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TMI Blog2016 (3) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... med in the original assessment on the issue and hence change of opinion does not arise?" 2. We have heard Mr. K.V. Aravind, learned Counsel for the appellants-Revenue and Mr. A. Shankar, learned Counsel for the respondent-assessee. 3. We may record that the Tribunal in its order dated 21.11.2014 (Annexure 'C') while dealing with the said aspects has observed from paragraph 12 to paragraph 26 as under: "12. It could be seen from the facts narrated as above that the proceeding u/s. 147 of the Act were sought to be initiated after a period of four years from the end of the relevant assessment year. It is also clear from the facts narrated as above that in the case of assessee for the A.Y. 2005-06, an order of assessment u/s. 143(3) of the Act had already been made. Therefore, proviso to section 147 of the Act will apply. 13. It can also be seen from the reasons recorded by the AO for initiating proceedings u/s. 147 of the Act, that the narration in para 1 to 9 of the reasons recorded are facts which were well within the knowledge of the AO while completing the original assessment proceedings u/s. 143(3) of the Act. The joint development agreement between the Assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital gains tax. In the remaining paragraphs, the AO has computed capital gain that has to be brought to tax which in his opinion has escaped assessment. 14. On the facts as narrated above and on the basis of provisions of section 147 as well as proviso to section 147 of the Act, the ld. counsel for the assessee contended as follows:- (a) Initiation of reassessment proceedings is bad in law because proviso to Sec. 147 will apply in the present case and therefore the initiation of reassessment proceedings can be only if there was failure on the part of the assessee to fully and truly disclose material facts necessary for assessment of income for AY 05-06. (b) Initiation of reassessment proceedings are merely on a change of opinion and therefore bad in law. 14.1 On point (a) as above, the learned counsel for the Assessee submitted that the fact that assessee owned 100.02 acres of land in Whitefield and the fact that the aforesaid property was treated as investment as on 31.3.2004 and shown as stock-in-trade as on 31.3.2005 are all facts within the knowledge of the AO, while completing the original assessment u/s. 143(3) of the Act. The fact that the property was subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear, by reason of failure on the part of the assessee to disclose truly and fully all material facts necessary for his assessment for that assessment year. He drew our attention to the reasons recorded by the AO u/s. 147 of the Act before issue of notice u/s. 148 of the Act and submitted that in the reasons so recorded by the AO, there has been no allegation that there was escapement of income due to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment of income of the assessee for A.Y. 2002-03. 14.4 Our attention was also drawn to the decision of the Hon'ble Karnataka High Court in the case of CIT and ACIT v. Hewelett Packard Digital Global Solutions Ltd., ITA No. 406 of 2007, judgment dated 19.09.2011, wherein the Hon'ble Karnataka High Court after making a reference to the decision of the Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar [2004] 137 Taxmann 479 (Bom.) observed as follows:- "7. It is observed in the said judgment that the reason recorded by the Assessing Officer no where state that there was failure on the part of the assessee to disclose fully and truly all material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw, it is barred by time and the findings recorded by the Tribunal is legal and valid and does not suffer from any legal infirmity. In that view of the matter, no substantial question of law arises for consideration in these appeals. Accordingly, the appeals are dismissed." 14.5 Our attention was drawn to the decision of the Hon'ble Gujarat High Court in the case of General Motors India (P.) Ltd. Vs. DCIT, 360 ITR 527 (Guj.) wherein the Hon'ble Gujarat High Court held: "It is required to be noted that in the present case notice u/s 148 of the Act had been issued on 27/4/2011 in relation to the Assessment Year 2005-06. Hence, admittedly the same had been issued after expiry of a period of four years from the end of the relevant assessment year. Under the circumstances, in light of the proviso to section 147 of the Act, in case, where assessment has been framed under section 143(3) of the Act, no action can be taken under section 147, unless income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for the assessment year. There was not even a whisper to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w material whatsoever has been referred to in the reasons recorded. 15. The ld. DR, on the other hand submitted that there was a failure on the part of the Assessee to fully and truly disclose material facts and in this regard drew our attention to para-19 of the reasons recorded wherein the AO has recorded the fact that the Assessee has not filed any information to the effect that there was incidence of capital gain u/s. 45(2) of the Act, as per the return of income. Further reference was also made to Expln.1 to Sec. 147 of the Act which lays down that merely filing of documents before AO from which facts regarding escapement of income could be gathered, will not necessarily amount to disclosure of all facts by an Assessee. Further reference was made to the fact that while completing the original assessment u/s. 143(3) of the Act there was no discussion regarding applicability of Sec. 45(2) of the Act. Reliance was placed on page-10 and 11 of the CIT (A)'s order wherein the CIT (A) has upheld the action of the AO in initiating proceedings u/s. 147 of the Act. 16. The ld. counsel for the assessee, in rejoinder, pointed out to Explanation 1 to section 147 of the Act, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade during the previous year relevant to AY 05-06 and the fact that the said property was subject matter of a Joint Development Agreement with Prestige Estates and Properties Ltd. It was his contention that the AO while completing the assessment did not deem it proper to consider the act of the Assessee entering into a Development agreement in respect of the property as resulting to a transfer giving raise to charge of capital gain u/s. 45(2) of the Act. It was pointed out by him that in the reasons recorded the AO has not referred to any material which had come into his possession subsequent to the passing of the order u/s. 143(3) of the Act based on which he entertained belief that Development Agreement resulted in a Transfer and thereby provisions of Sec. 45(2) of the Act became applicable. There being no material which has come to the possession of the AO since the conclusion of the original assessment proceedings, it was not possible for the AO to change or form a different opinion on the same set of facts and resort to reopening of a completed assessment. According to him, doing so will result in the AO reviewing his own order which is not legally permissible. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, AO has power to reopen, 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." He laid emphasis on the fact that there was absence of tangible material in possession of the AO to come to conclusion that there was escapement of income from assessment. According to him, the present action of the AO is clearly a case of resort to reassessment proceedings merely on change of opinion. 21. We have given a very careful consideration to the rival submissions. As we have already seen the Assessee held the Whitefield property as investment and converted the same as stock-in-trade of business during the previous year relevant to AY 05-06. This fact has also been recorded by the AO in the order of assessment passed u/s. 143(3) of the Act. Sec. 45(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the property for joint development. In coming to the aforesaid conclusion, the AO has placed reliance on the decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia Vs. CIT 260 ITR 491 (Bom.) rendered on 13.2.2007, which was much before when the AO concluded the original assessment proceedings u/s. 143(3) of the Act on 31.12.2007. The other decision referred to by the AO in the reasons recorded is CIT Vs. T.K. Dayalu 202 Taxman 531. This decision was rendered on 20.6.2011, after the conclusion of the original assessment proceedings. The decision rendered subsequent to the original assessment proceedings will not mean that assessee did not fully and truly disclose material facts. If reassessment proceedings are initiated on the basis of a subsequent judicial decision, then that would also be a case of change of opinion, as was held by the Hon'ble Bombay High Court in the case of Sesa Goa Ltd. Vs. JCIT 294 ITR 101 (Bom.) on which reliance was placed by ld. counsel for the assessee. 22. In the present case, the facts on record and reasons recorded clearly show that all facts were available before the AO when he completed the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be read in a manner so as to override Proviso to Sec. 147 of the Act. 25. Before us, the ld. DR had placed reliance on the order of the CIT (Appeals) on the issue of validity of initiation of reassessment proceedings. In our view, the ld. CIT (Appeals) has merely proceeded on the basis that income arises on executing joint development agreement to the assessee. He has not addressed the issue with regard to applicability of proviso to section 147 of the Act or the question whether reassessment proceedings were initiated merely on change of opinion. 26. We are, therefore, of the view that in the given facts and circumstances of the case, initiation of reassessment proceedings u/s 147 of the Act is held to be illegal and consequently, order passed u/s. 147 of the Act is cancelled on this ground.' 4. As such, whether it was a case of change of opinion or the non-disclosure of true and correct facts, if considered in light of the report, one may say that such may fall in the arena of question of fact which may include the consideration of the earlier proceedings of the assessment. The Tribunal having found that the relevant material including that of transfer by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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