Alpha Foam Ltd., Pune V. ACIT, Circle - 8, Pune

ITA 1627/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2903 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 27-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JADHAV
• Keywords: Reopening of assessment; Capital asset; Business income; Depreciation; Search and seizure; Cost of acquisition; Tangible material; Wrong claim; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 80IB; 194C; 147; 148; 139

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , . . , $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.1627/PN/2013 & & / ASSESSMENT YEAR : 2005-06 ALPHA FOAM LTD., J-172, MIDC, BHOSARI, PUNE 411 028 PAN NO.AACCA4196J . / APPELLANT V/S ACIT, CIRCLE-8, PUNE . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : SHRI S.K. JADHAV, JCIT / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 25-07-2013 OF THE CIT(A)-V, PUNE RELATING TO ASSES SMENT YEAR 2005-06. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF P.U. FOAM, AUTOM OBILE SEAT ASSEMBLY, VACUUM FORMED PARTS, CHEMICAL PVC, ABS, PP SHEETS ETC. IT FILED ITS RETURN OF INCOME ON 31-10-2005 DECLARING TOTAL INCOME OF RS.23,54,378/-. THE AO COMPLETED THE ASSESSMENT U/S.143(3 ) ON 24- / DATE OF HEARING :28.12.2015 / DATE OF PRONOUNCEMENT:15.01.2016 2 ITA NO.1627/PN/2013 12-2007 BY DETERMINING THE TOTAL INCOME AT RS.77,05,870/-. THEREAFTER, THE AO NOTICED THAT THE ASSESSEE COMPANY HAD NOT FULFILLE D THE CONDITIONS LAID DOWN FOR SMALL SCALE INDUSTRIES UNIT AND THERE FORE THE ASSESSEE COMPANY WAS NOT ELIGIBLE FOR DEDUCTION U/S.80IB(10 ) OF THE I.T. ACT. SIMILARLY, THE ASSESSEE HAS VIOLATED THE PROVISIONS O F SECTION 40(A)(IA) BY NOT DEPOSITING TDS COLLECTED WITHIN THE STIPULATED TIME. THE AO ACCORDINGLY ISSUED NOTICE U/S.148 OF THE I.T. ACT ON 19-01-2011 AFTER RECORDING FOLLOWING REASONS : AS PER SUB-SECTION(3) OF 80IB, THE AMOUNT OF DEDUCTIO N IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD ST ATE SPECIFIED IN THE EIGHT SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROF IT AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEAR S BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING. AN INDUSTRIAL UNDERTAKING IN WHICH THE INVESTMENT IN FIXED ASSETS IN PLANT AND MACHINERY WHETHER HELD ON OWNERSHIP TERMS OR ON L EASE, OR BY HIRE PURCHASE DOES NOT EXCEED RS.3 CRORE ON THE LAST DAY OF THE PREVIOUS YEAR IS A SMALL SCALE INDUSTRIAL UNDERTAKING. THE ASSESSMENT OF THE RETURN OF INCOME FOR A.Y. 2005-06 SWAS COMPLETED U/S.143(3) ON 24-12-2007 DETERMINING INCOME AT RS.77, 07,870/- AFTER ALLOWING DEDUCTION U/S.80IB RS.33,03,374/-. IT IS NOTICED FROM ASSESSMENT RECORD THAT THE ASSESSEE COMME NCED OPERATION OF THE UNIT FROM SET.1996 AND WAS ALLOWED DEDUCTION OF RS.33,03,374/- U/S.80IB BEING A SMALL SCALE UNIT FOR MA NUFACTURE PUC SHEETS, SEAT BELT, POLYURETHANE FOAM ETC. AS PER BA LANCE SHEET AS ON 31-03- 2005 THE TOTAL VALUE OF PLAT & MAY USED FOR BUSINESS WA S RS.5.26 CRORES AND WHICH EXCEEDED THE ELIGIBILITY TO BE RECKONED AS A SM ALL SCALE UNIT. THUS THE ASSESSEE IS NOT ENTITLE FOR THE BENEFIT OF 80IB DEDUCTIO N THE INCOME TAX ACT, 1961. OMISSION TO DISALLOW THE DEDUCTION HAS RESULTED I N UNDER ASSESSMENT OF INCOME OF RS.33,03,374/- AND CONSEQUENTLY RESULTED IN SHORT LEVY OF TAX OF RS.16,07,687/- INCLUDING INTEREST RS.3,98,900/- U.S.234 B. IT IS ALSO NOTICED THAT ASSESSEE COMPANY HAS SHOWN PROVISION FOR TDS AMOUNTING TO 13,08,600.54 AS ON 31-03-2005. THE COMPANY HAS PAID TDS AS UNDER AS VERIFIED FROM TH E CHALLANS OF TDS ENCLOSED WITH RETURN OF INCOME : RS.6900/- AS ON 30-06-2005 RS.513674/- AS ON 28-06-2005 RS.518976/- AS ON 28-06-2005 RS.55020/- AS ON 28-06-2005 -------------------- RS.10,94,870/- -------------------- 3 ITA NO.1627/PN/2013 THE ABOVE TDS AMOUNT TOTALING RS.10,94,870/- DEPOSITE D BY ASSESSEE COMPANY AFTER 31-05-2005, I.E. BEYOND THE TIME PRESC RIBED BY I.T. ACT, 1961. THUS THE PROVISION OF SEC.40(A)(IA) ARE ATTRACTED ON THE PAYMENT. NO FURTHER DETAILS ARE ON RECORDS. THUS THE UNDER ASSESSMENT IS WORKS OUT TO RS.5,47,435/- ON ESTIMATED BASIS (1094870 X100/2). 2. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME H AS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC.147 OF THE INCOME TAX ACT, 1961. THEREFORE, PERMISSION FOR ISSUE OF NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 BE GRANTED. 3. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME IN RESP ONSE TO THE NOTICE U/S.148 OF THE I.T. ACT. THE AO STARTED THE ASSE SSMENT PROCEEDINGS AFTER CONSIDERING THE OBJECTIONS OF THE ASSES SEE BY PASSING SEPARATE ORDER AND DISPOSING OF OBJECTIONS RAISED BY THE ASSESSEE TO THE NOTICE U/S.148 OF THE I.T. ACT. THE AO ACCEPTED THE CON TENTION OF THE ASSESSEE SO FAR AS THE SECOND ISSUE REGARDING SECTION 4 0(A)(IA) IS CONCERNED AND HAS NOT MADE ANY DISALLOWANCE. SO FAR AS THE FIRST ISSUE IS CONCERNED, THE AO NOTED THAT THE ASSESSEE HAD SHOW N PLANT AND MACHINERY AS ON 31-03-2005 IN THE BALANCE SHEET AMOUNT ING TO RS.5.26 CRORES WHICH WAS ABOVE THE LIMIT OF RS.3 CRORES APPLICABLE FO R SMALL SCALE INDUSTRIAL UNDERTAKING. ACCORDINGLY, AFTER CONFRONTING THE ASSESSEE ON THIS ISSUE THE AO CAME TO THE CONCLUSION TH AT ASSESSEE WAS NOT A SMALL SCALE INDUSTRIAL UNDERTAKING AND ACCORDINGLY DIS ALLOWED THE DEDUCTION CLAIMED U/S.80IB(3) OF THE I.T. ACT AMOUNTING TO RS.33,03,374/-. 4. BEFORE DOING SO, THE AO ALSO PROVIDED AN OPPORTUNITY T O THE ASSESSEE TO PROVIDE DETAILS OF PLANT AND MACHINERY USED FO R R&D PURPOSE AS WELL AS TOOLS AND SPARES ALONG WITH EVIDENCE S O THAT NO FUTURE CLAIM IS MADE IN THIS REGARD. THE AO ALSO ASKED T HE ASSESSEE TO PROVIDE SST REGISTRATION CERTIFICATE WHICH WAS NOT PROVIDED BY THE ASSESSEE. THE AO ACCORDINGLY DISALLOWED THE CLAIM OF DEDUC TION 4 ITA NO.1627/PN/2013 U/S.80IB(3) OF THE I.T. ACT AMOUNTING TO RS.33,03,374/- AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE ISSUE OF NOT ICE U/S.148 OF THE I.T. ACT AS WELL AS THE DISALLOWANCE ON MERIT. SO FAR AS THE VALIDITY OF NOTICE U/S.148 IS CONCERNED IT WAS ARGUED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. SINCE THE ORD ER U/S.143(3) OF THE I.T. ACT WAS PASSED AND REOPENING WAS CARRIED OU T AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEREFORE, PROVISO TO SECTION 147 OF THE I.T. ACT IS APPLICABLE AND SINCE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL THE MATERIAL FACT S NECESSARY FOR THE ASSESSMENT. THE AO WAS NOT EMPOWERED TO ASSUME J URISDICTION U/S.147 OF THE I.T. ACT. VARIOUS DECISIONS WERE ALSO BROU GHT TO THE NOTICE OF THE LD.CIT(A). 6. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPLANATIO N GIVEN BY THE ASSESSEE. THE LD.CIT(A) DISMISSED THE GROUND RAISE D BY THE ASSESSEE ON THE VALIDITY OF NOTICE ISSUED U/S.148 OF THE I. T. ACT BY OBSERVING AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, REOPENING HAS BEEN DONE AFTE R FOUR YEARS OF THE ASSESSMENT YEAR AND THEREFORE PROVISO TO SEE. 147 OF INC OME-TAX ACT IS APPLICABLE. HOWEVER, IN THIS CASE, IT IS SEEN THAT THER E WAS NO FULL AND TRUE DISCLOSURE BY THE APPELLANT IN RESPECT OF PLANT & MACH INERY AS WELL AS ELIGIBILITY OF DEDUCTION U/S. 80IB(3) OF INCOME-TAX ACT. WHILE THE BALANCE SHEET OF THE APPELLANT COMPANY AS ON 3L.03.2005 SHOWS VALUE OF PLANT & MACHINERY AT RS.5,25,74,340.58/-, THE AUDIT REPORT SH OWS THE VALUE OF PLANT & MACHINERY AT RS.1,33,95,656/- AND THE AUDIT REPORT ALSO CERTIFIES THE APPELLANT TO BE A SMALL SCALE INDUSTRIAL UNDERTAKING . WHEN THE LEARNED COUNCIL OF THE APPELLANT WAS ASKED AS TO HOW THE VALUE OF PLANT & MACHINERY HAS BEEN SHOWN AT 1,32,95,656/-, IT WAS STATED THAT THE SAME HAS BEEN SHOWN ON THE BASIS OF WDV. THUS, FROM THE DETAILS FILED BY THE APPELLANT IN THE BALANCE SHEET AS WELL AS IN FORM NO. 10CCB, IT I S CLEAR THAT THERE WAS NO TRUE AND FULL DISCLOSURE OF FACTS, AS FAR AS VALUE OF MA CHINERY IS CONCERNED. ON THE CONTRARY, THE ASSESSING OFFICER WAS. MISGUIDED BY THE VALUE SHOWN IN FORM NO.10CCB WHICH WAS CERTIFIED BY THE C.A. THEREF ORE, IN MY VIEW, THE CASE OF THE APPELLANT IS SIMPLY A CASE OF MIS-GUIDING THE ASSESSING OFFICER AND MAKING WRONG CLAIM ON THE BASIS OF FURNISHING INC ORRECT VALUE OF PLANT & 5 ITA NO.1627/PN/2013 MACHINERY IN FORM NO. 10CCB. THE CAS ARE REQUIRED TO PROVIDE CORRECT INFORMATION IN FORM NO. 10CCB, AS THE SAME FORMS BASIS FOR ALLOWING VARIOUS DEDUCTIONS STIPULATED IN THE ACT AND IN CASE T HERE WAS DIFFERENCE OF OPINION ON THIS ACCOUNT, THE CA. CERTIFYING THE FORM NO. 10CCB COULD HAVE VERY WELL PUT A NOTE IN FORM NO. 10CCB AS TO HOW THE VALUATION WAS TAKEN. THIS HAS NOT BEEN DONE BY THE CA. IN FROM NO. 10CCB A ND THEREFORE, IT CANNOT BE SAID THAT THERE WAS TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THIS REGARD, RELIANCE IS P LACED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE INDIAN HUME PIPE CO. LTD., VS. ACIT CENTRAL CIRCLE22 & ORS IN WRIT PET ITION NO.1017 OF 2011 PASSED ON NOVEMBER 8 TH , 2011 AVAILABLE ON WWW.ITATONLINE.ORG. IN THIS CASE, THE REOPENING WAS HELD TO BE OF VALID AS IN THE COM PUTATION, DATE OF INVESTMENT IN THE BONDS OF NATIONAL HIGHWAY AUTHORI TY OF INDIA, RURAL ELECTRIFICATION CORPORATION OF INDIA AND NATIONAL H OUSING BANK WAS NOT PROVIDED EVEN THOUGH, COPIES OF CERTIFICATES WHICH BEAR THE DATE OF ALLOTMENT WERE FILED. THEREFORE, IT WAS HELD THAT S INCE, THE DATE OF INVESTMENT WAS NOT PROVIDED BY THE APPELLANT, THERE WAS NO TRUE AND FULL DISCLOSURE OF MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED FOR THE SAKE OF CLARITY. 'FULL AND TRUE DISCLOSURES MUST MEAN WHAT THE STATUTE SA YS. THESE DISCLOSURES CANNOT BE GARBLED OR HIDDEN IN THE CREVICE S OF THE DOCUMENTARY MATERIAL WHICH HAS BEEN FILED BY THE ASSESSE E WITH THE ASSESSING OFFICER. THE ASSESSEE MUST ACT WITH CANDOR AND THE DISCLOSURE MUST BE FULL AND TRUE. A FULL DISCLOSURE IS A DISCLOSURE OF ALL MATERIAL FACTS WHICH DOES NOT CONTAIN ANY HIDDEN MATE RIAL OR SUPPRESSION OF FACT. A TRUE DISCLOSURE IS A DISCLOSURE WHIC H IS TRUTHFUL IN ALL RESPECTS. JUST AS THE POWER OF THE REVENUE TO REOPE N AN ASSESSMENT BEYOND A PERIOD OF FOUR YEARS IS RESTRICTED BY THE CON DITIONS PRECEDENT SPELT OUT IN THE PROVISO TO SECTION 141,. EQUALLY AN ASSESSEE WHO SEEKS THE BENEFIT AT THE PROVISO TO SECTION 147 MUST MAKE A FULL AND TRUE DISCLOSURE OF ALL PRIMARY FACTS. THE ASSESSEE IN THE PRESEN T CASE DID REFER TO THE FACTS THAT THE CAPITAL GAINS HAD RESULTED FROM THE TRANSFER OF A CAPITAL ASSET AND IN THE COURSE OF THE COMPUTATION D ID PROVIDE FOR THE COST OF ACQUISITION NOTIONALLY AS OF 1 APRIL 1981. AN EXEMPTION WAS CLAIMED UNDER SECTION 54-EC. ALL THE NECESSARY FACTS O N THE BASIS OF WHICH THE CLAIM TO AN EXEMPTION ARE FOUNDED MUST BE DISCLOSED. AS THE ASSESSEE FAILED TO DO SO, THE REVENUE IN THE PRESENT CASE WOULD BE JUSTIFIED IN REOPENING THE ASSESSMENT ON THE GROUND THAT INCOME HAS ESCAPED ASSESSMENT. ' 6. THUS, ON THE FACTS AND CIRCUMSTANCE OF THE CASE AS WELL AS RELYING UPON THE ABOVE DECISION OF HON'BLE BOMBAY HIGH COUR T, IT IS HELD THAT THERE WAS NO FULL AND TRUE DISCLOSURE OF MATERIAL F ACTS NECESSARY FOR ASSESSMENT AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN REOPENING THE ASSESSMENT U/S. 147 OF INCOME-TAX ACT . THUS, THE GROUND IS DISMISSED. 7. SO FAR AS THE MERIT OF THE CASE IS CONCERNED HE ALSO UPHELD THE ORDER OF THE AO IN ABSENCE OF ANY MATERIAL BEFORE HIM TO S UBSTANTIATE THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) WH ICH IS 6 ITA NO.1627/PN/2013 APPLICABLE TO SMALL SCALE INDUSTRIES HAVING PLANT AND MACHINE RY OF LESS THAN RS.3 CRORES. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE RE OPENING OF ASST. U/S.148 IS VALID WITHOUT APPRECIATING THE REOPENING O F ASST. MADE AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASST . YEAR WAS NOT JUSTIFIED IN LAW IN VIEW OF THE FACT THAT THE ASST. U/S 143(3) WAS ALREADY COMPLETED FOR THIS YEAR AND THE ASSESSEE HAD DULY DISCLOSED ALL THE MATE RIAL FACTS. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSE E HAD NOT MADE FULL AND TRUE DISCLOSURE IN RESPECT OF THE VALUE OF PL ANT AND MACHINERY FOR CLAIMING THE DEDUCTION U/S 80IB(3) IN THE COURSE OF ORIGINAL ASST. PROCEEDINGS AND HENCE, THE REOPENING OF ASST. U/S 148 WAS JUSTIFIED IN THE CASE OF THE ASSESSEE. 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT IN THE FORM NO. 10CCB FILED BY THE ASSESSEE, IT WAS WRONGLY STATED THAT THE ASSESSEE WAS E LIGIBLE TO CLAIM DEDUCTION U/S 80IB(3) ON ACCOUNT OF BEING A UNIT EVEN THOUGH THE NET VALUE OF PLANT AND MACHINERY EXCEEDED THE STIPULATED LIMIT OF RS. 3 CRS. FOR CLAIMING THE DEDUCTION AND HENCE, THE ASSESSEE HAD NOT MADE FULL AND TRUE DISCLOSURE OF ALL THE MATERIAL FACTS AND THEREFORE, TH E REOPENING U/S 148 WAS JUSTIFIED. 4. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASSESSEE HAD DULY DISCLOSED THE VALUE OF PLANT AND MACHINERY IN TH E BALANCE SHEET FILED AT THE TIME OF FILING THE RETURN AND THEREFORE, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACTS AND HENCE, THE REOPENING OF ASST. U/S 148 AFTER A PERIOD OF FOUR YEARS WAS NOT JUSTIFIED. 5. THE LEARNED CIT(A) ERRED IN RELYING UPON THE DEC ISION OF BOMBAY HIGH COURT IN THE CASE OF INDIAN HUME PIPE CO. LTD. VS. ASST. CIT & ORS. [348 ITR 439) WITHOUT APPRECIATING THAT THE SAID DECISION WAS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. 6. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ASSUMING WI THOUT ADMITTING THAT THE REOPENING U/S.148 IS JUSTIFIED, THE ASSESSEE SUBMI TS THAT THE LD.CIT(A) ERRED IN DENYING THE DEDUCTION U/S.80IB(1 0) OF RS.33,03,374/- WITHOUT APPRECIATING THAT THE ASSESSEE HAD DULY COMPLIE D WITH THE CONDITIONS LAID DOWN U/S.80IB AND HENCE, THE ASSESSEE WAS ELIGIBLE TO CLAIM THE SAID DEDUCTION. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 9. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THE ASSESSEE FILED RETURN OF INCOME U/S.139(1) ON 31-10-2005 AN D THE AO COMPLETED THE ASSESSMENT U/S.143(3) ON 24-12-2007, A COP Y OF WHICH IS 7 ITA NO.1627/PN/2013 PLACED AT PAGES 72 TO 87 OF THE PAPER BOOK. REFERRING T O THE ASSESSMENT ORDER PASSED U/S.143(3) ON 24-12-2007 HE SUBMITTED THAT THE AO IN THE SAID ORDER HAS ALLOWED DEDUCTION U/S.80IB(3) AT RS.33,03,374 /- BEING 30% OF THE TOTAL BUSINESS INCOME AS AGAINST THE CLAIM OF R S. 10,09,019/-. HE SUBMITTED THAT THE AO ISSUED NOTICE U/S.1 48 ON 19-01-2011 WHICH IS BEYOND THE PERIOD OF 4 YEARS FROM TH E END OF THE RELEVANT ASSESSMENT ORDER. REFERRING TO THE SECOND PRO VISO TO SECTION 147 HE SUBMITTED THAT AS PER SAID SECTION WHERE AN ASS ESSMENT UNDER SUB-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEV ANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SEC TION AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMEN T YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT B Y REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. 10. HE SUBMITTED THAT THE AO HAS ISSUED NOTICE U/S.148 BY GIVING TWO REASONS. HOWEVER, HE HAS NOT MADE ANY ADDITION/DISALLOWANC E U/S.40(A)(IA) I.E. SECOND REASON ON WHICH THE NOTICE U/S.148 WAS ISSUED. 11. SO FAR AS THE FIRST REASON, I.E. THE ASSESSEE IS NOT EN TITLED TO DEDUCTION U/S.80IB(3) OF THE I.T. ACT IS CONCERNED, HE SU BMITTED THAT IN THE ORIGINAL ASSESSMENT ORDER THE AO IN THE BODY OF THE ASSESSMENT ORDER WHILE DISCUSSING THE DEDUCTION U/S.80IB(3) HAS MENTION ED AS UNDER : DEDUCTION U/S.80IB(3) : IT IS SEEN FROM THE FORM 10CCB ENCLOSED WITH THE RETUR N OF INCOME THE ASSESSEE COMPANY IS REGISTERED AS SMALL SCALE INDUSTRIAL UNIT UNDER S.S.I AND ALSO FULFILLED THE CONDITIONS LAID DOWN IN THE PROVISI ONS OF SECTION 80IB(3) OF THE I.T. ACT. THE INITIAL YEAR WAS 1997-98 AS SUCH T HIS IS 9 TH YEAR OF CLAIMING DEDUCTION THE UNIT WAS INCORPORATED FROM 1996, HENCE THE DEDUCTION IS ALLOWABLE IN THE CASE OF ASSESSEE. 8 ITA NO.1627/PN/2013 12. HE SUBMITTED THAT IN THE NOTICE ISSUED U/S.148 BY TH E AO THERE IS NO MENTION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE PURPOSE OF COMPLETION OF THE ASSESSMENT. REFERRING TO PAGES 88 TO 96 OF THE PAP ER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE AUDIT REPORT FILED BY T HE ASSESSEE U/S.10CCB. REFERRING TO PAGE 94 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO CLAUSE 26 ACCORDING TO WHICH THE VALUE OF MACHINERY OR PLANT USED IN THE BUSINES S HAS BEEN SHOWN AT RS.1,32,95,656/- WHICH IS THE WRITTEN DOWN VALUE O F THE PLANT AND MACHINERY. REFERRING TO THE ORDER OF THE CIT(A) HE S UBMITTED THAT THE LD.CIT(A) HAS MENTIONED THAT THERE IS NO PROPER DISCLO SURE OF MATERIAL FACTS BUT HE DOES NOT GO BY THE ORDER OF THE A O. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT THE DECLARATION IN THE FORM 10CCB IS INCORRECT BECAUSE OF THE CONFUSION REGARDING TH E GROSS BLOCK AND NET BLOCK. WHILE THE VALUE OF THE PLANT AND MACHINER Y FOR THE PURPOSE OF SSI UNIT SHOULD BE ON GROSS BLOCK THE ASSESS EE HAS CONSIDERED THE PLANT AND MACHINERY AT THE WDV. HOWEVER , THERE IS NO WITHHOLDING OF ANY MATERIAL FACTS. REFERRING TO THE REASONS RECORDED BY THE AO HE SUBMITTED THAT THE AO REFERRED ONLY TO THE BALANCE SHEET OF THE ASSESSEE AND THERE IS NO MENTION IN THE ASSESSMENT ORDER REGARDING FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. THE AU DIT REPORT SHOWS THE VALUE OF THE FIXED ASSETS BOTH THE GROSS BLOC K AND THE W.D.V. THE AO DOES NOT SAY THAT THE AUDIT REPORT IS WRONG. T HEREFORE, NOW THE REVENUE CANNOT SUPPLEMENT THE REASONS. 13. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.S. WADKAR REPORTED IN 2 68 ITR 322 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DEC ISION HAS HELD 9 ITA NO.1627/PN/2013 THAT IN ABSENCE OF RECORDING OF REASONS BY THE AO THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENTS, REOPENING OF ASSESSMENT MADE U/S.143(3) AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR WAS INVALID. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF NDT SYSTEMS VS. ITO REPORTED IN 363 ITR 603 H E SUBMITTED THAT THE HONBLE HIGH COURT FOLLOWING THE DECISION IN THE CASE OF HINDUSTAN LEVER LTD. (SUPRA) HAS HELD THAT FOR THE PURPOSE OF EXAMIN ING THE JURISDICTION TO REOPEN THE COMPLETED ASSESSMENT ONE IS O NLY CONCERNED WITH THE REASONS RECORDED AT THE TIME OF ISSUING NOTICE U /S.148 OF THE ACT AND REASONS CANNOT BE SUPPLEMENTED OR IMPROVED UP ON LATER. WHERE ALL MATERIAL FACTS NECESSARY FOR DETERMINATION OF INC OME HAVE BEEN DISCLOSED BY ASSESSEE AND AO HAS TAKEN A PARTICULA R VIEW ON THOSE DISCLOSED FACTS AS REFLECTED IN ASSESSMENT ORDER PASSED IN REGULAR PROCEEDINGS, THEN IT WOULD NOT BE OPEN TO REOPEN THOSE ASSESSMENT PROCEEDINGS. REOPENING OF ASSESSMENT ON BASIS OF MERE RE -VERIFICATION OF MATERIAL AND PRIMARY FACTS WHICH ARE ALREADY ON RECORD AND DULY CONSIDERED BY THE AO WHILE PASSING ORIGINAL ASSESSMENT ORD ER IS BAD IN LAW. 14. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF ALFA LAVAL INDIA LTD. VS. DCIT REPORTED IN 160 TTJ 41 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD T HAT THE ABSENCE OF ANY AVERMENT IN THE REASONS RECORDED, AS RE QUIRED BY THE FIRST PROVISO TO SECTION 147 OF THE I.T. ACT TO THE EFFECT THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DIS CLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, RENDERS INITIATION OF PROCEEDINGS SUSCEPTIBLE TO A LEGAL INFIRMITY. REFERRING TO THE DECISION OF T HE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF THE JALNA DISTRICT CENT RAL 10 ITA NO.1627/PN/2013 COOPERATIVE BANK LTD. VS. ACIT VIDE ITA NOS. 154 AND 155 /PN/2014 ORDER DATED 29-04-2015 FOR A.YRS. 2004-05 AND 2005-06 HE SUBMITTED THAT THE TRIBUNAL AFTER CONSIDERING VARIOUS DECISIONS HAS HELD THAT IN ABSENCE OF ANY ALLEGATION IN THE NOTICE ISSUED U/S.148 OF TH E I.T. ACT THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSE E TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESS MENT, REOPENING AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR IS VOID AB-INITIO. 15. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF TITANOR COMPONENTS LTD. VS. ACIT REPORTED IN 343 ITR 183 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT WHERE THE AO HAD NOT RECORDED THE FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT YEAR 1997-98 AND WHAT WAS RECORDED WAS THAT THE PET ITIONER HAD WRONGLY CLAIMED CERTAIN DEDUCTIONS WHICH HE WAS NOT ENT ITLED TO, THE REASSESSMENT PROCEEDINGS INITIATED IN THE YEAR 2004 WERE INVALID. HE SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNA L IN VARIOUS OTHER DECISIONS. HE ACCORDINGLY SUBMITTED THAT THE REAS SESSMENT PROCEEDINGS INITIATED U/S.148 IS VOID AB-INITIO. THEREFORE, THE ORDER OF THE CIT(A) BE SET ASIDE ON THIS ISSUE. 16. SO FAR AS THE MERIT OF THE CASE IS CONCERNED HE FAIRLY CONCEDED TH AT THE ISSUE HAS TO BE DECIDED AGAINST THE ASSESSEE SINCE THE GROSS BLOCK OF PLANT AND MACHINERY EXCEEDED THE PRESCRIBED LIMIT OF RS.3 CRORES TO MAKE THE ASSESSEE ENTITLED AS A SMALL SCALE INDUSTRY. 17. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE REASONS RECORDED BY THE AO ARE SELF-EXPLANATORY AND SUFFICIENT. TH E FAILURE ON 11 ITA NO.1627/PN/2013 THE PART OF THE ASSESSEE TO DISCLOSE THAT IT IS NOT A SM ALL SCALE INDUSTRY ELIGIBLE FOR DEDUCTION U/S.80IB(3) MAKES THE 148 NOTICE VALID. HE SUBMITTED THAT THE FORM 10CCB REPORT FILED BY THE AUDITO R IS CONTRADICTORY AND CONFUSING. THEREFORE, THE VARIOUS DEC ISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE T O THE FACTS OF THE PRESENT CASE AND ARE DISTINGUISHABLE. HE ACCORDINGLY SUB MITTED THAT THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSES SEE SHOULD BE DISMISSED. 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CA SE HAS FILED HIS RETURN OF INCOME U/S.139(1) ON 03-10-2005 AND THE AO COM PLETED THE ASSESSMENT U/S.143(3) ON 24-12-2007. THE NOTICE ISSUED U/ S.148 ON 19-01-2011 IS ADMITTEDLY BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR SINCE THE PERIOD OF 4 YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR ENDS ON 31-03-2010. IT IS TH E CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THERE IS NO MENTION IN THE NOTICE ISSUED U/S.148 THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COM PLETION OF THE ASSESSMENT, THEREFORE, THE REOPENING OF THE ASSESSMENT A FTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, W HERE THE ASSESSMENT EARLIER WAS COMPLETED U/S.143(3), IS INVALID. IT IS AN ADMITTED FACT THAT THE AO IN THE ORIGINAL ASSESSMENT ORDE R AFTER DISCUSSING THE ALLOWABILITY OF DEDUCTION U/S.80IB(3) HAS ALLOW ED DEDUCTION OF RS.33,03,374/- AS AGAINST RS.10,09,019/- CLAIME D BY THE ASSESSEE. HE HAS ALLOWED THE DEDUCTION OF RS.33,03,374/- @ 30% OF T HE TOTAL BUSINESS INCOME DETERMINED BY HIM BY MAKING VARIOUS ADDITIONS 12 ITA NO.1627/PN/2013 TO THE NET PROFIT DECLARED BY THE ASSESSEE. 19. IT IS ALSO AN ADMITTED FACT THAT THE AUDITORS IN THE AUDIT REPORT IN FORM 10CCB HAS CALCULATED THE VALUE OF PLANT AND MACHINER Y AT RS.1,32,95,656/- WHICH IS THE NET BLOCK AS AGAINST THE GROS S BLOCK OF MORE THAN RS.5 CRORES. THUS, THE CLAIM MADE BY THE ASSE SSEE U/S.80IB(3) WAS NOT CORRECT. AT THE SAME TIME A PERUSAL OF THE NOTICE ISSUED U/S.148 SHOWS THAT THERE IS NO MENTION BY THE AO REGARDING ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. UNDER THESE CIRCUMSTANCES WE HAVE TO SEE AS TO WHETHER THE NOTICE ISSUED U/S.148 IS A VALID ONE OR NOT ? 20. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD. (SUPRA) WHILE DECIDING THE ISSUE OF NOTICE AFTER EX PIRY OF 4 YEARS WHERE THE AO HAD NOWHERE STATED IN THE NOTICE T HAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT HAS HELD THE REASSESSMENT PROCEEDINGS TO BE INVALID. THE RELEVANT OBS ERVATION OF THE HONBLE HIGH COURT AT PARA 17 TO 21 OF THE ORDER READ AS UNDER : 17. HAVING HEARD THE PARTIES AT LENGTH, WE ARE OF T HE OPINION THAT THE PETITION CAN BE DISPOSED OF ON THE FIRST CONTENTION RA ISED BY THE PETITIONER, WHEREIN THE PETITIONER HAS CONTENDED THAT THE NOTICE ISSUED UNDER SECTION 148 IS WITHOUT JURISDICTION BEING HIT BY THE PROVISO T O SECTION 147 OF THE ACT AS SUCH NOT WITHIN THE PRESCRIBED PERIOD PROVIDED UNDE R THE PROVISO TO SECTION 147 OF THE ACT. IN THE CIRCUMSTANCES, IT WOULD BE NECESSARY TO TURN TO SECTION 147 OF THE ACT, WHICH READS AS UNDER : 147. INCOME ESCAPING ASSESSMENT.- IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOM E AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESC APED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN T HE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE TH E LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECT ION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : 13 ITA NO.1627/PN/2013 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) O F SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNL ESS 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 IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT, FOR THAT ASSESSMENT YEAR. 18. READING OF THE PROVISO TO SECTION 147 MAKES IT CL EAR THAT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJEC T TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCO ME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 147, OR RECOMPUTE THE LOSS OR THE DEPREC IATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE CONC ERNED ASSESSMENT YEAR. HOWEVER, WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SEC TION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION C AN BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS E SCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT FOR THAT ASSESSMENT YEAR. 19. IN THE CASE IN HAND IT IS NOT IN DISPUTE THAT THE ASSESSMENT YEAR INVOLVED IS 1996-97. THE LAST DATE OF THE SAID ASSESSMENT YEAR WAS MARCH 31, 1997, AND FROM THAT DATE IF FOUR YEARS ARE COUNT ED, THE PERIOD OF FOUR YEARS EXPIRED ON MARCH 31, 2001. THE NOTICE ISSUED IS D ATED NOVEMBER 5, 2002, AND RECEIVED BY THE ASSESSEE ON NOVEMBER 7, 2002. UNDER THESE CIRCUMSTANCES, THE NOTICE IS CLEARLY BEYOND THE PERIOD OF FOUR YEARS. 20. THE REASONS RECORDED BY THE ASSESSING OFFICER NOWHE RE STATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THAT ASSESSMENT YEAR. IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DEL ETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE A SSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH REASONS RECORDED BY H IM. HE HAS TO SPEAK THROUGH HIS REASONS. IT IS FOR THE ASSESSING OFFICER T O REACH THE CONCLUSION AS TO WHETHER THERE WAS FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY F OR HIS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. IT IS FOR THE ASSESSING OFFICER T O FORM HIS OPINION. IT IS FOR HIM TO PUT HIS OPINION ON RECORD I N BLACK AND WHITE. THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHO ULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. THE REASONS ARE THE MANIFESTATION OF THE MIND OF THE ASSES-SI NG OFFICER. THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND SHOULD N OT KEEP THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROVIDE THE LINK B ETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE B ASED ON EVIDENCE. THE ASSESSING OFFICER, IN THE EVENT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RE CORD. HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISC LOSED BY THE ASSESSEE 14 ITA NO.1627/PN/2013 FULLY AND TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT Y EAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDEN CE. THAT VITAL LINK IS THE SAFE-GUARD AGAINST ARBITRARY REOPENING OF THE CON CLUDED ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLE MENTED BY FILING AN AFFIDAVIT OR MAKING AN ORAL SUBMISSION, OTHERWISE, T HE REASONS WHICH WERE LACKING IN THE MATERIAL PARTICULARS WOULD GET SU PPLEMENTED, BY THE TIME THE MATTER REACHES THE COURT, ON THE STRENGTH OF THE AFFIDAVIT OR ORAL SUBMISSIONS ADVANCED. 21. HAVING RECORDED OUR FINDING THAT THE IMPUGNED N OTICE ITSELF IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 1996- 97 AND DOES NOT COMPLY WITH THE REQUIREMENTS OF THE P ROVISO TO SECTION 147 OF THE ACT, THE ASSESSING OFFICER HAD NO JURISDICTION TO REOPEN THE ASSESSMENT PROCEEDINGS WHICH WERE CONCLUDED ON THE BASIS OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT. ON THIS SHORT COUNT A LONE THE IMPUGNED NOTICE IS LIABLE TO BE QUASHED AND SET ASIDE. 21. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE O F NDT SYSTEMS (SUPRA) FOLLOWING THE ABOVE DECISION HAS OBSERVED AS UNDER : 6) WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THAT NO TICE DATED 20/3/2012 UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E. 2007-08. IN SUCH CIRCUMSTANCES, THE PROVISO TO SECTION 147 OF THE ACT I S CLEARLY NOT APPLICABLE. THEREFORE, IT IS NOT NECESSARY FOR THE REVENUE TO PRIM A FACIE ESTABLISH THAT THERE HAS BEEN A 'FAILURE ON THE PART OF THE PETITIO NER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, WHILE ISSUING A NOTICE REOPENING A COMPLETED ASSESSMENT. HOWEVER, EVEN IN CASE OF REOPENING OF ASSESSMENT WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR THE ASSESSING OFFICER HAS TO HAVE REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON THE B ASIS OF TANGIBLE MATERIAL. THE WORD 'REASON TO BELIEVE' HAS BEEN CONSTRUED BY THE SUPREME COURT IN THE MATTER OF CIT VS. KELVINATOR INDIA LIMITED REPOR TED IN320 ITR PAGE 561 WHEREIN THE COURT HAS OBSERVED AS UNDER: 'HOWEVER ONE NEEDS TO GIVE SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH WE ARE AFRAID SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENT ON THE BASIS OF 'MERE CHANGE OF OPINION' WHICH CANNOT BE PER SE REASON TO R EOPEN. WE MUST KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS POWER TO REASSESS. BUT REASSESSMENT IS TO BE BASED OF FULFILLMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINI ON' IS REMOVED AS CONTENDED BY THE DEPARTMENT THEN IN THE GARB OF REO PENING OF ASSESSMENT REVIEW WOULD TAKE PLACE'. THE AFORESAID OBSERVATION OF THE APEX COURT MAKE IT C LEAR THAT SANCTITY MUST BE ATTACHED TO THE ASSESSMENT ORDERS AND IT CANNOT BE DI STURBED MERELY ON ACCOUNT OF CHANGE OF OPINION. THIS SANCTITY TO ASSESSMENT ORDERS IS NOT BASED ON THE BASIS OF THE TIME THAT HAS LAPSED FROM THE ASSESSMENT ORDER PASSED IN THE REGULAR PROCEEDINGS TO THE ISSUE OF NOTIC E FOR REOPENING AN ASSESSMENT. 15 ITA NO.1627/PN/2013 7) THEREFORE, WHERE ALL MATERIAL FACTS NECESSARY FOR DETERMINATION OF THE INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE AND THE ASSE SSING OFFICER HAS TAKEN A PARTICULAR VIEW ON THOSE DISCLOSED FACTS AS R EFLECTED IN THE ASSESSMENT ORDER PASSED IN REGULAR PROCEEDINGS, THEN WITHO UT ANYTHING MORE, IT WOULD NOT BE OPEN TO REOPEN THOSE ASSESSMENT PR OCEEDINGS. FOR IN SUCH A CASE IT IS A CLEAR CASE OF CHANGE OF OPINION. IN THE PRESENT FACTS IT IS VERY CLEAR THAT DURING THE ASSESSMENT PROCEEDINGS LEADIN G TO THE ASSESSMENT ORDER DATED 11/11/2009 THE PETITIONER HAD DI SCLOSED ALL FACTS WITH REGARD TO DEDUCTION BEING CLAIMED ON ACCOUNT O F LABOUR CHARGES AND RADIOGRAPHY CHARGES. IN FACT, THE ASSESSMENT ORDER DATED 11/12/2009 RECORDS THE FACT THAT A NOTICE WAS ISSUED TO THE PETIT IONER TO EXPLAIN WHY EXPENSES ON ACCOUNT OF LABOUR AND RADIOGRAPHY CHARGES SHOULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. THE P ETITIONER EXPLAINED ITS VIEW POINT AND THE ASSESSING OFFICER ON CONSIDERATION O F THOSE FACTS IN HIS ORDER OF ASSESSMENT DATED 11/12/2009 CONCLUDED THAT THE SE PAYMENTS ON ACCOUNT OF RADIOGRAPHY CHARGES AND LABOUR CHARGES ARE TAX DEDUCTIBLE AT SOURCE IN TERMS OF SECTION 194C OF THE ACT. FURTHER, THE OBLIGATION ON THE PART OF THE ASSESSEE IS ONLY TO MAKE A FULL DISCLOSURE OF PRIMARY FACTS AND THE INFERENCES TO BE DRAWN THERE FROM AND THE APPLICATIO N OF LAW THEREON IS THE JOB OF THE ASSESSING OFFICER. THE PETITIONER HAS DISCLOSED ALL PRIMARY FACTS AND ON CONSIDERATION OF THOSE FACTS AS REFLECTED IN TH E ASSESSMENT ORDER DATED 11/12/2003 THE AMOUNT OF INCOME HAS BEEN COMPU TED AFTER HOLDING THAT TDS HAS TO BE DEDUCTED UNDER SECTION 194C OF TH E ACT. 8) THEREFORE, THE IMPUGNED NOTICE AND THE REASONS I N SUPPORT THEREOF CLEARLY INDICATES THAT IT HAS BEEN ISSUED MERELY ON THE BASIS OF CHANGE OF OPINION AND WOULD AMOUNT TO A REVIEW OF THE ASSESSMENT ORDER DATED 11/12/2003. FURTHER, THE REASONS FOR REOPENING AS COMM UNICATED BY THE PETITIONER IS NOT ON THE BASIS OF ANY TANGIBLE MATER IAL BUT MERELY ON VERIFICATION OF THE MATERIAL AND PRIMARY FACTS ALREA DY ON RECORD THAT THE ASSESSING OFFICER HAS DULY CONSIDERED WHILE PASSING THE ORD ER DATED 11/12/2003 FOR ASSESSMENT YEAR 2007-08 . THERE IS NO FRESH TANGIBLE MATERIAL WHICH WOULD WARRANT TAKING A VIEW DIFFEREN T FROM THE ONE TAKEN DURING THE REGULAR ASSESSMENT PROCEEDINGS. IN FACT EVEN THE ORDER DATED 15/10/2012 DISPOSING OF THE OBJECTIONS CLEARLY RECORDS THAT RADIOGRAPHY CHARGES AND LABOR CHARGES WERE MADE TO VARIOUS PERSONS L IKE SENIOR TECHNICIANS, SENIOR RADIOGRAPHER AND JR. TECHNICIANS ETC. FROM THE CHART SUBMITTED IN THE REGULAR ASSESSMENT PROCEEDING LEADING T O ORDER DATED 11/12/2009. THEREFORE, IT IS VERY CLEAR THAT IMPUGNE D NOTICE FOR REASSESSING THE ASSESSMENT YEAR 2007-08 HAS BEEN ISSUED MERELY ON CHAN GE OF OPINION AND IN FACT SEEKS TO REVIEW THE ASSESSMENT WHICH IS ALREAD Y COMPLETED. 9) ONE MORE ASPECT OF THE MATTER MUST BE ADVERTED TO AND THAT IS IN THE ORDER DATED 15/10/2012 REJECTING THE OBJECTIONS FILE D BY THE PETITIONER WITH REGARD TO REASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2007- 08 A COMPLETELY NEW GROUND HAS BEEN ADDED. IN ITS ORDER DA TED 15/10/2012 THE ADDITIONAL GROUND TO REOPEN ASSESSMENT IS THE LACK OF CO RRELATION BETWEEN THE PAYMENT RECEIVED BY THE PETITIONER AND THE TDS CERTIFICATE ISSUED BY THE PERSONS MAKING PAYMENT TO IT DURING THE ASSESSMENT YEAR 2007-08. THIS ACCORDING TO ORDER DATED 15/10/2012 RESULTED IN UNDE R ASSESSMENT OF INCOME TO THE EXTENT OF RS.21.61 LACS. THE AFORESAID I SSUE WAS NOT ONE OF THE GROUNDS SPECIFIED IN THE REASONS COMMUNICATED TO THE P ETITIONER ON 23/7/2012 FOR THE PURPOSE OF REOPENING THE ASSESSMENT FO R ASSESSMENT YEAR 2007-08. OUR COURT IN THE MATTER OF HINDUSTAN L EVER LTD. V. R.B. WADKAR, ASSISTANT COMMISSIONER OF INCOME TAX AND OTHERS R EPORTED IN (2004) 268 ITR PAGE 332 HAS HELD THAT FOR THE PURPOSE OF EXAMINING THE JURISDICTION TO REOPEN A COMPLETED ASSESSMENT ONE IS ONL Y CONCERNED WITH 16 ITA NO.1627/PN/2013 THE REASONS RECORDED AT THE TIME OF ISSUING NOTICE UNDE R SECTION 148 OF THE ACT. THESE REASONS CANNOT BE SUPPLEMENTED/ IMPROVED UPO N LATER. THEREFORE, THE ORDER DATED 15/10/2012 DISPOSING OF TH E OBJECTION ALSO CANNOT BE SUSTAINED. SO FAR AS THE GROUND URGED BY MS. KHAN THAT REOPENING OF ASSESSMENT HAS BEEN DONE ON THE BASIS OF AUDIT OBJECTIO N, THE SAME IS NOT BEING EXAMINED. THIS IS FOR THE REASON THAT EVEN OTHER WISE, THE IMPUGNED NOTICE IS NOT SUSTAINABLE. 22. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD.(SUPRA) HAS ALSO TAKEN SIMILAR VIEW AND HAS OBSERVED AS UNDER : ACCORDING TO THE LEARNED COUNSEL, THE REVENUE IS ENT ITLED TO ISSUE SUCH A NOTICE IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE (A) TO MAKE A RETURN UNDER SECTION 139, OR (B) IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SEC TION 148, OR (C) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FO R THAT ASSESSMENT YEAR. SINCE THE FIRST TWO CONDITIONS ARE NOT PLEADED BY THE RESPONDENTS, IT IS THE SUBMISSION OF THE PETITIONER THAT THE NOTICE IS WHOLLY UNWARRANTED AND INVALID SINCE THERE IS NO ALLEGATION WHATSOEVER THAT T HE PETITIONER HAS FAILED TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THI S SUBMISSION CAN BE CONSIDERED ONLY WITH REFERENCE TO THE REASONS PUT F ORTH BY THE RESPONDENTS FOR ISSUING THE NOTICE. THE LETTER DATED JA NUARY 27, 2005, INTER ALIA, STATES THAT THE ASSESSING OFFICER HAS REASONS TO BELIE VE THAT INCOME HAS ESCAPED ASSESSMENT BECAUSE THE PETITIONER HAS WRONGLY CLAI MED DEDUCTION UNDER SECTION 80- IA IN RESPECT OF INCOME WHICH WAS NO T DERIVED FROM THE INCOME OF THE PETITIONERS UNIT OF KUNDAIM. FURTHER, THAT LONG-TERM CAPITAL GAINS HAVE BEEN WRONGLY CLAIMED BY THE ASSESSEE WHICH H AVE BEEN WRONGLY CONSIDERED FOR THE SET OFF OF THE UNIT OF KUNDAIM WHI CH HAS RESULTED IN ESCAPEMENT OF INCOME. NOWHERE HAS THE ASSESSING OFFICER ST ATED THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY 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 SECTION 147 DOES NOT PROVIDE A FRESH OPPORTUNITY TO THE ASSESSING OFFICE R TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNLESS THE MISTAKE IN TH E ASSESSMENT SO MADE IS 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 ASSESSING OFFICER TO REOPEN THE ASSESSMENT ON THE GROUND THAT THERE IS A MIST AKE IN ASSESSMENT. MOREOVER, IT IS NECESSARY FOR THE ASSESSING OFFICER TO FIR ST OBSERVE WHETHER THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS NECESSARY FOR ASSESSMENT AND HAVING OBSERVED THAT THERE IS SUCH A FAILUR E TO PROCEED UNDER SECTION 147. IT MUST FOLLOW THAT WHERE THE ASSESSIN G OFFICER DOES NOT RECORD SUCH A FAILURE HE WOULD NOT BE ENTITLED TO PR OCEED UNDER SECTION 147. AS OBSERVED EARLIER,' THE ASSESSING OFFICER HAS NOT RECOR DED THE FAILURE ON THE PART OF THE PETITIONER TO FULLY AND TRULY DISCLO SE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT YEAR 1997-98. WHAT IS RECORDE D IS THAT THE PETITIONER HAS WRONGLY CLAIMED CERTAIN DEDUCTIONS WHI CH HE WAS NOT ENTITLED TO. THERE IS A WELL KNOWN DIFFERENCE BETWEE N A WRONG CLAIM MADE BY AN ASSESSEE AFTER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATERIAL FACTS FULLY AND TRULY. IT IS ONLY IN THE LATTER CASE THAT THE ASSESSING OFFICER WOULD BE ENTITLED TO PROCEED UNDER SECTION 147. WE ARE SUPPORTED IN THIS VI EW BY A DECISION OF A DIVISION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. V. R. B. WADKAR, ASST. CIT 17 ITA NO.1627/PN/2013 (NO. 1) [2004] 268 ITR 332 (BOM) WHERE IN A SIMILAR CASE T HE 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 ASSESSING OFFICER AND IT WOULD NOT BE PERMISSIBLE TO DELETE OR ADD TO THOSE REASONS AND THAT THE ASSESSING OFFICER MUST BE ABLE TO JUSTIFY THE SAME BASED O N 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 NOTIC E IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED AND SET ASIDE. ACCORDINGLY, THE WRIT PETITION IS ALLOWED IN TERMS OF PRAYER CLAUSES (A) AND (C).' RULE MADE ABSOLUTE IN TERMS OF PRAYER CLAUSES (A) AND (C) WHICH READ AS FOLLOWS: (A) THAT THIS HON'BLE COURT MAY BE PLEASED TO ISSUE A W RIT OF CERTIORARI OR A WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER APPRO PRIATE WRIT, ORDER OR DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF I NDIA, CALLING FOR THE RECORDS OF ITS CASE IN SO FAR AS THEY RELATE TO THE IMPU GNED NOTICE DATED MARCH 18, 2004, THE IMPUGNED SATISFACTION OF RESPONDEN T NO.2 UNDER SECTION 151 OF THE ACT, IF ANY, AND THE IMPUGNED ASSESSMENT PRO CEEDINGS OF THE PETITIONER FOR THE ASSESSMENT YEAR 1997-98 AND AFTER GO ING THROUGH THE SAME AND EXAMINING THE LEGALITY AND VALIDITY THEREOF , TO QUASH AND CANCEL THE SAME. (C) THAT THIS HON'BLE COURT MAY BE PLEASED TO ISSUE A W RIT OF PROHIBITION OR A WRIT IN THE NATURE OF PROHIBITION OR ANY OTHER APPR OPRIATE WRIT, ORDER OR DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF I NDIA, PERMANENTLY RESTRAINING AND PROHIBITING RESPONDENT NO.1 FROM TAKI NG ANY ACTION IN FURTHERANCE, OR IN PURSUANCE OF OR IN IMPLEMENTATION OF THE IMPUGNED NOTICE DATED MARCH 18, 2004, AND PERMANENTLY PROHIBITING A ND RESTRAINING RESPONDENT NO. 1 FROM REASSESSING THE INCOME OF THE PETI TIONER FOR THE ASSESSMENT YEAR 1997-98. FOLLOWING THE ABOVE DECISIONS SIMILAR VIEW HAS BEEN TAKEN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ALFA LAVAL INDIA LTD. ( SUPRA) AND THE JALNA DISTRICT CENTRAL COOPERATIVE BANK LTD. (SUPRA). 23. SINCE THE ASSESSMENT U/S.143(3) WAS COMPLETED IN THE IN STANT CASE ON 24-12-2007 FOR THE A.Y. 2005-06 AND SINCE NOWHE RE IN THE NOTICE ISSUED U/S.148 ON 19-01-2011 THE AO MAKES AN ALL EGATION THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TR ULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSME NT, THEREFORE, 18 ITA NO.1627/PN/2013 RESPECTFULLY FOLLOWING THE ABOVE DECISIONS CITED (SUPRA) WE H OLD THAT THE NOTICE ISSUED U/S.148 WHICH IS BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT ORDER IS VOID AB-INITIO. THE GR OUNDS RAISED BY THE ASSESSEE ON THE ISSUE OF VALIDITY OF NOTICE U/S.148 IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. THE APPEAL FILED THE ASS ESSEE IS ACCORDINGLY ALLOWED. 24. IN THE RESULT, THE APPEAL FILED BY THE ASSSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-01-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 15 TH JANUARY 2016. LRH'K ( )+, -, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT (A) - V , PUNE 4. 5. 6. CIT-V, PUNE ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE