SHRI RAKESH MTILAL JAIN, MUMBAI V. INCOME TAX OFFICER 19(3)(1), MUMBAI

ITA 2241/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6371 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITNYA ANJARIADR
• Keywords: Reopening of assessment; Bogus purchase; Bogus Share capital; Capital asset; Gift; Business income; Depreciation; Transfer pricing; Search and seizure; Opportunity of being heard; International transaction; Period of limitation; Question of law; Cost of acquisition; Tangible material; Difference of opinion; Accommodation entries; Competent authority; Assessment record; Onus to prove; Condonation of delay; Reason to believe; Documents seized; Change of opinion; Reassessment proceedings
• Section: 44AD; 92E; 133A; 133(6); 143(1); 195; 147; 131; 68; 148; 2; 139

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , , BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT, ITA NO.2241/MUM/2018 ASSESSMENT YEAR: 2009-10 SHRI RAKESH MOTILAL JAIN, 184, SHOP NO. G-3, VIMAL BUILDING, KHETWADI ROAD, MUMBAI-400064 / VS. INCOME TAX OFFICER-19(3)(1), ROOM NO.219, 02 ND FLOOR, MATRU MANDIR, GRANT ROAD, MUMBAI-400007 / ASSESSEE / REVENUE P.A. NO.ADIPJ7243D ' # $ / ASSESSEE BY NONE ' # $ / REVENUE BY SHRI CHAITNYA ANJARIA-DR / DATE OF HEARING 07/01/2019 $ / DATE OF ORDER: 16/01/2019 $ / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 22/09/2016 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, CHALLENGING THE REOPENING OF ASSESSMENT UND ER ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 2 SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R THE ACT) AND FURTHER DIRECTING THE LD. ASSESSING OFFICE R TO ESTIMATE THE PROFIT AT THE RATE OF 6.50% OF THE ALL EGED BOGUS PURCHASES AS UNEXPLAINED INCOME OF THE ASSESS EE. 2. DURING HEARING, NONE WAS PRESENT FOR THE ASSESSEE. IT IS NOTED THAT THIS APPEAL WAS FILED BY THE ASSESSEE ON 10/04/2018 AND ON 08/11/2018, THE APPEA L WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. ON 29/11/2018, AGAIN THE APPEAL WAS ADJOURNED TO 31/12/2018 THAT TOO AT THE REQUEST OF THE ASSESSEE. ON 31/12/2018, THE ASSESSEE AGAIN REQUESTED FOR ADJOURNMENT, VIDE LETTER DATED 28/12/2018 AND THE APPEAL OF THE ASSESSEE AND WAS ADJOURNED TO 07/01/2 019. TODAY, I.E. 07/01/2019, AT THE TIME OF HEARING NEIT HER THE ASSESSEE PRESENTED HIMSELF NOR MOVED ANY ADJOURNMEN T PETITION. IT SEEMS THAT THE ASSESSEE HAS NOTHING TO SAY AND MERELY KEEP ON TAKING ADJOURNMENTS, THEREFORE, I HA VE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE AN D TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. ON THE OTHER HAND, THE LD. DR, SHRI CHA ITANYA ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 3 ANJARIA, STRONGLY DEFENDED THE ADDITION MADE BY THE LD. ASSESSING OFFICER BY CONTENDING THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) RESTRICTED THE ADDITION AT 6.50%, WITHOUT ASSIGNING ANY REASON AND THUS THE ADDITION MADE BY THE LD. ASSESSING OFFICER MAY BE SUSTAINED I.E. 25% OF THE BOGUS PURCHASES. 2.1. I HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS APPEAL IS BARRED BY LIMITATION BY 491 DAYS FOR WHICH THE A SSESSEE HAS FILED APPLICATION OF CONDONATION OF DELAY. THE LD. DR CONTENDED THAT THE DELAY MAY NOT BE CONDONED AS THE ASSESSEE HAS TO EXPLAIN THE DELAY OF EACH DAY. SO FAR AS, CONDONATION OF DELAY IS CONCERNED NO DOUBT FILING O F AN APPEAL IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSEE AND IS NOT AN AUTOMATIC PRIVILEGE, THEREFORE, THE A SSESSEE IS EXPECTED TO BE VIGILANT IN ADHERING TO THE MANNE R AND MODE IN WHICH THE APPEALS ARE TO BE FILED IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT. NEVERTHELESS, A LIB ERAL APPROACH HAS TO BE ADOPTED BY THE APPELLATE AUTHORITIES, WHERE DELAY HAS OCCURRED FOR BONA-FIDE REASONS ON THE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 4 PART OF THE ASSESSEE OR THE REVENUE IN FILING THE A PPEALS. IN MATTERS CONCERNING THE FILING OF APPEALS, IN EXE RCISE OF THE STATUTORY RIGHT, A REFUSAL TO CONDONE THE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE THRESHOLD, WHICH MAY LEAD TO MISCARRIAGE OF JUSTICE . THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE IN JUSTICE ON TECHNICAL GROUNDS BUT BECAUS E IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 2.2. THE HONBLE APEX COURT IN A CELEBRATED DECIS ION IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS . 167 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AN D SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTAN TIAL JUSTICE. THIS IS FOR THE REASON THAT AN OPPOSING P ARTY, IN A DISPUTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BE ING DONE BECAUSE OF A NON- DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE COND ONATION OF DELAY, JUDICIOUS AND LIBERAL APPROACH IS TO BE A DOPTED. IF SUFFICIENT CAUSE IS FOUND TO EXIST, WHICH IS BON A-FIDE ONE, ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 5 AND NOT DUE TO NEGLIGENCE OF THE ASSESSEE, THE DELA Y NEEDS TO CONDONED IN SUCH CASES. THE EXPRESSION SUFFICI ENT CAUSE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY LAW IN A MEANINGFUL MANNER, WHICH SUB-SERVES THE EN D OF JUSTICE- THAT BEING THE LIFE PURPOSE OF THE EXISTEN CE OF THE INSTITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTIC E AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED. THE HONBLE APEX COURT IN VEDABHAI VS SANTARAM 253 ITR 798 OBSERVED THAT INORDINATE DELAY CALLS OF CAUTIOUS AP PROACH. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILA TORY TACTICS. SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTION TO ADVANCE SUBSTANTIAL JUSTICE. THE H ONBLE APEX COURT IN 167 ITR 471 OBSERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 196 3 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO P ARTIES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY EL ASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE- PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COUR TS. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 6 COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERC OLATED DOWN TO ALL THE OTHERS COURTS IN THE HIERARCHY. 2.3. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL V S. SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE C OURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADVANCING SUBS TANTIAL JUSTICE IS OF PRIME IMPORTANCE. THE COURT HELD THAT THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE LIBERA L CONSTRUCTION. 2.4. THE DECISION OF THE TRIBUNAL IN PEOPLE INFOCO M PRIVATE LTD. V/S CIT (ITA NO.210/MUM/2013) ORDER DA TED 19/05/2016, M/S NEUTRON SERVICES CENTRE PVT. LTD VS ITO (ITA NO.1180/MUM/2012) ORDER DATED 18/02/2016, SHRI SAIDATTA COOP-. CREDIT SOCIETY LTD. V/S ITO (ITA NO.2379/MUM/2015) ORDER DATED 15/01/2016 AND MR. NIKUNJ BAROT (PROP. ENIGMA) VS ITO (ITA NO.4887/MUM/2015) ORDER DATED 06/01/2016, WHEREIN, SUBSTANTIAL DELAY WAS CONDONED, SUPPORTS THE CASE O F THE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 7 PRESENT ASSESSEE. HAVING MADE THE AFORESAID OBSERVA TION AND VARIOUS DECISIONS DISCUSSED HEREINABOVE, INCLUD ING FROM HONBLE APEX COURT, THE CIRCUMSTANCES NARRATED BY THE ASSESSEE, WHEREIN, HE HAS STATED THE REASONS WH ICH CAUSED THE DELAY, THEREFORE, THE DELAY IS CONDONED. 3. NOW, I SHALL TAKE GROUND NO.1, RAISED BY THE ASSESSEE WITH RESPECT TO CHALLENGING, REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. THE FACTS OF THE PRESENT APPEAL, IT IS NOTED THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF TRADING AND SUPPLIER IN FERROUS AND NON- FERROUS METAL UNDER THE PROPRIETARY CONCERN M/S MUK ESH STEELS, DECLARED TOTAL INCOME OF RS.3,07,840/- IN H IS RETURN ON 18/09/2009, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINA FTER THE ACT). THE LD. ASSESSING OFFICER RECEIVED INFORMATI ON THAT A SCAM WAS UNEARTHED BY THE SALES TAX DEPARTMENT WITH RESPECT TO DEALERS WHO ARE PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGUS BILLS WITHOUT EFFECTIN G THE ACTUALLY DELIVERY OF GOODS. THE SAID INFORMATION W AS BASED UPON CERTAIN STATEMENTS/DEPOSITION/AFFIDAVITS FILED BEFORE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 8 THE SALES TAX AUTHORITIES. THE LIST OF THE CONCERNE D PARTIES WERE FORWARDED TO THE LD. ASSESSING OFFICER BY THE INVESTIGATION WING AND THE ASSESSEE WAS FOUND ONE O F THE BENEFICIARY OF SUCH BOGUS BILLS. THE DETAILS OF WHI CH ARE AVAILABLE AT PAGE-1 OF THE ASSESSMENT ORDER. THE LD . ASSESSING OFFICER OBSERVED THAT THERE IS SUPPRESSIO N OF PRIMARY FACTS IN THE RETURN OF THE ASSESSEE AND THE INCOME WAS FOUND TO BE ESCAPED FROM THE ASSESSMENT. THE CA SE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT AFTER RECORDING THE REASONS. IN THE LIGHT OF THE FO REGOING DISCUSSIONS, IT IS MY BOUNDED DUTY TO EXAMINE THE V ALIDITY OF REOPENING U/S 147 R.W.S 148 OF THE ACT, THEREFOR E, BEFORE ADVERTING FURTHER I AM REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 147 OF THE ACT FOR RE ADY REFERENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME C HARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 9 (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATE D OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY A SSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REV ISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE W ITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOM E OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR REL IEF IN THE RETURN ; ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 10 (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUIRED UNDER SECTION 92E ; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED A SSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASON S RECORDED UNDER SUB-SECTION (2) OF SECTION 148 . EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT Y EAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 3.1. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, I FIND THAT AFTER INSERTION OF EXPLANATION -3 TO SE CTION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH E FFECT FROM 01/04/1989 SECTION 147 HAS AN EFFECT THAT ASSE SSING OFFICER HAS TO ASSESS OR REASSESS INCOME (SUCH INCO ME) WHICH HAS ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSM ENT ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 11 AND WHICH CAME TO THE NOTICE DURING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT IN CIT VS JET AIRWAYS IND IA PVT. LTD. (2010) 195 TAXMAN 117 (MUM.) AND THE FULL BENC H DECISION FROM HONBLE KERALA HIGH COURT IN CIT VS B EST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN.COM 278 (KERALA)(FB). A PLAIN READING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWER TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THA T INCOME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOT ICE DURING THE COURSE OF PROCEEDINGS OF REASSESSMENT U/ S 148. MY VIEW IS FORTIFIED BY THE DECISION IN MAJIN DER SINGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JAY BHARAT MARUTI LTD. VS CIT (2010) TAX LR 476 (DEL.) AND V. LAKSHMI REDDY VS ITO (2011) 196 TAXMA N 78 (MAD.). THE PROVISION OF THE ACT IS VERY MUCH CLEA R AS WITH EFFECT FROM 01/04/1989, THE ASSESSING OFFICER HAS W IDE POWERS TO INITIATE PROCEEDINGS OF REOPENING. THE H ONBLE KERALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (200 6) 156 TAXMAN 206 (KERALA) EVEN WENT TO THE EXTENT SO LONG ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 12 AS THE AO HAS INDEPENDENTLY APPLIED HIS MIND TO ALL THE RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REO PENING CANNOT BE SAID TO BE INVALID. 3.2. I AM AWARE THAT MERE CHANGE OF OPINION CANNOT FORM THE BASIS OF REOPENING WHEN THE NECESSA RY FACTS WERE FULLY AND TRULY DISCLOSED BY THE ASSESSE E IN THAT SITUATION; THE ITO IS NOT ENTITLED TO REOPEN THE AS SESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. HOWEVER, POWERS UNDER AMENDED PROVISION ARE WIDE ENOUGH WHER E THERE IS A REASONABLE BELIEF WITH THE ASSESSING OFF ICER, THAT INCOME HAS ESCAPED ASSESSMENT, BECAUSE THE POWERS W ITH EFFECT FROM 01/04/1989 ARE CONTEXTUALLY DIFFERENT A ND THE CUMULATIVE CONDITIONS SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CONDITION FOR ACTION I S THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. S UCH BELIEF CAN BE REACHED IN ANY MANNER AND IS NOT QUAL IFIED BY A PRE-CONDITION OF FAITH AND TRUE DISCLOSURE OF MATERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 13 SECTION 147. VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSMENT IS MUCH WIDER UNDER THE AMENDED PROVISIO N. MY VIEW IS FORTIFIED BY THE DECISION FROM HONBLE D ELHI HIGH COURT IN BAWA ABHAI SINGH VS DCIT (2001) 117 TAXMAN 12 AND RAKESH AGARWAL VS ACIT (1996) 87 TAXM AN 306 (DEL.). THE HONBLE APEX COURT IN CIT VS SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) CLEARL Y HELD THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT FOR TH E REVENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT THE SAME TIME, I AM AWARE THAT POWERS U/S 147 AND 148 OF THE ACT ARE NOT UNBRIDLED ONE AS IT IS HEDGED WITH SEVERAL SAFEGUARDS CONCEIVED IN THE INT EREST OF ELIMINATING ROOM FOR ABUSE OF THIS POWER BY THE AO. HOWEVER, THE MATERIAL AVAILABLE ON RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, THE LD. ASSESSING OFFICER W AS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT. THE HONBLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD. (2001) 247 ITR 818 (SC) HELD THAT MERELY BECAU SE THE CASE OF THE ASSESSEE WAS CORRECT IN ORIGINAL ASSESS MENT FOR ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 14 THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO REOPEN THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF FINDING OF HIS FACT THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. 3.3. UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDENED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICT ION, PUT IN THAT SECTION IS THAT REASON TO BELIEVE. THAT R EASON HAS TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE ASSESSEE T O DISCLOSE FULLY AND PARTIALLY SOME MATERIAL FACTS RE LEVANT FOR ASSESSMENT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DELHI HIGH COURT IN UNITED ELECTRIC AL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (D EL.) AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 83 8 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE AC T IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 15 ASSESSMENT FOR ANY ASSESSMENT YEAR. THE HONBLE GUJ ARAT HIGH COURT IN PRAFULL CHUNNILAL PATEL VS ACIT (SUPR A) EVEN WENT TO THE EXTENT THAT AT THE INITIATION STAGE FOR MATION OF REASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FI NDING OF FACTS. IDENTICAL RATIO WAS LAID DOWN IN BRIJMOHAN AGRAWAL VS ACIT (2004) 268 ITR 400, 405 (ALL.) AND RATNACHUDAMANI S. UTNAL VS ITO (2004) 269 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN VS ITO (1968) 70 ITR 79(SC). 3.4. SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PR OMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PARTICU LAR CASE. IT DEPENDS UPON THE FACTS OF EACH CASE. THE BELIEF MUST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONA BLE GROUNDS. THE ASSESSING OFFICER IS REQUIRED TO ACT, NOT ON MERE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVI DENCE. MY VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FO LLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 16 II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (2011) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISI ONS:- IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 IT R 417 (DEL.). XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 I TR 742, 746 (PUNJ.), XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXM AN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37, 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 324 , 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 17 3.5. IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994-95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJA V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM) , WHERE THE INFORMATION REGARDING ACQUISITION OF THE ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE RELEVANT ASSESSMENT YEAR 1992-93 AND SUC H INFORMATION WAS DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 1995-96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ESCAPEMENT OF INCOM E IN RELATION TO ASSESSMENT YEAR 1992-93 . 3.6. THE HONBLE JURISDICTIONAL HIGH COURT IN EXP ORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT, ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 18 (2013) 350 ITR 651 (BOM), WHERE THERE HAD BEEN NO APPLICATION OF MIND TO THE RELEVANT FACTS DURING TH E COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFI CER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALI D. 3.7. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRILAL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 43 2 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDIN ARY JURISDICTION OF THE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PART OF THE RELEVANT MATERIAL HA D BEEN KEPT OUT FROM THE ASSESSING OFFICER). THE INFORMATION WAS IN THE ANNEXURE AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 147 WOULD APPLY. TH E REASSESSMENT PROCEEDINGS AFTER FOUR YEARS WERE VALI D. 3.8. IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYAN KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CAS E OF THE ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE E XPIRY OF THE TIME LIMIT PROVIDED IN SECTION 153(2). THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD. V. ASST. CIT, (2012) 348 ITR 439 ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 19 (BOM), BOTH IN THE COMPUTATION OF TAXABLE LONG-TERM CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME AND IN THE COMPUTATION THAT WAS SUBMITTED IN RESPONSE TO THE Q UERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILEN CE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVES TED, AS SUCH THERE BEING A FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. THI S VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 (DEL). 3.9. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V . ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE INITIATION WAS STARTED WITHIN FOUR YEARS FOR RE-EXA MINING THE DEDUCTION UNDER SECTION 80HHC, WAS HELD TO BE WRONGLY ALLOWED IN THE ORIGINAL ASSESSMENT. IDENT ICALLY, IN THE CASE OF HAPPY FORGING LTD. V. CIT, (2002) 25 3 ITR ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 20 413,416-17 (P & H), WHERE EXCISE DUTY PAID IN ADVAN CE WAS SHOWN AS AN ASSET IN THE BALANCE SHEET AND WAS ALLOWED AS A DEDUCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN TH E BALANCE SHEET AND WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN THE CASE OF VIPAN KHANNA V. CIT, (2002) 255 ITR 220, 230 (P & H), WHERE FROM THE FACTS IT WAS C LEAR THAT THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE R ETURN AT THE RATE OF 50 PER CENT AND HE HAD NOWHERE DISPU TED THE FACT THAT THE ADMISSIBLE RATE OF DEPRECIATION T O HIM WAS 40 PER CENT., SUCH FACT ALONE WAS SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS UNDER SECTION 147 AND, THEREFORE, SUCH INITIATION WAS SUSTAINED. THE HONB LE PUNJAB & HARYANA HIGH COURT IN MRS. RAMA SINHA V. C IT, (2002) 256 ITR 481, 483, 486, WHERE THE REASSESSMEN T NOTICE HAS BEEN ISSUED ON THE BASIS OF DEFINITE INF ORMATION FROM CBI REGARDING INVESTMENTS BY THE ASSESSEE WHIC H HAD NOT BEEN DISCLOSED DURING THE ORIGINAL ASSESSME NT PROCEEDINGS, SUCH INITIATION HAS BEEN UPHELD. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 21 3.10. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJRANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOU GH THE TRANSACTION OF SALE OF SHARES WAS DISCLOSED AND ACC EPTED IN THE ORIGINAL ASSESSMENT, BUT THE SUBSEQUENT DISCOVE RY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSACTI ON WAS NOT GENUINE, A REASSESSMENT NOTICE AFTER FOUR YEARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DIS CLOSURE OF THE MATERIAL FACTS. IN THIS REGARD, THE PETITION ER- ASSESSEE CANNOT DRAW ANY SUPPORT FROM THE STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTICE FOR REASSESS MENT. IT GOES WITHOUT SAYING THAT FOR THE PURPOSE OF MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHALL HAVE TO CON FRONT THE PETITIONER WITH THE ENTIRE MATERIAL IN HIS POSS ESSION ON THE BASIS OF WHICH HE PROPOSES TO MAKE THE ADDITION S. IN PUNJAB LEASING PVT. LTD. V. ASST. CIT, (2004) 267 I TR 779, 781-82 (P & H), WHERE DEPRECIATION WAS ALLOWED TO T HE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FINANC ING OF VEHICLES AND CONSUMER DURABLES ON 'HIRE-PURCHASE BA SIS' ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 22 AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NO TICE ISSUED AFTER FOUR YEARS HAS BEEN HELD NOT TO SUFFER FROM ANY ILLEGALITY AS THE SAME WAS BASED ON THE BONA FI DE ACTION OF THE COMPETENT AUTHORITY TO DETERMINE WHET HER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEEN CLAIMING DEPRECIATION, WERE ACTUALLY OWNED BY IT. 3.11. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DED UCTION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRONGLY GRANTED TO THE ASSESSEE, FOR WHICH IT WAS N OT ENTITLED. THEREFORE, REASSESSMENT PROCEEDINGS TO WI THDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKEWISE, IN CIT V. HINDUSTAN TOOLS & FORGINGS P. LTD., (2008) 306 ITR 209 (P & H), WHERE, THE ASSESSEE IN THE REGULAR ASSESSMENT HAD BEEN ALLOWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTION 80HHC. THEREFORE, THE ACTION INITIATE D BY THE AO FOR REASSESSMENT UNDER SECTION 147(B) COULD NOT BE HELD TO BE INVALID. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 23 3.12. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFOR MATION FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYME NT OF LIABILITY IN REGARD OF THE SALES TAX COLLECTED IN E XCESS. THE ASSESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE CASE OF SAT NAR AIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID N OT FORM THE SOLE BASIS FOR THE ASSESSING OFFICER TO I NITIATE REASSESSMENT PROCEEDING BUT HE ALSO TOOK INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT COMMISSIONER AS WELL AS THE FACT THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1995-96. THUS, IT WAS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY INVOKED THE JURISDICTION TO INITIATE THE REASSESSMENT PROCE EDINGS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SIN GH, (2005) 276 ITR 347 (P & H), IT WAS HELD THAT THE RESPONDENTS DID NOT HAVE THE LOCUS STANDI TO QUESTI ON THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOT ICE. NON-ISSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS O F THE LATE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 24 P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT A FFECT THE VALIDITY OF THE REASSESSMENT ORDERS. LIKEWISE, IN TILAK RAJ BEDI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FACTS COMING TO LIGHT IN A SUBSEQUENT ASSESSMENT YE AR COULD VALIDLY FORM THE BASIS FOR INITIATING REASSES SMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 14 7. THE ACTION OF THE INCOME TAX AUTHORITIES IN REOPENING T HE ASSESSMENT OF THE ASSESSEE AND RESTRICTING THE DEDU CTION UNDER SECTION 80-IB WAS HELD TO BE VALID. 3.13. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHO W THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPAC ITY OF THE DONOR TO MAKE GIFTS AND THE OCCASION THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (199 9) 240 ITR 728, 736-37, 739 (PAT), WHERE THE INVESTIGATION REPORT INDICATED THAT THE OFFICER HAD REASON TO BELIEVE TH AT ON ACCOUNT OF FAILURE ON THE PART OF THE PETITIONER-AS SESSEE TO DISCLOSE TRUE AND FULL FACTS, INCOME HAD BEEN GROSS LY ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 25 UNDER ASSESSED, REASSESSMENT PROCEEDINGS WERE HELD VALIDLY INITIATED. 3.14. IN THE CASE OF KAPOOR BROTHERS V. UNION OF I NDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MA TERIAL EVIDENCE FOR THE PURPOSE OF REOPENING OF THE ASSESS MENT ALREADY COMPLETED HAS BEEN BROUGHT TO THE NOTICE OF THE AUTHORITY DURING THE COURSE OF ENQUIRY. THE NOTICE WAS HELD TO BE VALID BY THE HONBLE HIGH COURT. IN THE CASE OF VIPPY PROCESSORS PVT. LTD. V. CIT, (2001) 249 ITR 7 , 8 (MP), WHERE THE NEED TO ISSUE NOTICE AROSE DUE TO NOTICIN G OF VAST DIFFERENCE IN VALUE OF PROPERTIES DISCLOSED BY THE ASSESSEE AND THAT OF THE REPORT OF THE VALUATION OF FICER AND THE REASONS THAT LED TO THE ISSUE OF THE NOTICE WERE DULY RECORDED AND THE SAME WERE ALSO ADEQUATE AND B ASED ON RELEVANT FACTS AND MATERIAL, INITIATION WAS UPHE LD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CI T, (2001) 249 ITR 109, 110-11 (MP), WHERE THE NOTICE WAS ISSU ED AFTER RECORDING REASONS IN THAT REGARD, INITIATION WAS UPHELD. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 26 3.15. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARD EN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 481, 489, 494- 95, SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COURT: (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE W AS HOLDING SHARES IN AN AMALGAMATING COMPANY AND HE WA S ALLOTTED SHARES IN THE AMALGAMATED COMPANY AND SUCH SHARES WERE SOLD BY HIM AND HE HAS DISCLOSED THE MA RKET PRICE OF SUCH SHARES AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISCLOSED THE COST OF ACQUISITION OF SHARES IN THE AMALGAMATING COMPANY IN ACCORDANCE WITH SECTION 49( 2) READ WITH SECTION 47(VII), INITIATION OF REASSESSME NT PROCEEDINGS AFTER FOUR YEARS HAS BEEN SUSTAINED BEC AUSE THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412, 418- 19 (RAJ), WHERE THE RETURN OF THE ASSESSEE FOR ASSE SSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DECLARED BY THE ASSES SEE, WHO ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 27 CARRIED ON CON- TRACT BUSINESS, INITIATION OF REASS ESSMENT PROCEEDINGS BY ISSUING A NOTICE DATED 15-5-2001 PROPOSING TO REASSESS PETITIONER-ASSESSEE AT HIGHER RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRIBED UNDER SECTI ON 44AD HAS BEEN SUSTAINED. IN THE CASE OF DR. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), THE REASSESS MENT PROCEEDINGS WERE INITIATED AFTER RECORDING REASONS IN WRITING BY THE AO. THE NON-AVAILABILITY OF A FEW DO CUMENTS DEMANDED BY THE ASSESSEE WOULD NOT MAKE THE REASSESSMENT PROCEEDINGS INITIATED FOR THE REASONS RECORDED IN DETAIL ILLEGAL. 3.16. IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT Y EARS IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALL Y BY THE ASSESSING AUTHORITY WHETHER THE INCOME SHOULD BE TR EATED UNDER THE HEAD 'BUSINESS INCOME' OR 'PROPERTY INCOM E'. THE ASSESSEE WOULD GET OPPORTUNITY TO SHOW SUFFICIE NT CAUSE TO THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESSMENT. THUS, IT COULD NOT BE SAID THAT THERE W AS NO ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 28 RELEVANT MATERIAL TO INITIATE PROCEEDINGS UNDER SEC TION 147. IN THE CASE OF KARTIKEYA INTERNATIONAL V. CIT , (2010) 329 ITR 539 (ALL), IN VIEW OF THE MATTER, THE PETIT IONER WAS NOT ENTITLED FOR THE DEDUCTION ON THE DUTY DRAWBACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HAD BEEN AL LOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1) , IT HAD ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATI ON OF THE PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WAS LEGAL AND IN ACCORDANCE WITH LAW. 3.17. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: SURESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL ), NOTWITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX IN THE HANDS OF P, HE HAD TAKEN A S TAND THAT THE AMOUNT DID NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT WAS NOT CLEAR AS TO IN WHOS E HANDS THE AMOUNT IN QUESTION HAD TO BE ASSESSED. THE ITO WAS JUSTIFIED IN TAKING PROCEEDINGS UNDER SECTION 147 F OR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETITIONE RS ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 29 ACCORDING TO THE CLAIM MADE BY THE PETITIONERS. LI KEWISE, HONBLE KERALA HIGH COURT IN CIT V. DR. SADIQUE UMM ER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSING OFFI CER COLLECTED FURTHER INFORMATION TO COMPLETE THE REASSESSMENTS WHICH WAS ALSO PERMISSIBLE UNDER THE ACT. THE FINDING OF THE FIRST APPELLATE AUTHORITY AS WEL L AS THE TRIBUNAL, THAT THE ASSESSING OFFICER HAD NO MATERIA L TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT WAS WRONG AND CONTRARY TO FACTS. THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. THEREFORE, THE REO PENING OF ASSESSMENTS WAS HELD TO BE VALID AND WITHIN TIME . IN THE CASE OF CIT V. UTTAM CHAND NAHAR, (2007) 295 I TR 403 (RAJ), THE NOTICE REQUIRING THE ASSESSEE TO FIL E THE RETURN WITHIN 30 DAYS WAS IN ACCORDANCE WITH SECTIO N 148 AS IT MUST BE DEEMED TO BE IN FORCE WITH EFFECT FRO M 1-4- 1989, AND IN FORCE AS ON THE DATE NOTICE WAS ISSUED . THERE WAS NO VIOLATION OF SECTION 148 IN RESPECT OF THE S PECIFIED PERIOD WITHIN WHICH THE RETURN IS TO BE SUBMITTED. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 30 3.18. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONC EDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UN-AMENDED PROVISION OR UN-DER THE AMENDED PROVISION, THE RECO URSE OPEN TO THE DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSESSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHERWISE INVALID. LIKEWISE, IN AT UL TRADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOU NT BOOKS OR RECORD AND OTHER MATERIAL WERE ALL COMMON WHICH WERE BEING CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATING TO THREE APPEALS. THE PETITION ER HAD NOTICE AND OPPORTUNITY OF BEING HEARD. THE REASSESS MENT PROCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. V. LAMES KURIAN, AS ST. CIT, (2007) 294 ITR 341 (GUJ), THE ASSESSING OFFICER HA D FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWA NCES. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, (2010) 323 ITR 60 (MAD), WHERE THE ASSESSEE HAD FURNISHED INCORREC T ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 31 PARTICULARS AND THEREFORE, THE REOPENING OF THE ASS ESSMENT WAS HELD TO BE JUSTIFIED. 3.19. IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCTION OF PENAL INTEREST WHICH HAD ACCRUED NOT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BUT IN EARLIER YEAR S. THIS THE ASSESSEE HAD NOT DISCLOSED. THE REASSESSMENT WA S HELD TO BE VALID. LIKEWISE, IN KUSUM INDUSTRIES P. LTD. V. CIT, (2008) 296 ITR 242 (ALL), AS THE AWARD HAD BEC OME FINAL IT WOULD BE TAKEN THAT THE DIRECTORS OF THE A SSESSEE HAD ACCEPTED THE FACTUM OF EARNING OF SECRET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO B INDING ON THE COMPANY. THE NON-APPEARANCE OF ONE OF THE ARBITRATORS AND ONE OF THE DIRECTORS IN RESPECT OF THE SUMMON ISSUED UNDER SECTION 131 WOULD NOT MAKE THE REASSESSMENT INVALID. THE HONBLE KERALA HIGH COURT IN CIT V. INDO MARINE AGENCIES (KERALA) P. LTD., (2005 ) 279 ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 32 ITR 372 (KER), HELD THAT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 144. THE MERE FACT THAT IT WAS NOT COMMUNICATED TO THE ASSESSEE WOULD NOT MAKE SUCH AN ASSESSMENT RECORDED IN THE ORDER SHEET ILLEGAL AND THAT WOULD NOT BAR FURTHER PROCEEDINGS UNDER SECTION 147 . THUS, THE ASSESSMENT WAS HELD TO BE VALIDLY REOPENE D UNDER EXPLANATION 2(C) TO SECTION 147. LIKEWISE, I N CIT V. N. JAYAPRAKASH, (2006) 285 ITR 369 (KER), WHERE, TH E ASSESSEE COULD NOT, AFTER HAVING PERSUADED THE ASSE SSING AUTHORITY TO WITHDRAW THE NOTICE DATED 1-10-1993, POINTING OUT THAT IT WAS NOT IN CONFORMITY WITH LAW , BE ALLOWED TO CONTEND THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF THE TIME-LIMIT BY THE FINANCE (NO.2) AC T, 1996, WITH EFFECT FROM 1-4-1989. IN THE ABSENCE OF SPECIF IC PROVISION IN THE FINANCE (NO. 2) ACT, 1996, INVALID ATING PROCEEDINGS INITIATED BY THE INCOME-TAX OFFICER, TH E ACTION TAKEN BY HIM APPLYING THE THEN EXISTING LAW COULD N OT BE SAID TO BE INVALID. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 33 3.20. LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FR OM T AND K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTO RS HAD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW O F THE ABSENCE OF THESE DETAILS, THE ASSESSING OFFICER CO ULD NOT EXAMINE THE TAXABILITY OF ADVANCES OR LOAN RAISED B Y THE ASSESSEE. THERE WAS FAILURE TO DISCLOSE MATERIAL FA CTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDI NGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBL E ALLAHABAD HIGH COURT IN CHANDRA PRAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (ALL), WHEREIN, THE I NCOME- TAX DEPARTMENT HAD SENT A REQUISITION ON 27-3-2002, UNDER SECTION 132A REQUISITIONING THE BOOKS OF ACCO UNT AND OTHER DOCUMENTS SEIZED BY THE CENTRAL EXCISE DEPARTMENT. THE RECORD OF THE PROCEEDING DATED 18-4 - 2002, SHOWED THAT THE REQUISITION WAS NOT FULLY EXE CUTED AS ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN DELIVERED TO THE REQUISITIONING AUTHORITY. THE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 34 PROCEEDINGS INITIATED UNDER SECTION 147 WAS HELD TO BE VALID. 3.21. IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIARY CONSTITUTED SUFFICIENT INFORMATION FOR THE ESCAPEME NT OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATION OR FURNISHING OF INACCURATE PARTICULA RS AS REGARDS SALE CONSIDERATION. THUS, THE TRIBUNAL W AS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED . 3.22. LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (2006) 285 ITR 57 (KER), IT WAS CLEAR FROM THE REAS ONS RECORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOS E FULLY AND TRULY THE MATERIAL FACTS AND THAT AS A CONSEQUE NCE INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSW ARE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 35 CORPORATION LTD. V. CIT, (2005) 277 ITR 40 (ALL), T HE PRINCIPLES LAID DOWN BY THE CALCUTTA HIGH COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : (1979) 118 ITR 10 05 (CAL) DID CONSTITUTE INFORMATION ON A POINT OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FO RMING HIS BELIEF THAT THE INCOME TO THAT EXTENT HAD ESCAP ED ASSESSMENT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER CARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD THAT THE DEPARTMENTAL VALUER'S REPO RT CONSTITUTED MATERIAL FOR ENTERTAINING A BELIEF OF E SCAPED INCOME IN THE YEARS UNDER CONSIDERATION. THE REASSESSMENT PROCEEDING WAS HELD TO BE VALID. 3.23. IN AUROBINDO SANITARY STORES V. CIT, (2005) 276 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BETWEEN THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESSEE-FIRM AND THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE BALANCE -SHEET OF THE ASSESSEE-FIRM FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1989-90. THESE MATERIALS HAD A DIRE CT ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 36 LINK AND NEXUS FOR FORMATION OF A BELIEF BY THE ASS ESSING OFFICER THAT INCOME OF THE ASSESSEE-FIRM HAD ESCAPE D ASSESSMENT BECAUSE OF FAILURE OF THE ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. IN THE CASE OF CIT V. BEST WOOD INDUST RIES & SAW MILLS, (2011) 331 ITR 63 (KER), THE ASSESSEE CHALLENGED THE VALIDITY OF THE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SEC TION 147 AND BOTH THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE HO LDING THAT SO FAR AS THE REASSESSMENTS RELATED TO ASSESSM ENT OF UNEXPLAINED TRADE CREDITS, THEY WERE INVALID. ON AP PEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VAL ID. IN HONDA SIEL POWER PRODUCTS LTD. V. DEPUTY CIT, (2012 ) 340 ITR 53 (DEL), THERE BEING OMISSION AND FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIA L FACTS THUS REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID . 3.24. IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUT Y CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCO UNT AND ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 37 OTHER MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, THE ORDER PASSED BY THE COMMISSIONER (APPEALS) IN T HE ASSESSMENT YEAR 2001-02 WOULD CONSTITUTE 'INFORMATI ON' OR MATERIAL FROM ANY EXTERNAL SOURCE AND, AS SUCH, THE REASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 20 00- 01 WERE HELD TO BE VALID. LIKEWISE, IN THE CASE OF CIT V. SMT. R. SUNANDA BAI, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WERE HELD TO BE VALID ON T HE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDE R SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH DISENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FO R THE ASSESSMENT YEARS 1992-93 AND 1993-94. 3.25. IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. ASST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BEING SU FFICIENT MATERIAL ON RECORD FOR THE ASSESSING OFFICER TO FOR M A BELIEF AS REGARDS THE ESCAPEMENT OF INCOME IN RELATION TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIRE BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (201 3) ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 38 357 ITR 177 (DEL), WHERE THERE BEING PRIMA FACIE MA TERIAL IN THE POSSESSION OF THE ASSESSING OFFICER TO FORM A TENTATIVE BELIEF THAT SECTION 9(1)(I) HELD ATTRACTE D, SAID REASON BY ITSELF CONSTITUTED A RELEVANT GROUND TO R EOPEN THE ASSESSMENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 (MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 30 8 ITR 434 (KER)]; VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 (MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 337 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 (KARN)]; X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 343 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 39 XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CIT [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 73 (DEL)]; XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 I TR 158 (GUJ)]; XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BAN K LTD. [(2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (BOM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 IT R 630 (MAD)]. 3.26. SO FAR AS, THE DECISION IN THE CASE OF CIT V S KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A PARTICULAR CONCLUSION, ONLY IN A SITUATION, WHEN NO T A SINGLE PIECE OF PAPER OR DOCUMENT WAS RECOVERED, THEREFORE, THE HONBLE COURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIAL FOUND AND THE ADDITION WAS MERELY ON THE BASIS OF STATEMENT ONLY THEN REOPENING OF ASSES SMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. LIKEWISE, IN THE CASE OF CIT VS S. KHADER KHAN SON (2012) 254 CTR 22 8 (SC), AFFIRMING THE DECISION OF MADRAS HIGH COURT I N ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 40 (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS M ADE SOLELY ON THE BASIS OF STATEMENT U/S 133A AND NO OT HER MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE. 3.27. IN THE CASE OF ARADHNA ESTATE PVT. LTD. VS D CIT (2018) 91 TAXMANN.COM 119 (GUJARAT), THE HON'BLE HI GH COURT OBSERVED/HELD AS UNDER:- IN REASONS RECORDED BY THE ASSESSING OFFICER FOR R EOPENING THE ASSESSMENT. HE POINTED OUT THAT THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT CALCUTTA RE GARDING SHELL COMPANIES WHICH HAD GIVEN ACCOMMODATION ENTRIES FOR SHARE PREMIUM TO SURAT BASED COMPANIES. A LIST OF 114 CALCUTTA BA SED COMPANIES WAS PROVIDED WHICH HAD GIVEN ACCOMMODATION ENTRIES TO S UCH SURAT BASED COMPANIES. STATEMENTS OF MANY ENTRY OPERATORS AND D UMMY DIRECTORS RECORDED DURING VARIOUS SEARCH AND SEIZURE OPERATIO N, SURVEY OPERATION AND INVESTIGATION WERE CHECKED. THE ASSESSING OFFIC ER THEREUPON PROCEEDED TO RECORD THAT 'ON PERUSAL OF DATA SO PRO VIDED BY THE DEPUTY DIRECTOR (INVESTIGATION), IT IS NOTICED THAT DURING THE PERIOD UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS ACCEPTED SH ARE CAPITAL/SHARE PREMIUM FROM THE FOLLOWING ENTRIES/PARTIES WHICH HA VE BEEN PROVED TO BE SHELL COMPANIES BASED ON THE INVESTIGATION CONDU CTED BY THE DEPUTY DIRECTOR (INVESTIGATION). UNDERNEATH, HE PROVIDED A LIST OF 17 COMPANIES WHO HAD TRANSACTED WITH THE ASSESSEE COMP ANY DURING THE YEAR UNDER CONSIDERATION AND WERE ALLOTED EQUITY SH ARES BY PURPORTED INVESTMENT OF SIZEABLE SHARE CAPITAL AND SHARE PREM IUM AMOUNTS. ON VERIFICATION OF SUCH MATERIALS, THE ASSESSING OFFIC ER NOTED THAT THE ASSESSEE HAD RECEIVED SHARE CAPITAL/SHARE PREMIUM A MOUNT, SINCE THE INVESTOR COMPANIES WERE FOUND TO BE SHELL COMPANIES INDULGING IN PROVIDING ACCOMMODATION ENTRIES, THE ASSESSING OFFI CER WAS OF THE OPINION THAT THE SHARE CAPITAL/SHARE PREMIUM CLAIME D TO HAVE BEEN RECEIVED FROM THE COMPANY BY THE ASSESSEE WAS NOT G ENUINE. AMOUNT IS NOTHING BUT ASSESSEE'S OWN MONEY INTRODUCED IN THE GARB OF SHARE CAPITAL/SHARE PREMIUM FROM THE SHELL COMPANIES AND THEREFORE, SUCH AMOUNT IS LIABLE TO BE TAXED UNDER SECTION 68. HE T HEREFORE, RECORDED HIS SATISFACTION THAT THE INCOME HAD ESCAPED ASSESS MENT AND THAT THIS ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 41 WAS DUE TO THE ASSESSEE HAVING FAILED TO DISCLOSE T RULY AND FULLY ALL FACTS. [PARA 7] SECTION 147 PROVIDES INTER ALIA THAT IF THE ASSESSING OFFICER HAS THE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE MAY SUBJECT TO THE PROVISIONS OF SEC TIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME. PROVISO TO SECTION 147 OF COURSE REQUIRES THAT WHERE THE ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF THE FO UR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO MAKE RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR 148 OR TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IN THIS CONTEXT, IT IS WELL SETTLED THAT THE REQUIR EMENT OF FULL AND TRUE DISCLOSURE ON PART OF THE ASSESSEE IS NOT CONFINED TO FILING OF RETURN ALONE BUT WOULD CONTINUE ALL THROUGHOUT DURING THE ASSESSMENT PROCEEDINGS ALSO. IN THIS CONTEXT, THE MATERIALS ON RECORD WOULD SUGGEST THAT THE ASSESSING OFFICER HAD RECEIVED FRESH INFOR MATION AFTER THE ASSESSMENT WAS OVER PRIMA FACIE SUGGESTING THAT SIZEABLE AMOUNT OF INCOME CHARGEABLE TO TAX IN CASE OF THE ASSESSEE HA D ESCAPED ASSESSMENT AND THAT SUCH ESCAPEMENT WAS ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MAT ERIAL FACTS. THE ASSESSING OFFICER FORMED SUCH A BELIEF ON THE BASIS OF SUCH MATERIALS PLACED BEFORE HIM AND UPON PERUSAL OF SUCH MATERIAL . THIS IS NOT A CASE WHERE THE ASSESSING OFFICER WAS REEXAMINING THE MAT ERIALS AND THE DOCUMENTS ALREADY ON RECORD FILED BY THE ASSESSEE A LONG WITH THE RETURN OR SUBSEQUENTLY, BROUGHT ON RECORD DURING THE ASSES SMENT PROCEEDINGS. IT WAS A CASE WHERE ENTIRELY NEW SET OF DOCUMENTS A ND MATERIALS WAS PLACED FOR HIS CONSIDERATION COMPILED IN THE FORM O F REPORT RECEIVED FROM THE INVESTIGATION WING. SUCH MATERIAL WAS PERU SED BY THE ASSESSING OFFICER AND UPON EXAMINATION THEREOF, HE FORMED A BELIEF THAT THE ASSESSEE COMPANY HAD RECEIVED SHARE APPLICATION AND SHARE PREMIUM MONEY FROM AS MANY AS 20 DIFFERENT INVESTOR COMPANIES WHO WERE FOUND TO BE SHELL COMPANIES AND INDULGING IN G IVING ACCOMMODATION ENTRIES. FROM THIS VIEW POINT, SINCE THE ASSESSING OFFICER HAD SUFFICIENT MATERIAL AT HIS COMMAND TO F ORM SUCH A BELIEF. SUCH MATERIALS DID NOT FORM PART OF THE ORIGINAL AS SESSMENT PROCEEDINGS AND WAS PLACED BEFORE THE ASSESSING OFFICER ONLY AF TER THE ASSESSMENT WAS COMPLETED. SINCE ON THE BASIS OF SUCH MATERIALS , ASSESSING OFFICER, CAME TO A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, MERELY BECAUSE THESE TRANSACTIONS WERE SCRUTINISED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT AL SO WOULD NOT PRECLUDE HIM FROM REOPENING THE ASSESSMENT. HIS SCR UTINY DURING THE ASSESSMENT WILL NECESSARILY BE ON THE BASIS OF THE DISCLOSURES MADE BY THE ASSESSEE. [PARA 8] ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 42 THE CONTENTION THAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY FACTS CANNOT BE ACCEPTED. THE ASSESSING OFFICER, AS NOTED, RECEIVED FRESH MATERIAL AFTER THE ASSESSM ENT WAS OVER, PRIMA FACIE , SUGGESTING THAT THE ASSESSEE COMPANY HAD RECEIVED BOGUS SHARE APPLICATION/PREMIUM MONEY FROM NUMBER OF SHELL COMP ANIES. [PARA 10] MERELY BECAUSE THE TRANSACTIONS IN QUESTION WERE EX AMINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT WO ULD NOT MAKE ANY DIFFERENCE. THE SCRUTINY WAS ON THE BASIS OF DISCLO SURES MADE AND MATERIALS SUPPLIED BY THE ASSESSEE. SUCH MATERIAL I S FOUND TO BE PRIMA FACIE UNTRUE AND DISCLOSURES NOT TRUTHFUL. EARLIER SCRUT INY OR EXAMINATION ON THE BASIS OF SUCH DISCLOSURES OR MAT ERIALS WOULD NOT DEBAR A FRESH ASSESSMENT. EACH INDIVIDUAL CASE OF T HIS NATURE IS BOUND TO HAVE SLIGHT DIFFERENCE IN FACTS. [PARA 11] THE NEXT CONTENTION THAT THE ASSESSING OFFICER DID NOT DEMONSTRATE ANY MATERIAL ENABLING HIM TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS FALLACIOUS. THE ASSESSING OFFICER RECORDED DETAILED REASONS POINTING OUT THE MATERIAL AVAILABL E WHICH HAD A LIVE LINK WITH FORMATION OF BELIEF THAT THE INCOME CHARG EABLE TO TAX HAD ESCAPED ASSESSMENT. AT THIS STAGE, AS IS OFTEN REPE ATED, ONE WOULD NOT GO INTO SUFFICIENCY OF SUCH REASONS. [PARA 13] SECTION 68 AS IS WELL KNOWN, PROVIDES THAT WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FR OM ABOVE-NOTED COMPANIES WAS ONLY BY NATURE OF ACCOMMODATION ENTRI ES AND IN REALITY, IT WAS THE FUNDS OF THE ASSESSEE WHICH WAS BEING RE -ROUTED. UNDOUBTEDLY. SECTION 68 WOULD HAVE APPLICABILITY. P ROVISO ADDED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013, DO ES NOT CHANGE THIS POSITION. [PARA 14] AS PER THIS PROVISO, WHERE THE ASSESSEE IS A COMPAN Y AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, EXPLANATION OFFERED BY THE ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON IN WHOSE NAME SUCH CREDIT IS RECO RDED IN THE BOOKS OF THE COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NA TURE AND SOURCE OF SUM SO CREDITED AND SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER HAS BEEN FOUND TO BE SATISFACTORY. ESSENTIA LLY, THIS PROVISO EASES THE BURDEN OF PROOF ON THE REVENUE WHILE MAKING ADD ITION UNDER SECTION 168 WITH RESPECT TO NON GENUINE SHARE APPLICATION M ONEY OF THE COMPANIES. EVEN IN ABSENCE OF SUCH PROVISO AS WAS T HE CASE GOVERNING ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 43 THE PERIODS WITH WHICH WE ARE CONCERNED IN THE PRES ENT CASE, IF FACTS NOTED BY THE ASSESSING OFFICER AND RECORDED IN REAS ONS ARE ULTIMATELY ESTABLISHED, INVOCATION OF SECTION 68 WOULD BE CALL ED FOR. [PARA 15] THE CONTENTION THAT THE ASSESSING OFFICER HAD MEREL Y AND MECHANICALLY ACTED ON THE REPORT OF THE INVESTIGATION WING ALSO CANNOT BE ACCEPTED. ONE HAS REPRODUCED THE REASONS RECORDED BY THE ASSE SSING OFFICER AND NOTED THE GIST OF HIS REASONS FOR RESORTING TO REOP ENING OF THE ASSESSMENT. THE ASSESSING OFFICER HAD PERUSED THE M ATERIALS PLACED FOR HIS CONSIDERATION AND THEREUPON, UPON EXAMINATION O F SUCH MATERIALS FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAD E SCAPED ASSESSMENT. [PARA 16] IN THE RESULT, PETITION IS DISMISSED. [PARA 17] 3.28. THE HON'BLE GUJARAT HIGH COURT WHILE VALIDAT ING THE REOPENING OF ASSESSMENT UNDER SECTION 147/148 O F THE ACT IN A LATER ORDER (AFORESAID) DATED 20/02/2018 O N THE ISSUE OF CASH CREDIT (SHARE APPLICATION MONEY) DULY CONSIDERED THE ARGUMENTS OF BOTH SIDES AND FOLLOWED THE FOLLOWING THE DECISIONS I. JAYANT SECURITY AND FINANCE LTD. V. ASSTT. CIT [SPECIAL CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2-201 8] (PARA 12); II. RAYMOND WOOLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) (PARA 13); III. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) IV. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16) AND DISTINGUISHED THE FOLLOWING DECISIONS ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 44 I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 11) AND II. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 11) THE HON'BLE HIGH COURT WHILE UPHOLDING THE VALIDITY OF REOPENING ALSO CONSIDERED FOLLOWING DECISION, WHICH WERE REFERRED BY BOTH SIDES- I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 5), II. HARIKRISHAN SUNDERLAL VIRMANI V. DY. CIT [2017] 394 ITR 146 (GUJ.) (PARA 5), III. RAYMOND WOOLEN MILLS LTD.V. ITO [1999] 236 ITR 34 (SC) (PARA 6), IV. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 6), V. AASPAS MULTIMEDIA LTD. V. DY. CIT [2017] 83 TAXMANN.COM 82/249 TAXMAN 568 (GUJ.) (PARA 6), VI. JAYANT SECURITY & FINANCE LTD. V. ASSTT. CIT [SP. CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2- 2018] (PARA 12), VII. ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) AND VIII. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16). 3.29. THE SUM AND SUBSTANCE OF THE AFORESAID DECISION WAS THAT SINCE THE ASSESSING OFFICER WAS H AVING SUFFICIENT MATERIAL AT HIS COMMAND TO FORM A REASON ABLE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 45 BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, MERELY BECAUSE THIS TRANSACTIONS WERE SCRUTINIZE BY THE ASSESSING OFFICER DURING THE ORIG INAL ASSESSMENT, WOULD NOT PRECLUDE HIM FROM REOPENING ASSESSMENT. THUS, THE ASSESSMENT NOTICE WAS HELD TO BE JUSTIFIED. REFERRING TO THE SAID EXPLANATION IN CON SOLIDATED PHOTO & FINVEST LTD. (2006) 281 ITR 394 (DEL.), HON 'BLE HIGH COURT OBSERVED AS UNDER:- 8. IT IS CLEAR FROM THE ABOVE THAT THE TWO CRITICAL A SPECTS WHICH NEED TO BE ADDRESSED IN ANY ACTION UNDER SECTION 147 ARE WHETHER THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND WHETHE R THE PROPOSED REASSESSMENT IS WITHIN THE PERIOD OF LIMITATION PRE SCRIBED UNDER THE PROVISO TO SECTION 147. EXPLANATION (1 ) TO THE SAI D PROVISION MAKES IT CLEAR THAT PRODUCTION OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH THE ASSESSING OFFICER COULD WITH DUE DILIGENC E DISCOVER MATERIAL EVIDENCE WOULD NOT NECESSARILY AMOUNT TO D ISCLOSURE WITHIN THE MEANING OF THE PROVISO THAT STIPULATES AN EXTEN DED PERIOD OF LIMITATION FOR ACTION IN CASES WHERE THE ESCAPEMENT ARISES OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 3.30. THE FORMATION OF OPINION BY THE ASSESSING OFFICER HAS TO BE CONSIDERED ON THE TOUCH STONE WHE THER THERE WAS REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND FOR THAT PURPOSE, THE HO N'BLE APEX COURT IN RAYMOND WOOLEN MILLS LTD. VS INCOME T AX OFFICER THROWS LIGHT ON THE ISSUE AND FURTHER BY HO N'BLE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 46 JURISDICTIONAL HIGH COURT IN M/S GIRILAL & COMPANY VS INCOME TAX OFFICER 300 ITR 432 (BOM.). IN THE APPEA L BEFORE ME, THE LD. ASSESSING OFFICER RECEIVED INFOR MATION DATED FROM DGIT(INV.) THAT THE ASSESSEE IS ONE OF T HE BENEFICIARIES OF ACCOMMODATION ENTRIES PROVIDED BY THE SOME OF THE MVAT DEALERS, WHO WERE INDULGED IN ISSU ING BOGUS SALE/PURCHASE BILLS, WHICH WAS INVESTIGATED A ND KEPT ON PUBLIC DOMAIN BY THE SALES TAX DEPARTMENT A ND FURTHER, THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT TO SUCH EIGHT PARTIES BY THE LD. ASSESSING OFFICER WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE RE MARK NOT KNOWN NOT TRACEABLE AND LEFT ETC. THE ASSES SEE ALSO COULD NOT PROVE THE GENUINENESS OF THE PURCHASES FR OM THESE PARTIES, THEREFORE, THE LD. ASSESSING OFFICER WAS UNDER A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WHICH IN MY OPINION WAS SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS. EXPLANATION-1 TO SECTION 147 OF THE ACT SUPPORTS MY VIEW. SINCE THE ASSESSEE WAS BENEFICIARY OF SUCH BOGUS BILLINGS/ACCOMMODATION ENTRIES AND FURTHER THE NOTI CES ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 47 ISSUED UNDER SECTION 133(6) OF THE ACT TO SUCH PART IES WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITI ES WITH THE REMARK NOT KNOW OR LEFT, ETC. THE GENU INENESS OF THE PURCHASES COULD NOT BE ESTABLISHED, THEREFOR E, THE GROUND WITH RESPECT TO REOPENING RAISED BY THE ASSE SSEE IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED. 4. SO FAR AS, GROUND NO.2 WITH RESPECT TO THE DIRECTION TO THE LD. ASSESSING OFFICER TO ESTIMATE THE PROFIT @6.50% OF THE BOGUS PURCHASES IS CONCERNED, THE LD. DR CONTENDED THAT THE GENUINENESS OF THE PURCHASES COU LD NOT BE ESTABLISHED BY THE ASSESSEE AND EVEN THE NOT ICES SENT UNDER SECTION 133(6) OF THE ACT TO THE CONCERN ED PARTIES WERE RETURNED UNSERVED BY THE POSTAL AUTHOR ITIES, THEREFORE, THE ADDITION MADE BY THE LD. ASSESSING O FFICER @ 25% MAY BE SUSTAINED. 4.1. IN VIEW OF THIS ARGUMENT, BEFORE ADVERTING FURTHER, I DEEM IT APPROPRIATE TO CONSIDER VARIOUS DECISIONS FROM HON'BLE HIGH COURTS / HON'BLE APEX C OURT, SO THAT I CAN REACH TO A FAIR CONCLUSION. THE HON' BLE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 48 GUJARAT HIGH COURT IN SANJAY OILCAKES INDUSTRIES VS . CIT (2009) 316 ITR 274 (GUJ.) HELD AS UNDER:- 11. HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTERFERENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELLANEOUS APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDINGS:- '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF INCOME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF THE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 PER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHDRAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREATION OF THE ASSESSEE ITSELF FOR THE PURPOSE OF BANKING PURCHASES INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS WERE NOT FEASIBLE. THUS, THE ABOVENOTED PARTIES BECOME CONDUIT PIPES BETWEEN THE ASSESSEE-FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPOSSIBLE FOR THE ASSESSEE TO INFLATE THE PRICES OF RAW ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 49 MATERIALS. ACCORDINGLY, AN ADDITION AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY THE ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMIS SIONER OF INCOME-TAX (APPEALS).' 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FINDING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND THERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNTS. IN THE LIGHT OF THE AFORESAID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT CONCLUSION, DIFFERENT FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THAT THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE, THEREFORE, COME TO THE CONCLUSION THAT IN SUCH CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERIAL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MATCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PERSONS. THE ISSUE IS WHETHER THE PURCHASE PRICE PAID BY THE ASSESSEE IS REFLECTED AS RECEIPTS BY THE RECIPIENTS. THE ASSESSEE HAS, BY SET OF EVIDENCE AVAILABLE ON RECORD, MADE IT POSSIBLE FOR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF INQUIRY AS TO ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 50 WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, THE ESTIMATE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARRANT INTERFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM, CAN NEVER BE AN ISSUE OF LAW. IN THE AFORESAID CASE, THE HON'BLE HIGH COURT ACCEP TED THAT THE APPARENT SELLERS, WHO ISSUED THE SAID BILL S WERE NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES O THER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOODS. THE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKIN G PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPARENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A SITUATION, THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY T HE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHW ALA GEMS VS JCIT (2007) 158 TAXMAN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITABLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 51 4.2 THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (G UJ.) HELD/OBSERVED AS UNDER:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE FROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WERE NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD AND CAME TO THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOCK, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE ENTIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTENTION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NOT THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADER S AND ALSO MADE REFERENCE TO THE TRIBUNAL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST. CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATURAL COROLLARY, NOT ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 52 THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGMENT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 679 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED. 4.3. LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN C IT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (GUJ.) HELD/OBSERVED AS UNDER:- 6. AS IS APPARENT FROM THE FACTS NOTED HEREINABOVE, THE COMMISSIONER (APPEALS) AFTER APPRECIATING THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT MADE THE PURCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTEINS (SUPRA) RESTRICTED THE DISALLOWANCE TO 20 PER CENT. THE TRIBUNAL IN THE IMPUGNED ORDER HAS FOLLOWED ITS EARLIER ORDER IN THE CASE OF VIJAY PROTEINS TO THE LETTER AND ENHANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, THE DECISION OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM CAN NEVER BE A QUESTION OF LAW. 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [2007] 288 ITR 10 (SC) HAS HELD THAT IN A BEST ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 53 JUDGMENT ASSESSMENT THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORITIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT. 8. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECISIONS, THE DECISION OF T HE TRIBUNAL, BEING BASED ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRANT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUESTION (A) WHEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERTAINS TO THE DELETION OF ADDITION OF RS. 7,88,59 0 MADE ON ACCOUNT OF INFLATION OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. (MMTC), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNERSHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HI S FATHER AND BROTHER OPERATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE EVIDENCE ON RECORD, THE ASSESSING OFFICER DISALLOWED THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO MMTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GENUINENESS OF THE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 54 PURCHASES MADE FROM MMTC WHILE MAKING THE DISALLOWANCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISSIONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSESSEE- COMPANY, STILL IT COULD NOT BE EXPECTED THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PROVED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE COMPARABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND. THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECTED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT BE THE NET PROFIT I N THE HANDS OF MMTC ; AND THAT WHILE CONDUCTING THE ENTIRE EXERCISE MMTC WOULD HAVE TO INCUR CERTAIN EXPENDITURE IN TRANSPORTATION, IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WAS ACCORDINGLY OF THE VIEW THAT THERE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE ADDITION. 12. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS CONCURRED WITH THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) AND HAS FOUND THAT THE ASSESSEE HAD MADE PURCHASES FROM MMTC AT THE PREVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WOULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE. IN THE CIRCUMSTANCES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 13. THUS, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) AS WELL AS THE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 55 TRIBUNAL. IT IS NOT THE CASE OF THE REVENUE THAT TH E TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL OR THAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BEING POINTED OUT ON BEHALF OF THE REVENUE, THE IMPUGNED ORDER BEING BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPRECIATION OF THE EVIDENCE ON RECORD, DOES NOT GIVE RISE TO ANY QUESTION OF LAW I N SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,42 6 MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMINING THE EVIDENCE ON RECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,936 BEING DEPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIONER (APPEALS), UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PERMITTED BY THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY HAVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE AND SPARE PARTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISITION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (APPEALS), THE DISALLOWANCE COULD HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESSING OFFICER CONCLUSIVELY PROVED THAT THE PURCHASES OF CRANE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 56 AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSIONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNICAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RECEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; EXISTENCE OF THE CRANE EVEN TILL DATE WITH TH E ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS PURCHASED AND IT WAS IN USE EVEN AS ON DATE WITH THE ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEPRECIATION AS CLAIMED BY THE ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVIDENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND THE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (APPEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISALLOWANCE OF COST OF CRANE AS WELL AS DEPRECIATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDING THE SAME TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENCE OF ANY EVIDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CRANE IN FACT DID NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVED THE PURCHASE AND EXISTENCE OF ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 57 THE CRANE, AND HAD NOT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEEN MADE IN RESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPRECIATION BEEN DISALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSENCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, THE APPEAL IS DISMISSED. 4.4. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/2009) ORDER DATED 22/02/2011, OBSERVED/HELD AS UNDER:- THE QUESTION RAISED IN THIS APPEAL IS, WHETHER THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE REVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALES / PURCHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVOLVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTNESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE CONCERNED DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 58 SUPPLIES P. LTD. WHO HAD MADE THE ABOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIED UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL BEING BASED ON THE FACT, NO SUBSTANTIAL QUESTION OF LAW CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL. THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 4.5. THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESSEE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NORMAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NOT COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF THE REVENUE, IT WAS URGED THAT DETAILED INQUIRIES WERE MADE AND THEREAFTER TH E CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE. NO DOUBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT TH E EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTIES WERE BOGUS. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. HENCE, AT THE INSTANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED TO THIS COURT FOR OPINION. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 59 HAS ALSO POINTED OUT THAT NOTHING IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASSESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT IS FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH THE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, THE TRIBUNAL ULTIMATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE STATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHORT DURATION AND TH E PAYMENTS WERE GIVEN BY CHEQUES. WHEN THAT IS SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES O F THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT FIND THAT THE CONCLU SION ARRIVED AT BY THE TRIBUNAL IS AGAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. 4.6. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM . TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF PURCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERED DEALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THAT LEDGER ACCOUNTS OF THE PARTIES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUNTED ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 60 FOR, THAT PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FROM THE BANKER GIVING DETAILS OF CHEQU E PAYMENT TO THE SAID PARTIES WAS ALSO FURNISHED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING THAT MATERIAL PURCHASED WAS ACTUALLY DELIVERED AT THE SITE WAS FURNISHED BEFORE THE AO. IT WAS ALSO ARGUED THAT SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIES WERE LYING PART OF CLOSING STOCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITTED ON RECORD. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MADE TO THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WITH BANK CERTIFICATE HAT THE SUPPLIERS WAS SHOWN AS DEFAULT UNDER THE MAHARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WERE NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY INDEPENDENT AND RELIABLE EVIDENCES AGAINST THE ASSESSEE TO PROVE THE NON-GENUINENESS OF THE PURCHASES, THAT THERE WAS NO EVIDENCE REGARDING CASH RECEIVED BACK FROM THE SUPPLIERS. FINALLY, HE DELETED THE ADDITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY THE ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF WESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010-DATED 13.11.2013). AUTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYMENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STATEMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK,THAT THE TRANSPORTER HAD ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE.HE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 61 RELIED UPON THE CASE OF BABULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF T HE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO , ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THERERFORE, CONSIDERING T HE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORS E THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO . ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 62 4.7. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS NIKUNJ EXIM ENTERPRISES PVT. LTD. (2015) 372 ITR 61 9 (BOM.) HELD/OBSERVED AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DATED APRIL 30, 2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT, I.E., RECONCILIATION STATEMENT BUT ALSO IN VIEW OF THE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNT OF THE RESPONDENT-ASSESSEE HAVE NOT BEEN REJECTED. SIMILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME-TAX (APPEALS), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT-ASSESSEE. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME-TAX (APPEALS) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS. 1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED APRIL 30, 2010, OF THE TRIBUNAL. ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 63 4.8 IF THE RATIO LAID DOWN BY HON'BLE JURISDICTION AL HIGH COURT IN THE AFORESAID CASE OF M/S NIKUNJ EXIM P. ENTERPRISES PVT. LTD.((SUPRA)) IS ANALYZED WITH FAC TS OF THE PRESENT APPEAL, AS DISCUSSED EARLIER, THE ASSESSEE DECLARED TOTAL INCOME OF RS.3,07,840/- IN HIS RETURN ON 18/09/2009, WHICH WAS PROCESSED UNDER SECTION 143(1 ) OF THE ACT. UNDISPUTEDLY, THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF TRADING/SUPPLIER OF FERROUS AND NON-FER ROUS METAL UNDER THE NAME AND STYLE OF PROPRIETARY CONCE RN M/S MUKESH STEELS. THE LD. ASSESSING OFFICER RECEIV ED INFORMATION THAT A SCAM WAS UNEARTHED BY THE SALES TAX DEPARTMENT WITH RESPECT TO DEALERS WHO ARE PROVIDIN G ACCOMMODATION ENTRIES IN THE FORM OF BOGUS BILLS WI THOUT EFFECTING THE ACTUALLY DELIVERY OF GOODS. THE SAID INFORMATION WAS BASED UPON CERTAIN STATEMENTS/DEPOSITION/AFFIDAVITS FILED BEFORE THE S ALES TAX AUTHORITIES. THE LIST OF THE CONCERNED PARTIES WAS FORWARDED TO THE LD. ASSESSING OFFICER BY THE INVES TIGATION WING AND THE ASSESSEE WAS FOUND ONE OF THE BENEFICI ARY OF SUCH BOGUS BILLS. THE DETAILS OF WHICH ARE AVAILABL E AT ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 64 PAGE-1 OF THE ASSESSMENT ORDER. THE LD. ASSESSING O FFICER OBSERVED THAT THERE IS SUPPRESSION OF PRIMARY FACTS IN THE RETURN OF THE ASSESSEE AND THE INCOME WAS FOUND TO BE ESCAPED FROM THE ASSESSMENT. ONE UNDISPUTED FACT IS OOZING OUT THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE GENUINENESS OF THE PURCHASES MADE FROM HAWALA PARTI ES IN THE FORM OF ACCOMMODATION ENTRIES OUT OF THESE N ON- GENUINE TRANSACTIONS. EVEN VIDE LETTER DATED 25/02/ 2015, THE ASSESSEE WAS ASKED TO ESTABLISH THE GENUINENESS OF THE PARTIES AND THE PURCHASES MADE FROM THEM. THE ASSESSEE WAS PROVIDED OPPORTUNITY TO PRODUCE THE PA RTIES ALONG WITH BOOKS OF ACCOUNTS AS THESE PARTIES WERE FOUND NON-EXISTENCE (PARA-4.1 OF THE ASSESSMENT ORDER). THE ASSESSEE WAS FOUND INDULGED IN NON-GENUINE TRANSACT ION WITH THE INTENSION TO SUPPRESS THE TRUE PROFIT AND TO REDUCE THE TAX LIABILITY. THE LD. ASSESSING OFFICER ESTIMATED THE PROFIT @ 25% OF SUCH BOGUS PURCHASES OF RS.91,96,666/-. IT IS NOTED THAT THE LD. COMMISSION ER OF INCOME TAX (APPEAL) REDUCED THE PROFIT @ 6.50% OF S UCH BOGUS PURCHASES, WHICH IS UNDER CHALLENGE BEFORE TH IS ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 65 TRIBUNAL. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. DR, IF KEPT IN JUXTAPOSITION AND ANALYZED, IT IS A FACT THAT THE A SSESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASES AN D EVEN THE CONCERNED PARTIES WERE NOT FOUND EXISTENCE AT THE GIVEN ADDRESSES AS THE NOTICES ISSUED UNDER SEC TION 133(6) OF THE ACT WERE RETURNED UNSERVED BY THE POS TAL AUTHORITIES WITH THE REMARK NOT KNOWN OR LEFT. EVEN ON ASKING THE BY THE LD. ASSESSING OFFICER, THE ASS ESSEE COULD NOT PRODUCE SUCH PARTIES OR THEIR RECORD. THU S, I FIND MERIT IN THE ARGUMENT OF THE LD. DR IN MAKING THE ADDITION BY THE LD. ASSESSING OFFICER. IT IS NOTED THAT THE ADDITION HAS BEEN MADE BY THE LD. ASSESSING OFFICER MERELY ON THE BASIS OF INFORMATION FROM THE SALES T AX DEPARTMENT ABOUT BOGUS BILLERS AND RATHER INDEPENDE NT INVESTIGATION/ENQUIRIES WERE MADE BY THE LD. ASSESS ING OFFICER AND EVEN THE ASSESSEE WAS DULY CONFRONTED W ITH THE SAME. EVIDENTLY, THE ASSESSEE HAS ADOPTED A MOD US- ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 66 OPERANDI TO REDUCE THE TRUE PROFIT BY INFLATING EXP ENSES INCLUDING PURCHASES EXPENSES BY TAKEN ACCOMMODATION ENTRIES FROM SUCH BOGUS PARTIES. IT IS ALSO OBSERVE D THAT THE ONUS CAST UPON THE ASSESSEE WAS NEVER DISCHARGE D. EVEN ON ASKING BY THE LD. ASSESSING OFFICER TO PROD UCE THE HAWALA DEALERS FOR CROSS EXAMINATION, THE ASSES SEE FAILED TO DO SO AND THUS THE PURCHASES REMAINED UNVERIFIABLE. THE ASSESSEE COULD NOT FILE THE VITAL DOCUMENTS SUCH AS DELIVERY CHALLANS, TRANSPORT RECE IPTS, OCTROI RECEIPT FOR PAYMENT OCTROI DUTY, RECEIPT OF WEIGHBRIDGE FOR WEIGHING THE GOODS, EXCISE GATE PAS S, GOODS INWARD REGISTER, MAINTAINED AT GODOWN/WAREHOUSE/STORAGE PLACE ETC. EVEN THE SALES TAX DEPARTMENT CERTIFIES THAT THE CONCERNED PARTIES ARE HAWALA OPERATORS EVEN THAT TO CONDUCTING INDEPENDEN T ENQUIRIES. IT IS EVIDENTLY CLEAR THAT THE ASSESSEE DID NOT MAKE ANY EFFORT TO CONTROVERT THE FINDING OF THE INVESTIGATION WING AND FURTHER TO PRODUCE THE SELLE R PARTIES. AT THE SAME TIME, THE PROFITABILITY @25% IS HIGHLY EXCESSIVE, THEREFORE, I DEEM IT APPROPRIATE TO REDU CE THE ITA NO.2241/ MUM/2018 RAKESH MOTIAL JAIN 67 GROSS PROFIT @12.5% OF SUCH BOGUS PURCHASES AS AGAI NST 25% MADE BY THE LD. ASSESSING OFFICER AND 6.50% SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). THE APPEAL OF THE ASSESSEE IS DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 07/01/2019. SD/- (JOGINDER SINGH) '() / VICE PRESIDENT MUMBAI; ' DATED : 16/01/2019 F{X~{T? P.S / #$ $&'*+,-.$-/, / COPY OF THE ORDER FORWARDED TO : 1. %&'( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. ++ , ( %& ) / THE CIT, MUMBAI. 4. ++ , / CIT(A)- , MUMBAI 5. /01)# , +%&%#3 , / DR, ITAT, MUMBAI 6. 145& / GUARD FILE. $& / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI