Change of opinion not permissible for invoking Section 147

By | December 2, 2015



New Delhi Television Ltd., vs. A.C.I.T., Circle 13(1)

ITA Nos. 1023/Del./2013 Asstt. Year : 2003-04

The brief facts of cases are :-

that the assessee-company is engaged in the business of producing customize software/programs for broadcasters like Star TV, BBC, Vijay Television etc. The assessee filed its return of income on 02.12.2003, declaring total income at Rs.14,41,49,689/-. In this return deduction under section 80HHF of Rs 12,01,29,653/- was claimed by the assessee. The case was selected for scrutiny and the assessment order u/s. 143(3) was completed on 28.02.2006, assessing the total income at Rs.26,55,52,542/-. In his order of assessment deduction under section 80HHF of the Act was re-computed by the AO at Rs 12,06,49,803/-.

Subsequently, the Assessing Officer reopened the assessment of assessee u/s. 147 by issuing notice u/s. 148 of the Act on the ground that the assessee has failed to disclose fully and truly the issue of actual export of eligible item and eligibility of deduction u/s 80HHF in case of export of limited rights.

Thereafter, vide reassessment order dated 24th December, 2010 the AO reassessed the total income of the assessee at Rs.14,94,40,960/- after restricting the claim for deduction u/s 80HHF to Rs.11,48,38,379/- as against claim of Rs.12,01,29,653/- made by the appellant in 5 ITA No.5126/Del./11 & 1023/Del./2013 its return of income.

AO claim :-

The AO was of the opinion that the sales are credited to the profit and loss account as per the invoice amounts and the foreign exchange fluctuation gain is not a part of the sales.

CIT (Appeal) :-

He held that the foreign exchange fluctuation gain cannot be regarded as profits derived by the assessee from the export of eligible software items. The learned CIT(A), therefore, confirmed the reassessment order .


In the instant case, in the return of income itself the assessee had furnished sufficient material adequately disclosing the fact that it had claimed deduction u/s 80HHF on foreign exchange fluctuation gain of Rs.1,19,64,641/-. It is also matter of fact that during the course of original assessment proceedings the then AO himself recomputed the deduction u/s 80HHF to Rs.12,06,49,803/- as against the claim of Rs.12,01,29,653/- made by the Appellant in his return of income. This increase in deduction was allowed by the then AO owing to certain addition / disallowances made to the business income in his order under section 143(3). It is thus hard to comprehend that the AO framing the original assessment did not apply his mind to the computation of income and Form 10CCAI furnished along with the return of income. It is an established principle of law that if conscious application of mind is made to the relevant facts and material available while making the assessment and again a different or divergent view is taken, it would amount to nothing but change of opinion.

In the instant case, the subsequent AO appears to have initiated reassessment proceedings on account of mere change of opinion. Moreover, we concur with the submissions of the Ld. AR that no new facts have come to the knowledge of the AO justifying assumption of jurisdiction after four years.

A bare reading of first proviso to section 147, shows that the law merely casts a duty on the assessee to disclose fully and truly all material facts necessary for his assessment. The duty of the assessee does not extend beyond the disclosure of all material facts necessary for his assessment. It is thereafter the duty of AO to properly apply the law thereto

Law relating to change of opinion being not permissible for invoking proceedings u/s 147 of the Act is now well settled. Support in this regard can be derived from the decisions of Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India reported in 320 ITR 561(SC) and the judgment of Delhi High Court in the case of Usha International Ltd. reported in 348 ITR 485(Del)(FB

Complete Judgement ;NDTV VS ACIT

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