AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 571
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....sment proceedings. All the details were provided by the petitioner during the course of assessment proceedings. Accordingly, the first respondent passed the assessment order on 31.12.2016 under Section 143(3) read with Section 92CA of the Income Tax Act, 1961. 4. Although the first respondent in the assessment order had discussed on certain additions to be made in determining the book profits under Section 115JB, he did not give effect to the same in the computations attached to that order. A rectification petition was filed in this regard. Under these circumstances, a notice under Section 148 of the Income Tax Act, 1961 was issued for reopening of assessment for the assessment year 2013- 2014 stating that the income chargeable to tax has escaped assessment. 5. The petitioner responded to the notice and requested for reasons. The reasons were provided and the petitioner submitted its objections elaborately. The said objections were also disposed of by the Assessing Authority and challenging the said disposal order, the present writ petition is filed by the petitioner. 6. The learned counsel appearing on behalf of the petitioner mainly raised a contention that the reasons stated ....
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.... all the issues and in respect of the issues queries were raised and the petitioner had also submitted detailed answers for the queries and accordingly, final assessment order was passed. 13. Shockingly, the very same particulars and details adjudicated were taken into consideration for the purpose of reopening of assessment and therefore, it is the change of opinion and the initiation itself is in violation of Section 147 of the Income Tax Act. 14. The learned Senior Standing Counsel, appearing on behalf of the respondents, disputed the contentions of the learned counsel for the petitioner, by stating that under Section 147 of the Income Tax Act, if the Assessing Officer has reason to believe, the same would be sufficient for reopening of assessment. The materials already considered by the Assessing Authority may also be a ground to cull out certain new informations and from and out of such new informations, reassessment proceedings shall be initiated by the Competent Authority. 15. In the present case, merely comparing the subjects which were discussed by the Assessing Authority in the assessment order, the petitioner cannot make out a ground by stating that the very same subj....
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....n allowance or any other allowance, as the case may be, for the assessment year concerned". 20. Let us now consider the spirit of the language employed in the said provision. The term "has reason to believe" is considered by the Constitutional Courts on many occasions. The reasons must have live link for the purpose of reopening of assessment. Therefore, it is not mere reasons to believe and such reasons must have some nexus for the purpose for which the reopening proceedings are initiated. 21. This apart, the reasons should not be change of opinion. The change of opinion is also elaborately discussed by the Courts. If any adjudication is made with reference to a particular issue and an interpretation is given in a particular manner or a finding is given and in respect of the same finding, if another opinion is formulated, the same amounts to change of opinion. However, the Courts are expected to be cautious, while forming an opinion whether it is 'change of opinion' or 'reason to believe'. 22. In many occasions, materials are one and the same, issues are also one and the same. However, from and out of the same materials and issues, if the Competent Authority cou....
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....y would be able to find out some new informations or materials and such authority is empowered to assess or reassess the said income also. Two circumstances are contemplated. The first circumstance is that after passing the assessment order if the Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment for reopening assessment proceedings by issue of notice under Section 148 of the Income Tax Act. The second circumstance would be that any other income chargeable to tax has escaped assessment and which comes to his notice subsequently in the course of the proceedings under Section 147, then also the Assessing Officer is empowered to go for reassessment of such income, which was traced out during the course of proceedings. 27. The significance of the second circumstance is that even after furnishing of reasons or at the time of continuance of reopening proceedings, if the Assessing Authority could able to find out any other income chargeable to tax, which has escaped assessment and which comes to his notice, then he can provide an opportunity to the Assessee and proceed with the reassessment against such income escaped assessment also. 28. ....
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....les of natural justice. 31. The directives of the Apex Court are in between procedures created by judgment, more specifically, from the initiation of Section 147 proceedings and the disposal of objections by the Assessing Officer. 32. The very purport of directions are to ensure that the Assessee must know the reasons for reopening and he must be provided with an opportunity to contest the reasons by way of submitting the objections and such objections must be disposed of by a Competent Authority by passing a speaking order. 33. The speaking order in the present context means only with reference to the reasons for reopening of assessment. Therefore, speaking order would not include the entire issues, which all are to be adjudicated. After disposing of the reasons and while passing the order of reassessment, the Assessee would get further opportunity to participate in the reassessment proceedings and he is entitled to submit any further documents available during the course of proceedings of reassessment. Therefore, the submission of objections for the reasons for reopening is not the end of the matter and there are further proceedings and during such proceedings, the Assessee i....
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....Income Tax Act, which has not been considered by the original authority, then also reopening of assessment is permissible. 38. This exactly is the reason why Explanation 2 to sub clause (c) of Section 147 of the Income Tax Act, contemplates, where an assessment has been made, but income chargeable to tax has been underassessed, then also the reassessment is permissible. Such income has been assessed at too low a rate under various circumstances as provided under Explanation 2 also. Thus, the comparison alone cannot be a ground or mere adjudication of an issue cannot be construed as change of opinion. If such an adjudication is based on reasons to believe, then the authorities may be allowed to continue the reopening proceedings for all purposes by following the procedures as contemplated under law. 39. In respect of the case on hand, the reasons furnished would reveal the following informations/materials for reopening of assessment:- (1) In this connection, on verification of the ITMR file and the assessment order, it is observed that in the assessment order an addition to Book profit amounting to Rs. 35,91,44,949/- towards disallowance of provision for Lease Equalisation charg....
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....n was arrive for Rs. 40,62,04,596/-. However, as amount of Rs. 1,86,37,918/- was deducted from the above short term gain stating that the amount relates to unrealised capital gains accounted in the financial statements as on 31.03.2012 and was added back in the assessment of earlier years. As per income tax act, short term capital gain in computed based on the difference between the cost of acquisition and the cost of sale. Hence the deduction of earlier year unrealised loss is not an acceptable deduction". 40. The Assessee also submitted elaborate objections for all the reasons furnished. For disposing of the objections dated 16.10.2018, the Assessing Authority considered the objections as raised by the petitioner. The Assessing Authority considered the objections on issue basis and made findings in paragraphs 5.1, 5.3 and 6.2, extracted as under:- "5.1 The Assessee's objection is carefully considered, however, it is not accepted for the reason that the relevant issue was not specifically considered by the Assessing Officer. The Assessing Officer nowhere left the traces for verification of the issue, therefore, it does not tantamount to change of opinion and to review ....