BSES RAJDHANI POWER LTD.,NEW DELHI V. ACIT, CICLE- 5(1), NEW DELHI

ITA 4851/DEL/2017

AI Insights

The case involves four appeals by BSES Rajdhani Power Ltd. and BSES Yamuna Power Ltd. against the orders of the Commissioner of Income Tax (Appeals) for the assessment years 2007-08 and 2008-09. The primary contention was regarding the legality of the reassessment proceedings initiated under section 148 of the Income Tax Act, 1961, which were challenged on grounds of being time-barred and based on mere change of opinion. The Tribunal examined the procedural validity of the reassessment notices and the substantive grounds for reassessment, including issues related to depreciation on energy meters, late payment surcharge, and capitalization of personnel costs.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 102464 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Other Referred Cases: Calcutta Discount Co. Ltd. Vs. ITO, CIT Vs. Foramer France, CIT Vs. Motor & General Finance Ltd., BLB Limited Vs. ACIT, D.T. & T.D.C. Ltd. Vs. ACIT, CIT Vs. Maruti Suzuki India Ltd., JSRS Udyog Ltd. Vs. ITO, Vatika Ltd. Vs. ITO, Hindustan Liver Ltd. Vs. R.B. Wadkar, CIT Vs. Kelvinator of India, ACTT Vs. DHARIYA CONSTRUCTION CO.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: ROHIT JAIN
• Keywords: Set aside; Difference of opinion; Change of opinion; Opportunity of being heard; Reassessment proceedings; Depreciation; Cost of acquisition; Period of limitation; Reopening of assessment; Capital expenditure; Principle of natural justice; Rectification of order; Assessment record; Reason to believe; Time period of passing order; Tangible material; Borrowed satisfaction
• Section: 147; 148; 143(3); 119; 250; 154; 251; 153; 139(1); 22; 13; 139; 234B; 44AB; 191; 264; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4850/Del/2017 (ASSESSMENT YEAR 2007-08) BSES Rajdhani Power Ltd., BSES Bhawan, Nehru Place, New Delhi-110019 PAN-AAGCS3187H Vs. Dy. CIT, Cicle-5(1), New Delhi. (Appellant) (Respondent) ITA No.4851/Del/2017 (ASSESSMENT YEAR 2008-09) BSES Rajdhani Power Ltd., BSES Bhawan, Nehru Place, New Delhi-110019 PAN-AAGCS3187H Vs. Asst. CIT, Cicle-5(1), New Delhi. (Appellant) (Respondent) ITA No.4852/Del/2017 (ASSESSMENT YEAR 2007-08) BSES Yamuna Power Limited, Shakti Kiran Building, Karkardoooma, Delhi-110092 PAN-AAGCS3187H Vs. Dy. CIT, Cicle-5(1), New Delhi. (Appellant) (Respondent) 2 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT ITA No.4853/Del/2017 (ASSESSMENT YEAR 2008-09) BSES Yamuna Power Limited, Shakti Kiran Building, Karkardoooma, Delhi-110092 PAN-AAGCS3187H Vs. Asst. CIT, Cicle-5(1), New Delhi. (Appellant) (Respondent) Assessee by Shri Rohit Jain, Adv., Sh. Deepesh Jain, Adv. and Sh. Shivam Gupta, CA Department by Mr. Javed Akhtar, CIT-DR Date of Hearing 20/02/2025 Date of Pronouncement 16/04/2025 O R D E R PER MANISH AGARWAL, AM: These four appeals filed by two different assessees namely M/s BSES Rajdjhani Powers Ltd. and M/s BSES Yamuna Power Ltd. against the two separate orders of ld. Commissioner of Income Tax (Appeals) [CIT(A) in short] – 2, New Delhi dated 31.03.2017 for Assessment Years 2007-08 & 2008-09 passed u/s 250 of the Income Tax Act, 1961 (the Act in short). 2. As the issues involved in all the appeals are common as is evident from the grounds of appeals taken by both the assessees for 3 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT both the assessment years, therefore, all these appeals are taken together and disposed-off by a single order. 3. First, we take up the appeal for AY 2007-08 in ITA No. 4850/Del/2017 in the case of M/s BSES Rajdhani Power Ltd. 4. Brief fact of the case are that assessee is a public limited company and engaged in a business of distribution of electricity in the specified area of south and west Delhi in the NCT of Delhi. The return of income was filed on 06.11.2007 declaring total loss of Rs. 1,76,80,71,626/-. Original assessment was completed u/s 143(3) vide order dated 24.12.2009 at a loss of Rs. 3,80,38,807/-. Thereafter vide notice u/s 148 of the Act dated 31.03.2014, the reassessment proceedings were initiated in the case of the assessee and the assessment order was passed u/s 147 / 143(3) of the Act on 26.03.2015 wherein the income of the assessee is reassessed at Rs. 36,76,28,228/- which stood rectified in terms of the rectification order passed u/s 154 / 147 / 143(3) dated 24.11.2015 at a total loss of Rs. 40,34,81,098/-. Against the order passed u/s 147 / 143(3), the assessee filed an appeal before ld. CIT(A) who vide impugned order dated 31.03.2017 has dismissed the appeal of the assessee ex- parte thus the assessee preferred appeal before the tribunal in the present case. 4 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 5. The assessee has raised following grounds of appeals: “1. That on the facts and circumstances of the case and in law, the ex- parte consolidated order dated 31.03.2017 passed by the CIT(A) without affording reasonable opportunity of being heard to the appellant is beyond jurisdiction, illegal and bad in law. 2 That on the facts and circumstances of the case and in law, the CIT(A) erred in passing the impugned ex-parte order dated 31.03.2017 in gross violation of principles of natural justice, on the alleged ground that the appellant was not inclined to prosecute its appeal. 2.1 That the CIT(A) erred in not appreciating that there was no default, whatsoever, on the part of the appellant in pursuing the appeal. Without Prejudice 3. That the CIT(A) erred on facts and in law in not holding that the assessment order passed by the assessing officer under section 147/143(3) of the Income-tax Act, 1961 (\"the Act\") is beyond jurisdiction, bad in law and void-ab-initio 3.1. That the CIT(A) erred on facts and in law in not appreciating that proceedings under section 147 of the Act were initiated on a mere change of opinion without formation of reasonable belief regarding escapement of income, which is sine-qua-non for assumption of valid jurisdiction 3.2. That the CIT(A) erred on facts and in law in not appreciating that the initiation of reassessment proceedings under section 147 of the Act was, in any case, barred by limitation prescribed in first proviso to that section. 3.3. That the CIT(A) erred on facts and in law in not appreciating that reassessment proceedings under section 147 of the Act having being initiated for the purpose of scrutinizing/ investigating the details of the appellant, is illegal and bad in law. 3.4 That the CIT(A) erred on facts and in law in not appreciating that the proceedings under section 147 of the Act having been initiated on the basis of incorrect facts, is without jurisdiction, illegal and bad in law. 4. Without prejudice, that the CIT(A) erred on facts and in law in upholding the assessment completed under section 147/143(3) of the Act at an income of Rs.36,76,28,228 as against loss of Rs. 153,46,87,868 returned by the appellant. 5 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 5. That the CIT(A) erred on facts and in law in upholding the action of the assessing officer in disallowing depreciation amounting to Rs.40,37,00,000 on capital goods purchased from M/s. Reliance Energy Limited ('REL) in earlier years. 5.1. That the CIT(A) erred in not appreciating that the aforesaid issue of disallowance of depreciation on capital goods purchased from M/s. Reliance Energy Limited ('REL) was decided in favour of the appellant by the Delhi High Court in the earlier assessment year(s). 5.2. That the CIT(A) erred in not following the binding decisions of High Court/ Tribunals and co-ordinate quasi-judicial authorities in gross violation of principles of judicial propriety. 6. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the assessing officer in making addition of Rs. 47,46,05,172 on account of theft billing and late payment surcharge ('LPSC). 6.1 That the CIT(A) erred on facts and in law in not appreciating that amounts on account of late payment surcharge and theft billing did not represent 'real' income taxable under the provisions of the Act. 6.2 That the CIT(A) erred on facts and in law in not appreciating that addition made by the assessing officer was, in any case, revenue interfere/neutral and consequently, there was no reason to inte tinker with the consistent method of accounting followed by the appellant 7. That on the facts and circumstances of the case and in law the CIT(A) erred in upholding the action of the assessing officer in making addition of Rs.8,81,68,166 on account of short capitalization of personnel cost and overheads to the value of assets. 7.1 That the CIT(A) erred on facts and in law in holding that personnel cost should be capitalized @ 10% of employee cost as per the directives of DERC, without appreciating that the method adopted by the appellant was scientific and based on rational approach. 7.2 That the CIT(A) erred on facts and in law in alleging that the appellant failed to file any documentary evidence in support of capitalization of 5% of material and labour cost. 7.3 Without prejudice, the assessing officer erred in not allowing depreciation on aforesaid amount of personnel cost treated as capital expenditure. 6 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 8. That on the facts and circumstances of the case and in law the CIT(A) erred in upholding the levy of interest under section 234B of the Act. 9. The appellant craves leave to add, to amend, to delete, to modify. To rescind, supplement or alter any of the grounds stated herein above either before or at the time of hearing of this appeal.” 6. The ground of appeal No. 1 to 2.1 are in relation to the action of ld. CIT(A) in passing the appellate order ex-parte. 7. During the course of hearing, the ld. AR submit that though the assessee has sought adjournment before the ld. CIT(A), however, ld. CIT(A) ignored this fact and decided the appeal as ex-parte. He thus submitted that the CIT(A) has dismissed the appeal of the assessee without providing an opportunity of being heard to the assessee. However, he prayed that the matter may be decided on the basis of the submissions made before us as the issues involved in the present appeal are either covered by assessee’s own order in other assessment years or there are legal issues taken by the assessee with respect to the initiation of the proceedings u/s 148 which have been dealt with by the ld. CIT(A) in detailed in the appellate order. 8. Per-contra ld. CIT-DR submitted that if the assessee is having grievance that ld. CIT(A) has not provided the opportunity of being heard, the matter may be set aside to the file of the CIT(A) to decide the appeal of the assessee afresh after considering the written submissions of the assessee. 7 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 9. After considering the submissions made by both the parties, in our considered opinion, in the instant case the matter relates to AY 2007-08 whereas almost more than 15 years have been passed and since the CIT(A) has already decided the appeal of the assessee on merits also, therefore, instead of remanding back the matter to the file of the CIT(A), we hereby proceed to decide the appeal of the assessee on the basis of the material produced and submissions made by both the parties. Accordingly, the ground of appeal No. 1 to 2.1 of the assessee are partly allowed. 10. In ground of appeal No. 3 to 3.4, assessee has challenged the order u/s 147 / 143(3) as passed without jurisdiction, mere change of opinion and barred by limitation thus bad in law and void-ab- initio. 11. Before us, the ld. AR argued that the assessment in the case of the assessee was originally completed u/s 143(3) and the reassessment proceedings had been initiated in terms of the notice issued on 31.03.2014 i.e. the vary feg end of the period of limitations for reopening the assessment for AY 2007-08. When the assessment was completed u/s 143(3) after making proper and thorough inquiry and investigations and no new material was available with the AO to form an opinion that some income has escaped assessment, reassessment proceedings could not be initiated in such facts of the case. He further submitted that from the perusal of the reasons recorded for reopening which are available on the paper book pages 8 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 88 to 89, the AO has reason to believe of escapement of income on three issues which has already been considered and detailed inquiries were made in this regard in the original assessment orders. It is not a case where the assessee has failed to disclose fully and truly all material / primary facts necessary for assessment. 12. For this he placed reliance on the following judgements: - Calcutta Discount Co. Ltd. Vs. ITO: [1961] 41 ITR 191 (SC) - CIT Vs. Foramer France: [2003] 264 ITR 566 (SC) - CIT Vs. Motor & General Finance Ltd.: [2009] 184 Taxman 465 (Del) - BLB Limited Vs. ACIT: [2012] 206 Taxman 37 (Del) - D.T. & T.D.C. Ltd. Vs. ACIT: [2010] 232 CTR 260 (Del) - CIT Vs. Maruti Suzuki India Ltd.: [2013] 215 Taxman 494 (Del) - JSRS Udyog Ltd. Vs. ITO: [2009] 313 ITR 321 (Del) - Vatika Ltd. Vs. ITO: [2013] 357 ITR 170 (Del) 13. The ld. AR further submitted that the AO has failed to mention specific failure on the part of the assessee truly and fully disclosing the material / facts. The ld. AR stated that on the perusal of the reasons recorded, it could be seen that there is no whisper by the AO of any failure on the part of the assessee to disclose material / facts. The reasons recorded nowhere notice the applicability of the first proviso of the section 147 of the Act. He therefore prayed that without making any specific charge of failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment, the reassessment proceedings initiated u/s 147 of the act after the expiry of four years from the end of the relevant assessment year is barred by limitation. 9 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 14. Ld. AR further submitted that the AO cannot seek to review the earlier assessment framed u/s 143(3) when all the enquiries / investigations were carried out thus is a mere change of opinion. He further drew our attention to the fact that notice u/s 148 was dated 31.03.2014 which was handed over to the postal authorities only on 01.04.2014 i.e. after the expiry of the six years from the relevant assessment year which fact is evident from the detailed track event of the document i.e. the envelop under which the notice u/s 148 was sent to the assessee through Speed Post, therefore, the notice which was issued on 01.04.2014 is barred by limitation and accordingly the entire reassessment proceedings are void-ab-initio. For this, the reliance is placed on the judgement of the Hon’ble Delhi High Court in the case of Sumanjeet Agarwal Vs. ITO reported in (2022) 449 ITR 517 (Del.) wherein the court has observed as under: “25.12 The review of the aforesaid judgments of the Supreme Court and the several High Courts shows that all Courts have consistently held that the expression 'issue' in its common parlance and its legal interpretation means that the issuer of the notice must after drawing up the notice and signing the notice, make an overt act to ensure due dispatch of the notice to the addressee. It is only upon due dispatch, that the notice can be said to have been 'issued……...” 15. The ld. AR of the assessee has filed a detailed written submission on the issue of all the grounds taken challenging the initiation of reassessment proceedings u/s 148 which are as under: GOA No. 3 to 3.4-Validity of re-assessment proceedings 24. In the present case, reassessment proceedings under section 147/148 of the Act were initiated by the assessing officer vide notice dated 31.03.2014, ie, much beyond the period of 4 years and almost at the fag-end of the overall limitation period of 6 years. 10 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 25. In the reasons recorded [refer pages 88 to 89 of PB] for re- opening of assessment, the assessing officer has alleged, that the income of the assessee escaped assessment on account of the following three issues viz.: a) Disallowance of Depreciation on Energy meters - Denial of excessive claim of depreciation to the extent of Rs.40,37,00,000, on account of alleged inflated cost of capital goods purchased from Reliance Energy Limited (REL) during FY(s) 2004-05 and 2005-06 [AYs 2005-06 and 2006-07] In the reasons, the assessing officer, solely, on the basis of order dated 23.02.2008 passed by the Delhi Electricity Regulatory Commission ('DERC'), went on to hold that the aforesaid energy meters were purchased by the appellant from REL at inflated/exorbitant prices in earlier years. Basis that, the assessing officer held that excess depreciation was claimed by the appellant qua such energy meters in the relevant assessment year, resulting in escapement of income. b) Addition on account of LPSC and Power Theft billing - The assessing officer held that LPSC and Power Theft billing amounting to Rs.47,46,05,172, is taxable on accrual basis, whereas the same is being offered for tax on receipt basis, resulting in escapement of income; and c) Addition on account of alleged short-capitalization of personnel cost of Rs.8,81,68,166 vis-à-vis the capitalization permitted by the DERC 26. It is respectfully submitted that the reassessment proceedings and consequent reassessment order dated 26.03.2015 passed under section 147 r.w.s. 143(3) of the Act are without jurisdiction, bad in law and void ab initio, inter alia, for the following reasons: (a) Re-assessment is barred by limitation of 4 years in terms of proviso to section 147 of the Act; (b) Re-assessment has been initiated on mere change of opinion, in the absence any new tangible material/information available with the assessing officer, (c) There is no valid reason to believe to allege escapement of income in the hands of the assessee; (d) Re-assessment was completed without providing complete reasons, in particular the sanction obtained; 11 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT (e) Reassessment is barred by limitation in terms of section 149 of the Act. Each of the aforesaid contentions is explained as under: Re (a): Re-assessment barred by limitation in terms of proviso to section 147 27. In terms of proviso to section 147, where assessment had been completed under section 143(3) of the Act, reopening is not permissible beyond 4 years from end of relevant assessment year, unless income has escaped assessment by reason of failure of the assessee to disclose fully and truly all material/primary facts necessary for assessment. 28. The Courts have in this context held that in so far as primary facts are concerned, it is the assessee's duty to disclose all of them, including particular entries in account books, particular portions of documents and other evidence disclosed. Once all the primary facts are before the assessing authority, the assessing officer requires no further assistance by way of disclosure. It is for the assessing officer to decide what inferences of fact can be reasonably drawn and what legal inferences have ultimately to be drawn. 29. Reliance placed on the following decisions: Calcutta Discount Co. Ltd. vs. ITO [1961] 41 ITR 191 (SC) CIT v. Foramer France [2003] 264 ITR 566 (SC) CIT vs. Motor & General Finance Ltd: [2009] 184 Taxman 465 (Del) BLB Limited vs. ACIT [2012] 206 Taxman 37 (Del) D.T. & T.D.C. Ltd. vs. ACIT: [2010] 232 CTR 260 (Del) CIT vs. Maruti Suzuki India Ltd: [2013] 215 Taxman 495 (Del) JSRS Udyog Ltd. v. ITO: [2009] 313 ITR 321 (Del) Vatika Ltd. vs. ITO: [2013] 357 ITR 170 (Del) 30. In order to validly reopen an already concluded assessment under section 143(3) beyond a period of 4 years from the end of the relevant assessment year, as in the present case, it is incumbent upon the assessing officer to make a specific assertion in the reasons recorded to the effect that escapement of income, if any, is on account of the 'failure of the assessee to disclose fully and truly all material facts relating to its assessment, as has been held in the following decisions: Wel Intertrade (P.) Ltd. vs. ITO: [2009] 308 ITR 22 (Del) CIT vs. Indian Farmers Fertilizers Cooperative Ltd.: [2008] 171 Taxman 379 (Del) Haryana Acrylic Manufacturing Company vs. CTT: [2009] 308 ITR 38 (Del) 12 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT Atma Ram Properties (P.) Ltd. vs. DCIT: [2012] 343 ITR 141 (Del) CIT vs. Purolator India Ltd.: [2012] 343 ITR 155 (Del) 31. It is further submitted that Courts have even gone to the extent that even if a claim made by an assessee is incorrect (though it is not so in the facts of the present case), the assessing officer does not have power to reopen assessment under section 147 after 4 years, if the reasons recorded fail to mention specific failure on the part of assessee in fully and truly disclosing material facts in relation to such claim, as has been held in the following decisions: Atma Ram Properties (P.) Ltd. vs. DCIT: [2012] 343 ITR 141 (Del) CIT vs. Purolator India Ltd.: [2012] 343 ITR 155 (Del) Titanor Components Ltd. v. ACTT: [2012] 343 ITR 183 (Bom) Plus Paper Food Pac Ltd vs. ITO: [2015] 374 ITR 485 (Bom) Kalpataru Sthapatya (P.) Ltd vs. ITO: [2013] 215 Taxman 479 (Guj) Kaira District Cooperative Milk Producers Union Ltd. vs. ACIT: [1995] 216 ITR 371 (Guj) 32. Applying the aforesaid settled legal position to the facts of the present case, it is respectfully submitted that on perusal of reasons recorded [refer pages 88 to 89 of PB]. it will kindly be appreciated that there is not even a whisper by the assessing officer alleging any failure on part of the appellant to disclose material facts. The reasons recorded, in fact, nowhere even notice the applicability of the first proviso to section 147 of the Act, much less mentioning any specific fact qua any of the three issues which was not disclosed by the appellant to justify the reopening. 33. On perusal of the aforesaid, it is patently clear that in the reason there is, as a matter of fact, no charge of any failure on the part of the appellant in disclosing any material fact on the contrary, the assessing officer is simply relying upon information already available and furnished by the appellant. 34. In the aforesaid facts, it is respectfully submitted that in view of the absence of specific charge in the reasons recorded of any failure on the part of the appellant to disclose fully and truly all material facts necessary for assessment, the reassessment initiated under section 148 of the Act, after the expiry of four years from the end of the relevant assessment year is barred by limitation and consequently the impugned order is beyond jurisdiction, bad in law and void-ab-initio. 35. Without prejudice, it is most respectfully submitted that there was, even otherwise, on the facts of the case and in law, no 13 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT failure on the part of the appellant in disclosing fully and truly all material facts necessary for assessment in connection with the aforesaid issues and the assessing officer had, after specifically verifying the claim(s) and forming opinion, allowed/ varied the same in the regular assessment proceedings as elaborated hereunder: (i) Depreciation on energy meters * In the audited financial statements energy meters were shown separately in the fixed assets schedule [Refer page 24 of the PB] * In the Tax Audit Report furnished under section 44AB of the Act, particulars of depreciation were disclosed under clause (14) of Form No. 3CD. In the said report, in Annexure 2A depreciation on energy meters was shown separately and rate of depreciation was clearly mentioned @ 80% [Refer page 56 of PB]. * The claim of depreciation on energy meter was specifically examined by the assessing officer in the regular assessment proceedings and claim of depreciation @ 80% was restricted to 15% [Refer page 75 to 81 of PB]. * Specific query was raised and replied vide letter dated 27.10.2009 that no energy meters were acquired from REL in financial year 2006-07, i.e., the year under consideration [Refer page 272 to 281 @272 of PB]. * Pertinently, DERC order dated 23.02.2008 was very much available at the time of original assessment, which was completed vide order dated 24.12.2009. As a matter of fact, the DERC order was set aside on the issue of computation of market price of energy meters by the order dated 06.10.2009 passed by the Appellate Tribunal for Electricity (\"ATE\"), which, too, was passed prior to the completion of original assessment. It is, in these circumstances, the assessing officer made a specific query, and did not make any addition/ disallowance on the issue of alleged excess price of energy meters. (ii) LPSC and Power Theft * The accounting policy followed by the appellant while recognizing \"income from operations\" was duly disclosed vide Note No. 2 to the \"Significant Accounting Policies and Notes to Accounts\" as under [Refer page 32 of PB]: \"Revenue from sale of energy is accounted for on the basis of billing cycles falling due to the consumers during the accounting year. Generally all consumers are billed on the basis of energy consumed as recorded by installed meters. All rectifications relating to consumer accounts are recognized in 14 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT the year in which they are approved. Late Payment Surcharge and bills raised in cases of power theft are accounted for on realization.\" * The LPSC charge recognized as income during the relevant year was specifically disclosed in the audited accounts under \"Schedule-10 - Other Income\" [Refer page 18 of PB]. (iii) Capitalization of Personnel cost * The accounting policy followed by the appellant while recognizing Fixed Assets and Capital Work in Progress was duly disclosed vide Note No. 4 to the \"Significant Accounting Policies and Notes to Accounts\" as under [Refer Pg. @33 of PB]: (d) The capital work in progress is stated at cost inclusive of all direct and proportionate overhead costs incurred\" * The capitalization on account of personnel cost to the value of assets constructed/ lying in Capital Work-in-Progress ('CWIP') was specifically disclosed in the audited financial accounts for the year in Fixed Asset Schedule [Refer page 14 of PB]. * Directions of DERC vide order dated 26.06.2003, was very much available and in the knowledge of the assessing officer during the course of original assessment proceedings; * DERC itself, vide order dated 23.02.2008, had approved personnel costs aggregating to Rs.6.57 crores, in line with the accounting treatment adopted by the assessee, to be capitalized to the value of assets. 36. The aforesaid facts clearly establish beyond any doubt that not only complete material facts were duly filed by the appellant, the same were duly considered in the course of original assessment. Neither in the original assessment nor in the reasons recorded there is any allegation of failure on the part of the appellant to disclose any material facts. In fact, as stated above, the assessing officer, in the reasons recorded, has not even whispered about applicability of proviso to section 147 of the Act. 37. Pertinently, the assessee raised the aforesaid specific legal objection vide letter dated 15.10.2014 [Refer pages 90-154 @ 95, 119 of PB). 15 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 38. In the order dated 15.10.2014, the assessing officer failed to specifically dispose off, much less reject, the aforesaid legal objection [Refer pages 155-161 of PB), except cryptically repeating the language of proviso to section 147 @pg 160 (refer second last para) observing as under: The notice under section 148 of LT Act, 1961 has been issued after taking into consideration the fact of the case that the assessee has failed to disclose fully and truly material facts. In view of the above facts notice issued under section 148 of LT Act, 1961 is valid and justified.\" 39. In the aforesaid order, too, the assessing officer has thus failed to consider the specific legal objection, except repeating the language of proviso to section 147, which is clearly not permissible in law. 40. In view of the above, it is submitted that the re- assessment proceedings are barred by limitation in terms of proviso to section 147 of the Act. Re (b): Re-assessment initiated on mere 'change of opinion' no fresh tangible material 41. It may be pointed out that though the powers under section 147/148 are wide, the same are not unfettered or plenary, insofar as the assessing officer in the garb of reassessment, cannot seek to review the earlier assessment framed under section 143(3) of the Act on account of mere \"change of opinion\" and or mere review of existing material/ facts. 42. Reliance in this regard is placed on the following decisions: CIT v. Foramer France: [2003] 264 ITR 566 (SC) ACIT v. ICICI Securities Primary Dealership Ltd: [2012] 348 ITR 299 (SC) CIT v. Kelvinator of India: [2010] 320 ITR 561 (SC) [affirming CIT v. Kelvinator of India Ltd.: [2002] 256 ITR 1 (Del) (FB)] ITO v. TechSpan India (P) Ltd. [2018] 302 CTR 74 (SC) CIT v. Usha International Limited: [2012] 348 ITR 485 (Del) (FB) 43. In the following cases it has been held that reassessment cannot be initiated unless some new/ additional fact/material/ information comes on record leading to the belief of escapement of income: 16 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT KLM Royal Dutch Airlines v. ADIT: [2007] 292 ITR 49 (Del.) CIT v. Feather Foam Enterprises (P) Ltd.: [2008] 296 ITR 342 (Del.) Atma Ram properties Pvt. Ltd v DCIT: [2012] 343 ITR 141 (Del) CIT v. Orient Craft Ltd: [2013] 354 ITR 536 (Del) Aventis Pharma Ltd. v. ACIT: [2010] 323 ITR 570 (Bom) 44. Reliance in this regard is placed on the following decisions of the Delhi High Court wherein the Court has held that when the reasons recorded refers to \"perusal of records\" or similar observations, it itself indicates that reassessment proceedings are initiated on reappraisal of exiting facts and not on the basis of any new tangible material, which is not permissible in law: Atma Ram properties Pvt. Ltd v. DCIT: [2012] 343 ITR 141 (Del.) Satnam Overseas v. ACIT: [2010] 228 CTR 121 (Del.) Ashok Mittal v. ACIT: [2014] 224 Taxman 55 (Del.) CIT v. Orient Craft Ltd: [2013] 354 ITR 536 (Del) 45. It is submitted that on all the aforesaid three issues in respect of which reassessment proceedings were initiated by the assessing officer, it will kindly be appreciated that: (a) the appellant had made adequate and complete disclosures of entire facts, as elaborately discussed supra; (b) it is nobody's case that any new or additional fact has come on record post completion of assessment. Pertinently, DERC order dated 23.02.2008, relied upon by the AO, was very much available prior to passing of original assessment order on 24.12.2009 and was in fact considered in the original assessment. There is no other material which has been referred in reasons recorded; (c) the assessing officer, in the original assessment proceedings, had made detailed enquiries/ investigations in respect of the issues qua which reassessment proceedings had been initiated - refer reply dated 27.10.2009 on main issue and complete disclosures made in respect of other two legal claims; (d) the assessing officer, after due application of mind, agreed with certain claims and also disallowed certain claims in the original assessment order. For example, excess claim of depreciation qua energy meters has been specifically disallowed, which clearly shows that the assessing officer was very much conscious of the claim of depreciation; 17 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT (e) issue of disallowance of depreciation on energy meters raised in the assessment order, in fact, merged with the order passed by the CIT(A) and hence barred by third proviso to section 147; (f) allegation of inflated purchase cost of energy meters made in FY 2004-05 and 2005-06, forming basis for denial of claim of depreciation has been deleted by the Tribunal, which also stands confirmed by the High Court; (g) the DERC order, forming the basis for reopening the issue of depreciation on energy meter stands reversed by the Appellate Tribunal for Electricity [Refer pages 208-236 @233 of PB]; (h) issue of taxability of LPSC and power theft on cash basis is covered in favour of the appellant by the order of the Supreme Court in the case of Dakshin Haryana Bijli Vitran Nigam (infra). 46. In these circumstances, it is patently clear that the impugned reassessment proceedings are nothing but a mere attempt to rake up the very same issues again which clearly tantamount to change of opinion and hence not permissible in terms of section 147 of the Act. 47. There is, it is reiterated at the cost of duplicity, nothing to suggest, either from the reasons recorded and/or from the assessment order that any new fact/information came to the notice of the assessing officer subsequent to the original assessment. 48. It is reiterated that in the impugned order and the reasons recorded, the assessing officer has merely relied on the profit and loss account, balance sheet, tax audit report and computation of income of the assessee and also DERC order dated 23.02.2008, which were already part of the assessment records and furnished at the time of filing of return of income and original assessment proceedings, which clearly highlight the fact that the reassessment had been reopened on mere reappraisal of exiting facts, not permissible in law. 49. In view of the above, it is submitted that the impugned reopening of assessment in the case of the assessee clearly falls in the category of change of opinion and suffers from the vice of lack of jurisdiction. Re (c): No valid reason to believe-initiation of reassessment invalid 18 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 50. Under the scheme of the Act, the assessing officer can initiate proceedings under section 147 of the Act only if he has \"reason to believe\" that any income has escaped assessment. Such belief has to be arrived at by the assessing officer on the basis of tangible/ reliable information in the possession of the assessing officer. The reasons recorded must, therefore, show application of mind by the assessing officer. If the reasons recorded are vague or ambiguous or based on suspicion, conjectures and surmises, the proceedings initiated under section 147 of the Act are liable to be held as invalid and bad in law. 51. In this regard, attention is invited to the judgment of Supreme Court in the case Sheo Nath Singh vs. ACIT 82 ITR 148, wherein while construing the expression \"reason to believe\", it has been observed as under: \"There can be no manner of doubt that the words \"reason to believe\" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court.\" 52. It has been similarly held in the following decisions: Ganga Saran & Sons (P) Ltd vs. ITO 130 ITR 1 (SC); Birla VXL vs. ACIT 217 ITR 1 (Guj); Multiscreen Media (P) Ltd. vs UOI 324 ITR 54 (Bom.) ITO vs. Lakhmani Mewal Das 103 ITR 437, 448 (SC) Arjun Singh vs. ADIT 246 ITR 363 (MP) Seth Brothers vs. JCIT 251 ITR 270 (Guj.) Bombay Pharma Products vs. ITO 237 ITR 614 (MP) Lokendra Singh Rathore vs. WTO 155 ITR 629 (MP) United Electrical Co. (P) Limited vs. CIT 258 ITR 317 (Del.) 53. In view of the aforesaid, it may be noted that the words \"reason to believe\" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds to suggest that income of the assessee has escaped assessment and that the assessing officer may act on direct or circumstantial 19 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT evidence but not on mere presumption or suspicion. \"Reason to believe', it is submitted, cannot be equated with 'reason to suspect [refer Krown Agro Foods (P) Ltd vs. ACIT: 375 ITR 460 (Del), GS Engineering & Construction Corporation vs DDIT (International Taxation): 357 ITR 335 (Del.)] 54. It is also settled law that the assessing officer cannot reopen assessment to carry out verification or fishing and roving enquiries to establish escapement of income [Refer Chhugamal Rajpal v. SP Chaliha: 79 ITR 603 (SC), CIT v. Batra Bhatta Co. 321 ITR 526 (Del.), Digi Electronics Pvt. Ltd. v. ACIT WP No. 1798 of 2022 (Bom.), Inductotherm (India) P. Ltd. vs. DCIT 356 IT'R 481 (Guj)). 55. In the present case, the reasons recorded by the assessing officer in the case of the assesses, it is respectfully submitted, do not constitute 'reasons to believe' which can suggest that income on the three alleged accounts had escaped assessment, as briefly submitted hereunder: * Disallowance of Depreciation on Energy meters There cannot be any escapement of income on this issue, inter alia, for the following reasons: - The assessing officer, solely on the basis of enquiry conducted by DERC, went on to hold that the aforesaid energy meters were purchased by the appellant from REL at inflated/ exorbitant prices. The assessing officer while initiating reassessment failed to appreciate that the DERC tariff order dated 23.02.2008 was subsequently set aside by Appellate Tribunal for Electricity ('ATE') vide order dated 06.10.2009 - It is noteworthy that no fresh energy meters were acquired by the appellant from REL during the relevant year, the proposed disallowance of depreciation is energy meters capitalized in AY 2005-06 and 2006-07. In this regard, it may be noted that (1) no adverse inference is drawn by the AO in AY 2005-06 in completed assessment qua assets purchased in that year; and (ii) for AY 2006-07, disallowance stands deleted by the CIT(A) which order was affirmed by the Tribunal and Revenue's appeal before the High Court has been disposed off. * Addition on account of LPSC and Power Theft billing - The assessing officer has alleged escapement citing that that LPSC and Power Theft billing is taxable on accrual basis, whereas 20 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT the same is being offered for tax on receipt basis, resulting in escapement of income. The assessing officer has failed to appreciate that-(i) there is considerable uncertainty in realization of LPSC and power theft billing revenue and hence the same is recognized as receipt basis considering the Accountant Standards, (ii) the same cannot be considered as income as per real income theory; and (iii) covered by judgements in the case of ACIT vs. Dakshin Haryana Bijli Vitran Nigam Ltd: [2013] 35 taxmann.com 486 as affirmed by P& H High Court. * Addition on account of alleged short-capitalization of personnel cost vis-à-vis the capitalization permitted by the DERC. The AO failed to appreciate that DERC itself, vide subsequent order passed on 23.02.2008, approved personnel costs aggregating to Rs.6.57 crores to be capitalized to the value of assets, being approximately same to the actual capitalization of Rs.6,57,40,336 made by the assessee. [Merits detailed infra] 56. For the aforesaid reasons, there cannot be any reason to belief that income of the assessee has escaped assessment on any of the aforesaid accounts. Re (d): Non-furnishing of complete reasons, specifically sanction: 57. During the course of reassessment proceedings, reasons recorded for initiating the aforesaid proceedings were furnished to the assessee on 11.04.2014. In response thereto, the assessee filed letter dated 15.10.2014 objecting to the assumption of jurisdiction under section 147/148 of the Act on several grounds. [refer pages 90 to 154 @ 95 onwards of PB] 58. It is submitted, that incomplete reasons recorded were provided to the assessee in as much as while communicating the reasons for reopening the assessment, copy of the standard form used by the assessing officer for recording basic facts, reasons for reopening, obtaining the approval of the Superior Officer (if any), was not provided, which is violative of the law laid down in Sabh Infrastructure Ltd. v. ACIT: [2017] 398 ITR 198 (Del). In that case, the Court held as under: \"19. Before parting with the case, the court would like to observe that on a routine basis, a large number of writ petitions are 21 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT filed challenging the reopening of assessments by the Revenue under sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the court would like the Revenue to adhere to the following guidelines in matters of reopening of assessments: (i) while communicating the reasons for reopening the assessment, the copy of the standard form used by the Assessing Officer 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. In other words, merely stating the reasons in a letter addressed by the Assessing Officer to the assessee is to be avoided, (ii) the reasons to believe ought to spell out all the reasons and grounds available with the Assessing Officer for reopening 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 Assessing Officer on the same and if so, the conclusions thereof (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. SLP filed by the Revenue against the aforesaid decision has been dismissed by the apex Court. 59. Further, it is respectfully submitted that initiation of proceedings under section 147 is invalid since sanction obtained, if any, under section 151 has not been communicated to the assessee along with reasons recorded nor is there any reference in the notice under section 148 of the Act regarding any sanction 22 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT being obtained; be that as it may, the sanction, if any, has not been communicated even till date. 60. Reliance, in this regard, is placed on the following decisions wherein reassessment has been held to be invalid in absence of valid sanction being obtained: CIT v. SPL's Siddhartha Ltd. [2012] 345 ITR 223 (Del) Ghanshyam K. Khabrani v. ACIT: [2012] 346 ITR 443 (Bom.) DSJ Communication Ltd. v. DCIT: [2014] 222 Taxman 129 (Bom.) Dhadda Exports v. ITO: S.B. Civil Writ Petition No.913/2015 (Raj.) Adani Ports and Special Economic Zone Ltd. v. DCIT: Special Civil Application No. 17184 of 2012 (Guj.) 61. For the aforesaid reason, too, since complete reasons, as required in law, were not provided to the assessee, the reassessment proceedings are invalid and bad in law Re (e): Reopening is barred by limitation under section 149 of the Act 62. In this regard, it is at the outset respectfully submitted that, in the present case, though the notice issued under section 148 bears the date of issuance as 31.03.2014 [refer page 87 of PB], the same was actually dispatched by the assessing officer only on the next day Le. 01.04.2014 via speed post bearing Booking ID No. ED340358868IN. In this regard, screenshot of tracking status of the booking ID, as obtained from post office's website, along with envelope served to the appellant is enclosed as Annexure-1 63. Reliance, in this regard, is placed on the decision of Hon'ble Delhi High Court in the case of Suman Jeet Agarwal v. ITO: [2022] 449 ITR 517 (Delhi) wherein the court, after going through various judgments, held that a notice can be construed as 'issued\" only when the same is dispatched to the addressee. The court observed as under: “25.12 The review of the aforesaid judgments of the Supreme Court and the several High Courts shows that all Courts have consistently held that the expression 'issue' in its common parlance and its legal interpretation means that the issuer of the notice must after drawing up the notice and signing the notice, make an overt act to ensure due despatch of the notice to the addressee. It is only upon 23 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT due despatch, that the notice can be said to have been issued 64. In the present case, since the aforesaid notice was dispatched only on 01.04.2014, the notice could be said to have been 'issued' on 01.04.2014 which renders the same invalid and non-est in the eyes of law since issued beyond the limitation period prescribed under section 149 of the Act ie. before the expiry of six years from the end of the relevant assessment year 65. Also, independent of the above, it is respectfully submitted, proceedings initiated under section 147 cannot be regarded as having been validly initiated unless reasons recorded for initiating the proceedings are served on the assessee within the period of limitation prescribed in section 149 of the Act, i.e., before the expiry of six years from the end of the relevant assessment year. [Refer: Haryana Acrylic Manufacturing Company vs. CIT: [2009] 308 ITR 38 (Del); Shri Balwant Rai Wadhwa in ITA No. 4806/Del/10] 66. In the present case, notice under section 148 of the Act dated 31.03.2014 was issued. Reasons recorded were communicated much later on 11.04.2014 i.e., clearly after the expiry of the limitation period of six years from the end of the assessment years as provided under section 149 of the Act. 67. Since in the present case copy of reasons recorded was served on the assessee after the expiry of the limitation prescribed in section 149 of the Act, the reassessment proceedings are barred by limitation prescribed under that section. 68. For the aforesaid cumulative reasons, it is respectfully submitted that the impugned reassessment proceedings are bad in law and are liable to be quashed.” 16. He therefore prayed that the entire reassessment proceedings are barred by limitation, mere change of opinion and no valid reason to believe to reopen the completed proceedings therefore, the notice issued u/s 148 deserves to be quashed and consequent reassessment proceedings deserves to be hold void-ab-initio. 24 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 17. Per-contra ld. CIT-DR vehemently supported the order of the lower authorities and submitted that the ld. CIT(A) has dealt with all this issues in detailed in para 4.1 to 4.4 of its order which are self explanatory and therefore he requested that the AO has rightly initiating the proceedings u/s 148 of the Act and he prayed accordingly. 18. We have considered the rival submissions and perused the material available on record. At the outset, we first decide the ground of the assessee with regard to the limitation issued where the assessee claimed that the notice u/s 148 bears the date of issue as 31.03.2014 however, the same was actually dispatched on 01.04.2014 through Speed Post bearing booking ID No. ED340358868IN. The assessee has placed before us the screenshot of tracking status of booking ID as obtained from the post office web site alongwith the copy of envelop through which such notice was served upon to the assessee according to which the claim of the assessee that the notice u/s 148 was handed over to the postal authorities on 01.04.2014 at 18:12 hrs. at Indraprasth H.O. The screenshot of the notice, copy of envelop and track record is as under: 25 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 26 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 19. From the perusal of the track statement of the Indian Post, it is clear that the document No. ED340358868IN through which the notice u/s 148 was issued to the assessee was actually delivered to 27 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT the postal authorities for the service on 01.04.2014. The Hon’ble Delhi HC in the case of Sumanjeet Agarwal (supra) has held that drawing and signing of the notice is not sufficient and the AO should ensure due dispatch of the notice to the addressee. It is only upon due dispatch the notice can be said to have been issued. In the instant case as could be observed the notice u/s 148 was actually dispatched on 01.04.2014 therefore it is barred by limitation. 20. Even otherwise, from the perusal of the reasons recorded which are available at Paper book pages 88 and 89 filed by the Assessee, we find that it is nowhere stated that the assessee has failed to disclose fully and truly all the material necessary for the assessment, it appears that the Assessing Officer has acted based on some report received from some unknown source which has not been appearing in the reasons recorded entire exercise was carried out of reopening the assessment. Here it is pertinent to mention that in the case of the assessee itself in AY 2009-10, the case were reopened u/s 148 wherein these reasons for reopening were common as is evident from the copies of the reasons recorded for AY 2009-10 available in the paper book pages 96-100. The said reassessment proceedings were quashed by ld.CIT(A) and on further appeal the coordinate bench of the ITAT in ITA No. 1843/Del/2023 vide its order dated 29.01.2025 has confirmed the order of ld. CIT(A) by making following observations: 3. We next note that the learned CIT(A)’s lower appellate discussion quashing the impugned reopening thereby holding it as not sustainable in law being an invalid one, reads as under: 28 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT “5.1.1 These grounds relate to challenging the issue of notice u/s. 148 of I.T. Act. Before adjudicating the issues under disputes, it is pertinent to have a look at the statutory provision of income escaping assessment as envisaged under section 147 of IT Act, which stipulate \"If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1. Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. - For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- 29 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 1. Where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; 1. Where a return of income has been furnished by the assessee but not assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return: 1. Where an assessment has been made, but- 1. Income chargeable to tax has been underassessed; or 2. Such income has been assessed at too low a rate; or 3. Such income has been made the subject of excessive relief under this Act, or 4. Excessive loss or depreciation allowance or any other allowance under this Act has been computed. Explanation 3. For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the Income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under subsection (2) of section 148.\" 5.1.2 Hence, considering the above legal provisions before initiating action under section 147 of IT Act, the first and the foremost step is that AO should examine the information in his possession which he is going to rely on, for formation of his belief that income of the assessee has escaped assessment. The information should be specific clear and have nexus with the assessee. Further, the information should be available at the time of reopening of the assessment and not subsequent to the re- opening of the assessment by issuing a notice u/s. 148, 240 ITR (Nagpur) 12 & 311 ITR (P&H) 38.Further, the information should be specific and not general in nature. After the examination of the information, the AO has to form a belief that income has escaped assessment. Again for formation of the 30 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT belief the information should be credible and should have a live link and nexus with the belief about escapement of income. The belief is to be formed on the basis of the information available with the AO at that time. He cannot go ahead in re-opening of the assessment, issue a notice and then search for the material. IT is also important to note that there should be reasons to form a belief and not reasons to suspect. Whatsoever strong the suspicion, it may be. 90 ITR Patna (TM) 90, 104 TTJ(Asr)353. Further, there is an another aspect also to formation of the belief and that is the satisfaction should be the own satisfaction of the AO and not the borrowed satisfaction. If the AO re-opens an assessment simply on the basis of satisfaction recorded by some other authority like Sales Tax, Excise or Director Investigation and does not record his own satisfaction re- opening by the assessment has been held as bad. 313 ITR (Raj 231, SLP dismissed (St) 27, 135 ITD (Ahd) I, 220 CTR Mad 335 & (Raj) 361 & (Del) 531 125 TTJ (Del) 816, 236 CTR (Del) 362. 5.1.3 The Hon'ble Supreme Court in the case of ACTT Vs. DHARIYA CONSTRUCTION CO. reported in 328 ITR 515 has held that having examined the record, we find that in this case, the department sought reopening of the assessment based on the opinion given by the District Valuation Officer (DVO). The opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income Tax Act, 1961. The AO has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is not merit in the civil appeal. The department was not entitled to reopen the assessment. 5.1.4 After formation of the belief that income has escaped assessment, the next important step is that AO has to record reasons in writing that income has escaped assessment. The reasons should be clear specific and not vague, it should clearly point towards the escaped income and not based on any kind of suspicion, conjunctures and surmises. It is not only mandatory upon the AO to record the reasons but also it is mandatory upon the AO to supply the copy of the same to the assessee after he files his return enabling him to make his case. 248 ITR (P&H) 266, 203 CTR (Bom) 232, 258 ITR (Bom) 183, 96 TTJ (Hyd) 832, 106 TTJ(JP) 114, 112 TTJ(Del) 445, 218 CTR (Guj) 53, 114 ITD (Del) 166, 340 ITR (Bom) 66, 350 ITR (Bom) 120, 350 ITR (Guj) 131. It is mandatory upon the AO to record the reasons for re-opening of the assessment. Now after filing of the return it 31 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT is the right of the assessee to obtain the copy of the reasons recorded by the AO. Once this request is made the AO is bound to provide the copy of the reasons recorded within a reasonable time but before starting the reassessment proceedings. After receiving the copy of the reasons recorded the assessee shall within a reasonable time file his objections to the reasons recorded with the AO. It is important to note here that objections must be filed within a reasonable time before the initiation of the reassessment proceedings. In case the assessee files his objections, the objections must be disposed off by the AO by way of speaking order. This procedure was settled by the Hon'ble Apex Court in the famous case of GKN Drive Shaft reported in 259 ITR(SC) 19.The AO gets its power to issue the notice and start the reassessment proceedings from the reasons recorded by him. It is clearly settled by Hon'ble Bombay High Court, in the case of Jet Airways 331 ITR 236, Delhi High Court, in the case of Ranbaxy Laboratories and Punjab & Haryana High Court in the case of Atlas Cycle 180 ITR that, if no addition is made in the assessment order by the Assessing Officer in respect of the escaped income recorded in the reasons of re-opening and the other additions are made in respect of other escaped income, which has no nexus with the reasons recorded then the AO losses his jurisdiction for making reassessment and the assessment order passed by him was treated to be invalid. This judgment was followed and discussed by various Benches of ITAT and the High Court in the following judgements: 108 TTJ(Asr)I, 108 ITD (Agra)115, 239 CTR(Bom)183, 242 CTR(Del)117, 339 ITR (Pat)272, 253 CTR(Guj)321, 258 CTR(Guj)168, 128 TTJ(Mum)514, 217 CTR(Raj)345, CTR(Chatti)255. 237 CTR(Del)473, 220 CTR(Raj)629, 246. 5.1.5 Admittedly, in impugned case, the issue relates to AY 2009-10, therefore, a notice u/s.148 of 1.T. Act can only be issued upto 31.03.2016. Accordingly, notice u/s.148 of 1.T. Act was issued on 03.03.2016, which is well within the statutory time limit. However, since an assessment u/s. 143(3) of I.T. Act was already completed in this case by an order dated 23.12.2011, therefore, proviso to section 147 of I.T. Act applies as the notice was issued after four years from the end of the relevant assessment year. The proviso to the aforesaid section places fetters on the powers of the AO to initiate re-assessment proceedings beyond the period of four years from the end of the relevant assessment year, where, the assessment has been completed u/s.143(3) of I.T. Act unless the income has escaped assessment by reason of the failure of the assessee to disclose 32 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT fully and truly all material facts necessary for assessment. While recording the reasons, the AO has merely alleged that the assessee has failed to disclose full and true material facts. However, he has nowhere, in the reasons recorded stated any instance of failure on the part of the assessee to disclose any material facts in respect of issue sought to be re-assessed. The entire premise of the re-assessment was based on scrutiny and verification of the material already existing on record and not even an iota of any new tangible material which the assessee had failed to disclose was brought on record by the AO. It has been held in several decisions of Hon'ble High Courts that, if the reasons recorded for reopening the assessment after expiry of four years from the end of the relevant assessment year do not specify that the income has escaped assessment on account of default on failure on the part of the assessee to disclose material facts, the entire re-assessment proceeding and re-assessment order would be invalid. I find force in the argument of the appellant that conditions necessary as envisaged in proviso to section 147 of I.T. Act are not fulfilled by the AO while recording the reason for re-opening the assessment, hence; the issuance of notice u/s. 148 of I.T. Act is held to be bad in law and accordingly, the re-assessment proceeding is quashed. As a result, ground no.1 to 1.4. are allowed.” 4. We have given our thoughtful consideration to both the parties reiterating their respective stands against and in support of the impugned reopening. 5. Learned CIT(DR), more particularly, invites our attention to the reopening reasons discussed in para 3 onwards of the assessment order dated 20.12.2016 that since the assessee was found to have inflated the corresponding acquisition of fixed assets purchased in the preceding assessment years itself, corresponding depreciation claim thereupon raised herein, deserves to be disallowed as a necessary corollary thereof. 6. The assessee, on the other hand, inter alia, submits that it had filed its return on 28.09.2009 under section 139(1) of the Act declaring loss of Rs.154,39,15,018/-, which stood assessed in a regular assessment under section 143(3) of the Act framed on 23rd December, 2011. 7. We are further taken to the learned Assessing Officer’s reopening reasons as well, wherein, there is not even an iota of allegation against the taxpayer that it had not disclosed the 33 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT relevant particulars in its returns, the said section 143(3) assessment proceedings “fully” and “truly” in light of section 147 1st proviso, and, therefore, it is prayed that the learned CIT(A)’s detailed discussion quashing the impugned reopening itself be confirmed. 8. Learned counsel further invites our attention to the assessee’s detailed paper-books wherein all the relevant details of facts as well as case law(s) have been duly compiled. Our attention is invited to pages 425 to 436 wherein the tribunal had settled the issue long back in the preceding assessment years 2005-06 and 2006-07 that the foregoing allegation raised at the department’s behest of alleged inflated purchases stood decided in assessee’s favour, as upheld in hon’ble jurisdictional high court’s itself dated 14.09.2016. The Revenue could hardly dispute that all these developments took place well before the learned Assessing Officer had set into motion his section 148/147 proceedings. We thus quote Hindustan Liver Ltd. Vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.) that once there is no scope of any addition/deletion or substitution in the reopening reasons recorded by the learned prescribed authority as the same have to be read on standalone basis, the CIT(A) has rightly decided the instant legal issue in assessee’s favour and against the department whilst invoking section 147 1st proviso as well as going by the various judicial precedents. The same are hereby upheld in the Revenue’s instant appeal which stands rejected in very terms. 9. This Revenue’s appeal is dismissed. 21. In the instant case, we find that assessee has truly and fully disclosed all the material facts necessary for the purpose of assessment during the course of assessment proceedings carried out. In the original assessment proceedings, the AO after considering all the material has formed an opinion. There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. Not only material facts were disclosed by the assessee but the same was 34 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT fully scrutinized by the AO in the original assessment proceedings and figure of income as well as the deductions were worked out by the AO. The claim of depreciation, LPSE receipts and capitalization were duly disclosed in the Profit & Loss account which were available with the AO while framing the assessment u/s 143(3) of the Act. The hon’ble Apex court in the case of CIT Vs. Kelvinator of India Ltd (supra) has laid down that “ the assessing officer has no power to review; he has the power to re-assess, but re-assessment has to be based on fulfilment of certain pre -condition and if the concept of ‘change of opinion’ is removed, then, in the garb of re-opening the assessment, the review would take place. One must treat the concept of ‘Change of opinion’ as an in-built test to check abuse of power by the assessing officer.” 22. Further as observed above, in the case of assessee itself in AY 2009-10 the coordinate bench of the tribunal in ITA No. 1843/Del/2023 under identical circumstances held the reopening as bad in law. IN view of above discussion, we hold that the reassessment proceedings initiated in the case of the assessee are bad in law. Further we have already hold that the notice issued u/s 148 as barred by limitation, therefore, in view of these facts we hereby quash the notice issued u/s 148 of the Act and consequent reassessment order passed u/s 147 / 143(3) of the Act is hereby held as bad in law and void-ab-initio and consequent additions made are hereby deleted. 35 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT 23. Since the ground No. 3 to 3.4 of the assessee taken on the legality of the proceedings initiated u/s 148 have been allowed in its favour, the remaining grounds of appeal became academic and are not adjudicated. 24. As a result, appeal of the assessee for AY 2007-08 is allowed. ITA No. 4851/Del/2017 of M/s BSES Rajdhani Power Ltd. 25. This appeal relates to AY 2008-09 in the case of M/s BSES Rajdhani Power Ltd. where the all the facts, except for limitation issue of service of notice remaining facts are identical with the facts of the assessee’s appeal for AY 2007-08 where we have already held the entire reassessment proceedings as void-ab-initio. The findings given by us in aforesaid appeal in the case of M/s BSES Rajdhani Power Ltd. for AY 2007-08 in ITA No. 4850/Del/2017 are also applicable to the facts of the present appeal, thus, by following the same, the grounds of appeal of the assessee on legal issues are allowed. 26. As we have allowed the assessee’s appeal on legality on the notice issued u/s 148, therefore the other grounds of appeal taken on merits become academic and not adjudicated. ITA No. 4852/Del/2017 of M/s BSES Yamuna Power Ltd. [AY 2007-08] 27. This appeal relates to AY 2007-08 in the case of M/s BSES Yamuna Power Ltd. where the all the facts, except for limitation issue 36 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT of service of notice remaining facts are identical with the facts of the appeal in the case of M/s BSES Rajdhani Power Ltd. for AY 2007-08 in ITA No. 4850/Del/2017 where we have already held the entire reassessment proceedings as void-ab-initio. It is also a matter of fact that ld. CIT(A) has also decided the appeal of both the assessees i.e. M/s BSES Rajdhani Power Ltd. and M/s BSES Yamuna Power Ltd. by a single order dated 31.03.2017 which further fortified the fact that all the issues in both the appeals of different assessee’s are common. Thus, the findings given by us in appeal for AY 2007-08 in the case of M/s BSES Rajdhani Power Ltd. are also applicable to the facts of the present appeal in the case of M/s BSES Yamuna Power Ltd., thus, by following the same, the appeal of the assessee is allowed on legal issues. 28. As we have allowed the assessee’s appeal on legality on the notice issued u/s 148, therefore the other grounds of appeal taken on merits become academic and not adjudicated. ITA No. 4853/Del/2017 of M/s BSES Yamuna Power Ltd. [AY 2008-09] 29. This appeal relates to AY 2008-09 in the case of M/s BSES Yamuna Power Ltd. where the all the facts, except for limitation issue of service of notice remaining facts are identical with the facts of the appeal in the case of M/s BSES Rajdhani Power Ltd. for AY 2007-08 where we have already held the entire reassessment proceedings as void-ab-initio. It is also a matter of fact that ld. CIT(A) has also decided the appeal of both the assessees i.e. M/s BSES Rajdhani 37 ITA Nos.4850 to 4853/Del/2017 BSES Rajdhani Power Ltd. & Ors vs. ACIT Power Ltd. and M/s BSES Yamuna Power Ltd. by a single order dated 31.03.2017 which further fortified the fact that all the issues in both the appeals of different assessee’s are common. Thus, the findings given by us in appeal for AY 2007-08 in ITA No. 4850/Del/2017 in the case of M/s BSES Rajdhani Power Ltd. are also applicable to the facts of the present appeal in the case of M/s BSES Yamuna Power Ltd., thus, by following the same, the appeal of the assessee is allowed on legal issues. 30. As we have allowed the assessee’s appeal on legality on the notice issued u/s 148, therefore the other grounds of appeal taken on merits become academic and not adjudicated. 31. As a result, appeals filed by M/s BSES Rajdhani Power Ltd. for AY 2007-08 & 2008-09 and by M/s BSES Yamuna Power Ltd. for AY 2007-08 & 2008-09 are allowed. Order pronounced on 16/04/2025. Sd/- Sd/- (ANUBHAV SHARMA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 16/04/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW, DELHI "