S.Devendran, Trichy V. ITO, Trichy

ITA 1221/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6394 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1997-1998
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Reopening of assessment; Gift; Recovery proceedings; Depreciation; Search and seizure; Opportunity of being heard; Difference of opinion; Competent authority; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 133A; 246; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NOS.1218 & 1219/MDS/2017 / ASSESSMENT YEARS : 1996-97 & 1997-1998 SHRI. M.R. PRASAD, NO.25, I.A.S. NAGAR, THIRUVERUMBUR, TRICHY 620 014. [PAN AAKPP 4768N] VS. THE INCOME TAX OFFICER, WARD IV(1) TRICHY. ./I.T.A. NOS.1220 & 1221/MDS/2017 / ASSESSMENT YEARS : 1996-97 & 1997-1998 SHRI. S. DEVENDRAN, NO.25, I.A.S. NAGAR, THIRUVERUMBUR, TRICHY 620 014. [PAN ABSPD 3194P] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE IV, TRICHY. ./I.T.A. NOS.1222 & 1223/MDS/2017 / ASSESSMENT YEARS : 1996-97 & 1997-1998 SHRI. M.R. PRAKASH, NO.25, I.A.S. NAGAR, THIRUVERUMBUR, TRICHY 620 014. [PAN AAKPP 4767D] VS. THE INCOME TAX OFFICER, WARD IV(1) TRICHY ( !' / APPELLANT) ( #$ !' /RESPONDENT) ITA NOS.1218 TO 1223/2017 :- 2 -: / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADV. /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 10-08-2017 !' /DATE OF PRONOUNCEMENT : 17-08-2017 % / O R D E R APPEALS FILED BY THE ASSESSEE SHRI. M.R. PRASAD AR E DIRECTED AGAINST AN ORDER DATED 31.03.2017 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-2, TIRUCHIRAPPALLI; APPEALS OF THE ASSE SSEE SHRI. S. DEVENDRAN ARE DIRECTED AGAINST ORDERS DATED 17.03.2 017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, TIRUCHIRAPP ALLI AND APPEALS OF THE ASSESSEE SHRI. M.R. PRAKASH ARE DIRECTED AGA INST ORDERS DATED 29.03.2017 OF INCOME TAX (APPEALS)-2, TIRUCHIRAPPAL LI. SINCE ALL THESE APPEALS EMANATE FROM SAME SET OF FACTS, THESE ARE D ISPOSED OFF THROUGH A CONSOLIDATED ORDER. 2. THERE WAS A SURVEY CONDUCTED U/S. 133A OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT) ON 20.12.2002 IN T HE BUSINESS PREMISES OF THE FOLLOWING FIRMS WHICH WERE ENGAGED IN QUARRY OF BLUE METAL. 1. SRI SWETHA INDUSTRIES. 2. SWETHA TRANSPORTS. 3. SRI SWETHA CONSTRUCITONS 4. SRI MANJUNATHAN INDUSTRIES 5. SRI MANJUNATHAN TRANSPORTS ITA NOS.1218 TO 1223/2017 :- 3 -: 6. BALAJI ROADLINES 7. BALAJI INDUSTRIES. 8. SWATHI CONSTRUCTION THE ABOVE FIRMS WERE CONTROLLED BY FAMILY MEMBERS O F ONE LATE SHRI. M.R PRASAD AND THE ASSESSEES IN THESE APPEALS ARE SOME SUCH FAMILY MEMBERS. LD. ASSESSING OFFICER ISSUED NOTICES U/S. 148 OF THE ACT TO THESE ASSESSEES FOR REOPENING THE ASSESSMENTS FOR T HE IMPUGNED ASSESSMENT YEARS. THE ASSESSEES THEREUPON REQUES TED THE LD. ASSESSING OFFICER TO FURNISH THE REASONS FOR SUCH R EOPENING. IT SEEMS SUCH REASONS WERE NOT SUPPLIED TO THE ASSESSEE. TH E ASSESSMENT WAS THEREAFTER COMPLETED CONSIDERING THE RETURNS FILED BY THE ASSESSEES PURSUANT TO SUCH NOTICE. ADDITIONS WERE MADE FOR OP ENING CASH BALANCE AS ON 01.04.1995 FOR ASSESSMENT YEAR 1996-9 7, AND ADDITIONS WERE MADE FOR INVESTMENTS MADE BY THE ASSESSEES IN A FIRM CALLED M/S. NATCHIYAR INDUSTRIAL MAKES FOR A.Y. 1997-9 8. ALL THE ASSESSEES MOVED IN APPEALS BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHEREIN THEY CHALLENGED THE VALIDITY OF THE REOPENI NG FOR WANT OF SUPPLY OF REASONS. IT SEEMS REASONS FOR REOPENING W ERE GIVEN TO THE ASSESSEES DURING THE COURSE OF PROCEEDINGS BEFORE L D. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) HELD THAT REASONS CITED BY THE LD. ASSESSING OFFICE R WERE GOOD ENOUGH FOR A REOPENING. THEREUPON ALL THE ASSESSEES MOVE D FURTHER APPEALS ITA NOS.1218 TO 1223/2017 :- 4 -: BEFORE THIS TRIBUNAL, RELYING ON THE JUDGMENT OF H ONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT (INDIA) LTD VS. ITO 259 ITR 19. THIS TRIBUNAL IN APPEALS OF THE ASSESSEES NUMBERED ITA 1981 TO 1988/MDS/2007 VIDE ITS ORDER DATED 24 TH OCTOBER, 2008 HELD AS UNDER AT PARA 5 & 6 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND TH AT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF K. S. SURESH V. DCIT (SUPRA) HAS HELD AS UNDER:- IT WAS ADMITTED THAT THE OBJECTIONS THE PETITIONERS MODE ON DECEMBER 2004, FEBRUARY 10, 2005 AND FEBRUARY 18, 2005 WERE NOT CONSIDERED BY THE INCOME-TAX AUTHORITIES , IT WAS THAT THE INCOME-TAX AUTHORITIES HAD COMMITTED AN ERROR APPARENT ON THE FACT OF THE RECORD BY PRE- DETERMINING THE ISSUE, HOLDING THAT IT WAS A FIT C ASE FOR LEVY OF PENALTY UNDER SECTION 271(1) ( C) INCOME-TAX ACT, EVEN WHILE GIVING OPPORTUNITY TO THE PETITIONER IN PROCEEDINGS DATED FEBRUARY 10, 2005, TO SUBMIT THEIR OBJECTIONS ON OR BEFORE FEBRUARY, 2005, WITH REGARD TO REOPENING OF THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001-01 AND BEFORE DECIDING THE MATTER ON THE MERITS. THE NOTICES OF REASSESSMENT AS WELL AS CONSEQUENTIAL PROCEEDINGS OF PROVISIONAL ATTACHMENT DATED NOVEMBER, 25 2004 ISSUED UNDER SECTION 281B WERE NOT VALID AND WERE LIABLE TO BE QUASHED. WE FURTHER FIND THAT THE HON'BLE SUPREME COURT IN T HE CASE OF GKN DRIVESHAFT (INDIA) LTD. V. ITO (SURPA) HAS HELD AS UNDER :- WHEN A NOTICE UNDER SEC.148 OF THE I.T ACT, 1961 IS ISSUED THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE THE RETURN AN D. IF HE SO DESIRES TO SEEK REASONS FOR ISSUEING THE NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WIT HIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICE OF ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND ITA NOS.1218 TO 1223/2017 :- 5 -: THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER ' 6. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS CASE A ND REMIT THE MATTER TO THE LD. ASSESSING OFFICER WITH A DIRE CTION TO DEAL WITH THE OBJECTIONS OF THE ASSESSEE IN RESPECT OF R EOPENING OF THE ASSESSMENT AND THEN PROCEED TO FRAME THE REASSESSME NT. WE MAKE IT CLEAR THAT WE ARE NOT COMMENTING ON THE MER ITS OF THE CASE AND THE ASSESSING OFFICER SHOULD DECIDE THE SA ME IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. THEREAFTER PROCEEDINGS WERE TAKEN UP AFRESH BY THE LD. ASSESSING OFFICER. ASSESSEES WERE SUPPLIED WITH T HE REASONS FOR REOPENING WHICH READ AS UNDER:- 1 NAME AND ADDRESS OF THE ASSESSEE : 1. MR. S. DEVEMNDRAN 2. MRS. SANTHAKUMARI 3. MRS.MANJULA. 4. MRS. PUSHPA 5. MR. M.R. PRASAD 6. MR. M.R. PRAKASH 7. MRS. ARUN 8. M/S. SRI MANJUNATHAN INDUSTRIES 9. LATE MUNIRATHINAM NAIDU, 25, I.A.S. NAGAR, 9. D. NAGAR THIRUERUMBUR, TRICHY 13 2 PERMANENT ACCOUNTANT NUMBER : 1. ABSPD3194P 2. NOT AVAILABLE. 3. ACMPM0805B 4. ACZPP6938R 5. AAKPP4767D 6. AAKPP4768N 7. NOT AVAILABLE 8. AALFS9108E 9. 41-PM-267 3 STATUS : S. NO. 1 TO 7 INDIVIDUAL, 8 FIRM. 4 DISTRICT/CIRCLE/ RANGE : CITY WARD IV(1), TRICHY 5 ASSESSMENT YEAR IN RESPECT OF WHICH IT IS PROPOSED TO ISSUE : 96 - 97, 97 - 98 ITA NOS.1218 TO 1223/2017 :- 6 -: NOTI CE U/S. 148 6 THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT : LIKELY TO EXCEED L1 LAKH 7 WHETHER THE PROVISIONS OF SEC.147 (A) OR 147(B) ARE APPLICABLE OR BOTH THE SECTIONS ARE APPLICABLE : 147(A) 8 WHETHER THE ASSESSMENT IS PROPOSED TO BE MADE FOR THE FIRST TIME? IF, REPLY IS IN THE AFFIRMATIVE : YES A WHETHER ANY VOLUNTARY RETURN HAS ALREADY BEEN MADE : NO B IF SO, THE DATE OF FILING THE SAID RETURN. : 9 IF THE ANSWER TO ITEM NO.8 IS IN THE NEGATIVE, PLEASE STATE : A THE I NCOME ORIGINALLY ASSESSED : B WHETHER IT IS A CASE OF UNDER - ASSESSMENT AT TOO LOW RATE, ASSESSMENT WHICH HAS BEEN MADE, THE SUBJECT OF EXCESSIVE RELIEF OR ALLOWING OF EXCESSIVE RELIEF DEPRECIATION. : 10 WHETHER THE PROVISIONS OF SEC150(1) ARE APPLICABLE. IF THE REPLY IS IN HE AFFIRMATIVE THE RELEVANT FACTS MAY BE STATED AGAINST ITEM NO.11 AND MAY ALSO BE BROUGHT OUT THAT THE PROVISIONS OF SECTION 150(1) WOULD NOT STAND IN THE WAY FOR INITIATING : NO. 11 ASSESSING OFFICERS REMARK : IN THE CASE AT SL.NO.8, A SURVEY U/S. 133A WAS CONDUCTED ON 20.12.2002. THE INDIVIDUAL LISTED OUT IN SL. NUMBERS 1 TO 7 ARE ALL PARTNERS IN DIFFERENT FI RMS CONNECTED WITH THE SURVEY CONDUCTED ON 20.12.2002. THOUGH RETURNS HAVE BEEN FILED FOR THE OTHER FIRMS, RETURNS FROM THE INDIVIDUALS WERE NOT FILED TILL 27.03.2003. AS ALL THE PERSONS ARE LIKELY TO HAVE INCOME EXCEEDING L1 LAKH DURING THE ASSESSMENT YEARS 1996- 97 AND 1997-98, THE ASSESSMENTS MAY BE REOPENED U/S. ITA NOS.1218 TO 1223/2017 :- 7 -: 147 FOR BOTH THE ASSESSMENT YEARS BY VIRTUE OF SECT ION 149(1) (B) OF THE ACT. I SOLICIT ADDITIONAL COMMIS SIONERS APPROVAL IN THIS REGARD. ASSESSEES RAISED OBJECTIONS TO THE REASONS WHEREIN IT WAS STATED THAT RETURNS WERE FILED BY THE ASSESSEES PRIOR TO THE IS SUE OF THE NOTICES UNDER SECTION 148 OF THE ACT, AND POINTING OUT THA T LD. ASSESSING OFFICER WAS NOT SURE WHETHER INCOME ESCAPED ASSESSM ENT WAS MORE THAN L1,00,000/-. AS PER THE ASSESSEES, THE REOPE NING WAS PURELY BASED ON PRESUMPTIONS AND REASONS RECORDED WERE VAG UE. ASSESSEES ALSO ALLEGED THAT THERE WAS NO LIVE LINK BETWEEN RE ASONS RECORDED AND FORMATION OF BELIEVE FOR ESCAPEMENT OF INCOME. AS PER THE ASSESSEES, JUST BECAUSE THERE WAS SURVEY IN THE FIRMS IN WHICH ASSESSEES WERE PARTNERS WOULD NOT MEAN THAT ASSESSEES IN THEIR IN DIVIDUAL CAPACITY HAD INCOME EXCEEDING L1,00,000/-. HOWEVER, THE LD. ASSESSING OFFICER DID NOT ACCEPT THE ABOVE CONTENTIONS. ACCORDING TO HIM, SEC. 147 OF THE ACT AUTHORIZED THE LD. AO TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX, IF HE HAD CAUSE OR JUSTIFICATION TO KNOW O R SUPPOSE ESCAPEMENT OF INCOME IN THE HANDS OF THE PARTNERS. FURTHER, AS PER LD. ASSESSING OFFICER, THOUGH RETURNS WERE FILED BY THE ASSESSEES FOR ASSESSMENT YEARS 1991 -92 TO 1997-98 PRIOR TO THE D ATE OF SURVEY, THESE RETURNS WERE ALL OUT OF TIME, AND NON-EST IN THE EYES OF LAW. ITA NOS.1218 TO 1223/2017 :- 8 -: 4. THEREAFTER LD. ASSESSING OFFICER WENT THROUGH TH E CASH FLOW STATEMENTS FILED BY THE ASSESSEES DURING THE COURSE OF RE-ASSESSMENT. LD. ASSESSING OFFICER BASED ON THE CLOSING BALANCE AS ON 31.03.1997 SHOWN BY THE ASSESSEES IN THEIR CASH FLOW STATEMEN TS WORKED BACK TO ARRIVE AT THE OPENING CASH BALANCE AS ON 01.04.1995 . FOR THIS PURPOSE, THE LD. ASSESSING OFFICER, DEDUCTED FROM T HE CLOSING CASH AS ON 31.03.1997 SHOWN BY THE ASSESSEES, THE INCOME R ETURNED IN THE RETURNS FILED BY THE ASSESSEES FOR ASSESSMENT YEAR S 1991-92 TO 1997- 98 AS ALSO AGRICULTURAL INCOME SHOWN BY IT FOR THES E YEARS. AS PER LD. ASSESSING OFFICER, ASSESSEES COULD NOT FURNISH ANY COLLABORATIVE EVIDENCE FOR THE CLOSING BALANCE SHOWN BY THEM. F URTHER, AS PER LD. ASSESSING OFFICER ASSESSEES COULD NOT FURNISH DETAI LS OF DRAWINGS IN THE EARLIER YEARS, IF ANY, FROM THE FIRMS IN WHICH ASSESSEES WERE PARTNERS AND HENCE, COULD NOT JUSTIFY THE EXISTENC E OF THE OPENING BALANCE CASH AS ON 01.04.1995. OPENING CASH BALANCE AS ON 01.04.1995 WAS ADDED AS UNEXPLAINED INCOME FOR ASSE SSMENT YEAR 1996-97. FOR ASSESSMENT YEAR 1997-98, ADDITIONS WE RE MADE FOR INVESTMENTS MADE BY THE ASSESSEES IN M/S. NATCHIYAR INDUSTRIAL MAKES. AS PER LD. ASSESSING OFFICER, ASSESSEES COULD NOT S HOW SOURCE FOR SUCH INVESTMENTS. SUMMARY OF THE ADDITIONS MADE FOR ASS ESSMENT YEARS 1996-97 AND 1997-98 FOR EACH OF THE ASSESSEES WERE AS UNDER:- ITA NOS.1218 TO 1223/2017 :- 9 -: ASSESSMENT YEAR NAME ADDITION AMOUNT REASONS FOR ADDITION 1996 - 97 M.R. PRASAD 3,55,030 OPENING BALANCE AS ON 01.04.1995 1997 - 98 M.R. PRA SAD 1,68,750 27,364 INVESTMENTS IN M/S. NATCHIYAR INDUSTRIAL MAKES. SALARY AND INTEREST FROM THE FIRM M/S. NATCHIYAR INDUSTRIAL MAKES. 1996 - 97 S. DEVENDRAN 2,76,000 OPENING BALANCE AS ON 01.04.1995 1997 - 98 S. DEVENDRAN 1,68,750 25,233 INVESTM ENTS IN M/S. NATCHIYAR INDUSTRIAL MAKES. SALARY AND INTEREST FROM M/S. NATCHIYAR INDUSTRIAL MAKES. 1996 - 97 M.R. PRAKASH 1,81,330 OPENING BALANCE AS ON 01.04.1995 1997 - 98 M.R. PRAKASH 1,68,750 27,362 INVESTMENTS IN M/S. NATCHIYAR INDUSTRIAL MAKES. SALARY AND INTEREST FROM M/S. NATCHIYAR INDUSTRIAL MAKES. 5. AGGRIEVED, ASSESSEES MOVED IN APPEALS BEFORE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). APART FROM CH ALLENGING THE MERITS OF THE ADDITIONS, ASSESSEES ALSO CHALLENGED THE VALIDITY OF THE REOPENING. AS PER ASSESSEES, THERE WAS NO MATERI AL GATHERED AT THE ITA NOS.1218 TO 1223/2017 :- 10 -: TIME OF SURVEY ON 20.12.2002 FROM THE PREMISES OF THE FIRMS, WHICH COULD SHOW THAT THERE WAS ANY ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEES. ASSESSEES ALSO RAISED CONTENTIONS SIMILAR TO WHAT WERE TAKEN BY THEM BEFORE LD. ASSESSING OFFICER. 6. VIZ-A-VIZ, MERITS OF THE ADDITIONS, ASSESSEES S TATED THAT OPENING CASH BALANCE AS ON 01.04.1995 COULD NOT BE CONSIDERED FOR ADDITION FOR ASSESSMENT YEAR 1996-97. FURTHER AS PE R ASSESSEES THEY HAD CONFIRMATION LETTERS FROM CLOSE RELATIVES WHO H AD GIVEN MONEY, APART FROM THEIR OWN INCOME, RETURNED BY THEM IN TH E RETURNS FILED FOR EARLIER ASSESSMENT YEARS, FOR JUSTIFYING THE OPENIN G CASH. 7. VIZ-A-VIZ ADDITIONS MADE FOR INVESTMENT IN M/S. NATCHIYAR INDUSTRIAL MAKES, CONTENTION OF THE ASSESSEES WAS T HAT OPENING CASH BALANCE ONCE ACCEPTED, THERE WAS NO SCOPE FOR SUCH ADDITIONS. HOWEVER, IT SEEMS ASSESSEES DID NOT PRESS THEIR GR OUND AGAINST THE ADDITIONS MADE FOR SALARY AND INTEREST RECEIVED FRO M M/S. NATCHIYAR INDUSTRIAL MAKES. 8. LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER G OING THROUGH THE SUBMISSIONS OF THE ASSESSEE, HELD THA T THE REOPENING FOR ASSESSMENT YEAR 1996-97 WERE VALID SINCE EVIDENCE OBTAINED DURING THE SURVEY OPERATIONS INDICATED INVESTMENTS MADE BY THE ASSESSEES IN ITA NOS.1218 TO 1223/2017 :- 11 -: GRANITE QUARRY BUSINESS AND THERE WERE NO CASH WIT HDRAWALS FOR MEETING THE HOUSEHOLD EXPENSES. AS PER LD. COMMISS IONER OF INCOME TAX (APPEALS) ASSESSEES HAD SHOWN ONLY VERY LITTLE INCOME FOR THE EARLIER YEARS. AS FOR ASSESSMENT YEAR 1997-98, LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT EVIDENCE OBTAINE D DURING THE SURVEY REVEALED SALARY AND INTEREST INCOME RECEIVED FROM M/S. NATCHIYAR INDUSTRIAL MAKES APART FROM THEIR UNACCOU NTED INVESTMENTS IN SUCH FIRM. HE ALSO NOTED THAT LD. ASSESSING OF FICER HAD RECEIVED APPROVAL FROM THE COMPETENT AUTHORITY AS PER PROVIS IONS U/S. 153(1) OF THE ACT BEFORE RESORTING TO THE REOPENING. HE THUS HELD THAT THE REOPENINGS WERE VALIDLY DONE. AS FOR THE ADDITIONS MADE FOR CASH BALANCE ON 01.04.1995, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ASSESSEE COULD NOT SHOWN THE SOURCE FOR O PENING CASH BALANCE, SINCE THE RETURNS FOR EARLIER YEARS FILED BY THE ASSESSEES DISCLOSED ONLY MEAGRE INCOME. FURTHER, AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) CLAIM OF THE ASSESSEE THAT TH EY HAD RECEIVED MONEY FROM CLOSE RELATIVES AS LOANS/GIFTS WERE ALS O NOT SUBSTANTIATED. THUS, HE CONFIRMED THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEES FOR THE IMPUGNED ASSESSMENT YEARS. 9. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STR ONGLY ASSAILING THE REOPENING DONE FOR THE IMPUGNED ASSES SMENT YEARS ITA NOS.1218 TO 1223/2017 :- 12 -: SUBMITTED THAT REASONS INTIMATED TO ASSESSEE INDI CATED AN ASSUMPTION TAKEN BY THE LD. ASSESSING OFFICER THAT INCOME OF THE ASSESSEES HAD EXCEEDED L1,00,000/- FOR THE IMPUGNED ASSESSMENT YEARS. AS PER LD. AUTHORISED REPRESENTATIVE IT WAS AN ADMITTED POSITION THAT RETURNS WERE FILED BY THOSE ASSESSEES FOR IMPUGNED ASSESSMENT YEARS BEFORE 27.03.2003. HENCE, ACCORDI NG TO HIM, OBSERVATION OF THE LD. ASSESSING OFFICER THAT ASSE SSEES HAD NOT FILED RETURNS TILL 27.03.2003, APPEARING IN THE REASONS, WAS INCORRECT. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE BELA TED RETURNS COULD NOT BE CONSIDERED AS EQUAL TO A CASE OF NON-FILI NG OF RETURNS. FURTHER, ACCORDING TO HIM, THERE WAS NO LIVE LINK BETWEEN SURVEY CONDUCTED IN THE PREMISES OF THE FIRM ON 20.12.2012 AND THE REASONS MENTIONED BY THE LD. ASSESSING OFFICER. ACCORDING TO HIM, REOPENING WAS PURELY BASED ON PRESUMPTIONS AND THE REQUIREMEN T OF LAW WAS NOT MET. RELYING ON THE JUDGMENT OF HONBLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD 331 ITR 0236 AN D THAT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. MARTECH PERIPHERALS PVT LTD VS. DCIT (W.P. NO.10710 OF 2014, DATED 04.04.2 017), LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT UNLESS TH ERE WAS A CLEAR INDICATION AS TO WHAT WAS THE INCOME WHICH ESCAPED ASSESSMENT THERE COULD BE NO VALID REASSESSMENT. ITA NOS.1218 TO 1223/2017 :- 13 -: 10. ON MERITS SUBMISSION OF THE LD. AUTHORISED REP RESENTATIVE WAS THAT OPENING CASH BALANCE AS ON 01.04.1995 COUL D NOT BE CONSIDERED FOR ADDITION FOR ASSESSMENT YEAR 1996-97 , ESPECIALLY WHEN ASSESSEES HAD FILED RETURNS FOR PRECEDING VERY MANY ASSESSMENT YEARS. AS PER LD. AUTHORISED REPRESENTATIVE IF THE OPENING CASH BALANCE WAS ACCEPTED THERE WAS NO CASE FOR ANY ADDITION FOR BOT H THE ASSESSMENT YEARS. 11. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE ST RONGLY SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW SUBM ITTED THAT LD. ASSESSING OFFICER HAD CLEARLY GIVEN THE REASONS FOR REOPENING. AS PER LD. DEPARTMENTAL REPRESENTATIVE EARLIER RETURNS FI LED BY THE ASSESSEES WERE ALL OUT OF TIME AND HENCE COULD NOT BE CONSID ERED AS VALID RETURNS UNDER THE EYE OF LAW. THUS, ACCORDING TO H IM, EXPLANATION (2) TO SEC. 147 OF THE ACT COULD BE APPLIED AND LD. ASS ESSING OFFICER WAS JUSTIFIED IN DEEMING THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. FURTHER, AS PER LD. DEPARTMENTAL REPRE SENTATIVE ASSESSEES COULD NOT FILE ANY EVIDENCE FOR THE OPEN ING CASH BALANCE AS ON 01.04.1995 AND THEREFORE THE ADDITIONS WERE RIGH TLY DONE. 12. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. REASONS FOR REOPEN ING FURNISHED TO THE ASSESSEES HAS BEEN REPRODUCED AT PARA 3 ABOVE. IT HAS NOT BEEN ITA NOS.1218 TO 1223/2017 :- 14 -: DISPUTED BY THE REVENUE THAT ASSESSEES HAD FILED TH E RETURNS FOR THE IMPUGNED ASSESSMENT YEARS PRIOR TO THE DATE OF SURV EY. CONTENTION OF THE REVENUE IS THAT THESE RETURNS WERE FILED OUT OF TIME AND HENCE NON-EST IN THE EYES OF LAW. BE THAT AS IT MAY, TH ERE IS NO DISPUTE THAT THE EARLIER RETURNS EVEN IF CONSIDERED AS VALID, W ERE ONLY SUBJECT TO A PROCESSING U/S. 143(1) OF THE ACT. THE QUESTION OF VALIDITY OF A REOPENING WHEN THE ORIGINAL RETURN WAS ONLY SUBJECT TO A PROCESSING U/S. 143(1) OF THE ACT, HAD COME UP BEFORE THE HON BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD 291 ITR 500. THEIR LORDSHIP HAS HELD AS UNDER AT PARA 12 TO 18 OF THE JUDGMENT:- 12. WHAT WERE PERMISSIBLE UNDER THE FIRST PROVISO T O SECTION 143(1)(A) TO BE ADJUSTED WERE, (I) ONLY APP ARENT ARITHMETICAL ERRORS IN THE RETURN, ACCOUNTS OR DOCU MENTS ACCOMPANYING THE RETURN, (II) LOSS CARRIED FORWARD, DEDUCTION, ALLOWANCE OR RELIEF, WHICH WAS PRIMA FAC IE ADMISSIBLE ON THE BASIS 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, PRIMA FACIE INADMISSIBLE, WERE TO BE RECTIFIED/ALLOWED/ DISALLOWED. WHAT WAS PERMISSI BLE WAS CORRECTION OF ERRORS APPARENT ON THE BASIS OF T HE DOCUMENTS ACCOMPANYING THE RETURN. THE ASSESSING OFFICER HAD NO AUTHORITY TO MAKE ADJUSTMENTS OR ADJUDICATE UPON ANY DEBATABLE ISSUES. IN OTHER WORD S, THE ASSESSING OFFICER HAD NO POWER TO GO BEHIND THE RET URN, ACCOUNTS OR DOCUMENTS, EITHER IN ALLOWING OR IN DIS ALLOWING DEDUCTIONS, ALLOWANCE OR RELIEF. 13. ONE THING FURTHER TO BE NOTICED IS THAT INTIMAT ION UNDER SECTION 143(1)(A) IS GIVEN WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 143(2). THOUGH TECHNICALLY TH E INTIMATION ISSUED WAS DEEMED TO BE A DEMAND NOTICE ISSUED UNDER SECTION 156, THAT DID NOT PER SE PRECL UDE THE ITA NOS.1218 TO 1223/2017 :- 15 -: RIGHT OF THE ASSESSING OFFICER TO PROCEED UNDER SEC TION 143(2). THAT RIGHT IS PRESERVED AND IS NOT TAKEN AW AY. BETWEEN THE PERIOD FROM APRIL 1, 1989, AND MARCH 31 , 1998, THE SECOND PROVISO TO SECTION 143(1)(A), REQU IRED THAT WHERE ADJUSTMENTS WERE MADE UNDER THE FIRST PR OVISO TO SECTION 143(1)(A), AN INTIMATION HAD TO BE SENT TO THE ASSESSEE NOTWITHSTANDING THAT NO TAX OR REFUND WAS DUE FROM HIM AFTER MAKING SUCH ADJUSTMENTS. WITH EFFECT FROM APRIL 1, 1998, THE SECOND PROVISO TO SECTION 143(1) (A) WAS SUBSTITUTED BY THE FINANCE ACT, 1997, WHICH WAS OPE RATIVE TILL JUNE 1, 1999. THE REQUIREMENT WAS THAT AN INTI MATION WAS TO BE SENT TO THE ASSESSEE WHETHER OR NOT ANY ADJUSTMENT HAD BEEN MADE UNDER THE FIRST PROVISO TO SECTION 143(1) AND NOTWITHSTANDING THAT NO TAX OR I NTEREST WAS FOUND DUE FROM THE ASSESSEE CONCERNED. BETWEEN APRIL 1, 1998, AND MAY 31, 1999, SENDING OF AN INTI MATION UNDER SECTION 143(1)(A) WAS MANDATORY. THUS, THE LEGISLATIVE INTENT IS VERY CLEAR FROM THE USE OF TH E WORD 'INTIMATION' AS SUBSTITUTED FOR 'ASSESSMENT' THAT T WO DIFFERENT CONCEPTS EMERGED. 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 TH E INFORMATION GIVEN IN THE RETURN COULD BE MADE BY TH E ASSESSING OFFICER. THE REASON IS THAT UNDER SECTION 143(1)(A) NO OPPORTUNITY IS GRANTED TO THE ASSESSEE AND THE ASSESSING OFFICER PROCEEDS ON HIS OPINION ON TH E BASIS OF THE RETURN FILED BY THE ASSESSEE. THE VERY FACT THAT NO OPPORTUNITY OF BEING HEARD IS GIVEN UNDER S ECTION 143(1)(A) INDICATES THAT THE ASSESSING OFFICER HAS TO PROCEED ACCEPTING THE RETURN AND MAKING THE PERMISS IBLE ADJUSTMENTS ONLY. AS A RESULT OF INSERTION OF THE EXPLANATION TO SECTION 143 BY THE FINANCE (NO. 2) A CT OF 1991 WITH EFFECT FROM OCTOBER 1, 1991, AND SUBSEQUE NTLY WITH EFFECT FROM JUNE 1, 1994, BY THE FINANCE ACT, 1994, AND ULTIMATELY OMITTED WITH EFFECT FROM JUNE 1, 199 9, BY THE EXPLANATION AS INTRODUCED BY THE FINANCE (NO. 2 ) ACT OF 1991 AN INTIMATION SENT TO THE ASSESSEE UNDER SE CTION 143(1)(A) WAS DEEMED TO BE AN ORDER FOR THE PURPOSE S OF SECTION 246 BETWEEN JUNE 1, 1994 AND MAY 31, 1999, AND UNDER SECTION 264 BETWEEN OCTOBER 1, 1991, AND MAY 31, 1999. IT IS TO BE NOTED THAT THE EXPRESSIONS 'INTIM ATION' AND 'ASSESSMENT ORDER' HAVE BEEN USED AT DIFFERENT PLACES. THE CONTEXTUAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS HAS TO BE UNDERSTOOD IN THE CONTEXT THE EXPRESSIONS ARE USED. ASSESSMENT IS USED AS MEANING SOMETIMES 'THE COMPUTATION OF INCOME', SOMETIMES 'T HE DETERMINATION OF THE AMOUNT OF TAX PAYABLE' AND ITA NOS.1218 TO 1223/2017 :- 16 -: SOMETIMES 'THE WHOLE PROCEDURE LAID DOWN IN THE ACT FOR IMPOSING LIABILITY UPON THE TAX PAYER'. IN THE SCHE ME OF THINGS, AS NOTED ABOVE, THE INTIMATION UNDER SECTIO N 143(1)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSES SMENT. THE DISTINCTION IS ALSO WELL BROUGHT OUT BY THE STA TUTORY PROVISIONS AS THEY STOOD AT DIFFERENT POINTS OF TIM E. UNDER SECTION 143(1)(A) AS IT STOOD PRIOR TO APRIL 1, 198 9, THE ASSESSING OFFICER HAD TO PASS AN ASSESSMENT ORDER I F HE DECIDED TO ACCEPT THE RETURN, BUT UNDER THE AMENDED PROVISION, THE REQUIREMENT OF PASSING OF AN ASSESSM ENT ORDER HAS BEEN DISPENSED WITH AND INSTEAD AN INTIMA TION IS REQUIRED TO BE SENT. VARIOUS CIRCULARS SENT BY T HE CENTRAL BOARD OF DIRECT TAXES SPELL OUT THE INTENT OF THE LEGISLATURE, I.E., TO MINIMIZE THE DEPARTMENTAL WOR K TO SCRUTINIZE EACH AND EVERY RETURN AND TO CONCENTRATE ON SELECTIVE SCRUTINY OF RETURNS. THESE ASPECTS WERE HIGHLIGHTED BY ONE OF US (D. K. JAIN J.) IN APOGEE INTERNATIONAL LIMITED V. UNION OF INDIA [1996] 220 ITR 248 (DELHI). IT MAY BE NOTED ABOVE THAT UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED SECTION 143(1), WITH EFFEC T FROM JUNE 1, 1999, EXCEPT AS PROVIDED IN THE PROVISION I TSELF, THE ACKNOWLEDGMENT OF THE RETURN 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 N OT DONE BY ANY ASSESSING OFFICER, BUT MOSTLY BY MINISTERIAL STAFF. CAN IT BE SAID THAT ANY 'ASSESSMENT' IS DONE BY THE M ? THE REPLY IS AN EMPHATIC 'NO'. THE INTIMATION UNDER SECTION 143(1)(A) WAS DEEMED TO BE A NOTICE OF DEMA ND UNDER SECTION 156, FOR THE APPARENT PURPOSE OF MAKI NG MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDIC ATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. AN D NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVI SION. THEREFORE, THERE BEING NO ASSESSMENT UNDER SECTION 143(1)(A), THE QUESTION OF CHANGE OF OPINION, AS CONTENDED, DOES NOT ARISE. 14. ADDITIONALLY, SECTION 148 AS PRESENTLY STANDS I S DIFFERENTLY COUCHED IN THE LANGUAGE FROM WHAT WAS E ARLIER THE POSITION. PRIOR TO THE SUBSTITUTION BY THE DIRE CT TAX LAWS (AMENDMENT) ACT, 1987, THE PROVISION READ AS FOLLOWS : '148. ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT.(1) BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE CONTAINING ALL OR ITA NOS.1218 TO 1223/2017 :- 17 -: ANY OF THE REQUIREMENTS WHICH MAY BE INCLUDED IN A NOTICE UNDER SUB-SECTION (2) OF SECTION 139 ; AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF THE NOTICE WERE A NOTICE ISSUED UNDER THAT SUB-SECTION. (2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO.' 15. SECTION 147 PRIOR TO ITS SUBSTITUTION BY THE DI RECT TAX LAWS (AMENDMENT) ACT, 1987, STOOD AS FOLLOWS : '147. INCOME ESCAPING ASSESSMENT.IF (A) THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT, BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR TO THE ASSESSING OFFICER OR TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR HIS ASSESS MENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR, OR (B) NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTIONED IN CLAUSE (A) ON THE PART OF THE ASSESSEE, THE ASSESSING OFFICER HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT 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 INCOME OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HERE AFTER IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR). EXPLANATION 1.FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR ITA NOS.1218 TO 1223/2017 :- 18 -: (B) WHERE SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR (C) WHERE SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT OR UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922) ; OR (D) WHERE EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN COMPUTED. EXPLANATION 2.PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THIS SECTION.' 16. SECTION 147 AUTHORISES AND PERMITS THE ASSESSIN G OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD ME AN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HA S CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON T O BELIEVE THAT AN 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. THE FUNCTION OF THE ASSESSI NG OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUD E FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS T O TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENT RAL PROVINCES MANGANESE ORE CO. LTD. V. ITO [1991] 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147 (A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILMEN T OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIA L. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABL ISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELE VANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WO ULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCER N AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BEL IEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJEC TIVE ITA NOS.1218 TO 1223/2017 :- 19 -: SATISFACTION (SEE ITO V. SELECTED DALURBAND COAL CO . P. LTD. [1996] 217 ITR 597 (SC) ; RAYMOND WOOLLEN MILL S LTD. V. ITO [1999] 236 ITR 34 (SC). 17. THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITU TED WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTIONS 14 8 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OL D PROVISIONS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDIC TION UNDER SECTION 147(A) TWO CONDITIONS WERE REQUIRED T O BE SATISFIED : FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEME NT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 1 47 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. I T IS, HOWEVER, TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAI N PROVISION AND NOT THE PROVISO. 18. SO LONG AS THE INGREDIENTS OF SECTION 147 ARE F ULFILLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDIN G UNDER SECTION 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERL ESS TO INITIATE REASSESSMENT PROCEEDINGS EVEN WHEN INTIMAT ION UNDER SECTION 143(1) HAD BEEN ISSUED. THUS WHERE A RETURN WAS SUBJECT ONLY TO A PROCES SING U/S. 143(1) OF THE ACT, ONLY ONE CONDITION HAS TO BE SATISFIED F OR A VALID REOPENING. SUCH CONDITION IS THAT LD. ASSESSING OFFICER HAS C AUSE OR JUSTIFICATION ITA NOS.1218 TO 1223/2017 :- 20 -: TO KNOW OR SUPPOSE THAT ASSESSEE HAD INCOME ESCAPI NG ASSESSMENT. ON THE TOUCH-STONE OF ABOVE LAW LAID DOWN BY HONBL E APEX COURT, WE NEED TO MAKE AN ANALYSIS OF THE REASONS CITED BY TH E LD. ASSESSING OFFICER FOR REOPENING THE ASSESSMENTS FOR THE IMPU GNED ASSESSMENT YEARS. WHAT I FIRST NOTICE IS THAT LD. ASSESSING O FFICER WAS UNDER A COMPLETELY WRONG IMPRESSION THAT ASSESSEES HAD NOT FILED ANY RETURNS TILL 27.03.2003. MAY BE RETURNS FILED WERE BELATED, BUT THIS BY ITSELF WOULD NOT TRANSLATE TO A SITUATION WHERE ASSESSEES HAD NOT FILED ANY RETURNS. AS PER THE LD. ASSESSING OFFICER ASSESS EES WERE PARTNERS IN DIFFERENT CONCERNS AND THEY WERE LIKELY TO HAVE INC OME EXCEEDING L1,00,000/-. CAN WE SAY THAT BEING PARTNER IN A FIR M IS A REASON TO HAVE INCOME EXCEEDING L1,00,000/-? I AM AFRAID TH IS CAN NEVER BE A REASON; TO HARBOUR SUCH A BELIEF. THE VITAL LIVE LINK BETWEEN THE SURVEY AND THE REASON WHY LD. ASSESSING OFFICER FOU ND ASSESSEES LIKELY TO HAVE INCOME EXCEEDING L1,00,000/- IS MISSING. I F WE LOOK AT THE ADDITIONS FINALLY MADE, THESE WERE CONFINED TO OPEN ING CASH BALANCE AS ON 01.04.1995 AND INVESTMENTS MADE BY THE ASSESSEES IN M/S. NACHIYAR INDUSTRIAL MAKES FOR ASSESSMENT YEAR 1997 -98, APART FROM SALARY & INTEREST FROM THE SAID FIRM, WHICH AGGREGA TED MUCH LESS THAN L1,00,000/-. IF THE OPENING CASH BALANCE IS NOT D ISPUTED THERE WAS NO ROOM FOR ANY ADDITION. LD. ASSESSING OFFICER HAS NO T SPELLED OUT THE REASONS THAT PROMPTED HIM TO BELIEVE THAT INCOME HA D ESCAPED ITA NOS.1218 TO 1223/2017 :- 21 -: ASSESSMENT IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ABOVE AND WHAT CAME OUT OF THE SURVEY WHICH INDICATED SO. WHAT COULD BE THE SUBJECT MATTER OF AN ADDITION IN AREASSESSMENT PROCEEDINGS HAS BEEN EXPLAINED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD (SUPRA) WHAT WAS HELD BY THE LORDSH IP AT PARA 22 IS REPRODUCED HEREUNDER:- 22. WE HAVE APPROACHED THE ISSUE OF INTERPRETATIO N THAT HAS ARISEN FOR DECISION IN THESE APPEALS, BOTH AS A MAT TER OF FIRST PRINCIPLE, BASED ON THE LANGUAGE USED IN SECTION 14 7 AND ON THE BASIS OF THE PRECEDENT ON THE SUBJECT. WE AGREE WIT H THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE AS SESSEE THAT SECTION 147 AS IT STANDS POSTULATES THAT UPON THE F ORMATION OF A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THE ASSESSING O FFICER MAY ASSESS OR REASSESS SUCH INCOME 'AND ALSO' ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO HIS NOTICE SUBSEQU ENTLY DURING THE PROCEEDINGS AS HAVING ESCAPED ASSESSMENT. THE W ORDS 'AND ALSO' ARE USED IN A CUMULATIVE AND CONJUNCTIVE SENS E. TO READ THESE WORDS AS BEING IN THE ALTERNATIVE WOULD BE TO REWRITE THE LANGUAGE USED BY PARLIAMENT. OUR VIEW HAS BEEN SUPP ORTED BY THE BACKGROUND WHICH LED TO THE INSERTION TO EXPLAN ATION 3 TO SECTION 147. PARLIAMENT MUST BE REGARDED AS BEING A WARE OF THE INTERPRETATION THAT WAS PLACED ON THE WORDS 'AND AL SO' BY THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH [2008] 306 I TR 343 . PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DEC ISION. WHILE IT IS OPEN TO PARLIAMENT, HAVING REGARD TO THE PLENITU DE OF ITS LEGISLATIVE POWERS TO DO SO, THE PROVISIONS OF SECT ION 147 AS THEY STOOD AFTER THE AMENDMENT OF APRIL 1, 1989, CONTINU E TO HOLD THE FIELD. OBSERVATION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. MARTECH PERIPHERALS PVT. LTD (SUPRA) IS ALSO APPOSI TE. PARA 21 & 22 OF THIS JUDGMENT IS REPRODUCED HEREUNDER:- 21. TO MY MIND, A CAREFUL READING OF SECTION 147 OF THE ACT WOULD SHOW THAT IT EMPOWERS AN ASSESSING OFFICER TO ITA NOS.1218 TO 1223/2017 :- 22 -: REOPEN THE ASSESSMENT, IF, HE HAS REASON TO BELIEVE , THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE RELEVANT YEAR, ''AND ALSO BRING TO TAX', ANY OT HER INCOME, WHICH MAY ATTRACT ASSESSMENT, THOUGH, IT IS BROUGHT TO HIS NOTICE, SUBSEQUENTLY, ALBEIT, IN THE COURSE OF THE REASSESSMENT PROCEEDINGS. 21.1.TO PUT IT PLAINLY, THE PURPORTED INCOME DISCOV ERED SUBSEQUENTLY DURING THE COURSE OF REASSESSMENT PROCEEDINGS, CAN BE BROUGHT TO TAX, ONLY, IF THE ES CAPED INCOME, WHICH CAUSED, IN THE FIRST INSTANCE, THE IS SUANCE OF NOTICE UNDER SECTION 148 OF THE ACT, IS ASSESSED TO TAX. 22. EXPLANATION 3, TO MY MIND, SUPPORTS THIS APPROA CH, WHICH EMERGES UPON A PLAIN READING OF THE SAID PROV ISION, ALONG WITH THE MAIN PART OF SECTION 147 OF THE ACT. THE EMPHASIS IN THIS BEHALF IS ON THE EXPRESSION ''AND ALSO BRING TO TAX'' APPEARING IN THE MAIN PART OF SECTION 147 IN RELATION TO THE RIGHT OF THE REVENUE TO ASSESS TAXABLE INCOM E DISCOVERED DURING REASSESSMENT PROCEEDINGS. IN MY V IEW, EXPLANATION 3, CLEARLY, EXPOUNDS THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT AND SUCH OTHER ISSUE, THAT COMES TO HIS NOTICE SUBSEQUENTLY, ALBEIT, IN THE CO URSE OF PROCEEDINGS HELD UNDER SECTION 147 OF THE ACT. IN OTHER WORDS, IF, NOTICE FOR REOPENING OF THE ASSESSMENT W AS ISSUED ON ONE ASPECT, AND IN THE COURSE OF REASSESS MENT PROCEEDINGS ANOTHER ASPECT WAS DISCOVERED, THE REASSESSMENT ORDER WOULD BE VALID, ONLY IF, THE ASP ECT, WHICH LED TO THE REOPENING OF ASSESSMENT, CONTINUES TO FORM PART OF THE REASSESSED INCOME . COMING TO THE EXPLANATION (2) TO SEC. 147 OF THE AC T, NO DOUBT THIS GIVES A DEEMING POWER TO THE LD. ASSESSING OFFICER , WHERE NO RETURN OF INCOME WAS FURNISHED, AND WHERE INCOME EXCEEDED MAXIMUM AMOUNT WHICH WAS NOT CHARGEABLE TO TAX. AS ALREADY MENTIONED BY ME, ASSESSEES HERE HAD FILED THEIR RETURNS PRIOR TO THE DATE OF SURVEY THOUGH THE RETURNS WERE BEYOND THE TIME STIPULATED UNDER THE ACT. ITA NOS.1218 TO 1223/2017 :- 23 -: 13. FOR THE AFOREMENTIONED REASONS, I AM OF THE OPI NION THAT THE REASONS GIVEN FOR REOPENING THE ASSESSMENT OF THE A SSESSEES FOR IMPUGNED ASSESSMENT YEARS, DID NOT SATISFY THE PRIM ARY CONDITION LAID DOWN U/S. 147 OF THE ACT. I HAVE NO HESITATION TO H OLD THAT REOPENING FOR THE IMPUGNED ASSESSMENT YEARS WERE INVALID. EX -CONSEQUENTI THE ASSESSMENTS FOR IMPUGNED ASSESSMENT YEARS ARE SET SIDE. SINCE I HAVE SET ASIDE THE ASSESSMENT ON JURISDICTIONAL ASP ECT THE MERITS OF THE ADDITION ARE NOT DEALT WITH. 14. IN THE RESULT, THE APPEALS OF THE ASSESSEES FOR ALL THE ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 17TH DAY OF AUGU ST, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:17TH AUGUST, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF