TMI Blog2020 (5) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... aped the attention of the Assessing Authority at the original instance and he has in fact made a modification to the valuation of the first lot of shares. For reasons best known to him, the second lot has been left untouched. Admittedly, there is no material that has come to the notice of the Assessing Authority in 2018 to warrant re-assessment. The proceedings impugned before me are thus nothing but a change of opinion, impermissible in law. - W.P. No.23768 of 2018 And WMP. Nos.27723 to 27725 of 2018 - - - Dated:- 23-1-2020 - Honourable Dr. Justice Anita Sumanth For the Petitioner : Mr.Suhrith Parthasarathy For the Respondents : Mr.ANR.Jayapratap, Standing Counsel ORDER The petitioner challenges proceedings for re-assessment in respect of Assessment Year 2014-15 commencing with notice for re-opening issued under Section 148 of the Income Tax Act, 1961 (in short 'Act') dated 17.08.2017 and all subsequent proceedings. The petitioner had filed a return of income within time that was accompanied by relevant financials. The notes on accounts detail the reserves and surplus position as follows: '2. Reserve and Surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner thus raised an objection to assumption of jurisdiction in line with the procedure prescribed in GKN Driveshafts (India) Limited V. Income Tax Officer and others (259 ITR 1) which came to be rejected by order of the respondent dated 14.08.2018. The Assessing Authority, in rejecting the objections raised, relies on the provisions of Section 147 of the Act pointing out that he has 'reason to believe' that the income in relation to 2,17,870 shares has escaped assessment insofar as the computation of fair market value of the shares was, according to the Officer, incorrect. He relies on the judgment of the Supreme Court in the case of Assistant Commissioner of Income Tax V. Rajesh Jhaveri Stock Brokers (P) Ltd. (291 ITR 500) and the decision of the Delhi High Court in the case of Consolidated Photo Finvest Ltd. V. Asstt. CIT [(2006) 151 Taxman 41 (Delhi)]. It is as against the aforesaid proceedings dated 14.08.2018 that the present Writ Petition is filed. 5. The impugned proceedings have no doubt, been initiated within a period of four years. However, there is, admittedly no tangible or fresh material that has come to the notice of the Assessing Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jolly to the effect that the impugned order of reassessment cannot be faulted as the same was based on information derived from the tax audit report. The tax audit report had already been submitted by the assessed. It is one thing to say that the Assessing Officer had received information from an audit report which was not before the ITO, but it is another thing to say that such information can be derived by the material which had been supplied by the assessed himself. 43. We also cannot accept submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded on analysis of the materials on the record by itself may justify the Assessing Officer to initiate a proceeding under Section 147 of the Act. The said submission is fallacious. An order of assessment can be passed either in terms of Sub-section (1) of Section 143 or Sub-section (3) of Section 143. When a regular order of assessment is passed in terms of the said Subsection (3) of Section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reintroduced 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Assessment) MANU/GJ/0027/2000 : [2000]243ITR482(Guj) , Praful Chunilal Patel v. M.J. Makwana, Assistant CIT MANU/GJ/0059/1998 : [1999]236ITR832(Guj) and Garden Silk Mills Ltd. v. Deputy CIT (No. 1), MANU/GJ/0030/1996 : [1996]222ITR27(Guj) . The Full Bench of this Court has taken into consideration both Praful Chunilal Patel as well as Garden Silk Mills. In Kelvinator the Full Bench had also analysed the earlier Division Bench decisions, namely, Jindal Photo Films Ltd. v. Deputy Commissioner of Income Tax MANU/DE/0729/1998 : [1998]234ITR170(Delhi) presided over by R.C. Lahoti J. (as learned Chief Justice of India then was) and Bawa Abhai Singh v. Deputy Commissioner of Income Tax MANU/DE/0302/2001 : [2002] 253 ITR 83 comprising Arijit Pasayat and D.K. Jain (as their Lordships then were). It is quite possible that had the Court in Consolidated Photo been made aware of the consistent opinion of this Court in Jindal Photo and Bawa Abhai Singh, their conclusion may have been totally different, notwithstanding alternative view of the Gujarat High Court.' 10. The existence of new and tangible material is a jurisdictional fact. This fact must necessarily exist in order to validate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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