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TMI Blog2022 (4) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue in ITA No.799/Mum/2021 for assessment year 2010-11 is taken as lead case and hence, the facts are narrated from the said appeal. ITA NO.799/MUM/2021- A.Y.2010-11: 3. As per the defect notice by the Registry, this appeal is time barred by eight days. The ld.Departmental Representative submitted that the impugned order was passed on 17/12/2021 and appeal was filed on 17/05/2021. The marginal delay in filing of the appeal is on account of COVID-19 Pandemic. The Hon'ble Supreme Court of India taking Cognizance for Extension of Limitation in filing of the appeals/petitions/suits during pandemic on its own motion vide order dated 23/03/2020 reported as 117 Taxmann.com 66 (SC) has extended the limitation period for filing of the appeals on account of COVID -19 pandemic. The appeal has been filed by the Revenue within the extended time. Hence, in effect there is no delay in filing of the appeal. 4. We have heard the submissions made by ld.Departmental Representative on alleged delay in filing of appeal. We find merit in the submissions with regard to alleged delay of eight days. Thus, in view of the judgment of Hon'ble Apex Court (supra) we find that there is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee referred to the letter of the Assessing Officer addressed to the Principal Director of Audit dated 20/07/2016 at page 7 to 9 of the paper book. The ld. Authorized Representative for the assessee asserted that on the one hand the Assessing Officer has recommended for dropping audit objection and on the other the Assessing Officer has initiated reopening of assessment. This clearly shows that it is not Assessing Officer's own belief to reopen the assessment. The assessment has been reopened solely on the basis of objections raised by the audit party 5.3 The third argument of ld. Authorized Representative for the assessee assailing reopening of assessment is that reopening of assessment is result of change of opinion. The ld. Authorized Representative for the assessee submitted that no new material came to the knowledge of the Assessing Officer after scrutiny assessment u/s. 143(3) of the Act. Reopening on the basis of re-appreciation of very same material is a clear case of 'change of opinion'. Reopening on the basis of change of opinion is unsustainable. To support his argument the ld. Authorized Representative for the assessee inter-alia placed reliance on following decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82 (Guj) (iv) Central Province Manganese Ore Co. Ltd., 191 ITR 662(SC) (v) Raymond Woolen Mills vs. ITO, 236 ITR 34(SC) (vi) Asstt. CIT vs. Rajesh Jhaveri Stock Broker, 291 ITR 500 (SC) 6.1 The ld. Departmental Representative further submitted that it is not a case of change of opinion, as has been held by the CIT(A). A detailed chart was prepared to reveal the facts behind the returned income, assessment order passed u/s.143(3) of the Act and the order u/s. 147 r.w.s. 143(3) of the Act. The assessee had claimed incorrect deduction u/s. 80IB of the Act during the relevant period. The Assessing Officer had reasons to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Therefore, notice u/s. 148 of the Act was issued after obtaining the approval of JCIT/Addl.CIT and the Range Head. The assessee's incorrect claim of deduction u/s. 80IB in A.Y.2010-11 was detected by the Department and corrective measures were being taken to stop pilferage of tax. The Revenue Audit subsequently detected that the claim of the assessee requires remedial measures to protect revenue loss. The ld. Departmental Representative prayed for reversing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e validity of reassessment proceedings are liable to fail on this account itself. 7.1 The Hon'ble Bombay High Court in the case of PCIT vs. L&T Ltd., 113 taxmann.com 47 affirming the order of Tribunal held, that in absence of any failure on part of assessee to disclose fully and truly all material facts at time of assessment, reassessment proceedings could not be initiated after expiry of four years from end of the relevant year. The Hon'ble High Court held: "3. Perusal of the reasons recorded by the Assessing Officer would show that the Tribunal was perfectly correct in coming to the conclusion that the notice of reopening of assessment was invalid. From the reasons we gather that there was no element of lack of true and full disclosure on the part of the assessee, which resulted into any income chargeable to tax escaping assessment. The reasons clearly reveal that the Assessing Officer was proceeding on the material which was already on record. In the absence of the statutory requirement of income chargeable to tax have been escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts been satisfied, the Tribunal corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of opening the assessment. The courts have also held that notice of reassessment cannot be issued based on information received from audit objection. The Apex Court in Indian & Eastern Newspaper Society v. CIT [1979] 2 Taxman 197 in paragraph 20 has held as under:- "20. Therefore, whether considered on the basis that the nature and scope of the functions of the internal audit organisation of the Income-tax Department are coextensive with that of receipt audit or on the basis of the provisions specifically detailing its functions in the Internal Audit Manual Vol. 2, we hold that the opinion of an internal audit party of the Income-tax Department on a point of law cannot be regarded as "information" within the meaning of section 147(b) of the Income-tax Act, 1961" 5. In Indian Eastern Newspaper Society's case (supra), the court further held that in every case, the Income-tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice he can reasonably believe that income had escaped assessment. The basis of his belief must be the law of which he has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own conviction or belief that income chargeable to tax has escaped assessment. Even if it is assumed that the reasons for reopening were recorded by the Assessing Officer out of his own belief even then the reopening is not sustainable as it is the result of 'change of opinion'. While giving reply to the audit objection the Assessing Officer was convinced that the assessment made u/s. 143(3) of the Act was justified. The Assessing Officer in his reply to audit objections has defended the view taken in assessment order. The Assessing Officer changed his opinion and recorded reasons for reopening on re-appreciation of the documents already record. There is nothing on record to suggest that there was any new incrimination material that had come to the knowledge of the Assessing Officer after scrutiny assessment. Thus, reopening of assessment is unsustainable on account of 'change of opinion'. There are catena of judgments wherein it has been held that re-opening of assessment on the basis of 'change of opinion' is unsustainable. It amounts to review by the Assessing Officer which is not permissible under the Act. 9.1 The Hon'ble Supreme Court of India in the case of CIT vs. Kelv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gers Ltd. v. ITO [2008] 298 ITR 32 (Bom.) has concluded the issue by pointing out that where the Assessing Officer in response to the query from the Revenue audit has opposed the reopening, it cannot be said that the Assessing Officer has formed his opinion that income has escaped assessment for the purpose of the reopening notice. In the above view, the question as framed does not give rise to any substantial question of law." [Emphasised by us] 11. The Revenue has countered the argument that the recommendation of the Assessing Officer to drop audit objection has no sanctity as it is the PCIT who has to take a call to drop audit objections. The aforesaid arguments by the Revenue may hold good in so far as Departmental procedures, for the purpose of section 147 of the Act it is the belief of the Assessing Officer that material. The requirement of section 147 of the Act is the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. The Assessing Officer's reason to believe is sine-qua-non for reopening assessment. It is not the reason to believe of PCIT or any other authority which matters when it comes to the provisions of section 147 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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