TMI Blog2013 (1) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 27-6-2012 - VAZIFDAR S. J. and SANKLECHA M. S. JJ. For Petitioner S.N. Inamdar with Mihir Naniwadekar. For Respondents Vimal Gupta Judgment: Rule, returnable forthwith. Respondents waive service. At the instance and request of the advocates for the petitioner and the respondents the petition is taken up for final hearing. 2. By this petition under article 226 of the Constitution of India, the peti-tioner challenges the following : (a) Notice dated March 31, 2011, issued by the Deputy Commissioner of Income-tax (respondent No.1) under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), seeking to reopen the assessment for the assessment year 2006-07 on the ground that income has escaped assessment within the meaning of section 147 of the said Act ; and (b) Order dated November 14, 2011, passed by respondent No.1 rejecting the petitioner's objections to initiation of proceedings under sec-tion 147 of the said Act. 3. The facts leading to the present petition are as under : (a) During the assessment year 2006-07, the petitioner sold property at Pune to a builder for the consideration of Rs. 9.23 crores. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment within the meaning of section 147 of the said Act. The petitioner by her chartered accountant's letter dated April 1, 2011, called upon respondent No. 1 to furnish/provide the reasons recorded forreopening the assessment for the assessment year 2006-07 for the pur-poses of reassessment. (e) On April 19, 2011, respondent No. 1 furnished reasons for reopen-ing of the petitioner's assessment for the assessment year 2006-07 which are as under : "The assessee has (sic) having income from house property and long- term capital gain and income from other sources. The assess-ment under section 143(3), in this case, has been completed on November 28, 2008, for a total income of Rs. 34,44,080 after allowing deduction under section 54EC of Rs. 7,40,00,000. The assessee sold a land to the developer for Rs. 9,23,00,000 (market value as per registration deed) on indexation the capital gain worked out to Rs. 8,65,38,000 out of this 85,36,483 invested in purchase of house property and Rs.740 lakhs invested in specified bonds, i.e., NABARD C. G.bonds, Rs. 200 lakhs, NHB C. G. Bonds Rs. 240 lakhs, REGCG bonds 150 lakhs and SIDBI bonds 150 lakhs and claimed deduction under section 54EC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Hence, the claim of assessee that the reopening is based on change of opinion is rejected." (h) The petitioner has filed this petition challenging the jurisdiction of respondent No.1 to issue a reopening notice under section 148 of the said Act. The respondent has also filed an affidavit dated December 19, 2012, justifying the reopening of assessment within four years even on a mere change of opinion. 4. Mr. S. N. Inamdar, senior counsel appearing on behalf of the petitioner, submits that (i) the present proceeding for reopening an assessment com-pleted under section 143(3) of the said Act is without jurisdiction as the same is merely based on a change of opinion as the facts/material recorded for reopening of the assessment was already available on record at the time the assessment order dated November 28, 2008, under section 143(3) of the said Act was passed by respondent No.1 and on examination of the mate-rial and application of law to the same the benefit was extended to the petitioner. Consequently, the present proceeding is nothing more than a different view on law applicable on the facts already disclosed ; (ii) there is no reason to believe that income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Act ; and (e) Circular No. 359, dated May 10, 1983, relied upon by the petitioner is not applicable to the present case which is under section 54EC of the said Act, while circular dated May 10, 1983, deals with section 54E of the said Act. 6. It is a well settled position in law that the power to reopen a completed assessment within the period of four years from the end of the relevant assessment year is very wide. Nevertheless this power to reopen an assess-ment within a period of four years does not permit review of an assessment order. This is settled by the Supreme Court in the matter of CIT v. Kelvi-nator of India Ltd. reported in [2010] 320 ITR 561 (SC) wherein it has been held as under (page 564) : "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 assessment on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t follows that respondent No. 1 while granting the above benefit to the petitioner took a view that investment made out of earnest money/advance received as a part of the sale consideration before the date of the transfer of the assets would also be entitled to the benefit of section 54EC of the said Act. This view was a possible view in view of Circular No.359, dated May 10, 1983, and the decision of the Tribunal in the matter of Ramesh Narhari Jakhadi reported in [1992] 41 ITD 368. Circular No. 359, dated May 10, 1983 (see [1983] 143 ITR (St.) 2), inter alia, provides as under : "1. Section 54E of the Income-tax Act, provides for exemption of long-term capital gains if the net consideration is invested by the assessee in specified assets within a period of six months after the date of such transfer. A technical interpretation of section 54E could mean that the exemption from tax on capital gains would not be available if part of the consideration is invested prior to the date of execution of the sale deed as the invest cannot be regarded as having been made within a period of six months after the date of transfer. 2. On consideration of the matter in consultation with the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt very categorically held that the reasons recorded must clearly establish some facts or material which lead to escapement of income. In any view of the matter the afore-said submission is not sustainable for the reason that if a query is raised during assessment proceedings and the assessee meets the query and/or supplies the information called for, it must be presumed that the officer was satisfied before allowing the claim and there is no need to discuss the matter in his assessment order. As observed by the Gujarat High Court in the matter of CIT v. Nirma Chemical Works P. Ltd. reported in [2009] 309 ITR 67 (Guj) (page 78) : "The contention on behalf of the Revenue that the assessment order does not reflect any application of mind as to the eligibility otherwise under section 80-I of the Act requires to be noted to be rejected. An assessment order cannot incorporate reasons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic tome. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly without appli-cation of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi- judicial function to take benefit of its own wrong." 12. One more point very strenuously urged by Mr. Gupta for the Revenue was that the court should not at this stage quash the proceedings as the only obligation of the Revenue is to establish that prima facie material exists to show that income has escaped assessment and the party can thereafter establish in reassessment proceedings that the deduction as allowed in the original assessment proceedings are valid. 13.The issue here is one of jurisdiction to issue notice and not sufficiency of reasons in issuing a notice for reassessment. We are considering the juris-diction to issue a notice under section 148 to reopen proceedings. In view of what is stated earlier, we do not find any merit in this contention. 14. In view of the above, the notice under section 148 dated March 31, 2011, is without jurisdiction and we set aside the same. Similarly, the order rejecting the objections raised by the petitioner dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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