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TMI Blog2014 (5) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... rn was declared by the assessee company as its business income after claiming various expenses against the same thereby declaring the loss of Rs. 11,85,250/-. In the original assessment completed u/s 143(3) vide order dated 12.3.2003, the loss so declared was accepted by the AO. Subsequently, he found from the material available on record that the assessee had discontinued its business and there were no details available on record to suggest that the assessee-company continued its business for which it was incorporated. He was of the opinion that the assessee company thus had treated the rental income as business income and claimed certain expenses and depreciation on the entire block of assets by not disclosing fully and truly all the material facts necessary for the assessment. He, therefore, reopened the assessment originally completed u/s 143(3) and issued notice u/s 147 r.w.s.148 of the Act to the assessee on 6.1.2007. In reply, a letter dated 15.12.2007 was filed by the assessee stating therein that the return originally filed by it may be treated as return filed in response to the notice u/s 148 of the Act. During the course of assessment proceedings, the assessee, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it had no other activity. The notice issued by the AO and the Appellant's reply thereto are enclosed herewith and marked Annexure "A1" and "A2". The original assessment proceedings were completed under section 143(3) of the Act. Thereafter, the impugned notice under section 148 dated 6th December 2007 was Your Honour's attention is invited to the Proviso to section 140 which states that where an assessment under section 143(3) of the Act has been made for the relevant assessment year, no action shall be taken under section 147 after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the Appellant: * to make a return under section 139 or in response to a notice issued under section 142(1) or section 148/ or * to disclose fully and truly all material facts necessary for his assessment for that assessment year. . " . The Appellant submits that there is no faIlure on the part of the Appellant of the kind envisaged in the proviso. As explained above, there has been a full and true disclosure by the Appellant of all material fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be regarded as falling under the head "income from house property". In this connection reliance is placed on the following decisions of the Bombay High Court wherein it has been held that a different View taken by the officer subsequent to completion of the assessment proceedings would amount to a change of opinion on the basis of material already before him. * CITV. Killick Industries Ltd. [1980] 126 ITR 147 (Bom) * Wyeth India Pvt. Ltd. v. IAC [1982] 137 ITR 20 (Bom) 4. The issue relating to the validity of the assessment made by AO u/s 143(3) r.w.s.147 of the Act was examined by the ld. CIT(A) in the light of the submissions made by the assessee, the material available on record and the relevant case laws. On such examination, he agreed with both the points raised by the assessee challenging the validity of the assessment and cancelled the said assessment holding the same to be bad in law. The relevant observations/findings of the ld. CIT(A) as recorded in paras 2.7 and 2.8 of his impugned order are reproduced below: "2.7 On perusal of the above facts and the reasons recorded for re-opening, I find that there is no failure on the part of the assessee to disclose full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be cancelled" 5. Keeping in view his decision on the preliminary issue cancelling the assessment made by the AO u/s 143(3) r.w.section 147 of the Act, the ld. CIT(A) did not go in to the merits of the other issues raised by the assessee relating to the addition made by the AO in the said assessment on account of income from house property. Aggrieved by the order of ld. CIT(A), the revenue has preferred this appeal before the Tribunal. 6. The ld. DR, at the outset, invited our attention to the copy of reasons recorded by the AO placed at page 40 of the paper book and pointed out that the fact that son of the director of the assessee company is one of the partners of M/s Popley Diamond and Gold Plaza, the lessee firm was not disclosed by the assessee. He submitted that although this fact was disclosed somewhere else by the assessee separately, the same was not specifically brought to the notice of the AO during the course of assessment proceedings. He contended that there was thus a clear failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment and the reopening of the assessment made by the AO within the period of six year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this contention, he relied on the following decisions : a) Asian Paints Ltd V/s DCIT (2009) 308 ITR 195 (Bom); b) Rabo India Finance Limited V/s DCIT (2012) 346 ITR 528 (Bom) c) Asteroids Trading and investment P Ltd V/s DCIT (2009) 308 ITR 190(Bom); d) Hindustan Lever Ltd V/s ACIT and ors (2004) (268 ITR 332) (Bom) 8. We have considered the rival submissions and perused the material available on record. It is observed that the assessment originally completed u/s 143(3) in the present case was reopened by the AO after a period of four years from the end of relevant assessment year by issuing notice u/s 148 after recording the reasons. As per first proviso to section 147, assessment completed u/s 143(3) can be reopened after a period of four years from the end of the relevant assessment year only if there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that assessment year and and as held by the Hon'ble Bombay High Court in the case of Hindustan Lever Ltd (supra) cited by ld. counsel for the assessee, the AO must disclose in the reasons as to which fact or material was not disclosed by the assessee ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed requires to be treated as consideration for the user of the leased property and accordingly annual value of the leased property needs to be re-worked out. Reference in this regard may also be made to the decision of hon'ble ITAT, Mumbai in the case of Trivoli Investment & Trading Co.Pvt Ltd ( ITA No.3269/Bom/93 and 3009/Bom/94) which has been circulated vide CIT(Judicial), Mumbai's letter No.Addl.CIT(J,C & L)-1/2003-04 dated 29.01.2004 and the facts of the resent case are almost identical with those of the decided case. In view of the above, I have reason to believe that income chargeable to tax as escaped assessment within the meaning of provisions of section 147 of the I.T. Act, inasmuch as the income chargeable-to tax has not been correctly shown nor assessed correctly. Accordingly, the proposals are submitted requesting approval of the CIT-9, Mumbai in accordance with the proviso to section 151(1) of the I.T. Act. to reopen the assessment u/s.147 of the I.T. Act for A.Y. 2001- 02" 9. When the ld. DR, at the time of hearing before us, was required by us to point out exactly as to which fact or material was not disclosed by the assessee fully and truly necessary for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w information that had come to the possession of the AO after completion of the original assessment. There was no change of law and the reopening was based merely on fresh application of mind by the AO to the same set of facts. In these facts and circumstances involved in the case of Asteroids Trading and Investment P.Ltd (supra), Hon'ble Bombay High Court held that it was a case of mere "change of opinion" which did not provide jurisdiction to the AO to initiate proceedings u/s 148 of the Act. In the case of CIT vs. Kelvinator of India Ltd., 320 ITR 561(SC), the Hon'ble Supreme Court had an occasion to consider the similar issue and it was held by the Hon'ble Apex Court that although the power to reopen the assessment is much wider post 1.4.1989, one needs to give a schematic interpretation to the words " reasons to believe" failing which, section 147 would give arbitrary powers to the AO to reopen the assessment on the basis of mere "change of opinion " which could not be per-se reasons to re-open. Explaining further, the Hon'ble Supreme Court observed that the specific difference between the power to review and power to re-assess should also be kept in mind and if the concept o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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