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TMI Blog2013 (4) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 2-4-2013 - Hemant Gupta And Ritu Bahri,JJ. For the Petitioner : Ms. Radhika Suri, Advocate. For the Revenue : Mr. Rajesh Katoch, Advocate. JUDGMENT Challenge in the present writ petition is to the show cause notice dated 29.3.2011, proposing to initiate reassessment proceedings under Section 147 of the Income Tax Act, 1961 (for short `the Act ), inter-alia, on the ground that the basis of the notice is only a change of opinion and, thus, does not fall within the scope of reassessment. The petitioner in its return for the Assessment Year 2006- 07 capitalized interest on capital work in progress and on addition to fixed assets. Such information was submitted by the petitioner to the Assessing Officer on 28.11.2008 (Annexure P.3). Thereafter, the assessment was finalized in terms of Section 143(3) of the Act on 28.11.2008. The perusal of the Assessment order does not reflect any discussion on the capitalized interest on capital work in progress and on addition to fixed assets. On 29.3.2011 vide Annexure P.6, the petitioner has been issued a notice under Section 147 of the Act on the ground that the income chargeable for tax for the Assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.12,09,29,290/. The other reason disclosed is the investment of a sum of Rs.50,38,88,268/- in equity shares of various Companies for the purpose of investment. The assessee has claimed income from such investment as exempt. It has been communicated that it was mandatory for the Assessing Officer to determine the amount of expenditure incurred in relation to such income, which does not form part of the total income in accordance with the method prescribed under Section 14(A) of the Act as explained by the Circular No.14 of 2006 dated 28.12.2006. Reference is made to Rule 8(d) of the Income Tax Rules, 1962 as well. In the objections to the reopening of the assessment, it was pointed out that these points were raised during the assessment proceedings and specific queries on these points were raised by the Assessing Officer and duly replied by the assessee. Therefore, it is a change of opinion and thus, the same is not permissible for initiating reassessment proceedings. Such objections were not accepted by the competent authority, inter-alia, on the ground that it is not merely a change of opinion, but a mistake has been detected which led to change of opinion. With the said ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have the jurisdiction to initiate reassessment proceedings merely on account of his opinion that the assessee should not have capitalized interest or assessee is not entitled to exemption from the income. On the other hand, Shri Rajesh Katoch, learned counsel for the respondent, has referred to certain judgments to contend that at the stage of issuing of show cause notice, this Court should not entertain the writ petition as the petitioner has an effective alternative remedy after completion of assessment proceedings. Reference is made to Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Broken Private Limited, (2008)14 SCC 208, to contend that the final outcome of the proceedings is not relevant at the stage of initiation of proceedings. What is required is `reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Reference was made to the following quote:- 20. As observed by the Delhi High Court (sic the Supreme Court) in Central Provinces Manganese Ore Co. Ltd. v. ITO, (1991)4 SCC 166 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. At this stage Section 147 of the Act needs to be extracted herein below:- 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). xx xx xx It may be noticed that present Section 147 of the Act was substituted by Direct Tax Laws (Amendment) Act, 1987 with effect from 1.4.1989. Prior to the substitution, the Assessing Officer could re-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether there was any material available on the record from which the requisite belief could be formed by the Assessing Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. The Assessing Officer has no power to review; he has power to reassess. But the reassessment must be based on fulfillment of certain preconditions. The concept of change of opinion must be treated as an inbuilt test to check abuse of power by the Assessing Officer. The Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. In view of the principles of law laid down by the Hon ble Supreme Court in Kelvinator of India s case (supra) and Rajesh Jhaveri Stock Broken Private Limited s case (supra), we find that the Assessing Officer has no power to review merely on the change of opinion and that the reasons must have a live link with the formation of a belief that the income has escape from assessment. The argument of the learned counsel for the petitioner is based upon the fact that the capitalize interest on capital work in progress and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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