TMI Blog2015 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... dictat of the internal audit party without independently applying his mind to know whether income has escaped assessment. In our view, for this reason initiation of proceeding u/s 147 of the Act is incorrect. See DCIT Vs. Lee Pharma Pvt. Ltd.(2012 (11) TMI 310 - ITAT, HYDERABAD ). - Decided in favour of assessee. M/s. Gayatri Sugars Ltd. Versus Asst. Commissioner of Income-tax [2014 (12) TMI 3 - ITAT HYDERABAD ] - ITA No. 249/Hyd/2015 - - - Dated:- 29-7-2015 - Shri P.M. Jagtap and Shri Saktijit Dey, JJ. For the Petitioner : Shri P. Murali Mohan Rao For the Respondent : Shri Ramakrishna Bandi ORDER PER SAKTIJIT DEY, J.M.: This appeal by assessee is directed against the order dated 29/12/2014 of ld. CIT(A) 3, Hyderabad for the AY 2008-09. 2. Assessee has raised as many as 13 grounds. Ground Nos. 1 13 being general in nature do not require any specific adjudication. In ground Nos. 2 to 6, assessee has challenged the validity of proceeding initiated u/s 147 of the Act. Ground Nos. 7 to 12 are on the merits of various additions made by AO and sustained by ld. CIT(A). 3. At the outset, we propose to deal with the legal issue relating to validity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er reopening the assessment u/s 147 of the Act. On the basis of the aforesaid reasoning, ld. CIT(A) dismissed the grounds raised by assessee on the legality issue of reopening of assessment u/s 147. 6. Ld. AR objecting to the action initiated u/s 147 of the Act, submitted before us, the material on record as well as the assessment order passed u/s 143(3) read with section 147 of the Act would clearly reveal that reopening is on the basis of the materials/documents submitted by assessee itself along with return of income or in course of original assessment proceeding on the basis of which assessment was originally completed u/s 143(3) of the Act. Thus, ld. AR submitted, there being no tangible material before AO to form his belief that income has escaped assessment, action u/s 147 is invalid. Ld. AR referring to the reasons recorded, a copy of which is at page 17 of the paper book submitted, AO has not referred to any fresh or tangible material, which has come to his possession after completion of original assessment, which reveals escapement of income. Ld. AR submitted, on the contrary, the reasons recorded would demonstrate that only on the basis of objections raised by interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and perused the material on record. At the outset, it needs to be mentioned that in the present case reopening of assessment u/s 147 of the Act is within four years from the end of the relevant AY. Therefore, proviso to section 147 does not apply. In the aforesaid scenario, it has to be examined whether in a case where reopening of assessment is within four years whether AO can initiate action u/s 147 of the Act in absence of tangible material. On perusal of the reasons recorded for reopening assessment, a copy of which is submitted in assessee s paper book, it is patent and obvious that AO is only referring to materials/informations furnished by assessee along with the return of income or in course of original assessment proceeding. The issues on which AO has initiated action are pertaining to certain expenditure debited to P L A/c or item forming part of balance sheet, which according to AO is not allowable for various reasons. It is evident from the reasons recorded that issues on which AO has reopened assessment u/s 147 are relating to matters which were part of the original assessment proceeding and information relating to such issues were already available before AO whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion. The concept of change of opinion must be treated as an in-built test to check the abuse of power. Hence after April 1, 1989, the AO has power to reopen an assessment, provided there is tangible material to come to the conclusion that there was escapement of income from assessment. Reason must have a link with the formation of the belief. 16. The full Bench of Hon ble Delhi High Court in case of CIT Vs. Usha International Ltd. (supra)on a conspectus of various decisions of Hon ble Supreme Court, including CIT Vs. Kelvinator of India Ltd. (supra), and as well as different high courts, while expressing the majority view held as under: 39. In view of the above observations we must add one caveat. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iny u/s 143(3) not by the same AO but by different AOs. It is highly improbable that each of the AOs in successive assessment years have not examined or overlooked this issue when assessee has disclosed full particulars regarding the issue in dispute. On the contrary, on going through the facts and materials on record the impression one gets is only because the AO in assessment order passed for AY 2006-07 has taken a different view on the issue, assessments for the preceding assessment years have been reopened to unsettle the issues already considered and decided in original assessments completed after scrutiny. 18. Once an assessment order is passed u/s 143(3) after scrutiny of books of account and other materials, it has to be presumed that AO has examined all facts and materials and concluded assessment after due application of mind. Therefore, unless there is tell tale evidence that AO has passed the order ignoring material facts on record or overlooking provisions of law or unless further tangible material comes to possession of AO indicating escapement of income, action u/s 147 of the Act cannot be taken. Assessment orders passed u/s 143(3) cannot be allowed to be reop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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