ITO, New Delhi V. M/s. Manak Shoes Co. Pvt. Ltd, New Delhi

ITA 4022/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8197 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 21-01-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Keywords: Depreciation; Search and seizure; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 143(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 4022/DEL/2009 ASSESSMENT YEAR : 2002-03 DCIT, CIRCLE 6(1), NEW DELHI. VS. M/S. MANAK SHOES CO. PVT. LTD. B-3A, HANS BHAWAN, BAHADUR SHAH ZAFAR MARG, NEW DELHI-110002 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. SAHO TA, SR. D.R. RESPONDENT BY : SHRI ANIL JAIN, C.A. O R D E R PER: C.L. SETHI, J.M. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 03.07.2009 PASSED BY THE LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE BY T HE A.O. U/S 143(3)/148 OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2002-03. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CO NTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE NOTICE ISSUED U/S 147/148 OF THE INCOME TAX ACT. 2.1 THE LD. CIT(A) DID NOT APPRECIATE THE FACT THAT THE NOTICE U/S 148 WAS ISSUED AFTER RECORDING PROPER REASON AND WAS NO T CHANGE OF OPINION OF THE A.O. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. ITA NO. 4022/DEL/2009 2 OF 19 3. THE RELEVANT FACTS RELATING TO THE ISSUE RAISED IN THE ABOVE GROUNDS OF APPEAL MAY BE STATED, IN BRIEF, AS UNDER:- 4. IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF I NCOME ON 29.10.2002 DECLARING TOTAL INCOME AT RS. NIL. THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) ON 26.02.2003. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. NOTICE U/S 143(2) WAS ISSUED ON 13.10.2003 AND SERVED UPON THE ASSESSEE. THEREAFTER, THE ASSESSMENT WAS COMPLETED BY THE A.O. U/S 143(3) ON 30.09.2004 DETERMINING TOTAL INCOME AT RS. NIL. LATER ON, THE A.O. OBSERV ED THAT ALTHOUGH THERE WAS NO MANUFACTURING ACTIVITY DURING THE PREVIOUS YEAR, TH E ASSESSEE HAD STILL CLAIMED DEPRECIATION ON PLANTS AND MACHINERY, FACTORY BUILD ING, DIES AND MOULDS ETC. THE A.O. ALSO OBSERVED THAT THE ASSESSEE ALSO CLAIMED E XPENSES ON POWER AND FUEL, WAGES AND JOB CHARGES AND RAW MATERIAL, EVEN THOUGH THERE WAS NO PRODUCTION DURING THE YEAR. THE A.O., THEREFORE, ENTERTAINED A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF EXPLAN ATION-2 (C) (I) AND (IV) OF SECTION 147 OF THE INCOME TAX ACT. THE A.O., THERE FORE, ISSUED A NOTICE U/S 148 TO THE ASSESSEE COMPANY ON 18.09.2006. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEES AUTHORIZED REPRESENTATIVE ATTENDED THE A SSESSMENT PROCEEDINGS AND FILED THE DETAILS AS CALLED FOR BY THE A.O. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATE 28.09.2007 AS TO WHY DEPRECIATION ON PLANT AND MACHINERY, FACTORY BUILDI NG, DIES AND MOULDS ETC., AND EXPENSES ON POWER AND FUEL, WAGES AND JOB CHARGES A ND MISCELLANEOUS EXPENSES SHOULD NOT BE DISALLOWED WHEN NO MANUFACTURING OR P RODUCTION HAS BEEN DONE BY ITA NO. 4022/DEL/2009 3 OF 19 THE ASSESSEE DURING THE YEAR. THE ASSESSEE THEN FIL ED ITS REPLY DATED 15.10.2007, WHICH IS REPRODUCED BY THE A.O. IN THE ASSESSMENT O RDER. AFTER CONSIDERING THE ASSESSEES EXPLANATION, THE A.O. DISALLOWED DEPRECI ATION ON PLANT AND MACHINERY, FACTORY BUILDING, DIES AND MOULDS AND ALSO DISALLOW ED THE EXPENSES ON ACCOUNT OF POWER AND FUEL WAGES AND JOB WORK CHARGES AND MISCE LLANEOUS EXPENSES AND THEN DETERMINED THE ASSESSEES TOTAL INCOME AT RS. 1,16, 88,750/-. 5. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LD. CIT(A). 6. BEFORE THE LD. CIT(A), ASSESSEE CHALLENGED THE R EOPENING OF THE ASSESSMENT U/S 147 OF THE ACT AS INVALID AND BAD IN LAW VIDE G ROUND NOS. 2, 3 AND 4 RAISED BEFORE THE LD. CIT(A). 7. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING SHOES. IT S PROMOTERS ARE OVERSEAS AND THE UNIT WAS SET UP TO MANUFACTURE SHOES FOR OVERSE AS MARKET. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT RECEIVE A NY ORDER FROM ITS OVERSEAS BUYERS, WHO WERE FACING COMPETITION FROM CHINA-MADE SHOES AND AS SUCH ASSESSEE HAD INCURRED HUGE LOSSES IN ITS MANUFACTUR ING OPERATIONS. THE ASSESSEE HAD KEPT ALL ITS MANUFACTURING FACILITIES INTACT AT THE BEHEST OF THE BUYERS AND IN MAINTAINING THE SAME, CERTAIN EXPENDITURES WERE INC URRED. THE A.O. ALLOWED THE ENTIRE EXPENDITURE IN THE ORIGINAL ASSESSMENT. THE EXPENDITURE INCURRED BY THE ASSESSEE, WERE CLAIMED FROM THE PROMOTERS AND THE A SSESSEE GOT REIMBURSEMENT OF RS. 1.34 CRORES FROM ITS BUYERS AS COMPENSATION FOR MAINTAINING MANUFACTURING FACILITIES. THOUGH THE SAID AMOUNT R ECEIVED BY WAY OF ITA NO. 4022/DEL/2009 4 OF 19 REIMBURSEMENT WAS TAXED IN ENTIRETY, YET THE A.O. D ISALLOWED THE EXPENDITURE SO CLAIMED IN ITS RETURN OF INCOME. IT WAS THEN CONTEN DED BEFORE THE LD. CIT(A) BY THE ASSESSEE THAT ALL THESE ASPECTS WERE DULY EXAMI NED AT THE TIME OF MAKING ORIGINAL ASSESSMENT BY THE A.O., AND NO NEW FACT HA D COME TO LIGHT THEREAFTER, ON THE BASIS OF WHICH THE REOPENING OF THE ASSESSMENT U/S 147 COULD BE DONE. 8. IT WAS FURTHER SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ASSESSEE FILED ITS OBJECTIONS AGAINST THE REOPENING WHICH HAD BEEN DISPOSED OFF BY THE A.O. VIDE HIS ORDER DATED 07.11.2007. THE ASSES SEE POINTED OUT THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) VIDE O RDER DATED 30.09.2004 AFTER THE A.O. ISSUED DETAILED QUESTIONNAIRE THROUGH HIS LETTER DATED 01.06.2004. IN THE SAID QUESTIONNAIRE ISSUED BY THE A.O., THE A.O. ENQ UIRED ABOUT THE NATURE OF THE BUSINESS ACTIVITY AND ALSO HAD ASKED THE DETAILS OF AMOUNT WRITTEN OFF AND THE COPY OF ACCOUNT OF FOREIGN BUYERS. ALL THESE INFOR MATIONS WERE FURNISHED BEFORE THE A.O. IT WAS FURTHER POINTED OUT THAT THE ASSESS EE HAD FILED ITS COMPLETE BALANCE SHEET INDICATING THEREIN ASSESSEES ACTIVIT IES CARRIED OUT DURING THE YEAR UNDER CONSIDERATION. IN THE REASSESSMENT PROCEEDIN GS, THE A.O. PROPOSED TO DISALLOW SUBSTANTIAL EXPENSES AND ENTIRE DEPRECIATI ON ON THE PLEA THAT NO MANUFACTURING ACTIVITY WAS DONE THOUGH THE SAME WAS EXAMINED AT THE TIME OF ORIGINAL ASSESSMENT AND NO NEW FACTS HAVE COME TO L IGHT SUBSEQUENTLY. IT WAS, THEREFORE, CONTENDED THAT THE A.O. HAS REOPENED THE ASSESSMENT ON MERE CHANGE OF HIS OPINION, WHICH IS NOT PROMOTED UNDER THE EYE S OF LAW. IN SUPPORT OF THE ASSESSEES CONTENTION, THE ASSESSEE HAD RELIED UPON THE FOLLOWING DECISIONS- ITA NO. 4022/DEL/2009 5 OF 19 JINDAL PHOTO FILMS VS. DEPUTY COMMISSIONER OF INCOM E TAX 234 ITR 170 (DEL) CIT VS. KELVINATOR OF INDIA LTD. 256 ITR 1 (DEL) CIT VS. CHAMUNDESHWARI 290 ITR (MAD) TECHSPAN INDIA P. LTD. VS. ITO 183 ITR 213 (DEL) CIT VS. INDIAN SUGAR & GENERAL INDUSTRY (2008) 303 ITR 155 (DEL) 9. THE ASSESSEE HAD DISTINGUISHED THE FACTS OF THE DECISION IN THE CASE OF CONSOLIDATED PHOTO AND FINWEST LTD. VS. ACIT (2006) 281 ITR 394 (DELHI) ON WHICH THE A.O. PLACED RELIANCE IN SUPPORT OF HIS AC TION IN REOPENING THE ASSESSMENT. 10. AFTER CONSIDERING THE ASSESSEES SUBMISSION AND A.O.S ORDER IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND THE DECISION CITE D BY BOTH THE PARTIES, THE LD. CIT(A) HAD TAKEN A VIEW THAT REOPENING OF THE ASSES SMENT MADE BY THE A.O. WAS NOT VALID INASMUCH AS IT WAS PURELY BASED ON THE CH ANGE OF OPINION OF THE A.O. THE LD. CIT(A) THEN QUASHED THE NOTICE ISSUED U/S 1 48 BY THE A.O. THE LD. CIT(A)S ORDER RUNS AS UNDER:- 3.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE L D. A.R. OF THE APPELLATE COMPANY. I HAVE ALSO PERUSED THE RETURN O F INCOME OF THE APPELLANT COMPANY FILED WITH THE DEPARTMENT WHICH I S ACCOMPANIED BY P&L ACCOUNT AND BALANCE SHEET AND VARIOUS SCHEDULED ANNEXED THERETO. SCHEDULE 17 RELATES TO SIGNIFICANT ACCOU NTING POLICY WHEREIN DATA ON CONSUMPTION OF RAW MATERIAL, PAYMENT TO AUD ITORS, PRODUCTION DATA ON SPORT/ CASUAL SHOES/ SLEEPERS AND SALES HAS BEEN PROVIDED. THOUGH THERE IS NOT PRODUCTION DURING THE YEAR UNDE R CONSIDERATION BUT STILL THE APPELLANT HAS SHOWN SALES AMOUNTING TO RS . 4,70,570/- AND JOB WORK INCOME AMOUNTING TO RS. 20,400/-. NO NEW PURCH ASES HAVE BEEN MADE BUT THE OPENING STOCK IS SHOWN AT RS. 30,01,84 3.87 AND CLOSING STOCK AT RS. 9,04,364.00 AND ALL THESE FIGURES ARE CLEARLY DISCERNIBLE FROM THE DATA AVAILABLE ON THE RETURN OF INCOME. IT THESE FACTS ARE AVAILABLE ON RECORD AND THE ASSESSING OFFICER HAD P ASSED THE ORIGINAL ITA NO. 4022/DEL/2009 6 OF 19 ASSESSMENT ORDER AFTER SCRUTINY, THEN I AM OF THE C ONSIDERED OPINION THAT REOPENING HAS BEEN RESORTED TO BY THE OFFICER ON ACCOUNT OF CHANGE OF OPINION. I HAVE ALSO GONE THROUGH THE RECENT JU DGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF JAL HOTELS CO. LTD. (SUPRA) WHICH IS DATED 25 TH MAY, 2009 WHERE THE ASSESSMENT YEARS INVOLVED WERE ASSESSMENT YEARS 2001-02 TO 2003-04 WHICH MEAN S THAT THE DECISION HAD BEEN RENDERED IN THE CONTEXT OF THE SC OPE OF AMENDED SECTION 147 (INTRODUCED W.E.F. 01.04.1989). WHILE DELIVERING THE JUDGMENT, THE COURT ALSO REFERRED TO VARIOUS CASE L AWS OF CALCUTTA DISCOUNT CO. LTD. VS ITO (1961) 41 ITR 191 (SC), CI T VS. EICHER LTD. (2007) 213 CTR 57 (DEL), CIT VS. LUCAS TVS LTD. (19 98) 234 ITR 296 (MAD), CIT VS. LUCAS TVS LTD. (2001) 249 306 (SC), CIT VS. P.V.S. BEEDIES P. LTD. (1999) 237 ITR 13 (SC), KISHANCHAND CHELLARAM VS. CIT (1980) 19 CTR 360 (SC) AND ALSO TO THE CASE LAW S ON WHICH THE AR RELIED (AS MENTIONED IN PARA 3.2 ABOVE). THE FACTS OF THE JAL HOTELS CO. LTD. ARE QUITE SIMILAR TO THE FACTS OF THE INSTANT CASE AS IN THAT CASE TOO, COPIES OF THE STATEMENT OF INCOME, TRADING ACCOUNT, P&L ACCOUNT, AUDIT REPORT ETC. WERE APPENDED TO THE RETURN OF INCOME A ND THE COURT HELD THAT IF THIS IS THE FACTUAL POSITION THEN THE TRIBU NAL HAS RIGHTLY CONCLUDED THAT TAKING RESORT TO THE SECTION 147 WAS UNWARRANTED AS IT CONSTITUTED A CHANGE OF OPINION. 3.5 IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS AND ES PECIALLY BY THE HONBLE JURISDICTIONAL HC IN THE CASE OF JAL HO TELS CO. LTD. (SUPRA), I AM INCLINED TO ACCEPT THE VIEW POINT OF THE LD. A R THAT THERE IS NO NEW INFORMATION WHICH HAS COME TO THE POSSESSION OF THE AO ON THE STRENGTH OF WHICH THE REOPENING CAN BE RESORTED TO. THIS IS THE CASE OF CHANGE OF OPINION AND HENCE THE NOTICE ISSUED UNDER SECTION 1 48 IS QUASHED. 11. BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 12. THE LD. D.R. SUPPORTING THE A.O.S ORDER HAS SU BMITTED THAT THERE WERE SUFFICIENT MATERIAL ON RECORD FOR ENABLING THE A.O. TO HAVE A REASON TO BELIEVE THAT INCOME WITHIN THE MEANING OF EXPLANATION-2(C) (I) AND (IV) OF SECTION 147 HAD ESCAPED ASSESSMENT. HE FURTHER SUBMITTED THAT THE ASSESSEES CLAIM OF DEPRECIATION ON PLANT AND MACHINERY, FACTORY BUILDI NG, DIES AND MOULDS ETC. AND ASSESSEES EXPENSES ON POWER AND FUEL WAGES AND JOB CHARGES AND RAW MATERIAL WERE PRIMA FACIE NOT ADMISSIBLE AS DEDUCTION IN THE YEAR UNDER CONSIDERATION AS ITA NO. 4022/DEL/2009 7 OF 19 THERE WAS NO PRODUCTION ACTIVITY CARRIED OUT BY THE ASSESSEE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . HE FURTHER SUBMITTED THAT THE PRESENT CASE IS SQUARELY COVERED BY THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINWEST LTD. VS. ACIT (2006) 281 ITR 394 (DELHI) WHERE THE HONBLE DELHI HIGH COURT HAS HOLD THAT MERE PRODUCTION OF BOOKS OF ACCOUNT OR OTHER EVIDENCE FROM WHICH THE A .O. COULD HAVE, WITH DUE DILIGENCE, DISCOVERED THE MATERIAL EVIDENCE DOES NO T NECESSARILY AMOUNT TO A DISCLOSURE WITHIN THE MEANING OF THE PROVISO TO SEC TION 147 OF THE INCOME TAX ACT, 1961. HE FURTHER SUBMITTED THAT THE HONBLE DE LHI HIGH COURT IN THE ABOVE REFERRED CASE WENT FURTHER TO HOLD THAT THE PRINCIP LE THAT A MERE CHANGE OF OPINION COULD NOT BE A BASIS FOR REOPENING THE COMPLETED AS SESSMENTS WOULD BE APPLICABLE ONLY TO SITUATION WHERE THE A.O. HAD APP LIED HIS MIND AND TAKEN CONSCIOUS DECISION ON A PARTICULAR MATTER IN ISSUE, AND IT WOULD HAVE NO APPLICATION WHERE THE ORDER OF ASSESSMENT DID NOT A DDRESS ITSELF TO THE ASPECT WHICH WAS THE BASIS FOR REOPENING THE ASSESSMENT. HE, THEREFORE, SUBMITTED THAT THE REOPENING OF THE ASSESSMENT MADE BY THE A.O. U/ S 147 OF THE ACT WAS JUSTIFIED INASMUCH AS THE REOPENING WAS BASED ON MA TERIAL AVAILABLE BEFORE THE A.O. TO TAKE A VIEW THAT INCOME HAD ESCAPED ASSESSM ENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. 13. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTING THE ORDER OF LD. CIT(A), HAS SUBMITTED THAT, IN THE PRESENT CASE , THE ORIGINAL ASSESSMENT CAME TO BE MADE BY THE A.O. U/S 143(3) OF THE ACT, DURIN G THE COURSE OF WHICH A ITA NO. 4022/DEL/2009 8 OF 19 DETAILED QUESTIONNAIRE DATED 01.06.2004 ASKING THE ASSESSEE TO FURNISH THE DETAILS ABOUT THE NATURE OF BUSINESS ACTIVITY, DETAILS OF A MOUNT WRITTEN OFF, COPY OF ACCOUNT OF FOREIGN BUYERS AND OTHERS WERE ASKED FOR BY THE A.O. WHICH WERE DULY SUBMITTED BEFORE HIM. HE FURTHER SUBMITTED THAT ASS ESSEE ALSO FILED ITS COMPLETE BALANCE SHEET, WHICH CLEARLY DEPICTED ASSESSEES AC TIVITIES DURING THE YEAR UNDER CONSIDERATION. THE A.O. COMPLETED THE ASSESSMENT U /S 143(3), WHERE NO DISALLOWANCE OF DEPRECIATION OR EXPENSES WERE MADE BY THE A.O. HOWEVER, ON THE BASIS OF THE SAME MATERIALS AVAILABLE AT THE TI ME OF ORIGINAL ASSESSMENT COMPLETED U/S 143(3), THE A.O. HAS SOUGHT TO CHANGE HIS VIEW AND INITIATED REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT BY ENTE RTAINING A BELIEF THAT ASSESSEES CLAIM OF DEPRECIATION AND EXPENSES IS NO T ALLOWABLE AS NO MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION. HE, THEREFORE, CONTENDED THAT THE R EOPENING OF THE ASSESSMENT U/S 147 HAS BEEN DONE IN THE LIGHT OF THE SAME MATERIAL S WHICH WERE AVAILABLE BEFORE THE A.O. AT THE TIME OF MAKING REGULAR ASSESSMENT U /S 143(3) OF THE ACT AND NO NEW FACTS OF MATERIAL HAD COME INTO LIGHT OR BROUGH T ON RECORD TO ENTERTAIN A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT WITHIN TH E MEANING OF SECTION 147 OF THE ACT. IN SUPPORT OF THE ASSESSEES CASE, THE DE CISIONS RELIED UPON BY THE ASSESSEE BEFORE THE LD. CIT(A) HAS BEEN REITERATED. BESIDES THOSE DECISIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED UPON T HE RECENT DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT, DELHI VS. KELVINATOR OF INDIA LTD. IN CIVIL APPEAL NO. 2009 2011 OF 2003 WITH CIVIL APP EAL NO. 2520 OF 2008 IN ITA NO. 4022/DEL/2009 9 OF 19 THE CASE OF CIT VS. EICHER LTD. WHERE THE HONBLE S UPREME COURT VIDE ORDER DATED 18.01.2010 HAS HELD THAT THE MERE CHANGE OF O PINION CANNOT PER SE REASON TO REOPEN THE ASSESSMENT U/S 147 OF THE ACT. THE L D. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISIONS OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SATNAM OVERSEAS LTD. AND ANOTHER VS. ACIT REPORTED IN (201 0) 33 DTR (DELHI) 81. 14. WE HAVE CONSIDERED RIVAL CONTENTIONS OF BOTH TH E PARTIES AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 15. WE HAVE DELIBERATED ON THE RELEVANT PROVISIONS OF LAW CONTAINED IN THAT BEHALF AND THE DECIDED CASES CITED AT THE BAR. 16. IT IS NOT IN DISPUTE THAT ORIGINALLY, AN ASSESS MENT WAS COMPLETED BY THE A.O. U/S 143(3) OF THE ACT. DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS, CERTAIN QUERIES WERE RAISED BY THE A.O., WHICH WERE DULY REPLIED TO BY THE ASSESSEE AND, THEREAFTER, THE A.O. COMPLETED THE AS SESSMENT U/S 143(3) OF THE ACT. THE A.O., THEREAFTER, ISSUED A NOTICE U/S 148 ON 18 .09.2006 BY ENTERTAINING A BELIEF THAT THOUGH THERE WAS NO MANUFACTURING ACTIV ITY DURING THE PREVIOUS YEAR, THE ASSESSEE HAD EVEN CLAIMED DEPRECIATION ON PLANT AND MACHINERY ETC. AND HAS ALSO CLAIMED EXPENSES ON POWER AND FUEL, WAGES AND JOB CHARGES AND RAW MATERIAL. THE A.O. HAD ENTERTAINED A BELIEF THAT I NCOME HAD ESCAPED ASSESSMENT BY INVOKING THE EXPLANATION 2(C) (I) AND (IV) OF SE CTION 147 OF THE ACT. FROM THE REASONS SO RECORDED BY THE A.O., IT IS CLEAR THAT N O NEW FACTS OR MATERIAL CAME TO THE LIGHT AFTER THE ASSESSMENT WAS ORIGINALLY COMPL ETED U/S 143(3) OF THE ACT. ON THE BASIS OF THE SAME MATERIAL OR DETAILS AVAILABLE WITH THE A.O. AT THE TIME OF ITA NO. 4022/DEL/2009 10 OF 19 COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT, TH E A.O. HAS ENTERTAINED A BELIEF THAT INCOME CHARGEABLE TO TAX HAS BEEN UNDER-ASSESS ED OR EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCES IN T HIS ACT HAS BEEN COMPUTED. IT IS ALSO NOT THE CASE OF THE A.O. THAT ANY NEW MATER IAL OR FACT CAME TO HIS NOTICE TO ENTERTAIN A BELIEF THAT INCOME HAD ESCAPED ASSESSME NT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THE A.O.S CASE IS THAT AT THE TIME OF MAKING ASSESSMENT U/S 143(3), THE ISSUE OF ALLOWABILITY OF DEPRECIATI ON AND OTHER EXPENSES WERE NEVER GONE INTO, AND MERE PRODUCTION OF THE BOOKS O F ACCOUNT OR OTHER EVIDENCES FROM WHICH THE A.O. COULD HAVE, WITH DUE DILIGENCE, DISCOVERED THE MATERIAL EVIDENCE DOES NOT NECESSARILY AMOUNT TO A DISCLOSER WITHIN THE MEANING OF THE SECTION 147 OF THE ACT. THE A.O.S CASE IS THAT TH E A.O. HAD NEVER APPLIED HIS MIND TO THE ISSUE OF ALLOWABILITY OF DEPRECIATION A ND OTHER EXPENSES WHILE MAKING THE ASSESSMENT U/S 143(3) OF THE ACT, AND, T HUS, THE REASSESSMENT PROCEEDINGS INITIATED BY THE A.O. COULD NOT BE CHAL LENGED ON THE GROUND THAT IT WAS BASED ON A CHANGE OF OPINION. IN THIS RESPECT, THE A.O. HAD RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINWEST LTD. VS. ACIT (SUPRA) WHERE IT HAS BEEN OBS ERVED AND HELD AS UNDER:- MERE PRODUCTION OF BOOKS OF ACCOUNT OR OTHER EVIDE NCE FROM WHICH THE ASSESSING OFFICER COULD HAVE, WITH DUE DILIGENCE, D ISCOVERED THE MATERIAL EVIDENCE DOES NOT NECESSARILY AMOUNT TO A DISCLOSUR E WITHIN THE MEANING OF THE PROVISO TO SECTION 147 OF THE INCOME TAX ACT , 1961. THE PRINCIPLE THAT A MERE CHANGE OF OPINION COULD NOT BE A BASIS FOR REOPENING COMPLETED ASSESSMENTS WOULD BE APPLICABLE ONLY TO SITUATIONS WHERE THE ASSESSING OFFICER HAD APPLIED HIS MIND AN D TAKEN A CONSCIOUS DECISION ON A PARTICULAR MATTER IN ISSUE. IT WOULD HAVE NO APPLICATION WHERE THE ORDER OF ASSESSMENT DID NOT ADDRESS ITSEL F TO THE ASPECT WHICH ITA NO. 4022/DEL/2009 11 OF 19 WAS THE BASIS FOR REOPENING OF THE ASSESSMENT. THE REFORE, IT WAS INCONSEQUENTIAL WHETHER OR NOT THE MATERIAL NECESSA RY FOR TAKING A DECISION WAS AVAILABLE TO THE ASSESSING OFFICER EIT HER GENERALLY OR IN THE FORM OF A REPLY TO THE QUESTIONNAIRE SERVED UPON TH E ASSESSEE. WHAT IS IMPORTANT WAS WHETHER THE ASSESSING OFFICER HAD, BA SED ON THE MATERIAL AVAILABLE TO HIM TAKEN A VIEW. SINCE, HE HAD NOT D ONE SO, THE REASSESSMENT COULD NOT BE CHALLENGED ON THE GROUND THAT IT WAS BASED ON A CHANGE OF OPINION. 17. HOWEVER, THE AFORESAID DECISION OF HONBLE DELH I HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO & FINWEST LTD. VS. ACIT (SUP RA) HAS BEEN HELD TO BE RENDERED PER INCURIAM AS SO OBSERVED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF KLM ROYAL DUTCH AIRLINES VS. ADIT (2007) 29 2 ITR 49 (DELHI) WHERE THE HONBLE DELHI HIGH COURT HAS HELD THAT THE DECI SION OF THE DIVISION BENCH IN THE CASE OF CONSOLIDATED PHOTO & FINWEST LTD. VS. C IT IS IRRECONCILABLE WITH THE VIEWS OF THE FULL BENCH OF THE SAME HIGH COURT IN T HE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2002) 256 ITR 1 AND IT HAS NOT LAYIN G DOWN THE CORRECT LAW. THE AFORESAID OBSERVATION OF HONBLE DELHI HIGH COURT I N THE CASE OF KLM ROYAL DUTCH AIRLINES VS. ADIT (SUPRA) HAS BEEN NOTICED IN LATER DECISION OF THE DIVISION BENCH OF HONBLE DELHI HIGH COURT IN THE C ASE OF JAI HOTELS COMPANY LTD. VS. ADIT (2009) 24 DTR (DELHI) 37 WHERE HONBL E COURT HAVE OBSERVED THAT THE DECISION IN THE CASE OF CONSOLIDATED PHOTO & FI NWEST LTD. VS. ACIT (SUPRA) BEING IRRECONCILABLE WITH THE FULL BENCH VIEW IN TH E CASE OF KELVINATOR OF INDIA LTD. (SUPRA), IS PER INCURIAM AS SO OBSERVED IN KLM ROYAL DUTCH AIRLINES VS. ADIT (SUPRA). THEREFORE, THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO & FINWEST LTD. VS. ACIT (SUPR A) BEING IRRECONCILABLE WITH THE FULL BENCH VIEW IN THE CASE OF KELVINATOR OF IN DIA LTD. (SUPRA) IS PER INCURIAM ITA NO. 4022/DEL/2009 12 OF 19 AND WOULD NOT ADVANCE THE REVENUES CASE ANY FURTHE R AND IS OF NO HELP TO THE REVENUES CASE. 18. IN THE CASE OF JAI HOTELS LTD. VS. ADIT (SUPRA) , THE HONBLE DELHI HIGH COURT HAS HELD THAT THERE BEING NO NEW MATERIAL IN THE HANDS OF THE REVENUE LEADING TO THE VIEW THAT THERE WAS REASON TO BELIEV E THAT INCOME HAD ESCAPED ASSESSMENT, THE CASE IS A CLASSIC INSTANCE OF A CHA NGE OF OPINION. THE HONBLE HIGH COURT FURTHER OBSERVED THAT WHEN COPIES OF STA TEMENT OF INCOME, TRADING ACCOUNT, PROFIT AND LOSS ACCOUNT, AUDIT REPORT ETC. WERE APPENDED TO THE RETURN FILED BY THE ASSESSEE, TAKING RESORT TO SECTION 147 /148 WAS UNWARRANTED AS IT CONSTITUTED A CHANGE OF OPINION SINCE THE MATERIAL ACTED UPON HAD BEEN MADE AVAILABLE ALONGWITH RETURN OF INCOME. 19. A GAINFUL REFERENCE MAY ALSO BE MADE TO THE REC ENT DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SATNAM OVERSEAS LTD. AND INDUSTRY VS. ACIT WHERE THE HONBLE DELHI HIGH COURT VIDE ORDER DATED 11.12.2009 HAS HELD AND OBSERVED AS UNDER:- 6. WE FEEL THAT THE WRIT PETITIONS HAVE TO SUCCEE D BECAUSE THE CONTENTIONS AS RAISED ON BEHALF OF THE COUNSEL FOR THE PETITIONER ARE WELL FOUNDED. THE ONLY REASON WHICH HAS BEEN GIVEN SEEK ING RE-OPENING OF THE ASSESSMENT FOR THE YEARS 1997-98 AND 1998-99 IS THAT SUPPRESSION OF SALES HAVE TAKEN PLACE ON ACCOUNT OF THE FACT THAT WHEN AVERAGE PRICE OF THE CLOSING STOCK IS MULTIPLIED WITH THE QUANTITY O F THE SALES IN THE YEAR THEN THE VALUE OF THE SALES WOULD BE AT A HIGHER FI GURE THAN THAT AS DECLARED BY THE ASSESSEE. CLEARLY, THERE IS NO NEW MATERIAL WHICH IS ALLEGED TO HAVE COME TO THE NOTICE OF THE A.O. WHIC H HAS CAUSED HIM TO SEEK REOPENING OF THE ASSESSMENT. ADMITTEDLY, THE REASONS GIVEN FOR SEEKING REOPENING OF THE ASSESSMENT CONTAINS THE EX PRESSION PERUSAL OF THE CASE RECORD REVEALS CLEARLY SHOWING THAT IT IS ON THE BASIS OF THE SAME ASSESSMENT RECORD AS WAS FILED BY THE ASSESSEE , DURING THE RELEVANT ITA NO. 4022/DEL/2009 13 OF 19 ASSESSMENT YEARS AND ALSO SCRUTINIZED BY THE AO BEF ORE PASSING THE ORDERS UNDER SECTION 143(3) IS THE BASIS FOR SEEKIN G REOPENING OF THE ASSESSMENT. FURTHER THE NEW LOGIC, RATIONALE AND O PINION WHICH HAS BEEN FORMED BY THE A.O. FOR SEEKING RE-OPENING OF THE AS SESSMENT IS NOTHING BUT A CHANGE OF OPINION AND A NEW APPROACH TO THE E XISTING FACTS AND MATERIAL WHICH THE AO COULD WELL HAVE DONE DURING T HE REGULAR ASSESSMENT PROCEEDINGS OF THE RELEVANT ASSESSMENT Y EARS. NOT ONLY THIS, THE RATIONALE/LOGIC/REASONS GIVEN THAT SALE PRICE O F STOCKS DURING THE ENTIRE ASSESSMENT YEAR WOULD REMAIN CONSTANT IS SOM ETHING WHICH INDEED CONFOUNDS US. IT CANNOT STAND TO REASON THAT THE P RICE OF SALE OF PADDY/RICE/ PULSES REMAINED CONSTANT THROUGHOUT THE YEAR SO THAT ON THE BASIS OF AN AVERAGE PRICE OF THE CLOSING STOCK THE SALE PRICE FOR THE ENTIRE YEAR COMPRISING OF 12 MONTHS, 48 WEEKS AND 365 DAYS CAN BE ASCERTAINED IN THAT THE SAME WOULD HAVE REMAINED FIXED THROUGHO UT THIS PERIOD. EVEN ASSUMING THAT THIS LOGIC IS CORRECT, IT WAS SURELY AN EXERCISE WHICH THE AO COULD HAVE DONE ON THE BASIS OF THE MATERIALS WH ICH HE IS NOW PRESENTLY SEEKING TO DO BECAUSE THE SAME VERY MATER IALS WERE AVAILABLE TO HIM IN THE RELEVANT ASSESSMENT YEARS AND MERELY BECAUSE THE AO FEELS THAT HE HAS FAILED TO DO WHAT HE OUGHT TO HAVE DONE CANNOT BE A VALID GROUND FOR SEEKING INITIATION OF REASSESSMENT UNDER SECTION 147/ 148 OF THE ACT. 20. FROM THE SAID DECISION, IT IS, THUS, CLEAR THAT ON THE BASIS OF MATERIAL WHICH WERE AVAILABLE BEFORE THE A.O. WHILE MAKING THE ORD ER U/S 143(3) AND WHERE NO NEW MATERIAL CAME TO THE NOTICE OF THE A.O., WHICH HAS CAUSED HIM TO SEEK REOPENING OF THE ASSESSMENT, THE REOPENING OF ASSES SMENT U/S 147 IS NOT VALID BEING BASED ON CHANGE OF OPINION. 21. AN IDENTICAL VIEW HAS BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INDIAN SUGAR AND GENERAL INDUSTRY E X. (2008) 303 ITR 155 (DELHI) WHERE THE FULL BENCH DECISION IN THE CASE O F CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) WAS REFERRED TO AND IN THE LIGHT OF TH E FACTS OF THAT CASE IT WAS HELD THAT IF THE A.O. CHOSE NOT TO INVESTIGATE THE FACTS , THEN IT WOULD AMOUNT TO GIVE A ITA NO. 4022/DEL/2009 14 OF 19 PREMIUM TO AN AUTHORITY EXERCISING QUASH JUDICIAL F UNCTION TO TAKE BENEFIT OF ITS OWN WRONG. 22. SIMILARLY IN THE CASE OF LD. CIT(A) VS. EICHER LTD. (2007) 294 ITR 310 (DELHI), THE HONBLE DELHI HIGH COURT HAS TAKEN A V IEW THAT SINCE THE FACTS AND MATERIALS WERE BEFORE THE A.O. AT THE TIME OF FRAMI NG THE ORIGINAL ASSESSMENT, AND LATER A DIFFERENT VIEW WAS TAKEN BY HIM OR HIS SUCCESSORS ON THE SAME FACTS, IT CLEARLY AMOUNTED TO A CHANGE OF OPINION, WHICH COUL D NOT FORM THE BASIS FOR PERMITTING THE A.O. OR HIS SUCCESSORS TO REOPEN THE ASSESSMENT OF THE ASSESSEE. THE HONBLE COURT FURTHER OBSERVED THAT IF THE ENTI RE MATERIAL HAD BEEN PLACED BY THE ASSESSEE BEFORE THE A.O. AT THE TIME WHEN THE O RIGINAL ASSESSMENT WAS MADE AND A.O. APPLIED HIS MIND TO THAT MATERIAL AND ACCE PTED THE VIEW CONFESSED BY THE ASSESSEE, THEN MERELY BECAUSE HE DID NOT EXPRES S THIS IN THE ASSESSMENT ORDER, THAT BY ITSELF WOULD NOT GIVE HIM A GROUND TO CONCL UDE THAT INCOME HAD ESCAPED ASSESSMENT AND, THEREFORE, THE ASSESSMENT NEEDED TO BE REOPENED. THE HONBLE COURT FURTHER OBSERVED THAT THE ASSESSEE HAS NO CON TROL OVER THE WAY AN ASSESSMENT ORDER IS DRAFTED. GENERALLY, ISSUES WHI CH ARE ACCEPTED BY THE A.O. DID NOT FIND MENTIONED IN THE ASSESSMENT ORDER AND ONLY SUCH POINTS ARE TAKEN NOT OF ON WHICH THE ASSESSEES EXPLANATION ARE REJECTED AN D ADDITIONS/ DISALLOWANCE ARE MADE. THE COURT FURTHER OBSERVED THAT IT WOULD NOT BE CORRECT ON THE COURTS PART TO OVER LOOK THE DECISION OF THE FULL BENCH IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) AND RELY UPON THE DECISIONS OF D IVISION BENCH IN CONSOLIDATED PHOTO & PHINWEST LTD. VS. ACIT (SUPRA). ITA NO. 4022/DEL/2009 15 OF 19 23. AT THIS STAGE, IT IS PERTINENT TO NOTE THAT THE FULL BENCH DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF M/S. KELVINATOR OF INDIA LTD. (SUPRA) AND DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. EICHER LTD. (SUPRA) HAS BEEN APPEALED AGAINST BY THE DEPARTMENT BEFORE THE HONBLE SUPREME COURT, AND NOW THE HONBLE SUPREME COURT VIDE THEIR LORDSH IPS ORDER DATED 18.01.2010 HAS DISMISSED THE CIVIL APPEAL FILED BY THE DEPARTM ENT BY OBSERVING AND HOLDING AS UNDER:- HEARD LD. COUNSEL ON BOTH SIDES. A SHORT QUESTION WHICH ARISES FOR DETERMINATION IN THIS BATCH OF CIVIL APPEALS IS, WHETHER THE CONCEPT OF CHANGE OF OPINION STANDS OBLITERATED WITH EFFECT FROM 1 ST APRIL, 1989, I.E., AFTER SUBSTITUTION OF SECTION 147 OF THE INCOME TAX ACT, 1961 BY DIRECT T AX LAWS (AMENDMENT) ACT, 1987? TO ANSWER THE ABOVE QUESTION, WE NEED TO NOTE THE CHANGES UNDERGONE BY SECTION 147 PF THE INCOME TAX ACT, 196 1 [FOR SHORT, THE ACT]. PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1 987, SECTION 147 READS AS UNDER:- INCOME ESCAPING ASSESSMENT. 147, IF (A) THE INCOME TAX OFFICER HAS REASON TO BE BELIEVE THAT, BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESS EE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR TO THE IN COME TAX OFFICER OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR, OR (B) NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTIONED IN CLAUSE(A) ON THE PART OF THE ASSESSEE, THE INCOME TAX OFFICER HAS IN CONSEQUENCE OF INFORMATION IN HIS PO SSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTION 148 TO 153, ASSESS OR REASSESS SUCH INCOME OR RECOMPUTE TH E LOSS OR THE DEPRECIATION ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN SECTIONS 148 TO 153 REFERRE D TO AS THE RELEVANT ASSESSMENT YEAR). ITA NO. 4022/DEL/2009 16 OF 19 AFTER ENACTMENT OF DIRECT TAX LAWS (AMENDMENT) ACT, 1987, I.E. PRIOR TO 1 ST APRIL, 1989, SECTION 147 OF THE ACT, READS AS UNDE R:- 147. INCOME ESCAPING ASSESSMENT IF THE ASSESSING OFFICER, FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OT HER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS UNDER THIS SECTION, OR RECOMPUTED THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR). AFTER THE AMENDING ACT, 1989, SECTION 147 READS AS UNDER:- INCOME ESCAPING ASSESSMENT. 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THI S SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASS ESSMENT YEAR). ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX LAWS (AM ENDMENT) ACT, 1987, RE-OPENING COULD BE DONE UNDER ABOVE TWO CONDITIONS AND FULFILLMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 1 47 OF THE ACT [WITH EFFECT FROM 1 ST APRIL, 1989], THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESS ING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, CONFERS JURISDICTION TO RE-OPEN THE ASSESSMENT. THEREFORE, POST 1 ST APRIL, 1989 POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS REASON TO BE LIEVE FAILING WHICH, WE ARE AFRAID. SECTION 147 WOULD GIVE ARBITR ARY POWERS TO THE ASSESSING OFFICER TO RE-OPEN ASSESSMENTS ON THE BAS IS OF MERE CHANGE OF OPINION, WHICH CANNOT BE PER SE REASON TO REOPE N. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWE R TO REVIEW AND POWER TO RE-ASSESS. THE ASSESSING OFFICER HAS NOT POWER TO RE-ASSESS. BUT RE-ASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE- CONDITION AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED, AS ITA NO. 4022/DEL/2009 17 OF 19 CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE-OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN IN-BUILD TEST TO CHECK AB USE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE-OPEN, PROVIDED THERE IS TANGIBLE MATER IAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 O F THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS REASON TO BE LIEVE BUT ALSO INSERTED THE WORD OPINION IN SECTION 147 OF THE A CT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAIN ST OMISSION OF THE WORDS REASONS TO BELIEVE, PARLIAMENT RE-INTRODUCE D THE SAID EXPRESSION AND DELETED THE WORD OPINION ON THE GR OUND THAT IT WOULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBELOW THE RELEVANT PORTION OF CIRCULAR NO. 549 DATED 31 ST OCTOBER, 1989, WHICH READS AS FOLLOWS: 7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO R EINTRODUCE THE EXPRESSION REASON TO BELIEVE IN SECTION 147. A NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS REASON TO BELIEVE FROM SECTION 147 AND THEIR SUBS TITUTION BY THE OPINION OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, REASON TO BELIEVE HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWE RS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON MER E CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1 989, HAS AGAIN AMENDED SECITON1 147 TO REINTRODUCE THE EXPRESSION HAS REASON TO BELIEVE IN PLACE OF WORDS FOR REASONS TO BE RECOR DED BY HIM IN WRITING, IS OF THE OPINION. OTHER PROVISIONS OF T HE NEW SECTION 147, HOWEVER, REMAIN THE SAME. FOR THE AFORE-STATED REASONS, WE SEE NO MERIT IN TH ESE CIVIL APPEALS FILED BY THE DEPARTMENT, HENCE, DISMISSED WITH NO ORDER A S TO COSTS. 24. FROM THE AFORESAID DECISION OF HONBLE SUPREME COURT, IT IS, THUS, CLEAR THAT THE REOPENING OF THE ASSESSMENT ON THE BASIS O F MERE CHANGE OF OPINION CANNOT BE PERMITTED AND WE MUST KEEP IN MIND THE CO NCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE A.O. HA S NO POWER TO REVIEW AND, ITA NO. 4022/DEL/2009 18 OF 19 THUS, THE A.O. HAS NO POWER TO REOPEN THE ASSESSMEN T ON THE BASIS OF MERE CHANGE OF OPINION. 25. IN THE PRESENT CASE, THE A.O. HAS REOPENED THE ASSESSMENT AFTER REVIEWING THE DETAILS AND MATERIALS, WHICH WERE ALREADY AVAIL ABLE BEFORE HIM AT THE TIME OF MAKING ASSESSMENT AND, THUS, THE REOPENING OF THE A SSESSMENT IS PURELY BASED ON HIS CHANGE OF OPINION AS WOULD BE CLEAR FROM THE FO LLOWING FACTS WHICH HAVE BEEN DISCUSSED BY THE LD. CIT(A) IN HIS ORDER:- 3.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR OF THE APPELLANT COMPANY. I HAVE ALSO PERUSED THE RETURN O F INCOME OF THE APPELLANT COMPANY FILED WITH THE DEPARTMENT WHICH I S ACCOMPANIED BY P&L ACCOUNT AND BALANCE SHEET AND VARIOUS SCHEDULES ANNEXED THERETO. SCHEDULE 17 RELATES TO SIGNIFICANT ACCOUNTING POLI CY WHEREIN DATA ON CONSUMPTION OF RAW MATERIAL, PAYMENT TO AUDITORS, P RODUCTION DATA ON SPORT/ CASUAL SHOES/ SLEEPERS AND SALES HAS BEEN PR OVIDED. THOUGH THERE IS NO PRODUCTION DURING THE YEAR UNDER CONSIDERATIO N BUT STILL THE APPELLANT HAS SHOWN SALES AMOUNTING TO RS. 4,70,570 /- AND JOB WORK INCOME AMOUNTING TO RS. 20,400/-. NO NEW PURCHASES HAVE BEEN MADE BUT THE OPENING STOCK IS SHOWN AT RS. 30,01,843.87 AND CLOSING STOCK AT RS. 9,04,364.00 AND ALL THESE FIGURES ARE CLEARLY D ISCERNIBLE FROM THE DATA AVAILABLE ON THE RETURN OF INCOME. IF THESE F ACTS ARE AVAILABLE ON RECORD AND THE ASSESSING OFFICER HAD PASSED THE ORI GINAL ASSESSMENT ORDER AFTER SCRUTINY, THEN I AM OF THE CONSIDERED O PINION THAT REOPENING HAS BEEN RESORTED TO BY THE OFFICER ON ACCOUNT OF C HANGE OF OPINION. 26. FOR THE REASONS GIVEN ABOVE AND IN THE LIGHT OF THE FACTS OF THE PRESENT CASE WE NOTED ABOVE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE A.O. HAS INITIATED PROCEEDINGS U/S 147OF T HE ACT MERELY ON THE BASIS OF CHANGE OF HIS OPINION AND, HENCE, THE NOTICE ISSUED BY HIM U/S 148 IS INVALID AND BAD IN LAW. THE ORDER OF THE LD. CIT(A) IS, THUS, UPHELD. SINCE THE ORDER OF LD. CIT(A) IN QUASHING THE NOTICE ISSUED U/S 148 IS UPH ELD BY US, THE OTHER ADDITIONAL GROUNDS RAISED BY THE REVENUE WITH REGARD TO THE VA RIOUS ADDITIONS MADE BY THE ITA NO. 4022/DEL/2009 19 OF 19 AO IN THE ASSESSMENT ORDER NEED NOT BE DECIDED AS T HEY HAVE BECOME REDUNDANT AT THIS STAGE AS THE ASSESSMENT ORDER PASSED BY THE A.O. IS TO BE TREATED AS CANCELLED. WE, THEREFORE, DO NOT ENTER INTO OTHER GROUNDS OF APPEAL RAISED BY THE REVENUE AGAINST THE LD. CIT(A)S ORDER WITH REGARD TO THE VARIOUS ADDITIONS OR DISALLOWANCE MADE BY THE A.O. 27. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 28. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 5 TH FEBRUARY, 2010. SD/- SD/- (B.P. JAIN) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 5 TH FEBRUARY, 2010. MAMTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. BY ORDER DEPUTY REGISTRAR