TMI Blog2011 (6) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the assessee, as set out in the first ground of appeal of the assessee, is as follows:- 1. On the facts and under the circumstances of the case and in law, the learned Commissioner of Income-Tax (Appeals) [(CIT(A)] has erred in upholding the proceedings u/s 147 of the Income-tax Act, 1961 (the Act ), initiated by the learned Assessing Officer. The Appellant prays that the reassessment order be set-aside. 4. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee before us is a public charitable trust, registered under the Bombay Public Trust Act 1950 as also under the Income Tax Act 1961. The assessee has filed it s income tax return, disclosing an income of Rs. 81,36,94,364/- on 08.10.2010. This return was processed under section 143(1) on 25.02.2012. The matter, however, did not end there. Notice under section 148 of the Act was issued and reassessment proceedings were initiated for the year under consideration. The reasons recorded by the Assessing Officer on 10.01.2014 were provided to the assessee, which reads as under:- Reason for opening of assessment u/s. 148 of the I.T Act. A) The assessee filed its return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for A.Y.2010-11. B) The assessee has claimed exemption u/s.10(33) of Rs.96,16,26,397/- which was not in order. As the assessee has received dividend on the Investments from shares / units which is income derived from property/investment held under trust wholly for charitable tor religious purpose. Therefore, the same dividend income should have been offered as income and should be subjected to the norms of application of income (i.e. 85% of unaccumulated income should be taxed in the year). As the dividend income was excluded from the gross income, the same was not included as income derived from the property held under a trust. Therefore an income of Rs. 96,16,26,397/- has escaped income for the A.Y.2010-11. C) The assessee claimed deduction U/s.11(1)(a) of Rs.54,56,784/- (15% of gross income) which was not in order. As the assessee has shown deficit of Rs. 81,36,94,364/- after claiming exemption u/s.11(1)(a) of Rs.54,56,784/- during the year, the exemption u/s.11(1)(a) was required to be restricted to Nil. Hence excess allowance of accumulation of Rs.54,56,784/-has been wrongly claimed by the assessee. Therefore an income of Rs.54,56,784/- has escaped income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14, the assessee again requested for providing reasons for reopening of the assessment. Subsequently, the reasons were supplied to the assessee during the course of hearing, consequent to the notice issued by the AO u/s.143(2) and 142(1) dated 26.09.2014. Accordingly, it is not a case or the contention of the assessee that the copy of the reasons recorded were not provided to the appellant. The appellant, relying on the decision of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs DCIT (supra) have contended that the procedure prescribed as per law for reopening of the assessment has not been followed. In this regard, it is stated that the law laid down by the Hon'ble Supreme Court stipulates that the assessee can ask for reasons recorded after having complied with the notice u/s. 148 and it is only after that, the AO is bound to furnish within reasonable time such reasons recorded. In the decision, the Hon'ble Supreme Court have not observed anywhere that the reasons are necessarily to be issued or supplied to the assessee prior to any issue of notice u/s.143(2)/142(1) of the Act. It is further not the case that the reasons in this case have not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enough to cover all the aspects of assessee s challenge to reassessment proceedings under section 147 of the Act. Learned Senior Counsel by referring to assessee s submission dated 20.11.2014 submitted that the assessment proceedings were also challenged on this aspect. 11. We have considered the rival submissions and perused the material available on record. In the present case, return filed by the assessee was processed vide intimation issued under section 143(1) of the Act and same was not selected for scrutiny and thus, no order under section 143(3) of the Act was passed. The Assessing Officer, pursuant to notice issued under section 148 of the Act, initiated reassessment proceedings. Copy of reasons recorded for reopening the assessment was subsequently provided to the assessee. From the perusal of the reasons recorded for reopening the assessment, as reproduced above, it is evident that the impugned reassessment proceedings has been initiated after perusal of the return and other annexures filed by the assessee along with the return. This fact has also been admitted by the Assessing Officer vide its order dated 02.12.2014 rejecting assessee s objections against impugned r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing assessee s objections: 13. Having regard to the judicial interpretation placed upon the expression reason to believe , and the continued use of that expression right from 1948 till date, we have to understand the meaning of the expression in exactly the same manner in which it has been understood by the courts. The assumption of the Revenue that somehow the words reason to believe have to be understood in a liberal manner where the finality of an intimation under Section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in Section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore it is not permissible to adopt different standards while interpreting the words reason to believe vis- -vis Section 143(1) and Section 143(3). We are unable to appreciate what permits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under Section 143(3) cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d expression should apply to an intimation in the same manner and subject to the same interpretation as it would have applied to an assessment made under section 143(3). The argument of the revenue that an intimation cannot be equated to an assessment, relying upon certain observations of the Supreme Court in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) would also appear to be self-defeating, because if an intimation is not an assessment then it can never be subjected to section 147 proceedings, for, that section covers only an assessment and we wonder if the revenue would be prepared to concede that position. It is nobody's case that an intimation cannot be subjected to section 147 proceedings; all that is contended by the assessee, and quite rightly, is that if the revenue wants to invoke section 147 it should play by the rules of that section and cannot bog down. In other words, the expression reason to believe cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in writing. The proviso to section 147 imposes an additional condition in a situation where action is sought to be taken after the expiry of four years from the end of the relevant assessment year and that condition is that the income chargeable to tax must have escaped assessment for such assessment year by reason of the failure on the part of the assessee inter alia to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the present case, admittedly, the notice under Section 148 has been issued within a period of four years of the expiry of relevant assessment year. Therefore, the condition which is imposed by the proviso to section 147 has no application. The only question in such a case is as to whether the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment. Another facet of the matter which must be taken into consideration is that in the present case, an assessment order has not been passed under section 143(3), a circumstance which has been emphasised by counsel for the Revenue. The case is, therefore, at the stage of an intimation under section 143(1). After 1st April, 1989 the power ..... X X X X Extracts X X X X X X X X Extracts X X X X
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