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TMI Blog2024 (9) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued pursuant to a scrutiny assessment. In such circumstances, it cannot be said that the petitioner herein withheld certain information from the department. When that be the position, the department cannot be expected to have recourse to the extended period of six years for issuing the notice under Section 149. Whether the notice issued can be considered as a case of mere change of opinion on the part of the assessing authority ? - As decided in Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] AO 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. Also decided in Marico Limited [ 2019 (8) TMI 1337 - BOMBAY HIGH COURT] parties have responded to it and the assessment order makes no reference to the above issue at all. However, once a query has been raised by the Assessing Officer during the assessment proceedings and the assessee has responded to that query, it would necessarily follow, as held by our court that the Assessing Officer has accepted the petitioner's/ assessee's submissions, so as to not deal with that issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner had been accumulating funds under the provisions of Section 11(3A) for the purchase of landed property for pursuing its objects as a charitable trust. By Ext.P1, the petitioner applied with the Deputy Commissioner of Income Tax (Exemption) - the 3rd respondent herein, pointing out that though it had filed an application in Form No.10 dated 30.12.1999, regarding the accumulation of Rs.50 lakhs for construction of buildings etc., insofar as the entire landed properties of the trust were already sold on 22.05.2008, there cannot be any construction and so much so that, the amount of Rs.50 lakhs is utilized for the purchase of certain landed property. It was prayed that permission may be granted for the application of the accumulated amounts for the above purpose. 3. The department has initiated scrutiny proceedings with respect to the assessment year 2009-10, through Ext.P2 notice dated 30.11.2011. One of the points, upon which the scrutiny was initiated as recorded in Ext.P2 is as under: A sum of Rs.50 lakhs was accumulated by you from AY 1999-2000 onwards. Please furnish proof that permission has been sought for accumulating this amount for purchase of land and in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income of Rs.50 lakhs for purchase of land. According to s.11(3A) of the IT Act, when the income accumulated could not be spent for the specific purposes for which it was accumulated but utilized with permission of the AO for any other charitable or religious purposes in conformity with the object of the trust, an application should be made to the AO specifying such purposes. However, the assessee utilized the accumulated income of Rs.50 lakhs for purchase of land, which was other than specific purposes earmarked in Form No.10, without permission of the AO which is violation of s.11(3A) of the IT Act. The application for seeking permission u/s 11(3A) for purchase of land had been submitted only on 18/09/09 ie., after expiry of the maximum period of accumulation. However, no permission has been granted so far. On receipt of the above, the petitioner submitted Ext.P8 dated 29.06.2016, pointing out that the reason stated for the initiation of the assessment proceedings under Section 147 has already been pointed out by the assessing authority, explained by the petitioner, and the assessment completed also as evidenced by the assessment order at Ext.P4. The petitioner also relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioner violated the conditions for accumulation of income and therefore, notice under the Act is issued in the matter, that the petitioner did not alert the assessing authority about the permission to change the utilization of the accumulated amounts. It is further pointed out in the statement that the case at hand is not one of review, and therefore, the assessment proceedings initiated are perfectly legal. 9. I have heard Sri. Kuryan Thomas, the learned counsel for the petitioner and Sri. Jose Joseph, the learned Standing Counsel for the respondents herein. 10. Sri. Kuryan Thomas, learned counsel for the petitioner, contends that the proceedings initiated are barred by limitation, insofar as the assessment steps were taken by issuing the notice at Ext.P2, beyond the period of six years without satisfying the twin conditions prescribed under Section 149 of the Act as it stood then. He further submits that the proceedings are nothing but a case of change of opinion by the 3rd respondent on the issue at hand, as is clear from a perusal of the notice for assessment in the scrutiny proceedings, the reply submitted by the petitioner, and the final assessment order at Ext.P4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year: Thus, firstly, the officer should have a reason to believe that income had escaped assessment to tax. Secondly, the officer should also have reason to believe that the escape from assessment is on account of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Unless the above conditions are satisfied, the six year extended period of limitation cannot be availed of by the assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the position, the department cannot be expected to have recourse to the extended period of six years for issuing the notice under Section 149. 16. The second issue for consideration in this writ petition is as to whether the notice issued at Ext.P5 can be considered as a case of mere change of opinion on the part of the assessing authority . In this connection, the Apex Court in Commissioner of Income Tax v. Kelvinator of India [(2010) 2 SCC 723], while considering the scope of reassessment under the provisions of the Income Tax Act has found as under; 5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987 reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that 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. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer during the assessment proceedings and the assessee has responded to that query, it would necessarily follow, as held by our court that the Assessing Officer has accepted the petitioner's/ assessee's submissions, so as to not deal with that issue in the assessment order 18. Again, in G K N Sinter Metals Ltd. v. Ramapriya Raghav [(2015) 371 ITR 225], the Bombay High Court considered an identical situation, where the department took the stand that in the original assessment proceedings, there were no discussions on the point so that the subsequent steps can be stated as a case of change of opinion, finding as under; 10. According to the Revenue, it could only be when the assessment order contains a discussion with regard to a particular claim can it be said that the Assessing Officer had formed an opinion with regard to the claim made by the assessee. In the above view, it is clear that once a query has been raised during the assessment proceedings and the petitioner has responded to the query to the satisfaction of the Assessing Officer as is evident from the fact that the assessment order dated March 9, 2005, accepts the petitioner s claim for deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings. However, the above principles were applied to the facts of the said case as the apex court concluded the issue, in the following lines: 13. However, a bare perusal of notice dated March 9, 2004 which was issued in the original assessment proceedings under section 143 makes it clear that the point on which the reassessment proceedings were initiated, was well considered in the original proceedings. In fact, the very basis of issuing the show-cause notice dated March 9, 2004 was that the assessee was not maintaining any separate books of account for the said two categories and the details filed do not reveal proportional allocation of common expenses be made to these categories. Even the said show-cause notice suggested how proportional allocation should be done. All these things lead to an unavoidable conclusion that the question as to how and to what extent deduction should be allowed under section 10A of the Income-tax Act was well considered in the original assessment proceedings itself. Hence, initiation of the reassessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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