TMI Blog2020 (2) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... /148 . On receipt of reasons, the assessee is entitled to file objections to issuance of notice and the A.O. is bound to dispose of the same by passing a speaking order. We note that AO has not disposed of the objections of the assessee by passing a speaking order. AO having not carried out the scrutiny assessment within the prescribed statutory limit, cannot be given another innings for no fault of the assessee and therefore in the facts and circumstances of the case, we are of the considered opinion that reason to believe which is the jurisdictional precondition to reopen the assessment as required by the law has not met in the reasons recorded in the instant case - Decided in favour of assessee. - ITA Nos. 1728,1729,1730,1731&1732/Kol/2018 - - - Dated:- 19-2-2020 - Shri S. S. Godara, JM And Dr. A.L. Saini, AM For the Appellant : Shri K. K. Khemka, Advocate For the Respondent : Smt. Ranu Biswas, Addl. CIT ORDER PER DR. A. L. SAINI, AM: The captioned five appeals filed by the assessee, pertaining to Assessment Years 2007-08, 2008-09, 2009-10, 2010-11 2011-12, are directed against the separate orders passed by Commissioner of Income Tax, Kolkata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce categorized as foreign investment and from Indian company. The details of sources of this investment made by Indian company was not furnished by the assessee. On perusal of the Bank statement A/c No.00501200026910 maintained with Axis Bank Ltd., Shakespeare Sarani, Kolkata, the AO observed that majority of transactions are with Rahee Infratech Ltd. and the amount of share capital has been received from Rahee Infratech Ltd, however no evidence related to identity, creditworthiness and genuineness of the transactions was submitted by the assessee. Accordingly proceedings u/s. 147 of the I.T. Act was initiated and notice u/s 148 was issued on 31.03.2014. During the assessment stage, the assessee challenged the reassessment but the assessing officer rejected the contention of the assessee and framed the assessment u/s 143(3)/147 of the Act by making additions under the head unexplained cash credit to the tune of ₹ 20,83,600/- and u/s 37(1) of the Act to the tune of ₹ 50,67,063/-. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the addition made by the Assessing Officer and dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive evidence to hold that invariably additions would be made in the income of the assessee. The conclusion therefore is that at the time of reopening the AO must have a reasonable belief that income chargeable to tax has escaped assessment, notwithstanding the fact that subsequently on verification of all facts and evidences the AO may not make the proposed addition. In view of the above the reopening of the assessment, in my opinion is proper and therefore the appeal of the assessee on this is hereby dismissed. 5. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 6. Before us the ld. Counsel for the assessee submitted that reasons recorded by the Assessing Officer u/s 147 of the Act is not valid and very vague therefore reopening made by the Assessing Officer is bad in law. Apart from this, the ld. Counsel has also relied on the submissions made before the ld CIT(A). 7. On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not being repeated for the sake of brevity. 8. We heard both the parties and carefully gone through the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. M/s Pendrol Limited. While checking the statement the transactions reflected in the account in the name of Carbonaire Industries, Ehwarnath Construction, Rahee Infratech Ltd. industries Limited and Kay pee Industries, M/s Pandrol Rahee Technologies Ltd. etc is to be given special attention while examining the accounts for income tax angel as stated by the FEMA. It could be seen that there are both debit and credit entries in the name of Rahee Infratech Ltd. The company is yet to start its manufacturing in India. As the details furnished by the other adagencies are not enough and the information available in the records are not satisfactory, to explain income,which has not been properly disclosed, necessary verifications are required in the case. Therefore I have reasons to believe that income has escaped assessment as the above discussion, I deem it, that it is a fit case for reopening u/s 147 by issuance of notice u/s 148. The ld Counsel for the assessee has challenged the validity of the above reasons recorded by assessing officer on the following counts: (i).The main grievance of the assessing officer is that assessee is engaged in Hawala Transactions . However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also in the case of Le Passage to India Tours Travels v. ACIT [2014] 369 ITR 109 (Del), wherein it was held as follows: 5. In the present case the reasons to believe - extracted above - nowhere reveal as to what tangible material which the AO came to obtain to justify the reassessment notice. In the previous instance, the reassessment notice was based on the assumption that a much larger income had accrued to the assessee whereas only a fraction of its was offered in the P L account. In the present case, a somewhat similar, if not identical, ground has been made out i.e. that of expenses incurred abroad have not been revealed. This was an aspect which was known to the AO at the time of the original assessment; the explanations by the assessee appear to have been taken into account. At the time when the first reassessment notice was issued a facet of this was taken into consideration and in fact cited in the reasons to believe . A virtual assertion of the same reasons in different words does not clothe the reassessment notice, in the opinion of the Court, with any more sanctity, nor does it take away the vice of lack of jurisdiction noticed in the order in WP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not escaped assessment, it is not open to him independently to assess some other income, for that ld Counsel relies on the judgment of Hon`ble Bombay High Court in the case of Jet Airways (I) limited 331 ITR 236 (Bom), wherein it was held as follows: 21. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under s. 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the AO could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Expln. 3 by the Finance Act (No. 2) of 2009. However, Expln. 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of s. 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before AO during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under s. 148. 9. In the assessee`s case the return of income was processed u/s 143(1) of the IT Act, 1961. Later on, the assessing officer reopened the assessment for A.Y. 2007- 08 on the basis of fact that there were investments made in the assessee company both from foreign source categorized as foreign investment and from Indian company. Where no assessment had been made u/s 143(3), it cannot be concluded that the income has escaped assessment, for that ld Counsel relied on the judgment of the Hon`ble Delhi High Court in the case of Ved Co., 302 ITR 328, wherein it was held as follows: 2. The assessee had filed its return of income on 29th Sept., 1994 declaring an income of ₹ 17,88,830. Without processing the return, the AO on 5th June, 1996 recorded reasons for issuing a notice to the assessee for reassessment on the ground that the assessee has wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) xxxxx 7. The submission made by learned counsel for the Revenue is that a return of income was furnished by the assessee and before any assessment was framed, it was noticed by the AO that the assessee had understated its income and claimed excessive deduction in the return and, therefore, action could be taken under ss. 147 and 148 of the Act. Consequently, the conclusion arrived at by the Tribunal was incorrect. 8. We are of the opinion that in view of the decisions that we have mentioned above, for the purposes of initiating reassessment proceedings, the AO could not have made up his mind that the income of the assessee has escaped assessment while a valid return was still pending before him. If the AO had allowed the time to elapse for taking action under s. 143(2) of the Act, it was entirely his own doing. What the AO is now trying to do in an indirect (and incorrect) manner is what he could not have done directly. 9. The further contention raised on behalf of the Revenue is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e`s case under consideration. (vi).Reasons recorded does not show application of mind by the AO. Hence in the assessee`s case under consideration, the essential conditions of reopening the assessment have failed, therefore, the reopening u/s 147 of the Act is not justified. At the cost of repetition, we state that the Hon`ble Supreme Court, in the case of Kelvinator of India Ltd (reported in 320 ITR 561(SC)) held that though the power to reopen under the amended section 147 is much wider, one needs to give a schematic interpretation to the words reason to believe failing which section 147 would give arbitrary powers to the AO to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. One must also keep in mind the conceptual difference between power to review and power to re-assess. The AO 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 Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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