M/s. Mala Roy & Others, Kolkata V. DCIT, Central Circle - 1(1), Kolkata , Kolkata

CO 40/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0244 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL JCIT SR DR SH
• Keywords: Reopening of assessment; Question of law; Tangible material; Difference of opinion; Accommodation entries; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; Rule 8D; Capital Gains
• Section: 143(3); 14A; 143(1); 250; 139(1); 13; 27; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI ABY T. VARKEY, JUDICIAL MEMBER) ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-25, KOLKATA.............APPELLANT VS. M/S. MALA ROY & OTHERS.......................RESPONDENT 192D, NETAJI SUBHAS CHANDRA BOSE ROAD TOLLYGUNGE KOLKATA 700 040 [PAN : AAJFM 7391 P] C.O. NO. 40/KOL/2019 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS...................... APPELLANT 192D, NETAJI SUBHAS CHANDRA BOSE ROAD TOLLYGUNGE KOLKATA 700 040 [PAN : AAJFM 7391 P] VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), KOLKATA.........RESPONDENT APPEARANCES BY: SHRI SUPRIYO PAL, JCIT SR. D/R, APPEARING ON BEHALF OF THE REVENUE SHRI S.M. SURANA, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. . DATE OF CONCLUDING THE HEARING : NOVEMBER 13 TH , 2019 DATE OF PRONOUNCING THE ORDER : DECEMBER 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- BOTH THESE APPEALS ARE FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2008-09 & 2013-13, RESPECTIVELY. THE CROSS-OBJECTION IS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. 2. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 3. WE FIRST TAKE UP THE C.O. NO. 40/KOL/2019, FOR THE ASSESSMENT YEAR 2008-09, WHICH IS ON THE ISSUE OF VALIDITY OF REOPENING OF ASSESSMENT. 4. THE ASSESSEE IN THIS CASE HAS FILED ITS RETURN OF INCOME U/S 139(1) OF THE ACT ON 28/09/2008 DECLARING TOTAL INCOME OF RS.17,11,08,910/ THE ACT, WAS COMPLETED ON 29/12/2010. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.17,11,70,330/- . THEREAFTER NOTICE FOR REOPENING WAS ISSUED U/S 148 OF THE ACT ON 28/11/2014 AND THIS WAS DULY SERVED ON THE ASSESSEE ON 02/12/2014. TH REOPENING ARE AS FOLLOWS:- INFORMATION IN THE FORM OF HONEBLE JUSTICE M.B. SHAH COMMISSION REPORT WAS RECEIVED WHEREIN IT WAS STATED THAT DURING THE RELEVANT PERIOD THERE WAS EXCESS PRODUCTION OF IRON ORE WHICH WAS NOT DISCLOSED BY THE ASSE ASSESSMENT. 4.1. THE LD. CITT(A), AT PARA 7.1.2. OF HIS ORDER AT PAGE 6, HELD AS FOLLOWS: 7.1.2. I PREFER NOT TO ADJUDICATE ON THIS ISSUE, BUT ONLY TO MAKE SOME REMARKS ORDER FOR THE AY 2012- 13, I WILL BE GRAN AO WAS TO SEND HIS REPORT ON REMEDIAL ACTION TAKEN, AND, THE LD. CIT HAD GRANTED SANCTION FOR ISSUE OF THE NOTICE U/S 148, THUS IT IS NOT APPROPRIATE FOR ME TO ADJUDICATE ON THE ISSUE. BUT, THERE AR E DEFINITELY DEFICIENCIES IN THAT: A) THE REASON TO BELIEVE OF THE AO REPORT AND REFERENCING TO THE ASSESSMENT RECORDS ESCAPED ASSESSMENT. THE ENQUIRY REPORT ONLY. ITS CORRECTNES NUMEROUS NUMBER OF CASES MENTIONED THEREIN. B) NOT PROVIDING THE REASONS TO THE ASSESSEE. 4.2. THE CONTENTION OF THE ASSESSEE IS THAT, THE REOPENING IS BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE COMPLETED U/S 143(3) OF THE ACT, AND THERE IS NO ALLEGATION IN THE REASONS RECORD FOR REOPENING STATING THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR ASSESSMENT AND HENCE THE REASSESSMENT IS BAD IN LAW. 4.2.1. FURTHER SUBMISSION WERE MADE THAT THE SATISFACTION IS BORROWED SATISFACTION AND THERE IS NON APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL RECEIVED. IT WAS ALSO ARGUED T HAT IN THE REASONS RECORDED, THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT HAS ALSO OTHER ARGUMENTS WERE RAISED THAT THE REASONS RECORDED FOR APPROVAL FROM THE LD. CIT(A) RANGE- 8 IN THE PROFORMA 2 THE ASSESSEE IN THIS CASE HAS FILED ITS RETURN OF INCOME U/S 139(1) OF THE ACT ON 28/09/2008 DECLARING TOTAL INCOME OF RS.17,11,08,910/ - . THE ASSESSMEN THE ACT, WAS COMPLETED ON 29/12/2010. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED . THEREAFTER NOTICE FOR REOPENING WAS ISSUED U/S 148 OF THE ACT ON 28/11/2014 AND THIS WAS DULY SERVED ON THE ASSESSEE ON 02/12/2014. TH INFORMATION IN THE FORM OF HONEBLE JUSTICE M.B. SHAH COMMISSION REPORT WAS RECEIVED WHEREIN IT WAS STATED THAT DURING THE RELEVANT PERIOD THERE WAS EXCESS PRODUCTION OF IRON ORE WHICH WAS NOT DISCLOSED BY THE ASSE SSEE FIRM AT THE TIME OF THE LD. CITT(A), AT PARA 7.1.2. OF HIS ORDER AT PAGE 6, HELD AS FOLLOWS: I PREFER NOT TO ADJUDICATE ON THIS ISSUE, BUT ONLY TO MAKE SOME REMARKS 13, I WILL BE GRAN TING RELIEF ON THE QUANTUM ISSUE; AND FURTHER THAT AS THE AO WAS TO SEND HIS REPORT ON REMEDIAL ACTION TAKEN, AND, THE LD. CIT HAD GRANTED SANCTION FOR ISSUE OF THE NOTICE U/S 148, THUS IT IS NOT APPROPRIATE FOR ME TO ADJUDICATE ON THE ISSUE. BUT, THERE E DEFINITELY DEFICIENCIES IN THAT: THE REASON TO BELIEVE OF THE AO MERE CITING OF THE JUSTICE M B SHAH ENQUIRY IS NOT REASON TO BELIEVE OF THE AO. THE AO HAS TO GIVE HIS OWN REASON; AND REFERENCING TO THE ASSESSMENT RECORDS THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE ENQUIRY REPORT IS JUST AS ANY OTHER ENQUIRY REPORT ONLY. ITS CORRECTNES S HAS TO BE LOOKED INTO; AND CONSIDERING THAT THERE ARE NUMEROUS NUMBER OF CASES MENTIONED THEREIN. NOT PROVIDING THE REASONS TO THE ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT, THE REOPENING IS BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND THE ORIGINAL ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT, AND THERE IS NO ALLEGATION IN THE REASONS RECORD FOR REOPENING STATING THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND CESSARY FOR ASSESSMENT AND HENCE THE REASSESSMENT IS BAD IN FURTHER SUBMISSION WERE MADE THAT THE SATISFACTION IS BORROWED SATISFACTION AND THERE IS NON APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL RECEIVED. HAT IN THE REASONS RECORDED, THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT HAS ALSO NOT BEEN MENTIONED. SEVERAL CASE- LAW WERE RELIED UPON. OTHER ARGUMENTS WERE RAISED THAT THE REASONS RECORDED FOR APPROVAL FROM THE LD. 8 IN THE PROFORMA I S NOT PROPER RECORDING OF SATISFACTION ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS THE ASSESSEE IN THIS CASE HAS FILED ITS RETURN OF INCOME U/S 139(1) OF THE ACT ON . THE ASSESSMEN T U/S 143(3) OF THE ACT, WAS COMPLETED ON 29/12/2010. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED . THEREAFTER NOTICE FOR REOPENING WAS ISSUED U/S 148 OF THE ACT ON 28/11/2014 AND THIS WAS DULY SERVED ON THE ASSESSEE ON 02/12/2014. TH E REASONS FOR INFORMATION IN THE FORM OF HONEBLE JUSTICE M.B. SHAH COMMISSION REPORT WAS RECEIVED WHEREIN IT WAS STATED THAT DURING THE RELEVANT PERIOD THERE WAS EXCESS SSEE FIRM AT THE TIME OF THE LD. CITT(A), AT PARA 7.1.2. OF HIS ORDER AT PAGE 6, HELD AS FOLLOWS: - I PREFER NOT TO ADJUDICATE ON THIS ISSUE, BUT ONLY TO MAKE SOME REMARKS AS, FOLLOWING MY TING RELIEF ON THE QUANTUM ISSUE; AND FURTHER THAT AS THE AO WAS TO SEND HIS REPORT ON REMEDIAL ACTION TAKEN, AND, THE LD. CIT HAD GRANTED SANCTION FOR ISSUE OF THE NOTICE U/S 148, THUS IT IS NOT APPROPRIATE FOR ME TO ADJUDICATE ON THE ISSUE. BUT, THERE MERE CITING OF THE JUSTICE M B SHAH ENQUIRY IS NOT REASON TO BELIEVE OF THE AO. THE AO HAS TO GIVE HIS OWN REASON; THAT INCOME CHARGEABLE TO TAX HAD IS JUST AS ANY OTHER ENQUIRY REPORT S HAS TO BE LOOKED INTO; AND CONSIDERING THAT THERE ARE THE CONTENTION OF THE ASSESSEE IS THAT, THE REOPENING IS BEYOND A PERIOD OF FOUR ASSESSMENT YEAR AND THE ORIGINAL ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT, AND THERE IS NO ALLEGATION IN THE REASONS RECORD FOR REOPENING STATING THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND CESSARY FOR ASSESSMENT AND HENCE THE REASSESSMENT IS BAD IN FURTHER SUBMISSION WERE MADE THAT THE SATISFACTION IS BORROWED SATISFACTION AND THERE IS NON APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL RECEIVED. HAT IN THE REASONS RECORDED, THE QUANTUM OF INCOME WHICH HAS LAW WERE RELIED UPON. OTHER ARGUMENTS WERE RAISED THAT THE REASONS RECORDED FOR APPROVAL FROM THE LD. S NOT PROPER RECORDING OF SATISFACTION . IN THESE REASONS ALSO THERE IS NO ALLEGATION THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT WAS FURTHER ARGUED THAT THE REASONS WERE NOT SUPPLIED TO THE ASSES 5. THE LD. D/R SUBMITS THAT THE MATERIAL CAME INTO THE POSSESSION OF THE ASSESSING OFFICER THAT SUGGESTED ESCAPEMENT OF INCOME AND VALID REASONS WERE RECORDED AND THEREAFTER ASSESSMENTS WERE REOPENED AFTER OBTAIN APPROVALS. HE ALSO RELIED ON CERTAIN CASE LAW WHICH WE WOULD BE REFERRING TO AS AND WHEN NECESSARY. 6. A PERUSAL OF THE REASONS RECORDED CLEARLY DEMONSTRATES THAT THERE IS NO WHISPER THAT THERE WAS VIOLATION ON THE PART OF THE ASSESSEE TO DIS ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ALSO, FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND AS THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, COMES INTO PLAY. 7. THIS BENCH OF THE OF THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES IN THE CASE OF CYGNUS INVESTMENT & FINANCE VS ACIT; I.T.A. NO. 117/KOL/2018, ASSESSMENT YEAR: 2008-09, HAD HEL WE FIND THAT THE 'A' BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. BEEKAY STEEL INDUSTRIES LTD. VS. DCIT CC- XXX, KOLKATA, IN I.T.A. NO. 105/KOL/2015, ORDER DT. 31/05/2017, HELD AS FOLLOWS: 4.4. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF REPORTED IN (2015) 370 ITR 135 (BOM.), HAS HELD AS FOLLOWS: '10. AS STATED ABOVE, THE REASONS SUPPLIED TO THE PETITIONER DO NOT DISCLOSE THAT THERE WAS ANY FAILURE ON THE FACTS. THAT BEING THE POSITION, THIS GROUND COULD NOT HAVE BEEN TAKEN UP AGAINST THE PETITIONER AT THE TIME OF DISPOSING OF THE OBJECTIONS. ONCE THIS WAS NOT THE BASIS FOR ISSUANCE OF NOTICE FOR REASSESSME PETITIONER THAT THE PETITIONER HAD FAILED TO MAKE A TRUE AND FULL DISCLOSURE. IT WILL HAVE TO BE HELD THAT THE PETITIONER DID NOT FAIL TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. THE JURISDICTIONAL REQUIREMENT THE REASSESSMENT, AFTER THE EXPIRY OF PERIOD OF FOUR YEARS, IS NOT FULFILLED IN THE PRESENT CASE.' 4.5. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SOUND CASTING (P) LTD. V. DY. CIT REPORTED IN 250 CTR 119 (BOM.) (HC), HAS HELD THAT THER WHICH HAVE BEEN DISCLOSED TO THE ASSESSEE THAT THERE WAS ANY FAILURE ON HIS PART TO FULLY 3 REASONS ALSO THERE IS NO ALLEGATION THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT WAS FURTHER ARGUED THAT THE REASONS WERE NOT SUPPLIED TO THE ASSES SEE DESPITE SPECIFIC REQUEST FOR THE SAME. THE LD. D/R SUBMITS THAT THE MATERIAL CAME INTO THE POSSESSION OF THE ASSESSING OFFICER THAT SUGGESTED ESCAPEMENT OF INCOME AND VALID REASONS WERE RECORDED AND THEREAFTER ASSESSMENTS WERE REOPENED AFTER OBTAIN APPROVALS. HE ALSO RELIED ON CERTAIN CASE LAW WHICH WE WOULD BE REFERRING TO AS AND A PERUSAL OF THE REASONS RECORDED CLEARLY DEMONSTRATES THAT THERE IS NO WHISPER THAT THERE WAS VIOLATION ON THE PART OF THE ASSESSEE TO DIS CLOSE FULLY AND TRULY FACTS NECESSARY FOR ASSESSMENT. ALSO, THE REOPENING IS BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND AS THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, AND HENCE THE PROVISO TO SECTION THIS BENCH OF THE OF THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES IN THE CASE OF CYGNUS INVESTMENT & FINANCE VS ACIT; I.T.A. NO. 117/KOL/2018, HAD HEL D AS FOLLOWS:- WE FIND THAT THE 'A' BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. BEEKAY STEEL INDUSTRIES LTD. VS. XXX, KOLKATA, IN I.T.A. NO. 105/KOL/2015, ORDER DT. 31/05/2017, HELD AS FOLLOWS: 4.4. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TAO PUBLISHING (P) LTD. V. DY.CIT REPORTED IN (2015) 370 ITR 135 (BOM.), HAS HELD AS FOLLOWS: - '10. AS STATED ABOVE, THE REASONS SUPPLIED TO THE PETITIONER DO NOT DISCLOSE THAT THERE WAS ANY FAILURE ON THE PART OF THE PETITIONER TO PROVIDE ALL THE MATERIAL FACTS. THAT BEING THE POSITION, THIS GROUND COULD NOT HAVE BEEN TAKEN UP AGAINST THE PETITIONER AT THE TIME OF DISPOSING OF THE OBJECTIONS. ONCE THIS WAS NOT THE BASIS FOR ISSUANCE OF NOTICE FOR REASSESSME NT, IT CANNOT BE HELD AGAINST THE PETITIONER THAT THE PETITIONER HAD FAILED TO MAKE A TRUE AND FULL DISCLOSURE. IT WILL HAVE TO BE HELD THAT THE PETITIONER DID NOT FAIL TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. THE JURISDICTIONAL REQUIREMENT THE REASSESSMENT, AFTER THE EXPIRY OF PERIOD OF FOUR YEARS, IS NOT FULFILLED IN THE PRESENT CASE.' 4.5. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SOUND CASTING (P) LTD. V. DY. CIT REPORTED IN 250 CTR 119 (BOM.) (HC), HAS HELD THAT THER E IS NO ALLEGATION IN THE REASONS WHICH HAVE BEEN DISCLOSED TO THE ASSESSEE THAT THERE WAS ANY FAILURE ON HIS PART TO FULLY ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS REASONS ALSO THERE IS NO ALLEGATION THAT THE ASSESSEE HAS FAILED TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT WAS FURTHER ARGUED THAT THE SEE DESPITE SPECIFIC REQUEST FOR THE SAME. THE LD. D/R SUBMITS THAT THE MATERIAL CAME INTO THE POSSESSION OF THE ASSESSING OFFICER THAT SUGGESTED ESCAPEMENT OF INCOME AND VALID REASONS WERE RECORDED AND THEREAFTER ASSESSMENTS WERE REOPENED AFTER OBTAIN ING STATUTORY APPROVALS. HE ALSO RELIED ON CERTAIN CASE LAW WHICH WE WOULD BE REFERRING TO AS AND A PERUSAL OF THE REASONS RECORDED CLEARLY DEMONSTRATES THAT THERE IS NO CLOSE FULLY AND TRULY THE REOPENING IS BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND AS THE ORIGINAL ASSESSMENT WAS 147 OF THE ACT, THIS BENCH OF THE OF THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES IN THE CASE OF M/S. CYGNUS INVESTMENT & FINANCE VS ACIT; I.T.A. NO. 117/KOL/2018, WE FIND THAT THE 'A' BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. BEEKAY STEEL INDUSTRIES LTD. VS. XXX, KOLKATA, IN I.T.A. NO. 105/KOL/2015, ORDER DT. 31/05/2017, HELD AS FOLLOWS: TAO PUBLISHING (P) LTD. V. DY.CIT '10. AS STATED ABOVE, THE REASONS SUPPLIED TO THE PETITIONER DO NOT DISCLOSE THAT PART OF THE PETITIONER TO PROVIDE ALL THE MATERIAL FACTS. THAT BEING THE POSITION, THIS GROUND COULD NOT HAVE BEEN TAKEN UP AGAINST THE PETITIONER AT THE TIME OF DISPOSING OF THE OBJECTIONS. ONCE THIS WAS NOT THE NT, IT CANNOT BE HELD AGAINST THE PETITIONER THAT THE PETITIONER HAD FAILED TO MAKE A TRUE AND FULL DISCLOSURE. IT WILL HAVE TO BE HELD THAT THE PETITIONER DID NOT FAIL TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. THE JURISDICTIONAL REQUIREMENT FOR CARRYING OUT THE REASSESSMENT, AFTER THE EXPIRY OF PERIOD OF FOUR YEARS, IS NOT FULFILLED IN THE 4.5. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SOUND CASTING (P) LTD. V. DY. CIT E IS NO ALLEGATION IN THE REASONS WHICH HAVE BEEN DISCLOSED TO THE ASSESSEE THAT THERE WAS ANY FAILURE ON HIS PART TO FULLY AND TRULY DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THEREFORE REOPENING BEYOND FOUR YEARS WAS NOT VALID. (A.Y. 2005 4.6. THE HON'BLE DELHI HIGH COURT IN THE CASE OF ITR 356 (DEL.)(HC) HAS HELD AS FOLLOWS: 'THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CA APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS 'REASON TO BELIEVE' VIS-- VIS AN INTIMATION ISSUED UNDER THERE IS NO WHISPER IN THE REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED UNDER 4.7. THE HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. V. COMMISSIONER OF INCOME- TAX AND ANOR. REPORTED IN [2009] 308 ITR 38 (DELHI) HAS HELD AS FOLLOWS: '26VIEWED IN THIS LIGHT, THE PROVISO TO SECT FROM THE MAIN PROVISIONS OF SECTION 147. IF A CASE WERE TO FALL WITHIN THE PROVISO, WHETHER OR NOT IT WAS COVERED UNDER THE MAIN PROVISIONS OF SECTION 147 OF THE SAID ACT WOULD NOT BE MATERIAL. ONCE THE EXCE FALL OUTSIDE THE AMBIT OF SECTION 147. 27 EXAMINING THE PROVISO [SET OUT ABOVE], WE FIND THAT NO ACTION CAN BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA THE FOLLOWING CONDITIONS ARE SATISFIED: (A) AN ASSESSMENT UNDER SUB FOR THE RELEVANT ASSESSMENT YEAR; AND (B) UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ASSESSEE: (I) 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 (II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NEC CONDITION (A) IS ADMITTEDLY SATISFIED INASMUCH AS THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE SAID ACT. CONDITION (B) DEALS WITH A SPECIAL KIND OF ESCAPEMENT OF INCOME CHARGEABLE TO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB THE CASE HERE BECAUSE THE PETITIONE MAKE THE RETURN, THE ESCAPEMENT OF INCOME CANNOT BE ATTRIBUTED TO SUCH FAILURE. THIS LEAVES US WITH THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX WHICH ARISES OUT OF THE FAILURE ON THE PART OF THE ASSESSEE FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF IT IS ALSO FOUND THAT THE PETITIONER HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, THEN NO ACTION UNDER SECTION 147 CO THE KEY QUESTION IS WHETHER OR NOT THE PETITIONER HAD MADE A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS ? 29 IN THE REASONS SUPPLIED TO THE PETITIONER, THERE IS NO WHISPER, WHAT TO SP ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS 4 AND TRULY DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THEREFORE REOPENING BEYOND FOUR YEARS WAS NOT VALID. (A.Y. 2005 -06). 4.6. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD . REPORTED IN [2013] 354 ITR 356 (DEL.)(HC) HAS HELD AS FOLLOWS: 'THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CA APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS 'REASON TO VIS AN INTIMATION ISSUED UNDER SECTION 143(1) CAN CAUSE TO THE TAX REGIME. WHISPER IN THE REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED UNDER SECTION 147 .' 4.7. THE HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. V. TAX AND ANOR. REPORTED IN [2009] 308 ITR 38 (DELHI) HAS HELD AS FOLLOWS: '26VIEWED IN THIS LIGHT, THE PROVISO TO SECT ION 147 OF THE SAID ACT, CARVES OUT AN EXCEPTION FROM THE MAIN PROVISIONS OF SECTION 147. IF A CASE WERE TO FALL WITHIN THE PROVISO, WHETHER OR NOT IT WAS COVERED UNDER THE MAIN PROVISIONS OF SECTION 147 OF THE SAID ACT WOULD NOT BE MATERIAL. ONCE THE EXCE PTION CARVED OUT BY THE PROVISO CAME INTO PLAY, THE CASE WOULD FALL OUTSIDE THE AMBIT OF SECTION 147. 27 EXAMINING THE PROVISO [SET OUT ABOVE], WE FIND THAT NO ACTION CAN BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR IF THE FOLLOWING CONDITIONS ARE SATISFIED: (A) AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR; AND (B) UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUC H ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE: (I) TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SECTION (1) OF SECTION 142 OR SECTION 148; OR (II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NEC ESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. CONDITION (A) IS ADMITTEDLY SATISFIED INASMUCH AS THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE SAID ACT. CONDITION (B) DEALS WITH A SPECIAL KIND OF ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THE ESCAPEMENT MUST ARISE OUT OF THE FAILURE ON THE 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. THIS IS CLEARLY NOT THE CASE HERE BECAUSE THE PETITIONE R DID FILE THE RETURN. SINCE THERE WAS NO FAILURE TO MAKE THE RETURN, THE ESCAPEMENT OF INCOME CANNOT BE ATTRIBUTED TO SUCH FAILURE. THIS LEAVES US WITH THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX WHICH ARISES OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF IT IS ALSO FOUND THAT THE PETITIONER HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, THEN NO ACTION UNDER SECTION 147 CO ULD HAVE BEEN TAKEN AFTER THE FOUR YEAR PERIOD INDICATED ABOVE. SO, THE KEY QUESTION IS WHETHER OR NOT THE PETITIONER HAD MADE A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS ? 29 IN THE REASONS SUPPLIED TO THE PETITIONER, THERE IS NO WHISPER, WHAT TO SP ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS AND TRULY DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THEREFORE REOPENING . REPORTED IN [2013] 354 'THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CA SE DO CONFIRM OUR APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS 'REASON TO CAN CAUSE TO THE TAX REGIME. WHISPER IN THE REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN 4.7. THE HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. V. TAX AND ANOR. REPORTED IN [2009] 308 ITR 38 (DELHI) HAS HELD AS FOLLOWS: ION 147 OF THE SAID ACT, CARVES OUT AN EXCEPTION FROM THE MAIN PROVISIONS OF SECTION 147. IF A CASE WERE TO FALL WITHIN THE PROVISO, WHETHER OR NOT IT WAS COVERED UNDER THE MAIN PROVISIONS OF SECTION 147 OF THE SAID ACT WOULD NOT PTION CARVED OUT BY THE PROVISO CAME INTO PLAY, THE CASE WOULD 27 EXAMINING THE PROVISO [SET OUT ABOVE], WE FIND THAT NO ACTION CAN BE TAKEN UNDER NT ASSESSMENT YEAR IF SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR; AND (B) UNLESS ANY INCOME CHARGEABLE TO TAX HAS H ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE: (I) TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SECTION (1) OF SECTION 142 OR SECTION 148; OR (II) TO DISCLOSE FULLY AND TRULY ALL CONDITION (A) IS ADMITTEDLY SATISFIED INASMUCH AS THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE SAID ACT. CONDITION (B) DEALS WITH A SPECIAL KIND TAX. THE ESCAPEMENT MUST ARISE OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO SECTION (1) OF SECTION 142 OR SECTION 148. THIS IS CLEARLY NOT R DID FILE THE RETURN. SINCE THERE WAS NO FAILURE TO MAKE THE RETURN, THE ESCAPEMENT OF INCOME CANNOT BE ATTRIBUTED TO SUCH FAILURE. THIS LEAVES US WITH THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX WHICH ARISES OUT OF THE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF IT IS ALSO FOUND THAT THE PETITIONER HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, THEN NO ACTION ULD HAVE BEEN TAKEN AFTER THE FOUR YEAR PERIOD INDICATED ABOVE. SO, THE KEY QUESTION IS WHETHER OR NOT THE PETITIONER HAD MADE A FULL AND TRUE DISCLOSURE OF 29 IN THE REASONS SUPPLIED TO THE PETITIONER, THERE IS NO WHISPER, WHAT TO SP EAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, FULL Y AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THAT THE REASO NS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECISION IN WELINTERTRADE PRIVAT E LTD (SUPRA) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA (SUPRA) THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE O NECESSARY FOR HIS ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEW- POINT, W E HOLD THAT THE NOTICE DATED 29.03.2004 UNDER SECTION 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 02.03.2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN BEYOND THE FOUR YE 4.8. APPLYING THE PROPOSITIONS LAID DOWN IN THE ABOVE CASE LAW TO THE FACTS TO THIS CASE, WE HAVE TO NECESSARILY HOLD THAT THE RE EVEN A WH ISPER IN THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE NECESSARY MATERIAL FACTS REQUIRED FOR ASSESSMENT IN VIEW OF THE 1ST PROVISO TO SECTION 147 OF THE ACT. HAVE COME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ASSESSMENT ORDER U/S 143(3). RE- OPENING IS DONE BASED ON THE SAME MATERIAL AND RECORD AND HENCE IT IS BAD IN LAW. AS FAR AS THE CONTENTION, THAT THER THE LD. COUNSEL FOR THE ASSESSEE AS THERE WAS NEITHER A QUERY ON THIS ISSUE BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, NOR THERE WAS A REPLY BY THE ASSESSEE. HENCE WAS NO OPINION FORMED. THUS, THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. 4.9. IN ANY EVENT, AS WE HAVE HELD THAT THE RE REQUIREMENT OF THE PROVISO TO SECTION 147 OF THE ACT, AND AS NO TANGIBLE POSSESSION OF THE ASSESSING OFFICER, WE QUASH THE ASSESSMENT AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5.1. HENCE FOR THIS REASON, WE HAVE TO NECESSARILY HOLD THAT THE REOPENIN IN LAW. 6. SECTION 151 OF THE ACT, READS AS FOLLOWS: '151. SANCTION FOR ISSUE OF NOTICE. ASSESSING OFFICER, AFTER THE E ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS 5 NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, Y AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THAT THE NS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECISION IN WELINTERTRADE E LTD (SUPRA) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA (SUPRA) THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE O N THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR E HOLD THAT THE NOTICE DATED 29.03.2004 UNDER SECTION 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 02.03.2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN BEYOND THE FOUR YE AR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE. 4.8. APPLYING THE PROPOSITIONS LAID DOWN IN THE ABOVE CASE LAW TO THE FACTS TO THIS CASE, WE HAVE TO NECESSARILY HOLD THAT THE RE - OPENING OF THE ASSESSMENT PROCEEDINGS IS NOT VALID THAT THERE IS NOT ISPER IN THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE NECESSARY MATERIAL FACTS REQUIRED FOR ASSESSMENT IN VIEW OF THE 1ST PROVISO TO SECTION 147 OF THE ACT. IN THIS CASE NO TANGIBLE MATERIALS HAVE COME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ASSESSMENT ORDER U/S OPENING IS DONE BASED ON THE SAME MATERIAL AND RECORD AND HENCE IT IS BAD IN LAW. AS FAR AS THE CONTENTION, THAT THER E IS A CHANGE IN OPINION IS CONCERNED, WE ARE UNABLE TO AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE AS THERE WAS NEITHER A QUERY ON THIS ISSUE BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, NOR THERE WAS A REPLY BY THE ASSESSEE. HENCE WAS NO OPINION FORMED. THUS, THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. 4.9. IN ANY EVENT, AS WE HAVE HELD THAT THE RE - OPENING IS BAD IN LAW AS IT DOES NOT FULFILL THE REQUIREMENT OF THE PROVISO TO SECTION 147 OF THE ACT, AND AS NO TANGIBLE MATERIAL HAS COME TO THE POSSESSION OF THE ASSESSING OFFICER, WE QUASH THE ASSESSMENT AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5.1. HENCE FOR THIS REASON, WE HAVE TO NECESSARILY HOLD THAT THE REOPENIN G OF THE ASSESSMENT IS BAD OF THE ACT, READS AS FOLLOWS: - '151. SANCTION FOR ISSUE OF NOTICE. -- (1) NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, AFTER THE E XPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE.' ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, Y AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THAT THE NS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECISION IN WELINTERTRADE E LTD (SUPRA) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA (SUPRA) THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY N THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR E HOLD THAT THE NOTICE DATED 29.03.2004 UNDER SECTION 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 02.03.2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN 4.8. APPLYING THE PROPOSITIONS LAID DOWN IN THE ABOVE CASE LAW TO THE FACTS TO THIS CASE, WE HAVE TO OPENING OF THE ASSESSMENT PROCEEDINGS IS NOT VALID THAT THERE IS NOT ISPER IN THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE NECESSARY MATERIAL FACTS REQUIRED FOR IN THIS CASE NO TANGIBLE MATERIALS HAVE COME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ASSESSMENT ORDER U/S OPENING IS DONE BASED ON THE SAME MATERIAL AND RECORD AND HENCE IT IS BAD IN LAW. AS E IS A CHANGE IN OPINION IS CONCERNED, WE ARE UNABLE TO AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE AS THERE WAS NEITHER A QUERY ON THIS ISSUE BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, NOR THERE WAS A REPLY BY THE ASSESSEE. HENCE THERE WAS NO OPINION FORMED. THUS, THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. OPENING IS BAD IN LAW AS IT DOES NOT FULFILL THE MATERIAL HAS COME TO THE POSSESSION OF THE ASSESSING OFFICER, WE QUASH THE ASSESSMENT AND ALLOW THE APPEAL OF THE ASSESSEE. G OF THE ASSESSMENT IS BAD (1) NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN XPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE 6.1. ADMITTEDLY, THE APPROVAL U/S 151(1) OF THE ACT, IN THE CASE ON HAND HAS BEEN GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE CIT/RANGE- 7/KOL/148/2014 UNDER THE ACT. HENCE THE REOPENING IN QUESTION IS BAD IN LAW AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GHANSHYAMDAS KHABRANI VS. ACIT 346 ITR 443, WHEREIN IT HAS BEEN HELD AS FOLLOWS:- 'THE SECOND GROUND UPON WHICH THE REOPENING IS SOUGHT TO BE CHALLENGED IS THAT THE MANDATORY REQUIREMENT OF SECTION 151(2) HAS NOT BEEN FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 IN CERTAIN INSTANT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR SECTION 147 FOR ASSESSMENT YEAR 2004 ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER WHO IS BELOW THE RAN COMMISSIONER AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE EXPRESSI COMMISSIONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME 117(1). IN THE INSTANT CASE, THE RECORD BEFORE THE COURT INDICATES THAT THE A OFFICER SUBMITTED A PROPOSAL ON 28 ADDITIONAL COMMISSIONER. ON 28 PROPOSAL TO THE COMMISSIONER. ON THIS, A COMMUNICATION WAS ISSUED ON 29 (1) CONVEYING APPROVAL TO THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER. THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF COULD HAVE ONLY BEEN FULFILLED BY THE SATISFACTION OF THE JOINT COMMISSIONER THAT THIS IS A FIT CASE FOR THE ISSUANCE OF A NOTICE UNDER SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER. THAT EXPRESSION HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION IN COMMISSIONER WITHIN THE MEANING OF COMMISSIONER FORWARDED THE PROPOSAL SUBMITTED BY THE ASSESSING OFFI COMMISSIONER. THE APPROVAL WHICH HAS BEEN GRANTED IS NOT BY THE ADDITIONAL COMMISSIONER BUT BY THE COMMISSIONER. THERE IS NO STATUTORY PROVISION UNDER WHICH A POWER TO BE EXERCISED BY AN OFFICER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE S TATUTE MANDATES THE SATISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOMETHING TO BE DONE IN A PARTICULAR MANNER, IT HAS TO BE DONE IN THAT MANNER. [PARA 6] ONCE THE HAS COME TO THE CONCLUSION THAT THERE WAS NO COMPLIANCE OF THE MANDATORY REQUIREMENTS OF SECTIONS 147 SUSTAINED IN LAW. [PARA 7] UNDER SIMILAR CIRCUMSTANCES, THE LUCKNOW BENCH OF THE ITAT IN THE CASE OF BALBIR SINGH, BEING ITA NO. 880/K/2014, DT. 13/03/2015, WHEREIN THE JUDGEMENT OF THE DELHI HIGH COURT IN THE CASE OF ITR 223 (DELHI) WHEREIN IT HAS BEEN HELD AS FOLLOWS: IT WAS APPARENT FROM RECORDS THAT THE ASSESSING OFFICER HAD SPECIFICALLY SOUGHT THE APPROVAL OF THE COMMISSIONER ONLY. THEREFORE, IT COMMISSIONER/ADDITIONAL COMMISSIONER HAD GRANTED THE APPROVAL. FURTHER, NO DOUBT, THE FILE WAS ROUTED THROUGH ADDITIONAL COMMISSIONER. HOWEVER, HE ALSO, IN TURN 6 6.1. ADMITTEDLY, THE APPROVAL U/S 151(1) OF THE ACT, IN THE CASE ON HAND HAS BEEN GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE - 7 VIDE ORDER DATED 31.03.2015 VIDE NO. ADDL. 7/KOL/148/2014 - 15/3916 AND NOT BY THE COMMISSIONER OF INCOME TAX AS MANDATED UNDER THE ACT. HENCE THE REOPENING IN QUESTION IS BAD IN LAW AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GHANSHYAMDAS KHABRANI VS. ACIT 346 ITR 443, WHEREIN IT HAS BEEN HELD AS 'THE SECOND GROUND UPON WHICH THE REOPENING IS SOUGHT TO BE CHALLENGED IS THAT THE MANDATORY REQUIREMENT OF SECTION 151(2) HAS NOT BEEN FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 IN CERTAIN INSTANT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR SECTION 147 FOR ASSESSMENT YEAR 2004 -05. HENCE, UNDER SUB- SECTION (2) OF SECTION 151, NO NOTICE CAN BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER WHO IS BELOW THE RAN COMMISSIONER AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE EXPRESSI COMMISSIONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME - TAX OR AN ADDITIONAL COMMISSIONER OF INCOME 117(1). IN THE INSTANT CASE, THE RECORD BEFORE THE COURT INDICATES THAT THE A OFFICER SUBMITTED A PROPOSAL ON 28 -3- 2011 TO THE COMMISSIONER (APPEALS) THROUGH THE ADDITIONAL COMMISSIONER. ON 28 -3- 2011, THE ADDITIONAL COMMISSIONER FORWARDED THE PROPOSAL TO THE COMMISSIONER. ON THIS, A COMMUNICATION WAS ISSUED ON 29 -3- 2011 FROM THE OFFICE OF THE COMMISSIONER (1) CONVEYING APPROVAL TO THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER. THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF COULD HAVE ONLY BEEN FULFILLED BY THE SATISFACTION OF THE JOINT COMMISSIONER THAT THIS IS A FIT CASE FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 . SECTION 151(2) SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER. THAT EXPRESSION HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION IN SECTION 2(28C) . THE COMMISSIONER IS NOT A JOINT COMMISSIONER WITHIN THE MEANING OF SECTION 2(28C) . IN THE INSTANT CASE, THE ADDITIONAL COMMISSIONER FORWARDED THE PROPOSAL SUBMITTED BY THE ASSESSING OFFI COMMISSIONER. THE APPROVAL WHICH HAS BEEN GRANTED IS NOT BY THE ADDITIONAL COMMISSIONER BUT BY THE COMMISSIONER. THERE IS NO STATUTORY PROVISION UNDER WHICH A POWER TO BE EXERCISED BY AN OFFICER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE TATUTE MANDATES THE SATISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOMETHING TO BE DONE IN A PARTICULAR MANNER, IT HAS TO BE DONE IN THAT MANNER. [PARA 6] ONCE THE HAS COME TO THE CONCLUSION THAT THERE WAS NO COMPLIANCE OF THE MANDATORY SECTIONS 147 AND 151(2) , THE NOTICE REOPENING THE ASSESSMEN SUSTAINED IN LAW. [PARA 7] UNDER SIMILAR CIRCUMSTANCES, THE LUCKNOW BENCH OF THE ITAT IN THE CASE OF BALBIR SINGH, BEING ITA NO. 880/K/2014, DT. 13/03/2015, WHEREIN THE JUDGEMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. SPL 'S SIDDHARTHA LTD. [2012] 345 ITR 223 (DELHI) WHEREIN IT HAS BEEN HELD AS FOLLOWS: - IT WAS APPARENT FROM RECORDS THAT THE ASSESSING OFFICER HAD SPECIFICALLY SOUGHT THE APPROVAL OF THE COMMISSIONER ONLY. THEREFORE, IT COULD NOT BE SAID THAT THE JOINT COMMISSIONER/ADDITIONAL COMMISSIONER HAD GRANTED THE APPROVAL. FURTHER, NO DOUBT, THE FILE WAS ROUTED THROUGH ADDITIONAL COMMISSIONER. HOWEVER, HE ALSO, IN TURN ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS 6.1. ADMITTEDLY, THE APPROVAL U/S 151(1) OF THE ACT, IN THE CASE ON HAND HAS BEEN GRANTED BY THE 7 VIDE ORDER DATED 31.03.2015 VIDE NO. ADDL. 15/3916 AND NOT BY THE COMMISSIONER OF INCOME TAX AS MANDATED UNDER THE ACT. HENCE THE REOPENING IN QUESTION IS BAD IN LAW AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GHANSHYAMDAS KHABRANI VS. ACIT 346 ITR 443, WHEREIN IT HAS BEEN HELD AS 'THE SECOND GROUND UPON WHICH THE REOPENING IS SOUGHT TO BE CHALLENGED IS THAT THE MANDATORY REQUIREMENT OF SECTION 151(2) HAS NOT BEEN FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 IN CERTAIN CASES. IN THE INSTANT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR SECTION 147 FOR SECTION (2) OF SECTION 151, NO NOTICE CAN BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER WHO IS BELOW THE RAN K OF JOINT COMMISSIONER AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE EXPRESSI ON 'JOINT COMMISSIONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT TAX OR AN ADDITIONAL COMMISSIONER OF INCOME -TAX UNDER SECTION 117(1). IN THE INSTANT CASE, THE RECORD BEFORE THE COURT INDICATES THAT THE A SSESSING 2011 TO THE COMMISSIONER (APPEALS) THROUGH THE 2011, THE ADDITIONAL COMMISSIONER FORWARDED THE 2011 FROM THE OFFICE OF THE COMMISSIONER (1) CONVEYING APPROVAL TO THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER. THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF SECTION 151(2) COULD HAVE ONLY BEEN FULFILLED BY THE SATISFACTION OF THE JOINT COMMISSIONER THAT THIS IS A SECTION 151(2) MANDATES THAT THE SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER. THAT EXPRESSION HAS A DISTINCT MEANING . THE COMMISSIONER IS NOT A JOINT . IN THE INSTANT CASE, THE ADDITIONAL COMMISSIONER FORWARDED THE PROPOSAL SUBMITTED BY THE ASSESSING OFFI CER TO THE COMMISSIONER. THE APPROVAL WHICH HAS BEEN GRANTED IS NOT BY THE ADDITIONAL COMMISSIONER BUT BY THE COMMISSIONER. THERE IS NO STATUTORY PROVISION UNDER WHICH A POWER TO BE EXERCISED BY AN OFFICER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE TATUTE MANDATES THE SATISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOMETHING TO BE DONE IN A PARTICULAR MANNER, IT HAS TO BE DONE IN THAT MANNER. [PARA 6] ONCE THE COURT HAS COME TO THE CONCLUSION THAT THERE WAS NO COMPLIANCE OF THE MANDATORY , THE NOTICE REOPENING THE ASSESSMEN T CANNOT BE SUSTAINED IN LAW. [PARA 7] UNDER SIMILAR CIRCUMSTANCES, THE LUCKNOW BENCH OF THE ITAT IN THE CASE OF BALBIR SINGH, BEING ITA NO. 880/K/2014, DT. 13/03/2015, WHEREIN THE 'S SIDDHARTHA LTD. [2012] 345 IT WAS APPARENT FROM RECORDS THAT THE ASSESSING OFFICER HAD SPECIFICALLY SOUGHT THE COULD NOT BE SAID THAT THE JOINT COMMISSIONER/ADDITIONAL COMMISSIONER HAD GRANTED THE APPROVAL. FURTHER, NO DOUBT, THE FILE WAS ROUTED THROUGH ADDITIONAL COMMISSIONER. HOWEVER, HE ALSO, IN TURN FORWARDED THE SAME TO THE COMMISSIONER. [PARA 4] IT IS CLEAR NOT APPLY HIS MIND OR GAVE ANY SANCTION. INSTEAD, HE REQUESTED COMMISSIONER TO ACCORD THE APPROVAL. IT, THUS, CANNOT BE SAID THAT IT IS AN IRREGULARITY CURABLE UNDER SECTION 292B. [PARA 5] SECTION 116 ALSO DEFINES THE INCOME DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIED CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY A MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF THE OTHER AUTHORITY. IT BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. [PARA 7] THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WORDS UPO EXCLUDES THE DOING OF THE ACT AUTHORISED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER S ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' AND NOT 'BORROWED' OR 'D [PARA 8] THE APEX COURT IN THE CASE OF ANIRUDH SINHJI KARAN SINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. [PARA 9] THEREFORE, THE TRIBUNAL HAS RIGHTLY DECIDED THE LEGAL ASPECT, KEEPING IN VIEW WELL OF LAW LAID DOWN IN CATENA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. [PARA 10] NO QUESTION OF LAW ARISES. THIS APPEAL IS ACCORDINGLY DISMISSED. [PARA 11] THE HON'BLE DELHI HIGH COURT IN THE CASE OF DATED 11.01.2017 HELD THAT APPROVAL UNDER MIND. IT IS NOT SO IN THIS CASE AS MECHANICAL APPROVAL IS GIVEN BY AN OFFICER WHO IS NOT AUTHORISED TO DO SO IN LAW. 6.2. THUS ON THIS COUNT ALSO WE HOLD THAT THE REOPENING IS BAD IN LAW. 7. FURTHER A PERUSAL OF THE REASONS RECORDE OFFICER. DIRECTIONS HAVE BEEN GIVEN BY THE DDIT (INV.) UNIT CITED. THE REASONS RECORDED ARE ONLY BASED ON SUCH DIRECTIONS. THE REOPENING WAS DONE IN COMPLIANCE IN SUCH DIREC TIONS. 7.1. THE HON'BLE DELHI HIGH COURT IN THE CASE OF (INDIA) LTD [2013] 357 ITR 330 (DELHI) UPHELD THE ORDER OF THE ITAT DELHI BENCH IN ITA NOS. 2332 2333 /DEL/2010, HOLDING AS FOLLOWS: '7. WE MAY POINT OUT AT THIS JUNCTURE ITSELF THAT THE TRIBUNAL DID NOT GO INTO THE QUESTION OF MERITS. IT ONLY EXAMINED THE QUESTION OF THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE SAID ACT. THE TRIBUNAL, IN ESS WERE ENTIRELY VAGUE AND DEVOID OF ANY MATERIAL. AS SUCH, ON THE AVAILABLE MATERIAL, NO REASONABLE PERSON COULD HAVE ANY REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, TRIBUNAL HELD THAT THE PROCEEDINGS UNDER SECTION 147 OF THE SAID ACT WERE INVALID. 7 FORWARDED THE SAME TO THE COMMISSIONER. [PARA 4] IT IS CLEAR THAT THE ADDITIONAL CIT DID NOT APPLY HIS MIND OR GAVE ANY SANCTION. INSTEAD, HE REQUESTED COMMISSIONER TO ACCORD THE APPROVAL. IT, THUS, CANNOT BE SAID THAT IT IS AN IRREGULARITY CURABLE UNDER SECTION 292B. [PARA 5] SECTION 116 ALSO DEFINES THE INCOME -TAX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIED CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY A RE ARROGATED BY OTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF THE OTHER AUTHORITY. IT IS TRITE THAT WHEN A STATUTE REQUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. [PARA 7] THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WORDS UPO N A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORISED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER S ATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' AND NOT 'BORROWED' OR 'D ICTATED' SATISFACTION. LAW IN THIS REGARD IS NOW WELL [PARA 8] THE APEX COURT IN THE CASE OF ANIRUDH SINHJI KARAN SINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. [PARA 9] THEREFORE, THE HAS RIGHTLY DECIDED THE LEGAL ASPECT, KEEPING IN VIEW WELL - ESTABLISHED PRINCIPLES OF LAW LAID DOWN IN CATENA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. [PARA 10] NO QUESTION OF LAW ARISES. THIS APPEAL IS ACCORDINGLY DISMISSED. [PARA 11] THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS N.C. CABLES IN ITA NO. 335/2015 JUDGEMENT DATED 11.01.2017 HELD THAT APPROVAL UNDER SECTION 151 IS TO BE MAD E AFTER APPLICATION OF MIND. IT IS NOT SO IN THIS CASE AS MECHANICAL APPROVAL IS GIVEN BY AN OFFICER WHO IS NOT AUTHORISED TO DO SO IN LAW. 6.2. THUS ON THIS COUNT ALSO WE HOLD THAT THE REOPENING IS BAD IN LAW. 7. FURTHER A PERUSAL OF THE REASONS RECORDE D SHOWS NON- APPLICATION OF MIND BY THE ASSESSING OFFICER. DIRECTIONS HAVE BEEN GIVEN BY THE DDIT (INV.) UNIT - 2(1), KOLKATA, VIDE COMMUNICATION CITED. THE REASONS RECORDED ARE ONLY BASED ON SUCH DIRECTIONS. THE REOPENING WAS DONE IN TIONS. 7.1. THE HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME- TAX, IV V.INSECTICIDES [2013] 357 ITR 330 (DELHI) UPHELD THE ORDER OF THE ITAT DELHI BENCH IN ITA NOS. 2332 /DEL/2010, HOLDING AS FOLLOWS: - '7. WE MAY POINT OUT AT THIS JUNCTURE ITSELF THAT THE TRIBUNAL DID NOT GO INTO THE QUESTION OF MERITS. IT ONLY EXAMINED THE QUESTION OF THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE SAID ACT. THE TRIBUNAL, IN ESS ENCE, HELD THAT THE PURPORTED REASONS FOR REOPENING THE ASSESSMENTS WERE ENTIRELY VAGUE AND DEVOID OF ANY MATERIAL. AS SUCH, ON THE AVAILABLE MATERIAL, NO REASONABLE PERSON COULD HAVE ANY REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, TRIBUNAL HELD THAT THE PROCEEDINGS UNDER SECTION 147 OF THE SAID ACT WERE INVALID. ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS THAT THE ADDITIONAL CIT DID NOT APPLY HIS MIND OR GAVE ANY SANCTION. INSTEAD, HE REQUESTED COMMISSIONER TO ACCORD THE APPROVAL. IT, THUS, CANNOT BE SAID THAT IT IS AN IRREGULARITY CURABLE UNDER SECTION AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIED CIRCUMSTANCES. IF RE ARROGATED BY OTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY IS TRITE THAT WHEN A STATUTE REQUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. [PARA 7] THUS, IF AUTHORITY IS GIVEN N A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORISED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN ATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' ICTATED' SATISFACTION. LAW IN THIS REGARD IS NOW WELL - SETTLED. [PARA 8] THE APEX COURT IN THE CASE OF ANIRUDH SINHJI KARAN SINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. [PARA 9] THEREFORE, THE ESTABLISHED PRINCIPLES OF LAW LAID DOWN IN CATENA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. [PARA 10] NO QUESTION OF LAW ARISES. THIS APPEAL IS ACCORDINGLY DISMISSED. [PARA 11] THE HON'BLE IN ITA NO. 335/2015 JUDGEMENT E AFTER APPLICATION OF MIND. IT IS NOT SO IN THIS CASE AS MECHANICAL APPROVAL IS GIVEN BY AN OFFICER WHO IS NOT APPLICATION OF MIND BY THE ASSESSING 2(1), KOLKATA, VIDE COMMUNICATION CITED. THE REASONS RECORDED ARE ONLY BASED ON SUCH DIRECTIONS. THE REOPENING WAS DONE IN TAX, IV V.INSECTICIDES [2013] 357 ITR 330 (DELHI) UPHELD THE ORDER OF THE ITAT DELHI BENCH IN ITA NOS. 2332 - '7. WE MAY POINT OUT AT THIS JUNCTURE ITSELF THAT THE TRIBUNAL DID NOT GO INTO THE QUESTION OF MERITS. IT ONLY EXAMINED THE QUESTION OF THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE ENCE, HELD THAT THE PURPORTED REASONS FOR REOPENING THE ASSESSMENTS WERE ENTIRELY VAGUE AND DEVOID OF ANY MATERIAL. AS SUCH, ON THE AVAILABLE MATERIAL, NO REASONABLE PERSON COULD HAVE ANY REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, THE TRIBUNAL HELD THAT THE PROCEEDINGS UNDER SECTION 147 OF THE SAID ACT WERE INVALID. 8. THE TRIBUNAL GAVE DETAILED REASONS FOR CONCLUDING THAT THE PROCEEDINGS UNDER SECTION 147 WERE INVALID. INSTEAD OF ADDING ANYTHING TO THE SAID REASONS, WE THINK IT WO THE SAME ARE REPRODUCED: -- 'IN THE CASE AT HAND, AS IS SEEN FROM THE REASONS RECORDED BY THE AO, WE FIND THAT THE AO HAS MERELY STATED THAT IT HAS BEEN INFORMED BY THE DIRECTOR OF INCOME LETTER DATED 16.06 .2006 THAT THE ABOVE NAMED COMPANY WAS INVOLVED IN GIVING AND TAKING BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT YEAR, WHICH IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. THE AO HAS FURTHER STATED THAT THE ASSESSEE COMPANY HAS FAILED TO DISCLO FULLY AND TRULY ALL MATERIAL FACTS AND SOURCE OF THESE FUNDS ROUTED THROUGH BANK ACCOUNT OF THE ASSESSEE COMPANY. IN THE REASONS RECORDED, IT IS NOWHERE MENTIONED AS TO WHO HAD GIVEN BOGUS ENTRIES/TRANSACTIONS TO THE ASSESSEE OR TO WHOM THE ASSESSEE HAD TRANSACTIONS. IT IS ALSO NOWHERE MENTIONED AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES AND TRANSACTIONS WERE MADE BY THE ASSESSEE. WHAT WAS THE INFORMATION GIVEN BY THE DIRECTOR OF INCOME- TAX (INV.), NEW DELHI, VID MENTIONED. IN OTHER WORDS, THE CONTENTS OF THE LETTER DATED 16.06.2006 OF THE DIRECTOR OF INCOME TAX (INV.), NEW DELHI HAVE NOT BEEN GIVEN. THE AO HAS VAGUELY REFERRED TO CERTAIN COMMUNICATIONS THAT HE HAD RECEIV FACTS MENTIONED IN THE SAID COMMUNICATION EXCEPT THAT FROM THE INFORMATIONS GATHERED BY THE DIT (INV.), NEW DELHI THAT THE ASSESSEE WAS INVOLVED IN GIVING AND TAKING ACCOMMODATION ENTRIES ONLY AN D REPRESENTED UNSECURED MONEY OF THE ASSESSEE COMPANY IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY OR THAT IT HAS BEEN INFORMED BY THE DIRECTOR OF INCOME DELHI VIDE LETTER DATED 16.06.2006 THAT THE ASSESSEE COMPANY WAS INVOLVED IN BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT FINANCIAL YEAR. THE AO DID NOT MENTION THE DETAILS OF TRANSACTIONS THAT REPRESENTED UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. THE INFORMATION ON THE BASIS OF WHICH THE AO HAS INITIATED PRO AND UNCERTAIN AND CANNOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORMED A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. IN OTHER WORDS, THE REAS ONS RECORDED BY THE AO ARE TOTALLY VAGUE, SCANTY AND AMBIGUOUS. THEY ARE NOT CLEAR AND UNAMBIGUOUS BUT SUFFER FROM VAGUENESS. THE REASONS RECORDED BY THE AO DO NOT DISCLOSE THE AO'S MIND AS TO WHAT WAS THE NATURE AND AMOUNT OF TRANSACTION OR ENTRIES, WHICH HAD BEEN GIVEN OR TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR. THE REASONS RECORDED BY THE AO ALSO DO NOT DISCLOSE HIS MIND AS TO WHEN AND IN WHAT MODE OR WAY THE BOGUS ENTRIES OR TRANSACTIONS WERE GIVEN OR TAKEN BY THE ASSESSEE. FROM THE REASONS RECORDED, AMOUNT AND NATURE OF BOGUS ENTRIES OR TRANSACTIONS GIVEN AND TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. AS ALREADY NOTED ABOVE, IT IS WELL SETTLED THAT ONLY THE REASONS RECORDED B TO BE LOOKED AT OR EXAMINED FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED U/S 148 OF THE ACT. THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AO. NO SUBSTITUTION OR DELETION IS P ERMISSIBLE. NO ADDITION CAN BE MADE TO THOSE REASONS. THEREFORE, THE DETAILS OF ENTRIES OR AMOUNT MENTIONED IN THE ASSESSMENT ORDER AND IN RESPECT OF WHICH ULTIMATE ADDITION HAS BEEN MADE BY THE AO, CANNOT BE MADE A BASIS TO SAY THAT THE REASONS RECORDED B REFERENCE TO THOSE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER. THE REASONS RECORDED BY THE AO ARE TOTALLY SILENT WITH REGARD TO THE AMOUNT AND NATURE OF BOGUS ENTRIES AND TRANSACTIONS AND THE PERSONS WITH WHOM THE TRANSACTIONS HAD TAKEN P DECISION OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF 383, IN WHICH CASE THE INFORMATION RELIED UPON BY THE AO FOR ACT DID INDICATE THE SOURCE OF THE CAPITAL GAIN AND NOBODY KNEW WHICH SHARES WERE TRANSACTED 8 8. THE TRIBUNAL GAVE DETAILED REASONS FOR CONCLUDING THAT THE PROCEEDINGS UNDER SECTION 147 WERE INVALID. INSTEAD OF ADDING ANYTHING TO THE SAID REASONS, WE THINK IT WO ULD BE APPROPRIATE IF -- 'IN THE CASE AT HAND, AS IS SEEN FROM THE REASONS RECORDED BY THE AO, WE FIND THAT THE AO HAS MERELY STATED THAT IT HAS BEEN INFORMED BY THE DIRECTOR OF INCOME - TAX (INV.), NEW DELHI, VIDE .2006 THAT THE ABOVE NAMED COMPANY WAS INVOLVED IN GIVING AND TAKING BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT YEAR, WHICH IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. THE AO HAS FURTHER STATED THAT THE ASSESSEE COMPANY HAS FAILED TO DISCLO FULLY AND TRULY ALL MATERIAL FACTS AND SOURCE OF THESE FUNDS ROUTED THROUGH BANK ACCOUNT OF THE ASSESSEE COMPANY. IN THE REASONS RECORDED, IT IS NOWHERE MENTIONED AS TO WHO HAD GIVEN BOGUS ENTRIES/TRANSACTIONS TO THE ASSESSEE OR TO WHOM THE ASSESSEE HAD GIVEN BOGUS ENTRIES OR TRANSACTIONS. IT IS ALSO NOWHERE MENTIONED AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES AND TRANSACTIONS WERE MADE BY THE ASSESSEE. WHAT WAS THE INFORMATION GIVEN BY TAX (INV.), NEW DELHI, VID E LETTER DATED 16.06.2006 HAS ALSO NOT BEEN MENTIONED. IN OTHER WORDS, THE CONTENTS OF THE LETTER DATED 16.06.2006 OF THE DIRECTOR OF INCOME TAX (INV.), NEW DELHI HAVE NOT BEEN GIVEN. THE AO HAS VAGUELY REFERRED TO CERTAIN COMMUNICATIONS THAT HE HAD RECEIV ED FROM THE DIT(INV.), NEW DELHI; THE AO DID NOT MENTION THE FACTS MENTIONED IN THE SAID COMMUNICATION EXCEPT THAT FROM THE INFORMATIONS GATHERED BY THE DIT (INV.), NEW DELHI THAT THE ASSESSEE WAS INVOLVED IN GIVING AND TAKING ACCOMMODATION ENTRIES D REPRESENTED UNSECURED MONEY OF THE ASSESSEE COMPANY IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY OR THAT IT HAS BEEN INFORMED BY THE DIRECTOR OF INCOME DELHI VIDE LETTER DATED 16.06.2006 THAT THE ASSESSEE COMPANY WAS INVOLVED IN BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT FINANCIAL YEAR. THE AO DID NOT MENTION THE DETAILS OF TRANSACTIONS THAT REPRESENTED UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. THE INFORMATION ON THE BASIS OF WHICH THE AO HAS INITIATED PRO CEEDINGS U/S 147 OF THE ACT ARE UNDOUBTEDLY VAGUE AND UNCERTAIN AND CANNOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORMED A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. IN ONS RECORDED BY THE AO ARE TOTALLY VAGUE, SCANTY AND AMBIGUOUS. THEY ARE NOT CLEAR AND UNAMBIGUOUS BUT SUFFER FROM VAGUENESS. THE REASONS RECORDED BY THE AO DO NOT DISCLOSE THE AO'S MIND AS TO WHAT WAS THE NATURE AND AMOUNT OF TRANSACTION OR ENTRIES, WHICH HAD BEEN GIVEN OR TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR. THE REASONS RECORDED BY THE AO ALSO DO NOT DISCLOSE HIS MIND AS TO WHEN AND IN WHAT MODE OR WAY THE BOGUS ENTRIES OR TRANSACTIONS WERE GIVEN OR TAKEN BY THE ASSESSEE. FROM THE REASONS RECORDED, NOBODY CAN KNOW WHAT WAS THE AMOUNT AND NATURE OF BOGUS ENTRIES OR TRANSACTIONS GIVEN AND TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. AS ALREADY NOTED ABOVE, IT IS WELL SETTLED THAT ONLY THE REASONS RECORDED B Y THE AO FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT ARE TO BE LOOKED AT OR EXAMINED FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED U/S 148 OF THE ACT. THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AO. NO SUBSTITUTION OR DELETION IS ERMISSIBLE. NO ADDITION CAN BE MADE TO THOSE REASONS. THEREFORE, THE DETAILS OF ENTRIES OR AMOUNT MENTIONED IN THE ASSESSMENT ORDER AND IN RESPECT OF WHICH ULTIMATE ADDITION HAS BEEN MADE BY THE AO, CANNOT BE MADE A BASIS TO SAY THAT THE REASONS RECORDED B Y THE AO WERE WITH REFERENCE TO THOSE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER. THE REASONS RECORDED BY THE AO ARE TOTALLY SILENT WITH REGARD TO THE AMOUNT AND NATURE OF BOGUS ENTRIES AND TRANSACTIONS AND THE PERSONS WITH WHOM THE TRANSACTIONS HAD TAKEN P LACE. IN THIS RESPECT, WE MAY RELY UPON THE DECISION OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT V. ATUL JAIN 383, IN WHICH CASE THE INFORMATION RELIED UPON BY THE AO FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT DID INDICATE THE SOURCE OF THE CAPITAL GAIN AND NOBODY KNEW WHICH SHARES WERE TRANSACTED ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS 8. THE TRIBUNAL GAVE DETAILED REASONS FOR CONCLUDING THAT THE PROCEEDINGS UNDER SECTION 147 ULD BE APPROPRIATE IF 'IN THE CASE AT HAND, AS IS SEEN FROM THE REASONS RECORDED BY THE AO, WE FIND THAT THE AO HAS TAX (INV.), NEW DELHI, VIDE .2006 THAT THE ABOVE NAMED COMPANY WAS INVOLVED IN GIVING AND TAKING BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT YEAR, WHICH IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. THE AO HAS FURTHER STATED THAT THE ASSESSEE COMPANY HAS FAILED TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS AND SOURCE OF THESE FUNDS ROUTED THROUGH BANK ACCOUNT OF THE ASSESSEE COMPANY. IN THE REASONS RECORDED, IT IS NOWHERE MENTIONED AS TO WHO HAD GIVEN BOGUS GIVEN BOGUS ENTRIES OR TRANSACTIONS. IT IS ALSO NOWHERE MENTIONED AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES AND TRANSACTIONS WERE MADE BY THE ASSESSEE. WHAT WAS THE INFORMATION GIVEN BY E LETTER DATED 16.06.2006 HAS ALSO NOT BEEN MENTIONED. IN OTHER WORDS, THE CONTENTS OF THE LETTER DATED 16.06.2006 OF THE DIRECTOR OF INCOME - TAX (INV.), NEW DELHI HAVE NOT BEEN GIVEN. THE AO HAS VAGUELY REFERRED TO CERTAIN ED FROM THE DIT(INV.), NEW DELHI; THE AO DID NOT MENTION THE FACTS MENTIONED IN THE SAID COMMUNICATION EXCEPT THAT FROM THE INFORMATIONS GATHERED BY THE DIT (INV.), NEW DELHI THAT THE ASSESSEE WAS INVOLVED IN GIVING AND TAKING ACCOMMODATION ENTRIES D REPRESENTED UNSECURED MONEY OF THE ASSESSEE COMPANY IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY OR THAT IT HAS BEEN INFORMED BY THE DIRECTOR OF INCOME -TAX (INV.), NEW DELHI VIDE LETTER DATED 16.06.2006 THAT THE ASSESSEE COMPANY WAS INVOLVED IN GIVING AND TAKING BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT FINANCIAL YEAR. THE AO DID NOT MENTION THE DETAILS OF TRANSACTIONS THAT REPRESENTED UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. THE INFORMATION CEEDINGS U/S 147 OF THE ACT ARE UNDOUBTEDLY VAGUE AND UNCERTAIN AND CANNOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORMED A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. IN ONS RECORDED BY THE AO ARE TOTALLY VAGUE, SCANTY AND AMBIGUOUS. THEY ARE NOT CLEAR AND UNAMBIGUOUS BUT SUFFER FROM VAGUENESS. THE REASONS RECORDED BY THE AO DO NOT DISCLOSE THE AO'S MIND AS TO WHAT WAS THE NATURE AND AMOUNT OF TRANSACTION OR ENTRIES, WHICH HAD BEEN GIVEN OR TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR. THE REASONS RECORDED BY THE AO ALSO DO NOT DISCLOSE HIS MIND AS TO WHEN AND IN WHAT MODE OR WAY THE BOGUS ENTRIES OR TRANSACTIONS NOBODY CAN KNOW WHAT WAS THE AMOUNT AND NATURE OF BOGUS ENTRIES OR TRANSACTIONS GIVEN AND TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. AS ALREADY NOTED ABOVE, IT IS WELL Y THE AO FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT ARE TO BE LOOKED AT OR EXAMINED FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED U/S 148 OF THE ACT. THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AO. NO SUBSTITUTION OR DELETION IS ERMISSIBLE. NO ADDITION CAN BE MADE TO THOSE REASONS. THEREFORE, THE DETAILS OF ENTRIES OR AMOUNT MENTIONED IN THE ASSESSMENT ORDER AND IN RESPECT OF WHICH ULTIMATE ADDITION HAS BEEN Y THE AO WERE WITH REFERENCE TO THOSE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER. THE REASONS RECORDED BY THE AO ARE TOTALLY SILENT WITH REGARD TO THE AMOUNT AND NATURE OF BOGUS ENTRIES AND TRANSACTIONS AND THE LACE. IN THIS RESPECT, WE MAY RELY UPON THE CIT V. ATUL JAIN [2000] 299 ITR INITIATING PROCEEDINGS U/S 147 OF THE ACT DID INDICATE THE SOURCE OF THE CAPITAL GAIN AND NOBODY KNEW WHICH SHARES WERE TRANSACTED AND WITH WHOM THE TRANSACTION HAS TAKEN PLACE AND IN THAT CASE THERE WERE ABSOLUTELY NO DETAILS AVAILABLE AND THE INFORMATION FACTS, THE HON'BLE JURISDICTIONAL DELHI HIGH COURT HELD THAT INITIATION OF PROCEEDINGS U/S 147 OF THE ACT BY THE AO WAS NOT VALID AND JUSTIFIED IN THE EYES OF LAW. THE RECENT DECISION OF H JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SIGNATURE HOTELS (P.) LTD. (SUPRA) ALSO SUPPORTS THE VIEW WE HAVE TAKEN ABOVE.' 9. WE DO NOT SEE ANY REASON TO DIFFER WITH THE VIEW EXPRESSED BY THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES F OR OUR CONSIDERATION. THE APPEALS ARE DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. 7.2. THE JURISDICTIONAL HIGH COURT IN THE CASE OF 545/2015 VIDE ORDER DT. 08.10.2015 AT PARAS 12 AND 13 WAS HELD AS FOLLOWS: '12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEB. 2003, FROM FOUR ENTRIES WHICH WERE RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEB. 2003, FROM FOUR ENTRIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTOR INVESTIGATION, THE A.O. STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND THE ASSESSEE COMPANY HAS, INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES'. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE A.O. APPLIED HIS MIND TO THE MATERIAL WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE A.O., IF HE HAD IN FACT UNDERTAKEN THE EXERC ISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER, 2004 AND WAS PROCESSED U/S 143(3) OF THE ACT. WITHOUT F OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE A.O. TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE C WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISION DISCUSSED, THE BASIC REQUIREMENT THAT THE A.O. MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. A PERUSAL OF THE REASONS RECORDED DEMONSTRATE TOTAL NON APPLICATION OF MIND BY THE A.O. THUS APPLYING THE PROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN G&G PHARMA INDIA (SU WE HOLD THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW' 7.3. THE HON'BLE DELHI HIGH COURT IN THE CASE OF REPORTED IN 338 ITR 51 (DELHI) HAS UNDER SIMILAR 'FOR THE A.Y. 2003- 04, THE RETURN OF INCOME OF THE ASSESSEE COMPANY WAS ACCEPTED U/S 143(1) OF THE INCOME-TAX ACT , 1961 AND WAS NOT SELECTED FOR SCRUTINY. SUBSEQUENTLY, THE ISSUED NOTICE U/S 148 WHICH WAS OBJECTED BY THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE OBJECTIONS. THE ASSESSEE COMPANY FILED WRIT PETITION AND CHALLENGED THE NOTICE AND THE ORDER ON OBJECTIONS. THE DELHI HIGH COURT ALLOWED THE WRI TAX ACT, 1961, IS WIDE BUT NOT PLENARY. THE ASSESSING OFFICER MUST HAVE 'REASONS TO BELIEVE' THAT 9 AND WITH WHOM THE TRANSACTION HAS TAKEN PLACE AND IN THAT CASE THERE WERE ABSOLUTELY NO DETAILS AVAILABLE AND THE INFORMATION SUPPLIED WAS EXTREMELY SCANTY AND VAGUE AND IN THAT LIGHT OF THOSE FACTS, THE HON'BLE JURISDICTIONAL DELHI HIGH COURT HELD THAT INITIATION OF PROCEEDINGS U/S 147 OF THE ACT BY THE AO WAS NOT VALID AND JUSTIFIED IN THE EYES OF LAW. THE RECENT DECISION OF H JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SIGNATURE HOTELS (P.) LTD. (SUPRA) ALSO SUPPORTS THE VIEW WE HAVE TAKEN ABOVE.' 9. WE DO NOT SEE ANY REASON TO DIFFER WITH THE VIEW EXPRESSED BY THE TRIBUNAL. NO SUBSTANTIAL OR OUR CONSIDERATION. THE APPEALS ARE DISMISSED. THERE SHALL BE NO ORDER 7.2. THE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS G&G PHARMA INDIA LTD DT. 08.10.2015 AT PARAS 12 AND 13 WAS HELD AS FOLLOWS: '12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEB. 2003, FROM FOUR ENTRIES WHICH WERE RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEB. 2003, FROM FOUR ENTRIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTOR INVESTIGATION, THE A.O. STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS, INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES'. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE A.O. APPLIED HIS MIND TO THE MATERIAL S THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE A.O., IF HE HAD IN FACT UNDERTAKEN THE ISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER, 2004 AND WAS PROCESSED U/S 143(3) OF THE ACT. WITHOUT F ORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE A.O. TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE C ONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISION DISCUSSED, THE BASIC REQUIREMENT THAT THE A.O. MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. A PERUSAL OF THE REASONS RECORDED DEMONSTRATE TOTAL NON APPLICATION OF MIND BY THE A.O. THUS APPLYING THE PROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN G&G PHARMA INDIA (SU WE HOLD THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW' 7.3. THE HON'BLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS (P) LTD. VS ITO AND ANOTHER REPORTED IN 338 ITR 51 (DELHI) HAS UNDER SIMILAR CIRCUMSTANCES HELD AS FOLLOWS: 04, THE RETURN OF INCOME OF THE ASSESSEE COMPANY WAS ACCEPTED U/S 143(1) OF , 1961 AND WAS NOT SELECTED FOR SCRUTINY. SUBSEQUENTLY, THE ISSUED NOTICE U/S 148 WHICH WAS OBJECTED BY THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE OBJECTIONS. THE ASSESSEE COMPANY FILED WRIT PETITION AND CHALLENGED THE NOTICE AND THE ORDER ON THE DELHI HIGH COURT ALLOWED THE WRI T PETITION AND HELD AS UNDER: '(I) SECTION 147 TAX ACT, 1961, IS WIDE BUT NOT PLENARY. THE ASSESSING OFFICER MUST HAVE 'REASONS TO BELIEVE' THAT ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS AND WITH WHOM THE TRANSACTION HAS TAKEN PLACE AND IN THAT CASE THERE WERE ABSOLUTELY NO DETAILS SUPPLIED WAS EXTREMELY SCANTY AND VAGUE AND IN THAT LIGHT OF THOSE FACTS, THE HON'BLE JURISDICTIONAL DELHI HIGH COURT HELD THAT INITIATION OF PROCEEDINGS U/S 147 OF THE ACT BY THE AO WAS NOT VALID AND JUSTIFIED IN THE EYES OF LAW. THE RECENT DECISION OF H ON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SIGNATURE HOTELS (P.) LTD. (SUPRA) ALSO SUPPORTS 9. WE DO NOT SEE ANY REASON TO DIFFER WITH THE VIEW EXPRESSED BY THE TRIBUNAL. NO SUBSTANTIAL OR OUR CONSIDERATION. THE APPEALS ARE DISMISSED. THERE SHALL BE NO ORDER PRINCIPAL CIT VS G&G PHARMA INDIA LTD . IN ITA '12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEB. 2003, FROM FOUR ENTRIES WHICH WERE RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEB. 2003, FROM FOUR ENTRIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTOR INVESTIGATION, THE A.O. STATED: 'I HAVE ALSO ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS, INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES'. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE S THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE A.O., IF HE HAD IN FACT UNDERTAKEN THE ISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE A.O. TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY ONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISION DISCUSSED, THE BASIC REQUIREMENT THAT THE A.O. MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME 13. A PERUSAL OF THE REASONS RECORDED DEMONSTRATE TOTAL NON APPLICATION OF MIND BY THE A.O. THUS APPLYING THE PROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN G&G PHARMA INDIA (SU PRA) SIGNATURE HOTELS (P) LTD. VS ITO AND ANOTHER , CIRCUMSTANCES HELD AS FOLLOWS: 04, THE RETURN OF INCOME OF THE ASSESSEE COMPANY WAS ACCEPTED U/S 143(1) OF , 1961 AND WAS NOT SELECTED FOR SCRUTINY. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 WHICH WAS OBJECTED BY THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE OBJECTIONS. THE ASSESSEE COMPANY FILED WRIT PETITION AND CHALLENGED THE NOTICE AND THE ORDER ON SECTION 147 OF THE INCOME- TAX ACT, 1961, IS WIDE BUT NOT PLENARY. THE ASSESSING OFFICER MUST HAVE 'REASONS TO BELIEVE' THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME ARE REQUIRED TO BE RECORDED IN WRITING BY THE ASSESSING OFFICER. (II) A NOTICE U/S 148 CAN BE QUASHED IF THE 'BELIEF' IS NOT BONA FIDE, OR ONE BASED ON VAGUE, IRRELEVANT AND NON- SPECIFIC INFORMATION. THE B MATERIAL ON RECORD, WHICH WAS AVAILABLE WITH THE ASSESSING OFFICER WHEN HE RECORDED THE REASONS. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE EVIDENCE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER. ( III) THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME- TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING F.Y.2002 AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NOT A POIN ESCAPEMENT OF INCOME. (IV) FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, BAD A PAID UP CAPITAL OF RS. 90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO THE QUASHED. 7.4. IN THE CASE OF CIT VS ATUL JAIN 'HELD DISMISSING THE APPEALS, THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS ENTRY OF CAPITAL GAINS BY AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPITAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE TRANSACT ION HAD TAKEN PLACE. THE A.O. DID NOT VERIFY THE CORRECTNESS OF INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE A.O. HAD NOT EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNESS OR OTHERWISE OF ISSUING A NOTICE U/S 148. WHAT HAD BEEN RECORDED BY THE A.O. AS HIS 'REASONS TO BELIEVE' WAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE SUBSTITUTED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE A.O. WAS NOT SUSTAINABLE' 8. RESPECTFULLY APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE JUDGMENTS CITED ABOVE TO THE FACTS OF THE CASE, WE HAVE N BAD IN LAW. HENCE WE QUASH THE RE 8. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE QUASH THE REOPENING OF ASSESSMENT AND ALLOW THIS CROSS- OBJECTION OF THE HAD BEEN VIOLATED. 10 INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT. THIS IS MANDATORY AND THE 'REASON TO BELIEVE' ARE REQUIRED TO BE RECORDED IN WRITING BY THE ASSESSING OFFICER. (II) A NOTICE U/S 148 CAN BE QUASHED IF THE 'BELIEF' IS NOT BONA FIDE, OR ONE BASED ON VAGUE, SPECIFIC INFORMATION. THE B ASIS OF THE BELIEF SHOULD BE DISCERNIBLE FROM THE MATERIAL ON RECORD, WHICH WAS AVAILABLE WITH THE ASSESSING OFFICER WHEN HE RECORDED THE REASONS. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE EVIDENCE MATERIAL AVAILABLE WITH THE III) THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING F.Y.2002 -03 AS STATED IN THE ANNEXURE. ACCORDING T O THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NOT A POIN TER AND DID NOT INDICATE (IV) FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, BAD A PAID UP 90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO THE QUASHED. CIT VS ATUL JAIN REPORTED IN 299 ITR 383 IT HAS BEEN HELD AS FOLLOWS: 'HELD DISMISSING THE APPEALS, THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS PAYING CASH ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE FOR THAT AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPITAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE ION HAD TAKEN PLACE. THE A.O. DID NOT VERIFY THE CORRECTNESS OF INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE A.O. HAD NOT EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNESS OR OTHERWISE OF ISSUING A NOTICE U/S 148. WHAT HAD BEEN RECORDED BY THE A.O. AS HIS 'REASONS TO BELIEVE' WAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE A.O. HAD CLEARLY SUBSTITUTED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE A.O. WAS NOT SUSTAINABLE' 8. RESPECTFULLY APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE JUDGMENTS CITED ABOVE TO THE FACTS OF THE CASE, WE HAVE N O OTHER ALTERNATIVE BUT TO HOLD THAT THE REOPENING OF THE ASSESSMENTS IS QUASH THE RE -OPENING OF ASSESSMENT. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE QUASH THE REOPENING OF ASSESSMENT OBJECTION OF THE ASSESSEE AS THE PROVISO TO SECTION 147 OF THE ACT, ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS NT. THIS IS MANDATORY AND THE 'REASON TO BELIEVE' (II) A NOTICE U/S 148 CAN BE QUASHED IF THE 'BELIEF' IS NOT BONA FIDE, OR ONE BASED ON VAGUE, ASIS OF THE BELIEF SHOULD BE DISCERNIBLE FROM THE MATERIAL ON RECORD, WHICH WAS AVAILABLE WITH THE ASSESSING OFFICER WHEN HE RECORDED THE REASONS. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE EVIDENCE MATERIAL AVAILABLE WITH THE III) THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO O THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH TER AND DID NOT INDICATE (IV) FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, BAD A PAID UP 90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO THE QUASHED. REPORTED IN 299 ITR 383 IT HAS BEEN HELD AS FOLLOWS: 'HELD DISMISSING THE APPEALS, THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS PAYING CASH ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE FOR THAT AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPITAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE ION HAD TAKEN PLACE. THE A.O. DID NOT VERIFY THE CORRECTNESS OF INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE A.O. THE INFORMATION FOR ISSUING A NOTICE U/S 148. WHAT HAD BEEN RECORDED BY THE A.O. AS HIS 'REASONS TO BELIEVE' WAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS FOR ISSUING A NOTICE. THE A.O. HAD CLEARLY SUBSTITUTED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE A.O. WAS NOT SUSTAINABLE' 8. RESPECTFULLY APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE JUDGMENTS CITED ABOVE TO THE O OTHER ALTERNATIVE BUT TO HOLD THAT THE REOPENING OF THE ASSESSMENTS IS CONSISTENT WITH THE VIEW TAKEN THEREIN, WE QUASH THE REOPENING OF ASSESSMENT ASSESSEE AS THE PROVISO TO SECTION 147 OF THE ACT, 9. AS WE HAVE QUASHED THE REOPENING OF ASSESSMENT, THE REVENUE APPEAL IN ITA NO. 406/KOL/2018, FOR THE ASSESSMENT YEAR 2008 10. WE NOW TAKE UP THE REVENUE APPEAL YEAR 2012- 13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT ON THE FACTS OF THE CASE, LD. CIT(A) DELETING THE ADDITION OF RS.3,45,90,750/ PRODUCTION OF 2. THAT ON THE FACTS OF THE CASE LD. CIT(A) DELETING THE ADDITION OF RS.2,28,664/ R.W.S. 14A OF THE I.T. ACT, 1961 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND 11. THE LD. CIT(A) HAS VERY CLEARLY BROUGHT OUT AFTER DUE VERIFICATION THAT ACTUAL PRODUCTION OF THE ASSESSEE WAS 151200 MT AND THAT THIS FIGURE WAS RECORDED BY THE ASSESSEE IN ITS ANNUAL ACCOUNTS A REPORTED TO THE DIRECTOR, DEPARTMENT OF MINES AND GEOLOGY AND HENCE THERE IS NO DISCREPANCY BETWEEN THE FIGURES AS ALLEGED BY THE ASSESSING OFFICER. HE HAS STATED THAT THE RAW MATERIAL PRODUCED WAS 15 PRODUCTS AND FINISHED PRODUCTS AT ITEM (II), WHICH IS A FIGURE OF 110505 MTS. 11.1. THIS FACTUAL FINDING OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D/R. IN OUR VIEW, THE ASSESSING OFFICER WAS IN THERE IS A DISCREPANCY IN THE QUANTUM OF PRODUCTION REPORTED TO DIRECTOR, DEPARTMENT OF MINES AND GEOLOGY , GOVT. OF ORISSA BY THE ASSESSEE. THUS, WE UPHOLD TH AND DISMISS THIS GROUND OF THE REVENUE. 12. GROUND NO. 2 IS ON THE DISALLOWANCE MADE U/S 14A R.W.R. 8D(III). 12.1. THE LD. CIT(A) HAS STATED THAT THE ASSESSEE HAS NOT CLAIMED EXEMPTION AND HENCE THE QUE STION OF INCLUDING DISALLOWANCE U/S 14A OF THE ACT, DOES NOT ARISE. WE FIND NO INFIRMITY IN THE SAME. 11 AS WE HAVE QUASHED THE REOPENING OF ASSESSMENT, THE REVENUE APPEAL IN ITA NO. 406/KOL/2018, FOR THE ASSESSMENT YEAR 2008 - 09 IS HEREBY DISMISSED. WE NOW TAKE UP THE REVENUE APPEAL IN ITA NO. 407/KOL/2018; ASSESSMENT 13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. THAT ON THE FACTS OF THE CASE, LD. CIT(A) - 20, KOLKATA HAD ERRED IN DELETING THE ADDITION OF RS.3,45,90,750/ - FOR UNDER REPORTING OF PRODUCTION OF IRON ORE. THAT ON THE FACTS OF THE CASE LD. CIT(A) - 20, KOLKATA HAD ERRED IN DELETING THE ADDITION OF RS.2,28,664/ - ADDED AS PER RULE 8D(III) R.W.S. 14A OF THE I.T. ACT, 1961 . THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. THE LD. CIT(A) HAS VERY CLEARLY BROUGHT OUT AFTER DUE VERIFICATION THAT ACTUAL PRODUCTION OF THE ASSESSEE WAS 151200 MT AND THAT THIS FIGURE WAS RECORDED BY THE ASSESSEE IN ITS ANNUAL ACCOUNTS A S WELL AS TAX AUDIT REPORT AND THAT THIS WAS THE FIGURE REPORTED TO THE DIRECTOR, DEPARTMENT OF MINES AND GEOLOGY AND HENCE THERE IS NO DISCREPANCY BETWEEN THE FIGURES AS ALLEGED BY THE ASSESSING OFFICER. HE HAS STATED THAT THE RAW MATERIAL PRODUCED WAS 15 1200 MT HAS STATED AT ITEM (III) OF THE TRADING PRODUCTS AND FINISHED PRODUCTS AT ITEM (II), WHICH IS A FIGURE OF 110505 MTS. THIS FACTUAL FINDING OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D/R. IN OUR VIEW, THE ASSESSING OFFICER WAS IN ERROR IN MAKING AN ADDITION ON THE GROUND THAT THERE IS A DISCREPANCY IN THE QUANTUM OF PRODUCTION REPORTED TO DIRECTOR, DEPARTMENT OF , GOVT. OF ORISSA AND THE QUANTUM OF PRODUCTION REPORTED TO THE BY THE ASSESSEE. THUS, WE UPHOLD TH E ORDER OF THE LD. FIRST APPELLATE AUTHORITY ON FACTS AND DISMISS THIS GROUND OF THE REVENUE. GROUND NO. 2 IS ON THE DISALLOWANCE MADE U/S 14A R.W.R. 8D(III). THE LD. CIT(A) HAS STATED THAT THE ASSESSEE HAS NOT CLAIMED EXEMPTION AND HENCE STION OF INCLUDING DISALLOWANCE U/S 14A OF THE ACT, DOES NOT ARISE. WE FIND NO ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS AS WE HAVE QUASHED THE REOPENING OF ASSESSMENT, THE REVENUE APPEAL IN ITA 09 IS HEREBY DISMISSED. IN ITA NO. 407/KOL/2018; ASSESSMENT 13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 20, KOLKATA HAD ERRED IN FOR UNDER REPORTING OF 20, KOLKATA HAD ERRED IN ADDED AS PER RULE 8D(III) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. THE LD. CIT(A) HAS VERY CLEARLY BROUGHT OUT AFTER DUE VERIFICATION THAT ACTUAL PRODUCTION OF THE ASSESSEE WAS 151200 MT AND THAT THIS FIGURE WAS RECORDED BY THE S WELL AS TAX AUDIT REPORT AND THAT THIS WAS THE FIGURE REPORTED TO THE DIRECTOR, DEPARTMENT OF MINES AND GEOLOGY AND HENCE THERE IS NO DISCREPANCY BETWEEN THE FIGURES AS ALLEGED BY THE ASSESSING OFFICER. HE HAS STATED THAT 1200 MT HAS STATED AT ITEM (III) OF THE TRADING PRODUCTS AND FINISHED PRODUCTS AT ITEM (II), WHICH IS A FIGURE OF 110505 MTS. THIS FACTUAL FINDING OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D/R. IN ERROR IN MAKING AN ADDITION ON THE GROUND THAT THERE IS A DISCREPANCY IN THE QUANTUM OF PRODUCTION REPORTED TO DIRECTOR, DEPARTMENT OF AND THE QUANTUM OF PRODUCTION REPORTED TO THE DMG, E ORDER OF THE LD. FIRST APPELLATE AUTHORITY ON FACTS GROUND NO. 2 IS ON THE DISALLOWANCE MADE U/S 14A R.W.R. 8D(III). THE LD. CIT(A) HAS STATED THAT THE ASSESSEE HAS NOT CLAIMED EXEMPTION AND HENCE STION OF INCLUDING DISALLOWANCE U/S 14A OF THE ACT, DOES NOT ARISE. WE FIND NO 12.2. THIS FACTUAL FINDING COULD NOT BE CONTROVERTED BY THE LD. D/R. THUS, WE DISMISS THIS GROUND OF THE REVENUE. 13. IN THE RESULT, THIS APPEAL OF THE 14. IN THE RESULT, BOTH THE REVENUE APPEALS ARE DISMISSED AND THE CROSS THE ASSESSEE IS ALLOWED. KOLKATA, THE SD/- [ABY T. VARKEY] JUDICIAL MEMBER DATED : 31.12.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. M/S. MALA ROY & OTHERS 192D, NETAJI SUBHAS CHANDRA BOSE ROAD TOLLYGUNGE KOLKATA 700 040 2. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 3. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 4. CIT(A)- 5. CIT- , 6 . CIT(DR), KOLKATA BENCHES, KOLKATA. 12 THIS FACTUAL FINDING COULD NOT BE CONTROVERTED BY THE LD. D/R. THUS, WE DISMISS IN THE RESULT, THIS APPEAL OF THE REVENUE IS DISMISSED. IN THE RESULT, BOTH THE REVENUE APPEALS ARE DISMISSED AND THE CROSS KOLKATA, THE 31 ST DAY OF DECEMBER, 2019. [ J. SUDHAKAR ACCOUNTANT MEMBER 192D, NETAJI SUBHAS CHANDRA BOSE ROAD COMMISSIONER OF INCOME TAX, CIRCLE -25, KOLKATA 3. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1(1), KOLKATA . CIT(DR), KOLKATA BENCHES, KOLKATA. ASSISTANT ITAT, KOLKATA BENCHES ITA NO. 406/KOL/2018 ASSESSMENT YEAR: 2008-09 & ITA NO. 407/KOL/2018 ASSESSMENT YEAR: 2012-13 C.O. NO. 407/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. MALA ROY & OTHERS THIS FACTUAL FINDING COULD NOT BE CONTROVERTED BY THE LD. D/R. THUS, WE DISMISS IN THE RESULT, BOTH THE REVENUE APPEALS ARE DISMISSED AND THE CROSS -OBJECTION BY SD/- J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES