Rain Cements Limited, Hyd, Hyderabad V. DCIT, Circle-3(1), Hyderabad, Hyderabad

ITA 864/HYD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7070 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 22-07-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Transfer pricing; Audit objection; Principle of natural justice; International transaction; Difference of opinion; Procedural lapse; Reason to believe; Change of opinion; Reassessment proceedings; TDS; Set aside
• Section: 271(1)(c); 143(3); 92B; 234B; 115JB; 10B; 144C; 147; 148

Judgement Text

ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.864/HYD/2017 ASSESSMENT YEAR: 2008-09 M/S. RAIN CEMENTS LTD (FORMERLY KNOWN AS RAIN CII CARBON (INDIA) LTD HYDERABAD PAN:AABCR8858F VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3 (1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI NISHANT THAKKAR REVENUE BY : SRI Y.V.S.T. SAI, CIT-DR DATE OF HEARING: 22/07/2019 DATE OF PRONOUNCEMENT: 18/10/2019 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2008-09 AGAIN ST THE FINAL ASSESSMENT ORDER, DATED 24.3.2017 PASSED BY THE AO U/S 143(3) R.W.S. 144C(5) R.W.S. 260 OF THE I.T. AC T. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A COMPANY CARRYING ON THE BUSINESS OF MANUFACTURING O F CALCINATED PETROLEUM COKE (CPC) AND GENERATION OF ELECTRICITY, HAS ESTABLISHED TWO SEPARATE UNITS WHICH CARRY OUT MANU FACTURING AND EXPORT OF CPC AND CLAIMED DEDUCTION U/S 10B OF THE ACT. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO POWER GENERATION UNITS AND A TRADING UNIT. FOR THE A.Y 2008-09, THE ASSESSEE HAS FILED THE RETURN OF INCOME WHICH WAS SCRUTINIZED U/ S 143(3) OF THE ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 2 OF 18 ACT ON 25.1.2012 COMPUTING THE TOTAL INCOME AT NIL. THEREAFTER, THE AO REOPENED THE ASSESSMENT BY ISSUANCE OF A NOT ICE U/S 148 ON 21.3.2013. THE ASSESSEE REQUESTED THE AO TO SUPP LY THE REASONS FOR REOPENING WHICH WERE SUPPLIED TO THE AS SESSEE AND THE ASSESSEE FILED ITS OBJECTIONS TO THE REOPENING VIDE LETTER DATED 19.8.2013. THE AO CONSIDERED THAT THERE WERE INTERN ATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE AND THERE FORE, MADE A REFERENCE TO THE TPO FOR DETERMINATION OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS. THE TPO PASSED A N ORDER U/S 92CA OF THE ACT PROPOSING TP ADJUSTMENT AND ACCORDI NGLY, THE AO PASSED A DRAFT ASSESSMENT ORDER DATED 26.3.2014 DIS POSING OF THE OBJECTIONS OF THE ASSESSEE AND ALSO MAKING THE ADDI TION OF THE PROPOSED ADJUSTMENT. AGAINST THE DRAFT ASSESSMENT O RDER, THE ASSESSEE FILED ITS OBJECTIONS BEFORE THE DRP, ALSO RAISING THE QUESTION OF VALIDITY OF THE REOPENING OF THE ASSESS MENT. THE DRP REJECTED THE ASSESSEES OBJECTIONS TO THE REOPENING AND ALSO PASSED AN ORDER U/S 144C OF THE ACT. THE ASSESSEE C HALLENGED THE ORDER OF THE DRP BEFORE THE HON'BLE HIGH COURT ON T HE GROUND THAT HE WAS NOT SERVED WITH THE COPY OF THE DRAFT A SSESSMENT ORDER DATED 26.3.2014 WITHIN TIME. THE HON'BLE TELA NGANA & A.P. HIGH COURT AT HYDERABAD VIDE ORDERS DATED 31.08.201 6 SET ASIDE THE ORDER OF THE DRP AND DIRECTED IT TO PASS A FRES H ORDER WITHIN A PERIOD OF 3 MONTHS FROM THE DATE OF RECEIPT OF THE COPY OF ITS ORDER. AFTER RECEIPT OF THE DIRECTIONS FROM THE DRP, THE A O WAS DIRECTED TO PASS THE FINAL ASSESSMENT ORDER ACCORDINGLY. IN COMPLIANCE THEREOF, THE DRP RECONSIDERED THE ISSUE AND PASSED ITS ORDER AND THEREAFTER, THE AO PASSED THE FINAL ASSESSMENT ORDE R DATED 24.3.2017 AGAINST WHICH THE ASSESSEE IS IN APPEAL B EFORE US. ORIGINALLY ALONG WITH FORM 36, THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL: ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 3 OF 18 EACH GROUND GIVEN BELOW IS INDEPENDENT AND WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEAL PREFERRED BY THE APPELLANT: RE-ASSESSMENT PROCEEDINGS 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. AO HAS ERRED IN LAW AS WELL AS IN FACTS IN ASSUMING JURISDICTION U/S 147 OF THE ACT AND ISSUIN G NOTICE U/S 148 OF THE ACT TO THE APPELLANT, IN AS M UCH AS THERE HAS BEEN NO ESCAPEMENT OF ASSESSMENT OF INCOME CHARGEABLE TO TAX FOR THE YEAR UNDER APPEAL. TRANSFER PRICING ('TP') MATTERS - CORPORATE GUARANTEE FEE 2. THE LD. TPO ERRED IN MAKING TP ADJUSTMENT OF RS. 6,63,99,205/- ON SHAREHOLDER CORPORATE GUARANTEE PROVIDED TO BANK WITHOUT APPRECIATING THE SPECIFIC FACTS OF THE CASE (I.E., THE WHOLLY OWNED SUBSIDIAR Y ('WOS') WAS SET UP AS A SPY FOR ACQUISITION OF BUSI NESS IN USA) 3. THE LD. DRP/TPO ERRED IN NOT APPRECIATING THAT T HE SHAREHOLDER CORPORATE GUARANTEE IS NOT COVERED UNDE R THE DEFINITION OF INTERNATIONAL TRANSACTION U/S 92B OF THE ACT AS THERE IS NO BEARING ON THE PROFITS, INCO ME, LOSSES OR ASSETS OF THE COMPANY. 4. THE LD. DRP/TPO ERRED IN NOT APPRECIATING THAT T HE PROVISIONS OF CHAPTER X APPLY ONLY WHEN THERE IS AN Y INCOME ARISING FROM THE INTERNATIONAL TRANSACTION. 5. THE LD. DRP/TPO ERRED IN NOT APPRECIATING THAT T HE AMENDMENT TO SECTION 92B WOULD NOT APPLY TO THE YEA R UNDER CONSIDERATION AS IT WAS INSERTED ON A LATER D ATE. THE AMENDMENT HAS TO BE INTERPRETED AS PROSPECTIVE IN NATURE. 6. THE LD. DRP/TPO ERRED IN NOT APPRECIATING THE FA CT THAT RAIN CII ('RCC') HAD ALSO PROVIDED GUARANTEE T O THE LOAN TAKEN BY RCL AND TRANSACTION IS RECIPROCAT ING IN NATURE. 8. THE LD. TPO ERRED IN NOT UNDERTAKING AN OBJECTIV E ANALYSIS FOR DETERMINING THE ARM'S LENGTH PRICE ON THE SHAREHOLDER CORPORATE GUARANTEE AND MAKING ADJUSTMENT BY DETERMINING THE BENEFIT TO US WAS AS DIFFERENCE IN THE INTEREST RATE OF DIFFERENTLY RATE D BONDS IN THE INDIAN MARKET. ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 4 OF 18 CORPORATE TAX MATTERS 8. THE LD. DRP/AO ERRED IN CONCLUDING THAT ONLY THE REALIZED FOREIGN FLUCTUATIONS CAN BE SAID TO BE DER IVED FROM 10B UNITS, THEREBY ELIGIBLE FOR 10B BENEFIT, WITHOUT APPRECIATING THAT THE REINSTATED FOREIGN FLUCTUATIONS ALSO FORMS PART OF THE INCOME OF THE UNDERTAKINGS AS PER THE PRINCIPLES OF ACCOUNTING. 9. THE LD. DRP/AO ERRED IN HOLDING THE OTHER INCOME S (I.E., INSURANCE CLAIM, INTEREST ON FIXED DEPOSITS, MISCELLANEOUS INCOME) ARE NOT TO BE CONSIDERED FOR THE PURPOSE OF COMPUTATION OF PROFITS ELIGIBLE FOR DEDU CTION ULS 10B OF THE ACT. 10. THE LD. DRP/AO ERRED IN FACTS AND LAW BY CONCLUDING THE INTEREST EXPENDITURE INCURRED FOR TH E PURPOSE OF MAKING INVESTMENTS (I.E., ACQUISITION OF RCC IN USA) IS TO BE ALLOCATED TO THE CPC UNITS WIT HOUT APPRECIATING THE SEPARATE AND SPECIFIC FUNCTION OF THE CPC UNITS VIS-A-VIS BLENDING, TRADING AND INVESTMEN T UNIT. 11. THE LD. DRP/AO ERRED IN DISALLOWING THE FINANCE CHARGES AMOUNTING TO RS. 17,65,88,101/- BY CONTENDING IT TO BE NOT FOR THE PURPOSE OF BUSINESS AND SIMULTANEOUSLY ALSO CONSIDERING THE SAME TO BE OF CAPITAL NATURE. OTHER GROUNDS 12. THE LD. AO INADVERTENTLY CONSIDERED THE RELIEF PROVIDED BY THE DRP ON CORPORATE GUARANTEE FEES AS RS. 19,72,603/- INSTEAD OF RS. 23,29,8901/- 13. THE LD. AO INADVERTENTLY ALLOWED SHORT DEDUCTIO N ULS 10B - RS. 10,98,79,594/- 14. THE LD. AO PROVIDED A SHORT CREDIT OF TDS TO AN EXTENT OF RS. 9,70,814/- 15. THE LD. AO ERRED IN COMPUTING INTEREST ULS 234B OF RS. 31, ] 6,646/- 16. THE LD. AO ERRED IN COMPUTING INTEREST ULS 234C OF RS. 37,20,1301/- 17. THE APPELLANT CRAVES TO CONSIDER EACH OF THE AB OVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER A ND CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 5 OF 18 3. SUBSEQUENTLY, VIDE LETTER DATED 4.4.2018, THE AS SESSEE HAS REQUESTED FOR ADMISSION OF ADDITIONAL GROUNDS O F APPEAL UNDER RULE 11 OF ITAT RULES 1963. THE ADDITIONAL GR OUNDS RAISED ARE AS UNDER: GROUNDS ON REASSESSMENT PROCEEDINGS: THE LEARNED ASSESSING OFFICER / DISPUTE RESOLUTION PANEL, ERRED IN LAW AND FACTS, IN INITIATION / NOT QUASHIN G THE REASSESSMENT PROCEEDINGS AS: 1.1 THERE WAS NO REASON TO BELIEVE THAT INCOME ESCA PED ASSESSMENT AS THE REASSESSMENT IS MERELY BASED ON A UDIT OBJECTIONS. 1.2 NO REASONS WERE RECORDED FOR INITIATION OF REAS SESSMENT, PRIOR TO ISSUE OF NOTICE U/S 148, THEREBY MAKING TH E REASSESSMENT PROCEEDINGS BAD-IN-LAW. 1.3 THERE WAS NO NEW MATERIAL ON RECORD TO JUSTIFY THAT THERE EXISTED A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. L.4 THERE IS A MERE CHANGE OF OPINION ON THE SAME S ETS OF FACTS AS EXISTED AND UNDER THE KNOWLEDGE OF THE ASS ESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. 1.5 THE PROCESS LAID DOWN BY THE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LIMITED [259 ITR 19 (SC)] W AS NOT FOLLOWED, WHEREIN THE OBJECTIONS RAISED BY THE APPE LLANT AGAINST INITIATION OF 147 PROCEEDINGS WAS NOT SEPAR ATELY DISALLOWED. 1.6 WITHOUT PREJUDICE TO THE ABOVE, EVEN POST REASS ESSMENT PROCEEDINGS, THERE IS NO ADDITIONAL TAX LIABILITY A ND THAT APPELLANT IS LIABLE TO PAY TAX UNDER THE PROVISIONS OF MINIMUM ALTERNATIVE TAX (NO ADJUSTMENT MADE TO THE BOOK PROFITS) AND THUS THE QUESTION OF INCOME HAVING ESC APED ASSESSMENT DOES NOT ARISE. CORPORATE TAX MATTERS: 17. THE LD AO/DRP ERRED IN ASSUMING THE FINANCE CHA RGES FOR LOANS TAKEN BY THE APPELLANT AS CAPITAL IN NATU RE, WITHOUT APPRECIATING THAT THE SAME QUALIFIES AS INTEREST UN DER THE PROVISIONS OF THE INCOME-TAX ACT, 1961 AND THE APPE LLANT HAD ALSO DEDUCTED TAX AT SOURCE IN RESPECT OF FINANCE C HARGES. 18. WITHOUT PREJUDICE TO THE ABOVE, ASSUMING WITHOU T ADMITTING, EVEN IF THE INTEREST AND FINANCE CHARGES IN RELATION TO GLOBAL ACQUISITION IS CONSIDERED TO BENEFIT THE APPELLANT'S BUSINESS, THE SAME OUGHT TO HAVE BEEN APPORTIONED A MONG ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 6 OF 18 ALL THE BUSINESS DIVISIONS BASED ON AN APPROPRIATE ALLOCATION KEY. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE GROUNDS OF APPEAL. 4. FOR ADMISSION OF ADDITIONAL GROUNDS, THE ASSESSE E HAS SUBMITTED AS UNDER: REQUEST FOR ADMISSION OF ADDITIONAL GROUNDS OF APP EAL - RULE 11 OF INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1 963 THE FACTS LEADING TO THE RAISING OF THE ADDITIONAL GROUND OF APPEAL ARE AS UNDER: THE CAPTIONED APPEAL IS IN CONNECTION WITH THE FI NAL ORDER PASSED BY THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 3(1), FOLLOWING THE DIRECTIONS O F THE LEARNED DISPUTE RESOLUTION PANEL IN RELATION TO THE RE- ASSESSMENT PROCEEDINGS INITIATED AGAINST THE APPELL ANT. CONSIDERING THE FACT THAT THE APPELLATE HAD UNDER GONE A DETAILED SCRUTINY ASSESSMENT FOR THE SAID YEAR, P RIOR TO INITIATION OF REASSESSMENT PROCEEDINGS, ON TRACING CERTAIN SUBMISSIONS MADE TO THE ASSESSING OFFICER, WHICH AR E FILED AS PAPER BOOK - 2 ON 28 MARCH 2018 AND SUBSEQUENT DISCUSSIONS WITH THE COUNSELS, THE APPEL LANT BELIEVES TO RAISE SPECIFIC GROUNDS IN RELATION TO T HE INITIATION OF REASSESSMENT PROCEEDINGS. THE GROUND RAISED EARLIER IN RESPECT OF RE-ASSESS MENT PROCEEDINGS IS GENERAL IN NATURE AND ON DISCUSSIONS WITH THE COUNSEL, THE APPELLANT WISHES TO HAVE MORE SPEC IFIC GROUNDS WITH RESPECT TO THE RE-ASSESSMENT PROCEEDIN GS, FOR SAKE OF CLARITY. THE APPELLANT SUBMITS THAT IT HAS MERELY RAISED A LEGAL CLAIM AND THE OMISSION TO RAISE THE AFORESAID GROUN DS OF APPEAL IN THE MEMORANDUM OF APPEAL FILED BEFORE THE HON'BLE BENCH OF THE TRIBUNAL WAS NEITHER WILLFUL N OR DELIBERATE. CONSIDERING THE FACTS AND CIRCUMSTANCES ABOVE, TH E HON'BLE BENCH OF THE TRIBUNAL MAY BE PLEASED TO ENTERTAIN THE GROUNDS OF APPEAL. IN VIEW OF THE ABOVE, WE HUMBLY PRAY THAT YOUR HONOURS BE PLEASED TO EXERCISE THE DISCRETION VESTE D IN YOUR HONOURS UNDER RULE 11 OF THE INCOME-TAX (APPEL LATE TRIBUNAL) RULES, 1963, AND ADMIT THE ADDITIONAL GRO UNDS. THE APPELLANT IN THIS REGARD, ALSO HUMBLY SUBMITS T HAT IT RELIES ON THE DECISION OF THE SUPREME COURT IN THE CASE OF ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 7 OF 18 NATIONAL THERMAL POWER CO LTD (229 ITR 383) AS A E DECISION IN THE CASE OF JUTE CORPORATION OF INDIA ( 187 ITR 688). 5. THUS, ON THE DATE OF HEARING, THE LEARNED COUNSE L FOR THE ASSESSEE PRAYED THAT THE ASSESSEE HAD ALREADY R AISED A GROUND AGAINST THE VALIDITY OF THE RE-ASSESSMENT PR OCEEDINGS AND ADDITIONAL GROUNDS NOW RAISED ARE ONLY SPECIFIC ARG UMENTS OR SUBMISSIONS AGAINST THE VALIDITY OF THE REOPENING O F THE ASSESSMENT AND THEREFORE, THEY SHOULD BE ADMITTED A ND ADJUDICATED. 6. THE LEARNED DR WAS ALSO HEARD WHO OPPOSED THE ADMISSION OF THE ADDITIONAL GROUNDS. 7. UPON HEARING BOTH THE PARTIES, WE FIND THAT THE ASSESSEE HAD RAISED ITS OBJECTIONS BEFORE THE DRP A ND THE DRP HAS UPHELD THE VALIDITY OF THE REOPENING AND ALL TH E RELEVANT DETAILS ARE AVAILABLE ON RECORD AND NO VERIFICATION OF FRESH FACTS IS NECESSARY FOR ADJUDICATING THESE GROUNDS. AS THESE GROUNDS GO TO THE ROOT OF THE MATTER AND THE VALIDITY OF REOPENIN G IS ALREADY RAISED IN THE REGULAR GROUNDS AS GROUND NO.1, WE AR E INCLINED TO ADMIT THE SAME AND ADJUDICATE THE SAID GROUND. 8. ONE OF THE OBJECTIONS OF THE ASSESSEE IS THAT TH ERE IS NO ESCAPEMENT OF INCOME, BUT THE RE-OPENING OF THE ASS ESSMENT IS MERELY BASED ON AUDIT OBJECTION. WE FIND THAT THE A SSESSMENT U/S 143(3) WAS COMPLETED ON 25.01.2012 WHILE NOTICE U/S 148 WAS ISSUED ON 21.3.2013. THEREFORE, THE REOPENING OF TH E ASSESSMENT IS WITHIN 4 YEARS FROM THE END OF THE RELEVANT A.Y. THE REASONS FOR REOPENING ALSO WERE PROPERLY RECORDED BY THE AO AND ON A REQUEST ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 8 OF 18 BY THE ASSESSEE, THE REASONS FOR REOPENING HAVE ALS O BEEN COMMUNICATED TO THE ASSESSEE. THE ASSESSEE HAS ALSO FILED ITS OBJECTIONS TO THE REOPENING. THE GRIEVANCE OF THE A SSESSEE IS THAT THE REOPENING IS BASED ON AUDIT OBJECTION ONLY. THE LEARNED COUNSEL FOR THE ASSESSEE EXTENSIVELY ARGUED THAT TH E AUDIT OBJECTION CANNOT BE THE BASIS FOR THE REOPENING OF THE ASSESSMENT, WHILE THE LEARNED DR, SUBMITTED THAT THE AUDIT OBJE CTION IS ALSO MATERIAL WHICH WAS AVAILABLE WITH THE AO TO MAKE UP HIS MIND ABOUT THE ESCAPEMENT OF THE INCOME AND IS NOT THE S OLE REASON FOR THE REOPENING OF THE ASSESSMENT. THEREFORE, ACCORDI NG TO THE DR, THE REOPENING IS VALIDLY MADE. 9. UPON HEARING BOTH THE PARTIES AND ON CONSIDERATI ON OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO HAS PROPERLY RECORDED THE REASONS FOR REOPENING AND THERE IS NO MATERIAL PRODUCED BY THE ASSESSEE TO SUBMIT THAT THE REOPENI NG OF THE ASSESSMENT IS ONLY ON THE BASIS OF AUDIT OBJECTION. AS RIGHTLY POINTED OUT BY THE LEARNED DR, AS LONG AS THE AO HA S THE MATERIAL BEFORE HIM TO COME TO A PRIMA FACIE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME, THE REOPENING OF THE ASSESSME NT IS VALID. THE AUDIT OBJECTION MAY ALSO BE ONE OF THE SOURCES FOR THE AO TO MAKE UP HIS MIND, BUT IT IS ONLY THE AO, WHO HAS TO APPLY HIS MIND AND BE SATISFIED THAT THERE IS ESCAPEMENT OF I NCOME. THEREFORE, WE ARE NOT INCLINED TO ACCEPT THE OBJECT ION OF THE ASSESSEE ON THIS COUNT. THUS, THE ARGUMENT UNDER PA RA 1.1 OF THE ADDITIONAL GROUND IS REJECTED. 10. AS REGARDS ADDITIONAL GROUND NO.1.2 THAT NO REA SONS WERE RECORDED BY THE AO FOR INITIATION OF THE RE-AS SESSMENT PROCEEDINGS PRIOR TO ISSUANCE OF NOTICE U/S 148, TH E LEARNED ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 9 OF 18 COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REASONS WERE COMMUNICATED TO THE ASSESSEE ON 31.7.2013, WHEREAS NOTICE U/S 148 WAS ISSUED ON 21.3.2013. EXCEPT FOR THE STATEME NT THAT THE REASONS WERE NOT RECORDED ON THE DAY OF ISSUANCE OF NOTICE U/S 148, THERE IS NO MATERIAL PLACED BEFORE US TO SUBST ANTIATE THE SAID OBJECTIONS. THE ONLY REQUIREMENT IS THAT THE AO HAS TO BE PRIMA FACIE SATISFIED THAT THERE IS ESCAPEMENT OF INCOME AND HE HAS TO RECORD HIS REASONS FOR REOPENING OF THE ASSESSMENT. IN THE ABSENCE OF ANY MATERIAL THAT THE REASONS WERE NOT R ECORDED PRIOR TO ISSUANCE OF THE NOTICE U/S 148 OF THE ACT, SECON D OBJECTION OF THE ASSESSEE IS REJECTED. 11. AS REGARDS THE THIRD OBJECTION IN ADDITIONAL GR OUND NO. 1.3, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO, DURING THE RE-ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT HAD REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS TO SUBS TANTIATE ITS CLAIM U/S 10B AND THAT ALL THE RELEVANT MATERIAL WA S AVAILABLE BEFORE THE AO AND ONLY AFTER BEING SATISFIED ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE, THAT THE AO HAS ALLOW ED RELIEF U/S 10B OF THE ACT. HE SUBMITTED THAT THE AO HAVING ACC EPTED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE MATERIAL FILED BY THE ASSESSEE, CANNOT INITIATE THE RE-ASSESSMENT PROCEED INGS ON THE BASIS OF THE VERY SAME MATERIAL. THEREFORE, ACCORDI NG TO HIM, THE RE-ASSESSMENT PROCEEDINGS ARE BAD IN LAW. 12. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 13. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT DURING THE ASSESSMENT PROCE EDINGS U/S ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 10 OF 18 143(3), THE AO VIDE LETTER DATED 9.8.2011 HAD REQUI RED THE ASSESSEE TO FILE CERTAIN DETAILS. ON PERUSAL OF THE COPY OF THE LETTER DATED 9.8.2011, WE FIND THAT AT ITEM NO.40, THE AO HAD ASKED THE ASSESSEE TO JUSTIFY THE CLAIM MADE U/S 10B ALONG WI TH THE DETAILS OF COMPUTATION IN RESPECT OF KIN-1 AND KIN-2. IN RE SPONSE TO THE SAME, THE ASSESSEE FILED A REPLY STATING THAT THE D ETAILS WITH REGARD TO THE CLAIM U/S 10B WILL BE SUBMITTED LATER . THEREAFTER, THERE HAS BEEN CORRESPONDENCE BETWEEN THE ASSESSEE AND THE AO, BUT WE DO NOT FIND THAT ANY INFORMATION WAS FILED B Y THE ASSESSEE JUSTIFYING THE CLAIM OF DEDUCTION U/S 10B OF THE AC T. THUS, IT IS CLEAR THAT THE ASSESSEE HAS NOT GIVEN THE DETAILS O F ITS CLAIM U/S 10B AND THE AO WITHOUT TAKING THE SAME INTO CONSIDE RATION HAS ALLOWED THE CLAIM OF DEDUCTION U/S 10B OF THE ACT T O THE ASSESSEE. THUS, IT CANNOT BE SAID THAT THE ASSESSEE HAS GIVEN ALL THE DETAILS AND THE AO HAS CONSIDERED THE SAME. THE ASSESSEES GROUND THAT THERE WAS NO NEW MATERIAL ON RECORD TO JUSTIFY THAT THERE EXISTS A REASON TO BELIEVE THAT THE INCOME HAS ESCAPED THE A SSESSMENT IS WITHOUT ANY BASIS. IN FACT, IN THE DRAFT ASSESSMENT ORDER, THE AO HAS CLEARLY RECORDED THAT THE AO HAS NOT CALLED FOR THE INFORMATION NOR HAS THE ASSESSEE FILED THE INFORMATION WITH REG ARD TO THE CLAIM OF DEDUCTION U/S 10B OF THE ACT. THIS FINDING OF TH E AO IN THE DRAFT ASSESSMENT ORDER AND ALSO THE DRP HAS NOT BEE N REBUTTED BY THE ASSESSEE BY FILING ANY EVIDENCE BEFORE US TO THE CONTRARY. THUS, ADDITIONAL GROUNDS OF APPEAL NO.1.3 & 1.4 ARE REJECTED. 14. AS REGARDS GROUND NO.1.5, IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAVING FILED THE DETAILE D OBJECTIONS TO THE REOPENING OF THE ASSESSMENT, THE AO OUGHT TO HA VE PASSED A SEPARATE ORDER DISPOSING OF THE OBJECTIONS BEFORE C OMPLETING THE ASSESSMENT BUT INSTEAD THE AO HAS REJECTED THE ASSE SSEES ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 11 OF 18 OBJECTIONS IN THE DRAFT ASSESSMENT ORDER ALONG WITH THE ASSESSMENT, THEREBY DENYING THE ASSESSEE A REASONAB LE OPPORTUNITY OF CHALLENGING SUCH AN ORDER BEFORE THE HON'BLE HIGH COURT. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS GROUND: I) HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT S(INDIA) LTD VS. ITO REPORTED IN (2002) 125 TAXMANN 963(S.C) II) HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL M OTORS INDIA (P) LTD VS. DY. CIT REPORTED IN (2012) 25 TAXMANN.COM 364(GUJ.) 15. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 16. HAVING REGARD TO THE ABOVE CONTENTIONS OF THE P ARTIES, WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS(INDIA) LTD VS. ITO (SUPRA) HAS HELD THA T ONCE A NOTICE U/S 148 IS ISSUED TO THE ASSESSEE AND WHERE THE ASS ESSEE, AFTER FILING THE RETURN OF INCOME, ASKED FOR THE REASONS FOR REOPENING OF THE ASSESSMENT, AO SHALL PROVIDE SUCH REASONS TO TH E ASSESSEE AND THE AO SHALL DISPOSE OF THE OBJECTIONS OF THE A SSESSEE BEFORE PROCEEDING TO COMPLETE THE ASSESSMENT. IN THE CASE OF GENERAL MOTORS INDIA (P) LTD VS. DCIT (SUPRA), THE HON'BLE GUJARAT HIGH COURT WAS CONSIDERING THE CASE OF AN ASSESSEE WHERE THE OBJECTIONS OF THE ASSESSEE WERE DISPOSED OF IN THE ASSESSMENT ORDER AND THEREFORE, THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT IT WAS NOT OPEN TO THE AO TO DECIDE THE OBJECTIONS TO THE NOTICE U/S 148 IN THE ASSESSMENT ORDER. HOWEVER, WE FIND T HAT THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IS NOT S TRICTLY APPLICABLE TO THE CASE OF THE ASSESSEE. AS OBSERVED ABOVE, THE AO HAD SUPPLIED THE REASONS FOR REOPENING OF THE ASSES SMENT TO THE ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 12 OF 18 ASSESSEE AND THEREAFTER, THE ASSESSEE HAS RAISED IT S OBJECTIONS TO THE REOPENING WHICH WERE DISPOSED OF BY THE AO IN T HE DRAFT ASSESSMENT ORDER. ADMITTEDLY, THE DRAFT ASSESSMENT ORDER IS NOT THE FINAL ORDER OF THE ASSESSMENT BECAUSE THE ASSES SEE IS PROVIDED WITH AN OPPORTUNITY TO FILE ITS OBJECTIONS BEFORE T HE DRP AND ALSO HAD THE OPTION OF FILING A W.P. AGAINST THE SAME. T HEREFORE, THE AO HAS NOT TAKEN AWAY THE REMEDY AVAILABLE TO THE ASSE SSEE OF CHALLENGING THE ORDER REJECTING THE ASSESSEES OBJE CTIONS, BY DISPOSING OF THE OBJECTIONS IN THE DRAFT ASSESSMENT ORDER. FURTHER, THE ASSESSEE HAD FILED A W.P BEFORE THE HON'BLE HIG H COURT OF TELANGANA & A.P AT HYDERABAD, CHALLENGING THE SERVI CE OF THE DRP ORDER AFTER A PERIOD OF 5 YEARS. HOWEVER, THE ASSES SEE DID NOT RAISE ANY OBJECTION AGAINST THE FINDINGS OF THE AO IN THE DRAFT ASSESSMENT ORDER REJECTING THE OBJECTIONS OF THE AS SESSEE ON THE REOPENING OF THE ASSESSMENT. THE ASSESSEE HAD THE O PTION OF RAISING SUCH A GROUND BEFORE THE HON'BLE HIGH COURT IN THE W.P BUT THE ASSESSEE HAS FAILED TO DO SO FOR THE REASON S BEST KNOWN TO IT. SINCE THE FINAL ASSESSMENT ORDER WAS PASSED AFT ER DISPOSAL OF THE OBJECTIONS IN THE DRAFT ASSESSMENT ORDER AND TH E ASSESSEE HAD THE OPPORTUNITY OF RAISING ITS OBJECTIONS BEFORE TH E DRP AND IT HAD ALREADY FILED A WRIT PETITION BEFORE THE HON'BLE HI GH COURT IN A W.P. ON A DIFFERENT GROUND, WE ARE OF THE OPINION T HAT NO PREJUDICE HAS BEEN CAUSED TO THE ASSESSEE BY DISPOSAL OF THE ASSESSEES OBJECTION TO THE REOPENING OF THE ASSESSMENT IN THE DRAFT ASSESSMENT ORDER. 17. THE LEARNED DR HAS RELIED UPON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF HOME FINDE RS HOUSING LTD REPORTED IN (2018) 93 TAXMANN.COM 371 (MADRAS) WHEREIN IT WAS HELD THAT NON-COMPLIANCE OF PROCEDURES INDICATE D BY THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVE WOUL D NOT MAKE ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 13 OF 18 THE ORDER VOID OR NON-EST AND SUCH A VIOLATION IS A PROCEDURAL IRREGULARITY WHICH COULD BE CURED BY REMITTING THE MATTER TO THE AUTHORITY, 18. IN REBUTTAL, THE LEARNED COUNSEL FOR THE ASSESS EE HAS RELIED UPON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF SONA BUILDERS REPORTED IN (2001) 119 TAXMANN 430 (S.C), FOR THE PROPOSITION THAT WHERE THERE IS FAILURE TO ACT IN CONFORMITY WITH PRINCIPLES OF NATURAL JUSTICE, THE MATTER NEED NOT BE REMANDED TO THE APPROPRIATE AUTHORITY AND THE ORDER HAS TO BE SET ASIDE. BUT IN THE CASE OF SONA BUILDERS, WE FIND TH AT THE FACTS ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE BEFORE U S. IN THE CASE OF SONA BUILDERS, THE APPELLANT THEREIN WAS GIVEN ONLY THREE DAYS TO RESPOND TO THE NOTICE OF THE APPROPRIATE AUTHORITY U/S 269UD TO RESPOND AND NO DOCUMENT RELATING TO SALE INSTANCE W AS FURNISHED BY THE SAID AUTHORITY ALONG WITH THE NOTICE OR THER EAFTER TO THE APPELLANT THEREIN TO ENABLE IT TO ADEQUATELY RESPON D TO THE ALLEGATION IN THE NOTICE. IN VIEW OF THESE FACTS AN D CIRCUMSTANCES, THE HON'BLE SUPREME COURT HAS HELD THAT THERE HAS B EEN A GROSS BREACH OF PRINCIPLES OF NATURAL JUSTICE AND THE ORD ER HAD TO BE QUASHED. HOWEVER, IN THE CASE BEFORE US, THE ASSESS EE WAS GIVEN ADEQUATE OPPORTUNITY TO FILE ITS OBJECTIONS AND THE RE IS NO BREACH OF OR VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. H ENCE, THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE U S. THEREFORE, THE ADDITIONAL GROUND OF APPEAL IS REJECTED. 19. AS REGARDS THE ADDITIONAL GROUND NO.1.6, THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO, IN THE DRAFT ASSESSMENT ORDER DATED 26.3.2014 HAD MADE FOUR ADDI TIONS ON THE ISSUES REFERRED TO IN THE RE-ASSESSMENT NOTICE AND COMPUTED ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 14 OF 18 THE TOTAL INCOME UNDER THE NORMAL PROVISIONS AT RS.34,62,48,597/-, WHILE THE INCOME U/S 115JB WAS RS.70,09,87,659/- AND THERE WERE NO ADDITIONS MADE TO THE INCOME COMPUTED U/S 115JB OF THE ACT IN THE RE-ASSE SSMENT ORDER AND THEREFORE, THE INCOME U/S 115JB WHICH WA S COMPUTED AT RS.70,09,86,659/- WAS BROUGHT TO TAX. THUS, ACCO RDING TO THE ASSESSEE, THE INCOME OF THE ASSESSEE SO COMPUTED UN DER THE NORMAL PROVISIONS BEING LESS THAN THE INCOME U/S 11 5JB OF THE ACT AND THERE WAS NO CHANGE IN THE INCOME OF THE AS SESSEE COMPUTED IN THE ASSESSMENT COMPLETED U/S 143(3) IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE A CT AND THEREFORE, THERE IS NO ESCAPEMENT OF INCOME IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. THE ASSESSEE SUBMI TTED THAT THE ASSESSMENT U/S 147 CAN BE REOPENED ONLY IF THE INCO ME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT. HE SU BMITTED THAT SINCE THE INCOME OF THE ASSESSEE IN THE ORIGINAL AS SESSMENT AS WELL AS THE RE-ASSESSMENT U/S 147 OF THE ACT WAS TH E INCOME U/S 115JB, THE REOPENING OF THE ASSESSMENT U/S 147 IS B AD IN LAW. HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE GU JARAT HIGH COURT IN THE CASE OF MOTTO TILES (P) LTD VS. ACIT R EPORTED IN (2016) 386 ITR 280 (GUJ.) WHEREIN AN ADDITION OF RS.81.18 LAKHS WAS PROPOSED TO THE INCOME COMPUTED UNDER THE NORMAL PR OVISIONS BUT FURTHER EVEN AFTER THE PROPOSED ADDITION, THERE WAS NO CHANGE IN THE BOOK PROFIT AND RESULTANTLY, THERE WOULD STI LL BE NO ADDITIONAL TAX LIABILITY U/S 115JB OF THE ACT, THE HON'BLE HIGH COURT HELD THAT THE REOPENING U/S 147 WAS BAD IN LA W. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RELIAN CE UPON THE FOLLOWING OTHER DECISIONS ALSO: A) INDIA GELATINE AND CHEMICALS LTD. V/S. ASSISTANT COMMISSIONER OF INCOME-TAX (NO.1), REPORTED IN 364 ITR 649, ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 15 OF 18 B) ITAT AHMEDABAD BENCH IN THE CASE OF ALEMBIC LTD VS. DY. CIT ITA NO.1448/AHD/2016 C) ITAT AHMEDABAD BENCH IN THE CASE OF M/S. MARCK BIOSCIENCES LTD. (NOW ... VS THE DY. CIT(OSD)-1, CI RCLE-4,IN ITA NO. 3301/AHD/2016 THUS, HE PRAYED THAT THE RE-ASSESSMENT ORDER BE QUA SHED AND THERE WAS NO ESCAPEMENT OF INCOME AND THE DECISION WAS ARRIVED AT BY THE AO ERRONEOUSLY. 20. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDER OF THE AO AND SUBMITTED THAT PURSUANT TO THE REOPENING, THE ADDITIONS HAVE BEEN MADE TO THE RETURNED INCOME OF THE ASSESSEE, WHICH IN FACT WAS LOSS AND THE INCOME HAS BEEN COMPUTED AT A POSITIVE FIGURE AND SINCE THE INCOMES BOTH U/S 143(3) ASSESSMENT AS WELL AS RE-ASSESSMENT U/S 147 WAS LESS THAN THE INCOME COMPUTED U/S 115JB, THE INCOME U/S 115JB ONLY HAS BEEN BROUGHT TO TAX. HE FURTHER SUBMITTED THAT SUCH POSITIVE INCOME UNDER THE NORMAL PROVISIONS WILL DE CREASE THE MAT CREDIT THAT WOULD BE AVAILABLE TO THE ASSESSEE IN THE SUBSEQUENT YEARS AND THEREFORE, THERE IS ESCAPEMENT OF INCOME OF THE ASSESSEE. 21. IN THE REBUTTAL, THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE REOPENING OF THE ASSESSMENT COUL D ONLY BE FOR THE INCOME CHARGEABLE TO TAX IN THE RELEVANT A.Y BU T SINCE THE TOTAL INCOME REMAINED THE SAME IN THE ORIGINAL ASSE SSMENT AND ALSO IN THE DRAFT AND FINAL ASSESSMENT, AND THEREFO RE, THERE WAS NO INCOME CHARGEABLE TO TAX THAT HAS ESCAPED THE ASSES SMENT AND THEREFORE, REOPENING OF THE ASSESSMENT IS BAD IN LA W. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE DEC ISION OF THE ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 16 OF 18 HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAL WA INVESTMENT LTD REPORTED IN 327 ITR 543, WHEREIN THE ADDITIONS WERE MADE WHILE COMPUTING THE INCOME UNDER THE NORMAL PROVISI ONS BUT ULTIMATELY THE ASSESSMENT WAS FRAMED U/S 115JB OF T HE ACT AS THE TAX PAYABLE U/S 115JB WAS ON HIGHER SIDE. IN RE SPECT OF THE PENALTY LEVIED U/S 271(1)(C) UNDER SUCH CIRCUMSTANC ES, THE HON'BLE DELHI HIGH COURT HELD THAT WHEN THE COMPUTA TION WAS MADE U/S 115JB OF THE ACT, THERE WAS NO CONCEALMENT OF INCOME AND WILL NOT LEAD TO TAX EVASION ALSO. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE CBDT CIRCULAR NO.25/2015 DATED 31.12.2015 WHEREIN THE DECISION OF THE HON'BL E DELHI HIGH COURT WAS TAKEN INTO CONSIDERATION AND IT WAS CLARI FIED THAT PRIOR TO 1.4.2016 I.E. BEFORE THE SUBSTITUTION OF EXPLANA TION 4 TO SECTION 271 OF THE ACT WITH PROSPECTIVE EFFECT, IF ANY ADJU STMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT, THE LEVY OF PENALTY U/S 271(1)(C) WILL DEPEND ON THE NATURE OF THE ADJUSTMENT. THEREFORE, HE PRAYED FOR THE RE-ASSESSMENT ORDER TO BE SET ASIDE ON THIS GROUND ALSO. 22. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT AT THE TIME OF INITIATING T HE RE-ASSESSMENT PROCEEDINGS, THE AO HAS ONLY TO BE SATISFIED PRIMA FACIE THAT THERE IS ESCAPEMENT OF INCOME. HE HAS ONLY TO RECORD THE REASONS FOR BEING SATISFIED ABOUT THE ESCAPEMENT OF INCOME BUT NEED NOT RECORD A FINDING THAT THERE IS ESCAPEMENT OF INCOME . BY ISSUANCE OF A NOTICE U/S 148, THE AO HAS ONLY GOT THE JURISD ICTION TO VERIFY THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EVIDEN CE FILED AND THE ALLOWABILITY OF SUCH A CLAIM AND THE AO CAN GIVE A FINDING ABOUT THE ESCAPEMENT OF INCOME ONLY AFTER THE VERIFICATIO N OF FACTS. IN THE FINAL ASSESSMENT ORDER U/S 147, THERE MAY OR MA Y NOT BE ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 17 OF 18 ADDITION TO THE RETURNED INCOME BUT THAT WOULD NOT INVALIDATE THE PROCEEDINGS U/S 147 OF THE ACT. IN A CATENA OF DEC ISIONS, THE HON'BLE HIGH COURTS AND THE HON'BLE SUPREME COURT H AVE HELD THAT AT THE TIME OF ISSUANCE OF NOTICE U/S 148, THE AO HAS ONLY TO BE PRIMA FACIE SATISFIED ABOUT THE ESCAPEMENT OF IN COME. FURTHER, AS RIGHTLY POINTED OUT BY THE LEARNED DR, THE ASSES SEE HAD RETURNED A LOSS IN THE ORIGINAL RETURN, WHICH HAS B EEN CONVERTED INTO POSITIVE INCOME BY VIRTUE OF THE INCOME, COMPU TED DURING THE ASSESSMENT COMPLETED U/S 147. THIS WOULD DEFINITELY HAVE AN IMPACT ON THE MAT CREDIT TO BE GIVEN TO THE ASSESSE E IN THE SUBSEQUENT A.YS. BUT, AS FAR AS THE RELEVANT A.Y IS CONCERNED, THERE IS NO CHANGE IN THE ASSESSED INCOME AND NO PR EJUDICE IS CAUSED TO THE ASSESSEE AS FAR AS ITS TAXABLE INCOME FOR THE RELEVANT A.Y IS CONCERNED. THEREFORE, THE ADDITIONA L GROUND OF APPEAL NO. 1.6 IS ALSO REJECTED. AS REGARDS THE DEC ISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF NALWA INVES TMENT LTD (CITED SUPRA), WE FIND THAT IT IS A CASE OF PENALTY U/S 271(1)(C) AND THEREFORE, IT IS NOT APPLICABLE MUTATIS MUTANDIS TO THE CASE BEFORE US. 23. THE OTHER TWO ADDITIONAL GROUNDS ON CORPORATE T AX MATTERS ARE ON MERITS ON THE ISSUES. AT THE TIME OF HEARING, WE HAVE HEARD THE APPEAL ONLY ON THE VALIDITY OF THE R E-ASSESSMENT AS IT GOES TO THE ROOT OF THE MATTER AND WE HAD INDICA TED THAT IF THE REOPENING OF THE ASSESSMENT WERE TO BE HELD AS VALI DLY INITIATED, THEN WE WILL POST THE APPEAL FOR FRESH HEARING ON M ERITS OF THE ISSUES. AS THE ADDITIONAL GROUNDS OF APPEAL ON RE-O PENING OF THE ASSESSMENT ARE REJECTED BY OUR ORDER AS ABOVE, THE ORIGINAL AS WELL AS THE ADDITIONAL GROUNDS OF APPEAL ON THE MERITS O F THE ISSUE NEEDS TO BE HEARD BY THE BENCH. THEREFORE, THE APPE AL IS DIRECTED ITA NO 864 OF 2017 RAIN CEMENTS LTD HYDERABAD. PAGE 18 OF 18 TO BE FIXED FOR HEARING IN DUE COURSE FOR HEARING O N MERITS. THE ASSESSEES APPEAL ON THE ADDITIONAL GROUNDS ARE THU S REJECTED AND THE APPEAL IS REFIXED FOR HEARING AFRESH. 24. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2019. SD/- SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 18 TH OCTOBER, 2019. VINODAN/SPS COPY TO: 1 RAIN CEMENTS LTD, 34, RAIN CENTER, SRINAGAR COLON Y, HYDERABAD 500073 2 DY.CIT, CIRC LE 3(1) 7 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, SERILINGAMPALLY, HYDERABAD 3 DRP 59 HMT BHAVAN, 3 RD FLOOR, BELLARY ROAD, GANGANAGAR, BENGALURU 560032 4 CIT A, 3 LT TOWERS, MASAB TANK, HYDERABAD 50000 4 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER