Income Tax Appellate Tribunal - Delhi
Bharati Airtel Ltd ( Formelry Bharti ... vs Acit 8(3), Mumbai on 17 June, 2021
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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'A' BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA No. 5389/MUM/2010
[A.Y 2004-05]
Bharti Airtel Ltd. Vs. The C.I.T(A) -16
[Formerly Bharti Broadband Ltd Mumbai
Airtel Center, Plot No. 16,
Udyog Vihar, Phase -IV
Gurgaon
PAN: AAACB 2894 G
[Appellant] [Resp ondent]
Assessee by : Shri Anil Bhalla, CA
Revenue by : Shri Satpal Gulati, CIT- DR
Date of Hearing : 15.06.2021
Date of Pronouncement : 17.06.2021
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the CIT(A)-16, Mumbai dated 26.04.2010 pertaining to A.Y 2004-05. 2
2. The grievances of the assessee read as under:
1. The learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in upholding the action of the learned Assessing Officer in assuming jurisdiction u/s 147 of the Income Tax Act, 1961 and consequently the reassessment order passed u/s 147/143 (3) is invalid in law.
2. The learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in upholding the action of the learned Assessing Officer in reducing the cost of plant and machinery block of Fixed Assets i.e. written down value during the relevant previous year allegedly on the ground that the waiver of loan is related to the cost of acquisition of plant and machinery block of assets and thereby reducing the claim of depreciation by Rs.96,19,618/- being 25% of Rs.3,84,78,473/-/.
3. The appellant craves leave to add, alter or amend the ground of appeal at a later stage."
3. Briefly stated, the facts of the case are that original assessment order was framed u/s 143(3) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] vide order dated 22.12.2006 which is placed in the paper book at PDF page 116. Certain additions were made to the returned income of the assessee and the assessee 3 preferred an appeal before the ld. CIT(A), who, vide order dated 20.03.2009, decided the appeal.
4. The order of the ld. CIT(A) is placed at PDF page 190 of the paper book. On 16.03.2009, the Assessing Officer assumed jurisdiction u/s 148 of the Act by issuing notice. The following reasons were recorded for reopening the completed assessment:
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5. Assessment order was passed on 25.11.2009. The order was framed u/s 143(3) r.w.s 147 of the Act.
6. A perusal of the reasons recorded for reopening the assessment show that the Assessing Officer wants to review the very same statement of accounts which were basis for framing the original assessment order dated 22.12.2006.
7. During the course of original assessment proceedings, the Assessing Officer has considered the computation of income which is placed at pages 68 to 72 of the paper book. It would be pertinent to refer to the relevant Note II to accounts which were considered at the time of original assessment proceedings and the same read as under:
"II Pursuant to Share Sale and Purchase agreement dated February 20, 2003, amongst Comsat / Investments amongst Comsat Investment and Comsat Corporation, Max India Limited and the Company, Max India Limited acquired the balance 49 % of the share holding in the Company. In terms of the aforesaid agreement in/addition to payment of the purchase price, Max India Limited was required to secure an unconditional release from letters of comfort given by CIIM to a bank in respect of certain facilities 6 availed by the Company. The release was obtained by Max India Limited giving a Corporate Guarantee to the bankers. Upon fulfilment of the conditions stipulated in the aforesaid agreement the loans including accumulated interest thereon, given by CUM and its associates to the Company, were deemed to have been repaid in full and extinguished, during the financial year. Accordingly, loans related to acquisition of fixed assets amounting to Rs.38;478,473 have been set off against cost of the related fixed assets and the corresponding accumulated depreciation amounting to Rs. 31,998,187 has been reversed and set off against current year's depreciation charge. The balance amount of Rs. 51,083,475 included in the total loan amount was retained by the Company to continue to maintain and support its infrastructure thereby enabling, through a deemed grant by virtue of the Corporate Guarantee referred to above, as approved by the Board of Directors, the strengthening of its net worth position. The amount so retained has been transferred to Capital reserves.
8. The relevant part of the balance sheet is as under; 7
9. A conjoint reading of the aforesaid facts would show that the Assessing Officer is reviewing the same set of facts which were considered by him at the time of framing original assessment order and 8 there is no new material or information with the Assessing Officer for assuming jurisdiction u/s 147 of the Act and reasons recorded for reopening as extracted elsewhere also show that there is no new tangible material evidence which has come to the notice of the Assessing Officer to reopen the completed assessment which was framed after due consideration of all facts and after due application of mind and after considering the relevant provisions of the Act.
10. A perusal of the facts show that all the facts are same as they were at the time of original assessment.
11. We have carefully perused the original assessment order qua the relevant documentary evidences. We are of the considered view that the Assessing Officer has considered the return of income, computation of income, balance sheet, profit and loss account and tax audit report and raised queries and reviewed the reply of the assessee. We find that from these very records, the Assessing Officer noted and formed a belief that income has escaped assessment which means that there was no new tangible material or information.9
12. The relevant note to the balance sheet, as extracted hereinabove, shows that the Assessing Officer wants to re- examine/review the very same note for assumption of jurisdiction u/s 148 of the Act. In our considered opinion, this is nothing but change of opinion and absence of tangible new material.
13. The Hon'ble Delhi High Court in the case of Kelvinator of India Ltd 256 ITR 1 had observed as under:
"22. We are unable to agree with the submission of Mr. Jolly to the effect that the impugned order of reassessment cannot be faulted as the same was based on information derived from the tax audit report. The tax audit report had already been submitted by the assessee. It is one thing to say that the AO had received information from an audit report which was not before the ITO, but it is another thing to say that such information can be derived by the material which had been supplied by the assessee himself.
23. We also cannot accept submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded on analysis of the materials on the record by itself may justify the AO to initiate a proceeding under s. 147 of the Act. The said submission is fallacious. An order of assessment can be passed either in terms of sub-s. (1) of s. 143 or sub-s. (3) of s. 143. When a regular order of assessment is passed in terms of the said sub- s. (3) of s. 143 10 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of cl.
(e) of s. 114 of the Indian Evidence Act the judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi judicial function to take benefit of its own wrong.
14. This decision of the Hon'ble High Court of Delhi [supra] was affirmed by the Hon'ble Supreme Court in 320 ITR 561.
15. The ld. DR strongly relied upon the findings of the CIT(A) which read as under:
"1.4 I have considered the submissions made by the appellant and the order of the A.O. carefully. As per the provision of the section 147, this case falls under Explanation 2(c) of section 147 which is reproduced as under:
(c) Where an assessment has been made, but -
(i) income chargeable to tax has been underassessed; or
(ii) such income has been assessed at too low a rate ; or 11
(iii) such income has been made the subject of excessive relief under this Act;
(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. "
1.5 The above said explanation (iii) clearly states that where excess relief has been allowed, A.O. can take action under this section. In the decision of the Hon'ble Supreme Court in the case of ACIT V Rajesh Jhaveri Stock Brokers P. Ltd. (SC) reported in 291 ITR 501, the Hon'ble Court has clarified the explanation recently in section 147 and held that what is required is "reason to believe" but not established the fact of estimating of income. It was further stated that where material would normally prove escapement of income is not concerned at that stage. This is so because of formation of rule is within the term of subject of the A.O. This decision of Hon'ble Apex Court clarifies this issue that at the time of recording reasons, the A.O. should have reason to believe that there is under-assessment. So, excess relief has been allowed in the earlier assessment. Reliance is also placed on the decision of Hon'ble Jurisdictional High Court in the case of Girilal & Co. vs. ITO 300 ITR 432 (Bom). This is a clear cut case which falls under the explanation 2(c)(iii) of section 147. The arguments taken by the appellant and the decision relied upon are distinguishable because it is not a case of difference of opinion and the fact of this case are distinguishable from the cases relied upon by the appellant. Since it is a clear cut case of excess relief allowed to the appellant in the original assessment, therefore, the 12 action of the AO in issuing notice u/s.148 after recording reasons is held as valid. Keeping in view the totality of the facts and position of law, the action of the A.O. is confirmed and this ground of appeal is dismissed."
16. We do not concur with the findings of the first appellate authority in as much as the facts of the case, as discussed hereinabove, clearly show that there was no new tangible material evidence which prompted the Assessing Officer to reopen the assessment and in fact, as held by the Hon'ble Delhi High Court in the case of Kelvinator of India Ltd [supra] considered the same set of facts which were considered during the original assessment proceedings for framing the reassessment order would amount to change of opinion and, therefore, reassessment order dated 25.11.2009 deserves to be quashed.
17. The Hon'ble Delhi High Court in the case of Madhukar Khosla 267 ITR 165 had the occasion to consider a similar issue and the Hon'ble High Court held as under:
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18. Considering the facts of the case discussed hereinabove, in totality, in light of the judicial decisions discussed hereinabove, we are of the considered view that on the basis of the same assessment record as was filed by the assessee during the original assessment proceedings and also scrutinised by the Assessing Officer, before passing original assessment order u/s 143(3) of the Act is the basis for seeking reopening of the assessment.
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19. In our considered view, the reasoning given by the Assessing Officer for reopening assessment is nothing but change of opinion and a new approach to the existing facts. Therefore, the impugned reassessment notice cannot be sustained and is hereby quashed.
20. Since we have quashed the assessment order for want of jurisdiction, we do not find it necessary to dwell into the merits of the case.
21. In the result, appeal of the assessee in ITA No. 5389/MUM/2010 is allowed.
The order is pronounced in the open court on 17.06.2021.
Sd/- Sd/-
[AMIT SHUKLA] [N.K. BILLAIYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 17th June, 2021
VL/
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
Date of dictation
Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order