ALLIED ELECTRONICS CORPORATION, MUMBAI V. DCIT 14(2), MUMBAI

ITA 4449/MUM/2010

• Counselvise Citation: 444919914 RSA 2010
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: V G GINDE
• Keywords: Search and seizure; Retrospective amendment; Question of law; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 80HHC

Judgement Text

, , ,, , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. . , / ! ! ! ! , BEFORE S/SH. B.R. MITTAL, JUDICIAL MEMBER & RAJENDR A, ACCOUNTANT MEMBER /. ITA NO.4449/MUM/2010, ' ' ' ' # # # # / ASSESSMENT YEAR-2002-03 M/S ALLIED ELECTRONICS CORPORATION, 94, KANSARA CHAWL, 1 ST FLOOR, KALBADEVI ROAD, MUMBAI- 400002 VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-14(2), EARNEST HOUSE, NARIMAN POINT,MUMBAI-400021 PAN: AAAFA2043E ( $% / APPELLANT ) ( &'$% / RESPONDENT ) '() * '() * '() * '() * / ASSESSEE BY : SHRI V.G.GINDE + * / REVENUE BY : SHRI JAVED AKHTAR ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 28-10-2013 -.# + ), / DATE OF PRONOUNCEMENT : 13-11-2013 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 12.03.2010 OF CIT(A)-25 ,MUMBAI,ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED BY THE ORDER DATED 12.03.2010 PASSE D BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-25, MUMBAI. [CIT(A)] U/S 250 OF THE INCOME-TAX ACT,1961 (ACT),YOUR APPELLANT PREFERS THIS APPEAL, AMONG OTHERS, ON THE FOLLOWING GROUNDS OF APPEAL, EACH OF WHICH IS WITHOUT PREJUDICE TO, AND INDEPENDENT OF, THE OTHER: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , AND ALSO IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE LEGAL VALIDITY OF THE REASSESSMENT PR OCEEDINGS. 2.THE LEARNED CIT(A) FAILED TO APPRECIATE, AND OUGH T TO HAVE HELD, THAT THE ASSESSMENT COULD NOT HAVE BEEN REOPENED ON A MERE CHANGE OF OPINION. 3.THE LEARNED CIT(A) FAILED TO APPRECIATE, AND OUGH T TO HAVE HELD, THAT UNDER THE PROVISO TO S.147, THE ASSESSMENT COULD NOT HAVE BEEN REOPENED UNLESS THE ALLEGED ESCAPEMENT WAS DUE TO FAILURE BY THE APPELLANT TO FULLY AND TRULY DISCLOSE THE MATER IAL FACTS. 4.THE LEARNED CIT(A) ERRED IN REJECTING THE APPELLA NTS ABOVE CONTENTIONS, DISPUTING THE LEGALITY OF THE REASSESSMENT PROCEEDINGS, MERELY BECAUSE SUCH C ONTENTIONS WERE NOT RAISED BEFORE THE ASSESSING OFFICER.THE LEARNED CIT(A) FAILED TO APPR ECIATE THAT THE ISSUE BEING PURELY OF JURISDICTION, INVOLVING A QUESTION OF LAW, COULD NO T HAVE BEEN SO REJECTED, EVEN IF SUCH CONTENTIONS WERE NOT RAISED BEFORE THE ASSESSING OFFICER. 5.THE LEARNED CIT(A) ERRED IN INVOKING THE PROVISIO NS OF S.292BB FOR UPHOLDING THE LEGAL VALIDITY OF THE REASSESSMENT PROCEEDINGS WITHOUT APPRECIATIN G THAT S.292BB DOES NOT APPLY IN THIS CASE BECAUSE IT ONLY COVERS THE ISSUE RELATING TO SERVIC E OF A NOTICE, WHICH WAS NOT AN ISSUE IN DISPUTE BEFORE HIM, AND THAT, IN ANY EVENT, THAT SECTION CA NNOT BE APPLIED RETROSPECTIVELY. 6.THE LEARNED CIT(A) ERRED IN RELYING UPON THE AMEN DMENTS MADE TO S.80HHC BY THE FINANCE ACT, 2005 FOR UPHOLDING THE LEGAL VALIDITY OF THE REASSE SSMENT PROCEEDINGS, WITHOUT APPRECIATING THAT SUBSEQUENT STATUTORY AMENDMENTS COULD NOT BE A GROU ND FOR REOPENING AN ASSESSMENT COMPLETED U/S.143(3) BEYOND FOUR YEARS AS STIPULATED IN THE P ROVISO TO S.147 SINCE THERE WAS NO FAILURE BY THE APPELLANT TO FULLY AND TRULY DISCLOSE THE MATERIAL FACTS. IN LIGHT OF THE ABOVE, YOUR APPELLANT PRAYS THAT TH E IMPUGNED ASSESSMENT ORDER BE QUASHED, BEING 2 ITA NO. 4449/MUM/2010 M/S ALLIED ELECTRONICS CORPOR ATION BAD IN LAW. 7.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , AND ALSO IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.5,18,3291- OUT OF TOTAL ADDITION OF RS.6,60,353/- MADE IN RESP ECT OF THE DEPB ENTITLEMENTS ON ACCRUAL BASIS.YOUR APPELLANT, THEREFORE, PRAYS THAT THE IMPUGNED ADDITION BE DELETED. YOUR APPELLANT CRAVES LEAVE TO ALTER, MODIFY, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL, OR TO ADD ONE OR MORE NEW GROUND(S), AS MAY BE NECE SSARY. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING AND SALE OF ELECTRO MECHANICAL CONNECTORS HAD FILED ITS RETURN OF INCOME ON 24.10. 2002 DECLARING TOTAL INCOME OF RS. 2.80 CRORES. ASSESSING OFFICER (AO) FINALISED THE ASSESSMENT ON 31.03.2002 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 2,80,93,290. AO ALSO WORKED OUT THE DEDUCTION U/S 80HHC OF THE ACT AT RS. 42.93 LACS. ASSESSMENT WAS RE-OPENED AFTER ISSUING A NOTICE U/S 148 OF THE ACT DATED 05.03.2008. ASSESSEE SUBMITTED THAT ORIGINAL RETURN FILED BY IT SHOULD BE TAKEN AS A RETURN FILED IN RESPONSE TO THE NOTICE ISSUED BY THE AO.HE SUPPLIED THE REASONS RECORDED TO THE ASSESSEE VIDE HIS LETTER DATED 07.10.2008.ASSESSEE FILED ITS OBJECTION WITH REGARD TO RE-OPENING OF ASSESSMENT AS WELL AS CHARGE -ABILITY OF INCOME FROM DEPB LICENSES U/S 28(IIID) OF THE ACT.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,AO HELD THAT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS FOR AY-2003-04, IT WAS NOTICED THAT ASSESSEE HAD SHOWN A CREDIT OF RS.7.22 LACS AS DEPB SALES,THAT DEPB BENEFIT ACCRUED TO THE ASSESSEE ON ACCOUNT OF EXPORT OF SALES MADE DURING THE PERIOD RELEVANT TO THE AY- 2002- 03,THAT DEPB BENEFIT OF RS.6.60 LACS WAS TO BE TAXE D U/S 28(IV) OF THE ACT FOR THE AY UNDER CONSIDERATION,THAT CONTENTION OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 28(IV) WAS NOT APPLICABLE TO ITS CASE WAS NOT ACCEPTABLE,THAT DEPB BENEFITS WAS TO BE TREATED AS PERQUISITE AND INCOME.FINALLY,HE MADE AN ADDITION OF RS. 6,60,353/ - TO THE INCOME OF THE ASSESSEE. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,FAA HELD THAT AO HAD SUP PLIED THE REASONS RECORDED BY HIM TO THE ASSESSEE, THAT AO HAD OBTAINED THE PRIOR APPROVAL O F THE CIT,THAT THE OBJECTIONS RAISED BY THE ASSESSEE HAD NO FORCE IN MERIT, THAT ASSESSEE HAD N OT RAISED OBJECTIONS WITH REGARD TO APPLICABILITY OF PROVISO TO SECTION 147 BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. FURTHER HE HELD THAT IN THE ORIGINAL ASSESSMENT ISSUE RELATING TO DEPB CRED ITS WAS DEALT WITH BY THE AO AS PER THE EXISTING PROVISIONS, THAT FINANCE LAW AMENDMENT ACT , 2005 INTRODUCED AMENDMENT WITH REGARD TO SECTION 80HHC WITH RETROSPECTIVE EFFECT FROM ASS ESSMENT YEAR 1998 ONWARDS,THAT AO HAD RIGHTLY INVOKED THE PROVISIONS OF SECTION 148 SUBSE QUENT TO THE AMENDMENT,THAT ASSESSEE HAD NOT RAISED ANY SUCH OBJECTION BEFORE THE AO,THAT THE AS SESSEE HAD APPEARED BEFORE THE AO AND HAD FURNISHED THE REQUISITE DETAILS RELATING TO DEPB AN D 80HHC DEDUCTION, THAT PROVISIONS OF SECTION 299BB OF THE ACT WERE APPLICABLE IN THE CASE UNDER CONSIDERATION. FINALLY, HE HELD THAT THERE WAS NO INFIRMITY IN THE ACTION OF THE AO AND HE DECIDED THE ISSUE AGAINST THE ASSESSEE. 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THE MATERIAL F ACTS RELEVANT FOR THE CASE UNDER CONSIDERATION, THAT ORIGINAL ASSESSMENT WAS PASSED U/S.143(3)OF TH E ACT,THAT AO HAD CALLED FOR THE DETAILS AND HAD MADE INQUIRES WITH REGARD TO DEPB ENTITLEMENTS, THAT IT WAS A CASE OF REVIEW OF ORDER BY THE AO,THAT REASSESSMENT PROCEEDINGS COULD NOT BE INITI ATED BY AN AO ON THE BASIS OF A RETROSPECTIVE AMENDMENT TO A SECTION.DEPARTMENTAL REPRESENTATIVE (DR)SUBMITTED THAT THERE WAS NO CHANGE OF OPINION,THAT INCOME HAD ESCAPED ASSESSMENT. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE ARE OF THE OPINION THAT BEFORE DECIDING THE ISSUE ON MERITS,IT WILL BE USEFUL TO DECIDE THE QUESTION OF VALIDITY OF RE- ASSESSMENT PROCEEDINGS.CERTAIN PRINCIPLES GOVERN TH E REOPENING OF COMPLETED ASSESSMENTS, ESPECIALLY,IF PROCEEDINGS ARE INITIATE AFTER THE PE RIOD OF FOUR YEARS FROM THE AY IN QUESTION. COURT HAVE HELD THAT IF AN ASSESSMENT IS TO BE RE-OPENED AFTER A PERIOD OF FOUR YEARS,THERE SHOULD BE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL L AND TRUE ALL THE NECESSARY FACTS.NOT ONLY THIS,TH E 3 ITA NO. 4449/MUM/2010 M/S ALLIED ELECTRONICS CORPOR ATION AO SHOULD MENTION,IN THE REASONS RECORDED,ABOUT THE ALLEGED FAILURE AND HAS TO EXPLAIN AS WHICH MATERIAL FACTS WERE NOT DISCLOSED BY THE ASSESSEE. HONBLE JURISDICTIONAL HIGH COURT,IN THE CASE OF EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD.HA S HELD THAT WHEN AN ASSESSMENT IS SOUGHT TO BE REOPENED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR,THE TEST TO BE APPLIED IS WHETHER THERE IS TANGIBLE MATERIAL TO DO SO.WHAT IS TANGIBLE IS SOMETHING WHICH IS NOT ILLUSORY,HYPOTHETICAL OR A MATTER OF CONJECTURE.SOM ETHING WHICH IS TANGIBLE NEED NOT BE SOME - THING WHICH IS NEW(350ITR650).THUS,THE MOST IMPORTA NT FACTOR TO BE CONSIDERED BEFORE ISSUING A NOTICE U/S.148 OF THE ACT IS EXISTENCE OF TANGIBLE MATERIAL.RELYING UPON THE JUDGMENT OF KELVI - NATOR OF INDIA LTD.(320ITR561),DELIVERED BY THE HON BLE APEX COURT,IT WAS FURTHER HELD THAT WHERE THE ASSESSMENT WAS SOUGHT TO BE REOPENED EVEN WITHI N A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR THE GOVERNING TEST,FORMULA TED BY THE ABOVE REFERRED JUDGMENT OF THE SUPREME COURT,HAD TO BE APPLIED.HONBLE BOMBAY HIGH COURT REFERRED TO THE FOLLOWING PORTION OF THE ORDER OF THE KELVINATOR OF INDIA LTD.(SUPRA) : 'THEREFORE, POST 1ST APRIL, 1989, POWER TO REOPEN I S MUCH WIDER.HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BE LIEVE' FALLING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE AO TO REOPEN ASS ESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REA SSESS. THE AO HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE B ASED ON FULFILLMENT OF CERTAIN PRECONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, A S CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK AB USE OF POWER BY THE AO. HENCE, AFTER 1ST APRIL, 1989, THE AO HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMEN DMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSE RTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COM PANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SAID EXPRE SSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS IN THE A O.' FROM THE ABOVE DISCUSSION IT IS CLEAR THAT THE AO,E VEN WITHIN A PERIOD OF FOUR YEARS,CANNOT RE- OPEN AN ASSESSMENT MERELY ON THE BASIS OF A CHANGE OF OPINION.SECONDLY,AO HAS NO POWER TO REVIEW AN ASSESSMENT WHICH HAS BEEN CONCLUDED.BUT,W HERE HE HAS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOM E FROM ASSESSMENT,THE POWER TO REOPEN CAN BE EXERCISED.EXISTENCE OF TANGIBLE MATERIAL HAS TO BE PROVED BY THE AO. OTHER SETTLED PRINCIPLE,RELATED TO PROCEEDINGS U/S. 147 OF THE ACT,IS THAT THE ASSESSING AUTHORITY CANNOT KEEP ON IMPROVING HIS CASE FROM TIME TO TIME .IT OTHER WORDS REASSESSMENT PROCEEDINGS HAVE TO STAND OR FALL ON THE BASIS OF WHAT IS STATE D IN THE REASONS RECORDED U/S.148(2) OF THE ACT AND NOTHING MORE.IT IS ALSO AN ACCEPTED NORM THAT O NCE THE AO RAISES DOUBT ABOUT THE ELIGIBILITY OF A CLAIM,MADE BY THE ASSESSEE,BY RAISING QUERIES AN D EXTRACTING RESPONSE FROM THE ASSESSEE; THEREAFTER IN WHAT MANNER SUCH CLAIM SHOULD BE TRE ATED IN THE FINAL ORDER OF ASSESSMENT IS AN ISSUE ON WHICH THE ASSESSEE WOULD HAVE NO CONTROL WHATSOE VER.AO CAN ALLOW/REJECTS SUCH A CLAIM OR HE CAN ALSO PARTIALLY ALLOW/PARTIALLY REJECT THE SAID CLAIM.BUT,ASSESSES DO NOT HAVE ANY CONTROL OVER THE DISCRETIONARY POWERS OF THE AO-HE CANNOT DO BEY OND TRYING TO PERSUADE THE AO.SO, FRAMING OF AN ASSESSMENT ORDER OR ALLOWING THE CLAIM FULLY OR PARTIALLY IS WITHIN THE EXCLUSIVE DOMAIN OF AN AO.IF THE AO AFTER SCRUTINISING THE CLAIM MINUTELY DURING THE ASSESSMENT PROCEEDI-NGS DOES NOT REJECT SUCH A CLAIM AND CHOOSES NOT TO GIVE ANY REA SONS FOR ADOPTING SUCH A COURSE OF ACTION IT CAN HARDLY BE STATED THAT HE DID NOT FORM AN OPINION ON SUCH A CLAIM.IT IS A KNOWN FACT THAT NOW-A-DAYS ASSESSMENTS OF BIG ASSESSEES INVOLVE A LARGE NUMBE R OF COMPLEX CLAIMS AND THE AO HAS TO DEAL WITH VOLUMINOUS MATERIAL,NUMEROUS EXEMPTIONS AND DE DUCTIONS.IF THE AO IS BURD -ENED WITH THE RESPONSIBILITY OF GIVING REASONS FOR SEVERAL CLAIM S SO MADE AND ACCEPTED BY HIM, IT WOULD CAST AN UNREASONABLE EXPECTATION ON HIM.IN SHORT,IN A GIVEN CASE,IF THE AO,FOR REASONS BEST KNOWN TO 4 ITA NO. 4449/MUM/2010 M/S ALLIED ELECTRONICS CORPOR ATION HIM,CHOOSES NOT TO ASSIGN REASONS FOR ACCEPTING/REJ ECTING THE CLAIM OF AN ASSESSEE AFTER THOROUGH SCRUTINY,IT CAN HARDLY BE ARGUED THAT THE AO HAD NO T FORMED ANY OPINION ABOUT THE SAID CLAIM.SUCH A CONTENTION,IN OUR OPINION,IS DEVOID OF MERITS.IF A CLAIM MADE BY THE ASSESSEE IN THE RETURN IS NOT REJECTED,IT STANDS ALLOWED.IF A CLAIM IS SCRUTINISED BY THE AO DURING ASSESSMENT,IT MEANS THAT HE WAS CONVINCED ABOUT THE VALIDITY OF T HE CLAIM.HIS FORMATION OF OPINION, ABOUT THE ALLOWABILTY OF THE CLAIM,HAS TO BE CONSIDERED FINAL AND COMPLETE.MERELY BECAUSE HE CHOOSES NOT TO ASSIGN ANY REASONS FOR ALLOWING THE CLAIM OF THE AS SEESSEE,IN THE ASSESSMENT ORDER, WOULD NOT ALTER THIS POSITION.IT MAY BE A NON-REASONED ORDER BUT IT CANNOT BE HELD THAT IT IS A CASE OF ACCEPTANCE OF A CLAIM WITHOUT FORMATION OF OPINION. 2.3.1. UNDISPUTED FACTS OF THE PRESENT CASE ARE THAT THE O RIGINAL ASSESSMENT WAS COMPLETED U/S.143 (3)OF THE ACT,THAT NOTICE U/S.148 OF THE ACT WAS IS SUED AFTER FOUR YEAR FROM THE END OF THE ASSESSMENT YEAR CONCERNED,THAT IN THE REASONS RECOR DED BY THE AO FOR REOPENING THE ASSESSMENT AO HAD NOT MENTIONED AS HOW THE ASSESSEE HAD NOT FU LLY AND TRULY DISCLOSED THE MATERIAL FACT.IN OUR OPINION MANDATE OF PROVISO TO SECTION 147 OF TH E ACT IS VERY CLEAR.IT REQUIRES THE AO TO CLEARLY MENTION AND PROVE THE FACT THAT BECAUSE OF THE FAIL URE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS TRULY AND FULLY TAXABLE INCOME HAD ESCAPED ASSESSME NT.FROM THE ASSESSMENT ORDER ALSO IT IS NOT CLEAR AS WHICH MATERIAL FACTS WERE NOT DISCLOSED FU LLY AND TRULY BY THE ASSESSEE.DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AO HAD DECIDED THE AMOUNT OF DEDUCTION AVAILABLE TO THE ASSESSEE AND HE HAD TAKEN A DEFINITE VIEW WITH REGARD TO THE AVAILA BILITY OF THE DEDUCTION. THUS, HE HAD FORMED AN OPINION ABOUT THE SAID TRANSACTION.IN OUR OPINION A O WAS NOT JUSTIFIED IN INITIATING REASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION. WE ARE AWARE THAT RE-OPENING OF A COMPLETED ASSESSM ENT, EVEN AFTER A PERIOD OF FOUR YEARS, HAS BEEN ALLOWED BY THE ACT BUT FOR REOPENING THE ASSES SMENT CERTAIN CONDITIONS SHOULD EXIST AS ENVISAGED BY THE PROVISO TO SECTION 147.IT HAS BEEN HELD THAT THE SAID PROVISO WAS INCORPORATED IN THE ACT TO PREVENT MISUSE OF RE-OPENING OF THE ASSE SSMENTS BY THE AOS.PROVISO CAST ONUS UPON THE AO TO PROVE FAILURE OF THE ASSESSEE WHICH MEANS THA T IF THE AO IS NOT SUCCESSFUL TO DO PROVE FAILURE OF THE ASSESSE,THEN ASSESSMENT PASSED BY HI M IN PURSUANCE OF RE-OPENING NOTICE,LOOSES LEGAL VALIDITY AND SANCTITY.IN OUR OPINION,IN THE P RESENT CASE BASIC PRE-CONDITIONS OF ISSUING NOTICE FOR REOPENING THE ASSESSMENT ARE MISSING.WE DO NOT ENDORSE THE VIEW OF THE FAA THAT BY APPEARING BEFORE THE AO AND BY FURNISHING DETAILS I N THE REASSESSMENT PROCEEDINGS ASSESSEE HAD LOST THE RIGHT TO AGITATE THE ISSUE BEFORE APPELLAT E AUTHORITY.IF THE HAD NOT COMPLIED WITH THE DIRECT IONS OF THE AO,IT WOULD HAVE BEEN VISITED BY PENAL PROVISIONS.THEREFORE,PRESENCE OF THE ASSESSEE CANNOT BE HELD TO BE A BASIS FOR UPHOLDING THE ORDE R OF THE AO.BESIDES,IN OUR OPINION PROVISIONS OF SECTION 292BB ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE.PROVISIONS OF SECTION 292BB OF THE ACT ARE OPERATIVE FROM 01.04.2008. CONSIDERING THE ABOVE AND REVERSING THE ORDER OF TH E FAA,WE DECIDE GROUNDS NO.1-6 IN FAVOUR OF THE ASSESSEE. AS WE HAVE DECIDED THE JURISDICTIONAL ISSUE IN FAVO UR OF THE ASSESSEE HOLDING THE INITIATION OF RE- ASSESSMENT PROCEEDINGS WAS NOT VALID,SO GROUND NO SEVEN IS ALLOWED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSE. AS A RESULT,APPEAL F ILED BY THE ASSESSEE STANDS ALLOWED. ( )1 '() 2 3 + / 4 + ) 56 . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER,2013 . 0 + -.# 7 8' 13 UOECJ UOECJ UOECJ UOECJ , 2013 . + / 9 5 ITA NO. 4449/MUM/2010 M/S ALLIED ELECTRONICS CORPOR ATION SD/- SD/- ( . : : : : . . B.R.MITTAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8' /DATE: 13 TH NOVEMBER,2013 SK 0 0 0 0 + ++ + &); &); &); &); < ;#) < ;#) < ;#) < ;#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT (A) / = > , 4. THE CONCERNED CIT / = > 5. DR A BENCH, ITAT, MUMBAI / ;?/ &)' , ,, , , . . . 6. GUARD FILE/ / @ ';) ';) ';) ';) &) &)&) &) //TRUE COPY// 0' / BY ORDER, A / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI