P.D. Dinakaran, J.@mdashThe above tax case'' appeals are directed against the common order of the Income Tax Appellate Tribunal in ITA No.
1507/Mds/2002 and CO. No. 101/Mds/2002 in ITA No. 1507/Mds/2002, for the assessment year 1997-98.
2. The Revenue is the appellant. During the relevant assessment year, viz., 1997-98, the assessee filed a return declaring loss of Rs. 9.58 lakhs.
But, thereafter, the assessee filed a revised return declaring a total income of Rs. 95.32 lakhs. On completing the assessment, the assessing officer
accepted the claim of the assessee for exemption of non-competition fee. But, later, a notice u/s 148 of the Act was issued, as the assessing officer
had reason to believe that income chargeable to tax had escaped assessment and after taking note of the objections of the assessee, the assessing
officer passed the order of reassessment. Aggrieved against the same, the assessee filed appeal before the Commissioner of Income Tax
(Appeals), who, while holding the issue in favour of the assessee on merits, held re-opening of assessment as valid. Against the said order of the
Commissioner, the Revenue as well as the assessee filed appeals before the Income Tax Appellate Tribunal and the Tribunal, by its common order
dated 28.2.212)06, without going into the merits of the case, held that assessement was re-opened on change of opinion and the re-assessment as
void for delayed issuance of notice u/s 143 (2) of the Act after one year. Against the said order of the Tribunal, the Revenue preferred the above
appeals raising the following substantial questions of law:
1. Whether on the facts and circumstances of the case, the Tribunal was right in holding that the re-assessment was only on account of change of
opinion?
2. Whether on the facts and circumstances of the case, and considering the retrospective amendment to Section 148, the re-assessment could be
said to be invalid as the notice u/s 143(2) was not issue within one year?
3. Heard both sides.
4. The issue raised in the first question with regard to re-opening the assessment merely on the basis of change of opinion is already covered
against the Revenue by the decision of this Court in Commissioner of Income Tax Vs. Annamalai Finance Ltd., ., wherein this Court, held as
follows:
...that Section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a
mere change of opinion. The Assessing Officer proposed to reopen the assessment for the year 1994-95 purely based on the change of opinion,
namely, the change in the method of accounting of overdue interest on case or actual receipt basis, when the assessee was following the mercantile
system of accounting. The reassessment proceedings were not valid.
4. Admittedly, in the instant case, on completing the original assessment, the assessing officer accepted the exemption claimed by the assessee on
non competition fee. But, thereafter, the assessing officer reopened the assessment purely based on the change of opinion that income derived from
competition fees, which are chargeable to tax, had escaped assessment. Therefore, applying the ratio laid down by the Apex Court in the case of
Annamalai Finance Ltd., cited supra, we hold that reopening of assessment merely on the basis of change of opinion is invalid and accordingly, the
first question of law is answered against the Revenue.
5. In view of the above conclusion with regard to question No. 1, we do not think it necessary to answer the second question, as it is consequential
in nature.
Accordingly, finding no substantial question of law arises for consideration, the above Tax Case Appeals stand dismissed.
