ACIT-22(3), Mumbai V. M/S VENUS MANUFACTURING COMPANY, Mumbai

ITA 1977/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3442 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIKHIL CHOUDHARY
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Validity of assessment; Reason to believe; Change of opinion
• Section: 143(3); 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBERAND SHR I M. BALAGANESH , ACCOUNTANT MEMBER I TA NO. 384 & 385 / CHD . /20 08 ( ASSESSMENT YEAR : 1999 2000 & 2000 01 ) STATE BANK OF PATIALA HEAD OFFICE, THE MALL PATIALA 147001 PAN AACCS0143D . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX PATIALA CIRCLE, PATIALA . RESPONDENT ASSESSEE BY : SHRI C. NARESH REVENUE BY : S HRI NIKHIL CHOUDHARY DATE OF HEARING 26.10.2020 DATE OF ORDER 09.11.2020 O R D E R PER SAKTIJIT DEY. J.M. CAPTIONED APPEALS BY THE ASSESSEE ARISE OUT OF TWO SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA, PERTAINING TO THE ASSESSMENT YEAR S 1999 2000 AND 2000 01. 2. PERTINENTLY, THE AFORESAID APPEALS WERE EARLIER DISPOSED OFF BY THE TRIBUNAL VIDE ORDER DATED 3 RD AUGUST 2018. HOWEVER, WHILE DECIDING THE APPEAL S , THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE 2 STATE BANK OF PATIALA VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) WERE LEFT UNDECIDED. THEREFORE, THE ASSESSEE FILED MISC. APPLICATION REGISTERED AS M.A. NO.250 AND 251/CH D./22018, SEEKING RECTIFICATION/ RECALL OF THE APPEAL ORDER FOR DECIDING THE LEGAL ISSUE. WHILE CONSIDERING THESE MISC. APPLICATIONS FILED BY THE ASSESSEE, THE TRIBUNAL, VIDE ORDER DATED 14 TH JUNE 2019, RECALLED THE APPEAL ORDER FOR THE LIMITED PURPOSE OF DECIDING THE LEGAL ISSUE CONCERNING VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. THIS IS HOW THE APPEALS CAME UP FOR HEARING BEFORE US. 3. AS MENTIONED ABOVE, IN BOTH THE APPEALS, THE ASSESSEE HAS RAISED MORE OR LESS IDENTICAL GROUNDS CHALLENGING THE VALIDITY OF ASSESSMENT UNDER SEC TION 147 OF THE ACT. AT THE OUTSET, WE WILL DEAL WITH THE APPEAL BEING ITA NO.384/CHD./2008. 4. BRIEF FACTS A RE, THE ASSESSEE IS A N ATIONALIZ ED B ANK. FOR THE ASSESSMENT YEAR 1999 2000, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 27 TH DECEMBER 1999, DECLAR ING TOTAL INCOME OF ` 169,04,50,060. T HE RETURN OF INCOME FILED BY THE ASSESSEE WAS SUBJECT ED TO SCRUTINY AND AFTER CALLING FOR VARIOUS DETAILS AND EXAMINING THEM, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT VIDE ORDER DA TED 19 TH MARCH 2002, DETERMINING THE TOTAL INCOME AT ` 241,44,54,651. T HE VARIATION BETWEEN THE TOTAL INCOME RETURNED AND TOTAL INCOME DETERMINED WAS 3 STATE BANK OF PATIALA DUE TO CERTAIN DISALLOWANCES/ ADDITIONS MADE BY THE ASSESSING OFFICER. BEING AGGRIEVED WITH THE ASSESSMENT ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. L EARNED COMMISSIONER (APPEALS) DISPOSED OFF THE APPEAL GRANTING CERTAIN RELIEF TO THE ASSESSEE. 5. BE THAT AS IT MAY, WHEN THE MATTER STOOD THUS, THE ASSESSING OFFICER HAVI NG REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX IN THE ASSESSMENT YEAR UNDER DISPUTE HAS ESCAPED ASSESSMENT , RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT BY IS SUING A NOTICE UNDER SECTION 148 OF THE ACT ON 11 TH JULY 2006. ULTIMATELY, THE AS SESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R/W 147 OF THE ACT VIDE ORDER DATED 27 TH DECEMBER 2006, DISALLOWING DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT AND ADDING BACK AN AMOUNT OF ` 6,00,41,600. BEING AGGRIEVED WITH THE AS SESSMENT ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) , BOTH , ON THE ISSUE OF VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT AS WELL AS ON THE MERITS OF THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER S ECTION 36(1 )(VIIA) OF THE ACT. HOWEVER, LEARNED COMMISSIONER (APPEALS) DECIDED BOTH THE ISSUES AGAINST THE ASSESSEE. 4 STATE BANK OF PATIALA 6. CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT WAS MADE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE SUBMITTED , SINCE THE ORIGINAL ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT , THE ASSESSING OFFICER MUST ESTABLISH THAT THE ESCAPEMENT OF INCOME IS DUE TO FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND CORRECTLY DISCLOSE THE PARTICULARS OF INCOME. HE SUBMITTED , SINCE THERE IS NO SUCH FAILURE ON THE PART OF THE ASSESSEE WITH REGARD TO THE DISCLOSURE OF ITS INCOME, THE RE OPENING OF ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS IS INVALID. FURTHER, HE SUBMITTED , AFTER COMPLYING TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THE ASSESSEE HAD RAISED OBJECTIONS BEFORE THE ASSESSING OFFICER QUESTIONING THE VALIDITY OF RE OPENING OF ASSESSMENT. HE SUBMITTED , WITHOUT DISPOSING OFF THE OBJECTIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT. THEREFORE, SUCH ACTION OF THE ASSESSING OFFICER IS AGAINST THE SETTLED POSITION O F LAW. IN THIS REGARD, HE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN BAYER MATERIAL SCIENCE PVT. LTD. V/S D CIT, [2019] 382 ITR 333 (BOM.) . HE SUBMITTED , IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS S PECIFICALLY ENQUIRED INTO ASSESSEES CLAIM OF DE DUCTION UNDER SECTION 36(1)(VII A) OF THE ACT. IN 5 STATE BANK OF PATIALA REPLY, THE ASSESSEE HAD ALSO FURNISHED THE DETAILS OF ITS RURAL ADVANCES , BRANCH WISE , AND ALSO JUSTIFIED ITS CLAIM OF DEDUCTION. HE SUBMITTED , AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE AND AFTER MAKING NECESSARY ENQUIRY, THE ASSESSING OFFICER HAD DISALLOWED THE ENTIRE CLAIM MADE BY THE ASSESSEE. THEREFORE, HE SUBMITTED , WHEN IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS APPLIED HIS M IND AND EXAMINED THE ISSUE, THE RE OPENING OF ASSESSMENT ON THE VERY SAME ISSUE IS ON A MERE CHANGE OF OPINION, HENCE, IMPERMISSIBLE. FINALLY, HE SUBMITTED , AGAINST THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSEE HAD PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) AND LEARNED COMMISSIONER (APPEALS) HAS DELETED SUCH DISALLOWANCE. THEREFORE, SINCE THE ISSUE HAVING BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND MERGED IN THE ORDER PASSED BY LEARNED COMMISSIONER (APPEALS), NO RE OPENING OF ASSESSMENT ON SUCH ISSUE CAN BE DONE. THUS, HE SUBMITTED , RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT SHOULD BE HELD AS INVALID. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE STR ONGLY RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND FIRST APPELLATE AUTHORITY SUBMITTED , THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT IN RESPECT OF ADVANCES MADE BY BRANCHES WHICH CANNOT BE CONSIDERE D AS RURAL BRANCH ES AS PER CENSU S RECORD. HE 6 STATE BANK OF PATIALA SUBMITTED , DURING THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER COMPLETELY FAILED TO ENQUIRE INTO THE ASPECT AS TO WHETHER DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT IN REALITY RELATE S TO RURAL BRANCHES. THEREFORE, HE SUBMITTED , THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND CORRECTLY THE FACTS RELATING TO HIS ASSESSMENT , HENCE , RE OPENING OF ASSESSMENT AFTER FOUR YEARS IS VALID. HE SUBMITTED , SINCE THE ASSESSING OFFICER HAD NOT AT ALL EXAMINED THE ISSUE WHETHER THE DEDUCTION CLAIMED ACTUALLY RELATED TO RURAL BRANCHES , THERE IS NO FORMATION OF OPINION ON THE ISSUE IN THE ORIGINAL ASSESSMENT PROCEEDING . THE ASSESSING OFFICER HAVING TANGIBLE MATE RIAL IN HIS POSSESSION, THE RE OPENING OF ASSESSMENT IS VALID. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS , PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL PLACED ON RECORD. INSOFAR AS THE BASIC FACTS ARE CONCERNED, THERE IS NO DISPUTE THAT THE ORIGINAL ASSESSMENT IN CASE OF THE ASSESSEE W AS COMPLETED UNDER SECTION 143(3 ) OF THE ACT ON 19 TH MARCH 2002. W HEREAS , THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 11 TH JULY 2006. THEREFORE, TH ERE IS NO DOUBT THAT PROCEED ING FOR RE OPENING OF ASSESSMENT WAS INITIATED AFTER EXPIRY OF PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER DISPUTE. THAT BEING THE CASE, THE PROVISO TO SECTION 147 OF THE ACT APPLIES. AS PER THE SAID PROVISO , IN A CASE WHERE THE ASSESSME NT WAS ORIGINALLY COMPLETED UNDER SECTION 7 STATE BANK OF PATIALA 143(3) OF THE ACT , RE OPENING OF ASSESSMENT CAN BE MADE AFTER EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, ONLY IF , THERE IS FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL F ACTS RELATING TO ITS ASSESSMENT. IT NEEDS TO BE EXAMINED AS TO WHETHER THERE IS ANY SUCH FAILURE ON THE PART OF THE ASSESSEE. 9. FROM THE REASONS RECORDED FOR RE OPENING OF ASSESSMENT BY THE ASSESSING OFFICER , A COPY OF WHICH IS AT PAGE 67 OF THE PAPER BOOK, I T IS OBSERVED THAT RE OPENING OF ASSESSMENT IS FOR TWO REASONS. THE FIRST REASON IS RELATING TO CLAIM OF DEPRECIATION ON VARIOUS CATEGORIES OF SECURITIES. WHEREAS, THE SECOND REASON FOR WHICH THE ASSESSMENT WAS RE OPENED IS RELATING TO DEDUCTION CLA IMED UNDER SECTION 36(1)(VIIA) OF THE ACT. AS REGARDS THE FIRST REASON, ADMITTEDLY, N O DISALLOWANCE OR ADDITION HAS BEEN MADE IN THE RE ASSESSMENT ORDER. THIS, IN OTHER WORDS, MEANS THE ASSESSING OFFICER HIMSELF WAS SATISFIED THAT THERE IS NO ESCAPEMENT OF INCOME ON THIS ISSUE. AS REGARDS THE SECOND REASON RELATING TO CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT , SPECIFIC ALLEGATION OF THE ASSESSING OFFICER IS , SOME OF THE BRANCHES IN RESPECT OF WHICH THE ASSESSEE CLAIMED DEDUCTION , DID NOT QU ALI FY AS RURAL BRANCHES AS PER C ENSES DEPARTMENT. IT IS WORTH MENTIONING , IN COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD NOTICED THAT THE ASSESSEE HAD CLAIMED THE FOLLOWING DEDUCTION S UNDER SECTION 36(1)(VIIA) OF THE ACT: 8 STATE BANK OF PATIALA DEDUCTION U/S 36(1)(VIIA) BEING 5% OF THE TOTAL INCOME ` 11,56,95,424 DEDUCTION U/S 36(1)(VIIA) I.E., 10% OF THE AGGREGATE OF RURAL ADVANCES OF ` 50,74,37,500 ` 50,74,37,500 TOTAL: ` 62,31,32,924 10. THE DISPUTE IN THE PRESENT APPEAL IS PRECISELY WITH REGARD TO A PART OF THE DEDUCTION CLAIMED OF ` 50,74,37,500. ON A PERUSAL OF THE DOCUMENTS SUBMITTED IN THE PAPER BOOK, IT IS NOTICED THAT IN COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS , IN LETTERS DATED 31 ST JANUARY 2002 AND 15 TH FEBRUARY 2002, THE ASSESSING OFFICER HAD SPECIFICALLY ENQUIRED INTO THE DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT. IN COMPLIANCE TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE HAD FURNISHED ITS REPLY ON 12 T H FEBRUARY 2002, NOT ONLY JUSTIFYING ITS CLAIM, BUT FURNISHED THE DETAILS CALLED FOR BY THE ASSESSING OFFICER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MAKING NECESSARY ENQUIRY, THE ASSESSING OFFICER DISALLOWED BOTH THE DEDUCTION S CLAIMED BY T HE ASSESSEE UNDER SECTION 36(1)(VIIA) IN ITS ENTIRETY. 11. IT IS WORTH MENTIONING , WHILE DISALLOWING THE DEDUCTION OF ` 50,74,37,500, UNDER SECTION 36(1)(VIIA) OF THE ACT PERTAINING TO RURAL ADVANCES, THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER HA S 9 STATE BANK OF PATIALA ALSO DEALT WITH THE ISSUE WHETHER SOME OF THE BRANCHES CAN ACTUALLY BE TREATED AS RURAL BRANCHES AND HAS PROPOSED DISALLOWANCE ON THAT GROUND AS WELL . HOWEVER, SINCE HE HAS ALREADY DISALLOWED THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE , NO SEPARATE DISA LLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE AFORESAID REASONING. THE RELEVANT OBSERVATIONS OF THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER IS EXTRACTED HEREIN BELOW FOR BETTER APPRECIATIONS. BEFORE PARTING WITH THE ISSUE, IT IS ALSO BROUG HT ON RECORD THAT THE DEDUCTION CLAIMED BY THE ASSESSEE IS IN ANY CASE EXCESSIVE. IT HAS BEEN HELD BY MY PREDECESSOR THAT THE ASSESSEE HAS INCLUDED IN THE CATEGORY OF RURAL BRANCHES SOME BRANCHES WHICH ARE LOCATED IN PLACES WHERE POPULATION HAS CROSSED THE LIMIT OF 10,000 AS PER THE LAST CENSUS, THE FIGURES OF WHICH HAVE BEEN PUBLISHED. THE DETAILS OF SUCH BRANCHES HAS BEEN PLACED ON RECORD. THEY CONTINUE TO BE SAME AS LAST YEAR. HOWEVER, NO SEPARATE DISALLOWANCE ON THIS COUNT IS BEING MADE IN THIS ORDER ON THE ASSESSEES TOTAL CLAIM UNDER SUB SECTION 36(1)(VIII) ON THE ISSUE OF RURAL BRANCH ADVANCES HAS BEEN DENIED. 12. THUS, A READIN G OF THE AFORESAID OBSERVATIONS OF THE ASSESSING OFFICER WOULD MAKE IT CLEAR THAT WHILE COMPLETING THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER WAS ALSO CONSCIOUS OF THE FACT THAT SOME OF THE BRANCHES MAY NOT QUALIFY AS RURAL BRANCHE S. IN VIEW OF THE AFORESAID , IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT APPLIED THE MIND TO THE ISSUE DURING THE ORIGINAL ASSESSMENT P ROCEEDINGS. THAT BEING THE CASE, THE RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT AGAIN ON THE SELFSAME ISSUE , WHICH WAS EXAMINED DURING THE 10 STATE BANK OF PATIALA ORIGINAL ASSESSMENT PROCEEDINGS , IS ON A MERE CHANGE OF OPINION OR FOR REVIEW OF THE DECISION TAKEN IN ORI GINAL ASSESSMENT ORDER. 13. AS OBSERVED BY US, T HE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT AND ONE OF THE REASONS FOR SUCH DISALLOWANCE IS , SOME OF THE BRANCHES MAY NOT QUALIFY AS RURAL BRANCHES. IT IS ANOTHER MATTER THAT THE AF ORESAID DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELETED BY THE FIRST APPELLATE AUTHORITY. HOWEVER, THE VERY FACT THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 36(1)( VIIA) OF THE ACT , LEAVE S NO ROOM FOR ESCAPEMENT OF INCOME AS , IN REALITY , NO INCOME HAS ESCAPED ASSESSMENT DUE TO DISALLOWANCE OF THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE. THEREFORE, WHEN THERE IS NO INCOME ESCAPING ASSESSMENT, THE INITIATION OF PROCEE DINGS UNDER SECTION 147 OF THE ACT IS NOT ONLY UNCALLED FOR BUT DOES NOT ARISE. 14. IT IS FURTHER TO BE NOTED THAT AFTER COMPLETION OF ORIGINAL ASSESSMENT DISALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT, THE ASSESSEE HAD PREFER RED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). IT IS A FACT ON RECORD THAT WHILE DISPOSING OFF ASSESSEES APPEAL, LEARNED COMMISSIONER (APPEALS) HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. IT IS 11 STATE BANK OF PATIALA SUBMITTED BEFORE US BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT AGAINST THE ORDER OF LEARNED COMMISSIONER (APPEALS) NO APPEAL COULD BE PREFERRED BEFORE THE TRIBUNAL AS THE COMMITTEE ON DISPUTE FORMED BY THE GOVERNMENT OF INDIA DID NOT PERMIT FILING OF SUCH APPEAL. THUS, ESSENTIALLY, THE DISPUTE R ELATING TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT HAS ATTAINED FINALITY AFTER THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE ARISING OUT OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THOUGH, THESE EVENTS HAVE HAPPENED MUC H PRIOR TO THE INITIATION OF RE ASSESSMENT PROCEEDINGS AND, IN EFFECT, THE ORIGINAL ASSESSMENT ORDER HAS MERGED WITH THE ORDER OF LEARNED COMMISSIONER (APPEALS), STILL THE ASSESSING OFFICER WENT AHEAD TO N OT ONLY INITIATE THE PROCEEDING UNDER SECTION 147 O F THE ACT ON THE VERY SAME ISSUE, BUT HAS ALSO PASSED AN ASSESSMENT ORD ER UNDER THE SAID PROVISION. THI S, IN OUR VIEW, IS CONTRARY TO THE SETTLED LEGAL POSITION. 15. FINALLY, THERE IS ONE MORE ASPECT TO THE ISSUE. UNDISPUTEDLY, IN RESPONSE TO THE NOTICE ISSUE D UNDER SECTION 148 OF THE ACT, THE ASSESSEE AFTER NECESSARY COMPLIANCE FILED AN OBJECTION BEFORE THE ASSESSING OFFICER CHALLENGING THE VALIDITY OF RE OPENING OF ASSESSMENT. ON A PERUSA L OF THE OBJECTIONS RAISED BY THE ASSESSEE , A COPY OF WHICH IS AT PAGE 70 OF THE PAPER BOOK, IT IS NOTICED THAT ONE OF THE GROUNDS RAISED BY THE ASSESSEE IS, ON THE BASIS OF A CENSUS REPORT OF 2004 WHICH IS NOT APPLICABLE TO THE IMPUGNED ASSESSMENT YEAR , IT CANNOT BE 12 STATE BANK OF PATIALA SAID THAT SOME OF THE BRANCHES HAVE EXCEEDED CERTAIN POPULA TION LIMIT, HENCE, WOULD NOT QUALIFY AS RURAL BRANCHES. HOWEVER, IT IS A FACT ON RECORD THAT THE OBJECTION FILED BY THE ASSESSEE RAISING SUCH A VITAL ISSUE HAS NOT BEEN DISPOSED OFF BY THE ASSESSING OFFICER INDEPENDENTLY PRIOR TO COMPLETION OF ASSESSMENT U NDER SECTION 143(3) R/W SECTION 147 OF THE ACT. THIS ACTION OF THE ASSESSING OFFICER AGAIN IS IN VIOLATION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD .V/S I TO AND ORS . , [2002] 259 ITR 19 (SC) AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF BAYER MATERILA SCIENCE PVT. LTD. (SUPRA) . FURTHER, IN CASE OF FOMENTO RESORTS & HOTELS LTD. V/S ACIT (T. A. NO. 63 OF 2007, ORDER DATED. 30.08.2009) THE HONBLE JURISDICTIONAL HIGH COURT WHILE REITERATING THE SAME VIEW HAS HELD THAT THE ASSESSING OFFICER CANNO T EVEN DISPOSE OF THE OBJECTION IN THE ASSESSMENT ORDER. THUS, FROM THE AFORESAID DISCUSSION, ONE CAN EASILY CONCLUDE THAT THIS IS A CLASSIC CASE OF ARBITRARY EXERCISE OF POWER UNDER SECTI ON 147 OF THE ACT. 16. THUS, AFTER OVER ALL CONSIDERATION OF FACTS AND MATERIAL ON RECORD, WE HAVE NO HESITATION IN HOLDING TH AT THE INITIATION OF PROCEEDING UNDER SECTION 147 OF THE ACT IN THE PRESENT CASE IS INVALID. CONSEQUENTLY, THE ASSESSMENT ORDER PASSED IN PURSUANCE THERETO IS ALSO INVALID. ACCORDINGLY, WE QUASH THE IMPUGNED ASSESSMENT ORDER. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 13 STATE BANK OF PATIALA 17. IN THE RESULT, APPEAL IS ALLOWED. ITA NO.385 /CHD./2008 18. THIS APPEAL RELATES TO ASSESSMENT YEAR 2000 01. THE FACTS RELATING TO THE ISSUE OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT ARE MORE OR LESS IDENTICAL TO THE APPEAL BEING ITA NO.384/CHD./ 2008, EXCEPT FOR THE FACT THAT THE IMPUGNED ASSESSMENT YEAR, THE DISALLOWANCE MADE IN THE RE ASSESSMENT ORDER IS FOR AN AMOUNT OF ` 36,50,900, AND IT PERTAINS TO A SINGLE BRANCH. HOWEVER, THE LEG AL PRINCIPLE ON THE BASIS OF WHICH THE ISSUE IS DECIDED IN ITA NO.384/CHD./2008, WOULD SQUARELY APPLY TO THE FACTS OF THE PRESENT APPEAL. THEREFORE, FOLLOWING OUR DECISION THEREIN, WE QUASH THE IMPUGNED ASSESSMENT ORDER AS WELL. GROUNDS RAISED BY THE ASSES SEE ARE ALLOWED. 19. I N THE RESULT, APPEAL IS ALLOWED. 20. TO SUM UP, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.11.2020 SD/ - M. BALAGANESH ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 09.11.2020 14 STATE BANK OF PATIALA COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE C I T(A); (4) THE C I T, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI