DR BATRAS POSITIVE HEALTH CLINIC PRIVATE LIMITED,MUMBAI vs. CIT(A), NFAC, NATIONAL FACELESS APPEAL CENTRE

and disposed off by way of this and disposed off by way of this consolidated order for convenience order for convenience and avoid reputation of facts. and avoid reputation of facts.

DR Batras Positive Health Clinic Pvt. Ltd.. 3 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 1.3. The Appellant prays that the reopening proceedings u/s. 147 of the 1.3. The Appellant prays that the reopening proceedings u/s. 147 of the 1.3. The Appellant prays that the reopening proceedings u/s. 147 of the Act be held as void Act be held as void-ab-initio and/or otherwise bad in law. WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1, 2. GROUND NO. 2: DISALLOWANCE OF ADVERTI 2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES SEMENT EXPENSES AMOUNTING TO TO RS. 3,72,89,606/-: 2.1. On the facts and in the circumstances of the case and in law, the Id. 2.1. On the facts and in the circumstances of the case and in law, the Id. 2.1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the advertisement expenses of Rs. 3,72,89,606/ advertisement expenses of Rs. 3,72,89,606/- incurred by the Ap incurred by the Appellant holding the same to be allegedly in violation of 'The Homeopathy holding the same to be allegedly in violation of 'The Homeopathy holding the same to be allegedly in violation of 'The Homeopathy Practitioners Regulations, 1982' (hereinafter "Homeopathy Regulations). Practitioners Regulations, 1982' (hereinafter "Homeopathy Regulations). Practitioners Regulations, 1982' (hereinafter "Homeopathy Regulations). 2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2.1. the advertisement expenses are all 2.2.1. the advertisement expenses are allowable expense under the Act owable expense under the Act and thus, the proviso to section 37(1) of the Act does not get attracted; and thus, the proviso to section 37(1) of the Act does not get attracted; and thus, the proviso to section 37(1) of the Act does not get attracted; 2.2.2. the Appellant has not violated any regulations under the 2.2.2. the Appellant has not violated any regulations under the 2.2.2. the Appellant has not violated any regulations under the Homeopathy Regulations; Homeopathy Regulations; 2.2.3 since the Homeopathy Regulations mandatorily require an since the Homeopathy Regulations mandatorily require an since the Homeopathy Regulations mandatorily require an Individual Practitioner alone' to be registered, the Homeopathy Regulations ividual Practitioner alone' to be registered, the Homeopathy Regulations ividual Practitioner alone' to be registered, the Homeopathy Regulations apply only to 'Individual Practitioner' and not to a Company; apply only to 'Individual Practitioner' and not to a Company; apply only to 'Individual Practitioner' and not to a Company; 2.2.4. without prejudice, the advertising and promotion expenses are fully 2.2.4. without prejudice, the advertising and promotion expenses are fully 2.2.4. without prejudice, the advertising and promotion expenses are fully compliant with the Homeopathy Regulations and compliant with the Homeopathy Regulations and in turn with The in turn with The Homeopathic Practitioners Homeopathic Practitioners - (Professional Conduct, Etiquette and Code of (Professional Conduct, Etiquette and Code of Ethics) Regulations 1982 (hereinafter "Practitioners Regulations); Ethics) Regulations 1982 (hereinafter "Practitioners Regulations); Ethics) Regulations 1982 (hereinafter "Practitioners Regulations); 2.2.5. the question whether there is an infraction of law or whether the 2.2.5. the question whether there is an infraction of law or whether the 2.2.5. the question whether there is an infraction of law or whether the expenditure is incurred fo expenditure is incurred for any purpose which is an offence or which is r any purpose which is an offence or which is prohibited by law has to be decided by the authority or the court prohibited by law has to be decided by the authority or the court prohibited by law has to be decided by the authority or the court empowered to do so under the respective law and the tax department empowered to do so under the respective law and the tax department empowered to do so under the respective law and the tax department cannot determine such violation under the other laws without any cannot determine such violation under the other laws without any cannot determine such violation under the other laws without any authority; 2.2.6 the Appellant has consistently claimed advertisement which have the Appellant has consistently claimed advertisement which have the Appellant has consistently claimed advertisement which have been allowed by Tax Department. been allowed by Tax Department. 2.3 The Appellant prays that the disallowance of the advertisement The Appellant prays that the disallowance of the advertisement The Appellant prays that the disallowance of the advertisement expenses amounting to Rs. 3,72,89,606/ expenses amounting to Rs. 3,72,89,606/- claimed by the Appellant while claimed by the Appellant while computing its inc computing its income under the head 'Income from Business and ome under the head 'Income from Business and Profession' be deleted. Profession' be deleted. WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1, 3. GROUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT 3. GROUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT 3. GROUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT AMOUNTING TO RS. 29,62,433/ AMOUNTING TO RS. 29,62,433/-:

DR Batras Positive Health Clinic Pvt. Ltd.. 4 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 3.1. On the facts and in the circumstances of the case and in law, 3.1. On the facts and in the circumstances of the case and in law, 3.1. On the facts and in the circumstances of the case and in law, Id. CIT(A) erred in confirming the action of the Id. AO of not allowing CIT(A) erred in confirming the action of the Id. AO of not allowing CIT(A) erred in confirming the action of the Id. AO of not allowing depreciation on yacht amounting to Rs. 29,62,433/ depreciation on yacht amounting to Rs. 29,62,433/-. 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2.1. the yacht has been used for the business of the Appella 3.2.1. the yacht has been used for the business of the Appella 3.2.1. the yacht has been used for the business of the Appellant for holding conferences etc. and therefore depreciation is allowable; holding conferences etc. and therefore depreciation is allowable; holding conferences etc. and therefore depreciation is allowable; 3.2.2. the asset had been added to the block of asset and it looses its 3.2.2. the asset had been added to the block of asset and it looses its 3.2.2. the asset had been added to the block of asset and it looses its identity when added to the block of assets; identity when added to the block of assets; 3.2.3 depreciation on yacht is consistently claimed by the depreciation on yacht is consistently claimed by the depreciation on yacht is consistently claimed by the Appellant and the same has been accepted by the Id. AO in earlier years; the same has been accepted by the Id. AO in earlier years; 3.2.4 it is a settled position in law that claim of depreciation allowed in it is a settled position in law that claim of depreciation allowed in it is a settled position in law that claim of depreciation allowed in first year cannot be disallowed in subsequent assessment years unless first year cannot be disallowed in subsequent assessment years unless first year cannot be disallowed in subsequent assessment years unless the claim in the first year itself ha the claim in the first year itself has been disturbed; 3.2.5. the Id. AO cannot sit in the armchair of the businessman to decide 3.2.5. the Id. AO cannot sit in the armchair of the businessman to decide 3.2.5. the Id. AO cannot sit in the armchair of the businessman to decide whether or not to use and how to use a particular asset for its business; whether or not to use and how to use a particular asset for its business; whether or not to use and how to use a particular asset for its business; 3.2.5 the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have used the yacht for used the yacht for treating patients; 3.2.6 The Appellant prays that the disallowance of the depreciation on The Appellant prays that the disallowance of the depreciation on The Appellant prays that the disallowance of the depreciation on yacht amounting to Rs. 29,62,433/ yacht amounting to Rs. 29,62,433/- while computing its income under the while computing its income under the head 'Income from Business and Profession' be deleted. head 'Income from Business and Profession' be deleted. WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1, 4. GROUND NO. 4: DISALLOWANCE OF REPAIRS ON YACHT AMOUNTING ROUND NO. 4: DISALLOWANCE OF REPAIRS ON YACHT AMOUNTING ROUND NO. 4: DISALLOWANCE OF REPAIRS ON YACHT AMOUNTING TO RS.23,23,212/ TO RS.23,23,212/-: 4.1. On the facts and in the circumstances of the case and in law, the Id. 4.1. On the facts and in the circumstances of the case and in law, the Id. 4.1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the expenditure pertaining to repairs o expenditure pertaining to repairs on yacht amounting to Rs. 23,23,212/ n yacht amounting to Rs. 23,23,212/- for the reason that the said yacht has not been used by the Appellant for for the reason that the said yacht has not been used by the Appellant for for the reason that the said yacht has not been used by the Appellant for its business. 4.2. The Id. CIT(A) failed to appreciate and ought to have held that: 4.2. The Id. CIT(A) failed to appreciate and ought to have held that: 4.2. The Id. CIT(A) failed to appreciate and ought to have held that: 4.2.1 the yacht has been used for the business of the the yacht has been used for the business of the the yacht has been used for the business of the Appellant for holding conferences etc. and therefore repairs expenditure in respect of the holding conferences etc. and therefore repairs expenditure in respect of the holding conferences etc. and therefore repairs expenditure in respect of the same is allowable u/s. same is allowable u/s. 37(1); 4.2.2 repairs have been consistently allowed whenever claimed by the repairs have been consistently allowed whenever claimed by the repairs have been consistently allowed whenever claimed by the Appellant; 4.2.3 the Appellant at no stage of the proceedings had the Appellant at no stage of the proceedings had claimed to have claimed to have used the yacht for treating patients. used the yacht for treating patients.

DR Batras Positive Health Clinic Pvt. Ltd.. 5 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 4.3 The Appellant prays that the disallowance of expense on repairs of The Appellant prays that the disallowance of expense on repairs of The Appellant prays that the disallowance of expense on repairs of yacht amounting to Rs. 23,23,212/ yacht amounting to Rs. 23,23,212/- while computing its income under the while computing its income under the head 'Income from Business and Profession' be deleted. head 'Income from Business and Profession' be deleted.”

3.1 In the re-assessment completed under section 147 of the Act assessment completed under section 147 of the Act assessment completed under section 147 of the Act on 28/12/2018, the Assessing Officer disallowed following on on 28/12/2018, the 28/12/2018, the Assessing Officer disallowed Assessing Officer disallowed expenses:

(i) Business promotion expenses amounting to Business promotion expenses amounting to ₹3,72,89,606/ 606/- ; (ii) Depreciation on ‘yacht ‘yacht’ amounting to ₹29,62,433/-and (iii) Repair expenses of the yacht amounting to ₹ 23, 23, 212/. Repair expenses of the yacht amounting to 23, 23, 212/.

DR Batras Positive Health Clinic Pvt. Ltd.. 6 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 validity of the reassessment as well as on merit of the addition/ validity of the reassessment as well as on merit of the addition/ validity of the reassessment as well as on merit of the addition/ disallowance made by the Assessing Officer. disallowance made by the Assessing Officer. Therefore herefore, the assessee is before us by way of the grounds raised as reproduced above. before us by way of the grounds raised as reproduced above. before us by way of the grounds raised as reproduced above.

6.1 Firstly, in ground ground No.1.2.2, the assessee has challenged , the assessee has challenged s bad in law being based on ‘change of opinion’ change of opinion’ on reopening as bad in law being based on ‘ same set of facts. The learned counsel same set of facts. The learned counsel for assessee for assessee submitted that reassessment has been initiated reassessment has been initiated for examining different aspects / for examining different aspects / another facet of issue another facet of issue of business promotion expenses expenses, which was already dealt in assessment completed u/s 143(3) of the Act. The already dealt in assessment completed u/s 143(3) of the Act already dealt in assessment completed u/s 143(3) of the Act learned counsel referred to paper book page 80 to 84 and submitted learned counsel referred to paper book page 80 to 84 and submitted learned counsel referred to paper book page 80 to 84 and submitted that the Assessing Officer in para s that the Assessing Officer in para seven of the assessment order even of the assessment order passed u/s 143(3) of the Act, had already made disallowance already made disallowance amounting to ₹ 1, 87, 624 out of the business promotion expenses 1, 87, 624 out of the business promotion expenses 1, 87, 624 out of the business promotion expenses and therefore reassessment is based on and therefore reassessment is based on examination of examination of ‘another facet’ of same issue or mere ‘change of opinion’ only. In support of only. In support of the contention that Assessing Officer cannot reopen assessment to the contention that Assessing Officer cannot reopen assessment to the contention that Assessing Officer cannot reopen assessment to examine ‘another facet another facet’ of same issue, the learned counsel relied on , the learned counsel relied on decision of the Hon’ble Gujarat High Court in the case of Qx Kpo Hon’ble Gujarat High Court in the case of Qx Kpo Hon’ble Gujarat High Court in the case of Qx Kpo

DR Batras Positive Health Clinic Pvt. Ltd.. 7 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 Services P Ltd vs DCIT (2018) 94 ta Services P Ltd vs DCIT (2018) 94 taxmann.com 467 (Guj). xmann.com 467 (Guj). Further, he submitted that Special Leave Petition (SLP)filed by the Further, he submitted that Special Leave Petition (SLP)filed by the Further, he submitted that Special Leave Petition (SLP)filed by the Department against the said decision has been dismissed by the Department against the said decision has been dismissed by the Department against the said decision has been dismissed by the Hon’ble Supreme Court as reported in (2018) 99 taxmann.com (2018) 99 taxmann.com Hon’ble Supreme Court as reported in 301(SC). The learned counsel also relied on t . The learned counsel also relied on the decision of the he decision of the Hon’ble Supreme Court in the case of CIT vs Kelvinator of India CIT vs Kelvinator of India Hon’ble Supreme Court in the case of Ltd reported in 320 ITR 561 (SC) in 320 ITR 561 (SC).

6.2 The learned DR on the other hand submitted that issue of The learned DR on the other hand submitted that issue of The learned DR on the other hand submitted that issue of disallowance of business promotion expenses has not been dealt by disallowance of business promotion expenses has not been dealt by disallowance of business promotion expenses has not been dealt by the Assessing Officer in the original assessment proceedings ng Officer in the original assessment proceedings ng Officer in the original assessment proceedings u/s 143(3) of the Act and the disallowance of and the disallowance of ₹1,87,624/ 87,624/- referred by the learned counsel for assessee in para 7 of the assessment order the learned counsel for assessee in para 7 of the assessment order the learned counsel for assessee in para 7 of the assessment order is out of ‘Public Relation E ‘Public Relation Expenses’ of ₹37,52,470/-, whereas in the , whereas in the reassessment proceeding reassessment proceeding, the Assessing Officer has disallowed the Assessing Officer has disallowed expenses of ₹3,72,89, 3,72,89,606/- out of ‘advertisement and business advertisement and business promotion expenses’ amounting to Rs.23,84,27,077/ 077/-. According to the Assessing Officer the Assessing Officer, no opinion was framed in respect of no opinion was framed in respect of disallowance of ‘advertisement and business promotion advertisement and business promotion advertisement and business promotion’ expenses in the original assessment proceeding and therefore question of the original assessment proceeding and therefore the original assessment proceeding and therefore change of opinion on same set of facts change of opinion on same set of facts does not arise in instant does not arise in instant case. He also submitted th . He also submitted that contention of examining of another at contention of examining of another facet of same expense of learned counsel of the facet of same expense of learned counsel of the assessee assessee is also not correct in the case in hand. correct in the case in hand.

DR Batras Positive Health Clinic Pvt. Ltd.. 8 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 6.3 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute and perused the relevant material on record. dispute and perused the relevant material on record. contention of the assessee that in the original assessment contention of the assessee that in the original assessment contention of the assessee that in the original assessment proceeding, already disallowance has already disallowance has already been made out of been made out of same head of expenses and therefore now the Assessing Officer is expenses and therefore now the Assessing Officer is expenses and therefore now the Assessing Officer is not permitted to examine another facet of said to examine another facet of said expenses. expenses. However on perusal of para 7 of original assessment order, which is available n perusal of para 7 of original assessment order, which is available n perusal of para 7 of original assessment order, which is available on paper book pages 80 to 84, we find that disallowance in original on paper book pages 80 to 84, we find that disallowance in original on paper book pages 80 to 84, we find that disallowance in original assessment order has been has been made in respect of made in respect of ‘public relation expenses’ and not in respect of and not in respect of ‘advertisement and advertisement and business promotion’ expenses. For ready expenses. For ready reference, the relevant paragraph of the relevant paragraph of the original assessment order is reproduced as under: the original assessment order is reproduced as under: the original assessment order is reproduced as under:

07. Public Public Public Relation Relation Relation Expenses: Expenses: Expenses: The The The assessee assessee assessee has has has debited debited debited Rs.37,52,470/- - on public relation expenses. It is treated by the asse on public relation expenses. It is treated by the assessee that this expenditure has incurred necessarily to maintain public visibility that this expenditure has incurred necessarily to maintain public visibility that this expenditure has incurred necessarily to maintain public visibility and proper media relations in the interest of the business of the and proper media relations in the interest of the business of the and proper media relations in the interest of the business of the company. However, personal and non company. However, personal and non-business element cannot be ruled business element cannot be ruled out in the types of expenditures as list out in the types of expenditures as listed by the assessee. Hence 5% of ed by the assessee. Hence 5% of these expenses ie, Rs. 1,87,624/ these expenses ie, Rs. 1,87,624/- are disallowed and added back to the are disallowed and added back to the total income of the assessee. total income of the assessee. (Amount added back: Rs. 1,87,624/ (Amount added back: Rs. 1,87,624/-)

6.3.1 Before us n Before us no other evidence, like query letter issued by the AO or submission or submission on behalf of assessee, has been submitted to has been submitted to support that the issue of disallowance of support that the issue of disallowance of ‘advertisement and advertisement and business promotion’ ’ expenses was examined by the Assessing expenses was examined by the Assessing Officer in original assessment proceeding or any o in original assessment proceeding or any opinion was in original assessment proceeding or any o framed by him on the framed by him on the issue. Thus, in absence of examination of the in absence of examination of the issue or opinion framed on the issue of disallowance of issue or opinion framed on the issue of disallowance of issue or opinion framed on the issue of disallowance of ‘advertisement and business promotion expenses advertisement and business promotion expenses’ in the original

DR Batras Positive Health Clinic Pvt. Ltd.. 9 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 assessment proceeding, assessment proceeding, the decisions relied upon by the learned the decisions relied upon by the learned counsel for the assessee counsel for the assessee citing ‘change of opinion’ or examination of or examination of ‘another facet’ of same expense of same expense, are not applicable are not applicable on the facts of the instant case and hence same are distinguishable and hence same are distinguishable and hence same are distinguishable. Accordingly, the relevant ground of the appeal is dismissed. the relevant ground of the appeal is dismissed.

Secondly, in ground No. 1.2.5 ground No. 1.2.5 of the appeal, the assessee has 7. of the appeal, the assessee has challenged validity of the reassessment on the ground of challenged validity of the reassessment on the ground of challenged validity of the reassessment on the ground of ‘vagueness’ of the reasons recorded and reopening on the basis of of the reasons recorded and reopening on the basis of of the reasons recorded and reopening on the basis of ‘audit objection’. The learned counsel for the assessee submitted . The learned counsel for the assessee submitted . The learned counsel for the assessee submitted that reasons recorded are vague an that reasons recorded are vague and not clear. He further d not clear. He further submitted that reopening based on the audit objection is not submitted that reopening based on the audit objection is not submitted that reopening based on the audit objection is not permissible. In support of the contention permissible. In support of the contention, the learned counsel relied the learned counsel relied on the decision of the Hon’ble Bombay High Court in the case of on the decision of the Hon’ble Bombay High Court in the case of on the decision of the Hon’ble Bombay High Court in the case of DRM Enterprises reported reported in (2015) 55 taxmann.com 181 (Bom) taxmann.com 181 (Bom) and Supreme Court in the case of Indian & Eastern Indian & Eastern Newspaper and Supreme Court in the case of Society vs CIT (1979) 119 ITR 996(SC) Society vs CIT (1979) 119 ITR 996(SC) and CIT Vs Lucas TVS CIT Vs Lucas TVS Ltd (2001) 249 ITR 306 (SC) Ltd (2001) 249 ITR 306 (SC). The learned DR on the other hand . The learned DR on the other hand submitted that in the reasons recorded submitted that in the reasons recorded, the Assessing Officer has the Assessing Officer has clearly specified that expenses incurred on advertisement and clearly specified that expenses incurred on advertisement and clearly specified that expenses incurred on advertisement and business promotion being in violation of the statutory regulations business promotion being in violation of the statutory regulations business promotion being in violation of the statutory regulations therefore, there is no vagueness there is no vagueness in the reasons recorded as alleged the reasons recorded as alleged by the learned counsel for the a by the learned counsel for the assessee. As far as reopening based ssessee. As far as reopening based on the audit objection is concerned, the learned on the audit objection is concerned, the learned DR submitted that reopening on the basis of audit objection is permitted if the reopening on the basis of audit objection is permitted if the reopening on the basis of audit objection is permitted if the DR Batras Positive Health Clinic Pvt. Ltd.. 10 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 Assessing Assessing Assessing Officer Officer Officer has has has reopened reopened reopened the the the assessment assessment assessment after after after due due due application of mind.

7.1 We have heard rival submission of the parties rd rival submission of the parties on the issue in dispute and perused the relevant material on record. The assessee dispute and perused the relevant material on record. The assessee dispute and perused the relevant material on record. The assessee has challenged reasons recorded on the basis of the vagueness, challenged reasons recorded on the basis of the vagueness, challenged reasons recorded on the basis of the vagueness, therefore it is imperative to reproduce the reasons recorded for therefore it is imperative to reproduce the reasons recorded for therefore it is imperative to reproduce the reasons recorded for ready reference, as under: erence, as under:

Subject: Reasons recorded for reopening of assessment U/s. 147 of the Subject: Reasons recorded for reopening of assessment U/s. 147 of the Subject: Reasons recorded for reopening of assessment U/s. 147 of the I.T. Act, 1961 in your case for A.Y. 2012 I.T. Act, 1961 in your case for A.Y. 2012-13 PAN AABCD3857G 13 PAN AABCD3857G Assessee is a company carrying on the activity of operating Assessee is a company carrying on the activity of operating Assessee is a company carrying on the activity of operating homeopathy clinics for medical consultation and homeopathy clinics for medical consultation and treatment and operates treatment and operates a large number of clinics located in various cities of the country. During a large number of clinics located in various cities of the country. During a large number of clinics located in various cities of the country. During the year assessee has declared income under the heads Profits and the year assessee has declared income under the heads Profits and the year assessee has declared income under the heads Profits and Gains of Business or Profession and Income from Other Sources. The Gains of Business or Profession and Income from Other Sources. The Gains of Business or Profession and Income from Other Sources. The assessee has filed the r assessee has filed the return of income of Rs. 9,66,78,890/ eturn of income of Rs. 9,66,78,890/-. The return was processed u/s. 143(1) and was assessed under section 143(3) on was processed u/s. 143(1) and was assessed under section 143(3) on was processed u/s. 143(1) and was assessed under section 143(3) on 18.03.2015 assessing income at Rs.9,75,88,480/ 18.03.2015 assessing income at Rs.9,75,88,480/- The revenue audit has vide LAR 54 cycle has held that the assessee The revenue audit has vide LAR 54 cycle has held that the assessee The revenue audit has vide LAR 54 cycle has held that the assessee has i incurred expenditur has i incurred expenditure of Rs.23,84,27,0771- on advertisement and on advertisement and business promotion. business promotion. Any expenditure in form of advertising/publicity by Any expenditure in form of advertising/publicity by physician, by group of physicians or by institutions or organisations is physician, by group of physicians or by institutions or organisations is physician, by group of physicians or by institutions or organisations is unethical. This has resulted in underassessment of income amounting unethical. This has resulted in underassessment of income amounting unethical. This has resulted in underassessment of income amounting to Rs. 23,84,27.077/ to Rs. 23,84,27.077/-with resultant short levy of tax amounting to with resultant short levy of tax amounting to Rs.7,73,57.665 ii)availed depreciation of Rs.29,62,433/ Rs.7,73,57.665 ii)availed depreciation of Rs.29,62,433/- and repairs and maintenance charges of Rs.23,23,212 on account of repairs to the and maintenance charges of Rs.23,23,212 on account of repairs to the and maintenance charges of Rs.23,23,212 on account of repairs to the yatch in A.Y. 2012 yatch in A.Y. 2012-13 on Azimuth Yacht. This has r 13 on Azimuth Yacht. This has resulted in underassessment of income amounting to Rs.53,85,645/ underassessment of income amounting to Rs.53,85,645/-with resultant with resultant short levy of tax amounting to Rs.17.47,372/ short levy of tax amounting to Rs.17.47,372/-. The relevant portion of . The relevant portion of audit objection is as under: audit objection is as under: On perusal of the details filed, return of income and Annexure Il to Form On perusal of the details filed, return of income and Annexure Il to Form On perusal of the details filed, return of income and Annexure Il to Form 3CD pertaining to depreciation availed as per Income Tax, it is observed pertaining to depreciation availed as per Income Tax, it is observed pertaining to depreciation availed as per Income Tax, it is observed that assessee had incurred expenditure of Rs.23,84,27,0771 that assessee had incurred expenditure of Rs.23,84,27,0771 that assessee had incurred expenditure of Rs.23,84,27,0771- on advertisement and business promotion. In view of para 6(1) of the advertisement and business promotion. In view of para 6(1) of the advertisement and business promotion. In view of para 6(1) of the Homeopathic Practitioners Regulations, 1982, which is rep Homeopathic Practitioners Regulations, 1982, which is rep Homeopathic Practitioners Regulations, 1982, which is reproduced as follows:

Solicitation of patients directly or indirectly by a practitioner of "Solicitation of patients directly or indirectly by a practitioner of "Solicitation of patients directly or indirectly by a practitioner of Homoeopathy either personally or by advertisement in the Homoeopathy either personally or by advertisement in the Homoeopathy either personally or by advertisement in the newspapers. by placards or by the distribution of circular cards newspapers. by placards or by the distribution of circular cards newspapers. by placards or by the distribution of circular cards

DR Batras Positive Health Clinic Pvt. Ltd.. 11 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 or handbills is unethical. A practitioner of or handbills is unethical. A practitioner of Homeopathy shall not Homeopathy shall not make use of, or permit others to (make use of. him or his name make use of, or permit others to (make use of. him or his name make use of, or permit others to (make use of. him or his name as a subject of any form or manner of advertising or publicity as a subject of any form or manner of advertising or publicity as a subject of any form or manner of advertising or publicity through lay channels which shall be of such a character as to through lay channels which shall be of such a character as to through lay channels which shall be of such a character as to invite attention to hin or to his professionai invite attention to hin or to his professionai position or skill or as position or skill or as would ordinarily result in his self would ordinarily result in his self-aggrandisementprovided that aggrandisementprovided that a a a practitioner practitioner practitioner of of of Homoeopathy Homoeopathy Homoeopathy is is is permitted permitted permitted formal formal formal announcement in press about the following matters, namely: announcement in press about the following matters, namely: announcement in press about the following matters, namely:- (i) the starting of his practice: (ii) change of the type of practice: (iii) change of address: (iv) temporary absence from duty; (v) resumption of practice (vi) succeeding to another's practice. (2) He shall further not advertise himself directly or indirectly through (2) He shall further not advertise himself directly or indirectly through (2) He shall further not advertise himself directly or indirectly through price lists or publicity price lists or publicity materials of manufacturing firms or materials of manufacturing firms or traders with whom he may be traders with whom he may be connected in any capacity, nor shall he publish cases. operations or connected in any capacity, nor shall he publish cases. operations or connected in any capacity, nor shall he publish cases. operations or letters of thanks from patients in non letters of thanks from patients in non-professional newspapers or professional newspapers or journals provided it shall be permissible for him to publish his name in journals provided it shall be permissible for him to publish his name in journals provided it shall be permissible for him to publish his name in connection with a pr connection with a prospectus or a director's or a technical expert's ospectus or a director's or a technical expert's report" As per the above, advertisement expenses incurred by the assessee is As per the above, advertisement expenses incurred by the assessee is As per the above, advertisement expenses incurred by the assessee is unethical. Therefore, the expenses incurred on advertisement and Therefore, the expenses incurred on advertisement and Therefore, the expenses incurred on advertisement and business promotion is needed to be added back. And therefore, in business promotion is needed to be added back. And therefore, in business promotion is needed to be added back. And therefore, in view of the above facts, I have reason to believe that income to the extent of of the above facts, I have reason to believe that income to the extent of of the above facts, I have reason to believe that income to the extent of Rs. 23,84,27,077/ Rs. 23,84,27,077/- has escaped assessment for the year A.Y.2012 has escaped assessment for the year A.Y.2012-13. On perusal of the details filed, return of income and Annexure Il to Form On perusal of the details filed, return of income and Annexure Il to Form On perusal of the details filed, return of income and Annexure Il to Form 3CD pertaining to depreciation avai 3CD pertaining to depreciation availed as per Incone Tax. it is observed led as per Incone Tax. it is observed that assessee had availed depreciation of Rs 29,62,433/ that assessee had availed depreciation of Rs 29,62,433/- in A.Y. 2012 in A.Y. 2012- 13 on Azimuth Yacht. Further the break up of repairs and maintenance 13 on Azimuth Yacht. Further the break up of repairs and maintenance 13 on Azimuth Yacht. Further the break up of repairs and maintenance charges debited to the P&L Account revealed that the assessee has charges debited to the P&L Account revealed that the assessee has charges debited to the P&L Account revealed that the assessee has debited an amount of Rs.23,23,212/ ount of Rs.23,23,212/- on account of repairs to the yatch. on account of repairs to the yatch. Since the assessee is in the business of medical consultation and Since the assessee is in the business of medical consultation and Since the assessee is in the business of medical consultation and treatment, the use of yatch for the purpose of business and profession treatment, the use of yatch for the purpose of business and profession treatment, the use of yatch for the purpose of business and profession is not justified. Therefore the depreciation availed and expenses debited enses debited on the yatch are incorrect and needed to be added back. on the yatch are incorrect and needed to be added back. Therefore, in view of the above facts, I have reason to believo that Therefore, in view of the above facts, I have reason to believo that Therefore, in view of the above facts, I have reason to believo that income to the extent of Rs. 53,85,645/ income to the extent of Rs. 53,85,645/- has escaped assessment for the has escaped assessment for the A.Y.2012-13. Therefore in view of the above fa Therefore in view of the above facts, I have reason to believe that cts, I have reason to believe that income to the extent of income to the extent of Rs.24,38,12,722/- has escaped assessment for has escaped assessment for the A.Y.2012-13. 13.”

DR Batras Positive Health Clinic Pvt. Ltd.. 12 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 7.1.1 On perusal of above reasons recorded, we do not find any perusal of above reasons recorded, we do not find any perusal of above reasons recorded, we do not find any ‘vagueness’ and the Assessing Officer has duly recorded his reasons the Assessing Officer has duly recorded his reasons the Assessing Officer has duly recorded his reasons in respect of both the issues of respect of both the issues of ‘advertisement and business advertisement and business promotion expenses’ ’ as well as ‘expenses related to yacht expenses related to yacht’. The Assessing Officer has also specified the quantum of escapement of Assessing Officer has also specified the quantum of escapement of Assessing Officer has also specified the quantum of escapement of income in relation to both the issues. Therefore the allegations of income in relation to both the issues. Therefore the income in relation to both the issues. Therefore the the assessee of the vagueness in the reasons recorded are rejected. the assessee of the vagueness in the reasons recorded are the assessee of the vagueness in the reasons recorded are Regarding the contention of the learned counsel Regarding the contention of the learned counsel for for the assessee that reopening on the basis of audit objection is not valid, the reopening on the basis of audit objection is not valid, the reopening on the basis of audit objection is not valid, the learned counsel relied on the decision of the Hon’ble Bombay High learned counsel relied on the decision of the Hon’ble Bom learned counsel relied on the decision of the Hon’ble Bom Court in the case of DRM Enterprises (supra), wherein the Hon’ble Court in the case of DRM Enterprises (supra), wherein the Hon’ble Court in the case of DRM Enterprises (supra), wherein the Hon’ble High Court has analysed the decision of the Hon’ble Supreme Court High Court has analysed the decision of the Hon’ble Supreme Court High Court has analysed the decision of the Hon’ble Supreme Court in the case of Indian & Ea in the case of Indian & Eastern newspaper Society (supra) stern newspaper Society (supra).

7.1.2 After thoroughly considering the arguments put forth by After thoroughly considering the arguments put fo After thoroughly considering the arguments put fo both parties and the relevant judicial precedents, both parties and the relevant judicial precedents, including including Indian and Eastern Newspapers Society (supra), and CIT vs. Lucas T.V.S. and Eastern Newspapers Society (supra), and CIT vs. Lucas T.V.S. and Eastern Newspapers Society (supra), and CIT vs. Lucas T.V.S. Ltd. (supra), we have carefully have carefully examined whether the current case whether the current case aligns with the established legal principles. aligns with the established legal principles.

7.1.3 In the Indian and Eastern Newspapers Society (supra) In the Indian and Eastern Newspapers Society (supra) In the Indian and Eastern Newspapers Society (supra) case, it is emphasized that the internal audit party's stance on a case, it is emphasized that the internal audit party's stance on a case, it is emphasized that the internal audit party's stance on a legal matter does not constitute a valid basis for initiating re- legal matter does not constitute a valid basis for initiating re legal matter does not constitute a valid basis for initiating re assessment proceedings. This principle has been reiterated in the assessment proceedings. This principle has been reiterated in the assessment proceedings. This principle has been reiterated in the Lucas T.V.S. Ltd. (supra) case, where the audit party's perspective cas T.V.S. Ltd. (supra) case, where the audit party's perspective cas T.V.S. Ltd. (supra) case, where the audit party's perspective on a legal question did not warrant the initiation of re-assessment. on a legal question did not warrant the initiation of re on a legal question did not warrant the initiation of re

DR Batras Positive Health Clinic Pvt. Ltd.. 13 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 However, the decision in the case of PVS Beedis Pv PVS Beedis Pvt. 7.1.4 However, the Ltd., 237 ITR 13 (SC) , 237 ITR 13 (SC) provided a nuanced perspective, as the provided a nuanced perspective, as the Hon'ble Supreme Court upheld the initiation of re-assessment Hon'ble Supreme Court upheld the initiation of re Hon'ble Supreme Court upheld the initiation of re proceedings based on a factual error identified by the internal audit proceedings based on a factual error identified by the internal audit proceedings based on a factual error identified by the internal audit party. The Hon’ble Court underscored that while the audit party Court underscored that while the audit party Court underscored that while the audit party cannot judicially interpret a provision, it is well within its role to erpret a provision, it is well within its role to erpret a provision, it is well within its role to draw the Assessing Officer's attention to relevant legal provisions. draw the Assessing Officer's attention to relevant legal provisions. draw the Assessing Officer's attention to relevant legal provisions. The relevant finding of Hon’ble Supreme Court is reproduced as The relevant finding of Hon’ble Supreme Court is reproduced as The relevant finding of Hon’ble Supreme Court is reproduced as under:

3. We are of the view that both the Tribunal and the High Court 3. We are of the view that both the Tribunal and the High Court 3. We are of the view that both the Tribunal and the High Court were in error in holding that the information given by internal re in error in holding that the information given by internal re in error in holding that the information given by internal audit party could not be treated as information within the audit party could not be treated as information within the audit party could not be treated as information within the meaning of Section 147(b) Section 147(b) of the Income Tax Act. The audit of the Income Tax Act. The audit party has merely pointed party has merely pointed out a fact which has been overlooked out a fact which has been overlooked by the Income Tax Officer in the assessment. The fact that the by the Income Tax Officer in the assessment. The fact that the by the Income Tax Officer in the assessment. The fact that the recognition granted to this charitable trust had expired on 22 recognition granted to this charitable trust had expired on 22 recognition granted to this charitable trust had expired on 22-9- 1992 was not noticed by the Income Tax Officer. This is not a 1992 was not noticed by the Income Tax Officer. This is not a 1992 was not noticed by the Income Tax Officer. This is not a case of information on a que case of information on a question of law. The dispute as to stion of law. The dispute as to whether reopening is permissible after audit party expresses an whether reopening is permissible after audit party expresses an whether reopening is permissible after audit party expresses an opinion on a question of law is now being considered by a opinion on a question of law is now being considered by a opinion on a question of law is now being considered by a larger Bench of this Court. There can be no dispute that the larger Bench of this Court. There can be no dispute that the larger Bench of this Court. There can be no dispute that the audit party is entitled to point out a fa audit party is entitled to point out a factual error or omission in ctual error or omission in the assessment. Reopening of the case on the basis of a factual the assessment. Reopening of the case on the basis of a factual the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In error pointed out by the audit party is permissible under law. In error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under view of that we hold that reopening of the case under view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual in the facts of this case was on the basis of factual in the facts of this case was on the basis of factual information given by the internal audit party and was valid in information given by the internal audit party and was valid in information given by the internal audit party and was valid in law. The judgment under appeal is set aside to this extent. law. The judgment under appeal is set aside to this extent.” law. The judgment under appeal is set aside to this extent.” 7.1.5 This distinction between interpreting the law and This distinction between interpreting the law and This distinction between interpreting the law and further emphasized in CIT communicating its existence communicating its existence has been further emphasized in vs. First Leasing Co. of India Ltd. (2000) 241 ITR 248 (Mad). vs. First Leasing Co. of India Ltd. (2000) 241 ITR 248 (Mad). vs. First Leasing Co. of India Ltd. (2000) 241 ITR 248 (Mad).

DR Batras Positive Health Clinic Pvt. Ltd.. 14 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 7.1.6 In essence, the In essence, the Hon’ble Court has clarified that initiating clarified that initiating re-assessment proceedings solely based on the audit party's proceedings solely based on the audit party's proceedings solely based on the audit party's interpretation of legal provisions interpretation of legal provisions is impermissible, h is impermissible, however, when the audit party communicates the existence of law or highlights the audit party communicates the existence of law or highlights the audit party communicates the existence of law or highlights factual inaccuracies, such communication qualifies as 'information' factual inaccuracies, such communication qualifies as 'information' factual inaccuracies, such communication qualifies as 'information' justifying re-assessment. assessment. We further note that various decisions various decisions relied upon by the assessee have been considered by the Coordinate relied upon by the assessee have been considered by the Coordinate relied upon by the assessee have been considered by the Coordinate bench of Tribunal in the case of Rollatainers Ltd., New Delhi in Rollatainers Ltd., New Delhi in bench of Tribunal in the case of for AY 2003 ITA No. 3134/Del/2010 for AY 2003-04, wherein , wherein it is held that audit objection communicating law constitutes jection communicating law constitutes ‘information information’ and thus reopening based in such audit objection is valid. thus reopening based in such audit objection is valid. thus reopening based in such audit objection is valid.

7.1.7 In the instant case before us also the audit party merely n the instant case before us also the audit party merely n the instant case before us also the audit party merely noticed the expenses incurred of expenses incurred of ₹23,84,27,077/ 077/- incurred on ‘advertisement in business promotion business promotion’ expenses and referred to the expenses and referred to the homeopathic practitioners regulation, 1982. It is the Assessing homeopathic practitioners regulation, 1982. It is the Assessing homeopathic practitioners regulation, 1982. It is the Assessing Officer who after examination of the re Officer who after examination of the relevant annexure to 3CD levant annexure to 3CD report (tax audit report) formed opinion that said expenses were tax audit report) formed opinion that said expenses were tax audit report) formed opinion that said expenses were unethical and accordingly he recorded the reasons to believe that ccordingly he recorded the reasons to believe that ccordingly he recorded the reasons to believe that corresponding amount of the income had escaped assessment. The corresponding amount of the income had escaped assessment. The corresponding amount of the income had escaped assessment. The issue of disallowance of advertisement and business promotion allowance of advertisement and business promotion allowance of advertisement and business promotion expenses was not examined in original assessment proceeding and expenses was not examined in original assessment proceeding and expenses was not examined in original assessment proceeding and the audit party has merely communicated position of the law and has merely communicated position of the law and has merely communicated position of the law and the facts of the case and not interpreted the law ase and not interpreted the law. Further, it is not Further, it is not DR Batras Positive Health Clinic Pvt. Ltd.. 15 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 the case that initially audit objection was not accepted by the AO as the case that initially audit objection was not accepted by the AO as the case that initially audit objection was not accepted by the AO as there are no evidence there are no evidences on record to substantiate the same. to substantiate the same.

7.1.8 Applying these principles to the present case, the audit Applying these principles to the present case, the audit Applying these principles to the present case, the audit objection presented a factual oversight where the AO had failed to objection presented a factual oversight where the AO had failed to objection presented a factual oversight where the AO had failed to recognize that a sum incurred and claimed on advertisement and recognize that a sum incurred and claimed on advertisement and recognize that a sum incurred and claimed on advertisement and business promotion by ‘homeopathic practitioners’ is in violation of business promotion by ‘homeopathic practitioners’ is in violation of business promotion by ‘homeopathic practitioners’ is in violation of Regulation issued by Government of Maharashtra. This omission, Regulation issued by Government of Maharashtra. This omission, Regulation issued by Government of Maharashtra. This omission, as communicated by the audit party, amounted to a communication as communicated by the audit party, amounted to a communication as communicated by the audit party, amounted to a communication of law rather than an interpretation of law. Therefore, the audit of law rather than an interpretation of law. Therefore, the audit of law rather than an interpretation of law. Therefore, the audit objection in this case qualifies as 'information,' justifying the objection in this case qualifies as 'information,' justifying t objection in this case qualifies as 'information,' justifying t initiation of reassessment proceedings initiation of reassessment proceedings 7.1.9 In conclusion, In conclusion, we do not find merit in the argument we do not find merit in the argument opposing the validity of reassessment based on the audit objection. opposing the validity of reassessment based on the audit objection. opposing the validity of reassessment based on the audit objection. The audit objection in the present case constitutes The audit objection in the present case constitutes an an 'information,' leading to a valid initiation of reassessment proceedings. d initiation of reassessment proceedings. d initiation of reassessment proceedings. The relevant ground of the appeal is accordingly dismissed. relevant ground of the appeal is accordingly dismissed. relevant ground of the appeal is accordingly dismissed.

8.1 The learned counsel The learned counsel for the assessee referred referred to the reasons recorded and submitted that the Assessing Officer has nowhere recorded and submitted that the Assessing Officer has nowhere recorded and submitted that the Assessing Officer has nowhere recorded that there was that there was any failure on the part of the assessee in failure on the part of the assessee in DR Batras Positive Health Clinic Pvt. Ltd.. 16 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 disclosing the material fact disclosing the material facts fully and truly. He further submitted fully and truly. He further submitted that assessee has duly disclose that assessee has duly disclosed all information in respect of all information in respect of advertisement and business promotion expenses in the original advertisement and business promotion expenses in the original advertisement and business promotion expenses in the original assessment proceeding an assessment proceeding and even provided entire list of the expenses d even provided entire list of the expenses claimed under said head and thus under said head and thus, assessee had disclosed all the disclosed all the facts related to said expenses fully and truly facts related to said expenses fully and truly and in absence of any in absence of any such failure on the part of the assessee failure on the part of the assessee, the assessment cannot be the assessment cannot be reopened for the assessment year for the assessment year beyond period of four years from beyond period of four years from the end of relevant assessment year. He submitted that the of relevant assessment year. He submitted that the of relevant assessment year. He submitted that the assessment year being 2012 assessment year being 2012-13 and four years from the relevant 13 and four years from the relevant assessment year expire assessment year expired on 31/03/2017, whereas , whereas notice under section 148 of the A e Act has been issued to the assessee on ct has been issued to the assessee on 26/03/2018. The learned counsel submitted that therefore 26/03/2018. The learned counsel submitted that therefore 26/03/2018. The learned counsel submitted that therefore reopening of the assessment beyond the period of four years from reopening of the assessment beyond the period of four years from reopening of the assessment beyond the period of four years from the end of the relevant assessment year the end of the relevant assessment year, without satisfying the without satisfying the condition of the nondisclosur condition of the nondisclosure of material fact truly and fully by the e of material fact truly and fully by the assessee, is bad in law. The learned assessee, is bad in law. The learned DR on the other hand other hand relied on the order of the lower lower authorities.

8.2 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material dispute and perused the relevant material on record. In the case on record. In the case original assessment was completed under section 143(3) of the Act original assessment was completed under section 143(3) of the original assessment was completed under section 143(3) of the on 18/03/2015 and thereafter case has been reopened on on 18/03/2015 and thereafter case has been reopened on 18/03/2015 and thereafter case has been reopened 26/03/2018. Regarding the reopening of the completed assessment . Regarding the reopening of the completed assessment . Regarding the reopening of the completed assessment

DR Batras Positive Health Clinic Pvt. Ltd.. 17 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 beyond the four years from the of the relevant a beyond the four years from the of the relevant assessment year, the ssessment year, the proviso below the section 147 prescribes proviso below the section 147 prescribes as under:

147. If the Assessing Officer has reason to believe that any income If the Assessing Officer has reason to believe that any income If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he chargeable to tax has escaped assessment for any assessment year, he chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of may, subject to the provisions of sections 148 to 153, assess or reassess , assess or reassess such income and also any other income chargeable such income and also any other income chargeable such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the escaped assessment and which comes to his notice subsequently in the escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the course of the proceedings under this section, or recompute the loss or 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 depreciation allowance or any other allowance, as the case may be, for the depreciation allowance or any other allowance, as the case may be, for the assessment year conc assessment year concerned (hereafter in this section and in erned (hereafter in this section and in sections 148 to 153 referred to as t referred to as the relevant assessment year) : he relevant assessment year) : Provided that where an assessment under sub that where an assessment under sub-section (3) of section (3) of section 143 or this section has been made for the relevant assessment or this section has been made for the relevant assessment or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of no action shall be taken under this section after the expiry of no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless four years from the end of the relevant assessment year, unless four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such any income chargeable to tax has escaped assessment for such any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessment year by reason of the failure on the part of the assessment year by reason of the failure on the part of the assessee to make a return under e to make a return under section 139 or in response to a or in response to a notice issued under sub notice issued under sub-section (1) of section 142 section 142 or section 148 or to disclose fully and truly all material facts necessary for his to disclose fully and truly all material facts necessary for his to disclose fully and truly all material facts necessary for his assessment, for that assessment year: assessment, for that assessment year: ………………………………… ……………………………………………………………………………………….. ……………………………………………………...

8.3 As far as facts of the case in hand are concerned, details of s far as facts of the case in hand are concerned, details of s far as facts of the case in hand are concerned, details of advertisement and business promotion expenses were already advertisement and business promotion expenses were already advertisement and business promotion expenses were already available on the assessment record and it is not the case that available on the assessment record and it is not the case that available on the assessment record and it is not the case that assessee has hidden hidden or suppressed any of the details of or suppressed any of the details of advertisement and business promotion expenses during the course advertisement and business promotion expenses during the advertisement and business promotion expenses during the of original assessment proceeding and thus assessment proceeding and thus, we do not find any we do not find any failure on the part of the assessee in disclosing all material facts failure on the part of the assessee in disclosing all material facts failure on the part of the assessee in disclosing all material facts truly and fully to the truly and fully to the Assessing Officer. Further, the , the Assessing Officer while recording Officer while recording ‘reasons to believe’ has also not formed his has also not formed his belief that there was any failure on the part of the assessee in belief that there was any failure on the part of the assessee in belief that there was any failure on the part of the assessee in disclosing all the material facts truly and fully. disclosing all the material facts truly and fully. Thus invoking the hus invoking the DR Batras Positive Health Clinic Pvt. Ltd.. 18 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 above proviso, where assessment has been completed under section so, where assessment has been completed under section so, where assessment has been completed under section 143(3) of the Act, the Assessing Officer is barred from reopening the ct, the Assessing Officer is barred from reopening the ct, the Assessing Officer is barred from reopening the assessment beyond the period of four years from assessment beyond the period of four years from end end of the relevant assessment year unless there is a failure on the part of the assessee assessment year unless there is a failure on the part of the ass assessment year unless there is a failure on the part of the ass in disclosing all the material fact truly and fully. In absence of any in disclosing all the material fact truly and fully. In absence of any in disclosing all the material fact truly and fully. In absence of any such satisfaction by the Assessing Officer, the reopening of the such satisfaction by the Assessing Officer, the reopening of the such satisfaction by the Assessing Officer, the reopening of the assessment is invalid and bad in law. The reassessment assessment is invalid and bad in law. The reassessment assessment is invalid and bad in law. The reassessment proceedings are accordingly quashed. The relevant ground of accordingly quashed. The relevant ground of accordingly quashed. The relevant ground of the appeal of the assessee appeal of the assessee is accordingly allowed.

In ground 1.2.4 the assessee has challenged reopening on the 9. ground 1.2.4 the assessee has challenged reopening on the ground 1.2.4 the assessee has challenged reopening on the ground that notice under section 143(2) of the A ce under section 143(2) of the Act was issued, ct was issued, prior to disposing off the objections, which is in violation of the principle to disposing off the objections, which is in violation of the principl to disposing off the objections, which is in violation of the principl of Hon’ble Supreme Court in the case of of Hon’ble Supreme Court in the case of GKN Driveshaft(india) Ltd GKN Driveshaft(india) Ltd Vs ITO (2003) 259 ITR 19. Vs ITO (2003) 259 ITR 19. The learned counsel referred to the The learned counsel referred to the decision of the Hon’ble Supreme Court and further referred to the decision of the Hon’ble Supreme Court and further referred to the decision of the Hon’ble Supreme Court and further referred to the decision of the coordinate bench of the T of the coordinate bench of the Tribunal in the case ribunal in the case of Motilal R Todi vs ACIT (2017) 174 TTJ 185(Mumbai) and Motilal R Todi vs ACIT (2017) 174 TTJ 185(Mumbai) Motilal R Todi vs ACIT (2017) 174 TTJ 185(Mumbai) submitted that the Assessing Officer was required to issue notice submitted that the Assessing Officer was required to issue noti submitted that the Assessing Officer was required to issue noti under section 143(2) of the A under section 143(2) of the Act only after disposing of ct only after disposing off the objection of the assessee against reopening of the assessment. He submitted of the assessee against reopening of the assessment. He submitted of the assessee against reopening of the assessment. He submitted that the Assessing Officer has disposed off the objections of the that the Assessing Officer has disposed off the objections of the that the Assessing Officer has disposed off the objections of the assessee on 05/11/2018 whereas the noti assessee on 05/11/2018 whereas the notice under section 143(2) of ce under section 143(2) of the Act was issued on 07/09/2018, which bei ct was issued on 07/09/2018, which being prior to the ng prior to the disposal of the objections, is in violation of the principle laid down disposal of the objections, is in violation of the principle laid down disposal of the objections, is in violation of the principle laid down

DR Batras Positive Health Clinic Pvt. Ltd.. 19 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 by Hon’ble Supreme Court in the case of GKN Driveshaft Ltd by Hon’ble Supreme Court in the case of GKN Driveshaft Ltd by Hon’ble Supreme Court in the case of GKN Driveshaft Ltd (supra). The learned counsel for the assessee filed The learned counsel for the assessee filed a a detailed chart of various dates for action taken in the of various dates for action taken in the process of reassessment process of reassessment proceeding. For ready reference proceeding. For ready reference, said chart is reproduced as under: said chart is reproduced as under:

Chart showing chronology of reassessment proceedings : Chart showing chronology of reassessment proceedings : Chart showing chronology of reassessment proceedings : Sr. Particulars AY 2011-12 AY 2012-13 AY 2012 AY 2013-14 No. Date Date 1. AO to record reasons for reopening AO to record reasons for reopening - - - 2. AO to obtain prior approval u/s 151 AO to obtain prior approval u/s 151 23-03-2018 23-03 03-2018 22-03-2018 (FPB - 236) (FPB - 202) (FPB (FPB – 235) 3. AO to issue notice u/s 148 AO to issue notice u/s 148 26-03-2018 26-03 03-2018 30-03-2018 (FPB - 103) (FPB - 85) (FPB (FPB - 113) 4. Assessee to file ROI and ask for reasons for Assessee to file ROI and ask for reasons for 16-04-2018 16-04 04-2018 16-04-2018 reopening (FPB - 104) (FPB - 86) (FPB (FPB - 114) 5. AO to provide copy of reasons for reopening AO to provide copy of reasons for reopening 07-09-2018 07-09 09-2018 07-09-2018 (FPB -105) (FPB -87) (FPB (FPB - 115) 6. Assessee to file objections to reopening objections to reopening 19-10-2018 19-10 10-2018 19-10-2018 (FPB - 108) (FPB - 91) (FPB (FPB - 118) 7. AO to pass order disposing objections to AO to pass order disposing objections to 05-11-2018 05-11 11-2018 05-11-2018 reopening (FPB - 111) (FPB - 94) (FPB (FPB - 121) 8. AO AO to to issue notice issue notice u/s 143(2) w.r.s. u/s 143(2) w.r.s. 07-09-2018 07-09 09-2018 07-09-2018 147/148 (FPB - 107) (FPB - 90) (FPB (FPB - 117)

9.1 The learned departmental representative The learned departmental representative(DR) on the contrary, on the contrary, submitted that under the procedure laid down in GKN Driveshaft submitted that under the procedure laid down in GKN Driveshaft submitted that under the procedure laid down in GKN Driveshaft Ltd (supra), there is no specific mention a there is no specific mention as when s when notice under section 143(2) of the A section 143(2) of the Act can be issued. He submitted that under ct can be issued. He submitted that under the notice u/s 143(2) of the Act, u/s 143(2) of the Act, an assessee is asked only to assessee is asked only to support the return of income filed with evidences only and therefore support the return of income filed with evidences only and therefore support the return of income filed with evidences only and therefore no prejudice is caused to the assessee by mere no prejudice is caused to the assessee by merely issuing noti ly issuing notice under section 143(2) of the A under section 143(2) of the Act. The issuing of notice under section notice under section 143(2) of the Act cannot come in ways ct cannot come in ways of AO, if he is satisfied with , if he is satisfied with the objection of the assessee and the Assessing Officer can drop the the objection of the assessee and the Assessing Officer can drop the the objection of the assessee and the Assessing Officer can drop the DR Batras Positive Health Clinic Pvt. Ltd.. 20 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 proceedings under section 148 dings under section 148 of the Act even after issuing notice even after issuing notice u/s 143(2) of the Act. .

9.2 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute in the light of the material available on record. We find that dispute in the light of the material available on record. dispute in the light of the material available on record. coordinate bench of the T rdinate bench of the Tribunal in the case of Motila ribunal in the case of Motilal R Todi (supra) has charted out various steps of reassessment proceedings (supra) has charted out various steps of reassessment proceedings (supra) has charted out various steps of reassessment proceedings in pursuance to the decision of the Hon’ble Supreme Court in the in pursuance to the decision of the Hon’ble Supreme Court in the in pursuance to the decision of the Hon’ble Supreme Court in the case of GKN Drivshaft (India) Ltd (supra). The relevant part of the case of GKN Drivshaft (India) Ltd (supra). The relevant part of the case of GKN Drivshaft (India) Ltd (supra). The relevant part of the decision of the Tribunal ribunal(supra) is reproduced as unde is reproduced as under:

“6.3. Thus, taking help from these judgments, relevant provisions of law, 6.3. Thus, taking help from these judgments, relevant provisions of law, 6.3. Thus, taking help from these judgments, relevant provisions of law, fixing obligations upon the AO for making mandatory compliances, in a fixing obligations upon the AO for making mandatory compliances, in a fixing obligations upon the AO for making mandatory compliances, in a step-wise manner, for valid assumption of jurisdiction for reopening and wise manner, for valid assumption of jurisdiction for reopening and wise manner, for valid assumption of jurisdiction for reopening and reframing of reassessment order, can be reframing of reassessment order, can be summarized as under: summarized as under: (i) Availability of the new tangible material indicating escaped income Availability of the new tangible material indicating escaped income Availability of the new tangible material indicating escaped income of the assessee, which should have come into possession of the AO, of the assessee, which should have come into possession of the AO, of the assessee, which should have come into possession of the AO, after the passing of after the passing of original assessment order, whether u/s 143(3) original assessment order, whether u/s 143(3) or 143(1), or 143(1), (ii) Recording of the ‘Re Recording of the ‘Reasons’ by the AO: ‘Reasons’ recorded should asons’ by the AO: ‘Reasons’ recorded should not be based upon the change of opinion of the Assesing Officer. not be based upon the change of opinion of the Assesing Officer. not be based upon the change of opinion of the Assesing Officer. ‘Reasons’ should be such that any person of ordinary prudence ‘Reasons’ should be such that any person of ordinary prudence ‘Reasons’ should be such that any person of ordinary prudence should be in a position to make a belief about escapement of income should be in a position to make a belief about escapement of income should be in a position to make a belief about escapement of income on the basis of f on the basis of facts narrated and material referred to, in the acts narrated and material referred to, in the ‘Reasons’ recorded. The ‘Reasons’ should show that, there is ‘Reasons’ recorded. The ‘Reasons’ should show that, there is ‘Reasons’ recorded. The ‘Reasons’ should show that, there is rational nexus and cause & effect relationship between the material rational nexus and cause & effect relationship between the material rational nexus and cause & effect relationship between the material sought be relied upon in the Reasons and belief sought to be formed sought be relied upon in the Reasons and belief sought to be formed sought be relied upon in the Reasons and belief sought to be formed by the AO ab by the AO about escapement of income. (iii) (iii) In case; reopening is sought to be done by the AO after expiry of (iii) In case; reopening is sought to be done by the AO after expiry of (iii) In case; reopening is sought to be done by the AO after expiry of four years from the end of the relevant assessment year and the four years from the end of the relevant assessment year and the four years from the end of the relevant assessment year and the original assessment was framed u/s 143(3) then reasons can be original assessment was framed u/s 143(3) then reasons can be original assessment was framed u/s 143(3) then reasons can be recorded only if there was fail recorded only if there was failure on the part of the assessee in ure on the part of the assessee in disclosure of material of facts, as has been envisaged in first disclosure of material of facts, as has been envisaged in first disclosure of material of facts, as has been envisaged in first proviso to section 147. proviso to section 147. (iv) (iv) Before issuing notice u/s 148, the AO has to obtain, on the (iv) Before issuing notice u/s 148, the AO has to obtain, on the (iv) Before issuing notice u/s 148, the AO has to obtain, on the reasons recorded by him, sanction for reopening of the case, from reasons recorded by him, sanction for reopening of the case, from reasons recorded by him, sanction for reopening of the case, from the competent authority as envisaged u/s 151 viz. Additional he competent authority as envisaged u/s 151 viz. Additional he competent authority as envisaged u/s 151 viz. Additional Commissioner or the Commissioner of Income Tax, as the case may Commissioner or the Commissioner of Income Tax, as the case may Commissioner or the Commissioner of Income Tax, as the case may

DR Batras Positive Health Clinic Pvt. Ltd.. 21 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 be. Before granting its sanction, the sanctioning authority is be. Before granting its sanction, the sanctioning authority is be. Before granting its sanction, the sanctioning authority is required to record its satisfaction based upon its independent required to record its satisfaction based upon its independent required to record its satisfaction based upon its independent application of mind, making out a case that as per the facts ation of mind, making out a case that as per the facts ation of mind, making out a case that as per the facts narrated and material referred to in the ‘Reasons’ recorded by the narrated and material referred to in the ‘Reasons’ recorded by the narrated and material referred to in the ‘Reasons’ recorded by the AO, a belief can be formed about escapement of income and case AO, a belief can be formed about escapement of income and case AO, a belief can be formed about escapement of income and case sought to be reopened is a fit case for reopening u/s 147. sought to be reopened is a fit case for reopening u/s 147. sought to be reopened is a fit case for reopening u/s 147. (v) (v) After o (v) After obtaining the sanction, the AO is required to issue and btaining the sanction, the AO is required to issue and serve notice u/s 148 upon the assessee, within the time limit as serve notice u/s 148 upon the assessee, within the time limit as serve notice u/s 148 upon the assessee, within the time limit as prescribed u/s 149, to enable him to assume jurisdiction to reopen prescribed u/s 149, to enable him to assume jurisdiction to reopen prescribed u/s 149, to enable him to assume jurisdiction to reopen the assessment. the assessment. (vi) (vi) The assessee is required to file to return of income, in response (vi) The assessee is required to file to return of income, in response (vi) The assessee is required to file to return of income, in response to notice u/s 148 and may request for the copy of reasons. to notice u/s 148 and may request for the copy of reasons. to notice u/s 148 and may request for the copy of reasons. (vii) (vii) The AO is bound, as per law, to provide a certified and verbatim (vii) The AO is bound, as per law, to provide a certified and verbatim (vii) The AO is bound, as per law, to provide a certified and verbatim copy of Reasons to the assessee. copy of Reasons to the assessee. (viii) (viii) The assessee (viii) The assessee may file its objections before the AO, to the may file its objections before the AO, to the Reasons recorded, if any. Reasons recorded, if any. (ix) (ix) In pursuance to judgment of Hon’ble Supreme Court in the case (ix) In pursuance to judgment of Hon’ble Supreme Court in the case (ix) In pursuance to judgment of Hon’ble Supreme Court in the case of GKN Driveshafts 259 ITR 19 (SC), the AO is obliged to dispose of of GKN Driveshafts 259 ITR 19 (SC), the AO is obliged to dispose of of GKN Driveshafts 259 ITR 19 (SC), the AO is obliged to dispose of these objections and intimate the same to the assessee, before these objections and intimate the same to the as these objections and intimate the same to the as proceeding proceeding proceeding further further further with with with the the the reassessment reassessment reassessment proceedings. proceedings. proceedings. (x) (x) (x) Thereafter, the AO is obliged under the law to issue and serve Thereafter, the AO is obliged under the law to issue and serve Thereafter, the AO is obliged under the law to issue and serve notice u/s 143(2) to enable him to make http://www.itatonline.org notice u/s 143(2) to enable him to make http://www.itatonline.org notice u/s 143(2) to enable him to make http://www.itatonline.org 11 Motilal R. Todi assessment of the return filed by the assessee in 11 Motilal R. Todi assessment of the return filed by t 11 Motilal R. Todi assessment of the return filed by t response to notice issued under section 148. response to notice issued under section 148. (x) (xi) Framing of the re (xi) Framing of the re-assessment order by the AO u/s 147/143(3) assessment order by the AO u/s 147/143(3) after providing adequate opportunity of hearing to the assessee and after providing adequate opportunity of hearing to the assessee and after providing adequate opportunity of hearing to the assessee and considering replies and evidences of the assessee, and all other considering replies and evidences of the assessee, and all oth considering replies and evidences of the assessee, and all oth applicable provisions of the Act. applicable provisions of the Act. 6.4. The aforesaid compliances have to be made by the AO u/s 147 to 151 6.4. The aforesaid compliances have to be made by the AO u/s 147 to 151 6.4. The aforesaid compliances have to be made by the AO u/s 147 to 151 of Income Tax Act, 1961 read with other relevant provisions of the Act, in a of Income Tax Act, 1961 read with other relevant provisions of the Act, in a of Income Tax Act, 1961 read with other relevant provisions of the Act, in a step-wise and chronological manner. Therefore, validity of the reopen wise and chronological manner. Therefore, validity of the reopening wise and chronological manner. Therefore, validity of the reopen proceedings initiated by the AO, can be examined in this step proceedings initiated by the AO, can be examined in this step proceedings initiated by the AO, can be examined in this step-wise or chronological manner only. chronological manner only.” 9.2.1 Evidently, in the instant case notice under section 143(2) ce under section 143(2) of the Act has been issued prior to disposal of ct has been issued prior to disposal off the objection of the the objection of the assessee challenging reopening, which i ng reopening, which is not permitted as held by s not permitted as held by the Tribunal (supra), and therefor ribunal (supra), and therefore following the finding of the e following the finding of the Tribunal, the reassessment proceeding are liable to be quashed. the reassessment proceeding are liable to be quashed. the reassessment proceeding are liable to be quashed. Therefore, we are of view that Therefore, we are of view that other propositions of of learned counsel

DR Batras Positive Health Clinic Pvt. Ltd.. 22 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 for the assessee challenging validity of the reassessment sessee challenging validity of the reassessment sessee challenging validity of the reassessment are also accordingly not required to be adjudicated upon. not required to be adjudicated upon.

9.2.2 Since we have he Since we have held the reassessment proceeding a ld the reassessment proceeding as invalid in law and the reassessment order stands quashed, the invalid in law and the reassessment order stands quashed, invalid in law and the reassessment order stands quashed, impugned order of the Ld. CIT(A) impugned order of the Ld. CIT(A) for assessment year 2012 for assessment year 2012-13 is also set aside and we are not required to adjudicate upon also set aside and we are not required to adjudicate upon also set aside and we are not required to adjudicate upon arguments of parties on arguments of parties on the other grounds of the assessee grounds of the assessee challenging merit of the addition. challenging merit of the addition.

by the assessee

14. The grounds raised by the assessee are are reproduced as under:

GROUND NO. 1: REOPENING OF ASSESSMENT U/S. 147 OF THE ACT GROUND NO. 1: REOPENING OF ASSESSMENT U/S. 147 OF THE ACT GROUND NO. 1: REOPENING OF ASSESSMENT U/S. 147 OF THE ACT IS BAD-IN-LAW LAW 1.1 On the facts and in the circumstances of the case On the facts and in the circumstances of the case and in law, the Id. and in law, the Id. CIT(A) erred in upholding the action of the Assistant Commissioner of CIT(A) erred in upholding the action of the Assistant Commissioner of CIT(A) erred in upholding the action of the Assistant Commissioner of Income Tax - 16(2), Mumbai ("the Id. AO") of reopening the assessment 16(2), Mumbai ("the Id. AO") of reopening the assessment 16(2), Mumbai ("the Id. AO") of reopening the assessment u/s. 147 of the Act holding the same justified and in accordance with u/s. 147 of the Act holding the same justified and in accordance with u/s. 147 of the Act holding the same justified and in accordance with the provisions of the law the provisions of the law. 1.2. The Id. CIT(A) failed to appreciate and ought to have held that: 1.2. The Id. CIT(A) failed to appreciate and ought to have held that: 1.2. The Id. CIT(A) failed to appreciate and ought to have held that: 1.2.1. reopening in absence of no new tangible material is bad in law; 1.2.1. reopening in absence of no new tangible material is bad in law; 1.2.1. reopening in absence of no new tangible material is bad in law; 1.2.2. reopening based on change of opinion with same set of facts is 1.2.2. reopening based on change of opinion with same set of facts is 1.2.2. reopening based on change of opinion with same set of facts is bad in law; 1.2.3. in the absence of any al 1.2.3. in the absence of any allegation that there is a failure on the part legation that there is a failure on the part of the assessee to furnish fully and truly all material and relevant facts of the assessee to furnish fully and truly all material and relevant facts of the assessee to furnish fully and truly all material and relevant facts for the purpose of the assessment, reassessment is bad in law; for the purpose of the assessment, reassessment is bad in law; for the purpose of the assessment, reassessment is bad in law; 1.2.4 notice u/s 143(2) of the Act issued prior to disposing off the notice u/s 143(2) of the Act issued prior to disposing off the notice u/s 143(2) of the Act issued prior to disposing off the objections which is in violation of the principles of GKN Driveshafts objections which is in violation of the principles of GKN Driveshafts objections which is in violation of the principles of GKN Driveshafts (India) Ltd. v. ITO [2003| 259 ITR 19; (India) Ltd. v. ITO [2003| 259 ITR 19;

DR Batras Positive Health Clinic Pvt. Ltd.. 23 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 1.2.5 reopening based on audit objection is bad in law reopening of reopening based on audit objection is bad in law reopening of reopening based on audit objection is bad in law reopening of assessment is i assessment is invalid for vagueness in reasons; 1.2.6 reopening merely on taking approval from Pr. CIT u/s 151 does reopening merely on taking approval from Pr. CIT u/s 151 does reopening merely on taking approval from Pr. CIT u/s 151 does not satisfy that AO has applies his mind; not satisfy that AO has applies his mind; 1.2.7. the reassessment is otherwise bad in law; 1.2.7. the reassessment is otherwise bad in law; 1.3. The Appellant prays that the reopening proceedings u/s. 147 1.3. The Appellant prays that the reopening proceedings u/s. 147 1.3. The Appellant prays that the reopening proceedings u/s. 147 of the Act be held as void Act be held as void-ab-initio and/or otherwise bad in law.

WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1,

2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES 2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES 2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES AMOUNTING TO RS. 4,01,53,779/ AMOUNTING TO RS. 4,01,53,779/-:

2.1. On the facts and in the circumstances of the case and in law, 2.1. On the facts and in the circumstances of the case and in law, 2.1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the advertisement expenses of Rs. advertisement expenses of Rs. 4,01,53,779/- incurred by the Appellant incurred by the Appellant holding the same to be allegedly in violation of The Homeopathy holding the same to be allegedly in violation of The Homeopathy holding the same to be allegedly in violation of The Homeopathy Practitioners Practitioners Regulations, Regulations, 1982' 1982' (hereinafter (hereinaf ter "Homeopathy "Homeopathy Regulations*).

2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2. The Id. CIT(A) failed to appreciate and ought to have held that:

2.2.1. the advertisement expenses are allowable expense under the Act 2.2.1. the advertisement expenses are allowable expense under the Act 2.2.1. the advertisement expenses are allowable expense under the Act and thus, the proviso to section 37(1) of the Act does not get attracted; and thus, the proviso to section 37(1) of the Act does not get attracted; and thus, the proviso to section 37(1) of the Act does not get attracted; 2.2.2. the Appellant has not violated any regulations under the Appellant has not violated any regulations under the Appellant has not violated any regulations under the Homeopathy Regulations; Homeopathy Regulations; 2.2.3. since the Homeopathy Regulations mandatorily require an 2.2.3. since the Homeopathy Regulations mandatorily require an 2.2.3. since the Homeopathy Regulations mandatorily require an Individual Practitioner alone' to be registered, the Homeopathy Individual Practitioner alone' to be registered, the Homeopathy Individual Practitioner alone' to be registered, the Homeopathy Regulations apply only to Individual Practitioner' a Regulations apply only to Individual Practitioner' and not to a Company; nd not to a Company; 2.2.4 without prejudice, the advertising and promotion expenses are without prejudice, the advertising and promotion expenses are without prejudice, the advertising and promotion expenses are fully compliant with the Homeopathy Regulations and in turn with 'The fully compliant with the Homeopathy Regulations and in turn with 'The fully compliant with the Homeopathy Regulations and in turn with 'The Homeopathic Practitioners Homeopathic Practitioners - (Professional Conduct, Etiquette and Code (Professional Conduct, Etiquette and Code of Ethics) Regulations 1982 of Ethics) Regulations 1982 (hereinafter "Practitioners Regulations"); (hereinafter "Practitioners Regulations"); 2.2.5. the question whether there is an infraction of law or whether the 2.2.5. the question whether there is an infraction of law or whether the 2.2.5. the question whether there is an infraction of law or whether the expenditure is incurred for any purpose which is an offence or which is expenditure is incurred for any purpose which is an offence or which is expenditure is incurred for any purpose which is an offence or which is prohibited by law has to be decided by the authority or the court prohibited by law has to be decided by the authority or the court prohibited by law has to be decided by the authority or the court empowered to do so under the respective law and the tax department mpowered to do so under the respective law and the tax department mpowered to do so under the respective law and the tax department cannot determine such violation under the other laws without any cannot determine such violation under the other laws without any cannot determine such violation under the other laws without any authority; 2.2.6 the Appellant has consistently claimed advertisement which have the Appellant has consistently claimed advertisement which have the Appellant has consistently claimed advertisement which have been allowed by Tax Department. been allowed by Tax Department.

DR Batras Positive Health Clinic Pvt. Ltd.. 24 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 2.3 The Appellant prays that the disallowance of the advertisement Appellant prays that the disallowance of the advertisement Appellant prays that the disallowance of the advertisement expenses amounting to Rs. 4,01,53,779/ expenses amounting to Rs. 4,01,53,779/- claimed by the Appellant claimed by the Appellant while computing its income under the head 'Income from Business and while computing its income under the head 'Income from Business and while computing its income under the head 'Income from Business and Profession' be deleted. Profession' be deleted. WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1, 3. GROUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT OUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT OUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT AMOUNTING TO RS. 23,69,946/ AMOUNTING TO RS. 23,69,946/-: 3.1. On the facts and in the circumstances of the case and in law, Id. 3.1. On the facts and in the circumstances of the case and in law, Id. 3.1. On the facts and in the circumstances of the case and in law, Id. CIT(A) erred in confirming the action of the Id. AO of not allowing CIT(A) erred in confirming the action of the Id. AO of not allowing CIT(A) erred in confirming the action of the Id. AO of not allowing depreciation on yacht amounting to Rs depreciation on yacht amounting to Rs. 23,69,946/-. 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2.1. the yacht has been used for the business of the Appellant for 3.2.1. the yacht has been used for the business of the Appellant for 3.2.1. the yacht has been used for the business of the Appellant for holding conferences etc. and therefore depreciation is allowable; holding conferences etc. and therefore depreciation is allowable; holding conferences etc. and therefore depreciation is allowable; 3.2.2. the asset had been added to t 3.2.2. the asset had been added to the block of asset and it looses its he block of asset and it looses its identity when added to the block of assets; identity when added to the block of assets; 3.2.3 depreciation on yacht is consistently claimed by the Appellant and depreciation on yacht is consistently claimed by the Appellant and depreciation on yacht is consistently claimed by the Appellant and the same has been accepted by the Id. AO in earlier years; the same has been accepted by the Id. AO in earlier years; 3.2.4 it is a settled position in law that c it is a settled position in law that claim of depreciation allowed in laim of depreciation allowed in first year cannot be disallowed in subsequent assessment years unless first year cannot be disallowed in subsequent assessment years unless first year cannot be disallowed in subsequent assessment years unless the claim in the first year itself has been disturbed; the claim in the first year itself has been disturbed; 3.2.5 the Id. AO cannot sit in the armchair of the businessman to decide the Id. AO cannot sit in the armchair of the businessman to decide the Id. AO cannot sit in the armchair of the businessman to decide whether or not to use and whether or not to use and how to use a particular asset for its business; how to use a particular asset for its business; 3.2.6 the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have used the yacht for treating patients; used the yacht for treating patients; 3.3 The Appellant prays that the disallowance of the depreciation on The Appellant prays that the disallowance of the depreciation on The Appellant prays that the disallowance of the depreciation on yacht amounting to Rs. 23,69, yacht amounting to Rs. 23,69,946/- while computing its income under while computing its income under the head Income from Business and Profession' be deleted. the head Income from Business and Profession' be deleted.

by the assessee 12. The grounds raised by the assessee 12. The grounds raised by the assessee are reproduced as under:

GROUND NO. 1: REOPENING OF ASSESSMENT U/S. 147 OF THE ACT GROUND NO. 1: REOPENING OF ASSESSMENT U/S. 147 OF THE ACT GROUND NO. 1: REOPENING OF ASSESSMENT U/S. 147 OF THE ACT IS BAD-IN-LAW LAW 1.1. On the facts and in the circumstances of the case and in law, the 1.1. On the facts and in the circumstances of the case and in law, the 1.1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in upholding the action Id. CIT(A) erred in upholding the action of the Assistant Commissioner of of the Assistant Commissioner of Income Tax - 16(2), Mumbai (the Id. AO") of reopening the assessment 16(2), Mumbai (the Id. AO") of reopening the assessment 16(2), Mumbai (the Id. AO") of reopening the assessment u/s. 147 of the Act holding the same justified and in accordance with u/s. 147 of the Act holding the same justified and in accordance with u/s. 147 of the Act holding the same justified and in accordance with the provisions of the law. the provisions of the law. 1.2. The Id. CIT(A) failed to appreciate and ought to hav 1.2. The Id. CIT(A) failed to appreciate and ought to have held that: e held that: 1.2.1 reopening after the expiry of a period of four years from the end of reopening after the expiry of a period of four years from the end of reopening after the expiry of a period of four years from the end of the relevant assessment year, is bas in law; the relevant assessment year, is bas in law; 1.2.2 reopening in absence of no new tangible material is bad in law; reopening in absence of no new tangible material is bad in law; reopening in absence of no new tangible material is bad in law; 1.2.3. reopening based on change of opinion with same 1.2.3. reopening based on change of opinion with same set of facts is set of facts is bad in law; 1.2.4 in the absence of any allegation that there is a failure on the part in the absence of any allegation that there is a failure on the part in the absence of any allegation that there is a failure on the part of the assessee to furnish fully and truly all material and relevant facts of the assessee to furnish fully and truly all material and relevant facts of the assessee to furnish fully and truly all material and relevant facts for the purpose of the for the purpose of the assessment, reassessment is bad in law; assessment, reassessment is bad in law;

DR Batras Positive Health Clinic Pvt. Ltd.. 26 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 1.2.5 notice u/s 143(2) of the Act issued prior to disposing off the /s 143(2) of the Act issued prior to disposing off the /s 143(2) of the Act issued prior to disposing off the objections which is in violation of the principles of GKN Driveshafts objections which is in violation of the principles of GKN Driveshafts objections which is in violation of the principles of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19; (India) Ltd. v. ITO [2003] 259 ITR 19; 1.2.6 reopening based on audit objection is bad in law reopening of reopening based on audit objection is bad in law reopening of reopening based on audit objection is bad in law reopening of assessment is invalid fo assessment is invalid for vagueness in reasons; 1.2.7 reopening merely on taking approval from Pr. CIT u/s 151 does reopening merely on taking approval from Pr. CIT u/s 151 does reopening merely on taking approval from Pr. CIT u/s 151 does not satisfy that AO has applies his mind; not satisfy that AO has applies his mind; 1.2.8. the reassessment is otherwise bad in law; 1.2.8. the reassessment is otherwise bad in law; 1.3 The Appellant prays that the reopening proceedings u/s. 147 of the The Appellant prays that the reopening proceedings u/s. 147 of the The Appellant prays that the reopening proceedings u/s. 147 of the Act be held as void t be held as void-ab-initio and/or otherwise bad in law.

WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1,

2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES 2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES 2. GROUND NO. 2: DISALLOWANCE OF ADVERTISEMENT EXPENSES AMOUNTING TO RS. 3,05,22,128/ AMOUNTING TO RS. 3,05,22,128/-:

2.1. On the facts and in the circumstances of the case and in law, the 2.1. On the facts and in the circumstances of the case and in law, the 2.1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the advertisement expenses of Rs. advertisement expenses of Rs. 3,05,22,128/- incurred by the Appellant incurred by the Appellant holding the same to be allegedly in violation of The Homeopathy holding the same to be allegedly in violation of The Homeopathy holding the same to be allegedly in violation of The Homeopathy Practitioners Practitioners Practitioners Regulations, Regulations, Regulations, 1982' 1982' 1982' (hereinafter (hereinafter (hereinafter "Home "Homeopathy "Home Regulations").

2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2. The Id. CIT(A) failed to appreciate and ought to have held that: 2.2. The Id. CIT(A) failed to appreciate and ought to have held that:

2.2.1. the advertisement expenses are allowable expense under the Act 2.2.1. the advertisement expenses are allowable expense under the Act 2.2.1. the advertisement expenses are allowable expense under the Act and thus, the proviso to section 37(1) of the Act does not get attracted; and thus, the proviso to section 37(1) of the Act does not get attracted; and thus, the proviso to section 37(1) of the Act does not get attracted; 2.2.2 the Appellant the Appellant has not violated any regulations under the has not violated any regulations under the Homeopathy Regulations; Homeopathy Regulations; 2.2.3 since the Homeopathy Regulations mandatorily require an since the Homeopathy Regulations mandatorily require an since the Homeopathy Regulations mandatorily require an 'Individual Practitioner alone' to be registered, the Homeopathy 'Individual Practitioner alone' to be registered, the Homeopathy 'Individual Practitioner alone' to be registered, the Homeopathy Regulations apply only to 'Individual Practitioner' and not to Regulations apply only to 'Individual Practitioner' and not to Regulations apply only to 'Individual Practitioner' and not to a Company; 2.2.4 without prejudice, the advertising and promotion expenses are without prejudice, the advertising and promotion expenses are without prejudice, the advertising and promotion expenses are fully compliant with the Homeopathy Regulations and in turn with The fully compliant with the Homeopathy Regulations and in turn with The fully compliant with the Homeopathy Regulations and in turn with The Homeopathic Practitioners Homeopathic Practitioners - (Professional Conduct, Etiquette and Code (Professional Conduct, Etiquette and Code of Ethics) Regulations 1982 (hereinaf of Ethics) Regulations 1982 (hereinafter "Practitioners Regulations"): ter "Practitioners Regulations"):

2.2.5 the question whether there is an infraction of law or whether the the question whether there is an infraction of law or whether the the question whether there is an infraction of law or whether the expenditure is incurred for any purpose which is an offence or which is expenditure is incurred for any purpose which is an offence or which is expenditure is incurred for any purpose which is an offence or which is prohibited by law has to be decided by the authority or the court prohibited by law has to be decided by the authority or the court prohibited by law has to be decided by the authority or the court empowered to do so under the respective law and the tax department do so under the respective law and the tax department

DR Batras Positive Health Clinic Pvt. Ltd.. 27 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 cannot determine such violation under the other laws cannot determine such violation under the other laws without any without any authority; 2.2.6 the Appellant has consistently claimed advertisement which have the Appellant has consistently claimed advertisement which have the Appellant has consistently claimed advertisement which have been allowed by Tax Department. been allowed by Tax Department.

2.3 The Appellant prays The Appellant prays that the disallowance of the advertisement that the disallowance of the advertisement expenses amounting to Rs. 3,05,22, 128/ expenses amounting to Rs. 3,05,22, 128/- claimed by the Appellant claimed by the Appellant while computing its income under the head Income from Business and while computing its income under the head Income from Business and while computing its income under the head Income from Business and Profession' be deleted. Profession' be deleted.

WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1,

3. GROUND NO. 3: DIS 3. GROUND NO. 3: DISALLOWANCE OF DEPRECIATION ON YACHT ALLOWANCE OF DEPRECIATION ON YACHT AMOUNTING TO RS. 22,72,613/ AMOUNTING TO RS. 22,72,613/-:

3.1. On the facts and in the circumstances of the case and in law, Id. 3.1. On the facts and in the circumstances of the case and in law, Id. 3.1. On the facts and in the circumstances of the case and in law, Id. CIT(A) erred in confirming the action of the Id. AO of not allowing CIT(A) erred in confirming the action of the Id. AO of not allowing CIT(A) erred in confirming the action of the Id. AO of not allowing depreciation on yacht amounting to Rs. 22,72,613/ depreciation on yacht amounting to Rs. 22,72,613/-.

3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2. The Id. CIT(A) failed to appreciate and ought to have held that: 3.2. The Id. CIT(A) failed to appreciate and ought to have held that:

3.2.1 the yacht has been used for the business of the Appellant for the yacht has been used for the business of the Appellant for the yacht has been used for the business of the Appellant for holding conferences etc. and therefore depreciation is allowable; holding conferences etc. and therefore depreciation is allowable; holding conferences etc. and therefore depreciation is allowable; 3.2.2. the asset had been added to the block of asse 3.2.2. the asset had been added to the block of asset and it looses its t and it looses its identity when added to the block of assets; identity when added to the block of assets; 3.2.3. depreciation on yacht is consistently claimed by the Appellant 3.2.3. depreciation on yacht is consistently claimed by the Appellant 3.2.3. depreciation on yacht is consistently claimed by the Appellant and the same has been accepted by the Id. AO in earlier years; and the same has been accepted by the Id. AO in earlier years; and the same has been accepted by the Id. AO in earlier years; 3.2.4 it is a settled position in law that claim of it is a settled position in law that claim of depreciation allowed in depreciation allowed in first year cannot be disallowed in subsequent assessment years unless first year cannot be disallowed in subsequent assessment years unless first year cannot be disallowed in subsequent assessment years unless the claim in the first year itself has been disturbed; the claim in the first year itself has been disturbed; 3.2.5 the Id. AO cannot sit in the armchair of the businessman to decide the Id. AO cannot sit in the armchair of the businessman to decide the Id. AO cannot sit in the armchair of the businessman to decide whether or not to use and how to u whether or not to use and how to use a particular asset for its business; se a particular asset for its business; 3.2.6 the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have used the yacht for treating patients; used the yacht for treating patients; 3.3 The Appellant prays that the disallowance of the depreciation on The Appellant prays that the disallowance of the depreciation on The Appellant prays that the disallowance of the depreciation on yacht amounting to Rs. 22,72,613/ yacht amounting to Rs. 22,72,613/- while computing its income under le computing its income under the head Income from Business and Profession' be deleted. the head Income from Business and Profession' be deleted.

WITHOUT PREJUDICE TO GROUND NO. 1, WITHOUT PREJUDICE TO GROUND NO. 1,

4. GROUND NO. 4: DISALLOWANCE OF REPAIRS ON YACHT 4. GROUND NO. 4: DISALLOWANCE OF REPAIRS ON YACHT 4. GROUND NO. 4: DISALLOWANCE OF REPAIRS ON YACHT AMOUNTING TO RS. AMOUNTING TO RS. 17,67,9231-:

DR Batras Positive Health Clinic Pvt. Ltd.. 28 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 4.1 On the facts and in the circumstances of the case On the facts and in the circumstances of the case and in law, the Id. and in law, the Id. CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the CIT(A) erred in confirming the action of the Id. AO of disallowing the expenditure pertaining to repairs on yacht amounting to Rs. expenditure pertaining to repairs on yacht amounting to Rs. expenditure pertaining to repairs on yacht amounting to Rs. 17,67,923/- for the reason that the said yacht has not been used by the for the reason that the said yacht has not been used by the for the reason that the said yacht has not been used by the Appellant for its business. Appellant for its business. 4.2. The Id. CIT(A) failed to appreciate and ought to have held that: The Id. CIT(A) failed to appreciate and ought to have held that: The Id. CIT(A) failed to appreciate and ought to have held that: 4.2.1. the yacht has been used for the business of the Appellant for 4.2.1. the yacht has been used for the business of the Appellant for 4.2.1. the yacht has been used for the business of the Appellant for holding conferences etc. and therefore repairs expenditure in respect of holding conferences etc. and therefore repairs expenditure in respect of holding conferences etc. and therefore repairs expenditure in respect of the same is allowable u/s. the same is allowable u/s. 37(1); 4.2.2. repairs have been consistently allowed whenever claimed by the have been consistently allowed whenever claimed by the have been consistently allowed whenever claimed by the Appellant; 4.2.3 the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have the Appellant at no stage of the proceedings had claimed to have used the yacht for treating patients. used the yacht for treating patients. 4.3 The Appellant prays that the disallowance of expense on repairs of The Appellant prays that the disallowance of expense on repairs of The Appellant prays that the disallowance of expense on repairs of yacht amounting to Rs. 17,67,923/ unting to Rs. 17,67,923/- while computing its income under while computing its income under the head Income from Business and Profession' be deleted. the head Income from Business and Profession' be deleted.

DR Batras Positive Health Clinic Pvt. Ltd.. 29 DR Batras Positive Health Clinic Pvt. Ltd.. 2747 & 2761/Mum/2023 ITA Nos. 2748 under consideration i.e AY 2011 under consideration i.e AY 2011-12 are accordingly quashed. Since 12 are accordingly quashed. Since we have quashed the reassessment proceeding, the finding of the we have quashed the reassessment proceeding, the finding of the we have quashed the reassessment proceeding, the finding of the Ld. CIT(A) are accordingly set aside and we are not required to Ld. CIT(A) are accordingly set aside and we are not required to Ld. CIT(A) are accordingly set aside and we are not required to adjudicate upon merit of the a adjudicate upon merit of the addition.