ACIT 20(2), MUMBAI V. DURATEX EXPORT, MUMBAI

ITA 3088/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49120 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 20-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K SHIVRAM
• Keywords: Reopening of assessment; Business income; Retrospective amendment; Reason to believe; Reassessment proceedings
• Section: 147; 263; 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A NOS.3088 & 3089/ MUM/2010 ASSESSMENT YEARS: 2001-02 & 2002-03 DY.COMMISSIONER OF INCOME TAX,20(2) .. APPELLAN T 612, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-12 VS DURATEX EXPORT, ,. RESPONDEN T GALA NO.122, BUILDING NBO.5-A, MITTAL INDUSTRIAL ESTATE, ANDHERI KURLA ROAD, ANDHERI(E), MUMBAI-59 PA NO.AAAFD 4540 J C.O.NOS.19 & 20/MUM/2011 (ARISING OUT OF ITA NOS. 3088 & 3089/ MUM/2010) ASSESSMENT YEARS: 2001-02 & 2002-03 DURATEX EXPORT, ,. CROSS OBJECTOR GALA NO.122, BUILDING NBO.5-A, MITTAL INDUSTRIAL ESTATE, ANDHERI KURLA ROAD, ANDHERI(E), MUMBAI-59 PA NO.AAAFD 4540 J VS DY.COMMISSIONER OF INCOME TAX,20(2) .. RESPOND ENT 612, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-12 APPEARANCES: R.K.GUPTA, FOR THE REVENUE K.SHIVRAM, FOR THE ASSESSEE I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 2 O R D E R PER PRAMOD KUMAR: 1. THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIO NS FILED BY THE ASSESSEE ARE DIRECTED AGAINST COMMON ORDER DATED 19.2.2010 OF THE CIT(A)-31,MUMBAI FOR THE ASSESSMENT YEARS 2001-02 & 2002-03, RESPECTIVELY. ITA NO.3088/M/10: ASSESSMENT YEAR: 2001-02 & C.O.NO.1 9/MUM/2011 2. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CALLE D INTO CORRECTNESS OF CIT(A)S ORDER DATED 19.2.2010, IN THE MATTER OF ASSESSM ENT UNDER SECTION 143(3)/147 OF THE ACT FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION AGAINST THE SAME ORDER OF THE CIT(A) . THEREFORE, FOR THE SAKE OF CONVENIENCE, WE TAKE UP THE APPEAL OF THE REVENUE A S WELL AS CROSS OBJECTION FILED BY THE ASSESSEE TOGETHER. 3. AS THE CROSS OBJECTION DEALS WITH THE VALIDITY OF RE ASSESSMENT PROCEEDINGS ITSELF, WE TAKE UP THE CROSS OBJECTION FIRST BECAUSE IN THE EVENT OF ASSESSEES GRIEVANCE AGAINST INITIATION OF REASSESSMENT PROCEEDINGS BEING UPHELD, THE ISSUES RAISED IN DEPARTMENTAL APPEAL, WHICH DEALS WITH THE Q UANTUM OF ADDITION MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS WILL BE RENDERED ACA DEMIC AND INFRUCTUOUS. 4. THE GRIEVANCES RAISED IN THE CROSS OBJECTION ARE AS F OLLOWS: 1. THE NOTICE U/S.148 OF THE ACT DT.28.3.2008 FOR R EOPENING OF COMPLETED ASSESSMENT UNDER SECTION 143(3) DT.19.12.2003 IS BAD IN L AW AS THE ASSESSEE HAD DECLARED FULL AND TRUE PARTICULARS OF ITS INCOME, THEREFORE, NOTICE OF REOPENING IS LIABLE TO BE QUASHED. 2. THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) DT.19.12 .2003 WAS COMPLETED AFTER PROPER APPLICATION OF MIND ON THE I SSUE OF DEDUCTION U/S. 80 HHC OF THE ACT EVEN SUBSEQUENT NOTICE ISSUED U/S.263 DAT ED 17.3.2004 WAS DROPPED THEREAFTER ISSUE OF NOTICE U/S.148 DT.28.3.200 8 BASED ON RETROSPECTIVE AMENDMENT OF SECTION 80 HHC OF THE ACT. I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 3 5. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTUR ING AND TRADING IN FABRICS DURING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE FILED ITS RETURN OF INCOME ON 24.10.2001 DECLARING A TOTAL INCOME OF ` . 80,09,030. PURSUANT TO THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSMENT WAS FINALIZED ON 19. 12.2003. SUBSEQUENT TO THE ASSESSMENT BEING FINALIZED, THE COMMISSIONER OF IN COME TAX -20 INITIATED REVISION PROCEEDINGS ON THE GROUND THAT THE DEDUCTION U/S. 80HHC AMOUNTING TO ` . 3,18,37,885 WAS WRONGLY ALLOWED INASMUCH AS AMOUNT O F ` . 24,03,463 RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE OF DEPB LICENCE, WHICH WAS NOT ELIGIBLE FOR TREATING AS BUSINESS INCOME WAS INCLUDED IN THE BUSINESS INCOME IN R ESPECT OF WHICH DEDUCTION UNDER SECTION 80 HHC WAS COMPUTED. RELIANC E WAS PLACED ON THE JUDICIAL PRECEDENTS IN THE CASE OF AP INDL. COMPONENTS LTD VS DC IT, 74 TTJ (HYD) 272 AND METAL ROLLING WORKS PVT LTD VS CIT, 142 ITR 170(BOM). IN RESPONSE TO THE PROCEEDINGS SO INITIATED BY THE COMMISSIONER, THE ASSESSEE MADE ELABORATE SUBMISSIONS ON 16.5.2009 AND THE COPY OF THE SAID SUBMISSI ONS ARE PLACED BEFORE US AT PAGES 36-41 OF PAPERS. ACCORDINGLY, THE REVISION PROCEEDINGS INITIATED WERE DROPPED. THE MATTER DID NOT REST THERE. SINCE THER E WAS A SUBSEQUENT RETROSPECTIVE AMENDMENT BY VIRTUE OF TAXATION LAW (AMENDMENT) 200 5, THE AO PROCEEDED TO REOPEN THE ASSESSMENT PROCEEDINGS FOR THE FOLLOWING REASO NS:- IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S.143(3) ON 19.12.2003 AT RS. 80,08,030. IT IS SEEN FROM THE RECORDS THAT THE ASSESSEE HAS CLAIMED D EDUCTION U/S. 80HHC OF RS. 3,18,37,885 IT INCLUDES THE DEDUCTION CL AIMED ON THE EXPORT INCENTIVES OF RS. 24,03,463 BY WAY OF DEPB LICENSES. T HE EXPORT TURNOVER OF THE ASSESSEE EXCEEDS RS. 10 CRORES AND THEREFORE, IN VIEW OF THE AMENDMENT BROUGHT ABOUT BY THE TAXATION LAWS (AMENDMENT) ACT, 2005, WITH RETROSPECTIVE EFFECT FROM APRIL 1, 1998, THE DEDUCTI ON U/S. 80 HHC HAS BEEN WRONGLY CLAIMED BY THE ASSESSEE. IN THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2004-05, AN ADDITION T O THE INCOME OF THE ASSESSEE HAS BEEN ON THE SIMILAR GROUND AND THE ADDIT ION HAS BEEN UPHELD BY THE HONBLE CIT(A). IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THAT THERE IS ESCAPEMENT OF INCOME OF MORE THAN RS. 1 LAKH. HENCE ASSESSMENT IS REOP ENED U/S.147 OF THE INCOME TAX ACT, 1961. I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 4 6. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) TREATED THE GRIEVANCE AGAINST REOPENING OF ASSE SSMENT AS NOT PRESSED BUT GAVE RELIEF TO THE ASSESSEE ON MERITS IN RESPECT OF ADD ITIONS MADE IN SALE OF DEPB LICENCE BY FOLLOWING THE ITAT (SB) IN THE CASE OF TO PMAN EXPORTS, 318 ITR (AT) 87 (MUM)(SB . HOWEVER, AS THE THINGS STAND NOW, THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS (SUPRA) IS REVER SED BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CHEMI CALS, 328 ITR 451(BOM) AND, THEREFORE, THE ASSESSEE HAS ONCE AGAIN RAISED THE GRIEVAN CE OF REOPENING OF ASSESSMENT AND IS IN CROSS OBJECTION BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERU SED THE MATERIAL ON RECORD AS ALSO THE LEGAL POSITION. IN THE COURSE OF HEARING B EFORE US, LEARNED DEPARTMENTAL REPRESENTATIVE HAS TAKEN A PRELIMINARY OBJECTION ON T HE GROUND THAT ONCE THE ASSESSEE DOES NOT RAISE THE GRIEVANCE OF REOPENING OF ASSESSM ENT BEFORE THE CIT(A), IT IS NOT OPEN TO DO SO AT THIS STAGE. HE INVITES OUR ATTENTION TO THE CATEGORICAL OBSERVATIONS MADE BY THE CIT(A) TO THE EFFECT THAT T HE GRIEVANCE AGAINST REASSESSMENT PROCEEDINGS WAS NOT PRESSED BY THE ASSESSEE. LEA RNED COUNSEL, ON THE OTHER HAND, SUBMITS THAT THE GRIEVANCE AGAINST REOPENI NG OF ASSESSMENT WAS NOT PRESSED FOR THE REASON THAT THE ISSUE WAS, AT THE RELEVAN T POINT OF TIME, BY AND LARGE COVERED IN FAVOUR OF THE ASSESSEE BY ITAT SPECIAL BENCH DECISION AND, THEREFORE, THIS GRIEVANCE DID NOT HAVE MUCH IMPACT ON THE INTEREST O F THE ASSESSEE. IT IS ALSO POINTED OUT THAT THE CIT(A) SUGGESTED THAT NOW THAT T HE MATTER HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE ON MERITS, THE ASSESSEE NEED NOT BE HYPER TECHNICAL FOR PRESSING THE GRIEVANCE AGAINST THE REOPENING OF ASSESSMENT . THE ASSESSEE AGREED TO THE SUGGESTION OF THE CIT(A) AND IT WAS FOR THIS REASON THAT THE GRIEVANCE AGAINST REOPENING OF ASSESSMENT WAS NOT PRESSED. IT IS FURTHER POI NTED OUT THAT AS OF NOW, WHEN THE SPECIAL BENCH DECISION OF THE TRIBUNAL HAS BEEN REVERSED BY HONBLE BOMBAY HIGH COURT AND THE ISSUE, ON MERITS, IS COVERED AGAINST THE ASSESSEE, THE QUESTION OF VALIDITY OF REOPENING OF ASSESSMENT ASSUMES SIGN IFICANT IMPORTANCE. HE THUS URGES US TO ADJUDICATE THE SAME ON MERITS REJECTING THE TECHNICAL OBJECTION RAISED BY LEARNED DEPARTMENTAL REPRESENTATIVE. LEARN ED COUNSEL RELIES UPON THE DECISION OF A CO-ORDINATE BENCH OF THIS TRIBUNAL IN T HE CASE OF ITO VS NATIONAL CO- I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 5 OPERATE BANK LTD, IN ITA NO.3879/M/2009 FOR THE ASSE SSMENT YEAR 2003-04 ORDER DATED 15.10.2010, WHEREIN, ON MATERIALLY IDENTICAL SET OF FACTS, SIMILAR OBJECTION OF THE REVENUE WAS OVERRULED. 8. WE SEE SUBSTANCE IN THE LEARNED COUNSELS PLEA. THE QUESTION AS TO WHETHER THE ASSESSMENT PROCEEDINGS ARE ADMITTEDLY REOPENED OR NO T ARE A VERY FUNDAMENTAL QUESTION REGARDING RETROSPECTIVE AMENDMENT TO SECTION 80 HHC, WHICH GOES TO THE ROOT OF THE MATTER. THE MERE FACT THAT THE ASSESSEE W AS NOT ALLOWED TO, OR DID NOT, PRESS THIS GRIEVANCE BEFORE THE CIT(A), PARTICULARLY I N A SITUATION IN WHICH THE RESULTANT ADDITION ON MERITS COULD NOT HAVE BEEN SUSTA INED BECAUSE OF BINDING JUDICIAL PRECEDENT THEN HOLDING AT THE RELEVANT POI NT OF TIME, THE ASSESSEE CANNOT BE DEPRIVED OF HIS RIGHTS TO ADJUDICATE THE REOPENING OF ASSESSMENT AT THIS STAGE. WE, THEREFORE, REJECT THE PLEA RAISED BY LEARNED DEPARTM ENTAL REPRESENTATIVE AND PROCEED TO DECIDE THE ISSUE RAISED IN THE CROSS OBJECTI ON. 9. IN VIEW OF THE FACT THAT ADMITTEDLY, THE PROCEE DINGS FOR REASSESSMENT WERE INITIATED AFTER FOUR YEARS AND THAT THESE PROCEEDING S WERE INITIATED ON THE BASIS OF RETROSPECTIVE AMENDMENT IN LAW, WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF A CO-ORDINATE BENCH OF THIS TRIBUNAL IN T HE CASE OF DHARMIK EXIM PVT LTD V ACIT, IN ITA NO.232/M/2009 AND OTHERS FOR A.Y. 200 0-2001 ORDER DATED 9.9.2010, WHEREIN, ON SIMILARLY MATERIAL FACTS, THE CO-ORDINAT E BENCH, INTER ALIA, OBSERVED AS FOLLOWS: 15. WHAT REMAINS FOR CONSIDERATION NOW IS GROUND NO . 5 TO 7 RAISED BY THE ASSESSEE IN ITS APPEAL. THIS RELATES TO THE VALIDITY OF INIT IATION OF REASSESSMENT PROCEEDINGS FOR A.Y. 2000-01. IN THIS REGARD, WE HAVE M/S. DHARMIK EXIM PVT. LTD. ALREADY NOTICED THAT THE NOTICE U/S. 148 OF THE ACT FOR THIS ASSESS MENT YEAR WAS ISSUED AND SERVED ON THE ASSESSEE ON 28.3.2007. THE REASSESSMENT PROCEED INGS HAVE BEEN INITIATED BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF ASS ESSMENT YEAR. IT IS THEREFORE NECESSARY THAT THE ESCAPEMENT OF INCOME SHOULD BE B ECAUSE OF FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERI AL FACTS NECESSARY FOR COMPUTATION OF ITS INCOME. IN THIS REGARD, WE HAVE ALSO SEEN TH AT THE ASSESSMENT FOR A.Y. 2000-01 WAS REOPENED CONSEQUENT TO AMENDMENT TO THE PROVISI ONS OF SECTION 80HHC OF THE ACT BY THE TAXATION LAWS (AMENDMENT) ACT, 2005 WITH RETROSPECTIVE EFFECT. ON THIS ISSUE, WE FIND THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF DENISH INDUSTRY VS. ITO, 271 ITR 340 HAS DEALT WITH AN IDENTICAL ISSUE, WHERE ASSESSMENT WAS SOUGHT TO BE REOPENED CONSEQUENT TO RETROSPECTIVE AMENDMENT T O THE LAW. THE HON'BLE GUJARAT HIGH COURT HAD HELD THAT FOR THE PURPOSE OF DECIDING QUESTION U/S. 147, WHETHER THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE RELEVANT ASSESSMENT YEAR, LAW APPLICABLE WOULD BE LAW AS IT STOOD ON THE DATE OF I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 6 FILING OF THE RETURN. IN THE PRESENT CASE, THE ASSE SSEE HAD FILED RETURN OF INCOME FOR A.Y. 2000- 01 ON 30.11.2000. AS ON THAT DATE QUESTI ON AS TO WHETHER DEPB BENEFIT WOULD BE ENTITLED TO DEDUCTION U/S. 80HHC OF THE AC T, WAS A DEBATABLE ISSUE. IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS REGARDING DEDUCTION OF CLAIM U/S. 80 HHC ON EXPORT INCENTIVE. IN FACT, EVEN IN THE ORIGINAL PROCEEDINGS CLAIM OF THE ASSES SEE WAS ACCEPTED BY THE REVENUE AUTHORITIES. IN VIEW OF THE AFORESAID DECISION OF H ON'BLE GUJARAT HIGH COURT IN THE CASE OF DENISH INDUSTRY (SUPRA), IT CANNOT BE SAID THAT THERE WAS ANY FAILURE ON THE PART OF THE SSESSEE TO FULLY AND TRULY DISCLOSE AL L MATERIAL FACTS NECESSARY FOR RELEVANT ASSESSMENT YEAR IN ACCORDANCE WITH THE LAW APPLICABLE ON THE DATE WHEN IT FILED RETURN OF INCOME. SINCE, ABOVE CONDITION MENT IONED UNDER PROVISO TO SECTION 147 IS NOT SATISFIED AND SINCE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR, REOPENI NG OF THE ASSESSMENT IS INVALID. WE THEREFORE HOLD THAT INITIATION OF REASSESSMENT P ROCEEDINGS U/S. 147 M/S. DHARMIK EXIM PVT. LTD. WAS NOT PROPER. THEREFORE OR DER DATED 24.12.2007 TO THE EXTENT THAT IT RELATES TO PROCEEDINGS U/S. 147 OF T HE ACT IS ANNULLED. THE SAID ORDER IN SO FAR AS IT RELATES TO GIVING EFFECT OF THE ORDER OF THE TRIBUNAL IS HOWEVER UPHELD. 10. WE ARE IN RESPECTFUL AGREEMENT WITH THE VIEWS SO E XPRESSED BY THE CO- ORDINATE BENCH. WE , THEREFORE, UPHOLD THE GRIEVAN CE OF THE ASSESSEE AND HELD THAT REASSESSMENT PROCEEDINGS WERE INDEED VITIATED IN LAW IN THE CASE OF REOPENING AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR BUT THE MERE FACT THAT THE ASSESSEE HAS NOT OFFERED THE INCOME IN RESPECT OF DEPB LI CENSES TO TAX, COULD NOT BE TREATED AS LAPSE ON BEHALF OF THE ASSESSEE BECAUSE THE LAW AS STOOD AT THE RELEVANT POINT OF TIME, WHEN THE RETURN WAS FILED, DID NOT PR OVIDE FOR TAXABILITY OF THE SAID INCOME. THE PROCEEDINGS AGAINST THE ORDER UNDER SECTI ON 263 TO BRING THE SAID INCOME TO TAX WERE ALSO DROPPED BY THE CIT. IT IS SET TLED LEGAL POSITION THAT WHEN THE ASSESSMENT IS REOPENED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT PREVIOUS YEAR AND UNLESS IT CANNOT BE ESTABLISHED THAT THE ASSESSE E HAS FAILED TO DISCLOSE ALL THE MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT , SUCH REASSESSMENT PROCEEDINGS CANNOT BE UPHELD UNDER LAW. THAT PRECISE LY IS THE CASE BEFORE US. IN VIEW OF THE ABOVE DISCUSSION AND BEARING IN MIND THE E NTIRETY OF THE CASE, WE UPHOLD THE GRIEVANCE RAISED BY THE ASSESSEE IN ITS CROSS OBJECTIO N AND, ACCORDINGLY ALLOW THE SAME. ONCE THE REASSESSMENT PROCEEDINGS ITSELF ARE QUASHED , THE ADDITIONS MADE DURING THE ASSESSMENT PROCEEDINGS SO REOPENED SEEMS TO HAV E ANY PRACTICAL IMPLICATION. THE ISSUE REGARDING VALIDITY OF SUCH AD DITIONS IS RENDERED ACADEMIC AND INFRUCTUOUS. THEREFORE, EVEN THOUGH AS LEARNED C OUNSEL FAIRLY AGREES THAT THE CORRECTNESS OF ADDITIONS MADE DURING THE COURSE OF SUCH REASSESSMENT PROCEEDINGS IS NOW COVERED AGAINST THE ASSESSEE BY JURISDICTIONAL HIG H COURTS JUDGEMENT IN THE I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 7 CASE OF KALAPATARU COLOURS CHEMICALS (SUPRA). SINCE T HE VERY REASSESSMENT PROCEEDINGS ITSELF ARE QUASHED THAT ASPECT OF THE MATTE R CEASES TO HAVE ANY PRACTICAL IMPLICATION. 11. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSESSEE I S ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED AS INFRUCTUOUS. ITA NO.3089/M/2010 AND CO NO.20/M/2011: 12. THE ONLY DIFFERENCE IN THE FACTS OF THE PRESENT CASE IS THAT WHEREAS IN ASSESSMENT YEAR 2001-02, THE ASSESSMENT WAS SO FRAMED UNDER SE CTION 143(3) BUT IN THE ASSESSMENT YEAR 2002-03, THE ASSESSMENT WAS FRAMED UN DER SECTION 143(1). THIS ASPECT OF THE MATTER, HOWEVER, WILL NOT HAVE ANY IMPACT ON THE VALIDITY OF REASSESSMENT PROCEEDINGS BECAUSE AS OBSERVED BY A CO-ORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF PIROJSHA GODREJ FOUNDATION VS ADIT, 133 TTJ (MUMBAI) 194, THAT IRRESPECTIVE OF WHETHER THE ASSESSMENT IS FINALIZED UNDER SECTION 143(1) OR 143(3), THE REQUIREMENT OF SECTION 147 ARE TO BE FUL FILLED. NEVERTHELESS THE CO- ORDINATE BENCH, SPEAKING THROUGH ONE OF US (I.E. ACCO UNTANT MEMBER), OBSERVED AS FOLLOWS: A LOT OF EMPHASIS HAS BEEN PLACED BY THE AUTHORITIE S BELOW ON THE FACT THAT SINCE THE REASSESSMENT IS BEING RESORTED TO WITHIN FOUR YE ARS OF THE END OF THE RELEVANT ASSESSMENT YEAR, I.E. IN THE MAIN PROVISION OF SECTION 147 AND NOT THE PROVISO THERETO, ALL THAT IS TO BE SEEN IS PRIMA FA CIE WHETHER THE INCOME HAS ESCAPED THE ASSESSMENT. HONBLE JURISDICTIONAL HIGH C OURT, IN THE CASE OF PRASHAT S JOSHI VS ITO (SUPRA) HAD AN OCCASION TO DEAL W ITH THIS QUESTION AND ALSO CONSIDER THE SCOPE OF HONBLE SUPREME COURTS JUDG MENT IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS PVT LTD (291 ITR 500) IN THIS REGARD. AFTER ELABORATELY CONSIDERING HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI (SUPRA), THEIR LORDSHIPS OF HONBLE BOMBAY HIG H COURT HAVE OBSERVED THAT HONBLE SUPREME COURT HELD THAT SO LO NG AS THE INGREDIENTS OF SECTION147 ARE FULFILLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDINGS UNDER SECTION 147, AND THAT THE FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER HIM POWERLESS TO INITIATE REASSESSMENT PR OCEEDINGS EVEN WHEN INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED. IN OTHER WORDS, ACCORDING TO HONBLE BOMBAY HIGH COURT, WHEN AN IN TIMATION HAS BEEN ISSUED UNDER SECTION 143(1), THE ASSESSING OFFICER IS COMPE TENT TO INITIATE REASSESSMENT PROCEEDINGS PROVIDED THAT THE REQUIREMENTS O F SECTION 147 ARE FULFILLED. IT IS THUS CONCLUDED THAT IN SUCH A CASE [I.E. WHEN THE REOPENING IS WITHIN FOUR YEARS AND THE INCOME TAX RETURN IS PROCESSE D UNDER SECTION 143(1)] AS WELL, THE TOUCHSTONE TO BE APPLIED IS AS TO WHETHER THERE WAS REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IT IS THUS CLEAR THAT I.T.A NOS.3088 & 3089/ MUM/2010 C.O.NOS.19 & 20/MUM/2011 DURATEX EXPORT, 8 EVEN WHEN THE ORIGINAL ASSESSMENT IS UNDER SECTION 143(1 ) AND EVEN WHEN REASSESSMENT PROCEEDINGS ARE INITIATED WITHIN A PERIOD O F FOUR YEARS, IT IS STILL NECESSARY THAT THERE SHOULD BE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND SUCH REASONS ARE SUBJECT TO JUDICIAL SCRUTINY . NO DOUBT THAT AT THE STAGE OF INITIATING REASSESSMENT PROCEEDINGS, IT IS NO T NECESSARY TO ESTABLISH THAT THERE HAS BEEN AN ESCAPEMENT OF INCOME, BUT ESSENTIALLY THERE HAVE TO BE VALID REASONS TO BELIEVE THAT INCOME HAS ESC APED ASSESSMENT AND THESE REASONS, ON STANDALONE BASIS, MUST BE CONSIDERED APPR OPRIATE FOR ARRIVING AT THE CONCLUSION ARRIVED AT BY THE OFFICER RECORDING THE REASONS. 13. IN VIEW OF THE ABOVE OBSERVATIONS MADE BY THE CO- ORDINATE BENCH, IN WHICH, WE ARE IN CONSIDERED AGREEMENT, THE FACT THAT ASSESSMENT IS COMPLETED UNDER SECTION 143(1), IN THE PRESENT CASE WILL NOT COME TO R ESCUE TO THE DEPARTMENT. THE FACTS REMAINS THAT THE CONDITIONS OF SECTION 147 ARE NO T COMPLIED WITH AND, ACCORDINGLY, THE REASSESSMENT PROCEEDINGS MUST BE QUASHED . 14. IN THE RESULT, CROSS OBJECTIONS FILED BY THE ASSESSEE A RE ALLOWED AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED AS INFRUCTUOU S. PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2011 SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 15 TH JUNE, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),-31, MUMBAI 4. COMMISSIONER OF INCOME TAX,20 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI