DCIT 7(3), MUMBAI V. ZODIAC CLOTHING CO. LTD, MUMBAI

ITA 3386/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2644 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 09-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 02-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: VASANTI B PATEL
• Keywords: Rectification of order; Retrospective amendment; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO. 3386/MUM./2013 ( ASSESSMENT YEAR : 2005 06 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 7(3), AAYAKAR BHAWAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. ZODIAC CLOTHING CO. LTD. 10/76, OFF HAINES ROAD WORLI, MUMBAI 400 018 PAN AAACZ0151A .... RESPONDENT ITA NO.3387/MUM./2013 ( ASSESSMENT YEAR : 2006 07 ) DY. COMMISSIONER OF INCOME TAX C IRCLE 7(3), AAYAKAR BHAWAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. ZODIAC CLOTHING CO. LTD. 10/76, OFF HAINES ROAD WORLI, MUMBAI 400 018 PAN AAACZ0151A .... RESPONDENT ASSESSEE BY : MS. VASANTI B. PATEL REVENUE BY : SHRI VACHASPATI TRIPATHI DATE OF HEARING 1 4 . 10 .2015 DATE OF ORDER 30.10.2015 M/S. ZODIAC CLOTHING CO. LTD. 2 O R D E R PER SAKTIJIT DEY , J.M. BOTH THESE APPEALS ARE BY THE REVENUE AGAINST SEPARATE ORDERS OF THE LEARNED COMMISSIONER (APPEALS) - 13, MUMBAI, PERTAINI NG TO THE ASSESSMENT YEAR 2005 - 06 AND 2006 - 07. WE WILL FIRST TAKE UP REVENUES APPEAL IN ITA NO.3386/ MUM./ 2013 , FOR THE ASSESSMENT YEAR 2005 - 06. IN THIS APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS: - 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW IN EXTENDING THE SCOPE OF 'CHANGE OF OPINION' TO A CASE WHERE NO OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE PRESUMED DEEMED FORMATION OF OPINION. 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE SCOPE OF S ECTION 154 AND SECTION 147 OF INCOME TAX ACT ARE DIFFERENT AND THIS IS A CASE WHERE NO OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE REOPENING WAS OUTSIDE THE SCOPE OF CHANGE OF OPINION. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT THAT IN NOT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER IN REASONS RECORDED FOR REOPENING THE ASSESSMENT. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT THAT DELETING THE DISALLOWANCE AMOUNTING OF RS.7 ,00,96,048/ - U/S. 40(A) HOLDING THAT REOPENING IN INVALID AND BAD IN LAW. 2. BRIEFLY STATED THE FACTS ARE, THE ASSESSEE IS A COMPANY. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 31 ST DECEMBER 2008, DECLARING TOTAL IN COME OF ` 12,13,58,454. THE ASSESSMENT IN CASE OF ASSESSEE WAS COMPLETED M/S. ZODIAC CLOTHING CO. LTD. 3 ORIGINALLY UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) VIDE ORDER DATED 31 ST DECEMBER 2008 BY DETERMINING THE TOTAL INCOME AT ` 21,15,02,350. WHILE DETERMIN ING THE INCOME OF THE ASSESSEE AS ABOVE, THE ASSESSING OFFICER DISALLOWED COMMISSION PAYMENT MADE BY THE ASSESSEE CLAIMED AS EXPENDITURE AMOUNTING TO ` 7,00,96,048. SUBSEQUENT TO THE COMPLETION OF ASSESSMENT AS AFORESAID, THE ASSESSEE ON 28 TH JANUARY 2009, MOVED A PETITION FOR RECTIFICATION OF MISTAKE UNDER SECTION 154 OF THE ACT, FOR DELETION OF THE DISALLOWANCE MADE UNDER SECTION 40(A) (I) OF THE ACT FOR THE AMOUNT OF ` 7,00,96,048. THE ASSESSING OFFICER, AFTER VERIFYING THE DETAILS SUBMITTED BY THE ASSESS EE PASSED AN ORDER UNDER SECTION 154 OF THE ACT ON 13 TH MARCH 2009, DELETING THE ADDITION OF ` 7,00,96,048. THE ASSESSING OFFICER SUO MOTU ISSUED ANOTHER NOTICE UNDER SECTION 154 OF THE ACT ON 4 TH OCTOBER 2010, PROPOSING TO RECTIFY THE ORDER PASSED UNDER S ECTION 154 OF THE ACT PROPOSING TO RETAIN THE DISALLOWANCE OF ` 7,00,96,048 MADE UNDER SECTION 40(A) (I) OF THE ACT. AS IT APPEARS, AFTER THE ASSESSEE OBJECTED TO SUCH ACTION OF THE ASSESSING OFFICER NO FURTHER ORDER UNDER SECTION 154 WAS PASSED BY THE ASSE SSING OFFICER. THEN ON 17 TH MARCH 2011, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT RE - OPENING THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION FOR THE REASON THAT COMMISSION PAYMENT OF ` 7,00,96,048 IS NOT AN ALLOWABLE EXPENDITURE AS THE ASSESSEE HAS NOT M/S. ZODIAC CLOTHING CO. LTD. 4 DEDUCTED TAX AT SOURCE IN TERMS WITH SECTION 195 R/W SECTION 200(I) OF THE ACT. THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION OF ` 7,00,96,048 . O BSERVING THAT SUCH DEDUCTION WAS WRONGLY ALLOWED TO THE ASSESSEE IN THE ORDER PASS ED UNDER SECTION 154 , ASSESSING OFFICER HELD, THERE IS UNDER ASSESSMENT OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. THOUGH , THE ASSESSEE OBJECTED TO RE - OPENING OF THE ASSESSMENT BUT THE ASSESSING OFFICER REJECTING THE CONTENTION OF THE ASSESSEE ULTIMATELY COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT BY DISALLOWING THE AMOUNT OF ` 7,00,96,048 UNDER SECTION 40(A) (I) . BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED BY THE ASSESSING OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE LEA RNED COMMISSIONER (APPEALS) CHALLENGING THE ORDER ON THE LEGALITY OF THE RE - OPENING OF ASSESSMENT AS WELL AS ON THE MERITS OF THE DISALLOWANCE. 3. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD OBSERVED THAT THE ASSESSMENT IN CASE OF THE ASSESSEE WAS RE - OPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE ALSO NOTED THAT WHILE COMPLETING THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER HAD EXAMINED THE ISSUE AND MADE DISALLOWANCE. HOWEVER, IN RESPONSE TO THE PETITION FILED UNDER SECTION 154 SUBSEQUENT TO THE ORDER OF ASSESSMENT UNDER SECTION 143(3), THE M/S. ZODIAC CLOTHING CO. LTD. 5 ASSESSING OFFICER AGAIN EXAMINED ALL THE DETAILS AND ALLOWED ASSESSEES CLAIM BY DELETING THE ADDITION OF ` 7,00,96,048. HE, THEREFORE, OBSERVED THAT MATERIAL ON RECORD CLEARLY DEMONSTRATE THAT ALL THE DETAILS AND INFORMATION PERTAINING TO THE PAYMENT OF ` 7,00,96,048, WERE FURNISHED TO THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. HENCE, AS THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT TRULY AND FULLY, THE PROVISO OF SECTION 147 WOULD APPLY, HENCE, THE CONDITIONS PRESCRIBED INITIATING UNDER SECTION 147 ARE NOT FULFILLED. HE FURTHE R OBSERVED , RE - OPENING OF THE ASSESSMENT IS ON THE BASIS OF CHANGE OF OPINION IS PROVED FROM THE FACT THAT IN THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER FORMED AN OPINION THAT THE PAYMENT IS DISALLOWABLE UNDER SECTION 40(A) (I) . AGAIN THE SAME ASSESSING OFFICER FORMED AN OPINION THAT IT IS AN ALLOWABLE EXPENDITURE WHILE PASSING THE RECTIFIC ATION ORDER UNDER SECTION 154. T HE ASSESSING OFFICER AGAIN CHANGED HIS OPINION WITH REGARD TO THE PAYMENT MADE WHILE RE - OPENING THE ASSESSMENT UNDER SECTION 147. THERE FORE, HE CONCLUDED THAT RE - OPENING OF ASSESSMENT ON SUCH MULTIPLE CHANGE OF OPINION ON THE SAME ISSUE THAT TOO AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS NOT PERMISSIBLE. ACCORDINGLY, HE HELD TH E RE - OPENING OF ASSESSMENT UNDER SECTION 147 TO BE BAD - IN - LAW AND AS A M/S. ZODIAC CLOTHING CO. LTD. 6 CONSEQUENCE THEREOF DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE GROUNDS RAISED BY THE ASSESSING OFFICER. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, NARRATING THE SEQUENCE OF EVENT LEADING TO THE RE - OPENING OF ASSESSMENT SUBMITTED BEFORE US , NOT ONLY THE FACT THAT RE - OPENING OF ASSESSMENT IS MADE AFTER FOUR YEARS WITHOUT EVEN AN ALLEGATION THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELATING TO ITS ASSESSMENT BUT THERE IS MULTIPLE CHANGE OF OPINION BY THE ASSESSING OFFICER. IT WAS SUBMITTED , DURING THE ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE IN RESPONSE TO THE QUE RY RAISED BY THE ASSESSING OFFICER HAS PRODUCED ALL NECESSARY DETAILS AS WELL AS EVIDENCES RELATING TO THE COMMISSION PAYMENT TO NON RESIDENTS. AFTER CONSIDERING THE SAME, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY DISALLOWING THE COMMISSION PAYMENT UNDER SECTION 40(A) (I) OF THE ACT ALLEGING NON DEDUCTION OF TAX ON SUCH PAYMENT. HOWEVER, ON ASSESSEES PETITION UNDER SECTION 154, THE ASSESSING OFFICER PASSED AN ORDER ALLOWING ASSESSEES CLAIM OF COMM ISSION PAYMENT. T HEREFORE, THE ASSESSING OFFICER HAV ING ALREADY FORMED AN OPINION RE - OPENING OF ASSESSMENT ON THE BASIS OF VERY SAME FACT AND MATERIAL ON A MERE M/S. ZODIAC CLOTHING CO. LTD. 7 CHANGE OF OPINION IS NOT PERMISSIBLE. ACCORDINGLY, THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN ANNULLING THE ASSESSMENT. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT IN ASSESSEES CASE, THE ASSESSMENT WAS ORIGINAL COMPLETED UNDER SECTION 143(3). THERE IS ALSO NO DISPUTE TO THE FACT THAT ACTION UNDER SECTIO N 147 WAS INITIATED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, THE PROVISO TO SECTION 147 CLEARLY APPLIES. AS PER THE PROVISO TO SECTION 147 , IN A CASE WHERE ASSESSMENT IS COMPLETED UNDER SECTION 143(3), NO ACTION U NDER SECTION 147 CAN BE INITIATED AFTER EXPIR Y OF FOUR YEARS UNLESS THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELATING TO HIS ASSESSMENT. IN THE PRESENT CASE, ON A PERUSAL OF THE REASONS RECORDED FOR RE - O PENING OF ASSESSMENT, WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER, IT IS SEEN THAT RE - OPENING IS FOR ASSESSING THE AMOUNT OF ` 7,00,96,048, ALLOWED AS DEDUCTION TO THE ASSESSEE IN THE ORDER PASSED UNDER SECTION 154 OF THE ACT. THE REASONS RECORDED DO NOT REVEAL ANY ALLEGATION BY THE ASSESSING OFFICER THAT ESCAPEMENT OF INCOME WAS DUE TO A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELATING TO ITS ASSESSMENT. ON THE CONTRARY, THE REASONS RECORDED DEMONSTRATE THAT THE ISSUE ON WHICH THE ASSESSING OFFICER HAS RE - OPENED THE ASSESSMENT WAS CONSIDERED M/S. ZODIAC CLOTHING CO. LTD. 8 EARLIER AT TWO DIFFERENT STAGES , ON C E AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT AND AGAIN IN THE ORDER PASSED UNDER SECTION 154. ON A PERUSAL OF THE ORIGINAL ASSES SMENT ORDER PASSED UNDER SECTION 143(3), IT IS NOTICED THAT THE ASSESSING OFFICER, AFTER EXAMINING ALL DETAILS RELATING TO THE COMMISSION PAYMENT TO NON - RESIDENTS WAS OF THE VIEW THAT THE EXPENDITURE CLAIMED CANNOT BE ALLOWED AS THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS. HE, THEREFORE, DISALLOWED THE EXPENDITURE CLAIMED BY INVOKING PROVISIONS OF SECTION 40(A) (I) . WHEN THE ASSESSEE MOVED AN APPLICATION UNDER SECTION 154 BEFORE THE ASSESSING OFFICER SEEKING DELETION OF DISALLOWANCE, THE ASSESSING OFFICER AGAIN EXAMINING THE ISSUE IN DETAIL ALLOWED ASSESSEES CLAIM BY DELETING THE ADDITION OF ` 7,00,96,048, MADE UNDER SECTION 40(A) (I) . THUS, FROM THE AFORESAID FACTS, IT IS VERY MUCH CLEAR THAT THE ASSESSING OFFICER WAS FULLY AWARE OF THE ISSUE RELATING TO THE COMMISSION PAYMENT TO NON - RESIDENT AGENTS AND AFTER CONSIDERING ALL MATERIAL FACT HAS TAKEN A DECISION ON THE ISSUE NOT ONLY IN THE ORIGINAL ASSESSMENT PROCEEDINGS BUT SUBSEQUENTLY ALSO IN THE PROCEEDINGS UNDER SECTION 154. TH AT B EING THE CASE, THE ASSESSING OFFICER AGAIN CANNOT RE - OPEN THE ASSESSMENT UNDER SECTION 147 ON THE VERY SAME ISSUE AND ON THE BASIS OF SAME SET OF FACTS AND MATERIALS WHICH WERE CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND ALSO DURING THE P ROCEEDINGS UNDER SECTION 154 AS IT AMOUNTS TO M/S. ZODIAC CLOTHING CO. LTD. 9 CHANGE OF OPINION. MOREOVER, THE ASSESSING OFFICER HAVING TAKEN A CONSCIOUS DECISION IN THE ORDER PASSED UNDER SECTION 154 OF THE ACT, WHILE DELETING THE ADDITION OF ` 7,00,96,048 MADE UNDER SECTION 40(A) (I) , H E CANNOT TAKE RECOURSE T O SECTION 147 OF THE ACT TO RESTORE BACK THE ADDITION. POWER CONFERRED UNDER SECTION 147 OF THE ACT ON THE ASSESSING OFFICER HAS TO BE EXERCISED IN GENUINE CASE OF ESCAPEMENT OF INCOME EITHER DUE TO MISREPRESENTATION OR NON DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE OR BECAUSE OF NON CONSIDERATION OF A PARTICULAR ISSUE BY THE ASSESSING OFFICER IN THE ORIGINAL PROCEEDINGS. POWER OF RE OPENING CANNOT BE INVOKED ARBITRARILY AS A TOOL FOR HARASSMENT OF ASSESSEE. IN OUR VIEW, IN THE PRESENT CAS E, THE ACTION ON THE PART OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT NOT ONLY AMOUNTS TO HARASSMENT OF THE ASSESSEE BUT AN ABUSE OF PROCESS OF LAW, HENCE, CANNOT BE PERMITTED UNDER ANY CIRCUMSTANCES. THE LEARNED COMMISSIONER (APPEALS), THEREFORE, IN OUR VIEW, WAS JUSTIFIED IN HOLDING THE RE - OPENING OF ASSESSMENT TO BE INVALID AND DELETING THE ADDITION MADE. THUS, GROUNDS RAISED BY THE REVENUE BEING DEVOIDE OF MERIT DISMISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. WE NOW TAKE UP REVENUES A PPEAL IN ITA NO.3387/ MUM./ 2013, FOR THE ASSESSMENT YEAR 2006 07 . GROUNDS RAISED IN THIS APPEAL ARE AS ASSESSEE UNDER: - M/S. ZODIAC CLOTHING CO. LTD. 10 I) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN EXTENDING THE SCOPE OF 'CHANGE OF OPINION' TO A CASE WHERE NO OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE PRESUMED DEEMED FORMATION OF OPINION. II) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE SCOPE OF SECTION 154 AND SECTION 147 OF INCOME TAX ACT ARE DIFFERENT AND THIS IS A CASE WHERE N O OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE REOPENING WAS OUTSIDE THE SCOPE OF CHANGE OF OPINION. III) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT THAT IN NOT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER IN REASONS RECORDED FOR REOPENING THE ASSESSMENT. IV) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT THAT DELETING THE DISALLOWANCE AMOUNTING OF RS.7,00,96,048/ - U/S. 40(A) HOLDING THAT REOPENING IN INVALID AND BAD IN LAW. 2. THE LD. CIT(A)'S ORDER IS CONTRARY IN LAW AND ON FACTS AND DESERVES TO BE SET ASIDE. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND THAT MAY BE NECESSARY. 8. AS COULD BE SEEN, IN THIS APPEAL ALSO, THE DISPUTE IS WITH REGARD TO LEARNED COMMISSIONER (APPEALS)S DECISION IN HOLDING RE - OPENING ASSESSMENT UNDER SECTION 147 TO BE INVALID. 9. BRIEFLY STATED THE FACTS IN THE PRESENT CASE ARE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH DECEMBER 2009, DECLARING INCOME OF ` 11,73,86,121. THE ASSESSMENT IN CASE OF THE ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT ON 29 TH DECEMBER 2009. THE ASSESSING OFFICER INITIA TED ACTION UNDER SECTION 147 OF THE ACT BY ISSUING A NOTICE UNDER SECTION 148 ON 24 TH MARCH 2011, ON THE M/S. ZODIAC CLOTHING CO. LTD. 11 REASONING COMMISSION PAYMENT TO NON - RESIDENT AGENTS AMOUNTING TO ` 4,17,04,625, WITHOUT DEDUCTION OF TAX AT SOURCE WAS ALLOWED AS DEDUCTION, THEREBY RE SULTING IN UNDER ASSESSMENT OF INCOME. THOUGH , THE ASSESSEE OBJECTED TO RE - OPENING OF ASSESSMENT, BUT THE ASSESSING OFFICER REJECTING THE OBJECTION OF THE ASSESSEE COMPLETED THE ASSESSMENT BY DISALLOWING THE COMMISSION PAYMENT OF ` 4,17,04,625 BY ALLEGING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 195 R/W SECTION 200(1) OF THE ACT. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 10. BEFORE THE FIRST APPELLATE AUTHORITY, C HALLENGING THE RE - OPENING OF ASSESSMENT, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ENTIRE ISSUE RELATING TO COMMISSION PAYMENT WAS EXAMINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THAT THERE IS NO LIABILITY TO DEDUCT TAX ON SUCH PAYMENT ALLOWED THE COMMISSION PAYMENT WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3 ) OF THE ACT. SH E, THEREFORE, SUBMITTED THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE AS SESSING OFFICER FORM BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. SH E SUBMITTED , RE - OPENING OF ASSESSMENT ON AN ISSUE WHICH HAS ALREADY BEEN EXAMINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT AND IN THE ABSENCE OF ANY NEW TANGIBLE MATERIAL M/S. ZODIAC CLOTHING CO. LTD. 12 COMI NG TO THE POSSESSION OF THE ASSESSING OFFICER, AMOUNTS TO CHANGE OF OPINION, HENCE, NOT PERMISSIBLE. THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD OBSERVED THAT ALL FACT S AND MATERIALS RELATING TO THE ISSUE OF COMMISSION PAYMENT TO NON - RESIDENTS WAS BEFORE THE ASSESSING OFFICER AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT. THE ASSESSING OFFICER HAVING COMPLETED THE ORIGINAL ASSESSMENT BY APPLYING HIS MIND TO ALL FACTS AND MATERIALS RELATING TO A PARTICULAR ISSUE, THE RE - OPENING OF ASSESSMENT ON THE VERY SAME ISSUE ON A MERE CHANGE OF OPINION IS NOT PERMISSIBLE. HE, THEREFORE, HELD , THE RE - OPENING OF ASSESSMENT AS BAD - IN - LAW AND, A CCORDINGLY, DELETED THE ADDITION. 11. THE L EARN ED DEPARTMENTAL REPRESENTATIVE SUBMITTED , AS THE ASSESSING OFFICER WHILE COMPLETING THE ORIGINAL ASSESSMENT HAS N EITHER CONSIDERED NOR FORWARD ANY OPINION ON THE ISSUE ON WHICH REOPENING WAS MADE , THERE CANNOT BE ANY CHANGE OF OPINION . HE SUBMITTED THE ASSESSING OFFICER IN THE REASONS RECORDED HAS POINTED OUT THE SPECIFIC INSTANCE OF UNDER ASSESSMENT OF INCOME, THEREFORE, RE - OPENING OF ASSESSMENT IN CASE OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR IS VALID. 12. THE LEARNED COUNSEL FOR THE ASSESSEE, O N THE OTHER HAND, REFERRING TO THE REASONS RECORDED, A COPY OF WHICH IS PLACED AT PAGE - 36 M/S. ZODIAC CLOTHING CO. LTD. 13 OF THE PAPER BOOK SUBMITTED BEFORE US , NO NEW TANGIBLE MATERIAL HAS COME INTO POSSESSION OF THE ASSESSING OFFICER AFTER COMPLETING OF ORIGINAL ASSESSMENT WHICH COULD HAVE ENABLE D HIM FORM THE BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED ON THE BASIS OF VERY SAME FACTS AND MATERIAL WHICH WERE AVAILABLE ON RECORD AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMEN T, THE ASSESSING OFFICER HAS FORMED AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT. SHE SUBMITTED WHILE COMPLETING THE ORIGINAL ASSESSMENT SINCE THE ASSESSING OFFICER HAS EXAMINED ALL THESE MATERIALS AND HAS ALLOWED THE EXPENDITURE, THE RE - OPENING OF ASSESS MENT ON THE VERY SAME MATERIAL AMOUNTS TO CHANGE OF OPINION, HENCE, NOT PERMISSIBLE IN LAW. CHALLENGING THE OBSERVATIONS OF THE ASSESSING OFFICER THAT CIRCULAR NO.786 DATED 7 TH FEBRUARY 2002, OF THE CBDT WAS WITHDRAWN SUBSEQUENTLY HENCE, COMMISSION PAYMENT TO NON - RESIDENTS CANNOT BE ALLOWED, T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , SUBSEQUENT WITHDRAWAL OF CIRCULAR WILL NOT HAVE ANY EFFECT AS THE CIRCULAR NO.7 OF 2009 DATED 22 ND OCTOBER 2009 WITHDRAWING CIRCULAR NO.786 OF 2000 WILL BE OPERATIVE FROM THE DATE OF ISSUE AND WILL HAVE NO RETROSPECTIVE EFFECT. IN THIS CONTEXT, SHE RELIED UPON THE DECISION OF THE TRIBUNAL, LUCKNOW BENCH, IN DCIT V/S SANJIV GUPTA, 135 TTJ 641 (LUCK.). SHE ALSO RELIED UPON A NUMBER OF OTHER DECISIONS TO CONTEND THAT CBDT CIRC ULAR WILL BE EFFECTIVE FROM THE DATE OF ITS M/S. ZODIAC CLOTHING CO. LTD. 14 ISSUANCE. FURTHER, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , IN COURSE OF ORIGINAL PROCEEDINGS, THE ASSESSING OFFICER IN THE QUESTIONNAIRE ISSUED HAS SPECIFICALLY RAISED QUERY WITH REGARD TO PAYMENT MADE TO NON - RESIDENT AGENT AND THE REASONS FOR NOT DEDUCTING TAX ON SUCH . IT WAS SUBMITTED , IN RESPONSE TO SUCH QUERY, THE ASSESSEE HAD SUBMITTED DETAILED REPLY FURNISHING THE DETAILS OF COMMISSION PAYMENT TO THE NON - RESIDENTS AND THE REASONS FOR WHICH SUCH PAYMENTS DO NOT COME WITHIN THE PURVIEW OF SECTION 195 R/W 200(1). IN THIS CONTEXT, SHE DREW OUR ATTENTION TO EVIDENCES SUBMITTED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. SHE FURTHER SUBMITTED , ON EXAMINING THE DETAILS, THE ASSESSING OFFICER WAS SATISFIED THAT P ROVISIONS OF SECTION 195 R/W SECTION 201, WERE NOT ATTRACTED TO THE PAYMENTS MADE TO NON - RESIDENTS, THEREFORE, HE DID NOT DISALLOW SUCH PAYMENT UNDER SECTION 40(A) (I) . SHE SUBMITTED ONLY BECAUSE THE ISSUE WAS NOT DEALT WITH IN THE ASSESSMENT ORDER WILL NOT LEAD TO THE CONCLUSION THAT THE ASSESSING OFF ICER HAS NOT EXAMINED THE ISSUE AND FORMED AN OPINION. IN THIS CONTEXT, SHE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S PRIMA PAPER AND ENGINEERING INDUSTRIES, [ 2014 ] 36 4 ITR 22 2 (BOM.). SHE SUBMITTED , EVEN WHERE THE RE - OPENING IS DONE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THERE MUST BE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND SUCH REASON TO BELIEVE SHOULD NOT M/S. ZODIAC CLOTHING CO. LTD. 15 BE ON ACCOUNT OF MERE CHANGE OF OPINION. IN THIS CONTEXT SHE RELIED UPON THE FOLLOWING CASE LAWS: - I) CARTINI INDIA LTD., 314 ITR 275 (SC) ; AND II) IDEA CELLULAR LTD. V/S DCIT, 301 ITR 407 (BOM.) FINALLY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED TO PUT THE CONTROVERSY AT REST THE ASSESSEE APPLIED BEFORE THE DEPARTMENT FOR ISSUANCE OF NO DEDUCTION CERTIFICATE IN RESPECT OF COMMISSION PAYMENT TO NON - RESIDENT AGENT AND THE DEPARTMENT BEING SATISFIED THAT SUCH PAYMENTS ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE HAS ISSUED ORDER UNDE R SECTION 195 OF THE ACT FOR THE FINANCIAL YEAR 2012 - 13 PERMITTING THE ASSESSEE T O MAKE PAYMENT WITHOUT DEDUCTING TAX AT SOURCE. THUS, IT WAS SUBMITTED THE RE - OPENING OF ASSESSMENT IS INVALID. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE ORDERS OF THE DEPARTMENTAL AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. BEFORE DECIDING THE VALIDITY OF THE RE - OPENING OF ASSESSMENT, IT IS NECESSARY TO BEAR IN MIND CERTAIN FACTUAL ISSUES WHICH ARE VERY MUCH CRUCIAL IN DECIDING THE ISSUE . AS CO ULD BE SEEN ASSESSMENT IN CASE OF ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT. ON A PERUSAL OF THE REASONS RECORDED FOR RE - OPENING OF ASSESSMENT DATED 24 TH MARCH 2011, A COPY OF WHICH IS AT PAGE - 36 OF THE PAPER BOOK, IT IS OBSERVED TH AT THE ASSESSING OFFICER ON RE - M/S. ZODIAC CLOTHING CO. LTD. 16 EXAMINING THE ASSESSMENT RECORDS HAS FORMED AN OPINION THAT COMMISSION PAYMENT TO NON - RESIDENT OF ` 4,17,04,625 IS NOT ALLOWABLE AS CIRCULAR NO.786 DATED 7 TH DECEMBER 2002, HAS BEEN WITHDRAWN. THEREFORE, THERE IS AN ESCAPEMEN T OF INCOME IN TERMS WITH SECTION 147 OF THE ACT. ON ANALYSIS OF THE REASONS RECORDED, IT IS VERY MUCH CLEAR THAT NO NEW TANGIBLE MATERIAL HAS COME TO THE POSSESSION OF THE ASSESSING OFFICER AFTER COMPLETION OF ORIGINAL ASSESSMENT ON THE BASIS OF WHICH THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, IT NEEDS TO BE EXAMINED WHETHER RE - OPENING OF ASSESSMENT ON THE BASIS OF SAME SET OF FACTS AND MATERIAL WHICH WERE AVAILABLE BEFORE THE ASSESSING OFFICER AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT AMOUNTS TO CHANGE OF OPINION. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS CONTESTED SUCH ARGUMENT OF THE ASSESSEE BY SUBMITTING THAT IF IN THE ORIGINAL ASSESSMENT NO OPINION IS FORMED THERE CANNOT BE ANY CHANGE OF OPINION . IN VIEW OF SUCH ARGUMENTS, IT IS RELEVANT TO EXAMINE WHETHER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS EXAMINED THE ISSUE OF COMMISSION PAYMENT TO NON - RESIDENT OR NOT. IN THIS CONTEXT, IT IS TO BE NOTED THAT IN COURSE OF ORIGIN AL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON 17 TH NOVEMBER 2009, HAD ISSUED A QUESTIONNAIRE TO THE ASSESSEE RAISING A NUMBER OF QUERIES. IN ITEM NO.25 OF THE QUESTIONNAIRE, THE ASSESSING OFFICER RAISED FOLLOWING ISSUE. M/S. ZODIAC CLOTHING CO. LTD. 17 25. DETAILS OF PAYMENTS TO THE NON RESIDENT DURING THE YEAR AND DETAILS OF TAX DEDUCTED ON THE PAYMENT MADE. IF NO TAX IS DEDUCTED, GIVE JUSTIFICATION AS TO WHY THE PAYMENT MADE SHOULD NOT BE DISALLOWED. IN RESPONSE TO THE SAID QUERY, THE ASSESSEE HAD SUBMITTED ALL RELEVANT DETA ILS RELATING TO THE COMMISSION PAYMENT TO THE NON - RESIDENT AGENTS WHICH HAVE BEEN SUBMITTED IN THE PAPER BOOK PAGE - 18 TO 26B. THUS, FROM THE AFORESAID MATERIALS SUBMITTED BEFORE US, IT IS VERY MUCH CLEAR THAT THE ISSUE RELATING TO COMMISSION PAYMENT TO NON - RESIDENT AND THE REASON FOR NON DEDUCTION OF TAX THEREON WAS NOT ONLY EXPLAINED IN DETAIL BY THE ASSESSEE BEFORE THE ASSESSING OFFICER BUT THE ASSESSING OFFICER HAD ALSO EXAMINED THE ISSUE AND BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE , HE DID N OT MAKE ANY DISALLOWANCE , THEREFORE, HE DID NOT DISCUSS THE ISSUE IN THE ASSESSMENT ORDER. HOWEVER, THAT WILL NOT LEAD TO THE INFERENCE THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE RELATING TO COMMISSION PAYMENT AT THE TIME OF ORIGINAL ASSESSMENT OR FORMED ANY OPINION. THUS, FROM THE AFORESAID FACTS, IT CAN BE CONCLUDED THAT THE ASSESSING OFFICER WHILE COMPLETING THE ORIGINAL ASSESSMENT NOT ONLY EXAMINED THE ISSUE, BUT, DID FORM AN OPINION REGARDING THE ALLOWABILITY OF COMMISSION PAYMENT TO NON - RES IDENTS. IN THIS CONTEXT, WE REFER TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S PRIMA PAPER AND ENGINEERING INDUSTRIES (SUPRA) AND JUDGMENT DATED 26 TH MARCH 2015, M/S. ZODIAC CLOTHING CO. LTD. 18 IN W.P. NO.2959 OF 2015, IN CASE OF TATA BUSINESS SUPPLY SERVICES LTD. V/S DCIT, AS WELL AS THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V/S KELVINATOR OF INDIA LTD., [2010] 322 ITR 561 (SC) . THUS , THE ASSESSING OFFICER HAVING ALREADY FORMED AN OPINION ON AN ISSUE AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT, RE - OPENI NG OF ASSESSMENT ON THE VERY SAME ISSUE BY RELYING UPON THE SAME SET OF FACTS AND MATERIAL ON THE BASIS OF WHICH ORIGINAL ASSESSMENT WAS COMPLETED AND THERE BEING NO FRESH TANGIBLE MATERIAL AVAILABLE TO THE ASSESSING OFFICER , THE RE - OPENING OF ASSESSMENT O N A MERE CHANGE OF OPINION IS NOT PERMISSIBLE IN LAW. MOREOVER, AS COULD BE SEEN THE COMMISSION PAYMENT WAS DISALLOWED MAINLY FOR THE REASON THAT CIRCULAR NO.786 WAS SUBSEQUENTLY WITHDRAWN BY THE CBDT. HOWEVER, SUCH WITHDRAWAL, IN OUR OPINION, WILL NOT AFFECT THE ALLOWABILITY OF COMMISSION PAYMENT FOR THE IMPUGNED ASSESSMENT YEAR AS THE CIRCULAR WOULD BE EFFECTIVE FROM THE DATE OF ITS ISSUANCE. FURTHER, IT IS OBSERVED, THE DEPARTMENT BEING SATISFIED WITH THE FACT THAT COMMISSION PAYMENTS TO NON RESIDENTS DO NOT ATTRACT LIABILITY UNDER SECTION 195 HAS ISSUED NO DEDUCTION CERTIFICATE FOR THE ASSESSMENT YEAR 2012 - 13 . THIS FACT FURTHER VINDICATES THE STAND OF ASSESSEE. CONSIDERING ALL THESE ASPECTS, WE ARE OF THE OPINION THAT RE - OPENING OF ASSESSMENT IN THE PRESENT CASE IS IN VALID DUE TO LACK OF SUFFICIENCY OF REASON FOR FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN OTHER WORDS, THERE IS M/S. ZODIAC CLOTHING CO. LTD. 19 NO LIVE LINK BETWEEN MATERIAL AVAILABLE AND FORMATION OF BELIEF. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IN HOLDING THE RE - OPENING OF ASSESSMENT TO BE INVALID IN LAW. ACCORDINGLY, UPHOLDING THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) WE DISMISS THE GROUND RAISED BY THE DEPARTMENT. 14. IN THE RES ULT, BOTH THE APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.10.2015 SD/ - ASHWANI TAEAJA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.10.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI