TaxTMI 
TaxTMI 
2018 (4) TMI 1781
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....ities under Section 143(2) of the Act and the Petitioner was subjected to scrutiny assessment. Notice was issued on 27 July 2015 under Section 142(1) to the Petitioner to substantiate his claim. The Petitioner responded by letter dated 11 August 2015 and placed its explanation regarding the activity carried out by the Petitioner. Thereafter, the assessment order was passed on 27 August 2015 under Section 143(3) accepting the contention raised by the Petitioner and the Assessing Officer, from the perusal of the record and after hearing the Petitioner, held that the assessee is deriving an agricultural income, and the activity of mushroom farming is agricultural activity. On 28 September 2016, a notice was issued to the Petitioner under Section 148(1) of the Act on the ground that income chargeable to tax for the assessment year 2013- 14 has escaped assessment. The Petitioner by letter dated 24 October 2016 submitted his objections to the notice. The Petitioner also sought for the reasons to issue notice under Section 148(1). The Respondent no. 1 furnished reasons by letter dated 31 August 2017, primarily stating mushroom farming is not agriculture, which was served on the Petitioner....
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....l of the details submitted and discussion, the Total Income of the assessee is computed as under: Returned Total Income :- Rs. 13,238/- (Income from other sources) Assessed Total Income :- Rs. 13,240/-." After the notice was issued seeking reopening of the assessment, the Petitioner requested for reasons for the same. The Respondent no. 1 furnished the reasons. In the reasons it was stated by the Respondent no.1 that mushrooms are grown by the assessee in wooden containers & bags inside closed chamber, using different layers of artificial soil filled in wooden trays and temperature controlled to a specific degree by closing the inlet and outlets of air to provide necessary humidity for cultivation of mushrooms, and there is no connection with land. The Respondent No.1 then gave his interpretation of the term "agriculture". It was stated that when there is no connection with land, the activity of the assessee cannot be called as Agriculture. It was, inter alia, stated that the activity cannot be stated to be in a "nursery". The Respondent No.1 stated that the income arising from Mushroom farming is not covered under explanation 3 to sec. 2(1A) of I. Tax Act 1961, and also....
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....record which was not available when the assessment order was passed earlier. Mr. Gopal submitted that in the present case no fresh material has come before the Revenue in the course of the relevant assessment year which can justify reopening of the assessment. He submitted that since this jurisdiction requirement is lacking, the writ of prohibition needs to be issued against the Respondent no. 1 and the impugned order needs to be quashed and set aside. 9. Ms. Linhares, the learned Standing Counsel for the Respondent submitted that new tangible material on the basis of which reassessment can be proceeded, is the fact of non consideration of the CBDT circular dated 14 June 1979. According to Ms. Linhares, this Circular ought to have been pointed out by the Assessee and once it has come to light that this Circular has been ignored, gives jurisdiction to the Respondent no.1 to proceed to reopen the assessment. 10. In rejoinder, Mr. Gopal submitted that firstly, the Circular of CBDT, which is binding on the Respondent authorities, cannot be considered as a new tangible material. Secondly, he submitted that even otherwise the Circular of 1979 has only dealt with certain exemptions an....
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....r to reopen assessments on the basis of mere change of opinion, which cannot be per se reason to reopen the assessment. Reassessment has to be based on fulfillment on certain preconditions and the concept of change of opinion has to be treated as a test to check abuse of power by the Assessing Officer. The Court laid down that the reasons must have live link with the formation of belief. It was noted that, by Direct Tax Laws (Amendment) Act, of 1997, the Parliament had deleted the words 'Reason to Believe' from Section 147 and there were various representations from all over the country against the deletion. The Parliament reintroduced the words 'Reason to Believe' and deleted the word 'opinion'. Circular 549 dated 31 October 1989 explains the reintroduction of the word 'Reason to Believe' stating that omission might give arbitrary powers to reopen past assessments on mere change of opinion. Thus, the reintroduction of the words 'reason to believe' by the Parliament has been taken note of by the Apex Court in the decision of CIT vs. Kelvinator India Ltd., to emphasize that the assessments cannot be reopened on a mere change of opinion. 13. ....
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....e book has been construed as a check on the arbitrary powers. The phrase 'Reason to Believe' cannot be considered as a mere change of opinion. The Assessing Officer does not have power to Review on the basis of the same material which was available earlier. Ultimately, what is required for reopening the assessments is that there must be tangible material to come to the conclusion that there has been escapement of income from assessment. There cannot be a mere change of opinion on the part of the Assessing Officer, but the Revenue must demonstrate that, subsequently some new information or material had been brought on record which was not available when the assessment order was passed earlier. If no fresh material was before the revenue in the course of assessment subsequently, the revenue cannot justify reopening of the assessment. This is the position of law as regard the jurisdiction of the Assessing Officers to reopen the assessment. 15. In the case of GKN Driveshafts ( India ) Ltd., v Income Tax Officer and others 2002 Supp(4) SCR 359 the Apex Court has laid down that unless jurisdictional requirements are met, the Assessing Officer cannot proceed to reopen the ....
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.... well as in the present petition that the Circular dated 14 June 1979 has no relevance, the contention of the Petitioner that this Circular was issued in context of Section 80JJA of the Act which was in operation prior to insertion of explanation 3 to Section 2(1A) and it had no relevance, has not been dealt with by the Respondent at all, except stating that it cannot be ignored. If by subsequent amendments, the Circular had lost its efficacy and that it was substituted by another circular dated 27 March 2009, the same cannot be considered as new and tangible material. Whether the Circular has lost its relevance and is substituted by a subsequent Circular has not been explained in the order rejecting the reasons, neither in the affidavit of reply. How a preexisting Circular amounts to discovery of new tangible material is also not explained. 19. Therefore, what is before us is only a change of opinion of the Assessing Officer, without any new material. The Petitioner had placed the material before the Assessing Officer. The Assessing Officer is supposed to apply law, including the Circulars, to the material placed before him. The Assessing Officer took a particular view and the R....