JAYANT MANILAL GANDHY, MUMBAI V. ASST CIT CIR 16(2), MUMBAI

ITA 4504/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3468 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KIRTNEYDR
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Depreciation; Transfer pricing; International transaction; Period of limitation; Question of law; Cost of acquisition; Tangible material; Difference of opinion; Assessment record; Time period of passing order; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 148; 56; 12; 144; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4504/MUM/2014 ASSESSMENT YEAR-2005-06 JAYANT MANILAL GANDHY, DELUX APARTMENT, ALTAMOUNT ROAD, MUMBAI-400026 / VS. ACIT, CIRCLE-16(2), MATRU MANDIR BLDG. NANA CHOWK, MUMBAI-400007 PAN NO. AFUPG3313H ( / ASSESSEE) ( / REVENUE) / ASSESSEE BY SHRI VIJAY KOTHARI / REVENUE BY SHRI S.R. KIRTNEY-DR / DATE OF HEARING : 18/05/2016 / DATE OF ORDER: 30/05/2016 ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 01/04/2014 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE ASSESSEE HAS TAKEN AS MANY SIXTEEN GROU NDS OF APPEAL, HOWEVER, DURING HEARING, THE ASSESSEE ON LY PRESSED GROUND NUMBERS 1, 7 AND 13. 2. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE, BY THE LD. COUNSEL, SHRI VIJAY KOTHARI, T HAT NOTICE U/S 148/147 WAS ISSUED BEYOND A PERIOD OF FOUR YEAR S, THEREFORE, AS PER THE PROVISO TO THE SAID SECTION, THE REOPENING IS BAD. IT WAS ALSO CONTENDED THAT THE MA TERIAL FACTS, WERE DULY DISCLOSED BY THE ASSESSEE, WHICH W ERE NECESSARY FOR ASSESSMENT. RELIANCE WAS PLACED UPON THE DECISION FROM HONBLE BOMBAY HIGH COURT IN IPCA LABORATORIES LTD. VS DCIT 251 ITR 416 (BOM.) BY EXP LAINING THAT, WITHOUT PREJUDICE THAT THE AMOUNT OF RUPEES O NE CRORE WAS RECEIVED BY THE ASSESSEE UNDER THE AGREEMENT DA TED 23/05/2004 FOR TRANSFERRING HIS RESIDUAL OR REVISIO NARY INTEREST LEFT AFTER THE AGREEMENT OF LEASE DATED 03 /08/1998. THE LD. COUNSEL FURTHER EXPLAINED THAT THE ISSUE WA S ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 3 EXAMINED BY THE ASSESSING OFFICER DURING ORIGINAL ASSESSMENT, REASONS DOES NOT STATE OF ANY FAILURE O N THE PART OF THE ASSESSEE AND IN THE CASE OF ASIAN PAINT S, THE ISSUE WAS CONSIDERED, FOR WHICH OUR ATTENTION WAS I NVITED TO ORDER IN ITA NO.408/MUM/2010 (PARA-25 TO 29). THE CRUX OF THE ARGUMENT IS THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE. 2.1. ON THE OTHER HAND, THE LD. DR, SHRI S.R. KIRT NEY, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT THE FACTS WERE NOT TRULY DISCLOS ED BY THE ASSESSEE, THEREFORE, THE PROCEEDINGS WERE RIGHTLY I NITIATED. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DECLARED INC OME OF RS.25,63,605/- ON 29/08/2005, WHICH WAS ASSESSED U/ S 143(3) OF THE ACT DETERMINING THE INCOME AT RS.26,0 1,100/- ON 03/10/2007. 2.3. LATER ON, IT WAS NOTICED BY THE ASSESSING OFF ICER THAT THE ASSESSEE HAS OFFERED LONG TERM CAPITAL GAI N OF RUPEES ONE CORES AND IN ITS COMPUTATION OF INCOME C LAIMED ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 4 AS EXEMPT BY INVESTING THE AMOUNT IN SPECIFIED BOND S U/S 53EC OF THE ACT. FURTHER, IT CAME TO THE NOTICE OF THE ASSESSING OFFICER THE ASSESSEE HAD ALREADY SOLD THE PROPERTY IN THE YEAR 1998 AND THE OWNERSHIP OF THE LAND WAS TRANSFERRED TO THE PURCHASER IN THE SAME YEAR, THEREFORE, THE RECEIPT OF RUPEES ONE CRORES REMAINE D TO BE TAXED IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES U/S 56 OF THE ACT. 2.4. IN VIEW OF THE ABOVE, THE ASSESSMENT WAS REOPENED WITH THE ISSUANCE OF NOTICE U/S 148 AND TH E REASONS OF REOPENING WERE PROVIDED TO THE ASSESSEE ON 31/08/2012. THE ASSESSEE WAS ASKED TO SUBMIT THE BALANCE SHEET FOR THE YEAR ENDING 2000 TO 2005, COMPUTATION OF INCOME FOR THE SAME PERIOD SHOWING L EASE RENT FOR THE LAND CONCERNED, COPIES OF THE DEVELOPM ENT AGREEMENT RIGHT OF THE LAND TO ASIAN PAINT REVERSIO NARY AGREEMENT AND PROOF OF INVESTMENT OF CAPITAL GAIN I N 54EC. THE LD. ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SOLD ALL RIGHTS IN THE LAND AT A CONSIDERATION OF RS.3 C RORES TO M/S ASIAN PAINTS (I) LTD. SUBJECT TO A LEASE RENT OF ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 5 RS.50,000/- TO BE RECEIVED BY HIM IN PERPETUITY. I T WAS ALSO FOUND THAT THE SAID CONSIDERATION WAS OFFERED TO TAX AS CAPITAL GAIN AFTER DEDUCTING INDEXED DEEMED COST OF PLOT AS ON 01/04/1981 AND CLAIMING OTHER DEDUCTION U/S 54EA AND 54EB THEREBY OFFERING NET AMOUNT OF RS.95,61,25 0/- TO TAX IN ASSESSMENT YEAR 1999-2000 AND THE RENT RECEI VED AT THE RATE OF RS.50,000/- PER MONTH WAS OFFERED TO TA X UNDER THE HEAD INCOME FROM OTHER SOURCES. STILL THE LD. A SSESSING OFFICER FOUND THE EXPLANATION OF THE ASSESSEE TO BE UNCONVINCING ON THE PLEA THAT THE ASSESSEE FAILED T O DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY WHICH W ERE NECESSARY FOR ASSESSMENT, THUS, THE LD. ASSESSING O FFICER REOPENED THE ASSESSMENT WITHIN THE PROVISIONS OF SE CTION 147/148 OF THE ACT AND ADDED RUPEES ONE CRORE AS IN COME OF THE ASSESSEE FROM OTHER SOURCES. 2.5. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), WHEREIN, THE CONTENTION/SUBMISSIONS OF THE ASSESSEE WERE CONSIDE RED AND FOLLOWING THE DECISION IN SHRI KRISHNA PVT. LTD . 221 ITR 538 (SC), WHEREIN, IT WAS HELD THAT EVERY DISCLOSUR E IS NOT ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 6 AND CANNOT BE TREATED TO BE TRUE AND FULL DISCLOSUR E, ANOTHER DECISION IN SHEO NATH SINGH 82 ITR 147 (SC) , BHAGWAN INDUSTRIAL PVT. LTD. 31 STC 293 (SC), RAYMO ND WOOLEN MILLS LTD. VS ITO 236 ITR 34, CONSOLIDATED P HOTO AND FINVEST LTD. VS ACIT 281 ITR 394 (DEL.), KANTAM ANI VENKATA NARAIN & SONS (1967) 63 ITR 638 (SC), MALAG AON ELECTRICITY COMPANY PVT. LTD. VS CIT 78 ITR 466 (SC ), CIT VS MANORANJAN PICTURES CORPORATION 228 ITR 202 (DEL .) AND VARIOUS OTHER DECISIONS AS MENTIONED IN THE IMPUGNE D ORDER, DISMISSED THE APPEAL OF THE ASSESSEE. 2.6. THE ASSESSEE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. IF THE OBSERVATION MA DE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE T OTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MAT ERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE ARE EXPECTED TO FIRST ANALYZE THE PROVISION OF SECTION 147 OF THE ACT. 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISI ONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INC OME AND ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 7 ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, O R RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SE CTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT Y EAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN R ELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY E NTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAP ED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVI NG MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL , REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT T O DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : ( A ) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY T HE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSAB LE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXI MUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 8 ( B ) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY TH E ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOS S, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; ( BA ) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REPORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO RE QUIRED UNDER SECTION 92E; ( C ) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ( I ) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR ( II ) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIV E RELIEF UNDER THIS ACT ; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY O THER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; ( D ) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INCLU DING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA. EXPLANATION 3. FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFI CER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASON S FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RE CORDED UNDER SUB-SECTION (2) OF SECTION 148. EXPLANATION 4. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS A MENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 2.7. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, PROVISO HAS BEEN ADDED, WHERE AN ASSESSMENT UNDER S UB- SECTION (3) OF SECTION 143 OR THE SECTION THAT NO A CTION SHALL BE TAKEN UNDER THE SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR DUE TO THE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 9 FAILURE ON THE PART OF THE ASSESSEE OR MATERIAL FAC TS WERE NOT FULLY AND TRULY DISCLOSED WHICH ARE NECESSARY FOR M AKING THE ASSESSMENT. IN THE PRESENT APPEAL, RETURN WAS FILED BY THE ASSESSEE ON 29/08/2005, WHICH WAS ASSESSED ON 03/10/2007 U/S 143(3) OF THE ACT, THUS, FOUR YEARS ENDS ON 31/03/2010. NOTICE U/S 148 OF THE ACT WAS ISSUED ON 30/03/2012 (PAGE-57 OF THE PAPER BOOK). ONE FACT IS CLEARLY OOZING OUT THAT THE REQUIRED NOTICE WAS ISSUED BEYO ND THE LIMITATION PERIOD OF FOUR YEARS. 2.8. NOW, WE WILL EXAMINE THE REASONS RECORDED BY THE LD. ASSESSING OFFICER WHICH ARE AVAILABLE AT PA GE-57 OF THE PAPER BOOK. THE SAME ARE REPRODUCED HEREUNDER F OR READY REFERENCE:- ON VERIFICATION OF THE RECORDS, IT IS FOUND THAT T HE ASSESSEE HAD OFFERED LONG TERM CAPITAL GAIN AMOUNTI NG TO RS.1,00,00,000/- IN THE COMPUTATION AND THE SAME WA S CLAIMED EXEMPTED INCOME BY INVESTING IN SPECIFIED B ONDS U/S.54EC. WHILE CALCULATING LONG TERM CAPITAL GAIN THE ASSESSEE HAD NOT SHOWN THE DATE AND THE COST OF ACQUISITION OF ASSET HAD NOT CLAIMED INDEXATION ON THE COST OF ASSET AND ALSO HAD NOT SUBMITTED ANY DOCUMENTS I N SUPPORT OF THE ACQUISITION. DURING THE ASSESSMENT T HE ASSSSEE HAD SUBMITTED THE CONVEYANCE DEED IN SUPPOR T OF THE SALE OF THE SALE OF THE LAND. THE ASSESSEE HAD MADE INDENTURE CONVEYANCE WITH ASIAN PAINTS LTD. ON 22 ND MAY, 2004 AND MENTIONED THAT THE ASSESSEE HAS AT THE REQ UEST OF THE PURCHASER AT THE PRICE OF RS.1, 00, 00, 000/ -. FURTHER, IT IS NOTICED THAT THE SAID DEED THAT ASSE SSEE HAD ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 10 ALREADY ENTERED IN TO A LEASED DEED AGREEMENT WITH THE ASIAN PAINTS LTD. ON 03.08.1998. HENCE, IT SHOWS TH AT THE SA7D LAND WAS SOLD IN THE YEAR 1998 ONLY. A/SO IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE HAD NOT REFLECTED THE-SAID-LAND AS EN -ASSET -IN -HIS BALAN CE-SHEET FOR THE YEAR, IT SHOWS THAT THE OWNERSHIP OF THE LA ND WAS TRANSFERRED TO THE PURCHASER IN THE YEAR 1998 .. HENCE, THE AMOUNT RECEIVED BY- THE ASSESSEE AGAINST THE CONVEYANCE DEED DURING THE ASSESSMENT YEAR SHOULD H AVE BEEN TREATED AS OTHER INCOME AS PER SECTION 56 OF THE I T. ACT. AS THE SAID INCOME WAS TREATED AS INCOME FROM CAPITAL GAIN AND EXEMPTION U/S.54EC WAS ALSO ALLOWE D INSTEAD OF TREATING IT AS INCOME FROM OTHER SOURCE, IT IS CLEAR THAT INCOME HAS BEEN UNDER ASSESSED BY RS.1,00,00,000/-. CONSIDERING THE ABOVE MENTIONED FACTS, I HAVE A REASON TO BELIEVE THAT IT A FIT CASE FOR REOPENING ASSESSM ENT SINCE, THE INCOME ASSESSABLE TO TAX TO THE TUNE OF RS.1,00,00,000/- HAS ESCAPED ASSESSMENT FOR THE A. Y. 2005-06. 2.9. IF THE AFORESAID REASONS ARE ANALYZED, IT IS NOWHERE MENTIONED THAT THE FACTS WERE NOT TRULY AND FULLY DISCLOSED BY THE ASSESSEE RATHER THE REASONS RECORD ED ARE SELF CONTRADICTORY. THE MATERIAL FACTS WERE DULY D ISCLOSED BY THE ASSESSEE, IT IS MENTIONED THAT WHILE CALCULA TING LONG TERM CAPITAL GAIN, THE ASSESSEE HAS NOT SHOWN THE D ATE AND COST OF ACQUISITION HAD NOT CLAIMED INDEXATION AND THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENT IN SUPPORT OF ACQUISITION. WHEREAS, IN THE NEXT LINE ITSELF, IT H AS BEEN MENTIONED THAT THE ASSESSEE SUBMITTED THE CONVEYANC E DEED IN SUPPORT OF SALE OF THE LAND. IN THE NEXT LI NE, IT HAS ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 11 BEEN MENTIONED THAT THE ASSESSEE HAD MADE INDENTURE CONVEYANCE WITH ASIAN PAINTS LTD. ON 22/05/2004. 2.10. NOW, WE SHALL EXAMINE WHETHER THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE IN MAKING THE F ULL AND TRUE DISCLOSURE FOR MAKING AN ASSESSMENT. WE FIND THAT FIRSTLY, THE ASSESSMENT WAS FRAMED U/S 143(3) OF TH E ACT THAT TOO IN RESPONSE TO STATUTORY NOTICES ISSUED TO THE ASSESSEE U/S 143(2) AND 142(1) OF THE ACT. IN SUPP ORT OF THE RETURN (AS IS EVIDENT FROM ASSESSMENT ORDER ITS ELF), THE ASSESSEE DULY FURNISHED THE CAPITAL ACCOUNT OF THE FIRMS, STATEMENT OF AFFAIRS, INCOME AND EXPENDITURE ACCOUN T, STATEMENT OF DIVIDEND AND INTEREST, BADLA ACCOUNT, BANK STATEMENT AND CASH FLOW STATEMENT, ETC. AT PAGE-2 OF THE ASSESSMENT ORDER, IT HAS BEEN CLEARLY MENTIONED THA T AFTER DISCUSSION AND ON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, THE INCOME WAS COMPUTED. IT IS NOT THE CA SE, SOMETHING WAS HIDE BY THE ASSESSEE, THUS, WE FIND T HAT THERE IS TRUE AND FULL DISCLOSURE OF MATERIAL FACTS , CONSEQUENTLY, FROM THIS ANGLE ALSO, PRIMA FACIE, TH E ASSESSEE IS HAVING A GOOD CASE. ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 12 2.11. SO FAR AS, THE ISSUE OF INDENTURE CONVEYANCE WITH ASIAN PAINTS ON 22/05/2004 IS CONCERNED, THIS ISSUE HAS ALREADY BEEN EXAMINED BY THE TRIBUNAL VIDE ORDER DA TED 31/10/2011 (ITA NO.408 & 1937/MUM/2010) FOR ASSESSMENT YEAR 2005-06 AND DISMISSED THE APPEAL OF THE REVENUE (PAGE 12 ONWARDS OF THE ORDER AND PAGE-69 O F THE PAPER BOOK). THE SAME IS REPRODUCED HEREUNDER FOR R EADY REFERENCE:- 25. GROUND NO. 1 PERTAINS TO THE ISSUE OF COST OF ACQUISITION WHILE COMPUTING THE CAPITAL GAINS ON SA LE OF MATUNGA LAND. BRIEFLY STATED, ASSESSEE ACQUIRED PER PETUAL LEASE RIGHTS OF THE LAND SITUATED AT MATUNGA (W) FR OM SHRI JAYANT MANILAL GANDHI FOR A TOTAL COST OF RS.3.32 C RORES ON 3 RD AUGUST 1998. THESE RIGHTS INCLUDED OCCUPATION, DEVELOPMENT RIGHTS AND ALSO RIGHT TO TRANSFER/SALE OF THE SAID LAND. THERE WERE SUB-TENANTS OCCUPYING THE LAN D AND ON 22 ND MARCH 2000 AN AMOUNT OF RS.4.77 CRORES WAS PAID TO THE SUB-TENANTS FOR VACATING THE LAND. ON 22 ND MAY 2004 ASSESSEE ACQUIRED REVERSIONARY RIGHTS FROM SHR I JAYANT MANILAL GANDHI AT A COST OF RS.1.12 CRORES. ON 12.07.2004 ASSESSEE ENTERED INTO DEVELOPMENT AGREEMENT WITH M/S. CHALET HOTELS LTD. TO TRANSFER THE LAND AND FULL DEVELOPMENT RIGHTS FOR A CONSIDERATIO N OF RS.9.3 CRORES. ASSESSEE WORKED OUT THE LONG TERM CA PITAL GAINS BY TAKING INDEXATION OF VARIOUS AMOUNTS PAID AND ARRIVED AT LOSS OF RS.2,46,35,466/-. THE A.O. HOWE VER, CONSIDERED THAT AS SHORT TERM CAPITAL GAINS AND WHI LE RECALCULATING THE SHORT TERM CAPITAL GAINS HE ALLOW ED ONLY ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 13 THE COST OF RS.1.12 CRORES PAID ON 22 ND MAY 2004 AND ARRIVED AT THE SHORT TERM CAPITAL GAIN AT RS.8.02 C RORES. IT WAS AOS CONTENTION THAT THE PURCHASE OF LEASE RIGH TS AS WELL SURRENDER OF TENANCY WAS NOT RELATED TO THE PU RCHASE OF LAND, THEREFORE, THE COST PAID FOR THAT CANNOT B E CONSIDERED AS COST OF ACQUISITION. BEFORE THE CIT(A ) IT WAS CONTENDED THAT ASSESSEE HAD ACQUIRED THE CAPITAL AS SET BY ORIGINALLY PAYING FOR COMPLETE LEASE HOLD RIGHTS AN D SUBSEQUENTLY VACATING THE TENANCY BY PAYING AN AMOU NT OF RS.4.77 CRORES, WHICH AMOUNT SHOULD BE CONSIDERE D AS COST OF IMPROVEMENT CONSEQUENT TO THE DECISION OF T HE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PI ROJA C. PATEL 242 ITR 582. FURTHER THE PAYMENT FOR REVERSIO NARY RIGHTS OF RS.1.12 CRORES WAS FOR BETTERMENT OF EXIS TING LEASE HOLD RIGHTS AND ALL PUT TOGETHER ASSESSEE HA S ACQUIRED COMPLETE RIGHTS OF THE LAND WHICH IT HAS S OLD. THEREFORE, ASSESSEE WAS CORRECT IN TAKING INDEXED C OST OF ACQUISITION AT RS.11.66 CRORES. 26. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS AND CONSIDERING THE HON'BLE BOMBAY HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. DR. D.A. IRA NI 111 TAXMAN 600, WHICH THE A.O. ALSO REFERRED, TO CONSID ER THAT THE EXPENDITURE INCURRED IN ACQUIRING THE TENA NCY RIGHTS WILL FORM PART OF COST OF THE PROPERTY. THER EFORE, HE DIRECTED THE A.O. TO ALLOW THE ENTIRE COST. HOWEVER , CONSIDERING THE DATE OF ACQUISITION OF THE COMPLETE RIGHTS HE DIRECTED THE A.O. TO TREAT IT AS SHORT TERM CAPI TAL GAIN AS AGAINST LONG TERM CAPITAL LOSS OFFERED BY ASSESS EE AND ARRIVED AT A CAPITAL LOSS OF RS.0.08 CRORES AS AGAI NST SHORT TERM CAPITAL GAIN OF RS.8.01 CRORE DETERMINED BY TH E A.O. REVENUE IS AGGRIEVED. 27. THE LEARNED D.R. SUBMITTED THAT THERE IS NO CORRELATION BETWEEN REVERSIONARY RIGHTS OBTAINED BY ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 14 ASSESSEE AND THE ORIGINAL FREE HOLD RIGHTS OBTAINED IN 1998 AND, THEREFORE, THE A.O. WAS CORRECT IN DENYING THE AMOUNT PAID FOR ACQUIRING THE LEASE HOLD RIGHTS ON PURCHASE OF TENANCY RIGHTS. HE RELIED ON THE ORDER OF THE A.O. TO SUBMIT THAT THE CAPITAL GAIN WAS CORRECTLY CALCULATED BY THE A.O. 28. THE LEARNED COUNSEL SUBMITTED THAT WHAT THE ASSESSEE HAS ACQUIRED IS COMPLETE RIGHTS OVER THE L AND IN MATUNGA AND ORIGINALLY THE PERPETUAL LEASE HOLD RIG HTS OF THE LAND WERE ACQUIRED ON 03.08.1998 AND SUBSEQUENT LY TENANCY RIGHTS WERE PURCHASED BY PAYING THE AMOUNT TO THE TENANTS THE THEREAFTER ON 22.05.2004 ACQUIRED T HE REVERSIONARY RIGHTS FROM SHRI JAYANT MANILAL GANDHI SO AS TO AVOID ANY FUTURE LITIGATION AS THE PROPERTY WAS TO BE DEVELOPED. ACCORDINGLY IT WAS SUBMITTED THAT ALL TH E AMOUNTS PAID FOR ACQUIRING THE RIGHTS IN THE PROPER TY ARE CORRECTLY ALLOWED BY THE CIT(A) AS COST OF ACQUISIT ION/COST OF IMPROVEMENT. EVEN THOUGH THE REVERSIONARY RIGHTS WERE PURCHASED WHICH THE A.O. HAS ALLOWED, WHAT THE ASSESSEE HAS ACQUIRED WAS ONLY PART OF REVERSIONARY RIGHTS NOT THE COMPLETE TITLE IN THE PROPERTY. THEREFORE, LOOKING INTO THE FACTS OF THE CASE ALL THE THREE AMOUNTS AR E TO BE ALLOWED AS COST OF ACQUISITION. HOWEVER, ASSESSEES COUNSEL FAIRLY ADMITTED THAT ON THE ISSUE OF LONG T ERM CAPITAL GAIN/SHORT TERM CAPITAL GAIN ASSESSEE HAS N OT CONTESTED THE ISSUE AND HAS ACCEPTED CIT(A)S FINDI NGS THAT IT IS SHORT TERM CAPITAL GAIN. 29. WE HAVE CONSIDERED THE ISSUE AND RIVAL CONTENTI ONS. AFTER EXAMINING THE ORDERS OF THE CIT(A), WE ARE OF THE OPINION THAT THE CIT(A) HAS CORRECTLY CONSIDERED TH E ISSUE. THE PROPERTY IS NOTHING BUT BUNDLE OF RIGHTS. IT IS NOT IN DISPUTE THAT ASSESSEE HAS ACQUIRED PERPETUAL LEASE HOLD TENANCY RIGHTS IN 1998 ITSELF. THE PAYMENT FOR VACA TION OF ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 15 TENANTS HAS TO BE CONSIDERED AS COST OF IMPROVEMENT OF THE EXISTING TENANCY RIGHTS AS PER THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PI ROJA C. PATEL 242 ITR 582. SUBSEQUENT TO THE VACATION OF TE NANCY IN 2000, ASSESSEE HAS COMPLETE TENANCY RIGHTS WHICH ARE PERPETUALLY HANDED OVER BY THE ORIGINAL OWNER SHRI GANDHI. FOR BETTERMENT OF THE EXISTING TITLE WHICH THE ASSESSEE HAS ALREADY HAD, A FURTHER AGREEMENT WAS ENTERED INTO WITH SHRI GANDHI FOR ACQUIRING REVERSI ONARY RIGHTS SO THAT THE TITLE IS COMPLETE. SO WHEN THE L ESSEE PURCHASED THE LEASED PROPERTY FROM THE OWNER BY ACQUIRING THE REVERSIONARY RIGHTS THE LEASE GOT EXTINGUISHED. THEREFORE, THE DECISION OF CIT(A) IN TREATING THAT THE COMPLETE RIGHTS WERE ACQUIRED ONLY IN 2004 CONSEQUENT TO THE ACQUISITION OF REVERSIONARY RIGHT S CANNOT BE FAULTED. THE DOCTRINE OF MERGER WAS APPLI ED RESULTING IN DROWNING AND SINKING OF INFERIOR R IGHT INTO SUPERIOR RIGHT. ASSESSEE HAS TRANSFERRED HIS COMPLE TE RIGHTS ACQUIRED BY WAY OF TENANCY RIGHTS AS WELL AS REVERSIONARY RIGHTS IN THE PROPERTY FOR DEVELOPMENT . THEREFORE, WE ARE OF THE OPINION THAT THE CIT(A) HA S RIGHTLY CONSIDERED THE AMOUNT OF RS.3.32 CRORES PAI D IN 1998 AND RS.4.77 CRORES PAID FOR VACATING THE TENAN CY AS COST OF ACQUISITION OF THE RIGHTS TRANSFERRED. THE ASSESSING OFFICERS TREATMENT OF ACQUIRING REVERSIONARY RIGHT S ALONE AS COST OF ACQUISITION IS NOT CORRECT AS WHAT THE A SSESSEE HAS ACQUIRED IN 2004 FROM THE ERSTWHILE OWNER, WHO ALREADY SURRENDERED TENANCY RIGHT, IS ONLY PART OF THE REVERSIONARY RIGHTS WITH HIM SO THAT THE TITLE IS C OMPLETE IN ALL RESPECTS AS FAR AS ASSESSEE IS CONCERNED. IN VIEW OF THIS WE DO NOT SEE ANY MERIT IN THE CLAIM OF THE RE VENUE THAT THE LEASE RIGHTS ACQUIRED AND TENANCY RIGHTS A CQUIRED SHOULD NOT FORM PART OF COST OF ACQUISITION. IT IS ALSO TO BE NOTED THAT AO ALLOWED COST OF ACQUIRING REVERSIONA RY ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 16 RIGHTS AS COST OF PURCHASE OF LAND. CONSIDERING THE FACTS OF THE CASE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY THE GROUND 1 I S REJECTED. 2.12. NOW, WE SHALL EXAMINE THE FACTUAL POSITION I N THE PRESENT APPEAL, THEREFORE, QUESTION ARISES WHETHER THE REOPENING WAS VALIDLY MADE BY THE ASSESSING OFFICER. AT THE OUTSET, WE ARE OF THE VIEW THAT REASSESSMENT PROCEE DINGS CAN BE VALIDLY INITIATED IN A CASE WHERE THE RETURN IS PROCESSED U/S 143(1) OF THE ACT AND NO SCRUTINY ASSESSMENT IS UNDERTAKEN. HOWEVER, IN THE PRESENT A PPEAL UNDISPUTEDLY, THE ORIGINAL ASSESSMENT WAS FRAMED U/ S 143(3) OF THE ACT, MEANING THEREBY, A OPINION WAS F ORMED BY THE ASSESSING OFFICER. IN SUCH CASES THERE IS NO CHANGE OF OPINION. REASSESSMENT PROCEEDINGS WILL BE INVALI D IN A CASE WHERE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED, FACTS WERE EXAMINED, NECESSARY DETAILS WERE FILED BY THE ASSESSEE AND THE ASSESSING OFFICER DEC IDES IN FAVOUR OF THE ASSESSEE, THUS, REASSESSMENT PROCEEDI NGS IN SUCH CASES WILL BE HIT BY THE PRINCIPLE OF CHANGE OF OPINION. REASSESSMENT PROCEEDINGS WILL BE INVALID IN A CASE, WHERE AN ISSUE OR QUERY IS RAISED AND ANSWERE D BY ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 17 THE ASSESSEE IN ORIGINAL ASSESSMENT PROCEEDINGS BUT THEREAFTER THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN THE ASSESSMENT ORDER. IN SUCH SITUATIONS IT SHOU LD BE ACCEPTED THAT THE ISSUE WAS EXAMINED BUT THE ASSESS ING OFFICER DID NOT FIND ANY GROUND OR REASON TO MAKE A DDITION OR REJECT THE STAND OF THE ASSESSEE, MEANING THEREB Y, HE FORMS AN OPINION. THE EXPRESSION CHANGE OF OPINION POSTULATES FORMATION OF OPINION AND THEN A CHANGE T HEREOF. IN THE CONTEXT OF ASSESSMENT PROCEEDINGS, IT MEANS FORMATION OF BELIEF BY AN ASSESSING OFFICER RESULTI NG FROM WHAT HE THINKS ON A PARTICULAR QUESTION. IT IS A RE SULT OF UNDERSTANDING, EXPERIENCE AND REFLECTION. A DISTINC TION MUST BE DRAWN BETWEEN ERRONEOUS APPLICATION/ INTERPRETATION/ UNDERSTANDING OF LAW AND CASES WHER E FRESH OR NEW FACTUAL INFORMATION COMES TO THE KNOWLEDGE O F THE ASSESSING OFFICER SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER. THE REASON IS THAT OPINION IS F ORMED ON FACTS. OPINION FORMED OR BASED ON WRONG AND IN CORRECT FACTS OR WHICH ARE BELIED AND UNTRUE DO NOT GET PRO TECTION AND COVER UNDER THE PRINCIPLE OF CHANGE OF OPINION . FACTUAL INFORMATION OR MATERIAL WHICH WAS INCORRECT OR WAS ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 18 NOT AVAILABLE WITH THE ASSESSING OFFICER AT THE TIM E OF ORIGINAL ASSESSMENT WOULD JUSTIFY INITIATION OF REA SSESSMENT PROCEEDINGS. THE REQUIREMENT IN SUCH CASES IS THAT THE INFORMATION OR MATERIAL AVAILABLE SHOULD RELATE TO MATERIAL FACTS. THE EXPRESSION MATERIAL FACTS MEANS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADVERSE E FFECT ON THE ASSESSEE BY A HIGHER ASSESSMENT OF INCOME TH AN THE ONE ACTUALLY MADE. THEY SHOULD BE PROXIMATE AND NOT HAVE A REMOTE BEARING ON THE ASSESSMENT. THE OMISSION TO DISCLOSE MAY BE DELIBERATE OR INADVERTENT. HOWEVER, IN SUCH CASES, THE ONUS WILL BE ON THE REVENUE TO SHOW THAT THE ASSESSEE HAD STATED INCORRECT AND WRONG MATERIAL FA CTS RESULTING IN THE ASSESSING OFFICER PROCEEDING ON TH E BASIS OF FACTS, WHICH ARE INCORRECT AND WRONG. THE REASONS R ECORDED AND THE DOCUMENTS ON RECORD ARE OF PARAMOUNT IMPORT ANCE AND WILL HAVE TO BE EXAMINED TO DETERMINE WHETHER T HE STAND OF THE REVENUE IS CORRECT. THERE IS A DIFFERE NCE BETWEEN CHANGE OF OPINION AND FAILURE OR OMISSIO N OF THE ASSESSING OFFICER TO FORM AN OPINION ON A SUBJE CT- MATTER, ENTRY, CLAIM, DEDUCTION, ETC. WHEN THE ASSE SSING OFFICER FAILS TO EXAMINE A SUBJECT-MATTER, ENTRY, C LAIM OR ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 19 DEDUCTION, HE FORMS NO OPINION. IT IS A CASE OF NO OPINION. WHETHER OR NOT THE ASSESSING OFFICER HAD APPLIED HI S MIND AND EXAMINED THE SUBJECT-MATTER, CLAIM, ETC., DEPEN DS UPON FACTUAL MATRIX OF EACH CASE. THE ASSESSING OFF ICER CAN EXAMINE A CLAIM OR SUBJECT-MATTER EVEN WITHOUT RAIS ING A WRITTEN QUERY. THERE CAN BE CASES WHERE AN ASPECT O R QUESTION IS TOO APPARENT OR OBVIOUS TO HOLD THAT TH E ASSESSING-OFFICER DID NOT EXAMINE A PARTICULAR SUBJ ECT- MATTER, CLAIM, ETC. THE STAND AND STANCE OF THE ASS ESSEE AND THE ASSESSING OFFICER IN SUCH CASES ARE RELEVAN T. 2.13. SECTION 114 OF THE EVIDENCE ACT, 1872, IS PERMISSIVE AND NOT A MANDATORY PROVISION. NINE SITU ATIONS BY WAY OF ILLUSTRATIONS ARE STATED, WHICH ARE BY WA Y OF EXAMPLE OR GUIDELINES. AS A PERMISSIVE PROVISION IT ENABLES TO JUDGE TO SUPPORT HIS JUDGMENT BUT THERE IS NO SC OPE OF PRESUMPTION WHEN FACTS ARE KNOWN. PRESUMPTION OF FA CTS UNDER SECTION 114 IS REBUTTABLE. THE PRESUMPTION RA ISED UNDER ILLUSTRATION (E) TO SECTION 114 OF THE ACT ME ANS THAT WHEN AN OFFICIAL ACT IS PROVED TO HAVE BEEN DONE, I T WILL BE PRESUMED TO HAVE BEEN REGULARLY DONE BUT IT DOES NO T RAISE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 20 ANY PRESUMPTION THAT AN ACT WAS DONE FOR WHICH THER E IS NO EVIDENCE OR PROOF. (I) SECTION 114(E) OF THE ACT CAN BE APPLIED TO AN ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) OF THE ACT, PROVIDED THAT THERE HAS BEEN A FULL AND TRUE DISCLO SURE OF ALL MATERIAL AND PRIMARY FACTS AT THE TIME OF ORIGI NAL ASSESSMENT. IN SUCH A CASE IF THE ASSESSMENT IS REO PENED IN RESPECT OF A MATTER COVERED BY THE DISCLOSURE, I T WOULD AMOUNT TO CHANGE OF OPINION. THE FOLLOWING CASES AR E WORTH MENTIONING: A. L. A. FIRM V. CIT [1976] 102 ITR 622 (MAD) (PARA 9) A. L. A. FIRM V. CIT [1991] 189 ITR 285 (SC) (PARAS 32, 60, 61) ANANDJI HARIDAS AND CO. P. LTD. V. KUSHARE (S. P.), STO [1968] 21 STC 326 (SC) (PARA 35) BANKIPUR CLUB LTD. V. CIT [1971] 82 ITR 831 (SC) (P ARA 34) BARIUM CHEMICALS LTD. V. CLB [1966] 36 COMP CAS 639 (SC) (PARA 56) BLB LTD. V. ASST. CIT [2012] 343 ITR 129 (DELHI) (P ARA 14) CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 (SC) (PARA 45) CIT V. A. RAMAN AND CO. [1968] 67 ITR 11 (SC) (PARA S 9, 34) CIT V. CHASE BRIGHT STEEL LTD. (NO. 1) [1989] 177 I TR 124 (BOM) (PARA 21) CIT V. DLF POWER LTD. [2012] 345 ITR 446 (DELHI) (P ARA 14) CIT V. EICHER LTD. [2007] 294 ITR 310 (DELHI) (PARA S 10, 28) CIT V. KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (D ELHI) [FB] (PARAS 2, 12, 20, 48) CIT V. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) (PARAS 2, 28) ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 21 CIT V. KHEMCHAND RAMDAS [1938] 6 ITR 414 (PC) (PARA 50) CIT V. P. V. S. BEEDIES P. LTD. [1999] 237 ITR 13 ( SC) (PARA 18) CIT (ASST.) V. RAJESH JHAVERI STOCK BROKERS P. LTD. [2007] 291 ITR 500 (SC) (PARAS 4, 12) CIT V. SHARMA (H. P.) [1980] 122 ITR 675 (DELHI) (P ARA 9) CONSOLIDATED PHOTO AND FINVEST LTD. V. ASST.CIT [20 06] 281 ITR 394 (DELHI) (PARAS 9, 11) DALMIA P. LTD. V. CIT [2012] 348 ITR 469 (DELHI) (P ARA 17) G. R. RAMACHARI AND CO. V. CIT [1961] 41 ITR 142 (M AD) (PARAS 38, 61) HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437 (P& H) (PARA 10) ITO V. HABIBULLAH (S. K.) [1962] 44 ITR 809 (SC) (P ARA 50) INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) (PARAS 34, 35) INDIAN HUME PIPE CO. LTD. V. ASST. CIT [2012] 348 I TR 439 (BOM) (PARA 17) 3I INFOTECH LTD. V. ASST. CIT [2010] 329 ITR 257 (B OM) (PARA 26) INTERNATIONAL WOOLLEN MILLS V. STANDARD WOOL (U. K. ) LTD. [2001] 5 SCC 265 (PARA 30) KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (S C) (PARAS 9, 33, 34, 35) KLM ROYAL DUTCH AIRLINES V. ASST. DIRECTOR OF I. T. [2007] 292 ITR 49 (DELHI) (PARA 12) KUNHAYAMMED V. STATE OF KERALA [2000] 245 ITR 360 ( SC) (PARA 31) MAHARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 ITR 1 (S C) (PARA 34) MUTHUKRISHNA REDDIAR V. CIT [1973] 90 ITR 503 (KER) (PARA 9) NEW LIGHT TRADING CO. V. CIT [2002] 256 ITR 391 (DE LHI) (PARA 18) PRAFUL CHUNILAL PATEL V. MAKWANA (M. J.)/ASST. CIT [1999] 236 ITR 832 (GUJ) (PARA 21) SNOWCEM INDIA LTD. V. DEPUTY CIT [2009] 313 ITR 170 (BOM) (PARA 31) SRI KRISHNA P. LTD. V. ITO [1996] 221 ITR 538 (SC) (PARAS 56, 58) SURESH BUDHARMAL KALANI V. STATE OF MAHARASHTRA [19 98] 7 SCC 337 (PARA 29) UNION OF INDIA V. SURESH C. BASKEY [1996] AIR 1996 SC 849 (PARA 20) UNITED MERCANTILE CO. LTD. V. CIT [1967] 64 ITR 218 (KER) (PARA 9) ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 22 2.14. FOR REOPENING AN ASSESSMENT MADE UNDERSECTIO N 143(3) OF THE ACT, THE FOLLOWING CONDITIONS ARE REQ UIRED TO BE SATISFIED: (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR P RIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE IS UNDERASSESSMEN T OR ESCAPEMENT OF INCOME ; (II) HE MUST RECORD THE PRIMA FACIE OPINION INTO WRI TING ; (III) THE OPINION FORMED IS SUBJECTIVE BUT THE REASON S RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW THAT THE OPI NION IS NOT A MERE SUSPICION. (IV) REASONS RECORDED AND/OR THE DOCUMENTS AVAILABL E ON RECORD MUST SHOW A NEXUS OR THAT IN FACT THEY ARE GERMANE AND RELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE ASSESSING OFFICE R REGARDING ESCAPEMENT OF INCOME. (V) IN CASES WHERE THE FIRST PROVISO APPLIES, THERE IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSION O N THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FA CTS. THE EXPLANATION TO THE SECTION STIPULATES THAT MERE PRO DUCTION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS FROM WHICH THE ASSESSING OF FICER COULD HAVE, WITH DUE DILIGENCE, INFERRED MATERIAL FACTS, DO ES NOT AMOUNT TO 'FULL AND TRUE DISCLOSURE OF MATERIAL FACTS' (THE PR OVISO IS NOT APPLICABLE WHERE REASONS TO BELIEVE FOR ISSUE OF NOT ICE ARE RECORDED AND NOTICE IS ISSUED WITHIN FOUR YEARS FROM THE END OF ASSESSMENT YEAR). 2.15. THE TERM AND FACETS OF THE TERM 'CHANGE OF OPINION'. THE EXPRESSION 'CHANGE OF OPINION' POSTUL ATES FORMATION OF OPINION AND THEN A CHANGE THEREOF. IN THE CONTEXT OF SECTION 147 OF THE ACT IT IMPLIES THAT T HE ASSESSING OFFICER SHOULD HAVE FORMED AN OPINION AT THE FIRST ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 23 INSTANCE, I.E., IN THE PROCEEDINGS UNDER SECTION 14 3(3) AND NOW BY INITIATION OF THE REASSESSMENT PROCEEDING, T HE ASSESSING OFFICER PROPOSES OR WANTS TO TAKE A DIFFE RENT VIEW. 2.16. THE WORD 'OPINION' IS DERIVED FROM THE LATIN WORD 'OPINARI' WHICH MEANS 'TO BELIEVE', 'TO THINK'. THE WORD 'OPINION' AS PER THE BLACK'S LAW DICTIONARY MEANS A STATEMENT BY A JUDGE OR A COURT OF A DECISION REACH ED BY HIM INCORPORATING CAUSE TRIED OR ARGUED BEFORE THEM , EXPOUNDING THE LAW AS APPLIED TO THE CASE AND, DETA ILING THE REASONS UPON WHICH THE JUDGMENT IS BASED. ADVAN CED LAW LEXICON BY P. RAMANATHA AIYAR (THIRD EDITION) E XPLAINS THE TERM 'OPINION' TO MEAN 'SOMETHING MORE THAN MER E RETAINING OF GOSSIP OR HEARSAY ; IT MEANS JUDGMENT OR BELIEF, THAT IS, A BELIEF OR A CONVICTION RESULTING FROM WH AT ONE THINKS ON A PARTICULAR QUESTION . . . AN OPINION IS A CONVICTION BASED ON TESTIMONY . . . THEY ARE AS A R ESULT OF READING, EXPERIENCE AND REFLECTION'. 2.17. IN THE CONTEXT OF ASSESSMENT PROCEEDINGS, IT MEANS FORMATION OF BELIEF BY AN ASSESSING OFFICER RESULTI NG FROM WHAT HE THINKS ON A PARTICULAR QUESTION. IT IS A RE SULT OF ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 24 UNDERSTANDING, EXPERIENCE AND REFLECTION TO USE THE WORDS IN LAW LEXICON BY P. RAMANATHA AIYAR. THE QUESTION OF CHANGE OF OPINION ARISE WHEN AN ASSESSING OFFICER F ORMS AN OPINION AND DECIDES NOT TO MAKE AN ADDITION OR HOLD S THAT THE ASSESSEE IS CORRECT AND ACCEPTS HIS POSITION OR STAND. IN HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437 (P& H), A DIVISION BENCH OF THE HONBLE PUNJAB AND HARYANA HI GH COURT OBSERVED THAT AN ASSESSEE HAS NO CONTROL OVER THE WAY AN ASSESSMENT ORDER IS DRAFTED. IT WAS OBSERVED THAT GENERALLY, THE ISSUES WHICH ARE ACCEPTED BY THE ASS ESSING OFFICER DO NOT FIND MENTION IN THE ASSESSMENT ORDER AND ONLY SUCH POINTS ARE TAKEN NOTE OF ON WHICH THE ASS ESSEE'S EXPLANATIONS ARE REJECTED AND ADDITIONS/DISALLOWANC ES ARE MADE. APPLYING THE PRINCIPLES LAID DOWN BY THE FUL L BENCH OF THIS COURT AS WELL AS THE OBSERVATIONS OF THE PU NJAB AND HARYANA HIGH COURT, WE FIND THAT IF THE ENTIRE MATE RIAL HAD BEEN PLACED BY THE ASSESSEE BEFORE THE ASSESSING OF FICER AT THE TIME WHEN THE ORIGINAL ASSESSMENT WAS MADE AND THE ASSESSING OFFICER APPLIES HIS MIND TO THAT MATERIAL AND ACCEPTED THE VIEW CANVASSED BY THE ASSESSEE, THEN M ERELY BECAUSE HE DID EXPRESS THIS IN THE ASSESSMENT ORDER , THAT ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 25 BY ITSELF WOULD NOT GIVE HIM A GROUND TO CONCLUDE T HAT INCOME HAS ESCAPED ASSESSMENT AND, THEREFORE, THE ASSESSMENT NEEDED TO BE REOPENED. ON THE OTHER HAND , IF THE ASSESSING OFFICER DID NOT APPLY HIS MIND AND CO MMITTED A LAPSE, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE MADE TO SUFFER THE CONSEQUENCES OF THAT LAPSE. 2.18. THE HONBLE DELHI HIGH COURT IN CONSOLIDATED PHOTO AND FINVEST LTD. [2006] 281 ITR 394 (DELHI) HELD AS UNDER: 'IN THE LIGHT OF THE AUTHORITATIVE PRONOUNCEMENTS OF THE SUPREME COURT REFERRED TO ABOVE, WHICH ARE BINDING UPON US AND THE O BSERVATIONS MADE BY THE HIGH COURT OF GUJARAT WITH WHICH WE FIND OU RSELVES IN RESPECTFUL AGREEMENT, THE ACTION INITIATED BY THE ASS ESSING OFFICER FOR REOPENING THE ASSESSMENT CANNOT BE SAID TO BE EITHER INCOMPETENT OR OTHERWISE IMPROPER TO CALL FOR INTERFERENCE BY A WRI T COURT. THE ASSESSING OFFICER HAS IN THE REASONED ORDER PASSED BY HIM INDICATED THE BASIS ON WHICH INCOME EXIGIBLE TO TAX HAD IN HIS OPINI ON ESCAPED ASSESSMENT. THE ARGUMENT THAT THE PROPOSED REOPENING O F ASSESSMENT WAS BASED ONLY UPON A CHANGE OF OPINION HAS NOT IMPRE SSED US. THE ASSESSMENT ORDER DID NOT ADMITTEDLY ADDRESS ITSELF TO THE QUESTION WHICH THE ASSESSING OFFICER PROPOSES TO EXAMINE IN THE COURSE OF REASSESSMENT PROCEEDINGS. THE SUBMISSION OF MR. VOHRA THAT EVEN WHEN THE ORDER OF ASSESSMENT DID NOT RECORD ANY EXPLICIT OPINION ON THE ASPECTS NOW SOUGHT TO BE EXAMINED, IT MUST BE PRESU MED THAT THOSE ASPECTS WERE PRESENT TO THE MIND OF THE ASSESSING OFF ICER AND HAD BEEN HELD IN FAVOUR OF THE ASSESSEE IS TOO FAR-FETCHED A PR OPOSITION TO MERIT ACCEPTANCE. THERE MAY INDEED BE A PRESUMPTION THAT THE ASSESSMENT PROCEEDINGS HAVE BEEN REGULARLY CONDUCTED, BUT THERE CAN BE NO PRESUMPTION THAT EVEN WHEN THE ORDER OF ASSESSMENT IS SILENT, ALL POSSIBLE ANGLES AND ASPECTS OF A CONTROVERSY HAD BE EN EXAMINED AND DETERMINED BY THE ASSESSING OFFICER. IT IS TRITE TH AT A MATTER IN ISSUE CAN BE VALIDLY DETERMINED ONLY UPON APPLICATION OF MIND BY THE AUTHORITY DETERMINING THE SAME. APPLICATION OF MIND IS, IN TUR N, BEST ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 26 DEMONSTRATED BY DISCLOSURE OF MIND, WHICH IS BEST DON E BY GIVING REASONS FOR THE VIEW WHICH THE AUTHORITY IS TAKING. IN CASES WHERE THE ORDER PASSED BY A STATUTORY AUTHORITY IS SILENT AS T O THE REASONS FOR THE CONCLUSION IT HAS DRAWN, IT CAN WELL BE SAID THAT THE AUTHORITY HAS NOT APPLIED ITS MIND TO THE ISSUE BEFORE IT NOR FORMED A NY OPINION. THE PRINCIPLE THAT A MERE CHANGE OF OPINION CANNOT BE A B ASIS FOR REOPENING COMPLETED ASSESSMENTS WOULD BE APPLICABLE ONLY TO SITUATIONS WHERE THE ASSESSING OFFICER HAS APPLIED HIS MIND AND TAKEN A CONSCIOUS DECISION ON A PARTICULAR MATTER IN ISSUE. IT WILL HAVE NO APPLICATION WHERE THE ORDER OF ASSESSMENT DOES NOT AD DRESS ITSELF TO THE ASPECT WHICH IS THE BASIS FOR REOPENING OF THE ASSESSM ENT, AS IS THE POSITION IN THE PRESENT CASE. IT IS IN THAT VIEW INCO NSEQUENTIAL WHETHER OR NOT THE MATERIAL NECESSARY FOR TAKING A DECISION WAS AVAILABLE TO THE ASSESSING OFFICER EITHER GENERALLY OR IN THE FORM OF A REPLY TO THE QUESTIONNAIRE SERVED UPON THE ASSESSEE. WHAT IS IMPOR TANT IS WHETHER THE ASSESSING OFFICER HAD BASED ON THE MATERIAL AVAIL ABLE TO HIM TAKEN A VIEW. IF HE HAD NOT DONE SO, THE PROPOSED REOPENING CANNOT BE ASSAILED ON THE GROUND THAT THE SAME IS BASED ONLY ON A CHANGE OF OPINION.' 2.19. FROM THE FOREGOING DISCUSSION, THE CLEAR POSI TION EMERGES AS UNDER: (1) REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIATE D IN CASE RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1) AND NO SCR UTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES THERE IS NO CHANGE OF OPINIO N. (2) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CASE THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND IS DECIDED IN FAVOUR OF THE ASSESSEE. REASSESSMENT PROCEEDINGS IN THE SAID CAS ES WILL BE HIT BY THE PRINCIPLE OF 'CHANGE OF OPINION'. (3) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CASE AN ISSUE OR QUERY IS RAISED AND ANSWERED BY THE ASSESSEE IN ORIGINAL A SSESSMENT PROCEEDINGS BUT THEREAFTER THE ASSESSING OFFICER DOE S NOT MAKE ANY ADDITION IN THE ASSESSMENT ORDER. IN SUCH SITUATIONS IT SHOULD BE ACCEPTED THAT THE ISSUE WAS EXAMINED BUT THE ASSESSI NG OFFICER DID NOT FIND ANY GROUND OR REASON TO MAKE ADDITION OR REJEC T THE STAND OF THE ASSESSEE. HE FORMS AN OPINION. THE REASSESSMENT WILL BE INVALID BECAUSE THE ASSESSING OFFICER HAD FORMED AN OPINION IN THE ORI GINAL ASSESSMENT, THOUGH HE HAD NOT RECORDED HIS REASONS. ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 27 2.20. THUS, WHERE AN ASSESSING OFFICER INCORRECTLY OR ERRONEOUSLY APPLIES LAW OR COMES TO A WRONG CONCLUS ION AND INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT , RESORT TO SECTION 263 OF THE ACT IS AVAILABLE AND S HOULD BE RESORTED TO. BUT INITIATION OF REASSESSMENT PROCEED INGS WILL BE INVALID ON THE GROUND OF CHANGE OF OPINION. HER E A DISTINCTION HAS TO BE DRAWN BETWEEN ERRONEOUS APPLICATION/INTERPRETATION /UNDERSTANDING OF LAW AN D CASES WHERE FRESH OR NEW FACTUAL INFORMATION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER SUBSEQUENT TO TH E PASSING OF THE ASSESSMENT ORDER. IF NEW FACTS, MATE RIAL OR INFORMATION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER, WHICH WAS NOT ON RECORD AND AVAILABLE AT T HE TIME OF THE ASSESSMENT ORDER, THE PRINCIPLE OF 'CHANGE O F OPINION' WILL NOT APPLY. THE REASON IS THAT 'OPINIO N' IS FORMED ON FACTS. 'OPINION' FORMED OR BASED ON WRONG AND INCORRECT FACTS OR WHICH ARE BELIED AND UNTRUE DO N OT GET PROTECTION AND COVER UNDER THE PRINCIPLE OF 'CHANGE OF OPINION'. FACTUAL INFORMATION OR MATERIAL WHICH WAS INCORRECT OR WAS NOT AVAILABLE WITH THE ASSESSING O FFICER AT THE TIME OF ORIGINAL ASSESSMENT WOULD JUSTIFY INITI ATION OF ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 28 REASSESSMENT PROCEEDINGS. THE REQUIREMENT IN SUCH C ASES IS THAT THE INFORMATION OR MATERIAL AVAILABLE SHOUL D RELATE TO MATERIAL FACTS. THE EXPRESSION 'MATERIAL FACTS' MEA NS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADV ERSE EFFECT ON THE ASSESSEE BY A HIGHER ASSESSMENT OF IN COME THAN THE ONE ACTUALLY MADE. CORRECT MATERIAL FACTS CAN BE ASCERTAINED FROM THE ASSESSMENT RECORDS ALSO AND IT IS NOT NECESSARY THAT THE SAME MAY COME FROM A THIRD PERSO N OR SOURCE, I.E., FROM SOURCE OTHER THAN THE ASSESSMENT RECORDS. HOWEVER, IN SUCH CASES, THE ONUS WILL BE O N THE REVENUE TO SHOW THAT THE ASSESSEE HAD STATED INCORR ECT AND WRONG MATERIAL FACTS RESULTING IN THE ASSESSING OFF ICER PROCEEDING ON THE BASIS OF FACTS, WHICH ARE INCORRE CT AND WRONG. THE REASONS RECORDED AND THE DOCUMENTS ON RE CORD ARE OF PARAMOUNT IMPORTANCE AND WILL HAVE TO BE EXA MINED TO DETERMINE WHETHER THE STAND OF THE REVENUE IS CO RRECT. A DECISION FROM HONBLE DELHI HIGH COURT DATED SEPTEM BER 26, 2011 IN DALMIA P. LTD. V. CIT [2012] 348 ITR 46 9 (DELHI) AND ANOTHER DECISION FROM HONBLE JURISDICT IONAL HIGH COURT DATED NOVEMBER 8, 2011, IN INDIAN HUME P IPE CO. LTD. V. ASST. CIT [2012] 348 ITR 439 (BOM) ARE TWO SUCH ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 29 CASES, WHICH THROWS LIGHT ON THE ISSUE. IN THE FIRS T CASE, THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT HAD MA DE ADDITION OF RS. 19,86,551 UNDER SECTION 40(1) ON AC COUNT OF UNCONFIRMED SUNDRY CREDITORS. THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER NOTICING THAT UNCO NFIRMED SUNDRY CREDITORS, OF WHICH DETAILS, ETC., WERE NOT FURNISHED, WERE TO THE EXTENT OF RS. 52,84,058 AND NOT RS. 19, 86,551. IN INDIAN HUME PIPE CO. LTD. (SUPRA), AFTER VERIFIC ATION THE CLAIM UNDER SECTION 54EC WAS ALLOWED BUT SUBSEQUENT LY ON EXAMINATION IT TRANSPIRED THAT THE SECOND PROPERTY WAS PURCHASED PRIOR TO THE DATE OF SALE. THE AFORESAID DECISIONS/ FACTS CASES MUST BE DISTINGUISHED FROM C ASES WHERE THE MATERIAL FACTS ON RECORD ARE CORRECT BUT THE ASSESSING OFFICER DID NOT DRAW PROPER LEGAL INFEREN CE OR DID NOT APPRECIATE THE IMPLICATIONS OR DID NOT APPLY TH E CORRECT LAW. THE SECOND CATEGORY WILL BE A CASE OF 'CHANGE OF OPINION' AND CANNOT BE REOPENED FOR THE REASON THAT THE ASSESSEE, AS REQUIRED, HAS PLACED ON RECORD PRIMARY FACTUAL MATERIAL BUT ON THE BASIS OF LEGAL UNDERSTANDING, T HE ASSESSING OFFICER HAS TAKEN A PARTICULAR LEGAL VIEW . HOWEVER, AS STATED ABOVE, AN ERRONEOUS DECISION, WH ICH IS ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 30 ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, C AN BE MADE SUBJECT-MATTER OF ADJUDICATION UNDER SECTION 2 63 OF THE ACT. 2.21. A DIVISION BENCH OF HONBLE DELHI HIGH COUR T IN NEW LIGHT TRADING CO. V. CIT [2002] 256 ITR 391 (DE LHI), REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN CIT V. P. V. S. BEEDIES P. LTD. [1999] 237 ITR 13 (SC) AND MADE FOLLOWING OBSERVATIONS. (PAGE 392) : 'IN THE CASE OF CIT V. P. V. S. BEEDIES P. LTD. [19 99] 237 ITR 13 (SC), THE APEX COURT HELD THAT THE AUDIT PARTY CAN POINT OUT A FACT, WHICH HAS BEEN OVERLOOKED BY THE INCOME-TAX OFFICER IN THE ASSESSME NT. THOUGH THERE CANNOT BE ANY INTERPRETATION OF LAW BY THE AUDIT PAR TY, IT IS ENTITLED TO POINT OUT A FACTUAL ERROR OR OMISSION IN THE ASSESSM ENT AND REOPENING OF A CASE ON THE BASIS OF FACTUAL ERROR OR OMISSION POINT ED OUT BY THE AUDIT PARTY IS PERMISSIBLE UNDER LAW. AS THE TRIBUNAL HAS R IGHTLY NOTICED, THIS WAS NOT A CASE OF THE ASSESSING OFFICER MERELY ACTI NG AT THE BEHEST OF THE AUDIT PARTY OR ON ITS REPORT. IT HAS INDEPENDENTLY E XAMINED THE MATERIALS COLLECTED BY THE AUDIT PARTY IN ITS REPORT AND HAS CO ME TO AN INDEPENDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME. THE AN SWER TO THE QUESTION IS, THEREFORE, IN THE AFFIRMATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' AS RECORDED ABOVE, THE REASONS RECORDED OR THE DOCUM ENTS AVAILABLE MUST SHOW NEXUS THAT IN FACT THEY ARE GERMANE AND RELE VANT TO THE SUBJECTIVE OPINION FORMED BY THE ASSESSING OFFICER R EGARDING ESCAPEMENT OF INCOME. AT THE SAME TIME, IT IS NOT THE REQUIREMEN T THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED ESCAPEMENT OF INCOME BY RECORDING CONCLUSIVE FINDINGS. THE FINAL ASCERTAINME NT TAKES PLACE WHEN THE FINAL OR REASSESSMENT ORDER IS PASSED. IT IS ENO UGH IF THE ASSESSING OFFICER CAN SHOW TENTATIVELY OR PRIMA FACIE ON THE BA SIS OF THE REASONS RECORDED AND WITH REFERENCE TO THE DOCUMENTS AVAILABL E ON RECORD THAT INCOME HAS ESCAPED ASSESSMENT. ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 31 THIS BRINGS US TO THE OBSERVATIONS OF THE DELHI HIG H COURT IN KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI ) [FB] WHICH READ AS UNDER (PAGE 18): 'THE BOARD IN EXERCISE OF ITS JURISDICTION UNDER THE AFOREMENTIONED PROVISIONS HAD ISSUED THE CIRCULAR ON OCTOBER 31, 1989. THE SAID CIRCULAR ADMITTEDLY IS BINDING ON THE REVENUE. THE AUTHORITY, THEREFORE, COUL D NOT HAVE TAKEN A VIEW, WHICH WOULD RUN COUNTER TO THE MANDATE OF THE SAID CIR CULAR. FROM A PERUSAL OF CLAUSE 7.2 OF THE SAID CIRCULAR IT WOULD APPEAR THAT IN NO UNCERTAIN TERMS IT WAS STAT ED AS TO UNDER WHAT CIRCUMSTANCES THE AMENDMENTS HAD BEEN CARRIED OUT, I.E., ONLY WITH A VIEW TO ALLAY THE FE ARS THAT THE OMISSION OF THE EXPRESSION 'REASON TO BELIEVE' FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OF FICER TO REOPEN PAST ASSESSMENT ON MERE CHANGE OF OPINION. I T IS, THEREFORE, EVIDENT THAT EVEN ACCORDING TO THE CBDT A MERE CHANGE OF OPINION CANNOT FORM THE BASIS FOR REOPENI NG A COMPLETED ASSESSMENT. 2.22 . ANOTHER ASPECT OF THE MATTER ALSO CANNOT BE LOST SIGHT OF. A STATUTE CONFERRING AN ARBITRARY POWER M AY BE HELD TO BE ULTRA VIRUS ARTICLE 14 OF THE CONSTITUTI ON OF INDIA. IF TWO INTERPRETATIONS ARE POSSIBLE, THE INTERPRETA TION WHICH UPHOLDS CONSTITUTIONALITY, IT IS TRITE, SHOULD BE F AVOURED. IN ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 32 THE EVENT IT IS HELD THAT BY REASON OF SECTION 147 IF THE INCOME-TAX OFFICER EXERCISES ITS JURISDICTION FOR I NITIATING PROCEEDING FOR RE-ASSESSMENT ONLY UPON MERE CHANGE OF OPINION, THE SAME MAY BE HELD TO BE UNCONSTITUTIONA L. WE ARE, THEREFORE, OF THE OPINION THAT SECTION 147 OF THE ACT DOES NOT POSTULATE CONFERMENT OF POWER UPON THE ASS ESSING OFFICER TO INITIATE REASSESSMENT PROCEEDING UPON HI S MERE CHANGE OF OPINION. THE HONBLE APEX COURT THEREAFT ER REFERRED TO THE SUBSEQUENT DECISION IN INDIAN AND E ASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) WH EREIN IT WAS OBSERVED THAT SOME OF THE OBSERVATIONS MADE IN KALYANJI MAVJI (SUPRA) WERE FAR TOO WIDE AND THE ST ATUTE DID NOT PERMIT REAPPRAISAL OF MATERIAL CONSIDERED BY TH E ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT. T HE OBSERVATIONS IN KALYANJI MAVIJI (SUPRA) THAT REOPEN ING WOULD COVER A CASE 'WHERE INCOME HAS ESCAPED ASSESS MENT DUE TO THE OVERSIGHT, INADVERTENCE OR MISTAKE' WAS TOO BROADLY EXPRESSED AND DID NOT LAY DOWN THE CORRECT LAW. IT WAS CLARIFIED AND OBSERVED AT PAGE 1004 IN INDIAN A ND EASTERN NEWSPAPER SOCIETY [1979] 119 ITR 996 (SC) A S UNDER : ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 33 'NOW, IN THE CASE BEFORE US, THE INCOME-TAX OFFICER HA D, WHEN HE MADE THE ORIGINAL ASSESSMENT, CONSIDERED THE PROVISIONS OF SECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE APP LICATION OF THOSE PROVISIONS WOULD AMOUNT TO A CHANGE OF OPINION ON MA TERIAL ALREADY CONSIDERED BY HIM. THE REVENUE CONTENDS THAT IT IS OPEN TO HIM TO DO SO, AND ON THAT BASIS TO REOPEN THE ASSESSMENT UNDER SEC TION 147(B). RELIANCE IS PLACED ON KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC), WHERE A BENCH OF TWO LEARNED JUDGES OF THIS COUR T OBSERVED THAT A CASE WHERE INCOME HAD ESCAPED ASSESSMENT DUE TO THE 'O VERSIGHT, INADVERTENCE OR MISTAKE' OF THE INCOME-TAX OFFICER M UST FALL WITHIN SECTION 34(1)(B) OF THE INDIAN INCOME-TAX ACT, 1922. IT APPEARS TO US, WITH RESPECT, THAT THE PROPOSITION IS STATED TOO WIDEL Y AND TRAVELS FARTHER THAN THE STATUTE WARRANTS IN SO FAR AS IT CAN BE SAI D TO LAY DOWN THAT IF, ON REAPPRAISING THE MATERIAL CONSIDERED BY HIM DURI NG THE ORIGINAL ASSESSMENT, THE INCOME-TAX OFFICER DISCOVERS THAT HE HAS COMMITTED AN ERROR IN CONSEQUENCE OF WHICH INCOME HAS ESCAPED ASSES SMENT IT IS OPEN TO HIM TO REOPEN THE ASSESSMENT. IN OUR OPINION, AN ERROR DISCOVERED 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 MA HARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 ITR 1 (SC), CIT V. A. RAM AN 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. ANY OBSERVATIONS IN KALYANJI MAVJI AND CO. V. CIT [ 1976] 102 ITR 287 (SC) SUGGESTING THE CONTRARY DO NOT, WE SAY WITH RESP ECT, LAY DOWN THE CORRECT LAW.' 2.23. IN A. L. A. FIRM (SUPRA), THE HONBLE APEX C OURT EXPLAINED THAT THERE WAS NO DIFFERENCE BETWEEN THE OBSERVATIONS OF THE SUPREME COURT IN KALYANJI MAVIJ I [1976] 102 ITR 287 (SC) AND INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1979] 119 ITR 996 (SC), AS FAR AS PRO POSITION (4) IS CONCERNED. IT WAS HELD THAT (PAGE 297 OF 189 ITR) : 'WE HAVE POINTED OUT EARLIER THAT KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC) OUTLINES FOUR SITUATIONS IN WHICH ACTION UNDER SECTION 34(1)(B) CAN BE VALIDLY INITIATED. THE INDIAN EASTER N NEWSPAPER ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 34 SOCIETY'S CASE [1979] 119 ITR 996 (SC) HAS ONLY INDIC ATED THAT PROPO SITION (2) OUTLINED IN THIS CASE AND EXTRACTED EARLIER MAY HAVE BEEN SOMEWHAT WIDELY STATED ; IT HAS NOT CAST ANY DOUBT ON THE OTHER THREE PROPOSITIONS SET OUT IN KALYANJI MAVJI'S CASE. THE FACTS OF THE PRESENT CASE SQUARELY FALL WITHIN THE SCOPE OF PROPOSITIONS 2 AND 4 ENUNCIATED IN KALYANJI MAVIJI'S CASE [1976] 1 02 ITR 287 (SC). PROPOSITION (2) MAY BE BRIEFLY SUMMARIZED AS PERMIT TING ACTION EVEN ON A 'MERE CHANGE OF OPINION'. THIS IS WHAT HAS BE EN DOUBTED IN THE INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1 979] 119 ITR 996 (SC) AND WE SHALL DISCUSS ITS APPLICATION TO THIS CASE A LITTLE LATER. BUT, EVEN LEAVING THIS OUT OF CONSIDERATION, THERE CAN BE NO DOUBT THAT THE PRESENT CASE IS SQUARELY COVERED BY P ROPOSITION (4) SET OUT IN KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC). THIS PROPOSITION CLEARLY ENVISAGES A FORMATION OF OPINIO N BY THE INCOME- TAX OFFICER ON THE BASIS OF MATERIAL ALREADY ON REC ORD PROVIDED THE FORMATION OF SUCH OPINION IS CONSEQUENT ON 'INFORMAT ION' IN THE SHAPE OF SOME LIGHT THROWN ON ASPECTS OF FACTS OR LAW WHICH THE INCOME-TAX OFFICER HAD NOT EARLIER BEEN CONSCIOUS OF . TO GIVE A COUPLE OF ILLUSTRATIONS ; SUPPOSE AN INCOME-TAX OFF ICER, IN THE ORIGINAL ASSESSMENT, WHICH IS A VOLUMINOUS ONE INVOL VING SEVERAL CONTENTIONS, ACCEPTS A PLEA OF THE ASSESSEE IN REGAR D TO ONE OF THE ITEMS THAT THE PROFITS REALISED ON THE SALE OF A HOUSE IS A CAPITAL REALISATION NOT CHARGEABLE TO TAX. SUBSEQUENTLY, HE F INDS, IN THE FOREST OF PAPERS FILED IN CONNECTION WITH THE ASSESS MENT, SEVERAL INSTANCES OF EARLIER SALES OF HOUSE PROPERTY BY THE A SSESSEE. THAT WOULD BE A CASE WHERE THE INCOME-TAX OFFICER DERIVES INFORMATION FROM THE RECORD ON AN INVESTIGATION OR ENQUIRY INTO FACTS NOT ORIGINALLY UNDERTAKEN. AGAIN, SUPPOSE THE INCOME-TAX OFFICER ACCEPTS THE PLEA OF AN ASSESSEE THAT A PARTICULAR R ECEIPT IS NOT INCOME LIABLE TO TAX. BUT, ON FURTHER RESEARCH INTO L AW HE FINDS THAT THERE WAS A DIRECT DECISION HOLDING THAT CATEGORY OF RECEIPT TO BE AN INCOME RECEIPT. HE WOULD BE ENTITLED TO REOPEN THE A SSESSMENT UNDER SECTION 147(B) BY VIRTUE OF PROPOSITION (4) O F KALYANJI MAVJI. THE FACT THAT THE DETAILS OF SALES OF HOUSE PROPERTIES WERE ALREADY IN THE FILE OR THAT THE DECISION SUBSEQUENTLY COME ACROSS BY HIM WAS ALREADY THERE WOULD NOT AFFECT THE POSITION BECAUSE THE INFORMATION THAT SUCH FACTS OR DECISION EXISTED COMES TO HIM ONLY MUCH LATER. WHAT THEN, IS THE DIFFERENCE BETWEEN THE SITUATIONS EN VISAGED IN PROPOSITIONS (2) AND (4) OF KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC). THE DIFFERENCE, IF ONE KEEPS IN MIND THE TR END OF THE JUDICIAL DECISIONS, IS THIS. PROPOSITION (4) REFERS TO A CASE WHERE THE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 35 INCOME- TAX OFFICER INITIATES REASSESSMENT PROCEEDI NGS IN THE LIGHT OF 'INFORMATION' OBTAINED BY HIM BY AN INVESTIGATION INTO MATERIAL ALREADY ON RECORD OR BY RESEARCH INTO THE LAW APPLICA BLE THERETO WHICH HAS BROUGHT OUT AN ANGLE OR ASPECT THAT HAD BEEN MISSED EARLIER, FOR E.G., AS IN THE TWO MADRAS DECISIONS R EFERRED TO EARLIER. PROPOSITION (2) NO DOUBT COVERS THIS SITUATION ALSO BUT IT IS SO WIDELY EXPRESSED AS TO INCLUDE ALSO CASES IN WHICH THE INCOME -TAX OFFICER, HAVING CONSIDERED ALL THE FACTS AND LAW, ARRIVES AT A PARTICULAR CONCLUSION, BUT REINITIATES PROCEEDINGS BECAUSE, ON A REAPPRAISAL OF THE SAME MATERIAL WHICH HAD BEEN CONSIDERED EARLIER AND IN THE LIGHT OF THE SAME LEGAL ASPECTS TO WHICH HIS ATTENTION H AD BEEN DRAWN EARLIER, HE COMES TO A CONCLUSION THAT AN ITEM OF INCOME WHICH HE HAD EARLIER CONSCIOUSLY LEFT OUT FROM THE EARLI ER ASSESSMENT SHOULD HAVE BEEN BROUGHT TO TAX. IN OTHER WORDS, AS POINTED OUT IN INDIAN AND EASTERN NEWSPAPER SOCIETY 'S CASE [1979] 119 ITR 996 (SC), IT ALSO ROPES IN CASES OF A 'BARE OR MERE CHANGE OF OPINION' WHERE THE INCOME-TAX OFFICER (VERY OFTEN A S UCCESSOR OFFICER) ATTEMPTS TO REOPEN THE ASSESSMENT BECAUSE T HE OPINION FORMED EARLIER BY HIMSELF (OR, MORE OFTEN, BY A PRED ECESSOR INCOME- TAX OFFICER) WAS, IN HIS OPINION, INCORRECT. JUDICIA L DECISIONS HAD CONSISTENTLY HELD THAT THIS COULD NOT BE DONE AND THE INDIAN AND EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) HAS WARNED THAT THIS LINE OF CASES CANNOT BE TAKEN TO HAV E BEEN OVERRULED BY KALYANJI MAVJI [1976] 102 ITR 287 (SC). THE SECOND PARAGRAPH FROM THE JUDGMENT IN THE INDIAN AND EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) EAR LIER EXTRACTED HAS ALSO REFERENCE ONLY TO THIS SITUATION AND INSISTS UPON THE NECESSITY OF SOME INFORMATION WHICH MAKE THE INCOME-TA X OFFICER REALISE THAT HE HAS COMMITTED AN ERROR IN THE EARLIER ASSESSMENT. THIS PARAGRAPH DOES NOT IN ANY WAY AFFECT THE PRINCIPL E ENUMERATED IN THE TWO MADRAS CASES CITED WITH APPROV AL IN ANANDJI HARIDAS 21 STC 326. EVEN MAKING ALLOWANCES FOR THIS LIMITATION PLACED ON THE OBSERVATIONS IN KALYANJI MAVJI, THE POS ITION AS SUMMARISED BY THE HIGH COURT IN THE FOLLOWING WORDS RE PRESENTS, IN OUR VIEW, THE CORRECT POSITION IN LAW (AT PAGE 629 O F 102 ITR) : THE RESULT OF THESE DECISIONS IS THAT THE STATUTE DOES NOT REQUIRE THAT THE INFORMATION MUST BE EXTRANEOUS TO THE RECORD. IT IS ENOUGH IF THE MATERIAL, ON THE BASIS OF WHICH THE REASSESSMENT PROCEE DINGS ARE SOUGHT TO BE INITIATED, CAME TO THE NOTICE OF THE INC OME-TAX OFFICER SUBSEQUENT TO THE ORIGINAL ASSESSMENT. IF THE INCOME -TAX OFFICER HAD CONSIDERED AND FORMED AN OPINION ON THE SAID MATERI AL IN THE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 36 ORIGINAL ASSESSMENT ITSELF, THEN HE WOULD BE POWERLES S TO START THE PROCEEDINGS FOR THE REASSESSMENT. WHERE, HOWEVER, THE I NCOME-TAX OFFICER HAD NOT CONSIDERED THE MATERIAL AND SUBSEQUEN TLY CAME BY THE MATERIAL FROM THE RECORD ITSELF, THEN SUCH A CASE WOULD FALL WITHIN THE SCOPE OF SECTION 147(B) OF THE ACT'.' (EM PHASIS SUPPLIED) THE AFORESAID OBSERVATIONS ARE A COMPLETE ANSWER TO THE ISSUE THAT IF A PARTICULAR SUBJECT-MATTER, ITEM , DEDUCTION OR CLAIM IS NOT EXAMINED BY THE ASSESSING OFFICER, IT WILL NEVERTHELESS BE A CASE OF CHANGE OF OPINION AND THE REASSESSMENT PROCEEDINGS WILL BE BARRED. 2.24. WE ARE CONSCIOUS OF THE FACT THAT THE AFORE SAID OBSERVATIONS HAVE BEEN MADE IN THE CONTEXT OF SECTI ON 147(B) WITH REFERENCE TO THE TERM 'INFORMATION' AND CONCEPTUALLY THERE IS DIFFERENCE IN SCOPE AND AMBIT OF REOPENING PROVISIONS INCORPORATED WITH EFFECT FROM APRIL 1, 1989. HOWEVER, IT WAS OBSERVED BY THE HONBLE APEX COURT IN KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) THAT THE AMENDED PROVISIONS ARE WIDER. WHAT IS IMPORTANT AND RELEVANT IS THAT THE PRINCIPLE OF 'CHANGE OF OPINIO N' WAS EQUALLY APPLICABLE UNDER THE UN-AMENDED PROVISIONS. THE SUPREME COURT WAS, THEREFORE, CONSCIOUS OF THE SAID PRINCIPLE, WHEN THE OBSERVATIONS MENTIONED ABOVE IN A. L. A. FIRM [1991] 189 ITR 285 WERE MADE. ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 37 2.25. UNDER THE NEW PROVISIONS OF SECTION 147, AN ASSESSMENT CAN BE REOPENED IF THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT; BUT IF HE WANTS TO DO SO AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, HE CAN DO SO ONLY IF THE ASSESSEE HAS FALLEN SHORT OF HIS DUTY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. IT DOES NOT FOLLOW THAT HE CANNOT REOPE N THE ASSESSMENT EVEN WITHIN THE PERIOD OF FOUR YEARS AS AFORESAID IF HE HAS REASON TO BELIEVE THAT THE ASSE SSEE HAS FAILED TO MAKE THE REQUISITE DISCLOSURE. ALL THAT T HE SECTION SAYS IS THAT IN A CASE WHERE THE ASSESSMENT IS SOUG HT TO BE REOPENED AFTER THE PERIOD OF FOUR YEARS, THE ONLY R EASON AVAILABLE TO THE ASSESSING OFFICER IS THE NON-DISCL OSURE OF MATERIAL FACTS ON THE PART OF THE ASSESSEE. THE AC T PLACES A GENERAL DUTY ON EVERY ASSESSEE TO FURNISH FULL AND TRUE PARTICULARS ALONG WITH THE RETURN OF INCOME OR IN T HE COURSE OF THE ASSESSMENT PROCEEDINGS SO THAT THE ASSESSING OFFICER IS ENABLED TO COMPUTE THE CORRECT AMOUNT OF INCOME ON WHICH THE ASSESSEE SHALL PAY TAX. THE POSITION HAS BEEN FURTHER CLARIFIED BY THE PROVISO ITSELF IN A CASE W HERE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 38 ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 144 OF THE ACT OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSE SSMENT YEAR, NO ACTION SHALL BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH YEAR BY THE REASON OF FAILURE ON THE PART OF THE AS SESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE IS SUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IT IS ALSO NOT ED THAT THE SCOPE OF NEWLY SUBSTITUTED (W.E.F. 01/04/1989) SECTION 147 HAS BEEN ELABORATED IN DEPARTMENT CIRCULAR NUMB ER 549 DATED 31 ST OCTOBER, 1989, MEANING THEREBY, ON OR AFTER 01/04/1989, INITIATION OF REASSESSMENT PROCEEDINGS HAS TO BE GOVERNED BY THE PROVISIONS OF SECTION 147 TO 151 AS SUBSTITUTED (AMENDED) W.E.F. 01/04/1989. STILL, PO WER U/S 147 OF THE ACT, THOUGH VERY WIDE BUT NO PLENARY. W E ARE AWARE THAT HONBLE GUJARAT HIGH COURT IN PRAFUL CHU NILAL PATEL: VASANT CHUNILAL PATEL VS ACIT (1999) 236 ITR 82, 840 (GUJ.) EVEN WENT TO THE EXTENT THAT ACTION UNDE R MAIN SECTION 147 IS POSSIBLE IN SPITE OF COMPLETE DISCLO SURE OF ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 39 MATERIAL FACTS. THE PRIMARY CONDITION OF REASONABLE BELIEF HAVING NEXUS WITH THE MATERIAL ON RECORD IS STILL O PERATIVE. HOWEVER, WE ARE OF THE VIEW, THAT MERE FRESH APPLIC ATION OF MIND TO THE SAME SET OF FACTS OR MERE CHANGE OF OPI NION DOES NOT CONFER JURISDICTION TO THE ASSESSING OFFIC ER EVEN UNDER THE POST 1989 SECTION 147 OF THE ACT. OUR VI EW FIND SUPPORT FROM FOLLOWING DECISIONS:- A. JINDAL PHOTO FILMS LTD. VS DCIT (1998) 234 ITR 170 (D EL.), B. GARDEN SILK MILLS PVT. LTD. VS DCIT (1999) 151 CTR (G UJ.) 533, C. GOVIND CHHAPABHAI PATEL VS DCIT 240 ITR 628, 630 (GUJ.), D. FORAMER VS CIT (2001) 247 ITR 436 (ALL.), AFFIRMED IN CIT VS FORAMER FINANCE (2003) 264 ITR 566, 567 (SC), E. IPCA LABORATORIES VS DCIT (2001) 251 ITR 416 (BOM.), F. RITU INVESTMENT PVT. LTD.(2012) 345 ITR 214 (DEL.), G. KETAN B. MEHTA VS ACIT (2012) 346 ITR 254 (GUJ.), H. MS. PRAVEEN P. BHARUCHA VS DCIT (2012) 348 ITR 325 (BOM.), I. CIT VS USHA INTERNATIONAL LTD. 348 ITR 485 (DEL.), ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 40 J. AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO (2013) 3 55 ITR 348 (GUJ.), K. B.B.C. WORLD NEWS LTD. VS ASST. DIT (2014) 362 ITR 57 7 (DEL.). 2.26. IDENTICAL RATIO WAS LAID DOWN IN CIT VS MALA YALA MANORMA COMPANY LTD. (2002) 253 ITR 378 (KER.) WE THINK THIS THREAD RUNS THROUGH THE VARIOUS PROVISIO NS OF THE ACT. BUT EXPLANATION 1 TO THE SECTION CONFINES THE DUTY TO THE DISCLOSURE OF ALL PRIMARY AND MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, FULLY AND TRULY. AS TO WHAT ARE MATERIAL OR PRIMARY FACTS WOULD DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND NO UNIVERSAL FORMULA MAY BE ATTEMPTED. THE LEGAL OR FACTUAL INFERENCES FROM THOSE PRIMARY OR MATERIAL FACTS ARE FOR THE ASSESSING OFF ICER TO DRAW IN ORDER TO COMPLETE THE ASSESSMENT AND IT IS NOT FOR THE ASSESSEE TO ADVISE HIM, FOR OBVIOUS REASONS. TH E EXPLANATION, HOWEVER, CAUTIONS THE ASSESSEE THAT HE CANNOT REMAIN SMUG WITH THE BELIEF THAT SINCE HE HAS PRODU CED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER FROM WHICH MATERIAL OR EVIDENCE COULD HAVE BEEN WITH DUE DILIG ENCE GATHERED BY HIM, HE HAS DISCHARGED HIS DUTY. IT IS FOR HIM ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 41 TO POINT OUT THE RELEVANT ENTRIES WHICH ARE MATERIA L, WITHOUT LEAVING THAT EXERCISE TO THE ASSESSING OFFICER. THE CAVEAT, HOWEVER, IS THAT SUCH PRODUCTION OF BOOKS OF ACCOUN T MAY, IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES, AMOUNT TO FULL AND TRUE DISCLOSURE ; THIS IS CLEAR FROM THE USE OF THE EXPRESSION 'NOT NECESSARILY' IN THE EXPLANATION. TH US, THE QUESTION OF FULL AND TRUE DISCLOSURE OF PRIMARY OR MATERIAL FACTS IS A PURE QUESTION OF FACT, TO BE DETERMINED ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. NO GENERAL PR INCIPLE CAN BE LAID DOWN. IT WAS OBSERVED BY THE HONBLE APEX COURT, IN VARIOUS CASES THAT THERE SHOULD BE SOME ' TANGIBLE MATERIAL' COMING INTO THE POSSESSION OF THE ASSESSI NG OFFICER IN SUCH CASES TO ENABLE HIM TO RESORT TO SE CTION 147 OF THE ACT. DESPITE BEING A CASE OF FULL AND TRUE D ISCLOSURE, TANGIBLE MATERIAL COMING TO THE POSSESSION OF THE A SSESSING OFFICER AFTER HE MADE THE ORIGINAL ASSESSMENT UNDER SECTION 143(3), WOULD INFLUENCE THE OPINION, FORMED OR PRES UMED TO HAVE BEEN FORMED EARLIER, BY THE ASSESSING AUTHORIT Y; HE CAN WITH JUSTIFICATION CHANGE IT, BUT THAT WOULD NO T BE A CASE OF A 'MERE CHANGE OF OPINION' UNGUIDED BY NEW FACTS OR CHANGE IN THE LEGAL POSITION. IT WILL BE A CASE OF THE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 42 ASSESSING AUTHORITY HAVING 'REASON TO BELIEVE', NOTWITHSTANDING THAT FULL AND TRUE PARTICULARS WERE FURNISHED BY THE ASSESSEE WHICH WERE EXAMINED, OR PRESUMED TO BE EXAMINED, BY HIM. THERE WAS A DIVER GENCE OF OPINION AMONGST VARIOUS HIGH COURTS AS TO WHAT CONSTITUTE INFORMATION FOR THE PURPOSES OF SECTIO N 34(1)(B) OF THE 1922 ACT (WHICH CORRESPONDS TO SECTION 147(B ) OF THE 1961 ACT) THE HONBLE APEX COURT IN CWT VS IMPERIA L TOBACCO COMPANY LTD. (1966) 61 ITR 461 HAS NOTED SU CH DIVERGENCE OF OPINION ON THE POINT. HONBLE JURISDI CTIONAL HIGH COURT IN CIT VS SIR MOHAMMAD YUSUF ISMAIL (194 4) 12 ITR 8 (BOM.) HELD THAT MERE CHANGE OF OPINION ON TH E SAME FACTS ARE ON QUESTION OF LAW OR MERE DISCOVERY OF M ISTAKE OF LAW IS NOT SUFFICIENT INFORMATION AND THAT IN ORDER TO SUSTAINED ACTION U/S 34 BY FURTHER HOLDING THAT REASSESSMENT IS NOT PERMISSIBLE. THE HONBLE APEX C OURT IN SIMON CARVES LTD. (1976) 105 ITR 212 HELD THAT ERRO RLESS LEGALLY CORRECT ORDER CANNOT BE REOPENED, THEREFORE , IT IS SETTLED LAW THAT WITHOUT ANY NEW INFORMATION AND ON THE BASIS OF MERE CHANGE OF OPINION, REOPENING OF ASSES SMENT IS NOT PERMISSIBLE. AS WAS HELD IN CIT VS TTK PRESTIGE LTD. ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 43 (2010) 322 ITR 390 (KARN.) SLP DISMISSED IN 2010 32 2 ITR (ST.) 14 (SC). REFERENCE ALSO MADE TO ASIAN PAINTS LTD. VS DCIT (2009) 308 ITR 195 (BOM.), ANDHRA BANK LTD. VS CIT (1997) 225 ITR 447 (SC). THE OBSERVATIONS OF THE SU PREME COURT ARE A PROTECTION AGAINST THE ABUSE OF POWER; THEY ALSO PROTECT THE REVENUE WHICH CAN, IN THE LIGHT OF SUBS EQUENT COMING INTO LIGHT OF FACTS OR LAW, REOPEN THE ASSES SMENT. IN THE LIGHT OF THE AFORESAID DISCUSSION, SINCE, THERE WAS NO NEW TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WHILE RESORTING TO SECTION 147/148 OF THE ACT, MORE SPECIFICALLY, WHILE FRAMING ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT, THERE WAS FULL DISCLOSURE OF MATERIAL FACT S BY THE ASSESSEE AND ON THE BASIS OF THOSE FACTS, ASSESSMEN T WAS COMPLETED U/S 143(3) OF THE ACT. EVEN OTHERWISE, IT IS NOTED BY THE LD. ASSESSING OFFICER ISSUED STATUTORY NOTIC ES U/S 143(2) AND 142(1) TO WHICH THE ASSESSEE FURNISHED T HE NECESSARY DETAILS AS IS EVIDENT FROM PAGE-1 OF THE ASSESSMENT ORDER ITSELF, THEREFORE, IN OUR HUMBLE O PINION, THE REASSESSMENT IS UNJUSTIFIED AS THE REOPENING WA S DONE BY THE ASSESSING OFFICER BEYOND THE PRESCRIBED PERI OD OF FOUR YEARS, THEREFORE, ON THIS LEGAL ISSUE, THE APP EAL OF THE ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 44 ASSESSEE DESERVES TO BE ALLOWED. OUR VIEW FIND SUPP ORT FROM HONBLE JURISDICTIONAL HIGH COURT IN MISTRY LALJI N ARSI DEVELOPMENT CORPORATION VS ACIT (2010) 323 ITR 194 (BOM.), ANIL RADHA KRISHNAWANI VS ITO (2010) 323 I TR 564 (BOM.), SADBHAV ENGINEERING LTD. VS DCIT (2011) 333 ITR 483 (GUJ.), AAYOJAN DEVELOPERS VS ITO 335 ITR 234 ( GUJ.), CIT VS PI & IC CORPORATION OF UP LTD. (2011) 332 IT R 324 (ALL.), SLP DISMISSED BY HONBLE APEX COURT, KIMPLA S TRENTON FITTINGS LTD. VS ACIT (2012) 340 ITR 299 (B OM.), THUS, CONSIDERING THE TOTALITY OF FACTS AND THE RAT IO LAID DOWN IN THE AFOREMENTIONED JUDICIAL DECISIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 18/05/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 30/05/2016 F{X~{T? P.S/. . . ITA NO.4504/MUM/2014 JAYANT MANILAL GANDHY 45 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI