TMI Blog2023 (4) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... A FOR THE RESPONDENT : J V PRASAD SC FOR INCOME TAX JUDGMENT ( Per the Hon ble the Chief Justice Ujjal Bhuyan ) Heard Mr. A.V.A.Siva Kartikeya, learned counsel for the appellant; and Mr. J.V.Prasad, learned Standing Counsel, Income Tax Department for the respondent. 2. This appeal has been preferred by the assessee as the appellant under Section 260A of the Income Tax Act, 1961 (briefly the Act hereinafter) against the order dated 28.07.2005 passed by the Income Tax Appellate Tribunal, Hyderabad Bench B, Hyderabad (briefly Tribunal hereinafter) in I.T.A.No.783/Hyd/2004 for the assessment year 1998-1999. 3. Though the appeal was admitted on 14.03.2006, no substantial question of law was framed. However, from the memo of appeal, we find that appellant has proposed the following two questions as substantial questions of law: a) Whether on the facts and in the circumstances of the case, Tribunal is right in sustaining the reopening of assessment under Section 148 of the Act particularly when the original assessment was completed under Section 143(3) of the Act ? b) Whether the amount of Rural Development Cess reimbursed by the Food Corporation of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 154 of the Act. It was thereafter that notice under Section 148 of the Act was issued following which the assessment was reopened and completed under Section 147 of the Act whereafter assessment order dated 31.10.2003 was passed under Section 143(3) of the Act read with Section 147 thereof. By the aforesaid order, the RD Cess amount was added to the income of the appellant. 7. On the objection raised by the appellant that all material facts were disclosed before the assessing officer at the time of original assessment and therefore, the reopening was sought to be done on the basis of change of opinion, assessing officer took the view that the reopening was being done within four years from the end of the relevant assessment year; therefore, the question of escapement of income due to failure or omission on the part of the assessee to disclose material facts at the time of original assessment, thereby conferring jurisdiction on the assessing officer to reopen assessment proceedings, does not arise. 8. On appeal before the Commissioner of Income Tax (Appeals)-IV, Hyderabad (briefly CIT(A) hereinafter), the first appellate authority vide the appellate order dated 29.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be to such a view taken by the revenue authority. 14. This aspect was gone into by a Full Bench of the Delhi High Court in CIT v. Kelvinator of India Ltd [2002] 256 ITR 1 (FB) , against which decision, revenue preferred appeal before the Supreme Court. In CIT v. Kelvinator of India Ltd [2010] 320 ITR 561 (SC) , Supreme Court extracted Section 147 of the Act, which existed in the statute book prior to Direct Tax Laws (Amendment) Act, 1987 as well as Section 147 of the Act, which came into the statute book after enactment of the Direct Tax Laws (Amendment) Act, 1987. Thereafter, Supreme Court held that reassessment has to be based on fulfillment of certain preconditions and if the concept of change of opinion is removed as contended by the revenue, then in the garb of reopening the assessment, a review would take place, which is not permissible under the Act. Supreme Court held as follows: On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning 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 Act, 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. 15. In Damodar H. Shah v. Asst. CIT 245 ITR 774 , a Division Bench of the Gujarat High Court took the view that once a proceeding under Section 154 of the Act is dropped on objection raised by the assessee, it is not open to the revenue to initiate proceedings under Section 148 of the Act. Gujarat High Court held as follows: ...Mistake apparent from the record which has the effect of enhancing assessment ought to be rectified by resorting to this special and speedy procedure when in the view of the Assessing Officer it is unnecessary to resort to reopening of the assessment. In the field of chargeable income escapi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e will also be true even when the Assessing Officer starts the proceedings under section 147 on the same material, because, that power cannot be invoked when there is only a mere change of opinion and in case where in the proceedings under section 154 it is found that what was thought to be a mistake was not a mistake because that view was warranted or permissible from the existing record, then the same finding will bind the Assessing Officer when trying to exercise powers under section 147. In such a case, it would be incumbent on the part of the Assessing Officer who had chosen to resort to section 154 to demonstrate why he is now for the same purpose resorting to section 147. There has to be some compelling reason in such a case for him still to believe that the income that was the subject-matter of rectification has escaped assessment though that was not due to any obvious mistake borne out from the existing record, which could be rectified under section 154. ...................................It will not be open to the Assessing Officer to arbitrarily or wantonly resort to the provisions of section 147 where the process of rectification under section 154 fails on the merits. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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