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TMI Blog2020 (3) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... icer for re- opening the assessment was tenable in the eye of law, the conditions precedent to invoke the powers for re-opening assessment as provided in Section 147 of the Act is absent, therefore we find that the Assessing Officer acted illegally and issued Notice of re-assessment on the self same material forming second opinion without having any tangible material to exercise jurisdiction. - Decided in favour of assessee. - R/SPECIAL CIVIL APPLICATION NO. 3626 of 2014 - - - Dated:- 3-3-2020 - MR. J.B. PARDIWALA AND MR. BHARGAV D. KARIA JJ. Appearance: Mr. S.N. Divatia (1378) for the Petitioner(s) No. 1 Mrs. Mauna M. Bhatt (174) for the Respondent(s) No. 1 Rule Served (64) for the Respondent(s) No. 1 ORAL JUDGMENT (PER : MR. BHARGAV D. KARIA) 1. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs: 10.0 (a)to issue a writ of certiorari or in the nature of certiorari or any other appropriate writ, orders or directions quashing and setting aside the impugned notice dated 27/09/2012 [Exhibit-A] issued by the Respondent proposing to reopen the completed assessment of the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded the following reasons for re-opening of the assessment : During the course of assessment proceedings in A.Y.2008-09 it was observed that the asessee had collected fees from the students at the time of Admission and credited the same directly to the Balance Sheet but this amount was not credited to the income and expenditure account. Furthermore, its activities were ascertained to have been carried out on commercial lines and assessed accordingly. Moreover, the registration procured u/s.12 AA of the Income Tax Act too had been cancelled by the DIT (E), Ahmedabad w.e.f. 21/03/1990 i.e. from A.Y.1990-91 onwards, vide his order dated 17/03/2011. Hence, the assessee is not eligible for deduction u/s.11 of the I.T. Act and the income of the assessee ought to be computed in normal commercial manner as per the provisions of section 28 to section 44D of the I.T. Act. In view of the aforesaid facts, I have reason to believe that in this year too the income of the Trust has escaped form being assessed to tax under the normal commercial manner. 5. The petitioner filed objections to the Notice for re-opening on 11.11.2013 pointing out as under : 2.3. The assessee-trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndary reason for reopening may not exist anymore but the primary reason still exist and addition in A.Y. 2009-10 and 2010- 11 were made by the Assessing Officer on the primary reason i.e. one time admission fees credited directly to the Balance Sheet instead of the same is to be credited to the income and expenditure account. 5. In view of above mentioned facts of the case, the assessee's objections raised against the reopening proceedings so far as the issue relates to the cancellation of registration u/s.12AA is acceptable. But, the one time admission fees income was not taken to Income Expenditure account which leads to escapement of income for A.Y. 2006-07. Accordingly, the objection so raised is hereby disposed off. 7. The Assessing Officer accepted the objections with regard to the issue of cancellation of Registration under Section 12 AA of the Act, 1961 raised by the petitioner, but so far as the reasons for reopening with regard to crediting the fees collected from the students to corpus in the balance-sheet instead of crediting the same to the income and expenditure account was concerned, Notice for re-opening was sustained. 8. The assessee therefore, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent submitted that it is not in dispute that the Assessing Officer has formed the reasons to believe that the income escaped the assessment and that the Assessee in spite of taking fees from the students as donation has credited the same to the balance-sheet, instead of crediting the same to the income and expenditure account. 10.1. It was submitted that as there is a failure on the part of the assessee-petitioner to disclose fully and truly all material facts during the course of assessment in view of the reasons recorded by the Assessing Officer, the Notice for re-opening was valid and no interference is required to be made by this Court while exercising powers under Article 226 of the Constitution of India. 11. Having heard the learned counsel for the respective parties and having gone through the materials on record, it appears that during the course of regular assessment, the petitioner-assessee has furnished requisite details sought for by the Assessing Officer in the form of details of the donation received by the petitioner as corpus credited to the Earmarked Funds being part of the balance-sheet. It is also not in dispute that during the course of the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. One must treat the concept of change of opinion as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4-1989, the assessing officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words reason to believe , Parliament reintroduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the assessing officer. 8. We quote hereinbelow the relevant portion of Circular No. 549 dated 31-10- 1989, which reads as follows: 7.2. Amendment made by the Amending Act, 1989, to reintroduce the expression reason to believe in Section 147.-A number of representations were received against the omission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot give him or his successor in office a reason to reopen the assessment of the assessee or to contend that because the facts were not considered in the assessment order, a full and true disclosure was not made. Since the facts were before the Assessing Officer at the time of framing the original assessment, and later a different view was taken by him or his successor on the same facts, it clearly amounts to a change of opinion. This cannot form the basis for permitting the Assessing Officer or his successor to reopen the assessment of the assessee. 14. In view of above dictum of law the issue of reopening in the facts of the present case is no more res-integra. Therefore, the impugned notice is required to be quashed and set aside, as none of the reasons assigned by the Assessing Officer for re- opening the assessment was tenable in the eye of law, the conditions precedent to invoke the powers for re-opening assessment as provided in Section 147 of the Act is absent, therefore we find that the Assessing Officer acted illegally and issued Notice of re-assessment on the self same material forming second opinion without having any tangible material to exercise jurisdiction. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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