TMI Blog2022 (11) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion u/s.147 of the Act, which is not permissible in the eyes of law. A.O had exceeded his jurisdiction and reopened the concluded assessment in the case of the assessee merely on the basis of change of opinion u/s.147 which is not permissible in the eyes of law. Thus, on the basis of my aforesaid observations quash the reassessment framed by the A.O vide order passed u/s.144 r.w.s. 147 for want of valid assumption of jurisdiction on his part. Appeal of the assessee is allowed. - ITA No. 04/RPR/2022 - - - Dated:- 23-11-2022 - Shri Ravish Sood, Judicial Member For the Assessee : Shri Praveen Jain, CA For the Revenue : Shri Gitesh Kumar, Sr. DR ORDER PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 15.11.2021, which in turn arises from the order passed by the A.O under Sec. 144 r.w.s. 147 of the Income-tax Act, 1961 (in short the Act ) dated 28.11.2019 for the assessment year 2012-13. The assessee has assailed the impugned order on the following grounds of appeal: 1. Ground 1: That the order of Ld. AO is opposed to la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained by the CIT(A) itself is bad in law, initiation of penalty itself is bad in Law. 9. Ground 9: The appellant craves leave to add, amend, alter and delete the ground(s) of appeal at the time of hearing the appeal. III. RELIEF SOUGHT That above mentioned disallowance amounting to Rs.6,27,368/- made by Ld. AO and sustained by CIT(A) is uncalled for, against the natural justice may kindly be deleted. 2. Succinctly stated, the assessee had filed her return of income for the assessment year 2012-13 on 31.03.2013, declaring an income of Rs.3,73,910/-. Original assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) dated 16.03.2015 determining the income of the assessee at Rs.4,01,095/-. Case of the assessee was thereafter reopened u/s.147 of the Act. Notice u/s.148 dated 02.08.2018 was issued to the assessee calling upon her to file her return of income in compliance thereto. As the assessee failed to comply with the notice issued u/s.148 of the Act, dated 02.08.2018, therefore, the A.O vide Show Cause Notice (SCN), dated 23.10.2019 called upon her to explain as to why the assessment in her case may not be framed u/s.144 r.w.s. 147 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it share of Rs.4,69,792/- from the aforesaid firm, viz. Balaji Distributors (supra), therefore, the interest expenditure of Rs.6,27,368/- (supra) that was claimed by her as a deduction u/s.57 of the Act, having not been incurred wholly and exclusively for earning of the interest income u/s.56 of the Act from the said firm, thus, was wrongly allowed as a deduction by his predecessor while framing the original assessment u/s.143(3) of the Act, dated 16.03.2015. Accordingly, the A.O on the basis of his aforesaid deliberations reopened the assessee s concluded assessment and disallowed her claim for deduction of interest expenditure of Rs.6,27,368/- (supra) u/s.57 of the Act. 9. The Ld. Authorized Representative (for short A.R ) for the assessee, had at the very outset of the hearing of the appeal assailed the validity of the jurisdiction that was assumed by the A.O for reopening the concluded assessment of the assesee. It was the claim of the ld. A.R that the A.O had reopened the concluded assessment of the assessee merely on the basis of a change of opinion, on the same set of facts as were available before the A.O while framing of the original assessment u/s.143(3), dated 16.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case was selected for scrutiny and assessment was completed u/s. 143(3) at Rs.4,01,095/- on 16.03.2015 by making addition of Rs.27,185/- on account of low withdrawal for household expenses. On perusal of computation of income for the A.Y.2012-13, it is found that the assessee has shown income from interest to the tune of Rs.5,64,841/- and claimed expenses of Rs.6,53,060/- against this income ( under the head interest paid to ICICI of Rs.6,09,143/-, interest to LIC loan of Rs.18,225/-, and interest to Sharda Nathani of Rs.25,692/) The discrepancy is noted above press that the assessee has utilized the secured loans taken from ICICI and LIC to meet the expenses of business and not to earn interest income as claimed by the assessee. Herein, it is pertinent to mention that to claim deduction u/s.57 of the IT Act, it is important to satisfy the following conditions: (i) the expenditure must have been laid out or expended wholly and exclusively for the purpose of making or earning income from other sources Therefore, in view of Para (b) of explanation 2 of Section 147, income chargeable to tax of Rs.6,27,368/- has escaped assessment. In view of above, I have reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to ITA No.1212/Mum/2019 A.Y. 2012- 13 M/s Medley Pharmaceuticals Ltd. Vs. DCIT-10(2)(2) give a schematic interpretation to the words reason to believe failing which, we are afraid, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition 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. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, AO 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 format ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing deduction under s. 80M. The AO after applying his mind to the relevant records had made a specific order allowing the deduction. A perusal of the record shows that now respondent No. 1 proposes to reopen the assessment because according to him deduction under s. 80M was wrongly allowed, and, therefore, he was of the opinion that the income has ITA No.1212/Mum/2019 A.Y. 2012-13 M/s Medley Pharmaceuticals Ltd. Vs. DCIT-10(2)(2) escaped assessment. Though, in the notice respondent No. 1 has used the phrase reason to believe , admittedly between the date of the order of assessment sought to be reopened and the date of forming of opinion by respondent No. 1, nothing new has happened and there is no change of law, no new material has come on record, no information has been received. It is merely a fresh application of mind by the same officer to the same set of facts. Thus, it is a case of mere change of opinion, which, in our opinion, does not provide jurisdiction to respondent No. 1 to initiate proceedings under s. 148 of the Act. It can now be taken as a settled law, because of a series of judgments of various High Courts and the Supreme Court, which have been referred to in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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