DCIT, CENTRAL CIRCLE-32, DELHI, DELHI vs. BSES YAMUNA POWER LIMITED, NEW DELHI
Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI VIMAL KUMARDCIT, Central Circle-32, Delhi.
PER VIMAL KUMAR, JM:
The appeal filed by the Revenue is against order dated 23.05.2025 of the Learned Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as ‘the Ld. CIT(A)’] passed u/s 250 of the Income Tax Act, 1961,
[hereinafter referred to as ‘the Act’] arising out of assessment order dated 20.12.2016
of Ld. Assessing Officer/DCIT, Circle-5(1), New Delhi (hereinafter referred to as ‘the Ld. AO’ ) u/s 147/143(3) of the Act for Assessment Year 2009-10. 2. Brief facts of the case are that original return of income was filed by assessee on 29.09.2009 u/s 139(1) of the Act after adjusting brought forward losses of DCIT vs. BSES Yamuna Power Ltd.
Rs.9,93,48,282/-. It was revised on 25.03.2011 declaring an income of Rs. Nil after adjustment of brought forward losses of Rs.11,72,59,616/-. The assessment was completed at the assessed income of Rs. Nil vide order dated 23.12.2011. Subsequently, appeal effect was given u/s 250/143(3) of the Act at income of Nil.
Notice u/s 148 of the Income Tax Act was issued on 03.03.2016 after duly recording reasons and taking appropriate approval for doing so. In response to the notice issued, the assessee has stated that the revised return of income filed on 25.03.2011
may please be treated as return u/s 148 of the Income Tax Act, 1961. In compliance to the statutory notice Shri Praveen Salwan, VP (finance) and Shri V.K. Choudhary,
CA & AR appeared. On the request of the assessee detailed reasons were supplied to the AR of the assessee. On completion of proceeding, Ld. AO vide order dated
20.12.2016, made additions (i) Disallowance of Excess claim of depreciation of Rs.15,79,00,000/-, (ii) Capitalization of personnel cost Rs.7,35,38,670/- and Revised book profit of Rs.77,25,65,044/-.
Against order dated 20.12.2016 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was allowed vide order dated 23.05.2025. 4. Being aggrieved, Department of Revenue preferred present appeal on following grounds: “1. Ld. CIT(A) erred in not considering that case of the assessee has been reopened correctly for AY 2009-10 by issuing notice u/s 148 of the Act as per relevant provisions of the Income-tax Act, 1961. 2. Ld. CIT(A) erred in not considering the fact that the one of the issues on which case of the assessee has been reopened by issuing notice u/s 148 of the Act for AY 2009-10 e non-capitalization of personnel costs has been confirmed by CIT(A) in assessment order passed u/s 143(3) of the Act for AY 2010-11. 3. Ld. CIT(A) erred in not considering the fact that the assessee has not disclosed the fact that directives of Delhi Electricity Regulatory Commission (vide its tariff order dated 26.06.2003) to take 10% of personnel cost for capitalisation whereas assessee has taken the same @ 5% for capitalisation cost thus the said information covered 4. Ld. CIT(A) erred in not considering the fact that the information was received from Delhi Electricity Regulatory Commission (DERC) dt. 23.02.2008 that assessee has made extensive purchase of capital goods at exorbitant price is tangible material suggesting the escapement of income and not a mere change of opinion which shows that case of the assessee can be reopened u/s 147 of the Act.
That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.
6 That the grounds of appeal are without prejudice to each other.
That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.”
The Ld. Authorized Departmental Representative submitted that Ld. CIT(A) erred in not considering that case of the assessee has been reopened correctly for AY 2009-10 issuing notice u/s 148 of the Act. Ld. CIT(A) erred in not considering the fact that the case of the assessee was reopened for Assessment Year 2009-10 i.e. non-capitalisation of personnel costs has been confirmed by CIT(A) in assessment order passed u/s 143(3) of the Act for AY 2010-11. Ld. CIT(A) erred in in not considering the fact that the assessee has not disclosed the fact that directives of Delhi Electricity Regulatory Commission (vide its tariff order dated 26.06.2003) to take 10% of personnel cost for capitalisation whereas assessee has taken the same @ 5% for capitalisation cost thus the said information covered under failure on part of assessee to disclose true complete and true materials mandated condition for reopening as mentioned in 1 proviso to Section 147 of the Act. Ld. CIT(A) erred in not considering the fact that the information was received from Delhi Electricity Regulatory escapement of income and not a mere change of opinion which shows that case of the assessee can be reopened u/s 147 of the Act.
Ld. Authorized Representative for respondent assessee submitted that in the present case, reassessment proceedings under section 147/148 of the Act were initiated by the AO vide notice dated 03.03.2016 i.e., much beyond the period of 4 years and almost at the fag-end of the overall limitation period of 6 years.
1 In the reasons for reopening of assessment, the AO alleged that the income of the assessee escaped assessment, inter allia, on account of the following four issues viz.: a) Disallowance of Depreciation on Energy meters - Denial of excessive claim of depreciation to the extent of Rs. 15,79,00,000 on account of alleged inflated cost of capital goods purchased from Reliance Energy Limited (REL) during FY(s) 2004-05 and 2005-06 [AYs 2005-06 and 2006-071. In the reasons, the assessing officer, solely, on the basis of order dated 23.02.2008 passed by the Delhi Electricity Regulatory Commission ('DERC"), went on to hold that the aforesaid energy meters were purchased by the assessee from REL at inflated/ exorbitant prices in earlier years. Basis that, the assessing officer held that excess depreciation was claimed by the assessee qua such energy meters in the relevant assessment year, resulting in escapement of income. b) Addition on account of alleged short-capitalization of personnel cost vis-à-vis the capitalization permitted by the DERC.
c) LPSC and Power Theft- The assessing officer held that LPSC and Power Theft billing is taxable on accrual basis, whereas the same is being offered for tax on receipt basis, resulting in escapement of income.
d) Provision on account of Legal Claims - The assessing officer heid the provisions to be in the nature of unascertained liability required to be added back in terms of provisions of Explanation 1(c) to section 115JB(2) of the Act, for the purpose of computation of book profit.
2 The reassessment proceedings and consequent reassessment order dated 20.12.2016 passed under section 147/143(3) of the Act are without juri iction, bad in law and void ab initio, for the following reasons. (a) Re-assessment is barred by limitation of 4 years in terms of provision to section 147 of the Act:
(b) Re-assessment has been initiated on mere change of opinion, in the absence of any new tangible material/ information available with the assessing officer.
(c) There are no valid reasons to believe to allege escapement of income in the hands of the assessee;
(d) Re-assessment was completed without providing complete reasons, in particular the sanction obtained;
(e) Re-assessment is barred by limitation in terms of section 149 of the Act.
3 Aforesaid juri ictional issue i.e., validity of initiation of reassessment proceedings on identical facts, stands squarely covered in favour of the assessee by the decision of Hon'ble co-ordinate Bench of the Tribunal in the case of assessee's sister concern viz. BSES Rajdhani Power Limited for AY 2009-10 vide order dated 29.01.2025. Copy of order dated 29.01.2025 is at page No.1 to 9 of compilation.
4 It is further submitted that the issue in question was again decided in favour of the assessee by subsequent decision of Hon’ble Co-ordinate Bench of the Tribunal in the case of the assessee and its sister concern viz. BSES Rajdhani Power Limited for AYs 2007-08 & 2008-09 vide consolidated order dated 16.04.2025 [bearing ITA Nos.4850 to 4853/Del/2017 wherein the Tribunal took note of its earlier decision dated 29.01.2025. Copy of order dated 16.04.2025 is at page No.10 to 46 of compilation.
From examination of record in light aforesaid rival contention, it is crystal clear that Ld. CIT(A) vide order dated 23.05.2025 setting aside the order dated 20.12.2016 of Ld. AO making additions of Rs.15,79,00,000/-, Rs.7,35,38,670/- and Rs.77,25,65,044/-. A co-ordinate Bench of Tribunal in assessee’s sister concern case for Assessment Year 2009-10 in ITA No.1843/Del/2023 dated 29.01.2025 held as under: “4. We have given our thoughtful consideration to both the parties reiterating their respective stands against and in support of the impugned reopening.
Learned CIT(DR), more particularly, invites our attention to the reopening reasons discussed in para 3 onwards of the assessment order dated 20.12.2016 that since the assessee was found to have inflated the corresponding acquisition of fixed assets purchased in the preceding assessment years itself, corresponding depreciation claim thereupon raised herein, deserves to be disallowed as a necessary corollary thereof.
The assessee, on the other hand, inter alia, submits that it had filed its return on 28.09.2009 under section 139(1) of the Act. declaring loss of Rs. 154,39,15,018- which stood assessed in a regular assessment under section 143(3) of the Act framed on 23rd December, 2011. 7. We are further taken to the learned Assessing Officer's reopening reasons as well, wherein, there is not even an iota of allegation against the taxpayer that it had not disclosed the relevant particulars in its returns, the said section 143(3) assessment proceedings "fully" and "truly" in light of section 147 1 proviso, and, therefore, it is prayed that the learned CIT(A)'s detailed discussion quashing the impugned reopening itself be confirmed.
Learned counsel further invites our attention to the assessce's detailed paper- books wherein all the relevant details of facts as well as case lawisi have been duly compiled. Our attention is invited to pages 425 to 436 wherein the tribunal had settled the issue long back in the preceding assessment years 2005-06 and 2006-07 that the foregoing allegation raised at the department's behest of alleged inflated purchases stood decided in assessee's favour, as upheld in hon'ble juri ictional high court's itself dated 14.09.2016. The Revenue could hardly dispute that all these developments took place well before the learned Assessing Officer had set into motion his section 148/147 proceedings. We thus quote Hindustan Liver Ltd. Vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.) that once there is no scope of any addition/deletion or substitution in the reopening reasons recorded by the learned prescribed authority as the same have to be read on standalone basis, the CIT(A) has rightly decided the instant legal issue in assessee's favour and against the department whilst invoking section 147 1st proviso as well as going by the various judicial precedents. The same are hereby upheld in the Revenue's instant appeal which stands rejected in very terms.
This Revenue's appeal is dismissed.” A Co-ordinate Bench of ITAT, Delhi in ITA No.4850 and 4851/Del/2017 and ITA No.4852 and 4853/Del/2017 order dated 16.04.2025 decided in favour of the assessee and its sister concern viz. BSES Rajdhani Power Limited for AYs 2007-08 & 2008-09 vide consolidated order dated 16.04.2025. 8. In view of the above, the issue regarding validity of reassessment proceedings in pursuance to reopening deserves to be decided in favour of the assessee. The grounds of appeal No.1 and 2 being devoid on merit are untenable.
On accounts of decision of legal grounds, grounds No. 3 to 7 taken on merits have become academic are not adjudicated.
In the result, the appeal filed by the Revenue is dismissed. Order is pronounced in the Open Court on 13.03.2026. -/- (S. RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:13.03.2026
*PK, Sr. Ps*