DCIT, Circle - 8, Kolkata, Kolkata V. M/s. E. I. H. Ltd., Kolkata

ITA 1742/KOL/2008

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3209 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 03-06-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 08-09-2008
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Assessee Lawyers: A K GUPTA; R N BAJORIA SRAR
• Keywords: Business income; Depreciation; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1742/KOL/2008, 847/KOL/2009 & 347/KOL/2011 ASSESSMENT YEARS:1999-00. 2001-02 & 2002-03 DCIT, CIRCLE-8, AAYAKAR BHAVAN, P-7, CHOWRINGHEE SQ. 611- 69,KOLKATA 700 001 / V/S . M/S. E.I.H. LTD., 4, MANGOE LANE, KOLKATA 700 001 [PAN NO.AAACE 6898B ] /APPELLANT .. /RESPONDENT C.O. NO.54/KOL/2009 (A/O ITA NO.847/KOL/2009) C.O. NO.22/KOL/2011 (A/O ITA NO.347/KOL/2011) ASSESSMENT YEARS: 2001-02 & 2002-03 M/S. E.I.H. LTD., 4, MANGOE LANE, KOLKATA 700 001 / V/S . DCIT, CIRCLE-8, AAYAKAR BHAVAN, P-7, CHOWRINGHEE SQ. 611-69, KOLKATA 700 001 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI R.N. BAJORIA, SR-AR & SHRI A.K. GUPTA, AR /BY REVENUE SHRI L.K.S. DEHIYA, CIT-DR /DATE OF HEARING 05-06-2013 ! /DATE OF PRONOUNCEMENT 31-07-2013 ' ' ' ' /O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 2 THREE APPEALS FILED BY REVENUE AND TWO CROSS OBJECT IONS FILED BY ASSESSEE ARE AGAINST THE DIFFERENT ORDERS OF COMMISSIONER OF IN COME-TAX(APPEALS)-VIII, XVI, KOLKATA DATED 25-08-2008,17-03-2009 AND 30-11-2010 PERTAINING TO ASSESSMENT YEARS 1999-00, 2001-02 AND 2002-03 RESPECTIVELY. ASSESSME NTS WERE FRAMED SEPARATELY BY DCIT, CIRCLE-8, KOLKATA VIDE HIS ORDERS DATED 29.12 .2006, 07.11.2007 AND 31.12.2009 U/S. 147/143(3) OF THE INCOME-TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT. ALL THESE ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.1742/KO L/2008 FOR A.Y. 99-00. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) QUASHING THE RE-ASSESSMENT PROCEEDINGS INITIATED BY ASSESSING OFFICER U/S. 147 R.W.S. 148 OF THE ACT ON THE GROUND THAT AO WAS UNABLE FIN D ANY NEW MATERIAL WHICH WERE NOT DISCLOSED BY THE ASSESSEE EARLIER. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PUBL IC LIMITED COMPANY ENGAGED IN THE BUSINESS OF RUNNING LUXURIOUS HOTELS OF INTERNA TIONAL STANDARDS IN MAJOR CITIES OF INDIA. ORIGINALLY, ASSESSMENT WAS COMPLETED U/S. 14 3(3) OF THE ACT ON 26-03-2002. IN THIS ASSESSMENT ORDER DEDUCTION U/S. 80HHD AND 80IA OF THE ACT WERE ALLOWED TO THE ASSESSEE TO THE EXTENT OF RS.48,98,74,299/- AND RS. 3,18,83,094/- RESPECTIVELY. SUBSEQUENTLY, ASSESSMENT WAS RE-OPENED BY ISSUING N OTICE U/S. 148 OF THE ACT DATED 09-03-2006. THE REASONS RECORDED BY AO DATED 01-03- 2006 READ AS UNDER: M/S. EIH LTD. ASSESSMENT YEAR 1999-2000 PAN NO. AAACE 6898B 01.03.2006 THE ASSESSMENT FOR THE YEAR WAS ORIGINAL LY COMPLETED U/S. 143(3) ON 26.03.2002 AT A TOTAL INCOME OF RS.44,43,74,840/ -. THE ASSESSMENT WAS REVISED U/S. 251/154/143(3) ON 21.05.2004 AT A TOTA L INCOME OF RS.32,98,80,396/-. ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 3 IN THE ORIGINAL ASSESSMENT THE DEDUCTIONS U/S. 80HH D OF RS.48,98,74,299/- AND U/S. 80IA OF RS.3,18,83,094/- WERE ALLOWED. SUBSEQU ENTLY, IN THE APPEAL EFFECT ORDER THE DEDUCTION U/S. 80HHD WAS ALLOWED AS PER R EVISED COMPUTATION AT RS.35,60,58,711/- AND U/S. 80IA AS PER ORIGINAL ASS ESSMENT AT RS.3,18,83,094/-. IT APPEARS FROM THE PROFIT & LOSS ACCOUNT THAT AN A MOUNT OF RS.37,00,00,000/- WAS TRANSFERRED TO PROFIT AND LOSS ACCOUNT FOR THE YEAR AFTER ARRIVING NET PROFIT OUT OF RESERVES BUT NOT INCLUDED IN THE COMP UTATION OF TOTAL INCOME WHICH APPEARS TO BE AN UNDER ASSESSMENT ON INCOME BY RS.3 4,70,37,961/-, THE AMOUNT OF RESERVE CREATED DURING FINANCIAL YEAR 1997-98 RE LEVANT TO ASSESSMENT YEAR 1998-99. BESIDE, ABOVE THERE WAS ANOTHER OMISSION IN ALLOWIN G DEDUCTION U/S. 80IA OF I.T. ACT DURING ALLOWING THE DEDUCTION U/S. 80IA OF RS.3,18,83,094/- @ 30% ON THE PROFIT FROM OBEROI HOTEL, BANGALORE OF RS.10,62 ,76,981/- WHICH INCLUDES TOTAL BUSINESS INCOME ON ASSESSEE TAKEN INTO CONSID ERATION IN ALLOWING DEDUCTION U/S. 80HHD OF THE I.T. ACT BUT DID NOT EX CLUDE PROFITS OF OBERIO HOTEL, BANGALORE IN THE COMPUTATION OF THE AMOUNT O F DEDUCTION U/S. 80IA OF THE I.T. ACT WHICH WAS CONSIDERED IN THE COMPUTATIO N OF DEDUCTION U/S. 80HHD OF THE I.T. ACT. IN VIEW OF ABOVE, I HAVE REASON TO BELIEVE THAT BY REASONS OF OMISSION OR FAILURE ON THE PART OF ASSESS-COMPANY TO MAKE THE RETURN OF INCOME FOR THE YEAR U/S. 139 OF THE I.T. ACT TRULY OR CORRECTLY DISCLOSING A LL MATERIALS FACTS NECESSARY FOR THEIR ASSESSMENT FOR THE YEAR WHICH HAS INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER DURING THE COURSE OF RE-ASSES SMENT PROCEEDINGS NOTICED THAT ASSESSEE CLAIMED DEDUCTION U/S. 80IA OF THE ACT AMO UNTING TO RS.3,18,83,094/- IN RESPECT OF PROFIT FROM BANGALORE UNIT BUT WHILE CLA IMING DEDUCTION U/S. 80HHD OF THE ACT IT DID NOT EXCLUDE ITS INCOME FROM BANGALORE UN IT, ON WHICH DEDUCTION U/S. 80IA OF THE ACT WAS CLAIMED. ACCORDINGLY, AO RE-COMPUTED THE DEDUCTION U/S. 80HHD OF THE ACT BY OBSERVING AS UNDER:- THE ASSESSEE HAS ATTEMPTED TO SEGREGATE ITS PROFIT S FROM THE SAME ENTERPRISE FOR THE PURPOSE OF CLAIMING DEDUCTION U/ S. 80HHD AND U/S. 80IA. THE ACT DOES NOT ALLOW SUCH SEGREGATION AND I T IS CLEAR THAT IF DEDUCTION IS CLAIMED U/S. 80HHD ON PROFITS OF A UNI T DEDUCTION UNDER ANY OTHER SECTION OF CHAPTER VIA OF THE INCOME TAX ACT, 1961 UNDER THE HEADING C DEDUCTION IN RESPECT OF CERTAIN INCOMES CANNOT BE ALLOWED ON THE PROFITS OF THE SAME UNIT. ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 4 AND DEDUCTION U/S 80HHD OF THE ACT WAS ALLOWED AT R S.33,05,30,050/- AS AGAINST ORIGINALLY ALLOWED U/S. 143(3) OF THE ACT VIDE DATE D 26-03-2002 AT RS.48,98,74,299/-. EFFECTIVELY, THE DEDUCTION U/S. 80HHD OF THE ACT WA S WITHDRAWN AT RS.3,12,33,429/-. AGGRIEVED AGAINST RE-OPENING, ASSESSEE PREFERRED AP PEAL BEFORE CIT(A). 4. CIT(A) QUASHED THE RE-OPENING VIDE PARA-2.3 OF H IS ORDER, WHICH IS AS UNDER:- 2.3 I HAVE CONSIDERED THE SUBMISSION OF LD. AUTHOR IZED REPRESENTATIVE OF THE APPELLANT AND ALSO CONSIDERED THE ORDERS UNDER SEC. 143(3) AND 147/143(3) DATED 26.03.2002 AND 29.12.2006 RESPECTI VELY, THE FACTS OF THE CASE AND THE DECISIONS CITED. I HAVE ALSO GONE THRO UGH THE RELEVANT PROVISIONS OF THE ACT. THE FACTS THAT HAVE EMERGED IN THE INSTANT CASE AR E AS UNDER:- 1. CLAIMS FOR DEDUCTIONS UNDER SECTIONS, 80HHD AND 80- IA WERE MADE IN THE ORIGINAL RETURN OF INCOME SUPPORTED BY STATUTORY / RELEVANT DOCUMENTS AND COMPUTATIONS 2. THE CLAIMS WERE EXAMINED AND GRANTED BY THE ASSESSI NG OFFICER IN THE ASSESSMENT ORDER PASSED UNDER SEC. 143(3) OF THE ACT AFTER SCRUTINY OF THE DOCUMENTS FILED WITH THE RETURN. 3. THE NOTICE UNDER SEC. 148 WAS ISSUED AFTER EXPIRY O F 4 YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERA TION. 4. THE RECORDED REASONS DID NOT SPECIFY THE MATERIAL F ACTS WHICH THE APPELLANT HAD FAILED TO DISCLOSE AT THE ASSESSM ENT SAGE THAT LED TO THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX. 5. THERE WAS NO NEW INFORMATION THAT WAS NOT ALREADY A VAILABLE TO THE ASSESSING OFFICER. ALSO, THERE WAS NO CHANGE IN LEGAL POSITION. 6. THE SUCCEEDING ASSESSING OFFICER ON THE SAME SET OF FACTS HAD TAKEN A VIEW WHICH WAS DIFFERENT FROM THE PROCEEDIN G ASSESSING OFFICER ON THE INTERPRETATION OF THE SAME PROVISION S OF LAW. THE PROVISO TO SECTION 147 IS MATERIAL FOR OUR PURP OSE. IT WILL BE EVIDENT FROM THE SAID PROVISO THAT IF AN ASSESSMENT IS MADE UNDER SEC. 143(3) OF THE ACT FOR ANY ASSESSMENT YEAR, NO ACTION CAN BE T AKEN FOR REOPENING SUCH ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI ALS FACTS NECESSARY FOR THE ASSESSMENT YEAR. THERE IS NO DISPUTE THAT THE ASSES SMENT IN THIS CASE WAS ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 5 MADE UNDER SEC. 143 OF THE ACT. THE ONLY QUESTION I S, THEREFORE, WHETHER THE APPELLANT AT THE TIME OF ORIGINAL ASSESSMENT DI SCLOSED FULLY AND TRULY ALL MATERIAL ACTS NECESSARY FOR THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE APPELLANT CLAIMED DEDUCTION UNDER SEC. 80HHD AN D 90-IA OF THE ACT IN THE ORIGINAL RETURN OF INCOME AND FOR THAT PURPO SE SUPPORTING DOCUMENTS WERE FILED WITH THE RETURN AND THE SAME H AD BEEN EXAMINED AND ALLOWED BY THE ASSESSING OFFICER AFTER APPLICATION OF PROPER MIND AND KNOWLEDGE. THIS HAS BEEN RECORDED IN THE ASSESSMENT ORDER ITSELF. IT IS UNDISPUTED HAST THE PRIMARY FACTS WERE BEFORE THE A SSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT UNDER SEC. 143(3) FOR T HE ASSESSMENT YEAR 1999-2000. IT IS EVIDENT FROM THE ABOVEMENTIONED FACT THAT IT IS NOT THE CASE OF ASSESSING OFFICER THAT ANY INCOME ESCAPED ASSESSMEN T ON ACCOUNT OF OMISSION OR FAILU9E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIALS FACTS NECESSARY FOR THE PURPOSE OF AS SESSMENT. IN THE OPINION OF THE PRESENT ASSESSING OFFICER THE DEDUCTION UNDER SEC. 80HHD AND 80-IA OF THE ACT ALLOWED BY HIS PREDECESS OR WAS NOTED PROPERLY DONE, RESULTING IN UNDERASSESSMENT AND WOU LD CONSTITUTE GROUNDS FOR REOPENING THE ASSESSMENT. IT IS A CASE OF CHANG E OF OPINION BETWEEN THE TWO ASSESSING OFFICER SO FAR AS GRANTING DEDUCTION UNDER SEC. 80HHD AND 80-IA OF THE ACT IS CONCERNED. BUT THE QUESTION IS WHETHER SUCH UNDERASSESSMENT WAS DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AD TRULY ALL THE MATERIAL FACTS OR N OT. FROM THE ASSESSMENT ORDER IT WILL BE EVIDENT THAT ALL THE PARTICULARS H AD BEEN DISCLOSED IN COURSE OF THE ORIGINAL ASSESSMENT. THE AUTHORIZED R EPRESENTATIVE HAD RIGHTLY POINTED OUT THAT IN THE RECORDED REASONS NO THING HAD BEEN MENTIONED AS TO WHAT OTHER MATERIAL FACTS THE ASSES SEE SHOULD HAVE DISCLOSED BEFORE THE ASSESSING OFFICER SO THAT THER E WOULD NOT HAVE BEEN ANY ESCAPEMENT OF INCOME CHARGEABLE TO TAX. IN VIEW OF ABOVE, I AM OF THE OPINION THAT THE APPE LLANT HAD DISCLOSED ALL PRIMARY FACTS BEFORE THE ASSESSING OFFICER AT THE T IME OF ORIGINAL ASSESSMENT AND THERE WAS NO OMISSION OR FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREF ORE, IN VIEW OF THE ABOVE THE PROCEEDINGS INITIATED UNDER SEC. 147 CANNOT BE JUSTIFIED AND ACCORDINGLY TREATED AS INVALID AND VOID AB-INITIO. ACCORDINGLY, GROUND NOS. 1 & 2 ARE ALLOWED. AGGRIEVED, REVENUE CAME IN SECOND APPEAL BEFORE US AGAINST THE ORDER OF CIT(A). ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 6 5. BEFORE US, LD. SR-CIT, DR, SHRI L.K.S. DEHIYA AR GUED ON BEHALF OF REVENUE. HE, FIRST OF ALL, TOOK US TO THE REASONS RECORDED B Y ASSESSING OFFICER FOR RE-OPENING OF ASSESSMENT U/S. 147 OF THE ACT. HE STATED THAT AO H AS RECORDED CATEGORICAL REASONS THAT TRANSFER AND RESERVES TO PROFIT AND LOSS ACCOU NT AMOUNTING TO RS.37 CRORES WAS NOT INCLUDED IN THE COMPUTATION OF TOTAL INCOME FOR WHI CH REASON INCOME ESCAPED ASSESSMENT. FURTHER, HE STATED THAT THERE IS OMISSI ON IN ALLOWING DEDUCTION U/S. 80-IA OF THE ACT THAT PROFIT FROM OBERIO HOTEL, BANGALORE UNIT, ON WHICH DEDUCTION WAS ALREADY ALLOWED WAS AGAIN INCLUDED IN THE TOTAL BUS INESS INCOME FOR ALLOWING DEDUCTION U/S. 80HHD OF THE ACT. LD. CIT-DR TOOK US TO PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE IN ITS PAPER BOOK AT PAGE 11 AND HE REFERRED TO ITEMS OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31-03-2003 THAT THESE I TEMS, WHICH ARE APPROPRIATION AFTER TAX INCLUDES THE AMOUNT OF FOREIGN EXCHANGE EARNING S AT RS.37 CRORES. HE STATED THAT BELOW THE PROFIT FOR TAXATION ITEMS, THE FOLLOWING ARE AS UNDER:- ADD TRANSFER FROM RESERVES DEBENTURE REDEMPTION 34500,000 86,200,000 FOREIGN EXCHANGE EARMOMGS 370,000,000 450.000,000 LD. CIT-DR IN VIEW OF THE ABOVE, STATED THAT IN RE- ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CONSEQUENTLY MADE DISALLOWANCE OF DEDUC TION U/S. 80HHD OF THE ACT EFFECTIVELY AT RS.3,12,33,439/-. FURTHER, LD. CIT-D R STATED THAT EVEN FOREIGN EXCHANGE EARNINGS OF RS.37 CRORES HAS NOT BEEN INCLUDED IN T HE COMPUTATION OF INCOME DESPITE THE FACT THAT ITS UTILIZATION HAD NOT BEEN MADE FOR THE PURPOSES SPECIFIED IN SECTION 80HHD(4) & (5) OF THE ACT, WHICH READS AS UNDER:- 80HHD (1) (2) . (3) (4) THE AMOUNT CREDITED TO THE RESERVE ACCOUNT UNDER CL AUSE (B) OF SUB-SECTION (1), SHALL BE UTILIZED BY THE ASSESSEE BEFORE THE E XPIRY OF A PERIOD OF FIVE YEARS NEXT FOLLOWING THE PREVIOUS YEAR IN WHICH THE AMOUNT WAS CREDITED FOR THE FOLLOWING PURPOSES, NAMELY :- ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 7 (A) CONSTRUCTION OF NEW HOTELS APPROVED BY THE PRESCRIB ED AUTHORITY IN THIS BEHALF OR EXPANSION OF FACILITIES IN EXISTING HOTEL S ALREADY SO APPROVED; (B) PURCHASE OF NEW CARS AND NEW COACHES BY TOUR OPERAT ORS ALREADY SO APPROVED OR BY TRAVEL AGENTS; (C) PURCHASE O SPORTS EQUIPMENT FOR MOUNTAINEERING, TRE KKING, GOLF, RIVER- RAFTING AND OTHER SPORTS IN OR ON WATER; (D) CONSTRUCTION OF CONFERENCE OR CONVENTION CENTRES ; (E) PROVISION OF SUCH NEW FACILITIES FOR THE GROWTH OF INDIAN TOURISM AS THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE, SPECIFY IN THIS BEHALF; (F) SUBSCRIPTION TO EQUITY SHARES FORMING PART OF ANY E LIGIBLE ISSUE OF CAPITAL MADE BY A PUBLIC COMPANY;] PROVIDED THAT WHERE ANY OF THE ACTIVITIES REFERRED TO IN CLAUSES (A) TO [(F)] WOULD RESULT IN CREATION OF ANY ASSET OWNED BY THE ASSESSEE OUTSIDE INDIA, SUCH ASSET SHOULD BE CREATED ONLY AFTER OBTAINING PRIOR APPROVAL OF THE PRESCRIBED AUTHORITY. (5) WHERE ANY AMOUNT CREDITED TO THE RESERVE ACCOUNT UN DER CLAUSE (B) OF SUB- SECTION (1):- (A) HAS BEEN UTILISED FOR ANY PURPOSE OTHER THAN THOSE REFERRED TO IN SUB- SECTION (4), THE AMOUNT SO UTILIZED; OR (B) HAS NOT BEEN UTILIZE D IN THE MANNER SPECIFIED IN S UB-SECTION (4), THE AMOUNT NOT SO UTILIZED, SHALL BE DEEMED TO BE THE PROFITS, - (I) IN A CASE REFERRED TO IN CLAUSE (A) IN THE YEAR IN WHICH THE AMOUNT WAS SO UTILISED; OR (II) IN A CASE REFERRED TO IN CLAUSE (B), IN THE YEAR IM MEDIATELY FOLLOWING THE PERIOD OF FIVE YEARS SPECIFIED IN SUB-SECTION (4), 6. LD. CIT-DR ARGUED THAT EVEN NOW THERE IS NO DETA ILS AVAILABLE OR FILED BY ASSESSEE REGARDING UTILIZATION OF THIS FOREIGN EXCH ANGE EARNINGS ON WHICH DEDUCTION U/S. 80HHD OF THE ACT WAS CLAIMED, THAT THE SAME WA S USED FOR CONSTRUCTION OF NEW HOTEL OR UTILIZED FOR EXPANSION FACILITIES IN EXIST ING HOTELS ALREADY APPROVED. EVEN THESE ARE NOT USED FOR CONSTRUCTION OF CONFERENCE O R CONVENTION CENTRE AS PRESCRIBED IN THE PROVISIONS OF SECTION 80HHD (4) OF THE ACT. HE REFERRED TO PROVISIONS OF SECTION 80HHD(5) OF THE ACT THAT IN CASE THE FOREIGN EXCHAN GE EARNINGS ARE NOT UTILIZED IN THE MANNER SPECIFIED IN SUB-SECTION (4), THE AMOUNTS, N OT SO UTILIZED, SHALL BE DEEMED TO ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 8 THE PROFIT OF THE ASSESSEE, AS PER THE PROVISIONS O F SECTION 80HHD(5) OF THE ACT. LD. CIT-DR MAINLY EMPHASIZED THAT FOREIGN EXCHANGE EARN INGS, DURING THE YEAR UNDER CONSIDERATION HAVE NOT BEEN UTILISED FOR THE PURPOS E SPECIFIED IN SECTION 80HHD (4) OF THE ACT. AND HENCE, THE REOPENING MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT NEEDS TO BE UPHELD. FURTHER, LD. DR REFERRED TO THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT DATED 26-03-200 2, WHICH IS ENCLOSED IN ASSESSEE PAPER BOOK AT PAGES 23 TO 30. THERE IS NO REFERENCE OF THIS RESERVE CREATED OF RS.37 CRORES WHETHER THE SAME IS UTILIZED BY THE ASSESSEE OR NOT AND EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS NOT FLE D ANY DETAILS OF UTILIZATION FOR THE ABOVE EARNING OF FOREIGN EXCHANGE. FOR THIS, LD. CI T-DR REFERRED PARA-17 OF THE ASSESSMENT ORDER WHICH READS AS UNDER:- 17. THE ASSESSEE CLAIMED DEDUCTION U/S. 80HHD TO T HE TUNE OF RS.36,96,25,490/-. IN THE SAID CALCU9LATION FOR DED UCTION THE ASSESSEE CLAIMED RECEIPT OF RS.272,54,15,600/- IN FOREIGN CURRENCY. IT IS NOTICED THAT THE RECEIPT IN FOREIGN CURRENCY WAS INCLUSIVE OF SALE PROCEEDS OF RS.25,9894,752/- REPRESENTING SALE OF FOOD AND DRINKS AT FLIGHTS, WH ICH CANNOT BE TREATED AS SALES IN HOTELS. THEREFORE, NECESSARY MODIFICATION HAS BE EN DONE WHILE ALLOWING DEDUCTION U/S. 8HHD. AND HE REFERRED TO DEDUCTION ALLOWED BY THE ASSESSI NG OFFICER AND RELEVANT DEDUCTION ALLOWED, READS AS UNDER:- (III) U/S. 80HHD (AS PER ANNEXURE RS.48,98,74,299/- A ENCLOSED) (IV) U/S. 80IA (AS PER COMPUTATION FILED BY THE ASSESSEE) RS.3,18,83,09 4/- RS.52,21,27,243/- LD. CIT-DR STATED THAT THERE ARE NO DETAILS OF UTIL IZATION OF FOREIGN EXCHANGE EARNINGS AND THIS IS SUFFICIENT REASON FOR REOPENING OF ASSE SSMENT. THE ASSESSING OFFICER WHILE RECORDING REASON HAS REASONABLE BELIEF THAT THERE I S ESCAPEMENT OF INCOME IN VIEW OF THE ABOVE STATED REASONS, WHICH ARE SUPPORTED BY TH E ARGUMENT. 7. ON THE OTHER HAND, LD. SR-AR, SHRI R. N. BAJORIA ARGUED ON BEHALF OF ASSESSEE. HE FIRST TOOK US TO REASON RECORDED THAT AMOUNT OF FOREIGN EXCHANGE EARNINGS WAS ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 9 TRANSFERRED TO PROFIT AND LOSS ACCOUNT FOR THE YEAR AFTER ARRIVING AT NET PROFIT OUT OF RESERVES BUT THE SAME WAS UTILIZED FOR THE PURPOSE MENTIONED IN SECTION 80HHD(4) AND THEN REFERRED TO THE ACCOUNT OF THE ASSESSEE, W HEREIN UTILIZATION HAS BEEN ENCLOSED AT ASSESSEES PAPER BOOK PAGE-12 I.E., SCHEDULE OF DEPRECIATION AS PER INCOME TAX RULE 1962 FOR YEAR ENDED AS ON 31-03-1999 FOR THE A Y 1999-00. HE STATED THAT THE TOTAL ADDITION IN BUILDING, FURNITURE AND FIXTURE, PLANT AND MACHINERY AND COMPUTERS ABOVE SIX MONTHS IS RS.20,24,09,711/- AND BELOW SIX MONTHS IS RS.18,74,51,612/-. THE RELEVANT DETAILS ARE ENCLOSED IN THIS DEPRECIATION CHART AND THIS SUFFICIENT COMPLIANCE U/S. 80HHD OF THE ACT. ACCORDING TO HIM, THESE DETA ILS WERE AVAILABLE BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMEN T PROCEEDINGS AND ASSESSEE HAS FILED THESE DETAILS ALONG WITH RETURN OF INCOME AND AO HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER EXAMINING ALL THESE DOCUMENTS AND PA SSED A SPEAKING ORDER. LD. AR OF THE ASSESSEE FROM THE REASONS RECORDED STATED THAT THE REASONS RECORDED BY AO FOR INITIATING RE-ASSESSMENT PROCEEDINGS, FIRSTLY, THE DEDUCTION U/S. 80HHD AND 80-IA OF THE ACT CANNOT BE CLAIMED ON THE BUSINESS PROFIT OF THE SAME UNIT I.E., THE OBERIO HOTEL, BANGALORE AND SECONDLY, AS A RESULT OF TRANS FER OF RS.37 CRORES FROM THE RESERVE TO PROFIT AND LOSS ACCOUNT THERE CANNOT BE UNDER AS SESSMENT OF INCOME TO THE EXTENT OF RS.34,70,37,961/-. ACCORDING TO HIM, THE AO ALLEGED THAT UNDER-ASSESSMENT WAS DUE TO REASONS OF OMISSION OR FAILURE ON THE PART OF TH E ASSESSEE TO MAKE THE RETURN OF INCOME U/S. 139(1) OF THE ACT DISCLOSING ALL MATERI AL FACT NECESSARY FOR ITS ASSESSMENT TRULY AND CORRECTLY. ACCORDING TO LD. AR OF THE ASS ESSEE, THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR OMISSION ON THE PART OF THE ASSESSEE. HE, ONLY OBSERVED THAT FROM RECORDS AND PROFIT AND LOSS ACCOUNT, WHICH WAS SUBJECT-MATTER OF ASSESSMENT ORIGINALLY, WERE BEFORE THE AO. ACCORDING TO HIM, I N THE PRESENT CASE, ALL MATERIAL FACTS WERE NECESSARY FOR COMPLETING ASSESSMENT FOR RELEVANT AY WERE FILED ALONG WITH RETURN AND WERE AVAILABLE ON THE RECORD OF THE AO. AS REGARDS THE CLAIM OF DEDUCTION U/S.80HHD OF THE ACT, A CERTIFICATE FROM THE CHARTE RED ACCOUNTANT IN THE FORM OF 10CCA WAS FILED WITH THE RETURN OF INCOME AND SIMIL ARLY THE COMPUTATION OF DEDUCTION U/S. 80-IA OF THE ACT WAS ALSO FILED. THE AO IN ORIGINAL ASSESSMENT ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80HHD A ND 80-IA OF THE ACT AFTER EXAMINING THE RELEVANT DETAILS AND EVEN THE COMPUTA TION MADE BY AO IN RESPECT OF THE ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 10 CLAIM OF THESE DEDUCTIONS ARE AS PER THE PROVISIONS OF CHAPTER-VI REFERRED TO NOW BY THE AO WERE VERY MUCH AVAILABLE AT THE TIME OF ORIG INAL ASSESSMENT ALSO. LD. AR OF THE ASSESSEE FURTHER STATED THAT THE AO COULD NOT B RING ANY NEW MATERIAL WHICH WAS NOT DISCLOSED EARLIER NOR THERE WAS AN ERROR IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME. REGARDING NONE-INCLUSION OF THE AMOUNT OF FOREIGN EXCHANGE EARNING IN RESERVE ACCOUNT OF RS.37 CRORES , WHICH IS PART OF PROFIT AND LOSS ACCOUNT AR OF THE ASSESSEE STATED THAT AS LAID DOWN IN SECTION 80HHD(4)(A) OF THE ACT, THE AMOUNT UTILIZED FOR EXPANSION OF FACILITIE S IN EXISTING HOTELS HAVING EXCEEDED TO RS.37 CRORES I.E., RS.34,17,37,961/-, THE ENTIRE AMOUNT ALLOWING IN FOREIGN EXCHANGE EARNING RESERVE AMOUNT AS ON 31-03-1998 WAS TRANSFE RRED TO PROFIT AND LOSS ACCOUNT. ACCORDING TO HIM, THE DETAILS OF ADDITION TO HOTEL BUILDING, PLANT AND MACHINERY, FURNITURE AND FIXTURES IN HOTEL ROOMS WERE FILED IN TAX AUDIT REPORT AND DEPRECIATION CHART FORMING PART OF ACCOUNT. LD. AR OF THE ASSESS EE TOOK US TO PROVISO TO SECTION 147 OF THE ACT AND THE RELEVANT PROVISO, WHICH READ S AS UNDER:- IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY B E, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTIO N AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) . ACCORDING TO HIM, AS PER THE PROVISO, IF AN ASSESSM ENT IS MADE U/S. 143(3) OF THE ACT FOR THE RELEVANT AY UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH AY BY REASON OF THE FAILURE ON THE PART OF ASS ESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THAT AY. ACCORDING TO HIM, THAT THERE IS NO DISPUTE THAT THE ASSESSMENT IN THIS CASE WAS MADE U/S. 143(3) OF THE ACT AND THE ONLY QUESTION IS, THEREFORE WHETHER THE ASSESSEE AT THE TIME OF ORIGI NAL ASSESSMENT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT FOR THE AY IN QUESTION. THE REASONS RECORDED HAVE ALREADY BEEN EXTRACTED. LD. A R OF THE ASSESSEE STATED THAT IT IS ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 11 EVIDENT FROM THE RECORDED REASONS THAT IT IS NOT TH E CASE OF THE AO THAT ANY INCOME ESCAPED ASSESSMENT ON ACCOUNT OF THE OMISSION OR TH E FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE AY 1999-00. THE TENOR OF THE REASONS RECORDED INDICATES THAT TH E AO, WHO MADE THE ORIGINAL ASSESSMENT, ERRED IN ALLOWING CERTAIN DEDUCTIONS, W HICH ACCORDING TO HIS SUCCESSOR IN OFFICE, RESULTED IN UNDER-ASSESSMENT AND WOULD CONS TITUTE GROUNDS FOR REOPENING THE ASSESSMENT. BUT THE QUESTION IS WHETHER SUCH UNDER- ASSESSMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS OR NOT. FROM ASSESSMENT ORDER, IT WILL BE EVIDENT THAT ALL PARTI CULARS HAD BEEN SHOWN AND / OR DISCLOSED BY ASSESSEE IN THE COURSE OF ORIGINAL ASS ESSMENT. WHERE PRIMARY FACTS NECESSARY FOR ASSESSMENT ARE FULLY AND TRULY DISCLO SED TO AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND NO NEW MATERIAL HAS COME ON RECORD NOR ANY NEW INFORMATION HAS BEEN RECEIVED, IT IS MERELY A FRESH APPLICATION OF MIND BY AO TO SAME SET OF FACTS AND IN SUCH A SITUATION, IT WOULD BE A CASE OF MERE CHANGE OF OPINION WHICH DOES NOT PROVIDE JUSTIFICATION FOR INITIATION OF PR OCEEDINGS U/S. 147 OF THE ACT. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM REASONS RECORDED THAT AMOUN T OF FOREIGN EXCHANGE EARNINGS WAS TRANSFERRED TO PROFIT AND LOSS ACCOUNT FOR THE YEAR AFTER ARRIVING AT NET PROFIT OUT OF RESERVES BUT THE SAME WAS UTILIZED FOR THE PURPOSE MENTIONED IN SECTION 80HHD(4) AS IS EVIDENT FROM ASSESSEES PAPER BOOK PAGE-12 I.E., SCHEDULE OF DEPRECIATION AS PER INCOME TAX RULE 1962 FOR YEAR ENDED AS ON 31-03-199 9 FOR THE AY 1999-00, AS REFERRED BY LD. COUNSEL FOR THE ASSESSEE. WE FIND F ROM THE DEPRECIATION CHART THAT TOTAL ADDITION IN BUILDING, FURNITURE AND FIXTURE, PLANT AND MACHINERY AND COMPUTERS ABOVE SIX MONTHS IS RS.20,24,09,711/- AND BELOW SIX MONTH S IS RS.18,74,51,612/-. THE RELEVANT DETAILS ARE ENCLOSED IN THIS DEPRECIATION CHART AND THIS SUFFICIENT COMPLIANCE U/S. 80HHD OF THE ACT. WE HAVE GONE THROUGH THE ORI GINAL ASSESSMENT ORDER AND FIND THAT THESE DETAILS WERE AVAILABLE BEFORE THE ASSESS ING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND ASSESSEE HAS FILED THESE DETAILS ALONG WITH RETURN OF INCOME AND AO HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER EXAMINING ALL THESE DOCUMENTS AND PASSED A SPEAKING ORDER. WE FIND FROM THE REASONS R ECORDED BY AO FOR INITIATING RE- ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 12 ASSESSMENT PROCEEDINGS, FIRSTLY, THE DEDUCTION U/S. 80HHD AND 80-IA OF THE ACT CANNOT BE CLAIMED ON THE BUSINESS PROFIT OF THE SAME UNIT I.E., THE OBERIO HOTEL, BANGALORE AND SECONDLY, AS A RESULT OF TRANSFER OF RS.37 CRORES F ROM THE RESERVE TO PROFIT AND LOSS ACCOUNT THERE CANNOT BE UNDER ASSESSMENT OF INCOME TO THE EXTENT OF RS.34,70,37,961/-. THE AO ALLEGED THAT UNDER-ASSESSMENT WAS DUE TO REA SONS OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE THE RETURN OF INCOME U /S. 139(1) OF THE ACT DISCLOSING ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT TRULY A ND CORRECTLY. WE FIND THAT THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR OMISSION ON THE PART OF THE ASSESSEE. HE ONLY OBSERVED THAT FROM RECORDS AND PROFIT AND LOSS ACCO UNT, WHICH WAS SUBJECT-MATTER OF ASSESSMENT ORIGINALLY, WERE BEFORE THE AO. IN THE P RESENT CASE, ALL MATERIAL FACTS WERE NECESSARY FOR COMPLETING ASSESSMENT FOR RELEVANT AY WERE FILED ALONG WITH RETURN AND WERE AVAILABLE ON THE RECORD OF THE AO. AS REGARDS THE CLAIM OF DEDUCTION U/S.80HHD OF THE ACT, A CERTIFICATE FROM THE CHARTERED ACCOUN TANT IN THE FORM OF 10CCA WAS FILED WITH THE RETURN OF INCOME AND SIMILARLY THE COMPUTA TION OF DEDUCTION U/S. 80-IA OF THE ACT WAS ALSO FILED. THE AO IN ORIGINAL ASSESSMENT A LLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80HHD AND 80-IA OF THE ACT AFTER EXAM INING THE RELEVANT DETAILS AND EVEN THE COMPUTATION MADE BY AO IN RESPECT OF THE C LAIM OF THESE DEDUCTIONS ARE AS PER THE PROVISIONS OF CHAPTER-VI REFERRED TO NOW BY THE AO WERE VERY MUCH AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT ALSO. FROM THE F ACTS OF THE CASE IT IS ANALYSED THAT THE AO COULD NOT BRING ANY NEW MATERIAL WHICH WAS NOT D ISCLOSED EARLIER NOR THERE WAS AN ERROR IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME. REGARDING NONE-INCLUSION OF THE AMOUNT OF FOREIGN EXCHANGE EA RNING IN RESERVE ACCOUNT OF RS.37 CRORES, WHICH IS PART OF PROFIT AND LOSS ACCOUNT AS LAID DOWN IN SECTION 80HHD(4)(A) OF THE ACT, THE AMOUNT UTILIZED FOR EXPANSION OF FACIL ITIES IN EXISTING HOTELS HAVING EXCEEDED TO RS.37 CRORES I.E., RS.34,17,37,961/-, T HE ENTIRE AMOUNT ALLOWING IN FOREIGN EXCHANGE EARNING RESERVE AMOUNT AS ON 31-03-1998 WA S TRANSFERRED TO PROFIT AND LOSS ACCOUNT. THE DETAILS OF ADDITION TO HOTEL BUILDING, PLANT AND MACHINERY, FURNITURE AND FIXTURES IN HOTEL ROOMS WERE FILED IN TAX AUDIT REP ORT AND DEPRECIATION CHART FORMING PART OF ACCOUNT. WE HAVE GONE THROUGH THE PROVISO T O SECTION 147 OF THE ACT AND FIND THAT AS PER THE PROVISO, IF AN ASSESSMENT IS MADE U /S. 143(3) OF THE ACT FOR THE RELEVANT AY UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH AY BY ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 13 REASON OF THE FAILURE ON THE PART OF ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THAT AY. EVEN THERE IS NO DISPUTE THA T THERE IS ASSESSMENT IN THIS CASE WAS MADE U/S. 143(3) OF THE ACT AND THE ONLY QUESTION I S, THEREFORE WHETHER THE ASSESSEE AT THE TIME OF ORIGINAL ASSESSMENT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE AY IN QUESTION. THE REASONS RECORDED HAVE ALREADY BEEN EXTRACTED. THERE IS NO FAILURE ON THE PART OF THE A SSESSEE AS IS EVIDENT FROM THE RECORDED REASONS THAT IT IS NOT THE CASE OF THE AO THAT ANY INCOME ESCAPED ASSESSMENT ON ACCOUNT OF THE OMISSION OR THE FAILURE ON THE PART OF THE A SSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE AY 1999-00. THE TE NOR OF THE REASONS RECORDED INDICATES THAT THE AO, WHO MADE THE ORIGINAL ASSESS MENT, ERRED IN ALLOWING CERTAIN DEDUCTIONS, WHICH ACCORDING TO HIS SUCCESSOR IN OFF ICE, RESULTED IN UNDER-ASSESSMENT AND WOULD CONSTITUTE GROUNDS FOR REOPENING THE ASSE SSMENT. BUT THE QUESTION IS WHETHER SUCH UNDER-ASSESSMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS OR NOT. FROM ASSESSMENT ORDER, IT WILL BE EVIDENT THAT ALL PARTICULARS HAD BEEN SHOWN AND / O R DISCLOSED BY ASSESSEE IN THE COURSE OF ORIGINAL ASSESSMENT. WHERE PRIMARY FACTS NECESSA RY FOR ASSESSMENT ARE FULLY AND TRULY DISCLOSED TO AO AT THE TIME OF ORIGINAL ASSES SMENT PROCEEDINGS AND NO NEW MATERIAL HAS COME ON RECORD NOR ANY NEW INFORMATION HAS BEEN RECEIVED, IT IS MERELY A FRESH APPLICATION OF MIND BY AO TO SAME SET OF FACT S AND IN SUCH A SITUATION, IT WOULD BE A CASE OF MERE CHANGE OF OPINION WHICH DOES NOT PROVIDE JUSTIFICATION FOR INITIATION OF PROCEEDINGS U/S. 147 OF THE ACT. NOW WE FIND THA T THE ISSUE IS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC), WHEREIN IT HAS BEEN HELD A S UNDER: HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETA TION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASI S OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST AL SO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REA SSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. B UT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWE R BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS PO WER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 14 GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 O F THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PA RLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WOR D 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM TH E COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODU CED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WO ULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREIN BELOW THE RELEVA NT PORTION OF CIRCULAR NO. 549 DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST.) 1, 29) , WHICH READS AS FOLLOWS: '7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO R EINTRODUCE THE EXPRESSION `REASON TO BELIEVE' IN SECTION 147.-A NUMBER OF REP RESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS `REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE `OPINION' OF THE ASSESSING OFFICER. IT WAS P OINTED OUT THAT THE MEANING OF THE EXPRESSION, `REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SEC TION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSE SSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 19 89, HAS AGAIN AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION `HAS REASON TO BELIEV E' IN PLACE OF THE WORDS `FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION '. OTHER PROVISIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME.' IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE C IT(A) HAS RIGHTLY QUASHED THE REASSESSMENT PROCEEDINGS AND WE CONFIRM THE SAME. 9. WE ALSO QUASH THE REASSESSMENT PROCEEDINGS IN OTHER TWO APPEALS SINCE THE ISSUE IS EXACTLY IDENTICAL AND FACTS ARE SAME. 10. THE CROSS OBJECTIONS FILED BY ASSESSEE ARE IN SUPPO RT OF THE ORDER OF CIT(A), HENCE WE DISMISS THE SAME AS INFRUCTUOUS. 11. IN THE RESULT, APPEALS OF REVENUE AND CROSS OBJ ECTIONS OF ASSESSEE ARE DISMISSED. ORDERS ARE PRONOUNCED IN THE OPEN COURT ON 31.07.2 013 SD/- SD/- (N.S.SAINI) 26.07.2013 (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, *DKP PRONOUNCED BY SD/- (PRAMOD KUMAR) SD/- (MAHAVIR SINGH) #$% - AM JM 31.07.2013 ITA NO.1742/K/08, 847/K/09 & 347/K/11 & CO 54/K/09, 22/K/11 A.YS. 99-00, 01-02 & 02-03 DCIT CIR-8, KOL V. M/S. E.I.H. LTD. PAGE 15 ' ' ' ' ''( ''( ''( ''( )( )( )( )( / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $$'* + / CONCERNED CIT 4. + - / CIT (A) 5. (,- '''* , '*! / DR, ITAT, KOLKATA 6. -./ 01 / GUARD FILE. BY ORD ER/ ' , 2 / 3 $ '*! ,