DEPUTY COMMISSIONER OF INCOME-TAX,, PUNE vs. M/S. SECO TOOLS INDIA PVT. LTD.,, PUNE

आदेश / ORDER

PER SUSHMA CHOWLA, JM:

Both the appeals filed by Revenue are against separate orders of CIT(A)-4, Pune, both dated 15.11.2016 relating to assessment years 2002-03 and 2003-04 against respective orders passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’). The assessee has also filed Cross Objections against the appeals of Revenue.

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domestic market. The assessee was in existence from 1997. There was an intention to set up a factory in India. However, the group company decided to acquire existing running facility i.e. M/s. Drillco Seco Ltd. and continue the business of manufacturing in the said facility. In this regard, permission was taken from Foreign Investment Promotion Board (FIPB), which in its directive asked the assessee to stop the trading of tools and thereafter, acquire and run the facility. The learned Authorized Representative for the assessee here pointed out that in line with the said directions, no trading activity was carried out in the present year. However, the assessee had taken loan for acquisition of facility and also had claimed the deduction on account of interest payable on such loan. He fairly pointed out that intimation under section 143(1) of the Act was issued to assessee. The Assessing Officer thereafter, records reasons for reopening the assessment, which are placed at page 1 of Paper Book and issues notice under section 148 of the Act. In reply, the assessee filed a letter dated 22.12.2009, copy of which is also placed in Paper Book and objected to the reasons recorded for reopening the assessment. Our attention was drawn to the aforesaid reasons recorded and it was pointed out that entire reasons recorded referred to the audited Balance Sheet and Profit and Loss Account of assessee. In other words, the Assessing Officer had no new tangible material before it for reopening the assessment in the case of assessee. He further stressed that in the absence of any tangible material coming to the knowledge of Assessing Officer, reopening under section 147/148 of the Act was bad in law. In this regard, reliance was placed on the ratio laid down in DDIT(IT) Vs. Sandvik AB in ITA Nos.608/PUN/2014 and 623/PUN/2014 along with CO Nos.20/PUN/2015 and 28/PUN/2015 relating to assessment years 2006-07 and 2005-06, order dated 05.06.2018. The learned Authorized Representative for the assessee also pointed out that CIT(A) had relied on decision in the case of

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DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (2015) 373 ITR 661 (SC) which was against the assessee. It was also further pointed out by him that the said decision of DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (supra) has been taken note of in DDIT(IT) Vs. Sandvik AB (supra) and the decision has been given after relying on other decisions on the issue.

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there was reason to belief of escapement of income and hence, there is no merit in invoking jurisdiction under section 147 of the Act.

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any tangible material. He further stated that the Dispute Resolution Panel (DRP) in assessment year 2006-07 in the absence of any tangible material had held that the reopening of assessment was bad in law but because of low tax effect, no appeal has been filed before the Tribunal. He further pointed out that proceedings for assessment year 2008-09 were taken first and hence, the order of authorities below is elaborate. However, he stated that for all the years i.e. starting from assessment years 2006-07 to 2009-10, reasons were recorded on the same date i.e. 26.07.2013 and the proceedings were initiated under section 147 of the Act. In assessment year 2008-09, the DRP had relied on the ratio laid down by the Hon'ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 (SC) to uphold re-assessment proceedings. Similarly, re-assessment proceedings were upheld in assessment years 2007-08 and 2009-10. He further pointed out that identical reasons were recorded for reopening the assessment in the case of Sandvik Systems Development AB, for assessment year 2008-09. He referred to the copy of reasons recorded for reopening of assessment dated 26.07.2013 in the said case, which are placed in Compilation No.II at pages 1 to 3. He also referred to the computation of income where the declaration in respect of receipts from Sandvik Asia Ltd. towards IT Support Services were declared in the Note No.3 and it was reported that the same do not fall within ambit of Royalty / Fees for Technical Services within the meaning of Article 12 of the Tax Treaty read with Protocol thereto. He also referred to Annexure to the audit report in this regard. He further referred to the order of Tribunal in ITA No.464/PUN/2015, relating to assessment year 2008-09, order dated 10.11.2017 and pointed out that the issue was considered at length by the Tribunal and relying on earlier order of Tribunal in the case of DDIT Vs. Sandvik Information Technology AB in ITA No.128/PUN/2014 along with CO No.10/PUN/2015, relating to assessment year 2005-06, order dated 28.12.2016, had held that in the absence of any new information or tangible material to come to the conclusion that there was escapement of income, even in proceedings which were completed under section 143(1) of the Act, held that there was no merit in invoking of re-assessment proceedings under section 147 of the Act. The learned Authorized Representative for the assessee further referred to the reasons recorded for reopening of assessment in the case of Sandvik Information Technology AB, relating to assessment year 2005- 06 along with computation of income and the Annexure to Form No.3CEB, placed in Compilation No.II at pages 24 and 25 along with copy of order of Tribunal dated 28.12.2016 in ITA No.128/PUN/2014, placed in Compilation No.II at pages 28 to 45. Further, the learned Authorized Representative for the assessee referred to reasons recorded for reopening of assessment dated 26.07.2013 in the case of Sandvik Australia Pty Ltd., relating to assessment year 2008-09 along with Note filed in the computation of income and relevant Annexure to Form No.3CEB, which are attached at pages 46 to 51 of Compilation No.II and also the order of Tribunal dated 18.08.2017 in ITA Nos.250 & 251/PUN/2015, relating to assessment year 2008-09, placed at pages 52 to 62 of Compilation No.II and pointed out that the issue is squarely covered in favour of assessee. The learned Authorized Representative for the assessee referring the Compilation No.I took us through the reasons recorded for each of the year starting from assessment year 2006-07 in the case of assessee and pointed out that similar reasons were recorded for each of the year except for the amount received as license fees from Sandvik Asia Ltd., which varied in each of the year. The copy of said reasons for assessment year 2006-07 are placed at

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pages 1 to 3 of the Compilation No.I, thereafter, for each of the years are also placed in the said Compilation No.I. The learned Authorized Representative for the assessee also referred to Note in the computation of total income and the relevant Annexure to Form No.3CEB. The learned Authorized Representative for the assessee pointed out that the ground of appeal No.1 raised by the assessee was against initiation of re-assessment proceedings under section 147 of the Act and grounds of appeal No.2 ad 3 were on merits of the issue which would become academic in case the ground of appeal No.1 is decided in favour of assessee. He further pointed out that the issues raised in assessment years 2007-08 and 2009-10 were similar and identical to the issues in assessment year 2008-09.” 18. It may be pointed out that while arguing the said appeal on identical issue, the learned Departmental Representative for the Revenue had placed reliance on the orders of DRP/Assessing Officer. The Tribunal thereafter, analyzed the issue and held as under:- “7. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against applicability of provisions of section 147 of the Act. The said section lays down the proposition that in case where there is any escapement of income, which comes to the knowledge of the Assessing Officer on the basis of some tangible material, then the said proceedings could be reopened in order to assess the escapement of income in the hands of assessee. The assessee for the year under consideration had furnished the return of income in time declaring total income at Nil. The Assessing Officer under the provisions of section 147 of the Act, recorded reasons for reopening assessment on the ground that it was noticed from Form No.3CEB of Sandvik Asia Ltd. for assessment year 2008-09 that the assessee had received Rs.80,72,286/- as IT Support Services and the same was not offered to tax. The Assessing Officer further held that the said receipts paid to the assessee were in the nature of Royalty and Fees for Technical Services and taxable in India as per Article 12 of DTAA of India and Sweden as well as section 9(1)(vi) and 9(1)(vii) of the Act. Reference was made to several decisions in this regard by the Assessing Officer and in view thereof, it was recorded by the Assessing Officer that he was satisfied that income for the assessment year under consideration had escaped assessment within meaning of provisions of section 147 of the Act. Thereafter, proceedings were reopened by issue of notice under section 148 of the Act. The said reasons were recorded by the Assessing Officer on 26.07.2013. Similar reasons for reopening assessment were recorded for assessment years 2006-07, 2007-08, 2008-09 and 2009-10, all dated 26.07.2013. 8. We find that the assessee had made a declaration in the computation of income filed along with return of income, copy of which is placed at page 13 of Compilation No.1, wherein it was reported as under:- “3. Further, STSA has also received license fees aggregating to Rs.8,072,285 from SAL. These being payments received for use of a copyrighted article, do not fall within the ambit of royalty under Article 12 of the Tax Treaty. This is a limited user right granted by STSA and doesn‟t involve exploitation of the rights embedded in the copyright. Accordingly, in the absence of permanent establishment of STSA in India, such payments are not considered as taxable in India.”

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income in time declaring total income at Nil. The Assessing Officer recorded his reasons for reopening the assessment on the ground that it was noticed from the submissions made during the assessment for assessment year 2005-06 that the assessee had received IT support fees of Rs.1.94 crores and licence fees of Rs.3,10,396/- from Sandvik Asia Pvt. Ltd. in assessment year 2008-09, but the same were not offered for tax. The reasons mentioned that for assessment year 2005-06, the Assessing Officer had concluded that receipts under the head „IT Support Fees‟ received by the assessee from Sandvik Asia Pvt. Ltd., were in the nature of royalty and fees for technical services and taxable as per Article 12 of DTAA of India and Sweden as well as section 9(1)(vi) & 9(1)(vii) of the Act. The Assessing Officer further holds that on examination of nature of payments made to the assessee as per agreement dated 01.04.2002, it could be concluded that the payments received by the assessee constitute royalty and fees for technical services, as per sections of the Act as well as Article 12 of the DTAA between India and Sweden. Reference was made to several decisions in this regard and also to the order under section 201(1) and 201(1A) of the Act in the case of Sandvik Asia Pvt. Ltd. for assessment year 2008-09, wherein the Assessing Officer held that the payments received constitute royalty and fees for technical services. After recording aforesaid reasons for reopening the assessment, the Assessing Officer issued notice under section 148 of the Act. The assessee filed letter stating that earlier return of income may be treated as filed in response to the notice under section 148 of the Act. Thereafter, the assessee sought reasons for reopening the assessment and filed objections. The objections filed by the assessee were rejected by the Assessing Officer as there was no assessment under section 143(3)/147 of the Act and the Assessing Officer was satisfied that there was escapement of income on the basis of tangible material before him, then it was fit case for reopening the assessment. The DRP also upheld the action of Assessing Officer, in view of the ratio laid down by the Hon‟ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra). 10. The assessee is in appeal against the said exercise of jurisdiction by the Assessing Officer under section 147 of the Act. The first plea which has been raised by the assessee is that in the absence of any tangible material for reason to believe that there is escapement of income, the action adopted by the Assessing Officer was without any basis. The learned Authorized Representative for the assessee pointed out that in assessment year 2005-06 same tangible material was available with the Assessing Officer and the re-assessment proceedings were reopened. However, the DRP held that there was no material brought in the reasons recorded on the basis of which valid reasons to believe could be formed. The DRP held that it was case of re-appraisal of existing facts. It was further held by the DRP that reopening of assessment without new material was not permissible even if the original assessment was processed under section 143(1) of the Act and order was not passed under section 143(3) of the Act. Reliance of the Assessing Officer on ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) was found to be misplaced, where the case of the Assessing Officer

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was that the Hon‟ble Supreme Court had decided that in case the return was processed under section 143(1) of the Act, the Assessing Officer is empowered to issue notice under section 148 of the Act. Reliance in this regard was placed on the ratio laid down by the Hon‟ble High Court of Delhi in Orient Craft Ltd. Vs. CIT (supra), hence reopening in the case of three sister concerns was held to be invalid. The Revenue did file an appeal before the Tribunal in this regard and the appeal was dismissed for low tax effect. Similarly, in assessment year 2006-07, same issue was raised and the DRP decided the issue in favour of assessee in the absence of any fresh material and the appeal of Revenue was dismissed for low tax effect. In assessment year 2007-08, though the issue of reopening under section 148 of the Act was decided against the assessee, but since the issue on merits was decided in favour of assessee, no appeal was filed by the assessee or the Revenue. 11. Now, coming to the appeal in assessment year 2008-09. The Assessing Officer recorded reasons for reopening assessment on the basis of reasons recorded in assessment year 2005-06. The Assessing Officer very categorically states that information came to his knowledge during proceedings in assessment year 2005-06 that the assessee had received IT Support fees and Licence fees, which has not been offered to tax. The question which arises before us is whether any tangible material is available with the Assessing Officer to come to finding of escapement of income. The second aspect of the issue is in case no assessment has been completed under section 143(3) of the Act, where there is escapement of income, proceedings can be reopened under section 147/148 of the Act keeping the spirit of provisions which are applied in the present case. The first and foremost for invoking the said provisions is the „reason to believe‟ of escapement of income and such reason to believe has to be based on tangible material or otherwise there has to be live link between the reason to believe and escapement of income‟ then only the proceedings under section 147 of the Act can be initiated. The proviso under section 147 of the Act provides that where assessment under section 143(3) of the Act has been made, then no action under the main section would be taken after expiry of four years from the end of relevant assessment year, unless escapement of income is by reason of failure on the part of assessee to make return under section 139 of the Act or in response to notice under section 142(1) of the Act or 148 of the Act to disclose fully and truly all material facts necessary for assessment for that assessment year. Undoubtedly, proviso is applicable in case of non-fulfilment of certain conditions laid down but before applying the provisions provided in the proviso to the section, the provisions of main section have to be seen, which clearly provides that there has to be reason to believe of escapement of income and then only provisions of section 147 of the Act can be triggered. There is no merit in the reasoning of the Revenue that where no assessment under section 143(3) of the Act has been completed and the assessment is only completed under section 143(1) of the Act and since the assessee has failed to disclose fully and truly all material facts necessary for assessment, then action under section 147 of the Act can be taken. We find no merit in the plea of the Revenue.

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finality of an intimation under Section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in Section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore it is not permissible to adopt different standards while interpreting the words “reason to believe” vis-à-vis Section 143(1) and Section 143(3). We are unable to appreciate what permits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under Section 143(3) cannot apply where only an intimation was issued earlier under Section 143(1). It would in effect place an assessee in whose case the return was processed under Section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under Section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression “reason to believe” in cases where assessments were framed earlier under Section 143(3) and cases where mere intimations were issued earlier under Section 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed.” 13. The Tribunal also took note of the contention of the Department that where the original assessment was completed under section 143(1) of the Act, then the Assessing Officer does not get opportunity to apply the mind and relied upon the Hon‟ble Bombay High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO reported in 68 taxmann.com 91 (Bom.), which was also in relation to assessment being completed by issue of intimation under section 143(1) of the Act and thereafter, issue of notice under section 148 of the Act. The Hon‟ble Bombay High Court also considered the ratio laid down by the Apex Court in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra). The relevant observations of the Tribunal in this regard are as under:-

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“16. In so far contentions of the department that the Assessing Officer did not get opportunity to apply his mind on the documents furnished by assessee as the original assessment was completed u/s.143(1), we do not find any force in the said contentions. The Hon‟ble Delhi High Court in the case of CIT Vs. Orient Craft Ltd. (supra) has held that expression, „reason to believe‟ does not have different meaning, where assessments are framed u/s.143(1) andwhere assessment is completed u/s.143(3) of the Act. The relevant extract of the findings of the Hon‟ble High court are as under: “13. Having regard to the judicial interpretation placed upon the expression “reason to believe”, and the continued use of that expression right from 1948 till date, we have to understand the meaning of the expression in exactly the same manner in which it has been understood by the courts. The assumption of the Revenue that somehow the words “reason to believe” have to be understood in a liberal manner where the finality of an intimation under Section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in Section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore it is not permissible to adopt different standards while interpreting the words “reason to believe” vis-à-vis Section 143(1) and Section 143(3). We are unable to appreciate what permits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under Section 143(3) cannot apply where only an intimation was issued earlier under Section 143(1). It would in effect place an assessee in whose case the return was processed under Section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under Section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression “reason to believe” in cases where assessments were framed earlier under Section 143(3) and cases where mere

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intimations were issued earlier under Section 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed.” 17. The Hon‟ble Bombay High Court in the case of Khubchandani Healthparks (P) Ltd. Vs. ITO (supra) has reiterated that notice issued u/s.148 would be without jurisdiction for absence of „reason to believe‟ that income has escaped assessment even in case where assessment has been completed earlier by intimation u/s.143(1) of the Act. The Hon‟ble High Court while holding so, considered the decisions rendered by the Hon‟ble Apex Court in the case of CIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. reported as 291 ITR 500 and CIT Vs. Zuari Estate Development & investment Co. Ltd. (supra). The relevant extract of the judgment rendered in the case of Khubchandani Healthparks (P) Ltd. Vs. ITO (supra) reads as under : “3. On hearing the parties, we find that the Apex Court in Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR 500, had an occasion to deal with identical facts, namely reopening Notices issued under Section 148 of the Act where assessment is completed earlier by Intimation under Section 143(1) of the Act. In the above case, the Apex Court held that a Notice for-reopening an assessment under Section 148 of the Act could only be justified if the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. This decision of the Supreme Court in Rajesh Jhaveri Stock Brokers P. Ltd. (Supra) has not been disturbed by the Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra). In fact, the Supreme Court in Zuari Estate Development and Investment Co. Ltd. (Supra) makes a specific reference to its decision in Rajesh Jhaveri Stock Brokers P. Ltd. (Supra) to hold that where the assessment has been completed by Intimation under Section 143(1) of the Act, there can be no question of change of opinion. 4. We further find that the Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra) has not dealt with the issue whether before invoking Section 148 of the Act, the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment, where the original assessment has been completed by Intimation under Section 143(1) of the Act. The Revenue is trying to infer that because the Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra) has set aside the order of this Court and restored

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the issue to be decided on merits by the Tribunal, it must be inferred that the Apex Court had come to the conclusion that reason to believe was not necessary for issuing reassessment Notices where the regular assessment was completed under Section 143(1) of the Act. As rightly pointed out by Mr. Pardiwalla, it can equally be inferred that the Apex Court in the above case had come to the conclusion that there is reason to believe that income had escaped assessment and consequently restored the issue to the Tribunal to decide the reassessment proceedings on merits.” 18. Thus, in view of the facts of the present case and the case laws discussed above we hold that the Assessing Officer had no tangible material to justify his “reason to believe” that income has escaped assessment. The reassessment proceedings initiated by the Assessing Officer u/s.147 are without jurisdiction and hence, are not sustainable. Accordingly ground No.1 to 3 raised by Department in appeal are dismissed.” 14. In the facts of the present case also the assessee in the computation of total income, copy of which is placed at page 2 of the Paper Book, had in the Note given a declaration in respect of such receipts and had pointed out that the same do not fall within ambit of royalty or fees for technical services. The relevant Note reads as under:- “Note: 1. Sandvik Systems Development AB („SSDAD‟) is a non- resident company incorporated in Sweden. SSDAB does not have any office (or any other establishment) in India. It is a tax resident of Sweden under the Double Taxation Avoidance Agreement between India and Sweden („Tax treaty‟). 2. SSDAB provides IT support services to Sandvik AB Group companies all over the world, including Sandvik Asia Limited („SAL‟) and Walter Tools India Private Limited („Walter India‟) in India. 3. During the year ended 31 March 2008, SSDAB has charged Rs.19,414,642 to SAL and Rs 310,396 to Walter India towards the aforesaid IT support services. The receipts towards such IT support services rendered by SSDAB do not fall within the ambit of Royalties or Fees for technical services within the meaning of Article 12 of the Tax treaty read with the Protocol thereto.” 15. Further in Form No.3CEB, audited report, the assessee in clause 12 Appendix B has given declaration in respect of international transactions with associated enterprises, which is as under:- Particulars in respect of mutual agreement or arrangement:

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International transactions with an associated enterprise or enterprises by way of mutual agreement or arrangement for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit. Sr.N Name and Description Amount paid/received Method o address of of such or payable/receivable in used for the mutual the transaction determinin associated agreement g the arm's enterprise or length with whom arrangemen price (See the t section internationa 92C(1) l as per as transaction books of computed has been account by the entered assessee into having regard to the arm's length price (Rs) (Rs) Clause Clause Clause 12(c) Clause 12(a) 12(b) 12(d) 1 Sandvik Receipt for 19,414,64 19,414,64 Refer Note Asia IT support 2 2 7 to Limited, services Appendix Mumbai- C Pune Road, Dapodi, Pune- 411012 2 Walter Receipt for 310,396 310,396 Refer Note Tools India IT support 7 to Private services Appendix Limited, C Mumbai- Pune Road, Dapodi, Pune- 411012 16. In view of the above said declarations made by the assessee which has also been considered by the Pune Bench of Tribunal in sister concern of the assessee i.e. Sandvik Information Technology AB, though for assessment year 2005- 06, we hold that in the absence of any tangible material establishing escapement of income in the hands of assessee, there is no merit in the exercise of invoking of re-assessment proceedings under section 147 of the Act. The reason to believe escapement of income should have a live link. There is no merit in the stand of authorities below that in the present case, where the assessment order was passed under section 143(1) of the Act, then the Assessing Officer had no action to look at or to

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consider the same. Under the provisions of the Act, it is incumbent upon the Assessing Officer to come to finding on the basis of tangible material to establish his case of reason to believe of escapement of income; in the absence of which, re- assessment proceedings are invalid and bad in law. Accordingly, we hold so and cancel the same. The consequent order passed under section 143(3) r.w.s. 147 of the Act also does not stand. Thus, the ground of appeal No.1 raised by the assessee is allowed and the balance grounds of appeal become academic in nature.” 12. We find that issue raised in the present appeal is identical to the issue before the Tribunal and following the same parity of reasoning as in the case of sister concern of the assessee, we hold that in the absence of any tangible material establishing escapement of income in the hands of assessee, the Assessing Officer has erred in exercise of jurisdiction under section 147 of the Act by reopening assessment after recording reasons. The reasons to believe of escapement of income should have a live link with the tangible material and even if the assessment order was passed under section 143(1) of the Act, the requirement is for the Assessing Officer to come to a finding on the basis of tangible material to establish his case of reason to believe of escapement of income; in the absence of which, re-assessment proceedings are both invalid and bad in law. Accordingly, we hold so and cancel the re-assessment proceedings initiated in the case of assessee, the consequent order passed under section 143(3) r.w.s. 147 of the Act does not stand. Thus, the ground of appeal No.1 raised by the assessee is allowed and balance grounds of appeal become academic in nature.” 19. The Tribunal while deciding the issue had referred to the earlier decision in Sandvik System Development AB Vs. DDIT (IT) (supra), wherein the issue was tangible material available before the Assessing Officer while recording reasons for reopening the assessment under section 148 of the Act and reliance was placed on the ratio laid down by the jurisdictional High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra). The Hon‟ble Bombay High Court in turn, had relied on the ratio laid down by the Hon‟ble Apex Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) and also on Orient Craft Ltd. Vs. CIT (supra), wherein the Hon‟ble High Court of Delhi had held the expression „reason to believe‟ does not have different meaning, where the assessments are framed under section 143(1) of the Act and where assessment was completed under section 143(3) of the Act. The findings of the Hon‟ble Bombay High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra) were reproduced, wherein the Hon‟ble High Court had referred to the ratio laid down in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) and also the decision of the Hon‟ble Apex Court in DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (supra) and Zuari Estate Development Co. Ltd. & Investment Co. (P.) Ltd. Vs. JR. Kanekar, DCIT (2004) 271 ITR 269 (Bom). In both the cases, assessment was completed by way of intimation under section 143(1) of the Act and it was observed that in both the cases, the Hon'ble Apex Court reiterated that where the assessment has been completed by intimation under section 143(1) of the Act, there can be no question of change of opinion. This is the first finding of the Hon‟ble Apex Court in both the decisions which has been referred by the Hon‟ble Bombay High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra). Then, the Hon‟ble High Court goes on to observe that the Hon‟ble Apex Court in DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (supra) has not dealt with the issue whether before invoking provisions of section 148 of the Act, the Assessing

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Officer must have reason to believe that income chargeable to tax has escaped assessment, where the original assessment was completed by intimation under section 143(1) of the Act. The Hon‟ble High Court further observed that the Revenue was trying to infer that because Hon‟ble Apex Court in DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (supra) had set aside the order on this count and restored the issue to be decided on merits by the Tribunal, it must be inferred that the Hon‟ble Apex Court had come to the conclusion that reason to believe was not necessary for issuing re-assessment notices where regular assessment was completed under section 143(1) of the Act. Vide para 5, the Hon‟ble High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra) reiterates that the decision of the Court had to be read in the context of the facts involved therein and not on the basis of what logically flows therefrom. The Hon‟ble High Court further holds that the Hon‟ble Apex Court in DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (supra) not having dealt with the issue of reason to believe that income chargeable to tax has escaped assessment on the part of Assessing Officer in cases where regular assessment was completed by intimation under section 143(1) of the Act, in categorical terms held it would not be wise for us to infer that the Supreme Court in Zuari Estate Development & Investment Co. Ltd. (supra) has held that the condition precedent for the issue of reopening notice namely, reason to believe that income chargeable to tax has escaped assessment, has no application where the assessment has been completed by Intimation under section 143(1) of the Act. The Hon‟ble High Court further held that the law on this point has been expressly laid down by the Apex Court in the case of Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) and the same would continue to apply and be binding upon us. The Hon‟ble Bombay High Court further held that Thus, even in cases where no assessment order is passed and assessment is completed by Intimation under section 143(1) of the Act, the sine qua non to issue a reopening notice is reason to believe that income chargeable to tax has escaped assessment. For the sake of clarity, relevant extract of the judgment referred in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra) is again reproduced hereunder:- “3. On hearing the parties, we find that the Apex Court in Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR 500, had an occasion to deal with identical facts, namely reopening Notices issued under Section 148 of the Act where assessment is completed earlier by Intimation under Section 143(1) of the Act. In the above case, the Apex Court held that a Notice for reopening an assessment under Section 148 of the Act could only be justified if the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. This decision of the Supreme Court in Rajesh Jhaveri Stock Brokers P. Ltd. (Supra) has not been disturbed by the Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra). In fact, the Supreme Court in Zuari Estate Development and Investment Co. Ltd. (Supra) makes a specific reference to its decision in Rajesh Jhaveri Stock Brokers P. Ltd. (Supra) to hold that where the assessment has been completed by Intimation under Section 143(1) of the Act, there can be no question of change of opinion. 4. We further find that the Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra) has not dealt with the issue whether before invoking Section 148 of the Act, the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment, where the original assessment has been completed by Intimation under Section 143(1) of the Act. The Revenue is trying to infer that because the Apex Court in Zuari Estate Development and

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Investment Co. Ltd. (Supra) has set aside the order of this Court and restored the issue to be decided on merits by the Tribunal, it must be inferred that the Apex Court had come to the conclusion that reason to believe was not necessary for issuing reassessment Notices where the regular assessment was completed under Section 143(1) of the Act. As rightly pointed out by Mr. Pardiwalla, it can equally be inferred that the Apex Court in the above case had come to the conclusion that there is reason to believe that income had escaped assessment and consequently restored the issue to the Tribunal to decide the reassessment proceedings on merits. 5. It is settled position in law that the decision of the Court has to be read in the context of the facts involved therein and not on the basis of what logically flows therefrom as held by the Supreme Court in Ambica Quarry Works Vs. State of Gujarat, 1987(1) SCC 213. The Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra)not having dealt with the issue of reason to believe that income chargeable to tax has escaped assessment on the part of the Assessing Officer in cases where regular assessment was completed by Intimation under Section 143(1) of the Act, it would not be wise for us to infer that the Supreme Court in Zuari Estate Development and Investment Co. Ltd. (Supra) has held that the condition precedent for the issue of reopening notice namely, reason to believe that income chargeable to tax has escaped assessment, has no application where the assessment has been completed by Intimation under Section 143(1) of the Act. The law on this point has been expressly laid down by the Apex Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd. (Supra) and the same would continue to apply and be binding upon us. Thus, even in cases where no assessment order is passed and assessment is completed by Intimation under Section 143(1) of the Act, the sine qua non to issue a reopening notice is reason to believe that income chargeable to tax has escaped assessment. In the above view, it is open for the petitioner to challenge a notice issued under Section 148 of the Act as being without jurisdiction for absence of reason to believe even in case where the Assessment has been completed earlier by Intimation under Section 143(1) of the Act.” 20. The Hon‟ble Bombay High Court which is the jurisdictional High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra) while deciding the issue of case where assessment was completed by way of intimation issued under section 143(1) of the Act had held that the Assessing Officer must have reason to believe that income chargeable to tax had escaped assessment. It was also clarified by the Hon‟ble High Court that the Hon‟ble Apex Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) had laid down the law on the point that even in cases where intimation under section 143(1) of the Act was issued sine qua non to issue reopening notice is reason to believe that income chargeable to tax has escaped assessment. In case of absence of reason to believe even where assessment was earlier completed by issue of intimation under section 143(1) of the Act, it was open to the petitioner to challenge notice issued under section 148 of the Act. Such proposition has been laid down by the Hon‟ble High Court vide its judgment dated 10.02.2016. 21. Similar is the proposition which has been laid down by the Mumbai Bench of Tribunal in Third Member decision in Telco Dadajee Dhackjee Ltd. Vs. DCIT (supra), wherein the argument was that if no opinion was formed by the Assessing Officer when return was merely processed under section 143(1) of the Act by issuing notice under section 148 of the Act, he could not be said to have changed his opinion. The Third Member held that so far so good and

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further held that but it needed to be remembered that section 147 of the Act applies both to section 143(1) as well as section 143(3) of the Act, then it was still open to assessee to challenge notice on the ground that there was no reason to believe that income chargeable to tax had escaped assessment. The Third Member had elaborated upon the issue and referred to the decision of the Hon‟ble Apex Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) and held thus fulfillment of conditions of section 147 of the Act, including the one that there should be reason to believe is essentially for the validity of notice issued under section 148 of the Act. Further, reference was made to the judgment of Hon'ble Supreme Court in later judgment in CIT Vs. Kelvinator of India Ltd. (supra), wherein it has been held that there should be tangible material to come to the conclusion that income had escaped income. In the absence of tangible material before the Assessing Officer from which he could entertain the belief of escapement of income chargeable to tax, re-assessment proceedings initiated were held to be bad in law. 22. In other words, while deciding the case of re-assessment, Courts have held that there are two aspects; the first is the change of opinion which can only arise in the case of assessment made under section 143(3) of the Act; where the return of income has only been processed and intimation issued under section 143(1) of the Act, it could not be a case of change of opinion since the Assessing Officer has not expressed his opinion on any count. However, the second aspect is the reason to believe of escapement of income, which has to be fulfilled both in the cases where assessment has been completed under section 143(3) of the Act or where intimation is issued under section 143(1) of the Act and for reason to believe of escapement of income, tangible material should be available with the Assessing Officer to come to such a finding. In the absence of the same, the Assessing Officer cannot be said to have exercised jurisdiction within framework of law and re-assessment proceedings initiated in such cases held to be invalid in law. 23. The learned Departmental Representative for the Revenue has placed reliance on the ratio laid down by the Hon‟ble Bombay High Court in Amin‟s Pathology Laboratory Vs. P.N. Prasad, JCIT (supra). It may be noted that the said decision was in respect of assessment order passed under section 143(3) of the Act, wherein the reopening was upheld holding it to be not a case of change of opinion on the part of Assessing Officer, since he had not opined in respect of an item representing unpaid purchases. Reliance placed upon by the learned Departmental Representative for the Revenue on the said case is misplaced since the issue before us is not case of change of opinion but case of reason to believe for escapement of income and the absence of tangible material. 24. Similarly, reliance on the decision of the Hon‟ble High Court of Delhi in Consolidated Photo & Finvest Ltd. Vs. ACIT (supra) is also in respect of completed assessment, wherein no doubt the reason to believe was found from the very same record as was available during assessment. The decision is dated 17.01.2006. The decision of Apex Court in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) is prior to the ratio laid down by the Hon'ble Supreme Court in DCIT Vs. Zuari Estate Development & Investment Co. Ltd. (2015) 63 taxmann.com 177 (SC) and is dated 17.04.2015. The Hon'ble Supreme Court has elaborated on the aspect of change of opinion and reason to believe in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) and is binding. 25. Now, coming to the decision in Indu Lata Rangwala Vs. DCIT (supra), which is rendered on 18.05.2016 by the Hon‟ble High Court of Delhi. The Hon‟ble High Court has referred first to the decision of said Court in Orient Craft

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Ltd. Vs. CIT (supra) and the proposition laid down therein in respect of return of income being processed under section 143(1) and the reopening of assessment under section 147 of the Act. However, except for making reference to the said decision, the Hon‟ble High Court of Delhi, with due respect, has not given a finding as to why the said proposition is not to be applied. The decision of the Hon‟ble High Court of Delhi in Indu Lata Rangwala Vs. DCIT (supra) being non-jurisdictional High Court has at best pervasive value, but cannot be given precedence once the same issue has been decided by the jurisdictional High Court as referred to by us in the case of Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra). Further, it may be pointed out that the Hon‟ble High Court of Madras in TANMAC India Vs. DCIT (supra) which is delivered on 19.12.2016 i.e. after the decision of Indu Lata Rangwala Vs. DCIT (supra) has held otherwise. It has been held that in the case of an assessee where intimation under section 143(1) of the Act has been issued, then re-assessment cannot be initiated on the basis of return of income and enquiries thereof which were already part of record, the reopening of assessment was held to be not justified. The Hon‟ble High Court has elaborated on the expression „reason to believe‟ and has held as under:- “11. The phrase „reason to believe‟ in section 147 relates to such other new or tangible material as may have come to the knowledge of the assessing officer pursuant to the original proceedings for assessment. The Supreme Court in CIT Vs. Kelvinator of India (320 ITR 561) states thus in the context of the „belief‟ that should form the basis for a re-assessment; „We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review, he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-conditions and if the concept of „change of opinion‟ is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of „change of opinion‟ as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is „tangible material‟ to come to the conclusion that there is escapement of income from assessment. Reasons must have a link with the formation of the belief.‟ 12. If the assessing officer, after issuing intimation u/s section 143(1) does not to issue a notice u/s 143(2) of the Act to initiate proceedings for scrutiny of the return of income, the obvious conclusion is that he does not consider it necessary or expedient to do so, the inference being that the Return of Income filed in order. It is this opinion that cannot be arbitrarily changed by the assessing officer, to re-assess income on the basis of stale material, already on record. If we thus keep in the mind the above fundamental requirement of section 147, it would be apparent that the exercise undertaken by the Revenue in this case is not one of re-assessment, but of review. The reasons make it abundantly clear that the re-assessment is sought to be initiated on the basis of the return of income and the enclosures which were available with the assessing officer since 2.11.1998 and which ought to have prompted him to issue a notice under section 143(2) of the Act to conduct the proceedings under scrutiny. What is sought to be done by the re-assessment ought to have been achieved by scrutiny assessment proceedings. Having missed the bus earlier, the Department cannot be permitted to avail of the extended time limit in the absence of any new or tangible material, when the time for scrutiny

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assessment has elapsed on 31.3.2001, prior to issue of notice u/s 148. The notice under section 148 dated 9.12.2002 is thus an arbitrary exercise of power and a review of proceedings impermissible in law. 13. The Division Bench of the Delhi High Court in the case of Commissioner of Income Tax Vs. Orient Craft Ltd (354 ITR 546) deals specifically with this aspect of the matter. The substantial question of law that was dealt with by the High Court is as follows; „Was the Tribunal right in law in holding that in the absence of any tangible material available with the Assessing Officer to form the requisite belief regarding escapement of income, the reopening of the assessment made under section 143(1) is bad in law?‟ 14. The Division Bench notes that the Supreme Court in the case of Asst. CIT V. Rajesh Jhaveri stock Brokers P. Ltd, (supra) only deals with the formation of an opinion at the time of issuance of prima facie intimation and does not indicate anywhere that a re-assessment can be initiated in the absence of a reason to believe. To conclude, the Division Bench holds thus: „This judgment, contrary to what the Revenue would have us believe, does not give a carte blanche to the Assessing Officer to disturb the finality of the intimation under section 143(1) at his whims and caprice; he must have reason to believe within the meaning of the section.‟ 15.…. 16….. 17. A decision of the Delhi High Court in the case of CIT Vs Orient Craft Limited (354 ITR 536) had occasion to consider a similar question and the Division Bench, at Page 546, holds as follows; „Having regard to the judicial interpretation placed upon the expression reason to believe‟, and the continued use of that expression right from 1948 till date, we have to understand the meaning of the expression in exactly the same manner in which it has been understood by the courts. The assumption of the Revenue that somehow the words „reason to believe‟ have to be understood in a liberal manner where the finality of an intimation under section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore, it is not permissible to adopt different standards while interpreting the words „reason to believe‟ vis-à- vis section 143(1) and section 143(3). We are unable to appreciate what permits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under section 143(3) cannot apply where only an intimation was issued earlier under section 143(1). It would in effect place an assessee in whose case the return was processed under section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny or is accepted without demur is not a

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matter which is within the control of the assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden or proving valid reasons to believe could be circumvented by first accepting the return under section 143(1) and, thereafter, issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression �reason to believe� in cases where assessments were framed earlier under section 143(3) and cases where mere intimations were issued earlier under section 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed.‟ …….... The reasons recorded by the Assessing Officer reached the belief that there was escapement of income „on going through the return of income‟ filed by the assessee after he accepted the return under section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in CIT v. Kelvinator (supra).‟ 18. The above extracts are applicable on all fours to the present case in the facts and circumstances pointed out earlier. In the light of the aforesaid discussion, we answer question of Law No.2 in favour of the assessee. In view of our conclusion on the aspect of assumption of jurisdiction, we do not see any need to go into the merits of the case and refrain from answering the substantial question of law relating to the same. No costs.” 26. The Hon‟ble High Court of Madras has referred to earlier decision of Hon‟ble High Court of Delhi in the case of Orient Craft Ltd. Vs. CIT (supra) and also to the decision of the Hon'ble Supreme Court in CIT Vs. Kelvinator of India Ltd. (supra) and also in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra). 27. Further, the Hon‟ble High Court of Gujarat in Krupesh Ghanshyambhai Thakkar Vs. DCIT (supra) has laid down similar proposition and it has been observed that since the Assessing Officer wanted to have roving enquiry as he has no material, the impugned action of opening of assessment could not be sustained. The Hon‟ble High Court of Gujarat had also referred to the decision of Hon‟ble High Court of Delhi in Indu Lata Rangwala Vs. DCIT (supra), wherein it was observed as under: “11. At the outset, it is required to be noted that by the impugned notice, the assessment for AY 2009-2010 is sought to be reopened in exercise of power under Section 147 of the I.T Act. The reasons recorded to reopen the assessment are already produced hereinabove. Thus, as per the reasons recorded, the notice has been issued and assessment is sought to be reopened for deep verification of the claims. Even in the order disposing of the objections, it has been specifically stated that to verify whether all the criteria are met by the said transaction of Rs.50 lakhs routed through the group and also to verify the claim of having recorded these transactions in the regular books of account, notice under Section 148 has been issued. Even with respect to investment in shares of M/s. Rushil Decor, it has been submitted that whether the investment in shares of M/s. Rushil Decor were acquired

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from the capital of the assessee and the same is duly recorded in the books of account, needs to be verified and for that purpose, the assessment for A.Y 2009-2010 is sought to be reopened. 12. In case of Inductotherm (India) (P.) Ltd. v. M. Gopalan, Dy. CIT (2013) 356 ITR 481 (Guj) Division Bench of this Court has observed that for a mere verification of the claim, the power of reopening of assessment could not be exercised. It is further observed that the Assessing Officer under the guise of power to reopen an assessment, cannot seek to undertake a fishing or roving inquiry and seek to verify the claims, as if it were a scrutiny assessment. 12.1 Similar view has been expressed by the Division Bench in case of Deep Recycling Industries v. Dy.CIT (Special Civil Application No.3611 of 2013, dated 2-8-2016) wherein it has been held and observed that for mere scrutiny, reopening of the assessment would not be permissible. It is further observed that the reopening of the assessment could be made if the Assessing Officer had formed a belief that income chargeable to tax had escaped assessment. The Court has further observed that in order to do so, the Assessing Officer must have some tangible material having live link with the escapement of the income on the basis of which he can form a bona fide belief of escapement of income chargeable to tax. It has also been observed that reopening cannot be resorted to for fishing or roving inquiry on mere suspicion that income chargeable to tax may have escaped assessment. 13. Applying the aforesaid two decisions to the facts of the present two cases on hand and the reasons recorded to reopen the assessment, we are of the opinion that under the guise of reopening of the assessment, the Assessing Officer wants to have a roving inquiry; as observed hereinabove. Even as per the Assessing Officer in the reasons recorded has specifically mentioned that for the purpose of verification/deep verification of the claim, it is necessary to reopen the assessment. Under the circumstances, it cannot be said that the Assessing Officer had any tangible material to form an opinion that the income chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the assessment in exercise of power under Section 148 of the I.T Act for the reasons recorded hereinabove cannot be sustained. 14. Resultantly, both these writ petitions succeed. Impugned Notice issued by the Assessing Officer under Section 148 of the Income-tax Act, 1961 in each case is hereby quashed and set-aside.” 28. In view of the decision of jurisdictional High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra) and the decision of Hon‟ble High Court of Madras in TANMAC India Vs. DCIT (supra) and Hon‟ble High Court of Gujarat in Krupesh Ghanshyambhai Thakkar Vs. DCIT (supra) and also the principle laid down by the Hon'ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra), we find reliance placed by the learned Departmental Representative for the Revenue on the decision of non-jurisdictional High Court, where view has been expressed by jurisdictional High Court is against judicial propriety and is case of judicial indiscipline. The Pune Bench of Tribunal on identical facts had decided the issue in turn relying on the decision of jurisdictional High Court in Khubchandani Healthparks (P.) Ltd. Vs. ITO (supra) and the same has not been reversed by higher Forum, cannot be brushed aside. The insistence of the learned Departmental Representative for the Revenue on later decision of the Hon‟ble High Court of Delhi, where though

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earlier decisions are referred but not distinguished, is against judicial discipline especially where issue is settled by Apex Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra). Accordingly, we hold that in the absence of live link between reason to believe of escapement of income with the tangible material and even in the present case where the assessment order was passed under section 143(1) of the Act, the requirement of section is for the Assessing Officer to come to a finding on the basis of tangible material to establish his case of reason to believe of escapement of income and in the absence of the same, re-assessment proceedings initiated were both invalid and bad in law. Accordingly, we hold so. We cancel the re-assessment proceedings initiated against the assessee and consequent order passed under section 143(3) r.w.s. 147 of the Act does not stand.”

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para 2. In other words, the entire exercise of reopening the assessment on the alleged premise of claim of interest at ₹ 1.87 crores is wild goose chase, where the assessee had not even claimed expenditure or carry forward of the loss. In other words, it had declared income not at loss but at nil. We find no merit in the exercise carried out by Assessing Officer in this regard.

Order pronounced on this 1st day of August, 2019.

Sd/- Sd/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 1st August, 2019. GCVSR आदेश की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to : अऩीऱाथी / The Appellant; 1. प्रत्यथी / The Respondent; 2. 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-4, Pune; 4. The Pr.CIT-3, Pune; ववबागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “फी” / DR 5. ‘B’, ITAT, Pune; 6. गार्ड पाईऱ / Guard file. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे/ ITAT, Pune