TaxTMI 
TaxTMI 
2013 (4) TMI 452
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....ition to fixed assets. On 29.3.2011 vide Annexure P.6, the petitioner has been issued a notice under Section 147 of the Act on the ground that the income chargeable for tax for the Assessment year 2006-07, has escaped assessment. On 28.9.2011, at the request of the petitioner, the reasons for reassessment were communicated. The relevant extracts from the reasons so communicated read as under:- "The assessee filed its original return of income for A.Y. 2006- 07 on 30.11.2006 showing income of Rs.29,67,03,998/-. The return was processed u/s 143(1). Subsequently, the assessee filed revised return on 30.3.2008 at an income of Rs.29,48,10,266/-. The assessment was completed u/s 143(3) at an income of Rs.34,28,14,372/- vide order dated 28.11.2008. A perusal of the assessment record reveals the following:- 1. As per Balance Sheet, the assessee company has made investment in capital work in progress amounting to Rs.1,20,92,92,905/-. The assessee company has incurred interest expenditure of Rs.23,80,26,558/-. The above advances/investments have been made for acquisition of capital assets which have not been put to use during the year under consideration. Provisions of Section 36(1)(iii....
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....epted by the competent authority, inter-alia, on the ground that it is not merely a change of opinion, but a mistake has been detected which led to change of opinion. With the said observation, the objections were found to be unacceptable. In the written statement, it has been asserted that the proceedings have been initiated against the petitioner not in terms of proviso to Section 147 of the Act, but in terms of the main provisions of Section 147 of the Act, according to which if the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment for any assessment year, proceedings under Section 147 of the Act for that assessment year can be initiated within the statutory time limit. It was on the basis of the said grounds, the proceedings under Section 147 of the Act, for that Assessment Year have been initiated. It has been asserted that where a tax lawfully exigible has not been imposed or lesser tax than what was exigible has been imposed due to incorrect or incomplete application or interpretation of the relevant provisions of the Income Tax Act or incorrect appreciation of the facts, proceedings under Section 147 of the Act, can be initiated e....
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....erence was made to the following quote:- "20. As observed by the Delhi High Court (sic the Supreme Court) in Central Provinces Manganese Ore Co. Ltd. v. ITO, (1991)4 SCC 166 for initiation of action under Section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the assessing officer is within the realm of subjective satisfaction [see ITO v. Selected Dalurband Coal Co. (P) Ltd, (1997) 10 SCC 68; Raymond Woollen Mills Ltd. v. ITO,(2008)14 SCC 218]. 21. The scope and effect of Section 147 as substituted with effect from 1.4.1989, as also Sections 148 to 152 are substantially different from the provisions as they s....
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....sent Section 147 of the Act was substituted by Direct Tax Laws (Amendment) Act, 1987 with effect from 1.4.1989. Prior to the substitution, the Assessing Officer could re-assess if he has reason to believe (i) by reason of omission or failure on the part of the assessee to make a return under Section 139 for any Assessment Year; (ii) to disclose fully and truly all material facts necessary for his assessment for that year or notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. After amendment, it is clause (b), which has been rephrased as sub-section (1) of Section 147, whereas rephrased clause (a) is proviso to subsection (1) of Section 147 of the Act. The principles on which, reassessment could be initiated prior to amendment with effect from 1.4.1989 are not the same. In Rajesh Jhaveri Stock Broken Private Limited's case (supra), the Hon'ble Supreme Court has held that only the condition that Assessing Officer must have reason to believe that income, ....