Cwjc/3171/2019 Of Ravindra Kumar (Huf) @ Rabindra Kumar (Huf) v. Commissioner Of Income Tax, Bhagalpur

IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.3171 of 2019 ====================================================== Ravindra Kumar (HUF) @ Rabindra Kumar (HUF) son of Late BhagirathPrasad Kumar @ Bhagirath Kumar a Hindu Undivided Family resident ofJhandapur, District Bhagalpur through its Karta Rabindra Kumar, resident ofRadha Rani Sinha Road, P.O. Adampur, P.S. Joskar, Jagdishpur, District-Bhagalpur. ... ... Petitioner/s Versus 1.Commissioner of income Tax, Bhagalpur. 2.Income Tax Officer, Ward1(2), Bhagalpur. ... ... Respondent/s ====================================================== Appearance :For the Petitioner/s: Mr. D.V. Pathy, Adv. Ms. Manju Jha, Adv. Mr. Sadashiv Tiwari, Adv.For the Respondent/s: Mr. Rishi Raj Sinha, Sr. S.C Ms. Shilpi Keshri, J.S.C. ====================================================== CORAM: HONOURABLE MR. JUSTICE JYOTI SARAN and HONOURABLE MR. JUSTICE PARTHA SARTHYORAL JUDGMENT(Per: HONOURABLE MR. JUSTICE JYOTI SARAN) Date : 06-08-2019 The petitioner by filing this writ petition underArticle 226 of the Constitution of India questions the noticedated 22.03.2018 issued by the respondent No.2, Income TaxOfficer, Ward 1(2), Bhagalpur in purported exercise of powervested in him under Section 148 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’). Alongside the petitioneralso questions the final order dated 26.12.2018 together with thedemand notice issued by the same authority. Copies of the notice and the assessment order are impugned at Annexures-3and 10 series respectively to the writ petition. Mr. D.V. Pathy, learned counsel for the petitionerhas appeared for the petitioner. The respondents are representedby Mr. Rishi Raj Sinha, learned Senior Standing Counsel whoappears with Ms. Shilpi Keshri, Junior Standing counsel. A preliminary objection was raised by the learnedcounsel for the respondents when this matter came up forconsideration on 21.02.2019 on the plea of the alternativeremedy of appeal available to the petitioner to question theassessment order but since according to Mr. Pathy, theassessment order so passed was de hors the statutory provisionsunder which it was exercised and also lacked foundation that weallowed the parties to address the issue on merits and when thematter has been heard with the view to final disposal at the stageof admission. Facts of the case as advanced by Mr. Pathy brieflystated is that the petitioner submitted his returns for theassessment year in question i.e. 2011-12 together with auditreport on 30.03.2012, a copy of which is on record at Annexure-1 series to the writ petition. It is the case of the petitioner thatsince after filing of the return under Section 139 of ‘the Act’ no objection was raised by the department and it is after lapse ofalmost 6 years that a notice was issued on 22.03.2018 by therespondent No.2, the Income Tax Officer, Ward 1 (2), Bhagalpurin purported exercise of powers vested under Section 133 (6) of‘the Act’ requiring the petitioner to furnish the informationdetailed in the notice. Facts of the case as advanced by Mr. Pathy brieflystated is that the petitioner submitted his returns for theassessment year in question i.e. 2011-12 together with auditreport on 30.03.2012, a copy of which is on record at Annexure-1 series to the writ petition. It is the case of the petitioner thatsince after filing of the return under Section 139 of ‘the Act’ no objection was raised by the department and it is after lapse ofalmost 6 years that a notice was issued on 22.03.2018 by therespondent No.2, the Income Tax Officer, Ward 1 (2), Bhagalpurin purported exercise of powers vested under Section 133 (6) of‘the Act’ requiring the petitioner to furnish the informationdetailed in the notice. A plain look of the directions present in the noticewould confirm that the documents so directed to be producedrelated to the agricultural income disclosed by the petitioner inhis return which is to the tune of Rs.4,85,905/- for theassessment year 2011-12, a copy of which is at Annexure-2. Thepetitioner did not respond to this notice which was followed bya notice under Section 148 of ‘the Act’ charging the petitioner ofescaped assessment for the reasons to believe in possession ofthe said officer and thereby proposing to reassess theincome/loss for the assessment year 2011-12. A copy of suchnotice is at Annexure-3 to the writ petition and it is incompliance of the direction that the return was again submittedby the petitioner before the Income Tax Officer vide Annexure-4 to the writ petition which is identical to the one originally filedand placed at Annexure-1 series to the writ petition. Thepetitioner along side requested for supply of the ‘reason’ which led the Income Tax Officer to believe that some part of incomehad escaped assessment within the meaning of Section 148 of‘the Act’ which was supplied by the Income tax Officer and acopy of which is enclosed at Annexure-5 to the writ petition.The petitioner filed his objection to the initiation of theproceedings, a copy of which is at Annexure-6 to the writpetition which was followed by two notices dated 7.12.2018 and15.12.2018 requiring the petitioner to furnish the informationsought through vide Annexure-2 to the writ petition. Copies ofsuch notice is at Annexure 7 and 8 respectively to the writpetition and which was followed by a third notice dated16.12.2018 to the same effect at Annexure-9. The petitioner didnot comply with the directions to produce the documents sodirected through the notices under reference and which led tothe passing of the order impugned dated 22.06.2018 by therespondent No.2, Income Tax Officer in purported exercise ofpower vested in him under Section 147 of ‘the Act’ whereby, theIncome Tax Officer while holding the audit report submitted bythe petitioner along with his original return at Annexure-1series,a fabrication, has proceeded to disallow the claim towardsagricultural income as well the claim on expenses under thehead income from business and profession, to be added to his total income. It is on computation of the total income that thetax liability has been determined at Rs. 10,73,780/- vide theassessment order at Annexure 10 series and which is followedby a demand notice issued under Section 156 of ‘the Act’ whichaccompanies Annexure-10 which is put to question in this writpetition. total income. It is on computation of the total income that thetax liability has been determined at Rs. 10,73,780/- vide theassessment order at Annexure 10 series and which is followedby a demand notice issued under Section 156 of ‘the Act’ whichaccompanies Annexure-10 which is put to question in this writpetition. Mr. Pathy, learned counsel for the petitioner hasstraightway taken this Court to the reasons so supplied to thepetitioner by the respondent No.2 to reopen the proceedingsunder Section 147 of ‘the Act’, a copy of which is impugned atAnnexure-5 to the writ petition. It is submitted that thepetitioner has disclosed an income of Rs. 4,85,905/- as hisagricultural income in his return which was accompanied withan audit report as well as balance sheet, the profit and lossaccount etc. It is submitted that the return of the petitioner wasnot subjected to scrutiny nor an assessment proceeding washeld, which would allow the Income Tax Officer to verify theposition on agricultural income but having not done so, the lawdoes not permit the Assessing officer to hold an enquiry whichshould have been done at the stage of filing of the returns.According to Mr. Pathy, in case the Assessing authority is inpossession of materials which leads to a reasonable belief that any part of income had escaped assessment that a proceeding ofsuch kind under Section 147 can be carried out but such powercannot be abused for holding a roving enquiry where thepetitioner was being directed to produce evidence againsthimself. It is submitted by Mr. Pathy, that although thepetitioner questioned the authority of the Income Tax Officer toreopen the proceedings but the same has been ignored to resultin the order impugned at Annexure-10 series. Learned counsel has next turned to the satisfactionrecorded by the Commissioner on such reopening and the copyof which has been placed on record by the department in itscounter affidavit at Annexure- B. According to Mr. Pathy, whileSection 151 of ‘the Act’ casts an obligation on the PrincipalChief Commissioner or the Chief Commissioner or the PrincipalCommissioner or the Commissioner to record satisfaction on thereasons recorded by the Assessing Officer that it is a fit forissuance of a notice, a plain look at the remarks recorded by theJoint Commissioner and the Principal Commissioner of Incometax accompanying Annexure -B would confirm that while theJoint Commissioner of Income Tax has recorded a mechanicalsatisfaction on the reasons recorded by the Assessing Officer forissuance of notice under Section 148 of ‘the Act’, the Principal Commissioner of Income Tax has simply certified it as a fit casefor issuing notice. Learned counsel in support of the submission thatthe entire exercise of reopening of the assessment is de hors thestatutory provisions and the Assessing authority whileexercising such jurisdiction cannot force the petitioner toproduce documents/records against himself, has relied upon thefollowing judgments (1) [1961] 41 ITR 191 (SC)]( Culcutta DiscountCo.Ltd. versus Income Tax Officer) In reference to the opinion expressed by theSupreme Court at paragraph 11 of the judgment, he submits thatthe Supreme Court has held that no duty remains on the assesseeto produce any record or documents after making full andtruthful disclosure of all primary facts. According to Mr. Pathy,the entire disclosure is present in the returns filed which wasaccompanied with audit report as well as the balance sheet andthe profit and loss statement of the petitioner allowinghim to hold whatsoever enquiry that the Assessing Officerwanted to do at that stage, but not having exercised suchjurisdiction to hold assessment proceedings, when assessee waslawfully obliged to supply the particulars, this jurisdiction cannot be carried forward to a proceeding under Section147/148 of ‘the Act’ (2) [1976]103 ITR 437 (SC)] (Income Tax Officer cannot be carried forward to a proceeding under Section147/148 of ‘the Act’ (2) [1976]103 ITR 437 (SC)] (Income Tax Officer versus Lakhmani Mewal Das) placing reliance on the opinionexpressed at paragraph 7 of the judgment, it is submitted that thelegal position as to the exercise of jurisdiction under Section147/148 of ‘the Act’ has been discussed. He submits that theSupreme Court while accepting that a duty is cast upon assesseeto make true and full disclosure of the preliminary fact at thetime of assessment further goes on to hold that the duty ofassessee does not extent beyond such true and full disclosureand once he has done his part then his duty ends for it is noresponsibility of the assessee to advise the Income Tax Officeras to the inference that he should draw from the fact sodisclosed. (3) W.P. No. 1000 of 2017 and W.P. No.1001 of2017 (Zuari Foods and Farms Pvt. Ltd. versus AssistantCommissioner of Income Tax and Ors.). In reference to the opinion expressed by theBombay High Court at paragraph 6 of the judgment, he submitsthat the grounds for reopening an assessment has to be recordedbefore a notice is issued and which reason must disclose live link between the tangible material in possession of the assessingOfficer as well as the reason to believe that income chargeableto tax has escaped assessment. It is submitted that in so far asthe present case is concerned, there is no material in possessionof the Assessing Officer to reopen a proceeding rather it is togather material that documents etc. are being directed to beproduced as manifest from notice issued under section 133 of‘the Act’ impugned at Annexure-2. (4) (2016) 91 VST 1(SC) (State of Uttar Pradeshversus Aryaverth Chawal Udyog and Ors.) In reference to the position settled by the SupremeCourt at paragraphs 19 to 27 it is submitted by Mr. Pathy thatthe legal position on reopening of assessment has been settled tohold that unless there is a tangible material in possession of theAssessing Officer for formation of reason to believe that anyincome chargeable to tax has escaped assessment, such exercisecannot be carried out by holding a roving enquiry as in a case oforiginal assessment. (5) 235 ITR 219 (Rina Sen versus CIT) Mr. Pathy in reference to the opinion at para 2 to 7submits that Assessing Officer while exercising such jurisdictioncannot force an assessee to produce particular information in his possession. Summarizing his argument, it is contended by Mr.Pathy that a reopening of assessment under Section 147/148 of‘the Act’ is not a mechanical discharge rather the Assessingofficer having accepted the return filed by an assessee whichbecame deemed assessed, there had to be some tangible materialin possession of the Assessing Officer for the formation of‘reasons to believe’ that any part of income of the petitioner hasescaped assessment and when any Assessing officer would bewell within his jurisdiction to reopen an assessment to carry outreassessment proceeding but in a case of present nature whereevery disclosure as regarding the Agricultural income was madeby the petitioner at the stage of filing of the original return andno steps were taken by the Assessing Officer to doubt the returnon its veracity as well as on the disclosure of agriculturalincome, this failure on the part of the Assessing Officer to carryout an exercise of verification as well as for demand of recordsin support of the disclosure so made, cannot be extended andstretched to a proceeding under Section 147 of ‘the Act’.According to Mr. Pathy the illegality is perpetuated by theAssessing Officer in going beyond the reasons supplied bydisallowing the expenses claimed by the petitioner under various heads to the tune of Rs. 12, 39,000/- to add it to the totalincome of the assessee, which is beyond the reasons supplied bythe Assessing Officer. various heads to the tune of Rs. 12, 39,000/- to add it to the totalincome of the assessee, which is beyond the reasons supplied bythe Assessing Officer. The writ petition is resisted by Mr. Rishi Raj Sinha,learned Senior standing Counsel for the Income TaxDepartment. Defending the exercise and the orders passedthereunder, he submits that the exercise is within the parametersof the statutory provisions and there is neither any default injurisdiction nor the order is in excess of such jurisdiction.According to Mr. Sinha, the entire argument of Mr. Pathy isresting on preamended provisions of Section 147 of ‘the Act’and even the judgments relied upon is in reference to suchprovision. According to Mr. Sinha, there has been a sea changein the provisions of Section 147 of ‘the Act’ vide Direct TaxLaw (Amendment) Act, 1987 which came into force with effectfrom 01.04.1989. According to Mr. Sinha, the enunciation oflaw as found in the judgments relied upon by Mr. Pathy is inconsideration of the unamended provisions of Section 147 of‘the Act’ but since after its amendment with effect from01.04.1989, the Assessing officer has been given a wider playfield. According to Mr. Sinha, learned Senior Standing Counselfor the Department, a disclosure towards agricultural income was made by the petitioner in his returns which was notsupported with material. He submits that it is in the light of anorder passed by this Court on a pubic interest litigation that anadvisory was issued to all Assessing Officers to carefullyexamine the claim on agricultural income and in cases where theassessment was completed or pending, to verify, whether suchincome has been rightfully claimed by the assessee. It issubmitted by Mr. Sinha, that it is in course of such exercise thatthe case of the petitioner also was taken into consideration andsince the claim was not supported with material that the noticeunder Section 148 was issued enclosing the reasons. Inreference to the letter issued on behalf of the PrincipalCommissioner, Income Tax dated 20.03.2018 at Annexure B, hesubmits that approval was granted for such reopening ofassessment in the case of 3 assessees including the petitioner inrespect of the agricultural income so declared. It is submittedthat since in the course of such examination, it also transpiredthat the disclosure on agricultural income was not supportedwith material and certain expenses had been wrongfully claimedby the petitioner that the same, were rejected for being added tohis total income. To differentiate the case laws relied upon by Mr. Pathy, learned counsel has placed strong reliance on thejudgment of the Supreme Court reported in (2007) 291 ITR 500(Asst. CIT versus Rajesh Jhaveri Stock Brokers). Inreference to the opinion expressed at paragraphs 9, 16 and 17 hesubmits that the transition in Section 147 has been dealt andeven if the preamended provisions of Section 147, gaveopenings for assessee to question the proceedings, no such pleais entertainable since after the amendment was brought inSection 147 effective from 01.04.1989. Defending thedisallowance of expenses, learned counsel refers to Explanation3 attached to Section 147 to submit that no infirmity exists inthe exercise. According to Mr. Sinha, the Assessing Officer waswell within his jurisdiction to direct the assessee to produce therecords supporting the agricultural income so claimed by thepetitioner. Learned counsel has referred to Section 151 of ‘theAct’ to submit that a plain look at the letter of the PrincipalCommissioner enclosed at Annexure- B to the counter affidavitwhich also encloses the sanction accorded, would confirm thatthere is absolutely no infirmity in the exercise of reopening ofassessment. Reverting back to provisions of Section 147 it is Learned counsel has referred to Section 151 of ‘theAct’ to submit that a plain look at the letter of the PrincipalCommissioner enclosed at Annexure- B to the counter affidavitwhich also encloses the sanction accorded, would confirm thatthere is absolutely no infirmity in the exercise of reopening ofassessment. Reverting back to provisions of Section 147 it is submitted that once an Assessing Officer on the materials onrecord has reasons to believe that any income chargeable to taxhas escaped assessment, it is after issuing notice and hearing theassessee that the Assessing Officer can assess or reassess.According to Mr. Sinha, even if the reasons supplied by theAssessing Officer made reference to the disclosure ofagricultural income by the assessee but once the assessment isreopened, it allows the Assessing Officer to examine the otherclaims as well and since the material on record showed thatcertain expenses had been wrongly claimed by the assesseepetitioner that it is within the powers so vested under Section147 to assess or reassess, the Assessing officer has proceeded topass the order in respect of the expenses claimed as well andwhich would suffer no infirmity. In sum and substance, it is the argument of Mr.Sinha that there is absolutely no infirmity in the exercisecomplained of which warrants any interference. Briefly responding to the arguments of Mr. Sinha,Mr. Pathy has made reference to the statutory provisions ofSection 143 of ‘the Act’ to submit that when a return is filedunder Section 139 of ‘the Act’ it is processed in the mannerprescribed in Section 142, 143(2) and 143(3) which inter alia allows the Assessing Officer to satisfy himself on the claim ofloss, deduction, allowance or relief etc. and whether it isinadmissible and if he has reasons to believe that the claim isinadmissible then he is at liberty to direct the assessee toproduce or cause to be produced any evidence or particularswhich may be required in support of such claim. In reference toSub section (3) of Section 143 he submits that in case on thedate fixed, the assessee fails to comply with such notice then theAssessing Officer has all jurisdiction under ‘the Act’ to put suchassessee to notice and make computation of the income/loss tothe best of his judgment and also to determine sum payable bythe assessee. According to Mr. Pathy, even if the law vests suchjurisdiction in the Assessing Officer at the stage of originalassessment, this power cannot be stretched once a period of 6months has lapsed from the end of the financial year for whichthe return is furnished because even this power has beenwithdrawn by the legislature under Section 143 of ‘the Act’ onexpiry of such period. According to Mr. Pathy, if the law doesnot allow the Assessing Officer to put an assessee on notice onhis disclosure at the time of original assessment on expiry of 6months of the end of the financial year to which the returnsrelates, it cannot be done by resorting to the power for reopening of such reassessment. We have heard learned counsel for the parties andwe have perused the records. Although exhaustive arguments have beenadvanced by either side but it is the following issues which fallfor consideration in the present case; (a) Whether the exercise under Section 147 of ‘theAct’ is barred by limitation so prescribed under Section 149 of‘the Act’; (b) Whether the Assessing officer in exercise ofjurisdiction vested under Section 147 of ‘the Act’ can compelthe assessee for production of records /documents/particulars inrespect of any disclosure made in the returns; (c) Whether there was any tangible materialavailable with the Assessing Officer to reopen the proceedingswhich was a live link in between the ‘reasonable belief’ and theorder passed under Section 147 of ‘the Act’; and We have heard learned counsel for the parties andwe have perused the records. Although exhaustive arguments have beenadvanced by either side but it is the following issues which fallfor consideration in the present case; (a) Whether the exercise under Section 147 of ‘theAct’ is barred by limitation so prescribed under Section 149 of‘the Act’; (b) Whether the Assessing officer in exercise ofjurisdiction vested under Section 147 of ‘the Act’ can compelthe assessee for production of records /documents/particulars inrespect of any disclosure made in the returns; (c) Whether there was any tangible materialavailable with the Assessing Officer to reopen the proceedingswhich was a live link in between the ‘reasonable belief’ and theorder passed under Section 147 of ‘the Act’; and (d) Whether the Assessing Officer could havetravelled beyond the reasons to disallow the expenses claimedby the petitioner in his return to add to his total income, byrelying on Explanation 3 attached to Section 147. In so far as the issue of limitation as raised by Mr. Pathy is concerned, considering the import of Section 149 of‘the Act’ that the return were originally filed on 30.3.2012, thenotice issued under Section 148 on 22.3.2018 is found to bewell within the limitation period and to that extent there is noinfirmity in the initiation of the proceedings. The issue of contest is that the disclosure towardsagricultural income made by the petitioner in his return atAnnexure-1 of the writ petition has been disbelieved and it is tosatisfy himself on this account that an enquiry is initiated by theAssessing officer under Section 133(6) of ‘the Act’. No less than14 documents/records/registers have been demanded by theIncome Tax Officer respondent No.2. It is rather fairly informed by Mr Sinha that suchexercise was initiated in view of an advisory issued which hadthe approval of the Principal D.G.I.T. (S) New Delhi. Suchadvisory contained in a letter dated 10.3.2016 was issued in thelight of an order passed by this Court on a public interestlitigation and required verification of agricultural income for theperiods, which also included the assessment year in question.The advisory directs the Assessing Officer to verify whetherthere is any data entry error in the returns filed; to providefeedback where assessment is complete and in cases where assessment is pending, to thoroughly verify the claims onagricultural income. We are persuaded to take notice of the advisoryissued, a copy of which was handed over during the course ofthe proceedings, because, in case it is the said advisory whichlies at the foundation of the reopening then the entire exercise isfit to be struck down on this score because this does notconstitute an information or live link in between the materialsavailable and ‘the reasons to believe’ formed by the AssessingOfficer for the reopening of the assessment. In fact, two lettershave been handed over by Mr. Sinha during the course ofargument, each having the approval of Principal D.G.I.T(S),New Delhi and they have been circulated in reference to thejudgment of this Court in respect of claims towards agriculturalincome. Paragraph 2 of the letter dated 10.03.2016 takes noticeof the assessees who have declared income of more than 1 Croreas agricultural income in their returns filed for the assessmentyear 2011-12 to 2013-14. The writ petitioner does not comewithin this category because his claim towards agricultureincome is Rs. 4,85,905/- which is less than 1 crore. Paragraph4 of the letter dated 10.3.2016 accepts that a disclosure towardsagricultural income is only for rate purposes. Paragraph 5 of the letter issues directions to theAssessing Officer to verify any error in data entry, to providefeedback based on such score where assessment is completedand to verify the claims where assessment proceeding ispending. Paragraph 6 again mentions about a list of cases inwhich agricultural income exceeding Rs. 1 crore has beenclaimed. Paragraph 5 of the letter issues directions to theAssessing Officer to verify any error in data entry, to providefeedback based on such score where assessment is completedand to verify the claims where assessment proceeding ispending. Paragraph 6 again mentions about a list of cases inwhich agricultural income exceeding Rs. 1 crore has beenclaimed. We completely fail to appreciate as to how thisadvisory can lay the foundation for such exercise especiallywhere there is no direction in the advisory to reopen anyproceeding. Perhaps, the Assessing Officer in his exuberancehas got misled by such advisory to issue notice for suchproceeding and unfortunately even the Principal Commissionerhas defaulted in not appreciating whether at all the case was a fitcase for reopening especially where the Assessing Officer hadfailed to satisfy himself on the reasons for the belief that anypart of income chargeable to tax had escaped assessment. Much reliance has been placed by Mr. Sinha tocontest the proposition advanced by Mr. Pathy in reference tothe parameters drawn for exercise of power vested in theAssessing Officer under Section 147 of ‘the Act’ by submitting that the proposition canvassed may be good under thepreamended provision of Section 147 of ‘the Act’ but since afterits amendment with effect from 01.04.1989, this argumentwould not hold good for extensive powers has been vested inthe Assessing Officer to reopen assessments where he hasreasons to believe that any income chargeable to tax has escapedassessment and in such exercise, the Assessing Officer can alsodirect for production of the documents/records needed for thepurpose. It is also his argument that in this course, the AssessingOfficer can also go beyond the reasons supplied, to commentupon any other matter that my arise during such exercise underExplanation 3 attached to Section 147. In our opinion the argument advanced on behalf ofthe department is fallacious. The transitory provision of Section147 came up for consideration in the case of Commissioner ofIncome Tax versus Kelvinator of India reported in (2010)2SCC723. The Supreme Court after taking note of thepreamended provision of Section 147, its amendment videAmendment Act, 1987 as well as the Amendment Act, 1989 hasobserved thus in paragraphs 5,6 and 7: “5.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, reopening could be done under above two conditions and fulfillmentof the said conditions alone conferredjurisdiction on the Assessing Officer to make aback 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 tobelieve that income has escaped assessment,confers jurisdiction to reopen the assessment.Therefore, post-1-4-1989,power to reopen ismuch wider. However, one needs to give aschematic interpretation to the words “reason tobelieve” failing which, we are afraid, Section147 would give arbitrary powers to the AssessingOfficer to reopen assessments on the basis of“mere change of opinion”,which cannot be perse reason to reopen. 6. We must also keep in mind theconceptual difference between power to reviewand power to reassess. The Assessing Officer hasno power to review; he has the power to reassess.But reassessment has to be based on fulfillmentof certain precondition and if the concept of“change of opinion” is removed, as contended onbehalf of the Department, then, in the garb ofreopening the assessment, review would takeplace. 6. We must also keep in mind theconceptual difference between power to reviewand power to reassess. The Assessing Officer hasno power to review; he has the power to reassess.But reassessment has to be based on fulfillmentof certain precondition and if the concept of“change of opinion” is removed, as contended onbehalf of the Department, then, in the garb ofreopening the assessment, review would takeplace. 7. One must treat the concept of“change of opinion” as an in-built test to checkabuse of power by the Assessing Officer. Hence,after 1-4-1989, Assessing Officer has power toreopen, provided there is “tangible material” tocome to the conclusion that there is escapementof income from assessment. Reasons must have alive link with the formation of the belief. Ourview gets support from the changes made toSection 147 of the Act, as quoted hereinabove.Under the Direct Tax Laws(Amendment) Act,1987, Parliament not only deleted the words“reason to believe” but also inserted the word“opinion” in Section 147 of the Act. However, onreceipt of representations from the companiesagainst omission of the words “reason tobelieve”, Parliament reintroduced the said expression and deleted the word “opinion” on theground that it would vest arbitrary powers in theAssessing Officer.” The Supreme Court taking note of the transitorychange in Section 147 has in paragraph 7 concluded that apower to reopen would vest in the Assessing Officer only if,there is tangible material in his possession for coming to aconclusion that there was an escapement of income chargeableto tax, from assessment and the reasons with the AssessingOfficer must have a live link with the formation of belief.Testing the case in hand in the backdrop of the position sosettled in the judgments relied upon by Mr. Pathy as well as onthe transitory change as clarified in the judgment of Kelvinatorof India (supra), it is to be seen whether the case in hand wouldpass the test. The reasons in possession of the Assessing Officerfinds mention in the enclosure to Annexure -B to the counteraffidavit and runs under. “The assessee has not producedconcrete evidence like land adanga register,nature of crop cultivated expenses incurred towhom the agricultural produce was sold, whocultivated the land and how the income wasderived. In the absence of any material producedto substantiate the receipt an agricultural incometherefore, I have reason to believe that thequantum of agriculture income as claimed in ITRfor the A.Y.2011-12 is not his agricultural income. Accordingly, the same is treated as theincome from undisclosed source which escapedfor assessment. Hence income chargeable to tax to the extent ofRs. 4,85,905/- has escaped assessment within themeaning of Sec. 147 of the Act, 1961. Proposalfor issuing notice u/s 148 of the Act may beapproved accordingly.” A plain look at the reasons so assigned wouldconfirm that no tangible material was in possession of theAssessing Officer which could constitute any reasons which ledto a belief that any part of income chargeable to tax had escapedassessment rather it is in search of such tangible material thatthe proceedings had been reopened. The Income Tax Officer fairly mentions in the‘reasons’ so supplied that the assessee had not produced certainevidences in support of agricultural income and in absence ofwhich the claim towards agricultural income could not besubstantiated. We completely fail to appreciate as to how suchadmission by the Assessing Officer regarding absence ofmaterial, could lead to a formation of belief that the disclosurewas incorrect and chargeable to tax under Section 147 of ‘theAct’. The reason is two fold. Firstly such opportunity was muchavailable to the Assessing Officer at the stage of filing of thereturns when in exercise of powers under Section 142/143, suchdirections could have been issued for production of records and The Income Tax Officer fairly mentions in the‘reasons’ so supplied that the assessee had not produced certainevidences in support of agricultural income and in absence ofwhich the claim towards agricultural income could not besubstantiated. We completely fail to appreciate as to how suchadmission by the Assessing Officer regarding absence ofmaterial, could lead to a formation of belief that the disclosurewas incorrect and chargeable to tax under Section 147 of ‘theAct’. The reason is two fold. Firstly such opportunity was muchavailable to the Assessing Officer at the stage of filing of thereturns when in exercise of powers under Section 142/143, suchdirections could have been issued for production of records and a failure of the petitioner to satisfy the Assessing Officer onsuch count could have led to a best judgment assessment underSection 144 at the stage of original assessment but having notdone so, such recourse cannot be adopted by relying upon thestatutory provisions of Section 147 of ‘the Act’. Secondly suchenabling powers is only to be exercised only where there istangible material available at the hands of the Assessing Officerand not in absence thereof. The judgments relied upon by Mr.Pathy has been contested by Mr. Sinha on grounds that theyrelate to the preamended provisions of Section 147 but in ourconsidered opinion, in view of the position settled by theSupreme Court in the case of Kelvinator of India (supra) aftertaking note of the transitory change in Section 147, the legalposition as to the prerequisites for such exercise, has notundergone a change and which is that, there had to be tangiblematerial at the disposal of the Assessing Officer for reopening ofsuch proceedings and which power cannot be exercised forinitiating a roving enquiry. Even if the judgments rendered by the SupremeCourt in the case of Calcutta Discount Co. Ltd. andLakhmani Mewal Das is relatable to preamended provisionsof Section 147, in view of the legal position settled by the Supreme Court in the judgment rendered in the case ofKelvinator of India(supra), whatsoever doubts that may bepresent are in the mind of the department is set at rest. In thiscontest we are persuaded to reproduce the opinion of theDivision Bench of this Court recorded in the case of Rina Sen(supra) relied upon by Mr. Pathy, which not only relates to theperiod after amendment to Section 147 but also discusses theextent of power exercised by an Assessing Officer under Section147 when it records at page 226 as under: “…………….……..It is well settledthat the object of Section 147 of ‘the Act’ is notto make a roving or fishing enquiry. While it isopen to the authority in an appropriate case tomake an enquiry confidentially or otherwise -inorder to obtain information or verify factsdisclosed to him by the assessee or coming tohis notice, before reaching the stage ofreasonable believe, he cannot compel theassessee to associate himself in such roving orfact finding enquiry. The assessee can berequired to appear only after the AssessingOfficer has come to the conclusion as to thereasonable believe within the meaning ofSection 147 of ‘the Act’……..………………...” The discussions above would answer the issues relating to the power in the Assessing officer to compelproduction of records in the negative. A corollary to suchconclusion is that there was no tangible material in possessionof the Assessing officer for formation of belief of escaped income chargeable to tax The discussions above would answer the issues relating to the power in the Assessing officer to compelproduction of records in the negative. A corollary to suchconclusion is that there was no tangible material in possessionof the Assessing officer for formation of belief of escaped income chargeable to tax For the reasons and discussions that we have madeabove and in view of the clear fact situation available on therecord where such reopening is simply founded on the advisorydated 10.03.2016 issued by the department and where thereasons so present for the formation of belief is not resting onany tangible material, in possession of the Assessing officer asconfirmed from the discussions above, in our opinion, the entireexercise is illegal and dehors the provisions of Section 147/148of ‘the Act’. Since the entire exercise is held de hors thestatutory prescriptions, we do not consider it necessary toexpress our opinion on the expanded scope of Explanation 3attached to Section 147 and leave it open for discussion in anappropriate case.The issues so taken note of above are answeredaccordingly. In result, we quash the entire proceedings including the notice dated 22.03.2018 impugned at Annexure-3 togetherwith the final order dated 26.12.2018 and the demand noticeissued thereunder impugned at Annexure 10 series passed by therespondent No.2 Income Tax Officer which are accordingly set aside. The writ petition is allowed but with no order as to costs. (Jyoti Saran, J) Bibhash/- AFR/NAFRAFRCAV DATENAUploading Date16.08.2019Transmission DateNA ( Partha Sarthy, J)