M/s. Sohna Forge (P) Ltd., New Delhi V. JCIT (OSD), New Delhi

ITA 4956/DEL/2012

• Counselvise Citation: 495620114 RSA 2012
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 19-09-2012

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI FRIDAY G BENCH BEFORE SHRI A.N. PAHUJA, AM & SHRI C.M. GARG, JM ITA NO.4956/DEL/2012 ASSESSMENT YEAR:2004-05 M/S SOHNA FORGE (P) LTD., A-9/19, FIRST FLOOR, VASANT VIHAR, NEW DELHI V/S . JT. CIT (OSD), CIRCLE-9(1), NEW DELHI [PAN :AAACS 2110 E] (APPLICANT) (RESPONDENT) ASSESSEE BY S/SHRI DEEPAK AGRAWAL & R.K. CHAUHAN, ARS REVENUE BY DR. DEEPAK SEHGAL, DR DATE OF HEARING 20-11-2012 DATE OF PRONOUNCEMENT 14-12-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 19.09.2012 BY THE ASSESSEE AGA INST AN ORDER DATED 05.06.2012 OF THE LD. CIT(A)-XII, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ACTION OF LD. A.O. IN REOPENING THE CASE U/S 148 ON THE GR OUND THAT DEPRECIATION HAS BEEN CLAIMED BY THE ASSESSEE WITHO UT THERE BEING ANY BUSINESS, COMMERCIAL AND MANUFACTUR ING ACTIVITY WHEREAS AS PER THE ASSESSEE THE ISSUE OF A LLOWANCE OF DEPRECIATION HAS ALREADY ATTAINED FINALITY IN AS SESSEE'S OWN WEALTH TAX CASES FOR THE A.Y'S 2001-02 TO 2006- 07 WHEREIN THE HON'BLE DELHI HIGH COURT WHILE DISMISSI NG THE DEPARTMENTAL APPEAL IN WT A NO. 1 TO 6 OF 2011 HELD THAT IN THE IMPUGNED YEAR THE ASSESSEE HAD CARRIED ON BUSIN ESS UTILIZING THE ASSETS. 2. (A) THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CON FIRMING THE ADDITION OF ` .718230.00 MADE BY THE LD. A.O. ON THE GROUND THAT NO INFORMATION WITH REGARD TO THESE EXPENDITUR E HAVE BEEN FURNISHED WHEREAS AS PER THE ASSESSEE THE MATT ER WAS REOPENED UNDER SECTION 148 AND REASONS RECORDED WER E NOT ITA NO.4956/DEL./2012 2 INCLUDING THE DETAILS OF EXPENDITURE, THEREFORE THE ROVING ENQUIRY MADE BY THE LD. A.O. WITH REGARD TO THE DET AILS OF THE EXPENDITURE WAS UN-JURISDICTIONAL. B) THAT THE LD. CIT{A) WAS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF ` .718230.00 MADE BY THE LD. A.O. ON THE GROUND THAT NO INFORMATION WITH REGARD TO THESE EXPENDITUR E HAVE BEEN FURNISHED WHEREAS AS PER THE ASSESSEE NO OPPOR TUNITY WAS EVER GRANTED BY THE LD. A.O. AND DISALLOWANCE O F SAME IS AD-HOC AND WITHOUT THERE BEING ANY EVIDENCE ON R ECORD. C) THAT ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE ALSO DISPUTES THE QUANTUM OF THE ADDITION CONFIRMED BY THE LD. CIT(A). 3. THAT THE ASSESSEE PRAYS FOR ANY CONSEQUENTIAL R ELIEF AND/OR LEGAL CLAIM ARISING OUT OF THIS APPEAL BEFORE THE D ISPOSAL OF THE SAME. 4. THAT THE ASSESSEE PRAYS FOR ANY ADDITION, DELET ION, AMENDMENT AND MODIFICATION IN THE GROUNDS OF APPEAL BEFORE THE DISPOSAL OF THE SAME IN THE INTEREST OF SUBSTAN TIAL JUSTICE TO THE ASSESSEE. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` ` 7,65,495/- FILED ON 26.10.2004 BY THE ASSESSEE, WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT). SUBSEQUENTLY, THE ASSESSING OFFICER[AO IN SHORT] RE CORDED THE FOLLOWING REASONS, IN WRITING, IN TERMS OF PROVISIONS OF SEC. 148(2) O F THE ACT:- DURING THE YEAR, THE ASSESSEE HAS CLAIMED DEPRECIA TION OF ` `1,58,494/- AS PER THE INCOME TAX ACT. SINCE, NO B USINESS OR COMMERCIAL OR MANUFACTURING ACTIVITY WERE CARRIED O UT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE WAS NOT ELIGIBLE TO CLAIM ANY DEPRECIATION. HENCE, THE DEPRECIATION CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE. 2.1 ACCORDINGLY ,THE AO ISSUED A NOTICE U/S 148 OF THE ACT ON 31.03.2011. IN RESPONSE, THE ASSESSEE FILED A LETT ER DATED 18.04.2011 STATING THAT RETURN FILED ORIGINALLY MAY BE TREATED AS RE TURN IN RESPONSE TO NOTICE U/S 148 ITA NO.4956/DEL./2012 3 OF THE ACT. AFTER HAVING A COPY OF REASONS RECORDE D BY THE AO, THE ASSESSEE FILED OBJECTIONS AGAINST THE REASONS, WHICH WERE DI SPOSED OF BY THE AO ON 1.11.2011. TO A QUERY BY THE AO, THE ASSESSEE SUBMI TTED VIDE LETTER DATED 16.11.2011 AS UNDER:- 'THE INFORMATION CALLED FOR BY YOUR GOOD SELF HAS N O RELEVANCE WITH THE ISSUE OF DEPRECIATION DISALLOWANCE WHICH IS PAR T OF THE REASONS RECORDED BY YOUR GOOD SELF SINCE THE ASSESSEE NEVER CLAIMED THAT IT IS CARRYING OUT ANY MANUFACTURING ACTIVITY SO TH E CALLING OF INFORMATION IN THIS REGARD HAS NO RELEVANCE. THE AS SESSEE HAS ONLY CARRIED OUT BUSINESS ACTIVITY FROM WHICH COMMISSION INCOME WAS EARNED. IT IS NOWHERE DISPUTED IN THE ORDER DISPOSI NG OFF OBJECTIONS THAT ASSESSES COMPANY WAS NOT DOING ANY BUSINESS. T HE ONLY DISPUTE CREATED IN THE ORDER OF DISPOSING OBJECTION S WAS REGARDING MANUFACTURING ACTIVITY FOR WHICH THE ASSESSEE COMPA NY ITSELF ADMITTED THAT IT WAS NOT CARRIED OUT AS MANUFACTURI NG ACTIVITY. CALLING OF INFORMATION REGARDING COMPUTATION OF LON G TERM CAPITAL GAIN HAS NO RELEVANCE TO THE CLAIMING OF DEPRECIATI ON. MOREOVER, MOST OF THE INFORMATION CALLED BY YOUR GOOD SELF IS THE PART OF THE COMPUTATION AND BALANCE SHEET THAT FILED ALONG WITH INCOME TAX RETURN. SINCE THE ASSESSEE COMPANY IS CLAIMING DEPRECIATION ONLY BECAUSE THE ASSET USED FOR BUSINESS ACTIVITIES WHICH FACT I S NOT IN DISPUTE. SO THE CALLING OF GENERAL INFORMATION-HAS NO RELEVANCE TO THE FACT OF THE ISSUE INVOLVED. IN VIEW OF ABOVE, KINDLY DROP THE A SSESSMENT PROCEEDING INITIATED U/S 147 OF THE INCOME TAX ACT. ' 2.2 HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT IN THE PRECEDING AY 2003-04 ALSO , THE ASSESSMENT WAS REOPENED AND THEREAFTER ,COMPLETED WITH THE DISALL OWANCE OF CLAIM FOR DEPRECIATION ON THE GROUND THAT NO BUSINESS OR COMM ERCIAL OR MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE IN THE PRE CEDING SO MANY YEARS. SINCE THE LAND SOLD BY THE ASSESSEE WAS PART OF LAND ON W HICH BUILDING WAS CONSTRUCTED WHILE NO COMMERCIAL ACTIVITIES WERE TAKEN IN THE PR ECEDING SEVERAL YEARS, THE AO DISALLOWED THE CLAIM OF DEPRECIATION OF ` `1,58,494/-. BESIDE AN AMOUNT OF ` `7,18,230/- WAS DISALLOWED ON ACCOUNT OF REPAIRS A ND MAINTENANCE OF BUILDING, ITA NO.4956/DEL./2012 4 LEGAL AND FILING FEE, TELEPHONE EXPENSES, SALARIES ETC. , THE ASSESSEE HAVING NOT SUBMITTED COPY OF BILLS, VOUCHERS ETC. CALLED FOR I N TERMS OF A NOTICE DATED 01.11.2011ISSUED U/S 142(1) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) WHILE REFERRING TO DE CISION DATED 18.7.2011 OF HONBLE JURISDICTIONAL HIGH COURT IN T HE ASSESSEES OWN CASE FOR THE AY 2001-02 TO 2006-07 IN WTA NOS. 1 TO 6OF 2011,UPH ELD THE VALIDITY OF REOPENING OF THE ASSESSMENT AS UNDER:- GROUND NO.1: I HAVE PERUSED THE FACTS STATED IN TH E ASSESSMENT ORDER AS WELL AS THE FACTS STATED BY THE ASSESSEE IN HIS SUBMISSIONS AND THE ITAT AND THE HONBLE HIGH COURT IN ASSESSEES OWN CASE. IN THIS CASE THE RETURN FOR A SSESSMENT YEAR 2004-05, WAS FILED ON 26.10.04 DECLARING TAXABLE IN COME OF ` .7,65,495/-. THE ORIGINAL ASSESSMENT WAS MADE U/S 1 43(1) OF THE LT. ACT. A NOTICE UNDER SECTION 148 WAS ISSUED ON 31.3.11 AF TER RECORDING THE FOLLOWING REASONS:- 'DURING THE YEAR, THE ASSESSEE HAS CLAIMED DEPRECIA TION OF ` .1,58,494/- AS PER THE INCOME TAX ACT. SINCE, NO BU SINESS OR COMMERCIAL OR MANUFACTURING ACTIVITY WERE CARRIED O UT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE WAS NOT ELIGIBLE TO CLAIM ANY DEPRECIATION. HENCE, THE DEPRECIATION CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE. ' ALTHOUGH THE ASSESSEE HAS ITAT 'G' BENCH AND DELHI HIGH COURT'S ORDER IN HIS FAVOUR, BUT WHEN THE ASSESSING OFFICER HAD REOPENED THE CASE AND ISSUED NOTICE ON 31.3.2010, AT THE TIM E OF REOPENING HE COULD NOT TAKE'-BENEFIT OF DELHI HIGH COURT'S OR DER WHICH WAS PASSED ON 18, JULY,2011. IN VIEW OF THE FACTS STATED ABOVE, I UPHOLD THE REO PENING PROCEEDINGS U/S 148 OF THE LT. ACT. 3.1 AS REGARDS CLAIM OF DEPRECIATION, THE LD. CIT( A) FOLLOWED THE AFORESAID DECISION OF HONBLE DELHI HIGH COURT AND ALLOWED THE CLAIM IN THE YEAR UNDER CONSIDERATION , HOLDING AS UNDER:- ITA NO.4956/DEL./2012 5 GROUND N0.2 I HAVE PERUSED THE FACTS STATED IN THE SUBMISSION AND AS WELL AS IN THE ASSESSMENT ORDER PASSED BY THE ASSES SING OFFICER. THE FACTS ARE STATED IN THE HON'BLE DELHI HIGH COUR T'S ORDER, DETAILS ARE AT PAGE 5 & 8 OF THIS ORDER. FOLLOWING THE DECI SION OF DELHI HIGH COURT, DEPRECIATION OF ` .1,58,494/- HAS BEEN ALLOWED ON MERITS. THE SAME ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE'S OWN CASE FOR ASSTT. YEAR 2003-04 VIDE MY ORDER DATED 24.8.11. HE NCE THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS GROUND. 3.2. REGARDING DISALLOWANCE OF EXPENSES OF ` `7,18,230/-, THE LD. CIT(A) CONCLUDED AS UNDER:- GROUND NO. 3(A)&(B) I HAVE PERUSED THE FACTS STATED IN THE SUBMISSION A ND AS WELL AS IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. THE ASSESSEE IN HIS SUBMISSION HAS STATED THAT THE AO H AS WRONGLY MADE AN ADDITION OF R ` .7,18,230 ON ACCOUNT OF DISALLOWANCE OF EXPENSE. THE ASSESSEE IN HIS SUBMISSION HAS STATED AS UNDER: 'THAT DURING THE REASSESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER EXCEEDED HIS THE JURISDICTION BY ASKING FOR THE DETAILS OF OTHER EXPENDITURES CLAIMED BY THE AS SESSEE, WHICH WAS DECLINED BY THE ASSESSEE AS THE SAME DID NOT FALL UNDER HIS JURISDICTION WHEN THE MATTER HAVE BEEN RE - OPENED ON SPECIFIC ISSUE, HOWEVER WITHOUT EXAMINING THE SAID ISSUE THE LD. A.O. MADE AD-HOC ADDITION AMOUNT ING TO RS.7, 18,230/-. ' WHEREAS, THE ASSESSING OFFICER IN HIS ASSESSMENT OR DER HAS STATED AS UNDER:- 'THE ASSESSEE WAS ASKED TO FILE LEDGER ACCOUNT OF TELEPHONE EXPENSES, SALARIES ETC. ALONGWITH COPY OF BILLS VOUCHERS ETC. VIDE NOTICE DATED. 1.11.2011. THE ASSESSEE VIDE ITS LETTER DATED 16.11.20.1 1 HAS STATED THAT HIS HAS NO RELEVANCE WITH THE REASONS RECORDED FOR REOPENING THE ASSESSMENT. THIS SHOWS THAT THE ASSESSEE HAS NOT MAINTAINED ANY BILLS OR VOUCHERS IN ITA NO.4956/DEL./2012 6 RESPECT OF THE EXPENSES CLAIMED AND AS THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY THE EXPENSES CLAIMED AT RS.7,18,230/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. ' IN VIEW OF THE FACTS STATED ABOVE, I AM OF THE VIEW THAT ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING OFFICER CAN L OOK INTO THE DETAILS WHICH ARE NECESSARY FOR MAKING THE ASSESSME NT. IN THIS CASE ASSESSING OFFICER HAD ALSO GIVEN AN OPPORTUNIT Y TO THE ASSESSEE VIDE NOTICE U/S 142(1) DATED 1.11.11 BUT T HE ASSESSEE CHOSE NOT FILE ANY DETAILS HENCE IN ABSENCE OF THES E DETAILS THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.7,18,2 301- FOR WANT OF PROOF IS BEING CONFIRMED. HENCE KEEPING IN VIEW OF THE ABOVE FACTS, THE ADDITION MADE BY THE AO IS BEING UPHELD. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSESSEE WHILE REFERRING TO DECISION DATED 18 TH JULY, 2011 OF THE HONBLE HIGH COURT IN THE ASSESSEES OWN CASE IN THE WEALTH TAX PROCEEDINGS F OR THE AYS 2001-02 TO 2006-07 IN WTA NOS.1 TO 6 OF 2011 AND THE DECISION DATED 9 TH APRIL, 2010 OF THE TRIBUNAL IN WTA NOS.6 TO11/DEL./2010 AS ALSO THE DE CISION OF THE LD. CIT(A) FOR THE AY 2003-04 ARGUED THAT THE ASSESSEE HAVING CARR IED ON BUSINESS ACTIVITY IN THE YEAR UNDER CONSIDERATION, AS CONCLUDED BY THE H ONBLE HIGH COURT, LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VALIDITY OF REOP ENING ON THE ISSUE OF DEPRECIATION. AS REGARDS DISALLOWANCE OF EXPENSES, THE LD. AR ARGUED THAT SINCE VALIDITY OF REOPENING OF ASSESSMENT IS BEING QUESTI ONED ON THE ISSUE OF DEPRECIATION, THE LD. CIT(A) WAS NOT JUSTIFIED IN T RAVELLING BEYOND THE REASONS RECORDED BY THE AO AND THEREBY, UPHOLDING THE DISAL LOWANCE. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. THE ISSUE BEFORE US RELATES TO VALIDITY OF RE OPENING OF THE ASSESSMENT ON THE BASIS OF AFORESAID REASONS[EXTRACTED IN PARA 2 ABOVE] RECORDED BY THE AO, BEFORE ISSUING NOTICE U/S 148 OF THE ACT ON 31.3.20 11. INDISPUTABLY, THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(1) OF THE ACT IN PURSUANCE TO ITA NO.4956/DEL./2012 7 RETURN FILED ON 26.10.2004. IN THE ASSESSMENT UNDER SECTION 143(1) OF THE ACT INQUIRY RELATING TO THE INCOME OF AN ASSESSEE IS NO T MADE. UNDER SECTION 147 OF THE ACT, AS SUBSTITUTED BY THE DIRECT TAX LAWS (AME NDMENT) ACT, 1987, WITH EFFECT FROM 1-4-1989, THE ONLY REQUIREMENT FOR INIT IATING PROCEEDING IS THAT THE AO SHOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX, HAS ESCAPED ASSESSMENT. HOWEVER, WHERE AN ASSESSMENT HAS BEEN M ADE UNDER SUB-SECTION (3) OF SECTION 143, THE ACTION IS REQUIRED TO BE TA KEN WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. EXPLANATION 1 PROVIDES THAT THE PROD UCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHI CH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE AO W ILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO TO SEC. 147 OF THE ACT. EXPLANATION 2(B) & (C), INTER ALIA, STIPULATE DEEME D CASES OF INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT WHERE EXCESSIVE DEDUCTI ON OR RELIEF HAS BEEN CLAIMED IN THE RETURN. IN THE INSTANT CASE, RETURN WAS MERELY ACCEPTED U/S 143(1) OF THE ACT . IN THE ASSESSMENT MADE WITHIN THE FRAM EWORK OF THE PROVISIONS OF SECTION 143(1) OF THE ACT ITSELF, THE AO NEITHER CA LLS UPON THE ASSESSEE TO APPEAR PERSONALLY NOR SEEKS PRODUCTION OF ANY DOCUMENT. TH E ASSESSMENT IS MADE ON THE BASIS OF RETURN ONLY AND WITHOUT MAKING ANY ADJ USTMENTS. THERE IS NO SCRUTINY AT ALL. IN THESE CIRCUMSTANCES, IF THE CONDITIONS M ENTIONED IN SECTION 147 OF THE ACT ARE FULFILLED, THE JURISDICTION CAN BE VALIDLY EXERCISED IN SUCH A CASE. IN THE INSTANT CASE, THE AO RECORDED IN THE REASONS[PG.11O F THE PB & EXTRACTED IN PARA 2 ABOVE] THAT SINCE NO BUSINESS OR COMMERCIAL OR M ANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM DEPRECIATION OF ` 1,58,494/-.ACCORDINGLY ASSESSMENT WAS REOPENED. THE BASIS FOR THE AFORESAID REASONS APPEA RS TO BE ORDER DATED 29.9.2009 OF THE LD. CWT(A) FOR THE AY 2004-05,WHER EIN THE LD. CWT(A) ,INTER ALIA, OBSERVED THAT ITA NO.4956/DEL./2012 8 II)THE AO MAY LOOK IN TO THE ISSUE OF REOPENING OF INCOME-TAX PROCEEDINGS TO DISALLOW DEPRECIATION SINCE OBVIOUSLY NO COMMERCIAL ACTIVITY IS ADMITTEDLY BEING CARRIED OUT BY THE ASSESSEE. III) IT IS ON RECORD AND NOT CONTESTED BY THE ASSES SEE/AR THAT THE COMMERCIAL ACTIVITY WAS NOT TAKING PLACE ON THE SAID PREMISE S . 6. THE FATE OF AFORESAID FINDINGS OF THE LD. CWT(A ) IN HER DATED 29.9.2009 IN FURTHER APPEAL IS NOT KNOWN NOR THE LD. AR OR DR TH REW ANY LIGHT ON THAT ASPECT. HOWEVER, WE FIND THAT THE ITAT VIDE THEIR ORDER DAT ED 9.4.2010 IN WTA NOS. 6 TO 11/DEL./2010 IN THE ASSESSEES OWN CASE FOR THE AYS 2001-02 TO 2006-07 IN APPEALS AGAINST A COMMON ORDER DATED 23.11.2009 OF THE LD. CWT(A) CONCLUDED THAT THAT THE LAND(.PLOT NO. 14/6,SITE IV,SAHIBABAD INDUSTRIAL AREA, GHAZIABAD] OR BUILDING CONSTRUCTED THEREON WAS UNDOUBTEDLY USED B Y THE ASSESSEE FOR ITS BUSINESS. THE SAID OF THE TRIBUNAL HAS SUBSEQUENTL Y BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE THEIR ORDER DATED 18.7.2011 IN WTA NOS. 1 TO 6 OF 2010 IN THE FOLLOWING TERMS: . 3. THE CIT(A) TOOK NOTE OF THE DETAILS OF JOB WORK FURNISHED BY THE RESPONDENT. HOWEVER, HE WAS OF TH E VIEW THAT THIS CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAD DONE JO B WORK DID NOT REPOSE ANY CONFIDENCE IN ABSENCE OF REQUISITE DETAI LS AND THERE WAS NO PROOF SUBMITTED BY THE ASSESSEE THAT IT HAD DONE SOME JOB WORK. THE CIT(A) EVEN CALLED UPON THE ASSESSING OF FICER TO LOOK INTO THE ISSUE OF REOPENING OF THE INCOME TAX PROCE EDINGS TO DISALLOW DEPRECIATION, AS ACCORDING TO HIM, NO COMM ERCIAL ACTIVITIES WERE CARRIED OUT BY THE ASSESSEE. 4. THE TRIBUNAL HAS, AS NOTICED ABOVE, ACCEPTED TH E APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE HA D DOING THE BUSINESS IN THE FORM OF AFORESAID JOB WORK AND THER EFORE, THE PROPERTY IN QUESTION WOULD BE EXEMPT FROM THE WEALT H TAX, AS PER SECTION 2(EA) OF THE WEALTH TAX ACT, WHICH DEFINES ASSET AND SPECIFICALLY EXCLUDES THE ASSET OCCUPIED BY THE ASS ESSEE FOR THE PURPOSE OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM. 5. THE TRIBUNAL TOOK NOTE OF A VERY CRUCIAL FACT, VIZ., FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07, THE ASSESS EE HAD FILED INCOME TAX RETURNS IN WHICH THE ASSESSEE HAD SHOWN BUSINESS INCOME. IT HAD ALSO CLAIMED DEPRECIATION ON THE AF ORESAID BUILDING ITA NO.4956/DEL./2012 9 CONSTRUCTED BY THE ASSESSEE ON THE LEASEHOLD LAND I N QUESTION AND THIS DEPRECIATION WAS ALLOWED BY THE ASSESSING OFFI CER IN ALL THESE YEARS. THE TRIBUNAL FURTHER FOUND THAT THOUGH NO R EGULAR ASSESSMENT U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2001- 02 TO 2004-05 HAD BEEN MADE BY THE ASSESSING OFFICE R AND IN THOSE ASSESSMENT YEARS, THE ASSESSMENT WAS COMPLETE D U/S 143(1) OF THE ACT, INSOFAR AS THE ASSESSMENT YEARS 2005-06 TO 2006-07 ARE CONCERNED, THE CASE OF THE ASSESSEE FOR THESE YEARS WAS SELECTED FOR SCRUTINY AND REGULAR ASSESSMENT U/ S 143(3) OF THE ACT HAD BEEN MADE WHEREIN THE ASSESSEES CLAIM OF D EPRECIATION ON THE BUILDING @10% ON WRITTEN DOWN VALUE HAD BEEN ALLOWED. AS MENTIONED ABOVE, IN THESE ASSESSMENT YEARS, THE ASS ESSEE HAD SHOWN INCOME UNDER THE HEAD PROFITS AND GAINS OF B USINESS OR PROFESSION, WHICH WAS ALSO ACCEPTED BY THE ASSESSI NG OFFICER. EVEN WHEN THE CIT(A) WHILE DISCUSSING THE CASE OF T HE ASSESSEE UNDER THE WEALTH TAX ACT HAD OPINED THAT THE CASE O F THE ASSESSEE UNDER INCOME TAX ACT BE REOPENED, NO SUCH STEPS WER E TAKEN BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF THE A CT HAD BECOME FINAL. THIS FACT WAS SPECIALLY TAKEN NOTE OF BY TH E TRIBUNAL. 6. FROM THE AFORESAID NARRATION, IT IS CLEAR THAT NOT ONLY IN THE ASSESSMENT YEARS IN QUESTION, THE ASSESSEE HAD CARR IED ON ITS BUSINESS UTILIZING THE AFORESAID ASSET FOR THIS PUR POSE, BUT THIS DECISION WAS EVEN ACCEPTED BY THE DEPARTMENT AS WEL L. 7. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION TH AT THE ORDER OF THE TRIBUNAL IS WITHOUT BLEMISH. WE ARE, THUS, OF T HE VIEW THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. THESE APPEALS A RE ACCORDINGLY DISMISSED. 6.1 THUS, AS ON THE DATE OF RECORDING REASONS AN D ISSUANCE OF NOTICE U/S 148 OF THE ACT ON 31.3.2011, THE AO HAD BEFORE HIM AFORESA ID FINDINGS OF FACTS RECORDED BY THE ITAT IN THEIR ORDER DATED 9.4.2010 THAT THE LAND OR BUILDING CONSTRUCTED THEREON WAS UNDOUBTEDLY USED BY THE ASSESSEE FOR IT S BUSINESS. THE LD. DR DID NOT PLACE BEFORE US ANY MATERIAL FOR THE BASIS RE CORDED BY THE AO IN HIS AFORESAID REASONS THAT NO BUSINESS OR COMMERCIAL OR MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER C ONSIDERATION. THE POWER OF ASSESSMENT OR REASSESSMENT OF ANY INCOME CHARGEABLE TO TAX THAT HAVE ESCAPED ASSESSMENT HAS BEEN PROVIDED UNDER SECTION 147 R W S 148 OF INCOME TAX ACT OF 1961. IF THE AO HAS THE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT THEN THE ASSESSING OFFICER MAY S UBJECT TO THE PROVISIONS OF ITA NO.4956/DEL./2012 10 SECTION 147 TO 153 ASSESS OR REASSESS SUCH INCOME. IT IS SETTLED POSITION OF LAW THAT THE AO MUST HAVE TANGIBLE MATERIAL ON THE BAS IS OF WHICH HE CAN HAVE A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. IN THE PRESENT CASE, IT IS SUBMITTED THAT THERE WAS A TOTAL ABSENCE OF ANY TANGIBLE MATERIAL TO FORM A BELIEF. RATHER THE FINDINGS OF THE ITAT IN WEALTH T AX PROCEEDINGS FOR THE AYS 2001-02 TO 2006-07 CONTRADICT THE REASONS RECORDED BY THE AO BEFORE ISSUING NOTICE U/S 148 OF THE ACT ON 31.3.2011.THE AO HAS P OWER TO REOPEN, PROVIDED THERE IS `TANGIBLE MATERIAL' TO COME TO THE CONCLUS ION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LINK WI TH THE FORMATION OF THE BELIEF. HONBLE JURISDICTIONAL HIGH COURT IN CIT VS . JAGSON INTERNATIONAL LTD.,345 ITR 414(DEL.) HELD THAT THE 'REASONS TO BELIEVE' HA VE TO BE TESTED ON THE FACTS/MATERIAL WHEN THE REASONS ARE RECORDED. IN TH E INSTANT CASE, AS ON THE DATE OF RECORDING OF REASONS AND ISSUANCE OF NOTICE U/S 148 OF THE ACT, THE FINDINGS OF THE ITAT IN THEIR ORDER DATED 9.4.2011 STARE IN THE FACE OF THE AO AND THEREFORE, WE ARE OF THE VIEW THAT REASONS RECORDED BY HIM AR E TOTALLY BASELESS. IT MAY WORTH BE MENTIONING THAT THE LD. CIT(A) QUASHED THE REASSESSMENT PROCEEDINGS FOR THE AY 2003-04 ON SIMILAR FACTS VIDE HER ORDER DATED 24.8.2011. IN VIEW OF THE FOREGOING, IN OUR OPINION, THERE WAS NO TANGIBLE MA TERIAL BEFORE THE AO, AS EXPLAINED IN THE JUDGMENT OF THE HONBLE SUPREME CO URT IN CIT VS. KELVINATOR OF INDIA LTD.[2010] 320 ITR 561 TO FORM A CONCLUSION T HAT INCOME HAS ESCAPED ASSESSMENT. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE VERY INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT STANDS VITIATED AND AS SUCH CANNOT BE SUSTAINED, THE INGRE DIENTS OF SECTION 147 HAVING NOT BEEN FULFILLED. IT IS WELL-SETTLED THAT IF A NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 OF THE ACT BEING AVAILABLE TO TH E AO, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WILL BE WITHOUT JUR ISDICTION AND THUS, LIABLE TO BE STRUCK DOWN . IN VIEW THEREOF, W E HAVE NO HESITATION IN REVERSING THE FINDINGS OF THE LD. CI T(A) ON THE ISSUE OF VALIDITY OF REOPENING OF THE ASSESSMENT AND ACCORDI NGLY, QUASH THE REASSESSMENT ORDER. CONSEQUENTLY, GROUND NO. 1 IN T HE APPEAL IS ITA NO.4956/DEL./2012 11 ALLOWED. AS A COROLLARY, GROUND NO.2 IN THE APPE AL DOES NOT SURVIVE FOR OUR ADJUDICATION AND IS , THEREFORE, TREATED AS INFRUC TUOUS. 7. GROUND NO.3 IN THE APPEAL ,BEING GENERAL IN NA TURE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITION AL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO. 4 IN TH E APPEAL, ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 8. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US . 9. IN THE RESULT, APPEAL IS ALLOWED. SD/- SD/- (C.M. GARG) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. JT. CIT (OSD),CIRCLE-9(1),NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-XII, NEW DELHI 5. DR, ITAT, FRIDAY G BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT