TaxTMI 
TaxTMI 
2024 (1) TMI 1139
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....ged in the business of power generation. Respondent No. 1 is the Assistant Commissioner of Income Tax having jurisdiction over Petitioner. Respondent No. 2 is the National Faceless Assessment Centre set up by the Central Board of Direct Taxes ("CBDT") and Respondent No. 3 is the Union of India. 4. Petitioner filed its return of income for AY 2016-17 on 27th September 2016 declaring a total income of Rs. 1,24,47,75,691/- and Rs. 1,68,00,96,627/- under the provisions of Section 115JB of the Act. Respondent No. 1- Assessing Officer ("AO") issued a notice dated 17th July 2016 under Section 143(2) of the Act, selecting the case of Petitioner for scrutiny assessment. Petitioner by its letter dated 4th August 2017 provided all the required details and documents to the AO including audited accounts, tax audit report, return of income and computation of income. The AO by another notice dated 10th May 2018 raised specific queries and sought further details/documents from Petitioner. Petitioner by its letter dated 20^th June 2018 responded with details and documents as sought by the AO followed by letters dated 2nd July 2018 and 16th July 2018 specifically providing party wise details of e....
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....er. (2) The details of expenses and investments relating to earning of exempt income were accepted by the AO and after conducting relevant inquiries the assessment order was passed. Thus, re-evaluation of the same facts by the AO tantamounts to a change of opinion which is not permitted by law. (3) In the absence of any tangible material indicating escapement of income, the AO cannot exercise the power of reassessment. (4) The details pertaining to disallowance of expenses as per Section 14A r/w Rule 8D was already submitted in the course of the original assessment proceedings and hence, the AO cannot exercise the power of reassessment in the garb of review. (5) Reassessment proceedings initiated within four years from the end of the relevant assessment year is untenable considering that there is no new fact or tangible material coming to the possession of the AO and thus, reopening the assessment on the basis of very same material is a mere change of opinion. (6) The onus on Petitioner is only to disclose primary facts and not inferential facts. (7) The notice under Section 148 of the Act is not digitally signed by the AO and t....
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....missible on the ground of change of opinion of the AO. Once a query is raised during assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query itself. This Court in its decision in the matter of Aroni Commercials Limited v. The Deputy Commissioner of Income Tax and Another [2014] 362 ITR 403 (Bom)., has expounded the law in this regard. Paragraph 14 of the said decision reads as thus, "14)... We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on all issues raised by him during the assessment proceeding even where he is satisfie....
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....w and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess, but the re-assessment has to be based on fulfillment of certain pre-conditions 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. 7. 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, the Assessing Officer has power to re-open, provided there is "tangible material" to come to conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." 12. From the settled legal position ascertained from the various decisions of this Court and the Apex Court, it is clear that the basis for valid reopening of assessment should be availability of tangible material, leaving the AO to scrutinize the returns for the assessment year in question to determine whether a notice under Section 147 of the Act is called for. In the present case, the queries raised by the AO in the course of the original a....
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....idend income. Such investments are held with a long-term objective of holding strategic interest in the above group companies. Further, it is submitted that the aforesaid investments do not require day-to-day monitoring and accordingly no expenditure is attributable to the earning of exempt income therefrom. Accordingly, it is humbly submitted no disallowance ought to be made in respect of investment in group companies." 14. The aforesaid detailed information was in the know of the AO while passing the original assessment order dated 20th July 2018 as well as the computation sheet of the same date. The AO is now not within his rights to claim that he has a reason to believe that taxable income by virtue of an incorrect claim of expenses has escaped assessment within the meaning of Section 147 of the Act. The objections taken by Mr. Sharma justifying the reliance of the AO on a CBDT circular dated 11th February 2014 mandating such disallowance whether there is an exempt income or not from the investments is untenable since no such objection was taken at the time of issuance of original assessment order on the same information which was within the knowledge of the AO even on that ....