M/s. DSC Ltd., New Delhi V. DCIT, New Delhi

ITA 146/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3932 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHMIA NEB
• Keywords: Bogus purchase; Additional evidence; Block assessment; Reason to believe
• Section: 143(3); 14A; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI. N. K. SAINI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.146/DEL/2015 ASSESSMENT YEAR:2006 - 07 M/S DSC LTD., E-9, 3 RD FLOOR, NDSE PART-2, NEW DELHI. VS DCIT, CENTRAL CIRCLE - 15, NEW DELHI. PAN AAACD0003D ( APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL AGGARWAL, ADVOCATE SHRI SHAILESH GUPTA, ADVOCATE SHRI MADHUR AGGARWAL, ADVOCATE RESPONDENT BY: MS ASHMIA NEB, SR. DR DATE OF HEARING: 10.10.2018 DATE OF PRONOUNCEMENT: 31 .10.2018 O R D E R PER NARASIMHA K. CHARY, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 10 TH NOVEMBER 2014 IN APPEAL NO.97/2014-15 OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II, NEW DELHI FOR ASSTT. YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE EXECUTION OF CONTRACTUAL WORKS INCLUDING THE EXTENSION OF WIDENING OF HIGHWAYS, CONSTRUCTION OF FLYOVERS, CULVERTS, 2 REHABILITATION/STRENGTHENING OF RAILWAY TRACTS, PAVEMENTS, ROAD SURFACE DISTRESS, IMPROVEMENT OF CROSS DRAINAGE STRUCTURES. FOR THE ASSTT. YEAR 2006-07, THEY HAVE FILED THEIR RETURN OF INCOME ON 2.2.2007 DECLARING AN INCOME OF RS.54,14,79,842/-. ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED AT AN INCOME OF RS.54,16,13,061/- BY ORDER DATED 15.10.2008. 3. SUBSEQUENTLY, PURSUANT TO THE SEARCH OPERATIONS CARRIED OUT AT THE PREMISES OF DSC GROUP OF COMPANIES ON 28.8.2012, THE INVESTIGATION WING FOUND CERTAIN BOGUS PURCHASES MADE THROUGH UNEXPLAINED SOURCES BY THE ASSESSEE AND PROCEEDINGS WERE TAKEN UP ACCORDINGLY. NOTICE DATED 28.3.2013 WAS ISSUED U/S 148 OF THE INCOME-TAX ACT, 1961 (THE ACT) AND THE ASSESSEE REPLIED THAT THE ORIGINAL RETURN FILED U/S 139 OF THE ACT MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY, NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND PROCEEDINGS WERE TAKEN UP. LEARNED AO CONCLUDED THE ASSESSMENT BY AN ORDER DATED 30.3.2014 BY MAKING AN ADDITION OF RS.3,01,69,142/- BEING THE AMOUNT OF UNVERIFIED PURCHASES. ACCORDING TO THE LEARNED AO, THE ASSESSEE MADE PURCHASES FROM THE GROUP COMPANY BY NAME M/S JMD BUILDING MATERIAL SUPPLIERS. SUCH M/S JMD BUILDING MATERIAL SUPPLIERS WHEN REQUIRED BY THE LEARNED AO FAILED TO FURNISH THE RELEVANT DOCUMENTS, THE ASSESSEE COMPANY COULD FURNISH THE SUPPORTING DOCUMENTS RELATING TO THE PURCHASES TO THE EXTENT OF RS.92,34,545/- ONLY WHERE ITS TOTAL PURCHASES FROM M/S JMD BUILDING MATERIAL SUPPLIERS WAS RS.3,94,03,687/-, AS SUCH, THE BALANCE AMOUNT OF RS.3,01,69,142/- BEING CONSTRUED AS THE AMOUNT RELATING TO THE UNVERIFIED PURCHASES AND HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE. WHEN THE ASSESSEE PREFERRED THE APPEAL CHALLENGING THE ASSUMPTION OF JURISDICTION BY THE AO AND THE PROPRIETY OF THE RE-OPENING OF THE PROCEEDINGS AND ALSO THE MERITS OF THE 3 CASE, LEARNED CIT(A) HELD THAT THE SEARCH OPERATIONS CONDUCTED ON 28.8.2012 AT THE ASSESSEES PREMISES REVEAL BOOKING OF BOGUS PURCHASES AND THE LEARNED AO ISSUED NOTICE U/S 148 DISPOSED OF THE OBJECTIONS FILED BY THE ASSESSEE BY WAY OF SPEAKING ORDER DATED 22.1.2014 AND FOLLOWED THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF G.K.N. DRIVESHAFTS (INDIA) LTD. VS ITO (2003) 259 ITR 19(SC), AS SUCH, THE ASSUMPTION OF JURISDICTION BY THE LEARNED AO IS PROPER AND CORRECT. ON MERITS ALSO, LEARNED CIT(A) DECLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED AO AND SUSTAINED THE ADDITIONS. 4. THE ASSESSEE IS, THEREFORE, IN THIS APPEAL BEFORE US STATING THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THAT NEITHER THE MANDATORY REQUIREMENT OF SECTION 148 OF THE ACT NOR THE PRE CONDITIONS FOR INVOKING THE PROVISIONS U/S 147 OF THE ACT WERE SATISFIED IN THIS MATTER. THE ASSESSEE FURTHER ASSAILS THE IMPUGNED ORDER ON THE GROUND THAT THE PURCHASES MADE BY THE ASSESSEE FROM M/S JMD BUILDING MATERIAL SUPPLIERS WERE DULY SUPPORTED BY VOUCHERS AND PURCHASE PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND THE AUTHORITIES USED EVIDENCE THE MATERIAL GATHERED AS A RESULT OF ENQUIRIES CONDUCTED FROM VARIOUS PARTIES AT THE BACK OF THE ASSESSEE AND WITHOUT CONFRONTING THE ASSESSEE WITH SUCH MATERIAL. 5. IT IS THE ARGUMENT OF THE LEARNED AR THAT WHATEVER THE MATERIAL THAT WAS GATHERED BY THE LEARNED AO IN CONNECTION WITH THE SEARCH IN THE PREMISES OF M/S JMD BUILDING MATERIAL SUPPLIERS DOES NOT IPSO FACT INDICATE THAT THE ASSESSEE IS GUILTY OF NOT DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THIS ASSTT. YEAR. HE FURTHER SUBMITTED THAT AFTER THE ASSESSEE SUBMITTED ITS OBJECTION, THE LEARNED AO FAILED TO CONSIDER THE SAME IN A PROPER PERSPECTIVE BUT 4 MECHANICALLY DISPOSE OF THAT BY ORDER DATED 22.1.2014 BUT AS A MATTER OF FACT SUCH AN ORDER SUFFERS THE NON APPLICATION OF MIND AS TO THE OBJECTIONS TAKEN BY THE ASSESSEE. HE FURTHER SUBMITTED THAT IT IS MANDATORY ON THE PART OF THE REVENUE TO ESTABLISH THAT IN CASE OF THE NOTICE U/S 148 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR TO PROVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY RAISING ALL THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR ANY RESPONSE TO A NOTICE ISSUE UNDER SUB SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THIS CASE, ABSOLUTELY THERE IS NO FINDING ON THE PART OF THE AO THAT THE ASSESSEE IS GUILTY OF NOT FURNISHING ANY MATERIAL FACT FULLY AND TRULY AND IN THE ABSENCE OF SUCH A FINDING, THE ASSUMPTION OF JURISDICTION BY THE LEARNED AO IS BAD IN LAW. 6. THE NEXT CONTENTION OF THE LEARNED AR IS THAT THE MATERIAL THAT WAS USED AGAINST THE ASSESSEE FOR REOPENING THE CONCLUDED ASSESSMENT IS THE MATERIAL THAT WAS GATHERED AT THE SEARCH CONDUCTED IN THE JMB GROUP OF COMPANIES INCLUDING M /S JMD BUILDING MATERIAL SUPPLIERS AND WITHOUT CONFRONTING SUCH MATERIAL TO THE ASSESSEE, IT IS NOT OPEN FOR THE AUTHORITIES TO USE SUCH MATERIAL AGAINST THE ASSESSEE. FOR THESE REASONS, LEARNED AR PRAYED TO QUASH REOPENING PROCEEDINGS. 7. PER CONTRA, IT IS THE ARGUMENT OF THE LEARNED DR THAT IT IS NOT A CASE OF PROPOSING TO RE-OPEN THE CONCLUDED ASSESSMENT WITHOUT ANY REASON BUT AS A MATTER OF FACT THOROUGH ENQUIRIES WERE CONDUCTED BY THE INVESTIGATION WING AND THE INFORMATION FURNISHED BY THE INVESTIGATION WING IS SUFFICIENT REASON FOR THE LEARNED AO TO PROPOSE THE REOPENING PROCEEDINGS. FURTHER, AS INDICATED IN PARA 4 OF THE ASSESSMENT ORDER, THE ASSESSEE AND FOR THAT MATTER M /S JMD BUILDING MATERIAL SUPPLIERS FAILED 5 TO PRODUCE ANY FUNDAMENTAL DOCUMENTS LIKE INVOICE/KHAKIS BEFORE THE ADIT, INVESTIGATION UNIT III(3), NEW DELHI, AS SUCH, THE AUTHORITIES BELOW ARE JUSTIFIED IN MAKING AND SUSTAINING THE ADDITIONS. 8. THE LEARNED AR RELIED UPON THE FOLLOWING PROPOSITIONS THAT THE PROCEEDINGS HAD BEEN INITIATED AFTER LAPSE OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IN RESPECT OF ASSESSMENT FRAMED U/S 143(30 OF THE ACT AND THERE IS NO ALLEGATION IN THE REASONS RECORDED THAT ASSESSEE HAD NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, AS SUCH THE PROCEEDINGS ARE WITHOUT ANY JURISDICTION IN VIEW OF STATUTORY PROVISIONS CONTAINED IN PROVISO TO SECTION 147 OF THE ACT: I) SUPREME COURT A) (1961)] 41 ITR 191 (SC) CALCUTTA DISCOUNT CO. LTD. V. ITO; B) ( 1998) 231 ITR 200 (SC) COCA-COLA EXPORT CORPN. V. ITO II) DELHI HIGH COURT A) WPC 747/2014 .DATED 17.10.2014 GLOBAL SIGNAL CABLES (INDIA) PVT. LTD. VS. DCIT, 368 ITR 609 B) ITA NO. 468/2014 DT 19.08.2014 CIT VS. STAR FINVEST PVT. LTD. C) [2014] 226 TAXMAN 162 (DEL) M/S SWAROVSKI INDIA PVT. LTD. D) [2013] 355 ITR 356 (DEL) RURAL ELECTRIFICATION CORPN. LTD. E) WPC 284/2013 DATED 23.05.2013 MICROSOFT CORPORATION INDIA PVT. LTD. F) 313 ITR 321 JSRS UDYOG LTD. VS. ITO G) 177 TAXMAN 300 CIT VS. DCM LTD. H) 165 TAXMAN 84 CIT VS. INTERCONTINENTAL TRADING & INVESTMENT CO. LTD. I) 171 TAXMAN 379 INDIAN FERTILIZER CO-OP LTD. J) 303 ITR 155 CIT V INDIAN SUGAR AND GEN. INDS EXIM CORPN K) 324 ITR 234 DT AND TDC LTD. VS. ACIT 1) 308 ITR 22 WEI INTER-TRADE PVT. LTD. VS. ITO M) 308 ITR 38 HARYANA ACRYLIC MANUFACTURING COMPANY V. CIT 6 N) 343 ITR 141 ATMA RAM PROPERTIES PVT. LTD. VS. DCIT O) 215 TAXMAN 441 SHIVALIK BIMETAL CONTROLS LTD.VS.ITO P) 354 ITR 24 CIT VS. SUREN INTERNATIONAL PVT. LTD. Q) [2009] 119 ITD 175 (DEL) M.M.T.C. LTD. VS. DCIT R) [2009] 184 TAXMAN 1 (DEL) JAL HOTELS CO. LTD. VS. ASST.DIT 9. IN THIS MATTER, THE ORIGINAL ASSESSMENT WAS COMPLETED BY ORDER DATED 15.10.2008 ASSESSING THE INCOME OF THE ASSESSEE AT RS.54.16 CRORES AS AGAINST THE RETURNED INCOME OF RS.54.14 CRORES BY ADDING A SUM OF RS.1,33,219/- U/S 14A OF THE ACT. SEARCH TOOK PLACE IN THE BUSINESS PREMISES OF MS DS CONSTRUCTION GROUP ON 28.8.2013. LEARNED AR SUBMITTED THAT APPROPRIATE STEPS WERE TAKEN FOR THE BLOCK ASSESSMENT FOR THE YEARS BETWEEN 2007-08 TO 2012-13 AND THEN PARTICULAR ASSESSMENT YEAR 2006-07 IS BEYOND SUCH PERIOD OF 6 YEARS. AS SUCH, THE REVENUE RESORTED TO REOPEN THE SAME U/S 147 OF THE ACT BY ISSUING NOTICE DATED 28.3.2013. ACCORDING TO THE LEARNED AR UNDER PROVISO TO SECTION 147, WHERE AN ASSESSMENT WAS MADE U/S 143(3) OF THE ACT, NO ACTION SHALL BE PROPOSED TO BE TAKEN U/S 147 AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE TO FURNISH THE RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT AND THIS PARTICULAR PROVISO IS VIOLATED IN THE PRESENT CASE. AS STATED ABOVE, HE PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT AND THE JURISDICTIONAL HIGH COURT. THE DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEE ARE IN SUPPORT OF THIS PROPOSITION ONLY. 10. THE LEARNED DR SUBMITTED THAT THE ORDERS RELIED UPON BY THE LEARNED AR NOT APPLICABLE TO THE FACTS OF THIS CASE SINCE THERE IS A FACTUAL DIFFERENCE IN THESE CASES. SHE FURTHER SUBMITTED THAT PROVISO TO SECTION 7 147 IS NOT APPLICABLE TO THE FACTS OF THIS CASE INASMUCH AS THERE IS SUFFICIENT EVIDENCE TO REACH A CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME DUE TO THE NON FURNISHING OF THE PARTICULARS SOUGHT BY THE AO LIKE INVOICES/KHAKIS. IN THIS FACTUAL SITUATION, THE ASSESSEE CANNOT BE SAID TO HAVE MADE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. FOR THIS PRUPOSE SHE PLACED RELIANCE ON THE DECISIONS REPORT IN THE CASE OF M/S PARAMOUNT COMMUNICATIONS VS PCIT, SLP NO.16943/2017 ON THE FILE OF THE HONBLE SUPREME COURT WHEREIN THE HONBLE SUPREME COURT REFUSED TO GRANT SUCH LEAVE AGAINST THE ORDERS OF THE HIGH COURT. SHE FURTHER SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) VIDE PARA 4 CLEARLY INDICATES THAT THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA) WAS FOLLOWED BY THE AO IN PASSING THE SPEAKING ORDER DATED 22.1.2014, HENCE, THE ASSESSEE CANNOT COMPLAIN ON THAT SCORE. SHE BROUGHT TO OUR NOTICE THAT THE ASSESSMENT ORDER ITSELF CONTAINS THAT THE ASSESSEE HAVING OBTAINED THE COPY OF THE REASONS FILED THE OBJECTIONS AND THE SAID OBJECTIONS WERE DISPOSED OF BY A SPEAKING ORDER DATED 22.1.2014. 11. IN RESPECT OF THE GRIEVANCE OF THE ASSESSEE THAT THE MATERIAL WAS NOT FURNISHED TO THE ASSESSEE, IT IS THE SUBMISSION OF THE LEARNED DR THAT THIS IS A CASE INVOLVING THE GROUP COMPANIES AND THERE IS NO MATERIAL THAT IS EXTRANEOUS TO THIS COMPANY THAT WAS RELIED UPON BY THE AO, AS SUCH, NO QUESTION OF FURNISHING OR NON FURNISHING MATERIAL TO THE ASSESSEE ARISES AND THE ASSESSEE CANNOT HAVE ANY GRIEVANCE ON THAT SCORE. LASTLY, SHE SUBMITTED THAT ADEQUATE OPPORTUNITY WAS GIVEN TO THE ASSESSEE WHICH THE ASSESSEE HAS NOT AVAILED TO PRODUCE ANY ADDITIONAL EVIDENCE BY FILING APPLICATION UNDER RULE 46A. 12. IN THE CASE IN HAND THE REASONS RECORDED BY THE LEARNED AO 8 ARE TO THE FOLLOWING EFFECT: CONSEQUENT UPON SEARCH OPERATION CARRIED OUT AT THE PREMISES OF THE DSC GROUP OF CASES ON 28.08.2012, THE FOLLOWING SUPPRESSION OF INCOME BY THE GROUP COMPANY M/S. DSC LIMITED HAS EMERGED. M/S. DSC LIMITED HAS SHOWN HUGE PURCHASE OF BOULDERS OF ABOUT RS.69,00,00,000/- IN ITS BOOKS FROM JMD BUILDING MATERIAL SUPPLIERS. DURING THE SEARCH OPERATION IT WAS REVEALED THAT THE FIRM M/S. JMD BUILDING MATERIAL SUPPLIERS WITH PARTNERS SHRI OM PRAKASH & SHRI MOHAMMAD ABBAS WAS E XECUTED BY THE DSC GROUP AND THE TWO PARTNERS ARE IN FACT THE EMPLOYEES OF DSC GROUP. THE GROUP SHOWED HUGE INFLATED PURCHASES FROM THIS FIRM AT ITS FREE WILL AND KEPT CONTROL ON THE FINANCIAL TRANSACTIONS OF THE BUYER AND SELLER FOR DIVERTING FUNDS RAISED AS LOAN FOR THE PURPOSE OF BUILDING VARIOUS PROJECTS. DURING THE COURSE OF POST SEARCH PROCEEDING FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FAILED TO PRODUCE SUPPORTING DOCUMENTS VIZ BILLS AND VOUCHERS AS WELL AS KHAKI (A SLIP ISSUED BY THE LOCAL AUTHORITY FOR EXTRACTION OF BOULDERS FROM MINES) AS REQUISITIONED FOR, TO THE TUNE OF RS.3,94,03,687/-. AFTER THOROUGH INVESTIGATION IN THIS CASE, WHICH INCLUDED RECORDING OF STATEMENTS OF MANY PERSONS INCLUDING VILLAGERS BY THE INVESTIGATION WING IT CAN BE CONCLUDED THAT A SUM OF RS.3,94,03,687/- HAS ESCAPED ASSESSMENT ON THE ABOVE ASPECT THE ASSESSEE DURING THE F.Y. 2005-2006 RELEVANT TO A.Y. 2006-2007 HAS CLAIMED PURCHASES OF RS.8,79,55,3687- FROM M/S. AGGARWAL IRON & STEEL COMPANY. DURING THE POST SEARCH OPERATION NEITHER THE ASSESSEE NOR M/S. AGGARWAL IRON & STEEL COMPANY COULD PROVE GENUINENESS OF SUPPLIES AND QUANTUM OF SUPPLIES. THEREFORE, IT COULD WELL BE ESTABLISHED THAT SUPPLIES/PURCHASES TO THE TUNE OF RS.8,79,55,368/- FOR THE YEAR UNDER CONSIDERATION WERE BOGUS/INFLATED SUPPLIES. THUS.IT CAN BE CONCLUDED THAT A SUM OF RS.8,79,55,368/-HAS ESCAPED ASSESSMENT DURING THE YEAR ON ACCOUNT OF BOGUS PURCHASES. DURING THE YEAR THE ASSESSEE MADE CASH PAYMENT TO THE TUNE OF RS.36,54,533/-TO M/S. H.S. BUILDTECH A SUB-CONTRACTOR OF THE GROUP. AS THESE PAYMENTS HAVE BEEN MADE THROUGH UNEXPLAINED SOURCES, IT CAN BE INFERRED THAT A SUM OF RS.36,54,533/-HAS ESCAPED , ASSESSMENT DURING THE YEAR ON ACCOUNT OF UNEXPLAINED CASH PAYMENT IN CONTRAVENTION TO THE PROVISION OF SECTION 40A(III) OF THE INCOME TAX ACT, 1961. THE ENQUIRES CONDUCTED BY THE INVESTIGATION WING HAVE CONFIRMED THE BOGUS PURCHASES AND CASH PAYMENTS MADE THROUGH UNEXPLAINED 9 SOURCES BY THE ASSESSEE. I THEREFORE, HAVE REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX AMOUNTING TO RS.13,10,13,588/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. 13. A CAREFUL READING OF THE REASONS EXTRACTED ABOVE, IT IS CLEAR THAT IT IS NOT THE CASE OF THE REVENUE THAT THERE IS ANY ESCAPEMENT OF INCOME BECAUSE OF THE NON FURNISHING OF THE MATERIAL FACTS TRULY AND FULLY BY THE ASSESSEE. FURTHER, PARA 4 OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT BECAUSE THE ASSESSEE COMPANY MADE PURCHASES FROM M/S JMD BUILDING MATERIAL SUPPLIER FOR WHICH INVOICE BE RAISED BY THE FIRM TO THE COMPANY AND THE ASSESSEE MADE THE PAYMENTS AND THE ASSESSEE FAILED TO PRODUCE THE RECORD RELATING TO THE INVOICE/KHAKIS ON THE GROUND THAT SUCH RECORD WAS LYING WITH THE DIRECTORATE GENERAL OF THE CENTRAL EXCISE INTELLIGENCE, NEW DELHI AND THAT IS THE REASON WHY THEIR REMAINS UNVERIFIED PURCHASES CONSEQUENT TO WHICH LEARNED AO MADE THE ADDITIONS. THIS IS A MATTER OF VERIFICATION OF THE RECORD SUBSEQUENT TO THE REOPENING OF THE PROCEEDINGS AND BECAUSE THE ASSESSEE COULD NOT PRODUCE THE RELEVANT RECORD ON THE GROUND THAT SUCH RECORD IS LYING WITH THE DIRECTORATE GENERAL OF THE CENTRAL EXCISE INTELLIGENCE, NEW DELHI, THE ADDITION IS MADE. IT IS NOT AS THAT THE LEARNED AO MADE THESE ENQUIRIES BEFORE RESORTING TO THE REOPENING OF THE MATTER. IT APPEARS THAT THE LEARNED AO ISSUED NOTICE U/S 148 OF THE ACT AND SUBSEQUENTLY, UNDER SECTION 143(2) OF THE ACT WITH A HOPE THAT SOME MATERIAL COULD BE SECURED WHEN ROWING ENQUIRIES MADE. ALL THESE PURCHASES, SALES ETC. WERE AVAILABLE BEFORE THE LEARNED AO WHEN THE PROCEEDINGS U/S 143(3) OF THE ACT WAS TAKEN. IT IS NOT THE CASE OF SECURING ANY NEW MATERIAL AGAINST THE ASSESSEE OR A CASE OF ASSESSEE NOT FURNISHING THE MATERIAL FACTS EITHER FULLY OR TRULY. 14. THE HONBLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC 10 MANUFACUTRING CO. VS CIT, 308 ITR 38 (DEL) HAS OPINED AS UNDER:- IN THE REASONS SUPPLIED TO THE PETITIONER, THERE IS NO WHISPER, WHAT TO SPEAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, FULLY AND TRULY. THIS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION U/S 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THAT THE REASONS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECISION IN WEI INTERTRADE PRIVATE LTD. (2009) 308 ITR 22 (DEL.) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA (2004) 269 ITR 192 THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER U/S 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEW-POINT, WE HOLD THAT THE NOTICE DATED MARCH 29, 2004, U/S 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED MARCH 2, 2005, ARE WITHOUT JURISDICTION AS NO ACTION U/S 147 COULD BE TAKEN BEYOND THE FOUR YEAR'S PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE. 15. WHILE FOLLOWING THE DECISION IN THE CASE OF WEL INTERTRADE P. LTD VS ITO (2009) 308 ITR 22 (DELHI) AND DULI CHAND SINGHANIA VS. ACIT (2004) 269 ITR 192 (P&H) FOR THE PRINCIPLE THAT IN THE ABSENCE OF AN ALLEGATIONS THAT ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, WHICH IS A SINE QUA NON FOR ASSUMING JURISDICTION UNDER SECTION 147 OF THE ACT IN A CASE FALLING UNDER THE PROVISO THERETO, ANY ACTION TAKEN BY THE ASSESSING OFFICER IS WHOLLY WITHOUT JURISDICTION. 11 16. WHILE FOLLOWING THE ABOVE DECISION IN ITA NO.2654/2013 IN THE CASE OF JINDAL PIPES LTD., A COORDINATE BENCH OF THIS TRIBUNAL REACHED A CONCLUSION THAT WHEN THERE IS NO MENTION OR ALLEGATION THAT THERE HAS BEEN ANY FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT, THERE IS FAILURE TO MEET THE STATUTORY REQUIREMENT AND CONSEQUENTIAL RE- ASSESSMENT PROCEEDINGS ARE LIABLE TO BE QUASHED. 17. IN THE INSTANT CASE, IT IS NOT THE CASE OF THE REVENUE THAT ANY MATERIAL COULD BE SECURED IN THE SEARCH CONDUCTED AT THE PREMISES OF THE ASSESSEE TO SUGGEST THAT THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, AS SUCH, REOPENING U/S 147 OF THE ACT IS JUSTIFIED. FOR THESE REASONS, WHILE RESPECTFULLY FOLLOWING THE DECISIONS CITED (SUPRA), WE HOLD THAT THE REOPENING PROCEEDINGS CANNOT SURVIVE AND THAT ARE LIABLE TO BE QUASHED AND ARE ACCORDINGLY QUASHED. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/ 2018. S D / - S D / - [K. NARASIMHA CHARY] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST OCTOBER , 2018 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REGISTRAR 12 DRAFT DICTATED ON 10.10.2018 DRAFT PLACED BEFORE AUTHOR 12.10.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 2 . 1 0 . 2 0 1 8 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 3 1 . 1 0 . 2 0 1 8 APPROVED DRAFT COMES TO THE SR.PS/PS 31.10.2018 KEPT FOR PRONOUNCEMENT ON 31.10.2018 DATE OF UPLOADING ORDER ON THE WEBSITE 2 . 1 1 . 2 0 1 8 FILE SENT TO THE BENCH CLERK 2 . 1 1 . 2 0 1 8 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.