ITO 3(1)(4), MUMBAI V. EVERLON SYNTHETICS P.LTD, MUMBAI

ITA 6965/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3359 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Audit objection; Tangible material; Difference of opinion; Capital receipt; Reason to believe; Change of opinion
• Section: 143(3); 115JB; 80G; 148; 139

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 6965 /MUM/2013 ( / ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER 3(1)(4), R. NO. 666, AAYAKAR BHAWAN,M.K. ROAD, MUMBAI 400 020. / V. M/S EVERLON SYNTHETICS PVT. LTD., 67, REGENT CHAMBERS, 208 NARIMAN POINT, MUMBAI 400 021 ./ PAN : AAACE0860H ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI SUNIL KUMAR AG AR WAL ASSESSEE COMPANY BY : SHRI P.K. PARIDA & MS. SANJUKTA CHOWDHURY / DATE OF HEARING : 25-2-2016 / DATE OF PRONOUNCEMENT : 23-05-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 6 965/MUM/2013, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 20-09-20 13 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 6, MUMBAI (HE REINAFTER CALLED THE CIT(A) ), FOR THE ASSESSMENT YEAR 2006-07, THE APP ELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ORDER DATED 30- 8-2011 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 AC T). ITA 6965/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) READS AS UNDER 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE RE GULAR ASSESSMENT MADE U/S.143(3) CANNOT BE REOPENED U/S.147 MERELY ON THE BASIS OF 'CHANGE OF OPINION' AND ACCORDINGLY ERRED IN TREATIN G THE PROCEEDINGS INITIATED U/S.147 AS INVALID. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN NOT FOLLOWING THE JUDICIAL DECISIONS IN THE CASES VIZ. (1 )A.L.A. FIRM VS. CIT(MAD) 102 ITR 622. (2) ESS KAY ENGINEERING CO. (P) LTD. VS. CIT(SC) 247 ITR 818. (3 ) REVATHY C.P. EQUIPMENTS LTD. VS. DCIT & ORS.(MAD) 241 ITR 856. ( 4) EMA INDIA LTD. VS. ACIT(ALL) 30 DTR 82 WHEREIN IT HAS BEEN HELD THA T WHEN THERE IS NO DISCUSSION ON THE ISSUE IN THE ASSESSMENT ORDER AND NO DETAILS WERE CALLED FOR BY THE ASSESSING OFFICER OR FILED BY THE A SSESSEE ON THE ISSUE, NO FINDING EITHER POSITIVE OR NEGATIVE WAS ARRIVED A T DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THERE IS NO QUES TION OF CHANGE OF OPINION. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT THE IS SUE OF TAXABILITY OF RS.1,37,19,684/- WAS ALREADY DISCUSSED AND DELIBERA TED BY THE A.O. AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS ULS.143( 3) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ISSUE WAS NOT C ONSIDERED DURING THE COURSE OF ORIGINAL ASSESSMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A) HAS ERRED IN NOT DISCUSSING THE ADDITION MA DE ON ACCOUNT OF CESSATION OF LIABILITY ON MERITS BUT ALSO HAS NOT ADJU DICATED UPON THE GROUND MERELY STATING THAT REOPENING HAS BEEN ANNULLED AND ACCORDINGLY GROUND OF APPEAL HAS BECOME ACADEMIC IN NATURE. 5. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE A BOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RES TORED.' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF POLYESTER TEXTURISED /TWISTED YARN AND MANAGEMENT CONSULTANCY. ITA 6965/MUM/2013 3 4. THE ASSESSEE COMPANY HAS FILED ITS RETURN OF INC OME U/S. 139 OF THE ACT WITH THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 ON 29 TH NOVEMBER, 2006 DECLARING TOTAL INCOME OF RS. NIL AND BOOK PROFIT U/S. 115JB OF THE ACT AT RS.59,21,067/-. THE ASSESSMENT WAS COMPLETED BY TH E AO ON 24 TH NOVEMBER, 2008 U/S 143(3) OF THE ACT ACCEPTING THE RETURNED I NCOME. 5. THEREAFTER, THE A.O. HAS REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2006 -07 WITHIN THE MEANING OF SECTION 147 OF THE ACT FOR THE REASONS RECORDED U/S 148(2) OF THE ACT. NOTICE U/S 148 OF THE ACT DATED 28 TH MARCH, 2011 WAS ISSUED AND SERVED UPON THE ASSESSEE COMPANY ON 28 TH MARCH, 2011 I.E. WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. THE ASS ESSEE COMPANY VIDE LETTER DATED 25 TH APRIL, 2011 REQUESTED THE AO THAT THE RETURN OF IN COME FILED BY THE ASSESSEE COMPANY ORIGINALLY U/S 139 OF THE ACT ON 29 TH NOVEMBER, 2006 MAY BE TREATED AS FILED IN COMPLIANCE TO NOTICE U/S 148 OF THE ACT. THE ASSESSEE COMPANY VIDE LETTER DATED 25-04-2011 ASKED FOR REAS ONS WHICH WERE RECORDED BY THE AO FOR RE-OPENING U/S 147/148 OF THE ACT OF THE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT , WHICH WERE SUPPLIED TO THE ASSESSEE COMPANY BY THE REVENUE VIDE LETTER DATED 24-05-2011 WHICH ARE AS F OLLOWS:- THE ASSESSEE COMPANY DURING THE PREVIOUS YEAR HAD RE CEIVED RELIEF AMOUNTING TO RS. 3,44,02,155/- ON ACCOUNT OF OVER DR AFT AND OTHER FACILITIES. OUT OF THIS AMOUNT RS. 2,06,82,471/- WAS T RANSFERRED TO REVENUE RECEIPT AND AN AMOUNT OF RS. 1,37,19,684/- W AS TRANSFERRED TO CAPITAL RESERVE. THE AMOUNT OF RS. 1,37,19,684/- IS NOT OFFERED BY THE ASSESSEE COMPANY CONSIDERING IT AS CAPITAL RECEIPT, N EITHER IT IS BROUGHT UNDER TAXATION IN COURSE OF THE ASSESSMENT. AS THE MONE Y WAS RECEIVED BY THE ASSESSEE COMPANY IN THE COURSE OF CARRYING ON HIS BUSINESS THE SAME HAS BECOME ASSESSEE COMPANYS OWN MONEY, AND R ELIEF ON OVERDRAFT ON THE SAME SHOULD BE TREATED AS CESSATION OF LIABILITY AND TAKEN AS INCOME OF THE PREVIOUS YEAR UNDER CONSIDERAT ION U/S 41 THE ASSESSEE COMPANY SUBMITTED BEFORE THE AO IN THE RE-ASSESSMENT PROCEEDINGS THAT SECTION 41 OF THE ACT HAS NO APPLI CATION ON THIS ISSUE AS THE ITA 6965/MUM/2013 4 CESSATION AND REMISSION IS NOT ON ACCOUNT OF A TRAD ING LIABILITY, AND THE AMOUNT TRANSFERRED TO CAPITAL RESERVE IS ON CAPITAL ACCOUNT AND THE AMOUNT WAS NEVER CLAIMED AS DEDUCTION WHILE COMPUTING TOTA L INCOME IN ANY EARLIER PREVIOUS YEAR. THE CONTENTIONS OF THE ASSESSEE COMPANY WERE REJECT ED BY THE A.O., AS IN ITS BALANCE SHEET IN RESERVES AND SURPLUS AT SCHEDULE B, THERE WAS AN ADDITION OF RS. 1,37,19,684/- IN THE CAPITAL RESERVES, WHILE RS.2,06,82,471/- WAS CREDITED UNDER THE HEAD EXCEPTIONAL INCOME IN THE PROFIT AND LOSS ACCOUNT. BOTH THE ENTRIES ARE EXPLAINED BY THE ASSESSEE COMP ANY AS : IN VIEW OF ONE TIME SETTLEMENT WITH BANKERS, THE CO MPANY HAS BEEN GRANTED RELIEF WHICH HAVE BEEN APPROPRIATED TO CAPITAL REC EIPTS AND REVENUE RECEIPTS AS PER TREATMENT GIVEN BY BANKERS. . THE ASSESSEE COMPANY SUBMITTED THAT SINCE AS PER TH E LAST BANK STATEMENT OF BOMBAY MERCANTILE COOPERATIVE BANK LIMITED , THE NO N PERFORMING ACCOUNT(NPA) IN THEIR BOOKS SHOWED A BALANCE OF RS. 1,37,19,684/- , THE ASSESSEE COMPANY FOR THE SAKE OF SIMPLICITY , TRANS FERRED THE SAID AMOUNT OF RS.1,37,19,684/- TO THE CAPITAL RESERVES ACCOUNT WH ICH WAS NOT OFFERED FOR TAXATION, AND TRANSFERRED THE BALANCE AMOUNT OF RS. 2,06,82,471/- TO THE PROFIT AND LOSS ACCOUNT AND OFFERED THE SAME FOR TA XATION. THE A.O. HELD THAT THE ASSESSEE COMPANY DOES NOT HA VE CREDIBLE EXPLANATION ABOUT THE BIFURCATION OF THE AMOUNT OF SETTLEMENT A S REVENUE RECEIPT OR CAPITAL RECEIPT. THE RELIEF RECEIVED FROM THE BANK ON OVERDRAFT OF RS. 2,06,82,471/- WAS OFFERED FOR TAXATION AS REVENUE R ECEIPT, WHILE THE ASSESSEE COMPANY HAS NO REASON TO TREAT THE REMAINING AMOUNT OF RS. 1,37,19,684/- AS CAPITAL RECEIPT. THUS, THE SUM OF RS. 1,37,19,6 84/- WAS ADDED TO THE TOTAL ITA 6965/MUM/2013 5 INCOME OF THE ASSESSEE COMPANY BY THE A.O , VIDE AS SESSMENT ORDERS DATED 30.08.2011 PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT. WITHOUT PREJUDICE TO THE ABOVE, IT WAS HELD BY THE AO THAT AS THE MONEY WAS RECEIVED BY THE ASSESSEE COMPANY IN THE COURSE OF C ARRYING ON THEIR BUSINESS, EVEN IF THE OVERDRAFT AMOUNT OF RS. 3,44,02,155/- R ECEIVED FROM THE BANK ARE CONSIDERED AS CAPITAL RECEIPT OF EARLIER PREVIOUS Y EARS, EVEN THOUGH IT IS NOT TAXABLE IN THE YEAR OF RECEIPT AS BEING OF THE REVE NUE CHARACTER, THE AMOUNT CHANGES ITS CHARACTER WHEN THE AMOUNT BECOMES ASSES SEE COMPANYS OWN MONEY BECAUSE OF THE SETTLEMENT WITH THE BANKERS. THUS, THE AO HELD THAT THE AMOUNT SHOULD BE TREATED AS REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE COMPANY. TO SUPPORT, RELIANCE WAS PLACED ON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. T.V. SUNDARAM IYENGAR & SONS LTD., (1996)222 ITR 344 [SC]. THE AO HELD THAT THE ASSESS EE COMPANY HAS OFFERED FOR TAXATION AS REVENUE RECEIPT ON THE RELIEF ALLOW ED BY THE BANK ON THE AMOUNT OF RS. 2,06,82,471/- , AND BY THE SAME TREAT MENT THE AMOUNT OF RS. 1,37,19,684/- IS ALSO TAXABLE AS REVENUE RECEIPTS I N THE HANDS OF THE ASSESSEE COMPANY AND HENCE THE SUM WAS ADDED TO THE TOTAL IN COME OF THE ASSESSEE COMPANY BY THE AO , VIDE ASSESSMENT ORDERS DATED 30 .08.2011 PASSED BY THE AO U/S. 143(3) READ WITH SECTION 147 OF THE ACT. 6. AGGRIEVED BY THE ASSESSMENT ORDERS DATED 30.08.2 011 PASSED BY THE A.O. U/S 143(3) READ WITH SECTION 147 OF THE ACT, THE AS SESSEE COMPANY FILED ITS FIRST APPEAL BEFORE THE LEARNED CIT(A). 7. BEFORE THE LEARNED CIT(A), THE ASSESSEE COMPANY CHALLENGED THE VALIDITY OF THE REOPENING OF THE ASSESSMENT U/S 147 /148 OF THE ACT AND CONTENDED THAT DURING THE COURSE OF ORIGINAL ASSESS MENT PROCEEDINGS U/S 143(3) OF THE ACT , THE ISSUE REGARDING ONE TIME SE TTLEMENT OF BANK LOAN LIABILITY AND RELIEF GRANTED BY THE BANK TO THE ASS ESSEE COMPANY WAS ALSO ITA 6965/MUM/2013 6 RAISED BY THE A.O. AND IN RESPONSE, THE ASSESSEE C OMPANY HAD VIDE SUBMISSIONS DATED 11.11.2008 FURNISHED ENTIRE PARTI CULARS WITH RESPECT TO THE ONE TIME SETTLEMENT REACHED WITH THE BANK AND T HE ACCOUNTING TREATMENT AS ADHERED TO BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNT. THE VARIOUS DETAILS REGARDING ONE TIME SETTLEMENT WITH THE BANK WERE FILED BEFORE THE A.O. INCLUDING , BANK STATEMENTS FOR THE LAST SIX YEARS FROM 1-4-2000 TO 31-03- 2006 , LETTER FROM THE BANK OFFERING SETTLEMENT DAT ED 22.12.2005 AND THE BANK CERTIFICATE DATED 28 TH MARCH, 2006 SETTLING THE BANK ACCOUNT . THE ASSESSEE COMPANY CONTENDED BEFORE THE LEARNED CIT(A ) THAT IT TRANSFERRED RS.1,37,19,684/- TO CAPITAL RESERVE ACCOUNT WHICH W AS BROUGHT TO THE NOTICE OF THE AO, WHILE THE REST OF THE RELIEF WHICH AMOUN TED TO RS. 2,06,82,471/- WAS TRANSFERRED TO PROFIT AND LOSS ACCOUNT UNDER TH E HEAD EXCEPTIONAL INCOMES. THE ASSESSEE COMPANY SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE COMPANY IN REPLY TO NOTICE U/S 148 OF THE ACT CONTENDED BEFORE THE AO THAT SECTION 41 OF THE ACT HAS NO APPLICATION AS THE CESSATION OF THE LIABILITY OF RS. 1,37,19,684/- WAS NOT ON ACCOUNT O F TRADING LIABILITY AND HENCE THE SAME WAS CAPITAL IN NATURE. IT WAS CONTENDED BY THE ASSESSEE COMPANY BEFORE THE LEARNED CIT(A) THAT AFTER CONSIDERING TH E ASSESSEES COMPANY REPLY, THE A.O. HELD THAT THE AMOUNT OF RS. 1,37,19,684/- IS TAXABLE AS REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE COMPANY U/S 41 (1) OF THE ACT ON ACCOUNT OF CESSATION OF LIABILITY. IT WAS SUBMITTED BY THE ASSESSEE COMPANY DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) THAT THE RETURN OF INCOME FILED U/S 139 OF THE ACT ON 29 TH NOVEMBER, 2006 BY THE ASSESSEE COMPANY WITH THE REVENUE WAS INITIALLY ACCEPTED U/S 143(1) OF THE ACT , BUT A SCRUTINY ASSESSMENT ORDER WAS PASSED U/S 143(3) ON 24 TH NOVEMBER, 2008 BY THE REVENUE ACCEPTING THE RETURNED INCOME. DURING T HE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT, THE ISSUE OF BANK SETTLEMENT AND CONSEQUENTIAL RELIEF G RANTED BY THE BANK WAS DISCUSSED AND DELIBERATED BY THE A.O. ON WHOSE REQU EST THE ASSESSEE COMPANY HAD FURNISHED THE ENTIRE PARTICULARS WITH R EGARD TO THE SETTLEMENT ITA 6965/MUM/2013 7 REACHED AND THE ACCOUNTING TREATMENT ADHERED TO BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNT. IT WAS SUBMITTED THAT THE DET AILED SUBMISSIONS WERE MADE BEFORE THE A.O. VIDE REPLY DATED 11 TH NOVEMBER, 2008 IN ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT. THE ASSESSEE COMPANY ALSO FILED BANK STATEMENT FOR THE LAST SIX YEARS FROM 1ST APRIL, 2000 TO 31 ST MARCH, 2006. THE ASSESSEE COMPANY SUBMITTED THAT IT FILED BEFORE THE AO A LETTER RECEIVED FROM THE BANK OFFERING THE SETTLEMENT DATED 22 ND DECEMBER, 2005 AND THE BANK CERTIFICATE DATED 28 TH MARCH, 2006 CONFIRMING THE SETTLING OF THE BANK ACCOUNT. THE A SSESSEE COMPANY HAS SHOWN CAPITAL RECEIPT OF RS. 1,37,19,684 WHICH WAS SPECIFICALLY MADE KNOWN TO THE A.O. . ON THE RELIEFS GRANTED, THE ASSESSEE COMPANY HAD TRANSFERRED RS. 2,06,82,471/- TO ITS P&L ACCOUNT AND RS. 1,37,19,68 4/- TO ITS CAPITAL RESERVE ACCOUNT. THE AO AFTER EXAMINING THE VARIOUS DETAIL S AND APPLYING HIS MIND ON THE MATERIALS AND THE SUBMISSION MADE BY THE ASS ESSEE COMPANY, HAD PASSED THE ORIGINAL SCRUTINY ASSESSMENT ORDER U/S 1 43(3) OF THE ACT ON 24 TH NOVEMBER, 2008 , AS NOTHING WAS WITHHELD BY THE ASS ESSEE COMPANY FROM THE AO. NO NEW TANGIBLE MATERIAL HAS COME INTO THE POS SESSION OF THE A.O. WHICH COULD INDICATE THAT INCOME HAS ESCAPED ASSESSMENT. IT WAS STATED BEFORE THE LEARNED CIT(A) BY THE ASSESSEE COMPANY THAT THE RE OPENING OF THE CONCLUDED ASSESSMENT WAS MADE DUE TO THE AUDIT OBJECTIONS WHI CH IS NOT PERMISSIBLE UNDER LAW AND THE ACTION OF THE A.O. IS NOT JUSTIFI ED . THE ASSESSEE COMPANY SUBMITTED THAT THE AUDIT OBJECTIONS HAS PERSUASIVE OR SUGGESTIVE VALUE AND FOR ACQUIRING JURISDICTION U/S 147 OF THE ACT, THER E HAS TO BE AN INDEPENDENT REASONS TO BELIEVE BASED ON POSSESSION OF TANGIBLE MATERIAL / INFORMATION WITH THE AO HAVING LIVE NEXUS AND CLOSE LINK WITH THE FO RMATION OF BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT. THE ASSESSEE COMPANY RELIED ON THE FOLLOWING DECISIONS TO SUPPORT ITS PROPOSITIONS:- (1) 294 ITR 32 (BOM) IL&FS INVESTMENT MANAGERS LTD. V. ACIT (2) (2009)318 ITR 295 (DEL) CARLTON OVERSEAS (P) LTD. V . CIT ITA 6965/MUM/2013 8 (3) 65 DTR (GUJ) 385 CARDILA HEALTHCARE LTD. V. ACIT THUS, THE ASSESSEE COMPANY REQUESTED THE LEARNED CI T(A) THAT THE NOTICE U/S 148 OF THE ACT IS DEFECTIVE AND SHOULD BE TREATED A S INVALID. IT WAS ALSO SUBMITTED THAT THE NOTICE U/S 148 OF THE ACT CANNOT BE ISSUED TO MAKE ROVING AND FISHING ENQUIRIES AND NO ACTION CAN BE TAKEN DU E TO THE CHANGE OF OPINION. REOPENING WAS BASED MERELY ON A CHANGE OF OPINION, THE NOTICE U/S 148 IS HENCE DEFECTIVE AND THE A.O. HAS WITHOUT ANY TANGIBLE MATERIAL OR INDEPENDENT REASONING RE-OPENED THE CONCLUDED ASSES SMENT , THE ISSUE OF NOTICE U/S 148 SHOULD BE TREATED AS NULLITY AND ALS O THE CONSEQUENTIAL PROCEEDINGS AGAINST THE ASSESSEE COMPANY BE DROPPED . THE ASSESSEE COMPANY RELIED UPON THE FOLLOWING DECISIONS:- 1. (2010) 320 ITR 561 (SC), KELVINATOR INDIA LTD. 2. (2012)254 CTR 221(SC), SIMPLEX CONCRETE PILES INDI A LTD. 3. (2012) 252 CTR 78 (BOM. HC), MONITOR INDIA (P) LTD. 4. (2012) 68 DTR 85 (BOM), NYK LINE (INDIA) LTD. 5. (2011)349 ITR 150 (BOM), DIRECT INFORMATION P. LTD. 6. (2010) 332 ITR 587 (BOM), IOT INFRASTRUCTURE & ENER GY SERVICES LTD. 7. (2010) 331 ITR 236 (BOM), JET AIRWAYS INDIA LTD. 8. (2010)329 ITR 257 (BOM), 3I INFOTECH LTD. 9. (2010) 323 ITR 54 (BOM), RALLIS INDIA LTD. 10. (2009) 314 ITR 275 (BOM) CARTINI INDIA LTD. V. ADD L. CIT 11. {2007) 295 ITR 333 (BOM) SIEMENS INFORMATION SYSTEM LTD..V. ACIT THE ASSESSEE COMPANY SUBMITTED THAT IT HAD TRULY AN D FULLY DISCLOSED ALL THE MATERIALS WHILE FILING ITS RETURN OF INCOME AND DUR ING THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT, WHICH MATERIAL HAD BEEN DULY CONSIDERED BY THE A.O. WHILE FRAMING THE ORIGINAL ASSESSMENT ORDER DATED 24.11.2008 U/S 143(3) OF THE ACT BY THE AO. THE SAID ITA 6965/MUM/2013 9 INFORMATION WITH RESPECT TO THE ONE TIME BANK SETTL EMENT AND RELIEF RECEIVED BY THE ASSESSEE COMPANY HAD ALREADY BEEN DISCLOSED IN THE AUDITED BALANCE SHEET , AUDITED P&L ACCOUNT, DIRECTORS REPORT AND N OTES TO ACCOUNTS BY THE STATUTORY AUDITOR, HENCE, THERE WAS NO SUPPRESSION OF THE MATERIAL FACTS. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE CO MPANY TO FULLY AND TRULY DISCLOSE THE MATERIAL FACTS NECESSARY FOR THE ASSES SMENT , WAS THE CONTENTION OF THE ASSESSEE COMPANY BEFORE THE LEARNED CIT(A). THE ASSESSEE COMPANY RELIED UPON THE FOLLOWING DECISIONS:- 1. [2012] 252 CTR 78 (BOM) MONITOR INDIA P) LTD. V. UO I AND 2. [2012] 68 DTR 85 (BOM) NYX LINE (INDIA) LTD. V. DY CIT. THE ASSESSEE COMPANY SUBMITTED THAT IT IS AN UNDISP UTED FACT THAT THE ASSESSEE COMPANY HAD MADE TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS AT THE TIME OF ASSESSMENT PROCEEDINGS, HENCE, THE ACTI ON OF THE REVENUE IN REOPENING OF THE CONCLUDED ASSESSMENT IS NOT CORREC T. TO SUPPORT THIS CONTENTION OF THE ASSESSEE COMPANY, THE FOLLOWING C ASE LAWS WERE RELIED UPON:- 1. (2010)329 ITR 257 (BOM) 31 INFOTECH LTD. V. ASST. C IT 2. (2009)314 ITR 275 (BOM) CORTINI INDIA LTD. V. ADDL. CIT THE ASSESSEE COMPANY SUBMITTED THAT THUS THE REOPEN ING OF THE ASSESSMENT BASED ON CHANGE OF OPINION IS NOT PERMISSIBLE. TO SUPPORT THIS CONTENTION, THE ASSESSEE COMPANY RELIED UPON THE DECISION IN TH E CASE OF [2010] 321 ITR 431 (DEL) CIT V. GOETZE (INDIA) LTD. THE ASSESSEE C OMPANY ALSO RELIED UPON THE DECISION IN THE CASE OF [2011] 334 ITR 420 (GUJ) CA DILA HEALTHCARE LTD. V. DY. CIT AND JUDGMENT OF HONBLE DELHI HIGH COURT FULL B ENCH IN THE CASE [2012] 348 ITR 485 (DEL) CIT V. USHA INTERNATIONAL LTD. TO CONTEND THAT THE ASSESSEE COMPANY HAS TRULY AND FULLY DISCLOSED ALL THE MATER IAL NECESSARY FOR THE ASSESSMENT AND NO NEW TANGIBLE MATERIAL HAS COME IN TO POSSESSION OF THE AO ITA 6965/MUM/2013 10 AND THIS IS A CASE OF REOPENING OF THE CONCLUDED AS SESSMENT BASED ON CHANGE OF OPINION WHICH IS NOT PERMISSIBLE THE ASSESSEE COMPANY WAS ASKED BY THE A.O. TO PRODUCE THE DETAILS WITH REGARD TO BANK SET TLEMENT AND HOW IT HAD TREATED THE BENEFIT DERIVED PROPORTIONATELY INTO IT S P&L ACCOUNT AND INTO ITS CAPITAL RESERVE ACCOUNT FOR WHICH THE ASSESSEE COMP ANY SUBMITTED WRITTEN SUBMISSION DATED 11 TH NOVEMBER, 2008.THE ASSESSEE COMPANY ALSO SUBMITTED THE BANK STATEMENT OF THE BANK OVERDRAFT ACCOUNT TO DEMONSTRATE AND PROVE THAT THE PROCEEDS OF THE BANK OVERDRAFT ACCOUNT WER E UTILIZED FOR THE PURPOSES OF ACQUISITION OF PLANT AND MACHINERY AND CONSTRUCT ION OF BUILDING FOR ITS MANUFACTURING UNIT. THUS, THE A.O. TOOK COGNIZANCE OF THE ISSUE OF BANK SETTLEMENT RELIEF WITH ITS TREATMENT IN THE BOOKS O F ACCOUNT AT THE ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS U/S. 143(3) READ WI TH SECTION 143(2) OF THE ACT. THUS IT WAS THE CONTENTION OF THE ASSESSEE CO MPANY, IT IS ONLY A CHANGE OF OPINION ON WHICH THE ISSUE OF NOTICE U/S 148 IS NOT TENABLE IN VIEW OF VARIOUS CASE LAWS DECIDED BY THE HONBLE COURTS DE CISION RELIED UPON BY THE ASSESSEE COMPANY AS STATED ABOVE. THE ASSESSEE COM PANY SUBMITTED THAT IT IS AN UNDISPUTED AND ADMITTED POSITION THAT THE MON EY OUT OF THE BANK OVERDRAFT AMOUNT WAS UTILIZED FOR MAKING ADVANCE PA YMENT FOR PLANT AND MACHINERY AND FACTORY BUILDING CONSTRUCTION FOR THE MANUFACTURING UNIT OF THE ASSESSEE COMPANY . THE LEARNED CIT(A) AFTER CONSIDERING THE AFORE-STA TED SUBMISSIONS OF THE ASSESSEE COMPANY AND THE FACTS OF THE CASE OBSERVE D THAT A SCRUTINY ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED B Y THE A.O. ON 24 TH NOVEMBER, 2008 AND DURING THE COURSE OF SCRUTINY AS SESSMENT PROCEEDINGS, THE ISSUE OF BANK SETTLEMENT AND CONSEQUENTIAL RELI EF GRANTED BY THE BANK WAS DISCUSSED AND DELIBERATED UPON BY THE A.O. THE A.O. HAD SPECIFICALLY MADE ENQUIRIES FROM THE ASSESSEE COMPANY REGARDING THE O NE TIME BANK SETTLEMENT AND THE ASSESSEE COMPANY HAD FURNISHED THE PARTICU LARS WITH RESPECT TO THE ONETIME SETTLEMENT REACHED WITH THE BANKERS. THE A CCOUNTING TREATMENT AS ITA 6965/MUM/2013 11 ADHERED BY THE ASSESSEE COMPANY IN THE BOOKS OF ACC OUNT WAS ALSO DISCLOSED AND THE DETAILED SUBMISSIONS WERE MADE BY THE ASSES SEE COMPANY TO THE A.O. ON 11 TH NOVEMBER, 2008 WITH RESPECT TO THE RELEVANT ISSUE UNDER CONSIDERATION. THE ASSESSEE COMPANY DURING THE COU RSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT DULY FILED THE BANK STATEMENTS FOR THE LAST 6 YEARS FROM 1ST APRIL 200 0 TO 31 ST MARCH, 2006 , A LETTER FROM THE BANK SHOWING THE SETTLEMENT DATED 2 2 ND DECEMBER, 2005 AND THE BANK CERTIFICATE DATED 28 TH MARCH, 2006 SETTLING THE BANK LOAN ACCOUNT. THE ASSESSEE COMPANY HAS DISCLOSED A SUM OF RS. 1, 37,19,684/- AS CAPITAL RECEIPT AND RS. 2,06,82,471/- AS REVENUE RECEIPT TR ANSFERRED TO ITS P&L ACCOUNT. THUS IT WAS HELD BY THE LEARNED CIT(A), I T IS EVIDENT THAT THE ISSUE OF TAXABILITY OF RS. 1,37,19,684/- WAS ALREADY DISCUSS ED AND DELIBERATED UPON BY THE A.O. AT THE TIME OF ORIGINAL ASSESSMENT PROC EEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT AND ACCORDINGLY THE ASSESSMENT ORDER WAS PASSED ON 24 TH NOVEMBER, 2008. THUS, THE LEARNED CIT(A) HELD THA T IT IS EVIDENT THAT THIS IS A CASE OF CHANGE OF OPINION O N THE BASIS OF WHICH THE ASSESSMENT HAS BEEN REOPENED AND IT IS A SETTLED LA W THAT THE ASSESSMENT CANNOT BE REOPENED MERELY ON THE BASIS OF CHANGE OF OPINION. THE LEARNED CIT(A) DISCUSSED THE FOLLOWING CASE LAWS:- 1. CIT V. KELVINATOR OF INDIA (2010)320 ITR 561(SC) 2. PURITY TECHTEXTILE PRIVATE LIMITED, 2010-TIOL-211-H C-MUM. 3. CARLTON OVERSEAS (P) LTD. V. CIT (2009) 318 ITR 295 (DEL) 3. CARTINI INDIA LTD. V. ADDL. CIT (2009)314 ITR 275 ( BOM) 4. IPCA LABS LTD., (2002) 251 ITR 416 (BOM) 5. ASTEROIDS TRADING AND INVESTMENTS LTD., (2009) 308 ITR 190 (BOM), 6. SIEMENS INFORMATION SYSTEMS LTD., (2008)295 ITR 333 (BOM) AND 7. ASIAN PAINTS LTD., (2009)308 ITR 195 (BOM) ITA 6965/MUM/2013 12 8. DELHI HIGH COURT FULL BENCH IN THE CASE OF KELVINAT OR OF INDIA LTD, (2002) 256 ITR 1 (DEL) 9. SIRPUR PAPER MILLS LTD., (1978)114 ITR 404 (AP) 10. RALLIS INDIA LTD, (2010) 323 ITR 54 (BOM) BASED UPON THE ABOVE DISCUSSIONS AND CASE LAWS, THE LEARNED CIT(A) OBSERVED THAT IT IS CLEAR THAT IF THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE A.O. DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASS ESSMENT CANNOT BE REOPENED U/S 147 OF THE ACT ON THE BASIS OF CHANGE OF OPINION BECAUSE IF THE ISSUE HAS BEEN CONSIDERED DURING THE ORIGINAL ASSES SMENT PROCEEDINGS, IT HAS TO BE PRESUMED THAT ALL ASPECTS PERTAINING TO THE S AID ISSUE HAVE BEEN CONSIDERED, HENCE, THE DECISION ON THE SAID ISSUE C ANNOT BE REVIEWED OTHERWISE IT WILL AMOUNT TO GIVING THE A.O.S POWER TO REVIEW HIS OWN FAULTY DECISION WHICH CANNOT BE PERMITTED UNDER LAW. SUCH CASES ARE NOTHING BUT CHANGE OF OPINION. ONLY WHEN FRESH TANGIBLE MATERI AL OR INFORMATION IS AVAILABLE WITH THE A.O. AND THE A.O. HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT, THEN THE ASSESSMENT CAN BE REOP ENED U/S 147 OF THE ACT WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSM ENT YEAR. IN THE INSTANT CASE, NO SUCH FRESH TANGIBLE MATERIAL IS AVAILABLE WITH THE AO FOR WHICH THE ASSESSMENT CAN BE REOPENED AND IN FACT DURING THE O RIGINAL ASSESSMENT PROCEEDINGS , THE VERY SAME AMOUNT OF RS. 1,37,19,6 84/- DECLARED AS CAPITAL RECEIPT WAS CONSIDERED BY THE A.O. AND THE EXPLANAT ION OF THE ASSESSEE COMPANY WAS ACCEPTED. THUS, IT COULD NOT BE HELD T HAT THE A.O. HAD ANY FRESH MATERIAL OR INFORMATION IN HIS POSSESSION ON THE BASIS OF WHICH HE COULD BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. TH ERE WAS NO FAILURE ON THE PART OF THE ASSESSEE COMPANY TO DISCLOSE ALL MATERI ALS FACTS. THE ASSESSMENT HAS BEEN REOPENED ONLY ON THE BASIS OF CHANGE OF OP INION AND THUS THE PROCEEDING WAS HELD TO BE INVALID BY THE LEARNED CI T(A) VIDE APPELLATE ORDERS DATED 20-09-2013 AND THE ADDITIONS SO MADE BY THE A O OF RS.1,37,19,684/- VIDE ORDERS DATED 30.08.2011 PASSED U/S. 143(3) REA D WITH SECTION 147 OF THE ITA 6965/MUM/2013 13 ACT WAS ORDERED TO BE DELETED BY THE LEARNED CIT(A) VIDE ORDERS DATED 20.09.2013. THE ASSESSEE COMPANY ALSO PRESENTED ITS DETAILED AR GUMENTS ON MERIT BEFORE THE LEARNED CIT(A), WHICH ARE DETAILED BY THE LEARN ED CIT(A) IN HIS APPELLATE ORDERS DATED 20-09-2013. THE LEARNED CIT(A) CONSID ERED THE ARGUMENTS OF THE ASSESSEE COMPANY ON MERIT, HOWEVER, SINCE THE R EOPENING WAS HELD TO BE INVALID AND THE REASSESSMENT ORDER WAS ANNULLED BY THE LEARNED CIT(A), THUS, THE LEARNED CIT(A) HELD THAT THE GROUND OF APPEALS ON MERITS HAS BECOME ACADEMIC, HENCE, THE LEARNED CIT(A) CONSIDERED IT N OT NECESSARY TO ADJUDICATE THE SAID GROUNDS OF APPEAL VIDE APPELLATE ORDERS DA TED 20-9-2013. 8. AGGRIEVED BY THE APPELLATE ORDERS DATED 20-9-201 3 OF THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 9. THE LD. D.R. SUBMITTED THAT THE REOPENING OF THE ASSESSMENT HAVE BEEN DONE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR , WHEREBY THE CONCLUDED ASSESSMENT U/S. 143(3) OF THE ACT HAS BEEN REOPENED U/S 147/148 OF THE ACT. THE LD. D.R. RELIED UPON T HE ASSESSMENT ORDER DATED 30.08.2011 OF THE A.O. PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT AND SUBMITTED THAT THE ASSESSEE COMPANY HAS GOT ONE TIME SETTLEMENT RELIEF OF RS. 3.44 CRORES , OUT OF WHICH RS. 2.07 CRORES WAS OFFERED FOR TAXATION AS REVENUE RECEIPT AND RS. 1.37 CRORES WAS TRANSFERRED TO CAPITAL RESERVE AND WAS NOT OFFERED FOR TAXATION BY THE ASSESSEE COMPAN Y. NO PROPER BASIS FOR TRANSFER OF THE AMOUNT OF RS. 1.37 CRORES TO THE CA PITAL RESERVE HAS BEEN FURNISHED BY THE ASSESSEE COMPANY . THERE IS NO FIN DING IN THE ASSESSMENT ORDER DATED 24.11.2008 PASSED BY THE A.O. IN THE OR IGINAL ASSESSMENT FRAMED U/S 143(3) OF THE ACT THAT ANY QUERY WAS RAISED BY THE AO FROM THE ASSESSEE COMPANY WITH RESPECT TO THE ONETIME SETTLEMENT AND THE RELIEF GRANTED BY THE ITA 6965/MUM/2013 14 BANK TO THE ASSESSEE COMPANY IN THE ORIGINAL ASSESS MENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT. 10. THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMIT TED THAT THERE WAS AUDIT OBJECTION RAISED BY THE REVENUE AUDIT TEAM AN D BASED ON THAT THE REOPENING HAS BEEN DONE. NO NEW TANGIBLE MATERIAL HAS COME INTO THE POSSESSION OF THE A.O. WHICH COULD HAVE LIVE LINK A ND CLOSE NEXUS WITH THE FORMATION OF A BELIEF THAT INCOME HAS ESCAPED ASSES SMENT. THE LD. COUNSEL DREW OUR ATTENTION TO PAPER BOOK PAGE 59 B AND CONT ENDED THAT THERE WAS AUDIT OBJECTION RAISED BY THE REVENUE AUDIT TEAM VI DE LETTER DATED 24/09/2010 WHEREBY IT WAS SUBMITTED BY THE SENIOR A UDIT OFFICER, THAT THERE WAS ONETIME SETTLEMENT WITH THE BANK WHEREBY THE AS SESSEE COMPANY HAS GOT THE RELIEF OF RS. 3.44 CRORES OUT OF WHICH RS. 2.07 CRORES WAS TRANSFERRED TO REVENUE RECEIPT WHICH WAS OFFERED FOR TAXATION , AN D RS. 1.37 CRORES WAS TRANSFERRED TO CAPITAL RESERVE ACCOUNT WHICH WAS NO T OFFERED FOR TAXATION BY THE ASSESSEE COMPANY AND SINCE THERE IS A CESSATION OF LIABILITY U/S 41 OF THE ACT AS THE SAID AMOUNT OF RS.1.37 CRORES HAS BECOME ASSESSEE COMPANYS OWN MONEY, THE SAME SHOULD BE TREATED AS CESSATION OF LIABILITY AND TREATED AS INCOME OF THE PREVIOUS YEAR U/S 41 OF THE ACT . T HUS THE LD. COUNSEL SUBMITTED THAT ASSESSEE COMPANY WAS ASKED A QUERY B Y THE A.O. DURING THE ASSESSMENT PROCEEDINGS WHEREBY ASSESSEE COMPANY REP LIED VIDE SUBMISSION DATED 11 TH NOVEMBER, 2008 AND COMPLETE DETAILS REGARDING THE ONETIME SETTLEMENT AND RELIEF RECEIVED FROM THE BANK WERE E XPLAINED, THE SAME ARE PLACED IN PAPER BOOK PAGE 45-45C. THE LD COUNSEL P OINTED TO THE AUDIT OBJECTION DATED 24.09.2010(PAGE 59B/PAPER BOOK) WHE REBY THERE IS A MENTION OF THE LETTER DATED 11.11.2008 OF THE ASSESSEE COMP ANY BASED ON WHICH THE AUDIT OBJECTION WAS RAISED AND IT WAS SUBMITTED THA T THE CONTENTION OF REVENUE TO THAT EXTENT ARE WRONG THAT NO QUERY WAS RAISED BY THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS WHICH CULMINATE D INTO AN ASSESSMENT ORDERS DATED 24.11.2008 PASSED BY THE AO U/S 143(3) OF THE ACT. IT WAS ITA 6965/MUM/2013 15 SUBMITTED THAT THE A.O. HAS PASSED THE ASSESSMENT O RDER DATED 24.11.2008 U/S. 143(3) OF THE ACT AFTER CONSIDERING THE REPLY OF THE ASSESSEE COMPANY. THERE WAS COMPLETE NOTE GIVEN IN THE AUDITED BALANC E SHEET, AUDITED P&L ACCOUNT , NOTES TO THE ACCOUNTS AND IN THE DIRECTOR S REPORT REGARDING THE RELIEF RECEIVED BY THE ASSESSEE COMPANY WHICH IS PL ACED IN PAPER BOOK PAGES 4 TO 44 FILED WITH THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THE REOPENING U/S 147/148 OF THE ACT OF THE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT HAS BEEN DONE WHIC H IS BASED UPON THE AUDIT OBJECTION OF THE REVENUE AUDIT TEAM WHICH IS NOT PERMISSIBLE UNDER LAW. THE LD. COUNSEL RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT FULL BENCH IN THE CASE [2012] 348 ITR 485 (DEL) CIT V. USHA INTERNATIONAL LTD., DECISION OF THE AHMEDABAD BENCHES OF THE ITAT IN TH E CASE OF SWETA ORGANISORS PRIVATE LIMITED V. ACIT (2008)118 TTJ 42 6(AHD. TRIB.) AND CONTENDED THAT THIS IS MERELY A CHANGE OF OPINION B Y THE A.O. , WHILE ALL THE MATERIAL FACTS WERE PLACED BEFORE THE A.O. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE COMPANY IS LOSS MAKING POLYESTER TEXTURISE D/TWISTED YARN MANUFACTURING UNIT. THERE WAS AN OUTSTANDING DEFAU LT WITH THE BANK WHEREBY LOANS HAD BECOME NPA. THE MATTER WENT UPTO THE DRT AND BIFR. THE ONETIME SETTLEMENT WAS ENTERED INTO WITH THE BA NKERS WHEREBY TOTAL RELIEF OF RS.3.44 CRORES WAS GRANTED, OF WHICH RS.2.07 CRO RES WAS TRANSFERRED TO REVENUE ACCOUNT AND OFFERED FOR TAXATION, WHILE RS. 1.37 CRORES WAS TRANSFERRED TO CAPITAL RESERVES BEING THE AMOUNT OU TSTANDING IN THE OVERDRAFT ACCOUNT AS PER BANK AS ON 31-03-2006 . THE ASSESSE E COMPANY DREW OUR ATTENTION TO PAPER BOOK PAGE 29 WHEREBY THE AUDITED P&L ACCOUNT IS PLACED AND UNDER THE HEAD EXCEPTIONAL INCOME THERE WAS A CREDIT OF RS. 2.07 CRORES, WHICH WAS OFFERED FOR TAXATION. SIMILARLY, THE LD. COUNSEL SUBMITTED VIDE PAPER BOOK PAGE 31, THERE WAS UNDER HEAD RESERVES AND SURPLUS CREDIT TO THE CAPITAL RESERVES OF RS. 1.37 CRORES, WHICH IS T HE AMOUNT REMAINING OUTSTANDING ON 31-03-2006 IN THE OVERDRAFT BANK ACC OUNT AS PER THE BANK BOOKS OF ACCOUNTS, WHICH WAS EVIDENCED BY THE BANK STATEMENT PLACED AT ITA 6965/MUM/2013 16 PAPER BOOK PAGE 45A. THUS, IN NUTSHELL, THE LD. C OUNSEL SUBMITTED THAT THE REOPENING OF THE CONCLUDED ASSESSMENT HAS BEEN DONE BASED ON CHANGE OF OPINION WHICH IS BASED UPON THE AUDIT OBJECTIONS, WHICH IS NOT PERMISSIBLE UNDER LAW WHEREAS ALL THE DETAILS WERE FURNISHED BE FORE THE A.O. VIDE LETTER DATED 11 TH NOVEMBER, 2008 WHICH IS PLACED IN THE PAPER BOOK P AGE 45 DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 1 43(3) READ WITH SECTION 143(2) OF THE ACT WHICH CULMINATED INTO AN ASSESSME NT ORDERS DATED 24.11.2008 PASSED U/S 143(3) OF THE ACT. 11. THE LD. D.R. IN THE REJOINDER, SUBMITTED THAT T HERE WERE NO CHANGE OF OPINION BY THE A.O. AS NO OPINION WAS FORMED AT THE TIME OF ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDERS DATED 24.11.2008. THE PROVISIONS OF SECTION 147 OF THE ACT CLEARLY STIPUL ATES THAT MERELY PRODUCTION BEFORE THE A.O. OF THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS ARE NOT SUFFICIENT . NO INF ORMATION WAS CALLED BY THE A.O. AS NOTHING HAS BEEN COME IN THE ASSESSMENT ORD ER THAT THE AO CALLED FOR THIS INFORMATION AND FORMED ANY OPINION THEREOF. T HERE IS NO DISCUSSION IN THE ASSESSMENT ORDER WITH RESPECT TO THE RELIEFS R ECEIVED BY THE ASSESSEE COMPANY WITH RESPECT TO ONE TIME SETTLEMENT WITH TH E BANK. THUS, THE A.O. HAS NOT CONSIDERED THE PLEA OF THE ASSESSEE COMPANY BEFORE FINALIZING THE ASSESSMENT ORDER. THE LD. D.R. RELIED UPON THE DEC ISION OF THE ITAT,MUMBAI IN THE CASE OF ARVEE INTERNATIONAL V. ACIT, [2006] 101 ITD 495 (MUM), HONBLE SUPREME COURT DECISION IN THE CASE OF ESS ESS KAY E NGINEERING COMPANY PRIVATE LIMITED V. CIT (2002) 247 ITR 818 (SC), HON BLE MADRAS HIGH COURT DECISION IN THE CASE OF ALA FIRM V. CIT (1976) 102 ITR 622(MAD.) , HONBLE MADRAS HIGH COURT IN THE CASE OF REVATHY CP EQUIPME NT LIMITED V. DCIT (2000) 241 ITR 856(MAD.) AND IN THE CASE OF SOM DUT T BUILDERS PRIVATE LIMITED V. DCIT (2006)98 ITD 78(KOL). THE LD. D.R. SUBMITTED THAT THERE IS NO NECESSITY THAT THE INFORMATION WHICH IS RECEIVED BY THE A.O. SHOULD BE AN EXTERNAL INFORMATION FOR REOPENING OF CONCLUDED ASS ESSMENTS U/S 147/1148 ITA 6965/MUM/2013 17 OF THE ACT .THE LD. DR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KALYANJI MAVJI & COMPANY V. CIT (1976)1 02 ITR 287(SC). THE LD DR RELIED UPON THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITED (2007) 161 TAXMAN 316(SC) . IT WAS SUBMITTED BY LD DR THAT THE INFORMATION COULD B E RECEIVED FROM THE REVENUE AUDIT PARTY WHERE MERELY INFORMATION AS TO THE ESCAPEMENT OF INCOME IS PROVIDED BY THE AUDIT PARTY AND HE RELIE D UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. PVS BEE DIES PRIVATE LIMITED (1999) 237 ITR 13(SC) HE SUBMITTED THAT THE INCOME HAS ESCAPED ASSESSMENT AND THE REVENUE HAS RIGHTLY REOPENED THE ASSESSMENT BASED UPON THE INFORMATION RECEIVED BY THE AO FROM THE RE VENUE AUDIT TEAM WHICH IS IN ITSELF A TANGIBLE MATERIAL. THE LD. DR FURTH ER RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT (1979)119 ITR 996(SC) AND THAT THE A UDIT TEAM HAS NOT INTERPRETED LAW BUT MERELY PROVIDED INFORMATION AS TO THE ESCAPEMENT OF INCOME RELYING UPON THE DECISION IN THE CASE OF HON BLE MADRAS HIGH COURT IN THE CASE OF CIT V. FIRST LEASING COMPANY OF INDIA L IMITED (2001) 241 ITR 248(MAD.) AND SUBMITTED THAT THE ASSESSMENT ORDER I S A DUMB DOCUMENT, THERE IS NO APPLICATION OF MIND BY THE AO WHILE FRA MING THE ORIGINAL ASSESSMENT ORDER DATED 24.11.2008 U/S 143(3) OF THE ACT AND HENCE THERE IS NO CHANGE OF OPINION BY THE AO WHILE RE-OPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT AND HE CONCLUDED THAT THE ASSESS MENT WAS RIGHTLY REOPENED BY THE REVENUE. 12.WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS CITED B Y BOTH THE PARTIES. WE HAVE OBSERVED THAT THE ASSESSMENT IN THE INSTANT CASE OF THE ASSESSEE COMPANY WAS ORIGINALLY COMPLETED U/S. 143(3) OF THE ACT BY THE REVENUE VIDE ASSESSMENT ORDERS DATED 24 TH NOVEMBER, 2008. THE CONCLUDED ASSESSMENT U/S. 143(3) OF THE ACT HAS BEEN SOUGHT TO BE RE-OPE NED U/S 147/148 OF THE ITA 6965/MUM/2013 18 ACT IN THE INSTANT CASE BY THE REVENUE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR BY ISSUANCE AND SERVING O F THE NOTICE U/S 148(1) OF THE ACT DATED 28-03-2011, AFTER RECORDING OF THE RE ASONS U/S 148(2) OF THE ACT FOR RE-OPENING OF THE ASSESSMENT U/S 147/148 OF TH E ACT. THE SAID REASONS RECORDED FOR RE-OPENING OF THE CONCLUDED ASSESSMENT WAS DULY SUPPLIED BY THE REVENUE TO THE ASSESSEE COMPANY. WE HAVE OBSERV ED THAT THE ASSESSEE COMPANY HAS ENTERED INTO ONE-TIME SETTLEMENT AGREEM ENT WITH THE BOMBAY MERCANTILE CO-OPERATIVE BANK LIMITED (THE BANK), WHEREBY THE ASSESSEE COMPANY HAS BEEN GIVEN RELIEF/WAIVER OF RS.3.44 CRO RES ON ONE TIME SETTLEMENT OF LOAN LIABILITY WITH THE BANK . OUT OF RELIEF OF RS.3.44 CRORES RECEIVED BY THE ASSESSEE COMPANY FROM THE BANK ON ONE TIME SETTLEMENT OF LOAN LIABILITIES, THE ASSESSEE COMPANY TRANSFERRED RS. 2.07 CRORES TO THE PROFIT AND LOSS ACCOUNT AND OFFERED THE SAME FOR TAXATION , WHILE THE BALANCE AMOUNT OF THE RELIEF BEING RS.1.37 CRORES LOAN LIAB ILITY WAIVER BY THE BANK WAS THE AMOUNT OUTSTANDING TO BE PAYABLE OF RS. 1.37 CR ORES AS ON 31-03-2006 BY THE ASSESSEE COMPANY AS PER THE BOOKS OF ACCOUNTS O F THE BANK VIDE BANK STATEMENT OF THE OVERDRAFT ACCOUNT OF THE BANK BEIN G PART OF THE NPA AMOUNT , WHICH WAS TRANSFERRED BY THE ASSESSEE COMPANY TO CA PITAL RESERVES ACCOUNT AND THE SAME WAS NOT OFFERED FOR TAXATION BY THE AS SESSEE COMPANY BEING TERMED AS CAPITAL WAIVER/RELIEF. THE ASSESSEE COMPA NY DULY DECLARED AND DISCLOSED THE ONE TIME SETTLEMENT ARRIVED AT WITH T HE BANK FOR SETTLING ITS BANK LOANS OUTSTANDING IN THE DIRECTORS REPORT, AUD ITED BALANCE SHEET , AUDITED PROFIT AND LOSS ACCOUNT AND IN THE AUDITED NOTES FORMING PART OF THE ACCOUNTS , WHICH WERE ALL FILED BEFORE THE REVENUE BEFORE THE ORIGINAL ASSESSMENT STOOD CONCLUDED VIDE ASSESSMENT ORDERS U /S. 143(3) DATED 24.11.2008. THE A.O. DURING THE COURSE OF THE ORIG INAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT DULY ENQUIRED ABOUT THE ONETIME SETTLEMENT ENTERED INTO BY THE AS SESSEE COMPANY WITH THE BANK AND THE DETAILS THEREOF INCLUDING THE RELIEF/W AIVER OBTAINED BY THE ASSESSEE COMPANY FROM THE BANK. THE ASSESSEE COMPA NY VIDE ITS ITA 6965/MUM/2013 19 REPLY/SUBMISSIONS DATED 11 TH NOVEMBER, 2008 DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT HAS DULY REPLIED AND GIVEN ALL THE DETAILS ALONG WITH O NETIME SETTLEMENT AGREEMENT ENTERED INTO WITH THE BANK, THE BANK STATEMENT FROM 1.4.2000 TO 31-3-2006, A LETTER FROM THE BANK OFFERING SETTLEMENT DATED 22 ND DECEMBER 2005 AS WELL AS THE BANK CERTIFICATE DATED 28 TH MARCH, 2006 SETTLING THE LOAN LIABILITY ACCOUNTS OF THE ASSESSEE COMPANY. THE ASSESSEE COM PANY HAS DULY EXPLAINED THAT THE CAPITAL RELIEF / WAIVER OF RS. 1 .37 CRORES HAS BEEN GRANTED BY THE BANK WHICH IS TRANSFERRED TO THE CAPITAL RE SERVE ACCOUNT , WHILE RS. 2.07 CRORES HAS BEEN TRANSFERRED TO THE REVENUE REC EIPT, WHICH WAS SUPPORTED BY THE AUDITED FINANCIAL STATEMENTS AND THE RETURN OF INCOME FILED BY THE ASSESSEE COMPANY WITH THE REVENUE. THUS, THERE WAS A TRUE AND FULL DISCLOSURE BY THE ASSESSEE COMPANY BEFORE THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) WIT H RESPECT TO THE WAIVER/RELIEFS OBTAINED BY THE ASSESSEE COMPANY UN DER ONE TIME SETTLEMENT WITH THE BANKERS OF RS.3.44 CRORES WITH RESPECT TO ITS NPA LOAN LIABILITY WHICH WAS ALSO SUBJECT MATTER OF LITIGATION WITH DEBT REC OVERY TRIBUNAL AND BIFR. THE FACTUM OF THIS LETTER DATED 11-11-2008 SUBMITTE D BY THE ASSESSEE COMPANY BEFORE THE AO DID FIND MENTION IN THE AUDIT OBJECTION LETTER DATED 24-09-2010 ISSUED BY SENIOR AUDIT OFFICER/LAP-IX, W HICH WAS THE BASIS FOR RE-OPENING OF THE CONCLUDED ASSESSMENT . THUS , THE CONTENTIONS OF THE REVENUE THAT NO SUCH QUERY RELATING TO ONE TIME SET TLEMENT WITH THE BANKER AND CONSEQUENT RELIEF / WAIVER OBTAINED BY THE ASSE SSEE COMPANY , WAS EVER RAISED BY THE AO DURING THE ORIGINAL ASSESSMENT PRO CEEDINGS U/S. 143(3) READ WITH SECTION 143(2) OF THE ACT AND NO SUCH REPLY DA TED 11.11.2008 WAS EVER GIVEN BY THE ASSESSEE COMPANY DURING THE ORIGINAL A SSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT BECA USE NOTHING HAS BEEN DISCUSSED BY THE AO ABOUT THIS ONE TIME SETTLEMENT WITH THE BANKER AND THE RELIEF SO OBTAINED BY THE ASSESSEE COMPANY IN HIS A SSESSMENT ORDER U/S 143(3) OF THE ACT DATED 24.11.2008 , THE AFORE-STAT ED CONTENTIONS OF THE LD. DR ITA 6965/MUM/2013 20 ARE NOT CORRECT AND ARE DEVOID OF ANY MERIT AND ARE HEREBY REJECTED BASED ON THE FACTS AS EMERGING FROM THE RECORDS AS SET OUT A BOVE. NOTHING CONTRARY HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SUBSTANTIA TE THE BALD CONTENTIONS OF THE LD DR NOR ANY AFFIDAVIT HAS BEEN FILED BY TH E REVENUE TO THIS EFFECT TO DISPROVE THE CONTENTIONS OF THE ASSESSEE COMPANY TH AT THERE WAS COMPLETE AND TRUE DISCLOSURES OF ALL THE FACTS RELATING TO T HE ONE TIME SETTLEMENT ARRIVED AT WITH THE BANKERS AND RELIEF OBTAINED BY THE ASSE SSEE COMPANY UNDER THE SETTLEMENT WITH THE BANKERS, WHICH WERE SUBMITTED B Y THE ASSESSEE COMPANY VIDE LETTER DATED 11-11-2008 AND ALSO VIDE AUDITED FINANCIAL STATEMENTS , DIRECTORS REPORT AND NOTES TO THE ACCOUNTS FILED WI TH THE REVENUE . THE A.O. WAS HAVING ALL THE DOCUMENTS VIDE LETTER DATED 11 TH NOVEMBER, 2008 GIVEN BY THE ASSESSEE COMPANY DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S. 143(3) READ WITH SECTION 143(2) OF THE ACT, WH ICH IS PLACED AT PAPER BOOK PAGE 45 TO 45C FILED WITH THE TRIBUNAL ALONG WITH D ISCLOSURES IN AUDITED FINANCIAL STATEMENTS, DIRECTOR REPORT AND NOTES TO ACCOUNTS FILED WITH THE REVENUE BY THE ASSESSEE COMPANY WHICH ARE ALSO PLAC ED IN PAPER BOOK PAGE 4-44. THE A.O. AFTER CONSIDERING THE REPLY/SUBMISS IONS OF THE ASSESSEE COMPANY ALONG WITH THE BANK STATEMENTS , BANK CORRE SPONDENCE, BANK CERTIFICATES AND DISCLOSURES IN THE AUDITED FINANCI AL STATEMENTS AS SET OUT ABOVE WITH RESPECT TO THE ONE TIME SETTLEMENT WITH THE BANKERS AND RELIEF / WAIVERS ALLOWED BY THE BANKERS TO THE ASSESSEE COMP ANY, FRAMED THE IMPUGNED ASSESSMENT ORDER U/S 143(3) OF THE ACT ON 24-11-2008 ACCEPTING THE CONTENTIONS OF THE ASSSESSEE COMPANY. NORMALLY , WHEN THE ASSESSMENT ORDERS ARE FRAMED BY THE REVENUE U/S 143(3) OF THE ACT, IT NORMALLY CONTAINS DISCUSSIONS WITH RESPECT TO WHICH THERE IS DIFFEREN CE OF OPINION BETWEEN THE TAX-PAYER AND THE REVENUE WARRANTING ADDITION TO TH E DISCLOSED INCOME BY THE TAX-PAYER IN THE RETURN OF INCOME FILED WITH THE RE VENUE, AND THE ISSUES WHERE THERE IS A CONSENSUS BETWEEN THE REVENUE AND TAX-PAYER AND CONSEQUENTIALLY NO ADDITIONS ARE WARRANTED TO THE DISCLOSED INCOME OF THE TAX-PAYER ARE NOT INCLUDED IN THE ASSESSMENT ORDERS . THUS, THE A.O. HAS DULY ITA 6965/MUM/2013 21 APPLIED HIS MIND AND ACCEPTED THE CONTENTIONS OF TH E ASSESSEE COMPANY THAT THE CAPITAL RELIEF OF LOAN OUTSTANDING TO BE PAYABL E AS PER THE BOOKS OF ACCOUNTS OF THE BANK REFLECTED IN THE BANK STATEMEN T OF RS.1.37 CRORES WHICH WAS CREDITED BY THE ASSESSEE COMPANY TO CAPITAL RES ERVE AND NOT OFFERED TO TAX, IS ON A CAPITAL FIELD AND WAIVER THEREOF DOES NOT RESULT INTO INCOME EXIGIBLE TO TAX AND HENCE NO ADDITIONS WERE MADE WH ILE FRAMING ASSESSMENT ORDERS DATED 24.11.2008 FRAMED BY THE AO U/S 143(3) OF THE ACT. THUS, THE OPINION WAS CLEARLY FORMED BY THE A.O. AS PER THE F ACTS EMERGING FROM THE RECORDS THAT THE SAID AMOUNT OF CAPITAL RELIEF OF R S.1.37 CRORES IS NOT EXIGIBLE TO TAX , WHILE THE AO ALSO ACCEPTED THE CONTENTIONS OF THE ASSESSEE COMPANY THAT RS.2.07 CRORES IS EXIGIBLE TO TAX AS REVENUE R ECEIPTS. HOWEVER, LATER ON THE REVENUE RE-OPENED U/S 147/148 OF THE ACT , THE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT BASED ON THE AUDIT OBJECTIONS BY THE AUDIT TEAM VIDE LETTER OF SENIOR AUDIT OFFICER/LAP-IX DATED 24-09-2 010 THAT INCOME HAS ESCAPED ASSESSMENT AS THE ASSESSEE COMPANY HAS NOT OFFERED TO TAX RS.1.37 CRORES BEING RELIEF RECEIVED BY THE ASSESSEE COMPAN Y ON ONE TIME SETTLEMENT WITH THE BANKERS WHICH IS EXIGIBLE TO TAX AS THE AM OUNT WAS RECEIVED BY THE ASSESSEE COMPANY IN THE COURSE OF CARRYING ON ITS B USINESS , THE SAME AMOUNT BECAME THE ASSESSEE COMPANY MONEY , THE SAME SHOULD BE TREATED AS CESSATION OF THE LIABILITY AND BE EXIGIBLE TO TAX U /S 41 OF THE ACT , VIDE AUDIT OBJECTION DATED 24-09-2010. ON MERITS ALSO IT IS TH E SAY OF THE ASSESSEE COMPANY THAT THE PROCEEDS OF THE BANK OVERDRAFT ACC OUNT HAD BEEN UTILIZED BY THE ASSESSEE COMPANY FOR ACQUISITION OF PLANT AND M ACHINERY AND CONSTRUCTION OF BUILDING FOR THE MANUFACTURING UNIT OF THE ASSESSEE COMPANY FOR WHICH EVIDENCES WERE PLACED ON RECORD AND HENCE THE LOAN LIABILITY VIDE BANK OVERDRAFT ACCOUNT WERE UTILIZED ON CAPITAL FIE LD. IT IS ALSO THE SAY OF THE COMPANY ON MERITS THAT THE SAID RELIEF OF RS.1.37CR ORES BEING ON CAPITAL FIELD WAS NEVER EVER TAKEN INTO ACCOUNT BY THE ASSESSEE C OMPANY FOR CLAIMING THE DEDUCTIONS AS AN EXPENDITURE OR TRADING LIABILITY U NDER THE PROVISIONS OF THE ACT SINCE THE AVAILMENT OF THE SAID BANK OVERDRAFT BY THE ASSESSEE COMPANY ITA 6965/MUM/2013 22 AND HENCE RELIEF/WAIVER THEREOF THE BALANCE OUTSTAN DING TO BE PAYABLE OF RS.1.37 CRORES AS INCLUDED IN THE NPA AMOUNT CANNOT BE EXIGIBLE TO TAX U/S.41 OF THE ACT AS THE SAME IS NOT THE CESSATION OF THE TRADING LIABILITY AS THE SAME WERE NEVER BEING CLAIMED OR ALLOWED AS DED UCTION AS AN TRADING EXPENDITURE OR LIABILITY BY THE REVENUE WHILE COMPU TING THE INCOME OF THE ASSESSEE COMPANY CHARGEABLE TO TAX . BE THAT IT MAY BE, IN OUR CONSIDERED VIEW, THE A.O. HAS DULY APPLIED HIS MIND IN THE ORI GINAL ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT BEFORE CONCLUDING ASSESSMENT VIDE ORDERS U/S 143(3) OF THE ACT DATED 24.11.2008 WITH RESPECT TO THE ONE TIME SETTLEMENT ENTERED INTO BY THE ASSE SSEE COMPANY WITH ITS BANKERS AND THE CONSEQUENT RELIEFS SO OBTAINED BY THE ASSESSEE COMPANY FOR WHICH FULL AND COMPLETE DISCLOSURES WERE MADE BY TH E ASSESSEE COMPANY IN ITS DIRECTORS REPORT, AUDITED FINANCIAL STATEMENTS AND AUDITED NOTES TO ACCOUNTS AS WELL REPLY/SUBMISSIONS DATED 11-11-2008 IN RESPONSE TO THE QUERY OF THE AO , THE SAID REPLY DATED 11-11-2008 W AS SUBMITTED BY THE ASSESSEE COMPANY ALONG WITH NECESSARY ENCLOSURES OF BANK STATEMENTS AND CERTIFICATES AS SET OUT ABOVE, WHICH CULMINATED INT O AN ASSESSMENT ORDERS DATED 24.11.2008 PASSED BY THE AO U/S 143(3) OF THE ACT WHEREBY THE AO ACCEPTED THE CONTENTIONS OF THE ASSESSEE COMPANY TH AT THE WAIVER/RELIEF OF THE BALANCE OUTSTANDING AMOUNT OF RS.1.37 CRORES PA YABLE AS PER BANK STATEMENT IN THE NPA OVERDRAFT ACCOUNT IS NOT TAXAB LE AS IT IS A CAPITAL RELIEF ON CAPITAL ACCOUNT. THUS, IT IS PROVED BEYOND DOUBT THAT THE AO DID FORMED AN OPINION WHILE ALLOWING THE RELIEF OF RS.1.37 CRO RES WAIVER BY THE BANK AS NOT EXIGIBLE TO TAX BASED ON FULL AND COMPLETE DISC LOSURE BY THE ASSESSEE COMPANY AS SET OUT ABOVE. THE ASSESSMENT HAS BEEN RE-OPENED U/S 147/148 OF THE ACT WITHIN FOUR YEARS FROM THE END OF THE AS SESSMENT YEAR WHICH CAN NO DOUBT BE RE-OPENED IF IT COULD BE SHOWN EITHER THAT THERE WAS FAILURE OR OMISSION ON THE PART OF THE ASSESSEE COMPANY IN FUL L AND COMPLETE DISCLOSURE BEFORE THE AO TO SHOW THAT THE OPINION IS FORMED BY THE AO BASED ON THE FACTS WHICH WERE NOT CORRECTLY STATED OR PLACED BY THE AS SESSEE COMPANY BEFORE THE ITA 6965/MUM/2013 23 AO AND HENCE OPINION FORMED BY THE AO ON THE APPREC IATION OF WRONG FACTS PRESENTED BY THE ASSESSEE COMPANY GETS VITIATED AND HENCE THE REVENUE BECOMES ELIGIBLE TO RE-OPEN U/S 147/148 OF THE ACT THE CONCLUDED ASSESSMENT U/S. 143(3) OF THE ACT WHILE NO SUCH AVERMENTS HAS BEEN MADE BY THE REVENUE THAT INCORRECT OR WRONG FACTS WERE PRESENTE D BY THE ASSESSEE COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH LED TO FORMATION OF AN OPINION BY THE AO WHICH IS A VITIATED OPINION . RATHER, IT IS THE CONTENTIONS OF THE REVENUE THAT THE INCOME HAS ESCA PED ASSESSMENT AS THE SAME IS CHARGEABLE TO TAX U/S 41 OF THE ACT AS WAIV ER MONEY HAS BECOME ASSSESSEE COMPANYS OWN MONEY AND IS A CESSATION OF LIABILITY EXIGIBLE TO TAX. SECONDLY, THE ASSESSMENT CAN BE RE-OPENED BY THE RE VENUE WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT IF THERE IS A NEW AN D TANGIBLE INCRIMINATING MATERIAL COMING INTO POSSESSION OF THE REVENUE WHIC H HAS A LIVE LINK AND CLOSE NEXUS WITH THE FORMATION OF A BELIEF BY THE A O THAT INCOME HAS ESCAPED ASSESSMENT. AGAIN, WE FAILED TO UNDERSTAND WHICH NE W AND TANGIBLE INCRIMINATING MATERIAL HAS COME TO THE POSSESSION O F THE REVENUE HAVING LIVE LINK AND CLOSE NEXUS WITH THE FORMATION OF A BELIEF BY THE AO THAT THE INCOME HAS ESCAPED ASSESSMENT. THE AUDIT OBJECTION VIDE LE TTER DATED 24/09/2010 LEADING TO RE-OPENING U/S 147/148 OF THE ACT OF THE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT IS BASED ON DIFFERENT INTERPR ETATION OF LAW WITH RESPECT TO SECTION 41 OF THE ACT ARRIVED AT BY THE AUDIT TEAM ON THE SAME SET OF FACTS AND MATERIAL WHICH WERE ALSO AVAILABLE BEFORE THE AO WH ILE FRAMING THE ORIGINAL ASSESSMENT ORDERS DATED 24.11.2008 U/S 143(3) OF TH E ACT. THE POWERS U/S 147/148 OF THE ACT ARE POWERS TO ASSESS OR RE-ASSES S THE INCOME , WHILE THERE IS NO LICENSE GRANTED TO THE AUTHORITIES BELOW TO R EVIEW THEIR OWN FAULTY DECISIONS OR TO MAKE FRESH ROVING OR INVESTIGATING ENQUIRIES TO BRING TO TAX INCOME WHICH COULD NOT BE BROUGHT TO TAX IN THE ORI GINAL ASSESSMENT PROCEEDINGS. IF THAT BE ALLOWED THEN THERE WILL BE NO END TO LITIGATION AND THE CONSEQUENCES WILL BE DISASTROUS. IN CASE AT ANY STA GE , IF IT FOUND THAT THE DECISION OF THE AO IS FAULTY, THE REVENUE IS NOT RE MEDY LESS AS THE POWERS U/S ITA 6965/MUM/2013 24 263 OF THE ACT ARE ALWAYS WITH THE REVENUE WHEREBY THE LEARNED COMMISSIONER OF INCOME TAX(THE CIT) IS EMPOWERED TO SET ASIDE FAULTY DECISIONS OF THE AO IF THE SAME ARE FOUND TO BE ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS POWER IS ALWAYS A VAILABLE WITH THE CIT U/S 263 OF THE ACT TO SET ASIDE FAULTY DECISIONS OF THE AO , BUT CERTAINLY NOT THE POWERS U/S 147/148 OF THE ACT CAN BE INVOKED TO REV IEW ALL KIND OF FAULTY DECISIONS OF THE AO. THUS, IN OUR CONSIDERED VIEW, THE REOPENING IN THE INSTANT CASE IS CLEARLY BASED UPON THE CHANGE OF OP INION AND BASED UPON THE AUDIT OBJECTIONS DATED 24-09-2010 WHICH IS BASED ON DIFFERENT INTERPRETATION OF LAW WITH RESPECT TO SECTION 41 OF THE ACT OF THE MATERIAL AND FACTS WHICH WERE ALREADY AVAILABLE ON RECORDS BEFORE THE AO WHI LE FRAMING ORIGINAL ASSESSMENT ORDER DATED 24.11.2008 U/S 143(3) OF THE ACT AND THE SAME IS NOT SUSTAINABLE AS THE POWER U/S 147/148 IS TO ASSESS O R RE-ASSESS THE INCOME WHICH HAS ESCAPED ASSESSMENT , BUT NOT TO REVIEW TH E ASSESSMENTS BASED ON THE CHANGE OF OPINION BY THE AO . THE AUDIT TEAM U NDERTAKE THE AUDIT FUNCTIONS WHICH ARE NOT JUDICIAL FUNCTIONS AND THE AUDIT TEAM CERTAINLY HAS POWERS TO FURNISH THE INFORMATION TO BRING TO THE N OTICE OF THE A.O. WITH RESPECT TO THE INCOME HAVING ESCAPED ASSESSMENT, BU T THEY CANNOT COME TO THE CONCLUSIONS THAT INCOME HAS ESCAPED ASSESSMENT BASED ON A DIFFERENT INTERPRETATION OF THE LAW ON THE SAME SET OF FACTS AND MATERIAL AS ARE AVAILABLE BEFORE THE AO WHILE FRAMING ORIGINAL ASSESSMENT AND THEN MAKE THE RECOMMENDATIONS TO THE AO FOR RE-OPENING OF THE ASS ESSMENT BASED ON THEIR DIFFERENT INTERPRETATION OF LAW ON THE SAME SET OF FACTS AND MATERIAL WHICH WAS ALREADY WITH THE AO AS THE AUDIT TEAM DOES NOT DISC HARGE JUDICIAL FUNCTIONS TO OVERSEE THE FUNCTIONING AND WORKING OF THE AO UNLES S THE COURSE ADOPTED BY THE AO IS COMPLETELY AN IMPRESSIBLE AND IMPOSSIBLE COURSE WHICH IS AGAINST THE PROVISIONS OF LAW , WHILE THE A.O. BEING THE QU ASI JUDICIAL AUTHORITY ALSO DISCHARGE THE JUDICIAL FUNCTIONS INVOLVING INTERPRE TATION OF LAW AND ACCORDINGLY FRAME AN OPINION ON THE SUBJECT MATTER WHILE FRAMING ASSESSMENT BASED ON THE INTERPRETATION OF LAW ON THE FACTS AND MATERIAL BEFORE HIM. . IN ITA 6965/MUM/2013 25 ANY CASE IF ANY SUCH RECOMMENDATION IS MADE BY THE AUDIT TEAM BASED ON DIFFERENT INTERPRETATION OF LAW ON THE SAME SET OF FACTS AND MATERIAL AS WERE AVAILABLE BEFORE THE AO, IT REQUIRES INDEPENDENT SA TISFACTION OF THE AO AFTER DUE APPLICATION OF MIND TO COME TO THE CONCLUSION T HAT INCOME HAS ESCAPED ASSESSMENT. IT CLEARLY APPEARS FROM THE FACTS EMERG ING FROM THE RECORDS THAT THE A.O. IN THE INSTANT CASE HAS NOT APPLIED ANY MI ND TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT BEFOR E ACCEPTING THE AUDIT OBJECTIONS OF THE AUDIT TEAM TO ARRIVE AT HIS INDEP ENDENT SATISFACTION BEFORE RE-OPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT THE OTHERWISE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT , AS PER THE FACTS EMERGING FROM THE RECORDS PLACED BEFORE US . THE AO HAS IN AN STEREO TYPED ME CHANICAL MANNER MERELY ACCEPTED THE RECOMMENDATIONS OF THE AUDIT TEAM WITH OUT ANY APPLICATION OF MIND AND PROCEEDED TO REOPEN THE CONCLUDED ASSESSME NT U/S 143(3) OF THE ACT BY RECORDING THE SAME REASONS AS WERE SUGGESTED BY THE AUDIT TEAM ON A STEREO TYPED MECHANICAL MANNER BASED ON AUDIT OBJE CTIONS AND ISSUING NOTICE U/S 148(1) OF THE ACT, WITHOUT RECORDING HIS OWN INDEPENDENT SATISFACTION TO RE-OPEN THE OTHERWISE CONCLUDED ASS ESSMENT U/S 143(3) OF THE ACT. HONBLE SUPREME COURT IN THE CASE OF INDIAN AND EAS TERN NEWSPAPER SOCIETY V. CIT (1979)119 ITR 996(SC) HAS HELD THAT WHETHER IT IS THE INTERNAL AUDIT PARTY OF THE INCOME-TAX DEPARTMENT OR AN AUDIT PART Y OF THE COMPTROLLER AND AUDITOR GENERAL, THEY PERFORM ESSENTIALLY ADMINISTR ATIVE OR EXECUTIVE FUNCTIONS AND CANNOT BE ATTRIBUTED THE POWER OF JUD ICIAL SUPERVISION OVER THE QUASI-JUDICIAL ACTS OF INCOME-TAX AUTHORITIES. THE INCOME-TAX ACT DOES NOT CONTEMPLATE SUCH POWER IN ANY INTERNAL AUDIT ORGANI SATION OF THE INCOME-TAX DEPARTMENT; IT RECOGNISES POWER IN THOSE AUTHORITIE S ONLY WHICH ARE SPECIFICALLY AUTHORISED TO EXERCISE ADJUDICATORY FU NCTIONS THE COMPTROLLER AND AUDITOR-GENERAL'S ( DUTIES, POWERS & CONDITION) ACT DOES NOT ALSO ENVISAGE SUCH A POWER. NEITHER STATUTE SUPPORTS THE CONCLUSI ON THAT AN AUDIT PARTY ITA 6965/MUM/2013 26 CAN PRONOUNCE ON THE LAW, AND THAT SUCH PRONOUNCEME NT AMOUNTS TO 'INFORMATION' WITHIN THE MEANING OF SECTION 147(B) . IN EVERY CASE, THE ITO MUST DETERMINE FOR HIMSELF WHAT IS THE EFFECT AND C ONSEQUENCE OF THE LAW MENTIONED IN THE AUDIT NOTE AND WHETHER, IN CONSEQU ENCE OF THE LAW WHICH HAS NOW COME TO HIS NOTICE, HE CAN REASONABLY BELIE VE THAT INCOME HAS ESCAPED ASSESSMENT. THE BASIS OF HIS BELIEF MUST BE THE LAW OF WHICH HE HAS NOW BECOME AWARE. THE OPINION RENDERED BY THE AUDIT PARTY IN REGARD TO THE LAW CANNOT, FOR THE PURPOSE OF SUCH BELIEF, ADD TO OR COLOUR THE SIGNIFICANCE OF SUCH LAW. THE TRUE EVALUATION OF THE LAW IN ITS BEA RING ON THE ASSESSMENT MUST BE MADE DIRECTLY AND SOLELY BY THE ITO. IN THI S CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY(SUPRA), THE ITO HAD, WHEN HE MADE THE ORIGINAL ASSESSMENT, CONSIDERED THE PROVISIONS OF SECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE APPLICATION OF THOSE PROVISIONS WOULD AMOUNT TO A CHANGE OF OPINION ON MATERIAL ALREADY C ONSIDERED BY HIM. AN ERROR DISCOVERED ON A RECONSIDERATION OF THE SAME M ATERIAL DOES NOT EMPOWER THE ITO TO REOPEN THE ASSESSMENT UNDER SECTION 147( B). PLAINLY, THE STATUTORY PROVISION ENVISAGES THAT THE ITO MUST HAVE INFORMAT ION IN HIS POSSESSION, AND THEN, IN CONSEQUENCE OF SUCH INFORMATION, HE MU ST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE REALISATION THAT INCOME HAS ESCAPED ASSESSMENT IS COVERED BY THE WORDS REASON T O BELIEVE, AND IT FOLLOWS FROM THE 'INFORMATION' RECEIVED BY THE ITO. THE INF ORMATION IS NOT THE REALISATION, THE INFORMATION GIVES BIRTH TO THE REA LISATION.THEREFORE, WHETHER CONSIDERED ON THE BASIS THAT THE NATURE AND SCOPE O F THE FUNCTIONS OF THE INTERNAL AUDIT ORGANISATION OF THE INCOME-TAX DEPAR TMENT ARE CO-EXTENSIVE WITH THAT OF RECEIPT AUDIT OR ON THE BASIS OF THE P ROVISIONS SPECIFICALLY DETAILING ITS FUNCTIONS IN THE INTERNAL AUDIT MANUA L, THE OPINION OF AN INTERNAL AUDIT PARTY OF THE INCOME-TAX DEPARTMENT ON A POINT OF LAW CANNOT BE REGARDED AS 'INFORMATION' WITHIN THE MEANING OF SEC TION 147(B) . ITA 6965/MUM/2013 27 IN THIS INSTANT CASE BASED ON THE FACTS AS EMERGING FROM THE RECORDS, THE AO HAS CERTAINLY APPLIED HIS MIND AND FORMED AN OPINIO N WHILE FRAMING THE ORIGINAL ASSESSMENT ORDERS DATED 24.11.2008 PASSED U/S 143(3) OF THE ACT THAT THE RELIEF /WAIVER ON ACCOUNT OF THE BALANCE A MOUNT OF RS.1.37 CRORES PAYABLE ON THE BANK LOAN LIABILITY ACCOUNT AS PART OF THE AMOUNT PAYABLE ON THE DATE OF NPA IS NOT TAXABLE AS IT IS A CAPITAL R ELIEF ON CAPITAL FIELD BEING THE PRINCIPAL AMOUNT WHICH HAS NEVER BEEN TAKEN INTO AC COUNT WHILE CLAIMING DEDUCTIONS/EXPENDITURE WHILE COMPUTING INCOME UNDER THE ACT WHICH IS ONE OF THE PLAUSIBLE AND POSSIBLE VIEW ADOPTED BY THE A O AFTER DUE APPLICATION OF MIND BEFORE FORMING SUCH OPINION ON THE SUBJECT. NO R THERE IS ANY ALLEGATION BY THE REVENUE THAT THERE IS AN FAILURE OR OMISSION ON THE PART OF THE ASSESSEE COMPANY IN CORRECTLY PRESENTING THE FACTS BEFORE THE AO WHICH LED TO FORMATION OF AN OPINION WHICH IS VITIATED BY APPREC IATION OF THE AO OF THE WRONG MATERIAL FACTS DISCLOSED BEFORE HIM OR CONCE ALMENT OF THE MATERIAL FACTS BY THE ASSESSEE COMPANY WHICH OTHERWISE WAS E SSENTIAL TO FORMATION OF AN OPINION TO COME TO THE CONCLUSION WHICH IN THE A BSENCE OF THE SAID MATERIAL FACTS BEING DISCLOSED GOT VITIATED ENTITLI NG THE REVENUE TO RE-OPEN U/S 147/148 OF THE ACT THE CONCLUDED ASSESSMENT U/S 143 (3) OF THE ACT. IT CLEARLY APPEARS FROM THE FACTS EMERGING FROM THE RECORDS TH AT THE A.O. IN THE INSTANT CASE HAS NOT APPLIED ANY MIND TO COME TO THE CONCLU SION THAT INCOME HAS ESCAPED ASSESSMENT BEFORE ACCEPTING THE AUDIT OBJEC TIONS OF THE AUDIT TEAM TO ARRIVE AT HIS INDEPENDENT SATISFACTION BEFORE RE-OP ENING OF THE ASSESSMENT U/S 147/148 OF THE ACT THE OTHERWISE CONCLUDED ASSESSME NT U/S 143(3) OF THE ACT , AS PER THE FACTS EMERGING FROM THE RECORDS PLACED BEFORE US . THE AO HAS IN AN STEREO TYPED MECHANICAL MANNER MERELY ACCEPTED THE RECOMMENDATIONS OF THE AUDIT TEAM WITHOUT ANY APPLICATION OF MIND AND PROCEEDED TO REOPEN THE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT BY RECOR DING THE SAME REASONS AS WERE SUGGESTED BY THE AUDIT TEAM ON A STEREO TYPED MECHANICAL MANNER BASED ON AUDIT OBJECTIONS AND ISSUING NOTICE U/S 14 8(1) OF THE ACT, WITHOUT RECORDING HIS OWN INDEPENDENT SATISFACTION TO RE-OP EN THE OTHERWISE ITA 6965/MUM/2013 28 CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT.THUS, IN OUR CONSIDERED VIEW AND BASED ON THE FACTUAL MATRIX OF THE CASE AS SET OUT ABOVE , THIS ACT OF AN AO IN REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT OF THE CONCLUDED ASSESSMENT U/S. 143(3) OF THE ACT IS NOT SUSTAINABL E UNDER THE LAW AND THE REOPENING IS HELD TO BE BAD IN LAW AND IS HEREBY QU ASHED. IN VIEW OF OUR ABOVE DISCUSSIONS AND REASONING AS SET OUT ABOVE, T HE REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT OF THE OTHERWISE CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT IN THE INSTANT CASE OF THE AS SESSEE COMPANY IS HELD TO BE BAD IN LAW AND THE APPEAL FILED BY THE REVENUE I S DISMISSED. WE DID NOT FIND ANY INFIRMITY IN THE WELL REASONED AND DETAILE D ORDERS OF THE LEARNED CIT(A) DATED 20-09-2013 WHICH WE AFFIRM. WHILE COMING TO THE ABOVE CONCLUSIONS ,WE HAVE DULY CONSIDERED THE DECISION RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE COM PANY OF THE HONBLE DELHI HIGH COURT FULL BENCH IN THE CASE [2012] 348 ITR 4 85 (DEL) CIT V. USHA INTERNATIONAL LTD. ANDDECISION OF THE AHMEDABAD BEN CHES OF THE ITAT IN THE CASE OF SWETA ORGANISORS PRIVATE LIMITED V. ACIT (2 008)118 TTJ 426(AHD. TRIB.). NOW, WE WILL DEAL WITH THE DECISIONS RELIED UPON BY THE LD DR DURING THE COURSE OF HEARING.THE LD DR RELIED UPON THE FOLLOWI NG DECISIONS A) ITAT, MUMBAI IN THE CASE OF ARVEE INTERNATIONAL V. ACIT, [2006] 101 ITD 495 (MUM). IN THE SAID CASE IT WAS HELD BY THE ITAT THAT THE AO IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR AND HE SHOULD NOT ACCEPT THE CONTENTIONS OF THE TAX-PAYER IN A SUMMARY MANNER WITHOUT ANY EN QUIRY AS CONTEMPLATED U/S 143(1) OF THE ACT. THIS CASE IS DISTINGUISHABLE AS IN THE PRESENT CASE, THE AO DULY ENQUIRED ABOUT ONE TIME SETTLEMENT ENTERED INTO BY THE ASSESSEE COMPANY AND ASKED FOR DETAILS WHICH WERE DULY SUBMI TTED ALONG WITH EVIDENCES BY THE ASSESSEE COMPANY AS SET OUT ABOVE WITH RESPECT TO ONE TIME ITA 6965/MUM/2013 29 SETTLEMENT ARRIVED AT BY THE ASSESSEE COMPANY AND R ELIEF/WAIVER OBTAINED BY THE ASSESSEE COMPANY. THE AO FORMED AN OPINION AND ACCEPTED THE CONTENTIONS OF THE ASSESSEE COMPANY AFTER EXAMININ G THE CLAIM OF THE ASSESSEE COMPANY . THUS, IT COULD NOT BE SAID THAT THE CLAIM OF THE ASSESSEE COMPANY WAS ACCEPTED IN AN SUMMARY MANNER AS CONTEM PLATED U/S 143(1) OF THE ACT. MOREOVER 101 ITD 495 WAS DEALING WITH POWE RS OF THE CIT U/S 263 OF THE ACT AND WE HAVE ALSO HELD THAT POWERS U/S 263 O F THE ACT CAN BE INVOKED TO SET ASIDE THE FAULTY ORDERS OF THE AO , WHILE IN THE INSTANT CASE WE ARE DEALING WITH POWERS OF THE AO U/S 147/148 OF THE AC T TO ASSESS OR RE-ASSESS THE INCOME IN CONTRADISTINCTION TO THE POWER OF THE AO TO REVIEW ITS OWN FAULTY DECISIONS WHICH IS NOT PERMISSIBLE WITHIN THE AMBI T OF SECTION 147/148 OF THE ACT. B) HONBLE SUPREME COURT DECISION IN THE CASE OF ES S ESS KAY ENGINEERING COMPANY PRIVATE LIMITED V. CIT (2002) 247 ITR 818 ( SC) - IN THIS CASE, THE HONBLE SUPREME COURT DEALT WITH POWER OF THE AO TO RE-OPEN ASSESSMENT U/S 147/148 OF THE ACT WHEN THERE IS A NEW AND TANGIBLE MATERIAL IN POSSESSION OF THE AO LEADING TO THE CONCLUSION THAT INCOME HAS ES CAPED ASSESSMENT WHILE IN THE INSTANT CASE THERE WAS NO FRESH TANGIBLE MAT ERIAL BEFORE THE AO LEADING TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMEN T RATHER IT IS THE AUDIT OBJECTION WHICH IS ON INTERPRETATION OF LAW WITH RE SPECT TO SECTION 41 OF THE ACT ON THE SAME SET OF FACTS AND MATERIAL WHICH WER E BEFORE THE AO, THAT THE AUDIT TEAM CAME TO A DIFFERENT CONCLUSIONS, WHICH I S NOT PERMISSIBLE. THUS, THIS CASE IS DISTINGUISHABLE VIS--VIS FACTS IN THE INSTANT APPEAL. ) HONBLE MADRAS HIGH COURT DECISION IN THE CASE OF ALA FIRM V. CIT (1976) 102 ITR 622(MAD.) IN THIS CASE , THE HONBLE MADR AS HIGH COURT HAS UPHELD THAT RE-ASSESSMENT IS NOT POSSIBLE BASED ON CHANGE OF OPINION BUT IF NO OPINION IS FORMED IN THE ORIGINAL ASSESSMENT PROCEE DINGS, THEN RE-ASSESSMENT ITA 6965/MUM/2013 30 IS JUSTIFIED BASED ON TANGIBLE MATERIAL WHICH MAY C OME TO THE NOTICE OF THE AO AFTER THE CONCLUSION OF THE ORIGINAL ASSESSMENT, IN THE INSTANT CASE UNDER APPEAL WE HAVE BASED ON THE APPRECIATION OF FACTS C ONCLUDED THAT THE AO DID FORM AN OPINION WHILE FRAMING ORIGINAL ASSESSMENT O RDERS U/S 143(3) OF THE ACT DATED 24.11.2008.THUS, THIS CASE RELIED UPON BY THE LD DR IS DISTINGUISHABLE AS TO THE FACTS IN THE INSTANT APPE AL AS SET OUT ABOVE. D) HONBLE MADRAS HIGH COURT IN THE CASE OF REVATHY CP EQUIPMENT LIMITED V. DCIT (2000) 241 ITR 856(MAD.)-THIS CASE IS ALSO DIS TINGUISHABLE AS THE TAX- PAYER HAS NOT PLACED ON RECORDS MATERIAL FACTS BEFO RE THE AO IN ORIGINAL ASSESSMENT PROCEEDINGS TO COME TO THE CONCLUSION OF ALLOWABILITY OF CLAIM OF THE TAX-PAYER U/S. 80-I OF THE ACT, WHILE IN THE IN STANT APPEAL ALL THE FACTS RELATING TO ONE TIME SETTLEMENT ENTERED INTO BY THE ASSESSEE COMPANY WITH THE BANK WERE PLACED BEFORE THE AO VIDE LETTER DATED 11 -11-2008 AND ALSO IN AUDITED FINANCIAL STATEMENTS, DIRECTORS REPORT AND NOTES TO ACCOUNTS AS SET OUT ABOVE AND THE AO CONSIDERED THE SAME BEFORE ALL OWING RELIEF TO THE ASSESSEE COMPANY.HOWEVER, WITH UTMOST RESPECT , THI S DECISION IS REVERSED BY HONBLE MADRAS HIGH COURT IN REVATHY CP EQUIPMENT L IMITED V. DCIT,(2010) 321 ITR 384(MAD.) E) SOM DUTT BUILDERS PRIVATE LIMITED V. DCIT (2006) 98 ITD 78(KOL). IN THIS CASE , THE KOLKATTA TRIBUNAL HAS UPHELD THE RE-OPE NING BASED ON THE OBJECTION RAISED BY THE REVENUE AUDIT AS IT PERMISS IBLE FOR REVENUE AUDIT TO POINT OUT FACTUAL ERRORS AND OMISSIONS IN THE ASSES SMENT AND THE AO HAS NOT TAKEN A VIEW WHICH WAS PERMISSIBLE VIEW UNDER LAW, BUT IN THE INSTANT CASE THE AUDIT OBJECTION IS BASED ON THE INTERPRETATION OF LAW THAT MONEY HAVING BEING RECEIVED IN THE COURSE OF BUSINESS AND ON BEI NG GRANTED RELIEF HAS BECOME THE ASSESSEE COMPANYS OWN MONEY , THE SAME SHOULD BE TREATED AS CESSATION OF LIABILITY AND INCOME OF THE ASSESSEE C OMPANY OF THE PREVIOUS YEAR U/S 41 OF THE ACT, WHILE THE AO HAS TAKEN ONE OF TH E POSSIBLE VIEW THAT WAIVER ITA 6965/MUM/2013 31 OF CAPITAL RELIEF BY WAY OF OUTSTANDING PAYABLE AS PER THE BOOKS OF ACCOUNTS REFLECTED IN THE BANK STATEMENT BEING PART OF NPA A CCOUNT IS ON CAPITAL ACCOUNT NOT EXIGIBLE TO TAX BASED ON ALL THE FACTS AND MATERIAL PLACED BEFORE THE AO BY THE ASSESSEE COMPANY BEFORE ARRIVING AT A N OPINION BY THE AO THAT THE SAID SUM IS NOT EXIGIBLE TO TAX. F) KALYANJI MAVJI & COMPANY V. CIT (1976)102 ITR 28 7(SC)-THIS CASE ALSO , NEW AND TANGIBLE INFORMATION HAS COME TO THE POSSES SION OF THE AO AFTER COMPLETION OF THE ASSESSMENT THAT THE DEDUCTION WAS WRONGLY ALLOWED AND INCOME HAS ESCAPED ASSESSMENT, WHILE IN THE INSTANT CASE UNDER APPEAL NO NEW TANGIBLE MATERIAL HAS COME INTO POSSESSION OF T HE AO AFTER THE CONCLUSION OF THE ASSESSMENT INDICATING ESCAPEMENT OF INCOME, RATHER BASED ON THE SAME FACTS AND MATERIAL ON RECORD , THE AUDIT TEAM HAS I NTERPRETED THAT WAIVER/RELIEF OF THE BANK LOAN UNDER ONE TIME SETTL EMENT WITH THE BANK TO HAVE BECOME THE ASSESSEE COMPANYS OWN MONEY AND IS A CESSATION OF LIABILITY CHARGEABLE TO TAX U/S 41 OF THE ACT, WHILE THE AO H AS ALREADY ON THE BASIS OF SAME FACTS AND MATERIAL BEFORE HIM FORMED AN OPINIO N THAT THE SAID CAPITAL RELIEF IS NOT EXIGIBLE TO TAX.THE ASSESSEE COMAPNY HAS ALSO FULLY AND TRULY DISCLOSED ALL MATERIAL FACTS BEFORE THE AO DURING T HE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT WITH RESPECT TO ONE TIME SETTLEMENT WITH THE BANK AND RELIEF /WAIVER OBTAINE D BY THE ASSESSEE COMPANY FROM THE BANK. G) HONBLE SUPREME COURT IN THE CASE OF ACIT V. RAJ ESH JHAVERI STOCK BROKERS PRIVATE LIMITED (2007) 161 TAXMAN 316(SC) . IN THIS CASE ALSO, THE HONBLE SUPREME COURT HAS LAID DOWN THAT THE AO CAN RE-OPEN THE CONCLUDED ASSESSMENT IF HE HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. SECTION 147 AUTHORISES AND PERMITS THE AO TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THUS, AGAIN IT COULD B E SEEN THAT HONBLE ITA 6965/MUM/2013 32 SUPREME COURT HELD THAT THE AO HAS POWER TO ASSESS OR REASSESS THE INCOME AND THE AO DOES NOT HAVE POWERS TO REVIEW THE ASSES SMENT WHICH WAS MADE BY THE AO BASED ON OPINION FORMED DURING THE ASSESS MENT PROCEEDINGS. THUS, CHANGE OF OPINION IS NOT PERMITTED TO ENABLE THE AO TO REVIEW ITS OWN FAULTY DECISIONS. H) HONBLE SUPREME COURT IN THE CASE OF CIT V. PVS BEEDIES PRIVATE LIMITED (1999) 237 ITR 13(SC) . IN THIS CASE, THE AUDIT TE AM GAVE FACTUAL INFORMATION THAT RECOGNITION OF THE TRUST HAS EXPIRED BEFORE 01 -04-1973 AND HENCE DEDUCTION U/S. 80G OF THE ACT WILL NOT BE AVAILABLE . THIS WAS FACTUAL INFORMATION AND NOT A CASE OF INFORMATION ON A QUES TION OF LAW AND HENCE THE RE-OPENING WAS UPHELD BY HONBLE SUPREME COURT, WHI LE IN THE INSTANT CASE THE AUDIT TEAM IS INTERPRETING THE LAW WITH RESPEC T TO THE PROVISIONS OF SECTION 41 OF THE ACT TO CONCLUDE THAT THE LOAN WAS TAKEN BY THE ASSESSEE COMPANY IN THE COURSE OF BUSINESS AND THERE IS A WA IVER OF LOAN AND HENCE THE MONEY HAS BECOME ASSESSEE COMPANYS OWN MONEY A ND THE SAME SHOULD BE TREATED AS INCOME OF THE ASSESSEE COMPANY FOR TH E PREVIOUS YEAR U/S 41 OF THE ACT. I)HONBLE SUPREME COURT IN THE CASE OF INDIAN AND E ASTERN NEWSPAPER SOCIETY V. CIT (1979)119 ITR 996(SC) IT WAS HELD THAT BY HONBLE SUPREME COURT IN THIS CASE THAT WHETHER IT IS THE INTERNAL AUDIT PARTY OF THE INCOM E-TAX DEPARTMENT OR AN AUDIT PARTY OF THE COMPTROLLER AND AUDITOR GENERAL, THEY PERFORM ESSENTIALLY ADMINISTRATIVE OR EXECUTIVE FUN CTIONS AND CANNOT BE ATTRIBUTED THE POWER OF JUDICIAL SUPERVISION OVER T HE QUASI-JUDICIAL ACTS OF INCOME-TAX AUTHORITIES. THE INCOME-TAX ACT DOES NOT CONTEMPLATE SUCH POWER IN ANY INTERNAL AUDIT ORGANISATION OF THE INCOME-TA X DEPARTMENT; IT RECOGNISES POWER IN THOSE AUTHORITIES ONLY WHICH ARE SPECIFICA LLY AUTHORISED TO EXERCISE ADJUDICATORY FUNCTIONS . THE COMPTROLLER AND AUDITO R-GENERAL'S ( DUTIES, POWERS & CONDITION) ACT DOES NOT ALSO ENVISAGE SUCH A POWER. NEITHER STATUTE ITA 6965/MUM/2013 33 SUPPORTS THE CONCLUSION THAT AN AUDIT PARTY CAN PRO NOUNCE ON THE LAW, AND THAT SUCH PRONOUNCEMENT AMOUNTS TO 'INFORMATION' WI THIN THE MEANING OF SECTION 147(B) . IN EVERY CASE, THE ITO MUST DETERM INE FOR HIMSELF WHAT IS THE EFFECT AND CONSEQUENCE OF THE LAW MENTIONED IN THE AUDIT NOTE AND WHETHER, IN CONSEQUENCE OF THE LAW WHICH HAS NOW COME TO HIS NOTICE, HE CAN REASONABLY BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. THE BASIS OF HIS BELIEF MUST BE THE LAW OF WHICH HE HAS NOW BECOME A WARE. THE OPINION RENDERED BY THE AUDIT PARTY IN REGARD TO THE LAW CA NNOT, FOR THE PURPOSE OF SUCH BELIEF, ADD TO OR COLOUR THE SIGNIFICANCE OF S UCH LAW. THE TRUE EVALUATION OF THE LAW IN ITS BEARING ON THE ASSESSMENT MUST BE MADE DIRECTLY AND SOLELY BY THE ITO. IN THIS CASE OF INDIAN AND EASTERN NEWS PAPER SOCIETY(SUPRA), THE ITO HAD, WHEN HE MADE THE ORIGINAL ASSESSMENT, CONS IDERED THE PROVISIONS OF SECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE APPLICATION OF THOSE PROVISIONS WOULD AMOUNT TO A C HANGE OF OPINION ON MATERIAL ALREADY CONSIDERED BY HIM. AN ERROR DISCOV ERED ON A RECONSIDERATION OF THE SAME MATERIAL DOES NOT EMPOWER THE ITO TO RE OPEN THE ASSESSMENT UNDER SECTION 147(B). PLAINLY, THE STATUTORY PROVIS ION ENVISAGES THAT THE ITO MUST HAVE INFORMATION IN HIS POSSESSION, AND THEN, IN CONSEQUENCE OF SUCH INFORMATION, HE MUST HAVE REASON TO BELIEVE THAT IN COME HAS ESCAPED ASSESSMENT. THE REALISATION THAT INCOME HAS ESCAPED ASSESSMENT IS COVERED BY THE WORDS REASON TO BELIEVE, AND IT FOLLOWS FROM THE 'INFORMATION' RECEIVED BY THE ITO. THE INFORMATION IS NOT THE REALISATION, THE INFORMATION GIVES BIRTH TO THE REALISATION.THEREFORE, WHETHER CONSIDERED ON THE BASIS THAT THE NATURE AND SCOPE OF THE FUNCTIONS OF THE INTERNAL AUDIT OR GANISATION OF THE INCOME-TAX DEPARTMENT ARE CO-EXTENSIVE WITH THAT OF RECEIPT AU DIT OR ON THE BASIS OF THE PROVISIONS SPECIFICALLY DETAILING ITS FUNCTIONS IN THE INTERNAL AUDIT MANUAL, THE OPINION OF AN INTERNAL AUDIT PARTY OF THE INCOME-TA X DEPARTMENT ON A POINT OF LAW CANNOT BE REGARDED AS 'INFORMATION' WITHIN THE MEANING OF SECTION 147(B) . ITA 6965/MUM/2013 34 THUS,IN THE CASE UNDER INSTANT APPEAL , THE AUDIT O BJECTION CANNOT BE CONSIDERED AS TANGIBLE MATERIAL FOR THE AO TO REOPE N U/S 147/148 OF THE ACT CONCLUDED ASSESSMENT U/S 143(3) OF THE ACT , UNLESS THE AO RECORDS HIS OWN SATISFACTION THAT INCOME HAS ESCAPED ASSESSMENT . I N THE INSTANT CASE THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO TO THE AUDIT OBJECTION TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMEN T. WHILE IN THIS INSTANT CASE, THE AO HAS AFTER CONSIDERING OF THE ENTIRE MA TERIAL AND FACTS ON RECORDS HAVE FORMED AN OPINION THAT CAPITAL RELIEF IS NOT E XIGIBLE TO TAX IN THE ORIGINAL ASSESSMENT PROCEEDINGS , AND NOW IT WILL BE COVERE D BY CHANGE OF OPINION WHICH IS NOT PERMISSIBLE , AS THE AUDIT TEAM HAS AL SO RELIED UPON THE SAME MATERIAL TO PROPOUND INTERPRETATION OF LAW WHICH IS EXCEEDING THEIR JURISDICTION. THUS, RATHER THE CASE QUOTED BY THE L D DR SUPPORTS IN PRINCIPLE THE PROPOSITION OF LAW FOLLOWED BY US IN THIS DECIS ION. J) HONBLE MADRAS HIGH COURT CIT V. FIRST LEASING C OMPANY OF INDIA LIMITED (2001) 241 ITR 248(MAD.)- IN THIS CASE THE AUDIT PA RTY HAS RAISED OBJECTION ON FACTUAL ISSUE AND THERE IS NO AUDIT OPINION BASED O N INTERPRETATION OF LAW AND HENCE THE HONBLE MADRAS HIGH COURT UPHELD THE RE-O PENING U/S 147/148 OF THE ACT . IN-FACT THIS CASE SUPPORTS IN PRINCIPLE THE PROPOSITION OF LAW FOLLOWED BY US IN THIS DECISION. THIS DISPOSES OF GROUND NO 1 TO 3 RAISED BY THE REV ENUE IN THE INSTANT APPEAL. WE ORDER ACCORDINGLY. SINCE, WE HAVE ANNULLED AND QUASHED THE RE-OPENING OF THE OTHERWISE CONCLUDED ASSESSMENT BY AFFIRMING THE ORDERS OF THE LEARNED CIT(A) AS SET OUT AND INDICATED ABOVE, THE ISSUE ON MERITS HAS BECOME ACADEMIC AND INFRUCTUOUS AND WE REFRAIN FROM DECIDING THE ISSUE ON MERITS AND THE ITA 6965/MUM/2013 35 QUESTION IS KEPT OPEN. THIS DISPOSES OF THE GROUND NO 4 RAISED BY THE REVENUE. WE ORDER ACCORDINGLY. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA N0. 6965/MUM/2013 FOR THE ASSESSMENT YEAR 2006-07 IS DI SMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY , 2016. # $% &' 23-05-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 23-05-2016 [ .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 D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI