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TMI Blog2014 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment was already finalized under section 143(3) of the Act on the assessee, wherein, assessee had made full and true disclosure of its affairs and more over the reasons recorded was merely based in reappraisal of existing assessee's records and as such, there was no tangible material with the learned assessing officer and thus, the initiation of proceedings under section 147 is untenable and unsustainable in law. 4. That further, the reasons recorded were mere reasons to suspect and were just to make fishing and roving enquiries, as assessment was already finalized under section 143(3) of the Act, wherein full and true disclosure was made by the appellant, thus, proceedings initiated under section 148 was a mere pretence and a clear case of change of opinion and thus, unsustainable in law. 4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in sustaining an addition of Rs. 1,66,23,750/- under section 69 of the Act, on account of purchase of equity shares of M/s Ishwar Dass Sahni & Brother Ltd from its shareholders namely Mr. Brij Mohan Sahni HUF and Niamat Sahni. 4.1 That in doing so, the learned Commissioner of Income Tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded, the Assessing Officer has observed that the assessee invested in the share capital of Isher Dass Sahni and Bros. (P) Ltd. but the accounts of the assessee did not reflect this investment. He submitted that the above observation of the Assessing Officer is factually incorrect. The investment was duly disclosed to the Assessing Officer during the course of original assessment proceedings. The assessee had also disclosed the source from which the above investment was made. He explained that the part of investment was made during the accounting year relevant to the assessment year 2003-04 and therefore, in the reply relating to AY 2003-04, the detailed explanation for the source was given. He also stated that the assessment proceedings for AY 2003-04 and 2004-05 were taken up simultaneously. The learned counsel stated that since there was no failure on the part of the assessee to disclose fully and truly all material facts, the reopening of assessment was not valid as per proviso to Section 147. He further submitted that the reopening of assessment is bad in law because it is based upon the change of opinion. He stated that when during original assessment proceedings the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected the assessee's contention. His order should be upheld and assessee's appeal may be dismissed. 6. We have carefully considered the arguments of both the sides and perused relevant material placed before us. The assessment year under consideration is 2004-05. Original assessment was completed under Section 143(3). Reopening is made vide notice under Section 148 dated 25.3.2011. Thus, the reopening is made after four years from the end of the relevant assessment year. Proviso to Section 147 reads as under:- "Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:" 7. As per the above proviso to Section 147, since in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to Rs. 1,66,23,750/-. During the course of assessment proceedings, the Assessing Officer issued questionnaire dated 17.05.2006. Vide question No.4, details and evidence of investment made in the movable and immovable properties during the year under consideration were asked. At page 8, there is a reply by the assessee. With regard to question No.4, the reply of the assessee reads as under:- "Q.No.4. The assessee has not made any investment in immovable properties during the year under consideration. Further, the assessee is submitting herewith details of investment made in unquoted shares in the following companies : Name of Company No. of shares Amount a) Deluxe Properties & Ind. Ltd. 300 3000.00 b) Isherdas Sahni & Bros.Pvt.Ltd. 2500 16623750.00 Regarding investment in 2500 shares of M/s Isherdas Sahni & Bros. Pvt.Ltd., the assessee has already submitted the relevant details before your goodself in assessment proceedings for assessment year 2003-04." 9. Thus, during the course of original assessment proceedings, the Assessing Officer raised the question with regard to investment in movable and immovable properties and the assessee stated that there is no investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss. Hon'ble Bombay High Court quashed the notice issued under Section 148 with the following finding:- "In the facts of the present case, there is nothing new which has come to the notice of the Revenue. The accounts had been furnished by the petitioner when called upon. Thereafter, the assessment was completed under section 143(3) of the Income-tax Act. Now, on a mere relook, the officer has come to the conclusion that the income has escaped assessment and he is of course justified in his analysis. In our view, this is not something which is permissible under the proviso to section 147 of the Income-tax Act which speaks about a failure on the part of the assessee to make a proper return. In the present case, no such case is made out on the record. In the circumstances, we allow this petition in terms of prayer (a) and quash and set aside the notice dated March 27, 2006, directing reopening of the assessment for the year 1999-2000." 10. The Revenue had filed the appeal against the above decision of Hon'ble Bombay High Court to Hon'ble Apex Court and Hon'ble Apex court affirmed the decision of Hon'ble Bombay High Court with the following finding:- "The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an opinion accepting the assessee's explanation for source of investment in such shares. Now, reopening on the basis of same material which is already available on record would be a clear case of change of opinion. In view of the above, we, respectfully following the decision of Hon'ble Apex Court in the case of ICICI Securities Primary Dealership Ltd. (supra), of Hon'ble Jurisdictional High Court in the case of Usha International Ltd. (supra) and also in view of the proviso to Section 147, hold that the reopening of assessment by the Assessing Officer under Section 147 was not valid. We, therefore, quash the notice issued under Section 148 beyond the period of four years from the end of the relevant assessment year and consequentially, the assessment order framed in pursuance to such notice is also quashed. 13. Since while adjudicating ground Nos.2, 3 & 4 we have quashed the assessment order, the other grounds of appeal, which are against the addition made by the Assessing Officer and sustained by the learned CIT(A), do not survive for adjudication. 14. In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 14th August, 2014. ..... 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