9911796707
TMI Blog2022 (4) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... E COURT] - In the considered opinion of this court, when it is undisputed that the AO asked for details relating to the details of the payments made as subcontractor charges and the TDS affected and the petitioner has furnished those details, with the AO issuing the assessment order dated 22.11.2016 without any additions, it must be deemed that the AO has opined in favour of the petitioner on the TDS deductions made. The reason offered in justification of the notice issued under section 147 read with section 148 of the I-T Act is that on perusal of records it is observed by the AO that though the petitioner has paid subcontractor charges the petitioner has not deducted the TDS for the entire amount and therefore a sum cannot be allowed under section 40(a)(ia) of the I-T Act. If there is conscious application of mind on an issue during assessment, and this Court as in the circumstances of the case has already opined that there was such conscious application of mind and therefore a deemed opinion, there cannot be reassessment only because of an error in such opinion. The reasons offered by the A.O to justify reassessment cannot be accepted as an objective view based on any subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order dated 28.03.2019 (Annexure-M). The first respondent, in this impugned order, has opined that reassessment is not because of mere suspicion but there is reason to believe that ₹ 3,97,43,979/- has escaped taxation and the re-assessment need not be based only on fresh material. The first respondent has further opined that there is no change of opinion as the question of non-deduction of TDS was not examined at the time of assessment order under section 143(3) of the Income Tax Act [for short, 'the I-T Act']. 3. A brief statement of facts would be as follows. The petitioner was issued with notice under Section 142(1) read with Section 129 of the I-T Act on 11.08.2016. This notice required the petitioner to furnish, amongst others, the details of the payments covered under Section 40A (2)(b) of the I-T Act in a particular format. This notice required the petitioner not only to furnish the details of the related party, nature of transaction, payments made but also to furnish details on whether TDS is deducted or not and if TDS is deducted the necessary details in this regard. The petitioner has furnished these details. The Assessing Officer [AO] has extended the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, where the first respondent, who relies upon the records already submitted during the hearing of the proceedings under section 143 of the I-T Act, could be held to have reasons to believe that any income chargeable to income tax has escaped assessment. Sri T. Suryanarayana emphasizes that if it could be held either that the first respondent proposes to change opinion or that there is no reason to believe, the impugned re-assessment notice and the subsequent order would be without jurisdiction. 7. Sri. T. Suryanarayana in support of his submissions that this Court must opine that the AO has accepted the explanation offered by the petitioner in the proceedings under Section 143 of the I-T Act and therefore there is AO's deemed opinion in this regard urges the following grounds. 7.1 The AO had issued notice under Section 143(1) read with 129 of the I-T Act as the petitioner's returns for the relevant assessment year was selected for scrutiny through Computer Aided Scrutiny Selection [CASS] and in the course of the hearing after the said notice, the petitioner is extended opportunity of hearing. Though the petitioner was called upon to furnish the details of relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... International Ltd (2012) 25 Taxmann.com 200 (Delhi) (FB). 7.4 A change in the AO's opinion cannot be a reason for reopening assessment. If change of opinion by itself could confer jurisdiction for reopening of assessment, it would tantamount to review and an AO has no power to review. Therefore, change of opinion is an inbuilt test to check abuse of power by an AO. After the Amendment Act, 1989 (w.e.f. 01.04.1989), an AO can reopen assessment provided there is subsequent 'tangible material' to come to the conclusion that there is escapement of income from assessment as against mere change of opinion. In this regard reliance is placed upon paragraph 4 of the decision of the Apex Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd (2012) 25 Taxmann.com 200 (Delhi) (FB). 7.5 The petitioner, in furnishing the details of the tax withheld qua M/s Broadcom Communications Technologies Ltd., in response to a query during the hearing prior to the assessment order dated 22.11.2016, had truthfully placed all material details and it is on the perusal of these details that the AO has accepted the expenditure claimed without issuing a demand. The reassessment proceedings in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I-T Act, the only question that would be relevant is whether there is relevant material on which a reasonable person could have formed the requisite belief regarding escapement of tax; if this threshold is established, whether the materials will conclusively prove the escapement - the final outcome - would not be material. He emphasizes that this is the proposition underlined by the Hon'ble Apex Court in ACIT v. Rajesh Jhaveria Stockbrokers (P) Limited (2007) 291 ITR 0500 (SC). He argues that in the present case, it is obvious that the question of non-deduction of TDS and the consequence thereof under section 40(a)(ia) of the I-T Act was not considered by the AO in the original proceedings, and therefore there is prima facie reason to conclude that the commencement of the reassessment proceedings would be justified. The petitioner will not be without remedy as it would be open to it to present its case before the first respondent. 8.2 Sri K V Aravind next submits that relevant material for requisite belief on escapement of tax i.e, information, could be obtained even from the record of the original assessment or from an investigation of the material on record; if it is shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed to take advantage of an oversight or mistake committed by the taxing authority; (3) where the information is derived from an external source of any kind. Such external source would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment; (4) where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law. 10. In the later decision in Indian and Eastern Newspaper Society, New Delhi v. CIT, New Delhi supra, examining the question of reassessment commenced under the provisions of section 147 read with section 148 of the I-T Act [as it stood at the relevant time], and considering the circumstances delineated in Kalyanji Mavji and Co. v. CIT, West Bengal-II supra has declared that the observation in this decision that 'where income had escaped assessment due to the oversight, inadvertence are mistake must fall within section 34 (1)(b) of the I-T Act' travels farther than the statute warrants and any observation in this regard does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed as to include also cases in which the I.T.O., having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been brought to tax. In other words, as pointed out in IENS case, it also ropes in cases of a "bare or mere change of opinion" where the I.T.O. (very often a successor officer) attempts to reopen the assessment because the opinion formed earlier by himself (or, more often, by a predecessor I.T.O.) was, in his opinion, incorrect. Judicial decisions had consistently held that this could not be done and the IENS case (supra) has warned that this line of cases cannot be taken to have been overruled by Kalyanji Mavji (supra). The second paragraph from the judgment in the IENS case earlier extracted has also reference only to this situation and insists upon the necessity of some information which make the ITO realise that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. 15. In the present case, it is undisputed, as recorded in annexure C, that the petitioner was asked to submit certain details/information relating to the relevant assessment year viz., AY 2014-15. The petitioner in response thereto, furnished different details including the details as regards the payments made to related parties, the TDS affected and the tax withheld. The petitioner has furnished such details relating to M/s Broadcom Communications Technologies Pvt. Ltd. After these details are furnished, the assessment order is issued on 22.11.2016 without any additions, or rejection. 16. These circumstances would be material to decide whether the assessment order dated 22.11.2016 incorporates the AO's deemed opinion on the query raised. It is now settled that an assessment order can be passed either in terms of section 143(1) or 143(3) of the I-T Act, and when a regular order of assessment is passed in terms of section 143 (3), a presumption that such an order is passed on application of mind is attached to it. This presumption is rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case has already opined that there was such conscious application of mind and therefore a deemed opinion, there cannot be reassessment only because of an error in such opinion. The reasons offered by the A.O to justify reassessment cannot be accepted as an objective view based on any subsequent information in the absence of necessary material in this regard. 20. In the light of the afore discussion, this Court is of the considered view that the impugned notice dated 28.03.2019 (Annexure- E) issued under Section 148 read with Section 147 of the Income Tax Act 1961 and the order dated 23.08.2019 (Annexure-M) by the Additional Commissioner of Income Tax, Special Range-I (the first respondent) cannot be sustained and must be quashed on the ground of lack of jurisdiction. Therefore, the following: ORDER The writ petition is allowed, and the impugned notice dated 28.03.2019 (Annexure- E) issued under Section 148 read with Section 147 of the Income Tax Act 1961 and the order dated 23.08.2019 (Annexure-M) by the Additional Commissioner of Income Tax, Special Range-I (the first respondent) are quashed. --------------------- Notes: 1. [34. Income escaping assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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