SRI RABINDRA NATH PRADHAN,BHUBANESWAR vs. ITO, WARD-2(1), BHUBANESWAR

This is an appeal filed by the assessee against the order of

the Commissioner of Income Tax(Appeals)-1, Bhubaneswar dated

29.3.2017 for the assessment year 2010-11.

that the impugned order of reassessment so passed by the AO

u/s.147/143(3) of the Act is without jurisdiction and without the

P a g e 1 | 7 authority of law, as such the same is liable to be quashed in the

interest of justice.

been made by the Assessing Officer on the ground that the

assessee has made deposits in his bank account of

Rs.1,11,69,050/- whereas the total turnover in his cement

business was disclosed at Rs.37,90,324/- only. Therefore, there

was suppression of turnover to the extent of Rs.83,78,726/-.

Considering the above, the Assessing Officer determined that the

assessee has escaped income of Rs.7,31,882/- and, therefore,

issued notice u/s.148 of the Act to furnish the return of income for

the assessment year 2010-2011.

u/s.143(3) of the Act on 4.3.2013, the Assessing Officer had

examined the issue of bank transaction with State Bank of India,

Bapuji Nagar, Bhubaneswar. The Assessing Officer in the original

assessment proceedings u/s.143(3) of the Act has verified the

bank transaction and computed the income of the assessee at

Rs.5,18,560/- and then on the basis of very same materials, the

Assessing Officer cannot reopen the assessment by issue of notice

u/s.148 of the Act as it amounts to change of opinion. To support

his contention, ld A.R. filed a copy of decision of Hon’ble Supreme

P a g e 2 | 7 Court in the case of CIT vs. Kelvinator of India Ltd.,320 ITR 561

(SC) . Therefore, the reopening of assessment is bad in law and it

was his prayer that the re-assessment order dated 15.10.2015

should be cancelled. Ld A.R. also relied on the decision of Indore

Bench of Hon’ble M.P.High Court in the case of Lokendrasingh vs

ITO, 128 ITR 450(MP).

available on record of the Tribunal. I find the reasons for

reopening the assessment as recorded in the order sheet dated

23.12.2014 as under:

“The assessee has transacted a tune of Rs.37,90,324/- through bank for wholesale trading in cement and rods which also includes Rs.10 lakhs received as advance for land which is not the source of business income rather income from other sources. However, as per the copy of bank statement, the assessee had deposits/receipts of Rs.1,11,69,050/- from business of cement trading only. Hence, the assessee has under disclosed his receipts to the tune of Rs.83,78,726/- [Rs.1,11,69,050/- ( Rs.37,90,324 – 10,00,000)}. Therefore, it is reason to believe that the assessee has escaped assessment within the meaning of section 147 of the I.T.Act. 1961. Accordingly, proposal for reopening the case u/s.147 of the I.T.Act, 1961 is sent to CIT-1, Bhubaneswar.”

was no new material which has come to the knowledge of the

Assessing Officer to show after passing of the order u/s.143(3) of

P a g e 3 | 7 the Act on 4.3.2013 that income chargeable to tax has escaped

assessment so as to trigger the reopening of assessment made

u/s.147 of the Act. In the original assessment order it is stated

that the assessee has made transaction around Rs.46.00 lakhs

with SBI, Bapuji Nagar, Bhubaneswar vide account

No.10032396002 during the financial year 2009-2010. Out of

which a sum of Rs.10 lakhs was received from Mr Raja Roy on

transfer made from same Bank on 19.9.2009 as advance for land

but same cheque was refunded on same day while there was

some dispute regarding land. Further, the brokerage income

arising out of land business were also routed through the same

bank.

Speed Audio Pvt Ltd.,(2015) 372 ITR 762 has held that the power

to reopen is not a power to review an assessment order. At the

time of passing assessment order, it is expected of the Assessing

Officer that he will apply mind and pass an order. If the Assessing

Officer had considered and formed an opinion on the material in

the original assessment itself then he would be powerless to start

the proceedings for reassessment.

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of India Ltd. (supra) has held that he concept of “change of

opinion” must be treated as an in-built test to check abuse of

power by the Assessing Officer. Hence, after 1st April, 1989, the

Assessing Officer has power to reopen an assessment, provided

there is "tangible material" to come to the conclusion that there is

escapement of income from assessment. Reasons must have a

live link with the formation of the belief. In this context, the

observations of Hon’ble apex Court at page 564 are very relevant,

which are reproduced as follows:

“Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. “

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primary facts were already before the ITO and after some routine

enquiry, the ITO could assess the income on the basis of such

information, it was not open to invoke the provisions of section

147(a) of the I.T.Act and reopen the assessment even though he

might have omitted to notice the facts mentioned in the return

oversight.

material with the Assessing Officer before reopening of

assessment to show that income chargeable to tax has escaped

assessment. Further, it is observed that the sole reason regarding

transaction with bank was examined by the Assessing Officer at

the time of original assessment proceedings and, therefore, on the

same set of facts, the reopening of assessment is clearly a change

of opinion and in view of the decision of Hon’ble Bombay High

Court in the case of Jet Speed Audio Pvt Ltd and Hon’ble Supreme

Court in the case of Kelvinator of India Ltd (supra), reassessment

is not permissible in law. Hence, I hold that the reopening of

assessment in the instant case by issuance of notice u/s.148 of

the Act is bad in law and consequently, reassessment order dated

15.10.2015 passed u/s.143(3)/147 is also bad in law and hence I

cancel the same and allow this ground of appeal.

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15.10.2015, other grounds of appeal on merits of the additions

have become infructuous and hence not adjudicated upon.

Order pronounced on 30/04/2019. Sd/- (Chandra Mohan Garg) JUDICIALMEMBER Cuttack; Dated 30 /04/209 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Rabindra Nath Pradhan, M/s. Jay Bhawani Enterprises, Plot No.565, Near Poonama Gate, Bhubaneswar.

By order

Sr. Pvt. Secretary, ITAT, Cuttack

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