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TMI Blog2014 (6) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... f is not sustainable - any action of reopening solely at the behest of objection raised by audit party without any independent belief while recording the reasons would surely make the very assumption of jurisdiction vulnerable - the petitions is to be allowed on the ground of assumption of jurisdiction for issuance of notice of reassessment being contrary to law and unsustainable - Decided in favour of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... itself is not sustainable. Reliance is placed on a decision of this court rendered in the case of Gujarat Fluorochemicals Ltd. v. Asst. CIT [2013] 353 ITR 398 (Guj). The court in the said decision held and observed thus (page 403) : "On the basis of such pleadings we have not the slightest hesitation in coming to the conclusion that the petitioner's firm assertion that the Assessing Officer did not agree with the audit objection and stuck to her position that she was right in law as well as in facts while framing the original assessment and that, therefore, audit objection should be dropped, has not been denied by the Assessing Officer though she herself filed an affidavit before this court in response to such averments made in the petition. All that she had to state was that she was surprised that the petitioner could claim access to interdepartmental correspondence which was strictly confidential in nature. This is hardly what the court would accept when specific factual averment has been made by the petitioner, the answer to which would go to the very root of the authority of the Assessing Officer to exercise jurisdiction to reopen the assessment. It is by now well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not valid and that she was under compulsion to reopen the assessment solely under insistence of the audit party. The Revenue not having either denied such clear averments of the petitioner made in the petition on oath nor having produced the original files to demonstrate the independent formation of opinion by the Assessing Officer, though sufficient time was made available, issue stands firmly concluded." This court in the case of Adani Exports v. Deputy CIT (Asstt.) [1999] 240 ITR 224 (Guj) held that the satisfaction of the Assessing Officer for the purpose of reopening an assessment is subjective in character and judicial review is limited. However, reassessment at the instance of audit party's objections was not held sustainable in the following manner (page 230) : "It is true that satisfaction of the Assessing Officer for the purpose of reopening is subjective in character and the scope of judicial review is limited. When the reasons recorded show a nexus between the formation of belief and the escapement of income, a further enquiry about the adequacy or sufficiency of the material to reach such belief is not open to be scrutinised. However, it is always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme court in the case of CIT v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144 (SC) in which it was held that if income does not arise at all there cannot be tax even though in books an entry is made about 'hypothetical income' which is not materialised. Also in the case of Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746 (SC) the hon'ble Supreme Court has held that hypothetical income cannot be brought to tax unless it is accrued. In this case, no interest is accrued nor any provisions are made in the profit and loss account. The issue which arose in the audit objection is fully covered by the aforesaid decisions. However, the most appropriate remedial action available is revision of assessment order by the Commissioner under section 263 for which limitation expires on March 31, 2006. Alternatively, the assessment can be reopened under section 147(c) of the Income-tax Act for which limitation expires on March 31, 2008. 5. Necessary directions/guidance in the matter are solicited. (Sd.) . . . . . . ACIT CC 2(1), A'bad" It is apparent from the noting made by the Assessing Officer that the Assessing Officer did not hold any belief that income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... catena of judgments, neither can surrender or abdicate his/her functions of forming belief to his superiors. Any action of reopening solely at the behest of objection raised by audit party without any independent belief while recording the reasons would surely make the very assumption of jurisdiction vulnerable. Trigger may have come from the audit party but the logical decision of initiating the proceedings of reassessment in the form of reason to believe has to be directly and invariably of that of the Assessing Officer. In the affidavit-in-reply filed by the Revenue, a lame attempt is made to contend that the ratio laid down by the Supreme Court in case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) has been strictly followed and, therefore, the petition deserves no entertainment. It is also contended that there is no question of change of opinion on the part of the Assessing Officer, since the reopening is mainly in connection with accrued interest which was not added to the income of the assessee-company. We notice that in the memo of petition as well as in the affidavit-inrejoinder, it has been specifically averred that no interest has been claimed on the bor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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