Anil Kumar Tiwari, Kanpur V. Astt. Commissioner of Income Tax-II, Kanpur

ITA 222/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1080 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-03-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Application of stay; Question of law; Tangible material; Difference of opinion; Assessment record; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 139(5); 147; 148; 139

Judgement Text

I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 09-10 SHRI ANIL KUMAR TIWARI, E-185, ADARSH NAGAR, BARRA-1, NEAR SANKATMOCHAN MANDIR, KANPUR. PAN:ACCPT 8165 F VS. A.C.I.T.-II, KANPUR. (APPELLANT) (RESPONDENT) STAY APPLICATION NO.10 & 11/LKW/2017 ( IN ITA NO.222 & 223/LKW/2017) ASSESSMENT YEAR:2008-09 & 09-10 SHRI ANIL KUMAR TIWARI, E-185, ADARSH NAGAR, BARRA-1, NEAR SANKATMOCHAN MANDIR, KANPUR. PAN:ACCPT 8165 F VS. A.C.I.T.-II, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LEARNED CIT(A) BOTH DATED 30/01/2017. TH E GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN ITS APPEALS ARE REPRODUCED BELOW: APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI AJAY KUMAR, D.R. DATE OF HEARING 22/03/2018 DATE OF PRONOUNCEMENT 23 /03/2018 I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 2 I.T.A. NO.222/LKW/2017 01. BECAUSE THERE BEING NO MATERIAL TO FORM REASO N TO BELIEVE, THE REASONS RECORDED ON 25.03.2015 AND THE NOTICE ISSUED UNDER SECTION 148 DATED 26.03.2015 IS WITHOUT JURISDICTION AND BAD IN LAW, THE NOTICE AS WELL AS THE PROCEEDINGS INITIATED BE QUASHED. 02. BECAUSE THE AO RECORDING THE REASONS AND THE AO ISSUING THE NOTICE BEING 'NOT ONE AND THE SAME PERSON', THE RE IS NO SATISFACTION AS CONTEMPLATED, IN SECTION 147 AND THE NOTICE ISSUED UNDER SECTION 148 AND THE ENTIRE RE- ASSESSMENT PROCEEDINGS BEING BAD IN LAW BE QUASHED. 03. BECAUSE THE ASSESSEE HAVING FILED THE REVISED RETURN AND THE SAME HAVING BEING PROCESSED UNDER SECTION 143(1), THERE BEING NO ESCAPEMENT OF INCOME, THE NO TICE ISSUED UNDER SECTION 148 IS BAD IN LAW AND THE RE- ASSESSMENT PROCEEDINGS BE QUASHED. 04. BECAUSE THE ASSESSEE HAVING FILED THE REVISE D RETURN, WELL WITHIN TIME, THE AO SHOULD OUGHT TO HAVE ISSUED NOT ICE UNDER SECTION 143(2) OF THE ACT, FAILURE TO DO SO, THE RE- ASSESSMENT CANNOT BE FRAMED ON THE SAME PREMISE ON WHICH THE REVISED RETURN WAS FILED, THE REASSESSMEN T PROCEEDINGS ARE BAD IN LAW. 05. BECAUSE NO OPPORTUNITY AS MANDATED U/S 127 HA S BEEN PROVIDED TO THE ASSESSEE TO TRANSFER THE FILE FROM ACIT-2 TO ACIT-3, THE ENTIRE REASSESSMENT FRAMED IS WITHOU T JURISDICTION AND BE QUASHED. 06. BECAUSE THE AUTHORITIES BELOW HAVE ERRED ON F ACTS AND IN LAW IN MAKING AND UPHOLDING THE ADDITION OF RS.84,96,4997- ON ACCOUNT OF UNACCOUNTED SALES AND BOGUS PURCHASES IN THE BUSINESS STYLED AS M/S. TIWA RI EXPORTS, WHICH ADDITION IS CONTRARY TO FACTS, BAD I N LAW BE DELETED. 07. BECAUSE THE AUTHORITIES BELOW HAVE ERRED ON F ACTS AND IN LAW IN MAKING AND UPHOLDING THE ADDITION OF RS. 18,00,0017- ON ACCOUNT OF UNACCOUNTED SALES AND BOG US I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 3 PURCHASES IN THE BUSINESS STYLED AS M/S. KAMAKHYA CORPORATION, WHICH ADDITION IS CONTRARY TO FACTS, B AD IN LAW BE DELETED. 08. BECAUSE THE AUTHORITIES BELOW HAVE ERRED ON F ACTS AND IN LAW IN MAKING AND UPHOLDING THE ADDITION OF RS.11,00,0017- ON ACCOUNT OF UNACCOUNTED SALES AND BOGUS PURCHASES IN THE BUSINESS STYLED AS M/S. ISHA N IMPEX, WHICH ADDITION IS CONTRARY TO FACTS, BAD IN LAW BE DELETED. 09. BECAUSE IN ANY CASE AND IN ALL CIRCUMSTANCES OF THE CASE, THE ORDER PASSED IS BAD IN LAW AND BE QUASHED. I.T.A. NO.223/LKW/2017 01. BECAUSE THERE BEING NO MATERIAL TO FORM REAS ON TO BELIEVE, THE REASONS RECORDED ON 25.03.2015 AND THE NOTICE ISSUED UNDER SECTION 148 DATED 26.03.2015 IS WITHOUT JURISDICTION AND BAD IN LAW, THE NOTICE AS WELL AS THE PROCEEDINGS INITIATED BE QUASHED. 02. BECAUSE THE AO RECORDING THE REASONS AND THE AO ISSUING THE NOTICE BEING 'NOT ONE AND THE SAME PERSON', THE RE IS NO SATISFACTION AS CONTEMPLATED, IN SECTION 147 THE NOTICE ISSUED UNDER SECTION 148, AND THE ENTIRE RE-ASSESSM ENT PROCEEDINGS BEING BAD IN LAW BE QUASHED. 03. BECAUSE THE ORIGINAL ASSESSMENT HAVING BEEN FR AMED U/S. 143(3) OF THE ACT 1961 ON 27.12.2011, NOTICE U/S. 1 48 ISSUED ON 27.03.2015, AFTER A PERIOD OF FOUR YEARS CONDITION AS STIPULATED IN THE PROVISO TO SECTION 1 47 HAVING BEING FULFILLED, IN AS MUCH AS THERE BEING N O FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS, NECESSARY FOR ASSESSMENT, NOR THERE BEING ANY SUCH FACT MENTIONED IN THE REASONS RECORDED, THE NOTICE ISSUED U/S. 148 IS WITHOUT JURISDICTION, BAD IN LAW, THE PROCEEDINGS INITIATED BE QUASHED. 04. BECAUSE THE ASSESSEE HAVING FILED THE REVISED R ETURN AND THE SAME HAVING BEING PROCESSED UNDER SECTION 143(1 ), THERE BEING NO ESCAPEMENT OF INCOME, THE NOTICE ISS UED I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 4 UNDER SECTION 148 IS BAD IN LAW, THE RE-ASSESSMENT PROCEEDINGS BE QUASHED. 05. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LA W IN NOT APPRECIATING THE WRITTEN SUBMISSIONS/EXPLANATIONS A S FILED, THE ORDER OF THE CIT(A) BEING CRYPTIC, BAD I N LAW BE QUASHED. 06. BECAUSE NO OPPORTUNITY AS MANDATED U/S 127 HAS BEEN PROVIDED TO THE ASSESSEE BEFORE TRANSFER OF FILE FR OM ACIT-2 TO ACIT-3, THE ENTIRE REASSESSMENT FRAMED IS WITHOUT JURISDICTION BE QUASHED. 07. BECAUSE THE AO AS WELL AS THE CIT(A) HAVE ER RED ON FACTS AND IN LAW IN MAKING AND UPHOLDING THE ADDITION OF RS.48,29,9017- ON ACCOUNT OF UNACCOUNTED SALES AND THE BOGUS PURCHASES IN THE BUSINESS STYLED AS M/S. TIWA RI EXPORTS, WHICH ADDITION IS CONTRARY TO FACTS, BAD I N LAW AND BE DELETED. 08. BECAUSE THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAVE ARBITRARILY HELD, THAT RS.48,29,9017-IS UNDISCLOSED INCOME OF THE ASSESSEE. 09. BECAUSE IN ANY CASE AND IN ALL CIRCUMSTANCES OF THE CASE, THE ORDER PASSED IS BAD IN LAW AND BE QUASHED. THESE APPEALS WERE HEARD TOGETHER AND THEREFORE, FO R THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. 2. THE BRIEF FACTS, AS NOTED IN THE ASSESSMENT ORDE R, ARE THAT THE ASSESSMENTS WERE COMPLETED BY REOPENING THE CASE UN DER THE PROVISIONS OF SECTION 147 OF THE ACT. LEARNED A. R. AT THE OUTSET , SUBMITTED THAT HE WILL BE CHALLENGING THE REOPENING OF THE CASES AND WILL NOT BE ARGUING ON THE MERITS OF THE CASES AS IN HIS OPINION THE REOPENING ITSELF IN THESE TWO CASES IS BAD IN LAW AND THEREFORE, THE ASSESSMENT ORDER ITSELF N EEDS TO BE QUASHED. LEARNED A. R. FIRST TOOK UP THE APPEAL IN I.T.A. NO .223 FOR ASSESSMENT YEAR 2009-10. HE SUBMITTED THAT RETURN IN THIS CASE WAS FILED ON 30/09/2009 AND I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 5 THEREAFTER THE ASSESSMENT WAS COMPLETED UNDER THE P ROVISIONS OF SECTION 143(3) OF THE ACT ON 27/12/2011. OUR ATTENTION WAS INVITED TO PAGES 10 TO 17 OF THE PAPER BOOK WHERE A COPY OF THE ASSESSMENT ORDER PASSED U/S 143(3) WAS PLACED. INVITING OUR ATTENTION TO THE P ROVISIONS OF SECTION 147 REGARDING REOPENING OF THE CASE, LEARNED A. R. SUBM ITTED THAT AS PER THE PROVISO TO SECTION 147, THE REASSESSMENT PROCEEDING S CANNOT BE INITIATED IN A CASE WHERE THE ASSESSMENT IS FINALIZED U/S 143(3) AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. LEARNED A. R. SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED IN THIS CASE IS ASSESSMENT YEAR 2009-10 AND THEREFORE, THE PERIOD OF FOUR YEARS EXPIRED ON 31/0 3/2014 WHEREAS THE NOTICE U/S 148 WAS ISSUED ON 27/03/2015 AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAGE NO. 9 OF THE PAPER BOOK WHERE A COPY OF NOTICE DATED 27/03/2015 WAS PLACED. LEARNED A. R. THEREFORE, SU BMITTED THAT THE NOTICE ISSUED U/S 148 IS BEYOND A PERIOD OF FOUR YEARS AND THEREFORE, THE ASSESSMENT PROCEEDINGS ARE BAD IN LAW IN VIEW OF TH E PROVISO TO SECTION 147 OF THE ACT AS THE REASONS RECORDED THE ASSESSIN G OFFICER HAS NOWHERE MENTIONED THAT INCOME HAS ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIA L FACTS. INVITING OUR ATTENTION TO THE COPY OF REASONS RECORDED PLACED AT PAGES 6 TO 8 OF THE PAPER BOOK, LEARNED A. R. SUBMITTED THAT THE REOPEN ING WAS DONE AS IN THE OPINION OF THE ASSESSING OFFICER THE ASSESSEE HAD N OT DISCLOSED SEVEN SAVINGS BANK ACCOUNT AND FOUR CURRENT ACCOUNTS IN T HE NAMES OF VARIOUS GROUP COMPANIES WHERE THE ASSESSEE WAS PROPRIETOR. INVITING OUR ATTENTION TO THE QUERIES RAISED BY THE ASSESSING OFFICER DURI NG ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3), LEARNED A. R. INVITED OUR A TTENTION TO PAGES 72 AND 73 OF THE PAPER BOOK WHERE THE QUESTIONNAIRE REQUIR ING ASSESSEE TO GIVE I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 6 DETAILS OF ALL BANK ACCOUNTS WAS PLACED AT SR.NO. 7 . LEARNED A. R. TOOK US TO REPLY FILED BY THE ASSESSEE AGAINST THIS QUERY LETT ER WHICH WAS PLACED AT PAGES 18 AND 19 OF THE PAPER BOOK. OUR SPECIFIC AT TENTION WAS INVITED TO PARA NO. 7 WHERE ASSESSEE HAD SUBMITTED THE DETAIL OF ALL BANK ACCOUNTS AND HAD ENCLOSED THE DETAILS AS PER ANNEXURE-6. LE ARNED A. R. SUBMITTED THAT ANNEXURE-6 WAS PLACED IN PAGE NO. 20 OF THE PA PER BOOK WHERE THE DETAILS OF ALL THE 10 ACCOUNTS WAS PLACED AND FROM THE ACCOUNT NUMBERS MENTIONED BY ASSESSEE AT PAGE NO. 20, LEARNED A. R. AGAIN TOOK US TO REASONS RECORDED AT PAGES 6 TO 8 OF THE PAPER BOOK AND SUBMITTED THAT THE SAME BANK ACCOUNT NUMBERS HAVE BEEN MENTIONED BY TH E ASSESSING OFFICER FOR REOPENING OF THE CASES WHICH HAS ALREADY BEEN E XAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. IN VIEW OF ALL THESE FACTS AND CIRCUMSTANCES LEARNE D A. R. SUBMITTED THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL INFORMATION AND IN FACT THE SAME INFORMATION HAS BEEN DULY EXAM INED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THEREFORE, AFTER THE EXPIRY OF FOUR YEARS THE REASSESSMENT NOTICE IS NOT VALID AND THEREFORE, NEEDS TO BE QUASHED. IN THIS RESPECT RELIANCE WAS PLACED ON A NUMBER OF CASE LAWS WITH REFERENCE TO PROVISO TO SECTION 147 PLACED IN PAPER BOOK PAGES 1 TO 22. OUR SPECIFIC ATTENTION WAS INVITED TO THE CASE LAW OF UNITECH LIMITED VS. DCIT [2017] 397 ITR 547 (DEL) AND ALSO THE CASE LAW OF NIRMAL BANG SECURITIES PVT. LTD. VS. ACIT 382 ITR 93 (BOM) . THE LEARNED A. R. FURTHER PLACED HIS RELIANCE ON THE ORDER OF JURISDI CTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF MIRZA TANNERS. 3. LEARNED D. R., ON THE OTHER HAND, SUBMITTED THAT THE ASSESSING OFFICER IN THE REASONS RECORDED HAS STATED THAT THE ASSESSEE HAD USED THE BANK ACCOUNTS FOR ISSUING CHEQUES TO BRIJ BHUSHAN S INGH WHO WAS NOT A SUPPLIER BUT WAS DRIVER OF THE ASSESSEE AND HAD WIT HDRAWN CASH FROM THE I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 7 BANK ON THE SAME DATE AND HAD GIVEN THE MONEY TO TH E ASSESSEE AND THEREFORE, IT IS A CASE OF ESCAPEMENT OF INCOME AND THEREFORE, THE REASSESSMENT PROCEEDINGS WERE RIGHTLY INITIATED. 4. ARGUING UPON THE APPEAL IN I.T.A. NO. 222 FOR AS SESSMENT YEAR 2008- 09, LEARNED A. R. SUBMITTED THAT IN THIS YEAR THOUG H THE INITIATION OF PROCEEDINGS WERE WITHIN TIME AS THE ASSESSMENT IN T HIS YEAR WAS NOT COMPLETED U/S 143(3) OF THE ACT. IT WAS SUBMITTED THAT IN THIS YEAR THE ASSESSEE HIMSELF HAD FILED REVISED RETURN WITHIN TH E PRESCRIBED PERIOD OF TIME AND HAD INCLUDED THE INCOME FROM THE BANK ACCO UNTS MENTIONED BY THE ASSESSING OFFICER FOR REOPENING OF THE CASE. IT WA S SUBMITTED THAT SINCE THE ASSESSEE HAD DECLARED THE INCOME FROM TRANSACTIONS OF BANK ACCOUNT IN THE REVISED RETURN OF INCOME, WHICH WAS FILED WELL WITH IN THE PRESCRIBED PERIOD OF TIME, THERE WAS NO FRESH MATERIAL WITH THE ASSES SING OFFICER TO REOPEN THE CASE AS HAS BEEN HELD IN VARIOUS CASE LAWS INCLUDIN G THE KELVINATOR OF INDIA DECIDED BY HON'BLE SUPREME COURT. LEARNED A. R. SU BMITTED THAT IN A DECISION IN THE CASE OF MOTILAL R. TODI VS. ACIT, H ON'BLE BOMBAY TRIBUNAL HAS DECIDED THE SIMILAR ISSUE AND HAS QUASHED THE A SSESSMENT ORDER AFTER TAKING INTO ACCOUNT THE VARIOUS CASES INCLUDING HON 'BLE DELHI HIGH COURT DECISION IN THE CASE OF PR. CIT VS. TUPPERWARE INDI A PVT. LTD. IT WAS SUBMITTED THAT HON'BLE TRIBUNAL HAS ALSO TAKEN INTO ACCOUNT VARIOUS CASE LAWS DECIDED BY VARIOUS HIGH COURT AND OUR SPECIFIC ATTENTION WAS INVITED TO PARA 6.5 ONWARDS. LEARNED A. R. EXPLAINING THE FAC TS OF THE CASE INVITED OUR ATTENTION TO THE COPY OF THE REASONS RECORDED, PLAC ED AT PAGES 15 TO 19 OF THE PAPER BOOK AND SUBMITTED THAT SAME REASONS, AS RECORDED IN ASSESSMENT YEAR 2009-10, HAVE BEEN RECORDED. HE SU BMITTED THAT IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS MENTION ED CERTAIN NAMES OF FIRMS ALONG WITH THEIR RELEVANT BANK ACCOUNT NUMBER S FOR TRANSACTIONS OF WHICH ASSESSING OFFICER WANTED TO INCLUDE IN THE IN COME OF ASSESSEE BY I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 8 TAKING ACTION U/S 148 OF THE ACT. LEARNED A. R. SU BMITTED THAT THE ASSESSEE AT HIS OWN HAD INCLUDED THE INCOME FROM TRANSACTION S IN THESE BANK ACCOUNTS IN THE REVISED RETURN WHICH WAS FILED WITH IN THE PRESCRIBED PERIOD OF TIME AND IN THIS RESPECT TOOK US TO PAGES 50 TO 52 OF THE PAPER BOOK WHERE A COPY OF REVISED RETURN ALONG WITH THE REVIS ED COMPUTATION OF INCOME WAS PLACED. OUR SPECIFIC ATTENTION WAS INVI TED TO PAGE NO. 52 OF THE PAPER BOOK WHERE THE ASSESSEE HAD INCLUDED AN INCOM E OF RS.19,94,731/- AS INCOME FROM OTHER SOURCES. LEARNED A. R. SUBMIT TED THAT THE BREAK UP OF THIS INCOME IS FROM THE TRANSACTIONS IN THE SAME BA NK ACCOUNTS WHICH HAS BEEN USED BY THE ASSESSING OFFICER TO TAKE ACTION U /S 148 OF THE ACT. WE WERE AGAIN TAKEN TO THE REASONS RECORDED AT PAGE NO . 17 OF THE PAPER BOOK WHERE THE ASSESSING OFFICER HAS HIMSELF ADMITTED TH AT IN BANK ACCOUNT PERTAINING TO TIWARI EXPORT, THE ASSESSEE HAD SURR ENDERED RS.12,01,119/- WHEREAS THE ENTIRE DEPOSIT OF RS.54,02,885/- SHOULD HAVE BEEN SURRENDERED. SIMILARLY, OUR ATTENTION WAS INVITED TO PAGE NO. 17 OF THE PAPER BOOK WHERE THE ASSESSING OFFICER IN ITS REASONS RECORDED HAS R ECORDED THAT KAMAKHYA CORPORATION, PROPRIETOR SHRI ANIL KUMAR TIWARI HAD DEPOSITED RS.7,99,238/- WHEREAS THE ASSESSEE HAD DISCLOSED THE INCOME AT RS .96,726/-. SIMILARLY, WE WERE TAKEN TO THE INCOME DECLARED BY THE ASSESSE E IN REVISED RETURN FROM ISHAN IMPEX WHERE HE HAD DISCLOSED RS.97,287/- WHEREAS THE ASSESSING OFFICER IN THE REASONS RECORDED HAS HELD THAT ENTIRE DEPOSITS OF RS.1,99,720/- SHOULD HAVE BEEN DECLARED AS INCOME. LEARNED A. R. FURTHER SUBMITTED THAT FROM THESE FACTS IT BECOMES APPARENT THAT ASSESSEE HAD DISCLOSED THE INCOME FROM THE BANK ACCOUNTS IN HIS REVISED RETURN OF INCOME WHICH WAS FILED WITHIN THE PRESCRIBED PERIOD OF TIM E AND WHICH FACT HAS BEEN ACKNOWLEDGED BY THE ASSESSING OFFICER ALSO. HE SUB MITTED THAT INSTEAD OF FIXING THE CASE OF THE ASSESSEE U/S 143(3) OF THE A CT, THE ASSESSING OFFICER CHOSE TO IGNORE THE FIGURES IN REVISED RETURN AND I NSTEAD INITIATED PROCEEDINGS U/S 148 OF THE ACT WHICH IS NOT PERMIT TED AS NO NEW MATERIAL I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 9 HAD COME TO THE POSSESSION OF THE ASSESSING OFFICER AS ALL THE MATERIAL WAS ALREADY THERE BEFORE HIM IN THE FORM OF ANNEXURES T O REVISED RETURN AND THEREFORE, THE REOPENING WAS BAD IN LAW. RELIANCE IN THIS RESPECT WAS PLACED ON THE CASE LAWS OF MOTILAL TODI VS. DCIT WH ERE HON'BLE MUMBAI TRIBUNAL AFTER CONSIDERING NUMBER OF JUDGMENTS INCL UDING THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR IND IA HAS HELD THAT REOPENING OF THE CASE WITHOUT A TANGIBLE NEW MATERI AL IS NOT PERMITTED. 5. LEARNED D. R., ON THE OTHER HAND, SUBMITTED THAT THIS CASE WAS NOT HIT BY THE PROVISIONS OF SECTION 147 AND ASSESSING OFFI CER HAD RIGHTLY REOPENED THE CASE AS IN THE REASONS RECORDED HE HAS HELD THA T THE ASSESSEE HAD NOT DECLARED THE INCOME FROM BANK ACCOUNTS. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. FIRST WE TAKE APPEAL IN I.T.A. NO.223 FOR ASSESSMENT YEAR 2009-10. IN THIS CASE IT IS AN UNDISPUTED FAC T THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 27 /12/2011 WHICH IS PLACED AT PAGES 10 TO 17 OF THE PAPER BOOK. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSMENT YEAR INVOLVED IS 2009-10 AND THEREFO RE, AS PER THE FIRST PROVISO TO SECTION 147 THE REASSESSMENT PROCEEDINGS IN THIS CASE CAN BE INITIATED AFTER THE EXPIRY OF FOUR YEARS ONLY IF TH ERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT OR FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN U/S 139 OR FAILURE ON THE PART OF THE ASSESSEE TO RESPOND T O NOTICE ISSUED UNDER SUB SECTION (1) OF SECTION 142 OR SECTION 148. OUT OF T HESE THREE CONDITIONS I.E. THE FAILURE ON ACCOUNT OF NON FILING OF RETURN U/S 139 AND NO RESPONSE TO NOTICE U/S 142 AND 148 IS NOT APPLICABLE. THEREFOR E, WE HAVE TO ONLY EXAMINE THE THIRD EXCEPTION THAT WHETHER THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR AS ADMITTEDLY A PERIOD OF FOUR YEARS I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 10 HAD PASSED SINCE THE END OF THE RELEVANT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009-10. THE RELEVANT PERIOD OF FOUR YEARS EX PIRED ON 31/03/2014 AND NOTICE U/S 148 HAS BEEN ISSUED ON 27/03/2015. FROM THE REASONS RECORDED, AS PLACED IN PAGES 6 TO 8 OF THE PAPER BOOK, THE AS SESSING OFFICER HAS NOT BROUGHT OUT ANYTHING TO SUBSTANTIATE THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL THE MA TERIAL FACTS REQUIRED FOR COMPLETION OF ASSESSMENT. IN FACT DURING ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER VIDE QUERY LETTER DATED 21/10 /2011, PLACED IN PAPER BOOK PAGES 72 & 73, REQUIRED THE ASSESSEE VIDE PARA 7 TO FILE COMPLETE DETAILS OF BANK ACCOUNTS ALONG WITH THE RELEVANT ST ATEMENT OF BANK ACCOUNTS. THE ASSESSEE IN HIS REPLY VIDE LETTER DA TED 09/11/2011 PLACED AT PAGES 18 TO 19 OF THE PAPER BOOK, SUBMITTED THE REQ UIRED INFORMATION VIDE PARA 7 AND SUBMITTED THE DETAILS OF BANK ACCOUNTS A S PER ANNEXURE-6 PLACED AT PAGE NO. 20 OF THE PAPER BOOK. THE EXAMINATION OF DETAILS OF BANK ACCOUNT SUBMITTED BY THE ASSESSEE AS PER PAGE NO. 2 0 OF THE PAPER BOOK AND EXAMINATION OF REASONS RECORDED, REVEALS THAT A SSESSEE HAD SUBMITTED DETAILS OF BANK ACCOUNT NUMBER WHICH THE ASSESSING OFFICER MENTIONED IN THE REASONS RECORDED. FOR EXAMPLE, THE BANK ACCOUNT NO.62205129846 BELONGING TO M/S ISHAN IMPEX NOTED BY ASSESSING OFF ICER FINDS MENTION IN THE DETAILS OF BANK ACCOUNT SUBMITTED BY THE ASSESS EE AT SR.NO. 5 OF THE PAPER BOOK PAGE 20. SIMILARLY BANK ACCOUNT NO.6220 5129781 MENTIONED BY ASSESSING OFFICER IN HIS REASONS RECORDED FINDS MEN TION IN THE DETAIL OF BANK ACCOUNT SUBMITTED BY THE ASSESSEE AT SR.NO. 4 AVAIL ABLE AT PAGE 20 OF THE PAPER BOOK. THEREFORE, IN THIS CASE THE ASSESSEE H AD EVEN SUPPLIED THE WHOLE INFORMATION AS REQUIRED BY THE ASSESSING OFFI CER AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRU LY AND FULLY ALL MATERIAL FACTS FOR MAKING THE ASSESSMENT. THE EXAMINATION O F REASONS RECORDED ALONG WITH THE QUERY LETTER RAISED BY ASSESSING OFF ICER AND ITS REPLY, WE COME TO CONCLUSION THAT THE REASONS RECORDED DO NOT MENTION EVEN A WORD I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 11 ABOUT THE FAILURE ON THE PART OF THE ASSESSEE TO FI LE TRULY AND FULLY ALL MATERIAL FACTS AND IN FACT DURING ASSESSMENT PROCEE DINGS ON A SPECIFIC QUERY FROM THE ASSESSING OFFICER, THE ASSESSEE HAD FILED ALL THE DETAILS OF BANK ACCOUNTS AND THE SAME BANK ACCOUNTS HAVE BEEN USED BY THE ASSESSING OFFICER TO REOPEN THE COMPLETED ASSESSMENT OF THE A SSESSEE WHICH IS NOT PERMITTED UNDER THE LAW AS DECIDED BY VARIOUS HON'B LE COURTS INCLUDING HON'BLE DELHI HIGH COURT IN THE CASE OF UNITECH LTD . (SUPRA), HON'BLE BOMBAY HIGH COURT IN THE CASE OF NIRMAL BANG SECURI TIES PVT. LTD. AND BY VARIOUS OTHER DECISIONS AS RELIED ON BY LEARNED A. R., THE COPIES OF WHICH ARE PLACED IN PAGES 1 TO 203 OF THE PAPER BOOK. FO R THE SAKE OF COMPLETENESS, THE FINDINGS OF HON'BLE DELHI HIGH CO URT IN THE CASE OF UNITECH LTD. (SUPRA) ARE REPRODUCED BELOW: 12. THERE ARE A LARGE NUMBER OF CASES THAT HAVE BE EN DECIDED BY THIS COURT WITH RESPECT TO REOPENING OF ASSESSME NTS UNDER SECTION 147/148 OF THE ACT. AFTER A PERIOD OF FOUR YEARS UNDER THE FIRST PROVISO TO SECTION 147 OF THE ACT, FOR RE ASSESSMENT PROCEEDINGS TO BE INITIATED, THE FOLLOWING PRE-COND ITIONS HAVE TO BE SATISFIED : THE ORIGINAL ASSESSMENT HAD TO BE COMPLETED UNDER SECTION 143(3) OF THE ACT. MORE THAN FOUR YEARS HAVE LAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT. DUE TO FAILURE OF THE ASSESSEE TO MAKE A RETURN U NDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, OR DUE TO A FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT FOR THE RELEVANT ASSESSMENT ORDER.' I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 12 13. THE WORDING OF THIS PROVISION MAKES IT CLEAR TH AT REOPENING OF ASSESSMENTS AFTER A PERIOD OF FOUR YEARS, OUGHT TO BE AN EXCEPTION AND NOT THE RULE. THE PURPOSE OF THIS PRO VISION IS TO ENSURE THAT THERE IS SOME FINALITY WHICH IS ATTACHE D AFTER THE PERIOD OF FOUR YEARS, FOR ASSESSMENTS WHICH HAVE BE EN COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSE SSING OFFICER HAS TO NECESSARILY RECORD THAT THERE HAS BE EN A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FAILING WHICH T HE REOPENING OF THE ASSESSMENT CANNOT BE TRIGGERED. SIMILARLY HON'BLE BOMBAY HIGH COURT IN THE CASE OF NIRMAL BANG SECURITIES PVT. LTD. (SUPRA) HAS HELD AS UNDER: 21. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSMEN T HAD BEEN MADE UNDER SECTION 143(3) OF THE ACT FOR THE ASSESS MENT YEAR 2000-01. IT IS ALSO ADMITTED THAT THE REASSESSMENT PROCEEDINGS INITIATED FOR THE ASSESSMENT YEAR 2000-01 WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE SAID ASSESSMENT Y EAR. IN SUCH A SCENARIO, AS PER THE FIRST PROVISO TO SECTION 147 OF THE ACT, NO ACTION FOR INITIATION OF REASSESSMENT PROCEEDINGS F OR THE ASSESSMENT YEAR 2000-01 COULD HAVE BEEN TAKEN UNLES S THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT BY REASON OF A FAILUR E ON THE PART OF THE PETITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. AS RIGHTLY SUBMITTED BY M R. MURLIDHARAN, LEARNED COUNSEL APPEARING ON BEHALF OF THE PETITIONER, THERE IS NOT EVEN AN ALLEGATION IN THE SAID REASONS THAT THERE WAS ANY FAILURE ON THE PART OF THE PETIT IONER TO DISCLOSE TRULY AND FULLY ANY MATERIAL FACT, LET ALO NE THE DETAILS THEREOF. IN FACT, ON A PERUSAL OF THE SAID REASONS AND AS REPRODUCED ABOVE, IT IS CLEAR THAT THE REASON GIVEN FOR INITIATING REASSESSMENT PROCEEDINGS UNDER SECTION 148 OF THE A CT WAS THAT THE EXEMPTION UNDER SECTION 10(33) OF THE ACT, AND WHICH WAS AMENDED RETROSPECTIVELY BY THE FINANCE ACT, 200 1 WITH EFFECT FROM APRIL 1, 2000, WOULD NOT APPLY TO ANY I NCOME ARISING FROM THE TRANSFER OF UNITS OF A MUTUAL FUND. SINCE THE ASSESSEE HAD EARNED DIVIDEND INCOME FROM TRANSFER OF UNITS O F MUTUAL FUNDS, IT WAS NOT ENTITLED TO EXEMPTION UNDER SECTI ON 10(33) OF THE ACT. IT WAS FURTHER MENTIONED IN THE SAID REASO NS THAT SINCE THE PETITIONER WAS TRADING IN SHARES, THE DIVIDEND INCOME RECEIVED WAS AN INTEGRAL PART OF TRADING GOODS AND COULD NOT BE SEGREGATED FROM THE ACQUISITION OF THE SHARES. IT W AS FOR THESE I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 13 REASONS AND THESE REASONS ONLY THAT RESPONDENT NO. 1 OPINED THAT THE DIVIDEND INCOME SO EARNED SHOULD HAVE BEEN CHARGED TO TAX AS A SHORT- TERM CAPITAL GAIN AND THEREFORE HE HAD REASON TO BELIEVE THAT INCOME TO THE TUNE OF RS. 3,31,15,3 13.49 HAD ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2000-01. A BARE READING OF THE REASONS WOULD EX-FACIE SHOW THAT THE RE WAS NOT EVEN AN ALLEGATION IN THE SAID REASONS THAT THERE W AS ANY FAILURE ON THE PART OF THE PETITIONER TO DISCLOSE ANY MATER IAL FACT, LET ALONE THE DETAILS THEREOF, WHICH LED TO ANY INCOME ESCAPING ASSESSMENT. MOREOVER, EVEN ON A HOLISTIC READING OF THE REASONS RECORDED IT CANNOT BE SAID THAT IT SUGGESTS ANY FAILURE ON THE PART OF THE PETITIONER TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. SIMILARLY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MIRZA INTERNATIONAL LTD. VIDE ORDER DATED 23/09/2014 HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. THE FINDINGS OF HON'BLE COURT ARE REPRODUCED BELOW: HEARD SHRI SHAMBHU CHOPRA, THE LEARNED COUNSEL FOR THE APPELLANT AND SHRI SHAKEEL AHMAD, THE LEARNED COUNS EL FOR THE RESPONDENT. ON 05.05.2014, A COORDINATE BENCH HAS ADMITTED THE PRESENT APPEAL ON THE FOLLOWING SUBSTANTIAL QUESTIO N OF LAW: 'WHETHER THE TRIBUNAL IS LEGALLY JUSTIFIED IN QUASH ING THE INITIATION OF PROCEEDING UNDER SECTION 147 ON THE G ROUND THAT THE NOTICES WERE ISSUED BEYOND FOUR YEARS WITH OUT MENTIONING IN THE REASON RECORDED BY THE ASSESSING AUTHORITY THAT THERE WAS FAILURE ON THE PART OF THE ASESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR THE ASSESSMENT, AS SUCH THE NOTICE UNDER SECTION 14 8 IS NOT VALID?' WE FIND THAT THE RETURN OF INCOME WAS FURNISHED BY THE ASSESSEE ON 31.10.2001 AND THE ASSESSMENT WAS FRAME D BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOM E TAX ACT ON 18.03.2004. THE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, WAS ISSUED BY THE ASSESSING OFFICER ON 31. 03.2007 AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR. IN THE SAID NOTICE, THE ASSESSING OFFICER NOWHERE DISCLOSED THAT THE ASSESSEE HAD FAILED TO D ISCLOSE TRULY I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 14 AND FULLY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT. THIS IS AN ESSENTIAL REQUIREMENT AS PER THE DECISION OF THE HON'BLE SUPREME COURT IN GANGA SARAN & SONS P. LTD. VS. 2 I NCOME-TAX OFFICER AND OTHERS, 1981 VOL.130 ITR 1, THE SUPREME COURT HELD: 'IT IS WELL SETTLED AS A RESULT OF SEVERAL DECISION S OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SATISFIE D BEFORE THE INCOME TAX OFFICER CAN ASSUME JURISDICTION TO I SSUE NOTICE UNDER SECTION 147 (A). FIRST, HE MUST HAVE R EASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCA PED ASSESSMENT AND SECONDLY, HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. IF EITHER OF THESE CONDITIONS IS NOT FU LFILLED, THE NOTICE ISSUED BY THE INCOME TAX OFFICER WOULD B E WITHOUT JURISDICTION. THE IMPORTANT WORDS UNDER SEC TION 147 (A) ARE 'HAS REASON TO BELIEVE' AND THESE WORDS ARE STRONGER THAN THE WORDS 'IS SATISFIED'. THE BELIEF ENTERTAINED BY THE INCOME TAX OFFICER MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR I N OTHER WORDS IT MUST BE BASED ON REASONS WHICH ARE RELEVAN T AND MATERIAL. THE COURT, OF COURSE, CANNOT INVESTIG ATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHI CH HAVE WEIGHED WITH THE INCOME TAX OFFICER IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHE THER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERT AIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147 (A). IT THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF, SO THAT, ON SUCH REASONS, N O ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONAB LY ENTERTAIN THE BELIEF, THE CONCLUSION WOULD BE INESC APABLE THAT THE INCOME TAX OFFICER COULD NOT HAVE REASON T O BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASO N OF THE OMISSION OR FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE NOTICE ISSUED BY HIM WOULD BE LIABLE TO HE STRUCK DOWN AS INVALID.' I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 15 IN PHOOL CHAND BAJRANG LAL AND ANOTHER VS. INCOME T AX OFFICER AND ANOTHER, 203 ITR 456 THE SUPREME COURT HELD:- 'FROM A COMBINED REVIEW OF THE JUDGMENTS OF THIS CO URT, IT FOLLOWS THAT AN INCOME-TAX OFFICER ACQUIRES JURI SDICTION TO REOPEN ASSESSMENT UNDER SECTION 147(A) READ WITH SECTION 148 OF THE INCOME TAX 1961 ONLY IF ON THE B ASIS OF SPECIFIC, RELIABLE AND RELEVANT INFORMATION COMI NG TO HIS POSSESSION SUBSEQUENTLY, HE HAS REASONS WHICH HE MU ST RECORD, TO BELIEVE THAT BY REASON OF OMISSION OR FA ILURE ON THE PART OF THE ASSESSEE TO MAKE A TRUE ANA FULL DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT DURING THE CONCLUDED ASSESSMENT PROCEEDINGS, ANY PART OF HIS INCOME, PROFIT OR GAIN S CHARGEABLE TO INCOME TAX HAS ESCAPED ASSESSMENT. HE MAY START REASSESSMENT PROCEEDINGS EITHER BECAUSE S OME FRESH FACTS COME TO LIGHT WHICH WHERE NOT PREVIOUSL Y DISCLOSED OR SOME INFORMATION WITH REGARD TO THE FA CTS PREVIOUSLY DISCLOSED COMES INTO HIS POSSESSION WHIC H 3 TENDS TO EXPOSE THE UNTRUTHFULNESS OF THOSE FACTS. IN SUCH SITUATIONS, IT IS NOT A CASE OF MERE CHANGE OF OPIN ION OR THE DRAWING OF A DIFFERENT INFERENCE FROM THE SAME FACTS AS WERE EARLIER AVAILABLE BUT ACTING ON FRESH INFOR MATION. SINCE, THE BELIEF IS THAT OF THE INCOME-TAX OFFICER , THE SUFFICIENCY OF REASONS FOR FORMING THE BELIEF, IS N OT FOR THE COURT TO JUDGE BUT IT IS OPEN TO AN ASSESSEE TO EST ABLISH THAT THERE IN FACT EXISTED NO BELIEF OR THAT THE BE LIEF WAS NOT AT ALL A BONA FIDE ONE OR WAS BASED ON VAGUE, IRRELEVANT AND NON-SPECIFIC INFORMATION. TO THAT LI MITED EXTENT, THE COURT MAY LOOK INTO THE CONCLUSION ARRI VED AT BY THE INCOME-TAX OFFICER AND EXAMINE WHETHER THERE WAS ANY MATERIAL AVAILABLE ON THE RECORD FROM WHICH THE REQUISITE BELIEF COULD BE FORMED BY THE INCOME-TAX OFFICER AND FURTHER WHETHER THAT MATERIAL HAD ANY RATIONAL CONNECTION OR A LIVE LINK FOR THE FORMATION OF THE REQUISITE BELIEF. IT WOULD BE IMMATERIAL WHETHER THE INCOME-T AX OFFICER AT THE TIME OF MAKING THE ORIGINAL ASSESSME NT COULD OR, COULD NOT HAVE FOUND BY FURTHER ENQUIRY O R INVESTIGATION, WHETHER THE TRANSACTION WAS GENUINE OR NOT, IF ONE THE BASIS OF SUBSEQUENT INFORMATION, TH E INCOME-TAX OFFICER ARRIVES AT A CONCLUSION, AFTER S ATISFYING THE TWIN CONDITIONS PRESCRIBED IN SECTION 147(A) OF THE ACT, THAT THE ASSESSEE HAD NOT MADE A FULL AND TRUE I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 16 DISCLOSURE OF THE MATERIAL FACTS AT THE TIME OF ORI GINAL ASSESSMENT AND THEREFORE INCOME CHARGEABLE TO TAX H AD ESCAPED ASSESSMENT.' IN VIEW OF THE AFORESAID, THE TRIBUNAL WAS JUSTIFIE D IN HOLDING THAT THE INITIATION OF PROCEEDINGS UNDER SE CTION 148 WAS BARRED BY LIMITATION. WE DO NOT FIND ANY MANIFEST ERROR IN THE ORDER PASS ED BY THE TRIBUNAL. THE ANSWER TO THE SUBSTANTIAL QUESTIO N OF LAW IS IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT I S DISMISSED. 6.1 KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL PRECEDENTS, AS RELIED ON BY LEARNED A. R., WE QUASH THE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S 148 OF THE ACT AS T HIS REASSESSMENT IS VOID AB INITIO AND HAD NOT BEEN DONE IN ACCORDANCE WITH THE PROVISIONS OF LAW. SINCE THE ASSESSMENT ORDER HAS BEEN QUASHED ON LEGA L GROUND ITSELF, THE OTHER GROUNDS ON MERITS DO NOT CALL FOR ANY ADJUDIC ATION. IN VIEW OF ABOVE, APPEAL IN I.T.A. NO.223 FOR ASSESSMENT YEAR 2009-10 IS ALLOWED. 7. NOW COMING TO APPEAL IN I.T.A. NO.222 FOR ASSESS MENT YEAR 2008-09. IN THIS CASE THE REASSESSMENT NOTICE HAS BEEN ISSUE D WITHIN THE PRESCRIBED PERIOD OF TIME AS IN THIS YEAR THE ASSESSMENT WAS C OMPLETED U/S 143(1) AND NOT U/S 143(3) OF THE ACT. IN THIS YEAR THE ASSESS EE HAD FILED ORIGINAL RETURN OF INCOME ON 14/08/2008 AND HAD REVISED HIS RETURN OF INCOME ON 12/11/2008. THESE FACTS ARE VERIFIABLE FROM THE OR DER OF THE ASSESSMENT DATED 23/03/2016 PASSED U/S 147/143(3) OF THE ACT. THE ASSESSEE FILED HIS REVISED RETURN OF INCOME ON 12/11/2008 WHICH IS WIT HIN THE PRESCRIBED PERIOD OF TIME PERMITTED BY THE PROVISIONS OF SECTI ON 139(5) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 139(5) ARE REPRODUCED BELOW: I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 17 (5) IF ANY PERSON, HAVING FURNISHED A RETURN UNDER SUB-SECTION (1) OR SUB-SECTION (4), DISCOVERS ANY OMISSION OR A NY WRONG STATEMENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR OR B EFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER. PROVIDED THAT WHERE THE RETURN RELATES TO THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR, THE RE FERENCE TO ONE YEAR AFORESAID SHALL BE CONSTRUED AS A REFERENCE TO TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE EXAMINATION OF ABOVE PROVISIONS OF THE ACT REVE ALS THAT A PERSON CAN REVISE HIS RETURN OF INCOME BEFORE THE EXPIRY OF ON E YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION O F ASSESSMENT, WHICHEVER IS EARLIER. IN THE PRESENT CASE THE ASSE SSMENT YEAR INVOLVED IS 2008-09 THEREFORE, THE ASSESSEE WAS PERMITTED TO FI LE HIS REVISED RETURN OF INCOME BEFORE 31/03/2010 OR BEFORE THE COMPLETION O F ASSESSMENT WHICHEVER IS EARLIER. TO EXAMINE AS TO WHETHER THE ASSESSMENT WAS COMPLETED BEFORE THE FILING OF RETURN OF INCOME IN THIS CASE, IT IS NECESSARY TO GO THROUGH THE PROVISIONS OF SECTION 143(2) OF T HE ACT WHICH, FOR THE SAKE OF COMPLETENESS ARE REPRODUCED BELOW: WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 13 9, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142, THE ASSESSING OFFICER OR THE PRESCRIBED INCOME-TAX AUTH ORITY, AS THE CASE MAY BE, IF, CONSIDERS IT NECESSARY OR EXPEDIEN T TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE T AX IN ANY MANNER, SHALL SERVE ON THE ASSESSEE A NOTICE REQUIR ING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND TH E OFFICE OF THE ASSESSING OFFICER OR TO PRODUCE, OR CAUSE TO BE PRO DUCED BEFORE THE ASSESSING OFFICER ANY EVIDENCE ON WHICH THE ASS ESSEE MAY RELY IN SUPPORT OF THE RETURN. PROVIDED THAT NO NOTICE UNDER THIS SUB-SECTION SHAL L BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED . I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 18 THE EXAMINATION OF THESE PROVISIONS REGARDING COMPL ETION OF ASSESSMENT INDICATE THAT ASSESSING OFFICER MAY REQUIRE THE ASS ESSEE TO PRODUCE OR CAUSE TO BE PRODUCED BEFORE HIM ANY EVIDENCE ON WHICH THE ASSESSEE MAY HAVE RELIED IN SUPPORT OF THE RETURN. THE PROVISION FUR THER CLARIFIES THAT NO NOTICE UNDER THIS SUB SECTION SHALL BE SERVED UPON THE ASS ESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE RETURN WAS FURNISHED. IN THE PRESENT CASE THE ORIGINAL RETURN WAS FILED ON 14/08/2008 AND ASSESSING OFFICER HAD IN HIS DISPOSAL A PERIOD UPTO 30 TH SEPTEMBER, 2009 FOR THE ISSUE OF NOTICE U/S 143(2) OF THE ACT AND THEREFORE, UNLESS THAT PERIOD EXPIRES, THE ASSESSMENT CANNOT BE SAID TO HA VE BEEN COMPLETED AS THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF FINANCIAL YEAR IN WHICH THE RETURN OF INCOME IS FILED AND THEREFORE, UPTO 30/09/2009 THE ASSESSMENT WAS P ENDING. NOW THE TIME LIMIT PROVIDED BY THE PROVISIONS OF ACT FOR FILING REVISED RETURN OF INCOME IS ONE YEAR FROM THE END OF ASSESSMENT YEAR AND THEREF ORE, THE PERIOD FOR FILING OF RETURN WAS AVAILABLE UPTO 31/03/2010. TH E OTHER CONDITION THAT REVISED RETURN CAN BE FILED BEFORE THE COMPLETION O F ASSESSMENT AND IN THIS CASE THE ASSESSMENT WAS PENDING UPTO 30/09/2009. T HE EARLIER OF THE TWO DATES IS 30/09/2009 AND THEREFORE, ANY REVISED RETU RN FILED BEFORE 30/09/2009 IS A VALID REVISED RETURN. THE ASSESSEE ON 12/11/2008 ITSELF FILED REVISED RETURN OF INCOME. THE SAID FILING OF REVISED RETURN FULFILLS BOTH THE CONDITIONS I.E. THE REVISED RETURN HAS BEEN FIL ED BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR AND H AS ALSO BEEN FILED BEFORE THE COMPLETION OF ASSESSMENT. SUCH REVISED RETURN, WHICH WAS VALIDLY FILED, REPLACES THE ORIGINAL RETURN OF INCO ME AND FOR ASSESSMENT PURPOSES THE ORIGINAL RETURN WAS TO BE IGNORED AND ONLY REVISED RETURN WAS TO BE CONSIDERED. THIS HAS BEEN HELD IN A NUMBER O F CASES. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BECO ENGINEERIN G CO. LTD. VS. CIT [1984] 148 ITR 478 HAS HELD AS UNDER: I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 19 IT IS WELL SETTLED THAT IN CASE AN ASSESSEE FILES REVISED RETURNS, THEY ARE TO BE TAKEN INTO CONSIDERATION FOR THE PUR POSES OF MAKING AN ASSESSMENT. ONCE A REVISED RETURN HAS BEE N FILED UNDER S.139(5), THE ORIGINAL RETURN IS SUBSTITUTED BY THE REVISED RETURN AS A RESULT OF THE AMENDMENTS MADE IN THE OR IGINAL RETURN BY THE REVISED RETURN. THEREFORE, WHERE AN A SSESSEE FILES A REVISED RETURN IN WHICH HE DID NOT CLAIM DEPRECIA TION, ETC., WHICH HAD BEEN CLAIMED IN THE ORIGINAL RETURN, THE INCOME-TAX AUTHORITIES COULD NOT TAKE INTO CONSIDERATION THE O RIGINAL RETURNS. THEREFORE, THE ASSESSING OFFICER COULD NOT HAVE IGN ORED THE REVISED RETURN WHICH WAS FILED WITHIN THE PRESCRIBED PERIOD OF TIM E AND WHICH INCLUDED THE INCOME FROM TRANSACTIONS MADE IN THE BANK ACCOUNTS WHICH THE ASSESSING OFFICER HAS INTENDED TO REOPEN U/S 148 BY RECORDING SUCH REASONS. AN EXAMINATION OF THE PAPER ACCOMPANIED WITH THE REVIS ED RETURN, PLACED AT PAGES 50 TO 93 OF THE PAPER BOOK, REVEALS THAT ASSE SSEE HAD INCLUDED THE INCOME GENERATED FROM BANK ACCOUNTS IN THE NAME OF KAMAKHYA CORPORATION, ISHAN IMPEX AND TIWARI EXPORTS. THESE FACTS ARE VERIFIABLE FROM THE BREAK-UP OF COMPUTATION OF INCOME PLACED A T PAPER BOOK PAGE NO. 52. NOW WHEN THE REVISED RETURN ALONG WITH ALL MAT ERIAL FACTS WAS AVAILABLE WITH THE ASSESSING OFFICER AND WHICH WAS FILED WITH IN THE PRESCRIBED PERIOD OF TIME, THE ASSESSING OFFICER WAS ALWAYS EMPOWERED TO ISSUE NOTICE U/S 143(2) FOR COMPLETION OF ASSESSMENT U/S 143(3) OF T HE ACT. INSTEAD OF TAKING COGNIZANCE OF THE INCOME DECLARED BY THE ASS ESSEE IN HIS REVISED RETURN OF INCOME, THE ASSESSING OFFICER CHOSE TO RE OPEN THE CASE BY RESORTING TO THE PROVISIONS OF SECTION 147 OF THE A CT. WE HAVE ALREADY OBSERVED THAT IN THE REASONS RECORDED, THE ASSESSIN G OFFICER HAS MENTIONED THE ACCOUNTS RELATING TO THREE PROPRIETORSHIP FIRMS NAMELY KAMAKHYA CORPORATION, ISHAN IMPEX AND TIWARI EXPORTS. IN TH E REASONS RECORDED THE ASSESSING OFFICER HAS ALSO TAKEN NOTE OF THE FACT T HAT ASSESSEE HAD SURRENDERED CERTAIN INCOMES FROM THE TRANSACTIONS T AKEN IN THESE BANK ACCOUNTS BUT HE IS OF THE OPINION THAT INSTEAD OF D ECLARING A PART OF INCOME I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 20 FROM THESE TRANSACTIONS THE ASSESSEE SHOULD HAVE DE CLARED THE WHOLE OF DEPOSITS IN THESE BANK ACCOUNTS. FOR THE SAKE OF C OMPLETENESS IT IS IMPORTANT TO REPRODUCE THE RELEVANT PART OF REASONS RECORDED BY ASSESSING OFFICER, WHICH ARE AS UNDER: ALSO AS PER INFORMATION ON RECORD, ASSESSEE HAS NOT ACCOUNTED FOR THE INCOME FROM BANK ACCOUNT FOR THE BANK ACCOUNT NO. 62205129811 PERTAINING TO M/S TIWARI EX PORTS PROP. -SH. ANIL KUMAR TIWARI IN THE REGULAR BOOKS O F ACCOUNT FOR THE A.Y. 2008-09 AND HE HAS SURRENDERED RS. 12,01,1 99/- IN THE HANDS OF SH. ANIL KUMAR TIWARI FOR THE A.Y. 2008-09 . PERUSAL OF THE ACCOUNT NO. 62205129811 PERTAINING TO M/S TIWAR I EXPORTS PROP.- SH. ANIL KUMAR TIWARI SHOWS THAT RS. 54,02,8 85/- HAS BEEN DEPOSITED IN THIS ACCOUNT FROM RBI IN THE A.Y. 2008-09. HENCE RS 54,02,885/- RATHER THAN RS.12,01,199/- IS AN INCOME WHICH HAS ESCAPED ASSESSMENT IN THE A.Y. 2008-09. S INCE RS.12,01,199/- HAS BEEN INCLUDED IN SURRENDERED AMO UNT IN THE HANDS OF SH. ANIL KUMAR TIWARI FOR THE A.Y. 2008-09 SO RS.42,01,686/- IS AN INCOME WHICH HAS ESCAPED ASSES SMENT PROCEEDINGS. ALSO IT WAS FOUND THAT THE ASSESSEE HAS NOT ACCOUN TED FOR THE INCOME FROM BANK ACCOUNT NO. 62205129781 PE RTAINING TO M/S KAMAKHAYA CORPORATION PROP. SH. ANIL KUMAR T IWARI IN THE REGULAR BOOKS OF ACCOUNT FOR THE A.Y. 2008-09 AND HE SURRENDERED RS, 96,726/- IN THE HANDS OF SH, ANIL K UMAR TIWARI FOR THE A.Y. 2008-09. PERUSAL OF ACCOUNT NO. 622051 29781 PERTAINING TO M/S KAMAKHAYA CORPORATION PROP.- SH . ANIL KUMAR TIWARI SHOWS THAT RS.7,99,238/- HAS BEEN DEPO SITED' IN THIS ACCOUNT FROM RBI IN THE A.Y. 2008-09. HENCE, RS.7,99,238/- RATHER THAN RS. 96,726/- IS THE INCOM E WHICH HAS ESCAPED ASSESSMENT IN A.Y. 2008-09 SINCE RS.96,726 /- HAS BEEN INCLUDED IN SURRENDERED AMOUNT IN THE HANDS OF SH. ANIL KUMAR TIWARI FOR THE A.Y. 2008-09 SO RS.7,02,512 (R S. 799,238 ~ RS. 96,726) IS THE INCOME WHICH HAS ESCAPED ASSES SMENT IN A.Y, 2008-09 AND DULY NOT SURRENDERED BY THE ASSESS EE IN ASSESSMENT PROCEEDINGS. ASSESSEE HAS NOT ACCOUNTED THE INCOME FROM THE BANK ACCOUNT NO. 62205129846 PERTAINING TO ISHAN IMPEX PROP.- SH. ANIL KUMAR TIWARI IN THE REGULAR BOOKS OF ACCOUNT F OR THE A.Y. 2008-09 AND HE SURRENDERED RS.97,287/- IN THE HANDS OF SH. I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 21 ANIL KUMAR TIWARI FOR THE A.Y.2008-09 PERUSAL OF AC COUNT NO, 62205129846 PERTAINING TO M/S ISHAN IMPEX PROP.- AN IL KUMAR TIWARI SHOWS THAT RS.1,99,720/- HAS BEEN DEPOSITED IN THIS ACCOUNT FROM RBI THE A.Y. 2008-09. HENCE, RS, 1,99, 720/- RATHER THAN RS. 97,287/- IS THE INCOME WHICH HAS ES CAPED ASSESSMENT IN A.Y. 2008-09, SINCE RS.97,287/- HAS B EEN INCLUDED IN SURRENDERED AMOUNT IN THE HANDS OF SH. ANIL KUMAR TIWARI FOR THE A.Y. 2008-09 SO RS. 1,02,433/- (RS.1 ,99,720 - RS.97,287) IS THE INCOME WHICH HAS ESCAPED ASSESSME NT IN A.Y. 2008-09 AND DULY NOT SURRENDERED BY THE ASSESSEE IN ASSESSMENT PROCEEDINGS. WE HAVE ALREADY EXAMINED THAT INCOME FROM THESE BAN K ACCOUNTS RELATING TO KAMAKHYA CORPORATION, ISHAN IMPEX AND TIWARI EXP ORTS HAS ALREADY BEEN DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF I NCOME, A COPY OF COMPUTATION OF REVISED RETURN IS PLACED AT PAGE NO. 52 OF THE PAPER BOOK. THEREFORE, FROM THE ABOVE FACTS AND CIRCUMSTANCES, IT IS APPARENT THAT FROM REVISED RETURN OF THE INCOME, THE ASSESSING OFFICER WAS HAVING ALL THE MATERIAL BEFORE HIM AND HE HAD AMPLE TIME TO COMPLE TE THE ASSESSMENT U/S 143(3) OF THE ACT AND INSTEAD OF COMPLETING THE ASS ESSMENT U/S 143(3) OF THE ACT THE ASSESSING OFFICER RESORTED TO THE PROVI SIONS OF SECTION 148 ON THE ISSUES WHICH WERE ALREADY PART OF THE ASSESSING OFFICERS RECORD. IN FACT THE ASSESSING OFFICER HAS RECORDED THE REASONS FROM THE EXAMINATION OF REVISED RETURN ONLY AND THAT IS WHY HE HAS MENTIONE D THE INCOMES DECLARED IN REVISED RETURNS FROM THESE BANK ACCOUNTS. THEREF ORE, THE REASSESSMENT PROCEEDINGS IN FACT ARE NOT ON THE BASIS OF ANY FRE SH MATERIAL AND RATHER IS BASED UPON THE MATERIAL WHICH WAS ALREADY IN THE PO SSESSION OF THE ASSESSING OFFICER AND THEREFORE, REASSESSMENT PROCE EDINGS WOULD AMOUNT TO CHANGE OF OPINION WHICH IS NOT PERMITTED UNDER THE PROVISIONS OF LAW AS HELD BY VARIOUS HON'BLE COURTS. HON'BLE TRIBUNAL IN THE CASE OF MOTI LAL TODI (SUPRA) VIDE ORDER DATED 22/09/2015 HAS EXHAUSTIVEL Y DEALT WITH SIMILAR ISSUE AND HAS DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE. WHILE DISPOSING OF THE APPEAL, HON'BLE TRIBUNAL HAS RELIED ON A NUM BER OF IMPORTANT CASE I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 22 LAWS LIKE KELVINATOR OF INDIA DECISION OF HON'BLE S UPREME COURT. THE FINDINGS OF HON'BLE TRIBUNAL, AS CONTAINED FROM PAR A 6.5 ONWARDS, ARE REPRODUCED BELOW: 6.5. THUS, COMING BACK TO THE FACTS AND CIRCUMSTA NCES OF THE CASE BEFORE US, WE ARE REQUIRED TO EXAMINE THE FIRS T THING FIRST I.E. WHETHER, IN THIS CASE, THERE WAS ANY FRESH TAN GIBLE MATERIAL IN THE POSSESSION OF THE AO AT THE TIME OF RECORDIN G OF THE TREASONS'. IN CASE, THE FIRST CONDITION IS FULFILLE D, THEN WE ARE REQUIRED TO EXAMINE THE COMPLIANCE OF PRESCRIBED CO NDITIONS AT THE NEXT STEP, AND SO ON. IN CASE, THE FIRST CONDIT ION ITSELF IS NOT FULFILLED, THE PROCEEDINGS BECOME INVALID IN THE EY ES OF LAW, THERE AND THEN, AND THERE WOULD NOT BE ANY REQUIREM ENT TO EXAMINE ANY FURTHER. IF THE CASE OF THE AO FAILS ON THE FIRST STEP ITSELF, WE WOULD NOT BE REQUIRED TO LOOK INTO THE O THER SUBSEQUENT ASPECTS, AS PROCEEDINGS WILL BECOME INVA LID IN THE EYES OF LAW AT THE VERY INCEPTION. 6.6 IN THE PRESENT CASE, IT WAS NOTICED BY US THAT THE CASE OF THE ASSESSEE IS THAT THERE WAS NO FRESH TANGIBLE MA TERIAL IN THE POSSESSION OF AO AT THE TIME OF RECORDING OF IMPUGN ED REASONS. A PERUSAL OF THE REASONS' RECORDED BY THE AO IN TH IS CASE REVEALS THAT AT THE TIME OF RECORDING OF THESE REA SONS' THE AO HAD EXAMINED ORIGINAL ASSESSMENT RECORDS ONLY AND N O FRESH MATERIAL HAD COME IN THE POSSESSION OF THE AO. IN R ESPONSE TO OUR SPECIFIC QUERY ALSO, LD DR COULD NOT POINT OUT ANY FRESH MATERIAL AVAILABLE WITH THE AO AT THE TIME OF REOPE NING OF THE CASE OF THE ASSESSEE. THUS, ASSERTION OF THE ASSESS EE THAT THERE WAS NO FRESH MATERIAL WITH AO FOR REOPENING OF THIS CASE, REMAINED UNCONTROVERTED. 6.7 UNDER THESE FACTS AND CIRCUMSTANCES, LET US NOW EXAMINE SETTLED POSITION OF LAW ON THIS ISSUE. IT HAS BEEN HELD IN VARIOUS JUDGMENTS COMING FROM VARIOUS COURTS THAT AVAILABIL ITY OF FRESH TANGIBLE MATERIAL IN THE POSSESSION OF AO AT THE TI ME OF RECORDING OF IMPUGNED REASONS IS A SINE QUA NONE, B EFORE THE AO CAN RECORD REASONS FOR REOPENING OF THE CASE. WE BEGIN WITH THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS. KELVINATOR INDIA LTD. 320 ITR 561 (SC), LAYING DOWN THAT FOR REOPENING OF THE ASSESSMENT, THE AO SHOULD HAVE IN ITS POSSESSION TANGIBLE MATERIAL. THE TERM TANGIBLE MAT ERIAL HAS BEEN UNDERSTOOD AND EXPLAINED BY VARIOUS COURTS SUB SEQUENTLY. THERE HAS BEEN UNANIMITY OF THE COURTS ON THIS ISSU E THAT IN I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 23 ABSENCE OF FRESH MATERIAL INDICATING ESCAPED INCOME , THE AO CANNOT ASSUME JURISDICTION TO REOPEN ALREADY CONCLU DED ASSESSMENT. 6.8. RECENTLY, HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS TUPPERWARE INDIA PVT. LTD., IN ITS ORDER DT 10-8-15 (ITA NO 415/2015 ) GOT AN OCCASION TO ANALYSE LATEST POSITI ON OF LAW ON THIS ISSUE. AFTER DISCUSSING MANY JUDGMENTS ON THIS ISSUE, IT WAS HELD THAT EVEN IN THE CASE OF ORIGINAL ASSESSMENT O RDER HAVING BEEN PASSED U/S 143(1), IT IS MANDATORY FOR THE AO TO HAVE IN ITS POSSESSION, FRESH TANGIBLE MATERIAL BEFORE REOP ENING OF THE CASE. 6.9 IN THE CASE OF BOMBAY STOCK EXCHANGE LTD, (WRIT PETITION NO.2468 DT 12.06.2014) (89 CCH 118), HON'BLE BOMBAY HIGH COURT OBSERVED AS UNDER: '5. IT IS PERTINENT TO NOTE THAT RESPONDENT NO. 1 H AS NOT SET OUT IN THE REASONS WHICH FACT OR OTHER MATERIAL WAS NOT DISCLOSED BY THE PETITIONER THAT LED TO INCOME ESCAPING ASSESSMENT. IN FACT, ON GOING THROUGH THE REASONS, WE FIND THAT RESPONDENT NO. 1 HAS COME TO THE CONCLUSION/BELIEF THAT INCOME HAD ESCAPED ASSESSMEN T ON THE BASIS OF THE MATERIAL ALREADY BEFORE HIM AND NO NEW TANGIBLE MATERIAL HAS BEEN RELIED UPON BV RESPONDEN T NO. 1 TO COME THE SAID CONCLUSION/BELIEF. THIS IS CLEAR FROM THE USE OF THE WORDS 'ON PERUSAL OF THE RECOR DS IT IS NOTICED........', 'FURTHER PERUSAL OF STATEMENT 2 ENCLOSED WITH THE COMPUTATION OF INCOME SHOWS.......' AND 'IT IS FURT HER NOTICED......' IN THE IMPUGNED NOTICE.' 6.10. IN THE CASE OF CIT VS. ORIENT CRAFT LTD. 354 ITR 536, IT WAS OBSERVED BY HON'BLE DELHI HIGH COURT THAT IN TH E SAID CASE, REASONS FOR REASSESSMENT DISCLOSED THAT AO REACHED BELIEF THAT THERE WAS ESCAPEMENT OF INCOME 'ON GOING THROUGH TH E RETURN OF INCOME' FILED BY ASSESSEE AFTER HE ACCEPTED RETU RN U/S. 143(1) WITHOUT SCRUTINY, AND NOTHING MORE. IN THESE FACTS, IT WAS HELD BY THE HON'BLE HIGH COURT THAT IT WAS NOTH ING BUT REVIEW OF EARLIER PROCEEDINGS AND ABUSE OF POWER BY AO. IT WAS FURTHER HELD THAT SINCE THERE WAS NO WHISPER IN REA SONS RECORDED, OF ANY TANGIBLE ' MATERIAL WHICH CAME TO POSSESSION OF AO SUBSEQUENT TO ISSUE OF INTIMATION, THEREFORE, IT WAS AN I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 24 ARBITRARY EXERCISE OF POWER CONFERRED U/S 147. THUS , REOPENING WAS HELD TO BE INVALID ON THIS GROUND ITSELF. 6.11. IN THE CASE OF MOHAN GUPTA (HUF) VS. CIT 366 ITR 115, SAME VIEW HAS BEEN FOLLOWED BY HON'BLE DELHI HIGH C OURT. 6.12. FURTHER, IN THE CASE OF CIT VS. K. L. ARORA IN ITA 118/2014 DATED 21-04-2014, HON'BLE DELHI HIGH COURT OBSERVED AS UNDER: 'THIS COURT IS OF THE OPINION THAT NO FAULT CAN BE FOUND WITH THE TRIBUNAL'S ORDER. IT IS WELL SETTLED THAT IN ORDER TO ISSUE A VALID REASSESSMENT NOTICE, THE AO HAS TO BE SATISFIED ON THE BASIS OF TANGIBLE MATERIAL OR INFORMATION SUBSEQUENTLY AVAILABLE TO HIM THAT THE ASSESSEE HAD NOT MADE FULL AND TRUE DISCLOSURE WHIC H LED TO INCOME ESCAPING ASSESSMENT AT THE STAGE WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED. SHORT OF THAT A RE- APPRECIATION OF THE EXISTING MATERIALS WHICH REALLY AMOUNTS TO REVIEW IS IMPERMISSIBLE. THE TRIBUNAL, I N THE CIRCUMSTANCES OF THIS CASE WAS JUSTIFIED IN CONCLUD ING THAT RE-ASSESSMENT PROCEEDINGS THEMSELVES WERE NOT IN ACCORDANCE WITH LAW AND CONSEQUENTLY DISMISSING THE REVENUE'S APPEAL. NO QUESTION OF LAW ARISES FOR CONSIDERATION. 6.13. IN THE CASE OF CIT VS. SHRI ATUL KUMAR SWAMI IN ITA NO. 112/2014 DATED 18-03-2014 REPORTED AT 52 TAXMAN N.COM 47, HON'BLE DELHI HIGH COURT OBSERVED AS UNDER: '.....REOPENING OF ASSESSMENT IS VALID IF IT IS BAS ED ON TANGIBLE MATERIAL TO JUSTIFY CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOMEIN INSTANT CASE NOTE FORMING P ART OF RETURN CLEARLY MENTIONED AND DESCRIBED NATURE OF THE RECEIPT UNDER A NON-COMPETE AGREEMENTREASONS FOR ISSUANCE OF NOTICE U/S 147 NOWHERE MENTIONED THAT REVENUE CAME UP WITH ANY OTHER FRESH MATERIAL WARRANTING REOPENING OF ASSESSMENTMERE CONCLUSION OF PROCEEDINGS U/S 143(1) IPSO FACTO DOES NOT BRING INVOCATION OF POWERS FOR REOPENING ASSESSMENT REOPENING OF ASSESSMENT WAS UNJUSTIFIEDREVENUE'S APPEAL DISMISSED.' I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 25 6.14. FURTHER RELIANCE CAN BE PLACED ON THE DETAILE D JUDGMENT IN THE CASE OF MADHUKAR KHOSLA VS. ACIT 367 ITR 165 (DELHI), WHEREIN IT HAS BEEN HELD THAT THE REOPENING IS NOT PERMITTED UNDER THE LAW UNLESS IT IS BASED ON FRESH TANGIBLE MATERIAL AND THAT IF THE 'REASONS TO BELIEVE? ARE NOT BASED ON NEW, 'TANGIBLE MATERIALS', THE REOPENING AMOUNTS TO AN IMPERMISSIBLE REVIEW. IT HAS BEEN FURTHER OBSERVED THAT: 'THE FOUNDATION OF THE AO'S JURISDICTION AND THE RA ISON D'ETRE OF A REASSESSMENT NOTICE ARE THE 'REASONS TO BELIEVE'. NOW THIS SHOULD HAVE A RELATION OR A LINK WITH AN OBJECTIVE FACT, IN THE FORM OF INFORMATION OR FACTS EXTERNAL TO THE MATERIALS ON THE RECORD- SUCH EXTERNAL FACTS OR MATERIAL CONSTITUTE THE DRIVER, OR THE KEY WHICH EN ABLES THE AUTHORITY TO LEGITIMATELY RE-OPEN THE COMPLETED ASSESSMENT IN ABSENCE OF THIS OBJECTIVE 'TRIGGER', THE AO DOES NOT POSSESS JURISDICTION TO REOPEN THE ASSESSM ENT IT IS AT THE NEXT STAGE THAT THE QUESTION, WHETHER THE RE- OPENING OF ASSESSMENT AMOUNTS TO 'REVIEW' OR 'CHANG E OF OPINION' ARISES. IN OTHER WORDS, IF THERE ARE NO 'REASONS TO BELIEVE' BASED ON NEW, 'TANGIBLE MATERI ALS*, THEN THE REOPENING AMOUNTS TO AN IMPERMISSIBLE REVI EW. HERE, THERE IS NOTHING TO SHOW WHAT TRIGGERED THE ISSUANCE OF NOTICE OF REASSESSMENT - NO INFORMATION OR NEW FACTS WHICH LED THE AO TO BELIEVE THAT FULL DIS CLOSURE HAD NOT BEEN MADE (KELVINATOR OF INDIA LTD [(2010) 320 ITR 561 (SC)J AND ORIENT CRAFT LTD [(2003) 354 ITR 536 (DELHI)] FOLLOWED. USHA INTERNATIONAL (2012) 348 JTR 485 (DEL) (FB)] REFERRED)' 6.15. IN THE CASE OF CIT VS JYOTI DEVI 218 CTR 264, HON'BLE RAJASTHAN HIGH COURT HELD THAT SINCE REVENU E COULD NOT POINT OUT ANY INFORMATION OR MATERIAL WHICH HAD SUB SEQUENTLY COME TO THE NOTICE OF THE AO TO ENABLE HIM TO FORM THE REQUISITE BELIEF THAT ANY INCOME LIABLE TO BE ASSES SED HAD ESCAPED ASSESSMENT, THEREFORE, THE INITIATION OF RE ASSESSMENT PROCEEDINGS WAS NOT VALID. 6.16. HON'BLE MADRAS HIGH COURT IN .THE CASE OF BAPALAL & CO. EXPORTS 289 ITR 37, HELD THAT IN THE ABSENCE OF ANY NEW MATERIAL, THE AO IS NOT EMPOWERED TO REOPEN AN ASSE SSMENT IRRESPECTIVE OF THE FACT WHETHER IT WAS MADE UNDER S. 143(1) OR S. 143(3). I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 26 6.17. RECENTLY, MUMBAI BENCH OF ITAT IN THE CASE HV TRANSMISSIONS LTD, IN I.T.A NO. 2230/MUM/2010 HELD THAT EVEN THOUGH ORIGINAL ASSESSMENT WAS MADE UNDER S. 1 43(1) AND NOT UNDER S. 143(3), ASSESSEE HAVING MADE FULL DISCLOSURE OF ITS INCOME, AO WAS NOT JUSTIFIED IN REOPENING TH E ASSESSMENT IN THE ABSENCE OF ANY NEW MATERIAL. HON'BLE BENCH H AS RELIED UPON THIRD MEMBER JUDGMENT FROM MUMBAI BENCH OF ITA T IN THE CASE TELCO DADAJEE DHACKJEE LTD VS DCIT (ITA NO 4613/MUMBAI/2013 DT 12-5-2010), IN SUPPORT OF THIS VIEW. 6.18. SIMILAR VIEW HAS BEEN EXPRESSED BY HON'BLE DE LHI BENCH OF ITAT IN THE CASE OF M/S NEXGEN SCHOOL OF BUSINESS VS. DEPUTY COMMISSIONER OF INCOME TAX, [ITA NO. 56O9/DEL/201O] HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO INITIATE THE REOPENING PROCEEDINGS IN ABSENCE OF ANY NEW INFORMATION OR MATERIAL ON RECORD SINCE THE DAT E OF FILLING AND PROCESSING OF THE RETURN OF INCOME. 6.19. IN THE PRESENT CASE, IT HAS ALREADY BEEN DISC USSED THAT ADMITTED FACTS ARE THAT THERE WAS NO FRESH MATERIAL COMING INTO THE POSSESSION OF THE AO, AT THE TIME OF RECORDING OF THE 'REASONS'. THESE FACTS HAVE NOT BEEN REBUTTED BY LD DR ALSO. THE -CASE LAW RELIED UPON BY LD DR IN THE CASE OF D R. AMIN'S PATHOLOGY, SUPRA IS NOT APPLICABLE ON THE ISSUE BEI NG DECIDED HERE. THE ISSUE THAT IN ABSENCE OF ANY FRESH MATERI AL, WHETHER AO CAN PROCEED TO RECORD REASONS, WAS NOT BEFORE HO N'BLE HIGH COURT, THEREFORE HON'BLE HIGH COURT HAD DECIDE D THE ISSUE OF CHANGE OF OPINION IN THAT CASE. IN THE CASE BEFO RE US, AS DISCUSSED ABOVE, WE ARE NOT GOING INTO THAT ISSUE. IN OUR CONSIDERED OPINION, AT THIS STAGE, WE NEED NOT GO I NTO THE OTHER ASPECT I.E. WHETHER THERE WAS CHANGE OF OPINION OR NOT. THIS ISSUE HAS BEEN APTLY CLARIFIED BY HON'BLE HIGH COUR T IN THE .CASE OF MADHUKAR KHOSLA, (SUPRA), WHEREIN IT HAS BEEN HE LD BY THEIR LORDSHIPS THAT EXTERNAL FACTS OR MATERIAL CONSTITUT E THE DRIVER, OR THE KEY WHICH ENABLES THE AO TO LEGITIMATELY REOPEN THE COMPLETED ASSESSMENT AND IN ABSENCE OF THIS OBJECTI VE 'TRIGGER', THE AO DOES NOT POSSESS JURISDICTION TO REOPEN THE ASSESSMENT. FURTHER, MOST IMPORTANTLY, IT WAS HELD BY THE HON'BLE HIGH COURT THAT IT IS AT THE NEXT STAGE WHE N THE QUESTION, WHETHER THE REOPENING OF ASSESSMENT AMOUN TS TO 'REVIEW' OR 'CHANGE OF OPINION' ARISES. IN OTHER WO RDS, IF THERE ARE NO 'NEW TANGIBLE MATERIALS', THEN THERE WOULD B E NO I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 27 'REASONS TO BELIEVE', AND CONSEQUENTLY REOPENING WO ULD BE AN IMPERMISSIBLE REVIEW. UNDER THESE CIRCUMSTANCES THE RE WOULD NOT ARISE ANY NEED TO GO THE NEXT STAGE TO EXAMINE THE NEXT QUESTION, I.E., WHETHER THERE WAS 'REVIEW' OR 'CHAN GE OF OPINION'. THE CONDITION WITH RESPECT TO AVAILABILIT Y OF 'NEW TANGIBLE MATERIAL' IS STEP ANTERIOR TO THE CONDITIO N OF NO 'CHANGE OF OPINION' OR 'REVIEW'. 6.20 THUS, IN VIEW OF JUDGMENTS DIRECTLY ON THE ISS UE UNDER CONSIDERATION, AS DISCUSSED IN PARAS 6.7 TO 6.18, A BOVE, REOPENING DONE BY LD. AO IN THE ABSENCE OF FRESH TA NGIBLE MATERIAL, IS INVALID AND BAD IN LAW. THEREFORE, THE INITIATION OF REASSESSMENT PROCEEDINGS WAS NOT VALID. THUS, RE-AS SESSMENT ORDER FRAMED IN PURSUANCE TO INVALID REOPENING IS I LLEGAL; THE SAME IS HEREBY QUASHED. SINCE ASSESSMENT ORDER HAS BEEN QUASHED ON JURISDICTIONAL GROUND ITSELF, OTHER GROU NDS ARE NOT BEING ADJUDICATED. 8. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE AND THE JUDICIAL PRECEDENTS RELIED ON BY THE ASSESSEE, WE QUASH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AS IT IS VOID AB INITIO. SINCE THE ASSESSMENT ORDER HAS BEEN QUASHED ON LEGAL GROUND I TSELF, THE OTHER GROUNDS ON MERITS HAVE NOT BEEN ADJUDICATED AND THE REFORE, APPEAL FILED BY THE ASSESSEE IN I.T.A. NO.222 IS ALLOWED. 9. SINCE WE HAVE DISPOSED OF BOTH THE APPEALS OF TH E ASSESSEE THEREFORE, BOTH THE STAY APPLICATIONS FILED BY THE ASSESSEE HA VE BECOME INFRUCTUOUS AND ACCORDINGLY STAND DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE STAY APPLICATIONS ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:23/03/2018 *SINGH I.T.A. NO.222 & 223/LKW/2017 ASSESSMENT YEAR:2008-09 & 2009-10 28 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW