TMI Blog2020 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... erely because there is a possibility of change of opinion. No review on the original assessment order is permissible in the reassessment proceedings initiated under Section 147. Therefore, we are of the view that the Tribunal had rightly set aside the impugned reassessment made under Section 147 - Decided in favour of assessee. - T.C.A.No. 450 of 2017 - - - Dated:- 4-8-2020 - HONOURABLE DR. JUSTICE VINEET KOTHARI HONOURABLE MR. JUSTICE KRISHNAN RAMASAMY For Appellant: Mr. J. Narayanaswamy, Senior Standing Counsel For Respondent : No Appearance JUDGMENT (Judgment of the Court was delivered by Mr.Krishnan Ramasamy, J.) The Court was held by Video Conference, as per the Resolution of the Full Court dated 3 July 2020, by Judges at their respective residences and the counsel, staff of the Court appearing from their respective residences. 2. This tax case appeal has been filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras C Bench, dated 25.01.2017 in I.T.A.No.1250/Mds/ 2016. 3. Heard Mr. J. Narayanaswamy, learned Senior Standing Counsel for the department/appellant and none appeared f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt/assessee claimed that they have been dealing with the shares for several years and therefore, the loss on sale of shares could be treated as business loss . However, the Commissioner of Income Tax (Appeals)-15, Chennai rejected the contentions of the respondent/assessee and confirmed the action of the Assessing Officer in initiating the proceedings under Section 147 of the Act, as there was no opinion formed by the Assessing Officer in the original assessment proceedings and accordingly, dismissed the appeal. 8. Challenging the said order, the respondent/assessee preferred an appeal before the Income Tax Appellate Tribunal (ITAT). The ITAT, after hearing the arguments of both the counsel, passed a detailed order holding that the details of loss on sale of shares have been clearly disclosed in the profit and loss account by the assessee, while filing the original return of income and that the Assessing Authority made a thorough scrutiny after issuing scrutiny notice and thereafter, passed the original assessment order and therefore, the department cannot say now that no material was disclosed by the assessee and hence, the reassessment order passed under Section 147 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment for the reason that no assessment order can be made by any Assessing Officer, without forming any opinion prima facie. In the present case, the assessee company has filed its income tax return for the year 2006-07 on 28.11.2006 declaring the total loss of ₹ 18,15,356/- and the same was processed under Section 143(1) on 19.03.2008. Again the case was taken up for scrutiny by issuing notice under Section 143(2) on 08.10.2007. Subsequently, a notice under Section 142(1) was issued on 20.04.2008, calling for some information. The said required information was also furnished by the assessee. After thorough examination of the information received from the assessee and on scrutiny of the balance sheet, including the profit and loss account, the Assessing Officer (AO) passed the assessment order on 15.12.2008. The said assessment order has not been challenged. Therefore, by no stretch of imagination, it can be said by anyone that the order was passed without forming any opinion, as the Assessing Officer (AO) could pass the assessment order, only after forming an opinion and therefore, the original assessment order itself should be considered as it has been passed after form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be na ve to presume that Id. Assessing Officer would not have gone through the profit and loss account of the assessee, especially when such profit and loss account reflected a loss of ₹ 15,93,811/-. It is not a case were loss claimed was not visible. Substantial part of loss claimed by the assessee was on account of loss in sale of shares of ₹ 26,51,684/-, which was debited in its profit and loss account as a specific item. It is not a case, where the Id. Assessing Officer was required to discover any material evidence with diligence. The entry was visibly available on the face of the record itself. Thus, we cannot say that Ld. Assessing Officer had determined the loss of the assessee without verifying the profit and loss account filed by it. In a case where reopening is attempted after four years from the end of an assessment year, first proviso to Sec.147 of the Act would clearly apply. Nothing has been brought on record by the Revenue to show that assessee had failed to disclose fully and truly all material facts necessary for the assessment. Further, hon'ble Apex Court in the case of Kelvinator India Ltd (Supra) held that in the absence of fresh tangible mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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). 3.1. After enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1-4-1989, 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 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended 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 in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power to reopen, 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 reasons 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 herein below the relevant portion of Circular No.549, dated 31.10.1989, which reads as follows:- 7.2. Amendment made by the Amending Act, 1989 to reintroduce the expression 'r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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