Smt. Menka Radhu, New Delhi V. ITO, New Delhi

ITA 1905/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6993 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SANKALPA SHARMA
• Keywords: Capital asset; Depreciation; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1905 /DEL/201 4 A.Y. : 200 5 - 0 6 SMT. MENKA RADHU, D-828, NEW FRIENDS COLONY, NEW DELHI 110 025 (PAN: AAHPR4503N) VS. ITO, WARD 15(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANKALPA SHARMA, ADV. DEPARTMENT BY : SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING : 22-06-2016 DATE OF ORDER : 01-07-2016 ORDER PER H.S. SIDHU, JM ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER D ATED 09.1.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVIII, NEW DELHI PERTAINING TO ASSESSMENT YEARS 2005-06 ON THE FOLLOWING GROUNDS:- THAT THE LD C.I.T.(APPEALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS, IN UPHOLDING THE REASSESSMENT PROCEED INGS INITIATED BY THE INCOME TAX OFFICER, WARD 15(1), NE W ITA NO. 1905/DEL/2014 A.Y. 2005-06 2 DELHI FAILING TO APPRECIATE THAT THE NOTICE ISSUED U/S 148 OF THE ACT WAS WHOLLY ILLEGAL, WITHOUT JURISDICTION AND HAD BEEN ISSUED WITHOUT FULFILLING THE PRE-REQUISITE CO NDITIONS LAID DOWN FOR ASSUMPTION OF VALID JURISDICTION. THE ORDER OF THE ID C.I.T.(APPEALS) IS VITIATED BEING AB INIT IO VOID AS THE SAME HAS BEEN PASSED IN DISREGARD OF THE SETTLE D LAW THAT MERE CHANGE OF OPINION IS NOT PERMISSIBLE IN L AW FOR ASSUMPTION OF A VALID JURISDICTION TO REOPEN A CASE 1.1 THAT THE ID C.I.T.(APPEALS) HAS FAILED TO APPRE CIATE THAT THERE WAS MATERIAL ON RECORD TO SHOW THAT T ER E HAD BEEN ANY FAILURE ON THE PART OF THE ASSESSEE TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT TO THE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE FINDING THAT THAT REOPENING DONE BY THE AO IS IN ACCORDANCE WITH CRITERIA LAID DOWN BY HON'BLE SUPREME COURT IS DEVOID OF ANY MERIT AND IS THUS UNSUSTAINABLE. 1.2 THAT THE ID C.I.T.(APPEALS) HAS FURTHER FAILED TO APPRECIATE THAT THE AO HAS NOT DISPOSED OFF ALL THE OBJECTIONS RAISED BY THE ASSESSEE TO THE INITIATION OF REASSESSMENT PROCEEDINGS AND AS SUCH THE ASSESSMENT AS FRAMED WAS WHOLLY ILLEGAL AND WITHOUT JURISDICTI ON. ITA NO. 1905/DEL/2014 A.Y. 2005-06 3 1.3 THAT THE ID C.I.T.(APPEALS) HAS GROSSLY IGNORED THE FACT THAT IN THE ORIGINAL RETURN OF INCOME, THE ASS ESSEE HAD DECLARED LONG TERM CAPITAL GAIN ON SALE OF PROP ERTY NO. 0-828, 2ND FLOOR, NEW FRIENDS COLONY, NEW DELHI , DEDUCTION U/S 54EC AND SET OFF OF BROUGHT FORWARD L OSSES AGAINST LONG TERM CAPITAL GAINS HAD BEEN SETTLED BY THE ID C.I.T.(APPEALS), WHICH ORDER WAS ALSO CONFIRMED BY THE HON'BLE INCOME FAX APPELLATE TRIBUNAL AND AS SU CH THE RE-ASSESSMENT AS FRAMED IS ONLY CHANGE OF OPINI ON. 2. THAT THE ID C.I.T.(APPEALS) HAS GROSSLY ERRED BO TH IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT FRA MED DETERMINING THE TOTAL INCOME AT RS.30,39,020/- AGAI NST THE RETURNED INCOME OF RS.6,03,596/- INTER ALIA ARB ITRARILY UPHOLDING THE COMPUTATION OF LTCG AT RS.24,35,427/- AGAINST NIL CLAIMED BY THE ASSESSEE. 2.1 THAT THE ID C.I.T.(APPEALS) HAS GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE ALLOWANCE OF DEDUCTIO N ULS 54EC OF THE ACT AT RS.40 LAKH AGAINST RS.70 LAKH CLAIMED BY THE ASSESSEE. THE FINDING THAT THE INVES TMENT WILL TAKE PLACE AS AND WHEN AMOUNT IS DEBITED IN TH E BANK ACCOUNT AND NOT ON THE DATE OF REMITTANCE OF CHEQUE FOR THE PURPOSES OF INVESTMENT IS DEVOID OF ANY ITA NO. 1905/DEL/2014 A.Y. 2005-06 4 MERIT AS THE SAME IS CONTRARY TO THE SETTLED LEGAL POSITION. THE LD C.I.T.(APPEALS) HAS ARBITRARILY DISREGARDED THE JUDICIS: PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE IN THIS REGARD. 3. THAT THE LD. C.I.T.(APPEALS) HAS ERRED IN UPHOLD ING THE LEVY OF INTEREST HOLDING THE SAME TO BE MECHANI CAL FAILING TO APPRECIATE THAT NO SUCH INTEREST COULD B E CHARGED ON THE FACTS OF THE INSTANT CASE. IT IS, THEREFORE, PRAYED THAT THE ORDERS OF THE AUTHORITIES BELOW BE SET ASIDE AND THE REASSESSMENT PROCEEDINGS AS INITIATED BE HELD AS ILLEGAL, BARRED BY LIMITATION AND WITHOUT JURISDICTION. IN ANY CASE, T HE LONG TERM CAPITAL GAINS AS DECLARED BY THE ASSESSEE BE ACCEPTED. THE B/F LOSSES AS CLAIMED BE ALLOWED. THE INTEREST AS CHARGED BY CANCELLED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED A RETURN DECLARING INCOME OF RS. 6,03,596/- ON 24.6.2006. O RIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED ON 17.9.2007 AT AN INCOME OF RS. 17,88,230/- U/S. 143(2) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED AS THE ACT). IN PURSUANCE OF THE CIT(A)S ORDER NO. 68/07-08 DATED 26.2.2008, THE SAME WAS REDUCED TO RS. 6,03,596/- VIDE ORDER U/S. 250/143 OF THE ACT. AO HAS OBSERVED ITA NO. 1905/DEL/2014 A.Y. 2005-06 5 THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 54EC W HICH WAS WRONGLY BEEN ALLOWED. ACCORDINGLY, THE PROCEEDINGS U/S. 147/148 OF THE ACT WERE INITIATED BY ISSUE OF NOTICE DATED 30. 3.2012. IN RESPONSE THEREOF, THE ASSESSEE VIDE LETTER DATED 6. 4.2012 THAT THE RETURN OF INCOME FILED ORIGINALLY MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THE REASONS RECORDED WERE DULY PROVIDED TO THE ASSESSEE ALONGWITH THE NOTICE ISSUED U/S. 148 OF THE ACT. THEREAFTER THE OBJECTIONS RAISED WERE A LSO DULY COMPLIED WITH VIDE AOS LETTER DATED 24.1.2013. IN RESPONSE TO STATUTORY NOTICE, LD. AUTHORISED REPRESENTATIVE OF THE ASSESS EE FILED LETTER DATED 6.2.2013 IN DAK AND THE SAME WAS PERUSED BY T HE AO. AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD PROPERTY NO. D-828, 2 ND FLOOR, NEW FRIENDS COLONY, NEW DELHI ON 21.2.2005 FOR A CONSIDERATION OF RS. 80 LACS. T HE ASSESSEE HAD CLAIMED DEDUCTION U/S. 54EC IN RESPECT OF INVESTMEN T MADE IN SPECIFIED BONDS OF NHB ON 27.8.2005. AO OBSERVED TH AT ON PLAIN READING OF THE SECTION 54EC(1) IT REVEALS THAT NO D EDUCTION SHALL BE ALLOWED IN RESPECT OF THE INVESTMENT MADE AFTER A PERIOD OF SIX MONTHS FROM THE DATE OF SUCH TRANSFER. IN THE INST ANT CASE THE DATE OF SUCH TRANSFER IS 21.2.2005. AS PER THE CERTIFICA TE ISSUED BY NATIONAL HOUSING BANK ON 7.10.2005, THE DATE OF ALL OTMENT IS 27.8.2005, HOWEVER IT HAS BEEN CLAIMED BY THE ASSE SSEE THAT THE ITA NO. 1905/DEL/2014 A.Y. 2005-06 6 INVESTMENT HAS BEEN MADE VIDE CHEQUE DATED 18.8.200 5. AO FURTHER OBSERVED THAT ON PERUSAL OF THE STATEMENT O F THE ASSESSEE REVEALS THAT THE SAID CHEQUE WAS DEBITED FROM ITS A CCOUNT ON 26.8.2005. THEREFORE, NEITHER THE PAYMENT HAS BEE N MADE NOR THE ALLOTMENT OF BONDS HAS BEEN MADE WITHIN THE STIPULA TED PERIOD OF SIX MONTHS AND THUS THE AMOUNT OF RS. 30 LACS DO NOT Q UALIFY FOR DEDUCTION U/S. 54EC OF THE ACT. HENCE, THE CLAIM O F DEDUCTION WAS DENIED BY THE AO. 2.1 AO FURTHER NOTED THAT DURING THE COURSE OF OR IGINAL ASSESSMENT PROCEEDINGS, THE AO WORKED OUT INCOME UN DER THE HEAD LONG TERM CAPITAL GAIN AT RS. 11,84,633/-. THE ASS ESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 26.2.2008 DISPOSED OFF THE SAME. THE ISSUES DISPOSED OFF IN TER ALIA INCLUDED THE MANNER OF ALLOWING CLAIM OF B/F LOSSES OF LONG TERM CAPITAL GAINS. THE LD. CIT(A) HAD DIRECTED TO ALLOW B/F LOSSES AFT ER COMPUTING INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN AND NO T AGAINST THE CAPITAL GAIN EARNED ON EACH PROPERTY. THEREFORE, T HE AO COMPLETED THE ASSESSMENT AT AN INCOME OF RS. 30,39,020/- U/S. 147/254/143(3) OF THE I.T. ACT, 1961 ON 22.2.2003. 3. AGAINST THE ORDER OF THE LD. AO, ASSESSEE APPEA LED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 09.1.201 4 HAS ITA NO. 1905/DEL/2014 A.Y. 2005-06 7 DISMISSED THE APPEAL OF THE ASSESSEE ON THE LEGAL G ROUND OF REOPENING AS WELL AS ON MERITS. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE HAS ONLY ARGUED ON THE LEGAL ISSUE I.E. ABOUT THE VALIDITY O F THE REOPENING. IN THIS CONNECTION, HE STATED THAT THE LD C.I.T.(APPE ALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS, IN UPHOLDING THE RE ASSESSMENT PROCEEDINGS INITIATED BY THE INCOME TAX OFFICER, WA RD 15(1), NEW DELHI FAILING TO APPRECIATE THAT THE NOTICE ISSUED U/S 148 OF THE ACT WAS WHOLLY ILLEGAL, WITHOUT JURISDICTION AND HAD BE EN ISSUED WITHOUT FULFILLING THE PRE-REQUISITE CONDITIONS LAID DOWN F OR ASSUMPTION OF VALID JURISDICTION. IT WAS THE FURTHER CONTENTION T HAT THE ORDER OF THE LD C.I.T.(APPEALS) IS VITIATED BEING AB INITIO VOID AS THE SAME HAS BEEN PASSED IN DISREGARD OF THE SETTLED LAW THAT ME RE CHANGE OF OPINION IS NOT PERMISSIBLE IN LAW FOR ASSUMPTION OF A VALID JURISDICTION TO REOPEN A CASE. HE FURTHER STATED T HAT THERE WAS MATERIAL ON RECORD TO SHOW THAT THERE HAD BEEN ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS RELEVANT TO THE COMPUTATION OF INCOME FOR THE ASSES SMENT YEAR UNDER CONSIDERATION. IT WAS FURTHER STATED THAT THE FINDING THAT REOPENING DONE BY THE AO IS IN ACCORDANCE WITH CRIT ERIA ITA NO. 1905/DEL/2014 A.Y. 2005-06 8 LAID DOWN BY HON'BLE SUPREME COURT IS DEVOID OF ANY MERIT AND IS THUS UNSUSTAINABLE. HE FURTHER STATED THAT THE REAS ONS RECORDED AS REFERRED TO THE RECORD THAT WERE ALREADY AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT. HENCE, NO FRESH OR TANGIBLE MA TERIAL CAME INTO THE HANDS OF THE AO WHEN REASONS WERE RECORDED AND IT IS A CASE OF CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE, IN V IEW OF THE LAW SETTLED BY THE HONBLE SUPREME COURT OF INDIA IN TH E CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC), T HEREFORE, HE REQUESTED THAT THE ORDERS OF THE AUTHORITIES BELOW BE SET ASIDE AND THE REASSESSMENT PROCEEDINGS AS INITIATED BE HELD A S ILLEGAL AND THE SAME MAY BE QUASHED. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LOWER AUTHORITIES HAVE PASSE D A WELL REASONED ORDER ON THE BASIS OF THE DOCUMENTARY EVID ENCES FILED BY THE ASSESSEE AS WELL AS PREVAILING LAW. HE FURTHER STATED THAT NOTICE U/S. 148 HAS BEEN ISSUED AFTER ADOPTING THE PRESCR IBED PROCEDURE UNDER THE LAW AND WITH TANGIBLE MATERIAL. THEREFOR E, HE STATED THAT THE QUESTION OF QUASHING THE REASSESSMENT DOES NOT ARISE. ACCORDINGLY, HE REQUESTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AL ONGWITH THE ITA NO. 1905/DEL/2014 A.Y. 2005-06 9 PAPER BOOK FILED BY THE ASSESSEE CONTAINING PAGES 1 TO 48 HAVING VARIOUS DOCUMENTARY EVIDENCES INCLUDING THE COPY O F NOTICE U/S. 148 DATED 30.3.2012 ALONGWITH THE REASONS RECORDED DATED 30.3.2012 AT PAGE NO. 34 & 35. WE HAVE ALSO PERUSED THE CASE LAW CITED BY THE LD. COUNSEL OF THE ASSESSEE, AS AFORES AID. WE HAVE ALSO PERUSED THE REASONS RECORDED BY THE AO. FOR THE SAKE OF CLARITY, WE ARE REPRODUCING THE REASONS RECORDED BY THE AO AS UNDER:- OFFICE OF THE INCOME TAX OFFICER, WARD-15(I), ROOM NO. 213, C RBUILDING, NEW DELHI F.NO. ITO W -15(1)/2011-12/426 DATED 30.3.2012 TO SMT. MENKA RADHU D-828, NEW FRIENDS COLONY, NEW OELHI-11 0029 REASON THE CASE HAS BEEN COMPLETED U/S 143(3) AT A TOTAL I NCOME OF RS. 17,88,230/- AS AGAINST THE RETURNED INCOME OF RS. 6 ,03,596/-. IT WAS OBSERVED THAT THE DATE OF SALE OF PROPERTY NO D -828, NEW ITA NO. 1905/DEL/2014 A.Y. 2005-06 10 FRIENDS COLONY 2ND FLOOR, WAS 21.02.2005 AND THE SA LE CONSIDERATION IS RS, 80,00,000/-. OUT OF THIS THE AMOUNT OF RS. 30,00,000/- WERE INVESTED IN SPECIFIED BONDS OF NHB ON 27.08.2005 I. E. BEYOND THE PERIOD OF SIX MONTH FROM THE DATE OF TRANSFER OF LO NG TERM CAPITAL ASSETS. THUS THE DEDUCTION ALLOWED U/S 54EC FOR TH IS AMOUNT IS NOT ALLOWABLE. AS PER SECTION 54EC OF INCOME-TAX ACT, ANY LONG TE RM GAIN, ARISING TO ANY ASSESSEE, FROM THE TRANSFER OF ANY CAPITAL A SSET SHALL BE EXEMPT TO THE EXTENT SUCH CAPITAL GAIN IS INVESTED WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER IN THE L ONG TERM SPECIFIED ASSETS, PROVIDED THAT SUCH SPECIFIED ASSET IS NOT T RANSFERRED OR CONVERTED INTO MONEY WITHIN A PERIOD OF 03 YEARS FR OM THE DATE OF ITS ACQUISITION. IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIEV E THAT THE ASSESSEE HAS NOT DISCLOSED ITS INCOME FULLY AND TRU LY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. I HAVE ALSO REA SONS TO BELIEVE THAT THE INCOME OF RS.30,00,000/-(CAPITAL GAINS) HA S ESCAPED ASSESSMENT IN THE CASE AND THE SAME IS TO BE BROUGH T TO TAX UNDER SECTION 147/148 OF THE INCOME TAX ACT. SD/- (I P MADAN) INCOME TAX OFFICER, WARD 15(1), NEW DELHI ITA NO. 1905/DEL/2014 A.Y. 2005-06 11 7.1 AFTER GOING THROUGH ALL THE RECORDS AVAILABLE WITH US, WE FIND THAT IN THIS CASE THE REASSESSMENT SEEKS TO REVIEW THE ORIGINAL ASSESSMENT WITHOUT ANY FRESH OR TANGIBLE MATERIAL A ND WAS ACTUATED BY CHANGE OF OPINION IN THE ORIGINAL ASSESSMENT. WE NOTE THAT THE AO IN THE REASONS RECORDED HAS REFERRED TO THE RECO RD WHICH WERE ALREADY AVAILABLE AT THE TIME OF ORIGINAL ASSESSMEN T. NO FRESH OR TANGIBLE MATERIAL CAME INTO THE HANDS OF THE AO WHE N REASONS WERE RECORDED. IN THE CIRCUMSTANCES, THE REOPENING WAS S OUGHT TO BE MADE ONLY TO REVIEW THE ORIGINAL ASSESSMENT WHICH W AS ACTUATED BY CHANGE OF OPINION BY THE AO, WHICH IS CLEARLY IMPER MISSIBLE IN VIEW OF THE LAW SETTLED BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC). THE HONBLE APEX COURT IN THE AFORESAID CASE HAS ANALYS ED IN DETAIL THE PROVISIONS OF SECTION 147 OF THE IT ACT AND HELD AS UNDER:- AFTER THE AMENDING ACT, 1989, SECTION 147 READS AS UNDER: INCOME ESCAPING ASSESSMENT - 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YE AR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE ITA NO. 1905/DEL/2014 A.Y. 2005-06 12 OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) . 4. 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 FULFIL LMENT 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 H AS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THER EFORE, POST-1ST APRIL, 1989, POWER TO RE-OPEN IS MUCH WIDE R. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATI ON 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 BAS IS OF MERE CHANGE OF OPINION, WHICH CANNOT BE PER SE RE ASON TO RE-OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUA L DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE- ASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIE W; HE HAS THE POWER TO RE-ASSESS. BUT RE-ASSESSMENT HAS T O BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITION AND I F THE CONCEPT OF CHANGE OF OPINION IS REMOVED, AS CONTE NDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF R E- ITA NO. 1905/DEL/2014 A.Y. 2005-06 13 OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ON E 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 OF FICER 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 O F THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TA X LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS REASON TO BELIEVE BUT ALSO INSE RTED THE WORD OPINION IN SECTION 147 OF THE ACT. HOWEV ER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AG AINST OMISSION OF THE WORDS REASON TO BELIEVE, PARLIAM ENT RE-INTRODUCED THE SAID EXPRESSION AND DELETED THE W ORD OPINION ON THE GROUND THAT IT WOULD VEST ARBITRAR Y POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBEL OW THE RELEVANT PORTION OF CIRCULAR NO.549 DATED 31ST OCTOBER, 1989, WHICH READS AS FOLLOWS: 7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION `REASON TO BELIEVE' IN SECTION 147. A NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS `REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE `OPINION' OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, `REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE ITA NO. 1905/DEL/2014 A.Y. 2005-06 14 PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION `HAS REASON TO BELIEVE' IN PLACE OF THE WORDS `FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION'. OTH ER PROVISIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME. 5. FOR THE AFORE-STATED REASONS, WE SEE NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT, HENCE, DISMISSED WITH NO ORDER AS TO COSTS. 7.2 IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCE S, AS EXPLAINED ABOVE AND RESPECTFULLY FOLLOW THE LAW AS LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. KELVI NATOR OF INDIA LTD. (2010) 320 ITR 561 (SC), AS AFORESAID, WE ARE OF THE VIEW THAT BOTH THE AUTHORITIES BELOW HAVE GONE WRONG IN DECID ING THE REOPENING AS VALID. THEREFORE, WE QUASH THE ORDERS OF THE AUTHORITIES BELOW ON THIS LEGAL ISSUE AND DECIDE THE SAME IN FAVOR OF THE ASSESSEE. 8. SINCE WE HAVE ALREADY QUASHED THE REASSESSMENT P ROCEEDINGS AS AFORESAID, RAISED IN THE ASSESSEES APPEAL, IN OUR CONSIDERED OPINION, THERE IS NO NEED TO ADJUDICATE THE ISSUES ON MERITS. ITA NO. 1905/DEL/2014 A.Y. 2005-06 15 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/07/2016. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/07/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES