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

PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 29.07.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds: 1. That the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances in upholding the reassessment order dated 14

December challenge a 2. That the C
Faceless A circumstan maintenanc
Appellant i
AY 2013-14
Reassessment
3. That the C
Faceless A circumstan building m the Appella proceedings ground is m
4. That the C
Faceless A circumstan objections t no failure o necessary f and thus th
The issue of maintenance
Appellant in t
5. 5. That the Faceless A circumstan was made by the AO under Secti
Act, 1961 (I
6. That the C
Faceless A circumstan are no chan
2014-15 (i.e be made o pursuant to Hon'ble Sup
CIT (1992)
Principles of N
7. That the C
Faceless A Mack S
ITA

2018 in relation to the disputed items and agitated in this appeal.
Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and on the fact ces of the case in disallowing the bu ce charges of INR 3,42,97,676 incurred b n relation to the commercial building Kaledo
4. t was without juri iction
Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and on the fact ces of the case in not appreciating that the is aintenance charges was discussed in detai ant's assessing officer (AO) during the asses s and thus, reopening the assessment o merely a change in opinion.
Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and on the fact ces of the case in not appreciating the Appe to the reopening of the assessment that ther on part of the Appellant to disclose all materia fully and truly for its assessment for AY 20
he reassessment was without juri iction.
f deduction claimed on account of bu charges has been decided in favour o the immediately succeeding AY e Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and on the fact ces of the case in not appreciating that no ad on the same issue of building maintenance ch in the reassessment order dated 29 March ion 147 read with Section 144B of the Incom
IT Act) for the immediately succeeding AY 201
Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and on the fact ces of the case in not appreciating that since nge in facts of the present AY 2013-14 vis-à- e., the immediately succeeding AY), no additi on account of the building maintenance ch o the principle of consistency as laid down preme Court in the case of Radhasaomi Sats
193 ITR 321 (SC).
Natural Justice
Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and the fact
Star Marketing Pvt. Ltd.
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under ational ts and uilding by the nia for ational ts and ssue of iled by ssment on this ational ts and ellant's re was al facts
013-14
uilding of the ational ts and ddition harges h 2022
me Tax
14-15
ational ts and e there
-vis AY ion can harges by the sang v.
ational ts and circumstan made by th
8. That the C
Faceless A circumstan without pro
Appellant w
9. That the Ap
/ or delete grounds of 10. All the afo alternative
2. Briefly stated, fa is a real estate comp investor, i.e. 78.79%
Holding Ltd’. (Foreig certain companies ow
Promoter Entities).
assessee company wa commercial building its statement of fact during period from control and manage promoters of the HD
Sarang Wadhawan complete control ove assessee. It is furthe carried out by them took management co
For the assessmen
Mack S
ITA ces of the case in not considering the submi he Appellant before passing the Impugned Ord
Commissioner of Income Tax (Appeals) / Na
Appeal Centre erred in law and the fact ces of the case in passing the Impugned oviding an opportunity of personal hearing which goes against the principles of natural ju ppellant craves leave to add to and / or amen e and / or modify and / or alter the afo appeal as and when the occasion demands.
resaid grounds of appeal are independent, and without prejudice to one another.
acts of the case are that the ass pany and is a joint venture be % shares are held by ‘Ocean D gn Investor) and 21.19% shar wned by promoters of the ‘HDIL
During the year under con as engaged in the development/
namely ‘Kaledonia’ in Mumbai.
ts filed before the Ld. CIT(A)
2011-17 upto 1st September, ement of the company was h
DIL group i.e. Mr. Rakesh wadh through their representative er the documents and tax e-filin er stated that when misapprop came to public knowledge, the ontrol of the company only for nt year under consideration,
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issions der.
ational ts and Order to the ustice.
nd and oresaid in the sessee company etween a foreign
Debt Investment res are held by L Group’ (‘HDIL’
nsideration, the /construction of The assessee in mentioned that , 2017, entire handled by the hawan and Shri and they had ng portal of the riation of funds foreign investor rm AY 2018-19. , the assessee company filed its reg a total income of Rs the assessee was sel
Officer completed t
Income-tax Act, 196
total income at Rs.4
order, the assessee
Authority on 15.06.2
the Ld. counsel for before us.
2.1 Subsequently, believe that income notice u/s 148 of th the Assessing Office charges of Rs.3,42
deduction, firstly, th u/s 24(a) of the Act a the vacant flats and the reason that build loss account were cla reassessment order p
Assessing Officer dis
Rs.3,42,97,676/-. O assessee challenged
Mack S
ITA gular return of income on 30.09
s.2,25,79,333/-. The return of lected for scrutiny assessment the scrutiny assessment u/s 1 (in short ‘the Act’) on 30.09.2
41,87,12,490/-. Against the s filed appeal before the Ld.
016, which is currently pending the assessee in the written s the Assessing Officer record escaped assessment and acc e Act on 27.03.2018. In the re er noted that on the buildin
,97,676/-, the assessee had he deduction provided by the A at the rate of 30% on the deemed
, secondly, a deduction u/s 3
ding maintenance charges debit aimed as allowable revenue expe passed on 14.12.2018 u/s 147
sallowed the building maintena n further appeal before the validity of the reassessment
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9.2013 declaring income filed by . The Assessing
143(3) of the 2016, assessing aid assessment
First Appellate g as informed by submission filed ded reasons to cordingly issued asons recorded, ng maintenance taken double
Assessing Officer d rental value of 7 of the Act for ted in profit and enditure. In the 7 of the Act, the ance charges of ld CIT(A) , the proceedings as well as merit of the a the assessee is in ap
(in short ‘the Tribuna
3. Before us, the a to 1519. The asses documents from page
4. Before us, the ground No. 7 and 8 o and accordingly sam
Nos. 1, 2, 9 and 10 o also dismissed as infr
4.1 Now, we take u the validity of the rea objected that there w disclose all the mate and truly and therefo to lack of complying
147 of the Act.
5. We have heard perused the relevant challenged the valid under Section 147
Mack S
ITA addition, however, could not suc ppeal before the Income-tax Ap al’) raising the grounds as reprod assessee filed a Paper Book con ssee also filed a compilation e 1 to 172. Ld. counsel for the assessee of the appeal were not pressed me are dismissed as infructuou of the appeal being general in n fructuous.
up the effective ground No. 3 an assessment. In ground No. 4, th was no failure on the part of erial facts necessary for the a fore reassessment was without j g mandatory requirement of pr d the rival submissions of bo t material placed on record. Th dity of the reassessment proce of the Act, specifically with r
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cceed. Aggrieved pellate Tribunal duced above.
ntaining pages 1
of the relevant submitted that by the assessee us. The ground nature, same are nd 4 challenging he assessee has the assessee to assessment fully juri iction due oviso to section oth parties and he assessee has eedings initiated reference to the proviso to Section 1
ready reference, the s
"147. Income escaping

If the Assessing writing, is of the escaped assessm to the provisions such income and which has escap subsequently in section, or recomp any other allowa year concerned (h
153 referred to as Provided that w of Section 143
relevant assess under this secti end of the relev chargeable to assessment yea the assessee to necessary for h
5.1 On perusal of the assessment for failur the material facts f permissible only if tw
Mack S
ITA

47 applicable during the relev said proviso is reproduced as un assessment.—
Officer, for reasons to be record opinion that any income chargea ment for any assessment year, he s of Sections 148 to 153, asses d also any other income char ed assessment and which come the course of the proceeding mpute the loss or the depreciation ance, as the case may be, for th hereafter in this section and in S s the relevant assessment year):
where an assessment under su
3 or this section has been m sment year, no action sha ion after the expiry of four ye vant assessment year, unless tax has escaped assessme ar by reason of the failure on disclose fully and truly all m is assessment for that assess e above proviso, it is clear that re on the part of the assessee fo for completing assessment ful wo cumulative conditions are sat
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vant period. For nder:
ded by him in able to tax has e may, subject ss or reassess rgeable to tax es to his notice gs under this n allowance or he assessment
Sections 148 to :
ub-section (3) made for the all be taken ears from the s any income ent for such n the part of material facts sment year."
reopening of an or not disclosing ly and truly is tisfied:

 First, the asse
Section 143(3) o
 Second, the reo four years from 5.2 In the present c
143(3) of the Act was the first condition. H relevant assessment year limitation period expired on 31.03.20
148 of the Act was four-year period. Si prescribed four-year assessee's failure to apply. In light of the Section 147 is not ap reopening of the as Consequently, the gr on the basis of the a facts does not succee dismissed.
5.3 In ground No.
reassessment on the for the assessee refe
Mack S
ITA essment must have been co of the Act.
opening is made for assessme the end of relevant assessment case, the scrutiny assessment s completed on 30.03.2016, th
However, as regards the second year in this case is AY 2013-14
d from the end of the relevant a 018. In this instance, the notice issued on 27.03.2018, which ince the reopening has occur period, the proviso to Section 14
disclose material facts fully and above findings, it is evident tha pplicable to the facts of the inst ssessment falls within the fo round challenging the validity o assessee's alleged failure to discl ed. Accordingly, Ground No. 4 o
3, the assessee has challenged ground of ‘change of opinion’. T erred to the Paper Book page 3
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ompleted under ent year beyond year.
t under Section hereby satisfying d condition, the 4, and the four- assessment year e under Section falls within the rred within the 47 requiring the d truly does not at the proviso to ant case, as the our-year period.
of reassessment lose all material of the appeal is d validity of the The Ld. counsel
3 and submitted that during the origi
Act, the Assessing O maintenance expens further referred to maintenance expens
Rs.1,98,50,207/- an Rs.1,44,47,469/- tot
Rs.3,42,97,676/-. It building maintenanc developer/assessee t to the society of slu referred to Paper Bo maintenance charges provided by the asse the Assessing Office pages 21 to 27. In vie the assessee submitt expenses’ was alread addition was made i the Act and therefore assessment without information/material regular assessment p seeking to reopen th only on account of Mack S
ITA inal assessment proceedings u/
Officer asked the query regardi ses of slum/rehab buildings. T
Paper Book page 7 provi ses in respect of slum building nd commercial building to taling to building maintenanc t was contended by the asse ce were required to be unde till the slum/rehab building we um/rehab building. The Ld.
ook page 18 wherein detail of s was called for in prescribed fo essee in reply submitted on 17
er, a copy which is available ew of the above contentions, the ted that the issue of the ‘buildin dy examined by the Assessing in the assessment order passe e, now the Assessing Officer ha any tangible material, based l which was available before h proceedings. Therefore, the Asse e assessment for the year unde building maintenance charges
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/s 143(3) of the ng the detail of The Ld. counsel iding detail of g amounting to the tune of ce expenses of essee that said ertaken by the ere handed over counsel further f gross building rmat which was .02.2016 before on Paper Book e Ld. counsel for ng maintenance
Officer and no d u/s 143(3) of as reopened the d on the same him during the essing Officer is er consideration s merely due to ‘change of the opinio in law. The Ld. coun
Bench of the Tribun
PALLONJI
ENERPR
1907/Mum/2017, w
Officer raised speci taxpayer responded proceedings, then t reassessment to disa placed reliance on th in the case of Marico
(Bombay), wherein it relation to issue duri has raised specific qu part of the Assessin applied his mind to t position taken by the the Assessing Officer counsel further refer the Tribunal in the c
No. 1677 & 1676/M
2017-18. 5.2 On the contrar submitted that in the Mack S
ITA on’ on same set of facts, which i nsel referred to the decision of nal in the case ITO 1(2)(3), M
RISES
P.
LTD,
MUMBAI wherein the Tribunal held that ific queries in relation to ex d to such queries during t the AO cannot be permitted allow the same expense. The Ld.
he decision of the Hon’ble Bom o Ltd. v. ACIT (2019) 111 tax t is held that if the AO has rem ing the assessment proceedings ueried on such issue, then such ng Officer would be presume the issue under consideration a e taxpayer and the reassessment r thus rendered is without juris red to the decision of the Co-or case of Union Bank of India v
Mum/2024 for assessment yea ry, the Ld. Departmental Repr e queries raised by the Assessin
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is not permitted the Co-ordinate rdinate Bench of v. DCIT in ITA ar 2016-17 and resentative (DR) ng Officer during the original assessme detail of the entire bu filed details in respec building maintenanc amounting to Rs.1,
Officer in assessmen became more impor made addition for building flats in the for maintenance ex allowed to the exten provisions of section expenses at the rate by the Assessing Off expenses of comme account was not a Assessing Officer for is no ‘change of opini that issue in the o submitted that in th specific issue was proceedings whereas maintenance expens which were though assessee as investm
Mack S
ITA ent proceedings, the Assessing O uilding maintenance expenses b ct of slum/rehab building only a ce expenses in respect of comm
,44,47,469/- was filed before t proceddings. The examination rtant particularly, when the As the ‘deemed rent’ in respect
‘Kaladonia’ project was made xpenses toward such comme nt of 30% by the Assessing Of n 24 of the Act. In view of th of 30% of the gross ‘deemed re ficer, the claim of the assessee ercial building /flats in the p allowable and therefore, the reopening the assessment is jus ion’ when the Assessing Officer original assessment proceedin he decisions relied upon by th duly examined in the origin s in the instant case the iss ses in relation to commercial in the return of income were ment but in assessment pr
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Officer called for but the assessee and no details of mercial building the Assessing n of such details ssessing Officer of commercial
, but deduction rcial flats was fficer under the he maintenance ent’ was allowed of maintenance profit and loss action of the stified and there did not examine ngs. He further he assessee, the nal assessment sue of building buildings/flats treated by the roceedings, the assessee admitted th
Accordingly, he subm be sustained.
6. We have heard r relevant material on in the case of M P discussed the issue there is a new tan assessment then even assessment year, as finding of the Tribuna
“8. We hav dispute and p dispute before
Officer to belie change of opi adjudication o recorded by th of the paperbo
"The a AAFCM
The as income assessm
26/09/
From t relevan premiu premiu and th origina
Mack S
ITA he same to be stock-in-trade o mitted that order of the lower a rival submission of the parties a record. The Co-ordinate Bench
PALLONJI ENERPRISES P. LT of ‘change of opinion’ and h ngible material or a trigger n within four years from the end ssessment cannot be reopened al (supra) is reproduced as unde ve heard rival submission of the parties on perused the relevant material on record.
e us is whether the reasons recorded by t eve that income escaped assessment are me inion without there being any tangible m of issue in dispute it is relevant to refer he Assessing Officer, which are available on p ook. For ready reference, same are extracted ssessee, M. Pallonji Enterprises Pvt. Ltd.
M3357A is an assessee of this charge.
ssessee for the A.Y. 2009-10 has e- filed e on 29/09/2009 declaring income at Rs. Ni ment u/s. 143(3) of the IT. Act was c
/2011 assessing income at Rs. Nil.
the records, it is seen that during the nt to A.Y. 2009-10 assessee has shown rec um amounting to Rs.279,48,42,181/- The is um was not a subject matter of verification erefore no opinion has been formed on al assessment u/s. 143(3). At the same time,
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of the assessee.
authorities must and perused the of the Tribunal
TD (supra) has eld that unless to reopen the d of the relevant d. The relevant er:
n the issue in The issue in the Assessing rely based on material. For r the reasons page 26 to 27
d as under:
having PAN:
its return of l. In this case, completed on F.Y. 2008-09
ceipt of shäre ssue of share n by the A:O.
the issue in e, the assessee has als share p receive
The Ho
C.I.T. W their Lo be reop is 'reas income where person sought be app
Someth new. A materia
If as a juri ic confirm assessm establis placed
348 IT In view
Hon’ble income receive provisio
Necessa obtaine of notic of the a 8.1
On per there was no invoke a trigg
The Assessing assessment wi year, there sho the assessmen or information
Mack S
ITA so not filed complete details showing the n premium (justification for the excess sha d in comparison to the intrinsic value of the n'ble Bombay High Court in the case of E.C.
Writ Petition No. 502 of 2012 dated 10-11 Ja ordships have held that when the assessmen pened within a period of four years, then wh son to believe' but not established fact of es e. At this stage of issue of notice, the only there is relevant material on which th can form a requisite belief. When an a to be reopened within a period of four yea plied is whether there is tangible materi hing which is tangible need not be someth
An Assessing Officer who has plainly igno al in arriving at an assessment acts contrar consequence of this there is escapement of ctional requirement of section 147 is fulf mation of a reason to believe that income ha ment. A reason to believe is what is relevan shed fact of escapement of income. Reli on the judgment in the case of M/s. Usha I
485 (Delhi High Court).
w of the above facts and the judicial de e Bombay High Court, I have reason to e, in the garb of share application money/sh d in this case has escaped assessments ons of section 147 of the I.T. Act.
ary approval reopening the assessee’ ca ed from the Addl. CIT, Range-1(2), Mumba ce u/s 148 of the I.T. Act. Issue notice u/s 1
assessee.”
rusal of the above reasons recorded, it is new tangible material before the Assessi ger for making belief that income escaped
Officer has himself mentioned that for r ithin four years from the end of the relevan ould be some tangible material to do so. F t there has to be some trigger by way of a fr n, which make the Assessing Officer to re
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nature of this are premium e share
G.C. v/s. Addl.
anuary, 2013, nt is sought to at is required scapement of ly question is e reasonable assessment is rs, the test to ial to do so.
hing which is ored relevant ry to the law.
of income, the lfilled on the as escapement nt and not an iance is also International, ecision of the believe that hare premium in terms of ase has been i before issue
148 of the Act evident that ing Officer to d assessment.
reopening the nt assessment
For reopening fresh material look into the completed ass
Officer sudden escaped assess believe that in material, whi assessment rec internal source on same mat assessment rat
Chakraborthy
CIT 102 ITR 28
external sour proceedings of reopening of t
ITO & Others
Deputy Commi
8.2
Further made by the As issue of exam
Assessing Offic
09/08/2011 a capital and de on paper boo giving detail o with bank stat
The Assessing
26/09/2011 u income, and n capital or secu has satisfied h capital and s reopened the a four years from any new tang premium amo verified during reopening in opinion”, whic
Court in the taxmann.com
Credit Guaran within four ye
Mack S
ITA sessment. It cannot be a situation where nly wake up a fine morning and say that sment in case of an assessee. The trigger f ncome escaped assessment may be in the f ich may be information or material cord or information from other assessment e), but same cannot be by way of a dream terial, which will be in the nature of re ther than reassessment. In the case of CIT &
56 DTR 227 (Kar) and Kalyanji Mavji and 87 (SC) it is held that such information need rces only. The information obtained in f subsequent assessment year can also be he completed assessment (Raymond Woole
236 ITR 34 (SC) and Revathy Cp Equip issioner of Income-tax and Ors. 241 ITR 856
r, the Ld. counsel of the assessee has referre ssessing Officer in original assessment proc mination of share capital and security p cer had issued a notice under section 142(1) sking the assessee to furnish details of incr etails of security premium. A copy of said no k page Nos. 35. A detailed reply filed by of increase in share capital and security pr tement is available on pages 36 to 50 of th g Officer completed the original ass under section 143(3) of the Act accepting no addition was made in respect of incre urity premium, which means that the Asse himself and formed an opinion on the is share premium. Thereafter, the Assessing assessment by way of notice dated 28/03/20
m end of the relevant assessment year, tha gible material, for the purpose of taxin ount received by the assessee, which sta g the course of the original assessment pro such circumstances, amounts to based on ch is not permitted in law. The Hon’ble B case of State Bank of India vs. ACIT
77 (Bom) after considering the judgme tee Corporation vs. Add CIT (supra) held th ears on change of opinion and without fres
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an Assessing t income had for reason to form tangible external to t year etc. (i.e.
or rethinking eview of the & Ars v. Rinku d Company v.
d not be from n assessment e utilized for n Mills Ltd. v.
pment Ltd. vs
6 (Mad.) ed to inquiries eeding on the remium. The ) of the Act on rease in share otice is placed the assessee remium along he paperbook.
sessment on the returned ease in share essing Officer ssue of share g Officer has 014 i.e. within t too without ng the share ands already oceeding. The n “change of Bombay High
T (2018) 96
ent in Export hat reopening sh material is bad in law. In dated 28/01/2
High Court qu new material the end of the Supreme Cour
561 held the abuse of powe
Hon’ble Suprem
"Income
147. If—
[a] the I the omis under s
Officer o his asse escaped there ha on the consequ that inc assessm to 153, a deprecia year con relevant
(Amend of the A "147. In reasons income concept of change opinion is an inbuilt t er of the Assessing Officer. The relevant f me Court is reproduced as under:
e escaping assessment.
—
Income-tax Officer has reason to believe that, b ssion or failure on the part of an assessee to ma section 139 for any assessment year to the or to disclose fully and truly all material facts ne essment for that year, income chargeable d assessment for that year, or [b] notwithsta as been no omission or failure as mentioned in part of the assessee, the Income- tax Offi uence of information in his possession reason come chargeable to tax has escaped assessme ment year, he may, subject to the provisions of s assess or reassess such income or recompute the ation allowance, as the case may be, for the ncerned (hereafter in sections 148 to 153 referr t assessment year)." After enactment of Direc dment) Act, 1987, i.e., prior to 1st April, 1989, S ct, reads as under:
ncome escaping assessment.-- If the Assessing to be recorded by him in writing, is of the opini chargeable to tax has escaped assessmen
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1287 of 2016
n’ble Bombay there was no ur years from w that Hon’ble
010) 320 ITR test check on finding of the by reason of ake a return
Income-tax ecessary for to tax has anding that n clause (a) icer has in n to believe ent for any sections 148
e loss or the assessment red to as the t Tax Laws
Section 147
Officer, for ion that any nt for any assessm to 153, chargea to his n this sect or any year con
153 refe
After th
"Income reason t assessm provisio and also assessm course o or the d may be section assessm
On going of the A Act, 198
and fulf on the A 147 of t go-by a Assessin assessm
Therefo
Mack S
ITA ment year, he may, subject to the provisions of S assess or reassess such income and also any ot able to tax which has escaped assessment and w otice subsequently in the course of the proceed tion, or recomputed the loss or the depreciation other allowance, as the case may be, for the ncerned (hereafter in this section and in Secti erred to as the relevant assessment year)."
he Amending Act, 1989, Section 147 reads e escaping assessment. 147. If the Assessing to believe that any income chargeable to tax h ment for any assessment year, he may, subj ons of sections 148 to 153, assess or reassess s o any other income chargeable to tax which h ment and which comes to his notice subseque of the proceedings under this section, or recomp depreciation allowance or any other allowance, e, for the assessment year concerned (hereaf and in sections 148 to 153 referred to as th ment year)."
g through the changes, quoted above, made to S
Act, we find that, prior to Direct Tax Laws (A 87, re-opening could be done under above two fillment of the said conditions alone conferred j
Assessing Officer to make a back assessment, bu the Act [with effect from 1st April, 1989], they nd only one condition has remained, viz., that ng Officer has reason to believe that income h ment, confers juri iction to re-open the re, post-1st April, 1989, power to re-open is m
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Sections 148
ther income which comes dings under n allowance assessment ions 148 to as under:
Officer has has escaped ject to the uch income has escaped ently in the pute the loss as the case fter in this he relevant
Section 147
mendment) o conditions juri iction ut in section are given a t where the has escaped assessment.
much wider.

Howeve words "
would g assessm cannot the con power review; to be b concept behalf o assessm concept abuse
April, 1
there is there is have a support quoted h
1987, P but also Howeve against introduc the gro
Officer.
No.549
"7.2 Am the exp represen
Mack S
ITA er, one needs to give a schematic interpreta
"reason to believe" failing which, we are afraid, S give arbitrary powers to the Assessing Officer ments on the basis of "mere change of opini be per se reason to re-open. We must also kee nceptual difference between power to re to reassess. The Assessing Officer has no ; he has the power to re-assess. But reasses ased on fulfillment of certain pre-condition t of "change of opinion" is removed, as con of the Department, then, in the garb of re-op ment, review would take place. One must t of "change of opinion" as an in-built tes of power by the Assessing Officer. Hence,
1989, Assessing Officer has power to re-open s "tangible material" to come to the concl s escapement of income from assessment. Re live link with the formation of the belief. Ou t from the changes made to Section 147 of hereinabove. Under the Direct Tax Laws (Amen
Parliament not only deleted the words "reason o inserted the word "opinion" in Section 147
er, on receipt of representations from the omission of the words "reason to believe", Par ced the said expression and deleted the word "o und that it would vest arbitrary powers in th
We quote here in below the relevant portion dated 31st October, 1989, which reads as follow mendment made by the Amending Act, 1989, to r ression `reason to believe' in Section 147. --A ntations were received against the omission of Star Marketing Pvt. Ltd.
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A No. 4994/MUM/2024
tion to the Section 147
to re-open ion", which ep in mind eview and o power to ssment has n and if the ntended on pening the t treat the st to check
, after 1st n, provided lusion that easons must r view gets the Act, as dment) Act, to believe"
of the Act.
Companies rliament re- opinion" on he Assessing of Circular ws:
reintroduce number of f the words

`reason
`opinion meaning in a num its omis
Assessin opinion.
amende believe'
writing, however
8.3
The As Bombay High assessment is s what is requir escapement of and but in the of escapement which could tr
High Court in t
Ltd (supra) he
“8. To h accepte assessm
147 to a and con is imper within a year. th do so.
hypothe tangible
Mack S
ITA to believe' from Section 147 and their substitu n' of the Assessing Officer. It was pointed ou g of the expression, `reason to believe' had been mber of court rulings in the past and was well ssion from section 147 would give arbitrary po ng Officer to reopen past assessments on mere
. To allay these fears, the Amending Act, 1989
ed section 147 to reintroduce the expression `ha in place of the words `for reasons to be recorde
, is of the opinion'. Other provisions of the new s r, remain the same."
(Emphasize supplied ssessing Officer has referred the ratio of Court in the case of ECGC (supra) th sought to be reopened within a period of fou red is reason to believe and not an establ f income. This ratio of Hon’ble High Court in the instant case issue is not related to est t of income but the issue is absence of tang rigger process of reason to believe. The Hon the case of Export Credit Guarantee Corpora ld as under:
hold that the Assessing Officer must be deem d what he has plainly overlooked or igno ment order would be to stretch the interpretation a point where the provision would cease to hav ntent. Such an exercise of excision by judicial int rmissible. When an assessment is sought to b a period of four years of the end of the relevant e test to be applied is whether there is tangible
What is tangible is something which is n etical or a matter of conjecture. Something e need not be something which is new. An Asses
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ution by the ut that the n explained settled and wers to the e change of 9, has again as reason to ed by him in section 147, d externally) f the Hon’ble hat when an ur years, then lished fact of is undisputed tablished fact gible material n’ble Bombay ation of India med to have red in the n of Section ve meaning terpretation be reopened assessment material to ot illusory, g which is ssing Officer who ha assessm income
147 wou income within a juri ict
8.4
The Ho
Officer, when arriving at an Officer had ra capital and s assessee, made the ratio of th applied over th
8.5
Thus, r
Court in the reopening bas tangible mate the reassessm accordingly all 6.1 Similarly, in the ordinate Bench has r
Court in the case of and held that ‘chang period of four years
The relevant finding o
“9.6
In view
Court, it is set and informati passing the or which is not p
Mack S
ITA as plainly ignored relevant material in arriv ment acts contrary to law. If there is an esca in consequence, the juri ictional requirement uld be fulfilled on the formation of a reason to b has escaped assessment. The reopening of the a period of four years is in these circumstan tion.”
on’ble High Court has justified reopening by he has plainly ignored the relevant ma assessment order, but in the instant case aised specific queries on the issue of incre hare premium and after examining the e no addition in original assessment proc he decision of the Hon’ble High Court (supr he facts of the instant case.
respectfully following the finding of the Hon case of Kelvinator of India Ltd(supra), w sed on the change of opinion without the rial, is not permitted in law and according ment proceeding. The grounds of cross o lowed.”
e case of Union Bank of India referred to the decision of the H
CIT vs. Kelvinator of India L ge of opinion’ cannot be allowed from the end of the relevant as of the Tribunal(supra) is reprodu w of the above decision of the Hon’ble Juri ttled that reopening of the assessment on ion which was already available on the riginal assessment order, amounts to chang permitted in law. Further, In CIT vs. Kelvin
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ving at an apement of t of Section believe that assessment nces within the Assessing aterial while the Assessing ease in share reply of the ceedings, thus ra) cannot be n’ble Supreme we hold that ere being any gly, we quash objection are (supra) the Co-
Hon’ble Supreme
Ltd. 256 ITR 1
even within the ssessment year.
uced as under:
dictional High the material record while ge of opinion nator of India

Ltd. 256 ITR 1
a case of reo assessment ye assessment is presumption c application of has been passe confer juri ic without anyth to an authority own wrong. It conferment o reassessment p by the depar dismissing the “ On go
147 of (Amend two co conferr assessm
April, 1
remain
Assessin assessm
Therefo
Howeve words
147 wo open a which c mind th power review; be bas concep behalf assessm concep of powe
Assessin
“tangib
Mack S
ITA

, the Full Bench of the Delhi High Court wa opening u/s 147 within 4 years from the ear. The Court held that when a regu s passed in terms of section 143 (3) o can be raised that such an order has bee f mind. It was held that if it be held that an ed purportedly without application of mind ction upon the Assessing Officer to reopen th ing further, the same would amount to giv ty exercising quasi-judicial function to take t was held that section 147 of the Act does of power upon the Assessing Officer proceedings upon a mere change of opinio rtment to the Supreme Court in 320 I appeal, held as under:
oing through the changes, quoted above, ma f the Act, we find that, prior to Direc dment) Act, 1987, re-opening could be done onditions and fulfillment of the said cond red juri iction on the Assessing Officer to ment, but in section 147 of the Act [with eff
1989], they are given a go-by and only one c ed, viz., that ...4/- www.taxguru.in - 4
ng Officer has reason to believe that income ment, confers juri iction to reopen the ore, post-1st April, 1989, power to re-open is er, one needs to give a schematic interpre
“reason to believe” failing which, we are af ould give arbitrary powers to the Assessing assessments on the basis of “mere change cannot be per se reason to re-open. We mus he conceptual difference between power t to re-assess. The Assessing Officer has ; he has the power to re-assess. But re-asses sed on fulfillment of certain pre-conditio t of “change of opinion” is removed, as c of the Department, then, in the garb of re ment, review would take place. One mu t of “change of opinion” as an in-built test to er by the Assessing Officer. Hence, after 1s ng Officer has power to re-open, provi ble material” to come to the conclusion
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as considering e end of the lar order of of the Act, a en passed on n order which d would itself he proceeding ving premium benefit of its not postulate to initiate on. On appeal
ITR 561(SC), ade to Section ct Tax Laws e under above ditions alone make a back ffect from 1st condition has - where the e has escaped e assessment.
s much wider.
etation to the fraid, Section Officer to re- e of opinion”, st also keep in to review and no power to ssment has to n and if the contended on e-opening the ust treat the o check abuse st April, 1989, ided there is that there is escapem live link from th hereina
1987, P but also Howeve against re-intro
“opinio the As portion reads a “7.2 A reintro number of the substitu pointed believe past an would g past as fears, t to reint the wor opinion remain
For the appeals as to co
9.7
In our o the Act, for reo by way of eithe the internal assessment me had been cons amount to rev which is not pe
Act. The Asses
Mack S
ITA ment of income from assessment. Reasons k with the formation of the belief. Our view he changes made to Section 147 of the A above. Under the Direct Tax Laws (Amen
Parliament not only deleted the words “reaso o inserted the word “opinion” in Section 14
er, on receipt of representations from th t omission of the words “reason to believe oduced the said expression and delete on” on the ground that it would vest arbitra ssessing Officer. We quote hereinbelow n of Circular No.549 dated 31st October, as follows:
mendment made by the Amending Ac duce the expression `reason to believe' in Se r of representations were received against words `reason to believe' from Section 1
ution by the `opinion' of the Assessing Of d out that the meaning of the expression
' had been explained in a number of court r nd was well settled and its omission from give arbitrary powers to the Assessing Offic ssessments on mere change of opinion. T the Amending Act, 1989, has again amended troduce the expression `has reason to believ rds `for reasons to be recorded by him in wr n'. Other provisions of the new section 1
the same.”
e afore-stated reasons, we see no merit s filed by the Department, hence, dismissed w osts.”
opinion, after completion of the assessment opening of the assessment, there has to be er information received from the external so source and without such trigger reope erely to relook into the assessment on the sidered during the regular assessment proc view of the assessment order by the Asse ermitted in law under the provisions of secti ssing Officer can only reassess the assessm
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must have a w gets support ct, as quoted ndment) Act, on to believe”
47 of the Act.
he Companies
”, Parliament ed the word ary powers in the relevant
1989, which ct, 1989, to ection 147.--A the omission
47 and their fficer. It was n, `reason to rulings in the m section 147
cer to reopen
To allay these d section 147
ve' in place of riting, is of the 47, however, in these civil with no order u/s 143(3) of some trigger ource or from ening of the issues, which ceedings, will essing Officer, ion 147 of the ent wherever income escape him. In view decision of the Ltd. (supra) an the Ld. CIT(A) the reassessme assessee is acc
6.2 In view of the a need to be examined assessment proceed specific issue of th expenses u/s 37(1) o deemed rental under query raised u/s 14
u/s 143(3) of the Ac called detail of maint
Accordingly, the ass
(Paper Book page 7
charges of the rehab responsibility of the handed over to releva
25, the assessee h maintenance expense of these facts, it is r the AO in instant cas
2. The reasons
Mack S
ITA ed assessment, and not the review the ord of the above discussion and respectfully f e Hon’ble Bombay High Court in the case of nd Castrol India Ltd. (supra), we set aside t on the issue of validity of the reassessment a ent proceedings. The ground No. 2 of the a ordingly allowed.”
above decisions, we are of the d in the instant case whether dings, the Assessing Officer he allowability of the buildin of the Act despite allowing the de r the provisions of section 24 of 2(1) of the Act during the regu ct (Paper Book page 3), the A tenance expenses of slum/rehab sessee in its submissions da
7) also provided justification fo b building on the ground that assessee till such slum/rehab ant slum dwellers society. On p has provided details of the es to the tune of Rs.1,98,50,20
relevant to reproduce the reaso se as under:
for reopening of assessment recorded are as Star Marketing Pvt. Ltd.
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A No. 4994/MUM/2024
der passed by following the of HDFC Bank the finding of and we quash appeal of the opinion that it r in the original examined the ng maintenance eduction @ 30%
f the Act. In the ular assessment ssessing Officer b buildings only.
ted 28.12.2015
or maintenance t same was the b building were paper book page slum building
7/-. In the light ons recorded by s under:-

"On verification
F.Y.2012-13 re claimed Buildi head Other Exp
2. During the deemed rent o purpose. How calculating de
3,42,97,676/- added back wh
3. Allowance of of allowance of vacant flats chargeable to t the above fa
Rs.3,42,97,676
2013-14 within the Income-tax section 147 of t
4. It is pertine
Rs.3,42,97,676
the above, prov
Explanation 1
and the asses where income c
5. In this ca consideration
30.03.2016. S expired in this of the Act is paragraph 2 &
5.1. It is pertin made as stipul to believe in th by an amount o
6.3 On perusal of th
Officer has recorded charges in respect of in-trade was allowed of section 24(a) of Mack S
ITA n of the financials submitted with annual elevant to A. Y.2013-14, it is observed that ing Maintenance Charges of Rs. 3,42,97,67
penses in the Profit and Loss Account.
assessment additions were made mainly n vacant flats, and interest disallowed bein wever, deduction w/s. 24(a) @ 30% was eemed rent thus building maintenance c claimed in the Profit and Loss Account sho hile calculating business income.
f building maintenance charges of Rs. 3,42,9
f deduction u/s. 24(n) @ 30% on account of d would tantamount to double deduction.
tax of Rs.3,42,97,676/- has escaped assessm cts, I have a reason to believe that t
6/- chargeable to tax has escaped assess n the meaning of clause (c) of Explanation-2 o x Act, 1961 and is also covered by the Ex the Act.
ent to mention here that building maintena
6/- chargeable to tax has been under asses visions of clause (c) of Explanation-2 of sectio to section 147 of the Act is applicable to fa ssment year under consideration is deemed chargeable to tax has escaped assessment.
ase a return of income was filed for th and regular assessment u/s. 143(3) w ince, 4 years from the end of the relevan case, the only requirement to initiate procee reason to believe which has been recorde
4).
nent to mention here that in this case an as lated u/s. 2(40) of the Act. However, as discu his case income chargeable to tax has been u of Rs. 3,42,97,676/-."
he reasons recorded, we find tha d that once the deduction fo f flats of the commercial buildin at the rate of 30% of the deeme f the Act, the allowance o
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l report for the t assessee had 76/- under the on account of ng non-business allowed while charges of Rs.
ould have been 7,676/- in view deemed rent on Thus income ment. In view of the amount of sment for A. Y.
of section 147of xplanation 1 to ance charges of ssed. In view of on 147 and also cts of this case d to be a case he year under was made on t year has not edings u/s. 147
ed above (refer ssessment was ussed in reason under assessed at the Assessing or maintenance ng held as stock- ed rent in terms f the building maintenance charges the nature in the in reasons recorded, we opinion’ by the Asses charges. The buildi rehab/slum building assessee as business for the purpose of assessee treated the the AO treated the s
Act related to head thirty percent expens issue of allowability by the Assessing Offi proceedings. The A maintenance expense not examine into th expenses claimed in treated as stock-in-t the Assessing Office concluded that no sp
Officer for allowance
Mack S
ITA s claimed in the profit and loss ncome escaped assessment. In e have to examine whether there ssing Officer in respect of buildi ing maintenance expenses de g and commercial building was s expenditure incurred wholly business in the return of inc commercial flats a part of its same as stock-in-trade and in the case of Ansal housing and c taxmann.com 238(Delhi) com e (ALV) of those flats invoking of income from house proper ses as repairs and maintenance of maintenance expenses had icer in any of the queries raised
Assessing Officer has merely es in respect of slum/rehab bu he justification of the buildin n respect of commercial build rade and deemed rent had bee er in respect of vacant flats.
pecific query has been raised b of building maintenance charge
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account was in n view of above e is a ‘change of ng maintenance ebited for both claimed by the and exclusively come filed. The investment but view of Hon’ble construction ltd mputed deemed provisos of the rty and allowed e. Evidently, this not been raised d in assessment examined the uildings and did ng maintenance ding which was en computed by Since we have by the Assessing es vis-à-vis 30%

deduction of the dee computing income fro by the assessee are n accordingly the issu instant case.
6.4 However, we no any information of t our opinion, the word some material or info to believe that asse claimed loss or deduc in the case of Ganga
(SC) has held that A chargeable to tax a believe’ are stronger
Court in the case of 236 ITR 34 (SC) hel of the reassessment whether there was pr the Department coul
Bajrang Lal v. ITO [
exist reasons for hold the question whethe courts to decide. Fur
Mack S
ITA emed rent for the maintenance om house, the ratio of the decisi not applicable over the facts of i e of ‘change of opinion’ does n te that the Assessing Officer ha the material for reopening the d ‘reason to believe’ suggest tha ormation in possession of the A essee has either under stated ction as allowance. The Hon’ble
Saran & Sons (P.) Ltd v. ITO [1
AO must have reasons to belie as escaped income. In the wo than word ‘is satisfied’. The H f Raymond Woollen Mills Ltd.
ld that in determining whether proceedings was valid it has rima facie some material on the d reopen the case. In the case o
[1993] 203 ITR 456 (SC) held ding believe for escapement of in r reasons adequate or sufficien rther the Hon’ble Delhi High Co
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e charges while ions relied upon nstant case and not arise in the s not referred to assessment. In at there must be Assessing Officer his income or Supreme Court
1981] 130 ITR 1
eve that income ord ‘reasons to Hon’ble Supreme
. v. ITO [1999]
commencement only to be seen e basis of which of Phool Chand that there must ncome although nt is not for the ourt in the case of SMCC Constructi held that where the r any material came to which the Assessing that the expenditure when the recorded assessee were not ba and were in realm o set aside. The Tribun
LTD (supra) has als whether external o material, will be in rather than reassess
India, the Tribunal trigger by way of e source or from the reopening of the asse on the issues which h assessment proceedi assessment which is 6.5 We find that in any information wh source. Though inter
Officer in earlier
Mack S
ITA ion v. ACIT [2014] 220 Taxm reasons to believe recorded does o the knowledge of the Assessi g Officer could have formed rea referred to not crystallized duri reasons to believe that incom ased on any direct or circums r mere suspicion, thus, the rea nal in the case of M PALLONJI E so observed that unless there or internal reopening without the nature of the review of t sment. Similarly, in the case of has also observed that there h either information received fro internal source and in absenc essment is merely to relook into had already been considered du ings and same will amount to not permitted in law.
instant case the reasons record hether from the external sou rnal source may be any finding o or subsequent assessment
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man 354 (Delhi) s not referred to ing Officer from asonable believe ing the year and me had escaped tantial evidence assessment was ENERPRISES P.
is any material t any tangible the assessment f Union Bank of has to be some m the external ce such trigger, the assessment uring the regular o review of the ded do not refer rce or internal of the Assessing years or any information received audit objections were such reference to sou reopening of the asse
6.6 In the facts dis addition for deemed maintenance expens proceedings u/s 143
maintenance expense in the nature of error which could have reassessment proceed
6.7 In view of the sustainable in law a proceedings.
6.8 As far as groun
Ld. counsel for the succeeding assessme on the identical grou to Rs.2,13,34,586/- raised by the assess made on account reassessment order f
Mack S
ITA d either from the audit object e duly accepted by him. But in urce of information in the reason essment cannot be sustained.
scussed above, we find it is the rent in respect of commercial fl es at the rate of 30 percentile
3(3) of the Act, but omitted es debited in profit and loss acc r on the part of the AO in the as subject to revision proceedin dings.
aforesaid discussion, the reass and accordingly we quashed th d Nos.5 and 6 of the appeal are e assessee submitted that in ent year 2014-15, the assessmen nd of building maintenance cha allowed as double deduction bu see against the reassessment n of building maintenance c for assessment year 2014-15. T
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tions and such absence of any ns recorded, the e AO who made lats and allowed e in assessment to disallow the count. This was ssessment order gs rather then sessment is not he reassessment e concerned, the the immediate nt was reopened arges amounting ut on objections no addition was harges in the The Ld. counsel for the assessee cont present assessmen assessment year an quashed on the princ
Supreme Court in th
ITR 321 (SC).
6.9 We have heard r relevant material on for assessment year page 40. On perusal the assessment year four years from the e case of beyond four y assessee to disclose the assessment is to 14, the reassessmen relevant assessment years are entirely d addition in the asses for the reason that n year 2014-15 followin
6.10 In view of afore in the instant asse discussed above. T
Mack S
ITA ested that there is no change in nt year vis-à-vis immediate nd thus the reassessment or ciple of consistency as laid down he case of Radhasoami Satsa rival submission of the parties a record. We also examined the re r 2014-15 which are available l of the said reasons recorded,
2014-15 reopening has been m end of the relevant assessment years, the condition of failure on all material facts fully and tru o be satisfied. Since in assessm nt is within the four years from year and therefore facts of the different. Hence we are of th ssment year 2013-14 cannot be no addition has been made in ng the principle of consistency.
said discussion, the reassessm essment can’t be sustained f
The relevant ground challeng
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n the facts in the ely succeeding rder should be n by the Hon’ble ang (1992) 193
and perused the easons recorded on paper book we find that in made beyond the year and in the n the part of the ly necessary for ment year 2013- m the end of the two assessment he opinion that e deleted merely the assessment ment proceedings for the reasons ging validity of reassessment accor reassessment itself a addition on merit is are adjudicating grou
7. In the result, th
Order pronoun (SUNIL KUMA
JUDICIAL M
Mumbai;
Dated: 21/01/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

Mack S
ITA rdingly allowed. Since, we h as non sustainable in law, the rendered merely academic, an unds raised on merit of addition he appeal of the assessee is partl ced in the open Court on 21/0
/-
S
AR SINGH)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

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have held the adjudicating of nd therefore, we s.
ly allowed.
01/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai