TaxTMI 
TaxTMI 
2010 (2) TMI 84
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....ofessional misconduct or conviction of an offence involving moral turpitude upon which a partner shall become disqualified. Clause 35 of the deed of partnership provides as follows: "A partner who has retired voluntarily or has been required to withdraw from the firm under clause 41 of this deed shall not, so long as the continuing or surviving partners or any of them shall carry on the said business, for a period of three years from such retirement or withdrawal, solicit the clients of the firm." 3. On retirement from the firm, the petitioner became entitled to a sum of Rs. 1,73,25,000 which was payable in eight instalments, During the course of the previous year relevant to the assessment year 2004-05, the petitioner received an amount of Rs. 21,65,625, out of the total amount receivable. In his return of income for the assessment year 2004-05, the petitioner disclosed receipt of the aforesaid amount and claimed, in a note appended to the return, that during the year he had retired from the firm with effect from October 22, 2003; the amount receivable on retirement was not liable to tax and out of the total amount, the aforesaid instalment has been received from the firm. ....
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....04-05. Therefore, a notice under section 148 is being issued." (emphasis supplied) 5. On October 23, 2009, the petitioner lodged his objections to the reasons recorded by the Assessing Officer. The contention of the petitioner was that (i) clause 35 of the deed of partnership had no application to a situation where a partner had retired mandatorily on attaining the age of seventy years. Ex facie, clause 35 applies only to a partner who has retired voluntarily or who has been required to retire under clause 41; (ii) section 28(va) refers to a sum received or receivable for carrying out any activity in relation to any business. There is a distinction between the expression "business" which is defined in section 2(13) and the expression "profession" defined in section 2(36). Section 28(va) has no application to an amount received in relation to a profession. In any event, the petitioner had not renounced any right to carry on his profession within the meaning of section 28(va) ; (iii) The amount which has been paid to the petitioner was out of a reserve fund established and maintained to pay retiring partners of the firm. There was no purchase of a share of the retiring partner, by....
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....is made in money would not fall within the ambit of section 28(iv). Assuming that the Assessing Officer was entitled to correct a mistake, if any, section 28(va) would also have no application. In these circumstances, it was submitted that the jurisdictional condition for the exercise of the power is absent in the present case. 8. On behalf of the Revenue, it has been submitted that an assessment has not been carried out in the present case and the exercise of power by the issuance of a notice under section 148 is within a period of four years. It has been urged that at this stage, material which has been produced before the court was not produced before the Assessing Officer and, consequently, interference under article 226 of the Constitution of India was not warranted since it would be for the Assessing Officer to determine as to whether income has, as a matter of fact, escaped assessment. However, during the course of submissions, counsel appearing on behalf of the Revenue submitted that while recording his reasons, the Assessing Officer had erroneously referred to clause 35 of the deed of partnership, which would have no application to the retirement of a partner upon attai....
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....re change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. But reassessment has to be based on fulfilment of certain pre-conditions and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after April 1, 1989, the Assessing Officer has power to reopen, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a link with the formation of the belief." 11. In the present case, while recording his reasons for the formation of belief that income has escaped assessment, the Assessing Officer placed reliance on clause 35 of the deed of partnership. Clause 35 states that a partner who is retiring voluntarily or has been required to withdraw from the firm under clause 41 shall not, so long as the continuing or surviving partners or any of them shall carry on the business, s....