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TMI Blog2024 (3) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, which impugned action AO is not permitted to do because he doesn t enjoy the power of review as held in the case of CIT v/s Kelvinator of India Ltd., [ 2010 (1) TMI 11 - SUPREME COURT ] wherein after taking note of the amendment brought to section 147 of the Act w.e.f. 1st April 1989 has held that though, post amendment the power to re-opening is much wider, however, a schematic interpretation to the words reason to belief has to be given, otherwise, the AO would exercise arbitrary power by re-opening the assessment on mere change of opinion. The Hon ble Court clarified that the AO has no power to review but has power to re-assess and such power to re-assess has to be based on fulfilment of certain pre-conditions one of which is, such re-assessment cannot be on the basis of a mere change of opinion. The Hon ble Court held, even after 1st April 1989, the AO has power to re-open provided there is tangible material to come to the conclusion that there is escapement of income from assessment. In the present case, AO only on re-appraisal of the material available at the time of original assessment has re- opened the assessment under section 147 of the Act by forming a belief t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the building pins of such housing project is first approved by the Local authority; (iii) the date of completion of construction of the housing project shall be takes to be the date on which the completion certificate in respect of such is issued by the local authority. Considering the facts of the case it is seen that the project under consideration was commenced on the basis of first commencement certificate, which was granted on 21/05/2004, Therefore following the dictum of statutory provision for availing deduction u/s, 80IB(10) (t ought to have been completed on or before 31/03/2009, within the stipulated time provided in the statute, but it is evident from (he part completion certificate dated 31/03/2009 and revised commencement certificate issued again on 31/03/2009 by the focal authority that the project has not been completed within the stipulated time. Hence there was 9 belief that the assessee has been allowed excess deduction u/s. 80IB(10) of the IT, Act." 3. From the records, it is noted that the assessee had filed its return of income for AY. 2009-10 declaring total income at Rs. Nil by filing return of income on 15.09.2009. Later, the case of the assessee was sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on 17.09.2012. Therefore, there is no doubt that the notice u/s. 148 of the Act was issued after the expiry of four years from the end of the relevant assessment year. Section 151(1) of the Act postulates sanction by prescribed authority for issuance of notice u/s. 148 of the Act by the Assessing Officer. As per the proviso to section 151(1) of the Act as existed during the relevant assessment year, in case of an assessee where assessment u/s. 143(3) has already been completed, no notice u/s. 148 can be issued after expiry of four years from the end of the relevant assessment year, unless, the Principal Chief Commissioner or the Chief Commissioner or Principal Commissioner or Commissioner is satisfied on the reasons record by the Assessing Officer that It Is a fit case for issue of such notice. From perusal of the notice Issued u/s. 148 of the Act dated 17.09.2012, a copy of which is placed at page 37 of the paper-book, it is very much evident that the Assessing Officer has mentioned that such notice is being issued after obtaining necessary satisfaction of the Additional CIT Range 12(1). Further, at the time of hearing, learned AR has submitted before us a copy of the form for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as re-opened as per the reasons recorded was examined at the time of original assessment; secondly, whether the formation of belief that income has escaped assessment has a live link with the materials on record and thirdly, whether the re-opening of assessment under section 147 of the Act is on the basis of some tangible material. Before proceeding further On the issue, it is necessary to look into the reasons for re-opening of assessment as reproduced by the Assessing Officer in Para-2 of the impugned assessment order. "On verification of records, it is seen that the assessee was developing housing project within the limits of Pimpri Chinch ward Municipal Corporation on plot bearing survey No 185 Hissa No 185148, 18515, 185168. During the year the project was under construction. The assessee follows WIP method of accounting and has declared estimated profit every year. The assessee has shown net profit of Rs. 47,73,163/- and the same has been claimed as deduction u/s 8018(10) of the Act. On going through the records it is observed that the first commencement certificate for this project was granted by Pimpri Chinch ward Municipal Corporation on 21.05.2004. The explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished all supporting documentary evidences in support of the claim of deduction. The Assessing Officer while completing the assessment under section 143(3) of the Act on 30th December 2010, allowed assessee's claim of deduction under section 80IB(10) in respect of the housing project after examining the documentary evidences as well as being satisfied with the fact that the assessee has fulfilled the conditions for claiming deduction under section 80IB(10). This fact is evident from the following observations of the Assessing Officer in the original assessment order passed under section 143(3) of the Act. "4, Assessee is developing housing project within the limits of Pimpri Chinchwad Municipal Corporation. During the year under consideration, the project was under construction and some of the flats are booked and advances received from these people. The assessee/s following WIP method of accounting and has declared estimated profit every year on the cost incurred during that year. Assessee has shown net profit of Rs. 47,37,504/- and the same is claimed as exempt u/s 80IB(10) of the I.T. Act, 1961. 5. Assessee has furnished the copy of plan approved by the Pune Municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009. Thus, the aforesaid facts available on record clearly establish that there was no tangible material available before the Assessing Officer at the time of recording reasons for reopening the assessment that income chargeable to tax has either escaped assessment or has been under assessed. It is evident, on re-examination of the very same material considered by the Assessing Officer while allowing assessee's claim of deduction under section 80IB(10) of the Act during the original assessment proceedings, the re-assessment proceedings have been Initiated. The Assessing Officer on examining the documentary evidences brought on record by the assessee at the time of original assessment having formed an opinion that the assessee is eligible to claim deduction under section 80IB(10) of the Act in respect of the housing project, on re-appraisal of the same material on record the Assessing Officer cannot form a different opinion regarding assessee's eligibility to claim deduction under section 80IB(10) of the Act to initiate the re-assessment proceedings under section 147 of the Act, as it tantamount to change of opinion resulting in review of the decision taken by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that re-opening assessment under section 147 of the Act in the instant case is not valid; consequently, the impugned assessment order passed in pursuance thereto is also invalid and has to be quashed. Accordingly, we do so." 6. We note that the "Reasons Recorded" by AO for the earlier AY. 2008-09 has been recorded by the Tribunal at para no. 13 (supra), which we find to be pari-materia with that of the year under consideration i.e. AY. 2009-10. We note that the original assessment for the year under consideration u/s 143(3) of the Act was passed by AO on 23.12.2011; and the AO has issued notice for re-opening u/s 148 of the Act on 30.03.2016 which is after expiry of four (4) years from the end of the relevant assessment year. In such a scenario, the first proviso to section 147 of the Act would also come into play. Therefore, AO had to satisfy two pre-conditions before successfully re-opening the assessment i.e, before issuing notice u/s 148 of the Act the AO has to first record his "Reasons to believe, escapement of income" and in addition has to satisfy one more requirement of law, that the assessee in the original assessment had not disclosed fully and truly all the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it cannot be said that there was no application of mind of AO. While re-opening the assessment, the AO had no tangible material to come to the conclusion that there is escapement of income. In the present case, AO only on re-appraisal of the material available at the time of original assessment has re- opened the assessment under section 147 of the Act by forming a belief that the assessee is not eligible to claim deduction under section 80IB(10) of the Act due to non-completion of the project within the stipulated time. Thus, considering the facts and material on record in the light of well settled legal principle leads to the irresistible conclusion that the AO has re-opened the assessment on mere change of opinion without having in his possession any tangible material. Therefore, it amounts to review of the original assessment order passed in case of the assessee, which is legally impermissible. Therefore, we are of the considered opinion that re-opening assessment under section 147 of the Act in the instant case is not valid; consequently, the impugned assessment order passed in pursuance thereto is also invalid and has to be quashed. Further it is noted that the "Reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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