TaxTMI 
TaxTMI 
2010 (4) TMI 718
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....mputing deduction under section 80HHC of the Act and calculation of deduction under section 80HHC in respect of DEPB respectively. 3. First we take up the legal ground challenging reopening of assessment u/s 147 of the Act. The CIT(A) rejected this legal ground of the assessee on the ground that the reopening is within four years. He further observed that after the amended provisions of section 147 substituted with effect from 01.04.1989 the power to reopen the assessment is much wider and the same can be exercised even after the assessee has disclosed fully and truly all the material facts. 4. The learned AR pointed out the reasons recorded by the AO for of which copy has been placed at page 68 of paper book filed by the assessee. ....
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....hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts59 necessary for his assessment, for that assessment year: [Provided further that....
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....ation allowance or any other allowance under this Act has been computed.]" 7.1 On plain reading of above section we noticed that one of the conditions which must be satisfied before the AO can assume jurisdiction under section 147 of the Act that, he must have reason to believe that the income of the assessee has escaped assessment. If this condition is not fulfilled, the notice issued by the AO would be without jurisdiction. The important words under s. 147 are "has reason to believe" and these words are stronger than the words "is satisfied ". The belief entertained by the AO must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The court, of course, ca....
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....the opinion that, howsoever widen the scope of taking action under section 148 of the Act, it does not confer jurisdiction on change of opinion on the interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion whether there has been excessive loss or depreciation allowance or there has been underassessment or assessment at a lower rate or for applying other provisions of Explanation 2, it must be material and it should have nexus for holding such opinion contrary to what has been expressed earlier. The scope of section 147 of the Act is not for reviewing its earlier order suo motu irrespective of there being any material to come to a different conclusion apart from just having second th....
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....ntly the Assessing Officer changes his opinion or some other officer takes a different view. A decision is right or wrong is none of the concern of the subsequent officer. If the primary facts were not available or there was concealment or there was no application of mind at all, then a case for reopening the assessment could be made out . 7.4 If we consider the facts of the case under consideration we find the following reasons were recorded by the AO which are reproduced from page 68 of paper book filed by the assessee:- "It is seen that you have claimed deduction u/s 80IB amounting to Rs. 58,13,490/-. However, this sum of Rs. 58,13,490/- has not been reduced from the eligible prof its for deduction u/s 80 HHC. As per clause 9 of se....
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....uoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in section 147 of the Act. However, on receipt of representations from the Companies against omission of the words 'reason to believe', Parliament re-introduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the AO. We quote here in below the relevant portion of Circular No. 549 dated 31st October, 1989, which reads as follows:- '7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in section 147. A number of representations were received against the omission of the words 'reason....