The power to reopen assessments under Section 147 of the IT Act is much wider post-1st April, 1989, but must be based on tangible material and have a live link with the formation of belief.

ORDER

Dr. S. Muralidhar, CJ. - The challenge in this writ petition is to a notice dated 16th September, 2013 issued by the Deputy Commissioner of Income Tax, Berhampur Circle, Berhampur (Opposite Party No.1) to the Petitioner under Section 148 of the Income Tax Act, 1961 (IT Act) seeking to reopen the assessment for the assessment year (AY) 2009-10.

2. While issuing notice in the petition on 7th August, 2014, this Court directed that reassessment proceeding shall remain stayed till the disposal of the writ petition.

3. The background facts are that the Petitioner is a proprietorship concern, dealing with retail sales of IMFL, mobile phone recharge vouchers business in the name of M/s. Sandeep Enterprises and execution of works contract in the name of R.D. Constructions. The Petitioner filed her return under Section 139 of the IT Act on 30th September, 2009 disclosing total income of Rs.15,30,040/-. The return was picked up as scrutiny and notices were issued under Section 143 (1) and 142 of the IT Act by the Assessing Officer (AO). The AO passed the assessment order on 22nd November, 2011 under Section 143 (3) of the IT Act computing the taxable income at Rs.19,68,310/-. The AO estimated the income from the IMFL business at Rs.15,95,138/-, for M/s. Sandeep Enterprises in the sum of Rs. 2 lakh and R.D. Constructions in the sum of Rs.2,59,000/-.

4. On 16th September, 2013, the impugned notice was issued to the Petitioner Assessee by Opposite Party No.1 under Section 148 of the IT Act stating that he had reason to believe that the income chargeable to tax for AY 2009-10 has escaped assessment. In response to the said notice, the Petitioner sought the reasons for reopening. By a letter dated 3rd July, 2014, Opposite Party No.1 disclosed the reasons, which read as under:

'On verification of records show that during the previous year relevant to the assessment year 2009- 10, the assessee has shown to have received rebate and discount of Rs.4,16,123/- from IMFL business and commission of Rs.1,45,057/- from R.C.I.L. and Reliance Company Ltd. from Mobile phone recharge voucher business. These rebate and discount and commission income have not been included in the total income of the assessee while computing its total income in the assessment proceeding u/s 143(3) of the Income Tax Act, 1961.

Further, during the year the assessee has also shown to have received gross contract receipt of Rs.37,00,000/- from execution of civil contract works. However, the assessee has not furnished any details in this regard such as, the name and address of the contractee(s), PAN and TAN etc. It has also not furnished copy of works statement and TDS certificates etc. in the absence of such details/particulars, specifically when there is no identity of the contractee (s), it cannot be said that the gross contract receipt shown at Rs.37,00,000/- by the assessee is genuine. Hence, the entire amount of Rs.37,00,000/- shown to have received from execution of civil contract work is required to be added to the total income of the assessee as income from undisclosed sources.'

5. Contending that the initiation of the reassessment proceedings was based merely on a change of opinion, the present petition has been filed.

6. Despite notice having been issued to the Department by this Court on 7th August, 2014 itself , till date no reply has been filed.

7. A perusal of the reasons mentioned above for reopening of the assessment reveals that there was no new material available with Opposite Party No.1. The reasons begin with the sentence 'On verification of records....' In other words, it is the same statement of accounts already filed by the Petitioner during the original assessment proceedings under Section 143 (3) of the IT Act that have been revisited by Opposite Party No.1.

8. In respect of each of the lines of business of the Petitioner in the original assessment order, the AO estimated the business- wise profit by observing as under:

'IMFL Business

During the course of as