DCIT 1(2)(1), MUMBAI v. INTELNET GLOBAL SERVICES P. LTD, MUMBAI

ITA 7428/MUM/2014 | 2007-2008
Pronouncement Date: 20-10-2016

Appeal Details

RSA Number 742819914 RSA 2014
Assessee PAN AAACI7387P
Bench Mumbai
Appeal Number ITA 7428/MUM/2014
Duration Of Justice 1 year(s) 10 month(s) 8 day(s)
Appellant DCIT 1(2)(1), MUMBAI
Respondent INTELNET GLOBAL SERVICES P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-10-2016
Appeal Filed By Department
Bench Allotted I
Tribunal Order Date 18-11-2016
Assessment Year 2007-2008
Appeal Filed On 12-12-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I MUMBAI BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER ITA NO.7428/MUM/2014 ASSESSMENT YEAR: 2007-08 DCIT-1(2)(1) R. NO.535 5 TH FLOOR AAYAKAR BHAVAN M. K. ROAD MUMBAI-400020 / VS. M/S INTELNET GLOBAL SERVICES PVT. LTD. INTELNET TOWERS MINDSPACE MALAD WEST MUMBAI-400064 ( / REVENUE) ( #$% & /ASSESSEE) PAN. NO . AAACI7387P C.O. NO.99/MUM/2016 (ARISING OUT OF ITA NO.7428/MUM/2014) ASSESSMENT YEAR: 2007-08 M/S INTELNET GLOBAL SERVICES PVT. LTD. INTELNET TOWERS MINDSPACE MALAD WEST MUMBAI-400064 / VS. DCIT-1(2)(1) R. NO.535 5 TH FLOOR AAYAKAR BHAVAN M. K. ROAD MUMBAI-400020 ( #$% & /ASSESSEE) ( / REVENUE) PAN. NO . AAACI7387P ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 2 ' & ( / DATE OF HEARING : 20/10/2016 ' & ( / DATE OF ORDER: 18/11/2016 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 10/08/2014 OF THE LD. FIRST APPELLATE AUTHORITY MU MBAI AND THE ASSESSEE HAS PREFERRED CROSS OBJECTION. 2. FIRST WE SHALL TAKE UP APPEAL OF THE REVENUE WHEREIN DISMISSAL OF APPEAL BY THE FIRST APPELLATE AUTHORITY ON REOPENING OF ASSESSMENT U/S 147/148 OF THE INCOM E TAX ACT 1961 (HEREINAFTER THE ACT) ON ACCOUNT OF CHAN GE OF OPINION HAS BEEN CHALLENGED. 2.1. DURING HEARING THE LD. DR SHRI K. MOHANDAS ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUN D RAISED BY CONTENDING THAT MATERIAL FACTS FOR FRAMING THE ASSESSMENT WERE NOT FILED BY THE ASSESSEE THEREFOR E THERE IS NO CHANGE OF OPINION BY THE ASSESSING OFFICER. THE ASSESSMENT SO FRAMED WAS ARGUED TO BE JUSTIFIED. TH E LD. DR RELIED UPON THE FOLLOWING DECISIONS:- I. CIT VS BLACK & VEATCH CONSULTING PVT. LTD. (2012) 348 ITR 002 (BOM.) ! / REVENUE BY SHRI K. MOHANDAS-DR #$% & ! / ASSESSEE BY SHRI S.K. TYAGI ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 3 II. DALMIA PVT. LTD VS CIT 348 ITR 469(DEL.) III. EXPORT CREDIT GUARANTEE CORPORATION INDIA LTD. VS ADDL. CIT (2013) 350 ITR 651 (BOM.) AND IV. CONSOLIDATED PHOTO AND FINVEST LTD. VS ACIT 281 ITR 394 (DEL.) 2.2. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE SHRI S.K. TYAGI DEFENDED THE IMPUGNED OR DER BY CONTENDING THAT MATERIAL FACTS WERE DULY PRODUCED B Y THE ASSESSEE BEFORE THE ASSESSING OFFICER FOR WHICH OUR ATTENTION WAS INVITED TO VARIOUS PARAS OF THE ASSESSMENT ORDE R AND ALSO THE FACTUAL FINDING RECORDED BY THE LD. COMMIS SIONER OF INCOME TAX (APPEAL). THE CASE LAWS RELIED UPON BEFO RE THE LD. FIRST APPELLATE AUTHORITY WAS ARGUED TO BE CONS IDERED AGAIN. 2.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING IT ENABLED SERVICES LIKE BPO AND CALL CENTRE SERVIC ES AND IS REGISTERED AS A SOFTWARE TECHNOLOGY PARK (STP) WITH THE SOFTWARE TECHNOLOGY PARK OF INDIA (STPI) FILED E-R ETURN ON 26/10/2007 WHICH WAS PROCESSED U/S 143(1) OF THE A CT ON 15/10/2008. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THEREFORE NOTICE U/S 143(2) DATED 24/09/2 008 AND ANOTHER NOTICE DATED 02/01/2010 ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED AND SERVED UPON THE ASSE SSEE. IN RESPONSE TO THE NOTICES THE ASSESSEE FILED THE NEC ESSARY ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 4 DETAILS AND SUBMISSIONS AS MENTIONED IN PARA-2 OF T HE ASSESSMENT ORDER ITSELF. THE ORIGINAL ASSESSMENT U /S 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT) W AS PASSED BY THE ASSESSING OFFICER ON 24/12/2010 BY MAKING AN ELABORATE DISCUSSION ON THE ISSUE OF CLAIM OF DEDUC TION U/S 10A OF THE ACT AND THEREAFTER REDUCED THE CLAIM OF THE ASSESSEE U/S 10A OF THE ACT FROM THE FIGURE OF RS.15 61 76 657/- TO RS.9 78 61 176/-. IT IS NOTICE D THAT THE LD. ASSESSING OFFICER IN PARA-4 OF THE ASSESSMENT O RDER HAS MADE DISCUSSION WITH RESPECT TO CLAIM OF THE ASSESS EE AND HAS MENTIONED ON PERUSAL OF DETAILS IN PROFIT & LOSS ACCOUNT ASSESSEE CREDITED THE RENT INCOME-SUB-LEAS E OF RS.6 23 67 627/- AND INCLUDED IN THE HEAD INCOME FR OM BUSINESS ON WHICH DEDUCTION WAS CLAIMED U/S 10A OF THE ACT. THE ASSESSEE WAS ASKED FOR THE JUSTIFICATION OF THE CLAIM DEDUCTION U/S 10A OF THE ACT. THE EXPLANATION OF THE ASSESSEE HAS BEEN REPRODUCED IN PARA-4 ITSELF WHIC H IS REPRODUCED HEREUNDER:- CLAIM OF SECTION 10A DEDUCTION ON RENT INCOME OF RS.6 23 67 327/-; WE HAVE TAKEN PREMISES ON LEASE FOR WHICH WE HAVE PAID RENT OF RS.6 23 67 627/-. THE SAME HAS BEEN TAKEN AS AN EXPENSE UNDER RENT RATES AND AXES. WE HAVE GIVEN THE SAME PREMISES ON SUB-LEASE FOR WHICH WE HAVE EARNED SUB-LEASE INCOME OF THE AMOUNT OF RS.6 23 67 627/- HAS CLAIMED AS PART OF INCOME AND EXPENSES WHILE COMPUTING SECTION 10A DEDUCTION. ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 5 2.4. IN PARA-5 OF THE ASSESSMENT ORDER IT HAS BE EN MENTIONED THAT THE SUBMISSIONS OF THE ASSESSEE IS D ULY CONSIDERED AND THE SAME WAS FOUND TO BE NOT ACCEPTA BLE ON THE REASONS ASSIGNED IN PARA 5.1 ONWARDS. THE LD. A SSESSING OFFICER HAS ALSO REPRODUCED THE PROVISIONS OF SECTI ON 10A IN PARA 5.5 AND ANALYZED THE SAME IN PARA 5.6 AND 5.7. VARIOUS CASE LAWS AS MENTIONED IN PARA 5.8 ONWARDS HAVE BEEN DISCUSSED AND FINALLY THE CLAIMED DEDUCTION WA S HELD TO BE NOT ELIGIBLE. 2.5. BEFORE ADVERTING FURTHER WE ARE EXPECTED TO DEAL WITH THE CASES RELIED UPON BY THE LD. DR. IN CIT VS BLACK AND VEATCH CONSULTING PVT. LTD. THE ISSUE HAS BEEN DEALT WITH IN RESPECT TO DEDUCTION U/S 10A OF THE ACT WH ICH SAYS THAT EFFECT IS TO BE GIVEN AT THE STAGE OF COMPUTIN G PROFIT AND GAINS OF BUSINESS AT FIRST INSTANCE I.E. ANTERIOR T O APPLICATION OF PROVISIONS OF SECTION 72 WHICH DEALS WITH CARRY FORWARD AND SET OFF OF BUSINESS LOSSES WHEREAS THE ISSUE BEFORE US IS WITH RESPECT TO JUSTIFICATION OF REOPENING OF AS SESSMENT WITHIN FOUR YEARS MORE SPECIFICALLY WHEN THE NECESS ARY MATERIAL FACTS WERE MADE AVAILABLE BY THE ASSESSEE DURING ASSESSMENT PROCEEDING ITSELF. IN THE CASE OF DALMIA (P.)LTD. VS CIT 348 ITR 469 (DEL.) THE ISSUE WAS WHETHER T HERE WAS FULL AND TRUE DISCLOSURE. IT IS NOTED THAT OUT OF SUNDRY CREDIT OF RS.1 66 37 402/- RETURNED BY THE ASSESSEE THE LD. ASSESSING OFFICER MADE ADDITION OF RS.19 86 551/- U /S 41(1) IN RESPECT OF CREDITORS WHO HAD FILED CONFIRMATION S. THE ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 6 ASSESSING OFFICER ISSUED NOTICE U/S 148 ON THE BASI S OF AUDIT NOTE TO THE EFFECT THAT ASSESSEE HAD FILED CONFIRMA TION IN RESPECT OF CREDITS OF RS.1 13 53 344/- AND THE BALA NCE THAT REMAINED UNCONFIRMED WAS RS.52 84 058/-. FURTHER A S ADDITION U/S 41(1) WAS MADE IN THE AMOUNT OF RS.19 86 551/- AND BALANCE AMOUNT OF RS.32 97 057/- ESCAPED ASSESSMENT. IN VIEW OF THESE FACTS THE HON 'BLE HIGH COURT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WHEREAS IN THE PRESENT APPEAL MATERIAL FACTS WERE DULY PROD UCED BY THE ASSESSEE. SO FAR AS THE DECISION IN EXPORT CRE DIT GUARANTEE CORPORATION OF INDIA LTD. VS ADDL. CIT (S UPRA) IS CONCERNED THERE WAS NON-DISCLOSURE OF PRIMARY FACT S AND THERE WAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IN THAT SITUATION THE ISSUE WAS DECIDE D IN FAVOUR OF THE REVENUE. IN THE CASE OF CONSOLIDATED PHOTO & FINVEST LTD. VS ACIT (SUPRA) IT WAS HELD THAT THE PRINCIPLE A MERE CHANGE OF OPINION CANNOT BE BASIS FOR REOPENIN G COMPLETED ASSESSMENT WOULD BE APPLICABLE ONLY TO A SITUATION WHERE THE ASSESSING OFFICER HAS APPLIED HIS MIND AND TOOK A CONSCIOUS DECISION ON A PARTICULAR MATTE R AND ISSUE AND NOT WHERE THE ORDER OF ASSESSMENT DOES NO T ADDRESS ITSELF TO THIS ASPECT WHICH IS THE BASIS FO R REOPENING OF ASSESSMENT. THE ASSESSING OFFICER HAS INDICATED THE BASIS ON WHICH INCOME EXIGIBLE TO TAX IN HIS OPINION HAD ESCAPED ASSESSMENT. THEREFORE THE CASES RELIED UPON BY THE LD. DR ARE NOT OF MUCH HELP BEING ON DIFFERENT FACTS/PROP OSITION. ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 7 EVEN OTHERWISE WE WILL DEAL WITH THE ISSUE IN THE SUBSEQUENT PARAS OF THIS ORDER. 2.6. NOW QUESTION ARISES WHETHER ANY OPINION WAS FORMED BY THE ASSESSING OFFICER. THE TOTALITY OF FA CTS CLEARLY INDICATES THAT A OPINION WAS FORMED BY THE ASSESSIN G OFFICER AND AFTER CONSIDERING THE FACTUAL MATRIX AND VARIOU S CASE LAWS DECIDED AGAINST THE ASSESSEE. 2.7. NOW QUESTION ARISES WHETHER THERE WAS A CHAN GE OF OPINION BY THE ASSESSING OFFICER AND THE VALIDIT Y OF REOPENING OF ASSESSMENT U/S 147/148 AFTER A PERIOD OF FOUR YEARS. SINCE WE HAVE UPHELD THAT AN OPINION WAS FO RMED BY THE ASSESSING OFFICER THAT TOO AFTER DUE DELIBERATI ON THEREFORE WE SHALL ANALYZED THE VALIDITY OF REOPEN ING OF ASSESSMENT. CONSIDERING THE TOTALITY OF FACTS WE FIND THAT REASSESSMENT PROCEEDINGS WILL BE INVALID IN CASE THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND IS DECIDED AGAINST THE ASSESSEE THEREFORE THE REASSESSMENT PROCEEDINGS IN THIS CASE IS HIT BY THE PRINCIPLE OF CHANGE OF OPINION BECAUSE REASSESSMENT PROCEED INGS WILL BE INVALID AS NOTICES ALONG WITH DETAILED QUE STIONNAIRE WERE ISSUED QUERY WAS RAISED AND ANSWERED BY THE A SSESSEE IN ORIGINAL ASSESSMENT PROCEEDINGS. THE EXPRESSION CHANGE OF OPINION POSTULATES FORMATION OF OPINION AND THE N A CHANGE THEREOF. IN THE CONTEXT OF ASSESSMENT PROCEE DINGS IT MEANS FORMATION OF BELIEF BY AN ASSESSING OFFICER R ESULTING FROM WHAT HE THINKS ON A PARTICULAR QUESTION. IT IS A RESULT ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 8 OF UNDERSTANDING EXPERIENCE AND REFLECTION. A DIST INCTION MUST BE DRAWN BETWEEN ERRONEOUS APPLICATION/ INTERPRETATION/ UNDERSTANDING OF LAW AND CASES WHER E FRESH OR NEW FACTUAL INFORMATION COMES TO THE KNOWLEDGE O F THE ASSESSING OFFICER SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER. IF NEW FACTS MATERIAL OR INFORMA TION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER WH ICH WAS NOT ON RECORD OR NOT MADE AVAILABLE BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS THE PRINCIPLE OF CHANGE OF OPINION WILL APPLY. THE REASON IS THAT OPINION IS FORMED ON FACTS. OPINION FORMED OR BASED ON WRONG AND INCORRECT FA CTS OR WHICH ARE BELIED AND UNTRUE DO NOT GET PROTECTION A ND COVER UNDER THE PRINCIPLE OF CHANGE OF OPINION. FACTUAL INFORMATION OR MATERIAL WHICH WAS INCORRECT OR WAS NOT AVAILABLE WITH THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT WOULD JUSTIFY INITIATION OF REASSESSMENT PROCEEDINGS. THE REQUIREMENT IN SUCH CASES IS THAT THE INFORMATION OR MATERIAL AVAILABLE SHOULD RELATE TO MATERIAL FACTS. THE EXPRESSION MATERIAL FACTS MEANS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADVERSE E FFECT ON THE ASSESSEE BY A HIGHER ASSESSMENT OF INCOME THAN THE ONE ACTUALLY MADE. THEY SHOULD BE PROXIMATE AND NOT HAV E A REMOTE BEARING ON THE ASSESSMENT. THE OMISSION TO D ISCLOSE MAY BE DELIBERATE OR INADVERTENT. THE QUESTION OF CONCEALMENT IS NOT RELEVANT AND IS NOT A PRECONDITI ON WHICH CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. CORR ECT MATERIAL FACTS CAN BE ASCERTAINED FROM THE ASSESSME NT ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 9 RECORDS ALSO AND IT IS NOT NECESSARY THAT THE SAME COME FROM A THIRD PERSON OR SOURCE I.E. FROM SOURCE OT HER THAN THE ASSESSMENT RECORDS. HOWEVER IN SUCH CASES THE ONUS WILL BE ON THE REVENUE TO SHOW THAT THE ASSESSEE HA D STATED INCORRECT AND WRONG MATERIAL FACTS RESULTING IN THE ASSESSMENT PROCEEDINGS ON THE BASIS OF FACTS WHICH ARE INCORRECT AND WRONG. THE REASONS RECORDED AND THE DOCUMENTS ON RECORD ARE OF PARAMOUNT IMPORTANCE AND WILL HAVE TO BE EXAMINED TO DETERMINE WHETHER THE STAND OF THE REVENUE IS CORRECT. IF A SUBJECT-MATTER ENTRY OR CLAIM/DEDUCTION IS NOT EXAMINED BY AN ASSESSING OFF ICER IT CANNOT BE PRESUMED THAT HE MUST HAVE EXAMINED THE CLAIM/DEDUCTION OR THE ENTRY AND THEREFORE IT IS A CASE OF CHANGE OF OPINION. WHEN AT THE FIRST INSTANCE IN THE ORIGINAL ASSESSMENT PROCEEDINGS NO OPINION IS FORM ED THE PRINCIPLE OF CHANGE OF OPINION CANNOT AND DOES NO T APPLY. THERE IS A DIFFERENCE BETWEEN CHANGE OF OPINION A ND FAILURE OR OMISSION OF THE ASSESSING OFFICER TO F ORM AN OPINION ON A SUBJECT-MATTER ENTRY CLAIM DEDUCTIO N ETC. WHEN THE ASSESSING OFFICER FAILS TO EXAMINE A SUBJE CT- MATTER ENTRY CLAIM OR DEDUCTION HE FORMS NO OPIN ION. IT IS A CASE OF NO OPINION. WHETHER OR NOT THE ASSESSING OFFICER HAD APPLIED HIS MIND AND EXAMINED THE SUBJECT-MATTE R CLAIM ETC. DEPENDS UPON FACTUAL MATRIX OF EACH CA SE. THE ASSESSING OFFICER CAN EXAMINE A CLAIM OR SUBJECT-MA TTER EVEN WITHOUT RAISING A WRITTEN QUERY. THERE CAN BE CASES WHERE AN ASPECT OR QUESTION IS TOO APPARENT OR OBVI OUS TO ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 10 HOLD THAT THE ASSESSING-OFFICER DID NOT EXAMINE A P ARTICULAR SUBJECT-MATTER CLAIM ETC. THE STAND AND SUBSTANCE OF THE ASSESSEE AND THE ASSESSING OFFICER IN SUCH CASES AR E RELEVANT. 2.8. SECTION 114 OF THE EVIDENCE ACT 1872 IS PERMISSIVE AND NOT A MANDATORY PROVISION. NINE SITU ATIONS BY WAY OF ILLUSTRATIONS ARE STATED. THESE ARE BY WA Y OF EXAMPLE OR GUIDELINES. AS A PERMISSIVE PROVISION IT ENABLES TO JUDGE TO SUPPORT HIS JUDGMENT BUT THERE IS NO SC OPE OF PRESUMPTION WHEN FACTS ARE KNOWN. PRESUMPTION OF FA CTS UNDER SECTION 114 IS REBUTTABLE. THE PRESUMPTION RA ISED UNDER ILLUSTRATION (E) TO SECTION 114 OF THE ACT ME ANS THAT WHEN AN OFFICIAL ACT IS PROVED TO HAVE BEEN DONE I T WILL BE PRESUMED TO HAVE BEEN REGULARLY DONE BUT IT DOES NO T RAISE ANY PRESUMPTION THAT AN ACT WAS DONE FOR WHICH THER E IS NO EVIDENCE OR PROOF. (I) ASSESSMENTS CANNOT BE VALIDLY REOPENED UNDER S ECTION 147 OF THE ACT EVEN WITHIN FOUR YEARS IF AN ASSESS EE HAD FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT IF THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(3). SO LONG AS THE ASSESSEE HAS F URNISHED FULL AND TRUE PARTICULARS AT THAT TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS FRAMED UNDER SECTION 143(3) OF THE ACT IT MATTERS LITTLE THAT THE ASSES SING OFFICER DID NOT ASK ANY QUESTION OR QUERY WITH RESPECT TO O NE ENTRY ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 11 OR NOTE BUT HAD RAISED QUERIES AND QUESTIONS ON OTH ER ASPECTS. (II) SECTION 114(E) OF THE ACT CAN BE APPLIED TO AN ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) OF THE ACT PROVI DED THERE HAS BEEN A FULL AND TRUE DISCLOSURE OF ALL MATERIAL AND PRIMARY FACTS AT THE TIME OF ORIGINAL ASSESSMENT. I N SUCH A CASE IF THE ASSESSMENT IS REOPENED IN RESPECT OF A MATTER COVERED BY THE DISCLOSURE IT WOULD AMOUNT TO CHANG E OF OPINION. THE RATIO LAID DOWN IN THE FOLLOWING CASES USEFULLY THROW LIGHTS ON THE ISSUE IN HAND:- A. L. A. FIRM V. CIT [1976] 102 ITR 622 (MAD) (PARA 9) A. L. A. FIRM V. CIT [1991] 189 ITR 285 (SC) (PARAS 32 60 61) ANANDJI HARIDAS AND CO. P. LTD. V. KUSHARE (S. P.) STO [1968] 21 STC 326 (SC) (PARA 35) BANKIPUR CLUB LTD. V. CIT [1971] 82 ITR 831 (SC) (PA RA 34) BARIUM CHEMICALS LTD. V. CLB [1966] 36 COMP CAS 639 (SC) (PARA 56) BLB LTD. V. ASST. CIT [2012] 343 ITR 129 (DELHI) (PAR A 14) CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 (SC) (PARA 45) CIT V. A. RAMAN AND CO. [1968] 67 ITR 11 (SC) (PARAS 9 34) CIT V. CHASE BRIGHT STEEL LTD. (NO. 1) [1989] 177 ITR 124 (BOM) (PARA 21) CIT V. DLF POWER LTD. [2012] 345 ITR 446 (DELHI) (PAR A 14) CIT V. EICHER LTD. [2007] 294 ITR 310 (DELHI) (PARAS 1 0 28) CIT V. KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DE LHI) [FB] (PARAS 2 12 20 48) CIT V. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 ( SC) (PARAS 2 28) CIT V. KHEMCHAND RAMDAS [1938] 6 ITR 414 (PC) (PARA 50) CIT V. P. V. S. BEEDIES P. LTD. [1999] 237 ITR 13 (S C) (PARA 18) CIT (ASST.) V. RAJESH JHAVERI STOCK BROKERS P. LTD. [2 007] 291 ITR 500 (SC) (PARAS 4 12) CIT V. SHARMA (H. P.) [1980] 122 ITR 675 (DELHI) (PARA 9) CONSOLIDATED PHOTO AND FINVEST LTD. V. ASST.CIT [200 6] 281 ITR 394 (DELHI) (PARAS 9 11) DALMIA P. LTD. V. CIT [2012] 348 ITR 469 (DELHI) (PAR A 17) G. R. RAMACHARI AND CO. V. CIT [1961] 41 ITR 142 (MAD) (PARAS 38 61) ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 12 HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437 (P&H ) (PARA 10) ITO V. HABIBULLAH (S. K.) [1962] 44 ITR 809 (SC) (PAR A 50) INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) (PARAS 34 35) INDIAN HUME PIPE CO. LTD. V. ASST. CIT [2012] 348 I TR 439 (BOM) (PARA 17) 3I INFOTECH LTD. V. ASST. CIT [2010] 329 ITR 257 (BOM ) (PARA 26) INTERNATIONAL WOOLLEN MILLS V. STANDARD WOOL (U. K. ) LTD. [2001] 5 SCC 265 (PARA 30) KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC ) (PARAS 9 33 34 35) KLM ROYAL DUTCH AIRLINES V. ASST. DIRECTOR OF I. T. [ 2007] 292 ITR 49 (DELHI) (PARA 12) KUNHAYAMMED V. STATE OF KERALA [2000] 245 ITR 360 (SC ) (PARA 31) MAHARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 ITR 1 (SC) (PARA 34) MUTHUKRISHNA REDDIAR V. CIT [1973] 90 ITR 503 (KER) (P ARA 9) NEW LIGHT TRADING CO. V. CIT [2002] 256 ITR 391 (DELHI ) (PARA 18) PRAFUL CHUNILAL PATEL V. MAKWANA (M. J.)/ASST. CIT [ 1999] 236 ITR 832 (GUJ) (PARA 21) SNOWCEM INDIA LTD. V. DEPUTY CIT [2009] 313 ITR 170 (BOM) (PARA 31) SRI KRISHNA P. LTD. V. ITO [1996] 221 ITR 538 (SC) (P ARAS 56 58) SURESH BUDHARMAL KALANI V. STATE OF MAHARASHTRA [1998] 7 SCC 337 (PARA 29) UNION OF INDIA V. SURESH C. BASKEY [1996] AIR 1996 SC 849 (PARA 20) UNITED MERCANTILE CO. LTD. V. CIT [1967] 64 ITR 218 (KER) (PARA 9) '(I) WHAT IS MEANT BY THE TERM 'CHANGE OF OPINION' ? (II) WHETHER ASSESSMENT PROCEEDINGS CAN BE VALIDLY REOPENED UNDER SECTION 147 OF THE ACT EVEN WITHIN FOUR YEARS IF AN ASSESSEE HAS FURNISHED FULL AND TRUE P ARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE T O INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT AND WHETHER AND WHEN IN SUCH CASES REOPENING IS VALID OR INVALID ON THE GROUND OF CHANGE OF OPINION ? (III) WHETHER THE BAR OR PROHIBITION UNDER THE PRINCIPLE 'CHANGE OF OPINION' WILL APPLY EVEN WHEN THE ASSESS ING OFFICER HAS NOT ASKED ANY QUESTION OR QUERY WITH RE SPECT TO AN ENTRY/NOTE BUT THERE IS EVIDENCE AND MATERIAL T O SHOW THAT THE ASSESSING OFFICER HAD RAISED QUERIES AND Q UESTIONS ON OTHER ASPECTS ? ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 13 (IV) WHETHER AND IN WHAT CIRCUMSTANCES SECTION 114( E) OF THE EVIDENCE ACT CAN BE APPLIED AND IT CAN BE HELD THAT IT IS A CASE OF CHANGE OF OPINION ?' 2.9. TO EXPLAIN THE AFOREMENTIONED POSITION OF THE LAW WE ARE REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 147 OF THE ACT. '147. INCOME ESCAPING ASSESSMENT.IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION OR RE -COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALL OWANCE AS THE CASE MAY BE FOR THE ASSESSMENT YEAR CONCERNED (HER EAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS T HE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SEC TION 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 M ATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YE AR. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE W ITHIN THE MEANING OF THE FORE GOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 14 ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS DEDUCTION ALLOWANCE OR RELIEF IN THE RETURN ; (C) WHERE AN ASSESSMENT HAS BEEN MADE BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSE D ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RAT E ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOW ANCE UNDER THIS ACT HAS BEEN COMPUTED. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED A SSESSMENT AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASON S RECORDED UNDER SUB- SECTION (2) OF SECTION 148.' 2.10. FOR REOPENING AN ASSESSMENT MADE UNDER SECTI ON 143(3) OF THE ACT THE FOLLOWING CONDITIONS ARE REQ UIRED TO BE SATISFIED:- (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR PRIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE IS UNDE RASSESSMENT OR ESCAPEMENT OF INCOME ; (II) HE MUST RECORD THE PRIMA FACIE OPINION INTO WR ITING ; ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 15 (III) THE OPINION FORMED IS SUBJECTIVE BUT THE REAS ONS RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW TH AT THE OPINION IS NOT A MERE SUSPICION. (IV) REASONS RECORDED AND/OR THE DOCUMENTS AVAILAB LE ON RECORD MUST SHOW A NEXUS OR THAT IN FACT THEY ARE G ERMANE AND RELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE AS SESSING OFFICER REGARDING ESCAPEMENT OF INCOME. (V) IN CASES WHERE THE FIRST PROVISO APPLIES THERE IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSION ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS. THE EXPLANATION TO THE SECTION STIP ULATES THAT MERE PRODUCTION OF BOOKS OF ACCOUNT OR OTHER DOCUME NTS FROM WHICH THE ASSESSING OFFICER COULD HAVE WITH DUE DI LIGENCE INFERRED MATERIAL FACTS DOES NOT AMOUNT TO 'FULL A ND TRUE DISCLOSURE OF MATERIAL FACTS' (THE PROVISO IS NOT A PPLICABLE WHERE REASONS TO BELIEVE FOR ISSUE OF NOTICE ARE RE CORDED AND NOTICE IS ISSUED WITHIN FOUR YEARS FROM THE END OF ASSESSMENT YEAR). 2.11. THE EXPRESSION 'CHANGE OF OPINION' POSTULATE S FORMATION OF OPINION AND THEN A CHANGE THEREOF. IN THE CONTEXT OF SECTION 147 OF THE ACT IT IMPLIES THAT T HE ASSESSING OFFICER SHOULD HAVE FORMED AN OPINION AT THE FIRST INSTANCE I.E. IN THE PROCEEDINGS UNDER SECTION 143(3) AND T HEREAFTER WITH THE INITIATION OF THE REASSESSMENT PROCEEDING THE ASSESSING OFFICER PROPOSES OR WANTS TO TAKE A DIFFE RENT VIEW. THE WORD 'OPINION' IS DERIVED FROM THE LATIN WORD ' OPINARI' WHICH MEANS 'TO BELIEVE' 'TO THINK'. THE WORD 'OPI NION' AS PER THE BLACK'S LAW DICTIONARY MEANS A STATEMENT BY A JUDGE OR A COURT OF A DECISION REACHED BY HIM INCOR PORATING CAUSE TRIED OR ARGUED BEFORE THEM EXPOUNDING THE L AW AS APPLIED TO THE CASE AND DETAILING THE REASONS UPON WHICH THE JUDGMENT IS BASED. ADVANCED LAW LEXICON BY P. RAMANATHA AIYAR (THIRD EDITION) EXPLAINS THE TERM ' OPINION' ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 16 TO MEAN 'SOMETHING MORE THAN MERE RETAINING OF GOSS IP OR HEARSAY; IT MEANS JUDGMENT OR BELIEF THAT IS A BE LIEF OR A CONVICTION RESULTING FROM WHAT ONE THINKS ON A PART ICULAR QUESTION . . . AN OPINION IS A CONVICTION BASED ON TESTIMONY . . . THEY ARE AS A RESULT OF READING EXPERIENCE AND REFLECTION'. 2.12. IN THE CONTEXT OF ASSESSMENT PROCEEDINGS I T MEANS FORMATION OF BELIEF BY AN ASSESSING OFFICER R ESULTING 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. THE QUESTION OF CHANGE OF OPINION ARISE WHEN AN ASSESSING OFFICER FORMS AN OPINION AND DECIDES NOT TO MAKE AN ADDITION OR HOLDS THAT T HE ASSESSEE IS CORRECT AND ACCEPTS HIS POSITION OR STA ND. IN HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437 (P&H) A DIVISION BENCH OF THE HONBLE PUNJAB AND HARYANA HIGH COURT OBSERVED THAT AN ASSESSEE HAS NO CONTROL OVER THE W AY AN ASSESSMENT ORDER IS DRAFTED. IT WAS OBSERVED THAT GENERALLY THE ISSUES WHICH ARE ACCEPTED BY THE ASSESSING OFFI CER DO NOT FIND MENTION IN THE ASSESSMENT ORDER AND ONLY S UCH POINTS ARE TAKEN NOTE OF ON WHICH THE ASSESSEE'S EXPLANATIONS ARE REJECTED AND ADDITIONS/DISALLOWANC ES ARE MADE. APPLYING THE PRINCIPLES LAID DOWN BY THE FUL L BENCH OF THIS COURT AS WELL AS THE OBSERVATIONS OF THE PU NJAB AND HARYANA HIGH COURT WE FIND THAT IF THE ENTIRE MATE RIAL HAD BEEN PLACED ON RECORD BY THE ASSESSEE BEFORE THE AS SESSING OFFICER AT THE TIME WHEN THE ORIGINAL ASSESSMENT WA S MADE AND THE ASSESSING OFFICER APPLIED HIS MIND TO THAT MATERIAL ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 17 AND ACCEPTED/REJECTED THE VIEW CANVASSED BY THE ASS ESSEE THEN MERELY BECAUSE HE DID EXPRESS THIS IN THE ASSE SSMENT ORDER THAT BY ITSELF WOULD NOT GIVE HIM A GROUND T O CONCLUDE THAT INCOME HAS ESCAPED ASSESSMENT AND THEREFORE THE ASSESSMENT NEEDED TO BE REOPENED. ON THE OTHER HAND IF THE ASSESSING OFFICER DID NOT APPLY HIS MIND AND COMMIT TED A LAPSE THERE IS NO REASON WHY THE ASSESSEE SHOULD B E MADE TO SUFFER THE CONSEQUENCES OF HIS LAPSES. 2.13. THE HONBLE DELHI HIGH COURT IN CONSOLIDATE D PHOTO AND FINVEST LTD. [2006] 281 ITR 394 (DELHI) H ELD AS UNDER: ' IN THE LIGHT OF THE AUTHORITATIVE PRONOUNCEMENTS OF THE SUPREME COURT REFERRED TO ABOVE WHICH ARE BINDING UPON US AND THE OBSERVATIONS MADE BY THE HIGH COURT OF GUJA RAT WITH WHICH WE FIND OURSELVES IN RESPECTFUL AGREEMENT TH E ACTION INITIATED BY THE ASSESSING OFFICER FOR REOPENING TH E ASSESSMENT CANNOT BE SAID TO BE EITHER INCOMPETENT OR OTHERWIS E IMPROPER TO CALL FOR INTERFERENCE BY A WRIT COURT. THE ASSESSING OFFICER HAS IN THE REASONED ORDER PASSED BY HIM INDICATED THE BASIS ON WHICH INCOME EXIGIBLE TO TAX HAD IN HIS OPINION ESCAPED ASSESSMENT. THE ARGUMENT THAT THE P ROPOSED REOPENING OF ASSESSMENT WAS BASED ONLY UPON A CHANG E OF OPINION HAS NOT IMPRESSED US. THE ASSESSMENT ORDER DID NOT ADMITTEDLY ADDRESS ITSELF TO THE QUESTION WHICH THE ASSESSING OFFICER PROPOSES TO EXAMINE IN THE COURSE OF REASSE SSMENT PROCEEDINGS. THE SUBMISSION OF MR. VOHRA THAT EVEN WHEN THE ORDER OF ASSESSMENT DID NOT RECORD ANY EXPLICIT OPI NION ON THE ASPECTS NOW SOUGHT TO BE EXAMINED IT MUST BE PRESU MED THAT THOSE ASPECTS WERE PRESENT TO THE MIND OF THE ASSES SING OFFICER AND HAD BEEN HELD IN FAVOUR OF THE ASSESSEE IS TOO FAR-FETCHED A PROPOSITION TO MERIT ACCEPTANCE. THERE MAY INDEED B E A PRESUMPTION THAT THE ASSESSMENT PROCEEDINGS HAVE BE EN REGULARLY CONDUCTED BUT THERE CAN BE NO PRESUMPTIO N THAT ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 18 EVEN WHEN THE ORDER OF ASSESSMENT IS SILENT ALL PO SSIBLE ANGLES AND ASPECTS OF A CONTROVERSY HAD BEEN EXAMINED AND DETERMINED BY THE ASSESSING OFFICER. IT IS TRITE TH AT A MATTER IN ISSUE CAN BE VALIDLY DETERMINED ONLY UPON APPLICATI ON OF MIND BY THE AUTHORITY DETERMINING THE SAME. APPLICATION OF MIND IS IN TURN BEST DEMONSTRATED BY DISCLOSURE OF MIND W HICH IS BEST DONE BY GIVING REASONS FOR THE VIEW WHICH THE AUTHO RITY IS TAKING. IN CASES WHERE THE ORDER PASSED BY A STATUT ORY AUTHORITY IS SILENT AS TO THE REASONS FOR THE CONCL USION IT HAS DRAWN IT CAN WELL BE SAID THAT THE AUTHORITY HAS N OT APPLIED ITS MIND TO THE ISSUE BEFORE IT NOR FORMED ANY OPIN ION. THE PRINCIPLE THAT A MERE CHANGE OF OPINION CANNOT BE A BASIS FOR REOPENING COMPLETED ASSESSMENTS WOULD BE APPLICABLE ONLY TO SITUATIONS WHERE THE ASSESSING OFFICER HAS APPLIED HIS MIND AND TAKEN A CONSCIOUS DECISION ON A PARTICULAR MATT ER IN ISSUE. IT WILL HAVE NO APPLICATION WHERE THE ORDER OF ASSE SSMENT DOES NOT ADDRESS ITSELF TO THE ASPECT WHICH IS THE BASIS FOR REOPENING OF THE ASSESSMENT AS IS THE POSITION IN THE PRESENT CASE. IT IS IN THAT VIEW INCONSEQUENTIAL WHETHER OR NOT THE MATERIAL NECESSARY FOR TAKING A DECISION WAS AVAILA BLE TO THE ASSESSING OFFICER EITHER GENERALLY OR IN THE FORM O F A REPLY TO THE QUESTIONNAIRE SERVED UPON THE ASSESSEE. WHAT IS IMPORTANT IS WHETHER THE ASSESSING OFFICER HAD BASED ON THE M ATERIAL AVAILABLE TO HIM TAKEN A VIEW. IF HE HAD NOT DONE S O THE PROPOSED REOPENING CANNOT BE ASSAILED ON THE GROUND THAT THE SAME IS BASED ONLY ON A CHANGE OF OPINION.' 2.14. FROM THE FOREGOING DISCUSSION THE CLEAR PO SITION EMERGES AS UNDER: (1) REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIAT ED IN CASE RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1) AND NO SCRUTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES TH ERE IS NO CHANGE OF OPINION. (2) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E 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 THE PRINCIPLE OF ' CHANGE OF OPINION'. ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 19 (3) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E 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 O R REASON TO MAKE ADDITION OR REJECT THE STAND OF THE ASSESSEE. HE FORMS AN OPINION. THE REASSESSMENT WILL BE INVALID BECAUSE T HE ASSESSING OFFICER HAD FORMED AN OPINION IN THE ORIG INAL ASSESSMENT THOUGH HE HAD NOT RECORDED HIS REASONS. 2.15. THUS WHERE AN ASSESSING OFFICER INCORRECTL Y OR ERRONEOUSLY APPLIES LAW OR COMES TO A WRONG CONCLUS ION AND INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT RE SORT MAY BE MADE THROUGH SECTION 263 OF THE ACT. BUT INI TIATION OF REASSESSMENT PROCEEDINGS WILL BE INVALID ON THE GROUND OF CHANGE OF OPINION. HERE A DISTINCTION HAS TO BE DR AWN BETWEEN ERRONEOUS APPLICATION/INTERPRETATION/ UNDERSTANDING OF LAW AND CASES WHERE FRESH OR NEW F ACTUAL INFORMATION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER. IF NEW FACTS MATERIAL OR INFORMATION COMES TO THE KNOWLED GE OF THE ASSESSING OFFICER WHICH WAS NOT ON RECORD AND AVAI LABLE AT THE TIME OF THE ASSESSMENT ORDER THE PRINCIPLE OF 'CHANGE OF OPINION' WILL NOT APPLY. THE REASON IS THAT 'OPINIO N' IS FORMED ON FACTS. 'OPINION' FORMED OR BASED ON WRONG AND INCORRECT FACTS OR WHICH ARE BELIED AND UNTRUE DO N OT GET PROTECTION AND COVER UNDER THE PRINCIPLE OF 'CHANGE OF OPINION'. FACTUAL INFORMATION OR MATERIAL WHICH WAS INCORRECT OR WAS NOT AVAILABLE WITH THE ASSESSING O FFICER AT THE TIME OF ORIGINAL ASSESSMENT WOULD JUSTIFY INITI ATION OF ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 20 REASSESSMENT PROCEEDINGS. THE REQUIREMENT IN SUCH C ASES IS THAT THE INFORMATION OR MATERIAL AVAILABLE SHOULD R ELATE TO MATERIAL FACTS. THE EXPRESSION 'MATERIAL FACTS' MEA NS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADV ERSE EFFECT ON THE ASSESSEE BY A HIGHER ASSESSMENT OF IN COME THAN THE ONE ACTUALLY MADE. CORRECT MATERIAL FACTS CAN BE ASCERTAINED FROM THE ASSESSMENT RECORDS ALSO AND IT IS NOT NECESSARY THAT THE SAME MAY COME FROM A THIRD PERSO N OR SOURCE I.E. FROM SOURCE OTHER THAN THE ASSESSMENT RECORDS. HOWEVER IN SUCH CASES THE ONUS WILL BE ON THE REV ENUE TO SHOW THAT THE ASSESSEE HAD STATED INCORRECT AND WRO NG MATERIAL FACTS RESULTING IN THE ASSESSING OFFICERS PROCEEDING ON THE BASIS OF FACTS WHICH ARE INCORRECT AND WRON G. THE REASONS RECORDED AND THE DOCUMENTS ON RECORD ARE OF PARAMOUNT IMPORTANCE AND WILL HAVE TO BE EXAMINED T O DETERMINE WHETHER THE STAND OF THE REVENUE IS CORRE CT. A DECISION OF FROM HONBLE DELHI HIGH COURT DATED SEP TEMBER 26 2011 IN DALMIA P. LTD. V. CIT [2012] 348 ITR 46 9 (DELHI) AND ANOTHER DECISION FROM HONBLE JURISDICTIONAL HI GH COURT DATED NOVEMBER 8 2011 IN INDIAN HUME PIPE CO. LTD . V. ASST. CIT [2012] 348 ITR 439 (BOM.) ARE TWO SUCH CA SES WHICH THROWS LIGHT ON THE ISSUE. IN THE FIRST CASE THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT HAD MA DE ADDITION OF RS. 19 86 551 UNDER SECTION 40(1) ON AC COUNT OF UNCONFIRMED SUNDRY CREDITORS. THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER NOTICING THAT UNCO NFIRMED SUNDRY CREDITORS OF WHICH DETAILS ETC. WERE NOT FURNISHED ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 21 WERE TO THE EXTENT OF RS. 52 84 058 AND NOT RS. 19 86 551. IN INDIAN HUME PIPE CO. LTD. (SUPRA) AFTER VERIFIC ATION THE CLAIM UNDER SECTION 54EC WAS ALLOWED BUT SUBSEQUENT LY ON EXAMINATION IT TRANSPIRED THAT THE SECOND PROPERTY WAS PURCHASED PRIOR TO THE DATE OF SALE. THE AFORESAID DECISIONS/ FACTS CASES MUST BE DISTINGUISHED FROM CASES WHERE THE MATERIAL FACTS ON RECORD ARE CORRECT BUT THE ASSESS ING OFFICER DID NOT DRAW PROPER LEGAL INFERENCE OR DID NOT APPR ECIATE THE IMPLICATIONS OR DID NOT APPLY THE CORRECT LAW. THE SECOND CATEGORY WILL BE A CASE OF 'CHANGE OF OPINION' AND CANNOT BE REOPENED FOR THE REASON THAT THE ASSESSEE AS REQUI RED HAS PLACED ON RECORD PRIMARY FACTUAL MATERIAL BUT ON TH E BASIS OF LEGAL UNDERSTANDING THE ASSESSING OFFICER HAS TAKE N A PARTICULAR LEGAL VIEW. HOWEVER AS STATED ABOVE AN ERRONEOUS DECISION WHICH IS ALSO PREJUDICIAL TO TH E INTERESTS OF THE REVENUE CAN BE MADE SUBJECT-MATTER OF ADJUD ICATION UNDER SECTION 263 OF THE ACT. 2.16. A DIVISION BENCH OF HONBLE DELHI HIGH COUR T IN NEW LIGHT TRADING CO. V. CIT [2002] 256 ITR 391 (DE LHI) REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN CIT V. P. V. S. BEEDIES P. LTD. [1999] 237 ITR 13 (SC) AND MADE FOLLOWING OBSERVATIONS. (PAGE 392) : 'IN THE CASE OF CIT V. P. V. S. BEEDIES P. LTD. [19 99] 237 ITR 13 (SC) THE APEX COURT HELD THAT THE AUDIT PARTY CAN POINT OUT A FACT WHICH HAS BEEN OVERLOOKED BY THE INCOME-TAX OFFICER IN TH E ASSESSMENT. THOUGH THERE CANNOT BE ANY INTERPRETATION OF LAW BY THE AUDIT PARTY IT IS ENTITLED TO POINT OUT A FACTUAL ERROR OR OMIS SION IN THE ASSESSMENT AND REOPENING OF A CASE ON THE BASIS OF FACTUAL ERR OR OR OMISSION ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 22 POINTED OUT BY THE AUDIT PARTY IS PERMISSIBLE UNDER LAW. AS THE TRIBUNAL HAS RIGHTLY NOTICED THIS WAS NOT A CASE O F THE ASSESSING OFFICER MERELY ACTING AT THE BEHEST OF THE AUDIT PA RTY OR ON ITS REPORT. IT HAS INDEPENDENTLY EXAMINED THE MATERIALS COLLECT ED BY THE AUDIT PARTY IN ITS REPORT AND HAS COME TO AN INDEPENDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME. THE ANSWER TO THE Q UESTION IS THEREFORE IN THE AFFIRMATIVE IN FAVOUR OF THE REV ENUE AND AGAINST THE ASSESSEE.' AS RECORDED ABOVE THE REASONS RECORDED OR THE DOC UMENTS AVAILABLE MUST SHOW NEXUS THAT IN FACT THEY ARE GERMANE AND R ELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME. AT THE SAME TIME IT IS NOT T HE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCE RTAINED ESCAPEMENT OF INCOME BY RECORDING CONCLUSIVE FINDINGS. THE FIN AL ASCERTAINMENT TAKES PLACE WHEN THE FINAL OR REASSESSMENT ORDER IS PASSED. IT IS ENOUGH IF THE ASSESSING OFFICER CAN SHOW TENTATIVEL Y OR PRIMA FACIE ON THE BASIS OF THE REASONS RECORDED AND WITH REFERENC E TO THE DOCUMENTS AVAILABLE ON RECORD THAT INCOME HAS ESCAP ED ASSESSMENT. THIS BRINGS US TO THE OBSERVATIONS OF THE DELHI HIG H COURT IN KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI) [FB] WHICH READ AS UNDER (PAGE 18): 'THE BOARD IN EXERCISE OF ITS JURISDICTION UNDER TH E AFOREMENTIONED PROVISIONS HAD ISSUED THE CIRCULAR ON OCTOBER 31 1 989. THE SAID CIRCULAR ADMITTEDLY IS BINDING ON THE REVENUE. THE AUTHORITY THEREFORE COULD NOT HAVE TAKEN A VIEW WHICH WOULD RUN COUNTER TO THE M ANDATE OF THE SAID CIRCULAR. FROM A PERUSAL OF CLAUSE 7.2 OF THE SAID CIRCULAR IT WOULD APPEAR THAT IN NO UNCERTAIN TERMS IT WAS STAT ED AS TO UNDER WHAT CIRCUMSTANCES THE AMENDMENTS HAD BEEN CARRIED OUT I.E. ONLY WITH A VIEW TO ALLAY THE FE ARS THAT THE OMISSION OF THE EXPRESSION 'REASON TO BELIEVE' FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OF FICER TO REOPEN PAST ASSESSMENT ON MERE CHANGE OF OPINION. I T IS THEREFORE EVIDENT THAT EVEN ACCORDING TO THE CBDT A MERE ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 23 CHANGE OF OPINION CANNOT FORM THE BASIS FOR REOPEN ING A COMPLETED ASSESSMENT. 2.17 . ANOTHER ASPECT OF THE MATTER ALSO CANNOT BE LOST SIGHT OF. A STATUTE CONFERRING AN ARBITRARY POWER M AY BE HELD TO BE ULTRA VIRUS ARTICLE 14 OF THE CONSTITUTION OF INDIA. IF TWO INTERPRETATIONS ARE POSSIBLE THE INTERPRETATION WH ICH UPHOLDS CONSTITUTIONALITY IT IS TRITE SHOULD BE F AVOURED. IN THE EVENT IT IS HELD THAT BY REASON OF SECTION 147 IF THE INCOME-TAX OFFICER EXERCISES ITS JURISDICTION FOR I NITIATING A PROCEEDING FOR RE-ASSESSMENT ONLY UPON MERE CHANGE OF OPINION THE SAME MAY BE HELD TO BE UNCONSTITUTIONA L. WE ARE THEREFORE OF THE OPINION THAT SECTION 147 OF THE ACT DOES NOT POSTULATE CONFERMENT OF POWER UPON THE ASSESSIN G OFFICER TO INITIATE REASSESSMENT PROCEEDING UPON ME RE CHANGE OF OPINION. 2.18. THE HONBLE APEX COURT THEREAFTER REFERRED T O THE SUBSEQUENT DECISION IN INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) WHEREIN IT W AS OBSERVED THAT SOME OF THE OBSERVATIONS MADE IN KALY ANJI MAVJI (SUPRA) WERE FAR TOO WIDE AND THE STATUTE DID NOT PERMIT REAPPRAISAL OF MATERIAL CONSIDERED BY THE AS SESSING OFFICER DURING THE ORIGINAL ASSESSMENT. THE OBSERVA TIONS IN KALYANJI MAVIJI (SUPRA) THAT REOPENING WOULD COVER A CASE 'WHERE INCOME HAS ESCAPED ASSESSMENT DUE TO THE OVE RSIGHT INADVERTENCE OR MISTAKE' WAS TOO BROADLY EXPRESSED AND DID NOT LAY DOWN THE CORRECT LAW. IT WAS CLARIFIED AND OBSERVED AT ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 24 PAGE 1004 IN INDIAN AND EASTERN NEWSPAPER SOCIETY [ 1979] 119 ITR 996 (SC) AS UNDER : ' NOW IN THE CASE BEFORE US THE INCOME-TAX OFFICER HAD WHEN HE MADE THE ORIGINAL ASSESSMENT CONSIDERED THE PROVIS IONS OF SECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARD S ON THE APPLICATION OF THOSE PROVISIONS WOULD AMOUNT TO A C HANGE OF OPINION ON MATERIAL ALREADY CONSIDERED BY HIM. THE REVENUE CONTENDS THAT IT IS OPEN TO HIM TO DO SO AND ON THAT BASIS TO RE OPEN THE ASSESSMENT UNDER SECTION 147(B). RELIANCE IS PLACED ON KALYANJ I MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC) WHERE A BENCH OF TWO L EARNED JUDGES OF THIS COURT OBSERVED THAT A CASE WHERE INCOME HAD ESCAPED ASSESSMENT DUE TO THE 'OVERSIGHT INADVERTENCE OR M ISTAKE' OF THE INCOME-TAX OFFICER MUST FALL WITHIN SECTION 34(1)(B ) OF THE INDIAN INCOME-TAX ACT 1922. IT APPEARS TO US WITH RESPEC T THAT THE PROPOSITION IS STATED TOO WIDELY AND TRAVELS FARTHE R THAN THE STATUTE WARRANTS IN SO FAR AS IT CAN BE SAID TO LAY DOWN TH AT IF ON REAPPRAISING THE MATERIAL CONSIDERED BY HIM DURING THE ORIGINAL ASSESSMENT THE INCOME-TAX OFFICER DISCOVERS THAT H E HAS COMMITTED AN ERROR IN CONSEQUENCE OF WHICH INCOME HAS ESCAPED ASSESSMENT IT IS OPEN TO HIM TO REOPEN THE ASSESSMENT. IN OUR OPI NION AN ERROR DISCOVERED ON A RECONSIDERATION OF THE SAME MATERIA L (AND NO MORE) DOES NOT GIVE HIM THAT POWER. THAT WAS THE VIEW TAK EN BY THIS COURT IN MAHARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 ITR 1 (SC) CIT V. A. RAMAN AND CO. [1968] 67 ITR 11 (SC) AND BANKIPUR CL UB LTD. V. CIT [1971] 82 ITR 831 (SC) AND WE DO NOT BELIEVE THAT THE LAW HAS SINCE TAKEN A DIFFERENT COURSE. ANY OBSERVATIONS IN KALYA NJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (SC) SUGGESTING THE CONTR ARY DO NOT WE SAY WITH RESPECT LAY DOWN THE CORRECT LAW.' 2.19. IN A. L. A. FIRM (SUPRA) THE HONBLE APEX C OURT EXPLAINED THAT THERE WAS NO DIFFERENCE BETWEEN THE OBSERVATIONS OF THE SUPREME COURT IN KALYANJI MAVIJ I [1976] 102 ITR 287 (SC) AND INDIAN AND EASTERN NEWSPAPER S OCIETY CASE [1979] 119 ITR 996 (SC) AS FAR AS PROPOSITION (4) IS CONCERNED. IT WAS HELD THAT (PAGE 297 OF 189 ITR) : 'WE HAVE POINTED OUT EARLIER THAT KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC) OUTLINES FOUR SITUATIONS IN WHICH ACTION UNDER ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 25 SECTION 34(1)(B) CAN BE VALIDLY INITIATED. THE INDI AN EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) HA S ONLY INDICATED THAT PROPO SITION (2) OUTLINED IN THIS CA SE AND EXTRACTED EARLIER MAY HAVE BEEN SOMEWHAT WIDELY STA TED ; IT HAS NOT CAST ANY DOUBT ON THE OTHER THREE PROPOSITI ONS SET OUT IN KALYANJI MAVJI'S CASE. THE FACTS OF THE PRESENT CAS E SQUARELY FALL WITHIN THE SCOPE OF PROPOSITIONS 2 AND 4 ENUNCIATED IN KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC). PROPOSITION (2) MAY BE BRIEFLY SUMMARIZED AS PERMITTING ACTION EVEN ON A ' MERE CHANGE OF OPINION'. THIS IS WHAT HAS BEEN DOUBTED I N THE INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1979] 119 ITR 9 96 (SC) AND WE SHALL DISCUSS ITS APPLICATION TO THIS CASE A LITTLE LATER. BUT EVEN LEAVING THIS OUT OF CONSIDERATION THERE CAN BE NO DOUBT THAT THE PRESENT CASE IS SQUARELY COVERED BY PROPOSITION (4) SET OUT IN KALYANJI MAVIJI'S CASE [1976] 102 IT R 287 (SC). THIS PROPOSITION CLEARLY ENVISAGES A FORMATION OF O PINION BY THE INCOME-TAX OFFICER ON THE BASIS OF MATERIAL ALREADY ON RECORD PROVIDED THE FORMATION OF SUCH OPINION IS CONSEQUEN T ON 'INFORMATION' IN THE SHAPE OF SOME LIGHT THROWN ON ASPECTS OF FACTS OR LAW WHICH THE INCOME-TAX OFFICER HAD NOT E ARLIER BEEN CONSCIOUS OF. TO GIVE A COUPLE OF ILLUSTRATIONS ; S UPPOSE AN INCOME-TAX OFFICER IN THE ORIGINAL ASSESSMENT WHI CH IS A VOLUMINOUS ONE INVOLVING SEVERAL CONTENTIONS ACCEP TS A PLEA OF THE ASSESSEE IN REGARD TO ONE OF THE ITEMS THAT THE PROFITS REALISED ON THE SALE OF A HOUSE IS A CAPITAL REALIS ATION NOT CHARGEABLE TO TAX. SUBSEQUENTLY HE FINDS IN THE F OREST OF PAPERS FILED IN CONNECTION WITH THE ASSESSMENT SEVERAL IN STANCES OF EARLIER SALES OF HOUSE PROPERTY BY THE ASSESSEE. TH AT WOULD BE A CASE WHERE THE INCOME-TAX OFFICER DERIVES INFORMATI ON FROM THE RECORD ON AN INVESTIGATION OR ENQUIRY INTO FACTS NO T ORIGINALLY UNDERTAKEN. AGAIN SUPPOSE THE INCOME-TAX OFFICER A CCEPTS THE PLEA OF AN ASSESSEE THAT A PARTICULAR RECEIPT IS NO T INCOME LIABLE TO TAX. BUT ON FURTHER RESEARCH INTO LAW HE FINDS THAT THERE WAS A DIRECT DECISION HOLDING THAT CATEGORY OF RECEIPT TO BE AN INCOME RECEIPT. HE WOULD BE ENTITLED TO REOPEN THE ASSESSMENT UNDER SECTION 147(B) BY VIRTUE OF PROPOSITION (4) O F KALYANJI MAVJI. THE FACT THAT THE DETAILS OF SALES OF HOUSE PROPERTIES WERE ALREADY IN THE FILE OR THAT THE DECISION SUBSEQUENT LY COME ACROSS BY HIM WAS ALREADY THERE WOULD NOT AFFECT THE POSIT ION BECAUSE THE INFORMATION THAT SUCH FACTS OR DECISION EXISTED COMES TO HIM ONLY MUCH LATER. WHAT THEN IS THE DIFFERENCE BETWEEN THE SITUATIONS ENVISAGED IN PROPOSITIONS (2) AND (4) OF KALYANJI MAVIJI'S CASE [1976] 102 ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 26 ITR 287 (SC). THE DIFFERENCE IF ONE KEEPS IN MIND THE TREND OF THE JUDICIAL DECISIONS IS THIS. PROPOSITION (4) RE FERS TO A CASE WHERE THE INCOME- TAX OFFICER INITIATES REASSESSMEN T PROCEEDINGS IN THE LIGHT OF 'INFORMATION' OBTAINED BY HIM BY AN INVESTIGATION INTO MATERIAL ALREADY ON RECORD OR BY RESEARCH INTO THE LAW APPLICABLE THERETO WHICH HAS BROUGHT O UT AN ANGLE OR ASPECT THAT HAD BEEN MISSED EARLIER FOR E.G. A S IN THE TWO MADRAS DECISIONS REFERRED TO EARLIER. PROPOSITION ( 2) NO DOUBT COVERS THIS SITUATION ALSO BUT IT IS SO WIDELY EXPR ESSED AS TO INCLUDE ALSO CASES IN WHICH THE INCOME-TAX OFFICER HAVING CONSIDERED ALL THE FACTS AND LAW ARRIVES AT A PART ICULAR CONCLUSION BUT REINITIATES PROCEEDINGS BECAUSE ON A REAPPRAISAL OF THE SAME MATERIAL WHICH HAD BEEN CON SIDERED EARLIER AND IN THE LIGHT OF THE SAME LEGAL ASPECTS TO WHICH HIS ATTENTION HAD BEEN DRAWN EARLIER HE COMES TO A CON CLUSION THAT AN ITEM OF INCOME WHICH HE HAD EARLIER CONSCIOUSLY LEFT OUT FROM THE EARLIER ASSESSMENT SHOULD HAVE BEEN BROUGHT TO TAX. IN OTHER WORDS AS POINTED OUT IN INDIAN AND EASTERN N EWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) IT ALSO ROP ES IN CASES OF A 'BARE OR MERE CHANGE OF OPINION' WHERE THE INCOME -TAX OFFICER (VERY OFTEN A SUCCESSOR OFFICER) ATTEMPTS TO REOPEN THE ASSESSMENT BECAUSE THE OPINION FORMED EARLIER BY HI MSELF (OR MORE OFTEN BY A PREDECESSOR INCOME- TAX OFFICER) W AS IN HIS OPINION INCORRECT. JUDICIAL DECISIONS HAD CONSISTE NTLY HELD THAT THIS COULD NOT BE DONE AND THE INDIAN AND EASTERN N EWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) HAS WARNED T HAT THIS LINE OF CASES CANNOT BE TAKEN TO HAVE BEEN OVERRULED BY KALYANJI MAVJI [1976] 102 ITR 287 (SC). THE SECOND PARAGRAPH FROM THE JUDGMENT IN THE INDIAN AND EASTERN NEWSPAPER SOCIET Y'S CASE [1979] 119 ITR 996 (SC) EARLIER EXTRACTED HAS ALSO REFERENCE ONLY TO THIS SITUATION AND INSISTS UPON THE NECESSI TY OF SOME INFORMATION WHICH MAKE THE INCOME-TAX OFFICER REALI SE THAT HE HAS COMMITTED AN ERROR IN THE EARLIER ASSESSMENT. T HIS PARAGRAPH DOES NOT IN ANY WAY AFFECT THE PRINCIPLE ENUMERATED IN THE TWO MADRAS CASES CITED WITH APPROVAL IN ANAN DJI HARIDAS 21 STC 326. EVEN MAKING ALLOWANCES FOR THIS LIMITAT ION PLACED ON THE OBSERVATIONS IN KALYANJI MAVJI THE POSITION AS SUMMARISED BY THE HIGH COURT IN THE FOLLOWING WORDS REPRESENTS IN OUR VIEW THE CORRECT POSITION IN LA W (AT PAGE 629 OF 102 ITR) : THE RESULT OF THESE DECISIONS IS THAT THE STATUTE D OES NOT REQUIRE THAT THE INFORMATION MUST BE EXTRANEOUS TO THE RECO RD. IT IS ENOUGH IF THE MATERIAL ON THE BASIS OF WHICH THE R EASSESSMENT ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 27 PROCEEDINGS ARE SOUGHT TO BE INITIATED CAME TO THE NOTICE OF THE INCOME-TAX OFFICER SUBSEQUENT TO THE ORIGINAL ASSES SMENT. IF THE INCOME-TAX OFFICER HAD CONSIDERED AND FORMED AN OPI NION ON THE SAID MATERIAL IN THE ORIGINAL ASSESSMENT ITSELF THEN HE WOULD BE POWERLESS TO START THE PROCEEDINGS FOR THE REASSESSMENT. WHERE HOWEVER THE INCOME-TAX OFFICE R HAD NOT CONSIDERED THE MATERIAL AND SUBSEQUENTLY CAME BY TH E MATERIAL FROM THE RECORD ITSELF THEN SUCH A CASE WOULD FALL WITHIN THE SCOPE OF SECTION 147(B) OF THE ACT'.' (EMPHASIS SUP PLIED) THE AFORESAID OBSERVATIONS ARE A COMPLETE ANSWER TO THE ISSUE THAT IF A PARTICULAR SUBJECT-MATTER ITEM DEDUCTION OR CLAIM IS NOT EXAMINED BY THE ASSESSING OFFICER IT WILL NEVERTHELESS BE A CASE OF CHANGE OF OPINION AND T HE REASSESSMENT PROCEEDINGS WILL BE BARRED. 2.20. WE ARE CONSCIOUS OF THE FACT THAT THE AFORE SAID OBSERVATIONS HAVE BEEN MADE IN THE CONTEXT OF SECTI ON 147(B) WITH REFERENCE TO THE TERM 'INFORMATION' AND CONCEP TUALLY THERE IS DIFFERENCE IN SCOPE AND AMBIT OF REOPENING PROVISIONS INCORPORATED WITH EFFECT FROM APRIL 1 1 989. HOWEVER IT WAS OBSERVED BY THE HONBLE APEX COURT IN KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) TH AT THE AMENDED PROVISIONS ARE WIDER. WHAT IS IMPORTANT AND RELEVANT IS THAT THE PRINCIPLE OF 'CHANGE OF OPINIO N' WAS EQUALLY APPLICABLE UNDER THE UN-AMENDED PROVISIONS. THE SUPREME COURT WAS THEREFORE CONSCIOUS OF THE SAID PRINCIPLE WHEN THE OBSERVATIONS MENTIONED ABOVE IN A. L. A. FIRM [1991] 189 ITR 285 WERE MADE. 2.21. UNDER THE NEW PROVISIONS OF SECTION 147 AN ASSESSMENT CAN BE REOPENED IF THE ASSESSING OFFICER HAS ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 28 'REASON TO BELIEVE' THAT INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT; BUT IF HE WANTS TO DO SO AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR HE CAN DO SO ONLY IF THE ASSESSEE HAS FALLEN SHORT OF HIS DUT Y TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. IT DOES NOT FOLLOW THAT HE CANNOT REOPE N THE ASSESSMENT EVEN WITHIN THE PERIOD OF FOUR YEARS AS AFORESAID IF HE HAS REASON TO BELIEVE THAT THE ASSESSEE HAS F AILED TO MAKE THE REQUISITE DISCLOSURE. ALL THAT THE SECTION SAYS IS THAT IN A CASE WHERE THE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER THE PERIOD OF FOUR YEARS THE ONLY R EASON AVAILABLE TO THE ASSESSING OFFICER IS THE NON-DISCL OSURE ON THE PART OF THE ASSESSEE. THE ACT PLACES A GENERAL DUTY ON EVERY ASSESSEE TO FURNISH FULL AND TRUE PARTICULARS ALONG WITH THE RETURN OF INCOME OR IN THE COURSE OF THE ASSESS MENT PROCEEDINGS SO THAT THE ASSESSING OFFICER IS ENABLE D TO COMPUTE THE CORRECT AMOUNT OF INCOME ON WHICH THE ASSESSEE SHALL PAY TAX. THE POSITION HAS BEEN FURTH ER CLARIFIED BY THE PROVISO ITSELF IN A CASE WHERE ASS ESSMENT UNDER SUB-SECTION (3) OF SECTION 144 OF THE ACT OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR NO ACTION SHALL BE TAKEN AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH Y EAR BY THE REASON OF FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE ISSUED UN DER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DIS CLOSE TRULY ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 29 AND FULLY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT ASSESSMENT YEAR. IT IS ALSO NOTED THAT THE SCO PE OF NEWLY SUBSTITUTED (W.E.F. 01/04/1989) SECTION 147 HAS BEE N ELABORATED IN DEPARTMENT CIRCULAR NUMBER 549 DATED 31 ST OCTOBER 1989 MEANING THEREBY ON OR AFTER 01/04/1 989 INITIATION OF REASSESSMENT PROCEEDINGS HAS TO BE GO VERNED BY THE PROVISIONS OF SECTION 147 TO 151 AS SUBSTITUTED (AMENDED) W.E.F. 01/04/1989. STILL POWER U/S 147 OF THE ACT THOUGH VERY WIDE BUT NO PLENARY. WE ARE AWARE THAT HONBLE GUJARAT HIGH COURT IN PRAFUL CHUNILAL PATEL : VASANT CHUNILAL PATEL VS ACIT (1999) 236 ITR 82 840 (GUJ. ) EVEN WENT TO THE EXTENT THAT ACTION UNDER MAIN SECTION 1 47 IS POSSIBLE IN SPITE OF COMPLETE DISCLOSURE OF MATERIA L FACTS. THE PRIMARY CONDITION OF REASONABLE BELIEF HAVING NEXUS WITH THE MATERIAL ON RECORD IS STILL OPERATIVE. HOWEVER WE ARE OF THE VIEW THAT MERE FRESH APPLICATION OF MIND TO THE SA ME SET OF FACTS OR MERE CHANGE OF OPINION DOES NOT CONFER J URISDICTION TO THE ASSESSING OFFICER EVEN UNDER THE POST 1989 S ECTION 147 OF THE ACT. OUR VIEW FIND SUPPORT FROM THE DEC ISION FROM HONBLE DELHI HIGH COURT IN JINDAL PHOTO FILMS LTD. VS DCIT (1998) 234 ITR 170 (DEL.) GARDEN SILK MILLS P VT. LTD. VS DCIT (1999) 151 CTR (GUJ.) 533 GOVIND CHHAPABHA I PATEL VS DCIT 240 ITR 628 630 (GUJ.) FORAMER VS C IT (2001) 247 ITR 436 (ALL.) AFFIRMED IN CIT VS FORAM ER FINANCE (2003) 264 ITR 566 567 (SC) IPICA LABORAT ORIES VS DCIT (2001) 251 ITR 416 (BOM.) RITU INVESTMENT PVT . LTD.(2012) 345 ITR 214 (DEL.) KETAN B. MEHTA VS AC IT ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 30 (2012) 346 ITR 254 (GUJ.) MS. PRAVEEN P. BHARUCHA VS DCIT (2012) 348 ITR 325 (BOM.) CIT VS USHA INTERNATIONA L LTD. 348 ITR 485 (DEL.) AGRICULTURAL PRODUCE MARKET COM MITTEE VS ITO (2013) 355 ITR 348 (GUJ.) B.B.C. WORLD NEWS LTD. VS ASST. DIT (2014) 362 ITR 577 (DEL.). IDENTICAL RATI O WAS LAID DOWN IN CIT VS MALAYALA MANORMA COMPANY LTD. (2002) 253 ITR 378 (KER.) WE THINK THIS THREAD RUNS THROUGH T HE VARIOUS PROVISIONS OF THE ACT. BUT EXPLANATION 1 TO THE SECTION CONFINES THE DUTY TO THE DISCLOSURE OF ALL PRIMARY AND MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FULLY AND TRULY. AS TO WHAT ARE MATERIAL OR PRIMARY FACTS WOULD DEPE ND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND NO UNI VERSAL FORMULA MAY BE ATTEMPTED. THE LEGAL OR FACTUAL INFE RENCES FROM THOSE PRIMARY OR MATERIAL FACTS ARE FOR THE AS SESSING OFFICER TO DRAW IN ORDER TO COMPLETE THE ASSESSMENT AND IT IS NOT FOR THE ASSESSEE TO ADVISE HIM FOR OBVIOUS REA SONS. THE EXPLANATION HOWEVER CAUTIONS THE ASSESSEE THAT HE CANNOT REMAIN SMUG WITH THE BELIEF THAT SINCE HE HAS PRODU CED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER FROM WHICH MATERIAL OR EVIDENCE COULD HAVE BEEN WITH DUE DILIG ENCE GATHERED BY HIM HE HAS DISCHARGED HIS DUTY. IT IS FOR HIM TO POINT OUT THE RELEVANT ENTRIES WHICH ARE MATERIAL WITHOUT LEAVING THAT EXERCISE TO THE ASSESSING OFFICER. THE CAVEAT HOWEVER IS THAT SUCH PRODUCTION OF BOOKS OF ACCOUN T MAY IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AMOUNT TO FULL AND TRUE DISCLOSURE; THIS IS CLEAR FROM THE USE OF THE EXPRESSION 'NOT NECESSARILY' IN THE EXPLANATION. TH US THE ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 31 QUESTION OF FULL AND TRUE DISCLOSURE OF PRIMARY OR MATERIAL FACTS IS A PURE QUESTION OF FACT TO BE DETERMINED ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. NO GENERAL PRINCIPL E CAN BE LAID DOWN. IT WAS OBSERVED BY THE HONBLE APEX COURT IN VARIOUS CASES THAT THERE SHOULD BE SOME 'TANGIBLE M ATERIAL' COMING INTO THE POSSESSION OF THE ASSESSING OFFICER IN SUCH CASES TO ENABLE HIM TO RESORT TO SECTION 147 OF THE ACT. DESPITE BEING A CASE OF FULL AND TRUE DISCLOSURE T ANGIBLE MATERIAL COMING TO THE POSSESSION OF THE ASSESSING OFFICER AFTER HE MADE THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) WOULD INFLUENCE THE OPINION FORMED OR PRESUMED TO HAVE BEEN FORMED EARLIER BY THE ASSESSING AUTHORITY; HE CAN WITH JUSTIFICATION CHANGE IT BUT THAT WOULD NOT BE A CA SE OF A 'MERE CHANGE OF OPINION' UNGUIDED BY NEW FACTS OR C HANGE IN THE LEGAL POSITION. IT WILL BE A CASE OF THE ASS ESSING AUTHORITY HAVING 'REASON TO BELIEVE' NOTWITHSTANDI NG THAT FULL AND TRUE PARTICULARS WERE FURNISHED BY THE ASS ESSEE WHICH WERE EXAMINED OR PRESUMED TO BE EXAMINED BY HIM. THERE WAS A DIVERGENCE OF OPINION AMONGST VARIOUS H IGH COURTS AS TO WHAT CONSTITUTE INFORMATION FOR THE PURPOSES OF SECTION 34(1)(B) OF THE 1922 ACT (WHICH CORRESPO NDS TO SECTION 147(B) OF THE 1961 ACT) THE HONBLE APEX CO URT IN CWT VS IMPERIAL TOBACCO COMPANY LTD. (1966) 61 ITR 461 HAS NOTED SUCH DIVERGENCE OF OPINION ON THE POINT. HONBLE JURISDICTIONAL HIGH COURT IN CIT VS SIR MOHAMMAD YU SUF ISMAIL (1944) 12 ITR 8 (BOM.) HELD THAT MERE CHANGE OF OPINION ON THE SAME FACTS ARE ON QUESTION OF LAW OR MERE ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 32 DISCOVERY OF MISTAKE OF LAW IS NOT SUFFICIENT INFOR MATION AND THAT IN ORDER TO SUSTAINED ACTION U/S 34 BY FURTHER HOLDING THAT REASSESSMENT IS NOT PERMISSIBLE. THE HONBLE A PEX COURT IN SIMON CARVES LTD. (1976) 105 ITR 212 HELD THAT ERRORLESS LEGALLY CORRECT ORDER CANNOT BE REOPENED THEREFORE IT IS SETTLED LAW THAT WITHOUT ANY NEW INFORMATION AND ON THE BASIS OF MERE CHANGE OF OPINION REOPENING OF ASSES SMENT IS NOT PERMISSIBLE. AS WAS HELD IN CIT VS TTK PRESTIGE LTD. (2010) 322 ITR 390 (KARN.) SLP DISMISSED IN 2010 32 2 ITR (ST.) 14 (SC). REFERENCE ALSO MADE TO ASIAN PAINTS LTD. VS DCIT (2009) 308 ITR 195 (BOM.) ANDHRA BANK LTD. VS CIT (1997) 225 ITR 447 (SC). THE OBSERVATIONS OF THE SU PREME COURT ARE A PROTECTION AGAINST THE ABUSE OF POWER; THEY ALSO PROTECT THE REVENUE WHICH CAN IN THE LIGHT OF SUBS EQUENT COMING INTO LIGHT OF FACTS OR LAW REOPEN THE ASSES SMENT. IN THE LIGHT OF THE AFORESAID DISCUSSION SINCE THERE WAS NO NEW TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFI CER WHILE RESORTING TO SECTION 147/148 OF THE ACT MORE SPECI FICALLY WHILE FRAMING ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT THERE WAS FULL DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE AND ON THE BASIS OF THOSE FACTS ASSESSMENT WAS COM PLETED U/S 143(3) OF THE ACT THEREFORE IN OUR OPINION T HE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS JUSTIFIED TO ALLOW THE APPEAL OF THE ASSESSEE. THEREFORE THE APPEAL OF TH E REVENUE IS DISMISSED. 3. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE CONFIRMING THE STAND OF THE LD. FIRST APPE LLATE ITA NO.7428/MUM/2013 & C.O. 99/MUM/2016 M/S INTELNET GLOBAL SERVICES PVT. LTD. 33 AUTHORITY THEREFORE THE CROSS OBJECTION RAISED BY THE ASSESSEE HAS REMAINED FOR ACADEMIC INTEREST ONLY CONSEQUENTLY DISMISSED AS IN-FRUCTUOUS. FINALLY THE APPEAL OF THE REVENUE AS WELL AS THE C ROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT I N THE PRESENCE OF THE LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 20/10/2016. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER MUMBAI; * DATED : 18/11/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE RESPONDENT. 3. 1& ( ) / THE CIT MUMBAI. 4. 1& / CIT(A)- MUMBAI 5. 34/&# (# 5 / DR ITAT MUMBAI 6. 6$7 / GUARD FILE. / BY ORDER 03 &/& //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI