TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 652
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....overned by the Reserve Bank Act. 3. The appellant originally filed its return of income declaring 'nil' income on 27.10.2004 after claiming an exemption under Section 80P(2) of the Act. The same was processed under Section 143(1) of the Act. Subsequently, the case was selected for scrutiny and order under Section 143(3) of the Act was passed accepting the return of income at 'nil'. Thereafter, the assessing officer issued a notice under Section 148 of the Act dated 06.03.2009 and the assessment under Section 143(3) r/w Section 147 of the Act was concluded on 31.12.2009 by determining the total income of the appellant at Rs. 44,53,500/- as against the 'nil' income filed by the appellant. Being aggrieved, the assessee/appellant preferred an appeal before the Commissioner of Income Tax (Appeals)-III, Bengaluru, who partly allowed the appeal. However, being aggrieved by the order of the Commissioner of Income Tax (Appeals) to the extent it was against the appellant, the appellant preferred an appeal before the Tribunal and the same came to be dismissed. Hence, this appeal by the appellant/assessee. 4. This appeal was admitted by this Court to consider the following substantial questi....
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....he revenue. 6. Learned counsel appearing for the Revenue would argue that valid reasons have been recorded by the assessing officer for reopening the assessment proceedings under Section 147/148 of the Act; no flaw could be found in the said reasons; hence, the same cannot be held to be without jurisdiction. Learned counsel placing reliance on the judgment of the Hon'ble Apex Court in the case of Kalyanji Mavji & Co., v. Commissioner of Income-tax, reported in (1976) 102 ITR 287 (SC) and in the case of Indian & Eastern Newspaper Society v. Commissioner of Income-tax, reported in (1979) 2 Taxman 197(SC) as well as in the case of Income Tax Officer v. Techspan India (P) Ltd., reported in (2018) 92 taxmann.com 361(SC) submitted that to ascertain whether reopening is on change in opinion, it is required to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If no such analysis is made in the assessment order, it may be difficult to attribute to the assessing officer, the change in opinion. 7. On our direction, learned counsel appearing for ....
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....urities may be assessable where what is done is not merely a realization or change of investment, but an act done in what is truly the carrying on, or carrying out, of a business. In the ordinary case of a Bank, the business consists in its essence of dealing with money and credit. Numerous depositors place their money with the bank often receiving a small rate of interest on it. A number of borrowers receive loans of a large part of these deposited funds at somewhat higher rate of interest. But the banker has always to keep enough cash or easily realizable securities to meet any probable demand by the depositors. No doubt there will generally be loans to persons of undoubted solvency which can quickly be called in, but it may be very undesirable to use this second line of defence. If some of the securities of the bank are realized in order to meet withdrawals by depositors, this is a normal step in carrying on the banking business, or in other words, that it is an act done in what is truly the carrying on of the banking business." Considering the aforesaid judicial pronouncements on the subject, allowance of deduction u/s 80P of the Act in respect of profit from sale of securiti....
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....of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year)." After the Amending Act, 1989, Section 147 reads as under: "147. Income escaping assessment. - If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)." On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the....
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....n within four year, if an assessee has furnished full and true particulars at the time of original assessment with reference to income alleged to have escaped assessment and whether and when in such cases reopening is valid or invalid on the ground of change of opinion? (iii) Whether the bar or prohibition under the principle "change of opinion" will apply even when the Assessing Officer has not asked any question or query with respect to an entry/note, but there is evidence and material to show that the Assessing Officer had raised queries and questions on other aspects? (iv) Whether and in what circumstances Section 114 (e) of the Evidence Act can be applied and it can be held that it is a case of change of opinion?" Analyzing the Judgments of the Hon'ble Apex Court in extenso, observed thus: "(1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assesse. Reassessment proceedings in t....
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....ment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Incometax Officer had not considered the material and subsequently come by the material from the record itself, then such a case would fall within the scope of Section 147(b) of the Act. (emphasis supplied) The aforesaid observations are complete answer to the submission that if a particular subject matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred. We are conscious of the fact that the aforesaid observations have been made in the context of Section 147(b) with reference to the term 'information' and conceptually there is difference in scope and ambit of reopening provisions incorporated w.e.f. 1st April, 1989. However, it was observed by the Supreme Court in Kelvinator India (supra) that amended provisions are wider. What is important and relevant is that the principle of 'change of opinion' was equally applicable under the unamended provisions. The Supreme Court was therefore conscious of the said principle, when the observations mentioned above i....
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....ing officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing Officer and answers given by the assessee but in others cases, a deeper scrutiny or examination may be necessary. The stand of the Revenue and the assessee would be relevant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case." 12. The reasons recor....