MAHARASHTRA STATE ELECTRICITY TRANSMISSION COMPANY LTD., MUMBAI V. THE INCOME TAX OFFICER, WARD-14(2)(3), MUMBAI

ITA 990/MUM/2022

AI Insights

The case involves the Maharashtra State Electricity Transmission Company Ltd. appealing against the reassessment of income for the assessment year 2011-12. The reassessment was initiated by the Income Tax Officer based on the Comptroller and Auditor General (CAG) report, which highlighted non-refundable supervision charges collected by the company. The primary legal contention was whether the reassessment was valid under section 147 of the Income-tax Act, 1961, given that it was based on the same set of facts and circumstances as the original assessment. The Tribunal examined whether there was a failure to disclose material facts by the assessee and whether the reassessment constituted a change of opinion by the Assessing Officer.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 123463 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-11-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2022
• Other Referred Cases: Honda Siel Power Products Ltd. Vs DCIT & Anr., A.L.A. Firm Vs CIT, Kay Engineering Co. (P) Ltd. Vs CIT, EMA India Ltd. Vs ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Capital asset; Depreciation; Difference of opinion; Competent authority; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure; Set aside
• Section: 147; 148; 263; 139; 143(3); 142(1); 64; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 990/MUM/2022 Assessment Year: 2011-12 Maharashtra State Electricity Transmission Company Ltd., Plot No. C-19 E Block, Prakashganga, Bandra-Kurla Complex, Bandra (East), Mumbai-400051. Vs. Income-tax Officer, Ward 14(2)(3), Aayakar Bhavan, Maharshi Karve Road, Mumbai-400020. PAN No. AAECM 2936 N Appellant Respondent Assessee by : Mr. Ketan Ved, AR Revenue by : Mr. Harishankar Lal, DR Date of Hearing : 15/11/2022 Date of pronouncement : 29/12/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee, is directed against order dated 11/03/2022 passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre (NFAC), New Delhi [in short the Ld. CIT(A)] for assessment year 2011-12, raising following grounds: 1:0 Re.: Validity of the re 1:1 The Commissioner of Income confirming the action of the Assessing Officer in re the Appellant's assessment u/s. 148 of the Income 1961. 1: 2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the impugned re jurisdiction and was also otherwise bad in law and the Commissioner of Income such. 1: 3 The Appellant submits that the proceedings u/s. 148 of the Income-tax Act, 1961 were not in accordance with law and consequently ought to be struck down. 2. Briefly stated facts of the case are that the assessee company is a state public undertaking, engage transmission in the state of Maharashtra. For the year under consideration, the assessee file declaring total loss of by the assessee was selected for scrutiny assessment, which was completed on 11/02/2014 assessing total income at ₹239,64,79,710/-. Subsequently, the Assessing Officer recorded Maharashtra State Electricity Transmission 1:0 Re.: Validity of the re-assessment proceedings: 1:1 The Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer in re the Appellant's assessment u/s. 148 of the Income Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the impugned re-opening us. 148 was in excess of jurisdiction and was also otherwise bad in law and the Commissioner of Income-tax (Appeals) ought to have held as 1: 3 The Appellant submits that the proceedings u/s. 148 of tax Act, 1961 were not in accordance with law and consequently ought to be struck down. stated facts of the case are that the assessee company state public undertaking, engaged in the business of electricity transmission in the state of Maharashtra. For the year under consideration, the assessee filed return of income on 29/09/2011, declaring total loss of ₹211,54, 80,928/-. The return of income by the assessee was selected for scrutiny assessment, which was completed on 11/02/2014 assessing total income at . Subsequently, the Assessing Officer recorded Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 2 assessment proceedings: tax (Appeals) has erred in confirming the action of the Assessing Officer in re-opening the Appellant's assessment u/s. 148 of the Income-tax Act, Appellant submits that considering the facts and circumstances of its case and the law prevailing on the opening us. 148 was in excess of jurisdiction and was also otherwise bad in law and the ght to have held as 1: 3 The Appellant submits that the proceedings u/s. 148 of tax Act, 1961 were not in accordance with law stated facts of the case are that the assessee company in the business of electricity transmission in the state of Maharashtra. For the year under return of income on 29/09/2011, . The return of income filed by the assessee was selected for scrutiny assessment, which was completed on 11/02/2014 assessing total income at . Subsequently, the Assessing Officer recorded reasons that income escaped assessment and issued notice under section 148 of the Income 30/03/2018. In response on 26/04/2018, reiterating the income which was filed in the original return of income. The assessee was provided copy of reasons recorded. The disposed off the objections raised by the assessee against reopening of the assessment. In the reassessment proceeding, the Assessing Officer did not accept contention of the assessee that nonrefundable supervision charges of executed in lieu of services provided for private parties declared as income no addition should be made in the year under consideration. According to the Ld. mercantile system of accounting therefore once the income accrued in the year under consideration, the same had to be offered in the relevant assessment year in which it had accrued. Though the assessee had not objected to the accrual of the income but stated Maharashtra State Electricity Transmission reasons that income escaped assessment and issued notice under 8 of the Income-tax Act, 1961 (in short In response, the assessee filed the return of income on 26/04/2018, reiterating the income which was filed in the return of income. The assessee was provided copy of d. The Ld. Assessing Officer on 12/11/2018 disposed off the objections raised by the assessee against reopening of the assessment. In the reassessment proceeding, the Assessing Officer did not accept contention of the assessee that nonrefundable n charges of ₹28.17 Crores against various works executed in lieu of services provided for private parties declared as income in subsequent assessment year and therefore no addition should be made in the year under consideration. Ld. Assessing Officer, the assessee was following mercantile system of accounting therefore once the income accrued in the year under consideration, the same had to be offered in the relevant assessment year in which it had accrued. Though the t objected to the accrual of the income but stated Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 3 reasons that income escaped assessment and issued notice under in short ‘the Act’) on the assessee filed the return of income on 26/04/2018, reiterating the income which was filed in the return of income. The assessee was provided copy of Assessing Officer on 12/11/2018 disposed off the objections raised by the assessee against reopening of the assessment. In the reassessment proceeding, the Assessing Officer did not accept contention of the assessee that nonrefundable 28.17 Crores against various works executed in lieu of services provided for private parties, were subsequent assessment year and therefore no addition should be made in the year under consideration. Assessing Officer, the assessee was following mercantile system of accounting therefore once the income accrued in the year under consideration, the same had to be offered in the relevant assessment year in which it had accrued. Though the t objected to the accrual of the income but stated that same had been offered in the subsequent year. The Assessing Officer accordingly made addition for the said income of ₹28,17,00,000/- in assessment order dated 22/12/2018. On further appeal, the Ld. assessee challenging validity of the reassessment CIT(A) upheld that addition should have been made under consideration verifying whether the s ₹28,17,00,000/- has been declared by the assessee in assessment year 2012-13, and if offered so, then pass assessment year 2012 supervisory charges of 2.1 The relevant finding rejecting the contention of the assessee challenging validity of the reassessment is reproduced as under: 4.3 In Grounds of Appeal No. 1, the assessee has challenged the validity of reassessment which the appellant had challenged the validity of reassessment proceedings is summarized as under: Maharashtra State Electricity Transmission that same had been offered in the subsequent year. The Assessing Officer accordingly made addition for the said income of in assessment order dated 22/12/2018. On further appeal, the Ld. CIT(A) rejected the contention of the assessee challenging validity of the reassessment. On merit CIT(A) upheld that addition should have been made under consideration, however directed the Assessing Officer for verifying whether the same income from supervisory charges of has been declared by the assessee in assessment , and if offered so, then pass necessary or assessment year 2012-13, for avoiding double taxation of supervisory charges of ₹28,17,00,000 /-. The relevant finding rejecting the contention of the assessee challenging validity of the reassessment is reproduced as under: 4.3 In Grounds of Appeal No. 1, the assessee has challenged the validity of reassessment proceedings. The main issue which the appellant had challenged the validity of reassessment proceedings is summarized as under: Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 4 that same had been offered in the subsequent year. The Assessing Officer accordingly made addition for the said income of in assessment order dated 22/12/2018. On CIT(A) rejected the contention of the . On merit, the Ld. CIT(A) upheld that addition should have been made in the year , however directed the Assessing Officer for ame income from supervisory charges of has been declared by the assessee in assessment necessary order for , for avoiding double taxation of The relevant finding rejecting the contention of the assessee challenging validity of the reassessment is reproduced as under: 4.3 In Grounds of Appeal No. 1, the assessee has challenged proceedings. The main issues on which the appellant had challenged the validity of reassessment proceedings is summarized as under:  There has been no failure to disclose any material facts by the assessee as the re in the case is after the expiry of four years end of Assessment Year 2011  The addition made by the AO has already been accounted for in accordance with assessee's accounting principles and was offered to tax by the Appellant while computing its total income in the subsequent year i.e. A Therefore, there is no income chargeable to tax which has escaped assessment.  The addition was made on basis of observations/comments made by the CAG on the accounts of the Appellant. However, the said comments were already part of assessee and were filed along with return of income, financial statements accompanying the return and notes to the accounts.  Therefore, same was already in the knowledge of the assessing officer. Hence re change In respect of the above assessment order passed by the AO, Grounds of appeal filed by the appellant, statement of facts filed by the appellant, submission made by the appellant and legal case laws are carefully perused. Since, all the issues on which validity of reassessment proceedings challenged are interlinked, the same is dealt with simultaneously for better clarity. Maharashtra State Electricity Transmission There has been no failure to disclose any material facts by the assessee as the re-opening of assessment in the case is after the expiry of four years end of Assessment Year 2011-2012. The addition made by the AO has already been accounted for in accordance with assessee's accounting principles and was offered to tax by the Appellant while computing its total income in the subsequent year i.e. Assessment Year Therefore, there is no income chargeable to tax which has escaped assessment. The addition was made on basis of observations/comments made by the CAG on the accounts of the Appellant. However, the said comments were already part of accounts of the assessee and were filed along with return of income, financial statements accompanying the return and notes to the accounts. Therefore, same was already in the knowledge of the assessing officer. Hence re-opening is on the basis of a change of opinion. In respect of the above-mentioned grounds of appeal, the assessment order passed by the AO, Grounds of appeal filed by the appellant, statement of facts filed by the appellant, submission made by the appellant and legal case laws are perused. Since, all the issues on which validity of reassessment proceedings challenged are interlinked, the same is dealt with simultaneously for better clarity. Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 5 There has been no failure to disclose any material opening of assessment in the case is after the expiry of four years from the The addition made by the AO has already been accounted for in accordance with assessee's accounting principles and was offered to tax by the Appellant while computing its total income in the ssessment Year 2012-13. Therefore, there is no income chargeable to tax which The addition was made on basis of observations/comments made by the CAG on the accounts of the Appellant. However, the said accounts of the assessee and were filed along with return of income, financial statements accompanying the return and Therefore, same was already in the knowledge of the opening is on the basis of a mentioned grounds of appeal, the assessment order passed by the AO, Grounds of appeal filed by the appellant, statement of facts filed by the appellant, submission made by the appellant and legal case laws are perused. Since, all the issues on which validity of reassessment proceedings challenged are interlinked, the same is dealt with simultaneously for better clarity. In the present case, the Assessing Officer had noticed from the CAG Report (point assessee had not accounted non charges of Rs. 28.17 crores on receipt basis (Nagpur Circle office Rs. 1.50 cr. + Nagpur Substation division Rs. 26.67 Cr.) collected against various works in lieu of services for execution of private partiesin F.Y. 2010 A.Y. 2011-12). Therefore, the same was required to be accounted in the A.Y. 2011 the reasons for reopening of the case and even after taking prior approval of the Pr. Commissioner of Income Tax ie. competent authority. the AO had issued notice u/s 148 of the IT Act. In its reasons recorded, the Assessing Officer had duly mentioned that the appellant assessee had filed the C&AG Annual Audit report, however noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO with due diligence, accordingly attracting provisions of Explanation I of section 147 of the Act.The Explanation effective & very much applicable for the year under consideration says that Production before the Assessing Officer of account books or other evidence from which material evidence could with due discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. "It is pertinent to mention that the appellant Maharashtra State Electricity Transmission In the present case, the Assessing Officer had noticed from the CAG Report (point 20) of accounts of assessee that the assessee had not accounted non-refundable supervision charges of Rs. 28.17 crores on receipt basis (Nagpur Circle 1.50 cr. + Nagpur Substation division Rs. 26.67 Cr.) collected against various works in lieu of services for execution of private partiesin F.Y. 2010-11 relevant for 12). Therefore, the same was required to be accounted in the A.Y. 2011-12. Accordingly, after recording the reasons for reopening of the case and even after taking val of the Pr. Commissioner of Income Tax ie. competent authority. the AO had issued notice u/s 148 of the In its reasons recorded, the Assessing Officer had duly mentioned that the appellant assessee had filed the C&AG Annual Audit report, however, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO with due diligence, accordingly attracting provisions of Explanation I of section 147 of the Act.The Explanation-1 to Section 147 of the IT Act which was effective & very much applicable for the year under consideration says that Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. "It is pertinent to mention that the appellant Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 6 In the present case, the Assessing Officer had noticed from ounts of assessee that the refundable supervision charges of Rs. 28.17 crores on receipt basis (Nagpur Circle 1.50 cr. + Nagpur Substation division Rs. 26.67 Cr.) collected against various works in lieu of services provided 11 relevant for 12). Therefore, the same was required to be 12. Accordingly, after recording the reasons for reopening of the case and even after taking val of the Pr. Commissioner of Income Tax ie. competent authority. the AO had issued notice u/s 148 of the In its reasons recorded, the Assessing Officer had duly mentioned that the appellant assessee had filed the C&AG , the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO with due diligence, accordingly attracting provisions of Explanation I of section 147 of the 1 to Section 147 of the IT Act which was effective & very much applicable for the year under consideration says that Production before the Assessing Officer of account books or other evidence from which diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. "It is pertinent to mention that the appellant assessee has not challenged the applicability of provisions of Explanation- appellate proceedings. Hence, considering all such facts it is concluded that there was failure on part of appellant assessee to disclose fully and truly all material facts necessary for its assessment. He of the appellant on this account is rejected The Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Vs DCIT &Anr. (Del) 340 ITR 53 upheld in 340 IT 64 (SC had upheld the reopening of assessment as valid by clearly holding that term 'failure' on the part of the assessee is not restricted only to the return or tax audit report but also covers the stage of Omission to disclose material facts during the course of assessment proceedings confers Assessing Officer to re The Assessing Officer has clearly mentioned in the reasons recorded itself that the issues under consideration were never examined by the Assessing Officer during the course of regular assess the assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c, Balance Sheet and books of account, it would require due diligence by the A to extract this information. It is pertinent to mention here that, during the appellate proceedings, the appellant assessee has not filed Maharashtra State Electricity Transmission assessee has not challenged the applicability of provisions of -1 to section 147 of the IT Act during the appellate proceedings. Hence, considering all such facts it is concluded that there was failure on part of appellant assessee to disclose fully and truly all material facts necessary for its assessment. Hence, the groundsof appeal of the appellant on this account is rejected. The Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Vs DCIT &Anr. (Del) 340 ITR 53 upheld in 340 IT 64 (SC had upheld the reopening of assessment as valid y holding that term 'failure' on the part of the assessee is not restricted only to the return or tax audit report but also covers the stage of assessment proceedings. Omission to disclose material facts during the course of assessment proceedings confers jurisdiction on the Assessing Officer to re-open the assessment. The Assessing Officer has clearly mentioned in the reasons recorded itself that the issues under consideration were never examined by the Assessing Officer during the course of regular assessment. Moreover, the material facts relevant for assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c, Balance Sheet and books of account, in such a manner that it would require due diligence by the A to extract this information. It is pertinent to mention here that, during the appellate proceedings, the appellant assessee has not filed Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 7 assessee has not challenged the applicability of provisions of 1 to section 147 of the IT Act during the appellate proceedings. Hence, considering all such facts it is concluded that there was failure on part of appellant assessee to disclose fully and truly all material facts nce, the groundsof appeal The Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Vs DCIT &Anr. (Del) 340 ITR 53 upheld in 340 IT 64 (SC had upheld the reopening of assessment as valid y holding that term 'failure' on the part of the assessee is not restricted only to the return or tax audit assessment proceedings. Omission to disclose material facts during the course of jurisdiction on the The Assessing Officer has clearly mentioned in the reasons recorded itself that the issues under consideration were never examined by the Assessing Officer during the course of Moreover, the material facts relevant for assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c, in such a manner that it would require due diligence by the A to extract this information. It is pertinent to mention here that, during the appellate proceedings, the appellant assessee has not filed any details or any documentary evidences which shows th the Assessing Officer hadalready examined the issue under questionin earlier assessment / reassessment proceedings. Since, the issue under dispute was never examined by the Assessing Officer earlier, question of change of opinion does not arise. Hence, this account is rejected. The Hon'ble Madras High Court in case of A.L.A. Firm Vs CIT(Mad) 102 IT 622. Kay Engineering Co. (P) Ltd. Vs CIT(SC) Madras High C Vs DCIT&Ors. (Mad) 241 IT 856and Hon'ble Allahabad High Court in case of EMA clearly held that "When there is no discussion on the issue in the assessment order and no Assessing Officer or filed by the assessee on the issue, no finding either positive or negative was arrived at during the course of the original assessment proceedings, there is no question of change of opinion." The Hon'ble Ltd. Vs DCIT( ITAT, Kol) 98 ITD 78 had held the reopening of assessment is valid stating that change of opinion comes to rescue of assessee only when Assessing Officer has taken one of permissible views at the A wrong application of law cannot be held as permissible view and that can always be changed for appreciating law The Hon'ble Karnataka High Court in the case of CIT&Anr Vs Maharashtra State Electricity Transmission any details or any documentary evidences which shows th the Assessing Officer hadalready examined the issue under questionin earlier assessment / reassessment proceedings. Since, the issue under dispute was never examined by the Assessing Officer earlier, question of change of opinion does not arise. Hence, the grounds of appeal of the appellant on this account is rejected. The Hon'ble Madras High Court in case of A.L.A. Firm Vs CIT(Mad) 102 IT 622. Hon'ble Supreme Court in case of Ess Kay Engineering Co. (P) Ltd. Vs CIT(SC) 247 ITR 818. Hon'ble Madras High Court in case ofRevathy C.P. Equipments Ltd. Vs DCIT&Ors. (Mad) 241 IT 856and Hon'ble Allahabad High Court in case of EMA India Ltd. Vs ACIT(All) 30 DTR 82 have clearly held that "When there is no discussion on the issue in the assessment order and no details were called for by the Assessing Officer or filed by the assessee on the issue, no finding either positive or negative was arrived at during the course of the original assessment proceedings, there is no question of change of opinion." The Hon'ble ITAT, Kolkata in case of SomDutt Builders (P) Ltd. Vs DCIT( ITAT, Kol) 98 ITD 78 had held the reopening of assessment is valid stating that change of opinion comes to rescue of assessee only when Assessing Officer has taken one of permissible views at the time of original proceedings. A wrong application of law cannot be held as permissible view and that can always be changed for appreciating law The Hon'ble Karnataka High Court in the case of CIT&Anr Vs Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 8 any details or any documentary evidences which shows that the Assessing Officer hadalready examined the issue under questionin earlier assessment / reassessment proceedings. Since, the issue under dispute was never examined by the Assessing Officer earlier, question of change of opinion does the grounds of appeal of the appellant on The Hon'ble Madras High Court in case of A.L.A. Firm Vs Hon'ble Supreme Court in case of Ess 247 ITR 818. Hon'ble ourt in case ofRevathy C.P. Equipments Ltd. Vs DCIT&Ors. (Mad) 241 IT 856and Hon'ble Allahabad High India Ltd. Vs ACIT(All) 30 DTR 82 have clearly held that "When there is no discussion on the issue in details were called for by the Assessing Officer or filed by the assessee on the issue, no finding either positive or negative was arrived at during the course of the original assessment proceedings, there is no ITAT, Kolkata in case of SomDutt Builders (P) Ltd. Vs DCIT( ITAT, Kol) 98 ITD 78 had held the reopening of assessment is valid stating that change of opinion comes to rescue of assessee only when Assessing Officer has taken time of original proceedings. A wrong application of law cannot be held as permissible view and that can always be changed for appreciating law The Hon'ble Karnataka High Court in the case of CIT&Anr Vs Rinku Chakraborthy Supreme Court in the case of Kalyanji Mavis Co. 102 IT 287 had held that when an income liable to tax has escaped assessment in the original assessment proceedings due to oversight and inadvertence or a mistake committed by the ITO, he has jurisdi Reassessment is permissible even if the information is obtained after. proper investigation from the materials on record or from any enquiry or research into Information need not be from external source. The appellant assessee had submitted that the supervision charges of Rs.28.17 crore was offered to tax in the AY 2012 13. However, the appellant had not submitted any documentary evidences as to why the said amount of Rs. 28.17 crore was not offered to tax duri year 2011-12. When the said amount was accrued in the financial 2010 to tax in the same year ie in the AY 2011 is following mercantile system of accounting. It is clear from the CAG report and the submissions of the appellant that the said amount was accrued in the financial year 2010 appellant, assessee cannot follow hybrid system of accounting ie. certain receipts cannot be recorded on receipt basis if the assessee Therefore, the income has escaped assessment within the meaning of reopening of assessment for the year under consideration. Hence, the grounds of appeal of the appellant that there is no income escaped from the asse Maharashtra State Electricity Transmission Rinku Chakraborthy (Kar) 56 DTR 227and the Hon ble preme Court in the case of Kalyanji Mavis Co. 102 IT 287 had held that when an income liable to tax has escaped assessment in the original assessment proceedings due to oversight and inadvertence or a mistake committed by the ITO, he has jurisdiction to re-open the assessment. Reassessment is permissible even if the information is obtained after. proper investigation from the materials on record or from any enquiry or research into facts or law. Information need not be from external source. ppellant assessee had submitted that the supervision charges of Rs.28.17 crore was offered to tax in the AY 2012 13. However, the appellant had not submitted any documentary evidences as to why the said amount of Rs. 28.17 crore was not offered to tax during the assessment 12. When the said amount was accrued in the financial 2010-11 relevant to AY 2011-12, it must be offered to tax in the same year ie in the AY 2011-12 as the assessee is following mercantile system of accounting. It is clear from the CAG report and the submissions of the appellant that the said amount was accrued in the financial year 2010 appellant, assessee cannot follow hybrid system of accounting ie. certain receipts cannot be recorded on receipt basis if the assessee follows mercantile system of accounting Therefore, the income has escaped assessment within the meaning of reopening of assessment for the year under consideration. Hence, the grounds of appeal of the appellant that there is no income escaped from the assessment for the Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 9 (Kar) 56 DTR 227and the Hon ble preme Court in the case of Kalyanji Mavis Co. Vs CIT(SC) 102 IT 287 had held that when an income liable to tax has escaped assessment in the original assessment proceedings due to oversight and inadvertence or a mistake committed by open the assessment. Reassessment is permissible even if the information is obtained after. proper investigation from the materials on facts or law. ppellant assessee had submitted that the supervision charges of Rs.28.17 crore was offered to tax in the AY 2012- 13. However, the appellant had not submitted any documentary evidences as to why the said amount of Rs. ng the assessment 12. When the said amount was accrued in the 12, it must be offered 12 as the assessee is following mercantile system of accounting. It is clear from the CAG report and the submissions of the appellant that the said amount was accrued in the financial year 2010-11. The appellant, assessee cannot follow hybrid system of accounting ie. certain receipts cannot be recorded on receipt follows mercantile system of accounting Therefore, the income has escaped assessment within the meaning of reopening of assessment for the year under consideration. Hence, the grounds of appeal of the appellant ssment for the year under consideration is not acceptable and accordingly rejected. In view of the above detailed discussion, it is concluded that There was failure on part of appellant assessee to disclose fully and truly all material facts necessary for assessment. In the present facts & circumstances of the case, the question of change of opinion does not arise. The income has escaped assessment within the meaning of reopening of assessment for the year under consideration. Hence, appeal filed by th in Grounds of Appeal No. 1 are hereby dismissed. 3. Before us, the assessee has only challenged validity of the reassessment. 4. Before us the reasons recorded by the Assessing Officer are merely change of opinion on same set of facts and circumstances submitted that assessment completed under section 143 (3) of the Act has been reopened beyond the peri of the relevant assessment year Maharashtra State Electricity Transmission year under consideration is not acceptable and accordingly In view of the above detailed discussion, it is concluded that There was failure on part of appellant assessee to disclose fully and truly all material facts necessary for assessment. In the present facts & circumstances of the case, the question of change of opinion does not arise. The income has escaped assessment within the meaning of reopening of assessment for the year under consideration. Hence, appeal filed by the Appellant on all the issues raised of Appeal No. 1 are hereby dismissed.” us, the assessee has only challenged validity of the Before us the Ld. counsel of the assessee submitted that reasons recorded by the Assessing Officer are merely change of opinion on same set of facts and circumstances submitted that assessment completed under section 143 (3) of the has been reopened beyond the period of four years from the end of the relevant assessment year without there being any Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 10 year under consideration is not acceptable and accordingly In view of the above detailed discussion, it is concluded that: There was failure on part of appellant assessee to disclose fully and truly all material facts necessary for its In the present facts & circumstances of the case, the question The income has escaped assessment within the meaning of reopening of assessment for the year under consideration. e Appellant on all the issues raised ” us, the assessee has only challenged validity of the of the assessee submitted that reasons recorded by the Assessing Officer are merely change of opinion on same set of facts and circumstances. He further submitted that assessment completed under section 143 (3) of the od of four years from the end without there being any failure on the part of the assessee in disclosing fully and truly all material facts and therefore action of the Ld. CIT(A) in upholding the reassessment proceeding is no 5. The Ld. Department Representative on the order of the Ld. CIT(A) on the issue in dispute. 6. We have heard rival submission of the parties on the issue in dispute and perused the relevant mat Ld. Counsel of the assessee has challenged the validity of the reassessment on two grounds. Firstly, the assessment completed under section 143(3) of the years from the end of the relevant year unless there is a the part of the assessee in disclosing material facts fully and truly. He submitted that there was no failure on the part of the assessee in disclosing the facts material to the observation of truly and fully Secondly, purely on mere ‘change of opinion decision of the Hon’ble Bombay High Court in the case of versus ACIT(LTU), Mumbai reported in (2014) 46 taxmann.com Maharashtra State Electricity Transmission the part of the assessee in disclosing fully and truly all material facts and therefore action of the Ld. CIT(A) in upholding the reassessment proceeding is not justified. Department Representative on the other hand relied on the order of the Ld. CIT(A) on the issue in dispute. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Befor of the assessee has challenged the validity of the reassessment on two grounds. Firstly, the assessment completed under section 143(3) of the Act cannot be reopened beyond four years from the end of the relevant year unless there is a the part of the assessee in disclosing material facts fully and truly. He submitted that there was no failure on the part of the assessee in disclosing the facts material to the observation of truly and fully Secondly, he submitted that reassessment is based change of opinion’. In support, he relied on the decision of the Hon’ble Bombay High Court in the case of versus ACIT(LTU), Mumbai reported in (2014) 46 taxmann.com Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 11 the part of the assessee in disclosing fully and truly all material facts and therefore action of the Ld. CIT(A) in upholding the on the other hand relied on the order of the Ld. CIT(A) on the issue in dispute. We have heard rival submission of the parties on the issue in erial on record. Before us, the of the assessee has challenged the validity of the reassessment on two grounds. Firstly, the assessment completed cannot be reopened beyond four years from the end of the relevant year unless there is a failure on the part of the assessee in disclosing material facts fully and truly. He submitted that there was no failure on the part of the assessee in disclosing the facts material to the observation of CAG report reassessment is based he relied on the decision of the Hon’ble Bombay High Court in the case of Lupin Ltd versus ACIT(LTU), Mumbai reported in (2014) 46 taxmann.com 396 (Bombay), wherein the Hon’ble disclosure of material fact truly and fully has held as under: “5. Section 147 of the Act inter alia provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedin section further empowers the Assessing Officer to recompute the loss or the depreciation allowance or any other allowance as the case may be. The first proviso to section 147 of the Act reads as under: "Provided that wher section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." Maharashtra State Electricity Transmission , wherein the Hon’ble High Court on the first issue of disclosure of material fact truly and fully has held as under: 5. Section 147 of the Act inter alia provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings. In such a situation, the said section further empowers the Assessing Officer to recompute the loss or the depreciation allowance or any other allowance as the case may be. The first proviso to section 147 of the Act reads as under:- "Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under section (1) of section 142 or section 148 or to disclose ully and truly all material facts necessary for his assessment, for that assessment year." Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 12 on the first issue of disclosure of material fact truly and fully has held as under: 5. Section 147 of the Act inter alia provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in gs. In such a situation, the said section further empowers the Assessing Officer to recompute the loss or the depreciation allowance or any other allowance as the case may be. The first proviso to section 147 of the Act section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under section (1) of section 142 or section 148 or to disclose ully and truly all material facts necessary for his The said proviso clearly stipulates that where an assessment under section 143(3) or 147 has been carried out for the relevant assessment year, no action can be take section 147, after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under section 142(1) or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. 6. In the present case, admittedly, a scrutiny assessment was done and an assessment order w section 143(3) of the Act for the Assessment Year 2005 and the proposed re the expiry of four years from the end of the relevant assessment year. In such a situation, the first proviso to section 147 initiation of re 2005-06 could be initiated unless the income chargeable to tax had escaped assessment by reason of the failure on the part of the Petitioner to disclo facts. Mr. Pardiwala, the learned counsel appearing on behalf of the Petitioner, submitted that apart from making a bald assertion that there was a failure on the part of the Petitioner to disclose fully and truly all materi necessary for its assessment, no details whatsoever were given with reference to the same. Maharashtra State Electricity Transmission The said proviso clearly stipulates that where an assessment under section 143(3) or 147 has been carried out for the relevant assessment year, no action can be take section 147, after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in nse to a notice issued under section 142(1) or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. 6. In the present case, admittedly, a scrutiny assessment was done and an assessment order was passed under section 143(3) of the Act for the Assessment Year 2005 and the proposed re-assessment is sought to be done after the expiry of four years from the end of the relevant assessment year. In such a situation, the first proviso to section 147 of the Act is attracted. Thus, no action for initiation of re-assessment proceedings for Assessment Year 06 could be initiated unless the income chargeable to tax had escaped assessment by reason of the failure on the part of the Petitioner to disclose fully and truly all material facts. Mr. Pardiwala, the learned counsel appearing on behalf of the Petitioner, submitted that apart from making a bald assertion that there was a failure on the part of the Petitioner to disclose fully and truly all materi necessary for its assessment, no details whatsoever were given with reference to the same. Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 13 The said proviso clearly stipulates that where an assessment under section 143(3) or 147 has been carried out for the relevant assessment year, no action can be taken under section 147, after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in nse to a notice issued under section 142(1) or section 148 or to disclose fully and truly all material facts necessary 6. In the present case, admittedly, a scrutiny assessment as passed under section 143(3) of the Act for the Assessment Year 2005-06 assessment is sought to be done after the expiry of four years from the end of the relevant assessment year. In such a situation, the first proviso to of the Act is attracted. Thus, no action for assessment proceedings for Assessment Year 06 could be initiated unless the income chargeable to tax had escaped assessment by reason of the failure on the se fully and truly all material facts. Mr. Pardiwala, the learned counsel appearing on behalf of the Petitioner, submitted that apart from making a bald assertion that there was a failure on the part of the Petitioner to disclose fully and truly all material facts necessary for its assessment, no details whatsoever were 7. On the other hand, Mr Gupta, learned counsel appearing on behalf of the Respondents, submitted that the reasons clearly stated that there had been a fail petitioner to disclose fully and truly all material facts necessary for its assessment and therefore, Respondent No. 1 was justified in initiating reassessment proceedings. 8. It is true that the reasons for initiating the reassessme proceedings does in fact state that there was a failure on the part of the petitioner to disclose fully and traly all material facts necessary for its assessment. However, merely making this bald assertion is not enough. It is now well settled that the reasons which are recorded by the Assessing Officer for re-opening the assessment, 'are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons are the manifestation of the mind of the Assessing Officer and therefore, should be self the Assessee guessing for the reasons. The reasons provide the link between the conclusion and the evidence. The reasons recorded must be based on evidence so that in the event of a challenge, the Assessing Officer must be able to justify the same base He must disclose in the reasons as to which fact or materiar was not disclosed by the Assessee fully and truly necessary for assessment for that assessment year, so as to establish Maharashtra State Electricity Transmission 7. On the other hand, Mr Gupta, learned counsel appearing on behalf of the Respondents, submitted that the reasons clearly stated that there had been a failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment and therefore, Respondent No. 1 was justified in initiating reassessment proceedings. 8. It is true that the reasons for initiating the reassessme proceedings does in fact state that there was a failure on the part of the petitioner to disclose fully and traly all material facts necessary for its assessment. However, merely making this bald assertion is not enough. It is now well settled that reasons which are recorded by the Assessing Officer for opening the assessment, 'are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons are the manifestation of the mind of the Assessing Officer and therefore, should be self-explanatory and should not k the Assessee guessing for the reasons. The reasons provide the link between the conclusion and the evidence. The reasons recorded must be based on evidence so that in the event of a challenge, the Assessing Officer must be able to justify the same based on the material avallable on record. He must disclose in the reasons as to which fact or materiar was not disclosed by the Assessee fully and truly necessary for assessment for that assessment year, so as to establish Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 14 7. On the other hand, Mr Gupta, learned counsel appearing on behalf of the Respondents, submitted that the reasons ure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment and therefore, Respondent No. 1 was justified in initiating reassessment proceedings. 8. It is true that the reasons for initiating the reassessment proceedings does in fact state that there was a failure on the part of the petitioner to disclose fully and traly all material facts necessary for its assessment. However, merely making this bald assertion is not enough. It is now well settled that reasons which are recorded by the Assessing Officer for opening the assessment, 'are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be based on reasons not recorded. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons are the manifestation of the mind of the Assessing Officer and explanatory and should not keep the Assessee guessing for the reasons. The reasons provide the link between the conclusion and the evidence. The reasons recorded must be based on evidence so that in the event of a challenge, the Assessing Officer must be able to d on the material avallable on record. He must disclose in the reasons as to which fact or materiar was not disclosed by the Assessee fully and truly necessary for assessment for that assessment year, so as to establish the vital link between the reasons a vital link is the safeguard against arbitraly te concluded assessment. 9. In the present case, as stated earlier, there are absolutely, no details as to which fact or material was not disclosed by the Petitioner that led There is merely a bald assertion in the reasons that there was a failure on the part of the personer to disclose fully and truly all material facts. In our View, this is, not enough. It is equally important that Responden facts of other material was not disclosed by the Petitioner that had led to the income escaping assessment as contemplated under section 147 of the Act. This is absent in the present case. In our view therefore, on this ground the Petitioner is entitled to succeed in this writ petition 10. Even otherwise, from the record we find that the Petitioner has disclosed fully and truly all material facts for the Assessment Year 2005 considered the sam under section 143(3) of the Act. This is clear from the return of income filed by the Petitioner for Assessment Year 2005 06 on 31st October 2005, the queries raised and the material sought for by Respondent No.1 by its 2007 and 7th August 2007, the Petitioner's replies thereto dated 16th July 2007, 13th August 2007 and ist September 2008 and the assessment order passed on 30th December 2008 under section 143(3) of the Act. Maharashtra State Electricity Transmission the vital link between the reasons and the evidence. This vital link is the safeguard against arbitraly te-opening of a concluded assessment. 9. In the present case, as stated earlier, there are absolutely, no details as to which fact or material was not disclosed by the Petitioner that led to its income escaping assessment. There is merely a bald assertion in the reasons that there was a failure on the part of the personer to disclose fully and truly all material facts. In our View, this is, not enough. It is equally important that Respondent No.1 clearly sets out what facts of other material was not disclosed by the Petitioner that had led to the income escaping assessment as contemplated under section 147 of the Act. This is absent in the present case. In our view therefore, on this ground Petitioner is entitled to succeed in this writ petition 10. Even otherwise, from the record we find that the Petitioner has disclosed fully and truly all material facts for the Assessment Year 2005-06 and that Respondent No. I considered the same before making his assessment order under section 143(3) of the Act. This is clear from the return of income filed by the Petitioner for Assessment Year 2005 06 on 31st October 2005, the queries raised and the material sought for by Respondent No.1 by its letters dated ist June 2007 and 7th August 2007, the Petitioner's replies thereto dated 16th July 2007, 13th August 2007 and ist September 2008 and the assessment order passed on 30th December 2008 under section 143(3) of the Act. Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 15 nd the evidence. This opening of a 9. In the present case, as stated earlier, there are absolutely, no details as to which fact or material was not disclosed by to its income escaping assessment. There is merely a bald assertion in the reasons that there was a failure on the part of the personer to disclose fully and truly all material facts. In our View, this is, not enough. It is t No.1 clearly sets out what facts of other material was not disclosed by the Petitioner that had led to the income escaping assessment as contemplated under section 147 of the Act. This is absent in the present case. In our view therefore, on this ground alone, Petitioner is entitled to succeed in this writ petition 10. Even otherwise, from the record we find that the Petitioner has disclosed fully and truly all material facts for 06 and that Respondent No. I e before making his assessment order under section 143(3) of the Act. This is clear from the return of income filed by the Petitioner for Assessment Year 2005- 06 on 31st October 2005, the queries raised and the material letters dated ist June 2007 and 7th August 2007, the Petitioner's replies thereto dated 16th July 2007, 13th August 2007 and ist September 2008 and the assessment order passed on 30th December 11. In the return of inc Petitioner enclosed its balance Certificate under section 35(2AB) certifying the claim for weighted deduction in respect of research and development expenditure incurred at Lupin Research P No.3 to Annexure VIl to Enclosure IV of the Auditor's Certificate stated that legal and professional charges included payments made towards patent applications filed outside India amounting to Rs.2,70,97,115/, Rs.12,59,783/ towards consult outsiders for collaborative study. It is not in dispute that these three figures are the subject matter of the notice issued under section 148 of the Act. In fact, the notice under section 148 proceeds on the basis that claimed as a revenue expenditure when they were in the nature of a capital expenditure. 12. Thereafter, with reference to these very issues, Respondent No. by its letters dated ist June 2007 and 7th August 2007. As stated earlier, all details were furnished by the Petitioner by its letters dated 17 September 2008. In fact, by their letter dated 13th August 2007, the Petitioner categorically informed Respondent No. 1 that the total legal and professional charges incurred for filing patent applications were Rs.328 section 35(2AB), this amount was allowable as a revenue expenditure but they had claimed weighted deduction only on Rs.57.39 lakhs because the sum of Rs.270.97 lakhs was Maharashtra State Electricity Transmission 11. In the return of income filed on 31st October 2005, the Petitioner enclosed its balance-sheet as well as its Auditor's Certificate under section 35(2AB) certifying the claim for weighted deduction in respect of research and development expenditure incurred at Lupin Research Park, Pune, Note No.3 to Annexure VIl to Enclosure IV of the Auditor's Certificate stated that legal and professional charges included payments made towards patent applications filed outside India amounting to Rs.2,70,97,115/, Rs.12,59,783/ towards consultancy fees and Rs.4,77,0271 outsiders for collaborative study. It is not in dispute that these three figures are the subject matter of the notice issued under section 148 of the Act. In fact, the notice under section 148 proceeds on the basis that these expenses were wrongly claimed as a revenue expenditure when they were in the nature of a capital expenditure. 12. Thereafter, with reference to these very issues, Respondent No.-1 called for information from the Petitioner by its letters dated ist June 2007 and 7th August 2007. As stated earlier, all details were furnished by the Petitioner by its letters dated 17th July 2007, 13th August 2007 and 1st September 2008. In fact, by their letter dated 13th August 2007, the Petitioner categorically informed Respondent No. 1 that the total legal and professional charges incurred for filing patent applications were Rs.328.36 lakhs. As per section 35(2AB), this amount was allowable as a revenue expenditure but they had claimed weighted deduction only on Rs.57.39 lakhs because the sum of Rs.270.97 lakhs was Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 16 ome filed on 31st October 2005, the sheet as well as its Auditor's Certificate under section 35(2AB) certifying the claim for weighted deduction in respect of research and development ark, Pune, Note No.3 to Annexure VIl to Enclosure IV of the Auditor's Certificate stated that legal and professional charges included payments made towards patent applications filed outside India amounting to Rs.2,70,97,115/, Rs.12,59,783/- ancy fees and Rs.4,77,0271- paid to outsiders for collaborative study. It is not in dispute that these three figures are the subject matter of the notice issued under section 148 of the Act. In fact, the notice under section these expenses were wrongly claimed as a revenue expenditure when they were in the 12. Thereafter, with reference to these very issues, 1 called for information from the Petitioner by its letters dated ist June 2007 and 7th August 2007. As stated earlier, all details were furnished by the Petitioner by th July 2007, 13th August 2007 and 1st September 2008. In fact, by their letter dated 13th August 2007, the Petitioner categorically informed Respondent No. 1 that the total legal and professional charges incurred for .36 lakhs. As per section 35(2AB), this amount was allowable as a revenue expenditure but they had claimed weighted deduction only on Rs.57.39 lakhs because the sum of Rs.270.97 lakhs was paid for filing patent applications outside India. The details thereof were also furnished by the petitioner. Thereafter, by their letter dated 1st September 2008, the petitioner once again enclosed details of the legal and professional charges. 13. Thereafter, the Assessing Officer, after scrutinising all details and appl under section 143(3) of the Act. The Assessing Officer chose not to disallow the claim of the Petitioner for deductions claimed towards legal and professional charges incurred for filing patent applications. The accepted the deductions claimed by the Petitioner. He however rejected the Petitioner's claims with respect to some other issues, which do not form the subject matter of the re assessment proceedings. It is pertinent to note th Respondent No. 1 disagreed with the Petitioner's contentions, he gave his reasons for doing so but where the contentions were accepted, there was no discussion with reference to the same in the assessment order. All this clearly goes to show that all material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny assessment, which dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under the first proviso to section 147 of the Act Maharashtra State Electricity Transmission paid for filing patent applications outside India. The details of were also furnished by the petitioner. Thereafter, by their letter dated 1st September 2008, the petitioner once again enclosed details of the legal and professional charges. 13. Thereafter, the Assessing Officer, after scrutinising all details and applying his mind to all issues, passed an order under section 143(3) of the Act. The Assessing Officer chose not to disallow the claim of the Petitioner for deductions claimed towards legal and professional charges incurred for filing patent applications. The Assessing Officer therefore accepted the deductions claimed by the Petitioner. He however rejected the Petitioner's claims with respect to some other issues, which do not form the subject matter of the re assessment proceedings. It is pertinent to note th Respondent No. 1 disagreed with the Petitioner's contentions, he gave his reasons for doing so but where the contentions were accepted, there was no discussion with reference to the same in the assessment order. All this clearly goes to show all material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny assessment, which culminated in the assessment dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under the first proviso to section 147 of the Act.” Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 17 paid for filing patent applications outside India. The details of were also furnished by the petitioner. Thereafter, by their letter dated 1st September 2008, the petitioner once again enclosed details of the legal and professional charges. 13. Thereafter, the Assessing Officer, after scrutinising all ying his mind to all issues, passed an order under section 143(3) of the Act. The Assessing Officer chose not to disallow the claim of the Petitioner for deductions claimed towards legal and professional charges incurred for Assessing Officer therefore accepted the deductions claimed by the Petitioner. He however rejected the Petitioner's claims with respect to some other issues, which do not form the subject matter of the re- assessment proceedings. It is pertinent to note that where Respondent No. 1 disagreed with the Petitioner's contentions, he gave his reasons for doing so but where the contentions were accepted, there was no discussion with reference to the same in the assessment order. All this clearly goes to show all material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny culminated in the assessment order dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under 6.1 On the issue of change of opinion, the Hon’ble Bombay High Court held as under: “14. We also find force in the submission of Mr. Pardiwala that the initiation of re Assessment Year 2005 opinion". On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income had escaped assessment were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December 2008 under section 143(3). It is therefore e Respondent No. 1 after passing the original assessment order dated 30th December 2008 has changed his opinion and issued the impugned notice under section 148. The reasons for the impugned notice as well as the impugned order proceed on the bas and hence expenditure incurred towards filing of patent applications should have been treated as capital expenditure. Since it was treated as a revenue expenditure, there was computation of excessive loss which resulted income escaping assessment. that in the original assessment order this very expenditure was allowed as a revenue expenditure, Respondent No. 1 now seeks to treat the same as a capital expenditure. This to Maharashtra State Electricity Transmission the issue of change of opinion, the Hon’ble Bombay High 14. We also find force in the submission of Mr. Pardiwala that the initiation of re-assessment proceedings for the Assessment Year 2005-06 is merely based on a "change opinion". On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income had escaped assessment. As stated earlier, all material facts were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December 2008 under section 143(3). It is therefore evident that Respondent No. 1 after passing the original assessment order dated 30th December 2008 has changed his opinion and issued the impugned notice under section 148. The reasons for the impugned notice as well as the impugned order proceed on the basis that a patent is a capital asset and hence expenditure incurred towards filing of patent applications should have been treated as capital expenditure. Since it was treated as a revenue expenditure, there was computation of excessive loss which resulted income escaping assessment. Therefore now, despite the fact that in the original assessment order this very expenditure was allowed as a revenue expenditure, Respondent No. 1 now seeks to treat the same as a capital expenditure. This to Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 18 the issue of change of opinion, the Hon’ble Bombay High 14. We also find force in the submission of Mr. Pardiwala assessment proceedings for the 06 is merely based on a "change of opinion". On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income . As stated earlier, all material facts were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December vident that Respondent No. 1 after passing the original assessment order dated 30th December 2008 has changed his opinion and issued the impugned notice under section 148. The reasons for the impugned notice as well as the impugned is that a patent is a capital asset and hence expenditure incurred towards filing of patent applications should have been treated as capital expenditure. Since it was treated as a revenue expenditure, there was computation of excessive loss which resulted in Therefore now, despite the fact that in the original assessment order this very expenditure was allowed as a revenue expenditure, Respondent No. 1 now seeks to treat the same as a capital expenditure. This to our mind is noth Respondent No.1 had no jurisdiction to re assessment proceedings. 6.2 For adjudicating the issue the above decision, it is relevant to reproduce the reasons recorded by the Assessing Officer as under: "As per the CAG Report (point 20) of accounts of assessee that the assessee had not accounted non supervision charges of Rs.28.17 crores on receipt basis (Nagpur Circle office Rs. 1.50 cr. + Nagpur substation division Rs. 26.67 Cr.) collected against various works in lieu of services provided for execution of private parties". It is evident that the assessee has collected the above sum in lieu of services provided in F.Y. 2010 Therefore the s A.Y.2011-12, and the assessee has not accounted this amount. In return of income for A.Y.2011 that the assessee has not fully and truly disclosed the material facts necessary for its assessment f under consideration.” 6.3 When we examine the first issue of nondisclosure of material fact truly and fully, we find that the entire report containing comments of the audit finding of the Comptroller and Maharashtra State Electricity Transmission our mind is nothing but a "change of opinion", and hence Respondent No.1 had no jurisdiction to re assessment proceedings.” adjudicating the issue-in-dispute in the case in the above decision, it is relevant to reproduce the reasons recorded by the Assessing Officer as under: "As per the CAG Report (point 20) of accounts of assessee that the assessee had not accounted non supervision charges of Rs.28.17 crores on receipt basis (Nagpur Circle office Rs. 1.50 cr. + Nagpur substation division Rs. 26.67 Cr.) collected against various works in lieu of services provided for execution of private parties". evident that the assessee has collected the above sum in lieu of services provided in F.Y. 2010-11 (A. Y.2011 Therefore the same was required to be accounted in the 12, and the assessee has not accounted this amount. In return of income for A.Y.2011-12 clearly indicate that the assessee has not fully and truly disclosed the material facts necessary for its assessment fo under consideration.” we examine the first issue of nondisclosure of material fact truly and fully, we find that the entire report containing comments of the audit finding of the Comptroller and Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 19 ing but a "change of opinion", and hence Respondent No.1 had no jurisdiction to re-open the dispute in the case in the light of the above decision, it is relevant to reproduce the reasons recorded "As per the CAG Report (point 20) of accounts of assessee that the assessee had not accounted non-refundable supervision charges of Rs.28.17 crores on receipt basis (Nagpur Circle office Rs. 1.50 cr. + Nagpur substation division Rs. 26.67 Cr.) collected against various works in lieu of services provided for execution of private parties". evident that the assessee has collected the above sum in 11 (A. Y.2011-12). ame was required to be accounted in the 12, and the assessee has not accounted this 12 clearly indicate that the assessee has not fully and truly disclosed the or the year we examine the first issue of nondisclosure of material fact truly and fully, we find that the entire report containing comments of the audit finding of the Comptroller and Auditor General of India (CAG assessment proceeding under section 143(3) of the fact is also evident from the para four of the original assessment order dated 11/02/2014 under section 143(3) of the reference, the relevant 4. The books of accounts of the previous year of the assessee company were audited by the CAG, under section619(4) of the Companies Act, 1956. The CAGS findings and comments during the said audit, relevant for the purp assessed's assessment, as stated on pages 17 to23 of the Annual Report are discussed 5. " Profit & Loss Account INCOME : Revenue from operation (Schedule 12) i) Open Access charges Rs.57.69 Crore This does not include an charges for the current year. This has resulted in understatement of profit and receicables hy Rs.3.30 crone (HO)." 5.1 The assessee was called upon to give his views on repercussions of C&AG report and explain and the sa Further, the assessee was also asked to explain the Maharashtra State Electricity Transmission CAG) was filed by the assessee in the original assessment proceeding under section 143(3) of the fact is also evident from the para four of the original assessment order dated 11/02/2014 under section 143(3) of the relevant para is reproduced as under: 4. The books of accounts of the previous year of the assessee company were audited by the CAG, under section619(4) of the Companies Act, 1956. The CAGS findings and comments during the said audit, relevant for the purp assessed's assessment, as stated on pages 17 to23 of the Annual Report are discussed below: & Loss Account Revenue from operation (Schedule 12)-Rs.2097.78 Open Access charges Rs.57.69 Crore This does not include an amount of Rs.3.30 crore being STU charges for the current year. This has resulted in understatement of profit and receicables hy Rs.3.30 crone 1 The assessee was called upon to give his views on repercussions of C&AG report and explain and the sa Further, the assessee was also asked to explain the Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 20 ) was filed by the assessee in the original assessment proceeding under section 143(3) of the Act, and this fact is also evident from the para four of the original assessment order dated 11/02/2014 under section 143(3) of the Act. For ready 4. The books of accounts of the previous year of the assessee company were audited by the CAG, under section619(4) of the Companies Act, 1956. The CAGS findings and comments during the said audit, relevant for the purpose of the assessed's assessment, as stated on pages 17 to23 of the Rs.2097.78 crore amount of Rs.3.30 crore being STU charges for the current year. This has resulted in understatement of profit and receicables hy Rs.3.30 crone 1 The assessee was called upon to give his views on repercussions of C&AG report and explain and the same. Further, the assessee was also asked to explain the understatement of profits on account of recovery of rates & taxes of Rs.91.00 lacs as per the C&AG report. 5.2 The assessee in its reply to the above states as under : The Open Access Charges are initially accounted for in SLDC, Kalua (476) and then transferred to HO IBA towards Open Access Charges amounting to Rs.3,25,81,590/ amount is shown as Prior 5.3 The above contention of the assessee have been carefully considered and is not acceptable as the assessee failed to include the STU charges for the current year receivable by the assessee. The assessee is following mercantile system of accounting & hence the same should have been offered for tax during the vear. Therefore, the revenue of Rs.3.30 crore on account of non inclusion of STU charges, is hereby brought to tax and added in the income of assessee. Further, the assessee did not submit any explanation in respect of rates & taxes & hence it is construed that the assessee has nothing to offer in this regard. Therefore, R income being understatement of profits. The total disallowance works out to Rs.4, 6.4 In view of the above, the finding of the Ld. CIT(A) material facts were not produced by the assessee in assessment Maharashtra State Electricity Transmission understatement of profits on account of recovery of rates & taxes of Rs.91.00 lacs as per the C&AG report. assessee in its reply to the above states as under : Open Access Charges are initially accounted for in SLDC, Kalua (476) and then transferred to HO A/c’s IBA towards Open Access Charges amounting to .3,25,81,590/- in the month of Ang 2011. Hence such amount is shown as Prior Period item in the year 2011 The above contention of the assessee have been carefully considered and is not acceptable as the assessee failed to include the STU charges for the current year receivable by the assessee. The assessee is following mercantile system of ing & hence the same should have been offered for tax during the vear. Therefore, the revenue of Rs.3.30 crore on account of non inclusion of STU charges, is hereby brought to tax and added in the income of assessee. Further, the assessee did not ny explanation in respect of rates & taxes & hence it is construed that the assessee has nothing to offer in this regard. Therefore, Rs.91,00,000/- is also added to the total income being understatement of profits. The total disallowance works out to Rs.4,21,00,000/-.” view of the above, the finding of the Ld. CIT(A) material facts were not produced by the assessee in assessment Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 21 understatement of profits on account of recovery of rates & assessee in its reply to the above states as under : Open Access Charges are initially accounted for in A/c’s though IBA towards Open Access Charges amounting to in the month of Ang 2011. Hence such 2011-12 The above contention of the assessee have been carefully considered and is not acceptable as the assessee failed to include the STU charges for the current year receivable by the assessee. The assessee is following mercantile system of ing & hence the same should have been offered for Therefore, the revenue of Rs.3.30 crore on account of non- inclusion of STU charges, is hereby brought to tax and added in the income of assessee. Further, the assessee did not ny explanation in respect of rates & taxes & hence it is construed that the assessee has nothing to offer in this is also added to the total income being understatement of profits. The total view of the above, the finding of the Ld. CIT(A) that the material facts were not produced by the assessee in assessment proceeding under section 143(3) of the distortion of facts.. The relev which is basis of the reopening is reproduced here as under for ready reference: 20. Above includes non supervision charges ? 28.17 crore (Nagpur Circle office 7 1.50 crore + Nagpur Substation Division § 26.67 crore) collected against v in lieu of services provided / to be provided for execution of private parties jobs by the Company. Thus non-accounting of supervision charges as income on receipt basis by the Circle and Substation Division Nagpur has resulted in understateme Other Income &. Profit and Overstatement of Other Liabilities by 728.17 crore. (EHVT Construction Circle, Nagpur) 6.5 When the asses and comments of the assessee that said income was liable to be assessed in subsequent assessment year subsequent assessment year only, we do not find which material facts has been suppressed by the assessee. If the Assessing Officer wanted more information charges in dispute, the Assessing Officer should have asked the Maharashtra State Electricity Transmission proceeding under section 143(3) of the Act is baseless and . The relevant column of the C & AG which is basis of the reopening is reproduced here as under for Above includes non-refundable supervision charges ? 28.17 crore (Nagpur Circle office 7 1.50 crore + Nagpur Substation Division § 26.67 crore) collected against various works in lieu of services provided / to be provided for execution of private parties jobs by the Company. Thus accounting of supervision charges as income on receipt basis by the Circle and Substation Division Nagpur has resulted in understatement of Other Income &. Profit and Overstatement of Other Liabilities by 728.17 crore. (EHVT Construction Circle, Nagpur) In connection to the above out of 7 1.50 Crores, Circle Office has transfered § 49.73 Lakhs vide JV no. 12 Aug. 2011 to the orior period income. Remaining amount of Rs. 1:00 Crores will be adjusted after complition of work as this is ORC deposit. Nagpur sub Station Division has transferred the Amount of 26.67 Crores to prior period income Vide JV no. 10 in Sept. 2011. When the assessee had filed the observation of the Ld. C & AG and comments of the assessee that said income was liable to be assessed in subsequent assessment year as income subsequent assessment year only, we do not find which material ppressed by the assessee. If the Assessing Officer wanted more information in respect of income of supervisory charges in dispute, the Assessing Officer should have asked the Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 22 is baseless and ant column of the C & AG report, which is basis of the reopening is reproduced here as under for In connection to the above out of 7 1.50 Crores, Circle Office has transfered § 49.73 Lakhs vide JV no. 12 Aug. 2011 to the orior period Remaining amount of Rs. 1:00 Crores will be adjusted after complition of work as this is ORC deposit. Nagpur sub Station Division has transferred the Amount of ₹ 26.67 Crores to prior period income Vide JV no. 10 in Sept. 2011. see had filed the observation of the Ld. C & AG and comments of the assessee that said income was liable to be as income crystallized in subsequent assessment year only, we do not find which material ppressed by the assessee. If the Assessing Officer in respect of income of supervisory charges in dispute, the Assessing Officer should have asked the said information from the assessee, would have failed in supplying the said information, then only the assessee could have been held responsible for not disclosing material facts fully and truly. If there is a failure on the part of the Assessing Officer in carrying out the inquirie been done, then remedy against such failure is not within section 147 of Act and appropriate remedy may be under section 263 of the Act. Without asking any further information in respect of comment of C & AG, from the assessee, the asse responsible for not disclosing material facts fully and truly. The decision relied by the Ld. CIT(A) in the case of Hond Products Ltd (supra) is accordingly distinguishable on facts. 6.6 Regarding the second issue of reopening based on the mere change of the opinion is concerned, we find that there is no reference in the reasons recorded as to why the Officer has re-examined the same material which was available before him during the course of original assessment proceeding. We find that there is no trigger Maharashtra State Electricity Transmission d information from the assessee, and if in response the ass would have failed in supplying the said information, then only the have been held responsible for not disclosing material facts fully and truly. If there is a failure on the part of the Assessing Officer in carrying out the inquiries which ought to have , then remedy against such failure is not within section 147 of Act and appropriate remedy may be under section 263 of the . Without asking any further information in respect of comment of C & AG, from the assessee, the assessee cannot be held responsible for not disclosing material facts fully and truly. The decision relied by the Ld. CIT(A) in the case of Hond Ltd (supra) is accordingly distinguishable on facts. Regarding the second issue of reopening based on the mere change of the opinion is concerned, we find that there is no reference in the reasons recorded as to why the examined the same material which was available ring the course of original assessment proceeding. We find that there is no trigger or cause in the form of information from Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 23 nd if in response the assessee would have failed in supplying the said information, then only the have been held responsible for not disclosing material facts fully and truly. If there is a failure on the part of the hich ought to have , then remedy against such failure is not within section 147 of Act and appropriate remedy may be under section 263 of the . Without asking any further information in respect of comment ssee cannot be held responsible for not disclosing material facts fully and truly. The decision relied by the Ld. CIT(A) in the case of Hond Siel Power Ltd (supra) is accordingly distinguishable on facts. Regarding the second issue of reopening based on the mere change of the opinion is concerned, we find that there is no reference in the reasons recorded as to why the Ld. Assessing examined the same material which was available ring the course of original assessment proceeding. We in the form of information from sources whether internal or external or any kind of the material which could lead the Assessing Officer for re material i.e. C& AG report and comments of the assessee, and form reason to believe that income escaped assessment. any such trigger or cause in the form action of the Assessing Officer amounts to review of the ass completed by him, which is not permitted in law. The information of C & AG Report that said supervision charges should be considered for the income in the year under consideration was duly available before the Assessing Officer. The comments of the said income was declared in subsequent assessment year as prior period Income was also available with the Assessing Officer and such circumstances, if Assessing Officer has not questioned the action of the assessee of declaring the said i assessment year, the opinion. The decision distinguishable on facts as is in the instant case the very information on the basis of which the Assessing Offi Maharashtra State Electricity Transmission sources whether internal or external or any kind of the material which could lead the Assessing Officer for re-examination of the C& AG report and comments of the assessee, and form reason to believe that income escaped assessment. or cause in the form information or material, the action of the Assessing Officer amounts to review of the ass completed by him, which is not permitted in law. The information of C & AG Report that said supervision charges should be considered for the income in the year under consideration was duly available before the Assessing Officer. The comments of the said income was declared in subsequent assessment year as prior period Income was also available with the Assessing Officer and such circumstances, if Assessing Officer has not questioned the action of the assessee of declaring the said income in subsequent the Assessing Officer is presumed to have formed . The decisions relied upon by the Ld. CIT(A) are distinguishable on facts as is in the instant case the very information on the basis of which the Assessing Offi Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 24 sources whether internal or external or any kind of the material examination of the C& AG report and comments of the assessee, and form reason to believe that income escaped assessment. In absence of information or material, the action of the Assessing Officer amounts to review of the assessment completed by him, which is not permitted in law. The information of C & AG Report that said supervision charges should be considered for the income in the year under consideration was duly available before the Assessing Officer. The comments of the assessee that said income was declared in subsequent assessment year as prior period Income was also available with the Assessing Officer and in such circumstances, if Assessing Officer has not questioned the ncome in subsequent presumed to have formed relied upon by the Ld. CIT(A) are distinguishable on facts as is in the instant case the very information on the basis of which the Assessing Officer has reopened the assessment was available with him during the course of original assessment proceeding under section 143(3) of the Regarding the decision the case of Kalyanji Mavji and Co (supra), referred by the Ld. CIT(A) to hold that reassessm even if the information is obtained after proper investigation from the material on record or from any enquiry or research into facts are law and information need not be from any external source, we find that said decision pertains to th Income-tax Act, 1922, where in information in possession of the Assessing Officer could validly be used for reopening. The relevant observation of the Hon’ble Supreme Court provisions in the income tax “In order to appreciate the contentions advanced by counsel for the parties, it is necessary to make a brief survey of the provisions of runs thus: "34. (1) If- (a) the Income of the omission or failure on the part of an assessee to make a return of his income under Maharashtra State Electricity Transmission reopened the assessment was available with him during the course of original assessment proceeding under section 143(3) of the Regarding the decision the case of Kalyanji Mavji and Co (supra), referred by the Ld. CIT(A) to hold that reassessment is permissible even if the information is obtained after proper investigation from the material on record or from any enquiry or research into facts are law and information need not be from any external source, we find that said decision pertains to the provisions of law available in tax Act, 1922, where in information in possession of the Assessing Officer could validly be used for reopening. The relevant on of the Hon’ble Supreme Court, wherein the relevant provisions in the income tax Act 1922 are reproduced as under In order to appreciate the contentions advanced by counsel for the parties, it is necessary to make a brief survey of the provisions of s. 34(1) of the Income-tax Act, 1922. The section (a) the Income-tax officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 25 reopened the assessment was available with him during the course of original assessment proceeding under section 143(3) of the Act. Regarding the decision the case of Kalyanji Mavji and Co (supra), ent is permissible even if the information is obtained after proper investigation from the material on record or from any enquiry or research into facts are law and information need not be from any external source, we e provisions of law available in tax Act, 1922, where in information in possession of the Assessing Officer could validly be used for reopening. The relevant , wherein the relevant Act 1922 are reproduced as under : In order to appreciate the contentions advanced by counsel for the parties, it is necessary to make a brief survey of the 1922. The section tax officer has reason to believe that by reason of the omission or failure on the part of an assessee to make for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the consequence of information in his possession reason to believe that income, profits or gains chargeable to income have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub 22 and may proceed to assess or reassess such income profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub Maharashtra State Electricity Transmission disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable tax have escaped assessment for that year, or have been under-assessed or assessed at too low a rat have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income- tax officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of and may proceed to assess or reassess such income profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued at sub-section Provided * * * *" Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 26 disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable tax have escaped assessment for that year, or assessed or assessed at too low a rate, have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been (b) notwithstanding that there has been no omission or tax officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under- assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may section (2) of section and may proceed to assess or reassess such income profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued It would be seen that cases for re-opening the previous assessment has been an omission or failure on the part of the to make a return of his income under and truly all material facts necessary for his assessment; and (2) where there has been no such omission on the part of the assessee but the Income information in his possession finds that income chargeable to tax has escaped assessment for any year. It is, therefore, manifest that the first category deals with cases where an assessee is himself in default with cases where there is no fault on the part of an assessee but where the income chargeable to tax has actually escaped assessment for one reason or the other and the Income officer comes to know about the same. In the however, we are concerned with clause (b) of 34(1) extracted supra. Before however proceeding to interpret the ambit and import of consider the history of passed through different phases with amendments and additions made to the section from time to time.” 6.7 Further, Hon’ble Supreme Court (supra) opined that if fresh facts came into the possession change of opinion may not apply, however in the same set of facts, Maharashtra State Electricity Transmission It would be seen that s. 34(1) contemplates two categories of opening the previous assessment-(1) where there has been an omission or failure on the part of the to make a return of his income under s. 22 or to disclose fully and truly all material facts necessary for his assessment; and (2) where there has been no such omission on the part of ee but the Income-tax officer on the basis of information in his possession finds that income chargeable to tax has escaped assessment for any year. It is, therefore, manifest that the first category deals with cases where an assessee is himself in default and the second category deals with cases where there is no fault on the part of an assessee but where the income chargeable to tax has actually escaped assessment for one reason or the other and the Income officer comes to know about the same. In the instant case, however, we are concerned with clause (b) of extracted supra. Before however proceeding to interpret the ambit and import of s. 34(1) (b) it may be necessary to consider the history of s. 34 of the Act which appears to have passed through different phases with amendments and additions made to the section from time to time.” , Hon’ble Supreme Court (supra) opined that if fresh possession of the Assessing Officer, then change of opinion may not apply, however in the same set of facts, Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 27 contemplates two categories of (1) where there has been an omission or failure on the part of the assessee or to disclose fully and truly all material facts necessary for his assessment; and (2) where there has been no such omission on the part of tax officer on the basis of information in his possession finds that income chargeable to tax has escaped assessment for any year. It is, therefore, manifest that the first category deals with cases where an and the second category deals with cases where there is no fault on the part of an assessee but where the income chargeable to tax has actually escaped assessment for one reason or the other and the Income-tax instant case, however, we are concerned with clause (b) of s. extracted supra. Before however proceeding to interpret (b) it may be necessary to of the Act which appears to have passed through different phases with amendments and , Hon’ble Supreme Court (supra) opined that if fresh of the Assessing Officer, then plea of change of opinion may not apply, however in the same set of facts, change of opinion may not apply. The relevant observation of the Hon’ble Supreme Court “We might mention that it was submitted by Mr. Banerjee that in fact the amount sought to be deducted was paid towards the income done to protect the business of the partners. Even this specific plea does not appear to have been taken before the Income however, not concerned with this particular plea because we are given to understand by the counsel for the the appeals against the assessment orders for the years 1958-59 and 1959 authorities. In these circumstances we are clearly of the opinion that the facts of the present case clearly fall within the tests and principles laid down by this Court in A. Raman and Company's case (supra) inasmuch as the Income officer proceeded on the basis of the information which came to him after the original assessment by fresh facts revealed in the assessment for the y conduct of the appellant itself in not adducing any evidence to support its plea. We are, therefore, unable to agree with the view of the Tribunal that this was a case of a mere change of opinion by the Income which were already on the record. our attention was also drawn by the learned counsel for the appellant to the decision of the Bombay High Court Maharashtra State Electricity Transmission change of opinion may not apply. The relevant observation of the Hon’ble Supreme Court (supra) are reproduced as under: We might mention that it was submitted by Mr. Banerjee that in fact the amount sought to be deducted was paid towards the income-tax liability of the partners and this was done to protect the business itself and to improve the credit of the partners. Even this specific plea does not appear to have been taken before the Income-tax officer. We are, however, not concerned with this particular plea because we are given to understand by the counsel for the appellant that the appeals against the assessment orders for the years 59 and 1959-60 are pending before the Income authorities. In these circumstances we are clearly of the opinion that the facts of the present case clearly fall within and principles laid down by this Court in A. Raman and Company's case (supra) inasmuch as the Income officer proceeded on the basis of the information which came to him after the original assessment by fresh facts revealed in the assessment for the year 1958-59 and consisted of the conduct of the appellant itself in not adducing any evidence to support its plea. We are, therefore, unable to agree with the view of the Tribunal that this was a case of a mere change of opinion by the Income-tax officer on the materials which were already on the record. our attention was also drawn by the learned counsel for the appellant to the decision of the Bombay High Court Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 28 change of opinion may not apply. The relevant observation of the (supra) are reproduced as under: We might mention that it was submitted by Mr. Banerjee that in fact the amount sought to be deducted was paid tax liability of the partners and this was itself and to improve the credit of the partners. Even this specific plea does not appear to tax officer. We are, however, not concerned with this particular plea because we appellant that the appeals against the assessment orders for the years 60 are pending before the Income- tax authorities. In these circumstances we are clearly of the opinion that the facts of the present case clearly fall within and principles laid down by this Court in A. Raman and Company's case (supra) inasmuch as the Income- tax officer proceeded on the basis of the information which came to him after the original assessment by fresh facts revealed 59 and consisted of the conduct of the appellant itself in not adducing any evidence to support its plea. We are, therefore, unable to agree with the view of the Tribunal that this was a case of a mere n the materials our attention was also drawn by the learned counsel for the appellant to the decision of the Bombay High Court in Commissioner of Income Larsen(1). In this case, Chandrachud, J., as he then was, speaking for the Court after review of the authorities of this Court and other High Courts, observed as follows: "What is obligatory in order to apply he must have "information" in his possession in consequence of which he has reason to believe that the income has escaped assessment or is under distinction really consists in a change of opinion by subsequent information on the one hand and a change of opinion based on information subsequently obtained, on the other. In the former class of cases, the assessment proceedings are attempted to be re discovery of an erro as to fact or law............................ Such a reopening is based on a "mere" change of opinion and is without jurisdiction..... ........ In the latter class of cases, the reopening is based on information lead within the jurisdiction of the officer." This decision is really based on the question whether it is open to the Income subsequently on the same materials and reopen the origina assessment. We are no doubt inclined to agree with the view expressed by Chandrachud, J., in the aforesaid case, but as this question is not free from difficulty as there is some divergence of judicial opinion on the subject, we would refrain from giving Maharashtra State Electricity Transmission Commissioner of Income-tax, Bombay City II v. H. Holck (1). In this case, Chandrachud, J., as he then was, speaking for the Court after review of the authorities of this Court and other High Courts, observed as follows: "What is obligatory in order to apply section 34(1)(b) he must have "information" in his possession in consequence of which he has reason to believe that the income has escaped assessment or is under-assessed, etc. The distinction really consists in a change of opinion unsupported by subsequent information on the one hand and a change of opinion based on information subsequently obtained, on the other. In the former class of cases, the assessment proceedings are attempted to be re-opened without the discovery of an error and without receiving any information as to fact or law............................ Such a reopening is based on a "mere" change of opinion and is without jurisdiction..... ........ In the latter class of cases, the reopening is based on information leading to the requisite belief and is therefore within the jurisdiction of the officer." This decision is really based on the question whether it is open to the Income-tax officer to change his opinion subsequently on the same materials and reopen the origina assessment. We are no doubt inclined to agree with the view expressed by Chandrachud, J., in the aforesaid case, but as this question is not free from difficulty as there is some divergence of judicial opinion on the subject, we would refrain from giving any definite decision on this point, Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 29 I v. H. Holck (1). In this case, Chandrachud, J., as he then was, speaking for the Court after review of the authorities of this Court and other High Courts, observed as follows: section 34(1)(b) is that he must have "information" in his possession in consequence of which he has reason to believe that the income has assessed, etc. The unsupported by subsequent information on the one hand and a change of opinion based on information subsequently obtained, on the other. In the former class of cases, the assessment opened without the r and without receiving any information as to fact or law............................ Such a reopening is based on a "mere" change of opinion and is without jurisdiction..... ........ In the latter class of cases, the reopening is based on ing to the requisite belief and is therefore This decision is really based on the question whether it is tax officer to change his opinion subsequently on the same materials and reopen the original assessment. We are no doubt inclined to agree with the view expressed by Chandrachud, J., in the aforesaid case, but as this question is not free from difficulty as there is some divergence of judicial opinion on the subject, we would any definite decision on this point, particularly when in this point does not really arise for determination in this case, which is really based on another principle, namely, that the information was derived by the In facts and is clearly covered by the principles laid down in A. raman and Company's case (supra). 6.8 In view of above, we set aside the finding of the Ld. CIT(A) on the issue in dispute and hold invalid in law. The grounds of appeal of the assessee accordingly allowed. 7. In the result, the appeal of the assessee is al Order pronounced the ITAT Rules, 1963 on Sd/- (VIKAS AWASTHY JUDICIAL MEMBER Mumbai; Dated: 29/12/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai Maharashtra State Electricity Transmission particularly when in the view we take in the instant case, this point does not really arise for determination in this case, which is really based on another principle, namely, that the information was derived by the Income-tax officer from fresh facts and is clearly covered by the principles laid down in A. raman and Company's case (supra).” In view of above, we set aside the finding of the Ld. CIT(A) on the issue in dispute and hold that reassessment proceeding a invalid in law. The grounds of appeal of the assessee In the result, the appeal of the assessee is allowed. Order pronounced in the open Court/under Rule 34(4 the ITAT Rules, 1963 on 29/12/2022. Sd/- VIKAS AWASTHY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 30 the view we take in the instant case, this point does not really arise for determination in this case, which is really based on another principle, namely, that the tax officer from fresh facts and is clearly covered by the principles laid down in A. In view of above, we set aside the finding of the Ld. CIT(A) on that reassessment proceeding as invalid in law. The grounds of appeal of the assessee are lowed. under Rule 34(4) of - OM PRAKASH KANT) ACCOUNTANT MEMBER 6. Guard file. //True Copy// Maharashtra State Electricity Transmission BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Maharashtra State Electricity Transmission Company Ltd. ITA No. 990/M/2022 31 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai