TaxTMI 
TaxTMI 
2018 (3) TMI 463
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....hange or delete any of the grounds of the appeal, either before or during the course of hearing." 2. The Ground no. 1 and 2 are regarding the validity of reopening u/s 147/148 of the Act. The assessee is trust and running education institutions namely 'Sir Chhotu Ram Training Institute, Bharatpur'. The assessee was granted registration u/s 12AA of the Act vide order dated 04/11/2004. The assessee filed its return of income declaring Nil income on 15/10/2010 and scrutiny assessment u/s 143(3) was completed by the AO vide order dated 18.03.2013; thereby the return income and exemption/deduction claimed u/s 11 of the Act was accepted by the AO. Subsequently, the Assessing Officer proposed to reopen the assessment by issuing the notice u/s 148 on 16/03/2015 to assess the surplus income to tax. The assessee raised objection against reopening of the assessment before the Ld. CIT(A), but could not succeed. 3. Before us, the Ld. AR of the assessee submitted that while completing the scrutiny assessment u/s 143(3) vide order dated 18.03.2013, the Assessing Officer has examined all the details and records and accepted the expenditure incurred by the assessee as for charitable purpose and ....
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....Ward-3, Bharatpur. The same was processed u/s 143(1). The case was selected for scrutiny. Notice u/s 143(2) of the I.T. Act was issued on 22.09.2011 by ITO, Ward-3, Bharatpur and which was duly served upon the assessee. Due to change of jurisdiction of the case, record of the assessee received in this circle on transfer from ITO, Ward-3, Bharatpur and consequently notice u/s 143(2) & 142(1) alongwith questionnaires 30.05.2012. Incompliance thereto, Sh. Rajendra Agarwal, C.A. and A.R. of the assessee attended from time to time and furnished requisite details/Information/books of accounts etc. The assessee trust is running educational institutions namely Sir Chhotu Ram L.S.A. Training Institute and other charitable activities at Bharatpur and registered u/s 12AA of the I.T. Act by the worthy CIT, Alwar vide order dated 04.11.2004. The trust is working as per its by laws and carried out charitable activities. All the income of the trust is applied for fulfillment of the objects of the trust. The educational institutions are existing solely for educational purpose and not for purpose of profit. The trust has shown aggregate annual receipts of Rs. 36,05,243/- out of which an amount o....
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....the Revenue and perused the material on record. 5. Indisputably, as per the provision of Section 147 of the Act, the Assessing Officer is empowered to initiate the re- assessment proceedings if any income of the assessee chargeable to tax has escaped assessment for any assessment year. But then, before initiating the re-assessment proceedings, the AO has to record the reasons in terms of sub-section (2) of Section 148, for formation of the belief that any income of the assessee chargeable to tax for the relevant assessment year has escaped assessment. As laid down by the Hon'ble Supreme Court, the belief entertained by the Assessing Officer must not be arbitrary or irrational, it must be reasonable and based on material on record. The assumption of jurisdiction by the Assessing Officer under the provisions of the Act pre-supposes due application of mind by the Assessing Officer on the material on record and formation of the belief by the Assessing Officer that the income has escaped assessment cannot be based on whims and fancy, there must exists rational and intelligible nexus between the reasons and the belief. 6. In the matter of Calcutta Discount Co. Ltd. v. ITO [1961....
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....er section 34. Whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression "reason to believe" in section 34 does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith: it cannot be merely a pretence. To put it differently, it is open to the court to examine whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under section 34 of the Act is open to challenge in a court of law.' (Emphasis Supplied) 8. In the matter of ITO v. Lakhmani Mewal Das[1976] 103 ITR 437, the ....
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....ed earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income -tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts." (Emphasis Supplied) 9. In the matter of Ganga Saran & Sons (P.) Ltd. v. ITO [1981] 130 ITR 1/6 Taxman 14 (SC), the Hon'ble Supreme Court held as under:- "6. It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under Section 147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these condition....
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.... the reasons recorded by the Income-tax Officer, that it is a fit case for issuance of such a notice. The power conferred upon the Income-tax Officer by sections 147 and 148 is thus not an unbridled one. It is hedged in with several safeguards conceived in the interest of eliminating room for abuse of this power by the Assessing Officers. The idea was to save the assessees from harassment resulting from mechanical reopening of assessments but this protection avails only to those assessees who disclose all material facts truly and fully. Every disclosure is not and cannot be treated to be true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. A partial disclosure may very often be a misleading one. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. All the requirements stipulated by section 147 must be given due and equal weight." It was further observed that : "Since the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that, in fact th....
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....r deduction under Section 80IA/80IB was also duly submitted. The assessee had also submitted reply pursuant to all queries made by AO during the assessment proceedings under Section 143(3) of the Act. In this view of the matter, the contention sought to be raised by the Revenue about non-disclosure on the basis of the failure on the part of the assessee in mentioned bifurcated amount of additional depreciation allowable in the depreciation chart is absolutely baseless. It is to be noticed that all that has been said by the AO is that after scrutiny assessment, it was observed that assessee has made incorrect claim of additional depreciation on CPP whereas, the claim for additional depreciation on CPP was allowed by the AO while framing the assessment under Section 143(3) after conscious consideration of the material on record. It is not even the case of the Revenue that the formation of the belief regarding the escapement of the assessment by the AO is based on any new material coming on record. Apparently, the formation of the belief by the AO regarding escapement of the assessment is based on reappreciation of the material already available on record at the time of scrutiny asses....