TaxTMI 
TaxTMI 
2026 (5) TMI 1348
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....ly of its trustee Mr. Ahmed Akbarali Sundrani. 3. Heard Mr. Suresh Kumar, the learned counsel appearing for the Appellant and Mr. Balakrishna Jhaveri, the learned counsel appearing for the Respondent. 4. The Appeals raise following substantial questions of law:- "A. Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was correct in holding proceedings u/S. 147 invalid on the ground that the income has not escaped assessment for non-disclosure of true and full disclosure of facts by the assessee despite the fact that in the Return of Income and during assessment proceedings neither the complete and correct facts relating to computation of capital gain and claim of deduction u/S. 11(1A) were disclosed nor they were verified by the A.O. in original proceedings u/S. 143(3) of the I.T. Act ? B. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right by ignoring the decision of Hon'ble Bomby High Court in the case of Yuvraj Vs. Union of India 315 ITR 84 (Bombay HC) wherein it was held that points not decided while passing assessment order u/S. 143(3) is not a case of change of opinion ....
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....e context of capital assets. Accordingly, the CIT(A) passed an Order dated 18.12.2014. Being further aggrieved, the assessee preferred Income Tax Appeal No.784/Mum/2015 (A.Y.2004-05) before the ITAT, Mumbai. Vide impugned Order dated 6th September, 2017 the said Appeal was allowed by the ITAT, Mumbai holding that the AO has not established the failure of the assessee to disclose truly and fully the material facts necessary for making the original assessment. It has been observed that failure of the assessee is not only to be alleged but has to be demonstrated by positive evidences. The AO has used the terminology used in the Section, but has not explained as to how and which material facts the assessee did not or had failed to disclose. All the facts about the sale of development rights and investments of sale proceeds in form of FDRs was dealt with by the AO in great details in the original assessment. Further, the ITAT has also held that there is no failure on the part of the assessee to disclose fully and truly the material facts as the assessee had filed all the details of the impugned transaction. Being aggrieved, the Revenue has preferred the Appeal. 6. Mr. Suresh Kumar....
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....t and to substitute it. No doubt, escapement of income includes both non-assessment/underassessment, but, it is mandated by the provisions of the Act that reasons to believe must necessarily show, indicate and communicate why and on what grounds it can be said that any income has escaped assessment. Reasons recorded must be germane, pertinent and disclose a prima facie belief that income has escaped assessment. The relevance of reason has to be established. So, if the reasons do not show any nexus or connection with the allegation of under assessment, they fall in the realm of suspicion, surmise or conjecture. It is observed that reasons to believe must have a rational connection and should be relevant for the formation of a belief regarding escapement of income and should not be extraneous or irrelevant, otherwise they will be considered as invalid since they do not meet the statutory prerequisites. The policy of law is that there should be finality in all legal proceedings. Thus, stale or irrelevant issues should not and cannot be a ground to reactivate closed and concluded proceedings. Formation of rational belief that income chargeable to tax had escaped assessment is a conditi....
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....d. In other words, there was no material outside the assessment proceedings which enabled the Assessing Officer to conclude that income chargeable to tax had escaped assessment. The notice for reopening was issued beyond a period of four years from the end of the assessment year. The claim was also examined by the AO during the assessment proceedings. Therefore, it was held that having accepted the claim in law, but having made partial disallowance after considering the facts, it was not open to the Assessing Officer to issue notice for reopening, that too, without any additional material which would suggest that the assessee had made a false declaration or provided inaccurate particulars. 14. In the light of aforesaid principles governing the re-opening, when the ITAT examined the matter, it found that the AO had not referred to any material, other than what was examined in the initial round of assessment proceedings, to form his belief that the assessee's income had escaped assessment. The AO's belief was based solely on the basis of material already examined by him during the first round of assessment proceedings. This aspect was confirmed by the fact that the notice issued u....
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....on with the compensation received on sale of plot of land. After considering the above submissions of the assessee and after deliberating upon the documents furnished by it, the AO had passed the scrutiny assessment. He had formed an informed opinion that the assessee was entitled to benefit of the provisions of Section 11 of the Act and that it had made the investment on sale of one kind of assets in other assets within the stipulated time and in prescribed manner. Later on, he issued a notice u/S. 148 of the Act and has reappraised the same facts and has reached on a different conclusion. It was a clear case of change of opinion. There was no failure on the part of the assessee to disclose fully and truly the material facts. In the facts of the case, Mr. Suresh Kumar, the learned counsel could not take any exception to the aforesaid observations by the learned ITAT. 17. In wake of above, the learned ITAT has reversed the order of the FAA and answered the first effective ground of the appeal in favour of the assessee. As a result, it was held that the reassessment proceedings were invalid and declined to decide the other issues raised by the assessee. 18. As noted above, the....