M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 25/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9366 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT DHK
• Keywords: Reopening of assessment; Depreciation; Additional depreciation; Tangible material; Difference of opinion; Assessment record; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 143(1); 147; 148; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B, JAIPUR JH JES'K LH- 'KEKZ] YS[KK LNL; ,O A H JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA-@ ITA NO. 25/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06. M/S. RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., VIDYUT BHAWAN, JAN PATH, JYOTI NAGAR, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.AABCR 8312 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI PC PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08.05.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 03/07/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20 TH NOVEMBER, 2018 OF LD. CIT (A), AJMER FOR THE ASSESS MENT YEAR 2005-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF THE ORDER PASSED BY AO U/S 147 OF THE I T ACT, 1961. 2. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 26.52 CRORES ON ACCOUNT OF ACCRUED INTEREST ON DEFERRED SUBVENTION RECEIVABLE FROM STATE GOVERNMEN T BY HOLDING THAT SINCE THERE IS NO CHANGE IN THE FACTS AS COMPARED TO THE FACTS OF EARLIER AYS, THERE CANNOT BE ANY JU STIFICATION FOR ACCOUNTING THE INTEREST ON CASH BASIS DURING THE YE AR AS AGAINST ACCRUAL BASIS IN THE EARLIER YEARS. 2 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. 3. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 4. THE APPROPRIATE COST BE AWARDED TO THE ASSESSE E. GROUND NO. 1 IS REGARDING VALIDITY OF REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE IT ACT. 2. THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING A ND ENGAGED IN GENERATION OF POWER. THE ASSESSEE FILED ITS RETURN OF INCOME F OR THE YEAR UNDER CONSIDERATION ON 29.10.2005 DECLARING TOTAL INCOME AT NIL. SCRUTINY ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 14.06.2007 BY MAKING VARIOUS ADDIT IONS TO THE TUNE OF RS. 121,85,97,423/- THOUGH THE TOTAL INCOME WAS ASSESSE D AT NIL AFTER SETTING OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION TO THE EXTE NT OF AVAILABLE INCOME. SUBSEQUENTLY THE AO NOTED THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND FROM THE CURRENT YEAR THE METHOD OF ACCOUNTING ON DEFERRED SUBVENTION RECEIVABLE FROM GOVERNMENT OF RAJASTHAN WAS CHANGED FROM ACCRUAL BASIS TO CASH BASIS. THIS CHANGE OF METHOD OF ACCO UNT ON A PARTICULAR ITEM OF INCOME HAS RESULTED UNDERSTATEMENT OF INCOME OF RS. 24.59 CRORES. ACCORDINGLY, THE AO PROPOSED TO REOPEN THE ASSESSMENT BY ISSUING A N OTICE UNDER SECTION 148 IN THE MONTH OF MARCH, 2012. THE ASSESSEE OBJECTED TO THE ADDITION PROPOSED BY THE AO ON ACCOUNT OF INTEREST ON DEFERRED SUBVENTION RECEI VABLE FROM STATE GOVERNMENT AS WELL AS CHALLENGED THE VALIDITY OF NOTICE UNDER SEC TION 148 OF THE IT ACT ON THE GROUND THAT THE AO HAS REOPENED THE ASSESSMENT ON T HE BASIS OF INFORMATION 3 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. ALREADY AVAILABLE ON RECORD. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE AN ADDITION OF RS. 26.52 CRORES ON ACCOUNT OF INTEREST ON SUBVENTION RECEIVABLE FROM GOVERNMENT OF RAJASTHAN. THE ASSES SEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED . 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED ON 14.06.2007 UNDER SECTIO N 143(3) AND THE REOPENING OF THE ASSESSMENT IS AFTER 4 YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERATION, THEREFORE, WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT, THE REOPENING IS BAD IN LAW AS BARRED BY LIMITATION AS PER THE PROVI SION TO SECTION 147 OF THE IT ACT. THE LD. A/R HAS POINTED OUT THAT THE AO IN THE REAS ONS RECORDED HAS MENTIONED THAT ON PERUSAL OF THE RECORD AND PARTICULARLY FROM THE AUDIT REPORT HE NOTICED THAT THE ASSESSEE HAS CHANGED THE METHOD OF ACCOUNTING IN RE SPECT OF INTEREST ON DEFERRED SUBVENTION RECEIVABLE FROM STATE GOVERNMENT. THIS FACT ITSELF SHOWS THAT THE ENTIRE FACTS AND RECORD WAS AVAILABLE WITH THE AO AT THE T IME OF ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3) AND, THEREFORE, IT CANN OT BE SAID THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR ITS ASSESSMENT. FROM THE ABOVE PROVISIONS IT CAN BE NOTED THAT ASSESSMEN T U/S 147 IN RESPECT OF ORIGINAL ASSESSMENT COMPLETED U/S 143(3) CAN BE REOPENED AFT ER 4 YEARS ONLY WHEN THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS. IN THE PRESENT CASE, THE AO HAS REOPENED THE ASSESSMENT ON THE BASIS OF CHANGE IN ACCOUNTING POLICY. IT IS SUBMITTED THAT WHILE FILIN G RETURN OF INCOME ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS FULLY AND TRULY. T HE FACTS RELATING TO CHANGE IN 4 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. AFORESAID ACCOUNTING POLICY HAS BEEN SPECIFICALLY M ENTIONED IN PARA 5 OF SCHEDULE 28 NOTES ON ACCOUNTS AS UNDER :- DURING THE YEAR CHANGE HAS BEEN MADE IN THE POLIC Y REGARDING ACCOUNTING OF THE INTEREST ON THE DEFERRED SUBVENTI ON RECEIVABLE FROM STATE GOVERNMENT. PREVIOUSLY THE SAME WAS BEING ACC OUNTED FOR ACCRUAL BASIS AND INTEREST @ 5% WAS ACCOUNTED FOR, BUT FROM NOW ONWARDS INTEREST IS BEING ACCOUNTED FOR ON ACTUAL C ASH BASIS DUE TO THIS CHANGE, OTHER INCOME OF THE CURRENT YEAR IS LO WER BY RS. 24.59 CRORES. FURTHER IN PARA 11(B) & (C) TO FORM NO. 3CD OF TAX AUDIT REPORT WHICH DEALS WITH METHOD OF ACCOUNTING, CHANGE IN ACCOUNTING POLICIES AND EFFECT OF CHANGE, IT HAS BEEN SPECIFICALLY MENTIONED THAT THE COMPANY HAS CH ANGED THE METHOD OF ACCOUNTING OF INTEREST INCOME ON DEFERRED SUBVENTIO N RECEIVABLE FROM THE GOVERNMENT OF RAJASTHAN FROM ACCRUAL TO CASH BASIS. IT HAS ALSO BEEN MENTIONED THAT DUE TO AFORESAID CHANGE, THE INCOME OF THE YEA R IS UNDERSTATED BY RS. 24.59 CRORES. THE LD. A/R HAS ALSO SUBMITTED THAT STATUT ORY AUDITORS HAS ALSO MENTIONED IN ITS AUDIT REPORT IN PARA 13(A)(III) OF ANNEXURE II TO AUDIT REPORT THAT INTEREST ON DEFERRED SUBVENTION RECEIVABLE FROM STATE GOVERNMEN T HAS BEEN ACCOUNTED ON RECEIPT BASIS. THUS, FACTS RELATING TO CHANGE IN A CCOUNTING POLICY VIS A VIS EFFECT OF CHANGE IN ACCOUNTING POLICY HAS BEEN FULLY AND TRUL Y DISCLOSED BY THE ASSESSEE. THE AO IN THE ORDER PASSED U/S 143(3) HAS STATED THAT A SSESSEE HAS FILED ITS RETURN DECLARING TOTAL INCOME OF RS. NIL AND AUDIT REPORT U/S 44AB WAS ACCOMPANIED WITH THE RETURN. HENCE, REOPENING OF ASSESSMENT PROCEEDI NG IS NOTHING BUT CHANGE OF OPINION WHICH IS OUTSIDE THE SCOPE OF PROVISION OF SECTION 147. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISI ONS :- 5 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. DCIT VS. ARISTOCRAT LUGGAGE LTD. 46 CCH 254 (MUMBAI TRIB.) PCIT VS. TUPPERWARE INDIA PVT. LTD. 127 DTR 161 (DEL. HC) CIT VS. HINDUSTAN ZINC LTD. 143 DTR 79 (RAJ. HC) 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS CHANGED T HE METHOD OF ACCOUNTING FOR RECOGNIZING THE INCOME OF A PARTICULAR HEAD BEING I NTEREST ON DEFERRED SUBVENTION RECEIVABLE FROM STATE GOVERNMENT. THE SAID CHANGE OF METHOD OF ACCOUNTING IS SOLELY FOR AVOIDING THE TAX LIABILITY BY DEFERRING THE INCOME. THE AO HAS GOT SPECIFIC INFORMATION THAT THE ASSESSEE HAS NOT OFFERED TO TA X THE INTEREST ACCRUED OF RS. 26.52 CRORES, THEREFORE, IT CONSTITUTE A TANGIBLE M ATERIAL TO FORM THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ORIGINAL ASSE SSMENT WAS COMPLETED ON 14.06.2007 UNDER SECTION 143(3) WHEREBY THE AO MADE VARIOUS ADDITIONS TO THE TUNE OF RS. 121,85,97,423/-. SUBSEQUENTLY THE AO RE OPENED THE ASSESSMENT BY RECORDING THE REASONS AS UNDER :- 6 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. ON PLAIN READING OF THE REASONS RECORDED BY THE AO, IT REVEALS THAT AFTER COMPLETION OF THE ASSESSMENT UNDER SECTION 143(3), THE AO NOTI CED FROM THE AUDIT REPORT IN FORM 3CD THAT THE ASSESSEE IS OTHERWISE FOLLOWING M ERCANTILE BASIS OF ACCOUNTING 7 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. BUT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CHANGED THE METHOD OF ACCOUNTING IN RESPECT OF DEFERRED SUBVENTION RECEIV ABLE FROM GOVERNMENT OF RAJASTHAN. THUS THE AO WAS OF THE VIEW THAT THIS CH ANGE OF METHOD OF ACCOUNTING NOT RECOGNIZING THE INTEREST ON DEFERRED SUBVENTION RECEIVABLE FROM STATE GOVERNMENT HAS RESULTED UNDERSTATEMENT OF INCOME OF RS. 24.59 CRORES. THIS INFORMATION HAS BEEN TAKEN BY THE AO FROM THE RECOR D AND FACTS ALREADY AVAILABLE WITH THE AO AT THE TIME OF ASSESSMENT COMPLETED UND ER SECTION 143(3). WE FURTHER NOTE THAT APART FROM THE AUDIT REPORT, THIS FACT WA S ALSO REVEALED BY THE ASSESSEE AS PER NOTE ON ACCOUNTS ITEM NO. 16 OF SCHEDULE-28 OF ANNUAL REPORT. THIS FACT IS ALSO RECORDED BY THE AO IN THE REASONS RECORDED. THUS T HE ENTIRE INFORMATION WHICH IS GATHERED BY THE AO FOR FORMATION OF THE BELIEF THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT WAS AVAILABLE ON THE ASSESSMENT RECORD. THOUGH THE CHANGE OF METHOD OF ACCOUNTING FOR A PARTICULAR ITEM OF INCOM E FROM ACCRUAL TO CASH BASIS AND NOT TAKING A CONSISTENT POLICY DECISION IN RESPECT OF THE CORRESPONDING EXPENDITURE TOWARDS INTEREST PAYABLE TO GOVERNMENT OF RAJASTHAN MAY BE A SERIOUS DIVERGENT FROM THE CONSISTENT ACCOUNTING POLICY, HOWEVER, WHE N ALL THESE FACTS AND MATERIAL WERE ALREADY AVAILABLE WITH THE AO AT THE TIME OF S CRUTINY ASSESSMENT, THEN NOT TAKING UP THE SCRUTINY ON THIS POINT AND CONDUCTING ANY ENQUIRY ON THIS ISSUE WOULD HAVE RENDERED THE ASSESSMENT ORDER PASSED UNDER SEC TION 143(3) AS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE A ND, THEREFORE, THE REMEDY WITH THE REVENUE WAS UNDER SECTION 263 OF THE IT ACT. IT IS NOT OPEN TO THE AO TO REVIEW ITS OWN DECISION BY RE-ANALYZING AND EVALUATING THE SAM E MATERIAL AFTER COMPLETING THE ASSESSMENT UNDER SECTION 143(3). THIS WOULD AMOUNT TO CHANGE OF OPINION OR REVIEWING ITS OWN DECISION. EVEN OTHERWISE, IF THE AO HAS FAILED TO CONDUCT AN 8 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. ENQUIRY IN RESPECT OF A PARTICULAR ISSUE, IT WILL B E A LAPSE AND DEFECT IN THE SAID ORDER AND SUBSEQUENTLY THE AO IS NOT PERMITTED TO MAKE UP THE SAID DEFICIENCY BY RESORTING TO THE PROVISIONS OF SECTION 147/148 OF T HE IT ACT. THEREFORE, ONCE THE RELEVANT FACTS WERE AVAILABLE BEFORE THE AO AT THE TIME OF SCRUTINY ASSESSMENT, THEN ON THE BASIS OF THE SAME FACTS THE AO CANNOT TAKE A DIFFERENT STAND UNDER THE PROVISIONS OF SECTION 147/148 OF THE IT ACT. THE H ONBLE DELHI HIGH COURT IN CASE OF PCIT VS. TUPPERWARE INDIA PVT. LTD. 236 TAXMAN 494 (DELHI) HAS CONSIDERED THIS ISSUE OF REOPENING OF THE ASSESSMENT ON THE BASIS O F THE MATERIAL ALREADY AVAILABLE WITH THE AO AND HELD IN PARA 12 TO 21 AS UNDER :- 12. AT THE OUTSET IT REQUIRES TO BE FACTUALLY NOTIC ED THAT THE REOPENING ORDER OF THE AO ONLY REFERS TO THE REPORT OF STATUT ORY AUDITOR UNDER SECTION 44AB OF THE ACT WHICH REPORT WAS ALREADY EN CLOSED WITH THE RETURN FILED BY THE ASSESSEE. THEREFORE, FACTUALLY, THERE WAS NO NEW MATERIAL THAT THE AO CAME ACROSS SO AS TO HAVE REASONS TO BELIEV E THAT THE INCOME HAD ESCAPED ASSESSMENT. 13. AS FAR AS THE LEGAL REQUIREMENT IS CONCERNED, T HE COURT FINDS THAT THE DECISION IN CIT V. ORIENT CRAFT LTD. (SUPRA) ANSWER S THE QUESTION SQUARELY IN FAVOUR OF THE ASSESSEE IN THE FACTS OF THE PRESE NT CASE. IN ORIENT CRAFT LTD. THIS COURT CONSIDERED THE DECISIONS OF THE SUP REME COURT IN CIT V. KELVINATOR INDIA LTD. (2010) 320 ITR 561 AND RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA). 14. THE QUESTION EXAMINED BY THE COURT IN CIT V. OR IENT CRAFT LTD. (SUPRA) IS IDENTICAL TO THE ONE SOUGHT TO BE PROJECTED BY T HE REVENUE IN THIS APPEAL VIZ., WHETHER THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO TO FORM THE REQUISITE BELIEF REGARDING ESCAPEMENT OF INCOME, TH E REOPENING (UNDER SECTION 147/148) OF THE ASSESSMENT MADE UNDER SECTI ON 143 (1) WAS BAD IN LAW? 15. IN CIT V. ORIENT CRAFT LTD. (SUPRA) THE REVENUE SOUGHT TO ARGUE, PLACING RELIANCE ON RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) THAT INTIMATION COULD NOT BE EQUATED WITH ASSESSMENT . THE COURT OBSERVED THAT THE DECISION IN RAJESH JHAVERI STOCK BROKERS P . LTD. (SUPRA) CONTRARY TO WHAT THE REVENUE WOULD HAVE US BELIEVE, DOES NOT GIVE A CARTE BLANCHE TO THE ASSESSING OFFICER TO DISTURB THE FINALITY OF THE INTIMATION UNDER SECTION 143 (1) AT HIS WHIMS AND CAPRICE; HE MUST H AVE REASON TO BELIEVE WITHIN THE MEANING OF THE SECTION. THE COURT IN OR IENT CRAFT LTD. RECORDED 9 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. THAT THE DECISION IN RAJESH JHAVERI STOCK BROKERS P . LTD. UNDERSCORED THAT THE INTIMATION UNDER SECTION 143 (1) OF THE ACT COU LD BE DISTURBED BY INITIATING REASSESSMENT PROCEEDINGS ONLY: SO LONG AS THE INGREDIENTS OF SECTION 147 ARE FULF ILLED AND WITH REFERENCE TO SECTION 143(1) VIS-A-VIS SECTION 147, THE ONLY INGREDIENT IS THAT THERE SHOULD BE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND IT DOES NOT MATTER THAT THERE 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 NOTHING IN THE LANGUAGE OF SECTION 147 TO UNSHACKLE THE ASSESS ING OFFICER FROM THE NEED TO SHOW REASON TO BELIEVE. THE FACT THAT THE INTIMATION ISSUED UNDER SECTION 143(1) CANNOT BE EQUATED TO AN ASSESSMENT, A POSITION WHICH HAS BEEN ELABORATED BY THE SUPREME C OURT IN THE JUDGMENT CITED ABOVE, CANNOT IN OUR OPINION LEAD TO THE CONCLUSION THAT THE REQUIREMENTS OF SECTION 147 CAN BE DISPENSED WI TH WHEN THE FINALITY OF AN INTIMATION UNDER SECTION 143(1) IS S OUGHT TO BE DISTURBED. 16. THE COURT IN CIT V. ORIENT CRAFT LTD. (SUPRA) E XAMINED THE MEANING GIVEN OF THE WORDS REASONS TO BELIEVE, QUOTED FRO M THE DECISION OF THE SUPREME COURT IN CIT V. KELVINATOR INDIA LTD. AND H ELD AS UNDER: HAVING REGARD TO THE JUDICIAL INTERPRETATION PLACE D UPON THE EXPRESSION REASON TO BELIEVE, AND THE CONTINUED USE OF THAT EXPRESSION RIGHT FROM 1948 TILL DATE, WE HAVE TO UNDERSTAND THE MEANING O F THE EXPRESSION IN EXACTLY THE SAME MANNER IN WHICH IT HAS BEEN UNDERS TOOD BY THE COURTS. THE ASSUMPTION OF THE REVENUE THAT SOMEHOW THE WORDS REASON TO BELIEVE HAVE TO BE UNDERSTOOD IN A LIBE RAL MANNER WHERE THE FINALITY OF AN INTIMATION UNDER SECTION 143(1) IS SOUGHT 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; IT MAKES NO DISTINCTION BE TWEEN AN ORDER PASSED UNDER SECTION 143(3) AND THE INTIMATION ISSU ED UNDER SECTION 143(1). THEREFORE IT IS NOT PERMISSIBLE TO ADOPT DI FFERENT STANDARDS WHILE INTERPRETING THE WORDS REASON TO BELIEVE VI S-A-VIS SECTION 143(1) AND SECTION 143(3). WE ARE UNABLE TO APPRECI ATE WHAT PERMITS THE REVENUE TO ASSUME THAT SOMEHOW THE SAME RIGOROU S STANDARDS WHICH ARE APPLICABLE IN THE INTERPRETATION OF THE E XPRESSION WHEN IT IS APPLIED TO THE REOPENING OF AN ASSESSMENT EARLIER M ADE UNDER SECTION 143(3) CANNOT APPLY WHERE ONLY AN INTIMATION WAS IS SUED EARLIER UNDER SECTION 143(1). IT WOULD IN EFFECT PLACE AN ASSESSE E IN WHOSE CASE THE RETURN WAS PROCESSED UNDER SECTION 143(1) IN A MORE VULNERABLE POSITION THAN AN ASSESSEE IN WHOSE CASE THERE WAS A FULL-FLEDGED SCRUTINY ASSESSMENT MADE UNDER SECTION 143(3). WHET HER THE RETURN IS PUT TO SCRUTINY OR IS ACCEPTED WITHOUT DEMUR IS NOT A MATTER WHICH IS WITHIN THE CONTROL OF ASSESSEE; HE HAS NO CHOICE IN THE MATTER. THE OTHER CONSEQUENCE, WHICH IS SOMEWHAT GRAVER, WOULD BE THAT THE ENTIRE RIGOROUS PROCEDURE INVOLVED IN REOPENING AN ASSESSM ENT AND THE BURDEN OF PROVING VALID REASONS TO BELIEVE COULD BE CIRCUMVENTED BY FIRST ACCEPTING THE RETURN UNDER SECTION 143(1) AND THEREAFTER ISSUE NOTICES TO REOPEN THE ASSESSMENT. AN INTERPRETATION WHICH MAKES A DISTINCTION BETWEEN THE MEANING AND CONTENT OF THE EXPRESSION REASON TO BELIEVE IN CASES WHERE ASSESSMENTS WERE FRAMED EARLIER UNDER SECTION 143(3) AND CASES WHERE MERE INTIMATIONS WER E ISSUED EARLIER 10 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. UNDER SECTION 143(1) MAY WELL LEAD TO SUCH AN UNINT ENDED MISCHIEF. IT WOULD BE DISCRIMINATORY TOO. AN INTERPRETATION THAT LEADS TO ABSURD RESULTS OR MISCHIEF IS TO BE ESCHEWED. 17. THE COURT IN CIT V. ORIENT CRAFT LTD. (SUPRA) F URTHER COMPREHENSIVELY REJECTED THE ARGUMENT OF THE REVENUE, WHICH IT SEEK S TO URGE IN THE PRESENT CASE AS WELL, THAT AN 'INTIMATION' UNDER SE CTION 143 (1) CANNOT BE EQUATED TO AN ASSESSMENT. THE COURT HELD: THE ARGUMENT OF THE REVENUE THAT AN INTIMATION CAN NOT BE EQUATED TO AN ASSESSMENT, RELYING UPON CERTAIN OBSE RVATIONS OF THE SUPREME COURT IN RAJESH JHAVERI (SUPRA) WOULD ALSO APPEAR TO BE SELF-DEFEATING, BECAUSE IF AN INTIMATION IS NOT A N ASSESSMENT THEN IT CAN NEVER BE SUBJECTED TO SECTION 147 PROCE EDINGS, FOR, THAT SECTION COVERS ONLY AN ASSESSMENT AND WE WONDER I F THE REVENUE WOULD BE PREPARED TO CONCEDE THAT POSITION. IT IS N OBODYS CASE THAT AN INTIMATION CANNOT BE SUBJECTED TO SECTION 147 PROCEEDINGS; ALL THAT IS CONTENDED BY THE ASSESSEE, AND QUITE RIGHTL Y, IS THAT IF THE REVENUE WANTS TO INVOKE SECTION 147 IT SHOULD PLAY BY THE RULES OF THAT SECTION AND CANNOT BOG DOWN. IN OTHER WORDS, T HE EXPRESSION REASON TO BELIEVE CANNOT HAVE TWO DIFFERENT STAND ARDS OR SETS OF MEANING, ONE APPLICABLE WHERE THE ASSESSMENT WAS EA RLIER MADE UNDER SECTION 143(3) AND ANOTHER APPLICABLE WHERE A N INTIMATION WAS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THAT IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOTWITHSTANDING THAT T HE ARGUMENT OF CHANGE OF OPINION IS NOT AVAILABLE TO HIM, IT WOU LD STILL BE OPEN TO HIM TO CONTEST THE REOPENING ON THE GROUND THAT THE RE WAS EITHER NO REASON TO BELIEVE OR THAT THE ALLEGED REASON TO BELIEVE IS NOT RELEVANT FOR THE FORMATION OF THE BELIEF THAT INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN DOING SO, IT IS FURT HER OPEN TO THE ASSESSEE TO CHALLENGE THE REASONS RECORDED UNDER SE CTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS S ET IN THE VARIOUS JUDICIAL PRONOUNCEMENTS. 18. IT MAY BE NOTICED AT THIS STAGE THAT THE DECISI ON IN ORIENT CRAFT LTD HAS BEEN FOLLOWED BY THIS COURT IN MADHUKAR KHOSLA V. A SSISTANT COMMISSIONER OF INCOME TAX (2013) 354ITR 356. 19. THERE IS NO GROUND URGED IN THE PRESENT APPEAL BY THE REVENUE THAT THE DECISION IN CIT V. ORIENT CRAFT LTD. WAS ERRONE OUSLY DECIDED AND REQUIRES RECONSIDERATION. DURING THE COURSE OF ARGU MENTS IT WAS SUBMITTED THAT HAVING REGARD TO THE DECISION OF THE FULL BENC H IN CIT-VI V. USHA INTERNATIONAL LTD. (2012) 348 ITR 485, THE QUESTION SHOULD BE RE- EXAMINED BY THE COURT. 20. IN THE FIRST PLACE, IT REQUIRES TO BE NOTED THA T THE DECISION IN ORIENT CRAFT LTD. WAS DELIVERED AFTER THE DECISION OF THE FULL BENCH IN USHA INTERNATIONAL LTD. (SUPRA). SECONDLY, THE SUBSEQUEN T DECISION IN MADHUKAR KHOSLA NOTED THE DECISION IN USHA INTERNATIONAL LTD . AND REITERATED THE DICTUM IN ORIENT CRAFT LTD. AGAIN IN A DECISION DAT ED 28 TH JANUARY 2015 IN MOHAN GUPTA (HUF) V. COMMISSIONER OF INCOME TAX-XI (2014) 366ITR 115 (DEL) THE COURT REITERATED THE DECISION IN ORIE NT CRAFT LTD. THIRDLY, THE COURT FINDS THAT THE QUESTIONS FRAMED FOR CONSIDERA TION BY THE FULL BENCH IN USHA INTERNATIONAL LTD. AS SET OUT IN PARA 1 OF THE SAID JUDGMENT DID NOT 11 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. PERTAIN TO REOPENING OF AN ASSESSMENT UNDER SECTION 143 (1) OF THE ACT. THE FOUR QUESTIONS REFERRED TO THE FULL BENCH WERE AS UNDER: (I) WHAT IS MEANT BY THE TERM 'CHANGE OF OPINION'? (II) WHETHER ASSESSMENT PROCEEDINGS CAN BE VALIDLY REOPENED UNDER SECTION 147 OF THE ACT, EVEN WITHIN FOUR YEAR, IF A N ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT AND WHETHER AND WHEN IN SUCH CASES REOPE NING IS VALID OR INVALID ON THE GROUND OF CHANGE OF OPINION? (III) WHETHER THE BAR OR PROHIBITION UNDER THE PRIN CIPLE 'CHANGE OF OPINION' WILL APPLY EVEN WHEN THE ASSESSING OFFICER HAS NOT ASKED ANY QUESTION OR QUERY WITH RESPECT TO AN ENTRY/NOTE , BUT THERE IS EVIDENCE AND MATERIAL TO SHOW THAT THE ASSESSING OF FICER HAD RAISED QUERIES AND QUESTIONS ON OTHER ASPECTS? (IV) WHETHER AND IN WHAT CIRCUMSTANCES SECTION 114 (E) OF THE EVIDENCE ACT CAN BE APPLIED AND IT CAN BE HELD THAT IT IS A CASE OF CHANGE OF OPINION? 21. THEREFORE, THE CENTRAL ISSUE EXAMINED IN THE DE CISION OF THE FULL BENCH IN USHA INTERNATIONAL LTD. WAS AS TO WHAT CONSTITUT ED A CHANGE OF OPINION. THE COURT, THEREFORE, DOES NOT CONSIDER THE DECISIO N IN ORIENT CRAFT LTD. AS BEING CONTRARY TO THE DECISION IN USHA INTERNATIONA L LTD. IN OTHER WORDS, THERE IS NO OCCASION FOR THE COURT TO REFER TO A LA RGER BENCH THE QUESTION OF THE CORRECTNESS OF THE DECISION IN ORIENT CRAFT LTD . WHICH DECISION SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. THUS THE HONBLE HIGH COURT HAS HELD THAT IN THE AB SENCE OF ANY NEW INFORMATION FOR TAKING RECOURSE TO PROVISIONS OF SECTION 147/148, T HE REOPENING OF THE ASSESSMENT IS NOT VALID. THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. HINDUSTAN ZINC LTD. 393 ITR 264 HAS HELD IN PARA 5 TO 13 AS UNDER :- 5. INDISPUTABLY, AS PER THE PROVISION OF SECTION 147 OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO INITIATE THE RE- ASSESSMENT PROCEEDINGS IF ANY INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR. BUT THEN, BEFORE INITIATING THE RE-ASSESSMENT PROCEEDINGS, THE AO HAS TO RECORD THE REASONS IN TERMS OF SUB-SECTION (2) OF S ECTION 148, FOR FORMATION OF THE BELIEF THAT ANY INCOME OF THE ASSESSEE CHARGEAB LE TO TAX FOR THE RELEVANT ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. AS LAID DOW N BY THE HON'BLE 12 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. SUPREME COURT, THE BELIEF ENTERTAINED BY THE ASSESS ING OFFICER MUST NOT BE ARBITRARY OR IRRATIONAL, IT MUST BE REASONABLE AND BASED ON MATERIAL ON RECORD. THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFF ICER UNDER THE PROVISIONS OF THE ACT PRE-SUPPOSES DUE APPLICATION OF MIND BY THE ASSESSING OFFICER ON THE MATERIAL ON RECORD AND FORMATION OF THE BELIEF BY THE ASSESSING OFFICER THAT THE INCOME HAS ESCAPED ASSESSMENT CANNOT BE BA SED ON WHIMS AND FANCY, THERE MUST EXISTS RATIONAL AND INTELLIGIBLE NEXUS B ETWEEN THE REASONS AND THE BELIEF. 6. IN THE MATTER OF CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 (SC) , THE HON'BLE SUPREME COURT WHILE DEALING WITH THE AM BIT AND SCOPE OF THE PROVISIONS OF SECTION 34 OF THE INDIAN INCOME TAX, 1922, WHICH WERE SIMILAR TO THE PROVISIONS OF SECTION 147 OF THE ACT OF 1961 EXPLAINED THE PURPORTS OF SECTION 34, AS UNDER: 'TO CONFER JURISDICTION UNDER THIS SECTION TO ISSUE NOTICE IN RESPECT OF ASSESSMENTS BEYOND THE PERIOD OF FOUR YEARS, BUT WI THIN A PERIOD OF EIGHT YEARS, FROM THE END OF THE RELEVANT YEAR TWO CONDITIONS HAVE THEREFORE TO BE SATISFIED. THE FIRST IS THAT THE IN COME-TAX OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAIN S CHARGEABLE TO INCOME-TAX HAVE BEEN UNDER- ASSESSED. THE SECOND IS THAT HE MUST HAVE ALSO REASON TO BELIEVE THAT SUCH 'UNDER-ASSESSMENT' , HAS OCCURRED BY REASON OF EITHER (I) OMISSION OR FAILURE ON THE PAR T OF AN ASSESSEE TO MAKE A RETURN OF HIS INCOME UNDER SECTION 22, OR (I I) OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. B OTH THESE CONDITIONS ARE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE INCOME-TAX OFFICER COULD HAVE JURISDICTION TO ISSUE A NOTICE FOR THE A SSESSMENT OR REASSESSMENT BEYOND THE PERIOD OF FOUR YEARS, BUT W ITHIN THE PERIOD OF EIGHT YEARS, FROM THE END OF THE YEAR IN QUESTION.' THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT IT IS DUTY OF EVERY ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. BUT, HIS DUTY DOES NOT EXTEND BEYOND THIS. THE HON'BLE SUPRE ME COURT OPINED THAT ONCE ALL PRIMARY FACTS ARE BEFORE THE ASSESSING AUT HORITY, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE . IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASONABLY DRAWN AND WHAT LEGAL INF ERENCES HAVE ULTIMATELY TO BE DRAWN. 7. IN THE MATTER OF S. NARAYANAPPA AND OTHERS V. COMMISSIONER OF INCOME TAX, BANGALORE [1967] 63 ITR 219 , THE HON'BLE SUPREME COURT WHILE RELYING UPON THE DECISION IN THE MATTER OF CALCUTTA DISCOUNT CO. LTD. ( SUPRA ), HAS OBSERVED AS UNDER : 'BUT THE LEGAL POSITION IS THAT IF THERE ARE IN FAC T SOME REASONABLE GROUNDS FOR THE INCOME-TAX OFFICER TO BELIEVE THAT THERE HAD BE EN ANY NON-DISCLOSURE AS REGARDS ANY FACT, WHICH COULD HAVE A MATERIAL BARIN G ON THE QUESTION OF UNDER- ASSESSMENT, THAT WOULD BE SUFFICIENT TO GIVE JURISD ICTION TO THE INCOME TAX OFFICER TO ISSUE THE NOTICE UNDER SECTION 34. WHETH ER THESE GROUNDS ARE ADEQUATE OR NOT IS NOT A MATTER FOR THE COURT TO IN VESTIGATE. IN OTHER WORDS, THE SUFFICIENCY OF THE GROUNDS WHICH INDUCED THE INCOME -TAX OFFICER TO ACT IS NOT A 13 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. JUSTICIABLE ISSUE. IT IS OF COURSE OPEN FOR THE ASS ESSEE TO CONTEND THAT THE INCOME-TAX OFFICER DID NOT HOLD THE BELIEF THAT THE RE HAD BEEN SUCH NON- DISCLOSURE. IN OTHER WORDS, THE EXISTENCE OF THE BELIEF CAN BE CHALLENGED BY THE ASSESSEE BUT NOT THE SUFFICIENCY OF THE REASONS FOR THE BELIEF. AGAIN THE EXPRESSION 'REASON TO BELIEVE' IN SECTION 34 DOES N OT MEAN A PURELY SUBJECTIVE SATISFACTION 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 DIFFERENTLY, IT IS OPEN TO THE COURT TO EXAMINE 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 SECT ION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX OFFICER IN STARTING PR OCEEDINGS UNDER SECTION 34 OF THE ACT IS OPEN TO CHALLENGE IN A COURT OF LAW .' (EMPHASIS SUPPLIED) 8. IN THE MATTER OF ITO V. LAKHMANI MEWAL DAS [1976] 103 ITR 437 , THE HON'BLE SUPREME COURT HAS OBSERVED AS UNDER : 'PRODUCTION BEFORE THE INCOME-TAX OFFICER OF THE AC COUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DU E DILIGENCE AMOUNT TO DISCLOSURE CONTEMPLATED BY LAW. THE DUTY OF THE ASS ESSEE IN ANY CASE DOES NOT EXTEND BEYOND MAKING A TRUE AND FULL DISCLOSURE OF PRIMARY FACTS. ONCE HE HAS DONE THAT HIS DUTY ENDS. IT IS FOR THE INCOME-TAX O FFICER TO DRAW THE CORRECT INFERENCE FROM THE PRIMARY FACTS. IT IS NO RESPONSI BILITY OF THE ASSESSEE TO ADVICE THE INCOME-TAX OFFICER WITH REGARD TO THE IN FERENCE WHICH HE SHOULD DRAW FROM THE PRIMARY FACTS. IF AN INCOME-TAX OFFIC ER DRAWS AN INFERENCE WHICH APPEARS SUBSEQUENTLY TO BE ERRONEOUS, MERE CH ANGE OF OPINION WITH REGARD TO THAT INFERENCE WOULD NOT JUSTIFY INITIATI ON OF ACTION FOR REOPENING ASSESSMENT. THE GROUNDS OR REASONS WHICH LEAD TO THE FORMATION OF THE BELIEF CONTEMPLATED BY SECTION 147 (A) OF THE ACT MUST HAVE A MATERIAL BEARING ON THE QUESTION OF ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMEN T BECAUSE OF HIS FAILURE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIA L FACTS. ONCE THERE EXIST REASONABLE GROUNDS FOR THE INCOME-TAX OFFICER TO FO RM THE ABOVE BELIEF, THAT WOULD BE SUFFICIENT TO CLOTHE HIM WITH JURISDICTION TO ISSUE NOTICE. WHETHER THE GROUNDS ARE ADEQUATE OR NOT IS NOT A MATTER FOR THE COURT TO INVESTIGATE. THE SUFFICIENCY OF THE GROUNDS WHICH INDUCE THE INCOME- TAX OFFICER TO ACT IS, THEREFORE, NOT A JUSTICIABLE ISSUE. IT IS, OF COURS E, OPEN TO THE ASSESSEE TO CONTEND THAT THE INCOME-TAX OFFICER DID NOT HOLD TH E BELIEF THAT THERE HAD BEEN SUCH NON-DISCLOSURE. THE EXISTENCE OF THE BELIEF CA N BE CHALLENGED BY THE ASSESSEE BUT NOT THE SUFFICIENCY OF THE REASONS FOR THE BELIEF. THE EXPRESSION 'REASON TO BELIEVE' DOES NOT MEAN A PURELY SUBJECTI VE SATISFACTION ON THE PART OF THE INCOME-TAX OFFICER. THE REASON MUST BE HELD IN GOOD FAITH. IT CANNOT BE MERELY A PRETENSE. IT IS OPEN TO THE COURT TO EXAMI NE WHETHER THE REASONS FOR THE FORMATION OF THE BELIEF HAVE A RATIONAL CONNECT ION WITH OR A RELEVANT BEARING ON THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT FOR THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX OFFICER IN STARTING PROCEEDINGS IN RESPECT OF INCOM E ESCAPING ASSESSMENT IS OPEN TO CHALLENGE IN A COURT OF LAW.' THE HON'BLE SUPREME COURT FURTHER OBSERVED : 14 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. 'AS STATED EARLIER, THE REASONS FOR THE FORMATION O F THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE IN COME -TAX OFFICER AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEM ENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BEC AUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS.' (EMPH ASIS SUPPLIED) 9. IN THE MATTER OF GANGA SARAN & SONS (P.) LTD. V. ITO [1981] 130 ITR 1/6 TAXMAN 14 (SC) , THE HON'BLE SUPREME COURT HELD AS UNDER: '6. IT IS WELL SETTLED AS A RESULT OF SEVERAL DECIS IONS OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SATISFIED BEFORE THE IN COME TAX OFFICER CAN ASSUME JURISDICTION TO ISSUE NOTICE UNDER SECTION 1 47(A). FIRST, HE MUST HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE H AS ESCAPED ASSESSMENT AND SECONDLY, HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IF EIT HER OF THESE CONDITIONS IS NOT FULFILLED, THE NOTICE ISSUED BY THE INCOME TAX OFFI CER WOULD BE WITHOUT JURISDICTION. THE IMPORTANT WORDS UNDER SECTION 147 (A) ARE 'HAS REASON TO BELIEVE' AND THESE WORDS ARE STRONGER THAN THE WORD S ' IS SATISFIED'. THE BELIEF ENTERTAINED BY THE INCOME TAX OFFICER MUST NOT BE A RBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BAS ED ON REASONS WHICH ARE RELEVANT AND MATERIAL . THE COURT, OF COURSE, CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE W EIGHED WITH THE INCOME TAX OFFICER IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147(A). IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETW EEN THE REASONS AND THE BELIEF, SO THAT, ON SUCH REASONS, N O ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERTAIN THE BELIEF , THE CONCLUSION WOULD BE INESCAPABLE THAT THE INCOME TAX OFFICER COULD NOT H AVE REASON TO BELIEVE THAT ANY SUCH ESCAPEMENT WAS BY REASON OF THE ASSESSEE H AD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION O R FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS AND THE NOTICE ISSUED BY HIM WOULD BE LIABLE TO BE STRUCK DOWN AS INVALID .' (EMPHASIS SUPPLIED) 10. IN THE MATTER OF SRI KRISHNA (P.) LTD. V. ITO [1996] 221 ITR 538/87 TAXMAN 315 , THE HON'BLE SUPREME COURT HAS OBSERVED AS UNDER : 'THE INCOME-TAX OFFICER CAN ISSUE NOTICE UNDER SECT ION 148 OF THE INCOME-TAX ACT,1961, PROPOSING TO REOPEN AN ASSESSMENT ONLY WH ERE HE HAS REASON TO BELIEVE THAT ON ACCOUNT OF EITHER THE OMISSION OR F AILURE ON THE PART OF THE ASSESSEE TO FILE THE RETURN OR ON ACCOUNT OF THE OM ISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME HAS ESCAPED ASSESS MENT. THE EXISTENCE OF THE REASON(S) TO BELIEVE IS INTENDED TO BE A CHECK, A L IMITATION, UPON HIS POWER TO REOPEN THE ASSESSMENT. SECTION 148(2) IMPOSES A FUR THER CHECK UPON THE SAID POWER, VIZ., THE REQUIREMENT OF RECORDING OF REASON S FOR SUCH REOPENING BY THE INCOME-TAX OFFICER. SECTION 151 IMPOSES YET ANOTHER CHECK UPON THE SAID POWER, VIZ., THE COMMISSIONER OR THE BOARD, AS THE CASE MAY BE, HAS TO BE 15 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. SATISFIED, ON THE BASIS OF THE REASONS RECORDED BY THE INCOME-TAX OFFICER, THAT IT IS A FIT CASE FOR ISSUANCE OF SUCH A NOTICE. THE PO WER CONFERRED UPON THE INCOME-TAX OFFICER BY SECTIONS 147 AND 148 IS THUS NOT AN UNBRIDLED ONE. IT IS HEDGED IN WITH SEVERAL SAFEGUARDS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR ABUSE OF THIS POWER BY THE ASSESSING OFFIC ERS. THE IDEA WAS TO SAVE THE ASSESSEES FROM HARASSMENT RESULTING FROM MECHAN ICAL REOPENING OF ASSESSMENTS BUT THIS PROTECTION AVAILS ONLY TO THOS E ASSESSEES WHO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY. EVERY DISCLOSURE IS NOT AND CANNOT BE TREATED TO BE TRUE AND FULL DISCLOSURE. A DISCLOSURE MAY BE A FALSE ONE OR A TRUE ONE. IT MAY BE A FULL DISCLOSURE OR IT MAY NOT BE. A PARTIA L DISCLOSURE MAY VERY OFTEN BE A MISLEADING ONE. WHAT IS REQUIRED IS A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR MAKING ASSESSMENT FOR THAT YEAR. ALL THE REQUIREMENTS STIPULATED BY SECTION 147 MUST BE GIVE N DUE AND EQUAL WEIGHT.' IT WAS FURTHER OBSERVED THAT : 'SINCE THE BELIEF IS THAT OF THE INCOME-TAX OFFICER , THE SUFFICIENCY OF REASONS FOR FORMING THE BELIEF IS NOT FOR THE COURT TO JUDG E BUT IT IS OPEN TO AN ASSESSEE TO ESTABLISH THAT, IN FACT THERE EXISTED NO BELIEF OR THAT THE BELIEF WAS NOT AT ALL A BONA FIDE ONE OR WAS BASED ON VAGUE, IRRELEVANT A ND NON-SPECIFIC INFORMATION . TO THAT LIMITED EXTENT, THE COURT MAY LOOK INTO T HE CONCLUSION ARRIVED AT BY THE INCOME-TAX OFFICER AND EXAMINE WH ETHER THERE WAS ANY MATERIAL AVAILABLE ON THE RECORD FROM WHICH THE REQ UISITE BELIEF COULD BE FORMED BY THE INCOME-TAX OFFICER AND FURTHER WHETHE R THAT MATERIAL HAD ANY RATIONAL CONNECTION OR A LIVE LINK FOR THE FORMATIO N OF THE REQUISITE BELIEF.' (EMPHASIS SUPPLIED) 11. IN THE MATTER OF CIT V. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561/187 TAXMAN 312 (SC) , THE HON'BLE SUPREME COURT HELD: 'HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETAT ION TO THE WORDS 'REASON TO BELIEVE', FAILING WHICH SECTION 147 WOULD GIVE ARBI TRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASI S OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. ONE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW A ND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS TH E POWER TO REASSESS, BUT THE REASSESSMENT HAS TO BE BASED ON FULFILMENT OF C ERTAIN PRE-CONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED AS CO NTENDED ON BEHALF OF THE DEPARTMENT, THEN IN THE GARB OF REOPENING THE ASSES SMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPI NION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER . HENCE, AFTER 1-4-1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THE RE IS 'TANGIBLE MATERIAL' TO COME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCO ME FROM ASSESSMENT. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, TH E PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE', THE PARLIAME NT REINTRODUCED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GR OUND THAT IT WOULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER.' (EMPHAS IS SUPPLIED) 12. IN THE BACKDROP OF THE SETTLED POSITION OF LAW NOT ICED HEREINABOVE ADVERTING TO THE FACTS OF THE PRESENT CASE, IT IS TO BE NOTICED THAT THE ASSESSEE HAD MADE TRUE AND FULL DISCLOSURE OF ALL RELEVANT FACTS RELATING TO THE CL AIM OF ADDITIONAL DEPRECIATION AND ALSO 16 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. IN RESPECT OF CLAIM FOR GRANT OF DEDUCTION UNDER SE CTION 80 IA. A SEPARATE AUDIT REPORT IN THE PRESCRIBED FORM 10CCB IN SUPPORT OF THE CLAI M FOR DEDUCTION UNDER SECTION 80IA/80IB WAS ALSO DULY SUBMITTED. THE ASSESSEE HAD ALSO SUBMITTED REPLY PURSUANT TO ALL QUERIES MADE BY AO DURING THE ASSESSMENT PRO CEEDINGS UNDER SECTION 143(3) OF THE ACT. IN THIS VIEW OF THE MATTER, THE CONTENTION SOUGHT TO BE RAISED BY THE REVENUE ABOUT NON-DISCLOSURE ON THE BASIS OF THE FAILURE ON THE PART OF THE ASSESSEE IN MENTIONED BIFURCATED AMOUNT OF ADDITIONAL DEPRECIAT ION ALLOWABLE IN THE DEPRECIATION CHART IS ABSOLUTELY BASELESS. IT IS TO BE NOTICED T HAT ALL THAT HAS BEEN SAID BY THE AO IS THAT AFTER SCRUTINY ASSESSMENT, IT WAS OBSERVED THA T ASSESSEE HAS MADE INCORRECT CLAIM OF ADDITIONAL DEPRECIATION ON CPP WHEREAS, THE CLAI M FOR ADDITIONAL DEPRECIATION ON CPP WAS ALLOWED BY THE AO WHILE FRAMING THE ASSESSM ENT UNDER SECTION 143(3) AFTER CONSCIOUS CONSIDERATION OF THE MATERIAL ON RECORD. IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE FORMATION OF THE BELIEF REGARDING THE ESCAPEMENT OF THE ASSESSMENT BY THE AO IS BASED ON ANY NEW MATERIAL COMING ON RE CORD. APPARENTLY, THE FORMATION OF THE BELIEF BY THE AO REGARDING ESCAPEMENT OF THE ASSESSMENT IS BASED ON RE- APPRECIATION OF THE MATERIAL ALREADY AVAILABLE ON R ECORD AT THE TIME OF SCRUTINY ASSESSMENT WHICH AMOUNTS TO MERE CHANGE OF OPINION. OBVIOUSLY, IN THE GARB OF PURPORTED EXERCISE OF THE POWER TO REASSESS, THE AO CANNOT BE PERMITTED TO REVIEW HIS OWN ORDER OR THE ORDER PASSED BY HIS PREDECESSOR. T HUS, THE FINDING ARRIVED AT BY THE ITAT THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO BY MERE CHANGE OF OPINION IS PATENTLY ILLEGAL, CANNOT BE FAULTED WITH . 13. THE ITAT HAVING ARRIVED AT THE CATEGORICAL FINDING THAT RE- OPENING OF THE COMPLETED ASSESSMENT WITHOUT ANY FRESH MATERIAL, ME RELY ON THE BASIS OF CHANGE OF OPINION OF THE AO, IS WITHOUT JURISDICTION AND ERRO NEOUS, THE APPEAL PREFERRED BY THE REVENUE HAS RIGHTLY BEEN DISMISSED AS HAVING BECOME INFRUCTUOUS. THEREFORE, REOPENING OF THE COMPLETED ASSESSMENT WI THOUT FRESH MATERIAL MERELY ON THE BASIS OF CHANGE OF OPINION ON THE MATERIAL ALRE ADY AVAILABLE WITH THE AO IS WITHOUT JURISDICTION AND NOT SUSTAINABLE IN LAW. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AS WEL L AS FOLLOWING THE DECISION CITED SUPRA, WE HOLD THAT THE REOPENING OF THE COMPLETED ASSESSMENT UNDER SECTION 147 ON THE BASIS OF THE FACTS AND MATERIAL ALREADY AVAI LABLE WITH THE AO AT THE TIME OF SCRUTINY ASSESSMENT IS NOT PERMISSIBLE UNDER THE LA W. ACCORDINGLY, WE QUASH THE REOPENING OF THE ASSESSMENT AND CONSEQUENTIAL REASS ESSMENT ORDER PASSED BY THE AO. 17 ITA NO. 25/JP/2019 RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. 6. SINCE WE HAVE QUASHED THE REASSESSMENT ON THE VA LIDITY OF REOPENING, THEREFORE, WE DO NOT PROPOSE TO ADJUDICATE GROUND N O. 2 OF ASSESSEES APPEAL. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 03/07/2 019. SD/- SD/- ( JES'K LH- 'KEKZ ) ( FOT; IKY JKWO (RAMESH C. SHARMA ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 03/07/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD., JAIPUR. 2. THE RESPONDENT THE ACIT, CIRCLE-6, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 25/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR