TaxTMI 
TaxTMI 
2024 (12) TMI 1264
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.... 3.1. The petitioner filed its original return of income for the Assessment Year 2014-15 on 28th November, 2014 declaring total income of Rs.3,23,95,810/-. Thereafter the case of the petitioner for the Assessment Year 2014-15 was selected for scrutiny, detailed scrutiny was undertaken and notice under Section 142 (1) of the Income Tax Act, 1961 (for short 'the Act') dated 26th April, 2016 was issued asking inter-alia specific details relating to disallowance in accordance with Rule 8D read with Section 14A of the Act as well as the depreciation claimed by the petitioner on various assets. 3.2. The petitioner replied to the said notice in part on 30th August, 2017 and as such, further notice was issued to the petitioner seeking further details which were provided by the petitioner vide letter dated 20th November, 2017. 3.3. Thereafter, the Assessing Officer passed an Assessment Order under Section 143 (3) read with Section 144C of the Act for Assessment Year 2014-15 on 28th December, 2017 assessing total income of the petitioner at Rs. 6,69,69,760/- under normal provisions and book profit at Rs. 17,29,38,070/- and also made disallowance Rs. 2,72,88,280/- under Section 14A of the ....
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.... MSME Act is not considered by the assessee while computing the total income. 3.2 It is further seen that while working out the disallowance u/s. 14A of the Act, the interest of Rs. 19,47,87,211/- is taken instead of Rs. 33,28,98,762/- debited in the P&L A/ c." 5.1. Learned advocate Mr. B.S. Soparkar for the petitioner submitted that the reasons recorded are based on the perusal of the assessment records only and there is no fresh new tangible material to form a prima-facie reason to believe that the income has escaped the assessment. It was submitted that the impugned notice is issued beyond the period of four years and the petitioner has disclosed truly and fully all material facts required for the assessment. 5.2. It was further submitted that the re-opening is made by mere change of opinion as all the three issues which are referred to in reasons recorded are scrutinised during the course of the regular assessment. Reference was made to the notice issued under Section 142 (1) of the Act dated 26th April, 2016 more particularly, point 9 pertaining to the dis-allowance under Section 14A of the Act and point 18 pertaining to the details to be furnished for fixed assets and the....
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....The main ingredient required to issue notice u/s 148 of the IT. Act, 1961 is to form 'reason to believe. At the stage of issue of notice u/s 148, the only question is whether there was relevant material on which reasonable person could have form the requisite belief as to whether an income chargeable to tax has escaped assessment. The expression 'reason to believe' cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. Whether material would conclusively prove escapement of income is not the concern at the stage of issue of notice. It only means that the AO forms a belief from the examination of facts, from any information the AO receives. If the AO discovers or finds or satisfies that the taxable income has escaped assessment, it would amount to saying that the AO had 'reason to believe that such income has escaped assessment. The justification of AO's belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings u/s 147 may ultimately stand altered after the hearing and while reaching the final concl....
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....r a superior officer that would appear to be information disclosed to the Income-tax Officer. If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income-tax Officer in such circumstances is in one sense extraneous to the record. It is difficult to accept the position that while what is seen by another in the record is 'information' what is seen by the Income-tax Officer himself is not information to him. In the latter case he just informs himself. It will be information in his possession within the meaning of section 34." To the same effect the Gujarat High Court in the case of Gruh Finance Ltd. Vs. Jt. CIT (2000) 161 CTR (Guj) 100: (2000) 243 ITR 482 (Guj) held that if no conscious consideration of the material available on record is made and a mistake has been committed, it will not prevent the competent officer to exercise powers under section 147 of the Act. The Hon'ble Court observed as under: "We have also seriously considered the entire case law from which aforesaid paragraphs are relied on. Insofar as the expressions "reason to believe" and "change of opi....
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....bove facts as mentioned in the reason recorded, that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration. At this juncture, it is worthwhile to point out here that the only requirement for reopening the assessment is that the AO has reasonable belief of escaped assessment. As stated in the ason recorded and also detailed discussion made above, it is apparent that the AO has information in his possession about the aecommodation entries provided to the assessee which is not genuine as discussed in foregoing paras. At the time of recording the reasons for reopening the assessment, it not necessary for the AO to bring all the evidences of concealed income of the assessee but the AO on the material available with him has a reasonable belief of escapement of income. In the case under reference, the AO has enough material in his hands to prove that the assessee has on the ground that the same is based only on a change of opinion." In Bawabhai Singh Vs. DCIT, 253 ITR 83 the Hon'ble Delhi High Court has observed that : "there must be some material which can be regarded as information, on the basis of which the Asses....
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....;ble High Court that the reasons recorded or the material available on record must have nexus to the subjective opinion formed by the A.O. regarding the escapement of the income but then, while recording the reasons for the belief formed, the A.O, is not required to finally ascertain the factum of escapement of the tax and it is sufficient that the A.O had cause or justification to know or suppose that the income had escaped assessment [CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 161 Taxman 316 (SC)]. It is also well settled that the sufficiency and adequacy of the reasons which have led to the formation of a belief by the Assessing Officer that the income has escaped the assessment cannot be examined by the court. In view of the above ruling of Hon'ble jurisdictional High court, the objection raised by the assessee does not sustain hence requires to be rejected. It is thus submitted that for aforesaid reasons, it is not a case of change of opinion. It is evident from the above facts as mentioned in the reason recorded, that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration. At this juncture, it....
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....issioner of Income Tax, Delhi vs M/S. Kelvinator of India Ltd reported in 320 ITR 560 (SC) which reads as under, we are of the opinion that the impugned notice cannot be sustained: "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, re-opening could be done under 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 re-open the assessment. Therefore, post-1st April, 1989, power to re-open 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 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 p....