TaxTMI 
TaxTMI 
2025 (6) TMI 1408
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....he Constitution of India, the petitioner has challenged the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 (for short 'the Act') to re-open the assessment for the Assessment Year 2017-18. 5. The brief facts of the case are as under: 5.1. The petitioner who is engaged in the business of construction and development, filed return of income under Section 139(1) of the Act on 27.10.2017 declaring total income of Rs. 3,46,34,530/- for Assessment Year 2017-18. 5.2. The Assessing Officer issued the notice dated 11.10.2019 under Section 142(1) of the Act calling for various information and documents from the petitioner which was duly complied by the petitioner by reply dated 30.11.2019. 5.3. Thereafter, the Assessment Order under Section 143(3) of the Act was passed on 26.12.2019 determining the total income of Rs. 14,80,16,806/-. 5.4. Thereafter, the order dated 26th February, 2020 was passed under Section 154 of the Act and the assessed income was recomputed to Rs.14,32,93,610/-. 5.5. Thereafter, the impugned notice dated 31.03.2021 was issued under Section 148 of the Act to re-open the assessment for Assessment Year 2017-18 after obtaining the approva....
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....wance u/s. 14A is applicable to the case of the assessee company and the amount of such disallowance as per Rule 8D r.w.s. 14A works out as under:- As per Rule 8D (2)(i) Direct expenditure relating to income which does not form part of total income NIL As per Rule 8D(2)(ii) Indirect Expenditure-Interest not directly attributable to any particular income or receipt Total investment which can earn exempt income as on 01.04.2016 Rs. 7,83,60,531/- Total investment which can earn exempt income as on 31.03.2017 Rs. 51,78,61,815/- Average value of Investment divided by 2 Rs. 29,81,11,173/- 1% of the average value of Rs. 29,81,111/- Investment Total Disallowance Rs.29,81,111/- 5. Findings of the A.O: The assessee company, during the year under consideration, had made investments in unquoted shares and had share in partnership firms as mentioned in para 3. The total amount of such investments, as verified from the Balance Sheet and P&L Account of the assessee, works out to be Rs. 7,83,60,531/- as on 01/04/2016 and Rs. 51,78,61,815/- as on 31/03/2017. The average of the same works out to be Rs. 29,81,11,173/....
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.... 6.3. It was submitted that the petitioner by letter dated 30.11.2019 has replied that the petitioner received share of profit from the partnership of Rs. 45,02,074/- which is disclosed in return of income as well as in Note No.22 of Notes forming part of financial statements namely "Other Income" as share of profit from the partnership firm in which the petitioner is a partner along with the details of investment in partnership firm submitted by the petitioner. 6.4. It was submitted that after considering the reply of the petitioner, the Assessment Order dated 26.12.2019 was passed under Section 143(3) of the Act without making any addition for dis-allowance under Section 14A of the Act. 6.5. It was therefore submitted that there is no new tangible material with the respondent after framing the assessment and the re-opening is sought to be made mainly on the basis of the perusal of the profit and loss account which is evident from the reasons recorded for re-opening. 6.6. It was therefore submitted that the respondent could not have assumed the jurisdiction on basis of the mere change of opinion on the same set of facts, more particularly, when an opinion at the regular assessm....
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....partnership firm of Rs. 45,02,074/- as per the Note No.22 of the profit and loss account for the year under consideration and therefore, the petitioner-Company ought to have provided for dis-allowance of the expenditure under Section 14A of the Act. 7.5. It was submitted that considering such reasons for re-opening, it cannot be said that the Assessing Officer has formed reason to believe that the income has escaped assessment only on mere change of opinion, more particularly, when the aspect of dis-allowance under Section 14A has not been considered in the impugned Assessment Order passed under Section 143(3) of the Act. 7.6. It was pointed out by learned Senior Standing Counsel Mr. Varun Patel that on detailed examination, it was not ascertainable that whether the petitioner has rightly offered the income at the time of filing original return of income and according to the respondent, the income chargeable to tax has escaped from assessment in absence of dis-allowance under Section 14A of the Act. 8. Having heard the learned advocates for the respective parties and having considered the facts of the case and documents placed on record, it is not in dispute that at the time of ....
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....r. 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 power to re-assess. 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 Law....