TMI Blog2013 (10) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. In the present case, it is explicitly clear that the reasons given for effecting reassessment were not the matters considered by the assessing authority while passing assessment order and no opinion was formed in this regard. This being the position, the version of the petitioner that no new materials have been brought to light to invoke the power and proceedings under section 147 or that it is proposed by way of "change of opinion", does not contain any pith or substance – Decided against the Assessee. - W.P.(C) 5061/2013 - - - Dated:- 12-4-2013 - RAMACHANDRA MENON P. R., J. FOR THE APPELLANT: SRI.M.GOPIKRISHNAN NAMBIAR, SRI.P.GOPINATH, SRI.P.BENNY THOMAS, SRI.K.JOHN MATHAI, SRI.KURYAN THOMAS, ADVOCATE FOR THE RESPONDENT: SRI.JOSE JOSEPH, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner was served with exhibit P-6 notice dated March 6, 2012, seeking to reopen the assessment under section 147 of the Income-tax Act. The petitioner pointed out that, by virtue of the law declared by the apex court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC), reason for reopening the assessment was liable to be given in writing for contesting the matter effectively. According to the petitioner, exhibit P-7 request was made and after considering the same, exhibit P-8 order/proceeding was issued by the third respondent revealing the reasons. On receipt of exhibit P-8, exhibit P-9 statement of objections was filed by the petitioner and sought to pass a speaking order, particularly on the question of jurisdiction. However, before passing any such order, the petitioner was required to furnish some documents as per exhibit P-10, when the petitioner reminded the third respondent as to the necessity to pass a speaking order, vide exhibit P-11. After considering the matter, exhibit P-12 speaking order came to be passed on February 11, 2013, overruling the objections and deciding to proceed with the merits of the case. The petitioner filed exhibit P-13 represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004] 268 ITR 48 (Guj). 6. Mr. Jose Joseph, the learned standing counsel for the respondents, vehemently opposed the reliefs sought for, pointing out that there is absolutely no merit or bona fides in the writ petition. It is stated that there is no violation of any of the relevant provisions of law or the mandate given by the various binding judicial precedents. It was in conformity with the law declared by the apex court in GKN's case [2003] 259 ITR 19 (SC) that exhibit P-8 reasons for reopening the assessment was given, followed by a speaking order, as borne by exhibit P-12. The learned counsel also submits that it is not a case of "change of opinion" as contended by the petitioner, for the reason that the aspects which form the basis for reopening the assessment were never considered by the assessing authority earlier, when exhibit P-2 order was passed and no opinion was formed in respect of these issues. In the absence of any opinion, there is no question of any change of opinion. It is also pointed out that the citations sought to be relied on from the part of the petitioner do not come to the rescue of the petitioner in any manner, but, on the other hand, the true mandate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opened under section 147 of the Act or whether it merely amounts to "change of opinion" to be intercepted in view of the law declared by the apex court in Kelvinator's case [2010] 320 ITR 561 (SC). 10. The main reasons for reopening the assessment, as understood and extracted by the petitioner in exhibit P-9 statement of objections are as given below : "Prior period depreciation amounting to Rs. 28,86,370 had been debited to the profits and loss account (P L Account) during the assessment year 2007-08. However, the same had not been disallowed in the tax computation. Prepayment premium on IDFC term loan amounting to Rs. 15,00,000 debited to the profit and loss account, being expenditure directly in relation to the capital base of the company, is a capital expenditure but has not been disallowed in computing the total income. Excess depreciation amounting to Rs. 8,75,240 had been claimed by the company on plant and machinery. However, the same had not been disallowed in the tax computation. Excess depreciation amounting to Rs. 25,41,250 had been allowed on the intangible asset 'brand name' by wrongly adopting the written down value as on the first day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation allowance has been computed. Explanation 2.-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 this section." After the Amending Act 1989, section 147 reads as under : "147. Income escaping assessment.-If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en as an in-built test to check the abuse of power by the Assessing Officer. 14. In Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC), the apex court observed that the expression "reason to believe" in section 147 of the Act would mean "cause or justification to know" and if the Assessing Officer has cause or justification to know or suppose that income has escaped assessment, he can be said to have reason to believe that income has escaped assessment. It is added that the expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion and what is required is "reason to believe" but not the established fact of escapement of income ; and at the stage of issuance of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. 15. The scope of the provision, as it stood before the amendment and the position after the amendment, has been discussed further in paragraph 17 of Rajesh Jhaveri's case [2007] 291 ITR 500 (SC) in the following terms: "17. The scope and effect of section 147 as substituted with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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