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TMI Blog2016 (5) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... table to a fault or omission on the part of the assessee and the assessee cannot be penalized for a fault of the AO; Secondly when one or more modes of assessment or remedies are available to the taxing Authority, the Authority must adopt that remedy which causes least prejudice to the assessee. - Decides against revenue - ITA No.6498/Mum/2013 - - - Dated:- 6-4-2016 - SHRI B.R.BASKARAN, AM SHRI SANDEEP GOSAIN, JM For The Revenue : Shri Uday B Jakke For The Assessee : Shri Dharmesh Shah ORDER PER SANDEEP GOSAIN,(JM) The appeal filed by the revenue is directed against the order dated 8-8-2013, passed by the CIT(A)-8, Mumbai, for the assessment year 2005-2006, on the following grounds :- 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in holding that the proceeding u/s.147 of the Act, 1961 as bad in law in spite of the fact that the set off of carried forward losses are not in existence as per section 72 of the Act for A.Y.1999-2000. 2. On the facts and circumstances of the case and in law, the impugned order of the ld. CIT(A) is contrary to law and consequently merits to be set aside that of the Assessing officer be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. From the order of CIT(A), we found that the CIT(A) after going through the details as available on record and relying on the various judicial pronouncements held that the reassessment proceedings is bad in law. The observations of the CIT(A) in this regard are as under :- 2.4.1 I have considered the facts of the case and the argument of the appellant. After the introduction of the new provisions of Section 147, several High Courts considered the scope of the new provisions. The Delhi High Court (Full Bench) in the case of CIT Vs. Kelvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617: (2002) 256 ITR 1 (Del)FB) observed that when a regular order of assessment is passed in terms of the said sub-section (3) of section n143, a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. 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 proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer to review his own order. Therefore, the power under section 147 cannot be used to review the order. Where between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts, and the reason that has been given is that the some material which was available on records while assessment order was made, was inadvertently excluded from consideration, it will amount to opening of the assessment merely because there is change of opinion. 2.4.4 The Court reiterated the above view in the case of Cartini India Ltd. vs. Addl. ClT Anr (2009) 314 ITR 275 (Born) and observed that what section 147 of the Act contemplates is the existence of material on record on the basis of which a prima facie opinion could be formed by the Assessing Officer that any income chargeable to tax has escaped assessment and not the material on record on the basis of which a final decision has already been taken at the time of assessment under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income should not be based on the change of his opinion. In other words if while finalizing the original assessment he had applied his mind to a particular item of income or expenditure and accepted the claim of the assessee positively, then he cannot take the assistance of s. 147 for such items unless something new comes to his notice after the completion of assessment which belies the assessee's claim on that item. Again it is pertinent to mention that there should be positive application of mind by the AO on a particular item of income or expenditure so as to bar it from inclusion in the reassessment. Where the information was available before the AO in the original assessment but it escaped his attention, then it cannot be said that the said item of income has attained finality so as to merit exclusion in reassessment. Explanation 1 to s. 147 makes the things very clear, which provides that the production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure. When Expln. 2 is read in juxtaposition to Expln. 1 and the main provision of s. 147, it becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res. The AO then issued as. 148 notice (within 4 years) to reopen the assessment on the ground that the claim for expenses (which was withdrawn) had to be assessed as unexplained expenditure u/s 69. The CIT (A) Tribunal struck down the reassessment order on the ground that the material on the basis of which the assessment was sought to be reopened was always available at the time of the original proceeding and there was no new material. On appeal by the department to the High Court, held dismissing the appeal that the assessee had made a claim for 30% adhoc expenditure. This was withdrawn by the assessee when asked by the AO to substantiate. The reopening on the basis that the said adhoc expenditure constituted unexplained expenditure u/s 69 was based on the same material. There was no fresh tangible material before the AO to reach a reasonable belief that the income liable to tax has escaped assessment: It is a settled position of law that review under the garb of reassessment is not permissible, 2.4.10 In Asteroids Trading Investments (P) Ltd, vs. DCIT (2009) 223 CTR (Bom) 144, the Bombay High Court held that reopening of the assessment within a period of 4 ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment would constitute a 'reason to believe that income had escaped assessment' within the meaning of section 147. Similar view has been taken by the apex court in the following cases:- (i) Phool Chand Bajrang Lal v. ITa 203 ITR 456,477; (ii) ALA Firm v. CIT 189 ITR 285, 298; (iii) Indian and Eastern Newspaper Society v . CIT 119 ITR 996,1004; and (iv) ITO v. Lakhmani Mewal Das 103 ITR 437, 445. 2.4.12 In view of the foregoing, it can be seen that no new tangible material is in the possession of the AO to form a reasonable belief that income has escaped assessment. Therefore, invoking of provisions of section 147 r.w. section 148 is bad in law. Further, the Ld. AO has failed to bring any material on record to show that the income has escaped assessment on account of failure on the part of the appellant to disclose fully and truly all material facts necessary for re-assessment for that assessment year. Having failed to do so, invoking of provisions of section 147 is bad in law. The same is accordingly held to be bad in law. These ground of appeal are allowed. 6. In the case of Cholamandalam Investment and Finance Co. Limited 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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