Cafe D Lake Pvt Ltd., Hyderabad V. ACIT, Circle-1(2), Hyderabad, Hyderabad

ITA 249/HYD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0314 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 115JB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 249/HYD/2015 ASSESSMENT YEAR: 2008-09 M/S CAF D LAKE PVT. LTD., HYDERABAD. PAN AACCC2044F VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI RAMAKRISHNA BANDI DATE OF HEARING : 14-07-2015 DATE OF PRONOUNCEMENT : 29-07-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 29/12/2014 OF LD. CIT(A) 3, HYDERABAD FOR THE AY 2008-09. 2. ASSESSEE HAS RAISED AS MANY AS 13 GROUNDS. GROUN D NOS. 1 & 13 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SPECI FIC ADJUDICATION. IN GROUND NOS. 2 TO 6, ASSESSEE HAS CHALLENGED THE VAL IDITY OF PROCEEDING INITIATED U/S 147 OF THE ACT. GROUND NOS . 7 TO 12 ARE ON THE MERITS OF VARIOUS ADDITIONS MADE BY AO AND SUST AINED BY LD. CIT(A). 3. AT THE OUTSET, WE PROPOSE TO DEAL WITH THE LEGAL ISSUE RELATING TO VALIDITY OF INITIATION OF PROCEEDING U/S 147 OF THE ACT AS RAISED IN GROUND NOS. 2 TO 6. 2 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. 4. BRIEFLY THE FACTS ARE, ASSESSEE IS A COMPANY, FO R THE AY UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 29/08/2008 DECLARING NIL INCOME UNDER NORMAL PROVISIONS AND BOOK PROFIT OF RS. 2,84,13,526 U/S 115JB OF THE ACT. ORIGINALLY, ASSES SMENT IN CASE OF ASSESSEE WAS COMPLETED U/S 143(3) OF THE ACT VIDE O RDER DATED 24/12/2010 DETERMINING TOTAL INCOME AT RS. 1,54,00, 464 UNDER NORMAL PROVISIONS AND AT RS. 2,87,33,056 AFTER DISALLOWING PART OF UNABSORBED DEPRECIATION LOSS. SUBSEQUENTLY, AO ALLE GED THAT DUE TO NON-DISCLOSURE OF FULL PARTICULARS RELATING TO ITS INCOME, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ACCORDING LY, AO INITIATED ACTION U/S 147 OF THE ACT BY ISSUING A NOTICE U/S 1 48 OF THE ACT TO ASSESSEE CALLING UPON IT TO FURNISH ITS RETURN OF I NCOME. IN RESPONSE TO THE SAID NOTICE, ASSESSEE FILED A LETTER REQUESTING TO TREAT THE RETURN ORIGINALLY FILED TO BE A RETURN IN RESPONSE TO NOTI CE U/S 148. THOUGH, ASSESSEE OBJECTED TO INITIATION OF PROCEEDING U/S 1 47 OF THE ACT, BUT, AO COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SE CTION 147 OF THE ACT VIDE ORDER DATED 21/11/2013 BY DETERMINING TOT AL INCOME AT RS. 3,76,19,525 AFTER MAKING THE FOLLOWING ADDITIONS: 5. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSE D ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BOTH ON THE VALI DITY OF THE INITIATION OF PROCEEDING U/S 147 AS WELL AS ON THE MERITS OF T HE ADDITIONS. AS FAR AS LEGAL ISSUE CONCERNING REOPENING OF ASSESSMENT U /S 147 OF THE ACT IS CONCERNED, LD. CIT(A) REFERRING TO EXPLANATION 1 TO SECTION 147 OF THE ACT, OBSERVED THAT ONLY BECAUSE REOPENING WAS O N THE BASIS OF MATERIALS ALREADY AVAILABLE ON RECORD, IT CANNOT BE SAID THAT REOPENING U/S 147 IS INVALID. LD. CIT(A) REFERRING TO