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In the present case, we find that not only is there a change of opinion but also the re-opening is barred by limitation inasmuch as the condition that the escapement of income must have resulted from the failure on the part of the petitioner to fully and truly disclose all material facts, has not been satisfied. The impugned order dated 27.10.2010 merely glosses over the objections raised by the petitioner with regard to limitation.
Only primary fact was that the assessee had earned interest income. We are, however, of the opinion that in the context of the close connection between the petitioner and Aditya Medisales, the fact that the assessee was eligible for deduction under section 80IA of the Act and the interest income received from the sister concern had relevance to the provisions of section 80IA(10) of the Act, primary facts were not on record.
It is not in dispute that the petitioner had placed all the relevant records, including the construction agreement, before the passing of the original assessment order. Further, it is not the case of the respondent that the petitioner had suppressed certain material facts, due to which the original assessment order, passed by the respondent is liable to be re-assessed.
It is difficult to appreciate the petitioner’s objection that the information received from DAO-45, New Delhi, acting under Article 26 of the Indo-Japanese treaty for the Avoidance of Double Taxation, cannot constitute valid material on the basis of which the Assessing Officer can form even a tentative or prima facie belief that income to the extent of Rs. 11,28,644/- had escaped assessment.
In the case of the assessee, it is clear that a precise and definite information was received by the Assessing Officer regarding receipt of accommodation entries in respect of capital from various persons aggregating to Rs. 14.45 lakhs. He compared the information with the information available in the return of the assessee.
There may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc, because the aspect or question may be too apparent and obvious. To hold that the assessing officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually.
In the instant case also, the assessee furnished all the details relating to its claim for deduction u/s 80IB of the Act and the Assessing Officer thoroughly examined the claim while framing the assessment u/s 143(3) and on being satisfied the claim was allowed. Therefore, in the present case, reopening of the assessment by issuing notice u/s 148 of the Act is definitely a change of opinion which is not maintainable and therefore, the re-assessment framed by the Assessing Officer u/s 147 of by issuing notice u/s 148 of the Act after completing the assessment u/s 143(3) of the Act by taking a view which was in consonance with the judgment of the Hon’ble jurisdictional High Court was not valid.
Thus, in the case before us, in the absence of existence of “any tangible material” to come to the conclusion that there was escapement of income from assessment, the Assessing Officer exceeded his authority to reopen the assessment merely on the basis of a “change of opinion” and accordingly, it is a fit case of quashing the notice.
We see no error in the observation made by the Division Bench of the High Court in the impugned judgement that once limitation period of four years provided under Section 147/149(1A) of the Income Tax Act, 1961, [for short, `the Act’] expires then the question of reopening by the Department does not arise.
Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. That expression has a distinct meaning by virtue of the definition in Section 2(28C). The Commissioner of Income Tax is not a Joint Commissioner within the meaning of Section 2(28C).
