TaxTMI 
TaxTMI 
2018 (9) TMI 353
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....luru. 2. The learned Tribunal has held in favour of the assessee in the impugned order that re-assessment proceedings under Section 147/148 of the Income Tax Act, 1961 for the A.Y. 2003-2004 could not be undertaken on a mere change of opinion or audit objection raised by the internal auditors of the Department. The Tribunal further held that the income from 'Dividends on Shares' could not be taxed by the assessing authority under the head 'Income from other sources' as the business of the assessee itself was that of investing in shares and securities and therefore, it was taxable as business income. 3. The learned Tribunal has also held that the business loss of the assessee was set-off against the capital gains earned by the assessee dur....
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....caped assessment and it was in his knowledge that income escaped assessment by fault of the assessee. In our opinion, a mere change of opinion is not sufficient to issue notice u/s.148 of the Act for reassessing the income by invoking the provisions of section 147 of the Act. 17. In the present case, another objection taken by the AO in the reasons recorded for reopening the assessment is that the assessee had not set off business loss against the capital gains, which is contrary to the provisions of the Act. In our opinion, the said observation of the AO is totally wrong because the assessee had set off the business loss against the income from capital gain and the provisions contained in section 71(2) of the Act clearly stipulates that ....
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.... exercises its jurisdiction for initiating a proceeding for reassessment only upon mere change of opinion, the same may be held to be unconstitutional. Section 147 does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceeding upon his mere change of opinion." The aforesaid case has been affirmed by the Hon'ble Supreme Court as reported in [2010] 187 Taxman 312 SC wherein it has been held as under: "Prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under two conditions viz., if (a) the ITO had reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the ITO or to disclose fully an....
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....on' as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, the Assessing Officer has power to re-open, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in section 147. However on receipt of representations from the companies against omission of the words 'reasons to believe', the Parliament re-introduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer." 22. Recently, the Hon'ble Delhi High Court in the case of CIT....
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....eal. The appeal is devoid of any merit and is accordingly dismissed." 23. We therefore, by keeping in view the ratio laid down by the various Hon'ble Courts in the aforesaid referred to cases, are of the view that in the present case reopening u/s. 147 of the Act by the AO on the basis of change of opinion was not justified. xxx 30. In view of the aforesaid discussion, reopening u/s. 147 of the Act by issuing notice u/s. 148 was not justified because firstly, the AO nowhere mentioned in the reasons recorded that the income escaped assessment and the view taken by the AO while framing the original assessment u/s. 143(3) of the Act vide order dated 30.12.2005 was in consonance with the view taken in the preceding as well as succeeding ye....