M/s. LVMH Watch & Jewellery India P.Ltd., New Delhi V. ACIT, New Delhi

ITA 1111/DEL/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7808 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KATOCH
• Assessee Lawyers: VIKAS SRIVASTAVA
• Keywords: Reopening of assessment; Audit objection; Assessment record; Tax effect; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.1111/DEL/2016 ASSESSMENT YEAR: 2006-07 LVMH WATCH & JEWELLERY INDIA P. LTD., 301-312, 3 RD FLOOR, INTERNATIONAL TRADE TOWER, BLOCK-F, NEHRU PLACE, NEW DELHI. PAN: AAACL7814N VS. ACIT, CIRCLE-15(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIKAS SRIVASTAVA, ADVOCATE & SHRI MAYANK AGGARWAL, ADVOCATE REVENUE BY : SHRI ANIL KATOCH, SR.DR DATE OF HEARING : 19.12.2018 DATE OF PRONOUNCEMENT : 26.12.2018 ORDER PER R.K. PANDA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21 ST AUGUST, 2013 OF THE CIT(A)-8, NEW DELHI, RELATING TO ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THE ORDER PASSED BY THE LEARNED CIT(APPEALS) ('LD. CIT(A)'), CONFIRMING THE ASSESSMENT ORDER PASSED BY LEARNED A O ('LD. AO') UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ('THE ACT'), IS BAD IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1111/DEL/2016 2 1. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE RE-ASSES SMENT PROCEEDINGS INITIATED BY THE LD. AO, AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, EVEN THOUGH THE APPELLANT HAD DISC LOSED FULLY AND TRULY ALL MATERIAL FACTS DURING ASSESSMENT UNDER SECTION 143( 3) OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN UPHOLDING ACTION OF THE LD. AO IN PASSING THE ASSESSMENT BY DISREGARDING THE OBJECTIONS RAISE D BY THE APPELLANT AGAINST THE REOPENING OF THE ASSESSMENT PROCEEDINGS. 3. THE LD. CIT(A) ERRED IN UPHOLDING THE INITIATION OF RE-ASSESSMENT BY THE LD. AO, MERELY ON THE BASIS OF THE AUDIT OBJECTIONS DATED FEBRUARY 01, 2012 RAISED BY 'OFFICE OF THE DIRECTOR GENERAL OF AUDIT (CENTRAL RECEIPT)'. 4. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE LD. AO IN REOPENING OF ASSESSMENT WITHOUT INDEPENDENT APPLICA TION OF MIND TO DETERMINE WHETHER THE INCOME OF THE APPELLANT FOR THE RELEVAN T YEAR HAS ESCAPED ASSESSMENT. 5. THE LD. CIT(A) HAS ERRED IN REJECTING THE CONTENTIO NS RAISED BY THE APPELLANT BY PROVIDING INCORRECT / IRRELEVANT REASO NING. 6. THE LD. CIT(A) HAS ERRED IN MAKING IRRELEVANT OBSER VATION IN THE ORDER. 7. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE LD. AO IN DISALLOWING THE PROVISION FOR INVENTORY CREATED BY THE APPELLANT DURING THE RELEVANT YEAR. 8. THE LD. CIT(A) AS WELL AS LD. AO HAS ERRED IN IGNOR ING THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT. 9. THE LD. AO HAS ERRED IN INITIATING PENALTY PROCEEDI NGS UNDER SECTION 271(L)(C) OF THE ACT. 10. THE ABOVE GROUNDS OF APPEALS ARE INDEPENDENT AND WI THOUT PREJUDICE TO ONE ANOTHER. 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF WHOLESALE TRADE OF WATCHES AND ACCESSOR IES TOGETHER WITH RELATED SPARES, COMPONENTS, ETC. IT FILED ITS RETURN OF INCOME ON 3 0 TH NOVEMBER, 2006 DECLARING LOSS OF RS.6,11,27,191/-. THE ASSESSMENT U/S 143(3) READ W ITH SECTION 144C OF THE ACT WAS COMPLETED ON 6 TH SEPTEMBER, 2009 DETERMINING LOSS OF RS.1,07,78,050 /-. ITA NO.1111/DEL/2016 3 SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUE OF NOTICE U/S 147, AFTER RECORDING THE FOLLOWING REASONS:- REASONS RECORDED U/S 147 OF THE INCOME TAX ACT, 19 61. ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961 AT A LOSS OF RS. 1,07,78,050/- . SCRUTINY OF ASSESSMENT RECORDS REVEALED THAT THE ASSESSEE HAD MADE PROVISI ONS OF RS. 1,63,04,874/- ON ACCOUNT OF INVENTORIES' AS PER SCHEDULE-5 OF THE B ALANCE SHEET AND SCHEDULE-14 OF THE PROFIT & TOSS ACCOUNT OF THE RELEVANT PREVIOUS YEAR. THE PR OVISIONS NOT BEING ACTUAL EXPENDITURE SHOULD HAVE BEEN ADDED BAC K TO THE INCOME OF THE ASSESSEE. THE MISTAKE RESULTED IN OVER ASSESSMENT O F LOSS AND UNDER ASSESSMENT OF INCOME BY RS. 1,07,78,050/- AND RS.55,26,824/- R ESPECTIVELY INVOLVING TAX EFFECT OF RS.64,92,799/-. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE T HAT INCOME OF RS. 1,63,04,874/- HAS ESCAPED ASSESSMENT UNDER THE MEAN INGS OF SECTION 147 OF THE INCOME TAX ACT, 1961. 4. SUBSEQUENTLY, THE ASSESSING OFFICER DETERMINED T HE TOTAL INCOME OF THE ASSESSEE AT RS.55,26,824/-. AFTER RESTRICTING THE BROUGHT F ORWARD LOSS OF RS.1,80,15,267/-, HE DETERMINED THE TAXABLE INCOME AT NIL. 5. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE V ALIDITY OF THE REASSESSMENT PROCEEDINGS AS WELL AS THE ADDITION ON MERITS. HOW EVER, THE LD.CIT(A) REJECTED BOTH THE ISSUES BY OBSERVING AS UNDER:- I HAVE PERUSED THE ASSESSMENT ORDER, WRITTEN SUBM ISSION OF THE AR, GROUNDS OF APPEAL AND DISCUSSED THE MATTER WITH THE AR VERY CA REFULLY. THE ARS HAVE TWO ISSUES ON THIS CASE. ONE LEGAL ISSUE IS THAT THE AO HAD REOPENED THE CASE ON THE BASIS OF AUDIT OBJECTION AND NOT DONE ANY PRELIMINARY INQ UIRY BEFORE REOPENING THE CASE U/S 148 OF THE IT ACT. THE ARS OBJECTED SUCH REOPEN ING ON THE BASIS OF AUDIT OBJECTION AND RELIED ON THE FOLLOWING CASE LAWS. 1. INDIAN AND EASTERN NEWSPAPER SOCIETY VS. COMMISSION ER OF INCOME TAX (1979) 119 ITR 996 2. DUNCAN SERVICES LIMITED VS. INCOME-TAX OFFICER AND OTHER [1992] 198 ITR 264 ITA NO.1111/DEL/2016 4 3. TRANSWORLD INTERNATIONAL INC. VS. JOINT COMMISSIONE R OF INCOME TAX (2005) 142 TAXMAN 35 (DELHI) 4. ICICI HOME FINANCE CO. LTD. VS. ACIT AND UNION OF INDIA 2012 (114) BOM. L.R. 2724, OBSERVED AS UNDER: 5. COMMISSIONER OF INCOME TAX VS. T.V.S LTD. [2001] 24 9 ITR 306 (SC) 6. ITO VS. SATYA PRAKASH AGARWAL, (ITA NO. 3729/DEL/20 11) I HAVE DISCUSSED THE MATTER WITH THE ARS AND CONV INCED THEM THAT THERE SHOULD BE SOME REMEDY FOR DISPOSAL OF AUDIT OBJECTI ON BY THE ASSESSMENT OFFICER OR BY THE DEPARTMENT, SO SUCH LEGAL ISSUES LIKE NON-RE OPENING U/S 148 SHOULD NOT BE VIEWED SERIOUSLY. IT IS BETTER TO GO ON THE MERITS OF THE CASE, SO THAT GOVERNMENT CAN COLLECT PROPER TAX FOR THE DEVELOPMENT OF THE COUNT RY. THEREFORE, I WILL GO ON THE MERITS OF THE CASE AND IN MY OPINION THE REOPENING OF THE CASE U/S 147/148 OF THE INCOME TAX ACT ON THE ABOVE OF AUDIT OBJECTION IS J USTIFIED. THE AUDIT WING OF THE DEPARTMENT OR REVENUE AUDIT OF CAG ARE THE AGENCIES TO GIVE FEED BACK TO COMMISSIONER/ ASSESSING OFFICER SO THAT REMEDIAL AC TION CAN BE TAKEN IN PROPER TIME AND REVENUE LOSS CAN BE REDUCED IN DUE COURSE. THEREFORE, THE OBJECTION OF THE APPELLANTS OF REOPENING OF THE CASE U/S 147 OF THE INCOME TAX ACT IS NOT JUSTIFIED. THE GROUNDS NO. 1,2,3,4 & 5 STANDS DISMISSED. THE OTHERS 6,7,8,9 & 10 ARE EITHER GENERAL IN NATURE OR PREMATURE TO DECIDE. LET ME GO ON THE MERITS OF THE CASE OF DISALLOWAN CE OF PROVISION FOR INVENTORY OF RS. 1,63,04,874/-. THE APPELLANT IS TH E WHOLESALE DISTRIBUTOR OF SWISS WATCHES FOR INDIA. THESE WATCHES ARE SOLD IN INDIAN MARKET AT A RELATIVELY LOW PACE BECAUSE THE WATCHES ARE VERY COSTLY, THEREFORE, THE APPELLANT COMPANY HAD CREATED THIS PROVISION OF CLOSING STOCK AT ESTIMATED AND AN EXPERIENCE OF MANAGEMENT. THE ARS COULD NOT PRODUCE ANY STOCK INVENTORY BOOK OR A NY SCIENTIFIC METHOD OF VALUATION OF SUCH WATCHES FOR PREPARING CLOSING STO CK INVENTORIES AT THE END OF EACH YEAR FOR CREATING PROVISION FOR INVENTORY/STOCK. TH E APPELLANT SHOULD HAVE TAKEN A REALISTIC MEASURE OF REDUCING THE PRICES OF WATCHES ON ACTUAL SALES REALIZATION PRICE. SUPPOSE THE VALUE OF WATCH GETS ERODED AFTER 2-3 YE ARS, THEN IT SHOULD BE WRITTEN ON VALUE OF THE SALES OF THE WATCH AT THE TIME OF SALE . THERE IS NO NEED OF MAKING SUCH PROVISION FOR CLOSING STOCK ANY MORE. HENCE, THE AD DITION MADE BY AO OF RS. 1,63,04,874/- IS HEREBY CONFIRMED. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SU BMITTED THAT THE ASSESSMENT HAS BEEN REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. REFERRING TO THE REASONS RECORDED U/S 147 OF THE IT ACT, HE SUBMITTED THAT THERE ITA NO.1111/DEL/2016 5 IS NO ALLEGATION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSE SSMENT. RELYING ON VARIOUS DECISIONS HE SUBMITTED THAT WHEN THERE IS NO ALLEGA TION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT, SUCH REASSESSMENT PROCEEDINGS ARE VOID AB INITIO . THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSMENT WAS REOPENED ON THE BASIS OF AUDIT OBJECTIONS. THEREFORE, IN VIEW OF VARIOUS DECISION S THE REOPENING OF THE ASSESSMENT IS NULL AND VOID. HE ACCORDINGLY, SUBMITTED THAT ON T HIS PRELIMINARY ISSUE ITSELF THE REASSESSMENT PROCEEDINGS SHOULD BE QUASHED AND THE SUBSEQUENT PROCEEDINGS THEREAFTER SHOULD ALSO BE QUASHED. 9. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE CIT(A). 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE REASONS RECORDED FOR THE REOPENING OF T HE ASSESSMENT HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. A BARE PER USAL OF THE REASONS RECORDED SHOWS THAT THERE IS NO ALLEGATION BY THE ASSESSING OFFICE R OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. IN ABSENCE OF SUCH ALLEGATION OF FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR COMPLETION OF THE ASSESSMENT, THE REASSESSMENT PROCEEDINGS HAVE BEEN HELD TO BE I NVALID BY VARIOUS DECISIONS. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR (2004) 268 ITR 332 (BOM), HAS HELD THAT WHERE REAS ONS RECORDED BY THE ASSESSING ITA NO.1111/DEL/2016 6 OFFICER NOWHERE STATED THAT THERE WAS FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT OF THAT ASSESSMENT YEAR AND NOTICE WAS CLEARLY BEYOND THE PERIOD OF FOUR YEARS, REASSESSMENT WAS BARRED BY LIMITATION. THE RELEVANT OBSERVATION OF THE HON'BLE HIGH COURT FROM PARA 19 ONWARDS READ AS UNDER:- 19. IN THE CASE IN HAND IT IS NOT IN DISPUTE THAT THE ASSESSMENT YEAR INVOLVED IS 1996- 97. THE LAST DATE OF THE SAID ASSESSMENT YEAR WAS 3 1ST MARCH, 1997 AND FROM THAT DATE IF FOUR YEARS ARE COUNTED, THE PERIOD OF FOUR YEARS EX PIRED ON 1ST MARCH, 2001. THE NOTICE ISSUED IS DATED 5TH NOVEMBER, 2002 AND RECEIVED BY THE ASSESSEE ON 7TH NOVEMBER, 2002. UNDER THESE CIRCUMSTANCES, THE NOTICE IS CLEARLY BE YOND THE PERIOD OF FOUR YEARS. 20. THE REASONS RECORDED BY THE ASSESSING OFFICER N OWHERE STATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THAT ASSESSMENT YEAR. IT IS NEEDL ESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AS SESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE T O THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASONS. IT IS FOR THE ASSESSING OFFICER TO REACH T O THE CONCLUSION AS TO WHETHER THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. I T IS FOR THE ASSESSING OFFICER TO FORM HIS OPINION. IT IS FOR HIM TO PUT HIS OPINION ON RE CORD IN BLACK AND WHITE. THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. REASONS AR E THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE S ELF-EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROV IDE LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EVI DENCE. THE ASSESSING OFFICER, IN THE EVENT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISCLOSE IN THE REASON S AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH VITAL LINK BETWEEN THE REASONS A ND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLU DED ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLEMENTED BY FILING AFFIDAVIT OR MAKING ORAL SUBMISSION, OTHERWISE, THE REASONS WHICH WERE LACKI NG IN THE MATERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES TO THE COURT, ON THE STRENGTH OF AFFIDAVIT OR ORAL SUBMISSIONS ADVANCED. 21. HAVING RECORDED OUR FINDING THAT THE IMPUGNED N OTICE ITSELF IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 1 996-97 AND DOES NOT COMPLY WITH THE REQUIREMENTS OF PROVISO TO SECTION 147 OF THE ACT, THE ASSESSING OFFICER HAD NO JURISDICTION TO REOPEN THE ASSESSMENT PROCEEDINGS WHICH WERE CON CLUDED ON THE BASIS OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT. ON THIS SHORT COUN T ALONE THE IMPUGNED NOTICE IS LIABLE TO BE QUASHED AND SET ASIDE. ITA NO.1111/DEL/2016 7 22. SINCE WE ARE SETTING ASIDE THE IMPUGNED NOTICE ONLY ON THE FIRST GROUND OF CHALLENGE, IN OUR OPINION IT IS NOT NECESSARY TO GO TO THE OTHER QUESTION AND RECORD OUR FINDINGS IN THAT BEHALF. 11. THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. SAMCOR GLASS LTD. & ORS., VIDE ITA NOS.768 AND 769 OF 2015, 12 TH OCTOBER, 2015, HAS ALSO HELD SIMILAR VIEW BY OBSERVING AS UNDER:- 5. APART FROM THE FACT THAT THE IMPUGNED ORDER OF THE ITAT SUFFERS FROM NO LEGAL INFIRMITY, THE COURT IS OF THE VIEW THAT ON THE FAC E OF IT, THE REASONS FOR REOPENING OF THE ASSESSMENT IN BOTH THE CASES DID NOT SATISFY TH E BASIC REQUIREMENT OF THE LAW, IN AT LEAST IN TWO ASPECTS. ONE WAS THAT THE REOPENING WAS OF ASSESSMENT BEYOND FOUR YEARS AFTER THE AY FOR WHICH THE ORIGINAL ASSESSMEN T WAS FRAMED AND YET THE REASONS FOR REOPENING DID NOT CATEGORICALLY STATE THAT THER E WAS A FAILURE BY THE ASSESSEES TO DISCLOSE ANY MATERIAL PARTICULARS ON THE BASIS OF W HICH THERE WERE REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THIS COURT HAS RECENTLY, IN A DECISION DATED 22ND SEPTEMBER 2015 IN ITA NO. 356 OF 2013 (CIT V. MULTIPLEX TRADING & INDUSTRIAL CO. LTD.), CLEARLY STATED IN CASES WHERE REOPENING OF ASSESSMENT IS BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR THE CONDITION THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS MUST BE CONCLUDED WITH CERTAIN LEVEL OF CERTAINTY. 6. SECONDLY, THE COURT FINDS THAT AT LEAST IN RESPE CT OF ONE OF THE ISSUES, VIZ., PAYMENT OF INTEREST ON FIXED DEPOSITS, THE ASSESSEE S DREW THE ATTENTION OF THE ASSESSING OFFICER (AO ) TO THE FACT THAT THE AMOUNT HAS ALREADY BEEN OFFE RED TO TAX AND TAX HAD BEEN PAID AND YET, IN THE ORDER DISPOSI NG OF THE OBJECTIONS, THE AO IS COMPLETELY SILENT AS REGARDS THIS OBJECTION. 7. THE COURT IS OF THE VIEW THAT NOTWITHSTANDING SE VERAL DECISIONS OF THE SUPREME COURT AS WELL AS THIS COURT CLEARLY ENUNCIATING THE LEGAL POSITION UNDER SECTION 147/148 OF THE ACT, THE REOPENING OF ASSESSMENT IN CASES LIKE THE ONE ON HAND GIVE THE IMPRESSION THAT REOPENING OF ASSESSMENT IS BEIN G DONE MECHANICALLY AND CASUALLY RESULTING IN UNNECESSARY HARASSMENT OF THE ASSESSEE. 8. THE COURT WOULD HAVE BEEN INCLINED TO IMPOSE HEA VY COSTS ON THE REVENUE FOR FILING SUCH FRIVOLOUS APPEALS BUT DECLINES TO DO SO SINCE THE APPEALS ARE BEING DISMISSED EX PARTE. HOWEVER, THE COURT DIRECTS THE REVENUE THROUGH THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (PR CIT) TO ISSUE INSTRUCTIONS TO THE AOS TO STRICTLY ADHERE TO THE LAW EXPLAINED IN VARIOUS DEC ISIONS OF THE SUPREME COURT AND THE HIGH COURT IN REGARD TO SECTIONS 147/148 OF THE ACT AND MAKE IT MANDATORY FOR THEM TO ENSURE THAT AN ORDER FOR REOPENING OF AN AS SESSMENT CLEARLY RECORDS THE COMPLIANCE WITH EACH OF THE LEGAL REQUIREMENTS. SEC ONDLY, THE AOS MUST BE DIRECTED TO STRICTLY COMPLY WITH THE LAW EXPLAINED BY THE SUPREME COURT IN GKN ITA NO.1111/DEL/2016 8 DRIVESHAFTS (INDIA) LTD V. INCOME TAX OFFICER (2003 ) 259 ITR 19 (SC) AS REGARDS THE DISPOSAL OF THE OBJECTIONS RAISED BY THE ASSESS EE TO THE REOPENING OF THE ASSESSMENT. 12. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. CO UNSEL FOR THE ASSESSEE ALSO SUPPORTS THE VIEW THAT WHERE THE REASONS RECORDED B Y THE ASSESSING OFFICER DO NOT STATE THAT THERE WAS FAILURE ON THE PART OF THE ASS ESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT OF THAT ASS ESSMENT YEAR AND THE NOTICE WAS CLEARLY BEYOND THE PERIOD OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR, SUCH REASSESSMENT PROCEEDINGS ARE BARRED BY LIMITAT ION. THERE IS ALSO ANOTHER ASPECT WHICH MERITS CONSIDERATION. IT IS AN ADMITTED FACT THAT THE REASSESSMENT WAS MADE ON THE BASIS OF AUDIT OBJECTION. THE HON'BLE SUPREME COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY VS. CIT, 119 ITR 996(SC) HAS HELD THAT THE VIEW EXPRESSED BY INTERNAL AUDIT PARTY ON A POINT OF LAW COULD NOT BE REGARDED AS INFORMATION FOR PURPOSE OF INITIATING PROCEEDING U/S 147(B). ACCORD INGLY, IT WAS HELD THAT THE REASSESSMENT PROCEEDINGS ON THE BASIS OF AUDIT OBJE CTION IS NOT VALID. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE REASSESSMENT PRO CEEDINGS INITIATED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) ARE VOID AB INITIO AND, THEREFORE, THE SUBSEQUENT PROCEEDINGS DO NOT SURVIVE. THE GROUNDS RAISED BY T HE ASSESSEE ON THIS LEGAL ISSUE ARE ACCORDINGLY, ALLOWED. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL ISSUE, THE GROUNDS ON MERIT ARE NOT BEING ADJUDICATED BEING ACADEMIC IN N ATURE. ITA NO.1111/DEL/2016 9 13. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 26.12.2018. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER AC COUNTANT MEMFBER DATED: 26 TH DECEMBER, 2018 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI