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TMI Blog2014 (3) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... s estimated income of the assessee (appellant) from property business at Rs.13,11,200 and unexplained investment in property at Rs.15,00,000 totaling to Rs.28,11,200/-. But the then ld. CIT(A) deleted this addition in his order dated 20.05.2009 and this decision of the then ld. CIT(A)-I has been further confirmed by the Hon'ble ITAT Agra vide its order dated 21st April, 2011. Meanwhile, the assessment proceeding of the assessee (appellant) has been reopened u/s.147 after recording reason to believe on 10.09.2009 and the same is reproduced as under: "A search was conducted at the premises of the assessee on 16.09.2004 in which several books of account, documents etc. was seized including Annexure A-1. Annexure A-1 is a binded ledger which contains details of expenditure made by the assessee in various properties. In this book, property wise ledger account has been maintained and amount and dates of making payments in respect of each property is clearly mentioned. Such details contain payment made towards purchase of land, stamp, dalali expenses, registration expenses and construction expenses. The details of expenditure made as per entries in this ledger are as under: Payment/expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the contrary, it has been observed that in the asst. order itself that the books of a/c produced by assessee, did not give correct picture to explain invests made in above properties. Precisely, on examination of records including seized material, no evidence or explanation to justify the source of expenditure of Rs.96,17,600/- is found. Thus at the most addition of Rs.13,11,000/- only was made on a/c of unexplained expenditure as against total unexplained expenditure of Rs.96,17,600/- made during A.Y. 2004-05 & 2005-06 in above properties. In view of the above discussion, it is clear that amount of at least Rs.37,92,600/- for A.Y. 2004-05 & Rs.45,14,000/- for A.Y. 2005-06 being unexplained expenditure in properties as mentioned above, have escaped from assessment and such unexplained expenditure is income of assessee under the provisions of sec.69C of the I.T. Act. In view of above facts and circumstances of the case, I have reason to believe that on account of failure on the part of the assessee to disclose truly and fully all material facts relating to assessments, income of Rs.37,92,600/- for A.Y. 2004-05 and Rs.45,14,000/- for A.Y. 2005-06 have escaped from assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order is given as under: "In this book, property wise ledger account has been maintained and amount and dates of making payments in respect of each property is clearly mentioned. Such details contain payment made towards purchase of land, stamp, dalali expenses, registration expenses and construction expenses. The details of expenditure made as per entries in this ledger are as under: Payment/expenditure made during F.Y. 2004-05 (A.Y. 2005-06) Page no. of Annexure A-1 Description of property Amount paid on different dates Period of payments 8 Bayu Vihar Patholi Rs.14,84,000 20.07.2004 to 20.10.2004 30 Advance for Rahul Vihar Cash - Rs.8,61,000 06.04.2004 to 05.08.2004 31 Land at Vaibhav Kunj, Dayalbagh, Agra Rs.34,80,000 10.04.2004 to 27.04.2004 Total Rs.58,25,000 As per ledger Annexure A-1 Page 8,30 & 31 an investment of Rs.58,25,000/- was made during A.Y. 2005-06. In this connection, assessee filed a letter dated 07.12.2010 the relevant portion of the letter is as under: 'That re-assessment proceeding have been initiated in this case and notice u/s.148 of the Act, 1961 dated 30.03.2010 has been issued to the assessee. A perusal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed expenditure / investment as against total unexplained expenditure / investment of Rs.58,25,000/- made during A.Y. 2005-06 in above properties. In view of the above discussion, it is clear that amount of at least Rs.30,13,800/- [58,25,000 (-) 28,11,200 already considered vide order dated 29.12.2006] for A.Y. 2005-06 being unexplained expenditure / investment in properties as mentioned above, have escaped from assessment and such unexplained expenditure is income of assessee under the provisions of sec.69C of the IT Act, 1961 and added back to the income of the assessee." 2.2 As per the above discussion made in the assessment order, the AO has made addition of Rs.30,13,800 after taking into account the additions of Rs.15 lac and Rs.13,11,200/- totaling to Rs.28,11,200/- already made in the original assessment order and this amount has been deducted out of the total amount of investment of Rs.58,25,000/- found recorded in the seized document pertaining to the year under consideration. The AO has further added Rs.1 lac in the impugned assessment order mentioning that vide order dated 29.12.2006, in para no.4, the AO has treated undisclosed investment in jewellery of Rs.1 lac and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained that re-assessment proceedings have been initiated again on the similar issue and on identical facts which have already been considered in the original assessment proceedings. It is a clear case of change of opinion and no new material has been brought on record to justify the additions. The facts were all within the knowledge of the AO. The assessee relied upon certain decisions in support of her contention. The remand report from the AO was called for which is reproduced in the appellate order. Rejoinder was also filed by the assessee. The ld. CIT(A), considering the facts of the case in the light of all the material and evidences on record, annulled the reassessment proceedings because the same were invalid and have been done on mere change of opinion considering the same facts and the seized material. The appeal of the assessee was accordingly allowed. The findings of the ld. CIT(A) in para 10 to 14 in the appellate order are reproduced as under : "10. I have considered all the facts and circumstances of the case as discussed so far and in the light of these facts and circumstances, I have examined the validity of reopening of assessment proceeding u/s.147 as per va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular No. 549 , dated 31-10-1989, which reads as follows : "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in section 147. -A number of representations were received against the omission of the words 'reason to believe' from section 147 and their substitution by the 'opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, 'reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989 , has again amended section 147 to reintroduce the expression 'has reason to believe' in place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." [Emphasis supplied] The AO in his remand report has relied on the judgement of Hon'ble Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erived from the latin word 'opinari' which means 'to believe', 'to think'. The word 'opinion' as per the Blacks Law Dictionary means a statement by a Judge or a Court of a decision reached by him incorporating cause tried or argued before them, expounding the law as applied to the case and, detailing the reasons upon which the judgment is based. Advanced Law Lexicon by P. Ramanatha Aiyar (3rd Edition) explains the term 'opinion' to mean 'something more than mere retaining of gossip or hearsay; it means judgment or belief, that is, a belief or a conviction resulting from what one thinks on a particular question ........ An opinion is a conviction based on testimony..... they are as a result of reading, experience and reflection'. [Para 7] 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 to make an addition or holds that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get protection and cover under the principle of 'change of opinion'. 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. [Para 16] 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the proviso does not apply, the reassessment proceedings cannot be declared invalid on the ground that the full and true disclosure of material facts was made. In such cases, re-assessment proceedings can be declared invalid when there is a change of opinion. As a matter of abundant caution it is clarified that failure to state true and correct facts can vitiate and make the principle of change of opinion inapplicable. This does not require reference to and the proviso is not invoked. The difference is this; when proviso applies the condition stated therein must be satisfied and in other cases it is not a prerequisite or condition precedent but the defence/plea of change of opinion shall not be available and will be rejected. [Para 24] Thus if a subject matter, entry or claim/deduction is not examined by an Assessing Officer, it cannot be presumed that he must have examined the claim/deduction or the entry, and therefore, it is the case of 'change of opinion'. When at the first instance, in the original assessment proceedings, no opinion is formed, principle of 'change of opinion' cannot and does not apply. There is a difference between change of opinion and fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng given by the High Court. The Supreme Court in the present case has given detailed reasons and ratio why 'change of opinion' cannot be a ground to reopen assessment. The said reasoning or ratio are the binding precedent. [Para 31] If a particular subject matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred. [Para 36] What is important and relevant is that the principle of 'change of opinion' was equally applicable under the unamended provisions. [Para 37] There may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc., because the aspect or question may be too apparent and obvious. To hold that the Assessing Officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon by the AO), it would depend on the facts of each case whether, there is change of opinion while reopening of the assessment proceeding or not. However, in both the decisions, it is very clear that re-assessment proceeding initiated merely on the basis of change of opinion is invalid. In the decision of CIT vs. Usha International Ltd. (supra), the Hon'ble Delhi High Court has discussed about the expression "change of opinion" and it has been held that question of change of opinion arises when the AO forms an opinion and decide not to make addition or holds that the assessee is correct and accept his position or stand. In order to examine, whether in the instant case, the reopening of assessment proceeding is merely on the basis of change of opinion or otherwise, the discussion made by the AO in the original assessment order dated 29.12.2006 with respect to examination of Annexure A-1 page 8, 20, 21, 30 & 31 is reproduced as under:- 12. On examination of the above discussion in the original assessment order, it is very clear that the AO has examined Annexure A-1, page 8 in which, investment in Vayu Vihar, Patholi of Rs.14,84,000/-, investment in Jairam Bagh property of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in property was recorded, he arrived to the conclusion for making addition of only Rs.28,11,200/- instead of the total amount of investment recorded in the seized document and, therefore, the second AO in the reassessment order, has made addition, only on account of balance amount. Therefore, it can be said that the first AO in the original assessment has formed his opinion about making the addition of only Rs.28,11,200/- after computing the profit earned by the assessee(appellant) on undisclosed receipts and also making an addition of Rs.15 lac to cover the value of properties shown as being invested and recorded in the seized documents. Under such circumstances, if it has been felt by the second AO that the addition made by the earlier AO who made the original assessment was not correct and he should have made the addition for the total amount of investment made in properties, it is nothing but the mere change of opinion because the earlier AO has formed his opinion about making addition of only Rs.28,11,200/- on the basis of seized documents and it cannot be said that he has not examined the seized documents as it is very clear from the discussion made in para 3 of the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quashed. Therefore, the impugned assessment order passed u/s.147 / 143(3) dated 10.12.2010 is annulled. 13. As the reopening of assessment proceeding u/s.147 has been found to be invalid and the consequent assessment order passed u/s.147 read with section 143(3) has been annulled, I have not decided the grounds taken on the merit of addition because the adjudication on the merit of addition would be only on academic nature. 14. In the result, appeal is allowed." 3. The ld. DR relied upon the order of the AO and submitted that the investment in the properties were not properly considered at the original assessment stage, therefore, it is not a case of change of opinion and relied upon the decision of Hon'ble Delhi High Court in the case of Consolidated Photo & Finest Ltd. vs. ACIT, 281 ITR 394, in which the writ petition was dismissed for failure to disclose fully or truly all material facts. 4. On the other hand, the ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the same seized material, Annexure A1 was considered at the original assessment stage, on which part addition was made which has been deleted by the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated Stone Industry Ltd., 224 ITR 560 held that the assessee shall have to disclose only the primary facts. Considering the above legal propositions decided in the above cases, it is clear that AO is not justified in reopening the assessment on mere change of opinion. It is admitted fact that Annexure A1 was considered at the original assessment stage and on that basis, the AO made addition on account of unexplained investment in property in a sum of Rs.15,00,000/- (total addition Rs.28,11,200/-). The AO has referred to the same properties in the original assessment order, which are referred to now in the reasons for reopening of assessment for the year under consideration. The assessee filed explanation and evidences before the AO at original assessment stage explaining the investment in the properties. Therefore, the same seized material, which is basis of reopening of assessment was considered at the original assessment stage in the light of the explanation of the assessee supported by evidences. Whatever addition was made by the AO at original stage on the identical facts have been deleted by the ld. CIT(A) as well as confirmed by the Tribunal. The propriety, therefore, demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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