TMI Blog2022 (5) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is allowed. - ITA No. 23/RPR/2018 - - - Dated:- 10-5-2022 - Shri Ravish Sood, Judicial Member And Shri Jamlappa D Battull, Accountant Member For the Assessee : Shri Bikram Jain, AR For the Revenue : Shri Shravankumar Meena, DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-1, Raipur dated 16.11.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short the Act ), dated Nil for assessment year 2008-09. Before us the assessee has assailed the impugned order on the following grounds of appeal: 1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in sustaining the order of the A.O. where in the A.O has erred in making addition of Rs.2,75,375/- u/s.69 of the Income Tax Act, 1961 as unexplained investment. The addition made by the A.O and confirmed by the CIT(A) is unjustified, unwarranted and uncalled for. 2.The assessee reserves the right to add, amend, or alter any grounds of appeal at any time of hearing. 2. Succinctly stated, original assessment was frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed u/s 40(a)(ia) of the I.T. Act, 1961/-. Assessment order u/s.143(3) r.w.s.147 of the Act dated Nil was thereafter framed by the A.O and an amount of Rs.2,75,375/- reflected in the balance sheet of the assessee company under the head loans, advances deposit was held by him as an unexplained investment u/s.69 of the Act. 3. Aggrieved, the assessee assailed the matter in appeal before the CIT(Appeals) but without any success. 4. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5. We have heard the ld. Authorised Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 6. At the very outset of the hearing of appeal, it was submitted by the Ld. Authorized Representative (for short AR ) for the assessee that the A.O. in the present case before us, had wrongly assumed jurisdiction u/s.147 of the Act and on the basis of a mere change of opinion , traversed beyond the scope of his jurisdiction and dislodged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR that the impugned order passed by the A.O u/s.143(3)/147 of the Act dated Nil cannot be sustained in the eyes of law and is liable to be quashed for want of valid assumption of jurisdiction on his part. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in in the case of CIT Vs. Kelvinator of India (2010) 320 ITR 561 (SC) wherein the Hon ble Apex Court had observed, that the case of an assessee cannot be reopened on the basis of a mere change of opinion‟, holding as under:- On going through the changes, quoted above, made to s. 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 of the Act (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to ITA No.1212/Mum/2019 A.Y. 2012- 13 M/s Medley Pharmaceuticals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in writing, is of the opinion‟. Other provisions of the new s. 147, however, remain the same. Further, following the judgment of the full bench of the Hon ble High Court of Delhi in the case of Kelvinator of India (supra), which thereafter had been upheld by the Hon ble Apex Court, the Hon'ble High Court of Bombay in the case of Asteroids Trading Investment P. Ltd. Vs. DCIT (2009) 308 ITR 190 (Bom), had held, that an A.O is precluded from assuming jurisdiction to initiate reassessment proceedings on the basis of a change of opinion‟, observing as under: 8. Perusal of the record shows that the petitioner had made full disclosure necessary for claiming deduction under s. 80M. The AO after applying his mind to the relevant records had made a specific order allowing the deduction. A perusal of the record shows that now respondent No. 1 proposes to reopen the assessment because according to him deduction under s. 80M was wrongly allowed, and, therefore, he was of the opinion that the income has ITA No.1212/Mum/2019 A.Y. 2012-13 M/s Medley Pharmaceuticals Ltd. Vs. DCIT-10(2)(2) escaped assessment. Though, in the notice respondent No. 1 has used the phrase reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under s. 148 . Further, the Hon'ble High Court of Bombay in the case of ICICI Prudential Life Insurance Co. Ltd. Vs. ACIT (2010) 325 ITR 471 (Bom), relying on the judgment of the Hon ble Supreme Court in the case of Kelvinator of India (supra), had held as under: 23. Though the power to reopen an assessment within a period of four years of the expiry of the relevant assessment year is wide, it is still structured by the existence of a reason to believe that income chargeable to tax has escaped assessment. The Supreme Court, in a recent judgment in Kelvinator of India Ltd. (supra) while drawing upon the legislative history of s. 147 held that the expression reason to believe‟ needs to be given a schematic interpretation in order to ensure against an arbitrary exercise of power by the AO. The judgment of the Supreme Court emphasises that the power to reopen an assessment is not akin to a power to review the order of assessment and a mere change of opinion would not justify a reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to propose a reassessment on the basis of a mere change of opinion. This, in view of the settled position of law is impermissible. No tangible material is shown on the basis of which the assessment is sought to be ITA No.1212/Mum/2019 A.Y. 2012-13 M/s Medley Pharmaceuticals Ltd. Vs. DCIT-10(2)(2) reopened. In the absence of tangible material, what the AO has done while reopening the assessment is only to change the opinion which was formed earlier on the allowability of the deduction. The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of power. There is no tangible material in the present case. 9. At this stage, we may herein observe, that as per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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