DCIT, Circle- 62(1), New Delhi V. Paveljeet Singh Ruppal, Delhi

ITA 1449/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9799 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Keywords: Reopening of assessment; Rectification of order; Audit objection; Period of limitation; Proportionate interest; Question of law; Tangible material; Difference of opinion; Competent authority; Assessment record; Time period of passing order; Reason to believe; Change of opinion; Reassessment proceedings; TDS
• Section: 143(3); 80HH; 143(2); 43; 13; 147; 148; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.1449/DEL/2018 ASSESSMENT YEAR: 2008-09 DCIT, CIRCLE-62(1), NEW DELHI. VS. PAVELJEET SINGH RUPPAL, 89, LOK NAYAK APARTMENT, SECTOR-9, ROHINI DELHI. TAN/PAN: ADMPR6978F (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI GOVIND SINGHAL, SR.D.R RESPONDENT BY: SHRI KAPIL GOEL, ADV. DATE OF HEARING: 17 02 2021 DATE OF PRONOUNCEMENT: 17 05 2021 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 14.12.2017 BY LD. COMMISSIONER OF INCOME TAX (APPEAL)-XVIII, NEW DELH I FOR THE QUANTUM OF ASSESSMENT PASSED U/S.147/148 FOR THE ASSESSMENT YEAR 2008-09. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS: (I) ON THE FACTS AND IN THE CIRCUMSTANCES O THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE REOPE NING OF THE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT BY IGNORI NG THE FACT THAT, THE CASE FOR AY 2008-09 WAS REOPENED BY THE AO CITING THAT THE ADDITION MADE ON SAME ISSUE IN CASE OF THE SAID ITA NO.1449/DEL/2018 2 ASSESSEE FOR AY 2009-10 WHICH WAS SUSTAINED BY LD. CIT(A). (II) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE REOPE NING OF THE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT BY IGNORI NG THE DECISION OF APEX COURT IN THE CASE OF CIT VS. PVS B EEDIES PVT. LTD. WHEREBY IT IS HELD THAT REOPENING OF THE CASE ON THE BASIS OF A FACTUAL ERROR POINTED OUT BY THE AUDIT P ARTY IS PERMISSIBLE UNDER LAW. (III) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HE ARING. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD FIL ED HIS RETURN OF INCOME ON 30.09.2008 ON A TOTAL INCOME OF RS.1,71,40,407/-. THEREAFTER, THE ASSESSEES CASE W AS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER WAS PASSED U/S.14 3(3) VIDE ORDER DATED 16.12.2010, AFTER MAKING ADDITIONS ON A CCOUNT OF AD HOC DISALLOWANCE OF EXPENSES AND ADDITIONAL DEMAND OF INCOME CLAIMED BY THE APPELLANT IN THE PROFIT AND L OSS ACCOUNT. INCOME WAS FINALLY ASSESSED AT RS.1,82,73, 260/-. AFTER COMPLETION OF THE ASSESSMENT IN THE AFORESAID MANNER AND AFTER EXPIRY OF FOUR YEARS FROM THE RELEVANT AS SESSMENT YEAR, THE ASSESSEES CASE WAS REOPENED U/S.147 BY T HE ISSUANCE OF NOTICE U/S 148 DATED 17.03.2015, AFTER RECORDING THE FOLLOWING REASONS: THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S. 143 (3) ON 16.12.2010 AT AN INCOME OF RS.1,82,73,260/-. ON EXA MINATION IT IS FOUND THAT THE ASSESSEE HAD TAKEN SECURED LOA N OF RS.4,09,54,814/- AND CLAIMED A TOTAL INTEREST INCLU DING BANK ITA NO.1449/DEL/2018 3 CHARGES OF RS.1,46,70,857/- . FURTHER, THE ASSESSEE HAD GIVEN TOTAL LOANS AND ADV ANCES OF RS. 3,63,80,734/- TO ITS SISTER CONCERN. ON PERUSAL OF RECORD OF DATE, IT IS OBSERVED THAT IT IS A CASE OF FUNDING O F SISTER CONCERN AT THE COST OF ASSESSEE. IT IS IMPORTANT TO MENTION THAT THIS ISSUE CAME UP FOR DETAILED DISCUSSION DURING T HE PROCEEDINGS FOR A.Y. 2009-10. AFTER EXAMINING THE I SSUE AT LENGTH, LD. ASSESSING OFFICER VIDE HIS AN ORDER DAT ED 11.12.2011 CAME TO CONCLUSION THAT PROPORTIONATE DISALLOWANCE OF INTEREST TO THE TUNE OF RS. 23,15,1 81/- IS TO BE MADE TO THAT ASSESSMENT YEAR. THE CIT(A) HAS ALSO S USTAINED THE SAID ADDITION ON THE ISSUE VIDE ORDER DATE 06.1 1.2013. ON EXAMINATION OF THE RECORDS AVAILABLE BEFORE ME, I FIND THAT IN THIS YEAR ALSO THE PROPORTIONATE INTEREST CLAIME D ON SECURED LOAN IS NOT AN ALLOWABLE EXPENDITURE AS PER THE CAL CULATION BELOW: TOTAL SECURED LOAN : RS.40954814/- TOTAL INTEREST CLAIMED : RS.14670851/- TOTAL ADVANCE GIVEN : RS.3,63,80,734/- LESS: ADVANCES TO SUPPLIES : RS.70,30,807/- PROPORTIONATE INTEREST TO BE DISALLOWED : RS.105137 43 (14670851/40954814*29349927) FORM THESE FACTS AND AFTER DUE APPLICATION OF MIND, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE A.Y. 2008-09 FOR THE REASON OF F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT ITA NO.1449/DEL/2018 4 3. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FIL ED A LETTER STATING THAT ORIGINAL RETURN FILED ON 30.09.2008 MA Y BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S.1 48. THEREAFTER, THE LD. ASSESSING OFFICER PROCEEDED TO MAKE DISALLOWANCE ON ACCOUNT OF PROPORTIONATE INTEREST O N BORROWED FUNDS AT RS.1,05,13,743/- U/S.36(1)(III). THE DISALLOWANCE WAS MADE ON THE GROUND THAT LOAN AND A DVANCES WERE GIVEN TO ITS SISTER CONCERNS FOR SUMS AGGREGAT ING TO RS.3,63,80,734/- ON WHICH NO INTEREST WAS CHARGED, AND ASSESSEE WAS PAYING INTEREST ON LOANS. 4. BEFORE THE LD. CIT (A) ASSESSEE HAD CHALLENGED T HE VALIDITY OF REOPENING U/S.147 ON VARIOUS COUNTS WHI CH HAS BEEN DISCUSSED IN DETAIL FROM PAGES 3 TO 7 OF THE A PPELLATE ORDER. AFTER CONSIDERING THE ENTIRE MATERIAL ON REC ORD AND JUDGMENTS RELIED UPON, THE LD. CIT (A) QUASHED THE R E- ASSESSMENT PROCEEDINGS U/S.147. HIS DETAIL FINDING READS AS UNDER: 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION MADE BY THE AR. ON PERUSAL OF THE WRITTEN SUBMISSIO N AND THE DOCUMENTS FURNISHED BY THE AR, IT IS OBSERVED THAT THE MAIN CONTENTIONS OF THE APPELLANT ARE AS UNDER: I. THE COMPETENT AUTHORITY HAS NOT APPLIED HIS MIND BEFORE GRANTING APPROVAL FOR THE REOPENING OF THE CASE U/S 147 OF THE ACT; II. THE AO HAS NOT BEEN ABLE TO SHOW THAT THE INCOM E HAS ESCAPED ASSESSMENT DUE TO ANY FAILURE ON THE PART O F THE APPELLANT, TO DISCLOSE FULLY 86 TRULY ALL MATERIAL FACTS; ITA NO.1449/DEL/2018 5 III. THE AO HAS REOPENED THE ASSESSMENT MERELY ON T HE BASIS OF AUDIT OBJECTION AND WITHOUT HAVING ANY TAN GIBLE MATERIAL TO SHOW THAT INCOME HAS ESCAPED ASSESSMENT ; IV. THE REOPENING OF THE ASSESSMENT AMOUNTS TO REVI EW OF THE EARLIER ASSESSMENT ORDER BY THE AO; V. THE AO HAD ACCEPTED THE REPLY OF THE APPELLANT O N THE ISSUE OF INTEREST DURING THE COURSE OF RECTIFICATIO N PROCEEDINGS U/S 154 OF THE ACT. 4.4 ON PERUSAL OF THE VARIOUS DOCUMENTS FILED BY TH E AR, IT IS OBSERVED THAT THE SEQUENCE OF EVENTS FOLLOWING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 1 6.12.2010, IS THAT THE AUDIT PARTY RAISED TWO OBJECTIONS VIDE AUDIT MEMO DATED 19.09.2011 AND THESE OBJECTIONS RAISED RELATE D TO THE DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT AND EXCESS ALLOWANCE OF TDS CREDIT. THE AO ISSUED A NOTICE U/S 154/155 OF THE ACT ON 21.09.2011 GIVING AN OPPORTUNITY TO T HE APPELLANT IN RESPECT OF THE TWO PROPOSED ADDITIONS BY STATING AS UNDER: AUDIT SCRUTINY REVEALS THAT- 1. TDS CLAIM OF RS. 10,08,039/- SHOULD BE DISALLOW ED WHILE CALCULATING THE TAX U/S 143(3) FOR AY 2008-09 . 2. THE ASSESSEE HAD GIVEN THE TOTAL LOANS & ADVANC ES OF RS. 3,63,80,734/- TO ITS SISTER CONCERN. HENCE, REA SONABLE PROPORTION OF INTEREST OF RS. 1,05,13,743/- TO BE D ISALLOWED AND TO BE ADDED TO THE INCOME OF THE ASSESSEE. THE APPELLANT REPLIED TO THIS NOTICE U/S 154 OF THE ACT VIDE LETTERS DATED 22.11.2011 86 28.12.2Q11. AFTER CONSI DERING THESE REPLIES, THE AO PASSED THE ORDER UNDER SECTION 154 ON 04.01.2012, IN WHICH THE AO HAS DISALLOWED THE EXCE SS CREDIT ITA NO.1449/DEL/2018 6 OF TDS GRANTED TO THE APPELLANT AND HAS RECTIFIED T HE MISTAKE, THEREBY IMPLYING THAT THE AO HAS ACCEPTED THE REPLY OF THE APPELLANT IN RESPECT OF THE PROPOSED ADDITION RELAT ED TO THE DISALLOWANCE OF INTEREST OF RS. 1,05,13,743/- U/S 3 6(I)(III) OF THE ACT. HOWEVER, THE AO REOPENED THE CASE U/S 147 OF T HE ACT ON 17.03.2015 BY RECORDING REASONS TO BELIEVE THAT THE INCOME AMOUNTING TO RS. 1,05,13,743/- HAS ESCAPED ASSESSME NT AND THE INTEREST OF THIS AMOUNT IS REQUIRED TO BE DISAL LOWED U/S 36(L)(III) OF THE ACT. 4.4.1 FROM THE ABOVE SEQUENCE OF EVENTS, IT IS CLEA R THAT THERE IS A CHANGE OF OPINION AS FAR AS THE DISALLOWANCE OF I NTEREST U/S 36(L)(III) OF THE ACT, IS CONCERNED IN THIS CASE. I N THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAD ISSUED A DETAILE D QUESTIONNAIRE ON 12.05.2010, IN WHICH THE AO HAD SP ECIFICALLY ASKED THE DETAILS ABOUT THE LOANS AND ADVANCES TAKE N/GRANTED BY THE APPELLANT AND AFTER CONSIDERATION OF ALL THE DOCUMENTS FILED BEFORE HIM, HAD FINALIZED THE ASSESSMENT WITH OUT MAKING ANY DISALLOWANCE OF INTEREST. MOREOVER, EVEN AFTER THE AUDIT OBJECTION WAS RAISED, THE AO PROPOSED TO MAKE THE DISALLOWANCE OF INTEREST U/S 154 OF THE ACT, BUT AF TER CONSIDERING THE REPLY OF THE APPELLANT, THE AO DID NOT MAKE ANY SUCH ADDITION AND SURPRISINGLY, AFTER MORE THAN THR EE YEARS OF THE SAID RECTIFICATION ORDER U/S 154 OF THE ACT, TH E AO HAS REOPENED THE ASSESSMENT ON THE SAME ISSUE. THIS FLI P FLOP ON THE PART OF THE AO IS NOTHING BUT MERE CHANGE OF OP INION AND THERE IS NOTHING ON RECORD TO SHOW THAT ANY INCOME HAS ESCAPED ASSESSMENT DUE TO ANY FAILURE ON THE PART OF THE AP PELLANT. 4.4.2 IN THIS REGARD, REFERENCE IS MADE TO THE DECI SION OF APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ITA NO.1449/DEL/2018 7 KELVINATOR OF INDIA LIMITED, (2010) 320 ITR 561, IN WHICH THE SUPREME COURT OBSERVED THAT POST 01-04-1989, TH E POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS REASON TO BELIEVE FAI LING WHICH, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSE SSING OFFICER TO REOPEN THE ASSESSMENTS ON THE BASIS OF M ERE CHANGE OF OPINION WHICH CANNOT BE PER SE REASON TO REOPEN . THE CONCEPTUAL DIFFERENCE BETWEEN THE POWER TO REVIEW A ND POWER TO REASSESS IS TO BE KEPT IN MIND. THE ASSESSING OF FICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON THE FULFILLMENT OL CERTAIN PRECONDITIONS AND IF THE CONCEPT OF CHANGE OF OPIN ION IS REMOVED, IN THE GARB OF RE-OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CH ANGE OF OPINION AS AN IN-BUILT TEST TO CHECK ABUSE OF POWE R BY THE ASSESSING OFFICER. HENCE, AFTER 01-08-1989, THE ASS ESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS TAN GIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS E SCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LINK WI TH THE FORMATION OF THE BELIEF. IN THE PRESENT CASE, THE AO HAS NOT BEEN ABLE TO PL ACE ON RECORD ANY MATERIAL WHICH LED TO THE FORMATION OF HIS BELI EF THAT SOME INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE APPELLANT. 4.4.3 IN JAI HOTELS CO. LIMITED VS. ASST. DIT, (2009) 24 DTR 37 (DEL), THE HONBLE DELHI HIGH COURT HAS HELD THAT THERE BEING NO NEW MATERIAL IN THE HANDS OF THE REVENUE L EADING TO THE VIEW THAT THERE WAS REASON TO BELIEVE THAT INCO ME HAD ESCAPED ASSESSMENT, THE CASE IS A CLASSIC INSTANCE OF A CHANGE ITA NO.1449/DEL/2018 8 OF OPINION. THE HIGH COURT FURTHER OBSERVED THAT WH EN COPIES OF STATEMENT OF INCOME, TRADING ACCOUNT, PROFIT AND LO SS ACCOUNT, AUDIT REPORT ETC., WERE APPENDED TO THE RETURN FILE D BY THE ASSESSEE, TAKING RESORT TO SECTION 147/148 WAS UNWA RRANTED AS IT CONSTITUTED A CHANGE OF OPINION, SINCE THE MA TERIAL ACTED UPON HAD BEEN MADE AVAILABLE ALONG WITH RETURN OF I NCOME. 4.4.4 FROM THE ABOVE DISCUSSION, IT HAS BECOME CLE AR THAT THE AO HAS REOPENED THE ASSESSMENT MERELY DUE TO CHANGE OF OPINION WHICH HAD RESULTED DUE TO THE AUDIT OBJECTI ON. THERE WAS NO MATERIAL ON RECORD TO PROVE THAT SOME INCOME HAS ESCAPED ASSESSMENT DUE TO THE FAILURE OF THE APPELL ANT. IN VIEW OF THESE FACTS AND THE LEGAL POSITION AS DISCUSSED IN DETAIL ABOVE, I AM CONSTRAINED TO QUASH THE REOPENING OF T HE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. 5. GROUND NOS. 3, 4 & 5 ARE RELATED TO THE ADDITION OF RS. 1,05,13,743/- MADE BY THE AO BY DISALLOWING INTERES T U/S 36(L)(III) OF THE ACT. AS THE ASSESSMENT HAS BEEN Q UASHED, THESE GROUNDS OF APPEAL HAVE BECOME INFRUCTUOUS AND FOR S TATISTICAL PURPOSES, THE SAME MAY BE TREATED AS ALLOWED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL PLACED ON RECORD AS WELL AS THE F INDING OF THE LD. CIT (A). ADMITTEDLY, IN THIS CASE, THE ORIGINAL RETURN OF INCOME WAS FILED ON 30.09.2008 WHICH WAS SUBJECT TO SCRUTINY PROCEEDINGS U/S. 143(2) AND ASSESSMENT WAS COMPLETE D U/S.143(3) VIDE ORDER DATED 16.12.2010. THEREAFTER IT IS BORNE OUT FROM THE ORDER OF LD. CIT(A) THAT AUDIT PARTY H AS RAISED TWO OBJECTIONS RELATING TO; I) EXCESS ALLOWANCE OF TDS CREDIT OF RS. 10,08,039/-; AND II) DISALLOWANCE OF INTEREST U /S.36(1)(III) ITA NO.1449/DEL/2018 9 RS. 1,05,13,743/- ON LOANS GIVEN TO SISTER CONCERNS . BASED ON THIS AUDIT OBJECTION, NOTICE U/S.154/155 WAS ISSUED BY THE ASSESSING OFFICER ON 21.09.2011. IN RESPONSE, THE A SSESSEE HAD FILED HIS DETAILED REPLY AND AFTER CONSIDERING THE SAME, ASSESSING OFFICER DISALLOWED THE EXCESS CREDIT OF T DS GRANTED TO THE ASSESSEE AND JUSTIFIED AND SECOND ISSUE WAS A CCEPTED. HOWEVER, AFTER 3 YEARS, IN SO FAR AS DISALLOWANCE OF INTEREST OF RS.1,05,13,743/- AS PROPOSED IN THE AUDIT OBJECT ION AND ALSO RAISED BY THE ASSESSING OFFICER IN THE PROCEED INGS U/S.154, THE ASSESSING OFFICER HAS SOUGHT TO REOPEN THE CASE U/S.147 VIDE NOTICE DATED 17.03.2015 AFTER RECORDIN G THE AFORESAID REASONS. 6. FIRST OF ALL, FROM THE BARE PERUSAL OF THE REASONS RECORDED, IT IS SEEN THAT THERE IS NO REFERENCE OF ANY TANGIBLE MATERIAL COMING ON RECORD AFTER COMPLETION OF THE A SSESSMENT U/S 143(3) SO AS TO SUGGEST THAT THERE IS ANY INCOM E CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT. THE REASONS ARE PURELY BASED ON RE-EXAMINING OF THE SAME BALANC E SHEET AND PROFIT & LOSS ACCOUNT TO COME TO A REASON TO BE LIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND TO BE ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO DI SCLOSE TRULLY AND FULLY ALL MATERIAL FACTS. IN THIS CASE, IT HAS TO BE KEPT IN MIND THAT THAT REOPENING OF ASSESSMENT COMPLETED U/ S 143(3) IS SOUGHT TO BE DONE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THEREFORE, LIMITATION AND CONDITIONS PROVIDED IN FIRST PROVISO TO SECTION 147 IS CLEARLY APPLICABLE. IT IS TRITE AND WELL SETTLED LA W THAT IN CASES ITA NO.1449/DEL/2018 10 WHERE ASSESSMENT HAS BEEN COMPLETED U/S.143(3) AND SAME IS BEING SOUGHT TO BE REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE S TATUTE PUT FETTERS ON THE POWER OF THE ASSESSING OFFICER IN TE RMS OF FIRST PROVISO, WHICH PROVIDES THAT, WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, THEN NO ACTION SHALL BE T AKEN UNDER SECTION 147/148 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT Y EAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O 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 NECESSA RY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. THUS, THE REO PENING IN THE AFORESAID CIRCUMSTANCES IS PERMISSIBLE ONLY WHE N, FIRSTLY , ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY THE REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE RETURN; OR SECONDLY , FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 7. IN SO FAR AS THE FIRST CONDITION IS CONCERNE D, IT IS AN UNDISPUTED FACT AND ALSO ACCEPTED BY THE ASSESSING OFFICER THAT RETURN OF INCOME U/S.139(1) WAS FILED. IN SO F AR AS THE SECOND CONDITION IS CONCERN, I.E., THE FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS IS NECESSARY FOR THE ASSESSMENT, THE SAME HAS NOT BEEN DEMONSTRATED BY THE ASSESSING OFFICER IN THE REASON S ITA NO.1449/DEL/2018 11 RECORDED AND MERE BALD STATEMENT THAT THERE IS A FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT CANNOT JUSTIFY TH E REOPENING IN TERMS OF PROVISO TO SECTION 147. THE ASSESSING OFFICER HAS TO DEMONSTRATE FROM THE RECORDS THAT TH ERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HERE IN THIS CASE, THE ASSESSEE HAS DULY DISCLOSED THE FACTUM OF TOTAL SECURED LOAN, TOTAL INTEREST CLAIMED, TOTAL ADVANCE S GIVEN, ETC. ALL THESE FACTS WERE DULY AVAILABLE ON THE RECORD A T THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. THE REASONS RECOR DED ITSELF SPEAKS THAT THE POINT ON WHICH ASSESSING OFFICER HA S SOUGHT TO RAISE, ALREADY STOOD DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AND NOTHING HAS BEEN FOUND WHICH HAS NOT BEEN DISCL OSED. IF THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS N ECESSARY FOR THE ASSESSMENT IN HIS RETURN OF INCOME AND IN THE A UDITED FINANCIAL STATEMENT, THEN THE LEGAL INFERENCE WHICH HAS TO BE DRAWN IS UPON THE ASSESSING OFFICER AND NOT UPON TH E ASSESSEE. THE 1 ST PROVISO TO SECTION 147 PUTS EMBARGO OF TIME LIMIT OF FOUR YEARS FROM THE END OF THE RELEVANT AS SESSMENT YEAR WHERE ASSESSMENTS HAVE BEEN DONE UNDER SECTION 143(3), IF THE TWIN CONDITIONS PROVIDED THEREIN ARE NOT MET . THE SAID PROVISO IS AN EXPLICIT SAFEGUARD WHICH PROHIBITS TH E ASSESSING OFFICER FROM EXERCISING THE POWER TO RE-ASSESS WHER E THE ASSESSMENT HAS ALREADY BEEN COMPLETED U/S. 143(3). IF IS THERE ANY OVER SIGHT OR INADVERTENT MISTAKE OF THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS WHIC H HAS BEEN ITA NO.1449/DEL/2018 12 DISCOVERED BY HIM LATER ON RECONSIDERATION OF SAME MATERIAL, THEN IT TANTAMOUNT TO CHANGE OF OPINION, MORE SO IN CASES WHERE THE REOPENING IS HIT BY FIRST PROVISO TO SECT ION 147 (SUPRA). IN SUCH CASES, LAW DOES NOT PERMIT THE ASS ESSING OFFICER TO REOPEN A CONCLUDED ASSESSMENT AFTER EXPI RY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR LIKE IN THE PRESENT CASE. 8. IN THE LATEST JUDGMENT OF HONBLE SUPREME COU RT IN THE CASE OF PCIT VS. L&T LTD., REPORTED IN (2020) 268 TAXMAN 390, THE HONBLE SUPREME COURT WHEREIN THE QUESTION FOR CONSIDERATION WAS; WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS CORRECT IN LAW IN HOLDIN G THAT THE NOTICE ISSUE U/S.148 WAS NOT VALID ON THE GROUND TH AT ASSESSING OFFICER HAS NOT DEMONSTRATED THE FAILURE OF THE ASSESSEE IN DISCLOSING THE MATERIAL FACT? THEIR LORDSHIPS AFTER REPRODUCING THE REASONS RECORDED BY THE ASSESSING O FFICER FOR ISSUING NOTICE U/S.148 OBSERVED AS UNDER: 2. THE APPEAL AS ARISES OUT OF THE JUDGMENT OF THE INCOME TAX APPELLATE TRIBUNAL IN WHICH IT WAS HELD THAT TH E NOTICE OF REOPENING WHICH WAS ISSUED BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WAS I NVALID. WE MAY REPRODUCE THE REASONS RECORDED BY THE ASSESS ING OFFICER FOR ISSUING SUCH A NOTICE : '(I) IT WAS SEEN FROM THE RECORDS THAT WHILE COMPUT ING THE DEDUCTION U/S 80-IA, CERTAIN PASS THROUGH COMPONENT S LIKE FUEL ADJUSTMENT CHARGES (FAC), ELECTRICITY DUT Y, ITA NO.1449/DEL/2018 13 WHEELING CHARGES, GRID SUPPORT CHARGES ETC. HAVE NO T BEEN CONSIDERED FOR ARRIVING AT THE MARKET VALUE OF THE ELECTRICITY. (II) FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80-I A, EXCESS PROFIT FROM THE GENERATION OF ELECTRICITY HA S BEEN SHOWN AS AGAINST '16% RETURN ON INVESTMENT' FIXED B Y THE MINISTRY OF POWER. (III) VARIOUS EXPENSES LIKE INTEREST, COMMISSION, B ROKERAGE AND CORPORATE OVERHEADS WERE NOT DEBITED TO THE SEP ARATE PROFIT & LOSS A/C. FURTHER, SALES AND ADMINISTRATIV E EXPENDITURE IS NOT PROPORTIONATE TO THE EXPENDITURE DEBITED IN CONSOLIDATED P&L A/C TO THE PROFIT OF 80 -IA UNITS, WHICH HAS RESULTED IN EXCESS DEDUCTION U/S 8 0-IA. (IV) THE ASSESSEE CLAIMED DEDUCTION U/S 80-IA, 80HH B, 80HHBA, 80-HHC, 80HHE ETC. HOWEVER, EXEMPTION CLAIMED U/S 80-IA WAS NOT REDUCED FROM OTHER CHAPTE R VI- A DEDUCTION AS PER PROVISIONS CONTAINED IN SECTION 80-IA. (V) DEDUCTION U/S 80-IA WAS WRONGLY CLAIMED IN RESP ECT OF WORK ON CONTRACT BASIS FOR VARIOUS GOVT. AGENCIES, WHICH CANNOT BE CONSIDERED AS INFRASTRUCTURE PROVIDER.' 3. PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER WOULD SHOW THAT THE TRIBUNAL WAS PERFECTLY CORRECT IN COMING TO THE CONCLUSION THAT THE NOTICE OF REOPENI NG OF ASSESSMENT WAS INVALID. FROM THE REASONS WE GATHER THAT THERE WAS NO ELEMENT OF LACK OF TRUE AND FULL DISCL OSURE ON THE PART OF THE ASSESSEE, WHICH RESULTED INTO ANY I NCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. THE REASONS CLEARLY ITA NO.1449/DEL/2018 14 REVEAL THAT THE ASSESSING OFFICER WAS PROCEEDING ON THE MATERIAL WHICH WAS ALREADY ON RECORD. IN THE ABSENC E OF THE STATUTORY REQUIREMENT OF INCOME CHARGEABLE TO TAX H AVE BEEN ESCAPED ASSESSMENT DUE TO THE FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS BEEN SATISFIED, THE TRIBUNAL CORRECTLY HELD THAT THE NOT ICE OF REOPENING OF ASSESSMENT WAS INVALID. NO QUESTION OF LAW ARISES. 9. FURTHER, HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF ORACLE INDIA PVT. LTD. VS. ACIT, AS REPORTED IN (2017) 397 ITR 480 (DEL), HELD THAT WHERE AUDITED ACCOUNTS WERE ALREADY AVAILABLE WITH THE ASSESSING OFFICER A ND FORM PART OF THE ASSESSMENT RECORD, THEN MERELY SUGGESTI NG THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO CO MPUTE AND DECLARE THE TRUE TAXABLE INCOME WITHOUT FURTHER CLA RIFICATION WOULD NOT JUSTIFY REOPENING OF THE ASSESSMENT AFTER THE LIMITATION PERIOD OF FOUR YEARS. 10. THE AFORESAID JUDGMENTS IN PRINCIPLE WILL APPLY MUTATIS MUTANDIS ON THE PRESENT REASONS ALSO, BECAUSE HERE IN THI S CASE THERE IS NO ELEMENT OF LACK OF TRUE AND FULL D ISCLOSURE ON THE PART OF THE ASSESSEE AND THE REASONS ARE BASED ON THE MATERIAL WHICH WAS ALREADY ON RECORD. THUS, SUCH A REASON CANNOT CLOTHE THE ASSESSING OFFICER WITH THE JURISDI CTION TO REOPEN THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR, MERELY ON BALD OBSERVATION THAT THERE WAS FAILURE ON THE PART OF T HE ASSESSEE TO COMPUTE AND DECLARE THE TRUE TAXABLE INCOME . ITA NO.1449/DEL/2018 15 11. LD. CIT (A) HAS TAKEN NOTE OF ALL THESE FACTS A ND AFTER RELYING UPON THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561, HELD THAT THE REOPENING HAS BEEN DONE MERELY ON CHANGE OF OPINION AND ASSESSING OFFICER HAS NO POWER TO REVIEW THE EARLIER ASSESSMENT. THE AFORESAID FINDIN G OF THE LD. CIT (A) IS BOTH FACTUALLY AND LEGALLY CORRECT AND N O INTERFERENCE IS CALLED FOR. ACCORDINGLY, WE HOLD TH AT RE- ASSESSMENT PROCEEDING U/S 147 VIDE NOTICE DATED 17. 03.2015 U/S 148 IS BAD IN LAW AND VOID AB INITIO AND SECONDLY THE ENTIRE REASSESSMENT PROCEEDINGS IS QUASHED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY, 2021. SD/- SD/- [ANIL CHATURVEDI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH MAY, 2021 PKK