Source: http://itatonline.org/articles_new/a-comprehensive-guide-to-the-law-of-reopening-of-assessments-under-sections-147-to-153-of-the-income-tax-act-1961/?replytocom=4014
Timestamp: 2019-04-19 21:09:09+00:00

Document:
4 Reasons – Recorded to be Supplied – Communication of Reasons – Mandatory.
6 Disposal of Objection – To be linked with recorded reasons.
10 Reasons – Reassessment merely on the basis of report from Investigation Wing.
‣Information Received from Investigation Wing: Bogus Purchase: Accommodation Entries: Penny Stock.
‣ Decisions in favour of Revenue – upholding reopening .
‣ Reopening – Client Code Modification.
16 No Reassessment just to make an enquiry or verification.
‣ notice u/s. 148 to be served .
21 No reassessment u/s. 148, if assessment or reassessment is pending.
‣ Condition – Sanction – Failure on part of Assessee to Disclosure Material facts.
‣ Reassessment has to be based on “ fresh material ” – New tangible material.
‣ Audit objection vis-a-vis debatable issue.
‣ Reassessment – Rectification pending.
1.1 It is well known that powers of the Assessing Officer to re-open a completed assessment are not unfertile. Sec. 147 and Section 148 of the Act contains the perquisite conditions to be fulfilled for invoking the jurisdiction to reopen the assessment.
2.1 The Apex Court in the case of GKN Driveshafts (India) Ltd. v/s D.C.I.T. (2003) 259 ITR 19 (SC) has laid down the procedure to challenge the reassessment proceedings.
(f) the assessee if desires can file a writ challenging the order or can proceed with the assessment . However the assessee has still a right to challenge the reopening of assessment after the assessment order is passed, before appellate authority.
2.2 The courts have consistently held that the pre condition are jurisdiction conferring on the AO to reopen the assessment and their non fulfillment renders the initiation itself ab-initio void. The High Court in appropriate cases has power to issue an order prohibiting the Income-tax Officer from proceeding to reassess the income when the conditions precedent do not exist. It is well-settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, will issue appropriate orders or directions to prevent such consequences.
CIT .v. Trend Electronics( 2015) 379 ITR 456 (Bom.)(HC).
3.1 The Income-tax Act provides a complete machinery for the assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities. The assessee cannot be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he has adequate remedy open to him by an appeal to the Commissioner of Income-tax (Appeals). As the said statutory remedy is an effective and efficacious one, the Writ Court should not entertained the Writ Petition.
However this principle of alternate remedy ought not to apply to a case where the Assessing Officer passes a reassessment order without following the GKN Driveshafts (India) Ltd .v. ITO (2003) 259 ITR 19 (SC) procedure of passing an order on objections and waiting 4 weeks thereafter as held in Allana Cold Storage Ltd v.ITO(2006)287 ITR 1 (Bom.)(HC), Kamlesh Sharma (Smt.) v. B.L.Meena, ITO (2006)287 ITR 337 (Delhi)(HC).
Similarly in the case of Annamalai University v. ITO (2018) 401 ITR 80 (Mad) (HC) the assessee had applied for exemption under section 10(23C)(vi) and final orders were awaited. The assessee was issued notices under section 148 for reopening of the assessments for the assessment years 1999 – 2000 to 2004 – 05. On writ petitions, the Court held, that the assessee was entitled to seek reasons for reopening of the assessment, under section 147 and on receipt of the reasons, the assessee was entitled to file its objections.
3.3 The Hon Bombay High Court in the case of Aroni Commercials Ltd vs. ACIT  393 ITR 637 observed thatthe argument, based on JCIT vs. Kalanithi Maran,  366 ITR 453(Mad) (HC) that this Court should not exercise its writ jurisdiction under Article 226 of the Constitution of India and the petitioner should be left to avail of the statutory remedies available under the Act is not acceptable. Writ Petition challenging lack of jurisdiction to issue s. 148 notice on the ground that it is based on ‘change of opinion’ & preconditions of s. 147 are not satisfied is maintainable .
3.4 A similar view has been taken in yet another case by the Hon Bombay High court in case of Crompton Greaves Ltd. v. ACIT (2015) 275 CTR 49 / 229 Taxman 545 (Bom).
Thus the facts in the case of Chhabil Das Agarwal (Supra) were different and distinguishable namely that the reassessment order was passed and thereafter the notice and the said order was challenged by way of writ. Similarly in Annamalai University(supra) the assessee had not followed the procedure to challenge the reopening notice, therefore distinguishable.
It is now a settled position of law that for passing an order under section 147 recording of reasons u/s. 148 and communication thereof to party concern is mandatory.
4.3 In the case of CIT v. Videsh Sanchar Nigam Ltd. (2012) 340 ITR 66 (Bom.) the Tribunal following the judgment of Bombay High Court in CIT v. Fomento Resorts and Hotels Ltd ITA no 71 of 2006 dated 27th November, 2006 , has held that though the reopening of assessment was within three years from the end of relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till date the completion of assessment, the reassessment order cannot be upheld, moreover, Special Leave Petition filed by revenue against the decision of this court in the case of CIY v. Fomento Resorts and Hotels Ltd , has been dismissed by Apex Court, vide order dated July 16, 2007. The court dismissed the appeal of the revenue.
M/s. Synopsys International Ltd (Bang) ITA no. 549/Bang/2011.
In absence of recorded reasons for reopening the assessment, the notice issued under section 148(2) of the Act would be bad-in-law.
4.4 Not giving copy of recorded reasons – Assessment records not traceable.
It was found that even after completion of the assessment/appellate proceedings the assessee was requesting the AO to supply him the copy of the reasons. But, till the date of hearing i.e. on 19.09.2014 i.e. even after 18 years of the issuance of notice u/s. 148 of the Act, the AO is not been able to prove that the assessee was supplied copy of the reasons recorded. Hence, the assessment was quashed.
In the case Bayer Material Science Pvt. Ltd.v. DCIT(2016) 382 ITR 333 (Bom.)(HC) observed that providing the assessee with the recorded reasons towards the end of the limitation period and passing a reassessment order without dealing with the objections results in gross harassment to the assessee which the Pr. CIT should note & remedy.
5.6 However now the Apex court in the case of Home Finders Housing Ltd. v. ITO (2018) 256 TAXMAN 59(SC) held that Reassessment Order passed without following the procedure , said Order passed before disposal of objections raised by assessee on reasons recorded for reopening is curable irregularity does not vitiate the proceedings. Matter can be remitted for compliance with procedure.
In my view remitting the matter for compliance with procedure will lead only to harassment and delay.
VI Disposal of objections – To be linked with recorded rea­sons.
6.1 In the case Pransukhlal Bros. v. ITO (2015) 229 Taxman 444 (Bom.)(HC) where in Assessment of the assessee was reopened. The recorded reasons stated that the assessee had taken accommodation entries from a Surat based diamond concern and this information (according to the recorded reasons) was obtained by the Department from search and survey action on the said diamond concern. The assessee objected to the recorded reasons which were disposed off the by AO referring to investigation carried out by Sales Tax authorities, display of names of parties on the website of Sales Tax department. Held, since these of these facts were even remotely adverted to in the recorded reasons, and hence, the order disposing off objections was held unsustainable in law with fresh op­portunity to AO to dispose off the objections keeping in mind the recorded reasons.
6.2 In case of Scan Holding P. Ltd. v. ACIT (2018) 402 ITR 290 (Delhi) (HC) held allowing the appeal that; the Assessing Officer had merely observed and recorded that the objections raised by the assessee were untenable and wrong, without elucidating and dealing with the contentions and issues raised in the objection. The Assessing Officer had not applied his mind to the assertions and contentions raised by the assessee and the core issue to be examined and considered. The reassessment proceedings were not valid.
6.3 Similarly in case of Karti P. Chidambaram v. ACIT (2018) 402 ITR 488 (Mad. )(HC) the court observed that, since reassessment order was passed without disposing of assessee’s objections to reopening of assessment and without passing a speaking order, same was unjustified. Court also held that where claim of assessee of exemption of income under section 10(1) on proceeds from sale of coffee subjected to only pulping and drying was accepted for several years and there were hundreds of coffee growers whose income were also exempted, reopening notice issued only against assessee during relevant assessment year was unjustified.
6.4 In the case of Venkatesan Raghuram Prasad v ITO (2018) 94 taxmann.com 249(Madras), Where A.O reopened assessment of assessee and assessee participated in assessment proceeding without raising any objection before A.O to effect that there was no valid issuance or service of reassessment notice upon assessee, such an objection could not be raised before first Appellant Authority.
7.1 New reasons cannot be allowed to be introduced or supplied by way of affidavit. Validity of an order must be judged by the reasons so mentioned therein. Reasons recorded cannot be supplemented by filing affidavit or making oral submission.
Aroni Commercial Ltd v/s DCIT (2014) 362 ITR 403 (Bom).
Northem Exim Pvt Ltd v/s Dy.CIT (2013) 362 ITR 586 (Del).
7.4 Proper Reasons to believe is must, even if there is no assessment u/s. 143(3) – Only reasons recorded by Assessing officer must be considered.
7.7 In the case Pransukhlal Bros. v. ITO (2015) 229 Taxman 444 (Bom.)(HC) where in Assessment of the assessee was reopened. The recorded reasons stated that the assessee had taken accommodation entries from a Surat based diamond concern and this information (according to the recorded reasons) was obtained by the Department from search and survey action on the said diamond concern. The assessee objected to the recorded reasons which were disposed off the by AO referring to investigation carried out by Sales Tax authorities, display of names of parties on the website of Sales Tax department. Held, since these facts were even remotely adverted to in the recorded reasons, and hence, the order disposing off objections was held unsustainable in law with fresh op­portunity to AO to dispose off the objections keeping in mind the recorded reasons.
VIII. Succeeding Assessing Officer cannot improve upon the reasons which were originally communicated to the assessee.
8.1 In the case of Indivest PTE Ltd v. ADDIT (2012) 250 CTR 15 / 206 Taxman 351 (Bom.) tThe assessee company filed its return of income for the A.Y. 2006‐07 on 31st Oct. 2006 declaring nil income. The assessee claimed that profits earned from the transactions in Indian securities are not liable to tax in India in view of art 7 of the India‐ Singapore treaty because the assessee company did not have PE in India. The assessment was reopened on the ground that no foreign companies are allowed to invest through stock exchange in India unless it is approved as FII by the regulatory authorities Viz‐ RBI, SEBI. Etc .According to the Assessing Officer the gain earned on investment as FII is liable to be taxed under section 115AD. The reassessment notice was challenged before the Court, the Court held that the attention was drawn to the notice of Assessing Officer that the assessee is not an FII and that provisions of section 115AD would not be attracted. The Assessing Officer attempted to improve upon the reasons which were originally communicated to the assessee. Those reasons constitute the foundation of action initiated by the Assessing Officer for reopening of assessment .Those reasons cannot be supplemented or improved upon subsequently . The court held that in the absence of any tangible material assessment could not be reopened under section 147, further succeeding Assessing Officer has clearly attempted to improve upon the reasons which were originally communicated to the assessee which was not permissible.
9.1. Assessing officer recording reasons for assessment and assessing officer issuing notice under section 148 must be the same person. Successor assessing officer cannot issue notice under section 148 on the basis of reasons recorded by predecessor assessing officer. Notice issued invalid and deserves to be quashed.
Assessee was assessed at Suratgarh, Notice issued by ITO at Delhi , matter later transferred to ITO Suratgraph , however AO did not issued fresh notice or recorded reasons – Held ITO did not have jurisdiction notice invalid.
10.3 Similarly in the case of CIT v. Indo Arab Air Services (2016) 130 DTR 78/ 283 CTR 92 (Delhi)(HC) it was held that mere information that huge cash deposits were made in the bank accounts could not give the AO prima facie belief that income has escaped assessment. The AO is required to form prima facie opinion based on tangible material which provides the nexus or the link having reason to believe that income has escaped assessment. The AO was also required to examine whether the cash deposits were disclosed in the return of income to form an opinion that income has escaped assessment.
10.4 The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of power.
10.6 In case of Amar Jewellers Ltd. v. Dy. CIT (2018) 254 Taxman 384 (Guj. )(HC) the Court held that; On verifying the record it was found that, there was no nexus with reasons recorded for initiating reassessment proceedings and the information received by the AO from the investigation wing, accordingly, reassessment was held to be bad in law.
10.7 In case of Deepraj Hospital (P) Ltd. v. ITO, 41/AGRA/2017, AY: 2010-11 Dtd: 01/06/2018 (Agra)(Trib), www.itatonline.org the Tribunal held that; If the reopening is based on information received from the investigation dept, the reasons must show that the AO independently applied his mind to the information and formed his own opinion. If the reopening is done mechanically, it is void. Also, if the reasons refer to any document, a copy should be provided to the assessee. Failure to do so results in breach of natural justice and renders the reopening void.
However In the case of Jayant Security & Finance Ltd. v. ACIT (2018) 254 Taxman 81 (Guj. )(HC) the court held that; Information from investigation Wing stating that loan from company working as an entry operator and earning bogus funds to provide advances to various persons. Reassessment was held to be valid.
Similarly in the case of Ankit Agrochem (P. ) Ltd. v. JCIT (2018) 253 Taxman 141 (Raj)(HC) the Court held that; reassessment on the basis of information for DIT stating that the assessee had received share application money from several entities which were only engaged in business of providing bogus accommodation entries to beneficiary concerns, reassessment on basis of said information was justified.
Amendments made By Finance Act 2016.
On the basis of information from investigation wing, in order to verify the genuineness of transaction in modification of clients code, reassessment was held to be bad in law.
10.12 In the absence of any material before the AO a statement by an unconnected person did not constitute reason to believe that assessee income had escaped assessment especially when the assessee had produced all the material and relevant facts and therefore the reassessment proceedings could not be sustained.
In the case of Subhash Chander Goel v. ITO (2016) 156 ITD 808 (Chd.)(Trib.) it was observed that Statement recorded by Police Officer under section 161 of Code of Criminal Procedure, 1973, is neither given ‘on oath’ nor it is tested by cross examination. Therefore, such a statement cannot be treated as substantive evidence to reopen assessment proceedings.
In the case of AMSA India P. Ltd. v. CIT (2017) 393 ITR 157/ 82 taxmann.com 29 (Delhi)( HC) the Court held that; the statement of third person not having live link with assessee’s suspected income, the reassessment was held to be bad in law . The material should have a live link with the assessee`s suspected income or non-disclosure of a material fact. That kind of live link was absent. Therefore the notice under section 148 read with section 147 of the Act was to be quashed.
In case of Kamla Devi S. Doshi v. ITO (2017) 57 ITR 1 (Mum.) (Trib) the tribunal observed that the Statement of third party cannot be the sole basis for disallowing the claim of the assessee in respect of capital gains . The s. 131 statement implicating the assessee is not sufficient to draw an adverse inference against the assessee when the documentary evidence in the form of contract notes, bank statements, STT payments etc prove genuine purchase and sale of the penny stock. Failure to provide cross-examination is a fatal error. Additions made by the AO was deleted .Reassessment was held to be invalid .
11.1 In the case of Rajat Saurabh Chatterji v. ACIT ITA NO. 2430/Del/2015, AY 2007-08 dtd: 20/05/2016(Delhi)(Trib) www.itatonline.org the Tribunal observed that where the AO detects incriminating material in search, he has to be processed only u/s 153C and not u/s 147. A notice u/s.148 to assess such undisclosed income is void ab initio.
In the case of CIT v. Late K.M. Bijli (2017) 390 ITR 402 (Delhi) (HC),the Court held that; the exclusive reliance placed upon the U.K. revenue authorities’ information was not sufficient to conclude that the amount which was attributed to the deceased assessee belonged to him. The materials showed that the amounts were brought to tax in the hands of the assessee’s relative. There were pointers to omissions, leads that could have been developed by the Assessing Officer, such as queries to the bank for foreign inward remittances and their source. Having received information the Department could have proceeded through reassessment proceedings at the earliest opportunity. However, the Department chose to wait for three years and sought to reopen a decade late completed assessment and by then the assessee had died. The order of the Appellate Tribunal deleting the additions was not perverse.
In the case of CIT Vs. Greenworld Corporation (2009) 314 ITR 81 (SC) it was held that the assessment order passed on the dictates of the higher authority being wholly without jurisdiction, was a nullity..
13.3 Similarly in case of Sun Pharmaceutical Industries Ltd. v. Dy.CIT (2016) 381 ITR 387 (Delhi)(HC) .The notice under section 148 was issued as a result of Instruction No. 9 of 2006 dated November 7, 2006 issued by the Central Board of Direct Taxes. These audit objections were not accepted by the Assessing Officer. CBDT instruction directing remedial action in case of audit objections – Notice based solely on such instruction not valid.
13.5 Where A.O accepted loss declared by the assessee on sale of immovable property in which she was one of co-owners, he could not reopen assessment subsequently on ground that in case of another co-sharer of same property, Assessing Officer had disputed value and referred question to DVO and, on basis of valuation so presented, he had computed certain capital gain and, on basis of valuation so presented, he had computed certain capital gain.
13.6 Detection of excess stock or unaccounted expenditure on renovation of business premises at the time of survey u/s. 133A in a subsequent year, could not constitute reason to believe that such discrepancies existed in earlier years also and, therefore, reopening of assessments for those years on the basis of aforesaid reason to believe was not valid.
13.6 Reasons recorded prior and subsequent to survey not satisfying requirement of law – Nothing before Assessing Officer to record belief that escapement has taken place -Notice is not valid.
13.7 AO can assume jurisdiction under this provision only if he has sufficient material before him; he cannot form belief on the basis of his whim and fancy and the existence of material must be real. Further, there must be nexus between the material and escapement of income. Statement recorded at the time of survey does not have evidentiary value, therefore, cannot be the basis for reopening. Reassessment proceedings initiated u/s 148 by AO based on survey statement was held to be invalid and thereby were quashed.
Notice based on suspicion and surmise – Notice is not valid. The requirement of law is “reason to believe” and not reason to “suspect”.
15.1 Sagar Enterprises vs. ACIT (2002) 257 ITR 335 (Guj) – Notice u/s 148 issued on the ground of factually incorrect basis that the assessee had not filed its return could not be sustained even on the basis of alternative reason since it could not be said with certainty as to which factor weighed with the concerned officer when he issued the impugned notice and when the respondent authority was himself unsure as to the year of taxability of the income which is stated to be undisclosed income.
Van Oord Dredging and Marine Contractors BV vs. ADIT – ITA No. 495, 496/Mum/2016 (Mum)(Trib.) dtd. February 28, 2018 .
Reassessment- Distinction between reason to believe and reason to suspect.
The Assessment re.opened merely to verify discrepancy- i.e. variation between Income declared by assessee and Income shown in TDS Certificate i.e. case re.opened on reasons to suspect is not valid.
No Reason to believe that income has escaped assessment – Assessing Officer wanted to inquire about source of funds of an immovable property purchased by assessee – No reason to issue notice for reassessment.
17.1 If Assessing officer does not assess income for which reasons were recorded u/s. 147 he cannot assess other income u/s. 147.
CIT v/s. Best Wood  331 ITR 63 Ker FB.
17.2 Though Explanation 3 to s. 147 inserted by the F Y 2009 w.r. e.f 1.4.1989 permits the AO to assess or reassess income which has escaped assessment even if the recorded reasons have not been recorded with regard to such items, it is essential that the items in respect of which the reasons had been recorded are assessed. If the AO accepts that the items for which reasons are recorded have not escaped assessment, it means he had no “reasons to believe that income has escaped assessment” and the issue of the notice becomes invalid. If so, he has no jurisdiction to assess any other income.
17.3 Similar view was taken in Hotel Regal International & Anr. Vs. ITO (2010) 320 ITR 573 (CAL) wherein the Petitioner were called upon to file objection to the notice u/s. 148 proposing to reopen the assessment on ground that Rs. 73,219 had escaped asst. Now the authorities could not shift their stand and pass on order on other ground that valuation report received subsequent to passing of the order disposing the objection the Assessing officer must consider the material and pass speaking order. Assessment quashed.
18.1 No notice u/s. 148 having been served on the assessee prior to re-opening of assessment, Asst. made u/s. 147 was bad in law; argument based on S. 292BB was not sustainable on the facts of the case.
18.3 Notice issued within period of limitation but send after that period – Direction to ascertain when the notice had been dispatched by reg. post.
18.4 The notice prescribed by section 148 cannot be regarded as a mere procedural requirement. It is only if the said notice is served on the assessee that the ITO would be justified in taking proceedings against the assessee. If no notice us issued or if the notice issued is shown to be invalid, then the proceedings taken by the ITO would be illegal and void.
18.6 Notice issued to individual. His HUF cannot be assessed on the ground that notice was issued to individual who was Karta of HUF. Defect of jurisdiction.
Suraj Mal HUF vs. ITO (2007) 109 ITD 327 (Del.)(TM).
18.7 Assessment – Amalgamation – Transferor company – Scheme of amalgamation sanctioned by the High Court – No proceedings can be initiated against the transferor company.
18.8 Similarly in the case of Techpac Holdings Ltd V/s Dy CIT [(2016) 135 DTR (Bombay H.C) 322] it was held that service of notice u/s 148 on the assessee company’s subsidiary was not valid service of notice,.
18.11 InITO v/s. Dharam Narain (2018) 253 CTR 479 (SC) held that non availability of the assessee to receive the notice sent by registered post as many as on two occasions and service of notice on authorized representative of the assessee whom the assessee disowned, is sufficient to draw an inference of deemed service of notice on the respondent assessee and sufficient compliance of the requirement of sec 143(2).
19.1. Where notice was not sent by registered post nor served upon assessee in any other manner whatsoever, proceedings for assessment were void.
19.4 Similarly in case of ITO V/s. Om Praksh Kukreja (2016) 134 DTR (Chd,. Tribl) 208 it was held that where A.O having served the notice under S.148 by affixture at a wrong address where the assessee was not residing it cannot be said that the notice u/s 148 was served upon the assessee and therefore the resultant reassessment proceedings were invalid and bad in law.
(i) As per sub-section (1) of section 282, the notice is to be served on the person named therein either by post or as if it was a summons issued by Court under the Code of Civil Procedure, 1908 (V of 1908). The relevant provision for effecting of service by different modes are contained in rules 17, 19 and 20 of Order V of CPC. Rules 17, 19 and 20 of Order V of CPC lay down the procedure for service of summons/notice and, therefore, the procedure laid down therein cannot be surpassed because the intention of the legislature behind these provisions is that strict compliance of the procedure laid down therein has to be made. The expression after using all due and reasonable diligence’ appearing in rule 17 has been considered in many cases and it has been held that unless a real and substantial effort has been made to find the defendant after proper enquiries, the Serving Officer cannot be deemed to have exercised ‘due and reasonable diligence’. Before taking advantage of rule 17, he must make diligent search for the person to be served. He therefore, must take pain to find him and also to make mention of his efforts in the report. Another requirement of rule 17 is that the Serving Officer should state that he has affixed the copy of summons as per this rule. The circumstances under which he did so and the name and address of the person by whom the house or premises were identified and in whose premises the copy of the summon was affixed. These facts should also be verified by an affidavit of the Serving Officer.
20.1 Issue of a notice u/s.143(2) is mandatory. The failure to do so renders the reassessment void (CWT v. HUF ofH. H. Late Shri. J.M. Scindia (2008) 300 ITR 193 (Bom). S.292BB was inserted w.e.f. 1-4-2008 and came into operation prospectively for AY 2008-09 and onwards.
CIT v. Salman Khan Appeal No. 508 OF 2010 dt. 06/06/2011 (Bom.)(HC)www.itatonline.org.
20.2 One should note that a Jurisdictional error cannot be cured by section 292BB. A reference can be made to a recent decision of Delhi High Court in the case PCIT v.
21.2 When time limit for issue of notice under section 143(2) has not expired, Assessing Officer cannot initiate proceedings under section 147.
22.1 Tribunal having concluded that all the material facts were fully and truly disclosed by the assessee at the time of original assessment, invoking the of provisions of S. 147 after the expiry of four years from the end of the relevant asst. year was not valid.
22.2 There was no tangible material before the Assessing Officer to form the belief that the income had escaped assessment and therefore, reopening of assessment under section 147 was not valid.
22.3 Where the deduction under section 80IB of the Act was allowed to the assessee by the assessing officer in the original assessment order under section 143(3) of the Act after considering the audit report in Form 10CCB and the other details filed by the assessee, it cannot be said that there was a failure on the part of the assessee to disclose fully and truly all the facts for the assessment so as to invoke the provisions of section 147 for re-examining the deduction under section 80 IB of the Act, after expiry of four years from the end of the assessment year.
second reassessment was held to be not valid.
CIT v. Central Warehousing Corporation (2015) 371 ITR 81 (Delhi) (HC).
Failure to disclose all material facts was not mentioned in the recorded reasons-Reassessment was held to be not valid.
22.4 Notice after expiry of four years ‐ As there is no allegation in the reasons for failure to disclose material facts necessary for assessment reopening beyond four years was held to be not valid.
22.5 Beyond four years-Reassessment held to be not valid in the absence of any new or additional information.
It is necessary for the AO to first state that there is a failure to disclose fully and truly all material facts. If he does not record such a failure he would not be entitled to proceed u/s 147.There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts.
23.1 CIT having mechanically granted approval for reopening of assessment without application of mind, the same is invalid and not sustainable.
23.2 Merely affixing a ‘yes’ stamp and signing underneath suggested that the decision was taken by the Board in a mechanical manner as such, the same was not a sufficient compliance under section 151 of the Act. The approval is a safeguard and has to be meaningful and not merely ritualistic or formal.
24.1 Order of Assessing officer u/s. 143(3) reflects that the primary facts relating to case was before the Assessing officer therefore there was disclosure of all primary facts relating to claim of deduction u/s. 80IB(10).
24.3 Assessment order is not a scrap of paper & AO is expected to have applied his mind. Reopening on ground of "oversight, inadvertence or mistake" is not permissible.
24.4 The Court held that AO has no power to review assessment order under shelter of re-opening of assessment under sections 147/148, therefore, it was not open for AO to re-look at same material only because he was subsequently of view that conclusion arrived at earlier was erroneous.
24.5. All facts were before AO at the time of original assessment as well as reopened asst. Even assuming that he failed to apply his mind, assessment cannot be reopened u/s 147.
24.10 Reassessment – After the expiry of four years – There was no failure to disclose all material facts – Reassessment was held to be not valid – Alternative remedy is no bar to file writ petition if the action of the authority is beyond their jurisdiction.
Mere production of account books from which material evidence could have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the proviso. Hence reopening of assessments is perfectly in accordance with law hence same is upheld.
27.1 An asst. order passed after detailed discussion cannot be reopened within a period of 4 years unless the AO has reason to believe that there is to some inherent defect in the assessment.
Pr. CIT v. Century Textiles and Industries Ltd[ Income tax Appeal no 1367 of 2015 dt : 03/04/2018 (Bombay High Court)].
Once an assessment has been completed under section 143 (3) after raising a query on a particular issue and accepting assessee’s reply to the query. Assessing Officer has no jurisdiction to reopen the assessment merely because the issue in question is not specifically adverted in the assessment order ,unless there tangible material before the Assessing Officer to come to the conclusion that there is escapement of income.( Asst Year 1998‐99).
Commissioner of Income tax- 3 vs. SICOM LTD. [ Income tax Appeal no 137 of 2014 dt : 08/08/2016 (Bombay High Court)].
27.4 During original assessment, assessee’s claim was processed at length and after calling for detailed explanation from him, same was accepted. Merely because a certain element or angle was not in mind of Assessing Officer while accepting such a claim, could not be a ground for issuing notice under section 148 for reassessment. Mere failure of AO to raise such a question would not authorise him to reopen assessment even within period of 4 years from end of relevant assessment year, any such attempt on his part would be based on mere change of opinion, therefore, notice issued under section 148 was liable to be quashed.
Amendment as per Direct tax laws (Amendment) Act, 1989 w.e.f. April 1, 1989 as also of sec. 148 to 152 have been elaborated in circular No. 549, dated October 31, 1989. A perusal of clause 7.2 of the said circular makes it clear that the amendments had been carried out only with a view to allay fears t hat the omission of the expression reason to believe” from sec. 147 would give arbitrary power to AO to reopen past assessments on a mere change of opinion i.e. a more change of opinion cannot form basis for reopening a completed assessment.
28.2. In determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage.
28.3. Points not decided while passing assessment order under section 143(3) not a case of change of opinion. Assessment reopened validly.
No new material brought on records – Reassessment on change of opinion of officer not valid.
28.5 Reassessment has to be based on "fresh material". A reopening based on reappraisal of existing material is invalid.
AO having communicated to the auditor that a certain decision of a HC did not apply to the facts of the petitioners case but later rejected the objections raised by the petitioner to the notice u/s. 148 taking a contrary view without giving any reason as to why he has departed from the earlier view that the decision was not applicable, there was total non application of mind on the part of AO; matter remanded back to AO for de-novo consideration.
29.2 AO having allowed assessee’s claim for depreciation in the regular assessment and reopened the assessment pursuant to audit objection, it cannot be said that he had formed his own opinion that the income had escaped assessment, and the reopening being based on mere change of opinion, same was not valid.
29.3 Audit Objection cannot be the basis for reopening of assessment to income tax by the revenue.
Indian & Eastern Newspaper Society Vs. CIT (1979) 119 ITR 996 (SC).
29.4 Reassessment was not valid as the AO held no belief on his own at any point of time that income of assessee had escaped asst. on account of erroneous computation of benefit u/s 80HHC and was constrained to issue notice only on the basis of audit object.
Raajratna Metal Industries Ltd vs. ACIT  227 TAXMAN 133 (Gujarat High Court).
Sunil Gavaskar V/s ITO (2016) 134 DTR (Mumbai ITAT) 113.
29.7 CBDT instruction directing remedial action in case of audit objections. Notice based solely on such instruction (CBDT Instruction No. 9 of 2006). No failure to disclose fact. No allegation that material facts had not been disclosed . Notice was held not valid.
31.1 Revisional authority having directed the AO to adjudicate specific issues which were addressed and examined by him, asst made by the AO on a higher total income by assuming more powers than that of the revisional authority is patently illegal and without jurisdiction.
31.2.The assessing officer for the assessment year 2000-01 recorded a specific note in the assessment order which indicated that the assessment order was passed under the dictates of the commissioner. The supreme court in the challenge to the reopening for the same assessment year held that the assessment order passed on the dictates of the higher authority being wholly without jurisdiction, was a nullity. Therefore with a view to complete the justice to the parties. The Supreme Court directed that the assessment proceedings should be gone through again.
CIT Vs.Greenworld Corporation (2009) 314 ITR 81 (SC).
Subsequent High court decision – beyond 4 yearDiscloure of complete facts. Reopening bad in law.
Kalpataru Sthapatya (P) Ltd. (2012) 68 DTR 221 (Guj)(High Court).
Assessee claimed the deduction under section 80(IB)(10) after enquiry the deduction was allowed. The amendment was introduced by Finance Act, 2009, inserting Explanation with retrospective effect from 1st April, 2001 which denied benefit of deduction under section 80IB(10) to works contractors execution housing project. The only reason for issuing the notice, was amendment brought in the statute book with retrospective effect. The said notice was challenged before the High Court. High Court quashed the notice and held that reopening only on the basis of retrospective amendment of law is not justified. (A. Y. 2004-05).
XXXIV. Appeal pending from original assessment order. Reassessment cannot be done as the order merged with order of Higher authorities.
Appeal was pending before ITAT and the matter was subject matter of appeal before CIT(A). No Reassessment. Once an issue is subject matter of appeal before Tribunal , issuance of notice of reassessment on said ground hasto be considered bad in law. ( A.Y. 2000‐01).
Chika Overseas (P) Ltd v ITO ( 2011) 131 ITD 471 (Mum) (Trib).
GTL Ltd . v. Asst CIT (2015) 37 ITR 376 (Mum.)(Trib.).
Rule 27 of ITAT Rules: Reassessment ground can be raised.
35.4 Jurisdiction to issue notice was challenged after limitation period prescribed under S.124 (3) – Reassessment was held to be valid .
35.5 In this context reference is made to the decision of Bombay High Court in case of CIT v/s. LalitKumar Bardia (2018) 404 ITR 63 wherein the court held that though the assessee has taken part in the assessment proceedings, waiver will not confer jurisdiction on Assessing Officer. Irregular exercise of jurisdiction and absence of jurisdiction is explained .
35.7 Section 292B would not empower the A.O. to treat a proceeding taken u/s 147(b) as a proceeding u/s 147(a). This is not a mere technicality but a question of jurisdiction.
XXXVI. Rectification proceedings initiated and dropped.
36.1 Dept. having taken one of the two possible views in the matter of calculation of deduction u/s. 10B and 80HHE asst. cannot be reopened by taking the other view more so when the CIT(A) has already quashed the rectification us. 154 which was made on the very same ground.
36.2 Allowance u/s. 80HHC having been granted by the ITO in rectification proceedings. The remedy the against lay with the dept. either u/s. 154 or S. 263 and not S. 147 further reassessment having been made on a date earlier than fixed same was bad.
When proceedings under section 154 were pending on the same issue and not concluded , parallel proceedings under section 147 initiated by the Assessing Officer are invalid ab inito , especially when except the return and its enclosures , no other material or information was in the possession of the assessing Officer.( Asst year 2004‐05).
Mahinder Freight Carriers v Dy CIT ( 2011) 56 DTR 247 (Mum) (Trib).
Honda Siel Power Products Ltd. vs. Dy. CIT( 2011) 197 Taxman415 (Delhi). Assessee’s SLP dismissed Honda Siel Power Products Ltd vs DCIT  240 Taxman 576 ( SC) .
37.1 AO had no jurisdiction to reopen the concluded assessments on the strength of valuation report of valuation officer obtained officer obtained subsequently and that too not in exercise of powers u/s. 55A impugned notices under S. 148 quashed.
37.2Assessing Authority having made a detailed enquiry before making the assessment of the petitioner u/s. 143(3) the impugned notice u/s. 148 was issued only on the basis of change of opinion and was therefore, invalid, notice was also illegal on the ground that it was based on the valuation report of cost of construction.
37.3 Mere DVO’s report cannot constitute reason to believes that income has escaped assessment for the purpose of initiating reassessment and therefore tribunal was justified on holding that the reassessment proceedings initiated on the basis of DVO’s report were invalid abinitio, more so when it has found that the DVO’s report sufers from various defects and mistakes.
ITO v Shiv Shakti Build Home ( P) Ltd ( 2011) 141 TTJ 123 ( Jodhpur) ( Trib).
Reopening of the assessment – based on the opinion given by the District Valuation Officer – opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income-tax Act,1961 – Held that: –. The Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon- Department was not entitled to reopen the assessment.
Assistant CIT vs. Dhariya Consturction Co. (2010) 328 ITR 515.
XXXVIII. Reassessment jurisdiction is available for benefit of revenue only.
38.1. Since the proceedings under section 147 are for the benefit of the revenue and in the assessee, and are aimed at gathering the escaped income of the revenue and an assessee and are aimed at gathering the escaped income of an assessee the same cannot be allowed to be converted as revisional or review proceedings at the instance of the assessee, thereby making the machinery workable.
CIT vs. Sun Engineering Works (p.) Ltd. (1992) 198 ITR 297 (SC).
38.2. Proceeding under section 147 are for the benefit of the revenue and not the assessee and hence the assessee cannot form the be permitted to convert the reassessment proceedings as his appeal or revision in disguise and seek relief in respect of items earlier rejected, or claim relief inrespect of items not claimed in the original assessment proceedings unless relatable to the escaped income and reagitate concluded matters. Allowance of such a claim in respect of escaped assessment in the case of reassessment has to be limited to the extent to which they reduce the income to that originally assessed. Income for the purpose of reassessment cannot be reduced beyond the income originally assessed.
CIT v/s. Caixa Economica DE Goa ( 1994) 210 ITR 719 Bom.
38.3 Assessee having not claimed deduction under section 80HHC, in its return because it had only income from other sources and no business income, claim made in the revised return by filing audit report under section 147 due to disallowances under section 43B is upheld.
ITO vs. Tamil Nadu Minerals Ltd. (2010) 124 ITD 156 (Chennai)(TM).
Issue concluded in original assessment proceedings cannot be re-agitated during course of reassessment proceedings.
39.1 So long as the ingredients of section 147 are fulfilled, Assessing Officer is free to initiate proceeding under section 147 even where intimation under section 143(1) has been issued; as intimation under section 143 (1) (a) is not assessment there is no question of treating re assessment in such a case as based on change of opinion.
Asstt. CIT V. Rajesh Jhaveri Stock Brokers (P) Ltd.
39.3 It is open to the assessee to challenge a notice issued u/s.148 as being without jurisdiction for absence of reason to believe even in case where the assessment has been completed earlier by Intimation u/s 143(1) of the Act.
Even if there is no assessment u/s 143 (3), reopening u/s 147 is bad if there are no proper “reasons to believe” recorded by the AO.
7. Assessment u/s 143(1) – Reopening on mechanical basis void even where section 143(3) assessment not made.
40.1 The Section 150 of the Act provides that notwithstanding the limitation prescribed under section 149, notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceedings under the Act by way of appeal, reference or revision or by a court in any proceeding under any other law.
40.2. ITO v. Murlidhar Bhagwan Das  52 ITR 335 (SC) held that the word “finding” can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The apex court further held that the appellate authority may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the assessment year in question. Similarly, the expression “direction” has been construed by the apex court to mean a direction which the appellate or revisional authority as the case may be, is empowered to give under the sections mentioned therein.
40.3 Apart from the above, section 150(1) of the Act provides that the power to issue notice under section 148 of the Act in consequence of or giving effect to any finding or direction of the appellate/revisional authority or the court is subject to the provision contained in section 150(2) of the Act. Section 150(2) provides that directions under section 150(1) of the Act cannot be given by the appellate/revisional authority or the court if on the date on which the order impugned in the appeal was passed, the reassessment proceedings had become time-barred.
40.4 According to s. 150(2), the provisions of s. 150(1) shall not apply where, by virtue of any other provision limiting the time within which action for assessment, reassessment or recomputation may be taken, such assessment, reassessment or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference or revision in which the finding or direction is contained. Thus, s. 150(2) enacts a well-settled principle of law that an appellate or revisional authority cannot give a direction which goes to the extent of conferring upon the AO if he is not lawfully seized of jurisdiction.
40.5 Similarly Bombay High court in the case of Rakesh N Dutt v/s. Asst CIT (2009) 311 ITR 247 wherein it was held, that the Tribunal had held that the addition of Rs. 90 lakhs, if at all permissible legally, it could be considered in the hands of the two companies and not in the hands of the assessee. There was no finding that the amount of Rs. 90 lakhs was liable to be taxed in the hands of the assessee. Consequently, reopening of the assessments by invoking the provisions of section 150 of the Act could not be sustained. Once it was held that section 150 of the Act was not applicable, then the reopening of the assessment beyond the period of six years from the end of the relevant assessment year would be time barred.
40.6 The Tribunal do not have power to give any finding or direction in respect of another year / period which is not before the authority as held by Supreme Court in CI T vs. Green World Corporation  314 ITR 81 (SC).
40.7 The decision of the apex court in the case of CIT v/s. Green World Corporation 314 ITR 81 (106) SC wherein it was observed that the provision of s. 150 although appears to be of a very wide amplitude, but would not mean that recourse to reopening of the proceeding sin terms of ss. 147 and 148 can be initiated at any point of time whatsoever. Such a proceedings can be initiated only within the period of limitation prescribed therefore as contained in s. 149. Sec. 150(1) is an exception to the aforementioned provision. It brings within its ambit only such cases where reopening of the proceedings may be necessary to comply with an order of the higher authority. For the said purpose, the records of the proceedings must be before the appropriate authority. It must examine the records of the proceedings. If there is no proceeding before it or if the assessment year in question is also not a matter which would fall for consideration before the higher authority, s. 150 will have no application.
40.8 Finding or Direction. (S.149.).
Sec 148 r.w.s 150: Reopening of assessment – Based on Tribunal “finding or direction ” in respect of any other year or period – Beyond six years – Not valid.
The observation of the Tribunal for the purpose of deleting the addition in respect of the AY: 2002-03 cannot be treated to be a ‘finding’ for reopening the AY 2001-02 as the appeal for said assessment year has not been before the Tribunal for adjudication. The observation of the Tribunal that ‘the case of the assessee is to be brought to tax for assessment year 2000-01 and not assessment 2002-03 as done by the assessing officer’ is incidental for holding the addition made in the year 2002-03 is not justifiable and the same cannot be the basis for having recourse to section 150 of the Act by holding it as ‘finding or direction’. Section 150(1) is an exception which brings within its ambit only such cases where reopening of the proceedings may be necessary to comply with an order of the higher authority. Since the observation of the Tribunal that ‘the case of the assessee is to be brought to tax for assessment year 2000-01’, does not require compliance by the authorities below so far as the assessment year 2000-01 is concerned, taking recourse to section 150 of the Act by holding the same as ‘finding’ of the Tribunal is not legally tenable.
Shri Anil Suri v/s. ITO 11(1)(3) ;  66 SOT (Mum ITAT).
40.9 Assessment having not been reopened to give effect to the order of the CIT (A). According to the Assessing Officer because of giving effect to the order made by the CIT (A) , will result in to escapement of income . The court held that section 150 did not apply. As there was no failure on the part of assessee to disclose fully and truly all material facts , reassessment is clearly time barred.( A.Y. 1988‐89).
Harsiddh Specific Family Trust v JCIT ( 2011) 58 DTR 149 ( Guj) (High Court).
40.10 Since no findings or directions had been given in assessment year 1992‐93 to tax the receipt in question in assessment year 1994‐95 under appeal which is also inherently impossible in view of the findings that it is capital receipt ,provisions of section 150 would apply in the case of the assessee and reopening of the assessment made after a period of six years from the end of the assessment year was clearly time barred.( A.Y. 1994‐95).
Vadilal Dairy International Ltd v Asst CIT ( 2011) 140 TTJ 371 ( Ahd) (Trib).
40.13 In respect of any assessment year wherein further proceedings are barred by limitation, assessment cannot be reopened merely by virtue of an opinion expressed by any higher forum at a later date, i.e., subsequent to date of limitation period.
40.14 Power of Appellate authority.
Section 150 does not enable or require an appellate authority to give any directions for reopening of assessment, but it deals with a situation in which a reassessment is to be initiated to give effect to finding or direction of appellate authority or Court.( A.Y. 2002‐03).
Sujeer Properties (AOP) v ITO ( 2011) 131 ITD 377 (Mum) (Trib).
If during the reassessment a reference is made to TPO then time limit will be two years from the end of the F.Y. in which the notice u/s. 148 has been served.
Finance Bill 2016 – Limits in both the above cases has been reduced by 3 months – Reduced to 9 months and 21 months respectively.
Thank You . I acknowledge support of Mr. Ravindra Poojari Adv and my office staff.
AO had issued 148 to our client, but the time for issuing 142 was still there, so the 148 was dropped by AO as he was at fault.
Now AO has again issued 148 for same reasons as period for 142 is over. Is the 148 issued second time for same reasons valid?
Very detailed guide on section 147/148. Greetings to the author.
Para 3.1 says that the a o must wait for 4 weeks after serving the order disposing the objections relating to Issue of notice u/s 148 but the cases mentioned therein do not contain this period . Need help about the source of the stipulation.
In one of client’s case, ROI filed showing capital gain on sale of Agri. land and assessment completed u/s. 143(3) r.w.s.147, but subsequently it is found that the said land is not capital assets as it is away by more than 6 Km from nearest municipality, satisfying exemption as provided in Sec 2(14) of IT Act.
My question is – (1) Can I Claim before CIT (A), that actually there is no capital gain on sale of land as said agri land is not capital asset ?
(2) Can I file application U/s 154 before ITO ?
(3) what could be remedy ?
Superb. Very hard labour has been put in.
Assessment u/s 148 was reopened after a period of 4 years on the basis of report of Investigation Wing. In the reasons recorded nothing is mentioned about escapement of chargeable income from tax due to omission or failure on the part of the assessee to disclose fully and truly all material facts, but the assessee did not raise this issue or did not object to the reopening u/s 148 during assessment proceedings but raised this issue as additional ground before CIT (A) who rejected the appeal of the assessee. Now the assessee is before the ITAT. Assessee wants to know case laws supporting the assessee action of raising this issue as additional ground before CIT & ITAT.
In the case of Jute Corporation of India Ltd. v. C.I.T 1991 AIR 241 the Supreme Court, while dealing with the powers of the Appellate Assistant Commissioner, observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter.
Should a person who is not bound to file ITR u/s 139 (1), liable to file his return on receipt of notice u/s 147 in view of GKN Driveshaft? Cannot he ask for reason to believe without filing ITR?
No, the obligation to file a return of income u/s 148 is independent of the obligation cast by section 139(1). The AO is obliged to give the recorded reasons only after the return of income is filed and not before.
have received notice u/s 148. Naturally they are not bound to take PAN u/s 139 A. Without PAN how can they file ITR? Or do you mean that on receipt of notice u/s 148 they should obtain PAN and file ITR even though they are not bound to do so u/s 139(1) r.w.s. 139 (A)?
Yes that consequence will follow. All statutory obligations arising from the issue of the section 148 notice will have to be complied with.
Do you really mean that a beggar/a riksha-puller/cooli who was issued by a notice u/s 148 for no specific reason should obtain PAN and file ITR in order to ask for the reason recorded to believe that his income had escaped assessment?
This is not a hypothetical question. I had an experience at hand.
Yes in my opinion it is mandatory on the part of AO to provide proof of dispatch of notice. Otherwise also if it not provided by AO then assessee should ask it under RTI. AO will be bound to supply the information.
Nobody helps reply a query here.Everyone show theirview points.???
My client has received a notice for reassessment. The ward on the notice indicates that it has been sent by an ACIT. However the ward on the envelope is that of an ITO. On further enquiry, I was informed that as the income is more than INR 20 lakhs, the file will get transferred from the ITO to ACIT at a later date.
The notice issued is a valid notice. The internal jurisdictional change in the same income tax office will not invalidate the notice. The assessee should ask copy of reasons recorded from the notice issuing authority.
Very nice article. The author had taken a lot of pain to share his knowledge.
This type of informative articles are very useful to all Tax professionals and other professionals particularly from the grassroots where proper guidance is not available.
Where 143(2)and142(1) notices issued , inquiry conducted , submissions made . AO dropped the proceeding u/s143(2) .reasons for dropping not communicated to a and served on Avon last day . Also serveved notice u/s148 on the same day . Is 148 valid particularly for same reason for which enquiry conducted U/s 142(1) .
Proceedings u/s. 143(2) & u/s. 148 can not run parallel. There is no provision for dropping the proceedings u/s. 143(2). The AO has to issue assessment order u/s. 143(3) in any way.
The notice u/s. 143(2) must have been sufferring from some discrepancy or may be time barred hence the AO is resorting to 148.
You must ask for order u/s. 143(3). The proceedings initiated u/s. 148 without passing order u/s. 143(3) is totally illegal & invalid.
Please tell me service of notice on the mail by income tax department.Is this proper service of notice to the assessee bt the income tax department.
We have received a section 148 notice for the assessment year 2010-1011. We have not filled any return for the said year. Now, this Pvt Ltd company is closed and we don’t have any documents/ expenditure details. Can I ask for drop of assessment as time barred. Pls guide.
No. As per the decision of JKN driveshart (SC) the first duty of the assessee is to file return of income after receipt of 148. Thereafter you can raise the grounds of objections whatever you wish after obtaining copy of reasons recorded.
However suggestions made in replay column by various authors be considered and incorporated so that it will be more useful.
” Reason to believe: and that test (reason to believe) must be satisfied for reopening of asst made u/s 143 (1) of the Income tax Act.
reopening of the assessment must exist he reason for the belief on the basis of which the assessment is sought to be reopened must have a direct bearing on the final order in reassessment proceedings because the existence of the reason is necessary not only at the stage when the notice regarding reassessment is issued but the reason must continue to exist till the order in reassessment proceedings is passed.
and seeking information under Right to information Act from C & AG audit will quicken the getting of reasons for reopening.if the audit objection emanates from them.
Articles on Section 147 always discuss on reassessment and reopening of assessment. Why the original asseessment under this section is being ignored?Is it because original order is not envisaged u/s 147?
The learned Advocate has tried and covered the old and new case law- that is, the court decisions ranging over a long period during which the related provisions of the Act have undergone numerous changes, having had effect on the judicial perspective and differing opinions handed out.
As personally viewed and shared therein, the moot point, – whether or not, as per the scheme of the applicable sections of the IT Act , in particular of section 143(1) and section 143 (2), if considered on first principles and in isolation, any assessment or re-assessment is at all possible u/s 147, r.w. 148; without having to go into the concepts of “reason to believe”,”opinion” or “change of opinion” as covered in the judgments- is still open for a final judicial adjudication.
It is hoped that,- it is time for, and if so realised by,- the eminent experts /luminaries to closely examine, and if agreed, to take on the above indicated issue for a final resolution by the apex court. Till then, of course, the issue could not but be regarded to continue to be miserably and inescapably ‘shrouded in mystery’.
Chandravijay Shah: Very useful Updates on a very important but rarely discussed subject.

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