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TMI Blog2011 (3) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... een issued by the AO merely on change of opinion. We shall first take up this ground challenge to the validity of notice under section 147 of the Act for consideration. 2. The assessee is a company. It is engaged in the business of manufacture of appliances. For A.Y 2001-02 the assessee filed the return of income on 30/10/2001 declaring a loss of Rs.115,95,22,634/-. The computation of total income filed by the assessee is at page No.1 to 4 of the assessee's paper book. In note No.9 to the computation of total income the assessee has mentioned as follows: "9. The Capital Investment Subsidy receivable from Punjab Small Industries and Export Corpn. Ltd. credited to Capital Subsidy Reserve Rs.3,000,000 is not considered in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee furnished along with its reply a copy of the subsidy scheme in question and further explained as to how the subsidy in question has to be treated as capital subsidy in the light of the decision of the Hon'ble Supreme Court in the case of Sahani Steel and Press Works Ltd. (supra). The AO thereafter passed an order under section 143(3) of the Act dated 30/1/2004 in which he did not bring to tax the subsidy received by the assessee from Punjab Small Industrial and Export Corporation Ltd.(PSIEC). 5. The AO thereafter on 9/3/2006 issued a notice under section 148 of the Act for making an assessment of income that has escaped assessment under section 147 of the Act. The reasons recorded by the AO for issue of notice under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears that the AO misinterpreted/misunderstood the decision of Hon'ble Supreme Court in case of Sahney Steel during original assessment proceedings and did not make any addition. Thus, by misinterpreting/misunderstanding of the decision by the A.O the income chargeable to tax escaped assessment. Such escapement of income resulted in under assessment of income. For such type of underassessment, the notice can be issued as per sub-clause (i) of clause (c) of Explanation - 2 to section 147 of the Act. Thus, the AO was justified in issuing notice u/s. 147 of the Act." 8. Before us ld. Counsel for the assessee submitted that the assessment has been reopened purely on a change of opinion. In this regard ld. Counsel for the assessee pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the stand of the revenue that the order of assessment under section 143(3) of the Act passed by the AO does not make any specific reference to the issue, the ld. Counsel for the assessee submitted that when an assessment is completed under section 143(3) of the Act it is presumed that the AO has applied his mind to the issue and fact that there is no discussion in the order of assessment will not empower the AO to resort to proceedings under section 147 of the Act. In this regard the ld. Counsel for the assessee relied on the decision of the Hon'ble Delhi High Court in the case of Kelvinator of India Ltd. (supra) and the decision in assessee's own case by the Hon'ble Bombay High Court namely Cartini India Ltd. vs. ACIT, 314 ITR 275(Bom), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion. The concept of "change of opinion" must be treated as an in-built test to check the abuse of power. Hence after April 1, 1989, the Assessing Officer has power to reopen an assessment, provided there is "tangible material" to come to the conclusion that there was escapement of income from assessment. Reason must have a link with the formation of the belief." 11. Merely because while completing original assessment the AO has not discussed the issue does not mean that he has not expressed any opinion. The Hon'ble Delhi High Court in the case of CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. An assessee has no control over the way an assessment order is drafted. Generally issues which are accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/disallowances are made." 13. We are of the view that the reassessment proceedings under section 147 has not been validly initiated because the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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