ACIT, CENT CIRCLE-1, TRICHY vs. M/S MANGAL & MANGAL, TRICHY

PER MANJUNATHA. G, ACCOUNTANT MEMBER:

This appeal filed by the revenue is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-19, Chennai, dated 17.03.2022 and pertains to assessment year 2012-13.

:-2-: ITA. No: 511/Chny/2022 2 The Ld.CIT(A) erred in holding that the reopening of assessment u/s.147 by issue of notice u/s.148 dated 01/10/2018 is not in accordance with provisions of Jaw and the same is held to be legally unsustainable. 2.1. The Ld.CIT(A) failed to appreciate that the reopening was made as per the first proviso to Sec.147 since there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the assessment year 2012-13 in the earlier assessment proceedings. 2.2. The Ld.CIT(A) erred in holding that the assessment was reopened on the basis of "Change of Opinion" without appreciating that the assessee has not furnished the details called for during the assessment proceedings u/s.143(3) r.w.s.153A and no opinion was formed by the assessing officer due to failure on the part of the assessee to furnish the details. 2.3 The Ld.CIT(A) failed to appreciate that the assessee has not admitted accrued interest income on E.B. deposit of Rs.15,69,118/- and interest income on a deposit of Rs.4,38,199/- shown in the balance sheet as on 31/03/2012, the same has been recorded by the assessing officer in reasons for reopening of assessment, which established that the assessee has failed to disclose fully and truly all material facts necessary for assessment and income has escaped assessment. 2.4 The Ld. CIT(A) erred in admitting the assessee's claim that it has furl5l° all evidences relating to the expenditure claimed and TDS deducted before AO , without calling for remand report from the assessing officer. It has been clearly mentioned in the proceedings dated 27/03/2019 that 'in the letter med by the assessee's representative on 29/10/2014, though it was mentioned that the details of expenses and TDS deducted have been filed, nothing was found to be enclosed. In such a case, the ld. CIT(A) ought to have forwarded the Information furnished before him to the assessing officer and given opportunity to the AO under Rule 46A of the Income tax rules. 2.5 The Ld. CIT(A) erred In observing that the AO had no occasion to cross- verify the expenses and relevant TDS on account of limitation prescribed under the Act to

:-3-: ITA. No: 511/Chny/2022 complete the assessment. The Ld.CIT(A) failed to appreciate that the assessee has claimed huge expenses under heads, ‘Making Charges' 'Hall Marking charges' "Sales promotion expenses return of income. But the assessee has not furnished the base details such as name and address of the parties, mode of payment , quantum and TDS deducted etc despite the same were called for. Hence, there is failure on the part of the assessee to furnish the details necessary for assessment. 2.6 The Ld .CIT(A) erred in observing that all the evidences were available 5fore the AO before completing the assessment and the assessing officer has failed to make necessary enquiry /investigation, without appreciating that the assessee has not furnished the base details called for during the earlier assessment proceedings to make necessary enquiry/ investigation to decide the admissibility of claim, 2.7 The Ld. CIT(A) failed to consider the decision of Hon'ble Madras High court In the case of SL Lumax Ltd reported 1 130 taxmann.com 157 (2021) where in the Court has held that, "since Assessing officer in original assessment had not considered many such details and passed assessment order in a cryptic mannet and out of such an assessment order, department traced out under assessment, case o. assessee falls under deemed case under Explanation to section 147 and reopening of assessment was justified". 2.8 The Ld. CIT(A) failed to consider the decision of Hon'ble Madras High Court in the case of Cairn India Ltd reported in 130 taxmann.com 167 (2021) wherein the Court has held that, "Where assessment was sought to be reopened in the case of assessee on ground that assessee had not deducted tax at source for payment effected in foreign currency towards interest on loan guarantee and such materials were not taken into consideration by original Assessing authority, if authorities based on said materials found that tax had escaped assessment then they would be empowered to initiate reopening proceedings and assessee would, have to defend his case" For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.”

:-4-: ITA. No: 511/Chny/2022 3. The brief facts of the case are that, the appellant M/s. Mangal and Mangal is a firm engaged in the business of trading in gold and diamond jewellery, silver ornaments, electronics, home appliances and metal wares. The assessee has filed its return of income for the assessment year 2012-13 on 19.07.2012, declaring total income of Rs. 26,15,69,490/-. A search action u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was conducted in the business premises of the assessee on 30.10.2012. During the course of search, books of accounts and other documents were seized. Consequent to search, notice u/s. 153A of the Act, was issued and served on the assessee on 17.07.2013. In response to notice, the assessee has filed its return of income on 25.07.2013, declaring total income of Rs. 98,32,25,710/-. The assessment has been completed u/s. 143(3) r.w.s. 153A of the Act on 30.03.2015, by making addition of Rs. 2,27,428/-, on account of undervaluation of closing stock.

:-5-: ITA. No: 511/Chny/2022 the Act, dated 01.10.2018 was issued and served on the assessee. In response, the assessee has filed its return of income on 07.12.2018, admitting total income of Rs. 98,32,25,710/-, which was the same income as reported in return filed in response to notice issued u/s. 153A of the Act. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed making charges of Rs. 5,20,95,198/-, on which TDS applicable as per provisions of section 194C of the Act was not deducted. The Assessing Officer, further noticed that the assessee has claimed sales promotion expenses of Rs. 3,06,55,952/- and majority expenses has been incurred in cash in excess of Rs. 20,000/- in violation of provisions of section 40A(3) of the Act. The Assessing Officer, further noticed that the assessee has claimed EB deposits of Rs. 15,69,118/- with Tamilnadu Electricity Board, but no interest income has been admitted, even though the Electricity board pay 9% interest p.a. on said deposits. The Assessing Officer, further noticed that the assessee has shown a sum of Rs. 4,38,199/- as deposits made for which no interest has been offered in the return. Therefore, called upon the assessee to furnish necessary evidences including supporting details and vouchers for

:-6-: ITA. No: 511/Chny/2022 various expenses made and TDS deducted on making charges, interest earned on EB deposits etc. The Assessing Officer, after considering relevant submissions of the assessee and also taken note of various facts completed assessment u/s. 143(3) r.w.s. 147 of the Act and determined total income of Rs. 1,08,73,92,312/-, by making additions towards disallowance of making charges u/s. 40(a)(ia) of the Act, at Rs. 5,35,70,810/-, disallowance of sales promotion expenses at Rs. 1,52,42,402/-, disallowance of chit bonus of Rs. 1,54,13,550/-, disallowance of chit prize u/s. 40A(3) of the Act at Rs. 1,97,54,250/-, addition of interest income on EB deposits for Rs. 1,41,220/- and addition of interest on other deposits @ 10% for Rs. 44,370/-.

:-7-: ITA. No: 511/Chny/2022 reopened after four years from the end of the relevant assessment years and proviso to section 147(1) of the Act is applicable. Therefore, unless the AO makes out a case of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the assessment cannot be reopened. The assessee had also challenged various additions made by the Assessing Officer towards disallowance of expenses u/s. 40A(3) of the Act, disallowance of expenses u/s. 40(a)(ia) of the Act and disallowance of chit fund etc, on the ground that the assessee has furnished all details including particulars of TDS and also details of cash payments and proved that the cash payments are not in excess of prescribed limit.

:-8-: ITA. No: 511/Chny/2022 assessment, said assessment has been reopened for the failure of the Assessing Officer to carry out necessary verification of details furnished by the assessee, but not for the failure of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, quashed re-assessment order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Act. The relevant findings of the ld. CIT(A) are as under: “10. The background for reopening the assessment and the contention of the AO justifying the: reopening were examined. The main objection raised by the appellant with regard to legal validity of the reopening of assessment has to be examined in the factual background of the case. 11. The AO in the assessment order has observed that the huge expenses claimed of Rs.5,20,95,198 & Rs.15,40,3410/- on 'making charges-Gold' and 'making charges-Silver' respectively and Rs.3,06,55,952/ on 'sales promotion expenses' were omitted to be verified; during the search assessment proceedings made on account of non-furnishing of details; evidences for TDS even though the same were called for through notices and reminders resulting in escapement of income in the hands of the assessee. 12. Further, the AO observed that in spite of many notices and oral reminders, until the fag end of time barring assessment, the assessee failed to furnish complete details of 'making charges', 'hallmarking charges' sales promotion expenses' and evidence for TDS made, leaving the assessing officer in haziness without any evidence to verify whether TDS were made to consider disallowance the major expenses claimed. The search assessment u/s 143(3) r.w.s. 153A was finally completed on 30.3.2015 making an addition of Rs.2,27,428 on account of undervaluation of closing stock by the assessee since it was a search assessment which requires analysis & scrutiny of seized materials, statements etc., on account of time barring limitations, the issues of disallowance of expenses

:-9-: ITA. No: 511/Chny/2022 claimed on making charges, hall marking charges etc, were left untouched in the absence of proper details/ evidence of TDS which were not furnished by the assessee. 13. From the above observation of the AO in the assessment order, the following facts are emerging. (a) There was no suppression of material facts by the appellant in the return of income filed. (b) The AO has claimed that the appellant has not furnished. the details of the expenditure claimed and TDS deducted upon it during the course of assessment proceedings. (However, the appellant pleaded during the course of appellate proceedings that all the evidences were furnished before the Assessing Officer and submitted copies of the same). (c) The AO had no occasion to cross-verify the expenses and relevant TDS on account ] limitation prescribed under the Act to complete the assessment. d) On account of non-verification of details furnished, the new AO has a reason to believe that income chargeable to tax has escaped from the assessment. The conclusion on the part of the AO is that on account· of non-furnishing of evidence the appellant has suppressed material facts. (e) There was no fresh tangible material which came to the possession of the Assessing Officer after completion of original assessment for forming a prima facie belief regarding the escapement of income. 14. During the course of appellate proceedings, the appellant has filed copy of all the details which were filed earlier before the AO. 15. The Income-tax Act has provided multiple powers to call for the details including issue of notice u/s. 131 and verification of deduction of TDS from the TDS wing of the Department. If the AO is of the opinion that no TDS has been deducted the matter could have been referred to the TDS wing for appropriate investigation and also could have made an attempt to receive report from the concerned TDS officer and could have utilized the same in completing the assessment. In addition, a cursory look of the Form 3CD filed along with the return the Assessing Officer could have formed an opinion a

:-10-: ITA. No: 511/Chny/2022 out the deduction of TDS and other details. There is no observation in the assessment order about the verification of Form 3CD. It appears that no attempt has been made by the AO in this regard. 16. It has been claimed that no evidences/ details were furnished. The appellant has filed the same details during the course of appellate proceedings. However, even if presumption is drawn that no evidence is furnished, such non-furnishing of evidence during the course of assessme1~i proceedings is a common practice adopted by the assessees. But non-furnishing of evidence, cannot be a reason for reopening of any assessment and thereby no conclusion can be drawn that the appellant has suppressed material facts suggesting escapement of income. The Assessing Officer while completing the assessment, if no evidence is furnished could have proceeded to, complete the assessment on the basis of the material available before him as per the provisions of section 144 of the Act. Failure on the part of the Assessing Officer to examine the issue cannot be a reason on the part of the new Assessing Officer to form a opinion about the escapement of income. 17. In the instant case, the reasons recorded for reopening of assessment are that the appellant has not furnished the details and the AO has no time to examine the issue. This cannot be reason for reopening of assessment forming a belief that income chargeable to tax has escaped from assessment. 18. Without any new tangible material/facts coming to the notice of the AO subsequent to the completion of the original assessment, forming opinion about escapement of income, amounts to change of opinion which is legally not permissible. 19. In the case of Asian Paints Ltd. Vs DCIT 308 ITR 195, the Hon’ble Bombay High Court held that where no new material has come on record or no new information has been received between the date of the order of assessment sought to be reopened and the date of formation opinion by the AO, it is merely a fresh application of mind by the same AO to the same set of facts and the same amounts to reopening of the assessment merely due to change of opinion which is not permissible. The relevant part of the decision of the Hon'ble High Court it: reproduced as under:

:-11-: ITA. No: 511/Chny/2022 1O. It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, the power under section 147 cannot be used to review the order. In the present case, though the Assessing Officer has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITRI referred to above, has taken a clear view that reopening of assessment under section 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under section 148. 20. Further, the Hon'ble Supreme Court held in the case of CIT Vs. Kelvinator of India Ltd, 320 ITR 561 that the concept of "Change of opinion" must be treated as an in-built test to check 'abuse of power by the AO and if that concept is removed, then review would take place in the garb of reopening the assessment. The Hon' ble Supreme Court held that the AO has the powers to reopen provided there is tangible material to come to the conclusion that there is escapement of income from assessment. The relevant part of the decision of the Hon'ble Supreme Court is reproduced as under: 4. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re- opening could be done under above two conditions and fullfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1-4-1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to

:-12-: ITA. No: 511/Chny/2022 believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post 1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words ''reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per .se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has. power to review; he has the power to reassess. 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 1-4- 1989, Assessing Officer has power to reopen, provided there is "tangible material” to come to the conclusion that there is escapement of income from assessment. 21. In the present case no tangible material evidence is available before the AO before forming the opinion about the escapement of income. All the evidences were available before the AO before completing the assessment. Before completing the assessment, the AO has failed to make necessary enquiry/investigation. The opinion was formed on account of non verification of details clue to lack of time. Lack of time to verify the evidences cannot be a reason to complete the assessment. In view of the facts of the case and the binding judicial precedents as mentioned above, the objection raised by the assessee is found to be acceptable and it is held that the reopening of the assessment u/s.147 that was sought to be made based on the same material during the original assessment proceedings and with no new information or material that came to the possession of the AO subsequently, amounts to mere change of opinion without the presence of tangible material and consequently, the reopening of the assessment is not legally tenable. 22. In view of the foregoing discussion, it is seen that the objection raised by the assessee with regard to the legal validity of the re-opening of the assessment is found to be acceptable. Hence, having regard to the discussion above, it is

:-13-: ITA. No: 511/Chny/2022 held that the reopening of the assessment u/s.147 by issue of notice u/s.148 dated 01.10.2018 is not in accordance with the provision's of law and the same is held to be legally unsustainable. The grounds of appeal raised upon this issue are therefore allowed.”

:-14-: ITA. No: 511/Chny/2022 to disclosure of material facts necessary to assessment, within the meaning of the above proviso. Therefore, just because the assessment has been completed u/s. 143(3) r.w.s. 153A of the Act, it does not mean that the Assessing Officer has considered all details and the assessee has disclosed full and true particulars of his assessment. The ld. DR, further referring to the decision of Hon’ble Supreme Court in the case of M/s. Larsen and Turbo Ltd vs State of Jharkhand, in Civil Appeal No. 5390/2007, more particularly Para 21 of the judgment submitted that, the expression ‘information’ means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or having a bearing on the assessment. Therefore, if the AO possessed certain information which suggests escapement of income and based on such information if the Assessing Officer form reasonable belief of escapement of income, it cannot be said that the assessment has been reopened on change of opinion. Therefore, he submitted that the ld. CIT(A) is erred in quashing the reassessment order passed by the AO u/s. 143(3) r.w.s. 147 of the Act. In this regard, he relied upon the decision of Hon’ble Madras High Court in the case of Smt. A. Sridevi vs ITO [2018] 409 ITR 502. The ld. DR, had also

:-15-: ITA. No: 511/Chny/2022 relied upon the decision of Hon’ble High Court of Delhi in the case of Honda Siel Power Products Ltd vs DCIT [2012] 340 ITR 53 and CIT vs Shriram Chits (Karnataka) P Ltd [2021] 277 Taxman 224 and also Cairn India Ltd vs DCIT [2021] 283 Taxmann.com 243.

:-16-: ITA. No: 511/Chny/2022 material facts necessary for assessment, the assessment cannot be reopened. The ld. Counsel for the assessee, further submitted that if you go through reasons recorded by the Assessing Officer for reopening of assessment, it is undisputedly clear that the Assessing Officer has reopened the assessment for the simple reason that, the assessee could not furnish certain details called for during the course of assessment proceedings. But, fact remains that if you go through the assessment order passed by the Assessing Officer, it is noticed that the Assessing Officer has reopened the assessment to verify the facts with regard to applicable TDS provisions on expenses and other details, but nowhere the Assessing Officer has makes out a case of escapement of income, on the basis of fresh tangible material which came into his possession subsequent to completion of original assessment. Therefore, he submitted that it is a clear case of change of opinion and thus, the reopening of assessment is bad in law and accordingly, the ld. CIT(A) has rightly quashed re-assessment order passed by the Assessing Officer and their order should upheld.

:-17-: ITA. No: 511/Chny/2022 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We have also carefully considered reasons recorded for reopening of assessment. As per reasons recorded for reopening of assessment, the Assessing Officer has formed reasonable belief of escapement of income on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment. The Assessing Officer, has considered the issue of expenses debited under the head ‘making charges’ and claimed that the entire expenses should be disallowed as per section 194C r.w.s. 40(a)(ia) of the Act. The Assessing Officer, had also considered disallowance of sales promotion expenses as per ledger account and also observed that, applicability of provisions of section 40A(3) of the Act, on cash payments in excess of Rs. 20,000/- was omitted to have been considered. Similarly, the Assessing Officer has considered interest income to be earned on EB deposits from State Electricity board. From the above reasons recorded by the Assessing Officer, it is undoubtedly clear that the Assessing Officer has considered very same materials which were available in the assessment folder during the course of original assessment proceedings

:-18-: ITA. No: 511/Chny/2022 u/s. 143(3) r.w.s. 153A of the Act. Further, the Assessing Officer nowhere specified that reasons for reopening of assessment was based on fresh tangible material which came into his possession, subsequent to completion of original assessment. But, the Assessing Officer simply referred to the documents submitted by the assessee during the course of assessment proceedings including financial statements, tax audit report, ledger account of expenses etc. Therefore, we are of the considered view, that the reasons relied upon by the Assessing Officer for reopening of assessment, is purely on the basis of very same materials which were available before him while completing the assessment and thus, in our considered view it is a case of change of opinion. Further, from the observations of the Assessing Officer himself, we are of the considered view that, there was no suppression of material facts by the appellant in the return of income filed for the relevant assessment year. Although, the Assessing Officer has claimed that the appellant has not furnished details of the expenditure claimed and TDS compliance, in our considered view, all those facts were available before the Assessing Officer when he completed the assessment proceedings, in consequent to search proceedings u/s. 132A of the Act.

:-19-: ITA. No: 511/Chny/2022 Therefore, we are of the considered view that, it is a clear case of change of opinion, but not reopening of assessment on fresh tangible material which came to the possession of the Assessing Officer after completion of original assessment.

:-20-: ITA. No: 511/Chny/2022 assessee to frame an assessment. Therefore, once the assessment has been completed u/s. 143(3) r.w.s. 153A of the Act, in our considered view, the question of failure of the assessee to disclose fully and truly all material facts necessary for his assessment does not arise. In any case, if you go by the reasons recorded by the Assessing Officer, it is undoubtedly clear that the assessee has furnished all details in respect of expenses debited under the head making charges and TDS particulars, expenses debited under the head sales promotion expenses etc. As regards, interest income on EB deposits, it was not the case of the assessee that the electricity board has paid or provided interest to the assessee, but the assessee has not offered such interest for taxation. But, the Assessing Officer simply assumed that the electricity board will pay interest @ 9% and assessee might have received said interest, without any reference to clear findings of facts that, the assessee has received interest income on such deposits. In so far as, interest on other deposits, the Assessing Officer has presumed that said deposits was interest bearing deposits and the assessee has not disclosed interest income for taxation. From the above reasons recorded by the Assessing Officer, we find that the Assessing Officer has

:-21-: ITA. No: 511/Chny/2022 formed reasonable belief of escapement of income, without there being any live nexus between fresh material and escapement of income, but purely on suspicion manner the assessment has been reopened. Therefore, it is a classic case of change of opinion, but not reopening of assessment on the basis of fresh tangible material.

:-22-: ITA. No: 511/Chny/2022 12. The ld. DR, has also relied upon the decision of Hon’ble Supreme Court in the case of M/s. Larsen and Turbo Ltd vs State of Jharkhand (supra), we find that the facts of the case before the Hon’ble Supreme Court, was in the context of sales tax proceedings before the authorities and in the context of definition ‘information’ as dealt in Para no. 21 and held that in a case of obvious mistakes apparent on the fact of the record of assessment, that record itself can be a source of information, if that information leads to a discovery or believe that there has been an escapement of income or under- assessment or wrong assessment, the assessment can be reopened. We find that the case law relied upon by the ld. DR has no application to the facts of the present case, in the context of Income-tax proceedings, where the law is clear in as much as, when the assessment has been reopened after four years from the end of the relevant assessment year, the Assessing Officer should point out lapse on the part of the assessee to disclose fully and truly or partially all material facts necessary for assessment. In the present case, by going through the reasons recorded for reopening of assessment, we could not make out a case of failure on the part of the assessee, in light of provisions of section 147 of the Act and

:-23-: ITA. No: 511/Chny/2022 thus, in our considered view, the case laws relied upon by the ld. DR has no application to the facts of the present case. Likewise, the ld. DR relied upon various judgments in support of his arguments and by going through the facts and circumstances of the above case laws, we find that none of the judgments relied upon by the ld. DR are applicable to the facts of the present case.

:-24-: ITA. No: 511/Chny/2022 “1O. It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, the power under section 147 cannot be used to review the order. In the present case, though the Assessing Officer has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITRI referred to above, has taken a clear view that reopening of assessment under section 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under section 148.”

:-25-: ITA. No: 511/Chny/2022 escapement of income from assessment. The relevant findings of the Hon’ble Supreme Court are as under: “4. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re- opening could be done under above two conditions and fullfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1-4- 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post 1-4- 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words ''reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per .se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has. power to review; he has the power to reassess. 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 1-4-1989, Assessing Officer has power to reopen, provided there is "tangible material” to come to the conclusion that there is escapement of income from assessment.”

:-26-: ITA. No: 511/Chny/2022 subsequent to completion of original assessment. Further, the assessment has been reopened without any findings as to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment years and thus, in our considered view, reopening of assessment is bad in law and liable to be quashed. The ld. CIT(A), after considering relevant facts has rightly quashed re- assessment order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Act. Thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeal filed by the revenue.