TMI Blog2012 (4) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... d 31.12.2007 under Section 143(3) was passed assessing the income at ₹ 4,76, 99,654/-. 4. The Assessing Officer thereafter recorded reasons to believe and issued the impugned Notice dated 14.09.2009. The reasons to believe reads as under: - Reasons It is seen from records that the assessee company paid an amount of ₹ 6.5 Crores to M/s WIMCO Limited. The deal was terminated due to the said land covered under Master Plan. After settlement, the amount of ₹ 3,53,76,361/- was forfeited towards advance given for acquisition of land. It was written off by the assessee company. It is capital expenditure which is not allowable. It is further seen that the assessee company claimed bad debt of ₹ 23,68,182/- whereas no debtors existed as on 31.03.2004. Therefore, I have reason to believe that income of ₹ 377.44 lakhs has escaped Assessment. Accordingly, re-Assessment proceedings are initiated under section 147 of Income Tax Act, 1961. Notice is issued under section 148 of Income Tax Act, 1961. 5. We may only note here that the second reason has not been pressed by the Revenue and in the order dated 02.12.2010 the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant portion of this letter: - 1. Kindly refer to the queries raised by you on the last date of hearing with respect to balance sheet of M/s. Vatika Townships Pvt. Ltd., (company merged with the assessee company pursuant to the order passed by the Hon ble High Court of Delhi at New Delhi). In the accounts of the company prepared as at 31.3.2005 under the head Farm House under construction in Schedule-7 relating to inventory, figures of the previous year i.e. as at 31.3.2004 is reflected as ₹ 6,99,74,327/- whereas as at 31.3.2005 no amount has been declared against Project at Bhondsi. You were pleased to direct the assessee as to how this entry has been adjusted in the accounts. 2. In this connection it is submitted that M/s Wimco Ltd. wanted to endeavour itself into real estate business and for this purpose they decided to acquire vast areas of land at village Bhondsi where the assessee company was already doing real estate business. 3. The company M/s. Wimco Ltd. entered into an agreement with the assessee company for acquisition of agricultural land on their behalf and for this purpose an understanding was executed between the two companies on 24.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, it was decided that the marketing rights of the land under reference is with the assessee for which a consideration of ₹ 6,50,00,000/- was paid by the assessee company to M/s Wimco Limited in Ass. Year 1997-98. It was thus apparently considered appropriate between the three companies M/s Amazing Academics Pvt. Ltd., M/s Smart Realtors Pvt. Ltd. and Wel Intertrade Pvt. Ltd. to settle the issue somehow. Accordingly, a letter dated 14.1.2005 was issued to the assessee company after prior discussions by M/s WEL Intertrade Pvt. Ltd. along with confirming parties M/s. Amazing Acdemics Pvt. Ltd. and Smart Realtors Pvt. Ltd. Accordingly, the marketing rights over the land were withdrawn on payment of a total sum of ₹ 3 Cr. As detailed hereunder: - Wel Intertrade Pvt. Ltd. 1,54,79,233/- Amazing Academics Pvt. Ltd. 75,71,885 Smart Realtors Pvt. Ltd. 69,48,882 6. During the year under consideration, these amounts were duly received by the assessee company and reduced from the aforesaid sum of ₹ 6,99,74,327/-. A further sum of ₹ 3,53,76,361/- was written off under the head other costs in Schedule-18 in the balance sheet as advance forfeited. 10. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act (with effect from 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the Assessing Officer 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, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of change of opinion is removed, as contended on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 02.12.2010 has not specifically dealt with the issues and contentions raised by the petitioner. They remained unanswered. The Assessing Officer has raised a number of questions. The questions do not form the part of the reasons recorded for the re-opening. In a case where an issue was examined and considered in the original assessment proceedings, mere question(s) is not sufficient. There is no material/evidence to show that the statement or the explanation given by the petitioner was false. This is not alleged or stated in the reasons to believe. Mere doubt or suspicion without any tangible material cannot justify re-opening. The Assessing Officer could have justified reopening if he had conducted verification and inquiries and referred to material/evidence to prima facie show that the explanation of the petitioner was false and wrong. No such exercise and verification was made and the reasons to believe are silent. 16. In view of the aforesaid discussion, a Writ of Certiorari is issued quashing the Notice dated 14.09.2009. In the facts of the case there will be no order as to costs. In view of the fact that we have quashed the notice, the re-assessment order, if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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