Case Law Details
Nvidia Graphics Pvt. Ltd. Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that when the reasons supplied to the assessee and the reasons supplied before higher forum is not verbatim same, it cannot sustain the validity of reopening of assessment under section 147 of the Income Tax Act. Accordingly, reassessment order was quashed.
Facts- Post completion of assessment u/s. 143(3), reassessment u/s. 148 was initiated. The reason for issuance of notice under section 148 of the Act was to bring to tax value of the free assets received by the assessee from its parent company by invoking the provisions of section 28(iv) of the Act. The objections of the assessee to the said addition under 28(iv) of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Since the case relates to Assessment Year 2014-15 and the notice has been issued by the AO on 31.03.2021, we observe from the notice that necessary ingredients, which were required to be mentioned for reopening beyond the period of 4 years, has not been mentioned. Accordingly, we hold that the reasons recorded by the AO for exercising jurisdiction under section 147 of the Act is not in conformity with the provisions of Section 147 of the Act.
Hon’ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. Vs. CIT had held that when the reasons supplied to the assessee and the reasons supplied before the higher forum is not verbatim same, it cannot sustain the validity of reopening of assessment under section 147 of the Act and consequently the reassessment order was quashed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of the assessee is directed against the Order of CIT(A) dated 30.03.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2014-15.
2. The grounds raised read as follows:
General Grounds
1. Impugned order of CIT(A) is based on incorrect interpretation of facts and law, and bad in law. Re-assessment under section 147 r.w.s. 144B vide order dated 30.03.2022 is not in accordance with law, without jurisdiction as statutory preconditions are not satisfied in facts of the case.
2. CIT(A) has erred, in law and in facts. by confirming addition of INR 3,54,82,002, towards free of costs assets received by Appellant from its associated enterprises (`AE’).
Reassessment proceedings are not in accordance with law
3. CIT(A) has erred in law and in facts of the case in upholding reassessment order passed by Ld. AO contrary to express provisions of law; beyond statutory time prescribed and in violation of settled principles of law as laid down by Hon’ble Courts.
4. Impugned reassessment is bad in law as same is passed without following procedure laid down in law, without any new material only by considering the same material on assessment record. Impugned reassess is nothing more than mere change of opinion.
Free of Cost assets
5. Impugned order has erred, in law and in facts. by confirming addition of INR 3.54,82.002, made under Section 28(iv) of the Act. in relation to the assets! computer supplies received free of cost or on loan basis by the Appellant.
6. Impugned order incorrectly presumes that the assets! computer supplies received are not custom made for Appellant and are freely available in the market for purchase.
7. Assets ! computer supplies made free of cost or on loan do not satisfy section 28(iv) and in any case the addition of full amount is based on incorrect presumptions and not justified in law.
Consequential Grounds
8. The learned CIT(A) has erred in upholding the levying of consequential interest under Section 234B and Section 234C of the
9. Initiation of penalty proceedings under section 271 (1) (c) of the Act is not justified in law.
10. Appellant craves leave to add, amend, substitute, alter, modify or delete any of the above grounds of appeal at the time of hearing.
3. Brief facts of the case are as follows:
Assessee is a company engaged in the business of development of graphics, media communication process and related services. It also provides marketing support services to its AEs. Assessee company is a captive service provider to its AE. For the Assessment Year 2014-15, the return of income was filed on 14.11.2014 declaring total income of Rs.91,34,83,890/-. Assessment was completed under section 143(3) of the Act, on 23.02.2018 assessing income at Rs.1,64,66,75,801/-. The additions made in the said Assessment Order was with regard to Transfer Pricing adjustments.
4. Subsequently, notice under section 148 of the Act was issued on 31.3.2021. In response to the notice issued under section 148 of the Act, assessee filed return of income on 29.04.202 1 declaring taxable income of Rs.91,34,83,890/- (declared in the original return of income). Thereafter, assessee asked for the reasons recorded for the issue of notice under section 148 of the Act which was provided on 02.03.2022. Assessee filed objections to the notice issued under section 148 of the Act and same was disposed off vide Order dated 20.03.2022. The reason for issuance of notice under section 148 of the Act was to bring to tax value of the free assets received by the assessee from its parent company by invoking the provisions of section 28(iv) of the Act. The objections of the assessee to the said addition under 28(iv) of the Act are reproduced in the Assessment Order (refer para 6 of the Assessment Order). However, the assessee’s objections were rejected and AO completed the Assessment under section 147 r.w.s. 144B of the Act, vide Order dated 30.03.2022, determining the income of the assessee at 1,68,21,57,803/-.
5. Aggrieved by reassessment completed under section 147 r.w.s. 144B of the Act, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, assessee had contended that reopening of assessment is bad in law since there has been full and true disclosure by the assessee in the return of income. Further, it was contended that since the reassessment notice has been issued beyond four years from the end of the relevant Assessment Year, the reasons recorded furnished to the assessee does not contain the terminology that income has escaped assessment on account of failure of the assessee to disclose fully and truly material facts. On merits, assessee raised the contentions that there is no benefit / perquisite in the nature of an income for invoking provisions of section 28(iv) of the Act. The CIT(A) rejected the contentions of the assessee both on legal as well as on merits and dismissed the appeal of the assessee.
6. Aggrieved by the CIT(A)’s Order, assessee has filed the present appeal before the Tribunal. Assessee has filed two sets of Paper Book. In one set of Paper Book, assessee has enclosed the case laws relied on. In the other Paper Book, assessee has enclosed notices issued, the submissions made before the AO and the CIT(A), etc. The learned AR reiterated the submissions made before the AO and the CIT(A).
7. The learned DR has also filed a Paper Book enclosing the reasons recorded for reopening of the assessment which was communicated to the assessee (Annexure B), copy of the reasons recorded which was placed for the first time before the Tribunal (Annexure A), copy of the original assessment passed under section 143(3) of the Act (Annexure C), copy of the notice issued under section 142(1) of the Act during the course of original assessment proceedings, etc. The learned DR had filed a brief written submissions on legal issues viz., validity of reopening of assessment and also on merits.
8. We have heard the rival submissions and perused the material on record. We shall first adjudicate the legal issue i.e., whether the reopening of assessment is valid or not. Admittedly, in this case, the notice under section 148 of the Act has been issued beyond four years from the end of the Assessment Year. The assessee, before the CIT(A), had objected to the reassessment proceedings by contending that first proviso to section 147 of the Act has not been satisfied since assessee had made full and true disclosure of all material facts for its assessment.
In this context, the contentions raised by the assessee before the CIT(A) is reproduced below:
“1.2.7. In this connection, reliance is placed on the following judicial precedents where the Courts have held that reassessment proceedings initiated after four years from the end of the AY are invalid, if the assessee has disclosed fully and truly all material facts at the time of the original proceedings:
- In the case of CIT and ACIT vs Hewelett Packard Digital Global Solutions Ltd.,, the Hon’ble Karnataka High Court held that in absence of a failure on the part of the asseesee to furnish all material facts and disclosures, the reopening of assessment proceedings is invalid in law.
- In the case of CIT vs Corporation Bank Ltd (2002) 254 ITR 791 (SC), the assessee was a banking company and interest was credited to interest suspense account since it was in the nature of a doubtful The amount was disclosed in the balance sheet filed along with the return. The original assessment was done excluding such interest. In this regard, the Hon ‘ble Supreme Court held that where the relevant statements showing the details were filed along with the ROI, there cannot be said to be failure on part of the assessee to disclose all material facts under the provisions of section 147 of the Act. The relevant extract of the judgment has been reproduced below:
- “5… there is no failure on the part of the assessee in furnishing the particulars pertaining to the above noted sum as not recoverable for the relevant accounting year and the statements filed along with the original return disclosed the full details of the aforesaid account. There is, therefore, no failure on the part of the assessee to disclose fully and truly the material facts necessary for the assessment years for the respective years and as such section 14 7(a) has no manner of application and is not attracted in the facts of the matter under consideration
- Similar principles have been outlined in the following cases:
- Haryana Acrylic Manufacturing Company vs CIT (2009) 308 ITR 38 (Del HC)
- Dhfl Vysya housing Finance Limited [2013-(ID2)-GJX-1147- TBAN]
- Duli Chand Singhania vs ACIT (2004) 188 CTR (PH)
1.2.8. Given the above, we wish to submit that the initiation of reassessment proceedings under section 147 of the Act is invalid in law as NVIDIA India has disclosed all the primary material facts during the course of the assessment proceedings.”
9. Further, it was submitted that there is no tangible material warranting issuance of notice under section 148 of the Act and contended that the reassessment proceedings have been initiated on a change of opinion for a fishing and roving enquiry. The contentions raised by the assessee was rejected by the CIT(A). The CIT(A) held that reopening of assessment is valid in law. The relevant finding of the CIT(A) upholding the reassessment as valid, reads as follows:
“4.0 Ground of appeal No. 1 & 2are general in nature and needs no adjudication.
5.0 Ground of appeal No. 3,4,5,6 & 7relates to reopening of assessment beyond four years.
5.1 In these grounds, the appellant objects to the reopening of the assessment beyond four years. Main contention of the appellant is that when the assessment order is reopened beyond four years, two conditions need to be satisfied:
(1) AO should have reason to believe that income chargeable to tax has escaped assessment.
(2) There should be failure on the part of the assessee to disclose material facts.
5.2 On a careful perusal of the assessment order, material available on record, it is seen that the AO had issued notice u/s. 148 and he has also during the course of the proceedings given a copy of the reasons for the same. The objections of the appellant have also been dealt with in the assessment order. Therefore, the first condition is satisfied.
5.3 As regards, the second condition, the appellant states that there is no failure on its part to disclose material facts. The appellant relies on the financial statements and Form 3CEB to canvass this point. However, a perusal of the relevant disclosures in Form 3CEB and financial statements, it is seen that there has been no full and fair disclosure of material facts. A copy of the Form 3CEB is scanned and placed under:
b) Form 3CEB
5.4 As can be seen the narration is “assets received free of cost, closely linked to research and development services under Clause-13”. This narration conveys the meaning as though the equipment received free of cost or proprietary equipment that are used for research and development purposes. However, as can be seen in the later part of this order, the impugned equipment are anything but proprietary and are freely available for purchase in the market. Therefore, the reopening u/s. 147 is held to be valid and this grounds of appeal is dismissed.”
10. Before the Tribunal, the learned DR had justified reopening of assessment by filing written submissions. The content of the same reads as follows:
“Arguments against the legal ground raised by the Appellant
(i) With regard to the above ground, it is submitted that the AO had issued notice under section 148 of the Act after following due procedure and recording reasons for the same and obtaining due approval from the PCIT. A copy of the reasons recorded have been placed at Annexure A. It is also noted that the reasons were provided to the Appellant vide communication dated 02.03.2022. The said communication is placed at Annexure B. The Appellant raised objections to re-opening which was disposed by the AO vide his order dated 20.03.2022. The relevant extract of the order disposing the objections has also been reproduced in the assessment order (reference paragraph 3 of the assessment order).
(ii) The above, facts are also noted that discussed by the Ld. CIT (A) in paragraph 5.2. page 5 of his order.
(iii) As regards the issue of validity of reassessment proceedings, it has been contended by the Appellant that reopening beyond a period of 4 years is bad in law as there was no new material that was not submitted during the original assessment proceedings and the reasons recorded amounted to a “change in opinion”. In this regard it is submitted that from the perusal of the reasons recorded it is noted that he AO while recording the reasons has observed that the Appellant had filed a copy of the annual report and audited P&L Account and balance sheet along with return of income where various information! material were disclosed, however , the requisite material facts i.e. assets received free of cost! on loan basis were embedded in such a manner that material evidence could not be discovered by the AO. In other words, the reasons recorded make a distinction as to why the information does not tantamount to change in opinion. In this regard the AO has also placed reliance on several case laws in his order disposing objections to reopening (reference page 2 of assessment order).
(iv)Further, it is also pertinent to note that the original assessment order passed under section 143(3) of the Act r.w.s. 144C of the Act for AY 2014-15 does not examine , discuss or form any opinion in respect of the aspect of receipt of free of cost assets!assets received on loan basis. A copy of the said order has been placed at Annexure The only addition made in the said order has been on account of the TP additions.
(v) Further, on perusal of the notices issued under section 142(1) of the Act, while framing assessment under section 143(3) of the Act, it is noted that no specific query was asked in respect of receipt of assets free of cost. A copy of the notice issued under section 142 (1) during the course of the original assessment has been placed at Annexure D.
(vi) Further, as regards the order passed by the Transfer Pricing Officer (TPO) under section 92CA of the Act for AY 2014-15, it may be noted that the TPO has proposed adjustments to the ALP only on account of comparability analysis. It may be pertinent to note that no discussion has been made on the definition of operating cost” i.e which expenses would constitute operating cost in the case of the This aspect is crucial as the Appellant has received free of cost assets! assets on loan basis from its Associated Enterprise (AE). Further, the Appellant is a cost-plus entity which is renumerated by its AE at a cost plus 12% mark-up. In other words, the cost base is directly proportional to the profits earned by the Appellant. Since the TPO had not gone into the definition of “operating. cost” even the TPO had not formed any opinion in respect of the costs pertaining to the assets received free of cost! on loan basis. A copy of the order passed by the TPO is placed at Annexure E.
(vii) Hence as is evident from all the points discussed above, no opinion was formed in respect of the issue of the cost relating to free of cost software received by the Appellant in the original assessment passed by the AO nor by the TPO while assessing the ALP of the transactions entered into by the Appellant.
(viii) Further, the CIT (A) in his order, in paragraph 5.4 notes that even though the Appellant had provided details of the assets received free of cost!on loan basis in Form No. 3CEB, the disclosures made with regard to receipt of assets free of cost were misleading as they were stated to be used for research and development purposes. However, this disclosure is factually incorrect as has been noted that in the order of CIT (A) in paragraph 5.4. From the list of assets received free of cost!on loan basis (reference page 16 of the assessment order), it is observed that all the said assets are generic in nature such as laptops or monitors which are available freely in the market. These assets are not proprietary in nature and are not exclusive to the group companies. If not supplied free of cost by the AE to the Appellant, the Appellant would have had to procure these assets from the open market at market prices. Accordingly, the Appellant has not made true and full disclosure in respect of the assets received free of cost! or loan basis.
(ix) Further, by not purchasing the assets from the open market, the Appellant has suppressed its cost base and thereby its profits (as the Appellant is a cost plus entity). It is reiterated that receipt of the said assets had a direct impact on the revenue of the Appellant and hence the said receipt resulted in a direct benefit to the Appellant. As per clause (iv) of section 28 of the Act, such benefit is. income that is chargeable to income-tax under the head “Profits and gains of business or profession. Accordingly, the AO has correctly held that income relating to the benefit received on account of receipt of assets free of cost/on a loan basis has escaped assessment for AY 2014-15.
(x) In view of the above, it is submitted that that the re-opening of assessment in the instant case is valid and as per law and squarely falls within the purview of the first proviso to section explanation 147 of the Act read with Explanation 1 to the said section.
(xi) With regard to the above, reliance is placed on the following case laws:
Principal Commissioner of Income Tax v. Bayer Vapi (P.) Ltd. [2019] 106 taxmann.com 395 (Gujarat) : In this the Hon’ble High Court of Gujarat held that Where assessee-company filed a writ petition against reopening notice issued against it on ground that assessee had failed to deduct TDS on certain payment and further reassessment order was passed making disallowance under section 40(a)(ia), since assessee had not deducted TDS as detailed in Form 3CD and said fact was not taken into consideration by Assessing Officer while passing original assessment order under section 143(3), consideration of same could not to be considered as change of opinion and, thus, there was tangible material to believe that there was an escapement of income
[2023] 147 taxmann.com 73 (Madras) Karur Kongu Charitable Trust v. Income-tax Officer: In this case, the Hon’bie High Court of Madras held that where assessment was sought to be reopened in case of assessee – Trust on ground that there was unaccounted investment and undisclosed income paid for acquiring land from trustees and Assessing Officer while making original assessment in case of assessee-Trust made no reference either to issue of undervaluation of land or sources of funds for cost of construction of building, it could be said that there was no formation of opinion on above issues for proceedings to be hit by restriction of reassessment not being permitted on ground of change of opinion
[2024] 163 taxmann.com 385 (Kerala) T.K. Salim v. Union of India: In this case, the Hon ‘ble High Court of Kerala held that if assessments concluded are not in accordance with law, it is not change of opinion, but it is a valid reason for reopening assessments; thus where Assessing Officer had ignored mandatory provision of section 14A and Circular No. 5,114 while completing assessments, reopening of assessment was justified
[2024] 163 taxmann.com 294 (Calcutta) Principal Commissioner of Income-tax v. I.T.C. Ltd.: In this case the Hon’ble High Court of Calcutta held that where Assessing Officer while passing original assessment order under section 143(3) was totally silent on liability of ass essee to tax under section 115./B and he neither noticed provisions of section 115./B nor formed any opinion with regard to liability to tax of assessee on book profit, assessment order was nonspeaking and cryptic and, therefore, reassessment proceedings initiated by Assessing Officer under section 147 was not based on change of opinion.
[2019] 110 taxmann.com 57 (Delhi) Chelan Sabharwal v. Assistant Commissioner of Income-tax, Circle-28(1): In this case the Hon ‘ble High Court of Delhi held that where original assessment orders were silent on aspect on which reopening had been ordered, it could not be said that reason to believe constituted a ‘change of opinion’
[2011] 16 taxmann.com 190 (Bom.) Indian Hume Pipe Co. Ltd v. Assistant Commissioner of Income-tax, Central Circle-22 : In this case the Hon ‘ble High Court of Bombay held that mere production of account books or other evidence from which material evidence could with due diligence have been discovered by Assessing Officer does not necessarily amount to a disclosure within meaning of first proviso to section 147.
[2012] 20 taxmann.com 5 (SC,) Honda Siel Power Products Ltd. v. Deputy Commissioner of Income-tax: In this case the Hon’ble Supreme Court held that merely because material lies embedded in material or evidence, which Assessing Officer could have uncovered but did not uncover, is not a good ground to deny or strike down a notice for reassessment to the DR’s submissions (also produced by the assessee in its Paper Book at Page 97).
11. In this context, it is relevant to extract the reasons recorded which was furnished to the assessee on 02.03.2022. This has been produced as Annexure Bto the DR’s submissions (also produced by the assessee in its Paper Book at Page
97).
12. As per first proviso to section 147 of the Act, no action can be taken under section 147 of the Act after the expiry of 4 years from the end of the relevant Assessment Year, if an assessment order is passed under section 143(3) for the relevant Assessment Year. However, if an assessee has failed to:
(i) furnish a return under section 139 of the Act or in response to a notice issued under sub-section (1) of section 142 or section 148 of the Act for the relevant Assessment Year or
(ii) disclose fully and truly all material facts necessary for assessment for the relevant Assessment Year, the AO can exercise jurisdiction under section 147 of the Act.
13. From the perusal of the reasons recorded for reopening the assessment (supra), we do not find anywhere in the copy of reasons recorded that there is any allegation upon the assessee regarding not disclosing fully and truly all material facts for completion of assessment which is necessary in the case of reopening beyond the period of 4 years in the case of assessment completed under section 143(3) of the Act. Since the case relates to Assessment Year 2014-15 and the notice has been issued by the AO on 3 1.03.2021, we observe from the notice that necessary ingredients, which were required to be mentioned for reopening beyond the period of 4 years, has not been mentioned. Accordingly, we hold that the reasons recorded by the AO for exercising jurisdiction under section 147 of the Act is not in conformity with the provisions of Section 147 of the Act.
14. In the following case laws, it was held that the reassessment is bad in law if the reasons recorded for issue of notice under section 148 of the Act does not show that the income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment.
i) The Hon’ble Karnataka High Court in the case of ACIT Vs. Hewelett Packard Digital Global Solutions Ltd., in ITA Nos.406 and 407 of 2007 (judgment dated 19.09.2011) by referring to the judgment of Hon’ble Bombay High Court in the case of Hindustan Lever Ltd., Vs. R B Wadkar reported in [2004] 268 ITR 332 (Bombay) has observed as follows:
“7. It is observed in the said judgment that the reason recorded by the Assessing Officer no where state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is for the Assessing Officer to disclose and open his mind through reasons. He has to speak through his reasons. It is for the Assessing Officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The order passed by the Assessing Authority did not state anywhere that there was a failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment of that year. All that has been stated in the order is that the assessee has appended the note and at no point of time, the assessee has disclosed as to the nexus between the amount of Rs. 10,06,617/-and the 10A unit. The disclosure has to be full and true. Both the criteria have to be met. In the assessee’s case, by failing to bring out the nexus between the 10A unit and the interest income, the assessee has not discharged its responsibility of furnishing full disclosure of facts. As set out above, the note clearly sets out the interest income earned by the STP unit and the claim of the assessee for exemption under Section 10A. It is not the requirement of law that further the assessee should show the nexus between the amount claimed and 10A unit. When he has categorically stated that the interest, which is earned from STP unit, is eligible for exemption under Section 10A, even that nexus is manifest. The Assessing Authority has not properly applied his mind towards the statutory provisions and has not taken into consideration that the original assessment passed under Section 143(3) which was also reopened once and adjustment was made. It is for the second time, he was raising all these objections. When admittedly the second reopening of the assessment is beyond four years, under law, it is barred by time and the findings recorded by the Tribunal is legal and valid and does not suffer from any legal infirmity. In that view of the matter, no substantial question of law arises for consideration in these appeals. Accordingly, the appeals are dismissed”
ii) In the case of Assistant Commissioner of Income Tax v Kotarki Constructions Pvt Ltd reported in (2021) 435 ITR 78 (Karnataka), the Hon’ble Karnataka High Court has observed as follows :
“21. Even in the instant case, on a reading of the contents of the order, we find that the reason set out does not have any nexus to the fact that there had been a failure on the part of the respondent/assessee in fully disclosing all material facts or that there was any basis for interfering on account of the said reason there had been any escapement of income. In fact, the primary jurisdictional requirement for reopening any assessment beyond a period of four years must be fulfilled strictly, otherwise it would be an arbitrary exercise of power.”
15. Further, it has to be mentioned that DR in her Paper Book as Annexure ‘A’ has furnished for the first time before this Tribunal the reasons recorded for reopening the assessment. The said reasons recorded by the AO (Annexure ‘A’) does not contain the date nor any signature. Admittedly, in the instant case, the reasons supplied to assessee on 02.03.2022 (reproduced supra) is not the same as the reasons recorded being produced before the Tribunal as Annexure ‘A’. The Hon’ble Orissa High Court in the case of PCIT Vs. Badal Prakash Jindal (HUF) and Ors reported in [2023] 457 ITR 345 (Orissa), by following the judgment of the Hon’ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. Vs. CIT reported in (2009) 308 ITR 38 (Delhi) had held that when the reasons supplied to the assessee and the reasons supplied before the higher forum is not verbatim same, it cannot sustain the validity of reopening of assessment under section 147 of the Act and consequently the reassessment order was quashed. The Hon’ble Orissa High Court in the case of PCIT Vs. Badal Prakash Jindal (HUF) and Ors (supra) reads as follows:
‘………………
10. It is, therefore, clear that the settled position of law on this aspect, as held by the hon’ble High Court in the case of Haryana Acrylic Manufacturing Co. v. CIT [2009] 308 ITR 38 (Delhi) is that the requirement of recording the reasons communicating the same to the assessee enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen assessments which have been finalized on his mere whim or fancy and that he does so only on the basis of lawful reasons and since these steps are also designed to ensure complete transparency and adherence to the principles of natural justice, any deviation from these directions would entail the nullifying of the proceedings.
11. Admittedly in the case on hand, the reasons supplied to the assessee are not the same and verbatim. In view of this settled position of law and respectfully following the line of decision in Haryana Acrylic Manufacturing Co. v. CIT [2009] 308 ITR 38 (Delhi) by the higher forum referred to in the decision of the co-ordinate Bench of this Tribunal in the case of Winico Seedlings (supra), we find it difficult to sustain the validity of the reopening of proceedings under section 147 of the Act and consequently quash the same.'”
11. This court is entirely in agreement with the above conclusion of the Income-tax Appellate Tribunal which is based on the decisions of the High Courts and the Supreme Court of India.
12. Indeed, if the original reassessment order itself was not validly passed, the subsequent revisional order by the Principal Commissioner of Income-tax was required to be held invalid.
13. No substantial question of law arises from the impugned order of the Income-tax Appellate Tribunal. The court is therefore not inclined to frame the questions of law as urged by the Revenue in the present appeals. It will be noted here that in para 19 of the impugned order of the Income-tax Appellate Tribunal, the Revenue has not disputed that the connected appeals raised similar issues.
14. The appeals are accordingly dismissed in the above terms.”
16. In light of the aforesaid reasoning and judicial pronouncements cited supra, we allow the appeal of the assessee on legal ground viz., reopening of assessment is not valid in law. Since we have decided the legal grounds raised by the assessee in its favour, the issue on merits is not adjudicated and is left open. It is ordered
17. In the result, appeal filed by the assessee s party allowed.
Pronounced in the open court on the date mentioned on the caption page.
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