DCIT 4(1), MUMBAI V. DOUBLE DOT FINANCE LTD, MUMBAI

ITA 6498/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4163 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 05-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY B JAKKE
• Keywords: Unexplained expenditure; Depreciation; Tangible material; Difference of opinion; Revised return; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 69; 154; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H MUMBAI BEFORE SHRI B.R.BASKARAN, AM & SHRI SANDEEP GOSAIN, JM ./ ITA NO.6498/MUM/2013 ( / ASSESSMENT YEAR :2005-2006) DCIT-4(1), MUMBAI VS. M/S DOUBLE DOT FINANCE LTD., KANTA TERRACE, 1 ST FLOOR, 533, KALVADEVI ROAD, MUMBAI-400002 ./ ./PAN/GIR NO. : AABCD 5429 J ( /APPELLANT ) .. ( / RESPONDENT ) ! /REVENUE BY : SHRI UDAY B JAKKE ! /ASSESSEE BY : SHRI DHARMESH SHAH / DATE OF HEARING : 30/11/2015 !'#$ /DATE OF PRONOUNCEMENT 06/04/2016 #$ / O R D E R PER SANDEEP GOSAIN,(JM) THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 8-8-2013, PASSED BY THE CIT(A)-8, MUMBAI, FOR THE A SSESSMENT YEAR 2005-2006, ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE PROCEEDING U/S. 147 OF THE ACT, 1961 AS BAD IN LAW IN SPITE OF THE FACT THAT T HE SET OFF OF CARRIED FORWARD LOSSES ARE NOT IN EXISTENCE AS PER SECTION 72 OF THE ACT FOR A.Y.1999-2000. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND CONSEQUENTLY MERITS TO BE SET ASIDE THAT OF THE ASS ESSING OFFICER BE RESTORED. 2. BRIEF FACTS GIVING RISE TO THIS APPEAL ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF NBFC AND TRADING IN SHAR ES AND SECURITIES. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME AT ITA NO.6498/13 2 RS.92,60,984/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY AND AN ORDER U/S.143(3) WAS PASSED REVISING THE INCOME AT RS.NIL AFTER SET OFF OF LOSS OF RS.3,75,67,477/- OF EARLIER YEARS. SUBSE QUENTLY, THE AO NOTICED THAT THE SET OFF OF LOSS OF RS.3,75,67,477/- ALLOWE D TO THE ASSESSEE WAS NOT IN ORDER AND THERE WAS UNDER ASSESSMENT OF RS.3 ,75,67,477/-. ACCORDINGLY, AFTER RECORDING THE REASONS FOR REOPEN ING OF ASSESSMENT, THE AO PASSED A SEPARATE ORDER. IN APPEAL, THE CIT(A) A LLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT REOPENING OF THE ASSESSME NT WAS BAD IN LAW. NOW, THE REVENUE IS IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF CIT(A) WITH THE GROUNDS MENTIONED ABOVE. 3. LD. DR BEFORE US SUBMITTED THAT THE REOPENING OF THE ASSESSEE WAS JUST AND PROPER AS THE ASSESSEE HAD SOLD ITS BUSINE SS ASSETS CONSISTING OF FOUR INDUSTRIAL UNITS DURING ASSESSMENT YEAR 1998-9 9 AND THEREBY DISCONTINUED THE BUSINESS FOR WHICH THE LOSS WAS OR IGINALLY COMPUTED. LD. DR FURTHER SUBMITTED THAT THE SET OFF OF CARRIED FO RWARD LOSSES ARE NOT IN EXISTENCE AS PER SECTION 72 OF THE ACT FOR A.Y.1999 -2000 AND, CONSEQUENTLY, RELIED ON THE ORDER OF ASSESSING OFFI CER IN THIS REGARD. 4. ON THE OTHER HAND, LD. AR CONTENDED THAT IT IS A CLEAR CASE OF CHANGE OF OPINION AFTER EXPIRY OF FOUR YEARS WHEN T HERE WAS NO FAILURE OR OMISSION ON THE PART OF THE ASSESSEE. LD. AR FURTHE R SUBMITTED THAT THE REASSESSMENT PROCEEDING WAS DONE IN RESPECT OF MATT ER COVERED BY THE DISCLOSURE OF PRIMARY FACTS AT THE TIME OF ORIGINAL ASSESSMENT AND ASSESSMENT BEING FRAMED U/S.143(3) OF THE ACT AND S UCH REASSESSMENT IS VOID AB INITIO . RELIANCE WAS PLACED ON THE DECISION OF HONBLE SU PREME ITA NO.6498/13 3 COURT IN THE CASE OF KELVINATOR INDIA LIMITED, 320 ITR 361 AND HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN UNILIVER LTD., 325 ITR 102. HE FURTHER SUBMITTED THAT THE ORDER PASSED BY THE C IT(A) IS BASED ON THE MATERIAL FACTS AVAILABLE ON RECORD AND, HENCE, NO I NTERFERENCE IS CALLED FOR. 5. WE HAVE HEARD THE PARTIES AT LENGTH AND PERUSED THE RECORD CAREFULLY. THE CENTRIPETAL ISSUE THAT REALLY WARRAN TS TO BE DWELLED UPON IS AS TO WHETHER THE REASSESSMENT U/S.147 IS VALID OR NOT. FROM THE ORDER OF CIT(A), WE FOUND THAT THE CIT(A) AFTER GOING THROUG H THE DETAILS AS AVAILABLE ON RECORD AND RELYING ON THE VARIOUS JUDI CIAL PRONOUNCEMENTS HELD THAT THE REASSESSMENT PROCEEDINGS IS BAD IN LA W. THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD ARE AS UNDER :- 2.4.1 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENT OF THE APPELLANT. AFTER THE INTRODUCTION OF THE NEW PR OVISIONS OF SECTION 147, SEVERAL HIGH COURTS CONSIDERED THE SCOPE OF TH E NEW PROVISIONS. THE DELHI HIGH COURT (FULL BENCH) IN TH E CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2002) 174 CTR (DEL)(FB) 6 17: (2002) 256 ITR 1 (DEL)FB) OBSERVED THAT WHEN A REGULAR ORDER O F ASSESSMENT IS PASSED IN TERMS OF THE SAID SUB-SECTION (3) OF SECT ION N143, A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BE EN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUM PTION CAN ALSO BE RAISED TO THE EFFECT THAT IN TERMS OF CLAUSE (E) OF SECTION 114 OF THE INDIAN EVIDENCE ACT JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD THAT 'AN ORDER WHICH HAS B EEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSEL F CONFER JURISDICTION UPON THE ASSESSING OFFICER TO REOPEN T HE PROCEEDINGS WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI-JUDICIAL F UNCTIONS TO TAKE BENEFIT OF ITS OWN WRONG. 2.4.2 THE HON'BLE SUPREME COURT WHILE AFFIRMING AFO RESAID DECISION OF THE' DELHI HIGH COURT REPORTED AT (2010) 228 CTR (SC) 488, HELD THAT PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1987 , REOPENING COULD BE DONE UNDER TWO CONDITIONS AND FULFILLMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE AO T O MAKE A BACK ASSESSMENT, BUT IN S. 147 (W.E.F. 1ST APRIL, 1989), THEY ARE GIVEN A GO BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., TH AT WHERE THE AO HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THER EFORE, POST 1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER , ONE NEEDS TO ITA NO.6498/13 4 GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASO N TO BELIEVE' FAILING WHICH, S. 147 WOULD GIVE ARBITRARY POWERS T O THE AO TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. THE CONCEP TUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REA SSESS SHOULD ALSO TO BE KEPT IN MIND. THE AO HAS NO POWER TO REV IEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF 'CHA NGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN- BUILT TEST TO CHECK ABUSE OF POWER BY THE AO. HENCE, AFTER 1ST AP RIL, 1989, AO HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MA TERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOM E FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BE LIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN S. 147 HOWEVER, ON R ECEIPT OF RE- PRESENTATIONS FROM THE COMPANIES AGAINST OMISSION O F THE WORDS 'REASON TO BELIEVE', PARLIAMENT RE-INTRODUCED THE S AID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT I T WOULD VEST ARBITRARY POWERS IN THE AO. 2.4.3 THE BOMBAY HIGH COURT IN THE CASE OF ASIAN PA INTS LTD. VS. DY. CIT (2009) 308 ITR 195 (BOM) AGREED WITH THE AB OVE DECISION AND OBSERVED THAT LEGISLATURE HAS NOT CONFERRED POW ER ON THE ASSESSING OFFICER TO REVIEW HIS OWN ORDER. THEREFOR E, THE POWER UNDER SECTION 147 CANNOT BE USED TO REVIEW THE ORDE R. WHERE BETWEEN THE DATE OF THE ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FORMATION OF OPINION BY TH E ASSESSING OFFICER, NOTHING NEW HAS HAPPENED, NO NEW MATERIAL HAS COME ON RECORD, NO NEW INFORMATION HAS BEEN RECEIVED, IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME ASSESSING OFFICER T O THE SAME SET OF FACTS, AND THE REASON THAT HAS BEEN GIVEN IS THA T THE SOME MATERIAL WHICH WAS AVAILABLE ON RECORDS WHILE ASSES SMENT ORDER WAS MADE, WAS INADVERTENTLY EXCLUDED FROM CONSIDERA TION, IT WILL AMOUNT TO OPENING OF THE ASSESSMENT MERELY BECAUSE THERE IS CHANGE OF OPINION. 2.4.4 THE COURT REITERATED THE ABOVE VIEW IN THE CA SE OF CARTINI INDIA LTD. VS. ADDL. CLT & ANR (2009) 314 ITR 275 ( BORN) AND OBSERVED THAT WHAT SECTION 147 OF THE ACT CONTEMPLA TES IS THE EXISTENCE OF MATERIAL ON RECORD ON THE BASIS OF WHI CH A PRIMA FACIE OPINION COULD BE FORMED BY THE ASSESSING OFFICER TH AT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND NOT TH E MATERIAL ON RECORD ON THE BASIS OF WHICH A FINAL DECISION HAS A LREADY BEEN TAKEN AT THE TIME OF ASSESSMENT UNDER SECTION 143(3) OF T HE ACT. REOPENING OF THE ASSESSMENT BASED ON THE VERY SAME MATERIALS TO TAKE A CONTRARY VIEW CONSTITUTES REOPENING ON ACCOU NT OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER SECTION 147 OF THE ACT. ITA NO.6498/13 5 2.4.5 THE LEGISLATURE HAS EMPLOYED THE EXPRESSION ' REASON TO BELIEVE'! ABOUT ANY INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED FOR ANY ASSESSMENT YEAR, IN ORDER TO EMPOWER THE AO FOR RESORTING TO THE ASSESSMENT UNDER S. 147, SUBJECT TO THE PROVISI ONS OF SS. 148 TO 153. THE AO CANNOT ASSUME POWER TO INITIATE REASSES SMENT PROCEEDINGS ON HIS IPSE DIXIT. IN ORDER TO TAKE REC OURSE TO THE PROVISIONS OF S. 147, THE AO SHOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH E EXPRESSION REASON TO BELIEVE' EMPLOYED IN THE SECT ION, PRE- SUPPOSES SOME OBJECTIVITY OF THE AO AND NOT MERE TH E SUBJECTIVE SATISFACTION OR ANY SUSPICION ABOUT THE ESCAPEMENT OF INCOME. A MERE SUSPICION OF THE AO ABOUT THE ESCAPEMENT OF IN COME CANNOT JUSTIFY THE ACTION UNDER THIS SECTION. THERE IS NO DISPUTE AND THERE CANNOT BE ANY THAT THE AO CANNOT REOPEN THE ASSESSM ENT AT HIS WHIMS AND FANCIES. THERE MUST BE SOMETHING POSITIVE TO INDICATE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT. 2.4.6 NO DOUBT THAT THE EXPLANATION 2 TO S. 147 HAS WIDENED THE SCOPE OF ASSESSMENT OR REASSESSMENT BY PROVIDING TH REE CLAUSES IN WHICH THE INCOME CHARGEABLE TO TAX SHALL BE DEEMED TO HAVE ESCAPED ASSESSMENT. CLAUSE (A) DEALS WITH THE SITUA TION IN WHICH NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSES SEE ALTHOUGH THE TOTAL INCOME IN RESPECT OF WHICH HE IS ASSESSAB LE EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX. CLAU SE (B) DEALS WITH THE SITUATION IN WHICH THE RETURN OF INCOME HA S BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE AO THAT THE ASSESSEE HAS UNDERSTATED THE INCOME. CLAUSE (C), WHICH IS RELEVANT FOR OUR PURPOSE, DEAL S WITH A SITUATION IN WHICH AN ASSESSMENT HAS BEEN MADE BUT INCOME CHA RGEABLE TO TAX HAS BEEN UNDER-ASSESSED OR SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE. THUS, IT IS SEEN THAT EVEN IF .O RIGINAL ASSESSMENT WAS FINALIZED UNDER S. 143(3) BUT LATER ON IT TRANS PIRES TO THE AO THAT SOME .INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT, HE CAN TAKE RECOURSE TO THE PROVISIONS OF S. 147. HERE AGA IN THERE IS A RIDER THAT THE BELIEF OF THE AO ABOUT THE ESCAPEMENT OF I NCOME SHOULD NOT BE BASED ON THE CHANGE OF HIS OPINION. IN OTHER WORDS IF WHILE FINALIZING THE ORIGINAL ASSESSMENT HE HAD APPLIED H IS MIND TO A PARTICULAR ITEM OF INCOME OR EXPENDITURE AND ACCEPT ED THE CLAIM OF THE ASSESSEE POSITIVELY, THEN HE CANNOT TAKE THE AS SISTANCE OF S. 147 FOR SUCH ITEMS UNLESS SOMETHING NEW COMES TO HI S NOTICE AFTER THE COMPLETION OF ASSESSMENT WHICH BELIES THE ASSES SEE'S CLAIM ON THAT ITEM. AGAIN IT IS PERTINENT TO MENTION THAT TH ERE SHOULD BE POSITIVE APPLICATION OF MIND BY THE AO ON A PARTICU LAR ITEM OF INCOME OR EXPENDITURE SO AS TO BAR IT FROM INCLUSIO N IN THE REASSESSMENT. WHERE THE INFORMATION WAS AVAILABLE B EFORE THE AO IN THE ORIGINAL ASSESSMENT BUT IT ESCAPED HIS ATTEN TION, THEN IT CANNOT BE SAID THAT THE SAID ITEM OF INCOME HAS ATT AINED FINALITY SO AS TO MERIT EXCLUSION IN REASSESSMENT. EXPLANATION 1 TO S. 147 MAKES THE THINGS VERY CLEAR, WHICH PROVIDES THAT TH E PRODUCTION BEFORE THE AO OF ACCOUNT BOOKS OR OTHER EVIDENCE FR OM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEE N DISCOVERED BY THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE . WHEN EXPLN. 2 ITA NO.6498/13 6 IS READ IN JUXTAPOSITION TO EXPLN. 1 AND THE MAIN P ROVISION OF S. 147, IT BECOMES CRYSTAL-CLEAR THAT, SUBJECT TO OTHER PRO VISIONS, IN A CASE WHERE THE ORIGINAL ASSESSMENT WAS FRAMED UNDER S. 1 43(3) AND SUBSEQUENTLY IT COMES TO THE NOTICE OF THE AO THAT STILL SOME INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE CAN GE T THE ASSISTANCE OF THE PROVISIONS OF S. 147 PROVIDED IT DOES NOT AMOUNT TO THE CHANGE OF OPINION. 2.4.7 IT IS A SETTLED PRINCIPLE OF LAW THAT HAVING CONCLUDED THAT ALL THE MATERIAL FACTS WERE FULLY AND TRULY DISCLOSED BY TH E ASSESSEE AT THE' TIME OF ORIGINAL ASSESSMENT, INVOKING THE OF PROVIS IONS OF S. 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASST. YEAR WAS NOT VALID. THE RELIANCE IS PLACED ON THE FOLLOW ING DECISIONS, NAMELY; JASHAN TEXTILES !VLILLS P. LTGD. VS. DEIT (2006) 284 ITR 542 (BOM) GERMAN REMEDIES LTD VS. DCIT (2006) 287 ITR 494 ( BORN) CIT VS. FORMER FINANCE (2003) 264 ITR 566 (SC) 2.4.8 NOTICE AFTER EXPIRY OF FOUR YEARS, IT IS IMPE RATIVE FOR THE REVENUE TO ALLEGE IN THE REASONS FOR FAILURE TO DIS CLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT REOPENING BEYOND FOUR YEAR S, IN CASE NO SUCH ALLEGATION IS MADE THE ACTION OF REOPENING CAN NOT BE HELD TO BE VALID. IN THE CASE OF SOUND CASTING (P) LTD V. D Y.CIT (2012) 250 CTR 119 (BOM.), WHEREIN THE ASSESSMENT WAS COMPLETE D UNDER SECTION 143 (3) ON 14TH DECEMBER, 2007 ACCEPTING TH E MELTING LOSS AT 7.75 PERCENT. THE NOTICE FOR REOPENING WAS ISSUE D ON THE GROUND THAT IN THE SIMILAR LINE OF BUSINESS OTHER ASSESSEE S HAVE CLAIMED THE MELTING LOSS AT 5.5 PERCENT. THE OBJECTION OF A SSESSEE WAS REJECTED BY THE ASSESSING OFFICER. THE ASSESSEE CHA LLENGED THE REOPENING BY WRIT PETITION. THE COURT ALLOWED THE W RIT PETITION AND HELD THAT THERE IS NO ALLEGATION IN THE REASONS WHI CH HAVE BEEN DISCLOSED TO THE ASSESSEE THAT THERE WAS ANY FAILUR E ON HIS PART TO FULLY AND TRULY DISCLOSE MATERIAL FACTS NECESSARY F OR ASSESSMENT AND THEREFORE REOPENING BEYOND FOUR YEARS WAS NOT VALID . (AY.2005-06) 2.1.9, IN THE CASE OF CIT VS. AMITABH BACHCHAN (BOM BAY HIGH COURT), FUR AY 2002-03, THE ASSESSEE FILED A ROI DE CLARING INCOME OF RS.14.99 CRORES. A REVISED ROI WAS THEN FILED CL AIMING 30% ADHOC EXPENSES (RS. 6.31 CRORES) AND OFFERING INCOM E OF RS. 8.11 CRORES. WHEN THE AO ASKED THE ASSESSEE TO SUBSTANTI ATE THE EXPENSES, HE WITHDREW THE CLAIM. THE AO PASSED A S. 143(3) ASSESSMENT DETERMINING THE INCOME AT RS.56.41 CRORE S. THE AO THEN ISSUED AS. 148 NOTICE (WITHIN 4 YEARS) TO REOP EN THE ASSESSMENT ON THE GROUND THAT THE CLAIM FOR EXPENSE S (WHICH WAS WITHDRAWN) HAD TO BE ASSESSED AS 'UNEXPLAINED EXPEN DITURE' U/S 69. THE CIT (A) & TRIBUNAL STRUCK DOWN THE REASSESS MENT ORDER ON THE GROUND THAT THE MATERIAL ON THE BASIS OF WHICH THE ASSESSMENT WAS SOUGHT TO BE REOPENED WAS ALWAYS AVAILABLE AT T HE TIME OF THE ORIGINAL PROCEEDING AND THERE WAS NO NEW MATERIAL. ON APPEAL BY ITA NO.6498/13 7 THE DEPARTMENT TO THE HIGH COURT, HELD DISMISSING T HE APPEAL THAT THE ASSESSEE HAD MADE A CLAIM FOR 30% ADHOC EXPENDI TURE. THIS WAS WITHDRAWN BY THE ASSESSEE WHEN ASKED BY THE AO TO SUBSTANTIATE. THE REOPENING ON THE BASIS THAT THE S AID ADHOC EXPENDITURE CONSTITUTED 'UNEXPLAINED EXPENDITURE' U /S 69 WAS BASED ON THE SAME MATERIAL. THERE WAS NO FRESH TANG IBLE MATERIAL BEFORE THE AO TO REACH A REASONABLE BELIEF THAT THE INCOME LIABLE TO TAX HAS ESCAPED ASSESSMENT: IT IS A SETTLED POSITIO N OF LAW THAT REVIEW UNDER THE GARB OF REASSESSMENT IS NOT PERMIS SIBLE, 2.4.10 IN ASTEROIDS TRADING & INVESTMENTS (P) LTD, VS. DCIT (2009) 223 CTR (BOM) 144, THE BOMBAY HIGH COURT HELD THAT REOPENING OF THE ASSESSMENT WITHIN A PERIOD OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR WHERE EARLIER ASSESSMENT WAS COMPLE TED U/S 143(3) OF THE ACT IS NOT TENABLE IN CASE OF CHANGE OF OPINION. IT WAS FURTHER HELD THAT A PERUSAL OF THE RECORD SHOWS THA T THE PETITIONER HAD MADE FULL DISCLOSURE NECESSARY FOR CLAIMING DED UCTION UNDER S. 80M. THE AO AFTER APPLYING HIS MIND TO THE RELEVANT RECORDS HAD MADE A SPECIFIC ORDER ALLOWING THE DEDUCTION. THOUG H, IN THE NOTICE RESPONDENT NO. 1 HAS USED THE PHRASE 'REASON TO BEL IEVE', ADMITTEDLY BETWEEN THE DATE OF THE ORDER OF ASSESSM ENT SOUGHT TO BE REOPENED AND THE DATE OF FORMING OF OPINION BY R ESPONDENT NO.1, NOTHING NEW HAS HAPPENED AND THERE IS NO CHAN GE OF LAW, NO NEW MATERIAL HAS COME ON RECORD, NO INFORMATION HAS BEEN RECEIVED. IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME OFFICER TO THE SAME SET OF FACTS. THUS, IT IS A CASE OF MER E CHANGE OF OPINION,' WHICH DOES NOT PROVIDE JURISDICTION TO RE SPONDENT NO. 1 TO INITIATE PROCEEDINGS UNDER S. 148. POWER UNDER S. 1 47 CANNOT BE USED LIKE THE POWER OF REVIEW TO REOPEN THE ASSESSM ENT AND THIS IS PRECISELY WHAT HAS BEEN DONE IN THE PRESENT CASE. 2.4.11 FOR MAKING REASSESSMENT UNDER SECTION 147 OF THE ACT, AO MUST HAVE REASONS TO BELIEVE THAT ANY INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT. THE EXPRESSION USED IN THIS SECTION IS 'REASON TO BELIEVE', WHICH ARE QUITE DIFFERENT FROM THE PHRASE 'REASON TO SUSPECT'. 'REASON TO BELIEVE' HAS BEEN THE MATTE R OF JUDICIAL SCRUTINY BY THE APEX COURT IN SEVERAL CASES. IN THE CASE OF CALCUTTA DISCOUNT CO. LTD. V. ITO 41 ITR 191 (SC), IT WAS OB SERVED THAT IT IS THE DUTY OF THE ASSESSEE TO DISCLOSE ALL THE PRIMAR Y FACTS WHICH HAVE A BEARING ON THE LIABILITY OF THE INCOME EARNED BY THE ASSESSEE BEING SUBJECTED TO TAX. IT IS FOR THE ASSESSING OFF ICER TO DRAW INFERENCES FROM THE FACTS AND APPLY THE LAW DETERMI NING THE LIABILITY OF THE ASSESSEE. THE ASSESSEE CANNOT DRAW THE CONCL USIONS DRAWN BY THE ASSESSING OFFICER AND ONCE THE CONCLUSION IS DRAWN AND THE ASSESSMENT ORDER FRAMED, THE ASSESSING OFFICER CANN OT AT A LATER POINT OF TIME FORM A DIFFERENT OPINION BY GIVING A SECOND THOUGHT TO THE FACTS DISCLOSED BY THE ASSESSEE, HOLDING THAT H E COMMITTED AN ERROR IN COMPUTING TAXABLE INCOME AND REOPEN THE AS SESSMENT UNDER SECTION 147. DISCOVERY OF NEW AND IMPORTANT M ATTERS OR KNOWLEDGE OF FRESH FACTS WHICH WERE NOT PRESENT AT THE TIME OF ORIGINAL ASSESSMENT WOULD CONSTITUTE A 'REASON TO B ELIEVE THAT INCOME HAD ESCAPED ASSESSMENT' WITHIN THE MEANING O F SECTION ITA NO.6498/13 8 147. SIMILAR VIEW HAS BEEN TAKEN BY THE APEX COURT IN THE FOLLOWING CASES:- (I) PHOOL CHAND BAJRANG LAL V. ITA 203 ITR 456,477; (II) ALA FIRM V. CIT 189 ITR 285, 298; (III) INDIAN AND EASTERN NEWSPAPER SOCIETY V . CIT 119 ITR 996,1004; AND (IV) ITO V. LAKHMANI MEWAL DAS 103 ITR 437, 445. 2.4.12 IN VIEW OF THE FOREGOING, IT CAN BE SEEN THA T NO NEW TANGIBLE MATERIAL IS IN THE POSSESSION OF THE AO TO FORM A R EASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, INVO KING OF PROVISIONS OF SECTION 147 R.W. SECTION 148 IS BAD I N LAW. FURTHER, THE LD. AO HAS FAILED TO BRING ANY MATERIAL ON RECORD T O SHOW THAT THE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS NECESSARY FOR RE-ASSESSMENT FOR THAT ASSESSMENT YEA R. HAVING FAILED TO DO SO, INVOKING OF PROVISIONS OF SECTION 147 IS BAD IN LAW. THE SAME IS ACCORDINGLY HELD TO BE BAD IN LAW. THES E GROUND OF APPEAL ARE ALLOWED. 6. IN THE CASE OF CHOLAMANDALAM INVESTMENT AND FINA NCE CO. LIMITED 2007 (10) TMI 276 - MADRAS HIGH COURT IT WAS HELD THAT AFTER EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, WH ERE THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL PRIMARY FACTS IN RELA TION TO HIS CLAIM FOR DEPRECIATION THE INITIATION OF REASSESSMENT PROCEED INGS ON THE GROUND THAT THE CLAIM FOR DEPRECIATION, HAD NOT BEEN EXPLAINED WOULD BE WITHOUT JURISDICTION, ILLEGAL, INVALID AND VOID AB INITIO . 7. BEFORE WE COME TO THE MERITS OF THE CASE IT IS N ECESSARY TO EVALUATE THE PROVISIONS OF SECTION 147. THE FIRST PROVISO OF SECTION 147 MAKES IT AMPLY CLEAR THAT THE PROVISION OF SECTION CANNOT BE INVOKED AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR , UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER ITA NO.6498/13 9 SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT , FOR THAT ASSES SMENT YEAR. IN ORDER TO MAKE THIS CRITERIA LD. AR DRAWN OUR ATTENT ION TO PAPER BOOK WHICH CONTAINS 1-98 DOCUMENTS THE DETAILS OF THOSE DOCUME NTS HAVE BEEN MENTIONED IN THE INDEX OF THE PAPER BOOK. MERE PART ICULARLY OUR ATTENTION WAS DRAWN TO PAGE NO. 1,6,7,8 AND 72 WHICH CONTAINS ORDER IN CASE OF APPELLANT GIVING EFFECT TO THE CIT(A)S ORDER FOR A SSESSMENT YEAR 1999- 2000 AND PAGE NO. 93 WHICH CONTAINS ORDER PASSED U/ S 154 OF THE INCOME TAX ACT IN THE CASE OF APPELLANT BY THE AO FOR ASSE SSMENT YEAR 2006-07 AND AT PART B ON PAGE NO.94 , THERE IS CATEGORICAL STATEMENT OF CARRY FORWARD AND SET-OFF OF BUSINESS LOSSES/ UN-ABSORBED DEPRECIATION. THE CO- JOINT READING OF ALL THE DOCUMENTS GOES TO SHOW THA T THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESS ARY FOR ASSESSMENT, FOR THAT ASSESSMENT YEAR AND AS PER THE DOCUMENTS IT IS ONLY THE UNABSORBED DEPRECIATION WHICH HAS BEEN ADJUSTED OUT. EVEN OTHE RWISE AS PER SETTLED POSITION OF LAW THE REOPENING OF AN ASSESSMENT U/S 147 HAS SERIOUS RAMIFICATIONS BECAUSE THE AO IS EMPOWERED TO REASSE SS INCOME EVEN IN RESPECT OF ISSUES NOT SET OUT IN THE NOTICE . THEREFORE, IF THE POWER TO RECTIFY AN ORDER U/S 154(1) IS ADEQUATE TO MEET A MISTAKE O R ERROR IN THE ORDER OF ASSESSMENT, THE AO MUST TAKE RECOURSE TO THAT POWER AS OPPOSED TO THE WIDER POWER TO REOPEN THE ASSESSMENT. IF THE ERROR CAN BE RECTIFIED U/S 154, IT WOULD BE ARBITRARY FOR THE AO TO REOPEN THE ENTIRE ASSESSMENT U/S 147. FURTHER, THE ERROR IN THE ORDER WAS NOT ATTRIB UTABLE TO A FAULT OR ITA NO.6498/13 10 OMISSION ON THE PART OF THE ASSESSEE AND THE ASSESS EE CANNOT BE PENALIZED FOR A FAULT OF THE AO ; SECONDLY WHEN ONE OR MORE MODES OF ASSESSMENT OR REMEDIES ARE AVAILABLE TO THE TAXING AUTHORITY, THE AUTHORITY MUST ADOPT THAT REMEDY WHICH CAUSES LEAST PREJUDICE TO THE ASSESSEE. 8. THE UPSHOT OF THE AFORESAID DISCUSSION WITH RESP ECT TO FACTUAL AND LEGAL POSITION AS WELL AS THE DECISION RENDERED BY THE HONBLE SUPREME COURT AS WELL AS THE DECISION OF HONBLE JURISDICTI ONAL HIGH COURT, WE HAVE NO HESITATION TO UPHOLD THE FINDINGS OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. 9. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 / 4 /2016. SD/- (B.R.BASKARAN) SD/- (SANDEEP GOSAIN) %!#& / ACCOUNTANT MEMBER !#& / JUDICIAL MEMBER % & MUMBAI ; '( DATED 06 / 04 /2016 . .*%/PKM , . / PS #$ '()* +*( / COPY OF THE ORDER FORWARDED TO : . #$ ! / BY ORDER, , / !- . ( ASSTT. REGISTRAR) , % & / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / ( ) / THE CIT(A), MUMBAI. 4. / / CIT 5. 012 3 , 3$ , % & / DR, ITAT, MUMBAI 6. 24 5 / GUARD FILE. 0 //TRUE COPY//