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TMI Blog2020 (5) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... r share. 10,63,20,560 --- Total 15,53,20,560 4,90,00,000' 2. The assessment was taken up for scrutiny by issue of notice under Section 143(2) and questionnaire under Section 142(1). After discussion of all relevant issues, an order of assessment under Section 143(3) came to be passed on 30.12.2016, wherein at paragraph 2 (internal page No.2 of the assessment order), the Officer deals with the share premium on the first lot of 1,00,000 shares. An addition under Section 56(2) (viib) came to be made in this regard. The petitioner states that the order of assessment is under challenge by way of statutory appeal. 3. While this is so, a notice under Section 148 of the Act was issued on 17.08.2017. Admittedly, this notice has been issued within a period of four years from the end of the relevant assessment year. The assessee, on 28.10.2017 complied with the notice under Section 148 and sought the reasons, on the basis of which the re-assessment had been initiated. Reasons were supplied, which read as follows: 'It is seen from the records that during the F.Y relevant to AY 2014-15 the assessee has issued on 2,17,870 numbers of 3% cumulative convertible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and re-apply their mind to the same stale material coming to different conclusions every time. 6. In the present case, the financials annexed to the return of income disclose two lot of shares, one numbering 1,00,000 and second numbering 2,17,870. The valuation thereof is also stated clearly. This has not escaped 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. 7. A Full Bench of the Delhi High Court in the case of CIT V. Kelvinator of India Limited ((2002) 256 ITR 1) went into the question of whether a re-assessment that is nothing but a change of opinion on available facts is permissible and within the contours of the Act and held as follows: ' 40. In the event it is held that by reason of Section 147 if ITO exercises its jurisdiction for initiating a proceeding for re-assessment only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Consolidated Photo (supra) is also clearly misplaced insofar as a subsequent Bench of the Delhi High Court in the case of KLM Royal Dutch Airlines V. Asst. Director of Income-tax ((2007) 292 ITR 49) has dissented from the view expressed by the Bench in Consolidated Photo (supra) pointing out that the judgment of the Supreme Court in Kelvinator (supra) and the ratio thereof have been omitted to be taken into consideration in that decision. The relevant paragraph is as follows: 12. The Full Bench of this Court in Commissioner of Income Tax v. Kelvinator of India Ltd. MANU/DE/2365/2002 : [2002] 256 ITR 1 had opined that the amendments introduced into Section 147 with effect from 1.4.1989 have not altered the position that a mere change of opinion of the AO was not sufficient ground for embarking on a reassessment. Calcutta Discount was duly considered and applied by the Full Bench. The Full Bench further observed that an order of assessment must be presumed to have been passed by the AO concerned after due and proper application of mind. In these circumstances the decision of the Division Bench in Consolidated Photo and Finvest Ltd. v. Assistant Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. So far as income-tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under Section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, this cannot be said in the present case.' 11. Though rendered in the context of a re-assessment beyond four years, the observations of the Court above, seen in the context of the march of the law, are equally applicable in the case of a review of assessment, couched as a reassessment. Thus and in the light of the discussion as above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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