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TMI Blog2011 (1) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded capital gains of Rs.1,30,21,230/-. The return was selected for scrutiny assessment. During the course of scrutiny assessment, in response to notice dated 17.10.2008 issued under section 142(1) of the Act, the petitioner filed a revised statement of total income at Rs.99,45,288/- which included capital gains of Rs.95,14,653/- as against the originally declared capital gains of Rs.1,30,21,230/-. Assessment came to be framed, vide order dated 3rdDecember, 2008 under section 143 (3) of the Act accepting the revised statement submitted by the petitioner and determining the total income of the petitioner at Rs.99,45,288/-. 4. Thereafter vide the impugned notice under section 148 of the Act issued on 28.07.2010, the respondent sought to re-open the assessment for the year under consideration. In response thereto, the petitioner filed return of income and requested for supply of reasons for proposed re-opening. Upon receipt of thereasons, the petitioner, vide letter dated 22.09.2010 raised objections to the re-opening both on facts as well as in law and submitted that since the very re-opening is without jurisdiction, no further action be taken in this regard. It was pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to the very issue on the basis of which assessment is now sought to be re-opened by the Assessing Officer, it is not open for the respondent now to change that opinion and take a different stand based on the very same set of facts and circumstances. It was contended that the petitioner had not filed a revised return and had only submitted a revised statement pointing out an arithmetical mistake in computation. According to the learned advocate, the Assessing Officer had issued a questionnaire calling for certain details pursuant to which the petitioner was duty bound to furnish correct details, hence, as there was a mistake in the computation while filing the original return, the petitioner had furnished correct details in response thereto. It was argued that "assessment" means "determination of correct income" and on facts, there is no escapement of income. It was submitted that even if the case of the revenue were to be accepted, namely that the Assessing Officer should not have accepted the revised computation, at best the assessment order may be said to be erroneous, for which the remedy available to the respondent is under section 263 of the Act, however, on a mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of mind as regards the issue in question. What had been claimed by the petitioner has been accepted. No opinion has been formed as regards the admissibility of the revised computation. It was submitted that income in the return filed under section 139(1) of the Act bears the character of self-assessment of income and that in the facts of the present case, the assessed income has gone below the self-assessed income. It was further submitted that a mere noting of facts cannot be equated with formation of an opinion so as to constitute change of opinion. It was contended that as to whether the revised return could have been accepted has not been gone into by the Assessing Officer and as such there was no application of mind in this regard so as to form an opinion and as such the re-opening, which is within a period of 4 years from the end of the relevant assessment year, is well within the jurisdiction of the Assessing Officer. In support of his submissions the learned counsel placed reliance upon a decision of the Apex Court in the case of Malegoan Electricity Co. P. Ltd. v. Commissioner of Income-tax, Bombay, (1970) 78 ITR 466 (SC) wherein in the facts of the said case the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is nothing to show, had been brought to his notice. When he subsequently became aware of the decision, he initiated proceedings under Section 147(b). The material which constituted information and on the basis of which the assessment was reopened was the decision in Ramachari2. This material was not considered at the time of the original assessment. Though it was a decision of 1961 and the ITO could have known of it had he been diligent, the obvious fact is that he was not aware of the existence of that decision then and, when he came to know about it, he rightly initiated proceedings for assessment. 23. We may point out that the position here is more favourable to the revenue than that which prevailed in the Madras cases referred to earlier. There, what the ITO had missed earlier was the true purport of the relevant statutory provisions. It seems somewhat difficult to believe that the ITO could have failed to read properly the statutory provisions applicable directly to the facts before him (though that is what seems to have happened). Perhaps an equally plausible view, on the facts, could have been taken that he had considered them and decided, in one case, not to appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Commissioner of Income-tax v. Kelvinator India Ltd. (supra) there has to be tangible material which has to be from an outside source for the purpose of forming an opinion regarding escapement of assessment. In the facts and circumstances of the present case, there is no tangible material on the basis of which the Assessing Officer could have formed an opinion that income has escaped assessment and the assumption of jurisdiction by the Assessing Officer is therefore invalid and as such the impugned notice being unsustainable in law is required to be quashed and set aside. 9. Various other decisions of the Supreme Court as well as High Courts have been cited by the learned advocates for the respective parties, however, with a view to avoid prolix, reference is not made to all the decisions. 10.The assessment year is 2006-07 and notice under section 148 of the Act has been issued on 28th July 2010, that is, within a period of four years from the expiry of the relevant assessment year, and as such, the only pre-requisite for the purpose of assuming jurisdiction under section 147 of the Act, is that the Assessing Officer should have reason to believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment." 12.The Supreme Court in the case of Commissioner ofIncome-tax v. Kelvinator of India Ltd. (supra) has held thus: "5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed section 147 makes certain provisions where, in certain circumstances, the income is deemed to have escaped assessment giving jurisdiction to the Assessing Officer to act under the said provision. Another requirement which is necessary for assuming jurisdiction is that the Assessing Officer shall record his reasons for issuing notice. This requirement necessarily postulates that before the Assessing Officer is satisfied to act under the aforesaid provisions, he must put in writing as to why in his opinion or why he holds the belief that income has escaped assessment. "Why" for holding such belief must be reflected from the record of reasons made by the Assessing Officer. In a case where the Assessing Officer holds the opinion that because of excessive loss or depreciation allowance the income has escaped assessment, the reasons recorded by the Assessing Officer must disclose by what process of reasoning he holds such belief that excessive loss or depreciation allowance has been computed in the original assessment. Merely saying that excessive loss or depreciation allowance has been computed without disclosing reasons which led the assessing authority to hold such belief, in our o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 22 ITR 339 (Nag)] an application or letter to the Assessing Officer for correcting or making amendments in original return already filed would not constitute revised return. Therefore, the assessee is not entitled to file revise statement beyond the statutory period allowed u/s 139(5) of the Act. In view of the above, I have reason to believe that income of Rs.35,06,575 [1,34,47,493 - 95,14,653] chargeable to tax under head capital gain has escaped assessment within the meaning of section 147 of the Act. I am, therefore, satisfied that it is a fit case for re-opening the assessment u/s. 147 r.w.s. 148 of the Act." 16.On a plain reading of the reasons recorded, it appears that it is the case of the Assessing Officer that as per the provisions of section 139(5) of the Act, if any omission or wrong statement is discovered after furnishing return, a revised return can be filed at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. That the petitioner had filed a revised statement on 18.11.2008 which was beyond the statutory period of limitation and as such the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer. In the circumstances, when this was the only issue before the Assessing Officer, it cannot be said that the Assessing Officer has not applied his mind to this aspect. Applying the concept of "change of opinion" as the inbuilt test as laid down in the case of Kelvinator of India Ltd. (supra), it is apparent that the Assessing Officer while framing the original assessment has examined the claim of the petitioner as per the revised computation of income and has accepted the same. If while accepting the claim, the Assessing Officer has failed to view the same from the angle that a revised computation of income cannot be treated to be a revised return, or that if treated as a revised return it had been submitted beyond the prescribed period of limitation, it is an error on the part of the Assessing Officer, in which case, the remedy lies elsewhere. An error committed by the Assessing Officer who framed the original assessment cannot be subject matter of re-opening of the assessment under section 147 of the Act. An opinion having been formed on the very issue on which the assessment is sought to be reopened, and that too the only issue, it can only be viewed as a change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot adopt the attitude which private litigants might adopt. 22.In the present case, the respondent has nowhere stated that the corrected computation submitted by the petitioner is incorrect or that the petitioner is not entitled to be taxed on the said income. The only ground for re-opening is that the petitioner was not entitled to file revised statement beyond the statutory period under section 139(5) of the Act and the Assessing Officer was not justified in accepting the corrected statement and making assessment accordingly. 23.For the purpose of re-opening the assessment, the Assessing Officer has placed reliance upon decisions of two high courts referred to hereinabove. Both these decisions are old decisions which the Assessing Officer, while framing the original assessment, would be well aware of. It is not as if the said decisions are recent decisions which may have escaped the notice of the Assessing Officer so as to constitute material for re-opening of the assessment. The decisions referred to in the order recording reasons can, in no manner, be said to be tangible material so as to justify initiation of proceedings under section 147 of the Act. Thus, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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