TMI Blog2011 (3) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... f these appeals in brief are that for the assessment year 1997-98, assessee filed return at a total loss of about Rs. 17.20 crores. This return was processed under section 143(1)(a) of the Income-tax Act (hereinafter referred to as "the Act"). Subsequently, the case was selected for scrutiny and assessment was completed under section 143(3) of the Act on 26th November, 1999 at a total loss of about Rs. 5.28 crores after making certain additions and unabsorbed losses and depreciation. The assessee preferred appeal before the Commissioner, Income-tax (Appellate) [hereinafter referred to as "CIT(A)"], who allowed certain reliefs to the assessee and after giving effect to the appellate order, the assessment order for the year under consideration was revised on a net loss of about Rs. 5.33 crores. Subsequently, after expiry of four years, on the basis of information available with the Department primarily based on the audit report, it surfaced that certain income chargeable to tax has escaped assessment for the assessment year under consideration and based on this, the Assessing Officer issued a notice dated 31.3.2004 under section 148 of the Act followed by another notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the issues that were subject-matter of reassessment proceedings, the assessee has made full and complete disclosure and the Assessing Officer framed opinion of those issues. Except for the audit objection, there appears to be no material whatsoever for issuance of the notice under section 147 of the Act. So, in these circumstances, we accept the contention of the assessee that reassessment proceedings are based on mere change of opinion and not on any valid material and it is now well-settled that an opinion of an internal audit party of the I.T. Deptt. on a point of law cannot be regarded as an information within the meaning under section 147 of the Act. Having regard to these discussions, we cancel the reassessment proceedings framed under section 148 of the Act. As we have cancelled the reassessment on the point of jurisdiction, we do not find it necessary to go into the merits of the case. Accordingly, appeal is allowed." 3. Against this order, the Revenue has come in appeal in ITA No. 1391/2009. 4. In the appellate penalty proceedings, CIT(A) vide its order dated 15.12.2006 following the order of quantum proceedings cancelled the penalty with reference to the first addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, on the charge of concealment. Therefore, in our considered opinion, penalty cannot be levied even in respect of the second addition under section 271(1)(c). We, therefore, cancel the penalty sustained by the CIT(A)." 6. From the above chronological narration of facts and the findings recorded by the authorities below, it is seen that the basis of issue of notice under section 148 for reassessment for the assessment year under consideration was nothing but the internal audit report. In the Reasons to Believe as recorded by the Assessing Officer, he had mentioned about the objections as raised in the audit report. Based on this audit report, a review was sought to be made by the Assessing Officer under the name of reassessment alleging escape of income in the assessment already concluded. With regard to the aforesaid two entries, the particulars were already available before the Assessing Officer. The assessee had made complete disclosure of the particulars before the Assessing Officer in the proceedings of assessment under section 143(3). 7. Reopening of assessment after four years was apparently not permissible. There is a catena of judgments with regard to the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an inbuilt test to check abuse of power by the Assessing Officer." 9. In another case of our High Court entitled CIT v. Eicher Ltd. [2007] 294 ITR 310/163 Taxman 259, after making reference to different judgments of various High Courts, it was observed that if the entire material had been placed by the assessee before the Assessing Officer at the time when the original assessment was made and the Assessing Officer applied his mind to that material and accepted the view canvassed by the assessee, then merely because he did not express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. On the other hand, if the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessee should be made to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
