TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1144
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of Rs.41,93,990/- made by the A.O on account of disallowance of deduction u/s.80IB(10) of the Act without appreciating the facts and evidences brought into light by the AO during assessment proceedings. 2. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal." 2. Succinctly stated, the assessee is engaged in the business of construction of flats and land development. Original assessment was framed by the A.O vide his order passed u/s.143(3)/147 of the Act, dated 21.12.2010 and the income of the assessee was assessed at Rs.1,00,38,000/-, i.e., after making an addition of Rs. 2.50 lac. 3. Subsequently, on the basis of an audit objection as regards the assessee's entitlement for claim of deduction u/s. 80IB(10) of the Act, the case of the assessee was reopened by the A.O u/s. 147 of the Act. On a perusal of the records, we find that it was reported by the Sr. Audit Officer, ITRAP-1, Raipur that the assessee for the purpose of quantifying its claim for deduction u/s 80IB(10) of the Act, had instead of as taking his actual gross receipts at Rs.2,97,95,000/-, i.e, the proceeds received on sale ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing facilities formed part of the project that was approved by "Nagar Niyojan Avam Vikas" Raipur vide "Anugya" dated 23.01.2004 and were facilities which the assessee as a builder was obligated to provide, therefore, the same being a part of the project was duly eligible for deduction u/s. 80IB (10) of the Act. Accordingly, the CIT(Appeals) on the basis of his aforesaid observations allowed the appeal of the assessee. 5. The Revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 7. On a perusal of the orders of the lower authorities, we find that it is a matter of fact borne from record that the case of the assessee was reopened not on the basis of any fresh information coming to the notice of the A.O after conclusion of the original assessment that was framed u/s.143(3) dated 25.03.2014, but was based on the same set of facts as were available on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Department, then, in the garb of reopening 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 AO. Hence, after 1st April, 1989, AO has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to s. 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in s. 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the AO. We quote hereinbelow the relevant portion of Circular No. 549, dt. 31st Oct., 1989 [(1990) 82 CTR (St) 1], which reads as follows : "7.2 Amendment made by the Amending Act, 1989, to re-introduce the expression "reason to believe" in s. 147.--A number of representations wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ious 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 cannot be reopened on a mere change of opinion." We further find that the Hon'ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (2008) 308 ITR 195 (Bom) had observed, that as no new information/material was received by the A.O, therefore, the fresh application of mind by the A.O to the same set of facts and material which were available on record at the time of framing of the assessment, but had inadvertently remained omitted to be considered would tantamount to review of order, which is not permissible as per law. Observations of the Hon'ble High Court for the aske of clarity are culled out as under : "10. It is further to be seen that the legislature has not conferred power on the AO to review its own order. Therefore, the power under s. 147 cannot be used to review the order. In the present case, though the AO has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eptual 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 "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 "change of opinion" as an inbuilt test to check abuse of power by the AO. Hence, after 1st April, 1989, AO has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a link with the formation of the belief." 24. In the present case, for all the assessment years in question, and a fortiorari for asst. yr. 2004-05, what the AO has purported to do is to reopen the assessment on the basis of a mere change of opinion. That the AO had no tangible material is evident from the circumstance that the reasons which have been disclosed contain a reference to the same basis, namely the existence of a nil surplus/deficit in Form 1 which was drawn to the attention of and was present to the mind of the AO during t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... therefore, finding no infirmity in the view taken by the CIT(Appeals) who had rightly observed that the reopening of a concluded assessment of the assessee on the basis of mere 'change of opinion" is not sustainable in the eyes of law, uphold his order to said extent. 10. Adverting to the observations of the CIT(Appeals) as regards the merits of the disallowance of the assessee's claim for deduction u/s. 80IB(10) of the Act, i.e., declining of such claim of deduction qua the charges received by the assessee for provision of various facilities, i.e., pipelines, electricity and stilt parking facilities, we are of the considered view, that as observed by the CIT(Appeals), and rightly so, now when the provision of the aforesaid facilities forms part and parcel of the approval of "Nagar Niyojan Avam Vikas" Raipur vide "Anugya", dated 23.01.2004, of the housing project in question and, the assessee in terms of the approval of his project was obligated to provide such services, therefore, the same would be eligible for deduction u/s. 80IB(10) of the Act. For the sake of clarity the relevant observations of the CIT(Appeals) on the aforesaid issue are reproduced as under: "Coming to the....