The main legal point established in the judgment is the requirement of 'tangible material' for the reopening of assessment under section 148 and the importance of full and true disclosure of material facts necessary for assessment.

JUDGMENT :

Arindam Sinha, J.

1. By this writ petition, petitioner assessee has impugned notice dated 13th July, 2016 issued under section 148 of Income Tax Act, 1961. Mr. Khaitan, learned senior advocate appears on behalf of assessee and on earlier occasions had submitted, reasons to believe reek of change of opinion. Impugned notice is for reassessment relating to assessment year 2010-11. As it is a change of opinion, no allegation of suppression was made, as it could not be made, to invoke extended period of limitation. He relied on following decisions :-

(i) Judgment of Supreme Court in CIT Vs. Kelvinator of India Ltd. reported in (2010) 320 ITR 561(SC), to paragraph 6 for declaration of law regarding change of opinion. Assessing Officer (AO) was declared to have power to reopen provided there is “tangible material” to come to the conclusion there is escapement of income of assessment. This, Mr. Khaitan submitted, is not available here as full disclosure was made by his client. Hence, on same material, reassessment proceedings initiated is indisputably by reason of change of opinion.

(ii) Judgment of Supreme Court in ACIT Vs. ICICI Securities Primary Dealership Ltd. reported in (2012) 348 ITR 299 (SC) by which same view on change of opinion taken by Bombay High Court was affirmed.

(iii) Division Bench judgment of Bombay High Court in Titanor Components Limited Vs. ACIT reported in (2012) 343 ITR 183 (Bom.), wherein it was said, it is necessary for AO to first observe whether there is failure to disclose fully and truly all material facts necessary for assessment and having observed that there is such failure, to proceed under section 147. It must follow that where AO does not record such failure he would not be entitled to proceed under section 147. He demonstrated from impugned notice, enclosing the reasons to believe, there was omission in this regard. In assessee’s objection dated 14th September, 2016 this was specifically pointed out. Answer by department’s letter dated 19th September, 2016 did not dispute the omission.

(iv) Judgment of a learned Single Judge of this Court in Tantia Construction Co. Ltd. Vs. DCIT reported in (2002) 257 ITR 84 (Cal), for the same view expressed.

2. Md. Nizamuddin learned advocate, since elevated to this Court and thereafter Mr. Bhowmik, learned advocate appeared on behalf of revenue. Submissions made were, reasons to believe cannot be scrutinised to be as assessment of escaped income. Re-assessment proceeding must follow. By this writ petition assessee is trying to obstruct the re-assessment, which might even yield nil demand of tax. First proviso to section 147 stands attracted since assessee had not fully or truly disclosed all material facts necessary for assessment in relevant assessment year. Mere production before AO, of account books or other evidence from which material evidence could, with due diligence, have been discovered by AO will not necessarily amount to disclosure within meaning of the proviso as has been said in explanation 1. Reasons to believe for reopening are as in clause (c) of explanation 2.

3. The reasons to believe would appear from extract reproduced below:-

“On perusal of assessment folder it revealed that during the previous year relating to the A.Y. 2010-11 the assessee was engaged in the business of Manufacturing and sale of Carbon Black and sale of surplus power generated utilizing off gases Carbon Black manufacturing process. It was also revealed from the Appendix III, clause 14 of Tax Audit Report that the assessee claimed additional depreciation of Rs.19,25,77,970/- for plant and machinery used in Co-generation power plant at Baroda, Durgapur and Mundra which included Rs.11,55,57,195/- in respect of plant and machinery used for a period less than 180 days in the preceding previous year.

Section 32 of Income Tax Act, 1961 provides for additional depreciation on new plant and machinery (other than ships and aircrafts), which has been acquired and installed by a com