Renuka Financial Services Ltd., New Delhi V. ITO, New Delhi

ITA 1599/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6985 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 14-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Income from undisclosed sources; Period of limitation; Question of law; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 115JB; 147; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI N.K. SAINI, AM & SMT. BEENA A PILLAI, J M ITA NO.1599/DEL/2013 ASSESSMENT YEAR : 2004-05 RENUKA FINANCIAL SERVICES LTD., 28, NAJAFGARH ROAD, NEW DELHI. PAN: AAACR4748M VS. ITO, WARD 15(4), NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI DINESH GUPTA, FCA & SHRI V. RAJA KUMAR. DEPARTMENT BY : S HRI V.R. SONBHADRA, SR. DR DATE OF HEARING : 14.12. 2015 DATE OF PRONOUNCEMENT : 19.02.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-XVII, NEW DELHI, VIDE ORDER DATED 10 TH JANUARY, 2013 FOR ASSESSMENT YEAR 2004-05, ON THE F OLLOWING GROUNDS OF APPEAL:- ITA NO.1599/DEL/2013 2 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. COMMISSIONER OF INCOME TAX (APPEALS)(C IT (A)) ERRED IN CONFIRMING THE ADDITION OF RS. 1,06,06,355 /- ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. 2. THE CIT (A) ERRED IN UPHOLDING THE REASSESSMENT U/S 147/148 DESPITE THE FACT THAT THE AO DID NOT HAVE A NY VALID REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT WHICH IS SINE QUA NON FOR FRAMING ASSESS MENT U/S 147/148. 3. THAT THE REASSESSMENT PROCEEDING INITIATED BEYON D FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS INVALID IN TERMS OF THE PROVISO TO SECTION 147 OF T HE ACT WHERE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSME NT. 4. THAT THE A.O. HAD NO MATERIAL WHATSOEVER FOR FORMATION OF ANY BELIEF THAT INCOME OF THE APPELLAN T CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT SINCE THE APPELLANT HAD NOT RECEIVED ACCOMMODATION ENTRIES BY WAY OF SHARE CAPITAL/CAPITAL GAINS. 5. THAT THE A.O. ERRED IN INITIATING THE REASSESSME NT PROCEEDINGS ON MERE CHANGE OF OPINION FOR REVIEWING ORDER OF ASSESSMENT MADE EARLIER WHICH IS CONTRARY TO THE LA W. 6. THAT IN ANY CASE, THE ALLEGED UNDISCLOSED INCOME WAS ALREADY OFFERED BY THE APPELLANT AS ITS INCOME HENC E THE CIT(A) ERRED IN UPHOLDING THE SAID ADDITION WHICH A MOUNTED TO ADDING THE SAME INCOME TWICE. 7. THAT THE ID. CIT(A) ERRED IN CONFIRMING THE SAID ADDITION BY HOLDING THAT THE APPELLANT FAILED TO PR OVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS AS IF THESE TRANSACTIONS WERE ON CAPIT AL ACCOUNT WHEREAS THE TRANSACTIONS WERE ON REVENUE ACCOUNT AN D THE ITA NO.1599/DEL/2013 3 APPELLANT HAD ALREADY ACCOUNTED THE SAID TRANSACTIO NS AS ITS INCOME. 8. THE APPELLANT PRAYS THAT IT MAY BE PERMITTE D TO ADD, AMEND OR FOREGO ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE AS RECORDED BY THE AO AR E THAT THE ASSESSEE HAD FILED RETURN DECLARING INCOME OF NIL A FTER SETTING OFF BROUGHT FORWARD LOSSES TO THE EXTENT OF PROFIT OF R S.10,71,42,915/-. THE INCOME U/S 115JB WAS HOWEVER SHOWN AT RS.10,50, 87,168/-. THE CASE WAS COMPLETED U/S 143(3) ON 24.11.2006 AT A BOOK PROFIT OF RS.10,50,87,168/-. LATER ON, AN INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, NEW DELHI, THAT THE ASSESSE E IS AMONGST THE BENEFICIARIES OF BOGUS ACCOMMODATION ENTRIES TOTALI NG TO RS.1,06,06,355/-. ACCORDINGLY, THE PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED AND NOTICE U/S 148 OF THE ACT WAS IS SUED ON 30.03.2011. THE AO MADE AN ADDITION OF RS.1,06,06,3 55/- 2.1. AGGRIEVED BY THE ORDER OF THE LD. AO, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) CONFIRM ED THE FINDINGS OF THE LD.AO AND HELD AS UNDER:- THE APPELLANT HAS THUS BEEN UNABLE TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PERSONS WHO HAVE ALLEGEDLY ENTERED INTO SHARE TRANSACTIONS. AS THE ASSESSEE DID NOT OFFER ANY ITA NO.1599/DEL/2013 4 EXPLANATION ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDITED IN THE BOOKS THERE WAS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY. THE BURDEN WAS ON THE ASSESSEE TO REBUT THE SAME, AND, IT FAILED TO REBUT IT, IT CAN THEREFORE BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN IN COME NATURE. THE APPELLANT HAS FAILED TO DISCHARGE ITS ONUS TO PRODUCE LEGALLY ACCEPTABLE EVIDENCE OF CREDITWORTHI NESS OF THE PERSONS. THE EXPRESSION THE ASSESSEE OFFER S NO EXPLANATION MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS TH E SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE. IN THIS CASE THE APPELLANT HAS OFFERED N O CREDITABLE EXPLANATION ABOUT THE AMOUNTS CREDITED I N ITS BOOKS, THE RECEIPT OF RS.1,06,06,355/- THEREFORE CA NNOT BE TREATED AS EXPLAINED. CONSIDERING THE ABOVE FAC TS, THE ADDITION OF RS.1,06,06,355/- MADE BY THE AO U/S 68 IS CONFIRMED. 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE US. 3.1. GROUNDS OF APPEAL NOS.2, 3, 4 AND 5 ARE DIRECT ED AGAINST THE REOPENING OF THE ASSESSMENT U/S 147 AS THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIALS FOR ASSESSMENT AND GROUND NOS.1, 6 AND 7 ARE DIRECTED A GAINST THE ADDITION OF RS.1,06,06,355/- ON ACCOUNT OF INCOME F ROM UNDISCLOSED SOURCES. SINCE ALL THE GROUNDS ARE INT ERCONNECTED WITH EACH OTHER, THEY ARE BEING DISCUSSED TOGETHER. ITA NO.1599/DEL/2013 5 3.2. THE LD. AR SUBMITTED THAT THE ASSESSEE IS ENGA GED IN DEALING IN SHARES AND ADVANCING OF LOANS. DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE HAD ENTERED INTO SHARE TRADING TRANSACTIONS WITH M/S CREATIVE FINANCIAL SERVICES P VT. LTD., WHICH RESULTED IN NET TRADING PROFIT OF RS.1,06,06,440/-. HE SUBMITTED THAT THE ASSESSEE HAS SPECIFICALLY DISCLOSED THE PR OFIT EARNED FROM THE SHARE TRADING IN P&L ACCOUNT UNDER THE HEAD PR OFIT ON SALE PURCHASE OF SHARES. THE LD. AR SUBMITTED THAT DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO HAD ASKED FOR TH E DETAILS OF PROFIT ON SALE AND PURCHASE OF SHARES. 3.3. IT IS FURTHER SUBMITTED THAT VIDE LETTER DATED 22 ND NOVEMBER, 2006, THE ASSESSEE HAD SUBMITTED ALL THE RELEVANT D ETAILS IN RESPECT OF THE SHARE PURCHASE. THE RELEVANT LETTER DATED 22 ND NOVEMBER, 2006 IS PLACED AT PAGES 48 TO 86 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT IT WAS AFTER GOING THROUGH THE RELEV ANT DETAILS PROVIDED BY THE ASSESSEE THAT THE LD. AO HAD ACCEPT ED THE SAME WHILE PASSING THE ORIGINAL ASSESSMENT ORDER U/S 143 (3) DATED 24.11.2006. HE SUBMITTED THAT THE LD. AO HAS APPLIE D HIS MIND ON THE ENTIRE DETAILS FILED BY THE ASSESSEE WHICH INCL UDES CONTRACT ITA NO.1599/DEL/2013 6 NOTICE, COPY OF THE ACCOUNT IN THE BOOKS OF THE COM PANY, ETC., BEFORE PASSING THE ORIGINAL ASSESSMENT ORDER. THE LD. AR STRONGLY OBJECTED THE RE-ASSESSMENT PROCEEDINGS ON THE FOLLOWING GROU NDS:- THAT THE RE-ASSESSMENT PROCEEDINGS INITIATED IS BEY OND THE JURISDICTION AND NOT IN ACCORDANCE WITH THE PROVISI ONS OF THE LAW; THAT THERE IS NO REASON TO BELIEVE THAT ANY INCOME HAS ESCAPED ASSESSMENT WHICH COULD BE PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. THAT THERE IS A NON-APPLICATION OF MIND BY THE LD. AO AT THE TIME OF RECORDING OF REASONS WHICH LEAVES THE RE-AS SESSMENT INVALID; THAT THE REOPENING IS INVALID IN TERMS OF THE PROVI SO TO SECTION 147 OF THE ACT; AND THAT THE REOPENING IS A MERE CHANGE OF OPINION BY T HE LD. AO. 4. ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDER PASSED BY THE LOWER AUTHORITIES. THE LD. DR SUBMITTED THAT THESE ARE MONEY RECEIVED FROM BOGUS COMPANY AS PER THE INFORMATION RECEIVED BY THE LD. AO AND THAT THEY ARE IN THE NATURE OF SHARE CAP ITAL. THE LD. DR ITA NO.1599/DEL/2013 7 SUBMITTED THAT THESE ARE NOT MONEY RECEIVED IN LIEU OF PURCHASE OF SHARES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE COUNS ELS FOR BOTH THE PARTIES AND PERUSED THE PAPER BOOK FILED BEFORE US. 5.1. ON PERUSAL OF THE RECORDS BEFORE US, IT IS OBS ERVED THAT THE ASSESSEE HAD SUBMITTED ALL THE DETAILS REGARDING TH E INCOME FROM TRADING OF SHARES AMOUNTING TO RS.1,06,05,440/-. T HE LD. AO, WHILE PASSING THE ORIGINAL ASSESSMENT ORDER HAS GONE THRO UGH THESE DETAILS AND HAS APPLIED HIS MIND BEFORE ACCEPTING T HE SUBMISSIONS MADE BY THE ASSESSEE IN LIEU OF THE PROFITS EARNED FROM TRADING IN SHARES. IT IS FURTHER OBSERVED THAT THE ASSESSEE H AS DISCLOSED THE AMOUNT IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD PROFIT AND LOSS FROM TRADING IN SHARES, THEREBY LEADING TO THE CON CLUSION THAT THE ASSESSEE HAS DISCLOSED THE SAID AMOUNT AS INCOME IN THE HANDS OF THE ASSESSEE FOR THE RELEVANT YEAR UNDER CONSIDERAT ION. 5.2. THE NOTICE ISSUED BY THE LD. AO FOR REOPENING IS ON THE GROUND THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIE S TO THE TUNE OF RS.1,06,06,355/- IN THE NATURE OF SHARE CAPITAL/CAP ITAL GAINS WHICH HAVE ESCAPED ASSESSMENT. IT IS ALSO NOTICED THAT T HE SAID NOTICE OF ITA NO.1599/DEL/2013 8 REOPENING HAS BEEN ISSUED BY THE LD. AO ON 30.3.201 1 WHICH IS BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT ORDER. THE LD. AO HAS PROCEEDED WITH THE RE-ASSESSMENT PRO CEEDINGS MERELY ON THE INFORMATION RECEIVED FROM THE INVESTI GATION WING, WITHOUT VERIFYING THE SAME. IN THE LIGHT OF THE AB OVE, WE SHALL EVALUATE THE PROVISIONS U/S 147 OF THE ACT AS UNDER . NO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESS MENT 5.3. THE INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF THE ABOVE REASONS/INFORMATION IS VOID AB INITIO SINCE THERE IS NO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE INFORMATION THAT ACCOMMODATION ENTRIES AGGREGATING TO RS.1,06,0 6,355/- WAS RECEIVED BY THE ASSESSEE HAS NOT BEEN ESTABLISHED B Y THE LD.AO. THE ASSESSEE COMPANY ENTERED INTO SHARE TRADING TRANSAC TIONS WITH THE SAID COMPANY AND ON SUCH TRADING IT HAD EARNED PROF IT. THUS THE INFORMATION THAT SUCH ENTRIES HAVE BEEN TAKEN AND I NTRODUCED EITHER AS SHARE CAPITAL OR CAPITAL GAIN IS INCORREC T. THEREFORE, THE VERY REASON ON THE BASIS OF WHICH THE CASE WAS REOP ENED IS NON- EXISTENT AND THEREFORE THE PROCEEDINGS ARE VOID AB INITIO . ITA NO.1599/DEL/2013 9 5.4. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS DULY ACCOUNTED THE SAID PROFIT IN ITS BOOKS OF ACCOUNT. THE ASSESS EE HAS SPECIFICALLY DISCLOSED THE SAME UNDER THE HEADING 'PROFIT ON SAL E-PURCHASE OF SHARES' AT RS. 1,06,05,440/- IN THE PROFIT AND LOSS ACCOUNT (THERE IS MARGINAL DIFFERENCE OF RS.915/-). THUS THE SAID INC OME HAS BEEN DULY SHOWN AND DULY ASSESSED. IT IS THEREFORE IMPOS SIBLE TO FORM A BELIEVE, IN THE ABOVE BACKGROUND THAT INCOME HAS ES CAPED ASSESSMENT WITH REGARD TO RS. 1,06,06,355/- AS ALLE GED IN THE NOTICE. NON-APPLICATION OF MIND AT THE TIME OF RECORDING OF REASONS LEAVES THE ASSESSMENT INVALID . 5.5. IT IS WELL SETTLED LAW THAT THE AO HAS TO INDE PENDENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM OUTSIDE AGENC Y (THE INVESTIGATION WING IN THIS CASE), AND ARRIVE AT THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN THE INSTANT CASE, THE RE ASONS DO NOT SHOW ANY APPLICATION, NOR THE SAME SHOW ANY BELIEF INDEPENDENTLY ARRIVED AT, WHICH IS THE BASIC PRE-REQUISITE FOR IS SUING NOTICE U/S 148. FURTHER, THE ALLEGED INFORMATION PROVIDED BY T HE INVESTIGATION WING HAS BEEN ACCEPTED AS GOSPEL TRUTH WITHOUT ANY VERIFICATION BY THE ASSESSING OFFICER. ITA NO.1599/DEL/2013 10 5.6. THE LAW POSTULATES THE ASSESSING OFFICER (AND NOT THE INVESTIGATION WING) TO HAVE REASON TO BELIEVE. BLIN D ACCEPTANCE OF THE INFORMATION FURNISHED BY THE INVESTIGATION WING CANNOT FORM REASONS LEADING TO THE BELIEF BY THE ASSESSING OFFI CER OF ANY ESCAPEMENT OF INCOME. SINCE THE AO HAS ACTED ON THE BASIS OF THE BORROWED SATISFACTION ONLY THE REASSESSMENT PROCEED INGS ARE VOID AB INITIO . 5.7. IN THE INSTANT CASE, THE AO RECEIVED INFORMATI ON THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES IN THE NATURE OF SHARE CAPITAL/CAPITAL GAINS. HE HAS NOT VERIFIED THE SAME BEFORE ISSUING THE NOTICE. THE ASSESSEE HAS NOT RECEIVED ANY AMOUN T BY WAY OF SHARE CAPITAL OR BY WAY OF CAPITAL GAINS. AS ALREAD Y EXPLAINED THE ASSESSEE HAS CARRIED OUT SHARE TRADING TRANSACTIONS DURING THE YEAR AND RECEIVED THE PAYMENT THEREOF BY CHEQUES. SUCH P ROFIT HAS BEEN DULY ACCOUNTED, DISCLOSED AND ASSESSED. THEREFORE T HE AO COULD NOT FORM A BELIEF AT THE TIME OF ISSUE OF NOTICE THAT I NCOME TO THAT EXTENT HAS ESCAPED ASSESSMENT. THEREFORE THE REASSESSMENT NOTICE IS INVALID AND VOID AB INITIO . ITA NO.1599/DEL/2013 11 REOPENING INVALID IN TERMS OF PROVISO TO SECTION 14 7 : 5.8. THE PRESENT PROCEEDINGS AS STATED ABOVE, WERE INITIATED VIDE IMPUGNED NOTICE DATED 30.3.2011, I.E., MUCH AFTER T HE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2004-05, THE YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 24.11.2006. IT IS SUBMITTED THAT THE ASSESSEE HAS DULY DISCLOSED THE INCOME/PROFIT IN ITS ACCOUNTS AND THE SAME WAS SPECIFICALLY REFLECTED IN THE PROFIT AND LOSS ACCOU NT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ENQUIRED A BOUT THE SAME AND RAISED A SPECIFIC QUERY. THE ASSESSEE HAS FILED DETAILED EXPLANATIONS ALONG WITH SUPPORTING DOCUMENTS. THUS, THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR ASSESSMENT BOTH AT THE TIME OF FILING THE RETURN OF INCOME AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS THEREFORE OBSERVED THAT THE PRESENT PROCEEDINGS ARE BAD, IN T ERMS OF THE PROVISO TO SECTION 147. 5.9. PROVISO TO THE SECTION 147 OF THE ACT PLACES F ETTERS ON THE POWERS OF THE ASSESSING OFFICER TO INITIATE REASSES SMENT PROCEEDINGS ITA NO.1599/DEL/2013 12 BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR, WHERE THE ASSESSMENT HAS BEEN COMP LETED UNDER SECTION 143(3) OF THE ACT UNLESS THE INCOME HAS ESC APED ASSESSMENT BY REASON OF THE FAILURE OF THE APPELLANT TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE SA ID PROVISO READS AS UNDER: 'PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E 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 PAR T OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR.' 5.9. THE COURTS INCLUDING THE HON'BLE JURISDICTIONA L HIGH COURT, HAVE CONSISTENTLY HELD REASSESSMENT PROCEEDINGS INI TIATED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, TO BE INVALID IN TERMS OF THE PROVISO TO SECTION 147 OF T HE ACT WHERE THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ITA NO.1599/DEL/2013 13 5.10. IN THE PRESENT CASE, THE PROCEEDINGS UNDER SE CTION 147 OF THE ACT WERE INITIATED AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE ASSESSMENT YEAR 2004-05 WITHOUT THERE BEING ANY FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MA TERIAL FACTS NECESSARY FOR ASSESSMENT. THAT BEING SO, THE IMPUGN ED REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED CLEARL Y BEYOND THE PERIOD OF LIMITATION PRESCRIBED IN PROVISO TO SECTI ON 147 OF THE ACT, WHICH IS NOT PERMISSIBLE IN LAW. THE PROCEEDINGS IN ITIATED ARE, THEREFORE, CLEARLY WITHOUT JURISDICTION, BAD IN LAW AND VOID AB INITIO . REOPENING NOT SUSTAINABLE BEING CHANGE OF OPINION : 5.11. THE LD.AR SUBMITS THAT THE IMPUGNED REASSESS MENT PROCEEDINGS ARE WITHOUT JURISDICTION AND BAD IN LAW SINCE THE PROCEEDINGS HAVE BEEN INITIATED ON A MERE CHANGE OF OPINION. IT IS SUBMITTED THAT ASSESSEE COMPANY HAS DULY DISCLOSED THE INCOME/PROFIT IN ITS ACCOUNTS AND THE SAME WAS SPEC IFICALLY REFLECTED IN THE PROFIT AND LOSS ACCOUNT. 5.12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ENQUIRED ABOUT THE SAME AND RAISED A SPECIFIC QUERY . THE ASSESSEE HAS FILED DETAILED EXPLANATIONS ALONG WITH SUPPORTI NG DOCUMENTS AS ITA NO.1599/DEL/2013 14 DETAILED EARLIER. THE AO AFTER FULL APPLICATION OF MIND PASSED THE ORDER U/S 143(3). IN SUCH A CASE, THE REASSESSMENT NOTICE IS BAD. THE SUPREME COURT HAS IN THE CASE OF KELVINATOR OF INDIA IN 320 ITR 561 HAS HELD THAT 'THE CONCEPT OF CHANGE OF OPINION ' ON THE PART OF ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUBSTITUTION OF SECTION 147 O F THE INCOME-TAX ACT, 1961, BY THE DIRECT TAX LAWS (AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING OFFICER HA S TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, BUT THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPE N AN ASSESSMENT ON MERE CHANGE OF OPINION. 5.13. THE LD. AR FOR THE ASSESSEE HAS PLACED HIS RE LIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. BHUSHAN CAPITAL AND CREDIT SERVICES LTD., REPORTED IN (2013) 263 CTR 393, WHEREIN IT HAS BEEN HELD AS UNDER:- HELD: THE AMOUNT HAD BEEN DECLARED IN THE RETURN O F INCOME AS CAPITAL GAINS AND WHAT THE AO DID WAS ONL Y TO CHANGE THE NOMENCLATURE FROM 'CAPITAL GAINS' TO 'UNDISCLOSED INCOME'. THE ASSESSMENT HAS BEEN REOPENED AFTER A LAPSE OF ABOUT EIGHT YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR AS NOTED BY THE TRIBUNAL. IF THE ASSESSMENT IS SOUGHT TO BE REOPENE D ITA NO.1599/DEL/2013 15 AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR, IT IS INCUMBENT UPON THE AO, UNDER THE FIRST PROVISO TO S. 147, TO SHOW THAT THE ESCAPEMEN T OF INCOME WAS ON ACCOUNT OF FAILURE OF THE ASSESSEE TO FILE THE RETURN OF INCOME OR TO FURNISH FULLY AND TRULY ALL MATERIAL FACTS RELATING TO THE ASSESSMENT. THE ASSE SSEE HAD DECLARED THE AMOUNT OF RS. 5,10,130 AS CAPITAL GAINS IN THE RETURN OF INCOME. THERE WAS THUS NO FA ILURE TO DISCLOSE THE INCOME. CONSEQUENTLY, THERE IS NO ESCAPEMENT OF INCOME. THE CHANGE OF THE NOMENCLATUR E FROM 'CAPITAL GAINS' TO 'UNDISCLOSED INCOME' DOES N OT RESULT IN ANY ESCAPEMENT OF INCOME SINCE THE RATE O F TAX IS THE SAME UNDER BOTH HEADS. IN THE RELEVANT ASSESSMENT YEAR, THERE WAS NO DIFFERENCE IN THE RAT E OF TAX APPLICABLE TO CAPITAL GAINS. THEREFORE, NEITHER . IS THERE ANY ESCAPEMENT OF INCOME NOR IS THERE ANY UND ER- ASSESSMENT. IT IS NOT A CASE COVERED BY SPECIAL SUB -CL. (II) OF CL. (C) OF EXPLN. (2) BELOW S. 147 WHICH SPEEKS OF THE INCOME BEING ASSESSED AT TOO LOW A RATE. THERE IS N O INFIRMITY IN THE ULTIMATE DECISION OF THE TRIBUNAL THAT THE REASSESSMENT WAS WITHOUT JURISDICTION. NO SUBSTANTI AL QUESTION OF LAW ARISES. 6. IN VIEW OF THE ABOVE DISCUSSION AND THE RATIO LA ID DOWN IN THE CASE OF BHUSHAN CAPITAL AND CREDIT SERVICES LTD. (S UPRA), WE HOLD THAT THE REOPENING OF THE ASSESSMENT TO BE INVALID AND, THEREFORE, WE QUASH THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO VIDE NOTICE DATED 31.3.2011. WE, THEREFORE, QUASH THE R E-ASSESSMENT PROCEEDINGS INITIATED BY THE LD. AO. THE GROUNDS O F APPEAL FILED BY THE ASSESSEE, THUS, STAND ALLOWED. ITA NO.1599/DEL/2013 16 7. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.201 6. SD/- SD/- [ N.K. SAINI ] [ BEENA A. PILLAI ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 19.02.2016 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI. ITA NO.1599/DEL/2013 17 DATE 1. DRAFT DICTATED ON 28.12. 20 15 2. DRAFT PLACED BEFORE THE AUTHOR 29.12. 2015 3. DRAFT PLACED BEFORE THE OTHER MEMBER 4. APPROVED DRAFT COMES TO THE SR.PS/PS 5. FILE SENT TO THE BENCH CLERK 6. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 7. DATE ON WHICH FILE GOES TO THE AR 8. DATE OF DISPATCH OF ORDER.