Income Tax Appellate Tribunal - Raipur
Dcit, Durg vs Shri Suryakant Gupta, Rajnansdgaon on 13 March, 2024
आयकर अपील य अ धकरण यायपीठ रायपुर म।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAIPUR BENCH, RAIPUR
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
AND
SHRI ARUN KHODPIA, ACCOUNTANT MEMBER
आयकर अपील सं. / ITA Nos. 321 & 322/RPR/2023
नधारण वष / Assessment Years : 2010-11 & 2012-13
The Deputy Commissioner of Income Tax-1(1),
Bhilai (C.G.)
.......अपीलाथ / Appellant
बनाम / V/s.
Suryakant Gupta
32/32, Bunglow,
Bhilai (C.G.)-490 006
PAN : ACZPG8034D
...... यथ / Respondent
Assessee by : Shri S.R. Rao, Advocate
Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख / Date of Hearing : 01.02.2024
घोषणा क तार ख / Date of Pronouncement : 13.03.2024
2
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta
ITA Nos. 321 & 322/RPR/2023
आदे श / ORDER
PER RAVISH SOOD, JM:
The captioned appeals filed by the revenue are directed against the respective orders passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 24.09.2023, which in turn arises from the orders passed by the A.O under Sec. 143(3)/147 of the Income-tax Act, 1961 (in short 'the Act') dated 25.12.2017 & 23.12.2017 for the assessment year 2010-11 & 2012-13, respectively. As the issues involved in the captioned appeals are inextricably interlinked or interwoven, therefore, the same are being taken up and disposed of by way of a consolidated order.
2. We shall first take up the appeal filed by the revenue in ITA No.321/RPR/2023 for the assessment year 2010-11, wherein the revenue has assailed the impugned order on the following grounds of appeal:
"1. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A)/NFAC was justified in quashing the assessment order passed u/s.148/143(3) of the Act wherein addition on account of wrong claim of deduction u/s. 80IA of the Income Tax Act, 1961 were made?
2. Whether the facts and circumstances of the case Ld. CIT(A)/NFAC was justified in quashing the assessment order passed u/s.148/143(3) of the Act wherein disallowance on depreciation claimed on bio gas plant were made?
3. Whether on the facts and circumstances of the case the Ld. CIT(A) was justified in quashing the re-assessment order by stating it as a mere change of opinion when the re-assessment proceedings was based on the wrong claim of deduction u/s -- 80IA of the Act and depreciation claimed wrongly on bio-gas plant , whereas Hon'ble High Court of Delhi in the case of Chetan Sabharwal vs. ACIT [2019] 110 taxmann.com 57 (Delhi) has held that where original assessment orders were silent on aspect on which re-opening had 3 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 been ordered, it could not be said that reason to believe constituted a 'change of opinion'?
4. Any other ground which may be adduced at the time of hearing."
3. Succinctly stated, the assessee who is engaged in the business of manufacturing starch, glucose, dextrin, dextrose monohydrate, etc., and generation of power, had e-filed his return of income for A.Y.2010-11 on 01.10.2010 declaring total income of Rs.2,53,80,620/-. The original assessment was, thereafter, completed u/s. 143(3) on 17.04.2012, determining income of the assessee at Rs.2,56,01,930/-.
4. On verification, it was observed by the A.O. that though the assessee had claimed deduction u/s.80IA on Razaram Maize Product (green power) on carbon credit income but had not shown any power generation. The A.O. was of the view that since Section 80IA of the Act is for deduction on account of profits and gains derived from power generation, therefore, deduction on account of carbon credit of Rs.1,04,01,562/- ought to have been disallowed. It was also observed by the A.O that though the assessee had deducted Rs.21,98,105/- on account of depreciation on the biogas plant, but as no plant and machinery was required to earn carbon credit, thus, the same also ought to have been disallowed and added back to the assessee's income. Considering the aforesaid facts, the A.O. after recording reasons and obtaining approval from the Pr. CIT-2, Raipur reopened the assessment u/s.147 of the Act and issued notice u/s.148 of the Act on 31.03.2016. In compliance, the 4 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 assessee filed his return of income on 11.05.2016 declaring his total income as originally returned at Rs.2,53,80,620/-.
5. During the course of reassessment proceedings, it was, inter alia, observed by the A.O. that in the return of income filed in response to notice u/s. 148 of the Act, the assessee had suddenly changed his version and claimed the Carbon credit receipts as a capital receipt in nature whereas, in the original return, he had treated the same as a revenue receipt and claimed deduction u/s. 80IA of the Act at Rs.1,04,01,562/- which was allowed.
6. The A.O. vide his order passed u/ss. 143(3)/147 of the Act dated 25.12.2017 reassessed the income of the assessee at Rs.3,82,01,600/- after, inter alia, making the following additions/disallowances:
Sr. No. Particulars Amount
1. Disallowance of excess deduction allowed Rs.1,04,01,562/-
u/s.80IA of the Act in Green power division
2. Disallowance on account of depreciation Rs.21,98,105/-
claimed in the original return on biogas plant (the depreciation was not claimed in the return filed in response to the notice u/s. 148 of the Act)
7. Aggrieved the assessee carried the matter before the CIT(Appeals) who allowed the appeal of the assessee by observing as under:
" FINDING 5 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 7.1 The submissions of the appellant are considered carefully in the light of facts of the case. In this case pertaining to A.Y. 2010-11, original assessment order u/s 143(3) was passed on 17.04.2012. The notice u/s 148 proposing reassessment is dated 31.03.2016. Therefore, the assessment has been re- opened after the expiry of four years form the end of the assessment year in a case where scrutiny assessment u/s 143(3) had also been carried out. Such a case would be covered by 1st proviso to section 147 which casts a duty on the assessing officer to establish that escapement of income is on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
7.2 The relevant extracts of the reasons recorded by the AO while reopening the assessment are as follows:
.....The assessee filed return of income on 01.10.2010 declaring total income of Rs. 2.53,80,620/-. The assessment order u/s. 143(3) was passed in the case on 17.04.2012 determining total income of Rs.2,56,01,930/- with addition of Rs. 1,00,000/- on account of disallowance out of Vehicle exp., Rs 36,790/-, out of depreciation, Rs. 15,000/-, out of General exp., Rs. 36,840/- out of telephone exp., Rs. 20,000/- out of traveling/ con. and Rs. 12,680/- in Power Dvn.
The assessee is an individual deriving income from manufacturing of starch, glucose, dextrin, dextrose Monohydrate etc. and power generation. The assessee generated power in three different units namely, Razaram Maize Product (power generation), Razaram Maize Product (Wind power), Razaram Maize Product (green power). In due course of verification, it was found that the assessee has claimed deduction u/s 80IA on Razaram Maize Product (green power) on carbon credit income, though has not shown any power generation.
The carbon credit income is an ancillary income and is not directly derived from business or profession of the assessee. Since the section 80IA of IT Act is for deduction on account of profits and gains-derived from power generation, the deduction on account of carbon credit Rs. 1,04,01,562/- should have been disallowed. The assessee had also deducted Rs.21,98,105/- on account of depreciation on bio gas plant. Since no plant and machinery is required to earn carbon credit, the said depreciation should have been disallowed. Considering the facts and circumstances of the case, I have reason to believe that the income of the assessee escaped assessment to the extent of Rs. 125,99,670/- and therefore the case is required to be re-opened u/s 147 of the income Tax Act, 1961 for assessment of the escaped income." 7.3 In this case, the deduction u/s 80IA was claimed by the appellant. In the original assessment proceedings, it is noted that vide his questionnaire (filed by the appellant as Annexure 2 to his submissions) issued along with a notice u/s 142(1) dated 27.02.2012, the AO specifically queried about the deduction in terms of following questions:
6
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 "...9. Justify the deductions claimed u/s BOG and 80IA with due evidence.
.......
32. To explain in brief regarding Carbon Credit Receipts (Green Power Dvn.)."
7.4 In response, the appellant filed a detailed reply to the queries vide his letter dated nil, which has been submitted by the appellant as a part of the paper book in the present appellate proceedings. Apparently, the AO was satisfied with the reply of the appellant, and he went on to complete the assessment vide his order dated 17.04.2012 without taking any adverse view on the claim of deduction u/s 80IA. Similarly, he did not form any adverse view on depreciation claimed on bio gas plant.
7.5 It is in this background, the validity of reopening of assessment is examined. Admittedly, the reopening has been done after the expiry of four years from the relevant assessment year, and as such, first proviso to section 147 is applicable. The first proviso to section 147 of the Act states that:
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 the 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:
7.6 A perusal of the reasons recorded for reopening the assessment, reproduced in para 7.2 above, clearly shows that the AO did not oven mention as to how the appellant failed to disclose all material facts -- fully and truly-
necessary for assessment during the first round of assessment. It is quite clear that the AO reopened the assessment on reappreciation of facts already available with him at the time of passing the original assessment order dated 17.04.2012, and no failure on the part of the appellant could be attributed to fully and truly disclose all material facts necessary for assessment. 7.7 The law is very clear that where there is no failure on the part of the assessee to disclose fully and truly all material facts in a case, in which order has been passed u/s 143(3), and where reopening has been done after the expiry of four years from end of the relevant Assessment Year, the reassessment proceedings are vitiated.
MERE CHANGE OF OPINION 7 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 7.8 It is a settled legal principle that reopening of an assessment is not valid on a mere change of opinion. The relevant extracts of the reasons recorded by the AO while reopening the assessment and as quoted in para 7.2 above clearly show that there was no new information or fresh evidence which had come into the possession of the AO and which was not already there when original assessment was framed. Therefore, reopening of the assessment is nothing but a mere change of opinion.
7.9 In a number of decisions, various courts have ruled that in such situations, the reopening is not valid in law. Reliance is placed on the following decisions :
1) Commissioner of Income-tax, Delhi V. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC);
2) Axis Bank Ltd. v. Assistant Commissioner of Income-tax, [2023] 149 taxmann.com 395 (Gujarat);
3) Assistant Commissioner of Income Tax (Central), Circle 1(2) V. Dharmnath Shares & Services (P) Ltd, reported in (2018) 100 taxmann.com 416(SC)
4) Principal Commissioner of Income Tax Vs. Maruti Suzuki India Ltd. reported in (2019) 107 corn 375(SC).
Also, in a recent decision in the case of Shahlon Silk Industries Pvt Ltd Vs ACIT (Special Civil Application No. 20436 of 2018) (2023), Gujarat High Court has also held that reopening of an assessment on a mere change of opinion is not permissible and is liable to be quashed.
7.10 It is apparent from the facts of this case that there is change of opinion by the Assessing Officer to reopen the assessment for the Assessment Year 2010-2011. During the original assessment proceedings, the AO raised a query about the issue in question which was duly responded to by the appellant. After that, no addition was made by the AO on such issue. Later on, while recording the reasons for reopening the assessment, AO made no reference to any new information being available with him which was not in his possession during the first round of assessment. Under such circumstances, the Assessing Officer cannot have any jurisdiction to issue the notice under section 148 of the Act, 1961 for reopening the assessment for the year under consideration, more particularly when the assessment is sought to be reopened beyond a period of four years as held by the Supreme Court in case of Commissioner of Income tax vs. Kelvinator of India Ltd. reported in 2010(2) SCC 723:
"2. A short question which arises for determination in this batch of civil appeals is, whether the concept of "change of opinion" stands obliterated with effect from 1st April, 1989, i.e., after substitution of Section 147 of the Income Tax Act, 1961 by Direct Tax Laws 8 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 (Amendment) Act, 1987? xxx 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 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 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, 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 reopen. 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 fulfilment 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. re view would take place. One must treat the concept of 'change of opinion" as an in-built lest 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 Assessing Officer. We quote herein below the relevant Portion of Circular No.549 dated 31st October, 1989, 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, 'reasons to believe' had been explained in a number of court rulings in the past and was well settled ang 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 9 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 fears the 'Amending Act, 1989, hag 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,"
7.11 In view of foregoing reasons, Various case laws on the issue and Considering the facts of the Case, impugned reassessment Proceedings initiated vide notice under Section 148 of the Act, 1961 are not tenable in law, and are accordingly quashed, Ground of appeal number 1 related to validity of reassessment notice on account of mere Change of Opinion along with the contention that there was No failure on the Part of the appellant to disclose al/ Material facts fully and truly succeeds.
8. As the reassessment Proceedings have already been quashed, the remaining grounds of appeal become academic in Nature and do not require Separate adjudication.
The appeal is allowed."
8. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
9. Shri Satya Prakash Sharma, Ld. Departmental Representative (for short 'DR') assailed the order of the CIT(Appeals). Elaborating on his contention, it was submitted by the Ld. DR that as the original assessment order was silent on account of the issues, based on which, the case of the assessee was reopened by the A.O u/s. 147 of the Act, therefore, the CIT(Appeals) had grossly erred in quashing the reassessment on the ground that the same was based on a "mere change of opinion"
which was not permissible as per the mandate of law. The Ld. DR in support of his aforesaid contention relied on the judgment of the Hon'ble High Court of Delhi in the case of Chetan Sabharwal Vs. ACIT (2019) 110 taxmann.com 57 (Delhi). It was, thus, submitted by the Ld. DR that as the A.O had rightly assumed jurisdiction and 10 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 framed the consequential reassessment vide order u/ss. 143(3)/147 dated 25.12.2017, therefore, the order of the CIT(Appeals) be set-aside and that of the A.O be restored.
10. Per contra, Shri S.R. Rao, Ld. Authorized Representative (for short 'AR') for the assessee supported the order of the CIT(Appeals). It was submitted by the Ld. AR that as the assessee's claim for deduction u/s. 80IA of the Act was at length looked into and deliberated upon by the A.O while framing the original assessment, therefore, reopening of the concluded assessment of the assessee on the ground that carbon credit being like ancillary income was not allowable for deduction u/s. 80IA of the Act was an exercise taken recourse to based on a mere "change of opinion" of the successor A.O. Also, it was submitted by him that as the A.O while framing the original assessment had looked into the assessee's claim for depreciation and partly disallowed the same to the extent relatable to that claimed by the assessee on motor cars, therefore, reopening of the assessee's case on the ground that depreciation on bio gas plant was liable to be disallowed as the said asset was not required to earn carbon credit was also based on a mere "change of opinion", which, thus, was not permissible as per the mandate of law. The Ld. AR in support of his contention that mere "change of opinion" cannot form the basis for reopening of a concluded assessment had relied on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India (2010) 320 ITR 561 (SC). 11
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023
11. Alternatively, the Ld. AR submitted that as the assessment in the case of the assessee was originally framed by the A.O. vide his order passed u/s. 143(3) dated 17.04.2012, therefore, as per the "1st proviso" to Section 147 of the Act in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, his case could not have been validly reopened after the lapse of a period of four years from the end of the relevant assessment year, i.e. A.Y.2010-11. The Ld. AR in support of his aforesaid contention had relied upon the following judicial pronouncements:
(a) Tirupati Foam Ltd. Vs. DCIT (2016) 380 ITR 493 (Guj-HC)
(b) Gujarat Eco Textile Park Ltd. Vs. ACIT (2015) 372 ITR 584 (Guj.- HC)
(c) Nirmal Bang Securities (P) Ltd. Vs. ACIT (2016) 382 ITR 93 (Bom. HC)
(d) German Remdeis Ltd. Vs. DCIT (2006) 287 ITR 494 (Bom.)
(e) CIT Vs. Former Finance (2003) 264 ITR 566 (SC)
(f) Tata Business Support Services Ltd. Vs. DCIT (2015) 232 Taxman 701 (Bom. HC)
12. It was, thus, averred by the Ld. AR that not only the A.O had grossly erred in law and facts of the case by assuming jurisdiction to reopen the concluded assessment based on a mere "change of opinion" which was not permissible as per the settle position of law, but had also, grossly erred in disturbing the original assessment after the lapse of a period of 4 years from the end of the relevant 12 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 assessment year despite there being no failure on the part of the assessee to disclose fully and truly all material facts which were necessary for his assessment.
13. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
14. As the revenue is, inter alia, aggrieved with the order of the CIT(Appeals) on the ground that he had held that the A.O., in the absence of any fresh information/material coming in his possession after the framing of the original assessment, which would justify the formation of a bonafide belief that his income chargeable to tax had escaped assessment, had, thus, wrongly assumed jurisdiction and reopened the concluded assessment of the assessee, therefore, we shall first deal with the same.
15. On a perusal of the assessment record, it transpires that as per the "reasons to believe," the view taken by the A.O while framing the original assessment vide his order u/s.143(3) dated 17.04.2012 had been revisited based on a mere "change of opinion" of the successor A.O as against that of his predecessor. For the sake of clarity, the "reasons to believe" that had formed the very basis for reopening the concluded assessment in the case of the assessee are culled out as under:
"The assessee filed return of income on 01.10.2010 declaring total income of Rs. 2,53,80,620/-. The assessment order u/s.143(3) was passed in re 13 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 case on 17.04.2012 determining total income of Rs.2,56,01,930/- with addition of Rs.1,00,000/- on account of disallowance out of Vehicle exp., Rs.36,790/- out of depreciation, Rs.15,000/- out of General exp., Rs.36,840/- out of telephone exp., Rs.20,000/- out of traveling/ con. and Rs.12,680/- in Power Dvn.
The assessee is an individual deriving income from manufacturing starch, glucose, dextrin, dextrose Monohydrate etc. and power generation. The assessee generated power in three different units namely Razaram Maize 7ffrAuct (power generation), Razaram Maize Product (Wind power), Razaram Maze Product (green power). In due course of verification, it was found that the assessee has claimed deduction u/s.80IA on Razaram Maize Product (green power) on carbon credit income, though has not shown any power generation.
The carbon credit income is an ancillary income and is not directly derived from business or profession of the assessee. Since the section 80 IA of IT act is for deduction on account of profits and gains derived from power generation, the deduction on account of carbon credit Rs.1,04,01,562/- should have been disallowed and added back to the total income of the assessee. The assessee has also deducted Rs.21,98,105/- on account of depreciation on bio gas plant. Since no plant and machinery is required to earn carbon credit, the said depreciation should have been disallowed and added back to total income of the assessee.
Considering the facts and circumstances of the case, I have reason to believe that the income of the assessee escaped assessment to the extent of Rs.1,25,99,670/- and therefore, the case is required to be re-opened u/s.147 of the Income Tax Act, 1961 for assessment of the escaped income.
Sd/-
(S.K. Barwa) Deputy Commissioner of Income Tax-2(1), Bhilai"
Ostensibly, the case of the assessee was reopened by the A.O. merely to re-visit the view that was taken by his predecessor while framing the original assessment vide his order passed u/s. 143(3) of the Act dated 17.04.2012 for two-fold reasons, viz.
(i) that as the carbon credit income disclosed by the assessee was an ancillary income which was not directly derived from the business or profession of the assessee, the same, thus, was not eligible for deduction u/s. 80IA of the Act; and
(ii) that as no plant and machinery were required to earn carbon credit, therefore, 14 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 the assessee's claim for deduction of depreciation on biogas plant of Rs.21,98,105/-
ought to have been disallowed.
16. On a perusal of the record, it can safely be gathered that the reopening of the concluded assessment of the assessee was based on the same set of facts as were available with the A.O. while framing the original assessment. To sum up, no fresh material/document had come in the possession of the A.O. after the culmination of the original assessment proceedings, which would have vested jurisdiction with him to reopen the concluded assessment of the assessee. Our aforesaid conviction is duly fortified on a bare perusal of the "reasons to believe", which reveals that the reopening of the concluded assessment of the assessee was based on a mere re- appreciation of the facts available on record by the successor A.O. The Ld. Departmental Representative ("DR", for short) on being confronted with the aforesaid factual position could not rebut the same.
17. Because the case of the assessee had been reopened with the purpose to re-appreciate the facts that were already available on record and not based on any fresh material/document coming into the possession of the A.O after the culmination of the original assessment by his predecessor vide order u/s.143(3) dated 17.04.2012, which would reveal that any income of the assessee chargeable to tax had escaped assessment, we find substance in the claim of the Ld. AR that the A.O. had traversed beyond the scope of his jurisdiction and had wrongly reopened the concluded assessment of the assessee under Sec. 147 of the Act. We are unable to 15 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 comprehend what new "material" or "information" had come up before the A.O., which justified the reopening of the concluded assessment of the assessee. We are afraid that re-appreciation of the facts already available on record before the A.O. while framing the original assessment is not permissible u/s 147 of the Act. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (2008) 308 ITR 195 (Bom). The Hon'ble High Court, by drawing support from the landmark judgment of the "Full bench" of the Hon'ble High Court of Delhi in the case of CIT Vs. Kelvinator of India (2002) 256 ITR 1 (Del) [which thereafter had been approved by the Hon'ble Apex Court in CIT Vs. Kelvinator of India (2010) 320 ITR 561 (SC)] had observed that the department cannot take recourse to the provisions of Sec. 147 of the Act for the failure of the A.O to apply his mind in the original assessment proceedings to the material which according to him, is relevant and which was available on record. Relying on the observations of the "Full bench" of the High Court of Delhi in CIT Vs. Kelvinator of India Ltd. (supra), the Hon'ble High Court of Bombay in Asian Paints Ltd. Vs. DCIT (supra), had observed that where according to the A.O he had failed to apply his mind to the relevant material in making the assessment order, he cannot take advantage of his own wrong and reopen the assessment by taking recourse to the provisions of Sec. 147. The Hon'ble High Court had further observed that fresh application of mind by the A.O to the same set of facts for the reason that some material that was available on record while framing the original assessment was inadvertently excluded from consideration would not justify reopening of the 16 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 assessment u/s 147 of the Act. For the sake of clarity, the observations of the Hon'ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (supra) are culled out as follows:
"7. We have heard the learned counsel appearing for both sides. We have also gone through the judgments on which reliance was placed by the learned counsel appearing for both sides.
8. In the order rejecting the objection filed by the petitioner to the notice under section 148, respondent No. 1 has observed "verification of assessment record reveals that the said details were called for but inadvertently the same were not taken into account while framing the assessment and, therefore, it cannot be said that there is a change of opinion." According to respondent No. 1, thus, the relevant material was available on record, but he failed to apply his mind to that material in making the assessment order. The question is, can respondent No. 1 take recourse to the provision of section 147 for his own failure to apply his mind to the material which, according to him, is relevant and which was available on record. We find that this situation has been considered by the Full Bench of the Delhi High Court in its judgment in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 and the Full Bench has observed thus (page 19) :
"The said submission is fallacious. An order of assessment can be passed either in terms of sub-section (1) of section 143 or sub-section (3) of section
143. When a regular order of assessment is passed in terms of the said sub- section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi- judicial function to take benefit of its own wrong."
9. It is clear from the observations made above that the Full Bench of the Delhi High Court has taken a view that in a situation where according to the Assessing Officer he failed to apply his mind to the relevant material in making the assessment order, he cannot take advantage of his own wrong and reopen the assessment by taking recourse to the provisions of section 147. We find, ourself, in respectful agreement with the view taken by the Full Bench of the Delhi High Court.
10. It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, the power under section 147 17 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 cannot be used to review the order. In the present case, though the Assessing Officer has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITR1 referred to above, has taken a clear view that reopening of assessment under section 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under section 148.
11. In the result, therefore, petition succeeds and is allowed. Rule is made absolute in terms of prayer clause (a) with no order as to costs."
(emphasis supplied by us) At this stage, it would be relevant to point out that the view taken by the "Full bench"
of the Hon'ble High Court of Delhi in CIT Vs. Kelvinator of India (2002) 256 ITR 1 (Del), that the failure of the A.O to consider certain material that was available on record while framing the original assessment cannot justify the reopening of his concluded assessment, as the same would amount to opening of the assessment based on a "change of opinion", which is not allowed as per the mandate of law, had thereafter been approved by the Hon'ble Apex Court in CIT Vs. Kelvinator of India (2010) 320 ITR 561 (SC). The observations of the "Full bench" of the Hon'ble High Court of Delhi in CIT Vs. Kelvinator of India (2002) 256 ITR 1 (Del), which thereafter had been approved by the Hon'ble Apex Court in 320 ITR 561, are culled out as under (relevant extract):
"10. It is further to be seen that the legislature has not conferred power on the AO to review its own order. Therefore, the power 18 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 under s. 147 cannot be used to review the order. In the present case, though the AO has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the AO, nothing new has happened, therefore, no new material has come on record, no new information has been received; it is merely a fresh application of mind by the same AO to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator (supra) referred to above, has taken a clear view that reopening of assessment under s. 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under s.
148".
18. At this stage, we may herein observe, that as per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is a must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments of the Hon'ble High Court of Bombay in the case of NYK Lime (India) Ltd. Vs. DCIT (No.2) [2012] 346 ITR 361 (Bom) and Purity Tech Textile Pvt. Ltd. Vs. ACIT & Anr. [2010] 325 ITR 459 (Bom).
19. Be that as it may, it would be relevant to point out that a careful perusal of the original assessment framed by the A.O vide his order passed u/s.143(3) dated 17.04.2012 reveals that he had at length deliberated upon the assessee's claim for deduction u/s. 80IA of the Act and only after found it in order had accepted the same. 19
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 Also, the A.O. had looked into the assessee's claim for depreciation on various assets and as is discernible from the assessment order, had partly disallowed his claim for depreciation on motor cars. Considering the aforesaid facts, we are of a firm conviction that it is not only a case that no fresh material had come to the notice of the A.O after the culmination of the original assessment which would reveal any income of the assessee chargeable to tax had escaped assessment, but in fact, is a case where the assessee's claim for deduction u/s. 80IA of the Act as well as depreciation was looked into by the A.O. while framing the original assessment and were allowed after necessary deliberations. We, thus, concur with the contention of the Ld. AR that as the concluded assessment of the assessee had been reopened based on a mere "change of opinion", therefore, the same had rightly been struck down on the said count itself by the first appellate authority.
20. Alternatively, we concur with the claim of the Ld. AR that the reopening of the concluded assessment of the assessee is also hit by the "1st proviso" to Sec. 147 of the Act. Admittedly, the original assessment was framed in the case of the assessee for the year under consideration, i.e., A.Y 2010-11 vide order passed under Sec. 143(3) of the Act, dated 17.04.2012. The concluded assessment of the assessee was thereafter reopened vide notice issued under Sec. 148 of the Act, dated 31.03.2016. It is the claim of the ld. A.R. that the A.O. had exceeded his jurisdiction and framed the reassessment order under Sec. 143(3) r.w.s 147, dated 25.12.2017, inter alia, for the reason that the same had been passed in violation of the mandate of the "1st proviso" of Sec. 147 of the Act. Admittedly, as stated by the Ld. A.R and, 20 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 rightly so, in a case where an assessment had earlier been made under Section 143(3) of the Act, and action thereafter is sought to be taken for the reopening of the case u/s.147 after the expiry of four years from the end of the relevant assessment year, then, it would be necessary that the twin conditions contemplated in the statutory provision are satisfied, i.e. (i). the AO must have reason to believe that income chargeable to tax has escaped assessment; AND (ii). he must also have a reason to believe that such escapement had occurred by reason of failure on the part of the assessee for either of the two conditions, viz. (a). to make a return of income under Section 139 or in response to notice issued under sub-section (1) of Section 142 or Section 148; or (b). to disclose fully and truly all material facts necessary for his assessment for that purpose.
21. Coming back to the two conditions carved out in the "1st proviso" to Sec. 147 of the Act, as it is neither the case of the department nor a fact discernible from the record that the income of the assessee chargeable to tax had escaped assessment for the reason that there was any failure on his part to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148, therefore, the first condition contemplated in the "1st proviso" to Sec. 147 is not satisfied by the assessee.
22. We shall now advert to the second condition contemplated in the "1st proviso"
to Sec. 147 of the Act, i.e., as to whether or not there has been any failure on the part of the assessee to disclose fully and truly all material facts as were necessary 21 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 for his assessment for the year under consideration, i.e., A.Y. 2010-11. On a perusal of the record, it transpires that the assessee had disclosed fully and truly all the material facts necessary for framing of his assessment. Rather, as observed by us hereinabove, the concluded assessment of the assessee had been reopened not for the reason that there was any failure on his part to fully and truly disclose all the material facts necessary for his assessment but was so reopened to revisit the view taken by the A.O while framing the original assessment vide his order passed u/s.
143(3), dated 17.04.2012. We may herein observe that the Hon'ble Supreme Court in the case of New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax (2020) 116 Taxmann.com 151 (SC), had, inter alia, held that though the assessee is obligated to disclose the "primary facts" but it is neither required to disclose the "secondary facts" nor required to give any assistance to the A.O by disclosure of the other facts and it is for the A.O to decide what inferences are to be drawn from the facts before him. It was observed by the Hon'ble Apex Court that the extended period of limitation for initiating proceedings under the "1st proviso" of Section 147 of the Act would only get triggered where the assessee had failed to disclose fully and truly all material facts necessary for his assessment. Now, in the case before us, we are unable to comprehend what facts the assessee had failed to disclose which would have otherwise justified bringing his case within the realm of the extended period contemplated in the "1st proviso" of section 147 of the Act. As the assessee had disclosed fully and truly all the material facts as were 22 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 necessary for his assessment for the year under consideration, i.e., AY 2010-11;
therefore, it could by no means be held to be in default to bring it within the sweep of "1st proviso" of Section 147 of the Act.
23. Analyzing the scope of the "1st proviso" to Sec. 147 of the Act, which contemplates that where assessment in the assessee's case had been framed u/s 143(3) of the Act, then no action under Sec. 147 shall be taken in his case after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax had escaped assessment for such assessment year for failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the Hon'ble Supreme Court had dismissed the Special Leave Petition (SLP) filed by the revenue in ACIT Vs. Marico Limited, 117 taxmann.com 244 (SC) and impliedly approved the decision of the Hon'ble High Court of Bombay in the case of Marico Limited Vs. ACIT, WP NO.1917 of 2019 dated 21.08.2009. The Hon'ble High Court of Bombay in Marico Limited Vs. CIT (supra) [as approved by the Hon'ble Apex Court] had observed as follows:
5. Upon hearing learned counsel for the parties and upon perusal of the documents and record, what we gather is that the notice of reopening of assessment has been issued beyond the period of four years from the assessment year. The reasons recorded by the Assessing Officer are elaborate and refer to various issues on which he wishes to carry out the reassessment. However, the central theme which passes though all these issues is that the Assessing Officer had gathered the information and material from the record of the assessment. For example in Paragraph No. 3 of the reasons which contains several sub-paragraphs which are different elements of the grounds for reassessment begins with the expression "On perusal of the record for the assessment year 2011-12, the following issues were found". Thus, with reference to various issues arise on the basis of the perusal of the record of the assessment year in question. Clearly, therefore, there is no material alien to the record which the 23 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 Assessing Officer has referred to for issuing the impugned notice. Further, almost for every ground which is part of various sub-paragraphs of Paragraph No. 3, he has referred to either scrutiny or verification of the case records. In clear terms, therefore, the Assessing Officer was acting on the information available from the record of the assessment.
6. As is well known, in an instance where the Assessing Officer exercises power of reassessment beyond the period of four years from the end of relevant assessment year, an essential requirement is that the escapement of income chargeable to tax is due to the failure on the part of the assessee to disclose truly and fully all material facts. This is part of section 147 of the Act itself and is on number of occasions by various judgments of High Court and Supreme Court held to be mandatory pre-
requirement. In view of such settled law, it is not necessary to refer to any judgment. Revenue is unable to bring to our notice any aspect or element which did not form part of the record and on the basis of which from the reasons recorded, it can be culled out that the Assessing Officer had formed a belief that income chargeable to tax had escaped assessment. In clear terms therefore, there was no failure on the part of the assessee to disclose truly and fully all material facts.
7. Counsel for the revenue however submitted that one of the issues raised by the Assessing Officer is that the activity carried on by the assessee does not amount to manufacturing activity. In the present petition, it is not necessary for us to comment on this aspect of the matter. What is important however is such belief also the Assessing Officer has formed on the basis of material already on record. Looked from any angle, the Assessing Officer cannot justify issuing the notice of reopening of assessment beyond the period of four years from the end of relevant assessment year.
8. Under the circumstances, impugned notice is quashed. Petition allowed and disposed of accordingly.
Considering the aforesaid settled position of law, we are of the considered view, that as in the case before the Hon'ble Apex Court in Marico Limited (supra), the concluded assessment in the case of the present assessee before us for the year under consideration, i.e., A.Y 2010-11 had been reopened vide notice u/s 148, dated 31.03.2016, i.e., beyond 4 years from the end of the relevant assessment year, for reappreciating the material that were available on the assessment record while framing the original assessment u/s. 143(3), dated 17.04.2012, i.e. for revisiting the view that was taken by the predecessor A.O while framing the original assessment 24 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 and not for any failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment, therefore, as stated by the Ld. AR, and, rightly so, the reopening of the concluded assessment of the assessee would even otherwise be hit by the "1st proviso" to Sec. 147 of the Act.
24. We have thoughtfully considered the aforesaid issue and concur with the contention of the Ld. AR that the assessment of the assessee for AY 2010-11 that was earlier framed under Sec. 143(3), dated 17.04.2012, dehors any failure on his part to fully and truly disclose all material facts necessary for his assessment could not have been reopened by the AO vide Notice u/s 148, dated 31.03.2016, i.e, after the expiry of four years from the end of the relevant assessment year.
25. We, thus, based on our aforesaid deliberations, finding no infirmity in the view taken by the CIT(Appeals) who had rightly quashed the assessment for want of valid assumption of jurisdiction by the A.O, uphold the same in terms of our aforesaid observations.
26. In the result, the appeal of the revenue in ITA No.321/RPR/2023 for A.Y.2010-11 is dismissed in terms of our aforesaid observations. ITA No.322/RPR/2023
A.Y.2012-13
27. We shall now take up the appeal filed by the revenue in ITA No.322/RPR/2023, wherein the impugned order has been assailed by the revenue on the following grounds of appeal before us:
25
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 "1. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A)/NFAC was justified in quashing the assessment order passed u/s.148/143(3) of the Act wherein addition on account of wrong claim of deduction u/s. 80IA of the Income Tax Act, 1961 were made?
2. Whether on the facts and circumstances of the case the Ld. CIT(A) was justified in quashing the re-assessment order by stating it as a mere change of opinion when the re-assessment proceedings was based on the wrong claim of deduction u/s -- 80IA of the Act and depreciation claimed wrongly on bio-gas plant , whereas Hon'ble High Court of Delhi in the case of Chetan Sabharwal vs. ACIT [2019] 110 taxmann.com 57 (Delhi) has held that where original assessment orders were silent on aspect on which re-opening had been ordered, it could not be said that reason to believe constituted a 'change of opinion'?
3. Any other ground which may be adduced at the time of hearing."
28. Succinctly stated, the assessee had e-filed his return of income for A.Y.2012- 13 on 28.09.2012, declaring an income of Rs.1,63,40,630/-. The original assessment was framed by the A.O. vide order u/s. 143(3) dated 03.03.2015, wherein total income of the assessee was determined at Rs.1,75,65,560/-. Thereafter, the case of the assessee was reopened by the A.O u/s. 147 of the Act. The "reasons to believe"
based on which the concluded assessment of the assessee was reopened reads as under:
"Reasons recorded under Section 148(2) of the Income Tax Act, 1961.
In this case, assessee filed the return of income on 28.9.2012 showing income at Rs.1,63,40,630/-. The assessment was completed u/s 143(3) of the Act on 3.3.2015 determining total income at Rs.1,75,65,560/-. On further verification, has come to the notice that the assessee had claimed deduction u/s. 80IA at Rs.1,74,51,342/- in respect of three power units which was allowed as claimed. This is inclusive of deduction in r/o. Green Power Division at Rs.1,07,62,181/-. The said deduction claimed by the assessee was not properly verified. During the course of further verification it is noticed that the assessee has declared initial assessment year in r/o. Green Power Division as 2010-11. Records reveal the fact that in assessment year 2011-12, the assessee had sustained loss in the said power division at Rs.1,33,34,231/-. As per the provisions of sub-section 5 of section 80IA, 26 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 the earlier year losses are to be first adjusted and then only for balance amount, the assessee is entitled for deduction. However, while completing the assessment, entire claim of deduction as claimed by the assessee was allowed which has resulted under assessment to the extent of Rs.1,07,62,181/-.
In view of the above discussion, I have reason to believe that income amounting to Rs.1,07,62,181/- is chargeable to tax has escaped assessment for the AY 2012-13 which is proposed to be re-assessed within the meaning of the provisions of Section 147 of the Act. For these reasons, the Jt.CIT, Range-2, Bhilai is requested to kindly accord necessary approval for issue of notice u/s.148 of the Act.
Sd/-
Dated : 3.3.2017 (R.K. Sharma)
Assistant Commissioner of Income Tax-2(1),
Bhilai"
On a careful perusal of the aforesaid "reasons to believe", it transpires that the concluded assessment in the case of the assessee was reopened by the A.O for two-
fold reasons, viz. (i) that the A.O while framing the original assessment, had failed to properly verify the assessee's claim for deduction u/s. 80IA of the Act; and (ii) that as the assessee had during the assessment year 2011-12 suffered a loss in his power generation of Rs.1,33,34,231/-, therefore, as per sub-section (5) of Section 80IA of the Act, the earlier year losses were to be first adjusted and then only the balance amount was to be allowed as deduction under the said statutory provision.
Accordingly, the A.O. based on his aforesaid observation was of the view that his predecessor while framing the original assessment had wrongly allowed the assessee's claim for deduction u/s. 80IA of the Act to the extent of Rs.1,07,62,181/-
.27
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023
29. Thereafter, the A.O. vide his order passed u/ss. 143(3)/147 of the Act, dated23.12.2017 disallowed the assessee's claim for deduction u/s. 80IA of the Act by an amount of Rs.1,07,62,181/- (supra) and recasted his income at Rs.2,71,02,810/-.
30. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals).
Observing, that the A.O had assumed jurisdiction for reopening of the concluded assessment of the assessee based on a mere "change of opinion", the CIT(Appeals) quashed the assessment for want of valid assumption of jurisdiction on the part of the A.O. For the sake of clarity, the relevant observations of the CIT(Appeals) are culled out as under:
" MERE CHANGE OF OPINION 7.8 However, it is a settled legal principle that reopening of an assessment is not valid on a mere change of opinion. The relevant extracts of the reasons recorded by the AO while reopening the assessment and as quoted in para 7.2 above clearly show that there was no new information or fresh evidence which had come into the possession of the AO and which was not already there when original assessment was framed. Therefore, reopening of the assessment is nothing but a mere change of opinion. In a number of decisions, various courts have ruled that in such situations, the reopening is not valid in law. Reliance is placed on the following decisions:
1) Commissioner of Income-tax, Delhi v. Kelvinator of India Ltd [2010] 320 ITR 561 (SC);
2) Axis Bank Ltd. v. Assistant Commissioner of Income-talc, [2023] 149 taxmann.com 395 (Gujarat);
3) Assistant Commissioner of Income-Tax (Central) Circular1(2) v.
Dharmnath Shares & Services (P) Ltd reported in (2018) 100 corn 416(SC); 28
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023
4) Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. reported in (2019) 107 corn 375(SC).
Also, in a recent decision in the case of Shahlon Silk Industries Pvt Ltd Vs ACIT (Special Civil Application No. 20436 of 2018) (2023), Gujarat High Court) has also held that reopening of an assessment on a mere change of opinion is not permissible and is liable to be quashed.
7.9 In a recent decision in the case of Anjis Developers (P.) Ltd. v. Commissioner of Income-tax [2023] 150 taxmann.com 112 (Bombay), hon'ble Bombay High Court held that no reopening of assessment can be done on a mere change of opinion even in the cases where notice u/s 148 was issued before the expiry of four years from the end of the assessment year. It was held that:
"...Petitioner is impugning notice dated 30-3-2013 issued under section 148 of the Income-tax, 1961 (hereinafter to be referred to as the 'said Act') on the ground that the petitioner's income in respect of which it was assessable to tax for the Assessment Year 2008-2009, has escaped assessment within the meaning of section 147 of the said Act. Petitioner has been provided reasons for re-opening with letter dated 26-4-2013. We have perused the reasons recorded and we are satisfied that it is a clear case of change of opinion. It is settled law that reopening cannot be based on change of opinion. ..."
7.10 Similar decision has been rendered by the hon'ble Delhi High Court (Full Bench) in the case of CIT, Delhi-VI v Usha International Ltd. (348 ITR
485) in which it was held that:
Expression 'Change of opinion' The expression 'change of opinion' postulates formation of opinion and then a change thereof. In the context of section 147 it implies that the Assessing Officer should have formed an opinion at the first instance, i.e., in the proceedings under section 143(3) and now by initiation of the reassessment proceeding, the Assessing Officer proposes or wants to take a different view.
[Para 6] The word 'opinion' is derived from the latin word 'opinari' which means 'to believe, 'to think'. The word 'opinion' as per the Blacks Law Dictionary means a statement by a Judge or a Court of a decision reached by him incorporating cause tried or argued before them, expounding the law as applied to the case and, detailing the reasons upon which the judgment is based. Advanced Law Lexicon by P. Ramanatha Aiyar (3rd Edition) explains the term 'opinion' to mean 'something more than mere retaining of gossip or hearsay; it means judgment or belief, that is, a belief or a conviction 29 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 resulting from what one thinks on a particular question An opinion is a conviction based on testimony they are as a result of reading, experience and reflection'. [Para 7] In the context of assessment proceedings, it means formation of belief by an Assessing Officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection to use the words in Law Lexicon by P. Ramanatha Aiyar. Question of change of opinion arise when an Assessing Officer forms an opinion and decides not to make an addition or holds that the assessee is correct and accepts his position or stand. [Para 8] It is clear that :
• Reassessment proceedings can be validly initiated in case return of income is processed under section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion?
• Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of 'change of opinion'.
• Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. [Para 13] • In the second and third situation, the revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the revenue, they are entitled to and can invoke power under section 263. [Para 14] • Thus, where an Assessing Officer incorrectly or erroneously applies law or comes to a wrong conclusion and income chargeable to tax has escaped assessment, resort to section 263 is available and should be resorted to. But initiation of reassessment proceedings will be invalid on the ground of change of opinion [ Para 15] 7.11 It is apparent from the facts of this case that there is change of opinion by the Assessing Officer to reopen the assessment for the Assessment Year 2012-2013. During the original assessment proceedings, the AO raised a query about the issue in question which was duly responded to by the appellant. After that, no addition was made by the AO on such issue. Later on, while recording the reasons at the time of reopening the assessment, 30 DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 the AO made no reference to any new information being available with him which was not in his possession during the first round of assessment. Under such circumstances, the Assessing Officer cannot have any jurisdiction to issue the notice under section 148 of the Act, 1961 for reopening the assessment for the year under consideration as it squarely falls within the purview of `change of opinion'.
7.12 In view of foregoing reasons, various case laws on the issue and considering the facts of the case, impugned reassessment proceedings initiated vide notice under section 148 of the Act, 1961 are not tenable in law, and are accordingly quashed as the notice u/s 148 of the Act has been issued only on a change of opinion. Ground of appeal number 1 related to validity of reassessment notice on account of mere change of opinion succeeds.
8. As the reassessment proceedings have already been quashed, the remaining Grounds of Appeal become academic in nature and do not require separate adjudication.
The appeal is allowed."
31. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
32. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
33. As is discernible from the record, the concluded assessment in the case of the assessee was reopened by the A.O for two fold reasons, viz. (i) that the A.O while framing the original assessment, had failed to properly verify the assessee's claim for deduction u/s. 80IA of the Act; and (ii) that as the assessee had during the assessment year 2011-12 suffered a loss in his power generation at Rs.1,33,34,231/- 31
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023 , therefore, as per sub-section (5) of Section 80IA of the Act, the earlier year losses were to be first adjusted and then only the balance amount was to be allowed as deduction under the said statutory provision. In our view, the reopening of the concluded assessment which was earlier framed by the A.O. vide his order passed u/s. 143(3), dated 03.03.2015 is merely based on a "change of opinion" of the successor A.O. concerning the entitlement of the assessee for claiming deduction u/s. 80IA of the Act. At this stage, we may herein observe that no fresh material had come to the notice of the A.O after the culmination of the original assessment which would reveal that the income of the assessee chargeable to tax had escaped assessment that would have otherwise justified the reopening of the concluded assessment. As the reopening of the concluded assessment based on a mere "change of opinion" as had been deliberated upon by us while disposing off the appeal of the revenue in ITA No.321/RPR/2023 for A.Y.2010-11 is not permissible as per the mandate of law, therefore, our observations, therein recorded to the said extent shall mutatis mutandis apply to dispose off the captioned appeal filed by the revenue in ITA No.322/RPR/2023 for A.Y.2012-13.
34. We, thus, in terms of our aforesaid observations, find no infirmity in the view taken by the CIT(Appeals) who had rightly quashed the reassessment order passed by the A.O vide his order passed u/s. 143(3) of the Act dated 23.12.2017 for want of valid assumption of jurisdiction, and thus, uphold the same. 32
DCIT/DCIT-1, Bhilai Vs. Suryakant Gupta ITA Nos. 321 & 322/RPR/2023
35. In the result, the appeal filed by the revenue in ITA No.322/RPR/2023 for A.Y.2012-13 is dismissed in terms of our aforesaid observations.
36. In the combined result, both the appeals of the revenue are dismissed in terms of our aforesaid observations.
Order pronounced in open court on 13th day of March, 2024.
Sd/- Sd/-
ARUN KHODPIA RAVISH SOOD
(ACCOUNTANT MEMBER) (JUDICIAL MEMBER)
रायपुर/ RAIPUR ; दनांक / Dated : 13th March, 2024.
***SB
आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-1, Raipur (C.G.)
4. The Pr. CIT, Raipur-1 (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण, रायपुर बच,
रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानुसार / BY ORDER,
// True Copy //
नजी स चव / Private Secretary
आयकर अपील य अ धकरण, रायपुर / ITAT, Raipur.