ACIT, New Delhi V. M/s. Bhayana Builders (P) Ltd., New Delhi

ITA 897/DEL/2012

• Counselvise Citation: 89720114 RSA 2012
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PIRTHI LAL
• Keywords: Reopening of assessment; Business income; Depreciation; Search and seizure; Tangible material; Difference of opinion; Royalty expenses; Assessment record; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 80HHC; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENC H BEFORE SHRI HARI OM MARATHA , JM & SHRI A.N. PAHU JA, AM ITA NOS..897,1878 &1879/DEL/2012 ASSESSMENT YEARS : 2005-06 TO 2007-08 A.C.I.T.,CIRCLE-2(1), ROOM NO. 398D, CR BUILDING,IP ESTATE,NEW DELHI V/S . M/S BHAYANA BUILDERS (P) LTD., 7, FACTORY ROAD, NEAR SAFDARJUNG HOSPTIAL, NEW DELHI [PAN :AAACB 4147 N] (APPELLANT) (RESPONDENT) REVENUE BY SHRI ANUJ TIWARI, AR ASSESSEE BY SHRI PIRTHI LAL, DR DATE OF HEARING 30-08-2012 DATE OF PRONOUNCEMENT 01-10-2012 O R D E R A.N. PAHUJA:- THESE THREE APPEALS FILED BY THE REVENUE ON 22.02. 2012 AGAINST AN ORDER DATED 7.12.2011 FOR THE AY 2005-06 ; ON 24.04.2012 AGAINST AN ORDER DATED 07.02.2012 FOR THE AY 2006-07 AND ON 24 .4.2012 AGAINST AN ORDER DATED 27.2.2012 OF THE AY 2007-08 OF THE LD. CIT(A) -V, NEW DELHI, RAISE THE FOLLOWING GROUNDS: I.T.A. NO.897/D/2012 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N TREATING THE REOPENING OF THE CASE U/S 147 OF THE I.T. ACT A S INVALID AND CANCELLING THE ORDER PASSED U/S 147/143 (3) OF THE I.T. ACT. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. ITA NOS.897,1878&1879/DE L./2012 2 I.T.A. NO.1878/D/2012 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN ALLOWING THE GROUND OF APPEAL OF THE ASSESSEE CHALLENGING TH E REOPENING OF THE CASE U/S 147 OF THE I.T. ACT. THE CIT(A) HAS NOT APPRECIATED THAT IN THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER HAS NOT CONSIDERED THE ISSUE AS T O WHETHER THE EXPENDITURE ON WOODEN SHUTTERING AND CENTERING MATERIAL IS REVENUE AS PER THE LAW. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN HOLDIN G THAT WOODEN SHUTTERING AND CENTERING IS TO BE ALLOWED AS REVENUE EXPENSES. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. I.T.A. NO.1879/D/2012 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN DELETI NG THE DISALLOWANCE OF COMMISSION PAID TO M/S BRAINSTREET MARKETING (P) LTD. AT ` ` 18,85,000/-, 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN H OLDING THAT WOODEN SHUTTERING AND CENTERING IS TO BE ALLOWED ON CONSUMPTION BASIS AS REVENUE EXPENSES. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL . 2. AT THE OUTSET, THE BENCH REJECTED THE REQUEST F OR ADJOURNMENT ON BEHALF OF THE ASSESSEE AND CONSIDERING THE NATURE O F ISSUES AND FINDINGS OF THE LD. CIT(A),PROCEEDED TO DISPOSE OF THESE APPEALS AF TER HEARING BOTH THE PARTIES. 3. ADVERTING FIRST TO GROUND NO.1 IN THE APP EAL OF THE REVENUE FOR THE AY 2005-06, FACTS, IN BRIEF, AS PER RELEVANT ORDERS A RE THAT ASSESSMENT IN THIS CASE ITA NOS.897,1878&1879/DE L./2012 3 WAS INITIALLY COMPLETED VIDE ORDER DATED 5 TH DECEMBER, 2007 U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT), DETERMINING AN INCOME OF ` ` 1,10,87,180/- IN PURSUANCE TO RETURN FILED ON 27 TH OCTOBER, 2005, DECLARING AN INCOME OF ` ` 1,10,50,707/-. SUBSEQUENTLY, ON PERUSAL OF ASSESSM ENT RECORDS, THE AO NOTICED THAT ON ACCOUNT OF ALLOWANCE OF CLAIM OF WOODEN SHUTTERING AND CENTERING EXPENSES, INCOME OF THE ASSESSEE HAD ESCA PED ASSESSMENT, THE EXPENDITURE BEING CAPITAL IN NATURE, IN THE OPINION OF THE AO. ACCORDINGLY, THE AO RECORDED THE FOLLOWING REASONS IN TERMS OF PROVISIO NS OF SECTION 148 (2) OF THE ACT: NOTE FOR REASONS TO BELIEVE U/S 147 OF THE I.T. ACT IN THE CASE OF BHAYANA BUILDERS PVT. LTD. ASSESSMENT YEAR 2005- 06 PAN AAACB 4147N THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-0 6 WAS FILED ON 27.10.2005 DECLARING AN INCOME OF ` `1,10,50,707/- AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 5 .12.2007 AT AN INCOME OF ` ` 1,10,87,180/-. ON PERUSAL OF ASSESSMENT RECORDS, IT IS DETECTED TH AT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, THE ASSESSEE COMPANY HAD DEBITED AN AMOUNT OF ` ` 2,60,28,512/- ON ACCOUNT OF SHUTTERING AND CENTERING EXPENSES WHICH INCLUDES WO ODEN SHUTTERING AND CENTERING AS WELL AS STEEL SHUTTERIN G AND CENTERING. OUT OF TOTAL EXPENSES OF ` ` 2,60,28,512/-, THE ASSESSEE COMPANY HAD CLAIMED EXPENSES AMOUNTING TO ` `2,42,56,947/- ON ACCOUNT OF WOODEN SHUTTERING AND CENTERING AND AN EXPENSES OF ` ` 17,71,565/- ON ACCOUNT OF STEEL SHUTTERING AND CENTERING. ONLY AN AMOUNT OF ` `17,71,565/- BEING STEEL SHUTTERING AND CENTERING W AS TAKEN AS CAPITAL EXPENDITURE AND ` `2,42,56,947/- AS REVENUE EXPENDITURE, WHEREAS, THE WHOLE AMOUNT I.E. ` `2,60,28,512/- SHOULD HAVE BEEN TAKEN AS CAPITAL EXPENDITURE AND ONLY DEPRECIATION AT THE PRESCRIBED RATE I.E. @25% ON ` `2,42,56,947/- TO BE ALLOWED. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF ` `2,42,56,947/- CHARGEABLE TO TAX HAS ESCAPED ASSESS MENT FOR THE ASSESSMENT YEAR 2005-06 AND, HENCE, CLEARLY ATTRACT S THE PROVISIONS OF CLAUSE (C) OF EXPLANATION 2 TO SECTIO N 147 OF THE I.T. ACT. ITA NOS.897,1878&1879/DE L./2012 4 3.1 AFTER RECORDING THE AFORESAID REASONS, THE AO ISSUED A NOTICE U/S 148 OF THE ACT ON 2 ND JULY, 2010. IN RESPONSE, THE ASSESSEE FILED RETU RN ON 9 TH AUGUST, 2010. DURING THE COURSE OF REASSESSMENT PR OCEEDINGS ON 8 TH OCTOBER, 2010, THE ASSESSEE RAISED OBJECTIONS AGAINST INITIA TION OF PROCEEDINGS U/S 148 OF THE ACT RELYING, INTER ALIA, ON A NUMBER OF JUDICI AL PRONOUNCEMENTS. HOWEVER, THE AO REJECTED THESE OBJECTIONS AND UPHELD THE VAL IDITY OF REOPENING OF THE ASSESSMENT IN THE LIGHT OF DECISIONS IN TEEKOY RUBB ERS (INDIA) LIMITED VS. CIT (KER) 181 ITR 387; RENUSAGAR POWER CO. LTD. VS. INC OME-TAX OFFICER AND ANOTHER (ALL) 117 ITR 719; M.A. CHIDAMBARAM VS. CIT (MAD) 216 ITR 175; TUBE SUPPLIERS LTD. VS. CIT (MAD) 216 ITR 596 AND CIT VS . FIRST LEASING COMPANY OF INDIA LTD. (MAD) 241 ITR 248. 3.2 THE AO, THEREAFTER, SHOWCAUSED THE ASSESSEE AS TO WHY THE EXPENDITURE OF ` ` 2,42,56,947/- ON WOODEN SHUTTERING AND CENTERING EX PENSES BE NOT TREATED AS CAPITAL IN NATURE. IN RESPONSE, THE ASSESSEE STATED THAT THE TOTAL AMOUNT OF ` ` 2,60,28,512/- COMPRISED WOODEN SHUTTERING AND SCAF FOLDING- ` 2,42,96,947.70 AND STEEL CENTERING & SHUTTERING- ` 17,31,565.30 . THE ASSESSEE TREATED AN AMOUNT OF ` ` 17,71,565/- STEEL SHUTTERING & CENTERING EXPENSES C APITAL IN NATURE WHILE CLAIMING REMAINING EXPENSES ON WOOD EN SHUTTERING & SCAFFOLDING REVENUE IN NATURE ON THE GROUND THAT THE PLY AND BA TTEN CONSUMED FOR MAKING BASE OF CASTING AND FLOORING OF MULTISTORIED BUILDI NG, REMAINED SOAKED WITH CONCRETE MIXTURES AND WATERING FOR ABOUT 4 WEEKS AT A STRETCH ;SINCE THIS PLY AND BATTEN COULD AT THE MOST BE USED, NOT MORE THAN 3 T O 4 TIMES, THEREFORE, THE AMOUNT WAS CLAMED AS REVENUE EXPENSE. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE WHILE RELYING UPON DECI SIONS IN SCIENTIFIC ENGINEERING HOUSE PVT. LTD. VS. CIT (1986) 157 ITR 86 (SC); ORISSA CEMENT LTD. VS. CIT (1969) 73 ITR 14, 20 (DEL.); CIT VS. BANK O F INDIA LTD.(1979) 118 ITR 809 (BOM); CIT VS. ELECON ENGG. CO. LTD. (1987) 166 ITR 16 (SC) AND CIT VS. SRI KRISHNA BOTTLERS PVT. LTD. (1989) 175 ITR 154(A P) AND CONCLUDED THAT WOODEN SHUTTERING AND CENTERING MATERIAL WAS PLANT. CONSE QUENTLY, THE AO DISALLOWED THE CLAIM, TREATING THE AMOUNT AS CAPITAL IN NATURE , RESULTING IN DISALLOWANCE OF ITA NOS.897,1878&1879/DE L./2012 5 ` ` 1,82,22,710/- AFTER ALLOWING DEPRECIATION @25% ON T HE AMOUNT OF WOODEN SHUTTERING AND CENTERING.. 4. ON APPEAL, THE ASSESSEE QUESTIONED THE VALIDITY OF REOPENING OF THE ASSESSMENT, RELYING, INTER ALIA, ON THE DECISION OF HONBLE APEX COURT IN CIT VS. PVS BEEDIES PVT. LTD. 237 ITR 13 (SC) AND CIT VS. S IMBAOLI SUGAR LTD. (2011) 333 ITR 470(DEL.). THE ASSESSEE POINTED OUT THAT T HE ORIGINAL RETURN FILED BY THEM WAS SELECTED FOR SCRUTINY AND THE AO REQUIRED THE ASSESSEE TO SUBMIT THE FOLLOWING DETAILS:- 1) COPY OF LEDGER A/C OF CENTERING AND SHUTTERING WOOD, PURCHASED DURING THE YEAR UNDER REFERENCE; 2) COPY OF LEDGER A/C OF STEEL SHUTTERING, PURCHAS ED DURING THE YEAR UNDER REFERENCE. 3) COPY OF LEDGER A/C OF CENTERING, SHUTTERING AND SCAFFOLDING CONSUMED DURING THE YEAR ENDED 31.3.2005 ALONG WITH WORKING THEREOF. 4.1 THE ASSESSEE HAVING SUBMITTED COMPLETE DETAILS VIDE LETTER DATED 15.10.2010, THERE WAS COMPLETE DISCLOSURE OF FACTS RELATING TO CLAIM OF EXPENSES ON WOODEN SHUTTERING CENTERING, SCAFFOLDING ETC. S INCE THE ASSESSEE HAD ALREADY DISCLOSED THE PRIMARY FACTS, RELYING UPON DECISIONS IN CIT VS. BHAJI LAVJI, 79 ITR 582; INCOME-TAX OFFICER VS. LAKHMANI MEWAL DAS, 103 ITR 437 (SC); CIT VS. MOTOR & GENERAL FINANCE LTD., (2009) 184 TAXMAN 465 (DEL), THE ASSESSEE ARGUED THAT REOPENING OF THE ASSESSMENT WAS INVALID . INTER ALIA, THE ASSESSEE RELIED UPON A NUMBER OF DECISIONS IN CIT VS. KELVIN ATOR OF INDIA LTD., 256 ITR 1 (DEL-FB); CIT VS. GOETZE (INDIA) LTD., (2010) 321 I TR 431 (DELHI); ASTEROIDS TRADING AND INVESTMENTS (P) LTD. VS. DCIT (2009) 30 8 ITR 190; CIT VS. EICHER LTD. (2007) 294 ITR 310 (DELHI); CARLTON OVERSEAS ( P) LTD. VS. INCOME-TAX OFFICER (2010) 188 TAXMAN 11 (DELHI); SATNAM OVERSEAS LTD. VS. ADDL. CIT (2010) 188 TAXMAN 172 (DEL); SUDHIR GENSETS LTD. VS. INCOME-TA X OFFICER (2011) 201 TAXMAN 216 (DELHI)(MAG.); CIT VS. RANDOM CONSTRUCTO RS PVT. LTD. (2010) 186 TAXMAN 303 (P&H); CIT VS. INDIAN FARMERS FERTILIZER S CO-OPERATIVE LTD.(2008) 171 TAXMAN 379 (DELHI); NATIONAL DAIRY DEVELOPMENT BOARD VS. DCIT (2011) ITA NOS.897,1878&1879/DE L./2012 6 242 CTR (GUJ) 302; CIT VS. SIMBHAOLI SUGAR MILLS LT D. (2011) 333 ITR 470 (DELHI); LEGATO SYSTEMS (INDIA) PVT. LTD. VS. DCIT (2010) 187 TAXMAN 294 (DELHI); DIWAKAR ENGINEERS LTD. VS. INCOME-TAX OFFI CER (2010) 187 TAXMAN 327 (DELHI); JAL HOTELS CO. LTD. VS. ASS. DIT (2009) 18 4 TAXMAN 1 (DELHI). IN THE LIGHT OF THESE SUBMISSIONS AND DECISIONS, THE LD. C IT(A) CONCLUDED AS UNDER:- 3.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AS WELL AS THE CONTENTIONS OF THE APPELLANT RAISED IN THE WRITTEN SUBMISSION. FROM PARA 4 OF THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3), IT IS SEEN THAT THERE WAS A DISCUSSION IN THE ORDER ON THE ISSUE OF EXPENSES CLAIMED ON SHUTTERING AND CENTERI NG, BOTH WOODEN AND STEEL, FOR WHICH THE AO HAD CALLED FOR N ECESSARY DETAILS. THE AO AFTER EXAMINATION OF THE DETAILS H AD ALLOWED THE EXPENSES IN RESPECT OF WOODEN SHUTTERING AND CENTER ING BY FOLLOWING THE DECISION IN EARLIER ASSESSMENTS AND A FTER APPLYING HIS MIND TO THE ISSUE. WHILE, HE HAD ALLOWED EXPENSES ON WOODEN SHUTTERING AND CENTERING AND SCAFFOLDING ON CONSUMP TION BASIS, HE HAD CAPITALIZED THE EXPENDITURE CLAIMED BY THE ASSE SSEE ON STEEL SHUTTERING AND CENTERING AND ALLOWED DEPRECIATION T HEREON AFTER TAKING INTO ACCOUNT THE BROUGHT FORWARD WRITTEN DOW N VALUE OF SUCH MATERIALS. IT MAY BE ADDED HERE THAT THERE MAY NOT BE DETAILED REASONS RECORDED IN THE ASSESSMENT ORDER ON ANALYSI S OF MATERIAL ON RECORD. THE FULL BENCH OF THE JURISDICTIONAL HI GH COURT OF DELHI IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. HAD REJECTED THE SUBMISSIONS OF THE DEPARTMENT BY HOLDING THAT WHERE THE DETAILED REASONS ARE NOT RECORDED, IT MAY JUSTIFY THE REOPEN ING OF THE CASE. IT WAS HELD THAT THIS SUBMISSION IS FALLACIOUS AND THE FULL BENCH DECISION OF THE DELHI HIGH COURT HAS ALSO BEEN CONF IRMED BY THE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD., (2010) 320 ITR 521 (SUPREME COURT). IT IS ALSO SEEN THAT THE DEPARTMENT HAS BEEN CONSI STENTLY FOLLOWING ITS EARLIER ORDERS OF TREATING THE EXPEND ITURE ON WOODEN SHUTTERING AND CENTERING AND SCAFFOLDING ON A CONSU MPTION BASIS AND CAPITALIZING THE EXPENDITURE OF STEEL SHUTTERIN G AND CENTERING AND ALLOWING DEPRECIATION THEREON. THIS IS A SETTL ED ISSUE, AS THE ASSESSEE HAS ALSO ACCEPTED THE SAME. IN VIEW OF THE FACTS OF THE PRESENT CASE AND VARIO US DECISIONS ON THE ISSUE, I FIND THAT THE PRIMARY FACTS WERE BE FORE AO AND THE SAME HAS BEEN CONSIDERED AND DISCUSSED IN THE ORIGI NAL ASSESSMENT ORDER. SINCE THE RE-ASSESSMENT HAS BEEN COMPLETED ITA NOS.897,1878&1879/DE L./2012 7 ON THE SAME SET OF FACTS, THE REOPENING IS HELD TO BE INVALID. CONSEQUENTLY, THE ORDER U/S 143(3) READ WITH SECTIO N 148 STANDS ANNULLED. SINCE THE REOPENING U/S 147 HAS BEEN HELD TO BE IN VALID AND ORDER PASSED IN PURSUANCE TO REOPENING STANDS CANCE LLED, THE GROUNDS ON MERIT HAVE BECOME ONLY OF ACADEMIC NATUR E AND REQUIRES NO SPECIFIC COMMENTS. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD DR WHILE CARRYI NG US THROUGH THE ASSESSMENT ORDER, SUPPORTED THE FINDINGS OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDINGS IN THE IMPUGNED O RDER. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED VIDE ORDER DATED 15 TH DECEMBER, 2007 U/S 143(3) OF THE ACT, DETERMINING INCOME OF ` `1,10,87,180/- IN PURSUANCE TO RETURN DECLARING INC OME OF ` `1,10,50,707/- FILED ON 27 TH OCTOBER, 2005. THEREAFTER, THE AO REOPENED THE ASS ESSMENT ON 2 ND JULY, 2010 U/S 147 OF THE ACT I.E. FOUR YEARS AFTER THE E ND OF THE AFORESAID ASSESSMENT YEAR ON THE GROUND THAT WOODEN SHUTTERING AND CENTE RING WERE CAPITAL IN NATURE, EVEN WHEN DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, ISSUE HAD BEEN EXAMINED BY THE AO AFTER RAISING QUERIES AND A MOUNT WAS ALLOWED AS REVENUE EXPENDITURE . AS POINTED OUT BY THE LD. CIT (A) , THE AO RAISED A SPECIFIC QUERY REGARDING CLAIM OF WOODEN SHUTTERING AND CENT ERING EXPENSES AND THE ASSESSEE FILED RELEVANT DETAILS VIDE LETTER DATED 1 5 TH OCTOBER, 2007. NO FAILURE ON THE PART OF THE ASSESSEE IN RELATION TO MATERIAL FACTS IN RESPECT OF WOODEN SHUTTERING & CENTERING EXPENSES IN THE ORIGI NAL ASSESSMENT FOR THE YEAR UNDER CONSIDERATION, HAS BEEN ATTRIBUT ED IN THE AFORESAID REASONS RECORDED BY THE AO NOR THE LD. DR ASCRIBED ANY SUCH FAILURE TO THE ASSESSEE, BEFORE US. THE REASON S DO NOT INDICATE WHY AND HOW THE ASSESSEE FAILED TO MAKE FULL AND TR UE DISCLOSURE OF ITA NOS.897,1878&1879/DE L./2012 8 MATERIAL FACTS IN RELATION TO WOODEN SHUTTERING & C ENTERING EXPENSES. AS POINTED OUT BY THE LD. CIT(A), DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD RAISED A SPECIFIC QUERY RELATING TO WOODEN SHUTTERING & CENTERING EXPENSES AND INDISPUTABLY, THE ASSESSEE SUBMITTED A DETAILED REPLY DATED 15.10.2007. WE FIND THAT THE FACTS MENTIONED IN THE AFORESAID REASONS WERE AVAILABLE WITH THE AO EVEN A T THE TIME OF FINALIZING THE INITIAL ASSESSMENT COMPLETED U/S 143 (3) OF THE ACT ON 5.12.2007. ON THE BASIS OF SAME MATERIAL, IF THE AO TAKES A DIFFERENT VIEW SUBSEQUENTLY, AFTER EXPIRY OF 4 YEARS FROM TH E END OF THE ASSESSMENT YEAR, THAT WOULD NOT CONFER ANY JURISDIC TION ON THE AO TO ISSUE NOTICE U/S 148 OF THE ACT. THE SCOPE AND EFFE CT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS A LSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISION S OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMST ANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSES SMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDIC TION UNDER SECTION 147(A), TWO CONDITIONS WERE REQUIRED TO BE SATISFIED- FIRSTLY THE AO MUST HAVE REASON TO BELIEVE THAT INCOME, PRO FITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSMENT, A ND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAP EMENT OCCURRED DUE TO REASON OF EITHER OMISSION OR FAILU RE ON THE PART OF THE TAXPAYER TO DISCLOSE FULLY OR TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE AO COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 14 7(A).BUT UNDER THE SUBSTITUTED SECTION 147, EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER, FOR WHATEVER REASON, HAS REASON TO BELIEVE THAT INCOME HAS ESCAP ED ASSESSMENT, IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. H OWEVER, BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITH IN THE AMBIT OF THE ITA NOS.897,1878&1879/DE L./2012 9 PROVISO TO SECTION 147. SINCE IN THE CASE UNDER CO NSIDERATION, NOTICE U/S 148 HAD BEEN ISSUED ONLY ON 2.7.2010 THA T IS AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, APP ARENTLY, THE ISSUE THAT ARISES FOR OUR CONSIDERATION IS AS TO WH ETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS? NO SUCH FAILURE IS EITHER EVIDENT F ROM THE ASSESSMENT ORDER OR THE REASONS RECORDED BY THE AO NOR HAS BEEN POINTED OUT BEFORE US BY THE LD. DR. INDISPUTABLY, THE AO CHOSE TO REOPEN THE ASSESSMENT COMPLETED U/S 143(3) OF THE A CT AFTER RECORDING REASONS, WHEREIN NO SUCH FAILURE AS HAS BEEN ENVISAGED IN PROVISO TO SEC. 147 OF THE ACT, HAS BEEN ATTRIBU TED TO THE ASSESSEE. IN RAKESH AGGARWAL V. ASST. CIT [1997] 22 5 ITR 496, HONBLE DELHI HIGH COURT HELD THAT IN VIEW OF THE P ROVISO TO SECTION 147, NOTICE FOR REASSESSMENT UNDER SECTION 148 WOUL D BE ILLEGAL IF ISSUED MORE THAN FOUR YEARS AFTER THE END OF THE RE LEVANT ASSESSMENT YEAR UNLESS FAILURE IS ASCRIBED TO THE A SSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECES SARY FOR HIS ASSESSMENT. HONBLE GUJRAT HIGH COURT WHILE ADJUD ICATING A SIMILAR ISSUE HELD IN SHREE THARAD JAIN YUVAK MANDAL V. ITO [2000] 242 ITR 612 AS UNDER: A PERUSAL OF THE AFORESAID PROVISION GOES TO SHOW T HAT UNDER THE PROVISO TO SECTION 147, THE FOUNDATION OF CONFERRIN G JURISDICTION ON THE ASSESSING OFFICER TO ASSESS OR REASSESS THE INC OME FOR ANY ASSESSMENT YEAR BEYOND THE END OF FOUR YEARS FROM T HE END OF RELEVANT ASSESSMENT YEAR MUST BE OMISSION OR FAILUR E ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR AND THAT THE INCOME-TAX OF FICER HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT FOR THAT YEAR. IN THE ABSENCE OF ANY SUC H OMISSION OR FAILURE ON THE PART OF THE ASSESSEE, TAKING ACTION FOR ASSESSMENT OR REASSESSMENT IS NOT PERMISSIBLE FOR ANY YEAR AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. THE SCOPE OF THE ASSESSEE'S DUTY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT IN THE CONT EXT OF THE PROVISIONS OF SECTION 34 OF THE INDIAN INCOME-TAX A CT, 1922, HAS ITA NOS.897,1878&1879/DE L./2012 10 BEEN SUCCINCTLY STATED BY THE SUPREME COURT BY THEI R LORDSHIPS IN CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 . THE COURT OBSERVED: 'THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING ALL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUESTION BEFORE THE ASSESSING AUTHORITY LIES ON THE ASSESSEE.' THE COURT FURTHER SAID: 'DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS? IN OUR OPINION, THE ANSWER TO TH IS QUESTION MUST BE IN THE NEGATIVE. ONCE ALL THE PRIMARY FACTS ARE BEFORE THE ASSESSING AUTHORITY, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE. IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASO NABLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT FOR SOMEBODY ELSE- FAR LESS THE ASSESSEE-TO TELL THE ASSESSING AUTHORI TY WHAT INFERENCES, WHETHER OF FACTS OR LAW, SHOULD BE DRAWN.' 6.1 AGAIN IN THE CASE OF PATIDAR OIL CAKE INDUSTR IES VS. DCIT, 270 ITR 347(GUJ), HONBLE GUJRAT HIGH COURT HELD IN THE LIGHT OF THE FACT THAT THE ASSESSMENTS H AVE BEEN SOUGHT TO BE REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE E ND OF EACH OF THE ASSESSMENT YEARS IN QUESTION, THE PROVISIONS OF SEC TION 147 OF THE ACT MANDATE THAT THE ASSESSING OFFICER SHALL BE VES TED WITH THE JURISDICTION TO INITIATE REASSESSMENT PROCEEDINGS O NLY IN CASE THERE IS ANY OMISSION OR FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND SUCH FAILURE SHOULD RE SULT IN INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. ON A PLAIN R EADING OF THE AFORESAID PROVISIONS AND THE REASONS RECORDED, IT B ECOMES CLEAR THAT THERE CANNOT BE ASCRIBED ANY FAILURE OR OMISSI ON TO THE PETITIONER SO AS TO VEST THE ASSESSING OFFICER WITH JURISDICTION TO REOPEN THE ASSESSMENTS WHICH WERE ALREADY FINALISED . IN THE CIRCUMSTANCES, FOR THE ASSESSMENT YEARS 1986-87, 19 87-88 AND 1988-89 IN THE LIGHT OF THE FACT THAT THE INITIATIO N BY ISSUANCE OF IMPUGNED NOTICES IS BEYOND THE PERIOD OF FOUR YEARS AND THE PREREQUISITE CONDITIONS STIPULATED BY SECTION 147 O F THE ACT ARE NOT FULFILLED, THERE IS NO CASE MADE OUT FOR UPHOLDING THE PROPOSED REASSESSMENT. THE NOTICES FOR ALL THE FOUR YEARS AR E, THEREFORE, BAD IN LAW AND ARE QUASHED AND SET ASIDE. 6.2 IN THE CASE OF DEVIDAYAL ROLLING MILLS & A NOTHER VS. Y.R.SAINI,ACIT,285 ITR 514,HONBLE BOMBAY HIGH COUR T HELD THAT WHERE AN ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT IS SOUGHT ITA NOS.897,1878&1879/DE L./2012 11 TO BE REOPENED BEYOND FOUR YEARS FROM THE END OF RE LEVANT ASSESSMENT YEAR, THE REVENUE MUST ESTABLISH THAT TH ERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS RELEVANT FOR THE PURPOSES OF THE ASSESSMENT. 6.3 IN THE CASE OF MERCURY TRAVELS LTD. VS. DCIT & ANOTHER,258 ITR 533(CAL.), HONBLE HIGH COURT IN THE LIGHT OF FACTS OF THE CASE CONCLUDED THAT NO INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT FOR THOSE ASSESSMENT YEARS DUE TO FAILUR E OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ITS ASSESSMENT. 6.4 IN PRIYANKA CARBON & CHEMICAL INDUSTRIES ( P) LTD. VS. DCIT (2008) 15 DTR (GUJ.) 31, HONBLE HIGH COURT HELD T HAT WHEN FACTUAL DATA WAS AVAILABLE WITH THE AO AT THE TIME OF ASSES SMENT, ON THE SAME VERY MATERIAL, IF THE AO TAKES A DIFFERENT VIE W SUBSEQUENTLY AND THAT TOO AFTER EXPIRY OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR, THAT WOULD NOT CONFER ANY JURISDIC TION ON THE AO TO ISSUE NOTICE U/S 148 OF THE ACT. SIMILAR VIEW WAS T AKEN IN ACIT VS. JAGDISHBHAI NANUBHAI TEKRAWALA (2008) 12 DTR (GUJ) 270, 6.5 IN VARELI WEAVERS PVT. LTD. VS. DCIT (1999) 240 ITR 77 (GUJ) ALSO NOTICES UNDER SECTION 148 READ WITH SECTION 14 7 OF THE ACT WERE QUASHED BY THE HONBLE HIGH COURT, THERE BEING NO W HISPER IN THE REASONS RECORDED BY THE AO ABOUT FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS . 6.6 IN CIT VS. DCM LTD.,(2009) 24 DTR(DEL.) 72,H ONBLE JURISDICTIONAL HIGH COURT FOUND THAT THERE WAS NO ALLEGATION IN THE REASONS RECORDED BY THE AO THAT THE ASSESSEE HAD FA ILED TO FILE ITS RETURN OR THAT IT HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL ITA NOS.897,1878&1879/DE L./2012 12 FACTS IN ITS RETURN NOR WAS THERE ANY ALLEGATION B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAD FAILED TO DISCLOSE F ULLY AND TRULY ALL MATERIAL FACTS IN ITS RETURN OF INCOME NOR EVEN THE RE WAS ANY ALLEGATION REGARDING ESCAPEMENT OF INCOME. IN THESE CIRCUMSTANCES, HONBLE HIGH COURT UPHELD THAT FINDINGS OF THE TRIB UNAL THAT NOTICE U/S 148 OF THE ACT ,HAVING BEEN ISSUED AFTER FOUR Y EARS, THE REOPENING OF THE ASSESSMENT WAS NOT VALID. 6.7 IN CIT & ANOTHER VS. FORAMER FRANCE, 264 ITR 566 (SC),HONBLE APEX COURT UPHELD THE ORDER OF THE HON BLE DELHI HIGH COURT IN CONCLUDING THAT WHEN THERE WAS ADMITTEDLY NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, TH E PROVISO TO THE NEW SECTION 147 OF THE ACT SQUARELY APPLIED, AND TH E IMPUGNED NOTICES WERE BARRED BY LIMITATION MENTIONED IN THE PROVISO. 6.8 IN SUPREME TRAVELS (P) LTD. VS. DCIT, 182 TAXMAN 216(BOM.), HONBLE BOMBAY HIGH COURT HELD THAT THE ASSESSING OFFICER CAN REOPEN THE ASSESSMENT ONLY IF THE INGRE DIENTS OF SECTION 147 ARE FULFILLED. 6.9 IN GUJARAT CARBON AND INDUSTRIAL LTD. VS. JT. CIT [2008] 307 ITR 271 (GUJ), HONBLE HIGH COURT IN THE ABSENCE O F ANY FAILURE ON PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MAT ERIAL FACTS RELEVANT FOR THE ASSESSMENT OF THE ASSESSMENT YEAR IN QUESTION, CONC LUDED THAT THE IMPUGNED NOTICE UNDER S. 148 ISSUED BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IS REQUIRED TO BE QUASHED . 6.10 LIKEWISE IN GUJRAT FLUOROCHEMICALS LTD. VS . DCIT [2009] 319 ITR 282 (GUJ), HONBLE HIGH COURT CONCLUDED THAT THE ASSESSEE HAVING MADE FULL DISCLOSURE OF MATERIAL FACTS IN TH E RETURN WHICH WAS ITA NOS.897,1878&1879/DE L./2012 13 ACCOMPANIED BY SEVERAL ENCLOSURES, ASSESSMENT COULD NOT BE REOPENED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR FOR THE REASON THAT CERTAIN INCOME HAS BEEN WRONGLY ASSESSED UNDER THE HEAD CAPITAL GAINS INSTEAD OF PROFITS AND GAINS OF BUSINESS OR PROFE SSION. 6.11 IN NIKHIL K KOTAK VS. MAHESH KUMAR , AO [2009] 319 ITR 445 (GUJ) ALSO IT WAS HELD THAT IN THE ABSENCE OF ANY A VERMENT OF THE REVENUE THAT THERE WAS ANY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSES SMENT OF THE ASSESSMENT YEAR IN QUESTION, IMPUGNED NOTICE UNDER S. 148 ISSUED BEYON D A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS BAD IN LAW AND WITHOUT JURISDICTION. 6.12 IN CADILA HEALTHCARE LTD. VS. DY. CIT [2010] 41 DTR 145 (GUJ), HONBLE HIGH COURT CONCLUDED THAT IN THE AB SENCE OF ANY AVERMENT IN THE REASONS RECORDED BY THE AO FOR REOP ENING THE ASSESSMENT THAT THE PETITIONER HAS FAILED TO DISCLOSE FULLY AND TRU LY ANY MATERIAL FACT NECESSARY FOR ITS ASSESSMENT FOR THE YEAR UNDER CONSIDERATION OR ANY NEW MATERIAL OR FACTS COMING TO THE NOTICE OF THE AO LEADING TO THE CONCL USION THAT INCOME HAD ESCAPED ASSESSMENT, THE INGREDIENTS OF THE PROVISO TO S. 147 ARE NOT SATISFIED AND, THEREFORE, ENTIRE PROCEEDINGS UNDER S. 147 INI TIATED PURSUANT TO THE IMPUGNED NOTICE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WERE WITHOUT JURISDICTION AND CANNO T BE SUSTAINED. 6.13 IN MIHIR TEXTILES LTD. VS. JT. CIT [2010] 4 3 DTR 11 (GUJ),HONBLE HIGH COURT HELD THAT THE PETITIONER HAVING SUBMITTED AUDITED BOOKS OF ACCOUNTS, P&L A/C, AND BALANCE SHE ET ALONG WITH NOTES AND ALSO MADE A SPECIFIC DISCLOSURE IN THE FORM OF A NOTE RE GARDING TRANSFER OF ITS UNDERTAKING, IT CANNOT BE SAID THAT THE PETITIONER IS GUILTY OF NOT MAKING FULL AND TRUE DISCLOSURE AND, THEREFORE, NOTICE UNDER S. 148 ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS QUASHED AND SET ASIDE. ITA NOS.897,1878&1879/DE L./2012 14 6.14 SIMILAR VIEW WAS TAKEN IN DECISION DATED 28. 11.2011 IN CIT VS. PUROLATOR INDIA LIMITED IN ITA NO. 489/DEL./2011 AN D DECISION DATED 1.12.2011 IN BLB LIMITED VS. ACIT IN WPC 6884/2010,JSRS UDYOG L IMITED & ANOTHER VS. ITO,313 ITR 321(DEL.);WEL INTERTRADE PRIVATE LIMITE D VS. ITO,308 ITR 22(DEL.) AND IN A RECENT DECISION DATED 11.11.2011 IN ITA NO .87 /2010 IN ATMA RAM PROPERTIES PVT. LTD. VS. DCIT BY THE HONBLE JU RISDICTIONAL HIGH COURT. 6.15 IN HARYANA ACRYLIC MANUFACTURING CO., 308 ITR 38 (DEL.),, HONBLE JURISDICTIONAL HIGH COURT, INTER ALIA, CONC LUDED AS UNDER: 20. IN THE REASONS SUPPLIED TO THE PETITIONER , THERE IS NO WHISPER, WHAT TO SPEAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FA ILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BE CAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED A BOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY T HE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, FULLY AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROV ISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE A ND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THA T THE REASONS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION . CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST T AKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECI SION IN WEL INTERTRADE (P.) LTD.',308 ITR 33(DEL.) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHA NIA,269 ITR 192 THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED TH AT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEWPOINT, WE HOLD THAT THE NOTICE DATED 29-3- 2004 UNDER SECTION 148 BASED ON THE RECORDED REASON S AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 2- 3-2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN BEYON D THE FOUR YEAR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE . ITA NOS.897,1878&1879/DE L./2012 15 6.16 HERE WE MAY ALSO REFER TO DECISION IN GRUH FINANCE LTD. V. JCIT(ASSESSMENT) 243 ITR 482GUJ) ,WHEREIN HONBLE HIGH COURT OBSERVED, INTER ALIA, AS UNDER: IN SO FAR AS THE EXPRESSIONS 'REASON TO BELIEVE' A ND 'CHANGE OF OPINION' ARE CONCERNED, WE ARE OF THE VIEW THAT THOUGH THE MATER IAL WAS AVAILABLE ON RECORD, AT THE TIME OF FIRST ASSESSMENT, WHEN NO CONSCIOUS CONSIDERATION OF THE MATERIAL IS MADE AND A MISTAKE HAS BEEN COMMITTED, IT WOULD NOT, IN ANY CASE, CREATE AN EMBARGO OR A BAN ON THE COMPETENT OFFICER TO EXERCI SE POWERS UNDER THE AMENDED SECTION 147 OF THE INCOME-TAX ACT, 1961, AS PRIMA FACIE, THERE COULD NOT BE 'CHANGE OF OPINION' IN THAT FACTUAL SCENARIO . IT HAS ALSO NOT BEEN SHOWN TO US ON BEHALF OF AN ASSESSEE. IF CONSCIOUS APPLICATI ON OF MIND IS MADE TO THE RELEVANT FACTS AND MATERIAL AVAILABLE OR EXISTING A T THE RELEVANT POINT OF TIME WHILE MAKING ASSESSMENT AND AGAIN A DIFFERENT OR DIVERGEN T VIEW IS SOUGHT, IT WOULD TANTAMOUNT TO 'CHANGE OF OPINION', WHEREAS, IN THE CASE OF EXISTING MATERIAL, NO CONSCIOUS ATTEMPT HAS BEEN MADE, IT WOULD TANTAMOUN T TO MISTAKE IN NOT CONSIDERING THE RELEVANT POINT OR PROPOSITION AND I T WOULD NOT BE A 'CHANGE OF OPINION'. 6.17 AS REGARDS CHANGE OF OPINION, WE MAY REIT ERATE THAT THE ASSESSEE MADE DISCLOSURE OF WOODEN SHUTTERING AND CENTERING EXPENSES DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS ,WHEN THE AO RAISED A SPECIFIC QUERY RELATING TO THESE EXPENSES AND INDISPUTABLY, THE ASSESSEE SUBMITTED A DETAILED REPLY DATED 15.10.2007. THESE FACTS HAVE N OT BEEN DISPUTED BEFORE US. IN THIS CONTEXT , WE FIND THAT HONBLE APEX COURT W HILE AFFIRMING THE DECISION OF HONBLE DELHI HIGH COURT IN KELVINATOR OF INDIA LT D.(SUPRA) AND GOING THROUGH THE CHANGES MADE TO SECTION 147 OF THE ACT OBSERVED AS UNDER: .., WE FIND THAT, PRIOR TO THE DIRECT TAX LAWS (A MENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER THE ABOVE TWO CONDITI ONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT (WIT H EFFECT FROM 1ST APRIL, 1989), THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS R EMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THER EFORE, POST-1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FA ILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASS ESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINIO N', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CO NCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSI NG OFFICER HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSES SMENT HAS TO BE BASED ON ITA NOS.897,1878&1879/DE L./2012 16 FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONC EPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHEC K ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, TH E ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REAS ONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUP PORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UND ER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN S ECTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES A GAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SA ID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST AR BITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBELOW THE RELEVANT PORTION OF CIRCULAR NO. 549 DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST.) 1, 29), WHI CH READS AS FOLLOWS :'7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION `REASON TO BELIEVE' IN SECTION 147.-A NUMBER OF RE PRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS `REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE `OPINION' OF THE ASSESSING OFFICER. IT WAS POI NTED OUT THAT THE MEANING OF THE EXPRESSION, `REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SEC TION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENT S ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMEN DED SECTION 147 TO REINTRODUCE THE EXPRESSION `HAS REASON TO BELIEVE' IN PLACE OF THE WORDS `FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION'. OTHER PROVISIO NS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME.' FOR THE AFORESTATED REASONS, WE SEE NO MERIT IN THE SE CIVIL APPEALS FILED BY THE DEPARTMENT ; HENCE, DISMISSED WITH NO ORDER AS TO C OSTS. 6.18 THE AFORESAID OBSERVATIONS OF THE HONBLE APEX COURT WHEN VIEWED IN THE LIGHT OF FACTS AND CIRCUMSTANCES IN T HE CASE BEFORE US, LEAD US TO AN INESCAPABLE CONCLUSION THAT THE AO RE OPENED THE ASSESSMENT IN RELATION TO WOODEN SHUTTERING AND CE NTERING EXPENSES MERELY ON THE BASIS OF CHANGE OF OPINION A ND NO TANGIBLE MATERIAL WAS BROUGHT ON RECORD BEFORE INITIATING A CTION U/S 147 OF THE ACT. ITA NOS.897,1878&1879/DE L./2012 17 6.19 MOREOVER, HONBLE MADRAS HIGH COURT IN THEIR DECISION DATED 3.8.201 IN CIT VS. M/S BAER SHOES (INDIA) PVT. LTD, IN ITA NO.706 OF 2010,FOLLOWING THE VIEW TAKEN BY HONBLE GUJRAT HIG H COURT IN AUSTIN ENGINEERING CO. LTD. VS. JCIT,312 ITR 70,CONCLUDED ON THE ISSUE OF REOPENING OF ASSESSMENT ON THE BASIS OF SUBSEQUENT DECISION OF H ONBLE SUPREME COURT, IN THE FOLLOWING TERMS: 4. WE ARE NOT ABLE TO COUNTENANCE THE SAID SUBMISS ION MADE BY THE LEARNED STANDING COUNSEL FOR THE APPELLANT. IN THE PRESENT CASE ON HAND, THE ASSESSEE AT THE TIME OF FILING RETURN FOR THE ASSESSMENT YEAR 1 999-2000 HAS DISCLOSED ALL THE MATERIALS BEFORE THE ASSESSING OFFICER AND CLAIMED DEDUCTION UNDER SECTION 80HHC. EVEN BEFORE THE EARLIER PROCEEDINGS INITIATE D UNDER SECTION 147, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT D ISCLOSED THE MATERIALS. THEREFORE, ON A CONSIDERATION OF THE MATERIALS AVAI LABLE ON RECORD, THE ASSESSING OFFICER PASSED AN ORDER ON THE EARLIER TWO OCCASION S. THEREAFTER, THE ASSESSING OFFICER HAS SOUGHT TO REOPEN THE ASSESSMENT ONCE AG AIN INVOKING THE POWER UNDER SECTION 147 OF THE ACT, WHICH, IN OUR CONSIDE RED OPINION, IS NOT PERMISSIBLE IN LAW ON THE FACTS OF THE CASE. 5. THE JUDGMENT RENDERED BY THE HONBLE SUPREME COU RT IS AN EXPRESSION OF OPINION ON THE INTERPRETATION OF STATUTE. THE POWER UNDER SECTION 147 WILL HAVE TO BE INVOKED BY THE ASSESSING OFFICER IN ACCORDANCE W ITH THE SAID PROVISION. IN OTHER WORDS, MERELY BECAUSE A JUDGMENT HAS BEEN REN DERED, THE SAME CANNOT BE A GROUND FOR REOPENING THE ASSESSMENT UNDER SECT ION 147 OF THE ACT. THE HONBLE GUJARAT HIGH COURT IN AUSTIN ENGINEERING CO . LTD. VS. JCIT (312 ITR 70) HAS TAKEN THE VIEW THAT IN A CASE WHERE THE MATERIA L FACTS WERE FULLY DISCLOSED AND THE ASSESSMENT WAS COMPLETED ALLOWING DEDUCTION UNDER SECTION 80HHC ON EXPORT INCENTIVE, SUCH AN ASSESSMENT CANNOT BE REOP ENED BASED UPON A SUBSEQUENT DECISION OF THE SUPREME COURT, SINCE IT MERELY WOULD AMOUNT TO A CHANGE OF OPINION. WE ARE IN RESPECTFUL AGREEMENT W ITH THE JUDGMENT OF THE GUJARAT HIGH COURT ON THE PROPOSITION OF LAW LAID D OWN THEREIN. 7. TO SUM UP, IN THE INSTANT CASE, AS IS APPA RENT FROM THE FACTS NARRATED IN THE IMPUGNED ORDERS, THE AO REOPENED TH E ASSESSMENT COMPLETED ON 5.12.2007 U/S 143(3) OF THE ACT MERELY ON THE BASIS OF FACTS ALREADY AVAILABLE BEFORE HIM AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. NOT EVEN A WHISPER IS EVIDE NT FROM THE REASONS RECORDED OR THE FACTS NARRATED IN THE IMPUG NED ORDER AS TO ITA NOS.897,1878&1879/DE L./2012 18 WHETHER OR NOT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECES SARY FOR HIS ASSESSMENT. THE REASONS DO NOT INDICATE WHY AND HOW THE ASSESSEE FAILED TO MAKE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS IN RELATION TO ROYALTY EXPENSES. WE ARE OF THE OPINION THAT ANY S UCH FAILURE AS IS ENVISAGED IN THE PROVISO TO SEC. 147 OF THE ACT, IS A MATTER OF FACT ALONE AND THERE CAN BE NO DEEMED FAILURE . IN THE SE CIRCUMSTANCES, IN ABSENCE OF ANY FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION, THE NOTICE UNDER SECTION 148 OF THE ACT HAVING BEEN ISSUED AFT ER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, THE VERY INITIATION OF PROCEEDINGS UNDER SECTION 14 7 OF THE ACT STANDS VITIATED AND AS SUCH CANNOT BE SUSTAINED, TH E INGREDIENTS OF SECTION 147 HAVING NOT BEEN FULFILLED. IN VIEW OF THE FOREGOING, ESPECIALLY IN THE LIGHT OF CONSISTENT VIEW TAKEN IN AFORESAID DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT AND OTHER COURTS, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE ARE OF THE OPINION THAT THERE IS NOTHING TO SUGGEST THAT ALL THE PRIMARY FACTS WERE NOT DISCLOSED BY THE ASSESSEE AT THE TIME OF O RIGINAL ASSESSMENT COMPLETED U/S 143(3) OF THE ACT NOR ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L THE MATERIAL FACTS HAS BEEN ASCRIBED IN THE CIRCUMSTANCES NARRATED BEF ORE US. IT CANNOT BE SAID THAT THE ASSESSEE SUPPRESSED ANY MAT ERIAL FACTS. IT IS WELL-SETTLED THAT IF A NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 14 7 OF THE ACT BEING AVAILABLE TO THE AO, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WILL BE WITHOUT JURISDICTION AND THUS, LIABLE TO BE STRU CK DOWN . IN VIEW THEREOF, WE HAVE NO HESITATION IN UPHOLDING THE F INDINGS OF THE LD. CIT(A) IN QUASHING THE REASSESSMENT ORDER. CONSEQ UENTLY, GROUND NO. 1 IN THE APPEAL IS DISMISSED.. ITA NOS.897,1878&1879/DE L./2012 19 8.. NOW ADVERTING TO GROUND NO.1 IN THE APPEAL OF REVENUE FOR ASSESSMENT YEAR 2006-07, FACTS IN BRIEF, AS PER REL EVANT ORDERS ARE THAT ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED ON AN INCOME OF ` ` 1,32,63,670/- VIDE ORDER DATED 27 TH MAY, 2008, U/S 143(3) OF THE ACT, IN PURSUANCE TO RETURN DECLARING INCOME OF ` 1,25,33,804/- FILED ON 20 TH NOVEMBER, 2006. SUBSEQUENTLY, THE AO RECORDED THE FOLLOWING REASONS IN TERMS OF P ROVISIONS OF SECTION 148 (2) OF THE ACT: NOTE FOR REASONS TO BELIEVE U/S 147 OF THE I.T. AC T IN THE CASE OF BHAYANA BUILDERS PVT. LTD. ASSESSMENT YEAR 2006- 07 PAN AAACB 4147N THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-0 7 WAS FILED ON 20.11.2006 DECLARING AN INCOME OF ` `1,25,33,804/- AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 2 7.05.2008 AT AN INCOME OF ` ` 1,32,63,670/-. ON PERUSAL OF ASSESSMENT RECORDS, IT IS DETECTED TH AT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2006-07, THE ASSESSEE COMPANY HAD DEBITED AN AMOUNT OF ` ` 2,31,96,085/- ON ACCOUNT OF SHUTTERING AND CENTERING EXPENSES WHICH INCLUDES WO ODEN SHUTTERING AND CENTERING AS WELL AS STEEL SHUTTERIN G AND CENTERING. OUT OF TOTAL EXPENSES OF ` `2,31,96,085/-, THE ASSESSEE COMPANY HAD CLAIMED EXPENSES AMOUNTING TO ` `2,15,89,571/- ON ACCOUNT OF WOODEN SHUTTERING AND CENTERING AND AN EXPENSES OF `16,06,514/- ON ACCOUNT OF STEEL SHUTTERING AND CENTERING. ONLY AN AMOUNT OF ` `16,06,514/- BEING STEEL SHUTTERING AND CENTERING W AS TAKEN AS CAPITAL EXPENDITURE AND ` `2,15,89,571/- AS REVENUE EXPENDITURE, WHEREAS, THE WHOLE AMOUNT I.E ` `2,31,96,085/- SHOULD HAVE BEEN TAKEN AS CAPITAL EXPENDITURE AND ONLY DEPRECIATION AT. THE PRESCRIBED RATE I.E. @15% ON ` ` 2,15,89,571/- TO BE ALLOWED. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF ` `2,15,89,571/- CHARGEABLE TO TAX HAS ESCAPED ASSESS MENT FOR THE ASSESSMENT YEAR 2006-07 AND, HENCE, CLEARLY ATTRACT S THE PROVISIONS OF CLAUSE (C) OF EXPLANATION 2 TO SECTIO N 147 OF THE I.T. ACT. THEREFORE, NOTICE U/S 148 OF THE ACT IS ISSUE D. 8.1 ACCORDINGLY, THE AO ISSUED A NOTICE U/S 148 OF THE ACT ON 2 ND JULY, 2010. IN RESPONSE, THE ASSESSEE FILED RETURN ON 9 TH AUGUST, 2010.FOR SIMILAR REASONS AS ITA NOS.897,1878&1879/DE L./2012 20 WERE ADDUCED IN HIS ORDER FOR THE AY 2005-06,THE A O AFTER REJECTING OBJECTIONS OF THE ASSESSEE AGAINST REOPENING OF THE ASSESSMENT , TREATED THE AMOUNT OF ` `2,15,89,571/- ON WOODEN SHUTTERING AS PLANT AND TH EREFORE, CAPITAL IN NATURE. AS A RESULT DISALLOWANCE OF ` ` 1,56,17,730/- WAS MADE AFTER ALLOWING DEPRECIATION @25%. 9. ON APPEAL, THE ASSESSEE QUESTIONED THE VALIDITY OF REOPENING OF THE ASSESSMENT. RELYING UPON THE ORDER OF HIS PREDECESS OR FOR THE AY 2005-06, THE LD. CIT(A) QUASHED THE REASSESSMENT IN THE FOLLOWIN G TERMS:- 5. IN THE SIMILAR FACTS AND CIRCUMSTANCES, MY PREDECESSOR, IN HER ORDER DATED 7.12.2011 FOR THE A SSESSMENT YEAR 2005-06 HAS HELD THE REOPENING OF ASSESSMENT AS CO NTRARY TO LAW AFTER MAKING A DETAILED DISCUSSION ON THE LEGAL POS ITION SO FAR AS SECTION 147 IS CONCERNED. I DO NOT FIND ANY REASON FOR NOT FOLLOWING THE APPEAL ORDER FOR THE ASSESSMENT YEAR 2005-06. SECTION 147 DOES NOT POSTULATE CONFERMENT OF POWER ON THE ASSES SING OFFICER TO INITIATE REASSESSMENT PROCEEDINGS ON A MERE CHANGE OF OPINION ON THE SAME SET OF FACTS. MATTERS WHICH HAVE BEEN CON SIDERED AND DECIDED CANNOT BE REOPENED CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561 (SUPREME COURT) AND LEGATO SYSTEMS (INDIA) (P ) LTD. VS. DCIT 187 TAXMAN 294(DEL). THEREFORE, THE REOPENING OF ASSESSMENT IS HELD AS CONTRARY TO LAW. THE GROUN DS OF APPEAL CHALLENGING THE REOPENING OF THE ASSESSMENT ARE ALL OWED. 9.1 AS REGARDS ON MERITS OF THE CLAIM, THE LD. CIT (A) ALLOWED THE CLAIM IN THE FOLLOWING TERMS:- 6. EVEN ON MERITS, AS REGARDS THE EXPENDITURE ON WOODEN SHUTTERING AND CENTERING, THE DEPARTMENT HAS BEEN CONSISTENTLY FOLLOWING ITS EARLIER ORDERS OF TREATI NG THE EXPENDITURE ON WOODEN SHUTTERING AND CENTERING AND SCAFFOLDING ON A CONSUMPTION BASIS AND CAPITALIZING THE EXPENDITURE OF STEEL SHUTTERING AND CENTERING AND ALLOWING DEPRECIATION THEREON. THIS IS A SETTLED ISSUE, AS THE ASSESSEE HAS ALSO ACCEPTED THE SAME. THEREFORE, FOLLOWING THE PRINCIPLES OF LAW OF CONSI STENCY IN RESPECT OF SETTLED ISSUES, WOODEN SHUTTERING AND CENTERING IS TO BE ALLOWED ON CONSUMPTION BASIS AS REVENUE EXPENDITURE. IT IS ACCORDINGLY ITA NOS.897,1878&1879/DE L./2012 21 HELD AS ALLOWABLE. THE GROUND OF APPEAL PERTAINING TO THIS ITEM IS ALLOWED. 10. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD DR WHILE CARRYI NG US THROUGH THE ASSESSMENT ORDER, SUPPORTED THE FINDINGS OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDINGS IN THE IMPUGNED O RDER. 11. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED ON 27 TH MAY, 2008 DETERMINING INCOME OF ` `1,32,63,670/- IN TERMS OF ORDER U/S 143(3) OF THE ACT IN PURSUANCE TO RETURN DECLARING INCOME OF ` ` 1,25,33,804/- FILED ON 20.11.2006. THEREAFTER, THE AO REOPENED THE ASSESS MENT ON 2 ND JULY, 2010 U/S 147 OF THE ACT ON THE GROUND THAT WOODEN SHUTTERING AND CENTERING EXPENSES WERE CAPITAL IN NATURE, EVEN WHEN DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, ISSUE HAD BEEN EXAMINED BY THE AO IN P ARA 4 OF THE ASSESSMENT ORDER AFTER RAISING QUERIES AND AMOUNT WAS ALLOWED AS REVENUE EXPENDITURE . AS POINTED OUT BY THE LEARNED CIT(A), THE AO, FOLLOWIN G HIS ORDERS OF EARLIER YEARS HAS CONSISTENTLY BEEN TREATING THE EXPENDITURE ON W OODEN CENTERING AND SCAFFOLDING AS REVENUE IN NATURE ON CONSUMPTION BA SIS AND CAPITALIZING THE EXPENDITURE OF STEEL SHUTTERING & CENTERING WHILE ALLOWING DEPRECIATION THEREON. ACCORDINGLY, THE LD. CIT(A) CONCLUDED THAT REOPENI NG OF THE ASSESSMENT ON A MERE CHANGE OF OPINION ON THE SAME SET OF FACTS IS CONTRARY TO LAW. AS ALREADY STATED IN GRUH FINANCE LTD. (SUPRA) ,HONBLE GUJRAT HIGH COURT OBSERVED IN THEIR DECISION THAT I F CONSCIOUS APPLICATION OF MIND IS MADE TO THE RELE VANT FACTS AND MATERIAL AVAILABLE OR EXISTING AT THE RELEVANT POIN T OF TIME WHILE MAKING ASSESSMENT AND AGAIN A DIFFERENT OR DIVERGENT VIEW IS SOUGHT, IT WOULD TANTAMOUNT TO 'CHANGE OF OPINION', WHEREAS, IN THE CASE OF EXISTING MATERIAL, NO CONSCIOUS ATTEMPT HAS BEEN MADE, IT WOULD TANTAMOUN T TO MISTAKE IN NOT CONSIDERING THE RELEVANT POINT OR PROPOSITION AND I T WOULD NOT BE A 'CHANGE OF OPINION'. IN THE INSTANT CASE, THE ASSESSEE MADE DISCLOSURE OF WOODEN SHUTTERING AND CENTERING EXPENSES DURING THE COURSE OF ASSESSMENT ITA NOS.897,1878&1879/DE L./2012 22 PROCEEDINGS, WHEN THE AO RAISED A SPECIFIC QUERY R ELATING TO THESE EXPENSES AND THE ISSUE HAS BEEN CONSIDERED IN DETAIL IN PAR A 4 OF THE ASSESSMENT DATED 27.5.2008.THESE FACTS HAVE NOT BEEN DISPUTED BEFORE US. IN THIS CONTEXT , WE FIND THAT HONBLE APEX COURT WHILE AFFIRMING THE DECISIO N OF HONBLE DELHI HIGH COURT IN KELVINATOR OF INDIA LTD.(SUPRA) AND GOING THROU GH THE CHANGES MADE TO SECTION 147 OF THE ACT CONCLUDED THAT THE AO HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASE D ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPIN ION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF R EOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE AS SESSING OFFICER. THESE OBSERVATIONS OF THE HONBLE APEX COURT WHEN VIEWED IN THE LIGHT OF FACTS AND CIRCUMSTANCES IN THE CASE BEFORE US, LEAD US TO AN INESCAPABLE CONCLUSION THAT THE AO REOPENED THE ASS ESSMENT IN RELATION TO WOODEN SHUTTERING AND CENTERING EXPENSE S MERELY ON THE BASIS OF CHANGE OF OPINION AND NO TANGIBLE MATERIA L WAS BROUGHT ON RECORD BEFORE INITIATING ACTION U/S 147 OF THE ACT. 11.1 IN THE PRESENT CASE THE RE-OPENING OF ASSE SSMENT IS SOUGHT TO BE EFFECTED WITHIN A PERIOD OF FOUR YEARS OF THE EXPIR Y OF THE RELEVANT ASSESSMENT YEAR. HOWEVER, IT IS NOW A WELL SETTLED POSITION OF LAW THAT A MERE CHANGE OF OPINION WOULD NOT JUSTIFY THE ASSESSING OFFICER IN SEEKING A RECOURSE TO THE POWERS UNDER SECTION 147 AND 148 AND THERE MUST BE TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO PROVE THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT. THE PRINCIPLE THAT THERE MUST BE TANGIB LE MATERIAL ON THE BASIS OF WHICH AN ASSESSMENT IS SOUGHT TO BE RE-OPENED EVEN WITHIN A PERIOD OF FOUR YEARS IS NOW ESTABLISHED IN VIEW OF THE AFORESAID J UDGMENT OF THE HONBLE SUPREME COURT IN M/S.KELVINATOR OF INDIA LIMITED(SU PRA). SAME VIEW HAS BEEN REITERATED IN D. T. & T. D. C. LTD. V. ACIT,324 ITR 234(DEL.);ASTEROIDS TRADING & INVESTMENT P. LTD. VS DCIT,(2009) 308 ITR 190 (BOM) ; ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. (2010) 325 ITR 471 (BOM); BHAVES H DEVELOPERS VS. A.O. ITA NOS.897,1878&1879/DE L./2012 23 (2010) 224 CTR 160 (BOM) AND AVENTIS PHARMA LTD. VS . ASTT. CIT (2010) 323 ITR 570 (BOM) (577). 11.2 IN VIEW OF THE FOREGOING, ESPECIALLY WHE N THE LD. DR DID NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE OF THE OPINION THAT THE VERY INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT STANDS VIT IATED AND AS SUCH CANNOT BE SUSTAINED, THE INGREDIENTS OF SECTIO N 147 HAVING NOT BEEN FULFILLED. IT IS WELL-SETTLED THAT IF A NOTIC E UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 OF THE ACT BEING AVAILABLE TO THE AO, THE NOTICE AN D THE SUBSEQUENT PROCEEDINGS WILL BE WITHOUT JURISDICTION AND THUS, LIABLE TO BE STRUCK DOWN . IN VIEW THEREOF, WE HAVE NO HESITATION IN U PHOLDING THE FINDINGS OF THE LD. CIT(A) IN QUASHING THE REASSE SSMENT ORDER. CONSEQUENTLY, GROUND NO. 1 IN THE APPEAL IS DISMIS SED. AS A COROLLARY, GROUND NO.2 IN THE APPEAL DOES NOT SURVIVE FOR OU R ADJUDICATION AND IS , THEREFORE, TREATED AS INFRUCTUOUS. 12. ADVERTING NOW TO GROUND NO.1 IN THE APPEAL OF T HE REVENUE FOR THE AY2007-08 RELATING TO DISALLOWANCE OF CLAIM OF ` ` 18,85,000/- ON ACCOUNT OF COMMISSION PAID TO M/S BRAINSTREET MARKETING (P) LT D., THE ASSESSEE FILED ORIGINAL RETURN REFLECTING INCOME OF 7,50,11,940 ON 30.10.20 07,WHICH WAS REVISED ON 19.07.2008 DECLARING INCOME OF ` `7,44,92,693/-.THE SAID RETURN WAS PROCESSED ON 28.03.2009 U/S 143(1) OF THE ACT. SUBSEQUENTLY, INCOME-TAX OFFICER WARD 3(1), NEW DELHI INFORMED THE AO IN THE INSTANT CASE THAT IN THE CASE OF M/S BRAINSTREET MARKETING (P) LTD. IN THE AY 2007-08, I T EMERGED FROM THE STATEMENT OF SHRI AMIT KUMAR AGGARWAL, DIRECTOR OF THE SAID C OMPANY AND FOUR OTHER COMMISSION AGENTS THAT THE COMMISSION RECEIVED FROM M/S BHAYANA BUILDERS (P) LTD. WAS BOGUS. ON THE BASIS OF THIS INFORMATION, THE AO REOPENED THE ASSESSMENT U/S 147 OF THE ACT WITH THE SERVICE OF A NOTICE U/S 148 OF THE ACT ISSUED ON 13.11.2009. IN RESPONSE TO THIS NOTICE, THE ASSESSEE FILED RETURN ON ITA NOS.897,1878&1879/DE L./2012 24 10 TH DECEMBER, 2009. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE AS TO WHY COMMISSION PAID TO M/S BRAINSTREET MARKETING (P) LTD. TO THE EXTENT OF ` ` 18,85,000/- BE NOT DISALLOWED. IN RESPONSE, THE AS SESSEE REPLIED THAT THE LEARNED CIT(A) VIDE HIS ORDER DATE D 15 TH OCTOBER, 2010 IN APPEAL NO.140/09-10 IN THE CASE OF M/S BRAINSTREET MARKETI NG (P) LTD. HAD CATEGORICALLY CONCLUDED THAT COMMISSION PAID TO THEM WAS GENUINE EXPENDITURE AND HAS BEEN TREATED AS BUSINESS INCOME OF THE SAID COMPANY. HO WEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUN D THAT THE AFORESAID ORDER OF THE LD. CIT(A) IN THE CASE OF M/S BRAINSTREET MARKE TING (P) LTD. HAD NOT BEEN ACCEPTED AND THERE WAS NO EVIDENCE OF SERVICE RENDE RED BY THE SAID COMPANY TO THE ASSESSEE. AS A RESULT ,AMOUNT OF ` `18,85,000/- WAS DISALLOWED. 13. ON APPEAL, THE LD CIT(A) RELYING UPON THE AFOR ESAID SAID ORDER DATED 15 TH OCTOBER, 2010 OF THE LD. CIT(A) IN APPEAL NO.140/ 09-10 IN THE CASE OF M/S BRAINSTREET MARKETING (P) LTD. DELETED THE DISA LLOWANCE, HOLDING AS UNDER:- 3.2 THE ISSUE INVOLVED AND THE SUBMISSION MADE BY THE APPELLANT HAVE BEEN CONSIDERED. I) THE AOS ONLY GROUND OF DISALLOWING COMMISSION PAYMENT BY THE APPELLANT TO M/S BRAINSTREET MARKETI NG (P) LTD. HAS BEEN THAT THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF CIT(A)-VI, NEW DELHI, IN WHICH THE CIT(A) HAS HELD THE COMMISS ION RECEIPT BY M/S BRAINSTREET MARKETING (P) LTD. FROM THE APPELLA NT AS A GENUINE TRANSACTION AND HAS DIRECTED THE SAME TO BE ACCEPTE D AS BUSINESS INCOME OF M/S BRAINSTREET MARKETING (P) LTD. AS A GAINST THE SAME BEING ASSESSED AS OTHER INCOME BY THE AO; OTHERWI SE THE AO HAS NOT BROUGHT ANY THING ON RECORD TO SHOW THAT THE TR ANSACTION WAS BOGUS. II) FOR A COMMISSION PAYMENT TO BE TREATED AS GEN UINE, IDENTITY OF THE PAYEE SHOULD BE ESTABLISHED, THERE SHOULD BE NO DOUBT AS TO THE SERVICES RENDERED, THERE SHOULD BE DIRECT NEXUS BETWEEN THE SERVICES RENDERED AND THE BUSINESS ACTI VITY OF THE APPELLANT; AND PAYMENT SHOULD BE REASONABLE KEEPING IN VIEW THE BUSINESS LINE OF THE APPELLANT AND FURTHER THERE SH OULD BE NO DOUBT AS TO THE PAYMENT OF MONEY. THE AO HAS NOT BROUGHT ANY THING ON RECORD TO SHOW THAT ANY OF THE AFORESAID CONDITIONS IS NOT FULFILLED. ITA NOS.897,1878&1879/DE L./2012 25 III) THE UNDERSIGNED HAS SEEN THE ASSESSMENT RECOR D. ORDERS FROM AS MANY AS 12 PARTIES WERE ARRANGED BY M/S BRAINSTREET MARKETING (P) LTD.. FOR THE APPELLANT D ETAILS AS TO THESE PARTIES IS AVAILABLE AT (PAGE 37 OF PB). THIS LIST PERTAINS TO CALCULATIONS OF AGENCY COMMISSION TO BE PAID TO BR AIN STREET MARKETING (P) LTD. BELOW THIS LIST, THERE IS A NOT ING KIND ATTEN:- MR. NITIN BHAYANA, DIRECTOR. WE HAVE RECEIVED THE ABOV E ORDERS THROUGH BRAIN STREET PLEASE APPROVE THE PAYMENT OF THEIR COMMISSION `75 PER SQ. MTR. THIS IS SIGNED AS ON 2.06.2006. THERE ARE INVOICES (PG 35 & 36 OF PB) ISSUED BY M/ S BRAINSTREET MARKETING (P) LTD. SHOWING COMMISSION C HARGES OF ` ` 9,50,00,000/- AND ` `9,35,00,000/-. SERVICE TAX @12% AND EDUCATION CESS @2% HAS BEEN CHARGED ON EACH OF THE AFORESAID AMOUNTS. THEN THERE IS CONFIRMATION (PG 34 OF PB) OF ACCOUNTS SHOWING PAYMENTS TO M/S BRAINSTREET MARKETING (P) L TD. AFTER DEDUCTING TDS OF ` `59,818 AND ` `58,874/- AT THE TIME OF CREDITING AMOUNT OF ` `10,49,444/- AND ` ` 10,66,280/-. TDS HAS BEEN DULY DEPOSITED IN GOVT. A/C. CERTIFICATE IN FORM NO.16A IS AVAILABLE AT PAGE 112 OF PB. FROM THE AFORESAID IT MAY BE SEEN THAT TDS WAS DEDUCTED FROM THE COMMISSION PAYMENT TO M/S BRAINST REET MARKETING (P) LTD. AND M/S BRAINSTREET MARKETING (P ) LTD. HAVE ALSO CHARGED SERVICE TAX ETC. ON THE PAYMENTS RECEIVED B Y IT FOR THE SERVICES GIVEN TO THE APPELLANT. 14. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD DR WHILE CARRYI NG US THROUGH THE ASSESSMENT ORDER, SUPPORTED THE FINDINGS OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDINGS IN THE IMPUGNED O RDER. 15. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS OF THE CASE, TH E AO DISALLOWED THE CLAIM FOR DEDUCTION OF PAYMENT OF COMMISSION TO M/S BRAINSTRE ET MARKETING (P) LTD ON THE BASIS OF FINDINGS OF THE AO IN THE CASE OF THE SAID COMPANY. ON APPEAL , THE LD. CIT(A) IN THAT CASE ALLOWED THE CLAIM , THE TRANSAC TION HAVING BEEN FOUND TO BE GENUINE . THE LD. CIT(A) IN THE IMPUGNED ORDER FOUN D ON PERUSAL OF RECORDS THAT M/S BRAINSTREET MARKETING (P) LTD. ARRANGED ORDERS FOR THE ASSESSEE FROM AS MANY AS 12 PARTIES AND TAX HAS ALREADY BEEN DULY DE DUCTED AT SOURCE FROM ITA NOS.897,1878&1879/DE L./2012 26 PAYMENTS TO THEM AND CREDITED TO THE ACCOUNT OF THE GOVERNMENT. IN NUTSHELL, THE LD. CIT(A) ALLOWED THE CLAIM ON THE BASIS OF SE RVICES RENDERED BY THE SAID COMPANY TO THE ASSESSEE. IN THE LIGHT OF THESE FIND INGS, ESPECIALLY WHEN THE LD. DR DID NOT PLACE BEFORE US ANY MATERIAL ,CONTROVERT ING THE AFORESAID FINDINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERE NT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO.1 IN TH E APPEAL F THE REVENUE FOR THE AY 2007-08 IS DISMISSED. 16.. GROUND NO.2 IN THE APPEAL OF THE REVENUE FOR THE AY 2007-08 RELATES TO DISALLOWANCE OF EXPENDITURE OF ` ` 1,38,76,932/- ON WOODEN SHUTTERING AND CENTERING. RELYING UPON HIS OWN ORDERS FOR PREC EDING AYS 2005-06 & 2006- 07, THE AO DISALLOWED THE CLAIM OF WOODEN SHUTTERIN G AND CENTERING, TREATING THE SAME CAPITAL IN NATURE. ACCORDINGLY, THE AO AFTER A LLOWING DEPRECIATION, RESTRICTED THE DISALLOWANCE TO ` ` 67,19,302/-. 17. ON APPEAL, THE LD. CIT(A), FOLLOWING THE DECIS ION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RANDOM CONSTRUCTORS PVT. LTD. (2010) 186 TAXMAN 303 (P&H), DELETED THE DISALLOWAN CE IN THE FOLLOWING TERMS:- 4.2 THE ISSUE INVOLVED AND SUBMISSIONS MADE BY TH E APPELLANT HAVE BEEN CONSIDERED. DEPARTMENT HAS BEE N CONSISTENTLY FOLLOWING ITS EARLIER ORDERS OF TREAT ING THE EXPENDITURE ON WOODEN SHUTTERING AND CENTERING AND SCAFFOLDING ON A CONSUMPTION BASIS AND CAPITALIZING THE EXPENDITURE OF STEEL SHUTTERING AND CENTERING AND ALLOWING DEPRECIATION THEREON. THIS IS A SETTLED ISSUE, AS THE ASSESSEE HAS ALSO ACCEPTED THE SAME. THEREFORE, FOLLOWING THE PRINCIPLES OF LAW OF CONSI STENCY IN RESPECT OF SETTLED ISSUES, WOODEN SHUTTERING AND CENTERING IS TO BE ALLOWED ON CONSUMPTION BASIS AS REVENUE EXPENDITURE. THE H ONBLE HIGH COURT OF PUNJAB & HARYANA IN ITS JUDGMENTS NOTED AB OVE HAS ALSO HELD THAT WOODEN SHUTTERING MATERIAL IS AN ALLOWABL E REVENUE EXPENSES EVEN IF THE SAME COULD BE USED IN A SUBSEQ UENT FINANCIAL YEAR. IT IS ACCORDINGLY HELD AS ALLOWABLE. THE GR OUND OF APPEAL PERTAINING TO THIS ITEM IS ALLOWED. ITA NOS.897,1878&1879/DE L./2012 27 18. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD DR WHILE CARRYI NG US THROUGH THE ASSESSMENT ORDER, SUPPORTED THE FINDINGS OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDINGS IN THE IMPUGNED O RDER. 19. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, IN THE PRECEDING YEARS STARTING FROM AY 1998-89 UNTIL ASSESSMENT YEAR 2003-04, THE CLAIM OF THE ASSESSEE HAS BEEN AC CEPTED TREATING THE AMOUNT INCURRED ON WOODEN SHUTTERING AND CENTERING, REVENU E IN NATURE. FOLLOWING THE PRINCIPLES OF CONSISTENCY , THE LD. CIT(A) ALLOWED THE CLAIM FOR DEDUCTION OF EXPENDITURE ON WOODEN SHUTTERING AND CENTERING ON CONSUMPTION BASIS AS REVENUE EXPENDITURE. SIMILAR VIEW WAS TAKEN BY HON BLE PUNJAB & HARYANA HIGH COURT IN M/S RANDOM CONSTRUCTORS PVT. LTD.(SUPRA),R ELIED UPON BY THE LD. CIT(A).SINCE THE LD. DR DID NOT PLACE BEFORE US ANY MATERIAL ,CONTROVERTING THE AFORESAID FINDINGS OF THE LD. CIT(A) NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION, SO AS TO ENABLE US TO TAKE A DIFFERENT VI EW IN THE MATTER , WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO.2 IN TH E APPEAL OF THE REVENUE FOR THE AY 2007-08 IS DISMISSED. 20. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFOR E US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL OF THE REVENUE FOR THE AY 2005-06 & GROUND NO.3 IN THEIR APPEALS FOR THE AY 2006-07 & 2007-08, ACCORDI NGLY, THESE GROUNDS ARE DISMISSED. 21. NO OTHER PLEA OR ARGUMENT WAS MADE BEFOR E US. ITA NOS.897,1878&1879/DE L./2012 28 22. IN RESULT, THESE THREE APPEALS ARE DISMISSED. SD/- SD/- (HARI OM MARATHA) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1 ASSESSEE 2. A.C.I.T.,CIRCLE-2(1), ROOM NO. 398D, CR BUILDIN G,IP ESTATE,NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-V, NEW DELHI 5. DR, ITAT,A BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT