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TMI Blog2011 (8) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusive view that income has escaped assessment so as to initiate the reassessment proceedings. The final view will emerge only on conclusion of the reassessment, or after considering the objections raised by the assessee. What is necessary to reopen an assessment is not the final verdict but a prima facie reason. Expenditure in respect of exempt income - applicability of proviso to 14A - Held That:- By majority it was held that Notice under 148 was issued to make assessment of expenses under 35D, therefore Assessing Officer is justified in dealing with the issue arising under section 14A as well. - ITA NO. 986 (MDS.) OF 2009 - - - Dated:- 10-8-2011 - DR. SHRI O.K. NARAYANAN, (AS A THIRD MEMBER) SHRI ABRAHAM P. GEORGE, SHRI U.B.S. BEDI AND SHRI HARI OM MARATHA, JJ. Represented By: Shri Shaji P. Jacob for the Appellant. Shri Ajay Vohra for the Respondent. ORDER Abraham P. George, Accountant Member - These are appeal and cross-objection of the Revenue and assessee respectively against the order dated 29-10-2009 of the CIT(A) for the impugned assessment year. 2. Since the assessee in its' Cross Objection assails jurisdiction of the AO under Sec. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) on a reasoning that no fresh material was available with the Department. Ld. CIT(A) was of the opinion' that AO having disallowed or restricted the claim under sec.35D of the Act for AYs 1995-96, 1997-98 and 1998-99, he had reasons to believe that income liable to tax had escaped assessment. Assessee also argued before the CIT(A) that the AO could not have taxed any other income apart from the income arising out of issues for which he had reopened the assessment. This also was not accepted by the CIT(A), for, according to him, the AO could bring to tax any other escaped income apart from the items for which he had reopened the assessment. 7. Now before us, strongly assailing the order of the AO in reopening the assessment, ld. counsel for the assessee submitted that as on the date when the reopening was resorted to, reasons cited by the AO did not exist. According to him, appeal of the assessee for AY 1998-99 was already adjudicated by the CIT(A) on the issue relating to curtailment of its' claim under sec. 35D of the Act and that the decision of the ld. CIT(A) was on record as early as 26-03-2004. Ld. counsel also submitted that even for AY 1995-96, Department had resorted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. For this proposition, reliance was placed on the decisions of the Hon'ble Punjab Haryana High Court in the case of Amrinder Singh Dhiman v. ITO [2004] 269 ITR 378. Ld. AR further submitted that Explanation 3 to Sec.147 introduced by Finance Act, 2009 with retrospective effect from 01-04-1989 would not be good enough to give jurisdiction to the AO for assessing items other than those mentioned in the reason for reopening. According to him, such Explanation, though it did widen powers of the AO retrospectively, nevertheless, assumption of jurisdiction could not be validated by a retrospective amendment. For this proposition, reliance was placed on the decision of Hon'ble Apex Court in the case of CIT v. Max India Ltd. [1997] 295 ITR 282, and on the decision of Hon'ble Bombay High Court in the case of Rallis India Ltd. v. Asstt. CIT [2010] 323 ITR 54. According to him, Hon'ble Bombay High Court had held that validity of the reopening of an assessment could not be supplemented on a base which was not present in the mind of the AO, on the date on which power to reopen the assessment was exercised. 9. Taking his argument to another plane, ld. counsel submitted that once the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the findings for such years for which the appeals were pending before a higher authority. 11. Replying to the argument of the ld. AR that jurisdictional High Court in Tamilnadu Petrgproducts Ltd. (supra) had held that principles evolving out of Hon'ble Apex Court decision in the case of Kalvinator India Ltd.'s (supra) would be applicable even where the proceedings were completed under sec. 143(1) of the Act, submission of the ld. DR was that observations of the jurisdictional High Court having been made in a Writ proceeding, could only be considered as obiter dicta. According to him, such decision should not be viewed with the same authority as that of a decision given by a Division Bench of High Court in an appeal filed under sec.260A of the Act. Ld. DR submitted that the Special Bench of the Tribunal in the case of Asstt. CIT/Dy. CIT v. Mahindra Holidays Resorts (India) Ltd. [2010] 39 SOT 438 (Chennai) had held that even on the same material available along with the return of income, a reopening could be resorted if the original proceedings were completed under Sec. 143(1) of the Act. 12. Replying to the argument that Explanation 3 to Sec. 147 introduced by Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been reproduced by us at para-4 above. No doubt, here the original proceedings were completed under Sec. 143(1) of the Act and the decision of Hon'ble Apex Court in the case of Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) would apply in every case of reopening, where original proceedings were completed under sec. 143(1) of the Act. The first question is whether the decision of Hon'ble Apex Court in Rajesh Jhaveri Stock Brokers Ltd.'s case (supra) completely obviate the requirement of a reason at all, where the original proceedings were completed under Sec. 143(1) of the Act. It was held by the Hon'ble Apex Court that intimation under Sec.143(1)(a) of the Act was only for recovery of demand and there was no assessment whatsoever under sec. 143(1)(a) of the Act, through such intimation, Nevertheless, it is pertinent to note that at para-17, of its order Hon'ble Apex Court held that out of the two conditions namely, (i) AO must have reason to believe that income, profits or gains chargeable to tax had escaped assessment and (ii) the AO must have had reason to believe that such escapement was occurred by reason of omission or failure on the part of the assessee to disclose fully o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under sec.35D are reproduced hereunder: "11. Now let us deal with the appeal in ITA No. 1534/04. The ground raised by the department in this appeal is that the Commissioner(A) erred in directing that the deduction u/s 35D should be allowed to the extent of Rs. 10,40,000/- as claimed by the assessee. The brief facts of the issue are that the assessee for the A. Y 1995-96 went for global depository receipts (GDR for short) for raising capital to fund new projects and incurred an amount of Rs. 5,67,51,709/- as expenditure related to GDR as per definition of sec.35D(2). The assessee has spent Rs. 41.59 crore or investment eligible for deduction u/s 35D. The assessee claimed Rs. 110,40,000/- as deduction u/s 35D. The AO allowed deduction of Rs. 3,43,138/- and disallowed Rs. 6,96,862/-. The AO has taken proportionate investment in the project at Rs. 13,72,55,250/- and out of this considered 2-1/2% eligible for deduction u/s 35D and allowed 10% of which is Rs. 3,43,138/-. On appeal the CIT(A) observed that actual expenditure in the project is Rs. 41.59 crores and there is no necessity to consider the proportionate investment in the project and the entire investment of Rs. 41.59 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - in place of Rs. 3,43,138/-allowed by the AO. In view of this, I direct the AO to allow deduction of Rs. 10,39,812/- (4th year) relating to AY 1995-96. The AO is also directed to allow deduction of Rs. 7,92,808/- (3rd year) for AY 1996-97and deduction of Rs. 8,64,171/- (2nd year) for AY 1997-98 as both the claims for AYs. 1996-97 and 1997-98 were allowed to the respective AYs. and no change has been made in such assessment so far. The appellant gets a total relief of Rs. 33,53,653/." 17. On the face of the above, can we say that when the AO resorted to the reopening on 01-03-2006 any reason could have been harboured regarding any excess claim of assessee under sec. 35D of the Act having been allowed? The answer for any reasonable man would be a 'No'. When appellate forums have consistently held that the claim of the assessee under sec. 35D for earlier A.Ys were in order, then how could the AO take a view that still there existed a reason for reopening on the same issue for the impugned A.Y? The refuge taken by the ld. DR on the decisions of Hon'ble Bombay High Court in the case of Anusandhan Investment Ltd. (supra) appears to be misplaced. According to the ld. DR pendency of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal under Sec. 260A of the Act. But we do not find any infirmity in the argument of the ld. AR that jurisdictional High Court in Tamilnadu Petro products Ltd.'s case (supra) held the basic principles evolving out of Kelvinator India Ltd.'s case (supra) as applicable in a reopening of proceedings completed under sec. 143(1) as well. 18. Nevertheless, we cannot appreciate the contention of the ld. AR that the AO could not have gone beyond the reasons stated for the reopening in the reassessment done. This is for the reason that the AO had without doubt made a disallowance under Sec.35D of the Act in his assessment. It might be true that such disallowances were knocked out by the ld. CIT(A), on assessee's appeal. However, AO when he passed the assessment order, had indeed made an assessment on the item mentioned by him in the reason and therefore, in view of the Explanation 3 to sec.147 of the Act, retrospectively given effect from 01-04-1989 by Finance Act, 2009, AO had sufficient powers to do so. The question whether jurisdiction was properly assumed by the AO based on a retrospective amendment is, in our opinion, irrelevant for the reason that jurisdiction was assumed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the Revenue, since existence of reason has not been given a go bye either by the Special Bench or by any higher judicial authority. 21. We, therefore, accept the plea of the assessee that the reassessment proceedings was not validly initiated, Such reassessment made pursuant to the notice under Sec. 148 is therefore, quashed. 22. Now we take up the Departmental appeal. Department has taken all together six grounds out of which ground Nos. 1 and 6 are general in nature. 23 . Vide its ground No.2 Revenue is aggrieved that CIT(A) allowed the electricity charges paid by the assessee to M/s Wescare. CIT(A) had allowed held the claim of the assessee vide para-13 of his order, which is reproduced hereunder: "13. However, I find that this issue has been allowed in favour of the appellant in the A.Y 1998-99 by my predecessor in ITA #139/2006-07/TRI6/A.VIII dated 30th March, 2007, which has been further upheld by the Chennai Bench of the Income-tax Appellate Tribunal by an order dated 09-01-2009, in ITA 1650/Mds/2007, The net result of both these decisions in AY 1998-99 is that it has been categorically held that the appellant cannot be treated as the owner of WTGs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al No.1759 of 2010, dated 15-11-2010]. 28 . We have heard the contentions and perused the orders. Without doubt, the AY involved here is AY 1999-2000. Sec. 14A was inserted by Finance Act, 2001 with retrospective effect from 01-04-1962. Proviso to sec.14A read as under: "Provided that nothing contained in this Section shall empower the Assessing officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001." The bar clearly covers reassessment under sec. 147 of the Act and also passing of any order enhancing the assessment or reducing a refund, already made. Contention of the ld. DR that assessment here done under sec. 147 of the Act was first assessment since original proceedings were completed under sec. 143(1) of the Act, and hence the above proviso would not apply, does not impress us. This is for the reason that even if we consider the original proceedings under sec.143(1) of the Act to be solely for raising a notice of demand, even then the subsequent reassessment do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Replacement of over arm assembly at 35" Slitter 73,131 11. Overhauling of Dinhatsu DG Set governer 17,74,736 12. Calculators 8,713 Total 31,36,379 31. From the above, it was noted by the CIT(A) that except for the claim with regard to overhauling of generator sets, all other expenditure were revenue in nature. He, therefore, directed the AO to allow the claim of the assessee, except for the overhauling expenditure on which depreciation was held as allowable. 32. Now before us, the ld. DR strongly supported the order of the AO and assailed the order of the CIT(A). Per contra, the ld. AR relied on the order of the ld. CIT(A). 33. We have heard both the parties and carefully perused the record. There is no dispute that the items of expenditure incurred by the assessee on 100% depreciation was claimed, are the same as mentioned by the CIT(A) at para-19 of his order which has been reprocduced by us above. A cursory look thereof would show that except for expenses relating to overhauling of generator set, other items were either spare or repairs. No doubt, all such expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of order of reopening of the assessment by raising following ground: "That the CIT(A) erred on facts and in law in not holding that the reassessment order passed by the assessing officer under section 147 r.w.s.143 of the Act was beyond jurisdiction bad in law and void ab-initio." 41. Facts indicate that return was filed on 31.12.1998 in which the assessee claimed deduction of Rs. 36,96,791/- under section 35D, which stood processed under section 143(1) vide intimation dated 23.02.2000 and on assessee's having sought for supplying reasons for reopening through fetters dated 09.03.2006 and 06.12.2006, the same were supplied by the Assessing Officer vide letter dated 11.12.2006. 42. On 28.12.2006, reassessment was completed, wherein the claim under section 35D was restricted to Rs.3,43,138/- against Rs. 36,96,791/- claimed by the assessee besides other additions. The assessee argued before the Assessing Officer that for the earlier assessment year, it had claimed Rs.36,96,791/- under section 35D of the Income Tax Act, which came to be restricted by the Assessing Officer to Rs. 3,43,138/- and in appeal, the ld. CIT(A) allowed the claim of the assessee in full by holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need to further work out any proportionate investment, and further, while placing reliance on the decision in the case of CIT v. Kelvinator India Ltd. (supra), it was argued that the Assessing Officer had no tangible material to come to any belief that there is any escapement in the assessment. Further it was submitted that it had clearly been held by the Hon'ble Supreme Court that materials which were available at the time of assessment alone could not be sufficient for coming to a belief that income has escaped assessment. Reliance was placed in the case of Tamilnadu Petroproducts Ltd. (supra) to support the plea that even when original assessment was completed u/s 143(1) which is mere processing of the return, it was necessary for the Assessing Officer to keep in mind the conceptional difference between power to review and power to reassess while making reopening of the assessment and it was emphasized with ratio of decision in the case of Kelvinator India Ltd. (supra) which is applicable to summary assessment also. Since the Assessing Officer had gone beyond the reason recorded and fishing enquiries were conducted by the Assessing Officer so while referring to questionnaire (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be applicable even where assessment/ return was completed/processed under section 143(1). Further, Special Bench of the Tribunal in the case of Mahindra Holidays Resorts (India) Ltd. (supra) has held that even on the same material available along with the return of income, a reopening is valid after the original proceedings were done summarily under section 143(1). So far as arguments of the assessee's counsel with regard to Explanation 3 to section 147 is concerned, it was contended that the Coordinate Bench of the Tribunal in the case of International Rubber Plastics (supra) has held that such Explanation did widen the power of the Assessing Officer and the Hon'ble Bombay High Court's decision in the case of Jet Airways (I) Ltd. (supra) would not be applicable in view of the facts and circumstances of the case because in this case, reassessment order on the item for which reasons have been recorded, has been made . As the Assessing Officer had made the assessment on the item mentioned in the reason for reopening and if some addition is deleted on appeal, which is mentioned in the reasons for reopening, it will not be at par with the case where assessment could not be made w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case fails within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued The inevitable conclusion is that the High Court has wrongly applied Adani's case [1999] 240 ITR 224 (Guj.) which has no application to the case on the facts in view of the conceptual difference between section 143(1) and section 143(3) of the Act." 46.1 In the case of CIT v. Ravindran Prabhakar [2010] 326 ITR 363 (Mad), while following Hon'ble Supreme Court decision in the case of Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise." In view of the above, the orders of the Tribunal setting aside the orders of reassessment passed by the Assessing Officer only on the ground that there was a change of opinion cannot be sustained. Accordingly, the orders questioned in all these appeals are set aside. As there was no consideration on the merits and as already pointed out, all the appeals are disposed of only on the ground of change of opinion, we wilt have to necessarily remit the matter to the Tribunal for fresh consideration on the merits of the case and without reference to the issue of change of opinion. Accordingly, all the appeals are allowed, the substantial questions of law are answered in favour of the Revenue and against the assessee. No costs." 46.2 The ITAT Chennai 'B' Bench - Special Bench in the case of Mahindra Holidays Resorts (India) Ltd. (supra) has held as under: "Held, (i) that since admittedly t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no jurisdiction to reopen the assessment is justified or proper. As the assessee has claimed excessive deduction under section 35D, therefore, the Assessing Officer has rightly proceeded to reopen the assessment and his action being legally and factually correct is liable to be upheld. 47. So for as the decision in the case of Kelvinator of India Ltd. (supra), heavily relied upon by the ld. Counsel for the assessee, is concerned, it is found that it relates to two appeals before the Hon'ble Supreme Court and the first case is that of Kelvinator of India Ltd. (supra), which has arisen from the Full Bench judgment of Hon'ble Delhi High Court as reported in CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 and if that judgment is looked into, it makes it clear that when a regular order of assessment is passed in terms of the sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind and the assessment year involved in that case is 1987-88 and order of assessment under section 143(3) came to be passed on 12.11.1989 and subsequently notice under section 148 came to be issued. Whereas, in the second case is that of CIT v. Eic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised ground Nos. 3.1 and 3.2 as under: "3.1 The learned CIT(A) erred in deleting the disallowance made by the assessing officer u/s 14A. 3.2 Having regard to the following decisions, the learned CIT(A) ought to have upheld the action of the assessing officer. a. CIT v. Sun Engineering Works (P.) Ltd. (198 ITR 297) (once an assessment is validly reopened the entire assessment is open before the assessing officer) b. Special Bench of the ITAT, Mumbai Bench in the case of M/s. Daga Capital Management Pvt. Ltd. (ITA No. 8057/Mum/2003 dated 28-10-2008) (Sections 14A(2) section 14A(3) are retrospectively applicable)." 51. Facts indicate that the assessee has claimed exemption of Rs. 2,90,01,592/- representing dividend income. The Assessing Officer noted that as per section 14A, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of total income. The Madras Bench of the ITAT, in the case of IndBank Merchant Banking Securities Ltd. [IT Appeal No, 420(Mds.) of 1998 dated 14-4-2004] has held that 5% of the exempted income is to be disallowed under section 14 of the Act. Accordingly, the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is and reasoning as given in the order passed by the ld. CIT(A) in this regard. He has further relied upon the Hon'ble Jurisdictional High Court's decision in the case of EWS Finance Investments Ltd. (supra) and that of the Hon'ble Delhi High Court in the case of PNB Finance Industries Ltd. (supra) and prayed for confirmation of the impugned order. 53. After having heard both the sides on the point of disallowance out of expenditure in relation to exempt income as provided under section 14A, going through the details and material on record as well as precedents relied upon by the rival sides, it is found that, no doubt, relevant provision was inserted by the Finance Act, 2001 with retrospect effect from 01.04.1962 and later on a proviso had been inserted, which specifically stipulates that nothing contained in the section empowers the Assessing Officer to reassess under section 147, whereas reopening in this case has been done on different basis and reasoning, which are not related at all to such disallowance and there is Special Bench decision in the case of Aquarius Travels (P.) Ltd. (supra), which interpreted the proviso to section 14A inserted by Finance Act, 2002 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )." And the Hon'ble Delhi High Court has drawn its conclusion at paras 8 and 9 as under: "8. Second and more important reason is that in the present case, the proviso has been added to Section 14A by the Legislature categorically providing that the Assessing Officer is not empowered to do reassessment under Section 147 for assessment period beginning on or before 01.04.2001. In these circumstances, the Court has to only examine as to whether the conditions stipulated in the proviso are fulfilled or not. When the matter is examined from this angle, it is clear that the conditions contained in proviso to Section 14A of the Act are satisfied, inasmuch as: (a) The reassessment proceedings were initiated pursuant to notice issued under Section 147. (b) The notice was based entirely on Section 14A of the Act. The AO wanted expenditure purportedly incurred in relation to income earned from the dividend to be disallowed; and (c) The notice also related to the assessment year beginning on or before 01.04.2001. 9. In view of the above mandate of the Legislature, it was clearly not permissible for the AO to issue such notice. We, thus, do not find any infirmity of the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-tax Act, 1961 As there is difference of opinion between the Members constituting the Bench with regard to issue raised in the appeal of the Revenue as well as in CO of the assessee, the following questions are formulated and referred to the Hon'ble President for nominating Third Member: CO No. 117/Mds/2009 "Whether in view of the facts and circumstances, order of the ld. CIT(A) in upholding the initiation of reassessment proceeding could be upheld or it can be reversed. ITA No. 986/Mds/2009 "Whether in view of the facts and circumstances, the order of ld. CIT(A) with regard to disallowance of expenditure under section 14A could be upheld or it could be set aside and that of the Assessing Officer be restored with further direction to the Assessing Officer to work out the quantum afresh. THIRD MEMBER ORDER Dr. O.K. Narayanan, Vice-President (As a Third Member) - The following two questions are referred for the consideration of the Third Member:- "1. Whether in view of the facts and circumstances, order of the learned Commissioner of Income-tax (Appeals) in upholding the initiation of reassessment proceedings could be upheld or it can be revers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready extracted above in this order, and the reason has been communicated to the assessee. Technically speaking, the requirements of law pronounced by the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (supra) have been complied with in the present case. 7. But the learned Accountant Member went one step ahead and held that the view of the Hon'ble Supreme Court expressed in the case of Kelvinator of India Ltd. (supra) requires a thematic interpretation in respect of the words "reason to believe". Placing reliance on the above premise, the learned Accountant Member held that the appellate authorities have already held in favour of the assessee on the same issue and those appellate decisions were available before the assessing authority and in such circumstances no reasonable man could form an opinion that income has escaped assessment by giving an excessive relief under section 35D. Thus by imputing a thematic interpretation to the words "reason to believe", the learned Accountant Member held that the reason pointed out by the Assessing Officer to reopen the assessment was already considered by the appellate authorities and held in favour of the assessee and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the proceedings under section 143(1) is contemplated for raising a demand or for making a refund and therefore the assessing authority could not have formed an opinion on any of the subject matter relating to the assessment. 2. Whether the assessment was completed under section 143(1) or under section 143(3) there should exist a reason for the Assessing Officer to believe that income has escaped assessment in the hands of the assessee. 3. The reason to believe that income has escaped assessment in the hands of the assessee must be recorded by the assessing authority in writing. 4.The reason so recorded by the assessing authority should be communicated to the assessee. 5. If the assessee on communication of the recorded reason, objects to the points raised by the assessing authority, those objections should be attended to by the assessing authority. 6.The reason recorded by the assessing authority should not be a subjective reason; it must answer the test of prima facie reasoning. 11. When the present case is examined in the light of the above propositions, it is to be seen that the assessment was initially completed under section 143(1) and the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. The assessing authority need not have a conclusive view that income has escaped assessment so as to initiate the reassessment proceedings. The final view will emerge only on conclusion of the reassessment, or after considering the objections raised by the assessee. What is necessary to reopen an assessment is not the final verdict but a prima facie reason. In the present case the assessing authority has recorded a proper reason prima facie, holding good. Once such a reason is recorded by the assessing authority and subject to other conditions laid down in the enabling provision, the assessing authority assumes jurisdiction to issue notice under section 148. The fact that for certain assessment years the issue has been decided by the Commissioner of Income-tax (Appeals) in assessee's favour cannot be a fetter to the Assessing Officer in exercising his jurisdiction under section 147. 14. Therefore, in the facts and circumstances of the case, I hold that the assessing authority has rightly invoked his jurisdiction under section 148 by issuing notice thereunder and completing the assessment under section 147 thereafter. 15. Accordingly, as far as the first question i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a tool to reopen past cases, which have attained finality. This order of the Hon'ble Delhi High Court has been confirmed by the Hon'ble Supreme Court by dismissing the Special Leave Petition filed by the assessee through the order of their Lordships dated 29-7-2011 in SLP (Civil) No. 19085/2011. 19. In view of the above law, I am not in a position to accept the view of the learned Accountant Member that for the purpose of the proviso to section 14A whether the proceeding under section 147 was only for the first assessment or for a reassessment becomes irrelevant. In other words, the learned Accountant Member has accepted the contention of the assessee that the bar stated in the proviso to section 14A is inflexible to any circumstance and is a total ban on the Assessing Officer to consider section 14A issue for any assessment year prior to 2002-03. As stated above, the Hon'ble Supreme Court has upheld the view of the Hon'ble Delhi High Court that the bar stated in the proviso to section 14A does not operate in a case of first assessment. 20. In the present case the initial proceeding was completed under section 143(1). An order under section 143(1) is passed only for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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