DCIT, New Delhi V. M/s. S. Chand and Co. Ltd., New Delhi

ITA 5806/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4852 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 30-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAILASH CHAND TIWARI
• Keywords: Reopening of assessment; Audit objection; Tangible material; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 148

Judgement Text

ITA NOS. 5778 & 5806/DEL/2013 ASSESSMENT Y EAR: 2007 - 08 PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G BENCH NEW DELHI) BEFORE SHRI G.D. AGRAWAL, PRESIDENT & SHRI AMIT SHUKLA , JUDICIAL MEMB E R I N ITA NO S . 5778 & 5806 /DEL/201 3 ASSESSMENT YEAR: 20 07 - 08 S. CHAND & CO. LTD. 7361, RAVINDRA MANSION, RAM NAGAR, DELHI VS. ACIT CIRCLE 7(1), NEW DELHI (APPLICANT) (RESPONDENT) (PAN: A AACS1149M ) DCIT CIRCLE 7(1), ROOM NO. 238A, 2 ND FLOOR, C.R. BUILDING, IP ESTATE, NEW DELHI VS. S. CHAND & CO. LTD. 7361, RAVINDRA MANSION, RAM NAGAR, DELHI (APPLICANT) (RESPONDENT) (PAN: AAACS1149M) ASSESSEE BY: SHRI V.K. BINDAL, CA MS. SWEETY KOTHARI, CA REVENUE BY: SH RI KAILASH CHAND TIWARI, SR. DR DATE OF HEARING 2 2 / 0 8 /201 7 DATE OF PRONOUNCEMENT 3 0 / 0 8 /201 7 ORDER PER : AMIT SHUKLA , JUDICIAL MEMBER : THE AFORESAID CROSS A PPEAL S HA VE BEEN FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINSTIMPUGNED ORDER DATED 1 6 . 0 8 .201 3 , PASSED BY THE LD. CIT(APPEALS) - 1 0 , NEW DELHI FOR THE QUANTUM OF PAGE 2 OF 14 ASSESSMENT PASSED U/S 147/ 143(3) F OR THE A.Y. 20 0 7 - 08 . THE GROUND RAISED IN THE ASSESSEE S APPEAL READS AS UNDER: 1. THE CIT (A) ERRED IN LAW AND ON FACTS IN HOLDING THE REOPENING OF ASSESSMENT IT/S 147 AS VALID IGNORING THE FACT THAT THE NOTICE U/S 148 HAS BEEN ISSUED BY THE ASSESSING OFFICER ON THE BASIS OF AUDIT OBJECTION. THUS THE NOTICE ISSUED U/S 148 IS BAD IN LAW AND ORDER PASSED UNDER REASSESSMENT SHOULD BE CANCELLED. 2. THE CIT (A) ERRED IN LAW AND ON FACTS IN HOLDING THE REOPE NING OF ASSESSMENT U/S 147 AS VALID IGNORING THE FACTS AND EVIDENCES PLACED ON THE RECORD TO SHOW THAT NOTICE U/S 148 HAS BEEN ISSUED DUE TO CHANGE IN OPINION ON THE SAME SET OF FACTS AS NO NEW INFORMATION CAME ON THE RECORD OF THE ASSESSING OFFICER. THUS THE NOTICE ISSUED U/S 148 IS BAD AN D LAW AND THE ORDER PASSED UNDER REASSESSMENT SHOULD BE CANCELLED. 3. THE CIT (A) ERRED IN LAW AND ON FACTS IN HOLDING THE REOPENING OF ASSESSMENT U/S 147 AS JUSTIFIED IGNORING THE FACT THAT THE ISSUE REGARDING THE VALUAT ION OF CLOSING STOCK HAS BEEN CONSIDERED AND DISCUSSED IN DETAIL BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THUS THE ORDER PASSED UNDER REASSESSMENT SHOULD BE CANCELLED. 4. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUTE, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. WHEREAS THE REVENUE HAS RAISED FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. C1T(. A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 2 , 07 , 62 , 305/ - MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF VALUATION OF CLOSING STOCK OF E - CLASS CONTENT . ' 2. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. PAGE 3 OF 14 3. WE WILL FIRST TAKE UP THE ASSESSEE S APPEAL , WHEREIN THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT U/S 148. BEFORE US THE LD. COUNSEL , SH RI V.K. BINDAL, EXPLAINING THE FACTS QUA THE VALIDITY OF REOPENING U/S 147 FROM THE RECORDS , POINTED OUT THAT HERE IN THIS CASE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) AT AN INCOME OF RS. 20,73,71,000/ - , AS AGAINST THE RETURN OF INCOME FILED AT F RS. 19,71,96,910/ - . LATER ON, THE ASSESS EE S CASE HA S BEEN REOPENED U/S 147BY ISSUANCE OF NOTICE DATED 23.3.2012 U/S 148 , ON THE FOLLOWING REASONS RECORDED : - PERUSAL OF RECORD REVEALS THAT IN SCHEDULE 'R'UNDER THE P&L ACCOUNT CLOSING STOCK OF E SOFTWARE SHOWNRS. 8293269/ - INSTEAD OF RS. 29055575/ - (OPENINGSTOCK+PURCHASE - SALE). THE FIGURE SHO W N AS CLOSING STOCK OFE SOFTWARE ACTUALLY PERTAINS TO ' E ' CLASS SOFTWARE SALE. INTHIS WAY THE ASSESSEE HAS DECLARED A LESSER AMOUNT ASCLOSING STOCK AND THUS REDUCED IT INCOME. THE MISTAKE RESULTED IN U NDER ASSESSMENT OF INCOME TO THE TUNE OF RS. 2,07,62,306. 4. LD. COUNSEL SUBMITTED THAT THOUGH THE REOPENING OF THE ASSESSMENT HAS BEEN DONE WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR , HO WEVER, PERUSAL OF THE REASONS RECORDED WILL REVEAL THAT THERE IS NO TANGIBLE MATERIAL ON RECORD HAV ING LI V E LINK NEXUS WITH INCOME ESCAPING ASSESSMENT , ALBEIT AO IS ONLY REFERRING TO THE RECORDS ALREADY AVAILABLE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , AND IN FACT IS BORNE OUT FROM SCHEDULE R OF AUDIT ED PROFIT AND LOSS ACCOUNT. H E FURTHER POINTED THAT THE REOPENING OF THE ASSESSMENT IS BASED ON AUDIT OBJECTION RAISED BY THE R EVENUE S AUDIT PARTY, WHICH IS EVIDENT FROM THE PAGE 4 OF 14 OBSERVATION MADE BY THE ASSESSING OFFICER AT PAGE 6 O F THE ASSESSMENT ORDER. A FTER THE AUDIT OBJECTION , THE ASSESSING OFFICER WITHOUT APPLYING HIS MIND HAS REOPENED THE ASSESSMENT WITHOUT EVEN BOTHERING TO REFER TO THE ASSESSMENT RECORDS WHICH WOULD HAVE REVEALED THAT THE SAME ISSUE HAS BEEN DULY CONSIDERED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. IN SUPPORT OF THIS CONTENTION HE REFERRED TO ORIGINAL ASSESSMENT ORDER DATED 4.12.2009 AND DREW OUR SPECIFIC ATTENTION ON PAGE 2 OF THE ASSESSMENT ORDER , WHEREIN THE PRECISE ISSUE OF VALUATION OF CLOSING STOCK INCLUDING THAT OF E - SOFTWARE HAS DULY BEEN NOTED AND CONSIDERED BY THE ASSESSING OFFICER. THUS, WHEN NO NEW MATERIAL HAS COME ON RECORD AND THE ISSUE WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE ORIGINAL AS SESSMENT PROCEEDINGS THEN REOPENING OF SUCH AN ASSESSMENT COMPLETED U/S 143(3) CANNOT BE REOPENED AS IT TANTAMOUNT TO CHANGE OF OPINION WHICH IS IMPERMISSIBLE IN LAW. IN SUPPORT OF HIS CONTENTION HE STRONGLY RELIED UPON THE LATEST JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT (INTL. TAX) VS. ROLLS ROYCE INDUSTRIAL POWER INDIA LTD. IN ITA NO. 1058/2011 (JUDGMENT DATED 18.5.2015). APART FROM THAT HE ALSO RELIED UPON VARIOUS OTHER DECISIONS THE COMPILATION OF WHICH HAS BEEN GIVEN SEPARATELY BEFORE US. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OBSERVATION AND FINDINGS OF THE LEARNED CIT(APPEALS) GIVEN AT PARA 2.3 , WHEREIN THE LEARNED CIT(APPEALS) HAS HELD THAT ANY INFORMATION/OBJECTION BY THE AUDIT PARTY IS AN ADEQUATE MATERIAL F OR REOPENING THE ASSESSMENT AND HE FURTHER REFERRED TO THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA INTERNATIONAL LTD. 348 ITR 0 485 (DEL) PAGE 5 OF 14 (2012) , WHEREIN THE HON BLE COURT HELD THAT THE OPINION CAN ONLY BE FORMED ON A PARTICULAR ISSUE WHEN THE ASSESSEE IS ABLE TO ESTABLISH THAT THE ISSUE HAS BEEN SPECIFICALLY DEALT BY THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT WHICH HERE IN THIS CASE DOES NOT APPEAR TO BE SO. H E ALSO REFERRED TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF R.K. MALHOTRA , 109 ITR 573 AND SUBMITTED THAT THE AUDIT OBJECTION IS ALSO A VALID GROUND FOR REOPENING OF THE ASSESSMENT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AND MATERIAL REFERRED TO BEFORE US QUA THE VALIDITY OF REOPENING U/S 147. FIRST OF ALL, FROM THE BARE PERUSAL OF THE REASONS RECORDED WHICH IS JURISDICTIONAL FACT FOR REOPENING THE ASSESSMENT U/S 147, IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INFORMATION OR MATERIAL COMING ON RECORD WHICH CAN TO BE SAID TO HAVE LI V E LINK NEXUS WITH THE INCOME ESCAPING ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER PROCEEDS WITH THE PHRASE PERUSAL OF THE RECORD REVEALS THAT IN SCHEDULE R UNDER THE PROFIT AND LOSS ACCOUNT CLOSING TO E SOFTWARE SHOWN .. . NOWHERE, THE REASONS REFERRED TO ANY INFORMATION RECEIVED FROM THE AUDIT PARTY OR ANY TANGIBLE MATERIAL COMING TO HIS POSSESSION THAT THE FIGURE OF CLOSING STOCK ON E - SOFTWARE HAS BEEN UNDERVALUED OR THIS ISSUE HAS BEEN FAILED TO BE EXAMINED / CONSIDERED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. REASONS AS RECORDED BY THE AO SIMPLY INDICATES THAT H E IS TRYING TO REAPPRAISE THE EXISTING MATERIAL SIMPLY BASED ON AUDIT OBJECTION WITHOUT APPLICATION OF HIS MIND INDEPENDENTLY. THE REASONS RECORDED ALONE IS THE FO UNDATIONAL FACT AND POINT OF JURISDICTION WHICH HAS TO BE EXAMINE D WHILE EVALUATING PAGE 6 OF 14 THE VALIDITY OF RE OPENING U/S 147 , IF CHALLENGED BEFORE THE COURT OR ANY QUASI JUDICIAL AUTHORITY. SUCH REASONS RECORDED BASED ON MERE REAPPRAIS AL OF SAME RECORD SANS ANY TANGIBLE MATERIAL OR INFORMATION COMING ON RECORD CANNOT CLOTHE THE ASSESSING OFFICER WITH THE JURISD ICTION TO REOPEN THE ASSESSMENT WHICH HAS BEEN COMPLETED U/S 143(3). 7. F URTHER F ROM THE PERUSAL OF THE RECORDS OF THE ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS THE ORIGINAL ASSESSMENT ORDER, IT IS SEEN THAT THE ASSESSING OFFICER HAD SPECIFICALLY CALLED UPON THE ASSESSEE TO EXPLAIN THE ISSUE OF CLOSING STOCK AS APPEARING IN THE BALANCE SHEET SHOWN AT RS. 12,13,86,177/ - , BREAK UP OF WHICH IS AS UNDER: - IN RS. BOOKS & PAPER 10,60,57,825/ - CD STOCK 11,19,312/ - MESSING (ITEMS & OTHERS) 2,25,448/ - E - SOFTWARE 82,93,269/ - SHARES 56,90,323/ - 12,13,86,177/ - THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER FURTHER NOTED THAT THE ASSESSEE WAS ASKED TO PROVIDE DETAILS ABOUT VALUATION OF THE CLOSING STOCK AND ALSO SUBSTANTIATE THE VALUATION OF THE CLOSING STOCK WITH THE EVIDENCE, VIDE ORDER SHEET ENTRY DATED 10.11.2009 . IN RESPONSE , T HE ASSESSEE HAD SUBMITTED THE DETAILS AND THE DIFFERENT METHODS ADOPTED F OR VALUATION OF STOCK. THE ISSUE OF VALUATION OF CLOSING STOCK HA S BEEN DISCUSSED FROM PAGES 2 TO 6 OF THE PAGE 7 OF 14 ASSESSMENT ORDER. WHENCE THE ISSUE OF VALUATION OF CLOSING STOCK INCLUDING THAT OF E - SOFTWARE HAS BEEN CONSIDERED AND IT HAS BEEN SPECIFICALLY CONTENDED BY THE ASSESSEE THAT THE SAME HAS BEEN VALUED A T NET REALIZABLE VALUE , BECAUSE THE SOFTWARE DEVELOPMENT IN E - CLASS PRODUCTS WERE FINISHED AND W ERE READY FOR DELIVERY, THEN IT CANNOT BE HELD THAT THIS ISSUE HAS NOT BEEN CONSIDERED OR THERE IS NO APPLICATION OF MIND BY THE AO . 8 . APART FROM THAT IT WOULD BE VERY RELEVANT TO NOTE THAT THE LEARNED CIT (APPEALS) IN THE IMPUGNED ORDER HA S DISCUSSED THIS ISSUE THREADBARE ON MERITS AND HAS COME TO THE CONCLUSIO N THAT THE VALUATION SHOWN BY THE ASSESSEE WAS CORRECT. THE RELEVANT OBSERVATION AND FINDINGS OF THE LEARNED CIT (APPEALS) IN THIS REGARD READS AS UNDER: - 3.3. AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE A.R. OF THE APPELLANT, THIS GROUND IS BEING FINALIZED AFTER MAKING THE FOLLOWING OBSERVATIONS: (A) ON GOING THROUGH THE OBSERVATIONS OF THE A.O., THE TWO MAIN CONTENTIONS OF THE ASSESSING OFFICER WERE THAT THE ASSESSEE HAD NOT VALUED ITS STOCK RELATING TO E - CLASS PROJECT AND RE LEVANT DETAILS AND DOCUMENTS WERE ALSO NOT PRODUCED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. THE A.R. OF THE APPELLANT HAS CONTENDED THAT AS PER THE TERMS OF CONTRACT WITH THE GOVERNMENT OF UTTRANCHAL, THE WHOLE PROJECT HAD TO BE COMPLETED OV ER A PERIOD OF SEVERAL YEARS AND IT WAS NOT POSSIBLE FOR IMPLEMENTING AND SUPPLYING ALL THE PRODUCTS DURING THE SAME YEAR. THE ASSESSING OFFICER HAD TREATED THE E - CLASS ITEMS AS WORK - IN - PROGRESS ON THE LOGIC THAT IT WAS STILL NOT PROCESSED AND, THEREFORE, SHOULD BE VALUED AT COST. ON THE OTHER HAND, THE A.R. OF THE APPELLANT HAS CONTENDED THAT ALL ITS SOFTWARE DEVELOPMENT AND E - CLASS PRODUCTS WERE FINISHED AND READY FOR DELIVERY BUT IT COULD NOT PAGE 8 OF 14 BE DELIVERED DUE TO THE TERMS OF AGREEMENT. THE A.R. HAS ALSO STRONGLY ARGUED THAT THERE WAS NO MATERIAL AVAILABLE WITH THE A.O. TO ARGUE THAT THESE ITEMS WERE NOT FINISHED PRODUCTS TO SAY ONLY PART OF WORK - IN - PROGRESS. IN VIEW OF THESE FACTS, THE CONTENTIOUS ISSUE IS WHETHER THESE ITEMS IN THE CLOSING STOCK RELATING TO E - C L ASS PROJECT SHOULD BE TREATED AS WORK - IN - PROGRESS OR FINISHED GOODS. WHILE THE APPELLANT HAS ARGUED THAT IT WAS IN THE BEST POSITION TO ASCERTAIN THATTHESE WERE FINISHED GOODS, THE A.O. HAS NOT BROUGHT ANY SPECIFIC DOCUMENTS OR FACTS ON RECORD TO D ISPUTE THE ARGUMENTS AND CONTENTIONS OF THE A.R. OF THE APPELLANT THAT THESE ITEMS RELATING TO E - CLASS SOFTWARE WERE NOT FINISHED GOODS BUT WERE ONLY WORK - IN - PROGRESS. (B) FROM THE FACTS AVAILABLE IT APPEARS THAT THE APPELLANT HA S , ALL THE INFORMATION AND DETAILS RELATING TO THE VARIOUS ITEMS OF CLOSING STOCK AS WELL AS THE EXPENSES ON VARIOUS ITEMS WHICH THE ASSESSEE WAS WILLING TO PROVIDE TO THE ASSESSING OFFICER DURING THE TIME OF ASSESSMENT. THE ASSESSING OFFICER HAS MADE GENERAL COMMENTS REGARDING NON - AVAILABILITY OF DETAILS WITH THE ASSESSEE ON THE BASIS OF WHICH HE HAS DRAWN AN ADVERSE INFERENCE AGAINST THE ASSESSEE. ON GOING THROUGH THE OBSERVATIONS OF THE A.O. ON PAGE 10 OF THE ASSESSMENT ORDER, THE FINDINGS OF THE ASSESSING OFFICER ARE NOT SPECIFIC AND ONLY GENERAL OBSERVATIONS HAD BEEN MADE THAT DETAILS OF EXPENSES ARE NOT PROVIDED AND THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS NOT ACCEPTABLE. THE A.O. DID NOT, HOWEVER, POINT OUT ANY SPECIFIC EXPENSE OR DETAIL MAINTAINED BY THE APPELLANT , WHICH WERE NOT ACCEPTABLE TO HIM. (C) ON GOING THROUGH THE FACTS OF THIS SPECIFIC CASE IT APPEARS THAT ONE OF THE CRUCIAL FACTORS REGARDING THIS DISPUTE OF TREATING THE E - CLASS PROJECTS AS WORK - IN - PROGRESS OR FINISHED STOCK IS RELATED TO THE TERMS OF AGR EEMENT WITH GOVERNMENT OF UTTRANCHAL AND THE NATURE OF THE PRODUCT RELATED TO E - CLASS PROJECTS. THE A.R. HAS VEHEMENTLY ARGUED THAT SO FAR AS E - CLASS PROJECTS ARE CONCERNED, SINCE THEY ARE COMPLETE AND READY AT THE END OF THE FINANCIAL YEAR, THERE WAS NO LOGIC OR BASIS FOR TREATING THE SAME ASWORK - IN - PROGRESS. THE ASSESSING OFFICER HAS ALSO NOT POINTED OUT ANYREASON TO DISPUTE THIS FUNDAMENTAL ARGUMENT OF THE APPELLANT THAT THESE ITEMS WERE NOT PAGE 9 OF 14 ACTUAL WORK - IN - PROGRESS AND SHOULD, THEREFORE, NOT BE TREATED AS WORK - IN - PROGRESS. (D) THE APPELLANT HAS STRONGLY ARGUED THAT IT IS FOLLOWING A CONSISTENT METHOD OF ACCOUNTING AND ACCORDINGLY THERE WOULD BE NO IMPACT ON THE INCOME OF THE APPELLANT OVER SEVERAL YEARS AS THE CONSISTENT SYSTEM OF ACCOUNTING WOULD ACCORD INGLY BALANCE OUT THE INCOME OF THE APPELLANT. IT WAS FURTHER SUBMITTED BY THE A.R. THAT THE APPELLANT WAS IN THE BEST POSITION TO ASSESS THAT THESE ITEMS RELATED TO E - CLASS PROJECTS WERE COMPLETE IN ALL ASPECTS AND COULD NOT BE TREATED AS WORK - IN - PROGRESS UNLESS THE ASSESSING OFFICER WOULD HAVE POINTED OUT ANY REASON TO DO SO. (E) AFTER CAREFUL CONSIDERATION OF THE ARGUMENTS OF THE A.R. OF THE APPELLANT AS WELL AS THE OBSERVATIONS OF THE A.O., AND ALSO CONSIDERING THE TERMS OF AGREEMENT WITH THE GOVERNMENT OF UTTRANCHAL, IT APPEARS THAT THE A.R. HAS INSISTED UPON THE TREATMENT OF E - CLASS SOFTWARE AS FINISHED PRODUCT AND NOT AS WORK - IN - PROGRESS. THE ASSESSING OFFICER HAS NOT BEEN ABLE TO DISPUTE THESE ARGUMENTS THROUGH ANY SPECIFIC FINDINGS. ALSO KEEPING IN VIEW THE CONSISTENT METHOD OF ACCOUNTING BEING FOLLOWED BY THE APPELLANT, THERE IS NO REASON TO DISTURB THE SYSTEM OF ACCOUNTING AND IN ANY CASE THIS VALUATION OF CLOSING STOCK WOULD HAVE A DIRECT IMPACT ON THE OPENING STOCK OF THE NEXT YEAR, WHICH WOULD BALANCE OUT THE IMPACT OF VALUATION OVER THE TWO YEARS. ACCORDINGLY, IN MY OPINION, THE ARGUMENTS OF THE A.R. OF THE APPELLANT HAVE REASONABLE LOGIC TO BE ACCEPTED AND THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO DISPUTE THESE ARGUMENTS. TH IS ADDITION IS, THEREFORE, DIRECTED TO BE DELETED. THIS GROUND OF THE A P PELLANT IS TREATED AS ALLOWED. 8 . THE AFORESAID FINDINGS OF THE LEARNED CIT (APPEALS) ITSELF GOES TO SHOW THAT THERE IS NO APPLICATION OF MIND OF THE ASSESSING OFFICER FROM THE MATERIALS ALREADY AVAILABLE ON RECORD AND HE HAS BLINDLY GONE BY THE OBSERVATION OF THE AUDIT PARTY WHICH CAN NOT BE RECKONED AS CONCLUSIVE FINDING OR OPINI ON BUT MERE SUGGESTION. THE ASSESSING OFFICER AFTER HAVING RECEIVING THE INFORMAT ION IN FORM OF AUDIT PAGE 10 OF 14 OBJECTION HAS TO APPLY HIS MIND INDEPENDENTLY FROM THE RECORDS AS TO WHETHER SUCH AN OBJECTION AND SUGGESTION BY THE AUDIT PARTY IS ACTUALLY TENABLE OR NO T. THUS, THE REASONS WHICH HAVE BEEN RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT CANNOT BE HELD TO BE IN THE REALM OF REASONS TO BELIEVE FOR REOPENING THE ASSESSMENT COMPLETED U/S 143(3). W E FIND THAT HON'BLE JURISDICTIONAL HIGH C OURT IN DIT (INTL. TAX) VS. ROLLS ROYCE INDUSTRIAL POWER INDIA LTD. (SUPRA) AFTER CONSIDER ING CATENA OF JUDGMENTS OF THE HON'BLE DELHI HIGH COURT IN CLUDING THE CASE OF CIT VS. USHA INTERNATIONAL LTD. (SUPRA) RELIED UPON BY LD. CIT (A) AND ALSO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA (2010) 320 ITR 561 (SC) , H ELD THAT IF THE REOPENING IS NOT BASED ON ANY NEW MATERIAL AND MERELY REVISITING THE SAME MATERIAL AMOUNTS TO CHANGE OF OPINION WHICH CANNOT BE UPHELD. THE RELEVANT CONCLUSION OF THE HON'BLE HIGH COURT READS AS UNDER: - 18. THERE IS NO MANNER OF DOUBT THAT THE DECISION OF THE DB OF THIS COURT IN CONSOLIDATED PHOTO AND FINVEST. LTD. V. ASSISTANT COMMISSIONER OF INCOME - TAX (SUPRA) IS NO LONGER GOOD LAW. THE MAIN PLANK OF THE REVENUE'S CASE BEFORE THIS COURT, THEREFORE, FAILS. NEVERTHELESS, THE COURT PROCEEDS TO EXAMINE THE QUESTION OF VALIDITY OF THE REOPENING OF THE ASSESSMENTS FOR THE AYS IN QUESTION. 1 9. THE FACT OF THE MATTER IS THAT DURING THE COURSE OF THE ORIGINAL ASSESSMENT UNDER SECTION 143(3), THE A.O. DID SERVE UPON THE ASSESSEE A DETAILED QUESTIONNAIRE. THE A.O. EXAMINED THE NATURE OF THE TRANSACTIONS INVOLVING THE ASSESSEE AND THE PAYMENTS RECEIVED THEREFOR. THE REOPENIN G WAS NOT BASED ON ANY FRESH MATERIAL. BY REVISITING THE SAME MATERIALS THE SUCCESSOR NOW CONCLUDED THAT THE PAYMENTS RECEIVED BY THE PAGE 11 OF 14 ASSESSEE PURSUANT TO THE O&M AGREEMENTS SHOULD BE TREATED AS FTS. IN THE CIRCUMSTANCES, THE VIEW TAKEN BY A SUCCESSOR AO O N THE SAME MATERIAL WAS INDEED NOTHING BUT A MERE CHANGE OF OPINION. IT IS A WELL - SETTLED LEGAL PROPOSITION, AS EXPLAINED IN CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 (SC) THAT ONCE AN ASSESSEE HAS DISCHARGED THE BURDEN OF NOT ONLY PRODUCING THE ACCOUNT BOOKS AND OTHER DOCUMENTS, BUT ALS O THE SPECIFIC MATERIAL RELEVANT TO THE ASSESSMENT, IT IS FOR THE INCOME - TAX OFFICER TO DRAWTHE PROPER INFERENCES OF FACT AND LAW THEREFROM AND THE ASSESSEE CANNOT FURTHER BE CALLED UPON TO DO SO FOR HIM.' IN INDIA N OIL CORPORATION V. ITO [1986] 159 ITR 956 , T HE COURT PERTINENTLY OBSERVED 'IT IS FOR THE TAXING AUTHORITY TO DRAW INFERENCE. IT IS NOT NECESSARY FOR THE ASSESSEE TO DRAW INFERENCE. THESE OBSERVATIONS APPLY ON ALL FOURS TO THE CASE ON HAND. HERE THE ASSE SSEE HAD DISCHARGED ITS BURDEN OF DISCLOSING FOLLY AND TRULY ALL THE MATERIAL FACTS BEFORE THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENTS. THERE WAS NO BASIS FOR THE SUCCESSOR AO T O CONCLUDE THAT 'NO OPINION WITH REGARD TO TAXATION OF THE PAYMENTS RECEIVED FOR THE SERVICES RENDERED HAD BEEN PRE - CONDITION FOR INVOKING SECTION 147 DID NOT EXIST. THE ASSUMPTION O F JURISDICTION UNDER SECTION 148 OF THE ACT WAS NOT VALID. 9 . THUS, WE HOLD THAT THE REOPENING IN THE PRESENT CASE IS BAD IN LAW , FIRSTLY, NO TANGIBLE MATERIAL HAS COME ON RECORD HAVING LIVE LINK NEXUS WITH THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT; AND SECONDLY, THE ISSUE WHICH HAS BEEN RAISED IN THE REASONS RECORDED WAS ALREADY ON RECORD AND DULY CONSIDERED BY THE AO IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, WHICH AMOUNTS TO CHANGE OF OPINION , IMPERMISSIBLE IN LAW. A CCORDINGLY, THE ASSESSMENT ORDER PASSED IN PURSUANCE OF SUCH REASONS IS LIABLE TO BE QUASHED. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE HAS BECOME INFRUCTUOUS IN VIEW OF THE FINDINGS GIVEN ABOVE. PAGE 12 OF 14 10 . IN THE RESULT, ASSESSEE S APPEAL IS ALLOWED AND REVENUE S APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 . 8.2017 . S D / - S D / - G.D. AGRAWAL ) (AMIT SHUKLA) (PRESIDENT) (JUDICIAL MEMBER) DATED: 3 0 .0 8 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON 2 8 .0 8 .2017 DRAFT PLACED BEFORE AUTHOR 2 9 . 0 8 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS . 8 .2017 KEPT FOR PRONOUNCEMENT ON .8.2017 FILE SENT TO THE BENCH CLERK . 8 .2017 PAGE 13 OF 14 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. PAGE 14 OF 14