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TMI Blog2014 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded, an analysis of Munshi Mini Rice Mill AY 2007-08 the materials on the record by itself may be justifying the AO to initiate a proceeding u/s. 147 of the Act - 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 – the reopening u/s. 147 r.w.s. 148 of the Act is to be set aside – Decided in favour of assessee. - I.T.A No. 1650/Kol/2014 - - - Dated:- 14-10-2014 - Shri Mahavir Singh, JM And Shri Shamim Yahya, AM,JJ. For the Appellant: Shri Somnath Ghosh, Advocate For the Respondent: Shri Varinder Mehta, CIT ORDER Per Shri Mahavir Singh, JM :- This appeal by assessee is arising out of order of CIT(A)-XXXVI, Kolkata in Appeal No. 188/CIT(A)-XXXVI/Kol/ITO,Wd-2(2),HG/2012-13 dated 30.06.2014. Assessment was framed by ITO, Wd-2(2), Hooghly u/s. 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 2007-08 vide his order dated 30.11.2009. 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming assumption of jurisdiction by AO u/s. 147 of the Act after issuing no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank statement, salary and wages statement, purchase of diesel statement, copy of electric bills, statement of bani milling charges, professional tax, panchayat tax along with G.P. rate details and assessment was framed by making addition on account of fluctuation of gross profit rate at ₹ 30,000/-. Further, the AO issued notice u/s. 148 of the Act dated 07.07.20121 and for this, the reasons recorded are as under: The assessment u/s. 147/143 was completed on 30.11.2009 and assessed income ₹ 30,000/-. On scrutiny of the assessment records it has been gathered that the assessee paid payment total amounting ₹ 14,67,200/- to 49 (forty nines) parties in cash during the financial year 2006-07 for paddy purchase. So @ 20% of ₹ 14,67,200/- i.e. ₹ 2,93,440/- should not be deductible expenditure and same would be require to be added back to total income. As per provision of sec.40A(3) of the Income Tax Act, 1961 provides that - where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceeding the assessing officer has not examined the issue at all, no opinion was formed, the principle of change of opinion cannot apply. Further this is a case where the assessment has been reopened within 4 years of the end of the assessment year. Therefore the reassessment proceeding cannot be treated as invalid on the ground that full and true disclosure of material fact was made in the original proceeding. Aggrieved, now assessee has challenged the jurisdiction before us. 4. We have heard rival submissions and gone through facts and circumstances of the case. First of all, we have to examine the documents produced by the assessee during the course of original assessment framed u/s. 147 read with section 143(3) of the Act vide order dated 20.11.2009. We find from the assessment order that the assessee produced complete details of purchases i.e. purchase statement. Ld. counsel for the assessee drew our attention to pages 46 to 48 of assessee's paper book, wherein total purchases made for an amount of ₹ 14,67,200/- by way of cash memo is disclosed. Ld. counsel for the assessee stated that these were produced before the AO during the course of original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore him at the time of original assessment. We find that this issue is squarely covered in favour of the assessee and against revenue by the judgment of Hon'ble Supreme Court in the case of CIT Vs. Kelvinator India Ltd. (2010) 310 ITR 561 (SC), wherein newly substituted provision of section 147 of the Act with effect from 01.04.1989 is interpreted by observing, that section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the AO to initiate reassessment proceeding upon his mere change of opinion. Further, if 'reason to believe' of the AO is founded on an information which might have been received by the AO after the completion of assessment, it may be a sound foundation for exercising the power under section 147 r.w.s. 148 of the Act. It cannot be accepted that only because in the assessment order, detailed reasons have not been recorded, an analysis of Munshi Mini Rice Mill AY 2007-08 the materials on the record by itself may be justifying the AO to initiate a proceeding u/s. 147 of the Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year. This new section has made a radical departure from the original section 147 inasmuch as clauses (a) and (b) of the original section 147 have been deleted and a new proviso added to section 147. In Rakesh Aggarwal v. Asst. CIT [1997] 225 ITR 496, the Delhi High Court held that in view of the proviso to section 147 notice for reassessment under section 147/148 should only be issued in accordance with the new section 147, and where the original assessment had been made under section 143(3) then in view of the proviso to section 147, the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO [2000] 242 ITR 612. In our opinion, we have to see the law prevailing on the date of issue of the notice under section 148, i.e., November 20, 1998. Admittedly, by that date, the new section 147 has come into force and, hence, in our opinion, it is the new section 147 which will apply to the facts of the present case. In the present case, there was admittedly no failure on the part of the assessee to make a return or to dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment of the petitioner's own case, vide Deputy CIT v. ONGC [1999] 70 ITD 468 (Delhi) has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and hence when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under section 147/148 would obviously be on the basis of a mere change of opinion by the income-tax authorities, which would not be valid as held by the Supreme Court in Indian and Eastern News- paper Society v. CIT [1979] 119 ITR 996 ; Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Deputy CIT [1998] 234 ITR 170 (Delhi), etc. In the decision of the Tribunal in the assessee's own case, Deputy CIT v. ONGC [1999] 70 ITD 468 (Delhi) it has been held that the income from the contract between the parties was business income and not fee for technical services. Although we are of the opinion that the law existing on the date of the impugned notice under section 147/148 has to be seen, yet even in the alternative even if we assume that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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