TMI Blog2022 (2) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... imony to the fact that the Assessing Officer has no tangible material evidence to initiate the re-assessment proceedings. Had there been any material evidence, which prompted the assessing officer to initiate re-assessment proceedings, he ought to have atleast indicated it in the order of reassessment proceedings. But the re-assessment proceedings was concluded only on the basis of the explanation offered by the assessee with respect to the suit filed against them before this Court and the Memorandum of Understanding entered into with M/s. Shree Aravindh Steel Private Limited. Therefore, it is evident that the re-assessment proceedings have been initiated without any tangible material evidence, unearthed subsequently, which the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial 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 the assessment year 1998-1999, they have submitted their return of income and the assessment was completed on 17.01.2001 under Section 143 (3) of The Income Tax Act (in short the Act) determining a loss of ₹ 3,60,69,466/. However, even before the completion of the assessment, the assessee approached the Appellate Authority namely Commissioner of Income Tax (Appeals). The appellate authority enhanced the loss from ₹ 3,60,69,466/- to ₹ 3,67, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-assessment itself becomes invalid. Since this additional ground is purely a legal ground requiring no further investigation of facts, we are admitting the same. This ground being of utmost importance and going to the very root of the matter, first of all, because we were convinced that after a lapse of four years, without there being any fresh material coming to the notice of the assessing officer, action under section 147 cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ₹ 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 pendency of the litigation, a Memorandum of Understanding was entered into between the Assessee and M/s. Shree Aravindh Steel Private Limited and based on the same, the case filed by M/s. Shree Aravindh Steel Limited was dismissed by this Court. At the time of completion of the assessment proceedings, the assessee has suppressed the dispute with M/s. Shree Aravindh Steel Limited over non-payment of ₹ 45.97 lakhs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 Officer to re-open 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 re-assess. The Assessing Officer has 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, revie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 opinion . Other provisions of the new section 147, however, remain the same 5. For the aforesaid reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs. 8. Applying the judgment of the Honourable Supreme Court in the above case, which was also relied on by the Tribunal, the assessment proceedings initiated under Section 143 (3) of the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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