Re-assessment proceedings cannot, be initiated on the ground that the Assessing Officer was legally wrong and had misapplied and wrongly understood the law/legal position

BLB Limited Vs. ACIT  (Delhi HC)

If in the course of original assessment proceedings, the Assessing Officer has considered and examined a particular aspect, the said aspect cannot be made a ground to reopen and initiate reassessment proceedings. The assessing authority cannot have a fresh look and reopen an assessment on the ground of change of opinion.

The facts noticed above, clearly show that in the original assessment proceedings, the Assessing Officer had considered and examined whether or not the non-compete fee payment was of capital or revenue nature. The Assessing Officer accepted the stand of the assessee and treated the non-compete fee as a revenue expenditure. The re-assessment proceedings cannot, therefore, be initiated on the ground that the Assessing Officer was legally wrong and had misapplied and wrongly understood the law/legal position.

HIGH COURT OF DELHI

Date of decision: December 01, 2011

W.P.(C) 6884/2010

BLB Limited

Versus

Assistant Commissioner of Income Tax

JUDGEMENT

SANJIV KHANNA,J: (ORAL)

The petitioner BLB Ltd. has filed the present writ petition impugning notice under Section 148 dated 01.02.2010 and the order dated 16.9.2010 passed by the Assessing Officer dismissing their objections to the re-opening. 2.      Reasons given for re-opening of the assessment for assessment year 2003-04 under Section 147/148 of the Income Tax Act, 1961 (Act, for short) are as under:-