORDS, THERE IS NO NEW MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER AFTER THE COMPLETION OF THE ORIGI NAL ASSESSMENT. THE REASON FOR REOPENING THE ASSESSMENT IS OBSERVATION FROM THE REVENUE AUDIT PARTY, BUT IT WAS NOT DUE TO THE CONCEALMENT OF ANY MATERIAL PARTICULARS OR ANY FACTS BY THE ASSESSEE. FURTHER , THE REVENUE AUDIT PARTY HAS MERELY GAVE AN OPINION AND THERE BEING NO NEW FRESH MATERIAL BEFORE THE ASSESSING OFFICER, MERE CHANGE OF OPINIO N CANNOT FORM THE BASIS FOR REOPENING THE ASSESSMENT AS HELD IN THE C ASE OF CARLTON OVERSEAS PVT. LTD. VS. ITO & OTHERS (318 ITR 295) ( DEL.HC). FURTHER, THE ASSESSING OFFICER DISALLOWED THE E XEMPTION CLAIMED BY THE ASSESSEE U/S 10(23C) (IIIAD) WHICH W AS ALSO CONSISTENT WITH THE EARLIER YEAR ASSESSMENT ORDERS, THE ASSESS ING OFFICER WAS NOT JUSTIFIED IN REOPENING OF THE ASSESSMENT ON THE GRO UNDS THAT THE ASSESSEES ACTIVITIES ARE NOT IN THE NATURE OF CHAR ITABLE. IN OUR OPINION, THERE IS NO NEW INFORMATION/MATERIAL HAD COME TO TH E NOTICE OF THE ASSESSING OFFICER AFTER COMPLETION OF THE ORIGINAL ASSESSMENT TO FORM ANY BELIEF ABOUT THE ESCAPEMENT OF THE ASSESSEES INCOM E AND THAT SUCH A PURPORTED BELIEF WAS ENTIRELY BASED ON REAPPRAISAL OR RECONSIDERATION OF THE MATERIAL/INFORMATION ALREADY AVAILABLE ON RECOR D AT THE TIME OF COMPLETION OF THE ORIGINAL ASSESSMENT DATED 28.9.20 06, THE REOPENING OF ASSESSMENT IS NOT VALID. WE PLACE RELIANCE ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVIT ANOR OF INDIA LTD. (320 ITR 561) (SC)WHEREIN IT WAS OBSERVED THAT: THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFT ER THE SUBSTITUTION OF SECTION 147 OF THE IT ACT, 1961 BY THE DIRECT TAX L AWS (AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE ITA NOS.1468 & 5/H/2011 HYDERABAD STUDY CIRCLE, HYDERABAD 8 REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, BUT THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSE SSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINI ON MUST BE TREATED AS AN IN BUILT TEST TO CHECK THE ABUSE OF POWER. HENC E AFTER 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESS MENT, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION TH AT THERE WAS ESCAPEMENT OF INCOME FROM THE ASSESSMENT. REASONS MUST HAVE A LINK WITH THE FORMATION OF THE BELIEF. 8. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF T HE OPINION THAT REOPENING IS BAD IN LAW AND THE CASE RELIED BY THE CIT(A) HAVE NO RELEVANCE TO THE FACTS OF THE PRESENT CASE. 9. SINCE WE HAVE HELD THAT REOPENING IS BAD IN LA W, WE REFRAIN FROM GOING INTO THE OTHER GROUNDS RAISED BY THE ASS ESSEE. FURTHER, SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON REOPE NING OF THE ASSESSMENT, THE REVENUE APPEAL HEREIN HAS BECOME IN FRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOUS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.5. 2011 SD/- G.C. GUPTA SD/- CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED 13 TH MAY 2011 COPY FORWARDED TO: 1. THE HYDERABAD STUDY CIRCLE, 1-2-365/25/1, DOMALGUD A, HYDERABAD 2. THE DDIT (EXEMPTIONS)-I, HYDERABAD 3. THE CIT(A) IV, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/