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TMI Blog2022 (4) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... hange of opinion, cannot be accepted. The approving authority the PCIT, has stated that he agrees with the comments of the A.O., which were annexed with the order, and has recorded his satisfaction that it was a fit case for issuance of the notice under Section 148 of the Act. The aforesaid order does not indicate non-application of mind by the PCIT to the proposal made by the A.O. and we are not able to accept the submission that the PCIT has granted approval without application of mind to the proposal put up by the A.O. In the instant case, the notice under Section 148 of the Act has been issued by the assessing officer after conducting an investigation and going through the income tax return and other related documents of the petitioner and after recording a reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income has escaped assessment. We are satisfied that there was prima facie material available on record before the assessing officer for issuing a notice under Section 148 of the Act. The notice dated 26-03-2021 issued under Section 148 of the Act as well as all the proceedings undertaken in consequence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the petitioner is Commission and following the nomenclature, some companies deduct TDS @10% under Section 194 H instead of 2% under Section 194 C. After taking into account all the expenses, the net margin of profit of the petitioner is lower than the tax deducted at source and, therefore, the petitioner is given refund of TDS. During the year under consideration, the petitioner could not obtain the certificate for lower deduction of TDS and, therefore, the ratio of tax refundable is much higher. 4. On 25-03-2015, the A.O. passed an Assessment Order assessing the petitioner s total income at ₹ 10,79,084/-, after adding ₹ 1,16,954/- towards part of expenses disallowed, to the returned income of ₹ 9,62,130/-. 5. On 26-03-2021, the A.O. issued a notice under Section 148 of the Act for the Assessment Year 2013-14, stating that he had reason to believe that the petitioner s income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act. 6. In response to the aforesaid notice under Section 148 of the Act, the petitioner sent a letter dated 09.09.2021 requesting the A.O. to provide a copy of the reasons recorded alongw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total receipts under Sections 194 A, 194 C, 194 H, 194 I and 194 J is ₹ 5,23,84,738/-. Hence there is a difference of ₹ 2,62,56,303/- in the receipts shown by the petitioner. This difference in receipts was not explained by the petitioner with documentary evidence and consequently the case was re-opened under Section 147 of the Act. 11. The order further states that the reply to the Audit Objection sent by the A.O. was not accepted by the CIT and thereafter, the objections of the Revenue audit and the submissions of the petitioner were re-looked by the A.O. and the A.O. formed the opinion that the income of the petitioner has escaped assessment. On the issue of change of opinion and there being no new material, the order states that although the petitioner might have submitted the documents in respect of the audit objection before the A.O., there is nothing on record to indicate that the A.O. had formed an opinion that no income had escaped assessment as he did not either accept or reject the petitioner s submissions at the time of assessment under Section 143 (3). Therefore, it is not a case of change of opinion. 12 . The petitioner has filed the instant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Issue of notice where income has escaped assessment .- (1) Before making the assessment, reassessment or re-computation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139: Provided that .. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. (Emphasis supplied) 15. Thus after giving a notice under Section 148 of the Act containing reasons for doing so, the Assessing Officer can pass an order for reassessment, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. The Hon ble Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-2015, a reply was submitted stating that the discrepancy in 26 AS and P L account was because the net margin of profit of the petitioner after taking into account all the expenses, is lower than the tax deducted at source and, therefore, the petitioner is given refund of TDS. During the year under consideration, the petitioner could not obtain the certificate for lower deduction of TDS and, therefore, the ratio of tax refundable is much higher. 19. Sri. Manish Mishra, the learned Counsel for the Income Tax department, has produced the original record of the department, which contains the reasons recorded for initiation of the reassessment proceedings. The reasons recorded state that the petitioner had filed its return of income on 23-09-2013 at ₹ 9,62,130/-. In the P L account, the petitioner had showed commission income of ₹ 2,50,58,983/- and interest income of ₹ 10,69,452/-, thus it has shown total receipts of ₹ 2,61,28,435/-. However, as per 26 AS the total receipt under Sections 194 A, 194 C, 194 H, 194 I and 194 J is ₹ 5,23,84,738/-. Hence there is a difference of ₹ 2,62,56,303/- in the receipts shown by the petitioner, which income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the audit objection in his letter dated 07-02-2020 cannot be accepted. 22. Sri. Misra has submitted that a perusal of the reasons recorded by the A.O. for initiating the reassessment proceedings establishes that the reassessment has not been ordered on the basis of the audit objection, but it has been ordered for numerous reasons, including that there is a difference of ₹ 2,62,56,303/- in the receipts shown by the petitioner in P L account and that reflected in 26 AS, which income has escaped assessment. During the assessment proceedings, the petitioner was asked to explain the discrepancy, but it did not show the payments received under Sections 194 I and 194 J. It did not show the details of expenses and it did not produce any ledger, bills and vouchers of expenses incurred by it on behalf of the principal companies. Thus the petitioner has not truly and fully disclosed all material facts necessary for the assessment thereby necessitating reassessment under Section 147 of the Act. 23. Sri. Chopra has next submitted that the proceedings under Section 147 have been initiated without bringing any fresh tangible material on record, by merely relying upon the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had not shown the said receipts in his P L account and had not given any explanation for the same. The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the petitioner did not make a full and true disclosure of all the material facts which resulted in an income of ₹ 2,62,56,303/- having escaped assessment. 27. In Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77, the Hon ble Supreme Court held that: - 25. From a combined review of the judgments of this Court, it follows that an Income Tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax Act, 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the jurisdiction of the Income Tax Officer under Sections 34/147. Take this very case: the Income Tax Officer says that on the basis of investigations and enquiries made during the assessment proceedings relating to the subsequent assessment year, he has come into possession of material, on the basis of which, he has reasons to believe that the assessee had put forward certain bogus and false unsecured hundi loans said to have been taken by him from non-existent persons or his dummies, as the case may be, and that on that account income chargeable to tax has escaped assessment. According to him, this was a false assertion to the knowledge of the assessee. The Income Tax Officer says that during the assessment relating to subsequent assessment year, similar loans (from some of these very persons) were found to be bogus. On that basis, he seeks to reopen the assessment. It is necessary to remember that we are at the stage of reopening only. The question is whether, in the above circumstances, the assessee can say, with any justification, that he had fully and truly disclosed the material facts necessary for his assessment for that year. Having created and recorded bogus entries of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment proceedings. 30. The meaning of the expression change of opinion has been explained by the Hon ble Supreme Court in CIT v. Techspan India (P) Ltd. , (2018) 6 SCC 685, in the following words: - 16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words change of opinion imply formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 17. It is well settled and held by this Court in a catena of judgments and it would be sufficient to refer to CIT v. Kelvinator of India Ltd. wherein this Court has held as under: (SCC p. 725, para 5-7) 5. where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe . Section 147 would give arbitrary powers to the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) non-production of any ledgers, bills and vouchers of expenses incurred on behalf of the Principal Companies etc. Therefore, it is not a case of change of opinion and challenge to the notice under Section 148 of the Act on the ground that it seeks to initiate reassessment on the ground of change of opinion, cannot be accepted. 32. Relying upon a decision of Delhi High Court in United Electrical Co. Ltd. Versus Commissioner of Income Tax, (2002) 258 ITR 317, the learned Counsel for the petitioner has submitted that the Commissioner is required to apply his mind to the proposal put up before him for approval in the light of the material relied upon by the A.O., but in the present case the approval was casually given merely relying upon the reasons to believe as provided by the A.O., without going through the previous records. 33. Section 151 of the Act, which contains the provision for grant of approval to a proposal for issuance of a notice under Section 148 of the Act, is as follows: - 151. Sanction for issue of notice .- (1) In a case where an assessment under sub-section (3) of Section 143 or Section 147 has been made for the relevant assessment year, no not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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