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

PER OM PRAKASH KANT, AM

This appeal by the assessee, is directed against order dated 11/03/2022 passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre (NFAC), New Delhi [in short the Ld. CIT(A)] for assessment year 2011-12, raising following grounds:

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1:0 Re.: Validity of the re 1:0 Re.: Validity of the re-assessment proceedings: assessment proceedings:

1:1 The Commissioner of Income 1:1 The Commissioner of Income-tax (Appeals) has erred in tax (Appeals) has erred in confirming the action of the Assessing Officer in re confirming the action of the Assessing Officer in re confirming the action of the Assessing Officer in re-opening the Appellant's assessment u/s. 148 of the Income the Appellant's assessment u/s. 148 of the Income the Appellant's assessment u/s. 148 of the Income-tax Act, 1961.

1: 2 The Appellant submits that considering the facts and Appellant submits that considering the facts and Appellant submits that considering the facts and circumstances of its case and the law prevailing on the circumstances of its case and the law prevailing on the circumstances of its case and the law prevailing on the subject the impugned re subject the impugned re-opening us. 148 was in excess of opening us. 148 was in excess of jurisdiction and was also otherwise bad in law and the jurisdiction and was also otherwise bad in law and the jurisdiction and was also otherwise bad in law and the Commissioner of Income Commissioner of Income-tax (Appeals) ought to have held as ght to have held as such.

1: 3 The Appellant submits that the proceedings u/s. 148 of 1: 3 The Appellant submits that the proceedings u/s. 148 of 1: 3 The Appellant submits that the proceedings u/s. 148 of the Income-tax Act, 1961 were not in accordance with law tax Act, 1961 were not in accordance with law tax Act, 1961 were not in accordance with law and consequently ought to be struck down. and consequently ought to be struck down.

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reasons that income escaped assessment and issued notice under reasons that income escaped assessment and issued notice under reasons that income escaped assessment and issued notice under section 148 of the Income 8 of the Income-tax Act, 1961 (in short in short ‘the Act’) on 30/03/2018. In response In response, the assessee filed the return of income the assessee filed the return of income on 26/04/2018, reiterating the income which was filed in the on 26/04/2018, reiterating the income which was filed in the on 26/04/2018, reiterating the income which was filed in the original return of income. The assessee was provided copy of return of income. The assessee was provided copy of return of income. The assessee was provided copy of reasons recorded. The d. The Ld. Assessing Officer on 12/11/2018 Assessing Officer on 12/11/2018 disposed off the objections raised by the assessee against reopening disposed off the objections raised by the assessee against reopening disposed off the objections raised by the assessee against reopening of the assessment. In the reassessment proceeding, the Assessing of the assessment. In the reassessment proceeding, the Assessing of the assessment. In the reassessment proceeding, the Assessing Officer did not accept contention of the assessee that nonrefundable Officer did not accept contention of the assessee that nonrefundable Officer did not accept contention of the assessee that nonrefundable supervision charges of n charges of ₹28.17 Crores against various works 28.17 Crores against various works executed in lieu of services provided for private parties, were executed in lieu of services provided for private parties executed in lieu of services provided for private parties declared as income declared as income in subsequent assessment year and therefore subsequent assessment year and therefore no addition should be made in the year under consideration. no addition should be made in the year under consideration. no addition should be made in the year under consideration. According to the Ld. Ld. Assessing Officer, the assessee was following Assessing Officer, the assessee was following mercantile system of accounting therefore once the income accrued mercantile system of accounting therefore once the income accrued mercantile system of accounting therefore once the income accrued in the year under consideration, the same had to be offered in the in the year under consideration, the same had to be offered in the in the year under consideration, the same had to be offered in the relevant assessment year in which it had accrued. Though the relevant assessment year in which it had accrued. Though the relevant assessment year in which it had accrued. Though the assessee had not objected to the accrual of the income but stated t objected to the accrual of the income but stated t objected to the accrual of the income but stated

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that same had been offered in the subsequent year. The Assessing that same had been offered in the subsequent year. The Assessing that same had been offered in the subsequent year. The Assessing Officer accordingly made addition for the said income of Officer accordingly made addition for the said income of Officer accordingly made addition for the said income of ₹28,17,00,000/- in assessment order dated 22/12/2018. On in assessment order dated 22/12/2018. On in assessment order dated 22/12/2018. On further appeal, the Ld. further appeal, the Ld. CIT(A) rejected the contention of the CIT(A) rejected the contention of the assessee challenging validity of the reassessment assessee challenging validity of the reassessment. On merit . On merit, the Ld. CIT(A) upheld that addition should have been made in the year CIT(A) upheld that addition should have been made CIT(A) upheld that addition should have been made under consideration under consideration, however directed the Assessing Officer for , however directed the Assessing Officer for verifying whether the s verifying whether the same income from supervisory charges of ame income from supervisory charges of ₹28,17,00,000/- has been declared by the assessee in assessment has been declared by the assessee in assessment has been declared by the assessee in assessment year 2012-13, and if offered so, then pass , and if offered so, then pass necessary or necessary order for assessment year 2012 assessment year 2012-13, for avoiding double taxation of , for avoiding double taxation of supervisory charges of supervisory charges of ₹28,17,00,000 /-.

2.1 The relevant finding rejecting the contention of the assessee The relevant finding rejecting the contention of the assessee The relevant finding rejecting the contention of the assessee challenging validity of the reassessment is reproduced as under: challenging validity of the reassessment is reproduced as under: challenging validity of the reassessment is reproduced as under:

4.3 In Grounds of Appeal No. 1, the assessee has challenged 4.3 In Grounds of Appeal No. 1, the assessee has challenged 4.3 In Grounds of Appeal No. 1, the assessee has challenged the validity of reassessment the validity of reassessment proceedings. The main issue proceedings. The main issues on which the appellant had challenged the validity of which the appellant had challenged the validity of which the appellant had challenged the validity of reassessment proceedings is summarized as under: reassessment proceedings is summarized as under: reassessment proceedings is summarized as under:

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 There has been no failure to disclose any material There has been no failure to disclose any material There has been no failure to disclose any material facts by the assessee as the re facts by the assessee as the re-opening of assessment opening of assessment in the case is after the expiry of four years from the in the case is after the expiry of four years in the case is after the expiry of four years end of Assessment Year 2011 end of Assessment Year 2011-2012.  The addition made by the AO has already been The addition made by the AO has already been The addition made by the AO has already been accounted accounted accounted for for for in in in accordance accordance accordance with with with assessee's assessee's assessee's accounting principles and was offered to tax by the accounting principles and was offered to tax by the accounting principles and was offered to tax by the Appellant while computing its total income in the Appellant while computing its total income in the Appellant while computing its total income in the subsequent year i.e. A subsequent year i.e. Assessment Year ssessment Year 2012-13. Therefore, there is no income chargeable to tax which Therefore, there is no income chargeable to tax which Therefore, there is no income chargeable to tax which has escaped assessment. has escaped assessment.  The The The addition addition addition was was was made made made on on on basis basis basis of of of observations/comments made by the CAG on the observations/comments made by the CAG on the observations/comments made by the CAG on the accounts accounts accounts of of of the the the Appellant. Appellant. Appellant. However, However, However, the the the said said said comments were already part of comments were already part of accounts of the accounts of the assessee and were filed along with return of income, assessee and were filed along with return of income, assessee and were filed along with return of income, financial statements accompanying the return and financial statements accompanying the return and financial statements accompanying the return and notes to the accounts. notes to the accounts.  Therefore, same was already in the knowledge of the Therefore, same was already in the knowledge of the Therefore, same was already in the knowledge of the assessing officer. Hence re assessing officer. Hence re-opening is on the basis of a opening is on the basis of a change change of opinion.

