Point of Law: Where Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post1st April, 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 reopen assessments on the basis of “mere change of opinion”, which cannot be per se reason to reopen.

ORDER :

ILESH J. VORA, J.

1. By filing this writ application under Article 226 of the Constitution of India, the writ applicant seeks to challenge the Notice dated 30.03.2018 issued by the respondent under Section 148 of the Income Tax Act, 1961 (‘the Act’ for short) seeking to reopen the writ applicant’s Income Tax assessment for the A.Y. 2011-12.

2. The brief facts leading to file this writ application can be summarized as under:

2.1 The assessee company - Garden Silk Limited is engaged in manufacturing and dealing in Men made Textiles POY. The assessee filed its return on 30.09.2011 declaring total income at Rs.70,32,21,512/- and claimed deduction under Section 80IA of the Rs.23,37,65,504/- in respect of various power generation units.

2.2 The return of income was processed under Section 143(1) of the Act.

2.3 The case of the assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued on 21.08.2012 and subsequently, notices under Section 142(1) of the Act dated 11.04.2013 and 26.08.2013 were issued along with detail questionnaire. The assessee company had submitted the explanation about justification of the deduction under Section 80IA and also furnished Form No. 10CCB in respect of all Power Generation Unit being the report of CA, as required under Section 7 of the 80IA of the Act. The Assessing Officer passed a detailed scrutiny order under Section 143(3), wherein, he disallowed Rs.3,65,25,780/- from the total claim made under Section 80IA of Rs. 23,37,65,504/- for generation of power consumed by other units. The assessee company preferred an appeal against the assessment order including the disallowance of Rs.3,65,25,860/-. The Appellate Authority i.e. the Commissioner of Income Tax (Appeals), allowed the Appeal and delete the addition of Rs.3,65,25,860/-, which was disallowed by the Assessing Officer out of total deduction claimed by the assessee Company under Section 80IA of the Act.

2.4 The notice dated 30.06.2018 under Section 148 of the Act was issued and at the request of assessee company, the reasons recorded have been furnished, which reads thus :

REASONS RECORDED

“In connection to above referred subject, it is stated that notice u/s. 148 of the I. T. Act was issued on 30.03.2018, which was duly served upon you. You have filed your return of income in pursuance to notice u/s. 148 of the Act on 02.05.2018 and sought for reasons recorded fore opening. Reasons recorded for reopening are as follows:

(i) The assessee company M/s. Garden Silk Mills Ltd., Surat deriving income from manufacturing of made textile and generation and distribution of power. The assessee filed return of income on 30.09.2011 for A.Y. 2011-12 declaring total income of Rs. 70,31,22,512/. The same was processed by accepting the return of income. Further the case was selected for scrutiny, assessment u/s. 143(3) of the Act was completed on 30.03.2014 by determining total income of Rs.74,07,45,129/. On perusal of records following facts of concealment of income are observed,

(ii) On going through the profit and loss account of the assessee company for A.Y. 2011-12, the assessee claimed deduction under Section 80IA in respect of profits derived from the generation of power of following five units.