By way of this appeal under s. 260A of the IT Act, 1961 ('the Act'), the Revenue seeks to question the order dt. 4th July, 2013 passed by the Income-tax Appellate Tribunal. Jodhpur Bench, Jodhpur ('Tribuna!') in ITA No. 113jJdj2013 relating to the asst. yr. 2006-07 wherein the Tribunal has found the reassessment proceedings not sustainable for being based only on change of opinion, and has, accordingly, quashed the reassessment order passed against the respondent-assessee.
2. In brief, the relevant background aspects of the matter could be noticed in the following : The respondent-assessee filed the return of income on 31st Oct., 2006 declaring total income of Rs. 87,24,190 for the asst. yr. 2006-07. The order under s. 143(3) was passed by the AO on 19th Dec., 2008 accepting the income as declared. However, the successor AO proceeded to examine the assessment record and purportedly believed that the income chargeable to tax hAO escaped assessment or hAO been under-assessed. The successor AO, therefore, proceeded to issue the notice under s. 148 of the Act while stating as under:
"The assessee filed return of income on 31 st Oct., 2006 declaring an income of Rs. 87,24,190 which was processed on 28th March, 2007. Assessment under s. 143(3) of the Act was completed on 19th Dec., 2008 at returned income.
On: perusal of the assessment record it was noticed that the assessee hAO debited Rs. 87,35,400 on account of development expenses in P&L ajc for the year under consideration. However, only Rs. 52,35,400 was incurred during the year and Rs. 35 lacs was taken to balance-sheet as provisions for project development. In the order of assessment, the AO allowed the proVision as a known liability on the ground that assessee hAO submitted the details of development expenses incurred in subsequent assessment year. The assessment of AO that proVision of Rs. 35 lacs was a known liability is not as per proVision of the Act ibid. A known liability meant any payment of any serVices rendered by any person or any supply made by any person or in relation to any work, if any other work order for certain items of work has been issued. In this case the proVision was made on the basis of quotations, which did not qualify for certain liability. Since this amount was not an expenditure, it should be added to total income. Thus, Rs. 35 lacs debited in P&L a/c was in Violation of s. 145 of the Act and liable to be disallowed.
Further, Rs. 33,48,915 was debited towards registration and stamp charges and sale of plot, in P&L a/c. The registration expenses are generally borne by the purchaser and not by seller. These expenses have been wrongly claimed by assessee.
In View of above facts and circumstances of the case I have reasons to believe that the income chargeable to tax has escaped assessment/been under-assessed within the meaning of s. 147 of the IT Act, 1961 for the asst. yr. 2006-07, for which proceedings under s. 147 are initiated.
Notice under s. 148 of the IT Act, 1961, issued today."
3. The assessee objected to the proceedings for reopening of the assessment but the objections were rejected. Thereafter, the AO observed that under the Act, only that much of the expenditures could be allowed against business receipts which were actually incurred during the year; and that only a sum of Rs. 52,35,400 was actually incurred and the rest amount of Rs. 35,00,000 was taken as proVision, which could not have been allowed. With these observations, the AO disallowed the said amount ofRs. 35,00,000 and added the same to the income.
4. Aggrieved of the reassessment order so made on 29th Dec., 2011, the assessee preferred an appeal which was considered and dismissed by the Commissioner of Income-tax (Appeals), Jodhpur ['the CIT(A)'], on 16th Jan., 2013, while holding that the AO was justified iTr'disallowing the claim of expenditure of Rs. 35,00,000, being the proVision for development.
5. In further appeal, the Tribunal. however, found the approach of the AO and CIT(A) unjustified. The Tribunal held that all the facts were available before the AO at the time of framing the original assessment order; and the AO haVing taken one of the possible Views, the same AO or his successor AO could not have taken a different View as it would amount to a change of opinion. With reference to the decision of the Hon'ble Supreme Court in CIT us. Keluinator of India Ltd. (2010) 228 CTR (SC) 488 : (2010) 34 DTR (SC) 49 : (2010) 320 ITR 561 (SC), the Tribunal found unsustainable the reassessment proceedings, based merely on change of opimlOn and proceeded to quash the same. The Tribunal observed and held as under:
"3.1 We have found that full facts relating to debited expenses of Rs. 87,35,400 on account of development expenses in the P&L alc and the fact that the assessee hAO incurred a sum of Rs. 52,35,400 during the relevant year, and remaining Rs. 35 lakhs was taken to the balance-sheet as provisions for project development, were available before the AO at the time of framing the original assessment order. The fact regarding debiting, registration and stamp charges on sale of plot, in P&L al c was also available and considered by the AO originally. On the basis of the same facts and figures which were considered and one possible view has been taken the same AO or his successor AO cannot take a different view as it would amount to a change in opinion which is not permitted in law even after 1st April. 1989 and even after considering the decisions of Hon'ble apex Court rendered in this regard. In our considered opinion the primary facts necessary for the assessee were fully and truly disclosed by the assessee so the AO is not entitled to change opinion to commence proceedings for reassessment. Both the grounds taken as reasons for reopening amount to shear and mere change of opinion and nothing more. In this regard, the ratio decidendi of the case of the Hon'ble apex Court rendered in the case of CIT us. Keluinator of India Ltd. (2010) 228 cm (SC) 488 : (2010) 34 DTR (SC) 49 : (2010) 320 ITR 561 (SC) would apply mutatis mutandis. Accordingly, we hold that the reassessment based on change of opinion cannot survive and has to be quashed. We quash the reassessment order as ab initio void and allow the appeal in this legal ground. Having taken the decision as above, there is no requirement to decide the issue on merits. As a result, the appeal of the assessee succeeds."
6. Seeking to question the order so passed by the Tribunal. it is contended on behalf of the appellant that for the mercantile system of accounting being followed by the assessee, the provision of expenditure was not allowable as having not been incurred or arisen. It is submitted that the provision for the alleged expenses of Rs. 35,00,000 being not based on any scientific basis and simply a figure having been carried to the balance-sheet, the AO hAO rightly disallowed the same. In support of his contentions, the learned counsel for the appellant has referred to the decisions of Hon'ble Gujarat High Court in Praful Chunilal Patel us. M.J. Makwana, Asstt. CIT (1998) 148 CTR (Guj) 62 : (1999) 236 ITR 832 (Guj) and Gruh Finance Ltd. us. Jt. CIT (2000) 161 CTR (Gtg) 100 : (2000) 243 1m 482 (Guj).
7. Having given thoughtful consideration to the submissions made and having examined the record, we are clearly of the view that no substantial question of law is involved; and this appeal does not merit admission.
8. The decisions as referred by the learned counsel for the appellant hAO been essentially of the matters pertaining to the petitions filed at the stage of notices issued to the concerned asses sees for reassessment proceedings. In the case of Gruh Finance Ltd. (supra), the assessee was found having claimed depreciation on non-existent machinery which was allowed in original assessment without consciously examining the scheme. In Praful Chunilal Patel (supra), the Hon'ble Court observed that if a particular item though reflected on record was not subjected to assessment, the AO could initiate reassessment proceedings and the cases of non-assessment of an item would warrant formation of requisite belief. In the said case, the assessee and other co-owner AO converted a property from capital ass'et to stock-in~trade and sold it to a firm and the amount of capital gains remained to be taxed. The said cases, essentially of the writ jurisdiction and proceedings on their own facts, could hardly be considered having application to the present case.
9. In the present case, apparent it is that all the facts relating to the debited expenses of Rs. 87,35.400 on account of development expenses were stated in the P&L ale wherein, a sum of Rs. 35,00,000 was taken to the balance-sheet as provision for project development. All the facts were definitely available before the AO at the time of framing of the original assessment order. A look at the reasons recorded by the AO for the purpose of reopening makes it clear that the observations were made as if the successor AO was sitting in appeal over the original assessment order dt. 19th Dec., 2008; and it was sought to be suggested as to what was meant by a 'known liability' and as to whether the provision made on the basis of the quotations would qualify for liability or not. It was suggested that this amount, being not an expenditure, should have been added to the total income. It was further suggested that Rs. 33.48,915 was debited to the registration and stamp charges and sale of plot though registration charges are generally borne by the purchaser and not by the seller. Hence, according to the AO , these expenses were wrongly claimed by the assessee.
10. Evidently, all the observations by the successor AO were only of the expression of another opinion on the same set of facts. In the given circumstances, the Tribunal cannot be faulted in finding that the reassessment was based only on change of opinion and hence, unsustainable.
In view of the above, we are clearly of the view that no substantial question of law is involved in this appeal.
The appeal fails and is, therefore. dismissed.