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2016 (9) TMI 1528 - HC - Income TaxRe-asessment u/s 148 - change of opinion - eligibility of reason to believe - HELD THAT:- The standard of reason exercised by Assessing Authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material, cannot be a "reason to believe" that a case of escaped assessment exists requiring assessment proceedings to be reopened. If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making assessment, and again a different or divergent view is reached, it would tantamount to "change of opinion". If an Assessing Authority forms an opinion during original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for reassessment. Thus, "reason to believe" cannot be said to be the subjective satisfaction of Assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between "change of opinion" and the material present before Assessing Authority. Discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to re-initiate proceedings on the basis of change in subjective opinion. When we go through the reasons assigned in the notice dated 31.3.2015, we find that Assessing Authority has failed to decide the objections raised by petitioner in accordance with law. The authorities had already assessed and passed final order for the said assessment year. All the material was before the authorities, no rational is disclosed in the order passed by Assessing Authority regarding escapement of income which was already assessed. We find that return to the tune for a total income of ₹ 4,47,70,070/- and ₹ 5,42,80,400/- were filed for A.Y. 2011-12 and A.Y. 2012-13 respectively. Assessment with respect to A.Y. 2011-12 was subsequently rectified for a mistake in conclusion of depreciation. For A.Y. 2012-13 assessment was completed under Section 143(3) vide order dated 9.12.2014. In its objection to the notice under Section 148 of Act, 1961, petitioner has denied entering into any transaction with any of the persons mentioned in the notice or on whom said was carried. The reason given by Assessing Officer has merely recorded a reason to suspect that certain transactions have escaped assessment. There is no material on record to show nor any material could be pointed out by Revenue so as to justify re-assessment proceedings under Section 148 of Act, 1961. We are satisfied that the so called reasons mentioned by authority concerned, for all Assessment Years in question, for justifying re-assessment proceedings under Section 147/148 of Act 1961, are illegal, showing non application of mind and an arbitrary exercise on the part of authority concerned. The writ petitions are allowed to the extent of notices issued by authority concerned under Section 148 and orders rejecting objection filed by petitioner against re-assessment under Section 147/148 of Act 1961, are hereby quashed.
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