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TMI Blog2014 (2) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of computer software for the AY 2002-03, the assessee company filed its return of income on 22/10/2002 admitting a loss of Rs. 1,12,192/-. A notice u/s 148 of the Act was issued on 23/02/2006 and in response, the assessee filed its return of income on 14/03/2006. The assessment was completed u/s 143(3) r.w.s. 147 on 29/03/2006 determining the loss at Rs. 79,387/-. 4. Subsequently, the Assessing Officer issued another notice u/s 148 of the Act on 30/03/2009 and vide letter dated 07/09/2009 asked the assessee to show cause why the amount of Rs. 12,59,219/- set off against interest receipts should not be brought to tax as 'income from other sources' in the absence of a declaration under section 10A(8) of the Act. After considering the explanation of the assessee, the Assessing Officer completed the assessment u/s 143(3) r.w.s. 147 of the Act on 29/10/2009 determining the taxable income of the assessee company at Rs. 12,59,219/-. 5. Before the CIT(A), the assessee contended that the reopening of assessment by issue of notice u/s 148 of the Act is merely a change of opinion as no new information was collected by the Assessing Officer. Further, it was contended that having exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure of material facts'. (The proviso is not applicable where reasons to believe for issue of notice are recorded and notice is issued within four years from the end of assessment year.) ++ the questions of law at serial Nos. 1 to 3 referred to the Full Bench are inter-connected. They deal with the term and facets of the term 'change of opinion'. The expression 'change of opinion' postulates formation of opinion and then a change thereof. In the context of Section 147 of the Act it implies that the Assessing Officer should have formed an opinion at the first instance, i.e., in the proceedings u/s 143(3) and now by initiation of the reassessment proceeding, the Assessing Officer proposes or wants to take a different view; ++ the word 'opinion' is derived from the latin word 'opinari' which means 'to believe', 'to think'. In the context of assessment proceedings, it means formation of belief by an Assessing Officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection to use the words in Law Lexicon by P. Ramanatha Aiyar. Question of change of opinion arise when an Assessing Officer forms an opinion and decides not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Factual information or material which was incorrect or was not available with the Assessing Officer at the time of original assessment would justify initiation of reassessment proceedings. The requirement in such cases is that the information or material available should relate to material facts. The expression 'material facts' means those facts which if taken into account would have an adverse affect on the assessee by a higher assessment of income than the one actually made. They should be proximate and not have remote bearing on the assessment. The omission to disclose may be deliberate or inadvertent. The question, of concealment is not relevant and is not a precondition which confers jurisdiction to reopen the assessment; ++ Correct material facts can be ascertained from the assessment records also and it is not necessary that the same may come from a third person or source, i.e., from source other than the assessment records. However, in such cases, the onus will be on the Revenue to show that the assessee had stated incorrect and wrong material facts resulting in the Assessing Officer proceeding on the basis of facts, which are incorrect and wrong. The reasons recorded and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a given case where an erroneous order prejudicial to the Revenue is passed, option to correct the error is available u/s 263 of the Act; ++ the said observations do not mean that even if the Assessing Officer did not examine a particular subject matter, entry or claim/deduction and therefore had not formed any opinion, it must be presumed that he must have formed an opinion. This is not what was argued by the assessee or held and decided. There cannot be deemed formation of opinion even when the particular subject matter, entry or claim/deduction is not examined; ++ distinction between disclosure/declaration of material facts made by the assessee and the effect thereof and the principle of change of opinion is apparent and recognized. Failure to make full and true disclosure of material facts is a precondition which should be satisfied if the reopening is after four years of the end of the assessment year. The explanation stipulates that mere production of books of accounts and other documents, from which the Assessing officer could have with due diligence inferred facts does not amount to full and true disclosure. Thus in cases of reopening after 4 years as per the proviso, cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or claim or entry was explained and the principle of better be-ware applies. When a subject matter, entry, claim or deduction remains hidden or unexamined by the Assessing Officer: be it for any reason, it is not a case of change of opinion; ++ Whether or not the Assessing Officer had applied his mind and examined the subject matter, claim etc. depends upon factual matrix of each case. The Assessing Officer can examine a claim or subject matter even without raising a written query. There can be cases where an aspect or question is too apparent or obvious to hold that the Assessing Officer did not examine a particular subject matter, claim etc. The stand and stance of the assessee and the Assessing Officer in such cases are relevant; ++ Section 114 of the Indian Evidence Act is a general provision dealing with presumption of facts, inferences drawn from facts, patterns drawn from experience and observations based upon habits of the society, human action, usages and ordinary course of human affairs and conduct. The presumption is no evidence or proof. It only shows on whom the burden of proof lies. Section 114 is permissive and not a mandatory provision. As a permissive provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case; ++ the ITA will be placed before the regular Bench as per the Roster for disposal of the same keeping in mind the elucidation of law made above." 8. Moreover, the coordinate bench in the case of S. Ranjit Reddy and others in ITA No. 292/Hyd/2012 and others observed as follows: "Now, undoubtedly an order of the assessment which has been passed in subsequent assessment year may furnish a foundation to reopen an assessment for an earlier assessment year. However, there must be some new facts which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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