TMI Blog2021 (2) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... above said view of the AO. Under these circumstances, we have no other option but to hold that the assessing officer does not have any reason to believe that there was escapement of income in any of the years under consideration. - Decided in favour of assessee. - ITA Nos.1344 to 1350/Bang/2017 - - - Dated:- 18-2-2021 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member For the Appellant : Shri H. Anil Kumar, A.R. For the Respondent : Smt. R. Premi, D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: All these appeals filed by the assessee are directed against the common order dated 30.3.2017 passed by Ld. CIT(A)-7, Bengaluru and they relate to the assessment years 2006-07 to 2012-13. All these appeals were heard together and hence they are being disposed of by this common order, for the sake of convenience. 2. In the grounds of appeal, the assessee inter-alia has challenged the validity of re-opening of the assessment in all the years under consideration. Both the parties were heard on this legal issue only. 3. The facts that are necessary to adjudicate the above said legal issue are stated in brief. The assessee is carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows: SI.No. Particulars Quantity Gold Jewellery belonging to customers as well as family members (out of this16.306 kgs belonging to family members only) 17.319 kgs Gold belonging to Gold Scheme subscribers 2.090 kgs Gold Jewellery belonging to the firm 32.711 kgs Total 52.121 Kgs During the course of recording the statements, the assessee stated that all the entries pertaining to sales purchases are not up to date in the books. The assessee clearly stated that the gold and jewellery of 17.319 kgs brought in by the family members as well as customers are recorded in weight of the gold and not its value in rupees and hence such liabilities do not appear in the Balance sheet. Further the assessee stated that such liabilities of gold cannot be identified as jewellery pieces as they are being used in the business. Accordingly to the assessee, this liability is recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would show that no where the assessing officer has alleged any escapement of income in any of the years. In fact, the assessing officer specifically mentions as under:- I am of the opinion that the value of un-reconciled gold stocks of 17.319 kgs has to be brought to tax by reopening the assessment u/s. 147 of the IT Act, in the case of assessee for the assessment year 2006-07 From the above said reasoning, we notice that the assessing officer has only formed an opinion that the un-reconciled gold stock of ₹ 17.319 kgs has to be brought to tax. 6. The provisions of sec. 147 of the Act, which governs reopening of assessment read as under:- 147. If the Assessing Officer has reason to believe that any 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 and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But re-assessment has to be based on fulfilment 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 reopening 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 1st April, 1989, Assessing Officer has power to re-open, 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be brought to tax. It is pertinent to note that the AO as recorded very same reasons in all the years under consideration. 9. In the instant case, the survey has taken place on 25.09.2012, wherein un-reconciled stock has been found. If at all the AO is not accepting the explanations given by the assessee with regard to the un-reconciled stock, then the cause of action shall arise in AY 2013-14, as the un-reconciled stock has been found during the financial year 2012-13. However, the AO has accepted that the unreconciled gold belong to family members. However, he is of the opinion that the family members should have transferred the gold/jewellery to the assessee firm. It can at most be his opinion, which cannot be thrusted upon the assessee. It is well settled proposition of law that the taxing authorities cannot sit in the arm chair of the business man and direct them the way of conducting the business. 10. It is well settled proposition that the belief of the AO may be subjective, but the reason should be objective. In the instant case, we are of the view that both the reason as well as belief are subjective, i.e., the AO has completely failed to show that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er years. Hence, we are of the view that the AO does not have any reason to doubt the genuineness of explanations given by the assessee with regard to the un-reconciled gold of 17.319 kgs of gold. In our view, the expression unreconciled itself is a misnomer, since the revenue is aware of the receipt of gold from family members since 2001 itself, i.e., from the date of earlier survey operations. 14. Under these set of facts, we are of the view that the AO has re-opened the assessment on mere change of opinion, because it is the assessing officer who took a different view at the time of reopening of assessment, i.e., he has entertained an opinion that the family members should have transferred the gold to the assessee firm and then the assessee firm should have held the gold on its own account. There should not be any dispute that there is no material brought on record to support the above said view of the AO. Under these circumstances, we have no other option but to hold that the assessing officer does not have any reason to believe that there was escapement of income in any of the years under consideration. 15. The Ld D.R placed her reliance on the decision rendered by Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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