MACK STAR MARKETING PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX 2(2)(1), MUMBAI

4. That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and Faceless Appeal Centre erred in law and on the facts and Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating the Appellant's circumstances of the case in not appreciating the Appellant's circumstances of the case in not appreciating the Appellant's objections to the reopening of the a objections to the reopening of the assessment that there was ssessment that there was no failure on part of the Appellant to disclose all material facts no failure on part of the Appellant to disclose all material facts no failure on part of the Appellant to disclose all material facts necessary fully and truly for its assessment for AY 2013-14 necessary fully and truly for its assessment for AY 2013 necessary fully and truly for its assessment for AY 2013 and thus the reassessment was without jurisdiction. and thus the reassessment was without jurisdiction. The issue of deduction claimed on account of buildin The issue of deduction claimed on account of buildin The issue of deduction claimed on account of building maintenance charges has been decided in favour of the maintenance charges has been decided in favour of the maintenance charges has been decided in favour of the Appellant in the immediately succeeding AY Appellant in the immediately succeeding AY 5.

5. That the Commissioner of Income Tax (Appeals) / National 5. That the Commissioner of Income Tax (Appeals) / National 5. That the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and Faceless Appeal Centre erred in law and on the facts and Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not circumstances of the case in not appreciating that no addition appreciating that no addition was made on the same issue of building maintenance charges was made on the same issue of building maintenance charges was made on the same issue of building maintenance charges by the AO in the reassessment order dated 29 March 2022 by the AO in the reassessment order dated 29 March 2022 by the AO in the reassessment order dated 29 March 2022 under Section 147 read with Section 144B of the Income Tax under Section 147 read with Section 144B of the Income Tax under Section 147 read with Section 144B of the Income Tax Act, 1961 (IT Act) for the immediately succeeding AY Act, 1961 (IT Act) for the immediately succeeding AY 2014 2014-15 6. That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and Faceless Appeal Centre erred in law and on the facts and Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating that since there circumstances of the case in not appreciating that since there circumstances of the case in not appreciating that since there are no change in facts of the present AY 2013 are no change in facts of the present AY 2013-14 vis-à- -vis AY 2014-15 (i.e., the immediately succeeding AY), no addition can (i.e., the immediately succeeding AY), no addition can (i.e., the immediately succeeding AY), no addition can be made on account of the building maintenance charges be made on account of the building maintenance charges be made on account of the building maintenance charges pursuant to the principle of consistency as laid down by the pursuant to the principle of consistency as laid down by the pursuant to the principle of consistency as laid down by the Hon'ble Supreme Court in the case of Radhasaomi Satsang v. Hon'ble Supreme Court in the case of Radhasaomi Satsang v. Hon'ble Supreme Court in the case of Radhasaomi Satsang v. CIT (1992) 193 ITR 321 (SC CIT (1992) 193 ITR 321 (SC). Principles of Natural Justice Principles of Natural Justice 7. That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and the facts and Faceless Appeal Centre erred in law and the facts and Faceless Appeal Centre erred in law and the facts and circumstances of the case in not considering the submissions circumstances of the case in not considering the submissions circumstances of the case in not considering the submissions made by the Appellant before passing the Impugned O made by the Appellant before passing the Impugned Order. rder.

8. That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National That the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and the facts and Faceless Appeal Centre erred in law and the facts and Faceless Appeal Centre erred in law and the facts and circumstances of the case in passing the Impugned Order circumstances of the case in passing the Impugned Order circumstances of the case in passing the Impugned Order without providing an opportunity of personal hearing to the without providing an opportunity of personal hearing to the without providing an opportunity of personal hearing to the Appellant which goes Appellant which goes against the principles of natural justice. against the principles of natural justice.

as and when the occasion demands. grounds of appeal as and when the occasion demands.

10. All the aforesaid grounds of appeal are ind All the aforesaid grounds of appeal are independent, in the ependent, in the alternative and without prejudice to one another. alternative and without prejudice to one another.

2. Briefly stated, facts of the case are that the assessee company Briefly stated, facts of the case are that the assessee company Briefly stated, facts of the case are that the assessee company is a real estate company and is a joint venture between a foreign is a real estate company and is a joint venture between a foreign is a real estate company and is a joint venture between a foreign investor, i.e. 78.79% shares 78.79% shares are held by ‘Ocean Debt Inv Ocean Debt Investment Holding Ltd’. (Foreign Investor) . (Foreign Investor) and 21.19% shares 21.19% shares are held by certain companies owned by promoters of the certain companies owned by promoters of the ‘HDIL Group HDIL Group’ (‘HDIL’ Promoter Entities). During the year under consideration, the Promoter Entities). During the year under consideration, the Promoter Entities). During the year under consideration, the assessee company was engaged in the development/construction of assessee company was engaged in the development/constructio assessee company was engaged in the development/constructio commercial building mercial building namely ‘Kaledonia’ in Mumbai. The assessee in . The assessee in its statement of facts filed before the Ld. CIT(A) mentioned that its statement of facts filed before the Ld. CIT(A) mentioned that its statement of facts filed before the Ld. CIT(A) mentioned that during period from 2011 during period from 2011-17 upto 1st September, 2017, September, 2017, entire control and management of the company was handled by the control and management of the company was handled by the control and management of the company was handled by the promoters of the HDIL group i.e. romoters of the HDIL group i.e. Mr. Rakesh wadhawan wadhawan and Shri Sarang Wadhawan through Wadhawan through their representative and they had complete control over the documents and tax e complete control over the documents and tax e-filing portal of the filing portal of the assessee. It is further stated that assessee. It is further stated that when misappropriation of funds misappropriation of funds carried out by them carried out by them came to public knowledge, the foreign investor the foreign investor took management control of the company management control of the company only form AY 2018 only form AY 2018-19. For the assessment year under consideration, the assessee or the assessment year under consideration, the assessee or the assessment year under consideration, the assessee company filed its regular return of income on 30.09.2013 declaring regular return of income on 30.09.2013 declaring regular return of income on 30.09.2013 declaring a total income of Rs.2,25,79,333/ total income of Rs.2,25,79,333/-. The return of income filed by . The return of income filed by the assessee was selected for scrutiny assessment. The Assessing the assessee was selected for scrutiny assessment. The Assessing the assessee was selected for scrutiny assessment. The Assessing Officer completed the scrutiny assessment u/s 143(3) of the Officer completed the scrutiny assessment u/s 143(3) of the Officer completed the scrutiny assessment u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) on 30.09.2016, assessing tax Act, 1961 (in short ‘the Act’) on 30.09.2016, assessing tax Act, 1961 (in short ‘the Act’) on 30.09.2016, assessing total income at Rs.41,87,12,490/ total income at Rs.41,87,12,490/-. Against the said assessment inst the said assessment order, the assessee filed he assessee filed appeal before the Ld. Ld. First Appellate Authority on 15.06.2016 Authority on 15.06.2016, which is currently pending as informed by which is currently pending as informed by the Ld. counsel for the assessee in the written submission filed the Ld. counsel for the assessee in the written submission fil the Ld. counsel for the assessee in the written submission fil before us.

2.1 Subsequently, the Assessing Officer recorded reason Subsequently, the Assessing Officer recorded reason Subsequently, the Assessing Officer recorded reasons to believe that income escaped assessment and accordingly issued believe that income escaped assessment and accordingly issued believe that income escaped assessment and accordingly issued notice u/s 148 of the Act on 27.03.2018. In the reasons recorded, notice u/s 148 of the Act on 27.03.2018. In the reasons recorded, notice u/s 148 of the Act on 27.03.2018. In the reasons recorded, the Assessing Officer noted that on the building maintenance the Assessing Officer noted that on the building main the Assessing Officer noted that on the building main charges of Rs.3,42,97,676/ charges of Rs.3,42,97,676/-, the assessee had taken double the assessee had taken double deduction, firstly, the deduction provided by the Assessing Officer , the deduction provided by the Assessing Officer , the deduction provided by the Assessing Officer u/s 24(a) of the Act at the rate of at the rate of 30% on the deemed rental value of 30% on the deemed rental value of , secondly, a deduction u/s 37 the vacant flats and, u/s 37 of the Act for the reason that building maintenance charges building maintenance charges debited in profit and debited in profit and loss account were claimed as allowable revenue expenditure were claimed as allowable revenue expenditure. In the were claimed as allowable revenue expenditure reassessment order passed on reassessment order passed on 14.12.2018 u/s 147 of the Act, t 14.12.2018 u/s 147 of the Act, the Assessing Officer disallowed the building Assessing Officer disallowed the building maintenance charges of maintenance charges of Rs.3,42,97,676/-. On further appeal . On further appeal before the ld CIT(A) before the ld CIT(A) , the assessee challenged validity of the reassessment proceedings as assessee challenged validity of the reassessment proceedings as assessee challenged validity of the reassessment proceedings as well as merit of the addition, however, could not succeed. Aggrieved well as merit of the addition, however, could not succeed. Aggrieved well as merit of the addition, however, could not succeed. Aggrieved the assessee is in appeal before the the assessee is in appeal before the Income-tax Appellate Tribunal tax Appellate Tribunal (in short ‘the Tribunal’) raising the grounds as reproduced above. (in short ‘the Tribunal’) raising the grounds as reproduced above. (in short ‘the Tribunal’) raising the grounds as reproduced above.

3. Before us, the assessee filed a Paper Book containing pages 1 Before us, the assessee filed a Paper Book containing pages 1 Before us, the assessee filed a Paper Book containing pages 1 to 1519. The assessee also filed a compilation of the relevant The assessee also filed a compilation of the relevant The assessee also filed a compilation of the relevant documents from page 1 to 172. documents from page 1 to 172.

4. Before us, the Ld. counsel for the assessee submitted Before us, the Ld. counsel for the assessee submitted Before us, the Ld. counsel for the assessee submitted that ground No. 7 and 8 of the appeal ground No. 7 and 8 of the appeal were not pressed by the assessee not pressed by the assessee and accordingly same and accordingly same are dismissed as infructuous. The ground dismissed as infructuous. The ground Nos. 1, 2, 9 and 10 of the appeal being of the appeal being general in nature general in nature, same are also dismissed as infructuous. also dismissed as infructuous.

4.1 Now, we take up the effective ground No. 3 and 4 challenging we take up the effective ground No. 3 and 4 challenging we take up the effective ground No. 3 and 4 challenging the validity of the reassessment. In ground No. 4, the assessee has the validity of the reassessment. In ground No. 4, the assessee has the validity of the reassessment. In ground No. 4, the assessee has objected that there was no failure on the part of the assessee to objected that there was no failure on the part of the assessee to objected that there was no failure on the part of the assessee to disclose all the material facts necessary for the assessment e material facts necessary for the assessment e material facts necessary for the assessment fully and truly and therefore reassessment was without jurisdiction and therefore reassessment was without jurisdiction and therefore reassessment was without jurisdiction due to lack of complying mandatory requirement of proviso to section of complying mandatory requirement of proviso to section of complying mandatory requirement of proviso to section 147 of the Act.

"147. Income escaping assessment.— "147. Income escaping assessment.

If the Assessing Officer, for reasons to be recorded by him in If the Assessing Officer, for reasons to be recorded by him in If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any income chargeable to tax has writing, is of the opinion that any income chargeable to tax has writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he may, subject escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess to the provisions of Sections 148 to 153, assess or reassess to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax such income and also any other income chargeable to tax such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice which has escaped assessment and which comes to his notice which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this subsequently in the course of the proceedin gs under this section, or recompute the loss or the depreciation allowance or section, or recompute the loss or the depreciation allowance or section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment any other allowance, as the case may be, for the assessment any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to year concerned (hereafter in this section and in Sections 148 to year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): 153 referred to as the relevant assessment year): 153 referred to as the relevant assessment year): Provided that where an assessment under sub that where an assessment under sub-section (3) that where an assessment under sub of Section 143 or this section has been made for the of Section 143 or this section has been made for the of Section 143 or this section has been made for the relevant assessment year, no action shall be taken relevant assessment year, no action shall be taken relevant assessment year, no action shall be taken under this section after the expiry of four years from the under this section after the expiry of four years from the under this section after the expiry of four years from the end of the relevant assessment year, unless any income end of the relevant assessment year, unl ess any income chargeable to tax has escaped assessment for such chargeable to tax has escaped assessment for such chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of assessment year by reason of the failure on the part of assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts the assessee to disclose fully and truly all material facts the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year necessary for his assessment for that assessment year." necessary for his assessment for that assessment year 5.1 On perusal of the above proviso, it is clear that reopening of an the above proviso, it is clear that reopening of an the above proviso, it is clear that reopening of an assessment for failure on the part of the assessee for not disclosing assessment for failure on the part of the assessee for not disclosing assessment for failure on the part of the assessee for not disclosing the material facts for completing assessment fully and truly is the material facts for completing assessment fully and truly is the material facts for completing assessment fully and truly is permissible only if two cumulative conditions are satisfied: permissible only if two cumulative conditions are satisfied: permissible only if two cumulative conditions are satisfied:

 First, the assessment must have been completed under e assessment must have been completed under e assessment must have been completed under Section 143(3) of the Act. Section 143(3) of the Act.  Second, the reopening is made Second, the reopening is made for assessment year for assessment year beyond four years from the end of relevant assessment year. four years from the end of relevant assessment year. four years from the end of relevant assessment year.

5.2 In the present case, the scrutiny assessment under Section 5.2 In the present case, the scrutiny assessment under Section 5.2 In the present case, the scrutiny assessment under Section e Act was completed on 30.03.2016, thereby satisfying 143(3) of the Act was completed on , thereby satisfying the first condition. However, as regards the second condition, the However, as regards the second condition, the However, as regards the second condition, the relevant assessment year in this case is AY 2013-14 14, and the four- relevant assessment year in this case is year limitation period from the end of the relevant assessment year year limitation period from the end of the relevant assessment year year limitation period from the end of the relevant assessment year expired on 31.03.2018 31.03.2018. In this instance, the notice under Section . In this instance, the notice under Section 148 of the Act was issued on 27.03.2018, which falls within the 148 of the Act was issued on , which falls within the four-year period. Since the reopening has occurred within the year period. Since the reopening has occurred within the year period. Since the reopening has occurred within the prescribed four-year period, the proviso to Section 147 requiring year period, the proviso to Section 147 requiring year period, the proviso to Section 147 requiring the assessee's failure to disclose material facts fully and truly does not assessee's failure to disclose material facts fully and truly does not assessee's failure to disclose material facts fully and truly does not apply. In light of the above findings, it is evident that the proviso to apply. In light of the above findings, it is evident that the proviso to apply. In light of the above findings, it is evident that the proviso to Section 147 is not applicable to the facts of the instant case, as the Section 147 is not applicable to the facts of the instant case, as the Section 147 is not applicable to the facts of the instant case, as the reopening of the assessment falls wi reopening of the assessment falls within the four thin the four-year period. Consequently, the ground challenging the validity of reassessment Consequently, the ground challenging the validity of reassessment Consequently, the ground challenging the validity of reassessment on the basis of the assessee's alleged failure to disclose all material on the basis of the assessee's alleged failure to disclose all material on the basis of the assessee's alleged failure to disclose all material facts does not succeed. facts does not succeed. Accordingly, Ground No. 4 of the appeal Ground No. 4 of the appeal is dismissed.

5.3 In ground No. 3, the assessee has challenged validity of the In ground No. 3, the assessee has challenged validity of the In ground No. 3, the assessee has challenged validity of the reassessment on the ground of reassessment on the ground of ‘change of opinion’. The Ld. counsel . The Ld. counsel for the assessee referred to the Paper Book page 3 and submitted for the assessee referred to the Paper Book page 3 and submitted for the assessee referred to the Paper Book page 3 and submitted that during the original assessment proceedings u/s 143(3) of the that during the original assessment proceedings u/s 143(3) of t that during the original assessment proceedings u/s 143(3) of t Act, the Assessing Officer asked the query regarding the detail of Act, the Assessing Officer asked the query regarding the detail of Act, the Assessing Officer asked the query regarding the detail of maintenance expenses of slum/rehab buildings. The Ld. counsel maintenance expenses of slum/rehab buildings. The Ld. counsel maintenance expenses of slum/rehab buildings. The Ld. counsel further referred to Paper Book page 7 providing detail of further referred to Paper Book page 7 providing detail of further referred to Paper Book page 7 providing detail of maintenance expenses in respect of slum building amounting to maintenance expenses in respect of slum building amounting to maintenance expenses in respect of slum building amounting to Rs.1,98,50,207/- and and and commercial building to the commercial building to commercial building to the the tune of tune of tune of Rs.1,44,47,469/- totaling to building maintenance expenses of totaling to building maintenance expenses of totaling to building maintenance expenses of Rs.3,42,97,676/-. It was contended by the assessee that said . It was contended by the assessee that said . It was contended by the assessee that said building maintenance were required to be undertaken by the building maintenance were required to be undertaken by the building maintenance were required to be undertaken by the developer/assessee til developer/assessee till the slum/rehab building were handed over l the slum/rehab building were handed over to the society of slum/rehab building. The Ld. counsel further to the society of slum/rehab building. The Ld. counsel further to the society of slum/rehab building. The Ld. counsel further referred to Paper Book page 18 wherein detail of gross building referred to Paper Book page 18 wherein detail of gross building referred to Paper Book page 18 wherein detail of gross building maintenance charges was called for maintenance charges was called for in prescribed format which was prescribed format which was provided by the asse provided by the assessee in reply submitted on 17.02.2016 before ssee in reply submitted on 17.02.2016 before the Assessing Officer, a copy which is available on Paper Book the Assessing Officer, a copy which is available on Paper Book the Assessing Officer, a copy which is available on Paper Book pages 21 to 27. In view of the above contentions 21 to 27. In view of the above contentions, the , the Ld. counsel for the assessee submitted that the issue of the the assessee submitted that the issue of the ‘building maintenance building maintenance expenses’ was already examined by the Assessing Officer and no as already examined by the Assessing Officer and no as already examined by the Assessing Officer and no addition was made in the assessment order passed u/s 143(3) of addition was made in the assessment order passed u/s 143(3) of addition was made in the assessment order passed u/s 143(3) of the Act and therefore, now the Assessing Officer has reopened the the Act and therefore, now the Assessing Officer has reopened the the Act and therefore, now the Assessing Officer has reopened the assessment without any tangible material, without any tangible material, based on the same based on the same information/material which was available before him during the erial which was available before him during the erial which was available before him during the regular assessment proceedings. Therefore, the Assessing Officer is regular assessment proceedings. Therefore, the Assessing Officer is regular assessment proceedings. Therefore, the Assessing Officer is seeking to reopen the assessment for the year under consideration seeking to reopen the assessment for the year under consideration seeking to reopen the assessment for the year under consideration only on account of building maintenance charges merely due to only on account of building maintenance charges merely only on account of building maintenance charges merely ‘change of the opinion he opinion’ on same set of facts, which is not permitted which is not permitted in law. The Ld. counsel referred to the decision of the Co-ordinate in law. The Ld. counsel referred to the decision of the Co in law. The Ld. counsel referred to the decision of the Co Bench of the Tribunal in the case ITO 1(2)(3), MUMBAI VS. M ITO 1(2)(3), MUMBAI VS. M Bench of the Tribunal in the case PALLONJI PALLONJI ENERPRISES ENERPRISES P. P. LTD, LTD, MUMBAI MUMBAI in wherein th wherein the Tribunal held that if the Assessing e Tribunal held that if the Assessing Officer raised specific queries in relation to expense and the Officer raised specific queries in relation to expense and the Officer raised specific queries in relation to expense and the taxpayer responded to such queries during the assessment taxpayer responded to such queries during the assessment taxpayer responded to such queries during the assessment proceedings, then the AO cannot be proceedings, then the AO cannot be permitted to permitted to undertake reassessment to disallow the same expens reassessment to disallow the same expense. The Ld. counsel further e. The Ld. counsel further placed reliance on the decision of the Hon’ble Bombay High Court placed reliance on the decision of the Hon’ble Bombay High Court placed reliance on the decision of the Hon’ble Bombay High Court in the case of Marico Ltd. v. ACIT (2019) 111 taxmann.com 253 Marico Ltd. v. ACIT (2019) 111 taxmann.com 253 Marico Ltd. v. ACIT (2019) 111 taxmann.com 253 (Bombay), wherein it is held that if the AO has remained silent in wherein it is held that if the AO has remained silent in wherein it is held that if the AO has remained silent in relation to issue during the assessment proceedings even though he relation to issue during the assessment proceedings even though he relation to issue during the assessment proceedings even though he has raised specific queried on such issue has raised specific queried on such issue, then such silence on the then such silence on the part of the Assessing Officer would be presumed that he had sing Officer would be presumed that he had sing Officer would be presumed that he had applied his mind to the issue under consideration and accepted the lied his mind to the issue under consideration and accepted the lied his mind to the issue under consideration and accepted the position taken by the taxpayer and the reassessment undertaken by position taken by the taxpayer and the reassessment undertaken by position taken by the taxpayer and the reassessment undertaken by the Assessing Officer thus rendered the Assessing Officer thus rendered is without jurisdiction. The Ld. without jurisdiction. The Ld. counsel further referred to the decision of the Co counsel further referred to the decision of the Co-ordina ordinate Bench of the Tribunal in the case of Union Bank of India v. DCIT in ITA Union Bank of India v. DCIT in ITA the Tribunal in the case of No. 1677 & 1676/Mum/2024 for assessment year 2016-17 and No. 1677 & 1676/Mum/2024 for assessment year 2016 No. 1677 & 1676/Mum/2024 for assessment year 2016 2017-18.

5.2 On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) submitted that in the queries raised by the Assessing Officer during submitted that in the queries raised by the Assessin submitted that in the queries raised by the Assessin the original assessment proceedings, the Assessing Officer called for the original assessment proceedings, the Assessing Officer called for the original assessment proceedings, the Assessing Officer called for detail of the entire building maintenance expenses building maintenance expenses but the assessee but the assessee filed details in respect of slum/rehab building in respect of slum/rehab building only and no details of and no details of building maintenance expenses building maintenance expenses in respect of commercial building in respect of commercial building amounting to Rs.1,44,47,469/ amounting to Rs.1,44,47,469/- was filed before the Assessing was filed before the Assessing Officer in assessment proceddings in assessment proceddings. The examination of such details . The examination of such details became more important particularly became more important particularly, when the Assessing Officer when the Assessing Officer made addition for the made addition for the ‘deemed rent’ in respect of commercial in respect of commercial building flats in the ‘Ka s in the ‘Kaladonia’ project was made, but made, but deduction for maintenance expenses toward such commercial flats was for maintenance expenses toward such commercial flats was for maintenance expenses toward such commercial flats was allowed to the extent of 30% to the extent of 30% by the Assessing Officer under the by the Assessing Officer under the provisions of section 24 of the Act. provisions of section 24 of the Act. In view of the maintenance In view of the maintenance expenses at the rate of at the rate of 30% of the gross ‘deemed rent deemed rent’ was allowed by the Assessing Officer by the Assessing Officer, the claim of the assessee of maintenance the claim of the assessee of maintenance expenses of commercial building /flats of commercial building /flats in the profit and loss in the profit and loss account was not allowable and th account was not allowable and therefore, the action of the erefore, the action of the Assessing Officer for reopening the assessment is justified and there Assessing Officer for reopening the assessment is justified and there Assessing Officer for reopening the assessment is justified and there is no ‘change of opinion change of opinion’ when the Assessing Officer did not examine when the Assessing Officer did not examine that issue in the original assessment proceedings. He further that issue in the original assessment proceedings. He further that issue in the original assessment proceedings. He further submitted that in the decisi submitted that in the decisions relied upon by the assessee, the ons relied upon by the assessee, the specific issue was duly examined in the original assessment specific issue was duly examined in the original assessment specific issue was duly examined in the original assessment proceedings whereas in the instant case the issue of building proceedings whereas in the instant case the issue of building proceedings whereas in the instant case the issue of building maintenance expenses in relation to commercial buildings expenses in relation to commercial buildings/flats expenses in relation to commercial buildings which were though in the return o which were though in the return of income were treated by the f income were treated by the assessee as investment but in assessment proceedings, the assessee as investment but in assessment proceedings, the assessee as investment but in assessment proceedings, the assessee admitted the same to be stock assessee admitted the same to be stock-in-trade of the assessee. trade of the assessee. Accordingly, he submitted that order of the lower authorities must Accordingly, he submitted that order of the lower authorities must Accordingly, he submitted that order of the lower authorities must be sustained.

“8. We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute before us is whether the reasons recorded by the Assessing dispute before us is whether the reasons recorded by the Assessing dispute before us is whether the reasons recorded by the Assessing Officer to believe that income escaped assessm Officer to believe that income escaped assessment are merely based on ent are merely based on change of opinion without there being any tangible material. For change of opinion without there being any tangible material. For change of opinion without there being any tangible material. For adjudication of issue in dispute it is relevant to refer the reasons adjudication of issue in dispute it is relevant to refer the reasons adjudication of issue in dispute it is relevant to refer the reasons recorded by the Assessing Officer, which are available on page 26 to 27 recorded by the Assessing Officer, which are available on page 26 to 27 recorded by the Assessing Officer, which are available on page 26 to 27 of the paperbook. For read of the paperbook. For ready reference, same are extracted as under: y reference, same are extracted as under: "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: AAFCM3357A is an assessee of this charge. AAFCM3357A is an assessee of this charge. The assessee for the A.Y. 2009 The assessee for the A.Y. 2009-10 has e- filed its return of filed its return of income on 29/09/2009 declaring income at Rs. Nil. In this case, income on 29/09/2009 declaring income at Rs. Nil. income on 29/09/2009 declaring income at Rs. Nil. assessment u/s. 143(3) of the IT. Act was completed on assessment u/s. 143(3) of the IT. Act was completed on assessment u/s. 143(3) of the IT. Act was completed on 26/09/2011 assessing income at Rs. Nil. 26/09/2011 assessing income at Rs. Nil. From the records, it is seen that during the F.Y. 2008-09 From the records, it is seen that during the F.Y. 2008 From the records, it is seen that during the F.Y. 2008 relevant to A.Y. 2009 relevant to A.Y. 2009-10 assessee has shown receipt of shäre 10 assessee has shown receipt of shäre premium amounting to Rs.279, premium amounting to Rs.279,48,42,181/- The issue of share The issue of share premium was not a subject matter of verification by the A:O. premium was not a subject matter of verification by the A:O. premium was not a subject matter of verification by the A:O. and therefore no opinion has been formed on the issue in and therefore no opinion has been formed on the issue in and therefore no opinion has been formed on the issue in original assessment u/s. 143(3). At the same time, the assessee original assessment u/s. 143(3). At the same time, the assessee original assessment u/s. 143(3). At the same time, the assessee has also not filed complete details showing has also not filed complete details showing the nature of this the nature of this share premium (justification for the excess share premium share premium (justification for the excess share premium share premium (justification for the excess share premium received in comparison to the intrinsic value of the share received in comparison to the intrinsic value of the share received in comparison to the intrinsic value of the share The Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. The Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. The Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. Writ Petition No. 502 of 2012 dated 10 C.I.T. Writ Petition No. 502 of 2012 dated 10-11 Janua 11 January, 2013, their Lordships have held that when the assessment is sought to their Lordships have held that when the assessment is sought to their Lordships have held that when the assessment is sought to be reopened within a period of four years, then what is required be reopened within a period of four years, then what is required be reopened within a period of four years, then what is required is 'reason to believe' but not established fact of escapement of is 'reason to believe' but not established fact of escapement of is 'reason to believe' but not established fact of escapement of income. At this stage of issue of notice, the only question is income. At this stage of issue of notice, the only q income. At this stage of issue of notice, the only q where there is relevant material on which the reasonable where there is relevant material on which the reasonable where there is relevant material on which the reasonable person can form a requisite belief. When an assessment is person can form a requisite belief. When an assessment is person can form a requisite belief. When an assessment is sought to be reopened within a period of four years, the test to sought to be reopened within a period of four years, the test to sought to be reopened within a period of four years, the test to be applied is whether there is tangible material to do so. be applied is whether there is tangible material to do so. be applied is whether there is tangible material to do so. Someth Something which is tangible need not be something which is ing which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant new. An Assessing Officer who has plainly ignored relevant new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to the law. material in arriving at an assessment acts contrary to the law. material in arriving at an assessment acts contrary to the law. If as a consequence of this there is escapement of income, the If as a consequence of this there is escapement of income, the If as a consequence of this there is escapement of income, the jurisdictional re jurisdictional requirement of section 147 is fulfilled on the quirement of section 147 is fulfilled on the confirmation of a reason to believe that income has escapement confirmation of a reason to believe that income has escapement confirmation of a reason to believe that income has escapement assessment. A reason to believe is what is relevant and not an assessment. A reason to believe is what is relevant and not an assessment. A reason to believe is what is relevant and not an established fact of escapement of income. Reliance is also established fact of escapement of income. Reliance is also established fact of escapement of income. Reliance is also placed on the judgment in placed on the judgment in the case of M/s. Usha International, the case of M/s. Usha International, 348 IT 485 (Delhi High Court). 348 IT 485 (Delhi High Court). In view of the above facts and the judicial decision of the In view of the above facts and the judicial decision of the In view of the above facts and the judicial decision of the Hon’ble Bombay High Court, I have reason to believe that Hon’ble Bombay High Court, I have reason to believe that Hon’ble Bombay High Court, I have reason to believe that income, in the garb of share application money/share premium income, in the garb of share application money/share premium income, in the garb of share application money/share premium received i received in this case has escaped assessments in terms of n this case has escaped assessments in terms of provisions of section 147 of the I.T. Act. provisions of section 147 of the I.T. Act. Necessary approval reopening the assessee’ case has been Necessary approval reopening the assessee’ case has been Necessary approval reopening the assessee’ case has been obtained from the Addl. CIT, Range obtained from the Addl. CIT, Range-1(2), Mumbai before issue 1(2), Mumbai before issue of notice u/s 148 of the I.T. Act. Issue notice of notice u/s 148 of the I.T. Act. Issue notice u/s 148 of the Act u/s 148 of the Act of the assessee.” of the assessee.” 8.1 On perusal of the above reasons recorded, it is evident that On perusal of the above reasons recorded, it is evident that On perusal of the above reasons recorded, it is evident that there was no new tangible material before the Assessing Officer to there was no new tangible material before the Assessing Officer to there was no new tangible material before the Assessing Officer to invoke a trigger for making belief that income escaped assessment. invoke a trigger for making belief that income escaped assessment. invoke a trigger for making belief that income escaped assessment. The Assessing Offic The Assessing Officer has himself mentioned that for reopening the er has himself mentioned that for reopening the assessment within four years from the end of the relevant assessment assessment within four years from the end of the relevant assessment assessment within four years from the end of the relevant assessment year, there should be some tangible material to do so. For reopening year, there should be some tangible material to do so. For reopening year, there should be some tangible material to do so. For reopening the assessment there has to be some trigger by way of a fresh material the assessment there has to be some trigger by way of a fresh material the assessment there has to be some trigger by way of a fresh material or information, which make the Assessing Officer to relook into the or information, which make the Assessing Officer to relook into the or information, which make the Assessing Officer to relook into the completed assessment. It cannot be a situation where an Assessing completed assessment. It cannot be a situation where an Assessing completed assessment. It cannot be a situation where an Assessing Officer suddenly wake up a fine morning and say that income had Officer suddenly wake up a fine morning and say that income had Officer suddenly wake up a fine morning and say that income had escaped assessment in case of an assessee. The trigger fo escaped assessment in case of an assessee. The trigger fo escaped assessment in case of an assessee. The trigger for reason to believe that income escaped assessment may be in the form tangible believe that income escaped assessment may be in the form tangible believe that income escaped assessment may be in the form tangible material, which may be information or material external to material, which may be information or material external to material, which may be information or material external to assessment record or information from other assessment year etc. (i.e. assessment record or information from other assessment year etc. (i.e. assessment record or information from other assessment year etc. (i.e. internal source), but same cannot be by way of internal source), but same cannot be by way of a dream or rethinking a dream or rethinking on same material, which will be in the nature of review of the on same material, which will be in the nature of review of the on same material, which will be in the nature of review of the assessment rather than reassessment. In the case of CIT & Ars v. Rinku assessment rather than reassessment. In the case of CIT & Ars v. Rinku assessment rather than reassessment. In the case of CIT & Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that CIT 102 ITR 287 (SC) it is held that such information need not be from such information need not be from external sources only. The information obtained in assessment external sources only. The information obtained in assessment external sources only. The information obtained in assessment proceedings of subsequent assessment year can also be utilized for proceedings of subsequent assessment year can also be utilized for proceedings of subsequent assessment year can also be utilized for reopening of the completed assessment (Raymond Woolen Mills Ltd. v. reopening of the completed assessment (Raymond Woolen Mills Ltd. v. reopening of the completed assessment (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR 34 ITO & Others 236 ITR 34 (SC) and Revathy Cp Equipment Ltd. vs (SC) and Revathy Cp Equipment Ltd. vs Deputy Commissioner of Income Deputy Commissioner of Income-tax and Ors. 241 ITR 856 (Mad.) tax and Ors. 241 ITR 856 (Mad.) 8.2 Further, the Ld. counsel of the assessee has referred to inquiries Further, the Ld. counsel of the assessee has referred to inquiries Further, the Ld. counsel of the assessee has referred to inquiries made by the Assessing Officer in original assessment proceeding on the made by the Assessing Officer in original assessment proceeding on the made by the Assessing Officer in original assessment proceeding on the issue of examination of share capital and security premium. The issue of examination of share capital and security premium. The issue of examination of share capital and security premium. The Assessing Officer had issued a notice under section 14 Assessing Officer had issued a notice under section 142(1) of the Act on 2(1) of the Act on 09/08/2011 asking the assessee to furnish details of increase in share 09/08/2011 asking the assessee to furnish details of increase in share 09/08/2011 asking the assessee to furnish details of increase in share capital and details of security premium. A copy of said notice is placed capital and details of security premium. A copy of said notice is placed capital and details of security premium. A copy of said notice is placed on paper book page Nos.

35. A detailed reply filed by the assessee on paper book page Nos.

35. A detailed reply filed by the assessee on paper book page Nos.

147. If— —

[a] the Income [a] the Income-tax Officer has reason to believe that, by reason of tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return the omission or failure on the part of an assessee to make a return the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax under section 139 for any assessment year to the Income under section 139 for any assessment year to the Income Officer or to disclose fully and truly all material facts necessary for Officer or to disclose fully and truly all material facts necessary for Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has his assessment for that year, income chargeable to tax has his assessment for that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that escaped assessment for that year, or [b] notwithstanding that escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as mentioned in clause (a) there has been no omission or failure as mentioned in clause (a there has been no omission or failure as mentioned in clause (a on the part of the assessee, the Income on the part of the assessee, the Income- tax Officer has in tax Officer has in consequence of information in his possession reason to believe consequence of information in his possession reason to believe consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any that income chargeable to tax has escaped assessment for any that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 assessment year, he may, subject to the provisions of sections 148 assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the 153, assess or reassess such income or recompute the loss or the 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment depreciation allowance, as the case may be, for the assessment depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the year concerned (hereafter in sections 148 to 153 referred to as the year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." After enactment of Direct Tax Laws relevant assessment year)." After enactment of Direct Tax La relevant assessment year)." After enactment of Direct Tax La (Amendment) Act, 1987, i.e., prior to 1st April, 1989, Section 147 (Amendment) Act, 1987, i.e., prior to 1st April, 1989, Section 147 (Amendment) Act, 1987, i.e., prior to 1st April, 1989, Section 147 of the Act, reads as under: of the Act, reads as under:

"147. Income escaping assessment. "147. Income escaping assessment.-- If the Assessing Officer, for If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any reasons to be recorded by him in writing, is of the opinion that any reasons to be recorded by him in writing, is of the opinion that any income chargeable to ta income chargeable to tax has escaped assessment for any x has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 assessment year, he may, subject to the provisions of Sections 148 assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income to 153, assess or reassess such income and also any other income to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes chargeable to tax which has escaped assessment and which comes chargeable to tax which has escaped assessment and which comes to his notice subsequently i to his notice subsequently in the course of the proceedings under n the course of the proceedings under this section, or recomputed the loss or the depreciation allowance this section, or recomputed the loss or the depreciation allowance this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment or any other allowance, as the case may be, for the assessment or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to year concerned (hereafter in this section and in Sections 148 to year concerned (hereafter in this section and in Sections 148 to 153 referred to as the 153 referred to as the relevant assessment year)."

After the Amending Act, 1989, Section 147 reads as under: After the Amending Act, 1989, Section 147 reads as under: After the Amending Act, 1989, Section 147 reads as under: "Income escaping assessment.

147. If the Assessing Officer has "Income escaping assessment.

147. If the Assessing Officer has "Income escaping assessment.

On going through the changes, quoted above, made to Section 147 On going through the changes, quoted above, made to Section 147 On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) of the Act, we find that, prior to Direct Tax Laws (Amendment) of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re Act, 1987, re-opening could be done under above two conditions opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction and fulfillment of the said conditions alone conferred jurisdictio and fulfillment of the said conditions alone conferred jurisdictio on the Assessing Officer to make a back assessment, but in section on the Assessing Officer to make a back assessment, but in section on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a 147 of the Act [with effect from 1st April, 1989], they are given a 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the by and only one condition has remained, viz., that where the by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped Assessing Officer has reason to believe that income has Assessing Officer has reason to believe that income has assessment, confers jurisdiction to re assessment, confers jurisdiction to re-open the assessment. open the assessment. Therefore, post Therefore, post-1st April, 1989, power to re-open is much wider. open is much wider.

However, one needs to give a schematic interpretation to the However, one needs to give a schematic interpretation to the However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 words "reason to believe" failing which, we are afraid, Secti words "reason to believe" failing which, we are afraid, Secti would give arbitrary powers to the Assessing Officer to re-open would give arbitrary powers to the Assessing Officer to re would give arbitrary powers to the Assessing Officer to re assessments on the basis of "mere change of opinion", which assessments on the basis of "mere change of opinion", which assessments on the basis of "mere change of opinion", which cannot be per se reason to re cannot be per se reason to re-open. We must also keep in mind We must also keep in mind the conceptual difference between power to review and the conceptual difference between power to review and the conceptual difference between power to review and power to power to reassess. The Assessing Officer has no power to reassess. The Assessing Officer has no power to review; he has the power to re review; he has the power to re-assess. But reassessment has assess. But reassessment has to be based on fulfillment of certain pre to be based on fulfillment of certain pre-condition and if the condition and if the concept of "change of opinion" is removed, as contended on concept of "change of opinion" is removed, as contended on concept of "change of opinion" is removed, as contended on behalf of the Department, behalf of the Department, then, in the garb of re-opening the opening the assessment, review would take place. One must treat the assessment, review would take place. One must treat the assessment, review would take place. One must treat the concept of "change of opinion" as an in concept of "change of opinion" as an in-built test to check built test to check abuse of power by the Assessing Officer. Hence, after 1st abuse of power by the Assessing Officer. Hence, after 1st abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re April, 1989, Assessing Officer has power to re-open, provided open, provided there is "tangible material" to come to the conclusion that there is "tangible material" to come to the conclusion that there is "tangible material" to come to the conclusion that there is escapement of income from assessment. there is escapement of income from assessment. Reasons must Reasons must have a live link with the formation of the belief. Our view gets have a live link with the formation of the belief. Our view gets have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as support from the changes made to Section 147 of the Act support from the changes made to Section 147 of the Act quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" 1987, Parliament not only deleted the words "reason to believe" 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. but also inserted the word "opinion" in Section 147 of the Act. but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies However, on receipt of representations from the Companies However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re ainst omission of the words "reason to believe", Parliament re- ainst omission of the words "reason to believe", Parliament re introduced the said expression and deleted the word "opinion" on introduced the said expression and deleted the word "opinion" on introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing the ground that it would vest arbitrary powers in the Assessing the ground that it would vest arbitrary powers in the Assessing Officer. We quote here in below the relevant portion of Circular Officer. We quote here in below the relevant portion of Circular Officer. We quote here in below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: No.549 dated 31st October, 1989, which reads as follows: No.549 dated 31st October, 1989, which reads as follows:

"7.2 Amendment made by the Amending Act, 1989, to reintroduce "7.2 Amendment made by the Amending Act, 1989, to reintroduce "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147. the expression `reason to believe' in Section 147. --A number of A number of representations were received against the omission of the words representations were received against the omission of the words representations were received against the omission of the words

`reason to believe' from Section 147 and their substitution by the to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the `opinion' of the Assessing Officer. It was pointed out that the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained meaning of the expression, `reason to believe' had been explained meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and in a number of court rulings in the past and was well settled and in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the its omission from section 147 would give arbitrary powers to the its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of Assessing Officer to reopen past assessments on mere change of Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again opinion. To allay these fears, the Amending Act, 1989, has again opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to amended section 147 to reintroduce the expression `has reason t amended section 147 to reintroduce the expression `has reason t believe' in place of the words `for reasons to be recorded by him in believe' in place of the words `for reasons to be recorded by him in believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, writing, is of the opinion'. Other provisions of the new section 147, writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." however, remain the same." (Emphasize supplied externally) (Emphasize supplied externally) 8.3 The Assessing Officer has referred the ratio of the Hon’ble The Assessing Officer has referred the ratio of the The Assessing Officer has referred the ratio of the Bombay High Court in the case of ECGC (supra) that when an Bombay High Court in the case of ECGC (supra) that when an Bombay High Court in the case of ECGC (supra) that when an assessment is sought to be reopened within a period of four years, then assessment is sought to be reopened within a period of four years, then assessment is sought to be reopened within a period of four years, then what is required is reason to believe and not an established fact of what is required is reason to believe and not an established fact of what is required is reason to believe and not an established fact of escapement of income. This ratio of Hon’ble High escapement of income. This ratio of Hon’ble High Court is undisputed Court is undisputed and but in the in the instant case issue is not related to established fact and but in the in the instant case issue is not related to established fact and but in the in the instant case issue is not related to established fact of escapement of income but the issue is absence of tangible material of escapement of income but the issue is absence of tangible material of escapement of income but the issue is absence of tangible material which could trigger process of reason to believe. The Hon’ble Bombay which could trigger process of reason to believe. The Hon’ble Bombay which could trigger process of reason to believe. The Hon’ble Bombay High Court in the ca High Court in the case of Export Credit Guarantee Corporation of India se of Export Credit Guarantee Corporation of India Ltd (supra) held as under: Ltd (supra) held as under: “8. To hold that the Assessing Officer must be deemed to have 8. To hold that the Assessing Officer must be deemed to have 8. To hold that the Assessing Officer must be deemed to have accepted what he has plainly overlooked or ignored in the accepted what he has plainly overlooked or ignored in the accepted what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of Section assessment order would be to stretch the interpretation of assessment order would be to stretch the interpretation of 147 to a point where the provision would cease to have meaning 147 to a point where the provision would cease to have meaning 147 to a point where the provision would cease to have meaning and content. Such an exercise of excision by judicial interpretation and content. Such an exercise of excision by judicial interpretation and content. Such an exercise of excision by judicial interpretation is impermissible. When an assessment is sought to be reopened is impermissible. When an assessment is sought to be reopened is impermissible. When an assessment is sought to be reopened within a period of four years of the end of the relev within a period of four years of the end of the relevant assessment ant assessment year. the test to be applied is whether there is tangible material to year. the test to be applied is whether there is tangible material to year. the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, do so. What is tangible is something which is not illusory, do so. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. Something which is hypothetical or a matter of conjecture. Something which is hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Asse tangible need not be something which is new. An Assessing Officer ssing Officer who has plainly ignored relevant material in arriving at an who has plainly ignored relevant material in arriving at an who has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an escapement of assessment acts contrary to law. If there is an escapement of assessment acts contrary to law. If there is an escapement of income in consequence, the jurisdictional requirement of Section income in consequence, the jurisdictional requirement of Section income in consequence, the jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to 147 would be fulfilled on the formation of a reason to believe that believe that income has escaped assessment. The reopening of the assessment income has escaped assessment. The reopening of the assessment income has escaped assessment. The reopening of the assessment within a period of four years is in these circumstances within within a period of four years is in these circumstances within within a period of four years is in these circumstances within jurisdiction. jurisdiction.”

8.4 The Hon’ble High Court has justified reopening by the Assessing The Hon’ble High Court has justified reopening by the Assessing The Hon’ble High Court has justified reopening by the Assessing Officer, when he has plainly ignor Officer, when he has plainly ignored the relevant material while ed the relevant material while arriving at an assessment order, but in the instant case the Assessing arriving at an assessment order, but in the instant case the Assessing arriving at an assessment order, but in the instant case the Assessing Officer had raised specific queries on the issue of increase in share Officer had raised specific queries on the issue of increase in share Officer had raised specific queries on the issue of increase in share capital and share premium and after examining the reply of the capital and share premium and after examining the reply of the capital and share premium and after examining the reply of the assessee, made no add assessee, made no addition in original assessment proceedings, thus ition in original assessment proceedings, thus the ratio of the decision of the Hon’ble High Court (supra) cannot be the ratio of the decision of the Hon’ble High Court (supra) cannot be the ratio of the decision of the Hon’ble High Court (supra) cannot be applied over the facts of the instant case. applied over the facts of the instant case. 8.5 Thus, respectfully following the finding of the Hon’ble Supreme Thus, respectfully following the finding of the Hon’ble Supreme Thus, respectfully following the finding of the Hon’ble Supreme Court in the case of Kelvi Court in the case of Kelvinator of India Ltd(supra), we hold that nator of India Ltd(supra), we hold that reopening based on the change of opinion without there being any reopening based on the change of opinion without there being any reopening based on the change of opinion without there being any tangible material, is not permitted in law and accordingly, we quash tangible material, is not permitted in law and accordingly, we quash tangible material, is not permitted in law and accordingly, we quash the reassessment proceeding. The grounds of cross objection are the reassessment proceeding. The grounds of cross objection are the reassessment proceeding. The grounds of cross objection are accordingly allowe accordingly allowed.” 6.1 Similarly, in the case of Union Bank of India (supra) the Co Similarly, in the case of Union Bank of India (supra) the Co Similarly, in the case of Union Bank of India (supra) the Co- ordinate Bench has referred to the decision of the Hon’ble Supreme ordinate Bench has referred to the decision of the Hon’ble Supreme ordinate Bench has referred to the decision of the Hon’ble Supreme Court in the case of Court in the case of CIT vs. Kelvinator of India Ltd CIT vs. Kelvinator of India Ltd. 256 ITR 1 and held that ‘change of opinion change of opinion’ cannot be allowed llowed even within the period of four years from the end of the relevant assessment year. four years from the end of the relevant assessment year. four years from the end of the relevant assessment year. The relevant finding of the Tribunal The relevant finding of the Tribunal(supra) is reproduced as under: is reproduced as under:

“9.6 In view of the above decision of the Hon’ble Jurisdictional High In view of the above decision of the Hon’ble Jurisdictional High In view of the above decision of the Hon’ble Jurisdictional High Court, it is settled that reopening of the assessment on the material Court, it is settled that reopening of the assessment on the material Court, it is settled that reopening of the assessment on the material and information which was already available on the record while and information which was already available on the record while and information which was already available on the record while passing the original assessment order, amounts to change passing the original assessment order, amounts to change passing the original assessment order, amounts to change of opinion which is not permitted in law. Further, In which is not permitted in law. Further, In CIT vs. Kelvinator of India CIT vs. Kelvinator of India

Ltd. 256 ITR 1 , the Full Bench of the Delhi High Court was considering Ltd. 256 ITR 1 , the Full Bench of the Delhi High Court was considering Ltd. 256 ITR 1 , the Full Bench of the Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the a case of reopening u/s 147 within 4 years from the end of the a case of reopening u/s 147 within 4 years from the end of the assessment year. The Court held that wh assessment year. The Court held that when a regular order of en a regular order of assessment is passed in terms of section 143 (3) of the Act, assessment is passed in terms of section 143 (3) of the Act, assessment is passed in terms of section 143 (3) of the Act, a presumption can be raised that such an order has been passed on presumption can be raised that such an order has been passed on presumption can be raised that such an order has been passed on application of mind. It was held that if it be held that an order which application of mind. It was held that if it be held that an order which application of mind. It was held that if it be held that an order which has been passed purportedly without has been passed purportedly without application of mind would itself application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding confer jurisdiction upon the Assessing Officer to reopen the proceeding confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium without anything further, the same would amount to giving premium without anything further, the same would amount to giving premium to an authority exercising quasi to an authority exercising quasi-judicial function to take benefit of its judicial function to take benefit of its own wrong. It was held that section 147 of the Act does not postulate It was held that section 147 of the Act does not postulate It was held that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate conferment of power upon the Assessing Officer to initiate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion. On appeal reassessment proceedings upon a mere change of opinion. On appeal reassessment proceedings upon a mere change of opinion. On appeal by the department to the Supreme Court in 320 ITR 561(SC), by the department to the Supreme Court in 320 ITR 561(SC), by the department to the Supreme Court in 320 ITR 561(SC), dismissing the appeal, held as under: he appeal, held as under: “ On going through the changes, quoted above, made to Section “ On going through the changes, quoted above, made to Section “ On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws 147 of the Act, we find that, prior to Direct Tax Laws 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re (Amendment) Act, 1987, re-opening could be done under above opening could be done under above two conditions and fulfillment of the said conditions alone two conditions and fulfillment of the said conditions two conditions and fulfillment of the said conditions conferred jurisdiction on the Assessing Officer to make a back conferred jurisdiction on the Assessing Officer to make a back conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st assessment, but in section 147 of the Act [with effect from 1st assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go April, 1989], they are given a go-by and only one condition has by and only one condition has remained, viz., that ...4/ remained, viz., that ...4/- www.taxguru.in - 4 4 - where the Assessing Officer has reason to believe that income has escaped Assessing Officer has reason to believe that income has escaped Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. assessment, confers jurisdiction to reopen the assessment. assessment, confers jurisdiction to reopen the assessment. Therefore, post Therefore, post-1st April, 1989, power to re-open is much wider. open is much wider. However, one needs to give a schematic interpretation to the However, one needs to give a schematic interpretation to the However, one needs to give a schematic interpretation to the words “reason to believe” failing which, we are afraid, Section “reason to believe” failing which, we are afraid, Section “reason to believe” failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re- 147 would give arbitrary powers to the Assessing Officer to re 147 would give arbitrary powers to the Assessing Officer to re open assessments on the basis of “mere change of opinion”, open assessments on the basis of “mere change of opinion”, open assessments on the basis of “mere change of opinion”, which cannot be per se reason to re which cannot be per se reason to re-open. We must also keep in open. We must also keep in mind the conc mind the conceptual difference between power to review and eptual difference between power to review and power to re power to re-assess. The Assessing Officer has no power to assess. The Assessing Officer has no power to review; he has the power to re review; he has the power to re-assess. But re-assessment has to assessment has to be based on fulfillment of certain pre be based on fulfillment of certain pre-condition and if the condition and if the concept of “change of opinio concept of “change of opinion” is removed, as contended on n” is removed, as contended on behalf of the Department, then, in the garb of re-opening the behalf of the Department, then, in the garb of re behalf of the Department, then, in the garb of re assessment, review would take place. One must treat the assessment, review would take place. One must treat the assessment, review would take place. One must treat the concept of “change of opinion” as an in concept of “change of opinion” as an in-built test to check abuse built test to check abuse of power by the Assessing Officer. Hence, of power by the Assessing Officer. Hence, after 1st April, 1989, after 1st April, 1989, Assessing Officer has power to re Assessing Officer has power to re-open, provided there is open, provided there is “tangible material” to come to the conclusion that there is “tangible material” to come to the conclusion that there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a escapement of income from assessment. Reasons must have a escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support live link with the formation of the belief. Our view get live link with the formation of the belief. Our view get from the changes made to Section 147 of the Act, as quoted from the changes made to Section 147 of the Act, as quoted from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, hereinabove. Under the Direct Tax Laws (Amendment) Act, hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words “reason to believe” 1987, Parliament not only deleted the words “reason to believe” 1987, Parliament not only deleted the words “reason to believe” but also inserted the word “opinion” in Section 147 of the Act. but also inserted the word “opinion” in Section 147 of the Act. but also inserted the word “opinion” in Section 147 of the Act. However, on receipt of representations from the Companies ever, on receipt of representations from the Companies ever, on receipt of representations from the Companies against omission of the words “reason to believe”, Parliament against omission of the words “reason to believe”, Parliament against omission of the words “reason to believe”, Parliament re-introduced the said expression and deleted the word introduced the said expression and deleted the word introduced the said expression and deleted the word “opinion” on the ground that it would vest arbitrary powers in “opinion” on the ground that it would vest arbitrary powers in “opinion” on the ground that it would vest arbitrary powers in the Assessing Officer the Assessing Officer. We quote hereinbelow the relevant . We quote hereinbelow the relevant portion of Circular No.549 dated 31st October, 1989, which portion of Circular No.549 dated 31st October, 1989, which portion of Circular No.549 dated 31st October, 1989, which reads as follows: reads as follows: “7.2 Amendment made by the Amending Act, 1989, to “7.2 Amendment made by the Amending Act, 1989, to “7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A reintroduce the expression `reason to believe' in Section 147. reintroduce the expression `reason to believe' in Section 147. number of representations number of representations were received against the omission were received against the omission of the words `reason to believe' from Section 147 and their of the words `reason to believe' from Section 147 and their of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was substitution by the `opinion' of the Assessing Officer. It was substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to pointed out that the meaning of the expression, `reason to pointed out that the meaning of the expression, `reason to believe' had been explained in a number believe' had been explained in a number of court rulings in the of court rulings in the past and was well settled and its omission from section 147 past and was well settled and its omission from section 147 past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen would give arbitrary powers to the Assessing Officer to reopen would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these past assessments on mere change of opinion. To allay these past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 fears, the Amending Act, 1989, has again amended fears, the Amending Act, 1989, has again amended to reintroduce the expression `has reason to believe' in place of to reintroduce the expression `has reason to believe' in place of to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the the words `for reasons to be recorded by him in writing, is of the the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, opinion'. Other provisions of the new section 147, however, opinion'. Other provisions of the new section 147, however, remain the same.” remain the same.” For the afore For the afore-stated reasons, we see no merit in these civil see no merit in these civil appeals filed by the Department, hence, dismissed with no order appeals filed by the Department, hence, dismissed with no order appeals filed by the Department, hence, dismissed with no order as to costs.” as to costs.” 9.7 In our opinion, after completion of the assessment u/s 143(3) of In our opinion, after completion of the assessment u/s 143(3) of In our opinion, after completion of the assessment u/s 143(3) of the Act, for reopening of the assessment, there has to be some trigger the Act, for reopening of the assessment, there has to be some trigger the Act, for reopening of the assessment, there has to be some trigger by way of either information received from the external source or from either information received from the external source or from either information received from the external source or from the internal source and without such trigger reopening of the the internal source and without such trigger reopening of the the internal source and without such trigger reopening of the assessment merely to relook into the assessment on the issues, which assessment merely to relook into the assessment on the issues, which assessment merely to relook into the assessment on the issues, which had been considered during the regular assessment proceedings, had been considered during the regular assessment proceedings, had been considered during the regular assessment proceedings, will amount to review of the assessment order by the Assessing Officer, amount to review of the assessment order by the Assessing Officer, amount to review of the assessment order by the Assessing Officer, which is not permitted in law under the provisions of section 147 of the which is not permitted in law under the provisions of section 147 of the which is not permitted in law under the provisions of section 147 of the Act. The Assessing Officer can only reassess the assessment wherever Act. The Assessing Officer can only reassess the assessment wherever Act. The Assessing Officer can only reassess the assessment wherever income escaped assessment, and not the rev income escaped assessment, and not the review the order passed by iew the order passed by him. In view of the above discussion and respectfully following the him. In view of the above discussion and respectfully following the him. In view of the above discussion and respectfully following the decision of the Hon’ble Bombay High Court in the case of HDFC Bank decision of the Hon’ble Bombay High Court in the case of HDFC Bank decision of the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. (supra) and Castrol India Ltd. (supra), we set aside the finding of Ltd. (supra) and Castrol India Ltd. (supra), we set aside the finding of Ltd. (supra) and Castrol India Ltd. (supra), we set aside the finding of the Ld. CIT(A) on the is the Ld. CIT(A) on the issue of validity of the reassessment and we quash sue of validity of the reassessment and we quash the reassessment proceedings. The ground No. 2 of the appeal of the the reassessment proceedings. The ground No. 2 of the appeal of the the reassessment proceedings. The ground No. 2 of the appeal of the assessee is accordingly allowed.” assessee is accordingly allowed. 6.2 In view of the above decisions, we are of the opinion that it In view of the above decisions, we are of the opinion that it In view of the above decisions, we are of the opinion that it need to be examined in the instant cas need to be examined in the instant case whether in the original e whether in the original assessment proceedings, the Assessing Officer examined the assessment proceedings, the Assessing Officer examined the assessment proceedings, the Assessing Officer examined the specific issue of the allowability of the building maintenance specific issue of the allowability of the building maintenance specific issue of the allowability of the building maintenance expenses u/s 37(1) of the Act despite allowing the deduction @ 30% expenses u/s 37(1) of the Act despite allowing the deduction @ 30% expenses u/s 37(1) of the Act despite allowing the deduction @ 30% deemed rental under the provisions of sec deemed rental under the provisions of section 24 of the Act. In the tion 24 of the Act. In the query raised u/s 142(1) of the Act during the regular assessment query raised u/s 142(1) of the Act during the regular assessment query raised u/s 142(1) of the Act during the regular assessment u/s 143(3) of the Act (Paper Book page 3), the Assessing Officer u/s 143(3) of the Act (Paper Book page 3), the Assessing Officer u/s 143(3) of the Act (Paper Book page 3), the Assessing Officer called detail of maintenance expenses of slum/rehab buildings only. called detail of maintenance expenses of slum/rehab buildings only. called detail of maintenance expenses of slum/rehab buildings only. Accordingly, the assessee in it Accordingly, the assessee in its submissions dated 28.12.2015 s submissions dated 28.12.2015 (Paper Book page 7) also provided justification for maintenance (Paper Book page 7) also provided justification for maintenance (Paper Book page 7) also provided justification for maintenance charges of the rehab building on the ground that same was the charges of the rehab building on the ground that same was the charges of the rehab building on the ground that same was the responsibility of the assessee till such slum/rehab building were responsibility of the assessee till such slum/rehab building responsibility of the assessee till such slum/rehab building handed over to relevant slum dwel handed over to relevant slum dwellers society. On paper book page . On paper book page 25, the assessee has provided details of the slum building the assessee has provided details of the slum building the assessee has provided details of the slum building maintenance expenses expenses to the tune of Rs.1,98,50,207/ to the tune of Rs.1,98,50,207/-. In the light of these facts, it is relevant it is relevant to reproduce the reasons recorded reasons recorded by the AO in instant case the AO in instant case as under:

"On verification of the financials submitted with On verification of the financials submitted with annual annual report for the F.Y.2012-13 relevant to A. Y.2013 13 relevant to A. Y.2013-14, it is observed that assessee had 14, it is observed that assessee had claimed Building Maintenance Charges of claimed Building Maintenance Charges of Rs. 3,42,97,676/ Rs. 3,42,97,676/- under the head Other Expenses in the Profit and Loss Account. head Other Expenses in the Profit and Loss Account.

2. During the assessment additions were made mainly on account of 2. During the assessment additions were made mainly on account of 2. During the assessment additions were made mainly on account of deemed rent on vacant flats, and interest disallowed being non deemed rent on vacant flats, and interest disallowed being non deemed rent on vacant flats, and interest disallowed being non-business purpose. However, deduction w/s. 24(a purpose. However, deduction w/s. 24(a) @ 30% was allowed while ) @ 30% was allowed while calculating deemed rent thus building calculating deemed rent thus building maintenance charges of Rs. maintenance charges of Rs. 3,42,97,676/- claimed in the Profit and Loss Account should have been claimed in the Profit and Loss Account should have been added back while added back while calculating business income.

5. In this case a return of income was filed for the year under 5. In this case a return of income was filed for the year under 5. In this case a return of income was filed for the year under consideration and regular assessment u/s. 143(3) was made on consideration and regular assessment u/s. 143(3) was made on consideration and regular assessment u/s. 143(3) was made on 30.03.2016. Since, 4 years from the end of the relevant year has not 30.03.2016. Since, 4 years from the end of the relevant year has not 30.03.2016. Since, 4 years from the end of the relevant year has not expired in this case, the only requirement to initiate proceedings u/s. 147 expired in this case, the only requirement to initiate proceedings u/s. 147 expired in this case, the only requirement to initiate proceedings u/s. 147 of the Act is reason to believe which has been rec of the Act is reason to believe which has been recorded above (refer orded above (refer paragraph 2 & 4). paragraph 2 & 4). 5.1. It is pertinent to mention here that in this case an assessment was 5.1. It is pertinent to mention here that in this case an assessment was 5.1. It is pertinent to mention here that in this case an assessment was made as stipulated u/s. 2(40) of the Act. However, as discussed in reason made as stipulated u/s. 2(40) of the Act. However, as discussed in reason made as stipulated u/s. 2(40) of the Act. However, as discussed in reason to believe in this case income chargeable to tax has been under assessed to believe in this case income chargeable to tax has been under assessed to believe in this case income chargeable to tax has been under assessed by an amount of Rs. 3,42,97,676/ by an amount of Rs. 3,42,97,676/-." 6.3 On perusal of the reasons recorded, we find that the Assessing On perusal of the reasons recorded, we find that the Assessing On perusal of the reasons recorded, we find that the Assessing Officer has recorded that once the deduction Officer has recorded that once the deduction for maintenance for maintenance charges in respect of flats of the commercial building held as stock- charges in respect of flats of the commercial building held as stock charges in respect of flats of the commercial building held as stock in-trade was allowed a trade was allowed at the rate of 30% of the deemed rent in ter 30% of the deemed rent in terms of section 24(a) of the Act, t of section 24(a) of the Act, the allowance of the building he allowance of the building maintenance charges claimed in the profit and loss account was in maintenance charges claimed in the profit and loss account was in maintenance charges claimed in the profit and loss account was in the nature in the income escaped assessment. in the income escaped assessment. In view of above In view of above reasons recorded, we ha e have to examine whether there is a ve to examine whether there is a ‘change of opinion’ by the Assessing Officer in respect of building maintenance by the Assessing Officer in respect of building maintenance by the Assessing Officer in respect of building maintenance charges. The building maintenance expenses he building maintenance expenses debited for both debited for both rehab/slum building and commercial building was claimed by the rehab/slum building and commercial building was claimed by the rehab/slum building and commercial building was claimed by the assessee as business assessee as business expenditure incurred wholly and exclusively expenditure incurred wholly and exclusively for the purpose of business in the return of income filed. The for the purpose of business in the return of income filed. The for the purpose of business in the return of income filed. The assessee treated the commercial flats a part of its investment but assessee treated the commercial flats a part of its investment but assessee treated the commercial flats a part of its investment but the AO treated the same as stock the AO treated the same as stock-in-trade and in view of Hon’ble trade and in view of Hon’ble Dehi High Court in the case of in the case of Ansal housing and construction ltd housing and construction ltd Vs ACIT (2018) 89 taxmann.com 238(Delhi) c Vs ACIT (2018) 89 taxmann.com 238(Delhi) computed deemed omputed deemed annual lettable value (ALV) of those flats invoking provisos of the annual lettable value (ALV) of those flats invoking provisos of the annual lettable value (ALV) of those flats invoking provisos of the Act related to head of income from house property and allowed Act related to head of income from house property and allowed Act related to head of income from house property and allowed thirty percent expenses as repairs and maintenance. Evidently, this thirty percent expenses as repairs and maintenance. thirty percent expenses as repairs and maintenance. issue of allowability of maintenance expens of allowability of maintenance expenses had not been raised by the Assessing Officer in any of the queries raised in assessment by the Assessing Officer in any of the queries raised by the Assessing Officer in any of the queries raised proceedings. The Assessing Officer has merely examined the he Assessing Officer has merely examined the he Assessing Officer has merely examined the maintenance expenses in respect of slum/rehab buildings and did maintenance expenses in respect of slum/rehab buildings and did maintenance expenses in respect of slum/rehab buildings and did not examine into the justification of the not examine into the justification of the building maintenance building maintenance expenses claimed in respect of commercial building which was expenses claimed in respect of commercial building which was expenses claimed in respect of commercial building which was treated as stock-in-trade and deemed rent had trade and deemed rent had been computed by been computed by the Assessing Officer in respect of vacant flats. Since we have the Assessing Officer in respect of vacant flats. Since we have the Assessing Officer in respect of vacant flats. Since we have concluded that no specific query has been raise concluded that no specific query has been raised by the Assessing d by the Assessing Officer for allowance of building maintenance charges vis-à-vis 30% Officer for allowance of building maintenance charges vis Officer for allowance of building maintenance charges vis deduction of the deemed rent for the maintenance charges while deduction of the deemed rent for the maintenance charges wh deduction of the deemed rent for the maintenance charges wh computing income from house, t computing income from house, the ratio of the decisions relied upon he ratio of the decisions relied upon by the assessee are not applicable ove not applicable over the facts of instant case and instant case and accordingly the issue of accordingly the issue of ‘change of opinion’ does not arise in the does not arise in the instant case.

6.4 However, we note that the Assessing Officer has not referred to However, we note that the Assessing Officer has not referred to However, we note that the Assessing Officer has not referred to any information of the material for reopening the assessment. In any information of the material for reopening the assessment. In any information of the material for reopening the assessment. In our opinion, the word ‘reason to believe’ suggest that there must be on, the word ‘reason to believe’ suggest that there must be on, the word ‘reason to believe’ suggest that there must be some material or information in possession of the Assessing Officer some material or information in possession of the Assessing Officer some material or information in possession of the Assessing Officer to believe that assessee has either under stated his income or to believe that assessee has either under stated his income or to believe that assessee has either under stated his income or claimed loss or deduction as allowance. The Hon’ble Supreme Court claimed loss or deduction as allowance. The Hon’ble Supreme Court claimed loss or deduction as allowance. The Hon’ble Supreme Court in the case of Ganga Saran & Sons (P.) Ltd Ganga Saran & Sons (P.) Ltd v. ITO [1981] 130 ITR 1 v. ITO [1981] 130 ITR 1 (SC) has held that AO must have reasons to believe that income (SC) has held that AO must have reasons to believe that income (SC) has held that AO must have reasons to believe that income chargeable to tax as escaped income. In the word ‘reasons to chargeable to tax as escaped income. In the word ‘reasons to chargeable to tax as escaped income. In the word ‘reasons to believe’ are stronger than word ‘is satisfied’. The Hon’ble Supreme believe’ are stronger than word ‘is satisfied’. The Hon’ble Supr believe’ are stronger than word ‘is satisfied’. The Hon’ble Supr Court in the case of Raymond Woollen Mills Ltd. v. ITO [1999] Raymond Woollen Mills Ltd. v. ITO [1999] Court in the case of 236 ITR 34 (SC) held that in determining whether commencement held that in determining whether commencement held that in determining whether commencement of the reassessment proceedings was valid it has only to be seen of the reassessment proceedings was valid it has only to be seen of the reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which whether there was prima facie some material on the basis of whi whether there was prima facie some material on the basis of whi the Department could reopen the case. In the case of Phool Chand the Department could reopen the case. In the case of the Department could reopen the case. In the case of Bajrang Lal v. ITO [1993] 203 ITR 456 (SC) Bajrang Lal v. ITO [1993] 203 ITR 456 (SC) held that there must held that there must exist reasons for holding believe for escapement of income although exist reasons for holding believe for escapement of income although exist reasons for holding believe for escapement of income although the question whether reasons adequate or the question whether reasons adequate or sufficient is n sufficient is not for the courts to decide. Further the Hon’ble Delhi High Court in the case to decide. Further the Hon’ble Delhi High Court in the case to decide. Further the Hon’ble Delhi High Court in the case of SMCC Construction v. ACIT [2014] 220 Taxman 354 (Delhi) SMCC Construction v. ACIT [2014] 220 Taxman 354 (Delhi) SMCC Construction v. ACIT [2014] 220 Taxman 354 (Delhi) held that where the reasons to believe recorded does not referred to held that where the reasons to believe recorded does not referred to held that where the reasons to believe recorded does not referred to any material came to the knowledge of the Assessing Officer from any material came to the knowledge of the Assessing Officer from any material came to the knowledge of the Assessing Officer from which the Assessing Officer could have formed reasonable believe which the Assessing Officer could have formed reasonable believe which the Assessing Officer could have formed reasonable believe that the expenditure referred to not crystallized during the year and that the expenditure referred to not crystallized during that the expenditure referred to not crystallized during when the recorded reasons to believe that income had escaped when the recorded reasons to believe that income had escaped when the recorded reasons to believe that income had escaped assessee were not based assessee were not based on any direct or circumstantial on any direct or circumstantial evidence and were in realm or mere suspicion and were in realm or mere suspicion, thus, the reassessment was the reassessment was set aside. The Tribunal in the case of The Tribunal in the case of M PALLONJI EN M PALLONJI ENERPRISES P. LTD (supra) has also observed that unless there is any material (supra) has also observed that unless there is any material (supra) has also observed that unless there is any material whether external or internal reopening without any tangible whether external or internal reopening without any whether external or internal reopening without any material, will be in the nature of the review of the assessment material, will be in the nature of the review of the assessment material, will be in the nature of the review of the assessment rather than reassessment. Similarly, in the case of Union Bank of rather than reassessment. Similarly, in the case of Unio rather than reassessment. Similarly, in the case of Unio India, the Tribunal has also India, the Tribunal has also observed that there has to be so observed that there has to be some trigger by way of either information received from the external trigger by way of either information received from the external trigger by way of either information received from the external source or from the internal source and source or from the internal source and in absence in absence such trigger, reopening of the assessment is merely to relook into the assessment reopening of the assessment is merely to relook into t reopening of the assessment is merely to relook into t on the issues which had already been considered during the regular on the issues which had already been considered during the regular on the issues which had already been considered during the regular assessment proceedings and same will amount to review of the assessment proceedings and same will amount to review of the assessment proceedings and same will amount to review of the assessment which is not permitted in law. assessment which is not permitted in law.

6.5 We find that in We find that in instant case the reasons recorded the reasons recorded do not refer any information whether from the external source or internal information whether from the external source or internal information whether from the external source or internal source. Though internal source may be any finding of the Assessing source. Though internal source may be any finding of the Assessing source. Though internal source may be any finding of the Assessing Officer in earlier or subsequent assessment years or any Officer in earlier or subsequent assessment years or any Officer in earlier or subsequent assessment years or any information received either from the audit objections and such information received either from the audit objections and such information received either from the audit objections and such audit objections were duly accepted by him. But in absence of any ions were duly accepted by him. But in absence of any ions were duly accepted by him. But in absence of any such reference to source of rence to source of information in the reasons recorded, the the reasons recorded, the reopening of the assessment cannot be sustained. reopening of the assessment cannot be sustained.

6.6 In the facts discussed above, we find it is the AO who made In the facts discussed above, we find it is the AO who made In the facts discussed above, we find it is the AO who made addition for deemed rent in respect of commercial flats and allowed rent in respect of commercial flats and allowed rent in respect of commercial flats and allowed maintenance expenses at the rate of 30 percentile in assessment maintenance expenses at the rate of 30 percentile in assessment maintenance expenses at the rate of 30 percentile in assessment proceedings u/s 143(3) of the Act, but omitted to disallow the proceedings u/s 143(3) of the Act, but omitted to disallow the proceedings u/s 143(3) of the Act, but omitted to disallow the maintenance expenses debited in profit and loss account. This was maintenance expenses debited in profit and loss account. This was maintenance expenses debited in profit and loss account. This was in the nature of error on the part of the AO in the assessment order of error on the part of the AO in the assessment order of error on the part of the AO in the assessment order which could have subject to revision proceedings rather then which could have subject to revision proceedings rather then which could have subject to revision proceedings rather then reassessment proceedings. reassessment proceedings.

6.7 In view of the aforesaid discussion, the reassessment is not In view of the aforesaid discussion, the reassessment is not In view of the aforesaid discussion, the reassessment is not sustainable in law and accordingly we quashed t sustainable in law and accordingly we quashed the reassessment he reassessment proceedings.

6.8 As far as ground No As far as ground Nos.5 and 6 of the appeal are are concerned, the Ld. counsel for the assessee submitted that in the immediate Ld. counsel for the assessee submitted that in the immediate Ld. counsel for the assessee submitted that in the immediate succeeding assessment year 2014 succeeding assessment year 2014-15, the assessment was reopened 15, the assessment was reopened on the identical ground of building maintenance charges amounting on the identical ground of building maintenance charges amounting on the identical ground of building maintenance charges amounting to Rs.2,13,34,586/- allowed as double deduction but on objec allowed as double deduction but on objections raised by the assessee against the rea raised by the assessee against the reassessment no addition was ssessment no addition was made on account of building maintenance charges in the made on account of building maintenance charges i made on account of building maintenance charges i reassessment order for assessment year 2014 for assessment year 2014-15. The Ld. counsel The Ld. counsel for the assessee contested that there is no change in the facts in the for the assessee contested that there is no change in the facts in for the assessee contested that there is no change in the facts in present present assessment assessment year year vis-à-vis vis vis immediately immediately succeeding succeeding assessment year and thus the assessment year and thus the reassessment order order should be quashed on the principle of consistency as laid down by the Hon’ble quashed on the principle of consistency as laid down by the Hon’ble quashed on the principle of consistency as laid down by the Hon’ble Supreme Court in the case of Radhasoami Satsang (1992) 193 Radhasoami Satsang (1992) 193 Supreme Court in the case of ITR 321 (SC).

6.9 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. We also examined the reasons recorded relevant material on record. We also examined the reasons recorded relevant material on record. We also examined the reasons recorded for assessment year 2014 for assessment year 2014-15 which are available on paper book 15 which are available on paper book page 40. On perusal of the said reasons recorded, we find that in page 40. On perusal of the said reasons recorded, we fi page 40. On perusal of the said reasons recorded, we fi the assessment year 2014 the assessment year 2014-15 reopening has been made beyond the 15 reopening has been made beyond the four years from the end of the relevant four years from the end of the relevant assessment year and in the assessment year and in the case of beyond four years, the condition of failure on the part of the case of beyond four years, the condition of failure on the part of the case of beyond four years, the condition of failure on the part of the assessee to disclose all material facts full assessee to disclose all material facts fully and truly necessary for y and truly necessary for the assessment is to be satisfied. Since in assessment year 2013- the assessment is to be satisfied. Since in assessment year 2013 the assessment is to be satisfied. Since in assessment year 2013 14, the reassessment is within the four years from the end of the 14, the reassessment is within the four years from the end of the 14, the reassessment is within the four years from the end of the relevant assessment year and therefore facts of the two assessment relevant assessment year and therefore facts of the two assessment relevant assessment year and therefore facts of the two assessment years are entirely different. He years are entirely different. Hence we are of the opinion that nce we are of the opinion that addition in the assessment year 2013 addition in the assessment year 2013-14 cannot be deleted merely 14 cannot be deleted merely for the reason that no addition has been made in the assessment for the reason that no addition has been made in the assessment for the reason that no addition has been made in the assessment year 2014-15 following the principle of consistency. 15 following the principle of consistency.

6.10 In view of aforesaid discussion, the In view of aforesaid discussion, the reassessment ment proceedings in the instant assessment can’t be sustained for the reasons in the instant assessment can’t be sustained for the reasons in the instant assessment can’t be sustained for the reasons discussed above. The The relevant ground challenging validity of challenging validity of reassessment accordingly accordingly allowed. Since, we have held the allowed. Since, we have held the reassessment itself as non sustainable in law, the adjudicating of reassessment itself as non sustainable in law, the reassessment itself as non sustainable in law, the addition on merit is rendered merely academic, and therefore, we addition on merit is rendered merely academic, and therefore, we addition on merit is rendered merely academic, and therefore, we are adjudicating grounds raised on merit of additions. are adjudicating grounds raised on merit of additions. are adjudicating grounds raised on merit of additions.

Order pronounced in the open Court on nounced in the open Court on 21/01/2025. /01/2025.