BHARATI AIRTEL LTD ( FORMELRY BHARTI BROADBAND LTD), NEW DELHI V. ACIT 8(3), MUMBAI

ITA 5389/MUM/2010

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2719 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL GULATI
• Keywords: Depreciation; Cost of acquisition; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 72; 13; 147; 148; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER ITA NO. 5389/MUM/2010 [A.Y 2004-05] BHARTI AIRTEL LTD. VS. THE C.I.T(A) -16 [FORMERLY BHARTI BROADBAND LTD MUMBAI AIRTEL CENTER, PLOT NO. 16, UDYOG VIHAR, PHASE IV GURGAON PAN: AAACB 2894 G [APPELLANT] [RESP ONDENT] ASSESSEE BY : SHRI ANIL BHALLA, C A REVENUE BY : SHRI SATPAL GULATI, CIT- DR DATE OF HEARING : 15.06.2021 DATE OF PRONOUNCEMENT : 17.06.2021 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-16, MUMBAI DATED 26.04.2010 PERTAINING TO A .Y 2004-05. 2 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER IN ASSUMING JURISDICTION U/S 147 OF THE INC OME TAX ACT, 1961 AND CONSEQUENTLY THE REASSESSMENT ORDER PASSED U/S 147/143 (3) IS INVALID IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER IN REDUCING THE COST OF PLANT AND MACHINERY BLOCK OF FIXED ASSETS I.E. WRITTEN DOWN VALUE DURING THE RELEVANT PREVIOUS YEAR ALLEGEDLY ON THE GROUND THAT THE WAIVER OF LOAN IS RELATED TO THE COST OF ACQUISITION OF PLANT AND MACHINERY BLOCK OF ASSETS AND THEREBY REDUCING THE CLAIM OF DEPRECIATION BY RS.96 ,19,618/- BEING 25% OF RS.3,84,78,473/-/. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND T HE GROUND OF APPEAL AT A LATER STAGE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT O RIGINAL ASSESSMENT ORDER WAS FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] VIDE ORDER DATE D 22.12.2006 WHICH IS PLACED IN THE PAPER BOOK AT PDF PAGE 116. CERTAIN ADDITIONS WERE MADE TO THE RETURNED INCOME OF THE ASSESSEE AND THE ASSESSEE 3 PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO, VID E ORDER DATED 20.03.2009, DECIDED THE APPEAL. 4. THE ORDER OF THE LD. CIT(A) IS PLACED AT PDF PAG E 190 OF THE PAPER BOOK. ON 16.03.2009, THE ASSESSING OFFICER ASSUMED JURISDICTION U/S 148 OF THE ACT BY ISSUING NOTICE. THE FOLLOWING RE ASONS WERE RECORDED FOR REOPENING THE COMPLETED ASSESSMENT: 4 5 5. ASSESSMENT ORDER WAS PASSED ON 25.11.2009. THE ORDER WAS FRAMED U/S 143(3) R.W.S 147 OF THE ACT. 6. A PERUSAL OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT SHOW THAT THE ASSESSING OFFICER WANTS TO REVIEW THE VERY SAME STATEMENT OF ACCOUNTS WHICH WERE BASIS FOR FRAMING THE ORIGINAL ASSESSMENT ORDER DATED 22.12.2006. 7. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER HAS CONSIDERED THE COMPUTATION OF INCOME WHICH IS PLACED AT PAGES 68 TO 72 OF THE PAPER BOOK. IT WOU LD BE PERTINENT TO REFER TO THE RELEVANT NOTE II TO ACCOUNTS WHICH WER E CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE SAM E READ AS UNDER: II PURSUANT TO SHARE SALE AND PURCHASE AGREEMENT DATED FEBRUARY 20, 2003, AMONGST COMSAT / INVESTMENTS AMO NGST COMSAT INVESTMENT AND COMSAT CORPORATION, MAX INDIA LIMITED AND THE COMPANY, MAX INDIA LIMITED ACQUIRED THE BALANCE 49 % OF THE SHARE HOLDING IN THE COMPANY. IN TERMS OF THE AFORE SAID AGREEMENT IN/ADDITION TO PAYMENT OF THE PURCHASE PRICE, MAX I NDIA LIMITED WAS REQUIRED TO SECURE AN UNCONDITIONAL RELEASE FRO M LETTERS OF COMFORT GIVEN BY CIIM TO A BANK IN RESPECT OF CERTA IN FACILITIES 6 AVAILED BY THE COMPANY. THE RELEASE WAS OBTAINED BY MAX INDIA LIMITED GIVING A CORPORATE GUARANTEE TO THE BANKERS . UPON FULFILMENT OF THE CONDITIONS STIPULATED IN THE AFORESAID AGREEMENT THE LOANS INCLUDING ACCUMULATED INTEREST THEREON, GIVEN BY CUM AND ITS ASSOCIATES TO THE COMPANY, WERE DEEM ED TO HAVE BEEN REPAID IN FULL AND EXTINGUISHED, DURING THE FI NANCIAL YEAR. ACCORDINGLY, LOANS RELATED TO ACQUISITION OF FIXED ASSETS AMOUNTING TO RS.38;478,473 HAVE BEEN SET OFF AGAINST COST OF THE RELATED FIXED ASSETS AND THE CORRESPONDING ACCUMULATED DEPR ECIATION AMOUNTING TO RS. 31,998,187 HAS BEEN REVERSED AND S ET OFF AGAINST CURRENT YEARS DEPRECIATION CHARGE. THE BALANCE AMO UNT OF RS. 51,083,475 INCLUDED IN THE TOTAL LOAN AMOUNT WAS RE TAINED BY THE COMPANY TO CONTINUE TO MAINTAIN AND SUPPORT ITS INF RASTRUCTURE THEREBY ENABLING, THROUGH A DEEMED GRANT BY VIRTUE OF THE CORPORATE GUARANTEE REFERRED TO ABOVE, AS APPROVED BY THE BOARD OF DIRECTORS, THE STRENGTHENING OF ITS NET WORTH PO SITION. THE AMOUNT SO RETAINED HAS BEEN TRANSFERRED TO CAPITAL RESERVES. 8. THE RELEVANT PART OF THE BALANCE SHEET IS AS UND ER; 7 9. A CONJOINT READING OF THE AFORESAID FACTS WOULD SHOW THAT THE ASSESSING OFFICER IS REVIEWING THE SAME SET OF FACT S WHICH WERE CONSIDERED BY HIM AT THE TIME OF FRAMING ORIGINAL A SSESSMENT ORDER AND 8 THERE IS NO NEW MATERIAL OR INFORMATION WITH THE AS SESSING OFFICER FOR ASSUMING JURISDICTION U/S 147 OF THE ACT AND REASON S RECORDED FOR REOPENING AS EXTRACTED ELSEWHERE ALSO SHOW THAT THE RE IS NO NEW TANGIBLE MATERIAL EVIDENCE WHICH HAS COME TO THE NO TICE OF THE ASSESSING OFFICER TO REOPEN THE COMPLETED ASSESSMEN T WHICH WAS FRAMED AFTER DUE CONSIDERATION OF ALL FACTS AND AFT ER DUE APPLICATION OF MIND AND AFTER CONSIDERING THE RELEVANT PROVISIONS OF THE ACT. 10. A PERUSAL OF THE FACTS SHOW THAT ALL THE FACTS ARE SAME AS THEY WERE AT THE TIME OF ORIGINAL ASSESSMENT. 11. WE HAVE CAREFULLY PERUSED THE ORIGINAL ASSESSME NT ORDER QUA THE RELEVANT DOCUMENTARY EVIDENCES. WE ARE OF THE CONS IDERED VIEW THAT THE ASSESSING OFFICER HAS CONSIDERED THE RETURN OF INCOME, COMPUTATION OF INCOME, BALANCE SHEET, PROFIT AND LOSS ACCOUNT A ND TAX AUDIT REPORT AND RAISED QUERIES AND REVIEWED THE REPLY OF THE AS SESSEE. WE FIND THAT FROM THESE VERY RECORDS, THE ASSESSING OFFICER NOTED AND FORMED A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT WHICH MEA NS THAT THERE WAS NO NEW TANGIBLE MATERIAL OR INFORMATION. 9 12. THE RELEVANT NOTE TO THE BALANCE SHEET, AS EXTR ACTED HEREINABOVE, SHOWS THAT THE ASSESSING OFFICER WANTS TO RE- EXAMINE/REVIEW THE VERY SAME NOTE FOR ASSUMPTION OF JURISDICTION U/S 148 OF THE ACT. IN OUR CONSIDERED OPINION, THIS IS NOTHING BUT CHANGE OF OPINION AND ABSENCE OF TANGIBLE NEW MATERIAL. 13. THE HON'BLE DELHI HIGH COURT IN THE CASE OF KEL VINATOR OF INDIA LTD 256 ITR 1 HAD OBSERVED AS UNDER: 22. WE ARE UNABLE TO AGREE WITH THE SUBMISSION OF MR. JOLLY TO THE EFFECT THAT THE IMPUGNED ORDER OF REASSESSMENT CANNOT BE FAULTED AS THE SAME WAS BASED ON INFORMATION DERIVE D FROM THE TAX AUDIT REPORT. THE TAX AUDIT REPORT HAD ALREADY BEEN SUBMITTED BY THE ASSESSEE. IT IS ONE THING TO SAY T HAT THE AO HAD RECEIVED INFORMATION FROM AN AUDIT REPORT WHICH WAS NOT BEFORE THE ITO, BUT IT IS ANOTHER THING TO SAY THAT SUCH INFORMATION CAN BE DERIVED BY THE MATERIAL WHICH HA D BEEN SUPPLIED BY THE ASSESSEE HIMSELF. 23 . WE ALSO CANNOT ACCEPT SUBMISSION OF MR. JOLLY TO TH E EFFECT THAT ONLY BECAUSE IN THE ASSESSMENT ORDER, DETAILED REASONS HAVE NOT BEEN RECORDED ON ANALYSIS OF THE MATERIALS ON THE RECORD BY ITSELF MAY JUSTIFY THE AO TO INITIATE A P ROCEEDING UNDER S. 147 OF THE ACT. THE SAID SUBMISSION IS FAL LACIOUS. AN ORDER OF ASSESSMENT CAN BE PASSED EITHER IN TERMS O F SUB-S. (1) OF S. 143 OR SUB-S. (3) OF S. 143. WHEN A REGULAR O RDER OF ASSESSMENT IS PASSED IN TERMS OF THE SAID SUB- S. ( 3) OF S. 143 10 A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THA T A PRESUMPTION CAN ALSO BE RAISED TO THE EFFECT THAT I N TERMS OF CL. (E) OF S. 114 OF THE INDIAN EVIDENCE ACT THE JUDICI AL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD T HAT AN ORDER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATI ON OF MIND WOULD ITSELF CONFER JURISDICTION UPON THE AO T O REOPEN THE PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN WRONG. 14. THIS DECISION OF THE HON'BLE HIGH COURT OF DELH I [SUPRA] WAS AFFIRMED BY THE HON'BLE SUPREME COURT IN 320 ITR 56 1. 15. THE LD. DR STRONGLY RELIED UPON THE FINDINGS OF THE CIT(A) WHICH READ AS UNDER: 1.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THE ORDER OF THE A.O. CAREFULLY. AS PER THE PROVISI ON OF THE SECTION 147, THIS CASE FALLS UNDER EXPLANATION 2(C) OF SECT ION 147 WHICH IS REPRODUCED AS UNDER: (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; O R 11 (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT; (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTH ER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED. 1.5 THE ABOVE SAID EXPLANATION (III) CLEARLY STATE S THAT WHERE EXCESS RELIEF HAS BEEN ALLOWED, A.O. CAN TAKE ACTION UNDER THIS SECTION. IN THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF ACIT V RAJESH JHAVERI STOCK BROKERS P. LTD. (SC) RE PORTED IN 291 ITR 501 , THE HONBLE COURT HAS CLARIFIED THE EXPLANATION RECENTLY IN SECTION 147 AND HELD THAT WHAT IS REQUI RED IS REASON TO BELIEVE BUT NOT ESTABLISHED THE FACT OF ESTIMATING OF INCOME. IT WAS FURTHER STATED THAT WHERE MATERIAL WOULD NORMAL LY PROVE ESCAPEMENT OF INCOME IS NOT CONCERNED AT THAT STAGE . THIS IS SO BECAUSE OF FORMATION OF RULE IS WITHIN THE TERM OF SUBJECT OF THE A.O. THIS DECISION OF HONBLE APEX COURT CLARIFIES THIS ISSUE THAT AT THE TIME OF RECORDING REASONS, THE A.O. SHOULD HAVE REASON TO BELIEVE THAT THERE IS UNDER-ASSESSMENT. SO, EXCESS RELIEF HAS BEEN ALLOWED IN THE EARLIER ASSESSMENT. RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF GIRILAL & CO. VS. ITO 300 ITR 432 (BOM). THIS IS A CLEAR CUT CASE WHICH FALLS UNDER THE EXPLANATION 2(C)(III) OF SECTION 14 7. THE ARGUMENTS TAKEN BY THE APPELLANT AND THE DECISION RELIED UPON ARE DISTINGUISHABLE BECAUSE IT IS NOT A CASE OF DIFFERE NCE OF OPINION AND THE FACT OF THIS CASE ARE DISTINGUISHABLE FROM THE CASES RELIED UPON BY THE APPELLANT. SINCE IT IS A CLEAR CUT CASE OF E XCESS RELIEF ALLOWED TO THE APPELLANT IN THE ORIGINAL ASSESSMENT , THEREFORE, THE 12 ACTION OF THE AO IN ISSUING NOTICE U/S.148 AFTER RE CORDING REASONS IS HELD AS VALID. KEEPING IN VIEW THE TOTALITY OF T HE FACTS AND POSITION OF LAW, THE ACTION OF THE A.O. IS CONFIRME D AND THIS GROUND OF APPEAL IS DISMISSED. 16. WE DO NOT CONCUR WITH THE FINDINGS OF THE FIRST APPELLATE AUTHORITY IN AS MUCH AS THE FACTS OF THE CASE, AS D ISCUSSED HEREINABOVE, CLEARLY SHOW THAT THERE WAS NO NEW TAN GIBLE MATERIAL EVIDENCE WHICH PROMPTED THE ASSESSING OFFICER TO RE OPEN THE ASSESSMENT AND IN FACT, AS HELD BY THE HON'BLE DELH I HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD [SUPRA] CONSIDERED THE SAME SET OF FACTS WHICH WERE CONSIDERED DURING THE ORIGINAL ASSESSMEN T PROCEEDINGS FOR FRAMING THE REASSESSMENT ORDER WOULD AMOUNT TO CHAN GE OF OPINION AND, THEREFORE, REASSESSMENT ORDER DATED 25.11.2009 DESERVES TO BE QUASHED. 17. THE HON'BLE DELHI HIGH COURT IN THE CASE OF MAD HUKAR KHOSLA 267 ITR 165 HAD THE OCCASION TO CONSIDER A SIMILAR ISSU E AND THE HON'BLE HIGH COURT HELD AS UNDER: 13 18. CONSIDERING THE FACTS OF THE CASE DISCUSSED HER EINABOVE, IN TOTALITY, IN LIGHT OF THE JUDICIAL DECISIONS DISCUS SED HEREINABOVE, WE ARE OF THE CONSIDERED VIEW THAT ON THE BASIS OF THE SAM E ASSESSMENT RECORD AS WAS FILED BY THE ASSESSEE DURING THE ORIGINAL AS SESSMENT PROCEEDINGS AND ALSO SCRUTINISED BY THE ASSESSING OFFICER, BEFO RE PASSING ORIGINAL ASSESSMENT ORDER U/S 143(3) OF THE ACT IS THE BASIS FOR SEEKING REOPENING OF THE ASSESSMENT. 14 19. IN OUR CONSIDERED VIEW, THE REASONING GIVEN BY THE ASSESSING OFFICER FOR REOPENING ASSESSMENT IS NOTHING BUT CHA NGE OF OPINION AND A NEW APPROACH TO THE EXISTING FACTS. THEREFORE, TH E IMPUGNED REASSESSMENT NOTICE CANNOT BE SUSTAINED AND IS HERE BY QUASHED. 20. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER FOR WANT OF JURISDICTION, WE DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE CASE. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 5389/MUM/2010 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17.06. 2021. SD/- SD/- [ AMIT SHUKLA ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH JUNE, 2021 VL/ 15 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER