TaxTMI 
TaxTMI 
2016 (5) TMI 205
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....ssessee filed its return of income for AY 2010-11 on 12th October, 2010 declaring an income of Rs. 35,22,210/-. The said return was picked up for scrutiny and, thereafter, an assessment order under Section 143(3) of the Act was passed on 26th March, 2013 assessing the Assessee's income at Rs. 8,84,66,800/-. 4. Aggrieved by the aforesaid assessment order, the Assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [hereafter 'CIT(A)']. The said appeal was allowed by CIT(A) by an order dated 28th March, 2014 and all additions and disallowances made by the Assessing Officer (hereafter 'AO') were deleted. 5. Thereafter, the Assessee received the impugned notice dated 11th December, 2014 under Section 148 of the Act, inter alia, stating that the AO has reason to believe that the Assessee's income chargeable to tax in respect of AY 2010-11 had escaped assessment within the meaning of Section 147 of the Act and proposing to initiate the re-assessment proceedings. By the said notice, the Assessee was called upon to furnish a return of income for AY 2010-11 within a period of 30 days from the date of service of the said notice. 6. The Assessee....
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....ed that the queries raised by the AO were duly responded to and referred to in the letter dated 20th February, 2013 enclosing therewith various documents including copy of Ledger Account of M/s Unitech Limited, which indicated entries pertaining to purchase of the shares in question, as well as a statement indicating the details of the shares purchased. He laid emphasis on the opening words of the said letter dated 20th February, 2013 which indicated that the said letter was in compliance with the AO's demand for additional information. He contended that it was evident that the Assessee had made full disclosure in respect of the transactions of purchase of the shares in question and the same had been examined by the AO during the assessment proceedings. He contended that in the given circumstances, it was clear that the impugned re-assessment proceedings were initiated only on a change of opinion which was not permissible. 11. Mr. Aggarwal referred to the decisions of the Supreme Court in CIT v. Kelvinator of India Ltd.: (2010) 320 ITR 561(SC), and Commissioner of Income-tax v. Usha International Ltd.: (2012) 348 ITR 485 (SC) in support of his contention that the proceedings for r....
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....Dalurband Coal Co. P. Ltd.: (1996) 217 ITR 597 (SC) in support of his contention that the veracity or correctness of information received for reopening the assessment would only be determined during the course of the proceedings and not at the stage of initiation of reassessment proceedings. He earnestly contended that the opinion that Assessee's income had escaped assessment was the subjective opinion of the AO and if he had formed such an opinion on the basis of material available, the question whether the said material was sufficient or could lead to such opinion, could not be made the subject matter of enquiry by this court. He emphasised that so long as the AO considered the material to be sufficient to form an opinion, the same could not be questioned and all that was required to be looked into was whether there was any nexus between the material discovered and the AO's opinion. He submitted that, in the present case, the AO had felt that the sale of the shares in question below their respective book values indicated escapement of income and this opinion could not be questioned. 17. At the outset, we must note that the impugned notice under Section 148 of the Act has....
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....f such transfers is although reflected in the ledger a/c of Unitech Ltd which is enclosed here-in-above and is further specified as per the detail enclosed herewith. Annex-3 Further to above, it is brought to your kind notice that at the end of the F/y 2009-10, the assessee company became the 100% holding company of Bengal Unitech Universal Townscape Ltd and it is therefore advances of Rs. 39.11 Cr was transferred to the assessee company from Unitech Ltd and ledger A/c of Unitech Ltd in the books of the assessee company was credited accordingly. Simultaneously Share Capital of this company was transferred to the assessee company on the same day." 19. Annexure 3 to the aforementioned letter dated 20th February, 2013 indicated the details of transfer of investment as on 30th March, 2010 and 31st March, 2010 and is reproduced below:- ANNEXURE - 3 DETAILS OF TRANSFER OF INVESTMENT AS ON 30.03.2010 & 31.03.2010 30.03.2010 Unitech Amusement Parks Limited 250000000 Unitech Sai Private Limited 138600000 388600000 31.03.2010 Unitech Hitech Structures Limited 308320 Unitech Developers & Projects Limited 11103990 Unitech ....
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.... It is trite that a mere change of opinion cannot constitute a reason for re-opening the assessment. This has been authoritatively held by the Supreme Court in Kelvinator of India Limited (supra) in the following words:- "6. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act (with effect from 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words " reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of " mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conc....
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....e had escaped assessment. Even though such opinion may be his subjective opinion, nonetheless, it cannot be arbitrary or whimsical and must be one which a person could reasonably form on the basis of some tangible material. In Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra), the Supreme Court has explained that "the word 'reason' in the phrase 'reason to believe' would mean cause or justification". Thus, the AO must have cause or justification to believe that the income had escaped assessment. Thus, even though, the AO is not required to finally conclude at the stage of issuance of notice under Section 148 of the Act that the Assessee's income has escaped assessment, nonetheless, he must - on the basis of material in his possession - reasonably form a belief that the Assessee's income had escaped assessment. 24. In Lakhmani Mewal Das (supra), the Court had explained that the material available with the AO must have a live link with formation of belief that the Assessee's income had escaped assessment. 25. Applying the aforesaid principles, in the facts of the present case, it is difficult to accept that the sale of shares by Unitech Limited at its cost ....