M/S SAHARA CREDIT COOPERATIVE SOCIETY LTD.THRU.MANAGING DIRECTOR,KARUNESH AWASTHI V. DCIT/ACIT-3,LUCKNOW ,P.K. COMPLEX, RAM MOHAN MARG, LKO,AND ANOTHER

/53/2022

AI Insights

The case involves M/S Sahara Credit Cooperative Society Ltd., which challenged a notice under Section 148 of the Income Tax Act issued by the DCIT/ACIT-3, Lucknow, for reassessment of income for the Assessment Year 2013-2014. The petitioner had initially disclosed nil income, but subsequent audits and assessments raised questions about the genuineness and creditworthiness of deposits and share capital received. The Income Tax Officer (ITO) had made presumptive additions to the income due to insufficient verification of these deposits. The petitioner argued that the reassessment was based on a mere change of opinion and was barred by limitation, among other grounds. However, the court upheld the reassessment, citing the failure of the petitioner to disclose all material facts fully and truly, which justified the reopening of the assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 670759 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 20-04-2022
• Assessment Year: misc
• Other Referred Cases: Raymond Woolen Mills Ltd. Versus I.T.O., CIT v. P.V.S. Beedies (P) Ltd., CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., Phool Chand Bajrang Lal v. ITO, Srikrishna (P) Ltd. v. ITO, New Delhi Television Ltd. Vs. DCIT, ITO Vs. Tech Span India Pvt. Ltd., ACIT Vs. Marico Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: MANISH MISRA; RAVI MISHRA
• Assessee Lawyers: WASEEQ AHMED
• Keywords: Assessment Year 2013-2014; Audit objection; Escaped assessment; Income Tax; Reassessment
• Section: 147; 148; 142(1); 143(2); 139

Judgement Text

"1 Judgment reserved on 29.03.2022 Judgment delivered on 20.04.2022 Case - WRIT TAX No. - 53 of 2022 Petitioner - M/S Sahara Credit Cooperative Society Ltd. Thru. Managing Director, Karunesh Awasthi Respondent - DCIT/ACIT-3, Lucknow, P. K. Complex, Ram Mohan Marg, Lko, And Another Counsel for Petitioner - Waseeq Uddin Ahmed Counsel for Respondent - Manish Misra, Dr. Ravi Kumar Mishra Hon'ble Devendra Kumar Upadhyaya, J. Hon'ble Subhash Vidyarthi, J. (Per: Subhash Vidyarthi, J.) 1. Heard Sri. Waseeq Uddin Ahmed, Advocate, the learned counsel for the petitioner and Sri. Manish Misra, Advocate, the learned counsel for the respondents. 2. Briefly stated, the petitioner’s case is that it is a Multi-State Cooperative Society. On 30.09.2013, the petitioner had filed its return of income for the Assessment Year 2013-2014 disclosing nil income. On 02.09.2014, a notice under Section 143 (2) of the Income Tax Act (which will hereinafter be referred to as “the Act”) was issued to the petitioner, followed by a notice dated 15.07.2015 issued under Section 142 (1) of the Act requiring the petitioner to furnish certain details and documents. On 23.07.2015, the petitioner sent a reply to the aforesaid notice dated 15.07.2015. On 04.08.2015, the income Tax Officer - 3 (4), Lucknow sent another notice to the petitioner seeking certain further details and documents and directed the petitioner to produce the books of accounts, bills and vouchers on 20.08.2015. Amongst other things, the petitioner was directed to furnish the details of scheme wise collections, which were shown at Rs.184,467,717,884/-, in digitized form in the given format. 3. The petitioner claims that on 18.01.2016, it had sent a reply to the aforesaid letter dated 04.08.2015 stating that it was filing the 2 details of collections made from its members during the year as per the member ledger. Copies of the details in 50 ledgers were submitted and it was stated that the balance details were in the process of being printed and they would be submitted in due course of time. It appears that an objection was raised that the information given was not furnished in a systematic and chronological manner and ultimately on 02.02.2016, the petitioner sent a letter to the ITO Range 3 (4), Lucknow stating that details of scheme wise collections made from the members were being furnished in the desired format and details of all bank accounts maintained by the petitioner were also furnished. 4. On 31.03.2016, the ITO-3(4) passed an assessment order for the Assessment Year 2013-2014 in respect of petitioner completing the assessment on a total income of Rs.52,22,52,15,150/-. 5. On 22.03.2021 the DCIT-ACIT-3, Lucknow-New sent a notice under Section 148 of the Act to the petitioner regarding Assessment Year 2013-2014, stating that he has reasons to believe that petitioner's income chargeable to the tax in the Assessment year 2013-2014 has escaped assessment within the meaning of Section 147 of the Act. It is mentioned in the notice that the same was issued after obtaining necessary approval from the PCIT-Lucknow-1. 6. On 29.06.2021, the A.O. sent a notice under Section 143 (2) read with Section 147 of the Act, containing reasons for re-opening of the assessment. It was stated therein that the identity, creditworthiness and genuineness of the depositors were not verified during the course of assessment proceedings and the A.O. was not satisfied with the identity, creditworthiness and genuineness of the deposits from members (Rs.17,87,754.23 lakh) and share holders’ fund (Rs.32,775.04 lakhs). For this reason, an addition of 25% of the deposits was made on presumptive basis. As verification of the deposits made during the year was not made, the A.O. should have added the whole amount and not merely 25% of the amount on presumptive basis. Addition of merely 25% made on presumptive basis without verification of the depositors had led to escapement of 3 income amounting to Rs. 1,36,53,96,85,000/- as per the audit objection raised by the audit party. It gives rise to a reason to believe ‘that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment’. 7. On 28.07.2021, the petitioner filed its objection against the notice issued under Section 148 of the Act mainly on the grounds that the notice is barred by limitation; the assessment has been re-opened merely on the basis of internal audit objection, which is not permissible under the Act; the assessment cannot be re-opened merely on the basis of a change of opinion; in the original assessment proceedings the A.O. had discussed in detail the addition made under Section 68 of the Act and no tangible material has been found after the completion of original assessment and the assessment has been re- opened for want of verification and, thus, the provisions of Section 147 cannot be resorted only to verify or to further make inquiry. 8. On 25.01.2022, the National Faceless Assessment Centre passed an order disposing of the objections filed by the petitioner in response to the notice under Section 148 of the Act. 9. The petitioner has challenged the notice dated 22.03.2021 issued under Section 148 of the Act as also the order dated 25.01.2022 passed by the National Faceless Assessment Centre rejecting its objection against the aforesaid notice. 10. Before proceeding to examine the rival contentions advanced on behalf the parties, it would be appropriate to have a look at the relevant provisions of the Act and refer to some pronouncements of the Hon’ble Supreme Court explaining the scope of interference under Article 226 of the Constitution of India while examining the validity of a notice issued under Section 148 of the Income Tax Act. 11. The relevant provisions of Sections 147 and 148 of the Act, as they stood at the relevant time, are being reproduced below: - 4 “147. Income escaping assessment.— If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped 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 income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment 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 year, no action shall be taken under this section after the expiry of four years from the 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 part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: … Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. 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 person in respect of which he is assessable under this Act during the previous year 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 Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; 5[(b-a) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under Section 92-E;] (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 excessive relief under this Act; or 5 (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.—For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess 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 not been included in the reasons recorded 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 amended, by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.” (Emphasis Supplied) “148. Issue of notice where income has escaped assessment.— (1) Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139: Provided that …………….. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.” 12. Thus as per the scheme of Act extract above, after giving a notice under Section 148 of the Act containing reasons for doing so, the Assessing Officer can pass an order for reassessment, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. The Hon’ble Supreme Court has explained the scope of judicial review while examining the validity of a notice under Section 148 of the Act in Raymond Woolen Mills Ltd. Versus I.T.O., (1999) 236 ITR 34 (SC), in which it has been held that at the stage of the notice for reopening of the assessment, the Court has only to see whether there is prima facie some material, on the basis of which the Department could reopen the case. The 6 sufficiency or correctness of the material is not a thing to be considered at this stage. 13. Again, in Raymond Woollen Mills Ltd. v. ITO, (2008) 14 SCC 218, the Hon’ble Supreme Court reiterated that while examining the validity of a notice issued under Section 148 of the Income Tax Act, “we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have to see only whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage.” 14. The learned Counsel for the petitioner has submitted that the petitioner had submitted the following break-up of deposits received from its members: - S.No. Range (in Rs.) No. of Depositors (from whom collection received in No.) Amount (in Rs.) 1 Upto Rs. 10 13449 116521 2 11 to 100 137823 8861543 3 101 to 1000 3371147 2204414914 4 1001 to 10000 15741780 63777944894 5 10001 to 50000 4183962 78114460242 6 50001 to 100000 233523 16306022592 7 10001 to 500000 99171 16191517732 8 Above 500000 2877 2172084087 Total 23783732 178775422525 15. During the year, the petitioner had collected the total deposits of Rs. 1,78,77,54,22,525/- from 2,37,83,732 persons and it had 7 furnished KYC documents of 1051 persons for verification on exemplar basis because the number of depositors is quite large. 16. Per contra, Shri Manish Mishra, the learned Counsel representing the Income Tax Department, has stated that in the assessment order dated 21.03.2016, the A.O. had recorded that the petitioner was required to prove the genuineness, identity and creditworthiness of the persons from whom deposits were received during the years. In response to the above query, the petitioner has submitted that most of the deposits were in the collection range of Rs. 10/- to Rs. 50,000/- and since the quantum is not very high, creditworthiness of the depositors cannot be doubted. 17. The assessment order categorically mentions that the petitioner could not prove the creditworthiness of the share holders who have subscribed Rs. 5 lakh and above towards share capital in spite of repeated adjournments and it could provide IT returns of only one of the share holders and PAN of eight share holders and it could not provide bank statement of any of the share holders so as to show that the deposits were received through banking channels. Complete books of account/vouchers were not produced. Owing to non furnishing of proper details and documents, commercial expediency of expenses claimed could also not be examined. In absence of any satisfactory details and documents, 25 % of the claim made under this head which works out to Rs. 200,04,11,960/- was disallowed and added back to the petitioner’s income. 18. As per the petitioner’s own case, it had received the total deposits of Rs. 1,78,77,54,22,525/- from 2,37,83,732 persons and it had furnished KYC documents of 1051 persons for verification on exemplar basis. Therefore, we cannot accept that the petitioner had fully and truly disclosed all material facts necessary for its assessment. 19. In the reasons for re-opening of the assessment, it is stated that the identity, creditworthiness and genuineness of the depositors were 8 not verified during the course of assessment proceedings and the A.O. had made an addition of merely 25% of the deposits on presumptive basis without verification of the depositors and this had led to escapement of income amounting to Rs. 1,36,53,96,85,000/- as per the audit objection raised by the audit party. It gives rise to a reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. 20. In CIT v. P.V.S. Beedies (P) Ltd., (1998) 9 SCC 272, the Hon’ble Supreme Court held that: - “3. We are of the view that both the Tribunal and the High Court were in error in holding that the information given by internal audit party could not be treated as information within the meaning of Section 147(b) of the Income Tax Act. The audit party has merely pointed out a fact which has been overlooked by the Income Tax Officer in the assessment. The fact that the recognition granted to this charitable trust had expired on 22-9-1992 was not noticed by the Income Tax Officer. This is not a case of information on a question of law. The dispute as to whether reopening is permissible after audit party expresses an opinion on a question of law is now being considered by a larger Bench of this Court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law. The judgment under appeal is set aside to this extent.” (Emphasis Supplied) 21. In the present case also, the audit objection pointed out a factual error in the assessment, that an addition of merely 25% made on presumptive basis without verification of the depositors had led to escapement of income amounting to Rs. 1,36,53,96,85,000/-. In view of the law laid down by the Hon’ble Supreme Court in CIT v. P.V.S. Beedies (P) Ltd., reopening of the assessment is permissible on the basis of the factual error pointed out by the audit party. 22. In CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., (2008) 14 SCC 208, the Hon’ble Supreme Court held: - 9 “19. Section 147 authorises and permits the assessing officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word “reason” in the phrase “reason to believe” would mean cause or justification. If the assessing officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the assessing officer should have finally ascertained the fact by legal evidence or conclusion. The function of the assessing officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers.” 23. In Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77, the Hon’ble Supreme Court held that: - “25. From a combined review of the judgments of this Court, it follows that an Income Tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax Act, 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since, the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non- specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income Tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if on the basis of subsequent information, the Income Tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 10 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment.” 24. In Srikrishna (P) Ltd. v. ITO, (1996) 9 SCC 534, the Hon’ble Supreme Court held that: - “Now, what needs to be emphasised is that the obligation on the assessee to disclose the material facts — or what are called, primary facts — is not a mere disclosure but a disclosure which is full and true. A false disclosure is not a true disclosure. The disclosure must not only be true but must be full — “fully and truly”. A false assertion, or statement, of material fact, therefore, attracts the jurisdiction of the Income Tax Officer under Sections 34/147. Take this very case: the Income Tax Officer says that on the basis of investigations and enquiries made during the assessment proceedings relating to the subsequent assessment year, he has come into possession of material, on the basis of which, he has reasons to believe that the assessee had put forward certain bogus and false unsecured hundi loans said to have been taken by him from non-existent persons or his dummies, as the case may be, and that on that account income chargeable to tax has escaped assessment. According to him, this was a false assertion to the knowledge of the assessee. The Income Tax Officer says that during the assessment relating to subsequent assessment year, similar loans (from some of these very persons) were found to be bogus. On that basis, he seeks to reopen the assessment. It is necessary to remember that we are at the stage of reopening only. The question is whether, in the above circumstances, the assessee can say, with any justification, that he had fully and truly disclosed the material facts necessary for his assessment for that year. Having created and recorded bogus entries of loans, with what face can the assessee say that he had truly and fully disclosed all material facts necessary for his assessment for that year? True it is that Income Tax Officer could have investigated the truth of the said assertion — which he actually did in the subsequent assessment year — but that does not relieve the assessee of his obligation, placed upon him by the statute, to disclose fully and truly all material facts. Indubitably, whether a loan, alleged to have been taken by the assessee, is true or false, is a material fact — and not an inference, factual or legal, to be drawn from given facts. In this case, it is shown to us that ten persons (who are alleged to have advanced loans to the assessee in a total sum of Rs 3,80,000 out of the total hundi loans of Rs 8,53,298) were established to be bogus persons or mere name- lenders in the assessment proceedings relating to the subsequent assessment year. Does it not furnish a reasonable ground for the Income Tax Officer to believe that on account of the failure — indeed not a mere failure but a positive design to mislead — of the assessee to disclose all material facts, fully and truly, necessary for his assessment for that year, income has escaped assessment? We are of the firm opinion that it does. It is necessary to reiterate that we are now at the stage of the validity of the notice under Sections 148/147. The enquiry at this stage is only to see whether there are reasonable grounds for the Income Tax Officer to believe and not 11 whether the omission/failure and the escapement of income is established. It is necessary to keep this distinction in mind. A recent decision of this Court in Phool Chand Bajrang Lal v. ITO, we are gratified to note, adopts an identical view of law and we are in respectful agreement with it. The decision rightly emphasises the obligation of the assessee to disclose all material facts necessary for making his assessment fully and truly. A false disclosure, it is held, does not satisfy the said requirement. We are also in respectful agreement with the following holding in the said decision” (Emphasis supplied) 25. Examining the reasons for reopening of the assessment in light of the above referred judgments, we find that the petitioner had not made full and true disclosure of all the material facts and on the basis of the audit objection, the A.O. has formed reason to believe that income amounting to Rs. 1,36,53,96,85,000/- had escaped assessment and this, in our opinion, was sufficient reason for initiating reassessment proceedings under Section 147 of the Act. 26. The learned counsel for the petitioner has next submitted that the petitioner has already been subjected to assessment under Section 143 (3) after a full length examination of its claim for genuine collection of deposits and receipts of share capital and the A.O. had already formed an opinion about the claim of genuineness and creditworthiness of the deposits and share capital received by the petitioner and, therefore, the A.O. could not have issued the notice under Section 148 of the Act to re-visit the issue without bringing any fresh material on record. The reassessment proceedings have been initiated on a mere change of opinion, which is not permissible in law. 27. He has placed reliance upon a judgment of the Hon’ble Supreme Court in CIT Vs. Kelvinator of India Ltd., (2010) 2 SCC 723 wherein it has been held that:- “6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place.” 12 28. The learned counsel for the petitioner has placed reliance on another decision of Hon’ble Supreme Court in the case of New Delhi Television Ltd. Vs. DCIT, 2020 Scc Online SC 446, in which Hon’ble Supreme Court has held as follows: - “36.In our view the assessee disclosed all the primary facts necessary for assessment of its case to the assessing officer. What the revenue urges is that the assessee did not make a full and true disclosure of certain other facts. We are of the view that the assessee had disclosed all primary facts before the assessing officer and it was not required to give any further assistance to the assessing officer by disclosure of other facts. It was for the assessing officer at this stage to decide what inference should be drawn from the facts of the case. In the present case the assessing officer on the basis of the facts disclosed to him did not doubt the genuineness of the transaction set up by the assessee. This the assessing officer could have done even at that stage on the basis of the facts which he already knew. The other facts relied upon by the revenue are the proceedings before the DRP and facts subsequent to the assessment order, and we have already dealt with the same while deciding Issue No. 1. However, that cannot lead to the conclusion that there is non- disclosure of true and material facts by the assessee.” 29. He has also placed reliance on the decision in ITO Vs. Tech Span India Pvt. Ltd., 404 ITR 10 (SC), ACIT Vs. Marico Ltd., (2020) 117 Taxmann.com 244 (SC) and has submitted that the petitioner had disclosed all the facts relating to collection of deposits and share capital and the A.O. had examined all the issues in detail in the assessment order and has also considered that the assessee is engaged in the business of Multi State Co-operative Society and, therefore, the entire amount of deposits cannot be taken as non- genuine. As per the petitioner, the A.O. had formed an opinion that the petitioner had collected the major share deposits in small denomination mainly in daily schemes and, therefore, the entire amount of share capital deposits collected by it cannot be treated as non-verifiable. 30. As we have already observed, the petitioner had collected deposits from 2,37,83,732 persons and it had furnished KYC documents of only 1051 persons. Moreover, the assessment order 13 mentions that the petitioner provided the Income Tax return of only one depositor, and PAN of only eight depositors and it did not provide the bank statement of not even a single depositor. In these circumstances, it is for the A.O. to decide during the re-assessment proceedings as to how much of the deposits can be taken to be genuine or otherwise and the petitioner will have opportunity to put up and prove its case, but while exercising the Writ jurisdiction, we cannot record a finding as to how much of the deposits can be taken to be genuine. 31. Regarding the petitioner’s submission that the A.O. has proceeded to initiate reassessment proceedings merely on the basis of a change of opinion, we may state that the judgment of Kelvinator of India Ltd. (Supra) cited by the petitioner and the meaning of the expression “change of opinion” has been explained by the Hon’ble Supreme Court in CIT v. Techspan India (P) Ltd., (2018) 6 SCC 685, in the following words: - “16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words “change of opinion” imply formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 17. It is well settled and held by this Court in a catena of judgments and it would be sufficient to refer to CIT v. Kelvinator of India Ltd. wherein this Court has held as under: (SCC p. 725, para 5-7) “5. … where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words “reason to believe”…. Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of “mere change of opinion”, which cannot be per se reason to reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 14 7. One must treat the concept of “change of opinion” as an in-built test to check abuse of power by the assessing officer. Hence, after 1- 4-1989, assessing officer has power to reopen, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.” 18.Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings.” (Emphasis supplied) 32. As we have already held, in the present case all material facts relating to identity, creditworthiness and genuineness of the investors relevant for the assessment on the issues under consideration were not produced during the assessment proceedings and, therefore, in absence of the entire relevant material, the A.O. could not have examined the issues and could not have formed appropriate opinion regarding the same during the original assessment proceedings. Therefore, it is not a case of change of opinion and challenge to the notice under Section 148 of the Act on the ground that it seeks to initiate reassessment on the ground of change of opinion, cannot be accepted. 33. The learned counsel for the petitioner has further submitted that the sole reason for re-opening of the assessment was that the A.O. had disallowed 25% of the collection of the deposits and interest thereon, which is presumptive in nature. The presumptive income is defined in Chapter IV of the Income Tax Act with respect to computation of business income and Section 44 AD and 44 BBB of the Act defines the presumptive income in certain circumstances. The issue of 15 presumptive income is purely a question of law on which no reassessment could have been done on the basis of audit objection. 34. To appropriately appreciate the aforesaid submission made by learned counsel for the petitioner, relevant provisions of Sections 44 AD of the Act, as it stood at the relevant time, is being reproduced below: - “44-AD. Special provision for computing profits and gains of business on presumptive basis.— (1) Notwithstanding anything to the contrary contained in Sections 28 to 43-C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”. ……. Explanation.— For the purposes of this section,— (a) …. (b) “eligible business” means,— (i) ... (ii) whose total turnover or gross receipts in the previous year does not exceed an amount of one crore rupees. 35. It is not the petitioner’s case that its total turnover or gross receipts in the previous year did not exceed the amount of one crore rupees and, therefore, it does not fall within purview of “an eligible assessee engaged in an eligible business” and, therefore, Section 44 AD does not apply to the petitioner. 36. Section 44 BBB of the Act contains Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects. Undisputedly, the petitioner is not a foreign company and, therefore, Section 44 BB would also not apply to it. 37. Therefore, we are unable to accept the submission made on behalf of the petitioner that presumptive income is purely a question 16 of law and has to be decided as per provisions contained in Section 44 AD and 44 BBB of the Act. 38. The learned counsel for the petitioner has also submitted that the assessment order under Section 143 (3) was passed on 31.03.2016 and the notice under Section 148 of the Act has been issued on 22.03.2021, which is beyond 4 years from the end of the assessment year as stipulated in proviso appended to Section 147 of the Act. It is not a case where the assessee had failed to disclose fully and truly all material facts necessary for the assessment. 39. Shri Mishra, learned counsel for Revenue has submitted in reply that from the narration made in the assessment order dated 31.03.2016, it is evident that the petitioner had not made true and full disclosure of all material facts and, therefore, the present case falls under the exception carved out in the first proviso to Section 147 of the Act, which provides as follows: - “Provided that where an assessment under sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the 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 part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year” 40. As we have already held that the petitioner had failed to disclose fully and truly all material facts necessary for the assessment, the bar of four years would not apply. 41. The learned counsel for the petitioner next submitted that the notice under Section 148 of the Act was issued on 22.03.2021 by the DCIT/ACIT-3, Lucknow-New whereas the letter written by the member CIT-1/Lucknow to Additional CIT Range III (4), Lucknow communicating approval under Section 151 for issuance of notice under Section 148 of the Act was received by the A.O. on 24.03.2021. 17 Thus on the date of issuance of notice i.e. on 22.03.2021, the A.O. was not having any approval/sanction of ACIT-1 Lucknow. 42. In reply to the aforesaid submission, Sri. Manish Misra has stated that PCIT-1, Lucknow had granted approval under Section 151 of the Act on 20-03-2020 and the approval was uploaded on the portal of the Department. Acting on the approval uploaded on the portal, the A.O. issued the notice under Section 148 of the Act on 22-03-2020, without waiting for receipt of the paper copy of the approval. 43. We find that there is no need for the paper containing approval being received physically before issuing the notice and the A.O. can proceed to issue a notice under Section 148 of the Act if the approving authority has granted his approval and the approval has been communicated to the A.O. in any manner – including by uploading the approval on the portal of the Department. The notice under Section 148 of the Act is not vitiated on the ground that the paper containing approval under Section 151 was received by the A.O. after issuing the notice. 44. In view of the foregoing discussion, we are of the considered opinion that the petitioner did not make a true and full disclosure of all the material facts and the A.O. had reason to believe that the petitioner’s income for the relevant year had escaped assessment. The notice dated 22-03-2020 issued under Section 148 of the Act as well as all the proceedings undertaken in consequence of the notice, including the order dated 25-01-2022 passed by the National Faceless Assessment Centre rejecting the petitioner’s objections against the notice, do not suffer from any such illegality so as to warrant any interference by this Court in exercise of its extraordinary discretionary Writ Jurisdiction. 45. The Writ Petition lacks merits and is, accordingly, dismissed. 46. No order as to costs. Order Date :- 20.04.2022 Abhishek Singh/Jaswant Digitally signed by ABHISHEK SINGH Date: 2022.04.26 13:04:34 IST Reason: Location: High Court of Judicature at Allahabad, Lucknow Bench "