TaxTMI 
TaxTMI 
2013 (7) TMI 383
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....xpenses including a sum of Rs. 7,50,771 as maintenance contribution (society) under the head of administrative expenses. 5) The assessment was taken in scrutiny. The Assessing Officer framed assessment under section 143(3) of the Act on December 26, 2008. There was no disallowance of such expenditure. He computed the income of the assessee at Rs. 28,97,560. 6) Subsequently, the Assessing Officer issued the impugned notice dated April 19, 2010, under section 148 of the Act. 7) After receipt of the notice, the petitioner addressed a letter dated April 22, 2010, to the respondent. In addition to opposing such reopening of the assessment on the ground that any reopening would be based on a mere change of opinion, the petitioner also requested the Assessing officer to supply the reasons recorded for such reopening. Ignoring such request, the Assessing Officer issued notices to the petitioner to remain personally present or through representative to clarify certain aspects, on which he required clarification. The case of the petitioner thus, is that without even supplying the reasons for reopening recorded, the Assessing Officer assumed jurisdiction and proceeded with the reasse....
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....himself unable to accept the same. He made an addition of Rs. 7,50,771 by disallowing the expenditure claimed by the assessee, making the following observations : "The assessee's aforesaid reply has carefully been considered but the ground not convincing. The assessee-firm has given sufficient opportunity to filed its objections. The assessee-firm has stated in its reply that notice under section 148 was issued without obtaining approval of higher authority. In this regard, the contention of the assessee is not acceptable. The case was reopen under section 148 in proper and as per law. In this case, the approval for issuing notice under section 148 was obtaining from higher authority after recording reasons. On verification of the details furnished by the assessee-firm and as per case records, it is noticed that the assessee-firm, a consultant in real estate business, had entered into agreement with 'Kundan (Satellite) Co-operative Society'. As per the terms and conditions of the agreement, the developer should collect 'maintenance deposit' from the members and incur the expenditure from the deposit towards maintenance of the society. However, the assessee firm had ....
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....ad issued notice for reopening within a period of four years from the end of relevant assessment year. In the original assessment, the question of expenditure of Rs. 70,50,771 was not examined. The petition should, therefore, be dismissed. 12) By virtue of the decision of the apex court in the case of GKN Driveshafts (India) Ltd. v. ITO reported in [2003] 259 ITR 19 (SC), the assessee had the right to receive reasons recorded by the Assessing Officer for reopening and to raise his objections to such reopening of the assessment previously framed for scrutiny. Such objections were required to be dealt with and disposed of by the Assessing Officer before finalising the assessment. The Assessing Officer blatantly disregarded such decision of the apex court. Instead of disposing of the objections separately, he proceeded to frame the assessment ignoring the objections of the petitioner. It was only in the final order of the assessment that he touched on the various objections raised by the petitioner. It was perhaps possible for the petitioner to argue that only on this ground, the assessment should be set aside. We may not go to such length, keeping such a contention open to be exam....
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....ers as per development agreement. The details of maintenance deposit expenses of the three society handed over during the years is as under : Name of the society Maintenance deposit collected and repaid Maintenance contribution given by developer against use of fund Period Percentage of Exp. 6 Months Ohm Bileshwar Association 56,00,000 2,40,053 6 months 4.28 per cent. Mahima Satellite Co-Op Hou. Soc. Ltd 88,00,000 3,14,105 6 months 3.57 per cent. Kundan Satellite Co-Op Hos. Soc. Ltd. 62,00,000 1,96,613 6 months 3.17 per cent. Total 7,50,771 As per the understanding of the agreement we are required to contribute maintenance to the society by drawing cheques in their favour as and when the expense is incurred by the society. Our contribution is restricted to an amount as given by us. Actual expense incurred by society is more than the amount contributed by us. This contribution is given against the use of maintenance deposit in our business which is interest free. Thus the expense being less than 12 per cent. of fund utilized, the claim is justified." 16) The final or....
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....ing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions 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 live link with the formation of the belief. Our view gets supports from the changes made to section 147 of the Act, as quoted herein above. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words 'reasons 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 reintroduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Off....