Wallace Sports and Research Foundation , CHENNAI V. ACIT Non Corporate Circle 3 , CHENNAI

ITA 2057/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5659 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 24-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT D R
• Assessee Lawyers: R LAKSHMI RATAN
• Keywords: Reopening of assessment; Search and seizure; Period of limitation; Tangible material; Difference of opinion; Time period of passing order; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2057 /MDS./2017 ( ASSESSMENT YEAR : 2011-12 ) M/S.WALLACE SPORTS AND RESEARCH FOUNDATION , CHANDHOK CENTRE LEVEL 1, 244 MOUNT ROAD, CHENNAI-6. VS. THE ACIT, NON CORPORATE CIRCLE-3, CHENNAI-34. PAN AAAFW 0805 F ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SRI R.LAKSHMI RATAN,ADVOCATE / RESPONDENT BY : MR.B.SAGADEVAN, JCIT, D.R ! ' / DATE OF HEARING : 29.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 08.12.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-4, CHENNAI DA TED 27.06.2017 PERTAINING TO ASSESSMENT YEAR 2011-12. ITA NO. 2057/MDS/2017 2 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS FOR AD JUDICATION. 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO L AW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED BY HOLDING THAT THE APPELLANT WAS EX-PARTE IN THE PROCEEDINGS BEFORE THE LEARNED ACIT. THE LEARNE D CIT (A) HAS ERRED BY HOLDING THAT THE APPELLANT WAS GIVEN PROPER OPPO RTUNITY TO PRESENT ITS CASE WHEN, IN FACT, THE WRITTEN SUBMISSIONS OF THE APPELLANT WERE NOT TAKEN INTO CONSIDERATION. 3. THE LEARNED CIT(A) HAS FAILED TO TAKE INTO CONSI DERATION THAT THE APPELLANT PRESENTED WRITTEN SUBMISSIONS OBJECTING TO THE RE-O PENING OF THE ASSESSMENT BEFORE THE LEARNED ACIT ON 29.11.2016. T HE LEARNED CIT(A) HAS FAILED TO NOTE THAT DESPITE SUBMITTING THE WRIT TEN ARGUMENTS; THE LEARNED ACIT HAD IGNORED THE SAME AND ERRONEOUSLY S ET THE APPELLANT EXPARTE. 4. THE LEARNED CIT(A) HAS FAILED TO TAKE INTO CONSI DERATION THAT THE APPELLANT APPEARED BEFORE THE LEARNED ACIT ON MULTIPLE OCCASI ONS (INCLUDING) ON 22.11.2016 (VIZ, THE DATE ON WHICH CASE WAS POSTED FOR HEARING AS PER THE SHOW CAUSE NOTICE) AND SOUGHT ONE WEEKS TIME TO PR ESENT WRITTEN SUBMISSIONS, AND THE LEARNED ACIT AGREED TO THE REQ UEST OF THE APPELLANT. THE LEARNED CIT(A) HAS FAILED TO NOTE TH AT THE APPELLANT HAS APPEARED AGAIN BEFORE THE LEARNED ACIT AND FILED IT S WRITTEN SUBMISSIONS ON 29.11.2016, THE DATE ON WHICH THE HEARING WAS PO STED. THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THESE APPEARANCES OF THE APPELLANT WERE NOT TAKEN INTO CONSIDERATION AND THE APPELLANT WAS UNJU STLY SET EX-PARTE. 5. THE LEARNED CIT(A) HAS FAILED TO NOTE THAT EVEN AT THE TIME OF FILING ITS WRITTEN SUBMISSIONS ON 29.11.2016; THE APPELLANT WA S NOT INFORMED BY THE LEARNED ACIT THAT CASE HAS BEEN DECIDED WITHOUT GIV ING AN OPPORTUNITY TO THE APPELLANT TO PUT FORWARD ITS ARGUMENTS. ITA NO. 2057/MDS/2017 3 6. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE R EOPENING OF ASSESSMENT WAS BASELESS AS THE APPELLANT HAS SUBMITTED ALL THE MATERIALS ON RECORD AT THE TIME OF ORIGINAL SCRUTINY ASSESSMENT ITSELF. 6.1.THE LEARNED CT(A) OUGHT TO HAVE SEEN THAT WHERE ALL THE ASPECTS EMERGING FROM THE REASONS RECORDED BY THE SUCCESSOR OFFICER FOR INITIATION OF REASSESSMENT PROCEEDINGS HAS BEEN CONSIDERED IN THE ORIGINAL PROCEEDINGS, REOPENING OF ASSESSMENT IS INVALID AND CANNOT BE SUSTAINED BECAUSE THERE WAS NOTHING BUT A CHANGE OF OPINION B ECAUSE OF ACHANGE IN THE OFFICER. 6.2.THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT THE MAIN GROUND FOR REOPENING THE ASSESSMENT WAS INCOME ESCAPING ASSESS MENT ON ACCOUNT OF NON DEDUCTION OF TDS; WHICH ISSUE WAS ALREADY CO NSIDERED DURING SCRUTINY PROCEEDINGS ITSELF. 6.3.THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT A ME RE CHANGE IN OPINION CANNOT BE A GROUND FOR REOPENING ASSESSMENT. THE LE ARNED CIT(A) OUGHT TO HAVE SEEN THAT ALL ISSUES WERE ISSUE WAS DISCUSS ED AND DELIBERATED BY THE ASSESSING OFFICER DURING THE SCRUTINY PROCEEDIN GS AND RESPONDED TO BY THE APPELLANT AND THEREFORE, THERE IS NO REASON TO REOPEN THE ASSESSMENT. 