GUNDECHA BUILDERS, MUMBAI V. DCIT 24(3), MUMBAI

CO 122/MUM/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2833 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 27-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH KUMAR YADAV
• Keywords: Reopening of assessment; Audit objection; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 80IB; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G, BENCH MUM BAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO.6102/MUM/2014 ( / ASSESSMENT YEAR: 2006-07) THE DCIT- 24(3), ROOM NO. 702, C-11, 7 TH FLOOR, B.K.C, BANDRA (E), MUMBAI-400 051. VS. M/S. GUNDECHA BUILDERS, 141, GUDECHA HOUSE, JAWAHAR NAGA, GOREGAON(W), MUMBAI- 400 062. ./ ./ PAN/GIR NO. : AAAFG0848E ( ! / APPELLANT ) .. ( '#! / RESPONDENT ) & '# . / CROSS OBJECTION NO. 122/MUM/2016 ( ./ITA NO.6102/MUM/2014) ( / ASSESSMENT YEAR: 2006-07) M/S. GUNDECHA BUILDERS, 801, HUB TOWN SOLARIS, N.S.PHADKE MARG, OFF. TELI GALI, NEAR ANDHERI FLYOVER, ANDHERI (E), MUMBAI- 400 069. VS. THE DCIT- 24(3), ROOM NO. 702, C-11, 7 TH FLOOR, B.K.C, BANDRA (E), MUMBAI-400 051. ./ ./ PAN/GIR NO. : AAAFG0848E ( ! / APPELLANT ) .. ( '#! / RESPONDENT ) APPELLANT BY : SHRI.RAJESH KUMAR YADAV RESPONDENT BY : SHRI. DHARSHAN GHANDHI 2 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 DATE OF HEARING: 10/02/2017 DATE OF PRONOUNCEMENT: 23/02/2 017 O R D E R PER RAM LAL NEGI, JM THESE ARE THE APPEAL AND CROSS OBJECTION FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY AGAINST IMPUGNED ORDER DATED 23/07/2014 PASSED BY THE LD CIT(APPEALS)-34, MUMBAI FOR THE ASSESSMENT YEAR 2006-07, WHEREBY THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSES SES AGAINST THE ASSESSMENT ORDER DATED 26/03/2014 PASSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.10.2006, DECLARIN G THE TOTAL INCOME OF RS. 10,20,41,920/- AFTER CLAIMING DEDUCTION U/S 80IB(10 ) OF RS. 25,94,15,537/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, DETERMINING THE TOTAL INCOME OF RS. 11,12,30,910/-. AFTER THE EXPIRY OF F OUR YEARS AO INITIATED RE-ASSESSMENT PROCEEDING U/S 147 OF THE ACT AND NOT ICE U/S 148 OF THE ACT WAS ISSUED ON 28.02.2013. THE ASSESSEE AFTER RECEIVING THE COPY OF REASONS RECORDED, FILED RETURN OF INCOME AND ALSO FILED OBJ ECTIONS AGAINST THE INITIATION OF THE PROCEEDINGS. HOWEVER, THE AO WITHOUT PASSING ANY SPEAKING ORDER PROCEEDED FURTHER. AS PER THE REASONS RECORDED DURI NG THE YEAR UNDER CONSIDERATION ASSESSEE HAD CLAIMED SOLICITORS FEES PAID TO CHITNIS VAITHY & CO. AMOUNTING TO RS. 11,00,000/- AND AN AMOUNT OF RS. 8 ,39,475/- ON ACCOUNT OF PROFESSIONAL CHARGES PAID TO M.R.PATIL CONSULTING. ON PERUSAL OF THE BILL IT WAS NOTICED THAT THE SAME WAS NOT ALLOWABLE IN THE ASSE SSMENT YEAR UNDER CONSIDERATION. MOREOVER, ON BOTH THESE AMOUNTS, THE ASSESSEE HAD NOT DEDUCTED TDS. SINCE THE ASSESSEES INCOME FOR ASST. YEAR 2006-07 HAS BEEN ESCAPED ASSESSMENT IN RESPECT OF ABOVE TWO PAYMENTS , PROCEEDINGS U/S 147 3 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 WAS INITIATED. IN RESPONSE TO THE NOTICE U/S 148, 1 43(2) AND 142(1) OF THE ACT, THE ASSESSEE FURNISHED RELEVANT DETAILS THROUGH ITS AUTHORIZED REPRESENTATIVE. AFTER HEARING THE ASSESSEE THE A.O ADDED AN AMOUNT OF RS. 19,39,475/- TO ASSESSEES TOTAL INCOME. DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(10 ) OF THE ACT. AFTER TAKING INTO CONSIDERATION THE EXPLANATION GIVEN BY THE ASS ESSEE, THE A.O MADE DISALLOWANCE OF RS. 25,94,15,537/- U/S 80IB(10) OF THE ACT HOLDING THAT THE ASSESSEE FIRM HAS NOT FULFILLED CERTAIN CONDITIONS IN RESPECT OF DEDUCTION U/S 80IB(10) OF THE ACT. ACCORDINGLY, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 36,33,96,234/-. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER INTER ALIA RAISING THE FOLLOWING LEGAL GROUNDS THAT RE-OPENING OF ASSESSME NT U/S 147 AFTER THE EXPIRY OF 4 YEARS IS BAD IN LAW WHEN THE APPELLANT/ASSESSE E DISCLOED ALL THE PARTICULARS FULLY AND TRULY, REASSESSMENT ORDER CAN NOT BE PASSED WITHOUT PASSING SPEAKING ORDER ON OBJECTION FILED BY THE AS SESSEE, REASSESSMENT PROCEEDING CANNOT BE INITIATED ON THE BASIS OF AUDI T OBJECTION BY THE REVENUE AUDIT TEAM, PROCEEDING U/S 148 CANNOT BE INITIATED TO REVIEW THE EARLIER OPINION, REASSESSMENT PROCEEDING CANNOT BE INITIATE D FOR MAKING FRESH ENQUIRY OR VERIFICATION THAT EARLIER DEDUCTION WAS RIGHTLY ALLOWED OR NO AND THE ASSESSING OFFICERHAS NO POWER TO REASSESS THOSE MAT TERS WHICH ARE ALREADY SUBJECT MATTER OF APPEAL BEFORE THE HIGHER AUTHORIT Y. THE LD. CIT(A) AFTER HEARING THE ASSESSEE DISMISSED THE LEGAL GROUNDS RA ISED BY THE ASSESSEE, HOWEVER ALLOWED SOME OF THE OTHER GROUNDS AND ACCOR DINGLY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS. 11,00, 000/- MADE U/S 4 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 40(A)(IA) OF THE ACT FOR THE PAYMENT MADE TO M/S. C HITNIS VAITHYA & COMP. IGNORING THE FACT THAT THE ASSESSEE HAS NOT F URNISHED THE REQUIRED EVIDENCES BEFORE THE A.O AT THE ASSESSMENT STAGE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS. 8,39,4 75/- MADE U/S 40(A)(IA) OF THE ACT FOR THE PAYMENT MADE TO M/S. M .R. PATIL CONSULTING IGNORING THE FACT THAT THE ASSESSEE HAS NOT FURNISHED THE REQUIRED EVIDENCES BEFORE THE A.O AT THE ASSESSMENT STAGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE A.O TO ALLOW DEDU CTION CLAIMED U/S 80IB OF RS. 25,94,15,537/- IGNORING THE FACT THAT T HE ASSESSEE WAS NEITHER THE OWNER OF THE LAND NOR ANY OCCUPANCY CER TIFICATE WAS ISSUED BY THE LOCAL AUTHORITY FOR CLAIMING THE SAID DEDUCTION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE A.O TO ALLOW DEDU CTION CLAIMED U/S 80IB(10) OF RS.25,94,15,537/- IGNORING THE FACT THA T THE ASSESSEE HAS NOT COMPLIED WITH THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S 80-IB(10) OF THE ACT. 5. ON THE OTHER HAND THE ASSESSEE HAS FILED CROSS O BJECTION AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) 34 , MUMBAI, RAISING THE FOLLOWING EFFECTIVE GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE LAW, THE L D. CIT(A) HAS ERRED IN CONFIRMING INITIATING OF REASSESSMENT PROC EEDING U/S 147 OF THE I.T. ACT, 1961. 5 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 2. ON THE FACTS AND CIRCUMSTANCES OF THE LAW, THE L D. CIT(A) HAS FAILED TO CONSIDER THAT: (A) REASSESSMENT PROCEEDING CANNOT BE INITIATE AFTE R FOUR YEARS WHEN ASSESSEE HAS DISCLOSED ALL THE PARTICULARS FUL LY AND TRULY AND ORDER IS PASSED BY A.O U/S 143(3) OF THE I.T. ACT, 1961. (B) REASSESSMENT PROCEEDINGS CAN BE INITIATE ONLY W HEN INCOME ESCAPING ASSESSMENT BUT IN PRESENT CASE SURVEY WAS CONDUCTED AND AFTER DETAIL INVESTIGATION DEDUCTION U/S 80IB(10) W AS PARTLY ALLOWED TO ASSESSEE. HENCE, NO INCOME ESCAPE ASSESSMENT. TH EREFORE, PROCEEDING INITIATE U/S 147 IS BAD IN LAW. 6. SINCE, THE ASSESSEE HAS RAISED THE LEGAL GROUNDS IN ITS CROSS OBJECTION, WE HEARD THE ASSESSEE ON THE SAID GROUND S. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY REITERATED THE STAND TAKEN BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT REOPENING OF ASSESSMENT U/S 147 OF THE ACT AFTER EXPIRY OF FOUR YEARS IS BAD IN LAW WHEN THE APPELLANT DISCLOSED ALL THE PARTICULARS FULLY AND TRULY. THE ASSESSMENT CAN ONLY BE REOPENED AFTER FOUR YEARS IN CASE OF ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 O R IN RESPONSE TO A NOTICE ISSUED UNDER SUB SECTION (1) OF SECTION 142 OR SECTION 148 OR 2 DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESS ARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. SINCE THE AO HAS NOT POIN TED OUT ANY FAILURE ON THE PART OF THE ASSESSEE THE REASSESSMENT IS BAD IN LAW. THE LD. COUNSEL FURTHER SUBMITTED THAT AS PER THE LAW LAID DOWN BY HONBLE SUPREME COURT IN GKN DRIVESHAFT (INDIA) LTD. VS. ITO 259 ITR 19, REASSESSMENT ORDER CANNOT BE PASSED WITHOUT PASSING SPEAKING ORDER ON OBJECTION FILED BY THE ASSESSEE. IN THE PRESENT CAS E, THE REOPENING OF THE ASSESSMENT HAS BEEN DONE IN VIOLATION OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE AFORESAID CASE. THE LD . COUNSEL FURTHER 6 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 ARGUED THAT REOPENING PROCEEDING CANNOT BE INITIATE D ON THE BASIS OF AUDIT OBJECTION BY THE REVENUE TEAM. UNDER SECTION 147 OF THE ACT THE AO CAN REOPEN THE ASSESSMENT IF HE HAS REASON TO BELIE VE THAT ANY INCOME HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. SO IN ORDER TO EXERCISE THE JURISDICTION UNDER THIS SECTION SUBJECTIVE SATI SFACTION OF THE AO IS ESSENTIAL. 7. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE (DR) RELYING ON THE FINDINGS OF LD. CIT (A) ON THE LEGAL GROUNDS RAISED, SUBMITTED THAT SINCE THE AO HAD REASON TO BELIEVE T HAT INCOME CHARGEABLE TO TAX IN THIS CASE HAS ESCAPED ASSESSME NT, AO HAD RIGHTLY INITIATED PROCEEDINGS U/S 147 OF THE ACT AND LD. CI T (A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO. THEREFORE, THERE IS NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) SO FAR AS THE L EGAL GROUNDS RAISED BY THE ASSESSEE ARE CONCERNED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE DOCUMENTS PLACED ON RECORD. IT IS AN ADMITTED FACT THAT PROCEEDINGS UNDER SECTION 147 OF THE ACT, IN THIS CASE HAS BEEN DONE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSME NT YEAR. AS PER SECTION 147, IF THE AO HAS REASON TO BELIEVE THAT A NY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT HE MAY ASSESS OR RE-A SSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS PROVIDED THAT WHERE AN ASSESSMENT U NDER SUB SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER SEC TION 147 AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSME NT YEARS UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE AS SESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO NOTICE ISSUED U/S 142 (1) OR SECTION 148 OR TO 7 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEAR. 9. WE NOTICED THAT IN THE PRESENT CASE THE AO HAS N OT POINTED OUT ANY FAILURE ON THE PART OF THE ASSESSEE IN MAKING DISCL OSURE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, WHICH IS A CONDITION PRECEDENT FOR EXERCISING JURISDICTION U/S 147 OF TH E ACT. THE RELEVANT PORTION OF THE REASONS RECORDED FOR REOPENING OF AS SESSMENT READS AS UNDER:- IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2006, DECLARING TOTAL INCOME AT RS. 10,20,41,920/- AFTER CLAIMING DEDUCTION U/S 80IB (10) OF RS. 25,94,15,537/-. THE ASSESSMENT U/S 143 (3) OF THE ACT WAS COMPLETED ON 18.12.2008 DETE RMINING AN INCOME OF RS. 11,12,30,910/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DEBITED RS. 11,00,000/- AS SOLICIT ORS FEES PAID TO CHITNIS VAITHY AND CO. ON WHICH NO TAX HAS BEEN DED UCTED. THEREFORE, THE SAID AMOUNT HAS TO BE DISALLOWED U/S 40 (A) (IA). FURTHER, THE ASSESSEE HAS DEBITED PROFIT AND LOSS A CCOUNT WITH RS. 8,39,475 AS PROFESSIONAL CHARGES PAID TO MR. PATIL CONSULTING. ON PERUSAL OF SAID BILL, IT IS SEEN THAT THE BILL IS D ATED 01.11.2004 AND THE SAME CANNOT BE ALLOWED TO BE CLAIMED AS EXPENSE S FOR THE F.Y. 2005-06 RELEVANT TO A.Y. 2006-07. MOREOVER, NO TAX HAS BEEN DEDUCTED ON THE PAYMENT OF RS. 8,39,475/- PAID TO M R. PATIL CONSULTING ENGINEERS PVT. LTD. HENCE, THE SAME REQU IRED TO BE DISALLOWED U/S 40 (A) (IA) AND ADDED BACK TO THE TO TAL INCOME OF THE ASSESSEE. 10. FROM THE CONTENTS OF THE REASONS RECORDED AFORE SAID IT CANNOT BE INFERRED THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS NECESSARY F OR HIS ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT SINCE THERE IS NO F AILURE ON THE PART OF THE ASSESSEE IN DISCLOSING ALL MATERIAL FACTS FULLY AND TRULY, THE REOPENING IS BAD IN LAW. WE, THEREFORE, HOLD THAT THE ACTION OF REOPENING IN THIS CASE IS NOT IN ACCORDANCE WITH THE EXPRESSED PROVISIONS OF THE ACT. 8 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 11. THE SECOND ISSUE RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE AO HAS NOT FOLLOWED THE LAW LAID DOWN BY THE HO NBLE SUPREME COURT IN GKN DRIVESHAFT INDIA LTD. (SUPRA) THE REASSESSMENT ORDER CANNOT BE PASSED WITHOUT PASSING SPEAKING ORDER ON OBJECTION FILED BY THE ASSESSEE. WE NOTICE THAT THE ASSESSEE AFTER RECEIVING COPY OF REASONS RECORDED FILED RETURN OF INCOME AS WELL AS OBJECTION OF INITIATION OF REASSESSMENT PROCEEDING VIDE LETTER DATED 25.04.2013. BUT THE AO WITHOUT PASSING ANY SPEAKING ORDER ON OBJECTION FILED BY THE ASSESSEE, PROCEEDED FURTHER AND PASSED ORDER U/S 143 (3) R.W.S. 147 OF THE ACT. SO IT IS APPARENT THAT THE AO HAS NOT FOLLOWED THE LAW LAID DOWN BY THE HONBL E SUPREME COURT IN THE AFORESAID CASE. 12. THE THIRD ISSUE RAISED BY THE LD. COUNSEL IS RE GARDING SUBJECTIVE SATISFACTION OF THE AO TO THE EFFECT THAT ANY TAXAB LE INCOME HAS ESCAPE ASSESSMENT. THE CONTENTION OF THE LD. COUNSEL FOR T HE ASSESSEE IS BASED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN ADANI EXPORTS VS. DY. CIT 240 ITR 224, RELEVANT PORTION OF THE JU DGMENT READS AS UNDER:- IT IS TRUE THAT SATISFACTION OF THE ASSESSING OFFI CER FOR THE PURPOSE OF REOPENING IS SUBJECTIVE IN CHARACTER AND THE SCOPE OF JUDICIAL REVIEW IS LIMITED. WHEN THE REASONS RECORDED SHOW A NEXUS BETWEEN THE FORMATION OF BELIEF AND THE ESCAPEMENT OF INCOME, A FURTHER INQUIRY ABOUT THE ADEQUACY OR SUFFICIENCY IN THE MATERIAL T O REACH SUCH BELIEF IS NOT OPEN TO BE SCRUTINIZED. HOWEVER, IT IS ALWAY S OPEN TO QUESTION EXISTENCE OF SUCH BELIEF ON THE GROUND THAT WHAT HA S BEEN STATED IS NOT CORRECT STATE OF AFFAIRS EXISTING ON RECORD. UN DOUBTEDLY, IN THE CASE OF RECORD, BURDEN LIES, AND HEAVILY LIES, ON T HE PETITIONER WHO CHALLENGES IT. IF THE PETITIONER IS ABLE TO DEMONST RATE THAT IN FACT THE ASSESSING OFFICER DID NOT HAVE ANY REASON TO BELIE OR DID NOT HOLD SUCH BELIEF IN GOOD FAITH OR THE BELIEF WHICH IS PR OJECTED IN PAPERS IS NOT BELIEF HELD BY HIM IN FACT, THE EXERCISE OF AUT HORITY CONFERRING ON SUCH PERSON WOULD BE ULTRA VIRUS THE PROVISION OF L AW AND WOULD BE ABUSE OF SUCH AUTHORITY. 9 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 13. IN THE LIGHT OF THE SAID JUDGMENT REASSESSMENT PROCEEDINGS CANNOT BE INITIATED SOLELY ON THE BASIS OF AUDIT OBJECTION BY THE REVENUE TEAM. FURTHER IN CIT VS. LUCAS T.V.S. LTD. 249 ITR 306 , THE HONBLE SUPREME COURT HAS UPHELD THE DECISIONS OF THE HONBLE HIGH COURT IN WHICH THE HIGH COURT HAD QUASHED THE REOPENING PROCEEDINGS WH EREIN APART FROM THE INFORMATION FURNISHED BY THE AUDIT PARTY, THE I NCOME TAX OFFICER HAD NOT OTHER INFORMATION FOR REOPENING THE ASSESSMENT. IN INDIAN AND EASTERN NEWSPAPER SOCIETY VS. CIT (1979) 119 ITR 99 6 (SC) THE HONBLE SUPREME COURT HAS HELD THAT AUDIT OBJECTION CANNOT BE THE BASIS FOR REOPENING OF ASSESSMENT. IN VIEW OF THE FACTS AND C IRCUMSTANCES OF THE CASE AND THE LAW LAID DOWN BY THE HONBLE SUPREME C OURT AND VARIOUS HIGH COURTS, IT CAN BE CONCLUDED THAT IN THE PRESEN T CASE THE AO HAS EXERCISED THE JURISDICTION U/S 147 WITHOUT HIS OWN SATISFACTION, WHICH IS THE CONDITION PRECEDENT FOR INITIATING PROCEEDING U /S 147 IF THE ACT.. 14. FURTHER, WE AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROCEEDINGS U/S 148 CANNOT BE INITIATED TO REVIEW T HE EARLIER OPINION. IT IS WELL SETTLED LAW THAT WHEN DEDUCTION U/S 80 IB ( 10) WAS ALLOWED IN ORIGINAL ASSESSMENT AFTER CONSIDERING ALL THE FACTS THE SAME CANNOT BE WITHDRAWN BY INVOKING SECTION 147 OF THE ACT. IN TH IS CASE, THE AO HAD ALLOWED THE DEDUCTION IN QUESTION IN ORIGINAL ASSES SMENT AFTER CONSIDERING ALL THE FACTS AND DETAILS SUBMITTED BY THE ASSESSEE. SO FAR AS FEES PAID TO CHITNIS VAITHY & CO IS CONCERNED WE NO TICE THAT THE ASSESSEE VIDE LETTER 18.03.2014 SUBMITTED THE CERTI FICATE DATED 18.01.2001 ISSUED BY THE SAID COMPANY TDS LEDGER AC COUNT, BANK PAYMENT VOUCHER ETC. TO PROVE THAT THE SAID COMPANY HAD PROVIDED SOLICITOR FOR THE PROJECT OF THE ASSESSEE COMPANY, IT CANNOT BE SAID THAT NO TAX HAS BEEN DEDUCTED AT SOURCE. AS REGARDS PAYM ENT OF RS. 8,39,475/- MADE TO M. R. PATIL CONSULTING ENGINEERI NG LTD. THERE IS MERIT IN THE ASSESSEES CONTENTION OF THE LD. COUNSEL THA T EXPENDITURE IS 10 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 ALLOWABLE IN THE CURRENT YEAR AS THE ASSESSEE HAS B EEN FOLLOWING THE PROJECT COMPLETION METHOD AND SINCE IT WAS ALLOWED IN THE EARLIER YEAR THE AO CANNOT CHANGE HIS STAND BY EXERCISING POWERS U/S 147 OF THE ACT. AS PER THE SETTLED LAW ASSESSMENT CANNOT BE REOPENE D ONLY BECAUSE OF CHANGE OF THE OPINION. 15. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE OF THE CASE AND THE DISCUSSION IN THE LIGHT OF THE SETTLED LAW WE H OLD THAT THE REASSESSMENT PROCEEDINGS U/S 147 INITIATED IN THIS CASE IS BAD IN LAW. WE, THEREFORE, HOLD THE ENTIRE PROCEEDINGS VOID AB INITIO. SINCE WE HAVE HELD THE REASSESSMENT PROCEEDING INVALID THE IMPUGN ED ORDER PASSED BY THE LD. CIT (A) HAS BECOME INFRUCTUOUS. ACCORDINGLY , WE DISMISS THE APPEAL FILED BY THE REVENUE IN LIMINE . 16. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS DISMISSED AS INFRUCTUOUS AND CROSS OBJECTION FILED BY THE ASSESSEE FOR ASST. YEAR 2006-07 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2017 SD/- SD/- ( RAJENDRA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER % &' MUMBAI; ( DATED: 23/02/2017 11 ITA NO. 6102/MUM/2014 CO NO. 122/MUM/2016 ASSESSMENT YEAR: 2006-07 !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. % *+ ( ) / THE CIT(A)- 4. % *+ / CIT 5. -. '+/0 , 1 /02 , % &' / DR, ITAT, MUMBAI 6. 3 4' / GUARD FILE. % / BY ORDER, #-+ '+ //TRUE COPY// &/%( ) (DY./ASSTT. REGISTRAR) , % &' / ITAT, MUMBAI PRAMILA