TMI Blog2010 (10) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... II, Thane, passed on 18/06/2009 for the assessment year 2001-06. The Assessee has also filed C.O. against the very same order of CIT(A). 2. The facts in brief are that the assessee firm is carrying on business of consultancy in infrastructure environmental and power engineering works. For the year under consideration, the assessee firm had given consultancy for environmental projects to various govt, departments at Mumbai, Madras, Calcutta and other Metropolitan cities. The assessee filed its return of income declaring income of Rs. 5,16,560/- on 31/10/2001. During the course of assessment proceedings the AO had raised the following queries:- (i) Why depreciation of 100% be allowed on the machinery namely marine outfall machinery ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment read with section 147 dated 20/11/2008. As against the order of AO, the assessee carried the matter to the CIT(A) and the CIT(A) without considering the objection raised by the assessee under section 148, had decided the issue on merit. 5. Aggrieved by the order of CIT(A), the revenue filed appeal before the ITAT and the assessee raised C.O. 6. We have heard the learned representatives of the parties and perused the record. The issue to be examined under consideration is whether the AO was correct in reopening the assessment by issuing notice under section 148 dated 27/03/2008 on the completed assessment with the reasons recorded. To examine the issue we would like to refer section 147 which reads as under:- "147 [Income es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment.] 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters in regard to which he is required to entertain the belief before he can issue notice under S. 148. If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the AO could not have reason to believe that any part of the income of the assessee had escaped assessment under that circumstances the notice issued by him would be liable to be struck down as invalid. 8. The basis for initiating the reassessment proceedings is to be judged solely on the basis of reasons recorded by the Assessing Officer and the material and information referred to by him in the reasons for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same set of facts. From the earlier assessment which clearly assumes that the Assessing Officer applied his mind to the computation of income and, therefore, in a case like this it would not be open to the Assessing Officer to issue notice under section 148 of the Act. When the primary facts necessary for assessment are fully and truly disclosed, the ITO will not be entitled on change of opinion to commence proceedings for reassessment. Similarly, if he has raised a wrong legal inference from the facts disclosed, he will not, on that account, be competent to commence reassessment proceedings .Having second thoughts on the same material, and omission to draw the correct legal presumption during original assessment do not warrant the initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as forming an opinion that the assessee is eligible for the claim. Now issuing notice under section 148 is bad in law and lead to change of opinion, which is not permissible in the eye of law as it is not the case of the AO that the assessee has not disclosed fully and truly all the material facts necessary for the assessment. In the light of above discussion, and under the facts and circumstances of the case, we are of the considered view that there is no belief of the AO which can be said to be in accordance with section 147, therefore, the order of the AO is liable to be quashed on this legal issue itself. We do so and allow the cross objections raised by the assessee in C.O. Since we have decided the issue legally, therefore, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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