Ganesh Associates & Deveopers, Rajahmundry V. THE ITO, Rajahmundry

CO 29/VIZ/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2408 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 08-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.243/VIZAG/2014 ( / ASSESSMENT YEAR: 2005-06) ITO, WARD - 3, RAJAHMUNDRY VS. M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY [PAN: AAGFG0302B ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O.29/VIZAG/2014 (ARISING OUT OF I.T.A.NO.243/VIZAG/2014) ( / ASSESSMENT YEAR: 2005-06) M/S. GANESH AS SOCIATES & DEVELOPERS, RAJAHMUNDRY VS. ITO, WARD - 3, RAJAHMUNDRY ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T.S.N. MURTHY, DR / DATE OF HEARING : 26.07.2016 / DATE OF PRONOUNCEMENT : 09.09.2016 ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 2 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)-11, MUMBAI CAMP OFFICE AT VISAKHAPATNAM DATE D 19.3.2014 FOR THE ASSESSMENT YEAR 2005-06 AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS CHALLENGING THE NOTICE ISSUED U/S 148 O F THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A FIRM C ARRYING ON THE BUSINESS OF REAL ESTATE. THE FIRM HAD ENTERED INTO AN AGREEMENT WITH M/S. VIJAYA DURGA REAL ESTATE, PALAKOLLU AND DR. A. SATYANARAYANA, RAJAHMUNDRY, TO DEVELOP THEIR LAND ADMEASURING 28.0 1 ACRES SITUATED NEAR DIWANCHERUVU ABUTTING TO NATIONAL HIGHWAY. AS PER THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAS TO GET RS.2 LAKHS PER ACRE FOR DEVELOPMENT OF FLATS AS PER THE PRE AGREED TERMS & CONDITIONS FURTHER, THE ASSESSEE FIRM WAS ALSO ENTITLED TO RETAIN THE S ALE PROCEEDS OF LAND OVER AND ABOVE THE GUIDELINE VALUE OF SUB-REGISTRAR IN AS MUCH AS THE ADDITIONAL AMOUNT REPRESENTED THE VALUE OF AMENITIE S PROVIDED BY THE ASSESSEE FIRM. THE ASSESSEE FIRM HAS RECEIVED A SU M OF RS.5,61,60,203/- BEING THE SURPLUS OVER THE GUIDELI NE VALUE OF THE SUB- REGISTRAR FROM OUT OF TOTAL RECEIPTS OF RS.6,95,00, 000/-. A SURVEY WAS ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 3 TAKEN PLACE AT THE BUSINESS PREMISES OF THE ASSESSE E FIRM ON 12.3.2005 AND NOTE BOOK WAS FOUND WHEREIN THE DETAILS OF THE RECEIPTS BY WAY OF SALE OF FLATS AND THE DETAILS OF THE EXPENDITURE IN CURRED WERE RECORDED. AS PER THE SAID NOTE BOOK, THE TOTAL RECEIPTS WERE RS.6,12,26,833/- UP TO THE DATE OF SURVEY. THEREAFTER, THE ASSESSEE HAD F ILED A RETURN OF INCOME BY ADMITTING TOTAL INCOME OF RS.11,39,850/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS BELATED ONE, TO RE GULARIZE THE SAME, A NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSE E ON 2.11.2007. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A L ETTER DATED 5.11.2007 STATING THAT THE RETURN FILED BY THE ASSESSEE ORIGI NALLY BE TREATED AS IN RESPONSE TO NOTICE ISSUED. IN THE ASSESSMENT ORDER , THE A.O. HAS OBSERVED THAT THOUGH THE SALE PROCEEDS OF THE FLATS OF THE ASSESSEE AT RS.6.9 CRORES THE ASSESSEE NOT FILED AUDIT REPORT A S PER SECTION 44AB OF THE ACT AND NEITHER PROFIT & LOSS ACCOUNT NOR BALAN CE SHEET FOR THE YEAR ENDING 31.3.2005 WAS FURNISHED ALONG WITH THE RETUR N OF INCOME. ONLY RECEIPTS AND EXPENDITURE STATEMENT ARE ENCLOSED TO THE RETURN OF INCOME. HE FURTHER OBSERVED THAT DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS EXPLAINED THAT NO COMP LETE AND REGULAR BOOKS OF ACCOUNTS ARE MAINTAINED BY THE ASSESSEE. HENCE, NO AUDIT WAS REQUIRED U/S 44AB OF THE ACT COULD BE CONDUCTED. I N THE ABSENCE OF COMPLETE AND REGULAR BOOKS OF ACCOUNTS, INCOME OF T HE ASSESSEE MAY BE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 4 ESTIMATED. THE A.O. AFTER CONSIDERING THE EXPLANAT ION OF THE ASSESSEE BY CONSIDERING THE DETAILS FILED BY THE ASSESSEE AN D AFTER VISITING THE LAY OUT EXECUTED BY THE ASSESSEE THEREAFTER AFTER COMPA RING THE OTHER CASES IN THE SIMILAR LINE OF BUSINESS SUCH AS BIJAPURI TO WNSHIP, M/S. SUMA ESTATES, HE HAS ESTIMATED INCOME OF THE ASSESSEE AT RS.80 LAKHS. ACCORDINGLY, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. SUBSEQUENTLY, THE A.O. HAD ISSUED A NOTICE U/S 148 OF THE ACT DATED 25.3.2011 ON THE GROUND THAT INCOME CHARGEABLE TO T AX HAS ESCAPED ASSESSMENT. BEFORE A.O. THE ASSESSEE HAS SUBMITTED THAT ASSESSMENT IN ITS CASE ALREADY COMPLETED U/S 143(3) OF THE ACT BY CONSIDERING ALL THE FACTS AND THE A.O. HAS ESTIMATED THE INCOME AND SUB MITTED THAT THE SUBSEQUENT NOTICE ISSUED U/S 148 OF THE ACT DATED 2 5.3.2011 IS NOT LEGAL AND INVALID. HOWEVER, THE ASSESSING OFFICER BY FOL LOWING THE DECISION OF THE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (2007) 291 ITR 500, HE HAS OBSERVED THAT THE POWER TO REOPEN THE PROCEEDINGS WHETHER TO ASSESS, RE-ASSESS OR RE- COMPUTE THE INCOME, IT HAS PREDICTED ON A TEST WHER E A REASONABLE PERSON WOULD FORM A BELIEF THAT THERE WAS RELEVANT MATERIAL FOR INITIATING THE PROCEEDINGS U/S 147 OF THE ACT. HE FURTHER OBS ERVED THAT IT IS IN THE DISCRETION OF THE A.O. TO REOPEN THE PROCEEDINGS AS PER THE ABOVE JUDGEMENT OF THE HONBLE SUPREME COURT THE OBJECTIO N RAISED BY THE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 5 ASSESSEE IS OVERTURNED AND ASSESSMENT WAS COMPLETED BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE OF RS.3,35,51,689/-. 3. THE ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE NOTICE ISS UED U/S 148 OF THE ACT BY THE ASSESSING OFFICER IS INVALID AND LIABLE TO B E QUASHED. IT WAS ALSO SUBMITTED THAT THE REOPENING IS DONE BY THE A.O. BA SED ON THE CHANGE OF OPINION AND IT IS NOT PERMISSIBLE UNDER THE LAW. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE HAS OBS ERVED THAT THE A.O. ON PERUSAL OF THE INFORMATION AVAILABLE TO HIM FOUN D THAT THE ASSESSEE HAD SHOWN SALE OF ONLY 203 FLATS, WHEREAS THE MANAG ING PARTNER ADMITTED IN THE COURSE OF SURVEY OF AS MANY AS 330 FLATS HAD BEEN SOLD. BASED ON THE ABOVE INFORMATION, A.O. HAS A REASON T O BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. WI TH THE LD. COMMISSIONERS APPROVAL THE ASSESSMENT WAS REOPENED BY ISSUING A NOTICE U/S 148 ON 25.3.2011 AND UPHELD THE RE-OPENI NG OF THE ASSESSMENT DONE BY THE A.O. THE LD. CIT(A) FURTHER OBSERVED THAT THERE IS NOTHING ON THE RECORD TO SHOW THAT INCOME TAX STATEMENT FILED BY THE LAND OWNER HAS BEEN CONSIDERED BY THE A.O. I N THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. TO THAT EXTENT OF IT, IT CANNOT BE SAID THAT THE RE-ASSESSMENT PROCEEDINGS WERE INITIATED B Y THE PRESENT A.O. BASED SOLELY ON CHANGE OF OPINION ON THE SAME SET O F FACTS CONSIDERED IN ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 6 THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. IT IS ALSO NOTED THAT THE DISCLOSURE OF LOWER AMOUNT OF SALE CONSIDERATION IN ITS RETURN OF INCOME WOULD AMOUNT TO A FAILURE ON THE PART OF THE ASSESS EE FIRM TO DISCLOSE FULLY AND TRULY AND MATERIAL FACTS RELEVANT TO ITS ASSESSMENT. ON THAT GROUND ALSO, THE PROVISO TO SECTION 147 OF THE ACT WOULD NOT SAVE THE ASSESSEE FROM BEING SUBJECT TO RE-ASSESSMENT. ACCO RDINGLY, HE UPHELD THE RE-OPENING ORDER PASSED BY THE A.O. 4. SO FAR AS MERITS OF THE CASE IS CONCERNED, HE HA S OBSERVED THAT THE PROFIT RATIO OF 11.551% IS REASONABLE IN THE ORIGIN AL ASSESSMENT ORDER, WOULD BE A LEGITIMATE GUIDE TO ESTIMATE THE PROFIT ON THE ADDITIONAL TURNOVER THAT HAS BEEN HITHERTO SUPPRESSED BY THE A SSESSEE FIRM APPLYING SUCH A PROFIT RATIO TO THE SUPPRESSED TURN OVER OF ` 2,15,22,186/- IDENTIFIED, THE INCOME THAT HAD ESCAP ED ASSESSMENT IN THE ORIGINAL ASSESSMENT ORDER WOULD COME TO ` 24,77,204/- ADDITION TO THAT EXTENT IN THE RE-ASSESSMENT ORDER IS HEREBY SUSTAIN ED AND THE BALANCE IS DIRECTED TO BE DELETED. 5. ON BEING AGGRIEVED, REVENUE AS WELL AS ASSESSEE FILED CROSS APPEALS BEFORE THE TRIBUNAL I.E. ON MERITS REVENUE IS IN APPEAL. SO FAR AS LEGAL ISSUE OF RE-OPENING IS CONCERNED, ASSESSEE FILED A CROSS OBJECTION. THE CROSS OBJECTION FILED BY THE ASSESS EE IS REPRODUCED AS UNDER: ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 7 (1) (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) IS NOT JUSTIFIED IN HOLDING THAT THE NOTICE ISSUED U/S 148 IS A VALI D NOTICE. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OUGHT TO HAVE QUASHED THE NOTICE ISSUED U/S 148 AS ILLEGAL AND CO NSEQUENTLY HELD THAT THE ENTIRE REASSESSMENT PROCEEDINGS ARE VOID-A B-INITIO. (2) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THA T THE PROFIT WAS UNDER ASSESSED IN THE ORIGINAL ASSESSMENT PROCEEDIN GS. (3) WITHOUT PREJUDICE TO THE ABOVE, THE PROFIT EST IMATED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ON A HIGHER SIDE. (4) ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIM E OF APPEAL HEARING. 6. THE MAIN OBJECTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT NOTICE U/S 148 OF THE ACT ISSUED BY THE A.O. D ATED 25.3.2011 BEYOND 4 YEARS AND THEREFORE, THE PROVISO TO SECTIO N 147 OF THE ACT IS APPLICABLE IN THE ASSESSEES CASE AND AS PER THE PR OVISO THE A.O. HAS TO ALLEGE THAT THERE IS A FAILURE ON THE PART OF THE A SSESSEE TO DISCLOSE ALL THE TRUE PARTICULARS BEFORE THE A.O. IF THE A.O. HA S NOT RAISED ANY ALLEGATION IN THE REASONS RECORDED, THE RE-OPENING IS BAD AND NOTICE HAS TO BE QUASHED. TO SUPPORT HIS ARGUMENT, HE HAS REL IED ON THE FOLLOWING JUDGEMENTS: 1. GENERAL MOTORS INDIA (P) LTD. VS. DCIT (2014) 360 I TR 527 (GUJ) 2. DYNACRAFT AIR CONTROLS VS. SMT. SNEHA JOSHI AND OTH ERS (2013) 355 ITR 102 (BOM) 3. MAHALAKSHMI MOTORS LTD. VS. DCIT 265 ITR 53. 4. SRI SENA VAIBAGH SAHAKARI VS. DCIT (2016) 69 TAXMAN .COM 245 (GUJARAT) 5. SADHBHAVANA ENGINEERING LTD. VS. DCIT (2011) 333 IT R 483 (GUJARAT) 6. GRINDWELL NORTON LTD. VS. JAGADISH PRASAD JANGID, A CIT & OTHERS 267 ITR 673 (BOM.) ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 8 7. PENNAR INDIA LTD. VS. DCIT 241 ITR 672 (MAD.) 8. HINDUSTAN LEVER LTD. VS. RB WADEKAR 268 ITR 332 (B OM.) 7. THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED A FU RTHER LEGAL ISSUE THAT THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE A.O., IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE A.O. AFTER CONSIDERING THE ENTIRE DETAILS, HE HAS ESTIMATED THE INCOME OF THE ASSESSE E ON THE BASIS OF VERY SAME INFORMATION, THE A.O. AGAIN ISSUED A NOTI CE ON THE GROUND THAT THERE IS AN ESCAPEMENT OF INCOME AND SUBMITTED THAT IT IS A CLEAR CHANGE OF OPINION WHICH IS NOT PERMISSIBLE AS PER L AW. TO SUPPORT HIS ARGUMENTS HE HAS RELIED ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 . THE LD. A.R. HAS POINTED OUT FROM THE PAPER BOOK P AGE NO.3 QUESTION NO.22 THAT WHERE THE A.O. HAS ASKED THE ASSESSEE TO EXPLAIN HOW MANY FLATS SOLD SO FAR AND HOW MUCH AMOUNT WAS RECEIVED, IN RESPONSE TO THAT, IT WAS ANSWERED THAT WE HAVE SOLD ABOUT 330 F LATS AND 51 REMAIN TO BE SOLD AND OUT OF 330 FLATS, REGISTRATION WAS D ONE FOR ABOUT 200 FLATS AND REGISTRATION YET TO BE DONE FOR ABOUT 130 FLATS AND FURTHER SUBMITTED THAT THE LD. CIT(A) IN HIS ORDER, HE HAS OBSERVED T HAT THE ASSESSEE HAS SOLD 330 FLATS BUT ONLY DISCLOSED 203 FLATS, IT IS FACTUALLY NOT CORRECT. THE A.O. IN THE ORIGINAL ASSESSMENT ORDER, HE HAS CONSI DERED ALL THE DETAILS SUCH AS PROFIT & LOSS ACCOUNT (PAPER BOOK PAGE NO.1 2) CAPITAL ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 9 INTRODUCTION BY THE PARTNERS AT PAGE NO.13 AND OTHE R DETAILS ABOUT LAY OUT APPROVAL, EXPENDITURE CAPITAL INTRODUCTION AT P APER BOOK PAGE NOS.15 & 16 AND THE A.O. AFTER CONSIDERING THE OTHE R ASSESSEES WHO ARE INVOLVED IN THE REAL ESTATE BUSINESS PARTICULARLY B IJAPURI TOWNSHIP, RAJAHMUNDRY & M/S. SUMA ESTATE, RAJAHMUNDRY ESTIMAT ION WAS MADE. SUBSEQUENTLY, ON THE VERY BASIS OF SOME MATERIAL AN OTHER A.O. CAME TO A CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME WHI CH IS NOT PERMISSIBLE, WHICH AMOUNTING TO CHANGE OF OPINION. 8. ON THE OTHER HAND, THE LD. D.R. HAS POINTED OUT THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY, TRULY ALL MATERIAL TO COMPLETE THE ASSESSMENT, THEREFORE, THE A.O. HAS ISSUED A NOTICE U/S 148 OF THE ACT AND RE- ASSESSED THE INCOME OF THE ASSESSEE WHICH IS ACCORD ING TO LAW. THE LD. D.R. HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE CIT(A) IN RESPECT OF RE-OPENING AND SUBMITTED THAT THE RE-OPENING ORDERS PASSED BY BOTH THE AUTHORITIES BELOW MAY BE UPHELD. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS CARRYING ON THE REAL ESTATE BUSINESS. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH M/S. VIJAYA DURGA RE AL ESTATE, PALAKOLLU AND DR. A. SATYANARAYANA OF RAJAHMUNDRY TO DEVELOP THEIR LANDS. THERE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 10 IS A SURVEY TOOK PLACE AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON 12.3.2005 AND A NOTE BOOK WAS FOUND WHEREIN THE DET AILS OF THE RECEIPTS BY WAY OF SALE OF FLATS AND THE DETAILS OF EXPENDIT URE INCURRED WERE RECORDED. AS PER SAID NOTE BOOK, THE TOTAL RECEIPT S ARE OF ` 6,12,26,833/- UPTO THE DATE OF SURVEY. THEREAFTER, THE ASSESSEE HAS FILED A RETURN OF INCOME FOR A.Y. 2005-06 ADMITTING TOTAL INCOME OF ` 11,39,850/-. IN THE ASSESSMENT ORDER, THE A.O. HAS OBSERVED THAT THOUGH THE GROSS RECEIPTS OF THE ASSESSEE ARE AT ` 6.9 CRORES, THE RETURN OF INCOME FILED IS NOT ACCOMPANIED WITH THE AUDIT REPORT U/S 44AB OF THE A CT. THE ASSESSEE NEITHER FILED PROFIT & LOSS ACCOUNT NOR BALANCE SHE ET. ONLY A RECEIPT AND EXPENDITURE STATEMENT IS ENCLOSED TO THE RETURN OF INCOME. IT IS SUBMITTED BEFORE THE A.O. THAT NO COMPLETE AND REGU LAR BOOKS OF ACCOUNTS WERE MAINTAINED BY THE ASSESSEE, HENCE NO AUDIT IS REQUIRED U/S 44AB OF THE ACT WOULD BE CONDUCTED. HE FURTHER STATED THAT ON THE BASIS OF THE REGISTER MAINTAINED BY THE ASSESSEE WI TH REGARD TO THE SALE OF FLATS AND AMOUNT OF CONSIDERATION RECEIVED, EXPE NDITURE INCURRED AND OTHER INFORMATION AVAILABLE THE ASSESSEE FILED A RE TURN OF INCOME. HE PLEADED BEFORE THE A.O. THAT IN THE ABSENCE OF COMP LETE AND REGULAR BOOKS OF ACCOUNTS, THE INCOME OF THE ASSESSEE MAY B E DETERMINED ON THE ESTIMATE BASIS. THE A.O. AFTER EXAMINING THE A GREEMENT ENTERED BY THE ASSESSEE AND ALSO BASED ON THE NOTE BOOK FILED DURING THE COURSE OF ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 11 THE SURVEY AND ALSO TAKEN INTO CONSIDERATION OF OTH ER ASSESSEES WHO ARE CARRYING SIMILAR LINE OF BUSINESS AT RAJAHMUNDRY HA S ESTIMATED THE INCOME OF THE ASSESSEE AT ` 80 LAKHS. THEREAFTER, THE A.O. HAS ISSUED A NOTICE U/S 148 OF THE ACT DATED 25.3.2011 FOR THE F OLLOWING REASONS: OFFICE OF THE INCOME TAX OFFICER, WARD-3 RAJAHMUNDRY, DT.24.1.2012 F.NO.ITO, WARD-3/RJY/11-12 TO M/S. GANESH ASSOCIATES & DEVELOPERS D.NO.75-6-49, SARVA RESIDENCY, 3 RD STREET, ADDEPALLI COLONY, RAJAHMUNDRY SIR, SUB: REASONS FOR ISSUE OF NOTICE U/S 148 OF THE INC OME TAX ACT, 1961 IN THE CASE OF M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY, FOR THE A.Y. 2005-06 INTIMATION REGARDING. REF: YOUR LETTER DT. 9.1.2012 RECEIVED IN THIS OFF ICE ON 11.1.2012 *** WITH REFERENCE TO THE ABOVE, THE REASONS FOR ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961 IN THE ABOVE MENTIONED CASE ARE AS UN DER: ON VERIFICATION OF RECORDS, IT IS NOTICED THAT THE SALES ADMITTED BY THE ASSESSEE UPTO 13.3.2005 I.E. UPTO THE DATE OF SURVEY, OUT OF VDRE LAND ARE 125 PLOTS WITH AN EXTENT OF 31,147 SQ.YARDS AND ON-MONEY RECEIPTS WHI CH FALL TO THE SHARE OF THE ASSESSEE WERE SHOWN AT RS.2,71,12,917/- WHILE THE S ALE DETAILS AS PER THE STATEMENTS FURNISHED BY M/S. VDRE SHOW THAT 170 OF ITS PLOTS COMPRISING 48,037 SQ.YARDS WERE SOLD FOR THE SAME PERIOD. THE DIFFER ENCE IN THE LAND AREA OF THESE 45 PLOTS IN 16891 SQ.YARDS AND AT THE AVERAGE ON-MONEY RECEIPTS PER SQ.YARD WORKING OUT TO RS.876/- PER YARD, CONCEALMENT OF RECEIPTS B Y THE ASSESSEE WORKS OUT TO RS.1,47,96,516/-. SIMILARLY, THERE IS A VAST DISCREPANCY IN RESPECT OF THE LAND BELONGING TO THE OTHER LAND OWNER, SRI A. SATYANARAYANA. ASSESSEES MANAGING PARTNER HAD ADMITTED IN THE SWORN STATEMENT THAT 330 OF THE TOTAL 381 PL OTS WERE SOLD BY 13.3.2005. WHILE 170 PLOTS OUT OF VDRES LAND WERE SOLD AS ADM ITTED BY THE FIRM, THE BALANCE OF 160 PLOTS SOLD OUT OF THE LAND OF THE SRI A. SATYAN ARAYANA. HOWEVER, THE ASSESSEE HAS ADMITTED RECEIPTS IN RESPECT OF ONLY 71 PLOTS W ITH A TOTAL AREA OF 16741 SQ.YARDS. WITH AN AVERAGE EXTENT OF EACH PLOT WORKING OUT TO 240 SQ.YARDS, THE EXTENT OF LAND SUPPRESSED IS [240X89] 21360 SQ.YARDS AND ASSESSEE S SHARE CONSIDERATION AT RS.876/- PER SQ.YARD COMES TO RS.1,87,11,360/- [213 60X876]. ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 12 THUS, THE ENTIRE SUPPRESSED RECEIPTS OF RS.3,35,07 ,876/- [RS.147965156 + 18711360] HAVE TO BE BROUGHT TO TAX FOR THE ASST. Y EAR 2005-06. IN VIEW OF THE ABOVE, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. THIS IS FOR YOUR KIND INFORMATION. YOURS FAITHFULLY, SD/- (D. SUNDARA RAO) INCOME TAX OFFICER, WARD-3, RAJAHMUNDRY 10. IN SO FAR AS FIRST OBJECTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE NOTICE WAS ISSUED BEYOND 4 YEA RS AND SUBMITTED THAT THE PROVISO TO SECTION 147 OF THE ACT WILL COM E INTO PLAY. 11. FOR THE SAKE OF CONVENIENCE, PROVISO TO SECTION 147 OF THE ACT IS EXTRACTED AS UNDER: PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF S ECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E PART OF THE ASSESSEE TO 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 ASSESSMENT YEAR. 12. IT IS CLEAR FROM THE ABOVE PROVISO OF SECTION 1 47 OF THE ACT THAT WHERE ASSESSMENT IS COMPLETED U/S 143(3) OF THE ACT IF THE A.O. OF THE OPINION THAT THERE IS AN ESCAPEMENT OF INCOME AFTER 4 YEARS, HE HAS TO ALLEGE THAT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 13 A RETURN TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT FOR THAT ASSESSMENT YEAR. FROM THE ABOV E REASONS RECORDED BY THE A.O., WE FIND THAT THERE IS NO ALLEGATION/OB SERVATION THAT, THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. THE P ROVISO TO SECTION 147 OF THE ACT HAS BEEN CONSIDERED BY VARIOUS COURTS AN D THE RELEVANT CASE LAWS ARE DISCUSSED, WHICH ARE AS UNDER. 13. IN THE CASE OF GENERAL MOTOR INDIA PVT. LTD. (SUPRA), THE HONBLE GUJARAT HIGH COURT HAS HELD THAT WHEN THE N OTICE ISSUED BY THE A.O. AFTER 4 YEARS, THE A.O. NOT RECORDED A SATISFA CTION THAT INCOME HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT, NOTICE IS NOT VALID. IN THE ABSENCE OF ANY SATISFA CTION HAVING BEEN RECORDED BY THE A.O. THAT THE INCOME HAS ESCAPED BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT HEREUNDER CONSID ERATION ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT IS FAILURE AND T HEREFORE, THE IMPUGNED NOTICE U/S 148 OF THE ACT CANNOT BE SUSTAINED. 14. IN THE CASE OF DYNACRAFT AIR CONTROLS (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS OBSERVED THAT ONCE A.O. HAS I SSUED A NOTICE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 14 AFTER 4 YEARS, THE CONDITION PRECEDENT IS THAT THE A.O. HAS TO STATE THAT THERE WAS A FAILURE OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT YE AR IF THE A.O. FAILED TO GIVE A FINDING THAT THE RE-OPENING IS NOT VALID. 15. IN THE CASE OF MAHALAKSHMI MOTORS LTD. (SUPRA) THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE PETITIO NER ASSESSEE FURNISHED ALL THE MATERIAL FACTS TRULY AND FULLY BEFORE THE A SSESSING AUTHORITY AT THE RELEVANT POINT OF TIME WHEN ONCE ALL THE INFORMATIO N IS FURNISHED TO THE ASSESSING AUTHORITY, IT IS FOR THE ASSESSING AUTHOR ITY TO DECIDE WHAT INFERENCE CAN BE REASONABLY BE DRAWN AND WHAT LEGAL INFERENCES TO BE DRAWN ULTIMATELY. IT IS TO BE NOTED WHETHER FULL A ND TRUE DISCLOSURE OF THE FACTS WAS DONE BY THE ASSESSEE, THE DEPARTMENT CANNOT RE-OPEN THE ASSESSMENT EVEN AFTER THERE IS A LOSS OF REVENUE OR EVEN AFTER LEGAL INFERENCE DRAWN BY THE ASSESSING AUTHORITY WAS ERRO NEOUS IN THE FIRST PLACE. EVEN MERE CHANGE OF OPINION BY THE ASSESSIN G AUTHORITY IS NOT ENOUGH TO RE-OPEN THE ASSESSMENT IN VIEW OF THE VAR IOUS DECISIONS OF THE HONBLE SUPREME COURT. 16. IN THE CASE OF SRI SENA VAIBAGH SAHAKARI VS. DCIT (SUPRA) THE HONBLE GUJARAT HIGH COURT HAS CONSIDERED THE S IMILAR ISSUE AND HAS HELD THAT IN THE ABSENCE OF ANY FAILURE ON THE PART OF THE ASSESSEE TO ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 15 DISCLOSE ALL THE MATERIAL FACTS NECESSARY FOR ASSES SMENT, ASSESSING OFFICER COULD NOT INITIATE RE-ASSESSMENT PROCEEDINGS AFTER EXPIRY OF 4 YEARS FROM THE RELEVANT ASSESSMENT YEAR. 17. IN THE CASE OF SADBHAVANA ENGINEERING LTD. (SUPRA) THE HONBLE GUJARAT HIGH COURT HAS HELD THAT ON PLAIN R EADING OF THE REASONS RECORDED IT WAS APPARENT THAT THEY WERE TOTALLY SIL ENT AS REGARDS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE RELEVANT ASSESSMENT YEARS. WHETHER OR NOT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECES SARY FOR ITS ASSESSMENT WAS A MATTER OF FACT AND THERE COULD BE NO DEEMED F AILURE AS WAS SOUGHT TO BE CONTENDED ON BEHALF OF THE INCOME TAX AUTHORITIES. THEREFORE, IN THE ABSENCE OF ANY FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT, THE NOTICE U/S 148 OF THE ACT HAVING BEEN ISSUED AF TER EXPIRY OF THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR, THE VERY INITIATION OF THE PROCEEDINGS U/S 147 OF THE ACT SH OULD VITIATED AND COULD NOT BE SUSTAINED. 18. IN THE CASE OF GRINDWELL NORTON LTD. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT NOWHERE IN THE REA SON RECORDED BY ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 16 THE A.O., IT IS STATED THAT THERE IS A FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS IN THE RETURN FILED BY THE ASSESSEE. IT IS NOT IN DISPUTE THAT IN THE PRESENT CASE, THE RE-OPENING OF THE ASSESSMENT IS BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR. IN THE ABSENCE OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, THE RE -OPENING OF THE ASSESSMENT BEYOND THE PERIOD OF 4 YEARS CANNOT BE S USTAINED. 19. IN THE CASE OF PENNAR INDIA LTD. (SUPRA) THE HONBLE MADRAS HIGH COURT HAS CONSIDERED THE APPLICATION OF PROVIS O TO SECTION 147 OF THE ACT AND HELD THAT THE PRE-CONDITION FOR THE EXE RCISE OF POWER U/S 147 OF THE ACT, IN CASES WHERE POWER IS EXERCISED WITHI N A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS A B ELIEF REASONABLY ENTERTAINED BY A.O. THAT ANY INCOME CHARGEABLE TO T AX HAS ESCAPED ASSESSMENT FOR THAT ASSESSMENT YEAR. HOWEVER, WHEN THE POWER IS INVOKED AFTER THE EXPIRY OF THE PERIOD OF 4 YEARS F ROM THE END OF THE ASSESSMENT YEAR, A FURTHER CONDITION FOR SUCH AN EX ERCISE IS IMPOSED BY THE PROVISO, NAMELY, THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OF THE ACT OR IN RESPONSE TO A NOTICE ISSUED U/S 142 OF THE ACT OR SECTION 148 OF THE ACT OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 17 ITS ASSESSMENT FOR THAT ASSESSMENT YEAR. UNLESS TH E CONDITION IN THE PROVISO IS SATISFIED, THE A.O. DOES NOT ACQUIRE JUR ISDICTION TO INITIATE ANY PROCEEDINGS U/S 147 OF THE ACT AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT. THE A.O. MUST NECESSARILY RECOR D NOT ONLY HIS REASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMEN T BUT ALSO THE DEFAULT OR FAILURE COMMITTED BY THE ASSESSEE. FAIL URE TO DO SO WOULD VITIATE NOTICE AND THE ENTIRE PROCEEDINGS. WHENEVE R A NOTICE IS ISSUED BY THE A.O. BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, SUCH A NOTICE BEING ISSUED WITHOUT RECORDING THE REASONS FOR HIS BELIEF THAT INCOME ESCAPED ASSESSME NT, IT CANNOT BE PRESUMED IN LAW THAT THERE IS ALSO A FAILURE ON THE PART OF THE ASSESSEE TO FILE THE RETURNS REFERRED TO IN THE PROVISO OR A FAILURE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS. THE REASONS REFERRED TO IN THE MAIN PART OF SECTION 147 OF THE ACT WOULD, IN CASES WHERE THE PR OVISO IS ATTRACTED, INCLUDING REASONS REFERRED TO IN THE PROVISO AND IT IS NECESSARY FOR THE A.O. TO RECORD THAT ANY ONE OR ALL CIRCUMSTANCES RE FERRED TO IN THE PROVISO EXIST BEFORE THE ISSUE OF NOTICE U/S 147 OF THE ACT. IF A.O. CHOSES TO ENTERTAIN THE BELIEF THAT THE ASSESSMENT HAS BEEN MADE IN THE BACKGROUND OF ASSESSEES FAILURE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS IT IS NECESSARY FOR HIM TO RECORD THAT FACT, AND IN THE ABSENCE OF RECORD TO THAT EFFECT, IT CANNOT BE HELD THAT A NOT ICE WITHOUT RECORDING ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 18 SUCH FACT, IS CAPABLE OF BEING RECORDED AS A VALID NOTICE. AS TO WHETHER THE MATERIAL FACT DISCLOSED BY THE ASSESSEE ARE FUL L AND TRUE IS ALWAYS A QUESTION OF FACT UNLESS THE FACT DISCLOSED HAD BEEN EXAMINED IN RELATION TO THE EXTENT OF FAILURE, IF ANY, ON THE PART OF TH E ASSESSEE, IT IS NOT POSSIBLE TO CONFIRM THE OPINION THAT THERE HAD BEEN A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSED THE MA TERIAL FACTS. NOTICE ISSUED WITHOUT A RECORD OF AOS REASONABLE BELIEF T HAT THERE WAS SUCH A FAILURE ON THE PART OF THE ASSESSEE WOULD BE INDICA TING THE AOS FAILURE TO APPLY HIS MIND TO MATERIAL FACTS AND ON THAT GROUND THE NOTICE ISSUED COULD BE VITIATED AND HELD THAT NOTICE ISSUED BY TH E A.O. U/S 147 OF THE ACT CANNOT BE SUSTAINED. 20. IN THE CASE OF HINDUSTAN LEVER LTD. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS OBSERVED THAT REASONS RECORDED BY T HE A.O. NOWHERE STATING THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT, RE-OPENING OF ASSESSMENT MADE U/S 143(3) OF THE ACT AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS INVALID. 21. IN THE PRESENT CASE THE RE-OPENING NOTICE WAS I SSUED AFTER 4 YEARS, RELEVANT TO THE ASSESSMENT YEAR. THE ASSESSING OFF ICER HAS RECORDED THE REASONS FOR RE-OPENING, HE HAS NOT ALLEGED THAT THE RE IS A FAILURE ON THE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 19 PART OF THE ASSESSEE TO DISCLOSE FULLY, TRULY ALL M ATERIAL FACTS RELEVANT TO COMPLETE THE ASSESSMENT IN THAT ASSESSMENT YEAR. T HEREFORE, AS PER THE PROVISO TO SECTION 147 OF THE ACT WHEN THE ASSE SSMENT IS RE-OPENED BEYOND 4 YEARS, IT IS NECESSARY TO ALLEGE THAT THER E IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L THE MATERIAL FACTS TO COMPLETE THE ASSESSMENT OF SUCH ASSESSMENT YEAR. T HE A.O. HAS NOT ALLEGED THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE. NO DOUBT THAT EACH CASE HAS TO BE EXAMINED BY CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND ALSO REASONS RECORDED . IN THE PRESENT CASE, BY CONSIDERING FACTS AND CIRCUMSTANCES AND AL SO REASONS RECORDED BY THE A.O. AND BY FOLLOWING THE JUDICIAL PRECEDENT S, WE HOLD THAT THE NOTICE ISSUED BY THE A.O. BY RECORDING THE REASONS NOT IN ACCORDANCE WITH THE PROVISO TO SECTION 147 OF THE ACT, THUS, T HE NOTICE IS QUASHED AND CONSEQUENTLY HELD THAT THE ASSESSMENT IS INVALI D. 22. SO FAR AS ANOTHER LEGAL ISSUE RAISED BY THE ASS ESSEE IS THAT THE ASSESSEE HAS FILED ALL THE DETAILS AND THE A.O. AFT ER CONSIDERING ALL THE DETAILS HE HAS ESTIMATED THE INCOME OF THE ASSESSEE . SUBSEQUENTLY ON THE BASIS OF SAME MATERIAL, THE A.O. AFTER ISSUING A NOTICE U/S 148 OF THE ACT RE-ASSESSED THE INCOME AND SUBMITTED THAT IT IS A CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN ACCORDANCE WITH LAW. S O FAR AS THIS ISSUE IS ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 20 CONCERNED IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS CALLED VARIOUS DETAILS I.E. JOINT DEVELOPMENT AGREEMENT, W HAT ARE THE FLATS SOLD, WHAT ARE THE FLATS UNSOLD AND LAY OUT, AND ALL OTHE R DETAILS AND ALSO A.O. INSPECTED PERSONALLY THE LAY OUT AND ALSO CONSIDERE D THE OTHER ASSESSEES I.E. BIJAPURI TOWNSHIP, RAJAHMUNDRY AND M/S. SUMA E NCLAVE CARRYING SIMILAR LINES OF BUSINESS, HE HAS ESTIMATED INCOME OF THE ASSESSEE. ON THE BASIS OF VERY SAME INFORMATION, THE A.O. IS OF THE OPINION THAT THERE IS AN ESCAPEMENT OF INCOME. THERE IS NOTHING ON TH E RECORD TO SUGGEST THAT SOME MATERIAL CAME TO THE NOTICE OF THE A.O. A ND ACCORDINGLY RE- OPENING WAS MADE. WHEN THE ASSESSEE HAS RAISED AN O BJECTION IN RESPECT OF THE RE-OPENING PROPOSED BY THE A.O., THE A.O. HAS OBSERVED THAT AS PER THE JUDGEMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. 291 ITR 500 , A.O. HAS EVERY POWER TO ASSESS, RE-ASSESS, RE-COMPU TE THE INCOME OF THE ASSESSEE U/S 147 OF THE ACT. WE FIND THAT THE A .O. HAS FAILED TO NOTICE THAT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA), THE HONBLE SUPREME COURT HAS CONSIDERED SECTION 1 43(1) OF THE ACT AND HELD THAT IT IS A MERE PROCESS AND THE QUESTION OF EXPRESSING THE OPINION DOES NOT ARISE AND THEREFORE THERE IS N O CHANGE OF OPINION. IN THE PRESENT CASE THE ASSESSMENT WAS COMPLETED U/ S 143(3) OF THE ACT AND NOTICE U/S 148 OF THE ACT WAS ISSUED AFTER 4 YE ARS, THEREFORE, ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 21 PROVISO TO SECTION 147 OF THE ACT COMES INTO OPERAT ION. THE A.O. WITHOUT CONSIDERING THE FACTUAL MATRIX OF THE CASE SIMPLY BY FOLLOWING THE JUDGEMENT OF THE SUPREME COURT REJECTED THE OBJ ECTION RAISED BY THE ASSESSEE. ON APPEAL, THOUGH THE LD. CIT(A) HAS CONSIDERED PROVISO TO SECTION 147 OF THE ACT, HE FAILED TO CONSIDER TH E REASON RECORDED BY THE ASSESSEE, WHEREIN ANY ALLEGATION IS MADE AGAINS T THE ASSESSEE THAT THE ASSESSEE HAS FAILED TO DISCLOSE TRULY ALL MATER IAL FACTS TO COMPLETE THE ASSESSMENT FOR THE ASSESSMENT YEAR, WITHOUT CONSIDE RING SIMPLY CONFIRMED THE ORDER OF THE A.O. IN OUR OPINION, TH ERE IS NOTHING ON THE RECORD TO SUGGEST THAT THERE IS ANY MATERIAL CAME T O THE LIGHT OF THE A.O. TO COME TO THE CONCLUSION THAT THERE IS AN ESCAPEME NT OF INCOME. IN THE ORIGINAL ASSESSMENT ORDER, IN THE ABSENCE OF BO OKS OF ACCOUNTS A.O. CAME TO THE CONCLUSION THAT AFTER EXAMINING THE ENT IRE PROJECT CAME TO A CONCLUSION THAT ESTIMATION IS REASONABLE IN THIS CA SE, ACCORDINGLY HE HAS ESTIMATED RS.80 LAKHS AS THE INCOME OF THE ASSESSEE . THE A.O. IN THE RE-ASSESSMENT PROCEEDINGS ON THE BASIS OF VERY SAME MATERIAL, HE HAS COME TO A DIFFERENCE OF OPINION THAT THERE IS ESCAP EMENT OF INCOME. THIS IS A CLEAR CASE OF CHANGE OF OPINION AND THERE FORE, IT CANNOT BE PERMISSIBLE AS PER LAW. THE HONBLE JURISDICTIONAL HIGH COURT IN THIS CONTEXT HAS OBSERVED IN THE CASE OF MAHALAKSHMI MOTOR PVT. LTD. (SUPRA) THAT THE PETITIONER ASSESSEE HAD FURNISHED ALL MAT ERIAL FACTS ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 22 TRULY AND FULLY BEFORE THE ASSESSING AUTHORITY AT T HE RELEVANT POINT OF TIME WHEN ONCE ALL THE INFORMATION IS FURNISHED TO THE ASSESSING AUTHORITY, IT IS FOR THE ASSESSING AUTHORITY TO DEC IDE WHAT INFERENCE CAN BE REASONABLY BE DRAWN AND WHAT LEGAL INFERENCES TO BE DRAWN ULTIMATELY. IT IS TO BE NOTED WHETHER FULL AND TRU E DISCLOSURE OF THE FACTS WAS DONE BY THE ASSESSEE, THE DEPARTMENT CANNOT RE- OPEN THE ASSESSMENT EVEN AFTER THERE IS A LOSS OF REVENUE OR EVEN AFTER LEGAL INFERENCE DRAWN BY THE ASSESSING AUTHORITY WAS ERRO NEOUS IN THE FIRST PLACE. EVEN MERE CHANGE OF OPINION BY THE ASSESSIN G AUTHORITY IS NOT ENOUGH TO RE-OPEN THE ASSESSMENT IN VIEW OF THE VAR IOUS DECISIONS OF THE HONBLE SUPREME COURT. 23. IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) THE HONBLE SUPREME COURT HAS HELD THAT AFTER 1 ST APRIL, 1989, A.O. HAS POWER TO RE- OPEN THE ASSESSMENT U/S 147 OF THE ACT PROVIDED A.O . HAS REASONABLY BELIEVED THAT INCOME HAS ESCAPED ASSESSMENT AND THE RE MUST BE A TANGIBLE MATERIAL TO COME TO SUCH CONCLUSION THAT T HERE IS AN ESCAPEMENT OF INCOME. THAT MERE CHANGE OF OPINION CANNOT BE PER SE REASON TO RE-OPEN. KEEPING IN VIEW OF THE FACTS AN D CIRCUMSTANCES OF THE CASE AND BY FOLLOWING THE HONBLE JURISDICTIONA L HIGH COURT AS WELL AS THE JUDGEMENT OF THE HONBLE SUPREME COURT, WE HOLD THAT THE ITA NO.243/VIZAG/2014 & CO 29/VIZAG/2014 M/S. GANESH ASSOCIATES & DEVELOPERS, RAJAHMUNDRY 23 RE-OPENING DONE BY THE A.O. U/S 147 OF THE ACT, ON THE BASIS OF SAME INFORMATION NOT VALID. ACCORDINGLY, THE SAME IS SE T ASIDE. IN VIEW OF THE ABOVE, THE NOTICE ISSUED U/S 148 OF THE ACT IS QUAS HED, CONSEQUENTLY THE ASSESSMENT ORDER PASSED BY THE A.O. IS DECLARED AS INVALID. 24. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 25. SO FAR AS APPEAL FILED BY THE REVENUE IS CONCER NED, IN VIEW OF OUR DECISION ABOVE IT BECOME ACADEMIC AND THEREFORE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 TH SEPT16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 09.09.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-3, RAJAHMUNDRY 2. / THE RESPONDENT M/S. GANESH ASSOCIATES & DEVELO PERS, D.NO.73-17-1, SRINIVASA GARDENS, A.V. APPA RAO ROAD, RAJAHMUNDRY 3. ) / THE CIT, RAJAHMUNDRY 4. ) ( ) / THE CIT(A)-11, MUMBAI, CAMP OFFICE VISAKHAPATNA M 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM