DCIT, New Delhi V. M/s. PSB Industries India Pvt. Ltd., New Delhi

ITA 2967/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3660 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S D RAY
• Keywords: Business expenditure; Earning of tax free income; Tangible material; Wrong claim; Difference of opinion; Valuation report; Assessment record; Notional interest; Reason to believe; Change of opinion
• Section: 143(3); 14A; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.2967/DEL/2013 ASSESSMENT YEAR:2004-05 DCIT CIRCLE 14(1) NEW DELHI V. PSB INDUSTRIAL (INDIA) PVT. LTD. 207, 2 ND FLOOR, 87, ZAMRUDPUR GREATER KAILASH PART I NEW DELHI TAN/PAN:AAACP0009M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ATIQ AHMAD, D.R. RESPONDENT BY: SHRI S.D. RAY, ADVOCATE DATE OF HEARING: 02 11 2017 DATE OF PRONOUNCEMENT: 09 11 2017 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 28/2/2013, PASSED BY THE LD. CIT (APPEALS)-XVII, NEW DELHI FOR THE QUANTUM OF ASSESSME NT PASSED U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 FO R ASSESSMENT YEAR 2004-05. 2. THE BRIEF FACTS QUA THE VALIDITY OF REOPENING UNDER SECTION 148 AS WELL AS ON MERITS, ARE THAT THE ORIGINAL ASSESSMENT PROCEEDINGS WERE COMPLETED UNDER SECTION 147/143(3) ON 29/9/2009 AT A TOTAL INCOME OF RS.53,01,662/- WHICH INCLUDED ADDITION MADE ON ACCOUNT OF ALV OF THE RENTED PROPERTY AS WELL AS DISALLOWANCE UNDER SECTION 14A. I.T.A. NO.2967/DEL/2013 2 3. NOW AFTER EXPIRY OF FOUR YEARS AT THE END OF THE RELEVA NT ASSESSMENT YEAR, ASSESSEES CASE HAS AGAIN SOUGHT TO BE REOPENED ON THE FOLLOWING REASONS:- THE RETURN OF INCOME WAS FILED ON 29.03.2006 SHOWI NG LOSS WHICH WAS PROCESSED ON 06.12.2006 AT THE LOSS OF RS.5,60,840/-. LATER ON THE ASSESSMENT IN THE CASE WAS COMPLETED U/S 147/143(3) OF THE I. T. ACT, 1961 AT THE TOTAL INCOME OF RS. 53,01,662/- ON 29.09.2009. ON PERUSAL OF RECORD AND NOTES NO, 4 TO ACCOUNTS FO RMING PART OF BALANCE SHEET FOR THE PERIOD ENDING 31.03.2 004. IT IS NOTICED THAT COMPANY, HAS NOT EARNED OUT ANY, MANUFACTURING AND TRADING ACTIVITIES DURING THE PRE VIOUS YEAR AND HAS CLAIMED, THE EXPENSES AMOUNTING TO RS.12,06,777/- IN THE P & L A/C. SINCE THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS OR PROFESSION IN THE YEAR UNDER CONSIDERATION, THE EXPENSES OF RS.12,06,777/- HAS W RONGLY BEEN CLAIMED. THE ASSESSING OFFICER HAS NOT EXAMINE D THIS ISSUE WHILE COMPLETING THE ASSESSMENT AND HAS DISAL LOWED THE EXPENSES OF RS.6,10,487/- U/S 14A INSTEAD OF TH E DISALLOWANCE OF WHOLE EXPENSES CLAIMED BY THE ASSES SEE. THUS, THE INCOME TO THE EXTENT OF RS.5,96,290/- (RS.12,06,777 - RS.6,10,487 ALREADY DISALLOWED BY T HE AO U/S 14A) HAS ESCAPED ASSESSMENT. ON PERUSAL OF THE RECORD, IT HAS ALSO BEEN NOTICED THAT THE ASSESSEE COMPANY HAS ENTERED INTO A LEASE RENT AGRE EMENT WITH BANK OF PUNJAB LTD. IN CONNECTION WITH ITS PRO PERTY MEASURING 10682.83 SQ. MTS. OF KHASRA NO. 258 & 261 SITUATED AT MANESAR ROAD, GURGAON AT RENT OF RS.1,0 0,000/- PER YEAR FOR 25 YEARS. IT IS FURTHER NOTICED THAT T HE ASSESSEE COMPANY HAS TAKEN 67 CRORES INTEREST FREE DEPOSIT F ROM M/S BANK OF PUNJAB LTD. AS SECURITY AGAINST THE ABOVE S AID PROPERTY. THE LESSEE COMPANY HAS DEPOSITED A LUMP S UM AMOUNT OF RS.67 CRORES ON WHICH DEEMED INTEREST AMO UNT IS I.T.A. NO.2967/DEL/2013 3 TAKEN IN LIEU OF RENT AS WELL AS IT PAID A TOKEN AM OUNT OF RS. 1 LAKH AS RENT TO THE ASSESSEE COMPANY. IT IS SUBST ANTIATED FROM THE FACT THAT THE AMOUNT OF RS.67 CRORES IS TO BE RETURNED TO THE LESSEE AT THE COMPLETION OF LEASE P ERIOD OF 25 YEARS WITHOUT ANY INTEREST. THE ASSESSEE HAD DECLARED ALV OF RS.1 LAKH, WHICH W AS FAR BELOW THE MARKET RENT PREVALENT AT THAT TIME. THOUG H, THE ASSESSEE HAD BEEN VERY WELL COMPENSATED BY WAY OF INTEREST FREE HUGE DEPOSIT OF RS.67 CRORES FOR 25 Y EARS. THE ASSESSEE FAILED TO INCLUDE THE MARKET VALUE OF THIS HUGE BENEFIT OF INTEREST FREE DEPOSIT WHICH AT THE NORMA L PREVALENT RATE OF 10% PER ANNUM WORTH RS.6.70 CRORES PER ANNU M. KNOWING FULLY WELL THE LEGAL PROVISIONS AND THE EXT ENT OF BENEFIT IN THE FORM OF INTEREST FREE DEPOSIT, YET T HE ASSESSEE CHOSE TO DECLARE THE MARKET VALUE OF ITS RENT AT A MEAGER RS.1 LAKH PER ANNUM. EVEN THE ASSESSEES OWN VALUER ON REFERENCE HAS VALUED THE MARKET VALUE OF RENT AT RS.75,63,360/- PER ANNUM AS ON 01.04.2005. THIS HUG E DIFFERENCE IS NOT THE RESULT OF ANY HONEST DIFFEREN CE OF OPINION ABOUT MARKET RENT, BUT THE RESULT OF A WELL THOUGHT OF PLAN TO DEFRAUD THE REVENUE BY EVADING THE DUE TAXES BY CON SCIOUSLY REPORTING AN ARTIFICIALLY LOW ALV OF A HIGHLY VALUA BLE PROPERTY. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT ADOPTING THE ALV RS. 75.63.360/- PER ANN UM WITHOUT EXAMINING THE BENEFIT FROM INTEREST FREE DE POSIT OF RS.67 CRORES FOR 25 YEARS. IN FACT, THE ASSESSEE CO MPANY RECEIVED EXCESS RENT THAT MIGHT REASONABLY BE EXPEC TED TO LET FROM YEAR TO YEAR, HENCE, U/S 23(B) OF THE I. T. AC T, 1961, ANNUAL LETTING VALUE IS RS.6.70 CRORES INSTEAD OF R S. 75,63,360/-. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T AN INCOME TO THE TUNE OF RS.6,00,32,930/- [(5,96,290) + (6,70,00,000 - HAS ESCAPED ASSESSMENT IN THE A.Y. 2 004- 05. IN VIEW OF THE FACTS MENTIONED IN PARA 2 AND 4, I AM I.T.A. NO.2967/DEL/2013 4 SATISFIED THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL THE MATERI AL FACTS NECESSARY FOR ASSESSMENT FOR THE ABOVE ASSESSMENT Y EAR, THE INCOME CHARGEABLE TO TAX TO THE TUNE OF RS.6,00 ,32,930/- ON ACCOUNT OF WRONG CLAIM OF EXPENSES HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISO TO SECTION 147 OF THE I. T. ACT, 1961. 4. SO FAR AS FIRST GROUND TAKEN IN THE REASONS RECORDED , IT IS SEEN THAT THE ASSESSING OFFICER IS TRYING TO FIND OU T A FAULT ON THE PART OF THE ASSESSING OFFICE THAT WHILE MAKING DISAL LOWANCE UNDER SECTION 14A, HE HAS NOT EXAMINED THE CLAIM OF EX PENSES DEBITED TO THE PROFIT & LOSS ACCOUNT WITHOUT APPRECIATING THAT IN THE ORIGINAL ASSESSMENT ORDER, ASSESSING OFFICER HAS APPLIED RULE 8D FOR MAKING DISALLOWANCE FOR INDIRECT EXPENDITURES. THERE IS NO FAILURE ASCRIBED ON THE PART OF THE ASSESSEE TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. SIM ILARLY, ON THE SECOND ISSUE RELATING TO ALV OF THE PROPERTY, HER E AGAIN THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER HA S COMPLETED ASSESSMENT BY ADOPTING ALV AT RS.75,63,360/- WHEREIN HE HAS ALSO TAKEN NOTE OF INTEREST FREE DEPOSITS OF RS.67 CROR ES. THE ASSESSING OFFICER NOW IN THE REASONS RECORDED WIT HOUT ASCRIBING ANY FAILURE ON THE PART OF THE ASSESSEE, IS TRYING TO RE OPEN THE CASE ON THE GROUND THAT THIS INTEREST FREE DEPOSIT SHOULD ALSO BE INCLUDED WHILE DETERMINING THE MARKET VALUE OF THE PRO PERTY WHICH, IN OUR OPINION, IS NOT CORRECT; FIRSTLY, FOR THE REASON THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MONI KUMAR SUBBA REPORTED IN [2011] 333 ITR 38 (DELHI) FULL BENCH, CATEGORICALLY HELD THAT NOTIONAL INTEREST ON INTEREST FRE E SECURITY DEPOSIT CANNOT BE TAKEN AS DETERMINATIVE FACTO R TO ARRIVE I.T.A. NO.2967/DEL/2013 5 AT THE FAIR RENT/LETABLE VALUE; AND SECONDLY, ONCE THIS ISSUE HAS BEEN EXAMINED BY THE ASSESSING OFFICER, THEN WITHOUT A SCRIBING ANY FAILURE ON THE PART OF THE ASSESSEE, THE ASSESSING OFFICER CANNOT REOPEN THE CASE UNDER SECTION 147 IN VIEW OF THE EMBARGO OF LIMITATION PROVIDED UNDER THE PROVISO TO SECTION 147. 5. THE LD. CIT(A) HAS DULY APPRECIATED THIS FACT IN PAR AS 3.1 TO 3.6 OF THE APPELLATE ORDER WHICH, FOR THE SAKE OF R EADY REFERENCE, IS REPRODUCED HEREUNDER:- 3.1. THE ORIGINAL ASSESSMENT WAS DONE U/S 143(3) R EAD WITH 147 ON 29.09.2009. THE ASSESSMENT WAS REOPENED AGAIN ON 30.03.2011 AND THEREFORE PROVISO TO SECTIO N 147 IS APPLICABLE AND THE SAME IS AS FOLLOWS: PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (1) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FO R THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHANGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR IN RESPONS E TO A NOTICE ISSUED UNDER SUB-SECTION(1) OF SECTION 142 O R SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR. 3.2. THE PROVISO MAKES IT EXPLICIT THAT IN A CASE W HERE THE ASSESSMENT WAS DONE U/S 143(3) AND IN WHICH FOUR YE ARS HAVE ELAPSED, THE ASSESSMENT CAN BE REOPENED ONLY I F THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT. THE REASON FOR REOPENING MENTIONED BY THE AO SUPERFICIA LLY MENTIONS THIS ASPECT BUT IS NOT CATEGORICAL ENOUGH TO SPECIFY THE ACTUAL FAILURE OF THE APPELLANT TO DISCLOSE FUL LY AND TRULY I.T.A. NO.2967/DEL/2013 6 ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. PE RUSAL OF THE REASONS RECORDED ABOVE INDICATES THAT THE PRESE NT AO IS OF THE VIEW THAT THERE WAS FAILURE ON PART OF THE A O WHO FRAMED THE EARLIER ASSESSMENT ORDER DATED 29.09.200 9. THERE IS MENTION IN THE REASONS RECORDED THAT THE E ARLIER ASSESSMENT WAS COMPLETED WITHOUT EXAMINING THE ASPE CT OF INTEREST FREE DEPOSIT RECEIVED BY THE APPELLANT OF RS.67 CRORES FOR 25 YEARS. THERE IS ALSO MENTION THAT IN THE EAR LIER ASSESSMENT ORDER, THE AO HAD NOT CONSIDERED THAT TH E COMPANY HAD NOT CARRIED OUT ANY MANUFACTURING AND T RADING ACTIVITY DURING THE YEAR AND THEREFORE NO EXPENSE I S TO BE ALLOWED UNDER BUSINESS EXPENSES. THEREFORE, THIS AP PEARS TO BE A CLEAR CASE OF CHANGE OF OPINION. IN THIS CON NECTION, IT IS PERTINENT TO MENTION THE RELEVANT PORTION OF THE OR IGINAL REASSESSMENT ORDER DATED 29.09.2009 WHICH IS AS FOL LOWS: 3. ASSESSEE HAD ORIGINALLY SHOWN ALV OF PROPERTY A S RS.1 LAKH. HOWEVER, IT HAS SHOWN ALV OF RS.65,76,83 5/- IN THE RETURN FILED IN COMPLIANCE TO NOTICE U/S 148 OF THE ACT. ASSESSEE WAS ASKED TO FURNISH VALUATION REPORT IN RESPECT OF ANNUAL RENTAL VALUE OF THE PROPERTY. ASS ESSEE FILED VALUATION REPORT OF GOVT. APPROVED VALUER ON 29.09.2009. AS PER THIS VALUATION REPORT ALV OF TH E PROPERTY WAS WORKED OUT AT RS.76,02,877/-. THUS, TH ERE IS HUGE DEFERENCE IN RENTAL VALUE SHOWN BY THE ASSE SSEE IN ITS ORIGINAL RETURN, IN ITS RETURN FILED IN COMP LIANCE TO NOTICE U/S 148 AND THE ONE DETERMINED BY THE APPROV ED VALUER. THIS ISSUE WAS DISCUSSED WITH THE COUNSEL O F THE ASSESSEE. THE ALV SHOWN BY THE ASSESSEE IN ORIGINAL RETURN WAS ENHANCED BY THE ASSESSEE ITSELF IN THE R ETURN FILED BY IT IN COMPLIANCE TO NOTICE U/S 148 OF THE ACT. THIS WAS AGAIN DETERMINED AT A DIFFERENT FIGURE BY GOVT. APPROVED VALUER. ASSESSEE HAS NOT GIVEN ANY BASIS F OR SHOWING TWO DIFFERENT ALVS IN THE TWO RETURN WHEREA S THE APPROVED VALUER HAS DETERMINED ALV GIVING, PROPER B ASIS FOR DOING, SO. THUS, ALV AS DETERMINED BY THE APPRO VED I.T.A. NO.2967/DEL/2013 7 VALUER IS BEING ADOPTED FOR THE COMPUTATION OF ASSE SSEES INCOME FROM HOUSE PROPERTY. ALV OF THE PROPERTY AS PER THE VALUATION REPORT OF THE GOVT. APPROVED VALUER OBTAINED AND FILED BY THE ASSESSEE ITSELF IS RS.76,02,877/-, WHICH IS AS THE CORRECT ALV OF THE PROPERTY INSTEAD OF RS. 65,76,835/- AS DISCLOSED BY THE ASSESSEE IN THE RETURN FILED IN COMPLIANCE TO NOTIC E U/S 148 OF THE ACT. ASSESSEE ITSELF HAS FILED A REVISED COMPUTATION OF ITS INCOME ON 29.09.2009 IN WHICH IT HAS SHOWN OF THE PROPERTY AT RS.76,02,877/-. ACCORDINGL Y, INCOME FROM HOUSE PROPERTY BY TAKING ALV OF RS.76,02,877/- OF THE PROPERTY SITUATED AT KHANDSA ROAD, GURGAON. 4. A PERUSAI OF ASSESSEES BALANCE SHEET REVEALS T HAT ASSESSEE HAS MADE INVESTMENT OF RS.11,46,10,480/- I N SUCH ASSETS INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF TOTAL INCOME. ASSESSEE HAS DIVIDEND INCOME OF RS.3,91,380/- WHICH IS EXEMPT INCOME. THE ASSESSEE HAS NOT ATTRIBUTED ANY EXPENDITURE RELATING TO THIS EXE MPT INCOME. INVESTMENT DECISIONS ARE IMPORTANT AND COMPLICATED DECISIONS. THESE DECISIONS ARE GENERALL Y TAKEN AT THE HIGHEST LEVEL MANAGEMENT. MANAGEMENT O F SUCH INVESTMENTS I.E. WHEN TO SALE AND WHEN TO BUY OR WHEN TO RETAIN THE INVESTMENT ARE STRATEGICALLY DEC IDED. THESE INVESTMENTS AND INCOME HAVE TO BE PROPERTY ACCOUNTED FOR. AS ASSESSEE COULD NOT HAVE MANAGED S O MUCH INVESTMENT WITHOUT THE HELP OF ITS OFFICIAL MA CHINERY AND EXPERTISE OF ITS MANAGEMENT, CERTAIN PART OF EX PENSES SHOULD HAVE BEEN INCURRED ON THESE SERVICES BUT ASSESSEE, HAS NOT DISALLOWED ANY EXPENDITURE RELATI NG TO INCOME NOT FORMING PART OF TOTAL INCOME OR EXEMPT I NCOME. IN VIEW OF THIS SITUATION, I AM NOT SATISFIED THAT ASSESSEES CLAIM THAT NO EXPENDITURE WAS INCURRED IN RELATION TO SUCH INCOME IS CORRECT. IN THIS REGARD, ASSESSEE WAS ASK ED TO EXPLAIN WHY CERTAIN PART OF EXPENSES MAY NOT BE I.T.A. NO.2967/DEL/2013 8 DISALLOWED AS PER PROVISION OF SECTION 14A OF THE A CT, READ WITH RULE 8D OF THE I. T. RULES, 1962. IN THIS REGA RD, ASSESSEE AGREED THAT THE DISALLOWANCE OF EXPENSES I N RELATION TO INCOME NOT FORMING PART OF TOTAL INCOME IS COMPUTED AS UNDER: 1. DIRECT EXPENSES NIL 2. INTEREST NOT ATTRIBUTABLE TO ANY NIL SPECIFIC RECEIPT OR INCOME 3. 0.5% OF AVERAGE INVESTMENT (12,20,97,470*0.5% RS .6,10,487/- TOTAL RS.6,10,487/- 5. THUS, A DISALLOWANCE OF RS.6,10,487/- IS MADE U /S 14A OF THE ACT IN RESPECT OF EXPENSES RELATING TO I NCOME NOT FORMING PART OF TOTAL INCOME AND ADDED TO THE ASSESSEES TOTAL INCOME.' 3.3. IT IS CLEAR FROM THE ABOVE ASSESSMENT ORDER TH AT THE AO HAD EARLIER EXAMINED THE ASPECT OF ANNUAL VALUE AND THE CASE WAS REOPENED BY HIM BASED ON THE INFORMATION R ECEIVED FROM ITO, WARD 14(4) THAT IN THE A. Y. 2006-07 THE ANNUAL VALUE WAS DETERMINED AT RS.75,63,360/- BASED ON THE VALUATION REPORT OF REGISTERED VALUER. WITH REGARD TO THE EXPENSES THE AO HAD DISALLOWED PART OF THE EXPENSE U/S 14A OF THE I. T. ACT, 1961. THEREFORE, THE AO IN TH IS CASE IS ACTUALLY REVIEWING THE ORDER OF HIS PREDECESSOR THO UGH SUCH POWERS AS PER THE INCOME TAX ACT IS ONLY GIVEN TO T HE CONCERNED COMMISSIONER TO PASS ORDERS OF REVISION U /S 263/264 OF THE I. T. ACT, 1961. THE GROUND RAISED B Y THE APPELLANT THAT THE 147 PROCEEDINGS WERE INITIATED O N THE BASIS OF MERE CHANGE OF OPINION IS VALID. IN THIS CONNECTION, IT IS PERTINENT TO REFER TO THE HON'BLE SUPREME COU RTS DECISION IN THE CASE OF M/S KELVINATOR OF INDIA LTD. REPORTE D IN 320 ITR 561. THE HEAD NOTE OF THE ABOVE DECISION IS AS FOLLOWS: I.T.A. NO.2967/DEL/2013 9 THE CONCEPT OF 'CHANGE OF OPINION' ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUBSTITUTION OF SECTION 147 O F THE INCOME-TAX ACT, 1961, BY THE DIRECT TAX LAWS (AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMEN T, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IM PLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF 'CHANGE OF OPINION' MUST BE TREATED AS AN IN-BUILT TEST TO CHE CK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE ASSE SSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUS ION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMATION OF THE B ELIEF. 3.4. THEREFORE, IT IS NECESSARY TO LOOK WHETHER THE RE IS ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO WHILE REOPE NING THIS CASE. THOUGH IN THE ASSESSMENT ORDER THE AO MENTION S THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S K STREETLIGHT ELECTRIC CORPORATION (336 ITR 348), THERE IS NO MENTION OF THIS CASE LAW IN THE REASONS RECORDED BY THE AO FOR REOPENING THE EARLIER ASSESSMENT ORDE R. THERE IS MENTION IN THE ASSESSMENT ORDER THAT SPOT ENQUIR IES WERE CARRIED OUT BUT THE DATE MENTIONED IS 26.12.2011 WH ICH IS SUBSEQUENT TO THE SECOND REOPENING AND JUST BEFORE THE COMPLETION OF THE ASSESSMENT ON 29.12.2011. I HAVE ALSO VERIFIED THE ASSESSMENT RECORDS AND THERE IS NO EVI DENCE IN IT OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO FOR REOPENING THIS ASSESSMENT. THE ONLY CONCLUSION WHICH CAN BE D RAWN FROM THE ABOVE IS THAT THIS REOPENING IS ONLY A MER E CHANGE OF OPINION AND BASED ON THE HON'BLE SUPREME COURT S DECISION IN THE CASE OF M/S KELVINATOR OF INDIA LTD . SUCH REOPENING IS NOT PERMISSIBLE. I.T.A. NO.2967/DEL/2013 10 3.5. EVEN THE DECISION OF THE HON'BLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF M/S K STREETLIGHT ELECTRI C CORPORATION CANNOT BE APPLIED AS THE JURISDICTIONAL HIGH COURT HAS HELD IN THE CASE OF COMMISSIONER OF INCOM E-TAX V. MONI KUMAR SUBBA & COMMISSIONER OF INCOME-TAX V. MI RACLE EXPORTERS P. LTD. (333 ITR 38) THAT NOTIONAL INTERE ST ON INTEREST FREE SECURITY IS NOT TO BE CONSIDERED FOR COMPUTING ANNUAL VALUE. THE RELEVANT PORTION OF THE ABOVE DEC ISION IS AS FOLLOWS: IN THE PRESENT CASE, THE ASSESSING OFFICER ADDED N OTIONAL INTEREST ON THE INTEREST FREE SECURITY FOR ARRIVING AT ANNUAL LETTING VALUE. SINCE THAT WAS NOT PERMISSIBLE, THE EFFECT WOULD BE THAT SUCH ASSESSMENT WAS RIGHTLY SET ASIDE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL. THEREFORE, THE ORDERS WOULD NOT CALL FOR ANY INTERFERENCE. THESE APPEALS ARE, THUS, DISMISSED ON THIS GROUND. ONCE WE HOLD THIS, THE VERY BASIS ADOPTED B Y THE ASSESSING OFFICER TO FIX ANNUAL LETTING VALUE WAS W RONG AND THEREFORE, NO FURTHER EXERCISE IN FACT IS REQUI RED BY US IN THESE APPEALS. 3.6. THE PROVISIONS OF SECTION 23(1) CLEARLY STATE S THAT THE ANNUAL VALUE OF THE HOUSE PROPERTY IS DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. IN THE ORIGINAL ASSESSMENT THE A O HAS CALCULATED THE ANNUAL VALUE BASED ON THE VALUATION REPORT OF THE REGISTERED VALUER. THE PRESENT REASSESSMENT IS BASED ON SPOT ENQUIRIES MADE ON 26.12.2011, BUT THE SAME WER E NOT PUT TO THE APPELLANT FOR REBUTTAL AS THE ASSESSMENT WAS COMPLETED ON 29.12.2011. IN THE EARLIER ASSESSMENT ORDER, THE AO HAD CONSIDERED THE ISSUE AND FIXED THE ANNUA L VALUE WHILE THE PRESENT AO HAD FIXED ANNUAL VALUE BASED O N I.T.A. NO.2967/DEL/2013 11 ENQUIRIES CONDUCTED AFTER SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ANNUAL VALUE CALCULAT ED IN THE ORIGINAL ASSESSMENT ORDER MAY BE ON THE LOWER S IDE BUT REOPENING CAN BE DONE ONLY IF TANGIBLE MATERIAL IS AVAILABLE IN THE HANDS OF THE AO. IN THIS CASE, THERE IS NO T ANGIBLE MATERIAL FOR REOPENING AND IT IS ONLY A MERE CHANGE OF OPINION. THEREFORE BASED ON THE HON'BLE SUPREME COU RTS DECISION IN THE CASE OF M/S KELVINATOR OF INDIA LTD . (320 ITR 561) THE APPELLANT SUCCEEDS IN THESE GROUNDS NO. 1 TO 13. 6. SUCH A FINDING OF THE LD. CIT (A) IS NOT ONLY CORRECT IN FACTS, BUT IS ALSO IN ACCORDANCE WITH THE PROVISIONS OF LAW. THEREFORE, WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH A FINDING AND ACCORDINGLY, THE GROUNDS RAISED BY THE RE VENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2017. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH NOVEMBER, 2017 JJ:0611 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR I.T.A. NO.2967/DEL/2013 12 DATE 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.