M. PALLONJI & CO. P.LTD, MUMBAI V. JT, CIT RG 2(2), MUMBAI

ITA 1594/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1397 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 27-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARDR
• Assessee Lawyers: K K VED
• Keywords: Reopening of assessment; Gift; Business income; Depreciation; Transfer pricing; International transaction; Cost of acquisition; Tangible material; Wrong claim; Difference of opinion; Competent authority; Assessment record; Onus to prove; Retraction; Reason to believe; Documents seized; Change of opinion; Reassessment proceedings
• Section: 44AD; 133A; 147; 131; 148; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAM IT KOCHAR, ACCOUNTANT MEMBER ITA NO.1594/MUM/2013 ASSESSMENT YEAR: 2004-05 M. PALLONJI & CO. PVT. LTD. C/O- TAJ PRINTING WORKS, 46/A, CAWASJI PATEL STREET, FORT, MUMBAI-400001 / VS. JCIT, RANGE-2(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( /ASSESSEE) ( ' / REVENUE) PAN. NO.AAACM3525B # '$ % & / DATE OF HEARING : 28/12/2016 % & / DATE OF ORDER: 23/01/2017 !' / ASSESSEE BY SHRI K. K. VED ' !' / REVENUE BY SHRI SUMAN KUMAR-DR ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 29/11/2012 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE FIRST GROUND RAISED BY THE ASSESSEE PER TAINS TO UPHOLDING THE REOPENING OF ASSESSMENT U/S 147/14 8 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI K. K. VED, CONTENDED THAT THE REASSESSMENT WAS MADE BEYOND FOUR YEARS AS THE NOTICE WAS ISSUED ON 25/03 /2011 BY CONTENDING THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS. RELIANCE W AS PLACED UPON THE DECISION IN TITANO COMPONENTS LTD. VS ACIT (2012) 343 ITR 183 (BOM.). ON THE OTHER HAND, THE L D. DR, SHRI SUMAN KUMAR, DEFENDED THE REOPENING BY CONTEND ING THAT THE MATERIAL FACTS WERE NOT DISCLOSED BY THE A SSESSEE FOR WHICH OUR ATTENTION WAS INVITED TO THE FACTUAL FINDING RECORDED IN THE IMPUGNED ORDER AND THE ADMISSION OF THE ASSESSEE THAT THERE WAS ERROR ON THE PART OF THE AS SESSEE TO DISCLOSE THE MATERIAL FACTS. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.16,53,53,280/- IN ITS RETURN FILED ON 01/11/2011 . THE ASSESSEE COMPANY WAS SERVED WITH A NOTICE DATED 25/03/2011, ISSUED U/S 148, BY OPINING THAT INCOME HAS ESCAPED ASSESSMENT. THE REASONS WERE RECORDED AS HA S ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 3 BEEN MENTIONED IN PARA-2 ONWARDS OF THE ASSESSMENT ORDER. IN REPLY, THE ASSESSEE VIDE LETTER DATED 28/ 04/2011 AND 18/08/2011 ASKED FOR THE REASONS FOR REOPENING THE ASSESSMENT. THE REVENUE PROVIDED THE REASONS VIDE LETTER DATED 30/08/2011. IN REPLY, THE ASSESSEE ATTENDED A ND FURNISHED THE DETAIL. THE REPLY OF THE ASSESSEE IS AVAILABLE ON PARA-4 OF THE ASSESSMENT ORDER, WHICH IS SUMMARI ZED AS UNDER:- (A) THE SET OFF OF LONG TERM CAPITAL LOSS, AS INADVERTENTLY CLAIM, IS INCORRECT (B) A FURTHER SUM OF RS.1,49,353/- OUGHT TO BE REDUCED WHILE COMPUTING THE DEDUCTION U/S 80IA FOR THE YEAR UNDER CONSIDERATION. (C) NO ADJUSTMENT IS NECESSARY ON ACCOUNT OF INSURANCE PREMIUM AS THERE WAS NO ERROR COMMITTED. 2.2. IN THE LIGHT OF THE FOREGOING UNCONTROVERTED FACTUAL MATRIX, THE LD. COUNSEL FOR THE ASSESSEE DI D NOT DENY THAT THERE WAS WRONG CLAIM BY THE ASSESSEE. HE MERE LY STATED THAT IT WAS MADE INADVERTENTLY. IN VIEW OF M ATERIAL AVAILABLE ON RECORD, IT IS OUR BOUNDED DUTY TO EXAM INE THE VALIDITY OF REOPENING U/S 147 R.W.S 148 OF THE ACT. BEFORE ADVERTING FURTHER WE ARE REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 147 OF THE ACT FOR RE ADY REFERENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 4 HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATE D OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY A SSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REV ISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 5 THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN T HE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUIRED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED A SSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASON S RECORDED UNDER SUB-SECTION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT Y EAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 2.3. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, WE FIND THAT AFTER INSERTION OF EXPLANATION -3 TO S ECTION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH E FFECT FROM 01/04/1989 SECTION 147 HAS AN EFFECT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME (SUCH INCO ME) WHICH HAS ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSM ENT AND WHICH CAME TO THE NOTICE DURING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LAID DOWN BY HON BLE ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 6 JURISDICTIONAL HIGH COURT IN CIT VS JET AIRWAYS IND IA PVT. LTD. (2010) 195 TAXMAN 117 (MUM.) AND THE FULL BENC H DECISION FROM HONBLE KERALA HIGH COURT IN CIT VS B EST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN.COM 278 (KERALA)(FB). A PLAIN READING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWER TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THA T INCOME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOT ICE DURING THE COURSE OF PROCEEDINGS OF REASSESSMENT U/ S 148. OUR VIEW IS FORTIFIED BY THE DECISION IN MAJINDER S INGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JAY BHARAT MARUTI LTD. VS CIT (2010) TAX LR 476 (DE L.) AND V. LAKSHMI REDDY VS ITO (2011) 196 TAXMAN 78 (MAD.) . THE PROVISION OF THE ACT IS VERY MUCH CLEAR AS WITH EFFECT FROM 01/04/1989, THE ASSESSING OFFICER HAS WIDE POW ERS TO INITIATE PROCEEDINGS OF REOPENING. THE HONBLE KER ALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (2006) 156 TAXMA N 206 (KERALA) EVEN WENT TO THE EXTENT SO LONG AS THE AO HAS INDEPENDENTLY APPLIED HIS MIND TO ALL THE RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REOPENING CANNOT BE SAID TO BE INVALID. 2.4. WE ARE AWARE THAT MERE CHANGE OF OPINION CANNOT FORM THE BASIS OF REOPENING WHEN THE NECESSA RY FACTS WERE FULLY AND TRULY DISCLOSED BY THE ASSESSE E IN THAT SITUATION, THE ITO IS NOT ENTITLED TO REOPEN THE AS SESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. HOWEVER, POWERS UNDER AMENDED PROVISION ARE WIDE ENOUGH WHERE THERE IS A ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 7 REASONABLE BELIEF WITH THE ASSESSING OFFICER, THAT INCOME HAS ESCAPED ASSESSMENT, BECAUSE THE POWERS WITH EFF ECT FROM 01/04/1989 ARE CONTEXTUALLY DIFFERENT AND THE CUMULATIVE CONDITIONS SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CONDITION FOR ACTION I S THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. S UCH BELIEF CAN BE REACHED IN ANY MANNER AND IS NOT QUAL IFIED BY A PRE-CONDITION OF FAITH AND TRUE DISCLOSURE OF MAT ERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTI ON 147. VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSM ENT IS MUCH WIDER UNDER THE AMENDED PROVISION. OUR VIEW I S FORTIFIED BY THE DECISION FROM HONBLE DELHI HIGH C OURT IN BAWA ABHAI SINGH VS DCIT (2001) 117 TAXMAN 12 AND RAKESH AGARWAL VS ACIT (1996) 87 TAXMAN 306 (DEL.). THE HONBLE APEX COURT IN CIT VS SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) CLEARLY HELD THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT FOR THE REVENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT THE SAME TIME, WE ARE AWARE THAT POWERS U/S 147 AND 148 OF THE ACT ARE NO T UNBRIDLED ONE AS IT IS HEDGED WITH SEVERAL SAFEGUAR DS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR A BUSE OF THIS POWER BY THE AO. HOWEVER, THE MATERIAL AVAILA BLE ON RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT,THEREFORE, THE LD. ASSESSING OFF ICER WAS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMEN T. THE ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 8 HONBLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD. (2001) 247 ITR 818 (SC) HELD THAT MERELY BECAU SE THE CASE OF THE ASSESSEE WAS CORRECT IN ORIGINAL ASSESS MENT FOR THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO REOPEN THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF FINDING OF HIS FACT THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. 2.5. UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDENED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICT ION, PUT IN THAT SECTION IS THAT REASON TO BELIEVE. THAT R EASON HAS TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND PARTIALLY SOME MATERIAL FACTS RE LEVANT FOR ASSESSMENT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DELHI HIGH COURT IN UNITED ELECTRIC AL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (D EL.) AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 83 8 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE AC T IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR. THE HONBLE GUJARA HIGH CO URT IN PRAFULL CHUNNILAL PATEL VS ACIT (SUPRA) EVEN WENT T O THE EXTENT THAT AT THE INITIATION STAGE FORMATION OF RE ASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FINDING OF FA CTS. ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 9 IDENTICAL RATIO WAS LAID DOWN IN BRIJMOHAN AGRAWAL VS ACIT (2004) 268 ITR 400, 405 (ALL.) AND RATNACHUDAM ANI S. UTNAL VS ITO (2004) 269 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN VS ITO (1968) 70 ITR 79(SC). 2.6. SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PR OMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PARTICU LAR CASE. IT DEPEND UPON THE FACTS OF EACH CASE. THE BELIEF M UST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONABLE GROUNDS. THE ASSESSING OFFICER IS REQUIRED TO ACT, NOT ON MERE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVI DENCE. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN F OLLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (201 1) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISI ONS:- IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 10 X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 I TR 417 (DEL.). XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 I TR 742, 746 (PUNJ.), XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXM AN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37, 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 32 4, 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) 2.7. IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994- 95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJ A V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM), WHERE THE INFORMATION REGARDING ACQUISITION OF THE ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE REL EVANT ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 11 ASSESSMENT YEAR 1992-93 AND SUCH INFORMATION WAS DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 199 5- 96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME IN RELATION TO ASSESSMENT YEAR 1992-93 . 2.8. THE HONBLE JURISDICTIONAL HIGH COURT IN EXP ORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT, (2013) 350 ITR 651 (BOM), WHERE THERE HAD BEEN NO APPLICATION OF MIND TO THE RELEVANT FACTS DURING TH E COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFI CER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALID. 2.9. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRIL AL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 432 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDINARY JURISDICT ION OF THE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PART OF THE RELEVANT MATERIAL HAD BEEN KEPT OUT FROM THE ASSESSING OFFICER). THE INFORMATION WAS IN THE ANNEXURES AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 147 WOULD APPLY. THE REASSESSMENT PROCEEDIN GS AFTER FOUR YEARS WERE VALID. 2.10. IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYA N KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CAS E OF THE ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE EXPIR Y OF THE ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 12 TIME LIMIT PROVIDED IN SECTION 153(2). THE REASSESS MENT PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD. V. ASST. CIT, (2012) 348 ITR 439 (BOM), BOTH I N THE COMPUTATION OF TAXABLE LONG-TERM CAPITAL GAINS IN T HE ORIGINAL RETURN OF INCOME AND IN THE COMPUTATION TH AT WAS SUBMITTED IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILENCE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVESTED, AS SUCH THERE BEIN G A FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE H ELD TO BE VALID. THIS VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 (DEL). 2.11. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V. ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE I NITIATION WAS STARTED WITHIN FOUR YEARS FOR RE-EXAMINING THE DEDUCTION UNDER SECTION 80HHC, WAS HELD TO BE WRONG LY ALLOWED IN THE ORIGINAL ASSESSMENT. IDENTICALLY, IN THE CASE OF HAPPY FORGING LTD. V. CIT, (2002) 253 ITR 413,41 6-17 (P & H), WHERE EXCISE DUTY PAID IN ADVANCE WAS SHOWN A S AN ASSET IN THE BALANCE SHEET AND WAS ALLOWED AS A DED UCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN THE BALANCE SHEET AND WAS NOT ROUTED ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 13 THROUGH THE PROFIT AND LOSS ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN THE CASE OF VIPAN K HANNA V. CIT, (2002) 255 ITR 220, 230 (P & H), WHERE FROM THE FACTS IT WAS CLEAR THAT THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE RETURN AT THE RATE OF 50 PER CE NT AND HE HAD NOWHERE DISPUTED THE FACT THAT THE ADMISSIBLE R ATE OF DEPRECIATION TO HIM WAS 40 PER CENT., SUCH FACT ALO NE WAS SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS UND ER SECTION 147 AND, THEREFORE, SUCH INITIATION WAS SUS TAINED. THE HONBLE PUNJAB & HARYANA HIGH COURT IN MRS. RAM A SINHA V. CIT, (2002) 256 ITR 481, 483, 486, WHERE T HE REASSESSMENT NOTICE HAS BEEN ISSUED ON THE BASIS OF DEFINITE INFORMATION FROM CBI REGARDING INVESTMENTS BY THE ASSESSEE WHICH HAD NOT BEEN DISCLOSED DURING THE OR IGINAL ASSESSMENT PROCEEDINGS, SUCH INITIATION HAS BEEN UP HELD. 2.12. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJRANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOU GH THE TRANSACTION OF SALE OF SHARES WAS DISCLOSED AND ACC EPTED IN THE ORIGINAL ASSESSMENT, BUT THE SUBSEQUENT DISCOVE RY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSACTI ON WAS NOT GENUINE, A REASSESSMENT NOTICE AFTER FOUR YEARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DIS CLOSURE OF THE MATERIAL FACTS. IN THIS REGARD, THE PETITION ER-ASSESSEE CANNOT DRAW ANY SUPPORT FROM THE STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTICE FOR REASSESS MENT. IT ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 14 GOES WITHOUT SAYING THAT FOR THE PURPOSE OF MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHALL HAVE TO CON FRONT THE PETITIONER WITH THE ENTIRE MATERIAL IN HIS POSSESSI ON ON THE BASIS OF WHICH HE PROPOSES TO MAKE THE ADDITIONS. I N PUNJAB LEASING PVT. LTD. V. ASST. CIT, (2004) 267 I TR 779, 781-82 (P & H), WHERE DEPRECIATION WAS ALLOWED TO T HE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FINANC ING OF VEHICLES AND CONSUMER DURABLES ON 'HIRE-PURCHASE BA SIS' AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NOTIC E ISSUED AFTER FOUR YEARS HAS BEEN HELD NOT TO SUFFER FROM A NY ILLEGALITY AS THE SAME WAS BASED ON THE BONA FIDE A CTION OF THE COMPETENT AUTHORITY TO DETERMINE WHETHER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEE N CLAIMING DEPRECIATION, WERE ACTUALLY OWNED BY IT. 2.13. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DEDUC TION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRON GLY GRANTED TO THE ASSESSEE, FOR WHICH IT WAS NOT ENTIT LED. THEREFORE, REASSESSMENT PROCEEDINGS TO WITHDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKEWISE, IN CIT V. HINDUSTAN TOOLS & FORGINGS P. LTD., (2008) 306 ITR 209 (P & H), WHERE, THE ASSESSEE IN THE REGULAR ASSESSMENT HAD BEEN ALLOWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTION 80HHC. THEREFORE, THE ACTION INITIATED BY T HE AO FOR REASSESSMENT UNDER SECTION 147(B) COULD NOT BE HELD TO BE INVALID. ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 15 2.14. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFOR MATION FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYME NT OF LIABILITY IN REGARD OF THE SALES TAX COLLECTED IN E XCESS. THE ASSESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE CASE OF SAT NAR AIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID N OT FORM THE SOLE BASIS FOR THE ASSESSING OFFICER TO INITIA TE REASSESSMENT PROCEEDING BUT HE ALSO TOOK INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT COMMISSIONER AS WELL AS THE FACT THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1995-96. THUS, IT WAS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY INV OKED THE JURISDICTION TO INITIATE THE REASSESSMENT PROCEEDIN GS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SINGH, (2 005) 276 ITR 347 (P & H), IT WAS HELD THAT THE RESPONDEN TS DID NOT HAVE THE LOCUS STANDI TO QUESTION THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOTICE. NON-I SSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS OF THE LATE P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT AFFECT THE VAL IDITY OF THE REASSESSMENT ORDERS. LIKEWISE, IN TILAK RAJ BE DI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FAC TS COMING TO LIGHT IN A SUBSEQUENT ASSESSMENT YEAR COU LD VALIDLY FORM THE BASIS FOR INITIATING REASSESSMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 14 7. THE ACTION OF THE INCOME TAX AUTHORITIES IN REOPENING T HE ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 16 ASSESSMENT OF THE ASSESSEE AND RESTRICTING THE DEDU CTION UNDER SECTION 80-IB WAS HELD TO BE VALID. 2.15. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHO W THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPAC ITY OF THE DONOR TO MAKE GIFTS AND THE OCCASION THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (1999) 240 ITR 728, 736-37, 739 (PAT), WHERE THE INVESTIGATION REPORT I NDICATED THAT THE OFFICER HAD REASON TO BELIEVE THAT ON ACCO UNT OF FAILURE ON THE PART OF THE PETITIONER-ASSESSEE TO D ISCLOSE TRUE AND FULL FACTS, INCOME HAD BEEN GROSSLY UNDER ASSESSED, REASSESSMENT PROCEEDINGS WERE HELD VALIDL Y INITIATED. 2.16. IN THE CASE OF KAPOOR BROTHERS V. UNION OF I NDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MA TERIAL EVIDENCE FOR THE PURPOSE OF REOPENING OF THE ASSESS MENT ALREADY COMPLETED HAS BEEN BROUGHT TO THE NOTICE OF THE AUTHORITY DURING THE COURSE OF ENQUIRY. THE NOTICE WAS HELD TO BE VALID BY THE HONBLE HIGH COURT. IN THE CASE OF VIPPY PROCESSORS PVT. LTD. V. CIT, (2001) 249 ITR 7, 8 (M P), WHERE THE NEED TO ISSUE NOTICE AROSE DUE TO NOTICING OF V AST DIFFERENCE IN VALUE OF PROPERTIES DISCLOSED BY THE ASSESSEE AND THAT OF THE REPORT OF THE VALUATION OFFICER AND THE REASONS THAT LED TO THE ISSUE OF THE NOTICE WERE DU LY ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 17 RECORDED AND THE SAME WERE ALSO ADEQUATE AND BASED ON RELEVANT FACTS AND MATERIAL, INITIATION WAS UPHELD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CIT, (200 1) 249 ITR 109, 110-11 (MP), WHERE THE NOTICE WAS ISSUED A FTER RECORDING REASONS IN THAT REGARD, INITIATION WAS UP HELD. 2.17. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARD EN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 481, 489, 494- 95, SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COURT: (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE W AS HOLDING SHARES IN AN AMALGAMATING COMPANY AND HE WA S ALLOTTED SHARES IN THE AMALGAMATED COMPANY AND SUCH SHARES WERE SOLD BY HIM AND HE HAS DISCLOSED THE MA RKET PRICE OF SUCH SHARES AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISC LOSED THE COST OF ACQUISITION OF SHARES IN THE AMALGAMATING C OMPANY IN ACCORDANCE WITH SECTION 49(2) READ WITH SECTION 47(VII), INITIATION OF REASSESSMENT PROCEEDINGS AFTER FOUR Y EARS HAS BEEN SUSTAINED BECAUSE THERE WAS FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412,418-19 (RAJ), WHERE THE RETURN O F THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DEC LARED BY THE ASSESSEE, WHO CARRIED ON CON- TRACT BUSINESS, I NITIATION OF REASSESSMENT PROCEEDINGS BY ISSUING A NOTICE DAT ED 15- 5-2001 PROPOSING TO REASSESS PETITIONER-ASSESSEE AT HIGHER ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 18 RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRIBED UND ER SECTION 44AD HAS BEEN SUSTAINED. IN THE CASE OF D R. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER RECOR DING REASONS IN WRITING BY THE AO. THE NON-AVAILABILITY OF A FEW DOCUMENTS DEMANDED BY THE ASSESSEE WOULD NOT MAKE T HE REASSESSMENT PROCEEDINGS INITIATED FOR THE REASONS RECORDED IN DETAIL ILLEGAL. 2.18. IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT Y EARS IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALL Y BY THE ASSESSING AUTHORITY WHETHER THE INCOME SHOULD BE TR EATED UNDER THE HEAD 'BUSINESS INCOME' OR 'PROPERTY INCOM E'. THE ASSESSEE WOULD GET OPPORTUNITY TO SHOW SUFFICIENT C AUSE TO THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESS MENT. THUS, IT COULD NOT BE SAID THAT THERE WAS NO RELEVA NT MATERIAL TO INITIATE PROCEEDINGS UNDER SECTION 147. IN THE CASE OF KARTIKEYA INTERNATIONAL V. CIT, (2010) 329 ITR 539 (ALL), IN VIEW OF THE MATTER, THE PETITIONER WAS NO T ENTITLED FOR THE DEDUCTION ON THE DUTY DRAWBACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HAD BEEN ALLOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1), IT HA D ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATION O F THE PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WAS LEGAL AND IN ACCORDANCE WITH LAW. ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 19 2.19. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: S URESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL), NOTWITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX IN THE HANDS OF P, HE HAD TAKEN A S TAND THAT THE AMOUNT DID NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT WAS NOT CLEAR AS TO IN WHOS E HANDS THE AMOUNT IN QUESTION HAD TO BE ASSESSED. THE ITO WAS JUSTIFIED IN TAKING PROCEEDINGS UNDER SECTION 147 F OR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETITIONE RS ACCORDING TO THE CLAIM MADE BY THE PETITIONERS. LI KEWISE, HONBLE KERALA HIGH COURT IN CIT V. DR. SADIQUE UMM ER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSING OFFI CER COLLECTED FURTHER INFORMATION TO COMPLETE THE REASS ESSMENTS WHICH WAS ALSO PERMISSIBLE UNDER THE ACT. THE FINDI NG OF THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUN AL, THAT THE ASSESSING OFFICER HAD NO MATERIAL TO BELIEVE TH AT THE INCOME HAD ESCAPED ASSESSMENT WAS WRONG AND CONTRAR Y TO FACTS. THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. THEREFORE, THE REOPENING OF ASSESSMENTS WA S HELD TO BE VALID AND WITHIN TIME. IN THE CASE OF CIT V . UTTAM CHAND NAHAR, (2007) 295 ITR 403 (RAJ), THE NOTICE REQUIRING THE ASSESSEE TO FILE THE RETURN WITHIN 30 DAYS WAS IN ACCORDANCE WITH SECTION 148 AS IT MUST BE DEEMED TO BE IN FORCE WITH EFFECT FROM 1-4-1989, AND IN FORCE AS ON THE DATE NOTICE WAS ISSUED. THERE WAS NO VIOLATION OF S ECTION 148 IN RESPECT OF THE SPECIFIED PERIOD WITHIN WHICH THE ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 20 RETURN IS TO BE SUBMITTED. THE REASSESSMENT PROCEED INGS WERE HELD TO BE VALID. 2.20. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONC EDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UN-AMENDED PROVISION OR UN-DER THE AMENDED PROVISION, THE RECO URSE OPEN TO THE DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSESSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHERWISE INVALID. LIKEWISE, IN ATUL TR ADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOUNT BOOKS OR RECORD AND OTHER MATERIAL WERE ALL COMMON WHICH WERE BEING CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATIN G TO THREE APPEALS. THE PETITIONER HAD NOTICE AND OPPORT UNITY OF BEING HEARD. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (IN DIA) P. LTD. V. LAMES KURIAN, ASST. CIT, (2007) 294 ITR 341 (GUJ ), THE ASSESSING OFFICER HAD FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWANCES. THE REASSESSMENT PROCEED INGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, (2010) 323 ITR 60 (MAD), WHERE THE ASSESS EE HAD FURNISHED INCORRECT PARTICULARS AND THEREFORE, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE JUSTIFIED. 2.21. IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 21 OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCTION OF PENAL INTEREST WHICH HAD ACCRUED NOT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BUT IN EARLIER YEAR S. THIS THE ASSESSEE HAD NOT DISCLOSED. THE REASSESSMENT WA S HELD TO BE VALID. LIKEWISE, IN KUSUM INDUSTRIES P. LTD. V. CIT, (2008) 296 ITR 242 (ALL), AS THE AWARD HAD BECOME F INAL IT WOULD BE TAKEN THAT THE DIRECTORS OF THE ASSESSEE H AD ACCEPTED THE FACTUM OF EARNING OF SECRET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO BINDING ON THE COMPANY. THE NON-APPEARANCE OF ONE OF THE ARBITRATO RS AND ONE OF THE DIRECTORS IN RESPECT OF THE SUMMON ISSUE D UNDER SECTION 131 WOULD NOT MAKE THE REASSESSMENT INVALID . THE HONBLE KERALA HIGH COURT IN CIT V. INDO MARINE AGE NCIES (KERALA) P. LTD., (2005) 279 ITR 372 (KER), HELD TH AT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 144. T HE MERE FACT THAT IT WAS NOT COMMUNICATED TO THE ASSES SEE WOULD NOT MAKE SUCH AN ASSESSMENT RECORDED IN THE O RDER SHEET ILLEGAL AND THAT WOULD NOT BAR FURTHER PROCEE DINGS UNDER SECTION 147. THUS, THE ASSESSMENT WAS HELD TO BE VALIDLY REOPENED UNDER EXPLANATION 2(C) TO SECTION 147. LIKEWISE, IN CIT V. N. JAYAPRAKASH, (2006) 285 ITR 369 (KER), WHERE, THE ASSESSEE COULD NOT, AFTER HAVING PERSUADED THE ASSESSING AUTHORITY TO WITHDRAW THE N OTICE DATED 1-10-1993, POINTING OUT THAT IT WAS NOT IN CO NFORMITY WITH LAW, BE ALLOWED TO CONTEND THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF THE TIME-LIMIT BY THE FINANC E (NO.2) ACT, 1996, WITH EFFECT FROM 1-4-1989. IN THE ABSENC E OF ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 22 SPECIFIC PROVISION IN THE FINANCE (NO. 2) ACT, 1996 , INVALIDATING PROCEEDINGS INITIATED BY THE INCOME-TA X OFFICER, THE ACTION TAKEN BY HIM APPLYING THE THEN EXISTING LAW COULD NOT BE SAID TO BE INVALID. 2.22. LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FR OM T AND K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS H AD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW O F THE ABSENCE OF THESE DETAILS, THE ASSESSING OFFICER CO ULD NOT EXAMINE THE TAXABILITY OF ADVANCES OR LOAN RAISED B Y THE ASSESSEE. THERE WAS FAILURE TO DISCLOSE MATERIAL FA CTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDI NGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBL E ALLAHABAD HIGH COURT IN CHANDRA PRAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (ALL), WHEREIN, THE INCOME- TAX DEPARTMENT HAD SENT A REQUISITION ON 27-3-2002, UND ER SECTION 132A REQUISITIONING THE BOOKS OF ACCOUNT AN D OTHER DOCUMENTS SEIZED BY THE CENTRAL EXCISE DEPARTMENT. THE RECORD OF THE PROCEEDING DATED 18-4-2002, SHOWED TH AT THE REQUISITION WAS NOT FULLY EXECUTED AS ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN DELIVERED TO THE REQUISITIONING AUTHORITY. THE PROCEEDINGS INITIATED UNDER SECTION 147 WAS HELD TO BE VALID. 2.23. IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIARY ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 23 CONSTITUTED SUFFICIENT INFORMATION FOR THE ESCAPEME NT OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATION OR FURNISHING OF INACCURATE PARTICULA RS AS REGARDS SALE CONSIDERATION. THUS, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED . LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (2006) 28 5 ITR 57 (KER), IT WAS CLEAR FROM THE REASONS RECORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEV E THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRUL Y THE MATERIAL FACTS AND THAT AS A CONSEQUENCE INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSWARE CORPORA TION LTD. V. CIT, (2005) 277 ITR 40 (ALL), THE PRINCIPLES LAI D DOWN BY THE CALCUTTA HIGH COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : (1979) 118 ITR 1005 (CAL) DID CONSTITUTE INFORMATION ON A POINT OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FORMING HIS BELIEF THAT THE INCOME TO THAT EXTENT HAD ESCAPED ASSESSMENT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER C ARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD T HAT THE DEPARTMENTAL VALUER'S REPORT CONSTITUTED MATERIAL F OR ENTERTAINING A BELIEF OF ESCAPED INCOME IN THE YEAR S UNDER ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 24 CONSIDERATION. THE REASSESSMENT PROCEEDING WAS HELD TO BE VALID. 2.24. IN AUROBINDO SANITARY STORES V. CIT, (2005) 276 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BETWEEN THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESSEE-FIRM AND THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE BALANCE -SHEET OF THE ASSESSEE-FIRM FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1989-90. THESE MATERIALS HAD A DIRE CT LINK AND NEXUS FOR FORMATION OF A BELIEF BY THE ASSESSIN G OFFICER THAT INCOME OF THE ASSESSEE-FIRM HAD ESCAPED ASSESS MENT BECAUSE OF FAILURE OF THE ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. I N THE CASE OF CIT V. BEST WOOD INDUSTRIES & SAW MILLS, (2011) 331 ITR 63 (KER), THE ASSESSEE CHALLENGED THE VALIDITY OF T HE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SECTION 147 AND BOTH THE FIRST A PPELLATE AUTHORITY AS WELL AS THE TRIBUNAL ACCEPTED THE CONT ENTION OF THE ASSESSEE HOLDING THAT SO FAR AS THE REASSESSMEN TS RELATED TO ASSESSMENT OF UNEXPLAINED TRADE CREDITS, THEY WERE INVALID. ON APPEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VALID. IN HONDA SIEL POWE R PRODUCTS LTD. V. DEPUTY CIT, (2012) 340 ITR 53 (DEL ), THERE BEING OMISSION AND FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THUS REASSE SSMENT PROCEEDINGS WERE HELD TO BE VALID. ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 25 IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUTY CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCOUNT A ND OTHER MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, THE ORDER PASSED BY THE COMMISSIONER (APPEALS) IN THE ASSESSMENT YEAR 2001-02 WOULD CONSTITUTE 'INFORMATI ON' OR MATERIAL FROM ANY EXTERNAL SOURCE AND, AS SUCH, THE REASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 20 00-01 WERE HELD TO BE VALID. LIKEWISE, IN THE CASE OF C IT V. SMT. R. SUNANDA BAI, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WERE HELD TO BE VALID ON T HE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDE R SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH DISENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FO R THE ASSESSMENT YEARS 1992-93 AND 1993-94. 2.25. IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. ASST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BEING SU FFICIENT MATERIAL ON RECORD FOR THE ASSESSING OFFICER TO FOR M A BELIEF AS REGARDS THE ESCAPEMENT OF INCOME IN RELATION TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIRE BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (201 3) 357 ITR 177 (DEL), WHERE THERE BEING PRIMA FACIE MA TERIAL IN THE POSSESSION OF THE ASSESSING OFFICER TO FORM A T ENTATIVE BELIEF THAT SECTION 9(1)(I) HELD ATTRACTED, SAID RE ASON BY ITSELF ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 26 CONSTITUTED A RELEVANT GROUND TO REOPEN THE ASSESSM ENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 ( MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 30 8 ITR 434 (KER)]; VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 (MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 337 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 (KARN)]; X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 3 43 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CI T [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 7 3 (DEL)]; XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 I TR 158 (GUJ)]; ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 27 XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BAN K LTD. [(2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (BOM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 IT R 630 (MAD)]. 2.26. SO FAR AS, THE DECISION IN THE CASE OF CIT V S KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A PARTICULAR CONCLUSION, ONLY IN A SITUATION, WHEN NO T A SINGLE PIECE OF PAPER OR DOCUMENT WAS RECOVERED, THEREFORE , THE HONBLE COURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIAL FOUND AND THE ADDITION WAS MERELY ON THE B ASIS OF STATEMENT ONLY THEN REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. IT IS FURTHER NOTED TH AT RETRACTION WAS MADE BY THE ASSESSEE, MERELY AFTER A LONG GAP OF MORE THAN TWO YEARS AND NOT AT THE EARLIEST POSSIBLE TIME. IT WAS MERELY AS AFTERTHOUGHT. THERE IS A PO SSIBILITY THAT THE STATEMENT, IF, RECORDED UNDER DURESS AND T HREAT (WHICH IS NOT THE CASE IN THE PRESENT APPEALS) IN T HAT SITUATION, THERE IS A LESS POSSIBILITY OF RETRACTIO N DURING THAT PERIOD, HOWEVER, IF THE RETRACTION IS MADE WITHIN S HORT SPAN OF TIME THEN RETRACTION CARRIES MORE WEIGHT. THE A SSESSEE NEVER ALLEGED THAT THE STATEMENT WAS RECORDED UNDER DURESS AND THREAT. LIKEWISE, IN THE CASE OF CIT VS S. KHADER KHAN SON (2012) 254 CTR 228 (SC), AFFIRMING THE DEC ISION ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 28 OF MADRAS HIGH COURT IN (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS MADE SOLELY ON THE BASIS OF STAT EMENT U/S 133A AND NO OTHER MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE, THUS, UNDER THE PECULIAR FACTS I N THE PRESENT APPEAL, THE CASES RELIED UPON BY THE ASSESS EE ARE NOT OF MUCH HELP AS IS CLEARLY OOZING OUT FROM THE CONTENTS OF THE STATEMENT TENDERED BY THE ASSESSEE WITHOUT D URESS OR THREAT, CONNECTING THE ASSESSEE OF NON-RECORDING OF PURCHASE AND SALE IN THE REGULAR BOOKS OF ACCOUNTS. IF THE MATERIAL AVAILABLE ON RECORD AND THE JUDICI AL PRONOUNCEMENTS DISCUSSED HEREINABOVE ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, WE FIND THAT THERE WAS ESCARPMENT OF INCOME WHICH WAS EVEN ADMITTED BY THE ASSESSEE IN ITS REPLY. THUS, THERE WAS ESCAPEMENT OF INCOME. THERE WAS ENOUGH MATERIAL/TAN GIBLE MATERIAL WITH THE ASSESSING OFFICER ON THE BASIS OF WHICH REOPENING WAS MADE BY THE ASSESSING OFFICER, THEREF ORE, WE ARE OF THE OPINION THAT, SO FAR AS, INITIATION OF P ROCEEDINGS U/S 147 R.W.S. 148 OF THE ACT ARE CONCERNED, THE LD . ASSESSING OFFICER WAS JUSTIFIABLY WITHIN THE PARAME TER OF THE LAW TO REOPEN THE ASSESSMENT, THEREFORE, WE AFF IRMED THE STAND OF THE LD. FIRST APPELLATE AUTHORITY. 3. THE NEXT GROUND RAISED BY THE ASSESSEE IS ENHANCEMENT MADE BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) WITHOUT FOLLOWING THE PROVISIONS OF SE CTION ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 29 251(2) OF THE ACT BY CONTENDING THAT BEFORE MAKING ANY ENHANCEMENT/REDUCTION, NO NOTICE WAS GIVEN TO THE ASSESSEE. THE LD. DR, DEFENDED THE CONCLUSION OF TH E LD. COMMISSIONER OF INCOME TAX (APPEAL). 3.1. WE HAVE PERUSED THE RECORD AND FIND THAT BEFO RE MAKING ANY ENHANCEMENT/REDUCTION OF THE DEDUCTION CLAIMED U/S 80IA OF THE ACT, THE FIRST APPELLATE A UTHORITY, AS PER THE PROVISION OF SECTION 251(2), IS EXPECTED TO FOLLOW THE PROCEDURE LAID DOWN IN THE ACT. SECTION 251 IS REPRODUCED HEREUNDER FOR READY REFERENCE:- 251. (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (A PPEALS) SHALL HAVE THE FOLLOWING POWERS ( A ) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE M AY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; ( AA ) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT IN R ESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABATES UNDER SECTION 245HA , HE MAY, AFTER TAKING INTO CONSIDERATION ALL THE M ATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDED BY, THE SETTL EMENT COMMISSION, IN THE COURSE OF THE PROCEEDING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RECORD, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; ( B ) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALTY, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHER TO ENHANC E OR TO REDUCE THE PENALTY; ( C ) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN THE APPEAL AS HE THINKS FIT. (2) THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE A GAINST SUCH ENHANCEMENT OR REDUCTION. EXPLANATION .IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISIN G OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEF ORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. ITA NO. 1594/MUM/2013 M/S M. PALLONJI & CO. PVT. LTD. 30 IN THE LIGHT OF THE AFORESAID PROVISION OF THE ACT, WE REMAND THIS ISSUE TO THE FILE OF THE LD. COMMISSION ER OF INCOME TAX (APPEAL) TO DECIDE THE GROUND AFTER PROV IDING DUE OPPORTUNITY TO THE ASSESSEE AND DECIDE AFRESH I N ACCORDANCE WITH LAW, THUS, THIS GROUND OF THE ASSES SEE IS ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 28/12/2016. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) #'$ / ACCOUNTANT MEMBER %'$ /JUDICIAL MEMBER # $ MUMBAI; ' DATED : 23/01/2017 F{X~{T? P.S / /. . . &%'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT (RESPECTIVE ASSESSEE) 2. -.+, / THE RESPONDENT. 3. / / # 0 ( )* ) / THE CIT, MUMBAI. 4. / / # 0 / CIT(A)- , MUMBAI, 5. 2'3- , / )*&) 4 , # / DR, ITAT, MUMBAI 6. 56 / GUARD FILE. / BY ORDER, .2* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # / ITAT, MUMBAI