M/S. PANAMA PETROCHEM LTD., Bharuch V. THE DCIT, Bharuch

ITA 1182/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9372 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-08-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 16-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Reopening of assessment; Search and seizure; Tax effect; Reason to believe; Reassessment proceedings; Set aside
• Section: 80HHC; 234B; 260A; 147; 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 18/08/09 DRAFTED ON: 18/ 08/09 ITA NO.1182/AHD/2009 ASSESSMENT YEAR : 2004-05 M/S.PANAMA PETROCHEM LTD. PLOT NO.3303, GIDC INDL. ESTATE ANKLESHWAR 393 002 VS. THE DY.CIT BHARUCH CIRCLE BHARUCH PAN/GIR NO. : AABCP 1856 D (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ANIL R.SHAH, AR RESPONDENT BY: SHRI C.K. MISHRA, DR O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(APPEALS)- VI, BARODA DATED 19/02/2008 PASSED FOR ASSESSMENT YEAR 2004-05 BY TAKING THE FOLLOWING GROUNDS:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED BOTH IN LAW AND IN FACT IN CONFIRMING THE ORDER OF THE ASSESSING OF FICER WITH REGARD TO CLAIM OF DEDUCTION U/S. 80HHC AND ALLOWING THE SAME AT RS. 1,63,7157- AND NOT ALLOWING FULL AMOUNT CLAIMED BY YOUR APPELL ANT. YOUR APPELLANT SUBMITS THAT ON FACTS OF THE CASE AN D AS PER THE PROVISIONS OF LAW THE CLAIM MADE BY THE APPELLANT WAS CORRECT AND COMM. OF INCOME-TAX (APPEALS) OUGHT TO HAVE ALLOWED THE SAME . 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) H AS ALSO ERRED IN CONFIRMING THE DISALLOWANCE OF RS.5,63,072 MADE BY THE ASSESSING OFFICER IN WORKING OUT DEDUCTION CLAIMED BY THE APPELLANT U /S.80IB(4) OF THE ACT. YOUR APPELLANT SUBMITS THAT THE CLAIM OF THE APPELL ANT WAS CORRECT AS PER FACTS OF THE CASE AND AS PER THE PROVISIONS OF LAW AND THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE ALLOWED THE FULL AMOUNT AS CLAIMED BY THE APPELLANT. ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 2 - 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)H AS ALSO ERRED IN RESTRICTING THE DISALLOWANCE OF TELEPHONE EXPENSES TO L/4 TH OF THE TOTAL AMOUNT DISALLOWED BY THE ASSESSING OFFICER. YOUR APPELLANT SUBMITS THAT THERE IS NO PERSONAL OR NON BUSINESS ELEMENT AND THEREFORE, THE FULL TELEPHONE EXPENSE AS CLAIME D OUGHT TO HAVE BEEN ALLOWED. IT IS THEREFORE, SUBMITTED THAT RELIEFS CLAIMED ABO VE BE ALLOWED AND THE ORDER OF THE ASSESSING OFFICER BE MODIFIED ACCORDINGLY. YOUR APPELLANT RESERVES RIGHT TO ADD, ALTER OR AMEN D ANY OR ALL GROUNDS OF APPEAL. 2. THE APPEAL FILED BY THE ASSESSEE IS TIME-BARRED BY 332 DAYS. THE ASSESSEE FILED AN AFFIDAVIT DATED 12/05/2009, WHERE IN IT HAS BEEN STATED THAT THE ORDER OF LD.CIT(APPEALS) DATED 19/02/2008 WAS RECEI VED BY THE ACCOUNTANT OF THE ASSESSEE ON 11/03/2008 AND AFTER RECEIPT OF THE SAME, THE ACCOUNTANT LEFT THE SERVICE WITHOUT HANDING OVER THE ORDER TO HIS S UCCESSOR. FURTHER, THE ASSESSEE CONTACTED HIS CHARTERED ACCOUNTANT, SHRI N IRAJ SURATI WHO ADVISED THAT NO FURTHER ACTION WAS REQUIRED AGAINST THE ORD ER OF THE LD.CIT(APPEALS) AND, HENCE, THE ASSESSEE ON THE BASIS OF THIS OPI NION HAD TAKEN THE MATTER AS CLOSED. THEREAFTER, THE ASSESSEE HAD TAKEN ADVICE OF A CHARTERED ACCOUNTANT AT AHMEDABAD AND CAME TO KNOW THAT THE EARLIER CHARTER ED ACCOUNTANT WAS WRONG IN CONCEDING GROUND NOS.4 & 5 OF THE APPEAL B EFORE THE LD.CIT(APPEALS) REGARDING CLAIM OF DEDUCTION U/S.80 HHC OF THE I.T. ACT, 1961 OF RS.1,00,535/- AND DEDUCTION U/S.80-IB(4) OF THE I.T. ACT, 1961 OF RS.5,63,072/-. THEREAFTER, THE ASSESSEE FILED APPE AL BEFORE THE TRIBUNAL ON 16/04/2009. THEREFORE, THE DELAY OCCURRED IN FILI NG OF THE APPEAL AND THERE ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 3 - WAS NO INTENTIONAL DELAY ON THE PART OF THE ASSESSE E AND, THEREFORE, THE DELAY MAY BE CONDONED AND APPEAL ACCEPTED FOR HEARING. 3. THE LD.DEPARTMENTAL REPRESENTATIVE HAD NO OBJEC TION IN ADMITTING THE APPEAL OF THE ASSESSEE FOR HEARING. 4. AFTER CONSIDERING THE AFFIDAVIT FIELD BY THE ASS ESSEE EXPLAINING THE REASON FOR DELAY IN FILING OF APPEAL BEFORE THE TRI BUNAL, WE FIND THAT THE REASON FOR DELAY WAS A PLAUSIBLE ONE AND AS THE LD.DEPARTM ENTAL REPRESENTATIVE HAD NO OBJECTION TO ADMITTING THE APPEAL OF THE ASSESSE E FOR HEARING, WE CONDONE THE DELAY OF 332 DAYS AND ADMIT THE ASSESSEES APPE AL FOR HEARING. 5. GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL ARE DI RECTED AGAINST THE ORDER OF THE LD.CIT(APPEALS) CONFIRMING THE ORDER OF THE ASSESSING OFFICER DISALLOWING U/S.80HHC OF THE I.T. ACT, 1961 FOR RS. 1,63,715/- AND DISALLOWING DEDUCTION OF RS.5,63,072/- U/S.80-IB(4) OF THE I.T. ACT, 1961. 6. WE FIND FROM THE ORDER OF THE LD.CIT(APPEALS) TH AT THE ASSESSEE HAD TAKEN GROUND NOS.4 & 5 OF THE APPEAL BEFORE HIM CON TESTING THE DISALLOWANCE(S) OF DEDUCTION U/S.80HHC OF THE I.T. ACT, 1961 OF RS.1,00,535/- AND OF RS.5,63,072/- U/S.80IB(4) OF THE I.T. ACT, 1961 TO THE ASSESSEE. ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 4 - 7. AT THE TIME OF HEARING, THE LD. AUTHORISED REPRE SENTATIVE OF THE ASSESSEE HAD NOT PRESSED THESE GROUNDS OF APPEALS AND, THEREFORE, THE LD.CIT(APPEALS) DISMISSED THE GROUNDS OF APPEAL OF THE ASSESSEE. NOW, BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESS EE HAS ARGUED THAT THE CHARTERED ACCOUNTANT WHO APPEARED BEFORE THE LD.CIT (APPEALS) DID NOT HAVE THE PERMISSION OF THE ASSESSEE FOR NOT PRESSING THE SE GROUNDS OF APPEAL AGITATED BEFORE THE LD.CIT(APPEALS) AND, HENCE, THE ORDER OF THE LD.CIT(APPEALS) DISALLOWING THESE GROUNDS OF APPEAL OF THE ASSESSE E WAS NOT CORRECT AND, HENCE, THE ORDER OF THE LD.CIT(APPEALS) SHOULD BE S ET ASIDE AND THE MATTER SHOULD BE REMANDED BACK TO HIS FILE FOR ADJUDICATIN G THESE GROUNDS OF APPEAL OF THE ASSESSEE, OTHERWISE THE ASSESSEE WILL SUFFER FI NANCIAL LOSSES BECAUSE OF THE FAULT OF THE CHARTERED ACCOUNTANT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. ABDUL KHAD ER AHAMED HELD AS UNDER:- IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ABDUL KHADER AHAMED , HIGH COURT OF KERALA (K.S. RADHAKRISHNAN & V. RAMKUMAR, JJ. ) IN IT APPEAL NO. 3 OF 2006, DATED 19TH JUNE, 200 6, (2006) 204 CTR (KER) 453 : (2006) 285 ITR 57 (KER) : (2006) 156 TAXMAN 206 (KER) LEGISLATION REFERRED TO SECTIONS 147, 148, 254( 1), CASE PERTAINS TO ASST. YEAR 1998-99, DECISION IN FAVOUR OF REVENUE ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 5 - APPEAL (TRIBUNAL)ORDER OF TRIBUNALNON-CONSIDERATI ON OF GROUND NOT PRESSED BEFORE TRIBUNALCONTENTION OF THE ASSESSEE THAT THE STATEMENT IN THE APPELLATE ORDER THAT CERTAIN GROUNDS OF APPEAL WERE NOT PRESSED BY THE ASSESSEE IS WRONG IS NOT SUSTAINABLE EVEN IF A WRO NG RECORD HAS BEEN MADE IN THE ORDER AS TO WHAT TRANSPIRED BEFORE THE COURT OR THE TRIBUNAL, THE REMEDY OF THE AGGRIEVED PARTY IS NOT TO DISPUTE THE RECORD BEFORE A HIGHER FORUM BUT TO SEEK A REVIEW BEFORE THE LOWER FORUM ITSELFJUDGES' RECORD IS CONCLUSIVE AND NEITHER THE LAWYER NOR THE LITIGANT IS ENTITLED TO CONTRADICT IT EXCEPT BEFORE THE JUDGE HIMSELF HELD CONTENTION URGED ON BEHALF OF THE ASSESSEE THAT GRO UND NOS. 2, 4 AND 5 RAISED BEFORE THE TRIBUNAL WERE ALSO PRESSED BY THE ASSESSEE AND THE STATEMENT TO THE CONTRARY CONTAINED IN ANNEX. 'C' ORDER OF THE TRIBUNAL IS WR ONG IS NOT SUSTAINABLE. THE TRIBUNAL HAS UNEQUIVOCALLY OBSERVED IN PARA 1 OF ITS ORDER T HAT OUT OF THE FIVE GROUNDS RAISED BY THE ASSESSEE, THE COUNSEL APPEARING FOR THE ASSESSE E SUBMITTED THAT HE WAS PRESSING ONLY GROUND NOS. 1 AND 3. THE TRIBUNAL ACCORDINGLY DISMISSED AS NOT PRESSED GROUND NOS. 2, 4 AND 5. IT IS NOT THE COUNSEL WHO APPEARED FOR THE ASSESSEE BEFORE THE TRIBUNAL BELOW WHO HAS CHOSEN TO DISPUTE THE STATEMENT IN TH E ORDER. IT IS A DIFFERENT COUNSEL WHO HAS NOW COME OUT WITH A DENIAL AND THAT TOO BY MEAN S OF A VERIFIED PETITION. THAT IS CLEARLY NOT PERMISSIBLE. EVEN IF A WRONG RECORD HAS BEEN MADE IN THE ORDER AS TO WHAT TRANSPIRED BEFORE THE COURT OR TRIBUNAL THE REMEDY OF THE AGGRIEVED PARTY IS NOT TO DISPUTE THE RECORD BEFORE A HIGHER FORUM BUT TO SEE K A REVIEW BEFORE THE LOWER FORUM ITSELF. THE JUDGES' RECORD IS CONCLUSIVE AND NEITHE R THE LAWYER NOR THE LITIGANT IS ENTITLED TO CONTRADICT IT EXCEPT BEFORE THE JUDGE HIMSELF AN D NOWHERE ELSE. IT IS NOT OPEN TO THE ASSESSEE TO DISPUTE BEFORE THE COURT THE CORRECTNES S OF THE ABOVE OBSERVATION IN THE ORDER OF THE TRIBUNAL. THE QUESTION AS TO