Gujarat High Court
Bimalkumar Karshanbhai Tank vs Income Tax Officer, Ward 1(2)(1) on 23 February, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12620 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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BIMALKUMAR KARSHANBHAI TANK
Versus
INCOME TAX OFFICER, WARD 1(2)(1) & ANR.
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Appearance:
MR MANISH J SHAH(1320) for the Petitioner(s) No. 1
MRS KALPANA K RAVAL(1046) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 23/02/2024
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Rule. Learned Senior Standing Counsel Page 1 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined Mr.Nikunt Raval waives service of notice of rule on behalf of respondents.
2. Heard learned advocate Mr.Manish J.Shah for the petitioner and learned Senior Standing Counsel Mr.Nikunt K.Raval for learned advocate Mrs.Kalpana K.Raval for respondents.
3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice dated 30.05.2019 issued by the respondent no.1-Assessing Officer under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2016-17 alleging that the income for that year has escaped assessment and calling upon the petitioner to file return of income within a period of 30 days from the date of service of the impugned notice.
4. The facts in nutshell are that for the Assessment Year 2013-14, the petitioner filed original return of income on 31.07.2013 declaring total income of Rs.2,21,500/-. The Page 2 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined petitioner had claimed exemption under Section 54F of the Act against capital gain of Rs.3,75,85,296/- out of the sale proceeds received by the petitioner from the sale of shares of Paras Inn Pvt. Ltd by depositing the same in Capital Gains Deposit Scheme. 4.1. The case of the petitioner was selected for scrutiny assessment and notices under Section 142(1) of the Act was issued on 07.03.2016, requiring the petitioner to submit the details with regard to the exemption claimed under Section 54F of the Act. The petitioner justified the claim of exemption in his letter dated 09.03.2016 along with the details. The Assessing Officer after considering such details passed an Assessment Order dated 18.03.2016 under Section 143(3) of the Act by making addition of Rs.45,29,458/- to the return income being disallowance of cost in relation to the sale of shares .
4.2. For the Assessment Year 2015-16, the petitioner filed return of income declaring total income of Rs.6,87,010/- on 31.08.2015. The petitioner had purchased the residential plots during the previous year relating to Page 3 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined the Assessment Year 2015-16 by withdrawing the amount from Capital Gain Deposit Scheme. 4.3. The case of the petitioner was selected for scrutiny for Assessment Year 2015-16 by issuing notice under Section 143(2) on 29.07.2016. During the course of scrutiny assessment, the petitioner explained the transaction related to sale of shares and exemption under Section 54F of the Act claimed by the petitioner by calling upon the petitioner to furnish various details by issuing various notices under Section 142(1) of the Act. The petitioner complied with such notices by furnishing the information called for.
4.4. The Assessing Officer had also issued show-
cause notice dated 13.11.2017 during the course of assessment proceedings for the Assessment Year 2015-16 proposing withdrawal of the claim made by the petitioner under Section 54F of the Act, alleging that the condition to avail the exemption under Section 54F of the Act was not fulfilled by the petitioner as the Assessing Officer was of the opinion that the petitioner had purchased open plots instead of residential Page 4 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined houses as prescribed under Section 54F of the Act.
4.5. However, the petitioner justified his claim under section 54F of the Act by letter dated 30.11.2017 by furnishing a copy of Municipal Tax Bills, Electricity Bills and property card of the seller which showed that the plots with house purchased by the petitioner were duly reflected as residential property in the revenue/ municipal records. The Assessing Officer, accepting such explanation passed the Assessment Order under Section 143(3) of the Act on 26.12.2017 for Assessment Year 2015-16. The Assessing Officer however made addition of Rs.30,56,000/- to the return income by invoking provision of Section 56(2)(vii)(b) of the Act.
4.6. For the Assessment Year 2016-17 for which the impugned notice of re-assessment is issued, the petitioner filed return of income on 11.07.2016 declaring total income of Rs.2,96,220/- which was accepted under section 143(1) of the Act.
4.7. The respondent no.2 after a period of three years from the date of filing of the return Page 5 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined issued notice dated 30.05.2019 under Section 148 of the Act, alleging that the income for the year had escaped assessment and the petitioner was asked to file return of income within 30 days from the date of service of the notice.
4.8. The petitioner by letter dated 26.09.2019 requested the respondent no.1 to accept the return filed under Section 139(1) of the Act as return filed in response to notice under Section 148 of the Act. The respondent no.2 thereafter provided a copy of the reasons recorded by letter dated 07.04.2021. 4.9. On perusal of the reasons recorded, it appears that the Assessment Year 2016-17 was reopened as the Assessing Officer on scrutinising the assessment record for the Assessment Year 2015-16, formed a belief that the claim of exemption under Section 54F of the Act made by the petitioner by investing sale consideration received on sale of shares of Paras Inn Pvt. Ltd. for the purchase of small house along with large area of open land is improper and proportionate claim under Section 54F of the Act is required to be withdrawn by charging the amount under the Page 6 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined head "Capital Gain" in the Assessment Year 2016-17, in view of the provisions contained in Section 54F(4) of the Act.
4.10. The petitioner filed objection by letter dated 14.05.2021, contending inter alia that during the course of the Regular Assessment for Assessment Year 2013-14 and 2015-16, all the details and documents with regard to the claim of deduction under Section 54F of the Act was furnished to the Assessing Officer and the Assessing Officer after considering the details has allowed the exemption under Section 54F of the Act and therefore there is mere change of opinion for reopening of the Assessment Year 2016-17 on the part of the Assessing Officer.
4.11. It was also contended that Section 54F of the Act does not stipulate the area of residential house which is required to be acquired or purchased or constructed to become eligible for claiming deduction and hence the claim made by the petitioner is as per the provisions of Section 54F of the Act and there is no escapement of income for Assessment Year 2016-17.
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NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined 4.12. The respondent no.2 however by order dated 19.07.2021 rejected the objections raised by the petitioner reiterating that reopening of the assessment is proper and due opportunity would be provided to the petitioner during the course of reassessment proceedings. 4.13. Being aggrieved, the petitioner has preferred this petition.
5. Learned advocate Mr. Manish J. Shah for the petitioner submitted that reopening of the assessment is based on mere change of opinion as the Assessing Officer has allowed the claim of deduction under Section 54F in the Assessment Year 2013-14 and Assement Year 2015-16. Learned advocate Mr. Shah invited the attention of this Court to the relevant part of income tax return showing claim of deduction under Section 54F made by the petitioner of Rs.3,75,95,296/- in the Assessment Year 2013-14. He also referred to Page 8 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined the details submitted by the petitioner with regard to such claim to the Assessing Officer during the scrutiny assessment of the year 2013-14. It was also pointed out that by the notices under Section 142(1) dated 22.02.2016 and 07.03.2016 for Assessment Year 2013-14, the assessing officer specifically called for the details for disallowance of part of the deduction claimed under Section 54F of the Act. It was submitted that after scrutiny and analysis of the details submitted by the petitioner, the Assessing Officer disallowed the part of the cost in relation to the transfer of shares in the assessment order, however the claim of the petitioner under section 54F of the Act was accepted. It was pointed out that the petitioner has preferred an appeal against the disallowance made in the assessment order passed under Section 143(3) of the Act before the CIT(Appeals). Page 9 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024
NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined 5.1. Learned advocate Mr. Shah also invited the attention of the Court to the documents pertaining to the scrutiny assessment for Assessment Year 2015-16, as the Assessing Officer, during the course of regular assessment for Assessment Year 2015-16, has called for the details with regard to the purchase of the property made by the petitioner during the previous year and called for the details with regard to the utilization of the amount invested in capital gains deposit scheme against the claim made under Section 54F of the Act in the Assessment Year 2013-14.
5.2. It was also submitted that by show-cause notice dated 13.11.2017, the details were called for with a proposal to reject claim under Section 54F of the Act on the ground that the petitioner did not purchase residential house but purchased two opened Page 10 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined non-agricultural plots and addition under Section 56(2)(vii)(b) of the Act was also proposed being difference between the purchase consideration paid and the stamp valuation of the property purchased. 5.3. It was submitted that however, after consideration of the reply of the petitioner, the Assessing Officer dropped the show-cause notices with regard to deduction under Section 54F of the Act by allowing the claim of deduction made by the petitioner but made addition of Rs.30,56,000/- under Section 56(2)(vii)(b) of the Act. It was therefore submitted that the issue of deduction under Section 54F of the Act is thoroughly scrutinized twice, once, during the course of assessment proceedings for the Assessment Year 2013-14 and thereafter during the course for Assessment Year 2015-16.
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NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined 5.4. It was therefore submitted that the impugned notice issued by the respondent Assessing Officer is without jurisdiction as it is issued merely on the change of opinion on the basis of the material available on record in absence of any new tangible material for formation of belief as to escapement of income.
5.5. It was submitted that thought the reopening is within a period of four years from the end of the assessment year, the same is not permissible in absence of new tangible material, more particularly when Section 54F of the Act, no where prescribes that the area of residential house which is required to be acquired or purchased or constructed to become eligible for claiming deduction under Section 54F of the Act and therefore the reasons recorded by the respondent no.2 for reopening is erroneous and the impugned Page 12 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined notice is liable to be quashed and set aside. 5.6. Learned advocate Mr. Shah in support of his submissions, placed reliance upon the decision of the Hon'ble Supreme Court in case of Calcutta Discount Company Ltd. Vs. Income Tax Officer reported in 41 ITR 191 wherein it is held that the High Courts have power to issue a writ in the fit case, prohibiting an executive authority from acting without jurisdiction, an existence of alternative remedy as appeals and reference to the High Court would not be a sufficient reason for refusing quick relief by writ or order prohibiting an authority acting without jurisdiction from continuing such action. It was therefore submitted that the impugned notice is liable to be quashed and set aside.
6. Per Contra, learned Senior Standing Counsel Mr. Nikunt Raval appearing for the Page 13 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined respondents submitted that the Assessing Officer has rightly exercised the jurisdiction to issue the notice under Section 148 of the Act as no separate valuation is mentioned in the sale deed for small house purchased by the petitioner along with the open plots and the same was not considered by the Assessing Officer while passing the Assessment Order for Assessment Year 2015-16 and in view of the provision of Section 54F(4) of the Act, such purchase of open plots amounting to Rs.3,57,85,296/- as claimed by the assessee with small construction of residential house would not be considered for deduction under Section 54F of the Act. It was submitted that the period of three years in the present case expires on 30.01.2016 for claiming the deduction under Section 54F of the Act and therefore the Assessing Officer has assumed the jurisdiction for forming an opinion that the Page 14 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined amount of capital gains which was not utilized by the assessee as per section 54F(4) of the Act but was deposited in capital gains deposit scheme shall be charged to the capital gains in Assessment Year 2016-
17.
7. It was further submitted that when the Assessing Officer has issued the impugned notice under Section 148 of the Act within four years, the assessee can raise all the contentions during regular course of assessment as the objection raised by the petitioner are properly dealt with in the order disposing the objections. It was therefore submitted that the notice issued under Section 148 of the Act as well as the order disposing the objections are just proper and legal and well within the jurisdiction of Assessing Officer. Page 15 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024
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8. It was submitted that in the assessment order for Assessment Year 2015-16, the Assessing Officer has not given any specific finding regarding deduction claimed under Section 54F of the Act and in view of the reasons recorded, the Assessing Officer was justified to form a reasonable belief that the income has escaped the assessment and therefore no interference may be made in the impugned notice by this Court.
9. Considering the submissions made by the learned advocates for the respective parties and on perusal of the documents placed on record, it is apparent that the impugned notice under Section 148 is issued by the Assessing Officer on mere change of opinion because during the regular assessment proceedings for Assessment Year 2013-14, when the petitioner claimed the exemption under Section 54F of the Act on sale of the shares Page 16 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined of Paras Inn Pvt. Ltd. by depositing the amount in capital gain deposit scheme, the same was scrutinized and no addition was made and such allowance was accepted. During the regular assessment proceedings for the Assessment Year 2015-16, purchase two plots with residential house by the petitioner was also thoroughly scrutinized and no addition was made by the Assessing Officer disallowing the deduction under Section 54F of the Act. Therefore, when the petitioner claimed the exemption under Section 54F of the Act and has utilized amount deposited in capital gain deposit scheme by purchasing the property within the period of two years, no addition was made. The Assessing Officer on the same material by recording the reasons that the petitioner is not entitled to deduction under Section 54F as per Sub-section 4 of Section 54F is nothing but a mere change of opinion. Page 17 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024
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10. Section 54F of the Act reads as under:
"54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.--(1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date [constructed, one residential house in India] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,--
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45;
(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net Page 18 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined consideration, shall not be charged under section 45:
[Provided that nothing contained in this sub-section shall apply where--
(a) the assessee,--
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] Explanation.--
For the purposes of this section,--
"net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and Page 19 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined exclusively in connection with such transfer.
(2) Where the assessee purchases, within the period of [two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of subsection (1), shall be deemed to be income chargeable under the head "Capital gains"
relating to long-term capital assets of the previous year in which such residential house is purchased or constructed.
(3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains"
relating to long-term capital assets Page 20 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined of the previous year in which such new asset is transferred.] [(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for Page 21 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined the purchase or construction of the new asset within the period specified in sub-section (1), then,--
(i) the amount by which--
(a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds
(b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid."
11. On perusal of the above provisions, it is clear that the assessee claimed the exemption under Section 54F of the Act for Page 22 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined Assessment Year 2013-14 as well as purchased the residential plots furnishing the details for the same during the course of regular assessment for Assessment Year 2015-16 is in accordance with the above provisions. The Assessing Officer therefore cannot now again re-appreciate the same facts which was considered during the course of Assessment Year 2015-16 to disallow the exemption under Section 54F of the Act to assume the jurisdiction to reopen Assessment Year 2016- 17 on the ground that three years from the date of deposit in the capital gain deposit scheme would be over on 30.01.2016 which would fall in previous year relevant to the Assessment Year 2016-17.
12. The Hon'ble Apex Court in case of Calcutta Discount Company Ltd.(Supra) has held that the alternative remedy available to the assessee would not affect right of the assessee to obtain relief under Article 226 Page 23 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined of the Constitution of India as the condition precedent to exercise jurisdiction under Section 147 of the Act did not exist and therefore the Assessing Officer has no jurisdiction to issue the impugned notice under Section 148 for the Assessment Year 2016-17.
13. The Hon'ble Apex Court in case of Commissioner of Income Tax Vs. Kelvinator of India Ltd. reported in (2010) 320 ITR 561 (SC) has held as under:
"6. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment 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 1st April, 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-1st April, Page 24 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re- assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening 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 1st April, 1989, Assessing Officer has power to re-open, 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. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re- introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Page 25 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined Assessing Officer. We quote hereinbelow the relevant portion of Circular No.549 dated October 31st, 1989,([1990] 182 ITR (st.)1, 29) which reads as follows:
"7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same."
For the afore-stated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs."
14. In view of above facts emerging from the record as well as the aforesaid settled legal Page 26 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024 NEUTRAL CITATION C/SCA/12620/2021 JUDGMENT DATED: 23/02/2024 undefined position, there would be lack of jurisdiction to reopen the assessment on mere change of opinion. Therefore, the petition requires to be allowed by quashing and setting aside the impugned notice under Section 148 and the order rejecting the objection of the petitioner and all other sub-consequential action taken pursuant to the impugned notice by the respondents.
15. For the foregoing reasons, the petition succeeds. The impugned notice dated 30.05.2019 issued under Section 148 of the Act is hereby quashed and set aside and accordingly all consequential action would not survive. Rule is made absolute to the aforesaid extent. No order as to costs.
Sd/-
(BHARGAV D. KARIA, J) Sd/-
(NIRAL R. MEHTA,J) URIL RANA Page 27 of 27 Downloaded on : Fri Feb 23 21:34:58 IST 2024