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TMI Blog2022 (2) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted this tax case appeal by raising the following substantial question of law:- "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the reopening of the assessment for the Assessment Year 1998-99 was bad in law on the ground that there was no fresh material that came to the notice of the Assessing Officer, without appreciating that the assessee had not disclosed fully and truly the material facts necessary for the completion of the assessment for the Assessment Year 1998-99 and had wrongly claimed expenditure/ loss pertaining to the period subsequent to the close of the relevant accounting year?" 3. The assessee is a manufacture of steel rods, steel bars etc., For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax (Appeals) in ITA No. 584 of 2005-2006. The appellate authority, by an order dated 21.05.2008, dismissed the appeal. Therefore, the assessee has filed a further appeal to the Tribunal. The Tribunal, by the order dated 30th April 2010, set aside the order passed by the Appellate Authority, confirming the order of the assessing officer. The order passed by the Tribunal reads as under:- "3. Before us, a legal plea has been raised by way of additional ground that the already completed assessment under Section 143 (3) of the Act has been re-opened in this case after a lapse of four years although the conditions mentioned in Section 147 are not satisfied. Therefore, the re-assessment proceedings become invalid and consequently, the re-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this legal issue. Having decided the legal issue as above, there is no need to address the issues raised on merits." 6. The learned counsel appearing for the revenue would vehemently contend that there was failure on the part of the assessee in truly and fully disclosing the material particulars relating to the assessment in question which necessitated the Assessing Officer to re-open the assessment. The Tribunal did not take note of the fact that there was a dispute between the Assessee Company and M/s. Shree Aravindh Steel Limited with respect to non-payment of a sum of Rs. 45.97 lakhs by the assessee company towards purchases made by them. Therefore, M/s. Shree Aravindh Steel Limited has filed a suit before this Court and during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 147 of the Act, we find that prior to Direct Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfilment 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 01- 04-1989), 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 01-04-1989, power to reopen 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 Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion "reason to believe" in Section 147.- A number of representations were received against the omission the words "reason to believe" from Section 147 and their substitution of the 'opinion' of the Assessing Officer. It was pointed out that the meaning of the expression 'reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Acct, 1989, has again amended Section 147 to reintroduce the expression 'has reason to believe' in place of the words "for reasons to be recorded by him in writing, is of the opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-assessment proceedings have been initiated without any tangible material evidence, unearthed subsequently, which the assessee did not produce at the time of original assessment under Section 143 (3) of the Act. Thus, based on a change of opinion on the part of the Assessing Officer, the re-assessment proceedings were initiated. The Tribunal also held that there was no fresh material in the possession of the Assessing Officer warranting initiation of re-assessment proceedings under Section 147 of the Act. In such view of the matter, we are of the view that the Tribunal is right in allowing the appeal filed by the assessee and it does not call for any interference by this Court. In the light of our above conclusion, the substantial questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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