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TMI Blog2020 (1) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... that mere calling for of information and keeping the same on the record does not tantamount to application of mind". 3. "On the facts and in the circumstances of the case and in law, the appellate order passed by the CIT(A) is prima facie wrong because after having allowed the appeal of the assessee on technical ground that re-opening of the assessment was bad in law, CIT(A) was not right in directing the AO to verify from the records and make necessary rectification, as per law in so far as assessee's ground of appeal no.4 before the CIT(A) was concerned." 4. The Appellant prays that the order of the CIT (Appeals) on the above grounds be set aside and that of the AO be restored. 5. The Appellant craves leave to amend or alter any ground or to submit additional new ground, which may be necessary." 3. Briefly stated the facts are that, assessee is engaged in the business of Manufacturing and Marketing of Ayurvedic Pharmaceutical Products e-filed its return on 24.09.2009 declaring income of Rs..2,90,15,018/- which was later revised on 21.07.2010 declaring NIL income. Return was processed u/s. 143(1) of the Act and an assessment was made u/s. 143(3) of the Act on 08.12.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding so the Ld. CIT(A) observed as under: - "7.3. I have carefully perused the assessment order and the submission of the appellant. On perusal of the first reason recorded for the reopening of the assessment, it is seen that AO has noted that "as per information on records, it is noticed that the assessee has entered into bogus purchase for Rs. 31,200/- . I have therefore reason to believe that such income chargeable to has escaped assessment". The AO has not mentioned from where the information came and what is mentioned in the information, whose statements were recorded and as to how he formed the reason to believe that there was escapement of income. In the order for rejecting the appellant's objection, the AO has noted that specific information has been received from Maharashtra VAT authority that the appellant is a beneficiary of accommodation entry from M/s Ritesh Corporation and the party has given the statement on oath. In the assessment order at para 5.2 , the AO has noted that Sales Tax Department of Mumbai has investigated all these cases thoroughly and hawala operators have narrated the entire modus operandi of the hawala operators and their beneficiaries. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t para noted in the order of rejecting the objection against the reopening the assessment is clearly against the action of the AO, wherein the Hon'ble Supreme Court has held that the AO has no power to review. AO has the power to only reassess. One must treat the concept of change of opinion as an inbuilt test to check abuse of power by the AO. Hence, after 1.4.1989, AO has power to reopen, provided there is tangible material to come to the conclusion that, there is escapement of income from assessment. Reason must have a link with the formation of the belief. The AO also relied on the decision of Hon'ble jurisdictional High Court in the case of Export Credit Guarantee Corporation of India Ltd. It is seen that in that case the Hon'ble Jurisdictional High Court held that "an assessing officer who has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an escapement of income in consequence, the jurisdictional requirement of section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these circumstance within j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a subsidiary of a foreign company as a result of amalgamation or demerger of a foreign company subject to the condition that fifty-one per cent shareholders of the amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company.] (b) -[Omitted by the Finance Act, 1988, w.e.f. 1-4-1989.] On perusal of the said section, it is seen in clause (a) of section 79, that, on the day of previous year, the shares of the company carrying not less that fifty one percent of voting power were beneficially held by person who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred. It is clearly understood that the preference share holders are beneficially share holder who have voting right on the dividend issue. In the said section it is not mentioned that the share should be equity shares only. Similar wording is also noticed in section 2(22)(e), wherein it is specifically noted that "not being shares entitled to a fixed rate of dividend with or without a right to participate in profits. Relevant section, ie 2(22)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l interpretation or interpretation in favour of the assessee would, therefore, apply only in a case where, on a proper interpretation, the Court is in doubt about the true scope and ambit of the provision or finds that two equally reasonable interpretations - one in favour of the assessee and the other in favour of the revenue are possible. It is only in such cases that the question of accepting one of the two reasonably possible interpretations would arise. It has no application in a case like the instant one where the words of the statute were plain, precise and unambiguous. In such case, the courts have no option but to give effect to the plain meaning of the statute." Therefore, it cannot be said that the AO has not applied his mind and he had overlooked / plainly ignored the material before him. Therefore the case law relied on by the AO are not found applicable here. Further, the AO raised the issue against the issuance of share, ie, the shares were not issued during the financial year 2008-09 relevant to assessment year 2009-10. It is seen, that, for allowing the carry forward and set off the loss where share holding changes then there must be share allotted. But in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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