M/s R. Systems International ltd., New Delhi V. ITO, New Delhi

ITA 1729/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8164 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 06-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI SENIOR
• Keywords: Reopening of assessment; Business income; Audit objection; Retrospective amendment; Bad and doubtful debts; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 80HHC; 234B; 115JB; 10B; 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1729/DEL./2013 (ASSESSMENT YEAR : 2004-05) M/S. R. SYSTEMS INTERNATIONAL LTD., VS. ITO, WARD 1 5 (1), B 104A, GREATER KAILASHI I, NEW DELHI. NEW DELHI. (PAN : AABCR9541B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATYEN SETHI, ADVOCATE REVENUE BY : SHRI R.S. NEGI, SENIOR DR DATE OF HEARING : 19.04.2016 DATE OF ORDER : 22.04.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. R. SYSTEMS INTERNATIONAL LTD. (HER EINAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 01.02.2013 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, NEW DEL HI QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUNDS INTER ALIA T HAT :- 1) UNDER THE CIRCUMSTANCES AND FACTS OF THE CASE, WHETHER THE AUTHORITIES BELOW WERE JUSTIFIED IN ASSUMING JURISD ICTION U/S 148 OF THE ACT; AFTER LAPSE OF MORE THAN FOUR YEARS MAINLY ON THE BASIS OF MATERIAL ALREADY HELD ON RECORD AND ON THE SIMILAR POINT WHICH HAS BEEN DULY EXAMINED AND VERIFIED AT THE TIME OF ORIG INAL ASSESSMENT ITA NO.1729/DEL./2013 2 U/S 143 (3) OF THE ACT, AND MERELY IN VIEW OF THE R EVENUE AUDIT OBJECTION. THE UNJUSTIFIED AND UNCALLED FOR ACTION IS UNTENABL E UNDER THE LAW, AS SUCH URGED AND LIABLE TO BE CANCELLED. 2) IN VIEW OF THE FACTS AND UNDER THE CIRCUMSTANCES , THE ASSESSEE COMPANY DENIED TO BE ASSESSED U/S 1471143( 3) OF THE ACT; AFTER LAPSE OF MORE THAN FOUR YEARS, MERELY ON CHAN GE OF OPINION AFTER COMPLETION OF REGULAR ASSESSMENT U/S 143(3) O F THE ACT ON THE STRENGTH OF REVENUE AUDIT OBJECTION POINTING OUT TH E MISTAKE OF LAW AND IN THE ABSENCE OF ANY FRESH MATERIAL HELD ON RE CORD. THE UNLAWFUL AND UNJUSTIFIED ACTION OF THE AO IS UR GED AND LIABLE TO BE SET ASIDE/CANCELLED. 3) UNDER THE CIRCUMSTANCES, THE LEARNED AO GROSSLY ERRED IN LAW AND ON FACTS IN CALCULATING THE BOOK PROFIT U/S 115JB OF THE ACT; AT RS.2,28,70,485/- WITH HER OWN PRESUMPTION A ND ASSUMPTIVE VIEW AS UNDER:- (A) BY ADDING LOSS UNDER THE NORMAL PROVISIONS OF THE ACT AS LOSS U/S 10B OF THE ACT RS.56,47,76 4/- (B) BY NOT ADDING EXPENSES RELATING TO INCOME TO WHICH PROVISION OF SEC.10B OF THE ACT; APPLY AS PER EXPLN.[ 1 ](T) - TOTAL EXP. AS PER P&L A/C EXPORT SALES ____44,79,02,204 X 42,87,60,787 = RS.41,41,22,550/- TOTAL SALES 46,37,34,471 (C) BY NOT REDUCING INCOME TO WHICH PROVISION RS.42,87,60,787/- OF SEC.10B OF THE ACT; APPLY (EXPORT SALES) EXPLN.[1](II) IT IS PRAYED THAT THE APPARENT ADJUSTMENT AS PROVID ED UNDER EXPLN.[1](F) AS IN ITEM NO. 3(B) AND [1](II) TO SUB -SEC. 2 OF SEC.115JB OF THE ACT AS IN ITEM NO. 3(C) HEREINABOV E; MAY KINDLY DIRECTED TO BE MADE WHILE COMPUTING BOOK PROFIT U/S . 115JB OF THE ACT, IN CASE ACTION OF ASSUMING JURISDICTION UNDER THE PROVISION OF SEC.148 OF THE ACT IS LEGALLY FOUND TO BE JUSTIFIED UNDER THE LAW. 4) THE CIT(A) ALSO ERRED IN LAW AND ON FACTS IN UPH OLDING THE ACTION OF CHARGING INTEREST U/S 234B OF THE ACT; AT RS.3,83,499/-, ON THE BASIS OF BOOK PROFIT COMPUTED IN PURSUANT TO RETROSPECTIVE AMENDMENT BY THE FINANCE ACT, 2009 W.R.E.F U/S 115J B OF THE ACT AND ALSO ERRED IN CHARGING INTEREST U/S 234D OF THE ACT; OF RS.5,59,592/-. THE ARBITRARY ACTION IS URGED AND LI ABLE TO BE CANCELLED. ITA NO.1729/DEL./2013 3 5) THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH/ADDITIONAL GROUNDS OF APPEAL AND/OR WITHDRAW, MODIFY ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE : ASSES SMENT OF THE ASSESSEE WAS COMPLETED FOR THE ASSESSMENT YEAR 2004 -05 DECLARING NET LOSS OF RS.47,53,665/- UNDER SECTION 143 (3) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) IN DECEMBER 2006 AN D THEREAFTER NOTICE U/S 148 OF THE ACT ALONG WITH REASONS FOR RE OPENING OF ASSESSMENT WAS SERVED UPON THE ASSESSEE ON 30.03.20 11 AND CONSEQUENTLY, SHRI NARENDER NATH, CA PUT APPEARANC E AND PLEADED THAT THE RETURN ORIGINALLY FILED BY THE ASSESSEE MA Y BE TREATED AS COMPLIANCE TO THE NOTICE U/S 148 OF THE ACT. 3. THE AO OBSERVED THAT AS PER THE RECORD, THE ASSE SSEE HAS TAX LIABILITY U/S 115JB OF THE ACT ON THE BOOK PROFIT O F RS.1,36,64,830/- WHICH HAS EARLIER BEEN CHARGED TO TAX. HOWEVER, TH E ASSESSEE CHALLENGED THE SAME ON THE GROUND THAT CLAUSE (I) T O EXPLANATION 1 TO SECTION 115JB OF THE ACT WAS NOT IN EXISTENT, TH OUGH AMENDMENT HAS RETROSPECTIVE EFFECT W.E.F. 01.04.2001, THE NOT ICE U/S 148 OF THE ACT IS NOT VALID. THE AO NOTICED THAT AS PER PROFI T & LOSS ACCOUNT, THE ASSESSEE HAS SHOWN RS.1,67,74,508/- AS PROVISIO N FOR DIMINUTION OF THE VALUE OF THE INVESTMENT, WHICH IS ADDED BACK AS PER CLAUSE (I) OF EXPLANATION 1 OF SECTION 115JB OF THE ACT FOR ITA NO.1729/DEL./2013 4 CALCULATING THE BOOK PROFIT. THE AO ALSO NOTICED T HAT THE INCOME/EXPENDITURE RELATING TO ANY INCOME TO WHICH SECTION 10B APPLIES HAS NOT BEEN ADJUSTED IN THE BOOK PROFIT OF THE ASSESSEE, WHO HAS SHOWN A LOSS OF RS.56,47,764/- ON ACCOUNT O F BUSINESS ELIGIBLE FOR CLAIM OF DEDUCTION U/S 10B OF THE ACT AND THE SAME IS LIABLE TO BE ADDED WHILE COMPUTING THE BOOK PROFIT OF THE ASSESSEE COMPANY. CONSEQUENTLY, THE AO MADE AN ADDITION OF RS.2,28,70,485/- ON ACCOUNT OF BOOK PROFIT U/S 115J B OF THE ACT. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) WHO HAS PARTLY ALLOWED THE APPEAL VIDE IMPUGNED ORDER. FEE LING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ORDER CONTENDED INTER ALIA THAT THERE HAS NOT BEEN ANY FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE FULL AND TRUE MATER IAL FACTS AT THE TIME OF FILING THE RETURN ON ACCOUNT OF OMISSION TO COMPUTE BOOK PROFIT AT RS.1,36,64,830/-; THAT THE AO HAS ERRED I N REOPENING THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ITA NO.1729/DEL./2013 5 ASSESSMENT YEAR ON THE BASIS OF RETROSPECTIVE AMEND MENT THAT THE REOPENING OF THE ASSESSMENT ON THE BASIS OF AUDIT O BJECTION IS NOT ADMISSIBLE; THAT THE AO HAS ASSUMED THE JURISDICTIO N MERELY ON THE BASIS OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER LAW; THAT THE CIT HAS NOT APPLIED HIS MIND BEFORE ACCORDING A PPROVAL TO REOPEN THE ASSESSMENT. HOWEVER, ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIED UPON THE ORDERS PASSED BY THE AO AS WELL AS LD. CIT (A). 7. UNDISPUTEDLY, ASSESSMENT OF THE ASSESSEE WAS COM PLETED U/S 143(3) AT A LOSS OF RS.47,53,665/- FOR THE ASSESSME NT YEAR 2004-05 IN DECEMBER 2006 AND ASSESSMENT WAS REOPENED VIDE N OTICE DATED 30.03.2011 U/S 148 OF THE ACT I.E. AFTER A PERIOD O F FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. IT IS ALSO NOT DIS PUTED THAT REASSESSMENT HAS BEEN MADE VIDE IMPUGNED ORDER ON T HE BASIS OF RETROSPECTIVE AMENDMENT OF SECTION 115JB. 8. THE FIRST QUESTION ARISES FOR DETERMINATION IS AS TO WHETHER THERE HAS BEEN ANY FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULL AND TRUE MATERIAL FACTS AT THE TIME OF FILING THE R ETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION? 9. THE AO RECORDED REASONS FOR REASON TO BELIEVE TH AT INCOME HAS ESCAPED ASSESSMENT AS UNDER :- ITA NO.1729/DEL./2013 6 'THE ASSESSMENT OF M/S R SYSTEMS INTERNATIONAL LTD. FOR THE ASSESSMENT YEAR 2004-05 WAS COMPLETED AFTER SCRUTIN Y IN DECEMBER 2006 DETERMINING A LOSS OF RS.47,53,665/-. ON VERIFYING THE RECORDS, IT IS SEEN THAT THE ASSESSEE HAD TAX L IABILITY UNDER SECTION 115JB ON THE BOOK PROFIT OF RS.1,36,64,830 /-, HOWEVER, THE TAX UNDER THE SAID PROVISION WAS NOT CHARGED .. THUS, THE ASSESSEE HAS FAILED TO DISCLOSE ALL MATER IAL FACTS TRULY AND FULLY THAT WERE NECESSARY FOR ASSESSMENT IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 10. A BARE PERUSAL OF THE ASSESSMENT ORDER GOES TO PROVE THAT THE AO ONLY AFTER PERUSAL OF THE PROFIT AND LOSS ACCOUN T HAS NOTICED THAT THE ASSESSEE HAS SHOWN RS.1,67,74,508/- AS PRO VISION FOR DIMINUTION IN THE VALUE OF INVESTMENT AND HELD THAT THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT IS TO BE ADDED BACK BY INVOKING THE PROVISIONS CONTAINED UNDER CLAUSE (I) OF EXPLANATION 1 OF SECTION 115JB OF THE ACT WHILE CALCULATING THE B OOK PROFIT. SECONDLY, THE AO NOTICED THAT THE ASSESSEE HAS SHOW N A LOSS OF RS.56,47,764/- ON ACCOUNT OF BUSINESS ELIGIBLE FOR CLAIM OF DEDUCTION U/S 10B OF THE ACT AND HELD THAT THE SAME IS NOT TO BE ADJUSTED IN THE BOOK PROFIT OF THE ASSESSEE. THIRD LY, THE AO NOTICED THAT AS PER PROFIT & LOSS ACCOUNT, ASSESSEE HAS DEB ITED RS.37,57,891/- AS PROVISION FOR DOUBTFUL DEBTS AND ADVANCES BUT THE AO HELD THAT THE SAME BEING UNASCERTAINED LIABILITY IS TO BE ADDED BACK WHILE COMPUTING THE BOOK PROFIT AND PROCEEDED TO COMPUTE ITA NO.1729/DEL./2013 7 THE BOOK PROFIT OF THE ASSESSEE UNDER AMENDED PROVI SIONS OF SECTION 115JB AS UNDER :- NET PROFIT (AS PER P&L A/C) RS. 5,77,346/- ADD 1) PROVISION FOR INCOME TAX RS. 2,50,000/- 2) PROVISION FOR WEALTH TAX RS. 14,398/- 3) PROVISION FOR DIMINUTION IN RS.1,67,74,508/- VALUE OF ASSETS ( PARA 3.2) 4) LOSS U/S 10B OF IT ACT (PARA 3.3) RS. 56,47, 764/- 5) PROVISION FOR DOUBTFUL DEBTS AND ADVANCES RS. 37,57,891/- LESS : 1) PROVISION FOR INCOME TAX WRITTEN RS. 17,45,2 33/- 2) PROVISION FOR DEFERRED TAX (ASSET) RS. 22,06 ,189/- BOOK PROFIT RS.2,28,70,485/- 11. A BARE PERUSAL OF THE REASONS RECORDED BY THE A O FOR REOPENING OF THE FINDINGS RETURNED IN THE ASSESSMEN T ORDER GOES TO PROVE THAT THIS IS NOT A CASE OF FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE THE FULL AND TRUE MATERIAL FACTS, RATHER I T IS A CASE WHEREIN AO WAS REQUIRED TO DETERMINE AS TO WHETHER AMENDED PROVISIONS U/S 115JB ARE APPLICABLE TO THE CASE OF THE ASSESSE E AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT. WHEN THE ASSE SSEE HAS PLACED ON RECORD PROFIT & LOSS ACCOUNT, BOOKS OF ACCOUNT, AUDITED BALANCE SHEET, ON THE BASIS OF WHICH ASSESSMENT U/S 143(3) HAS BEEN COMPLETED, HE CANNOT BE FAULTED MERELY BY RECORDING THAT, THE ASSESSEE HAS NOT DISCLOSED FULL AND TRUE MATERIAL F ACTS . ITA NO.1729/DEL./2013 8 12. HONBLE JURISDICTIONAL HIGH COURT IN JUDGMENT C ITED AS ATMA RAM PROPERTIES PVT. LTD. VS. DCIT - 343 ITR 14 1 AND SWAROVSKI INDIA (P.) LTD. VS. DCIT - (2014) 368 ITR 601 (DEL.) HELD THAT MERE RECORDING OF REASON FOR REOPENING TH AT THE ASSESSEE HAS FAILED TO DISCLOSE FULL AND TRUE FACTS, IS NOT SUFFICIENT FOR REOPENING THE ASSESSMENT IN A CASE COVERED BY FIRST PROVISO TO SECTION 147 OF THE ACT UNLESS AO EXPLAINS AS TO WHY AND HOW THE ASSESSEE HAD FAILED TO MAKE FULL AND TRUE DISCLOSUR E OF THE MATERIAL FACTS. IN THE INSTANT CASE, THE AO HAS NOT SPECIFI CALLY INDICATED AS TO HOW AND WHAT MATERIAL FACTS HAS NOT BEEN DISCLOS ED BY THE ASSESSEE. MORE SO, UNDISPUTEDLY WHEN THE ASSESSEE HAS PLACED ON RECORD PROFIT & LOSS ACCOUNT, BOOKS OF ACCOUNT, AUD ITED BALANCE SHEET, TAX AUDIT REPORT AND CERTIFICATE IN FORM 29B DURING SCRUTINY OF ITS ASSESSMENT WHICH WAS COMPLETED U/S 143(3) BY THE AO AFTER APPLYING HIS MIND, WE ARE OF THE CONSIDERED VIEW TH AT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL L AND TRUE MATERIAL FACTS SUFFICIENT TO REOPEN THE CASE UNDER FIRST PRO VISO TO SECTION 147 OF THE ACT. 13. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IS, AS TO WHETHER THE ASSESSMENT CAN BE REOPENED AFTER THE EX PIRY OF FOUR YEARS FROM EXPIRY OF ASSESSMENT YEAR ON THE BASIS O F THE RETROSPECTIVE AMENDMENT? ITA NO.1729/DEL./2013 9 14. LD. AR FOR THE ASSESSEE BY RELYING UPON THE JUD GMENT CITED AS DIL LTD. VS. ACIT (2012) 343 ITR 296 (BOM.) CONTENDED THAT THE AO IS NOT EMPOWERED TO REOPEN THE ASSESSME NT AFTER EXPIRY OF FOUR YEARS ON THE BASIS OF RETROSPECTIVE AMENDME NT. 15. HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DIL LTD. (SUPRA) HELD AS UNDER :- SECTION 115JB, READ WITH SECTION 147, OF THE INCOM E-TAX ACT, 1961 - MINIMUM ALTERNATE TAX - NON-DISCLOSURE OF PR IMARY FACTS - ASSESSMENT YEAR 2004-05 - FOR ASSESSMENT YEAR 2004- 05, ASSESSING OFFICER COMPLETED ASSESSMENT OF ASSESSEE ON 30-8-2006 AND COMPUTED BOOK PROFIT UNDER SECTION 115JB AT A C ERTAIN AMOUNT - SUBSEQUENTLY, ASSESSING OFFICER REOPENED SAID ASS ESSMENT ON 8- 3-2011 - REASONS FOR REOPENING ASSESSMENT WERE TO E FFECT THAT WHILE COMPUTING BOOK PROFIT (I) AMOUNT SET ASIDE AS PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT, (II) AMOUNTS SET ASIDE TO PROVISIONS MADE FOR MEETING GRATUITY AND SUPERANNUA TION LIABILITIES, AND (III) AMOUNT OF BUSINESS DEVELOPME NT EXPENDITURE, HAD NOT BEEN ADDED BACK TO BOOK PROFIT - WHETHER SI NCE REASONS RECORDED BY ASSESSING OFFICER, IN FACT, MERELY INDI CATED A REASON TO BELIEVE THAT INCOME OF ASSESSEE HAD ESCAPED ASSESSM ENT AND THERE WAS NO REFERENCE WHATSOEVER TO FORMATION OF AN OPIN ION THAT THERE WAS A FAILURE ON PART OF ASSESSEE TO FULLY AND TRUL Y DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, REOPENING OF ASSESSMENT BEYOND PERIOD OF FOUR YEARS WAS CONTRARY TO LAW - H ELD, YES [IN FAVOUR OF ASSESSEE] 16. RATIO OF THE JUDGMENT (SUPRA) IS DULY APPLICABL E TO THE FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE IN THE INSTAN T CASE ALSO, THE AO HAS COMPLETED ASSESSMENT OF ASSESSEE U/S 143(3) BY COMPUTING THE BOOK PROFIT U/S 115JB AT RS.(-)1,42,73,435/- BU T REOPENED THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS BY MERELY RECORDING THAT, ON VERIFYING THE RECORDS, IT IS SEEN THAT THE ASSE SSEE HAD TAX LIABILITY U/S 115JB ON BOOK PROFIT TO FRS.1,36,64,8 30/-, HOWEVER, TAX ITA NO.1729/DEL./2013 10 UNDER THE SAID PROVISION WAS NOT CHARGED.. THE OMI SSION RESULTED IN SHORT LEVY OF RS.10.71 LAKH. 17. HONBLE JURISDICTIONAL HIGH COURT IN JUDGMENT C ITED AS CIT VS. SIL INVESTMENTS LTD. (2011) 339 ITR 166 HAS ALSO DEALT WITH IDENTICAL ISSUE AS TO WHETHER ASSESSMENT CAN BE REOPENED ON THE BASIS OF RETROSPECTIVE AMENDMENT AFTER THE EXPIRY O F FOUR YEARS AND ANSWERED IN THE NEGATIVE BY MAKING FOLLOWING OB SERVATIONS :- SECTION 147/148 READ WITH SECTION 80HHC OF THE INC OME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - NON-DISCLOSURE OF PRIMARY FACTS - ASSESSMENT YEARS 2001-02 AND 2002-03 - IN C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE'S CLAIM FOR DEDUCT ION UNDER SECTION 80HHC WAS ALLOWED - AFTER EXPIRY OF FOUR YE ARS FROM END OF RELEVANT ASSESSMENT YEAR AN AMENDMENT TO SECTION 80HHC WAS BROUGHT ABOUT BY WAY OF TAXATION LAWS (AMENDMENT) A CT, 2005 WITH RETROSPECTIVE EFFECT FROM 1.4.1998 - IN TERMS OF SAID AMENDMENT, CERTAIN CONDITIONS WERE TO BE FULFILLED FOR ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC IN RESPECT OF DUTY ENTITLEMENT PASS BOOK SCHEME WHERE TURNOVER OF ASSESSEE WAS MOR E THAN RS. 10 CRORES. - IT WAS AN ADMITTED POSITION THAT THOSE CONDITIONS WERE NOT THERE IN 'RELEVANT SECTION AT TIME WHEN ASSESSE E FILED RETURN OR EVEN WHEN ORIGINAL ASSESSMENTS WERE MADE - IT WAS A LSO NOT DISPUTED THAT THE ORIGINAL ASSESSMENTS HAD BEEN COM PLETED PRIOR TO FOUR YEARS OF THEIR REOPENING AND, THEREFORE, THE N OTICES UN DE R SECTION 148 WERE ISSUED BY INVOKING THE PROVISO TO SECTION 147 - ASSESSEE CHALLENGED INITIATION OF REASSESSMENT PROC EEDINGS - TRIBUNAL, ON AN EXAMINATION OF MATERIAL ON RECORD, CONCLUDED THAT ALL RELEVANT FACTS WERE AVAILABLE ON RECORD AND THA T IT COULD NOT BE SAID THAT AT TIME WHEN ASSESSEE FILED RETURN, HE HA D FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT BECAUSE AMENDMENT WHICH WAS INTRODUCED RETROSPECTIV ELY WAS NOT THERE AT ALL - ACCORDINGLY, REASSESSMENT PROCEEDING S WERE SET ASIDE - WHETHER, ON FACTS, TRIBUNAL HAD RIGHTLY CONCLUDED THAT PROVISO TO SECTION 147 COULD NOT BE INVOKED MERELY BECAUSE THE RE WAS AN AMENDMENT IN FUTURE WHICH WAS INTRODUCED RETROSPECT IVELY AND COVERED PERIOD IN QUESTION - HELD, YES - WHETHER, T HEREFORE, IMPUGNED ORDER OF TRIBUNAL WAS TO BE CONFIRMED - HE LD, YES ITA NO.1729/DEL./2013 11 18. SO, BY APPLYING THE LAW LAID DOWN BY THE HONBL E HIGH COURT IN JUDGMENTS, DIL LTD. VS. ACIT AND CIT VS. SIL INVESTMENTS LTD. (SUPRA) DISCUSSED IN THE PRECEDING PARAS, WE ARE OF THE CONSIDERED OPINION THAT ASSESSMENT CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS ON THE BASIS OF RETROSPECTIVE AMENDMENT FROM THE END OF THE ASSESSMENT YEAR. 19. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IS, AS TO WHETHER AO CAN REOPEN THE ASSESSMENT ON THE BASIS O F MERE CHANGE OF OPINION? 20. AS WE HAVE ALREADY DISCUSSED IN THE PRECEDING P ARAS THAT THE ASSESSMENT OF THE ASSESSEE WAS DULY ACCEPTED BY THE AO U/S 143(3) AND AGAIN AFTER EXPIRY OF FOUR YEARS, ASSUMED JURIS DICTION TO REOPEN THE ASSESSMENT UNDER AMENDED PROVISIONS CONTAINED U /S 115JB WHICH IS NOT PERMISSIBLE UNDER LAW. IDENTICAL ISS UE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF MADHUKAR KHOSLA VS. ACIT - 354 ITR 356 WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAS ALSO FOLLOWED ITS OWN DECISION RENDERED IN THE CASE TITLED AS CIT VS. ORIENT CRAFT LTD ., THE OPERATIVE PART OF THE JUDGMENT (SUPRA) IS REPRODUCE D AS UNDER :- THE ARGUMENT OF THE REVENUE THAT AN INTIMATION CAN NOT BE EQUATED TO AN ASSESSMENT, RELYING UPON CERTAIN OBSE RVATIONS OF THE SUPREME COURT IN RAJESH JHAVERI (SUPRA) WOUL D ALSO APPEAR TO BE SELF-DEFEATING, BECAUSE IF AN 'INTIMAT ION' IS NOT ITA NO.1729/DEL./2013 12 AN 'ASSESSMENT' THEN IT CAN NEVER BE SUBJECTED TO S ECTION 147 PROCEEDINGS, FOR, THAT SECTION COVERS ONLY AN 'ASSE SSMENT' AND WE WONDER IF THE REVENUE WOULD BE PREPARED TO CONCE DE THAT POSITION. IT IS NOBODY'S CASE THAT AN 'INTIMATION' CANNOT BE SUBJECTED TO SECTION 147 PROCEEDINGS; ALL THAT IS C ONTENDED BY THE ASSESSEE, AND QUITE RIGHTLY, IS THAT IF THE REV ENUE WANTS TO INVOKE SECTION 147 IT SHOULD PLAY BY THE RULES OF T HAT SECTION AND CANNOT BOG DOWN. IN OTHER WORDS, THE EXPRESSION 'REASON TO BELIEVE' CANNOT HAVE TWO DIFFERENT STANDARDS OR SETS OF MEANING, ONE APPLICABLE WHERE THE ASSESSMENT WAS EA RLIER MADE UNDER SECTION 143(3) AND ANOTHER APPLICABLE WH ERE AN INTIMATION WAS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THAT IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOT WITHSTANDING THAT THE ARGUMENT OF 'CHANGE OF OPINION' IS NOT AVA ILABLE TO HIM, IT WOULD STILL BE OPEN TO HIM TO CONTEST THE R EOPENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIE VE OR THAT THE ALLEGED REASON TO BELIEVE IS NOT RELEVANT FOR T HE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESC APED ASSESSMENT. IN DOING SO, IT IS FURTHER OPEN TO THE ASSESSEE TO CHALLENGE THE REASONS RECORDED UNDER SECTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS SET IN T HE VARIOUS JUDICIAL PRONOUNCEMENTS.' 21. FOLLOWING THE LAW LAID DOWN BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE JUDGMENT, MADHUKAR KHOSLA VS. ACIT (SUPRA) DISCUSSED ABOVE, WE ARE OF THE CONSIDERED V IEW THAT ASSUMING OF JURISDICTION BY THE AO IN THIS CASE IS BAD IN LAW FOR THE REASONS INTER ALIA THAT WHEN THE ASSESSEE HAD SPECI FICALLY PLACED ON RECORD PROFIT AND LOSS ACCOUNT AND BOOKS OF ACCOUNT , AUDITED BALANCE SHEETS, TAX AUDIT REPORT AND CERTIFICATE IN FORM NO.29B IN RESPONSE TO THE QUERY RAISED BY THE AO DURING THE A SSESSMENT PROCEEDINGS THAT, AS TO WHY ASSESSMENT BE NOT MADE AT THE BOOK PROFIT U/S 115JB OF THE ACT, THE ASSESSEE HAS DULY EXPLAINED THE ITA NO.1729/DEL./2013 13 WORKING OF THE BOOK PROFIT AND IT CERTAINLY AMOUNTS TO CHANGE OF OPINION. 22. LASTLY, IT IS CONTENDED BY THE LD. AR FOR THE A SSESSEE THAT CIT HAS NOT APPLIED HIS MIND WHILE ACCORDING APPROV AL FOR REOPENING AND RELIED UPON JUDGMENT CITED AS VIJAY RAMESHBHAI GUPTA VS. ACIT (2013) 32 TAXMAN.COM 41 (GUJ.) . A BARE PERUSAL OF THE ORDER PASSED BY THE CIT ACCORDING AP PROVAL FOR REOPENING GOES TO PROVE THAT HE HAS ACCORDED THE AP PROVAL IN MECHANICAL MANNER WITHOUT APPLYING HIS MIND PARTICU LARLY WHEN AO HIMSELF HAS NOT ENUNCIATED THE REASONS EXCEPT QU OTING THE LANGUAGE OF SECTION 147, THE APPROVAL ACCORDED BY C IT IS NOT SUSTAINABLE. IDENTICAL ISSUE HAS BEEN DECIDED BY T HE HONBLE HIGH COURT OF GUJARAT IN THE JUDGMENT, VIJAY RAMESHBHAI GUPTA VS. ACIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT WHERE COMMI SSIONER APPROVED SUGGESTIONS MADE BY THE AUDIT PARTY, SUCH APPROVAL COULD NOT BE SEEN AS SUBSTANTIAL COMPLIANCE OF SECTION 15 1 WHERE NOTICE FOR REOPENING WAS ISSUED AFTER A PERIOD OF FOUR YEA RS FROM END OF THE ASSESSMENT YEAR. JUDGMENT (SUPRA) IS APPLICABL E TO THE FACTS AND CIRCUMSTANCES OF THIS CASE. MOREOVER, ALL THE THREE ADJUSTMENTS OF RS.1,67,74,508/-, RS.56,47,764/- AND RS.37,57,89 1/- ON ACCOUNT OF PROVISION OF DIMINUTION OF VALUE OF ASSETS, LOSS U/S 10B AND PROVISION FOR DOUBTFUL DEBTS AND ADVANCES RESPECTIV ELY HAVE BEEN ITA NO.1729/DEL./2013 14 MADE BY INVOKING THE RETROSPECTIVE AMENDMENTS MADE TO SECTION 115JB WHICH IS NOT PERMISSIBLE AS HAS ALREADY BEEN DISCUSSED BY US IN THE PRECEDING PARAS. 23. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE HE REBY ALLOW THE PRESENT APPEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF APRIL, 2016. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESDIENT JUDICIAL MEMBER DATED THE 22 ND DAY OF APRIL, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.