In respect of the above In respect of the above-mentioned grounds of appeal, the mentioned grounds of appeal, the assessment order passed by the AO, Grounds of appeal filed assessment order passed by the AO, Grounds of appeal filed assessment order passed by the AO, Grounds of appeal filed by the appellant, statement of facts filed by the appellant, by the appellant, statement of facts filed by the appellant, by the appellant, statement of facts filed by the appellant, submission made by the appellant and legal case laws are submission made by the appellant and legal case laws are submission made by the appellant and legal case laws are carefully perused. Since, all the issues on which validity of perused. Since, all the issues on which validity of perused. Since, all the issues on which validity of reassessment proceedings challenged are interlinked, the reassessment proceedings challenged are interlinked, the reassessment proceedings challenged are interlinked, the same is dealt with simultaneously for better clarity. same is dealt with simultaneously for better clarity. same is dealt with simultaneously for better clarity.

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In the present case, the Assessing Officer had noticed from In the present case, the Assessing Officer had noticed from In the present case, the Assessing Officer had noticed from the CAG Report (point the CAG Report (point 20) of accounts of assessee that the ounts of assessee that the assessee had not accounted non assessee had not accounted non-refundable supervision refundable supervision charges of Rs. 28.17 crores on receipt basis (Nagpur Circle charges of Rs. 28.17 crores on receipt basis (Nagpur Circle charges of Rs. 28.17 crores on receipt basis (Nagpur Circle office Rs. 1.50 cr. + Nagpur Substation division Rs. 26.67 Cr.) 1.50 cr. + Nagpur Substation division Rs. 26.67 Cr.) 1.50 cr. + Nagpur Substation division Rs. 26.67 Cr.) collected against various works in lieu of services collected against various works in lieu of services collected against various works in lieu of services provided for execution of private partiesin F.Y. 2010 for execution of private partiesin F.Y. 2010-11 relevant for 11 relevant for A.Y. 2011-12). Therefore, the same was required to be 12). Therefore, the same was required to be 12). Therefore, the same was required to be accounted in the A.Y. 2011 accounted in the A.Y. 2011-12. Accordingly, after recording 12. Accordingly, after recording the reasons for reopening of the case and even after taking the reasons for reopening of the case and even after taking the reasons for reopening of the case and even after taking prior approval of the Pr. Commissioner of Income Tax ie. val of the Pr. Commissioner of Income Tax ie. val of the Pr. Commissioner of Income Tax ie. competent authority. the AO had issued notice u/s 148 of the competent authority. the AO had issued notice u/s 148 of the competent authority. the AO had issued notice u/s 148 of the IT Act.

In its reasons recorded, the Assessing Officer had duly In its reasons recorded, the Assessing Officer had duly In its reasons recorded, the Assessing Officer had duly mentioned that the appellant assessee had filed the C&AG mentioned that the appellant assessee had filed the C&AG mentioned that the appellant assessee had filed the C&AG Annual Audit report, however Annual Audit report, however, the requisite material facts as , the requisite material facts as noted above in the reasons for reopening were embedded in noted above in the reasons for reopening were embedded in noted above in the reasons for reopening were embedded in such a manner that material evidence could not be such a manner that material evidence could not be such a manner that material evidence could not be discovered by the AO with due diligence, accordingly discovered by the AO with due diligence, accordingly discovered by the AO with due diligence, accordingly attracting provisions of Explanation I of section 147 of the attracting provisions of Explanation I of section 147 of the attracting provisions of Explanation I of section 147 of the Act.The Explanation Act.The Explanation-1 to Section 147 of the IT Act which was 1 to Section 147 of the IT Act which was effective & very much applicable for the year under effective & very much applicable for the year under effective & very much applicable for the year under consideration says that Production before the Assessing consideration says that Production before the Assessing consideration says that Production before the Assessing Officer of account books or other evidence from which Officer of account books or other evidence from which Officer of account books or other evidence from which material evidence could with due material evidence could with due diligence have been diligence have been discovered by the Assessing Officer will not necessarily discovered by the Assessing Officer will not necessarily discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing amount to disclosure within the meaning of the foregoing amount to disclosure within the meaning of the foregoing proviso. "It is pertinent to mention that the appellant proviso. "It is pertinent to mention that the appellant proviso. "It is pertinent to mention that the appellant

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assessee has not challenged the applicability of provisions of assessee has not challenged the applicability of provisions of assessee has not challenged the applicability of provisions of Explanation- -1 to section 147 of the IT Act during the 1 to section 147 of the IT Act during the appellate proceedings. Hence, considering all such facts it is appellate proceedings. Hence, considering all such facts it is appellate proceedings. Hence, considering all such facts it is concluded that there was failure on part of appellant concluded that there was failure on part of appellant concluded that there was failure on part of appellant assessee to disclose fully and truly all material facts assessee to disclose fully and truly all material facts assessee to disclose fully and truly all material facts necessary for its assessment. He necessary for its assessment. Hence, the groundsof appeal nce, the groundsof appeal of the appellant on this account is rejected of the appellant on this account is rejected.

The Hon'ble Supreme Court in the case of Honda Siel Power The Hon'ble Supreme Court in the case of Honda Siel Power The Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Vs DCIT &Anr. (Del) 340 ITR 53 upheld in 340 Products Ltd. Vs DCIT &Anr. (Del) 340 ITR 53 upheld in 340 Products Ltd. Vs DCIT &Anr. (Del) 340 ITR 53 upheld in 340 IT 64 (SC had upheld the reopening of assessment as valid IT 64 (SC had upheld the reopening of assessment as valid IT 64 (SC had upheld the reopening of assessment as valid by clearly holding that term 'failure' on the part of the y holding that term 'failure' on the part of the y holding that term 'failure' on the part of the assessee is not restricted only to the return or tax audit assessee is not restricted only to the return or tax audit assessee is not restricted only to the return or tax audit report but also covers the stage of report but also covers the stage of assessment proceedings. assessment proceedings. Omission to disclose material facts during the course of Omission to disclose material facts during the course of Omission to disclose material facts during the course of assessment assessment proceedings proceedings confers confers jurisdiction jurisdiction on on the the Assessing Officer to re Assessing Officer to re-open the assessment.

The Assessing Officer has clearly mentioned in the reasons The Assessing Officer has clearly mentioned in the reasons The Assessing Officer has clearly mentioned in the reasons recorded itself that the issues under consideration were recorded itself that the issues under consideration were recorded itself that the issues under consideration were never examined by the Assessing Officer during the course of never examined by the Assessing Officer during the course of never examined by the Assessing Officer during the course of regular assess regular assessment. Moreover, the material facts relevant for Moreover, the material facts relevant for the assessment on the issue(s) under consideration were not assessment on the issue(s) under consideration were not assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the filed during the course of assessment proceeding and the filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c, same may be embedded in annual report, audited P&L A/c, same may be embedded in annual report, audited P&L A/c, Balance Sheet and books of account, Balance Sheet and books of account, in such a manner that in such a manner that it would require due diligence by the A to extract this it would require due diligence by the A to extract this it would require due diligence by the A to extract this information. It is pertinent to mention here that, during the information. It is pertinent to mention here that, during the information. It is pertinent to mention here that, during the appellate proceedings, the appellant assessee has not filed appellate proceedings, the appellant assessee has not filed appellate proceedings, the appellant assessee has not filed

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any details or any documentary evidences which shows th any details or any documentary evidences which shows th any details or any documentary evidences which shows that the Assessing Officer hadalready examined the issue under the Assessing Officer hadalready examined the issue under the Assessing Officer hadalready examined the issue under questionin earlier assessment / reassessment proceedings. questionin earlier assessment / reassessment proceedings. questionin earlier assessment / reassessment proceedings. Since, the issue under dispute was never examined by the Since, the issue under dispute was never examined by the Since, the issue under dispute was never examined by the Assessing Officer earlier, question of change of opinion does Assessing Officer earlier, question of change of opinion does Assessing Officer earlier, question of change of opinion does not arise. Hence, not arise. Hence, the grounds of appeal of the appellant on the grounds of appeal of the appellant on this account is rejected. this account is rejected.

The Hon'ble Madras High Court in case of A.L.A. Firm Vs The Hon'ble Madras High Court in case of A.L.A. Firm Vs The Hon'ble Madras High Court in case of A.L.A. Firm Vs CIT(Mad) 102 IT 622. CIT(Mad) 102 IT 622. Hon'ble Supreme Court in case of Ess Hon'ble Supreme Court in case of Ess Kay Engineering Co. (P) Ltd. Vs CIT(SC) Kay Engineering Co. (P) Ltd. Vs CIT(SC) 247 ITR 818. Hon'ble 247 ITR 818. Hon'ble Madras High C Madras High Court in case ofRevathy C.P. Equipments Ltd. ourt in case ofRevathy C.P. Equipments Ltd. Vs DCIT&Ors. (Mad) 241 IT 856and Hon'ble Allahabad High Vs DCIT&Ors. (Mad) 241 IT 856and Hon'ble Allahabad High Vs DCIT&Ors. (Mad) 241 IT 856and Hon'ble Allahabad High Court in case of EMA Court in case of EMA India Ltd. Vs ACIT(All) 30 DTR 82 have India Ltd. Vs ACIT(All) 30 DTR 82 have clearly held that "When there is no discussion on the issue in clearly held that "When there is no discussion on the issue in clearly held that "When there is no discussion on the issue in the assessment order and no the assessment order and no details were called for by the details were called for by the Assessing Officer or filed by the assessee on the issue, no Assessing Officer or filed by the assessee on the issue, no Assessing Officer or filed by the assessee on the issue, no finding either positive or negative was arrived at during the finding either positive or negative was arrived at during the finding either positive or negative was arrived at during the course of the original assessment proceedings, there is no course of the original assessment proceedings, there is no course of the original assessment proceedings, there is no question of change of opinion." question of change of opinion."

The Hon'ble The Hon'ble ITAT, Kolkata in case of SomDutt Builders (P) ITAT, Kolkata in case of SomDutt Builders (P) Ltd. Vs DCIT( ITAT, Kol) 98 ITD 78 had held the reopening of Ltd. Vs DCIT( ITAT, Kol) 98 ITD 78 had held the reopening of Ltd. Vs DCIT( ITAT, Kol) 98 ITD 78 had held the reopening of assessment is valid stating that change of opinion comes to assessment is valid stating that change of opinion comes to assessment is valid stating that change of opinion comes to rescue of assessee only when Assessing Officer has taken rescue of assessee only when Assessing Officer has taken rescue of assessee only when Assessing Officer has taken one of permissible views at the one of permissible views at the time of original proceedings. time of original proceedings. A wrong application of law cannot be held as permissible A wrong application of law cannot be held as permissible A wrong application of law cannot be held as permissible view and that can always be changed for appreciating law view and that can always be changed for appreciating law view and that can always be changed for appreciating law The Hon'ble Karnataka High Court in the case of CIT&Anr Vs The Hon'ble Karnataka High Court in the case of CIT&Anr Vs The Hon'ble Karnataka High Court in the case of CIT&Anr Vs

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Rinku Chakraborthy Rinku Chakraborthy (Kar) 56 DTR 227and the Hon ble (Kar) 56 DTR 227and the Hon ble Supreme Court in the case of Kalyanji Mavis Co. preme Court in the case of Kalyanji Mavis Co. preme Court in the case of Kalyanji Mavis Co. Vs CIT(SC) 102 IT 287 had held that when an income liable to tax has 102 IT 287 had held that when an income liable to tax has 102 IT 287 had held that when an income liable to tax has escaped assessment in the original assessment proceedings escaped assessment in the original assessment proceedings escaped assessment in the original assessment proceedings due to oversight and inadvertence or a mistake committed by due to oversight and inadvertence or a mistake committed by due to oversight and inadvertence or a mistake committed by the ITO, he has jurisdi the ITO, he has jurisdiction to re-open the assessment. open the assessment. Reassessment is permissible even if the information is Reassessment is permissible even if the information is Reassessment is permissible even if the information is obtained after. proper investigation from the materials on obtained after. proper investigation from the materials on obtained after. proper investigation from the materials on record or from any enquiry or research into record or from any enquiry or research into facts or law. facts or law. Information need not be from external source. Information need not be from external source.

The appellant assessee had submitted that the supervision ppellant assessee had submitted that the supervision ppellant assessee had submitted that the supervision charges of Rs.28.17 crore was offered to tax in the AY 2012 charges of Rs.28.17 crore was offered to tax in the AY 2012 charges of Rs.28.17 crore was offered to tax in the AY 2012- 13. However, the appellant had not submitted any 13. However, the appellant had not submitted any 13. However, the appellant had not submitted any documentary evidences as to why the said amount of Rs. documentary evidences as to why the said amount of Rs. documentary evidences as to why the said amount of Rs. 28.17 crore was not offered to tax duri 28.17 crore was not offered to tax during the assessment ng the assessment year 2011-12. When the said amount was accrued in the 12. When the said amount was accrued in the 12. When the said amount was accrued in the financial 2010 financial 2010-11 relevant to AY 2011-12, it must be offered 12, it must be offered to tax in the same year ie in the AY 2011 to tax in the same year ie in the AY 2011-12 as the assessee 12 as the assessee is following mercantile system of accounting. It is clear from is following mercantile system of accounting. It is clear from is following mercantile system of accounting. It is clear from the CAG report and the submissions of the appellant that the the CAG report and the submissions of the appellant that the the CAG report and the submissions of the appellant that the said amount was accrued in the financial year 2010 said amount was accrued in the financial year 2010 said amount was accrued in the financial year 2010-11. The appellant, appellant, appellant, assessee assessee assessee cannot cannot cannot follow follow follow hybrid hybrid hybrid system system system of of of accounting ie. certain receipts cannot be recorded on receipt accounting ie. certain receipts cannot be recorded on receipt accounting ie. certain receipts cannot be recorded on receipt basis if the assessee basis if the assessee follows mercantile system of accounting follows mercantile system of accounting Therefore, the income has escaped assessment within the Therefore, the income has escaped assessment within the Therefore, the income has escaped assessment within the meaning of reopening of assessment for the year under meaning of reopening of assessment for the year under meaning of reopening of assessment for the year under consideration. Hence, the grounds of appeal of the appellant consideration. Hence, the grounds of appeal of the appellant consideration. Hence, the grounds of appeal of the appellant that there is no income escaped from the asse that there is no income escaped from the assessment for the ssment for the

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year under consideration is not acceptable and accordingly year under consideration is not acceptable and accordingly year under consideration is not acceptable and accordingly rejected.

In view of the above detailed discussion, it is concluded that In view of the above detailed discussion, it is concluded that In view of the above detailed discussion, it is concluded that:

There was failure on part of appellant assessee to disclose There was failure on part of appellant assessee to disclose There was failure on part of appellant assessee to disclose fully and truly all material facts necessary for fully and truly all material facts necessary for fully and truly all material facts necessary for its assessment. assessment.

In the present facts & circumstances of the case, the question In the present facts & circumstances of the case, the question In the present facts & circumstances of the case, the question of change of opinion does not arise. of change of opinion does not arise.

The income has escaped assessment within the meaning of The income has escaped assessment within the meaning of The income has escaped assessment within the meaning of reopening of assessment for the year under consideration. reopening of assessment for the year under consideration. reopening of assessment for the year under consideration.

Hence, appeal filed by th Hence, appeal filed by the Appellant on all the issues raised e Appellant on all the issues raised in Grounds of Appeal No. 1 are hereby dismissed. of Appeal No. 1 are hereby dismissed.” ”

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the part of the assessee in disclosing fully and truly all material the part of the assessee in disclosing fully and truly all material the part of the assessee in disclosing fully and truly all material facts and therefore action of the Ld. CIT(A) in upholding the facts and therefore action of the Ld. CIT(A) in upholding the facts and therefore action of the Ld. CIT(A) in upholding the reassessment proceeding is no reassessment proceeding is not justified.

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396 (Bombay), wherein the Hon’ble , wherein the Hon’ble High Court on the first issue of on the first issue of disclosure of material fact truly and fully has held as under: disclosure of material fact truly and fully has held as under: disclosure of material fact truly and fully has held as under:

“5. Section 147 of the Act inter alia provides that if the 5. Section 147 of the Act inter alia provides that if the 5. Section 147 of the Act inter alia provides that if the Assessing Officer has reason to believe that any income Assessing Officer has reason to believe that any income Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for chargeable to tax has escaped assessment for chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of assessment year, he may, subject to the provisions of assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and sections 148 to 153, assess or reassess such income and sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped also any other income chargeable to tax which has escaped also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in assessment and which comes to his notice subsequently in assessment and which comes to his notice subsequently in the course of the proceedin the course of the proceedings. In such a situation, the said gs. In such a situation, the said section further empowers the Assessing Officer to recompute section further empowers the Assessing Officer to recompute section further empowers the Assessing Officer to recompute the loss or the depreciation allowance or any other allowance the loss or the depreciation allowance or any other allowance the loss or the depreciation allowance or any other allowance as the case may be. The first proviso to section 147 of the Act as the case may be. The first proviso to section 147 of the Act as the case may be. The first proviso to section 147 of the Act reads as under: reads as under:-

"Provided that wher "Provided that where an assessment under sub-section (3) of section (3) of section 143 or this section has been made for the relevant section 143 or this section has been made for the relevant section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section assessment year, no action shall be taken under this section assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant after the expiry of four years from the end of the relevant after the expiry of four years from the end of the relevant assessment year, unless any income assessment year, unless any income chargeable to tax has chargeable to tax has escaped assessment for such assessment year by reason of escaped assessment for such assessment year by reason of escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return the failure on the part of the assessee to make a return the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under under section 139 or in response to a notice issued under under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose section (1) of section 142 or section 148 or to disclose section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his ully and truly all material facts necessary for his ully and truly all material facts necessary for his assessment, for that assessment year." assessment, for that assessment year."

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The said proviso clearly stipulates that where an assessment The said proviso clearly stipulates that where an assessment The said proviso clearly stipulates that where an assessment under section 143(3) or 147 has been carried out for the under section 143(3) or 147 has been carried out for the under section 143(3) or 147 has been carried out for the relevant assessment year, no action can be take relevant assessment year, no action can be take relevant assessment year, no action can be taken under section 147, after the expiry of four years from the end of the section 147, after the expiry of four years from the end of the section 147, after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to relevant assessment year, unless any income chargeable to relevant assessment year, unless any income chargeable to tax had escaped assessment by reason of the failure on the tax had escaped assessment by reason of the failure on the tax had escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in part of the assessee to make a return under section 139 or in part of the assessee to make a return under section 139 or in response to a notice issued under section 142(1) or section nse to a notice issued under section 142(1) or section nse to a notice issued under section 142(1) or section 148 or to disclose fully and truly all material facts necessary 148 or to disclose fully and truly all material facts necessary 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. for his assessment for that assessment year.

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the vital link between the reasons a the vital link between the reasons and the evidence. This nd the evidence. This vital link is the safeguard against arbitraly te vital link is the safeguard against arbitraly te-opening of a opening of a concluded assessment. concluded assessment.

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paid for filing patent applications outside India. The details paid for filing patent applications outside India. The details paid for filing patent applications outside India. The details thereof were also furnished by the petitioner. Thereafter, by of were also furnished by the petitioner. Thereafter, by of were also furnished by the petitioner. Thereafter, by their letter dated 1st September 2008, the petitioner once their letter dated 1st September 2008, the petitioner once their letter dated 1st September 2008, the petitioner once again enclosed details of the legal and professional charges. again enclosed details of the legal and professional charges. again enclosed details of the legal and professional charges.

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6.1 On the issue of change of opinion, the Hon’ble Bombay High the issue of change of opinion, the Hon’ble Bombay High the issue of change of opinion, the Hon’ble Bombay High Court held as under:

“14. We also find force in the submission of Mr. Pardiwala 14. We also find force in the submission of Mr. Pardiwala 14. We also find force in the submission of Mr. Pardiwala that the initiation of re that the initiation of re-assessment proceedings for the assessment proceedings for the Assessment Year 2005 Assessment Year 2005-06 is merely based on a "change 06 is merely based on a "change of opinion". On a perusal of the reasons for initiating to opinion". On a perusal of the reasons for initiating to opinion". On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case assessment proceedings, we find that it is not even the case assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was of Respondent No. 1 that any new tangible material was of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income brought to his notice which led him to believe that income brought to his notice which led him to believe that income had escaped assessment had escaped assessment. As stated earlier, all material facts . As stated earlier, all material facts were disclosed by the Petitioner in proceedings that were were disclosed by the Petitioner in proceedings that were were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally undertaken under sections 142(1) r/w 143(2), which finally undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December culminated in the assessment order dated 30th December culminated in the assessment order dated 30th December 2008 under section 143(3). It is therefore e 2008 under section 143(3). It is therefore evident that vident that Respondent No. 1 after passing the original assessment Respondent No. 1 after passing the original assessment Respondent No. 1 after passing the original assessment order dated 30th December 2008 has changed his opinion order dated 30th December 2008 has changed his opinion order dated 30th December 2008 has changed his opinion and issued the impugned notice under section 148. The and issued the impugned notice under section 148. The and issued the impugned notice under section 148. The reasons for the impugned notice as well as the impugned reasons for the impugned notice as well as the impugned reasons for the impugned notice as well as the impugned order proceed on the bas order proceed on the basis that a patent is a capital asset is that a patent is a capital asset and hence expenditure incurred towards filing of patent and hence expenditure incurred towards filing of patent and hence expenditure incurred towards filing of patent applications applications applications should should should have have have been been been treated treated treated as as as capital capital capital expenditure. Since it was treated as a revenue expenditure, expenditure. Since it was treated as a revenue expenditure, expenditure. Since it was treated as a revenue expenditure, there was computation of excessive loss which resulted there was computation of excessive loss which resulted there was computation of excessive loss which resulted in income escaping assessment. income escaping assessment. Therefore now, despite the fact Therefore now, despite the fact that in the original assessment order this very expenditure that in the original assessment order this very expenditure that in the original assessment order this very expenditure was allowed as a revenue expenditure, Respondent No. 1 was allowed as a revenue expenditure, Respondent No. 1 was allowed as a revenue expenditure, Respondent No. 1 now seeks to treat the same as a capital expenditure. This to now seeks to treat the same as a capital expenditure. This to now seeks to treat the same as a capital expenditure. This to

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our mind is noth our mind is nothing but a "change of opinion", and hence ing but a "change of opinion", and hence Respondent No.1 had no jurisdiction to re Respondent No.1 had no jurisdiction to re Respondent No.1 had no jurisdiction to re-open the assessment proceedings. assessment proceedings.”

6.2 For adjudicating the issue adjudicating the issue-in-dispute in the case in dispute in the case in the light of the above decision, it is relevant to reproduce the reasons recorded the above decision, it is relevant to reproduce the reasons recorded the above decision, it is relevant to reproduce the reasons recorded by the Assessing Officer as under: by the Assessing Officer as under:

"As per the CAG Report (point 20) of accounts of assessee "As per the CAG Report (point 20) of accounts of assessee "As per the CAG Report (point 20) of accounts of assessee that the assessee had not accounted non that the assessee had not accounted non that the assessee had not accounted non-refundable supervision charges of Rs.28.17 crores on receipt basis supervision charges of Rs.28.17 crores on receipt basis supervision charges of Rs.28.17 crores on receipt basis (Nagpur Circle office Rs. 1.50 cr. + Nagpur substation (Nagpur Circle office Rs. 1.50 cr. + Nagpur substation (Nagpur Circle office Rs. 1.50 cr. + Nagpur substation division Rs. 26.67 Cr.) collected against various works in lieu division Rs. 26.67 Cr.) collected against various works in lieu division Rs. 26.67 Cr.) collected against various works in lieu of services provided for execution of private parties". of services provided for execution of private parties". of services provided for execution of private parties".

It is evident that the assessee has collected the above sum in evident that the assessee has collected the above sum in evident that the assessee has collected the above sum in lieu of services provided in F.Y. 2010 lieu of services provided in F.Y. 2010-11 (A. Y.2011 11 (A. Y.2011-12). Therefore the s Therefore the same was required to be accounted in the ame was required to be accounted in the A.Y.2011-12, and the assessee has not accounted this 12, and the assessee has not accounted this 12, and the assessee has not accounted this amount. In return of income for A.Y.2011 amount. In return of income for A.Y.2011-12 clearly indicate 12 clearly indicate that the assessee has not fully and truly disclosed the that the assessee has not fully and truly disclosed the that the assessee has not fully and truly disclosed the material facts necessary for its assessment f material facts necessary for its assessment fo or the year under consideration.” under consideration.”

6.3 When we examine the first issue of nondisclosure of material we examine the first issue of nondisclosure of material we examine the first issue of nondisclosure of material fact truly and fully, we find that the entire report containing fact truly and fully, we find that the entire report containing fact truly and fully, we find that the entire report containing comments of the audit finding of the Comptroller and Auditor comments of the audit finding of the Comptroller and comments of the audit finding of the Comptroller and

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General of India (CAG CAG) was filed by the assessee in the original ) was filed by the assessee in the original assessment proceeding under section 143(3) of the Act, and this assessment proceeding under section 143(3) of the assessment proceeding under section 143(3) of the fact is also evident from the para four of the original assessment fact is also evident from the para four of the original assessment fact is also evident from the para four of the original assessment order dated 11/02/2014 under section 143(3) of the Act. For ready order dated 11/02/2014 under section 143(3) of the order dated 11/02/2014 under section 143(3) of the reference, the relevant relevant para is reproduced as under:

INCOME :

Revenue from operation (Schedule 12) Revenue from operation (Schedule 12)-Rs.2097.78 Rs.2097.78 crore

i) Open Access charges Rs.57.69 Crore Open Access charges Rs.57.69 Crore

This does not include an This does not include an amount of Rs.3.30 crore being STU amount of Rs.3.30 crore being STU charges for the current year. This has resulted in charges for the current year. This has resulted in charges for the current year. This has resulted in understatement of profit and receicables hy Rs.3.30 crone understatement of profit and receicables hy Rs.3.30 crone understatement of profit and receicables hy Rs.3.30 crone (HO)."

5.1 The assessee was called upon to give his views on 1 The assessee was called upon to give his views on 1 The assessee was called upon to give his views on repercussions of C&AG report and explain and the sa repercussions of C&AG report and explain and the sa repercussions of C&AG report and explain and the same. Further, the assessee was also asked to explain the Further, the assessee was also asked to explain the Further, the assessee was also asked to explain the

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understatement of profits on account of recovery of rates & understatement of profits on account of recovery of rates & understatement of profits on account of recovery of rates & taxes of Rs.91.00 lacs as per the C&AG report. taxes of Rs.91.00 lacs as per the C&AG report.

5.2 The assessee in its reply to the above states as under : assessee in its reply to the above states as under : assessee in its reply to the above states as under :

The Open Access Charges are initially accounted for in Open Access Charges are initially accounted for in Open Access Charges are initially accounted for in SLDC, Kalua (476) and then transferred to HO SLDC, Kalua (476) and then transferred to HO A/c’s A/c’s though IBA IBA IBA towards towards towards Open Open Open Access Access Access Charges Charges Charges amounting amounting amounting to to to Rs.3,25,81,590/ .3,25,81,590/- in the month of Ang 2011. Hence such in the month of Ang 2011. Hence such amount is shown as Prior amount is shown as Prior Period item in the year 2011 2011-12

5.3 The above contention of the assessee have been carefully The above contention of the assessee have been carefully The above contention of the assessee have been carefully considered and is not acceptable as the assessee failed to considered and is not acceptable as the assessee failed to considered and is not acceptable as the assessee failed to include the STU charges for the current year receivable by include the STU charges for the current year receivable by include the STU charges for the current year receivable by the assessee. The assessee is following mercantile system of the assessee. The assessee is following mercantile system of the assessee. The assessee is following mercantile system of accounting & hence the same should have been offered for ing & hence the same should have been offered for ing & hence the same should have been offered for tax during the vear. tax during the vear.

Therefore, the revenue of Rs.3.30 crore on account of non Therefore, the revenue of Rs.3.30 crore on account of non Therefore, the revenue of Rs.3.30 crore on account of non- inclusion of STU charges, is hereby brought to tax and added inclusion of STU charges, is hereby brought to tax and added inclusion of STU charges, is hereby brought to tax and added in the income of assessee. Further, the assessee did not in the income of assessee. Further, the assessee did not in the income of assessee. Further, the assessee did not submit any explanation in respect of rates & taxes & hence it ny explanation in respect of rates & taxes & hence it ny explanation in respect of rates & taxes & hence it is construed that the assessee has nothing to offer in this is construed that the assessee has nothing to offer in this is construed that the assessee has nothing to offer in this regard. Therefore, R regard. Therefore, Rs.91,00,000/- is also added to the total is also added to the total income income income being being being understatement understatement understatement of of of profits. profits. profits. The The The total total total disallowance works out to Rs.4, disallowance works out to Rs.4,21,00,000/-.”

6.4 In view of the above, the finding of the Ld. CIT(A) view of the above, the finding of the Ld. CIT(A) that the view of the above, the finding of the Ld. CIT(A) material facts were not produced by the assessee in assessment material facts were not produced by the assessee in assessment material facts were not produced by the assessee in assessment

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proceeding under section 143(3) of the proceeding under section 143(3) of the Act is baseless and is baseless and distortion of facts.. The relev . The relevant column of the C & AG ant column of the C & AG report, which is basis of the reopening is reproduced here as under for which is basis of the reopening is reproduced here as under for which is basis of the reopening is reproduced here as under for ready reference:

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said information from the assessee, d information from the assessee, and if in response the ass nd if in response the assessee would have failed in supplying the said information, then only the would have failed in supplying the said information, then only the would have failed in supplying the said information, then only the assessee could have been held responsible for not disclosing have been held responsible for not disclosing have been held responsible for not disclosing material facts fully and truly. If there is a failure on the part of the material facts fully and truly. If there is a failure on the part of the material facts fully and truly. If there is a failure on the part of the Assessing Officer in carrying out the inquirie Assessing Officer in carrying out the inquiries which ought to have hich ought to have been done, then remedy against such failure is not within section , then remedy against such failure is not within section , then remedy against such failure is not within section 147 of Act and appropriate remedy may be under section 263 of the 147 of Act and appropriate remedy may be under section 263 of the 147 of Act and appropriate remedy may be under section 263 of the Act. Without asking any further information in respect of comment . Without asking any further information in respect of comment . Without asking any further information in respect of comment of C & AG, from the assessee, the asse of C & AG, from the assessee, the assessee cannot be held ssee cannot be held responsible for not disclosing material facts fully and truly. The responsible for not disclosing material facts fully and truly. The responsible for not disclosing material facts fully and truly. The decision relied by the Ld. CIT(A) in the case of Hond Siel Power decision relied by the Ld. CIT(A) in the case of Hond decision relied by the Ld. CIT(A) in the case of Hond Products Ltd (supra) is accordingly distinguishable on facts. Ltd (supra) is accordingly distinguishable on facts. Ltd (supra) is accordingly distinguishable on facts.

6.6 Regarding the second issue of reopening based on the mere Regarding the second issue of reopening based on the mere Regarding the second issue of reopening based on the mere change of the opinion is concerned, we find that there is no change of the opinion is concerned, we find that there is no change of the opinion is concerned, we find that there is no reference in the reasons recorded as to why the Ld. Assessing reference in the reasons recorded as to why the reference in the reasons recorded as to why the Officer has re-examined the same material which was available examined the same material which was available examined the same material which was available before him during the course of original assessment proceeding. We ring the course of original assessment proceeding. We ring the course of original assessment proceeding. We find that there is no trigger find that there is no trigger or cause in the form of information from in the form of information from

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sources whether internal or external or any kind of the material sources whether internal or external or any kind of the material sources whether internal or external or any kind of the material which could lead the Assessing Officer for re which could lead the Assessing Officer for re-examination of the examination of the material i.e. C& AG report and comments of the assessee, and form C& AG report and comments of the assessee, and form C& AG report and comments of the assessee, and form reason to believe that income escaped assessment. In absence of reason to believe that income escaped assessment. reason to believe that income escaped assessment. any such trigger or cause in the form or cause in the form information or material, the information or material, the action of the Assessing Officer amounts to review of the assessment action of the Assessing Officer amounts to review of the ass action of the Assessing Officer amounts to review of the ass completed by him, which is not permitted in law. The information of completed by him, which is not permitted in law. The information of completed by him, which is not permitted in law. The information of C & AG Report that said supervision charges should be considered C & AG Report that said supervision charges should be considered C & AG Report that said supervision charges should be considered for the income in the year under consideration was duly available for the income in the year under consideration was duly available for the income in the year under consideration was duly available before the Assessing Officer. The comments of the assessee that before the Assessing Officer. The comments of the before the Assessing Officer. The comments of the said income was declared in subsequent assessment year as prior said income was declared in subsequent assessment year as prior said income was declared in subsequent assessment year as prior period Income was also available with the Assessing Officer and in period Income was also available with the Assessing Officer and period Income was also available with the Assessing Officer and such circumstances, if Assessing Officer has not questioned the such circumstances, if Assessing Officer has not questioned the such circumstances, if Assessing Officer has not questioned the action of the assessee of declaring the said i action of the assessee of declaring the said income in subsequent ncome in subsequent assessment year, the the Assessing Officer is presumed to have formed presumed to have formed opinion. The decision . The decisions relied upon by the Ld. CIT(A) are relied upon by the Ld. CIT(A) are distinguishable on facts as is in the instant case the very distinguishable on facts as is in the instant case the very distinguishable on facts as is in the instant case the very information on the basis of which the Assessing Officer has information on the basis of which the Assessing Offi information on the basis of which the Assessing Offi

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reopened the assessment was available with him during the course reopened the assessment was available with him during the course reopened the assessment was available with him during the course of original assessment proceeding under section 143(3) of the Act. of original assessment proceeding under section 143(3) of the of original assessment proceeding under section 143(3) of the Regarding the decision the case of Kalyanji Mavji and Co (supra), Regarding the decision the case of Kalyanji Mavji and Co (supra), Regarding the decision the case of Kalyanji Mavji and Co (supra), referred by the Ld. CIT(A) to hold that reassessm referred by the Ld. CIT(A) to hold that reassessment is permissible ent is permissible even if the information is obtained after proper investigation from even if the information is obtained after proper investigation from even if the information is obtained after proper investigation from the material on record or from any enquiry or research into facts the material on record or from any enquiry or research into facts the material on record or from any enquiry or research into facts are law and information need not be from any external source, we are law and information need not be from any external source, we are law and information need not be from any external source, we find that said decision pertains to th find that said decision pertains to the provisions of law available in e provisions of law available in Income-tax Act, 1922, where in information in possession of the tax Act, 1922, where in information in possession of the tax Act, 1922, where in information in possession of the Assessing Officer could validly be used for reopening. The relevant Assessing Officer could validly be used for reopening. The relevant Assessing Officer could validly be used for reopening. The relevant observation of the Hon’ble Supreme Court on of the Hon’ble Supreme Court, wherein the relevant , wherein the relevant provisions in the income tax provisions in the income tax Act 1922 are reproduced as under Act 1922 are reproduced as under :

“In order to appreciate the contentions advanced by counsel In order to appreciate the contentions advanced by counsel In order to appreciate the contentions advanced by counsel for the parties, it is necessary to make a brief survey of the for the parties, it is necessary to make a brief survey of the for the parties, it is necessary to make a brief survey of the provisions of provisions of s. 34(1) of the Income-tax Act, 1922. The section 1922. The section runs thus:

"34. (1) If-

(a) the Income (a) the Income-tax officer has reason to believe that by reason tax officer has reason to believe that by reason of the omission or failure on the part of an assessee to make of the omission or failure on the part of an assessee to make of the omission or failure on the part of an assessee to make a return of his income under a return of his income under section 22 for any year or to for any year or to

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disclose fully and truly all material facts necessary for his disclose fully and truly all material facts necessary for his disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable assessment for that year, income, profits or gains chargeable assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or tax have escaped assessment for that year, or tax have escaped assessment for that year, or have been under have been under-assessed or assessed at too low a rat assessed or assessed at too low a rate, or have been made the subject of excessive relief under the have been made the subject of excessive relief under the have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been Act, or excessive loss or depreciation allowance has been Act, or excessive loss or depreciation allowance has been computed, or computed, or

(b) notwithstanding that there has been no omission or (b) notwithstanding that there has been no omission or (b) notwithstanding that there has been no omission or failure as mentioned in clause failure as mentioned in clause

(a) on the part of the assessee, the (a) on the part of the assessee, the Income- tax officer has in tax officer has in consequence of information in his possession reason to consequence of information in his possession reason to consequence of information in his possession reason to believe that income, profits or gains chargeable to income believe that income, profits or gains chargeable to income believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under have escaped assessment for any year, or have been under have escaped assessment for any year, or have been under- assessed, or assessed at too low a rate, or have been assessed, or assessed at too low a rate, or have been assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that the subject of excessive relief under this Act, or that the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, excessive loss or depreciation allowance has been computed, excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in he may in cases falling under clause (a) at any time and in he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of cases falling under clause (b) at any time within four years of cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a assessee is a company, on the principal officer thereof, a assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may notice containing all or any of the requirements which may notice containing all or any of the requirements which may be included in a notice under sub be included in a notice under sub-section (2) of section (2) of section 22 and may proceed to assess or reassess such income and may proceed to assess or reassess such income and may proceed to assess or reassess such income profits or gains or recompute the loss or depreciation profits or gains or recompute the loss or depreciation profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may allowance; and the provisions of this Act shall, so far as may allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued be, apply accordingly as if the notice were a notice issued be, apply accordingly as if the notice were a notice issued under that sub at sub-section Provided * * * *"

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It would be seen that It would be seen that s. 34(1) contemplates two categories of contemplates two categories of cases for re-opening the previous assessment opening the previous assessment-(1) where there (1) where there has been an omission or failure on the part of the has been an omission or failure on the part of the has been an omission or failure on the part of the assessee to make a return of his income under to make a return of his income under s. 22 or to disclose fully or to disclose fully and truly all material facts necessary for his assessment; and truly all material facts necessary for his assessment; and truly all material facts necessary for his assessment; and (2) where there has been no such omission on the part of and (2) where there has been no such omission on the part of and (2) where there has been no such omission on the part of the assessee but the Income ee but the Income-tax officer on the basis of tax officer on the basis of information in his possession finds that income chargeable to information in his possession finds that income chargeable to information in his possession finds that income chargeable to tax has escaped assessment for any year. It is, therefore, tax has escaped assessment for any year. It is, therefore, tax has escaped assessment for any year. It is, therefore, manifest that the first category deals with cases where an manifest that the first category deals with cases where an manifest that the first category deals with cases where an assessee is himself in default assessee is himself in default and the second category deals and the second category deals with cases where there is no fault on the part of an assessee with cases where there is no fault on the part of an assessee with cases where there is no fault on the part of an assessee but where the income chargeable to tax has actually escaped but where the income chargeable to tax has actually escaped but where the income chargeable to tax has actually escaped assessment for one reason or the other and the Income assessment for one reason or the other and the Income assessment for one reason or the other and the Income-tax officer comes to know about the same. In the officer comes to know about the same. In the instant case, instant case, however, however, however, we we we are are are concerned concerned concerned with with with clause clause clause (b) (b) (b) of s. of of 34(1) extracted supra. Before however proceeding to interpret extracted supra. Before however proceeding to interpret extracted supra. Before however proceeding to interpret the ambit and import of the ambit and import of s. 34(1) (b) it may be necessary to (b) it may be necessary to consider the history of consider the history of s. 34 of the Act which appears to have of the Act which appears to have passed through different phases with amendments and passed through different phases with amendments and passed through different phases with amendments and additions made to the section from time to time.” additions made to the section from time to time.”

6.7 Further, Hon’ble Supreme Court (supra) opined that if fresh , Hon’ble Supreme Court (supra) opined that if fresh , Hon’ble Supreme Court (supra) opined that if fresh facts came into the possession possession of the Assessing Officer, then of the Assessing Officer, then plea of change of opinion may not apply, however in the same set of facts, change of opinion may not apply, however in the same set of facts, change of opinion may not apply, however in the same set of facts,

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change of opinion may not apply. The relevant observation of the change of opinion may not apply. The relevant observation of the change of opinion may not apply. The relevant observation of the Hon’ble Supreme Court Hon’ble Supreme Court (supra) are reproduced as under: (supra) are reproduced as under:

“We might mention that it was submitted by Mr. Banerjee We might mention that it was submitted by Mr. Banerjee We might mention that it was submitted by Mr. Banerjee that in fact the amount sought to be deducted was paid that in fact the amount sought to be deducted was paid that in fact the amount sought to be deducted was paid towards the income towards the income-tax liability of the partners and this was tax liability of the partners and this was done to protect the business done to protect the business itself and to improve the credit itself and to improve the credit of the partners. Even this specific plea does not appear to of the partners. Even this specific plea does not appear to of the partners. Even this specific plea does not appear to have been taken before the Income have been taken before the Income-tax officer. We are, tax officer. We are, however, not concerned with this particular plea because we however, not concerned with this particular plea because we however, not concerned with this particular plea because we are given to understand by the counsel for the are given to understand by the counsel for the appellant that appellant that the appeals against the assessment orders for the years the appeals against the assessment orders for the years the appeals against the assessment orders for the years 1958-59 and 1959 59 and 1959-60 are pending before the Income 60 are pending before the Income- tax authorities. In these circumstances we are clearly of the authorities. In these circumstances we are clearly of the authorities. In these circumstances we are clearly of the opinion that the facts of the present case clearly fall within opinion that the facts of the present case clearly fall within opinion that the facts of the present case clearly fall within the tests and principles laid down by this Court in A. Raman and principles laid down by this Court in A. Raman and principles laid down by this Court in A. Raman and Company's case (supra) inasmuch as the Income and Company's case (supra) inasmuch as the Income and Company's case (supra) inasmuch as the Income- tax officer proceeded on the basis of the information which came officer proceeded on the basis of the information which came officer proceeded on the basis of the information which came to him after the original assessment by fresh facts revealed to him after the original assessment by fresh facts revealed to him after the original assessment by fresh facts revealed in the assessment for the y in the assessment for the year 1958-59 and consisted of the 59 and consisted of the conduct of the appellant itself in not adducing any evidence conduct of the appellant itself in not adducing any evidence conduct of the appellant itself in not adducing any evidence to support its plea. We are, therefore, unable to agree with to support its plea. We are, therefore, unable to agree with to support its plea. We are, therefore, unable to agree with the view of the Tribunal that this was a case of a mere the view of the Tribunal that this was a case of a mere the view of the Tribunal that this was a case of a mere change of opinion by the Income change of opinion by the Income-tax officer on the materials n the materials which were already on the record. which were already on the record.

our attention was also drawn by the learned counsel for the our attention was also drawn by the learned counsel for the our attention was also drawn by the learned counsel for the appellant to the decision of the Bombay High Court appellant to the decision of the Bombay High Court appellant to the decision of the Bombay High Court

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in Commissioner of Income Commissioner of Income-tax, Bombay City II v. H. Holck I v. H. Holck Larsen(1). In this case, Chandrachud, J., as he then was, (1). In this case, Chandrachud, J., as he then was, (1). In this case, Chandrachud, J., as he then was, speaking for the Court after review of the authorities of this speaking for the Court after review of the authorities of this speaking for the Court after review of the authorities of this Court and other High Courts, observed as follows: Court and other High Courts, observed as follows: Court and other High Courts, observed as follows:

"What is obligatory in order to apply "What is obligatory in order to apply section 34(1)(b) section 34(1)(b) is that he must have "information" in his possession in consequence he must have "information" in his possession in consequence he must have "information" in his possession in consequence of which he has reason to believe that the income has of which he has reason to believe that the income has of which he has reason to believe that the income has escaped escaped assessment assessment or or is is under-assessed, under assessed, etc. etc. The The distinction really consists in a change of opinion distinction really consists in a change of opinion unsupported unsupported by subsequent information on the one hand and a change of by subsequent information on the one hand and a change of by subsequent information on the one hand and a change of opinion based on information subsequently obtained, on the opinion based on information subsequently obtained, on the opinion based on information subsequently obtained, on the other. In the former class of cases, the assessment other. In the former class of cases, the assessment other. In the former class of cases, the assessment proceedings are attempted to be re proceedings are attempted to be re-opened without the opened without the discovery of an erro discovery of an error and without receiving any information r and without receiving any information as to fact or law............................ Such a reopening is based as to fact or law............................ Such a reopening is based as to fact or law............................ Such a reopening is based on a "mere" change of opinion and is without jurisdiction..... on a "mere" change of opinion and is without jurisdiction..... on a "mere" change of opinion and is without jurisdiction..... ........ In the latter class of cases, the reopening is based on ........ In the latter class of cases, the reopening is based on ........ In the latter class of cases, the reopening is based on information lead information leading to the requisite belief and is therefore ing to the requisite belief and is therefore within the jurisdiction of the officer." within the jurisdiction of the officer."

This decision is really based on the question whether it is This decision is really based on the question whether it is This decision is really based on the question whether it is open to the Income open to the Income-tax officer to change his opinion tax officer to change his opinion subsequently on the same materials and reopen the origina subsequently on the same materials and reopen the origina subsequently on the same materials and reopen the original assessment. We are no doubt inclined to agree with the view assessment. We are no doubt inclined to agree with the view assessment. We are no doubt inclined to agree with the view expressed by Chandrachud, J., in the aforesaid case, but as expressed by Chandrachud, J., in the aforesaid case, but as expressed by Chandrachud, J., in the aforesaid case, but as this question is not free from difficulty as there is some this question is not free from difficulty as there is some this question is not free from difficulty as there is some divergence of judicial opinion on the subject, we would divergence of judicial opinion on the subject, we would divergence of judicial opinion on the subject, we would refrain from giving refrain from giving any definite decision on this point, any definite decision on this point,

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particularly when in particularly when in the view we take in the instant case, the view we take in the instant case, this point does not really arise for determination in this case, this point does not really arise for determination in this case, this point does not really arise for determination in this case, which is really based on another principle, namely, that the which is really based on another principle, namely, that the which is really based on another principle, namely, that the information was derived by the In information was derived by the Income-tax officer from fresh tax officer from fresh facts and is clearly covered by the principles laid down in A. facts and is clearly covered by the principles laid down in A. facts and is clearly covered by the principles laid down in A. raman and Company's case (supra). raman and Company's case (supra).”

6.8 In view of above, we set aside the finding of the Ld. CIT(A) on In view of above, we set aside the finding of the Ld. CIT(A) on In view of above, we set aside the finding of the Ld. CIT(A) on the issue in dispute and hold the issue in dispute and hold that reassessment proceeding a that reassessment proceeding as invalid in law. The grounds of appeal of the assessee are invalid in law. The grounds of appeal of the assessee invalid in law. The grounds of appeal of the assessee accordingly allowed.

Order pronounced Order pronounced in the open Court/under Rule 34(4 under Rule 34(4) of the ITAT Rules, 1963 on the ITAT Rules, 1963 on 29/12/2022. Sd/- Sd/- - (VIKAS AWASTHY VIKAS AWASTHY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 29/12/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai

Maharashtra State Electricity Transmission Maharashtra State Electricity Transmission 31 Company Ltd. ITA No. 990/M/2022

BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai