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TMI Blog2013 (5) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... clared a total income of Rs.16.13 crores. The return of income was processed under Section 143(1) and an assessment order dated 1 December 2010 came to be passed under Section 143(3). During the relevant Assessment Year, the Petitioner paid an amount aggregating to Rs.1.50 crores to its three Directors i.e. Rs.50 lakhs to each Director as commission. The expenditure was allowed by the Assessing Officer. The assessment is however sought to be reopened vide notice dated 1 June, 2012. 4. The reasons for re-opening the assessment read as follows:- "In respect of the captioned matter, the return of income was filed by the assessee on 27.09.2008 declaring a total income of Rs.16,13,12,344/-. Subsequently, the Return of Income was processed u/s. 143(1) and the case was selected for scrutiny. The assessment in the said case was completed vide order u/s. 143(3) dated 01.12.2010. During the said year, the amount of Rs.1,50,00,000/- on account of commission was paid to the three directors of the company. After scrutinizing the said expenditure, the same was allowed u/s. 37(1) by the A.O. by respectfully following the judgment of the Hon'ble Mumbai Tribunal in assessee's own case for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of commission under Section 36(1)(ii) where dividend is declared. The reasons recorded are therefore without application of mind; (iii) The Assessing Officer issuing the notice under Section 148(1) has to be the same Officer who has recorded the reasons under Section 148(2). In the present case, the predecessor of the Assessing Officer had recorded the reasons for re-opening, whereas the succeeding Assessing Officer had issued notice dated 1 October 2012 under Section 148 and no reasons have been recorded by the succeeding Assessing Officer. The notice dated 1 October 2012 is therefore bad in law. The learned Counsel, in support of his submissions, has relied upon the decision of a Division Bench of this Court in M/s.OHM Stock Brokers Pvt. Ltd. v. Commissioner of Income Tax-4, Mumbai & Anr. W.P.No.79 of 2013 with other connected petitions decided on 20.2.2013. and the decision of a Division Bench of the Gujarat High Court in Hynoup Food and Oil Industries Ltd. v. Assistant Commissioner of Income-tax [2008] 307 ITR 115 (Guj). 7. The learned Counsel for the Respondents, on the other hand, has reiterated the assertions made in the affidavit-in-reply and submitted as follows:- (I) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-opened after the expiry for a period of four years from the end of the relevant Assessment Year, the proviso to Section 147 stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. This stipulation does not apply to a notice for re-opening within a period of four years. Where the assessment is sought to be opened within four years of the end of the relevant assessment year, the governing principle has been laid down in the judgment of the Supreme Court in Commissioner of Income Tax v. Kelvinator of India Limited (2010) 320 ITR 561 (SC). The Supreme Court held as follows: "Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" falling which, we are afraid, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction." Hence, when an assessment is re-opened, at that stage it is not necessary to conclusively prove or establish that income has escaped assessment. A reason to believe which the Supreme Court has construed to mean a cause or justification at the stage of re-opening, is all that is required. 10. In Maharaj Kumar Kamal Singh v. Commissioner of Income-tax (supra), a Bench of three learned Judges of the Supreme Court held that the ITO was justified in his belief that the assessee's income has escaped assessment on the basis of the decision of the Privy Council which was held to be 'information' within the meaning of Section 34(1)(b) of the 1922 Act. 11. In A.L.A. Firm v. Commissioner of Income-tax (supra), a Bench of three learned Judges of the Supreme Court held that a subsequent re-opening of assessment on consideration of a High Court decision which was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was distinguishable. Whether the judgment of the Special Bench is distinguishable or not, and the impact of the Petitioner having declaring dividend, if any, in the relevant assessment year, is not something which we are inclined to go into at this stage. It cannot be disputed that the issue in AYs 2005- 06, 2006-07 and the relevant AY 2008-09 is about disallowance of the commission to the three Directors of the Petitioner. What is relevant at this stage is whether the Assessing Officer had reason to believe that income had escaped assessment. In our opinion, in the facts and circumstances of the case, it would not be appropriate for this Court to preempt an inquiry by the Assessing Officer once a tangible basis has been disclosed for re-opening the assessment and we refrain from expressing any opinion on the merits of the issue at this stage. 13. M/s. OHM Stock Brokers Pvt. Ltd. (supra) relied upon on behalf of the Petitioner was not a case where the Division Bench of this Court had dealt with the issue of an assessment being re-opened on the basis of a subsequent decision. The said decision would therefore have no application to the case in hand. 14. The contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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