6.4. THE LEARNED CIT(A) HAS FAILED TO PLACE RELIANC E ON THE CASE OF ICICI HOME FINANCE CO. LTD VS. ACIT, 10(1)120121 25 TAXMA NN.COM 241 (BOMBAY) WHEREIN IT WAS HELD THAT REOPENING OF ASSE SSMENT ON ISSUE ALREADY CONSIDERED DURING ASSESSMENT IS BARRED. WHE N THE SAME SET OF FACTS WERE PRESENTED TO THE ASSESSING OFFICER AND H E HAD CONSIDERED THOSE FACTS, ASSESSMENT CANNOT BE REOPENED ON THE V ERY SAME ISSUES. 6.5.THE LEARNED CIT (A) HAS FAILED TO CONSIDER VARI OUS CASE LAWS SUCH AS MANAN EXPORTS PRIVATE LIMITED VS. INCOME TAX OFFICE R (2017) 78 TAXMANN.COM 225 (GUJARAT) ITA NO. 2057/MDS/2017 4 WHEREIN IT WAS HELD THAT WHEN THE ENTIRE ISSUE WAS GONE INTO BY THE ASSESSING OFFICER AT THE TIME OF FRAMING SCRUTINY ASSESSMENT UNDER SECTION 143(3); REOPENING OF ASSESSMENT ON THE VERY SAME ISSUE CAN BE SAID TO BE A CHANGE IN OPINION, WHICH IS NOT PERMISSIBLE. 7. THE LEARNED CIT(A) HAS ERRED BY HOLDING THAT THE APPELLANT HAS NOT SUBSTANTIATED ITS STAND WITH DOCUMENTARY EVIDENCE. THE LEARNED CIT(A) HAS FAILED TO NOTE THAT ALL THE EVIDENCE WAS SUBMIT TED AT THE TIME OF SCRUTINY PROCEEDINGS ITSELF AND WAS RESUBMITTED AT THE TIME OF APPEAL. THE LEARNED CIT(A) HAS FAILED TO CONSIDER THAT THE APPE LLANT HAS DISCLOSED FULLY AND TRULY ALL THE NECESSARY MATERIAL FACTS FO R COMPLETION OF ASSESSMENT WHILE FILING THE RETURN AS WELL AS DURIN G SCRUTINY ASSESSMENT U/S. 143 (3). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM HAD FILLED ITS RETURN OF INCOME FOR THE A.Y. 2011-12 ON 30.09.2011 ELECTRONICALLY ADMITTING A TOTAL INCOME OF RS. 18,85,750/- . THE RE TURN OF INCOME WAS SELECTED FOR SCRUTINY THROUGH CASS AND THE ORIGINAL ASSESSMENT U/S 143(3) WAS COMPLETED ON 26.02.2014, ACCEPTING THE INCOME RE TURNED. SUBSEQUENTLY, THE CASE WAS RE- OPENED U/S 147 AND A NOTICE U/S 148 WAS ISSUED ON 02.03.2016. IN RESPONSE TO THE SAME, TIE ASSEESSEE FIRM FILED A LETTER ON 20.10.2016, THEREBY STATING THAT THE ORIG INAL RETURN FILED ON 30.09,2011 MAY BE TAKEN ON RECORD IN COMPLIANCE WITH THE NOTICE U/S 148. THE ASSESSE:E FIRM HAD REQUESTED THE AO TO FURNISH T HE REASONS FOR ITA NO. 2057/MDS/2017 5 REOPENING, WHICH WAS DULY FURNISHED ON 24.10.2016, TH E GIST OF WHICH IS REPRODUCE AS UNDER: THE ASSESSEE HAS DEBITED AN INTEREST COST OF RS30, 46,435/- TOWARDS INTEREST ARID FINANCE CHARGES IN THE P&L ACCOUNT TH E BREAK-UP OF THE SAME CORNPNSES INTEREST PAID TO M/S.RELLGARE FI NVEST LTD. OF RS.25, 14,613/-, MIS. CHOLARNANDALARN OF RS.5,516/- AND THAT OF 1DB! BANK OF RS. 5,26,306/- THE ASSESSEE OUGHT TO H AVE DEDUCTED TDS AS PER THE PROVISIONS OF SECTION 194A ON THE U RN PAID TO MIS RELIGARE FINVEST LTD WHEN QUESTIONED ABOUT THE OMIS SION TO COMPLY WITH THE PROVISIONS OF SECTION 194A, THE ASSESSEE, VIDE HIS LETTER DATED 20/08/20 14 HAD REPLIED THAT THE AMOUNT HAS B EEN PAID TO A PUBLIC FINANCIAL INSTITUTION AND HENCE THE INTEREST NEED NOT SUFFER TDS. THE ARGUMENT OF THE ASSESSEE WAS NOT ACCEPTABLE . M /S. RELIGARE FINVEST LTD. IS NOT A PUBLIC FINANCIAL INSTITUTION OR A BANKING CONCERN, SO AS TO GET EXCLUDED FROM THE PURVIEW OF SECTION 194A. THE ASSESSEE HAS NEITHER SUBMITTED A COPY OF THE NO N DEDUCTION CERTIFICATE, IF ANY, IN RESPECT OF THE INTEREST PAY MENT MADE. UNDER THE CIRCUMSTANCES. I HAVE FIRM REASONS TO BELIEVE T HAT THE INTEREST COST OF RS.25, I4613/- HAS ESCAPED ASSESSMENT, SINC E THIS AMOUNT CALLS FOR DISALLOWANCE U/&40(A)(IA). ACCORDINGLY, IN VIEW OF THE ABOVE FACTS OF THE CASE, TO TAKE UP THE RETURN FOR SCRUTINY, NOTICE U/S.143(2) WAS ISSUED TO THE AS SESSEE FIRM ON 24/10/2016. LT IS NOTICED THAT DESPITE A NUMBER OF OPPORTUNITIES OF BEING HEARD PROVIDED TO THE ASSESSEE, THERE WAS NO COMPLIA NCE. THEREFORE, IN ITA NO. 2057/MDS/2017 6 VIEW OF THE SAME, A SHOW CAUSE NOTICE DATED 16/11/201 6 WAS ISSUED BY THE AO TO THE ASSESSEE FIRM, THEREBY GIVING ONE LAS T OPPORTUNITY TO SUBMIT THE COMPLETE SET OF DETAILS BY 22/11/2016. THE SHOW C AUSE NOTICE HAD CLEARLY STATED THAT IN THE ABSENCE OF COMPLETE SET OF DETAILS FURNISHED BY THE SAID DATE, IT WOULD BE PRESUMED THAT THE ASSESSE E FIRM DID NOT HAVE ANY OBJECTION TO PROCEED WISH THE SCRUTINY ASSESSMEN T AND THE SCRUTINY ASSESSMENT WOULD BE COMPLETED EXPARTE U/S.144, BASED ON THE MATERIAIS AVAILABLE ON RECORD, HOWEVER, THERE WAS NO RESPONSE F ROM THE ASSESSEE TILL THE DATE THIS ASSESSMENT ORDER WAS PASSED BY THE AO. UNDER THE CIRCUMSTANCES, THE ASSESSMENT ORDER WAS COMPLETED U/ S.144 OF THE ACT ON 28.11.2016. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL , LD.CIT(A) CONFIRMED THE ACTION OF THE LD. ASSESSING OFFICER. AGAINST T HE ORDER OF LD.CIT(A), NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL ON RECORD. THE MAIN CONTENTION OF THE LD.A.R IS THAT THE ASSESS MENT HEREIN WAS ORIGINALLY COMPLETED ON 26.02.2014 U/S.143(3) OF TH E ACT, SO THAT THE ASSESSMENT CAN BE RE-OPENED U/S.147 OF THE ACT SUB JECT TO FULFILLMENT OF ITA NO. 2057/MDS/2017 7 CONDITIONS PRECEDENT, WHICH INCLUDE THE CONDITION TH AT THE AO MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX IS ESCAPED ASSESSMENT. IT IS TRUE THAT THE ORIGINAL ASSESSMENT ORDER WAS PA SSED U/S.143(3) OF THE ACT. THE AO CANNOT DISTURB THE FINALITY OF THE ORIG INAL ASSESSMENT PASSED U/S.143(3) OF THE ACT AT HIS WHIMS AND CAPRICE; HE M UST HAVE REASON TO BELIEVE WITHIN THE MEANING OF SEC.147 OF THE ACT. TH E SCOPE AND EFFECT OF SEC.147 OF THE ACT SUBSTITUTED WITH EFFECT FROM 01.0 4.1989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FRO M THE PROVISIONS AS THEY STOOD PRIOR TO SUBSTITUTION. UNDER THE OLD PROVISIO NS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTA NCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED: FIRSTLY, T HE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAIN S CHARGEABLE TO INCOME- TAX HAVE ESCAPED ASSESSMENT, AND, SECONDLY, HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BO TH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTI ON 148 READ WITH SECTION ITA NO. 2057/MDS/2017 8 147(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXIST ENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPE D ASSESSMENT IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. IT I S, HOWEVER, TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE C ASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS C OVERED BY THE MAIN PROVISION AND NOT THE PROVISO. 4.1 AS SEEN FROM THE ABOVE, THE FINALITY OF THE AS SESSMENT PASSED U/S.143(3) OF THE ACT CAN BE DISTURBED BY INITIATIN G THE RE-ASSESSMENT PROCEEDINGS ONLY SO LONG AS THE INGREDIENTS OF SEC .147 ARE FULFILLED AND THERE SHOULD BE REASON TO BELIEVE THAT THE INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND IT DOES NOT MATTER THAT THER E HAS BEEN NO FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TRUE PARTICULARS AT THE TIME OF THE ORIGINAL ASSESSMENT. THERE IS NO THING IN THE LANGUAGE OF SECTION 147 TO UNSHACKLE THE ASSESSING OFFICER FROM THE NEED TO SHOW 'REASON TO BELIEVE'. WHEN SECTION 147 WAS RECAST WIT H EFFECT FROM APRIL 1, 1989, THE LEGISLATURE SOUGHT TO REPLACE THE EXPRESS ION 'REASON TO BELIEVE' WITH THE EXPRESSION 'FOR REASONS TO BE RECORDED BY H IM IN WRITING'. BUT THERE WERE REPRESENTATIONS AGAINST THE PROPOSAL AND BOWING TO THEM THE ORIGINAL EXPRESSION WAS RESTORED. THIS ASPECT OF THE MATTER HAS BEEN ITA NO. 2057/MDS/2017 9 BROUGHT OUT BY THE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR IN 320 ITR 561 AS FOLLOWS:- 'HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETAT ION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, S ECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DI FFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSIN G OFFICER HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEH ALF OF THE DEPART MENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT , REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE O F OPINION' AS AN IN- BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER . . . UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAME NT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSE RTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RE CEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIA MENT REINTRODUCED THE S AID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WO ULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBEL OW THE RELEVANT PORTION OF CIRCULAR NO. 549, DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST.) 1, 29), WHICH READS AS FOLLOWS : PAGE NO : 0544 '7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION 'REASON TO BELIEVE' IN S ECTION 147. A ITA NO. 2057/MDS/2017 10 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 OFFI CER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, 'RE ASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RU LINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SEC TION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICE R TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLA Y THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED SE CTION 147 TO REINTRODUCE THE EXPRESSION 'HAS REASON TO BELIEV E' IN PLACE OF THE WORDS 'FOR REASONS TO BE RECORDED BY HIM IN WRI TING, IS OF THE OPINION'. OTHER PROVISIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME'.' 5. IT WOULD BE APPROPRIATE AT THIS JUNCTURE TO TAKE A BRIEF SURVEY OF A FEW DECISIONS OF THE SUPREME COURT WHICH HAVE INFUS ED MEANING AND CONTENT TO THE EXPRESSION 'REASON TO BELIEVE' APPEA RING IN SECTION 147. 6. A CONSTITUTION BENCH OF THE SUPREME COURT IN A. N. LAKSHMAN SHENOY V. ITO [1958] 34 ITR 275 (SC), SPEAKING THROU GH S. K. DAS J HELD THAT AN ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF A MERE GUESS, GOSSIP OR RUMOUR. THIS WAS IN THE CONTEXT OF THE PRE -1948 LAW RELATING TO REASSESSMENT UNDER WHICH THE ASSESSING OFFICER WAS EM POWERED TO REOPEN THE ASSESSMENT ON THE BASIS OF 'DEFINITE INF ORMATION'. THOUGH THIS JUDGMENT IS BASED ON THE PHRASEOLOGY OF SECTION 34 OF THE 1922 ACT AS IT ITA NO. 2057/MDS/2017 11 EXISTED BEFORE 1948 WHICH DID NOT CONTAIN THE EXPRES SION 'REASON TO BELIEVE', THAT PRINCIPLE WAS ADOPTED BY THE SUPREME COURT WHILE DEALING WITH SECTION 34 OF THE ACT AFTER THE AMENDMENT MADE IN 1948. IN THAT YEAR, THE WORDS 'DEFINITE INFORMATION' WERE REPLACED BY THE WORDS 'REASON TO BELIEVE'. WHILE EXPATIATING ON THE NEW WORDS, A TH REE-JUDGE BENCH OF THE SUPREME COURT, SPEAKING THROUGH V. RAMASWAMI J., IN S.NARAYANAPPA V. CIT [1967] 63 ITR 219 (SC), OPINED AS UNDER (PAGE 222) : 'AGAIN, THE EXPRESSION 'REASON TO BELIEVE' IN SECTI ON 34 OF THE INCOME- TAX ACT DOES NOT MEAN A PURELY SUBJECTIVE SATISFACT ION ON THE PART OF THE INCOME-TAX OFFICER. THE BELIEF MUST BE HELD IN GOOD FAITH: IT CANNOT BE MERELY A PRETENCE. TO PUT IT DIFFERENT, IT IS OP EN TO THE COURT TO EXAMINE THE QUESTION WHETHER THE REASONS FOR THE BE LIEF HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING TO THE FORMATION O F THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT TO THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX OFFICE R IN STARTING PROCEEDINGS UNDER SECTION 34 OF THE ACT IS OPEN TO CHALLENGE IN A COURT OF LAW (SEE CALCUTTA DISCOUNT CO. LTD. V. ITO [1961 ] 41 ITR 191 (SC)).' 7. IN SHEO NATH SINGH V. AAC OF I. T. [1971] 82 ITR 147 (SC) THE SUPREME COURT (HEGDE J.) OBSERVED AS UNDER (PAGE 15 3) : 'THERE CAN BE NO MANNER OF DOUBT THAT THE WORDS 'RE ASON TO BELIEVE' SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST A ND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THAT THE I NCOME- TAX OFFICER MAY ACT ON DIRECT OR CIRCUMSTANCES EVIDENCE BUT NOT ON MERE ITA NO. 2057/MDS/2017 12 SUSPICION, GOSSIP OR RUMOUR. THE INCOME-TAX OFFICER WOULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS BELIEF T HAT THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS NOT MATERIAL OR RELE VANT TO THE BELIEF REQUIRED BY THE SECTION. THE COURT CAN ALWAYS EXAMI NE THIS ASPECT THOUGH THE DECLARATION OR SUFFICIENCY OF THE REASON S FOR THE BELIEF CANNOT BE INVESTIGATED BY THE COURT.' 7.1 IT WAS FURTHER OBSERVED THAT THE REASONS THEMSEL VES CANNOT BE STATED TO BE BELIEFS, WHICH WOULD BE AN OBVIOUS SELF- CONTRADICTION. 8. THE ENTIRE LAW AS TO WHAT WOULD CONSTITUTE 'REASON TO BELIEVE' WAS SUMMED UP BY H. R. KHANNA J., SPEAKING FOR THE S UPREME COURT IN ITO V. LAKHMANI MEWAL DAS [1976] 103 ITR 437 (SC). THE FOLLOWING PRINCIPLES WERE LAIDDOWN : '(A) THE POWERS OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT, THOUGH WIDE, ARE NOT PLENARY. (B) THE WORDS OF THE STATUTE ARE 'REASON TO BELIEVE ' AND NOT 'REASON TO SUSPECT'. (C) THE REOPENING OF AN ASSESSMENT AFTER THE LAPSE OF MANY YEARS IS A SERIOUS MATTER. SINCE THE FINALITY OF A JUDICIAL OR QUASI-JUDICIAL PROCEEDINGS ARE SOUGHT TO BE DISTURBED, IT IS ESSEN TIAL THAT BEFORE TAKING ACTION TO REOPEN THE ASSESSMENT, THE REQUIREMENTS O F THE LAW SHOULD BE SATISFIED. (D) THE REASONS TO BELIEVE MUST HAVE A MATERIAL BEA RING ON THE QUESTION ON ESCAPEMENT OF INCOME. IT DOES NOT MEAN A PURELY ITA NO. 2057/MDS/2017 13 SUBJECTIVE SATISFACTION OF THE ASSESSING AUTHORITY ; THE REASON BE HELD IN GOOD FAITH AND CANNOT MERELY BE A PRETENCE. (E) THE REASONS TO BELIEVE MUST HAVE A RATIONAL CON NECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RA TIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIV E LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE ASSESSING OFFI CER AND THE FORMATION IS BELIEF REGARDING ESCAPEMENT OF INCOME. (F) THE FACT THAT THE WORDS 'DEFINITE INFORMATION' WHICH WERE THERE IN SECTION 34 OF THE ACT OF 1922 BEFORE 1948, ARE NOT THERE IN SECTION 147 OF THE 1961 ACT WOULD NOT LEAD TO THE CONCLUSION THAT ACTION CAN NOW BE TAKEN FOR REOPENING AN ASSESSMENT EVEN IF THE INFOR MATION IS WHOLLY VAGUE, INDEFINITE, FAR-FETCHED OR REMOTE.' 9. IN CIT V. KELVINATOR INDIA LTD.(320 ITR 561) THE SUPREME COURT OBSERVED AS UNDER (PAGE 564) : 'HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETAT ION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFR AID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICE R TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION ', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MI ND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND P OWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REV IEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHA NGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPART MENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE ITA NO. 2057/MDS/2017 14 MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER.' IT WAS ALSO OBSERVED THAT AFTER APRIL 1, 1989, THE A SSESSING OFFICER HAS POWER TO REOPEN PROVIDED THERE IS 'TANGIBLE MATERIAL ' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. THIS JUDGMENT HAS LAID EMPHASIS ON TWO MORE ASPECTS: THAT THERE CAN BE NO R EVIEW OF AN ASSESSMENT IN THE GUISE OF REOPENING AND THAT A BAR E REVIEW WITHOUT ANY TANGIBLE MATERIAL WOULD AMOUNT TO ABUSE OF THE POWER. 10. HAVING REGARD TO THE JUDICIAL INTERPRETATION PL ACED UPON THE EXPRESSION 'REASON TO BELIEVE', AND THE CONTINUED U SE OF THAT EXPRESSION RIGHT FROM 1948 TILL DATE, WE HAVE TO UNDERSTAND THE MEANING OF THE EXPRESSION IN EXACTLY THE SAME MANNER IN WHICH IT HA S BEEN UNDERSTOOD BY THE COURTS. THE ASSUMPTION OF THE REVENUE THAT SOMEH OW THE WORDS 'REASON TO BELIEVE' HAVE TO BE UNDERSTOOD IN A LIBE RAL MANNER WHERE THE FINALITY OF AN INTIMATION UNDER SECTION 143(3) IS S OUGHT TO BE DISTURBED IS ERRONEOUS AND MISCONCEIVED. AS POINTED OUT EARLIER, THERE IS NO WARRANT FOR SUCH AN ASSUMPTION BECAUSE OF THE LANGUAGE EMPLOYED IN SECTION 147. ITA NO. 2057/MDS/2017 15 11. IN THE PRESENT CASE, THE REASONS DISCLOSED THA T THE AO REACHED THE BELIEF THAT THERE WAS AN ESCAPEMENT OF INCOME ON VERIFICATION OF THE DOCUMENTS, WHICH WERE ALREADY ON RECORD, AND IT WAS SEEN THAT ASSESSEE HAS NOT DEDUCTED TDS ON THE PAYMENT OF INTEREST TO VARIOUS PARTIES. HENCE, THE AO HAVE A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE AMBIT OF SECTION 147 O F THE ACT AND THE CASE WAS RE-OPENED. A NOTICE U/S.148 WAS ISSUED TO TH E ASSESSEE ON 02.03.2016. THERE WAS NO WHISPER THAT THE AO CAME TO KNOW THIS FROM ANY TANGIBLE FRESH MATERIAL, WHICH CAME TO HIS POSSE SSION AFTER CONCLUSION OF ORIGINAL ASSESSMENT SO THAT THERE WAS AN ESCAPEME NT OF INCOME. THIS IS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS AND AN ABUSE OF POWER BY THE LD. ASSESSING OFFICER, BOTH STRONGLY DEPRECATED BY THE SUPREME COURT IN THE CASE OF CIT VS. KELVIVATOR (SUPRA). 12. THE REASONS RECORDED BY THE AO IN THE PRESENT C ASE DO CONFIRM OUR APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS REASON TO BELIEVE VIS--VIS AND ORDER U/S.14 3(3) AND CAST TO THE TAX REGIME. SINCE THERE WAS NO WHISPER IN THE REASO NS RECORDED OF ANY TANGIBLE MATERIAL, WHICH CAME TO POSSESSION OF THE A O, SUBSEQUENT TO THE ORDER PASSED U/S.143(3) OF THE ACT. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED U/S.147 OF THE ACT. ITA NO. 2057/MDS/2017 16 13. I AM WELL AWARE THAT IT IS NEITHER NECESSARY NOR MANDATORY THAT AT THE TIME OF RECORDING OF REASONS ITSELF, THE AO SHO ULD COME TO A CONCLUSION THAT THERE WILL BE OPTION OF ESCAPED ASSESSMENT AS PER REASON RECORDED. THE ONLY REQUIREMENT IN LAW IS, THE AO PRIMA FACIE MU ST HAVE A REASON TO BELIEVE ON THE BASIS OF MATERIAL IN HIS POSSESSION, THAT INCOME IS ESCAPED ASSESSMENT . IN FACTS OF THE PRESENT CASE, THE AO C OMPLETED THE ORIGINAL ASSESSMENT ON THE BASIS OF RECORDS AVAILABLE WITH HI M AND THERE WAS NO ALLEGATION BY THE AO THAT NEITHER DISCLOSED CORRECT CONSIDERATION BY THE ASSESSEE IN THE RETURN FILED FOR THE ASSESSMENT YEA R NOR WAS AVAILABLE BEFORE THE AO WHEN THE ASSESSMENT WAS FRAMED U/S.1 43(3) OF THE ACT. UNDOUBTEDLY, THE INFORMATION ON THE BASIS OF WHICH A SSESSMENT WAS REOPENED, WHICH WAS ALREADY IN THE POSSESSION OF THE AO AND IT WAS NOT SUBSEQUENTLY CAME TO HIS POSSESSION AFTER THE COMPL ETION OF THE ORIGINAL ASSESSMENT SO AS TO REVEAL UNDERSTATEMENT OF THE S ALE VALUE. IN SUCH CIRCUMSTANCES, THE AO IS NOT EMPOWERED UNDER THE ACT TO REOPEN THE ASSESSMENT. 13.1 THE LD.D.R MADE A PLEA BEFORE US THAT PRODUCTI ON BEFORE ASSESSING OFFICER OF BOOKS OF ACCOUNTS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING ITA NO. 2057/MDS/2017 17 OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WIT HIN THE MEANING OF THE FIRST PROVISO TO SEC.147 OF THE ACT. WE FIND THAT THIS SITUATION HAS BEEN CONSIDERED BY THE FULL BENCH OF THE DELHI HIGH COUR T IN ITS JUDGMENT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD.(256 ITR 1) AND THE FULL BENCH OBSERVED THUS, ' THE SAID SUBMISSION IS FALLACIOUS. AN ORDER OF ASSE SSMENT CAN BE PASSED EITHER IN TERMS OF SUB-S. (1) OF S. 1 43 OR SUB-S. (3) OF S. 143. WHEN A REGULAR ORDER OF ASSESSMENT IS PA SSED IN TERMS OF THE SAID SUB-S. (3) OF S. 143, A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUMPTION CAN ALSO BE RAISED TO THE EFFECT THAT IN TERMS OF CL. (E) OF S. 114 OF THE INDIAN EVIDENCE ACT, JUDICI AL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD THAT A N ORDER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSELF CONFER JURISDICTION UPON THE AO TO REOPEN TH E PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI-JUDICIAL F UNCTION TO TAKE BENEFIT OF ITS OWN WRONG.' 13.2 IT IS CLEAR FROM THE OBSERVATIONS MADE ABOV E THAT THE FULL BENCH OF THE DELHI HIGH COURT HAS TAKEN A VIEW THAT IN A SITU ATION WHERE ACCORDING TO THE AO HE FAILED TO APPLY HIS MIND TO THE RELEVA NT MATERIAL IN MAKING THE ASSESSMENT ORDER, HE CANNOT TAKE ADVANTAGE OF HIS O WN WRONG AND REOPEN ITA NO. 2057/MDS/2017 18 THE ASSESSMENT BY TAKING RECOURSE TO THE PROVISIONS OF S. 147. WE FIND OURSELF IN RESPECTFUL AGREEMENT WITH THE VIEW TAKEN B Y THE FULL BENCH OF THE DELHI HIGH COURT. 13.3 IT IS FURTHER TO BE SEEN THAT THE LEGISLATUR E HAS NOT CONFERRED POWER ON THE AO TO REVIEW ITS OWN ORDER. THEREFORE, THE POWER UNDER S. 147 CANNOT BE USED TO REVIEW THE ORDER. IN THE PRESENT C ASE, THOUGH THE AO HAS USED THE PHRASE 'REASON TO BELIEVE', ADMITTEDLY BETWEEN THE DATE OF THE ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND T HE DATE OF FORMATION OF OPINION BY THE AO, NOTHING NEW HAS HAPPENED, THER EFORE, NO NEW MATERIAL HAS COME ON RECORD, NO NEW INFORMATION HAS BEEN RECEIVED; IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME AO T O THE SAME SET OF FACTS AND THE REASON THAT HAS BEEN GIVEN IS THAT THE SOME MATERIAL WHICH WAS AVAILABLE ON RECORD WHILE ASSESSMENT ORDER WAS MADE WA S INADVERTENTLY EXCLUDED FROM CONSIDERATION. THIS WILL, IN MY OPINION , AMOUNT TO OPENING OF THE ASSESSMENT MERELY BECAUSE THERE IS CHANGE OF OPINION. THE FULL BENCH OF THE DELHI HIGH COURT IN ITS JUDGMENT IN TH E CASE OF KELVINATOR (SUPRA) REFERRED TO ABOVE, HAS TAKEN A CLEAR VIEW TH AT REOPENING OF ASSESSMENT UNDER S. 147 MERELY BECAUSE THERE IS A C HANGE OF OPINION CANNOT BE ALLOWED. IN MY OPINION, THEREFORE, IN THE PRESENT CASE ALSO, IT WAS NOT PERMISSIBLE FOR ASSESSING OFFICER TO ISSUE NOTICE UNDER S. 148. ITA NO. 2057/MDS/2017 19 14. FURTHER, IN THE CASE OF CIT VS. ASHLEY SERVICES LTD. IN [2014] 369 ITR 209 (MAD) WHEREIN HELD THAT READING OF THE REASON S GIVEN FOR REOPENING OF ASSESSMENT SHOWS THAT IT WAS NOTHING BU T A REVIEW OF THE ORDERS PASSED U/S.143(3) OF THE ACT RELATING TO THE ASSESSMENT YEARS 1996- 97 & 1997-98. CONSEQUENTLY, EVEN THOUGH THE ASSESSM ENT WAS RE- OPENED, THEN A LIMITATION PERIOD OF 4 YEARS THERE B EING NO FRESH MATERIAL TO DISTURB THE REASONING ARRIVED AT REOPENING OF ASSE SSMENT WAS UNSUSTAINABLE. 14.1 IN THE CASE OF DISHMAN PHARMACEUTICALS AND CHE MICALS LTD. VS. DCIT IN [2012] 346 ITR 245 (GUJ) HELD THAT THE REASO NS FOR REOPENING OF ASSESSMENT DID NOT MAKE OUT ANY CASE OF ESCAPEMENT OF INCOME FROM ASSESSMENT ON ACCOUNT OF THE ASSESSEE NOT DISCLOSI NG FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE SAME. QUIET APART FROM THE FACT THAT NO SUCH SUGGESTION IS RECORDED IN THE REASONS, INDEPEN DENTLY ALSO THERE IS NO FINDING THAT THE AOS STAND IN THE REASONS RECORDED , CAN IN ANY MANNER BE CONSTRUED AS SUGGESTING THAT THE INCOME ESCAPEMENT ON ACCOUNT OF THE ASSESSEE NOT DISCLOSING THE MATERIAL FACTS. 14.2 IN THE CASE OF DEBASHIS MOULIK VS. ACIT IN [2015] 370 ITR 660 (CAL) HELD THAT ESCAPEMENT OF INCOME COULD NOT BE U SED TO REOPEN AN ITA NO. 2057/MDS/2017 20 ASSESSMENT ON FACTS, INFORMATION, DOCUMENTS WHICH WERE BEFORE THE AO OR COULD HAVE BEEN EASILY FOUND BY HIM WHILE MAKING THE ASSESSMENT. 15. THE AO CANNOT SAY THAT YESTERDAY HE WAS IGNORANT , AND HE IS WISE TODAY AS ALL THE MATERIALS ARE AVAILABLE BEFORE HIM, WHEN HE WAS FRAMING ORIGINAL ASSESSMENT U/S.143(3) OF THE ACT. IF HE FAILED TO TAKE A VIEW ON THE SUBJECT, THE SAME DOCUMENTS SHOULD NOT B E USED TO REOPEN THE ASSESSMENT AS IT WAS BEFORE HIM AND HE COULD H AVE BEEN EASILY FOUND BY HIM WHILE FRAMING THE ASSESSMENT. HE CANNOT HIMS ELF USE THE SAME DOCUMENTS TO REOPEN THE CONCLUDED ASSESSMENT, WHICH IS NOTHING BUT ABUSE OF LAW. 16. AT THIS STAGE, IT IS APPROPRIATE TO ADDRESS TH E CONTENTION OF THE LD.D.R THAT THE AO HAS BEEN CARELESS WHILE FRAMING ORIGINAL ASSESSMENT. THE AO SHOULD NOT BE PRECLUDED FROM ISSUING NOTICE U/S.148 OF THE ACT. THIS SUBMISSION OF THE LD.D.R OVERLOOKS THE FACTS TH AT POWER TO REOPEN IS NOT A POWER TO REVIEW AN ASSESSMENT ORDER. AT THE TI ME OF PASSING THE ASSESSMENT ORDER, IT IS EXPECTED FROM THE AO THAT H E WILL APPLY MIND AND PASS AN ORDER IN ACCORDANCE WITH LAW. AN ASSESSMENT O RDER IS NOT A MERE SCRAP OF PAPER. TO ACCEPT THE SUBMISSIONS OF THE LD .D.R, WOULD MEAN TO NEGATE THE WELL SETTLED POSITION IN LAW AS STATED BY THE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD.(256 ITR 1). ITA NO. 2057/MDS/2017 21 16.1 FURTHER, THE SUPREME COURT IN THE CASE OF IND IAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) WHEREI N HELD THAT:- 'NOW, IN THE CASE BEFORE US, THE INCOME-TAX OFFICER HAD, WHEN HE MADE THE ORIGINAL ASSESSMENT, CONSIDERED THE PROVISIONS OF S ECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE APPLI CATION OF THOSE PROVISIONS WOULD AMOUNT TO A CHANGE OF OPINION ON MATERIAL ALR EADY CONSIDERED BY HIM. THE REVENUE CONTENDS THAT IT IS OPEN TO HIM TO DO S O, AND ON THAT BASIS TO REOPEN THE ASSESSMENT UNDER SEC TION 147(B). RELIAN CE IS PLACED ON KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC), WHERE A BENCH OF TWO LEARNED JUDGES OF THIS COURT OBSERVED THAT A CASE WHERE INC OME HAD ESCAPED ASSESSMENT DUE TO THE 'OVERSIGHT, INADVERTENCE OR M ISTAKE' OF THE INCOME-TAX OFFICER MUST FALL WITHIN SECTION 34(1)(B) OF THE IN DIAN INCOME-TAX ACT, 1922. IT APPEARS TO US, WITH RESPECT THAT THE PROPOSITION IS STATED TOO WIDELY AND TRAVELS FARTHER THAN THE STATUTE WARRANTS IN SO FAR AS IT CAN BE SAID TO LAY DOWN THAT IF, ON REAPPRAISING THE MATERIAL CONSIDERED BY HIM DURING THE ORIGINAL ASSESSMENT, THE INCOME-TAX OFFICER DISCOVERS THAT H E HAS COMMITTED AN ERROR IN CONSEQUENCE OF WHICH INCOME HAS ESCAPED ASSESSME NT, IT IS OPEN TO HIM TO REOPEN THE ASSESSMENT. IN OUR OPINION, AN ERROR DIS COVERED ON A RECONSIDERATION OF THE SAME MATERIAL (AND NO MORE) DOES NOT GIVE HIM THAT POWER. THAT WAS THE VIEW TAKEN BY THIS COURT IN MAH ARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 ITR 1 (SC), CIT V. A. RAMAN AND CO . [1968] 67 ITR 11 (SC) AND BANKIPUR CLUB LTD. V. CIT [1971] 82 ITR 831 (SC ) AND WE DO NOT BELIEVE THAT THE LAW HAS SINCE TAKEN A DIFFERENT COURSE. AN Y OBSERVA TIONS IN KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC) SUG GE STING THE CONTRARY DO NOT, WE SAY WITH RESPECT, LAY DOWN THE CORRECT LAW. ' 16.2. THE AFORESAID VIEW ON THE ABOVE PROPOSITION HAS BEEN REITERATED BY THE APEX COURT IN A. L. A. FIRM V. CIT [1991] 189 ITR 285 (SC) WHEREIN THE ITA NO. 2057/MDS/2017 22 COURT HELD THAT CHANGE OF OPINION WHERE OPINION WAS F ORMED EARLIER DOES NOT GIVE THE ASSESSING OFFICER JURISDICTION TO REOP EN AN ASSESSMENT. THE APEX COURT, INTER ALIA, ON THE ABOVE ISSUE HELD AS UNDER (PAGE 298) : 'EVEN MAKING ALLOWANCES FOR THIS LIMITATION PLACED O N THE OBSERVATIONS IN KALYANJI MAVJI [1976] 102 ITR 287 ( SC) THE POSITION AS SUMMARISED BY THE HIGH COURT IN THE FOLLOWING WO RDS REPRESENTS, IN OUR VIEW THE CORRECT POSITION IN LAW (AT PAGE 62 9 OF 102 ITR) 'THE RESULT OF THESE DECISIONS IS THAT THE STATUTE DOES NOT REQUIRE THAT THE INFORMATION MUST BE EXTRANEOUS TO THE RECO RD. IT IS ENOUGH IF THE MATERIAL ON THE BASIS OF WHICH THE REASSESSM ENT PROCEEDINGS ARE SOUGHT TO BE INITIATED, CAME TO THE NOTICE OF T HE INCOME-TAX OFFICER SUBSEQUENT TO THE ORIGINAL ASSESSMENT. IF T HE INCOME-TAX OFFICER HAD CONSIDERED AND FORMED AN OPINION ON THE SAID MATERIAL IN THE ORIGINAL ASSESSMENT ITSELF THEN HE WOULD BE POWERLESS TO START THE PROCEEDINGS FOR REASSESSMENT. WHERE, HOWEVER TH E INCOME-TAX OFFICER HAD NOT CONSIDERED THE MATERIAL AND SUBSEQU ENTLY CAME BY THE MATERIAL FROM THE RECORD ITSELF, THEN SUCH A CA SE WOULD FALL WITHIN THE SCOPE OF SECTION 147(B) OF THE ACT.' ' ( EMPHASIS SUPPLIED) ITA NO. 2057/MDS/2017 23 16.3 THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.CHAKIAT AGENCIES PVT. LTD., IN [2009] 314 ITR 200 (MAD) WHEREIN HELD THAT:- DISMISSING THE APPEALS, (I) THAT THE REVENUE HAD N OT STATED THAT NEW MATERIALS WERE RECEIVED BY THE ASSESSING OFFICER AN D THE ASSESSING OFFICER ON THE BASIS OF THE NEW MATERIALS BASED HIS OPINION THAT THERE WAS ESCAPEMENT OF INCOME. THERE WAS NO MATERIAL PLA CED ON RECORD TO SHOW THAT THE ASSESSEE HAD SUPPRESSED ANY MATERI AL FACT OR HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR THE ASSESSMENT. THE ASSESSING OFFICER HAD RECOURSE TO R EOPENING OF THE ASSESSMENT ONLY DUE TO CHANGE OF HIS OPINION ABOUT THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80-O WHICH WAS ORIGINALL Y ALLOWED BY THE ASSESSING OFFICER AFTER CONSIDERING THE MATERIALS P LACED BEFORE HIM. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE REASSESS MENT PROCEEDINGS TO DENY THE BENEFIT OF SECTION 80-O WERE ONLY ON A CHANGE OF OPINION OF THE ASSESSING OFFICER. (II) THAT THE ASSESSEE WAS A SHIPPING AGENT AND ITS ACTIVITIES WERE BASED ON THE INFORMATION RECEIVED FROM THE PARTIES INTENDING TO SEND CARGO AND THE ASSESSEE ALSO USED TO CONTACT THE SHI P OWNERS AND OTHER PARTIES ON VARIOUS ISSUES BEFORE THE CONCLUSION OF THE AGREEMENTS BETWEEN THEM. THE ASSESSEE RECEIVED COMMISSION FOR SUCH SERVICES. IT WAS NOT DISPUTED THAT THE ASSESSEE HAD RENDERED COM MERCIAL SERVICE TO THE FOREIGN SHIPPING OWNERS AND FOR THE USE OF S UCH INFORMATION OUTSIDE INDIA BY THE FOREIGN SHIP OWNERS RECEIVED C OMMISSION IN CONVERTIBLE FOREIGN EXCHANGE. HENCE, THE RENDERING OF THE COMMERCIAL ITA NO. 2057/MDS/2017 24 SERVICE AND RECEIVING OF COMMISSION IN FOREIGN EXCH ANGE BY THE ASSESSEE WOULD ENTITLE THE ASSESSEE TO THE BENEFIT OF SECTION 80-O. 17. IN THE PRESENT CASE, THE REASONS AS RECORDED B Y THE ASSESSING OFFICER AND REPRODUCED HEREINABOVE CLEARLY INDICATE THAT THERE WAS NO TANGIBLE FRESH MATERIAL ADVERTING TO THE REASONS RE CORDED FOR ISSUING REOPENING NOTICE. SIMILARLY, THE DECISION OF BOMBAY HIGH COURT IN THE CASE DR. AMIN'S PATHOLOGY LABORATORY (252 ITR 673), IT HA S BEEN OBSERVED THAT IF ANY ITEM HAS ESCAPED FROM ASSESSMENT WHICH OTHER WISE IS INCLUDIBLE WITHIN THE ASSESSMENT AND THE ASSESSING OFFICER NOTI CES IT SUBSEQUENTLY BY RAISING OF SOME INFORMATION RECEIVED BY HIM, ONE CA NNOT SAY THAT IT CONSTITUTES CHANGE OF OPINION. IN THE PRESENT CASE, THE AO REOPENED THE ASSESSMENT ORIGINALLY COMPLETED BY HIM ON THE BASI S OF THE SAME RECORDS AS WERE AVAILABLE BEFORE HIM WHILE COMPLETING THE ORI GINAL ASSESSMENT AND THERE WAS NO NEW TANGIBLE MATERIAL THAT HAD COME TO HIS POSSESSION ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED. TH E RELEVANT RECORDS INCLUDING THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE DULY EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS COMP LETED U/S.143(3) OF THE ACT AND ONLY AFTER BEING SATISFIED WITH THE DETA ILS, THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED. THEREFORE, THE REOPENING OF THE ASSESSMENT ITA NO. 2057/MDS/2017 25 BY THE AO WAS BAD IN LAW AS IT WAS BASED MERELY ON A C HANGE OF OPINION AND THE ASSESSMENT IN PURSUANCE THEREOF WAS INVALID AND LIABLE TO BE QUASHED. IN VIEW OF THE ABOVE, I FIND NO SUBSTANCE IN THE SUBMISSIONS RAISED BY LD.D.R. ACCORDINGLY, I QUASH THE REASSES SMENT ORDER. 18. AT THIS STAGE, I REFRAIN FROM GOING INTO THE OT HER GROUNDS RAISED BY THE ASSESSEE. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 08 TH DECEMBER, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 08 TH DECEMBER, 2017. K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF