TMI Blog2020 (3) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 11 - SUPREME COURT] . For reopening the concluded assessment, the Assessing Officer should form an opinion on the basis of same material which is already on record and not from any external sources. Reopening an assessment, AO cannot consider the information which is already on record and it should be from outside sources as held by case of CIT v. Ramakrishna Hegde [ 2009 (7) TMI 815 - KARNATAKA HIGH COURT] - Since there is no new material and on the available material the A.O. has reopened the present assessment. Being so, we cannot uphold the action of the reopening of assessment. For this proposition, reliance is placed on the following judgments, viz., (i) CIT v. Standard Chartered Finance Ltd. [ 2012 (1) TMI 381 - KARNATAKA HIGH COURT] (ii) Parixit Industires (P.) Ltd. v. ACIT [ 2012 (4) TMI 464 - GUJARAT HIGH COURT] (iii) H.K.Buildcon Ltd. v.ITO [ 2010 (4) TMI 831 - GUJARAT HIGH COURT] (iv) Lahneyer Holdings GmbH v. DCIT [ 2015 (5) TMI 654 - DELHI HIGH COURT] . Accordingly, we quash the reassessment order. Since we have decided the issue on merits, we are refrain from going into other grounds raised by the assessee. - Decided in favour of assessee. - ITA No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore to allow, delete, amend or modify otherwise each of any of the grounds of appeal either before or at the time of hearing this appeal. 3. The facts of the case are that the assessee is a cooperative engaged in providing credit facilities to its members. For the A.Y. 2014-15, the assessee filed its return of income, claiming deduction u/s. 80P (2)(a)(i) of the Act. The assessee s case was selected for scrutiny and the assessment was completed U/s 143(3) of the I.T.Act accepting the returned income. On examination of the financial statements of the assessee, the AO noticed that the assessee had earned interest to the tune of ₹ 6,06,914 on FDs kept with Scheduled banks, which had to be taxed as income from other sources u/s 56 the Act. A notice u/s 148 of the Act dated 03.11.2017 was issued by the AO, directing the assessee to file the return of income. In response, the assessee filed a letter dated 22.11.2017 requesting the AO to treat the return of income filed on 30.11.2014 as its return filed u/s 148 of the Act. The assessee requested for copy of the reasons recorded which were furnished to it. The assessee filed its objections to the reasons recorded, which the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The same has to be taxed as income from other sources u/s 56 of the I.T.Act, 1961. The assessee was subjected for scrutiny proceedings and order u/s 143(3) was passed on 18.11.2016 accepting the income declared in the return. During the original assessment proceedings, the deduction claimed u/s 80P of the Act was examined. After due examination by the A.O. the deduction was allowed. Therefore, reassessment in view of the deduction u/s 80P will be due to mere change of opinion. It has been held in the following decisions that even if the reassessment is in accordance with the proviso to section 147 of the I.T.Act, it cannot be made on a mere change of opinion. It was also held that even if an assessment is possibly reopened within a period of 4 years from the end of the relevant assessment years, the reassessment would be bad in law if it is on a mere change of opinion. The learned AR relied on the following decisions:- (i) CIT v. Kelvinator of India Ltd. 320 ITR 561 (SC) (ii) ACIT v. ICICI Security Primary Dealership Ltd. 348 ITR 299 5.1 The learned AR further submitted that another ground on which the reopening is bad in law is that the so called formation of belief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was seen that the assessee had earned interest income from deposits with Scheduled banks, which ought to have been taxed u/s 56 of the Act in line with the aforesaid judgment, hence there was reason to believe that the assessee s income had escaped assessment. As for the AO's action in reopening the assessment u/s 147 of the Act, at the stage when the AO examined the financial statements if he was prima facie satisfied that income had escaped assessment, he was competent to take action 147 of the Act to bring to tax any income which had escaped assessment as held by the Hon'ble Supreme Court in ACIT V. Rajesh Jhaveri Stock Brokers P. Ltd. [291 ITR 500]. The Apex court in this case, after considering various decisions rendered by it in the past, construed the words 'reason to believe' in section 147 of the Act and held that, if the AO has cause or justification to know or suppose that any income has escaped assessment, then it could be said that the AO had reason to believe that the income chargeable to tax has escaped assessment. The Apex Court further held that the expression `reason to believe' in section 147 of the Act cannot be read to mean that the AO sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed conditions were required to be satisfied: firstly, the Assessing officer must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and secondly, he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material fact necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words, if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. Applying the ratio laid down by the Apex court in the aforesaid case, it has to be seen in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income on fixed deposits earned by the society which is chargeable to tax a/ s. 56 of the Income tax Act, 1961 for the A. Y. 2014-15 has escaped assessment 7.1 Now the contention of the learned AR is that it is only a change of opinion as the Assessing Officer already formed an opinion and allowed deduction u/s 80P of the I.T.Act. The learned AR further contended that there is no tangible fresh material on the basis of which assessment is sought to be reopened. In the present case, the original assessment was completed u/s 143(3) of the Act on18.11.2016 accepting the declared income and the A.O. examined the deduction u/s 80P of the Act and granted the deduction. Therefore, the reassessment in this case was made to withdraw deduction u/s 80P of the Act by treating the interest income under the head income from other sources instead of business income . This is nothing but change of opinion. On mere change of opinion, the concluded assessment cannot be reopened as held by the Hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. 320 ITR 561 (SC). Further, it is to be noted that for reopening the concluded assessment, the Assessing Officer should form an opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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