THE DE CISION OF HONBLE DELHI HIGH COURT IN CASE OF CONSOLIDATED PHOTO & FI NVEST LTD. VS. ACIT 281 ITR 394 OBSERVED THAT PRINCIPLE OF CHANGE OF OPINION CAN BE APPLIED ONLY WHERE AO APPLIED HIS MIND AND TOOK A C ONSCIOUS DECISION ON THE ISSUE, BUT, WHERE AO DID NOT ADDRES S THE ISSUE, THE CONCEPT OF CHANGE OF OPINION WILL NOT APPLY. FURTHE R, LD. CIT(A) 3 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. OBSERVED THAT AUDIT PARTY HAS RAISED SEVERAL OBJECT IONS IN RESPECT OF ASSESSEES CASE AND AO ACCEPTING THE OBJECTIONS HAS FORMED REASONABLE BELIEF THAT THERE WAS ESCAPEMENT OF INCO ME, HENCE, ISSUED NOTICE U/S 148 AFTER REOPENING THE ASSESSMEN T U/S 147 OF THE ACT. ON THE BASIS OF THE AFORESAID REASONING, LD. C IT(A) DISMISSED THE GROUNDS RAISED BY ASSESSEE ON THE LEGALITY ISSUE OF REOPENING OF ASSESSMENT U/S 147. 6. LD. AR OBJECTING TO THE ACTION INITIATED U/S 147 OF THE ACT, SUBMITTED BEFORE US, THE MATERIAL ON RECORD AS WELL AS THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF TH E ACT WOULD CLEARLY REVEAL THAT REOPENING IS ON THE BASIS OF THE MATERI ALS/DOCUMENTS SUBMITTED BY ASSESSEE ITSELF ALONG WITH RETURN OF I NCOME OR IN COURSE OF ORIGINAL ASSESSMENT PROCEEDING ON THE BASIS OF W HICH ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) OF THE ACT. THU S, LD. AR SUBMITTED, THERE BEING NO TANGIBLE MATERIAL BEFORE AO TO FORM HIS BELIEF THAT INCOME HAS ESCAPED ASSESSMENT, ACTION U /S 147 IS INVALID. LD. AR REFERRING TO THE REASONS RECORDED, A COPY OF WHICH IS AT PAGE 17 OF THE PAPER BOOK SUBMITTED, AO HAS NOT REFERRED TO ANY FRESH OR TANGIBLE MATERIAL, WHICH HAS COME TO HIS POSSESSION AFTER COMPLETION OF ORIGINAL ASSESSMENT, WHICH REVEALS ESCAPEMENT OF INCOME. LD. AR SUBMITTED, ON THE CONTRARY, THE REASONS RECORDED WO ULD DEMONSTRATE THAT ONLY ON THE BASIS OF OBJECTIONS RAISED BY INTE RNAL AUDIT PARTY, ASSESSMENT HAS BEEN REOPENED U/S 147 OF THE ACT. LD . AR REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN CASE OF CI T VS. KELVINATOR INDIA LTD., 320 ITR 561 SUBMITTED, WHEN AO IN THE O RIGINAL ASSESSMENT HAS CONSIDERED ALL THESE MATERIALS AND T HEREAFTER COMPLETED THE ASSESSMENT, REOPENING OF THE ASSESSME NT ON THE BASIS OF THE VERY SAME MATERIAL WOULD AMOUNT TO CHANGE OF OPINION. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE DECI SION OF ITAT, HYDERABAD BENCH IN CASE OF M/S GAYATRI SUGARS LTD. VS. ACIT IN ITA NOS. 1728 TO 1731/HYD/2011 DATED 26/11/2014. LD. AR SUBMITTED, ONLY ON THE BASIS OF OBJECTIONS RAISED BY INTERNAL AUDIT PARTY, 4 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. ASSESSMENT CANNOT BE REOPENED U/S 147. FOR THIS PRO POSITION, LD. AR RELIED UPON THE FOLLOWING TWO DECISIONS OF ITAT, HY DERABAD BENCH: 1. DCIT VS. LEE PHARMA PVT. LTD., ITA NO. 1236/HYD /2010, DT. 08/06/2012 2. DCIT VS. M/S VICKY REALTORS, ITA NO. 146/HYD/20 14, DTD. 10/04/15. 7. LD. DR, ON THE OTHER HAND, RELYING UPON THE OBSE RVATIONS OF LD. CIT(A), SUBMITTED BEFORE US, WHILE COMPLETING THE O RIGINAL ASSESSMENT, AO HAS FAILED TO LOOK INTO OR APPLY HIS MIND TO CERTAIN ISSUES, AS A RESULT OF WHICH, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE, REOPENING OF ASSESSMENT U/S 147 IS VALID. HE SUBMITTED, ONLY BECAUSE THE MATERIALS ON THE BASIS OF WHICH AO REOPENED ASSESSMENT ARE AVAILABLE ON RECORD WHEN OR IGINAL ASSESSMENT WAS MADE THAT WILL NOT LEAD TO THE CONCL USION THAT AO WHILE COMPLETING THE ORIGINAL ASSESSMENT HAS EXAMIN ED THE ISSUES RELATING TO ESCAPEMENT OF INCOME. LD. DR SUBMITTED, IF THERE ARE PATENT AND OBVIOUS MISTAKES COMMITTED WHILE COMPLET ING ORIGINAL ASSESSMENT, RECOURSE TO SECTION 147 CAN BE TAKEN TO RECTIFY SUCH MISTAKES. FOR SUCH PROPOSITION, HE RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. RINKU CHAKR AVARTHI, 242 CTR 425. LD. DR REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CONSOLIDATED PHOTO & FINVEST LTD. VS. ACIT 281 ITR 394 SUBMITTED THAT OBJECTIONS RAISED BY AUDIT PARTY CON STITUTES INFORMATION ON THE BASIS OF WHICH AO CAN REOPEN THE ASSESSMENT U/S 147 SO LONG AS AO APPLIES HIS OWN MIND TO SUCH INFORMATIONS AND FORMS BELIEF THAT THERE IS ESCAPEMENT OF INCOME. THUS, IT WAS SUBMITT ED BY LD. DR, ASSESSEES CONTENTION ON THE VALIDITY OF PROCEEDING U/S 147 SHOULD NOT BE ACCEPTED. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIAL ON RECORD. AT THE OUTSET, IT NEEDS TO BE MENTIONED THAT IN THE PRESENT CASE REOPENING OF ASSESSMENT U/S 147 OF THE ACT IS WITHIN 5 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. FOUR YEARS FROM THE END OF THE RELEVANT AY. THEREFO RE, PROVISO TO SECTION 147 DOES NOT APPLY. IN THE AFORESAID SCENAR IO, IT HAS TO BE EXAMINED WHETHER IN A CASE WHERE REOPENING OF ASSES SMENT IS WITHIN FOUR YEARS WHETHER AO CAN INITIATE ACTION U/S 147 O F THE ACT IN ABSENCE OF TANGIBLE MATERIAL. ON PERUSAL OF THE REA SONS RECORDED FOR REOPENING ASSESSMENT, A COPY OF WHICH IS SUBMITTED IN ASSESSEES PAPER BOOK, IT IS PATENT AND OBVIOUS THAT AO IS ONL Y REFERRING TO MATERIALS/INFORMATIONS FURNISHED BY ASSESSEE ALONG WITH THE RETURN OF INCOME OR IN COURSE OF ORIGINAL ASSESSMENT PROCEEDI NG. THE ISSUES ON WHICH AO HAS INITIATED ACTION ARE PERTAINING TO CER TAIN EXPENDITURE DEBITED TO P&L A/C OR ITEM FORMING PART OF BALANCE SHEET, WHICH ACCORDING TO AO IS NOT ALLOWABLE FOR VARIOUS REASON S. IT IS EVIDENT FROM THE REASONS RECORDED THAT ISSUES ON WHICH AO H AS REOPENED ASSESSMENT U/S 147 ARE RELATING TO MATTERS WHICH WE RE PART OF THE ORIGINAL ASSESSMENT PROCEEDING AND INFORMATION RELA TING TO SUCH ISSUES WERE ALREADY AVAILABLE BEFORE AO WHILE COMPL ETING ORIGINAL ASSESSMENT. MOREOVER, IT IS INCOMPREHENSIBLE THAT I SSUES PERTAINING TO CLAIM OF EXPENDITURE WERE NOT LOOKED INTO OR VER IFIED BY AO WHILE COMPLETING THE ORIGINAL ASSESSMENT CONSIDERING THE FACT THAT THEY WERE PART OF THE P&L A/C. FROM THE REASONS RECORDED , IT IS VERY MUCH CLEAR THAT AO WAS NOT HAVING IN HIS POSSESSION ANY FRESH TANGIBLE MATERIAL WHICH COULD DEMONSTRATE ESCAPEMENT OF INCO ME. ONLY ON REVISITING/REVIEWING THE MATERIALS/INFORMATIONS ALR EADY AVAILABLE ON RECORD AT THE TIME OF ORIGINAL ASSESSMENT AND ON RE APPRAISAL OF THE SAME, AO HAS FORMED BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, REOPENING OF ASSESSMENT ON RE-APPRECIATI ON OR REAPPRAISAL OF THE MATERIALS/INFORMATIONS AVAILABLE ON RECORD ON THE BASIS OF WHICH ORIGINAL ASSESSMENT WAS COMPLETED IS LEGALLY INVALID AS IT AMOUNTS TO CHANGE OF OPINION. THE ITAT, HYDERABA D BENCH WHILE CONSIDERING THE ISSUE OF IDENTICAL NATURE, IN CASE OF GAYATRI SUGARS LTD VS. ACIT (SUPRA) AFTER FOLLOWING THE DECISIONS OF HONBLE SUPREME COURT IN CASE OF CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC) 6 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. AND THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. USHA INTERNATIONAL LTD., 348 ITR 485 (FB) (DEL.), HELD A S UNDER: REASONS RECORDED ALSO DO NOT REFER TO ANY OTHER T ANGIBLE MATERIAL, APART FROM THE NOTE APPENDED TO ANNUAL REPORT WHICH REM AINS SIMILAR FOR ALL ASSESSMENT YEARS. HENCE, IT CAN BE INFERRED T HAT NO TANGIBLE MATERIAL HAS COME TO THE POSSESSION, AO AFTER COM PLETION OF ORIGINAL ASSESSMENTS WHICH COULD HAVE ESTABLISHED A LIVE LINK OR NEXUS FOR FORMATION OF BELIEF THAT INCOME HAS ESCA PED ASSESSMENT. AS IT APPEARS ON REVIEW/REAPPRAISAL OF SAME FACTS AND M ATERIALS WHICH WERE AVAILABLE ON RECORD AND ON THE BASIS OF WHICH ORI GINAL ASSESSMENTS WERE COMPLETED, ACTION FOR REOPENING O F ASSESSMENT U/S 147 HAS BEEN TAKEN. 15. THE HONBLE SUPREME COURT IN CASE OF CIT VS. K ELVINATOR OF INDIA LTD. (SUPRA) AFTER TAKING NOTE OF THE AMENDMENTS MADE TO SECTION 147 OF THE ACT, HELD AS UNDER: THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE AO TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE S UBSTITUTION OF SECTION 147 OF THE IT ACT, 1961, BY THE DIRECT TAX LAWS ( AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE AO HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT, BUT THIS DOES NOT IMPLY THAT THE AO CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE AO HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMATION OF THE BELIEF. 16. THE FULL BENCH OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. USHA INTERNATIONAL LTD. (SUPRA)ON A CONSPECTUS OF VARIOUS DECISIONS OF HONBLE SUPREME COURT, INCLUDING CIT VS. KELVINAT OR OF INDIA LTD. (SUPRA), AND AS WELL AS DIFFERENT HIGH COURTS, WHI LE EXPRESSING THE MAJORITY VIEW HELD AS UNDER: 39. IN VIEW OF THE ABOVE OBSERVATIONS WE MUST ADD ONE CAVEAT. THERE MAY BE CASES WHERE THE ASSESSING OFFICER DOES NOT AND MAY NOT RAISE ANY WRITTEN QUERY BUT STILL THE ASSESSING OFFICER IN THE FIRST ROUND/ ORIGINAL PROCEEDINGS MAY HAVE EXAMINED THE SUBJEC T MATTER, CLAIM ETC, BECAUSE THE ASPECT OR QUESTION MAY BE TOO AP PARENT AND OBVIOUS. TO HOLD THAT THE ASSESSING OFFICER IN TH E FIRST ROUND DID NOT EXAMINE THE QUESTION OR SUBJECT MATTER AND FORM A N OPINION, WOULD BE CONTRARY AND OPPOSED TO NORMAL HUMAN CONDUCT. SUC H CASES HAVE TO 7 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. BE EXAMINED INDIVIDUALLY. SOME MATTERS MAY REQUIR E EXAMINATION OF THE ASSESSMENT ORDER OR QUERIES RAISED BY THE ASSESSI NG OFFICER AND ANSWERS GIVEN BY THE ASSESSEE BUT IN OTHERS CASES , A DEEPER SCRUTINY OR EXAMINATION MAY BE NECESSARY. THE STAND OF THE REVENUE AND THE ASSESSEE WOULD BE RELEVANT. SEVERAL ASPECTS INCLUD ING PAPERS FILED AND SUBMITTED WITH THE RETURN AND DURING THE ORIGI NAL PROCEEDINGS ARE RELEVANT AND MATERIAL. SOMETIMES APPLICATION OF MI ND AND FORMATION OF OPINION CAN BE ASCERTAINED AND GATHERED EVEN WHEN NO SPECIFIC QUESTION OR QUERY IN WRITING HAD BEEN RAISED BY TH E ASSESSING OFFICER. THE ASPECTS AND QUESTIONS EXAMINED DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ITSELF MAY INDICATE THAT THE ASSESSING OFFICER MUST HAVE APPLIED HIS MIND ON THE ENTRY, CLAIM OR DEDUCTION ETC. IT MAY BE APPARENT AND OBVIOUS TO HOLD THAT THE ASSESSING O FFICER WOULD NOT HAVE GONE INTO THE SAID QUESTION OR APPLIED HIS M IND. HOWEVER, THIS WOULD DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. 17. APPLYING THE TESTS LAID DOWN IN CASE OF CIT VS . USHA INTERNATIONAL LTD. TO THE FACTS OF THE PRESENT CASE, IT CAN BE SEEN THAT ASSESSEE IN ALL THESE ASSESSMENT YEARS HAS DISCLOSED FULL PAR TICULARS RELATING TO DEBITING OF INTEREST TO INTEREST SUSPENSE ACCOUNT. EVIDENCES BROUGHT ON RECORD, AT LEAST IN SOME OF THE ASSESSMENT YEAR S ALSO MAKE IT CLEAR THAT AO AFTER EXAMINING THE ISSUE AND DUE APPLICAT ION OF MIND TO THE ISSUE HAS COMPLETED THE ASSESSMENT, THOUGH THERE MAY NOT BE ANY REFERENCE TO THE ISSUE IN THE ASSESSMENT ORDERS. HOWEVER, THAT CANNOT BE A GROUND TO CONCLUDE THAT AS AO HAS NOT EXAMINED THE ISSUE, THERE IS NO QUESTION OF FORMING ANY OPINION . FURTHER, ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE TO RESTRUCTURING O F INTEREST NOT ONLY IN ITS FINANCIAL STATEMENTS FORMING PART OF ANNUA L REPORT BUT ALSO IN THE RETURNS FILED FOR ALL THESE ASSESSMENT YEARS IS SO PATENT AND OBVIOUS THAT AN INFERENCE CAN SAFELY BE DRAWN THA T AO WHILE COMPLETING THE ASSESSMENT MUST HAVE APPLIED HIS MI ND ON THE CLAIM OF ASSESSEE. THE ALLEGATION BY THE DEPARTMENT THAT AS IN THE ORIGINAL ASSESSMENTS THE AO HAS OVERLOOKED OR NOT EXAMINED THE ISSUE, THERE CANNOT BE ANY FORMATION OF OPINION WHICH WI LL AMOUNT TO CHANGE OF OPINION WHILE REOPENING, IN OUR VIEW, IS UNACCEPTABLE. AS CAN BE SEEN, ORIGINAL ASSESSMENTS FOR THE ASSESSME NT YEARS UNDER CONSIDERATION HAVE BEEN COMPLETED AFTER SCRUTINY U/S 143(3) NOT BY THE SAME AO BUT BY DIFFERENT AOS. IT IS HIGHLY IMPROBABLE THAT EACH OF THE AOS IN SUCCESSIVE ASSESSMENT YEARS HAVE NO T EXAMINED OR OVERLOOKED THIS ISSUE WHEN ASSESSEE HAS DISCLOSED FULL PARTICULARS REGARDING THE ISSUE IN DISPUTE. ON THE CONTRARY, O N GOING THROUGH THE FACTS AND MATERIALS ON RECORD THE IMPRESSION ONE GETS IS ONLY BECAUSE THE AO IN ASSESSMENT ORDER PASSED FOR AY 2006-07 HAS TAKEN A DIFFERENT VIEW ON THE ISSUE, ASSESSMENTS F OR THE PRECEDING ASSESSMENT YEARS HAVE BEEN REOPENED TO UNSETTLE TH E ISSUES ALREADY CONSIDERED AND DECIDED IN ORIGINAL ASSESSMENTS COM PLETED AFTER SCRUTINY. 8 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. 18. ONCE AN ASSESSMENT ORDER IS PASSED U/S 143(3) A FTER SCRUTINY OF BOOKS OF ACCOUNT AND OTHER MATERIALS, IT HAS TO B E PRESUMED THAT AO HAS EXAMINED ALL FACTS AND MATERIALS AND CONCLUDED ASSESSMENT AFTER DUE APPLICATION OF MIND. THEREFORE, UNLESS THERE IS TELL TALE EVIDENCE THAT AO HAS PASSED THE ORDER IGNORING MAT ERIAL FACTS ON RECORD OR OVERLOOKING PROVISIONS OF LAW OR UNLESS FURTHER TANGIBLE MATERIAL COMES TO POSSESSION OF AO INDICATING ESCAPEMENT O F INCOME, ACTION U/S 147 OF THE ACT CANNOT BE TAKEN. ASSESSMENT OR DERS PASSED U/S 143(3) CANNOT BE ALLOWED TO BE REOPENED WITH IMPUN ITY SO AS TO UNSETTLE A DECISION ALREADY TAKEN. IF IT IS ALLOWE D, THEN THERE CANNOT BE A FINALITY TO ASSESSMENT AND ASSESSEES WILL BE EXPOS ED TO THE MERCY OF AO. FURTHER, ON PERUSAL OF THE MATERIALS ON RECORD INCL UDING THE REASONS RECORDED AS WELL AS OBSERVATIONS MADE BY LD. CIT(A) , IT IS VERY MUCH EVIDENT THAT ASSESSMENT WAS REOPENED U/S 147 OF THE ACT PURELY ON THE BASIS OF OBJECTIONS RAISED BY THE INTERNAL AUDI T PARTY. AO HAS MERELY FOLLOWED THE DICTAT OF THE INTERNAL AUDIT PA RTY WITHOUT INDEPENDENTLY APPLYING HIS MIND TO KNOW WHETHER INC OME HAS ESCAPED ASSESSMENT. IN OUR VIEW, FOR THIS REASON AL SO, INITIATION OF PROCEEDING U/S 147 OF THE ACT IS INCORRECT. IN THIS CONTEXT, WE REFER TO THE DECISIONS OF THE COORDINATE BENCH IN CASE OF DC IT VS. LEE PHARMA PVT. LTD.(SUPRA). AS FAR AS THE DECISIONS R ELIED UPON BY THE LD. DR ARE CONCERNED, WE ARE OF THE VIEW THAT THEY ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THUS, ON OVERALL CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THERE IS NO VALID REASONS FOR AO TO INITIATE PROCEEDING U/S 147 OF THE ACT IN ABSENCE OF TANGIBLE MATERIALS. ACCORDINGLY, WE QUAS H THE ASSESSMENT ORDER PASSED BY AO U/S 147 OF THE ACT. GROUNDS RAI SED BY ASSESSEE ON THE LEGAL ISSUE ARE THEREFORE ALLOWED. 9. IN VIEW OF OUR DECISION HEREINABOVE, WE DO NOT C ONSIDER IT NECESSARY TO DEAL WITH THE MERITS OF VARIOUS ADDITI ONS/DISALLOWANCES MADE BY AO WHICH HAVE BEEN RAISED BY ASSESSEE IN GR OUND NOS. 7 TO 12 AS THEY ARE OF MERE ACADEMIC INTEREST. 9 ITA NO. 249 /HYD/2015 CAFE D LAKE PVT. LTD. 10. IN THE RESULT, ASSESSEES APPEAL IS CONSIDERED TO BE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 29 TH JULY, 2015 KV COPY TO:- 1) M/S CAF D LAKE PVT. LTD., P. MURALI & CO., CAS. , 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) ACIT, CIRCLE 1(2), HYDERABAD. 3) CIT(A) 1, HYDERABAD 4) CIT-1, HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.