The ACIT, Baroda Circle-2, Baroda V. M/s. Monali Developers, Baroda

ITA 1532/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9171 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-07-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 02-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K PANDIT
• Keywords: Business expenditure; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings
• Section: 143(3); 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.1532/AHD/2005 ASSESSMENT YEAR:1996-97 DATE OF HEARING: 24.7.09 DRAFTED: 28.7.09 ACIT, BARODA, CIRCLE-2, 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE, BARODA V/S. M/S. MONALI DEVELOPERS, 2 ND FLOOR, PRESTIGE COMPLEX, RACE COURSE, CIRCLE, BARODA PAN NO.AACFM9086E (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI M.K. PANDIT, SR. DR RESPONDENT BY:- NONE O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-II, BARODA IN APPEAL NO.CAB/II- 371/04-05 DATED 14-03-2005. THE ASSESSMENT WAS FRAMED BY THE ACIT, CIRCLE-2, BA RODA U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 15-03-2004 FOR THE ASSESSMENT YEAR 1996-97. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) CANCELING THE ASSESSMENT FRAMED U/S.143(3) R.W.S 14 7 OF THE ACT BY CANCELING THE REOPENING. FOR THIS, THE REVENUE HAS RAISED THE FO LLOWING GROUND NO.1 :- 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CANCELING THE ASSESSMENT FRAMED U/S.143(3) R.W.S. 1 47 OF THE ACT HOLDING THAT THE REOPENING IS NOT JUSTIFIED AND NOTICE ISSUED U/ S.148 IS TIME BARRED, IGNORING THE PROVISIONS OF EXPLANATION-1 TO SECTION 147 OF T HE I.T. ACT., 1961. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO P ERUSED THE CASE RECORDS ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 2 INCLUDING THE ASSESSMENT ORDER AS WELL AS ORDER OF CIT(A). THE BRIEF FACTS ARE THAT THE ORIGINAL ASSESSMENT WAS FRAMED U/S.143(3) OF TH E ACT IN THIS CASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR 1996-97 O N 25-03-1999. SUBSEQUENTLY A NOTICE U/S.147 OF THE ACT WAS ISSUED TO THE ASSESSE E ON 27-03-2003 AND IN RESPONSE TO THE SAID NOTICE U/S.148 OF THE ACT THE ASSESSEE FILED RETURN OF INCOME DECLARING LOSS ASSESSED IN THE ORIGINAL ASSESSMENT ON 25-04-2 003. THE REASONS RECORDED FOR ISSUING NOTICE U/S.147 R.W.S.148 OF THE ACT AS REPR ODUCED BY THE CIT(A) IS BEING REPRODUCED AS IT IS:- IN THIS CASE, THE RETURN OF INCOME DECLARING TOTAL LOSS OF RS.1,26,890 1WAS FILED ON 27.3.1998. THE RETURN WAS PROCESSED ON 31. 3.1998. THE CASE WAS SELECTED FOR SCRUTINY AND AN ASSESSMENT WAS COMPLET ED U/S.143(3) ON 25.3.1999 AT A LOSS OF RS.1,26,000. ON VERIFICATIO N OF THE CASE RECORDS IT IS REVEALED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE PREVIOUS YEAR RELEVANT TO ASST. YEAR 1996-97. T HEREFORE, IT IS PROPOSED TO JUSTIFY THE CLAIM IN RESPECT OF VARIOUS EXPENSES DE BITED TO PROFIT AND LOSS ACCOUNT AS REVENUE EXPENDITURE. IT IS ALSO NOTICED THAT THE ASSESSEE HAS PAID INTEREST AMOUNTING TO RS.6,92,466 TO THE ICICI BANK . IT IS OBSERVED THAT THE ASSESSEE HAS NOT UTILIZED THE FOUND AGAINST WHICH T HE INTEREST PAID FOR THE PURPOSE OF BUSINESS AND IT IS PROPOSED TO DISALLOW THE INTEREST TO THE TUNE OF RS.6,92,466. THE ASSESSING OFFICER THEREAFTER FRAMED RE-ASSESSME NT AND DETERMINED TOTAL INCOME AT RS.16,28,950/- BY MAKING FOLLOWING ADDITIONS:- (I) SERVICE CHARGES FROM ICICI BANK RS.8,96,640 (II) CAR HIRE CHARGES RS. 60,000 (III) INTEREST FROM OTHERS RS.3,44,400 AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT (A) AND CHALLENGED THE RE- ASSESSMENT PROCEEDINGS BEFORE THE CIT(A). THE ASSE SSEE STATED THAT IN THE ORIGINAL RETURN OF INCOME A NOTE AS DISCLOSED THE RELEVANT F ACTS AND THE SAID NOTES READS AS UNDER:- 3. THE PREMISES LAND MARK BUILDING (UPPER SECOND F LOOR) IS RENTED TO ICICI LTD. RENT RECEIVABLE FOR THE PREMISES IS RS.74,720 PER MONTH. SIMILARLY AN EQUAL AMOUNT OF RS.74,720 IS RECEIVABLE AS SERVICE CHARGES. SERVICE CHARGES SO RECEIVABLE FOR THE PREMISES RELATE TO TH E BUILDING ITSELF WHICH IS GIVEN ON RENT AND SO IT IS A PART AND PARCEL OF THE RENT FOR THE BUILDING. THE RENT INCLUDING SERVICE CHARGES ARE THEREFORE, SHOWN UNDE R THE HEAD PROPERTY INCOME. 4. FIRST FLOOR OF THE LAND MARK BUILDING IS IN OCCU PATION OF THE FIRM AND USED FOR THE BUSINESS PURPOSE ALV OF THIS PROPERTY IS TH EREFORE NOT TAXABLE. ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 3 5. THE BUSINESS OF FIRM TO PURCHASE AND SALE THE LA NDS, TO DO THE CONSTRUCTION, TO WORK AS DEVELOPERS AND SUPERVISOR AND ALSO TO WO RK AS A CONTRACTOR. DURING THE YEAR THE FIRM HAS EARNED INTEREST INCOME, PROPE RTY INCOME AND ALSO CAR HIRING INCOME. THE FIRM CARRIED ON BUSINESS ACTIVIT IES, NEGOTIATED FOR THE PURPOSE OF PROPERTY, PAID ADVANCES AGAINST THE PURC HASE OF PROPERTY, NEGOTIATED WITH THE PROPOSED PURCHASES IN THE NEW P ROJECT AND ALSO DID THE CAR HIRING BUSINESS. THE VARIOUS EXPENSES AS PER PR OFIT AND LOSS ACCOUNT ARE THEREFORE INCURRED DURING THE COURSE OF CARRYING ON BUSINESS AND HENCE CLAIMED AS DEDUCTIONS. 6. THE INTEREST PAID AND CLAIMED IS REFERABLE TO TH E BORROWINGS WHICH HAVE BEEN UTILIZED AS INTEREST BEARING ADVANCES, INTERES T FROM WHERE IS SHOWN AS INCOME, AS WELL AS ADVANCES AGAINST THE PURCHASE OF PROPERTIES(BUSINESS PURPOSE). THE INTEREST OF RS.6,22,047 PAID TO RACHNA DEVELOPE R IS ON THE OUTSTANDING BALANCE AGAINST THE COST OF PROPERTY BEING GROUND F LOOR AND FIRST FLOOR OF LAND MARK BUILDING. THE UPPER GROUND FLOOR IS RENTED TO ICICI AND INTEREST RELATABLE TO THIS PREMISES IS CLAIMED AGAINST THE RENT INCOME . THE BALANCE AMOUNT IS RELATABLE TO THE FIRST FLOOR WHICH IS IN THE OCCUPA TION OF THE FIRM AND USED FOR THE BUSINESS PURPOSE. THE SAME IS THEREFORE CLAIMED AS BUSINESS EXPENDITURE. FURTHER THE ASSESSEE CLARIFIED THAT THE DETAILS OF ICICI ACCOUNT AND OTHERS WERE FILED BEFORE THE AO DURING THE ORIGINAL ASSESSMENT PROCEE DINGS AND THE RELEVANT DETAILS IS BEING RE-PRODUCED AS UNDER:- 1. DETAILS OF INTEREST PAID IS ENCLOSED HEREWITH. 2. COPY OF ICICI ACCOUNT IS ENCLOSED HEREWITH. THE CREDITS IN THE SAID ACCOUNT ARE RENTAL INCOME RECEIVED FROM ICICI WHICH HAVE BE EN DISCLOSED UNDER THE HEAD PROPERTY INCOME IN THE RETURN OF INCOME FIL ED. 3. COPY OF ACCOUNT OF THE PARTIES TO WHOM ADVANCES HAVE BEEN GIVEN IS ENCLOSED. DURING THE COURSE OF HEARING, EXPLANATION WAS CALLE D FOR, FOR THE CLAIM OF INTEREST PAID WHICH IS DEBITED TO THE PROFIT AND LO SS ACCOUNT FILED BEFORE YOU. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT THE FIRM H AS PAID INTEREST UNDER THE FOLLOWING HEADS (I) INTEREST TO OTHERS RS.6,22,047 (II) INTEREST ON PARTNERS CAPITAL RS.3,25,611 (III) INTEREST PAID TO ICICI BANK RS.7,50,000 OUT OF THE INTEREST PAID TO OTHERS, AMOUNTING TO RS .6,22,047, AN AMOUNT OF RS.3,33,256 HAS BEEN CLAIMED TOWARDS THE PROPERTY I NCOME. THIS INTEREST HAS BEEN PAID FOR BORROWINGS FOR THE ACQUISITION OF PRE MISES ON THE MEZANNINE FLOOR AND FIRST FLOOR OF THE LAND MARK. THE MEXANNI NE FLOOR HAS BEEN GIVEN ON RENT TO ICICI BANK AGAINST WHICH RENTAL INCOME OF R S.17,93,280 HAVE BEEN DISCLOSED IN THE COMPUTATION OF INCOME. THE FIRST F LOOR HAS BEEN USED FOR THE ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 4 BUSINESS PURPOSE AND THEREFORE, THE INTEREST RELATA BLE TO THE SAID PREMISES HAS BEEN CLAIMED AS REVENUE EXPENDITURE, ALLOWABLE UNDER THE INCOME TAX ACT. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT IT HAD S UBMITTED ALL THE RELEVANT DETAILS REQUIRED FOR ASSESSMENT PROCEEDINGS AND DISCLOSED F ULLY & TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT AND THEREFOR E THE ASSESSEE IS COVERED UNDER THE PROVISO OF THE SECTION 147 OF THE ACT, WH ICH CLEARLY STATES THAT NO ACTION UNDER THIS PROVISION CAN BE TAKEN AFTER EXPIRY OF F OUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, THE ASSESSEES CONTENTION BEFORE THE CIT(A) WAS THAT THE NOTICE ISSUED U/S.148 R.W.S. 147 OF TH E ACT IS ALMOST AFTER SEVEN YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND TH ERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY & TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE CIT(A) AFTER GOING THROUGH THE CIRCUMSTANCES AN D THE FACTS OF THE CASE QUASHED THE RE-ASSESSMENT BY GIVING FOLLOWING FINDING IN PARA-3.21 AND 3.22 AS UNDER:- 3.21 COMING TO THE APPELLANTS CASE, AS DISCUSSED EARLIER, THE AO HAS ISSUED THE NOTICE U/S.148 AFTER LAPSE OF 4 YEARS, BASED ON THE MATERIAL ALREADY AVAILABLE WITH HIM WHILE FINALIZING THE ORIGINAL AS SESSMENT U/S.143(3). THE APPELLANT NOT ONLY WHILE FILING ORIGINAL RETURN BUT ALSO DURING THE ORIGINAL ASSESSMENT PROCEEDING HAS SUBMITTED ALL THE RELEVAN T FACTS TRULY AND FULLY AND THERE IS NOTHING WHICH CAME TO THE NOTICE OF THE AO SUBSEQUENTLY. THE AO WHILE PASSING ORIGINAL ASSESSMENT HAS ACCEPTED THE FACTS AND DETAILS MADE AVAILABLE BY APPELLANT. IN OTHER WORDS, ONCE THE AO WHILE PASSING ORIGINAL ORDER HAS ALLOWED SUCH CLAIM AFTER CLING FOR NECESS ARY DETAILS AND TAXED INCOME TAKING A VIEW, THE ISSUANCE OF NOTICE U/S.14 8 AFTER LAPSE OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR TAKING DIF FERENT VIEW, IS CONTRARY TO LEGAL PRONOUNCEMENTS UNLESS THERE IS FAILURE ON THE PART OF APPELLANT TO DISCLOSE FULLY AND TRULY ALL THE RELEVANT FACTS AT THE TIME OF ORIGINAL ASSESSMENT. IT CAN BE SEEN FROM THE FOREGOING DISCUSSION THAT T HE AO WHILE PASSING ORIGINAL ASSESSMENT WAS IN POSSESSION OF ALL THE DE TAILS RELEVANT TO ASSESSMENT AND HAS ACCEPTED THE SAME WITHOUT ANY AD VERSE INFERENCE. THUS, THERE IS NO REASON FOR CALLING THE SAME DETAILS AGA IN AND RE-VERIFY THE SAME AND FRAME A DIFFERENT VIEW EITHER TO TAX SERVICE CH ARGES AS INCOME FROM OTHER SOURCES OR TO DISALLOW INTEREST CLAIM OF APPELLANT. THE SUBSEQUENT AO CANNOT TAKE ANOTHER VIEW STATING THAT THE PREDECESSOR HAS TAKEN A DIFFERENT VIEW UNLESS SOME NEW INFORMATION OR DETAILS ARE IN POSSE SSION OF THE ASSESSING OFFICER SUBSEQUENT TO FINALIZING THE ORIGINAL ASSES SMENT. 3.22 CONSIDERING THE FACT AND LEGAL PRONOUNCEMENTS I HOLD THAT THE RE-OPENING IS NOT JUSTIFIED. THE APPELLANT SUCCEEDS ON THIS GR OUND AND I HOLD THAT NOTICE ISSUED BY THE AO US.148 IS TIME BARRED AND ASSESSME NT FRAMED THEREFORE IS BEING NULL AND VOID ABB INITIO STANDS CANCELLED. ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 5 4. AFTER HEARING THE LD. DR AND GOING THROUGH THE F ACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT DURING THE COURSE OF ORIGINAL ASS ESSMENT PROCEEDINGS, THE ASSESSEE HAS DISCLOSED THE COMPLETE FACTS REGARDING SERVICE CHARGES FROM THE ICICI BANK , CAR HIRE CHARGES AND INTEREST FROM OTHERS AN D THE AO WHILE FRAMING ORIGINAL ASSESSMENT HAS ACCEPTED THE FACTS OF DETAILS FILED BY THE ASSESSEE AND AFTER GOING THROUGH THE SAME HE FRAMED ORIGINAL ASSESSMENT. THE PROVISION OF SECTION 147 PROVIDES THAT ONLY THOSE ITEMS WHICH HAVE ESCAPED A SSESSMENT AND WHICH HAVE SUBSEQUENTLY COME TO THE NOTICE OF THE ASSESSING OF FICER IN THE COURSE OF THE PROCEEDINGS MAY BE REOPENED FOR THE PURPOSE OF REAS SESSMENT. IN THIS CASE, THE ISSUE HAS BEEN CONSIDERED AND DEALT WITH AT LENGTH BY THE THEN ASSESSING OFFICER AND IT IS SUBMITTED THAT NO NEW FACTS HAVE COME TO LIGHT AFTER FINALISING THE ASSESSMENT TO JUSTIFY THE REOPENING OF THE ASSESSME NT. WE HAVE TO EXAMINE WHETHER THE ASSESSEES CASE FALLS UNDER PROVISO TO SEC.147 OR EXPLANATION TO SEC.147OF THE ACT? PROVISION OF EXPL ANATION 1 TO SEC.147 OF THE ACT IS VERY CLEAR AND FOR THE SAKE OF CLARIT Y THE SAME ARE REPRODUCED AS UNDER:- PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD W ITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. THE PROVISO TO SEC.147 VERY CLEARLY STATES THAT WHE RE ASSESSMENT U/S 143(3) HAS BEEN COMPLETED THEN NO ACTION SHALL BE T AKEN U/S 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSM ENT FOR THE REASON OF THE FAILURE ON THE PART OF ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. HON'BLE APEX COURT IN CIT V. FORAMER FRANCE [2003] 264 ITR 566 (SC) AFFIRMED THE DECISION OF HONBLE ALLAHABAD HIG H COURT IN FORAMER V. CIT [2001], 247 ITR 436, WHERE THE HONBLE ALLAH ABAD HIGH COURT HAS HELD AS UNDER:- IN OUR OPINION, WE HAVE TO SEE THE LAW PREVAILING ON THE DATE OF ISSUE OF THE NOTICE UNDER SECTION 148, I.E NOVEMBER 20, 1998. ADMITTEDLY, BY THAT DATE, THE NEW SECTION 147 HAS C OME INTO FORCE AND, HENCE, IN OUR OPINION, IT IS THE NEW SECTION 1 47 WHICH WILL ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 6 APPLY TO THE FACTS OF THE PRESENT CASE. IN THE PRE SENT CASE, THERE WAS ADMITTEDLY NO FAILURE ON THE PART OF ASSESSEE T O MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. HENCE, THE PROVISO TO THE NEW SECT ION 147 SQUARELY APPLIES, AND THE IMPUGNED NOTICES WERE BAR RED BY LIMITATION MENTIONED IN THE PROVISO. AND FINALLY THE HONBLE ALLAHABAD HIGH COURT HAS HELD AS UNDER:- ALTHOUGH WE ARE OF THE OPINION THAT THE LAW EXISTI NG ON THE DATE OF THE IMPUGNED NOTICE U/S 147/148 HAS TO BE S EEN, YET EVEN IN THE ALTERNATIVE EVEN IF WE ASSUME THAT THE LAW PRIOR TO THE INSERTION OF THE NEW SECTION 147 WILL APPLY EVEN THEN IT WILL MAKE NO DIFFERENCE SINCE EVEN UNDER THE ORI GINAL SECTION 147 NOTICE FOR REASSESSMENT COULD NOT BE GI VEN ON THE MERE CHANGE OF OPINION AS HELD IN NUMEROUS CASE S OF THE SUPREME COURT, SOME OF WHICH HAVE BEEN MENTIONE D ABOVE. SINCE THE TRIBUNAL IN THE APPEAL RELATING T O THE ASSESSEE COMPANY HAD CONSIDERED THE TRIBUNALS EARL IER DECISION IN BOUDIER CHRISTIANS CASE, IT WILL OBVIO USLY AMOUNT TO MERE CHANGE OF OPINION, AND HENCE NOTICE U/S 147/148 WOULD BE ILLEGAL. 5. SIMILARLY HONBLE DELHI HIGH COURT IN THE CASE O F JINDAL PHOTO FILMS LTD V. DY CIT [1998] 234 ITR 170 HAS HELD THA T IT CANNOT BE DISPUTED THAT DISCOVERY OF NEW AND IMPORTANT MATTER OR KNOWLEDGE OF FRESH FACTS WHICH WERE NOT PRESENT AT THE TIME OF O RIGINAL ASSESSMENT WOULD CONSTITUTE A REASON TO BELIEVE THAT ANY INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF EVEN SEC 147 (OPERATIVE FROM 1-4-1989). HERE ALSO SUCH FACTS WH ICH COULD HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER BUT WERE NOT SO DISCOVERED AT THE TIME OF ORIGINAL ASSESSMENT MAY NOT CONSTITUTE A NE W INFORMATION. IN THAT VIEW OF THE MATTER, WHERE THE ASSESSING OFFICE R HAS FORMED THE OPINION THAT THE INCOME HAS ESCAPED ASSESSMENT BECA USE HE HAS ALLOWED THE DEDUCTION UNDER SECTION 80-I WRONGLY AN D EVEN THOUGH IN RECORDING THE REASONS THE ASSESSING OFFICER HAS USE D THE PHRASE REASON TO BELIEVE, BETWEEN THE DATE OF THE ORIGIN AL ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FO RMING OF OPINION BY THE ASSESSING OFFICER, NOTHING NEW HAS HAPPENED. THERE IS NO CHANGE OF LAW. NO NEW MATERIAL HAS COME ON RECORD. NO INFORMATION HAS BEEN RECEIVED. IN SUCH CIRCUMSTANCES, IT CAN B E SAID THAT IT IS ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 7 MERELY A FRESH APPLICATION OF MIND BY THE SAME ASSE SSING OFFICER TO THE SAME SET OF FACTS. WHAT THE ASSESSING OFFICER HAS SAID ABOUT THE ORDER OF THE FIRST APPELLATE AUTHORITY WHILE RECORDING RE ASONS UNDER SECTION 147 HE COULD HAVE SAID EVEN IN THE ORIGINAL ORDER O F ASSESSMENT BECAUSE SUCH APPELLATE ORDER WAS BEFORE HIM AT THAT TIME. THUS, IT IS A CASE OF MERE CHANGE OF OPINION WHICH DOES NOT PROVI DE JURISDICTION TO THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S 1 47. 6. IN THE PRESENT CASE ALSO, THE ASSESSING OFFICER HAS ENQUIRED ABOUT VARIOUS DETAILS REGARDING CLAIM OF EXPENSES A ND THE ASSESSEE VIDE REPLY DATED 09-02-1999 AND 16-02-1999 FILED AL L THE DETAILS IN RESPECT OF INTEREST PAID AMOUNTING TO RS.6,92,466/- TO THE ICICI BANK AND ALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSEE HAS ALREADY REPLIED AT THE TIME OF ORIGINAL ASSESSMENT TO THIS QUERY AND THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION FOR CON SIDERING THIS REPLY WHICH IS VERY MUCH PART OF THE ASSESSMENT RECORD. AS THE LD DEPARTMENTAL REPRESENTATIVE REPLIED ON EXPLANATION 1 TO SEC147 OF THE ACT, FOR THIS PURPOSE AS PER THE PROVISION OF EXPLA NATION 1 TO SEC.147 PRODUCTION BEFORE THE ASSESSING OFFICER ON ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DU E DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT N ECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO TO SEC.147, IN PUTTING EXPRESSION DISCOVERY BY THE ASSESSING OFFICER WITH DUE DILIGENCE IMPLIED ANY EXPRESSION WHICH MEANS FOR CERTAIN ESTI MATE OR BOOKS OF ACCOUNT OR AGREEMENT AS PRODUCED BY THE ASSESSEE IN THE COURSE OF HIS ASSESSMENT AND THE ASSESSMENT IS ACTUALLY MADE ON T HAT BASIS BY EXPLOITING SUCH DEED OR AGREEMENT TO BE TRUE WITHIN THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT AGREEMENT WAS BOG US, HAS TO BE MADE WITHIN THE PERIOD OF 4 YEARS FROM THE END OF T HE RELEVANT ASSESSMENT YEAR AS PRESCRIBED IN THE PROVISO TO SEC .147 OF THE ACT. 7. IN VIEW OF THE ABOVE DISCUSSION OF THE FACTS AS NARRATED IN THE PRESENT CASE, WE FEEL THAT REOPENING U/S 147 DOES N OT POSTULATE ITA NO.1532/AHD/2005 A.Y. 1996-97 ACIT CIR-2 BARODA V. M/S. MONALI DEVELOPERS PAGE 8 CONFERMENT OF POWER UPON THE ASSESSING OFFICER TO I NITIATE REASSESSMENT PROCEEDINGS UPON HIS MERE CHANGE OF OP INION AND THAT ALSO BEYOND 4 YEARS. IN THE PRESENT CASE, THE ASSE SSEE IT HAS DISCLOSED ALL MATERIAL FACTS FOR ITS ASSESSMENT FOR THIS ASSESSMENT YEAR AND THERE IS NO FAILURE ON THE PART OF THE ASS ESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR IT S ASSESSMENT. IN VIEW OF THESE FACTS, WHERE THE ASSESSING OFFICER HAS FOR MED AN OPINION THAT THE INCOME HAS ESCAPED BECAUSE HE HAS ALLOWED DEDUCTION WRONGLY AND EVEN THOUGH IN RECORDING THE REASONS TH E ASSESSING OFFICER HAS USED THE PHRASE REASON TO BELIEVE, BE TWEEN THE DATE OF ORIGINAL ASSESSMENT AND THE DATE OF FORMING OF OPIN ION BY THE ASSESSING OFFICER, NOTHING NEW HAS HAPPENED. ACCOR DINGLY, ASSESSMENT REOPENED U/S 147 R/W SEC.148 IS BAD IN L AW AND HENCE REOPENING IS QUASHED. 8. AS THE ISSUE ON JURISDICTION IS DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE, WE DO NOT FEEL IT NECESSARY TO ADJUDICATE THE ISSUE ON MERITS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 04/09/2009 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SIN GH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED :04/09/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD