Facts

The assessee was engaged in the business of development and export of computer software and human resource services.

Assessee filed its return declaring a loss after claiming a deduction common expenses from its two sources of income, namely, software development and human resource development. The assessee also claimed deduction under section 10A for the income from software development.

The return was selected for assessment under section 143(2) and a specific query was raised regarding the allocation of common expenses between the two heads, viz., software development and human resource development. The issue was duly explained and an order passed assessing the income as ‘Nil’.

Subsequently a notice under section 148 was issued on the ground that an excess deduction under section 10A had been allowed.

The assessee filed objections against the proposed reopening. The objections of   the assessee were rejected.

On writ, the High Court set aside reassessment notice.

Issue

Whether an assessment could be reopened on the issue of excess deductions claimed under section 10A, where during the original assessment proceedings, the question of allocation of expenses was considered?

Views

Before interfering with the proposed re-opening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either express or necessary implication expressed an opinion on a matter which is the basis of the alleged escapement       of income.. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed re-assessmentproceedings.

In the present case, a bare perusal of the notice made it clear that the point on which the re-assessment proceedings were initiated, was well considered in the original proceedings.

Held

Initiation of the  re-assessment  proceedings under section 147, merely because of the fact that now the AO is of the view that theexcess deduction was allowed, was based on nothing but a change of opinion on the same facts and circumstances which were already in his knowledge even during the original assessment proceedings. (AY. 2001-02) (CA No.2732 of 2007 dt. 24-4-2018)

Editorial : Techspan India (P) Ltd v. ITO (2006) 283 ITR 212/203 CTR 550 (2007) 158 Taxman 182 (Delhi) (HC) in Dy. CIT v. Simplex Concrete Piles (India) Ltd. (2012) 79 DTR 82/254 CTR 221/210 Taxman 278/(2013) 358 ITR129(SC) the

Court held that subsequent reversal of Judgment by Supreme Court-Subsequent reversal of legal position by judgment of Supreme Court does not authorize department to re-open assessment, which stood closed on basis of law,  as it stood  at relevant time. Also refer CIT v. Kelvinator of India Ltd. (2010) 2 SCC 723/320 ITR 561/228 CTR 488/187 Taxman 312/34 DTR 49/216Taxation 41 (SC) ACIT v.

Marico Ltd (2020) 117 taxmann.com 244 (SC)

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I must respond to varying conditions, yet remain changeless within.”

– Mahatma Gandhi