SMT ASHA DEVI LATH, V. THE I T O,

ITA 323/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7997 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-03-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 11-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S DESHPANDE
• Keywords: Reopening of assessment; Depreciation; Opportunity of being heard; Tangible material; Difference of opinion; Onus to prove; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 133(6); 195; 150(1); 264; 153; 22; 147; 131; 68; 246; 148; 154; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NOS. 417 AND 323/IND/2008 AYS: 1998-99 & 1999-2000 SMT. ASHA DEVI LATH PROP. ABHISHEK TEXTILES SHAH BAZAR, BURHANPUR PAN AVSPL-4447-P ::: APPELLANT VS INCOME TAX OFFICER BURHANPUR ::: RESPONDENT ASSESSEE BY : SHRI S.S. DESHPANDE DEPARTMENT BY : SMT. APARNA KARAN, SR. DR O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THESE APPEALS ARE BY THE ASSESSEE FOR THE ASSESSMEN T YEARS 1998-99 AND 1999-2000. FIRST WE SHALL TAKE UP APPEAL IN ITA NO. 417/IND/2008 WHEREIN A LEGAL GROUND HAS BEEN RA ISED BY THE ASSESSEE CONTENDING THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE REOPENING OF ASSESSMENT AND THE ACTION U/S 148 OF THE ACT IS ILLEGAL AND UNJUSTIFIED, CONSEQUEN TLY IT SHOULD BE QUASHED. DURING HEARING, WE HAVE HEARD SHRI S.S. D ESHPANDE, LD. COUNSEL FOR THE ASSESSEE, AND SMT. APARNA KARAN, LE ARNED SENIOR DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSE E IS THAT ALL THE ADDITIONS HAVE BEEN MADE U/S 143(3) FOR WHICH O UR ATTENTION WAS INVITED TO PAGE 56 OF THE PAPER BOOK AND ALSO P AGES 58 ONWARDS. IT WAS POINTED OUT THAT THE ASSESSMENT ORD ER WAS CHALLENGED BEFORE THE LEARNED CIT(A). THERE ALSO TH E ADDITION WAS DELETED. A STRONG PLEA WAS RAISED THAT EVEN THE MAT TER WAS CARRIED BEFORE THE TRIBUNAL WHEREIN VIDE ORDER DATED 29 TH MAY, 2009 THE TRIBUNAL HAS FOLLOWED THE DECISION IN THE CASE OF M /S NUTAN SYNTHETICS (ITA NO. 122/IND/2006 AND CO NO. 42/IND/ 2006) AND QUASHED THE DIRECTION. A STRONG PLEA WAS RAISED THA T IT IS TIME BARRED AS A PERIOD OF SIX YEARS HAS ALREADY ELAPSED . ON THE OTHER HAND, THE LEARNED SR. DR THOUGH DEFENDED THE IMPUGN ED ORDER BUT FAIRLY ADMITTED THAT IT IS BEYOND THE PERIOD OF SIX YEARS. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LEAR NED REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE DEALS IN PURCHASE AND SALE OF POWER LOOM CLOTH ONLY AND THE ASSESSEE PURC HASED THE CLOTH FROM LOCAL WEAVERS OF BURHANPUR. DURING FINAL ISATION OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2001 -02 IT WAS OBSERVED BY THE AO THAT THE SUNDRY CREDITORS AMOUNT ING TO RS.38,09,125/- WERE OUTSTANDING AS ON 31.3.2001 AND MANY OF THESE WERE OLD CREDITORS AND THE AMOUNTS WERE OUTST ANDING FOR A LONG PERIOD AND EVEN SOME OF THEM WERE OUTSTANDING SINCE 1995- 96 OR EARLIER. THE ASSESSEE WAS DIRECTED TO PRODUCE THE CREDITORS IN PERSON FOR CONFIRMATION OF SUCH CREDITS. THE ASS ESSEE EXPRESSED ITS INABILITY TO PRODUCE THE CREDITORS AND MADE A R EQUEST TO THE AO TO ISSUE SUMMONS TO THESE CREDITORS. THE ASSESSEE W AS ASKED TO FURNISH THE COMPLETE ADDRESSES OF THESE CREDITORS. AS PER THE REVENUE, SUCH ADDRESSES WERE NOT FURNISHED BY THE A SSESSEE. FINALLY THE LD. COUNSEL FOR THE ASSESSEE ATTENDED T HE PROCEEDINGS ON 30.12.2004 AND SUBMITTED A COPY OF ACCOUNT OF CR EDITORS ALONG WITH COPY OF BILLS. FROM A PERUSAL OF THESE BILLS, AS PER THE REVENUE, IT WAS FOUND THAT MOST OF THE ADDRESSES WE RE INCOMPLETE. A PLEA WAS RAISED BY THE LD. COUNSEL F OR THE ASSESSEE THAT WHATEVER INFORMATION WAS AVAILABLE WITH HIM HA S BEEN FILED. THE AO ISSUED SUMMONS U/S 131 TO WHICH THE CONCERNE D CREDITORS ATTENDED THE PROCEEDINGS. IT IS OBSERVED BY THE AO THAT PURSUANT TO SUMMONS ISSUED U/S 131 OF THE ACT, FIVE PERSONS ATTENDED AND DENIED THAT ANY AMOUNT WAS RECEIVABLE FROM THEM AS ON 31.3.2001. ULTIMATELY, THE AO HELD THAT THE SUNDRY CREDITORS, AS PER BALANCE SHEET, HAVE EITHER BEEN CEASED OR REMIT TED, THUS THE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE AS P ER THE PROVISIONS OF SECTION 41(1) OF THE ACT. THE ASSESSE E CHALLENGED THE ASSESSMENT ORDER BEFORE THE CIT(A) WHO DELETED THE ADDITION SO MADE U/S 41(1) OF THE ACT BY HOLDING THAT ONE OF TH E MAJOR REQUIREMENTS OF SECTION 41(1) OF THE ACT IS ABSENT WHEREAS ALL THE REQUISITE CONDITIONS HAVE TO BE FULFILLED. HOWEVER, THE CIT(A) DIRECTED THE AO TO REOPEN THE ASSESSMENT OF THE RES PECTIVE YEARS U/S 147 OF THE ACT SUBJECT TO THE PROVISIONS OF SECT ION 150(1) AND 150(2) OF THE ACT. THE MATTER WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL WHERE ALSO THE STAND OF THE LEARNED LD. FI RST APPELLATE AUTHORITY WAS UPHELD BY HOLDING THAT NO ADDITION WA S JUSTIFIED U/S 41(1) OF THE ACT. THE TRIBUNAL VIDE ITS ORDER DATED 29 TH MAY, 2009 IN THE CASE OF ITO VS. SMT. ASHA DEVI LATH (ITA NO. 135/IND/2006) AND ALSO ITA NO. 153/IND/2006 A.Y. 20 01-02, BY FOLLOWING THE DECISION IN THE CASE OF M/S NUTAN SYN THETICS (REVENUES APPEAL NO. 122/IND/06 AND CO NO. 42/IND/ 2006), CONCLUDED THAT THE DIRECTIONS OF THE CIT(A) TO THE AO TO REOPEN THE ASSESSMENT U/S 147/148 OF THE ACT ARE NOT PROPE R, CONSEQUENTLY QUASHED THE SAME. THE RELEVANT PORTION OF THE ORDER DATED 29.5.2009 OF THE TRIBUNAL IS REPRODUCED HEREU NDER :- THE CROSS-APPEALS OF THE DEPARTMENT AND ASSESSEE AR E FILED AGAINST THE ORDER OF LD. CIT(A)-II, INDORE DA TED 28.12.2006 FOR THE AY 2001-02. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 3. FOR THE SAKE OF CONVENIENCE, WE FIRST DISCUSS APPEA L OF THE REVENUE. 4. THE FIRST GROUND OF APPEAL IS THAT THE LD. CIT(A), INDORE ERRED IN DELETING THE ADDITION OF RS.11,92,013/- WHICH WA S MADE ON ACCOUNT OF VERY OLD TRADE CREDITORS HOLDING THAT THE ENTIRE LIABILITY DID NOT PERTAIN TO THE YEAR UNDER CONSIDE RATION. 5. FACTS OF THE CASE AS MENTIONED IN THE ORDER OF LD. CIT(A) ARE REPRODUCED AS UNDER: ACCORDING TO THE ASSESSMENT ORDER, THE AO NOTICED SUNDRY CREDITORS WORTH SUM OF RS. 38,09,125 /- APPEARING IN THE BALANCE SHEET AND THE SAME WAS OUTSTANDING ON 31.3.2001. THE AO FROM THE RECORD NOTICED THAT MANY OF THE CREDITORS WERE OLD ONES FO R A LONG PERIOD AND EVEN SOME OF THEM WERE OUTSTANDING SINCE 1995-96 OR EARLIER WITH NO CHANGE IN THE BALANCES. THE AO REQUIRED THE APPELLANT TO FURNISH COPY OF ITS ACCOUNT IN THE BOOKS OF THE CREDITORS O R TO PRODUCE THEM IN PERSON FOR CONFIRMATION OF THE CRED ITS. IN RESPONSE, COPY OF THE CREDITORS FOR GOODS FOR TH REE YEARS AND COPY OF BILLS OF THE SUPPLIERS FOR THE PU RPOSE OF GIVING THE ADDRESSES WERE SUBMITTED. HOWEVER, IT WAS NOTICED THAT MOST OF THE BILLS DID NOT CONTAIN COMPLETE ADDRESS OF THE SUPPLIERS. AT THE REQUEST O F THE ASSESSEE, SOME OF THE CREDITORS WERE ISSUED SUMMONS U/S 131. IN MOST OF THE CASES, IT WAS SEEN THAT THE ASSESSEE REMITTED THE AMOUNT AND IN SOME CASES, THE RE WAS NO RESPONSE TO THE SUMMONS. THUS, THE ASSESSEE FAILED TO DISCHARGE ONUS TO PROVE THE SAID CREDITS, AS IN SOME CASES, THE SUMMONS ADDRESSED TO THE PERSONS AN D SENT BY POST WERE RETURNED BACK UNDELIVERED FOR WAN T OF COMPLETE ADDRESS. THE AO HAS ALSO OBSERVED THAT FIVE PERSONS WHO ATTENDED IN COMPLIANCE WITH THE SUMMONS, CATEGORICALLY DENIED HAVING ANY AMOUNT RECEIVABLE BY THEM FROM THE ASSESSEE AS ON 31.3.200 1 AS ADMITTED BY THEM IN THEIR STATEMENT RECORDED. CO PY OF STATEMENTS WITH RELEVANT ACCOUNT WERE ALSO MADE AVAILABLE TO THE ASSESSEE ASKING HER AS TO WHY THES E SUNDRY CREDITS SHOULD NOT BE TAXED INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT, SINCE THESE WERE BEYOND THE PRESCRIBED LIMIT PROVIDED BY THE LIMITAT ION ACT FOR FILING A SUIT FOR RECOVERY OF PRICE OF GOOD S SOLD. IN ABSENCE OF ANY COMPLIANCE, IT WAS PRESUMED BY TH E AO THAT SHE HAD NO EXPLANATION TO OFFER AND THE TRA DING LIABILITIES APPEARING AS SUNDRY CREDITORS IN HER BA LANCE SHEET HAVE EITHER BEEN CEASED OR REMITTED. THE AO HAS ALSO DIVIDED VARIOUS CATEGORIES OF THE TRADE CREDITORS IN RESPECT OF WHICH TOTAL ADDIT ION OF RS. 34,16,017/- WAS MADE AS UNDER: 1. ADDITION OF RS. 11,92,013/-: THE TRADE CREDITORS WHICH ARE VERY OLD AND THE LIMITATION OF THREE YEAR S PRESCRIBED BY THE LIMITATION ACT, 1963 FOR FILING A SUIT FOR RECOVERY OF PRICE OF THE GOODS SOLD, HAD ALREAD Y EXPIRED AND THEREBY THERE WAS CESSATION OF LIABILIT Y IN THE LIGHT OF THE OMISSION OF THE SUPPLIERS TO TAKE ANY LEGAL ACTION AGAINST THE ASSESSEE, BY RELYING ON TH E DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF K.G. SUBRAMANYAM VS. CIT (1992) 195 ITR 199 (KARN. ). EVEN THOUGH, IN ORDER TO VERIFY AS TO WHETHER THE C REDITS STILL EXIST, THE ASSESSEE WAS ASKED TO PRODUCE THE CREDITORS IN PERSON BUT NO COMPLETE ADDRESS WAS GIV EN BY HER IN THAT RESPECT, INSTEAD GIVEN COPIES OF BIL LS OF THE CREDITORS HAVING NO COMPLETE ADDRESS. THE SUMMONS ISSUED AND SENT BY POST WAS RETURNED BACK UNDELIVERED IN THE ABSENCE OF COMPLETE ADDRESS. THE INSPECTOR DEPUTED TO LOCATE COULD NOT FIND ANY PERS ON AT THE GIVEN ADDRESS. THE AO COULD NOT ISSUE SUMMON S TO THE PERSONS IN WHOSE CASE ONLY STATION I.E. BURH ANPUR WAS MENTIONED WITHOUT ADDRESS. THE AO CONCLUDED THAT TO TAX SUCH TRADE CREDITS OUTSTANDING SINCE 19 95- 96 TO 1997-98 WORTH RS. 11,92,103/- INVOKING THE PROVISIONS OF SECTION 41(1). 2. ADDITION OF RS. 15,22,888/-: THE TRADE CREDITOR S, WHICH WERE NOT THAT MUCH OLD BUT THE ASSESSEE FAILE D TO PROVE THAT THE CREDITS STILL EXISTED BY NOT PRODUCI NG THEM AND BY NOT GIVING COMPLETE ADDRESSES EITHER T HUS FAILING TO DISCHARGE THE ONUS AND THEREBY PROVING S UCH CREDITORS, LEADING TO ADDITION U/S 41(1) AT RS. 15,22,888/-. 3. ADDITION OF RS. 6,52,468/- AND RS. 48,558/-: THE LAST CATEGORY PREPARED IS IN RESPECT OF THE TRADE CREDIT ORS ATTENDING BEFORE THE AO IN RESPONSE TO THE SUMMONS U/S 131 OR THOSE, WHO HAD SUPPLIED COPY OF ACCOUNT OF THE ASSESSEE IN THEIR BOOKS IN COMPLIANCE WITH THE REQUIREMENT MADE U/S 133(6) OF THE ACT, DENYING THE Y BEING DEBTORS WITH THE ASSESSEE AS ON 31.3.2001. IT WAS ALSO STATED THAT THEY HAD NOTHING RECEIVABLE FROM T HE ASSESSEE. IN VIEW OF THESE FACTS, THE AO CONCLUDED TO ADD FURTHER AMOUNT OF RS. 6,52,468/- AND RS. 48,558 /- INVOKING THE PROVISIONS OF SECTION 41(1) AND FINALI ZED THE ASSESSMENT. 6. THE LD. CIT(A) DELETED THE AMOUNT OF RS.11,92,017/- WHICH WAS ADDED U/S 41(1) OF THE ACT AS ACCORDING TO THE LD. CIT(A), IT IS AN ADMITTED FACT THAT THESE TRADE CRE DITORS WERE VERY OLD AND THE ADDITION HAS BEEN MADE ONLY ON THE GROUND THAT THE PROVISIONS OF LIMITATION ACT WERE NOT APPL ICABLE TO THEM. HE FURTHER OBSERVED THAT IT IS ALSO A MATTER OF RECORD THAT NO UNILATERAL ACT HAS BEEN TAKEN BY THE ASSESS EE TO WROTE OFF THE LIABILITY. IN FACT THE LIABILITY IS E XISTING ONE. IT IS A SETTLED LAW THAT FOR SUCH ADDITION, REQUISITE CONDI TION LAID DOWN U/S 41(1) SHOULD HAVE BEEN FULFILLED AND THE F ACTUM OF REMISSION OR CESSATION SHOULD BE PROVED BY THE DEPA RTMENT. IN CASE IT IS NOT PROVED, NO SUCH ADDITION IS CALLE D FOR. FOR SUCH ADDITION, POSITIVE EVIDENCE SHOULD HAVE BROUGH T ON RECORD BY THE AO. PROVISIONS OF SEC. 41(1) DO NOT A TTRACT WHEN A DEBT HAS BECOME BARRED BY TIME LIMITATION BU T ONLY IN A SITUATION WHEN THE BAD DEBT WRITTEN OFF IN THE BO OKS OF ACCOUNT. FURTHER, AS PER THE REQUIREMENT OF SEC. 41 , TWO CONDITIONS SHOULD BE SATISFIED, FIRSTLY, THAT THE A MOUNT HAS BEEN ALLOWED AS A DEDUCTION IN THE EARLIER YEAR AND SECONDLY, THAT DURING THE AY IN QUESTION, THE ASSES SEE HAD RECEIVED THE BENEFIT REPRESENTING A GIVEN AMOUNT BY WAY OF CESSATION OR REMISSION OF THE LIABILITY IN REGARD T O THE SAID AMOUNT. IN CASE WHERE THE ASSESSEE HAD TREATED THE GIVEN AMOUNT AS HIS OWN INCOME IN HIS P & L ACCOUNT AND H AS ALSO MENTIONED THAT THE SAID AMOUNT BECAME HIS OWN INCOM E AS A RESULT OF FORFEITING THE SAME ITSELF, THEN PRIMA FACIE THE ASSESSING AUTHORITY WOULD BE ENTITLED TO HOLD THAT SECOND CONDITION STOOD SATISFIED BUT WHERE ANY OF THE TWO CONDITIONS WAS NOT FULFILLED, THE AMOUNT COULD NOT BE BROUGHT TO TAX U/S 41(1) OF THE ACT. 7. AFTER HEARING RIVAL CONTENTIONS, WE NOTED THAT THE ENTIRE AMOUNT OF RS.11,92,017/- WAS CARRIED FORWARD FROM L AST SO MANY YEARS AND IN VIEW OF THE ABOVE DISCUSSION, NO ADDITION IS JUSTIFIED U/S 41(1) OF THE ACT IN THE AY UNDER C ONSIDERATION. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) H AS RIGHTLY DELETED THE ADDITION OF RS.11,92,013/- AND THUS THI S GROUND OF APPEAL OF THE REVENUE IS DISMISSED. WE ALSO NOTE D THAT WHILE DELETING THE SAID ADDITION BY THE LD. CIT(A), HE HAS FURTHER MENTIONED THAT THE ASSESSEE NEITHER COULD P RODUCE THE COMPLETE ADDRESSES OF THE PARTIES NOR COULD PRO DUCE THEM PERSONALLY. IN SUCH A SITUATION, ALTERNATIVELY , THE IMPUGNED SUM IS LIABLE TO BE TREATED AND ADDED TO T HE INCOME AS EXPLAINED CASH CREDIT BY INVOKING THE PRO VISIONS OF SEC. 68 OF THE ACT. ACCORDINGLY, THE LD. CIT(A) DIR ECTED TO REOPEN ASSESSMENT OF THE RESPECTIVE YEARS U/S 147 O F THE ACT SUBJECT TO THE PROVISION OF SEC. 150(1) AND 150 (2) OF THE ACT AND TO TAX THE SAME ACCORDINGLY. IN THIS REGARD , WE ARE OF THE VIEW THAT SUCH DIRECTION GIVEN BY THE LD. CI T(A) IS CONTRARY TO THE PROVISIONS OF THE IT ACT. THIS ISSU E HAS BEEN DISCUSSED IN DETAIL IN THE ORDER PASSED BY THIS VER Y BENCH ON 24.4.2009 IN THE CASE OF M/S. NUTAN SYNTHETICS, DEW AS IN REVENUES APPEAL NO. 122/IND/2006 AND CO NO.42/IND/2006 FOR AY 1999-00 WHEREIN THIS ISSUE CA ME UP FOR OUR CONSIDERATION AND IN PARA 14 TO 15, THIS ISSUE HAS BEEN DECIDED AS UNDER: 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS NOT JUSTIFIED IN ISSUING DIRECTION TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT FOR THE EARLIER YEARS. SECTION 147 AND SUB-SECTION (2) OF SECTION 148 OF THE ACT PROVIDE 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BELIEVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCA PED 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 NOTIC E SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTIO N AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT Y EAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 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 NECESSA RY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: [PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVO LVING MATTERS WHICH ARE THE SUBJECT-MATTER OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. ] EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATER IAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT T O DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : ( A ) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY T HE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSAB LE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXI MUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; ( B ) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY TH E ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDE RSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION , ALLOWANCE OR RELIEF IN THE RETURN ; ( C ) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ( I ) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR ( II ) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIV E RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.] S. 148. [(2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO .] THE AFORESAID PROVISIONS CLEARLY PROVIDE THAT IF TH E 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 REASSES S SUCH INCOME IN ACCORDANCE WITH LAW. THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT IS, THEREFORE, SOLE PREROGATIVE OF THE ASSESSING OFFICER AFTER SATISFYING HIMSELF AND RECORDING THE REASONS AND HIS BELIEF THAT THE INCOME ESCAPED ASSESSMENT. HON'BLE SUPREME COURT IN THE CASE OF LAKHMANI MEWALDAS (SUPRA) NOTED THAT TWO CONDITIONS HAVE TO BE SATISFIED BEFORE AN INCOMETAX OFFICER ACQUIRES JURISDICTION TO ISSUE NOTICE UNDER SECTION 147/148 IN RESPECT OF AN ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS, BUT WITHIN A PERIOD OF 8 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E. (I) THE INCOMETAX OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT (II) HE MUST HAVE REASON TO BELIEVE THAT SUCH INCOME HAS ESCAPED ASSESSMENT BY REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO FURNISH RETU RN OR TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. BOTH THESE CONDITIONS MUST CO-EXIST TO CONFER JURISDICTION ON THE ITO. IT IS ALSO IMPERATIVE FOR THE INCOMETAX OFFICER TO RECORD HIS REASONS BEFORE INITIATING PROCEEDINGS UNDER SECTION 148 OF THE INCOMETAX ACT. THIS BENCH IN THE CASE OF THE SAME ASSESSEE WHILE CONSIDERING THE DEPARTMENTAL APPEAL IN THE CASE OF DCIT V. NUTAN SYNTHETICS VIDE ORDER DATED 22.9.2006 HELD AS UNDER :- 8. ON CONSIDERATION OF THE ABOVE SUBMISSIONS, WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) IS LIABLE TO BE SET ASIDE. THE IMPUGNED ORDERS IN ALL THE YEARS HAVE BEEN PASSED ON 13.1.05 BY CIT(A). SECTION 251(1)(A) PROVIDES POWERS OF CIT(A) AND PROVIDES THAT IN DISPOING OFF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS :- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. 8. THE PORTIONS BEGINNING WITH THE WORDS OR HE MAY SET ASIDE AND ENDING WITH THE WORDS ON THE BASIS OF SUCH FRESH ASSESSMENT OMITTED BY FINANCE ACT, 2001 W.E.F. 1.6.2001. PRIOR TO 1.6.2001, THE COMMISSIONER (APPEALS) HAD POWERS TO SET ASIDE THE ASSESSMENT AND REFER THE CASE BACK TO THE AO FOR MAKING A FRESH ASSESSMENT. THE LD. REPRESENTATIVES OF BOTH THE PARTIES ARE, THEREFORE, JUSTIFIED IN CONTENDING THAT THE COMMISSIONER (APPEALS) HAS NO POWER TO SET ASIDE THE ASSESSMENT TO THE FILE OF AO TO RE-FRAME THE ASSESSMENT AFTER 1.6.2001. THE CIT(A), THEREFORE, SHOULD HAVE DECIDED THE APPEALS OF THE ASSESSEE ON MERITS INSTEAD OF DIRECTING THE AO TO RECORD FRESH REASONS U/S 148 OF THE IT ACT. THE LD. DR IS JUSTIFIED IN CONTENDING THAT THE POWERS EXERCISED BY CIT(A) HAVE NOT BEEN PROVIDED IN THE ACT. SINCE THE CIT(A) HAS NO POWER TO SET ASIDE THE ASSESSMENT TO THE AO, THEREFORE, HE CANNOT DIRECT THE AO TO RECORD FRESH REASON U/S 148 OF THE IT ACT. THE INITIATION OF THE PROCEEDINGS U/S 147/148 ARE THE SOLE PREROGATIVE OF THE AO TO DO SO AFTER SATISFYIN G HIMSELF AND RECORDING REASONS AND HIS BELIEF THAT INCOME ESCAPED ASSESSMENT. THE CIT(A), THEREFORE, HAS EXCEEDED HIS JURISDICTION WHILE DISPOSING OFF ALL THE APPEALS OF THE ASSESSEE. WE, ACCORDINGLY, SET ASIDE ORDERS OF THE CIT(A) IN ALL THE ASSESSMENT YEARS AND RESTORE THE MATTER TO THE FILE OF THE CIT(A) WITH DIRECTION TO DECIDE THE APPEALS OF THE ASSESSEE ON MERITS GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND AO . ITAT, HYDRABAD BENCH, IN THE CASE OF PENNAR ELECTRONICS PRIVATE LIMITED (SUPRA) HELD THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT IT IS NOT THE ASSESSEE COMPANY THAT HAS EARNED THE SYNDICATION CHARGES BUT IT IS NEVER R WHO HAS EARNED THE SYNDICATION CHARGES AND IN DIRECTING THE AO TO REOPEN THE ASSESSMENT OF R. THIS BENCH IN THE CASE OF SARDAR MACHHE SINGH CONSIDERING THE DECISIONS IN THE CASES OF RAJENDRA NATH AND AGHA ABDUL JABBAR KHAN (SUPRA) HELD THAT THE INCIDENTAL FINDING OF THE APPELLATE AUTHORITY IS NOT A FINDING NECESSARY FOR DISPOSAL OF AN APPEAL. REASSESSMENT PROCEEDINGS ARE INVALID. ITAT, AGRA BENCH IN THE CASE OF K.G. HOTELS PVT. LTD. (SUPRA) HELD THAT REASSESSMENT AT THE BEHEST OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) - AO HAD POWER TO REOPEN AS INCOME ESCAPED ASSESSMENT. REOPENING IS, THEREFORE, NOT VALID. 15. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE, IT IS CLEARLY ESTABLISHED THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS GONE BEYOND THE ISSUES PENDING BEFORE HIM BECAUSE IN THE INITIAL ORDER ITSELF HE HAS MENTIONED THAT ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ARE NOT SUSTAINABLE. THEREFORE, NO MATTER WAS PENDING BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AS REGARDS BOGUS NATURE OF LOAN TRANSACTION OF EARLIER YEARS. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WITHOUT ANY JUST CAUSE ENTERED INTO AN AREA WHICH WAS BEYOND HIS JURISDICTION WHILE EXERCISING THE APPELLATE JURISDICTION FOR THE ASSESSMENT YEAR 1999-00. THEREFORE, IT IS A CASE OF EXERCISING EXCEEDED JURISDICTION BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) NOTED THAT HE HAS CO-TERMINUS POWERS AS THAT OF THE ASSESSING OFFICER AND RELIED UPON THE CASE LAW IN SUPPORT OF HIS FINDING. THIS RULE IS NOT UNIVERSALL Y APPLICABLE TO EACH AND EVERY CASE. THE ASSESSING OFFICER WOULD HAVE REOPENED THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT. IF SUCH POWER COULD HAVE BEEN EXERCISED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), NOTHING HAS PREVENTED HIM FROM RECORDING REASONS UNDER SECTION 147/148 OF THE ACT AND TO PROCEED IN THE MATTER. HOWEVER, THE SAME WOULD BE AGAINST THE SPIRIT OF THE PROVISIONS OF SECTION 147/148 OF THE ACT. SUCH A FINDING OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THUS IS CLEARLY CONTRARY TO THE PROVISION S OF LAW. THE SOLE OBJECTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS THAT THE ASSESSEE SHOULD HAVE PREFERRED SEPARATE APPEAL ON THIS ISSUE . WE DO NOT AGREE WITH THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE BECAUSE THE AFORESAID ISSUE OF EXCEEDED JURISDICTION IN DIRECTING THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT FOR EARLIER ASSESSMENT YEARS IS ARISING OUT OF THE SAID ORDER. THE ASSESSEE WELL WITHIN HIS RIGHTS HAS RIGHTLY FILED THE CROSS OBJECTION ON FILING OF THE DEPARTMENTAL APPEAL. IT IS A SETTLED LAW THAT CROS S OBJECTION IS LIKE A CROSS APPEAL FILED BY THE PARTI ES CHALLENGING THE IMPUGNED ORDER. THUS, THERE IS NO ILLEGALITY IN FILING THE CROSS OBJECTION BY THE ASSESSEE ON SUCH MATTER WHICH IS ARISING OUT OF THE IMPUGNED ORDER ON FILING OF THE DEPARTMENTAL APPEAL. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN DIRECTING THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT OF THE EARLIER YEARS. HIS DIRECTIONS ARE ACCORDINGLY QUASHED. 8. IN VIEW OF THE ABOVE FINDINGS, THE DIRECTIONS ISSUE D SUBSEQUENTLY AFTER DELETING THE ADDITION OF RS.11,9 2,013/- ARE QUASHED. THUS THIS GROUND OF APPEAL IS DISMISSED. 9. SECOND GROUND OF APPEAL IS THAT THE LD. CIT(A) ERRE D IN DIRECTING THE AO, REGARDING THE ADDITION OF RS.15,2 2,888/-, RS.6,52,468/- AND RS.48,558/- TO EXCLUDE THE AMOUNT OF CARRY FORWARD FROM THE PAST FOR WHICH ACTION U/S 14 7 SHOULD BE TAKEN IN THE RESPECTIVE YEARS SUBJECT TO THE PRO VISIONS OF SEC. 150(1)/150(2) OF THE IT ACT, 1961. 9.1 THE LD. CIT(A) IN HIS ORDER MENTIONED THAT THE DETA ILS FILED IN REGARD TO AMOUNT OF RS.15,22,888/- BY THE ASSESSEE REVEALS THAT THE MAJOR PART OF THE AMOUNT IS TRADE LIABILIT Y IN THE ASSESSMENT UNDER CONSIDERATION AND ONLY IN A FEW CA SES, THE LIABILITY HAS BEEN CARRIED FORWARD FROM THE PAST YE AR. ACCORDING TO THE LD. CIT(A), THE ASSESSEE HAS FAILE D TO DISCHARGE THE ONUS IN THE MATTER IN ESTABLISHING TH AT THE IDENTITY OF THE PARTIES; THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION. THUS, THE MAJOR PAR T OF THE TOTAL AMOUNT IS TO BE CONSIDERED AS UNEXPLAINED CAS H CREDIT AS PER PROVISIONS OF SEC. 68 OF THE IT ACT. HOWEVER , THE LD. CIT(A) FURTHER DIRECTED TO EXCLUDE THE AMOUNT WHICH WAS CARRIED FORWARD FROM THE PAST YEAR AS NO SUCH ADDIT ION CAN BE MADE IN THE YEAR UNDER CONSIDERATION. THE LD. CI T(A) ALSO DIRECTED TO THE AO THAT THE AMOUNT PERTAINED TO THE PAST YEAR SHOULD BE BROUGHT TO TAX BY TAKING NECESSARY ACTION U/S 147 IN THE RESPECTIVE YEARS SUBJECT TO PROVISIONI OF SE C. 150(1)/150(2) OF THE ACT. 10. AFTER HEARING RIVAL CONTENTIONS, WE NOTED THAT THE ADDITION IN RESPECT OF FRESH TRADE LIABILITY OF THE AY UNDER CO NSIDERATION HAS RIGHTLY BEEN SUSTAINED BY THE LD. CIT(A) BECAUS E THE ASSESSEE FAILED TO SUPPLY THE CORRECT/COMPLETE ADDR ESS OF THE CONCERNED PERSON OR TO PRODUCE THEM FOR EXAMINA TION DURING COURSE OF ASSESSMENT PROCEEDING. THE INSPECT OR DEPUTED BY THE AO COULD ALSO NOT TRACE OUT SUCH PER SON, THEREFORE, UNDER THESE CIRCUMSTANCES, THERE IS NO I NFIRMITY IN THE ORDER OF LD. CIT(A). HOWEVER, THE LD. CIT(A) FU RTHER DIRECTED THE AO TO TAKE ACTION U/S 147 IN THE RESPE CTIVE YEARS SUBJECT TO THE PROVISIONS OF SEC. 150(1)/150( 2) OF THE ACT. SUCH DIRECTION IS NOT CALLED FOR AS THE SAME I S CONTRARY TO THE PROVISIONS OF THE ACT IN VIEW OF THE DECISIO N TAKEN BY THIS VERY BENCH IN THE CASE OF M/S. NUTAN SYNTHETIC S (SUPRA) REPRODUCED ABOVE. 3. OUR ATTENTION WAS ALSO INVITED BY THE LEARNED CO UNSEL FOR THE ASSESSEE TO THE ORDER OF TRIBUNAL DATED 11.12.2009 (ITA NO. 758 AND 759/IND/2007) IN THE CASE OF SHRIRAM NUTRIENTS VS. DCIT WHEREIN IT WAS HELD AS UNDER :- 9. ON CONSIDERATION OF THE FACTS AND THE RIVAL SUBMISSION, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTIONS 150 TO 152 OF THE ACT ARE NOT APPLICABLE T O THE PRESENT FACTS BECAUSE THE DIRECTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALREADY BEE N QUASHED BY THE TRIBUNAL VIDE AFORESAID ORDER DATED 17 TH OCTOBER, 2008 BY HOLDING THAT THE LEARNED CIT(A) CO ULD NOT GIVE DIRECTION UNDER EXPLANATION TO SECTION 153 OF THE ACT, THEREFORE, IT CAN BE SAID THAT THE SAID DI RECTIONS ARE NON-EXISTENT. HERE SINCE THE ASSESSMENT WAS REOPENED ON THE DIRECTION OF THE LEARNED CIT(A) WHI CH HAS ALREADY BEEN QUASHED AND THE PRESCRIBED PERIOD HAS ALREADY EXPIRED, THEREFORE, REOPENING IS BAD IN LAW . CONSEQUENTLY, BOTH THESE APPEALS OF THE ASSESSEE ARE ALLOWED. 4. THE MOOT QUESTION BEFORE US IS WHETHER THE PROCE EDINGS U/S 147/148 OF THE ACT ARE TIME BARRED ESPECIALLY WHEN THE TRIBUNAL HAS ALREADY QUASHED THE DIRECTIONS OF THE LD. CIT(A) ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED. BEFORE COMING TO ANY C ONCLUSION, WE ARE REPRODUCING HEREUNDER THE PROVISIONS OF SECTION 147 /148 OF THE ACT :- INCOME ESCAPING ASSESSMENT. 22 147. IF THE 23 [ASSESSING] OFFICER 24 [HAS REASON TO BELIEVE 25 ] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 25 FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS 25 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 PROCEEDING S UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HER EAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE 26 ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS 26 NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: 27 [ PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCO ME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT.] EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATER IAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY 26 AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : ( A ) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY T HE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSAB LE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED TH E MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TA X ; ( B ) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY TH E ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; ( C ) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ( I ) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR ( II ) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIV E RELIEF UNDER THIS ACT ; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY O THER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.] 27A [ EXPLANATION 3. FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFI CER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASON S FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SECTION (2) OF SECTION 148 . ] ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMEN T. 29 148. 30 [(1)] BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 , THE ASSESSING OFFICER SHALL SERVE 31 ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, 32 [* * *] AS MAY BE SPECIFIED IN THE NOTICE, A RETURN OF HIS INC OME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN T HE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANN ER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED; AND THE PROVISIONS OF THIS ACT SHALL, S O FAR AS MAY BE 33 , APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 :] 34 [ PROVIDED THAT IN A CASE ( A ) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERI OD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDI NG ON THE 30TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AND ( B ) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SUB-S ECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143 , AS IT STOOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB-SECTIO N BY THE FINANCE ACT, 2002 (20 OF 2002) BUT BEFORE THE E XPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, RE- ASSESSMENT OR RECOMPUTATION AS SPECIFIED IN SUB-SEC TION (2) OF SECTION 153 , EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE: PROVIDED FURTHER THAT IN A CASE ( A ) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERI OD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDI NG ON THE 30TH DAY OF SEPTEMBER, 2005, IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AND ( B ) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CLAUS E ( II ) OF SUB-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO CLAUSE ( II ) OF SUB- SECTION (2) OF SECTION 143 , BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SECTION 153 , EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHAL L BE DEEMED TO BE A VALID NOTICE.] 35 [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THE FIRST PROVIS O OR THE SECOND PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FURNISHED ON OR AFTER THE 1ST DAY OF OCTOBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION.] 36 [(2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING AN Y NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR D OING SO.] 5. THE TIME LIMIT FOR ISSUANCE OF NOTICE HAS BE EN PROVIDED U/S 149 OF THE ACT WHICH IS REPRODUCED HEREUNDER :- 149. 37 [(1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED 38 FOR THE RELEVANT ASSESSMENT YEAR, 39 [( A ) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RE LEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE ( B ); ( B ) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOU NTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE 40 FOR THAT YEAR.] EXPLANATION. IN DETERMINING INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR THE PURPOSES OF THIS SUB -SECTION, THE PROVISIONS OF EXPLANATION 2 OF SECTION 147 SHALL APPLY AS THEY APPLY FOR THE PURPOSES OF THAT SECTION.] (2) THE PROVISIONS OF SUB-SECTION (1) AS TO THE ISS UE OF NOTICE SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 151 . (3) IF THE PERSON ON WHOM A NOTICE UNDER SECTION 148 IS TO BE SERVED IS A PERSON TREATED AS THE AGENT OF A NON-RE SIDENT UNDER SECTION 163 AND THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION TO BE MADE IN PURSUANCE OF THE NOTICE IS TO BE MADE ON HIM AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE ISSUED AFTER THE EXPIRY OF A PERIOD OF TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. SUB-CLAUSE (B) OF SUB-SECTION (1) OF SECTION 149 SP ECIFICALLY PROVIDES THE MAXIMUM PERIOD OF SIX YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR. EVEN OTHERWISE, THE DIRECTION OF THE LEARNE D CIT(A) FOR REOPENING THE ASSESSMENT HAS ALREADY BEEN QUASHED BY THE TRIB UNAL AND THE SAME HAS ATTAINED FINALITY AS NO CONTRARY DECISION FROM ANY HONBLE HIGHER FORUM WAS BROUGHT TO OUR NOTICE. HOWEVER, THE FACT REMAINS THAT STILL IT IS TIME BARRED. OUR VIEW FINDS SUPPORT FROM THE RAT IO LAID DOWN BY THE HONBLE KERALA HIGH COURT IN THE CASE OF ITO V. SMT . NILOPHER HAMID & ANOTHER; (262 ITR 281) (KER.). 5. DURING HEARING THE LEARNED SENIOR DR TOOK ANO THER PLEA THAT THE PROVISIONS OF SECTION 150 TO 152 OF THE ACT ARE APP LICABLE, THEREFORE, WE ARE REPRODUCING HEREUNDER THE AFORESAID PROVISIONS OF THE ACT :- PROVISION FOR CASES WHERE ASSESSMENT IS IN PURSUANCE OF AN ORDER ON APPEAL, ETC. 150. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 149 , THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THIS ACT BY WAY O F APPEAL, REFERENCE OR REVISION [OR BY A COURT IN ANY PROCEEDING UNDER ANY OTHER LAW]. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY IN ANY CASE WHERE ANY SUCH ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS IS REFERRED TO IN THAT SUB-SECT ION RELATES TO AN ASSESSMENT YEAR IN RESPECT OF WHICH A N ASSESSMENT, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WHICH WAS THE SUBJECT-MATTER OF THE APPEAL, REFERENCE OR REVISION , AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE TAKEN. [ SANCTION FOR ISSUE OF NOTICE. 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SH ALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER], UNLESS THE [JOINT] COMMISSIONER IS SATISFIED ON THE REASONS RECORDED B Y SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR TH E ISSUE OF SUCH NOTICE] : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT C ASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB- SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF [JOINT] COMMISSIONER, AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLES S THE [JOINT] COMMISSIONER IS SATISFIED, ON THE REASO NS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FI T CASE FOR THE ISSUE OF SUCH NOTICE.] [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR THE CHIEF COMMISSIONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE I SSUE OF NOTICE UNDER SECTION 148 , NEED NOT ISSUE SUCH NOTICE HIMSELF.] OTHER PROVISIONS. 152. (1) IN AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION MADE UNDER SECTION 147 , THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AT WHICH IT WOUL D HAVE BEEN CHARGED HAD THE INCOME NOT ESCAPED ASSESSMENT. (2) WHERE AN ASSESSMENT IS REOPENED [UNDER SECTION 147 ], THE ASSESSEE MAY, IF HE HAS NOT IMPUGNED ANY PART OF THE ORIGINAL ASSESSMENT ORDER FOR THAT YEAR EITHER UNDER SECTIONS 246 TO 248 OR UNDER SECTION 264 , CLAIM THAT THE PROCEEDINGS UNDER SECTION 147 SHALL BE DROPPED ON HIS SHOWING THAT HE HAD BEEN ASSESSED ON AN AMOUNT OR TO A SUM NOT LOWER THAN WHAT HE WOULD BE RIGHTLY LIABLE FOR EVEN IF THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT HAD BEEN TAKEN INTO ACCOUNT, OR THE ASSESSMENT OR COMPUTATION HAD BEEN PROPERLY MADE : PROVIDED THAT IN SO DOING HE SHALL NOT BE ENTITLED TO REOPEN MATTERS CONCLUDED BY AN ORDER UNDER SECTION 154 , 155 , 260 , 262 , OR 263 . 6. THE AFORESAID PROVISIONS OF SECTION 150 TO 152 OF T HE ACT ARE APPLICABLE IN THE CASES WHERE ASSESSMENT IS IN PURS UANT OF AN ORDER OF APPEAL, ETC. HOWEVER, IN THE PRESENT APPEAL, SUCH DIRECTION OF THE LEARNED CIT(A) HAS ALREADY BEEN QUASHED BY THE TRIB UNAL, THEREFORE, FIRSTLY SUCH DIRECTION HAS BECOME NON-EXISTENT AND SECONDLY THE PRESCRIBED TIME LIMIT AS PROVIDED U/S 149 HAS ALREA DY EXPIRED, THEREFORE, ON THIS LEGAL ISSUE, THIS APPEAL OF THE ASSESSEE DE SERVES TO BE ALLOWED. 7. NOW WE SHALL TAKE UP APPEAL IN ITA NO. 323/IND/2 008 WHEREIN THE CONFIRMATION OF REOPENING OF ASSESSMENT U/S 148 HAS BEEN CHALLENGED ALONG WITH ADDITION OF RS.4,43,345/- MADE U/S 68 OF THE ACT. 8. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY AGREED T HAT THIS REASSESSMENT HAS BEEN FRAMED WITHIN SIX YEARS BUT B EYOND FOUR YEARS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE ASSESSMENT YEAR 2001-02 THE ISSUE INVOLVED WAS WHETHER SUCH LIABILI TIES HAD CEASED OR NOT AND THE ISSUE OF GENUINENESS OF SUCH CREDITORS WAS NOT AT ALL INVOLVED WHEREAS IN THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT, THE GENUINENESS OF THESE LOANS WAS DOUB TED. HENCE, THE AOS STAND AS WELL AS THAT OF THE LEARNED CIT(A) IN THE ASSESSMENT YEAR 2001-02 WAS ON A DIFFERENT FOOTING AND THERE WAS CO NTRADICTION IN THE REASONS RECORDED BY THE AO. IN THIS BACKGROUND, IT WAS FURTHER PLEADED THAT THERE WAS NO FRESH INFORMATION WITH THE AO TO REOPEN THE ASSESSMENT U/S 147/148 OF THE ACT AND THE REOPENING IS MERELY BASED UPON REASON TO SUSPECT AND NOT ON REASON TO BELI EF . A STRONG PLEA WAS RAISED THAT FOR REOPENING THE ASSESSMENT THERE SHOULD BE FRESH INFORMATION/MATERIAL WITH THE AO FOR WHICH RELIANC E WAS PLACED UPON THE DECISION IN THE CASE OF CIT V. KELVINATOR INDIA LIMITED; (2010) 320 ITR 561 (SC); 14 ITJ 189. ON THE OTHER HAND, THE LE ARNED SR. DR DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT IT W AS REASON TO BELIEVE AND NOT REASON TO SUSPECT ESPECIALLY WHEN T HE ASSESSEE FAILED TO PRODUCE THE CREDITORS FOR WHICH OUR ATTENTION WAS I NVITED TO PAGES 46, 50 AND 51 OF THE PAPER BOOK. 9. ON CONSIDERATION OF RIVAL SUBMISSIONS AND ALSO O N PERUSAL OF RECORD, WE HAVE FOUND THAT THE ASSESSMENT WAS REOPE NED U/S 147/148 OF THE ACT ONLY ON THE BASIS OF THE MATERIAL WHICH WAS ALREADY AVAILABLE WITH THE AO AND THE DIRECTION OF THE LEARNED CIT(A) TO REOPEN THE ASSESSMENT HAD ALREADY BEEN QUASHED BY THE TRIBUNAL . NOW THE QUESTION ARISES AS TO WHAT WAS THE NEW MATERIAL WIT H THE AO. THE OBVIOUS REPLY IS THAT THERE WAS NO FRESH MATERIAL W ITH THE AO TO REOPEN THE ASSESSMENT. ADMITTEDLY, THE AO IS HAVING WIDER POWERS UNDER THE AMENDED PROVISIONS, STILL THE SAME ARE NOT UNBRIDLE D ONE AND HAVE TO BE USED JUDICIOUSLY. THE REASSESSMENT BASED ON NEW V IEW BUT ON SAME FACTS IS NOT PERMISSIBLE TO INITIATE FRESH LITIGATI ON. THIS PROPOSITION FINDS SUPPORT FROM THE DECISION IN SIRPUR PAPER MILLS LIM ITED V. ITO; 114 ITR 404 (AP). EVEN OTHERWISE AS PER SUB-SECTION (2) TO SECTION 151 THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEARS HAS BEEN PROVIDED SUBJECT TO THE SATISFACTION OF THE JO INT COMMISSIONER ON THE REASONS RECORDED BY THE AO. HOWEVER, IN THE PR ESENT CASE, SINCE NO FRESH MATERIAL WAS AVAILABLE WITH THE AO FOR REOPEN ING THE ASSESSMENT AND WAS MERELY PURSUANT TO THE DIRECTION OF THE LD. CIT(A) WHICH HAS ALREADY BEEN QUASHED BY THE TRIBUNAL, THE AO HAS NO JURISDICTION TO REOPEN THE ASSESSMENT U/S 147/148 OF THE ACT. MOREO VER, THE BELIEF OF THE AO SHOULD NOT BE ARBITRARY OR IRRATIONAL BUT SH OULD BE BASED ON RELEVANT AND MATERIAL REASONS BECAUSE THE IMPORTANT WORDS USED IN SECTION 147 ARE HAS REASON TO BELIEVE, THEREFORE, THESE WORDS ARE STRONGER THAN THE WORDS IS SATISFIED. IN OTHER WO RDS, IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. WE ARE AWARE THAT THE COURT OFCOURSE CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF REASONS WHICH HAVE WEIGHED WITH THE ITO IN COMING T O THE BELIEF BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTER IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN SUCH BELIEF BEFORE ISSUANCE OF NOTICE. TH EREFORE, IT CAN BE SAID THAT THE BELIEF MUST BE IN GOOD FAITH BASED ON M ATERIAL FACTS AND NOT MERELY BY PRETENCE. THE MATERIAL FACTS MEAN THE PRI MARY FACTS ONLY. A DISTINCTION HAS TO BE MADE BETWEEN THE PRIMARY FACT S AND COLLATERAL FACTS. HOWEVER, WITHOUT GOING FURTHER SINCE NO NE W MATERIAL/FRESH MATERIAL WAS AVAILABLE WITH THE AO, THEREFORE, THIS APPEAL OF THE ASSESSEE IS HAVING MERIT. THE AMENDED SECTION 147 READS AS UNDER :- IF THE 23 [ASSESSING] OFFICER 24 [HAS REASON TO BELIEVE 25 ] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 25 FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS 25 SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) VARIOUS REPRESENTATIONS WERE RECEIVED BY THE GOVERN MENT AND THE PARLIAMENT REINTRODUCED THE EXPRESSION AND DELETED THE WORD OPINION ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS T O THE AO. WE QUOTE HEREBELOW THE RELEVANT PORTION OF CIRCULAR NO. 549 DATED 31.10.1989 (1990) 182 ITR (ST.) 1, 29) WHICH READS AS FOLLOWS :- 7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION REASON TO BELIEVE I N SECTION 147.- A NUMBER OF REPRESENTATIONS WERE RECE IVED AGAINST THE OMISSION OF THE WORDS REASON TO BELIEV E FROM SECTION 147 AND THEIR SUBSTITUTION BY THE OPI NION OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION REASON TO BELIEVE HAD B EEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO R EOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALL AY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMEN DED SECTION 147 TO REINTRODUCE THE EXPRESSION HAS REAS ON TO BELIEVE IN PLACE OF THE WORDS FOR REASONS TO BE R ECORDED BY HIM IN WRITING, IS OF THE OPINION. OTHER PROVI SIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME. THE HONBLE APEX COURT IN A LATEST DECISION IN CIT V. KELVINATOR OF INDIA LIMITED/EICHER LIMITED (2010) 320 ITR 561 (SC); 14 ATJ 189 HAS DULY CONSIDERED THE AFORESAID AMENDMENT AND CBDT CIRCULA R NO. 549 DATED 31.10.1989 AND HELD THAT THERE MUST BE TANGIBLE MAT ERIAL FOR THE FORMATION OF THE BELIEF. IT WAS HELD AS UNDER :- THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUBSTITUTION OF SECTION 147 OF THE INCOMETAX ACT, 1961, BY THE DIRECT TAX LAWS (AMENDMENT ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMATION OF THE BELIEF. WHILE COMING TO THE AFORESAID CONCLUSION THE HONBL E APEX COURT AFFIRMED THE DECISION OF HONBLE DELHI HIGH COURT I N CIT V. KELVINATOR OF INDIA LIMITED; (2002) 256 ITR 1 (FB) AND CIT V. EIC HER LIMITED (2007) 294 ITR 310. IN THE LIGHT OF THE FACTS AND THE JUDIC IAL PRONOUNCEMENTS DISCUSSED ABOVE, THIS APPEAL OF THE ASSESSEE IS ALL OWED ESPECIALLY WHEN THERE WAS NO NEW/FRESH MATERIAL/INFORMATION WITH TH E AO TO REOPEN THE ASSESSMENT U/S 147/148 OF THE ACT SO AS TO DOUBT TH E GENUINENESS OF SUCH CREDITORS NOR IT WAS THE CASE OF THE AO THAT T HE MATERIAL ALREADY AVAILABLE ON RECORD HAD NOT BEEN CONSIDERED ORIGINA LLY SO AS TO CONSTITUTE THE INFORMATION NOW. IN VIEW OF THE AFORESAID DISCUSSION, THIS APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY, BOTH THESE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2010. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MARCH 22 , 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DBN/