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TMI Blog2015 (11) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction on the part of the Assessing Officer under section 147 of the Act by issuing notice under section 148 of the Act is clearly without any authority of law. In the light of the above discussion, while disagreeing with the reasons recorded by the Tribunal for holding that the reopening of assessment was bad in law, for the reasons recorded hereinabove, the court is in agreement with the final conclusion arrived at by the Tribunal. - Decided in favour of assessee - TAX APPEAL NO. 137 of 2015, TAX APPEAL NO. 138 of 2015 TO TAX APPEAL NO. 140 of 2015 - - - Dated:- 5-11-2015 - MS. HARSHA DEVANI AND MR. A.G.URAIZEE, JJ. FOR THE APPELLANT : MR M.R. BHATT, SENIOR ADVOCATE with MRS MAUNA M BHATT, ADVOCATE FOR THE OPPONENT : MR JP SHAH, ADVOCATE for MR MANISH J SHAH, ADVOCATE COMMON ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. The appellant revenue in these appeals under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has challenged the common order dated 5.9.2014 made by the Income Tax Appellate Tribunal, C Bench, Ahmedabad (hereinafter referred to as the Tribunal ) by proposing the following question, st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Industrial Undertaking is an industrial undertaking in which the investment in the fixed assets in Plant Machinery does not exceed ₹ 1 crore. As per schedule 5 to the Balance Sheet, the total value of Plant Machinery was certified at ₹ 4,73,81,571/- as on 01.04.2002 i.e. at the beginning of the Financial Year 2002-03 relevant to AY 2003-04, ₹ 4,80,33,282/- as on 01.04.2003 i.e. at the beginning of the Financial Year 2003-04 relevant to AY 2004-05, and ₹ 4,97,88,775/- as on 01.04.2004 i.e. at the beginning of the Financial Year 2004-05 relevant to AY 2005-06 which exceeded the limit fixed for investment in Plant and Machinery and thereby the assessee ceased to be an SSI unit and thus not eligible for deduction under section 80IB of the Act. However, the assessee claimed and was allowed deduction under section 80IB of the Act of ₹ 35,40,963/-, ₹ 37,13,631/- and ₹ 44,22,737/- for Assessment Years 2003-04, 2004- 05 and 2005-06 respectively. Thus, the income chargeable to tax has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. 4. The assessment for all the three assessment years was complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment cannot be based upon change of opinion. Referring to the impugned order, it was pointed out that the sole reason assigned by the Tribunal for setting aside the reopening of assessment is that the Assessing Officer had failed to bring on record any new tangible material which had come to his notice subsequent to the completion of the assessment made in the assessment years under consideration. It was submitted that it is settled legal position that the tangible material does not have to be from an external source and can be within the record itself. In support of such submission, the learned counsel placed reliance upon the decision of this court in the case of Gujarat Power Corporation Ltd. v. Assistant Commissioner of Income Tax , (2013) 350 ITR 266 (Guj) wherein the court had expressed the opinion that as long as there is some tangible material on the basis of which the Assessing Officer can form a belief that income chargeable to tax has escaped assessment, it would be permissible to reopen the assessment in exercise of the powers under section 147 of the Act, particularly after the amendments made with effect from April 1, 1989. Such tangible material need not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the relevant assessment year. The reasons recorded for reopening the assessments have already been reproduced hereinabove. The Tribunal has held the reopening to be bad in law on the ground that the same was not based upon any material external to the record and that in the absence of any new tangible material coming to his notice, the Assessing Officer was not justified in reopening the assessment. Insofar as the reasoning given by the Tribunal that the Assessing Officer was not justified in reopening the assessment as there was no new tangible material on record which had come to his notice subsequent to the completion of assessment is concerned, the same is clearly contrary to the settled legal position. This court in the case of Gujarat Power Corporation Ltd. v. Assistant Commissioner of Income Tax (supra) has clearly held that as long as there is some tangible material on the basis of which the Assessing Officer can form a belief that income chargeable to tax has escaped assessment, it would be permissible to reopen the assessment in exercise of the powers under section 147 of the Act and that such tangible material need not be alien to the record. Under the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment have been stated thus :- The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion .. ... In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the material would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] and Raymond Woollen Mills Ltd. v. ITO [1999 (236) ITR 34 (SC)] 14. Looked in the light of the above principles, it is necessary to appreciate the inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that the investment made by the assessee at all times was within the limit for plant and machinery for the assessment years under consideration. A perusal of the table showing the calculation of plant and machinery as on the 31st March of each year which has been reproduced in the order of the Commissioner (Appeals) as well as the impugned order passed by the Tribunal, clearly shows that the investment made in plant and machinery was within the limit prescribed for an SSI unit. As pointed out by the learned counsel for the respondent assessee, certain assets are exempted from the computation of the exemption limit under the relevant notification. The Assessing Officer, however, had taken into consideration even the exempted assets and come to the conclusion that the assessee had crossed the limit. Moreover, the Assessing Officer has failed to take into consideration that as per notification No.857(E) the limit for investment in plant and machinery for SSI units manufacturing drugs and pharmaceutical products was ₹ 3.00 crore and as per notification No.655(E) with effect from 5th June, 2003 such limit has been increased to ₹ 5.00 crore. Therefore, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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