DCIT 1(3), MUMBAI V. UNIVERSAL FERRO & ALLIED CHEMICALS LTD, MUMBAI

ITA 1827/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3513 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A KUMBHAR
• Assessee Lawyers: V MOHAN
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Audit objection; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 1827 /MUM/201 3 : (A.Y : 200 5 - 0 6 ) DCIT-1(3), MUMBAI. VS. M/S. UNIVERSAL FERRO & ALLIED CHEMICALS LTD., LIBERTY BLDG., SIR VITHALDAS THACKERSEY MARG, MUMBAI 400 020. PAN : AAACU1697C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. MOHAN DEPARTMENT BY : SHRI A. KUMBHAR DATE OF HEARING : 12.05.2016 DATE OF PRONOUNCEMENT : 25 .05.2016 O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER 25.10.2012 FOR A.Y 2005-06 IN APPEAL NO. CIT( A)-7/IT-320/12-13 ON THE FOLLOWING GROUND. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN QUASHING THE ESCAPEMEN T OF INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.67,55,710/- W ITHIN THE MEANING OF SECTION 147 OF THE IT ACT ON THE PREMISES THAT T HERE IS CHANGE OF OPINION. HOWEVER, THE FACTS ARE OTHERWISE. THE AM OUNT OF 2 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 RS.67,55,710/- WAS TAXABLE WHICH HAS BEEN ESCAPED F ROM THE ORIGINAL ASSESSMENT MADE U/S 143(3) IN VIEW OF PROVISIONS OF SECTION 147? 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY HAD SET UP AN INDUSTRIAL UNDERTAKING TO MANUFACTURE FER RO-MANGANESE AT MANEK NAGAR, TUMSAR IN LATE 50S AND EARLY 60S. IN EARLY 80S THE ASSESSEE SET UP A PLANT FOR MANUFACTURE OF 45000 TO NNES OF FERRO MANGANESE AND THE SAID PLANT HAD THE STATUS OF BEIN G AN EXPORT ORIENTED UNIT (EOU) AND BOTH THE GOVERNMENT OF INDI A AND THE STATE GOVERNMENT GRANTED VARIOUS CONCESSIONS WHICH WERE A VAILABLE TO THE UNIT SET BEING AN EOU. BECAUSE OF CERTAIN CIRCUMST ANCES AND PENDING COURT CASES, THOUGH APPELLANT COMPANY WAS IN EXISTE NCE, BUT THE ASSESSEE HAD TO TEMPORARILY CLOSE THE OPERATIONS. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR A.Y 2005-06 ON 8.11.2005 DECLARING TOTAL LOSS OF RS.6,30,63,950 /-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) ON 21.11.2007 AT TOTAL LOSS OF RS.5,73,56,870 /-. THEREAFTER, THE ORDER WAS RECTIFIED U/S 154 ON 5.1.2010 REDUCING TH E TOTAL INCOME TO NIL AFTER SET OFF OF BROUGHT FORWARD BUSINESS LOSS. SUBSEQUENTLY, THE CASE WAS REOPENED BY ISSUING NOTICE DT. 26.3.2010 U /S 148 OF THE ACT WHICH WAS SERVED UPON THE ASSESSEE. AFTER CONSIDER ING THE SUBMISSIONS FILED BY THE ASSESSEE AVAILABLE ON RECO RD, DCIT VIDE ORDER DT. 26.11.2010 PASSED AN ORDER OF ASSESSMENT U/S 14 3(3) R.W.S. 147 OF THE ACT. AGGRIEVED BY THE ORDER OF THE ASSESSING O FFICER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CHALLENGING T HE ACTION OF REOPENING OF ASSESSMENT DONE BY THE ASSESSING OFFIC ER. THE CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES HELD THAT REOPENING OF THE ASSESSMENT WAS DONE BY ASSESSING OFFICER MERELY BASED ON 3 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 CHANGE OF OPINION AND CONSEQUENTLY, THE ADDITIONS SO MADE BY THE ASSESSING OFFICER, EVEN ON MERITS, WERE FOUND TO BE UNSUSTAINABLE AND THE APPEAL FILED BY THE ASSESSEE WAS ALLOWED BY THE CIT(A). AGGRIEVED BY THE ORDER OF THE CIT(A), REVENUE HAS PREFERRED T HE PRESENT APPEAL ON THE GROUND MENTIONED HEREINABOVE. GROUND NO.1 3. THE LD. DR APPEARING ON BEHALF OF THE REVENUE SU BMITTED THAT LD. CIT(A) ERRED IN QUASHING THE ESCAPEMENT OF INCO ME CHARGEABLE TO TAX TO THE EXTENT OF RS.67,55,710/- WITHIN THE MEAN ING OF SEC. 147 OF THE ACT ON THE PREMISE THAT THERE IS CHANGE OF OPI NION. IT WAS ARGUED BY THE LD. DR THAT IN THE PRESENT CASE ACTION OF TH E ASSESSING OFFICER REGARDING REOPENING WAS NOT BASED ON MERE CHANGE OF OPINION, RATHER, IT WAS BASED ON THE FACTS OF THE CASE AS ASSESSEE R EDUCED THE AMOUNT OF RS.67,55,710/- FROM INCOME FROM BUSINESS IN TH E COMPUTATION OF INCOME. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DERIVED BENEFIT BY WAY OF ONE-TIME SETTLEMENT WHERE IN ASSESSEE BECOMES OWNER OF THE MONIES AMOUNTING TO RS.67,57,7 10/- WHICH IS NO MORE PAYABLE. AFTER CONSIDERING THESE FACTS, THE A SSESSING OFFICER HAS RIGHTLY COME TO THE CONCLUSION THAT THIS AMOUNT HAS TO BE TAXED AND NOT OFFERING THE SAME TO TAX HAS RESULTED IN ESCAPE MENT OF INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.67,55,710/- W ITHIN THE MEANING OF SEC. 147 OF THE ACT. THE LD. DR ALSO RELIED UPO N THE JUDGMENT OF ITAT, DELHI BENCH IN ITA NO. 3134/DEL/2010 IN THE C ASE OF ROLLATAINERS LTD. V. ACIT. LASTLY, THE LD. DR SUBMITTED THAT TH E ORDER OF THE LD. CIT(A) MAY BE REVERSED AND THE ORDER OF THE ASSESSI NG OFFICER MAY BE UPHELD. 4. ON THE OTHER HAND, THE LD. AR REPRESENTING THE A SSESSEE RELIED UPON THE ORDER PASSED BY THE LD. CIT(A). IT WAS AL SO ARGUED BY THE 4 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 LD. AR THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 8.11.2005 DECLARING INCOME OF RS.6,30,63,950/- AGAINST WHICH IT CLAIMED SET OFF OF BROUGHT FORWARD LOSS. FURTHER, PROCESSING U/S 143( 1) WAS DONE ON 10.3.2006 WHEREIN INCOME WAS WRONGLY TAKEN AT LOSS OF RS.6,30,63,950/-. IN THE ASSESSMENT U/S 143(3) PAS SED ON 21.11.2007 THE ASSESSED INCOME WAS DETERMINED AT LOSS OF RS.5, 73,56,870/-. THEREAFTER, THE ORDER WAS RECTIFIED U/S 154 OF THE ACT ON 5.1.2010 REDUCING THE TOTAL INCOME TO NIL AFTER SET OFF OF B ROUGHT FORWARD BUSINESS LOSS. IT WAS ALSO ARGUED BY THE LD. AR TH AT DURING THE A.Y 2005-06 THE ASSESSEE HAS CREDITED AMOUNT OF RS.67,5 5,710/- IN ITS PROFIT & LOSS ACCOUNT TOWARDS REMISSION OF BANK LIA BILITY UNDER THE HEAD EXCEPTIONAL ITEM. HOWEVER, THE ASSESSEE RED UCED THIS AMOUNT FROM INCOME FROM BUSINESS IN THE COMPUTATION OF I NCOME. IT WAS FURTHER ARGUED THAT THE ASSESSEE HAS DERIVED BENEFI T BY WAY OF ONE- TIME SETTLEMENT WHEREIN ASSESSEE BECOMES OWNER OF T HE MONIES AMOUNTING TO RS.67,55,710/-. THE LD. AR DREW OUR ATTENTION TO ITEM NO. 19 ON PAGE 15 OF THE PAPER BOOK WHEREIN DETAILS OF REMISSION OF LIABILITY ARE MENTIONED AND THE SAID SET OF DOCUMEN TS WERE ALSO SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER AS WELL AS THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT THERE HA S BEEN TOTAL DISCLOSURE MADE IN THE PROFIT & LOSS ACCOUNT IN RES PECT OF REMISSION OF LIABILITY AND SINCE ASSESSMENT HAS BEEN TERMED BEIN G SCRUTINY ASSESSMENT U/S 143(3), MERELY FOR CHANGE OF OPINION , WHERE NO ADDITIONAL INFORMATION OR ADDITION IS AVAILABLE, IT WOULD NOT BE OPEN FOR THE ASSESSING OFFICER TO INVOKE SEC. 148 AND REOPEN THE ASSESSMENT. THE LD. AR ALSO RELIED UPON THE JUDGMENT OF THE HON 'BLE BOMBAY HIGH COURT IN THE CASE OF ASTEROIDS TRADING & INVESTMENTS (P) LTD. V. DCIT, 308 ITR 190; ASIAN PAINTS LTD. V. DCIT, 308 ITR 195 ; AVENTIS PHARMA LTD. V. ACIT, 323 ITR 570 AND GKN SINTER METALS LTD . V. RAMAPRIYA 5 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 RAGHAVAN, ACIT, 371 ITR 225 . IN ADDITION, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO APPRECIATE THAT UNDER THE OTS SCHEME FRAMED BY THE RBI ASSESSEE WAS ENTITLED TO C ERTAIN BENEFITS AND PNB AGREED TO WAIVE PRINCIPAL AMOUNT OF LOAN AG GREGATING TO RS.67,55,710/-. THE LOAN AMOUNT HAS NEITHER BEEN D EBITED TO THE PROFIT & LOSS ACCOUNT IN ANY OF THE PRECEDING YEARS NOR CLAIMED AS A DEDUCTION AND, THEREFORE, CREDITING THE SAME TO PRO FIT & LOSS ACCOUNT WOULD NOT CHANGE THE CHARACTER OF THE CREDIT AND, T HEREFORE, SAME CANNOT BE TAXED EITHER U/S 41(1) AND/OR 28(IV). IN THIS RESPECT, THE LD. AR RELIED UPON THE JUDGMENT OF MAHINDRA & MAHINDRA LTD., 261 ITR 501 WHEREIN IT HAS BEEN HELD BY THE HON'BLE BOMBAY HIGH COURT THAT FOR WAIVER OF LOAN WHICH HAS NOT BEEN ALLOWED AS A DEDUCTION IN THE PRECEDING YEAR THAT IS THE PRINCIPAL AMOUNT OF LOAN , THE QUESTION OF TAXING SAME U/S 41(1) AND/OR 28(IV) DOES NOT ARISE. THE LD. AR ALSO RELIED UPON THE JUDGMENT IN CIT V. CHETAN CHEMICALS PVT. LTD., 267 ITR 770 WHEREIN A SIMILAR VIEW HAS BEEN TAKEN BY THE HO N'BLE GUJARAT HIGH COURT. THE LD. AR FURTHER SUBMITTED THAT SINCE THE COMPLETE SCRUTINY ASSESSMENT HAS ALREADY BEEN DONE IN THE PRESENT CAS E AND THE COMPLETE DETAILS WERE ALSO DISCLOSED BY THE ASSESSE E BEFORE THE ASSESSING OFFICER, THEREFORE, THE ASSESSING OFFICER HAD NO ACTION TO REOPEN THE ASSESSMENT BY INVOKING PROVISIONS OF REO PENING. 5. WE HAVE HEARD THE COUNSELS FOR BOTH PARTIES AND ALSO PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE WE COME TO THE MERITS OF THE C ASE, IT IS NECESSARY TO ANALYSE PARAGRAPHS 4.3 TO 5.1, BEING THE OPERATI VE PORTION OF CIT(A)S ORDER WHEREIN THE GROUND HAS BEEN DEALT. THE SAME IS REPRODUCED BELOW. 6 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 4.3 I HAVE CONSIDERED THE A.O.'S ORDER AS WELL AS A PPELLANT AR'S SUBMISSIONS. HAVING CONSIDERED BOTH, I FIND THAT TH E APPELLANT HAS DULY DISCLOSED THE AFORESAID SUM OF RS.67,55,710/- IN ITS PROFIT & LOSS ACCOUNT AND AS PER SCHEDULE ATTACHED, EVEN I FIND TH AT THE APPELLANT COMPANY MADE THE CLAIM OF THE AFORESAID SUM FOR DED UCTION THROUGH COMPUTATION OF INCOME WHICH WAS FILED ALONG WITH TH E RETURN OF INCOME WHICH WAS DULY DISCLOSED AT THE TIME FILING OF ORIGINAL RETURN OF INCOME, CONSEQUENT TO WHICH THAT THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 21/11/2007. THE PERUSAL O F THE COMPUTATION OF INCOME OF THE APPELLANT COMPANY CLEA RLY SUGGESTS THAT THE AFORESAID SUM WAS DULY DISCLOSED IN THE RE TURN OF INCOME AS WELL AS THE SAME WAS CLEARLY FORMING PART OF THE CO MPUTATION OF INCOME WHICH WAS FILED WITH ORIGINAL RETURN OF INCO ME. THE PERUSAL OF THE APPELLANT'S SUBMISSION ALSO SUGGEST THAT THE SA ID REOPENING HAS TAKEN PLACE BASED ON AUDIT OBJECTION WHICH I FIND TH AT THE JURISDICTIONAL HIGH COURT, MUMBAI IN THE CASE OF PU RITY TECHTEXTILE PVT LTD. VS. ACIT REPORTED IN 325 ITR 459 HAS CATEGORIC ALLY HELD THAT REOPENING OF ASSESSMENT BASED ON AUDIT OBJECTING CA N NOT BE HELD TO BE A JUSTIFIED ACTION. IN ADDITION TO THIS, I AM ALS O OF THE CONSIDERED VIEW THAT ONCE THE ASSESSMENT WAS COMPLETED U/S. 14 3(3) WHEREIN THE FACT WAS DULY DISCLOSED BY THE ASSESSEE AND THE N AFTER SUBSEQUENT ACTION OF REOPENING OF THE ASSESSMENT ON SIMILAR ISSUE IS MERELY A CHANGE OF OPINION OF THE AO AS HELD BY THE APEX COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. REPORTE D IN (2002) 256 ITR 1 (DELHI) 4.4 HAVING TAKEN NOTE OF THE APPELLANT AR'S SUBMISS ION AS WELL AS THE DECISIONS CITED BY THE APPELLANT'S AR IN HIS SU BMISSION, I AM OF THE CONSIDERED VIEW THAT IT WAS NOT CORRECT ON THE PART OF THE AO TO REOPEN THE ASSESSMENT ONCE THE ASSESSMENT WAS COMPL ETED U/S. 143(3) OF THE ACT. EVEN AFTER TAKING NOTE OF THE AV AILABLE RECORD BEFORE ME, I AM OF THE CONSIDERED VIEW THAT THE REO PENING OF THE ASSESSMENT WAS MERELY A CHANGE OF OPINION AND HENCE THE REOPENING OF THE ASSESSMENT IS HELD TO BE UNJUSTIFI ED. HENCE THE RE- ASSESSMENT ORDER ON THIS SCORE ITSELF DESERVES TO B E ANNULLED. HENCE, THE ASSESSMENT ORDER IS ANNULLED. 5. EVEN I FIND THAT THE APPELLANT HAS CHALLENGED THE ADDITION AS PER GROUND NO.2 TO 4. THE PERUSAL OF THE GROUNDS OF APPEAL AND ALSO THE APPELLANT'S SUBMISSION DATED 09/05/2012 WHICH I S EXTRACTED AS ABOVE IN PARA 4.2 CLEARLY SUGGEST THAT THE ADDITION SO MADE BY THE 7 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 AO WAS COMPLETELY WRONG AND UNJUSTIFIED IN VIEW OF THE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF: (A) MAHINDRA & MAHINDRA LTD. VS. CIT, 261 ITR PGS 5 01-513 (B) COMPAQ ELECTRIC LTD. VS. CIT KARNATAK HIGH CO URT DATED 18.10.2011 REPORTED IN (2012) 249 CTR PGS 214-217. 5.1 IN VIEW OF THE ABOVE, THE ADDITION SO MADE BY TH E AO EVEN ON MERIT IS ALSO NOT SUSTAINABLE. IN THE RESULT, APPE LLANTS APPEAL IS ALLOWED. AFTER A CO-JOINT READING OF THE GROUND TAKEN BY THE REVENUE AS WELL AS THE ORDERS PASSED BY THE LD. CIT(A) AND AFTER HEARI NG THE COUNSELS FOR BOTH PARTIES, WE NOTED THAT THE COMPUTATION OF INCO ME OF THE ASSESSEE COMPANY CLEARLY SUGGESTS THAT THE AFORESAID SUM WAS DULY DISCLOSED IN THE RETURN OF INCOME AS WELL AS THE SAME WAS CLEARL Y FORMING PART OF THE COMPUTATION OF INCOME WHICH WAS FILED WITH THE ORIGINAL RETURN OF INCOME. WE HAVE ALSO PERUSED PAGE 15 WHEREIN DETAI LS OF REMISSION OF LIABILITY HAVE ALREADY BEEN DISCLOSED BY THE ASSESS EE AND PAGE 11 TO 15 WHICH ARE CORRESPONDENCE WHEREIN THE ASSESSEE HAS SUBMITTED/ANSWERED ALL THE INFORMATION/QUERIES SO R AISED BY THE REVENUE. ON A CO-JOINT READING OF THE PAPERS CONTA INED IN THE PAPER BOOK IT IS MANIFESTLY CLEAR THAT THE ASSESSEE HAS M ADE ALL THE DISCLOSURES IN THE RETURN OF INCOME AS WELL AS THE SAME WAS CLEARLY FORMING PART OF THE COMPUTATION OF INCOME. THE ASS ESSEE HAD ALREADY REPLIED THE QUERIES SO RAISED BY THE ASSESSING OFFI CER AND ON THE PERUSAL OF THE RECORDS WE ALSO FOUND THAT THE ORIGI NAL ASSESSMENT WAS COMPLETED ON 21.11.2007 U/S 143(3) OF THE ACT AND T HE CORRESPONDENCE WHICH ARE BEING REFERRED TO BY THE A SSESSEE AT PAGES 11 TO 15 OF THE PAPER BOOK ARE DT. 31.10.2007, I.E. , PRIOR TO THE COMPLETION OF THE ASSESSMENT U/S 143(3) OF THE ACT. THE LD. DR RELIED UPON THE JUDGMENT OF THE EXPORT CREDIT GUARANTEE CORPORATION OF INDIA 8 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 LTD., 350 ITR 651 (BOM) BUT ON PERUSAL OF THE JUDGMENT RELIED BY THE LD. AR IN THE CASE OF GKN SINTER METALS LTD. (SUPRA) IT IS OBSERVED THAT HAS BEEN CATEGORICALLY MENTIONED IN PARAGRAPH 16 AS UNDER :- 16. IT IS FURTHER SUBMITTED ON BEHALF OF THE REVENU E THAT SO FAR AS LETTER DATED 27 TH DECEMBER, 2004 ISSUED BY THE ASSESSING OFFICER IS CONCERNED, SAME WAS OF GENERAL NATURE AND PARTICULA RS FURNISHED BY THE PETITIONER IN RESPONSE TO THE SAME ARE VOLUMINO US AND, THEREFORE, NOT INDICATIVE OF ANY APPLICATION OF MIN D ON THIS ISSUE BY THE ASSESSING OFFICER. RELIANCE WAS PLACED ON THE DECISION OF THIS COURT IN EXPORT CREDIT GUARANTEE CORPORATION V/S. A DDITIONAL CIT 350 ITR 651 BY THE REVENUE IN SUPPORT OF ITS STAND THAT AS THE ISSUE OF ALLOCATION OF EXPENSES WAS IGNORED/OVERLOOKED WHILE PASSING AN ASSESSMENT ORDER, THEN IN SUCH CASE, IT IS OPEN TO AN ASSESSING OFFICER TO EXERCISE ITS JURISDICTION UNDER SECTION 147/148 OF THE ACT AND RE-OPEN THE ASSESSMENT. IN THE ABOVE DECISION, DURING REGULAR ASSESSMENT PROCEEDINGS, NO QUERY WAS MADE WITH REGA RD TO THE ISSUE ON WHICH THE ASSESSMENT WAS SOUGHT TO BE RE-O PENED, AND THEREFORE, EX-FACIE INDICATIVE OF NON APPLICATION O F MIND. IN THE PRESENT CASE, THE ASSESSING OFFICER HAD RAISED QUER IES WITH REGARD TO THE ALLOCATION FOR EXPENDITURE BETWEEN THE THREE MA NUFACTURING UNITS OF THE PETITIONER WHICH COULD ONLY BE RAISED ON CON SIDERATION OF THE CLAIM AND CONSEQUENTLY ACCEPTED ON CONSIDERATION OF THE REPLY. THUS, IT IS NOT A CASE WHERE THE ASSESSING OFFICER OVERLOOKED/IGNORED THE MATERIAL AND/OR THE ISSUE WHICH NOW FORMS THE B ASIS OF ISSUING THE IMPUGNED NOTICE FOR REOPENING OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03. AFTER PERUSAL OF THE JUDGMENT OF GKN SINTER METALS LTD. (SUPRA) , THE HON'BLE BOMBAY HIGH COURT HAS DISTINGUISHED THE JUD GMENT OF EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. (SUPRA) AND CLARIFIED THAT IN THAT CASE DURING THE REGULAR ASSESSMENT PROCEEDINGS NO QUERIES WERE MADE WITH REGARD TO THE ISSUE ON WHICH THE ASSESSME NT WAS SOUGHT TO BE REOPENED AND, THEREFORE, EX FACIE INDICATIVE OF NON-APPLICATION OF MIND, BUT AS PER THE FACTS OF THE PRESENT CASE, QUE RIES IN RESPECT OF ISSUES ON WHICH THE REOPENING HAS BEEN SOUGHT WERE ASKED AND WERE 9 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. ITA NO. 1827/MUM/2013 REPLIED BY THE ASSESSEE. MOREOVER, THE ASSESSEE HA S MADE FULL DISCLOSURE OF ALL THE AFOREMENTIONED SUM IN THE RET URN OF INCOME AS WELL AS THE SAME WAS CLEARLY FORMING PART OF COMPUT ATION OF INCOME WHICH WAS FILED WITH THE ORIGINAL RETURN OF INCOME. THEREFORE, THE PARA MATERIA CONTAINED IN THE JUDGMENT OF EXPORT CREDIT GUARANT EE CORPORATION OF INDIA LTD. (SUPRA) IS ALTOGETHER DIFFERENT AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. MOREO VER, AFTER PERUSAL OF THE JUDGMENT OF THE ITAT IN ITA NO. 3134/DEL/2010 I N THE CASE OF ROLLATAINERS LTD. V. ACIT WE FIND THAT THE FACTS OF THAT CASE ARE ALTOGETHER DIFFERENT FROM THE FACTS OF THE PRESENT CASE AND ARE DISTINGUISHABLE, AND THUS NOT APPLICABLE TO THE FAC TS OF THE PRESENT CASE. 6. WE HAVE PERUSED THE JUDGMENT RELIED UPON BY LD. AR IN THE CASE OF ASTEROIDS TRADING & INVESTMENTS (P) LTD. (SUPRA) , THE RELEVANT PARAGRAPH OF WHICH IS REPRODUCED BELOW : HEAD NOTE - REASSESSMENT CHANGE OF OPINION DIFFERENT VI EW ON SAME FACTS AO ALLOWED DEDUCTION UNDER S. 80M A FTER APPLYING HIS MIND TO THE RELEVANT RECORDS NO NEW MATERIAL HAS COME ON RECORD AND NO NEW INFORMATION HAS BEEN RECEIVED BET WEEN THE DATE OF THE ORDER OF ASSESSMENT AND THE DATE OF FORMING OF OPINION BY THE AO FOR ISSUE OF NOTICE UNDER S. 148 IT IS A CASE O F MERE FRESH APPLICATION OF MIND BY THE SAME OFFICER TO THE SAME SET OF FACTS THUS, IT IS A CASE OF MERE CHANGE OF OPINION WHICH DOES NOT PROVIDE JURISDICTION TO INITIATE PROCEEDINGS UNDER S. 148. 9. IT IS, THUS, CLEAR FROM THE OBSERVATIONS QUOTED ABOVE THAT POWER UNDER SECTION 147 CANNOT BE USED LIKE THE POW ER OF REVIEW TO REOPEN THE ASSESSMENT AND THIS IS PRECISELY WHAT HA S BEEN DONE IN THE PRESENT CASE. THE DIVISION BENCH OF THIS COURT IN ITS JUDGMENT IN THE CASE OF GERMAN REMEDIES LTD. [2006] 285 ITR 26, REFERRED TO ABOVE, HAS TAKEN THE SAME VIEW. IN OUR OPINION, THE FOLLOWING 10 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD . ITA NO. 1827/MUM/2013 OBSERVATIONS FROM THE JUDGMENT OF THE DIVISION BENC H OF THIS COURT ARE RELEVANT: 'IT IS A SETTLED POSITION OF LAW THAT THOUGH THE PO WER CONFERRED UNDER SECTION 147 OF THE INCOME-TAX ACT FOR REOPENI NG THE CONCLUDED ASSESSMENT IS VERY WIDE, THE SAID POWER C ANNOT BE EXERCISED MECHANICALLY OR ARBITRARILY. THE EXPRESSI ON 'REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT' MEANS ENTERTAINING A REASONABLE BELIEF THAT A PARTICULAR INCOME WENT UNNOTICED BY THE ASSESSING O FFICER AND HENCE ESCAPED ASSESSMENT. EVEN AFTER THE INTRODUCTI ON OF THE CONCEPT OF DEEMED ESCAPEMENT OF INCOME BY EXPLANATI ON 2 TO SECTION 147 OF THE ACT WITH EFFECT FROM APRIL 1, 19 89, THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT ENTERTAINED BY THE ASSESSING OFFICER MUST BE A PRUDENT BELIEF AND NOT MERE CHANGE OF OPINION. THUS, AN ASSESSMENT ORDER PASSED AFTER DETAILED DISCUSSION CANNOT BE REOPENED WITHIN A PER IOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT DUE TO SOME INHERENT DEFECT IN THE ASSESSMENT, THE INCOME CHARG EABLE TO TAX HAS BEEN UNDERASSESSED OR ASSESSED AT TOO LOW A RATE OR EXCESSIVE RELIEF IS GRANTED TO EXCESSIVE LOSS OR DE PRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THE ACT HAS BEEN COMPUTED. IN THE PRESENT CASE, AFTER THE SERVICE OF THE NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE HAD FILED ITS OBJECTIONS FOR REOPENING THE ASSESSMENT TO THE EFFECT THAT IN THE LIGHT OF THE BINDING DECISION OF THIS COURT AND THE DECISION OF THE INCOME- TAX APPELLATE TRIBUNAL THERE IS NO SCOPE FOR ENTERT AINING THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT. HOWE VER, THE SAID OBJECTION HAD BEEN REJECTED WITHOUT EVEN CONSI DERING THE SAID BINDING DECISION. THEREFORE, IT IS NECESSARY T O FIND OUT AS TO WHETHER THE CONDITIONS PRECEDENT FOR INVOKING THE J URISDICTION TO REOPEN THE ASSESSMENT HAVE BEEN MET OR NOT.' 7. WE HAVE ALSO PERUSED THE JUDGMENT RELIED UPON BY LD. AR IN THE CASE OF ASIAN PAINTS LTD. (SUPRA) , THE RELEVANT PARAGRAPH OF WHICH IS REPRODUCED BELOW : 11 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD . ITA NO. 1827/MUM/2013 HEAD NOTE - REASSESSMENT CHANGE OF OPINION DIFFERENT VIEW ON SAME FACTS POWER UNDER S. 147 CANNOT BE U SED TO REVIEW THE ORDER ADMITTEDLY, IN THE INSTANT CASE, NO NEW MATERIAL HAS COME ON RECORD AND NO NEW INFORMATION HAS BEEN RECEIVED BETWEEN THE DATE OF ORDER OF ASSESSMENT AN D THE DATE OF FORMATION OF OPINION BY THE AO AO IS SEEKING T O REOPEN THE ASSESSMENT ON THE GROUND THAT SOME MATERIAL WHICH W AS AVAILABLE ON RECORD WHILE THE ASSESSMENT WAS MADE W AS INADVERTENTLY EXCLUDED FROM CONSIDERATION THIS AM OUNTS TO REOPENING OF ASSESSMENT MERELY ON THE BASIS OF CHAN GE OF OPINION WHICH IS NOT PERMISSIBLE. .......(WHICH PARA NOT CLEAR) 6. FROM THE RECORD, THEREFORE, NOW IT IS CLEAR THAT RESPONDENT NO. 1 IS INVOKING THE POWER UNDER S. 147 IN REOPENING THE ASSESSMENT BECAUSE, ACCORDING TO HIM, HE INADVERTENTLY DID NOT TAKE INTO ACCOUNT THE MATERIA L INFORMATION WHICH WAS AVAILABLE ON RECORD, WHEN HE MADE THE ASS ESSMENT ORDER. THE QUESTION IS, CAN POWER UNDER S. 147 BE EXERCISED IN THIS SITUATION. 8. WE HAVE ALSO PERUSED THE JUDGMENT RELIED UPON BY LD. AR IN THE CASE OF AVENTIS PHARMA LTD. (SUPRA) , THE RELEVANT PARAGRAPH OF WHICH IS REPRODUCED BELOW : HEAD NOTE - REASON TO BELIEVE CHANGE OF OPINION IN THE ORIGINAL ASSESSMENT, DEDUCTION OF CONSULTANCY FEE A ND THE AMOUNT PAID BY THE ASSESSEE TO THE PURCHASER FOR ME ETING THE DEMAND OF THE STATE GOVERNMENT TOWARDS UNEARNED INC REASE IN THE VALUE OF LAND WAS ALLOWED IN THE COMPUTATION OF LONG-TERM CAPITAL GAINS AO REOPENED THE ASSESSMENT FOR THE REASON THAT THE AMOUNT PAID TO THE GOVERNMENT IS NOT ALLOWABLE AS DEDUCTION IN COMPUTING THE LONG-TERM CAPITAL GAINS NOT JUSTIFIED THERE WAS NO TANGIBLE MATERIAL ON THE B ASIS OF WHICH THE ASSESSMENT COULD BE REOPENED REASSESSMENT IS SOUGHT TO BE MADE ON THE BASIS OF MERE CHANGE OF OPINION TH IS IS NOT PERMISSIBLE. 12 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD . ITA NO. 1827/MUM/2013 14. THE VIEW WHICH WE HAVE TAKEN OF THE PROVISIONS OF SECTION 147 IS CONSISTENT WITH THE LAW LAID DOWN BY THE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. [ 2010] 320 ITR 561. THE SUPREME COURT HAS HELD THAT: '....THEREFORE, POST-1 ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAI LING WHICH WE ARE AFRAID SECTION 147 WOULD GIVE ARBITRARY POWE RS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND P OWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSM ENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDIT ION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, A S CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLAC E. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' A S AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESS ING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MA TERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LI NK WITH THE FORMATION OF THE BELIEF.' 15. BEFORE CONCLUDING, IT WOULD BE NECESSARY TO REC ORD TWO FURTHER SUBMISSIONS WHICH HAVE BEEN URGED ON BEHALF OF THE ASSESSEE. THE FIRST SUBMISSION IS BASED ON THE PROV ISO TO SECTION 147 WHICH PROVIDES THAT THE ASSESSING OFFIC ER MAY ASSESS OR REASSESS SUCH INCOME WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT, OTHER THAN INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT-MATTER OF ANY APPEAL, REFEREN CE OR REVISION. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A GAINST THE ORDER OF ASSESSMENT, THE ASSESSEE HAD FILED AN APPE AL BEFORE THE CIT (APPEALS). THE GROUNDS IN THE APPEAL SPECIF ICALLY INCLUDE A CHALLENGE TO THE ORDER OF ASSESSMENT ON T HE GROUND THAT THE ASSESSING OFFICER ERRED IN DISALLOWING DEP RECIATION OF RS. 64.62 LAKHS BY HOLDING THAT THE SAME REPRESENTE D 13 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD . ITA NO. 1827/MUM/2013 DEPRECIATION ON OBSOLETE ASSETS WHICH ARE NOT USED IN BUSINESS AND INCLUDED IN THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS. SIMILARLY, ANOTHER POINT IN THE APPEAL IS THAT THE ASSESSING OFFICER ERRED IN DETERMINING LONG-TERM CAPITAL GAIN S ARISING ON THE SALE OF PHASE III LAND AT MULUND TO THE EXTENT OF RS. 10.66 CRORES. THE CONTENTION IS THAT IN VIEW OF THE PROVI SO TO SECTION 147, THE ASSESSING OFFICER IS PRECLUDED FROM REOPEN ING THE ASSESSMENT ON AN ISSUE WHICH IS THE SUBJECT-MATTER OF A PENDING APPEAL. THE SECOND SUBMISSION WAS BASED ON SECTION 120 OF THE ACT AND IT WAS URGED THAT SINCE THE ORIG INAL ORDER OF ASSESSMENT WAS PASSED BY THE ADDL.CIT, RANGE 8(1), MUMBAI, IT WAS NOT WITHIN THE JURISDICTION OF THE ASSTT. CI T, WHO IS A SUBORDINATE AUTHORITY, TO REOPEN THE ASSESSMENT. 9. AFTER PERUSAL OF THE AFOREMENTIONED JUDGMENTS RE LIED BY THE LD. AR, WE ARE OF THE CONSIDERED VIEW THAT THE FACTS IN THOSE JUDGMENTS ARE SIMILAR TO THE FACTS OF THE PRESENT CASE AND AR E THUS APPLICABLE. THE LD. CIT(A) WHILE DEALING WITH THE SAID ISSUE HA S TAKEN INTO CONSIDERATION THAT THE ASSESSEE HAS MADE FULL DISCL OSURE OF THE AFORESAID SUM IN THE RETURN OF INCOME AS WELL AS TH E SAME WAS CLEARLY FORMING PART OF COMPUTATION OF INCOME. ALSO, THE L D. CIT(A) ON MERITS OF THE CASE HAS RELIED UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD., 261 ITR 501 ( SUPRA ) AND HON'BLE KARNATAKA HIGH COURT IN THE CASE OF COM PAQ ELECTRIC LTD. DT. 18.10.2011 REPORTED IN (2012) 249 CTR PAGES 214 TO 217. THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE AND RELYING UPON THE JUDICIAL PRONOUNCEMENTS HAS RIGHTLY COME TO THE CON CLUSION THAT ONCE THE ASSESSMENT WAS COMPLETED U/S 143(3) WHEREIN THE FACTS WERE FULLY DISCLOSED BY THE ASSESSEE, THEN, SUBSEQUENT ACTION OF REOPENING OF ASSESSMENT ON SIMILAR ISSUE IS NOTHING BUT MERELY CHANGE OF OPINION OF ASSESSING OFFICER AND SAID CONCLUSION BY LD. CIT (A) IS FORTIFIED BY THE DECISION OF THE APEX COURT IN THE CASE OF KELVINATOR OF INDIA LTD., 256 ITR 1 . THE LD. CIT(A) AFTER APPRECIATING THE JUDGMENT I N THE CASE 14 M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD . ITA NO. 1827/MUM/2013 OF MAHINDRA & MAHINDRA LTD. ( SUPRA ) AND COMPAQ ELECTRIC LTD. ( SUPRA ) HAS RIGHTLY COME TO THE CONCLUSION THAT THE ADDITIO N SO MADE BY THE ASSESSING OFFICER WERE CLEARLY WRONG AND UNJUSTIFIE D IN VIEW OF THE JURISDICTIONAL HIGH COURTS DECISION AS MENTIONED A BOVE. NO NEW MATERIAL OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US TO CONTROVERT OR REBUT THE JUDICIOUS AND WELL-REASONED FINDINGS R ECORDED BY THE LD. CIT(A), THEREFORE, WE SEE NO REASON TO INTERFERE OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT(A). 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH MAY, 20 16. SD/- SD/- SD/ - SD/ - ( JASON P. BOAZ ) ACCOUNTANT MEMBER ( SANDEEP GOSAIN ) JUDICIAL MEMBER MUMBAI, DATE : 25 TH MAY, 2016 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, F BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI