Appeal Details
Counselvise Citation
[2018] 123 COUNSELVISE.COM (IT) 3894 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 10 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
12-06-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
I
Assessment Year
2007-2008
Appeal Filed On
02-04-2018
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.7385/MUM/2016 ASSESSMENT YEAR: 2007-08 DCIT 5(2)(2) MUMBAI / VS. MERIDIAN CHEM BOND PURCHASE LTD., 903 RAHEJA CENTRE, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI 400 021 ( / REVENUE) ( ! ' /ASSESSEE) PAN. AAACR1789G MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 2 ITA NO.7082/MUM/2016 ASSESSMENT YEAR: 2007-08 ITO19 (2)(3) MUMBAI / VS. MEENAKSHI N SHAH, 210/A, PANCHRATNA OPERA HOUSE, MUMBAI 400 051 ( / REVENUE) ( ! ' /ASSESSEE) PAN. AAIHM7909Q C.O. NO.86/MUM/2018 (ARISING OUT OF ITA NO.7385/MUM/2016) ASSESSMENT YEAR: 2007-08 MERIDIAN CHEM BOND PURCHASE LTD., 903 RAHEJA CENTRE, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI 400 021 / VS. DCIT 5(2)(2) MUMBAI ( ! ' /ASSESSEE) ( / REVENUE) PAN. AAACR1789G C.O. NO.85/MUM/2018 (ARISING OUT OF ITA NO.7082/MUM/2016) ASSESSMENT YEAR: 2007-08 MEENAKSHI N SHAH, 210/A, PANCHRATNA OPERA HOUSE, MUMBAI 400 051 / VS. ITO19 (2)(3) MUMBAI ( ! ' /ASSESSEE) ( / REVENUE) PAN. AAIHM7909Q MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 3 ! ' / ASSESSEE BY SHRI SUCHAK ANCHALIYA (AR) / REVENUE BY SHRI VIRENDRA SINGH-DR # $ % ' & / DATE OF HEARING : 12/06/2018 % ' & / DATE OF ORDER: 20/06/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 29.09.2016 (ITA NO.7385/M/2016) AND 16.09.2016 (ITA NO.7082/M/2016) OF THE LD. COMMISSIONER OF INCOME T AX(A), MUMBAI AND THE ASSESSEES HAVE PREFERRED CROSS OBJEC TIONS. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE (ITA 7385/M/2016) WHEREIN THE FIRST GROUND RAISED PERTAI NS TO DELETING THE ADDITION OF RS. 30,00,000/- ON ACCOUNT OF UNEXPLAINED CREDITS UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 3. DURING HEARING THE LEARNED DR - SHRI VIRENDRA SI NGH DEFENDED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER BY CONTENDING THAT THERE WAS AN INFORMATION WITH TH E ASSESSING OFFICER WITH RESPECT TO UNEXPLAINED CREDI TS FROM MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 4 NICE DIAMONDS AND THE ACTUAL PAYMENT OF CASH WAS NO T EXPLAINED BY THE ASSESSEE THEREFORE, CIRCUMSTANTIAL EVIDENCES CANNOT BE IGNORED. THE LEARNED DR RELIED UPON THE DECISION FROM HON'BLE APEX COURT IN THE CASE OF SUMATI DAYAL (82 ITR 540) (SC). IT WAS PLEADED THAT ACCOMMODATION ENTRI ES WITH RESPECT TO THE LOAN WERE PROVIDED BY BHAWARLAL JAIN GROUP AND OTHER PERSONS, WHO WERE SHOWN AS EMPLOYEES/DIRE CTORS ARE MERELY DUMMY PERSONS AND THEIR SALARY IS ALSO P AID IN CASH. THE LEARNED DR CONTENDED THAT THEIR STATEMEN TS WERE RECORDED BY THE DEPARTMENT ALONG WITH THE STATEMENT OF SHRI BHAWARLAL JAIN, WHEREIN THEY ACCEPTED OF PROVIDING ACCOMMODATION ENTRIES. OUR ATTENTION WAS INVITED T O THE FINDING AT PAGE 25 OF THE IMPUGNED ORDER ALONG WITH PARA 8.3 (PAGE 26 OF THE ORDER OF THE LEARNED CIT(A)). FURT HER OUR ATTENTION WAS INVITED TO PAGE 37 AND 40 OF THE PAPE R-BOOK. THE CRUX OF THE ARGUMENT IS IN SUPPORT OF THE ADDIT ION MADE BY THE LEARNED ASSESSING OFFICER. 4. ON THE OTHER HAND SHRI SUCHAK ANCHALIYA, LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDE R BY MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 5 CONTENDING THAT THE ASSESSEE TOOK LOANS FROM M/S. N ICE DIAMONDS, WHOSE PROPRIETOR IS SHRI BHUPENDER SINGH KARNAWAT AND NOT BHAWARLAL JAIN AS HAS BEEN DISCUSS ED IN THE ASSESSMENT ORDER. IT WAS PLEADED THAT INTEREST WAS DULY PAID THROUGH ACCOUNT PAYEE CHEQUE AND, ULTIMATELY, THE LOAN WHICH WAS TAKEN FROM BANKING CHANNEL WAS ALSO RETUR NED THROUGH BANKING CHANNEL. IT WAS PLEADED THAT EVEN THE STATEMENT OF SHRI BHUPENDER SINGH KARNAWAT WAS NEVE R RECORDED BY THE DEPARTMENT. PLEA WAS ALSO RAISED T HAT THE STATEMENT OF SHRI BHAWARLAL JAIN WAS RECORDED, WHIC H WAS RETRACTED BY HIM. IT WAS ALSO EXPLAINED THAT NO SE ARCH WAS CARRIED OUT ON M/S. NICE DIAMONDS AND THE ENTIRE AS SESSMENT ORDER SPEAKS OF MODUS OPERANDI OF SHRI BHAWARLAL JA IN AND NO DISCUSSION HAS BEEN MADE WITH RESPECT TO M/S. NI CE DIAMONDS. THE LEARNED COUNSEL FURTHER EXPLAINED TH AT THE ASSESSEE SUBMITTED THE NECESSARY DETAILS/INCOME TAX RETURNS OF M/S. NICE DIAMONDS FROM WHOM THE LOANS WERE TAKE N BY THE ASSESSEE. OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF PAPER-BOOK, DETAILS OF LOAN TAKEN AND REPAID AND TH E ASSESSEE PAID INTEREST @6% ON SUCH LOANS FOR WHICH OUR ATTEN TION WAS MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 6 INVITED TO PAGE 25,44 AND 46 OF THE PAPER-BOOK. IT WAS ALSO PLEADED THAT M/S. NICE DIAMONDS ALSO FILED AFFIDAVI T IN SUPPORT OF THE CLAIM (PG 47 OF THE PAPER-BOOK). TH E LEARNED COUNSEL FURTHER CONTENDED THAT THE STATEMENT RECORD ED FROM SHRI BHAWARLAL JAIN WAS NEVER PROVIDED TO THE ASSES SEE AND EVEN THE CROSS-EXAMINATION WAS NOT PROVIDED FOR WHI CH OUR ATTENTION WAS INVITED TO PG 19 (POINT NO.5 & 6 ) OF THE SUBMISSIONS MADE BEFORE THE LEARNED ASSESSING OFFIC ER. THE CRUX OF THE ARGUMENT IS THAT THE ONUS CAST UPON THE ASSESSEE UNDER SECTION 68 OF THE ACT WAS DULY DISCHARGED BY THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIE F ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, ENGAGED IN T HE BUSINESS OF MANUFACTURE OF CHEMICALS, DECLARED TOTA L INCOME OF RS. 94,96,330/- ON 26.10.2007, WHICH WAS PROCESS ED UNDER SECTION 143(1) OF THE ACT. THE CASE OF THE ASSESSE E WAS SELECTED FOR SCRUTINY THEREFORE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DETERMIN ING THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 7 TOTAL INCOME OF RS. 97,26,920/-. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH THE D ETAILS OF LOANS AND ADVANCES TAKEN FROM SHRI BHAWARLAL JAIN T O WHICH THE ASSESSEE VIDE LETTER DATED 4.02.2015, MADE ITS SUBMISSIONS. THE SUBMISSIONS OF THE ASSESSEE WERE CONSIDERED AND THE DETAILS FURNISHED BY THE ASSESSE E WERE FOUND TO BE CORRECT WITH RESPECT TO ADVANCES RECEIV ED BEFORE A.Y. 2007-08 (IN A.Y. 2006) AS IS OBSERVED IN PARA 6.1 OF THE ASSESSMENT ORDER. HOWEVER, THE LEARNED ASSESSING O FFICER SUSPECTED THE GENUINENESS OF LOANS OF RS. 30 LACS T AKEN FROM SANKHLA EXPORTS AND ADDED AS UNEXPLAINED CASH CREDI T UNDER SECTION 68 OF THE ACT. 5.1. ON APPEAL BEFORE THE LEARNED CIT(A), THE FACTU AL MATRIX WAS CONSIDERED, ALONG WITH VARIOUS CASE LAWS AND, ULTIMATELY, IT WAS OBSERVED THAT THERE WAS NO INCONSISTENCY OR INCOHERENCE IN THE RECEIPT OF LOAN FROM THE PARTIES , CONSEQUENTLY, THE ADDITION WAS DELETED. THE RELEVA NT FINDING AS CONTAINED IN PARA 5.2.2 (PG 11 OF THE IMPUGNED O RDER) ONWARDS IS REPRODUCED HERE UNDER: MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 8 5 . 2.2 . IN THE INSTANT CASE, HOWEVER, AS SEEN FROM THE DETAILS FILED BEFORE THE AO, A SET OF WHICH WERE AL SO FILED BEFORE ME, I DO NOT FIND ANY INCONSISTENCY OR INCOH ERENCE IN THE RECEIPT OF LOANS FROM THE PARTIES . FIRSTLY. AS REGARDS THE TRANSACTION, THE SAME HAS ROUTED THROUGH THE BANKIN G CHANNELS AND THE SOURCE CANNOT BE DOUBTED. SECONDLY . AS WAS HELD IN SEVERAL CASES THAT WHATEVER MAY BE THE STRENGTH OF PRESUMPTION IT CANNOT REPLACE EVIDENCE. EVEN THOUGH, THE TRANSACTION IS FROM A TAINTED GROUP, TH E AO HAS NOT GATHERED ANY ADDITIONAL/INDEPENDENT EVIDENCE TO SHOW THAT THE TRANSACTION WITH THE APPELLANT COMPANY WAS SHAM, FICTITIOUS OR ARTIFICIAL EXCEPT BELIEVING THE STATE MENTS GIVEN BY THE ENTRY OPERATORS. HE HAS FAILED TO GATHER EVI DENCE TO SHOW THAT THE UNACCOUNTED CASH OF THE APPELLANT HAD CHANGED HANDS SUBSEQUENTLY REPLACING THE CHEQUE PAYMENTS. THIRDLY. HE HAS ALSO NOT ANSWERED SEVERAL VALID POINTS RAISED BY THE APPELLANT NOR PROVED HOW THE D ETAILS LIKE PAN, THE IT RETURNS, CONFIRMATION LETTERS, BAN K STATEMENTS OF THE CREDITORS, AUDITED BALANCE SHEET OF THE CREDITORS CANNOT BE TAKEN NOTE OF. FOURTHLY. THE IT AT MUMBAI IN THE CASE OF ANANT SHELTERS P LTD . (2012) 20 TAXMANN.COM 153 HAS LAID DOWN CERTAIN PRINCIPLES WI TH REGARD TO SECTION 68 WHICH THE AO IS BOUND TO FOLLO W BUT DO NOT SEEM TO HAVE TAKEN NOTE OF. THEY ARE REPRODUCED AS UNDER(PARA- 7)- (I) SECTION 68 CAN BE INVOKED WHEN FOLLOWING THREE CONDITIONS ARE SATISFIED - (A) WHEN THERE IS CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE (B) SUCH CREDIT HAS TO BE A SUM OF MONEY DURING THE PREVIOUS YEAR (C) EITHER THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDITS FOUND IN THE BOOKS OR THE EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE AO , IS NOT SATISFACTORY . IT IS ONLY THEN THAT THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. (II) THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATION MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDI TED IN THE BOOKS MAINTAINED BY THE ASSESSEE.THE OPINION O F MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 9 THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION O F THE AO IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD FILE . ONCE THE EXPLANATION OF T HE ASSESSEE IS FOUND UNBELIEVABLE OR FALSE THE AO IS NO T REQUIRED TO BRING POSITIVE EVIDENCE ON RECORD TO TREAT AMOUNT IN QUESTION AS INCOME OF THE ASSESSEE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE AO HA S TO ACT REASONABLY-APPLICATION OF MIND IS THE SINE QUA NO N FOR FORMING THE OPINION. ( III) PHR AS E APP EA R I N G IN THE S ECT I ON - NATURE AND S OURCES OF SUCH CRED I TS - S H OULD B E UND E R S TO O D IN R IGHT PERS P E CTIVE , SO T H A T GE NU I NENE SS O F THE TRANSACT I ON CAN BE DE CI DED ON MERIT S AND NOT ON PR E JUDICES . CO U RTS A RE O F TH E F I R M V IEW THAT TH E EV I D E NC E PRODUCED BY TH E AS S ES S E E CAN N OT B E B RUSH ED A SID E IN A CAUSAL M A NNER . ASSESSEE C A NN O T B E ASKE D TO P RO V E I MPO SSI B LE . EX PL A N A T I ON A BO UT 'SOURCE OF S O URCE' OR ' ORIGINS O F TH E ORIGIN' CA N NO T AN D S H OULD N O T BE C ALLE D F OR WHI LE M A K I N G I NQU IRY UNDER SECTION . (IV) IN T H E MA T TERS RELATED TO SECTION 68 BUR D EN O F PROOF CANNO T B E D IS C HARGED TO T H E HILT -SUCH MATTERS ARE DECI D E D O N THE PARTICULAR FACTS OF THE CASE A S WELL AS ON THE B ASIS OF PREPO N D ERANCE OF PROBA B ILITI E S. CREDIBILITY OF TH E E X P LANATI ON , NO T THE MATE R IAL I TY OF EV I DEN CES, IS THE BASIS F OR DEC I D ING THE CASE S FALLING UN D E R S ECTION 6 8 . (V) CONFIRMAT O RY LETTERS OR A/C P AYEE CHE QU ES DO N O T PROVE TH A T TH E AMOUNT IN QU ES T ION IS P ROPERLY EXP L AI N E D FO R THE PU RP O SE O F S E CTION 68 . A SSE SS EE H A S TO EST AB L I SH I DENT I T Y AND CR E D ITWO RTHINE SS O F THE CREDI T OR A S W E L L A S THE GE NU I N ENE S S OF T HE TRAN SA C TI ON. A LL TH E TH REE IN G REDIENTS AR E C U M UL A TIV E A ND NOT EXCLUSI V E . (VI) IN MA TT E R S REGA R DING CASH CRE D IT THE ONUS OF P ROOF IS NOT A S T ATIC O N E . A S P ER THE PROVISIO N S OF THE SECTION THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE . AMOU N T APPEA R ING IN THE BOOKS OF A L CS . OF THE ASSESSEE IS C O NSI D ERED A PRO O F AGAINST HIM. HE CAN P R OVE TH E I D ENTI T Y MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 10 OF TH E C RE D ITORS BY EITHER FURNISHING THEIR PANS OR ASSESSMENT ORDERS . SIMILARLY , GENUINENESS OF THE TRANSACTION CAN BE PROVED BY SHOWING THAT THE MONEY WA S RECEIVED BY AN ACCOUNT PAYEE CH E QUE OR B Y DRAFT. CREDIT WORTHINESS OF THE LENDER CAN B E ESTA B LISHED BY AT T EN D ING CIRCUMSTANCE S . O NC E T H E ASSESSE E P R ODU CES EVIDENCES ABOUT IDENTITY, GEN U INENESS AND CREDIT WORTHINESS OF T H E LENDER O NUS O F PROO F S HIFTS TO THE REVENUE. FIFTHLY, THE HONORABLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS PR I VATE LIMITED , (2008 ) 2 1 6 CTR 195 (SC) , HAS STATED THAT THE AO IS AT LIBERTY TO BR I NG TO TAX THE AMOUNTS I N THEIR RESPECT I VE HANDS OF THE CREDITORS I F THEIR IDENTITY , GENU I NENESS AND CRED I TWORTH I NESS IS NOT PROVED . THE AO SHOULD HAVE MADE EFFORTS TO ASSESS THE AMOUNTS I N THE HANDS OF THE CREDITORS AT L EAST ON PROTECTIVE BASIS. LASTLY , EVEN I F THE CREDITWORTH I NESS OF THE CREDITORS IS NOT PROVED IT WIL L NOT AUTOMATICALLY G I VE LICENSE TO THE AO TO MAKE ADD I TIONS IN THE HANDS OF THE ASSESSEE U/S 68 UNLESS IT I S PROVED THAT I T IS THE UNEXPLAINED MONEY OF THE ASSESSEE WHICH HAS BEEN INTRODUCED IN ITS BOOKS OF ACCOUNT I N THE NAMES OF BOGUS/NON - EXISTENT ENT I T I ES . IN THE INSTANT CASE THE AO HAS NOT MADE ANY DENT I N THESE L I NES . ON THE OTHER HAND THE APPELLANT HAS F I LED THE FO L LOW I NG DETA I LS I N THE CASE OF M/S SANKHA L A EXPORTS P LTD . TO PROVE THE I DENT I TY , GENUINENESS AND CRED I TWORTHINESS OF THE CREDITORS. 1 . CONF I RMAT I ON OF NC. 2 . INCOME TAX RETURNS . 3 . BANK STATEMENTS SHOW I NG T HE LOAN TRANSACTIONS . 4 . AUD I TED BA L ANCE SHEE T & P&L A/C A L ONG W I TH THE SCHEDU L E WHE R E I N CRED IT I N THE NAME OF THE APPEL L A NT I S O U TSTAND I NG I N THE I R BOOKS . 5 . REP L Y G I VEN BY THE PAR T Y T O T HE NOT I CE I SSUED BY THE AO U / S 1 3 3(6) CONF I RM I NG THE TRANSACT I ON W IT H THE ASSESSEE . 6 . PAYMENT O F I NTEREST TO CRED I TORS AFTER SUB J ECT IN G THE AMOUNT TO TDS . 7 . DETA IL S O F REPAYMENT OF L OANS I N THE FORM OF BANK STATEMENTS AND CONF I RMAT I ON FROM THE PARTY TO THAT EXTENT . 5 . 2 . 3 AS SEEN FROM THE ABOVE, THE APPELLANT HAS FURNISHED ALL THE DETAILS PROVING CONCLUSIVELY THE THREE INGREDIE NTS OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 11 IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION. THE AMOUNTS WERE PAID B Y THE CREDITORS FROM THEIR RUNNING BANK ACCOUNTS WHICH WERE ACCOUNTED IN THE BOOKS OF THE APPELLANT AS WELL AS THE CREDITORS AS SEEN FROM THE AUDITED ACCOUNTS FILED . THE TRANSACTIONS WERE ALSO CONFIRMED BY ALL THE CREDITORS WHO ARE ASSESSED TO TAX. FURTHER , THE APPELLANT HAS PAID INTEREST THROUGH BANKS TO THE CREDITORS BY DULY SUBJECTI NG THE INTEREST AMOUNT TO TDS AND REPAID THE LOANS IN SUBSEQUENT ASSESSMENT YEARS I . E. IN AY . 2010-11 AND 2011-12 ALONG WITH INTEREST . I FIND THAT THE AO WAS IN POSSESSION OF GOOD INFORMATION IN THE FORM OF INVESTIG ATION REPORT, TO BEGIN WITH, BUT HE COULD NEITHER SUCCEED TO REPUDIATE THE EVIDENCES FILED BY THE APPELLANT NOR HE C OULD GATHER INDEPENDENT EVIDENCE EVEN TO ESTABLISH THE SURROUNDING CIRCUMSTANCES NOT TO SPEAK OF LEADING EVIDENCE TO PROVE HIS HYPOTHESIS . IN VIEW OF THE ABOVE DISCUSSION I HOLD THAT THE LOAN TAKEN BY THE APPELLANT FROM THE ABOVE THREE PARTIES CANNOT BE DOUBTED AND THE ADDITION MADE BY THE AO U/S 68 OF THE ACT CANNOT SURVIV E THE TEST OF APPEAL . I THEREFORE , DIRECT THE AO TO WITHDRAW THE ADDITION . THE GROUND IS ALLOWED. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LE ADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSER TIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSI TION AND ANALYZED, WE FIND THAT THE ASSESSEE, DURING ASSESS MENT PROCEEDINGS AS WELL AS FIRST APPELLATE PROCEEDINGS FILED NECESSARY DETAILS. THE FOLLOWING DETAILS WERE FILE D BY THE ASSESSEE (AS IS EVIDENT FROM PARA 5.1.1 OF THE IMPU GNED ORDER) MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 12 A. COPY OF THE CONFIRMATION DULY SIGNED BY SANKHALA EXPORTS PVT. LTD. CONFIRMING THAT LOAN ADVANCED BY THEM TO US ARE FROM BANKING CHANNEL. B. COPY OF THE LEDGER ACCOUNT OF M/S. SANKHALA EXPORTS PURCHASE LTD. IN OUR BOOKS OF ACCOUNT DULY CONFIRME D BY THEM C. COPY OF PAN CARD OF M/S. SANKHALA EXPORTS PURCHASE LTD. TO PROVE THEIR IDENTITY. D. COPY OF BANK STATEMENTS EVIDENCING LOANS ADVANCED T O US AND SHOWING THAT THEY HAVE SUFFICIENT BANK BALAN CE. E. COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME FILED BY M/S. SANKHALA EXPORTS PURCHASE LTD. FOR A.Y. 2007-0 8 TO DEMONSTRATE THAT THEY ARE INCOME TAX PAYEES AND ASSESSED TO INCOME TAX F. COPY OF AFFIDAVIT GIVEN BY SANKHALA EXPORTS PURCHAS E LTD. THAT THEY ADVANCED LOANS OF RS. 30 LACS TO THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 13 APPELLANT AND NO CASH WAS RECEIVED BACK BY THEM FRO M APPELLANT AGAINST THE SAID LOAN. G. COPY OF BANK STATEMENT OF THE APPELLANT EVIDENCING THAT LOAN OF RS. 30 LACS FROM M/S. SANKHALA EXPORTS PURC HASE LTD. RECEIVED FROM ACCOUNT PAYEE CHEQUES THROUGH NORMAL BANKING CHANNELS. H. COPY OF FINANCIAL STATEMENT OF M/S. SANKHALA EXPORT S PURCHASE LTD. FOR A.Y. 2007-08 IN WHICH SAID LOAN TRANSACTIONS ARE DULY REFLECTED. 5.2. DURING HEARING, THE LEARNED COUNSEL FOR THE AS SESSEE INVITED OUR ATTENTION TO THE DECISION OF THE TRIBUN AL CLAIMING TO BE ON IDENTICAL FACT, IN THE CASE OF M/S. SHREE LAXMI ESTATE PVT. LTD. VS. INCOME TAX OFFICER (ITA NO. 5954/M/20 16 AND ITA NO.2562/M/2017) WHEREIN ONE OF US (LEARNED ACCO UNTANT MEMBER) IS SIGNATORY TO THE ORDER DATED 19.12.2017. THEREFORE, IN ALL FAIRNESS, WE ARE REPRODUCING HERE UNDER THE RELEVANT PORTION FROM THE AFORESAID ORDER OF THE TR IBUNAL DATED 19.12.2017 2. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA NO.2562/MUM/2017 ARE THAT THE ASSESSEE FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, FILED ITS RETURN OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 14 INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 29-09-201 2 DECLARING TOTAL INCOME AT RS.21,572. THE CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S 14 3(2) AND 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATI VE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED T HE DETAILS, AS CALLED FOR. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE AO NOTICED THAT INFORMATION RECEIV ED FROM OFFICE OF DIRECTOR OF INCOME-TAX (INV), MUMBAI IN T HE CASE OF BENEFICIARIES OF ACCOMMODATION ENTRIES OBTAINED FRO M PRAVINKUMAR JAIN. ON GOING THROUGH THE LIST FURNIS HED BY THE INVESTIGATION WING, IT WAS SEEN THAT THE ASSESS EE WAS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES O F LOAN BEING TAKEN FROM GROUP COMPANIES OF PRAVINKUMAR JAI N. THEREFORE, THE AO CALLED UPON THE ASSESSEE TO FURNI SH DETAILS OF LOANS TAKEN FROM JOSH TRADING COMPANY PV T LTD AND VIRAJ MERCANTILE PVT LTD ALONGWITH CONFIRMATION LETTERS AND THEIR FINANCIAL STATEMENTS. IN RESPONSE TO SHO W CAUSE NOTICE, THE ASSESSEE HAS FURNISHED DETAILS OF UNSEC URED LOANS TAKEN FROM JOSH TRADING COMPANY PVT LTD AND V IRAJ MERCANTILE PVT LTD ALONGWITH CONFIRMATION LETTERS, BANK STATEMENTS AND FINANCIAL STATEMENTS OF THE PARTIES TO PROVE IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORT HINESS OF THE PARTIES. THE AO, AFTER CONSIDERING RELEVANT SU BMISSIONS OF THE ASSESSEE AND ALSO TAKING INTO ACCOUNT INFORM ATION RECEIVED FROM INVESTIGATION WING, OBSERVED THAT THE ASSESSEE IS BENEFICIARY OF BOGUS ACCOMMODATION ENTR IES PROVIDED BY GROUP COMPANIES OF SHRI PRAVINKUMAR JAI N WHICH IS EVIDENT FROM THE FACT THAT SHRI PRAVINKUMA R JAIN WAS INVOLVED IN THE ACTIVITY OF PROVIDING ACCOMMODA TION ENTRIES. THE AO FURTHER OBSERVED THAT SHRIDINESH CHOUDHARY A BROKER INVOLVED IN ARRANGING ACCOMMODAT ION ENTRIES FROM GROUP COMPANIES OF SHRI PRAVINKUMAR JA IN ADMITTED IN HIS STATEMENT THAT SHRI PRAVINKUMAR JAI N WAS INDULGING IN PROVIDING ACCOMMODATION ENTRIES THROUG H HIS VARIOUS CONCERNS AND NOT CARRYING OUT ANY GENUINE BUSINESS ACTIVITIES. THEREFORE, BASED ON THE INFOR MATION RECEIVED FROM INVESTIGATION WING, THE AO OPINED THA T THOUGH THE ASSESSEE HAS FURNISHED VARIOUS DETAILS TO PROVE IDENTITY, THE LOAN TRANSACTIONS ARE NOT GENUINE AND ACCORDINGLY MADE ADDITION U/S 68 OF THE INCOME-TAX ACT, 1961. BESIDES, THE AO ALSO DISALLOWED INTEREST PAI D MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 15 AGAINST THE SAID BOGUS LOANS. THE AO ALSO MADE ADD ITIONS TOWARDS ESTIMATION OF NET PROFIT FROM BUSINESS ACTI VITY OF CONSTRUCTION OF ZOOM PLAZA AND AURM PARK. BESIDES, THE AO MADE ADDITION TOWARDS DISALLOWANCE OF MVAT U/S 4 3B AND DISALLOWANCE OF CASH PAYMENT U/S 40A(3) OF THE INCOME-TAX ACT, 1961. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE CIT(A), ASSESSEE FILED ELABORATE WRITTEN SUBMISSIONS TO ARGUE THAT T HE AO WAS NOT JUSTIFIED IN MAKING ADDITIONS IN RESPECT OF LOANS RECEIVED FROM JOSH TRADING COMPANY PVT LTD AND VIRA J MERCANTILE PVT LTD DESPITE FURNISHING CONFIRMATION LETTERS ALONGWITH THE FINANCIAL STATEMENTS OF THE PARTIES T O PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES. THE ASSESSEE FURTHER SUBMITTED THA T IN RESPONSE TO NOTICE ISSUED U/S 133(6), THE ABOVE PAR TIES FILED THEIR REPLIES ALONGWITH REQUIRED DOCUMENTS BEFORE T HE AO, THEREFORE, THE AO WAS TOTALLY INCORRECT IN COMING T O THE CONCLUSION THAT THE LOAN TRANSACTIONS ARE BOGUS ACCOMMODATION ENTRIES ONLY ON THE BASIS OF INFORMAT ION RECEIVED FROM INVESTIGATION WING. AS REGARDS ADDIT ION MADE BY THE AO TOWARDS ESTIMATION OF NET PROFIT FRO M BUSINESS ACTIVITY OF CONSTRUCTION OF AURM PARK AND ZOOM PLAZA, THE ASSESSEE SUBMITTED THAT IT IS FOLLOWING PROJECT COMPLETION METHOD FOR ZOOM PLAZA AND PROFIT METHOD FOR AURM PARK AND MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR BOTH PROJECTS. THE AO, IGNORING ABOVE FACT HAS EST IMATED NET PROFIT AT 10% ON EXPENDITURE INCURRED FOR BOTH THE PROJECTS. INSOFAR AS ADDITION TOWARDS CASH EXPENDI TURE U/S 40A(3), THE ASSESSEE SUBMITTED THAT IT HAS MADE PUR CHASE AT CONSTRUCTION SITE ON URGENT BASIS, THEREFORE, TH E AO WAS ERRED IN DISALLOWING THE SAME WITHOUT CONSIDERING T HE NATURE OF BUSINESS OF ASSESSEE. AS REGARDS DISALLO WANCE OF MVAT U/S 43B, ASSESSEE SUBMITTED THAT IT IS FOLLOWI NG PROJECT COMPLETION METHOD AND SAID MVAT HAS BEEN CONSIDERED IN AY 2014-15, THEREFORE, THE AO WAS ERR ED IN DISALLOWING MVAT U/S 43B OF THE ACT. THE CIT(A), A FTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AN D ALSO RELYING UPON PLETHORA OF JUDGEMENTS CONFIRMED ADDI TIONS MADE BY THE AO TOWARDS UNSECURED LOAN FROM JOSH TRA DING COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LTD. THE CIT(A) ALSO CONFIRMED ADDITION MADE BY THE AO TOWARDS ESTI MATION MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 16 OF NET PROFIT FROM ZOOM PLAZA AND AURM PARK AND ALSO ADDITION MADE TOWARDS CASH PURCHASES U/S 40A(3) OF THE ACT; HOWEVER, DELETED ADDITION MADE BY THE AO TOWAR DS MVAT U/S 43B OF THE ACT. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4 . THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IS ADDITION MADE BY THE AO TOWARDS UNSECURED LOAN U/S 68 OF THE ACT. THE AO MADE ADDITION TOWARDS UNSECURED LO ANS ALONGWITH INTEREST THEREON RECEIVED FROM JOSH TRADI NG COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LTD ON THE GROUND THAT THESE ARE BOGUS ACCOMMODATION ENTRIES RECEIVED FROM GROUP COMPANIES OF SHRI PRAVINKUMAR JAIN. ACCORDIN G TO THE AO, THE ASSESSEE IS THE BENEFICIARY OF ACCOMMOD ATION ENTRIES PROVIDED BY SHRI PRAVINKUMAR JAIN FROM HIS BOGUS COMPANIES. THE AO FURTHER OBSERVED THAT THOUGH THE ASSESSEE HAS FURNISHED DETAILS OF IDENTITY, FAILED TO PROVE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES IN THE BACKDROP OF CLEAR FINDINGS OF INVEST IGATION WING THAT SHRI PRAVINKUMAR JAIN HAS ADMITTED THAT H E WAS INDULGING IN PROVIDING ACCOMMODATION ENTRIES. THIS FACT HAS BEEN FURTHER CONFIRMED BY SHRI DINESH CHOUDHARY, BR OKER INVOLVED IN ARRANGING ACCOMMODATION ENTRIES WITH SH RI PRAVINKUMAR JAIN, WHO STATED THAT SHRI PRAVINKUMAR JAIN IS INDULGING IN PROVIDING ACCOMMODATION ENTRIES, TH EREFORE, THE AO OPINED THAT UNSECURED LOANS STATED TO BE REC EIVED FROM THOSE COMPANIES ARE UNEXPLAINED CREDIT AND HEN CE MADE ADDITION U/S 68 OF THE ACT. IT IS THE CONTENT ION OF THE ASSESSEE THAT LOANS RECEIVED FROM JOSH TRADING COMP ANY PVT LTD AND VIRAJ MERCANTILE PVT LTD ARE SUPPORTED BY VALID DOCUMENTS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS FURNISHED CONFIRMATION LETTERS ALONGWITH COPIES OF THEIR BANK STATEMENT AND ACKNOWLEDGEMENT OF IT RETURNS SHOWIN G THE ABOVE TRANSACTIONS. THE ASSESSEE FURTHER CONTENDED THAT IN RESPONSE TO NOTICES U/S 133(6) ISSUED BY AO, THE AB OVE PARTIES REPLIED ALONGWITH DOCUMENTS MENTIONED IN TH E NOTICE, THEREFORE, THERE IS NO REASON FOR THE AO TO DOUBT THE TRANSACTIONS ONLY ON THE BASIS OF INFORMATION RECEI VED FROM INVESTIGATION WING THAT TOO, WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION OF THE PARTIES. I N THIS REGARD, HE RELIED UPON PLETHORA OF JUDGEMENTS INCLU DING THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD 349 ITR 680 (BO M) AND MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 17 HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT LTD VS CIT 216 CTR 295(SC). 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO MADE ADDITION TOWARDS UNSECURED LOANS RECEIVED FROM JOSH TRADING COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LTD ON THE BASIS OF IN FORMATION RECEIVED FROM INVESTIGATION WING WHICH REVEALED THA T THE ASSESSEE IS THE BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PROVIDED BY SHRI PRAVEENKUMAR JAIN THROUGH HIS BOGU S COMPANIES. THE AO HAS MADE ADDITIONS U/S 68 OF THE INCOME-TAX ACT, 1961 ON THE GROUND THAT THOUGH THE ASSESSEE HAS FURNISHED NECESSARY EVIDENCES TO PROVE IDENTITY OF THE PARTIES, BUT FAILED TO ESTABLISH GE NUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES IN THE BACKDROP OF CLEAR FINDINGS OF INVESTIGATION WING TH AT THOSE COMPANIES ARE HAWALA COMPANIES INVOLVED IN PROVIDIN G ACCOMMODATION ENTRIES. THE AO HAS BROUGHT OUT FACT S IN THE LIGHT OF STATEMENT OF SHRI PRAVINKUMAR JAIN DEP OSED BEFORE THE INVESTIGATION WING TO MAKE ADDITION. EX CEPT THIS, THERE IS NO CONTRARY EVIDENCE IN THE POSSESSION OF THE AO TO DISPROVE THE LOAN TRANSACTIONS FROM JOSH TRADING CO MPANY PVT LTD AND VIRAJ MERCANTILE PVT LTD. ON THE OTHER HAND, THE ASSESSEE HAS FURISHED VARIOUS DETAILS INCLUDING CONFIRMATION LETTERS FROM THE PARTIES, THEIR BANK S TATEMENTS ALONGWITH THEIR FINANCIAL STATEMENTS TO PROVE IDENT ITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE ASSESSEE ALSO FURNISHED EVIDENCES TO PROVE THAT THE PARTIES HAVE RESPONDED TO THE NOTICES ISSU ED U/S 133(6) BY AO BY FILING VARIOUS DETAILS. THE ASSESS EE ALSO FILED BANK STATEMENTS TO PROVE THAT THE SAID UNSECU RED LOANS HAVE BEEN REPAID IN THE SUBSEQUENT FINANCIAL YEARS. THEREFORE, WE ARE OF THE VIEW THAT THERE IS NO REAS ON FOR THE AO TO DOUBT THE GENUINENESS OF TRANSACTIONS DESPITE FURNISHING NECESSARY EVIDENCES INCLUDING THEIR FINA NCIAL STATEMENTS, BANK STATEMENTS AND IT RETURNS. 6. THE AO HAS MADE ADDITION U/S 68 OF THE ACT, ON THE GROUND THAT THE UNSECURED LOANS ARE BOGUS ACCOMMODA TION ENTRIES PROVIDED BY SHRI PRAVINKUMAR JAIN THROUGH H IS HAWALA COMPANIES. THE PROVISIONS OF SECTION 68 DEA L WITH CASES WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 18 ACCOUNT OF THE ASSESSEE IN ANY FINANCIAL YEAR AND T HE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE AO, SATISFACTORY, THEN SUM SO CREDIT ED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSES SEE OF THAT PREVIOUS YEAR. A PLAIN READING OF SECTION 68 MAKES IT CLEAR THAT THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE. IT IS WELL SETTLED LEGAL POSITION THAT THE ASSESSEE HA S TO DISCHARGE 3 MAIN INGREDIENTS IN ORDER TO DISCHARGE THE INITIAL BURDEN OF PROOF, I.E. THE IDENTITY OF THE C REDITOR, THE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS. ONCE THE ASSESSEE DISCHARGES INITIAL BU RDEN PLACED UPON HIM, THEN THE BURDEN TODIS PROVE THE SA ID CLAIM SHIFTS UPON THE AO. IN THIS CASE, THE ASSESSEE HAS DISCHARGED HIS ONUS CAST U/S 68 BY FILING IDENTITY OF THE CREDITORS, GENUINENESS OF TRANSACTIONS AND CREDITWO RTHINESS OF THE PARTIES WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS FURNISHED FINANCIAL STATEMENTS OF THE CREDITORS WHEREIN THE SAID TRANSACTION HAS BEEN DISCLOSED IN THE RELEVANT FINANCIAL YEARS. WE FURTHER NOTICE THAT T HE ASSESSEE ALSO FILED FINANCIAL STATEMENTS OF THE CRE DITORS WHICH ARE ENCLOSED IN PAPER BOOK FILED. ON PERUSAL OF THE FINANCIAL STATEMENTS FILED BY THE ASSESSEE, WE FIND THAT BOTH THE COMPANIES ARE ACTIVE IN THE WEBSITE OF MIN ISTRY OF CORPORATE AFFAIRS. THIS FACT HAS BEEN FURTHER SUPP ORTED BY THE LETTER OF AO WHEREIN THE AO HAS ACCEPTED THAT B OTH COMPANIES, VIZ. JOSH TRADING COMPANY PVT LTD AND VI RAJ MERCANTILE PVT LTD ARE ACTIVE IN MCA WEBSITE. WE F URTHER NOTICE THAT BOTH THE COMPANIES HAVE FILED FINANCIAL STATEMENTS FOR THE YEAR ENDING 31-03-2006. THEREFO RE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL BURDEN CAST U/S 68 BY FILING IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. ONCE, THE ASSESSEE HAS DISCHARGED ITS INI TIAL BURDEN, THE BURDEN SHIFTS TO THE AO TO PROVE OTHERW ISE. IN THIS CASE, THE AO MADE ADDITION ONLY ON THE BASIS O F INFORMATION RECEIVED FROM INVESTIGATION WING, BUT N OT BASED ON ANY EVIDENCE TO DISPROVE THE LOAN TRANSACTION FR OM ABOVE COMPANIES ARE INGENUINE. THEREFORE, WE ARE OF THE VIEW THAT THERE IS NO REASON FOR THE AO TO TREAT LOANS F ROM ABOVE 2 COMPANIES AS UNEXPLAINED CREDITS U/S 68 OF THE AC T. 7. COMING TO THE CASE LAWS RELIED UPON BY THE ASSESSEE, THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 19 ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS GAGANDEEP INFRASTR UCTURE PVT LTD (2017) 394 ITR 680 (BOM). WE HAVE GONE THRO UGH THE CASE LAWS RELIED UPON BY THE ASSESSEE IN THE LI GHT OF THE FACTS OF THE PRESENT CASE AND FIND THAT THE HONBLE HIGH COURT CATEGORICALLY OBSERVED THAT THE PROVISO TO SE CTION 68 HAS BEEN INSERTED BY THE FINANCE ACT, 2012 WEF 01-0 4-2013 IS APPLICABLE FROM AY 2013-14 ONWARDS. THE COURT F URTHER OBSERVED THAT THE PARLIAMENT DID NOT INTRODUCE THE PROVISO TO SECTION 68 WITH RETROSPECTIVE EFFECT NOR DOES TH E PROVISO INTRODUCED STATES THAT IT WAS INTRODUCED FOR REMOVA L OF DOUBTS. THEREFORE, IT IS NOT OPEN TO GIVE RETROSPE CTIVE EFFECT. THE RELEVANT PORTION OF THE ORDER OF HIGH COURT IS EXTRACTED BELOW:- THE PROVISO TO SECTION 68 HAS BEEN INTRODUCED BY T HE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013. THUS, IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013-14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT WAS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 AS IN FORCE DUR ING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONL Y FROM 1-42013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCED TO PROVISO OF SECTION 68, WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO TO INTROD UCED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBT S' OR THAT IT IS 'DECLARATORY'. THEREFORE, IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 6 8 BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHI LE CONFIRMING THE SECTION 68 LAID DOWN BY THE COURT NA MELY THE GENUINENESS OF THE TRANSACTION, IDENTITY AND TH E CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACT IT WAS F OUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIV ES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS, I.E., THEY ARE BOGUS. THE APEX COURT IN A MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 20 CASE IN THIS CONTEXT TO THE PRE-AMENDED SECTION 68 HAS HELD THAT WHERE THE REVENUE URGES THAT THE AMOUNT O F SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGU S SHAREHOLDERS THEN IT IS FOR THE INCOME-TAX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDER AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAM E TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. [PAR A 3] 8. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ARC HID INDUSTRIES PVT LTD IN ITA NO1433/MUM/2014 DATED 5 TH JULY, 2017. THE HONBLE BOMBAY HIGH COURT, AFTER CONSIDERING RELEVANT FACTS AND ALSO BY FOLLOWING JU DGEMENT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD (SUPRA) HELD AS UNDER:_ 6] THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HA S PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CRE DITORS ALONG WITH THE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SH ARE I.E. ALLOTMENT OF SHARES TO THESE PARTIES, THEIR SHARE A PPLICATION FORMS, ALLOTMENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSO NS HAD SUFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOU S DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HA D NOT APPEARED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN C ASE OF GAGANDEEP INFRASTRUCTURE (P) LTD (SUPRA) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE. 9. THE ASSESSEE HAS ALSO RELIED UPO THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (2008) 216 CTR 195 (SC). THE HONBLE APEX COURT WH ILE DELETING THE ADDITION MADE U/S 68 OBSERVED THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 21 TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANC E WITH LAW, BUT THIS AMOUNT OF SHARE APPLICATION MONEY CAN NOT BE REGARDED AS UNDISCLOSED INCOME U/S 68 OF THE INCOME -TAX ACT, 1961. 10. COMING TO THE CASE LAWS RELIED UPON BY THE LD. DR. THE LD.DR RELIED UPON THE DECISION OF HONBLE DELHI HIG H COURT IN THE CASE OF PRINCIPAL CIT VS BIKRAM SINGH IN ITA NO.55/DEL/2017 DATED 25-03-2017. WE HAVE GONE THRO UGH THE CASE LAW RELIED BY THE LD.DR IN THE LIGHT OF FA CTS OF THE PRESENT CASE AND FIND THAT THE FACTS OF CASE BEFORE HONBLE DELHI HIGH COURT ARE ENTIRELY DIFFERENT FROM FACTS OF THE PRESENT CASE. THE HONBLE DELHI HIGH COURT, HAS CO NSIDERED THE FACT THAT THE INDIVIDUALS, WHO ADVANCED LOANS H AD NO FINANCIAL STRENGTH TO LEND SUCH HUGE SUM OF MONEY T O THE ASSESSEE, THAT TOO, WITHOUT ANY COLLATERAL SECURITY WITHOUT INTEREST AND WITHOUT A LENDER AGREEMENT. UNDER THE SE FACTS, THE HONBLE COURT HELD THAT MERE ESTABLISHIN G OF THEIR IDENTITY AND THE FACT THAT THE AMOUNTS HAVE BEEN TRANSFERRED THROUGH CHEQUE PAYMENT DOES NOT BY ITSE LF MEAN THAT THE TRANSACTIONS ARE GENUINE. IN THIS CA SE, THE ASSESSEE HAS FURNISHED ALL EVIDENCES AND ALSO THE P ARTIES PERSONALLY RESPONDED TO THE NOTICES ISSUED BY THE A O U/S 133(6) BY FILING VARIOUS DETAILS, THEREFORE, CASE L AW RELIED UPON BY THE LD.DR CANNOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 11. IN THIS VIEW OF THE MATTER AND CONSIDERING THE RATI O OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CONSID ERED VIEW THAT THE ASSESSEE HAS DISCHARGED IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THEREFORE, THERE IS NO REASON FOR THE AO TO MAKE ADDITION TOWARDS LOAN U/S 68 OF THE ACT. HENCE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS LOANS ALONGW ITH INTEREST U/S 68 OF THE ACT. 5.3. IN VIEW OF THE DETAILS CONTAINED IN PARA 5.1 ((SUPRA), NOW WE SHALL EXAMINE THE PROVISION OF SECTION 68 OF THE ACT. AS PER WHICH THE ASSESSEE IS EXPECTED TO OFFER AN EXPLANAT ION WITH MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 22 RESPECT TO THE NATURE AND SOURCE OF CASH CREDITS TO THE SATISFACTION OF THE ASSESSING OFFICER. FOR READY R EFERENCE SECTION 68 OF THE ACT IS REPRODUCED HEREUNDER:- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINI ON OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATI ON MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SU CH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFAC TORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM RE FERRED TO THEREIN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAUSE (23FB)OF S ECTION 10. 5.4. AS PER SECTION 68 OF THE ACT, ONUS IS UPON THE ASSESSEE TO DISCHARGE THE BURDEN SO CAST UPON. FIRST BURDEN IS UPON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE CREDIT ENTRY CONTAINED IN MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 23 HIS BOOKS OF ACCOUNTS. THE BURDEN HAS TO BE DISCHAR GED WITH POSITIVE MATERIAL (OCEANIC PRODUCTS EXPORTING COMPA NY VS CIT 241 ITR 497 (KERALA.). THE LEGISLATURE HAD LAID DOW N THAT IN THE ABSENCE OF SATISFACTORY EXPLANATION, THE UNEXPL AINED CASH CREDIT MAY BE CHARGED U/S 68 OF THE ACT. OUR VIEW I S FORTIFIED BY THE RATIO LAID DOWN IN HONBLE APEX COURT IN P. MOHANKALA (2007)(291 ITR 278)(SC). A CLOSE READING OF SECTION 68 AND 69 OF THE ACT MAKES IT CLEAR THAT IN THE CASE OF SECTI ON 68, THERE SHOULD BE CREDIT ENTRY IN THE BOOKS OF ACCOUNT WHER EAS IN THE CASE OF 69 THERE MAY NOT BE AN ENTRY IN SUCH BOOKS OF ACCOUNT. THE LAW IS WELL SETTLED, THE ONUS OF PROVI NG THE SOURCE OF A SUM, FOUND TO BE RECEIVED/TRANSACTED BY THE AS SESSEE, IS ON HIM AND WHERE IT IS NOT SATISFACTORILY EXPLAINED , IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS INCOME OF THE ASS ESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INC OME IS FROM ANY OTHER PARTICULAR SOURCE. WHERE THE ASSESSE E FAILED TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF SUCH CREDIT, THE REVENUE IS FREE TO MAKE THE ADDITION. THE PRINCIPL E LAID DOWN IN GANPATI MUDALIAR (1964) 53 ITR 623/A. GOVINDA RA JULU MUDALIAR (34 ITR 807)(SC) AND ALSO CIT VS DURGA PRA SAD MORE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 24 (72 ITR 807)(SC) ARE THE LANDMARK DECISIONS. THE RA TIO LAID DOWN THEREIN ARE THAT IF THE EXPLANATION OF THE ASS ESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. THE RATIO LAID DOWN IN DAULAT RAM RAWATM AL 87 ITR 349 (SC) FURTHER SUPPORTS THE CASE OF THE ASSES SEE. IN THE CASE OF A CASH ENTRY, IT IS NECESSARY FOR THE ASSES SEE TO PROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO THE CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THE ONUS LIES ON THE ASSESSEE, UNDER THE FACTS AVAILABLE ON RECOR D. A HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDE NCE ACT AND SECTION 68 OF THE INCOME TAX ACT WILL BE THAT A PART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSE SSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION AS WEL L AS THE CREDITWORTHINESS OF THE CREDITORS. IN CIT VS KORLA Y TRADING COMPANY LTD. 232 ITR 820 (CAL.), IT WAS HELD THAT M ERE MENTION OF FILE NUMBER OF CREDITOR WILL NOT SUFFICE AND EACH ENTRY HAS TO BE EXPLAINED SEPARATELY BY THE ASSESSE E (CIT VS R.S. RATHAORE) 212 ITR 390 (RAJ.). THE HONBLE GUW AHATI HIGH COURT IN NEMI CHANDRA KOTHARI VS CIT (264 ITR 254)( GAU) HELD THAT TRANSACTION BY CHEQUES MAY NOT BE ALWAYS MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 25 SACROSANCT. IN THE PRESENT APPEAL, WE FIND THAT TH E ASSESSEE DULY FURNISHED THE DETAILS OF LOAN BEFORE THE LEARN ED ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED CIT(A). THE LOAN WAS OBTAINED THROUGH BANKING CHANNEL AND THE INTEREST W AS ALSO PAID ON SUCH LOAN AND ULTIMATELY THE LOAN AMOUNT WA S RETURNED. NO EVIDENCE HAS BEEN BROUGHT ON RECORD B Y THE LEARNED ASSESSING OFFICER EVIDENCING THAT THE LOAN WAS IN FACT ACCOMMODATION ENTRY AS HAS BEEN ALLEGED IN THE ASSE SSMENT ORDER AND ALSO ARGUED BY THE LEARNED DR. NO MATERI AL WAS GATHERED BY THE ASSESSING OFFICER TO SUBSTANTIATE H IS PRESUMPTION THAT IN FACT UNACCOUNTED CASH OF THE AS SESSEE CHANGED HANDS WHICH WAS SUBSEQUENTLY, REPLACED IN T HE FORM OF CHEQUE. THE ASSESSEE EXPLAINED THE GENUINENESS OF THE TRANSACTION WITH DOCUMENTARY EVIDENCE AS THE CONFIR MATION FROM THE PARTY FROM WHOM LOAN WAS TAKEN WAS FILED S UPPORTED BY AN AFFIDAVIT AND, ADMITTEDLY, THE LOAN WAS OBTAI NED THROUGH BANKING CHANNEL. THE LEDGER ACCOUNT OF M/S. SANKHA LA EXPORTS P LTD. WAS ALSO FILED ALONG WITH THE ACCOUN T OF THE ASSESSEE. THE COPY OF THE PAN CARD OF M/S. SANKHAL A EXPORTS WAS FILED THEREFORE, THE IDENTITY IS NOT IN DISPUTE . THE COPY OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 26 BANK STATEMENT OF M/S. SANKHALA EXPORTS P LTD., EVI DENCING THE ADVANCEMENT OF LOAN SHOWING SUFFICIENCY OF FUND S AND TRANSACTION IN THE ACCOUNT OF THE ASSESSEE WAS FILE D THEREFORE, THE TRANSFER OF MONEY/LOAN THROUGH BANKING CHANNEL WAS PRODUCED/EXPLAINED. THE COPY OF ACKNOWLEDGEMENT OF RETURN FILED BY M/S. SANKHALA EXPORTS P LTD. FOR A.Y. 2007 -08 DEMONSTRATING THAT THE CONCERNED PARTY IS INCOME TA X ASSESSEE WAS ALSO FILED ALONG WITH THE AFFIDAVIT SW ORN BY THE PARTY CONFIRMING ADVANCING LOAN TO THE ASSESSEE AND RECEIPT OF THE LOAN AMOUNT BACK ALONG WITH INTEREST THEREFORE THE GENUINENESS OF TRANSACTION CANNOT BE DOUBTED. THE COPY OF THE BANK STATEMENT OF THE ASSESSEE EVIDENCING THAT THE LOAN WAS TAKEN THROUGH BANKING CHANNEL WAS ALSO FILED TH EREFORE, THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTE D. THE COPY OF FINANCIAL STATEMENT OF M/S. SANKHALA EXPORT S P LTD. FOR A.Y. 2007-08, REFLECTING THE LOAN TRANSACTIONS WAS FILED. THEREFORE, THE IDENTITY, CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTION ALONG WITH THE SOURCE OF THE AMOUNT IS DULY ESTABLISHED. IT IS FURTHER NOTED THAT THE WHOLE AD DITION IS BASED UPON THE STATEMENT TENDERED BY THE KEY PERSON OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 27 BHAWARLAL JAIN GROUP AND SUCH STATEMENT WAS LATER O N RETRACTED THEREFORE, MERELY ON THE BASIS OF STATEME NT THAT TOO IN THE ABSENCE OF COGENT MATERIAL, WE ARE OF THE VI EW, CANNOT BE THE SOLE BASIS FOR MAKING THE ADDITION. THERE I S NO BASIS FOR SUSPICION THAT THE LOAN TRANSACTION WAS MERELY ACCOMMODATION ENTRY BECAUSE NO MATERIAL HAS BEEN BR OUGHT ON RECORD BY THE REVENUE IN SUPPORT OF ITS SUSPICIO N. EVEN OTHERWISE, SUSPICION CANNOT TAKE THE SHAPE OF EVIDE NCE HOWEVER, STRONG IT MAY BE. WE ARE IN AGREEMENT WIT H THE ARGUMENT OF LEARNED DR ONLY TO THE EXTENT THAT IT I S NOT UNCOMMON IN THE BUSINESS AS SERIES OF OPERATIONS AR E CONDUCTED BY THE INVESTIGATING AGENCIES WHEREIN ACCOMMODATION ENTRIES ARE TAKING SHAPE OF CASH CREDIT/UNEXPLAINED LOAN. HOWEVER, IN THE PRESENT C ASE NO MATERIAL EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE THAT IN FACT, THE IMPUGNED LOAN IS AN ACCOMMODATION ENTRY OR ANY CASH HAD TRANSACTED HANDS. NO INDEPENDENT INQU IRY WAS CONDUCTED BY THE LEARNED ASSESSING OFFICER PROVING THAT ANY CASH WAS TRANSACTED BETWEEN THE PARTIES. IDENTICAL IS THE OBSERVATION IN THE IMPUGNED ORDER WHEREIN NO INCONS ISTENCY MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 28 OR INCOHERENCE IN RECEIPT OF LOAN FROM THE CONCERNE D PARTY WAS FOUND. EVEN IF IT IS PRESUMED THAT THE TRANSACTION WAS THROUGH TAINTED PERSON STILL NO EVIDENCE HAS BEEN B ROUGHT ON RECORD TO STRENGTHEN THE PRESUMPTION THAT ACCOMMODA TION ENTRIES WERE IN FACT TAKEN. IT IS FURTHER NOTED TH AT INSPITE OF REQUEST OF THE ASSESSEE (AS IS EVIDENT FROM RECORD PAGE 19 OF THE PAPER-BOOK) NEITHER THE STATEMENT NOR CROSS-EXA MINATION WITH RESPECT TO SHRI BHAWARLAL JAIN WAS PROVIDED TO THE ASSESSEE, THEREFORE, IT IS VIOLATION OF PRINCIPLE O F NATURAL JUSTICE. IN ITS APPLICATION DATED 18.03.2015, ADDR ESSED TO THE LEARNED INCOME TAX OFFICER THE ASSESSEE HAS CLEARLY MENTIONED/EXPLAINED (PARA 4 ONWARDS) AS UNDER: 4. FURTHER THE CONCERN M/S. NICE DIAMOND IS ASSES SED TO INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) VIDE PAN NO. AIKPK8272C AND REGULAR IN FILING THE IT RETURN WITH INCOME TAX AUTHORITY. 5.THE PARTY M/S. NICE DIAMOND (PROP MR. BHUPENDRA SINGH KARNAWAT) IS AVAILABLE AND READY TO APPEAR BEFORE YOU AND EVEN YOU CAN ALSO ISSUE NOTICE UNDER SECTION. 133(6) OR SUMMON UNDER SECTION. 131 OF THE ACT FOR VERIFICATION THE GENUINENESS OF LOAN. 6. THE ASSESSEE ALREADY REQUESTED YOU TO PROVIDE THE OPPORTUNITY OF CROSS EXAMINATION TO PROVE THE GENUINENESS OF TRANSACTION, HOWEVER TILL DATE NO MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 29 OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED BY YOU. 7. THE ASSESSEE HAS NOT PAID OR RECEIVE ANY CASH AG AINST THE SAID LOAN AND THERE IS NO CORROBORATIVE EVIDENC E TO PROVE THAT THE ASSESSEE HAS PAID ANY CASH AGAINST THE SAI D LOAN AS THE LOAN TAKEN BY THE ASSESSEE IS GENUINE AND TH ROUGH BANKING CHANNEL. 8. FURTHER IN WHOLE ASSESSMENT PROCEEDINGS YOU HAVE NOT STATED WHETHER ANY SEARCH AND SEIZURE ACTION WAS CARRIED OUT ON M/S. NICE DIAMOND AND MR. BHUPENDRA SINGH KARNAWAT HAS GIVEN ANY STATEMENT BEFORE INVESTIGATION WING, MUMBAI AND SPECIFICALLY NAMED THE ASSESSEE. IF ANY STATEMENT OF MR. BHUPENDRA SINGH KARNAWAT RECORDED AT ALL THAN THE ASSESSEE REQUEST YOU TO PROVIDE THE COPY OF THE STATEMENT ON WHICH YOU ARE RELYING. 9. IN THE SAID SHOW CAUSE NOTICE YOU HAVE STATED TH AT THIS OFFICE HAS CARRIED OUT THE INDEPENDENT ENQUIRIES/INVESTIGATION UNDER IT ACT. THEREFORE, I REQUEST YOU TO PROVIDE THE DETAILED OF THE SAME. AS THE SA ME CANNOT BE USED AGAINST THE ASSESSEE WITHOUT PROVIDI NG COPY OF THE SAME. IF THE AFORESAID REQUEST/REPLY OF THE ASSESSEE IS A NALYZED THERE IS NO DISPUTE THAT THE ASSESSEE CATEGORICALLY STATE D THAT THE CONCERNED PARTY I.E. M/S. NICE DIAMOND (PROPRIETOR MR. BHUPENDRA SINGH KARNAWAT) IS AVAILABLE AND IS READY TO APPEAR BEFORE THE ASSESSING OFFICER AND EVEN FURTHE R REQUESTED THAT THE LEARNED ASSESSING OFFICER IS FREE TO ISSUE NOTICE UNDER SECTION 133(6) OR SUMMONS UNDER SECTION 133(1) OF T HE ACT FOR MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 30 VERIFICATION AND GENUINENESS OF THE LOAN. THIS REQ UEST OF THE ASSESSEE WAS NEVER CONSIDERED BY THE LEARNED ASSESS ING OFFICER. IN PARA 7 OF THE SAME APPLICATION (PAGE 1 9 OF THE PAPER-BOOK) IT HAS BEEN CLAIMED THAT THE ASSESSEE H AS NOT PAID OR RECEIVED ANY CASH AGAINST THE SAID LOAN AND FURTHER THERE IS NO CORROBORATIVE EVIDENCE TO PROVE THE ALL EGATION MADE AGAINST THE ASSESSEE. IN PARA 6 OF THE AFORESAID L ETTER, THE ASSESSEE HAS REQUESTED FOR PROVIDING CROSS EXAMINAT ION TO PROVE THE GENUINENESS OF THE TRANSACTIONS, WHICH WA S NOT PROVIDED TO THE ASSESSEE. EVEN IN THE IMPUGNED ORD ER THE LEARNED FIRST APPELLATE AUTHORITY HAS OBSERVED THAT THE ASSESSEE PAID INTEREST THROUGH BANKING CHANNELS TO THE CREDITOR BY DULY DEDUCTING THE TDS AND THE LOAN AMO UNT WAS RETURNED ALONG WITH INTEREST. THIS OBSERVATION OF THE LEARNED CIT(A) WAS NEVER CONTRADICTED AT ANY STAED. IT WAS NOTED THAT THE CLAIM/EXPLANATION OF THE ASSESSEE WAS NEVER REP UDIATED BY THE LEARNED ASSESSING OFFICER WITH THE HELP OF ANY EVIDENCE AND EVEN NO INDEPENDENT EVIDENCE WAS GATHERED TO ES TABLISH THE SURROUNDING CIRCUMSTANCES, NOT TO SPEAK OF BRIN GING ANY EVIDENCE ON RECORD TO PROVE THE PRESUMPTION BY THE ASSESSING MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 31 OFFICER. EVEN OTHERWISE, WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF STAT EMENT MADE BY A THIRD PARTY UNLESS AND UNTIL ANY CORROBOR ATIVE MATERIAL IS BROUGHT ON RECORD TO SUBSTANTIATE SUCH STATEMENT/PRESUMPTION. AS MENTIONED EARLIER, PRESU MPTION CANNOT TAKE THE SHAPE OF EVIDENCE HOWEVER, STRONG I T MAY BE. THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LEARNED CIT(A). RESULTANTLY, THE APPEAL OF THE REVE NUE IS DISMISSED. 6. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE I N ITA NO. 7082/M/2016 IN THE CASE OF SMT. MEENAKSHI N SHA H. THE LEARNED DR CONTENDED THAT SHE IS DAUGHTER OF MR . BHAWARLAL JAIN, OBTAINED BOGUS LOAN ENTRIES FROM BH AWARLAL JAIN GROUP. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE FACT AND ISSUE IS IDENT ICAL TO THE CASE IN ITA NO.7385/MUM/2016. 6.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE DELIBERAT ED UPON THE ISSUE IN EARLIER PARAS OF THIS ORDER, WHILE DISPOSI NG OF ITA MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 32 NO.7385/M/2016, THEREFORE, CONSIDERING THE FACTUAL FINDING RECORDED BY THE LEARNED CIT(A) AND DISCUSSION MADE BY US, WE FIND NO INFIRMITY IN THE ORDER OF THE FIRST APPELLA TE AUTHORITY. THUS, THIS APPEAL OF THE REVENUE IS ALSO DISMISSED. 7. NOW WE SHALL TAKE UP THE CROSS-OBJECTIONS OF THE ASSESSEE (CO NOS. 85 & 86/M/2018) WHEREIN, THE ASSE SSEE HAS CHALLENGED THE RE-OPENING OF ASSESSMENT UNDER S ECTION 147 OF THE ACT. 7.1 THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OU R ATTENTION TO THE REASONS RECORDED BY CONTENDING THA T THERE IS AMBIGUITY IN THE REASONS FOR WHICH OUR ATTENTION WA S INVITED TO PAGE 6 OF THE PAPER-BOOK, WHICH TALKS ABOUT BHAW ARLAL JAIN GROUP AND CONSEQUENT SEARCH AND SURVEY ACTION CARRI ED OUT BY THE INVESTIGATION WING ON 03.10.2013. OUR ATTEN TION WAS FURTHER INVITED TO PAGE 15 OF THE PAPER-BOOK, CONTA INING A LETTER DATED 05.01.2018, ADDRESSED TO MEENAKSHI N S HAH. THE CRUX OF THE ARGUMENT ON BEHALF OF THE ASSESSEE IS T HAT FOR TAKING AN ACTION REASONS SHOULD BE ON THE SAME GROU ND FOR WHICH OUR ATTENTION WAS INVITED TO THE ORDER OF HON 'BLE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 33 BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LT D (331 ITR 236 (BOM)). ON THE OTHER HAND, THE LEARNED DR STRO NGLY DEFENDED THE RE-OPENING OF ASSESSMENT BY EXPLAINING THAT THERE WAS INFORMATION WITH THE LEARNED ASSESSING OF FICER THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FROM BHAWARLAL JAIN GROUP, THEREFORE, THERE WAS A REASON ABLE BELIEF WITH THE ASSESSING OFFICER THAT INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT. IT WAS POINTED OUT THAT REASON S FOR RE- OPENING WERE CORRECTLY RECORDED. OUR ATTENTION WAS INVITED TO THE DECISION FROM HON'BLE APEX COURT IN THE CASE OF 291 ITR 500 (SUPREME COURT). THE LEARNED DR ALSO INVITED OU R ATTENTION TO SECTION 292C OF THE ACT. 7.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS, RE-OPE NING OF ASSESSMENT U/S 147/148 OF THE ACT ON THE PLEA THAT THE LD. AO IGNORED THE FACT THAT THERE WAS NO REASON TO BEL IEVE THAT INCOME HAS ESCAPED ASSESSMENT AS THERE WAS NO TANGI BLE MATERIAL WITH THE ASSESSING OFFICER AND INDEPENDENT APPLICATION OF MIND IS CONCERNED, WE FIND THAT THE ASSESSEES MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 34 ARE INDIVIDUALS AND THE RETURN WAS PROCESSED UNDER SECTION. 143(1) OF THE ACT. SUBSEQUENTLY, THE LEARNED ASSES SING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE INVES TIGATION WING WITH RESPECT TO SEARCH TAKEN IN THE GROUP CONC ERN OF SHRI BHAWARLAL JAIN, WHO INDULGED IN PROVIDING ACCOMMODA TION ENTRIES, AFTER RECORDING THE REASONS, RE-OPENED THE ASSESSMENT UNDER SECTION. 147 OF THE ACT. A SEARCH AND SEIZUR E ACTION WAS CONDUCTED IN THE GROUP CONCERNS OF SHRI BHAWARL AL JAIN, WHEREIN IT WAS REVEALED THAT THE GROUP IS ENGAGED I N PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES BY ISSUING NON- GENUINE BILLS AND ALSO GAVE UNSECURED LOANS. AS PE R THE REVENUE SHRI BHAWARLAL JAIN GROUP IS DOING ALL THES E ACTIVITIES MERELY ON PAPERS WITHOUT EFFECTING REAL BUSINESS ACTIVITY AND ISSUING BOGUS BILLS. THE STATEMENT OF SHRI BHAWARLAL JAIN WAS RECORDED BY THE DEPARTMENT (THOU GH RETRACTED LATER ON) ADMITTING THAT THEY ARE PROVIDI NG ACCOMMODATION ENTRIES/UNSECURED LOANS. HOWEVER, IN RESPONSE TO THE NOTICE THE ASSESSEE FURNISHED NECES SARY DETAILS OF THE LOANS AND INTEREST PAID THEREON ALON G WITH THE COPY OF THE AFFIDAVIT DULY SWORN BY THE PERSON FROM WHOM LOAN MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 35 WERE TAKEN, CONFIRMING THE CLAIM OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER ON THE BASIS OF INFORMATION RE-OP ENED THE ASSESSMENT. WITH THIS BACKGROUND, WE SHALL ANALYZE WHETHER THE LD.AO WAS RIGHT IN RE-OPENING THE ASSESSMENT U/ S.147 OF THE ACT. 7.3 IN THE LIGHT OF THE FOREGOING DISCUSSIONS, IT IS OU R BOUNDED DUTY TO EXAMINE THE VALIDITY OF REOPENING U /S 147 R.W.S 148 OF THE ACT. BEFORE ADVERTING FURTHER WE A RE REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SEC TION 147 OF THE ACT FOR READY REFERENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, O R RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT Y EAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A R ETURN MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 36 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 HI S ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVI NG MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL , REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT T O DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE U NDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM A MOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDE RSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION , ALLOWANCE OR RELIEF IN THE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO RE QUIRED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 37 (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFI CER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDE R SUB- SECTION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS A MENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 7.4. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, WE FIND THAT AFTER INSERTION OF EXPLANATION -3 TO SECT ION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH EFFECT F ROM 01/04/1989 SECTION 147 HAS AN EFFECT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME (SUCH INCOME) WHIC H HAS ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH CAME TO THE NOTICE DURING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN C IT VS JET MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 38 AIRWAYS INDIA PVT. LTD. (2010) 195 TAXMAN 117 (MUM. ) AND THE FULL BENCH DECISION FROM HONBLE KERALA HIGH COURT IN CIT VS BEST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN .COM 278 (KERALA)(FB). A PLAIN READING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWER TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THA T INCOME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOTICE DUR ING THE COURSE OF PROCEEDINGS OF REASSESSMENT U/S 148. OUR VIEW IS FORTIFIED BY THE DECISION IN MAJINDER SINGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JAY BHARA T MARUTI LTD. VS CIT (2010) TAX LR 476 (DEL.) AND V. LAKSHMI REDDY VS ITO (2011) 196 TAXMAN 78 (MAD.). THE PROV ISION OF THE ACT IS VERY MUCH CLEAR AS WITH EFFECT FROM 01/0 4/1989, THE ASSESSING OFFICER HAS WIDE POWERS TO INITIATE PROCE EDINGS OF REOPENING. THE HONBLE KERALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (2006) 156 TAXMAN 206 (KERALA) EVEN WE NT TO THE EXTENT SO LONG AS THE AO HAS INDEPENDENTLY APPL IED HIS MIND TO ALL THE RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REOPENING CANNOT BE SAID TO BE INVALID. MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 39 7.5 WE ARE AWARE THAT MERE CHANGE OF OPINION CAN NOT FORM THE BASIS OF REOPENING WHEN THE NECESSARY FACT S WERE FULLY AND TRULY DISCLOSED BY THE ASSESSEE IN THAT S ITUATION, THE ITO IS NOT ENTITLED TO REOPEN THE ASSESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. HOWEVER, POWERS UNDER AMENDED PROVISION ARE WIDE ENOUGH WHERE THERE IS A REASONAB LE BELIEF WITH THE ASSESSING OFFICER, THAT INCOME HAS ESCAPED ASSESSMENT, BECAUSE THE POWERS WITH EFFECT FROM 01/ 04/1989 ARE CONTEXTUALLY DIFFERENT AND THE CUMULATIVE CONDI TIONS SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CONDITION FOR ACTION IS THAT THE ASSESSING OFF ICER SHOULD HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO T AX HAS ESCAPED ASSESSMENT. SUCH BELIEF CAN BE REACHED IN ANY MANNER AND IS NOT QUALIFIED BY A PRE-CONDITION OF F AITH AND TRUE DISCLOSURE OF MATERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTION 147. VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSMENT IS MUCH WIDER UND ER THE AMENDED PROVISION. OUR VIEW IS FORTIFIED BY THE DE CISION FROM HONBLE DELHI HIGH COURT IN BAWA ABHAI SINGH VS DCI T (2001) MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 40 117 TAXMAN 12 AND RAKESH AGARWAL VS ACIT (1996) 87 TAXMAN 306 (DEL.). THE HONBLE APEX COURT IN CIT V S SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) CLEARL Y HELD THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT FOR THE REV ENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT TH E SAME TIME, WE ARE AWARE THAT POWERS U/S 147 AND 148 OF T HE ACT ARE NOT UNBRIDLED ONE AS IT IS HEDGED WITH SEVERAL SAFE GUARDS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR A BUSE OF THIS POWER BY THE AO. HOWEVER, THE MATERIAL AVAILABLE O N RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, THE LD. ASSESSING OFFICER W AS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT. THE HON BLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD. (20 01) 247 ITR 818 (SC) HELD THAT MERELY BECAUSE THE CASE OF T HE ASSESSEE WAS CORRECT IN ORIGINAL ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO REOPEN THE AS SESSMENT OF AN EARLIER YEAR ON THE BASIS OF FINDING OF HIS FACT THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 41 7.6 UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDE NED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICTION, PUT IN THAT SECTION IS THAT REASON TO BELIEVE. THAT REASON HA S TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE ASSESSEE TO DISCL OSE FULLY AND PARTIALLY SOME MATERIAL FACTS RELEVANT FOR ASSESSME NT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DE LHI HIGH COURT IN UNITED ELECTRICAL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (DEL.) AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 838 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE AC T IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIE VE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE HONBLE GUJARA HIGH COURT IN P RAFULL CHUNNILAL PATEL VS ACIT (SUPRA) EVEN WENT TO THE EX TENT THAT AT THE INITIATION STAGE FORMATION OF REASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FINDING OF FACTS. IDENTICAL RA TIO WAS LAID DOWN IN BRIJMOHAN AGRAWAL VS ACIT (2004) 268 ITR 4 00, 405 MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 42 (ALL.) AND RATNACHUDAMANI S. UTNAL VS ITO (2004) 26 9 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN V S ITO (1968) 70 ITR 79(SC). 7.7. SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PR OMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PARTICU LAR CASE. IT DEPEND UPON THE FACTS OF EACH CASE. THE BELIEF MUST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONABLE GR OUNDS. THE ASSESSING OFFICER IS REQUIRED TO ACT, NOT ON ME RE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE . OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (201 1) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISI ONS:- MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 43 IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 IT R 417 (DEL.). XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 I TR 742, 746 (PUNJ.), XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXM AN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37, 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 32 4, 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) 7.8 IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COUR T HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994-95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJ A V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM), WHERE THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 44 INFORMATION REGARDING ACQUISITION OF THE ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE REL EVANT ASSESSMENT YEAR 1992-93 AND SUCH INFORMATION WAS DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 199 5-96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME IN RELATION TO ASSESSMENT YEAR 1992-93 . 7.9 THE HONBLE JURISDICTIONAL HIGH COURT IN EXPO RT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT, (2013) 350 ITR 651 (BOM), WHERE THERE HAD BEEN NO APPLICAT ION OF MIND TO THE RELEVANT FACTS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALID. 7.10. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRILAL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 432 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDINARY JURISDICT ION OF THE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PART OF THE RELEVANT MATERIAL HAD BEEN KEPT OUT FRO M THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 45 ASSESSING OFFICER). THE INFORMATION WAS IN THE ANNE XURES AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 14 7 WOULD APPLY. THE REASSESSMENT PROCEEDINGS AFTER FOUR YEAR S WERE VALID. 7.11 IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYAN KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CAS E OF THE ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE EXPIR Y OF THE TIME LIMIT PROVIDED IN SECTION 153(2). THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD . V. ASST. CIT, (2012) 348 ITR 439 (BOM), BOTH IN THE COMPUTAT ION OF TAXABLE LONG-TERM CAPITAL GAINS IN THE ORIGINAL RET URN OF INCOME AND IN THE COMPUTATION THAT WAS SUBMITTED IN RESPON SE TO THE QUERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILENCE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVES TED, AS SUCH THERE BEING A FAILURE TO DISCLOSE FULLY AND TR ULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PR OCEEDINGS WERE HELD TO BE VALID. THIS VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 46 B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 ( DEL). 7.12. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V. ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE INITIAT ION WAS STARTED WITHIN FOUR YEARS FOR RE-EXAMINING THE DEDU CTION UNDER SECTION 80HHC, WAS HELD TO BE WRONGLY ALLOWED IN TH E ORIGINAL ASSESSMENT. IDENTICALLY, IN THE CASE OF HAPPY FOR GING LTD. V. CIT, (2002) 253 ITR 413,416-17 (P & H), WHERE EXCIS E DUTY PAID IN ADVANCE WAS SHOWN AS AN ASSET IN THE BALANC E SHEET AND WAS ALLOWED AS A DEDUCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN TH E BALANCE SHEET AND WAS NOT ROUTED THROUGH THE PROFIT AND LOS S ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN THE CASE OF VIPAN KHANNA V. CIT, (2002) 255 ITR 220, 23 0 (P & H), WHERE FROM THE FACTS IT WAS CLEAR THAT THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE RETURN AT THE RATE OF 5 0 PER CENT AND HE HAD NOWHERE DISPUTED THE FACT THAT THE ADMIS SIBLE RATE OF DEPRECIATION TO HIM WAS 40 PER CENT., SUCH FACT ALONE WAS MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 47 SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS UND ER SECTION 147 AND, THEREFORE, SUCH INITIATION WAS SUSTAINED. THE HONBLE PUNJAB & HARYANA HIGH COURT IN MRS. RAMA SINHA V. C IT, (2002) 256 ITR 481, 483, 486, WHERE THE REASSESSMEN T NOTICE HAS BEEN ISSUED ON THE BASIS OF DEFINITE INFORMATIO N FROM CBI REGARDING INVESTMENTS BY THE ASSESSEE WHICH HAD NOT BEEN DISCLOSED DURING THE ORIGINAL ASSESSMENT PROCEEDING S, SUCH INITIATION HAS BEEN UPHELD. 7.13. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJR ANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOUGH THE TRANSACT ION OF SALE OF SHARES WAS DISCLOSED AND ACCEPTED IN THE ORIGINA L ASSESSMENT, BUT THE SUBSEQUENT DISCOVERY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSACTION WAS N OT GENUINE, A REASSESSMENT NOTICE AFTER FOUR YEARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DISCLOSURE OF THE MATERIA L FACTS. IN THIS REGARD, THE PETITIONER-ASSESSEE CANNOT DRAW AN Y SUPPORT FROM THE STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTICE FOR REASSESSMENT. IT GOES WITHOUT SAYING THAT FOR THE P URPOSE OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 48 MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHALL HAVE TO CONFRONT THE PETITIONER WITH THE ENTIRE MATERIAL IN HIS POSSESSION ON THE BASIS OF WHICH HE PROPOSES TO MAK E THE ADDITIONS. IN PUNJAB LEASING PVT. LTD. V. ASST. CIT , (2004) 267 ITR 779, 781-82 (P & H), WHERE DEPRECIATION WAS ALL OWED TO THE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FI NANCING OF VEHICLES AND CONSUMER DURABLES ON 'HIRE-PURCHASE BA SIS' AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NOTIC E ISSUED AFTER FOUR YEARS HAS BEEN HELD NOT TO SUFFER FROM A NY ILLEGALITY AS THE SAME WAS BASED ON THE BONA FIDE ACTION OF TH E COMPETENT AUTHORITY TO DETERMINE WHETHER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEEN CLAIMIN G DEPRECIATION, WERE ACTUALLY OWNED BY IT. 7.14. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DEDUC TION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRON GLY GRANTED TO THE ASSESSEE, FOR WHICH IT WAS NOT ENTIT LED. THEREFORE, REASSESSMENT PROCEEDINGS TO WITHDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKEWISE, IN CIT V. HINDUSTAN MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 49 TOOLS & FORGINGS P. LTD., (2008) 306 ITR 209 (P & H ), WHERE, THE ASSESSEE IN THE REGULAR ASSESSMENT HAD BEEN ALL OWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTIO N 80HHC. THEREFORE, THE ACTION INITIATED BY THE AO FOR REASS ESSMENT UNDER SECTION 147(B) COULD NOT BE HELD TO BE INVALI D. 7.15. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFORMATIO N FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYME NT OF LIABILITY IN REGARD OF THE SALES TAX COLLECTED IN E XCESS. THE ASSESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE CASE OF SAT NAR AIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID NOT FO RM THE SOLE BASIS FOR THE ASSESSING OFFICER TO INITIATE R EASSESSMENT PROCEEDING BUT HE ALSO TOOK INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT COMMISSIONER AS WELL AS TH E FACT THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE FOR ASSESS MENT YEAR 1995-96. THUS, IT WAS HELD THAT THE ASSESSING OFFIC ER HAD RIGHTLY INVOKED THE JURISDICTION TO INITIATE THE RE ASSESSMENT MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 50 PROCEEDINGS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SINGH, (2005) 276 ITR 347 (P & H), IT WAS HEL D THAT THE RESPONDENTS DID NOT HAVE THE LOCUS STANDI TO QUESTI ON THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOT ICE. NON- ISSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS OF TH E LATE P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT AFFECT THE VALIDITY OF THE REASSESSMENT ORDERS. LIKEWISE, IN TILAK RAJ BEDI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FAC TS COMING TO LIGHT IN A SUBSEQUENT ASSESSMENT YEAR COULD VALI DLY FORM THE BASIS FOR INITIATING REASSESSMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 147. THE ACTION OF THE INC OME TAX AUTHORITIES IN REOPENING THE ASSESSMENT OF THE ASSE SSEE AND RESTRICTING THE DEDUCTION UNDER SECTION 80-IB WAS H ELD TO BE VALID. 7.16. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHOW TH E RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPAC ITY OF THE DONOR TO MAKE GIFTS AND THE OCCASION THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS . THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 51 REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (1999) 240 ITR 728, 736-37, 739 (PAT), WHERE THE INVESTIGATION REPORT INDICATED THAT THE OFFICER HAD REASON TO BELIEVE THAT ON ACCOUNT OF FA ILURE ON THE PART OF THE PETITIONER-ASSESSEE TO DISCLOSE TRUE AN D FULL FACTS, INCOME HAD BEEN GROSSLY UNDER ASSESSED, REASSESSMEN T PROCEEDINGS WERE HELD VALIDLY INITIATED. 7.17. IN THE CASE OF KAPOOR BROTHERS V. UNION OF I NDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MA TERIAL EVIDENCE FOR THE PURPOSE OF REOPENING OF THE ASSESS MENT ALREADY COMPLETED HAS BEEN BROUGHT TO THE NOTICE OF THE AUTHORITY DURING THE COURSE OF ENQUIRY. THE NOTICE WAS HELD TO BE VALID BY THE HONBLE HIGH COURT. IN THE CASE OF VIPPY PROCESSORS PVT. LTD. V. CIT, (2001) 249 ITR 7, 8 (M P), WHERE THE NEED TO ISSUE NOTICE AROSE DUE TO NOTICING OF VAST DIFFERENCE IN VALUE OF PROPERTIES DISCLOSED BY THE ASSESSEE AND T HAT OF THE REPORT OF THE VALUATION OFFICER AND THE REASONS THA T LED TO THE ISSUE OF THE NOTICE WERE DULY RECORDED AND THE SAME WERE ALSO ADEQUATE AND BASED ON RELEVANT FACTS AND MATERIAL, INITIATION MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 52 WAS UPHELD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CIT, (2001) 249 ITR 109, 110-11 (MP), WHERE T HE NOTICE WAS ISSUED AFTER RECORDING REASONS IN THAT REGARD, INITIATION WAS UPHELD. 7.18. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARD EN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 481, 489, 494-95, SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COU RT: (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE WAS HOLD ING SHARES IN AN AMALGAMATING COMPANY AND HE WAS ALLOTTED SHAR ES IN THE AMALGAMATED COMPANY AND SUCH SHARES WERE SOLD B Y HIM AND HE HAS DISCLOSED THE MARKET PRICE OF SUCH SHARE S AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISCLOSED THE COST OF ACQUISITIO N OF SHARES IN THE AMALGAMATING COMPANY IN ACCORDANCE WITH SECT ION 49(2) READ WITH SECTION 47(VII), INITIATION OF REAS SESSMENT PROCEEDINGS AFTER FOUR YEARS HAS BEEN SUSTAINED BEC AUSE THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412,418-19 (RAJ), WHERE THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 53 RETURN OF THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DECLARED BY THE ASSESSEE, WHO CARRIED ON CON- TRACT BUSINESS, INITIATION OF REASSESSMENT PROCEEDINGS BY ISSUING A NOTICE DATED 15-5-2001 PROPOSING TO REASSESS PETITIONER-AS SESSEE AT HIGHER RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRI BED UNDER SECTION 44AD HAS BEEN SUSTAINED. IN THE CASE OF D R. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), THE REAS SESSMENT PROCEEDINGS WERE INITIATED AFTER RECORDING REASONS IN WRITING BY THE AO. THE NON-AVAILABILITY OF A FEW DOCUMENTS DEM ANDED BY THE ASSESSEE WOULD NOT MAKE THE REASSESSMENT PROCEE DINGS INITIATED FOR THE REASONS RECORDED IN DETAIL ILLEGA L. 7.19. IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT YEAR S IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALL Y BY THE ASSESSING AUTHORITY WHETHER THE INCOME SHOULD BE TR EATED UNDER THE HEAD 'BUSINESS INCOME' OR 'PROPERTY INCOM E'. THE ASSESSEE WOULD GET OPPORTUNITY TO SHOW SUFFICIENT C AUSE TO THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESSMENT . THUS, IT MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 54 COULD NOT BE SAID THAT THERE WAS NO RELEVANT MATERI AL TO INITIATE PROCEEDINGS UNDER SECTION 147. IN THE CAS E OF KARTIKEYA INTERNATIONAL V. CIT, (2010) 329 ITR 539 (ALL), IN VIEW OF THE MATTER, THE PETITIONER WAS NOT ENTITLED FOR THE DEDUCTION ON THE DUTY DRAWBACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HAD BEEN ALLOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1), IT HAD ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147 REA D WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-0 7 WAS LEGAL AND IN ACCORDANCE WITH LAW. 7.20. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: S URESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL), NOTW ITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX I N THE HANDS OF P, HE HAD TAKEN A STAND THAT THE AMOUNT DI D NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT W AS NOT CLEAR AS TO IN WHOSE HANDS THE AMOUNT IN QUESTION H AD TO BE ASSESSED. THE ITO WAS JUSTIFIED IN TAKING PROCEEDIN GS UNDER SECTION 147 FOR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETITIONERS ACCORDING TO THE CLAIM MADE BY THE PETI TIONERS. MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 55 LIKEWISE, HONBLE KERALA HIGH COURT IN CIT V. DR. S ADIQUE UMMER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSI NG OFFICER COLLECTED FURTHER INFORMATION TO COMPLETE THE REASS ESSMENTS WHICH WAS ALSO PERMISSIBLE UNDER THE ACT. THE FINDI NG OF THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL, THAT THE ASSESSING OFFICER HAD NO MATERIAL TO BELIEVE THAT T HE INCOME HAD ESCAPED ASSESSMENT WAS WRONG AND CONTRARY TO FA CTS. THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. T HEREFORE, THE REOPENING OF ASSESSMENTS WAS HELD TO BE VALID A ND WITHIN TIME. IN THE CASE OF CIT V. UTTAM CHAND NAHAR, (2 007) 295 ITR 403 (RAJ), THE NOTICE REQUIRING THE ASSESSEE TO FILE THE RETURN WITHIN 30 DAYS WAS IN ACCORDANCE WITH SECTIO N 148 AS IT MUST BE DEEMED TO BE IN FORCE WITH EFFECT FROM 1-4- 1989, AND IN FORCE AS ON THE DATE NOTICE WAS ISSUED. THERE WA S NO VIOLATION OF SECTION 148 IN RESPECT OF THE SPECIFIE D PERIOD WITHIN WHICH THE RETURN IS TO BE SUBMITTED. THE REASSESSME NT PROCEEDINGS WERE HELD TO BE VALID. 7.21. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONCEDE THE INCOME MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 56 ON CAPITAL GAIN EITHER UNDER THE UN-AMENDED PROVISI ON OR UN-DER THE AMENDED PROVISION, THE RECOURSE OPEN TO THE DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSE SSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHE RWISE INVALID. LIKEWISE, IN ATUL TRADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOUNT BOOKS OR RECORD AND OTHER MATERI AL WERE ALL COMMON WHICH WERE BEING CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATING TO THREE APPEALS. THE PETITION ER HAD NOTICE AND OPPORTUNITY OF BEING HEARD. THE REASSESS MENT PROCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. V. LAMES KURIAN, ASST. CIT, (2007) 294 ITR 341 (GUJ), THE ASSESSING OFFICER HAD FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWANCES. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, (2010) 323 ITR 60 (MAD), WHERE THE ASSESSEE HAD FURNISHED INCORRECT PARTICUL ARS AND THEREFORE, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE JUSTIFIED. MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 57 7.22 IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCTION OF PEN AL INTEREST WHICH HAD ACCRUED NOT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BUT IN EARLIER YEARS. THIS THE ASSESSEE HAD NOT DISCLOSED. THE REASSESSMENT WAS HELD TO BE VALID. LIKEWISE, IN KUSUM INDUSTRIES P. LTD. V. CIT, (200 8) 296 ITR 242 (ALL), AS THE AWARD HAD BECOME FINAL IT WOULD B E TAKEN THAT THE DIRECTORS OF THE ASSESSEE HAD ACCEPTED THE FACT UM OF EARNING OF SECRET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO BINDING ON THE COMPANY. THE NON-APPE ARANCE OF ONE OF THE ARBITRATORS AND ONE OF THE DIRECTORS IN RESPECT OF THE SUMMON ISSUED UNDER SECTION 131 WOULD NOT MAKE THE REASSESSMENT INVALID. THE HONBLE KERALA HIGH COURT IN CIT V. INDO MARINE AGENCIES (KERALA) P. LTD., (2005) 279 I TR 372 (KER), HELD THAT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 144. THE MERE FACT THAT IT WAS NOT COMMUNIC ATED TO THE ASSESSEE WOULD NOT MAKE SUCH AN ASSESSMENT RECO RDED IN THE ORDER SHEET ILLEGAL AND THAT WOULD NOT BAR FURT HER MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 58 PROCEEDINGS UNDER SECTION 147. THUS, THE ASSESSMENT WAS HELD TO BE VALIDLY REOPENED UNDER EXPLANATION 2(C) TO SECTION 147. LIKEWISE, IN CIT V. N. JAYAPRAKASH, (2006) 28 5 ITR 369 (KER), WHERE, THE ASSESSEE COULD NOT, AFTER HAVING PERSUADED THE ASSESSING AUTHORITY TO WITHDRAW THE NOTICE DATE D 1-10- 1993, POINTING OUT THAT IT WAS NOT IN CONFORMITY WI TH LAW, BE ALLOWED TO CONTEND THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF THE TIME-LIMIT BY THE FINANCE (NO.2) AC T, 1996, WITH EFFECT FROM 1-4-1989. IN THE ABSENCE OF SPECIF IC PROVISION IN THE FINANCE (NO. 2) ACT, 1996, INVALIDATING PROC EEDINGS INITIATED BY THE INCOME-TAX OFFICER, THE ACTION TAK EN BY HIM APPLYING THE THEN EXISTING LAW COULD NOT BE SAID TO BE INVALID. 7.23 LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FROM T AND K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS HAD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE A SSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW OF THE ABS ENCE OF THESE DETAILS, THE ASSESSING OFFICER COULD NOT EXAM INE THE TAXABILITY OF ADVANCES OR LOAN RAISED BY THE ASSESS EE. THERE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 59 WAS FAILURE TO DISCLOSE MATERIAL FACTS NECESSARY FO R ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBLE ALLAHABAD HIGH COURT IN C HANDRA PRAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (A LL), WHEREIN, THE INCOME-TAX DEPARTMENT HAD SENT A REQUI SITION ON 27-3-2002, UNDER SECTION 132A REQUISITIONING THE BO OKS OF ACCOUNT AND OTHER DOCUMENTS SEIZED BY THE CENTRAL E XCISE DEPARTMENT. THE RECORD OF THE PROCEEDING DATED 18-4 -2002, SHOWED THAT THE REQUISITION WAS NOT FULLY EXECUTED A S ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN D ELIVERED TO THE REQUISITIONING AUTHORITY. THE PROCEEDINGS IN ITIATED UNDER SECTION 147 WAS HELD TO BE VALID. 7.24 IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIARY CONSTI TUTED SUFFICIENT INFORMATION FOR THE ESCAPEMENT OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATIO N OR FURNISHING OF INACCURATE PARTICULARS AS REGARDS SAL E CONSIDERATION. THUS, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 60 MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD B EEN VALIDLY INITIATED. 7.25 LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (20 06) 285 ITR 57 (KER), IT WAS CLEAR FROM THE REASONS REC ORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEV E THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRULY TH E MATERIAL FACTS AND THAT AS A CONSEQUENCE INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSWARE CORPORATION LTD. V. CI T, (2005) 277 ITR 40 (ALL), THE PRINCIPLES LAID DOWN BY THE C ALCUTTA HIGH COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : ( 1979) 118 ITR 1005 (CAL) DID CONSTITUTE INFORMATION ON A POIN T OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FORMING HIS BELIEF THAT THE INCOME TO THAT EXTENT H AD ESCAPED ASSESSMENT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER CARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD THAT THE DEPARTMENTAL VALUER'S REPORT CONSTITU TED MATERIAL FOR ENTERTAINING A BELIEF OF ESCAPED INCOM E IN THE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 61 YEARS UNDER CONSIDERATION. THE REASSESSMENT PROCEED ING WAS HELD TO BE VALID. 7.26 IN AUROBINDO SANITARY STORES V. CIT, (2005) 2 76 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BET WEEN THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESSEE-FIRM AND THE FIGURES OF LIA BILITIES TOWARDS SUNDRY CREDITORS IN THE BALANCE-SHEET OF TH E ASSESSEE- FIRM FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR 1989-90. THESE MATERIALS HAD A DIRECT LINK AND NEXU S FOR FORMATION OF A BELIEF BY THE ASSESSING OFFICER THAT INCOME OF THE ASSESSEE-FIRM HAD ESCAPED ASSESSMENT BECAUSE OF FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THE CASE OF CIT V . BEST WOOD INDUSTRIES & SAW MILLS, (2011) 331 ITR 63 (KER), TH E ASSESSEE CHALLENGED THE VALIDITY OF THE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SECTION 147 AND BOTH THE FIRST APPELLATE AUTHORITY AS WELL AS THE T RIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE HOLDING THA T SO FAR AS THE REASSESSMENTS RELATED TO ASSESSMENT OF UNEXPLAI NED TRADE MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 62 CREDITS, THEY WERE INVALID. ON APPEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VALID. IN HONDA SIEL POWE R PRODUCTS LTD. V. DEPUTY CIT, (2012) 340 ITR 53 (DEL), THERE BEING OMISSION AND FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THUS REASSESSMENT PR OCEEDINGS WERE HELD TO BE VALID. IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUTY CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCOUNT A ND OTHER MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, THE ORDER PASSED BY THE COMMISSIONER (APPEALS) IN THE ASSESSM ENT YEAR 2001-02 WOULD CONSTITUTE 'INFORMATION' OR MATERIAL FROM ANY EXTERNAL SOURCE AND, AS SUCH, THE REASSESSMENT PROC EEDINGS FOR THE ASSESSMENT YEAR 2000-01 WERE HELD TO BE VAL ID. LIKEWISE, IN THE CASE OF CIT V. SMT. R. SUNANDA BA I, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WER E HELD TO BE VALID ON THE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDER SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH DISENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FO R THE ASSESSMENT YEARS 1992-93 AND 1993-94. MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 63 7.27 IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. A SST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BEING SU FFICIENT MATERIAL ON RECORD FOR THE ASSESSING OFFICER TO FOR M A BELIEF AS REGARDS THE ESCAPEMENT OF INCOME IN RELATION TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIR E BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (2013) 357 ITR 17 7 (DEL), WHERE THERE BEING PRIMA FACIE MATERIAL IN THE POSSE SSION OF THE ASSESSING OFFICER TO FORM A TENTATIVE BELIEF THAT S ECTION 9(1)(I) HELD ATTRACTED, SAID REASON BY ITSELF CONSTITUTED A RELEVANT GROUND TO REOPEN THE ASSESSMENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 ( MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 30 8 ITR 434 (KER)]; VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 ( MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 3 37 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 ( KARN)]; MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 64 X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 3 43 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CI T [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 73 (DEL)]; XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 I TR 158 (GUJ)]; XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BAN K LTD. [(2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (B OM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 I TR 630 (MAD)]. 7.28 SO FAR AS, THE DECISION IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A PARTICULA R CONCLUSION, ONLY IN A SITUATION, WHEN NOT A SINGLE PIECE OF PAPER OR DOCUMENT WAS RECOVERED, THEREFORE, THE HON BLE COURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIA L FOUND AND THE ADDITION WAS MERELY ON THE BASIS OF STATEME NT ONLY THEN REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. LIKEWISE, IN THE CASE OF CIT VS S. KH ADER KHAN SON (2012) 254 CTR 228 (SC), AFFIRMING THE DECISION OF MADRAS MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 65 HIGH COURT IN (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS MADE SOLELY ON THE BASIS OF STATEMENT U/S 133A AND NO OTHER MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE. 7.29. IT IS NOTED THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF YUVRAJ VS UOI (2009) 315 ITR 84 (BOM.) HELD AS UNDER:- THAT FROM THE PERUSAL OF THE ORDER ONE FOUND NO APPLICATION OF MIND ON THE PART OF THE ASSTT. COMMI SSIONER TO THE FACTS OF THE CASE, THE ISSUE TO BE DEALT WIT H AND THE REASONS FOR PASSING THE ORDER. THE VALUE OF THE LAN D WAS NOT DETERMINED BY THE REVENUE. THE ISSUE RELATING T O CAPITAL GAIN OR CASUAL INCOME WAS ALSO NOT ADDRESSE D BY THE REVENUE. IN THE LIGHT OF THE SAME, IN THE FACTS OF THE CASE, THE ASSESSING OFFICER WAS JUSTIFIED IN ISSUIN G THE NOTICE UNDER SECTION 148. THE ASSTT. COMMISSIONER D ID NOT APPLY HIS MIND AND FAILED TO RECORD GOOD AND PROPER REASONS FOR PASSING THE ORDER. IN THE FACTS OF THE CASE, ONE DID NOT FIND MERE CHANGE OF OPINION IN RECORDING RE ASONS FOR ISSUING NOTICE UNDER SECTION 148 BY THE ASSESSI NG OFFICER. LIKEWISE, HON'BLE APEX COURT IN THE CASE OF RAYMON D WOOLLEN MILLS LTD. VS INCOME TAX OFFICER (1999) 236 ITR 34 (SUPREME COURT) HELD THAT THE SUPREME COURT HAD ONL Y TO SEE WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUF FICIENCY MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 66 OR CORRECTNESS OF THE MATERIAL WAS NOT A THING TO B E CONSIDERED AT THIS STAGE. THE SUPREME COURT COULD NOT STRIKE D OWN THE REOPENING OF THE CASE IN THE FACTS OF THE INSTANT C ASE. IT WOULD BE OPEN TO THE ASSESSEE TO PROVE THAT THE ASSUMPTIO N OF FACTS MADE IN THE NOTICE WAS ERRONEOUS. THE ASSESSEE MIGH T ALSO PROVE THAT NO NEW FACTS CAME TO THE KNOWLEDGE OF TH E ITO AFTER COMPLETION OF THE ASSESSMENT PROCEEDING. THE SUPREM E COURT WAS NOT EXPRESSING ANY OPINION ON THE MERITS OF THE CASE. THE QUESTIONS OF FACT AND LAW WERE LEFT OPEN TO BE INVE STIGATED AND DECIDED BY THE ASSESSING AUTHORITY. THE ASSESSEE WO ULD BE ENTITLED TO TAKE ALL THE POINTS BEFORE THE ASSESSIN G AUTHORITY. THE APPEALS WERE DISMISSED. 7.30. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD .331 ITR 236(BOM) HELD AS UNDER: EXPLANATION 3 TO SECTION 147 OF THE INCOME-TAX ACT, 1961, WAS INSERTED BY THE FINANCE (NO. 2) ACT OF 2009, WI TH EFFECT FROM APRIL 1, 1989. THE EFFECT OF THE EXPLANATION IS THAT EVEN THOUGH THE NOTICE THAT HAS BEEN ISSUED UNDER S ECTION 148 CONTAINING THE REASONS FOR REOPENING THE ASSESS MENT DOES NOT CONTAIN A REFERENCE TO A PARTICULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSMENT, T HE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT, WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 67 THE PROCEEDINGS. PARLIAMENT HAVING USED THE WORDS ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT, TH E WORDS AND ALSO CANNOT BE READ AS BEING IN THE ALT ERNATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD B E TO REGARD THOSE WORDS AS BEING CONJUNCTIVE AND CUMULAT IVE. IT IS OF SOME SIGNIFICANCE THAT PARLIAMENT HAS NOT USE D THE WORD OR. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING THE WORD AND. THE WORDS AND AS WELL AS A LSO HAVE BEEN USED TOGETHER AND IN CONJUNCTION. EVI-DEN TLY, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS AND AL SO IS THAT THE ASSESSING OFFICER, UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOT ICE UNDER SECTION 148(2) MUST ASSESS OR REASSESS : (I)S UCH INCOME ; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S UNDER THE SECTION. EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN T HE SUBSTANTIVE PART OF SECTION 147 . AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONT ENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SU BSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INC OME (SUCH INCOME) WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DU RING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER IS SUING A NOTICE UNDER SECTION 148 , HE ACCEPTS THE CONTENTIO N OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INI TIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS N OT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF H E INTENDS TO DO SO, A NOTICE UNDER SECTION 148 WOULD BE NECESSARY IN THE EVENT OF CHALLENGE BY THE ASSESSEE . THE EFFECT OF SECTION 147 AS IT NOW STANDS AFTER THE AM ENDMENT OF 2009 CAN THEREFORE, BE SUMMARISED AS FOLLOWS : ( I) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR ; (II) UPON THE FORMATION OF THAT B ELIEF AND BEFORE HE PROCEEDS TO MAKE AN ASSESSMENT, REASSESSM ENT MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 68 OR RECOMPUTATION, THE ASSESSING OFFICER HAS TO SERV E ON THE ASSESSEE A NOTICE UNDER SUB-SECTION (1) OF SECTION 148 ; (III) THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH I NCOME, WHICH HE HAS REASON TO BELIEVE, HAS ESCAPED ASSESSM ENT AND ALSO ANY OTHER INCOME, CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION ; AND (IV) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INCLUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH INCOME HAS ESCAPED ASSESSMENT, HE MAY NONE THE LESS , ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTIC E SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. THE HON'BLE HIGH COURT WHILE COMING TO THE AFORESAI D CONCLUSION RELIED UPON THE DECISION FROM HON'BLE RA JASTHAN HIGH COURT IN THE CASE OF CIT V. SHRI RAM SINGH [2 008] 306 ITR 343 (RAJ) AND ALSO CONSIDERED FOLLOWING DECISIO NS: CIT V. ATLAS CYCLE INDUSTRIES [1989] 180 ITR 319 (P&H) CIT V. SHRI RAM SINGH [2008] 306 ITR 343 (RAJ) CIT V. SUN ENGINEERING WORKS P. LTD. [1992] 198 ITR 297 (SC) JAGANMOHAN RAO (V.) V. CIT/EPT [1970] 75 ITR 373 (SC) TRAVANCORE CEMENTS LTD. V. ASST. CIT [2008] 305 ITR 170 (KER) VIPAN KHANNA V. CIT [2002] 255 ITR 220 (P&H) MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 69 7.31 HON'BLE APEX COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD. 291 ITR 500 (SUPREME COURT) HELD AS UNDER: UNDER THE SCHEME OF SECTION 143(1) OF THE INCOME-T AX ACT, 1961, AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989 , AND PRIOR TO ITS SUBSTITUTION WITH EFFECT FROM JUNE 1, 1999, WHAT WERE PERMISSIBLE TO BE ADJUSTED UNDER THE FIRST PRO VISO TO SECTION 143(1)(A) WERE : (I) ONLY APPARENT ARITHMET ICAL ERRORS IN THE RETURN, ACCOUNTS OR DOCUMENTS ACCOMPANYING T HE RETURN, (II) LOSS CARRIED FORWARD, DEDUCTION, ALLOW ANCE OR RELIEF, WHICH WAS PRIMA FACIE ADMISSIBLE ON THE BAS IS OF INFORMATION AVAILABLE IN THE RETURN BUT NOT CLAIMED IN THE RETURN, AND SIMILARLY (III) THOSE CLAIMS WHICH WERE , ON THE BASIS OF THE INFORMATION AVAILABLE IN THE RETURN, P RIMA FACIE INADMISSIBLE, AND WERE TO BE RECTIFIED/ALLOWED/DIS- ALLOWED. WHAT WAS PERMISSIBLE WAS CORRECTION OF ERRORS APPAR ENT ON THE BASIS OF THE DOCUMENTS ACCOMPANYING THE RETURN. THE ASSESSING OFFICER HAD NO AUTHORITY TO MAKE ADJUSTME NTS OR ADJUDICATE UPON ANY DEBATABLE ISSUES. IN OTHER WORD S, THE ASSESSING OFFICER HAD NO POWER TO GO BEHIND THE RET URN, ACCOUNTS AND DOCUMENTS, EITHER IN ALLOWING OR IN DISALLOWING DEDUCTIONS, ALLOWANCE OR RELIEF. THOUGH TECHNICALLY THE INTIMATION ISSUED WAS DEEMED TO BE A DEMAND NOTICE UNDER SECTION 156, THAT DID NOT PRECL UDE THE RIGHT OF THE ASSESSING OFFICER TO PROCEED UNDER SEC TION 143(2) : THAT RIGHT IS PRESERVED AND NOT TAKEN AWAY . WITH EFFECT FROM APRIL 1, 1998, THE SECOND PROVISO TO SECTION 143(1)(A) WAS SUBSTITUTED. DURING THE PERIOD BETWEE N APRIL 1, 1998, AND MAY 31, 1999, SENDING OF AN INTIMATION WAS MANDATORY. THE LEGISLATIVE INTENT IS VERY CLEAR FRO M THE USE OF THE WORD INTIMATION AS SUBSTITUTED FOR ASSESS MENT THAT TWO DIFFERENT CONCEPTS EMERGE. WHILE MAKING AN ASSESSMENT, THE ASSESSING OFFICER IS FREE TO MAKE A NY ADDITION AFTER GRANT OF OPPORTUNITY TO THE ASSESSEE . BY MAKING ADJUSTMENTS UNDER THE FIRST PROVISO TO SECTI ON 143(1)(A) NO ADDITION WHICH IS IMPERMISSIBLE BY THE INFORMATION GIVEN IN THE RETURN COULD BE MADE BY TH E MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 70 ASSESSING OFFICER. THE INTIMATION UNDER SECTION 143 (1)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT. UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED SE CTION 143(1), WITH EFFECT FROM JUNE 1, 1999, EXCEPT AS PR OVIDED IN THE PROVISION ITSELF, THE ACKNOWLEDGMENT OF THE RET URN SHALL BE DEEMED TO BE AN INTIMATION UNDER SECTION 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B ) NO REFUND IS DUE TO HIM. IT IS SIGNIFICANT THAT THE ACKNOWLEDGMENT IS NOT DONE BY ANY ASSESSING OFFICER , BUT MOSTLY BY MINISTERIAL STAFF. IT CANNOT THEREFORE BE SAID THAT AN ASSESSMENT IS DONE BY THEM. THE INTIMATION UND ER SECTION 143(1)(A) WAS DEEMED TO BE A NOTICE OF DEMA ND UNDER SECTION 156 FOR THE APPARENT PURPOSE OF MAKIN G MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX AP PLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDICATED TO BE P AYABLE IN THE INTIMATION BECAME PERMISSIBLE. NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISIONS. THEREFORE, TH ERE BEING NO ASSESSMENT UNDER SECTION 143(1) (A), THE QUESTIO N OF CHANGE OF OPINION DOES NOT ARISE. THE EXPRESSION REASON TO BELIEVE IN SECTION 147 W OULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFIC ER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME HAD ESCAPED ASSESSMENT, HE CAN BE SAID TO HAVE REASON T O BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSIN G OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. WHAT IS REQUIRED IS REASON TO BELIEVE BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY Q UESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REAS ONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. WHET HER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMENT OF INC OME IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE T HE FORMATION OF THE BELIEF IS WITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER. ITO V. SELECTED DALURBAND COAL CO. P. LTD. [1996] 217 ITR 597 (SC) AND RAYMOND WOOLLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) FOLLOWED . MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 71 TAXING INCOME ESCAPING ASSESSMENT IN THE CASE OF AN INTIMATION UNDER SECTION 143(1)(A) IS COVERED BY TH E MAIN PROVISION OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AND INITIATING REASSESSMENT PROCEEDINGS IN THE CASE OF INTIMATION WOULD BE COVERED BY THE MAIN PRO VISION OF SECTION 147 AND NOT THE PROVISO THERETO. ONLY ON E CONDITION HAS TO BE SATISFIED. FAILURE TO TAKE STEP S UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICE R POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS WHEN INTIMATION UNDER SECTION 143(1) HAS BEEN ISSUED. 7.32. IF THE MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, WE FIND THAT THE LD. ASSESSING OFFICER WAS GENUINELY OF THE VIEW THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AS THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TR ANSACTIONS FOR PURCHASING FISH AND EVEN THE ASSESSEE DID NOT A PPEAR BEFORE THE LD. ASSESSING OFFICER AND EVEN RESPOND T O THE NOTICES SERVED UPON THE ASSESSEE AND WERE ISSUED U/ S 147, 143(2) AND 142(1) OF THE ACT. WHILE COMING TO A PA RTICULAR CONCLUSION, THE HON'BLE APEX COURT IN THE CASE OF R AJESH JHAVERI STOCK BROKERS ((SUPRA)), DISTINGUISHED THE DECISION FROM HON'BLE GUJARAT HIGH COURT TAKEN IN ADANI EXPO RTS V. DEPUTY CIT (ASSESSMENT) [1999] 240 ITR 224 (GUJ) B Y MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 72 HOLDING THAT THE ASSESSING OFFICER HAD JURISDICTIO N TO ISSUE NOTICE UNDER SECTION 148 FOR BRINGING TO TAX INCOME ESCAPING ASSESSMENT IN AN INTIMATION UNDER SECTION 143(1)(A) ON THE GROUND THAT THE CLAIM FOR BAD DEBTS BY THE ASSESSEE WAS NOT ACCEPTABLE AS THE CONDITIONS FOR ALLOWANCE SPECIFIE D IN SECTION 36(1)(VII) AND (2) WERE NOT FULFILLED. THE HON'BLE APEX COURT REVERSED THE DECISION OF HON'BLE GUJARAT HIGH COURT IN RAJESH JHAVERI STOCK BROKERS P. LTD. V. ASST. CIT [2006] 284 ITR 593 AND ALSO CONSIDERED THE DECISIO NS IN ADANI EXPORTS V. DEPUTY CIT (ASSESSMENT) [1999] 240 ITR 224 (GUJ), APOGEE INTERNATIONAL LTD. V. UNION OF INDIA [1996] 220 ITR 248 (SC), CENTRAL PROVINCES MANGANESE ORE CO. L TD. V. ITO [1991] 191 ITR 662 (SC), (ITO V. SELECTED DALURBAND COAL CO. P. LTD. [1996] 217 ITR 597 (SC), RAYMOND WOOLLEN MI LLS LTD. V. ITO [1999] 236 ITR 34 (SC). IN THE PRESENT APPEAL, THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION. 143(1) OF THE ACT AND ON THE BASIS OF INFORMATION RECEIVED FR OM INVESTIGATION WING AND CONSEQUENT SEARCH CARRIED OU T IN THE CASES OF BHAWARLAL GROUP, RE-OPENED THE ASSESSMENT UNDER SECTION. 147/148 OF THE ACT HAVING REASONABLE BELIE F THAT MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 73 INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, TH EREFORE, TOTALITY OF FACTS AVAILABLE ON RECORD, CLEARLY INDI CATES THAT THERE WAS REASONABLE BELIEF WITH THE ASSESSING OFFICER TH AT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. CONSEQUEN TLY, SO FAR AS REOPENING IS CONCERNED, IN THE LIGHT OF FORE GOING DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE CON CLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THUS, THIS GROUND OF THE ASSESSEE IS DEVOID OF ANY MERIT, THER EFORE, DISMISSED IN BOTH THE CROSS-OBJECTIONS. FINALLY, THE APPEALS OF THE REVENUE AND CROSS-OBJEC TIONS OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 12/06/2018. SD/- SD/- ( G. MANJUNATHA ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ( DATED : 20/06/2018 SA-PS MERIDIAN CHEM BOND P LTD. & MEENAKSHI N SHAH ITA NO.7385 & 7082/MUM/2016 & C.O. NO.86 & 85/MUM/2018 74 !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / 0' ( )* ) / THE CIT, MUMBAI. 4. / / 0' / CIT(A)- , MUMBAI 5. 23-' , / )*&) 4 , / DR, ITAT, MUMBAI 6. 5 6 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI,
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