Reassessment on the basis of subsequent decision cannot be said to be a mere change of opinion

The assessment in the instant case was re-opened on the ground that the Special Bench of the Tribunal in the assessee’s own case for AY 2006-07 had reversed the earlier decision of the Tribunal in the assessee’s case for AY 2005-06 whereby the Special Bench held that the commission of Rs.1 .20 crores to the three Directors was in lieu of dividend and the same was not allowable as deduction under Section 36(1)(ii). The Special Bench confirmed the treatment of the commission under Section 36(1)(ii) and held that the provisions of Section 37(1) are not applicable.

In the circumstances, considering the principles enunciated in the judgments referred to above, in our opinion the re-opening of the assessment in the present case on the basis of the subsequent decision cannot be said to be a mere change of opinion. There was tangible material for the Assessing Officer to reopen the assessment. It is sought to be contended that the facts of the case before the Special Bench of the Tribunal were different than the facts of the relevant assessment year 2008-09 inasmuch as for the AY 2006-07 no dividend was declared, whereas for the relevant AY 2008-09, dividend was, in fact, declared and, therefore, the decision of the Special Bench of the Tribunal was distinguishable. Whether the judgment of the Special Bench is distinguishable or not, and the impact of the Petitioner having declaring dividend, if any, in the relevant assessment year, is not something which we are inclined to go into at this stage. It cannot be disputed that the issue in AYs 2005- 06, 2006-07 and the relevant AY 2008-09 is about disallowance of the commission to the three Directors of the Petitioner. What is relevant at this stage is whether the Assessing Officer had reason to believe that income had escaped assessment. In our opinion, in the facts and circumstances of the case, it wouldnot be appropriate for this Court to preempt an inquiry by the Assessing Officer once a tangible basis has been disclosed for re-opening the assessment and we refrain from expressing any opinion on the merits of the issue at this stage.