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TMI Blog2016 (5) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... l income at Rs. 92,60,984/-. The case of the assessee was selected for scrutiny and an order u/s.143(3) was passed revising the income at Rs.Nil after set off of loss of Rs. 3,75,67,477/- of earlier years. Subsequently, the AO noticed that the set off of loss of Rs. 3,75,67,477/- allowed to the assessee was not in order and there was under assessment of Rs. 3,75,67,477/-. Accordingly, after recording the reasons for reopening of assessment, the AO passed a separate order. In appeal, the CIT(A) allowed the appeal of the assessee holding that reopening of the assessment was bad in law. Now, the revenue is in appeal before us against the aforesaid findings of CIT(A) with the grounds mentioned above. 3. Ld. DR before us submitted that the reopening of the assessee was just and proper as the assessee had sold its business assets consisting of four industrial units during assessment year 1998-99 and thereby discontinued the business for which the loss was originally computed. Ld. DR further submitted that the set off of carried forward losses are not in existence as per Section 72 of the Act for A.Y.1999-2000 and, consequently, relied on the order of Assessing Officer in this regard. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the' Delhi High Court reported at (2010) 228 CTR (SC) 488, held that prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under two conditions and fulfillment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. The conceptual difference between power to review and power to reassess should also to be kept in mind. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture has employed the expression "reason to believe'! about any income chargeable to tax which has escaped for any assessment year, in order to empower the AO for resorting to the assessment under s. 147, subject to the provisions of ss. 148 to 153. The AO cannot assume power to initiate reassessment proceedings on his ipse dixit. In order to take recourse to the provisions of s. 147, the AO should have reason to believe that any income chargeable to tax has escaped assessment. The expression 'reason to believe' employed in the section, presupposes some objectivity of the AO and not mere the subjective satisfaction or any suspicion about the escapement of income. A mere suspicion of the AO about the escapement of income cannot justify the action under this section. There is no dispute and there cannot be any that the AO cannot reopen the assessment at his whims and fancies. There must be something positive to indicate that the income chargeable to tax has escaped assessment. 2.4.6 No doubt that the Explanation 2 to s. 147 has widened the scope of assessment or reassessment by providing three clauses in which the income chargeable to tax shall be deemed to have escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assistance of the provisions of s. 147 provided it does not amount to the change of opinion. 2.4.7 It is a settled principle of law that having concluded that all the material facts were fully and truly disclosed by the assessee at the' time of original assessment, invoking the of provisions of S. 147 after the expiry of four years from the end of the relevant asst. year was not valid. The reliance is placed on the following decisions, namely; * Jashan Textiles !vlills P. Ltgd. Vs. DeIT (2006) 284 ITR 542 (Bom) * German Remedies Ltd vs. DCIT (2006) 287 ITR 494 (Born) * CIT vs. Former Finance (2003) 264 ITR 566 (SC) 2.4.8 Notice after expiry of four years, it is imperative for the revenue to allege in the reasons for failure to disclose material facts necessary for assessment reopening beyond four years, in case no such allegation is made the action of reopening cannot be held to be valid. In the case of Sound Casting (P) Ltd v. Dy.CIT (2012) 250 CTR 119 (Bom.), wherein the assessment was completed under section 143 (3) on 14th December, 2007 accepting the melting loss at 7.75 percent. The notice for reopening was issued on the ground that in the similar line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 80M. The AO after applying his mind to the relevant records had made a specific order allowing the deduction. Though, in the notice respondent No. 1 has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of forming of opinion by respondent No.1, nothing new has happened and there is no change of law, no new material has come on record, no information has been received. It is merely a fresh application of mind by the same officer to the same set of facts. Thus, it is a case of mere change of opinion,' which does not provide jurisdiction to respondent No. 1 to initiate proceedings under s. 148. Power under s. 147 cannot be used like the power of review to reopen the assessment and this is precisely what has been done in the present case. 2.4.11 For making reassessment under section 147 of the Act, AO must have REASONS TO BELIEVE that any income chargeable to tax has escaped assessment. The expression used in this section is 'reason to believe', which are quite different from the phrase 'reason to suspect'. 'Reason to believe' has been the matter of judicial scrutiny by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation, had not been explained would be without jurisdiction, illegal, invalid and void ab initio. 7. Before we come to the merits of the case it is necessary to evaluate the provisions of section 147. The first proviso of section 147 makes it amply clear that the provision of section cannot be invoked after expiry of four years from the end of 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 assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment , for that assessment year. In order to make this criteria ld. AR drawn our attention to paper book which contains 1-98 documents the details of those documents have been mentioned in the index of the paper book. Mere particularly our attention was drawn to page no. 1,6,7,8 and 72 which contains order in case of appellant giving effect to the CIT(A)'s order for assessment year 1999- 2000 and page no. 93 which contains order passed u/s 154 of the Income Tax Act in the case of appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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