TaxTMI 
TaxTMI 
2022 (5) TMI 839
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..... 3 under section 147 read with section 144B of the Income Tax Act, 1961 for the assessment year 2017-18" Facts 3. Briefly stated facts of the present case are that the petitioner derives income from civil contract work. For the Assessment Year 2017-18, the petitioner filed a return of income on 21.03.2018 along with audit report dated 02.11.2017. The case of the petitioner was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act, 1961") was issued on 13.08.2018 which was followed by notices under Section 142(1) of the Act, 1961. A show cause notice dated 07.12.2019 was also issued to the petitioner and the petitioner submitted entire details as required by the assessing officer. 4. Vide notice dated 23.11.2019 under Section 142(1) of the Act, 1961 issued during the course of regular assessment proceedings, the assessing officer required the petitioner to furnish reply on several points and also required him to furnish entire details of all the accounts maintained with the Bank/Post Office/Financial Institutions and the cash deposited by him in the Bank during the demonetization period. Every details with re....
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.... F. No. 225/40/2021/ITA-II Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Ndw Delhi, the 4th March, 2021. To All. Pr. Chief Commissioner of Income Tax/Chief Commissioners of Income Tax. Madam/Sir, Subject:- Instructions regarding selection of cases for issue of notice under section 148 of the Income Tax Act, 1961-regarding. 1. The Central Board of Direct Taxes (Board), in exercise of its power under section 119 of the Income Tax Act, 1961 (Act), with an objective of streamlining the process of selection of cases for issue of notice under section 148 of the Act, hereby directs that the following categories of cases be considered as 'potential cases' for taking action under section 148 of the Act by 31.03.2021 for the A.Y. 2013-14 to A.Y. 2017-18 by the jurisdiction Assessing Officer (JAO): i. Cases where there are Audit Objection (Revenue/Internal) which require section under section 148 of the Act; ii.Cases of information from any other Government Agency/Law Enforcement Agency which require action under section 14....
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....lieve" recorded by assessing authority, therefore, writ petition is not maintainable. Discussion & Findings 11. We have carefully considered the submissions of learned counsels for the parties. 12. In the impugned reassessment order dated 30.03.2022, the respondent no.3 has recorded conclusion, as under:- "Considering the facts of the case, the submission/documentary evidences filed by the assessee in response to show cause, were found not verifiable and acceptable to justify the genuineness of transactions. Notice u/s 133(6) of the I.T. Act, dated 09.02.2021 issued for same amount of Rs. 1,05,00,000/- from department. In notice u/s 133(6), it is seen that in notice 133(6), details have been sought regarding source of cash deposits in SBN Notes, amounting to Rs. 1,05,00,000/- in bank accounts during the period 08.11.2016 to 31.03.2017. Period mention in notice u/s 133(6) is specific, not for period 01.04.2016 to 31.03.2017 (for F.Y. 2016-17). Once again, it has stated that the submission/documentary evidences filed by the assessee, were found not verifiable and acceptable to justify the genuineness of transactions. Subject to the above remarks, t....
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....nal assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. Thus, reason to believe cannot be said to be the subjective satisfaction of the assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. 30. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the "change of opinion" and the material present before the assessing Authority. Discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to reinitiate proceedings under Section 21(1) of the Act on the basis of change in subjective opinion (CIT v. Dinesh Chandra H. Shah, (1972) 3 SCC 231; CIT v. Nawab Mir Barkat Ali Khan Bahadur, (1975) 4 SCC 360)." (emphasis supplied) 15. In the case of The Commissioner of Sales-Tax U.P. vs. M/s. Bhagwan Industries (P) Ltd., Lucknow, AIR 1973 SC 370 (Paras 9 & 10), Hon'ble Supreme Court has held as under: "9. The controversy between....
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....eady in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary." (Emphasis supplied) 16. A Division Bench of this Court, while dealing with the validity of the re-assessment notice under Section 148 in Writ Tax No.874 of 2010 (M/S Parmarth Steel And Alloys Pvt. Ltd. vs. State of U.P. and Others, decided on 28.03.2022, held as under (Para 17) : "17. It is settled principles of law that proceedings under Section 21 of the Act, 1948 can be initiated if the material on which the Assessing Authority bases its opinion, is not arbitrary, irrational, vague, distant or irrelevant. There must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in Section 21 of the Act, 1948. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessmen....
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....for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words "definite information" which were there in section 34 of the Act of 1922 at one time before its amendment in 1948 are not there in section 147 of the Act of 1961 would not lead to the conclusion that ac....
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....(a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The important words under section 147 (a) are "has reason to believe" and these words are stronger than the words "is satisfied". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income Tax Officer in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147 (a). It there is no rational and intelligible nexus between the reasons and the beli....
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....s meaning in literal as well as legal terms. The words "change of opinion" implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 17. It is well settled and held by this court in a catena of judgments and it would be sufficient to refer Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. (2010) 320 ITR 561(SC) wherein this Court has held as under: (SCC p.725, para 5-7) "5....where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4- 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe"..... Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Offi....
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....re-assess any income on the ground which escaped his knowledge. (b) The words "reason to believe" suggest that the belief must be bona fide and must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. His vague feeling that there might have been some escapement of income from assessment is not sufficient. The reasons for the formation of the belief must be based on tangile material and must be based on a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular assessment year. In other words, such material on which the assessing Authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. If the grounds for formation of "reason to believe" are of an extraneous character, the same would not warrant initiation of pr....
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....er in the bank during the Assessment Year 2017-18, which were furnished by the petitioner-assessee. The assessing officer required various other details by notice dated 23.11.2019 under Section 142(1) of the Act, 1961 which were also furnished by the petitioner and thereafter, the regular assessment order under section 143(3) of the Act, 1961 dated 25.12.2019 was passed. The explanation submitted by the petitioner regarding cash deposits in bank during Assessment Year 2017-18, was accepted by the assessing officer. 25. After the assessing officer had earlier made assessment for the same assessment year and accepted the explanation of the petitioner regarding cash deposits in bank, reassessment proceedings for the alleged escapement of the income from assessment to tax on the ground of cash deposits in bank which were earlier considered by the assessing officer in regular assessment proceedings, would amount to "change of opinion". Since the assessing officer, during the course of the regular assessment proceedings, consciously applied his mind to the cash deposits in bank by the petitioner, then initiation of the reassessment proceedings on the same set of facts would tantamount....