Purnima Advertising Agency Pvt.Ltd., V. The Dy.CIT., Circle-5,

ITA 2331/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6368 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 19-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI RAJ KUMARDR
• Assessee Lawyers: G S PATEL
• Keywords: Reopening of assessment; Depreciation; Opportunity of being heard; Retrospective amendment; Bad and doubtful debts; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.2331/AHD/2008 (ASSESSMENT YEAR:-2001-02) PURNIMA ADVERTISING AGENCY PVT. LTD., 35, SHRIMALI SOCIETY, OPP. NAVRANGPURA POLICE STATION, NAVRANGPURA, AHMEDABAD V/S DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, AHMEDABAD PAN: AAACP 9266 G [APPELLANT] [RESPONDENT] ITA NO.2555/AHD/2008 (ASSESSMENT YEAR:-2001-02) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, AHMEDABAD V/S PURNIMA ADVERTISING AGENCY PVT. LTD., 35, SHRIMALI SOCIETY, OPP. NAVRANGPURA POLICE STATION, NAVRANGPURA, AHMEDABAD [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI G S PATEL, AR REVENUE BY:- SHRI JAI RAJ KUMAR,DR O R D E R A N PAHUJA: THESE CROSS APPEALS AGAINST AN ORDER DATED 16-04- 2008 OF THE LD. CIT(APPEALS)-XI, AHMEDABAD, FOR TH E ASSESSMENT YEAR 2001-02,RAISE THE FOLLOWING GROUNDS:- ITA NO.2331/AHD/2008[ASSESSEE] [1](I) THE APPELLANTS SUBMIT THAT THE ID CIT(A) HAS ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT U/S147AS PER NOTICE U/S 148 DATED 28-11- 2006 FOR A. Y.2001-2002, AGAINST THE ORIGINAL ASSES SMENT U/S 143(3) DATED 24-11-2003, ON THE FINDING IN PARA 2.1 -2 OF HIS ORDER THAT THE AO HAS ELABORATED THE PROCEDURE FOLLOWED B Y HIM FOR REOPENING THE ASSESSMENT U/S 147. [1](II)THE APPELLANTS FURTHER SUBMIT THAT THERE IS NO ALLEGATION IN THE REASONS RECORDED BY THE A.O. U/S 148 THAT THE ASSES SEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS 2 ITA NO.2331 & 2555/AHD/2008 2 ASSESSMENT FOR THAT ASSESSMENT YEAR. AS SUCH, THE A PPELLANTS SUBMIT THAT THE ID CIT(A) HAS ERRED IN CONFIRMING T HE ASSESSMENT U/S 147 READ WITH SECTION 148 OF I.T. ACT WHICH IS ILLEGAL AND BEYOND JURISDICTION AS PER PROVISO TO SECTION 147 OF IT AC T. [2](I)THE APPELLANTS SUBMIT THAT THE ID CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCES OF BAD DEBTS OF RS.12,90,996/- AND OF RS.26250/- MADE BY THE AO U/S 36(1)(VII) ON THE FINDING IN PAR A 3-1-3 OF HIS ORDER THAT THE APPELLANT HAS NOT RAISED THE SIMILAR REASON FOR CLAIMING THE DEBTS OF RS.1317246/- (RS.1290996 AND RS.26250) AS BAD DEBTS AND HENCE CAN NOT MAKE SIMILAR CLAIM FOR THESE DEBTS AND RELY UPON HON. ITAT'S ORDER. [2](II)THE APPELLANTS FURTHER SUBMIT THAT THE LD. C IT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.26250/- BEING BAD DEBTS PERTAINING TO PRAGATI UTSAV FILMS AS ESCAPED INCOME THOUGH REASONS RECORDED U/S 148 DO NOT INCLUDE THE SAID IS SUE FOR REOPENING THE ASSESSMENT U/S 147. AS SUCH THE DISAL LOWANCE OF RS.26250/-, CONFIRMED BY THE LD. CIT(A) IS WITHOUT JURISDICTION AND ILLEGAL, AS PER PROVISO TO SECTION 147 OF I.T. ACT. [3] THE APPELLANTS SUBMIT THAT THE LD. CIT(A) HAS E RRED IN DIRECTING THE AO TO VERIFY THE RELEVANT DETAILS WITH REGARD TO TH E ADDITION OF RS.24,12,200/- BEING ADVERTISEMENT EXPENSES INSTEAD OF DELETING THE ADDITION OF RS.24,12,200/- AS CLAIMED BY THE AP PELLANTS. ALSO THE SAID ADDITION IS ILLEGAL AND WITHOUT JURISDICTI ON AS PER PROVISO TO SECTION 147 OF I.T. ACT. [4](I)THE APPELLANTS SUBMIT THAT THE INTEREST OF RS .11,18,650/- CHARGED U/S 234B BY THE AO IS ILLEGAL AND HENCE BE CANCELLED, A S THE ASSESSMENT U/S 147 IS NOT REGULAR ASSESSMENT. [4](II)THE APPELLANTS FURTHER SUBMIT THAT THE CALCU LATION OF INTEREST OF RS.11,18,650/- U/S 234B IS ILLEGAL. [5] THE APPELLANTS SUBMIT THAT THE INTEREST OF RS.6 8,169/- CHARGED U/S 234D BY THE A.O. IS ILLEGAL AND HENCE BE CANCELLED. ITA NO.2555/AHD/2008[REVENUE] [1] THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFI CER TO VERIFY THE RELEVANT DETAILS OF THE ADVERTISEMENT EXPENSES AFTE R GIVING THE OPPORTUNITY OF BEING HEARD AS WELL AS ALLOW THE EXP ENSES CLAIMED. IF THE EXPENSES AS CLAIMED ARE TO BE ALLOWED, THERE IS NO RELEVANCE OR NEED FOR GIVING THE ASSESSEE AN OPPORTUNITY OF BEIN G HEARD. [2] ALL THE RELEVANT DETAILS OF THE ADVERTISEMENT E XPENSE ACCOUNT ARE AVAILABLE ON FILE AND PROPER AND ADEQUATE OPPORTUNI TY OF BEING 3 ITA NO.2331 & 2555/AHD/2008 3 HEARD HAD BEEN GIVEN TO THE ASSESSEE, HENCE THE LEA RNED COMMISSIONER OF INCOME-TAX(A)-XI OUGHT TO HAVE UPHE LD THE ORDER OF THE ASSESSING OFFICER INSTEAD OF SETTING IT ASID E. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [4] IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD . CIT (A)-XI, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 2. AFTER FILING OF APPEAL ON 19.6.2008, THE ASSES SEE VIDE APPLICATION DATED 16-07-2008, RAISED THE FOLLOWING ADDITIONAL GROUND:- THE APPELLANTS SUBMIT THAT THE ASSESSMENT DATED 20 -12-2007 U/S 147 R.W.S. 143(3) IS ILLEGAL AND BAD IN LAW AS THE ASSESSMENT PROCEEDINGS WERE PENDING WITH HON. TRIBUNAL AND WER E NOT COMPLETED WHEN THE NOTICE U/S 148 DATED 28-11-2006 WAS ISSUED TO THE APPELLANTS IN VIEW OF THE FACT THAT THE APPEALS FILED BY THE APPELLANTS AND BY THE DEPARTMENT AGAINST THE ORIGIN AL ORDER DATED 24-11-2003 U/S 143(3) WITH HON. TRIBUNAL WERE PENDI NG FOR DISPOSAL. THE APPEAL OF THE DEPARTMENT WAS DISMISSED BY THE H ON. TRIBUNAL AS PER ORDER DATED 14-12-2007 AND THE APPEAL BY THE APPELLANTS IS STILL PENDING. AS SUCH, AS PER LAW ALREADY SETTLED ON THIS ISSUE, THE NOTICE U/S 148 AND ASSESSMENT COMPLETED U/S 147 ON 20-12-2007 BEING ILLEGAL AND BAD IN LAW BE CANCELLED. 3. THOUGH THE LD. AR RELIED UPON A DECISION OF HONBLE BOMBAY HIGH COURT IN METRO AUTO CORPORATION VS. ITO & O THERS,286 ITR 618(BOM.), IN SUPPORT OF THEIR REQUEST FOR ADMISSIO N OF ADDITIONAL GROUND OF APPEAL, THE LD. AR DID NOT DEMONSTRATE BE FORE US AS TO HOW THE FACTS AND CIRCUMSTANCES IN THE CITED DECI SION ARE PARI MATERIA TO THE FACTS AND CIRCUMSTANCES IN THE INSTA NT CASE NOR ADDUCED ANY REASONS AS TO WHY THE SAID GROUND WAS N OT RAISED EARLIER. THE LD. DR APPEARING BEFORE US VEHMENTLY O PPOSED THE ADMISSION OF THE AFORESAID ADDITIONAL GROUND ,FACTS BEING ALTOGETHER DIFFERENT IN THE DECISION OF HONBLE BOMBAY HIGH CO URT IN METRO AUTO CORPORATION(SUPRA). SINCE THE RELEVANT FACTS AND CI RCUMSTANCES IN 4 ITA NO.2331 & 2555/AHD/2008 4 RELATION TO AFORESAID ADDITIONAL GROUND HAVE NOT B EEN PLACED BEFORE US BY THE LD. AR ON BEHALF OF THE ASSESSE, WE ARE NOT INCLINED TO ADMIT THE AFORESAID ADDITIONAL GROUND . EVEN OTHERW ISE, THE TRIBUNAL IS NOT DUTY BOUND TO ADMIT THE ADDITIONAL GROUND WHEN THE ASSESSEE DID NOT EVEN WHISPER THE CIRCUMSTANCES AS TO WHY SUCH GROUND COU LD NOT BE RAISED EARLIER AT THE TIME OF FILING OF THE APPEAL. THE DISCRETION VE STED IN THE JUDICIAL AUTHORITY CANNOT BE EXERCISED ARBITRARILY. THERE IS A DUTY UP ON THE TRIBUNAL TO EXERCISE THE DISCRETION IN A MOST JUDICIAL MANNER. WHEN THE REQU IREMENT OF LAW IS TO SATISFY THE TRIBUNAL ABOUT THE EXISTENCE OF GOOD REASONS FOR TH E OMISSION OF THE GROUND IN THE ORIGINAL APPEAL THEN ON THE FAILURE OF THE ASSE SSEE OR HIS REPRESENTATIVE TO GIVE ANY REASON MUCH LESS A GOOD REASON FOR THE OMI SSION, THE CONSEQUENCES ARE OBVIOUS. IN THE GIVEN CIRCUMSTANCES, CONSIDERIN G THE TOTALITY OF FACTS AND IN THE ABSENCE OF ANY REASONS, WE THEREFORE, DECLINE T O ADMIT THE ADDITIONAL GROUND SOUGHT TO BE TAKEN BEFORE US BY THE ASSESSEE . 4. ADVERTING NOW TO GROUND NOS.[1](I) AND (II) IN T HE APPEAL OF THE ASSESSEE , FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.93,88,660/- WAS FILED BY AS SESSEE-COMPANY ON 17-10-2001. SUBSEQUENTLY, ASSESSMENT U/S 143(3) OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ], WAS FINALIZED ON 24-11-2003, DETERMINING TOTAL INCOME OF RS.1,18,87, 220/- AFTER MAKING VARIOUS DISALLOWANCES / ADDITIONS. LATER T HE TOTAL INCOME WAS REVISED TO RS.1,13,16,165/- ON GIVING EFFECT TO THE ORDER OF THE LD. CIT(A). THEREAFTER, THE ASSESSMENT WAS REOPENED WITH THE ISSUE OF A NOTICE U/S 148 OF THE ACT ON 28-11-2006 AFTER RECORDING REASONS AND OBTAINING APPROVAL OF CIT. IN RESPONSE, THE ASS ESSEE-COMPANY FILED ITS RETURN ON 12-12-2006 DECLARING TOTAL INCO ME OF RS.93,88,660/-. 4.1 THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BECAUSE THE AO HAD REASON TO BELIEVE THAT THAT DUE TO INCORRECT CLAIM OF THE ASSESSEE FOR DEDUCTION OF CERTAIN EXPENDITURE , IN COME HAVE 5 ITA NO.2331 & 2555/AHD/2008 5 ESCAPED ASSESSMENT. THE AO RECORDED THE FOLLOWING R EASONS [PAGE 9 OF THE PB] BEFORE REOPENING THE ASSESSMENT :- THE ASSESSEE COMPANY HAS FILED ITS RETURN OF INCOME ON 17.10.2001DECLARING TOTAL INCOME AT RS.93,88,660/. SUBSEQUENTLY THE ASSESSMENT U/S 143(3) WAS FINALISE D ON 24.11.2003 DETERMINING TOTAL INCOME AT RS.1,18,87,2 16/- AFTER MAKING VARIOUS ADDITIONS/ DISALLOWANCES. ON VERIFICATION OF THE RECORDS, IT IS NOTIC ED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS C LAIMED THE FOLLOWING EXPENDITURES/DEDUCTIONS, WHICH HAVE E SCAPED ASSESSMENT:- 1) BAD DEBTS OF RS.12,90,996/- WRITTEN OFF IN THE N AME OF HYNOUP FOOD & INDUSTRIES LTD. 2) DEPRECIATION ON BUILDING AT MUMBAI OFFICE OF RS.2,63,882/-. 3) PROVISIONS FOR ADVERTISEMENT EXPENSES OF RS.24,1 2,200/- ON WHICH BILLS WERE NOT RECEIVED DURING THE PREVIOU S YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION . IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR AY 2001-02 TO THE TUNE OF RS.39,67,078/- AND ACCORDING LY THE ASSESSMENT IS REQUIRED TO BE REOPENED U/S 147 OF TH E IT ACT. 4.2 DURING THE COURSE OF REASSESSMENT PROCEEDING S ,THE ASSESSEE VIDE LETTER DATED 28-08-2007 RAISED FOLLOWING OBJEC TIONS AGAINST RE- OPENING OF THE ASSESSMENT :- (I) THE NOTICE U/S 148 OF THE IT ACT IS BAD IN LAW AND CAN NOT BE ISSUED BEYOND FOUR YEARS. (II) THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF TH E ACT AFTER VERIFYING ALL THE DETAILS CALLED FOR AND DISC USSING THE SAME AS MENTIONED IN PARA-2 OF THE ASSESSMENT ORDER . (III) THERE WAS NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE RETURN U/S.139(1) AS CONTEMPLATED IN CLAUSE (A) OF SECTION 147, NOR WAS THERE ANY INFORM ATION IN THE POSSESSION OF THE ASSESSING OFFICER OBTAINED 6 ITA NO.2331 & 2555/AHD/2008 6 SUBSEQUENT TO THE ASSESSMENT ORDER WHICH CAN JUSTIF Y ISSUANCE OF NOTICE U/S. 148. (IV) THE ASSESSEE HAS FULLY AND TRULY DISCLOSED ALL THE FACTS, PARTICULARS AND EVIDENCES CALLED FOR AND NO NEW FAC TS HAVE COME ON RECORD FOR THE RE-ASSESSMENT PROCEEDIN GS UNDER CLAUSE (C) TO EXPLANATION 2 TO PROVISO TO SEC TION 147 OF THE ACT. 4.3 HOWEVER, THE AO REJECTED THE AFORESAID CONTENT IONS OF THE ASSESSEE IN THE FOLLOWING WORDS :- 3.2. THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST ISSUE OF NOTICE U/S. 148 AND REASSESSMENT PROCEEDINGS HAVE BEEN CONSIDER ED CAREFULLY, AS PER THE SETTLED POSITION OF LAW, REASONS FOR RE-OPE NING OF THE ASSESSMENTS HAVE BEEN RECORDED BEFORE ISSUE OF NOTICE U/S.148 O F THE ACT IN ACCORDANCE WITH THE PROVISIONS OF LAW. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT WERE SUPPLIED TO THE ASSESSEE. THE R EASONS RECORDED SPECIFICALLY SPEAK ABOUT ESCAPEMENT OF INCOME. IN T HE INSTANT CASE, THE ASSESSEE COMPANY HAS WRITTEN OFF BAD DEBT OF RS.12, 90,996/- IN THE NAME OF HYNOUP FOOD INDUSTRIES LTD., DEPRECIATION WAS CL AIMED ON BUILDING AT MUMBAI OFFICE OF RS.2,63,882/- AND ALSO PROVISIONS WERE FOR ADVERTISEMENT EXPENSES OF RS.24,12,200 ON WHICH BILLS WERE NOT RE CEIVED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CON SIDERATION. THE DEPARTMENT HAD REASON TO BELIEVE THAT INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT BECAUSE OF THE FACT THAT PROPER VERIFICATION OF THE ABOVE CLAIMS MADE BY THE ASSESSEE WERE NOT MADE. 3.3 AFTER THE INTRODUCTION OF CHANGES IN THE PROVIS IONS OF SECTION 147 OF THE ACT, W.E.F. 1.4.1989, THE SCOPE OF RE-ASSESSMEN T HAS BEEN WIDENED. AFTER THE AMENDMENT, THE ONLY RESTRICTION PUT IN TH E SECTION IS 'REASON TO BELIEVE'. THAT REASON HAS TO BE A REASON OF A PRU DENT PERSON AND SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE A SSESSEE TO DISCLOSE FULLY OR PARTIALLY SOME MATERIAL FACTS RELEVANT FOR THE A SSESSMENT. IF ANY ITEM HAS ESCAPED FROM ASSESSMENT WHICH WAS OTHERWISE INC LUDIBLE WITHIN THE ASSESSMENT AND THE ASSESSING OFFICER NOTICES IT SUB SEQUENTLY BY HIS OWN INVESTIGATIONS OR BY REASONS OF SOME INFORMATION RE CEIVED BY HIM, ONE CANNOT SAY THAT IT CONSTITUTES CHANGE OF OPINION - PRAFUL CHUNILAL PATEL VS. ITO - 236 ITR 832 (GUJ). THE EXPLANATION (1) TO THE PROVISO LAID U/S.147 OF THE ACT, STATES THAT MERE PRODUCTION OF ACCOUNT BOO KS FROM WHICH MATERIAL EVIDENCE COULD HAVE BEEN DISCOVERED BY THE ASSESSIN G OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO. THEREFORE, MERE PRODUCTION OF THE BALANCE SHEET, P& L A/C OR ACCOUNT BOOKS WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WIT HIN THE MEANING OF THE PROVISO. NOTWITHSTANDING, SINCE THE ASSESSEE'S CASE HAS BEEN RE-OPENED WITHIN FOUR YEARS, PROVISO TO SECTION 147 OF THE AC T IS NOT EVEN APPLICABLE. IF THE ASSESSING OFFICER OVERLOOKED CERTAIN ITEMS A T THE TIME OF PASSING THE ORIGINAL ORDER OF ASSESSMENT AND HE NOTICED IT SUBS EQUENTLY, HE COULD NOT 7 ITA NO.2331 & 2555/AHD/2008 7 BE SAID TO NAVE OPINED ON THE ABOVE ITEMS - DR. AMI N'S PATHOLOGY LABORATORY - 252 ITR 673 (BOM). IN VIEW OF THE LAW LAID BY VARIOUS HON'BLE HIGH COURTS, IT IS CLEAR THAT ASSESSMENT CAN BE RE- OPENED IF ANY ITEM WENT UNNOTICED IN THE ASSESSMENT COMPLETED EARLIER. THE ASSESSMENT IN THE CASE OF ASSESSEE HAS BEEN REOPENED VALIDLY AFTER FO LLOWING PROPER PROCEDURE AS PRESCRIBED IN THE LAW. THE ASSESSEE'S OBJECTIONS AGAINST THE RE-ASSESSMENT PROCEEDINGS ARE THEREFORE, REJECTED A ND I PROCEED TO FINALIZE THE ASSESSMENT ON FACT AND MERITS OF THE C ASE. 4.4 ACCORDINGLY, REASSESSMENT WAS COMPLETED WIT H THE DISALLOWANCE OF RS.13,17,246/- ON ACCOUNT OF BAD DE BTS AND RS.24,12,200/- ON ACCOUNT OF PROVISION FOR ADVERTIS EMENT EXPENSES. 5. ON APPEAL ,THE LEARNED CIT(A) REJECTED THE PLEA OF THE ASSESSEE AGAINST VALIDITY OF REOPENING OF THE ASSES SMENT ON THE GROUND THAT THE AO ELABORATED THE PROCEDURE FOLLOW ED BY HIM WHEN THE ASSESSEE RAISED SIMILAR OBJECTIONS DURING THE ASSES SMENT PROCEEDINGS AND THEREFORE, THE OBJECTIONS RAISED BY THE APPELLANT R EGARDING REOPENING OF ASSESSMENT COULD NOT BE SUSTAINED. 6. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A).THE LEARNED AR ON BE HALF OF THE ASSESSEE IN HIS WRITTEN SUBMISSIONS CONTENDED THAT THE ASSESSEE DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS IN THE RETURN AND AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT WHEREIN ( 1) THE BAD DEBTS OF RS.18,88,301/- WERE DISCLOSED AS WRITTEN OFF TO P&L A/C AND (2) THE PROVISION FOR ADVERTISEMENT EXPENSES OF RS.24,1 2,200/-WAS DISCLOSED IN THE SCHEDULE OF BALANCE SHEET. THE REL EVANT DETAILS WERE FILED DURING THE ORIGINAL ASSESSMENT PROCEEDIN GS IN REPLY TO SCRUTINY NOTICE DATED 20-01-2003 .THERE WAS NO FIND ING RECORDED BY THE AO EITHER IN THE REASONS OR IN THE REASSESSMENT ORDER DATED 20- 12-2007 THAT THE ASSESSEE DID NOT DISCLOSE FULLY AN D TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT . INT ER ALIA,THE ASSESSEE RELIED ON DECISIONS IN KAIRA DISTRICT CO -OPERATIVE MILK PRODUCERS' UNION LIMITED. VS ASSISTANT COMMISSIONER OF INCOME-TAX (NO. 1),216 ITR 371 (GUJ) ; KRISHNA METAL INDUSTRIES. VS H. M. ALGOTAR,225 ITR 853 8 ITA NO.2331 & 2555/AHD/2008 8 (GUJ); AVANI CORPORATION VS. ITO, 238 ITR 407(GUJ) ; ARVIND MILLS LTD. VS DEPUTY COMMISSIONER OF INCOME-TAX (ASSESSMENT),242 ITR 173 (GUJ); AND PATIDAR OIL CAKE INDUSTRIES. VS DEPUTY COMMISSIONER OF INCOME TAX,270 ITR 347 (GUJ) APART FROM DECISIONS IN GUJARAT CARBO N AND INDUSTRIAL LTD. VS. JT. CIT [2008] 307 ITR 271 (GUJ); GUJARAT FLUOROCHEMICALS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX [2009] 319 ITR 282 (GUJ); NIKHIL K KOTAK VS. MAHESH KUMAR, AO [2009] 319 ITR 445 (GUJ); CADILA HEALTHCA RE LTD. VS. DY. CIT [2010] 41 DTR 145 (GUJ); MIHIR TEXTILES LTD. VS . JT. CIT [2010] 43 DTR 11 (GUJ) AND SADBHAV ENGINEERING LTD. VS. DY . CIT [2010] 45 DTR 103 (GUJ). IT WAS FURTHER POINTED OUT THAT THERE WAS ONLY CHANGE OF OPINION BY THE AO BASED ON RE-APPRECIATIO N OF MATERIAL POSSESSED AT THE TIME OF THE ORIGINAL ASSESSMENT U/ S 143(3) OF THE ACT IN THIS CONNECTION, THE ASSESSEE RELIED ON GAR DEN SILK MILLS LIMITED. VS DEPUTY COMMISSIONER OF INCOME-TAX (NO. 2) ,222 ITR 68 (GUJ) AND SESA GOA LIMITED.VS JOINT COMMISSIONER OF INCOME-TAX AND OTHERS.,294 IT R 101 (BOMB).THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE FINDINGS IN THE IMPUGNED ORDERS. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON ON BEHAL F OF THE ASSESSEE. AS IS APPARENT FROM THE FACTS NARRATED I N THE IMPUGNED ORDERS AND THE REASONS RECORDED BY THE AO, NO OMISS ION AND/OR FAILURE ON THE PART OF THE ASSESSEE HAS BEEN ATTRIB UTED IN RELATION TO DISCLOSURE OF MATERIAL FACTS, FULLY AND TRULY, RELA TING TO THE ASSESSMENT NOR THE LD. DR ASCRIBED ANY SUCH FAILUR E TO THE ASSESSEE .IN FACT, THE LD. DR MERELY RELIED UPON TH E FINDINGS OF THE LD. CIT(A). WE FIND THAT ALL THE NECESSARY DETAILS ,FORMING THE BASIS FOR CLAIM OF DEDUCTION BAD DEBTS AND ADVERTISEMENT EXPENSES, WERE AVAILABLE WITH THE AO EVEN AT THE TIME OF FINALIZIN G THE INITIAL ASSESSMENT COMPLETED U/S 143(3) OF THE ACT ON 24.11 .2003. ON THE BASIS OF SAME MATERIAL, IF THE AO TAKES A DIFFERENT VIEW SUBSEQUENTLY, AFTER EXPIRY OF 4 YEARS FROM THE EN D OF THE 9 ITA NO.2331 & 2555/AHD/2008 9 ASSESSMENT YEAR, THAT WOULD NOT CONFER ANY JURISDIC TION ON THE AO TO ISSUE NOTICE U/S 148 OF THE ACT. THE SCOPE AND EFFE CT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS A LSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISION S OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMST ANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSES SMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDIC TION UNDER SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE S ATISFIED- FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE T HAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCA PED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE TH AT SUCH ESCAPEMENT OCCURRED DUE TO REASON OF EITHER OMISS ION OR FAILURE ON THE PART OF THE TAXPAYER TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THE SE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE TH E ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UND ER SECTION 148 READ WITH SECTION 147(A).BUT UNDER THE SUBSTITUTED SECTI ON 147, EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORD S IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPE N THE ASSESSMENT. HOWEVER, BOTH THE CONDITIONS MUST BE FU LFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTI ON 147. SINCE IN THE CASE UNDER CONSIDERATION, NOTICE U/S 148 HAD BEEN I SSUED ONLY ON 1.12.2006 THAT IS AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, APPARENTLY, THE ISSUE THAT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THERE WAS ANY OMISSI ON OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS ? NO SUCH FAILURE IS EITHER EVIDENT FROM THE IMPUGNED ORDER NOR HAS BEEN POINTED OUT BEFORE US BY THE LD. DR. UNDISPUTEDLY, THE AO CHOSE TO REOPEN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT AFTER RE CORDING REASONS, WHEREIN NO SUCH FAILURE AS HAS BEEN ENVISAGED IN PROVISO TO SEC. 147 OF THE ACT, HAS BEEN ATTRIBUTED TO THE ASSESSEE . IN RAKESH 10 ITA NO.2331 & 2555/AHD/2008 10 AGGARWAL V. ASST. CIT [1997] 225 ITR 496, HONBLE D ELHI HIGH COURT HELD THAT IN VIEW OF THE PROVISO TO SECTION 147, NO TICE FOR REASSESSMENT UNDER SECTION 148 WOULD BE ILLEGAL IF ISSUED MORE THAN FOUR YEARS AFTER THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS FAILURE IS ASCRIBED TO THE ASSESSEE IN DISCLOSING F ULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. HONBL E GUJRAT HIGH COURT WHILE ADJUDICATING A SIMILAR ISSUE HELD IN S HREE THARAD JAIN YUVAK MANDAL V. ITO [2000] 242 ITR 612 AS UNDER: A PERUSAL OF THE AFORESAID PROVISION GOES TO SHOW T HAT UNDER THE PROVISO TO SECTION 147, THE FOUNDATION OF CONFERRIN G JURISDICTION ON THE ASSESSING OFFICER TO ASSESS OR REASSESS THE INC OME FOR ANY ASSESSMENT YEAR BEYOND THE END OF FOUR YEARS FROM T HE END OF RELEVANT ASSESSMENT YEAR MUST BE OMISSION OR FAILUR E ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR AND THAT THE INCOME-TAX OF FICER HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT FOR THAT YEAR. IN THE ABSENCE OF ANY SUC H OMISSION OR FAILURE ON THE PART OF THE ASSESSEE, TAKING ACTION FOR ASSESSMENT OR REASSESSMENT IS NOT PERMISSIBLE FOR ANY YEAR AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. THE SCOPE OF THE ASSESSEE'S DUTY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT IN THE CONT EXT OF THE PROVISIONS OF SECTION 34 OF THE INDIAN INCOME-TAX A CT, 1922, HAS BEEN SUCCINCTLY STATED BY THE SUPREME COURT BY THEI R LORDSHIPS IN CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 . THE COURT OBSERVED: 'THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING ALL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUEST ION BEFORE THE ASSESSING AUTHORITY LIES ON THE ASSESSEE.' THE COURT FURTHER SAID: 'DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS? IN OUR OPINION, TH E ANSWER TO THIS QUESTION MUST BE IN THE NEGATIVE. ONCE ALL THE PRIM ARY FACTS ARE BEFORE THE ASSESSING AUTHORITY, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE. IT IS FOR HIM TO D ECIDE WHAT INFERENCES OF FACTS CAN BE REASONABLY DRAWN AND WHA T LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT F OR SOMEBODY ELSE-FAR LESS THE ASSESSEE-TO TELL THE ASSESSING AU THORITY WHAT INFERENCES, WHETHER OF FACTS OR LAW, SHOULD BE DRAW N.' 7.1 AGAIN IN THE CASE OF PATIDAR OIL CAKE INDUSTR IES VS. DCIT, 270 ITR 347(GUJ), HONBLE HIGH COURT HELD 11 ITA NO.2331 & 2555/AHD/2008 11 IN THE LIGHT OF THE FACT THAT THE ASSESSMENTS HAVE BEEN SOUGHT TO BE REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF EACH OF THE ASSESSMENT YEARS IN QUESTION, THE PROVISIONS OF SEC TION 147 OF THE ACT MANDATE THAT THE ASSESSING OFFICER SHALL BE VES TED WITH THE JURISDICTION TO INITIATE REASSESSMENT PROCEEDINGS O NLY IN CASE THERE IS ANY OMISSION OR FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND SUCH FAILURE SHOULD RE SULT IN INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. ON A PLAIN R EADING OF THE AFORESAID PROVISIONS AND THE REASONS RECORDED, IT B ECOMES CLEAR THAT THERE CANNOT BE ASCRIBED ANY FAILURE OR OMISSION TO THE PETITIONER SO AS TO VEST THE ASSESSING OFFICER WITH JURISDICTION TO REOPEN THE ASSESSMENTS WHICH WERE ALREADY FINALISED. IN THE CI RCUMSTANCES, FOR THE ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89 I N THE LIGHT OF THE FACT THAT THE INITIATION BY ISSUANCE OF IMPUGNE D NOTICES IS BEYOND THE PERIOD OF FOUR YEARS AND THE PREREQUISITE CONDI TIONS STIPULATED BY SECTION 147 OF THE ACT ARE NOT FULFILLED, THERE IS NO CASE MADE OUT FOR UPHOLDING THE PROPOSED REASSESSMENT. THE NOTICES FO R ALL THE FOUR YEARS ARE, THEREFORE, BAD IN LAW AND ARE QUASHED AN D SET ASIDE. 7.2 IN THE CASE OF DEVIDAYAL ROLLING MILLS & A NOTHER VS. Y.R.SAINI,ACIT,285 ITR 514,HONBLE BOMBAY HIGH COUR T HELD THAT WHERE AN ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT IS SOUGHT TO BE REOPENED BEYOND FOUR YEARS FROM THE END OF RELEV ANT ASSESSMENT YEAR, THE REVENUE MUST ESTABLISH THAT THERE WAS FAI LURE ON THE PART OF THE ASSSESSEE TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS RELEVANT FOR THE PURPOSES OF THE ASSESSMENT. 7.3 IN THE CASE OF MERCURY TRAVELS LTD. VS. DCIT & ANOTHER,258 ITR 533(CAL.), HONBLE HIGH COURT IN THE LIGHT OF FACTS OF THE CASE CONCLUDED THAT NO INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT FOR THOSE ASSESSMENT YEARS DUE TO FAILUR E OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ITS ASSESSMENT. 7.4 IN PRIYANKA CARBON & CHEMICAL INDUSTRIES ( P) LTD. VS. DCIT (2008) 15 DTR (GUJ.) 31, HONBLE HIGH COURT HELD T HAT WHEN FACTUAL DATA WAS AVAILABLE WITH THE AO AT THE TIME OF ASSES SMENT, ON THE SAME VERY MATERIAL, IF THE AO TAKES A DIFFERENT VIE W SUBSEQUENTLY 12 ITA NO.2331 & 2555/AHD/2008 12 AND THAT TOO AFTER EXPIRY OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR, THAT WOULD NOT CONFER ANY JURISDIC TION ON THE AO TO ISSUE NOTICE U/S 148 OF THE ACT. SIMILAR VIEW WAS T AKEN IN ACIT VS. JAGDISHBHAAI NANUBHAI TEKRAWALA (2008) 12 DTR (GUJ ) 270, 7.5 IN VARELI WEAVERS PVT. LTD. VS. DCIT (1999) 240 ITR 77 (GUJ) ALSO NOTICES UNDER SECTION 148 READ WITH SECTION 14 7 OF THE ACT WERE QUASHED BY THE HONBLE HIGH COURT, THERE BEING NO W HISPER IN THE REASONS RECORDED BY THE AO ABOUT FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS . 7.6 IN CIT VS. DCM LTD.,(2009) 24 DTR(DEL.) 72,H ONBLE HIGH COURT FOUND THAT THERE WAS NO ALLEGATION IN THE RE ASONS RECORDED BY THE AO THAT THE ASSESSEE HAD FAILED TO FILE ITS RET URN OR THAT IT HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS IN ITS RETURN NOR WAS THERE ANY ALLEGATION BY THE ASSESSING OFFICER T HAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIA L FACTS IN ITS RETURN OF INCOME NOR EVEN THERE WAS ANY ALLEGATION REGARDIN G ESCAPEMENT OF INCOME. IN THESE CIRCUMSTANCES ,HONBLE HIGH COURT UPHELD THAT FINDINGS OF THE TRIBUNAL THAT NOTICE U/S 148 OF THE ACT ,HAVING BEEN ISSUED AFTER FOUR YEARS, THE REOPENING OF THE ASSES SMENT WAS NOT VALID. 7.7 IN CIT & ANOTHER VS. FORAMER FRANCE, 264 ITR 566 (SC),HONBLE APEX COURT UPHELD THE ORDER OF THE HON BLE DELHI HIGH COURT IN CONCLUDING THAT WHEN THERE WAS ADMITTEDLY NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, TH E PROVISO TO THE NEW SECTION 147 OF THE ACT SQUARELY APPLIED, AND TH E IMPUGNED NOTICES WERE BARRED BY LIMITATION MENTIONED IN THE PROVISO. 7.8 IN SUPREME TRAVELS (P) LTD. VS. DCIT, 182 TAXMAN 216(BOM.), HONBLE BOMBAY HIGH COURT HELD THAT THE ASSESSING 13 ITA NO.2331 & 2555/AHD/2008 13 OFFICER CAN REOPEN THE ASSESSMENT ONLY IF THE INGRE DIENTS OF SECTION 147 ARE FULFILLED. 7.9 IN SADBHAV ENGINEERING LTD.(SUPRA), THE PE TITIONER COMPANY HAD FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2004 -05 AND A SCRUTINY ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT, WHEREIN THERE WAS PARTIAL DISALLOWANCE UNDER SECTIO N 80IA (4) OF THE ACT. THE PETITIONER CARRIED THE MATTER IN APPEAL BE FORE COMMISSIONER (APPEALS), WHO DISMISSED THE APPEAL INSOFAR AS GROU ND RELATING TO SECTION 80IA (4) OF THE ACT WAS CONCERNED. AGAINST THE SAID ORDER THE PETITIONER HAD PREFERRED SECOND APPEAL BEFORE T HE INCOME TAX APPELLATE TRIBUNAL, WHICH WAS STILL PENDING. IN THE MEANWHILE, VIDE A NOTICE DATED 29.3.2010, ISSUED UNDER SECTION 148 OF THE ACT, THE AO SOUGHT TO REOPEN THE ASSESSMENT FOR THE AYR 2003-0 4. IN RESPONSE ,THE PETITIONER REQUESTED FOR A COPY OF THE REASON S RECORDED FOR REOPENING THE ASSESSMENT UNDER SECTION 148. UPON BE ING FURNISHED WITH A COPY OF THE REASONS RECORDED FOR REOPENING T HE ASSESSMENT, THE PETITIONER SUBMITTED OBJECTIONS TO THE REASSESS MENT PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE AO VIDE ORDER DAT ED 4.5.2010, REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE TO R EASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2003-04. SIMILAR WE RE THE FACTS IN RELATION TO ASSESSMENT YEAR 2004-05. ON A WRIT PETI TION, HONBLE HIGH COURT HELD 8 IN THE FACTS OF THE PRESENT CASE, RELEVANT ASSES SMENT YEARS ARE 2003-04 AND 2004-05. THE NOTICE UNDER SECTION 148 O F THE ACT RELATING TO ASSESSMENT YEAR 2003-04 HAS BEEN ISSUED ON 29.03.2010, WHEREAS THE NOTICE UNDER SECTION 148 OF THE ACT RELATING TO ASSESSMENT YEAR 2004-05 HAS BEEN ISSUED ON 29.4. 2010. COMPUTING THE PERIOD BETWEEN THE END OF THE RELEVAN T ASSESSMENT YEARS AND THE DATE OF ISSUANCE OF THE NOTICES UNDER SECTION 148, IT IS EVIDENT THAT BOTH THE NOTICES HAVE BEEN ISSUED BEYO ND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS. THE FIRST PROVISO TO SECTION 147 OF THE ACT, LAYS DOWN THAT W HERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THE SAID SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THE SECTION AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS 14 ITA NO.2331 & 2555/AHD/2008 14 ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT. THUS, FOR THE PURPOSE OF INVOKING SECTI ON 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, THE INCOME CHARGEABLE TO TAX SHOULD HAVE ESCAPED AS SESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE EITHE R (I) TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148, OR ( II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT. IN THE FACTS OF THE PRESENT CASE, IT IS AN UNDISPUTED POSI TION THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE INSOFAR AS THE FIRST CONDITION IS CONCERNED. INSOFAR AS THE SECOND CONDITION, VIZ. FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT IS CONCERNED, ON A PLA IN READING OF THE REASONS RECORDED, IT IS APPARENT THAT THE SAME ARE TOTALLY SILENT AS REGARDS ANY FAILURE ON THE PART OF THE PETITIONER T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT FOR THE RELEVANT ASSESSMENT YEARS. FROM THE REASONS RECORDED IT IS A PPARENT THE ASSESSMENTS ARE SOUGHT TO BE REOPENED ON THE GROUND THAT AS PER THE EXPLANATION GIVEN BELOW SUB-SECTION (13) OF SEC TION 80IA OF THE ACT, WHICH HAS BEEN SUBSTITUTED BY THE FINANCE ACT NO.2 OF 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000, DEDUCTION UNDER SECTION 80IA WOULD NOT BE ADMISSIBLE TO AN ASSESSEE WHO CAR RIES ON BUSINESS WHICH IS IN THE NATURE OF WORKS CONTRACT. THAT THE PETITIONER ASSESSEE BEING A CIVIL CONTRACTOR WORKING FOR THE G OVERNMENT IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA AS CLAIME D BY THE ASSESSEE, HENCE THERE WAS REASON TO BELIEVE THAT IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE AS SESSMENT YEARS UNDER CONSIDERATION. THE RECORD OF THE CASE DOES NO T IN ANY MANNER INDICATE THAT PROCEEDINGS UNDER SECTION 147 ARE SOU GHT TO BE REOPENED BY REASON OF FAILURE ON THE PART OF THE PE TITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT FOR ASSESSMENT YEARS UNDER CONSIDERATION . THE RESPONDENT IN ITS AFFIDAVIT IN REPLY ALSO HAS NOT D ISPUTED THE FACT THAT THERE IS NO FAILURE ON THE PART OF THE PETITIONER T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. ONLY BY WAY OF SUBMISSION ADVANCED BEFORE THE COURT IT IS CONTENDED THAT IN THE LIGHT OF THE AMENDMENT OF SECTION 80IB, IT IS DEEMED THAT THE PETITIONER HAS FAILED TO DISCLOSE THE CORRECT FACTS. AS TO WHETHER OR NOT THERE IS AN Y FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, IS A MATTER OF FACT A ND THERE CAN BE NO DEEMED FAILURE AS IS SOUGHT TO BE CONTENDED ON B EHALF OF THE RESPONDENTS. IN THE CIRCUMSTANCES, IN ABSENCE OF AN Y FAILURE ON THE PART OF THE PETITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEA RS UNDER CONSIDERATION, THE NOTICES UNDER SECTION 148 OF THE ACT HAVING BEEN ISSUED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS F ROM THE END OF THE 15 ITA NO.2331 & 2555/AHD/2008 15 RELEVANT ASSESSMENT YEARS, THE VERY INITIATION OF P ROCEEDINGS UNDER SECTION 147 OF THE ACT STAND VITIATED AND AS SUCH C ANNOT BE SUSTAINED. 9. FOR THE FOREGOING REASONS, THE PETITIONS SUCCEED AND ARE, ACCORDINGLY, ALLOWED. THE IMPUGNED NOTICES DATED 29 .3.2010 AND 29.4.2010 RESPECTIVELY, ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT, 1961, ARE HEREBY QUASHED AND SET ASIDE. RULE I S MADE ABSOLUTE ACCORDINGLY IN EACH OF THE PETITIONS. 7.10 IN GUJARAT CARBON AND INDUSTRIAL LTD. VS. JT. CIT [2008] 307 ITR 271 (GUJ),HONBLE HIGH COURT IN THE ABSENCE OF ANY FAILURE ON PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MAT ERIAL FACTS RELEVANT FOR THE ASSESSMENT OF THE ASSESSMENT YEAR IN QUESTION, CONC LUDED THAT THE IMPUGNED NOTICE UNDER S. 148 ISSUED BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IS REQUIRED TO BE QUASHED . 7.11 LIKEWISE IN GUJRAT FLUOROCHEMICALS LTD. VS . DCIT [2009] 319 ITR 282 (GUJ), HONBLE HIGH COURT CONCLUDED THAT THE ASSESSEE HAVING MADE FULL DISCLOSURE OF MATERIAL FACTS IN TH E RETURN WHICH WAS ACCOMPANIED BY SEVERAL ENCLOSURES, ASSESSMENT COULD NOT BE REOP ENED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR FOR TH E REASON THAT CERTAIN INCOME HAS BEEN WRONGLY ASSESSED UNDER THE HEAD CAPITAL G AINS INSTEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION. 7.12 IN NIKHIL K KOTAK VS. MAHESH KUMAR , AO [2009] 319 ITR 445 (GUJ) ALSO IT WAS HELD THAT IN THE ABSENCE OF ANY A VERMENT OF THE REVENUE THAT THERE WAS ANY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSES SMENT OF THE ASSESSMENT YEAR IN QUESTION, IMPUGNED NOTICE UNDER S. 148 ISSUED BEYON D A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS BAD IN LAW AND WITHOUT JURISDICTION. 7.13 IN CADILA HEALTHCARE LTD. VS. DY. CIT [2010] 41 DTR 145 (GUJ), HONBLE HIGH COURT CONCLUDED THAT IN THE AB SENCE OF ANY AVERMENT IN THE REASONS RECORDED BY THE AO FOR REOP ENING THE ASSESSMENT THAT 16 ITA NO.2331 & 2555/AHD/2008 16 THE PETITIONER HAS FAILED TO DISCLOSE FULLY AND TRU LY ANY MATERIAL FACT NECESSARY FOR ITS ASSESSMENT FOR THE YEAR UNDER CONSIDERATION OR ANY NEW MATERIAL OR FACTS COMING TO THE NOTICE OF THE AO LEADING TO THE CONCL USION THAT INCOME HAD ESCAPED ASSESSMENT, THE INGREDIENTS OF THE PROVISO TO S. 147 ARE NOT SATISFIED AND, THEREFORE, ENTIRE PROCEEDINGS UNDER S. 147 INI TIATED PURSUANT TO THE IMPUGNED NOTICE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WERE WITHOUT JURISDICTION AND CANNO T BE SUSTAINED. 7.14 IN MIHIR TEXTILES LTD. VS. JT. CIT [2010] 4 3 DTR 11 (GUJ),HONBLE HIGH COURT HELD THAT THE PETITIONER HAVING SUBMITTED AUDITED BOOKS OF ACCOUNTS, P&L A/C, AND BALANCE SHE ET ALONG WITH NOTES AND ALSO MADE A SPECIFIC DISCLOSURE IN THE FORM OF A NOTE RE GARDING TRANSFER OF ITS UNDERTAKING, IT CANNOT BE SAID THAT THE PETITIONER IS GUILTY OF NOT MAKING FULL AND TRUE DISCLOSURE AND, THEREFORE, NOTICE UNDER S. 148 ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS QUASHED AND SET ASIDE. 8. IN THE INSTANT CASE, AS IS APPARENT FROM TH E FACTS NARRATED IN THE IMPUGNED ORDERS, THE AO REOPENED THE ASSESSMENT COMPLETED ON 24.11.2003 MERELY ON THE BASIS THAT THE ASSESSE E CLAIMED CERTAIN DEDUCTIONS ON ACCOUNT OF BAD DEBTS AND PROV ISIONS FOR ADVERTISEMENT EXPENSES OR DEPRECIATION INCORRECTLY, IN THEIR ORIGINAL RETURN EVEN WHEN QUERIES WERE RAISED BY THE AO IN T HE ORIGINAL ASSESSMENT PROCEEDINGS REGARDING CLAIM FOR BAD DEBT S AND ADVERTISEMENT EXPENSES.. NOT EVEN A WHISPER IS EVID ENT FROM THE REASONS RECORDED OR THE FACTS NARRATED IN THE IMPUG NED ORDERS AS TO WHETHER OR NOT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECES SARY FOR HIS ASSESSMENT. WE ARE OF THE OPINION THAT ANY SUCH F AILURE AS IS ENVISAGED IN THE PROVISO TO SEC. 147 OF THE ACT, IS A MATTER OF FACT ALONE AND THERE CAN BE NO DEEMED FAILURE . IN THE SE CIRCUMSTANCES, IN ABSENCE OF ANY FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR IT S ASSESSMENT FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THE NOTICE UN DER SECTION 148 17 ITA NO.2331 & 2555/AHD/2008 17 OF THE ACT HAVING BEEN ISSUED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE VERY INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT STANDS VITIATED AND AS SUCH CANNOT BE SUSTAINED, THE INGREDIENTS OF SECTION 147 HAVING NOT BEEN FULFILLED. IN VIEW OF THE FOREGOIN G, ESPECIALLY IN THE LIGHT OF CONSISTENT VIEW TAKEN IN AFORESAID DECISIO NS OF THE HONBLE JURISDICTIONAL HIGH COURT AND OTHER COURTS, CONSID ERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT THERE IS NOTHING TO SUGGEST THAT ALL THE PRIMARY FACTS WERE NOT DISCLOSED BY THE ASSESSEE NOR ANY FAILURE ON THE PART OF THE ASS ESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS HAS BEEN ASC RIBED IN THE FACTS NARRATED BEFORE US. IT CANNOT BE SAID THAT THE ASSE SSEE SUPPRESSED ANY MATERIAL FACTS. IT IS WELL-SETTLED THAT IF A NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHOUT THE JURISDIC TIONAL FOUNDATION U/S 147 OF THE ACT BEING AVAILABLE TO THE ASSESSING OFFICER, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WILL BE WITH OUT JURISDICTION AND THUS, LIABLE TO BE STRUCK DOWN . IN THESE CIRCU MSTANCES, WE VACATE THE FINDINGS OF THE LD. CIT(A) AND QUASH TH E IMPUGNED REASSESSMENT ORDER .CONSEQUENTLY, GROUND NOS. 1(I) &(II) RAISED IN THE APPEAL OF THE ASSESSEE ARE ALLOWED. AS A COROLL ARY, THE OTHER GROUNDS IN THE APPEAL OF THE ASSESSEE AS ALSO IN THE APPEAL OF THE REVENUE DO NOT SURVIVE FOR OUR ADJUDICATION AND ARE , THEREFORE, TREATED A S INFRUCTUOUS. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLO WED WHILE THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 17-06-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 17-06-2011 COPY OF THE ORDER FORWARDED TO: 18 ITA NO.2331 & 2555/AHD/2008 18 1. PURNIMA ADVERTISING AGENCY PVT. LTD., 35, SHRIMA LI SOCIETY, OPP. NAVRANGPURA POLICE STATION, NAVRANGPURA, AHMED ABAD 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, AHMEDABAD 3. CIT CONCERNED 4. CIT(A), 5. DR, ITAT, AHMEDABAD BENCH-, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD