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TMI Blog2022 (5) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of certiorari to quash the impugned show cause notice dated 14.02.2022 U/s 144 of I.T. Act, 1961 issued by the respondent no.1." 3. This writ petition was heard at length on 06.04.2022 and 18.04.2022. On 18.04.2022, this Court passed the order in which the order dated 06.04.2022 was also reproduced. The aforesaid orders contain the facts of the case as well the controversy. The order dated 18.04.2022 is reproduced below : "Heard Sri Prakhar Tandon, learned counsel for the petitioner and Sri Gaurav Mahajan, learned Senior Standing counsel for the respondent nos. 1, 2 and 4. None appears for the respondent no.3. On 06.04.2022, this Court passed the following order : "1. On the oral request of the learned counsel for the petitioner, the National Faceless Assessment Centre, Delhi through Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, is allowed to be impleaded as respondent no. 4. 2. Necessary correction in the array of party shall be carried out within three days. 3. Notice on behalf of the respondent no. 4 has been accepted by Shri Gaurav Mahajan, learned Senior Standing Counsel for the Income Tax Department. 4. Heard Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner in his income tax return for assessment year 2013-14 is Rs. 82,010/-. The petitioner submitted objection to the reasons before the assessing authority in which he specifically stated that he has not sold any immovable property during the assessment year in question. Yet, in a most arbitrary manner the objection filed by him was rejected by the respondent no. 4 vide order dated 14.2.2022 who had not take pain even to look as to whether there is any such information and if it is there then whether it relates to the petitioner or has any factual foundation. The respondent no. 4, thereafter, issued draft re-assessment order dated 14.2.2022 in which in eight pages he merely reiterated or reproduced the contents of the notice, reasons, objection to the reasons filed by the assessee and the order rejecting the objections. Thereafter, at the ninth page, he all together changed the story and without any whisper about unfounded jurisdictional notice under Section 148 of the Act, 1961, he mentioned that the petitioner has purchased house property for a consideration of Rs. 10,00,000/- and since the income disclosed by him during the assessment year in question is Rs. 82,010/-, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent no.4 shall separately file a counter affidavit within the same period. The respondent no.3 shall file a counter affidavit in which it shall be communicated that what action and measures are being proposed by the Government against illegal and arbitrary exercise of powers by the respondent nos.1, 2 and 4 while issuing notice under Section 148 of the Income Tax Act, 1961 or while passing the reassessment order under Section 147 of the Act, 1961. Connect with Writ Tax No.465 of 2022 and put up as a fresh case for further hearing on 4.5.2022. Interim order passed earlier is extended till the next date fixed. In the event counter affidavit is not filed within the time allowed as aforesaid, and the respondent no.2 shall remain personally present and shall show cause for non filing of the counter affidavit. This order shall be communicated in writing by the learned counsel for the Income Tax Department to all the respondents within three days." 4. Undisputedly, the Assessing Authority issued notice under Section 148 of the Income Tax Act 1961, dated 30.03.2021. The reasons to believe recorded by the Assessing Authority for issuing aforesaid notice under Section 148 is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this is a fit case for reopening. Rebuttal by the AO: Assessee has claimed that AO has no reason to believe that this is a fit case for reopening. In the case of the assessee, case has been reopened as there is a clear reason to believe that income has escaped assessment after information has been received from the INSIGHT portal of income tax department. This is very specific information received in the office of Jurisdiction AO from ADIT(Inv.)-I, Kanpur, it clearly leads to prima-facie belief that income has escaped assessment as assesee has been involved in the sale of immovable property with a gain of Rs.26,02,150/-. It is pertinent to mention here that in CIT V Nova Promoters & Finlease (P) Ltd (ITA No.342 of 2011) dated 15.02.2012, the Hon'ble Delhi High Court, which is the jurisdictional High Court, held that "We are aware of the legal position that at the stage of issuing the notice u/s 148, the merits of the matter are not relevant and the Assessing Officer at that stage is required to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment." 7. Thereafter, the respondent no.4 prepared a draft reassessment order dated 14.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a "reason to believe" that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See: Binani Industries Ltd. v. CCT,(2007) 15 SCC 435; A.L.A. Firm v. CIT, (1991) 2 SCC 558). If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to "change of opinion". If an assessing Authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. Thus, reason to believe cannot be said to be the subjective satisfaction of the assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. 30. In case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sufficiency of reasons for the belief. At the same time, it is necessary to observe that the belief must be held in good faith and should not be a mere pretence. 10. It may also be mentioned that at the stage of the issue of notice the consideration which has to weigh is whether there is some relevant material giving rise to prima facie inference that some turnover has escaped assessment. The question as to whether that material in sufficient for making assessment or re-assessment under section 21 of the Act would be gone into after notice is issued to the dealer and he has been heard in the matter or given an opportunity for that purpose. The assessing authority would then decide the matter in the light of material already in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary." (Emphasis supplied) 11. A Division Bench of this Court, while dealing with the validity of the re-assessment notice under Section 148 in Writ Tax No.874 of 2010 (M/S Parmarth Steel And Alloys Pvt. Ltd. vs. State of U.P. and Others, decided on 28.03.2022, held as under (Para 17) : "17. It is settled principles of law that proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Of India And Others vs M/S. Rai Singh Dev Singh Bist & others, AIR 1974 SC 478 : (1973) 3 SCC 581 (para-5), Hon'ble Supreme Court held as under:- "................. before an Income-tax Officer can be said to have had reason to believe that some income had escaped assessment, he should have some relevant material before him from which he could have drawn the inference that income has escaped assessment. His vague feeling that there might have been some escape of income from assessment is not sufficient... .............." 14. In the case of ITO vs. Lakhmani Mewal Das, (1976) 3 SCC 757 (para-11 and 12), Hon'ble Supreme Court has held as under:- "11. As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n holding that the said material could not have led to the formation of the belief that the income of the assessee respondent had escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs." 15. In the case of M/s. S. Ganga Saran and Sons (P) Ltd. Calcutta vs. ITO and others, (1981) 3 SCC 143 (Para-6), Hon'ble Supreme Court held as under:- "6. It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under section 147 (a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The important words under section 147 (a) are "has reason to believe" and these words ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 15. Section 147 of the IT Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to reassess and not the power to review. 16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words "change of opinion" implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 17. It is well settled and held by this court in a catena of judgments and it would be sufficient to refer Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. (2010) 320 ITR 561(SC) wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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