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TMI Blog2019 (3) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 demanding the total income of Rs. 3,94,600/-. A notice u/S. 148 of the Income Tax Act, 1961 was issued on 13/1/2014 and the assessment u/S. 143(3) read with Sec. 147 was completed on 18/3/2015 assessing income of Rs. 38,16,851/-. The Assessing Officer, while passing the aforesaid order, made an addition of Rs. 34,22,251/- on account of disallowance u/S. 80IA(4) on the ground that a person who executes a work contract is not eligible to claim deduction u/S. 80IA of the Income Tax Act, 1961. It was held by the Assessing Officer that the assessee is a Contractor who is engaged in the construction work in respect of a Project on behalf of the developer and earns profit at various stages of the construction and does not have stakes in the financial viability of the project. The Assessing Officer held that he is being paid regularly for the work done by him and at no stage of work it owns any of the projects. The Assessing Officer held that the assessee is not a developer within the meaning of Sec. 80IA of the Income Tax Act, 1961 and, therefore, will not be eligible for tax benefits u/S. 80IA. The assessee being aggrieved by the order passed by the Assessing Officer has preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computation of income an amount of Rs. 34,22,251/- as Gross total income after making necessary adjustments in respect of the depreciation. An amount of Rs. 34,22,251/- is clamed by the assessee as deduction u/s 80IA in respect of 'Developing Infrastructure Facility' and has accordingly shown Nil income in its return of income. 5. It is thus clear that the Gross Profit shown by the assessee at Rs. 34,22,251/- which is claimed as deduction u/s 80IA, is inclusive of the indcome from Other Sourcess amounting to Rs. 7,10,297/-. Thus, the assessee has claimed excess deduction u/s 80IA in respect of the income from Other Sources amounting to Rs. 7,10,297/-. 6- .................................It is also held by the Hon'ble Supreme Court that duty drawback DEPB benefit in the P&L A/c for purpose of s. 80IA/80IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking. 7. Thus, I have reason to believe that income amounting to Rs. 7,10,297/- has escaped assessment in the meaning of section 147 of the Income Tax Act, 1961. 8. Hon'ble Commissioner of Income Tax, Ujjain, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had reason to believe that by reason of omission or failure on the part of an assessee to make a return under Section 139 for any assessment year or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax had escaped assessment for that year. On the other hand, Clause (b) of Section 147 provided that notwithstanding that there had been no omission of failure as mentioned in Clause (a) on the part of the assessee, if the Income Tax Officer had in consequence of information in his possession, reason to believe that income chargeable to tax had escaped assessment, he could initiate reassessment proceedings. Thus, reassessment proceedings could be initiated if the conditions specified in either Clause (a) or Clause (b) were satisfied. It must also be noted that prior to 1989, the time limit for issuance of notice under Section 149 was also different. In cases falling under Clause (a) of Section 147, the limitation was eight years from the end of the relevant assessment year unless the income chargeable to tax, which had escaped assessment, amounted to or was likely to amount to Rs. 50,000/- or more for that year, in which case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Office has information in his possession leading to give him reason to believe that income chargeable to tax had escaped assessment. 26. The provisions of Section 147 after the 1989 amendment are somewhat different. Section 147 after the amendment does not contain any expression pertaining to information in the possession of the Income Tax Officer. The only requirement is that the Assessing Officer has to have reason to believe that income chargeable to tax has escaped assessment. The proviso is by way of an exception to this provision. The proviso also does not speak of any information. This discussion makes it clear that the ratio in Phool Chand (supra) would not be strictly applicable to this case which relates to the provisions of Section 147 after the amendment of 1989. 14. In view of the above, as we have already noted that in the reasons there is no indication that the assessee failed to furnish truly and fully all material facts necessary for assessment, therefore, respectfully following the decision of the Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. (supra), we hold that the initiation of reassessment proceedings and reopening un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The concept of "change of opinion" has an in-built test to check abuse of power by the Assessing Officer. Therefore, after 1st April, 1989 the Assessing Officer has power to reopen the assessment under section 147/148 of the Act provided there is tangible material to come to the conclusion that there is escapement of income from assessment and the reasons must have a live-link with the formation of such believe that escapement of income from assessment has been done. 17. In the present case we are satisfied that the contention of the learned counsel for the assessee that initiation of reassessment proceedings and reopening was done on the same set of facts without any new tangible material. Therefore, the same is held as bad in law. Accordingly, ground nos. 1 and 1.1 of the assessee are allowed and initiation of reassessment proceedings and issue of notice u/s 148 of the Act and consequent proceedings including reassessment order passed under section 143(3) read with section 147 of the Act are held as unsustainable and bad in law, Consequently, we quash the same. This Court has carefully gone through the order passed by the Tribunal. The aforesaid order makes it very clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect law. In the light of the aforesaid, in the present case as the reassessment proceedings were initiated on the basis of same material which was available before the Assessing Officer and mere change of opinion led to reassessment, which is certainly not at all permissible in the light of the aforesaid judgment. Similar view has been taken in large number of cases by various High Courts, in the case of Yuvraj Vs. Union of India and another reported in [2009] 315 ITR 84 (Bom.); Honda Siel Power Products Ltd. Vs. Dy. Commissioner of Income Tax and another reported in [2012] 340 ITR 53 (Delhi); Principal Commissioner of Income Tax Vs. RJD Impex (P) Ltd., reported in [2016] 69 Taxmann.com 306 (Gujarat); and in the case of Commissioner of Income Tax chennai Vs. A. Vinod Kumar Reddy reported in [2018] 96 Taxmann.com 287 (Madras) as also by the Hon'ble Supreme Court in the case of Asstt. Commissioner of Income Tax Rs. Rajesh Jhaveri Stock Brokers Pvt. Ltd., reported in [2007] 291 ITR 500 (SC) and in the case of Honda Siel Power Products Ltd., Vs. Dy. Commissioner of Income Tax and another reported in [2012] 340 ITR 64 (SC), similar view has been taken time and again. The Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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