AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1781
X X X X Extracts X X X X
X X X X Extracts X X X X
....als are taken together and disposed-off by a single order. 3. First, we take up the appeal for AY 2007-08 in ITA No. 4850/Del/2017 in the case of M/s BSES Rajdhani Power Ltd. 4. Brief fact of the case are that assessee is a public limited company and engaged in a business of distribution of electricity in the specified area of south and west Delhi in the NCT of Delhi. The return of income was filed on 06.11.2007 declaring total loss of Rs. 1,76,80,71,626/-. Original assessment was completed u/s 143(3) vide order dated 24.12.2009 at a loss of Rs. 3,80,38,807/-. Thereafter vide notice u/s 148 of the Act dated 31.03.2014, the reassessment proceedings were initiated in the case of the assessee and the assessment order was passed u/s 147 / 143(3) of the Act on 26.03.2015 wherein the income of the assessee is reassessed at Rs. 36,76,28,228/- which stood rectified in terms of the rectification order passed u/s 154 / 147 / 143(3) dated 24.11.2015 at a total loss of Rs. 40,34,81,098/-. Against the order passed u/s 147 / 143(3), the assessee filed an appeal before ld. CIT(A) who vide impugned order dated 31.03.2017 has dismissed the appeal of the assessee ex-parte thus the assessee preferr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing to Rs. 40,37,00,000 on capital goods purchased from M/s. Reliance Energy Limited ('REL) in earlier years. 5.1. That the CIT(A) erred in not appreciating that the aforesaid issue of disallowance of depreciation on capital goods purchased from M/s. Reliance Energy Limited ('REL) was decided in favour of the appellant by the Delhi High Court in the earlier assessment year(s). 5.2. That the CIT(A) erred in not following the binding decisions of High Court/ Tribunals and co-ordinate quasi-judicial authorities in gross violation of principles of judicial propriety. 6. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the assessing officer in making addition of Rs. 47,46,05,172 on account of theft billing and late payment surcharge ('LPSC). 6.1 That the CIT(A) erred on facts and in law in not appreciating that amounts on account of late payment surcharge and theft billing did not represent 'real' income taxable under the provisions of the Act. 6.2 That the CIT(A) erred on facts and in law in not appreciating that addition made by the assessing officer was, in any case, revenue interfere/neutral and con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee afresh after considering the written submissions of the assessee. 9. After considering the submissions made by both the parties, in our considered opinion, in the instant case the matter relates to AY 2007-08 whereas almost more than 15 years have been passed and since the CIT(A) has already decided the appeal of the assessee on merits also, therefore, instead of remanding back the matter to the file of the CIT(A), we hereby proceed to decide the appeal of the assessee on the basis of the material produced and submissions made by both the parties. Accordingly, the ground of appeal No. 1 to 2.1 of the assessee are partly allowed. 10. In ground of appeal No. 3 to 3.4, assessee has challenged the order u/s 147 / 143(3) as passed without jurisdiction, mere change of opinion and barred by limitation thus bad in law and void-ab-initio. 11. Before us, the ld. AR argued that the assessment in the case of the assessee was originally completed u/s 143(3) and the reassessment proceedings had been initiated in terms of the notice issued on 31.03.2014 i.e. the vary feg end of the period of limitations for reopening the assessment for AY 2007-08. When the assessment was completed u/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the relevant assessment year which fact is evident from the detailed track event of the document i.e. the envelop under which the notice u/s 148 was sent to the assessee through Speed Post, therefore, the notice which was issued on 01.04.2014 is barred by limitation and accordingly the entire reassessment proceedings are void-ab-initio. For this, the reliance is placed on the judgement of the Hon'ble Delhi High Court in the case of Sumanjeet Agarwal Vs. ITO reported in (2022) 449 ITR 517 (Del.) wherein the court has observed as under: "25.12 The review of the aforesaid judgments of the Supreme Court and the several High Courts shows that all Courts have consistently held that the expression 'issue' in its common parlance and its legal interpretation means that the issuer of the notice must after drawing up the notice and signing the notice, make an overt act to ensure due dispatch of the notice to the addressee. It is only upon due dispatch, that the notice can be said to have been 'issued........." 15. The ld. AR of the assessee has filed a detailed written submission on the issue of all the grounds taken challenging the initiation of reassessment proceedings u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d) Re-assessment was completed without providing complete reasons, in particular the sanction obtained; (e) Reassessment is barred by limitation in terms of section 149 of the Act. Each of the aforesaid contentions is explained as under: Re (a): Re-assessment barred by limitation in terms of proviso to section 147 27. In terms of proviso to section 147, where assessment had been completed under section 143(3) of the Act, reopening is not permissible beyond 4 years from end of relevant assessment year, unless income has escaped assessment by reason of failure of the assessee to disclose fully and truly all material/primary facts necessary for assessment. 28. The Courts have in this context held that in so far as primary facts are concerned, it is the assessee's duty to disclose all of them, including particular entries in account books, particular portions of documents and other evidence disclosed. Once all the primary facts are before the assessing authority, the assessing officer requires no further assistance by way of disclosure. It is for the assessing officer to decide what inferences of fact can be reasonably drawn and what legal inferences have ultimately to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....will kindly be appreciated that there is not even a whisper by the assessing officer alleging any failure on part of the appellant to disclose material facts. The reasons recorded, in fact, nowhere even notice the applicability of the first proviso to section 147 of the Act, much less mentioning any specific fact qua any of the three issues which was not disclosed by the appellant to justify the reopening. 33. On perusal of the aforesaid, it is patently clear that in the reason there is, as a matter of fact, no charge of any failure on the part of the appellant in disclosing any material fact on the contrary, the assessing officer is simply relying upon information already available and furnished by the appellant. 34. In the aforesaid facts, it is respectfully submitted that in view of the absence of specific charge in the reasons recorded of any failure on the part of the appellant to disclose fully and truly all material facts necessary for assessment, the reassessment initiated under section 148 of the Act, after the expiry of four years from the end of the relevant assessment year is barred by limitation and consequently the impugned order is beyond jurisdiction, bad in law....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mers are billed on the basis of energy consumed as recorded by installed meters. All rectifications relating to consumer accounts are recognized in the year in which they are approved. Late Payment Surcharge and bills raised in cases of power theft are accounted for on realization." * The LPSC charge recognized as income during the relevant year was specifically disclosed in the audited accounts under "Schedule-10 - Other Income" [Refer page 18 of PB]. (iii) Capitalization of Personnel cost * The accounting policy followed by the appellant while recognizing Fixed Assets and Capital Work in Progress was duly disclosed vide Note No. 4 to the "Significant Accounting Policies and Notes to Accounts" as under [Refer Pg. @33 of PB]: (d) The capital work in progress is stated at cost inclusive of all direct and proportionate overhead costs incurred" * The capitalization on account of personnel cost to the value of assets constructed/ lying in Capital Work-in-Progress ('CWIP') was specifically disclosed in the audited financial accounts for the year in Fixed Asset Schedule [Refer page 14 of PB]. * Directions of DERC vide order dated 26.06.2003, was very much available an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s placed on the following decisions: CIT v. Foramer France: [2003] 264 ITR 566 (SC) ACIT v. ICICI Securities Primary Dealership Ltd: [2012] 348 ITR 299 (SC) CIT v. Kelvinator of India: [2010] 320 ITR 561 (SC) [affirming CIT v. Kelvinator of India Ltd.: [2002] 256 ITR 1 (Del) (FB)] ITO v. TechSpan India (P) Ltd. [2018] 302 CTR 74 (SC) CIT v. Usha International Limited: [2012] 348 ITR 485 (Del) (FB) 43. In the following cases it has been held that reassessment cannot be initiated unless some new/ additional fact/material/ information comes on record leading to the belief of escapement of income: KLM Royal Dutch Airlines v. ADIT: [2007] 292 ITR 49 (Del.) CIT v. Feather Foam Enterprises (P) Ltd.: [2008] 296 ITR 342 (Del.) Atma Ram properties Pvt. Ltd v DCIT: [2012] 343 ITR 141 (Del) CIT v. Orient Craft Ltd: [2013] 354 ITR 536 (Del) Aventis Pharma Ltd. v. ACIT: [2010] 323 ITR 570 (Bom) 44. Reliance in this regard is placed on the following decisions of the Delhi High Court wherein the Court has held that when the reasons recorded refers to "perusal of records" or similar observations, it itself indicates that reassessment proceedings are initiated on reappraisal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me Court in the case of Dakshin Haryana Bijli Vitran Nigam (infra). 46. In these circumstances, it is patently clear that the impugned reassessment proceedings are nothing but a mere attempt to rake up the very same issues again which clearly tantamount to change of opinion and hence not permissible in terms of section 147 of the Act. 47. There is, it is reiterated at the cost of duplicity, nothing to suggest, either from the reasons recorded and/or from the assessment order that any new fact/information came to the notice of the assessing officer subsequent to the original assessment. 48. It is reiterated that in the impugned order and the reasons recorded, the assessing officer has merely relied on the profit and loss account, balance sheet, tax audit report and computation of income of the assessee and also DERC order dated 23.02.2008, which were already part of the assessment records and furnished at the time of filing of return of income and original assessment proceedings, which clearly highlight the fact that the reassessment had been reopened on mere reappraisal of exiting facts, not permissible in law. 49. In view of the above, it is submitted that the impugned reo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to suggest that income of the assessee has escaped assessment and that the assessing officer may act on direct or circumstantial evidence but not on mere presumption or suspicion. "Reason to believe', it is submitted, cannot be equated with 'reason to suspect [refer Krown Agro Foods (P) Ltd vs. ACIT: 375 ITR 460 (Del), GS Engineering & Construction Corporation vs DDIT (International Taxation): 357 ITR 335 (Del.)] 54. It is also settled law that the assessing officer cannot reopen assessment to carry out verification or fishing and roving enquiries to establish escapement of income [Refer Chhugamal Rajpal v. SP Chaliha: 79 ITR 603 (SC), CIT v. Batra Bhatta Co. 321 ITR 526 (Del.), Digi Electronics Pvt. Ltd. v. ACIT WP No. 1798 of 2022 (Bom.), Inductotherm (India) P. Ltd. vs. DCIT 356 IT'R 481 (Guj)). 55. In the present case, the reasons recorded by the assessing officer in the case of the assesses, it is respectfully submitted, do not constitute 'reasons to believe' which can suggest that income on the three alleged accounts had escaped assessment, as briefly submitted hereunder: * Disallowance of Depreciation on Energy meters There cannot be any escapemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reasons, specifically sanction: 57. During the course of reassessment proceedings, reasons recorded for initiating the aforesaid proceedings were furnished to the assessee on 11.04.2014. In response thereto, the assessee filed letter dated 15.10.2014 objecting to the assumption of jurisdiction under section 147/148 of the Act on several grounds. [refer pages 90 to 154 @ 95 onwards of PB] 58. It is submitted, that incomplete reasons recorded were provided to the assessee in as much as while communicating the reasons for reopening the assessment, copy of the standard form used by the assessing officer for recording basic facts, reasons for reopening, obtaining the approval of the Superior Officer (if any), was not provided, which is violative of the law laid down in Sabh Infrastructure Ltd. v. ACIT: [2017] 398 ITR 198 (Del). In that case, the Court held as under: "19. Before parting with the case, the court would like to observe that on a routine basis, a large number of writ petitions are filed challenging the reopening of assessments by the Revenue under sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ITR 443 (Bom.) DSJ Communication Ltd. v. DCIT: [2014] 222 Taxman 129 (Bom.) Dhadda Exports v. ITO: S.B. Civil Writ Petition No.913/2015 (Raj.) Adani Ports and Special Economic Zone Ltd. v. DCIT: Special Civil Application No. 17184 of 2012 (Guj.) 61. For the aforesaid reason, too, since complete reasons, as required in law, were not provided to the assessee, the reassessment proceedings are invalid and bad in law Re (e): Reopening is barred by limitation under section 149 of the Act 62. In this regard, it is at the outset respectfully submitted that, in the present case, though the notice issued under section 148 bears the date of issuance as 31.03.2014 [refer page 87 of PB], the same was actually dispatched by the assessing officer only on the next day Le. 01.04.2014 via speed post bearing Booking ID No. ED340358868IN. In this regard, screenshot of tracking status of the booking ID, as obtained from post office's website, along with envelope served to the appellant is enclosed as Annexure-1 63. Reliance, in this regard, is placed on the decision of Hon'ble Delhi High Court in the case of Suman Jeet Agarwal v. ITO: [2022] 449 ITR 517 (Delhi) wherein the court,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to reopen the completed proceedings therefore, the notice issued u/s 148 deserves to be quashed and consequent reassessment proceedings deserves to be hold void-ab-initio. 17. Per-contra ld. CIT-DR vehemently supported the order of the lower authorities and submitted that the ld. CIT(A) has dealt with all this issues in detailed in para 4.1 to 4.4 of its order which are self explanatory and therefore he requested that the AO has rightly initiating the proceedings u/s 148 of the Act and he prayed accordingly. 18. We have considered the rival submissions and perused the material available on record. At the outset, we first decide the ground of the assessee with regard to the limitation issued where the assessee claimed that the notice u/s 148 bears the date of issue as 31.03.2014 however, the same was actually dispatched on 01.04.2014 through Speed Post bearing booking ID No. ED340358868IN. The assessee has placed before us the screenshot of tracking status of booking ID as obtained from the post office web site alongwith the copy of envelop through which such notice was served upon to the assessee according to which the claim of the assessee that the notice u/s 148 was handed over....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny 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 under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): 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 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: Provided further that the Assessing Officer may assess or reassess s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and not subsequent to the re- opening of the assessment by issuing a notice u/s. 148, 240 ITR (Nagpur) 12 & 311 ITR (P&H) 38.Further, the information should be specific and not general in nature. After the examination of the information, the AO has to form a belief that income has escaped assessment. Again for formation of the belief the information should be credible and should have a live link and nexus with the belief about escapement of income. The belief is to be formed on the basis of the information available with the AO at that time. He cannot go ahead in re-opening of the assessment, issue a notice and then search for the material. IT is also important to note that there should be reasons to form a belief and not reasons to suspect. Whatsoever strong the suspicion, it may be. 90 ITR Patna (TM) 90, 104 TTJ(Asr)353. Further, there is an another aspect also to formation of the belief and that is the satisfaction should be the own satisfaction of the AO and not the borrowed satisfaction. If the AO re-opens an assessment simply on the basis of satisfaction recorded by some other authority like Sales Tax, Excise or Director Investigation and does not record his own satisfaction ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n'ble Apex Court in the famous case of GKN Drive Shaft reported in 259 ITR(SC) 19.The AO gets its power to issue the notice and start the reassessment proceedings from the reasons recorded by him. It is clearly settled by Hon'ble Bombay High Court, in the case of Jet Airways 331 ITR 236, Delhi High Court, in the case of Ranbaxy Laboratories and Punjab & Haryana High Court in the case of Atlas Cycle 180 ITR that, if no addition is made in the assessment order by the Assessing Officer in respect of the escaped income recorded in the reasons of re-opening and the other additions are made in respect of other escaped income, which has no nexus with the reasons recorded then the AO losses his jurisdiction for making reassessment and the assessment order passed by him was treated to be invalid. This judgment was followed and discussed by various Benches of ITAT and the High Court in the following judgements: 108 TTJ(Asr)I, 108 ITD (Agra)115, 239 CTR(Bom)183, 242 CTR(Del)117, 339 ITR (Pat)272, 253 CTR(Guj)321, 258 CTR(Guj)168, 128 TTJ(Mum)514, 217 CTR(Raj)345, CTR(Chatti)255. 237 CTR(Del)473, 220 CTR(Raj)629, 246. 5.1.5 Admittedly, in impugned case, the issue relates to AY 2009-1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(DR), more particularly, invites our attention to the reopening reasons discussed in para 3 onwards of the assessment order dated 20.12.2016 that since the assessee was found to have inflated the corresponding acquisition of fixed assets purchased in the preceding assessment years itself, corresponding depreciation claim thereupon raised herein, deserves to be disallowed as a necessary corollary thereof. 6. The assessee, on the other hand, inter alia, submits that it had filed its return on 28.09.2009 under section 139(1) of the Act declaring loss of Rs. 154,39,15,018/-, which stood assessed in a regular assessment under section 143(3) of the Act framed on 23rd December, 2011. 7. We are further taken to the learned Assessing Officer's reopening reasons as well, wherein, there is not even an iota of allegation against the taxpayer that it had not disclosed the relevant particulars in its returns, the said section 143(3) assessment proceedings "fully" and "truly" in light of section 147 1st proviso, and, therefore, it is prayed that the learned CIT(A)'s detailed discussion quashing the impugned reopening itself be confirmed. 8. Learned counsel further invites our attention to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....' is removed, then, in the garb of re-opening the assessment, the review would take place. One must treat the concept of 'Change of opinion' as an in-built test to check abuse of power by the assessing officer." 22. Further as observed above, in the case of assessee itself in AY 2009-10 the coordinate bench of the tribunal in ITA No. 1843/Del/2023 under identical circumstances held the reopening as bad in law. IN view of above discussion, we hold that the reassessment proceedings initiated in the case of the assessee are bad in law. Further we have already hold that the notice issued u/s 148 as barred by limitation, therefore, in view of these facts we hereby quash the notice issued u/s 148 of the Act and consequent reassessment order passed u/s 147 / 143(3) of the Act is hereby held as bad in law and void-ab-initio and consequent additions made are hereby deleted. 23. Since the ground No. 3 to 3.4 of the assessee taken on the legality of the proceedings initiated u/s 148 have been allowed in its favour, the remaining grounds of appeal became academic and are not adjudicated. 24. As a result, appeal of the assessee for AY 2007-08 is allowed. ITA No. 4851/Del/2017 of M/s BSES Ra....