2023 (4) TMI 197

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....ant has proposed the following two questions as substantial questions of law: a) Whether on the facts and in the circumstances of the case, Tribunal is right in sustaining the reopening of assessment under Section 148 of the Act particularly when the original assessment was completed under Section 143(3) of the Act ? b) Whether the amount of Rural Development Cess reimbursed by the Food Corporation of India in accordance with the provisions of A.P.Rural Development Cess Act, 1996 is a trade receipt and is assessable as income when the assessee did not debit the liability to pay cess to the P&L Account ? 4. First question is whether Tribunal was justified in sustaining the reopening of assessment under Section 148 of the Act when the original assessment was completed under Section 143(3) of the Act. 5. Appellant before us is a partnership firm and is an assessee under the Act. Appellant is engaged in the business of rice industries. For the assessment year 1998-99, appellant had filed return of income which was subjected to scrutiny whereafter, assessment under Section 143(3) of the Act was completed on 23.08.1999 determining total income of the appellant at ....

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....on of escapement of income due to failure or omission on the part of the assessee to disclose material facts at the time of original assessment, thereby conferring jurisdiction on the assessing officer to reopen assessment proceedings, does not arise. 8. On appeal before the Commissioner of Income Tax (Appeals)-IV, Hyderabad (briefly 'CIT(A)' hereinafter), the first appellate authority vide the appellate order dated 29.07.2004 held that reopening of assessment was done within four years from the end of the relevant assessment year and after obtaining approval of the higher authority and after recording proper reasons. Therefore, the same was upheld. 9. On further appeal before the Tribunal, the view taken by CIT(A) was affirmed by the Tribunal vide the order dated 28.07.2005. Tribunal held that as per Explanation (2) to Section 147 of the Act, even where an assessment is made, so long as the notice is issued under Section 148 of the Act within four years from the end of the relevant assessment year, if the income chargeable to tax is under assessed, it has to be deemed that such income had escaped assessment and thus the reopening of assessment on such a ground is permissible....

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....garb of reopening the assessment, a review would take place, which is not permissible under the Act. Supreme Court held as follows: 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, reopening could be done under the above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in Section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer 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, Section 147 would give arbitrary powers to the Assessing Officer 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 Assessing Officer has no power ....

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....see, it is not open to the revenue to initiate proceedings under Section 148 of the Act. Gujarat High Court held as follows: "...Mistake apparent from the record which has the effect of enhancing assessment ought to be rectified by resorting to this special and speedy procedure when in the view of the Assessing Officer it is unnecessary to resort to reopening of the assessment. In the field of chargeable income escaping assessment, however, section 147 is very widely worded and would include even escapement due to any mistake in the assessment order. But, when even according to the Assessing Officer himself there is a mistake, apparent from the record as it exists, committed in the order of assessment, which is rectifiable on the basis of the existing record under section 154 being a special provision made for the purpose, and that there is no need to resort to reopening of the assessment as contemplated by section 148 read with section 147 of the Act, then he must resort to the provision and cannot wantonly or arbitrarily and without valid reason resort to reopening of the assessment... The function of the Assessing Officer acting under section 147 is not limited....