DCIT CIR 7(1), MUMBAI V. SHETH FINANCIAL SERVICES P.LTD, MUMBAI

ITA 5406/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2200 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSHDR
• Keywords: Reopening of assessment; Depreciation; Cost of acquisition; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 32; 148

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 5406 /MUM/2013 ( / ASSESSMENT YEAR : 2005-06) D.C.I.T. CIR. 7(1), ROOM NO. 622, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI -400020. / V. M/S SHETH FINANCIAL SERVICES P. LTD., (FORMERLY KNOWN AS P L RESEARCH & DEVELOPMENT PVT. LTD., SADHNA HOUSE, 3 RD FLOOR,, 570 P.B. MARG, BEHIND MAHINDRA TOWER, WORLI, MUMBAI 400 018. ./ PAN : AABCP4312L ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY MS. BEENA SANTOSH,DR ASSESSEE BY : SHRI HIRO RAI / DATE OF HEARING : 22-08-2016 / DATE OF PRONOUNCEMENT : 28-10-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 5 406/MUM/2013, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 28 TH MAY, 2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 13, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2005-06, THE APPE LLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDE R PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 5406/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN T HE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- (I) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW IN QUASHING THE ASSESSMENT ORDER U/S 143(3) R.W.S.147,WITHOUT PROPERL Y APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER IN REASON RECORDED FOR REOPENING THE ASSESS MENT. (II) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W IN EXTENDING THE SCOPE OF ' CHANGE OF OPINION' TO A CASE WHERE NO OP INION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE PRESUMED DEEM ED FORMATION OF OPINION. (III) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THIS IS A CASE WHERE NO OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE REOPENING WAS OUTSID E THE SCOPE OF CHANGE OF OPINION. (IV) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W IN DELETING THE DISALLOWANCE OF RS. 54,70,747/- ON ACCOUNT OF DEPREC IATION CLAIMED U/S 32 OF IT ACT,1961 WITHOUT PROPERLY APPRECIATING THE F ACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICE R. (V) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE OF RS. 54,70,747/- ON ACCOUNT OF DEPREC IATION CLAIMED U/S 32 OF IT ACT,1961, HOLDING THAT THE REASSESSMENT PROCEED ING IS BAD IN LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT IT WAS OBSE RVED BY THE AO FROM THE RECORDS THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 54,70,747/- ON ASSETS. THE AO OBSERVED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS DURING THE YEAR WHICH IS REFLECTED FROM THE ORIGINA L ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE ACT ON 26 TH DECEMBER, 2007, AND HENCE IT WAS OBSERVED BY THE AO THAT CONSEQUENTLY THE ASSESSEE I S NOT ENTITLED FOR DEPRECIATION OF RS.54,70,747/- . (THE ORIGINAL ASSE SSMENT ORDER IS PLACED ON RECORD VIDE PAPER BOOK PAGE NO. 6 TO 8.) ITA 5406/MUM/2013 3 THE CASE OF THE ASSESSEE WAS REOPENED BY THE AO U/S . 147/148 OF THE ACT AFTER RECORDING THE REASONS FOR REOPENING OF THE AS SESSMENT AND AFTER OBTAINING THE APPROVAL FROM THE LEARNED COMMISSIONE R OF INCOME TAX. NOTICE U/S 148 OF THE ACT WAS ISSUED ON 3 RD FEBRUARY, 2011 AND SERVED UPON THE ASSESSEE. FURTHER, NOTICE U/S 148 AND 143(2) OF THE ACT WERE ISSUED ON 26.08.2011 THE REASONS RECORDED ARE PLACED IN PAPE R BOOK PAGE NO. 10 WHICH ARE REPRODUCED BELOW:- M/S P L RESEARCH & DEVELOPMENT PVT. LTD. ASSESSMENT WAS COMPLETED IN THIS CASE U/S 143(3) OF THE IT ACT ON 26.12.2007 AT A TOTAL LOSS OF RS. 52,17,342/-. 2. THE ASSESSEE HAS NOT CONDUCTED ANY BUSINESS DURI NG THE YEAR UNDER CONSIDERATION BUT IT HAS CLAIMED DEPRECI ATION OF RS. 54,70,747/- ON ASSETS, ALL OF WHICH WERE ADDED DURI NG THE YEAR UNDER CONSIDERATION AS CAN BE SEEN FROM THE DEPRECI ATION STATEMENT ATTACHED WITH THE ROI. THEREFORE, THE ASS ESSEE WAS NOT ENTITLED TO DEPRECIATION OF RS.54,70,747/- AS IT HA D NOT COMMENCED BUSINESS DURING THE YEAR. THUS I HAVE REA SON TO BELIEVE THAT THE DEPRECIATION TO THE EXTENT OF RS. 54,70,747/- HAS BEEN ALLOWED IN EXCESS IN THIS CASE IN TERMS OF THE PROVISIONS OF SECTION 147 OF THE IT ACT 1961. 3. IN VIEW OF THE PROVISION OF SECTION 151(2) OF TH E IT ACT 1961, THE APPROVAL OF CIT IS SOLICITED FOR RE-OPENING OF THE CASE A.Y. 2005-06 BY WAY OF ISSUE OF NOTICE U/S 148. THE ASSESSEE SUBMITTED ITS REPLY ON 22 ND MARCH, 2011 , WHEREIN THE ASSESSEE RAISED OBJECTION AGAINST THE RE-OPENING OF THE ASSE SSMENT WHICH WAS REJECTED BY THE A.O. IN HIS ASSESSMENT ORDER DATED 20-12-201 1 PASSED U/S 143(3) R.W.S. 147 OF THE ACT, WHEREBY IT WAS OBSERVED BY T HE AO THAT THE AO IN ORIGINAL ASSESSMENT ORDER DATED 26.12.2007 U/S 143( 3) OF THE ACT HAS OBSERVED THAT THE ASSESSEE HAS NOT CONDUCTED ANY BU SINESS DURING THE YEAR UNDER CONSIDERATION , BUT WHILE PASSING THE ORDER D ATED 26.12.2007 ITA 5406/MUM/2013 4 U/S.143(3) OF THE ACT, THE A.O FAILED TO DISALLOW T HE DEPRECIATION CLAIMED BY THE ASSESSEE IN RESPECT OF ASSETS TRANSFERRED TO TH E ASSESSEE BY PRABHUDAS LILADHAR PVT. LTD. AND HENCE THE RE-ASSESSMENT PROC EEDINGS INITIATED U/S 147/148 OF THE ACT AGAINST THE ASSESSEE WERE HELD T O BE VALID AS PER THE PROVISIONS OF THE ACT. THE A.O. OBSERVED THAT DURING THE YEAR UNDER CONSID ERATION , THE ASSESSEE HAS SHOWN PURCHASES OF VARIOUS DEPRECIABLE ASSETS F ROM M/S PRABHUDAS LILADHAR PVT. LTD. ON 27 TH MARCH, 2005 FOR A TOTAL CONSIDERATION OF RS.4,22,49,466/-. THE ASSESSEE HAS ALSO RECEIVED TO TAL DEPOSITS OF RS. 2.4 CRORES FROM PRABHUDAS LILADHAR PVT. LTD. AND IT IS SEEN FROM THE NARRATION IN THE LEDGER ACCOUNT THAT THE SAID DEPOSITS IS RECEIV ED TOWARDS FURNITURE OF OFFICE. THE A.O. OBSERVED THAT THE ASSESSEE HAD REC EIVED THE ABOVE SECURITY DEPOSITS AMOUNTING TO RS. 2.22 CRORES TILL 24 TH MARCH, 2005 EVEN THOUGH ASSESSEE DID NOT HAVE ANY SUCH ASSETS. THESE ASSETS WERE ACTUALLY TRANSFERRED FROM PRABHUDAS LILADHAR PVT. LTD. TO THE ASSESSEE O N 27TH MARCH, 2005 WHEREIN THE ASSESSEE ACQUIRED THE ASSETS AND IT IS NOT KNOWN WHETHER THESE ASSETS WERE PUT TO USE OR NOT. THE AO HAD SCRUTINIZ ED U/S 143(3) OF THE ACT R.W.S. 143(2) OF THE ACT WHILE FRAMING ORIGINAL ASS ESSMENT ORDER AND AFTER VERIFICATION OF DETAILS, THE AO HAS HELD THAT THE A SSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE YEAR. THE A.O. O BSERVED THAT THE ASSESSEE HAS ONLY FURNISHED REPLY STATING THAT THE ASSESSEE HAS RECEIVED SERVICE CENTER RECEIPTS FROM M/S. PRABHUDAS LILADHAR PVT. LTD. AND CONTENDED THAT ITS CLAIM OF DEPRECIATION IS CORRECT BUT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE TO SHOW THAT IT HAS CARRIED OUT ANY BUSINE SS ACTIVITY INVOLVING THE USE OF THE ASSETS ACQUIRED BY IT ON 27 TH MARCH, 2005 , AND ACCORDINGLY THE A.O. DISALLOWED THE CLAIM OF DEPRECIATION WHICH WA S HELD TO BE NOT ALLOWABLE AND THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE A O VIDE ASSESSMENT ORDER DATED 20-12-2011 PASSED BY THE AO U/S. 143(3) OF TH E ACT READ WITH SECTION 147 OF THE ACT. ITA 5406/MUM/2013 5 4.AGGRIEVED BY THE ASSESSMENT ORDER DATED 20-12-201 1 PASSED BY THE A.O. U/S. 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESSEE FILED FIRST APPEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT THE ASSESSMENT HAD BEEN REOPENED ON THE GROUND THAT NO BUSINESS HAS BE EN CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND HE NCE DEPRECIATION U/S 32 OF THE ACT WAS WRONGLY ALLOWED. THE ASSESSEE SUBMIT TED THAT THIS WAS INCORRECT AS IS EVIDENT FROM THE MATERIAL ON RECORD . IT WAS SUBMITTED THAT THE ASSESSEE CARRIED ON THE BUSINESS DURING THE YEAR AN D HAD SHOWN BUSINESS SERVICE CENTRE CHARGES I.E. INCOME OF RS. 1,44,657/ - IN THE P&L ACCOUNT. IT WAS SUBMITTED THAT THOUGH NO INCOME WAS EARNED IN R ESPECT OF FACTORING BUSINESS, THE REQUIRED EXPLANATION WAS FURNISHED BY THE ASSESSEE VIDE LETTER DATED 24 TH DECEMBER, 2007. IT WAS SUBMITTED THAT WITH REGARD TO THE BUSINESS SERVICE CENTRE, ALL THE DETAILS WERE PROVIDED DURIN G THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE ACT IN RESPECT OF ACQUISITION OF FIXED ASSETS AND COMPUTATION OF DEPR ECIATION. RELEVANT DISCLOSURES WERE ALSO MADE IN NOTES APPENDED TO THE STATEMENT OF DEPRECIATION. THE ISSUES OF BUSINESS SERVICE CENTRE BUSINESS AND DEPRECIATION ON FIXED ASSETS USED FOR THE BUSINESS SERVICE CENTR E BUSINESS WERE DISCUSSED AT LENGTH DURING THE ORIGINAL ASSESSMENT PROCEEDING S U/S 143(3) R.W.S. 143(2) OF THE ACT AND AFTER CAREFUL CONSIDERATION OF THE A FORESAID MATERIAL, THE A.O ACCEPTED THE ASSESSEES CLAIM AND ALLOWED DEPRECIAT ION U/S.32 OF THE ACT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT THE A.O. IN THE ORIGINAL ASSESSMENT ORDER HAD MADE REMARKS THAT THE ASSESSEE HAD NOT CONDUCTED ANY BUSINESS DURING THE YEAR, THE ASSESSE E SUBMITTED THAT THE A.O COULD NOT HAVE AND HAS NOT RECORDED ANY FINDING OF THE FACT THAT THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS DURING THE YEAR. THO UGH THE A.O. MENTIONED SO BUT IN ALTOGETHER DIFFERENT CONTEXT WHILE JUSTIF YING ADDITION HE MADE ON ITA 5406/MUM/2013 6 ACCOUNT OF INCREASE IN DEBTORS. AS PER THE ORIGINAL ASSESSMENT ORDER DATED 26.12.2007 , SUNDRY DEBTORS HAD INCREASED DURING TH E YEAR BY RS.3,89,943/- BUT THE ADDITIONS WERE MADE ONLY ON ACCOUNT OF INCR EASE IN SUNDRY DEBTORS RELATING TO FACTORING BUSINESS AMOUNTING TO RS. 2,4 5,286/- AND NO ADDITIONS WERE MADE ON ACCOUNT OF INCREASE IN SUNDRY DEBTORS ATTRIBUTABLE TO BUSINESS OF SERVICE CENTRE BUSINESS AMOUNTING TO RS.1,44,657 /- IMPLYING THEREBY THAT THE AO HAS IMPLIEDLY ACCEPTED THE CARRYING OF RUNNI NG OF BUSINESS SERVICE CENTRE BUSINESS DURING THE YEAR. IN THE ORIGINAL AS SESSMENT ORDER DATED 26.12.2007 U/S. 143(3) OF THE ACT, THE A.O. MADE TH E ADDITION ON THE BASIS OF INCREASE IN DEBTORS RELATING TO FACTORING BUSINESS WHICH COULD NOT HAVE INCREASED DURING THE YEAR WITHOUT THERE BEING ANY F ACTORING CHARGES BUSINESS DURING THE YEAR. IT WAS SUBMITTED THAT THE AO MENT IONED IN THAT CONTEXT IN THE ORIGINAL ASSESSMENT ORDER DATED 26.12.2007 U/S. 143(3) OF THE ACT THAT THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS DURING THE YEAR BY MENTIONING THAT THE AO'S INTENTION WAS THAT THE ASSESSEE DID N OT CARRY OUT FACTORING BUSINESS DURING THE YEAR WHICH IS A CLEAR EVIDENCE THAT THE A.O. HAD ACCEPTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF RU NNING BUSINESS SERVICE CENTRE. THUS , THE REOPENING HAD BEEN MADE ON WRONG ASSUMPTION THAT ASSESSEE DID NOT CARRY ON BUSINESS OF BUSINESS SERV ICE CENTRE BUSINESS WHEREAS IN ORIGINAL ASSESSMENT ORDER DATED 26.12.20 07 U/S 143(3) OF THE ACT ITSELF THE A.O HAD ACCEPTED THAT ONE OF THE BUSINES SES I.E. BUSINESS SERVICE CENTRE BUSINESS WAS CARRIED ON BY THE ASSESSEE. THE ASSESSEE FURTHER SUBMITTED THAT IT HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT DURING THE ORIGINAL ASSESSMENT PROCE EDINGS U/S 143(3) OF THE ACT. THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ASSESSMENT ORDERS DATED 26.12.2007. IT WAS SUBMITTE D THAT THE REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT HAS BEEN MADE AFTER FOUR YEARS FROM THE END OF ASSESSMENT YEAR AND THEREFORE PROVISO TO SECTION 147 OF THE ACT IS APPLICABLE. IT WAS THE SAY OF THE ASSESSEE THAT TH E FULL AND PROPER DISCLOSURE OF BUSINESS SERVICE CENTRE CHARGES INCOME WAS DISCL OSED IN THE AUDITED P&L ITA 5406/MUM/2013 7 ACCOUNT. IT WAS SUBMITTED THAT THE FULL AND PROPER DISCLOSURE OF RECEIVABLES IN RESPECT OF ABOVE BUSINESS AMOUNTING TO RS. 1,14,409 /- WAS MADE IN THE BALANCE SHEET. SIMILARLY, FULL AND TRUE DISCLOSURE OF SECURITY DEPOSIT OF RS.2.4 CRORE WAS ALSO MADE IN THE BALANCE SHEET. THE FULL DETAILS IN RESPECT OF CLAIM OF DEPRECIATION OF RS. 54,70,747/- WAS ALSO MADE IN THE STATEMENT OF DEPRECIATION ALLOWANCE ATTACHED TO THE RETURN OF IN COME. SIMILARLY FULL DISCLOSURE WAS MADE ABOUT THE ACQUISITION OF BUSINE SS ASSETS FROM AN ASSOCIATE CONCERN AND MAKING THE SAME AVAILABLE TO THEM AS PART OF THE BUSINESS CENTRE SERVICES. THUS, THE ASSESSEE REQUE STED THAT THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS BAD IN LAW AND TH E REASSESSMENT ORDER BASED THEREON WAS ALSO INVALID AND NULL AND VOID. THE LD. CIT (A) CONSIDERED THE SUBMISSIONS OF THE A SSESSEE AND OBSERVED THAT THE ASSESSEE HAS FURNISHED FULL DETAILS TO THE AO I N RESPECT OF ASSESSEES BUSINESS OF FACTORING BUSINESS, SERVICE CENTRE BUSI NESS, CLAIM OF DEPRECIATION AND ACQUISITION OF ASSETS FROM GROUP CONCERNS. IN T HE ORIGINAL ASSESSMENT ORDER DATED 26-12-2007 U/S. 143(3) OF THE ACT , THE A.O. DISCUSSED THE ISSUE OF INCREASE IN DEBTORS IN RESPECT OF BUSINESS SERVI CE CENTRE CHARGES AND FACTORING BUSINESS AND MENTIONED THAT ASSESSEE HAS NOT CONDUCTED ANY BUSINESS, HENCE, ADDITION OF RS. 2,45,286/- WAS MAD E IN RESPECT OF EXCESS AMOUNT/ INCREASE IN DEBTORS WITH RESPECT TO FACTOR ING BUSINESS, ALTHOUGH NO ADDITION WAS MADE WITH RESPECT TO INCREASE IN DEBTO RS OF RS.1,44,657/- PERTAINING TO BUSINESS SERVICE CENTRE BUSINESS . HO WEVER, THE A.O. ALLOWED ASSESSEES CLAIM OF DEPRECIATION U/S. 32 OF THE ACT W.R.T. BUSINESS SERVICE CENTRE BUSINESS. THE A.O. REOPENED THE ASSESSMENT U /S 147 OF THE ACT ON THE GROUND THAT THERE WAS NO BUSINESS DURING THE YEAR, THE ASSESSEE WAS NOT ENTITLED FOR DEPRECIATION U/S 32 OF THE ACT AND THE A.O. ISSUED NOTICE U/S.148 OF THE ACT DATED 3 RD FEBRUARY, 2011 WHICH WAS ISSUED BEYOND FOUR YEARS FROM THE END OF ASSESSMENT YEAR UNDER CONSIDERATION AND THUS PROVISO TO SECTION 147 OF THE ACT IS APPLICABLE. SINCE ORIGINAL ASSESS MENT WAS MADE U/S 143(3) ITA 5406/MUM/2013 8 OF THE ACT, HENCE PROVISO TO SECTION 147 OF THE ACT IS CLEARLY APPLICABLE. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS FILED FULL DE TAILS DURING THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT WITH RESPECT TO ALL THE ISSUES AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS REQU IRED FOR THE COMPLETION OF THE ASSESSMENT AND UNDER THESE CIRCUMSTANCES THE ASSESS EES CASE COULD NOT BE REOPENED U/S 148 OF THE ACT WAS THE CONTENTION OF T HE ASSESSEE. IT WAS ALSO OBSERVED THAT THE A.O. HAS EXAMINED THE ASSESSEES CLAIM OF DEPRECIATION ON ASSETS WHILE FRAMING ORIGINAL ASSESSMENT ORDER U/S 143(3) OF THE ACT. FROM THE FACTS, THE LD. CIT(A) NOTICED THAT THE ASS ESSEE HAS TWO TYPES OF BUSINESS SOURCE. THE A.O. IN THE ORIGINAL ASSESSME NT ORDER MENTIONED THAT THERE WAS NO BUSINESS DURING THE YEAR BUT EVEN THEN THE A.O. ALLOWED DEPRECIATION ON THE ASSETS ACQUIRED DURING THE YEAR , HENCE, DISALLOWING THE DEPRECIATION IN THE REASSESSMENT ORDER AMOUNTS TO C HANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE LAW. THE LD CIT(A) OBSER VED THAT THE DETAILS OF SUCH ACQUISITION OF ASSETS WERE BEFORE THE AO DULY FILED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THE LD. CIT(A) ACCORDINGLY HELD THAT REOPENING OF ASSESSMENT U/S 148 OF THE ACT WAS BAD IN LAW AND HE NCE RE-ASSESSMENT ORDER BASED THEREON DISALLOWING DEPRECIATION IN THE RE-AS SESSMENT PROCEEDINGS WAS ALSO BAD IN LAW AND THEREFORE WAS ANNULLED BY THE L EARNED CIT(A) VIDE APPELLATE ORDERS DATED 28-05-2013 PASSED BY LEARNED CIT(A). 6. AGGRIEVED BY THE APPELLATE ORDERS DATED 28-05-20 13 PASSED BY THE LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS ACC EPTED THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT WHICH HAS NOT BEEN CHALLENGED BEFORE THE HIGHER AUTHORITIES. THUS, IT WAS SUBMITT ED BY THE LEARNED DR THAT THE ASSESSSEE ACCEPTED THE FINDINGS OF THE AO THAT THERE IS NO BUSINESS ITA 5406/MUM/2013 9 CARRIED ON BY THE ASSESSEE. DEPRECIATION WAS ALLOW ED TO THE ASSESSEE TO THE EXTENT OF RS. 54,70,747/- WHICH WAS A MISTAKE ON TH E PART OF THE AO , BUT THE A.O. MADE ADDITION OF RS. 2,45,286/- TOWARDS INCREA SE IN DEBTORS ON THE GROUND THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BU SINESS. THE LD. D.R. SUBMITTED THAT THERE IS A CHANGE IN THE NAME OF THE ASSESSEE I.E. FORMERLY KNOWN AS P L RESEARCH & DEVELOPMENT PVT. LTD. AND T HE NEW NAME IS M/S SHETH FINANCIAL SERVICES PVT. LTD. IT WAS SUBMITTED THAT THE ASSESSEE PURCHASED DEPRECIABLE ASSETS FROM M/S PRABHUDAS LIL ADHAR PVT. LTD. ON 27- 03-2005 WHICH IS AN ASSOCIATED CONCERN OF THE ASSES SEE. PAYMENTS WERE RECEIVED FROM M/S PRABHUDAS LILADHAR PVT. LTD. . NO BUSINESS WAS CARRIED ON BY THE ASSESSEE AND ALSO NO DECLARATION OF THE ASSE T WAS MADE BY THE ASSESSEE.IT WAS SUBMITTED THAT LEARNED CIT(A) ERRED IN HOLDING THAT REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT IS BAD IN LAW. THE LEARNED DR RELIED ON THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 14 7 OF THE ACT. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORIGINAL ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 26 TH DECEMBER, 2007. THE ASSESSEE HAS CLAIMED DEPRECIATION AMOUNTING TO RS. 54,70,747/- WHICH WAS ALLOWED BY THE AO WHILE FRAMING THE ORIGINAL ASSESS MENT ORDER U/S 143(3) OF THE ACT, ALTHOUGH FINDING OF FACT WAS RECORDED THA T THE ASSESSEE HAS NOT CARRIED ON ANY BUSINESS AS PER THE ORIGINAL ASSESSM ENT ORDER. THE CASE WAS REOPENED AND NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 3 RD FEBRUARY, 2011 WHICH IS BEYOND FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND PROVISO TO SECTION 147 OF THE ACT IS APPLI CABLE AND THE ASSESSMENT CAN BE RE-OPENED ONLY IF THERE IS FAILURE ON THE PA RT OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL THE MATERIAL FACTS OF THE CA SE NECESSARY FOR MAKING THE ASSESSMENT . IT WAS SUBMITTED THAT THE DEPRECIATIO N WAS CLAIMED U/S 32 OF THE ACT WHEREBY FULL DISCLOSURE WAS MADE BY THE ASS ESSEE AT THE TIME OF FILING OF RETURN OF INCOME FOR WHICH THE COMPUTATION OF IN COME IS PLACED AT PAPER BOOK PAGE 1 TO 3 WHEREIN NOTE HAS BEEN GIVEN WHICH IS AS UNDER:- ITA 5406/MUM/2013 10 DEPRECIATION ALLOWANCE IN RESPECT OF ASSETS, IF AN Y, USED FOR LESS THAN 180 DAYS DURING THE YEAR IS CALCULATED @ 50% O F THE RESPECTIVE RATES OF DEPRECIATION INDICATED IN THE A BOVE TABLE. THE ADJUSTMENT IN THE COST OF ACQUISITION IS REQUIR ED IN RESPECT OF MODIFIED VALUE ADDED TAX CREDIT IN RESPECT OF ASSET S REQUIRED ON OR AFTER 1ST MARCH, 1994, CHANGE IN RATE OF EXCHANG E IF CURRENCY, AND SUBSIDY OR GRANT OR REIMBURSEMENT, BY WHATEVER NAME CALLED. ADDITIONS DURING THE YEAR INCLUDE INTER ALIA CERTAI N ASSETS ACQUIRED DURING THE YEAR FROM AN ASSOCIATE CONCERN NAMELY PRABHUDAS LILADHAR PVT. LTD. (PLPL). THESE ASSETS WERE IN TURN MADE AVAILABLE TO PLPL UNDER THE BUSINESS SERVICE C ENTRE AGREEMENT. CONSEQUENTLY WDV OF SUCH ASSETS AS COMP UTED UNDER THE PROVISIONS OF THE INCOME TAX ACT IN THE H ANDS OF PLPL AS ON THE DATE OF SALE TO THE ASSESSEE IS TAKEN TO BE THE COST OF ACQUISITION DESPITE SUCH WDV BEING LOWER THAN THE V ALUE AT WHICH THE SAME HAVE BEEN PURCHASED BY THE ASSESSEE. DEPRECIATION IS THUS CLAIMED ON THE REDUCED AMOUNT AS REQUIRED BY EXPLANATION (4A) TO SECTION 43(1). IT IS SUBMITTED THAT DEPRECIATION WAS CLAIMED ON TH E REDUCED AMOUNT AS PER EXPLANATION 4A TO SECTION 43(1) OF THE ACT. COPY OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2005 WAS PLACED AT PAPER BOOK PAGE 5 WHEREI N THE BUSINESS SERVICE CENTRE CHARGED RECEIVED WERE RS. 144,657/- UNDER THE HEAD INCOME , WHICH IS OFFERED FOR TAXATION. IT IS SUB MITTED THAT THE ASSET WAS ACQUIRED ON 27 TH MARCH, 2005 AND THEY WERE PUT TO USE AND INCOME FO R 5 DAYS WERE INCLUDED IN THE RETURN OF INCOME FILED WITH TH E REVENUE WHICH IS ASSESSED TO TAX IN ORIGINAL ASSESSMENT AS WELL RE-A SSESSMENT. THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT BY TH E REVENUE IS PLACED ON PAPER BOOK FILED WITH THE TRIBUNAL AT PAGE 6-8 . T HE BENEFIT OF DEPRECIATION WAS DISALLOWED TO THE ASSESSEE IN THE ASSESSMENT FR AMED U/S 143(3) READ WITH SECTION 147 OF THE ACT ON THE GROUND THAT THER E WAS NO BUSINESS CONDUCTED BY THE ASSESSEE. THE ASSESSEE WAS ENGAGE D IN THE BUSINESS OF RUNNING BUSINESS SERVICE CENTRE. OUR ATTENTION WAS DRAWN TO THE REPLIES ITA 5406/MUM/2013 11 SUBMITTED BEFORE THE AUTHORITIES BELOW WHICH ARE PL ACED IN PAPER BOOK/PAGE 11-12 AND 14-15 , IT WAS SUBMITTED THAT EVEN BUSINE SS SERVICE CENTER AGREEMENT ENTERED INTO BY THE ASSESSEE FOR EARNING BUSINESS SERVICE CENTRE CHARGES WAS ALSO SUBMITTED BEFORE THE AO IN ORIGINA L ASSESSMENT PROCEEDINGS. AS PER THE ASSESSMENT ORDER THOUGH SUNDRY DEBTORS H AD INCREASED DURING THE YEAR BY RS. 3,89,943/-, ADDITIONS WERE MADE ONLY ON ACCOUNT OF INCREASE IN SUNDRY DEBTORS RELATING TO FACTORING BUSINESS OF RS . 2,45,286/- AND NO ADDITION WAS MADE ON ACCOUNT OF INCREASE IN SUNDRY DEBTORS ATTRIBUTABLE TO BUSINESS SERVICE CENTRE RS. 1,44,657/-. THE A.O. HA S ACCEPTED THAT ASSESSEE HAS INCURRED BUSINESS LOSS AND AN AMOUNT OF RS. 52, 17,342/- WAS ALLOWED TO BE CARRY FORWARD (PAPER BOOK PAGE 7) IN THE ORIGINA L ASSESSMENT FRAMED U/S 143(3) OF THE ACT. THE LD. COUNSEL HAS COME WITH SE VERAL PROPOSITION TO DEFEND THE CASE. IT IS SUBMITTED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRUE AND FULL DETAILS WITH RESPECT TO T HE ACQUISITION OF ASSET AND EARNING OF SERVICE CENTRE BUSINESS CHARGES AND ALL THE MATERIAL WERE PLACED BEFORE THE AO DURING ORIGINAL ASSESSMENT PROCEEDING S. THE COMPUTATION OF INCOME WAS FILED BEFORE THE A.O. ALONG WITH THE RET URN OF INCOME FILED WITH THE REVENUE. THE LD. COUNSEL ALSO DREW OUR ATTENTION TO PAPER BOOK PAGE NO. 1 TO 3 AND ALSO PAPER BOOK PAGE 6 TO 8 WHEREBY THE COMPU TATION OF INCOME AND ORIGINAL ASSESSMENT ORDER DATED 26 TH DECEMBER, 2007 WAS PLACED ON RECORD. THERE IS NO ESCAPEMENT OF INCOME WAS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WHICH COULD BE BROUGHT TO TAX DURI NG RE-ASSESSMENT PROCEEDINGS U/S 147/148 OF THE ACT. THE LD. COUNSEL SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) OF THE AC T VIDE ASSESSMENT ORDER DATED 26.12.2007. SECTION 147 OF THE ACT HAS NO AP PLICATION AS THE ASSESSEE HAS TRULY AND FULLY DISCLOSED ALL THE MATERIAL FACT S NECESSARY FOR THE ASSESSMENT AND THE ASSESSMENT IS SOUGHT TO BE RE-OP ENED AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND PROVISO TO SECTION 147 OF THE ACT IS APPLICABLE. NO INCRIMINATING TANGIBLE MATERIAL HAS COME TO THE POSSESSION OF THE A.O. WHICH COULD LEAD TO FORMATION OF REASONS T O BELIEVE THAT THE INCOME ITA 5406/MUM/2013 12 HAS ESCAPED ASSESSMENT. THERE IS NO SUCH ALLEGATIO N IN THE REASONS RECORDED BY THE REVENUE WHICH IS PLACED ON RECORD VIDE PAPER BOOK PAGE 9 & 10. NO FAILURE IS THERE ON THE PART OF THE ASSESSEE TO TRU LY AND FULLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR FRAMING THE ASSESSMENT AND IT WAS SUBMITTED THAT THE RE-OPENING U/S 147/148 OF THE ACT WAS BAD IN LAW. THERE IS NO TANGIBLE MATERIAL WHICH HAS COME INTO POSSESSION OF THE A.O. THAT THE INCOME HAS ESCAPED ASSESSMENT. THE LD. COUNSEL ALSO INVIT ED OUR ATTENTION TO THE ORIGINAL ASSESSMENT ORDER DATED 26.12.2007 PASSED U /S 143(3) OF THE ACT WHEREBY DEPRECIATION WAS ALLOWED TO THE ASSESSEE WI TH RESPECT TO THE ASSETS ACQUIRED FOR BUSINESS SERVICE CENTRE. IT WAS SUBMIT TED THAT WHEN THE AO STATED THAT THERE IS NO BUSINESS CARRIED ON BY THE ASSESSEE IN THE ORIGINAL ASSESSMENT ORDER HE MEANT THAT THE ASSESSEE HAS NOT CONDUCTED FACTORING BUSINESS AND HENCE DEBTORS TO THE TUNE OF RS. 2,45, 286/- WERE ADDED AND SUNDRY DEBTORS TO THE TUNE OF RS.1,44,657/- PERTAIN ING TO BUSINESS SERVICE CENTRE BUSINESS WERE NOT ADDED, WHILE THE TOTAL INC REASE IN DEBTORS WAS TO THE TUNE OF RS.3,89,943/- . THUS, IT WAS SUBMITTED THAT THE AO HAS APPLIED HIS MIND WHILE FRAMING THE ORIGINAL ASSESSMENT ORDER DA TED 26.12.2007 PASSED U/S 143(3) OF THE ACT . THE LD. COUNSEL ALSO INVITE D OUR ATTENTION TO PAGE NO. 13 /PAPER BOOK WHEREBY THE REVENUE HAS REJECTED THE OBJECTION RAISED BY THE ASSESSEE TO THE RE-ASSESSMENT PROCEEDINGS VIDE ORD ERS DATED 23-11-2011. THIS ORDER OF THE REVENUE DATED 23-11-2011 WAS STAT ED TO BE SERVED ON THE ASSESSEE ON 15 TH DECEMBER, 2011 , WHILE THE REASSESSMENT WAS FRAMED U/S 147/148 OF THE ACT ON 20 TH DECEMBER, 2011. IT WAS SUBMITTED THAT THE RE- ASSESSMENT WAS FRAMED WITHIN FOUR WEEKS OF SERVICE OF ORDER REJECTING THE OBJECTIONS OF THE ASSESSEE WHICH IS CONTRARY TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS LTD. DCIT, (2008) 296 ITR 90 (BOM) AND ALSO IN THE CASE OF ARONI COMMERCIALS LTD . V. DCIT, (2014) 362 ITR 403 (BOM). IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE CANNOT BE BURDENED WITH THE RE-ASSESSMENT FOR THE MISTAKES COMMITTED BY THE AO AS THE RE-OPENING IS DONE BEYON D FOUR YEARS FROM THE ITA 5406/MUM/2013 13 END OF THE ASSESSMENT YEAR AND PROVISO TO SECTION 1 47 OF THE ACT IS APPLICABLE AND THE RE-OPENING OF THE ASSESSMENT CAN BE DONE WH EN THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOS E ALL THE MATERIAL NECESSARY FOR FRAMING THE ASSESSMENT. IT WAS SUBMITTED THAT T HERE IS NO ALLEGATION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO TRULY AN D FULLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR MAKING THE ASSESSMENT. HE DREW OUR ATTENTION TO PAGE 10 OF PAPER BOOK WHEREIN REASONS RECORDED FOR RE-OPENI NG THE ASSESSMENT ARE PLACED AND IT IS SUBMITTED THAT THERE IS NO MENTION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MAT ERIAL FACTS NECESSARY FOR THE ASSESSMENT. IT WAS SUBMITTED THAT THE AO FAILED TO DISALLOW THE DEPRECIATION IN THE ORIGINAL ASSESSMENT FRAMED U/S 143(3) OF THE ACT. IT WAS ALSO SUBMITTED THAT NO NEW TANGIBLE MATERIAL HAS TO COME TO THE PO SSESSION OF THE AO WHEREBY HE COULD HAVE REASONS TO BELIEVE THAT THE I NCOME HAS ESCAPED ASSESSMENT RATHER IT IS STATED BY THE AO THAT IT IS SEEN FORM THE RECORDS AS COULD BE SEEN FROM THE REASONS RECORDED FOR RE-OPEN ING AND ALSO THE RE- ASSESSMENT ORDER FRAMED U/S 143(3) READ WITH SECTIO N 147 OF THE ACT THAT IT IS A CASE OF CHANGE OF OPINION AS NOW THE AO IS DRAWIN G DIFFERENT CONCLUSIONS FROM THE SAME RECORDS WHICH WERE BEFORE HIM WHILE F RAMING ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT. FURTHER, IT IS SU BMITTED THAT THE RE- ASSESSMENT IS FRAMED WITHIN FOUR WEEKS FROM THE REJ ECTION ORDER DATED 23-11- 2011 WHICH WAS SERVED ON THE ASSESSEE ON 15-12-2011 , OF THE OBJECTIONS FILED BY THE ASSESSEE WHILE RE-ASSESSMENT ORDER IS DATED 20-12-2011 PASSED U/S 143(3) R.W.S. 147 OF THE ACT . IT WAS SUBMITTED THA T THE REJECTION OF THE OBJECTION BY THE AO OF THE ASSESSEES OBJECTION WAS DATED 23.11.2011 WHICH WAS SERVED ON THE ASSESSEE ONLY ON 15-12-2011, WHIL E RE-ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT IS DATED 20-12-2011. IT WAS SUBMITTED THAT THE SAID RE-ASSESSMENT ORDER DAT ED 20-12-2011 IS BAD IN LAW AS THE AO CANNOT PROCEED WITHIN FOUR WEEKS FROM THE DATE OF ORDER REJECTING THE ASSESSEES OBJECTION AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS LIMITED V. DCIT 2 96 ITR 90(BOM.) AND ARONI ITA 5406/MUM/2013 14 COMMERCIALS LIMITED V. DCIT 362 ITR 403(BOM.). IT W AS SUBMITTED THAT THE LEARNED CIT(A) HAS NOT DECIDED THE APPEAL ON MERITS AND HAS QUASHED THE RE- ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT IF TH E ARGUMENTS OF THE ASSESSEE ARE NOT ACCEPTED, THEN THE MATTER CAN GO B ACK TO THE AUTHORITIES BELOW TO DECIDE THE ISSUE ON MERITS. 9. THE LEARNED DR SUBMITTED IN REJOINDER AND DREW O UR ATTENTION TO REASONS RECORDED FOR RE-OPENING PLACED AT PAGE 10/PAPER BOO K AND SUBMITTED THAT THE ASSESSEE HAS NOT CONDUCTED ANY BUSINESS DURING THE FINANCIAL YEAR AS THERE ARE ONLY 3 DAYS LEFT IN FINANCIAL YEAR WHEN THE ASS ESSEE ACQUIRED THE DEPRECIABLE ASSETS FROM PRABHUDAS LILADHAR PRIVATE LIMITED. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAW S RELIED UPON. WE HAVE OBSERVED THAT THE ASSESSEE HAS ACQUIRED THE DEPRECI ABLE ASSETS FROM M/S PRABHUDAS LILADHAR PVT. LTD. ON 27 TH MARCH, 2005. THE ASSESSEE HAS MADE THE DISCLOSURE OF THE SAME IN THE RETURN OF INCOME FILED WITH THE REVENUE WHEREBY NOTES WERE GIVEN BY THE ASSESSEE WHICH IS A S UNDER:- DEPRECIATION ALLOWANCE IN RESPECT OF ASSETS, IF A NY, USED FOR LESS THAN 180 DAYS DURING THE YEAR IS CALCULATE D @ 50% OF THE RESPECTIVE RATES OF DEPRECIATION INDICATED IN THE A BOVE TABLE. THE ADJUSTMENT IN THE COST OF ACQUISITION IS REQUIR ED IN RESPECT OF MODIFIED VALUE ADDED TAX CREDIT IN RESPECT OF ASSET S REQUIRED ON OR AFTER 1ST MARCH, 1994, CHANGE IN RATE OF EXCHANG E IF CURRENCY, AND SUBSIDY OR GRANT OR REIMBURSEMENT, BY WHATEVER NAME CALLED. ADDITIONS DURING THE YEAR INCLUDE INTER ALIA CERTAI N ASSETS ACQUIRED DURING THE YEAR FROM AN ASSOCIATE CONCERN NAMELY PRABHUDAS LILADHAR PVT. LTD. (PLPL). THESE ASSETS WERE IN TURN MADE AVAILABLE TO PLPL UNDER THE BUSINESS SERVICE C ENTRE AGREEMENT. CONSEQUENTLY WDV OF SUCH ASSETS AS COMP UTED UNDER THE PROVISIONS OF THE INCOME TAX ACT IN THE H ANDS OF PLPL AS ON THE DATE OF SALE TO THE ASSESSEE IS TAKEN TO BE THE COST OF ITA 5406/MUM/2013 15 ACQUISITION DESPITE SUCH WDV BEING LOWER THAN THE V ALUE AT WHICH THE SAME HAVE BEEN PURCHASED BY THE ASSESSEE. DEPRECIATION IS THUS CLAIMED ON THE REDUCED AMOUNT AS REQUIRED BY EXPLANATION (4A) TO SECTION 43(1). WE HAVE OBSERVED THAT THE A.O. FRAMED THE ORIGINAL ASSESSMENT ORDER, WHICH IS PLACED AT PAPER BOOK PAGE NO. 6 TO 8 WHEREBY HE DISCUSSED THE FACT THAT THE BALANCE DEBTORS AMOUNT WAS RS. 3,27,45,000/- IN THE ASSESSMENT YEAR 2004- 05 AND IN THE ASSESSMENT YEAR 2005-06 , THE BALANCE DEBTORS AMOUNT WAS RS. 3,31,34,943/- WHEREIN THERE IS AN INCREASE OF DEBTO RS TO THE TUNE OF RS.3,89,943/-, WHICH INCLUDED RS. 1,44,657/- DEBTS IN RESPECT OF BUSINESS SERVICE CENTRE CHARGES RECEIVED. WE HAVE OBSERVED THAT THE SAID AMOUNT IS REFLECTED UNDER THE HEAD INCOME FROM BUSINESS SERVI CE CENTRE CHARGES, WHICH IS DULY REFLECTED IN THE P&L ACCOUNT, COPY PLACED A T PAPER BOOK PAGE NO. 5 AND THE SAID SUM IS OFFERED FOR TAXATION BY THE ASS ESSEE IN THE RETURN OF INCOME FILED WITH THE REVENUE. THE ORIGINAL ASSESSM ENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDERS DATED 26-12-2007 , WH EREBY THE CLAIM OF DEPRECIATION WAS ALLOWED TO THE ASSESSEE WITH RESPE CT TO THE BUSINESS SERVICE CENTRE BUSINESS. THE INCREASE AMOUNT OF DEBTOR TO THE TUNE OF RS. 2,45,286/- RELATING TO FACTORING BUSINESS WERE ADDE D TO THE INCOME OF THE ASSESSEE IN THE ORIGINAL ASSESSMENT ORDER DATED 26- 12-2007 FRAMED U/S 143(3) OF THE ACT , ALTHOUGH THERE WAS TOTAL INCREA SE IN DEBTORS AMOUNT BY RS. 3,89,943/-, WHICH INCLUDES RS. 1,44,657/- BEING DE BTORS ARISING FROM BUSINESS SERVICE CENTRE CHARGES WHICH WERE NOT ADDE D BY THE AO WHILE FRAMING ORIGINAL ASSESSMENT ORDER. THUS, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS AS THE ASSETS WERE ACQUIRED FROM M/S PRABHUDAS LILADHAR PVT. LTD. ON 27-03-2005 AND THE REVENUE OF RS.1,44,657/- WAS OFFERED FOR TAXATION IN THE RETUR N OF INCOME FILED WITH THE REVENUE. THE BUSINESS SERVICE CENTER AGREEMENT ENT ERED INTO BY THE ASSESSEE WAS ALSO PLACED BEFORE THE AO IN THE ORIGINAL ASSES SMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT AND THE SAID INCOME ALSO SUFFERED ITA 5406/MUM/2013 16 TAX. THE SAID BUSINESS SERVICE CENTRE CHARGES OF RS .1,44,657/- WAS SUBJECTED TO TAX DEDUCTED AT SOURCE UNDER CHAPTER XVII-B OF T HE ACT BY THE PAYER. NO NEW FRESH TANGIBLE INCRIMINATING MATERIAL HAS COME INTO POSSESSION OF THE AO INCRIMINATING THE ASSESSEE WHICH COULD HAVE LED TO FORMATION OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT WHICH COULD BE BROUGHT TO TAX U/S 147/148 OF THE ACT. IT WAS ALLEGED BY THE REVEN UE THAT THERE WAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AS TH E A.O. WRONGLY ALLOWED THE DEPRECIATION WHEREAS THE FACTS EMANATING FROM T HE ORIGINAL ASSESSMENT ORDER DATED 26.12.2007 U/S 143(3) OF THE ACT CLEARL Y REVEALS THAT THE AO WAS FULLY AWARE THAT THE ASSESSEE IS CLAIMING TO BE ENG AGED IN THE BUSINESS OF FACTORING AND ALSO BUSINESS OF BUSINESS SERVICE CEN TRE BUSINESS. THE AO CAME TO THE CONCLUSION DURING ORIGINAL ASSESSMENT PROCEE DINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT THAT THE ASSESSEE HA S NOT CARRIED OUT FACTORING BUSINESS DURING THE RELEVANT PREVIOUS YEAR AND HENC E MADE ADDITIONS OF RS.2,45,286/- WHICH WAS TOWARDS INCREASE IN DEBTORS OF FACTORING BUSINESS. NO DISALLOWANCE OF INCREASE IN DEBTORS OF RS.1,44,6 57/- WAS MADE WHICH WAS TOWARDS BUSINESS SERVICE CENTRE BUSINESS AND ALSO D EPRECIATION TOWARDS DEPRECIABLE ASSETS ACQUIRED FOR BUSINESS SERVICE CE NTRE BUSINESS WAS ALSO ALLOWED. THE BUSINESS SERVICE CENTRE AGREEMENT AND ALL OTHER DETAILS CONNECTED WITH THE SAID BUSINESS SUCH AS ACQUISITIO N OF DEPRECIABLE ASSETS OF BUSINESS SERVICE CENTRE BUSINESS , DECLARATION OF I NCOME FROM BUSINESS SERVICE CENTRE BUSINESS IN THE PROFIT AND LOSS ACCO UNT AS WELL IN RETURN OF INCOME FILED WITH THE REVENUE , CLAIM OF DEPRECIATI ON ON THE BUSINESS SERVICE CENTRE BUSIESS ETC. WERE ALL BEFORE THE AO DURING T HE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(2) READ WITH SECTION 143(3) OF THE ACT. THUS, THE AO BEING FULLY AWARE OF THE BUSINESSES OF FACTORING AS WELL BUSINESS SERVICE CENTRE BUSINESS HAS MADE A FINDING OF FACT THAT THE ASSESS EE IS NOT CARRYING OUT ANY BUSINESS WAS IN CONTEXT OF FACTORING BUSINESS WHICH COULD BE GATHERED FROM THE READING OF THE ASSESSMENT ORDER DATED 26.12.200 7 PASSED U/S. 143(3) OF THE ACT. THERE IS CLEARLY A CHANGE OF OPINION AS TH E AO HAS DULY CONSIDERED ITA 5406/MUM/2013 17 THE CLAIM OF THE ASSESSEE WHILE FRAMING ORIGINAL AS SESSMENT WHEREBY INCREASE IN SUNDRY DEBTORS TO THE TUNE OF RS.1,44,657/- ON A CCOUNT OF BUSINESS SERVICE CENTER BUSINESS WAS NOT ADDED TO THE INCOME OF THE ASSESSE AND ALSO DEPRECIATION ON ASSETS OF BUSINESS SERVICE CENTRE B USINESS WERE ALLOWED. SECTION 147 OF THE ACT IS NOT APPLICABLE IN THE INS TANT CASE AS THE RE-OPENING IS DONE AFTER FOUR YEARS FROM THE END OF THE ASSESS MENT YEAR AND ALSO THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) OF THE AC T , WHICH RE-OPENING COULD HAVE BEEN MADE AFTER FOUR YEARS FROM THE END OF ASSESSMENT YEAR IF THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO T RULY AND FULLY DISCLOSE ALL RELEVANT MATERIAL TO FRAME ASSESSMENT KEEPING IN VI EW THE PROVISO TO SECTION 147 OF THE ACT. THE RATIO OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561(SC) IS DIRECTLY APPLICABLE. WE HAVE OBSERVED THAT THERE IS NO FAIL URE ON THE PART OF THE ASSESSEE IN MAKING A TRUE AND FULLY DISCLOSURE DURI NG THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS . THE ASSESSEE HAS RIGHTLY RELIED ON THE FOLLOWING DECISIONS:- 1. ICICI BANK V. DCIT, 268 ITR 203(BOM) 2. ADOR TECHNOPACK LTD. V. DCIT, 271 ITR 50 (BOM) 3. SUPREME TREVES P. LTD. V. DCIT, 323 ITR 323(BOM) 4. BETTS INDIA P. LTD. V. DCIT, 235 TAXMANN 77 (BOM) IT WAS ALSO OBSERVED THAT THERE WAS NO ESCAPEMENT O F INCOME DUE TO FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOS E ALL THE MATERIAL FOR FRAMING OF THE ORIGINAL ASSESSMENT , WHILE DURING ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT. UNDER THESE CIRCUMSTANCES , WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS RIGHTLY QUASHED THE RE- ASSESSMENT ORDER DATED 20-12-2011 PASSED BY THE AO U/S 148 READ WITH SECTION 143(3) OF THE ACT AND WE DO NOT FIND ANY IN FIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) WHICH WE SUSTAIN / AFFIRM.WE ORDE R ACCORDINGLY. ITA 5406/MUM/2013 18 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO. 5406/MUM/2013 FOR THE ASSESSMENT YEAR 2005-06 IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2016. # $% &' 28-10-2016 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 28-10-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI