Asst. CIT, Circle-1, Nashik V. Maharaj Krishna Birmani, Nashik

ITA 1383/PUN/2013

• Counselvise Citation: 138324514 RSA 2013
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Reopening of assessment; Capital asset; Business income; Depreciation; Audit objection; Earning of tax free income; Wrong claim; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1383/PN/2013 (ASSESSMENT YEAR : 2005-06) ACIT, CIRCLE-I, NASHIK .. APPELLANT VS. MAHARAJ KRISHNA BIRMANI, 226, LAM ROAD, DEOLALI CAMP, NASHIK-422101 .. RESPONDENT PAN NO.AAXPB8907C ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI S.P. WALIMBE DATE OF HEARING : 30-04-2014 DATE OF PRONOUNCEMENT : 30-05-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 25-04-2013 OF THE CIT(A)-I, NASHIK RELATING TO ASSE SSMENT YEAR 2005-06. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF METAL DETECTORS AND TRADING IN DERIVATIVES OF EQUITY SHARES AND COMMODITIES. THE ASSESSEE FILED HIS RETURN OF INCO ME ON 03-10-2005 DECLARING INCOME OF RS.3,11,28,681/-. THE ASSESSIN G OFFICER COMPLETED THE ASSESSMENT ON A TOTAL OF RS.3,13,58,681/- VIDE ORDER PASSED U/S.143(3) DATED 19-12-2007. IN THE SAID ASSESSMENT THE ASSES SING OFFICER MADE ADDITION OF RS.2 LAKHS U/S.14A IN RESPECT OF EXEMPT INCOME OF RS.16,37,026/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF MUTUAL FUND AND SHARES AND RS.39,24,659/- ON ACCOUNT OF DIVIDE ND INCOME AS AGAINST 2 THE EXPENDITURE IN RESPECT OF THE EXEMPT INCOME CLA IMED BY THE ASSESSEE AT RS.63,954/-. SUBSEQUENTLY, THE ASSESSING OFFICER R EOPENED THE ASSESSMENT U/S.148 OF THE I.T. ACT BY RECORDING THE FOLLOWING REASONS: 2. IN CONTEXT OF ABOVE LETTER SUBMITTED BY YOU, TH E REASON OF REOPENING THE ASSESSMENT IN YOUR CASE FOR A.Y. 2005-06 IS PROVIDE D AS UNDER : IT IS SEEN FROM THE RECORD THAT THE ASSESSEE HAS CL AIMED SET OFF OF BROUGHT FORWARD CAPITAL LOSS OF RS. 62,15,117/- FROM SHARES A GAINST LONG TERM CAPITAL GAIN ON SALE OF LAND. DURING THE AY 2005-06 THE ASSESSEE IS HAVING INCOME FROM SHORT TERM CAPITAL GAIN FROM SHARES AS WELL AS LONG TERM CAPITAL GAINS FROM SALE OF LAND. THE ASSESSEE SHOULD HAVE S ET OFF B/F SHORT TERM LOSS AGAINST SHORT TERM CAPITAL GAIN ON SHARES FIRST, WH EREAS THE ASSESSEE HAS TAKEN SET OFF AGAINST LONG TERM CAPITAL GAIN FROM T HE SALE OF LAND. AS PER THE PROVISION OF SEC 70 OF THE INCOME TAX ACT, ADJUSTMENT OF LOSS AND PROFIT BETWEEN SAME SOURCES IS MADE FIRST AND REMAINING LO SS IF ANY IS ADJUSTED AGAINST INCOME FROM ANOTHER SOURCE. BEING THE SIMIL AR NATURE OF LOSS AND TAX RATES, B/F SHORT TERM CAPITAL LOSS FROM SHARES HAS TO BE SET OFF FIRST AGAINST SHORT TERM CAPITAL GAIN FROM SHARES ONLY. FURTHER THE ASSESSEE HAS EARNED PROFIT OF RS. 7,23,524/- FROM SALE OF DEBT FUND WHICH IS NOT AN EQUITY ORIENTED FUND. TAXATION ON THIS FUND IS NOT COVERED U/S I I I A OF THE INCOME TAX. ACT AND HENCE TAXABLE @ 30%. THE ASSESSEE HAS CLAIMED SET OFF OF B/F SHORT TERM CAPITA L LOSS PARTLY AND COMPUTED TAX (A] 20% ON THIS ACCOUNT. THIS HAS ALSO RESU LTED IN TAXATION AT LOWER RATE. IN VIEW OF THE ABOVE FACTS, I HAVE THE REASON TO BELI EVE THAT THE INCOME OF RS. 62,15,117/- OF THE ASSESSEE HAS ESCAPED ASSESSM ENT FOR A. Y. 2005-2006 WITHIN THE MEANING OF SEC 147 OF THE ACT. 2.1 REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER SET OFF BROUGHT FORWARD SHORT TE RM LOSS OF RS.62,15,117/- AGAINST SHORT TERM CAPITAL GAIN ON SALE OF SHARES C HARGEABLE TO TAX @10%. THE ASSESSING OFFICER FURTHER DISALLOWED PORTFOLIO MANAGEMENT CHARGES, DEMAT CHARGES, SUBSCRIPTION CHARGES TOTALLING TO RS .7,49,059/- CLAIMED BY THE ASSESSEE AS DEDUCTION OUT OF SHORT TERM CAPITAL GAIN ON SALE OF SHARES. 3. BEFORE THE CIT(A) THE ASSESSEE CHALLENGED THE VA LIDITY OF THE RE- OPENING OF ASSESSMENT U/S.148 AS WELL AS ON MERITS. SO FAR AS THE ISSUE OF VALIDITY OF REOPENING OF ASSESSMENT IS CONCERNED, I T WAS SUBMITTED THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE HAD TRULY AND 3 FULLY DISCLOSED ALL MATERIAL FACTS NECESSARY FOR CO MPLETION OF ASSESSMENT IN THE RETURN OF INCOME FILED AS WELL AS DURING ASSESS MENT PROCEEDINGS. THEREFORE, IN VIEW OF PROVISO TO SECTION 147 THE AS SESSMENT COMPLETED U/S.143(3) CANNOT BE REOPENED AFTER EXPIRY OF 4 YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. VARIOUS CASE LAWS WERE A LSO BROUGHT TO THE NOTICE OF THE LD.CIT(A) TO THE PROPOSITION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT U/S.147 A FTER THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR SINCE THE ASSESSEE HAD DISCLOSED ALL MATERIAL FACTS NECESSARY FOR COMPLETI ON OF THE ASSESSMENT AND THERE WAS NO FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETI ON OF THE ASSESSMENT. 4. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, IT WAS SUBMITTED THAT BROUGHT FORWARD LOSS WAS IN RESPECT OF THE SHARES S OLD IN THE YEARS PRIOR TO 01-04-2004 IN WHICH THE SHORT TERM CAPITAL GAIN WAS CHARGEABLE TO TAX @30% WHICH CAN BE NOTED FROM THE PROVISIONS OF SECT ION 111A WHICH WAS INTRODUCED AFTER SECTION 111 BY THE FINANCE ACT, 20 04 W.E.F. 01-04-2005. THEREFORE, THE REASON FOR WHICH THE ASSESSING OFFIC ER HAS REOPENED THE ASSESSMENT WAS LEGALLY AND FACTUALLY INCORRECT. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HIMSELF IN PARA 4.1 OF THE ASSESS MENT ORDER HAS STATED THAT LOSS IN ONE HEAD SHOULD BE SET OFF AGAINST SIM ILAR HEAD CHARGEABLE AT SIMILAR RATE OF TAX. HOWEVER, HE HAS ALLOWED LOSS ON BROUGHT FORWARD SHORT TERM CAPITAL LOSS WHICH WAS CHARGEABLE @30% AGAINST THE INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN WHICH WAS CHARGE ABLE @10%. IT WAS SUBMITTED THAT PROVISIONS OF SECTION 74 ARE APPLICA BLE TO THE CASE OF THE ASSESSEE WHICH LAYS DOWN THAT SUCH BROUGHT FORWARD LOSS RELATING TO SHORT TERM CAPITAL ASSET SHALL BE SET OFF AGAINST INCOME, IF ANY, UNDER THE HEAD 4 CAPITAL GAINS ASSESSABLE FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. VARIOUS DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE CIT(A) TO THE PROPOSITION THAT THE COMPUTATION STAT EMENT FILED BY THE ASSESSEE IS CORRECT. CIRCULAR NO.08/2002 DATED 27- 08-2002 ISSUED BY CBDT WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A). 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BOTH ON MERIT AS WELL AS ON LEGAL POINT. SO FAR AS THE ISSUE ON MERIT IS CONCERNED, HE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 5.1.9 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTIC ED THAT THE APPELLANT HAS INCURRED SHORT TERM CAPITAL LOSS ON SALE OF SHAR ES IN THE A.YRS. 2002-03 & 2003-04 WHICH HAS BEEN BROUGHT FORWARD TO THE EXTEN T OF RS. 62,15,117/- TO THE YEAR UNDER APPEAL. THE CAPITAL GAIN CHARGEABLE TO TAX ON SALE OF SHARES IN A.YRS. 2002-03 AND 2003-04 WAS @ 30%. THEREFORE THE A.O. HAS ERRED IN ASSUMING THAT THE TAX RATE OF SHORT CAPITAL GAIN ON SA LE OF SHARES IN RESPECT OF A.YRS. 2002-03 AND 2003-04 BROUGHT FORWARD BY THE AP PELLANT WAS @ 10%. 5.2.0 IT HAS ALSO BEEN NOTICED THAT THE APPELLANT HAS SET OFF THE SAID LOSS AGAINST SHORT TERM CAPITAL GAIN OF RS. 14,44,429/- CHA RGEABLE TO TAX @ 30%, SHORT TERM CAPITAL GAIN ON SALE OF DEBT FUNDS CHARGE ABLE TO TAX @ 30% AND LONG TERM CAPITAL GAIN ON SALE OF LAND CHARGEABLE, TO TA X @ 20%. THE A.O. HAS HIMSELF STATED IN PARA 4.1 OF THE ASSESSMENT ORDER THAT LOSS UNDER ONE HEAD SHOULD BE SET OFF AGAINST SIMILAR HEAD CHARGEABLE AT SIM ILAR RATE OF TAX. THEREFORE THE APPELLANT IS JUSTIFIED IN SETTING OFF SHO RT TERM CAPITAL LOSS AGAINST SHORT TERM CAPITAL GAIN OF THE CURRENT YEAR C HARGEABLE TO TAX @ 30%. 5.2.1 THE APPELLANT IS ALSO JUSTIFIED IN SETTING OFF BR OUGHT FORWARD LOSS UNDER THE HEAD SHORT TERM CAPITAL GAIN AGAINST THE LO NG TERM CAPITAL GAIN OF THE CURRENT YEAR IN VIEW OF PROVISIONS OF SECTION 7 4 OF THE ACT.. THE RELEVANT PORTION OF THE SECTION 74 IS REPRODUCED BELOW: '74(L) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMPUTATION UNDER THE HEAD 'CAPITAL GAINS IS A LOSS TO THE ASSESSEE, THE WHOLE LOSS SHALL, SUBJECT TO THE OTHER PROVISIONS OF THI S CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AND (A) IN SO FAR AS SUCH LOSS RELATES TO A SHORT TERM CAPITA L ASSET, IT SHALL BE SET OFF AGAINST INCOME, IF ANY UNDER THE HEAD 'CAPITAL GAINS' ASSESSABLE FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASS ET.' 5.2.3 IN VIEW OF THE ABOVE PROVISIONS IT IS EVIDENT THAT THE SHORT TERM CAPITAL LOSS BROUGHT FORWARD CAN BE SET OFF AGAINST ANY INCOM E UNDER HEAD 'CAPITAL GAINS' OF THE CURRENT YEAR. THIS PROPOSITION OF LAW IS ALSO SUPPORTED BY CIRCULAR NO.8 OF 2002 DATED 27/8/2002 EXPLAINING AN D CLARIFYING THE PROVISIONS OF SET OFF OF CAPITAL LOSS. 5 PARA 40.2 OF THE SAID CIRCULAR ISSUED BY THE CBDT IS RELEVANT AND HENCE REPRODUCED BELOW: '40.2 SINCE LONG TERM CAPITAL GAINS ARE SUBJECT TO LOWER INCIDENCE OF TAX, THE FINANCE ACT, 2002 HAS RECTIFIED THE ANOMALY BY AMEND ING THE SAID SECTIONS TO PROVIDE THAT WHILE LOSSES FROM TRANSFER OF SHORT TERM CAPITAL ASSETS CAN BE SET OFF AGAINST ANY CAPITAL GAINS, WHETHER SHORT TERM O R LONG TERM, LOSS ARISING FROM TRANSFER OF LONG TERM CAPITAL ASSETS, WI LL BE ALLOWED TO BE SET OFF ONLY AGAINST LONG TERM CAPITAL GAINS. IT IS FURTHER PROVIDED THAT A LONG TERM CAPITAL LOSS SHALL BE CARRIED FORWARD SEPARATELY FOR 8 YEARS TO BE SET OFF ONLY AGAINST LONG TERM CAPITAL GAINS. HOWEVER, A SHORT TER M CAPITAL LOSS, MAY BE CARRIED FORWARD AND SET OFF AGAINST ANY INCOME UNDER THE HEAD 'CAPITAL GAINS.' FROM THE ABOVE CIRCULAR ISSUED BY CBDT, IT IS CLEAR TH AT THE BROUGHT FORWARD SHORT TERM CAPITAL LOSS CAN ALSO BE SET OFF AGAINST LON G TERM CAPITAL GAIN. THE CONTENTION OF THE APPELLANT IS ALSO SUPPORTED BY THE R ATIO LAID DOWN BY THE DECISIONS RELIED ON BY THE APPELLANT MENTIONED IN PRE CEDING PARAGRAPHS. 5.2.3 IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM O F THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN NOT ACCEPTING THE SET OFF OF BROUGHT FORWARD SHORT TERM CAPITAL LOSS IN RESPECT OF SALE OF SHA RES, WHICH WAS CHARGEABLE @30% AGAINST SHORT TERM CAPITAL LOSS IN RESPE CT OF CURRENT YEARS SHORT TERM CAPITAL GAIN ON SALE OF SHARES AND DEB T FUNDS CHARGEABLE TO TAX @30% AND LONG TERM CAPITAL GAIN IN RESPECT OF SAL E OF LAND CHARGEABLE TO TAX @20%. THE A.O. IS THEREFORE DIRECTED TO ACCEPT THE SET OFF OF BROUGHT FORWARD SHORT TERM CAPITAL LOSS AS CLAIMED BY THE APPEL LANT. GROUND NO.1 IS ALLOWED. 5.1 AS REGARDS THE VALIDITY OF THE REOPENING OF THE ASSESSMENT IS CONCERNED HE ALSO DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE BY OBSERVING AS UNDER: 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. THE FACT THAT ALL THE MATERIAL FACTS W ERE DISCLOSED TO THE A.O. DURING ORIGINAL ASSESSMENT PROCEEDINGS IS EVIDENT FROM T HE AUDIT OBJECTION AND REASON FOR REOPENING STATED BY THE A.O. THE COMP UTATION OF INCOME FILED WITH THE RETURN AND SUBMISSION IN ASSESSMENT PROCEED ING HAS RESULTED INTO FULL AND TRUE DISCLOSURE BY THE ASSESSEE. IN THIS RE GARD THE PROVISIONS OF SECTION 147 AND PROVISO THE SECTION 147 ARE RELEVANT A ND HENCE REPRODUCED BELOW : 147 IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT Y EAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME ARID ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN TH E COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RE-COMPUTE THE LOSS O R THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTI ONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR): 6 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) O F SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YE AR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR HI RE SPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 14 8 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS A SSESSMENT, FOR THAT ASSESSMENT YEAR': FROM THE ABOVE PROVISIONS OF SECTION 147 IT IS EVID ENT THAT IN THE CASES WHERE ORIGINAL ASSESSMENT HAS BEEN COMPLETED U/S 143(3) THEN THE NOTICE U/S 148 CAN BE ISSUED AFTER EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR ONLY IF THERE IS FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT . IN THE CASE UNDER APPEAL THERE IS NO FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE APPELLANT HAS FILED ALL THE INFORMATION REQUIRED BY THE AO FOR MAKING A SSESSMENT. FURTHER, IN FACT THE APPELLANT HAS FILED COMPUTATION OF INCOME D ISCLOSING THE MANNER OF SET OFF OF BROUGHT FORWARD SHORT TERM CAPITAL GAIN. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, CONTENTIONS OF THE APPELLANT AND R ESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY VARIOUS DECISIONS (SUPRA), I AM OF THE CONSIDERED VIEW THAT THE AO IS NOT JUSTIFIED IN ISSUING NOTICE U/ S 148 OF THE ACT FOR REOPENING THE ASSESSMENT AFTER EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR. THE NOTICE ISSUED U/S. 148 AND SUBSE QUENT RE-ASSESSMENT U/S 147 OF THE ACT ARE THEREFORE INVALID AND VOID AB INIO, HENCE QUASHED. THE AO IS DIRECTED ACCORDINGLY. GROUND NO.2 IS ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN HOLDING THAT SET- OFF OF SHORT TERM CAPITAL LOSS OF RS.62,15,117/- CHARGEABLE AT 10% IS ADJUSTED WIT H SHORT TERM CAPITAL GAIN CHARGEABLE AT 30% AND LONG TERM CAPITAL GAIN C HARGEABLE AT 20% RESULTING INTO HIGHER RATE OF TAX ON CAPITAL GAINS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION OF RS.7,49,059/- MADE ON ACCOUNT OF DISALLOWING THE PORTFOLIO CHARGES INCLUDING DEMAT ACCOUNT CHARGES AND SUBSCRIPTION CHARGES. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED TO HELD THAT THE NOT ICE ISSUED U/S.148 AND SUBSEQUENT RE-ASSESSMENT U/S.147 OF THE INCOME TAX ACT, 19 61 ARE INVALID AND VOID AB-INITIO. 4. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICE R MAY BE RESTORED. 7 7. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELI ED ON THE ORDER OF THE ASSESSING OFFICER. HE SUBMITTED THAT THE DECI SION OF THE LD.CIT(A)-I, NASHIK IS NOT CORRECT BECAUSE THE ASSESSEE HAD INCO ME FROM EXACTLY SIMILAR HEAD OF INCOME, I.E. SHORT TERM CAPITAL LOSS CHARGE ABLE AT EXACTLY SAME RATE OF TAX. INSPITE OF THIS, THE ASSESSEE HAD SET OFF C/F SHORT TERM CAPITA LOSS OF RS.62,15,117/- CHARGEABLE AT 10% WITH SHORT TERM CA PITAL GAIN CHARGEABLE AT 30% AND LONG TERM CAPITAL GAIN CHARGEABLE AT 20% . HE SUBMITTED THAT INTERPRETATION OF SECTION 74 R.W.S. 70 DERIVES THAT THE PRINCIPLE OF LAW IS WELL STATED, EVEN THOUGH THERE IS NO EXPLICIT COMPULSION BUT IMPLICIT PRINCIPLE LAID DOWN BY LAW THAT AS FAR AS POSSIBLE LOSS UNDER ONE HEAD SHOULD BE SET- OFF AGAINST SIMILAR HEAD CHARGEABLE AT SIMILAR RATE OF TAX. IF IT IS NOT POSSIBLE TO SET-OFF WITHIN THE SAME HEAD OF INCOME AND RATE OF TAX, THEN ONLY ALTERNATIVES SHOULD BE EXERCISED. HE SUBMITTED THAT THE ASSESSEE IN THE INSTANT CASE HAS FAILED TO SET-OFF THIS B/F SHORT T ERM CAPITAL LOSS AGAINST EXACTLY SAME HEAD OF INCOME AND RATE OF TAX WITHOUT ANY REASON. ON THE CONTRARY THE ASSESSEE HAS WRONGLY SET-OFF THIS B/F LOSS TO AVAIL BENEFITS WHICH ARE NOT EXPLICITLY GRANTED BY THE LAW. HE SUB MITTED THAT THE RELIANCE PLACED ON DECISION OF ITAT, PUNE IN THE CASE OF CO ATED FABRICS (P) LTD VS JCIT REPORTED IN 102 TTJ (PUNE) 1053(2006) BY THE A SSESSEE IS MISPLACED. THE DECISION WAS REGARDING THE BUSINESS LOSS TO BE SET-OFF AGAINST CAPITAL GAIN. FACTS AND CIRCUMSTANCES OF THIS DECISION ARE DIFFERENT FROM THE INSTANT CASE. THEREFORE, THE CASE LAWS FOLLOWED BY THE CIT( A)-I, NASHIK WHILE DECIDING THE SUBMISSION OF THE ASSESSEE DO NOT SQUA RELY APPLY IN THIS CASE. HENCE THE DECISION OF THE ID CIT(A)-I, NASHIK IS NO T ACCEPTABLE. 8 7.1 SO FAR AS THE DELETION OF THE ADDITION ON ACCOU NT OF PORTFOLIO CHARGES INCLUDING DEMAT CHARGES AND SUBSCRIPTION OF RS.7,4 9,059/- ARE CONCERNED HE SUBMITTED THAT PORTFOLIO CHARGES ARE IN RESPECT OF MANAGING THE PORTFOLIO OF THE ASSESSEE AND HENCE NEITHER CONSTITUTE COST O F ACQUISITION NOR IMPROVEMENT NOR ARE EXPENSES INCURRED WHOLLY AND EX CLUSIVELY IN CONNECTION WITH THE TRANSFER OF THE CAPITAL ASSET. THESE CHARGES ARE PARTLY FIXED IN NATURE AND PARTLY RELATE TO THE PERFORMANC E OF THE PORTFOLIO HENCE ARE NOT EXPENSES INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF THE CAPITAL ASSET. FOR THE ABOVE PROPOS ITION HE RELIED ON THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF HOMI K BHABHA VS ITO (INTERNATIONAL TAXATION) REPORTED IN 48 SOT 102 (MU MBAI)(2011). 8. SO FAR AS THE REOPENING OF THE ASSESSMENT IS CON CERNED HE SUBMITTED THAT THERE WAS FAULT ON THE PART OF THE ASSESSEE IN NOT FILING THE CORRECT METHOD OF COMPUTATION. HE SUBMITTED THAT MERE PROD UCTION OF BOOKS OF ACCOUNTS DOES NOT AMOUNT TO FURNISHING OF INFORMATI ON BY THE ASSESSEE AND APPLICATION OF MIND ON THE PART OF THE ASSESSING OF FICER. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ESSKAY ENGINEERING COMPANY LTD. VS. CIT REPORTED IN 247 ITR 818 HE SUB MITTED THAT WHEN THERE IS NO DISCUSSION ON THE ISSUE IN THE ASSESSME NT ORDER AND NO DETAILS WERE CALLED FOR BY THE ASSESSING OFFICER OR FILED B Y THE ASSESSEE ON THE ISSUE AND NO FINDINGS EITHER POSITIVE OR NEGATIVE A RRIVED AT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THERE IS NO QUESTION OF CHANGE OF OPINION AND THE REASSESSMENT PROCEEDINGS INITIAT ED BY THE ASSESSING OFFICER HAS TO BE TREATED AS VALID. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 9 9. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO PAGE 2 OF TH E PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE COMPUTATION STATEMENT FOR THE IMPUGNED ASSESSMENT YEAR AND SUBMITTED THAT THE ASSESSEE HAD CLEARLY STATED IN ITEM NO.5 THAT THE SHORT TERM CAPITAL GAINS ON SALE OF E QUITY SHARES AND FUNDS FROM 01-04-2004 TO 30-09-2004 AT RS.14,44,429 WHICH SUFFERS TAX @30% PREVAILING DURING THAT PERIOD. SIMILARLY, THE ASSE SSEE HAD DISCLOSED THE SHORT TERM CAPITAL PROFIT ON SALE OF DEBT FUNDS A T RS.7,23,524/- WHICH ALSO SUFFERS TO TAX @30%. HE SUBMITTED THAT THE ASSESSE E HAS SUBMITTED FULL AND COMPLETE PARTICULARS OF INCOME CHARGEABLE TO TAX AN D THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIA L FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. REFERRING TO THE ORD ER OF THE TRIBUNAL IN THE CASE OF KALYANI CARPENTER SPECIAL STEELS LTD. VS. A DDL.CIT FOR A.YRS. 2004-05, 2006-07 AND 2007-08 HE SUBMITTED THAT THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES, FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD., HAS H ELD THAT IN ABSENCE OF AN ALLEGATION BY THE AO IN THE NOTICE ISSUED U/S.14 8 THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT, REASSES SMENT PROCEEDINGS ARE VOID AB-INITIO. REFERRING TO THE REASONS RECORDED U/S.148 HE SUBMITTED THAT THERE IS NO ALLEGATION ON THE PART OF THE AO THAT T HERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. THEREFORE, THE REASS ESSMENT PROCEEDINGS INITIATED BY THE AO HAS TO BE HELD AS VOID AB-INITI O. 10 9.1 SO FAR AS THE MERIT OF THE CASE IS CONCERNED HE DREW THE ATTENTION OF THE BENCH TO CIRCULAR NO.14-D (XXV-27), DATED 2-8-1967 WHICH READS AS UNDER : 477. LOSS SUFFERED UNDER ONE HEAD - HOW IT CAN BE S ET-OFF AGAINST INCOME UNDER ANY OTHER HEAD PARTICULARLY WHERE TOTA L INCOME INCLUDES ITEMS OF TAX-FREE INCOME A QUESTION IS RAISED AS TO THE MANNER IN WHICH LOSS SUFFERED B Y AN ASSESSEE UNDER ONE HEAD CAN BE SET-OFF AGAINST INCOME, PROFITS OR GAINS U NDER ANY OTHER HEAD, PARTICULARLY WHERE THE TOTAL INCOME INCLUD ES ITEMS OF INCOME WHICH ARE 'TAX-FREE'. FOR INSTANCE, FOR AN ASSESSMENT YEAR THE MATERIAL FIGURES IN THE CASE OF AN ASSESSEE, ARE AS FOLLOWS: RS. INTEREST ON TAX-FREE SECURITIES UNDER SECTION 8 OF THE 192 2 ACT 6,000 PROPERTY INCOME UNDER SECTION 9 OF THE 1922 ACT 13,000 LOSS IN BUSINESS (OTHER THAN IN SPECULATIVE TRANSACTIONS) UNDER SECTION 10 OF THE 1922 ACT (-) 5,000 ---------- 14,000 ---------- AN INCOME-TAX OFFICER PROPOSES TO SET-OFF THE LOSS OF RS. 5,000 AGA INST TAX- FREE INCOME OF RS. 6,000 AND TO TAX RS. 13,000 OUT O F TOTAL INCOME OF RS. 14,000. ON THE OTHER HAND, THE ASSESSEE CONTENDS THAT THE LOSS OF RS. 5,000 SHALL BE SET-OFF AGAINST THE CHARGEABLE INCOME OF RS. 13 ,000 AND ONLY RS. 8,000 OUT OF THE TOTAL INCOME OF RS. 14,000 BE TAXE D IN HIS HANDS. THERE IS NOTHING IN SECTION 24(1) TO INDICATE THAT A PARTICULAR MODE OF SET- OFF SHALL BE FOLLOWED. [IN THE ABSENCE OF ANY SUCH INDICATION, THE GENERAL RULE TO BE FOLLOWED IN ALL FISCAL ENACTMENTS IS THAT WHERE WORDS USED ARE NEUTRAL IN IMPORT, A CONSTRUCTION MOST BENEFICIAL TO THE ASSESSEE SHOU LD BE ADOPTED.] THE WORDS 'HE SHALL BE ENTITLED TO HAVE THE A MOUNT OF LOSS SET- OFF' OCCURRING IN SECTION 24(1), WOULD SEEM TO BE C ONSISTENT WITH THE CONFERMENT OF A BENEFIT ON THE ASSESSEE WHICH HE CA N CLAIM AS OF RIGHT. HENCE, IN THE ABOVE ILLUSTRATION, THE ASSESSEE'S CONTENTIO N SHOULD PREVAIL AND THE DEPARTMENT SHOULD ADOPT THAT MODE WHICH WILL GIVE T HE ASSESSEE THE MAXIMUM BENEFIT. 9.2 REFERRING TO THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF JCIT VS. MONTGOMERY EMERGING MARKETS FUND R EPORTED IN 100 ITD 218 (MUM) (SB) HE SUBMITTED THAT THE SPECIAL BE NCH IN THE SAID DECISION HAS HELD THAT IN VIEW OF PROVISION OF LAW CONTAINING IN SECTION 70 WHICH EXISTED FOR PERIOD FROM ASSESSMENT YEARS 1988 -89 TO 2002-03, LOSS ARISING FROM ONE SOURCE CAN BE SET OFF AGAINST INCO ME FROM ANY OTHER SOURCE UNDER SAME HEAD OF INCOME AND THEREFORE FOR RELEVANT ASSESSMENT 11 YEARS SETTING OFF OF SHORT TERM CAPITAL GAINS AGAIN ST LONG TERM CAPITAL LOSSES WAS PERMISSIBLE TO COMPUTE AMOUNT FOR TAXATION UNDE R HEAD CAPITAL GAINS. HE ALSO RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF COATED FABRICS PVT. LTD. VS. JCIT REPORTED IN 10 1 ITD 297. 9.3 SO FAR AS THE ISSUE RELATING TO DISALLOWANCE OF PORTFOLIO CHARGES AMOUNTING TO RS.7,49,059/- HE SUBMITTED THAT THE IS SUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN THE CASE OF KRA TRADING REPORTED IN 46 SOT 90 (PARA 7.2.1). HE ACC ORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS R AISED BY THE REVENUE SHOULD BE DISMISSED. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ORIGINAL AS SESSMENT FOR THE A.Y. 2005-06 WAS COMPLETED ON 19-12-2007. WE FIND THE A O ISSUED NOTICE U/S.148 ON 27-03-2012 WHICH IS AFTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. FROM THE REASONS REC ORDED U/S.148 WHICH HAVE ALREADY BEEN REPRODUCED AT PAGE 2 OF THE IMPUG NED ORDER WE FIND THERE IS NO ALLEGATION BY THE AO THAT THERE WAS FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. IN THE COMPUTATION S TATEMENT THE ASSESSEE HAS CLEARLY REFLECTED THE AMOUNT OF SHORT TERM CAPI TAL GAIN ON SALE OF EQUITY SHARES AND FUND FROM 01-04-2004 TO 30-09-2004. SIM ILARLY, HE HAS ALSO DISCLOSED SHORT TERM CAPITAL GAIN ON SALE OF DEBT F UNDS. THE BROUGHT FORWARD LOSS OF ASSESSMENT YEAR 2004-05 AMOUNTING T O RS.62,15,117/- WHICH HAS BEEN SET OFF AGAINST THE SHORT TERM CAPIT AL GAIN ON SALE OF EQUITY 12 SHARES/FUNDS AND SHORT TERM CAPITAL PROFIT ON SALE OF DEBT FUNDS ARE CLEARLY REFLECTED IN THE COMPUTATION STATEMENT. 10.1 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KALYANI CARPENTER SPECIAL STEELS LTD. (SUPRA) UNDER IDENTIC AL CIRCUMSTANCES WHEN THERE WAS NO ALLEGATION BY THE AO THAT THERE WAS FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR COMPLETION OF ASSESSMENT HAS HELD THE REOPENING OF THE ASSESSMENT AS VOID AB-INITIO BY OBSERVING AS UNDER : 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A ) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ORIGINAL ASSESSMEN T IN THE INSTANT CASE WAS COMPLETED U/S.143(3) ON 18-12-2006 AND THE NO TICE U/S.148 WAS ISSUED ON 05-04-2010. FROM THE REASONS RECORDED U/S.148 , WE FIND THERE IS NO ALLEGATION BY THE AO THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR COMPLETION OF THE ASSESSMENT. FROM THE COPY OF THE ANN UAL AUDITED ACCOUNTS, WE FIND THE ASSESSEE IN SCHEDULE 19 - DEPRECIA TION AND WRITE OFF ETC. HAS CLEARLY DISCLOSED ROLLS AND MOULDS ETC. WRITT EN OFF - RS.2,27,78,000/- TREATING THE SAME AS REVENUE EXPEND ITURE. WE FIND THE ASSESSING OFFICER WHILE REOPENING THE CASE HAS RELIED ON THE ASSESSMENT IN THE CASE OF SOME OTHER COMPANY NAMELY KALYANI FORGE L TD. WHERE EXPENDITURE ON DIES AMOUNTING TO RS.2.24 CRORES WERE D ISALLOWED AND ADDED BACK TO BUSINESS INCOME BY TREATING THE SAME AS CA PITAL EXPENDITURE. IT IS SEEN FROM THE REASONS RECORDED BY THE ASSESSING OFFI CER THAT THE SAID ADDITION WAS CONFIRMED BY THE CIT(A) WHEREAS THE SAME WAS DELETED BY THE ITAT AND THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL DELETING THE ADDITION. 7.1 WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF TITANOR COMPONENTS LTD. (SUPRA) HAS OBSERVED AS UNDER : 4. ACCORDING TO THE LEARNED COUNSEL, THE REVENUE I S ENTITLED TO ISSUE SUCH A NOTICE IF THE AO HAS REASON TO BELIEVE THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE (A) TO MAKE A RETURN UNDER S. 139 OR (B) IN RESPONSE T O A NOTICE ISSUED UNDER SUB-S. (1) OF S. 142 OR S. 148 OR (C) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THAT ASSESSMENT YEAR. SINCE THE FIRST T WO CONDITIONS ARE NOT PLEADED BY THE RESPONDENTS, IT IS THE SUBMISSION OF THE PETITIONER THAT THE NOTICE IS WHOLLY UNWARRANTED AND INVALID SINCE TH ERE IS NO ALLEGATION WHATSOEVER THAT THE PETITIONER HAS FAILED TO DISCLOSE A LL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THIS SUBMISSION CAN BE CONSIDERED ON LY WITH REFERENCE TO THE REASONS PUT FORTH BY THE RESPONDENTS F OR ISSUING THE NOTICE. THE LETTER DT. 27TH JAN., 2005, INTER ALIA, STATES TH AT THE AO HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BECAUSE THE PET ITIONER HAS WRONGLY CLAIMED DEDUCTION UNDER S. 80-IA IN RESPECT O F INCOME WHICH WAS NOT DERIVED FROM THE INCOME OF THE PETITIONERS UNIT OF KUNDAIM. FURTHER, THAT LONG-TERM CAPITAL GAINS HAVE BEEN WRONGLY CLAIM ED BY THE ASSESSEE WHICH HAVE BEEN WRONGLY CONSIDERED FOR THE SET OFF O F THE UNIT OF KUNDAIM 13 WHICH HAS RESULTED IN ESCAPEMENT OF INCOME. NOWHERE HA S THE AO STATED THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HAVING REGAR D TO THE PURPOSE OF THE SECTION, WE ARE OF THE VIEW THAT THE POWER CONFE RRED BY S. 147 DOES NOT PROVIDE A FRESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNLESS THE MISTAKE IN THE ASSESSMENT SO MADE I S THE RESULT OF A FAILURE OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. INDEED, WHERE THE ASSESSEE HAS FULLY DISCLOSED ALL THE MATERIAL FACTS, IT IS NOT OPEN FOR THE AO TO REOPEN T HE ASSESSMENT ON THE GROUND THAT THERE IS A MISTAKE IN ASSESSMENT. MOREOVER, I T IS NECESSARY FOR THE AO TO FIRST OBSERVE WHETHER THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND HAVING OB SERVED THAT THERE IS SUCH A FAILURE TO PROCEED UNDER S. 147. IT MUST FOLL OW THAT WHERE THE AO DOES NOT RECORD SUCH A FAILURE HE WOULD NOT BE ENTITL ED TO PROCEED UNDER S. 147. AS OBSERVED EARLIER, THE AO HAS NOT RECORDED THE FAILURE ON THE PART OF THE PETITIONER TO FULLY AND TRULY DISCLOSE ALL MATERI AL FACTS NECESSARY FOR THE ASST. YR. 1997-98. WHAT IS RECORDED IS THAT THE PETITIO NER HAS WRONGLY CLAIMED CERTAIN DEDUCTIONS WHICH HE WAS NOT ENTITLED TO. THERE IS A WELL KNOWN DIFFERENCE BETWEEN A WRONG CLAIM MADE BY AN A SSESSEE AFTER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATERIAL FACTS FULLY AND TRU LY. IT IS ONLY IN THE LATTER CASE THAT THE ASSESSING OFFICER WOULD BE ENTITLE D TO PROCEED UNDER S. 147. WE ARE SUPPORTED IN THIS VIEW BY A DECISION OF A DIVISION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. VS. R.B. WADKAR, ASSTT. C IT (2004) 190 CTR (BOM) 166 : (2004) 268 ITR 332 (BOM) WHERE IN A SIMI LAR CASE THE DIVISION BENCH HELD THAT REASON THAT THERE WAS A FAILURE TO DI SCLOSE FULLY AND TRULY THAT ALL MATERIAL FACTS MUST BE READ AS RECORDED BY TH E AO AND IT WOULD NOT BE PERMISSIBLE TO DELETE OR ADD TO THOSE REASONS AND TH AT THE AO MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL RECORD. THE DIVISION BENCH OBSERVED AS FOLLOWS (PAGE 338): 'HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATE RIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSM ENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE.' WE FIND IN THE CIRCUMSTANCES THAT THE IMPUGNED NOTICE IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED AND SET ASIDE. ACCORDINGLY, THE WRIT PETITION IS ALLOWED IN TERMS OF PRAYER CLS. (A) AND (C). 7.2 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF ALFA LAVAL (INDIA) LTD. (SUPRA) FOLLOWING THE ABOVE DECISION HA S HELD THE RE-OPENING OF ASSESSMENT UNDER SUCH CIRCUMSTANCES AS BAD IN LAW. 7.3 SINCE IN THE INSTANT CASE THERE IS NO ALLEGATION B Y THE ASSESSING OFFICER IN THE NOTICE ISSUED U/S.148 THAT THERE WAS F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR COMPLETION OF THE ASSESSMENT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. (SUPRA) WE HOLD THAT RE-ASSESSMENT PROCEEDINGS ARE VOID AB-INITIO. WE, THEREFORE, SET-ASIDE THE ORDER OF LD.CIT(A) ON THIS ISSU E AND THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED. 10.2 SINCE IN THE INSTANT CASE THERE IS NO ALLEGATI ON BY THE AO THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT, T HEREFORE, RESPECTFULLY 14 FOLLOWING THE ABOVE DECISION WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. GROUNDS RAISED BY THE REVENUE ON THIS ISSUE ARE ACCORDINGLY DISMISSED. 11. SINCE THE REASSESSMENT PROCEEDINGS ARE HELD AS VOID AB-INITIO, THEREFORE, THE OTHER GROUNDS BY THE REVENUE BECOME ACADEMIC IN NATURE AND THEREFORE THE SAME ARE NOT BEING ADJUDICATED. THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30-05-2014. SD/- SD/- (R.S. PADVEKAR) (R.K. PAND A) JUDICIAL MEMBER ACCOUN TANT MEMBER PUNE DATED: 30 TH MAY, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE