ACIT, New Delhi V. M/s. North Delhi Power Ltd. (Now Tata Power Delhi Distribution Ltd.), Delhi

ITA 4053/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2845 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B D MISHRA
• Keywords: Depreciation; Rectification of order; Tangible material; Bad and doubtful debts; Difference of opinion; Assessment record; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 43B; 143(3); 115JB; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: E NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO: 1345/DEL/2011 ASSTT. YEAR 2003-04 NORTH DELHI POWER LIMITE D VS. DCIT GRID SUBSTATION BUILDING, CIRCLE 13(1), HUDSON LANE, KINGSWAY CA MP ROOM NO. 406, NEW DELHI 110 009. C.R. BUILDING PAN: AABCN6808R NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO: 1371/DEL/2011 ASSTT. YEAR 2003-04 ACIT VS. NORTH DELHI POWER LIMITED CIRCLE-13(1), ROOM NO. 406 GR ID SUBSTATION BUILDING, C.R. BUILDING, I.P. ES TATE HUDSON LANE, KINGSWAY CAMP NEW DELHI NEW DE LHI. PAN: AABCN6808R (APPELLANT) (RESPONDENT) ITA NO: 4053/DEL/203 ASSTT. YEAR 2004-05 ACIT VS. NORTH DELHI POWER LIMITED CIRCLE-16(1), GRID SUBSTATION BUILDING, C.R. BUILDING, HUDSON LANE, KINGSWAY CAMP NEW DELHI NEW D ELHI. PAN : AABCN6808R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D. KAPILA, ADVOCATE SHRI R.R. MAURYA, ADVOCATE SHRI SANJAY KUMAR, ADVOCATE SHRI PRAVESH SHARMA, ADVOCATE SHRI HARISH RESPONDENT BY : SHRI B.D. MISHRA, CIT, DR ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 2 'V* ' DATE OF HEARING : 07.10.2015 DATE OF PRONOUNCEMENT : 0 1.01.2016 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: ITA NO. 1345/11 IS APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER DATED 30.11.2010 PASSED BY THE LD. CIT (A)- XVI, NEW DELH I FOR AY 2003-04. ITA NO. 1371/11 IS THE CROSS APPEAL BY THE DEPARTMENT AGAIN ST THE SAME ORDER. ITA NO. 4053/13 IS APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 28.02.2013 PASSED BY THE LD. CIT(A) XVI, NEW DELHI FOR AY 2004 -05. SINCE THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON, WE ARE DISPOSING ALL THREE APPEALS THROUGH THIS COMMON ORDER. ITA NO. 1345/2011 & ITA NO. 1371/2011 2. THE MAIN ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE IS REGARDING THE ASSUMPTION OF JURISDICTION U/S 147 OF THE INCOME TA X ACT, 1961 AND BOTH THE PARTIES AGREED THAT THIS ISSUE HAS TO BE ADJUDICATED PRIOR TO THE ADJUDICATION ON THE MERITS OF THE CASE. WE, THEREFORE, PROCEED TO DISPOSE THIS GROUND FIRST AND IF NEED ARISES, THE ISSUES RELATING TO THE MERITS WILL BE TAKEN UP LATER. 3. THE BRIEF FACTS OF THE CASE, AS BORNE OUT F ROM THE RECORDS AND THE SUBMISSIONS MADE BY THE LD. AR, ARE AS UNDER:- ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 3 'V* ' NORTH DELHI POWER LIMITED (NDPL) WAS SET UP IN T ERMS OF THE POLICY DIRECTION ISSUED BY THE GOVERNMENT OF NATIONAL CAPITAL TERRIT ORY OF DELHI (GNCTD) UNDER THE PROVISIONS OF DELHI ELECTRICITY REFORMS ACT, 2000. THE FORMATION WAS A PART OF THE SCHEME TO ENABLE PRIVATISATION OF DELHI VIDYUT BOAR D (DVB). THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DISTRIBUTION AND SUPPLY OF ELECTRICITY IN THE NORTH AND NORTH WEST AREA OF NATIONAL CAPITAL TERRITORY OF DE LHI. IT HAS EARNED INCOME FROM SALE OF ENERGY AND OTHER INCOME ANCILLARY TO THE BU SINESS OF DISTRIBUTION OF ENERGY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 WAS MADE ON 23.2.2006 AT THE RETURNED INC OME. THEREAFTER, ASSESSMENT WAS MADE U/S 143(3) / 263 OF THE INCOME TAX ACT ON 25.7.2008 REVISING THE BOOK PROFIT U/S 115JB OF THE INCOME TAX ACT TO RS. 83682 4907/- AGAINST ASSESSEES WORKING OF RS. 395008907/-. FURTHER, THE CASE WAS R EOPENED U/S 147 OF THE INCOME TAX ACT AND NOTICE U/S 148 OF THE INCOME TAX ACT DA TED 20.02.2009 WAS ISSUED AFTER RECORDING THE REASONS FOR THE SAME. THE REASONS REC ORDED FOR REOPENING ARE AS UNDER:- REASONS FOR RE-OPENING THE ASSESSMENT U/S 147 OF T HE IT ACT. IN CASE OF M/S NORTH DELHI POWER LTD. FOR AY. 2003-04. RETURN OF INCOME IN THIS CASE WAS FILED ON 02-12-20 03 DECLARING A LOSS OF RS. 94,09,96,774/- AND BOOK PROFIT OF RS. 39,50, 08,907/-U/S 115JB OF THE IT ACT. ASSESSMENT U/S 143(3) OF THE ACT WAS MADE O N 23-03-2006 AT DECLARED LOSS AND BOOK PROFIT OF RS. 39,50,08,907/- . THEREAFTER, ASSESSMENT U/S 143(3)/263 OF THE IT ACT WAS MADE ON 25-07-2008 REVISING THE BOOK PROFIT U/S 115J8 OF THE IT ACT FOR RS. 83,68,24,907 /- AGAINST ASSESSEE'S CLAIM OF RS. 39,50,08,907/- PERUSAL OF THE ASSESSMENT RECORDS REVEALED THAT THE ASSESSEE HAD MADE A PROVISION OF RS. 4418.56 LAKH ON ACCOUNT OF ' PROVISION FOR BAD AND DOUBTFUL DEBTS' IN ITS BALANCE SHEET WHEREAS RS. 42 54.82 LAKH WERE DEBITED AS PROVISION IN THE PROFIT AND LOSS ACCOUNT AND WERE A DDED BACK IN ITS ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 4 'V* ' COMPUTATION OF INCOME. THEREBY PROVISION OF DOUBTFU L DEBT OF RS. 163.74 LAKH, WHICH IS ENERGY TAX PAYABLE TO MUNICIPAL CORP ORATION OF DELHI WAS NOT ADDED BACK BY THE ASSESSEE IN ITS INCOME AND HAS ES CAPED ASSESSMENT. IT IS ALSO OBSERVED THAT AS PER NOTE TO EXHIBIT 5 O F TAX AUDIT REPORT IN FORM 3CEB, THE AUDITOR HAS STATED THAT OUT OF ENERG Y TAX LIABILITY OF RS. 119,098,277/- WHICH WAS OUTSTANDINQ AT THE YEAR END RS. 34,566,3451- HAS BEEN PAID TILL THE DATE OF THE FILING OF THE RETUR N. IN VIEW OF THE PROVISIONS OF SECTION 438 OF THE IT ACT, UNPAID LIABILITY OF THE TAX AND DUTY IS NOT ALLOWABLE AND TO BE ADDED BACK TO THE TAXABLE INCOME. IN VIEW OF THE ABOVE INCOME OF RS. 8,45,31,932/- HAS ESCAPED ASSESSMENT. AS PER ASSESSEE'S THEORY, THE LIABILITY TO PAY THE ENERGY TAX TO MCS STARTS AFTER THE SAME HAS BEEN COLLECTED BY IT FROM THE CUSTOMERS AND PROVISION OF SECTION 43B OF THE IT ACT IS NOT APPLI CABLE IN RESPECT OF UNCOLLECTED LIABILITY. MOREOVER, AS PER MCD BYE LAW S 1962, IT IS ALSO PROVIDED THAT THE LICENSEE SHALL NOT BE LIABLE TO PAY THE TA X IN RESPECT OF ANY ELECTRICITY SUPPLIED BY HIM FOR WHICH HE HAS BEEN PROVED TO BE UNABLE TO RECOVER HIS OWN CHARGE. IN THIS CASE IT HAS NOT BEEN PROVED THA T THE ASSESSEE WAS UNABLE' TO RECOVER HIS OWN CHARGES. AS PER PROVISO TO CLAUSE 7 ALSO THE LICENSEE MAY HIMSELF PAY THE TAX INSTEAD OF RECOVER ING THE SAME FROM THE CUSTOMER. HENCE, THE UNPAID ENERGY TAX LIABILITY IN RESPECT OF WHICH IT HAS NOT BEEN PROVED THAT THE ASSESSEE WAS UNABLE TO RECOVER ITS OWN CHARGED, IS LIABLE TO BE DISALLOWED U/S 438 OF THE IT ACT. I THEREFORE HAVE REASONS TO BELIEVE THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY AL L MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR ABOVE ASSESSMENT YEAR, THE INCOME CH ARGEABLE TO TAX TO THE EXTENT OF RS. 10.11 CRORE AS MENTIONED ABOVE, HAS E SCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. 4. ORDER U/S 143/147 OF THE ACT CONSEQUENT TO THE REOPENING WAS PASSED ON 23.12.2009 AFTER MAKING DISALLOWANCES OF PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS. 16374000/- AND UNPAID ENERGY TAX U /S 43B AMOUNTING TO RS. 84531932/-. THUS A TOTAL ADDITION OF RS. 100905932/ - WAS MADE AND THE ASSESSMENT WAS COMPLETED AT A LOSS OF RS. 840090242/-. THE BOO K PROFIT U/S 115JB OF THE INCOME TAX ACT WAS RECALCULATED AT RS. 836824910/- AFTER ADDING THE PROVISION OF DOUBTFUL DEBTS OF RS. 441816000/-. AGGRIEVED THE AS SESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) CONTESTING THE REOPENING U/S 147/148 OF THE INCOME TAX ACT, 1961 ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 5 'V* ' AND ALSO CONTESTING THE CASE ON MERITS. REGARDING A DDITION OF RS. 16374000/- ON ACCOUNT OF PROVISION FOR ENERGY TAX AS WELL AS DISA LLOWANCE OF RS. 84531932/- DISALLOWED U/S 43B OF THE INCOME TAX ACT ON ACCOUNT OF UNPAID ENERGY TAX, THE LD. CIT (A) IN HIS IMPUGNED ORDER WHILE UPHOLDING THE R EOPENING U/S 147/148 OF THE ACT GAVE RELIEF TO THE ASSESSEE BY DELETING THE ADDITIO N OF RS. 16374000/- ON ACCOUNT OF DIFFERENCE IN FIGURES OF PROVISION FOR DOUBTFUL DEB TS. HOWEVER, THE ADDITION OF RS. 84531932/- DISALLOWED U/S 43B OF THE INCOME TAX ACT 1961 ON ACCOUNT OF UNPAID ENERGY TAX WAS SUSTAINED. FURTHER THE LD. CIT (A) A LSO DELETED THE ADDITION OF RS. 16374000/- MADE ON ACCOUNT OF ADJUSTMENT IN BOOK PR OFIT U/S 115JB OF THE ACT. IN THE PRESENT APPEALS BEFORE US THE ASSESSEE HAS PRIM ARILY ASSAILED THE ISSUANCE OF NOTICE U/S 148 APART FROM CONTESTING ON MERITS. THE DEPARTMENT ON THE OTHER HAND HAS OBJECTED TO THE ACT OF THE LD. CIT (A) IN DELET ING THE ADDITION OF RS. 16374000/- ON ACCOUNT OF PROVISION FOR ENERGY TAX AND ITS CONS EQUENT ADJUSTMENT IN CALCULATION OF BOOK PROFIT U/S 115JB OF THE INCOME TAX ACT, 196 1. 5. LD. AR FOR THE ASSESEE, WHILE ARGUING ON T HE ISSUE OF ASSUMPTION OF JURISDICTION U/S 147 OF THE INCOME TAX ACT, SUBMITT ED THAT IN THE PRESENT CASE ALL THE FACTS AND INFORMATION WERE AVAILABLE WITH THE AO AT THE TIME OF MAKING THE INITIAL ASSESSMENT U/S 143(3) OF THE ACT. THE ACTION OF THE AO IN REOPENING THE ASSESSMENT WAS BAD IN LAW AS THE SAME WAS PASSED ON A MERE CHA NGE OF OPINION / RE- APPRECIATION OF THE SAME FACTS WITHOUT THERE BEING ANY CHANGE IN CIRCUMSTANCES OR ADDITIONAL FACTS OR FRESH INFORMATION HAVING COME I N POSSESSION OF THE AO BETWEEN THE PASSING OF THE ORIGINAL ORDER U/S 143(3) AND TH E DATE OF ISSUANCE OF NOTICE U/S 148. LD. AR SUBMITTED THAT IN FACT THE AO HAS SAT O N A REVIEW OF HIS EARLIER ORDER ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 6 'V* ' WHICH WAS NOT LEGALLY PERMISSIBLE. THE LD. AR DREW OUR ATTENTION TO THE REASONS RECORDED BY THE AO AND SUBMITTED THAT THE AO HAD NO T STATED THE AVAILABILITY OF ANY NEW INFORMATION OR FACTS OR EVIDENCES AND THAT ALL THE INFORMATION USED BY HIM FOR RECORDING OF REASONS FOR THE PURPOSE OF ISSUANCE OF NOTICE U/S 148 WERE AVAILABLE TO HIM EVEN AT THE TIME OF THE ORIGINAL ASSESSMENT PRO CEEDINGS. AFTER DRAWING OUR ATTENTION TO THE VARIOUS DATES, THE LD. AR ALSO SUB MITTED THAT THIS IS A CASE OF REOPENING AFTER MORE THAN FOUR YEARS. LD. AR ALSO R ELIED ON A PLETHORA OF DECISIONS VIZ. XEROX MODICORP LTD. VS. DCIT (2013) 350 ITR 30 8 (DEL), QUALCOMM INCORPORATED VS. ADIT (2013) 85 DTR 408 (DELHI), CIT VS. EICHER LTD. 294 ITR 310 (DELHI), SIGNATURE HOTEL P. LTD. VS. ITO 331 ITR 51 (DELHI), PANCHANAN HATI VS. CIT 115 ITR 336 (CALCUTTA) ON THE ISSUE OF THE VALIDITY OF NOTI CE U/S 148 OF THE ACT. 6. LD. DR ON THE OTHER HAND STRONGLY SUPPORT ED THE ORDER OF THE AO AND THAT OF THE LD. CIT (A). HE SUBMITTED THAT SECTION 147 OF T HE ACT ENABLES THE AO TO REOPEN AN ASSESSMENT EVEN AFTER THE EXPIRY OF FOUR YEARS I F THE AO HAS REASON TO BELIEVE THAT BY REASONS OF OMISSION OR FAILURE ON THE PART OF THE ASSESEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE PURPOSE OF AN ASSESSMENT, AN INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. HE SUBMIT TED THAT EXPLANATION 1 TO PROVISO TO SECTION 147 FURTHER CLARIFIES THAT PRODU CTION BEFORE THE AO OF BOOKS OF ACCOUNTS AND OTHER EVIDENCE DOES NOT EXONERATE THE ASSESSEE FROM THE DUTY TO MAKE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS. HE SUBMITTED THAT IF SOME MATERIAL NECESSARY FOR ASSESSMENT LAY EMBEDDED IN BOOKS OF A CCOUNTS OR OTHER EVIDENCE WHICH THE AO COULD HAVE UNCOVERED WITH DUE DILIGENC E BUT DID NOT, HE WOULD BE ENTITLED TO REOPEN THE ASSESSMENT. HE RELIED ON THE DECISION OF THE HONBLE HIGH ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 7 'V* ' COURT OF DELHI IN THE CASE OF M/S. CONSOLIDATED PHO TO & FINVEST LTD. VS. ACIT 281 ITR 394 (DEL) IN SUPPORT OF HIS SUBMISSION. HE ACCO RDINGLY SUBMITTED THAT THE NOTICE U/S 148 WAS RIGHTLY ISSUED AND THE REOPENING WAS PE RFECTLY VALID IN THE EYES OF THE LAW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAV E ALSO PERUSED THE RECORDS, ESPECIALLY THE REASONS RECORDED FOR THE ISSUANCE OF NOTICE U/S 148 (REPRODUCED ELSEWHERE). FROM THE PARTICULARS CALLED FOR BY THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, SUBMISSIONS MADE BY THE ASS ESSEE BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE REA SONS RECORDED FOR INITIATION OF REASSESSMENT PROCEEDINGS, IT IS VERY MUCH EVIDENT T HAT THE REASSESSMENT PROCEEDINGS WERE INITIATED BY THE AO ON THE BASIS O F SAME SET OF FACTS WHICH WERE AVAILABLE BEFORE THE AO AT THE TIME OF ORIGINAL ASS ESSMENT. WE ARE OF THE CONSIDERED VIEW THAT THE AO, AT THE TIME OF ORIGINAL ASSESSMEN T, WAS VERY WELL AWARE ABOUT THE PRIMARY FACTS. THE AO, WHILE REOPENING THE ASSESSME NT U/S 147, HAS MADE NO REFERENCE TO ANY NEW MATERIAL WHICH HAS COME INTO H IS POSSESSION AFTER THE COMPLETION OF THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT. IN OUR OPINION, IT IS MERELY A FRESH APPLICATION OF MIND BY THE AO TO THE SAME SET OF FACTS. THUS, IT IS OUR CONSIDERED VIEW THAT IT IS A CASE OF MERE CHANGE OF OPINION ON THE MATERIAL WHICH WAS ALREADY AVAILABLE ON RECORD AT THE TIME OF COMP LETION OF THE ORIGINAL ASSESSMENT. THEREFORE, THE PROCEEDINGS FOR REASSESSMENT U/S 147 FAIL TO STAND THE TEST. FURTHER, THE FIRST PROVISO TO SECTION 147 OF THE INCOME TAX ACT PROVIDES THAT WHERE AN ASSESSMENT OR REASSESSMENT HAS ALREADY BEEN MADE U/ S 143(3) OR 147 OF THE ACT, NO ACTION SHALL BE TAKEN BY THE AO U/S 147 AFTER TH E EXPIRY OF FOUR YEARS FROM THE ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 8 'V* ' END OF RELEVANT ASSESSMENT YEAR WHERE ALL THE MATER IAL FACTS NECESSARY FOR THE ASSESSMENT HAS BEEN DISCLOSED BY THE ASSESSE FULLY AND TRULY. IT IS SEEN FROM THE RECORDS AND AS SPECIFICALLY POINTED OUT BY THE LD. AR, ALL MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT WERE TRULY AND FULLY DISC LOSED IN THE AUDITED FINANCIAL STATEMENTS, NOTES ON ACCOUNTS, TAX AUDIT REPORT AND ALSO BY WAY OF FILING OF VARIOUS SUBMISSIONS AND DOCUMENTS BY THE ASSESSEE DURING TH E COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. HENCE IT IS OUR CONSIDERED VIEW THAT THE AO HAS RECORDED HIS SATISFACTION IN THE REASONS RECORDED NOT ON THE BASIS OF NEW TANGIBLE MATERIAL BUT SIMPLY ON A FRESH SCRUTINY OF ASSESSMENT RECORDS AN D DOCUMENTS. WE ARE ALSO OF THE OPINION THAT ACCORDINGLY THERE WAS NO FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E PURPOSE OF ASSESSMENT. REFERENCE MAY BE MADE AT THIS JUNCTURE TO THE JUDGMENT OF FUL L BENCH OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF IND IA LTD. 256 ITR 1 (DEL) {AFFIRMED BY THE HONBLE APEX COURT IN CIT VS. KELVINATOR OF INDIA LTD.} WHEREIN THE HONBLE DELHI HIGH COURT HAS HELD: 'IT IS NOT IN DISPUTE THAT THE ASSESSING OFFICER DO ES NOT HAVE ANY JURISDICTION TO REVIEW ITS OWN ORDER. HIS JURISDICTION IS CONFIN ED ONLY TO RECTIFICATION OF MISTAKE AS CONTAINED IN SECTION 154. THE POWER OF R ECTIFICATION OF MISTAKE CONFERRED UPON THE ITO IS CIRCUMSCRIBED BY THE PROV ISIONS OF SECTION 154. THE SAID POWER CAN BE EXERCISED WHEN MISTAKE IS APPAREN T. EVEN MISTAKE CANNOT BE RECTIFIED WHERE IT MAY BE A MERE POSSIBLE VIEW O R WHERE THE ISSUES ARE DEBATABLE. EVEN THE TRIBUNAL HAS LIMITED JURISDICTI ON UNDER SECTION 254(2). THUS, WHEN THE ASSESSING OFFICER OR THE TRIBUNAL HA S CONSIDERED THE MATTER IN DETAIL AND THE VIEW TAKEN IS A POSSIBLE VIEW, THE O RDER CANNOT BE CHANGED BY WAY OF EXERCISING THE JURISDICTION OF RECTIFICATION OF MISTAKE. IT IS A WELL-SETTLED PRINCIPLE OF LAW THAT WHAT CAN NOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. IF THE ITO DOES NOT POSSESS THE POWER OF REVIEW, HE CANNOT BE PERMITTED TO ACHIEVE THE SAID OBJECT BY T AKING RECOURSE TO INITIATING A PROCEEDING OF REASSESSMENT OR BY WAY OF RECTIFICA TION OF MISTAKE. IN A CASE ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 9 'V* ' OF THIS NATURE THE REVENUE IS NOT WITHOUT REMEDY. S ECTION 263 EMPOWERS THE COMMISSIONER TO REVIEW AN ORDER WHICH IS PREJUDICIA L TO THE REVENUE. A MERE CHANGE IN THE OPINION WOULD NOT CONFER JURIS DICTION UPON THE ASSESSING OFFICER TO INITIATE A PROCEEDING UNDER SE CTION 147. IN THE EVENT IT IS HELD THAT BY REASON OF SECTION 1 47 IF THE ITO EXERCISES ITS JURISDICTION FOR INITIATING A PROCEEDING FOR REASSE SSMENT ONLY UPON MERE CHANGE OF OPINION, THE SAME MAY BE HELD TO BE UNCON STITUTIONAL. SECTION 147 DOES NOT POSTULATE CONFERMENT OF POWER UPON THE ASS ESSING OFFICER TO INITIATE REASSESSMENT PROCEEDING UPON HIS MERE CHANGE OF OPI NION. IF 'REASON TO BELIEVE' OF THE ASSESSING OFFICER IS FOUNDED ON AN INFORMATION WHICH MIGHT HAVE BEEN RECEIVED BY THE ASSESSING OFF ICER AFTER THE COMPLETION OF ASSESSMENT, IT MAY BE A SOUND FOUNDATION FOR EXE RCISING THE POWER UNDER SECTION 147, READ WITH SECTION 148.' 8. IN VIEW OF THE FACTUAL AND LEGAL POSITION OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA), IT IS OUR CONSIDERED OPINION THAT TH E REASSESSMENT PROCEEDINGS INITIATED BY THE AO U/S 147 OF THE ACT WERE BASED ON A MERE C HANGE OF OPINION AND THAT THE NOTICE ISSUED BY THE AO U/S 148 AND THE PROCEEDINGS INITIATED U/S 147 ARE WITHOUT ANY FOUNDATION. IN VIEW OF THE ABOVE, THE ORDER PAS SED U/S 147/143(3) BEING WITHOUT JURISDICTION IS QUASHED. 9. IN THE RESULT THIS GROUND OF THE ASSESSEE IS ALLOWED AND REMAINING GROUNDS ARE NOT BEING ADJUDICATED AS BEING IN FRUCTUOUS. IN VIEW OF OUR FINDING IN ASSESSEES APPEAL, THE DEPARTMENTAL APPEAL IS DISMISSED AS BEI NG IN FRUCTUOUS. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE I S ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 10 'V* ' ITA NO. 4053/DEL/2013 11. THIS APPEAL HAS BEEN PREFERRED BY THE DEPAR TMENT AGAINST THE ORDER DATED 28.2.2013 PASSED BY THE LD. CIT (A) XVI, NEW DEL HI FOR AY 2004-05 WHEREIN THE DEPARTMENT HAS OBJECTED TO THE LD. CIT(A) QUASHING THE ORDER DATED 18.1.2012 PASSED U/S 147/143(3) BY THE AO. 12. IT IS SEEN FROM THE RECORDS THAT THE REGULAR A SSESSMENT U/S 143(3) OF THE ACT HAD ALREADY BEEN DONE IN THE CASE OF THE ASSESEEE V IDE ORDER DATED DECEMBER, 22, 2006 WHEREIN A SOLE ADDITION OF RS. 37,00,84,297/- WAS MADE UNDER MAT PROVISION OF THE ACT ON ACCOUNT OF PROVISION FOR BAD AND DOU BTFUL DEBTS DEBITED TO THE PROFIT AND LOSS ACCOUNT. LATER, THE AO ISSUED NOTICE U/S 1 48 OF THE ACT DATED 28 TH MARCH, 2011 AND THE REASONS RECORDED FOR THE REOPENING ARE AS UNDER:- RETURN DECLARING LOSS OF RS. 12,84,96,795 WAS FILE D ON 29.10.2004. ASSESSMENT U/S 143(3) OF THE IT ACT WAS MADE ON 22. 12.2006 AT A LOSS OF RS. 12,84,96,795 UNDER NORMAL PROVISIONS AND INCOME OF RS. 91,52,15,718 UNDER SECTION 115JB OF THE IT ACT. THE SCRUTINY OF ASSESSMENT REVEALED THAT THE ASSESS EE HAS FAILED TO DISCLOSE FOLLOWING FACTS IN ITS COMPUTATION OF INCOME AND BA LANCE SHEET: (A) ASSESSEE HAD CLAIMED AND WAS ALLOWED DEPRECIAT ION @ 60% ON UPS, PRINTER, NETWORKING EQUIPMENT ETC. UNDER THE HEAD C OMPUTER, WHEREAS ALL THESE ITEMS SHOULD BE TREATED UNDER THE HEAD 'P LANT & MACHINERY' TO WHICH APPLICABLE RATE OF DEPRECIATION IS 25% INSTEA D OF 60%. THUS, DEPRECIATION AMOUNTING TO RS. 47,40,963 WAS EXCESS ALLOWED. THE MISTAKE RESULTED IN EXCESS CARRY FORWARD OF LOSS OF RS. 47,40,963 INVOLVING POTENTIAL TAX EFFECT OF RS. 17,00,820 INC LUDING SURCHARGE. (B) THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 37,0 0,84,297 IN THE P&L ACCOUNT AS PROVISION OF BAD & DOUBTFUL DEBTS WHICH WAS ADDED BACK TO THE TAXABLE INCOME IN THE COMPUTATION SHEET. A FURT HER SCRUTINY REVEALED THAT THE ASSESSEE HAD MADE / CREDITED PROV ISION FOR BAD & DOUBTFUL DEBTS FOR RS. 38,67,38.000 IN THE BALANCE SHEET. THE OMISSION RESULTED IN UNDER ASSESSMENT OF INCOME BY RS. 1,66,53,703 WITH POTENTIAL TAX EFFECT OF RS. 17,02,735 INCLUDIN G INTEREST. ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 11 'V* ' (C) AS PER 3CD REPORT, ENERGY TAX OF RS. 13,75,87, 467 (22,51,43,935 - 8,75,56,468) WAS NOT PAID BEFORE THE DUE DATE OF FI LING OF RETURN AND WAS THEREFORE, REQUIRED TO HE ADDED BACK TO THE INC OME OF THE ASSESSEE. THE OMISSION TO DO SO RESULTED IN INCORRE CT ALLOWANCE AND CARRY FORWARD OF LOSS OF RS. 13,75,87,467 (INCLUSIV E OF BROUGHT FORWARD LOSSES) INVOLVING POTENTIAL TAX EFFECT OF RS. 4,93, 59,504 (TAX @ 35% + S.C. @ 2.5%). I, THEREFORE, HAVE REASONS TO BELIEVE THAT ON ACCOU NT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT FOR THE ABOVE ASSESSMENT YEAR, THE INCOM E OF RS. 15,89,82,133 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVIS O TO SECTION 147 OF THE IT ACT. 13. THE ASSESSEE THEREAFTER FILED A LETTER DATED J UNE 7, 2011 OBJECTING TO THE RE- OPENING OF THE CASE U/S 148 OF THE ACT. THE SAID OB JECTION(S) WERE SUMMARILY REJECTED BY THE ASSESSING OFFICER VIDE HIS ORDER DA TED AUGUST 24, 2011 AND THE REASSESSMENT PROCEEDINGS WERE COMPLETED. IN AN APPE AL BEFORE LD. CIT(A), THE LD. CIT(A) QUASHED THE REOPENING PROCEEDINGS ON THE GRO UND THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO WERE BASED ON A MER E CHANGE OF OPINION AND THAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DIS CLOSE ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENTS FULLY AND TRULY. 14. AGGRIEVED BY THE IMPUGNED ORDER, THE DEPARTME NT IS IN APPEAL AND IS CONTESTING THE QUASHING OF REASSESSMENT PROCEEDINGS BY THE LD. CIT (A). LD. DR, WHILE SUPPORTING THE ORDER OF THE AO, SUBMITTED THA T THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT AND THEREFORE SUBSTANTIAL INC OME ASSESSABLE TO TAX HAD ESCAPED ASSESSMENT. LD. DR SUBMITTED THAT SECTION 1 47 OF THE ACT EMPOWERS THE AO TO REOPEN AN ASSESSMENT IF THERE IS AN OMISSION OR FAILURE ON PART OF THE ASSESSEE. HE FURTHER SUBMITTED THAT EVEN IF THE AO GATHERED A REASON TO BELIEVE FROM THE VERY ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 12 'V* ' SAME RECORDS AS HAD BEEN THE SUBJECT MATTER OF COMP LETED ASSESSMENT PROCEEDINGS, STILL NOTICE U/S 148 WOULD BE VALID AND THE PLEA TH AT MERE CHANGE OF OPINION CANNOT BE A BASIS FOR REOPENING COMPLETED ASSESSMENT WOULD HAVE NO APPLICATION WHERE THE ORDER OF ORIGINAL ASSESSMENT DOES NOT ADDRESS ITSEL F TO THE ASPECT WHICH IS THE BASIS FOR RE-OPENING OF THE ASSESSMENT. 15. LD. AR, ON THE OTHER HAND, SUBMITTED THAT T HE ASSESEE HAD FILED A LETTER DATED 7 TH JUNE, 2011 OBJECTING TO THE REOPENING OF THE CASE U/S 148 OF THE ACT. HOWEVER THESE OBJECTIONS WERE SUMMARILY REJECTED BY THE AO VIDE HIS ORDER DATED 24 TH AUGUST, 2011. THEREAFTER, THE ASSESSEE HAD FILED A WRIT PETITION BEFORE THE HONBLE DELHI HIGH COURT. HOWEVER, THE HONBLE DELHI HIGH C OURT, WITHOUT GOING INTO THE ISSUE OF REOPENING OF THE CASE U/S 148 OF THE ACT, VIDE ITS ORDER DATED NOVEMBER 4, 2011, HELD THAT THE REJECTION ORDER PASSED BY THE A O SUFFERED FROM A COMPLETE LACK OF REASONING AND THE REJECTION ORDER DATED 24 TH AUGUST, 2011 PASSED BY THE AO WAS STRUCK DOWN AND THE AO WAS ASKED TO PASS A FRESH OR DER DEALING WITH THE OBJECTIONS RAISED BY THE ASSESSEE. THEREAFTER, THE AO AGAIN RE JECTED THE OBJECTIONS RAISED BY THE ASSESSEE THROUGH HIS ORDER DATED 4 TH JANUARY, 2012 AND PASSED THE REASSESSMENT ORDER U/S 147 / 143 (3) OF THE ACT DAT ED 18 TH JANUARY, 2012 BY RE- ASSESSING THE INCOME AT RS. 3,04,85,340/- UNDER THE REGULAR PROVISIONS OF THE ACT AND AT RS. 56,17,85,124/- UNDER THE MAT PROVISION O F THE ACT AFTER DISALLOWING UNPAID ENERGY TAX U/S 43B OF THE ACT AMOUNTING TO R S. 13,75,87,467/-, DIFFERENCE BETWEEN FIGURE OF PROVISION FOR BAD AND DOUBTFUL DE BITS IN THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT AT RS. 1,66,53,703/- AN D BY RESTRICTING THE DEPRECIATION CLAIM ON UPS TO 25 % INSTEAD OF 60% AMOUNTING TO RS . 47,40,963/- . THE LD. AR ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 13 'V* ' SUBMITTED THAT DURING THE ORIGINAL ASSESSMENT PROCE EDINGS A DETAILED INQUIRY WAS CONDUCTED BY THE AO. THE LD. AR SUBMITTED THAT A DE TAILED REPLY WAS GIVEN BY THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE AND T HE REASONS RECORDED BY THE AO CLEARLY POINT OUT THAT THERE WAS NO NEW SOURCE OF I NFORMATION AVAILABLE WITH THE AO AND ALL THE INFORMATION USED BY THE AO WERE ALSO AV AILABLE AT THE TIME OF PASSING OF ORIGINAL ASSESSMENT ORDER U/S 143(3) OF THE ACT. TH E LD. AR RELIED ON A NUMBER OF CASES INCLUDING CIT VS. KELVINATOR OF INDIA LTD. 25 6 ITR 1 (DELHI), CIT VS. FORAMER FRANCE 264 ITR 567 (SC) AND CIT VS. BHANJI LAVJI 79 ITR 582. THE LD. AR SUBMITTED THAT THE QUASHING OF THE 147 / 148 PROCEEDINGS BY T HE LD. CIT (A) WAS LEGALLY CORRECT AND THAT IT SHOULD BE UPHELD. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HA VE ALSO CONSIDERED THE FACTS. IT IS SEEN THAT THE REOPENING WAS BASED ON EXCESS CLAIM O F DEPRECIATION, DIFFERENCE IN THE FIGURES OF PROVISION FOR BAD AND DOUBTFUL DEBT AS P ER THE BALANCE SHEET VIS-A-VIS PROFIT AND LOSS ACCOUNT AND UNPAID ENERGY TAX U/S 4 3B. WE HAVE ALSO PERUSED THE REASONS RECORDED FOR THE ISSUANCE OF NOTICE U/S 148 (REPRODUCED ELSEWHERE). FROM THE PARTICULARS CALLED FOR BY THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AO AT T HE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE REASONS RECORDED FOR INITIATION OF REASSESSMENT PROCEEDINGS, IT IS VERY MUCH EVIDENT THAT THE REASSESSMENT PROCEEDI NGS WERE INITIATED BY THE AO ON THE BASIS OF SAME SET OF FACTS WHICH WERE AVAILABLE BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT. WE ARE OF THE CONSIDERED VIEW THAT THE AO, AT THE TIME OF ORIGINAL ASSESSMENT, WAS VERY WELL AWARE ABOUT THE PRIMARY FACTS. THE AO, WHILE REOPENING THE ASSESSMENT U/S 147, HAS MADE NO REFER ENCE TO ANY NEW MATERIAL ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 14 'V* ' WHICH HAS COME INTO HIS POSSESSION AFTER THE COMPLE TION OF THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT. IN OUR OPINION, IT IS MERELY A FRESH APPLICATION OF MIND BY THE AO TO THE SAME SET OF FACTS. THUS, IT IS OUR CONSID ERED VIEW THAT IT IS A CASE OF MERE CHANGE OF OPINION ON THE MATERIAL WHICH WAS ALREADY AVAILABLE ON RECORD AT THE TIME OF COMPLETION OF THE ORIGINAL ASSESSMENT. THEREFORE , THE PROCEEDINGS FOR REASSESSMENT U/S 147 FAIL TO STAND THE TEST. 17. IN VIEW OF THE FACTUAL AND LEGAL POSITION OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA), IT IS OUR CONSID ERED OPINION THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO U/S 147 OF THE ACT WERE BASED ON A MERE CHANGE OF OPINION AND THAT THE NOTICE ISSUED BY THE AO U/S 14 8 AND THE PROCEEDINGS INITIATED U/S 147 WERE WITHOUT ANY FOUNDATION. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT A). 18. IN THE RESULT THE APPEAL OF THE DEPAR TMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01. 01.2016. SD/- SD/- (INTURI RAMA RAO) (SUD HANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 1 ST JANUARY, 2016 VEENA ITA NOS. 1345,1371/DEL/2011 & ITA NO. 4053/DEL/2013 15 'V* ' COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR