ASST CIT 24(3), MUMBAI V. NANAVATI CONSTRUCTIONS, MUMBAI

ITA 2424/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0290 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Assessee Lawyers: B V JHAVERI
• Keywords: Reopening of assessment; Audit objection; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 133A; 234B; 143(1); 48; 13; 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2424/M/2017 ASSESSMENT YEAR: 2009-10 ACIT 24(3), OFFICE OF THE ACIT-24(3), R.NO.413, 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012 VS. M/S. NANAVATI CONSTRUCTIONS, 52, SARVODYA INDL. ESTATE, MAHAKALI CAVES ROAD, ANDHERI (EAST), MUMBAI- 400 093 PAN: AAFFN9695M (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B.V. JHAVERI, A.R. REVENUE BY : MS. KAVITA P. KAUSHIK, D.R. DATE OF HEARING : 12.09.2019 DATE OF PRONOUNCEMENT : 19.12.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 09.01.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE APPEAL FILED BY THE ASSESSEE MERELY ON THE GROUND THAT THE RE-OPENING OF ASSESSMENT WAS INVALI D WITHOUT GOING INTO THE FACTS OF THE CASE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN IGNORING THE FACT THAT NO IN TEREST WAS CHARGED ON DEBIT BALANCE OF THE PARTNER'S (SHRI APURVA JAGDISH NANAV ATI) CAPITAL ACCOUNT. ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 2 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN IGNORING THE FACT DURING THE COU RSE OF SURVEY, ASSESSEE HAD ADMITTED RS. 15,16,44,927/- AS INCOME AT THE TIME O F STATEMENT ON OATH RECORDED U/S. 131 OF THE I.T. ACT, WHEREAS THE ASSESSEE HAS FILED RETURN OF INCOME ON 23.09.2009 FOR A.Y.-2009-10 OFFERING THE NET PROFIT AT RS.6,56,45,003/-. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CU(A) ERRED IN ALLOWING ADDITIONAL GROUND OF APP EAL WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER TO REBUT THE S AME. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A PPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE O RDER OF LD. CIT(A) ALLOWING THE APPEAL OF THE ASSESSEE ON THE J URISDICTIONAL ISSUE. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 23.09.2009 DECLARING AN INCOME OF RS.6,69 ,31,103/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEV ELOPMENT. THE ASSESSMENT PROCEEDINGS WERE COMPLETED UNDER SEC TION 143(3) OF THE ACT ON 28.12.2011 ACCEPTING THE RETUR N OF INCOME. THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED U NDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT DATED 27.03.2014 AFTER RECORDING THE REASONS TO BEL IEVE UNDER SECTION 148(2) OF THE ACT. THE ASSESSMENT WAS REOPE NED PRIMARILY FOR TWO REASONS ONE THAT THE ASSESSEE HAS NOT CHARGED INTEREST ON THE DEBIT BALANCE OF THE PARTNE R WHEREAS THE DEED OF PARTNERSHIP PROVIDES FOR CHARGING OF INTER EST @12% PER ANNUM ON THE DEBIT BALANCES AND THUS RS.82,01,370/- HAS ESCAPED ASSESSMENT. SECONDLY, THE ASSESSMENT WAS R EOPENED ON THE GROUND THAT AS PER DEVELOPMENT AGREEMENT WIT H THE LAND ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 3 OWNER, THE ASSESSEE DEVELOPED A PLOT AT JUHU AND AS PER SERIAL NO.3 OF THE DEVELOPMENT AGREEMENT, THE DEVELOPER WA S TO PAY TO THE LAND OWNER FOR DEVELOPMENT RIGHTS A SUM OF RS.1 8 CRORE TOWARDS COST OF THE SAID LAND AND IN ADDITION 50% O F THE PROFIT ACCRUING TO THE DEVELOPER AFTER MEETING ALL THE EXP ENSES. THE ASSESSEE HAS RECEIVED RS.9,52,87,548/- IN TWO YEARS AS 50% PROFIT FROM THE PROJECT WHICH WAS NOT OFFERED TO TA X BY THE ASSESSEE. ACCORDINGLY, AN INCOME OF RS.10,34,88,99 0/- HAS ESCAPED ASSESSMENT. THE AO FINALLY ADDED TO THE IN COME OF THE ASSESSEE RS.82,01,320/- AS DISCUSSED IN PARA 6 OF T HE ASSESSMENT ORDER AND RS.8,59,99,924/- AS PER PARA 7 .2 BY FRAMING ASSESSMENT UNDER SECTION 143(3) READ WITH S ECTION 147 DATED 20.03.2013. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) QUA SHED THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED BEFORE TH E LD. CIT(A) THAT THE ASSESSEE FILED THE RETURN OF INCOME OF RS. 6,69,31,103/- ON 29.03.2009 WHEREAS THE SURVEY WAS CONDUCTED ON 08.09.2009 ON THE APPELLANT PREMISES. DURING THE C OURSE OF SURVEY, STATEMENT OF SHRI APURVA JAGDISH NANAVATI, ONE OF THE PARTNERS OF THE ASSESSEE WAS RECORDED WHICH WAS SUB SEQUENTLY RETRACTED ON 18.09.2009 AND FINALLY THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON RS.6,69,31,103/- ACCEPTING THE RETURN OF INCOME. THE LD. A.R. SUBMITTED BEFORE THE APPEL LATE AUTHORITY THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AL L THESE STATEMENTS RECORDED DURING THE COURSE OF SURVEY ACT ION AND OTHER RELATED ISSUES WERE TAKEN INTO CONSIDERATION. THEREAFTER, INTERNAL AUDIT PARTY RAISED SEVERAL OBJECTIONS WHIC H WERE EXPLAINED VIDE LETTER DATED 16.08.2013 AND 21.10.20 13. THE AO WROTE LETTER TO THE SENIOR AUDIT OFFICER ON 12.06.2 014 DISPOSING ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 4 OF/SETTLING THE AUDIT OBJECTIONS AS THE AO DID NOT AGREE TO ANY OF THE OBJECTIONS RAISED BY THE AUDIT PARTY. THE LD. A.R. SUBMITTED THAT THE AO WHO DISPOSED OF THE AUDIT OBJECTIONS VI DE HIS LETTER DATED 12.06.2014 ISSUED NOTICE UNDER SECTION 148 ON 13.08.2014 ON THE BASIS OF SAME AUDIT OBJECTIONS WH ICH IS A CLEAR CUT CHANGE OF OPINION. HOWEVER, THE OBJECTIO N RAISED BY THE ASSESSEE FIRM AGAINST THE REOPENING OF ASSESSME NT WAS REJECTED BY THE AO ON 20.01.2015 AND WENT WITH THE REASSESSMENT PROCEEDINGS. THE LD. CIT(A) THUS CONS IDERING ALL THESE CONTENTIONS OF THE ASSESSEE ALLOWED THE APPEA L OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 5.7. HELD: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, R E-ASSESSMENT ORDER, WRITTEN SUBMISSION OF THE APPELLANT AND ASSESSMENT RECORD CALLED FOR DURING APPELLATE PROCEEDINGS. IN MY OPINION THERE IS SUBSTANCE IN THE ABOVE ARGUM ENT OF THE APPELLANT. IT SEEMS THAT REASON TO BELIEVE WERE RECORDED U/S 1 48 OF THE ACT ON 27.03.2014 AND NOTICE U/S 148 WAS ISSUED ON THE SAM E DAY. ON PERUSAL OF ASSESSMENT RECORD, IT IS FOUND THAT THE CASE WAS RE OPENED ON THE BASIS OF AUDIT OBJECTION. IN THE ASSESSMENT RECORD, IT IS FURTHER FOUND THAT THERE IS A LETTER ADDRESSED TO THE SR. AUDIT OFFICER, LAP-XVI, MUMBAI DATED 12X36, R 2_OM BY THE AO FORWARDED THROUGH PROPER CHANNEL, WHICH IS REPRODUC ED FOR READY REFERENCE AS UNDER: 'IN THIS CASE FOLLOWING TWO OBJECTIONS HAS BEEN RAI SED BY THE AUDIT PARTY. I) ASSESSEE FIRM IS BUILDER AND DEVELOPER AND CONST RUCTED A PROJECT AT WEST WING JUHU TARA ROAD. MUMBAI-42. THE ASSESSMENT OF A FIRM FOR THE ASSESSMENT YEAR 2009-10 WAS COMPLETED AFTER SCRUTIN Y IN DECEMBER 2011 BY ACCEPTING THE RETURNED INCOME OF RS. 6961103/-. AUDIT SCRUTINY REVEALED FROM THE SCHEDULE 8 OF THE PARTNERS' CAPITAL ACCOUN T APPENDED TO THE BALANCE SHEET THAT OUT OF TWO PARTNERS, ONE PARTNER SHRI. APURVAJAGDISHNANAVATI HAVING 50% SHARING RATIO IN T HE PROFIT HAD A DEBIT BALANCE OF RS.63844750/- TO HIS CAPITAL ACCOUNT AS ON 01.04.2008. HOWEVER, NO INTEREST IS CHARGED ON DEBIT BALANCE OF THE PART NER. THE DEBIT BALANCES INDICATE THE WITHDRAWAL OF FUNDS BY THE PARTNERS FO R PERSONAL PURPOSES WITHOUT ASSIGNING ANY COST. AS PER AUDIT REPORT IN FORM 3CD THERE IS NO CHANGE IN PARTNERS. AS PER CLAUSE 10 OF THE DEED OF PARTNERSHIP (DTD. 05.12.2005 SUBMITTED ALONGWITH RETURN OF INCOME FOR A.Y. 2006-07) IF THERE IS A DEBIT BALANCE IN THE CAPITAL OR LOAN ACCOUNT O F ANY PARTNER, SIMPLE INTEREST @12% SHALL BE RECOVERABLE FROM THE PARTNER . NON-CHARGING OF INTEREST @72% ON THESE DEBIT BALANCES 35 PER THE CL AUSE OF DEED OF PARTNERSHIP RESULTED IN UNDER ASSESSMENT OF INCOME OF RS. 8201370/- (RS. 68344750 ' 12%) A PREVIOUS YEAR RELEVANT TO A.Y. 20 09-10 LEADING TO SHORT ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 5 LEVY OF TAX OF RS.2787646/-INCLUDING SURCHARGE, EDU CATION CESS. AN INTEREST U/S. 234B IS ALSO LEVIABLE. DURING AUDIT, IT WAS OBSERVED THAT NANAVATI CONSTRU CTION IS A PARTNERSHIP FIRM WITH TWO PARTNERS. THE FIRM HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE LAND OWNER WHERE THE PLOT HAS BE EN DEVELOPED AT JUHU TARA ROAD. AS PER SR. NO. 3 OF THE DEVELOPMENT AGRE EMENT THE DEVELOPER SHALL PAY TO THE LAND OWNER FOR THE GRANT OFDEVELOP MENT RIGHTS TO THE SAID LAND A SUM OF RS.18,00,00,000/- TOWARDS THE COST OF THE SAID LAND (LAND COST) AND IN ADDITION THERETO, A SUM AMOUNTING TO 5 0% OF THE NET PROFIT ACCRUING TO THE DEVELOPER. NET PROFIT SHALL MEAN TH E SUMS ACCRUING TO THE DEVELOPER FROM THE SALE OF THE PREMISES CONSTRUCTED ON THE SAID LAND, LESS THE ENTIRE COST OF THE DEVELOPMENT OF THE SAID LAND . THE FIRM HAS PAID RS.95287549/- ( RS.65645003/- FOR A.Y. 2009-10 AND RS.29642546/- FOR A.Y. 2010-11) AS 50% PROFIT FROM THE PROJECT ( THE DETAI LS OF 50% OF SHARE OF PROFIT OF RS.29642546/- IN A.Y. 201-12 WAS COLLECTE D FROM THE LAND OWNERS RETURN) PASSED ON THE LAND OWNER MR. R.P. VAVIANA. THIS 50% OF THE PROFIT PAID TO THE LAND OWNER HAS ARISEN FROM THE PROJECT AND THE SAID SHARE OF PROFIT HAS BEEN PAID TO THE LAND OWNER HAS ARISEN F ROM THE NET PROFIT PASSED ON TO THE LAND OWNER THEREFORE IT WAS DUTY OF THE F IRM TO PAY THE TAX ON IT. AS PER THE AGREEMENT ALSO LAND COST AND NET PROFIT EXPLAINED SEPARATELY. HENCE THIS PROFIT ESCAPES THE TAX LIABILITY IN THE FIRM'S HAND. WITHOUT PREJUDICED TO ABOVE IT WAS ALSO OBSERVED TH AT DURING THE SURVEY, ASSESSEE FIRM HAS DISCLOSED THE PROFIT FROM THIS PR OJECT AT RS.15.16 CRORES, WHEREAS THE INCOME OFFERED ONLY RS.6.56 CRORES DURI NG THE A. Y. 2009-10. IN THIS REGARD, IT IS BRING TO YOUR KIND NOTICE THA T A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE O N 9/9/2009. IN THE YEAR IN REFERENCE THE ASSESSEE HAS EXECUTED ONLY ONE PRO JECT AT JUHU TARA ROAD. IN THE COURSE OF THE SURVEY, THE SURVEY PARTY HAD P REPARED A PROFIT AND LOSS ACCOUNT FOR THE YEAR IN REFERENCE BASED ON DETAILS AND MATERIAL AVAILABLE. THE SURVEY PARTY HAD TAKEN THE PROJECT EXPENDITURE AT RS.31,19,30,731/-. DURING THE COURSE OF SURVEY, THE ASSESSEE HAD STATE D THAT SOME BILLS RECEIVED AFTER 31.03.2009 BUT PERTAINING TO THE YEA R IN REFERENCE AND TO THE PROJECT HAD REMAINED TO BE ACCOUNTED FOR. THE SURVE Y TEAM WAS TAKEN AS RECEIVED/ ACCRUED AS SALE PROCEEDS OF THE FLATS TIL L 31.03.2009 AT RS.42.32,55,002/-. THE CLOSING STOCK AS AT 31.03.20 09 WAS VALUED AT RS.5,49,06,489/- PARTY AND NET PROFIT WAS COMPUTED AT RS.I5,16,44,927/~. THE REASONS FOR DIFFERENCE BETWEEN THE PROFIT COMPU TED BY THE SURVEY PARTY AND ACTUAL PROFIT RETURNED BY THE ASSESSEE MAY BE B RIEFLY EXPLAINED AND RECONCILED AS UNDER: PARTICULAR AMOUNT(RS) AMOUNT(RS) REMARKS 1. PROFIT COMPUTED BY THE SURVEY PARTY. 15,16,44,927 ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 6 2.LESS: DIFFERENCE IN CLOSING STOCK VALUED BY THE ASSESSEE AS PER ARCHITECT'S CERTIFICATE AND AS PER DETAILED COMPUTATION SHEET FILED IN ASSESSMENT AND THE CLOSING STOCK VALUED BY SURVEY PARTY ON ESTIMATED BASIS, (I.E. 5,49,06,489- 3,02,57,208) 2,46,49,281 THE CLOSING STOCK WAS VALUED BY THE SURVEY PARTY WITHIN THE TIME CONSTRAIN AND HENCE THERE WOULD BE SOME ELEMENT OF ESTIMATION AND ERRORS. AS AGAINST THIS, THE ASSESSEE HAS VALUED THE CLOSING STOCK ON A PROPER SCIENTIFIC BAS IS CONSIDERING ALL THE RELEVANT FACTORS AND TAKING INTO ACCOUNT THE ARCHITECT'S VALUATION CERTIFICATE. THE DETAILED VALUATION STATEMENT FILED IN THE COURSE OF ASSESSMENT WAS DULY VERIFIED AND ACCEPTED. IN ANY EVENT THE STOCK VALUATION W OULD BE TAX NEUTRAL AS IN THE SUBSEQUENT YEAR THE CHARGE FOR OPENING STOCK WOULD BE LOWER. 3.LESS: PURCHASE/COST BILLS RECEIVED ALTER 31'03'2009 BUT PERTAINING TO THE PERIOD IN REFERENCE AND TO THE PROJECT ACCOUNTED FOR AFTER THE SURVEY. 1,21,75,640 THE ASPECTS WERE ALREADY KNOWN TO THE SURVEY PARTY. 4.LESS: CONSIDERATION BEING 50% OF THE PROJECT PROFIT PAYABLE TO THE LAND OWNER MR. VEVAINA IN TERMS OF ROISTERED AGREEMENT ACCOUNTED FOR. 6,56,45,003 AS PER THE REGISTERE D DEVELOPMENT AGREEMENT DATED 3 RD DAY OF AUGUST, 2006 EXECUTED WITH THE LAND OWNER MR. VEVIANA, THE TOTAL CONSIDERATION PAYA BLE TO HIM WAS RS.18.0 CRORES AND ALSO 50% OF NET PROFIT FROM THE PROJECT. CLAUSE 3 OF THE SAID DEVELOPMENT AGREEMENT MAKES THIS VE RY CLEAR. IT ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 7 ALSO MAKES IT CLEAR THAT THE SAID ADDITIONAL CONSIDERATION WILL ACCRUE IN THE YEAR THE OC IS RECEIVED. SINCE THE OC WAS RECEIVED THIS YEAR AND THE PROJECT PROFIT ARE ASSESSABLE THIS YEAR, THE AMOUNT PAYABLE TO MR. VEVIANA IS COST OR A CHARGE ON THE PROFITS OF ASSESSEE AND IN ANY EVENT THIS AMOUNT WILL BE DIVERTED BY AN OVERRIDING TITLE AND HENCE THE SAME WOULD BE DEDUCTIBLE FROM THE PROFITS, ARRIVED AT IN THE COURSE OF SURVEY. MR. VEVIANA HAS ALSO DECLARED THIS AMOUNT AS HIS INCOME. IN ANY EVENT THE SAME AMOUNT CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE AND THIS AMOUNT WAS RIGHTLY TAXED IN THE HANDS OF MR. VEVAINA AND HENCE WOULD BE DEDUCTIBLE IN THE HANDS OF THE ASSESSEE. 5. ADD: RENOVATION CHARGED RECOVERED FROM MR. VEVIANA NOT ACCOUNTED BY SURVEY PARTY ACCOUNTED BY ASSESSEE. 1,64,70,000 ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 8 ACCOUNTED BY SURVEY PARTY ACCOUNTED BY ASSESSEE. 6. NET PROFIT DECLARED BY ASSESSEE 6,56,45,003 AT THE TIME OF THE SURVEY THE AUDIT OF THE ACCOUNTS OF THE ASSESSEE HAD NOT BEEN COMPLETED AND THE ACCOUNTS HAD NOT BEEN FINALIZED. THE RETURN PROFIT IS BASED ON AUDITED ACCOUNTS WHEREIN ALL THE AFORESAID MATTERS HAS BEEN DULY ACCOUNTED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DI FFERENCE BETWEEN THE PROFIT COMPUTED BY THE SURVEY PARTY AND THE RETURNED PROFI T HAD BEEN FULLY AND PROPERLY RECONCILED AND EXPLAINED. II RE: DEBIT BALANCE IN PARTNER'S CAPITAL ACCOUNT 1. THERE WAS A DEBIT BALANCE IN THE ACCOUNT OF ONE OF THE PARTNERS MR. APURVANANAVATI. 2. THE CLOSING DEBIT BALANCE WAS RS.3,61,72,248/- A ND THE SAME WAS RS.6,38,44,750/- AT THE OPENING. 3. THE CREDIT BALANCE OF THE OTHER PARTNER MR. SACH IN NANAVATI WAS RS.1,82,7.752/-. 4. THERE IS NO PROVISION IN THE PARTNERSHIP DEED TO PAY INTEREST ON CREDIT BALANCE OF PARTNERS NOR IS THERE ANY PROVISION TO CHARGE INTER EST ON DEBIT BALANCE OF PARTNERS. THE COPY OF THE PARTNERSHIP DEED IS ENCLOSED HEREWI TH FOR YOUR KIND PERUSAL. 5. THE ASSESSEE HAS NOT CLAIMED ANY INTEREST PAID/P AYABLE TO PARTNERS. 6. IN THE YEAR IN REFERENCE THE ASSESSEE HAS PAID I NTEREST OF RS. 5,05,3327- ONLY ON LOANS. BESIDES INTEREST OF RS.47,920/- PAID ON CAR LOAN. 7. THE ASSESSEE HAD MORE THAN AMPLE INTEREST FREE L OANS, NET CREDITORS (I.E. NET OF DEBTORS) AND CREDIT BALANCE IN OTHER PARTNER'S CAPI TAL ACCOUNT TO TAKE CARE OF THE DEBIT BALANCE IN ONE PARTNER'S CAPITAL ACCOUNT. IN VIEW OF THE ABOVE THE OBJECTIONS MAY KINDLY BE T REATED AS SETTLED UNDER THE INTIMATION TO THIS OFFICE.' IT IS CLEAR THAT AO HAS ASKED THE AUDIT OFFICER THA T OBJECTIONS ARE NOT CCEPTABLE MEANING THEREBY THAT OBJECTIONS BE TREATED AS SETTL ED. AGAIN, A REMINDER WAS FORWARDED BY THE SAME AO WHO HAS PASSED THE RE-ASSE SSMENT ORDER ON 23.03.2015 VIDE LETTER DATED 19.01.2015 AND ASKED THE SR. AUDI T OFFICER TO TREAT THE OBJECTIONS SETTLED BY REPEATING THE ABOVE REPLY IN TOTO MEANIN G THEREBY HE HAS NOT ACCEPTED THE AUDIT OBJECTIONS. ALL THESE FACTS CLEARLY ESTA BLISH THAT REASON TO BELIEVE WERE RECORDED U/S 148 OF THE ACT ON 2' 03.2014 AND NOTIC E U/S 148 WAS ISSUED ON THE SAME DAY. SUBSEQUENTLY, AO .,3E LETTER ADDRESSED TO THE SR. AUDIT OFFICER, LAP- XVI, MUMBAI DATED 12.06.2014 HAS ASKED THE AUDIT OFFICER THAT OBJECTIONS ARE NOT ACCEPTABLE MEANING THEREBY THAT OBJECTIONS BE TREA TED AS SETTLED. A REMINDER WAS FORWARDED BY THE SAME AO WHO HAS PASSED THE RE -ASSESSMENT ORDER ON ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 9 23.03.2015 VIDE LETTER DATED 19.01.2015 AND ASKED T HE SR. AUDIT OFFICER TO TREAT THE OBJECTIONS SETTLED. I AM OF CONSIDERED OPINION THA T THERE IS CHANGE OF OPINION BY THE AO ON THE ISSUE OF RE-OPENING THE ALREADY COMPLETED ASSESSMENT. THE POSITION OF LAW IS WELL-SETTLED IN RESPECT OF REOPE NING OF CASE U/S 147/148 OF THE ACT. UNDER TWO SITUATIONS THE AO HAS THE RIGHT TO R EOPEN A COMPLETED ASSESSMENT. IN THE FIRST SITUATION, A COMPLETED ASSESSMENT CAN BE REOPENED EITHER, IF THERE WAS OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL AND RELEVANT FACTS AND THE AO MUST HAVE IN HIS POSS ESSION, BEFORE HE ISSUES NOTICE, SOME MATERIAL FROM WHICH HE CAN REASONABLY FORM A B ELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME DUE TO SOME FAILURE OR OMISSIO N ON THE PART OF THE ASSESSEE TO DISCLOSE FUILY ALL RELEVANT OR MATERIAL FACTS. I N THE SECOND SITUATION, THE AO HAS THE RIGHT UNDER EXPLANATION 2, SUB-CLAUSE(C) OF SEC TION 147 OF THE ACT, WHICH EMPOWERS THE AO TO REOPEN A COMPLETED ASSESSMENT. T HE AO CAN RESORT TO REOPENING UNDER CLAUSE (C) OF SECTION 147 OF THE AC T NOTWITHSTANDING THE FACT THAT THERE WAS NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE, EITHER TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, BUT THE AO IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION SUBSEQUENT TO THE FIR ST ASSESSMENT, HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS BEEN UNDE R ASSESSED AND CONSEQUENTLY HAS ESCAPED ASSESSMENT. IN THE INSTANT CASE THE ISS UE OF SHORT OFFER OF INCOME DISCLOSED DURING SURVEY HAS BEEN CATEGORICALLY THRE ADBARE CONSIDERED BY THE AO IN THE ORIGINAL ASSESSMENT ORDER. REGARDING ISSUE OF N EGATIVE DEBIT BALANCE, THE AO HAS ALREADY ACCEPTED APPELLANT'S REPLY FILED VIDE L ETTER DATED 21,10.2013 AND ASKED THE AUDIT OFFICER TWICE TO TREAT THE AUDIT OBJECTIO NS AS SETTLED. THE AO MUST HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT; THAT THE AO IN THE REGULAR ASSESSMENT PROCEEDINGS HAD NOT FO RMED AN OPINION IN REGARD TO THE ISSUE ON WHICH THE REOPENING NOTICE IS ISSUED; AND THAT THERE HAS BEEN A FAILURE ON THE PART OF THE APPELLANT TO TRULY AND FULLY DIS CLOSE ALL NECESSARY FACTS FOR THE ASSESSMENT. IT IS FOUND THAT ALL THE ABOVE CONDITIO NS ARE TO BE SATISFIED BEFORE REOPENING ANY ASSESSMENT BY ASSESSING OFFICER . IN THE PRESENT CASE, NONE OF THE CONDITIONS ARE SATISFIED AND HENCE REOPENI NG OF ASSESSMENT U/S 147 IS ITSELF INVALID AB-INTIO. APPELLANT HAS RIGHTLY RELIED ON V ARIOUS CASE LAWS AS DETAILED AT PARA 5,6 SUPRA TO SUPPORT THIS POINT OF VIEW. THE JURISD ICTIONAL ITAT G BENCH IN THE CASE OF SUNIL GAVASKAR VS. ITO WARD (3), MUMBAI IN ITA N O.3970/MUM./2010, (ASSESSMENT YEAR : 2001-02) & ITA NO.3971/MUM./2010, (ASSESSMENT YEAR : 2002-03) DATED 16.03.2016 HAS HE LD AS UNDER: 10. THE SECOND ISSUE RAISED BY THE LEARNED COUNS EL FOR THE ASSESSEE IS THAT THERE WAS SOME AUDIT OBJECTION RAISED BY THE A UDIT TEAM IN ITS DRAFT REVIEW REPORT ON ELIGIBILITY OF THE ASSESSEE TO CLA IM DEDUCTION UNDER SECTION 80RR. WITH THE ASSISTANCE OF BOTH THE PARTIES, IT IS NOTED THAT THERE IS A LETTER DATED 29TH SEPTEMBER 2006, RETURNED BY THE A SSESSING OFFICER TO THE CIT, CITY-5, MUMBAI, ON THE SUBJECT OF 'REVIEW ON A SSESSMENT OF SELECTED COMPANIES IN SELECTED SECTORS IN THE CASE OF SHRI S UNIL GAVASKAR - A. Y. 2000- 01 TO 2002-03 -COMMENTS REG'. ONE RELEVANT PARA FRO M THE SAID LETTER ISREPRODUCED HEREUNDER- AT THE OUTSET, IT IS SUBMITTED THAT WHEN THE RETUR NS FOR A.Y. 2000-01 & 2002-03 ARE PROCESSED UNDER SECTION143(1) OF I.T. ACT, 1961 AND THE ADJUSTMENT POINTED BY THE AUDIT ARE NOT PERMISS IBLE WHILE ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 10 PROCESSING THE RETURN U/S 143(1), HENCE, IN PRINCIP LE THE OBJECTIONS RAISED BY THE AUDIT ARE NOT ACCEPTABLE FOR THESE TW O YEARS. HOWEVER, SINCE THE ISSUE INVOLVED IN ALL THE THREE ASSESSMEN T YEARS IS OF DEBATABLE IN NATURE, FURTHER NECESSARY ACTION IN TH IS CASE WILL BE TAKEN AFTER CARRYING OUT NECESSARY VERIFICATION. A FINAL REPLY WILT BE SENT TO THE AUDIT IN DUE COURSE.' 10.1. THE PERUSAL OF THE AFORESAID PARAGRAPH WOULD SHOW THAT THE AO HIMSELF FOUND THAT THE ISSUE WAS DEBATABLE IN NATUR E. THE REQUIREMENT OF LAW FOR REOPENING OF THE CASE IS THAT THE AQO SHOUL D BE IN A POSITION TO FORM A BELIEF ABOUT ESCAPEMENT OF INCOME. ALTHOUGH, IT I S TRUE THAT AT THE STAGE OF REOPENING, THE BELIEF NEED NOT BE CONCLUSIVE, BUT I T IS EQUALLY EXPECTED THAT THE POSITION OF LAW SHOULD BE CLEAR IN THE MIND OF THE AO, AT LEAST PRIMA- FACIE. THE BELIEF NEED NOT BE CONCLUSIVE BUT IT SHO ULD BE FIRM AND CLEAR. NO BELIEF CAN BE FORMED OUT OF CONFUSION AND DOUBTFUL THOUGHTS. IF THIS KIND OF SITUATION IS ALLOWED TO BE SUSTAINABLE IN LAW, THEN IT IS QUITE POSSIBLE THAT THERE WILL BE EXPERIMENTS BY THE REVENUE OFFICIALS BY REOPENING THE CASE OF ANY ASSESSEE AT THEIR WHIMS AND FANCIES AND THAT TO O ON THE BASIS OF DOUBTS AND SUSPICIONS AND WITHOUT COMPLYING WITH JURISDICT IONAL AND OTHER PROCEDURAL REQUIREMENTS OF LAW. THE RE-ASSESSMENT P ROCEEDINGS ARE NOT MEANT TO MAKE FISHING ENQUIRIES AND TO EXPERIMENT W ITH THE LEGAL ISSUES. IN THIS REGARD, THE POSITION OF LAW IS WELL SETTLED BY MANY JUDGMENTS COMING FROM VARIOUS HIGH COURTS. WE FIND SUPPORT OF OUR VI EW FROM THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN !LA AND FS INV ESTMENTS MANAGERS LTD. V/S ITO, 298 ITR 32 (BOM.) WHEREIN IT WAS HELD BY T HE HON'BLE JURISDICTIONAL HIGH COURT THAT WHERE THE AO HIMSELF DISAGREED WITH THE AUDIT OBJECTION, UNDER SUCH CIRCUMSTANCES, THERE COULD NOT HAVE BEEN VALID BASIS TO REOPEN THE ALREADY CONCLUDED ASSESSMENT. THIS JUDGMENT HAS BEEN RECENTLY FOLLOWED AGAIN BY HON'BLE BOMBAY HIGH COURT TO REIT ERATE THIS POINT IN THE CASE OF M/S RELIANCE INDUSTRIES LTD. (DT. 1ST FEBRU ARY, 2016 IN ITA 2000 OF 2013). SOME OF THE USEFUL OBSERVATIONS OF HON'BLE J URISDICTIONAL HIGH COURT ARE REPRODUCED BELOW: 'THE JURISDICTIONAL REQUIREMENTS TO REOPEN AN ASSES SMENT ARE: (I) THE AO MUST HAVE REASON TO BELIEVE THAT THE INC OME CHARGEABLE TO TAX ESCAPED ASSESSMENT: (II) THE AO IN THE REGULAR ASSESSMENT PROCEEDINGS H AD NOT FORMED AN OPINION IN REGARD TO THE ISSUE ON WHICH THE REOPENI NG NOTICE IS ISSUED; AND (III) THERE HAS BEEN A FAILURE ON THE PART OF THE A SSESSEE TO TRULY AND FULLY DISCLOSE ALL NECESSARY FACTS FOR THE ASSESSME NT. 5. IN THIS CASE, THE CIT (A) AS WELL AS THE TRIBUNA L HAVE, ON CONSIDERATION OF THE FACTS ARISING BEFORE THEM, HAV E CONCLUDED THAT NONE OF THE THREE CONDITIONS PRECEDENT HAVE BEEN SA TISFIED. THE REASON TO BELIEVE THAT INCOME CHARGEABLE TO FAX HAS ESCAPED ASSESSMENT ON THE PART OF THE AO IS A SINE QUA NON FOR ISSUE OF A REOPENING ASSESSMENT UNDER SECTION 148 OF THE ACT A S NON ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 11 SATISFACTION OF REASON TO BELIEVE WOULD BY ITSELF M AKE THE NOTICE FATAL. IN SUCH A CASE, THE SATISFACTION OF OTHER CO NDITIONS WOULD NOT EVEN REQUIRE EXAMINATION. 6. BOTH THE CIT(A) AS WELL AS THE TRIBUNAL, ON THE AFORESAID BASIS CAME TO THE CONCLUSION THAT IN VIEW OF TH EFACT THA T THE AO HIMSELF HAS NOT ACCEPTED THE AUDITOBJQCTION, THERE COULD BE NO REASON FOR HIM TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT. IT IS CLEAR FROM SECTION 147 OF THE ACT THAT THE JURISDICTIONAL REQUIREMENT TO ISSUE A NOTICE FOR RE OPENING THE ASSESSMENT IS THE SATISFACTION OF THE 'AO. ' THIS S ATISFACTION OF THE AO CANNOT BE OUTSOURCED OR ARRIVED AT ON THE BASIS OF DIRECTIONS OF HIS SUPERIORS. THE ACT REQUIRES HIS REASON TO BELIE VE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THUS, THE IMPUGNED NOTICE IS NOT SUSTAINABLE. IN THAT VIEW, THE FIRST CONDITION PRECEDENT OF REASON TO BELIEVE IS THAT INCOME CHARGEABLE TO T AX IS ESCAPED ASSESSMENT BEING THE PRIMARY REQUIREMENT IS NOT SAT ISFIED, THE NOTICE FOR REOPENING IS WITHOUT JURISDICTION. 7. MR. MALHOTRA, LEARNED COUNSEL FOR THE REVENUE, S UPPORTS THE APPEAL BY STATING THAT ONCE AN AUDIT OBJECTION HAD BEEN RAISED, THEN THE AO IS OBLIGED TO TAKE REMEDIAL ACTION AS IN THI S CASE, BY ISSUING A REOPENING NOTICE. THIS FOR THE REASON HE STATES TH AT OTHERWISE THE REVENUE DUE TO THE STATE WOULD BE LOST EVEN IN CASE THE AUDIT OBJECTION IS UPHELD. 8. WE ARE UNABLE TO UNDERSTAND HOW THE MANDATE OF T HE ACT REQUIRING THE AO TO HAVE REASON TO BELIEVE THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT CAN BE IGNORED ON THE ALTAR OF REVENUE COLLECTION. IF SUCH A SUBMISSION IS TO BE A CCEPTED, IT WOULD, BE THE BEGINNING OF THE END OF THE RULE OF LAW.' THE AFORESAID JUDGMENT IS SQUARELY APPLICABLE UPON THE FACTS OF THIS CASE BEFORE US. THUS, WE FIND THAT THE 'REASONS' RECORDE D BY THE AO WERE NOT IN ACCORDANCE WITH LAW.' 5.9. STRENGTH IS ALSO DRAWN FROM THE CASE OF ELE CON ENGINEERING CO LTD VS. AC1T (GUJARAT HIGH COURT)WHERE THE HON'BLE HIGH COU RT IN ITS ORDER DATED DECEMBER 8, 2016 HAS HELD THAT '..THE LAW ON THE PO INT LAID DOWN BY THE SUPREME COURT IN JUDGEMENT IN CASE OF COMMISSIONER OF INCOME-TAX V. P.V.S. BEEDIESPVT. LTD. REPORTED IN (1999) 237 ITR 13 AND IN CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY V. COMMISSIONER OF IN COME-TAX REPORTED IN (1979) 119 ITR 996 IS WELL SETTLED. WE ALSO HAVE TH E DECISION OF THIS COURT IN CASE OF ADANI EXPORTS V. DEPUTY COMMISSIONER OF INC OME TAX REPORTED IN (1999) 240 ITR 224(GUJ) ON THIS ISSUE. IN CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY (SUPRA), THE SUPREME OBSERVED THA T THE OPINION OF THE AUDIT PARTY ON A POINT OF LAW COULD NOT BE REGARDED AS INFORMATION ENABLING THE ASSESSING OFFICER TO INITIATE REASSESSMENT PRO CEEDINGS. THIS ASPECT WAS ELABORATED BY DIVISION BENCH JUDGEMENT OF THIS COUR T IN CASE OF ADANI EXPORTS (SUPRA) OBSERVING THAT IT IS THE SATISFACTI ON OF THE ASSESSING OFFICER ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 12 FOR THE PURPOSE OF REOPENING WHICH IS SUBJECTIVE IN NATURE BUT WHEN THE REASONS RECORDED SHOW A NEXUS BETWEEN THE FORMATION OF BELIEF AND THE ESCAPEMENT OF INCOME, A FURTHER ENQUIRY ABOUT THE A DEQUACY OR SUFFICIENT OF THE MATERIAL TO SUCH A BELIEF IS NOT OPEN TO BE SCRUTINISED. HOWEVER, THE DECISION OF THE SUPREME COURT WOULD INDICATE THAT T HOUGH AUDIT OBJECTION MAY SERVE AS AN INFORMATION, THE BASIS ON WHICH THE ITO CAN ACT, ULTIMATE ACTION MUST DEPEND DIRECTLY AND SOLELY ON THE FORMA TION OF BELIEF BY ITO ON HIS OWN, WHERE SUCH INFORMATION PASSED ON TO HIM BY THE AUDIT PARTY THAT INCOME HAS ESCAPED ASSESSMENT. IN THE SAID CASE, IT WAS HELD THAT ASSESSING OFFICER HAD ACTED AT THE BEHEST OF AUDIT PARTY AND THAT NOTICE FOR REOPENING WAS THEREFORE, BAD IN LAW. THIS CLEARLY ESTABLISHES THAT IF THE AO REOPENS THE ASSESSMENT ON INFORMATION SUPPLIED BY THE AUDIT PAR TY WITHOUT APPLICATION OF MIND, THE REOPENING IS INVALID. LIKEWISE, IF THE AO DISPUTES THE FINDINGS OF THE AUDIT PARTY, HE IS NOT ENTITLED TO REOPEN THE A SSESSMENT. THE REASONS MUST SHOW INDEPENDENT APPLICATION OF MIND OF THE AO ..' 5.10. IN VIEW OF FACTS OF THE CASE DISCUSSED ABO VE AND VARIOUS JUDICIAL PRONOUNCEMENTS, I AM OF CONSIDERED OPINION THAT WHE N THE AO HIMSELF HAS NOT ACCEPTED THE AUDIT OBJECTION, THERE COULD BE NO REASON FOR HIM TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. THE ASSESSING OFFICER HAD ACTED AT THE BEHEST OF AUDIT PARTY AND THAT NOTICE FOR REOPENING ISSUED U/S 148 OF THE ACT WAS THEREFORE, BAD IN LAW. THUS, THE NOTICE IS NOT SUSTAINABLE. THE GROUNDS OF APPEAL AR E ALLOWED. 6. THE GROUNDS OF APPEAL NO.3 TO 9 ARE NOT ADJUDICA TED AS THE REOPENING OF ASSESSMENT U/S 147 IS ITSELF HELD AS INVALID AB-INI TIO. HENCE, THESE GROUNDS ARE DISMISSED FOR STATISTICAL PURPOSES. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE AO HAS REO PENED THE ASSESSMENT ON THE BASIS OF AUDIT OBJECTIONS RAISED BY THE DEPARTMENT AUDIT OFFICER WHICH WERE DULY EXPLAINED VIDE LETTER DATED 16.08.2013 AND 21.10.2013. THEREAFTER, THE A O WROTE A LETTER TO SENIOR AUDIT OFFICER ON 12.06.2014 DISPOS ING/SETTLING THESE OBJECTIONS. HOWEVER, THE AO AGAIN REOPENED T HE CASE OF THE ASSESSEE ON THE BASIS OF SAME AUDIT OBJECTION. THE LD. CIT(A) HAS PASSED A VERY REASONED AND DETAILED ORDE R WHEREIN IT HAS BEEN STATED THAT AO HIMSELF HAS NOT ACCEPTED TH E AUDIT OBJECTION AND THUS ON THE BASIS OF SAME REASON THE AO COULD NOT HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSE SSMENT. THE LD. CIT(A) HAS HELD THAT AO HAS ACTED AT THE BE HEST OF THE ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 13 AUDIT PARTY WITHOUT APPLYING HIS OWN MIND AND THUS QUASHED THE ASSESSMENT ON THE TECHNICAL AND LEGAL ISSUE. T HE CASE OF THE ASSESSEE IS SQUARELY COVERED BY A SERIES OF DECISIO NS NAMELY; 1. CHOLAMANDALAM INVESTMENT & FINANCE CO. LTD. VS. ACIT (2018) 89 TAXMANN.COM 337 (MADRAS) 2. ICICI HOME FINANCE CO. LTD. VS. ACIT [(2012) 25 TAXMANN.COM 241, BOM.] 3. FIS GLOBAL BUSINESS SOLUTIONS INDIA (P.) LTD. VS . ACIT [(2019) 102 TAXMANN.COM 471 (DELHI)] 4. PR.CIT V. S. CHAND & CO. LTD. [(2018) 100 TAXMANN.COM 353 (SC)] 5. DR. FIRUZA RAJESH PARIKH V. ITO [(2017) 83 TAXMANN.COM 37 (MUMBAI-TRIB.)] 6. RAAJRATNA METAL INDUSTRIES LTD. V. ACIT [(2014) 49 TAXMANN.COM 15 (GUJARAT)] 7. ACIT VS. SUMA SHILP LIMITED IN ITA NO.2065/PN/2013 FOR A.Y. 2007-08 DATED 12 TH AUGUST, 2015. IN THE CASE OF CHOLAMANDALAM INVESTMENT & FINANCE CO. LTD. (SUPRA) THE HONBLE MADRAS HIGH COURT HAS HELD THAT SINCE THE REOPENING IS VERBATIM REPETITION OF AUDIT OBJE CTION FILED BY THE AUDIT PARTY AND THEREFORE THE AO DID NOT HAVE A NY INDEPENDENT MATERIAL TO REOPEN THE ASSESSMENT BUT M ERELY PROCEEDED TO REOPEN THE ASSESSMENT ON THE GROUND TH AT THERE WAS AN AUDIT OBJECTION. IN THE CASE OF ICICI HOME FINANCE CO. LTD. VS. ACIT (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THERE WAS NO APPLICATION OF MIND BY THE AO AS THE REASONS RECORDED BY THE AO WERE IDENTICAL TO OBJECTIONS OF THE AUDIT PARTY AND EXISTING MATERIAL WAS ALREADY ON RECORD A ND ACCORDINGLY NOTICE UNDER SECTION 148 WAS HELD TO BE WITHOUT JURISDICTION. THE HONBLE SUPREME COURT IN THE CAS E OF PR. CIT VS. S. CHAND & CO. LTD. (SUPRA) HAS HELD THAT REASS ESSMENT PROCEEDINGS BASED ON THE AUDIT OBJECTION CAN NOT BE SUSTAINED AND THE HONBLE SUPREME COURT HAS DISMISSED THE SLP FILED ITA NO.2424/M/2017 M/S. NANAVATI CONSTRUCTIONS 14 AGAINST THE ORDER OF HIGH COURT. CONSIDERING THE F ACTS OF THE CASE OF THE ASSESSEE IN THE LIGHT OF RATIO LAID DOW N BY THE VARIOUS HIGH COURTS AND HONBLE SUPREME COURT, WE ARE INCLI NED TO UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THE GROU ND NO.1 RAISED BY THE REVENUE. 7. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER ON TH E GROUND OF JURISDICTION, THE OTHER GROUNDS RAISED BY THE REVENUE NEED NOT BE ADJUDICATED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.2019. SD/- SD/- (VIKAS AWASTHY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19.12.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.