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Dy. CIT-7(3), Room No.615, 6th Floor, Aayakar Bhavan, M. K. Road, Mumbai-400 020 Vs. Tivoli Investment & Trading Co. Pvt. Ltd. 101, Champaklal Industrial Estate, Sion, Mumbai-400 022
August, 12th 2014

         ,         ,                                 

                     ./I.T.A. No. 7713/Mum/2012
                    (   / Assessment Year: 2006-07)

Dy. CIT-7(3),                                Tivoli Investment & Trading Co.
Room No.615, 6th Floor,                      Pvt. Ltd.
Aayakar Bhavan, M. K. Road,                  101, Champaklal Industrial Estate,
Mumbai-400 020                         Vs.   Sion, Mumbai-400 022

     . /   . /PAN/GIR No. AAACT 1591 N
          (  / Revenue)                 :             (   /Assessee)

                               CO No. 32/Mum/2014
                      (Arising out of ITA No.7713/Mum/2012)
                    (   / Assessment Year: 2006-07)

Tivoli Investment & Trading Co. Pvt.         Dy. CIT-7(3),
Ltd.                                         Room No.615, 6th Floor,
101, Champaklal Industrial Estate,           Aayakar Bhavan, M. K. Road,
Sion, Mumbai-400 022                   Vs.   Mumbai-400 020

     . /   . /PAN/GIR No. AAACT 1591 N
         (   /Assessee)                 :             (  / Revenue)

              /Revenue by               :    Shri Ravi Prakash

            / Assessee by               :    Shri Nitesh Joshi

                         /              :    16.05.2014
                  Date of Hearing
                                        :    08.08.2014
          Date of Pronouncement
                                        ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                       Tivoli Investment & Trading Co. Pvt. Ltd.

                                     / O R D E R
Per Sanjay Arora, A. M.:

       This is an Appeal by the Revenue and the Cross Objection (CO) by the Assessee
directed against the Order by the Commissioner of Income Tax (Appeals)-13, Mumbai
(`CIT(A)' for short) dated 10.10.2012, partly allowing the assessee's appeal contesting its
assessment u/s.143(3) r/w s. 147 of the Income Tax Act, 1961 (`the Act' hereinafter) for
the assessment year (A.Y.) 2006-07.

2.     The brief facts of the case are that the assessees', a company engaged in letting
house property and share trading, assessment for the year was framed u/s. 143(3) of the
Act on 29.12.2008 at an income of Rs.194.91 lacs by, inter alia, effecting disallowance
u/s.14A and assessing the house property income at Rs.42,37,301/- (as against the
returned income of Rs.39,06,101/- under the said head). Subsequently, notice u/s.148 was
issued on 23.02.2011, seeking to reopen the assessment on two grounds (copy of reasons
recorded at PB pgs. 22-23):

a)     the annual value of the Sahakar Bhavan property, one of the six properties let
during the relevant year, had been assessed at Rs.9,43,200/- by adopting a rental rate of
Rs.24/- per sq. ft.. The said property, letting of which was accompanied by an interest
free deposit of Rs.3.31 crores, had been assessed at a rental value of Rs.37,25,000/-
u/s.143(3) for A.Y. 2004-05. The annual value would have only witnessed an increase
during the two year period since. There was thus, i.e., even adopting the value as assessed
for A.Y. 2004-05, an escapement of income at least to the extent corresponding to the

b)    maintenance charges paid to the housing society had been claimed at Rs.3,75,755,
which, though inadmissible, had been allowed in assessment, so that there was an
escapement of income to that extent.

Assessment was accordingly made by assessing the income under the head `income from
house property' by making the afore-stated adjustments, allowing deduction u/s. 24(a)
while computing the revised annual letting value (ALV).
       In appeal, the assessee found favour with the ld. CIT(A) on the ground that the
reopening, even within four years, was hit by `change of opinion'. Relying on the
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

decision in the case of Idea Cellular Ltd. vs. Dy. CIT [2008] 301 ITR 407 (Bom), he
argued that once a material with regard to a particular issue was before the Assessing
Officer (A.O.), it could not be said that he had not applied his mind thereto, even if he
chooses not to deal with the same. The A.O. in his view had already considered the facts,
and thus applied his mind, making an addition on the issue under reference. Taking a
different decision on the same set of facts would amount to review, which is not
permissible, and would operate even where the assessment is sought to be reopened
within four years, which is a settled position in law, relying on the decision in the case of
CIT vs. Kelvinator of India Ltd. [2002] 256 ITR 1 (Del) (FB), since affirmed by the apex
court in CIT vs. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC). The reopening was
accordingly held as bad in law, and the reassessment quashed. Aggrieved, the Revenue is
in appeal. The assessee has also preferred a CO, which is largely supportive, besides
agitating the issue/s on merits.

Revenue's Appeal (in ITA No. 7713/Mum/2012)

3.     We have heard the parties, and perused the material on record. The reassessment
proceedings having been initiated on two grounds (listed at para 2(a) & (b) (supra)), we
shall proceed ground-wise. This is for the simple reason that the proceedings shall hold
even if sustained on any one of the reasons stated in the statement of the reasons
recorded, i.e., is held, in the facts and circumstances of the case and in law, as
constituting a valid ground for reopening the assessment. This, incidentally, we observe
to be the principal flaw in the impugned order; the entire discussion, recording his
deliberations and findings by the ld. CIT(A), being ostensibly with reference to the first
issue, i.e., the under assessment of income from the Sahakar Bhavan property (refer para
2.3/PB pgs. 6-10 of the impugned order).

Ground # 1 (Income from house property - Sahakar Bhavan property):

3.1    The assessee's case is that the matter was duly enquired into by the A.O. while
framing the original assessment; in fact, even subject to addition upon finding the
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

returned income, based on agreement, to be lower than the rent being fetched by other
properties in the same building with the same area by other, independent persons, and
toward which reference was made during hearing to the assessee's letters dated
10.12.2008 (PB pgs.11-12) and 24.12.2008 (PB pgs. 13-17). So much so that even the
assessment order u/s. 143(3) for A.Y. 2004-05 was furnished during the said assessment
proceedings (PB pgs.4-9). The A.O. had, thus, formed a definite view upon consideration
of all the relevant facts. The subsequent invocation of the assessment for A.Y. 2004-05,
confirmed in first appeal (PB pgs. 42-45), would be, under the circumstances, only a
change of opinion, precluding reassessment. Reliance was placed on Aroni Commercials
Ltd. vs. Dy. CIT [2014] 362 ITR 403 (Bom) and Cartini India Ltd. vs. Addl. CIT [2009]
314 ITR 275 (Bom).
       The Revenue's case, on the other hand, is that there has been without doubt no
consideration of the assessment of the income from the relevant property for A.Y. 2004-
05, which is relevant and material. There was, thus, sound reason to believe escapement
of income, based on cogent material and, accordingly, no scope for applying the concept
of `change of opinion'. Reliance stands placed on a host of decisions, as below, besides
on the decision in the case of CIT vs. Usha International Ltd. [2012] 348 ITR 485

Indian Hume Pipe Co. Ltd. vs. Asst. CIT [2012] 348 ITR 439 (Bom);
Dalmia (P.) Ltd. vs. CIT [2012] 348 ITR 469 (Del);
Sri Sakhi Textiles Ltd. vs. Jt. CIT [2012] 340 ITR 144 (Mad);
Innovative Foods Ltd. vs. Union of India [2013] 356 ITR 389 (Ker); and
Nancy Krafts P. Ltd. vs. Asst. CIT [2011] 10 ITR (Trib) 193 (Del).

3.2    We observe no dispute or quarrel on principle. A `change of opinion' would
preclude reassessment, whether within or outside the four year time limit (from the end of
the relevant assessment year). This, as explained by the apex court in Kelvinator of India
Ltd. (supra), is the in-built test to check against arbitrary use of the power of assessment,
which includes reassessment. The same stems from the principle that the assessing
                                        ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                       Tivoli Investment & Trading Co. Pvt. Ltd.

authority has no power to review, which is conceptually at variance with the power to
reassess. The moot question, however, would be of what constitutes a `review' or `change
of opinion'. In our view, and which corresponds with that of the first appellate authority
itself, it would be reappraisal of the facts of the case. When, however, a new fact comes
into picture, and there is a change in the factual matrix of the case consequent thereto, it
cannot be said to be a review, which predicates examining the same factual matrix, which
may lead to a view either in agreement or in modification of that formed earlier. It is well
settled that even one fact can change the whole complexion and lead to a change of
opinion formed in the absence of such fact or its consideration (refer: Padmasundara Rao
(Decd.) v. State of Tamil Nadu [2002] 255 ITR 147 (SC)). This would not amount to a
mere change of opinion, but a fresh opinion in light and consideration of the new,
emerging position. The same would, where the said opinion is as to escapement of
income, qualify to be a `reason to believe', which is itself a legislative check against any
arbitrariness in reopening concluded assessments. The proposition is unexceptional, if not
axiomatic, recommending itself to ready acceptance. If not so understood, any
consideration of any matter, irrespective of facts, would degenerate into or be liable to be
described as a `review', defeating the very concept and notion of `reason to believe'
controlling and placing a limitation on the power of assessment. The same, besides being
inconsistent with the meaning of the word `review', both as understood in common
parlance as well as judicially, would distort the meaning and sense of the word. The
decision of the ld. CIT(A) is also based on the said understanding in-as-much as it is
based on there being an examination and consideration of all the relevant material by the
A.O. in the original assessment proceedings, including the assessment for A.Y. 2004-05,
so that there is clarity and no dispute on this aspect of the matter, i.e., that only
consideration of the same material would amount to a review. Why, for example,
speaking again in context of the present case, the A.O. may receive information, post
assessment, of similar property/s fetching a much higher rent for the relevant year than
that assessed in the assessee's case. The same would definitely lead to a bona fide reason
as to escapement of income, leading to initiation of reassessment proceedings. The said
                                       ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                      Tivoli Investment & Trading Co. Pvt. Ltd.

example is para materia with what actually obtains in the present case. The position in
fact stands judicially settled by the decision by the apex court in Asst. CIT vs. Rajesh
Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 519 (SC), wherein the `reason to believe'
stands stated as the sole arbiter and deciding factor where an assessment, whether
u/s.143(1) ­ which is not assessment at all, so that there is no question of forming an
opinion, or u/s.143(3), is sought to be `reopened' within four years (from the end of the
relevant assessment year). The same stands confirmed by the apex court in Kelvinator of
India Ltd. (supra); it adding formation of opinion based on materials. Though the term
`re-view', a composite of the words `re' and `view', itself signifies its meaning as a
reexamination of the subject matter of examination, the matter is not res integra, having
been considered by the apex court per its celebrated decision in Kalyanji Mavji & Co. vs.
CIT [1976] 102 ITR 287 (SC). The hon'ble court, after an extensive review of the
precedents, set out the following tests and principles to determine the applicability of
section 34(1)(b) (of the 1922 Act), which corresponds to the main provision of section
       `Section 34(1)(b) would apply to the following categories of cases:
       (1) where the information is as to the true and correct state of the law
           derived from relevant judicial decisions;
       (2) where in the original assessment the income liable to tax has escaped
           assessment due to oversight, inadvertence or a mistake committed by
           the Income-tax Officer;
       (3) where the information is derived from an external source of any kind:
           such external source would include discovery of new and important
           matters or knowledge of fresh facts which were not present at the time
           of original assessment;
       (4) where the information may be obtained even from the record of the
           original assessment from an investigation of the materials on the
           record, or the facts disclosed thereby or from other enquiry or research
           into facts or law.
           Where, however, the Income-tax Officer gets no subsequent
       information, but merely proceeds to reopen the original assessment without
       any fresh facts or materials or without any enquiry into the materials which
       form part of the original assessment, section 34(1)(b) would have no
                                           ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                          Tivoli Investment & Trading Co. Pvt. Ltd.

The hon'ble court clarified that the information or material may be external to or a part of
the record. It was further explained that the information though must come in the
possession of the A.O. after the assessment, but even if it is such that it could have been
obtained during the assessment itself, i.e., from an investigation of the materials on
record, or the facts disclosed thereby or from other enquiry or research into facts or law,
but was not in fact obtained, the jurisdiction of the assessing authority is not affected.
True, one could argue that the word `information' is absent in the extant law, but then the
law has been thus only further relaxed and, in any case, the interpretation accorded by the
hon'ble court, which itself represents a continuum, signifies the purposive manner in
which it reads the provision. (also refer para 6(a))

3.3      The question before us, therefore, is primarily factual; its determinants being as:

      a) Whether the `new' or `fresh' fact was considered earlier or not, i.e., at the time of
         original assessment, so that where it was, it is the case of a review, else not;
      b) Whether the fresh fact leads to `reason to believe' escapement of income; and
      c) Whether the said reason/s stands duly recorded, and the due process observed
         prior to the issue of the reassessment notice.

We shall consider each of the afore-stated elements. We find no case to hold that there
has been a consideration of the fact of the assessment of the rental value of the very same
property for the year preceding the immediately preceding year at Rs.105/- per sq. ft., i.e.,
as against Rs.16/- per sq. ft. returned by the assessee for the current year. There is nothing
to show of the said fact having been considered. The assessment order for A.Y. 2004-05
is, thus, the relevant tangible material. There is no reference to either the assessment for
A.Y. 2004-05, or the material on which the same was based, or otherwise of the
assessee's case/explanation qua the same, on record. This, despite the fact that the
assessee not only raised preliminary objections to its reassessment (PB pgs.24-25), but
also furnished submissions in the matter during the course of the assessment proceedings,
to which reference was made by the ld. Authorized Representative (AR) during hearing.
The finding by the ld. CIT(A), though not specifically with reference to the assessment
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

order for A.Y. 2004-05 (or the material on which the said assessment is based), is
inferable and implicit in his finding of all the relevant material having been considered by
the A.O. at the time of the original assessment, which we find to be de hors any material
on record. In fact, it would be beyond all reason to suggest or contend otherwise, i.e., that
the A.O. accepted the rental value at Rs.24/- per sq. ft. despite definite material
evidencing it at Rs.105/- per sq. ft., and that too without any explanation or basis,
inasmuch as it would be beyond all bounds of reasonableness and rationality or
probabilities of human conduct. In fact, such an acceptance on the A.O.'s part would be
grotesque, if not mala fide, making it incredulous, almost bizarre, to state so,
disqualifying the said opinion as an opinion in the eyes of law, even as, as afore-stated,
there is no whisper or even an iota of evidence to suggest a consideration of the said
material by him in framing the original assessment. The impugned order, imputing so,
inasmuch as the ld. CIT(A) does not state so explicitly, is thus itself without any
application of mind, being sub silentio in the matter, so that it does not inform us as to
the basis for the ld. CIT(A) in so stating. Rather, considering that the said material itself
forms the basis of the ground for reopening the assessment, one would have expected the
first appellate authority to have been more circumspect, i.e., than one normally is or is
wont to, and issue his finding/s in the matter upon due consideration of the material on
record, while we find he does so most causally, taking it, i.e., the consideration of the said
material by the A.O., as a `given'. It does not perhaps even occur to him that in doing so
he is implicitly holding the A.O. guilty of capriciousness and a conduct contumacious
and malicious, i.e., besides dereliction of duty. The most we are able to concede, i.e., on
the basis of the material on record, is that the A.O. in not considering or failing to
consider the materials before him in the form of assessment order for A.Y. 2004-05
assessing the rental value of the very same property at Rs.105/- per sq. ft., had committed
a lapse. Nothing more. As we see it, or as far as we may able to see, it is a clear case of
omission, and which, given the persuasive nature of the materials, would qualify to be
construed as a `mistake'. Does the law not envisage the assessing authority committing a
lapse, which is an incident and concomitant of human endeavor? Does the law estopp the
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

A.O. from correcting a mistake or lapse or omission? Does the law not provide a course
correction in such a case? Can an omission be considered as fatal, and the assessee
allowed advantage thereof? The answers to this and such like questions that arise are
evident from a mere perusal of the Act and its scheme, containing several provisions in
this regard, viz. sections 147, 154, 254(2), 263, 264, etc. The apex court in Honda Siel
Power Products Ltd. vs. CIT [2007] 295 ITR 466 (SC) clarified that the power to rectify
is inherent to the power of adjudication. The apex court in Kalyanji Mavji And Co.
(supra), listed oversight, inadvertence or mistake committed by the A.O. as among the
test, and principles that would make section 34(1)(b) (of the 1922 Act), i.e., where the
reopening of assessment is in the absence of any omission or failure on the part of the
assessee, corresponding to the main provision of section 147, applicable (refer pgs. 296
and 297 of the judgment). The strand continues to date; the law clearly providing for two
classes or categories (of situations), one where the escapement of income is on account of
an omission or failure on the part of the assessee, to inter alia disclose fully and truly all
material facts necessary for assessment for the relevant year, for which a higher time
period of six years (as per the extant law) is provided and, two, for the rest, and for which
the said time limit is set at four years (from the end of the relevant assessment year). In
our view, there has been thus no consideration of the material being non-relied upon by
the A.O., i.e., in recording the reasons for the reopening and in issuing the notice u/s.148.
We are under the circumstances unable to read any further limitation in law in the A.O.
proceeding to initiate the reassessment under such a situation, except of course of reason
to believe, and which brings us to our next step (b) afore-noted. (also refer para 6(a))
       The reason to believe in the instant case is, again, striking; there being a marked
difference between the rent rate assessed and that assessable, i.e., based on the
assessment u/s. 143(3) for the preceding year, and which would itself be based on
materials. The apex court in Pooran Mal vs. Director of Inspection [1974] 93 ITR
505 (SC) has clarified relevancy to be the prime factor in deciding the admissibility or
otherwise of evidence under the Indian jurisprudence. This gets imported in the Act by
the consideration of the material or information bearing a rational and live link or nexus
                                          ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                         Tivoli Investment & Trading Co. Pvt. Ltd.

with the formation of the belief as to escapement of income. The fact of the assessment
having been concluded at a much higher rate is itself a strong persuasive ground, an
objective basis, for forming the belief, even if it may have some subjective element to it,
for inferring under assessment of income. Sufficiency of reasons, it is trite, is not an
aspect that is relevant, at this stage, which is the existence of a reasonable belief, held in
good faith, as to escapement of income (refer, viz. Raymond Woollen Mills Ltd. vs. ITO
[1999] 236 ITR 34 (SC); ITO vs. Lakmani Mewal Dass [1976] 103 ITR 437 (SC); S.
Narayanappa v. CIT [1967] 63 ITR 219 (SC)). It needs to be appreciated, we may add at
this stage, that what is relevant is to arrive at a fair assessment of the annual letting value
of the relevant property, i.e., the sum for which it may reasonably be expected to let from
year to year. The matter is purely factual, and it is for this reason that the comparative
cases assumed prime relevance. The exercise was made even for the current year. Even
though in all the cases so compared there was a deposit by the tenant accompanying the
rental arrangement, it was lower than that obtaining in the instant case, so that the rental
being higher, the same was adopted in the assessee's case on `best available information'
basis. It is perhaps this limitation that gets diluted or removed in completing the
assessment for A.Y. 2004-05, so that the rent fetched without or a lower deposit is to that
extent more comparable and nearer to the requirement of law, i.e., the fair rental value of
the property per se.
       The third aspect [(c)] of the matter is also self explanatory and self evident, i.e.,
from the material on record, and sans any dispute. We, accordingly, find due satisfaction
of the prerequisite conditions as well as due compliance of procedure in its respect, so
that there is a valid assumption of jurisdiction u/s.147 of the Act qua this ground or
Reason # 1. We decide accordingly.

Ground # 2 ­ Maintenance Charges

4.1    The assessee's case before us was that the A.O. could not have possibly formed
such an opinion in-as-much as there was a binding decision by the first appellate
authority in the assessee's own case for A.Y. 2004-05 (dated 05.12.2009/PB pgs.42-45),
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

so that it was available on record at the time of recording reasons and issue of notice
u/s.148 on 23.02.2011. The A.O. could not have, thus, under the circumstances, formed a
view inconsistent with that held by the first appellate authority deleting the disallowance
of maintenance charges paid to the housing society. The Revenue had in fact even
accepted by the said decision by not preferring any appeal before the appellate tribunal.
This view had been upheld by the tribunal in the case of Atomstroyexport vs. Dy. CIT (in
ITA No.8037/Mum(L)/2010 dated 04.12.2013/copy on record). In fact, it has been held
that even if the Department was in appeal before the higher appellate authority, the order
of the lower appellate authority being binding on it, it would prevail; the appellate order
merging with that of the subordinate authority/s (refer para 12 of the said order).

4.2    The ld. Departmental Representative (DR) would, on the other hand, contend that,
true, the Revenue had not preferred an appeal against the order by the first appellate
authority in the assessee's case for A.Y. 2006-07, but that should not be inferred as an
acceptance by the Revenue of his view in the matter. The non-preference of an appeal by
the Revenue was on account of section 268A, which places a monetary limit for
preferring appeals against the orders of the various appellate authorities before the higher
forum. The scrutiny note put up by the concerned A.O. in the matter was placed by him
on record in this regard.

5.1    The issue, thus, on merits that arises is not a consideration of this aspect by the
A.O. at the time of the original assessment, which he decidedly did not, prompting us to
state that the order of the ld. CIT(A), stating so, is de hors the facts and the material on
record; rather, as it appears, without application of mind, but if the A.O. could, in view of
the order by the first appellate authority in the assessee's own case, at all form an opinion
as to escapement of income, i.e., on the same ground. The issue is purely legal, and which
we shall be required to examine; there being no dispute either qua the consideration (of
the said issue) or the relevance of the reason recorded or with regard to observance of due
procedure, i.e., the elements (a) to (c) as specified at para 3.3 above. The assessee has in
this regard relied on the order by the tribunal in the case of Atomstroyexport (supra). The
                                          ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                         Tivoli Investment & Trading Co. Pvt. Ltd.

same is without any reference to judicial precedents or discussion of law in the matter.
The basis of the tribunal's order, as would be evident from the foregoing, is the doctrine
of merger. The order of the assessing authority having merged with that of the first
appellate authority, it was not open for the former to continue to entertain a view
inconsistent therewith, even if for a different year, so that there could be no formation of
belief as to the escapement of income on the very same ground.

5.2    The first issue therefore that arises before us is if the cited order by the co-ordinate
bench of the tribunal in Atomstroyexport (supra) is binding on us. This is as in that case
we shall be obliged to adopt and follow the same view. As explained by the tribunal in
Napar Drugs Pvt. Ltd. vs. Dy. CIT [2006] 98 ITD 285 (Del) (TM) after review of
precedents, it is not so. Though the tribunal, where not in agreement with an earlier
decision, refer the matter to its larger bench, this cannot be said as a matter of rule, so that
where there is ample justification, the Bench is entitled to take a different view. The same
stands reiterated again in ITO vs. Baker Technical Services (P.) Ltd. [2010] 125 ITD 1
(Mum) (TM). We may in this regard refer to the decision in the case of Dy. CIT vs. Oman
International Bank SAOG [2006] 100 ITD 285 (Mum) (SB)/[2006] 102 TTJ 207 (Mum)
(SB). The hon'ble jurisdictional high court in the case of CIT vs. Thane Electricity Supply
Ltd. [1994] 206 ITR 727 (Bom) has clarified that even the decision of the non-
jurisdictional high court is not binding on the tribunal. It is only the decision by the
hon'ble jurisdictional high court or the apex court, that constitutes a binding precedent.
Further on, as we shall presently see, the said order by the tribunal is in direct conflict
with the settled law in the matter of assumption of jurisdiction u/s.147, as well as the
decision by the apex court in the case of C. K. Gangadharan v. CIT [2008] 304 ITR 61
(SC). We shall, accordingly, proceed to examine the issue on merits, taking the said
decision by the co-ordinate Bench as persuasive in nature.
       The first thing that strikes us in the matter is that the assessee's challenge is to the
assumption of jurisdiction, i.e., the validity thereof in law. Toward the same, a reasonable
ground would clothe the A.O. with the requisite jurisdiction. The adequacy or sufficiency
                                        ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                       Tivoli Investment & Trading Co. Pvt. Ltd.

of the reason/s is not an issue or germane; in fact not being a justiciable issue for the
court to examine the same. Conclusiveness is not a condition or relevant at that stage
which would follow later. Why, the A.O., where convinced may not proceed to effect the
addition/ disallowance under contemplation even for the relevant year, but that would
have been no bearing relevant on the jurisdiction per se. As such, the very basis of the
decision by the tribunal, i.e., what had transpired on merits for another year, may not be
of relevance or impact jurisdiction, being the matter subsequent. The same represents trite
law (refer, inter alia, ITO vs. Selected Dalurband Coal Co. Pvt. Ltd. [1996] 217 ITR 597
(SC); Central Provinces Manganese Ore Co. Ltd. vs. ITO [1991] 191 ITR 662 (SC)). The
assessee's argument is thus fundamentally flawed.
       Our second observation in the matter is that if the A.O. cannot entertain a belief,
i.e., which is valid in law, as to the escapement of income on a particular ground, for the
reason of the first appellate authority having deleted the addition/disallowance on that
ground for another year, the same would only imply that he cannot in law make the said
addition or effect the said disallowance in the assessee's case for any other year. This is
as it would be a contradiction in terms to hold that while he can have no reason to believe
the escapement of income on that ground, he can effect the corresponding addition/
disallowance in the regular assessment, as where it is not a case of reopening of
assessment. The ld. AR, on being confronted thus during hearing, was unable to furnish
any satisfactory answer. The only bar on the plenary power of assessment of the A.O. in
the case of reassessment, initiated within four years of the relevant assessment year, it
needs to be borne in mind, is a `reason to believe'. Of course, a review is ousted, but
then, as explained by the apex court in Kelvinator of India Ltd. (supra), there is a
difference between the power to review and power to reassess. Placing such a restriction
on the power of assessment of the assessing authority is contrary to the scheme of the
Act, besides would operate to cause prejudice to the Revenue. Even the CBDT does not
under law have the power to interfere with the A.O.'s independence in the matter of
making the assessment, being precluded u/s. 119(1)(a) for requiring the A.O. to make the
assessment or to dispose of a particular case in a particular manner, as well as in fact the
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

first appellate authority (section 119(1)(b)). What, for instance, if the Revenue succeeds
in appeal for the earlier year, so that the order of the first appellate authority, following
which an embargo is sought to be placed on the Revenue to give effect to its view, is
reversed by a higher appellate forum. This would in effect take away the Revenue's right
of appeal, a statutory right, in the case of the assessee for years other than for which the
order of the first appellate authority has been rendered in the first instance. The apex
court in C. K. Gangadharan (supra) clarified that the non-filing of an appeal by the
Revenue in one case could not be considered as an acceptance on its part of the issue
decided by a lower appellate forum, so that it is at liberty to prefer an appeal before the
high court or the apex court on the same issue. The Revenue has established that there
was no acceptance by it of the view of the first appellate authority in the present case, but
was constrained in appealing there-against per force s. 268A. In fact, a provision
prescribing a procedure for preventing repetitive appeals (before the high court or apex
court) u/s.158A of the Act is made in law only to ease the tedium involved in making
repetitive appeals on the same question of law. The argument as made amounts to
importing the principle of res adjudicata to the proceedings under the Act, which it is
trite does not apply thereto (refer: New Jehangir Vakil Mills Ltd. v. CIT [1963] 49 ITR
137 (SC); S. Narayanappa (supra)).
       Further, in our view, this shall also operate to offend Article 14 of the Constitution
of India. This is while the A.O. is precluded `in law' to proceed against the said assessee,
he is free to proceed on that ground in respect of other assessees falling within his
jurisdiction, as there is no merger in those cases. Again, this shall also not bind other
Assessing    Officers   in   the   country   who     may     proceed    to   the    effect   the
addition/disallowance on that ground. Interestingly, the assessee, while relying on the
appellate order for an earlier year (A.Y. 2004-05) to argue an estoppel on the Revenue
from pursuing the matter for other years, yet considers itself as not bound by it, inasmuch
as it returns a lower sum for the current year for no ostensible reason. That is, adopts an
inherently contradictory stand.
                                          ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                         Tivoli Investment & Trading Co. Pvt. Ltd.

         Coming back to the decision in the case of C. K. Gangadharan (supra), implicit in
the proposition that the Revenue is not estopped from filing an appeal despite having
chosen not to do so on the same issue on an earlier occasion, is the notion that it
continues to frame assessments consistent with its earlier view, which had not found
favour with the appellate authority, though had not been appealed against by it. This is
precisely why we stated of the tribunal's decision being relied upon by the assessee as
being in direct conflict with that by the apex court.

5.3      We are, therefore, with respect, of the considered view that the A.O. cannot be
bound in any manner in the matter of making the assessments, except where and to the
extent regulated and provided for by law. The same, it may be appreciated, does not
impinge upon or invalidate the doctrine of merger, which would extend only to the year
for which the first appellate authority has passed the order, and for which year, the A.O.
has in fact already made the addition/disallowance which is sought to be restrained or
estopped. There being no issue with regard to the satisfaction of the conditions for
assumption of jurisdiction on this ground, which was not at all a subject matter of
consideration at the time of original assessment, there is thus a valid assumption of
jurisdiction qua this ground as well. We decide accordingly.

Case Law

6.       Though we have relied extensively on the decisions by the hon'ble apex court,
settling the various issues arising, we may also state our consideration of the decisions by
the high courts relied upon by the parties, if only to exhibit so, as below, and particularly
that by the hon'ble jurisdictional high court:

      a) Aroni Commercials Ltd. (supra):
         This decision is based on the consideration of the relevant facts by the A.O. at the
         time of original assessment, and therefore to that extent supportive of our decision.
         The purport of the decision is that raising a query in the matter itself implies a
         consideration of the matter by the A.O. This is almost the truism, as it cannot but
         be presumed so, so that the absence of any reference to the matter in the
         assessment order cannot be decisive of the matter. In other words, non-
                                     ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                    Tivoli Investment & Trading Co. Pvt. Ltd.

   consideration cannot be lightly inferred. We understand this to be the ratio of the
   decision, which would thus prevail and guide us in application of the relevant law
   in the wide variety of facts and circumstances that arise and obtain in the different
   fact settings presented in different cases. Consideration or otherwise of a matter, it
   needs to be appreciated, is a matter of fact, which though tempered with some
   guidelines, as for instance provided by the hon'ble court, as also earlier by the
   decisions by the apex court to which reference has been made by us. In the facts of
   the case at hand, there is, as we have found, nothing on record to suggest even
   remotely the consideration of the material in the form of assessment of income
   from the very same property for the preceding year. Rather, given the nature of the
   material, on the contrary, the presumption, on the basis of the material on record,
   would be of its non consideration, rather than of consideration. There is no query
   on the income from the property in the past or its assessment, and which, as it
   turns out, to be a very material fact. There is also no explanation by the assessee,
   and which is itself indicative of no query in this regard or this aspect of the matter
   having been made during assessment, as to why, notwithstanding its assessment at
   a higher figure in the past, a lower figure is assessable for the current year. As
   such, under these circumstances, to suggest a consideration would be without any
   basis, completely inconsistent and contrary to the record, i.e., wholly
   presumptuous. Rather, the difference is so striking, that to suggest its
   consideration by the A.O. would be an indictment as to perversity and mala fides
   at the end of the assessing authority. There is or can be no presumption, either on
   fact or in law, that merely or only because a material is on record, it would have
   been considered by the A.O. We in this regard derive support from the decision in
   the case of Kalyanji Mavji & Co. (supra). The said decision in ratio has no
   application in the facts and circumstances of the instant case.

b) Indian Hume Pipe Co. Ltd. (supra) :
   The said decision is of reassessment beyond four years, and on the aspect of true
   and full disclosure within the meaning of the term u/s.147 of the Act. The same,
   thus, has no application in the facts and circumstances of the present case;

c) Cartini India Ltd. (supra):
   The decision, as its reading would show, does not lay any proposition of law that
   is any different from that advanced and elucidated by the apex court, even as
   clarified by the hon'ble court itself, but is based upon consideration of material on
   record, so that it is held to be a case of change of opinion, which, it is trite law,
   precludes reassessment; the A.O. having no power of review, which is vested with
   the CIT(Administration) u/ss. 263 and 264 of the Act. The said case, thus, would
   be of no assistance to the assessee.

d) Idea Cellular Ltd. (supra):
                                         ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                        Tivoli Investment & Trading Co. Pvt. Ltd.

       The decision is again a case of reassessment proceedings initiated after four years,
       dilating the scope of full and true disclosure of all the material facts, aspect which
       is absent in the instant case. The other elements of this decision find mention in
       Aroni Commercials Ltd. (supra), discussed hereinbefore. The said decision,
       therefore, has no application in the instant case.

       On the contrary, we find the decisions by the hon'ble court, as in the case of
Export Credit Guarantee Corporation of India Ltd. vs. Addl. CIT [2013] 350 ITR 651
(Bom) and Eleganza Jewellery Ltd. vs. CIT (in WP No. 2763 of 2013 dated
18.02.2014/copy on record), following it; the Special Leave Petition (SLP) against the
latter having been in fact dismissed by the apex court, as confirmatory of the position that
within a period of four years disclosure by the assessee is not relevant, and what all has to
be seen if the A.O. has applied his mind to the relevant aspect or material. If a material
has been considered, there is no question of it being revisited or reconsidered again, as
the same would be only a review. On the other hand, if it has been not, as we have found
for the reasons recorded (refer paras 3.3 and 6(a) above), the reasons recorded being
supported by material/s, it would not be a case of change of opinion. The said decision,
thus, clearly supports our decision.

CO No. 32/Mum/2014 (A.Y. 2006-07)

7.     As afore-noted, the assessee's CO is largely supportive, besides raising grounds on
merits as well. We have already held, while disposing the Revenue's appeal, in favour of
the validity of the reopening of reassessment, thereby disposing accordingly the
assessee's first two grounds. The ld. CIT(A) having decided the assessee's appeal only on
the legal ground of the validity of the instant proceedings, the matter shall necessarily
have to frame prevailed back to his file for adjudicating the assessee's appeal on merits,
i.e., the grounds raised by the assessee before him. The assessee's CO, thus, becomes
infructuous to that extent. We decide accordingly.
                                       ITA No. 7713/M/2012 & CO No.32/M/2014 (A.Y. 2006-07)
                                                      Tivoli Investment & Trading Co. Pvt. Ltd.

8.    In the result, the Revenue's appeal is allowed and the assessee's CO is dismissed.
               Order pronounced in the open court on August 08, 2014
          Sd/-                                        Sd/-
       (Amit Shukla)                              (Sanjay Arora)
         / Judicial Member                          / Accountant Member
 Mumbai;  Dated : 08.08.2014
. ../Roshani, Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent
3.     () / The CIT(A)
4.      / CIT - concerned
5.                ,     ,  / DR, ITAT, Mumbai
6.     / Guard File
                                                      / BY ORDER,

                                            /  (Dy./Asstt. Registrar)
                                         ,  / ITAT, Mumbai
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