M/s. DELTA AIR LINES INC., MUMBAI V. ITO (IT)-2(1), MUMBAI

ITA 3476/MUM/2008

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9536 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 29-10-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 19-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Double taxation relief; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP (AM) & SHRI VIJAY PAL RAO (JM) I.T.A. NO. 3476/MUM/2008 (ASSESSMENT YEAR : 2001-02) DELTA AIR LINES, INC GSA: INTERGLOBE AIR TRANSPORT BAJAJ BHAVAN 12 TH FLOOR, NARIMAN POINT MUMBAI-400 021. VS. ITO (INTERNATIONAL TAXATION)-2(1) SCINDIA HOUSE BALLARD PIER N.M. ROAD MUMBAI-400 001. PAN/GIR NO. AAACD4092N (APPELLANT) .. (RESPONDENT) ASSESSEE BY : SHRI NISHANT THAKKER DEPARTMENT BY : MS. NEERAJA PRADHAN DATE OF HEARING : 30.10.2012 DATE OF PRONOUNCEMENT : 30.11.2012 O R D E R PER P.M. JAGTAP (AM): THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED CIT(A)- XXXI, MUMBAI DATED 27.3.2008. 2. THE ASSESSEE IN THE PRESENT CASE IS CONNECTED WI TH OPERATION OF AIRCRAFTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS ORIGINALLY FILED BY IT ON 18.10.2001 DECLARING TOTAL INCOME AT NIL AFTER CLAI MING EXEMPTION FOR THE ENTIRE INCOME UNDER ARTICLE 8 OF INDO-US DTAA. THE SAID RE TURN WAS INITIALLY PROCESSED BY THE ASSESSING OFFICER U/S. 143(1) OF THE ACT ON 2.1 .2003. SUBSEQUENTLY, HE NOTICED FROM THE PERUSAL OF THE RECORD THAT INTEREST INCOME OF RS. 17,09,023/- WAS EARNED BY THE ASSESSEE ON FIXED DEPOSIT AND SINCE THE SAME WA S NOT CONNECTED WITH THE OPERATION ON AIRCRAFTS, ASSESSEE WAS NOT ENTITLED F OR EXEMPTION UNDER ARTICLE 8 OF INDO- US DTAA IN RESPECT OF THE SAID INTEREST INCOME. ACC ORDING TO THE ASSESSING OFFICER, THE SAID INTEREST WAS CHARGEABLE TO TAX IN THE HAND S OF THE ASSESSEE UNDER ARTICLE 11 OF INDO-US DTAA @ 15%. HE THEREFORE REOPENED THE AS SESSMENT FOR THE YEAR UNDER CONSIDERATION AFTER RECORDING THE REASONS AND ISSUE D A NOTICE U/S. 148 ON 26.10.2005. DELTA AIR LINES, INC 2 IN RESPONSE TO THE SAID NOTICE, A LETTER DATED 14.1 1.2005 WAS FILED BY THE ASSESSEE REQUESTING THAT THE RETURN ORIGINALLY FILED BY IT O N 18.10.2001 BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE OBTAINED A COPY OF REASONS RECORDED BY THE ASSESSING OFFICER AND CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT INTER-ALIA ON THE GROUND THAT THERE WAS NO NEW MATERIAL THAT HAD COME TO THE POSSESSION OF THE ASS ESSING OFFICER TILL DATE OF ISSUE OF THE NOTICE U/S. 148 ON THE BASIS OF WHICH ASSESSMEN T WAS REOPENED. THIS CONTENTION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASS ESSING OFFICER. ACCORDING TO HIM, THERE WAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND IT WAS SUFFICIENT TO JUSTIFY THE REOPENING OF ASSESSMENT. IN THIS REGARD HE RELIED ON THE DECISION OF THE FULL B ENCH OF HON'BLE DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (256 ITR 1), W HEREIN IT WAS HELD THAT REASON TO BELIEVE AFTER COMPLETION OF ASSESSMENT WAS SOUND FO UNDATION FOR EXERCISING POWER U/S. 147 OF THE ACT. THE ASSESSING OFFICER ACCORDI NGLY DID NOT FIND MERIT IN THE PRELIMINARY OBJECTION PRESSED BY THE ASSESSEE CHALL ENGING THE REOPENING OF ASSESSMENT AND OVERRULING THE SAME, HE COMPLETED TH E REASSESSMENT U/S. 143(3) READ WITH 147 OF THE ACT VIDE ORDER DATED 23.11.2006 BRI NGING TO TAX, INTEREST INCOME OF RS.17,09,023/- IN THE HANDS OF THE ASSESSEE AT THE RATE OF 15%. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R U/S. 143(3) READ WITH SECTION 147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE LEARNED CIT(A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENT AS WELL AS DISPUTIN G THE ADDITION MADE THEREIN ON ACCOUNT OF INTEREST INCOME ON MERIT. BEFORE LEARNED CIT(A), SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED ON BEHALF OF THE ASSESSEE ON THE ISSUE OF VALIDITY OF REOPENING OF ASSESSMENT. IT WAS ALSO POINTED OUT BY THE ASSESSEE THAT THE FACT THAT IT HAD EARNED INTEREST INCOME AND CLAIMED THE SAME AS NOT TAXABLE UNDER THE PROVISIONS OF ARTICLE 8 OF THE TREATY WAS CLEARLY D ISCLOSED IN THE RETURN OF INCOME. THE LEARNED CIT(A) DID NOT FIND MERIT IN THE SUBMISSION S MADE ON BEHALF OF THE ASSESSEE ON THIS ISSUE. HE HELD THAT PHRASE REASON TO BELIE VE WOULD MEAN CAUSE OR JUSTIFICATION AND IF THE ASSESSING OFFICER HAD CAUS E OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, REOPENING OF AS SESSMENT TO BRING TO TAX SUCH ESCAPED INCOME WAS IN ACCORDANCE WITH LAW. FOR THIS CONCLUSION, HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RA JESH JHAVERI STOCK BROKERS (P) DELTA AIR LINES, INC 3 LTD. (291 ITR 500), WHEREIN IT WAS HELD THAT SO LON G AS THE INGREDIENTS OF SECTION 147 ARE FULFILLED, THE ASSESSING OFFICER IS FREE TO INI TIATE PROCEEDING UNDER SECTION 147 EVEN WHEN INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUE D. HE ALSO RELIED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL (236 ITR 832), WHEREIN IT WAS HELD THAT IT IS NOT NECESSARY THAT F RESH FACTS SHOULD COME TO THE NOTICE OF THE ASSESSING OFFICER SUBSEQUENT TO ORIGINAL ASS ESSMENT TO JUSTIFY REOPENING AND IF THE ASSESSING OFFICER ON THE BASIS OF MATERIAL ALR EADY AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT COMES TO A CONCLUSION THAT ORIGINAL ASSE SSMENT WAS ERRONEOUS, THEN SUCH FACTS ALONE WOULD JUSTIFY INITIATION OF REASSESSMEN T PROCEEDINGS. ACCORDINGLY VALIDITY OF REASSESSMENT MADE BY THE ASSESSING OFFICER WAS UPHE LD BY LEARNED CIT(A) AND EVEN THE ADDITION MADE THEREIN TO THE TOTAL INCOME OF TH E ASSESSEE ON ACCOUNT OF INTEREST INCOME WAS CONFIRMED BY HIM ON MERIT. AGGRIEVED BY THE ORDER OF LEARNED CIT(A), ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBU NAL. 4. IN GROUND NO. 1 OF THIS APPEAL, ASSESSEE HAS RAI SED A PRELIMINARY ISSUE CHALLENGING THE VALIDITY OF REASSESSMENT MADE BY TH E ASSESSING OFFICER ON THE GROUND THAT INITIATION OF REASSESSMENT PROCEEDINGS ITSELF IS BAD IN LAW. 5. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET I NVITED OUR ATTENTION TO THE COPY OF THE NOTE FILED BY THE ASSESSEE ALONGWITH ITS RET URN OF INCOME PLACED AT PAGE NO. 16 OF HIS PAPER BOOK TO POINT OUT THAT THE FACT OF HAV ING EARNED INTEREST ON FIXED DEPOSIT OUT OF FUNDS RETAINED IN INDIA AND HAVING CLAIMED E XEMPTION FOR THE SAME AS PER PROVISIONS OF ARTICLE 8 OF THE TREATY WAS CLEARLY D ISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME FILED ORIGINALLY. HE THEN INVITED OUR ATT ENTION TO THE COPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER PLACED AT PAGE NO . 75 OF HIS PAPER BOOK AND SUBMITTED THAT THERE WAS NO REFERENCE TO ANY NEW MA TERIAL COMING TO POSSESSION OF THE ASSESSING OFFICER ON THE BASIS OF WHICH BELIEF ABOUT ESCAPEMENT OF INCOME WAS ENTERTAINED BY THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. HE RELIED ON THE THIRD MEMBER DECISION OF MUMBAI BENCH OF THE ITAT IN THE CASE OF TELCO DADAJI DHACKJEE LTD. VS. DCIT (ITA NO. 4613/MUM/2005 DATED 12.5.201 0), TO CONTEND THAT IN THE ABSENCE OF ANY SUCH NEW MATERIAL, REOPENING OF ASSE SSMENT ITSELF WAS BAD IN LAW AND THE ASSESSMENT MADE IN PURSUANCE THEREOF IS LIABLE TO BE CANCELLED BEING INVALID. DELTA AIR LINES, INC 4 6. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUBMITTED THAT THE RETURN OF INCOME ORIGINALLY FILED BY THE ASSESSEE W AS PROCESSED BY THE ASSESSING OFFICER U/S. 143(1) AND SINCE ASSESSMENT WAS REOPEN ED BY HIM WITHIN A PERIOD OF FOUR YEARS ON THE BASIS OF REASONS DULY RECORDED SHOWING BASIS OF HIS SATISFACTION, THE SAME WAS IN ACCORDANCE WITH LAW. IN SUPPORT OF THIS CONTENTION HE CITED THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL (SUPRA) RELIED UPON BY LEARNED CIT(A) IN HIS IMPUGNED ORDER, WHEREIN IT WAS HELD THAT IT WAS NOT NECESSARY THAT FRESH FACTS SHOULD COME TO THE NOTICE OF THE A SSESSING OFFICER SUBSEQUENT TO ORIGINAL ASSESSMENT TO JUSTIFY THE REOPENING. HE CO NTENDED THAT THE ASSESSMENT MADE FOR THE EARLIER YEARS IN ANY CASE WAS BEFORE THE AS SESSING OFFICER WHICH CONSTITUTED TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFI CER TO JUSTIFY THE REOPENING. IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE, LEARNE D DEPARTMENTAL REPRESENTATIVE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA) 7. IN THE REJOINDER, LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THERE IS NO REFERENCE WHATSOEVER TO ANY ASSESSMENT OF EARLIER Y EARS MADE BY THE ASSESSING OFFICER IN THE REASONS RECORDED TO JUSTIFY THE REOPENING. H E ALSO SUBMITTED THAT THE VIEW EXPRESSED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL (SUPRA) HAS NOT BEEN AGREED TO BY THE FULL BENCH OF THE HON 'BLE DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA), WHICH HAS BEEN AFFIRMED BY HON'BLE SUPREME COURT. HE FURTHER SUBMITTED THAT THE DECISIONS OF H ON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA) AN D IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) HAVE BEEN TAKEN INTO CONSIDERATION BY THE THIRD MEMBER IN THE CASE OF TELCO DADAJI DHACKJEE LTD. (SUPRA) WHILE DECIDING A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IT IS OBSERVED THAT IN THE RETURN OF INCOME ORIGINA LLY FILED FOR THE YEAR UNDER CONSIDERATION ON 18.10.2001, EXEMPTION WAS CLAIMED BY THE ASSESSEE IN RESPECT OF INTEREST INCOME AS PER PROVISIONS OF ARTICLE-7 OF I NDO-US TREATY AND THIS FACT WAS CLEARLY MENTIONED IN THE NOTE (COPY PLACED AT PAGE NO.16 OF THE PAPER BOOK) FILED ALONGWITH THE SAID RETURN. THE SAID RETURN WAS INIT IALLY PROCESSED BY THE ASSESSING DELTA AIR LINES, INC 5 OFFICER U/S. 143(1) ON 2.1.2003. SUBSEQUENTLY, HE H OWEVER REOPENED THE ASSESSMENT FOR THE FOLLOWING REASONS RECORDED U/S. 148(2) 30.9.2005 : THE ASSESSEE FILED ITS RETURN OF INCOME ON 18.10 .2001, DECLARING NIL INCOME. THE RETURN WAS PROCESSED U/. 143(1)(A) OF T HE I.T. ACT, 1961 ON 2.1.2003, ACCEPTING THE NIL INCOME DECLARED BY THE ASSESSEE A ND A REFUND OF RS. 1,58,701/- WAS DETERMINED AND ISSUED TO THE ASSESSE E. THE ASSESSEE HAS RECEIVED INTEREST WHICH IS NOT CONNECTED WITH OPERA TION OF AIRCRAFTS BUT CLAIMED EXEMPTION ON ALL INCOME UNDER ARTICLE 8 OF INDO-US DTAA, AND THAT THE INTEREST SHOULD BE TAXED UNDER ARTICLE 11 OF THE DTAA @ 15%. SINCE NO PRIMA FACIE ADJUSTMENT CAN BE MADE UNDER THE STATUTORY PROVISIO NS HENCE THE RETUNED INCOME WAS ACCEPTED WHILE PROCESSING THE RETURN. HO WEVER, REMEDIAL ACTION BY REOPENING THE ASSESSMENT U/S. 148 OF THE I.T. ACT, 1961 IS SUGGESTED. THE LAST DATE FOR ISSUING OF NOTICE U/S. 148 IS 31.3.2008. S UBMITTED FOR YOUR KIND APPROVAL PLEASE. 9. AS IS CLEARLY EVIDENT FROM THE REASONS RECORDED BY THE ASSESSING OFFICER AS ABOVE, THERE WAS NO NEW MATERIAL COMING TO THE POSS ESSION OF THE ASSESSING OFFICER ON THE BASIS OF WHICH ASSESSMENT COMPLETED U/S. 143(1) WAS REOPENED AND THIS POSITION HAS NOT BEEN DISPUTED EVEN BY LEARNED DEPARTMENTAL REPRESENTATIVE. SHE HOWEVER HAD SUBMITTED THAT THE ASSESSMENTS COMPLETED IN THE CASE OF THE ASSESSEE FOR THE EARLIER YEARS WERE AVAILABLE ON RECORD BEFORE THE A SSESSING OFFICER AND THEY FORMED THE BASIS FOR REOPENING THE ASSESSMENT. THERE IS HOWEVE R NO MENTION WHATSOEVER TO ANY SUCH ASSESSMENT IN THE REASONS RECORDED BY THE ASSE SSING OFFICER. IT IS WELL SETTLED THAT THE VALIDITY OF REOPENING HAS TO BE JUDGED ON THE BASIS OF REASONS RECORDED BY THE ASSESSING OFFICER AND THE DOCUMENT OR MATERIAL REFE RRED TO THEREIN AND NOT ON THE BASIS OF ANY EXTERIOR MATERIAL WHICH HAS NOT BEEN R EFERRED TO IN THE REASONS RECORDED. LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO RELIED UPON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL P ATEL (SUPRA) IN SUPPORT OF THE REVENUES CASE ON THE ISSUE UNDER CONSIDERATION WHI CH HAS BEEN RELIED UPON BY LEARNED CIT(A) IN HIS IMPUGNED ORDER. AS POINTED OU T BY LEARNED COUNSEL, THE VIEW EXPRESSED BY HON'BLE GUJARAT HIGH COURT IN THE SAID CASE THAT THERE IS NO NECESSITY FOR THE ASSESSING OFFICER TO HAVE FRESH FACTS COMIN G TO HIS NOTICE SUBSEQUENT TO ORIGINAL ASSESSMENT TO JUSTIFY REOPENING HAS NOT BE EN SUBSCRIBED TO BY THE FULL BENCH OF HON'BLE DELHI HIGH COURT IN THE CASE OF KELVINAT OR OF INDIA LTD. (SUPRA) WHICH HAS BEEN AFFIRMED BY HON'BLE SUPREME COURT. AS HELD BY HON'BLE DELHI HIGH COURT, IF THE CONTENTION OF THE REVENUE BASED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE DELTA AIR LINES, INC 6 CASE OF PRAFUL CHUNILAL PATEL (SUPRA) IS ACCEPTED, THE SAME WOULD CONFER AN ARBITRARY POWER UPON THE ASSESSING OFFICER TO REOPEN THE PROC EEDINGS ONLY ON THE SLIGHTEST PRETEXT, WHICH IS NOT PERMISSIBLE. 10. LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO RE LIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKERS (P) LTD. (SUPRA) TO CONTEND THAT THE REOPENING OF ASSESSMENT COMPLETED ORIGINAL LY U/S. 143(1) IS PERMISSIBLE WITHOUT THERE BEING ANY NEW MATERIAL COMING TO THE POSSESSION OF THE ASSESSING OFFICER IF THE REASONS RECORDED FOR REOPENING OF AS SESSMENT ARE OTHERWISE VALID. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , HAS RELIED ON THIRD MEMBER DECISION OF THE TRIBUNAL IN THE CASE OF TELCO DADAJ I DHACKJEE LTD. (SUPRA) STATING THAT A SIMILAR ISSUE INVOLVED IN THE SAID CASE HAS BEEN DECIDED BY THE THIRD MEMBER IN FAVOUR OF THE ASSESSEE AFTER TAKING INTO CONSIDERAT ION THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS ( P) LTD. (SUPRA) RELIED UPON BY THE LEARNED DR. IN THE SAID CASE, THE RETURN FILED BY T HE ASSESSEE WAS ORIGINALLY ACCEPTED U/S. 143(1). IN THE SAID RETURN THE ASSESSEE HAD C LAIMED DEDUCTION FOR PAYMENT OF NON-COMPETE FEES OF RS. 75 LAKHS WHICH INCLUDED PAY MENT OF RS. 15 LAKHS TO DIRECTORS. THE ASSESSEE HAD ALSO CLAIMED DEPRECIATI ON OF RS. 1,41,848/- ON LEASE PREMISES. THE ASSESSING OFFICER ISSUED NOTICE U/S 1 48 ON THE GROUND THAT THESE WERE NOT ALLOWABLE EXPENSES AND INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. HE ACCORDINGLY DISALLOWED BOTH THE ITEMS IN THE REASSE SSMENT ORDER. WHEN THE MATTER REACHED TO THE TRIBUNAL, THE LEARNED JUDICIAL MEMBE R TOOK THE VIEW THAT THERE WAS NO FRESH MATERIAL TO SUPPORT THE FORMATION OF THE BELI EF OF THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND IN THE ABSENCE OF ANY FRESH TANGIBLE MATERIAL, HE CAME TO THE CONCLUSION THAT I T WAS NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. THE LEA RNED ACCOUNTANT MEMBER, HOWEVER, TOOK A DIFFERENT VIEW RELYING ON THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPR A) AND THE MATTER, THEREFORE, WAS REFERRED TO A THIRD MEMBER FOR RESOLVING INTER ALIA , THE FOLLOWING POINT OF DIFFERENCE :- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE PROC EEDINGS INITIATED BY THE AO U/S 147 IS LIABLE TO BE CONFIRMED OR QUASHED WHE N THERE WAS NO FRESH MATERIAL AVAILABLE WITH THE AO AND THE ASSESSMENT H AD BEEN COMPLETED ORIGINALLY U/S 143(1). DELTA AIR LINES, INC 7 THE THIRD MEMBER AGREED WITH THE VIEW TAKEN BY THE LEARNED JUDICIAL MEMBER RELYING MAINLY ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) AND EICHER LTD. 320 ITR 561. IT WAS HE LD BY THE THIRD MEMBER THAT SECTION 147 APPLIES BOTH TO SECTION 143(1) AS WELL AS SECTION 143(3) AND, THEREFORE, EXCEPT TO THE EXTENT THAT A REASSESSMENT NOTICE ISS UED U/S 148 IN A CASE WHERE THE ORIGINAL ASSESSMENT WAS MADE U/S 143(1) CANNOT BE C HALLENGED ON THE GROUND OF A MERE CHANGE OF OPINION, IT IS OPEN TO AN ASSESSEE T O CHALLENGE THE NOTICE ON THE GROUND THAT THERE IS NO REASON TO BELIEVE THAT INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. AS REGARDS THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA) CITED BY THE REVENUE AND RELIED UPON BY THE ACCOUNTANT MEMBER, THE THIRD MEMBER HELD THAT THE S AME WAS APPLICABLE IN CASES WHERE THE RETURN WAS PROCESSED U/S 143(1) BUT LATER ON NOTICE WAS ISSUED U/S 148 AND THE ASSESSEE CHALLENGES THE NOTICE ON THE GROUN D THAT IT IS PROMPTED BY A MERE CHANGE OF OPINION. THE THIRD MEMBER THEN REFERRED T O THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA (SUPRA) WHEREIN IT WAS HELD THAT THERE SHOULD BE TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT. RELYING ON THE SAID DECISION, I T WAS HELD BY THE THIRD MEMBER THAT WHILE RESORTING TO SECTION 147 EVEN IN A CASE WHERE ONLY AN INTIMATION HAD BEEN ISSUED U/S 143(1)(A), IT IS ESSENTIAL THAT THE ASSE SSING OFFICER SHOULD HAVE BEFORE HIM TANGIBLE MATERIAL JUSTIFYING HIS REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. SINCE THERE WAS NO SUCH TANGIBLE MATERIAL BEFORE TH E AO FROM WHICH HE COULD ENTERTAIN THE BELIEF THAT INCOME OF THE ASSESSEE CH ARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THE THIRD MEMBER HELD THAT REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER WERE LIABLE TO BE QUASHED ON THE GROUND THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER EVEN THOUGH T HE ASSESSMENT WAS COMPLETED ORIGINALLY U/S 143(1). IN OUR OPINION, THE THIRD ME MBER DECISION OF THE TRIBUNAL IN THE CASE OF TELCO DADAJI DHACKJEE LTD. (SUPRA) IS SQUAR ELY APPLICABLE IN THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT T HE INITIATION OF REASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER ITSELF WAS BAD IN LAW AND THE REASSESSMENT COMPLETED IN PURSUANCE THEREOF IS LIABLE TO BE QUAS HED BEING INVALID. WE ORDER ACCORDINGLY AND ALLOW GROUND NO.1 OF THE ASSESSEES APPEAL. DELTA AIR LINES, INC 8 11. AS A RESULT OF OUR DECISION RENDERED ABOVE ON T HE PRELIMINARY ISSUE QUASHING/CANCELLING THE ASSESSMENT MADE BY THE ASSE SSING OFFICER U/S. 143(3) READ WITH SECTION 147, THE OTHER ISSUES RAISED IN THE AP PEALS OF THE ASSESSEE IN RESPECT OF ADDITION MADE IN THE SAID ASSESSMENT HAVE BECOME IN FRUCTUOUS AND WE DO NOT DEEM IT NECESSARY OR EXPEDIENT TO DECIDE THE SAME. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER HAS BEEN PRONOUNCED ON 30 TH DAY OF NOVEMBER, 2012. SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER MUMBAI; DATED 30/11/2012 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( (( ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS