TMI Blog2016 (1) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner is an individual and had filed return of income for assessment year 20082009. Such return was accepted under section 143(1) of the Income Tax Act, 1961( the Act for short) without scrutiny. The Assessing Officer issued impugned notice dated 21.9.2015 under section 148 of the Act seeking to reopen such assessment. At the request of the petitioner, he also supplied reasons for issuing such notice which reads as under : Assessee Shri Murlibhai Fatandas Sawlani is one of the Director in M/s. Shantai Reality (India) Ltd. He was having more than 10% share holding of the said company. During the AY.200809, M/s. Shantai Reality (India) Ltd. has shown following reserves in balance sheet. (a) Reserves on account on share premium ₹ 6, 75, 38,100/ (b) Reserves on account of profit ₹ 1,92,19,545/ Total Reserves ₹ 8,68,57,645 2. During FY 2007~08 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho was the director of M/S. Shantai Reality (India) Ltd. had purchased 88,300 shares of the said company for the assessment year 20082009 by investing fund of ₹ 1,76,60,000/. He thus had share holding in excess of 10% of the said company during the year under consideration. In the same year the company had shown total reserves of ₹ 8.68 crores (rounded off). Out of premium collected by the company from the petitioner, a sum of ₹ 1 crore was transferred back to the petitioner and shown as advance to the suppliers. It was in this context that the Assessing Officer formed a belief that provisions of section 2(22)(e) of the Act would apply. 6. We may recall that the original assessment in the present case was not framed after scrutiny. This being a case of accepting the return of assessee under section 143(1) of the Act, there was no question of Assessing Officer forming any opinion on the claims made by the assessee. Concept of change of opinion therefore, cannot be applied. 7. In this context, we may refer to the decision of Supreme Court in case of Assistant Commissioner of Incometax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500(SC) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a) But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. 18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mon requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment. 16. It would, thus, emerge that even in case of reopening of an assessment which was previously accepted under section 143(1) of the Act without scrutiny, the Assessing Officer would have power to reopen the assessment, provided he had some tangible material on the basis of which he could form a reason to believe that income chargeable to tax had escaped assessment. However, as held by the Apex Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (supra) and several other decisions, such reason to believe need not necessarily be a firm final decision of the Assessing Officer. 17. If we accept such proposition, the petitioner's apprehension that the Assessing Officer would arbitrarily exercise powers under section 147 of the Act to circumvent the scrutiny proceedings which could not be framed in view of notice under section 143(2) having become time barred, would be taken care of. To reiterate, even for reopening of an assessment which was accepted previously under section 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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