National Dairy Development Board, Anand V. The ACIT.,Anand Circle, Anand

ITA 2002/AHD/2014

AI Insights

The case involves the National Dairy Development Board (NDDB) and the Assistant Commissioner of Income Tax (ACIT), Anand Circle, concerning the reassessment for the Assessment Year 2006-07. The NDDB had initially filed a return declaring a loss, which was later assessed with various additions and disallowances. The ACIT reopened the assessment citing reasons such as unaccounted provisions and incorrect depreciation claims. The NDDB challenged the reopening, arguing it was based on a mere change of opinion without new tangible material. The Tribunal, after examining the reasons for reopening and the applicable legal precedents, concluded that the reassessment was invalid as it constituted a change of opinion rather than a reassessment based on new tangible material.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114195 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-06-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2014
• Other Referred Cases: CIT vs Kelvinator India Ltd., Inductotherm (India) Pvt. Ltd. vs. M. Gopalan, DCIT, Gujarat Power Corporation Ltd. vs. ACIT, Solvay Specialities India (P.) Ltd. vs. DCIT, PCIT vs. Atul Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Rectification of order; Search and seizure; Tangible material; Bad and doubtful debts; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 148; 263; 154; 143(3); 143(1); 254(2); 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member National Dairy Development Board, Post Box No. 40 Opp. Jagannath Temple Anand-388001 PAN: AABCN2029C Vs The ACIT Anand Circle, Anand The ACIT Anand Circle, Anand (Appellant) Vs National Dairy Development Board, Post Box No. 40 Opp. Jagannath Temple Anand-388001 PAN: AABCN2029C (Respondent) Assessee Represented: Shri Yogesh Shah, A.R. Revenue Represented: Shri Sudhendu Das, CIT-DR Date of hearing : 06-06-2023 Date of pronouncement : 16-06-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These cross appeals are filed by the Assessee and Revenue as against the appellate order dated 18.03.2014 passed by the ITA Nos. 2002 & 1871/Ahd/2014 Assessment Year 2006-07 I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 2 Commissioner of Income Tax (Appeals)-1V, Baroda arising out of the re assessment order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2006-07. 2. The brief facts of the case is that the assesse NDDB was constituted with objective of supporting of the Dairy cooperatives across the country by replicating Amul Model. The assessee filed its Return of Income declaring total loss of Rs. 14,02,04,517/-. The return was processed. After calling for various details and records, regular assessment u/s. 143(3) of the Act was completed on 30-12- 2008 determining the total income at Rs. 9,71,36,300/- by making various additions and disallowances. The assessee challenged the original assessment order by way of an appeal and got relief by giving effect order dated 16-11-2009 wherein the tax demand was reduced to Rs. 3,75,53,470/-. It is thereafter the assessment was reopened by issuing a notice u/s. 148 dated 12-07-2010 recording the reasons as follows: REASONS FOR ISSUE OF NOTICE U/S.148 OF THE IT ACT-1961 1. Name and Address of the assessee: National Dairy Development Board, PO Box No. 40. Anand-388001 2. A.Y.: 2006-07 3. PAN: AABCN2029C (A) The assessee company is engaged in the business of promoting, financing constructing, sponsoring, researching, facilitating training, collecting data and such other initiatives for the development of dairy and other agricultural based industries through cooperative initiatives. The return of income was filed on 23/12/2006 declaring loss of Rs 14,02,04,517/-. The assessment was complete u/s. 143(3) of the 1.T. Act on 30/12/2008 determining total income at Rs.9,71,36,300/-. On verification of the case records (income & expenditure statement of the F.Y 2005-06), it was found that the assessee has made provision in earlier years' of (1) Rs.41,00,00,000- excess provision for doubtful debts as per RBI I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 3 norms and (ii) Rs.22,12,962/- provision for inventory obsolescence were written back and accounted for in the P.Y.2005-06. But, while computing the business income of the assessee both the amounts were not added in the total income of the assessee again. Thus, the provisions made in the accounts for the above reasons and not utilized for which the same was made was not treated as income of the P.Y.2005-06 relevant to A.Y.2006-07. Thus, the above provision amount made of (1) Rs.41,00,00,000/- & (ii) Rs.22,12,962/- required to be added to the total income of the assessee. (B) On further verification, it was found that the assessee company has leased various assets like building and roads, electric installations, plant & machinery and Fail milk tankers all totaling to Rs.4,11,56,354/-. The above assets have been given on "operating lease" with an option to renew the agreement. The assessee company is not in the leasing business as per Chapter IV of the NDDB Act and it has started procurement and sale of milk only in the current A.Y. Therefore, the assets acquired by it were given on lease were not used by NDDB itself and the lessee were utilized the assets for the major portion of economic life of the assets thus qualifying it as a finance lease. The lessor does not get the benefit of depreciation in the case of finance lease or hire purchase lease agreement. As per the provisions of section 32(1) of the I.T. Act, 1961, the depreciation can be claimed in respect of the assets which are (i) owned by the assessee (ii) and used for the purpose of his business or profession. The leased assets though owned by the assessee were not used for the purpose of business or profession of the assessee and also the lease in the nature of finance lease which does not qualify the assessee for claim of depreciation of Rs.1,23,46,906/- @ 30% on the leased assets of Rs.4,11,56,354/-. Thus, the depreciation to the extent of Rs.1,23,46,906/- was incorrectly allowed is required to be withdrawn and added in the total income of the assessee. (C) The assessee company has claimed interest and financial charges of Rs.167,97,72,074/- in the A.Y. under consideration as per the income and expenditure account for the year ended on 31/03/2006. Further, on verification of the details of secured loans in Annexure-III of the Balance Sheet, it is found that the assessee had taken loans of Rs.189,23,12,271/- from Govt. of India and interest amounting to Rs.2,77,18,178/- was capitalized. Thus, as on 31/03/2006 loans from Govt. of India amounted to Rs.192,00,30,449/- (Rs.189,23,12,271/- plus Rs.2,77,18,178/-1 As per the provisions of section 43(d) read with explanation 3C of the Act, a deduction otherwise allowable under the Act in respect of any sum payable by the assessee as interest on any loan or advance from any financial institution in accordance with the terms and conditions of the agreement governing such loans or advances shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan or borrowing shall not be deemed to have been paid. In this case, the amount of interest amounting to Rs.2,77,18,178/- was capitalized and the assessee has not actually paid the interest but it has been converted into a loan as reflected from annexure-III attached to the balance sheet and in the circumstances this interest of Rs.2,77,18,178/- was required to be disallowed u/s.43B(d) read with explanation 3C of the Act was remained to be disallowed and added in the total income of the assessee. Thus, the above interest amount of Rs.2,77,18,178/- is required to be disallowed and added in the total income of the assessee. (D) On further verification, it was found that the assessee had claimed and was allowed depreciation of Rs.63,55,864/- @ 30% on "rail milk tankers" for I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 4 A.Y. under consideration. However, the rate of depreciation in the case of plant & machinery was 50% only and therefore, the "rail milk tankers" did not qualify for depreciation at other rates. Thus allowing the depreciation @30% as against 15% resulted in underassessment of income of Rs.31,77,932/- which required to be added in the total income of the assessee. In view of these facts and circumstances, I have reason to believe that the income chargeable to tax has escaped assessment to the extent of Rs.455455978/- (Rs.41,00,00,000/- + Rs.22,12,962/- + Rs. 1,23,46,906/- + Rs.2,77,18,178/- + Rs. 31,77,932/-) within the meaning of section 147 of the IT Act-1961. I therefore issue notice u/s. 148 of the IT Act, 1961. Issued notice u/s. 148 of the Act accordingly.” 3. The assessee objected to the reopening of assessment on the ground that it is mere change of opinion, however the Ld. A.O. rejected the same and completed reassessment by making disallowances and additions. On further appeal, the Ld. CIT(A) confirmed on the ground that reopening was within 4 years and out of 4 grounds of reopening only one ground was enquired by the A.O. during the original assessment and remaining 3 grounds are not enquired by the A.O. therefore the reopening was good in law and thereby dismissed the ground raised by the assessee observing as follows: “..4.2. I have considered the appellant's submissions and the AO's observations. In this case, the appellant has been able to establish that the AO during the course of original assessment proceedings had called for the details regarding write back of provision for doubtful debts and the same had been submitted to the AO. Except for this one issue the appellant has not established that the other issues on the basis of which the assessment has been reopened were also examined by the AO during the course of the original assessment proceedings by calling for details from the appellant. In this case, the assessment had been reopened within four years of the end of the assessment year and hence, the first proviso to Section 147 is not applicable in this case. The appellant has further relied upon the decision of the Hon'ble ITAT Ahmedabad in its own case for AY 2004-05. In this decision, the ITAT has relied upon the decision of the Hon'ble Delhi High Court in the case of CIT vs Kelvinator India Ltd. 256 ITR 1 (Del) which was subsequently, approved by the Hon'ble Supreme Court of India in the decision reported in 320 ITR 561. The relevant part of the decision of the Tribunal in this case has been reproduced above as a part of the appellant's submission. On the basis of this decision, the appellant's I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 5 contentions are that since, the AO had recorded reasons for reopening on the basis of the income and expenditure account and balance sheet itself which were very much before him at the time of required assessment also, hence, it is a mistake committed by the AO himself and as per the above decision of the Tribunal in its own case, the reopening is bad in law. In this regard, it is seen that the Hon'ble ITAT while deciding the appeal order for the AY 2004-05 in the appellant's case has not considered the decision of the jurisdictional High Court in the case of Gujarat Power Corporation Ltd. 350 ITR 266(Guj), in which the decision in the case of Kelvinator India Ltd. has also been discussed. In this decision, the Court has held as follows: "27. From the above discussion, it will emerge that when in an assessment framed by the Assessing Officer, if a certain claim of the assessee is not examined, no queries raised, no answers elicited, it can not be stated that merely because the Assessing Officer did not reject such a claim in the final order of assessment, he should be deemed to have expressed an opinion with respect to such a claim and any reopening of an assessment of this nature even within a period of four years from the end of relevant assessment year would amount to change of opinion. We are further of the opinion that in any such case, as long as there is some tangible material on the basis of which the Assessing Officer can form a belief that the income chargeable to tax has escaped assessment, it would be permissible to reopen the assessment in exercise of powers under section 147 of the Act, particularly after the amendments made with effect from 1.4.1989. Such tangible material need not be alien to the record." 4.2.1 Thus in the present case, the assessment has been reopened on four grounds out of which only one ground had been enquired into by the AO during the course of original assessment proceedings by calling for details from the appellant. Regarding other grounds, the reopening is valid on account of the fact that in several judicial pronouncements it has been held that if the assessment had been reopened on several grounds and even if the reopening is valid on any one of these grounds, the entire reopening cannot be held to be invalid and reassessment order will be a valid order, the AO's action is upheld. Reliance in this regard is placed upon the decision of Hon'ble Gujarat High Court in the case of Inductotherm (India) Pvt. Ltd. in Special Civil Application No. 858 of 2006. Besides, the jurisdictional High Court has also held that the information on the basis of which the assessment is reopened need not be alien to the assessment record. 4.2.2. So far as the appellant's claim regarding audit objection is concerned, it is seen that the AO in his reasons recorded for reopening has nowhere mentioned that the assessment is being reopened on the direction of the Audit Party. He has found his own reasons to believe that the income has escaped assessment. Under such circumstances, the AO's I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 6 action of reopening the assessment is upheld and these grounds of appeal are dismissed.” 4 Aggrieved against the appellate order, the Assessee is in appeal before us raising the following Grounds of Appeal: ITA No. 2002/Ahd/2014 “Your appellant being dissatisfied with the order passed by the Commissioner of Income-tax (Appeals) IV, Baroda (CIT(A)], prefers this appeal against the same on the following amongst other grounds, which are without prejudice to each other. 1. The learned CIT (A) has erred in upholding reassessment under section 147 of the Act. It is submitted that in the facts and circumstances of the case reassessment was bad in law. It is submitted it be so held now. 1.1 The learned CIT(A) failed to appreciate that reassessment on the satisfaction of Audit is not permissible. It be so held now. 2 The learned CIT(A) has erred in directing the AO to tax the rental income from buildings given on lease as income under the head 'Income from House Property' instead of "Profits and Gains from Business and Profession' and thereby denying depreciation and other expenditure on the said buildings. It is submitted that it be so held now. 2.1 The learned CIT(A) erred in not appreciating the fact that the buildings were given on lease in the ordinary course as a part of its business of Dairy Development and therefore eligible for depreciation. It be so held now. 2.2 The learned CIT(A) erred in not appreciating the fact that the assets given on lease have lost their identity when they entered the block of assets and no new building has been acquired during the year. Hence there cannot be disallowance of deprecation under the Act. 2.3 The Learned CIT(A) while holding that rental income be taxed as Income from House Property ought to have directed to grant standard deduction u/s 24 of the Act. Your appellant prays for leave to add to alter and/or to amend any of the grounds before the final hearing of the appeal.” 4.1. Since the assessee has raised the ground on the validity of reopening of assessment the same is required to address first and I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 7 then subject to the outcome, we need to proceed on the merits of case. Thus ground no. 1 & 1.1 are taken first for adjudication. 5. The Ld. Counsel Shri Yogesh Shah appearing for the assessee submitted before us, two sets of Paper Books and compilation of case laws and argued that the reopening of assessment within four years period wherein regular assessment u/s. 143(3) was completed, but there is no new tangible material was available with the Assessing Officer to reopen the assessment. As it can been seen from the reasons recorded by the Assessing Officer: (A) On further verification of the case records (income & expenditure statement of the Financial Year 2005-06), the A.O. found excess provision for doubtful debts of Rs. 41 crores and Rs. 22,12,962/- provision for inventory obsolescence were written back but not treated as income. (B) On further verification, it was found that the assessee company has leased out various assets like building and roads etc., totaling Rs. 4,11,56,354/- and depreciation thereon at 30% Rs. 1,23,46,906/- which was incorrectly allowed and required to be withdrawn and added to the total income of the assessee. (C) On further verification of the details of unsecured loans in Annexure-III of the Balance Sheet, interest amount of Rs. 2,77,18,178/- is required to be disallowed and added to the total income of the assessee. (D) On further verification, it was found that the assessee had claimed and allowed depreciation of Rs. 63,55,864/- @ 30% on “rail milk tankers” whereas depreciation is liable at 15% which has resulted in underassessment of income of Rs. 31,77,932/- which required to be added in the total income of the assessee. I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 8 5.1. Thus on all the four counts, the Assessing Officer relied upon from the materials available on record namely income and expenditure statement, balance sheet and other material filed along with the Return of Income. There is no new tangible material available before the A.O. to proceed with the reassessment proceedings. Thus there is no failure on the part of the assessee to disclose fully and truly all materials necessary for assessments in the Return of Income. 5.2. In this connection, the assessee relied upon the case laws compilation filed before us. The Ld. Counsel further submitted even on merits of the case, the additions made in the reassessment order are also covered in favour of the assessee. Therefore the entire reassessment proceeding itself is ab initio bad in law and the same is liable to be quashed. 6. Per contra, the Ld. CIT-DR Shri Sudhendu Das appearing for the Revenue supported the order passed by the Lower Authorities and claimed that the reopening of assessment within four years is valid in law and there is no restriction in reopening the assessment u/s. 147 and therefore the additions made in the reassessment order is to be upheld. The Ld. D.R. relied upon Jurisdictional High Court Judgment in the case of Inductotherm (India) (P.) Ltd. Vs. M. Gopalan, DCIT reported in [2013] 36 taxmann.com 401 which was followed by the Ld. CIT(A) in upholding the reassessment as good in law. Thus the Ld. D.R. pleaded to dismiss the validity of reopening ground raised by the assessee. I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 9 7. We have given our thoughtful consideration and perused the materials available on record including the Paper Books and compilation of Case Laws filed before us. The preliminary question that is to be adjudicated by us is whether the reopening of assessment done within 4 years period in a case where regular assessment is completed u/s. 143(3) without there being any tangible materials available on record is valid in law? 7.1. The Case Laws submitted before us by the assessee are distinguishable with the facts of the present case and our remarks are as follows: Sr. No. Case Laws Remarks 1. CIT V Kelvinator of India Ltd. 187 Taxmann.com 312 (SC) 143(3) order- Reopened within 4 years. Applicable 2. CIT V Kelvinator of India Ltd. 123 Taxmann.com 433 (Del) 143(3) order- Reopened within 4 years. Applicable 3. Nilamben Sandipbhai Parikh V Acit 109 Taxmann.com 336 (Guj.) 143(3) order- Reopened after 4 years- Not Applicable 4. Parul Bhupendra Patel V ITO 1346/Ahd/2015 (Ahd SMC bench) dated 30/10/2015 143(1) Intimation- within 4 years – Not Applicable 5. Aia Engineering Ltd. V ACIT 138 Taxmann.com 534 (Guj.) 143(3) order-Reopened after 4 years- Not Applicable 6. Gujarat Natural Resources Ltd. V ACIT 148 taxmann.com 476 (Guj.) 143(3) order-Reopened after 4 years- Not Applicable 7. Jivraj Tea Ltd. V ACIT 116 taxmann.com 27 (Guj.) 143(3) order-Reopened after 4 years- Not Applicable 8. CIT V Orient Craft Ltd. 29 Taxmann.com 392 (Del) 143(1) Intimation- within 4 years- Not Applicable 9. Solvay Specialities India (P.) Ltd. 149 Taxmann.com 228 (Bom) 143(3) order- Reopened within 4 years. Applicable 7.2. The Case Laws Nos. 1, 2 & 9 are applicable to the facts of the present case. We have already extracted the “reasons recorded” by the A.O. for reopening of assessment at Para 2 of this order. In the reasons, it is noted by the A.O. the assessee filed a loss return of Rs. 14,02,04,517/- and the original assessment was completed u/s. 143(3) of the Act on 30.12.2008 determining the total income I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 10 of Rs. 9,71,36,300/-. From the reasons recorded by the A.O., it clearly reflects that the same are based on the profit and loss account and balance sheet field by the assessee, which were very much available before the Assessing Officer at the time of passing original assessment order also. Further the reasons recorded by the Assessing Officer does not show that any new tangible material available on record and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. In the light of these facts, we examined the applicability of the Hon’ble Apex Court judgment rendered in the case of CIT Vs. Kelvinator of India Ltd. wherein categorically held that the Assessing Officer has no power to review his assessment order, but has only the power to reassess, provided there is “tangible material” on record that there is escapement of income from assessment. The relevant portion of the Supreme Court judgment in Kelvinator case reads as follows: “...4. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re- opening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1- 4-1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post 1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open 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 power to re- assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre- condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 11 Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power 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 gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987. Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer.” 7.3. Further the Full Bench judgment of the Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. (123 Taxmann.com 433) clearly held that the Assessing Officer does not have any jurisdiction to review his own order, his jurisdiction is confined only to rectification of mistake as contained in section 154 of the Act, that too “mistake apparent on record” and not on debatable issues. Thus the only remedy left with the department is to invoke Revision proceedings u/s. 263 of the Act, to revise the assessment order by the Commissioner of Income Tax on the ground that the assessment order is erroneous and prejudicial to the interest of Revenue. Further wherever a regular assessment order is passed by Assessing Officer, it is presumed that the order was passed after application of mind, thereby Assessing Officers are not given powers to reopen the assessment on the same set of facts in the absence of tangible material. The operative portion of the Full Bench Judgment reads as follows: “.....14. It is well-settled principle of interpretation of statute that entire statute should be read as a whole and the same has to be considered thereafter Chapter by Chapter and then section by section and ultimately word by word. It is not in dispute that the Assessing Officer does not have any jurisdiction to review its own order. His jurisdiction is confined only to rectification of mistake as contained in section 154 of the Act. The power of rectification of mistake conferred upon the ITO is circumscribed by the provisions of section 154. The said power can be exercised when mistake I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 12 is apparent. Even mistake cannot be rectified where it may be a mere possible view or where the issues are debatable. Even the Tribunal has limited jurisdiction under section 254(2) of the Act. Thus, when the Assessing Officer has considered the matter in detail and the view taken is a possible view, the order cannot be changed by way of exercising the jurisdiction of rectification of mistake. 15. It is a well-settled principle of law that what cannot be done directly cannot be done indirectly. If the ITO does not possess the power of review, he cannot be permitted to achieve the said object by taking recourse to initiating a proceeding of reassessment or by way of rectification of mistake. In a case of this nature the revenue is not without remedy. Section 263 of the Act empowers the Commissioner to review an order which is prejudicial to the revenue.” ............. “22. We are unable to agree with the submission of Mr. Jolly to the effect that the impugned order of reassessment cannot be faulted as the same was based on information derived from the tax audit report. The tax audit report has already been submitted by the assessee. It is one thing to say that the Assessing Officer had received information from an audit report which was not before the ITO, but it is another thing to say that such information can be derived by the material which had been supplied by the assessee himself. 23. We also cannot accept submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded on analysis of the materials on the record by itself may justify the Assessing Officer to initiate a proceeding under section 147. The said submission is fallacious. An order of assessment can be passed either in terms of sub-section (1) of section 143 or sub-section (3) of section 143. When a regular order of assessment is passed in terms of the said sub- section (3) of section 143, a presumption can be raised that such an order has been passed on application of mind. It is well-known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act the judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong. For the reasons aforementioned, we are of the opinion that answer to the question raised before this Bench must be rendered in the affirmation, ie, in favour of the assessee and against the revenue. No order as to costs.” I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 13 7.4. In our considered opinion, the facts in the present case regarding reopening of assessment is squarely covered in favour of the assessee by the Judgment of the Delhi High Court which is duly confirmed by Hon’ble Apex Court in the case of Kelvinator of India Ltd. It is noticed from the Ld. CIT(A), that the Ld. CIT(A) has followed Gujarat Power Corporation Ltd. Vs. ACIT wherein relying upon Para 27 of that judgment observing tangible material need not be alien to the record for the purpose of reopening of assessment. The Ld. CIT(A) also relied upon Gujarat High Court Judgment in the case of Inductotherm (India) (P.) Ltd. With due respects, the extract of the judgment made by Ld. CIT(A) in the case of Gujarat Power Corporation Ltd. is not the finding of the High Court of Gujarat. 7.5. The Jurisdictional High Court in the case of Gujarat Power Corporation after detailed consideration of the various High Court judgments and the Hon’ble Supreme Court of India in the case of Kelvinator of India Ltd. and in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. held as follows: “.....48. Before closing this issue, we would like to clarify one aspect. We have expressed our opinion on the question framed by us. In a given case, it may so happen that a particular claim may have many facets. For example, a claim of deduction under section 80-HHC of the Act would have various parameters. If one of the parameters is scrutinized or accepted either with or without reasons, that by itself may not mean that the entire claim of deduction under section 80-HHC of the Act stood verified and accepted by the Assessing Officer. We hasten to add that each case must depend on facts individually and in a given case, it may be possible for the assessee to argue that all aspects of the claim were examined or that different facets of the claim were so inextricably interlinked that the assessing officer must be taken to have examined the entire claim. We only clarify that our answer to the second question must be seen within the limited scope of the question itself. I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 14 49. The last question is how would these conclusions apply in the present case. To quickly recapitulate, the petitioner assessee put forth his claim for exemption under section 10(23G), of the Act with respect to three different incomes, namely, (1) interest from SSNNL bonds, (2) interest from GIPCL bonds, and (3) capital gain from sale of shares by GPEC. Such claim was supported by the notes forming part of the return of income. It is not as if the Assessing Officer did not notice these claims. In fact, the Assessing Officer asked the assessee to justify all the claims. In paragraph 5 of his letter dated 31.1.2005, he called upon the assessee to justify the claim of exemption of capital gain on the sale of shares. In paragraph 12, he called upon the assessee to justify the claim of exemption under section 10(23G) of the Act vis-a-vis interest earned from SSNNL/GIPCL bonds. The assessee gave detailed reply to the query raised in para 5 with respect to capital gain. The assessee, thereafter, contended that such justification would apply with respect to interest on the bonds also. Contents of the letter of the assessee would demonstrate that the assessee offered its explanation for claiming exemptions under section 10(23G) of the Act. If for some reason the Assessing Officer was not satisfied with such explanation, surely it was open for him to call for further explanation. In the final order of assessment, it is not as if the Assessing Officer totally lost sight of such claims. He in fact took into account the fact that the assessee was claiming exemption on the interest income from the bonds. He, therefore, examined as to what extent expenditure for earning such tax free income should be disallowed. In the order of assessment, he gave detailed reasons why a portion of the expenditure relating to earning tax free interest should be disallowed. 50. In the reasons which the Assessing Officer recorded for reopening the assessment, he based his case on wrong exemption of interest from SSNNL/GIPCL Bonds claimed under section 10(23G). 51. In our opinion, any such reopening would be based on a mere change of opinion. In the reasons, the Assessing Officer started with the words, "from the records, it can be seen that ...". Entire information and the material that the Assessing Officer, therefore, had at his command was reflected from the record itself. This coupled with the fact that in the original assessment, the Assessing Officer examined such claims in detail, would convince us that any reopening of the assessment of same claims on the basis of same material, amounts to a mere change of opinion. The fact that the Assessing Officer did not record reasons for making no disallowance on such claim of exemption, would be of no consequence. 52. In the result, we are of the opinion that the notice was issued without jurisdiction. The same, therefore, requires to be and is hereby quashed. Rule is made absolute accordingly with no order as to costs.” 7.6. Even in the case before us, the reasons recorded by the Assessing Officer, used the phrase “on verification of the case I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 15 records”, ........ “On further verification, it was found”. Thus it is proved beyond doubt, the Assessing Officer from the very same materials available on record proceeded to make reassessment without any new tangible material, which is not permissible in law and the same amount to mere change of opinion of the original assessment order passed. Further there is no failure on the part of the assessee in full and true disclosure of materials relevant for the assessment. 8. Very recently Bombay High Court Judgment in the case of Solvay Specialities India (P.) Ltd. Vs. DCIT reported in [2023] 149 taxmann.com 228 held that where Assessing Officer while passing regular assessment order u/s. 143(3) had gone into assessee’s claim of depreciation on WDV and allowed the claim later in the absence of any new tangible material, said assessment could not be reopened u/s. 147 of the Act by observing as follows: “.....17. It can also be seen from the reasons recorded that there was no new material which had come to the notice of the Assessing Officer and the entire reference in the reasons recorded is only to the material on record. 18. In Jindal Photo Films Ltd. v. Dy. CIT [1999] 105 Taxman 386/[1998] 234 ITR 170, the Court, in the background of section 147 of the Act, observed: “.............all that the Income-tax Officer has said is that he was not right in allowing deduction under section 801 because he had allowed the deductions wrongly and, therefore, he was of the opinion that the income had escaped assessment. Though he has used the phrase "reason to believe" in his order, admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of opinion by the Income-tax Officer nothing new has happened. There is no change of law. No new material has come on record. No information has been received. It is merely a fresh application of mind by the same Assessing Officer to the same set of facts. While passing the original orders of assessment the order dated February 28, 1994, passed by the Commissioner of I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 16 Income-tax (Appeals) was before the Assessing Officer. That order stands till today. What the Assessing Office has said about the order of the Commissioner of Income-tax (Appeals) while recording reasons under section 147 he could have said even in the original orders of assessment. Thus, it is a case of mere change of opinion which does not provide jurisdiction to the Assessing Officer to initiate proceedings under section 147 of the Act. It is also equally well settled that if a notice under section 148 has been issued without the jurisdictional foundation under section 147 being available to the Assessing Officer, the notice and the subsequent proceedings will be without jurisdiction, liable to be struck down in exercise of writ jurisdiction of this court. If "reason to believe" be available, the writ court will not exercise its power of judicial review to go into the sufficiency or adequacy of the material available. However, the present one is not a case of testing the sufficiency of material available. It is a case of absence of material and hence the absence of jurisdiction in the Assessing Officer to initiate the proceedings under section 147/148 of the Act." 19. Testing the facts of the present case on the touchstone of the judgments (supra), it can be seen that there was no new material in the possession of the Assessing Officer. Nothing new had happened, neither was there any change in the applicable law, which would have warranted the reopening of the case. It clearly suggests that in the garb of reopening the assessment, the Assessing Officer was reviewing the earlier order of assessment. In the absence of any new tangible material available with the Assessing Officer, and in view of the fact that there is a general presumption that an order of assessment under section 143(3) has been passed after proper application of mind and considering the fact that in the present case, the Assessing Officer had sought clarification with regard to the assets which had been written off, details whereof were submitted during the course of the proceedings, it certainly goes to show that the issue with regard to depreciation had been gone into by the said Assessing Officer without making any disallowance as regards the claim of the depreciation. 20. In the light of the above, we have no hesitation in holding that the reassessment proceedings were nothing but a case of 'change of opinion', which does not comply with the jurisdictional foundation under section 147 of the Act.” 9. Similarly, the Hon’ble Supreme Court of India in the case of PCIT vs. Atul Ltd. reported in [2020] 119 taxmann.com 287 dismissed the SLP are held as follows: I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 17 “Section 28(1), read with section 147, of the Income-tax Act, 1961 - Business loss/deductions - Allowable as (Loss on sale of stores) - Assessment year 2007-08 - Assessee-company was engaged in manufacturing pharmaceuticals, fertilizers, chemicals, paints etc. - For relevant year, assessee filed its return declaring certain taxable income Assessing Officer completed assessment under section 143(3) wherein loss incurred by assessee on sale of stores was allowed as business loss - Subsequently, Assessing Officer initiated reassessment proceedings by taking a view that loss in question was in nature of capital loss not eligible for deduction - Tribunal set aside reassessment proceedings by holding that same was based on mere change of opinion High Court upheld Tribunal's order- Whether SLP filed by revenue against order of High Court was to be dismissed - Held, yes [Para 2][In favour of assessee]” 10. Respectfully following the above judicial precedents, we have no hesitation in holding that in the absence of tangible material, reopening of assessment amounts to “change of opinion” only. Therefore the reopening is not valid as per law and the same is hereby quashed. Thus the ground no. 1 & 1.1 raised by the Assessee are hereby allowed. The case laws relied by the Ld. CIT(A) and reiterated by the Ld. D.R. namely Inductotherm (India) (P.) Ltd. is a case where intimation u/s. 143(1) was only passed and no regular assessment is been made. The facts in that case is not applicable to the facts of the present case. Thus the case laws relied by the Revenue is clearly distinguishable to the facts of the present case. In view of our decision that the reassessment order itself quashed, the remaining grounds raised by the Assessee on merits do not call for any adjudication and the same becomes infructuous. 11. In the result, the appeal filed by the Assessee stands allowed. ITA No. 1871/Ahd/2014 for Revenue’s appeal. 12. The Grounds of Appeal raised by the Revenue reads as under: I.T.A Nos. 2002 & 1871/Ahd/2014 A.Y. 2006-07 Page No National Dairy Development Board Vs. ACIT 18 1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting the addition to the extent of 41,00,00,000/- being write back provision and provision of inventory obsolescence to the extent of 22,12,962/- for A.Y. 2006-07, without appreciating that the entire entity was exempt from tax up to A.Y. 2002-03, therefore claiming such deduction by way of excess provision written back of earlier years amounts to double deduction. 2. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in holding that the agreement entered for leasing of assets by the assessee are in the nature of operating lease without appreciating the fact that the assessee is not engaged in the business of providing of lease. 3 The appellant craves leave to add, to amend or alter the above grounds as may be deemed necessary. Relief claimed in appeal. The order of the Ld. CIT(A) on the issues raised in the aforesaid Grounds be set aside and that of the Assessing Officer be restored. 13. As the reassessment proceedings itself held to be invalid and quashed in ITA No. 2002/Ahd/2014 consequently the appeal filed by the Revenue has no legs to stand and the same is hereby dismissed. Order pronounced in the open court on 16-06-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 16/06/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद