THE PR. COMMISSIONER OF INCOME TAX-4 vs. M/S HOME LINKERS E-SERVICES PVT. LTD.

$~1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 90/2017, C.M. APPL.3696/2017

THE PR. COMMISSIONER OF INCOME TAX-4 ..... Appellant

Through : Sh. Puneet Rai, Jr. Standing Counsel.

versus

M/S HOME LINKERS E-SERVICES PVT. LTD...... Respondent

Through : None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI

O R D E R %

22.03.2017

In this appeal under Section 260A of the Income Tax Act, 1961, the Revenue claims to be aggrieved by an order of the Income Tax Appellate Tribunal (ITAT). The ITAT upheld the assessee’s contentions and held that the reassessment was not warranted. The reassessment notice dated 20.02.2014 stated as follows: "Return of income declaring a loss of Rs.43,86,858/- has been filed on 31.10.2001. The business of the assessee is provision of E-Commerce based services to Us (sic) customers in lndia and abroad. This business is essentially carried on website. In the audited P&L ac has debited a sum of Rs.4,50,981/-on account of website development. The same is a capital expenditure and hence not an allowable deduction. Secondly, the assessee has also claimed the deferred revenue expense of Rs.23,37,043/-, which is not an allowable deduction under the FT Act.

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I have reasons to believe that income to the tune of Rs.64,88,024/- has escaped assessment. Issue notice u/s 148 of the IT Act, 1961." The ITAT followed the ruling of the Supreme Court in CIT v. Kelvinator of India Ltd. 320 ITR 561 and the judgment of this Court in CIT v. Orient Craft Ltd. 354 ITR 536 and held as follows: “We have carefully considered the rival contentions as well as the order of the lower authorities on the basis of the reasons recorded which are reproduced above. Certainly it shows that reopening is made only on the basis of reappraisal of existing material though assessment is made u/s 14311) of the Act. There is no whisper in the reason recorded of any tangible material which came into the possession of the AO subsequent to the issue of intimation and therefore it reflects arbitrary exercise of power conferred uls 147 of the Act. Hon'ble Supreme Court of lndia in the case of CIT Vs. Kelvinator lndia Ltd. [Supra) and Hon'ble Delhi High Court in the case of CIT Vs. Orient Craft Ltd [supra) both the decision are on similar line and therefore respectfully following the same the appeal of the assessee succeeds against the assumption of jurisdiction u/s 147 of the act without any tangible material on ground of reopening u/s 47 of the Act not in accordance with law. Therefore, we reverse the finding of the learned Commissioner of Income-tax (Appeals) and hold that notice u/s 148 of the Act and reasons recorded u/s 147 are not based on any tangible material and hence notice u/s 148 is quashed. Therefore ground No.1 of the appeal is allowed.”