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TMI Blog2013 (11) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that reopening of the proceedings being merely based on 'change of opinion' although the reopening proceeding was taken by the Assessing Officer within 4 years from the end of the assessment year? 2. Whether Ld. CIT(A), C-1, Kolkata had erred in annulling the reassessment order under section 143(3)/147 although reassessment proceeding as taken by the Assessing Officer was as per the Income Tax Act?" 3. Brief facts leading to the above issue are that the original assessment for the relevant AY 2005-06 was completed u/s. 143(3) of the Act on 23.03.2007 after issuing notices u/s. 143(2) and 142(1) of the Act calling for details. During the course of original assessment proceedings the assessee produced books of account, bank statement and other requisitioned details which were examined by the AO on test check basis and framed assessment. Subsequently, the AO issued notice u/s. 148 of the Act dated 29.08.2008 and vide letter dated 23.08.2009, assessee, required reasons for reopening of the assessment u/s. 148 of the Act and AO vide letter no. ACIT.CC.XVIII/2009-10/Kol/76 dated 26.08.2009 supplied the reasons, which read as under: "On perusal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 320 ITR 651 - has confirmed the finding of the full Bench decision of the Hon'ble Delhi High Court that on the basis of same facts and materials (and no more) disclosed at the time of original assessment made under section 143(3) of the I.T. Act, by mere change of opinion, the assessment cannot be re-opened u/s.147 of the I.T. Act, 1961. 3.2. In CIT vs. Kelvinator of India Ltd. 256 ITR 1 = (2003-TII-19-HC-DEL-INTL-LB) the Full Bench of the Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the assessment year. The Court held that when a regular order of assessment is passed in terms of section 143 (3) of the Act, a presumption can be raised that such an order has been passed on application of mind. It was held that if it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasijudicial function to take benefit of its own wrong. It was held that section 147 of the Act does not postulate conferment of power upon the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change of opinion is apparent and recognized. Failure to make full and true disclosure of material facts is a precondition which should be satisfied if the reopening is after four years of the end of the assessment year. The Explanation stipulates that mere production of books of account and other documents, from which the Assessing Officer could have with due diligence inferred facts does not amount to full and true disclosure. Thus, in cases of reopening after four years as per the proviso, conduct of the assessee and disclosures made by him are relevant. However, when the proviso is not applicable, the said precondition is not applicable. This additional requirement is not to be satisfied when reassessment proceedings are initiated within four years of the end of the assessment year. The sequitur is that when the pro viso does not apply, the reassessment proceedings cannot be declared invalid on the ground that the full and true disclosure of material facts was made. In such cases, reassessment proceedings can be declared invalid when there is a change of opinion. As a matter of abundant caution we clarify that failure to state true and correct facts can vitiate and make the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the following discrepancies are found", as the assessment was framed by the AO originally u/s. 143(3) of the Act, thereby scrutinizing the entire issue vide issuing questionnaire on the details of interest paid to BCL at Rs.8,59,78,653/-. We find that the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (supra) has observed as under: "However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer 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 Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain preconditions and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even Hon'ble Delhi High Court in the case of Orient Craft Ltd. (supra) has finally held as under: "14. In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income "on going through the return of income" filed by the assessee after he accepted the return under section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in CIT Vs. Kelvinator (supra). The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words "reason to believe" vis-à-vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147." Similarly, in the present case also there is no whisper in the reasons recorded of any tangible material which has come t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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