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TMI Blog2013 (5) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... er to reopen an assessment under Section 148. For these reasons, no reason or justification to interdict the exercise of the jurisdiction of the Assessing Officer to reopen an assessment under Section 148. The reopening within a period of four years in the present case is based on tangible material. against assessee. - Writ Petition (LODG.) No. 592 of 2013 - - - Dated:- 3-5-2013 - DR. D. Y. Chandrachud And A. A. Sayed, JJ. For the Petitioner : Mr. Jehangir D. Mistri, Senior Advocate with Mr. Atul K. Jasani For the Respondents : Mr. P. C. Chhotaray JUDGMENT (Per DR. D. Y. Chandrachud, J.) :- In these proceedings under Article 226 of the Constitution the Petitioner seeks to challenge the reopening of an assessment for Assessment Year 2006- 07, under Section 148 of the Income Tax Act, 1961 by a notice dated 28 March 2011. The reopening in the present case is admittedly within a period of four years of the end of the relevant Assessment Year. The reasons on the basis of which the assessment is sought to be reopened are as follows : The assessee company is a wholly owned subsidiary of a Scottish bank. It is paying business support charges, guarantee fees and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of an order that was passed under Section 195(2) of the Income Tax Act 1961. 3. On the other hand, it has been urged on behalf of the Revenue that - (i) The reopening of the assessment in the present case is on the basis of the assessment proceedings for Assessment Year 2007-08 since in the course of those proceedings it had emerged that no substantial or specific services were rendered by the holding company; (ii) In view of a line of precedent of the Supreme Court, it is a settled principle of law that the reopening of an assessment on the basis of information which is disclosed in the course of assessment proceedings for a subsequent assessment year is permissible. In the present case the reopening of the assessment is within a period of four years and the test to be applied is whether there was tangible material before the Assessing Officer on the basis of which the assessment could be reopened. Ex- facie, the order of assessment for Assessment Year 2007-08 would constitute tangible material on the basis of which the assessment for Assessment Year 2006-07 could be reopened; (iii) The earlier judgment of the Division Bench of this Court dated 9 July 2012 related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not in the nature of a power to review. Hence, the true test to be applied, where a reopening takes place within a period of four years, as in the present case, is whether there exists tangible material on the basis of which the Assessing Officer has proceeded to reopen the assessment. That determination has to be made on the basis of the reasons which are disclosed to the assessee. For it is those reasons which form the foundation of the action of the Assessing Officer and form the basis on which the belief that income has escaped assessment is formed. (Hindustan Lever Limited v. R.B. Wadkar, Assistant Commissioner of Income Tax (2004) 268 ITR 332) 5. The judgments of the Supreme Court on the subject contain a clear elaboration of principle in which it has been held that an Assessing Officer acts within jurisdiction in reopening an assessment on the basis of information which comes to him after the original assessment and during the course of the assessment proceedings for a subsequent assessment year. This principle was laid down in a judgment of the Supreme Court in Kalyanji Mavji Co. v. Commissioner of Income Tax (1976) 102 ITR 287 while construing the expression info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The assessee may also prove that no new facts came to the knowledge of the Incometax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. 7. A similar principle of law has been laid down in a judgment of a Division Bench of the Madras High Court in Virudhunagar Co-operative Milk Supply Society Limited v. Commissioner of Income Tax (1990) 183 ITR 545 and in a judgment of a Division Bench of the Punjab and Haryana High Court in Ropar District Cooperative Milk Producers Union Ltd. v. Commissioner of Income Tax (2009) 311 ITR 42 . In a more recent judgment, a Division Bench of the Delhi High Court in Diwakar Engineers Ltd. v. Income Tax Officer (2010) 329 ITR 28 held that where materials had come to light during the assessment of a subsequent Assessment Year, that would not constitute a mere change of opinion, but could sustain a notice of reopening. 8. In Assistant Commissioner of Income Tax v. Rajesh J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d services, that the payments were made for commercial reasons of business exigency, as a result of which the expenses were inadmissible under Section 37(1). At this stage, the Court is not concerned with the correctness of that determination, since the only issue is as to whether the material which emerged during the course of the assessment proceedings for Assessment Year 2007-08 and the order of assessment could furnish tangible material on the basis of which the assessment for Assessment Year 2006-07 could be reopened. Having regard to the law as expounded by the Supreme Court in the several judgments which we have noted earlier, we have come to the conclusion that the assessment for Assessment Year 2006-07 could legitimately be reopened on the basis of the material which came before the Assessing Officer during the course of the assessment proceedings for Assessment Year 2007-08. 10. The earlier judgment of a Division Bench of this Court in the proceedings initiated by the assessee related to the reopening for Assessment Years 2004-05 and 2005-06 which was admittedly beyond a period of four years. Where the reopening of an assessment takes place beyond a period of four years ..... X X X X Extracts X X X X X X X X Extracts X X X X
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