R.P. SUVARNA, MUMBAI V. CIT (33), MUMBAI

ITA 5536/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4217 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S JADHAVDR
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Depreciation; Question of law; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 147; 148; 144; 139

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.5536/MUM/2015 ASSESSMENT YEAR: 2006-07 MR. R. P. SUVARNA, NO.15, RAJANIGANDHA APTS. T.H. KATARIA MARG, MAHIM, MUMBAI-400016 / VS. ITO-18(3)(3), MUMBAI / ASSESSEE / REVENUE P.A. NO .ANBPS3240G $ % & / ASSESSEE BY NONE $ % & / REVENUE BY SHRI V.S. JADHAV-DR / DATE OF HEARING 28/01/2016 & / DATE OF ORDER: 01/02/2016 & / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 30/10/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, CHALLENGING REOPENING OF ASSESSMENT AFTER E XPIRY OF FOUR YEARS OF AN ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), WHE REIN, NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFIC ER THAT ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 2 THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE THE MATERIAL FACTS FULLY AND TRULY. 2. DURING HEARING OF THIS APPEAL, NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE IN SPITE OF SERVI CE OF NOTICE ISSUED ON 04/01/2016. IT IS SEEM THAT THIS APPEAL WAS FILED BY THE ASSESSEE ON 31/12/2015. THE ASSESS EE HAS MOVED APPLICATION FOR ADJOURNMENT ON THE PLEA T HAT THE COUNSEL FOR THE ASSESSEE WILL REMAIN OUT OF STA TION. THIS APPLICATION WAS FILED ON 18/01/2016, MEANING THEREBY, THE ASSESSEE WAS AWARE WELL IN ADVANCE THA T THE APPEAL WILL BE HEARD ON 28/01/2016. THE ASSESSEE D ID NOT MADE ARRANGEMENT FOR THE EFFECTIVE PROSECUTION OF THE APPEAL, THEREFORE, THE APPLICATION FOR ADJOURNMENT, FILED BY THE ASSESSEE, IS REJECTED. I HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF T HE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD . 2.1. THE LD. DR, SHRI V.S. JADHAV, DEFENDED THE REOPENING AS WELL AS THE ADDITION MADE U/S 50C OF T HE ACT ON THE BASIS OF VALUATION MADE BY THE STAMP DUTY AUTHORITIES. 2.2. I HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE F ACTS, IN BRIEF, ARE THAT THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT ON 07/04/2008 COMPUTING THE INCOM E AT RS.97,200/-. DURING ORIGINAL ASSESSMENT, THE ASSESS EE FURNISHED ALL THE DETAILS, REQUIRED BY THE LD. ASSE SSING ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 3 OFFICER INCLUDING THE COPY OF SALE AGREEMENT DATED 25/01/2005. THE LD. ASSESSING OFFICER AFTER SATISFY ING HIMSELF WITH THE DOCUMENTATION/EXPLANATION OF THE ASSESSEE FRAMED ASSESSMENT U/S 143(3) OF THE ACT. THE LD. ASSESSING OFFICER REOPENED THE ASSESSMENT ON TH E BASIS OF VALUATION ADOPTED BY THE STAMP DUTY AUTHOR ITIES AFTER EXPIRY OF FOUR YEARS. EVEN DURING SCRUTINY ASSESSMENT, THE FACTUAL POSITION WAS EXPLAINED BY T HE ASSESSEE AND CHALLENGED THE REOPENING ON TWO COUNTS FIRSTLY, THE NECESSARY DETAILS/EXPLANATION WERE DUL Y FURNISHED BY THE ASSESSEE DURING ORIGINAL ASSESSMEN T AND SECONDLY, THE REOPENING HAS BEEN DONE AFTER THE EXP IRY OF FOUR YEARS AND THAT TOO WITHOUT RECORDING ANY SATIS FACTION, MORE SPECIFICALLY, WHEN ALL MATERIAL FACTS WERE ALR EADY AVAILABLE WITH THE ASSESSING OFFICER AND NO NEW MAT ERIAL CAME TO HIS KNOWLEDGE. IN SUCH AS SITUATION, NOW QU ESTION ARISES WHETHER THE REOPENING WAS VALIDLY MADE BY TH E ASSESSING OFFICER. AT THE OUTSET, I AM OF THE VIEW THAT REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIATED I N A CASE WHERE THE RETURN IS PROCESSED U/S 143(1) OF TH E ACT AND NO SCRUTINY ASSESSMENT IS UNDERTAKEN. HOWEVER, IN THE PRESENT APPEAL UNDISPUTEDLY, THE ORIGINAL ASSES SMENT WAS FRAMED U/S 143(3) OF THE ACT, MEANING THEREBY, A OPINION WAS FORMED BY THE ASSESSING OFFICER. THE REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIATED I N CASE RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1) AND NO SCRUTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES TH ERE IS ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 4 NO CHANGE OF OPINION. REASSESSMENT PROCEEDINGS WILL BE INVALID IN CASE THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND IS DECIDED IN FAVOUR OF THE AS SESSEE. REASSESSMENT PROCEEDINGS IN THE CASES WILL BE HIT B Y THE PRINCIPLE OF CHANGE OF OPINION. REASSESSMENT PROCEEDINGS WILL BE INVALID IN CASE AN ISSUE OR QUE RY IS RAISED AND ANSWERED BY THE ASSESSEE IN ORIGINAL ASSESSMENT PROCEEDINGS BUT THEREAFTER THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN THE ASSESSMEN T ORDER. IN SUCH SITUATIONS IT SHOULD BE ACCEPTED THA T THE ISSUE WAS EXAMINED BUT THE ASSESSING OFFICER DID NO T FIND ANY GROUND OR REASON TO MAKE ADDITION OR REJECT THE STAND OF THE ASSESSEE, MEANING THEREBY, HE FORMS AN OPINION. THE REASSESSMENT WILL BE INVALID BECAUSE THE ASSESS ING OFFICER HAD FORMED AN OPINION IN THE ORIGINAL ASSES SMENT, THOUGH HE HAD NOT RECORDED HIS REASONS. THE EXPRESS ION CHANGE OF OPINION POSTULATES FORMATION OF OPINION AND THEN A CHANGE THEREOF. IN THE CONTEXT OF ASSESSMENT PROCEEDINGS, IT MEANS FORMATION OF BELIEF BY AN ASS ESSING OFFICER RESULTING FROM WHAT HE THINKS ON A PARTICUL AR QUESTION. IT IS A RESULT OF UNDERSTANDING, EXPERIEN CE AND REFLECTION. A DISTINCTION MUST BE DRAWN BETWEEN ERR ONEOUS 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 ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 5 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 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 MEANS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADVERSE EFFECT ON THE ASSESSEE BY A HIGHER ASSESSME NT OF INCOME THAN THE ONE ACTUALLY MADE. THEY SHOULD BE PROXIMATE AND NOT HAVE A REMOTE BEARING ON THE ASSESSMENT. THE OMISSION TO DISCLOSE MAY BE DELIBER ATE OR INADVERTENT. THE QUESTION OF CONCEALMENT IS NOT REL EVANT AND IS NOT A PRECONDITION WHICH CONFERS JURISDICTIO N TO REOPEN THE ASSESSMENT. CORRECT MATERIAL FACTS CAN B E ASCERTAINED FROM THE ASSESSMENT RECORDS ALSO AND IT IS NOT NECESSARY THAT THE SAME COME FROM A THIRD PERSON 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 OFFICER PROCEEDING ON THE BASIS OF FACTS, WHICH ARE INCORRE CT AND ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 6 WRONG. THE REASONS RECORDED AND THE DOCUMENTS ON RECORD ARE OF PARAMOUNT IMPORTANCE AND WILL HAVE TO BE EXAMINED TO DETERMINE WHETHER THE STAND OF THE REVE NUE IS CORRECT. IF A SUBJECT-MATTER, ENTRY OR CLAIM/DED UCTION IS NOT EXAMINED BY AN ASSESSING OFFICER, IT CANNOT BE PRESUMED THAT HE MUST HAVE EXAMINED THE CLAIM/DEDUCTION OR THE ENTRY, AND, THEREFORE, IT IS A CASE OF CHANGE OF OPINION. WHEN AT THE FIRST INSTANCE, IN THE ORIGINAL ASSESSMENT PROCEEDINGS, NO OPINION IS FORM ED, THE PRINCIPLE OF CHANGE OF OPINION CANNOT AND DOES NO T APPLY. THERE IS A DIFFERENCE BETWEEN CHANGE OF OPI NION AND FAILURE OR OMISSION OF THE ASSESSING OFFICER TO FORM AN OPINION ON A SUBJECT-MATTER, ENTRY, CLAIM, DEDUC TION, ETC. WHEN THE ASSESSING OFFICER FAILS TO EXAMINE A SUBJECT- MATTER, ENTRY, CLAIM OR DEDUCTION, HE FORMS NO OPIN ION. IT IS A CASE OF NO OPINION. WHETHER OR NOT THE ASSESSI NG OFFICER HAD APPLIED HIS MIND AND EXAMINED THE SUBJE CT- MATTER, CLAIM, ETC., DEPENDS UPON FACTUAL MATRIX OF EACH CASE. THE ASSESSING OFFICER CAN EXAMINE A CLAIM OR SUBJECT-MATTER EVEN WITHOUT RAISING A WRITTEN QUERY . THERE CAN BE CASES WHERE AN ASPECT OR QUESTION IS TOO APP ARENT OR OBVIOUS TO HOLD THAT THE ASSESSING-OFFICER DID N OT EXAMINE A PARTICULAR SUBJECT-MATTER, CLAIM, ETC. TH E STAND AND STANCE OF THE ASSESSEE AND THE ASSESSING OFFICE R IN SUCH CASES ARE RELEVANT. 2.3. SECTION 114 OF THE EVIDENCE ACT, 1872, IS PERMISSIVE AND NOT A MANDATORY PROVISION. NINE SITU ATIONS ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 7 BY WAY OF ILLUSTRATIONS ARE STATED. THESE 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 ANY PRESUMPTION THAT AN ACT WAS DONE FOR WHICH THER E IS NO EVIDENCE OR PROOF. (I) ASSESSMENTS CANNOT BE VALIDLY REOPENED UNDER S ECTION 147 OF THE ACT EVEN WITHIN FOUR YEARS, IF AN ASSESS EE HAD FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT, IF THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(3). SO LONG AS THE ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THAT TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS F RAMED UNDER SECTION 143(3) OF THE ACT, IT MATTERS LITTLE THAT THE ASSESSING OFFICER DID NOT ASK ANY QUESTION OR QUERY WITH RESPECT TO ONE ENTRY OR NOTE BUT HAD RAISED QUERIES AND QUESTIONS ON OTHER ASPECTS. (II) 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 ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 8 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) 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) ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 9 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) '(I) WHAT IS MEANT BY THE TERM 'CHANGE OF OPINION' ? (II) WHETHER ASSESSMENT PROCEEDINGS CAN BE VALIDLY RE OPENED UNDER SECTION 147 OF THE ACT, EVEN WITHIN FOUR YEARS, IF AN ASSESS EE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH R EFERENCE TO INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT AND WHETHER AND WHEN IN SUC H CASES REOPENING IS VALID OR INVALID ON THE GROUND OF CHANGE OF OPINION ? (III) WHETHER THE BAR OR PROHIBITION UNDER THE PRINCIPL E 'CHANGE OF OPINION' WILL APPLY EVEN WHEN THE ASSESSING OFFICER HAS NOT ASKED AN Y QUESTION OR QUERY WITH RESPECT TO AN ENTRY/NOTE, BUT THERE IS EVIDENCE AND MATERIAL TO SHOW THAT THE ASSESSING OFFICER HAD RAISED QUERIES AND QUESTION S 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 CHA NGE OF OPINION ?' 