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TMI Blog2016 (8) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ,610/- after taking into account the revised return filed by the assessee. The Assessing Officer while computing the total income in this assessment year had disallowed carry forward losses and unabsorbed depreciation of M/s. Maheswara Sugars Ltd. which was amalgamated with M/s. Bannari Amman Sugars Limited, the assessee, herein, pursuant trot he order issued by the High Court of Judicature at Madras which was effective from 01.01.2007. In this background, the Assessing Officer issued a notice under section 148 of the Act on 21.03.2013 by recording reasons for reopening of assessment as follows: "Hence, it needs to be verified whether as losses amalgamating company has been taken into account for the purpose of valuation. It needs verification whether the assessee company has actually carried over losses in its accounts for assessment year 2006-07 so that it is eligible for set-off. 3. Accordingly, the Assessing Officer has observed that for the assessment year 2007-08, the assessee had claimed set off of loss amounting to Rs..23,08,24,830/- being the unabsorbed losses relating to Maheswara Sugars Ltd. against its total income as per the provisions of section 72A of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sugars Ltd. and the assessee company and the Annual Reports for the relevant years were examined and found that the conditions stipulated in section 72A and Rule 9C of the I.T. Rules have been satisfied fully. Also, the losses of Maheswara Sugars Ltd. for the financial year 2005-06 were fully absorbed in the books of the assessee, M/s. Bannariamman Sugars Ltd. for the same year for the purpose of amalgamation. Considering this, as against the unabsorbed losses of Rs..23,08,24,830/- that were allowed to be carried forward and set off against the assessee's profits as per the original assessment order, depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to Rs..6,98,05,670/- would be reduced as determined in the assessment order in the case of Maheswara Sugar Mills Ltd. for assessment year 2006-07 and only losses amounting to Rs..16,10,19,160/- are allowed to be carried forward for set off against the assessee's current income. 5. Against this, the assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) placed judgement in the case of Usha International Ltd. 348 ITR 485 (Del)(FB) and the decision of the Hon'ble Apex Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d case. Further contention of the ld. AR is that notice for reassessment has been issued beyond four years from the end of relevant assessment year and against the assessee had brought all material facts in the return filed, the reopening on the basis of same set of facts is bad in law and it is only change of opinion. It is a settled law that on the basis of material, prima facie, available before the Assessing Officer, he was of the opinion that income chargeable to tax has escaped assessment can be formed. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. In case the Assessing Officer has a cause or justification to know or suppose that income has escaped assessment, action u/s 148 can be taken. But obviously, there should be relevant material on which a reasonable man could have formed a requisite belief. Whether this material(s) would conclusively prove the escapement of income is not the concern at that particular stage. So what is required is the subjective satisfaction of the Assessing Officer based on objective material evidence. In the given case, original assessment was completed on 29.12.2009. The reason was recorded as discussed abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matic interpretation of the words 'reason to believe' failing which section 147 would give arbitrarily powers to the Assessing Officer to reopen the assessment on the basis of mere change of opinion, which cannot be, per se a reason to reopen the case. The Act has not given power to the Assessing Officer to review but has only given power to re-assess. There is a conceptual difference between the two aspects as the Assessing Officer has no power at all to review the assessment. The reassessment, as stated above, has to be based on fulfillment of certain pre-conditions but the concept 'change of opinion' has to be taken into consideration otherwise it may give unbridled power to an Assessing Officer to reopen any and every assessment order which would simply amount to a review. The concept 'change of opinion' is an in-built test to check the abuse of power by the Assessing Officer. So, now only when the Assessing Officer has a tangible material to base his conclusion that there is an escapement of income from assessment and the reasons recorded have a link with the formation of his belief, he has the power u/s 147 of the Act. 11. Now the most material part which was argued by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he knowledge of the Assessing Officer that the depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to Rs..6,98,05,670/- was already set off out of total brought forward loss amounting to Rs..23,73,98,026/- and the balance amount of Rs..16,10,19,160/- could be carried forward for set off against the assessee's current income. As per Explanation 2 of Section147 it is very clear that due to excessive claim of the assessee, the income chargeable to tax had escaped assessment. The assessee has not produced anything before the Commissioner of Income Tax (Appeals) to show as to how this fact was fully and truly disclosed before the assessing authority and that there was not failure on the part of assessee. Hence, the Commissioner of Income Tax (Appeals) wrongly cancelled the assessment order. It is fully covered by the provisions of Explanation 1 to Section 147 of the Income Tax Act which reads as under: ''Production before the Assessing Officer of accounts books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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