DCIT 5(2), MUMBAI V. MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD, MUMBAI

ITA 4519/MUM/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0895 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-03-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Business income; Depreciation; Audit objection; Maximum Marginal Rate; Question of law; Tangible material; Difference of opinion; Non compliance; Assessment record; Non passing of speaking order; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 63; 144; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4519/MUM/2011 ASSESSMENT YEARS: 2002-03 DCIT-5(2), R. NO.571, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LIMITED, PWD COMPOUND, NEAR PRIYADARSHNI PARK, NEPEANSEA ROAD, MUMBAI-400036 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO.AAACM6833C ITA NO.4900/MUM/2011 ASSESSMENT YEARS: 2002-03 M/S MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LIMITED, PWD COMPOUND, NEAR PRIYADARSHNI PARK, NEPEANSEA ROAD, MUMBAI-400036 / VS. DCIT-5(2), R. NO.571, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( !'# $ /ASSESSEE) ( / REVENUE) PAN. NO.AAACM6833C ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 2 % & $ ' / DATE OF HEARING : 25/01/2018 & $ ' / DATE OF ORDER: 25/01/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS ASSESSEE IS IN CROSS APPEAL AGAINST THE IMPUGNED ORDER DATED 30/03/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. IN THE APPEAL OF THE ASSESSEE, THE GROUND RAISED PERTAINS TO CONFIRMING THE ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1 961 (HEREINAFTER THE ACT), DATED 30/03/2009 ON THE BASI S OF CHANGE OF OPINION AND BEYOND FOUR YEARS. 2. DURING HEARING, SHRI B.S. SHARMA ALONG WITH SHRI DALPAT SHAH, LD. COUNSEL FOR THE ASSESSEE, CON TENDED THAT THE REOPENING IS INVALID AS THE NOTICE WAS ISS UED BEYOND A PERIOD OF FOUR YEARS, AS PER THE ASSESSEE, IT IS NOT PERMISSIBLE FOR WHICH RELIANCE WAS PLACED UPON THE DECISION IN THE CASE OF GERMAN REMIDIES LTD. VS DCI T 287 !'# $ ! / ASSESSEE BY SHRI B.S. SHARMA & SHRI DALPAT SHAH ! / REVENUE BY SHRI NARENDRA SINGH JANPANGI-DR ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 3 ITR 494, GODREJ AGROVET LTD. VS DCIT & ANR. 323 ITR 97, NIRMAL BANG SECURITES PVT. LTD. VS ACIT 382 ITR 93( BOM.) AND CIT & ANR. VS FORAMAR FRANCE 264 ITR 566 (SC). IT WAS ALSO CONTENDED THAT THE NOTICE WAS ISSUED TO TH E ASSESSEE ON THE BASIS OF AUDIT OBJECTION. RELIANCE WAS PLACED UPON THE DECISION IN CIT VS LUCAS T.V.S. LTD . 249 ITR 306(SC), IDEA CELLUAR LTD. VS DCIT 301 ITR 407 (BOM.), ICICI HOME FINANCE CO. LTD. VS ACIT 210 TAXMANN 67 (BOM.), IL & FS INVESTMENT MANAGERS LTD. VS INCOME TAX OFFICER & ORS. 298 ITR 32(BOM.) AND ASIAN CERC INFORMATION SERVICES PVT. LTD. VS ITO 293 ITR 271 ( BOM.). OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF THE P APER BOOK. ON THE OTHER HAND, SHRI NARENDRA SINGH JANPAN GI, LD. CIT-DR, DEFENDED THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (APPEAL). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR A S, REOPENING BEYOND FOUR YEARS IS CONCERNED, IT IS OUR BOUNDED DUTY TO ANALYZE SECTION 147 OF THE ACT ALSO , WHICH IS REPRODUCED HEREUNDER:- ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 4 '147. INCOME ESCAPING ASSESSMENT.IF THE ASSESSING OFFICER, HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RE-COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANC E OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SE CTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T ASSESSMENT YEAR. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE W ITHIN THE MEANING OF THE FORE GOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE U NDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUN T WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 5 (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSE D ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RAT E ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOW ANCE UNDER THIS ACT HAS BEEN COMPUTED. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAP ED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBS EQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, N OTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLU DED IN THE REASONS RECORDED UNDER SUB- SECTION (2) OF SECTION 148.' 2.2. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, WE ARE OF THE VIEW THAT FOR REOPENING OF AN ASSESSM ENT MADE UNDER SECTION 143(3) OF THE ACT, THE FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFIED : (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR PRIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE IS UNDERASSESSMENT OR ESCAPEMENT OF INCOME ; (II) HE MUST RECORD THE PRIMA FACIE OPINION INTO WR ITING ; (III) THE OPINION FORMED IS SUBJECTIVE BUT THE REAS ONS RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUS T SHOW THAT THE OPINION IS NOT A MERE SUSPICION. (IV) REASONS RECORDED AND/OR THE DOCUMENTS AVAILAB LE ON RECORD MUST SHOW A NEXUS OR THAT IN FACT THEY ARE G ERMANE AND RELEVANT TO THE SUBJECTIVE OPINION FORMED BY TH E ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME. (V) IN CASES WHERE THE FIRST PROVISO APPLIES, THERE IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSION ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS. THE EXPLANATION TO THE SECTION STIPULATES THAT MERE PRODUCTION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS FROM WHICH THE ASSESSING OFFICER COULD HA VE, ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 6 WITH DUE DILIGENCE, INFERRED MATERIAL FACTS, DOES N OT AMOUNT TO 'FULL AND TRUE DISCLOSURE OF MATERIAL FACTS' (TH E PROVISO IS NOT APPLICABLE WHERE REASONS TO BELIEVE FOR ISSUE O F NOTICE ARE RECORDED AND NOTICE IS ISSUED WITHIN FOUR YEARS FROM THE END OF ASSESSMENT YEAR). 2.3. THE EXPRESSION 'CHANGE OF OPINION' POSTULATES FORMATION OF OPINION AND THEN A CHANGE THEREOF. IN THE CONTEXT OF SECTION 147 OF THE ACT IT IMPLIES THAT T HE ASSESSING OFFICER SHOULD HAVE FORMED AN OPINION AT THE FIRST INSTANCE, I.E., IN THE PROCEEDINGS UNDER SECTION 14 3(3) AND NOW BY INITIATION OF THE REASSESSMENT PROCEEDING, T HE ASSESSING OFFICER PROPOSES OR WANTS TO TAKE A DIFFE RENT VIEW. THE WORD 'OPINION' IS DERIVED FROM THE LATIN WORD 'OPINARI' WHICH MEANS 'TO BELIEVE', 'TO THINK'. THE WORD 'OPINION' AS PER THE BLACK'S LAW DICTIONARY MEANS A STATEMENT BY A JUDGE OR A COURT OF A DECISION REACH ED BY HIM INCORPORATING CAUSE TRIED OR ARGUED BEFORE THEM , EXPOUNDING THE LAW AS APPLIED TO THE CASE AND, DETA ILING THE REASONS UPON WHICH THE JUDGMENT IS BASED. ADVAN CED LAW LEXICON BY P. RAMANATHA AIYAR (THIRD EDITION) E XPLAINS THE TERM 'OPINION' TO MEAN 'SOMETHING MORE THAN MER E RETAINING OF GOSSIP OR HEARSAY ; IT MEANS JUDGMENT OR BELIEF, THAT IS, A BELIEF OR A CONVICTION RESULTING FROM WH AT ONE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 7 THINKS ON A PARTICULAR QUESTION . . . AN OPINION IS A CONVICTION BASED ON TESTIMONY . . . THEY ARE AS A R ESULT OF READING, EXPERIENCE AND REFLECTION'. 2.4. IN THE CONTEXT OF ASSESSMENT PROCEEDINGS, IT MEANS FORMATION OF BELIEF BY AN ASSESSING OFFICER R ESULTING FROM WHAT HE THINKS ON A PARTICULAR QUESTION. IT IS A RESULT OF UNDERSTANDING, EXPERIENCE AND REFLECTION TO USE THE WORDS IN LAW LEXICON BY P. RAMANATHA AIYAR. THE QUE STION OF CHANGE OF OPINION ARISE WHEN AN ASSESSING OFFICE R FORMS AN OPINION AND DECIDES NOT TO MAKE AN ADDITION OR H OLDS THAT THE ASSESSEE IS CORRECT AND ACCEPTS HIS POSITI ON OR STAND. IN HARI IRON TRADING CO. V. CIT [2003] 263 I TR 437 (P&H), A DIVISION BENCH OF THE HONBLE PUNJAB AND H ARYANA HIGH COURT OBSERVED THAT AN ASSESSEE HAS NO CONTROL OVER THE WAY AN ASSESSMENT ORDER IS DRAFTED. IT WAS OBSE RVED THAT GENERALLY, THE ISSUES WHICH ARE ACCEPTED BY TH E ASSESSING OFFICER DO NOT FIND MENTION IN THE ASSESS MENT ORDER AND ONLY SUCH POINTS ARE TAKEN NOTE OF ON WHI CH THE ASSESSEE'S EXPLANATIONS ARE REJECTED AND ADDITIONS/DISALLOWANCES ARE MADE. APPLYING THE PRI NCIPLES LAID DOWN BY THE FULL BENCH OF THIS COURT AS WELL A S THE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 8 OBSERVATIONS OF THE PUNJAB AND HARYANA HIGH COURT, WE FIND THAT IF THE ENTIRE MATERIAL HAD BEEN PLACED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AT THE TIME W HEN THE ORIGINAL ASSESSMENT WAS MADE AND THE ASSESSING OFFI CER APPLIED HIS MIND TO THAT MATERIAL AND ACCEPTED THE VIEW CANVASSED BY THE ASSESSEE, AND HE EXPRESSED THIS IN THE ASSESSMENT ORDER, THAT BY ITSELF WOULD NOT GIVE HIM A GROUND TO CONCLUDE THAT INCOME HAS ESCAPED ASSESSME NT AND, THEREFORE, THE ASSESSMENT NEEDED TO BE REOPENE D. ON THE OTHER HAND, IF THE ASSESSING OFFICER DID NOT AP PLY HIS MIND AND COMMITTED A LAPSE, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE MADE TO SUFFER THE CONSEQUENCES OF THOSE LAPSES. 2.5. WE NOTE THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE GERMAN REMEDIES LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX (287 ITR 494)(BOM.), VIDE ORDER DATED 28/10/2005 HELD THE NOTICE TO BE I NVALID, WHERE, THERE WAS NO FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE MATERIAL FACTS FOR MAKING THE ASSESSMENT. IN THIS CASE, THE ASSESSEE WAS A PUBLIC LIMITED COMPANY ENG AGED IN THE BUSINESS OF MANUFACTURING PHARMACEUTICAL PRODUC TS ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 9 AND OTHER FORMULATIONS. THE RETURN OF INCOME FOR TH E ASSESSMENT YEAR 1998-99 WAS FILED AND THE ASSESSMEN T ORDER WAS PASSED IN JANUARY, 2000. THE LAST DATE FO R ISSUE OF NOTICE UNDER SECTION 148(1) OF THE INCOME-TAX AC T, 1961, UNDER THE PROVISO TO SECTION 147 WAS MARCH 31, 2003 , WHEREAS NOTICES UNDER SECTION 148(1) WERE ISSUED ON SEPTEMBER 15, 2003. THE ASSESSEE RESPONDED TO THE N OTICE UNDER PROTEST AND FILED A LETTER SEEKING THE REASON S FOR ISSUING THE NOTICE TO REOPEN THE ASSESSMENT. THE RE ASONS DISCLOSED WERE THAT EXPENSES ON INTEREST, ROYALTY, CONSULTANCY AND ANALYTIC FEES IN FOREIGN CURRENCY H AD BEEN ALLOWED THOUGH THERE WAS NO EVIDENCE ON RECORD TO S HOW THAT TAX HAD BEEN DEDUCTED BEFORE REMITTANCE OF THE SAME, THAT CENTRAL EXCISE DUTY AND CUSTOMS DUTY PAYABLE O N FINISHED GOODS FOR THE YEAR HAD NOT BEEN TAKEN INTO ACCOUNT IN VALUING THE CLOSING STOCK RESULTING IN UNDERASSE SSMENT. THE OBJECTIONS OF THE ASSESSEE WERE REJECTED. THE H ON'BLE HIGH COURT HELD AS UNDER:- HELD, (I) THAT IT WAS NOT IN DISPUTE THAT THE RETU RN OF INCOME FILED BY THE ASSESSEE WAS ACCOMPANIED BY THE AUDIT REPORT , PROFIT AND LOSS ACCOUNT AND TAX AUDIT REPORT UNDER SECTION 44A B OF THE ACT. THE RECORD REVEALED THAT TRUE AND FULL INFORMATION WITH RESPECT TO DEDUCTION OF TAX AT SOURCE FROM THE PAYMENTS MADE T O VARIOUS PARTIES TOWARDS EXPENDITURE WAS DISCLOSED. WITH RES PECT TO VALUATION OF CLOSING STOCK WITH MODVAT (EXCISE AND CUSTOMS DUTY ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 10 PAID) THE INVENTORY WAS REQUIRED TO BE VALUED EITHE R AT COST OR MARKET PRICE WHICHEVER WAS LOWER. ACCORDING TO THIS PRINCIPLE, THE ASSESSEE HAD VALUED ITS CLOSING STOCK AT COST. THE REASONS FOR ISSUE OF NOTICE WERE UNSUSTAINABLE. (II) THAT FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE FULL AND TRUE MATERIAL HAD NOT BEEN ALLEGED. IN THE CIRCUMST ANCES, THE NOTICE HAVING BEEN ISSUED BEYOND FOUR YEARS FROM TH E LAST DATE OF THE RELEVANT ASSESSMENT YEAR WITHOUT ALLEGING ANY F AILURE TO DISCLOSE FULL AND TRUE MATERIAL FACTS WAS LIABLE TO BE SET ASIDE. WHILE GRANTING APPROVAL TO THE NOTICE IT WAS OBLIGA TORY ON THE PART OF THE COMMISSIONER TO VERIFY WHETHER THERE WA S ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TR UE RELEVANT FACTS IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT OF INCOME OF THAT ASSESSMENT YEAR. IT WAS ALSO OBLIGATORY ON THE PART OF THE COMMISSIONER TO CONSIDER WHETHER OR NOT POWER TO RE OPEN WAS BEING INVOKED WITHIN A PERIOD OF FOUR YEARS FROM TH E END OF THE ASSESSMENT YEAR TO WHICH THE PROCEEDINGS RELATED. N ONE OF THESE ASPECTS HAD BEEN CONSIDERED BY HIM. THE NOTICES AND CONSEQUENTLY THE ORDER JUSTIFYING REASONS RECORDED WERE UNSUSTAINABLE. WHILE COMING TO THE AFORESAID CONCLUSION, THE HON'BLE JURISDICTIONAL HIGH COURT ALSO CONSIDERED T HE FOLLOWING CASES:- I. CAPRIHANS INDIA LTD. V. TARUN SEEM, DEPUTY CIT [200 4] 266 ITR 566 (BOM) II. CIT V. BRITISH PAINTS INDIA LTD. [1991] 188 ITR 44 (SC) III. CIT V. FORAMER FRANCE [2003] 264 ITR 566 (SC) IV. CIT V. INDO NIPPON CHEMICAL CO. LTD. [2000] 245 ITR 384 (BOM) V. CIT V. INDO NIPPON CHEMICALS CO. LTD. [2003] 261 IT R 275 (SC) VI. CIT V. INDO NIPPON CHEMICALS CO. LTD. [2003] 1 RC 2 08 (SC) VII. GRINDWELL NORTON LTD. V. JAGDISH PRASAD JANGID, ASS T. CIT [2004] 267 ITR 673 (BOM) ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 11 VIII. HINDUSTAN LEVER LTD. V. R. B. WADKAR, ASST. CIT (NO . 2) [2004] 268 ITR 339 (BOM) IX. UNITED ELECTRICAL CO. P. LTD. V. CIT [2002] 258 ITR 317 (DELHI) 2.6. IN ANOTHER CASE, OF GODREJ AGROVET LTD. VS DCIT (2010) 323 ITR 97 (BOM.), THE HON'BLE HIGH COURT WH EREIN, FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE CLAIM ED DEDUCTION UNDER SECTION 80M OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 27.9 5 LAKHS. THE COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE AND DURING THE PENDENCY OF APPEALS TO THE TRIBUNAL BY THE ASSESSEE AND THE DEPARTMENT, A NOTI CE WAS ISSUED TO THE ASSESSEE UNDER SECTION 148 ON THE GRO UND THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UND ER SECTION 80M OF THE ACT IN RESPECT OF DIVIDEND DISTR IBUTED BY IT ON WHICH IT HAD FAILED TO PAY ADDITIONAL INCOME- TAX UNDER THE PROVISIONS OF SECTION 115-O WITHIN THE STIPULAT ED TIME. THE HON'BLE COURT HELD AS UNDER HELD, ALLOWING THE PETITION, THAT THE ASSESSING OF FICER REOPENED THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE PAID DIVIDEND TAX AFTER APRIL 1, 2003, UNDER SECTION 115-O . UNDE R SECTION 80M , THE DEDUCTION WAS NOT IN RESPECT OF THE AMOUNT DE CLARED OR DISTRIBUTED BY WAY OF DIVIDEND. THE DEDUCTION THAT WAS STIPULATED UNDER SECTION 80M WAS IN RESPECT OF DIVIDEND RECEIV ED BY A DOMESTIC COMPANY FROM ANOTHER DOMESTIC COMPANY. THE EXTENT OF THE DEDUCTION WAS, HOWEVER, SUBJECT TO A MONETAR Y CEILING, THE CEILING BEING THAT THE DEDUCTION SHOULD NOT EXCEED THE AMOUNT DISTRIBUTED BY WAY OF DIVIDEND ON OR BEFORE THE DUE DATE FOR THE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 12 FILING OF RETURN. THE ASSESSING OFFICER BY ADVERTIN G TO THE PROVISIONS OF SECTION 115-O HAD PROCEEDED TO REOPEN THE ASSESSMENT ON A PLAINLY EXTRANEOUS GROUND. THE ASSE SSING OFFICER HAD CLEARLY ACTED IN EXCESS OF THE RESTRAIN TS ON HIS JURISDICTION TO REOPEN AN ASSESSMENT IN EXERCISE OF THE POWERS UNDER SECTION 147 READ WITH SECTION 148 . 2.7. IN ANOTHER CASE IN ICICI HOME FINANCE CO. LTD. VS ACIT (2012) 210 TAXMAN 67 (BOM.), VIDE ORDER DATED 20/07/2012, THERE WAS PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, WHEREIN, IT WAS HELD AS UNDE R:- (A) NOTICE DATED 24.03.2011 (HEREINAFTER REFERRED TO AS 'IMPUGNED NOTICE') ISSUED UNDER SECTION 148 READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT') SEEKING TO REOPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 20 06-2007; AND (B) ORDER DATED 07.12.2011 OF THE ASSISTANT COMMISS IONER OF INCOME TAX (HEREINAFTER REFERRED TO AS 'THE ASSESSI NG OFFICER') REJECTING THE PETITIONER'S OBJECTION TO INITIATIONS OF REOPENING ASSESSMENT FOR ASSESSMENT YEAR 2006-2007 UNDER SECT ION 148 OF THE ACT (HEREINAFTER REFERRED TO AS 'THE IMPUGNED O RDER'). 3. THE FACTS LEADING TO THE PRESENT PETITION ARE AS UNDER: (A) THE PETITIONER IS ENGAGED IN THE BUSINESS OF HO ME FINANCE. FOR THE ASSESSMENT YEAR 2006-2007 (PREVIOUS YEAR ENDING ON 31.03.2006), THE PETITIONER FILED ITS RETURN OF INC OME DECLARING A LOSS OF RS. 9.11 CRORES. THEREAFTER, ON 31.12.2008, BY A N ORDER PASSED UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFI CER ASSESSED THE PETITIONER, TO A LOSS OF RS. 18.24 CRORES UNDER SEC TION 115(JB) OF THE ACT. (B) ON 29.12.2009, AN AUDIT OBJECTION WAS RAISED BY THE DY. COMMISSIONER OF INCOME TAX (AUDIT) WITH REGARD TO T HE PETITIONERS ASSESSMENT TO TAX FOR ASSESSMENT YEAR 2006-2007. TH E AUDIT OBJECTIONS WERE AS UNDER: '(I) PERUSAL OF THE RECORDS MADE AVAILABLE REVEAL T HAT THE ASSESSEE BANK IS ENGAGED IN THE BUSINESS OF 'HOUSING FINANCE '. DURING THE YEAR UNDER REVIEW, ASSESSEE CLAIMS A TURNOVER OF RS . 3,13,47,33,037/-. AFTER REDUCING THE DIRECT AND IND IRECT EXPENSES THE ASSESSEE COMPANIES' PROFIT AND LOSS ACCOUNT SHO WS A NET PROFIT OF RS. 12,28,90,685/-. HOWEVER, READING OF THE COMP UTATION REVEAL THAT THE ASSESSEE COMPANY HAS CLAIMED THE FOLLOWING DEDUCTIONS WHICH ARE ESSENTIALLY 'PROVISIONS'/'CONTINGENCIES' IN NATURE AND CHARACTER: XXXXXXXXXXXXXXXXXXXXX ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 13 PRIMA FACIE, BY AND LARGE, THESE ARE PROVISIONS ON VARIOUS ACCOUNTS, THOUGH THE NOMENCLATURE ADOPTED BY THE ASSESSEE PRI MARILY APPEARS TO BE VARIED. IT IS AN ACCEPTED FACT THAT NO PROVISIONS ARE ELIGI BLE FOR DEDUCTION WHILE ARRIVING AT THE TAXABLE PROFIT OF THE YEAR. I N PRINCIPLE, ONLY AMOUNTS EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PUR POSE OF EARNING THE PROFIT FROM THE SAID BUSINESS ARE ELIGIBLE FOR DEDUCTION BEFORE ARRIVING AT THE TAXABLE INCOME. RUMMAGING OF THE RECORDS MADE AVAILABLE, REVEAL THA T THE DISALLOWANCE OF THESE PROVISIONS AMOUNTING TO RS. 5 7,87,86,431/- HAS INELIGIBLE AS ADMISSIBLE DEDUCTION. SUBJECT TO FURTHER VERIFICATION THE TAX EFFECT ON THIS LAPSE WORKS OUT TO RS. 17,36 ,35,929/-. (II) PERUSAL OF THE PROFIT AND LOSS ACCOUNT AND THE SUBMISSIONS ON RECORD REVEAL THAT TDS HAS REMAINED TO BE DEDUCTED ON ADVERTISEMENT AND SALES PROMOTION EXPENSES TO TUNE OF RS. 22,48,91,672/- UNDER THE HEAD ESTABLISHMENT AND OTH ER EXPENSES IN ACCORDANCE WITH CHAPTER XVII-B OF THE I.T. ACT, 196 1. THE AFOREMENTIONED EXPENSES ARE TO BE DISALLOWED UN DER SECTION 40(A)(IA) R/W SECTION 200(1) OF THE I.T. ACT, 1961 FOR NON DEDUCTION OF TAX AT SOURCE. TAX EFFECT ON THIS ACCOUNT IS RS. 6,74,67,501/-. FURTHER, THE QUANTUM OF TDS THAT HAS REMAINED TO BE DEDUCTED COULD BE QUANTIFIED AT RS. 22,48,916/-. PENALTY UNDER SECTION 271-C FOR NON COMPLIANCE OF T DS PROVISION COULD BE QUANTIFIED AT RS. 22,48,916/-. (III) THE ASSESSEE COMPANY HAS DECLARED SHORT TERM CAPITAL GAIN TO THE TUNE OF RS. 36300587/-. HOWEVER, THE SUBMISSION S ON RECORD DOES NOT REVEAL THAT DETAILS OF THE TRANSACTIONS RE LATING TO THESE SHORT TERM CAPITAL GAINS IN ORDER TO ASCERTAIN AS T O WHY THE SAME COULD NOT BE CLASSIFIED AS BUSINESS INCOME. THE COR RECTNESS OF THESE TRANSACTIONS THEREFORE, HAS PRIMA FACIE, REMAINED T O HAVE BEEN EXAMINED DURING THE ASSESSMENT PROCEEDINGS. PRIMA F ACIE, FROM THE RECORDS IT APPEARS THAT THE GUIDELINES AND DIRECTIO NS LAID DOWN IN INSTRUCTION NUMBER 4 OF 2007 DATED 15TH JUNE, 2007 FOR DISTINGUISHING SHARES HELD AS STOCK-IN-TRADE AND SH ARES HELD AS INVESTMENT, HAS REMAINED TO HAVE BEEN FOLLOWED DURI NG THE ASSESSMENT PROCEEDINGS. REVENUE EFFECT CAN ONLY BE WORKED OUT AFTER VERIFYING THE DETAILS OF THE TRANSACTIONS, HE NCE NOT QUANTIFIED.' (C) ON 24.03.2011, THE ASSESSING OFFICER ISSUED A N OTICE UNDER SECTION 148 OF THE ACT POINTING OUT THAT HE HAS REA SON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T FOR THE ASSESSMENT YEAR 2006-07 AND THEREFORE HE PROPOSES T O REASSESS THE INCOME FOR THE ASSESSMENT YEAR 2006-2007. (D) THEREAFTER AT THE INSTANCE OF THE PETITIONER, O N 12.10.2011 THE ASSESSING OFFICER PROVIDED THE PETITIONER THE REASO NS FOR ISSUING OF SAID NOTICE UNDER SECTION 148 OF THE ACT. THE REASO NS READ AS UNDER : ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 14 'PERUSAL OF THE RECORDS MADE AVAILABLE REVEAL THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF 'HOUSING FINA NCE'. DURING THE YEAR ASSESSEE HAD A TURNOVER OF RS. 3,13,47,33,037/ -. AFTER REDUCING THE DIRECT AND INDIRECT EXPENSES THE COMPA NY SHOWED A NET PROFIT OF RS. 12,28,90,685/-. HOWEVER, THE COMP UTATION OF INCOME REVEAL THAT THE COMPANY HAS CLAIMED THE FOLL OWING DEDUCTIONS WHICH ARE 'PROVISIONS'/'CONTINGENCIES' I N NATURE AND CHARACTER: 1. WRITE BACK OF SERVING COST DISALLOWED EARLIER RS . 21,78,715/-. 2. WRITE BACK OF PROVISIONS FOR DELINQUENCIES, PREP AYMENT AND CONVERSION RISK DISALLOWED EARLIER. RS. 48,79,51,99 1/ 3. REVERSAL OF PROVISIONS ON SALE OF LOAN PORTFOLIO RS. 8,86,55,725/ PRIMA FACIE, BY AND LARGE, THESE ARE PROVISIONS ON VARIOUS ACCOUNTS, THOUGH THE NOMENCLATURE ADOPTED BY THE ASSESSEE PRI MARILY APPEARS TO BE VARIED. IT IS AN ACCEPTED FACT THAT NO PROVIS IONS ARE ELIGIBLE FOR DEDUCTION WHILE ARRIVING AT THE TAXABLE PROFIT OF T HE YEAR. IN PRINCIPLE, ONLY AMOUNTS EXPENDED WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF EARNING THE PROFIT FROM THE SAID BUSINES S ARE ELIGIBLE FOR DEDUCTION BEFORE ARRIVING AT THE TAXABLE INCOME. TH E RECORDS REVEAL THAT THE DISALLOWANCE OF THESE PROVISIONS AMOUNTING TO RS. 57,87,86,431/- HAS REMAINED TO HAVE BEEN DISALLOWED DURING THE ASSESSMENT PROCEEDINGS. PERUSAL OF THE PROFIT AND L OSS ACCOUNT AND THE SUBMISSIONS ON RECORD REVEAL THAT TDS HAS REMAI NED TO BE DEDUCTED ON ADVERTISEMENT AND SALES PROMOTION EXPEN SES TO TUNE OF RS. 22,48,91,672/- UNDER THE HEAD ESTABLISHMENT AND OTHER EXPENSES IN ACCORDANCE WITH CHAPTER XVII-B OF THE I .T. ACT, 1961. THE AFOREMENTIONED EXPENSES ARE TO BE DISALLOWED UN DER SECTION 40(A)(IA) R/W SECTION 200(1) OF THE I.T. ACT, 1961 FOR NON DEDUCTION OF TAX AT SOURCE. THE COMPANY HAS DECLARED SHORT TERM CAPITAL GAIN TO THE TUNE OF RS. 3,63,00,587/-. PRIMA FACIE, FROM THE RECORDS IT APP EARS THAT AS PER THE GUIDELINES AND DIRECTIONS LAID DOWN IN INSTRUCT ION NO. 4 OF 2007 DATED 15TH JUNE, 2007 FOR DISTINGUISHING SHARES HEL D AS STOCK-IN- TRADE AND SHARES HELD AS INVESTMENT THIS STCG IS TO BE TREATED AS THE BUSINESS INCOME HAS REMAINED TO HAVE BEEN FOLLO WED IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME OF RS. 83,99,78,690/- CHARGEABLE TO TAX HAS ESCAPED ASSESS MENT. HENCE, THE ASSESSMENT IS PROPOSED TO BE REOPENED AND NOTIC E UNDER SECTION 148 IS TO BE ISSUED.' (E) ON 28.11.2011, THE PETITIONER FILED ITS OBJECTI ON TO THE REASONS COMMUNICATED ON 24.10.2011 FOR REOPENING THE ASSESS MENT FOR ASSESSMENT YEAR 2006-2007. IN ITS OBJECTION, THE PE TITIONER POINTED OUT THAT THERE HAS BEEN NO ESCAPEMENT OF INCOME FOR THE ASSESSMENT YEAR 2006-2007. IN ANY EVENT, ALL FACTS IN RESPECT OF WHICH THE ASSESSMENT IS BEING SOUGHT TO BE REOPENED WERE AVAILABLE WITH THE ASSESSING OFFICER AT THE TIME OF ASSESSMEN T AND THE ISSUES NOW RAISED WERE SPECIFICALLY RAISED DURING THE ASSE SSMENT PROCEEDING FOR THE ASSESSMENT YEAR 2006-2007. THERE FORE, THE NOTICE UNDER SECTION 148 OF THE ACT WAS A MERE CHAN GE OF OPINION AND UNWARRANTED. WITHOUT PREJUDICE THE ABOVE, IT WA S POINTED OUT ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 15 THAT THE REOPENING OF THE ASSESSMENT HAS BEEN DONE ONLY AT THE BEHEST OF THE AUDIT DEPARTMENT AND NOT ON INDEPENDE NT APPLICATION OF MIND. IN VIEW OF THE ABOVE, THE PETITIONER REQUE STED THAT THE SAID NOTICE UNDER SECTION 148 OF THE ACT BE WITHDRAWN. (F) ON 07.12.2011, THE ASSESSING OFFICER BY THE IMP UGNED ORDER DISPOSED OF THE PETITIONER'S OBJECTION TO REOPENING OF ASSESSMENT FOR ASSESSMENT YEAR 2006-2007 BY THE IMPUGNED NOTICE. T HE RELEVANT PORTION OF THE REASONS RECORDED IN THE IMPUGNED ORD ER READ AS UNDER : WHEREAS NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS ISSUED ON 24.03.2011 AND DULY SERVED ON THE ASSESSEE COMPANY ON 28.03.2011; 2 WHEREAS OBJECTIONS HAVE BEEN RAISED BY THE ASSESS EE COMPANY, VIDE ITS LETTER DATED 28.11.2011 SUBMITTED ON 29.11 .2011 AGAINST THE ISSUANCE OF THE SAID NOTICE, WHICH ARE SUMMARIZ ED AS UNDER: (I) THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR THE ASSESSMENT. (II) NO REOPENING CAN BE DONE FOR THE REASON OF MER E CHANGE OF OPINION. 3.1 THE OBJECTIONS RAISED BY THE ASSESSEE ARE NOT M AINTAINABLE AND REJECTED IN NUMEROUS JUDGMENTS DISCUSSED HEREUNDER. THE GIST OF ALL THESE JUDGMENTS IS THAT MERE ACCEPTANCE OF THE CLAI M OF THE ASSESSEE AND MERE PRODUCTION OF VARIOUS DETAILS DOE S NOT AMOUNT TO FULL AND TRUE DISCLOSURE AND THE ASSESSING OFFICER HAS INFORMATION IN HIS POSSESSION LEADING TO A PRIMA FACIE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT, THE NOTICE U/S 148 IS VALID. IT IS PERTINENT TO REFER TO THE EXPLANATION 1 TO SECTION 147 WHICH PRO VIDES THAT 'PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DU E DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FORE GOING PROVISO'. THEREFORE, ALL THE INGREDIENTS OF THE APEX COURT'S JUDGMENT IN THE CASE OF 259 ITR 0019(SC) , GKN DRIVESHAFTS (INDIA) LTD HAVE BEEN COMPLIED WITH IN THIS CASE WHICH SAYS THAT THE OBJE CTION OF THE ASSESSEE, IF ANY, ARE TO BE DISPOSED OFF BY PASSING A SPEAKING ORDER. BESIDES THE IMPUGNED ORDER RELIED UPON EXTRACT OF V ARIOUS CASE LAWS WITHOUT MENTIONING HOW THE SAME ARE RELEVANT TO THE PRESENT PURPOSES. 4. MS. AARTI VISSANJI, THE LEARNED COUNSEL FOR THE PETITIONER IN SUPPORT OF THE PETITION SUBMITS AS UNDER: (A) THE SAID NOTICE IS COMPLETELY WITHOUT JURISDICT ION AS THE ASSESSING OFFICER DOES NOT HAVE ANY INDEPENDENT REA SON TO BELIEVE THAT THE PETITIONER'S INCOME FOR THE ASSESSMENT YEA R 2006-2007 HAS ESCAPED ASSESSMENT. THE ONLY BASIS FOR THE NOTICE I S THE AUDIT OBJECTION DATED 29.12.2009. IN PARTICULAR, SHE INVI TED OUR ATTENTION TO THE FACT THAT THE REASONS FOR AUDIT OBJECTION AN D THE REASONS RECORDED TO REOPEN THE ASSESSMENT ARE IDENTICAL. ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 16 (B) ALL FACTS WITH REGARD TO THE REASONS MENTIONED FOR REOPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2006-2007 WAS A SUBJECT MATTER OF EXAMINATION BY THE ASSESSING OFFICER WHIL E PASSING THE ASSESSMENT ORDER DATED 31.12.2008 FOR THE ASSESSMEN T YEAR 2006- 2007. (C) THE IMPUGNED ORDER IS WITHOUT REASONS AND DISPL AYS A NON- APPLICATION OF MIND TO THE OBJECTIONS MADE TO REOPE NING OF ASSESSMENT FOR THE ASSESSMENT YEAR 2006-2007. CONSE QUENTLY, THE ENTIRE EXERCISE OF SEEKING TO REOPEN THE ASSESSMENT FOR ASSESSMENT YEAR 2006-2007 HAS BEEN INITIATED NOT ON ANY TANGIB LE MATERIAL, BUT MERELY ON A CHANGE OF OPINION AND THE SAME IS NOT P ERMISSIBLE. 5. AS AGAINST THE ABOVE, MR. TEJVEER SINGH, COUNSEL FOR THE RESPONDENT SUBMITS: (A) THAT THE PRESENT PROCEEDING TO REOPEN ASSESSMEN T FOR ASSESSMENT YEAR 2006-2007 HAS BEEN COMMENCED BY THE IMPUGNED NOTICE, WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN SUCH CASES, IT IS HIS SUBMISSION THAT THE JURISD ICTION IS VERY WIDE AND NOT FETTERED BY THE CONDITIONS FOUND IN THE PRO VISO TO SECTION 147 OF THE ACT SEEKING TO REOPEN AN ASSESSMENT AFTE R THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEA R; (B) IN CASE WHERE ASSESSMENT SOUGHT TO BE REOPENED IS LESS THAN 4 YEARS THEN UNLESS AN ASSESSMENT ORDER DEALS WITH A PARTICULAR ISSUE, THE ASSESSING OFFICER IS FREE TO RE-AGITATE THE ISS UE EVEN IF THE SAME MAY HAVE BEEN BEFORE THE ASSESSING OFFICER DURING T HE ASSESSMENT PROCEEDING; (C) IN VIEW OF EXPLANATION (1) OF SECTION 147 OF TH E ACT MERE PRODUCTION OF EVIDENCE DURING THE COURSE OF ASSESSM ENT PROCEEDING WOULD NOT NECESSARILY LEAD TO THE CONCLUSION THAT T HE ASSESSING OFFICER HAS APPLIED HIS MIND AND FORMED AN OPINION WITH REGARD TO THE CLAIM OF THE PETITIONER. (D) IN ANY EVENT, THE PETITIONER COULD CONTEST THE ISSUES RAISED IN REASSESSMENT PROCEEDING ON MERITS DURING THE COURSE OF REASSESSMENT PROCEEDING. AT THIS STAGE THE COURT SH OULD NOT STOP THE RESPONDENT FROM PROCEEDING FURTHER WITH REASSES SING THE PETITIONER'S INCOME FOR THE ASSESSMENT YEAR 2006-20 07. THEREFORE, HE SUBMITS THAT THE PETITION BE DISMISSED. 6. THE POWER TO REOPEN A COMPLETED ASSESSMENT UNDER SECTION 147 OF THE ACT HAS BEEN BESTOWED ON THE ASSESSING OFFIC ER, IF HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. HOWEVER, THIS B ELIEF THAT INCOME HAS ESCAPED ASSESSMENT HAS TO BE THE REASONA BLE BELIEF OF THE ASSESSING OFFICER HIMSELF AND CANNOT BE AN OPIN ION AND/OR BELIEF OF SOME OTHER AUTHORITY. IN FACT, THE SUPREME COURT IN THE MATTER OF INDIANS & EASTERN NEWSPAPER SOCIETY V. CIT [1979] 1 19 ITR 996/ 2 TAXMAN 197 HAS HELD THAT WHETHER AN ASSESSMENT HAS ESCAPED ASSESSMENT OR NOT MUST BE DETERMINED BY THE ASSESSI NG OFFICER HIMSELF. THE ASSESSING OFFICER CANNOT BLINDLY FOLLO W THE OPINION OF AN AUDIT AUTHORITY FOR THE PURPOSE OF ARRIVING AT A BE LIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN THE PRESENT FACTS, IT WO ULD BE NOTICED THAT THE REASONS FOR WHICH THE ASSESSMENT FOR THE A SSESSMENT YEAR ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 17 2006-2007 IS SOUGHT TO BE REOPENED BY COMMUNICATION DATED 12.10.2011 ARE IDENTICAL TO THE OBJECTION OF THE AU DIT AUTHORITY DATED 29.12.2009. THE REASONS DO NOT RELY UPON ANY TANGIBLE MATERIAL IN THE AUDIT REPORT BUT MERELY UPON AN OPI NION AND THE EXISTING MATERIAL ALREADY ON RECORD. THIS ITSELF IN DICATES THAT THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE ASSES SING OFFICER BEFORE HE ISSUED THE IMPUGNED NOTICE. ON THIS GROUN D ALONE, THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER CAN BE FAULTED. 7. HOWEVER, AS SUBMISSIONS WERE MADE ON OTHER ISSUE S ALSO WE ARE EXAMINING THEM ALSO. IT IS A SETTLED POSITION IN LA W THAT WHERE ASSESSMENT SOUGHT TO BE REOPENED IS BEFORE THE EXPI RY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEN IN SUCH CASES THE POWER TO REOPEN AN ASSESSMENT IS VERY WIDE. HOW EVER, EVEN THOUGH SUCH A POWER IS VERY WIDE YET SUCH A POWER W OULD NOT JUSTIFY A REVIEW OF THE ASSESSMENT ORDER ALREADY PASSED. TH E SUPREME COURT IN THE MATTER OF THE CIT V. KELVINATOR INDIA LTD. [2010] 320 ITR 561/ 187 TAXMAN 312 HAS OBSERVED THAT THE POWER TO REASSESS IS CONCEPTUALLY DIFFERENT FROM A POWER TO REVIEW. THE ASSESSING OFFICER UNDER THE SAID ACT HAS ONLY POWER TO REASSESS ON FU LFILLMENT OF CERTAIN PRECONDITION NAMELY, HE MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND THAT THERE MUST B E TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT. THE APEX COURT CAUTIONED TH AT IN THE GARB OF REOPENING AN ASSESSMENT REVIEW SHOULD NOT TAKE P LACE. THIS COURT FOLLOWING THE APEX COURT IN THE MATTER OF CARTINI I NDIA LTD. V. ADDL. C.I.T. [2009] 314 ITR 275/ 179 TAXMAN 157 (BOM.) HAS ALSO HELD THAT EVEN WHERE REASSESSMENT IS SOUGHT TO BE DONE W ITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THERE MUST BE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T AND SUCH REASON TO BELIEVE SHOULD NOT BE ON ACCOUNT OF MERE CHANGE OF OPINION. THEREFORE, WHERE FACTS HAVE BEEN VIEWED DU RING THE ORIGINAL PROCEEDING AND AN ASSESSMENT ORDER HAS BEE N PASSED THEN IN SUCH CASES, REOPENING OF AN ASSESSMENT ON THE SA ME FACTS WITHOUT ANYTHING MORE WOULD BE A REVIEW AND NOT PER MITTED UNDER THE GARB OF REASSESSMENT. THIS WOULD BE A MERE CHAN GE OF OPINION IN THE ABSENCE OF ANY TANGIBLE MATERIAL AND IS NOT SUFFICIENT TO ASSUME JURISDICTION TO ISSUE THE IMPUGNED NOTICE. I N FACT, OUR COURT IN THE MATTER OF IDEA CELLULAR LTD V. DY. CIT [2008 ] 301 ITR 407 (BOM.) HAS HELD THAT ONCE ALL THE MATERIAL WITH REG ARD TO PARTICULAR ISSUE IS BEFORE THE ASSESSING OFFICER AN D HE CHOOSES NOT TO DEAL WITH THE SAME, IT CANNOT BE SAID THAT HE HA D NOT APPLIED HIS MIND TO ALL THE MATERIAL BEFORE HIM. FURTHER, AS OB SERVED BY THE FULL BENCH OF DELHI HIGH COURT IN THE MATTER OF C.I.T. V . KELVINATOR OF INDIA LTD. [2002] 256 ITR 1/ 123 TAXMAN 433 , WHEN THE ENTIRE MATERIAL IS PLACED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT AND HE PASSES AN ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT A PRESUMPTION CAN BE RAISED THAT HE APPLIED HIS MIND TO ALL THE FACTS INVOLVED IN THE ASSESSMENT. 8. THEREFORE, IN THE PRESENT FACTS ONE WOULD HAVE T O EXAMINE THE CONTENTION OF THE PETITIONER THAT THE IMPUGNED NOTI CE IS WITHOUT JURISDICTION AS THE SELF SAME FACTS WERE NOT ONLY B EFORE THE ASSESSING OFFICER BUT HE HAD ALSO VIEWED THE VERY I SSUES ON WHICH THE ASSESSMENT IS SOUGHT TO BE REOPENED. SO FAR AS, THE ISSUE IN RESPECT OF PROVISIONS CLAIMED AS DEDUCTION FOR ARRI VING AT TAXABLE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 18 PROFIT AGGREGATING TO RS. 52.87 CRORES IS CONCERNED , THE SAME WAS NOT ONLY DISCLOSED IN THE NOTES TO ACCOUNT FILED WI TH THE RETURN OF INCOME BUT ALSO IN RESPONSE TO SPECIFIC QUERIES RAI SED DURING THE ASSESSMENT PROCEEDING. IT WAS REITERATED AT THE HEA RING THAT ON THE AFORESAID ACCOUNT OF PROVISION, THE TAX HAD ALREADY BEEN PAID IN THE EARLIER YEARS AND THE AMOUNTS WERE MERELY WRITTEN B ACK IN THIS YEAR TO THE EXTENT THEY WERE IN EXCESS OF THE PROVISIONS REQUIRED. SO FAR AS, FAILURE TO DEDUCT TDS ON ADVERTISEMENT AND SALE S PROMOTION ARE CONCERNED LEADING TO DISALLOWANCE OF THE ENTIRE AMO UNT OF RS. 22.48 CRORES UNDER SECTION 40(A)(IA) THE SAME WAS ALSO SU BJECT TO SCRUTINY BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROC EEDINGS. IN FACT, THE CLAUSE 17(F) OF THE TAX AUDIT REPORT SUBMITTED ALONGWITH RETURN OF INCOME CLEARLY BRINGS OUT THE FACT THAT WHERE TA X HAS NOT BEEN DEDUCTED, THEN THE ENTIRE AMOUNT OF PAYMENT HAS BEE N OFFERED FOR DISALLOWANCE UNDER SECTION 40(A)(IA). IN FACT, BY L ETTERS DATED 10.11.2008 AND 26.12.2008 IN RESPONSE TO SPECIFIC Q UERIES OF THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS THE PETITIONER HAD POINTED OUT ALONGWITH DETAILS THE EXPENSES IN RESPE CT OF WHICH THE TAX HAD NOT BEEN DEDUCTED AND WHICH WERE OFFERED TO TAX. SO FAR AS, THE REASON TO REOPEN THE ASSESSMENT ON THE GROUND T HAT THE PETITIONER HAD DECLARED SHORT TERM CAPITAL GAINS OF RS. 3.63 CRORES IN RESPECT OF INCOME EARNED OUT OF INVESTMENTS HAD TO BE TAXED/CLASSIFIED AS BUSINESS INCOME IS CONCERNED, I T IS NOT DISPUTED BEFORE US THAT THE TREATMENT GIVEN WAS CONSISTENT W ITH THE EARLIER YEAR PRACTICE AND ACCEPTED BY THE RESPONDENT. FURTH ER, IT IS NOT DISPUTED BEFORE US THAT THE SHORT TERM CAPITAL GAIN S HAVE BEEN ASSESSED TO THE MAXIMUM MARGINAL RATE AND EVEN IF C ONSIDERED AS BUSINESS INCOME, THE TAX EFFECT WOULD BE THE SAME. CONSEQUENTLY, THERE COULD BE NO REASONABLE BASIS TO HAVE A BELIEF THAT THERE IS ANY ESCAPEMENT OF INCOME. 9. THEREFORE, IN VIEW OF THE ABOVE, WE ARE OF THE V IEW THAT THE IMPUGNED NOTICE IS WITHOUT JURISDICTION AND THE IMP UGNED ORDER DEALING WITH THE OBJECTION OF THE PETITIONER IS NON SPEAKING ORDER IN AS MUCH AS IT DOES NOT DEAL WITH ANY OF THE OBJECTI ONS RAISED BY THE PETITIONER IN ITS OBJECTIONS. 10. IN THE CIRCUMSTANCES, THE IMPUGNED NOTICE DATED 24.03.2011 ISSUED UNDER SECTION 148 OF THE ACT AS WELL AS THE IMPUGNED ORDER DATED 07.12.2011 REJECTING THE OBJECTION TO INITIAT ION OF REOPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2006-2007 AR E QUASHED AND SET ASIDE. 11. THE PETITION IS ALLOWED. NO ORDER AS TO COSTS. 2.8. THE HONBLE DELHI HIGH COURT IN CONSOLIDATED PHOTO AND FINVEST LTD. [2006] 281 ITR 394 (DELHI) H ELD AS UNDER:- ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 19 'IN THE LIGHT OF THE AUTHORITATIVE PRONOUNCEMENTS O F THE SUPREME COURT REFERRED TO ABOVE, WHICH ARE BINDING UPON US AND THE OBSERVATIONS MADE BY THE HIGH COURT OF GUJARAT WITH WHICH WE FIND OURSELVES IN RESPECTFUL AGREEMENT, THE ACTION INITI ATED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT CANN OT BE SAID TO BE EITHER INCOMPETENT OR OTHERWISE IMPROPER TO CALL FOR INTERFERENCE BY A WRIT COURT. THE ASSESSING OFFICER HAS IN THE R EASONED ORDER PASSED BY HIM INDICATED THE BASIS ON WHICH INCOME E XIGIBLE TO TAX HAD IN HIS OPINION ESCAPED ASSESSMENT. THE ARGUMENT THAT THE PROPOSED REOPENING OF ASSESSMENT WAS BASED ONLY UPO N A CHANGE OF OPINION HAS NOT IMPRESSED US. THE ASSESSM ENT ORDER DID NOT ADMITTEDLY ADDRESS ITSELF TO THE QUESTION W HICH THE ASSESSING OFFICER PROPOSES TO EXAMINE IN THE COURSE OF REASSESSMENT PROCEEDINGS. THE SUBMISSION OF MR. VOH RA THAT EVEN WHEN THE ORDER OF ASSESSMENT DID NOT RECORD AN Y EXPLICIT OPINION ON THE ASPECTS NOW SOUGHT TO BE EXAMINED, I T MUST BE PRESUMED THAT THOSE ASPECTS WERE PRESENT TO THE MIN D OF THE ASSESSING OFFICER AND HAD BEEN HELD IN FAVOUR OF TH E ASSESSEE IS TOO FAR-FETCHED A PROPOSITION TO MERIT ACCEPTANCE. THERE MAY INDEED BE A PRESUMPTION THAT THE ASSESSMENT PROCEED INGS HAVE BEEN REGULARLY CONDUCTED, BUT THERE CAN BE NO PRESU MPTION THAT EVEN WHEN THE ORDER OF ASSESSMENT IS SILENT, ALL PO SSIBLE ANGLES AND ASPECTS OF A CONTROVERSY HAD BEEN EXAMINED AND DETERMINED BY THE ASSESSING OFFICER. IT IS TRITE THAT A MATTER IN ISSUE CAN BE VALIDLY DETERMINED ONLY UPON APPLICATION OF MIND BY THE AUTHORITY DETERMINING THE SAME. APPLICATION OF MIND IS, IN TU RN, BEST DEMONSTRATED BY DISCLOSURE OF MIND, WHICH IS BEST D ONE BY GIVING REASONS FOR THE VIEW WHICH THE AUTHORITY IS TAKING. IN CASES WHERE THE ORDER PASSED BY A STATUTORY AUTHORITY IS SILENT AS TO THE REASONS FOR THE CONCLUSION IT HAS DRAWN, IT CAN WELL BE SAI D THAT THE AUTHORITY HAS NOT APPLIED ITS MIND TO THE ISSUE BEF ORE IT NOR FORMED ANY OPINION. THE PRINCIPLE THAT A MERE CHANGE OF OP INION CANNOT BE A BASIS FOR REOPENING COMPLETED ASSESSMENTS WOUL D BE APPLICABLE ONLY TO SITUATIONS WHERE THE ASSESSING O FFICER HAS APPLIED HIS MIND AND TAKEN A CONSCIOUS DECISION ON A PARTICULAR MATTER IN ISSUE. IT WILL HAVE NO APPLICATION WHERE THE ORDER OF ASSESSMENT DOES NOT ADDRESS ITSELF TO THE ASPECT WH ICH IS THE BASIS FOR REOPENING OF THE ASSESSMENT, AS IS THE PO SITION IN THE PRESENT CASE. IT IS IN THAT VIEW INCONSEQUENTIAL WH ETHER OR NOT THE MATERIAL NECESSARY FOR TAKING A DECISION WAS AVAILA BLE TO THE ASSESSING OFFICER EITHER GENERALLY OR IN THE FORM O F A REPLY TO THE QUESTIONNAIRE SERVED UPON THE ASSESSEE. WHAT IS IMP ORTANT IS WHETHER THE ASSESSING OFFICER HAD BASED ON THE MATE RIAL AVAILABLE TO HIM TAKEN A VIEW. IF HE HAD NOT DONE SO, THE PRO POSED REOPENING CANNOT BE ASSAILED ON THE GROUND THAT THE SAME IS BASED ONLY ON A CHANGE OF OPINION.' 2.9. FROM THE FOREGOING DISCUSSION AND JUDICIAL PRONOUNCEMENTS, THE CLEAR POSITION EMERGES AS UNDER : ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 20 (1) REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIAT ED IN CASE RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1) AND NO SCRUTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES TH ERE IS NO CHANGE OF OPINION. (2) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND IS DECIDED IN FAVOUR OF THE ASSESSEE. REASSESSMENT PRO CEEDINGS IN THE SAID CASES WILL BE HIT BY THE PRINCIPLE OF 'CHA NGE OF OPINION'. (3) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E AN ISSUE OR QUERY IS RAISED AND ANSWERED BY THE ASSESSEE IN ORI GINAL ASSESSMENT PROCEEDINGS BUT THEREAFTER THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN THE ASSESSMENT ORDER. IN S UCH SITUATIONS IT SHOULD BE ACCEPTED THAT THE ISSUE WAS EXAMINED B UT THE ASSESSING OFFICER DID NOT FIND ANY GROUND OR REASON TO MAKE ADDITION OR REJECT THE STAND OF THE ASSESSEE. HE FO RMS AN OPINION. THE REASSESSMENT WILL BE INVALID BECAUSE THE ASSESS ING OFFICER HAD FORMED AN OPINION IN THE ORIGINAL ASSESSMENT, T HOUGH HE HAD NOT RECORDED HIS REASONS. 2.10. THUS, WHERE AN ASSESSING OFFICER INCORRECTLY OR ERRONEOUSLY APPLIES LAW OR COMES TO A WRONG CONCLUS ION AND INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT , RESORT TO SECTION 263 OF THE ACT IS AVAILABLE AND S HOULD BE RESORTED TO. BUT INITIATION OF REASSESSMENT PROCEED INGS WILL BE INVALID ON THE GROUND OF CHANGE OF OPINION. HER E A DISTINCTION HAS TO BE DRAWN BETWEEN ERRONEOUS APPLICATION/INTERPRETATION /UNDERSTANDING OF LAW AN D CASES WHERE FRESH OR NEW FACTUAL INFORMATION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER SUBSEQUENT TO TH E PASSING OF THE ASSESSMENT ORDER. IF NEW FACTS, MATE RIAL OR INFORMATION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER, WHICH WAS NOT ON RECORD AND MADE AVAILABLE AT THE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 21 TIME OF THE ASSESSMENT ORDER, THE PRINCIPLE OF 'CHA NGE OF OPINION' WILL NOT APPLY. THE REASON IS THAT 'OPINIO N' IS FORMED ON FACTS. 'OPINION' FORMED OR BASED ON WRONG AND INCORRECT FACTS OR WHICH ARE BELIED AND UNTRUE DO N OT GET PROTECTION AND COVER UNDER THE PRINCIPLE OF 'CHANGE OF OPINION'. FACTUAL INFORMATION OR MATERIAL WHICH WAS INCORRECT OR WAS NOT AVAILABLE WITH THE ASSESSING O FFICER AT THE TIME OF ORIGINAL ASSESSMENT WOULD JUSTIFY INITI ATION OF REASSESSMENT PROCEEDINGS. THE REQUIREMENT IN SUCH C ASES IS THAT THE INFORMATION OR MATERIAL AVAILABLE SHOUL D RELATE TO MATERIAL FACTS. THE EXPRESSION 'MATERIAL FACTS' MEA NS THOSE FACTS WHICH IF TAKEN INTO ACCOUNT WOULD HAVE AN ADV ERSE EFFECT ON THE ASSESSEE BY A HIGHER ASSESSMENT OF IN COME THAN THE ONE ACTUALLY MADE. CORRECT MATERIAL FACTS CAN BE ASCERTAINED FROM THE ASSESSMENT RECORDS ALSO AND IT IS NOT NECESSARY THAT THE SAME MAY COME FROM A THIRD PERSO N OR SOURCE, I.E., FROM SOURCE OTHER THAN THE ASSESSMENT RECORDS. HOWEVER, IN SUCH CASES, THE ONUS WILL BE O N THE REVENUE TO SHOW THAT THE ASSESSEE HAD STATED INCORR ECT AND WRONG MATERIAL FACTS RESULTING IN THE ASSESSING OFF ICER PROCEEDING ON THE BASIS OF FACTS, WHICH ARE INCORRE CT AND ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 22 WRONG. THE REASONS RECORDED AND THE DOCUMENTS ON RE CORD ARE OF PARAMOUNT IMPORTANCE AND WILL HAVE TO BE EXA MINED TO DETERMINE WHETHER THE STAND OF THE REVENUE IS CO RRECT. A DECISION OF FROM HONBLE DELHI HIGH COURT DATED SEP TEMBER 26, 2011 IN DALMIA P. LTD. V. CIT [2012] 348 ITR 46 9 (DELHI) AND ANOTHER DECISION FROM HONBLE JURISDICT IONAL HIGH COURT DATED NOVEMBER 8, 2011, IN INDIAN HUME P IPE CO. LTD. V. ASST. CIT [2012] 348 ITR 439 (BOM) ARE TWO SUCH CASES, WHICH THROWS LIGHT ON THE ISSUE. THE AFORESA ID DECISIONS/ FACTS CASES MUST BE DISTINGUISHED FROM C ASES WHERE THE MATERIAL FACTS ON RECORD ARE CORRECT BUT THE ASSESSING OFFICER DID NOT DRAW PROPER LEGAL INFEREN CE OR DID NOT APPRECIATE THE IMPLICATIONS OR DID NOT APPLY TH E CORRECT LAW. THE SECOND CATEGORY WILL BE A CASE OF 'CHANGE OF OPINION' AND CANNOT BE REOPENED FOR THE REASON THAT THE ASSESSEE, AS REQUIRED, HAS PLACED ON RECORD PRIMARY FACTUAL MATERIAL BUT ON THE BASIS OF LEGAL UNDERSTANDING, T HE ASSESSING OFFICER HAS TAKEN A PARTICULAR LEGAL VIEW . HOWEVER, AS STATED ABOVE, AN ERRONEOUS DECISION, WH ICH IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, C AN BE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 23 MADE SUBJECT-MATTER OF ADJUDICATION UNDER SECTION 2 63 OF THE ACT. 2.11. A DIVISION BENCH OF HONBLE DELHI HIGH COUR T IN NEW LIGHT TRADING CO. V. CIT [2002] 256 ITR 391 (DE LHI), REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN CIT V. P. V. S. BEEDIES P. LTD. [1999] 237 ITR 13 (SC) AND MADE FOLLOWING OBSERVATIONS. (PAGE 392) : 'IN THE CASE OF CIT V. P. V. S. BEEDIES P. LTD. [19 99] 237 ITR 13 (SC), THE APEX COURT HELD THAT THE AUDIT PARTY CAN POINT OUT A FACT, WHICH HAS BEEN OVERLOOKED BY THE INCOME-TAX OFFICER IN THE ASSESSMENT. THOUGH THERE CANNOT BE ANY INTERPRETATI ON OF LAW BY THE AUDIT PARTY, IT IS ENTITLED TO POINT OUT A FACTUAL ERROR OR OMISSION IN THE ASSESSMENT AND REOPENING OF A CASE ON THE BASIS OF FACTUAL ERROR OR OMISSION POINTED OUT BY THE AUDIT PARTY IS PERMISSI BLE UNDER LAW. AS THE TRIBUNAL HAS RIGHTLY NOTICED, THIS WAS NOT A CA SE OF THE ASSESSING OFFICER MERELY ACTING AT THE BEHEST OF THE AUDIT PA RTY OR ON ITS REPORT. IT HAS INDEPENDENTLY EXAMINED THE MATERIALS COLLECT ED BY THE AUDIT PARTY IN ITS REPORT AND HAS COME TO AN INDEPENDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME. THE ANSWER TO THE Q UESTION IS, THEREFORE, IN THE AFFIRMATIVE, IN FAVOUR OF THE REV ENUE AND AGAINST THE ASSESSEE.' AS RECORDED ABOVE, THE REASONS RECORDED OR THE DOC UMENTS AVAILABLE MUST SHOW NEXUS THAT IN FACT THEY ARE GER MANE AND RELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE AS SESSING OFFICER REGARDING ESCAPEMENT OF INCOME. AT THE SAME TIME, I T IS NOT THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED ESCAPEMENT OF INCOME BY RECORDING CONCL USIVE FINDINGS. THE FINAL ASCERTAINMENT TAKES PLACE WHEN THE FINAL OR REASSESSMENT ORDER IS PASSED. IT IS ENOUGH IF THE ASSESSING OFFI CER CAN SHOW TENTATIVELY OR PRIMA FACIE ON THE BASIS OF THE REAS ONS RECORDED AND WITH REFERENCE TO THE DOCUMENTS AVAILABLE ON RECORD THAT INCOME HAS ESCAPED ASSESSMENT. ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 24 THIS TAKES US TO THE OBSERVATIONS OF THE DELHI HIGH COURT IN KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI) [FB] WHICH READ AS UNDER (PAGE 18): 'THE BOARD IN EXERCISE OF ITS JURISDICTION UNDER TH E AFOREMENTIONED PROVISIONS HAD ISSUED THE CIRCULAR O N OCTOBER 31, 1989. THE SAID CIRCULAR ADMITTEDLY IS B INDING ON THE REVENUE. THE AUTHORITY, THEREFORE, COULD NOT HA VE TAKEN A VIEW, WHICH WOULD RUN COUNTER TO THE MANDATE OF T HE SAID CIRCULAR. 2.12. FROM A PERUSAL OF CLAUSE 7.2 OF THE SAID CIR CULAR IT WOULD APPEAR THAT IN NO UNCERTAIN TERMS IT WAS S TATED AS TO UNDER WHAT CIRCUMSTANCES THE AMENDMENTS HAD BEEN CARRIED OUT, I.E., ONLY WITH A VIEW TO ALLAY THE FE ARS THAT THE OMISSION OF THE EXPRESSION 'REASON TO BELIEVE' FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OF FICER TO REOPEN PAST ASSESSMENT ON MERE CHANGE OF OPINION. I T IS, THEREFORE, EVIDENT THAT EVEN ACCORDING TO THE CBDT A MERE CHANGE OF OPINION CANNOT FORM THE BASIS FOR REOPENI NG A COMPLETED ASSESSMENT. 2.13. ANOTHER ASPECT OF THE MATTER ALSO CANNOT BE LOST SIGHT OF A STATUTE CONFERRING AN ARBITRARY POWER MA Y BE HELD TO BE ULTRA VIRUS ARTICLE 14 OF THE CONSTITUTION OF INDIA. IF TWO INTERPRETATIONS ARE POSSIBLE, THE INTERPRETATIO N WHICH UPHOLDS CONSTITUTIONALITY, IT IS TRITE, SHOULD BE F AVOURED. IN ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 25 THE EVENT IT IS HELD THAT BY REASON OF SECTION 147 IF THE INCOME-TAX OFFICER EXERCISES ITS JURISDICTION FOR I NITIATING A PROCEEDING FOR RE-ASSESSMENT ONLY UPON MERE CHANGE OF OPINION, THE SAME MAY BE HELD TO BE UNCONSTITUTIONA L. WE ARE, THEREFORE, OF THE OPINION THAT SECTION 147 OF THE ACT DOES NOT POSTULATE CONFERMENT OF POWER UPON THE ASS ESSING OFFICER TO INITIATE REASSESSMENT PROCEEDING UPON ME RE CHANGE OF OPINION. 2.14. THE HONBLE APEX COURT THEREAFTER REFERRED T O THE SUBSEQUENT DECISION IN INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) WHEREIN IT W AS OBSERVED THAT SOME OF THE OBSERVATIONS MADE IN KALY ANJI MAVJI (SUPRA) WERE FAR TOO WIDE AND THE STATUTE DID NOT PERMIT REAPPRAISAL OF MATERIAL CONSIDERED BY THE AS SESSING OFFICER DURING THE ORIGINAL ASSESSMENT. THE OBSERVA TIONS IN KALYANJI MAVIJI (SUPRA) THAT REOPENING WOULD COVER A CASE 'WHERE INCOME HAS ESCAPED ASSESSMENT DUE TO THE OVERSIGHT, INADVERTENCE OR MISTAKE' WAS TOO BROADLY EXPRESSED AND DID NOT LAY DOWN THE CORRECT LAW. IT WAS CLARIFIED AND OBSERVED AT PAGE 1004 IN INDIAN AND E ASTERN NEWSPAPER SOCIETY [1979] 119 ITR 996 (SC) AS UNDER : ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 26 'NOW, IN THE CASE BEFORE US, THE INCOME-TAX OFFICER HAD, WHEN HE MADE THE ORIGINAL ASSESSMENT, CONSIDERED THE PROVIS IONS OF SECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE APPLICATION OF THOSE PROVISIONS WOULD AMOUNT TO A CHANGE OF OPINION ON MATERIAL ALREADY CONSIDERED BY HIM. THE REVENUE CONTENDS THAT IT IS OPEN TO HIM TO DO SO, AND ON TH AT BASIS TO REOPEN THE ASSESSMENT UNDER SECTION 147(B). RELIANCE IS PL ACED ON KALYANJI MAVJI AND CO. V. CIT [1976] 102 ITR 287 (S C), WHERE A BENCH OF TWO LEARNED JUDGES OF THIS COURT OBSERVED THAT A CASE WHERE INCOME HAD ESCAPED ASSESSMENT DUE TO THE 'OVE RSIGHT, INADVERTENCE OR MISTAKE' OF THE INCOME-TAX OFFICER MUST FALL WITHIN SECTION 34(1)(B) OF THE INDIAN INCOME-TAX ACT, 1922 . IT APPEARS TO US, WITH RESPECT, THAT THE PROPOSITION IS STATED TO O WIDELY AND TRAVELS FARTHER THAN THE STATUTE WARRANTS IN SO FAR AS IT C AN BE SAID TO LAY DOWN THAT IF, ON REAPPRAISING THE MATERIAL CONSIDER ED BY HIM DURING THE ORIGINAL ASSESSMENT, THE INCOME-TAX OFFICER DIS COVERS THAT HE HAS COMMITTED AN ERROR IN CONSEQUENCE OF WHICH INCO ME HAS ESCAPED ASSESSMENT IT IS OPEN TO HIM TO REOPEN THE ASSESSMENT. IN OUR OPINION, AN ERROR DISCOVERED ON A RECONSIDERATI ON OF THE SAME MATERIAL (AND NO MORE) DOES NOT GIVE HIM THAT POWER . THAT WAS THE VIEW TAKEN BY THIS COURT IN MAHARAJ KUMAR KAMAL SIN GH V. CIT [1959] 35 ITR 1 (SC), CIT V. A. RAMAN AND CO. [1968 ] 67 ITR 11 (SC) AND BANKIPUR CLUB LTD. V. CIT [1971] 82 ITR 83 1 (SC), AND WE DO NOT BELIEVE THAT THE LAW HAS SINCE TAKEN A DIFFE RENT COURSE. ANY OBSERVATIONS IN KALYANJI MAVJI AND CO. V. CIT [1976 ] 102 ITR 287 (SC) SUGGESTING THE CONTRARY DO NOT, WE SAY WITH RE SPECT, LAY DOWN THE CORRECT LAW.' 2.15. IN A. L. A. FIRM (SUPRA), THE HONBLE APEX C OURT EXPLAINED THAT THERE WAS NO DIFFERENCE BETWEEN THE OBSERVATIONS OF THE SUPREME COURT IN KALYANJI MAVIJ I [1976] 102 ITR 287 (SC) AND INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1979] 119 ITR 996 (SC), AS FAR AS PRO POSITION (4) IS CONCERNED. IT WAS HELD THAT (PAGE 297 OF 189 ITR) :- 'WE HAVE POINTED OUT EARLIER THAT KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC) OUTLINES FOUR SITUATIONS IN WHICH ACTION UNDER SECTION 34(1)(B) CAN BE VALIDLY INITIATED. THE INDI AN EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) HA S ONLY INDICATED THAT PROPO SITION (2) OUTLINED IN THIS CA SE AND EXTRACTED EARLIER MAY HAVE BEEN SOMEWHAT WIDELY STA TED ; IT HAS NOT CAST ANY DOUBT ON THE OTHER THREE PROPOSITI ONS SET OUT ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 27 IN KALYANJI MAVJI'S CASE. THE FACTS OF THE PRESENT CASE SQUARELY FALL WITHIN THE SCOPE OF PROPOSITIONS 2 AND 4 ENUNC IATED IN KALYANJI MAVIJI'S CASE [1976] 102 ITR 287 (SC). PRO POSITION (2) MAY BE BRIEFLY SUMMARIZED AS PERMITTING ACTION EVEN ON A 'MERE CHANGE OF OPINION'. THIS IS WHAT HAS BEEN DOU BTED IN THE INDIAN AND EASTERN NEWSPAPER SOCIETY CASE [1979] 11 9 ITR 996 (SC) AND WE SHALL DISCUSS ITS APPLICATION TO TH IS CASE A LITTLE LATER. BUT, EVEN LEAVING THIS OUT OF CONSIDERATION, THERE CAN BE NO DOUBT THAT THE PRESENT CASE IS SQUARELY COVERED BY PROPOSITION (4) SET OUT IN KALYANJI MAVIJI'S CASE [ 1976] 102 ITR 287 (SC). THIS PROPOSITION CLEARLY ENVISAGES A FORM ATION OF OPINION BY THE INCOME-TAX OFFICER ON THE BASIS OF M ATERIAL ALREADY ON RECORD PROVIDED THE FORMATION OF SUCH OP INION IS CONSEQUENT ON 'INFORMATION' IN THE SHAPE OF SOME LI GHT THROWN ON ASPECTS OF FACTS OR LAW WHICH THE INCOME-TAX OFF ICER HAD NOT EARLIER BEEN CONSCIOUS OF. TO GIVE A COUPLE OF ILLU STRATIONS ; SUPPOSE AN INCOME-TAX OFFICER, IN THE ORIGINAL ASSE SSMENT, WHICH IS A VOLUMINOUS ONE INVOLVING SEVERAL CONTENT IONS, ACCEPTS A PLEA OF THE ASSESSEE IN REGARD TO ONE OF THE ITEMS THAT THE PROFITS REALISED ON THE SALE OF A HOUSE IS A CAPITAL REALISATION NOT CHARGEABLE TO TAX. SUBSEQUENTLY, HE FINDS, IN THE FOREST OF PAPERS FILED IN CONNECTION WITH THE ASSES SMENT, SEVERAL INSTANCES OF EARLIER SALES OF HOUSE PROPERT Y BY THE ASSESSEE. THAT WOULD BE A CASE WHERE THE INCOME-TAX OFFICER DERIVES INFORMATION FROM THE RECORD ON AN INVESTIGA TION OR ENQUIRY INTO FACTS NOT ORIGINALLY UNDERTAKEN. AGAIN , SUPPOSE THE INCOME-TAX OFFICER ACCEPTS THE PLEA OF AN ASSESSEE THAT A PARTICULAR RECEIPT IS NOT INCOME LIABLE TO TAX. BUT , ON FURTHER RESEARCH INTO LAW HE FINDS THAT THERE WAS A DIRECT DECISION HOLDING THAT CATEGORY OF RECEIPT TO BE AN INCOME RE CEIPT. HE WOULD BE ENTITLED TO REOPEN THE ASSESSMENT UNDER SE CTION 147(B) BY VIRTUE OF PROPOSITION (4) OF KALYANJI MAV JI. THE FACT THAT THE DETAILS OF SALES OF HOUSE PROPERTIES WERE ALREADY IN THE FILE OR THAT THE DECISION SUBSEQUENTLY COME ACROSS BY HIM WAS ALREADY THERE WOULD NOT AFFECT THE POSITION BECAUSE THE INFORMATION THAT SUCH FACTS OR DECISION EXISTED COM ES TO HIM ONLY MUCH LATER. WHAT THEN, IS THE DIFFERENCE BETWEEN THE SITUATIONS ENVISAGED IN PROPOSITIONS (2) AND (4) OF KALYANJI MAVIJI'S CA SE [1976] 102 ITR 287 (SC). THE DIFFERENCE, IF ONE KEEPS IN MIND THE TREND OF THE JUDICIAL DECISIONS, IS THIS. PROPOSITION (4) RE FERS TO A CASE WHERE THE INCOME- TAX OFFICER INITIATES REASSESSMEN T PROCEEDINGS IN THE LIGHT OF 'INFORMATION' OBTAINED BY HIM BY AN INVESTIGATION INTO MATERIAL ALREADY ON RECORD OR BY RESEARCH INTO THE LAW APPLICABLE THERETO WHICH HAS BROUGHT OUT AN ANGLE OR ASPECT THAT HAD BEEN MISSED EARLIER, FOR E.G., AS I N THE TWO MADRAS DECISIONS REFERRED TO EARLIER. PROPOSITION ( 2) NO DOUBT COVERS THIS SITUATION ALSO BUT IT IS SO WIDELY EXPR ESSED AS TO INCLUDE ALSO CASES IN WHICH THE INCOME-TAX OFFICER, HAVING ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 28 CONSIDERED ALL THE FACTS AND LAW, ARRIVES AT A PART ICULAR CONCLUSION, BUT REINITIATES PROCEEDINGS BECAUSE, ON A REAPPRAISAL OF THE SAME MATERIAL WHICH HAD BEEN CON SIDERED EARLIER AND IN THE LIGHT OF THE SAME LEGAL ASPECTS TO WHICH HIS ATTENTION HAD BEEN DRAWN EARLIER, HE COMES TO A CON CLUSION THAT AN ITEM OF INCOME WHICH HE HAD EARLIER CONSCIO USLY LEFT OUT FROM THE EARLIER ASSESSMENT SHOULD HAVE BEEN BROUGH T TO TAX. IN OTHER WORDS, AS POINTED OUT IN INDIAN AND EASTER N NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC), I T ALSO ROPES IN CASES OF A 'BARE OR MERE CHANGE OF OPINION ' WHERE THE INCOME-TAX OFFICER (VERY OFTEN A SUCCESSOR OFFICER) ATTEMPTS TO REOPEN THE ASSESSMENT BECAUSE THE OPINION FORMED EA RLIER BY HIMSELF (OR, MORE OFTEN, BY A PREDECESSOR INCOME- T AX OFFICER) WAS, IN HIS OPINION, INCORRECT. JUDICIAL DECISIONS HAD CONSISTENTLY HELD THAT THIS COULD NOT BE DONE AND T HE INDIAN AND EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) HAS WARNED THAT THIS LINE OF CASES CANNOT BE TAKEN TO HAVE BEEN OVERRULED BY KALYANJI MAVJI [1976] 102 ITR 287 (SC). THE SECOND PARAGRAPH FROM THE JUDGMENT IN THE INDIAN AN D EASTERN NEWSPAPER SOCIETY'S CASE [1979] 119 ITR 996 (SC) EA RLIER EXTRACTED HAS ALSO REFERENCE ONLY TO THIS SITUATION AND INSISTS UPON THE NECESSITY OF SOME INFORMATION WHICH MAKE T HE INCOME-TAX OFFICER REALISE THAT HE HAS COMMITTED AN ERROR IN THE EARLIER ASSESSMENT. THIS PARAGRAPH DOES NOT IN ANY WAY AFFECT THE PRINCIPLE ENUMERATED IN THE TWO MADRAS CASES CI TED WITH APPROVAL IN ANANDJI HARIDAS 21 STC 326. EVEN MAKING ALLOWANCES FOR THIS LIMITATION PLACED ON THE OBSERV ATIONS IN KALYANJI MAVJI, THE POSITION AS SUMMARISED BY THE H IGH COURT IN THE FOLLOWING WORDS REPRESENTS, IN OUR VIEW, THE CO RRECT POSITION IN LAW (AT PAGE 629 OF 102 ITR) : THE RESULT OF THESE DECISIONS IS THAT THE STATUTE D OES NOT REQUIRE THAT THE INFORMATION MUST BE EXTRANEOUS TO THE RECORD. IT IS ENOUGH IF THE MATERIAL, ON THE BASIS OF WHICH TH E REASSESSMENT PROCEEDINGS ARE SOUGHT TO BE INITIATED , CAME TO THE NOTICE OF THE INCOME-TAX OFFICER SUBSEQUENT TO THE ORIGINAL ASSESSMENT. IF THE INCOME-TAX OFFICER HAD CONSIDERE D AND FORMED AN OPINION ON THE SAID MATERIAL IN THE ORIGI NAL ASSESSMENT ITSELF, THEN HE WOULD BE POWERLESS TO ST ART THE PROCEEDINGS FOR THE REASSESSMENT. WHERE, HOWEVER, T HE INCOME-TAX OFFICER HAD NOT CONSIDERED THE MATERIAL AND SUBSEQUENTLY CAME BY THE MATERIAL FROM THE RECORD I TSELF, THEN SUCH A CASE WOULD FALL WITHIN THE SCOPE OF SECTION 147(B) OF THE ACT'.' (EMPHASIS SUPPLIED) THE AFORESAID OBSERVATIONS ARE A COMPLETE ANSWER TO THE ISSUE THAT IF A PARTICULAR SUBJECT-MATTER, ITEM , ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 29 DEDUCTION OR CLAIM IS NOT EXAMINED BY THE ASSESSING OFFICER, IT WILL NEVERTHELESS BE A CASE OF CHANGE OF OPINION AND THE REASSESSMENT PROCEEDINGS WILL BE BARRED. T HE HON'BLE APEX COURT IN CIT VS FORAMER FRANCE, VIDE O RDER DATED 16/01/2003, WHERE, THERE WAS NO FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS, IT WAS HELD THAT THE NOTICE ISSUED BEYOND PRESCRIBED PERIOD CAN NOT BE SUSTAINED MERELY ON THE BASIS OF CHANGE OF OPINION. EVEN OTHERWISE, WHEN TWO VIEWS ARE POSSIBLE, THE VIEW, W HICH FAVOURS THE ASSESSEE HAS TO BE PREFERRED. 2.16. WE ARE CONSCIOUS OF THE FACT THAT THE AFORE SAID OBSERVATIONS HAVE BEEN MADE IN THE CONTEXT OF SECTI ON 147(B) WITH REFERENCE TO THE TERM 'INFORMATION' AND CONCEPTUALLY THERE IS DIFFERENCE IN SCOPE AND AMBIT OF REOPENING PROVISIONS INCORPORATED WITH EFFECT FROM APRIL 1, 1989. HOWEVER, IT WAS OBSERVED BY THE HONBLE APEX COURT IN KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) THAT THE AMENDED PROVISIONS ARE WIDER. WHAT IS IMPORTANT AND RELEVANT IS THAT THE PRINCIPLE OF 'CHANGE OF OPINIO N' WAS EQUALLY APPLICABLE UNDER THE UN-AMENDED PROVISIONS. THE SUPREME COURT WAS, THEREFORE, CONSCIOUS OF THE SAID ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 30 PRINCIPLE, WHEN THE OBSERVATIONS MENTIONED ABOVE IN A. L. A. FIRM [1991] 189 ITR 285 WERE MADE. 2.17. UNDER THE NEW PROVISIONS OF SECTION 147, AN ASSESSMENT CAN BE REOPENED IF THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT; BUT IF HE WANTS TO DO SO AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, HE CAN DO SO ONLY IF THE ASSESSEE HAS FALLEN SHORT OF HIS DUTY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. IT DOES NOT FOLLOW THAT HE CANNOT REOPE N THE ASSESSMENT EVEN WITHIN THE PERIOD OF FOUR YEARS AS AFORESAID IF HE HAS REASON TO BELIEVE THAT THE ASSE SSEE HAS FAILED TO MAKE THE REQUISITE DISCLOSURE. ALL THAT T HE SECTION SAYS IS THAT IN A CASE WHERE THE ASSESSMENT IS SOUG HT TO BE REOPENED AFTER THE PERIOD OF FOUR YEARS, THE ONLY R EASON AVAILABLE TO THE ASSESSING OFFICER IS THE NON-DISCL OSURE OF MATERIAL FACTS ON THE PART OF THE ASSESSEE. THE AC T PLACES A GENERAL DUTY ON EVERY ASSESSEE TO FURNISH FULL AND TRUE PARTICULARS ALONG WITH THE RETURN OF INCOME OR IN T HE COURSE OF THE ASSESSMENT PROCEEDINGS SO THAT THE ASSESSING OFFICER IS ENABLED TO COMPUTE THE CORRECT AMOUNT OF INCOME ON ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 31 WHICH THE ASSESSEE SHALL PAY TAX. THE POSITION HAS BEEN FURTHER CLARIFIED BY THE PROVISO ITSELF IN A CASE W HERE ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 144 OF THE ACT OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSE SSMENT YEAR, NO ACTION SHALL BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH YEAR BY THE REASON OF FAILURE ON THE PART OF THE AS SESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE IS SUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IT IS ALSO NOT ED THAT THE SCOPE OF NEWLY SUBSTITUTED (W.E.F. 01/04/1989) SECTION 147 HAS BEEN ELABORATED IN DEPARTMENT CIRCULAR NUMB ER 549 DATED 31 ST OCTOBER, 1989, MEANING THEREBY, ON OR AFTER 01/04/1989, INITIATION OF REASSESSMENT PROCEEDINGS HAS TO BE GOVERNED BY THE PROVISIONS OF SECTION 147 TO 151 AS SUBSTITUTED (AMENDED) W.E.F. 01/04/1989. STILL, PO WER U/S 147 OF THE ACT, THOUGH VERY WIDE BUT NO PLENARY. WE ARE AWARE THAT HONBLE GUJARAT HIGH COURT IN PRAFUL CHU NILAL PATEL: VASANT CHUNILAL PATEL VS ACIT (1999) 236 ITR 82, ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 32 840 (GUJ.) EVEN WENT TO THE EXTENT THAT ACTION UNDE R MAIN SECTION 147 IS POSSIBLE IN SPITE OF COMPLETE DISCLO SURE OF MATERIAL FACTS. THE PRIMARY CONDITION OF REASONABLE BELIEF HAVING NEXUS WITH THE MATERIAL ON RECORD IS STILL O PERATIVE. HOWEVER, WE ARE OF THE VIEW, THAT MERE FRESH APPLIC ATION OF MIND TO THE SAME SET OF FACTS OR MERE CHANGE OF OPI NION DOES NOT CONFER JURISDICTION TO THE ASSESSING OFFIC ER EVEN UNDER THE POST 1989 SECTION 147 OF THE ACT. OUR VI EW FINDS SUPPORT FROM THE DECISION FROM HONBLE HIGH COURTS IN FOLLOWING CASES:- I. JINDAL PHOTO FILMS LTD. VS DCIT (1998) 234 ITR 170 (DEL.), II. GARDEN SILK MILLS PVT. LTD. VS DCIT (1999) 151 CTR (GUJ.) 533, III. GOVIND CHHAPABHAI PATEL VS DCIT 240 ITR 628, 630 (GUJ.), IV. FORAMER VS CIT (2001) 247 ITR 436 (ALL.), AFFIRMED IN CIT VS FORAMER FINANCE (2003) 264 ITR 566, 567 (SC), V. IPICA LABORATORIES VS DCIT (2001) 251 ITR 416 (BOM.), VI. RITU INVESTMENT PVT. LTD.(2012) 345 ITR 214 (DEL.), VII. KETAN B. MEHTA VS ACIT (2012) 346 ITR 254 (GUJ.), ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 33 VIII. MS. PRAVEEN P. BHARUCHA VS DCIT (2012) 348 ITR 325 (BOM.), IX. CIT VS USHA INTERNATIONAL LTD. 348 ITR 485 (DEL.), X. AGRICULTURAL PRODUCE MARKET COMMITTEE VS ITO (2013) 355 ITR 348 (GUJ.), XI. B.B.C. WORLD NEWS LTD. VS ASST. DIT (2014) 362 ITR 577 (DEL.). XII. IDENTICAL RATIO WAS LAID DOWN IN CIT VS MALAYALA MANORMA COMPANY LTD. (2002) 253 ITR 378 (KER.) WE THINK THIS THREAD RUNS THROUGH THE VARIOUS PROVISIONS OF THE ACT. BUT EXPLANATION 1 TO THE SEC TION CONFINES THE DUTY TO THE DISCLOSURE OF ALL PRIMARY AND MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, FULLY AND TRULY. AS TO WHAT ARE MATERIAL OR PRIMARY FACTS WOULD DEPE ND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND N O UNIVERSAL FORMULA MAY BE ATTEMPTED. THE LEGAL OR FA CTUAL INFERENCES FROM THOSE PRIMARY OR MATERIAL FACTS ARE FOR THE ASSESSING OFFICER TO DRAW IN ORDER TO COMPLETE THE ASSESSMENT AND IT IS NOT FOR THE ASSESSEE TO ADVISE HIM, FOR OBVIOUS REASONS. THE EXPLANATION, HOWEVER, CAUTIONS THE ASSESSEE THAT HE CANNOT REMAIN SMUG WITH THE BELIEF THAT SINCE HE HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE T HE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 34 ASSESSING OFFICER FROM WHICH MATERIAL OR EVIDENCE C OULD HAVE BEEN WITH DUE DILIGENCE GATHERED BY HIM, HE HA S DISCHARGED HIS DUTY. IT IS FOR HIM TO POINT OUT THE RELEVANT ENTRIES WHICH ARE MATERIAL, WITHOUT LEAVING THAT EX ERCISE TO THE ASSESSING OFFICER. THE CAVEAT, HOWEVER, IS THAT SUCH PRODUCTION OF BOOKS OF ACCOUNT MAY, IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES, AMOUNT TO FULL AND TRUE DISCLOSU RE ; THIS IS CLEAR FROM THE USE OF THE EXPRESSION 'NOT N ECESSARILY' IN THE EXPLANATION. THUS, THE QUESTION OF FULL AND TRUE DISCLOSURE OF PRIMARY OR MATERIAL FACTS IS A PURE Q UESTION OF FACT, TO BE DETERMINED ON THE FACTS AND CIRCUMSTANC ES OF EACH CASE. NO GENERAL PRINCIPLE CAN BE LAID DOWN. IT WAS OBSERVED BY THE HONBLE APEX COURT, IN VARIOUS CASE S THAT THERE SHOULD BE SOME 'TANGIBLE MATERIAL' COMING INT O THE POSSESSION OF THE ASSESSING OFFICER IN SUCH CASES T O ENABLE HIM TO RESORT TO SECTION 147 OF THE ACT. DESPITE BE ING A CASE OF FULL AND TRUE DISCLOSURE, TANGIBLE MATERIAL COMI NG TO THE POSSESSION OF THE ASSESSING OFFICER AFTER HE MADE T HE ORIGINAL ASSESSMENT UNDER SECTION 143(3), WOULD INF LUENCE THE OPINION, FORMED OR PRESUMED TO HAVE BEEN FORMED EARLIER, BY THE ASSESSING AUTHORITY; HE CAN WITH JU STIFICATION ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 35 CHANGE IT, BUT THAT WOULD NOT BE A CASE OF A 'MERE CHANGE OF OPINION' UNGUIDED BY NEW FACTS OR CHANGE IN THE LEG AL POSITION. IT WILL BE A CASE OF THE ASSESSING AUTHOR ITY HAVING 'REASON TO BELIEVE', NOTWITHSTANDING THAT FULL AND TRUE PARTICULARS WERE FURNISHED BY THE ASSESSEE WHICH WE RE EXAMINED, OR PRESUMED TO BE EXAMINED, BY HIM. THER E WAS A DIVERGENCE OF OPINION AMONGST VARIOUS HIGH COURTS AS TO WHAT CONSTITUTE INFORMATION FOR THE PURPOSES OF S ECTION 34(1)(B) OF THE 1922 ACT (WHICH CORRESPONDS TO SECT ION 147(B) OF THE 1961 ACT) THE HONBLE APEX COURT IN C WT VS IMPERIAL TOBACCO COMPANY LTD. (1966) 61 ITR 461 HAS NOTED SUCH DIVERGENCE OF OPINION ON THE POINT. HON BLE JURISDICTIONAL HIGH COURT IN CIT VS SIR MOHAMMAD YU SUF ISMAIL (1944) 12 ITR 8 (BOM.) HELD THAT MERE CHANGE OF OPINION ON THE SAME FACTS ARE ON QUESTION OF LAW OR MERE DISCOVERY OF MISTAKE OF LAW IS NOT SUFFICIENT INFOR MATION AND THAT IN ORDER TO SUSTAINED ACTION U/S 34 BY FURTHER HOLDING THAT REASSESSMENT IS NOT PERMISSIBLE. THE HONBLE A PEX COURT IN SIMON CARVES LTD. (1976) 105 ITR 212 HELD THAT ERRORLESS LEGALLY CORRECT ORDER CANNOT BE REOPENED, THEREFORE, IT IS SETTLED LAW THAT WITHOUT ANY NEW I NFORMATION ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 36 AND ON THE BASIS OF MERE CHANGE OF OPINION, REOPENI NG OF ASSESSMENT IS NOT PERMISSIBLE. AS WAS HELD IN CIT V S TTK PRESTIGE LTD. (2010) 322 ITR 390 (KARN.) SLP DISMIS SED IN 2010 322 ITR (ST.) 14 (SC). REFERENCE ALSO MADE TO ASIAN PAINTS LTD. VS DCIT (2009) 308 ITR 195 (BOM.), ANDH RA BANK LTD. VS CIT (1997) 225 ITR 447 (SC). THE OBSER VATIONS OF THE SUPREME COURT ARE A PROTECTION AGAINST THE A BUSE OF POWER; THEY ALSO PROTECT THE REVENUE WHICH CAN, IN THE LIGHT OF SUBSEQUENT COMING INTO LIGHT OF FACTS OR LAW, RE OPEN THE ASSESSMENT. IN THE LIGHT OF THE AFORESAID DISCUSSIO N, SINCE, THERE WAS NO NEW TANGIBLE MATERIAL AVAILABLE WITH T HE ASSESSING OFFICER WHILE RESORTING TO SECTION 147/14 8 OF THE ACT, MORE SPECIFICALLY, WHILE FRAMING ORIGINAL ASSE SSMENT U/S 143(3) OF THE ACT, THERE WAS FULL DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE AND ON THE BASIS OF THOSE FAC TS, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, THE REFORE, IN OUR HUMBLE OPINION, THE REASSESSMENT/REOPENING U /S 147 OF THE ACT IS UNJUSTIFIED AS THERE WAS NO FRESH TANGIBLE MATERIAL WITH THE ASSESSING OFFICER, WHILE REOPENIN G THE ASSESSMENT, THEREFORE, THE REOPENING BEYOND A PERIO D OF FOUR YEARS IS NOT PERMISSIBLE, MORE SPECIFICALLY, W HEN THE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 37 MATERIAL FACTS WERE DISCLOSED BY THE ASSESSEE AND ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT. THUS, THE REOPENING OF ASSESSMENT IS BAD IN LAW. THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. ANOTHER ASPECT OF THE MATTER, WHICH CANNOT BE LOST SIGHT, IS THAT THE NOTICE WAS ISSUED ON THE BA SIS OF AUDIT OBJECTION. WE HAVE PERUSED THE RECORD AND ONE OF THE BASIS FOR ISSUANCE OF NOTICE/REOPENING OF ASSESSMEN T IS BASED UPON THE AUDIT OBJECTION. IN SUCH SCENARIO, F OLLOWING CASES THROWS LIGHT UPON THE ISSUE WHETHER REOPENING CAN BE DONE ON THE BASIS OF AUDIT OBJECTION. IN THE CAS E OF CIT VS LUCAS T.V.S. LTD. (2001) 249 ITR 306 (SC), ORDER DATED 05/12/2000, WHEREIN REASSESSMENT WAS DONE ON THE BA SIS OF INFORMATION THAT INCOME HAS ESCAPED ASSESSMENT I N THE OPINION OF AUDIT PARTY REGARDING APPLICATION OR INTERPRETATION OF LAW. THE HON'BLE APEX COURT HELD THAT REASSESSMENT BASED ON OPINION OF AUDIT PARTY IS NOT VALID. THE HON'BLE COURT HELD AS UNDER:- FROM THE DECISION OF THE HIGH COURT (SEE [1998] 23 4 ITR 296) TO THE EFFECT THAT, APART FROM THE INFORMATION FURNISHED BY THE AUDIT PARTY, THE INCOME-TAX OFFICER HAD NO O THER INFORMATION FOR REOPENING THE ASSESSMENT UNDER SECT ION 147(B) OF THE INCOME-TAX ACT, 1961, THAT THE OPINIO N OF THE AUDIT PARTY WAS TO THE EFFECT THAT THE INCOME-TAX O FFICER ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 38 FAILED TO APPLY SECTION 35 TO THE FACTS OF THE CASE , AND THAT THIS WOULD AMOUNT TO POINTING OUT THE LAW AND THE INTERPRETATION OF THE PROVISIONS OF SECTION 35, WHI CH WAS CLEARLY BARRED IN VIEW OF THE DECISION OF THE SUPRE ME COURT IN INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 , THE DEPARTMENT PREFERRED APPEALS TO THE SUPREME COURT. THE SUPREME COURT DISMISSED THE APPEALS. DECISION OF THE MADRAS HIGH COURT IN CIT V. LUCAS T . V. S. LTD. [1998] 234 ITR 296 AFFIRMED . 3.1. THE HON'BLE JURISDICTIONAL HIGH COURT IN ANOT HER CASE OF IDEA CELLULAR LTD. VS DCIT (2008) 301 ITR 4 07 (BOM.), ORDER DATED 13/02/2008 HELD AS UNDER:- ON OCTOBER 30, 2001, THE PETITIONER FILED A RETURN IN RESPECT OF THE ASSESSMENT YEAR 2001-02 WHICH INDICATED A LOSS OF RS. 133,91,49,737. THE RETURN WAS ACCOMPANIED BY A COPY OF THE PETITIONERS AUDITED ACCOUNTS FOR THE YEAR ENDED MA RCH 31, 2001. IN THE COMPUTATION ANNEXED TO THE RETURN, THE PETIT IONER HAD DISCLOSED THAT A COMPANY NAMED T HAD AMALGAMATED WI TH THE PETITIONER WITH EFFECT FROM JANUARY 1, 2001. MORE D ETAILS OF THE AMALGAMATION WERE GIVEN IN THE DIRECTORS REPORT AN NEXED TO THE AUDITED ACCOUNTS. IN THE BALANCE-SHEET AND IN SCHED ULE 2 THERETO, THE PETITIONER HAD DISCLOSED THAT A SUM OF RS. 9,98 4.15 LAKHS WAS CREDITED TO THE AMALGAMATION RESERVE ACCOUNT UNDER THE HEAD RESERVES OR SURPLUS. IN NOTE 4(A) OF SCHEDULE 19 TO THE AUDITED ACCOUNTS, THE PETITIONER HAD GIVEN FULL DETAILS AS TO HOW THE SUM OF RS. 9,984.15 LAKHS WAS ARRIVED AT. IT EXPLAINED THA T THE ASSETS AND LIABILITIES OF T HAD BEEN ACCOUNTED FOR IN THE ACCO UNTS AS PER THE POOLING OF INTEREST METHOD PRESCRIBED IN THE STANDA RD ON ACCOUNTING FOR AMALGAMATIONS (AS-14) AS ISSUED BY T HE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. IT WAS EXPLAINED THAT THE SUM OF RS. 9,984.15 LAKHS WAS THE DIFFERENCE BETWEEN TH E NET BOOK VALUE OF THE ASSETS AND LIABILITIES SO ACQUIRED AND THE SHARE CAPITAL TO BE ISSUED THEREAGAINST. QUERIES RAISED CONCERNIN G THIS ISSUE WERE REPLIED TO BY LETTER DATED FEBRUARY 11, 2002. AGAIN, THE DEPUTY COMMISSIONER RAISED FURTHER QUERIES BY SHOW- CAUSE LETTER DATED MARCH 1, 2002, AND THIS WAS REPLIED TO BY THE PETITIONER BY LETTER DATED MARCH 5, 2002. ON THE THIRD OCCASION, QUERIES WERE RAISED BY THE DEPUTY COMMISSIONER BY HIS LETTER DAT ED MARCH 10, 2005, AND THIS WAS REPLIED TO BY THE PETITIONER BY LETTER DATED MARCH 12, 2005. AGAIN, AFTER THE ISSUE OF THE NOTIC E DATED MARCH 26, 2007, AND AFTER RECEIPT OF RECORDING REASONS, T HE PETITIONER ADDRESSED THE ISSUE BY LETTER DATED DECEMBER 13, 20 07. THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION IN RESP ECT OF THE AMALGAMATION RESERVE OF RS. 9,984.15 LAKHS. ON MARC H 26, 2007, HE ISSUED A NOTICE UNDER SECTION 148 . IN REPLY TO THE OBJECTION RAISED BY THE PETITIONER IT WAS STATED THAT AS THE ISSUE HAD NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER, IT COULD NO T BE SAID THAT ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 39 THE DEPUTY COMMISSIONER HAD FORMED ANY OPINION AND THAT THERE WAS CONSEQUENTLY NO CHANGE OF OPINION. ON A WRIT PE TITION TO QUASH THE NOTICE : HELD, THAT THERE WAS A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS PLACED BEFORE THE ASSESSING OFFICER AT THE FIRST IN STANCE AND THUS THERE WAS NO SUPPRESSION OF ANY MATERIAL FROM THE A SSESSING OFFICER. THIS WAS A CASE IN WHICH THE ASSESSING OFF ICER HAD RAISED SPECIFIC QUERIES ON SEVERAL OCCASIONS AND ALL THE Q UERIES HAD BEEN ANSWERED. ONCE ALL THE MATERIAL WAS BEFORE THE ASSE SSING OFFICER AND HE CHOSE NOT TO DEAL WITH THE SEVERAL CONTENTIO NS RAISED BY THE PETITIONER IN HIS FINAL ASSESSMENT ORDER, IT COULD NOT BE SAID THAT HE HAD NOT APPLIED HIS MIND. THE EXPLANATION TO SECTIO N 147 WAS NOT APPLICABLE. THE NOTICE OF REASSESSMENT WAS NOT VALI D AND WAS LIABLE TO BE QUASHED. WHILE COMING TO THE AFORESAID CONCLUSION, FOLLOWING CASES WERE CONSIDERED BY THE HON'BLE HIGH COURT:- I. CIT V. SHAW WALLACE AND CO. [1932] 6 ITC 178 II. CIT V. SHAW WALLACE AND CO. [1932] 2 COMP CAS 276 (PC) (PARA 2) III. CIT V. FORAMER FRANCE [2003] 264 ITR 566 (SC) (PARA 2) IV. IPCA LABORATORIES LTD. V. GAJANAND MEENA, DEPUTY CIT (NO. 2) [2001] 251 ITR 416 (BOM) (PARA 2) 3.2. IN THE CASE OF IL AND FS INVESTMENT MANAGERS LTD. VS INCOME TAX OFFICER & ORS. (2008) 298 ITR 32 (BOM.), ORDER DATED 27/11/2006, WHEREIN, DEPRECIATION WAS ALLOWED ON INTANGIBLE ASSET. THERE WAS DISAGREEMENT WITH THE AUDIT OBJECTION ON SUBSEQUENT NOTICE TO WITHDRA W THE DEPRECIATION. IT WAS HELD THAT THERE WAS NO MATERIA L IN THE NOTICE TO SHOW HOW INCOME HAS ESCAPED ASSESSMENT. T HE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 40 NOTICE U/S 147/148 WAS HELD TO BE NOT VALID. THE HO N'BLE COURT HELD/OBSERVED AS UNDER:- THE ASSESSEE WAS AN ASSET MANAGEMENT COMPANY WHICH MANAGED PRIVATE INSTITUTIONAL FUNDS OF INDIAN AND F OREIGN INVESTORS FOR INVESTMENTS IN INDIA. THE ASSESSEE EN TERED INTO AN AGREEMENT DATED APRIL 12, 2002, WITH ITS SISTER CON CERN BY WHICH IT AGREED TO PURCHASE THE BUSINESS OF MANAGIN G PRIVATE EQUITY FUNDS AND VENTURE CAPITAL FUNDS AND PROVIDIN G FINANCIAL SERVICES, FOR A LUMPSUM CONSIDERATION OF RS. 14.15 CRORES. UNDER THE AGREEMENT, IT PURCHASED VARIOUS INTANGIBL E ASSETS. IT FILED ITS RETURN FOR THE ASSESSMENT YEAR 2003-04 WHEREIN IT CLAIMED DEPRECIATION ON THE INTANGIBLE ASSETS. THIS WAS ALLOWED. SUBSEQUENTLY, A NOTICE WAS ISSUED TO THE ASSESSEE S EEKING TO WITHDRAW THE DEPRECIATION. ON A WRIT PETITION AGAIN ST THE NOTICE : HELD, THAT THE ASSESSEE HAD GIVEN FULL PARTICULARS OF THE INTANGIBLE ASSETS AND IT HAD MAINTAINED THAT IT WAS ELIGIBLE FOR THE DEPRECIATION. THE STAND TAKEN BY THE ASSESSEE W AS ACCEPTED BY THE RESPONDENTS ON THE MERITS AND EVEN AFTER DIS AGREEING WITH THE AUDIT OBJECTION. REOPENING OF THE ASSESSME NT WITHOUT ANY BASIS WAS NOT VALID. 3.3. IN ANOTHER CASE, IN ASIAN CERC INFORMATION SERVICES (I) P. LTD. VS INCOME TAX OFFICER (2007) 2 93 ITR 271 (BOM.), ORDER DATED 17/07/2007, IT WAS HELD/OBSERVE D AS UNDER:- THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTIO N 148 OF THE INCOME-TAX ACT, 1961, TO THE ASSESSEE. WHILE DISPOS ING OF THE OBJECTIONS RAISED BY THE ASSESSEE, HE HAD NOT GIVEN ANY REASON AS TO WHY HE HAD NOW COME TO THE VIEW, FROM THE EAR LIER VIEW TAKEN WHILE ADDRESSING THE LETTER TO THE AUDITOR TO REMOVE THE OBJECTIONS AS TO WHY THE JUDGMENT OF THE RAJASTHAN HIGH COURT WHICH EARLIER IN HIS OPINION WAS NOT APPLICABLE, BE CAME APPLICABLE. IT WAS POSSIBLE THAT THE ASSESSING OFFI CER MAY HAVE FURTHER RECONSIDERED THE JUDGMENT, BUT SOME REASONS OUGHT TO HAVE BEEN DISCLOSED. THUS, THE MATTER WAS REMANDED TO THE ASSESSING OFFICER TO RECONSIDER THE MATTER DE NOVO AND ACCORDING TO LAW. IF THE AFORESAID JUDICIAL PRONOUNCEMENTS ARE KEPT I N JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEALS , WE FIND ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 41 THAT THE LD. ASSESSING OFFICER DURING SCRUTINY PROC EEDINGS VIDE LETTER DATED 07/02/2005 (PAGE-66 OF THE PAPER BOOK) ASKED FOR VARIOUS DETAILS (PAGE-67 OF THE PAPER BOO K) AND VIDE QUESTION NO.5 ASKED AS UNDER:- ON PERUSAL OF ANNUAL REPORT, IT IS NOTICED THAT DURING THE YEAR, YOU HAVE RECEIVED RS.496.41 LAKHS AND RS.3861.78 LAKHS FROM GOVT. OF MAHARASHTRA. PLEASE EXPLAIN WHETHER THAT INCOME IS OFFERED FOR TAXATION OR NOT. 3.4. THE LD. ASSESSING OFFICER VIDE QUESTION NO.10 (PAGE 68 OF THE PAPER BOOK) ALSO ASKED FOR NON-MATC H OF WORKING WITH RESPECT TO PUNE EXPRESSWAY AND MISCELLANEOUS EXPENSES, ETC. THE ASSESSEE REPLIED T O THE QUERY SO RAISED BY THE LD. ASSESSING OFFICER VIDE L ETTER DATED 17/03/2005 (PAGE-60 TO 62 OF THE PAPER BOOK) REPLIED TO THE QUERIES IN DETAIL. AT PAGE-61 OF THE PAPER BOOK SPECIFICALLY POINT NO.8, 10 AND 13 CLEARLY SPE CIFIES WITH RESPECT TO QUERIES RAISED BY THE ASSESSING OFF ICER. SO FAR AS, STATEMENT OF DEPRECIATION FOR THE YEAR ENDI NG 31/03/2002 IS CONCERNED, THE SAME HAS BEEN ATTACHED AND PRODUCED BEFORE THE LD. ASSESSING OFFICER (PAGE-59 OF THE PAPER BOOK). SO FAR AS, THE COMPLETION OF PUNE EXPR ESSWAY PROJECT IS CONCERNED, THE SAME HAS BEEN EXPLAINED V IDE ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 42 NOTE NO.12 (PAGE-91 OF THE PAPER BOOK) AND PAGE-59 IS THE PART OF TAX AUDIT REPORT. TOTALITY OF FACTS CLEARLY INDICATES THAT THE ASSESSEE MADE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS. THUS, THE REOPENING WAS DONE BY THE LD. ASSE SSING OFFICER MERELY ON THE BASIS OF CHANGE OF OPINION, A UDIT PARTY OBJECTION AND THE NOTICE WAS ISSUED BEYOND A PERIOD OF FOUR YEARS. CONSIDERING THE FACTUAL MATRIX AND T HE CASE LAWS DISCUSSED IN EARLIER PARAS OF THIS ORDER, WE F IND NO JUSTIFICATION IN THE ORDER OF THE LD. ASSESSING OFF ICER, THUS, IT IS HELD THAT THE ISSUANCE OF NOTICE BEYOND PERIO D OF FOUR YEARS/AUDIT OBJECTION/CHANGE OF OPINION IS NOT PERM ISSIBLE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. SINCE, ON LEGAL GROUND, THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED THEREFORE, WE REFRAIN OURSELVES TO GO INTO THE ALTERNATE GROUND. 4. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE (ITA NO.4519/MUM/2011), WHEREIN, THE DIRECTION TO T HE ASSESSING OFFICER TO DISALLOW DEPRECIATION AND DECI DE IN THE YEAR OF DISALLOWANCE HAS BEEN CHALLENGED. THE LD. C IT-DR, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 43 RAISED WHEREAS THE LD. COUNSEL FOR THE ASSESSEE DEF ENDED THE IMPUGNED ORDER. 4.1. WE HAVE PERUSED THE OBSERVATION MADE BY THE LD. ASSESSING OFFICER AND THE FACTUAL MATRIX CONSID ERED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). THE GI ST OF GRS RECEIVED WITH REFERENCE TO IRDP NAGPUR PROJECTS , IN THE NATURE OF PROMOTER CONTRIBUTIONS AND WITH NO CONDITIONS ATTACHED THERETO, THE DETAILS ARE AVAILA BLE IN PARA-5.6 OF THE IMPUGNED ORDER. IT WAS CLEAR FROM T HE NOTE ITSELF THAT SAID GRANTS WERE RECEIVED FROM THE GOVE RNMENT BODIES FROM TIME TO TIME FOR DEVELOPMENT OF INFRAST RUCTURE. THE STAND OF THE REVENUE/ASSESSING OFFICER/LD. CIT- DR IS THAT THE ASSESSEE DID NOT EXPLAIN AS TO WHY THE GRA NTS WHICH WERE IN THE NATURE OF CAPITAL SUBSIDY WERE NO T REDUCED FROM RESPECTIVE ASSET BEFORE CLAIMING DEPRE CIATION. WE HAVE PERUSED THE SUBMISSIONS FROM BOTH SIDES AND ARE IN AGREEMENT WITH THE FINDING OF THE LD. COMMISSION ER OF INCOME TAX (APPEAL) THAT NO DEPRECIATION WAS CLAIME D THIS YEAR AS NONE OF THE PROJECT WAS COMPLETED. THE AMOU NT WAS RELATED TO INCOMPLETE PROJECTS OF PWD DEPARTMENT WH ICH WERE TAKEN OVER BY THE ASSESSEE. THE AMOUNT OF RS.3 8.62 ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 44 CRORES WAS RECEIVED BY THE ASSESSEE AND WAS SPENT O N PROJECT IN QUESTION. THUS, WE FIND INFIRMITY IN THE DIRECTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) TO T HE ASSESSING OFFICER WITH RESPECT TO DECIDE THE YEAR O F DISALLOWANCE OF DEPRECIATION. THUS, THE APPEAL OF T HE REVENUE IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED . FINALLY, THE APPEAL OF THE ASSESSEE ALLOWED AND THA T OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 25/01/2018. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ( DATED : 25/01/2018 F{X~{T? P.S / /. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$ ! , 0 *+' *! 5 , % / DR, ITA NOS. 4519 & 4900/MUM/20111 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LTD. 45 ITAT, MUMBAI 6. 6' 7% / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI