Reasons had been taken from the facts disclosed in the assessee’s balance sheet as well as reflected in the Profit & Loss account which were also before the AO at the time of original assessment, hence, no escapement could have been attributed to the assessee.
We take note that the reopening was done u/s 147 of the Act subsequent to the four-year period stipulated in the proviso to Section 147 and, consequently, the same could only be initiated, if any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice under Section 142(1) or Section 148 or “to disclose fully and truly all material facts necessary for his assessment” for that assessment year. We take note of the fact that all the information had been furnished before the AO at the time of completion of the original assessment u/s 143(3) of the Act, therefore, the reopening of the assessment is not legally permitted; and the internal audit objection could not be constituted as a tangible material for reopening and thereafter reassessment u/s 147/148 of the Act. In this regard, we find that the CIT (A) has rightly relied upon the order of the Xerox Modicorp Ltd. vs. DCIT (supra) for forming such an opinion. We find that the assessee has truly and completely disclosed all material facts relating to all the expenses at the time of scrutiny original assessment proceedings itself. We further uphold the view of the ld. CIT (A) that there has been no failure which could be attributed to the assessee of not disclosing fully and truly all relevant primary material facts ITA No.4277/Del/2013 necessary for completion of assessment. We further find that reasons recorded were based on the audit report of the assessee which was furnished with the return of income. We further take note that the expenses related to agricultural activities were not claimed by the assessee and only the expenses on trading were claimed for which the detailed statement of accounts was filed. We find that these expenses were related to non-agricultural activities and due audit report u/s 44AB was also filed. We further find that the assessee had not claimed any of the expenses on the basis of which the assessment had been reopened. Therefore, we are of the view that the CIT (A) is right in holding that none of these expenses had been claimed by the assessee on the basis of which the reassessment proceedings were initiated and in this regard, ld. CIT (A) rightly relied upon the following judgments :-
(i) CIT vs. USHA International Ltd. in ITA No.2026/2010 dated 21.09.2012;
(ii) Hon’ble Supreme Court’s judgment in the case of M/s. Kelvinator of India Limited [2010-TIOL-06-SC-IT-LB];
(iii) Hon’ble Bombay High Court’s judgment in the case of OHM Stock Brokers (P) Ltd. vs. CIT & Anr. In WP Nos.79 to 92 of 2013 vide order dated 20.02.2013.
In view of the above, we are of the opinion that the CIT (A) has rightly held that the AO was not correct to assume jurisdiction over the assessee for the year under consideration and no new facts were brought on record which gave reasons to believe that the income of the assessee had escaped assessment and, therefore, the reopening of assessment in the present case had been merely on the basis of change of opinion. Further, it is evident that all the material information was available in the course of original assessment for framing an assessment and the AO failed to bring on record new facts or material which provided reasons to believe that the income of the assessee has escaped assessment. Moreover, we take note that the objection of the assessee against reopening has not been answered by a speaking order as mandated by the Apex Court in GKN Driveshafts (India) Ltd. vs. ITO (supra) which also vitiates the reopening of the original assessment. In the aforesaid circumstances, we uphold the view of the ld. CIT (A) that the reopening is based on change of opinion which is not permissible as held by Hon’ble Supreme Court in CIT vs. Kelvinator of India Ltd. (supra).