Goldtex Furnishing Industries, New Delhi V. DCIT, New Delhi

ITA 2202/DEL/2010

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7040 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Next Hearing Date: 19-12-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 10-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A.K. SAROHA
• Keywords: Reopening of assessment; Depreciation; Accommodation entries
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 80HHC; 80IB; 191; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 2202/DEL/2010 2202/DEL/2010 2202/DEL/2010 2202/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2001 2001 2001 2001 - -- - 02 0202 02 M/S GOLDTEX FURNISHING M/S GOLDTEX FURNISHING M/S GOLDTEX FURNISHING M/S GOLDTEX FURNISHING INDUSTRIES, INDUSTRIES, INDUSTRIES, INDUSTRIES, 1197, TRI NAGAR, 1197, TRI NAGAR, 1197, TRI NAGAR, 1197, TRI NAGAR, DELHI DELHI DELHI DELHI 110 035. 110 035. 110 035. 110 035. PAN : AAAFG3761A. PAN : AAAFG3761A. PAN : AAAFG3761A. PAN : AAAFG3761A. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -25(1), 25(1), 25(1), 25(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAURAV JAIN, ADVOCATE AND SHRI DEEPESH JAIN, CA. RESPONDENT BY : SHRI A.K. SAROHA, CIT - DR. DATE OF HEARING : 20.12.2016 20.12.2016 20.12.2016 20.12.2016 DATE OF PRONOUNCEMENT : 04.01.2017 04.01.2017 04.01.2017 04.01.2017 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2001-02 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXIV, NEW DELHI DATED 19 TH MARCH, 2010. 2. GROUND NOS.1 TO 5 OF THE ASSESSEES APPEAL ARE A GAINST THE VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 1 47 OF THE INCOME- TAX ACT, 1961. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ASSESSMENT WAS REOPENED BEYOND THE PERIOD OF FOUR YEARS WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/ S 143(3). HE STATED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS. HE STATED THAT THE ASSESSEE CL AIMED DEDUCTION U/S 80IB AS WELL AS 80HHC WHICH WAS ALLOWED BY THE ASSE SSING OFFICER ITA-2202/DEL/2010 2 AFTER MODIFYING THE QUANTUM OF DEDUCTION CLAIMED BY THE ASSESSEE. THE CASE WAS REOPENED ON THE GROUND THAT WHILE CALC ULATING DEDUCTION U/S 80HHC, DEDUCTION ALLOWED U/S 80IB WAS NOT REDUC ED IN VIEW OF THE PROVISIONS OF SECTION 80IA(9). THUS, EVEN AS PER A SSESSING OFFICER, ESCAPEMENT OF INCOME WAS ON ACCOUNT OF NON-APPLICAT ION OF A PARTICULAR PROVISION OF LAW. THERE IS NO MENTION I N THE REASONS RECORDED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ANY MATERIAL FACT. HE, THEREFORE, SUBMITTED THAT THE REOPENING OF ASSESSMENT BEYOND THE PERIOD OF FOUR Y EARS WAS NOT PERMISSIBLE. IN SUPPORT OF THIS CONTENTION, HE REL IED UPON THE FOLLOWING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT :- (I) HARYANA ACRYLIC MANUFACTURING CO. VS. CIT [20 09] 308 ITR 38 (DELHI). (II) CIT VS. SONITPUR SOLVEX LTD. [2013] 362 ITR 305 (GAUHATI). 4. LEARNED DR, ON THE OTHER HAND, ARGUED AT LENGTH. HE ALSO FURNISHED THE WRITTEN SUBMISSIONS, WHICH READ AS UN DER :- GR. 1 AND 2(THE REASONS RECORDED DID NOT POINT OUT THAT THERE WAS FAILURE ON PART ASSESSEE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS): 1.1 THIS IS GROUND IS LIABLE TO BE REJECTED BECAUSE: I) THE ASSESSEE RAISED OBJECTIONS VIDE LETTER DATED 21.11.2008. AO DISPOSED OFF THE OBJECTIONS VIDE LET TER DATED 02.12.2008( # 120/PB). WHILE DISPOSING OFF TH E OBJECTIONS, THE AO POINTED OUT THAT PLAIN READING O F THE REASONS RECORDED WOULD BRING OUT THAT IT IS CASE OF THE AO THAT THERE WAS FAILURE ON PART ASSESSEE OF THE ASSE SSEE TO DISCLOSE MATERIAL FACTS. II) THE AO POINTED OUT THAT ASSESSEE HAD FAILED TO DIS CLOSE BEFORE AUTHORITIES THE MATERIAL FACTS. THE AO POINT ED OUT THAT THE ASSESSEE FAILED TO DISCLOSE BEFORE THE AO THAT HE WAS NOT ELIGIBLE FOR FURTHER DEDUCTION U/S 80HHC ON THE SAME PROFIT IN RESPECT OF WHICH DEDUCTION HAD ALREA DY BEEN CLAIMED U/S 80IB. THE AO ALSO OBSERVED THAT THE ASS ESSEE ITA-2202/DEL/2010 3 PRESENTED WRONG INFORMATION IN RESPECT OF QUANTUM O F CLAIM. III) IT IS HAS BEEN RECORDED IN THE SATISFACTION NOTE(#8 8/PB) THAT THE ASSESSEE MADE DEDUCTION OF RS. 18314935/- AND ACTUAL DEDUCTION WORKS OUT TO BE 1,11,84,667/- . IT HAS ALSO BEEN POINTED OUT THAT THIS DIFFERENCE IS MAINLY BEC AUSE OF NOT REDUCING THE AMOUNT OF DEDUCTION CLAIMED U/S 80 IB WHILE CLAIMING CALCULATING DEDUCTION UNDER 80HHC. T HIS ACTION OF REDUCING WAS SUPPOSED TO DONE BY ASSESSEE AS THERE IS PROVISIONS IN SECTION 80IA(9) RWS 80IB(13) . IV) THE FACT CANNOT BE IGNORED THAT THE ASSESSEE FILED A CERTIFICATE FROM THE CHARTED ACCOUNTANT (# 39/PB) T O THE EFFECT THAT CLAIM MADE UNDER 80HHC IS CORRECT { WHI CH IS NOT IN ACCORDANCE WITH PROVISIONS OF SECTION 80IA(9 ) RWS 80IB(13) AND HENCE, CERTAINLY INCORRECT}. 2.1 IN THIS CASE IT IS A MATERIAL FACT AS TO WHETHE R CALCULATION OF DEDUCTIBLE AMOUNT U/S 80HHC HAS BEE N MADE CONSIDERING PROVISIONS CONTAINED IN SECTION 80 IA(9) RWS 80IB(13) {OR NOT}. 2.2 THE PROVISIONS CONTAINED IN SECTION 80IA(9) R WS 80IB(13) ARE INTEGRAL PART OF PART C OF CHAPTER V I-A WHICH ALSO CONTAINS SECTION 80IB. THEREFORE, ONCE A CERTI FICATE IS FILED UNDER SIGNATURE OF A CHARTED ACCOUNTANT, THE PRESUMPTION IS THAT CALCULATION OF DEDUCTION CLAIME D HAS BEEN MADE IN ACCORDANCE WITH PROVISIONS OF SECTION 80IA(9) RWS 80IB(13). 2.3 IT IS NOT EASY TO DECIPHER FROM THE CALCULATION OF DEDUCTIBLE AMOUNT U/S 80HHC {SUBMITTED BY ASSESSEE ALONGWITH REPORT IN FORM NO 10CCA ( # 40-41 OF PB)} WHETHER IT IS IN ACCORDANCE WITH PROVISIONS OF SEC TION 80IA(9) RWS 80IB(13). 2.4 IT IS NOT CASE OF THE AO THAT IT ACTIVELY POINT ED OUT THAT THE CALCULATION OF DEDUCTIBLE AMOUNT U/S 80H HC {SUBMITTED BY ASSESSEE IN MANDATORY FORM NO. 10CCB ) HAS NOT BEEN MADE CONSIDERING PROVISIONS IN SECTION 80IA(9) RWS 80IB(13).THEREFORE, THE PROVISIONS OF EXPLANATION 1 TO SECTION 147 ARE ATTRACTED WHICH AR E REPRODUCED AS UNDER: .. ITA-2202/DEL/2010 4 EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT T O DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. 2.5 TWO RATIOS OF JUDGMENT OF HONBLE SC IN CASE OF SRI KRISHNA (P.) LTD. VS. ITO [1996] 87 TAXMAN 315 (SC) IS SQUARELY APPLICABLE WHICH STATES THAT I) THE OBLIGATION ON THE ASSESSEE TO DISCLOSE THE MATERIAL FACTSOR WHAT ARE CALLED, PRIMARY FACTSIS NOT A MERE DISCLOSURE BUT A DISCLOSURE WHICH IS FULL AND TRUE. A FALSE DISCLOSURE IS NOT A TRUE DISCLOSURE. THE DISC LOSURE MUST NOT ONLY BE TRUE BUT MUST BE FULL 'FULLY AND TRULY'. II) THE ENQUIRY AT THAT STAGE OF THE VALIDITY OF THE N OTICE UNDER SECTION 148/ 147 IS ONLY TO SEE WHETHER THERE ARE REASONABLE GROUNDS FOR THE ITO TO BELIEVE AND NOT W HETHER THE OMISSION/FAILURE AND THE ESCAPEMENT OF INCOME I S ESTABLISHED. THE RELEVANT PORTION IS REPRODUCED AS UNDER: 9. 9. 9. 9. IN THAT CASE, THE ALLEGED NON-DISCLOSURE OF MATE RIAL FACTS FULLY AND TRULY - TO PUT IT IN THE WORDS OF T HE COURT - WAS THE FAILURE OF THE ASSESSEE TO DISCLOSE 'THE TR UE INTENTION BEHIND THE SALE OF THE SHARES'. THE ASSES SEE HAD STATED DURING THE ASSESSMENT PROCEEDINGS THAT THE S ALE OF SHARES DURING THE RELEVANT ASSESSMENT YEARS WAS A C ASUAL TRANSACTION IN THE NATURE OF MERE CHANGE OF INVESTM ENT. THE ITO FOUND LATER THAT THOSE SALES WERE REALLY IN THE NATURE OF TRADING TRANSACTIONS. THE CASE OF THE REV ENUE WAS THAT THE ASSESSEE OUGHT TO HAVE STATED THAT THE Y WERE TRADING TRANSACTIONS AND THAT HIS ASSERTION THAT TH EY WERE CASUAL TRANSACTIONS, IN THE NATURE OF CHANGE OF INV ESTMENT, AMOUNTED TO 'OMISSION OR FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR' WITHIN THE MEANING OF SECTION 34. THIS CONTEN TION OF THE REVENUE WAS REJECTED HOLDING THAT THE TRUE NATU RE OF TRANSACTION, BEING A MATTER CAPABLE OF DIFFERENT OP INIONS, IS NOT A MATERIAL OR PRIMARY FACT BUT A MATTER OF INFE RENCE AND, HENCE, IT CANNOT BE SAID THAT THERE WAS AN OMI SSION OR FAILURE OF THE NATURE CONTEMPLATED BY SECTION 34 ON THE PART OF THE ASSESSEE. NOW, WHAT NEEDS TO BE EMPHASI SED IS WHAT NEEDS TO BE EMPHASISED IS WHAT NEEDS TO BE EMPHASISED IS WHAT NEEDS TO BE EMPHASISED IS THAT THE OBLIGATION ON THE ASSESSEE TO DISCLOSE THE MATERIAL THAT THE OBLIGATION ON THE ASSESSEE TO DISCLOSE THE MATERIAL THAT THE OBLIGATION ON THE ASSESSEE TO DISCLOSE THE MATERIAL THAT THE OBLIGATION ON THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS FACTS FACTS FACTS - -- - OR WHA OR WHA OR WHA OR WHAT ARE CALLED, PRIMARY FACTS T ARE CALLED, PRIMARY FACTS T ARE CALLED, PRIMARY FACTS T ARE CALLED, PRIMARY FACTS - -- - IS NOT A MERE IS NOT A MERE IS NOT A MERE IS NOT A MERE DISCLOSURE BUT A DISCLOSURE WHICH IS FULL AND TRUE. A FALSE DISCLOSURE BUT A DISCLOSURE WHICH IS FULL AND TRUE. A FALSE DISCLOSURE BUT A DISCLOSURE WHICH IS FULL AND TRUE. A FALSE DISCLOSURE BUT A DISCLOSURE WHICH IS FULL AND TRUE. A FALSE DISCLOSURE IS NOT A TRUE DISCLOSURE. THE DISCLOSURE MUST NOT DISCLOSURE IS NOT A TRUE DISCLOSURE. THE DISCLOSURE MUST NOT DISCLOSURE IS NOT A TRUE DISCLOSURE. THE DISCLOSURE MUST NOT DISCLOSURE IS NOT A TRUE DISCLOSURE. THE DISCLOSURE MUST NOT ONLY BE TRUE BUT MUST BE FULL ONLY BE TRUE BUT MUST BE FULL ONLY BE TRUE BUT MUST BE FULL ONLY BE TRUE BUT MUST BE FULL - -- - 'FULLY AND TRULY' 'FULLY AND TRULY' 'FULLY AND TRULY' 'FULLY AND TRULY'. A FALSE ASSERTION, OR STATEMENT, OF MATERIAL FACT, THEREFOR E, ATTRACTS ITA-2202/DEL/2010 5 THE JURISDICTION OF THE ITO UNDER SECTION 34/ 147. TAKE THIS VERY CASE : THE ITO SAYS THAT ON THE BASIS OF INVES TIGATIONS AND ENQUIRIES MADE DURING THE ASSESSMENT PROCEEDING S RELATING TO THE SUBSEQUENT ASSESSMENT YEAR, HE HAS COME INTO POSSESSION OF MATERIAL, ON THE BASIS OF WHICH, HE HAS REASONS TO BELIEVE THAT THE ASSESSEE HAD PUT FORWAR D CERTAIN BOGUS AND FALSE UNSECURED HUNDI LOANS SAID TO HAVE BEEN TAKEN BY HIM FROM NON-EXISTENT PERSONS OR HIS DUMMIES, AS THE CASE MAY BE, AND THAT ON THAT ACCOU NT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ACCORDING TO HIM, THIS WAS A FALSE ASSERTION TO THE KNOWLEDGE OF THE ASSESSEE. THE ITO SAYS THAT DURING THE ASSESSMENT RELATING TO SUBSEQUENT ASSESSMENT YEAR, SIMILAR LOANS [FROM SOME OF THESE VERY PERSONS] WER E FOUND TO BE BOGUS. ON THAT BASIS, HE SEEKS TO RE-OPEN THE ASSESSMENT. IT IS NECESSARY TO REMEMBER THAT WE ARE AT THE STAGE OF RE-OPENING ONLY. THE QUESTION IS WHETHER, IN THE ABOVE CIRCUMSTANCES, THE ASSESSEE CAN SAY, WITH ANY JUSTIFICATION, THAT HE HAD FULLY AND TRULY DISCLOSE D THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T YEAR. HAVING CREATED AND RECORDED BOGUS ENTRIES OF LOANS, WITH WHAT FACE CAN THE ASSESSEE SAY THAT HE HAD TRULY AN D FULLY DISCLOSED ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT YEAR. TRUE IT IS THAT ITO COULD HAVE INVES TIGATED THE TRUTH OF THE SAID ASSERTION - WHICH HE ACTUALLY DID IN THE SUBSEQUENT ASSESSMENT YEAR - BUT THAT DOES NOT RELI EVE THE ASSESSEE OF HIS OBLIGATION, PLACED UPON HIM BY THE STATUTE, TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IND UBITABLY, WHETHER A LOAN, ALLEGED TO HAVE BEEN TAKEN BY THE ASSESSEE, IS TRUE OR FALSE, IS A MATERIAL FACT - AN D NOT AN INFERENCE, FACTUAL OR LEGAL, TO BE DRAWN FROM GIVEN FACTS. IN THIS CASE, IT IS SHOWN TO US THAT TEN PERSONS [WHO ARE ALLEGED TO HAVE ADVANCED LOANS TO THE ASSESSEE IN A TOTAL SUM OF RS. 3,80,000 OUT OF THE TOTAL HUNDI LOANS OF RS. 8,53,298] WERE ESTABLISHED TO BE BOGUS PERSONS OR M ERE NAME-LENDERS IN THE ASSESSMENT PROCEEDINGS RELATING TO THE SUBSEQUENT ASSESSMENT YEAR DOES IT NOT FURNISH A REASONABLE GROUND FOR THE ITO TO BELIEVE THAT ON AC COUNT OF THE FAILURE - INDEED NOT A MERE FAILURE BUT A POSIT IVE DESIGN TO MISLEAD - OF THE ASSESSEE TO DISCLOSE ALL MATERI AL FACTS, FULLY AND TRULY, NECESSARY FOR HIS ASSESSMENT FOR T HAT YEAR, INCOME HAS ESCAPED ASSESSMENT ? WE ARE OF THE FIRM OPINION THAT IT DOES. IT IS NECESSARY TO REITERATE THAT WE ARE IT IS NECESSARY TO REITERATE THAT WE ARE IT IS NECESSARY TO REITERATE THAT WE ARE IT IS NECESSARY TO REITERATE THAT WE ARE NOW AT THE STAGE OF THE VALIDITY OF THE NOTICE UNDE R SECTION NOW AT THE STAGE OF THE VALIDITY OF THE NOTICE UNDE R SECTION NOW AT THE STAGE OF THE VALIDITY OF THE NOTICE UNDE R SECTION NOW AT THE STAGE OF THE VALIDITY OF THE NOTICE UNDE R SECTION 148/147. THE ENQUIR 148/147. THE ENQUIR 148/147. THE ENQUIR 148/147. THE ENQUIRY AT THIS STAGE IS ONLY TO SEE W HETHER Y AT THIS STAGE IS ONLY TO SEE WHETHER Y AT THIS STAGE IS ONLY TO SEE WHETHER Y AT THIS STAGE IS ONLY TO SEE WHETHER THERE ARE REASONABLE GROUNDS FOR THE ITO TO BELIEVE AND NOT THERE ARE REASONABLE GROUNDS FOR THE ITO TO BELIEVE AND NOT THERE ARE REASONABLE GROUNDS FOR THE ITO TO BELIEVE AND NOT THERE ARE REASONABLE GROUNDS FOR THE ITO TO BELIEVE AND NOT WHETHER THE OMISSION/FAILURE AND THE ESCAPEMENT OF INCOME WHETHER THE OMISSION/FAILURE AND THE ESCAPEMENT OF INCOME WHETHER THE OMISSION/FAILURE AND THE ESCAPEMENT OF INCOME WHETHER THE OMISSION/FAILURE AND THE ESCAPEMENT OF INCOME ITA-2202/DEL/2010 6 IS ESTABLISHED. IT IS NECESSARY TO KEEP THIS DISTIN CTION IN IS ESTABLISHED. IT IS NECESSARY TO KEEP THIS DISTIN CTION IN IS ESTABLISHED. IT IS NECESSARY TO KEEP THIS DISTIN CTION IN IS ESTABLISHED. IT IS NECESSARY TO KEEP THIS DISTIN CTION IN MIND MIND MIND MIND.(EMPHASIS SUPPLIED). 2.6 THE RELIANCE IS PLACED ON THE RATIO OF JUDGMENT OF HONBLE SC IN CASE OF KANTAMANI VENKATA NARAYANA & SONS V. ADDL. ITO, RAJAHMUNDRY [1967] 63 ITR 638 IN WHICH IT HAS BEEN HELD THAT THE ASSESSEE DOES NOT DISCHARGE HIS DUTY TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NEC ESSARY FOR THE ASSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION BY MERELY PRODUCING BOOK ACCOUNT OR OTHER EVIDENCE. HE HAS TO BRING TO THE NOTICE OF THE ASSESSING OFFICER PAR TICULAR ITEMS IN THE BOOKS OF ACCOUNT OR PORTIONS OF DOCUME NTS, WHICH ARE RELEVANT. EVEN IF IT IS ASSUMED THAT, FRO M THE DOCUMENTS PRODUCED, THE ASSESSING OFFICER, IF HE HA D BEEN CIRCUMSPECT, COULD HAVE FOUND OUT THE TRUTH, HE IS NOT ON THAT ACCOUNT PRECLUDED FROM EXERCISING THE POWER TO ASSESS INCOME, WHICH HAD ESCAPED ASSESSMENT. 2.7 THE RELIANCE IS PLACED ON THE RATIO OF JUDGMENT OF HONBLE SC IN CASE OF INDO-ADEN SALT MFG. & TRADING CO. (P.) LTD. V. CIT [1986] 159 ITR 624 (SC). IN THIS CASE, THE ASSETS ON WHICH THE ASSESSEE SOUGHT TO CLAIM DEPRECIATION CONSISTED OF MASONRY WORK AS WELL AS EARTHWORK. DEPRECIATION WAS HOWEVER ALLOWABLE ON MASONRY WORK ONLY. BUT THE ASSESSING OFFICER ALLOWED DEPRECIATIO N INDISCRIMINATELY ON EARTHWORK ALSO IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER SOUGH T TO REOPEN THE ORIGINAL ASSESSMENT UNDER SECTION 147(A) TO WITHDRAW EXCESS DEPRECIATION THAT HAD BEEN ALLOWED ON THE ENTIRETY OF THE ASSETS IN THE ORIGINAL ORDER OF THE ASSESSMENT. NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 147/148 WAS CHALLENGED ON THE GROUND THAT T HERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY, AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT. THE HONBLE SUPREME COURT HAS HELD THAT THE ISSUE WHETHER THERE WAS SUCH NON-DISCLOSURE OF PRIMARY FA CTS AS HAD ESCAPED ASSESSMENT OF INCOME WAS ESSENTIALLY A QUESTION OF FACT. THE HONBLE COURT FURTHER HELD TH AT IT WAS WELL-SETTLED THAT THE OBLIGATION OF THE ASSESSEE WA S TO DISCLOSE ONLY PRIMARY FACTS AND NOT INFERENTIAL FAC TS. IF SOME MATERIAL FOR THE ASSESSMENT LAY EMBEDDED IN TH E EVIDENCE, WHICH THE REVENUE COULD HAVE UNCOVERED BU T DID NOT, THEN IT IS THE DUTY OF THE ASSESSEE TO BRING I T TO THE NOTICE OF THE ASSESSING OFFICER. THE ASSESSEE KNOWS ALL THE MATERIAL AND RELEVANT FACTSTHE ASSESSING AUTHORITY MIGHT NOT. IN RESPECT OF THE FAILURE TO DISCLOSE, THE OMI SSION TO ITA-2202/DEL/2010 7 DISCLOSE MAY BE DELIBERATE OR INADVERTENT BUT THAT IS IMMATERIAL. 2.8 THE RELIANCE IS PLACED ON THE ORDER OF ITAT MUM BAI IN CASE OF ACIT VS. MANUBHAI SONS & CO. [2007] 18 SOT 297 (MUM.) WHICH IN TURN RELY UPON THE ABOVE STATED RATIOS OF JUDGMENTS OF HONBLE SC IN CASES OF KANTAMANI VENKA TA NARAYANA & SONS V. ADDL. ITO, RAJAHMUNDRY(SUPRA) AN D INDO-ADEN SALT MFG. & TRADING CO. (P.) LTD. V. CIT( SUPRA). THE RELEVANT PORTION IS REPRODUCED AS UNDER: 6. 6. 6. 6. IT MAY NOT BE OUT OF PLACE TO MENTION HERE A DE CISION OF THE HONBLE SUPREME COURT IN KANTAMANI VENKATA NARAYANA & SONS V. ADDL. ITO, RAJAHMUNDRY [1967] 63 ITR 638 IN WHICH IT HAS BEEN HELD THAT THE ASSESSEE DOES NOT DISCHARGE HIS DUTY TO DISCLOSE FULLY AND TRULY MATE RIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THE ASSESSMENT YEA R IN QUESTION BY MERELY PRODUCING BOOK ACCOUNT OR OTHER EVIDENCE. HE HAS TO BRING TO THE NOTICE OF THE ASSE SSING OFFICER PARTICULAR ITEMS IN THE BOOKS OF ACCOUNT OR PORTIONS OF DOCUMENTS, WHICH ARE RELEVANT. EVEN IF IT IS ASS UMED THAT, FROM THE DOCUMENTS PRODUCED, THE ASSESSING OF FICER, IF HE HAD BEEN CIRCUMSPECT, COULD HAVE FOUND OUT TH E TRUTH, HE IS NOT ON THAT ACCOUNT PRECLUDED FROM EXERCISING THE POWER TO ASSESS INCOME, WHICH HAD ESCAPED ASSESSMEN T. THUS, THE AFORESAID JUDGMENT IS IN AUTHORITY FOR TH E PROPOSITION THAT MERE DISCLOSURE IN THE BOOKS OF AC COUNT OR IN OTHER EVIDENCE DOES NOT NECESSARILY MEAN THAT TH E ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEA R IN QUESTION. 7. 7.7. 7. IN INDO-ADEN SALT MFG. & TRADING CO. (P.) LTD. V . CIT [1986] 159 ITR 624 2 (SC), THE ASSETS ON WHICH THE ASSESSEE SOUGHT TO CLAIM DEPRECIATION CONSISTED OF MASONRY W ORK AS WELL AS EARTHWORK. DEPRECIATION WAS HOWEVER ALLOWAB LE ON MASONRY WORK ONLY. BUT THE ASSESSING OFFICER ALLOWE D DEPRECIATION INDISCRIMINATELY ON EARTHWORK ALSO IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSING OFFI CER SOUGHT TO REOPEN THE ORIGINAL ASSESSMENT UNDER SECT ION 147(A) TO WITHDRAW EXCESS DEPRECIATION THAT HAD BEE N ALLOWED ON THE ENTIRETY OF THE ASSETS IN THE ORIGIN AL ORDER OF THE ASSESSMENT. NOTICE ISSUED BY THE ASSESSING OFFI CER UNDER SECTION 147/148 WAS CHALLENGED ON THE GROUND THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY, AND TRULY ALL MATERIAL FACTS NECESSARY FOR H IS ASSESSMENT. THE HONBLE SUPREME COURT HAS HELD THAT THE ISSUE WHETHER THERE WAS SUCH NON-DISCLOSURE OF PRIM ARY ITA-2202/DEL/2010 8 FACTS AS HAD ESCAPED ASSESSMENT OF INCOME WAS ESSENTIALLY A QUESTION OF FACT. THE HONBLE COURT F URTHER HELD THAT IT WAS WELL-SETTLED THAT THE OBLIGATION O F THE ASSESSEE WAS TO DISCLOSE ONLY PRIMARY FACTS AND NOT INFERENTIAL FACTS. IF SOME MATERIAL FOR THE ASSESSM ENT LAY EMBEDDED IN THE EVIDENCE, WHICH THE REVENUE COULD H AVE UNCOVERED BUT DID NOT, THEN IT IS THE DUTY OF THE A SSESSEE TO BRING IT TO THE NOTICE OF THE ASSESSING OFFICER. THE ASSESSEE KNOWS ALL THE MATERIAL AND RELEVANT FACTS THE ASSESSING AUTHORITY MIGHT NOT. IN RESPECT OF THE FA ILURE TO DISCLOSE, THE OMISSION TO DISCLOSE MAY BE DELIBERAT E OR INADVERTENT BUT THAT IS IMMATERIAL. 3.1 THE CASE LAW IN OF CALCUTTA DISCOUNT COMPANY [1 961] 41 ITR 191 DOES NOT HELP THE CAUSE OF THE ASSESSEE BECAUSE ISSUE AT HAND IN THAT CASE WAS THAT AO ALL EGED THAT ASSESSEE FAILED TO DISCLOSE ITS TRUE INTENSIO N BEHIND SALES OF SHARES. THE HONBLE SC HELD THAT FINDING INTENSION IS A MATTER OF INFERENCE WHICH COULD BE DIFFERENT FOR DIFFERENT PEOPLE. THEREFORE, IT IS DU TY OF THE AO TO DRAW INFERENCE FROM PRIMARY FACTS. 3.2 THE HONBLE SC OBSERVED THAT FROM PRIMARY FACT S MORE INFERENCES THAN ONE COULD BE DRAWN, THEREFORE, IT WOULD NOT BE POSSIBLE TO SAY THAT THE ASSESSEE SHOU LD HAVE DRAWN ANY PARTICULAR INFERENCE AND COMMUNICATED IT TO THE ASSESSING AUTHORITY. THE HONBLE SC WONDERED AS TO HOW COULD AN ASSESSEE BE CHARGED WITH FAILURE TO COMMUN ICATE AN INFERENCE, WHICH HE MIGHT OR MIGHT NOT HAVE DRAW N. IN THIS BACK GROUND, THE HONBLE SC HELD THAT EXPLANAT ION HAS NOTHING TO DO WITH 'INFERENCES' AND DEALS ONLY WITH THE QUESTION WHETHER PRIMARY MATERIAL FACTS NOT DISCLOS ED COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON THE GROUND THAT WITH DUE DILIGENCE THE INCOME-TAX OFFIC ER COULD HAVE DISCOVERED THEM FROM THE FACTS ACTUALLY DISCLO SED. THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED AS UNDER, .. THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING A LL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUEST ION BEFORE THE ASSESSING AUTHORITY LIES ON THE ASSESSEE TO TO TO TO MEET THE POSSIBLE CONTENTION THAT WHEN SOME ACCOUNT MEET THE POSSIBLE CONTENTION THAT WHEN SOME ACCOUNT MEET THE POSSIBLE CONTENTION THAT WHEN SOME ACCOUNT MEET THE POSSIBLE CONTENTION THAT WHEN SOME ACCOUNT BOOKS OR OTHER EVIDENCE HAS BEEN PRODUCED, THERE IS NO BOOKS OR OTHER EVIDENCE HAS BEEN PRODUCED, THERE IS NO BOOKS OR OTHER EVIDENCE HAS BEEN PRODUCED, THERE IS NO BOOKS OR OTHER EVIDENCE HAS BEEN PRODUCED, THERE IS NO DUTY ON THE ASSESSEE TO DISCLOSE FURTHER DUTY ON THE ASSESSEE TO DISCLOSE FURTHER DUTY ON THE ASSESSEE TO DISCLOSE FURTHER DUTY ON THE ASSESSEE TO DISCLOSE FURTHER FACTS, WHI CH ON DUE FACTS, WHICH ON DUE FACTS, WHICH ON DUE FACTS, WHICH ON DUE DILIGENCE, THE INCOME DILIGENCE, THE INCOME DILIGENCE, THE INCOME DILIGENCE, THE INCOME- -- -TAX OFFICER MIGHT HAVE DISCOVERED, THE TAX OFFICER MIGHT HAVE DISCOVERED, THE TAX OFFICER MIGHT HAVE DISCOVERED, THE TAX OFFICER MIGHT HAVE DISCOVERED, THE LEGISLATURE HAS PUT IN THE EXPLANATION LEGISLATURE HAS PUT IN THE EXPLANATION LEGISLATURE HAS PUT IN THE EXPLANATION LEGISLATURE HAS PUT IN THE EXPLANATION, WHICH HAS B EEN SET ITA-2202/DEL/2010 9 OUT ABOVE. IN VIEW OF THE EXPLANATION, IT WILL NOT BE OPEN TO IN VIEW OF THE EXPLANATION, IT WILL NOT BE OPEN TO IN VIEW OF THE EXPLANATION, IT WILL NOT BE OPEN TO IN VIEW OF THE EXPLANATION, IT WILL NOT BE OPEN TO THE ASSESSEE TO SAY, FOR EXAMPLE THE ASSESSEE TO SAY, FOR EXAMPLE THE ASSESSEE TO SAY, FOR EXAMPLE THE ASSESSEE TO SAY, FOR EXAMPLE 'I HAVE PRODUCED THE 'I HAVE PRODUCED THE 'I HAVE PRODUCED THE 'I HAVE PRODUCED THE ACCOUNT BOOKS AND THE DOCUMENTS: YOU, THE ASSESSING ACCOUNT BOOKS AND THE DOCUMENTS: YOU, THE ASSESSING ACCOUNT BOOKS AND THE DOCUMENTS: YOU, THE ASSESSING ACCOUNT BOOKS AND THE DOCUMENTS: YOU, THE ASSESSING OFFICER, EXAMINE THEM, AND FIND OUT THE FACTS NECES SARY FOR OFFICER, EXAMINE THEM, AND FIND OUT THE FACTS NECES SARY FOR OFFICER, EXAMINE THEM, AND FIND OUT THE FACTS NECES SARY FOR OFFICER, EXAMINE THEM, AND FIND OUT THE FACTS NECES SARY FOR YOUR PURPOSE: MY DUTY IS DONE WITH DISCLOSING THESE ACCOUNT YOUR PURPOSE: MY DUTY IS DONE WITH DISCLOSING THESE ACCOUNT YOUR PURPOSE: MY DUTY IS DONE WITH DISCLOSING THESE ACCOUNT YOUR PURPOSE: MY DUTY IS DONE WITH DISCLOSING THESE ACCOUNT BOOKS AND THE DOCUMENTS.' HIS OMISSION TO BRING TO THE BOOKS AND THE DOCUMENTS.' HIS OMISSION TO BRING TO THE BOOKS AND THE DOCUMENTS.' HIS OMISSION TO BRING TO THE BOOKS AND THE DOCUMENTS.' HIS OMISSION TO BRING TO THE ASSESSING AUTHORITY'S ATTENTI ASSESSING AUTHORITY'S ATTENTI ASSESSING AUTHORITY'S ATTENTI ASSESSING AUTHORITY'S ATTENTION THOSE PARTICULAR IT EMS IN THE ON THOSE PARTICULAR ITEMS IN THE ON THOSE PARTICULAR ITEMS IN THE ON THOSE PARTICULAR ITEMS IN THE ACCOUNT BOOKS, OR THE PARTICULAR PORTIONS OF THE DO CUMENTS, ACCOUNT BOOKS, OR THE PARTICULAR PORTIONS OF THE DO CUMENTS, ACCOUNT BOOKS, OR THE PARTICULAR PORTIONS OF THE DO CUMENTS, ACCOUNT BOOKS, OR THE PARTICULAR PORTIONS OF THE DO CUMENTS, WHICH ARE RELEVANT, WILL AMOUNT TO 'OMISSION TO DIS CLOSE FULLY WHICH ARE RELEVANT, WILL AMOUNT TO 'OMISSION TO DIS CLOSE FULLY WHICH ARE RELEVANT, WILL AMOUNT TO 'OMISSION TO DIS CLOSE FULLY WHICH ARE RELEVANT, WILL AMOUNT TO 'OMISSION TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT.' AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT.' AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT.' AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT.' NOR WILL HE BE ABLE TO CONTEND SUCCESSFU NOR WILL HE BE ABLE TO CONTEND SUCCESSFU NOR WILL HE BE ABLE TO CONTEND SUCCESSFU NOR WILL HE BE ABLE TO CONTEND SUCCESSFULLY THAT BY DISCLOSING LLY THAT BY DISCLOSING LLY THAT BY DISCLOSING LLY THAT BY DISCLOSING CERTAIN EVIDENCE, HE SHOULD BE DEEMED TO HAVE DISCL OSED CERTAIN EVIDENCE, HE SHOULD BE DEEMED TO HAVE DISCL OSED CERTAIN EVIDENCE, HE SHOULD BE DEEMED TO HAVE DISCL OSED CERTAIN EVIDENCE, HE SHOULD BE DEEMED TO HAVE DISCL OSED OTHER EVIDENCE, WHICH MIGHT HAVE BEEN DISCOVERED BY THE OTHER EVIDENCE, WHICH MIGHT HAVE BEEN DISCOVERED BY THE OTHER EVIDENCE, WHICH MIGHT HAVE BEEN DISCOVERED BY THE OTHER EVIDENCE, WHICH MIGHT HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY IF HE HAD PURSUED INVESTIGATION ON THE ASSESSING AUTHORITY IF HE HAD PURSUED INVESTIGATION ON THE ASSESSING AUTHORITY IF HE HAD PURSUED INVESTIGATION ON THE ASSESSING AUTHORITY IF HE HAD PURSUED INVESTIGATION ON THE BASIS OF WHAT HAS BEEN DISCLOSED. THE EXPLANATION T O THE BASIS OF WHAT HAS BEEN DISCLOSED. THE EXPLANATION T O THE BASIS OF WHAT HAS BEEN DISCLOSED. THE EXPLANATION T O THE BASIS OF WHAT HAS BEEN DISCLOSED. THE EXPLANATION T O THE SECTI SECTI SECTI SECTION GIVES A QUIETUS TO ALL SUCH CONTENTIONS ; A ND THE ON GIVES A QUIETUS TO ALL SUCH CONTENTIONS ; AND TH E ON GIVES A QUIETUS TO ALL SUCH CONTENTIONS ; AND TH E ON GIVES A QUIETUS TO ALL SUCH CONTENTIONS ; AND TH E POSITION REMAINS THAT SO FAR AS PRIMARY FACTS ARE C ONCERNED, POSITION REMAINS THAT SO FAR AS PRIMARY FACTS ARE C ONCERNED, POSITION REMAINS THAT SO FAR AS PRIMARY FACTS ARE C ONCERNED, POSITION REMAINS THAT SO FAR AS PRIMARY FACTS ARE C ONCERNED, IT IS THE ASSESSEE'S DUTY TO DISCLOSE ALL OF THEM IT IS THE ASSESSEE'S DUTY TO DISCLOSE ALL OF THEM IT IS THE ASSESSEE'S DUTY TO DISCLOSE ALL OF THEM IT IS THE ASSESSEE'S DUTY TO DISCLOSE ALL OF THEM INCLUDING INCLUDING INCLUDING INCLUDING PARTICULAR ENTRIES IN ACCOUNT BOOKS, PARTICULAR POR TIONS OF PARTICULAR ENTRIES IN ACCOUNT BOOKS, PARTICULAR POR TIONS OF PARTICULAR ENTRIES IN ACCOUNT BOOKS, PARTICULAR POR TIONS OF PARTICULAR ENTRIES IN ACCOUNT BOOKS, PARTICULAR POR TIONS OF DOCUMENTS, AND DOCUMEN DOCUMENTS, AND DOCUMEN DOCUMENTS, AND DOCUMEN DOCUMENTS, AND DOCUMENTS AND OTHER EVIDENCE WHICH C OULD TS AND OTHER EVIDENCE WHICH COULD TS AND OTHER EVIDENCE WHICH COULD TS AND OTHER EVIDENCE WHICH COULD HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY, FR OM THE HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY, FR OM THE HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY, FR OM THE HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY, FR OM THE DOCUMENTS AND OTHER EVIDENCE DISCLOSED. DOCUMENTS AND OTHER EVIDENCE DISCLOSED. DOCUMENTS AND OTHER EVIDENCE DISCLOSED. DOCUMENTS AND OTHER EVIDENCE DISCLOSED. DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS? IN OUR OP INION, THE ANSWER TO THIS QUESTION MUST BE IN THE NEGATIVE. ON CE ALL THE PRIMARY FACTS ARE BEFORE THE ASSESSING AUTHORIT Y, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE . IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASO NABLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT FOR SOMEBODY ELSEFAR LESS THE ASS ESSEE TO TELL THE ASSESSING AUTHORITY WHAT INFERENCES, WH ETHER OF FACTS OR LAW, SHOULD BE DRAWN. INDEED, WHEN IT IS REMEMBERED THAT PEOPLE OFTEN DIFFER AS REGARDS WHAT INFERENCES SHOULD BE DRAWN FROM GIVEN FACTS, IT WIL L BE MEANINGLESS TO DEMAND THAT THE ASSESSEE MUST DISCLO SE WHAT INFERENCESWHETHER OF FACTS OR LAWHE WOULD DR AW FROM THE PRIMARY FACTS. IF FROM PRIMARY FACTS MORE INFERENCES THAN ONE COUL D BE DRAWN, IT WOULD NOT BE POSSIBLE TO SAY THAT THE ASS ESSEE SHOULD HAVE DRAWN ANY PARTICULAR INFERENCE AND COMMUNICATED IT TO THE ASSESSING AUTHORITY. HOW COU LD AN ASSESSEE BE CHARGED WITH FAILURE TO COMMUNICATE AN INFERENCE, WHICH HE MIGHT OR MIGHT NOT HAVE DRAWN? IT MAY BE POINTED OUT THAT THE EXPLANATION EXPLANATION EXPLANATION EXPLANATION TO THE SUB- SECTION HAS NOTHING TO DO WITH 'INFERENCES' AND DEA LS ONLY HAS NOTHING TO DO WITH 'INFERENCES' AND DEALS ONLY HAS NOTHING TO DO WITH 'INFERENCES' AND DEALS ONLY HAS NOTHING TO DO WITH 'INFERENCES' AND DEALS ONLY WITH THE QUESTION WHETHER PRIMARY MATERIAL FACTS NO T WITH THE QUESTION WHETHER PRIMARY MATERIAL FACTS NO T WITH THE QUESTION WHETHER PRIMARY MATERIAL FACTS NO T WITH THE QUESTION WHETHER PRIMARY MATERIAL FACTS NO T DISCLOSED COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON DISCLOSED COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON DISCLOSED COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON DISCLOSED COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON THE GROUND THAT WITH DUE DILIGENCE THE INCOME THE GROUND THAT WITH DUE DILIGENCE THE INCOME THE GROUND THAT WITH DUE DILIGENCE THE INCOME THE GROUND THAT WITH DUE DILIGENCE THE INCOME- -- -TAX OFFICER TAX OFFICER TAX OFFICER TAX OFFICER ITA-2202/DEL/2010 10 COULD HAVE DISCOVERED THEM FROM THE FACTS ACTUALLY COULD HAVE DISCOVERED THEM FROM THE FACTS ACTUALLY COULD HAVE DISCOVERED THEM FROM THE FACTS ACTUALLY COULD HAVE DISCOVERED THEM FROM THE FACTS ACTUALLY DISCLOSED. DISCLOSED. DISCLOSED. DISCLOSED. THE EXPLANATION HAS NOT THE EFFECT OF EN LARGING THE SECTION, BY CASTING A DUTY ON THE ASSESSEE TO D ISCLOSE 'INFERENCES'TO DRAW THE PROPER INFERENCES BEING TH E DUTY IMPOSED ON THE INCOME-TAX OFFICER. WE HAVE, THEREFORE, COME TO THE CONCLUSION THAT WHI LE THE DUTY OF THE ASSESSEE IS TO DISCLOSE FULLY AND TRULY ALL RELEVANT FACTS, IT DOES NOT EXTEND BEYOND THIS. THE POSITION, THEREFORE, IS THAT IF THERE IS IN FAC T SOME REASONABLE GROUNDS FOR THINKING THAT THERE HAD BEEN NON- DISCLOSURE AS REGARDS ANY PRIMARY FACT, WHICH COULD HAVE A MATERIAL BEARING ON THE QUESTION OF 'UNDER-ASSESSME NT', THAT WOULD BE EFFICIENT TO GIVE JURISDICTION TO -TH E INCOME- TAX OFFICER TO ISSUE THE NOTICES UNDER SECTION 34. WHETHER THESE GROUNDS WERE ADEQUATE OR NOT OR ARRIVING AT T HE CONCLUSION THAT THERE WAS A NON-DISCLOSURE OF MATER IAL FACTS WOULD NOT BE OPEN FOR THE COURT'S INVESTIGATION. IN OTHER WORDS, , , , ALL THAT IS NECESSARY TO GIVE THIS SPECIAL JURISD ICTION IS THAT THE INCOME- -- -TAX OFFICER HAD WHEN HE ASSUMED JURISDICTION SOME PRIMA FACIE GROUNDS FOR THINKING THAT THERE HAD BEEN SOME NON-DISCLOSURE OF MATERIAL FACTS.(EMPHASIS SUPPLIED). 3.3 IT MAY BE SEEN THAT THE RATIO OF CALCUTTA DISCO UNT COMPANY(SUPRA) CLEARLY SUPPORTS THE CAUSE OF REVENU E. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. TH E UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSMENT YEAR UNDER CONS IDERATION IS 2001- 02. ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3). ASSESSMENT WAS SOUGHT TO BE REOPENED BY ISSUING NOTICE U/S 148 ON 28 TH MARCH, 2008. THUS, ADMITTEDLY, THE ASSESSMENT WAS SOUGHT TO BE R EOPENED BEYOND THE PERIOD OF FOUR YEARS IN A CASE WHERE THE ORIGIN AL ASSESSMENT WAS COMPLETED U/S 143(3). ON THESE FACTS, THE PROVISO TO SECTION 147 WOULD BE APPLICABLE, AS PER WHICH, UNLESS THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT, THE ASSESSMENT CANNOT BE REOPENED. LET US EXAMINE THE REASONS RECORDED SO AS TO ASCERTAIN WHETHER AS PER ASSESSING OFFICER, THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THE COPY OF REASONS RECO RDED IS PLACED AT PAGE 88 OF THE ASSESSEES PAPER BOOK, WHICH READS AS UND ER :- ITA-2202/DEL/2010 11 REASONS FOR TAKING ACTION U/S 147/148 IN THE CASE OF M/S GOLDTEX FURNISHING INDUSTRIES FOR A.Y. 2001-02 ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 31.3.2003. DEDUCTION U/S 80IB WAS ALLOWED AT RS.93,31,872 AS AGAINST ASSESSEES CLAIM OF RS.97,43,578/-. DEDUCTION U/S 80HHC WAS ALLOWED AT RS.1,82,08,386/- AGAINST ASSESSEES CLAIM OF RS.1,83,14,935/-. IT IS SEEN THAT WHILE CALCULATING DEDUCTION U/S 80H HC THE AMOUNT OF DEDUCTION U/S 80IB WAS NOT REDUCED FROM T HE PROFIT OF EXPORT BUSINESS IN VIEW OF THE PROVISIONS OF SECTION 80IA(9) WHICH PROVIDES THAT WHERE AS AMOUNT OF PROF ITS AND GAINS OF AN INDUSTRIAL UNDERTAKING IS CLAIMED AND A LLOWED AS DEDUCTION U/S 80IB, THE PROFITS TO THAT EXTENT S HOULD NOT QUALIFY FOR DEDUCTION FOR ANY ASSESSMENT YEAR UNDER ANY OTHER PROVISIONS OF CHAPTER VI A AND IN NO CASE SHA LL EXCEED THE PROFIT OF INDUSTRIAL UNDERTAKING. IN VIEW OF THE ABOVE FACTS THE DEDUCTION U/S 80HHC WORKS OUT TO RS.11184667 AS AGAINST CLAIM OF DEDUCTION MA DE BY THE ASSESSEE AT RS.18314935/- AND DEDUCTION ALLOWED BY THE A.O. AT RS.18208386 WHILE COMPLETING THE ASSESS MENT BY WAY OF EXCESS DEDUCTION OF RS.7130268/- ALLOWED TO THE ASSESSEE U/S 80HHC, HAS ESCAPED ASSESSMENT FOR A.Y. 2001-02. IT IS THEREFORE NECESSARY TO TAKE ACTION U/S 147/148 IN THIS CASE TO THE SAID ASSESSMENT YEAR. SD/- (ASEEM SHARMA) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 25(1), NEW DELHI. 6. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS NOWHERE MENTIONED THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. THE ASSESSING OFFICER HAS MENTIONED THE FACTS AND FIGURE RELATING TO DEDUCTION U/S 80HHC AND 80IB CLAIMED BY THE ASSESSEE AND ALLOWED BY THE ASSESSING OFFICER IN THE ORDER U/S 143(3). THEREAFTER, THE A SSESSING OFFICER HAS MENTIONED IT IS SEEN THAT WHILE CALCULATING DEDUCT ION U/S 80HHC THE AMOUNT OF DEDUCTION U/S 80IB WAS NOT REDUCED FROM T HE PROFIT OF EXPORT ITA-2202/DEL/2010 12 BUSINESS IN VIEW OF THE PROVISIONS OF SECTION 80IA( 9). THUS, THE ALLEGED ESCAPEMENT OF INCOME WAS ON ACCOUNT OF NON- APPLICATION OF A CERTAIN PROVISION OF LAW BY THE ASSESSEE AS WELL AS ASSESSING OFFICER. HOWEVER, NON-APPLICATION OF CERTAIN PROVISION OF LA W CANNOT BE EQUATED WITH THE FAILURE ON THE PART OF THE ASSESSEE TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS. MOREOVER, IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS NOT MENTIONED THAT THERE WAS ANY FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. LEARNED DR TRIED TO JUSTIFY THE ACTION OF THE ASSESSING OFFICER ON T HE GROUND THAT IN THE ORDER DATED 2 ND DECEMBER, 2008 PASSED BY THE ASSESSING OFFICER REJECTING THE ASSESSEES OBJECTION AGAINST THE REOP ENING OF ASSESSMENT, HE HAS CLEARLY MENTIONED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS. HE, THEREFORE, STATED THAT THE REASONS RECORDED SHOULD BE READ ALONG WITH ASSESSING OFFICERS ORDER WHEREIN THE ASSESSEES OB JECTION HAS BEEN REJECTED. WE FIND THAT THE IDENTICAL SITUATION WAS CONSIDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HA RYANA ACRYLIC MANUFACTURING CO. (SUPRA). IN THE SAID CASE ALSO, THERE WAS NO MENTION IN THE REASONS RECORDED THAT THERE WAS FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS BUT, IN THE COUNTER-AFFIDAVIT FILED BEFORE HON'BLE JURISDICTION AL HIGH COURT, SUCH ASSERTION WAS MADE. HON'BLE JURISDICTIONAL HIGH CO URT DID NOT ACCEPT THE REVENUES CONTENTION AND HELD THAT THE NOTICE I SSUED U/S 148 BASED ON THE REASONS RECORDED SUPPLIED TO THE PETIT IONER CANNOT BE SUSTAINED. THE FINDING OF THEIR LORDSHIPS READS AS UNDER :- HELD, ALLOWING THE PETITION, (I) THAT THE REASONS RECORDED DID NOT INDICATE THE FAILURE ON THE PART OF THE PET ITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99. WHILE IN THE REASONS SUPPLIED TO THE PETITIONER THERE WAS NO MEN TION OF THE ALLEGATION THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS, IN THE REASONS SHOWN IN THE SAID FORM TO THE COUNTER-AFFID AVIT THERE WAS A SPECIFIC ALLEGATION THAT THERE WAS A FA ILURE ON ITA-2202/DEL/2010 13 THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS RELATING TO ACCOMMODATION ENTRIES RA ISED FROM ONE OF THE COMPANIES TO THE EXTENT OF RS.5 LAK HS. THUS, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAID FOUR YEAR PERI OD REMAINED UNFULFILLED. CONSEQUENTLY, THE NOTICE UND ER SECTION 148 BASED ON THE RECORDED REASONS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER WERE WIT HOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD B E TAKEN BEYOND THE FOUR YEAR PERIOD. 7. THAT THE RATIO OF THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS UND ER APPEAL BEFORE US. 8. SIMILAR VIEW IS REITERATED BY THEIR LORDSHIPS OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SONITPUR S OLVEX LTD. (SUPRA), WHEREIN IT WAS HELD AS UNDER :- HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE HAD DISCLOSED, VERY CLEARLY AND THOROUGHLY, THAT ITS TR ANSPORT SUBSIDY RESERVE WAS, AS ON MARCH 31, 1996, RS.35,00 ,330 AND THAT BY MARCH 31, 1997, THIS AMOUNT HAD RISEN T O RS.59,70,889. THE REVENUE COULD NOT SAY THAT THE ASSESSEE DID NOT DISCLOSE ALL SUCH MATERIAL FACTS, WHICH WERE NECESSARY FOR MAKING A VALID AND EFFECTIVE ASSESSMENT OF INCOME FOR THE PURPOSE OF REALIZATION OF TAX. THE REASON ASSIGNED BY THE ASSESSING OFFICER SHOWED THAT THE INFORMATION REGARDING TRANSPORT SUBSIDY WAS AVA ILABLE IN THE AUDITED ACCOUNTS AND STATEMENTS FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER ALONG WITH THE AS SESSEES RETURN. THESE DETAILS BEING AVAILABLE BEFORE THE A SSESSING OFFICER, THE ASSESSING OFFICER COULD NOT SAY THAT T HERE WAS OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE THE 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 NECES SARY FOR ITS ASSESSMENT, FOR THAT ASSESSMENT YEAR. 9. RESPECTFULLY FOLLOWING THE ABOVE TWO DECISIONS O F HON'BLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE REOPENI NG OF ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS NOT JUSTIFIED BECAUSE (I) THE RE WAS NO FAILURE ON ITA-2202/DEL/2010 14 THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS AND (II) THERE WAS NO WHISPER IN THE REASONS RECORDED T HAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS. 10. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING TH E ABOVE TWO DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, WE QUASH THE NOTICE ISSUED U/S 148 OF THE ACT. 11. SINCE THE NOTICE ISSUED U/S 148 IS QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO SUCH NOTICE IS ALSO QUASHED. ONCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL DO NOT REQUIRE ANY ADJUD ICATION ON MERITS. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 04.01.2017 . SD/- SD/- (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S GOLDTEX FURNISHING INDUSTRIE S, M/S GOLDTEX FURNISHING INDUSTRIES, M/S GOLDTEX FURNISHING INDUSTRIES, M/S GOLDTEX FURNISHING INDUSTRIES, 1197, TRI NAGAR, DELH 1197, TRI NAGAR, DELH 1197, TRI NAGAR, DELH 1197, TRI NAGAR, DELHI I I I 110 035. 110 035. 110 035. 110 035. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -25(1), NEW DELHI. 25(1), NEW DELHI. 25(1), NEW DELHI. 25(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR