TaxTMI 
TaxTMI 
2024 (7) TMI 352
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Section 148 of the Act, proposing to reassess the income based on a belief that certain income had escaped assessment for AY 2017-18. 4. Notably, this Court vide order dated 05 January 2022 passed in W.P. (C) No. 141 of 2022 titled as Manmohan Kohli v. ACIT, quashed the notice issued on 28.06.2021 under Section 148 of the Act. Subsequently, in light of the Supreme Court's judgment in Union of India & Others v. Ashish Agarwal (2023) 1 SCC 617, the proceedings were revived and a show cause notice was issued under Section 148A (b) of the Act on 24.05.2022 for the relevant AY. 5. In response to the said notice, the petitioner duly filed a reply on 07 June 2022, as required under Section 148A (c) of the Act, asserting that since it had not sold any immovable property during the concerned AY, therefore, no long-term capital gains could arise from such sale. The petitioner also clarified that it had purchased an immovable property worth Rs. 1,81,00,000/- from Mr. Vinod Popli via registration deed dated 18 May 2016 and denied any transaction involving an amount of Rs. 1,16,00,000/- with Mr. Sunil. 6. After duly considering the submissions, the respondents concluded that the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lete non-application of mind on the part of the respondents. 12. Per contra, learned counsel for the respondents vehemently opposed the submissions advanced by the learned counsel for the petitioner. He submitted that the impugned notice has been issued after the final objections were raised by the Comptroller and Auditor General of India to the effect that the assessment has not been made in accordance with the provisions of the Act. According to him, there is no infirmity in the notice issued under Section 148 of the Act since the same has been made in reference to the survey conducted under Section 133A of the Act. 13. He contended that though the proceedings were dropped on 30 July 2022, however, upon further examination of the accounts of the petitioner, it was found that mere denial of transaction was not sufficient to terminate the proceedings. It was his contention that the transaction ought to have been fully investigated from the source and therefore, the Assessing Officer ["AO"] had sufficient reasons to believe for the issuance of the impugned notice. 14. Learned counsel also contended that the expression 'reason to believe' cannot be read to mean that the AO h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndividual errors is an incident rather that the object of audit." 18. Furthermore, other provisions stress that the primary function of audit in relation to assessments and refunds is the consideration whether the internal procedures are adequate and sufficient. It is not intended that the purpose of audit should go any further. In Indian & Eastern Newspaper Society (supra), it was further observed that:- "11--- Whether it is the internal audit party of the Income Tax Department or an audit party of the Comptroller and Auditor-General, they perform essentially administrative or executive functions and cannot be attributed the powers of judicial supervision over the quasi-judicial acts of income tax authorities. The Income Tax Act does not contemplate such power in any internal audit organisation of the Income Tax Department; it recognises it in those authorities only which are specifically authorised to exercise adjudicatory functions. --- Neither statute supports the conclusion that an audit party can pronounce on the law, and that such pronouncement amounts to "information" within the meaning of Section 147 (b) of the Income Tax Act, 1961." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction. It took a view that the concept of 'change of opinion' is an in-built test to check abuse of power by the Revenue and the reasons recorded for opening reassessment must have a live link with the formation of the belief. The relevant paragraphs of the decision in Kelvinator (supra) are reproduced as under:- "6. 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 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. 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 1-4-1989, the assessing officer 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 Section 147 of the Act, as quoted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Officer by any one including the audit party. In a case like this, the duty of the Assessing Officer is that he himself should examine the material placed on record and should arrive at a prima facie belief in this behalf. He must record a conclusion that there is escapement on account of excessive depreciation allowance and is required to give reasons in this behalf. He has to justify the exercise of reassessment. In the instant case, the Assessing Officer while recording the reasons has not done any exercise. Where an assessment has been made and there is purported excessive depreciation, its allowance would require examination of facts and that must be reflected in a well reasoned document before issuance of notice for reassessment. In the instant case, that exercise has not been done. Section 148 of the Act specifically requires the Assessing Officer to record reasons. The validity of initiation of reassessment proceedings has to be judged with regard to the material available with the authority at the point of time of issuing the notice under section 148 of the Act. When the assessee has disclosed fully and truly all material facts necessary for the assessment and on the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- to Shri Sunil Kumar Arora and Shri Vinod Popli respectively on 18.05.2016 by the assessee. The assessee company has denied to have any transaction with Sh. Sunil Arora. Regarding the sale of property to Sh. Vinod Popli, the assessee has submitted that it has purchased property of Rs. 1,81,00,000/- from Sh. Vinod Popli vide registration deed dated 18.05.2016. On examination of the copy of sale deed it is observed that agreement to sell was executed on 20.06.2012 and the full payment of Rs. 1,10,00,000/- was made at the time of execution of agreement to sale. Thereafter dispute was arisen between both the parties and the sale deed was executed vide order of Delhi High Court. On examination of the audited final accounts filed by the assessee company it is observed that there was no immovable property held by it as on 01.04.2016 therefore it is assumed that there is no sale of property by the assessee during the year under consideration. 7. In view of the above discussion and on the basis of material available on record, it is decided that this is not a fit case to issue a notice under section 148 of the I.T. Act, 1961." 23. However, on 30 July 2022 itself i.e., hours af....