INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., MUMBAI V. ACIT-10(1), MUMBAI

ITA 3338/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4428 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 01-12-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 27-04-2011
• Court: TRIBUNAL
• Assessee Lawyers: B C S NAIK
• Keywords: Reopening of assessment; Capital asset; Business income; Depreciation; Tangible material; Wrong claim; Bad and doubtful debts; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Revenue expenditure
• Section: 143(3); 147; 148

Judgement Text

, , I, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3338/MUM/2011 ASSESSMENT YEAR: 2003-04 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., THE IL & FS CENTRE, G. GLOCK, C-22, BANDRA KURLA COMPLEX BANDRA (E) MUMBAI-400051 / VS. ACIT - 10(1) , MUMBAI - ( ASSESSEE ) ( REVENUE ) P.A. NO. AAACI0989F ITA NO.2770/MUM/2011 ITA NO.6477/MUM/2013 ASSESSMENT YEAR: 2003-04 DCIT - 10(1), R. NO.455, AAYAKAR BHAVAN, M.K. RD. MUMBAI - 400020 / VS. M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. IL & FS CENTRE, G. GLOCK, C- 22, BANDRA KURLA COMPLEX BANDRA (E) MUMBAI-400051 (REVENUE) (RESPONDENT) P.A. NO.AAACI0989F REVENUE BY SHRI B.C.S. NAIK ( CIT - DR) RESPONDENT BY SHRI DILIP V. LAKHANI (AR) INFRASTRUCTURE LEASING 2 / DATE OF HEARING : 01/12/2015 / DATE OF ORDER: 6/01/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF IN COME TAX (APPEALS)-21, MUMBAI {(IN SHORT CIT(A)}, DATED 31 .01.2011 FOR THE ASSESSMENT YEAR 2003-04, PASSED AGAINST THE ASS ESSMENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) R. W. S. 147 OF THE ACT. FURTHER, THE REVENUE HAS A LSO FILED AN APPEAL AGAINST THE ANOTHER ORDER OF LD. CIT(A) DELE TING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT F OR AY 2003- 04. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI DILIP V. LAKHANI, AUTHORISED REPRESENTATIVE (A R) ON BEHALF OF THE ASSESSEE AND BY SHRI B.C.S. NAIK, DEP ARTMENTAL REPRESENTATIVE (CIT-DR) ON BEHALF OF THE REVENUE. FIRST, WE TAKE UP ITA NO. 3338/MUM/2011 (ASSESSEES APPEAL) AND ITA NO. 2770/MUM/2011(REVENUES APPEAL) : 3. IN THIS CASE, THE ASSESSEE HAS FILED THE APPEAL CH ALLENGING THE ACTION OF LD. CIT(A) UPHOLDING THE VALIDITY OF REOPENING WHEREAS THE REVENUE HAS FILED APPEAL CHALLENGING TH E ACTION OF LD. CIT(A) ON MERITS. THE REVENUE HAS ALSO FILED AN ADDITIONAL INFRASTRUCTURE LEASING 3 GROUND WHEREIN CHALLENGE HAS BEEN MADE TO THAT PORT ION OF ORDER OF LD. CIT(A), WHEREIN IT HAS BEEN HELD THAT REOPENING WAS NOT VALID ON THREE OUT OF FOUR ISSUES RAISED BY THE AO IN THE REASONS RECORDED BY HIM FOR REOPENING OF THE CASE. THE ADDITIONAL GROUND RAISED BY THE REVENUE IS PURELY L EGAL AND DOES NOT REQUIRE ANY INVESTIGATION OF FRESH FACTS, AND, THEREFORE THE SAME IS ADMITTED FOR ADJUDICATION. 3.1. SINCE, THE FIRST GROUND RAISED BY BOTH THE PARTIES IN THEIR RESPECTIVE APPEALS PERTAINS TO THE JURISDICTIONAL A SPECT OF VALIDITY OF REOPENING OF THE ASSESSMENT THEREFORE W E DEEM IT APPROPRIATE TO FIRST DECIDE THE ISSUE OF REOPENING. 3.2. BOTH THE PARTIES HAVE MADE DETAILED ARGUMENTS WITH RESPECT TO REOPENING MADE BY THE AO. IT HAS BEEN AR GUED BY THE LD. CIT-DR THAT NOTICE U/S 148 WAS ISSUED WITHI N FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, AND THEREFORE, PROVISO TO SECTION 147 WAS NOT ATTRACTED IN THIS CA SE. IT HAS BEEN FURTHER SUBMITTED THAT AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, CLAIM OF THE ASSESSEE WITH RESPECT TO AMORTIZATION OF PREMIUM PAID FOR LEASE-HOLD LAND WAS ALLOWED, AN D THERE WAS NEITHER ANY QUERY FROM THE AO NOR ANY REPLY FRO M THE ASSESSEE ON THIS ISSUE. WITH RESPECT TO OTHER THREE ISSUES RAISED BY THE AO IN THE REASONS RECORDED ONLY CRY PTIC NOTICES WERE GIVEN, AND DETAILED INFORMATION WAS NOT PROVID ED BY THE ASSESSEE, AND THE AO DID NOT DEAL THESE ISSUES PROP ERLY WHILE FRAMING THE ASSESSMENT ORDER. RELIANCE HAS BEEN PLA CED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF INFRASTRUCTURE LEASING 4 YUVARAJ 315 ITR 84, FOR THE PROPOSITION THAT THERE IS NO CHANGE OF OPINION ON THE PART OF AO. 3.3. ON THE OTHER HAND, LD. COUNSEL HAS ALSO MADE DETAI LED SUBMISSIONS CHALLENGING THE VALIDITY OF REOPENING D ONE BY THE AO. IN NUTSHELL, HE HAS ATTACKED REOPENING AND THE REASONS RECORDED BY THE AO ON THE FOLLOWING TWO GROUNDS:- (I) THERE IS A FRESH TANGIBLE MATERIAL COMING INTO THE POSSESSION OF THE AO FOR RECORDING THE REASONS AN D REOPENING THE CASE, WHICH IS MANDATORY CONDITIONS AND SINE QUE NONE FOR RECORDING THE REASONS FOR ESCAPEMENT OF INCOME. T HERE IS CHANGE OF OPINION ON THE PART OF AO. (II) ALL THE ISSUES HAVE VERY WELL EXAMINED BY THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS WITH RESPECT TO THR EE OUT OF FOUR ISSUES. THE LD. CIT(A) HAS GIVEN A FINDING THA T THERE WAS DISCLOSURE ON THE PART OF THE ASSESSEE AND FULL EXA MINATION BY THE AO. WITH REGARD TO THE FORTH ISSUE ALSO THE ASS ESSEE HAS MADE FULL DISCLOSURE, AND AO WAS SATISFIED, AND THE REFORE, NO ADVERSE QUERIES WERE RAISED IN THIS REGARD. IN SUPP ORT OF HIS SUBMISSIONS, HE HAS TAKEN US THROUGH VARIOUS PAGES OF THE PAPER BOOK AND CITED NUMEROUS JUDGMENTS. 3.4. WE HAVE HEARD BOTH THE PARTIES, GONE THROUGH THE O RDERS OF LOWER AUTHORITIES AND MATERIAL PLACED BEFORE US FOR OUR EXAMINATION AS WELL AS JUDGMENTS CITED BY BOTH THE PARTIES. THE BRIEF FACTS ARE THAT THE ASSESSEE FILED ITS RET URN OF INCOME ON 27.11.2003. THE RETURN WAS PICKED UP FOR SCRUTIN Y. DETAILED QUESTIONNAIRES WERE ISSUED BY THE AO CALLI NG FOR VARIOUS DETAILS AND EVIDENCES. REPLIES WERE FILED B Y THE INFRASTRUCTURE LEASING 5 ASSESSEE TIME TO TIME, AND THEREAFTER, ASSESSMENT W AS COMPLETED ON 30.11.2005 BY PASSING ASSESSMENT ORDER U/S 143(3) OF THE ACT. SUBSEQUENTLY, A NOTICE U/S 148 W AS ISSUED ON 11.03.2008 AND REASSESSMENT ORDER WAS FRAMED ON 29.12.2008 U/S 143(3) R.W.S. 147 OF THE ACT. THE AS SESSING OFFICER RECORDED FOLLOWING REASONS FOR REOPENING OF THE CASE: THE ASSESSEE COMPANY FILED THEIR, RETURN OF INCOME ON 27.11.2003 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED U/S 143 (3) ON 30.11.2005 AT AN INCOME OF RS. 126,12,52,300/-. 1. THE ASSESSEE IS ENGAGED IN ACTIVITY OF INVESTMENT WHICH IS ITS SOLE BUSINESS ACTIVITY. THE DEBT COMPONENT OF FINANCE IS VERY HIGH (IT IS 83% DURING 2003-04). AN ASSET FINANCED FROM DEBT CANNOT BE CONSIDERED AS AN INVESTMENT ASSETS ELIGIBLE FOR CAPITAL GAINS AS THIS IS THE PART OF THE BUSINESS TO MAKE REGULAR INVESTMENTS IN VARIOUS ASSETS. IT IS SEEN FROM THE COMPUTATION OF LONG-TERM CAPITAL GAIN ON SALE OF STRATEGIC/LONG- TERM INVESTMENTS AMOUNT OF RS.76.78 CRORES (AFTER INDEXATION) WHICH IS INCLUDED IN THE TOTAL CAPITAL GAIN OF RS. 88.70 CRORES REVEALED THAT MOST OF THE ASSETS INCLUDED IN THE COMPUTATION WERE CLASSIFIED UNDER 'TRADE INVESTMENTS' IN THE BALANCE SHEET. THE INDEXATION BENEFIT AVAILED IS RS.11,07,39,512/-. CONSEQUENTLY THE TOTAL BOOK PROFIT IN THIS CASE SHOULD HAVE BEEN RS.87,85,46,027/- INSTEAD OF RS. 76,78,06,515/- INFRASTRUCTURE LEASING 6 TAKEN BY THE ASSESSEE BY WRONGLY TREATING THE SAME AS LONG-TERM CAPITAL ASSETS AND THE BENEFIT OF INDEXATION. THE ASSESSEE HAS WRONGLY TREATED ITS REGULAR BUSINESS INVESTMENT AS LONG- TERM TRADE INVESTMENTS AND HAS ALSO WRONGLY CLAIMED THE BENEFIT OF INDEXATION WHICH IS AVAILABLE ONLY I N RESPECT OF CAPITAL ASSET. THE TREATMENT OF BUSINESS INCOME BY THE ASSESSEE AS LONG-TERM CAPITAL GAIN ASSESSED AT TOO LOW A RATE AND IN VIEW OF EXPLANATION TO SECTION 147 OF THE INCOME TAX ACT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 2.IN THE ASSESSMENT MANAGEMENT COST ATTRIBUTABLE TO INCOME CLAIMED AS EXEMPT U/S 10(23G) WAS TAKEN WRONGLY AT RS. 52 LAKHS AS SUCH MANAGEMENT COST WORKS OUT AT RS. 6,42,33,001/- WHICH RESULTED IN ESCAPEMENT OF INCOME OF RS.5.9 CRORE FROM ASSESSMENT. THE ASSESSEE CLAIMED ALLOWANCE OF BAD DEBTS OF RS. 3,91,15,554/- IN RESPECT OF NONPERFORMING ASSETS WHICH WAS NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTION 36 (1) (VII) AS ACTUAL WRITE OFF WAS NOT AFFECTED IN THE BOOKS OF ACCOUNTS. THE WRONG CLAIM OF BAD DEBTS RESULTED IN ESCAPEMENT OF INCOME WHICH WAS CHARGEABLE TO TAX. 3. THE ASSESSEE HAS WRONGLY CLAIMED AMORTISATION IN RESPECT OF PREMIUM PAID ON LEASE HOLD LAND AMOUNTING TO RS.22,32,084/-. AS THIS AMOUNT REPRESENTS THE COST OF LEASE RIGHT THE INFRASTRUCTURE LEASING 7 SAME CANNOT BE AMORTISED AND CLAIMED AS REVENUE EXPENDITURE. THE WRONG CLAIM RESULTED IN ESCAPEMENT OF RS. 22,32,084/-FROM ASSESSMENT. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AS MENTIONED ABOVE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147. PROCEEDINGS U/S 147 AS INITIATED HEREWITH. ISSUE NOTICE U/S 148 OF THE INCOME TAX ACT.' 3.5. THE PERUSAL OF THE ABOVE AFORESAID REASONS SHOWE D THAT REASONS HAVE BEEN RECORDED ON FOLLOWING FOUR ISSU ES: 1. TRADE INVESTMENTS TREATED BY THE ASSESSEE AS CAPITA L ASSET AND OFFERED CAPITAL GAINS INSTEAD OF BUSINESS INCOME. 2. EXPENDITURE ATTRIBUTABLE TO THE INCOME CLAIMED AS EXEMPT U/S. 10(23G) OF I.T. ACT WITH REGARD TO MANAGEMENT COST. 3. THE CLAIM OF BAD DEBT U/S 36(L)(VII) OF I.T. ACT. 4. AMORTIZATION OF PREMIUM PAID ON LEASE-HOLD LAND. 3.6. IT IS NOTED FROM THE FACTS BROUGHT BEFORE US THAT THE ASSESSEE OBJECTED TO THE REOPENING PROCEEDINGS AT T HE TIME OF RE-ASSESSMENT PROCEEDINGS BY STATING THAT IT HAS FURNISHED ALL THE DETAILS ON THE ABOVE ISSUES AT TH E TIME OF ORIGINAL ASSESSMENT AND THERE IS NO MENTION ABOUT ANY NEW MATERIAL OR FACTS WHICH HAS COME TO THE KNOWLEDGE OF THE A.O. TO CONCLUDE THAT THERE IS ESCAPEMENT OF INCOME . THE ASSESSING OFFICER REJECTED ALL THE OBJECTIONS RAISE D AND PASSED THE REASSESSMENT ORDER, MAKING ADDITIONS ON ALL THE FOUR INFRASTRUCTURE LEASING 8 ISSUES REFERRED AS ABOVE. THE ASSESSEE PREFERRED AP PEAL BEFORE CIT(A), WHO CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND HELD THAT ON THE FIRST THREE ISSUES, T HERE IS A CHANGE OF OPINION AND WITH REGARD TO 4 TH ISSUE, RELYING ON THE DECISION OF HON 7 BLE ITAT. SPL. BENCH IN THE CASE OF MUKUND LTD. AND ALSO HON'BLE HIGH COURT OF PUNJAB DECISION IN THE CASE OF PUNJAB STATE CO-OPERATIVE AGRICULTURAL DEVE LOPMENT HELD THAT REOPENING IS VALID. HOWEVER, ON MERITS, L D. CIT(A) DELETED THE ADDITIONS MADE ON THE FIRST THREE ISSUE S AND SUSTAINED ADDITION ON THE 4 TH ISSUE. IN THIS CONTEXT, THE DEPARTMENT AS WELL AS THE ASSESSEE, BOTH ARE IN APPEAL BEFORE THE TRIBUNAL. THE DEPARTMENT IS CONTESTING THE DECISION OF LD. CIT(A) IN TREATING T HE REOPENING AS BAD-IN-LAW ON THE FIRST THREE ISSUES AND ALSO CO NTESTING THE ISSUES ON MERITS. THE ASSESSEE IS CHALLENGING T HE VALIDITY OF REOPENING PROCEEDINGS. 3.7. DURING THE COURSE OF HEARING BEFORE US, IT HAS BEE N SUBMITTED BY THE LD. COUNSEL ON BEHALF OF THE ASSES SEE THAT FIRST OF ALL, IT SHOULD BE SEEN THAT THERE WAS NO F RESH TANGIBLE MATERIAL IN THE POSSESSION OF THE AO. ACCORDING TO HIM, THE STAGE OF EXAMINATION FOR CHANGE IN OPINION COMES LA TER. IF THERE IS NO FRESH TANGIBLE MATERIAL IN THE POSSESSION OF THE AO, THE AO DOES NOT GET JURISDICTION TO RECORD THE REASONS , AND THEREFORE, REASONS WOULD BE INVALID IN THE ABSENC E OF THE SAME, THEREFORE THERE WOULD NOT BE ANY NEED TO PROC EED FURTHER TO EXAMINE THE ASPECT OF CHANGE OF OPINION. INFRASTRUCTURE LEASING 9 3.8. WE HAVE GONE THROUGH THE REASONS VERY CAREFULLY, IT IS CLEAR FROM ITS PERUSAL THAT THESE HAVE BEEN RECORDE D ON THE BASIS OF PERUSAL OF RETURN AND COPY OF FINAL ACCOUN TS OF THE ASSESSEE AS AVAILABLE IN THE ASSESSMENT RECORDS, WH ICH WERE ALREADY EXAMINED BY THE LD. AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS FRAMED U/S 143(3). IT IS NOT ED THAT IN RESPONSE TO OUR SPECIFIC QUERY, LD. CIT-DR WAS NOT ABLE TO SHOW EVEN IOTA OF FRESH TANGIBLE MATERIAL COMING INTO THE POSSESSION OF AO TO ENABLE HIM TO FORM A BELIEF ABO UT ESCAPEMENT OF INCOME, AND THEN TO RECORD THE REASO NS FOR REOPENING OF THE ASSESSMENT 3.9. THUS, UNDISPUTED FACTS ARE THAT IMPUGNED REASONS HAVE BEEN RECORDED IN ABSENCE OF ANY FRESH TANGIBLE MATE RIAL COMING INTO THE POSSESSION OF THE AO BEFORE RECORDI NG REASONS. UNDER THESE FACTS AND CIRCUMSTANCES, LET US NOW EXAMINE SETTLED POSITION OF LAW ON THIS ISSUE. IT H AS BEEN HELD IN VARIOUS JUDGMENTS COMING FROM VARIOUS COURTS THA T AVAILABILITY OF FRESH TANGIBLE MATERIAL IN THE POSS ESSION OF AO AT THE TIME OF RECORDING OF IMPUGNED REASONS IS A S INE QUA NON, BEFORE THE AO CAN RECORD REASONS FOR REOPENI NG OF THE CASE. WE BEGIN WITH THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. 320 IT R 561 (SC), LAYING DOWN THAT FOR REOPENING OF THE ASSESSMENT, T HE AO SHOULD HAVE IN ITS POSSESSION TANGIBLE MATERIAL. THE TERM TANGIBLE MATERIAL HAS BEEN UNDERSTOOD AND EXPLAIN ED BY VARIOUS COURTS SUBSEQUENTLY. THERE HAS BEEN UNANIMI TY OF THE COURTS ON THIS ISSUE THAT IN ABSENCE OF FRESH MATER IAL INFRASTRUCTURE LEASING 10 INDICATING ESCAPED INCOME, THE AO CANNOT ASSUME JUR ISDICTION TO REOPEN ALREADY CONCLUDED ASSESSMENT. 3.10. RECENTLY, HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS TUPPERWARE INDIA PVT. LTD. , IN ITS ORDER DT 10-8-15 (ITA NO 415/2015 ) GOT AN OCCASION TO ANALYSE LATES T POSITION OF LAW ON THIS ISSUE. AFTER DISCUSSING MANY JUDGMEN TS ON THIS ISSUE, IT WAS HELD THAT IT IS MANDATORY FOR THE AO TO HAVE IN ITS POSSESSION, FRESH TANGIBLE MATERIAL BEFORE REOPENIN G OF THE CASE. 3.11. IN THE CASE OF BOMBAY STOCK EXCHANGE LTD. (WRIT PE TITION NO.2468 DT. 12.06.2014) (89 CCH 118), HONBLE BOMBA Y HIGH COURT OBSERVED AS UNDER: 5. IT IS PERTINENT TO NOTE THAT RESPONDENT NO.1 HA S NOT SET OUT IN THE REASONS WHICH FACT OR OTHER MATERIAL W AS NOT DISCLOSED BY THE PETITIONER THAT LED TO INCOME ESCA PING ASSESSMENT. IN FACT, ON GOING THROUGH THE REASONS , WE FIND THAT RESPONDENT NO.1 HAS COME TO THE CONCLUSION/BELIEF THAT INCOME HAD ESCAPED ASSESSMEN T ON THE BASIS OF THE MATERIAL ALREADY BEFORE HIM AND NO NEW TANGIBLE MATERIAL HAS BEEN RELIED UPON BY RESPONDEN T NO.1 TO COME THE SAID CONCLUSION/BELIEF. THIS IS CLEAR FROM THE USE OF THE WORDS ON PERUSAL OF THE RECORDS IT IS NOTICED........, FURTHER PERUSAL OF STATEMENT 2 E NCLOSED WITH THE COMPUTATION OF INCOME SHOWS....... AND I T IS FURTHER NOTICED...... IN THE IMPUGNED NOTICE. INFRASTRUCTURE LEASING 11 3.12. IN THE CASE OF CIT VS. ORIENT CRAFT LTD. 354 ITR 536, IT WAS OBSERVED BY HONBLE DELHI HIGH COURT THAT IN THE SAID CASE , REASONS FOR REASSESSMENT DISCLOSED THAT AO REACHE D BELIEF THAT THERE WAS ESCAPEMENT OF INCOME 'ON GOIN G THROUGH THE RETURN OF INCOME' FILED BY ASSESSEE AND NOTHING MORE. IN THESE FACTS, IT WAS HELD BY THE HONBLE HIGH COURT THAT IT WAS NOTHING BUT REVIEW OF EARLIER PROCEEDINGS AND ABUSE OF POWER BY AO. IT WAS FURTHER HELD THAT SINCE THERE WAS NO WHISPER IN REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO POSSESSION OF AO SUBSEQUENT TO ISSUE OF INTIMATION, THEREFORE, IT WAS AN ARBITRARY EXERCISE OF POWER CONFERRED U/S 147. THUS, REOPENING WAS HELD TO BE INVALID ON THIS GROUND ITS ELF. 3.13. IN THE CASE OF MOHAN GUPTA (HUF) VS. CIT 366 ITR 115, SAME VIEW HAS BEEN FOLLOWED BY HONBLE DELHI HIGH C OUT. 3.14. FURTHER, IN THE CASE OF CIT VS. K. L. ARORA IN ITA 118/2014 DATED 21-04-2014, HONBLE DELHI HIGH COU RT OBSERVED AS UNDER: THIS COURT IS OF THE OPINION THAT NO FAULT CAN BE FOUND WITH THE TRIBUNALS ORDER. IT IS WELL SETTLED THAT IN ORDER TO ISSUE A VALID REASSESSMENT NOTICE, THE AO HAS TO BE SATISFIED ON THE BASIS OF TANGIBLE MATERIAL OR INFORMATION SUBSEQUENTLY AVAIL ABLE TO HIM THAT THE ASSESSEE HAD NOT MADE FULL AND TRUE DISCLOSURE WHICH LED TO INCOME ESCAPING ASSESSMENT AT THE STAG E WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED. SHORT OF THAT A RE- APPRECIATION OF THE EXISTING MATERIALS WHICH REALLY AMOUNTS TO REVIEW IS IMPERMISSIBLE. THE TRIBUNAL, IN THE CIRCU MSTANCES OF THIS CASE WAS JUSTIFIED IN CONCLUDING THAT RE-ASSES SMENT PROCEEDINGS THEMSELVES WERE NOT IN ACCORDANCE WITH LAW AND CONSEQUENTLY DISMISSING THE REVENUES APPEAL. NO QU ESTION OF LAW ARISES FOR CONSIDERATION. INFRASTRUCTURE LEASING 12 3.15. IN THE CASE OF CIT VS. SHRI ATUL KUMAR SWAMI IN ITA NO. 112/2014 DATED 18-03-2014 REPORTED AT 52 TAXMAN N.COM 47, HONBLE DELHI HIGH COURT OBSERVED AS UNDER: ..REOPENING OF ASSESSMENT IS VALID IF IT IS BASED ON TANGIBLE MATERIAL TO JUSTIFY CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOMEIN INSTANT CASE NOTE FORMING PA RT OF RETURN CLEARLY MENTIONED AND DESCRIBED NATURE OF TH E RECEIPT UNDER A NON-COMPETE AGREEMENTREASONS FOR ISSUANCE OF NOTICE U/S 147 NOWHERE MENTIONED THAT REVENUE CAME UP WITH ANY OTHER FRESH MATERIAL WARRA NTING REOPENING OF ASSESSMENTREOPENING OF ASSESSMENT WAS UNJUSTIFIEDREVENUES APPEAL DISMISSED. 3.16. FURTHER RELIANCE CAN BE PLACED ON THE DETAILED JUD GMENT IN THE CASE OF MADHUKAR KHOSLA VS. ACIT 367 ITR 165 (DELHI), WHEREIN IT HAS BEEN HELD THAT THE REOPENING IS NOT PERMITTED UNDER THE LAW UNLESS IT IS BASED ON FRESH TANGIBLE MATERIAL AND THAT I F THE REASONS TO BELIEVE ARE NOT BASED ON NEW TANGIBLE MATERIALS , THE REOPENING AMOUNTS TO AN IMPERMISSIBLE REVIEW. IT HAS BEEN FURTHER OBSERVED THAT : THE FOUNDATION OF THE AOS JURISDICTION AND THE RA ISON DETRE OF A REASSESSMENT NOTICE ARE THE REASONS TO BELIEVE. NOW THIS SHOULD HAVE A RELATION OR A LINK WITH AN OBJECTIVE FACT, IN THE FORM OF INFORMATION OR FACTS EXTERNAL TO THE MATERIALS ON THE RECORD. SUCH EXTERNAL FACTS OR MATERIAL CONSTITUTE THE DRIVER, OR THE KEY WHICH ENABLES THE AUTHORITY TO LEGITIMATELY RE-OPEN THE COMPLETED ASSESSMENT. IN ABSENCE OF THIS OBJECTIVE TRIGGER, THE AO DOES NOT POSSESS JURISDICTION TO REOPEN THE ASSESSM ENT. IT IS AT THE NEXT STAGE THAT THE QUESTION, WHETHER THE RE- OPENING OF ASSESSMENT AMOUNTS TO REVIEW OR CHANG E OF OPINION ARISES. IN OTHER WORDS, IF THERE ARE NO R EASONS TO BELIEVE BASED ON NEW, TANGIBLE MATERIALS, THEN T HE REOPENING AMOUNTS TO AN IMPERMISSIBLE REVIEW. HERE, THERE INFRASTRUCTURE LEASING 13 IS NOTHING TO SHOW WHAT TRIGGERED THE ISSUANCE OF N OTICE OF REASSESSMENT NO INFORMATION OR NEW FACTS WHICH LE D THE AO TO BELIEVE THAT FULL DISCLOSURE HAD NOT BEEN MAD E (KELVINATOR OF INDIA LTD [(2010)320 ITR 561 (SC)] AND ORIENT CRAFT LTD [(2003)354 ITR 536 (DELHI)] FOLLOWED, USHA INTERNATIONAL [(2012)348 ITR 485 (DEL) (FB)] REFERRED) 3.17. IN THE CASE OF CIT VS JYOTI DEVI 218 CTR 264, HONBLE RAJASTHAN HIGH COURT HELD THAT SINCE REVENUE COULD NOT POINT OUT ANY INFORMATION OR MATERIAL WHICH HAD SUBSEQUEN TLY COME TO THE NOTICE OF THE AO TO ENABLE HIM TO FORM THE R EQUISITE BELIEF THAT ANY INCOME LIABLE TO BE ASSESSED HAD ES CAPED ASSESSMENT, THEREFORE, THE INITIATION OF REASSESSME NT PROCEEDINGS WAS NOT VALID. 3.18. HONBLE MADRAS HIGH COURT IN THE CASE OF BAPALAL & CO. EXPORTS 289 ITR 37, HELD THAT IN THE ABSENCE OF ANY NEW MATERIAL, THE AO IS NOT EMPOWERED TO REOPEN AN ASSE SSMENT. 3.19. RECENTLY, MUMBAI BENCH OF ITAT IN THE CASE HV TRANSMISSIONS LTD. IN I.T.A NO. 2230/MUM/2010 HELD THAT AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT IN THE ABSENCE OF ANY NEW MATERIAL. HONBLE BENCH HAS RELI ED UPON THIRD MEMBER JUDGMENT FROM MUMBAI BENCH OF ITAT IN THE CASE TELCO DADAJEE DHACKJEE LTD VS DCIT ( ITA NO 4613/MUMBAI/2013 DT 12-5-2010), IN SUPPORT OF THIS VIEW. 3.20. IN THE PRESENT CASE, IT HAS ALREADY BEEN DISCUSSED THAT ADMITTED FACTS ARE THAT THERE WAS NO FRESH MATERIAL COMING INTO THE POSSESSION OF THE AO, AT THE TIME OF RECOR DING OF THE INFRASTRUCTURE LEASING 14 REASONS. THESE FACTS HAVE NOT BEEN REBUTTED BY LD CIT-DR ALSO. THE CASES RELIED UPON BY HIM IN THE CASE OF D R. AMINS PATHOLOGY, 252 ITR 673 (BOM) AND IN THE CASE OF YUV ARAJ 315 ITR 84, FOR THE PROPOSITION THAT THERE IS NO CHANGE OF OPINION ON THE PART OF AO, ARE NOT APPLICABLE ON THE ISSUE BEING DECIDED HERE. THE ISSUE THAT IN ABSENCE OF ANY FRES H MATERIAL, WHETHER AO CAN PROCEED TO RECORD REASONS, WAS NOT BEFORE HONBLE HIGH COURT, THEREFORE HONBLE HIGH COURT HA D DECIDED THE ISSUE OF CHANGE OF OPINION IN THESE CASE. IN TH E CASE BEFORE US, AS DISCUSSED ABOVE, WE ARE NOT GOING INTO THAT ISSUE. IN OUR CONSIDERED OPINION, AT THIS STAGE, WE NEED NOT GO INTO THE OTHER ASPECT I.E. WHETHER THERE WAS CHANGE OF O PINION OR NOT. THIS ISSUE HAS BEEN APTLY CLARIFIED BY HON BLE HIGH COURT IN THE CASE OF MADHUKAR KHOSLA, (SUPRA), WHER EIN IT HAS BEEN HELD BY THEIR LORDSHIPS THAT EXTERNAL FACT S OR MATERIAL CONSTITUTE THE DRIVER, OR THE KEY WHICH EN ABLES THE AO TO LEGITIMATELY REOPEN THE COMPLETED ASSESSM ENT AND IN ABSENCE OF THIS OBJECTIVE TRIGGER, THE AO DOES NOT POSSESS JURISDICTION TO REOPEN THE ASSESSMENT. FURT HER, MOST IMPORTANTLY, IT WAS HELD BY THE HONBLE HIGH C OURT THAT IT IS AT THE NEXT STAGE WHEN THE QUESTION, WHE THER THE REOPENING OF ASSESSMENT AMOUNTS TO REVIEW OR CHA NGE OF OPINION ARISES. IN OTHER WORDS, IF THERE ARE NO NEW TANGIBLE MATERIALS, THEN THERE WOULD BE NO REASON S TO BELIEVE, AND CONSEQUENTLY REOPENING WOULD BE AN IMPERMISSIBLE REVIEW. UNDER THESE CIRCUMSTANCES THE RE WOULD NOT ARISE ANY NEED TO GO THE NEXT STAGE TO EX AMINE THE NEXT QUESTION, I.E., WHETHER THERE WAS REVIEW OR INFRASTRUCTURE LEASING 15 CHANGE OF OPINION. THE CONDITION WITH RESPECT TO AVAILABILITY OF NEW TANGIBLE MATERIAL IS STEP ANT ERIOR TO THE CONDITION OF NO CHANGE OF OPINION OR REVIEW . 3.21. THUS, IN VIEW OF JUDGMENTS DIRECTLY ON THE ISSUE U NDER CONSIDERATION, AS DISCUSSED IN ABOVE PARAS, REOPEN ING DONE BY LD. AO IN THE ABSENCE OF FRESH TANGIBLE MATERIAL , IS INVALID AND BAD IN LAW. THEREFORE, THE INITIATION OF REASSE SSMENT PROCEEDINGS WAS NOT VALID. THUS, RE-ASSESSMENT ORDE R FRAMED IN PURSUANCE TO INVALID REOPENING IS ILLEGAL; THE S AME IS HEREBY QUASHED. SINCE ASSESSMENT ORDER HAS BEEN QUASHED ON JURISDICTIONAL GROUND ITSELF, OTHER GROUNDS IN BOTH OF THE APPEALS ARE NOT BEING ADJUDICATED. 4. AS A RESULT, APPEAL OF ASSESSEE IS ALLOWED AND REV ENUES APPEAL IS DISMISSED. NOW, WE SHALL TAKE UP ITA NO.6477/MUM/2013: 5. IN THIS APPEAL THE REVENUE HAS CHALLENGED THE ACTI ON OF LD. CIT(A) IN DELETING PENALTY U/S. 271(1)(C) OF THE AC T AMOUNTING TO RS.7,82,300/-. FROM THE FACTS BROUGHT BEFORE US, IT IS NOTED THAT PENALTY WAS LEVIED BY THE AO ON THE CLAIM MADE BY THE ASSESSEE WITH REGARD TO AMORTIZATION OF LEASEHOLD P REMIUM OF LAND. IT IS NOTED BY US THAT WE HAVE QUASHED THE AS SESSMENT ORDERS FRAMED BY THE AO, THUS BASIS FOR LEVY OF PEN ALTY NO MORE SURVIVES. UNDER THESE CIRCUMSTANCES, WE FIND T HAT PENALTY HAS BEEN RIGHTLY DELETED BY LD. CIT(A), THU S, THERE IS INFRASTRUCTURE LEASING 16 NO FORCE IN THE GROUND RAISED BY THE REVENUE, AND T HEREFORE SAME IS DISMISSED AS INFRUCTUOUS. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2016. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; ' DATED : 6/01/2016 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. $ %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * ( $ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI 5. -. ' /0 , ) $ /01 , / DR, ITAT, MUMBAI 6. 2 3 / GUARD FILE. / BY ORDER, ( -$ ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI