M/s Materials Chemicals and Performance Intermediaries Pvt. Ltd., Kolkata V. DCIT, Cir-11, Kolkata, Kolkata

ITA 2348/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3521 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ADD
• Keywords: Depreciation; Transfer pricing; Tax effect; Reason to believe; Capital expenditure
• Section: 143(3); 142(1); 115JB; 147; 148; 139

Judgement Text

1 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 2348/KOL/2016 ASSESSMENT YEAR: 2004-05 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES PVT. LTD. (PAN: AAACM9169K) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-11, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 14.06.2018 DATE OF PRONOUNCEMENT 21.08.2018 FOR THE APPELLANT SHRI NAGESWAR RAO, AR FOR THE RESPONDENT SHRI SALLONG YADEN, ADD. CIT ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF LD. CIT(A)-10, KOLKATA DATED 30.09.2016 FOR AY 2004-05. 2. THE ASSESSEE HAS ASSAILED THE ACTION OF THE AO TO REOPEN THE ORIGINAL ASSESSMENT WHICH WAS COMPLETED U/S. 143(3) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AFTER THE EXPIRY OF 4 YEARS, WITHOUT POINTIN G OUT IN THE REASONS RECORDED FOR REOPENING, THE FACTS OR MATERIAL WHICH WERE NOT DIS CLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YE AR. FOR ADJUDICATING THE ISSUE LET US LOOK AT THE FACTS LEADING TO FRAMING OF THIS QUESTION. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE AY 2004-05 ON 29 OCTOBER 2004 DECLAR ING TOTAL INCOME AS PER NORMAL PROVISIONS OF THE ACT AT RS. NIL AND BOOK PROFIT UN DER SECTION 115JB OF THE ACT AT RS.1,303,360,620. MINIMUM ALTERNATE TAX ('MAT') PAY ABLE ON THE SAME WAS DETERMINED AT RS.101,604,031 (INCLUDING INTEREST OF RS.1,408,183 UNDER SECTION 234C OF THE ACT). AFTER 2 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 ADJUSTING THE SAME AGAINST TAX DEDUCTED AT SOURCE A MOUNTING TO RS 13,110,540 AND TAXES (ADVANCE TAX AND SELF-ASSESSMENT TAX) PAID AMOUNTIN G TO RS 90,132,295, A REFUND OF RS 1,638,804 WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. 3. THEREAFTER NOTICE UNDER SECTION 143(2) OF THE AC T DATED 28 MARCH 2005 WAS ISSUED BY AO INITIATING SCRUTINY ASSESSMENT PROCEEDINGS UN DER SECTION 143(3) OF THE ACT. AFTER ISSUING NOTICE UNDER SECTION 142(1) OF THE ACT VAR IOUS INFORMATION AND DETAILS WERE CALLED FOR FROM THE APPELLANT. PURSUANT TO THE NOTICES FRO M AO, THE ASSESSEE FILED DETAILED SUBMISSIONS/ INFORMATION/ EXPLANATIONS. THE AO ALSO MADE REFERENCE TO THE TRANSFER PRICING OFFICER UNDER SECTION 92CA(1) OF THE ACT AN D THE ORDER OF THE TPO WAS RECEIVED WHEREIN CERTAIN ADJUSTMENTS WAS PROPOSED. THE AO CO MPLETED THE ASSESSMENT ON 19 DECEMBER 2006 (ALSO CONSIDERING THE ADJUSTMENT SUGG ESTED BY THE TPO) AND ISSUED AN ORDER UNDER SECTION 143(3)/115JB OF THE ACT ASSESS ING THE TOTAL INCOME UNDER THE NORMAL PROVISION OF THE ACT AT RS 39,017,442 (AS AGAINST T HE RETURNED TOTAL INCOME AS PER NORMAL PROVISION OF THE ACT OF NIL) AND REVISING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT TO RS. 1,324,972,064 (AS AGAINST THE RETURNED BOOK PRO FIT UNDER SECTION 115JB OF THE ACT AT RS. 1,303,360,620). IN VIEW OF THE ABOVE ASSESSMENT THE AO COMPUTED THE TAX LIABILITY OF THE ASSESSEE AT RS 2,312,900 (INCLUDING INTEREST UNDER SECTIONS 234B, 234C & 234D OF THE ACT OF RS. 399,100, RS. 1,213,022 & RS. 252,420 RESPECT IVELY). 