WHAT TRAN SPIRED BEFORE A COURT OR TRIBUNAL, IF CAN BE GATHERED FROM THE PROCEEDINGS OR ORDER OF TH E TRIBUNAL, THEN NO PARTY WILL ORDINARILY BE PERMITTED TO TAKE EXCEPTION TO OR CON TRADICT THE STATEMENT TO THAT EFFECT IN THE ORDER. WHAT HAS BEEN STATED IN THE ORDER SHOULD BE TAKEN AS THE LAST WORD ON THAT QUESTION. IF THE PARTIES OR THEIR COUNSEL ARE PERMI TTED TO INDULGE IN A CONTROVERTING EXERCISE THEN THERE WILL BE NO END TO IT. (PARA 8) CONCLUSION EVEN IF A WRONG RECORD HAS BEEN MADE IN THE ORDER A S TO WHAT TRANSPIRED BEFORE THE COURT OR THE TRIBUNAL, THE REMEDY OF THE AGGRIEVED PARTY IS NOT TO DISPUTE THE RECORD BEFORE A HIGHER FORUM BUT TO SEEK A REVIEW BEFORE T HE LOWER FORUM ITSELF; IT IS NOT OPEN TO THE ASSESSEE TO DISPUTE THE CORRECTNESS OF THE OBSE RVATION IN THE ORDER OF THE TRIBUNAL TO THE EFFECT THAT CERTAIN GROUNDS OF APPEAL WERE NOT PRESSED BY THE ASSESSEE. IN FAVOUR OF REVENUE REASSESSMENTVALIDITYREOPENING AT THE DICTATE OF S UPERIOR AUTHORITYAO INITIATED REASSESSMENT PROCEEDINGS AFTER APPLYING H IS MIND TO ALL THE RELEVANT MATERIALS AND AFTER RECORDING THE GROUND OF HIS BEL IEFIT CANNOT BE SAID THAT THE AO WAS MECHANICALLY OBEYING THE DIRECTIONS OF C ITLETTER OF CIT ONLY ALERTED THE AO REGARDING HIS STATUTORY OBLIGATION I N THE LIGHT OF SUBSEQUENT EVENTSREASONS RECORDED BY THE AO INDICATE THAT HE HAD PRIMA FACIE REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS WHICH HAD RESULTED IN INCOME ESCAPING ASSESSM ENTTHEREFORE, ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 6 - REASSESSMENT WAS NOT VITIATED ON THE GROUND THAT TH E ASSESSING AUTHORITY WAS ACTING ON THE DIRECTION OF HIS SUPERIOR HELD THERE IS NOTHING IN THE LETTER OF THE CIT SO AS TO CONCLUDE THAT THE ASSESSING AUTHORITY WAS ACTING UNDER THE DICTATION OF HIS SUPERIOR. NO DOUBT, THE CIT HAS DIRECTED THE ASSESSING AUTHORITY TO INITIATE INCOME-TAX PROCEEDI NGS. BUT THE FURTHER DIRECTION WAS TO ISSUE NOTICE UNDER S. 148 AFTER RECORDING HIS REASO NS FOR THE SAME. THERE IS STILL ANOTHER DIRECTION THAT THE AO SHOULD COMPLY WITH ALL THE RE QUIREMENTS OF LAW WHILE INITIATING ACTION. THE REASSESSMENT PROCEEDINGS INITIATED BY T HE DY. CIT WERE AFTER APPLYING HIS MIND TO ALL THE RELEVANT MATERIALS AND ALSO AFTER R ECORDING THE GROUNDS OF HIS BELIEF. IT IS NOT EVEN REMOTELY DISCERNIBLE THAT THE DY. CIT WAS MECHANICALLY OBEYING THE DIRECTIONS OF HIS OFFICIAL SUPERIOR. THERE IS NOT EVEN A REFER ENCE TO THE LETTER. EVEN IF THERE IS ADVERTENCE IN THE REASSESSMENT PROCEEDINGS TO THE D IRECTION OF THE SUPERIOR OFFICER, THAT BY ITSELF WILL NOT VITIATE THE RESULTANT PROCEEDING S AS LONG AS THE AO HAS INDEPENDENTLY APPLIED HIS MIND TO ALL THE RELEVANT ASPECTS AND HA S ARRIVED AT THE REASONS FOR HIS BELIEF. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LET TER HAS ONLY ALERTED THE AO OF HIS STATUTORY OBLIGATION IN THE LIGHT OF THE SUBSEQUENT TURN OF EVENTS CULMINATING IN THE GOLD BISCUIT SEIZED FROM THE ASSESSEE HAVING BEEN ENTRUS TED TO THE IT DEPARTMENT. THE PENDENCY OF THE CRIMINAL PROCEEDINGS AND THE ULTIMA TE ORDER PASSED BY THE SESSIONS COURT, ETC. WERE NOT WITHIN THE KNOWLEDGE OF THE AO . THOSE SUPERVENING EVENTS WERE CONVEYED TO THE AO BY THE CIT AT WHOSE LEVEL THE LI TIGATIONS WERE CONDUCTED. REMINDING AN OFFICER OF HIS STATUTORY DUTY AND DIRECTING HIM TO PROCEED IN ACCORDANCE TO LAW AFTER ARRIVING AT THE REQUISITE SATISFACTION UNDER THE ST ATUTE CANNOT AMOUNT TO A DICTATION TO ACT IN A PARTICULAR WAY. THE OFFICER TO WHOM SUCH A REM INDER IS GIVEN ALSO CANNOT BE SAID TO ABDICATE HIS FUNCTION IF HE PROCEEDS ACCORDING TO L AW UNINFLUENCED BY ANY DIRECTION FROM HIS SUPERIOR. IF THE DIRECTION BY THE CIT WAS TO RE OPEN THE ASSESSMENT UNDER S. 147 BY BYE-PASSING THE STATUTORY FORMALITIES, THAT WOULD H AVE PROBABLY AMOUNTED TO DICTATING HIS SUBORDINATE TO ACT IN A PARTICULAR WAY THEREBY TAKI NG AWAY THE DISCRETION VESTED IN THE SUBORDINATE. ON THE CONTRARY, THE LETTER ONLY ASKS THE DY. CIT TO ISSUE A NOTICE OF REASSESSMENT UNDER S. 148 AND THAT TOO AFTER RECORD ING THE REQUISITE GROUNDS OF BELIEF. THE DY. CIT ALSO PROCEEDED ONLY AFTER SATISFYING HI MSELF THAT THERE EXISTED ADEQUATE GROUNDS OF BELIEF TO INITIATE REASSESSMENT PROCEEDI NGS. IT IS CLEAR FROM THE REASONS RECORDED BY THE AO THAT HE HAD PRIMA FACIE REASON T O BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRULY AIL MATERIAL FA CTS AND THAT AS A CONSEQUENCE OF SUCH NONDISCLOSURE, INCOME HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF S. 147. THE TRIBUNAL MISDIRECTED ITSELF ON THE MATTER WHICH CAM E UP FOR ITS CONSIDERATION. THE IMPUGNED ORDER OF THE TRIBUNAL IS SET ASIDE AND THA T OF THE CIT(A) IS RESTORED.CHUNNILAL ONKARMAL (P) LTD. VS. ITO (1983) 139 ITR 380 (MP) A ND SHEO NARAIN JAISWAL VS. ITO (1989) 176 ITR 352 (PAT) DISTINGUISHED. (PARAS 9 & 10) CONCLUSION CIT HAVING WRITTEN A LETTER TO THE AO TO ISSUE A NO TICE UNDER S. 148 TO THE ASSESSEE AFTER RECORDING THE REQUISITE REASONS FOR THE SAME AND TO COMPLY WITH ALL THE REQUIREMENTS OF LAW WHILE INITIATING ACTION FOR REASSESSMENT, PROCE EDINGS INITIATED BY THE AO AFTER APPLYING HIS MIND TO ALL THE RELEVANT MATERIALS AND AFTER RECORDING THE GROUND OF HIS BELIEF WERE NOT VITIATED ON THE GROUND THAT THE ASSESSING AUTHORITY WAS ACTING ON THE DIRECTION OF HIS SUPERIOR. IN FAVOUR OF REVENUE ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 7 - CASES REFERRED TO : BANK OF BIHAR VS. MAHABIR LAL & ORS. AIR 1964 SC 37 7 DAMAN SINGH VS. STATE OF PUNJAB AIR 1985 SC 973 GAURI SHANKER VS. HINDUSTAN TRUST (P) LTD. (1973) 2 SCC 127 ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR 1974 CTR (SC) 273 : (1974) 97 ITR 239 (SC) KRISHNA PILLAI VS. BHARATHI AMMA 1957 KLT 732 LOKENDRA SINGH VS. ITO (1981) 128 ITR 450 (MP) MADHAVAN PILLAI VS. BHASKARAN PILLAI 1985 KLT (SN) 47 MOHAMAMED SHAFI VS. MOHAMAMED HAJI 1986 KLT (SN) 55 RAMANUJAMMA VS. NAGAMMA 1968 ANDHRA PRADESH 223 SITA WORLD TRAVELS (INDIA) LTD. VS. CIT (2005) 193 CTR (DEL) 84 : (2004) 140 TAXMAN 381 (DEL) STATE OF MAHARASHTRA VS. RAMDAS SHRINIVAS NAYAK & A NR. 1983 (1) SCWR 80 : AIR 1982 SC 1249 SUMANGALI VS. KOCHUMATHA 1959 KLR 1043 VAMAKSHI RENUKA VS. BHARGAVI MEENAKSHI 1994 (1) KLT 306 VELAYUDHAN VS. JOSEPH 1955 KLT 276 WORKS MANAGER, B.S.S. FACTORY VS. C.P. SINGH AIR 19 73 SC 272 COUNSEL APPEARED P.K. RAVEENDRANATHA MENON & GEORGE K. GEORGE, FOR T HE APPELLANT : C. KOCHUNNY NAIR & DALE P. KURIEN, FOR THE RESPONDENT JUDGMENT V. RAMKUMAR, J. : IN THIS APPEAL FILED UNDER S. 260A OF THE IT ACT, 1 961 (HEREINAFTER REFERRED TO AS 'THE ACT'), THE REVENUE ASSAILS THE ORDER DT. 27TH JULY, 2005 O F THE TRIBUNAL, COCHIN BENCH IN ITA NO. 117/COCH/2005. 2. AS PER THE IMPUGNED ORDER, THE TRIBUNAL PARTLY A LLOWED RESPONDENT/ ASSESSEE'S APPEAL HOLDING THAT THE NOTICE ISSUED BY THE AO TO THE ASS ESSEE UNDER S. 148 OF THE ACT IS VOID AB INITIO AND CONSEQUENTLY SET ASIDE THE REASSESSME NT PROCEEDINGS INITIATED AGAINST THE ASSESSEE UNDER S. 147 OF THE ACT. 3. THE SUBSTANTIAL QUESTIONS OF LAW FORMULATED IN T HE MEMORANDUM OF APPEAL ARE THE FOLLOWING : '(I) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND THE SATISFACTION CONTEMPLATED UNDER THE STATUTE BEING PRIOR TO AND F OR THE ISSUE OF NOTICE UNDER S. 148 OF THE IT ACT AND THE SAME (SATISFACTION) HAVING BEEN FOUND BY THE CIT(A) ON THE PERUSAL OF THE REASONS RECORDED IN THE MISCELLANEOUS RECORDS V IDE PARA 4 OF THE ORDER OF CIT(A), THE TRIBUNAL IS RIGHT IN LAW AND FACT IN HOLDING THAT T HERE IS NOTHING ON RECORD TO SHOW THAT THE AO HAD APPLIED HIS MIND AND IS NOT THE FINDING PERV ERSE AND WITHOUT APPLICATION OF MIND TO MATERIALS ON RECORD ? (II) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS RIGHT IN LAW AND FACT : (I) IN INTERFERING WITH THE REASSESSMENT; (II) IN HOLDING THAT THE PROCEEDINGS INITIATED AGAI NST THE ASSESSEE UNDER S. 147 ARE BAD IN LAW ? ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 8 - (III) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE SHOULD NOT THE TRIBUNAL HAVE CONSIDERED IN ISSUE OF SATISFACTION AND THE VA LIDITY OF INITIATION OF REASSESSMENT IN THE LIGHT OF THE REASONS RECORDED PRIOR TO INITIATI ON OF REASSESSMENT AND IS NOT THE APPROACH TO THE ISSUE OF SATISFACTION BASED ON REMA RKS IN THE ASSESSMENT ORDER AGAINST LAW, LOGIC, PERVERSE AND VITIATED ?' 4. WE HEARD SENIOR ADVOCATE SRI P.K. RAVEENDRANATHA MENON, THE LEARNED COUNSEL APPEARING FOR THE REVENUE AND, ADVOCATE SRI DALE P. KURIAN, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE. THE STAND OF THE ASSESSEE 5. WITH A VIEW TO PERSUADE US TO CONFIRM THE ORDER OF THE TRIBUNAL, ADVOCATE SRI DALE KURIAN MADE THE FOLLOWING SUBMISSIONS BEFORE ME : ASSESSMENT IN RESPECT OF THE ASSESSEE UNDER S. 143( 3) OF THE ACT HAD INITIALLY BEEN COMPLETED ON THE BASIS OF A RETURN FILED BY HIM SHO WING HIS INCOME PURSUANT TO A NOTICE ISSUED UNDER S. 142 OF THE ACT BY THE DY. CIT, INV. CIRCLE-I, CALICUT. REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE UNDER S. 147 OF TH E ACT WERE INITIATED BY THE JT. CIT, R2, KOZHIKODE, ACTING UNDER THE DIRECTIONS AND INSTRUCTIONS OF THE CIT, CIRCLE-2(L), CALICUT, AS PER ANNEX. F LETTER DT. 30TH MAY, 2003. AS PER THE PROVISIONS OF S. 147 OF THE ACT IT IS THE AO WHO IS INVESTED WITH THE POWER TO INVOKE THE SAID PROVISION FOR REASSESSMENT AND THAT TOO AFTER COMPLYING WITH THE MANDATORY REQUIREMENTS WHICH INCLUDE A NOTICE UNDER S. 147 OF THE ACT. BEFORE IS SUING SUCH NOTICE, THE AO HIMSELF HAS TO APPLY HIS MIND AND FORM AN OPINION REGARDING HIS REASONS FOR INITIATING PROCEEDINGS UNDER S. 147. WHEN IT IS FOR THE AO TO FORM THE REQ UISITE OPINION ON BEING SATISFIED THAT ABOUT THE EXISTENCE OF REASONS FOR HIS BELIEF THAT INCOME HAS ESCAPED ASSESSMENT, HIS INDEPENDENT JUDGMENT CANNOT BE ALLOWED TO BE INFLUE NCED AT THE INSTANCE OF HIS OFFICIAL SUPERIOR. IN OTHER WORDS, IN A CASE, AS THE PRESENT , WHERE THE ORIGINAL AUTHORITY DOES SOMETHING ACTING UNDER THE DICTATION OF HIS SUPERIO R, HIS ACTION WILL BE TAINTED WITH ILLEGALITY THEREBY RENDERING THE PROCEEDINGS NULL A ND VOID. BUT FOR THE DIRECTION OF THE CIT IN ANNEX. 'F' LETTER DT. 30TH MAY, 2003, THE DY. CI T WOULD NOT HAVE ISSUED THE NOTICE UNDER S. 148 OF THE ACT. HENCE, THE CONSEQUENTIAL A CTION FOR REASSESSMENT OF INCOME INITIATED BY THE DY. CIT IS VITIATED. REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING AUTHORITY WITHOUT HIMSELF FORMING THE REQUISITE BEL IEF UNDER S. 147 OF THE ACT, BUT INSTEAD, REOPENING ASSESSMENT ON THE DIRECTIONS OF HIS SUPER IOR, ARE LIABLE TO BE QUASHED VIDE CHUNNILAL ONKARMAL (P) LTD. VS. ITO (1983) 139 ITR 380 (MP) AND SHEO NARAIN JAISWAL VS. ITO (1989) 176 ITR 352 (PAT). THE AO HAD INITIA LLY COMPLETED THE ASSESSMENT ON THE PREMISE THAT THE ASSESSEE WAS A CARRIER OF 48 GOLD BISCUITS IN QUESTION, THE VALUE OF WHICH WAS NOT TREATED AS THE INCOME OF THE ASSESSEE . GOING BY HIS STATEMENT, THE GOLD BISCUITS REALLY BELONGED TO ONE V. AHAMMED. WHEN TH ERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT, ORIGINA L ASSESSMENT CANNOT BE CORRECTED IN REASSESSMENT PROCEEDINGS. VIDE ITO VS. NAWAB MIR BA RKAT ALI KHAN BAHADUR 1974 CTR (SC) 273 : (1974) 97 ITR 239 (SC), LOKENDRA SINGH V S. ITO (1981) 128 ITR 450 (MP). IT WAS ON THE DIRECTION OF THE CIT THAT THE DY. CIT CH ANGED HIS OPINION TO HOLD THE VIEW THAT THE SUM OF RS. 26,46,000 INVESTED FOR PURCHASING TH E GOLD BISCUITS HAD ESCAPED ASSESSMENT FOR THE ASST. YR. 1998-99. THERE CANNOT BE ANY REOPENING OF ASSESSMENT FOR THE MERE REASON THAT THE AO HAD SUBSEQUENTLY CHANGE D HIS OPINION VIDE SITA WORLD TRAVELS (INDIA) LTD. VS. CIT (2005) 193 CTR (DEL) 8 4 : (2004) 140 TAXMAN 381 (DEL). THE ORDER OF THE TRIBUNAL DOES NOT CALL FOR ANY INTERFE RENCE AND MAY BE CONFIRMED. HOWEVER, THE DISMISSAL BY THE TRIBUNAL OF GROUND NOS. 2, 4 A ND 5 AS NOT PRESSED, IS NOT CORRECT SINCE THOSE GROUNDS WERE ALSO PRESSED BY THE ASSESS EE. ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 9 - JUDICIAL EVALUATION 6. WE ARE AFRAID THAT WE FIND OURSELVES UNABLE TO A GREE WITH THE ABOVE SUBMISSIONS. THE FACTUAL MATRIX 7. ON 26TH APRIL, 1997, THE AIRPORT SECURITY AT THE TRIVANDRUM AIRPORT SEIZED 48 GOLD BISCUITS WEIGHING 5595 GMS. FROM THE ASSESSEE. THEY HANDED OVER THE ASSESSEE ALONG WITH THE SEIZED GOLD TO THE VALIYATHURA POLICE WHO REGISTERED A CASE AS CRIME NO. 104/97. THE ASSESSEE WAS ARRESTED AND PRODUCED BEFO RE THE J.F.C.M.-I, THIRUVANANTHAPURAM, WHO REMANDED HIM TO JUDICIAL CU STODY. INVOKING THE PROVISIONS OF S. 132A OF THE ACT, THE IT AUTHORITIES REQUISITIONED T HE SEIZED GOLD FROM THE POLICE AUTHORITIES. THE ASSESSEE MOVED THIS COURT CHALLENG ING THE REQUEST MADE BY THE IT AUTHORITIES. THIS COURT SET ASIDE THE ACTION TAKEN BY THE IT AUTHORITIES AND ORDERED RETURN OF THE GOLD TO THE MAGISTRATE'S COURT. THEREAFTER A NOTICE WAS ISSUED TO THE ASSESSEE ON 13TH DEC., 1999 UNDER S. 142 OF THE ACT CALLING UPO N HIM TO FILE A RETURN OF HIS INCOME FOR THE ASST. YR. 1998-99. IN RESPONSE TO THE SAID NOTI CE, THE ASSESSEE FILED HIS RETURN SHOWING 'NIL' INCOME. THE RETURN FILED BY THE ASSES SEE WAS PROCESSED AND NO FURTHER ACTION WAS TAKEN. IN THE MEANWHILE, THE IT AUTHORIT IES RETURNED THE GOLD TO THE MAGISTRATE'S COURT IN OBEDIENCE TO THE DIRECTION OF THIS COURT. EVEN THOUGH THE IT DEPARTMENT MOVED THE MAGISTRATE FOR THE CUSTODY OF THE GOLD BISCUITS ALLEGING THAT THE SAME WERE ACQUIRED BY THE ASSESSEE OUT OF UNDISCLOS ED INCOME, THEIR REQUEST WAS DISALLOWED BY THE MAGISTRATE. THEREUPON THE DEPARTM ENT MOVED THE SESSIONS COURT, THIRUVANANTHAPURAM. THE SESSIONS COURT ORDERED TO H AND OVER THE GOLD TO THE IT DEPARTMENT. IN THE MEANTIME, NOTICING THAT THE SESS IONS COURT, THIRUVANANTHAPURAM, HAD ORDERED RETURN OF THE GOLD BISCUITS SEIZED FROM THE ASSESSEE TO THE IT DEPARTMENT AND THAT THEREAFTER, THE DEPARTMENT HAD TAKEN POSSE SSION OF THE SAME ON 7TH MAY, 2003 AND HAD DEPOSITED THE GOLD BISCUITS WITH THE RBI, T HIRUVANANTHAPURAM, FOR SAFE CUSTODY, THE CIT, KOZHIKODE AS PER ANNEX. 'F' LETTER DT. 30T H MAY, 2003 DIRECTED THE DY. CIT, CIRCLE-2(L), KOZHIKODE, TO INITIATE INCOME-TAX PROC EEDINGS BY ISSUING NOTICE UNDER S. 148 OF THE ACT AFTER RECORDING HIS REASONS FOR THE SAME . THE TEXT OF THE LETTER READS AS FOLLOWS: 'COPIES OF THE JUDGMENT OF THE ADDL. SESSIONS JUDGE , THIRUVANANTHAPURAM, AND OTHER RELEVANT DOCUMENTS ARE ENCLOSED HEREWITH. AS PER THE JUDGMENT REFERRED TO ABOVE, GOLD BISCUIT S WEIGHING 5.597 KG. WERE ORDERED TO BE HANDED OVER TO THE IT DEPARTMENT AND THE SAME WE RE TAKEN POSSESSION OF BY THE ITO (CIB) ON 7TH MAY, 2003 AND DEPOSITED WITH RBI, THIR UVANANTHAPURAM, FOR SAFE CUSTODY. AO IS HEREBY DIRECTED TO INITIATE INCOME-TAX PROCEE DINGS BY ISSUE OF NOTICE UNDER S. 148 AFTER RECORDING HIS REASON FOR THE SAME. THE GOLD B ISCUITS WERE SEIZED BY POLICE ON 26TH APRIL, 1997 FROM ABDUL KHADER. SO S. 148 PROCEEDING S ARE TO BE INITIATED WITH RESPECT TO THAT DATE. AO IS TO COMPLY WITH ALL THE REQUIREMENT S OF LAW WHILE INITIATING ACTION. THE ASSESSMENT MAY BE COMPLETED AS EARLY AS POSSIBLE.' (EMPHASIS, ITALICISED IN PRINT, SUPPLIED) ON RECEIPT OF THE ANNEX. T' LETTER, THE DY. CIT AFT ER VERIFYING THE RECORDS RECORDED THE FOLLOWING REASONS (ANNEX. V E') IN SUPPORT OF HIS BELIEF THAT THE INCOME HAD ES CAPED ASSESSMENT. 'REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT : ON 26TH APRIL, 1997 THE THIRUVANANTHAPURAM AIRPORT SECURITY SEIZED 48 GOLD BISCUITS WEIGHING 5,597 GMS. FROM ONE ABDUL KHADER AND THE S EIZED ARTICLES WERE HANDED OVER TO ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 10 - THE VALIATHURA POLICE. THE GOLD BISCUITS WERE HANDE D OVER TO THE IT DEPARTMENT AS PER THE PROVISIONS OF S. 132A OF THE IT ACT. LATER ON, THESE ARTICLES WERE RETURNED TO THE COURT. AS PER THE ORDER IN CRL. A, NO. 25/00 AND CR L. A. NO. 358/00 OF THE ADDL. SESSIONS JUDGE, THIRUVANANTHAPURAM, THESE GOLD BISCUITS WERE AGAIN HANDED OVER TO THE IT DEPARTMENT. THE ASSESSEE DID NOT DISCLOSE THE SOURC E OF INCOME FOR PURCHASE OF GOLD WEIGHING 5,595 GMS., VALUE OF WHICH WORKS OUT TO RS . 26,46,000 IN THE ORIGINAL RETURN FILED ON 31ST JAN., 2000. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME INVESTED IN PURCHASE OF GOLD BISCUITS HAS ESCAPED ASSESSMENT FO R THE ASST. YR. 1998-99. THE TAX EFFECT INCLUDING INTEREST UNDER SS. 234A AND 234B C OMES TO RS. 20,87,292. THE ACTION UNDER S. 148 IS THEREFORE, NECESSARY.' AS PER ANNEX. A ORDER DT. 23RD OCT., 2003, THE DY. CIT COMPLETED THE ASSESSMENT TREATING THE SUM OF RS. 26,46,000 AS THE ESCAPED IN COME WHICH CONSTITUTED THE SOURCE FOR ACQUIRING 48 GOLD BISCUITS WEIGHING 5,595 GMS. AN APPEAL PREFERRED BY THE ASSESSEE BEFORE THE CIT(A)-I, CALICUT, WAS UNSUCCESSFUL AS E VIDENCED BY ANNEX. B ORDER DT. 23RD AUG., 2004. THEREUPON THE ASSESSEE FILED AN APPEAL AS ITA NO. 117/COCH/2005 BEFORE THE TRIBUNAL, COCHIN BENCH, WHICH AS PER ANNEX. 'C' ORDER DT. 27TH JULY, 2005 ALLOWED THE APPEAL IN PART AND SET ASIDE THE REASSESSMENT P ROCEEDINGS INITIATED UNDER S. 147 OF THE ACT, FOR THE REASON THAT THE NOTICE UNDER S. 14 8 OF THE ACT ISSUED BY THE AO ACTING UNDER THE DICTATION OF HIS SUPERIOR AND WITHOUT APP LYING HIS MIND WAS VOID AB INITIO. THE LEGAL ISSUES 8. WE WILL FIRST DISPOSE OF A CONTENTION URGED ON B EHALF OF THE ASSESSEE THAT GROUND NOS. 2, 4 AND 5 RAISED BEFORE THE TRIBUNAL WERE ALSO PRE SSED BY THE ASSESSEE AND THE STATEMENT TO THE CONTRARY CONTAINED IN ANNEX. 'C OR DER OF THE TRIBUNAL IS WRONG. THE TRIBUNAL HAS UNEQUIVOCALLY OBSERVED IN PARA 1 OF IT S ORDER THAT OUT OF THE FIVE GROUNDS RAISED BY THE ASSESSEE, THE COUNSEL APPEARING FOR T HE ASSESSEE SUBMITTED THAT HE WAS PRESSING ONLY GROUND NOS. 1 AND 3. THE TRIBUNAL ACC ORDINGLY DISMISSED AS NOT PRESSED GROUND NOS. 2, 4 AND 5. IT IS PERTINENT TO NOTE THA T IT IS NOT THE COUNSEL WHO APPEARED FOR THE ASSESSEE BEFORE THE TRIBUNAL BELOW WHO HAS CHOS EN TO DISPUTE THE STATEMENT IN THE ORDER. IT IS A DIFFERENT COUNSEL WHO HAS NOW COME O UT WITH A DENIAL AND THAT TOO BY MEANS OF A VERIFIED PETITION. THAT IS CLEARLY NOT P ERMISSIBLE. EVEN IF A WRONG RECORD HAS BEEN MADE IN THE ORDER AS TO WHAT TRANSPIRED BEFORE THE COURT OR TRI BUNAL THE REMEDY OF THE AGGRIEVED PARTY IS NOT TO DISPUTE THE RECORD BE FORE A HIGHER FORUM BUT TO SEEK A REVIEW BEFORE THE LOWER FORUM ITSELF. THE JUDGES' R ECORD IS CONCLUSIVE AND NEITHER THE LAWYER NOR THE LITIGANT IS ENTITLED TO CONTRADICT I T EXCEPT BEFORE THE JUDGE HIMSELF AND NOWHERE ELSE. IT IS NOT OPEN TO THE ASSESSEE TO DIS PUTE BEFORE US THE CORRECTNESS OF THE ABOVE OBSERVATION IN THE ORDER OF THE TRIBUNAL. THE QUESTION AS TO WHAT TRANSPIRED BEFORE A COURT OR TRIBUNAL, IF CAN BE GATHERED FROM THE PR OCEEDINGS OR ORDER OF THE TRIBUNAL, THEN NO PARTY WILL ORDINARILY BE PERMITTED TO TAKE EXCEPTION TO OR CONTRADICT THE STATEMENT TO THAT EFFECT IN THE ORDER. WHAT HAS BEEN STATED I N THE ORDER SHOULD BE TAKEN AS THE LAST WORD ON THAT QUESTION. IF THE PARTIES OR THEIR COUN SEL ARE PERMITTED TO INDULGE IN A CONTROVERTING EXERCISE THEN THERE WILL BE NO END TO IT. SEE STATE OF MAHARASHTRA VS. RAMDAS SHRINIVAS NAYAK & ANR. 1983 (1) SCWR 80, KRI SHNA PILLAI VS. BHARATHI AMMA 1957 KIT 732, SUMANGALI VS. KOCHUMATHA 1959 KLR 104 3, WORKS MANAGER, B.S.S. FACTORY VS. C.P. SINGH AIR 1973 SC 272, BANK OF BIH AR VS. MAHABIR LAL & ORS. AIR 1964 SC 377, VAMAKSHI RENUKA VS. BHARGAVI MEENAKSHI 1994 (1) KIT 306, STATE OF MAHARASHTRA VS. RAMDAS SHRINIVAS NAYAK AIR 1982 SC 1249, GAURI SHANKER VS. HINDUSTAN TRUST (P) LTD. (1973) 2 SCC 127, DAMAN SI NGH VS. STATE OF PUNJAB AIR 1985 SC 973, MOHAMAMED SHAFI VS. MOHAMAMED HAJI 1986 KLT (SN) 55, RAMANUJAMMA VS. ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 11 - NAGAMMA 1968 ANDHRA PRADESH 223, VELAYUDHAN VS. JOS EPH 1955 KLT 276, MADHAVAN PILLAI VS. BHASKARAN PILLAI 1985 KLT (SN) 47. 9. WHAT NOW SURVIVES FOR CONSIDERATION IS THE QUEST ION AS TO WHETHER THE ORDER OF THE ASSESSING AUTHORITY IS VITIATED FOR THE REASON THAT HE WAS ACTING UNDER THE DICTATION OF HIS SUPERIOR. ON THE MERITS OF THE CASE WE ARE OF THE V IEW THAT THERE IS NOTHING IN ANNEX. T' LETTER OF THE CIT EXTRACTED HEREINABOVE SO AS TO CO NCLUDE THAT THE ASSESSING AUTHORITY WAS ACTING UNDER THE DICTATION OF HIS SUPERIOR. NO DOUBT, THE CIT HAS DIRECTED THE ASSESSING AUTHORITY TO INITIATE INCOME-TAX PROCEEDI NGS. BUT THE FURTHER DIRECTION WAS TO ISSUE NOTICE UNDER S. 148 AFTER RECORDING HIS REASO NS FOR THE SAME. THERE IS STILL ANOTHER DIRECTION THAT THE AO SHOULD COMPLY WITH ALL THE RE QUIREMENTS OF LAW WHILE INITIATING ACTION. THE REASSESSMENT PROCEEDINGS INITIATED BY T HE DY. CIT WAS AFTER APPLYING HIS MIND TO ALL THE RELEVANT MATERIALS AND ALSO AFTER R ECORDING THE GROUNDS OF HIS BELIEF AS ALREADY EXTRACTED HEREINABOVE. IT IS NOT EVEN REMOT ELY DISCERNIBLE FROM ANNEX. 'E' THAT THE DY. CIT WAS MECHANICALLY OBEYING THE DIRECTIONS OF HIS OFFICIAL SUPERIOR. THERE IS NOT EVEN A REFERENCE TO ANNEX. V F' LETTER. EVEN IF THERE IS ADVERTENCE IN THE REASS ESSMENT PROCEEDINGS TO THE DIRECTION OF THE SUPERIOR OFFICE R, THAT BY ITSELF WILL NOT VITIATE THE RESULTANT PROCEEDINGS AS LONG AS THE AO HAS INDEPEN DENTLY APPLIED HIS MIND TO ALL THE RELEVANT ASPECTS AND HAS ARRIVED AT THE REASONS FOR HIS BELIEF. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HAVE NO HESITATION TO CONCLUDE THAT ANNEX. 'F' LETTER HAS ONLY ALERTED THE AO OF HIS STATUTORY OBLIGATION IN THE LIGHT OF THE SUBSEQUENT TURN OF EVENTS CULMINATING IN THE GOLD BISCUIT SEIZED FROM THE ASS ESSEE HAVING BEEN ENTRUSTED TO THE IT DEPARTMENT. THE PENDENCY OF THE CRIMINAL PROCEEDING S AND THE ULTIMATE ORDER PASSED BY THE SESSIONS COURT, ETC. WERE NOT WITHIN THE KNOWLE DGE OF THE AO. THOSE SUPERVENING EVENTS WERE CONVEYED TO THE AO BY THE CIT AT WHOSE LEVEL THE LITIGATIONS WERE CONDUCTED. REMINDING AN OFFICER OF HIS STATUTORY DU TY AND DIRECTING HIM TO PROCEED IN ACCORDANCE TO LAW AFTER ARRIVING AT THE REQUISITE S ATISFACTION UNDER THE STATUTE CANNOT AMOUNT TO A DICTATION TO ACT IN A PARTICULAR WAY. T HE OFFICER TO WHOM SUCH A REMINDER IS GIVEN ALSO CANNOT BE SAID TO ABDICATE HIS FUNCTION IF HE PROCEEDS ACCORDING TO LAW UNINFLUENCED BY ANY DIRECTION FROM HIS SUPERIOR. IF THE DIRECTION BY THE CIT WAS TO REOPEN THE ASSESSMENT UNDER S. 147 OF THE ACT BY BYE-PASSI NG THE STATUTORY FORMALITIES, THAT WOULD HAVE PROBABLY AMOUNTED TO DICTATING HIS SUBOR DINATE TO ACT IN A PARTICULAR WAY THEREBY TAKING AWAY THE DISCRETION VESTED IN THE SU BORDINATE. ON THE CONTRARY, ANNEX. 'F' LETTER ONLY ASKS THE DY. CIT TO ISSUE A NOTICE OF R EASSESSMENT UNDER S. 148 OF THE ACT AND THAT TOO AFTER RECORDING THE REQUISITE GROUNDS OF BELIEF. THE DY. CIT ALSO PROCEEDED ONLY AFTER SATISFYING HIMSELF THAT THERE EXISTED AD EQUATE GROUNDS OF BELIEF TO INITIATE REASSESSMENT PROCEEDINGS. AS RIGHTLY OBSERVED BY TH E APPELLATE AUTHORITY IN ANNEX. B ORDER, THE ASSESSEE HAS BEEN ASSESSED ON THE BASIS OF THE PRESUMPTION UNDER S. 132(4A) OF THE ACT TO THE EFFECT THAT ANY VALUABLES , BOOKS OF ACCOUNT, CASH, ETC. FOUND ON A PERSON DURING A SEARCH SHALL BE DEEMED TO BE HIS OWN UNLESS PROVED OTHERWISE WITH SUFFICIENT EVIDENCE. THE PRESUMPTION UNDER S. 132(4 A) APPLIES EQUALLY TO ACTION UNDER S. 132A AND THE APPELLANT WHO WAS GIVEN SUFFICIENT OPP ORTUNITIES TO REBUT THE PRESUMPTION, FAILED TO DO SO. IT IS CLEAR FROM THE REASONS RECOR DED BY THE AO THAT HE HAD PRIMA FACIE REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THAT AS A CONSEQUENCE OF SUCH NON-DISCLOS URE, INCOME HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF S. 147 OF THE ACT. THE FACTS OF (1989) 176 ITR 352 (PAT) (SUPRA) CITED BY THE COUNSEL FOR THE ASSESSEE ARE UNIQUE. WHEN UNDER LAW THE REQUISITE BELIEF UNDER S. 147 OF THE ACT MUST BE TH AT OF THE AO, THE ITO IN THAT CASE, INSTEAD OF FORMING HIS OWN BELIEF, WAS MERELY ACTIN G AT THE BEHEST OF HIS SUPERIOR AUTHORITY. IN FACT, THE ITO WAS HOLDING THE VIEW AG AINST THE TAXABILITY OF THE ASSESSEE IN THAT CASE. LIKEWISE, IN (1983) 139 ITR 380 (MP) (SU PRA) CITED ON BEHALF OF THE ASSESSEE, IT WAS FOUND THAT THERE HAD BEEN NO OMISSION OR FAI LURE ON THE PART OF THE ASSESSEE TO ITA NO.1182/AHD /2009 M/S.PANAMA PETROCHEM LTD. VS. DCIT ASST.YEAR - 2004-05 - 12 - DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. MOREOVER, THE CIT HAD BY A LETTER DIRECTED THE ITO THAT 'IMMEDIATE AC TION SHOULD BE TAKEN UNDER S. 147' THEREBY LEAVING NO DISCRETION TO THE AO WHO WITHOUT THE BASIS OF HIS OWN INDEPENDENT SATISFACTION, WAS MECHANICALLY OBEYING THE DIRECTIO NS OF HIS SUPERIOR. BUT THAT IS NOT THE FACTUAL POSITION IN THE CASE ON HAND. 10. AFTER AN ANXIOUS CONSIDERATION OF ALL THE ASPEC TS OF THE CASE, WE ARE OF THE VIEW THAT THE TRIBUNAL MISDIRECTED ITSELF ON THE MATTER WHICH CAME UP FOR ITS CONSIDERATION. WE ANSWER THE QUESTIONS OF LAW IN FAVOUR OF THE REVENU E AND AGAINST THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER OF THE TRIBUNAL AND RESTOR E THAT OF THE CIT(A). IN THE RESULT, THIS APPEAL IS ALLOWED AS ABOVE. 8. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HON'BLE HIGH COURT OF KERALA, WE DISMISS THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 21/08/2009. SD/- SD/ - ( T.K. SHARMA ) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED 21/ 08 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD