TMI Blog2018 (11) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of change of opinion is not permissible - COMMISSIONER OF INCOME TAX, DELHI VERSUS M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT OF INDIA] The Hon'ble Supreme Court in LAKHMANI MEWAL DAS [1976 (3) TMI 1 - SUPREME COURT] has held that the power of Income Tax Officer to reopen assessment though wide, are not plenary and absolute and the words of statute are “reason to believe” and not “reason to suspect”. But in this case only the AO has “reason to suspect” and not “reason to believe”. We, therefore after taking into account the ratio laid down by the various decisions and facts of the case before us, are inclined to hold that reopening of assessment not initiated validly and is void ab-initio. Accordingly we quash the reopening of assessment. - Decided in favour of assessee - ITA.No.2259/MUM/2016 - - - Dated:- 10-10-2018 - Shri Mahavir Singh, Hon'ble Judicial Member And Shri Rajesh Kumar, Hon'ble Accountant Member For the Assessee : Shri Sashi Tulsiyan For the Revenue : Shri D.G. Pansari ORDER PER RAJESH KUMAR (AM) (1) These cross appeals are filed by the assessee and the Revenue are arising out of the order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee vide letter dated 03.04.2013 submitting that original return filed may be treated as return filed in compliance to the notice u/s. 148 of the Act. (5) Assessee has challenged the issue of notice and contested the reopening of assessment before the Assessing Officer. However, the Assessing Officer brushed aside the contentions of the assessee on the ground that the bogus purchases were amply proved by the documents downloaded from the Sales Tax Department website which proved that all the thirteen parties were engaged in the supplying of bogus bills on the commission basis and accordingly issued show cause notice to the assessee as to why the purchases to the tune of ₹.11,31,51,580/- should not be treated as unexplained expenditure. Assessing Officer finally after considering the various contentions of the assessee framed assessment u/s. 143(3) r.w.s. 147 of the Act vide order dated 21.03.2014 assessing income of ₹.11,44,20,630/- by making addition u/s. 69C of the Act on entire purchases to the tune of ₹.11,31,51,580/-. (6) In the Appellate proceedings assessee did not challenge the reopening of assessment which is being challenged for the first time by fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 12,69,050/- after making disallowance on account of certain expenses being personal in nature and for want of verification. From the assessment records, it was revealed that the assessee had shown purchases of ₹ 38,05,48,216 in his profit loss account. In this case, information is received from the Office of the D.G.I.T. (Inv.), Mumbai that the assessee made purchases from the following parties who indulge in issuing only bills without any goods or materials for a commission, as per the official website of the Sales Tax Department, Government of Maharashtra. www.mariavat.gov.in. Sr. No. TIN of party from which purchases made Name of the Party Amount of purchases 1 27560404324V. JIGAN- ENTERPRISES 16844356 2 27970657220V BIG TRADE AGENCY 317790 3. 27950092109V GHATALIA STEELS /DIVINE ENTERPRISES 201110 4. 27930682074V ADINATH TRADING CO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to believe that income chargeable to tax has escaped assessment for A.Y. 2009-10 in the case of the assessee. Notice under section 148 of the I.T. Act, 1961 is issued to the assessee. (10) Ld. AR submitted before the Bench that it is the basic requirement of law for reopening of assessment that Assessing Officer must apply his mind on material coming in its possession in order to entertain and form a belief that assessable income of the appellant has escaped assessment. Ld.AR submitted that from the reasons recorded it is clear and evident that Assessing Officer has not applied his mind independently on the material in his possession to show that having applied his mind to the said material he has satisfied himself that there were reasons to belief that income has escaped assessment. The Ld.AR stated that the Assessing Officer has only relied on the information received from the DGIT (Inv.) Mumbai which conveys that as per official website of the Sales Tax Department appellant has made bogus purchases of goods from thirteen parties who are engaged in issuing bogus bills only without supplying any materials. (11) Ld.AR further stated that the Assessing Officer has further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Proceedings u/s.143(3) of the Act. In order to reopen the assessment, the Assessing Officer has to record reasons to believe that income has escaped assessment. The said reasons to believe have to be formed out of the entirely new material on record on the basis of which the Assessing Officer came to the conclusion that the income has escaped assessment and that material should be something which was not available with the Assessing Officer during the original Assessment Proceedings. Unless and until it is done the mere reexamining of the records which were available with the Assessing Officer would amount to change of opinion which is not permissible under the Act. In this case, the Assessing Officer has already examined the purchases from time to time during the original Assessment Proceedings. So much so, that notice issued 133(6) of the Act to the suppliers during the original Assessment Proceedings were complied with and are part of the Assessment records which showed that the Assessing Officer has conducted thorough verification of the purchases and only thereafter accepted the genuineness of the transaction by the assessee. (16) The Learned Counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the ld.AR prayed for the Bench in view of the said facts, the reopening of assessment by the ld. AO is bad in law and has to be quashed. (21) Ld. DR on the other hand relied heavily on the order of the Assessing Officer and submitted that the reopening of assessment was validly made by the Assessing Officer on the basis of the material which came to the possession of the Assessing Officer from the DGIT(Inv.), Mumbai who got the information/material from the Sales Tax Department Website, Government of Maharashtra. Ld. DR stated that the thirteen bogus suppliers in their statements before the Sales Tax Authorities candidly admitted that they were engaged in supplying bogus bills on commission basis without supply of any material. Therefore, the Assessing Officer has sufficient and independent material before him to form the belief that income of the assessee has escaped assessment. Ld. DR prayed for the Bench that the ground raised by the assessee with respect to the reopening of assessment should be dismissed as being devoid of any merit and substance. (22) We have heard the rival submissions and perused the material on record including the impugned order and the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash after routing it through four or five bank accounts, there does not appear to be a link between facts found and the satisfaction arrived at by the assessing authority. Therefore, in the absence of application of mind to the facts alleged to have been found, the decision arrived at that income escaped assessment is not allowable in law. (23) We have also found merit in the second limb of the submissions of the assessee that reopening on the basis of the same material which was before the Investigating Officer at the time of original Assessment Proceedings is nothing but a change of opinion which is not permissible under the law and the concept of change of opinion is a built in test to check the abuse of power to reassess but no power to review under the garb of reopening the Assessment Proceedings is available. The case of the assessee is squarely covered by the ratio laid down by the Hon'ble Supreme Court in the case of CIT v. Kelvinator India(supra) wherein it has been held that the reopening of assessment on the basis of change of opinion is not permissible. Likewise, the case of the assessee is also supported by the various other decision as cited above by the ld.AR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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