M/S. ACIT-1(1), MUMBAI V. THE ACC LTD, MUMBAI

ITA 5101/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7415 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 11-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYA SHANKER
• Assessee Lawyers: SOUMAN ADAK
• Keywords: Reopening of assessment; Retrospective amendment; Tangible material; Difference of opinion; Revised return; Reason to believe; Change of opinion; Reassessment proceedings; Capital expenditure
• Section: 143(3); 115JB; 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI. BEFORE SHRI R.K. GUPTA, J.M. AND SHRI J. SUDHAKAR REDDY, A.M. I.T.A. NO. 5 101/MUM/2008. ASSESSMENT YEAR : 2001-02. ASSTT. COMMISSIONER OF M/S ACC LTD., INCOME TAX 1(1), MUMBAI. VS. CEMENT HOUSE, 121, M.K. ROAD, MUMBAI 400 020. PAN : AAACT 1507C APPELLANT RESPONDENT I.T.A. NO . 5067/MUM/2008 ASSESSMEN T YEAR : 2001-02. M/S ACC LTD., VS. DY. COMMISSIONER OF MUMBAI. INCOME TAX- CIR.1(1), MUMBAI. APPELLANT. RESPONDENT. DEPARTMENT BY : SHRI DAYA SHANKER. ASSESS EE BY : SHRI SOUMAN ADAK. O R D E R PER J. SUDHAKAR REDDY, A.M. THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS)-I, MUMBAI DATED 19-05-2008 FOR THE ASSESSMENT YEAR 2001-02. 2. FACTS IN BRIEF : THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND IS E NGAGED, INTER ALIA, IN THE BUSINESS OF MANUFACTURE AND SELL OF CEMENT. IT FILED ITS 2 RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ON 31-10-2001 DECLARING NIL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT AND DECLARING RS.39,23,05,178/- AS BOOK PROFIT UNDER TH E PROVISIONS OF SECTION 115JB OF THE ACT. THE RETURN WAS PROCESSED U/S 143( 1) ON 27-02-2003. NO ADJUSTMENTS WERE MADE. SUBSEQUENTLY, THE ASSESSE E FILED A REVISED RETURN OF INCOME ON 28-03-2003. IN THIS REVISED RET URN, WHILE THE TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT REMAI NED UNCHANGED AT NIL, THE TOTAL INCOME UNDER THE PROVISIONS OF SECTI ON 115JB WAS COMPUTED AT RS.38,39,51,694/-. THE SAID REVISED RETURN WAS P ROCESSED U/S 143(1) ON 19-04-2004 WITHOUT ADJUSTMENTS. LATER THE ASSESSMEN T WAS TAKEN UP FOR SCRUTINY AND THE AO PASSED AN ORDER U/S 143(3) ON 2 2 ND MARCH, 2004 DETERMINING THE TOTAL INCOME AT RS.2,37,81,155/- UN DER THE NORMAL PROVISIONS OF THE ACT AND AT RS.43,47,37,384/- UNDE R THE PROVISIONS OF SECTION 115JB OF THE ACT. THEREAFTER THE AO FOR REA SONS RECORDED, REOPENED THE ASSESSMENT U/S 147 BY ISSUING A NOTICE U/S 148 ON 30-03- 2006. THIS NOTICE WAS SERVED ON THE ASSESSEE ON 31 -03-2006. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A LETTER DAT ED 18-04-2006 REQUESTING THAT THE REVISED RETURN FILED BY IT ON 28-03-2003 B E TREATED AS A RETURN FILED IN RESPONSE TO NOTICE U/S 148. THEREAFTER THE AO COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE I.T. ACT VIDE ORDER DATED 29-12-2006. IN THIS RE-OPENED ASSESSMENT ORDE R, THE AO RECOMPUTED THE BOOK PROFIT U/S 115JB AT RS.93,69,42 ,890/-. THE ASSESSEE CARRIED THE MATTER IN APPEAL WHEREIN IT HAD CHALLEN GED BOTH THE VALIDITY OF REOPENING OF ASSESSMENT AS WELL AS THE ADJUSTMENTS MADE. THE FIRST APPELLATE AUTHORITY REJECTED THE PLEA OF THE ASSES SEE THAT THE REOPENING WAS BAD IN LAW. ON THE OTHER ISSUES RAISED BY THE A SSESSEE, HE GRANTED PART RELIEF. 3 3. ON THE ISSUE OF REOPENING WHICH WAS DECIDED AGA INST THE ASSESSEE BY THE FIRST APPELLATE AUTHORITY, THE ASSE SSEE HAS COME IN APPEAL ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE AO IN INITIATING THE REASSESSMENT PROCEEDINGS U/S 147 WIT HOUT APPRECIATING THE FACT THAT THE SAME HAD BEEN DONE I N UTTER DISREGARD OF THE EXPRESS PROVISIONS OF THE ACT ON F RESH APPLICATION OF MIND ON THE SAME SET OF FACTS, MORE SO WHEN THERE WAS NO FAILURE ON THE PART OF THE APPELLANT TO DISC LOSE TRULY AND FULLY ALL THE FACTS NECESSARY FOR COMPLETION OF THE ORIGINAL ASSESSMENT U/S 143(3). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(APPEALS) ERRED IN NOT HOLDING THAT THE ORDER U/ S 143 R.W.S. 147 DATED 29-12-2006 PASSED BY THE AO IS UNJUSTIFIE D, ERRONEOUS AND NEEDS TO BE SUMMARILY. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(APPEALS) ERRED IN ALLOWING AN AMOUNT OF RS.3,37 ,14,000/- INSTEAD OF THE ACTUAL AMOUNT DISALLOWED BY THE AO O F RS.30,00,00,000/- BEING CAPITAL EXPENDITURE DEBITED TO THE PROFIT & LOSS A/C, WHILE COMPUTING BOOK PROFIT UNDER THE P ROVISIONS OF SECTION 115JB OF THE ACT. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, INSERTION OF ADDITIONAL PARAS IN THE APPEAL ORDER BEING PARAS NO 10 & 11, SEEMS TO BE ERRONEOUS AND WITHOUT ANY BASIS AND HEN CE NECESSARY DIRECTION MAY PLEASE BE GIVEN TO THE LD. CIT(APPEALS) FOR DELETION OF THOSE PARAS. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, MODIFY , RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HERE- IN-ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APP EAL. 4. REVENUE HAS FILED THE APPEAL ON THE FOLLOWING G ROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS,3,37,14 ,000/- IN COMPUTATION OF BOOK PROFIT U/S 115JB MADE BY THE AS SESSING OFFICER BEING THE ASSETS WRITTEN OFF AND DEBITED TO P & L ACCOUNT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN HOLDING THAT IN ORDER TO GIVE FULL EFFECT TO THE 4 PROVISIONS OF SEC. 115JB IT IS NECESSARY THAT THE C OMPUTATION OF BOOK PROFIT SHOULD BE STARTED BY TAKING THE DIFFERE NCE OF THE PROFIT TRANSFERRED TO THE BALANCE SHEET IN THE CURR ENT YEAR AND THE BALANCE OF THE PROFIT AND LOSS ACCOUNT BROUGHT FORWARD FROM PREVIOUS YEAR AND NOT WITH THE PROFIT BEFORE TAX AS CONTENDED BY THE ASSESSING OFFICER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE WRITE BACK OF EXCESS PROVISION AS A DEDUCTION IN TH E COMPUTATION OF BOOK PROFIT US 115JB. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE WITHDRAWAL FROM SHARE PREMIUM ACCOUNT AS A DEDUCTIO N IN COMPUTATION OF BOOK PROFIT U/S 115JB. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE IT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SEC. 234D O F THE ACT CANNOT BE APPLIED IN THE ASSESSEES CASE BECAUSE TH E REFUND GRANTED VIDE INTIMATION U/S 143(1) WAS PRIOR TO THE INSERTION OF SEC. 234D W.E.F. 01.06.2003. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN HOLDING THAT SINCE THE ASSESSMENT H AS ALREADY BEEN MADE U/S 143(3) OF THE ACT THE PROVISIONS OF S EC. 234D OF THE ACT ARE NOT APPLICABLE IN THE CASE OF REASSESSM ENT MADE U/S 147 OF THE ACT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN HOLDING THAT INTEREST U/S 234D IS N OT CHARGEABLE AS SEC 234D OF THE ACT WAS APPLICABLE FROM 01.06.20 03. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN DELETING THE ADDITION OF NOTIONAL E XPENSES OFRS.31,17,643/- FOR EARNING DIVIDEND INCOME TO THE BOOK PROFIT U/S 115JB OF THE ACT MADE BY THE ASSESSING OFFICER. 9. FURTHER, PLACED IN THE ABOVE FACTUAL AND LEGAL SCEN ARIO, THE IMPUGNED ORDER OF THE LTD. CIT(A) IS, THE APPELLANT PRAYS, CONTRARY TO LAW AND CONSEQUENTLY MERITS TO BE SET A SIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR WITH DRAW THE AFORESAID GROUND OF APPEAL. 5. WE FIRST TAKE UP ASSESSEES APPEAL. 5 MR. SAUMAN ADAK, LEARNED COUNSEL FOR THE ASSESSE E, SUBMITTED THAT THE REOPENING IN THIS CASE WAS DONE FOR THE FOLLOWING REASONS : A) TO MAKE ADDITION OF ASSETS WRITTEN OFF AND DEBITED TO PROFIT AND LOSS ACCOUNT, AND B) TO MODIFY THE BOOK PROFITS BY CONSIDERING THE SAME AS PROFIT BEFORE TAX AS PER PROFIT AND LOSS ACCOUNT. MR. SOUMAN ADAK SUBMITTED THAT THE AO HAD CONSIDERE D ALL THE ISSUES WHILE PASSING THE ORIGINAL ASSESSMENT ORDER U/S 143 (3).HE SUBMITTED THAT BOTH THE COMPUTATION OF INCOME UNDER THE NORMAL PRO VISIONS AS WELL AS THE COMPUTATION OF INCOME U/S 115JB WERE DONE BY TH E AO WHILE PASSING THE ORIGINAL ORDER U/S 143(3). HE POINTED OUT THAT THERE IS NO NEW INFORMATION OR NO NEW MATERIAL THAT HAS COME TO THE POSSESSION OF THE AO, SO AS TO ENABLE HIM TO COME TO A CONCLUSION THA T INCOME HAS ESCAPED ASSESSMENT WARRANTING REOPENING. HE CONTENDED THAT THIS IS A CASE OF MERE CHANGE IN OPINION. HE POINTED OUT THAT ALL THE MATE RIALS WERE AVAILABLE ON RECORD AND THERE WAS NO FAILURE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS AND IT WAS MERELY A CASE OF FRESH APPLICATION OF MIND BY THE AO TO THE SAME SET OF FACTS. HE SUBMITTED THAT REASSESSME NT IS BASED ON MERE CHANGE OF OPINION. HE FURTHER SUBMITTED THAT BOTH T HE REASONS CITED BY THE AO ARE SUCH ISSUES WHICH ARE DECIDED BY THE TRIBUNA LS AND COURTS IN FAVOUR OF THE ASSESSEE. HE RELIED ON THE FOLLOWING CASE LAWS : I) ASIAN PAINTS LTD. VS. DCIT AND ANOTHER 308 ITR 195. II) CIT VS. KELVINATOR OF INDIA LTD. 2010-TIOL-06-SC- IT-LB. III) ASTEROIDS TRADING AND INVESTMENT P. LTD. VS. DCIT 308 ITR 190 (BOM.). 6. ON GROUND NO. 3, THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT WHILE THE AO ADDED BACK A FIGURE OF RS.30 CRORES, THE 6 CIT(APPEALS) COMMITTED AN ERROR AND MENTIONED THE SAME AS RS.3,37,14,000/-. HE WANTED TO FIGURE RECTIFIED. 7. ON GROUND NO. 4 THE LEARNED COUNSEL SUBMITS THA T INSERTION OF PARA 10 IN THE CIT(APPEALS) ORDER APPEARS TO BE ERRONEOUS. 8. THE LEARNED DR. MR. DAYA SHANKER, ON THE OTHER HAND, CONTRADICTED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND ARGUED THAT THE AO NEED NOT BY LEGAL EVIDENCE COME TO AN ULTIMATE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT, WHIL E RECORDING REASONS FOR REOPENING. HE SUBMITTED THAT A PRIMA FACIE OPIN ION WOULD BE SUFFICIENT IN THE MATTER. HE POINTED OUT THAT THE A SSESSMENTS WERE REOPENED WITHIN FOUR YEARS FROM THE END OF THE ASSE SSMENT YEAR AND THE SITUATION IS COVERED BY THE PROVISO TO SECTION 147 OF THE ACT. HE RELIED ON PARA 3.6 OF THE CIT(APPEALS) ORDER. ON THE OTHER I SSUES, HE SUBMITTED THAT THE ASSESSEE SHOULD HAVE FILED RECTIFICATION P ETITION BEFORE THE FIRST APPELLATE AUTHORITY. 9. MR. DAYA SHANKER, THE LEARNED CIT-DR STARTED HI S ARGUMENTS ON THE REVENUES APPEAL AND SUBMITTED THA T GROUND NO. 1 IS ON THE ADDITION OF ASSETS WRITTEN OFF AND DEBITED TO P ROFIT AND LOSS ACCOUNT, IN COMPUTING BOOK PROFITS U/S 115JB. HE SUBMITTED THAT THE RETROSPECTIVE AMENDMENT HAS BEEN BROUGHT IN TO SECTION 115JB AND CLAUSE (I) IS ADDED TO EXPLANATION 1 WITH EFFECT FROM 01-04-2001 BY FIN ANCE ACT, 2009 AND HENCE THIS GROUND SHOULD BE DECIDED IN FAVOUR OF TH E REVENUE. 9.1 ON GROUND NO.2 WHICH RELATES TO MODIFICATION I N COMPUTATION OF BOOK PROFITS U/S 115JB, MR. DAYA SHA NKER THOUGH NO LEAVING HIS GROUND, AGREED THAT THE ISSUE IS COVERE D IN FAVOUR OF THE 7 ASSESSEE BY THE DECISION OF GULF OIL CORPORATION V S. A.C.I.T. 111 ITD 124 (HYD.). 9.2 ON GROUND NO. 3 WHICH PERTAINS TO NON EXCLUSI ON OF RIGHT BACK OF EXCESS PROVISION WHILE COMPUTING BOOK PROFI TS U/S 115JB, THE LEARNED DR RELIED ON THE ORDER OF THE AO. 9.3 ON GROUND NO. 4 WHICH IS ON THE WITHDRAWAL FRO M SHARE PREMIUM ACCOUNT IN COMPUTATION OF BOOK PROFITS, MR. DAYA SHANKER FAIRLY SUBMITTED THAT THE ISSUE IS DECIDED IN FAVOU R OF THE ASSESSEE IN ITS OWN CASE BY THE TRIBUNAL VIDE ORDER DATED 18-01-200 7. 9.4 COMING TO GROUND NO. 5, 6 AND 7 WHICH IS ON IM POSITION OF INTEREST U/S 234D, THE LEARNED DR SUBMITTED THAT TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECI AL BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. EKATA PROMOTERS 113 ITD 719 (DEL) (S.B.). 9.5 ON GROUND NO. 8 WHICH WAS ON THE ADDITION OF N OTIONAL EXPENSES FOR EARNING DIVIDEND INCOME TO BOOK PROFIT S U/S 115JB, HE RELIED ON THE ORDER OF THE AO. 9.6 ON GROUND NO. 9 AND 10 HE SUBMITTED THAT THE S AME ARE GENERAL IN NATURE. 10. MR. SOUMAN ADAK, LEARNED COUNSEL FOR THE ASSES SEE, JOINING THE ISSUE, SUBMITTED THAT ON GROUND NO.1 THE ASSESS EE HAS ACTUALLY WRITTEN OFF THE ASSETS IN QUESTION IN PROFIT AND LOSS ACCOU NT AND HENCE SUB-CLAUSE (I) TO EXPLANATION 1 TO SECTION 115JB DOES NOT APPL Y TO HIM AS IT REFERS TO A PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSE T. 8 10.1 ON GROUND NO. 2 HE SUBMITS THAT THE ISSUE IS COVERED IN HIS FAVOUR BY THE DECISION IN THE CASE OF GULF OIL CORP ORATION (SUPRA). 10.2 ON GROUND NO.3 HE SUBMITTED THAT THE AO HAS N OT ALLOWED DEDUCTION WITHOUT ASSIGNING ANY REASON WHATSOEVER I N THE REASSESSMENT ORDER, WHILE NOT MAKING SIMILAR ADJUSTMENTS IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143. HE SUBMITTED THAT SUCH UNREAS ONED ADJUSTMENT WAS RIGHTLY STRUCK DOWN BY THE LEARNED CIT(APPEALS). 10.3 ON GROUND NO.4 HE SUBMITTED THAT THE ISSUE HA S BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TR IBUNAL IN ITS OWN CASE FOR THE ASSESSMENT YEAR 1990-91. 10.4 ON GROUND NO. 5, 6 AND 7 HE SUBMITTED THAT TH E ISSUE IS COVERED IN HIS FAVOUR. 10.5 ON GROUND NO. 8 I.E. ADDITIONAL OF NOTIONAL E XPENSES FOR EARNING OF DIVIDEND INCOME, HE SUBMITTED THAT WHILE PASSING THE ORIGINAL ASSESSMENT ORDER, THE AO MADE A SIMILAR ADJUSTMENT AND ON APPEAL THE FIRST APPELLATE AUTHORITY HAS DELETED THE SAME AND THE REVENUE HAS NOT COME IN APPEAL. HE PLEADS THAT THE ISSUE HAS ATTAIN ED FINALITY. 11. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDER ATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL O F THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED, WE HOLD AS FOLLOWS. 12. THE FIRST APPELLATE AUTHORITY AT PARA 3.1 HAS BROUGHT OUT IN BRIEF THE REASONS FOR REOPENING. THE SAME IS EXTRAC TED BELOW FOR READY REFERENCE : 9 3.1 IN THE ASSESSMENT YEAR UNDER CONSIDERATION, R EGULAR ASSESSMENT WAS COMPLETED VIDE ORDER U/S 143(3) DATE D 22-03-2004. IN THE SAID ORDER VARIOUS ADDITIONS/DISALLOWANCES W ERE MADE IN BOTH COMPUTATION OF TOTAL INCOME UNDER THE PROVISIO NS OF THE ACT OTHER THAN SEC. 115JB AS WELL AS BOOK PROFIT U/S 11 5JB. THEREAFTER NOTICE U/S 148 WAS ISSUED ON 28-03-2006, INITIATING RE-ASSESSMENT PROCEEDINGS. FOLLOWING REASONS WERE RECORDED BY THE A.O. FOR REOPENING THE COMPLETED ASSESSMENT : A) TO MAKE ADDITION OF ASSETS WRITTEN OFF AND DEBITED TO THE PROFIT AND LOSS ACCOUNT AMOUNTING TO RS.30 CRORES I N COMPUTATION OF BOOK PROFIT AND B) TO MODIFY THE BOOK PROFIT BY CONSIDERING THE SAME A S PROFIT BEFORE TAX AS PER PROFIT AND LOSS ACCOUNT. THE AO HAS PASSED THE ORIGINAL ASSESSMENT ORDER U/S 143(3) AND HAS DETERMINED NOT ONLY THE INCOME UNDER THE NORMAL PRO VISIONS OF THE ACT BUT HAD ALSO COMPUTED THE BOOK PROFITS U/S 115JB. T HE UNDISPUTED FACT IS THAT NO NEW MATERIAL OR INFORMATION HAS COME TO THE NOTICE OF THE AO. ON THE VERY SAME SET OF FACTS AND ON THE VERY SAME ISS UES, THE AO HAS RECORDED THAT HE HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT ON AN ADDITION OF ASSETS WRITTEN OFF AND ON THE ISSUE OF STARTING POINT OF PROFITS FOR THE PURPOSE OF COMPUTATION OF BOOK PROFITS. IN OUR HUMBLE OPINION, THIS IS NOT PERMITTED IN LAW. THE J URISDICTIONAL HIGH COURT IN THE CASE OF ASIAN PAINTS LTD.(SUPRA) HELD AS FOLLOWS : IN A SITUATION WHERE ACCORDING TO THE AO HE FAILE D TO APPLY HIS MIND TO THE RELEVANT MATERIAL IN MAKING THE ASS ESSMENT ORDER, HE CANNOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPE N THE ASSESSMENT BY TAKING RECOURSE TO THE PROVISIONS OF S. 147. THE LEGISLATURE HAS NOT CONFERRED POWER ON THE AO TO RE VIEW ITS OWN ORDER. THEREFORE, THE POWER UNDER S. 47 CANNOT BE U SED TO REVIEW THE ORDER. IN THE PRESENT CASE, THOUGH THE AO HAS USED THE PHRASE REASON TO BELIEVE, ADMITTEDLY BETWEEN THE DATE OF THE ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FO RMATION OF OPINION BY THE AO, NOTHING NEW HAS HAPPENED, THEREF ORE, NO NEW MATERIAL HAS COME ON RECORD, NO NEW INFORMATION HAS BEEN RECEIVED; IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME AO 10 TO THE SAME SET OF FACTS AND THE REASON THAT HAS BE EN GIVEN IS THAT THE SOME MATERIAL WHICH WAS AVAILABLE ON RECORD WHI LE ASSESSMENT ORDER WAS MADE WAS INADVERTENTLY EXCLUDED FROM CONS IDERATION. THIS WILL AMOUNT TO OPENING OF THE ASSESSMENT MEREL Y BECAUSE THERE IS CHANGE OF OPINION. THEREFORE, IT WAS NOT P ERMISSIBLE FOR RESPONDENT NO. 1 TO ISSUE NOTICE UNDER S. 148.- CIT VS. KELVINATOR OF INDIA LTD. (2002) 174 CTR (DEL)(FB) 617 : (2002) 256 ITR 1 (DEL)(FB) CONCURRED WITH. AT PARA 10 OF THE SAID DECISION, THE HONBLE HIGH C OURT HELD AS UNDER : IT IS FURTHER TO BE SEEN THAT THE LEGISLATURE HAS NOT CONFERRED POWER ON THE AO TO REVIEW ITS OWN ORDER. THEREFORE, THE POWER UNDER S. 147 CANNOT BE USED TO REVIEW THE ORD ER. IN THE PRESENT CASE, THOUGH THE AO HAS USED THE PHRASE RE ASON TO BELIEVE, ADMITTEDLY BETWEEN THE DATE OF THE ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FORMATION OF OPINION BY THE AO, NOTHING NEW HAS HAPPENED, THEREFORE, NO NEW MAT ERIAL HAS COME ON RECORD, NO NEW INFORMATION HAS BEEN RECEIVE D; IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME AO TO THE S AME SET OF FACTS AND THE REASON THAT HAS BEEN GIVEN IS THAT THE SOME MATERIAL WHICH WAS AVAILABLE ON RECORD WHILE ASSESSMENT ORDER WAS MADE WAS INADVERTENTLY EXCLUDED FROM CONSIDERATION. THIS WIL L, IN OUR OPINION, AMOUNT TO OPENING OF THE ASSESSMENT MERELY BECAUSE THERE IS CHANGE OF OPINION. THE FULL BENCH OF THE DELHI H IGH COURT IN ITS JUDGMENT IN THE CASE OF KELVINATOR (SUPRA) REFERRED TO ABOVE, HAS TAKEN A CLEAR VIEW THAT REOPENING OF ASSESSMENT UND ER S. 147 MERELY BECAUSE THERE IS A CHANGE OF OPINION CANNOT BE ALLOWED. IN OUR OPINION, THEREFORE, IN THE PRESENT CASE ALSO, I T WAS NOT PERMISSIBLE FOR RESPONDENT NO. 1 TO ISSUE NOTICE UN DER S. 148. 13. THE HONBLE SUPREME COURT HAS UPHELD THE JUDGM ENT OF THE FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF C IT, DELHI VS. KILVINATOR OF INDIA LD. 2010-TIOL-06-SC-IT-JB WHERE IN IT IS HELD AS FOLLOWS : INCOME TAX SEC 147 REASSESSMENT CONCEPT OF CHANGE OF OPINION IS NOT OBLITERATED BY 1989 AMENDMENT AO CAN REOPEN ASSESSMENT PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. 11 ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION A S AN IN- BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE-OPE N, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO TH E CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REAS ONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. 14. THUS IT IS WELL SETTLED THAT EVEN WITHIN A PER IOD OF FOUR YEARS, THE AO CANNOT REOPEN AN ASSESSMENT BASED ON A MERE CHANGE OF OPINION. APPLYING ALL THESE CASE LAWS TO THE CASE ON HAND, WE HAVE TO NECESSARILY HOLD THAT THE AO IN THIS CASE IS MERELY APPLYING HI S MIND AFRESH TO THE SAME SET OF FACTS AND THE REASONS THAT HAVE BEEN RE CORDED IS BASED ON THE SAME MATERIAL WHICH IS AVAILABLE ON RECORD WHILE TH E ORIGINAL ASSESSMENT ORDER WAS BEING PASSED. THE AO CANNOT COMPUTE THE B OOK PROFITS U/S 143(3) AND THEN RE-OPEN THE ASSESSMENT JUST TO RE-C OMPUTE THE SAME ON FRESH APPLICATION OF MIND TO THE SAME SET OF FACTS. THIS IS NOT PERMISSIBLE. 15. EVEN OTHERWISE, WHEN THE AO STATES THAT THE AS SESSEE HAS WRITTEN OFF CERTAIN ASSETS, IT IS CLEAR THAT THE SA ME DOES NOT FALL WITHIN THE ADJUSTMENTS CONTEMPLATED IN THE EXPLANATION TO SECT ION 115JB OF THE ACT. AS RIGHTLY POINTED OUT BY MR. SOUMAN ADAK, WRITE OF F OF AN ASSET IS DIFFERENT FROM AN AMOUNT SET ASIDE AS PROVISION FOR DIMINUTION FOR VALUE OF ASSET. THIS ISSUE WAS DECIDED BY THE SPECIAL BEN CH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE CASE OF JCIT VS. USH A MARTIN INDUSTRIES LTD. 104 ITD 249 (KOL)(S.B.) WHICH HAD LEAD TO A RETROSP ECTIVE AMENDMENT. COMING TO THE STARTING POINT OF COMPUTATION OF BOOK PROFITS, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION I N THE CASE OF M.S. ESTATES PVT. LTD. VS. DCIT (2006) 125 TAXMAN 220 (H YD) (MAG) AS WELL AS THE DECISION IN THE CASE OF GULF OIL CORPORATION LTD. VS. ACIT (SUPRA). THUS BOTH THE GROUNDS OF REOPENING HAVE TO BE DECID ED IN FAVOUR OF THE ASSESSEE ON MERITS ALSO. 12 16. BE AS IT MAY, AS WE ARE OF THE CONSIDERED OPIN ION THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE REA SSESSMENT WAS DONE MERELY BASED ON A CHANGE OF OPINION, WITHOUT ANY N EW MATERIAL, AND FOR FRESH APPLICATION OF MIND TO SAME FACTS, WE HOLD TH AT THE REASSESSMENT IS BAD IN LAW. THUS, THE REASSESSMENT ORDER IS HEREBY QUASHED. 17. AS WE HAVE QUASHED THE REASSESSMENT ORDER, IT WOULD BE AN ACADEMIC EXERCISE TO ADJUDICATE ALL THE OTHER GROUN DS THAT ARISE BOTH IN THE ASSESSEES APPEAL AS WELL AS IN THE REVENUES APPEA L. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MARCH, 2010. SD/- SD/- (R.K. GUPTA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 31 ST MARCH, 2010. COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, A-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI. WAKODE