M/s. TEJASKIRAN PHARMACHEM INDUSTRIES P. LTD., MUMBAI V. ACIT C.C. - 32, MUMBAI

ITA 2744/MUM/2006

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62551 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 28-05-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 04-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Keywords: Reopening of assessment; Business income; Question of law; Difference of opinion; Deemed dividend; Validity of assessment; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 43B; 143(3); 80HHC; 147; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, HON'BLE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.2744/MUM/2006 ASSESSMENT YEAR: 1996-1997 TEJASKIRAN PHARMACHEM INDUSTRIES PVT. LTD., F.P. 145, RAM MANDIR ROAD, VILE PARLE (E), MUMBAI-400 057. PAN NO.AAACT 1641 B ACIT C.C.-32, MUMBAI-20 APPELLANT VS. RESPONDENT APPELLANT BY : MR. RAJAN R. VORA RESPONDENT BY : MR. M. MURALI DATE OF HEARING : 28 TH MAY 2012 DATE OF PRONOUNCEMENT : 22 ND JUNE, 2012 O R D E R PER AMIT SHUKLA (J.M.) : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27-3-2006, PASSED BY THE CIT(A) CENTRAL-VIII, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) READ WITH SECTION 147 FOR THE ASSESSMENT YEAR 1996-1997. 2 . IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE PRELIMINARY ISSUE OF VALIDITY OF REOPENING UNDER SECTION 147, CONFIRMATION OF ADDITION MADE UNDER SECTION 2(22)(E) AND DISALLOWANCE IN DEDUCTIONS UNDER SECTION 80M. BESIDES THIS, ADDITIONAL GROUNDS HAVE ALSO BEEN FILED CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT UNDER PROVISO TO SECTION 147, BEING INITIATED BEYOND THE PERIOD OF FOUR YEARS AND DISALLOWANCE UNDER SECTION 80M. SINCE THE ADDITIONAL GROUNDS RAISED ARE PURELY LEGAL GROUND AND DO ITA NO : 2744/M/06 2 NOT REQUIRE ANY INVESTIGATION OF FACTS, THE SAME ARE THEREFORE, ADMITTED FOR ADJUDICATION. 3 . THE PRELIMINARY ISSUE OF VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 WHICH GOES TO THE VERY JURISDICTION OF THE 148 PROCEEDINGS ARE BEING TAKEN UP FIRST FOR ADJUDICATION. THE RELEVANT FACTS FOR ADJUDICATION OF THIS ISSUE ARE THAT, THE ASSESSEE IS A COMPANY, WHICH HAD FILED ITS RETURN OF INCOME U/S. 139 (1) ON 30-11-1996 FOR THE ASSESSMENT YEAR 1996-1997 WHEREIN NIL INCOME WAS DECLARED. THE SAID RETURN WAS DULY PROCESSED UNDER SECTION 143(1)(A), WHEREBY THE RETURN OF INCOME WAS ACCEPTED. SUBSEQUENTLY, THE CASE WAS REOPENED UNDER SECTION 147 BY ISSUANCE OF NOTICE UNDER SECTION 148, DATED 7-3- 2000 ON THE FOLLOWING REASONS :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE COMPANY FOR A.Y. 1997-1998, IT WAS FOUND THAT THE ASSESSEE HAS TAKEN LOAN FROM VIRTUOUS FINANCE LTD. ALL THE CONDITIONS AS STIPULATED U/S. 2(22)(E) WAS FOUND SATISFIED. THE LOAN TAKEN DURING THE YEAR 1997- 1998 WAS TREATED AS DIVIDEND AS PER PROVISIONS OF SECTION 2(22)(E). FROM THE RECORDS IT IS SEEN THAT THE PERIOD RELEVANT TO A.Y. 1996-1997 ALSO ASSESSEE HAS TAKEN LOAN OF ` .14,73,380/- FROM VIRTUOUS FINANCE LTD. IN THIS YEAR ALSO THE PROVISIONS OF SECTION 2(22)(E) IS ATTRACTED. ACCORDINGLY THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 28-3- 2002 AT AN INCOME OF ` .26,91,479/- AFTER MAKING THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) AND DISALLOWING THE DEDUCTION UNDER SECTION 80M. 3.1 IN THE FIRST APPEAL, AGAINST THE AFORESAID ORDER THE ASSESSEE CHALLENGED THE REOPENING UNDER SE CTION 147 ON THE GROUND THAT REASONS RECORDED DO NOT MEET THE REQUIREMENT OF LAW. THE LEARNED ITA NO : 2744/M/06 3 CIT(A) APPRECIATING THE OBJECTI ON OF THE ASSESSEE, QUASHED THE ASSESSMENT ORDER ON THE GROUND THAT REOPENING OF THE ASSESSMENT WAS BASED ON INCORRECT ASSUMPTION OF FACTS WHICH HAS RENDERED THE REOPENING ITSELF AS INVALID. AGAIN ST THE SAID ORDER, THE DEPARTMENT DID NOT PREFER ANY APPEAL BEFORE THE ITAT. 4 . ALMOST AT THE FAG END OF THE 6 TH YEAR FROM THE END OF THE RELEVANT ASSESSMENT ORDER, A NOTICE UNDER SECTION 148 WAS ISSUED ON 10-2- 2003 TO REOPEN THE ASSESSMENT WHICH WAS PASSED UNDER SECTION 143(3) READ WITH SECTION 147. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCO ME ON 17-3-2003 SHOWING NIL INCOME. FROM THE COPIES OF THE REAS ONS RECORDED, AS HAVE BEEN MADE AVAILABLE, THE FOLLOWING REASONS HAVE BEEN RECORDED FOR REOPENING THE ASSESSMENT FOR THE SECOND TIME:- ANNEXURE THE REASONS FOR REOPENING THE ASSESSMENT FOR A.Y. 1996-1997 IN THE CASE OF M/S TEJASKIRAN PHARMACHEM INDS. (P) LTD. ON THE BASIS OF THE INFORMAT ION GATHERED ON RECORD, IT IS SEEN THAT THE ASSESSEE COMPANY HAS RECEIVED LOANS FROM FOLLOWING THREE GROUP COMPANIES. A. M/S FAMILY INVESTMENT PVT. LTD B. M/S BONNAIRE EXPORTS PVT. LTD. C. M/S VIRTUOUS FINANCE PVT. LTD. 2. ALL THESE LOANS ARE HIT BY T HE PROVISIONS OF SECTION 2(22)(E) AND TAXABLE IN THE HANDS OF T HE ASSESSEE COMPANY AS DEEMED DIVIDEND. THE ASSESSEE COMPANY HAS NOT SHOWN THESE DEEMED DIVIDENDS IN THE RETURN OF INCOME. IN THESE CIRCUMSTANCES I HAVE REASONS TO BELIEVE THAT INCOME OF RUPEES MORE THAN 1 LAC HAS ESCAPED ASSESSMENT. THEREFORE, TH IS CASE NEED TO BE REOPENED TO BE COMPLETED U/S. 147 OF THE I.T.ACT. SD/- DY.COMMI SSIONER OF INCOME TAX, CENTRA L CIRCLE 32, MUMBAI ITA NO : 2744/M/06 4 4.1 BEFORE THE ASSESSING OFFICER, THE AFORESAID REASONS RECORDED AND THE VALIDITY OF REOPENING OF THE ASSESSMENT WAS OBJECTED FOR THE SECOND TIME. THE OBJECTIONS OF THE ASSESSEE HAS BEEN SUMMARIZED AT PAGE 2 OF THE IMPUGNED ASSESSMENT ORDER DATED 26-3-2004. THE ASSESSING OFFICER REJECTED THE SAID OBJECTIONS ON THE GROUND THAT THERE ARE SUFFICIENT REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, AS THE ASSESSEE HAS RECEIVED LOANS AND ADVANCES FROM THE THREE GROUP COMPANIE S, WHICH FULFILS ALL THE CRITERIA OF DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY IN TERMS OF SECTION 2(22)(E). ACCORDINGLY, HE COMPLETED THE ASSESSMENT AT AN INCOME OF ` .26,94,479/-, EXACTLY ON THE SA ME PATTERN AND ON THE SAME INCOME AS WAS MADE IN THE EARLIE R ASSESSMENT ORDER DATED 28-3-2002, PASSED UNDER SECTION 147/143(3). 5 . IN THE FIRST APPEAL, LEARNED CIT(A) REJECTED THE ASSESSEES GROUNDS NOT ONLY ON THE VALIDITY OF ASSESSMENT BUT ALSO CONFIRMED THE ADDITIONS ON ACCOUNT OF DEEMED DIVIDEND AND DISALLOWANCE MADE ON DEDUCTION UNDER SECTION 80M. 6 . LEARNED AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE SECOND TIME REOPENING IS WHOLLY ERRONEOUS AND INVALID, FIRSTLY , ON THE GROUND THAT IN THE REASONS RECORDED, THERE IS NO MENTION ABOUT ASSESSEES FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT AND SECONDLY , THE REOPENING HAS BEEN DONE ON THE INSTRUCTION OF THE CIT(A) AS PER HIS OFFICE NOTE GIVEN TO THE ITA NO : 2744/M/06 5 ASSESSING OFFICER AT THE TIME OF PASSING OF THE APPELLATE ORDER DATED 31-12-2002, WHEREIN HE HAS QUASHED THE EARLIER ASSESSMENT ORDER, WHICH IS NOT PERMISSIBLE IN LAW AS T HE ASSESSING OFFICER HIMSELF HAS TO FORM HIS SATISFACTION. THE SECOND PLEA HAS BEEN RAISED ON THE BASIS OF LETTER DATED 13-1-2003 AS HAS BEE N PLACED IN THE PAPER BOOK AT PAGE 205, WRITTEN BY THE ASSESSING OFFI CER TO CIT, CENTRAL-3, SEEKING PERMISSION FOR REOPENING THE CASE UNDER SECTION 148 FOR THE SECOND TIME ON THIS BASIS OF OFFICE NOTE OF CIT(A). FOR THE PROPOSITION THAT REOPENING OF ASSESSMENT UN DER SECTION 147 UNDER THE FIRST PROVISO , CAN BE DONE ONLY WHEN THE CONDITIONS SPECIFIED THEREIN ARE FULFILLED, HE HAS RELIED UPON CATENA OF CASE LAW S, COPY OF WHIC H HAS BEEN MADE AVAILABLE IN THE PAPER BOOK. HE FURTHER SUBMITTED THAT EVEN THE OFFICE NOTE AND INSTRUCTION BY THE CIT(A), CANNOT BE THE GROUND FOR REOPENING THE ASSESSMENT UNDER SECTION 147 AS THE ASSESSING OFFICER HAS TO APPLY HIS INDEPENDENT MIND AND IN SUPPOR T OF THIS PROPOSITION ALSO HE HAS RELIED UPON FURTHER CASE LAWS. 6.1 ON MERITS, HE SUBMITTED THAT THE ISSUE OF DEEMED DIVIDEND IS NOW STANDS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. UNIVERSAL MEDI CARE PRIVATE LIMITED, REPORTED IN (2010) 324 ITR 263 (BOM) , WHEREIN IT HAS BEEN HELD THAT IF A PERSON RECEIVING ADVANCES AND LOANS ARE NOT REGISTERED AND BENEFICIAL SHAREHOLDERS, PROVISIONS OF DEEMED DIVIDEND WILL NOT BE ITA NO : 2744/M/06 6 ATTRACTED. IN THIS CASE THE ASSESS EE IS NOT A BENEFICIAL OR REGISTERED SHAREHOLDER IN THE OTHER GROUP COMPANIES. 7 . ON THE OTHER HAND, LEARNED CIT DR SUBMITTED THAT SIMPLY BECAUSE THE INFORMATION HAS BEEN PASSED FROM THE CIT(A), THE REOPENING CANNOT BE HELD TO BE INVALID AS WHAT HAS TO BE LOOKED INTO IS THE NATURE OF INFORMATION AND THE RE ASONS RECORDED. IN THE REASONS RECORDED, THERE IS NO MENTION ABOUT T HE OFFICE NOTE OF CIT(A). HENCE, THE OFFICE NOTE CANNOT BE READ INTO T HE REASONS RECORDED. AT THE TIME OF RECORDING THE REASONS, WHAT HAS TO BE SEEN IS WHETHER, THERE IS ANY PRIMA FACIE BELIEF OF THE ASSESS ING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT OR NOT WHICH HEREIN IN THIS CASE HAS BEEN DEALT WITH BY THE LEARNED CIT(A) . ON MERITS OF THE DECISION, HE RELIED UPON THE FINDING GIVEN BY THE CIT( A) AS WELL AS BY THE ASSESSING OFFICER. 8 . WE HAVE CAREFULLY CONSIDERED T HE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. AS STATED IN THE FOREGOING PARAGRAPHS, THE REOPENING OF THE ASSESSMENT WAS DONE IN THE FIRST ROUND VIDE NOTICE DATED 7-3-2000 ISSUED UNDER SECTION 148 ON THE GROUND THAT PROVISIONS OF SECTION 2(22)(E) ARE ATTRACTED AND ACCORDINGLY ASSESSMENT ORDER WAS PASSED U/S. 143/147 VIDE ORDER DATED 28.3.2002. SUCH A REOPENING AND T HE REASONS RECORDED HAVE BEEN FOUND TO BE BASED ON INCORRECT FACTS IN THE FIRST APPEAL AND ACCORDINGLY, THE REOPENING ITSELF WA S HELD AS INVALID AND ASSESSMENT ITA NO : 2744/M/06 7 ORDER PASSED UNDER SECTION 143(3)/147 WAS QUASHED FROM THE STAGE OF CIT(A) ITSELF AND THAT MATTER ATTAINED FINALITY. IN THE SECOND ROUND, THE REOPENING HAS BEEN DONE VIDE NOTIC E DATED 10.2.2003, ISSUED UNDER SECTION 148, WHICH IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THU S, THE CONDITIONS GIVEN IN FIRST PROVISO TO SECTION 147 GETS SQUARELY APPLICABLE AS THE EARLIER ASSESSMENT WAS PASSED UNDER SECTION 143(3) READ WITH SECTION 147. 8.1 IT IS SETTLED LAW THAT THE CONDI TIONS LAID DOWN UNDER SECTION 147 FOR THE PURPOSE OF REOPENING THE A SSESSMENT MUST BE SATISFIED BEFORE THE NOTICE CAN BE ISSUED UNDER SECTI ON 148 AS THESE CONDITIONS ARE JURISDICTIONAL FACTS NECESSARY TO AC QUIRE JURISDICTION BY THE ASSESSING OFFICER. IF THE BASIC JURISDICTI ONAL FACTS REQUIRED FOR REOPENING UNDER SECTION 147 DO NOT EXIST, THE ENTIRE PROCEEDINGS INITIATED BY NOTICE ISSUED UNDER SECTION 148 BECOMES NULL AND VOID . THE FIRST AND FOREMOST CONDITION IS THAT THE ASSE SSING OFFICER MUST HAVE REASONS TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THIS BELIEF MUST NOT BE ARBITRARY OR IRRATIONAL, BUT MUST BE HELD IN GOOD FAITH AND MU ST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF BELIEF BY THE ASSESSING OFFICER. IN OTHER WORDS THERE MUST BE A DI RECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE ASSESSING OFFICER AND THE FORMATION OF HIS BELIEF THAT THER E HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE. SECONDLY, THE FORMATI ON OF REASONS TO BELIEVE MUST BE ITA NO : 2744/M/06 8 THAT OF THE ASSESSING OFFICER AND NOT THAT OF ANY HIGHER AUTHORITY. THE SOURCE OF INFORMATION OR MATERIAL CAN BE FROM ANY WHERE BUT BELIEF AND SATISFACTION SHOULD BE THAT OF T HE ASSESSING OFFICER THAT SUCH A INFORMATION OR MATERIAL HAS A DIRECT AND LIVE-LINK NEXUS WITH THE ESCAPEMENT OF INCOME. ONCE THIS VITAL CONDITIONS STANDS FULFILLED THE FIRST PROVISO CARVES OUT FURTHER LIMITATION THAT IN THE CASES WHERE THE ASSESSMENT HAVE BEEN COMPLETED UNDER SECTION 143(3) OR UNDER SECTION 147, NO ACTION CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS TWIN CONDITIONS ARE SATISFIED, FIRSTLY , ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE 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 OF SECTION 142 OR SECTION 148 AND SECONDLY , THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MA TERIALS FACTS NECESSARY FOR THE ASSESSMENT, FOR THAT ASSESSMENT YEAR. 8.2 ADVERTING TO THE INSTANT CASE, THE FIRST CONDITION GIVEN IN THE PROVISO IS ADMITTEDLY NOT APPLICABLE AS THE ASSESSEE HAS DULY FILED ITS RETURN OF INCOME UNDER SECTION 139. SO FAR AS THE SECOND CONDITION WHETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIALS FACTS OR NOT, ONE HAS TO SEE FROM THE REASONS RECORDED ITSELF. FROM THE PERUSAL OF THE REASONS RECORDED AS HAVE BEEN INCORPORATED IN FOREGOING PARAGRAPH 4, IT IS AMPLY ITA NO : 2744/M/06 9 EVIDENT THAT THE ASSESSING O FFICER HAS NOWHERE RECORDED HIS SATISFACTION THAT THERE WAS FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. SUCH AN ASSIGNMENT OF FAILURE IN THE REASONS RECORDED IS MANDATORY TO ACQUIRE THE JURISDICTION UNDER SE CTION 147. IT CANNOT BE INFERRED FROM ANYWHERE ELSE OR ANY OTHER DOCUMENT. THE REASONS RECORDED MUST DISCLOSE THAT THE ASSESSEE HAS FAIL ED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT. THE WORD FAILURE SHOULD NOT BE INFERRED, IT MUST BE CATEGORICALLY SPELLED OUT. IT IS THEN THE COURTS WILL EXAMINE WHETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE OR NOT. THUS, IN THE PRESENT CASE, THE REASONS RECORDED BY THE ASSESSING OFFICER DO NOT CLOTHE HIM WITH THE JURISDICTION TO PROCEED UNDER SECTION148 AND REOPEN THE CASE AS THERE IS NO FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN VIEW OF THE FI RST PROVISO TO SECTION 147. THIS PROPOSITION OF LAW THAT BEYOND FOUR YEARS THE ASSESSMENT COMPLETED U/S. 143(3) OR 147 CANNOT BE REOPENED UNLESS TWIN CONDITIONS SPECIFIED IN FIRST PROVISO TO SECTION 147 ARE FULFILLED, HAS BEEN SETTLED BY CATENA OF CASE LAWS BY THE VARIOUS HIGH COURTS AND THE HONBLE SUPREME COURT. THE GIST OF SOME CASE LAWS ARE REFERRED TO HEREIN IN BELOW :- (I) CALCUTTA DISCOUNT CO. LTD. VS. INCOME-TAX OFFICER, COMPANIES DISTRICTS 1, REPORTED IN (1961)41 ITR PAGE 191. A CONSTITUTION BENCH OF FIVE HONBLE JUDGES LAID DOWN THE FOLLOWING RULE IN THE MATTER OF ASSESSEES DUTY DISCLOSURE - THE DUTY IMPOSED BY THE ACT UPON THE TAX PAYER IS TO MAKE A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR THE ASSESSEE ; HE IS NOT REQUIRED TO INFORM THE INCOME-TAX OFFICER AS TO WHAT LEGAL INFERENCE ITA NO : 2744/M/06 10 SHOULD BE DRAWN FROM THE FACTS DISCLOSED BY HIM NOR TO ADVISE HIM ON QUESTIONS OF LAW. WHETHER ON THE FACTS FOUND OR DISCLOSED, THE COMPANY WAS A DEALER IN SHARES, MAY BE REGARDED AS A CONCLUSION ON A MIXED QUESTION OF LAW AND FACT AND FROM THE FAILURE ON THE PART OF THE COMPANY TO DISCLOSE TO THE INCOME-TAX OFFICER THIS LEGAL INFERENCE, NO FAULT MAY BE FOUND WITH THE COMPANY..... (215) DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS? IN OUR OPINION, THE ANSWER TO THIS QUESTION MUST BE IN THE NEGATIVE. ONE ALL THE PRIMARY FACTS ARE BEFORE THE ASSESSING AUTHORITY, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE. IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASONABLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN . IT IS NOT FOR SOMEBODY ELSEFAR LESS THE ASSESSEETO TELL THE ASSESSING AUTHORITY WHAT INFERENCES, WHETHER OF FACTS OR LAW, SHOULD BE DRAWN. INDEED, WHEN IT IS REMEMBERED THAT PEOPLE OFTEN DIFFER AS REGARDS WHAT INFERENCES SHOULD BE DRAWN FROM GIVEN FACTS, IT WILL BE MEANINGLESS TO DEMAND THAT THE ASSESSEE MUST DISCLOSE WHAT INFERENCESWHETHER OF FACTS OR LAWHE WOULD DRAW FROM THE PRIMARY FACTS. (201) (II) PARASHURAM POTTERY WORKS CO. LTD. VS. INCOME TAX OFFICER, CIRCLE-I, WARD A, RAJKOT (SC)REPORTED IN (1977) 106 ITR 1. IT WOULD APPEAR FROM WHAT HAS BEEN DISCUSSED ABOVE THAT ONE OF THE ESSENTIAL REQUISITES FOR PROCEEDING UNDER CLAUSE (A) OF SECTION 147 OF THE ACT OF 1961 IS THAT THE INCOME CHARGEABLE TO TAX SHOULD ESCAPE ASSESSMENT BECAUSE OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT . THE PRESENT IS NOT A CASE WHERE THE ASSESSEE HAD OMITTED OR FAILED TO FILE THE RETURN. QUESTION THEN ARISES AS TO WHAT HAS BEEN OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A FULL AND TRUE DISCLOSURE. THERE IS NOTHING BEFORE US TO SHOW THAT IN THE RETURN FILED BY THE ASSESSEE-APPELLANT THE PARTICULARS GIVEN WERE NOT CORRECT. (8) XXX XXX XXX XXX IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION. IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WITH THE TASK OF CALCULATING AND REALIZING THAT PRICE SHOULD FAMILIARIZE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL-VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEIR PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQUER AND MUST NECESSARY RESULT IN LOSS OF REVENUE . AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUE SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. SO FAR AS THE INCOME-TAX ASSESSMENT ORDERS ARE CONCERNED, THEY CANNOT BE REOPENED ON THE SCORE OF INCOME ESCAPING ASSESSMENT UNDER SECTION 147 OF THE ACT OF 1961 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNLESS THERE BE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. AS ALREADY MENTIONED, THIS CANNOT BE SAID IN THE PRESENT CASE. THE APPEAL IS CONSEQUENTLY ALLOWED, THE JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE IMPUGNED NOTICES ARE QUASHED. (10) ITA NO : 2744/M/06 11 (III) FENNER (INDIA) LTD. V. DEPUTY CIT REPORTED IN (2000) 241 ITR 672 THE PRE-CONDITION FOR THE EXERCISE OF THE POWER UNDER SECTION 147 IN CASES WHERE POWER IS EXERCISED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS THE BELIEF REASONABLY ENTERTAINED BY THE ASSESSING OFFICER THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT ASSESSMENT YEAR. HOWEVER, WHEN THE POWER IS INVOKED AFTER THE EXPIRY OF THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, A FURTHER PRE-CONDITION FOR SUCH EXERCISE IS IMPOSED BY THE PROVISO NAMELY, THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SECTION 142 OR SECTION 148 OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. UNLESS, THE CONDITION IN THE PROVISO IS SATISFIED, THE ASSESSING OFFICER DOES NOT ACQUIRE JURISDICTION TO INITIATE ANY PROCEEDING UNDER SECTION 147 OF THE ACT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. THUS IN CASES WHERE THE INITIATION OF THE PROCEEDINGS IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, THE ASSESSING OFFICER MUST NECESSARILY RECORD NOT ONLY HIS REASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT BUT ALSO THE DEFAULT OR FAILURE COMMITTED BY THE ASSESSEE. FAILURE TO DO SO WOULD VITIATE THE NOTICE AND THE ENTIRE PROCEEDINGS. THE RELEVANT WORDS IN THE PROVISO ARE, ..UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE. MERE ESCAPE OF INCOME IS INSUFFICIENT TO JUSTIFY THE INITIATION OF ACTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. SUCH ESCAPEMENT MUST BE BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE EITHER TO FILE A RETURN REFERRED TO IN THE PROVISO OR TO TRULY AND FULLY DISCLOSE THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WHENEVER A NOTICE IS ISSUED BY THE ASSESSING OFFICER BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, SUCH NOTICE BEING ISSUED WITHOUT RECORDING THE REASONS FOR HIS BELIEF THAT INCOME ESCAPED ASSESSMENT, IT CANNOT BE PRESUMED IN LAW THAT THERE IS ALSO A FAILURE ON THE PART OF THE ASSESSEE TO FILE THE RETURNS REFERRED TO IN THE PROVISO OR A FAILURE TO FULLY AND TRULY DISCLOSE THE MATERIAL FACTS. THE REASONS REFERRED TO IN THE MAIN PARAGRAPH OF SECTION 147 WOULD, IN CASES WHERE THE PROVISO IS ATTRACTED, INCLUDE REASONS REFERRED TO IN THE PROVISO AND IT IS NECESSARY FOR THE ASSESSING OFFICER TO RECORD THAT ANY ONE OR ALL THE CIRCUMSTANCES REFERRED TO IN THE PROVISO EXISTED BEFORE THE ISSUE OF NOTICE UNDER SECTION 147. AFTER AN ASSESSMENT HAS BEEN MADE, IN THE NORMAL CIRCUMSTANCES, THERE WOULD BE NO REASON FOR ANYONE TO DOUBT THAT THE ASSESSMENT HAS BEEN MADE ON THE BASIS OF ALL RELEVANT FACT. IF THE ASSESSING OFFICER CHOOSES TO ENTERTAIN THE BELIEF THAT THE ASSESSMENT HAS BEEN MADE IN THE BACKGROUND OF THE ASSESSEES FAILURE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS, IT IS NECESSARY FOR HIM TO RECORD THAT FACT, AND IN THE ABSENCE OF A RECORD TO THAT EFFECT, IT CAN NOT BE HELD THAT A NOTICE ISSUED WITHOUT RECORDING SUCH A FACT IS CAPABLE OF BEING REGARDED AS A VALID NOTICE. AS TO WHETHER THE MATERIAL FACTS DISCLOSED BY THE ASSESSEE ARE FULL AND TRUE IS ALWAYS A QUESTION OF FACTS AND UNLESS THE FACTS DISCLOSED HAD BEEN ITA NO : 2744/M/06 12 EXAMINED IN RELATION TO THE EXTENT OF FAILURE IF ANY ON THE PART OF THE ASSESSEE, IS NOT POSSIBLE TO FORM THE OPINION THAT THERE HAD BEEN A FAILURE ON THE ASSESSEES PART TO TRULY AND FULLY DISCLOSE THE MATERIAL FACTS. A NOTICE ISSUED WITHOUT A RECORD OF THE ASSESSING OFFICERS REASONABLE BELIEF THAT THERE WAS SUCH FAILURE ON THE PART OF THE ASSESSEE WOULD BE INDICATIVE OF A FAILURE ON THE PART OF THE ASSESSING OFFICER TO APPLY HIS MIND TO MATERIAL FACTS, AND ON THAT GROUND ALSO THE NOTICE ISSUED WOULD BE VITIATED. (678) (IV) IPCA LABORATORIES LTD. VS. GAJANAND MEENA, DY.CIT & OTHERS (NO.2) REPORTED IN ( 2001) 251 ITR PAGE 416 .... THE POSITION OF LAW AFTER APRIL1, 1989, IS NOT IN DISPUTE. BY VIRTUE OF A PROVISO TO SECTION 147, NO ACTION CAN BE TAKEN FOR REOPENING AFTER FOUR YEARS UNLESS THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THE PRESENCE CASE, THE AFFIDAVIT AND THE REASONS DISCLOSED INDICATE THAT THE DEPARTMENT HAS PURPORTED TO REOPEN THE ASSESSMENT ONLY ON THE BASIS OF CHANGE OF OPINION. THIS POSITION ITS, IN FACT, CONCEDED VIDE PARA 3 OF THE AFFIDAVIT-IN-REPLY DATED MARCH 13, 2001. THE REASONS DO NOT SPELL OUT FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL-MATERIAL FACTS. IN THE CIRCUMSTANCES, THE DEEMING PROVISION IN EXPLANATION 2 TO SECTION 147 HAS NO APPLICATION TO THE FACT OF THE PRESENT CASE. SECTION 148 ONLY PRESCRIBES THE TIME LIMIT FOR GIVING NOTICE. WE ARE REQUIRED IN THIS CASE TO LOOK INTO THE FACTS IN ORDER TO ASCERTAIN WHETHER THE PRE- CONDITION FOR THE ISSUE OF A VALID NOTICE UNDER SECTION 148 HAS BEEN FULFILLED OR NOT. WE ARE SATISFIED ON THE FACTS OF THE PRESENT CASE THAT REOPENING IS SOUGHT ON THE BASIS OF CHANGE OF OPINION. FURTHER, OVEN IN THE REASONS, THERE IS NOTHING TO INDICATE THAT REOPENING IS SOUGHT ON THE GROUND OF THE FAILURE ON THE PART OF THE PETITION TO DISCLOSE FULLY AND TRULY ALL-MATERIAL FACTS. (419) (V) OIL AND NATURAL GAS CORPORATION LTD. VS. DY. CIT & ORS. (UTTARANCHAL) REPORTED IN (2003) 262 ITR PAGE 648. THE PROVISO TO SECTION 147 OF THE INCOME-TAX ACT, 1961, PROVIDES THAT REOPENING OF THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE ASSESSMENT YEAR WOULD BE PERMISSIBLE ONLY IF THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE DUTY OF THE ASSESSEE DOES NOT EXTEND BEYOND MAKING A TRUE AND FULL DISCLOSURE OF PRIMARY FACTS. ONCE HE HAS DONE THAT HIS DUTY ENDS. IT IS FOR THE INCOME-TAX OFFICER TO DRAW THE CORRECT INFERENCE FROM THE PRIMARY FACTS. IT IS NO RESPONSIBILITY OF THE ASSESSEE TO ADVISE THE INCOME-TAX OFFICER WITH REGARD TO THE INFERENCE WHICH HE SHOULD DRAW FROM THE PRIMARY FACTS. IF AN INCOME-TAX OFFICER DRAWS AN INFERENCE WHICH APPEARS SUBSEQUENTLY TO BE ERRONEOUS, MERE CHANGE OF OPINION WITH REGARD TO THAT INFERENCE WOULD NOT JUSTIFY INITIATION OF ACTION FOR REOPENING OF ASSESSMENT. XXX XXXX XXXX XXXX XXXX XXX AT THE OUTSET IT NEEDS TO BE MENTIONED THAT IN THE REASONS FOR REOPENING OF ASSESSMENT WHICH HAVE BEEN REPRODUCED ABOVE IT HAS NOT BEEN ALLEGED THAT THERE HAS BEEN OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENTS. THE REASONS ITSELF, IN FACT INDICATE THAT THE ASSESSEE ITA NO : 2744/M/06 13 HAS DISCLOSED FULL AND TRUE FACTS ABOUT THE BORROWINGS OF FUNDS S WELL AS INVESTMENTS MADE IN TAX FREE PUBLIC SECTOR UNDERTAKING BONDS. THE REASON TO BELIEF THAT INCOME HAS ESCAPED ASSESSMENT WAS THAT THE ASSESSING OFFICER HAS, IN FACT, NOT GIVEN CONSCIOUS CONSIDERATION TO THE ASPECT THAT IF THE ASSESSEE HAD NOT INVESTED IN TAX FREE BONDS THERE WOULD NOT HAVE BEEN NECESSITY FOR BORROWING OF FUNDS BY THE ASSESSEE AND BY MISTAKE UNDERESTIMATION OF THE INCOME WAS MADE. IT IS, THUS OBVIOUS THAT THE REASONS SHOWN DO NOT SATISFY THE CONDITIONS AS ENVISAGED UNDER THE PROVISO TO SECTION 147 FOR REASSESSMENT. (653) XXX XXX XXX XXX XXXX XXXX XXX ON BEHALF OF THE PETITIONER RELIANCE WAS PLACED ON THE APEX COURT DECISION IN PARASHURAM POTTERY WORKS CO. LTD. VS. ITO (1977) 106 ITR 1, IN SUPPORT OF THE CONTENTION THAT FOR FAILURE OF THE ASSESSING OFFICER IN ASSESSING THE TAXABLE INCOME RECOURSE TO SECTION 147 OF THE ACT CAN NOT LEGALLY BE TAKEN. THE APEX COURT IN THE REPORTED DECISION HAS OBSERVED (PAGE 7) THAT: THE DUTY WHISH IS CAST UPON THE ASSESSEE IS TO MAKE A TRUE AND FULL DISCLOSURE OF THE PRIMARY FACTS T THE TIME OF THE ORIGINAL ASSESSMENT. PRODUCTION BEFORE THE INCOME-TAX OFFICER OF THE ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE INCOME-TAX OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE CONTEMPLATED BY LAW. THE DUTY OF THE ASSESSEE IN ANY CASE DOES NOT EXTEND BEYOND MAKING A TRUE AND FULL DISCLOSURE OF PRIMARY FACTS, ONCE HE HAS DONE THAT HIS DUTY ENDS. IT IS FOR THE INCOME-TAX OFFICER TO DRAW THE CORRECT INFERENCE FROM THE PRIMARY FACTS. IT IS NOT RESPONSIBILITY OF THE ASSESSEE TO ADVISE THE INCOME-TAX OFFICER WITH REGARD TO THE INFERENCE WHICH HE SHOULD DRAW FROM THE PRIMARY FACTS. IF AN INCOME-TAX OFFICER DRAWS AN INFERENCE WHICH APPEARS SUBSEQUENTLY TO BE ERRONEOUS, MERE CHANGE OF OPINION WITH REGARD TO THAT INFERENCE WOULD NOT JUSTIFY INITIATION OF ACTION FOR REOPENING ASSESSMENTS. THE PRINCIPLES LAID DOWN SQUARELY APPLY TO THE FACTS OF THE INSTANT CASE AND ON THE PRETEXT THAT THERE WAS NO CONSCIOUS CONSIDERATION OF THE POINTED FACTS AT THE TIME OF THE ASSESSMENT, REOPENING OF THE ASSESSMENT IS NOT LEGALLY PERMISSIBLE BY VIRTUE OF THE PROVISO TO SECTION 147 OF THE ACT. IN MCDERMOTT INTERNATION INC. V. ADDL. CIT (2003) 259 ITR 138 (UTTARANCHAL) TO WHICH ONE OF US (HUSSAIN J.) WAS A PARTY, THIS COURT HAS RECENTLY HELD THAT AN ASSESSMENT COULD NOT BE REOPENED WHEN THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. IT WAS REITERATED THAT A REASSESSMENT CAN NOT BE INITIATED ON THE BASIS OF A CHANGE OF OPINION AND THAT IT WAS REITERATED THAT A REASSESSMENT CAN NOT BE INITIATED ON THE BASIS OF A CHANGE OF OPINION AND THAT EXPLANATION 2 TO SECTION 147 OF THE ACT PERMITS REASSESSMENT WITHIN THE PERMISSIBLE PERIOD UNDER SECTION 147 WHEREAS TO CARRY REASSESSMENT BEYOND A PERIOD OF FOUR YEARS, THE CONDITIONS UNDER THE PROVISO HAVE TO BE FULFILLED. IT WAS THUS OBSERVED (PAGE 142); ACCORDING TO LEARNED COUNSEL, THE INFORMATION AS ENVISAGED UNDER THE EXPLANATION WOULD ALSO BE DECISION OF SUPERIOR AUTHORITIES AND INCLUDES TRUE AND CORRECT STATE OF LAW AND ALSO INFORMATION AS TO JUDICIAL DECISION. HE SOUGHT TO SUPPORT THIS PROPOSITION BY CITING VARIOUS AUTHORITIES. WE NEED NOT DISCUSS THE CASE LAW, EVEN ACCEPTING FOR INVOKING THE PROVISIONS UNDER SECTION 147 OF THE ACT. THE PROVISO TO SECTION 147 OF THE ACT AS DISCUSSED CASTS EXEMPLARY BURDEN FOR ITA NO : 2744/M/06 14 SATISFACTION THAT THE ASSESSMENT ESCAPED ONLY DUE TO FAILURE ON THE PART OF THE ASSESSEE FOR THE CONTINGENCY EITHER OF THE DESCRIPTION. IN OUR VIEW, INFORMATION RELATING TO THE POSITION OF LAW AVAILABLE THROUGH THE VERDICT OF THE HIGHER AUTHORITY COULD NOT BE SUCH FAILURE ON THE PART OF THE ASSESSEE WHICH AUTHORITIES THE ASSESSING AUTHORITY TO REOPEN THE ASSESSMENT. (VI) CIT & ANOTHER V. FORAMER FRANCE REPORTED IN (2004) 264 ITR PAGE 566(SC). (IV) ON THE FACTS, THE NOTICES ISSUED UNDER SECTION 148 ON NOVEMBER 20, 1998 TO THE ASSESSEE FOR REOPENING THE ORIGINAL ASSESSMENTS FOR THE ASSESSMENT YEARS 1988-89, 1989-90 AND 1990-91, ON THE BASIS OF THE APPELLATE TRIBUNALS DECISION RENDERED IN THE CASE OF BOUDIER CHRISTIAN RELATING TO THE ASSESSEES TECHNICIAN DEPUTED TO INDIA, THE INCOME OF THE ASSESSEE WAS TO BE TREATED AS FEE FOR TECHNICAL SERVICES AND NOT AS BUSINESS INCOME AS ASSESSED IN THE ORIGINAL ASSESSMENTS FOR THOSE ASSESSMENT YEARS, WERE WITHOUT JURISDICTION AS THEY WERE BARRED BY LIMITATION IN VIEW OF THE PROVISO TO SECTION 147, AS AMENDED GY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, AS THAT WAS THE PROVISION THAT WAS APPLICABLE ON NOVEMBER 20, 1998, WHEN THE REASSESSMENT NOTICES WERE ISSUED, AND ADMITTEDLY THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR ASSESSMENT; (VII) CAPRIHANS INDIA LTD. VS. TARUN SEEM, DY. CIT & OTHERS, (BOMBAY) REPORTED IN (2004) 266 ITR PAGE 566 ... THAT ON RECEIPT OF REASONS, THE NOTICEE HAS TO FILE OBJECTIONS TO THE ISSUANCE OF NOTICE AND THEREUPON THE ASSESSING OFFICER HAS TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IT IS TRUE THAT THE ASSESSEE SHOULD HAVE FILED ITS RETURN PURSUANT TO THE NOTICE UNDER SECTION 148 AND, ON THAT BASIS, THE ASSESSEE SHOULD HAVE SOUGHT REASONS FOR ISSUING SUCH NOTICE AS LAID DOWN BY THE SUPREME COURT IN THE ABOVE JUDGMENT REPORTED IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 259 ITR 19. THAT WAS NOT DONE. WE WOULD HAVE REJECTED THE PETITION ON THIS GROUND. HOWEVER, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE NOT INCLINED TO DISMISS THE PETITION IN LIMINE BECAUSE THE REASONS NOW DISCLOSED BY THE ASSESSING OFFICER, ON THE FACE OF IT, SHOW THAT THERE IS NOTHING IN THE REASONS TO INDICATE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THE CASE OF IPCA LABORATORIES LTD. (2001) 251 ITR 416, THIS COURT HAS HELD THAT IN VIEW OF THE PROVISO TO SECTION 147 OF THE INCOME-TAX ACT, NO ACTION FOR REOPENING AFTER FOUR YEARS COULD BE TAKEN UNLESS THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ADMITTEDLY, THE PERIOD OF FOUR YEARS HAS EXPIRED. HENCE, WE ARE NOT INCLINED TO DISMISS THE PETITION IN LIMINE. FURTHER AS STATED ABOVE, EVEN THE REASONS DO NOT DISCLOSE A FINDING, VIZ., THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN FACT, THE REASONS SHOW THAT FROM THE CASE RECORD ITSELF CERTAIN CONCLUSIONS ARE SOUGHT TO BE DRAWN. HENCE, WE ARE NOT INCLINED TO DISMISS THE PETITION IN LIMINE. WE MAY CLARIFY THAT THIS JUDGMENT SHOULD NOT BE READ TO MEAN THAT THE ASSESSES ARE ENTITLED TO REASONS WITHOUT FILING A RETURN PURSUANT TO NOTICE UNDER SECTION 148. HOWEVER, IN THIS CASE, THE COURT FINDS EX FACILE THAT THE ASSESSING OFFICER HAS SOUGHT TO REOPEN THE ASSESSMENT ON CERTAIN ERRONEOUS ASSUMPTIONS. AS STATED ITA NO : 2744/M/06 15 HEREINABOVE, THE ASSESSEE HAS NOT EVEN RECEIVED CASH SUBSIDY OF RS.20 LAKHS DURING THE ACCOUNTING YEAR ENDING MARCH 31, 1997, RELEVANT TO THE ASSESSMENT YEAR IN QUESTION AND, THEREFORE, THERE WAS NO QUESTION OF UTILIZING THE SAID AMOUNT TO REDUCE THE COST OF THE ASSETS AS SUGGESTED BY THE ASSESSING OFFICER IN HIS REASONS. SIMILARLY, AS STATED ABOVE, THE ASSESSEE HAD PAID PROVIDENT FUND FOR MARCH, 1996, IN APRIL 1996 AND THEREFORE, IT WAS DISALLOWED AS AN ITEM OF DEDUCTION FOR THE ASSESSMENT YEAR 1996-97 BUT IT WAS ALLOWED UNDER SECTION 43B IN THE ASSESSMENT YEAR IN QUESTION AS THE PROVIDENT FUND WAS PAID IN APRIL, 1996. THEREFORE, THERE WAS NO QUESTION OF ESCAPEMENT OF INCOME FROM THE ASSESSMENT. LASTLY, WITH REGARD TO CAPITALIZATION OF INTEREST EXPENDITURE, THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT A SUM OF RS.34.92 LAKHS HAD ESCAPED ASSESSMENT AS THE SAID AMOUNT SHOULD HAVE BEEN CAPITALIZED TO THE COST OF THE ASSETS. HOWEVER, THIS REASON IS ALSO BASED ON AN ASSUMPTION THAT THE ASSESSEE HAD UTILIZED THE BORROWINGS FOR CAPITAL WORK-IN-PROGRESS. FURTHER, THE PETITIONER HAD NOT CLAIMED ANY DEDUCTION UNDER SECTION 36(1)(III) DURING THE ASSESSMENT YEAR IN QUESTION FOR THE INTEREST WHICH WAS CAPITALIZED AND, THEREFORE, THE QUESTION OF DISALLOWANCE DID NOT ARISE. IN THE CIRCUMSTANCES, WE ARE NOT INCLINED TO DISMISS THE PETITION. (572& 573) (VIII) VIKAS PRINTERY VS ASSTT.DIRECTOR OF INCOME-TAX (INVESTIGATION) AND ANOTHER REPORTED IN (2004) 270 ITR 68 (GUJARAT H.C) IT IS AN ADMITTED POSITION THAT FOR THE ASSESSMENT YEARS 1982-83 TO 1985- 86, THE NOTICES UNDER SECTION 148 OF THE ACT DATED JANUARY 28, 1991, HAVE BEEN ISSUED BEYOND THE PERIOD OF FOUR YEARS AND HENCE, UNLESS AND UNTIL THE REVENUE IS IN A POSITION TO SHOW THAT THERE HAS BEEN ESCAPEMENT OF ANY INCOME DUE TO FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS FOR THE PURPOSES OF HIS ASSESSMENT, REOPENING CANNOT BE RESORTED TO . IN THE PRESENT CASE, AS THE FACTS ON RECORD SHOW, THERE IS NO FAILURE OR OMISSION ON THE PART OF THE PETITIONER EITHER TO MAKE A RETURN AS REQUIRED OR ANY FAILURE OR OMISSION IN RELATION TO ANY MATERIAL FACT NECESSARY FOR THE PURPOSES OF ASSESSMENT AS REQUIRED UNDER THE PROVISO TO SECTION 147 OF THE ACT. THEREFORE, THE REVENUE HAVING FAILED TO DISCHARGE THE ONUS UNDER THE PROVISO TO SECTION 147 OF THE ACT, NO CASE IS MADE OUT FOR THE ASSESSMENT YEARS 1982-83 TO 1985-86 BEING DISTURBED AND THE NOTICES FOR THE SAID FOUR ASSESSMENT YEARS ARE QUASHED. IT IS HELD THAT THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW. (71) (IX) MAHAVIR SPINNING MILLS LTD. VS C.I.T. REPORTED IN(2004) 270 ITR PAGE 290 (PUNJAB & HARYANA H.C) : A BARE PERUSAL OF THE ABOVE SHOWS THAT THE ENTIRE THRUST OF THE OBSERVATIONS RECORDED BY THE ASSESSING OFFICER IS TO JUSTIFY HIS SATISFACTION ABOUT ESCAPEMENT OF INCOME. THERE IS NOT EVEN A WHISPER OF AN ALLEGATION THAT SUCH ESCAPEMENT HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. AS HELD IN DULI CHAND SINGHANIAS CASE [2004] 269 ITR 192 ( P & H), ABSENCE OF THIS FINDING MAKES THE ACTION OF THE ASSESSING OFFICER WHOLLY WITHOUT JURISDICTION. SINCE THE ILLEGALITY OF NOTICE UNDER SECTION 148 OF THE ACT IS APPARENT FROM THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT, IT IS A FIT CASE FOR INTERFERENCE IN THE EXERCISE OF OUR WRIT JURISDICTION. SENDING THE PETITIONER BACK TO THE ASSESSING OFFICER TO RAISE THESE ITA NO : 2744/M/06 16 OBJECTIONS AND REQUIRING HIM TO PASS AN ORDER THEREON WOULD BE PROLONGING THE PROCEEDINGS UNNECESSARILY. IN VIEW OF THE ABOVE, WE ARE SATISFIED THAT THE IMPUGNED NOTICE UNDER SECTION 148 OF THE ACT IS WITHOUT JURISDICTION AND IS, ACCORDINGLY QUASHED. THE WRIT PETITION STANDS ALLOWED. HOWEVER, IN THE CIRCUMSTANCES OF THE CASE, THERE SHALL BE NO ORDER AS TO COSTS. (295) (X) BANSWARA SYNTEX LTD. VS ASSTT.COMMISSIONER OF INCOME-TAX REPORTED IN (2005) 272 ITR PAGE 154 (RAJASTHAN H.C.) IN THE PRESENT CASE, THE PETITIONER IS NOT CHALLENGING THE SUFFICIENCY OR ADEQUACY OF MATERIAL, ON THE BASIS OF WHICH, BELIEF HAS BEEN FOUND BUT HIS CASE IS ON THE BASIS OF THE REASONS RECORDED BY THE ASSESSING OFFICER HIMSELF, HE HAD NO JURISDICTION TO INITIATE PROCEEDINGS ON THE DATE ON WHICH HE ISSUED NOTICES WHICH WERE CLEARLY BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WHICH, IN THE PRESENT CASE, COMES TO END ON MARCH 31, 2001. IT IS APPARENT FROM THE REASONS THAT THE ASSESSING OFFICER DID NOT HOLD ANY BELIEF THAT ESCAPEMENT OF INCOME CHARGEABLE TO TAX FROM THE ASSESSEE WAS ON ACCOUNT OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEAR 1996- 97 . THUS, IT WAS CLEARLY A CASE FALLING WITHIN THE AMBIT OF THE PROVISO TO SECTION 147 AND NOTICES ISSUED AFTER JANUARY 31, 2001, WERE CLEARLY BARRED BY TIME. THUS, THE ASSESSING OFFICER HAD NO JURISDICTION TO ISSUE THE NOTICES. (158) (XI) GERMAN REMEDIES LTD. VS DEPUTY COMMISSIONER OF INCOME- TAX REPORTED IN( 2006) 287 ITR PAGES 494 (BOMBAY HIGH COURT) HAVING SAID SO, IT IS NECESSARY TO CONSIDER TWO MORE SUBMISSIONS ADVANCED ON BEHALF OF THE PETITIONERS. FIRSTLY, THE IMPUGNED NOTICE IS BARRED BY LIMITATION SINCE IT WAS ISSUED BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR . FAILURE ON THE PART OF THE PETITIONERS TO DISCLOSE FULL AND TRUE MATERIAL HAS NOT BEEN ALLEGED. IN THIS CASE, POWER TO REOPEN HAS BEEN EXERCISED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR TO WHICH THEY RELATE. IN THE CIRCUMSTANCES, THE IMPUGNED NOTICE HAVING BEEN ISSUED BEYOND FOUR YEARS FROM THE LAST DATE OF THE RELEVANT ASSESSMENT YEAR WITHOUT ALLEGING ANY FAILURE TO DISCLOSE FULL AND TRUE MATERIAL FACTS IS LIABLE TO BE SET ASIDE. IT IS NOT IN DISPUTE THAT THE ASSESSING OFFICER ON SEPTEMBER 15, 2003, HAD HIMSELF CARRIED THE FILE TO THE COMMISSIONER OF INCOME-TAX AND ON THE VERY SAME DAY, RATHER THE SAME MOMENT IN THE PRESENCE OF THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME-TAX GRANTED APPROVAL. AS A MATTER OF FACT, WHILE GRANTING APPROVAL IT WAS OBLIGATORY ON HIS PART TO VERIFY WHETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TRUE RELEVANT FACTS IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT OF INCOME OF THAT ASSESSMENT YEAR. IT WAS ALSO OBLIGATORY ON THE PART OF THE COMMISSIONER TO CONSIDER WHETHER OR NOT POWER TO REOPEN IS BEING INVOKED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR TO WHICH THEY RELATE. NONE OF THESE ASPECTS HAVE BEEN CONSIDERED BY HIM WHICH IS SUFFICIENT TO JUSTIFY THE CONTENTION RAISED BY THE PETITIONER THAT THE APPROVAL GRANTED SUFFERS FROM NON-APPLICATION OF MIND. IN THE ABOVE VIEW OF THE MATTER, THE IMPUGNED NOTICES AND CONSEQUENTLY THE ORDER JUSTIFYING REASONS RECORDED ARE UNSUSTAINABLE. THE SAME ARE LIABLE TO BE QUASHED AND SET ASIDE. ITA NO : 2744/M/06 17 ( 500 & 501) (XII) SESA GOA LTD. VS. JOINT COMMISSIONER OF INCOME TAX AND OTHERS REPORTED IN (2007) 294 ITR101. THE POWER OF REASSESSMENT CONFERRED UNDER SECTION 147 OF THE ACT CAN BE EXERCISED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITHOUT RESTRICTIONS IMPOSED BY THE PROVISO TO THAT SECTION. HOWEVER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, POWER OF THE ASSESSING OFFICER IS RESTRICTED BY THE LIMITATIONS IMPOSED UNDER THE PROVISO, AS STATED EARLIER. SHRI REVONKAR, LEARNED COUNSEL FOR RESPONDENTS NOS.1 AND 2 RELYING UNDER SUB-CLAUSE (III) OF CLAUSE (A) OF SUB-SECTION (1) OF SECTION 149 OF THE ACT CONTENDED THAT ON ACCOUNT OF THE WRONG COMPUTATION OF CLAIM OF THE DEDUCTION UNDER SECTION 80HHC OF THE ACT, TAX OR MORE THAN RS.1,00,000 WOULD BE PAYABLE AND, THEREFORE, THE NOTICE COULD BE ISSUED WITHIN A PERIOD OF 10 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WE ARE UNABLE TO AGREE. SECTION 147 OF THE ACT IS THE SOURCE OF POWER OF THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT. SECTION 148 CONTAINS PROCEDURAL RESTRICTION FOR ISSUANCE OF A NOTICE FOR EXERCISE OF THE POWER OF REOPENING OF AN ASSESSMENT CONFERRED UNDER SECTION 147. SECTION 149 PRESCRIBES THE TIME LIMIT FOR ISSUANCE OF A NOTICE UNDER SECTION 148. IN OUR OPINION, THE CONDITIONS LAID DOWN UNDER SECTION 147 OF THE ACT FOR THE PURPOSES OF REOPENING THE ASSESSMENT MUST BE SATISFIED BEFORE THE NOTICE CAN BE ISSUED. THE CONDITIONS LAID DOWN IN SECTION 147 ARE THE JURISDICTION FACTS NECESSARY FOR THE PURPOSE OF EXERCISE OF THE POWER UNDER SECTION 147. THE JURISDICTIONAL FACTS PRESCRIBED UNDER SECTION 147 MUST EXIST BEFORE A NOTICE UNDER SECTION 148 CAN BE ISSUED. THE TIME LIMIT PRESCRIBED UNDER SECTION 149 OF THE ACT FOR ISSUANCE OF A NOTICE UNDER SECTION 148 IS IN ADDITION TO AND NOT IN DEROGATION WITH THE NECESSARY CONDITIONS REQUIRED TO BE SATISFIED UNDER SECTION 147 OF THE ACT. IN OTHER WORDS, IF THE BASIC JURISDICTIONAL FACTS REQUIRED FOR REOPENING OF AN ASSESSMENT UNDER SECTION 147 OF THE ACT DO NOT EXIST IT WOULD NOT BE COMPETENT FOR THE ASSESSING OFFICER TO ISSUE A NOTICE UNDER SECTION 148. EVEN WHERE THE JURISDICTIONAL FACTS PRESCRIBED UNDER SECTION 147 EXIST AND ALL CONDITIONS LAID DOWN UNDER SECTION 147 AND THE PROVISO THERETO ARE SATISFIED, THE NOTICE UNDER SECTION 148 CAN BE ISSUED ONLY AFTER THE ASSESSING OFFICER HAS RECORDED HIS REASONS FOR DOING SO UNDER SUB-SECTION (2) OF SECTION 148 AND HAS FURTHER OBTAINED THE NECESSARY SANCTION FOR ISSUANCE OF THE NOTICE AS REQUIRED UNDER SECTION 151 OF THE ACT. SUCH NOTICE IS ALSO REQUIRED TO BE ISSUED WITHIN THE TIME LIMIT PRESCRIBED UNDER SECTION 149 OF THE ACT. SECTION 149 OF THE ACT, IN OUR OPINION, DOES NOT RELAX THE RESTRICTION OF OUR YEARS PRESCRIBED IN THE PROVISO TO SECTION 147 OF THE ACT FOR ISSUANCE OF A NOTICE UNDER THE PROVISO TO SECTION 147. THE RESTRICTION OF FOUR YEARS WOULD BE APPLICABLE UNLESS THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SECTION 142 OR 148 OF THE ACT OR THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IF THE REASSESSMENT IS REQUIRED TO BE MADE ON ACCOUNT OF THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, OBVIOUSLY, THE RESTRICTION OF FOUR YEARS PUT UNDER THE PROVISO TO SECTION 147 WOULD NOT BE APPLICABLE AND NOTICE CAN BE ISSUED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS, BUT WITHIN THE TIME LIMIT OF 7 OR 10 YEARS, AS THE CASE MAY BE, PRESCRIBED UNDER SECTION 149 OF THE ACT. THE OBJECT OF SECTION 149 IN IMPOSING THE RESTRICTION OF SEVEN YEARS OR TEN YEARS WHERE THE INCOME LIKELY TO HAVE ESCAPED ASSESSMENT IS LESS THAN RS.50,000 OR RS.1,00,000, AS THE CASE MAY BE, IS NOT TO PERMIT REOPENING ITA NO : 2744/M/06 18 OF THE ASSESSMENT WHERE THE TAX LIABILITY WOULD NOT BE SIGNIFICANT AS COMPARED WITH THE EFFORTS THAT WOULD BE REQUIRED FOR REOPENING OF AN ASSESSMENT AFTER A PASSAGE OF SEVEN OR TEN YEARS, AS THE CASE MAY BE. TO REPEAT, THE TIME-LIMIT IMPOSED UNDER SECTION 149 OF THE ACT FOR ISSUANCE OF THE NOTICE IS NOT IN DEROGATION OF AN IS NOT FOR ENLARGING THE TIME RESTRICTION IMPOSED UNDER THE PROVISO TO SECTION 147 OF THE ACT BUT TO PUT AN ADDITION TIME RESTRICTION EVEN WHERE THERE IS NO RESTRICTION OF TIME FOR REOPENING OF THE ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IN THE PRESENT CASE, THE REASONS WHICH HAVE BEEN RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT DO NOT DISCLOSE THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT. NO DOUBT IN THE LAST PARAGRAPH OF THE REASONS, THE FIRST RESPONDENT HAS STATED: I AM SATISFIED THAT DUE TO FURNISHING THE FALSE PARTICULARS OF THE INCOME BY WAY OF INCORRECT CERTIFICATE WHICH MEANS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS REQUIRED FOR THE ASSESSMENT, INCOME OF RS.6,10,10,272 HAD ESCAPED ASSESSMENT THE SAID STATEMENT IS CLEARLY MADE ONLY AS AN ATTEMPT TO TAKE THE CASE OUT OF THE RESTRICTION IMPOSED BY THE PROVISO TO SECTION 147 OF THE ACT. (111 TO 113) XXX XXX XXX XXX AS LAID DOWN BY THE SUPREME COURT IN THE CASE OF ITO V. LAKHMANI MEWAL DAS [1976] 103 ITR 437, THE PHRASE REASON TO BELIEVE DOES NOT MEAN PURELY SUBJECTIVE SATISFACTION ON THE PART OF THE ASSESSING OFFICER AND THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT BY REASON OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS MUST BE HELD IN GOOD FAITH AND NOT MERELY AS A PRETENCE. IT IS OPEN TO A COURT TO EXAMINE WHETHER THE RELEVANT FACTS ON WHICH THE OPINION HAS BEEN FORMED, HAVE A BEARING ON THE FORMATION OF THE BELIEF AND TO THAT LIMITED EXTENT THE OPINION IS OPEN TO CHALLENGE IN THE COURT OF LAW. PARAGRAPH NOS.2 AND 3 OF THE REASONS RECORDED BY THE INCOME-TAX OFFICER STATE THE REASON FOR THE BELIEF OF THE ASSESSING OFFICER THAT INCOME HAD ESCAPED ASSESSMENT. (113) XXX XXX XXX XXX IN OUR OPINION, A SUBSEQUENT DECISION OF A COURT CANNOT JUSTIFY THE REOPENING OF AN ASSESSMENT AFTER A PERIOD OF FOUR YEARS AS THE SUBSEQUENT DECISION DOES NOT MEAN FAILURE ON THE PART OF AN ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. WE ARE FORTIFIED IN OUR VIEW THE DECISION OF THE CALCUTTA HIGH COURT IN INDRA CO LTD. V. ITO [1971] 80 ITR 559 AT PAGES 562 TO 565, AND THE GUJARAT HIGH COURT, RENDERED IN ARVIND MILLS LTD. V. DEPUTY CIT [2000] 242 ITR 173 AND CIT V. GUJARAT GINNING AND MFG. CO. LTD. REPORTED IN [1994] 205 ITR 40 TO WHICH OUR ATTENTION WAS DRAWN BY MR. DASTUR. HE ALSO RELIED UPON A DECISION OF THE CALCUTTA HIGH COURT REPORTED IN SIMPLEX CONCRETE PILES (INDIA) LTD. V. DEPUTY CIT [2003] 262 ITR 605. IN THE CASE OF SIMPLEX CONCRETE PILES (INDIA) LTD. [2003]262 ITR 605, THE DIVISION BENCH OF THE CALCUTTA HIGH COURT, AFTER CONSIDERING THE LAW AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 147 (MADE WITH EFFECT FROM APRIL 1, 1989) AS ALSO THE LAW AFTER THE AMENDMENT, HELD THAT THERE HAS BEEN NO SUBSTANTIAL CHANGE IN THE PRINCIPLES ON WHICH ASSESSMENT CAN BE REOPENED EITHER BEFORE APRIL 1, ITA NO : 2744/M/06 19 1989, OR THEREAFTER. THE DIVISION BENCH FURTHER HELD THAT ACTION FOR REOPENING OF AN ASSESSMENT CANNOT BE TAKEN AFTER THE EXPIRY OF FOUR YEARS UNLESS THE GIVEN CASE FALLS UNDER THE PROVISO TO SECTION 147 OF THE ACT, I.E., THE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS OR ON ACCOUNT OF SOME OTHER CONTINGENCIES (WITH WHICH WE ARE NOT CONCERNED HERE) SPECIFIED IN THE PROVISO. WE ARE WHOLLY IN AGREEMENT WITH THE VIEW EXPRESSED BY THE DIVISION BENCH OF THE CALCUTTA HIGH COURT IN THE CASE OF SIMPLES CONCRETE PILES (INDIA)[2003] 262 ITR 605. (115 & 116) 9 . THE OTHER LIMB OF THE ISSUE, WHETHER THE INSTRUCTION OR OFFICE NOTE GIVEN BY THE CIT(A) CAN JUSTIFY T HE REOPENING IN THIS CASE. IN OUR OPINION ANY INSTRUCTION BY CIT(A) OR BY HIGHER AUTHORITIES CANNOT GIVE JURISDICTION TO THE ASSESSING OFFI CER TO REOPEN THE CASE UNDER SECTION 147, UNLESS THE CONDITIONS GIVEN IN SECTION 147 IS SATISFIED. THE ASSESSING OFFICER HAS TO APPLY HIS OWN MIND IN ENTERTAINING HIS REASONS TO BELIEVE. IT CANNOT BE S UBSTITUTED BY ANYONE ELSE. HERE IN THIS CASE, OFFICE NOTE BY CIT(A) PER SE CANNOT BE THE GROUND OR REASON TO REOPEN THE CASE. 10 . IN VIEW OF OUR ABOVE FINDING, WE HOLD THAT THE REASONS RECORDED DO NOT MEET THE REQUIREMENT OF LAW AND, THEREFORE, THE ENTIRE PROCEEDINGS AS HAVE BEEN COMMENCED BY ISSUANCE OF NOTICE UNDER SECTION 148 DATED 10-2-2003 AND CONS EQUENTLY THE ASSESSMENT ORDER DATED 26-3-2004, PASSED UNDER SECTION 143(3) READ WITH SECTION 147 IS QUASHED, BEING VOID AB INITIO . THE OTHER ARGUMENTS OF THE LEARNED AR AND ALSO ON THE MERITS OF THE ADDITIONS ARE NOT BEING ADJUDICATED UPON AS THEY HAVE BEEN RENDERED ACADEM IC, AS THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED ON JURISDICTION AL POINT UNDER SECTION 148. ITA NO : 2744/M/06 20 11 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 22 ND DAY OF JUNE, 2012. SD/- SD/- (G.E. VEERABHADRAPPA) ( AMIT SHUKLA ) PRESIDENT JUDICIAL MEMBER MUMBAI, DT: 22 ND JUNE, 2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR PKM ITAT, MUMBAI BENCHES, MUMBAI