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TMI Blog2015 (8) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT reported as 38 DTR 57 (Mad.). Therefore, issue of reopening of assessment has become academic and thus, does not require adjudication. The assessee filed Miscellaneous Application No.03/PN/2014 under section 254(2) with a prayer to adjudicate the ground challenging validity of reopening of assessment under section 147 of the Act in all appeals. The Miscellaneous Application of the assessee was accepted vide order dated 04.12.2014 and the appeals were directed to be listed only for limited purpose of adjudicating ground challenging the validity of reopening of assessment under section 147 of the Act. 4. Before we proceed with the issue of reopening, it is necessary to recapitulate the facts of the case as emanating from the records. The assessee is a partnership firm and is engaged in manufacturing of plastic moulded products. The assessee had installed windmill in assessment year 2000-01 for generation of power. In its return of income for the assessment year 2002-03 onwards, the assessee has been claiming deduction under section 80-IA of the Act. The return of income of the assessee for the assessment year 2002-03 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee under Chapter VI-A of the Act. In reassessment proceedings, the Revenue has disallowed the claim of assessee under section 80-IA, whereas in the case of the assessee's sister concern, M/s Prima Papers and Engineering Industry the claim of deduction under section 80-IA has been granted in the assessment year 2001-02. The assessee in support of his submissions placed reliance on the following decisions :- (i) Balakrishna H. Wani vs. ITO, 321 ITR 519 (Bom); (ii) Arun Gupta vs. UOI & Others, 371 ITR 394 (All); and, (iii) CIT vs. Prima Paper and Engineering Industry, 364 ITR 222 (Bom). 6. On the other hand, Shri B.C. Malakar representing the Department vehemently supported the action of the Department in initiating reassessment proceedings against the assessee. The Ld. Departmental Representative submitted that a perusal of the original assessment orders would show that the Assessing Officer has not applied his mind on the deduction claimed by the assessee under section 80-IA of the Act. There is no discussion in any of the assessment orders with regard to the deduction under section 80-IA. Since, no opinion was formed by the Assessing Officer in the original assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80IA is NIL, whereas the deduction claimed by the assessee is Rs. 11,79,686/-, leading to the escapement of income accessed to the tune of Rs. 11,79,686/-. Hence, the under sign has reason to believe that there is escapement of income to the extent of Rs. 11,79,686/-, for the AY 2002-03 in the case of pearl and plastic products. Therefore, necessary permission may be accorded for issue of notice under section 148 of the IT Act 1961 for the AY 2002-03. Sd/- (A D Chaubal) Income Tax Officer Ward 5(4), Pune" A perusal of reasons of reopening the assessment in all the years show that except for the amount, they are all identical. 8. First, we take-up the appeals of the assessee for the assessment years 2002-03 and 2003-04, where reopening proceedings have been initiated after the expiry of four years from the end of the relevant assessment years. For invoking jurisdiction under section 147 of the Act, where the reassessment proceedings are initiated after the expiry of four years, two conditions are required to be satisfied : (i) The Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment; and, ii) He must also have reason to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 147 ; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore, it is not permissible to adopt different standards while interpreting the words "reason to believe" vis-a-vis section 143(1) and section 143(3). We are unable to appreciate what permits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under section 143(3) cannot apply where only an intimation was issued earlier under section 143(1). It would in effect place an assessee in whose case the return was processed under section 143(1) in a more vulnerable position than an assessee in whose case there was a fullfledged scrutiny assessment made under section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of the assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings ; all that is contended by the assessee, and quite rightly, is that if the Revenue wants to invoke section 147 it should play by the rules of that section and cannot bog down. In other words, the expression "reason to believe" cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of "change of opinion" is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that income chargeable to tax has escaped assessment. In doing so, it is further open to the assessee to challenge the reasons recorded under section 148(2) on the ground that they do not meet the standards set in the various judicial pronouncements." 11. The Hon'ble Gujarat High Court in the case of Cadila Healthcare Ltd. vs. DCIT reported as 334 ITR 420 (Guj) has struck down the reassessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se fully and truly all material facts necessary for its assessment. The two preconditions laid down by the Hon'ble Delhi High Court in the case of CIT vs. Kelvinator of India Ltd. (supra) for exercising jurisdiction under section 147, that have been subsequently affirmed by the Hon'ble Supreme Court of India in the case of CIT vs. Kelvinator of India Ltd. reported as 320 ITR 561 are absent in the present case. One of the submissions of Ld. DR is that in assessment year 2002-03 assessment was made under section 143(1), therefore the Assessing Officer had no occasion to apply his mind on the return of income. The Hon'ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. (supra) has erased the line of distinction between assessment made under section 143(1) and 143(3). Thus, in view of the law laid down in the case of CIT vs. Orient Craft Ltd. (supra) the contention of the Ld. DR does not hold ground. In view of the facts of the case and the judgements of the Hon'ble High Court discussed above, we are of the considered view that the notice issued under section 148 for the assessment year 2002-03 and 2003-04 is bad in law. Hence, the subsequent proceedings ari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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