2.4. I AM REPRODUCING HEREUNDER THE RELEVANT PROVIS ION OF SECTION 147 OF THE ACT. '147. INCOME ESCAPING ASSESSMENT.IF THE ASSESSING O FFICER, HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INC OME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTIC E SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR R E-COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION ( 3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YE AR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 14 8 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMEN T FOR THAT ASSESSMENT YEAR. ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 10 EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFIC ER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NE CESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FORE GOING PROVIS O. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PER SON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS Y EAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASS ESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EX CESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSI VE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOW ANCE UNDER THIS ACT HAS BEEN COMPUTED. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSES S THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE N OT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB- SECTION (2) OF SECTION 148.' 2.5. FOR REOPENING AN ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT, THE FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFIED : (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR P RIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE IS UNDERASSESSMENT OR E SCAPEMENT OF INCOME ; ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 11 (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 OP INION 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 OFFICER REGARDING ESCAPEMENT OF INCOME. (V) IN CASES WHERE THE FIRST PROVISO APPLIES, THERE IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSION ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS. THE EXPLANATION TO THE SECTION STIPULATES THAT MERE PRODUCTION OF BOOKS OF ACCOUNT OR OTHER DOCUMEN TS FROM WHICH THE ASSESSING OFFICER COULD HAVE, WITH DUE DILIGENCE, INF ERRED MATERIAL FACTS, DOES NOT AMOUNT TO 'FULL AND TRUE DISCLOSURE OF MATERIAL FACTS' (THE PROVISO 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 ASSESSMEN T YEAR). 2.6. 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 INSTANCE, I.E., IN THE PROCEEDINGS UNDER SECT ION 143(3) AND NOW BY INITIATION OF THE REASSESSMENT PROCEEDIN G, THE ASSESSING OFFICER PROPOSES OR WANTS TO TAKE A DIFFE RENT VIEW. 2.7. THE WORD 'OPINION' IS DERIVED FROM THE LATIN W ORD '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 ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 12 LAW LEXICON BY P. RAMANATHA AIYAR (THIRD EDITION) EXPLAINS THE TERM 'OPINION' TO MEAN 'SOMETHING MORE THAN MERE RETAINING OF GOSSIP OR HEARSAY ; IT MEANS JUDG MENT OR BELIEF, THAT IS, A BELIEF OR A CONVICTION RESULTING FROM WHAT ONE THINKS ON A PARTICULAR QUESTION . . . AN OPINIO N IS A CONVICTION BASED ON TESTIMONY . . . THEY ARE AS A R ESULT OF READING, EXPERIENCE AND REFLECTION'. 2.8. 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 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 H OLDS THAT THE ASSESSEE IS CORRECT AND ACCEPTS HIS POSITI ON OR STAND. IN HARI IRON TRADING CO. V. CIT [2003] 263 I TR 437 (P&H), A DIVISION BENCH OF THE HONBLE PUNJAB AND HARYANA HIGH 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 ACCEP TED BY THE ASSESSING OFFICER DO NOT FIND MENTION IN THE ASSESSMENT ORDER AND ONLY SUCH POINTS ARE TAKEN NOT E OF ON WHICH THE ASSESSEE'S EXPLANATIONS ARE REJECTED A ND ADDITIONS/DISALLOWANCES ARE MADE. APPLYING THE PRINCIPLES LAID DOWN BY THE FULL BENCH OF THIS COUR T AS WELL AS THE OBSERVATIONS OF THE PUNJAB AND HARYANA HIGH COURT, I FIND THAT IF THE ENTIRE MATERIAL HAD BEEN PLACED BY ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 13 THE ASSESSED BEFORE THE ASSESSING OFFICER AT THE TI ME WHEN THE ORIGINAL ASSESSMENT WAS MADE AND THE ASSESSING OFFICER APPLIED HIS MIND TO THAT MATERIAL AND ACCEP TED THE VIEW CANVASSED BY THE ASSESSEE, THEN MERELY BECAUSE HE DID EXPRESS THIS IN THE ASSESSMENT ORDER, THAT BY I TSELF WOULD NOT GIVE HIM A GROUND TO CONCLUDE THAT 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 COMMIT TED A LAPSE, THERE IS NO REASON WHY THE ASSESSEE SHOULD B E MADE TO SUFFER THE CONSEQUENCES OF THAT LAPSE. 2.9. 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 T HE SUPREME COURT REFERRED TO ABOVE, WHICH ARE BINDING UPON US AN D THE OBSERVATIONS MADE BY THE HIGH COURT OF GUJARAT WITH WHI CH WE FIND OURSELVES IN RESPECTFUL AGREEMENT, THE ACTION INITI ATED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT CANN OT BE SAID TO BE EITHER INCOMPETENT OR OTHERWISE IMPROPER TO CALL FOR INTERFERENCE BY A WRIT COURT. THE ASSESSING OFFICER HAS IN THE REASONED ORDER PASSED BY HIM INDICATED THE BASIS ON WHICH INCOME EXIGIBLE TO TAX HAD IN HIS OPINION ESCAPED ASSESSMENT. THE ARGUMENT THAT THE PROP OSED REOPENING OF ASSESSMENT WAS BASED ONLY UPON A CHANGE OF OPINION HAS NOT IMPRESSED US. THE ASSESSMENT ORDER DID NOT ADMIT TEDLY ADDRESS ITSELF TO THE QUESTION WHICH THE ASSESSING OFFICER PRO POSES TO EXAMINE IN THE COURSE OF REASSESSMENT PROCEEDINGS. THE SUBMI SSION OF MR. VOHRA THAT EVEN WHEN THE ORDER OF ASSESSMENT DID NOT R ECORD ANY EXPLICIT OPINION ON THE ASPECTS NOW SOUGHT TO BE EXAM INED, IT MUST BE PRESUMED THAT THOSE ASPECTS WERE PRESENT TO THE MIND OF THE ASSESSING OFFICER AND HAD BEEN HELD IN FAVOUR OF THE A SSESSEE IS TOO FAR-FETCHED A PROPOSITION 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 AS PECTS OF A CONTROVERSY HAD BEEN EXAMINED AND DETERMINED BY THE ASSESSING OFF ICER. IT IS TRITE THAT A MATTER IN ISSUE CAN BE VALIDLY DETERMINED ONL Y UPON ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 14 APPLICATION OF MIND BY THE AUTHORITY DETERMINING THE SAME. APPLICATION OF MIND IS, IN TURN, BEST DEMONSTRATED BY DISCLOSURE OF MIND, WHICH IS BEST DONE BY GIVING REASONS FOR THE VIE W WHICH THE AUTHORITY IS TAKING. IN CASES WHERE THE ORDER PASSED BY A STATUTORY AUTHORITY IS SILENT AS TO THE REASONS FOR THE CONCLUS ION IT HAS DRAWN, IT CAN WELL BE SAID THAT THE AUTHORITY HAS NOT APPLIED IT S MIND TO THE ISSUE BEFORE IT NOR FORMED ANY OPINION. THE PRINCIPL E THAT A MERE CHANGE OF OPINION CANNOT BE A BASIS FOR REOPENING CO MPLETED ASSESSMENTS WOULD BE APPLICABLE ONLY TO SITUATIONS WHERE THE ASSESSING OFFICER HAS APPLIED HIS MIND AND TAKEN A CO NSCIOUS DECISION ON A PARTICULAR MATTER IN ISSUE. IT WILL HAVE NO APP LICATION WHERE THE ORDER OF ASSESSMENT DOES NOT ADDRESS ITSELF TO THE A SPECT WHICH IS THE BASIS FOR REOPENING OF THE ASSESSMENT, AS IS THE POS ITION IN THE PRESENT CASE. IT IS IN THAT VIEW INCONSEQUENTIAL WHETHER OR NO T THE MATERIAL NECESSARY FOR TAKING A DECISION WAS AVAILABLE TO THE ASSESSING OFFICER EITHER GENERALLY OR IN THE FORM OF A REPLY TO THE QUE STIONNAIRE SERVED UPON THE ASSESSEE. WHAT IS IMPORTANT IS WHETHER THE ASS ESSING OFFICER HAD BASED ON THE MATERIAL AVAILABLE TO HIM TAKEN A VIE W. IF HE HAD NOT DONE SO, THE PROPOSED REOPENING CANNOT BE ASSAILED O N THE GROUND THAT THE SAME IS BASED ONLY ON A CHANGE OF OPINION.' 2.10. 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 SCRUTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES THERE IS NO CHANGE OF OPINION. (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 CASES 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 ASSESSING OFFICER DID NOT FIND ANY GROUND OR REASON TO MAKE ADDITION OR R EJECT THE STAND OF THE ASSESSEE. HE FORMS AN OPINION. THE REASSESSMENT W ILL BE INVALID BECAUSE THE ASSESSING OFFICER HAD FORMED AN OPINION IN THE ORIGINAL ASSESSMENT, THOUGH HE HAD NOT RECORDED HIS REASONS. 2.11. THUS, WHERE AN ASSESSING OFFICER INCORRECTLY OR ERRONEOUSLY APPLIES LAW OR COMES TO A WRONG CONCLUS ION ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 15 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 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' MEANS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADVERSE EFFECT ON THE ASSESSEE BY A HIGHER ASSESSME NT OF INCOME THAN THE ONE ACTUALLY MADE. CORRECT MATERIA L FACTS CAN BE ASCERTAINED FROM THE ASSESSMENT RECORDS ALSO AND IT IS NOT NECESSARY THAT THE SAME MAY COME FROM A T HIRD ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 16 PERSON OR SOURCE, I.E., FROM SOURCE OTHER THAN THE ASSESSMENT RECORDS. HOWEVER, IN SUCH CASES, THE ONU S WILL BE ON THE REVENUE TO SHOW THAT THE ASSESSEE HAD STA TED INCORRECT AND WRONG MATERIAL FACTS RESULTING IN THE ASSESSING OFFICER PROCEEDING ON THE BASIS OF FACTS, WHICH ARE INCORRECT AND WRONG. THE REASONS RECORDED AND T HE DOCUMENTS ON RECORD ARE OF PARAMOUNT IMPORTANCE AND WILL HAVE TO BE EXAMINED TO DETERMINE WHETHER THE S TAND OF THE REVENUE IS CORRECT. A DECISION OF FROM HONB LE DELHI HIGH COURT DATED SEPTEMBER 26, 2011 IN DALMIA P. LT D. V. CIT [2012] 348 ITR 469 (DELHI) AND ANOTHER DECISION FROM HONBLE JURISDICTIONAL HIGH COURT DATED NOVEMBER 8, 2011, IN INDIAN HUME PIPE CO. LTD. V. ASST. CIT [2012] 34 8 ITR 439 (BOM) ARE TWO SUCH CASES, WHICH THROWS LIGHT ON THE ISSUE. IN THE FIRST CASE, THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT HAD MADE ADDITION OF RS. 19,86,551 UNDER SECTION 40(1) ON ACCOUNT OF UNCONFIRMED SUNDRY CRED ITORS. THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER N OTICING THAT UNCONFIRMED 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 VERIFICATION THE CLAIM UNDER SECTION 54EC WAS ALLOWED BUT SUBSEQUENTLY ON EXAMINATION IT TRANSPIRED THAT THE SECOND PROPERTY WAS PURCHASED P RIOR TO THE DATE OF SALE. THE AFORESAID DECISIONS/ FACTS CASES MUST BE DISTINGUISHED FROM CASES WHERE THE MATERIAL FACTS ON RECORD ARE CORRECT BUT THE ASSESSING OFFICER DID NOT ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 17 DRAW PROPER LEGAL INFERENCE OR DID NOT APPRECIATE T HE IMPLICATIONS OR DID NOT APPLY THE CORRECT LAW. THE SECOND CATEGORY WILL BE A CASE OF 'CHANGE OF OPINION' AND CANNOT BE REOPENED FOR THE REASON THAT THE ASSESSEE, AS RE QUIRED, HAS PLACED ON RECORD PRIMARY FACTUAL MATERIAL BUT O N THE BASIS OF LEGAL UNDERSTANDING, THE ASSESSING OFFICER HAS TAKEN A PARTICULAR LEGAL VIEW. HOWEVER, AS STATED A BOVE, AN ERRONEOUS DECISION, WHICH IS ALSO PREJUDICIAL TO TH E INTERESTS OF THE REVENUE, CAN BE MADE SUBJECT-MATTE R OF ADJUDICATION UNDER SECTION 263 OF THE ACT. 2.12. 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. [199 9] 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 ASSESSMEN T. THOUGH THERE CANNOT BE ANY INTERPRETATION OF LAW BY THE AUDIT PA RTY, IT IS ENTITLED TO POINT OUT A FACTUAL ERROR OR OMISSION IN THE ASSESS MENT AND REOPENING OF A CASE ON THE BASIS OF FACTUAL ERROR OR OMISSION POI NTED 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 FAVO UR OF THE REVENUE AND AGAINST THE ASSESSEE.' AS RECORDED ABOVE, THE REASONS RECORDED OR THE DOCU MENTS AVAILABLE MUST SHOW NEXUS THAT IN FACT THEY ARE GERMANE AND REL EVANT 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 O F INCOME BY RECORDING CONCLUSIVE FINDINGS. THE FINAL ASCERTAINME NT TAKES PLACE WHEN ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 18 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. 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, COULD 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. 2.13. ANOTHER ASPECT OF THE MATTER ALSO CANNOT BE LOST SI GHT OF. A STATUTE CONFERRING AN ARBITRARY POWER MAY BE HELD TO BE ULTRA VIRUS ARTICLE 14 OF THE CONSTITUTION OF IN DIA. IF TWO INTERPRETATIONS ARE POSSIBLE, THE INTERPRETATION WH ICH UPHOLDS CONSTITUTIONALITY, IT IS TRITE, SHOULD BE F AVOURED. IN THE EVENT IT IS HELD THAT BY REASON OF SECTION 1 47 IF THE INCOME-TAX OFFICER EXERCISES ITS JURISDICTION FOR I NITIATING A PROCEEDING FOR RE-ASSESSMENT ONLY UPON MERE CHANGE OF ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 19 OPINION, THE SAME MAY BE HELD TO BE UNCONSTITUTIONA L. I AM, THEREFORE, OF THE OPINION THAT SECTION 147 OF T HE ACT DOES NOT POSTULATE CONFERMENT OF POWER UPON THE ASSESSING OFFICER TO INITIATE REASSESSMENT PROCEEDI NG UPON HIS MERE CHANGE OF OPINION. 2.14. THE HONBLE APEX COURT THEREAFTER REFERRED T O THE SUBSEQUENT DECISION IN INDIAN AND EASTERN NEWSP APER SOCIETY V. CIT [1979] 119 ITR 996 (SC) WHEREIN IT W AS OBSERVED THAT SOME OF THE OBSERVATIONS MADE IN KALY ANJI MAVJI (SUPRA) WERE FAR TOO WIDE AND THE STATUTE DID NOT PERMIT REAPPRAISAL OF MATERIAL CONSIDERED BY THE AS SESSING OFFICER DURING THE ORIGINAL ASSESSMENT. THE OBSERVA TIONS IN KALYANJI MAVIJI (SUPRA) THAT REOPENING WOULD COV ER A CASE 'WHERE INCOME HAS ESCAPED ASSESSMENT DUE TO TH E 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 AND E ASTERN NEWSPAPER SOCIETY [1979] 119 ITR 996 (SC) AS UNDER : '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 OPE N TO HIM TO DO SO, AND ON THAT BASIS TO REOPEN THE ASSESSMENT UNDER SECTION 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 ' OVERSIGHT, INADVERTENCE OR MISTAKE' OF THE INCOME-TAX OFFICER MUST 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 SAID TO LAY DOWN THAT IF, ON REAPPRAISING THE MATERIAL CONSIDERED BY HI M DURING THE ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 20 ORIGINAL ASSESSMENT, THE INCOME-TAX OFFICER DISCOVE RS THAT HE HAS COMMITTED AN ERROR IN CONSEQUENCE OF WHICH INCOME HAS ESCAPED ASSESSMENT IT IS OPEN TO HIM TO REOPEN THE ASSESSMEN T. 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 T AKEN BY THIS COURT IN MAHARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 I TR 1 (SC), CIT V. A. RAMAN AND CO. [1968] 67 ITR 11 (SC) AND BANKIPU R CLUB LTD. V. CIT [1971] 82 ITR 831 (SC), AND WE DO NOT BELIEVE THA T THE LAW HAS SINCE TAKEN A DIFFERENT COURSE. ANY OBSERVATIONS IN KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC) SUGGESTING THE CON TRARY DO NOT, WE SAY WITH RESPECT, LAY DOWN THE CORRECT LAW.' 2.15. 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 MAVIJI [1976] 102 ITR 287 (SC) AND INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1979] 119 ITR 996 (SC), AS FAR AS PROPOSITION (4) IS CONCERNED. IT WAS HELD THAT (PAG E 297 OF 189 ITR) : 'WE HAVE POINTED OUT EARLIER THAT KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC) OUTLINES FOUR SITUATIONS IN WHICH ACT ION UNDER SECTION 34(1)(B) CAN BE VALIDLY INITIATED. THE INDIA N EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) HAS ONLY INDICATED 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 KALYANJ I MAVIJI'S CASE [1976] 102 ITR 287 (SC). PROPOSITION (2) MAY BE BRIE FLY SUMMARIZED AS PERMITTING ACTION EVEN ON A 'MERE CHAN GE OF OPINION'. THIS IS WHAT HAS BEEN DOUBTED IN THE INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1979] 119 ITR 996 (SC) AND W E 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 PROPOSITION (4) SET OUT IN KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC). THIS PROPOSITI ON CLEARLY ENVISAGES A FORMATION OF OPINION BY THE INCOME-TAX O FFICER ON THE BASIS OF MATERIAL ALREADY ON RECORD PROVIDED THE FOR MATION OF SUCH OPINION IS CONSEQUENT ON 'INFORMATION' IN THE SHAPE O F 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 OFFICER, IN THE ORIGINAL ASSES SMENT, WHICH IS ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 21 A VOLUMINOUS ONE INVOLVING SEVERAL CONTENTIONS, ACC EPTS A PLEA OF THE ASSESSEE IN REGARD TO ONE OF THE ITEMS THAT THE PRO FITS REALISED ON THE SALE OF A HOUSE IS A CAPITAL REALISATION NOT C HARGEABLE TO TAX. SUBSEQUENTLY, HE FINDS, IN THE FOREST OF PAPERS FILED IN CONNECTION WITH THE ASSESSMENT, SEVERAL INSTANCES OF EARLIER SALES OF HOUSE PROPERTY BY THE ASSESSEE. THAT WOULD BE A CAS E WHERE THE INCOME-TAX OFFICER DERIVES INFORMATION FROM THE RECO RD ON AN INVESTIGATION OR ENQUIRY INTO FACTS NOT ORIGINALLY UNDERTAKEN. AGAIN, SUPPOSE THE INCOME-TAX OFFICER ACCEPTS THE PL EA OF AN ASSESSEE THAT A PARTICULAR RECEIPT IS NOT INCOME LI ABLE TO TAX. BUT, ON FURTHER RESEARCH INTO LAW HE FINDS THAT THERE WAS A DIRECT DECISION HOLDING THAT CATEGORY OF RECEIPT TO BE AN IN COME RECEIPT. HE WOULD BE ENTITLED TO REOPEN THE ASSESSMENT UNDER SECTION 147(B) BY VIRTUE OF PROPOSITION (4) OF KALYANJI MAV JI. THE FACT THAT THE DETAILS OF SALES OF HOUSE PROPERTIES WERE ALREAD Y IN THE FILE OR THAT THE DECISION SUBSEQUENTLY COME ACROSS BY HIM WAS ALREADY THERE WOULD NOT AFFECT THE POSITION BECAUSE THE INFORM ATION 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 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 MI SSED 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, AR RIVES AT A PARTICULAR CONCLUSION, BUT REINITIATES PROCEEDINGS BECAUSE, ON A REAPPRAISAL OF THE SAME MATERIAL WHICH HAD BEEN CONSIDE RED EARLIER AND IN THE LIGHT OF THE SAME LEGAL ASPECTS TO WHICH HIS ATTENTION HAD BEEN DRAWN EARLIER, HE COMES TO A CONC LUSION THAT AN ITEM OF INCOME WHICH HE HAD EARLIER CONSCIOUSLY LEF T OUT FROM THE EARLIER ASSESSMENT SHOULD HAVE BEEN BROUGHT TO TAX. IN OTHER WORDS, AS POINTED OUT IN INDIAN AND EASTERN NEWSPAP ER 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 SUCCESSOR OFFICER) ATTEMPTS TO REOPEN THE ASSESSME NT BECAUSE THE OPINION FORMED EARLIER BY HIMSELF (OR, MORE OFTEN , BY A PREDECESSOR INCOME- TAX OFFICER) WAS, IN HIS OPINION , INCORRECT. JUDICIAL DECISIONS HAD CONSISTENTLY HELD THAT THIS COU LD 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 HAVE BEEN OVERRULED BY KALYANJI MAVJI [1976] 102 ITR 287 (SC). THE SECOND PARAGRAPH FROM THE JUDGMENT IN THE INDIAN A ND ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 22 EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) EARLIER EXTRACTED HAS ALSO REFERENCE ONLY TO THIS SITUATION A ND INSISTS UPON THE NECESSITY OF SOME INFORMATION WHICH MAKE THE INCOME -TAX OFFICER REALISE THAT HE HAS COMMITTED AN ERROR IN THE EARLIER ASSESSMENT. THIS PARAGRAPH DOES NOT IN ANY WAY AFFECT THE PRINCIPLE ENUMERATED IN THE TWO MADRAS CASES CITED W ITH APPROVAL IN ANANDJI HARIDAS 21 STC 326. EVEN MAKING ALLOWANC ES FOR THIS LIMITATION PLACED ON THE OBSERVATIONS IN KALYANJI MA VJI, THE POSITION AS SUMMARISED BY THE HIGH COURT IN THE FOLLOW ING WORDS REPRESENTS, IN OUR VIEW, THE CORRECT POSITION IN LAW (AT PAGE 629 OF 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 REAS SESSMENT PROCEEDINGS ARE SOUGHT TO BE INITIATED, CAME TO THE N OTICE OF THE INCOME-TAX OFFICER SUBSEQUENT TO THE ORIGINAL ASSESS MENT. IF THE INCOME-TAX OFFICER HAD CONSIDERED AND FORMED AN OPIN ION ON THE SAID MATERIAL IN THE ORIGINAL ASSESSMENT ITSELF, THEN HE WOULD BE POWERLESS TO START THE PROCEEDINGS FOR THE REASSESSME NT. WHERE, HOWEVER, THE INCOME-TAX OFFICER HAD NOT CONSIDERED THE MATERIAL AND SUBSEQUENTLY CAME BY THE MATERIAL FROM THE RECOR D ITSELF, THEN SUCH A CASE WOULD FALL WITHIN THE SCOPE OF SECTION 147 (B) OF THE ACT'.' (EMPHASIS 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. 2.16. I AM CONSCIOUS OF THE FACT THAT THE AFORESA ID 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 ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 23 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. 2.17. 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 NECESSARY FOR HIS ASSESSMENT. IT DOES NOT FOLLOW THAT HE CANN OT REOPEN THE ASSESSMENT EVEN WITHIN THE PERIOD OF FOU R YEARS AS AFORESAID IF HE HAS REASON TO BELIEVE THAT THE A SSESSEE HAS FAILED TO MAKE THE REQUISITE DISCLOSURE. ALL TH AT THE SECTION SAYS IS THAT IN A CASE WHERE THE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER THE PERIOD OF FOUR YEAR S, THE ONLY REASON AVAILABLE TO THE ASSESSING OFFICER IS T HE NON- DISCLOSURE ON THE PART OF THE ASSESSEE. THE ACT PL ACES 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 TA X. THE POSITION HAS BEEN FURTHER CLARIFIED BY THE PROV ISO ITSELF IN A CASE WHERE ASSESSMENT UNDER SUB-SECTION (3) OF ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 24 SECTION 144 OF THE ACT OR THIS SECTION HAS BEEN MAD E FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TA KEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH YEAR BY THE REASON OF F AILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 13 9 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T ASSESSMENT YEAR. IT IS ALSO NOTED THAT THE SCOPE OF NEWLY SUBSTITUTED (W.E.F. 01/04/1989) SECTION 147 HAS BEE N ELABORATED IN DEPARTMENT CIRCULAR NUMBER 549 DATED 31 ST OCTOBER, 1989, MEANING THEREBY, ON OR AFTER 01/04/1 989, INITIATION OF REASSESSMENT PROCEEDINGS HAS TO BE GO VERNED BY THE PROVISIONS OF SECTION 147 TO 151 AS SUBSTITU TED (AMENDED) W.E.F. 01/04/1989. STILL, POWER U/S 147 OF THE ACT, THOUGH VERY WIDE BUT NO PLENARY. I AM AWARE T HAT HONBLE GUJARAT HIGH COURT IN PRAFUL CHUNILAL PATEL : VASANT CHUNILAL PATEL VS ACIT (1999) 236 ITR 82, 84 0 (GUJ.) EVEN WENT TO THE EXTENT THAT ACTION UNDER MA IN SECTION 147 IS POSSIBLE IN SPITE OF COMPLETE DISCLO SURE OF MATERIAL FACTS. THE PRIMARY CONDITION OF REASONABLE BELIEF HAVING NEXUS WITH THE MATERIAL ON RECORD IS STILL O PERATIVE. HOWEVER, I AM OF THE VIEW, THAT MERE FRESH APPLICAT ION 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. MY VIE W FIND ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 25 SUPPORT FROM THE DECISION FROM HONBLE DELHI HIGH C OURT IN JINDAL PHOTO FILMS LTD. VS DCIT (1998) 234 ITR 1 70 (DEL.), GARDEN SILK MILLS PVT. LTD. VS DCIT (1999) 151 CTR (GUJ.) 533, GOVIND CHHAPABHAI PATEL VS DCIT 240 ITR 628, 630 (GUJ.), FORAMER VS CIT (2001) 247 ITR 436 (ALL.), AFFIRMED IN CIT VS FORAMER FINANCE (2003) 264 ITR 5 66, 567 (SC), IPICA LABORATORIES VS DCIT (2001) 251 ITR 416 (BOM.), RITU INVESTMENT PVT. LTD.(2012) 345 ITR 214 (DEL.), KETAN B. MEHTA VS ACIT (2012) 346 ITR 254 (GUJ.), M S. PRAVEEN P. BHARUCHA VS DCIT (2012) 348 ITR 325 (BOM .), CIT VS USHA INTERNATIONAL LTD. 348 ITR 485 (DEL.), AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO (2013) 355 ITR 348 (GUJ.), B.B.C. WORLD NEWS LTD. VS ASST. DIT (2014) 362 ITR 577 (DEL.). IDENTICAL RATIO WAS LAID DOWN I N CIT VS MALAYALA MANORMA COMPANY LTD. (2002) 253 ITR 378 (KER.) I THINK THIS THREAD RUNS THROUGH THE VARIOU S PROVISIONS OF THE ACT. BUT EXPLANATION 1 TO THE SEC TION 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 WOU LD DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CAS E AND NO UNIVERSAL FORMULA MAY BE ATTEMPTED. THE LEGA L OR FACTUAL INFERENCES FROM THOSE PRIMARY OR MATERIAL F ACTS ARE FOR THE ASSESSING OFFICER TO DRAW IN ORDER TO COMPL ETE THE ASSESSMENT AND IT IS NOT FOR THE ASSESSEE TO ADVISE HIM, FOR OBVIOUS REASONS. THE EXPLANATION, HOWEVER, CAUTIONS THE ASSESSEE THAT HE CANNOT REMAIN SMUG WITH THE BELIEF THAT ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 26 SINCE HE HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE T HE ASSESSING OFFICER FROM WHICH MATERIAL OR EVIDENCE C OULD HAVE BEEN WITH DUE DILIGENCE GATHERED BY HIM, HE HA S DISCHARGED HIS DUTY. IT IS FOR HIM TO POINT OUT THE RELEVANT ENTRIES WHICH ARE MATERIAL, WITHOUT LEAVING THAT EX ERCISE TO THE ASSESSING OFFICER. THE CAVEAT, HOWEVER, IS THAT SUCH PRODUCTION OF BOOKS OF ACCOUNT MAY, IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES, AMOUNT TO FULL AND TRUE DISCLOSURE ; THIS IS CLEAR FROM THE USE OF THE EXPR ESSION 'NOT NECESSARILY' IN THE EXPLANATION. THUS, THE QUE STION OF FULL AND TRUE DISCLOSURE OF PRIMARY OR MATERIAL FAC TS IS A PURE QUESTION OF FACT, TO BE DETERMINED ON THE FACT S AND CIRCUMSTANCES OF EACH CASE. NO GENERAL PRINCIPLE CA N 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 ASSESSING OFFICER AFTER HE MADE THE ORIGINAL ASSESS MENT UNDER SECTION 143(3), WOULD INFLUENCE THE OPINION, FORMED OR PRESUMED TO HAVE BEEN FORMED EARLIER, BY THE ASS ESSING AUTHORITY; HE CAN WITH JUSTIFICATION CHANGE IT, BUT THAT WOULD NOT BE A CASE OF A 'MERE CHANGE OF OPINION' UNGUIDED BY NEW FACTS OR CHANGE IN THE LEGAL POSITI ON. IT WILL BE A CASE OF THE ASSESSING AUTHORITY HAVING 'R EASON TO BELIEVE', NOTWITHSTANDING THAT FULL AND TRUE PARTIC ULARS ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 27 WERE FURNISHED BY THE ASSESSEE WHICH WERE EXAMINED, OR PRESUMED TO BE EXAMINED, BY HIM. THERE WAS A DIVERGENCE OF OPINION AMONGST VARIOUS HIGH COURTS A S TO WHAT CONSTITUTE INFORMATION FOR THE PURPOSES OF S ECTION 34(1)(B) OF THE 1922 ACT (WHICH CORRESPONDS TO SECT ION 147(B) OF THE 1961 ACT) THE HONBLE APEX COURT IN C WT VS IMPERIAL TOBACCO COMPANY LTD. (1966) 61 ITR 461 HAS NOTED SUCH DIVERGENCE OF OPINION ON THE POINT. HON BLE JURISDICTIONAL HIGH COURT IN CIT VS SIR MOHAMMAD YU SUF ISMAIL (1944) 12 ITR 8 (BOM.) HELD THAT MERE CHANGE OF OPINION ON THE SAME FACTS ARE ON QUESTION OF LAW OR MERE DISCOVERY OF MISTAKE OF LAW IS NOT SUFFICIENT INFOR MATION AND THAT IN ORDER TO SUSTAINED ACTION U/S 34 BY FUR THER HOLDING THAT REASSESSMENT IS NOT PERMISSIBLE. THE H ONBLE APEX COURT IN SIMON CARVES LTD. (1976) 105 ITR 212 HELD THAT ERRORLESS LEGALLY CORRECT ORDER CANNOT BE REOP ENED, THEREFORE, IT IS SETTLED LAW THAT WITHOUT ANY NEW INFORMATION AND ON THE BASIS OF MERE CHANGE OF OPIN ION, REOPENING OF ASSESSMENT IS NOT PERMISSIBLE. AS WAS HELD IN CIT VS TTK PRESTIGE LTD. (2010) 322 ITR 390 (KARN.) SLP DISMISSED IN 2010 322 ITR (ST.) 14 (SC). REFERENCE ALSO MADE TO ASIAN PAINTS LTD. VS DCIT (2009) 308 ITR 19 5 (BOM.), ANDHRA BANK LTD. VS CIT (1997) 225 ITR 447 (SC). THE OBSERVATIONS OF THE SUPREME COURT ARE A PROTECT ION AGAINST THE ABUSE OF POWER; THEY ALSO PROTECT THE R EVENUE WHICH CAN, IN THE LIGHT OF SUBSEQUENT COMING INTO L IGHT OF FACTS OR LAW, REOPEN THE ASSESSMENT. IN THE LIGHT O F THE ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 28 AFORESAID DISCUSSION, SINCE, THERE WAS NO NEW TANGI BLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WHILE RESORTING TO SECTION 147/148 OF THE ACT, MORE SPECI FICALLY, WHILE FRAMING ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT, THERE WAS FULL DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE AND ON THE BASIS OF THOSE FACTS, ASSESSMENT WAS COM PLETED U/S 143(3) OF THE ACT, THEREFORE, IN MY HUMBLE OPIN ION, THE REASSESSMENT IS UNJUSTIFIED, THEREFORE, THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. SINCE, I HAVE DECIDED THE GROUND OF THE ASSESSE E ON REOPENING AFTER EXPIRY OF FOUR YEAR AS BAD IN LA W, I NEED NOT GO TO ADJUDICATE GROUND NO.3, RAISED BY THE ASS ESSEE. THUS, THE APPEAL OF THE ASSESSEE IS DISPOSED OF IN TERMS INDICATED HEREINABOVE. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 28/01/2016. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 01/02/2016 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. ITA NO.5536/MUM/2015 MR. R.P. SUVARNA 29 3. ) ) * ( '#$ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI 5. -./ ' , ) '#$ ' 1 , / DR, ITAT, MUMBAI 6. /2 3$ / GUARD FILE. & / BY ORDER, (-# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI