Reassessment made in pursuance to notice u/s 148 of the Income Tax Act,1961.

1. REOPENING
UNDER
SECTION 147
- RANO JAIN

2. SCHEME OF THE ACT
 S. 147 - Income escaping Assessment
 S.148 - Issue of notice
 S.149 - Time Limit for notice
 S.150 - Assessment in pursuance of an order, appeal
etc.
 S.151 - Sanction for issue of notice
 S.152 - Other provisions
 S.153 - Time Limit for completion of assessment

3. NOTICE
 Issue within time
 Service is a must- raise objection during assessment/
292BB
 In the name of a non existing entity
 By the jurisdictional A.O.

4. NOTICE TO BE ISSUED
WITHIN TIME
 Issue means going from the hands of the issuing
authority
 Track speed post record

5. Qualimax Electronics Pvt. Ltd. versus
Union Of India & Ors, dated 2nd June,
2010 (257) E.L.T. 42 (Del.)
 “The answer to this would lie in construing the date of
adjudication to be the date on which the adjudicating
authority loses his locus poenitentia, or opportunity to tear
off, destroy or alter the adjudication order. In other words,
when the order goes out of his control and that happens
when the order is signed and the one-way process of
sending it to the assessee is put in motion either directly or
indirectly through some other agency.
 What is of prime importance is the date on which the order-
in-original was despatched from the office of the
adjudicating authority”
5

6. Kanubhai M Patel HUF Special Civil
Application No. 5295 of 2010
The Honorable High Court of Gujarat
 Considering the definition of the word issue, it is
apparent that merely signing the notices on
31.03.2010, cannot be equated with issuance of
notice as contemplated under section 149 of the
Act. The date of issue would be the date on which
the same were handed over for service to the
proper officer
6

7. Government Wood Works Versus State
of Kerala reported in [1988] 69 STC 62
(Ker)
“The mere preparation of an order or even keeping
the order signed in the files of the office would not
render it an effective order, an order which is
operative. This is naturally so, for any authority
who writes out an order and signs it is free to
change it at any time before it is communicated. It
is not final at all, for the authority may become
wiser on information supplied to it or otherwise and
may choose to change the order at any time before
it is dispatched to the party against whom it
operates.”
7

8.  M/s Commissioner Of Agricultural Income-Tax Vs
Kappumalai Estate, [1998] 234 ITR 187 by Hon’ble
Kerala High Court
 Hon’ble ITAT Kolkata in the case of M/S. Haldia
Petrochemicals Ltd. Versus C.I.T., Kol-IV, Kolkata,
having ITA NO.1743/Kol/2013 reported in 2016 (6) TMI
458, “
 Hon’ble Karnataka High Court in the case of M/S
Maharaja Shopping Complex Versus The Deputy
Commissioner Of Income-Tax, Circle-1 (2), having
ITA NO. 832/2008 reported in 2014 (10) TMI 880,
8

9. SERVICE IS MUST
 Principle of natural justice
 Audi Altem partem

10. Section 292BB
 S. 292BB attracted for failure of ‘service’ of notice and
not failure to ‘issue’ the notice.
 Failure of AO, in re-assessment proceedings, to issue
notice under Section 148 of the Act, cannot be
validated by referring to Section 292BB of the Act.
Issue of notice is a jurisdictional requirement.
 CIT vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H)
 Pr. CIT v. Shri Jai Shiv Shankar Traders Pvt. Ltd.,
[2016] 383 ITR 448, (Del)
 Pr. CIT v. Silver Line, [2016] 383 ITR 455, (Del)

11. NOTICE IN THE NAME OF
NON EXISTENT ENTITY
 BDR Builders & Developers Pvt. Ltd. V. Asstt. CIT,
[2017] 397 ITR 529, DHC
 Sky Light Hospitality Llp V. Asstt. Cit , SLP
7409/2018- based on 292B
 Spice Enfotainment Ltd. v. CIT, 2012 (280) E.L.T. 43
(Del.) (DHC)
 Pr. Commissioner Of Income Tax-6 Versus Nokia
Solutions & Network India Pvt Ltd, [2018] 402 ITR
21 (Del)

12. JURISDICTIONAL ISSUE
 Norton Motors, [2005] 275 ITR 595, P&H HC
- If the notice, summons or other proceeding taken
by an authority suffers from an inherent lacuna
affecting his/its jurisdiction, the same cannot be cured
by having resort to Section 292B.

13. File Return and ask for
reasons
 Return must be filed within the time prescribed.
 Return to be signed by the assessee himself.
 Return must be filed in protest even if the notice is
having some defects. i.e. compliance is must.
 Seek the reasons recorded for reopening the case.

14. REASONS RECORDED
FOR REOPENING
 Reasons to be recorded before issuance of notice.
 Get a copy of reasons recorded.
 Get copy of standard form used by the AO for
obtaining the approval of the sanctioning authority
 File objections against the reasons recorded

15. APPROVAL/ SANCTION
 Who can give ?
 Section 151
 Notice before 01.07.2015-
Matters under first proviso- CIT, CCIT, Pr.CIT
Others- Joint Commissioner
 Notice after 01.07.2015
After four years from the end of relevant assessment Year-
CIT, CCIT, Pr.CIT
Others- If order made by an officer below the rank of JCIT-
JCIT
 JCIT- includes Addl.CIT- S. 2(28C)

16.  Approval from specified authority only, not even of
superior authority – SPL’s Siddhartha, [2012] 345 ITR
223 (DHC)
 Application of mind- N.C. Cables Ltd. [2017] 391 ITR 11
(DHC)
 Principal Commissioner agreed with the reasons, not
necessary to accord sanction reiterating the reasons
furnished by the AO. - Rakesh Gupta, CWP No. 27068
of 2016, dt. 27.04.2018 (P&H HC)

17. ISSUES IN REASONS
 To be recorded before issuing notice u/s 148
 Reasons recorded on the same date of issuing notice- no
independent application of mind
 Reason to believe or suspect- may be, seems, likely, to be
verified
 Non application of mind
 Non mentioning of amount
 Non mentioning of name of the entry operator
 Non mentioning of nature of transaction
 Borrowed satisfaction- AIR information, Report of DIT(Inv)
 Tangible material
 Change of opinion- P&H High Court- GMADA

18. REASONS TO BE RECORDED
BEFORE ISSUING NOTICE
 Karnataka High court in the case of CIT vs. Baldwin
Girls High School, ITA 703-710/2007, dt. 18.03.2014,
 Morarjee Goculdas Spng. Wvg. Co. Ltd. Vs. P.N.
Bansal & Anr. (1994) 208 ITR 471 (Bom)

19. REASONS TO BELIEVE v.
REASONS TO SUSPECT
 Lakhmani Mewal Das, [1976] 103 ITR 437 (SC)
 Smt. Paramjit Kaur, [2009] 311 ITR 38, (P&H HC)
 Coronation Agro Industries Ltd. [2017] 390 ITR
464, Bombay HC
 Indian Oil Corporation Vs. ITO 159 ITR 956, 970
(SC)

20. INDEPENDENT
APPLICATION OF MIND
 G & G Pharma India Ltd., [2016] 384 ITR 147, (Del.
HC) - The basic requirement is that the AO must apply
his mind to the materials in order to have reasons to
believe that the income of the Assessee escaped
assessment.
 Meenakshi Overseas Pvt. Ltd., [2017] 395 ITR 677,
(Del. HC)
 Dhawan Creative Prints Vs. UOI, dt.11.01.2018,
(DHC)

21. BORROWED
SATISFACTION J. Sekar, S. Ramachandran, (Del-HC)
 “72. Reasons to believe cannot be a rubber stamping of the
opinion already formed by someone else. The officer who is
supposed to write down his reasons to believe has to
independently apply his mind. Further, and more importantly, it
cannot be a mechanical reproduction of the words in the
statute. When an authority judicially reviewing such a decision
peruses such reasons to believe, it must be apparent to the
reviewing authority that the officer penning the reasons has
applied his mind to the materials available on record and has,
on that basis, arrived at his reasons to believe. The process of
thinking of the officer must be discernible. The reasons have
to be made explicit. It is only the reasons that can enable the
reviewing authority to discern how the officer formed his
reasons to believe.”

22. NON MENTIONING OF AMOUNT,
NAME OF ENTRY PROVIDER,
NATURE OF TRANSACTION
 M/s. Shodiman Investments Pvt. Ltd., ITA no. 1297
of 2015 dt. 16.04.2018 (Bombay HC)
 Basically shows non application of mind

23. TANGIBLE MATERIAL
 Lakhmani Mewal Das, [1976] 103 ITR 437 (SC)
 Not just a review
 Delhi High Court- earlier assessment u/s 143(1)
-CIT vs. Orient Craft (2013) 354 ITR 536 (Del)
- Indulata Rangwala vs. CIT (2016) 384 ITR 337
(Del)
- Agya Ram vs. CIT (2016) 386 ITR 545 (Del)

24. CHANGE OF OPINION
 Greater Mohali Area Development Authority, CWP
No. 26125 of 2017 (O&M) dt. 27.04.2018
 Kelvinator of India Ltd., [2010] 320 ITR 561 (SC)

25. Guidelines given by Delhi HC
 Sabh Infrastrcuture Ltd., [2017] 398 ITR 198 (DHC)
(i) copy of the standard form used by the AO for obtaining the
approval of the Superior Officer should itself be provided to the
Assessee. This would contain the comment or endorsement of the
Superior Officer with his name, designation and date.
(ii) the reasons to believe ought to spell out all the reasons and
grounds available with the AO for re-opening the assessment
especially in those cases where the first proviso to Section 147 is
attracted. The reasons to believe ought to also paraphrase any
investigation report which may form the basis of the reasons and any
enquiry conducted by the AO on the same and if so, the conclusions
thereof;

26. (iii) where the reasons make a reference to another document,
whether as a letter or report, such document and/ or relevant
portions of such report should be enclosed along with the
reasons;
(iv) the exercise of considering the Assessee’s objections to the
reopening of assessment is not a mechanical ritual. It is a quasi-
judicial function. The order disposing of the objections should
deal with each objection and give proper reasons for the
conclusion. No attempt should be made to add to the reasons
for reopening of the assessment beyond what has already been
disclosed

27. Objections
 Both on legal as well as merits
 To be disposed of by a speaking order- GKN
Driveshafts 259 ITR 19 (SC)
 Truly speaking
 Mostly cases sent back
 Four weeks before passing of order-
 Aroni Commercials Ltd. Vs DCIT 362 ITR 403(Bom)
 Bharat Jayantilal Patel vs. UOI 122 DTR 321(Bom)/
378 ITR 596(Bom)

28. NOTICE U/S 143(2)
 Is a must after filing return
 Hotel Blue Moon, [2010] 321 ITR 362 (SC)
 Alpine Electronics Asia Pte Ltd. v. DGIT & Others,
[2012] 341 ITR 247, Delhi High Court
 CIT v. M/s. Panchvati Motors (P) Ltd., ITA No. 292 of
2008, dt. 03.05.2011
 CIT vs. Ram Narain Bansal (P&H)- against, as the
assessee had participated

29. PROVISO
 Four years from the end of relevant assessment year
 Earlier assessment u/s 143(3)
 Allegation in the reasons itself-CIT vs. IFFCO , ITA No.
884 of 2007, dt. 17.09.2007 (Del-HC)
 Fully and truly disclosed
 Haryana Acrylic Manufacturing Company, [2009]
308 ITR 38 (DHC)

30.  No obligation of assessee to tell the inference to be drawn-
 Titanor Components Ltd. Vs. ACIT, 343 ITR 183, by the
Bombay High Court as follows :
"Where a reassessment is sought to be made after four years
the power conferred by section 147 of the Income-tax Act, 1961,
does not provide afresh opportunity to the Assessing Officer to
correct an incorrect assessment made earlier unless the
mistake in the assessment so made is the result of a failure of
the assessee to fully and truly disclose all materials facts
necessary for assessment. There is a difference between a
wrong claim made by an assessee after disclosing all the true
and material facts and a wrong claim made by the assessee by
withholding the material facts fully and truly. It is only in the latter
case that the Assessing Officer would be entitled to proceed
under Section”

31.  Calcutta Discount Co. vs. ITO (1961) 41 ITR 191 (SC)
 Berger Paints India Ltd. & Ors. Vs. JCIT & Ors. (2000)
245 ITR 645.(Cal)

32. Income From Assets
Located outside India
 16 years from the end of relevant assessment year
 Section 149(1)(c)- Finance Act, 2012, w.e.f. 01.07.2012- A. Y.
2006-07 onwards
 Not the one which have already expired- simple logic is that no
amendment can revive a proceeding which has already become
non-existent or dead before the date of such amendment-Punjab
& Haryana High Court in the context of the newly substituted
provisions of section 149(1) w.e.f. 1st April, 1989 pronounced
such a view in Steel Strips Ltd. vs. Asstt. CIT (1994) 211 ITR
1021 (P&H)
 S.S. Gadgil v. Lal & Co. [1964] 53 ITR 231 (SC)
 Commissioner of Income Tax Vs Pushpak Enterprises 254
ITR 193[ Delhi]

33. Assessment u/s 147
 Time limit
 General- 153- Before1.06.2016- 1 years from the end
of the financial year in which notice was served
 After 01.06.2016- nine months
 On or after 01.04.2019- twelve months
 On finding, directions etc. of higher authority- issue of
notice- section 150
 Clause (a) and (b) to Explanation to section 153-
automatic extension
 But not the ones already expired

34. Assessment
 No addition on the basis of reasons
 Delhi High Court- Ranbaxy (2011) 366 ITR 136 (Del),
Monarch (2016) 387 ITR 416
 Bombay High Court- Jet Airways (2011) 331 ITR 236
 Punjab and Haryana- Majinder Singh Kang (2012)
344 ITR 358 (P&H)- against assessee
 CIT vs. Mehak finvest 367 ITR 769 (P&H)

35. Assessment
 Additions other then those mentioned in reasons-
Explanation 3 to section 147

36. Miscellaneous
 On the basis of document found during the course of
search of a third person-
 ITO vs. Arun Kumar Kapoor- Amritsar Bench, ITA
147/Asr/2010, dt. 21.06.2011
 Rajat Shubra Chaterjee vs. ACIT- Delhi Bench, ITA
No. 2430/Del/2015, dt. 20.05.2016

37. Protective Assessments
 Protective additions in 147 assessment- ITO vs. Prima
Transformer Co. Ltd. ITA No. 573/Ahd/2016, dt.
02.04.2018

38. Multiple 148
 Second 148 notice- Atma Ram Vs. CIT (1960) 39 ITR
418 (Pun)
 Smt.Nilofer Hameed vs. ITO (1999) 235 ITR 161 (ker)

39.  Notice u/s 148 issued at a time when even the time for
issue of notice u/s 143(2) was available.

40. Reopening on the basis of
Audit Objections
 Reopening on the basis of audit objections
 Indian and Eastern Newspaper Society vs. CIT
(1979) 119 ITR 996 (SC)- Only on a factual issue not
a position of law
 Justice Easwar Committee for simplification of
taxation laws- Recommendation

41. THANK YOU!
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