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TMI Blog2022 (10) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... ar is not sustainable in law and is liable to be quashed, when there was not even a whisper in the reasons that there was any omission or failure on the part of the assessee in disclosing fully and truly the material facts for assessment. See Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] In this case, the assessment was reopened beyond four years from the end of the relevant assessment year under consideration; the proviso to section 147 of the Act applies. Once the proviso to section 147 of the Act applies, it is the duty of the Assessing Officer to prove that the assessee has failed to furnish fully and truly all material facts to complete the assessment. In this case the Assessing Officer was not able to establish that there is failure on the part of the assessee to disclose fully and truly all materials. Therefore, in our opinion, the reopening is invalid beyond four years from the end of the relevant assessment year. - Decided in favour of assessee. - I.T.A. No.525/Chny/2020 - - - Dated:- 12-10-2022 - Shri V. Durga Rao, Judicial Member And Shri Manoj Kumar Aggarwal, Accountant Member For the Appellant : Shri R. Viswanathan, CA For the Respondent : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure and considering the submissions of the assessee, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 29.12.2016 by assessing total income of the assessee at Rs.76,95,635/- after disallowing the claim of exemption under section 54F of the Act. On appeal, the ld. CIT(A) confirmed the assessment order passed by the Assessing Officer. 3. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the reopening of assessment is beyond four years, reasons are not based on any evidence or any tangible materials. It was further submission that the Assessing Officer has examined the issue while concluding the assessment under section 143(3) of the Act. It was further submission that there was no failure on the part of the assessee to disclose any material. Subsequently, the assessment was reopened by the Assessing Officer based on the same material and there was no new tangible material and thus, the ld. Counsel has submitted that it was only a change of opinion and the judgement of the Hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. 320 ITR 561 appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 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, 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. 5.1 Respectfully following the above decision of the Hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. (supra), we hold that the action of the Assessing Officer in reopening the assessment under section 147 of the Act is bad in law. 6. Apart from the above, in this case, the assessment was reopened beyond four years from the end of the relevant assessment year under consideration; the proviso to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable laws and known accounting principles, and material details had been exhibited before the Assessing Officer, it is for the Assessing Officer to reach such conclusions as he considered warranted from such data and any failure on his part to do so cannot be regarded as the assessee's failure to furnish the material facts truly and fully. Any lack of comprehension on the part of the Assessing Officer in understanding the details placed before him cannot confer a justification for reopening the assessment, long after the period of four years had expired. By notice dated December 18, 1996, the Assessing Officer reopened the assessment of the petitioner for the assessment year 1989-90, for the following reasons: (a) that excessive deduction had been allowed under section 80HHC; (b) that excessive allowance had been granted under section 32AB; and (c) that adjustment from the Modvat account had wrongly been allowed as deduction as payment of excise duty. On a unit petition: Held, that the reasons recorded by the Assessing Officer did not establish, even prima facie, a failure on the part of the assessee to fully and truly disclose the material facts for the assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustan Lever Ltd. v. R.B. Wadkar, ACIT (2) 268 ITR 332, the Hon ble Bombay High Court has held as under: Held, that it was clear that the Revenue could not establish any lapse or failure on the part of the assessee-petitioner to disclose fully and truly all material necessary for the assessment of the petitioner for the assessment year in question. The notice was not valid and was liable to be quashed. 6.3 Further, in the case of Sadbhav Engineering Ltd. v. DCIT [2011] 333 ITR 483 (Guj), the Hon ble Gujarat High Court has held as under: Held, allowing the petitions, that on a plain reading of the reasons recorded, it was apparent that they were totally silent as regards any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessments for the relevant assessment years. Whether or not there was any failure on the part of the assessee in disclosing fully and truly all material facts necessary for his assessment, was a matter of fact and there could be no deemed failure as was sought to be contended on behalf of the income-tax authorities. Therefore, in the absence of any failure on the part of the assessee to disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1961, for the reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for re-opening the assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words definite information which were there in section 34 of the Act of 1922 at one time before its amendment in 1948 are not there in section 147 of the Act of 1961 would not lead to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial before the Income-tax Officer and the belief which he was to form was missing or in any event too tenuous to provide legally sound basis for reopening the assessment. Two conditions have to be satisfied before an Income-tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of Jour years but within a period of eight years from the end of the relevant year, viz., (i) the Income-tax Officer must have reason to believe that income chargeable to tax has escaped assessment, and (ii) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee (a) to make a return under section 139 for the assessment year to the Income-tax Officer, or (b) to disclose fully and truly material facts necessary for his assessment for that year. Both these conditions must co-exist to confer jurisdiction on the Income-tax Officer. It is also imperative for the Income-tax Officer to record his reasons before initiating proceedings as required by section 148(2). Another requirement is that before notice is issued after the expiry of Jour years from the end of the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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