Appeal Details
Counselvise Citation
[2017] 123 COUNSELVISE.COM (IT) 3159 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
31-08-2017
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2009-2010
Appeal Filed On
08-05-2017
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4736/MUM/2015 ASSESSMENT YEAR: 2009-10 DCIT -9(1))(1), ROOM NO.260A, 02 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020. / VS. M/S ACON MEASUREMENT PVT. LIMITED, A-22, NANDDHAM INDL. ESTATE, MAROL MAROSHI ROAD, ANDHERI (EAST), MUMBAI-400059 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AAACA5078K C.O. 112/MUM/2017 (ARISING OUT OF ITA NO.4736/MUM/2015) ASSESSMENT YEAR: 2009-10 M/S ACON MEASUREMENT PVT. LIMITED, A-22, NANDDHAM INDL. ESTATE, MAROL MAROSHI ROAD, ANDHERI (EAST), MUMBAI-400059 / VS. DCIT -9(1))(1), ROOM NO.260A, 02 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020. ( !'# $ /ASSESSEE) ( / REVENUE) PAN. NO. AAACA5078K ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 2 % & $ ' / DATE OF HEARING : 31/08/2017 & $ ' / DATE OF ORDER: 06/09/2017 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 12/05/2015 OF THE FIRST APPELLATE AUTHORITY, MUMBAI , DELETING THE ADDITION OF RS. 50,17,847/- ON ACCOUNT OF NON-G ENUINE PURCHASES/BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM IN SP ITE OF AMPLE OPPORTUNITY PROVIDED TO THE ASSESSEE, IGNORING THE FINDING BY THE LD. ASSESSING OFFICER THAT THE CONCERNED PARTIE S WERE DECLARED AS HAWALA DEALERS BY THE SALES TAX DEPARTM ENT OF THE STATE GOVERNMENT AND MORE SPECIFICALLY THE NOTICES ISSUED U/S 133(6) WERE RETURNED BACK. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI PRAKASH JHUNJHUNWALA, EXPLAINED THAT THE ASSESSEE H AS ALREADY DECLARED GROSS PROFIT AT RATE OF 33% AND NE T PROFIT @ 13.89%, THEREFORE, THE LD. ASSESSING OFFICER UNJUST IFIABLY ADDED THE BOGUS PURCHASES AT 100%. IT WAS ALSO PLEA DED THAT ! / REVENUE BY SHRI SAURABH DESHPANDE-DR !'# $ ! / ASSESSEE BY SHRI PRAKASH JHUNJHUNWALA ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 3 THE ADDITION RESTRICTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AT THE RATE OF 10% IS ALSO EXCESSIVE AS TH E VAT RATE APPLICABLE TO THE ASSESSEE IS 4%. HOWEVER, THE LD. COUNSEL FAIRLY AGREED THAT THERE IS SOME LEAKAGE TO THE REV ENUE, THEREFORE, SOME MORE RELIEF MAY BE GIVEN TO THE ASS ESSEE. ON THE OTHER HAND, SHRI SAURABH DESHPANDE, LD. DR STRO NGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSEE, IN SPITE OF OPPORTUNITY PROVIDED, DID NOT PRODUCE T HE CONCERNED PARTIES, THEREFORE, THE ADDITION, SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), MAY BE INCREAS ED. THE BENCH ASKED THE ASSESSEE WHETHER, THE PARTIES CAN B E PRODUCED NOW FOR EXAMINATION BEFORE THE ASSESSING O FFICER. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT HE IS N OT IN TOUCH WITH THE PARTIES, THEREFORE, CANNOT PRODUCE THEM. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDE R, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. DR, IF KEPT IN JUXTAPOSITION AND ANALYZED, BEFORE ADVERTING FURTHE R, THE FACTS OF THE PRESENT APPEALS BEFORE US, WE DEEM IT APPROP RIATE TO ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 4 CONSIDER VARIOUS DECISIONS FROM HON'BLE HIGH COURTS /HON'BLE APEX COURT, SO THAT WE CAN REACH TO A PROPER CONCLU SION. THE HON'BLE GUJARAT HIGH COURT IN SANJAY OILCAKES INDUS TRIES VS CIT (2009) 316 ITR 274 (GUJ.) HELD AS UNDER:- 11 . HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTERFERENCE IS CAL LED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994 , READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELLANEO US APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HAS RECORDED TH E FOLLOWING FINDINGS : '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF INCOME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF THE RAW MATERIAL PREVALENT A T THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWAN CE TO THE EXTENT OF 25 PER CENT. WAS CALLED FOR. IT IS ESTABL ISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK A CCOUNTS IN WHICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHDRAWN BY BEARER CHEQUES. THAT FAIR LY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREA TION OF THE ASSESSEE ITSELF FOR THE PURPOSE OF BANKING PURCHASE S INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS WERE NO T FEASIBLE. THUS, THE ABOVENOTED PARTIES BECOME CONDUIT PIPES B ETWEEN THE ASSESSEE-FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPOSSIBLE FOR THE ASSESS EE TO INFLATE THE PRICES OF RAW MATERIALS. ACCORDINGLY, AN ADDITI ON AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY THE ASSESSE E THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AN D WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMIS SIONE R OF INCOME- TAX (APPEALS).' 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FIN DING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHEQUES, TH E CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENS IBLY IN THE NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND THERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 5 ACCOUNTS. IN THE LIGHT OF THE AFORESAID NATURE OF E VIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT CONCLUSION, DIFFEREN T FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIB UNAL CONCURRENTLY HOLDING THAT THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. BOTH THE COMMI SSIONER (APPEALS) AND THE TRIBUNAL HAVE, THEREFORE, COME TO THE CONCLUSION THAT IN SUCH CIRCUMSTANCES, THE LIKELIHO OD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT A ND THERE IS NO MATERIAL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MA TCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PE RSONS. THE ISSUE IS WHETHER THE PURCHASE PRICE PAID BY THE ASS ESSEE IS REFLECTED AS RECEIPTS BY THE RECIPIENTS. THE ASSESS EE HAS, BY SET OF EVIDENCE AVAILABLE ON RECORD, MADE IT POSSIBLE F OR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF I NQUIRY AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, THE ESTIMA TE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARRANT INTE RFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM, CAN NEVER BE AN ISSUE OF LAW. IN THE AFORESAID CASE, THE HON'BLE HIGH COURT ACCEP TED THAT THE APPARENT SELLERS, WHO ISSUED THE SAID BILLS WER E NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOODS. T HE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPA RENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A SITUATION , THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY THE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHWALA GEMS VS JCIT (2007) 158 TAXMAN 71 ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 6 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITABLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. 2.2. THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOL ANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (GUJ.) HELD/ OBSERVED AS UNDER:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE FROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WERE NOT BOG US. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD AND CAME T O THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOCK, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WE RE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE ENTIRE 1, 02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTENTION THAT THE FINISHE D GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PART IES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. IN THAT VIEW OF T HE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NOT THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUNAL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST. CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTE D NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ES SENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATURAL COROL LARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGME NT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 679 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED. 2.3. LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN C IT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 49 8 (GUJ.) HELD/OBSERVED AS UNDER:- ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 7 6. AS IS APPARENT FROM THE FACTS NOTED HEREINABOVE , THE COMMISSIONER (APPEALS) AFTER APPRECIATING THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT MADE THE PURCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTEINS (SUPRA) RESTRICTED THE DISALLOWAN CE TO 20 PER CENT. THE TRIBUNAL IN THE IMPUGNED ORDER HAS FOLLOWED ITS EAR LIER ORDER IN THE CASE OF VIJAY PROTEINS TO THE LETTER AND ENHANCED THE DISAL LOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, THE DECISION OF THE COMMISSION ER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFF ERENT SUM CAN NEVER BE A QUESTION OF LAW. 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [200 7] 288 ITR 10 (SC) HAS HELD THAT IN A BEST JUDGMENT ASSESSMENT THERE I S ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORITIES SHO ULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BE ST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY B UT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGME NT ASSESSMENT. 8. EXAMINING THE FACTS OF THE PRESENT CASE IN THE L IGHT OF THE AFORESAID DECISIONS, THE DECISION OF THE TRIBUNAL, BEING BASE D ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRA NT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUESTION (A) WHERE IN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERT AINS TO THE DELETION OF ADDITION OF RS. 7,88,590 MADE ON ACCOUNT OF INFLATI ON OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. (MMTC), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNERSHIP FIRM OF SHRI NITIN GAJJ AR ALONG WITH HIS FATHER AND BROTHER OPERATING FROM BHAVNAGAR. A PERU SAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESS MENT ORDER. AFTER CONSIDERING THE EVIDENCE ON RECORD, THE ASSESSING O FFICER DISALLOWED THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO M MTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COM MISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOU ND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GENUINENESS OF THE PUR CHASES MADE FROM MMTC WHILE MAKING THE DISALLOWANCE. HIS OBSERVATION S WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM TH E ASSESSEE. ACCORDING TO THE COMMISSIONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSESSEE-COMPA NY, STILL IT COULD NOT BE EXPECTED THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PROVED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE COMPAR ABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND . THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECT ED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD N OT BE THE NET PROFIT IN ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 8 THE HANDS OF MMTC ; AND THAT WHILE CONDUCTING THE E NTIRE EXERCISE MMTC WOULD HAVE TO INCUR CERTAIN EXPENDITURE IN TRANSPOR TATION, IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WA S ACCORDINGLY OF THE VIEW THAT THERE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE ADDITION. 12. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS CONCUR RED WITH THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) AND HAS FOUN D THAT THE ASSESSEE HAD MADE PURCHASES FROM MMTC AT THE PREVAILING MARK ET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITURE IN ENGAGING P ERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WOULD MAKE SOME INC OME FROM THE ENTIRE EXERCISE. IN THE CIRCUMSTANCES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 13. THUS, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPE ALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CASE OF THE REVENUE THAT TH E TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL OR THAT ANY RE LEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF AN Y MATERIAL TO THE CONTRARY BEING POINTED OUT ON BEHALF OF THE REVENUE , THE IMPUGNED ORDER BEING BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPRECIATION OF THE EVIDENCE ON RECORD, DOES NOT GI VE RISE TO ANY QUESTION OF LAW IN SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,426 MADE ON ACCOUNT OF PUR CHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OF FICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN A MOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMINING THE EVIDENCE ON R ECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITIO N OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,936 BEING DEPRECIATION CLAIMED B Y THE ASSESSEE. THE COMMISSIONER (APPEALS), UPON APPRECIATION OF EVIDEN CE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECI ATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS N OT PERMITTED BY THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY HAVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT AND LO SS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE AND SPARE PA RTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISITION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (APPEALS), THE DISALL OWANCE COULD HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESS ING OFFICER CONCLUSIVELY PROVED THAT THE PURCHASES OF CRANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSI ONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNICAL INFIRMITIES AND THAT THE EVIDE NCE SUCH AS OCTROI RECEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; E XISTENCE OF THE CRANE EVEN TILL DATE WITH THE ASSESSEE CONCLUSIVELY PROVE D THAT THE CRANE WAS PURCHASED AND IT WAS IN USE EVEN AS ON DATE WITH TH E ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DISALL OWANCE MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEPREC IATION AS CLAIMED BY THE ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE THE ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 9 TRIBUNAL, THE ASSESSEE PRODUCED THE EVIDENCE THAT T HE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND THE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL , THEREFORE, HELD THAT THE COMMISSIONER (APPEALS) WAS LEGALLY AND FACTUALL Y CORRECT IN DELETING THE DISALLOWANCE OF COST OF CRANE AS WELL AS DEPREC IATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT , AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDING THE SAM E TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENCE OF ANY EV IDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CRANE IN FACT DI D NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVE D THE PURCHASE AND EXISTENCE OF THE CRANE, AND HAD NOT DEBITED THE EXP ENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEEN MADE IN R ESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPRECIATION BEEN DIS ALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSENCE OF ANY Q UESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, THE APPEAL IS DISMISSED. 2.4. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/2009) ORDER DATED 22/02/2011, OBSERVED/HELD AS UNDER:- THE QUESTION RAISED IN THIS APPEAL IS, WHETHER THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF BO GUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AG RO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE REVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALES / PUR CHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVO LVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORDED A FINDING O F FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTNESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPOR TUNITY TO CROSS EXAMINE THE CONCERNED DIRECTOR OF M/S. THAKKA R AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. WHO HAD MADE THE A BOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAN D REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROSS EXAMINATION OF THE PE RSON WHOSE STATEMENT WAS RELIED UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL BEING B ASED ON THE FACT, NO SUBSTANTIAL QUESTION OF LAW CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL. THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 10 2.5. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS NIKUNJ EXIM ENTERPRISES PVT. LTD. (2015) 372 ITR 61 9 (BOM.) HELD/OBSERVED AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DATED APRIL 30, 2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STAT EMENT, I.E., RECONCILIATION STATEMENT BUT ALSO IN VIEW OF THE OT HER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNT OF THE R ESPONDENT- ASSESSEE HAVE NOT BEEN REJECTED. SIMILARLY, THE SAL ES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SU BSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DE PARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY T HE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURC HASES WERE IN FACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIER S HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE COMMIS SIONER OF INCOME-TAX (APPEALS), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT-ASSESSEE. THE ASSES SING OFFICER AS WELL AS THE COMMISSIONER OF INCOME-TAX (APPEALS) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCO UNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASO NED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT T HE PURCHASES OF RS. 1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUN D WITH THE ORDER DATED APRIL 30, 2010, OF THE TRIBUNAL. 2.6. THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESS EE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NORMAL BUSIN ESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NOT COME, THE ASSE SSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF THE REVENUE, IT WAS U RGED THAT DETAILED INQUIRIES WERE MADE AND THEREAFTER THE CONCLUSION W AS REACHED. THE TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE. NO DO UBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FR OM THE SAID ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 11 PARTIES WERE BOGUS. THE TRIBUNAL ACCORDINGLY, DID N OT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMIS SIONER. HENCE, AT THE INSTANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED TO THIS COURT FOR OPINION. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL HAS ALSO POINTED OUT THAT NOTHIN G IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASS ESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT I S FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TW O STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH THE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, THE TRIBUNAL ULTIMATELY HAS OBS ERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FR OM THESE PARTIES WERE BOGUS. IT MAY BE STATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHORT DURATION AND THE PAYMENTS WE RE GIVEN BY CHEQUES. WHEN THAT IS SO, IT CANNOT BE SAID THAT TH E ENTRIES FOR THE PURCHASES OF THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT FIND THAT THE CONCLU SION ARRIVED AT BY THE TRIBUNAL IS AGAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGL Y, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. 2.7. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM. TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HI M IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF PURCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERED DEALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THAT LEDGER ACCOU NTS OF THE PARTIES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUNTED FOR, THA T PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FROM THE BANKER GIVING DETAILS OF CHEQUE PAYMENT TO THE SAID PARTIES WAS ALSO FURNISH ED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING THAT MATERIAL PURCHASED WAS ACT UALLY DELIVERED AT THE SITE WAS FURNISHED BEFORE THE AO. IT WAS ALSO A RGUED THAT SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIES WERE L YING PART OF CLOSING STOCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITTED ON RECORD. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSIONS ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 12 MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTION S WERE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MADE TO THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WITH B ANK CERTIFICATE,T HAT THE SUPPLIERS WAS SHOWN AS DEFAULT UNDER THE MA HARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WERE NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY INDEPE NDENT AND RELIABLE EVIDENCES AGAINST THE ASSESSEE TO PROVE TH E NON-GENUINENESS OF THE PURCHASES, THAT THERE WAS NO EVIDENCE REGARD ING CASH RECEIVED BACK FROM THE SUPPLIERS. FINALLY, HE DELETED THE AD DITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY THE AS SESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPAR TMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRAN SACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDER OF TH E G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF WESTERN EX TRUSION INDUSTRIES. (ITA/6579/MUM/2010-DATED 13.11.2013). A UTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYMENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STATEMENT, THAT GOOD S RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING S TOCK,THAT THE TRANSPORTER HAD ADMITTED THE TRANSPORTATION OF GOOD S TO THE SITE.HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DE PARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE L EFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TA KE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF T HE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS A NY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. TH E FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE O F WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLI ER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE C ASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUB T. THERERFORE, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT S UFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CO NFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO . ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 13 2.8. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICE R (ITA NO.1223/M/2014) ORDER DATED 22/01/2016, M/S IMPERIA L IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASSESSEE AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. HOWEVER, AS RELIED BY THE LD. DR, THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF N.K. INDUSTRIES LTD.,ETC VS DCIT (SUPRA) CONSIDERING VAR IOUS DECISIONS DECIDED THE ISSUE IN FAVOUR OF THE REVENU E AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE ORDER DAT ED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT I N THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGNED CHE QUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESS ING OFFICER. 2.9. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUST RIES LTD. VS DCIT (IT APPEAL NO.240, 261, 242, 260 AND 2 41 OF 2003), VIDE ORDER DATED 20/06/2016 CONSIDERED THE D ECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL DECISIONS INCLUDI NG THE CASE OF VIJAY PROTEINS AND SANJAY OILCAKES INDUSTRIES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 420 (RAJ.), T HE TRIBUNAL ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 14 WAS HELD TO BE JUSTIFIED IN DECIDING THE CASE AGAIN ST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DEC ISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SLP (C) NO.S 769 OF 2017, ORDER DATED 16 /01/2017. 2.10. IN SUCH TYPE OF CASES, BROADLY, THE LD. COMM ISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GUJARAT HIGH COURT IN THE CA SE OF SIMIT P. SETH (2013) 356 ITR 451 (GUJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LTD. (2013) 355 ITR 290 (GUJ.) AND V ARIOUS OTHER DECISIONS OF THE TRIBUNAL AND THE DECISION OF M/S N IKUNJ EXIMP(SUPRA) FROM HON'BLE JURISDICTIONAL HIGH COURT , WHEREIN, THE AGGREGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, THERE CANNOT BE SALE WITHOUT PURCHASES. THE CASE O F THE REVENUE IS THAT THERE IS BOGUS NATURE OF PURCHASES MADE FROM SUPPLIERS AND THE PARTIES WERE NOT FOUND EXISTING A T THE GIVEN ADDRESSES. 2.11. ADMITTEDLY, IN SUCH TYPE OF CASES, THERE IS NO OPTION BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPON THE SUBJECTIVE/OBJECTIVE APPROACH OF AN INDIVIDUAL AND THE MATERIAL ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 15 FACTS AVAILABLE ON RECORD. IN THE PRESENT APPEAL, THE ASSESSEE IS MANUFACTURER OF MEASURING INSTRUMENTS, DECLARED INC OME OF RS.51,24,860/- IN ITS RETURN FILED ON 25/08/2009. T HE COMPLETED ASSESSMENT WAS REOPENED U/S 147/148 OF TH E ACT, AS IT CAME TO THE NOTICE OF THE LD. ASSESSING OFFIC ER THAT THE ASSESSEE OBTAINED BOGUS PURCHASE BILLS FROM CERTAIN PARTIES, WHICH ARE HAWALA DEALERS ON THE LIST OF STATE SALES TAX DEPARTMENT. THE SAID LIST REVEALS THE NAME OF PART IES LIKE (I) MANI BHADRA SALES PVT. LTD. (II) SANDESH SALES PVT. LTD. AND (III) BLUE MOON TRADING PVT. LTD. FROM WHICH THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES OF RS.50,17,844/-. THE ASSESSE E ALSO FILED REPLY DATED 18/07/2014 CONTRADICTING THAT ANY BOGUS PURCHASES WERE MADE FROM THESE PARTIES. NOTICE U/S 133(6) OF THE ACT WERE ISSUED AT THE ADDRESSES OF THESE PARTI ES, WHICH WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITY WITH THE REMAND LEFT AND NOT KNOWN. CONSIDERING THE FAC TUAL MATRIX, THE LD. ASSESSING OFFICER FOUND THAT THERE WAS NO P HYSICAL DELIVERY OF PURCHASES AND ONLY BOGUS BILLS WERE ISS UED, THUS, CONSIDERING VARIOUS DECISIONS, THE LD. ASSESSING OF FICER ADDED THE SUM OF RS.50,17,844/-, AS BOGUS PURCHASES TO TH E TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. COMMISSI ONER OF ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 16 INCOME TAX (APPEAL) CONSIDERED VARIOUS DECISIONS HE LD THAT THE ENTIRE DISPUTED PURCHASES CANNOT BE ADDED AND THERE FORE, TO PLUG THE LEAKAGE OF REVENUE, ESTIMATED THE SUPPRESS ED INCOME AT THE RATE OF 10% OF THE DISPUTED PURCHASES (I.E. 10% OF RS.50,17,844/-) AND DELETED THE BALANCE ADDITION OF RS.45,16,059/-. WE HAVE EXAMINED THE FACTUAL MATRIX OF THE PRESENT APPEAL AND CONSIDERING THE TOTALITY OF FACT S AND THE ASSERTIONS MADE FROM BOTH SIDES AND ARE OF THE OPIN ION THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS TAKEN A REASONABLE VIEW. THEREFORE, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), RESULTING INTO DISMISSAL THE APPEAL OF THE REVENUE. 3. SO FAR AS, THE CROSS OBJECTION OF THE ASSESSEE (C.O. NO.112/MUM/2017) IS CONCERNED, IT IS BARRED BY 63 D AYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE DELA Y. THE LD. DR CONTENDED THAT THE DELAY MAY NOT BE CONDONED. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, SO F AR AS, CONDONATION OF DELAY IS CONCERNED NO DOUBT FILING O F AN APPEAL IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSE E AND IS NOT ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 17 AN AUTOMATIC PRIVILEGE, THEREFORE, THE ASSESSEE IS EXPECTED TO BE VIGILANT IN ADHERING TO THE MANNER AND MODE IN WHIC H THE APPEALS ARE TO BE FILED IN TERMS OF THE RELEVANT PR OVISIONS OF THE ACT. NEVERTHELESS, A LIBERAL APPROACH HAS TO BE ADOPTED BY THE APPELLATE AUTHORITIES, WHERE DELAY HAS OCCURRED FOR BONA-FIDE REASONS ON THE PART OF THE ASSESSEE OR THE REVENUE IN FILING THE APPEALS. IN MATTERS CONCERNING THE FILING OF APPEA LS, IN EXERCISE OF THE STATUTORY RIGHT, A REFUSAL TO CONDONED THE D ELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE THRESHOLD, WHICH MAY LEAD TO MISCARRIAGE OF JUSTICE . THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE IN JUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPA BLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 3.2. THE HONBLE APEX COURT IN A CELEBRATED DECIS ION IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. 1 67 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTA NTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS A RE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JUSTICE. THIS IS FOR THE REASON THAT AN OPPOSING PARTY, IN A DISPUTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON- DELIBERAT E DELAY. ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 18 THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTER S RELATING TO THE CONDONATION OF DELAY, JUDICIOUS AND LIBERAL APP ROACH IS TO BE ADOPTED. IF SUFFICIENT CAUSE IS FOUND TO EXIST, WHICH IS BONA- FIDE ONE, AND NOT DUE TO NEGLIGENCE OF THE ASSESSEE , THE DELAY NEEDS TO CONDONED IN SUCH CASES. THE EXPRESSION S UFFICIENT CAUSE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS T O APPLY LAW IN A MEANINGFUL MANNER, WHICH SUB-SERVES THE END OF JU STICE- THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INST ITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CON SIDERATION ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTAN TIAL JUSTICE DESERVES TO BE PREFERRED. THE HONBLE APEX COURT IN VEDABHAI VS SANTARAM 253 ITR 798 OBSERVED THAT INORDINATE DE LAY CALLS OF CAUTIOUS APPROACH. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILATORY TACTICS. SUFFICIENT CAUSE SHO ULD RECEIVE LIBERAL CONSTRUCTION TO ADVANCE SUBSTANTIAL JUSTICE . THE HONBLE APEX COURT IN 167 ITR 471 OBSERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 1963 I N ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CA USE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVE S THE ENDS OF ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 19 JUSTICE THAT BEING THE LIFE-PURPOSE OF THE EXISTENC E OF THE INSTITUTION OF COURTS. IT IS COMMON KNOWLEDGE THAT THIS COURT H AS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTE D IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHERS COURTS IN THE HIERARCHY. 3.3. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL VS. SH ANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE COURT HAS T O EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE P RINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PRIME IMPORTANC E. THE COURT HELD THAT THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTION. 3.4. THE DECISION OF THE TRIBUNAL IN PEOPLE INFOCO M PRIVATE LTD. V/S CIT (ITA NO.210/MUM/2013) ORDER DA TED 19/05/2016, M/S NEUTRON SERVICES CENTRE PVT. LTD VS ITO (ITA NO.1180/MUM/2012) ORDER DATED 18/02/2016, SHRI SAIDATTA COOP-. CREDIT SOCIETY LTD. V/S ITO (ITA NO.2379/MUM/2015) ORDER DATED 15/01/2016 AND MR. NIKUNJ BAROT (PROP. ENIGMA) VS ITO (ITA NO.4887/MUM/2015) ORDER DATED 06/01/2016, WHEREIN, SUBSTANTIAL DELAY WAS CONDONED, SUPPORTS T HE CASE OF ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 20 THE PRESENT ASSESSEE. HAVING MADE THE AFORESAID OBS ERVATION AND VARIOUS DECISIONS DISCUSSED HEREINABOVE, INCLUD ING FROM HONBLE APEX COURT, THE CIRCUMSTANCES NARRATED BY T HE ASSESSEE, WHEREIN, HE HAS STATED THE REASONS WHICH CAUSED THE DELAY, THEREFORE, THE DELAY IS CONDONED. 4. SO FAR AS, THE MERITS OF THE CROSS OBJECTION IS CONCERNED, THE ASSESSEE HAS CHALLENGED UPHOLDING TH E REOPENING OF ASSESSMENT U/S 147/148 OF THE ACT ON T HE PLEA THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IG NORED THE FACT THAT THERE WAS NO REASON TO BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AS THERE WAS NO TANGIBLE MATERIAL WITH T HE ASSESSING OFFICER AND INDEPENDENT APPLICATION OF MI ND. ON THE OTHER HAND, THE LD. DR STRONGLY DEFENDED THE REOPEN ING AS THERE WAS ENOUGH MATERIAL WITH THE ASSESSING OFFICE R ON THE BASIS OF WHICH, IT WAS RIGHTLY CONCLUDED THAT INCOM E HAD ESCAPED ASSESSMENT. 4.1. IN THE LIGHT OF THE FOREGOING DISCUSSIONS, IT IS OU R BOUNDED DUTY TO EXAMINE THE VALIDITY OF REOPENING U /S 147 R.W.S 148 OF THE ACT. BEFORE ADVERTING FURTHER WE A RE ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 21 REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SEC TION 147 OF THE ACT FOR READY REFERENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 1 53, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RE COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THI S SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHAR GEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHI CH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER P ERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PR EVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOM E-TAX ; ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 22 (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAI MED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUIRED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR R EASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF T HE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SEC TION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE FINAN CE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BEGINNIN G ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 4.2. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, WE FIND THAT AFTER INSERTION OF EXPLANATION -3 TO SECT ION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH EFFECT F ROM 01/04/1989 SECTION 147 HAS AN EFFECT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME (SUCH INCOME) WHIC H HAS ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 23 INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH CAME TO THE NOTICE DURING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN C IT VS JET AIRWAYS INDIA PVT. LTD. (2010) 195 TAXMAN 117 (MUM. ) AND THE FULL BENCH DECISION FROM HONBLE KERALA HIGH COURT IN CIT VS BEST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN .COM 278 (KERALA)(FB). A PLAIN READING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWE R TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THAT INC OME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOTICE DURING THE COURSE OF PROCEEDINGS OF REASSESSMENT U/S 148. OUR VIEW IS FORTIFIED BY THE DECISION IN MAJINDER SINGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JAY BHARA T MARUTI LTD. VS CIT (2010) TAX LR 476 (DEL.) AND V. LAKSHMI REDDY VS ITO (2011) 196 TAXMAN 78 (MAD.). THE PROV ISION OF THE ACT IS VERY MUCH CLEAR AS WITH EFFECT FROM 01/0 4/1989, THE ASSESSING OFFICER HAS WIDE POWERS TO INITIATE PROCE EDINGS OF REOPENING. THE HONBLE KERALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (2006) 156 TAXMAN 206 (KERALA) EVEN WE NT TO THE EXTENT SO LONG AS THE AO HAS INDEPENDENTLY APPL IED HIS ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 24 MIND TO ALL THE RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REOPENING CANNOT BE SAID TO BE INVALID. 4.3. WE ARE AWARE THAT MERE CHANGE OF OPINION CA NNOT FORM THE BASIS OF REOPENING WHEN THE NECESSARY FACT S WERE FULLY AND TRULY DISCLOSED BY THE ASSESSEE IN THAT SITUATI ON, THE ITO IS NOT ENTITLED TO REOPEN THE ASSESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. HOWEVER, POWERS UNDER AMENDED P ROVISION ARE WIDE ENOUGH WHERE THERE IS A REASONABLE BELIEF WITH THE ASSESSING OFFICER, THAT INCOME HAS ESCAPED ASSESSME NT, BECAUSE THE POWERS WITH EFFECT FROM 01/04/1989 ARE CONTEXTUALLY DIFFERENT AND THE CUMULATIVE CONDITION S SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CON DITION FOR ACTION IS THAT THE ASSESSING OFFICER SHOULD HAVE R EASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SUCH BELIEF CAN BE REACHED IN ANY MANNER AND IS NOT QUALIFIED BY A PRE-CONDITION OF FAITH AND TRUE DISCLOSURE OF MATERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTI ON 147. VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSMENT IS MUCH WIDER UNDER THE AMENDED PROVISION. OUR VIEW IS FOR TIFIED BY THE DECISION FROM HONBLE DELHI HIGH COURT IN BAWA ABHA I SINGH VS ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 25 DCIT (2001) 117 TAXMAN 12 AND RAKESH AGARWAL VS ACI T (1996) 87 TAXMAN 306 (DEL.). THE HONBLE APEX COUR T IN CIT VS SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) CL EARLY HELD THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT FOR TH E REVENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT THE SAME TIME, WE ARE AWARE THAT POWERS U/S 147 AND 148 OF THE ACT ARE NOT UNBRIDLED ONE AS IT IS HEDGED WITH SEVE RAL SAFEGUARDS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR ABUSE OF THIS POWER BY THE AO. HOWEVER, THE MATERI AL AVAILABLE ON RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT,THEREFORE, THE LD. ASSESSING OFF ICER WAS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT. THE HONBLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD . (2001) 247 ITR 818 (SC) HELD THAT MERELY BECAUSE THE CASE OF THE ASSESSEE WAS CORRECT IN ORIGINAL ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO RE OPEN THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF FINDI NG OF HIS FACT THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. 4.4. UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDE NED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICTION, PUT IN THAT SECTION ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 26 IS THAT REASON TO BELIEVE. THAT REASON HAS TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSA RILY DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND PARTI ALLY SOME MATERIAL FACTS RELEVANT FOR ASSESSMENT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DELHI HIGH COURT IN UNITED ELECTRICAL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (DEL.) AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 838 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING RE ASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE ACT IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR. THE HONBLE GUJARA HIGH COURT IN PRAFULL CHUN NILAL PATEL VS ACIT (SUPRA) EVEN WENT TO THE EXTENT THAT AT THE INITIATION STAGE FORMATION OF REASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FINDING OF FACTS. IDENTICAL RATIO WAS LA ID DOWN IN BRIJMOHAN AGRAWAL VS ACIT (2004) 268 ITR 400, 405 ( ALL.) AND RATNACHUDAMANI S. UTNAL VS ITO (2004) 269 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN VS ITO (19 68) 70 ITR 79(SC). ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 27 4.5. SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PR OMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PARTICU LAR CASE. IT DEPEND UPON THE FACTS OF EACH CASE. THE BELIEF MUST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONABLE GR OUNDS. THE ASSESSING OFFICER IS REQUIRED TO ACT, NOT ON ME RE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (20 11) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011 ) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISI ONS:- IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 IT R 417 (DEL.). XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 I TR 742, 746 (PUNJ.), ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 28 XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXM AN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37, 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 32 4, 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) 4.6. IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COUR T HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994-95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJ A V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM), WHERE THE INFORMATION REGARDING ACQUISITION OF THE ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE REL EVANT ASSESSMENT YEAR 1992-93 AND SUCH INFORMATION WAS DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 199 5-96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 29 ESCAPEMENT OF INCOME IN RELATION TO ASSESSMENT YEAR 1992- 93 . 4.7. THE HONBLE JURISDICTIONAL HIGH COURT IN EXP ORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT, (2013) 350 ITR 651 (BOM), WHERE THERE HAD BEEN NO APPLICAT ION OF MIND TO THE RELEVANT FACTS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALID. 4.8. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRILAL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 432 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDINARY JURISDICTION OF T HE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PA RT OF THE RELEVANT MATERIAL HAD BEEN KEPT OUT FROM THE AS SESSING OFFICER). THE INFORMATION WAS IN THE ANNEXURES AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 147 WO ULD APPLY. THE REASSESSMENT PROCEEDINGS AFTER FOUR YEAR S WERE VALID. 4.9. IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYAN KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CAS E OF THE ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 30 ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE EXPIR Y OF THE TIME LIMIT PROVIDED IN SECTION 153(2). THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD . V. ASST. CIT, (2012) 348 ITR 439 (BOM), BOTH IN THE COMPUTAT ION OF TAXABLE LONG-TERM CAPITAL GAINS IN THE ORIGINAL RET URN OF INCOME AND IN THE COMPUTATION THAT WAS SUBMITTED IN RESPON SE TO THE QUERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILENCE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVES TED, AS SUCH THERE BEING A FAILURE TO DISCLOSE FULLY AND TR ULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PR OCEEDINGS WERE HELD TO BE VALID. THIS VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 ( DEL). 4.10. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V. ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE INITIAT ION WAS STARTED WITHIN FOUR YEARS FOR RE-EXAMINING THE DEDU CTION UNDER SECTION 80HHC, WAS HELD TO BE WRONGLY ALLOWED IN TH E ORIGINAL ASSESSMENT. IDENTICALLY, IN THE CASE OF HAPPY FOR GING LTD. V. ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 31 CIT, (2002) 253 ITR 413,416-17 (P & H), WHERE EXCIS E DUTY PAID IN ADVANCE WAS SHOWN AS AN ASSET IN THE BALANCE SHE ET AND WAS ALLOWED AS A DEDUCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN THE BALANCE SH EET AND WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN T HE CASE OF VIPAN KHANNA V. CIT, (2002) 255 ITR 220, 230 (P & H ), WHERE FROM THE FACTS IT WAS CLEAR THAT THE ASSESSEE HAD C LAIMED DEPRECIATION IN THE RETURN AT THE RATE OF 50 PER CE NT AND HE HAD NOWHERE DISPUTED THE FACT THAT THE ADMISSIBLE RATE OF DEPRECIATION TO HIM WAS 40 PER CENT., SUCH FACT ALO NE WAS SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS UND ER SECTION 147 AND, THEREFORE, SUCH INITIATION WAS SUSTAINED. THE HONBLE PUNJAB & HARYANA HIGH COURT IN MRS. RAMA SINHA V. C IT, (2002) 256 ITR 481, 483, 486, WHERE THE REASSESSMEN T NOTICE HAS BEEN ISSUED ON THE BASIS OF DEFINITE INFORMATIO N FROM CBI REGARDING INVESTMENTS BY THE ASSESSEE WHICH HAD NOT BEEN DISCLOSED DURING THE ORIGINAL ASSESSMENT PROCEEDING S, SUCH INITIATION HAS BEEN UPHELD. ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 32 4.11. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJR ANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOUGH THE TRANSACT ION OF SALE OF SHARES WAS DISCLOSED AND ACCEPTED IN THE ORIGINA L ASSESSMENT, BUT THE SUBSEQUENT DISCOVERY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSACTION WAS N OT GENUINE, A REASSESSMENT NOTICE AFTER FOUR YEARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DISCLOSURE OF THE MATERIA L FACTS. IN THIS REGARD, THE PETITIONER-ASSESSEE CANNOT DRAW AN Y SUPPORT FROM THE STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTICE FOR REASSESSMENT. IT GOES WITHOUT SAYING THAT FOR THE P URPOSE OF MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHALL HAVE TO CONFRONT THE PETITIONER WITH THE ENTIRE MATERIAL IN HIS POSSESSION ON THE BASIS OF WHICH HE PROPOSES TO MAK E THE ADDITIONS. IN PUNJAB LEASING PVT. LTD. V. ASST. CIT , (2004) 267 ITR 779, 781-82 (P & H), WHERE DEPRECIATION WAS ALL OWED TO THE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FINANC ING OF VEHICLES AND CONSUMER DURABLES ON 'HIRE-PURCHASE BA SIS' AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NOTIC E ISSUED AFTER FOUR YEARS HAS BEEN HELD NOT TO SUFFER FROM ANY ILL EGALITY AS THE SAME WAS BASED ON THE BONA FIDE ACTION OF THE COMPE TENT ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 33 AUTHORITY TO DETERMINE WHETHER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEEN CLAIMING DEPRECIATION , WERE ACTUALLY OWNED BY IT. 4.12. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DEDUCTION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRONGLY G RANTED TO THE ASSESSEE, FOR WHICH IT WAS NOT ENTITLED. THE REFORE, REASSESSMENT PROCEEDINGS TO WITHDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKEWISE, IN CIT V. HINDUSTAN TOOLS & FORGINGS P. LTD., (2008) 306 ITR 209 (P & H), WHERE, THE ASSESS EE IN THE REGULAR ASSESSMENT HAD BEEN ALLOWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTION 80HHC. THEREFORE, THE ACTION INITIATED BY THE AO FOR REASSESSMENT UNDER SECTION 147(B) COULD NOT BE HELD TO BE INVALID. 4.13. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFORMATIO N FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYMENT OF LIAB ILITY IN REGARD OF THE SALES TAX COLLECTED IN EXCESS. THE AS SESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT P ROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDER ATION. IN ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 34 THE CASE OF SAT NARAIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID NOT FORM THE SOLE BASIS FOR THE ASSESS ING OFFICER TO INITIATE REASSESSMENT PROCEEDING BUT HE ALSO TOO K INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT C OMMISSIONER AS WELL AS THE FACT THAT NO RETURN HAD BEEN FILED B Y THE ASSESSEE FOR ASSESSMENT YEAR 1995-96. THUS, IT WAS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY INVOKED THE JURISDICT ION TO INITIATE THE REASSESSMENT PROCEEDINGS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SINGH, (2005) 276 ITR 347 (P & H), IT WAS HELD THAT THE RESPONDENTS DID NOT HAVE THE LOCUS STANDI TO QUESTION THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOTICE. NON- ISSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS OF TH E LATE P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT AFFECT THE VALIDITY OF THE REASSESSMENT ORDERS. LIKEWISE, IN TILAK RAJ BE DI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FACTS COM ING TO LIGHT IN A SUBSEQUENT ASSESSMENT YEAR COULD VALIDLY FORM THE BASIS FOR INITIATING REASSESSMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 147. THE ACTION OF THE INCOME TAX AUTH ORITIES IN REOPENING THE ASSESSMENT OF THE ASSESSEE AND RESTRI CTING THE DEDUCTION UNDER SECTION 80-IB WAS HELD TO BE VALID. ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 35 4.14. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHOW TH E RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPAC ITY OF THE DONOR TO MAKE GIFTS AND THE OCCASION THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS . THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (1999) 240 ITR 728, 736-37, 739 (PAT), WHERE THE INVESTIGATION REPORT INDICATED THAT THE OFFICER HAD REASON TO BELIEVE THAT ON ACCOUNT OF FA ILURE ON THE PART OF THE PETITIONER-ASSESSEE TO DISCLOSE TRUE AN D FULL FACTS, INCOME HAD BEEN GROSSLY UNDER ASSESSED, REASSESSMEN T PROCEEDINGS WERE HELD VALIDLY INITIATED. 4.15. IN THE CASE OF KAPOOR BROTHERS V. UNION OF I NDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MA TERIAL EVIDENCE FOR THE PURPOSE OF REOPENING OF THE ASSESS MENT ALREADY COMPLETED HAS BEEN BROUGHT TO THE NOTICE OF THE AUT HORITY DURING THE COURSE OF ENQUIRY. THE NOTICE WAS HELD T O BE VALID BY THE HONBLE HIGH COURT. IN THE CASE OF VIPPY PROCE SSORS PVT. LTD. V. CIT, (2001) 249 ITR 7, 8 (MP), WHERE THE NE ED TO ISSUE NOTICE AROSE DUE TO NOTICING OF VAST DIFFERENCE IN VALUE OF ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 36 PROPERTIES DISCLOSED BY THE ASSESSEE AND THAT OF TH E REPORT OF THE VALUATION OFFICER AND THE REASONS THAT LED TO T HE ISSUE OF THE NOTICE WERE DULY RECORDED AND THE SAME WERE ALS O ADEQUATE AND BASED ON RELEVANT FACTS AND MATERIAL, INITIATIO N WAS UPHELD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CIT, (2001) 249 ITR 109, 110-11 (MP), WHERE THE NOTICE WAS ISSU ED AFTER RECORDING REASONS IN THAT REGARD, INITIATION WAS UP HELD. 4.16. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARD EN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 481, 489, 494-95, SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COU RT: (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE WAS HOLD ING SHARES IN AN AMALGAMATING COMPANY AND HE WAS ALLOTTED SHAR ES IN THE AMALGAMATED COMPANY AND SUCH SHARES WERE SOLD BY HI M AND HE HAS DISCLOSED THE MARKET PRICE OF SUCH SHARES AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISCLOSED THE COST OF ACQUISITION OF SHARES IN THE AMALGAMATING COMPANY IN ACCORDANCE WITH SECTION 49( 2) READ WITH SECTION 47(VII), INITIATION OF REASSESSMENT PR OCEEDINGS AFTER FOUR YEARS HAS BEEN SUSTAINED BECAUSE THERE WAS FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NEC ESSARY FOR ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 37 ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412,418-19 (RAJ), WHERE THE RETURN O F THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DEC LARED BY THE ASSESSEE, WHO CARRIED ON CON- TRACT BUSINESS, INITI ATION OF REASSESSMENT PROCEEDINGS BY ISSUING A NOTICE DATED 15-5-2001 PROPOSING TO REASSESS PETITIONER-ASSESSEE AT HIGHER RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRIBED UNDER SECTION 44 AD HAS BEEN SUSTAINED. IN THE CASE OF DR. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), THE REASSESSMENT PROCEEDI NGS WERE INITIATED AFTER RECORDING REASONS IN WRITING BY THE AO. THE NON- AVAILABILITY OF A FEW DOCUMENTS DEMANDED BY THE ASS ESSEE WOULD NOT MAKE THE REASSESSMENT PROCEEDINGS INITIAT ED FOR THE REASONS RECORDED IN DETAIL ILLEGAL. 4.17. IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT YEAR S IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALLY BY THE A SSESSING AUTHORITY WHETHER THE INCOME SHOULD BE TREATED UNDE R THE HEAD 'BUSINESS INCOME' OR 'PROPERTY INCOME'. THE ASSESSE E WOULD GET OPPORTUNITY TO SHOW SUFFICIENT CAUSE TO THE ASSESSI NG AUTHORITY ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 38 DURING THE COURSE OF ASSESSMENT. THUS, IT COULD NOT BE SAID THAT THERE WAS NO RELEVANT MATERIAL TO INITIATE PROCEEDI NGS UNDER SECTION 147. IN THE CASE OF KARTIKEYA INTERNATIONA L V. CIT, (2010) 329 ITR 539 (ALL), IN VIEW OF THE MATTER, TH E PETITIONER WAS NOT ENTITLED FOR THE DEDUCTION ON THE DUTY DRAW BACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HAD BEEN AL LOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1), I T HAD ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATION O F THE PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WAS LEGAL AND IN ACCORDANCE WITH LAW. 4.18. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: S URESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL), NOTW ITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX I N THE HANDS OF P, HE HAD TAKEN A STAND THAT THE AMOUNT DID NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT WAS NOT CLE AR AS TO IN WHOSE HANDS THE AMOUNT IN QUESTION HAD TO BE ASSESS ED. THE ITO WAS JUSTIFIED IN TAKING PROCEEDINGS UNDER SECTI ON 147 FOR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETITIONE RS ACCORDING TO THE CLAIM MADE BY THE PETITIONERS. LIKEWISE, HO NBLE KERALA ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 39 HIGH COURT IN CIT V. DR. SADIQUE UMMER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSING OFFICER COLLECTED FURT HER INFORMATION TO COMPLETE THE REASSESSMENTS WHICH WAS ALSO PERMIS SIBLE UNDER THE ACT. THE FINDING OF THE FIRST APPELLATE A UTHORITY AS WELL AS THE TRIBUNAL, THAT THE ASSESSING OFFICER HA D NO MATERIAL TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT W AS WRONG AND CONTRARY TO FACTS. THE ASSESSEE HAD NOT MAINTAI NED ANY BOOKS OF ACCOUNT. THEREFORE, THE REOPENING OF ASSES SMENTS WAS HELD TO BE VALID AND WITHIN TIME. IN THE CASE OF CIT V. UTTAM CHAND NAHAR, (2007) 295 ITR 403 (RAJ), THE NOTICE R EQUIRING THE ASSESSEE TO FILE THE RETURN WITHIN 30 DAYS WAS IN A CCORDANCE WITH SECTION 148 AS IT MUST BE DEEMED TO BE IN FORC E WITH EFFECT FROM 1-4-1989, AND IN FORCE AS ON THE DATE NOTICE W AS ISSUED. THERE WAS NO VIOLATION OF SECTION 148 IN RESPECT OF THE SPECIFIED PERIOD WITHIN WHICH THE RETURN IS TO BE SUBMITTED. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. 4.19. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONCEDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UN-AMENDED PROVISI ON OR UN-DER THE AMENDED PROVISION, THE RECOURSE OPEN TO THE ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 40 DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSE SSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHE RWISE INVALID. LIKEWISE, IN ATUL TRADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOUNT BOOKS OR RECORD AND OTHER MATERI AL WERE ALL COMMON WHICH WERE BEING CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATING TO THREE APPEALS. THE PETITION ER HAD NOTICE AND OPPORTUNITY OF BEING HEARD. THE REASSESSMENT PR OCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. V. LAMES KURIAN, ASST. CIT, (2007) 294 ITR 341 (GUJ), THE ASSESSING OFFICER HAD FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWANCES. THE REASSESSMENT PRO CEEDINGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, (2010) 323 ITR 60 (MAD), WHERE THE ASSESSEE H AD FURNISHED INCORRECT PARTICULARS AND THEREFORE, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE JUSTIFIED. 4.20. IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCTION OF PEN AL INTEREST WHICH HAD ACCRUED NOT IN THE PREVIOUS YEAR RELEVANT TO THE ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 41 ASSESSMENT YEAR BUT IN EARLIER YEARS. THIS THE ASSE SSEE HAD NOT DISCLOSED. THE REASSESSMENT WAS HELD TO BE VALID. L IKEWISE, IN KUSUM INDUSTRIES P. LTD. V. CIT, (2008) 296 ITR 242 (ALL), AS THE AWARD HAD BECOME FINAL IT WOULD BE TAKEN THAT T HE DIRECTORS OF THE ASSESSEE HAD ACCEPTED THE FACTUM OF EARNING OF SECRET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO BINDING ON THE COMPANY. THE NON-APPEARANCE OF ONE O F THE ARBITRATORS AND ONE OF THE DIRECTORS IN RESPECT OF THE SUMMON ISSUED UNDER SECTION 131 WOULD NOT MAKE THE REASSES SMENT INVALID. THE HONBLE KERALA HIGH COURT IN CIT V. IN DO MARINE AGENCIES (KERALA) P. LTD., (2005) 279 ITR 372 (KER) , HELD THAT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 14 4. THE MERE FACT THAT IT WAS NOT COMMUNICATED TO THE ASSES SEE WOULD NOT MAKE SUCH AN ASSESSMENT RECORDED IN THE ORDER S HEET ILLEGAL AND THAT WOULD NOT BAR FURTHER PROCEEDINGS UNDER SECTION 147. THUS, THE ASSESSMENT WAS HELD TO BE VA LIDLY REOPENED UNDER EXPLANATION 2(C) TO SECTION 147. LI KEWISE, IN CIT V. N. JAYAPRAKASH, (2006) 285 ITR 369 (KER), WH ERE, THE ASSESSEE COULD NOT, AFTER HAVING PERSUADED THE ASSE SSING AUTHORITY TO WITHDRAW THE NOTICE DATED 1-10-1993, P OINTING OUT THAT IT WAS NOT IN CONFORMITY WITH LAW, BE ALLOWED TO CONTEND ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 42 THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF TH E TIME-LIMIT BY THE FINANCE (NO.2) ACT, 1996, WITH EFFECT FROM 1 -4-1989. IN THE ABSENCE OF SPECIFIC PROVISION IN THE FINANCE (N O. 2) ACT, 1996, INVALIDATING PROCEEDINGS INITIATED BY THE INC OME-TAX OFFICER, THE ACTION TAKEN BY HIM APPLYING THE THEN EXISTING LAW COULD NOT BE SAID TO BE INVALID. 4.21. LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FROM T AND K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS HAD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE A SSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW OF THE ABS ENCE OF THESE DETAILS, THE ASSESSING OFFICER COULD NOT EXA MINE THE TAXABILITY OF ADVANCES OR LOAN RAISED BY THE ASSESS EE. THERE WAS FAILURE TO DISCLOSE MATERIAL FACTS NECESSARY FOR AS SESSMENT. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBLE ALLAHABAD HIGH COURT IN CHANDRA P RAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (ALL), WHE REIN, THE INCOME-TAX DEPARTMENT HAD SENT A REQUISITION ON 27- 3-2002, UNDER SECTION 132A REQUISITIONING THE BOOKS OF ACCO UNT AND OTHER DOCUMENTS SEIZED BY THE CENTRAL EXCISE DEPART MENT. THE ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 43 RECORD OF THE PROCEEDING DATED 18-4-2002, SHOWED TH AT THE REQUISITION WAS NOT FULLY EXECUTED AS ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN DELIVERED TO THE REQUISITIONING AUTHORITY. THE PROCEEDINGS INITIATED UNDER SECTION 147 WAS HELD TO BE VALID. 4.22. IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIARY CONSTI TUTED SUFFICIENT INFORMATION FOR THE ESCAPEMENT OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATIO N OR FURNISHING OF INACCURATE PARTICULARS AS REGARDS SAL E CONSIDERATION. THUS, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD B EEN VALIDLY INITIATED. 4.23. LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (2 006) 285 ITR 57 (KER), IT WAS CLEAR FROM THE REASONS REC ORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEV E THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRULY TH E MATERIAL FACTS AND THAT AS A CONSEQUENCE INCOME HAD ESCAPED ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 44 ASSESSMENT. THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSWARE CORPORATION LTD. V. CIT, (2 005) 277 ITR 40 (ALL), THE PRINCIPLES LAID DOWN BY THE CALCUTTA HIGH COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : (1979) 118 ITR 1005 (CAL) DID CONSTITUTE INFORMATION ON A POINT OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FORMING H IS BELIEF THAT THE INCOME TO THAT EXTENT HAD ESCAPED ASSESSMENT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER C ARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD T HAT THE DEPARTMENTAL VALUER'S REPORT CONSTITUTED MATERIAL F OR ENTERTAINING A BELIEF OF ESCAPED INCOME IN THE YEAR S UNDER CONSIDERATION. THE REASSESSMENT PROCEEDING WAS HELD TO BE VALID. 4.24. IN AUROBINDO SANITARY STORES V. CIT, (2005) 276 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BET WEEN THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESSEE-FIRM AND THE FIGURES OF LIA BILITIES TOWARDS SUNDRY CREDITORS IN THE BALANCE-SHEET OF THE ASSESS EE-FIRM FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1 989-90. THESE MATERIALS HAD A DIRECT LINK AND NEXUS FOR FOR MATION OF A BELIEF BY THE ASSESSING OFFICER THAT INCOME OF THE ASSESSEE-FIRM ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 45 HAD ESCAPED ASSESSMENT BECAUSE OF FAILURE OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT. IN THE CASE OF CIT V. BEST WOOD INDUST RIES & SAW MILLS, (2011) 331 ITR 63 (KER), THE ASSESSEE CHALLE NGED THE VALIDITY OF THE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SECTION 147 AND BOT H THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL ACCEPTE D THE CONTENTION OF THE ASSESSEE HOLDING THAT SO FAR AS T HE REASSESSMENTS RELATED TO ASSESSMENT OF UNEXPLAINED TRADE CREDITS, THEY WERE INVALID. ON APPEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VALID. IN HONDA SIEL POWE R PRODUCTS LTD. V. DEPUTY CIT, (2012) 340 ITR 53 (DEL), THERE BEING OMISSION AND FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THUS REASSESSMENT PROCEEDI NGS WERE HELD TO BE VALID. IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUTY CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCOUNT AND OTHE R MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, THE ORDE R PASSED BY THE COMMISSIONER (APPEALS) IN THE ASSESSMENT YEAR 2 001-02 WOULD CONSTITUTE 'INFORMATION' OR MATERIAL FROM ANY EXTERNAL ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 46 SOURCE AND, AS SUCH, THE REASSESSMENT PROCEEDINGS F OR THE ASSESSMENT YEAR 2000-01 WERE HELD TO BE VALID. LIK EWISE, IN THE CASE OF CIT V. SMT. R. SUNANDA BAI, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WERE HELD TO BE VALID ON THE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDER SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH DI SENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FOR THE ASSESS MENT YEARS 1992-93 AND 1993-94. 4.25. IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. ASST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BEING SUFFICI ENT MATERIAL ON RECORD FOR THE ASSESSING OFFICER TO FORM A BELIE F AS REGARDS THE ESCAPEMENT OF INCOME IN RELATION TO THE CLAIM O F DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIR E BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (2013) 357 ITR 17 7 (DEL), WHERE THERE BEING PRIMA FACIE MATERIAL IN THE POSSE SSION OF THE ASSESSING OFFICER TO FORM A TENTATIVE BELIEF THAT S ECTION 9(1)(I) HELD ATTRACTED, SAID REASON BY ITSELF CONSTITUTED A RELEVANT GROUND TO REOPEN THE ASSESSMENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 47 II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 ( MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 30 8 ITR 434 (KER)]; VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 ( MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 3 37 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 ( KARN)]; X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 3 43 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CI T [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 73 (DEL)]; XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 I TR 158 (GUJ)]; XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BANK LTD. [( 2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (B OM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 IT R 630 (MAD)]. 4.26. SO FAR AS, THE DECISION IN THE CASE OF CIT V S KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A PARTICULA R CONCLUSION, ONLY IN A SITUATION, WHEN NOT A SINGLE PIECE OF PAPER ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 48 OR DOCUMENT WAS RECOVERED, THEREFORE, THE HONBLE C OURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIAL FOUND AND THE ADDITION WAS MERELY ON THE BASIS OF STATEMENT ONLY THEN REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. LIKEWISE, IN THE CASE OF CIT VS S. KH ADER KHAN SON (2012) 254 CTR 228 (SC), AFFIRMING THE DECISION OF MADRAS HIGH COURT IN (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS MADE SOLELY ON THE BASIS OF STATEMENT U/S 133A AND NO OTHER MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE. 4.27. IF THE MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, WE FIND THAT THE LD. ASSESSING OFFICER WAS GENUINELY OF THE VIEW THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AS THE ASS ESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASES. I T IS ALSO NOTED THAT THERE WAS AN INFORMATION RECEIVED FROM D GIT(INV.) THAT THE ASSESSEE MADE CERTAIN BOGUS PURCHASES FROM THE PARTIES MENTIONED IN THE ASSESSMENT ORDER/IMPUGNED ORDER AND THE ASSESSEE COULD NOT SUBSTANTIATE THE GENUINE NESS OF THE PURCHASE MADE FROM SUCH PARTIES. THE NOTICES ISSUED U/S ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 49 133(6) WERE ALSO RETURNED BACK BY THE POSTAL AUTHOR ITIES WITH THE REMARKS NOT KNOWN. THE SALES TAX DEPARTMENT H AS ALSO DECLARED THESE THREE PARTIES AS HAWALA DEALERS AND THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE SUBSTANTIATING THE PU RCHASES MADE FROM THESE PARTIES. IT IS ALSO NOTED THAT THE COPIES OF DELIVERY CHALLANS, FILED BY THE ASSESSEE, WERE NOT BEARING THE SIGNATURE, SEAL, STAMP AND LORRY NUMBERS. THUS, THE TOTALITY OF FACTS AVAILABLE ON RECORD, CLEARLY INDICATES THAT T HERE WAS REASONABLE BELIEF WITH THE ASSESSING OFFICER THAT I NCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THUS, SO FAR AS REOPENING IS CONCERNED, IN THE LIGHT OF FOREGOING D ISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THUS, THIS GRO UND OF THE ASSESSEE IS DEVOID OF ANY MERIT, CONSEQUENTLY, DISM ISSED. 5. THE ASSESSEE HAS ALSO CHALLENGED CONFIRMING TH E DISALLOWANCE OF PURCHASE OF RS.5,01,785/- AT THE RA TE OF 10% OF RS.50,17,844/- MADE FROM SUSPICIOUS DEALERS. WE HAV E MADE AN ELABORATE DISCUSSION, WHILE DEALING WITH THE APP EAL OF THE REVENUE IN PRECEDING PARAS OF THIS ORDER AND FINALL Y AFFIRMED THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (AP PEAL). HOWEVER, SINCE, THE ASSESSEE HAS ALREADY DECLARD GR OSS PROFIT AT ITA NO.4736/MUM/2015 & C.O. NO.112/MUM/2017 ACON MEASUREMENT PVT. LTD. 50 THE RATE OF 33% AND NET PROFIT AT THE RATE OF 13.89 %, THEREFORE, BY TAKING A LENIENT VIEW, THE ADOPTION OF PROFIT AT THE RATE OF 10% IS REDUCED TO 8% OF THE BOGUS PURCHASES I.E. RS.50,17,844/-, THUS, THIS GROUND IS PARTLY ALLOWED . THEREFORE THIS CROSS OBJECTION OF THE ASSESSEE IS ALSO PARTLY ALLOWED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 31/08/2017. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER MUMBAI; ) DATED : 06/09/2017 F{X~{T? P.S / /. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE ASSESSEE. 3. 1 1 2$ ( +, ) / THE CIT, MUMBAI. 4. 1 1 2$ / CIT(A)- , MUMBAI, 5. 45/$ ! , 1 +,'+! 6 , / DR, ITAT, MUMBAI 6. 7'8 / GUARD FILE. ! / BY ORDER, 04,$/$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
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