TaxTMI 
TaxTMI 
2021 (12) TMI 307
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....the fact that the reopening of assessment was not on the basis of change of opinion since the issues on which reopening was made were not verified in the original assessment. 3. Whether on the facts and circumstances and in law the Id.CIT(A) is right holding the reopening of assessment u/s.147 as invalid and bad in law without following the decision of the Hon'ble Supreme Court in the case of Kalyanji Mavji & Co. V.CIT (1976) 102 ITR (SC), which was subsequently confirmed in Indian & Eastern Newspaper Society v. CIT(1979) 119 ITR 996 (SC) and A.L.A. Firm v. CIT(1991) 189 ITR 285 (C). ? 4. Whether on the facts and circumstances and in law the Id.CIT(A) erred in not adjudicating the issues raised by the assessee in Ground no.2 to 4 of their appeal on merit and therefore it is humbly prayed that the Id.CIT(A) may be directed to decided the issues contained in ground no.2 to 4 on merit. 5. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 6. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. Briefly stated, the assess....
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....e, while the deduction claimed is Rs. 456.43 crore. Hence, the assessee has claimed excess deduction of Rs. 46.43 crore for the year under consideration. Accordingly, income amounting to Rs. 46.53 crore has escaped assessment. Based on above, I have reason to believe that income of Rs. 46,43,13,723 has escaped assessment in the hands of assessee for A.Y.2007-08 within the meaning of section 147 of I.T. Act." Thereafter, the A.O vide his order passed u/s 147 r.w.s 143(3), dated 12.03.2013 assessed the income of the assessee at Rs. 1242,83,78,880/- after making the following additions/disallowances: Sr. No. Particulars Amount 1 Disallowance of the assessee"s claim for deduction u/s 36(1)(viii) Rs. 4643,13,723/- 2. Disallowance of the assessee"s claim for deduction of interest on deposit under Rural Infrastructure Development Fund (RIDF) Rs. 219,64,13,423/- 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A) the assessee assailed the validity of the assessment framed by the A.O for reopening of its case on multiple grounds. The CIT(A) taking note of the fact that the A.O had reopened the concluded asses....
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....uoted in the instant order under section 147 r.w.s 143(3) on page 2. The same has been reproduced by the appellant in the contention extracted above and is hence not being reproduced here. The only important thing to be noted is the opening line of the reasons recorded for reopening, "On perusal of balance sheet and computation of income, it is observed that during the year under consideration, the assessee has transferred an amount of Rs. 410,00 crore to special reserve, while the corresponding deduction u/s 36(1)(vii) of the Act has been claimed at Rs. 456.43 crore........" the AO has reopened the case on the ground that the assessee has claimed excess deduction of Rs. 46.43 crore. 5.1.4 The appellant filed its objections to reopening vide its letter dated 11/12/2012 which was disposed of by Assessing Officer vide order dated 24/12/2012. Copies of both are available on record. 5.1.5 The appellant had made the same objections as are made in the course of these appellate proceedings and given above as part of the contentions of the appellant on this ground. In brief, they are objecting to reopening on the ground that it is done as a result of audit objection; that....
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....nts/workings/computation and other material that was made available to the Assessing Officer at the time of the original assessment in which the impugned deduction was allowed in the order passed u/s. 143(3). 5.1.12 I find that in NYK Line (India) Ltd. v. DCIT (346 ITR 361)(BOM), the Hon'ble jurisdictional High Court has held that where the assessee has disclosed all material facts relating to a particular item, mere fact that the Assessing Officer had come to a different conclusion in respect of the said item in subsequent assessment year would not justify reopening of assessment. Relevant paragraph of the said decision is reproduced below: ".... Undoubtedly an order of assessment which has been passed for a subsequent ignored in assessment year may furnish a foundation to reopen an assessment for an earlier assessment year. However, there must be some new facts which come to light in the course of assessment for the subsequent assessment year which emerge in the order of assessment. Otherwise, a mere change of opinion on the part of the Assessing Officer in the course of assessment for a subsequent assessment year would not by itself legitimise the reopening....
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.... would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong. Hence, it is clear that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon mere change of opinion." (c) The decision in case of CIT vs. Kelvinator of India Ltd (supra) has been affirmed by the Supreme Court (320 ITR 561) with the following observations: "We must keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, 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. Reasons....
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.... the assessment year. (b) Hon'ble Bombay High Court, being the jurisdictional High Court in our case, in the case of Purity Techtextile (P.) Ltd. vs. ACIT (325 ITR 459/189 Taxman 21), has held that when the AO did not have any additional material at all to form belief that income had escaped assessment then the reopening of assessment is bad and quash. (c) In Jal Hotels Co. Limited v. ADIT (2009) (184 Taxman 1) (Del.), the Hon'ble Delhi High Court held that in absence of new material on record which could form basis for recording reasons for reassessment; it would be a change of opinion which is not permissible u/s. 147 of the Act. (d) In Aipita Marketing Pvt. Ltd. vs. ITO (21 SOT 302) (Mum.), the Hon'ble jurisdictional Mumbai Tribunal has held that in the absence of any new material, the AO is not empowered to reopen an assessment irrespective of whether it is made u/s 143(1) or 143(3). (e) Reliance is also placed on the decision of the Madras High Court in Bapalal & Co. Exports v. JCIT (289 ITR 37) (Mad.) wherein it has been held that a change of opinion is not permissible whether the opinion was expressed under 143(2) or 143(1) of ....
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....does not empower the Assessing Officer to review on the same set of facts the assessment order which had already been framed merely by fresh application of to its own decision or to the decision of predecessor. 5.1.19 Fresh application of mind by the Assessing Officer on similar facts would tantamount to review of own decision. Amended section 147 does not authorize the Assessing Officer to reopen assessment under the garb of 'reason to believe' to review its own decision. If Assessing Officer does not bring any fresh/new material on record and neither receives any fresh information, then this would be a case of absence of jurisdiction on the part of the Assessing Officer to militate proceedings under section 147/148 and in the absence of jurisdiction, reassessment framed would be illegal void. 5.1.20 Reopening of an assessment completed under section 143(3) of the Act is not permissible merely on the basis of new opinion formed on the same material which happened to be the material of Sec 143(3) assessment. If on perusal of the reasons recorded by the assessing officer for initiating reassessment proceeding clearly shows that on the very same material whi....
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...."reasons to believe" on the basis of which the case of the assessee had been reopened, we find, that it is a matter of fact borne from the record that no new information/material had came to the notice of the A.O (after completion of the original assessment) which would have justified the reopening of the assessment u/s 147 of the Act. In fact, as observed by the A.O, and rightly so, a perusal of the opening line of the reasons recorded for reopening the case of the assessee, viz. "On perusal of balance sheet and computation of income, it is observed that during the year under consideration, the assessee has transferred an amount of Rs. 410.00 crore to special reserve, while the corresponding deduction u/s 36(1)(vii) of the Act has been claimed at Rs. 456.43 crore........" ,reveals beyond any scope of doubt that the A.O had reopened the concluded assessment only on the ground that the assessee had claimed an excess deduction of Rs. 46.43 crore, which in our considered view is nothing but clearly an attempt on his part to review/re-examine the assessee"s claim for deduction on the basis of the same material/accounts/workings/computation as were available before his predecessor at th....
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....to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 of the Act (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO 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, s. 147 would give arbitrary powers to the AO 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 conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "c....
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....the relevant records had made a specific order allowing the deduction. A perusal of the record shows that now respondent No. 1 proposes to reopen the assessment because according to him deduction under s. 80M was wrongly allowed, and, therefore, he was of the opinion that the income has escaped assessment. Though, in the notice respondent No. 1 has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of forming of opinion by respondent No. 1, nothing new has happened and there is no change of law, no new material has come on record, no information has been received. It is merely a fresh application of mind by the same officer to the same set of facts. Thus, it is a case of mere change of opinion, which, in our opinion, does not provide jurisdiction to respondent No. 1 to initiate proceedings under s. 148 of the Act. It can now be taken as a settled law, because of a series of judgments of various High Courts and the Supreme Court, which have been referred to in the judgment of the Full Bench of the Delhi High Court in the case of Kelvinator of India Ltd. (supra) referred to above, that under s. 147 assessment....
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....India Ltd. (supra) while drawing upon the legislative history of s. 147 held that the expression "reason to believe" needs to be given a schematic interpretation in order to ensure against an arbitrary exercise of power by the AO. The judgment of the Supreme Court emphasises that the power to reopen an assessment is not akin to a power to review the order of assessment and a mere change of opinion would not justify a recourse to the power under s. 147. Unless the AO has tangible material to reopen an assessment, the power cannot be held to be validly exercised. The Supreme Court has held thus : "...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 s. 147 would give arbitrary powers to the AO 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 conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "ch....
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....per the mandate of law even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments of the Hon'ble High Court of Bombay in the case of NYK Lime (India) Ltd. Vs. DCIT (No.2) [2012] 346 ITR 361 (Bom) and Purity Tech Textile Pvt. Ltd. Vs. ACIT & Anr. [2010] 325 ITR 459 (Bom). Backed by the aforesaid settled position of law, we are of the considered view that as the A.O for the reasons discussed at length hereinabove had wrongly assumed jurisdiction and reopened the concluded assessment of the assessee bank without satisfying the mandate of law as required u/s 147 of the Act, therefore, the CIT(A) had rightly observed that the assessment framed by him vide his order passed u/s 147 r.w.s 143(3), dated 12.03.2013 cannot be sustained and is liable to be struck down. Before parting, we may herein observe that as the revenue had assailed the striking down of the reassessme....