4. AGGRIEVED BY THE AFORESAID ORIGINAL ASSESSMENT O RDER, THE ASSESSEE HAD FILED AN APPEAL WHICH IS PRESENTLY PENDING BEFORE THE LD. CO MMISSIONER OF INCOME TAX (APPEALS)- 22. 5. IN THE MEANTIME, THE AO ISSUED NOTICE UNDER SECT ION 148 OF THE ACT DATED 22 MARCH 2011 PROPOSING TO REOPEN OF ASSESSMENT MADE ON 19.1 2.2006 U/S. 143(3) OF THE ACT. IN THIS REGARD, IT WAS BROUGHT TO OUR NOTICE THAT THE SAID NOTICE HAS BEEN ISSUED AFTER 4 YEARS (NEARLY 6 YEARS) FROM THE END OF THE RELEVANT AY. BY THE SA ID NOTICE, THE ASSESSEE WAS ASKED TO SUBMIT ITS RETURN OF INCOME, FOR WHICH THE ASSESSEE REITERATED ITS RETURN OF INCOME ORIGINALLY FILED ON 29 OCTOBER 2004 AND ALSO SOUGHT THE REASON FOR REOPENING THE ASSESSMENT. 3 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 6. THE LD. SR. COUNSEL MR. NAGESWAR RAO BROUGHT TO OUR NOTICE THE REASON RECORDED BY THE AO TO REOPEN THE ASSESSMENT WHICH, ACCORDING TO HIM, IS PLACED AT PAGE 49 OF THE PAPER BOOK. FOR ADJUDICATING THE LEGAL ISSUE LET US LOOK AT THE REASONS GIVEN BY AO TO REOPEN THE ASSESSMENT WHICH IS GIVEN BY THE AO AT PAGE 49 OF T HE PAPER BOOK AS STATED BY THE LD. SR. COUNSEL MR. NAGESWAR RAO FOR THE ASSESSEE BEFORE US : 2.1. IN THE COMPUTATION OF INCOME FOR THE A.Y. 2004-05, YOU HAD CLAIMED DEPRECIATION OF RS.1,34,69,64,982/- INCLUDING DEPRECIATION OF RS.1, 26,14,78,536/- ON ACCOUNT OF PLANT AND MACHINERY AND THE SAME WAS ALLOWED IN THE ASSESSMEN T. IN THE SCHEDULE OF DEPRECIATION AS PER I.T. ACT, ADDITION TO PLANT AND MACHINERY FOR LESS THAN 180 DAYS WAS SHOWN AS RS.(-) 34,56,75,769/~ WITH CORRESPONDING DEPRECIATION OF R S.(-)4,32,09,471/-. THE ADDITION TO PLANT AND MACHINERY ENDED UP IN A NEGATIVE FIGURE DUE TO ADJUSTMENT OF FOREIGN EXCHANGE FLUCTUATION. 2.2 SCHEDULE III(B) OF TAX AUDIT REPORT REVEALED TH AT THE ACTUAL ADDITION TO PLANT AND MACHINERY FOR LESS THAN 180 DAYS WAS MERELY RS,9,63 ,74,712/- WHICH WAS REDUCED BY RS.44,20,50,481/- BEING GAINS IN FOREIGN EXCHANGE I N RESPECT OF REPAYMENT AND REVALUATION OF LOAN TO ARRIVE AT A NET REDUCTION IN COST OF ASSETS BY RS.34,56,75,769/- ON WHICH DEPRECIATION WAS CHARGED AT FIFTY PERCENT OF NORMAL RATE CALCULA TED TO BE RS.(-) 4,32,09,471/-. IT WAS FURTHER NOTICED THAT FOREIGN EXCHANGE FLUCTUATION OF RS.44, 20,50,481/- CONSTITUTED 'ADDITION NO. 22- INR-USD-SWAP PRINCIPAL MERIT' OF RS.26,52,981/-, 'A DDITION NO. 23-FX GAIN-JBIC 4TH LOAN REPAYMENT' OF RS.1,05,51,500/-, 'ADDITION NO. 24 EC B LOAN REVALUATION' OF RS.20,44,24,000/- AND 'ADDITION NO. 25-ECB LOAN REVALUATION' OF RS.22 ,44,22,000/- WHICH HAD, THEREFORE, ARISEN OUT OF REPAYMENT/REVALUATION OF LOANS UTILIZED FOR ACQUIRING PLANT AND MACHINERY DURING EARLIER YEARS AS ADDITION DURING THE YEAR FOR LESS THAN 180 DAYS WAS MERELY RS.9,63,74,7121-. AS SUCH, THE DEPRECIATION ON FOREIGN EXCHANGE GAINS AFFECTING THE REDUCTION IN THE COST OF PLANT AND MACHINERY WAS REQUIRED TO BE CALCULATED @ 25% I NSTEAD OF CALCULATING AT 50% OF THE NORMAL RATE I.E. 12.5% SO THAT THE COST OF ASSETS A CQUIRED DURING EARLIER YEAR COULD HAVE BEEN REDUCED BY GIVING FULL EFFECT OF FOREIGN EXCHANGE F LUCTUATION. OMISSION TO DO SO RESULTED IN EXCESS COMPUTATION OF DEPRECIATION BY RS.5,52,56,31 0/- (I.E.12.5% ON RS.44,20,50,481/-) AND AS SUCH UNDERASSESSMENT OF INCOME BY RS.5,52,56,310 /~ WITH CONSEQUENT TAX EFFECT OF RS.1,90,23,201/-. 7. THE MAIN CONTENTION OF THE LD. SR. COUNSEL IS TH AT WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT AND REOPENING OF T HE COMPLETED ASSESSMENT WAS PROPOSED AFTER THE EXPIRY OF FOUR YEARS, THE AO IS BOUND TO POINT OUT IN THE REASONS RECORDED FOR REOPENING THE FACTS OR MATERIAL WHICH WERE NOT DISC LOSED BY THE ASSESSEE TRULY AND FULLY DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. ACCORD ING TO LD. COUNSEL WITHOUT POINTING OUT THE FACTS/MATERIAL WHICH WERE NOT DISCLOSED DURING THE ORIGINAL ASSESSMENT IN THE REASONS RECORDED FOR REOPENING GOES TO THE ROOT OF THE JURI SDICTION OF THE AO TO REOPEN THE ASSESSMENT AFTER FOUR YEARS. HERE IN THIS CASE IT WAS BROUGHT TO OUR NOTICE THAT THE NOTICE PROPOSING REOPENING HAS BEEN ISSUED AFTER FOUR YEAR S (NEARLY SIX YEARS) FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEREFORE, THE AO ACCORDI NG TO HIM, HAS TO SPELL OUT THE 4 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 FACTS/MATERIAL WHICH WERE NOT DISCLOSED BY THE ASSE SSEE DURING THE ORIGINAL ASSESSMENT WITHOUT WHICH THE AO LACKS JURISDICTION TO REOPEN T HE ASSESSMENT. FOR ADJUDICATING THIS ISSUE LET US LOOK INTO THE LEGAL PROVISIONS FOR REO PENING. INCOME ESCAPING ASSESSMENT . 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 REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION , OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY B E, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53 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 ACTI ON SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SEC TION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR: 8. READING OF THE PROVISO TO SECTION 147 MAKES IT C LEAR THAT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF THE PROCEEDINGS UNDER SECTION 147, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLO WANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE CONCERNED ASSESSMENT YEAR. HOW EVER, WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RE LEVANT ASSESSMENT YEAR, NO ACTION CAN BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSM ENT YEAR. 9. TAKING NOTE OF THE REQUIREMENT OF LAW IN CASE WH EN THE ORIGINAL ASSESSMENT WAS FRAMED U/S. 143(3) AND FOUR YEARS HAVE EXPIRED IN T HE PRESENT CASE BEFORE US AND A PERUSAL OF THE REASONS RECORDED TO REOPEN THE COMPLETED ASS ESSMENT U/S. 143(3),(SUPRA) WE DO NOT FIND ANY WHISPER/AVERMENT TO THE EFFECT THAT ASSESS EE HAS NOT TRULY AND FULLY DISCLOSED ANY FACTS OR MATERIAL TO ASSESS THE INCOME OF THE ASSES SEE IN THE ORIGINAL ASSESSMENT. IN A SIMILAR 5 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 CASE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF H INDUSTAN LEVER LTD. VS. ACIT 268 ITR 332 (BOM) HAS LAID THE LAW ON THE ISSUE AS UNDE R: THE REASONS RECORDED BY THE ASSESSING OFFICER NOWH ERE STATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THAT ASSESSMENT YEAR. IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUB STITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENC E CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFIC ER TO DISCLOSE AND OPEN HIS MIND THROUGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HI S REASONS. IT IS FOR THE ASSESSING OFFICER TO REACH THE CONCLUSION AS TO WHETHER THERE WAS FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. IT IS FOR THE ASSESSING OFFICER TO FORM HIS O PINION; IT IS FOR HIM TO PUT HIS OPINION ON RECORD IN BLACK AND WHITE. THE REASONS RECORDED SHO ULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. THE REASONS ARE THE MANIFESTATION OF THE MIND OF THE ASSESSING OFFI CER. THE REASONS RECORDED SHOULD BE SELF- EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSI NG FOR THE REASONS. REASONS PROVIDE THE LINK BETWEEN CONCLUSION AND EVIDENCE . THE REASONS RECORDED MUST BE BASED ON EVIDENCE. T HE ASSESSING OFFICER, IN THE EVENT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISC LOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AN D TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR , SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE RE ASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLEM ENTED BY FILING AN AFFIDAVIT OR MAKING AN ORAL SUBMISSION, OTHERWISE , THE REASONS WHICH WERE LACKING IN THE MATERIAL PA RTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES TH E COURT, ON THE STRENGTH OF THE AFFIDAVIT OR ORAL SUBMISSIONS ADVANCED.(EMPHASIS GIVEN BY US) 10. WE NOTE THAT IN THE REASONS RECORDED IN THIS CA SE IN HAND THE AO HAS USED THE EXPRESSION OMISSION TO DO SO RESULTED IN EXCESS CO MPUTATION OF DEPRECIATION AND AS SUCH UNDER ASSESSMENT OF INCOME, SO, ACCORDING TO LD. D R, THE AO HAS INDEED INDICATED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO MA KE FULL AND TRUE DISCLOSURE OF THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. WE ARE NOT INCLINE D TO ACCEPT THE SAID CONTENTION OF THE LD. DR. WE NOTE THAT ASSESSEE HAD IN FACT DISCLOSED AL L MATERIAL RELEVANT FOR CLAIMING DEPRECIATION. THE AO HAS MERELY USED THE EXPRESSIO N OMISSION TO DO SO RESULTED IN EXCESS COMPUTATION OF DEPRECIATION. THE AO HAS NOT POINT ED OUT WHICH FACT THE ASSESSEE HAS NOT TRULY AND FULLY DISCLOSED DURING THE ORIGINAL ASSES SMENT WHICH IN TURN RESULTED IN ESCAPEMENT OF INCOME. WITHOUT POINTING OUT THE FAC TS AND MATERIALS OMITTED BY THE ASSESSEE DURING THE ORIGINAL ASSESSMENT, IN THE REA SONS RECORDED TO REOPEN (AFTER 4 YEARS) MAKES THE INITIATION OF REOPENING BAD IN THE EYES O F LAW. WE NOTE IN A SIMILAR CASE THE HONBLE DELHI HIGH COURT HAS DEALT WITH SIMILAR CON TENTION OF DEPARTMENT IN THE CASE OF 6 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 M/S. MICROSOFT CORPORATION (I) PVT. LTD. VS. DCIT W P(C) 284/2014 ORDER DATED 23.05.2013 WHEREIN THE HONBLE HIGH COURT HELD AS U NDER: 20. WE MAY ALSO POINT OUT THAT WE DO NOT AGREE WI TH THE CONTENTION OF MR. SAHNI THAT THE RECORDED REASONS EXPRESSLY INDICATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO MAKE A FULL AND TRUE DISCLOSURE OF THE MATERIAL FAC TS NECESSARY FOR ITS ASSESSMENT. MR. SAHNI HAD PLACED RELIANCE ON THE LAST SENTENCE OF THE REC ORDED REASONS WHICH READS AS UNDER:- I THEREFORE HAVE REASONS TO BELIEVE THAT THE INCOM E OF RS.12,17,91,668/- HAVE ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE IT ACT, 1961, DUE TO OMISSION ON THE PART OF THE ASSESSEE TO INCLUDE THI S SUM INTO ITS INCOME FOR THE RELEVANT PREVIOUS YEARS'. WHAT IS TO BE SEEN IS THAT THE EXPRESSION USED BY T HE ASSESSING OFFICER IS 'DUE TO OMISSION ON THE PART OF THE ASSESSEE TO INCLUDE THIS SUM INTO I TS INCOME'. THE ALLEGATION IS NOT THAT THERE WAS NO DISCLOSURE ON THE PART OF THE ASSESSEE BUT T HAT THE ASSESSEE HAD NOT INCLUDED THE SAID AMOUNT AS PART OF ITS INCOME. THIS EXPRESSION NEEDS TO BE READ IN THE CONTEXT OF THE EARLIER PART OF THE RECORDED REASONS WHERE THE REASONS ESSE NTIALLY RECORDED THAT EXPENSES SHOULD HAVE BEEN SHOWN AS CAPITAL EXPENDITURE AND NOT AS R EVENUE EXPENDITURE AND THAT THE PROVISION FOR PAYMENT OF GRATUITY AS INADMISSIBLE E TC. IT IS NOT A STATEMENT THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ANY PARTICUL AR PIECE OF INFORMATION WHICH WAS NECESSARY FOR THE PURPOSE OF ASSESSMENT. FURTHERMO RE, WE ALSO CANNOT INFER ANY SUCH BELIEF ON THE PART OF THE ASSESSING OFFICER THAT THERE WAS A FAILURE TO MAKE A FULL AND TRUE DISCLOSURE OF MATERIAL FACTS ON THE PART OF THE ASS ESSEE. 11. WE, THEREFORE, HOLD THAT THERE WAS NO FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FO R ITS ORIGINAL ASSESSMENT AND THE AO WITHOUT POINTING OUT THE FACTS WHICH THE ASSESSEE F AILED TO TRULY AND FULLY DISCLOSE DURING THE ORIGINAL ASSESSMENT IN THE REASONS RECORDED TO REOP EN MAKES THE AO QUORUM NON-JUDICE . THUS THE ASSESSEES APPEAL SUCCEEDS. THEREFORE, WE QUASH THE NOTICE OF REOPENING ON THIS LEGAL INFIRMITY WHICH GOES TO THE ROOT OF SUBSEQUEN T ACTIONS AND, THEREFORE, ALL ACTIONS ARE NULL IN THE EYES OF LAW. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21ST AUG UST, 2018 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21ST AUGUST, 2018 JD.(SR.P.S.) 7 ITA NO. 2348/KOL/2016 MATERIALS CHEMICALS & PERFORMANCE INTERMEDIARIES (P ) LTD., AY 2004-05 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT MATERIALS CHEMICALS & PERFORMANCE IN TERMEDIARIES PVT. LTD. 22, CAMAC STREET, 4 TH FLOOR, BLOCK C, KOLKATA-700 016. 2 RESPONDENT DCIT, CIRCLE-11, KOLKATA. 3. 4. CIT(A)-10, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY