M/s. Richa Industries Ltd., Faridabad V. ACIT, Faridabad

ITA 1476/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6356 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Capital asset; Rectification of order; Audit objection; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 80IB; 147; 148; 154; 139

Judgement Text

I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SH. KULDIP SINGH, JUDICIAL M EMBER AND SH.ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A .NO.-1476/DEL/2014 (ASSESSMENT YEAR-2005-06) RICHA INDUSTRIES LTD., PLOT NO.29, DLF IND. AREA, PHASE-II, FARIDABAD PAN-AAACR7943J ( APPELLANT) VS ACIT, CIRCLE-1, FARIDABAD. (RESPONDENT) ASSESSEE BY SH.VIJAY KUMAR SINGLA, CA REVENUE BY SH.F.R.MEENA, SR.DR DATE OF HEARING 07 . 03 .201 7 DATE OF PRONOUNCEMENT 14 . 03 .201 7 ORDER PER ANADEE NATH MISSHRA, ACCOUNTANT MEMBER (A). THE PRESENT APPEAL HAS BEEN FILED BY THE ASSES SEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 22.01.2014 OF CIT(A)-2, FARIDABAD PERTA INING TO 2005-06 ASSESSMENT YEAR ON VARIOUS GROUNDS. (B). THE ORIGINAL RETURN WAS FILED BY THE ASSESSEE ON 29.10.2005 DECLARING INCOME OF RS.41,97,398/-. THE ASSESSMENT ORDER U/S 143(3) OF INCOME TAX ACT, 1961 (IN SHORT ACT) WAS PASSED ON 19.12.2007 WHEREIN TOTAL INCOME WAS ASSES SED AT RS.52,74,330/-. SUBSEQUENTLY, THE ORDER WAS RECTIFIED VIDE ORDER DATED 10.03.2008 U/S 154 OF THE ACT UNDER WHERE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.50,89,020/-. THE RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, WERE INITIATED BY NOTICE DATED 29.03.2012 U/S 148 OF THE ACT. REGARDING REASONS FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS , THE AO HAS STATED AS UNDER IN THE ASSESSMENT ORDER:- THE FOLLOWING REASONS WERE RECORDED BEFORE ISSUE O F NOTICE U/S 148 OF THE ACT:- 'IT HAS COME TO NOTICE THAT UNDER SECTION 36(I)(II I) OF THE INCOME TAX ACT, 1961 INTEREST PAID ON BORROWED FUND FOR ACQUIRING OF CAP ITAL ASSETS IS NOT DEDUCTIBLE TILL THE DATE OF THEIR UTILIZATION IN BUSINESS BUT THE ASSES SES HAS CLAIMED THE INTEREST ON THIS AMOUNT IN ITS PROFIT AND LOSS ACCOUNT. AS PER BALAN CE SHEET, STATUS OF BORROWED FUNDS WAS AS UNDER: CAPITAL WORK IN PROGRESS IN IMT GURGAON UNIT RS.2, 17,66,774/- SECURED AND UNSECURED LOANS RS.12,48,72,290/- LOAN (INTER UNITS) FROM FARIDABAD UNIT IN IMF UNIT RS.1,72,97,700/- PAGE 2 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT THE ASSESSEE IN IMT UNITS CLAIMED DEDUCTION OF INTE REST OF RS.81,85,546/- AND IN FARIDABAD UNIT FROM WHICH ABOVE FUNDS WERE TRANSFER RED TO IMT GURGAON OF RS.7,41,789/-. THUS, TOTAL INTEREST FOR IMT UNIT WA S PAID OF RS.89,27,335/- FOR WHICH DEDUCTION HAS BEEN CLAIMED AND ALLOWED. SINCE 15. 31% FUNDS WERE UTILIZED IN CAPITAL WORK IN PROGRESS WHICH WAS NOT BEEN PUT INT O USE IN BUSINESS UPTO 31.03.2005. THEREFORE, 15.31% OF TOTAL INTEREST PAI D BY THIS UNIT WHICH WORKED TO RS.13,66,775/- NEEDED TO BE DISALLOWED. HENCE INCOM E OF RS.13,66,775/- HAS ESCAPED ASSESSMENT. IT WAS FARTHER OBSERVED THAT THE IMT UNIT HAD ALSO RECEIVED RECEIPT OF RS.45,03,509/- ON ACCOUNT OF DEPB/DDB WHICH WAS NOT INCOME DERIVED FROM MANUFACTURING ACTIVITY BUT INCIDENTAL TO THE BUSINESS AND HENCE D EDUCTION ON THIS INCOME IS NOT ADMISSIBLE. THUS AFTER REDUCING OTHER INCOME OF RS. 45,03,509/- FROM ELIGIBLE PROFIT OF RS.26,74,214/- AND RS.6,17,703/- ON ACCOUNT OF ADDI TION MADE, THE ELIGIBLE PROFIT OF LMT MANESAR UNIT COMES TO (-) RS.12,11,592/- AND TH US, NO DEDUCTION WAS ADMISSIBLE U/S 80IB BUT WAS ALLOWED AT THE TIME OF ASSESSMENT/RECTIFICATION AMOUNTING TO RS.9,87,575/-. HENCE INCOME OF RS.9,87 ,575/- HAS ESCAPED ASSESSMENT. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT TAXABLE INCOME CHARGEABLE TO TAX AMOUNTING TO RS.23,54,350/- (RS.13,66,775/- + RS. 9 ,87,575/-) AND ANY OTHER INCOME WHICH SUBSEQUENTLY COMES TO NOTICE HAS ESCA PED ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT FOR THAT ASSESSMENT YEAR. ACCORDINGLY, NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 IS BEING ISSUED AFTER GETTING NECESSARY APPROVAL FROM THE COMMISSIONER OF INCOME TAX, FARIDABAD. (B.1). IN THE ASSESSMENT ORDER DATED 31.03.2013 PAS SED U/S 143(3)/147 OF THE ACT, THE AO RE- ASSESSED THE INCOME OF THE ASSESSEE AT RS.74,43,370 /- WHEREIN THE FOLLOWING ADDITIONS WERE MADE:- (A) AN ADDITION OF RS.13,66,775/- ON ACCOUNT OF DIS ALLOWANCE OF INTEREST PAID ON FUND BORROWED FOR ACQUIRING OF CAPITAL ASSETS; (B) AN ADDITION OF RS.9,87,575/- ON ACCOUNT OF DISA LLOWANCE OF DEDUCTION U/S 80IB OF THE ACT CLAIMED BY THE ASSESSEE ON DEPB/DDB. (B.2). AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEF ORE THE CIT(A). VIDE ORDER DATED 22.01.2014, LD.CIT(A) DISMISSED THE APPEAL OF THE A SSESSEE. AGGRIEVED AGAIN, THE ASSESSEE HAS FILED THIS APPEAL IN ITAT. IN THE COURSE OF TH E APPELLATE PROCEEDINGS IN ITAT, THE ASSESSEE FILED A PAPER BOOK CONTAINING 162 PAGES. THE ASSES SEE ALSO FILED WRITTEN SUBMISSIONS. THE ASSESSEE MOREOVER FILED COPY OF AUDIT OBJECTION RAI SED BY REVENUE AUDIT WHICH LED TO RE- OPENING OF ASSESSMENT. AT THE TIME OF HEARING BEFO RE US, THE LD.AR APPEARING FOR THE ASSESSEE RELIED UPON THE WRITTEN SUBMISSIONS AND EX PLAINED THE SAME WITH HELP OF PAPER BOOK PAGE 3 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT AND COPY OF AUDIT OBJECTION RAISED BY REVENUE AUDIT . THE LD.AR ALSO CONTENDED THAT THE DISPUTE IS COVERED IN FAOVUR OF ASSESSEE BY THE DEC ISIONS OF THE CO-ORDINATE BENCHES OF ITAT, DELHI IN THE FOLLOWING CASES:- (I) LANDBASE INDIA LTD. VS DCIT [2015] 43 ITR (TRIB ) 172 (ITAT [DEL]); (II) UTTARANCHAL JAL VIDYUT NIGAM LTD. VS ACIT [201 6] 47 ITR (TRIB) 198 (ITAT[DEL]); (III) UPKAR INTERNATIONAL P.LTD. VS DCIT [2016] 49 ITR (TRIB) 551 (ITAT [DEL]); AND (IV) MAGPPIE EXPORTS VS DCIT [2016] 49 ITR (TRIB) 4 7 (ITAT [DEL]). (B.3). FOR EASE OF REFERENCE, THE WRITTEN SUBMISSIO NS FILED BY THE ASSESSEE ARE REPRODUCED AS UNDER:- DATE OF HEARING:-29.09.2016 S.NO. PARTICULARS PAGE 1. RETURNED INCOME RS.41,97,398.00 ITR ENCLOSED ASSESSED INCOME U/S 143(3) RS.52,74,330.00 ON 19-1 2-2007 ASSTT ORDER RECTIFIED U/S 154 RS.50,89,020.00 ON 10-03-2008 RE CTIFICATION ORDER PB 1-2 72-79 81-83 2. APPEAL FILED BEFORE CIT(A)-AGAINST ORDER U/S 143 (3) IS ALLOWED TO WITHDRAW ON 23-06- 09 AS NECESSARY RECTIFICATION WAS ALLOWED IN ORDER DATED 10-03-2008 U/S 154 PB 81-83 3. (PARA 3 A) NOTICE U/S 148 IS VOID-AB-INITIO PROPOSAL SENT TO CIT FOR APPROVAL 26-03-12 GOT APPROVAL 28-03-12 NOTICE ISSUED U/S 148 29-03-12 THE REASONS WERE NOT RECORDED ON THE DATE OF ISSUAN CE OF NOTICE. THE ENTRIES IN THE ORDER SHEET WE RE MADE ON 19-09-12 BEING COMPUTERIZED ENTRIES CAN'T BE MADE IN ADVANCE / CAN 'T BE PREDICTED, IT MEANS THE ENTRIES IN ORDER SHEET WERE NEVER MADE ON 26-03-12/ 28-03-12/29-03- 12 (BEFORE THE ISSUANCE OF NOTICE U/S 148), 15-05-12/11 -09-12/19-09-12, (THE ACTIONS TAKEN THEREAFTER; EVEN THE REASONS RECORDED/SUPPLIED BEARS A DATE 29-03-12, IT MEANS REASONS WERE NEVER RECORDED ON 26-03-12, & WERE NEVER SENT TO CIT ALONG WITH FORM U/S 151 SENT FOR APPROVAL, HENCE APPROVAL OF CIT IS MEC HANICAL. SEE FORM -PARA 11 FOR REASONS = AS PER ANNEXURE ATTACHED => HOW IT IS POSSIBLE TO ATTACH THE REASONS DATED 29.03.12 TO BE ATTACHED ON LETTER SEN T TO CIT ON 26-03-12 MEANS REASONS WERE NEVER RECORDED ON OR BEFORE THE ISSUANCE OF NOTICE U/S 148. FURTHER SEE THE LAST LINES OF ''REASONS' '......ACCORDINGLY, NOTICE U/S 148 OF THE INCOME TA X ACT, 1961 IS BEING ISSUED AFTER GETTING NECESSARY APPROVAL FROM THE CO MMISSIONER OF INCOME TAX, FARIDABAD' SAFE INFERENCE CAN BE DRAWN THAT THE ABOVE REASONS WERE RECORDED WHEN THE 'REASONS' WERE DEMANDED BY ASSESSEE ON 23-04-2012 , WITH BACK DATED SINGED (29- 03-12) BY AO, AS THE ENTRIES IN THE ORDER SHEET ARE NOT SUPPORTING TO ANY OF ABOVE. OR, THE 'REASONS' WERE RECORDED AT THE TIME OF APPR OVAL, BUT THAT WERE NOT SUPPLIED TO THE ASSESSEE / OR NEVER ACTED UPON. MEA NS THERE ARE TWO COPIES OF 'REASONS', ONE WERE ATTACHED TO THE FORM SENT FOR A PPROVAL U/S 151 AND ONE SUPPLIED TO ASSESSEE. MAY BE ?? (PARA 3B) 147/148 AFTER 4-6 YEARS FROM THE END RELE VANT AY RELEVANT AY 2005-06 DATE OF NOTICE U/S 148 29-03-2012 I.E. AFTER 4 YEARS BUT BEFORE 6 YEARS FROM THE END OF RELEVANT AY 05-06. 147. INCOME ESCAPING ASSESSMENT, (FIRST PROVISO)-RE LEVANT PORTION PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE RELEVANT PB 159 PB-93 92 93 PAGE 4 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E 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: FIRST PROVISO TO SEE-147 => UNLESS ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FA ILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE T O NOTICE UNDER SECTION 142(1) OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YEAR. INFACT ALL THE FACTS FULLY DISCLOSED, I.E. WHY THE AUDIT OBJECTIONS HAS BEEN RAISED SO SPECIFICALLY, HAD THE INFORAMATI ON NOT SUBMITTED AT THE TIME OF ORIGINAL ASSESSEMENT, NO S UCH DATA BEFORE THE AUDIT TEAM, VIZ A VIZ NO AUDIT OBJECTION S -> PLACES SEVERE RESTRICTION ON THE POWER OF THE AO TO REOPEN AN ASSESSMENT ORDER PASSED UNDER SECTION 143/147, AFTER THE EXPIRY OF F OUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, EXCEPT IN CASES WHERE ASS ESSEE HAS FAILED TO FILE A RETURN OF INCOME UNDER SECTION 139, 142(1) OR UNDER SECTION 1 48 OR HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT FOR THAT ASSESSMENT YEAR. -> THE ASSESSEE HAS FILED ALL THE MATERIAL FACTS I N ITS ITR, DISCLOSED ALL THE FACTS WHILE SCRUTINY U/S 143(2)/(3) -> NO WHERE IN THE 'REASONS' STATED THAT THE ASS ESSEE FAILED TO DISCLOSED ALL THE FACTS. -> ASSTT ORDER - EVEN CLEARLY-INDICATES 'BOOKS OF ACCOUNTS PRODUCED' RELEVANT JUDICIAL PRONOUNCEMENTS ARE REFERRED IN 3B BELOW (PARA 3C) OBJECTIONS RAISED TO NOTICE U/S 148 WERE NEVER REPLIED IN FULL THE THEN AR RAISED 3 OBJECTIONS TO NOTICE U7S 148 - > LETTER DATED 21-08-12 1. TOWARDS THE INTEREST U/S 36(L)(III) OF I. T. ACT, 1961 2. REGARDING THE DUTY DRAWBACK 3. OBJECTION REGARDING THE COLUMN -12 FOR FORM SE NT TO CIT U/S 151 THE THEN AO ISSUED ORDER ON POINT-3, OF THE OBJECTI ONS ARE WERE SILENT / NEVER DISCUSSED ON POINT-1 & 2 THE FACT THAT THE AO IS SILENT ON BOTH OF THE ABOVE POINTS WERE EVEN RAISED THE THEN AR VIDE LETTER SUBMITTED ON 24-09-12. RELEVANT JUDICIAL PRONOUNCEMENTS ARE IN PARA 3C BEL OW (PARA 3D) 'REASONS' WERE PURLY BASED ON A UDIT OBJECTION S / NO APPLICATION OF MIND BY AO EVEN ORDER OF CIT(A) GIVES THE REFERENCE '....SUBSE QUENTLY THERE WERE AUDIT OBJECTIONS ON THE ISSUE OF SECTION 80IB AND DISALLO WANCE OF INTEREST AS PER SECTION 36(L)(III)......' TWO AUDIT MEMOS NO 2 & 26 ARE ATTACHED TO THE SUBMI SSION, WHICH CLEARLY SHOWS THAT THE FIGURES AND WORDS WERE BORROWED FROM THE AUDIT MEMOS. REFER ADVICE DATED 24TH JUNE 1982 => MINISTRY OF LA W TO THE MINISTRY OF FINANCE, HAS OPINED, AFTER REFERRING THE RULING OF SC,(IN EASTERN NEWPAPER SOCIETY VS CIT(1979) THAT THE '.....AUDIT OBJECTION AS WELL AS THE NOTE OF MINISTRY OF LAW CANNOT BE BASIS FOR RE-OPENING OF T HE ASSESSMENT MADE. REFER INCOME TAX SIMPLIFICATION COMMITTEE UNDER THE CHAIRMANSHIP OF JUSTICE R V EASWAR, FORMER JUDGE DHC, AND FORMER PRESIDENT OF ITAT. RELEVANT JUDICIAL PRONOUNCEMENTS ARE IN PARA 3D BEL OW ( PARA 3E) ITS CHANGE OF OPINION / NO NEW MATERIAL FA CTS WERE FOUND ON RECORD AS STATED ABOVE, THE 'REASONS' WERE SOLELY AND PURE LY BASED ON THE WORDS / FIGURES RAISED BY THE AUDIT OBJECTIONS. NOW, HOW IT IS POSSIBLE THAT AUDIT HAS RAISED SOM E OBJECTIONS, EVEN SPECIFICALLY, IN A CALCULATED MANNER, IN WORDS AND FIGURES, WITHOUT HAVING ANY MATERIAL ON RECORD. THE ASSESSEE FILED ITS PB 95-101 95 100 100 102 104 PB-146 ATTACHED ATTACHED PAGE 5 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT -> ITR (AY 2005-06) ON 29-10- 15, ALONG WITH COMPUTATION OF INCOME CLEARLY STATING THAT THE ASSESSEE HAS AVAILED DEDUC TION U/S 801B ->AUDIT REPORT IN FORM 10CCB, FOR CLAIMI NG DEDUCTION U/S 80IB ->THE ASSESSEE HAS PROVIDED EVEN UNIT WI SE BALANCE SHEETS I.E. FOR GURGAON UNIT, FARIDABAD UNIT, FILLING STATION, RETAIL DIVIS ION AND CONSOLIDATION OF ALL (PB-3 TO 68). IT CONTAIN THE DETAILS OF CAPITAL WIP, INTEREST PAI D -> EVEN UNSECURED LOANS WERE SPECIFICALL Y LOOKED BY THE THEN AO, AND HAS MADE ADDITIONS, DUE TO NON-CONFIRMATIONS. (PARA-2, PB-73) AS PER ASSTT ORDER -> '...BOOKS OF ACCOUNTS PRODUCED...' PB-73 -> ACCEPTED THE INCOME AS DECLARED RS.4197400/- AND MADE CERTAIN ADDITIONS (RS.1076931), IF THE RL IS ACCEPTED WITHOUT ANY VER IFICATION (PB-79) -> INTERESTINGLY, VIDE RECTIFICATION U/S 154/155 DA TED 10-03-08, THE SAME AO DISCUSSED THE DEDUCTION U/S 80IB IN DETAIL AND EVEN ALLOWED A DDITIONAL DEDUCTION U/S 80-IB (PB- 80-82) -> AND SURPRISINGLY, EVEN THE 'REASONS' STATES THAT '..... NO DEDUCTION WAS ADMISSIBLE U/S 80IB BUT WAS ALLOWED AT THE TIME OF ASSESSMENT / RECTIFICATION AMOUNTING TO RS.987575.....' (LAST TW O LINES OF PARA 2ND LAST AT PB-93) MEANS AT THE TIME OF ASSESSMENT U/S 143(3) 80IB WAS ALLOWED [RELEVANT JUDICIAL PRONOUNCEMENTS ARE IN PARA 3E BE LOW PB -1-2 69-71 3-68 73 73 80-82 93 HENCE IT IS REQUESTED AS FOLLOWS:- 1. CIT(A) FARIDABAD IS ERRED IN CONCLUDING THAT NO TICE U/S 148 IS VALID AND RE- ASSESSMENT PROCEEDINGS ARE VALIDLY INITIATED. THE A PPELLANT PRAYS THAT NOTICE ISSUED U/S 148 IS BAD IN LAW. THE CONDITIONS STIPULATED U/S 147 IS NOT SATISFIED. THUS IT MAY BE CONCLUDED THAT NEITHER THE REOPENING NOT THE ADDITIONS MADE B Y THE AO WAS VALID AND THEREFORE, REOPENING SHOULD BE QUASHED AND ADDITIONS SHOULD BE DELETED. 2. THE ASSESSEE IS VERY MUCH ELIGIBLE AS PER LAW TO CLAIM DEDUCTION U/S 80IB AND WHICH WAS ALLOWED IN ORIGINAL ASSESSMENT, AFTER DUE APPLICATION ON MIND, AND THE INCONSISTENT STAND OF THE REVENUE IS NOT ONLY LEGAL LY INVALID BUT ALSO CAUSING UNDUE HARDSHIP TO TAXPAYER. 3. IT MAY FAIRLY BE ADMITTED THAT NOTHING IS AVAILA BLE IN ASSESSMENT RECORD TO SHOW ANY APPROVAL/SANCTION OF AUTHORITY OF COMPETENT AUTHORI TY WITH REGARD TO 'REASONS' RECORDED. 4. THE JURISDICTIONAL REQUIREMENT TO REOPEN AN ASSE SSMENT ARE : (I) THE AO MUST HAVE REASON TO BELIEVE THAT TH E INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT. II) THE AO IN REGULAR ASSESSMENT PROCEEDINGS HAD NOT FORMED AN OPINION IN REGARD TO THE ISSUE ON WHICH THE REOPENING NOTICE IS ISSUED; AND (III) THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL NECESSARY FACTS FOR THE ASSESSMENT. AND NONE OF THE ABOVE THREE CONDITIONS PRECEDENT HA VE BEEN SATISFIED. 5. THE SATISFACTION OF AO CAN'T BE OUTSOURCED AND C AN'T BE ON THE BASIS OF AUDIT OBJECTIONS. THE LAW REQUIRES THE APPLICATION OF MIN D OF THE AO HIMSELF. SIMPLY COPY / PASTE, WITH FEW CHANGES, AND THAT NOT TO FIGURES, DO NOT A MOUNT TO APPLICATION OF MIND. 6. ON PERUSAL OF COMPUTATION SHEET ENCLOSED WITH TH E RETURN SHOWS THE COMPLETE FACTS HAVE BEEN NARRATED IN THE COMPUTATION SHEET, WHEREI N DEDUCTION U/S 80IB HAS BEEN CLAIMED AND EVEN AUDIT REPORT IN FORM 10CCB HAVE BEEN FURNI SHED. THE DEDUCTION U/'S 80IB WAS ALLOWED IN ORIGINAL ASSESSMENT U/S 143 AND FURTHER RECTIFICATION U/S 154 WAS ON THE BASIS OF ITR, INFORMATION PROVIDED, COMPUTATION SHEET, FORM 10CCB AND AO'S ATTEMPT OF REOPENING THIS CASE ON THE SAME FACTS AND FACTUAL MATERIAL IS BASED UPON CHANGE OF OPINION. 7. IT IS NOT AT ALL A CASE OF FAILURE ON THE PART O F THE ASSESSEE IN DISCLOSURE OF MATERIAL FACTS. IF AT ALL THERE WAS ANY FAILURE, IT WOULD BE ON THE PART OF AO IN NOT APPRECIATING THE FACTS AND APPLICABLE LEGAL POSITION, IN THE MANNER AS THE AO WANT NOW AT THE REASSESSMENT STAGE. 8. THE AO CANNOT BE GIVEN BENEFITS OF ITS OWN WRONG , AND PARTICULARLY IN THOSE CASES WHICH ARE COVERED BY THE FIRST PROVISIO TO SEC-147. THE POSITION OF LAW IN THIS REGARD IS WELL SETTLED ON THE BASIS OF UMPTEEN NUMBERS OF JUDGMENT S FROM HON'BLE JURISDICTIONAL HIGH PAGE 6 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT COURTS AND VARIOUS OTHER COURTS OF THE COUNTRY. FOR READY REFERENCE FEW CASES ARE LISTED BELOW. THE ASSESSEE IS PREPARED TO FURNISH ANY OF THE DETA ILS AND EVIDENCES IN SUPPORT TO ABOVE WITH PLEASURE, FOR WHICH THE ASSESSEE MAY BE APPRAI SED FOR FURTHER COMPLIANCE. JUDICIAL PRONOUNCEMENTS WRT TO PARA 3B ABOVE. JUDGEMENT JUDGEMENT NAME NUMBER 1. ASST. CIT V. ICICI SECURITIES PRIMARY DEALERSHIP LTD. [2012] 348 ITR 299 (SC). 2. DEPUTY CIT V. SIMPLEX CONCRETE PILES (I) LTD. [2 013] 358 ITR 129 (SC). 3. VOLTAS LTD. V. ASST. CIT [2012] 349 ITR 656 (BOM ). 4. RANBAXY LABORATORIES LTD. V. DEPUTY CIT [2013] 3 51 ITR 23 (DELHI). 5. ATOMSTROYEXPORT V. DEPUTY DIT (I.T.) [2014] 363 ITR 612 (BOM). 6. SAYAJI HOTELS LTD. V. ITO [2011] 339 ITR 498 (GU J). 7. BHOR INDUSTRIES LTD. V. ASST. CIT [2004] 267 ITR 161 (BOM). 17. GEMINI LEATHER STORES V. ITO [1975] 100 IT R 1 (SC). 28. HARYANA ACRYLIC MANUFACTURING CO. VS. CI T AND ANOTHER [2009] 308 ITR 38 (DEL) 29. WEL INTERTRADE P. LTD. AND ANOTHER VS. I TO [2009] 308 ITR 22 (DEL) 30. NESTLE INDIA LTD. VS.DCIT [2016] 384 ITR 334 (D EL) 31. CIT (LTU) VS. RELIANCE INDUSTRIES LTD. [2016] 3 82 ITR 574 (BOM) 32. MUNJALSHOWA LTD. VS.DCIT AND ANOTHER [2016] 382 ITR 555 (DEL) 33. NIRMAL BANG SECURITIES PVT. LTD. VS.ACIT AND OT HERS [2016] 382 ITR 93 (BOM) 34. SUN PHARMACEUTICAL INDUSTRIES LTD.(EARLIER KNOWN AS RANBAXY LABORATORIES LTD.) US.DCIT AND ANOTHER[2016] 381 ITR 387 (DEL) 35. BHARAT JAYANTILAL PATEL VS. UNION OF INDIA AND OTHERS S.C. DHARMADHIKARI AND A. K.MENON JJ. [2015] 378 ITR 596 (BOM) 37. CONSULTING ENGINEERING SERVICES (INDIA) P. LTD. US.DCIT [2015] 378 ITR 318 (DEL) 40. GLOBAL SIGNAL CABLES (INDIA) P. LTD. US.DCIT [2 014] 368 ITR 609 (DEL) 41. BBC WORLD NEWS LTD.(FORMERLY KNOWN AS BBC W ORLD LTD.) VS. ASSISTANT DIRECTOR OF INCOME-TAX [2014] 362 ITR 577 (DEL) JUDICIAL PRONOUNCEMENTS WRT TO PARA 3C ABOVE JUDGEMENT JUDGEMENT NAME NO. 21. GKN DRIVERSHAFTS (INDIA) LTD. V. ITO [2003] 259 ITR 19 (SC) 22. ALLANA COLD STORAGE LTD. V ITO [2006] 287 ITR 1 (BOM.) 23. SMT. KAMLESH SHARMA V. B.L.MEENA, ITO [2006] 28 7 ITR 337 (DELHI) 24. IOT INFRASTRUCTURE AND ENERGY SERVICES LTD. V A SST. CIT [2010] 329 ITR 547 (BOM.) JUDICIAL PRONOUNCEMENTS WRT TO PARA 3D ABOVE JUDGEMENT JUDGEMENT NAME NO. 14. CIT V. KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI). 25. VISHWANATH ENGINEERS V. ASST. CIT [2013] 352 IT R 549 (GUJ). 38. SHREE RAM BUILDERS VS. ACIT (OSD) [2015] 377 IT R 631 (GUJ) 39. RAAJRATNA METAL INDUSTRIES LTD. VS. ACIT [2015] 371 ITR 222 (GUJ) 43. XEROX MODICORP LTD. VS DCIT [2013] 350 ITR 308 (DEL) 44. ROSE SERVICED APARTMENTS PVT. LTD. AND ANOTHER VS DCIT [2012] 348 ITR 452 (DEL) JUDICIAL PRONOUNCEMENTS WRT TO PARA 3E ABOVE JUDGEMENT JUDGEMENT NAME NO. 5 ATOMSTROYEXPORT V. DEPUTY DIT (I.T.) [2014] 363 I TR 612 (BOM). 6 SAYAJI HOTELS LTD. V. ITO [2011] 339 ITR 498 (GUJ ). 8 CIT V. KELVINATOR OF INDIA LTD. [2010] 320 ITR 56 1 (SC). 9 CIT V. ICICI BANK LTD. [2012] 349 ITR 482 (BOM). 10 DIRECT INFORMATION (P.) LTD. V. ITO [2012] 349 I TR 150 (BOM) 11 NYK LINE (INDIA) LTD. V. DEPUTY CIT (NO. 2) [201 2J 346 ITR 361 (BOM). 12 RABO INDIA FINANCE LTD. V. DEPUTY CIT [2012] 346 ITR 528 (BOM). 13 NDT SYSTEMS V. ITO [2014] 363 ITR 602 (BOM) 15 RITU INVESTMENTS (P) LTD. V. DEPUTY CIT [2012] 3 45 1TR214 (DELHI). 16 AMRIT FEEDS LTD. V. ASST. CIT [2012] 344 ITR 187 . (CAL) PAGE 7 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT 18 ITO V. NAWAB MIR BARKAT ALI KHAN BAHADUR [1974J 97 ITR 239 (SC). 19 ASST. CIT V. ICICI SECURITIES PRIMARY DEALERSHIP LTD. [2012] 348 ITR 299 (SC). 20 CIT V. USHA INTERNATIONAL LTD. [2012] 348 ITR 48 5 (DELHI). 26 ABHA GUPTA VS. DCIT [2016] 385 ITR 452 (DEL) 27 ALLIED STRIPS LTD. VS. ACIT [2016] 384 ITR 424 ( DEL) 34 SUN PHARMACEUTICAL INDUSTRIES LTD.(EARLIER KNOWN AS RANBAXY LABORATORIES LTD.) VS. DCIT AND ANOTHER[2016] 381 I TR 387 (DEL) 36 CIT VS.ARVIND REMEDIES LTD. [2015] 378 ITR 547 ( MAD) 37 CONSULTING ENGINEERING SERVICES (INDIA) P. LTD. VS.DCIT [2015] 378 ITR 318 (DEL) 42 RANBAXY LABORATORIES LTD VS DCIT [2013] 351 ITR 23 (DEL) (B.4). THE LD.DR APPEARING ON BEHALF OF THE REVENU E, SUPPORTED THE ORDERS OF THE AO AND THE CIT(A) AND RELIED UPON THEIR ORDERS. (C). WE HAVE HEARD BOTH THE SIDES PATIENTLY. WE HA VE ALSO CONSIDERED ALL MATERIALS ON RECORD. THE CENTRAL ISSUE IN DISPUTE IS WHETHER IN ITIATION OF RE-ASSESSMENT PROCEEDINGS U/S 147 R.W.S. 148 OF THE ACT VIDE AFORESAID NOTICE DATED 2 9.03.2012 U/S 148 OF THE ACT IS VALID IN LAW. WE FIND THAT THE RE-ASSESSMENT PROCEEDINGS HAVE BEE N INITIATED VIDE NOTICE ISSUED ON 29.03.2012 U/S 148 OF THE ACT. THIS IS AFTER THE E XPIRY OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. ON PERUSAL OF PROVISO TO SECTION 147 OF THE ACT, IT IS OBVIOUS THAT RE- ASSESSMENT PROCEEDINGS U/S 147 R.W.S 148 OF THE ACT CANNOT BE INITIATED AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IN THE INSTANT CASE, NEITHER THE AO NOR THE CIT(A) HAS MENTIONED WHICH MATERIAL FACTS NECES SARY FOR THE ASSESSMENT OF THE ASSESSEE WERE NOT FULLY AND TRULY DISCLOSED BY THE ASSESSEE. THERE MAY BE AN AUDIT OBJECTION RAISED BY THE REVENUE AUDIT BUT EVEN THE AUDIT OBJECTION ITSE LF IS BASED ON THE MATERIAL ALREADY AVAILABLE TO THE AO AT THE TIME WHEN HE PASSED ASSE SSMENT ORDER DATED 19.12.2007 U/S 143(3) OF THE ACT/ RECTIFICATION ORDER DATED 10.03. 2008 U/S 154 OF THE ACT. IT IS NOT THE CASE OF THE AO OR THE CIT(A) THAT THE AUDIT OBJECTION WAS B ASED ON ANY FRESH MATERIAL WHICH WAS NOT ALREADY DISCLOSED BY THE ASSESSEE. ON PERUSAL OF T HE ORDERS OF THE LOWER AUTHORITIES AND ON CONSIDERATION OF MATERIALS AVAILABLE ON RECORD, WE DO NOT FIND ANY FRESH MATERIAL, NOT ALREADY DISCLOSED BY THE ASSESSEE THAT LED TO THE OBJECTION RAISED BY REVENUE AUDIT OR WHICH RESULTED IN INITIATION OF RE-ASSESSMENT PROCEEDINGS. REVENU E HAS FAILED TO MAKE A CASE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. FURTHER, THE DISPUTE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE B Y ORDERS OF CO-ORDINATE BENCH OF THE ITAT, PAGE 8 OF 8 I.T.A .NO.-1476/DEL/2014 RICHA INDUSTRIES LTD. VS ACIT DELHI IN THE CASES OF LANDBASE INDIA LTD. VS DCIT(SUPRA); UTTARANCHAL JAL VIDYUT NIGAM LTD. VS ACIT(SUPRA); UPKAR INTERNATIONAL P.LTD. VS DCIT(SUP RA); AND MAGPPIE EXPORTS VS DCIT (SUPRA). RESPECTFULLY FOLLOWING THESE PRECEDENTS AND ALSO IN VIEW OF THE FACT THAT REVENUE HAS FAILED TO MAKE OUT A CASE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY; WE HOLD THAT INITIA TION OF RE-ASSESSMENT PROCEEDINGS WAS INVALID IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. ACCORDIN GLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND ANNUL THE ASSESSMENT ORDER DATED 31.01.2013 PAS SED U/S 143(3)/147 OF THE ACT. (D). AS WE HAVE ALREADY DECIDED TO SET ASIDE THE OR DER OF THE CIT(A) AND TO ANNUL THE ASSESSMENT ORDER, OTHER ISSUES RAISED BY THE ASSESS EE IN THE APPELLATE PROCEEDINGS DO NOT REQUIRE SPECIFIC ADJUDICATION BEING ACADEMIC IN NAT URE; HENCE NOT DECIDED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 14 TH OF MARCH 2017. SD/- SD/- (KULDIP SINGH) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 14.03.2017 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI