TMI Blog2015 (5) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax has escaped assessment, by reason of failure on the part of the assessee to make the return or respond to the notice issued under Section 142(1) or Section 148. The other condition is that there should be disclosure of fully and truly all material facts necessary for the said assessment year. The reason for reopening, thus, being merely a change of opinion on account of the assessment being made for the subsequent years would not give the AO the jurisdiction to reopen as he would, thus, be reviewing his earlier decision which has been held not to be permissible. Reopening notice quashed - Decided in favour of assesse. - CWP No.6765 of 2013, CWP No.6767 of 2013, CWP No.17892 of 2013 - - - Dated:- 22-4-2015 - MR. S.J.VAZIFDAR AND MR. G.S.SANDHAWALIA, JJ. Mr. Sanjay Bansal, Sr. Advocate with Mr. Rajiv Sharma, Advocate, for the Appellant Mrs. Savita Saxena, Advocate, for the respondent JUDGEMENT G. S. Sandhawalia J. 1. This judgment shall dispose of CWP Nos.6765, 17892 6767 of 2013, pertaining to assessment years 2005-06, 2006-07 2007-08, respectively, since common questions of law and facts are involved. However, to dictate orders, facts ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to disclose fully and truly all the material facts. The same was replied by filing detailed objections on 13.03.2013 (Annexure P5) by taking the plea that the returns, in response to the notice, had been filed and the Bank had disclosed all the relevant materials, showing that operationalisation of 251 ATMs had been done by March, 2005 and no fresh material had come to the notice of the AO to reopen the assessment and issue the notice under Section 148. The reopening, thus, was alleged to be a change of opinion by the successor, which was not permissible. Another detailed reply was submitted on 23.03.2013 (Annexure P4), placing reliance upon various judgments that since there were two views on the ATMs, the view in favour of the assessee should be adopted. 6. The said objections were, thereafter, rejected by taking the plea that no separate head of ATM machines was furnished for depreciation in the depreciation chart and it was only later, this aspect came to the light in another assessment year. It was, accordingly, held that reason to believe that the income had escaped assessment would entitle the AO to re-assess the income chargeable to tax, for the said assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice. 10. Without going into the merits of the issue as to whether the ATM is a computer or ought to be treated as normal plant and machinery, attracting different rates of depreciation, we are of the opinion that the present writ petitions are liable to be allowed on the ground that admittedly, the notice issued on 27.03.2012 did not fulfil the mandatory requirement of recording that the assessee did not disclose fully and truly all the material facts which was the necessary requirement in CWP Nos.6765 and 17892 of 2013. The reasons which have prevailed with the AO to issue notice reads as under: Reasons u/s 147 r.w.s. 148 of the Income Tax Act, 1961 reopening the assessment. During the course of assessment proceedings for the assessment year 2008-09, it has been noticed that the assessee bank has claimed depreciation on ATM @ 60% by treating the ATM as Computer. At the time of finalizing the assessment, the assessee was allowed depreciation on ATM @ 15% as allowed under I.T. Laws on Plant Machinery by treating the ATM as Plant Machinery. Accordingly, an addition of ₹ 3,71,00,000/- was made by disallowing the excess depreciation claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en reads as under: 13. The entire thrust of the findings recorded by the Assessing Officer in his order dated 13-3-2003 is to justify his satisfaction about escapement of income. According to him, it was a clear case of escapement of income as defined in Explanation-2 to Section 147 as the assessee had been allowed excessive relief under Section 80-O of the Act. However, it is not necessary for us to go into the merits of this finding as the second requirement of the proviso has not been satisfied obviously. The reasons recorded by the Assessing Officer for initiation of proceedings under Section 147 of the Act have already been reproduced above. A bare perusal of the same shows that the satisfaction recorded therein is merely about escapement of income. There is not even a whisper of an allegation that such escapement had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. Absence of this finding, which is a sine quo non for assuming jurisdiction under Section 147 of the Act in a case falling under the proviso thereto, makes the action taken by the Assessing Officer wholly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the genuineness of the claims made in the return of income. He has only limited power of making adjustments on the basis of information available in the return. However, when an assessment is made under Section 143 (3) of the Act, the Assessing Officer has very wide power to examine the genuineness of the claims made in the return and require the assessee to furnish whatever information the Assessing Officer deems necessary. In the present case, the assessment had been made under Section 143(3) of the Act and if the Assessing Officer was of the view that he required profit and loss account and depreciation charts of the assessment years 1995-96 and 1996-97 for examining the correctness of the claim under Section 80IA of the Act, he could have required the assessee to produce the same. Failure of the Assessing Officer to do so, cannot be treated at par with the failure of the assessee to disclose fully and truly all material facts necessary for its assessment. 15. The reasons for opening the assessment which had already been concluded on 28.11.2007 and 30.11.2007, thus, do not show that there was any failure on the part of the assessee to disclose fully and truly all the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion as an inbuilt test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words reason to believe , Parliament re-introduced the said expression 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 31st October, 1989, which reads as follows: 7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression Rs. reason to believe' in Section 147.--A number of representations were received against the omission of the words Rs. reason to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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