TaxTMI 
TaxTMI 
2024 (12) TMI 1175
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate Ms. Vaibhavi K. Parikh for the petitioner and learned Senior Standing Counsel Mr. Karan G. Sanghani for the respondent No. 1. 2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for and on behalf of the respondent No. 1. 3. Having regard to the controversy arising in this petition in narrow compass, with the consent of the learned advocates for the parties, the same is taken up for hearing. 4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the legality and validity of assumption of jurisdiction by the respondent-authority to issue notice dated 31st March, 2021 for re-opening under Section 148 of the Income Tax Act, 196....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ances/deposits and thereby the amount was shown as liability and in asset side some amount was shown as Inventory/construction/Work in progress. This transpires that the assessee had received substantial revenue against expenditure made in the work in progress. However, no matching income for the receipt of amount on percentage completion method as per the provisions of Section AS-7, was offered for taxation. The revenue is recognised every year on basis of percentage of works completed as certified by civil engineer/architect. However, the assessee has not followed the percentage completing method and not offered the true income. (ii) in this case during the verification of Income-tax case records of the assessee for A.Y.2014-15, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as not claimed any exempted income and therefore, the dis-allowance under Section 14A of the Act pertaining to the interest proposed to be added on the investment made in LLC outside India would not arise. It was also contended that the land cost written off as well as the direct expenses and working of the closing stock in trade are duly explained and details were provided during the course of the regular assessment. 5.5. The respondent however, by order dated 24th March, 2022 disposed of the objections. 6.1. Learned Senior Advocate Mr. Tushar Hemani for the petitioner submitted that the impugned notice is issued beyond a period of four years and the Assessment Order was passed under Section 143 (3) of the Act after taking into consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aran Sanghani for the respondent No. 1 submitted that the respondent-Assessing Officer after taking into consideration the relevant material available on the record has formed the prima-facie reason to believe to re-open the assessment for the year under consideration. 7.2. It was further submitted that the assessee has made an investment of Rs. 1,11,97,054/- in partnership firm as capital gain in South Beach Investment LLC which is as exempt in the hands of the assessee under Section 10 (2A) of the Act and therefore, the Assessing Officer has rightly calculated the amount of Rs. 55,985/- being the underassessment of income which is required to be taxed as per the provisions of the Act. 7.3. It was further submitted that the assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t are duly covered in the details provided by the petitioner along with the Significant Accounting Policies referred to in the Audited Accounts. 10. In view of the above undisputed facts of all the details being provided during the course of the regular assessment and on perusal of the reasons recorded, we are of the opinion that the impugned notice was issued only on mere change of opinion which is not permissible as per the settled legal position as held by the Hon'ble Supreme Court in case of Commissioner of Income Tax versus Kelvinator of India Limited reported in (2010) 320 ITR 561 (SC) wherein, it is held as under : "6. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion 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, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 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 Assessing Officer. We quote hereinbelow the relevant portion of Circular No.549 dated 31st October, 1989, which reads as f....