TaxTMI 
TaxTMI 
2015 (4) TMI 15
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....r submitted that the Assessing Officer had no occasion to pass the impugned order and in any event reject the objections. According to the Petitioner, it had disclosed all material facts fully and truly, in the course of assessment proceedings including all long term capital gains, trial run expenses and bad debts during the course of original assessment proceedings. He further submitted that during the course of aforesaid proceedings, the Petitioner was called upon to submit the copies of Computation of Income, Balance Sheet, Profit and Loss Account and Audited books of account. After scrutinising the same, the Officer sought details of Long Term Capital Gains, trial run expenses and bad debts, all of which were furnished. 5. According to the Petitioner, there was no occasion for the Respondent No.1 to believe that any income had escaped assessment. Respondent No.1 had applied his mind and passed the assessment order on 7.12.2001 being fully satisfied after scrutinising the particulars. The notice under section 148 seeks to reconsider the same issue and this amounts to a change of opinion on the same set of facts and is impermissible in law. Mr.Gopal further submitted that on p....
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....erved that within a period of four years if the Assessing Officer found reason to believe that the income has escaped assessment, it is within his powers to reopen the assessment. He submitted that the impugned notice to reopen assessment has passed the test laid down in the said judgment as also the judgment in the case of Kelvinator India Ltd. According to Mr.Kumar, the Assessing Officer has applied his mind and found that there were reasons which formed a live link with the formation of the belief that the income had escaped assessment. In his view such live link having been established, the Assessing Officer was fully within his powers to issue impugned notice and reopen the assessment. 8. Having considered the rival contentions of the parties and having examined the facts we proceeded to consider the reasons adopted by the Assessing Officer for issuing the impugned notice dated 4.2.2015 which appears at Exhibit "M" of the petition. The assessment order dated 7.2.2011 records that the assessee had submitted the details required and called for during the course of assessment proceedings. The submissions of the assessee were recorded and the order dated 4.2.2015 came to be pas....
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....rlier. According to the Petitioner all information was provided while filing the return which found to be the basis of the assessing officer's proposed reopening of the assessment. It was contended that the proposed reopening only based on available records, there is no new material and that reopening under section 147 is bad in law. It was further pointed out that the Assessing Officer had used very same material provided during the assessment proceedings and has as an after thought, contended that income was under assessed. The Petitioner contended that what is being attempted is review of assessment under the guise of reopening which is not permissible in law. 11. The objections were disposed of by a communication dated 4.2.2015 in which the Assessing Officer repeated his earlier contentions. The Assessing Officer relied upon observations in paragraph 10 of the judgment in the case of Export Credit Guarantee Corporation Ltd. in Writ Petition No.502 of 2012 and contended that he was acting within his jurisdiction to reopen the assessment. 12. Section 147 of the Income Tax, 1961 is entitled "Income escaping assessment". That section reads as under : "147. If the Asses....
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.... amount which is not chargeable to income tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (ba) where the assessee has failed to furnish a report in respect of any international taxation which he was so required under section 92E. (c) where an assessment has been made, but - (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. (d) where a person is found to have any asset (including financial interest in any entity located outside India. Explanation 3.- For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the procee....
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....e Tax vs. Kelvinator of India Limited (2010) 320 ITR 561, but in section 147 of the Act from 1st April, 1989, they were given a go-by and one condition has remained viz. that where the Assessing Officer has reason to believe that income has escaped assessment he has jurisdiction to reopen the assessment. Though the power to reopen is much wider, but the interpretation that the words "reason to believe" must receive an interpretation which is in consonance with the scheme of the law. There cannot be arbitrary powers to the Assessing Officer to reopen assessment on the basis of mere change of opinion. The Assessing Officer has no power to review. He has only a power to reassess. In the garb of reopening the assessment review cannot take place. This view of the Hon'ble Supreme Court binds us. We have tested the impugned orders and the notice in the present case on this touchstone. In a somewhat similar situation, a Division Bench of this Court in the case of Titanor Components Limited, Goa vs. Assistant Commissioner of Income Tax, Panaji, Goa and Ors. 2011 (5) Mh.LJ 141, referred to the amended section 147 after 1st April, 1989 and all its provisions and explanation and held as un....
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.... does not record such a failure he would not be entitled to proceed under section 147. As observed earlier, the Assessing Officer has not recorded the failure on the part of the Petitioner to fully and truly disclose all material facts necessary for the assessment year 1997-98. What is recorded is that the Petitioner has wrongly claimed certain deductions which he was not entitled to. There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts fully and truly. It is only in the latter case that the Assessing Officer would be entitled to proceed under section 147. We are supported in this view by a decision of a Division Bench of this Court in Hindustan Lever Limited vs. R.B. Wadkar, Assistant Commissioner of Income Tax, 2004 (5) Mh.LJ 353 = (2004) 268 ITR 0332 where in a similar case the Division Bench held that the reason that there was a failure to disclose fully and truly that all material facts must be read as recorded by the Assessing Officer and it would not be permissible to delete or add to those reasons and that the Assessing Officer must....
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....eto, what we find is that the bad debts written off and to the tune of Rs. 36,72,286/- is also not an adjustment specified under section 115JB of the Income Tax Act. This has resulted in understatement of book profits to the extent indicated in the reasons leading to short levy of tax. If the assessee has not made full and true disclosure of income and its particulars in the return or during the assessment proceedings, then, we do not see how these figures have been derived by the Assessing officer. In one breath he says that he has perused the records and which reveals the above position. At the same time, he holds that the petitioner has not made full and true disclosure of income and its particulars in the return or during assessment proceedings. This contradiction and inconsistency in the reasons would indicate that the necessary satisfaction in terms of statutory provision has not been recorded at all. This would be further clear if one refers to the other reason viz. that the income has escaped assessment and also in view of sub-clause (I) of clause (c) of Explanation-2 to section 147 of the Act if income chargeable to tax has been underassessed. Such recording of reasons can....