TMI Blog2009 (9) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... s 147 valid – decided in favor of revenue - 6/07/7/07/8/06/8/07 - - - Dated:- 15-9-2009 - RANJAN GOGOI and KATAKEY B. P. JJ. Judgment: B. P. Katakey J.- These appeals under section 260A of the Income-tax Act, 1961 (in short, the Act) are directed against the common order dated September 16, 2005, passed by the Income-tax Appellate Tribunal, Gauhati Bench, Guwahati in I. T. A. Nos. 96, 97, 98 and 99 (Gau) of 2003 relating to the assessment years 1997-98, 1998-99, 1999-2000 and 2000-01, dismissing the appeals preferred by the Revenue against the common order dated August 4, 2003, passed by the Commissioner of Income-tax (Appeals), Dibrugarh in Appeals Nos. 2 (TSK), 3 (TSK), 4 (TSK) and 5 (TSK) of 2003-04. 2. This court, while admitting I. T. A. No. 8 of 2006, vide order dated May 19, 2006, had formulated the following substantial question of law : "(i) Whether initiation of a proceeding under section 147 of the Income-tax Act, 1961, is permissible under the law for reversal of the assessment order already passed on consideration of the materials on record ?" 3. I. T. A. Nos. 6, 7 and 8 of 2007 have been admitted for hearing, vide order dated August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and assess-ing the total income for the said assessment years by inclusion of transport subsidy, under section 147 of the Act. 5. Being aggrieved, the assessee preferred four separate appeals before the Commissioner of Income-tax (Appeals) (in short, CIT(A)), which were taken up for disposal together, the same having involved the same ques-tion of law. The Commissioner of Income-tax (Appeals), vide order dated August 4, 2003 has allowed the appeals by setting aside the orders passed by the Assessing Officer, on the ground that the assessment for the said years having been completed under section 143(1) of the Act, no assess-ment under section 147 of the Act can be made on reappraisal of pre-exist-ing materials on record, which tantamounts to change of opinion. The Revenue, thereafter, filed I. T. A. Nos. 96, 97, 98 and 99 (Gau) of 2003 before the learned Income-tax Appellate Tribunal, Gauhati Bench, Guwa-hati, which have been dismissed, vide the common order dated September 16, 2005, concurring with the view taken by the Commissioner of Income-tax (Appeals) and by holding that since there was no fresh information or material before the Assessing Officer, he had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 989, the requirement of passing an order under the said provision has been dispensed with and instead, an intimation only is required to be sent. There is, therefore, no assessment and formation of opinion by the Assessing Officer while issu-ing the intimation under section 143(1)(a) of the Act and the same being not an assessment within the meaning of the Act, the Assessing Officer is authorized to take action under section 147 of the Act, in case of escaped assessment. According to the learned counsel, for the same reason there is no question of change of opinion by the Assessing Officer while taking action under section 147 of the Act. Mr. Bhuyan has submitted that the expression "reason to believe" has to be understood in the context in which it is used in section 147 of the Act and hence the decisions of the various courts including of the apex court relating to such expression, ren-dered prior to the Amendment Act of 1987, with effect from April 1, 1989, cannot be applied in the present cases, the same being in respect of the assessment years after April 1, 1989. It has further been submitted that since the intimation issued under section 143(1)(a) of the Act is not an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deserved to be dismissed and accordingly, those have rightly been dis-missed by the learned Tribunal. 9. Mr. Agarwal has further submitted that the materials on the basis of which the notices under section 148 of the Act were directed to be issued, were already available before the Assessing Officer, as those were placed along with the original returns of income filed by the assessee and there being absolutely no new material placed or coming to the knowledge of the Assessing Officer to record his belief that there is an escaped assess-ment, the same materials cannot be the basis for the Assessing Officer to take action under section 147 of the Act. Mr. Agarwal, has submitted that, in any case, the transport subsidy is not taxable as income under the pro-visions of the Act. 10. Mr. Agarwal, in support of his contentions has placed reliance on the decisions of the apex court in Sheo Nath Singh v. AAC [1971] 82 ITR 147 (SC) ; ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) of this court in Assam Co. Ltd. v. Union of India [2005] 275 ITR 609 (Gauhati) of the Bom-bay High Court in Hindustan Lever Ltd. v. R. B. Wadkar, Asst. CIT (No. 1) [2004] 268 ITR 332 (Bom) and of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, 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. By the Finance Act, 2008, with effect from April 1, 2008, a second proviso to section 147 has been inserted authorizing the Assessing Officer to assess or reassess such income, other than the income involving matters which are the subject-matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 2 to section 147 of the Act stipulates the cases, which shall constitute escaped assessment. 13. It, therefore, appears that the Assessing Officer must record his "reason to believe" to take action under section 147 of the Act, whether it pertains to the assessment year prior to April 1, 1989 or thereafter, i.e., under the unamended as well as the amended provision of law. The expression "reason to believe" has naturally to be understood in the context of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee had escaped assessment. 15. A single Bench of this court in Assam Co Ltd. [2005] 275 ITR 609, has also observed that for exercising the jurisdiction under section 147 of the Act, there must be relevant and rational reason on which the Assessing Officer proceeds to act, which must have a bearing on the process of for-mation of the belief by the Assessing Officer that the income has escaped assessment, it has further been observed that if either of these two essen-tials is absent, the action under section 147 would be unauthorized. A Divi-sion Bench of the Gujarat High Court in Praful Chunilal Patel [1999] 236 ITR 832, while dealing with the expression "reason to believe", has opined that the word "reason" would mean cause or justification and, therefore, if the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. It has further been observed that the expression "reason to believe" cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. What requires is the formation of a beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken against an assessee if the Assessing Officer, for whatever reason, has reason to believe that the income has escaped assess-ment. The requirement of fulfilling the two conditions as stipulated in the un-amended provision of section 147(a) of the Act no longer exists after the new section 147 has been substituted by the said Amendment Act. 17. Under section 143(1), as it stands with effect from April 1, 1989, as held by the apex court in Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500, no assessment is made and there is no formation of opinion by the Assessing Officer. Therefore, there being no formation of opinion at the stage of issuance of intimation under section 143(1)(a), there is no question of change of opinion by the Assessing Officer while taking action under section 147 of the Act. In the present cases, the principal ground on which the learned Tribunal has dismissed the appeals preferred by the Revenue is that the action on the part of the Assessing Officer is merely on a change of opinion in the context of the earlier assessment made under section 143(1) of the Act and hence is not sustainable in law. 18. What transpires from the judicial pronoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he must have also reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that assessment year, the new provision of section 147 requires the fulfilment of only one condition, namely, the Assessing Officer has "reason to believe" that the income has escaped assessment. Once the said condition is fulfilled, it confers jurisdiction upon the Assessing Officer to take action under section 147 of the Act. As held by the apex court in Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500, such formation of belief may be for whatever reason. 20. There being no finality to the assessment at the stage of issuance of inti-mation under section 143(1)(a), it will be justified for an Assessing Officer to take into consideration the materials placed before him by an assessee along with his original return of income, if such materials had escaped the notice of the Assessing Officer, for whatever may be the reason. It is open to the Assessing Officer to take into consideration such materials already available before him for the purpose of forming th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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