TMI Blog2017 (11) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... eview; he has the power to re-assess. But re-assessment has to be based on fulfillment 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 re-opening 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 Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, 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. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer.” The appeal of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer is notional. 4d That the learned CIT(A) has erred in law and on facts of the case in not considering the fact that in respect of assessment year 2001-02, the same issue was considered and no addition was made on this account. 4.e. Without prejudice to above the learned CIT(A) should have directed the assessing officer to allow the same as deduction in the year in which final settlement was made and no amount was received on account of above interest. 5.a. That the learned CIT(A) has erred in law and facts of the case in upholding the computation of the deduction u/s 80 O, which is not as per the provisions of income tax act. 5.b. That the learned CIT(A) has erred in laws and facts of the case in holding that this is not change of opinion and thus upholding the recomputation of the deduction u/s 80-0, the full facts of which were given in the return, tax audit repo'1 and considered by the assessing officer in assessment u/s 143(3). 5.c The learned CIT(A) has erred in law and facts of the case in upholding the estimates of expenses by assessing officer attributable to earning of income for deduction u/s 80-0. 5.d The learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 8.d Without prejudice to above the CIT(A)has erred in law and on facts of the case in not holding that the interest u/s 234D is chargeable on the amount of tax which is payable in assessment u/s 147. 9.a That the CIT(A) has erred in law and on facts of the case in upholding the withdrawal of interest u/s 244A. 9.b. That the CIT(A) has erred in law and on facts of the case in holding that initiation of penalty proceedings u/s 271(1)(c) is not appealable. 3. The assessee company filed return of income on 26.11.1999 declaring an income of ₹ 10,84,60,76,693. The assessment u/s 143(3) was completed on 15.02.2002 at taxable income of ₹ 10,84,93,70,319 was determined. The case was reopened u/s 147 of the Income Tax Act on 04.03.2004 after recording the reasons. The extracts of the reasons are as under: SATISFACTION NOTE M/s. Bharat Heavy Electricals Ltd. A.Y. 1999-00 The case was assessed u/s 143(3) on 15.02.2002 at an income of ₹ 10,84,95,70,319/- against the returned income of ₹ 1084,60,76,693/-. However, the following points remained unattended while completing the assessment u/s 143(3) for the A.Y. 1999- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reopening), the said notice issued u/s 148 of the Act is null and void ab initio as per the Assessee. The assessee relied upon the proviso to Sec. 147 of the Act. Further the AR submitted that there was only a change of opinion in forming the reason to believe which could not be covered under reasons to believe. The Assessing Officer while considering the assessee s contentions held that the assessee failed to disclose the facts fully and truly which were material for completion of the assessment and thus, rejected the contentions of the assessee. The Assessing Officer made additions relating to interest on credit extended to APSEB prior period expenses as well as disallowed deduction u/s 80 of the Act, u/s 80IA and u/s 80HHC. 4. Being aggrieved the assessee filed appeal before the CIT(A). The CIT(A) dismissed the ground of reopening taken by the assessee and partly allowed the appeal of the assessee. 5. The Ld. AR submits that the reopening of the assessment u/s 147 is bad in law as full details on issues stated in satisfaction note were given by the assessee company and considered by the Assessing Officer in Assessment u/s 143(3) of the Act. Hence notice issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of ₹ 237.71 lakhs relating to prior period and the same has also formed part of profit of the company for the purpose of computation of taxable income for the year. Further this issue was also examined by ITAT vide order dated 12.02.1981 wherein the system of accounting of the company was accepted and no disallowance on account of prior period expenditure was made. 5.3 As relates to Ground No. 6.a to 6.c i.e. claims u/s 80IA, the Ld. AR submitted that the company claimed a deduction of ₹ 328.94 lakhs u/s 80IA in respect of Nuclear Steam generator expansion Scheme. In this connection it is stated that the commercial production of this project started in May, 1991. As per provisions of Section 80IA (iv) of the income tax act the deduction is allowed in case of industrial undertakings which begin to manufacture or produce articles or things or to operate such plant or plants, at any time during the period beginning of 1st day of April, 1991 and ending on the 31st day of March, 1995 or such further period as the Central Government may, by notification in the official gazette, specify with reference to any particular industrial undertaking. The deduction is allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease rental is a business income of the company. In the original assessment u/s 143(3), the assessing officer fully considered the facts relating to claim u/s 80HHC. In the appeal against the order u/s 143(3), the CIT(A) vide his order dated 10.12.2002 for AY 1999- 2000, upheld the working of claim u/s 80FIHC. However, the assessing officer changed his opinion with regard to method of working of claim u/s 80HHC. Since this has been fully considered in assessment u/s 143(3) and by CIT(A) also, the re-computation of claim u/s 80HHC is clearly a change of opinion. T his is nothing but change of opinion. While computing the profit for the purpose of deduction u/s 80HHC the assessing officer reduced 90% of the lease rentals. 6. The Ld. DR relied upon the orders of the Assessing Officer and the CIT(A). The Ld. DR further submitted that the assessee did not provide any details. There is no change of opinion but the escapement of income due to inaccurate particulars filed by the assessee during the assessment proceedings. Therefore, the Assessing Officer) rightly made additions and the same was confirmed by the CIT(A). 7. We have heard both the parties and perused the material avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though both the assessments were reopened after the expiry of four years from the end of the relevant assessment years. 10. The CIT(A) has rejected the assessee s objection in this regard by observing that the re-assessment proceedings were within limitation, since, the notices u/s 148 of the Act were issued within six years from the end of the relevant assessment year, after taking approval of the CIT(A) as stipulated in section 151 of the Act. In this regard, it would be appropriate to reproduce here section 151(1) of the Act: 151. (1) In a case where an assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an AO, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such AO that it is a fit case for the issue of such notice. 11. Thus, section 151(1) provides that in a case of a completed regular assessment, a notice u/s 148 of the Act is to be issued by an AO who is below the rank of Assistant Commissioner or Deputy Commissioner, only if the Joint Commissioner is sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to make a return u/s 139 or in response to a notice issued under sub Section 1 to Section 142 or Section 148 or to disclose fully and truly of material facts necessary for his assessment for that Assessment Year. But in this particular case, the assessee has given all the details at the time of regular assessment there was no failure on the part of the assessee to give any incorrect or inadequate particulars to the Assessing Officer at the time of original assessment proceedings. Therefore, there is no reason of failure on part of the assessee for reopening the assessment beyond four years. Therefore, the proviso to Section 147 of the Act will support the case of the assessee. Therefore, the reopening without any appropriate satisfaction/reason is not done as per the law by the Assessing Officer. Thus, the assessee s case gets support from the Hon ble Apex Court judgment in case of Kelvinator India (P) Ltd. wherein it is held that post-1st April, 1989, power to re-open 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 re-open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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