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2019 (8) TMI 737

..... ried out during the original assessment - HELD THAT:- The AO has power to reopen the assessment, 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 belief. In the present case, there is no tangible material. The issuance of the impugned notice u/s.148 is nothing but mere change of opinion. In absence of any new tangible material available with the A.O., it is not open to the A.O. to change his opinion by issuing the notice of reassessment. From the reasons recorded it can be said that the original assessment is sought to be reopened in exercise of powers u/s 147/148 on change of opinion by the AO, which is not permissible more particularly when the original assessment is sought to be reopened after a period of four years from the end of the assessment year. Under the circumstances, the conditions stipulated under first proviso to section 147 are not satisfied and therefore, on the aforesaid ground alone, the impugned notice deserves to be quashed and set aside. In view of the above and applying the ratio laid down in the decisions referred and for .....

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..... nd 6/7.7.2018. However, the respondent disposed of the objections, vide order dated dated 10/07/2018, holding that the reasons raised by the petitioner are not acceptable and hence rejected the same in totality. Hence, the petitioner has preferred present writ petition. 4.00. Mr. Sudhir Mehta, learned counsel appearing for the petitioner has vehemently submitted that the property was sold in the financial year 2012-13, but the purchaser had not made the payment in the financial year 2012-13 and payment was made in the financial year 2013-14. The assessee also paid tax on the consideration for the return of income for the A.Y. 2013-14. It is contended that this fact is already placed on record of the A.O. and the assessment order was passed under section 143(3) of the Act on 13/7/2015 and therefore, not it is not open for the A.O. to issue Notice under section 148 of the Act stating that income had escaped for the A.Y. 2013-14 and asking the petitioner to file the return. 4.01. Mr. Sudhir Mehta, further submitted that during the course of regular assessment proceedings, detailed inquiry was conducted and the petitioner had filed reply and during the course of the inquiry, the petiti .....

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..... is satisfaction that income has escaped assessment and such assessment must be based on a reason to believe that some income has escaped assessment. However, such satisfaction in absence of any application of mind and any real finding in the case of the assessment do not constitute valid reason to believe that income has escaped assessment. It is contended that therefore, the impugned notice u/s.148 is illegal, bad in law and cannot sustain. 4.06. Relying upon the decision in of this court in the case of Giriraj Steel Versus Deputy Commissionerof Income Tax, reported in [2018] 91 taxmann.com 342 (Gujarat), Mr.Mehta, submitted that reopening of assessment being based on a mere change of opinion, the assumption of jurisdiction on the part of the A.O. lacks validity and the notice u/s 148 of the Act cannot be sustained. Making above submissions and relying upon above decisions, it is requested to allow the present petition. 5.00. Ms.Mauna Bhatt, learned Senior Standing Counsel appearing for the revenue has vehemently opposed the present petition. She contended that in the return of income filed for the A.YH. 2013-14, the petitioner assessee has not shown the capital gain arising out o .....

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..... ake a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). 6.02.1. After enactment of Direct Tax Laws (Amendment) Act, 1987, I.e., prior to 1st April, 1989, Section 147 of the Act, reads as under: 147. Income escaping assessment.- If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 .....

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..... ut 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 inbuilt 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 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 Octo .....

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