2010-VIL-882-P&H-DT
PUNJAB AND HARYANA HIGH COURT
IT Appeal No. 690 of 2009
Date: 07.10.2010
SEWAK RAM
Vs
INCOME TAX OFFICER
K.L. Goyal with Sandeep Goyal for the Appellant
Savita Saxena for the Respondent
BENCH
Adarsh Kumar Goel, Ajay Kumar Mittal, JJ.
JUDGMENT
"(i) Whether on the facts and circumstances of the case, the learned Tribunal was justified in holding that the AO had any reason to initiate proceedings under s. 147 of the IT Act, 1961?
(ii) Whether on the facts and circumstances of the case, the finding of the learned Tribunal is perverse in nature to the extent that the assessee did not file the balance sheet, trading, P and L a/c and capital account with the original returns filed for asst. yr. 2000-01?"
2. The IT return of the assessee was processed under s. 143(1) and thereafter process of reassessment was initiated, inter alia, on the following grounds:-
(i) In the capital account of the assessee, five gifts were received without giving details or filing documents in support thereof. The said amount represented undisclose4 income of the assessee.
(ii) The assessee sold one bigha land but no capital gain was shown.
(iii) The assessee made huge investment in shares account.
(iv) The assessee was a director in a company and has shown the liability to the company without showing any income.
3. After issuing a questionnaire and considering the viewpoint of the assessee, order of reassessment was passed making additions of Rs. 95,83,013 to the declared income. On appeal, the CIT(A) set aside the reassessment order only on the ground that jurisdiction to reassess was not validly invoked. On further appeal, the Tribunal set aside the view taken by the CIT(A) and remanded the matter for fresh decision on merits. The finding recorded by the Tribunal is as under:-
"Keeping in view the facts and circumstances in the present case and after hearing both the parties, we are of the considered opinion that the case law cited by the learned Departmental Representative in the case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 : (2007) 291 ITR 500 (SC) is applicable to the facts of the present case. As regards to the fresh material on which the reassessment proceedings were initiated by the AO, we find that the AO has reopened the assessment on the sufficient reason which is mentioned at p. 2 and para 2 of this order. As per paper book filed by the learned counsel for the assessee, he drew our attention towards copy of trading, P and L a/c, capital account and balance sheet relating to asst. yr. 2000-01, which he placed at pp. 3 and 4 of the paper book. After considering the same, we are of the view that these documents, assessee has not filed with original returns. Assessee has filed these documents only at the time of reopening of the present case. As per sale deed for Rs. 4,95,000, which the assessee had sold as alleged by the AO, the AO has not made any addition in the reassessment on this account. As regards to the reasons for reopening the case of the assessee on the ground that the director of the company M/s Bhupindra Flour Mills (P) Ltd., the assessee has neither shown any income from the company nor shown any investment in it. As per record, the assessee has made huge investment in the shares of Rs. 40,87,040 and that income has been shown from these investments and dividend income from shares was exempted. In view of the judgment of jurisdictional High Court in the case of CIT vs. Suresh Kumar L/H of Siri Ram (2005) 196 CTR (P and H) 507 : (2005) 275 ITR 253 (P and H) and various judgments rendered by the Tribunal, in which they have discussed the validity of reassessment and held that even though the original assessment was made under s. 143(1) and not under s. 143(3) of the IT Act, assessee having made full disclosure of its income and AO was not justified in reopening the assessment in the absence of any new material. They held that s. 147 does not postulate conferment of power upon the AO to initiate reassessment proceedings upon a mere change of opinion.
The Hon'ble Court also held that if the AO feels that issue requires much deeper scrutiny is not enough ground for invoking the provisions of s. 147 of the Act, but in the present case, AO has sufficient reason to believe for reopening of present case. We have already discussed that the apex Court in the case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) has held that no opinion expressed by the AO that an assessment is framed under s. 143(l)(a) of the Act and as such, there is no change of opinion or invocation of s. 147 of the Act. The AO has jurisdiction to issue notice under s. 148, if there was cause or justification to know or suppose that income has escaped assessment, it can be said to have reason to believe that income had escaped assessment. The reason to believe is mandatory precondition for assuming of jurisdiction under s. 147 of the Act. It has been further held that such 'reason to believe' must necessary to be based on relevant material and that relevant material must be such that a reasonable person on information of such material would have formed a requisite belief that income of the assessee has escaped assessment. In other words, reasonable (sic—reopening) must be based upon reasons, which should be on the basis of new material on record to justify the reason for reopening the case. After considering the facts and circumstances of the present case with the support of arguments advanced by both the parties, we are of the considered opinion that the AO was justified for reopening in the case of the assessee under s. 148 of the Act. Therefore, we are not agreed with the reasons mentioned by the learned first appellate authority for cancelling the reassessment proceedings made by the AO. Accordingly, we cancel the same by allowing the appeal filed by the Department."
4. We have heard learned counsel for the parties and perused the record.
5. Learned counsel for the assessee submits that the reasons for reassessment were not based on a new material but on the basis of the particulars in the return and reassessment amounted to change of opinion and initiating a roving enquiry was not permissible. Reliance has been placed on the following judgments:-
1. Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 : (2007) 291 ITR 500 (SC);
2. Ram Bai vs. CIT (1999) 152 CTR (SC) 167 : (1999) 236 ITR 696 (SC);
3. CIT vs. Batra Bhatta Company (2008) 13 DTR (Del) 115;
4. ITO vs. Madnani Engineering Works Ltd. (1979) 12 CTR (SC) 144 : (1979) 118 ITR 1 (SC);
5. Chhagamal Rajpal vs. S.P. Chaliha and Ors. (1971) 79 ITR 603 (SC);
6. ITO vs. Lakhmani Mewal Das 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC);
7. Asoke Kumar Sen vs. ITO (1981) 132 ITR 707 (Del);
8. Vipan Khanna vs. CIT and Ors. (2002) 175 CTR (P and H) 335 : (2002) 255 ITR 220 (P and H);
9. Smt. Kamlesh Sharma vs. B.L. Meena, ITO and Ors. (2006) 205 CTR (Del) 569 : (2006) 287 ITR 337 (Del).
6. We are unable to accept the submission. After amendment of s. 147 w.e.f. 1st April, 1989, reassessment can be initiated even if there is disclosure in the return if without considering the particulars of the return, processing is done under s. 143(1) or assessment is made under s. 143(3). No doubt, mere change of opinion by itself is not a ground for reassessment as held in the judgments relied upon on behalf of the assessee but if there are reasons to believe that tax has escaped, reassessment is permissible. Reasons can be even on the basis of particulars of the return without any new material. Even if proceedings under s. 143(2) are not taken, reassessment proceedings can be taken.
7. In the present case, the CIT(A) set aside the proceedings by wrongly holding that reassessment could not be initiated on the basis of material already disclosed in the return without going into the correctness of the reasons.
8. We find, prima facie, that the reasons for reassessment are not irrelevant. In any case, the same could have been gone into by the CIT(A) before reassessment was set aside as rightly held by the Tribunal. The judgments relied upon by learned counsel for the assessee, thus, have no applicability in the present case. In these circumstances, the view taken by the Tribunal cannot be held to be erroneous. No substantial question of law arises.
9. The appeal is accordingly dismissed.
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