TMI Blog2018 (2) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... ee referred to in paragraph 9 and 10 support the conclusions that reassessment proceedings are not valid in law. For the reasons given above, we allow the grounds raised in the cross objection and hold that the reassessment proceedings are not validly initiated. Therefore order of the reassessment is liable to be annulled. Since the re-assessment order has has been annulled, the grounds raised by the revenue in its appeal does not require any adjudication. - Decided against revenue - I.T.A No. 1707/Kol/2016, C.O.No.62/Kol/2016 And I.T.A No. 1707/Kol/2016 - - - Dated:- 2-2-2018 - Sri N.V.Vasudevan, JM And Shri Waseem Ahmed, AM For The Department : Md. Usman, CIT (DR) For The Assessee : Shri A.K.Gupta, FCA ORDER Per N . V . Vasudevan, JM I.T.A.No.1707/Kol/2016 is an appeal by the Revenue against the order dated 27.06.2016 of C.I.T.(A)-16, Kolkata relating to A.Y.2006-07. C.O.No.62/Kol/2016 is a cross objection filed by the assessee against the very same order of CIT(A). 2. First we shall take up for consideration the grounds raised by the assessee in the cross objection with regard to the validity of initiation of re-assessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had entered into interest rate ( coupon ) swap transaction with different banks to take on interest rate risks for its rupee loan from SBI . UBI . CITI Bank, and UTI Bank and interest rate swap transaction with various banks namely Barclays, Standard' Chartered Bank and City Bank to manage its fixed interest rate risk against floating interest under respective underlying contract . As per CBDT Circular forex derivative transaction entered into through NSE, BSE after 25 . 1 . 2006 would not be treated as speculative transaction . As the above transactions included transaction entered into with various foreign banks, the same does not appear - to have fallen under the purview of the transaction to be treated as business transaction . Therefore loss on account of currency swap transaction amounting to Rs . 2,67,46 . 608 is required to be added back as loss not pertaining to business and omission to do so resulted in under assessment of income by Rs . 2,67,46,608 /-. Therefore, I have reason to believe that assessee has escaped assessment of income of Rs . 2,67,46,608 /-. Hence notice under section 148 is issued . 4. Even be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. Initiation of reassessment on the basis of same set of facts is nothing but a change of opinion which is not allowed in the law. Hence the reassessment initiated u/s 147 is bad in law. 5. The AO did not deal with the aforesaid objections raised by the assessee. He proceeded to frame an order of assessment u/s 147 r.w.s. 143(3) of the Act making an addition of ₹ 2,67,46,608/- which is a loss on account of swap transactions by treating the same as notional loss not allowable as a deduction. Apart from the above the AO also disallowed depreciation on aircraft and principal components of the lease rent on vehicles. Both the aforesaid items of disallowance were claimed as deduction by the assessee in computation of total income. 6. Aggrieved by the aforesaid order of the A O the assessee preferred appeal before CIT(A). In ground no.1 raised before CIT(A) the assessee specifically challenged the validity of initiation of re-assessment proceedings. The submissions made before the AO was reiterated before CIT(A). 7. The CIT(A) without considering any of its submissions dismissed the relevant grounds of appeal of the assessee by observing as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no fresh material with AO for reopening of this case, remained uncontroverted. 12. In the light of the above facts with regard to recording of reasons, let us examine settled position of law on this issue. The Hon ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. 320 ITR 561 (SC), has held that for reopening of the assessment, the AO should have in its possession tangible material . The term tangible material has been understood and explained by various courts subsequently. There has been unanimity of the courts on this issue that in absence of fresh material indicating escaped income, the AO cannot assume jurisdiction to reopen already concluded assessment. The Hon ble Delhi High Court in the case of Pr. CIT vs Tupperware India Pvt. Ltd., in its order dt 10-8-15 (ITA no 415/2015 ) has taken the view that that even in the case of original assessment order having been passed u/s 143(1), it is mandatory for the AO to have in its possession, fresh tangible material before reopening of the case. In the case of CIT vs. Orient Craft Ltd. 354 ITR 536, it was held by Hon ble Delhi High Court that reasons for reassessment disclosed that AO reached belief that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings were sought to be initiated on 01.03.2013 beyond a period of 4 years from the end of the relevant assessment year. The AO for initiating the re-opening of the assessment proceedings beyond the period of 4 years from the end of the relevant assessment year has to establish that there was escapement of income chargeable to tax because of the failure of the assessee to disclose fully and truly the material facts necessary for the assessment. Neither in the reasons recorded for reopening the assessment nor in the order of re-assessment u/s147 of the Act. The AO has not brought out facts to show any omission on the part of the assessee to disclose fully and truly the material facts when the original assessment was completed. We are of the view that the re-opening of the completed assessment u/s 143(3) of the Act beyond the period of 4 years cannot be justified. We hold that the re-opening of the assessment is beyond the time contemplated by the proviso to sec.147 of the Act and therefore, initiation of re-assessment proceedings is held to be bad. The decisions cited by the ld. Counsel for the assessee referred to in paragraph 9 and 10 support the conclusions that reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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