TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1284
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....; ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) 1. RULE returnable forthwith. Mr. Nikunt Raval learned Senior Standing Counsel for Mrs. Kalpana Raval learned advocate waives service of notice of Rule on behalf of the respondent. 2. With the consent of learned advocates for the respective parties, the petition is taken up for final hearing. 3. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed to quash and set aside the impugned notice under Section 148 dated 30.03.2019. 4. Facts of the present case are as under: 4.1 The petitioner is a company incorporated under the Companies Act, 1956 of which all of its shareholders are citizens of India. 4.2 The petitioner filed his return of income on 30.09.2012 declaring total income of Rs. 6,39,91,610/-. 4.3 The case of the petitioner was taken up for scrutiny assessment, and accordingly, notice u/s 143(2) was issued on 13.08.2013. 4.4 During the course of the original assessment proceedings, the petitioner had submitted Audited accounts in the Form No. 3CB & 3CD, copy of Balance Sheet and Profit & Loss account. 4.5 During the course of the original assessment proceedin....
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....ver received the amount nor shown as income or in its books of accounts, the expenditure of Rs. 135.00 lakhs claimed and allowed cannot be allowed at it does not pertain to the business, which has resulted in under assessment of Rs. 135.00 lakh. It was submitted that, therefore, even according to the Assessing Officer, the claim has been allowed. It was pointed out that during the course of scrutiny assessment, lump sum compensation of Rs. 135.00 lakh was duly reflected and formed part of the financial statement for the year under consideration. It was pointed out that by its reply dated 03.11.2014, in response to the notice under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), the petitioner had attached the order of the court and related documents for reference by the Assessing Officer to justify the lump sum compensation paid by the company. It was pointed out that plaint of the suit as well as the order passed thereon had been produced before the Assessing Officer during the time of scrutiny assessment. Reference was made to a communication dated 22.12.2014 filed by the petitioner in connection with the details and explanation sought for by th....
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....that in view of the above, the department has the reason to believe that income chargeable to tax to the extent of Rs. 1,35,00,000/- has escaped the assessment within the meaning of section 147 of the I.T. Act and it is a fit case to issue notice under Section 148 of the Act. 7. Having considered the submissions made by the learned advocates for the respective parties and having perused the reason to believe supplied to the petitioner along with the notice under section 148 of the Act, what is evident is that during the course of assessment proceedings, the petitioner had filed letters dated 03.11.2014 and 22.12.2014. He had also furnished the orders of the Court and related documents such as memorandum of understanding, entered into between the petitioner and the Ratna developers, ledger, account of the lump-sum compensation and the bank statement showing that the payment was made with regard to the lump sum compensation. The Assessing Officer at the time of original assessment proceedings after satisfying himself about the correctness of the lump-sum compensation had passed an assessment order under section 143(3) of the Act? In other words, there was no reason for the author of....
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....hange of opinion" stands obliterated with effect from 1st April, 1989, i.e., after substitution of Section 147 of the Income Tax Act, 1961 by Direct Tax Laws (Amendment) Act, 1987? To answer the above question, we need to note the changes undergone by Section 147 of the Income Tax Act, 1961 [for short, "the Act"]. Prior to Direct Tax Laws (Amendment) Act, 1987, Section 147 reads as under: "Income escaping assessment. 147. If-- [a] the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that 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 or recomput....
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.... schematic interpretation to the words "reason to believe" failing which, we are afraid, 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 re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. 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 must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parlia....