TMI Blog2021 (12) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O had reopened the concluded assessment only on the ground that the assessee had claimed an excess deduction of ₹ 46.43 crore, which in our considered view is nothing but clearly an attempt on his part to review/re-examine the assessee s claim for deduction on the basis of the same material/accounts/workings/computation as were available before his predecessor at the time of framing of the original assessment, vide his order passed u/s 143(3). We are of a strong conviction that in the garb of reopening the case of the assessee he had on the basis of the same set of facts as were available on record at the time of framing of the original assessment, tried to substitute his view as against that of his predecessor. In fact, we are unable to comprehend as to what new material or information had came to the notice of the A.O after the framing of the original assessment, which would have justified the reopening of its case. As can safely be gathered from a perusal of the reasons to believe, we are of the considered view that the A.O with the sole objective of substituting his view as against that of his predecessor had sought to reopen the case of the assessee bank. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in Ground no.2 to 4 of their appeal on merit and therefore it is humbly prayed that the Id.CIT(A) may be directed to decided the issues contained in ground no.2 to 4 on merit. 5. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 6. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. Briefly stated, the assessee bank had filed its return of income for A.Y.2007-08 on 30.10.2007, declaring an income of ₹ 951,63,84,562/-. Original assessment was framed by the A.O vide his order passed u/s 143(3) of the Act, dated 03.12.2009, wherein the income of the assessee was assessed at ₹ 976,76,51,700/-. Subsequently, the case of the assessee was reopened u/s 147 of the Act for the following reasons: On perusal of the balance sheet and the computation of income, it is observed that during the year under consideration, the assessee has transferred an amount of ₹ 410.00 crore to special reserve, while the corresponding deduction u/s.36(l)(vii) of the Act Has been claimed at ₹ 456.43 crore. The provisions of section 36(l){viii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of the assessee s claim for deduction u/s 36(1)(viii) ₹ 4643,13,723/- 2. Disallowance of the assessee s claim for deduction of interest on deposit under Rural Infrastructure Development Fund (RIDF) ₹ 219,64,13,423/- 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A) the assessee assailed the validity of the assessment framed by the A.O for reopening of its case on multiple grounds. The CIT(A) taking note of the fact that the A.O had reopened the concluded assessment of the assessee merely on the basis of a change of opinion de hors any new information/material coming to his notice after completion of the original assessment, therein, relied on the judgment of the Hon ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd, 320 ITR 561 (SC) a/w a host of other judicial pronouncements and concurred with the assessee that the A.O had wrongly assumed jurisdiction and reopened its case. Apart from that, the CIT(A) found favour with the claim of the assessee that as the reopening of the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 456.43 crore........ the AO has reopened the case on the ground that the assessee has claimed excess deduction of ₹ 46.43 crore. 5.1.4 The appellant filed its objections to reopening vide its letter dated 11/12/2012 which was disposed of by Assessing Officer vide order dated 24/12/2012. Copies of both are available on record. 5.1.5 The appellant had made the same objections as are made in the course of these appellate proceedings and given above as part of the contentions of the appellant on this ground. In brief, they are objecting to reopening on the ground that it is done as a result of audit objection; that reopening is not permissible when proceedings are initiated earlier under section 154 and have been dropped; no income chargeable to tax has escaped assessment and reopening is on basis of change of opinion . 5.1.6 It is noted that in his order dated 24/12/2012 disposing of the objections raised by the appellant, the Assessing Officer has no where disputed the fact of audit objection dated 19/07/2010, a copy of which is available on record. The Assessing Officer has merely questioned how the appellant had managed to get hold of the same. 5.1.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said decision is reproduced below: .... Undoubtedly an order of assessment which has been passed for a subsequent ignored in assessment year may furnish a foundation to reopen an assessment for an earlier assessment year. However, there must be some new facts which come to light in the course of assessment for the subsequent assessment year which emerge in the order of assessment. Otherwise, a mere change of opinion on the part of the Assessing Officer in the course of assessment for a subsequent assessment year would not by itself legitimise the reopening of an assessment for an earlier year. [Para 14] 5.1.13 Even after the amendment made in section 147 of the Act [made by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01.04.89] reassessment can be commenced only if Assessing officer has reason to believe that income chargeable to tax has escaped assessment. The expression reason to believe , postulates a bonafide belief that income has escaped assessment and the existence of objective reasons for that belief. Further, the foregoing expression also does not mean a purely subjective satisfaction of the Assessing Officer or pretense based on suspicion and conject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 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. d) The Hon'ble Supreme Court in the case of CIT Vs. Foramer France has held that the assessment could not be reopened on a mere change of opinion. e) CIT Vs. Rao Thakur Narayan Singh (56 ITR 234) (SC) wherein the Hon'ble Supreme Court has held that a mere change in opinion without any information that income has escaped assessment, does not warrant re-opening. f) CIT Vs. Bhanji Lavji (79 ITR 582) (SC) wherein the Apex Court has held that when the primary facts necessary for assessment are fully and truly disclosed, the ITO will not be entitled, on mere change of opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Pvt. Ltd. vs. ITO (21 SOT 302) (Mum.), the Hon'ble jurisdictional Mumbai Tribunal has held that in the absence of any new material, the AO is not empowered to reopen an assessment irrespective of whether it is made u/s 143(1) or 143(3). (e) Reliance is also placed on the decision of the Madras High Court in Bapalal Co. Exports v. JCIT (289 ITR 37) (Mad.) wherein it has been held that a change of opinion is not permissible whether the opinion was expressed under 143(2) or 143(1) of the Act and reassessment can be done only on the basis of fresh material to show that some income escaped assessment. (f) In the case of Legato Systems (India) Pvt. Ltd vs. DCIT (2009) (187 Taxman 294) (Del.), it has held that proceedings u/s. 147/148 vis a vis completed assessments cannot be reopened, on a mere change of opinion i.e. on the basis of the same set of facts and material which were in the knowledge of AO, and that the proceedings for reopening of assessment on the ground of income escaping assessment is an exception to the finality of the proceedings arrived at u/s. 143(3) of the Act during the regular assessment proceedings of the assessment years. 5.1.16 Reason to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47/148 and in the absence of jurisdiction, reassessment framed would be illegal void. 5.1.20 Reopening of an assessment completed under section 143(3) of the Act is not permissible merely on the basis of new opinion formed on the same material which happened to be the material of Sec 143(3) assessment. If on perusal of the reasons recorded by the assessing officer for initiating reassessment proceeding clearly shows that on the very same material which was available while completing the assessment under section 143(3) of the Act he had on a mere change of opinion issued notice for reassessment, it is not permissible for the assessing officer to resort to proceedings under Section 147 merely on change of opinion. 5.1.21 In the instant case, I find that the ratio of above decisions emphatically legate the action of the Assessing Officer in reopening the original assessment concluded under Section 143(3) of Income Tax Act, 1961. Under the circumstances, it would be a gross disregard to the view expressed by Hon'ble Supreme Court and jurisdictional Bombay High Court regarding reopening of assessment under section 147 of the Income Tax, 1961. I, therefore, find this action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed at ₹ 456.43 crore........ ,reveals beyond any scope of doubt that the A.O had reopened the concluded assessment only on the ground that the assessee had claimed an excess deduction of ₹ 46.43 crore, which in our considered view is nothing but clearly an attempt on his part to review/re-examine the assessee s claim for deduction on the basis of the same material/accounts/workings/computation as were available before his predecessor at the time of framing of the original assessment, vide his order passed u/s 143(3), dated 03.12.2009. We find substantial force in the contention of the ld. A.R that the entire exercise for reopening the concluded assessment of the assessee was embarked upon by the A.O not on the basis of any fresh tangible material or any new information which had came to his notice subsequent to the culmination of the original assessment proceedings, but on the basis of the same set of facts as were there before his predecessor while framing of the original assessment under Sec. 143(3), dated 03.12.2009. Backed by the aforesaid facts, we find substance in the claim of the ld. A.R that the reassessment proceedings had been initiated by the A.O not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment 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 AO. Hence, after 1st April, 1989, AO 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 s. 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 s. 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 opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a case of mere change of opinion, which, in our opinion, does not provide jurisdiction to respondent No. 1 to initiate proceedings under s. 148 of the Act. It can now be taken as a settled law, because of a series of judgments of various High Courts and the Supreme Court, which have been referred to in the judgment of the Full Bench of the Delhi High Court in the case of Kelvinator of India Ltd. (supra) referred to above, that under s. 147 assessment cannot be reopened on a mere change of opinion. We further find that the Hon ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (2008) 308 ITR 195 (Bom), had observed, that as no new information/material was received by the A.O, therefore, the fresh application of mind by him to the same set of facts and material which were available on record at the time of framing of the assessment but had inadvertently remained omitted to be considered would tantamount to review of order, which is not permissible as per law. The Hon ble High Court while concluding as hereinabove had held as under:- 10. It is further to be seen that the legislature has not conferred power on the AO to review its own order. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to believe failing which we are afraid s. 147 would give arbitrary powers to the AO to reopen 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 reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition 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 inbuilt test to check abuse of power by the AO. Hence, after 1st April, 1989, AO 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 link with the formation of the belief. 24. In the present case, for all the assessment years in question, and a fortiorari for asst. yr. 2004-05, what the AO has purported to do is to reopen the assessment on the basis of a mere change of opinion. That the AO had no tangible material is evident from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly assumed jurisdiction and reopened the concluded assessment of the assessee bank without satisfying the mandate of law as required u/s 147 of the Act, therefore, the CIT(A) had rightly observed that the assessment framed by him vide his order passed u/s 147 r.w.s 143(3), dated 12.03.2013 cannot be sustained and is liable to be struck down. Before parting, we may herein observe that as the revenue had assailed the striking down of the reassessment order by the CIT(A), on the standalone basis that the A.O had wrongly assumed jurisdiction and had reopened the concluded assessment on the basis of a mere change of opinion , therefore, we herein confine our aforesaid adjudication only to the said grievance of the revenue so raised before us. We, thus, in the backdrop of our aforesaid observations finding no infirmity in the view taken by the CIT(A) who had rightly struck down the assessment order passed by the A.O under Sec. 147 r.w.s 143(3), dated 12.03.2013 by holding the reopening of the assessment as bad in law, uphold the same. The Grounds of appeal Nos. 1-3 are accordingly dismissed. 7. As regards the grievance of the revenue that the CIT(A) had erred in law and the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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