TaxTMI 
TaxTMI 
2025 (7) TMI 606
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns 148 to 153 of the IT Act, assess or re-assess such income and also other income chargeable to tax which had escaped assessment and which came to his notice subsequently in the course of the proceedings under Section 147, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the concerned Assessment Year. The first proviso to Section 147 stipulated that where an assessment under Section 143 (3) or Section 147 was made for the relevant Assessment Year, no action could be taken under Section 147 after the expiry of 4 years from the end of the relevant Assessment Year, unless any income chargeable to tax had escaped assessment for that Assessment Year by reason of the failure on the part of the assessee to inter alia disclose fully and truly all material facts relevant for his assessment, for that Assessment Year. For the sake of convenience, the first proviso to Section 147 is reproduced hereunder : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... name, addresses, PAN, occupation, source of income, and position/capacity in the Trust. 5. Details of utilization of accumulated or set apart income referred to in clause (a) of section 11 (2) may please be furnished. 6. Give the details of investments/deposits in respect of income accumulated or set apart referred to in section 11 (5) of the I.T. Act. 7. Income set apart of set aside / transferred to Ear-marked Fund during the previous envisaged in section 11(2) of the Act. 8. Please furnish list of Donors with name, address and amount who have made donations with specific directions that they shall forms parts of CORPUS of Trust/institution. 9. Please furnish complete details of transactions of sale of Capital Asset covered by section 11(1A). 10. Income envisaged in provisions of section 13(1)(a) and (b) of the I.T. Act. 11. State whether income or any property of trust or institution is used directly or indirectly for benefit of any person referred to in section 11(3) of the Income Tax Act? Provide details with nature of payment/benefit and the amount involved. 12. Whether the trust has given any donation t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mphasis supplied) 7. What is important to note, and which is relevant for our purposes, is Query No. 5 and Query No. 7. Query No. 5 asked for details of the utilization of accumulated or set apart income referred to in Clause (a) of Section 11(2). Query No. 7, similarly, also asked for income set apart or set aside/transferred to the earmarked fund during the previous year, as envisaged under Section 11(2) of the IT Act. 8. These queries were replied to by the Petitioner by its letter dated 7th September, 2015. It answered Query No. 5, by supplying the details of utilization of accumulated or set apart income referred to in clause (a) of Section 11(2) in Annexure 6. Similarly, details of income set apart or set aside/transferred to the earmarked fund during the previous year, as envisaged in Section 11(2) of the Act, were also furnished in Annexure 8 to the said letter. 9. When one peruses these Annexures, both these Annexures clearly reflect that the Petitioner had set aside Rs. 32 crores under Section 11(2) of the IT Act. 10. After perusing the reply of the Petitioner to the queries, the Assessing Officer passed his Order under Section 143(3) of the IT Act on 16th Mar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actual scenario we are clearly of the opinion that there was no failure on the part of the assessee to fully and truly disclose all material facts necessary for Assessment Year 2013-14 which would give jurisdiction to the current Assessing Officer to initiate re-assessment proceedings under Sections 147 and 148 of the Income Tax Act. We say this because admittedly the Section 148 notice has been issued after a period of 4 years from the date of the end of the relevant Assessment Year. 14. We also agree with the learned Advocate appearing on behalf of the Petitioner that on perusing the reasons for re-opening the assessment, it can be seen that it is nothing but a change of opinion. This is wholly impermissible and does not allow the Assessing Officer to reopen the Assessment. The power given to the Assessing Officer is not to review the earlier order but only to reassess. The two are quite different. Reassessment can only take place (if the first proviso to Section 147 is attracted) when there is failure to disclose all material facts necessary for that particular Assessment Year. If that jurisdictional requirement is not met, the Assessing Officer has no power to reopen the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n assessment are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. Mr Dastur's reliance upon the judgement of a Division Bench of this Court in the case of Hindustan Lever Ltd. v. R. B. Wadkar [2004] 268 ITR 332/137 Taxman 479 is well founded. At page 338 of the report, this Court held as under- "It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....belief is impugned. The recording of reasons distinguishes an objective from a subjective exercise of power. The requirement of recording reasons is a check against arbitrary exercise of power. For it is on the basis of the reasons recorded and on those reasons alone that the validity of the order reopening the assessment cannot be allowed to grow with age and ingenulty, by devising new grounds in replies and affidavits not envisaged when the reasons for reopening an assessment were recorded. The principle of law, therefore, is well settled that the question as to whether there was reason to believe, within the meaning of section 147 that income has escaped assessment, must be determined with reference to the reasons recorded by the Assessing Officer. The reasons which are recorded cannot be supplemented by affidavits. The imposition of that requirement ensures against an arbitrary exercise of powers under section 148." (Emphasis supplied) 20. In view of these judgments and there admittedly being no allegation in the reasons that there was any failure on the part of the Petitioner to disclose any material fact, the impugned notice and the impugned order are liable....