ACIT, Faizabad V. M/s. Arohul Foods Pvt. Ltd., Bahraich

ITA 324/LKW/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8557 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHEELA CHOPRA
• Keywords: Depreciation; Income from undisclosed sources; Principle of natural justice; Period of limitation; Source of fund; Difference of opinion; Accommodation entries; Competent authority; Capital receipt; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 13; 153; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW [THROUGH VIRTUAL HEARING] BEFORE SHRI A.D JAIN, VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.324/LKW/2020 A.Y. 2012-13 M/S AROHUL FOODS PVT. LTD., CHHAWANI BAZAR, BAHRAICH. PAN : AAECA 9674R VS. ACIT, GONDA (RESPONDENT) (APPELLANT) ITA NO.236/LKW/2020 A.Y. 2012-13 DCIT, CIRCLE-GONDA GONDA 271001 (U.P.) VS. M/S AROHUL FOODS PVT. LTD., CHHAWANI BAZAR, BAHRAICH. PAN : AAECA 9674R (RESPONDENT) (APPELLANT) SHRI RAKESH GARG, ADVOCATE APPELLANT BY MRS. SHEELA CHOPRA, CIT, DR RESPONDENT BY 23/06/2021 DATE OF HEARING 11/08/2021 DATE OF PRONOUNCEMENT O R D E R PER T.S. KAPOOR, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-1, LUCKNOW DATED 23.07.2020. THE ASSESSEE HAS ALSO FILED CROSS APPEAL. THE REVENUE HAS CHALLENGED THE ORDER OF LD. CIT(A) ON THE ORIGINAL GROUNDS OF APPEAL AS WELL AS BY FILING ADDITIONAL GROUNDS OF APPEAL WHICH FOR THE SAKE OF COMPLETENESS ARE REPRODUCED BELOW: 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE HAD PROVED IDENTITY, CREDIT WORTHINESS AND 2 ITA NOS.324 & 236/LKW/2020 GENUINENESS OF MONEYS CREDITED IN THE BOOKS AS SHARE APPLICATION MONEY AND PREMIUM OF RS.5,46,83,750/- JUST BY SUBMITTING PAN, ACKNOWLEDGMENT OF INCOME TAX RETURNS AND BANK STATEMENTS. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,46,83,750/- IGNORING THE FACTS BROUGHT OUT BY THE ASSESSING OFFICER THAT RETURN OF THE INVESTING COMPANY SHOWS NO CREDIT WORTHINESS AND THAT INVESTING COMPANY HAD MERELY TRANSFERRED SHARE APPLICATION MONEY AND PREMIUM RECEIVED FROM OTHER PARTIES TO THE ASSESSEE COMPANY. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE APPARENT FACTS AS REAL WHILE THE ACTIONS OF INVESTIGATION WING AND SUBSEQUENT DATA MINING MADE BY THE ASSESSING OFFICER HAVE PROVED THAT APPARENT IS NOT REAL. 4. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN COMPREHENDING THE TOTAL FACTS INDICATING EVASION OF TAX BY CORPORATE BODIES THROUGH MISCHIEVOUS MODES AND IT IS A CASE OF LIFTING OF CORPORATE VEIL. ADDITIONAL GROUNDS OF APPEAL 1. THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE MANIPULATED THE SHARE PREMIUM WITH IMPUNITY AND WITHOUT ANY JUSTIFICATION, TO PLOUGH BACK ITS UNACCOUNTED INCOME IN THE GARB OF SHARE CAPITAL/PREMIUM. 2. THE LD.CLT(A) FAILED TO APPRECIATE THE FACT THAT ASSESSEE COMPANY CHARGED HUGE PREMIUM IN ONE YEAR AND THE SAME \\AS REDUCED TO 1/8' IN THE SUBSEQUENT YEAR WITHOUT JUSTIFYING ANY REASON FOR THE SAME. 3. THE LD.CIT(A) FURTHER ERRED IN NOT APPRECIATING THE FAET THAT THE SHARES ISSUED AT A PREMIUM OF RS.240/- WERE AGAIN PURCHASED HACK BY THE DIRECTORS OF THE ASSESSEE COMPANY AND THEIR RELATED ENTITIES WITHOUT DISCLOSING THE RATES BEFORE THE A.O. AS AN\ RATE BELOW THE ISSUE PRICE WOULD TANTAMOUNT TO BENEFITS ACCRUED TO THE ASSESSEE BY WAY OF MANIPULATION OF SHARE PRICE AND IS LIABLE TO BE TAXED. 3 ITA NOS.324 & 236/LKW/2020 2. THE ASSESSEE HAS FILED CROSS APPEAL AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE THE ENTIRE REASSESSMENT PROCEEDINGS INITIATED U/S 147/143(3) OF THE ACT IS WITHOUT JURISDICTION, BAD IN LAW AND BE QUASHED. 2. BECAUSE THE INITIAL ASSESSMENT BEING FRAMED U/S 143(3) OF THE INCOME TAX ACT, AND ALL THE DESIRED NECESSARY INFORMATION WITH EVIDENCES HAVING BEEN FURNISHED, THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR MAKING THE ASSESSMENT, THE ENTIRE PROCEEDINGS INITIATED U/S 147 ARE WITHOUT JURISDICTION, THE CIT(A) HAS ERRED IN LAW IN UPHOLDING REASSESSMENT PROCEEDINGS, THE SAME BE QUASHED. 3. BECAUSE THERE BEING NEITHER REASON TO BELIEVE NOR ANY SATISFACTION AS CONTEMPLATED U/S 147, NOR THERE BEING ANY NEW MATERIAL, THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE INITIATION THE PROCEEDINGS U/S 147 OF THE ACT, THE ORDER PASSED BY THE CIT(A) BE QUASHED. 4. BECAUSE THE APPROVAL GIVEN U/S 151 OF THE ACT IS PURELY MECHANICAL WITHOUT EXAMINING OF FACTS, RECORDS AND AS SUCH IS A LAW THE NOTICE ISSUED AND THE PROCEEDINGS INITIATED THEREAFTER ARE ALL VOID-AB-INITIO THE ORDER OF THE CIT(A) UPHOLDING THE SAME BE QUASHED. 5. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT INITIAL ASSESSMENT HAVING BEING FRAMED U/S.143(3) AND THE ENTIRE MATTER HAVING BEING EXAMINED BY THE AO, THE REASSESSMENT PROCEEDINGS CANNOT BE INITIATED ON REEXAMINATION OF THE SAME MATERIAL ON RECORD, IT WOULD BE A CASE OF SUBSEQUENT RECONSIDERATION OF THE MATERIAL EXISTING ON RECORD AND A CASE OF CHANGE OF OPINION, THE ENTIRE REASSESSMENT PROCEEDINGS WOULD BE WITHOUT JURISDICTION, VOID-AB-INITIO, THE ORDER PASSED BY THE CIT(A) UPHOLDING THE SAME BE QUASHED. 6. BECAUSE THE C1T(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 65,00,000/- ON ACCOUNT OF 4 ITA NOS.324 & 236/LKW/2020 SHARE CAPITAL AND PREMIUM RECEIVED FROM SUPRIYA FINCOM PVT. LTD., 133, CANNING STREET, KOLKATA, WHICH ADDITION IS BAD IN LAW AND BE DELETED. 7. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS OF THE CASE AND HAS ERRED IN HOLDING THAT THE SHARE CAPITAL OF RS.65,00,000/-RECEIVED FROM SUPRIYA FINCOM PVT. LTD. AS UNEXPLAINED, THE ADDITION MADE AND UPHELD BE DELETED. 8. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW BY RELYING UPON THE STATEMENT OF SHRI SANJAY SINGHI WHICH STATEMENT WAS RECORDED BEHIND THE BACK OF THE ASSESSEE, WHICH DOES NOT RELATE TO THE ASSESSEE, IN AS MUCH AS IT DOES NOT EVEN CONTAIN THE NAME OF THE ASSESSEE, NEVER FORMED PART OF THE REASONS FOR REOPENING OF THE ASSESSMENT, NOR WAS EVER CONFRONTED TO THE ASSESSEE, RELIANCE BY THE CIT(A) ON THE SAID STATEMENT EVEN WITHOUT PROVIDING A COPY OF THE SAME TO THE ASSESSEE, IS TOTALLY MISPLACED, WITHOUT JURISDICTION, NO ADDITION ON THE BASIS OF THE SAME BE MADE, THE ADDITION OF RS.65,00,000/- MADE U/S.68 IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, BE DELETED. 9. BECAUSE THE C!T(A) HAS ERRED ON FACTS AND IN LAW UPHOLDING THE ADDITION OF RS.65,00,000/- MERELY ON THE STATEMENT OF SHRI SANJAY SINGHI RECORDED BEHIND THE BACK OF THE ASSESSEE, ON MERE PRESUMPTION THAT THE SHARE CAPITAL OF RS.65,00,000/- IS UNEXPLAINED IS TOTALLY MISPLACED BE DELETED FOR NO ADDITION CAN BE MADE MERELY ON CONJECTURES, SURMISES OR SUSPICION. 10. BECAUSE THE CIT(A) HAS FAILED TO CONSIDER THE EXPLANATIONS FURNISHED, EVIDENCES FILED SUCH AS SHARE APPLICATION FORM, CONFIRMATION, PAN, INCOME TAX RETURN, BANK STATEMENT OF THE INVESTOR AND HAS IGNORED THE REPORT OF THE INVESTIGATION WING; KOLKATA AS RECEIVED PURSUANT TO THE COMMISSION ISSUED U/S 131(1}(D) OF THE ACT AND AS OBTAINED DURING THE REASSESSMENT PROCEEDINGS BY THE AO, THE ORDER PASSED BY THE CIT(A) BE QUASHED. 5 ITA NOS.324 & 236/LKW/2020 11. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 1,62,500/- ON ACCOUNT OF COMMISSION ALLEGEDLY INCURRED AT THE RATE OF 2.5 PERCENT FOR PROCURING THE SHARE CAPITAL AMOUNTING TO RS.65,00,000/-, WHICH ADDITION IS CONTRARY TO THE PROVISIONS OF LAW, TOTALLY UNWARRANTED BE DELETED. 3. THE LD. AR AT THE OUTSET SUBMITTED THAT THE ASSESSEE HAS CHALLENGED THE FINDINGS OF LD. CIT(A) ON LEGAL ISSUE FOR REOPENING OF THE CASE U/S. 148 OF THE INCOME TAX ACT, 1961 AND OUR SPECIFIC ATTENTION WAS INVITED TO GROUNDS NO. 1 & 2 OF THE CROSS APPEAL AND IT WAS PRAYED THAT SINCE ASSESSEE HAS AGITATED THE ORDER OF AUTHORITIES BELOW ON LEGAL ISSUES HE BE HEARD FIRST AND ON FINDING THAT ASSESSEE HAS CHALLENGED THE REOPENING OF THE CASE ITSELF THEREFORE HE WAS DIRECTED TO PROCEED WITH HIS ARGUMENTS. THE LD. AR SUBMITTED THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S. 143(3) OF THE ACT AND ALL THE INFORMATION AND MATERIAL DOCUMENTS AS REQUIRED BY A.O. WERE FILED WITH THE ASSESSING OFFICER AND THE REVENUE HAS REOPENED THE CASE OF THE ASSESSEE AFTER COMPLETION OF FOUR YEARS WHICH IS NOT PERMISSIBLE AS PER THE PROVISIONS OF LAW AND AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF NDTV VS. DCIT, CIVIL APPEAL NO. 1008 OF 2020 VIDE ORDER DATED 03.04.2020. IT WAS SUBMITTED THAT HON'BLE SUPREME COURT HAS HELD THAT BEFORE ISSUE OF NOTICE U/S. 148 OF THE ACT BEYOND A PERIOD OF FOUR YEARS THE REVENUE IS REQUIRED TO ESTABLISH THE FAILURE ON THE PART OF ASSESSEE TO FULLY AND TRULY DISCLOSE THE MATERIAL FACTS DURING THE ASSESSMENT PROCEEDINGS. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO FILE CERTAIN INFORMATION REGARDING RAISING OF FRESH SHARE CAPITAL AND WHICH THE 6 ITA NOS.324 & 236/LKW/2020 ASSESSEE HAD FILED WITH COMPLETE DOCUMENTARY EVIDENCES AS REQUIRED BY THE ASSESSING OFFICER AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO COPY OF NOTICE ISSUED U/S. 142(1) PLACED IN P.B. PAGE 124 TO 133. OUR ATTENTION WAS FURTHER INVITED TO P.B. PAGES 129 TO 133 WHERE THE REPLY TO THE QUERIES RAISED BY THE ASSESSING OFFICER WAS PLACED. OUR SPECIFIC ATTENTION WAS INVITED TO QUERY NO.1 WHEREBY THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO FURNISH DETAILS OF SHARE HOLDING WITH NEW SHARE CAPITAL ALONG WITH SOURCE OF FUNDS BY SHAREHOLDERS ALONG WITH THEIR NAMES AND ADDRESSES AND COPY OF INCOME TAX RETURN OF EACH OF THEM. OUR SPECIFIC ATTENTION WAS INVITED TO REPLY PLACED IN P.B. PAGES 129 TO 133, WHEREIN THE COMPLETE REPLY ALONG WITH NAMES AND ADDRESSES OF THE SHAREHOLDERS, COPY OF THEIR BANK ACCOUNT, COPY OF CONFIRMATION OF THE INVESTMENT AND COPY OF PAN CARD OF THE INVESTOR WAS PLACED. THEREFORE, IT WAS SUBMITTED THAT ASSESSEE HAD DISCHARGED ITS INITIAL ONUS OF PROVIDING FULL AND TRUE DISCLOSURE OF MATERIAL FACTS WHICH THE ASSESSING OFFICER WANTED THE ASSESSEE TO FILE AND THEREFORE THERE IS NO FAILURE ON THE PART OF ASSESSEE AND THEREFORE THE EXTENDED PERIOD BEYOND FOUR YEARS FOR REOPENING OF THE CASE OF THE ASSESSEE IS NOT APPLICABLE TO THE PRESENT CASE. IT WAS SUBMITTED THAT LD. CIT(A) HAS DISMISSED THIS ARGUMENT OF THE ASSESSEE BY HOLDING THAT THERE WAS FRESH INFORMATION AVAILABLE WITH THE ASSESSING OFFICER IN THE FORM OF STATEMENT OF CERTAIN PERSONS BY WHICH IT WAS PROVED THAT ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES AND THEREFORE HE REJECTED THESE GROUNDS OF APPEAL. IT WAS SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF NDTV VS. DCIT (SUPRA) HAS CLEARLY HELD THAT ITS ON THE PART OF REVENUE TO ESTABLISH THAT THERE WAS A FAILURE ON THE PART OF ASSESSEE TO FURNISH FULL AND TRUE MATERIAL FACTS BEFORE ACTION CAN BE TAKEN U/S. 148 OF THE ACT AND THEREFORE, IT 7 ITA NOS.324 & 236/LKW/2020 WAS SUBMITTED THAT SINCE THE NOTICE ISSUED U/S. 148 OF THE ACT IS NOT SUSTAINABLE AS ISSUED BEYOND THE PERIOD OF FOUR YEARS AND THEREFORE THE ASSESSMENT MADE THEREIN IS ALSO BAD IN LAW AND VOID AB INITIO AND NEEDS TO BE QUASHED AND CONSEQUENTIAL CIT(A)S ORDER IS ALSO BAD IN LAW. 4. THE LD. CIT, DR, ON THE OTHER HAND, HEAVILY PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT LD. CIT(A) HAS DISCUSSED THIS ISSUE IN DETAIL AND AFTER CONSIDERING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NDTV VS. DCIT (SUPRA) HAS DISTINGUISHED IT FROM THE FACTS OF THE CASE OF ASSESSEE BY HOLDING THAT IN THE PRESENT CASE THE ASSESSING OFFICER HAD THE FRESH INFORMATION AND THEREFORE THE CASE OF THE ASSESSEE HAS BEEN RIGHTLY REOPENED U/S. 148 OF THE ACT. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DATED 07.03.2014 A COPY OF THE ASSESSMENT ORDER IS PLACED IN P.B. PAGES 121 TO 123. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOT DISCUSSED THE ISSUE OF FRESH SHARE CAPITAL. HOWEVER IN THE ANNEXURE TO NOTICE ISSUED U/S. 142(1) OF THE ACT WE FIND THAT THE ASSESSING OFFICER SPECIFICALLY REQUIRED THE ASSESSEE TO FURNISH INFORMATION IN RESPECT OF NEW SHARE CAPITAL AND REQUIRED THE ASSESSEE TO FILE NAME AND ADDRESSES, COPY OF I.T. RETURN OF EACH SHAREHOLDER. FOR THE SAKE OF COMPLETENESS THE QUERY RAISED BY ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS IS REPRODUCED BELOW: (1). DETAILS OF SHAREHOLDER WITH HOLDING FOR NEW SHARE CAPITAL. (2). DETAILS OF SECURITY PREMIUM CREDIT ON SHARE ISSUE ALONGWITH SOURCE OF FUNDS BY EACH SHAREHOLDER WITH 8 ITA NOS.324 & 236/LKW/2020 THEIR NAME ADDRESSES, COPY OF I.T. RETURN OF EACH THEM AND ALSO PREMIUM ON REDEMPTION OF DEBENTURES. 6. AGAINST THIS QUERY, THE ASSESSEE FILED REPLY A COPY OF WHICH IS PLACED IN P.B. PAGE 129 TO 133. THE RELEVANT ANSWER TO QUERY NO. 1 AND 2 AS EXTRACTED FROM THE SAID REPLY AND IS MADE PART OF THIS ORDER WHICH IS REPRODUCED BELOW: 9 ITA NOS.324 & 236/LKW/2020 10 ITA NOS.324 & 236/LKW/2020 7. CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER ACCEPTED THE EVIDENCES WITH REGARD TO NEW SHARE CAPITAL AND PASSED THE ASSESSMENT ORDER WITHOUT MAKING ANY ADDITION IN THIS RESPECT. BEFORE COMPLETION OF ASSESSMENT NO FURTHER QUERY WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NEW SHARE CAPITAL AND WHATEVER INFORMATION WAS REQUIRED BY THE ASSESSING OFFICER THROUGH NOTICE U/S. 142(1) OF THE ACT WAS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. 8. ADMITTEDLY THE CASE OF THE ASSESSEE HAS BEEN REOPENED AFTER A PERIOD OF FOUR YEARS AND THEREFORE, IT IS IMPORTANT TO FIRST VISIT THE PROVISIONS OF SECTION 147 OF THE ACT WHICH FOR THE SAKE OF COMPLETENESS ARE REPRODUCED BELOW: 11 ITA NOS.324 & 236/LKW/2020 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE 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 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 THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS 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 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME 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 MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. 8.1 THE ABOVE PROVISIONS OF LAW PROHIBITS THE REOPENING OF A CASE AFTER EXPIRY OF FOUR YEARS UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF ASSESSEE TO MAKE A RETURN 12 ITA NOS.324 & 236/LKW/2020 U/S. 139 OR IN RESPONSE TO NOTICE ISSUED SUB SECTION (1) OF SECTION 142 OR SECTION 148 TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. EXPLANATION-1 TO THE ABOVE SECTION STATES THAT PRODUCTION BEFORE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD HAVE BEEN DISCOVERED BY ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF FOREGOING PROVISO. 9. IN THE LIGHT OF ABOVE PROVISIONS OF LAW, LETS EXAMINE THE FACTS OF THE PRESENT CASE. WE FIND THAT ASSESSEE DULY FILED THE REQUIRED INFORMATION AS REQUIRED BY ASSESSING OFFICER AS IS EVIDENT FROM THE PAPER BOOK PAGES 121 TO 133 WITH RESPECT TO THE QUERY REGARDING SHARE CAPITAL. THERE WAS ONLY ONE QUERY AND WHICH WAS DULY REPLIED AND AFTER THAT THE ASSESSING OFFICER DID NOT RAISE FURTHER QUERY AND MADE THE ASSESSMENT WITHOUT MAKING ANY ADDITIONS ON ACCOUNT OF SHARE CAPITAL. THE QUERY AND ITS REPLY HAS ALREADY BEEN MADE PART OF THIS ORDER. THE LD. CIT(A) IN HIS ORDER HAS HELD THAT SINCE THERE WAS FRESH MATERIAL BEFORE THE ASSESSING OFFICER, THEREFORE, THE EXTENDED PERIOD OF SIX YEARS WILL BE APPLICABLE. HOWEVER, WHILE HOLDING SO HE HAS NOT MENTIONED AS TO WHAT IS THE FAILURE ON THE PART OF THE ASSESSEE IN PROVIDING FULL AND TRUE INFORMATION. IN OUR VIEW BEFORE COMING TO THE SECOND ASPECT OF FRESH MATERIAL THE REVENUE HAS TO ESTABLISH FAILURE ON THE PART OF THE ASSESSEE TO FURNISH FULL AND FAIR DISCLOSURE WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. THE HON'BLE SUPREME COURT IN THE CASE OF NDTV VS. DCIT (SUPRA) VIDE ORDER DATED 03.04.2020 HAS ELABORATELY DISCUSSED THIS ISSUE AND HAS FINALLY HELD THAT BEFORE COMING TO THE SECOND ASPECT OF FRESH MATERIAL, THE REVENUE HAS TO ESTABLISH THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE. THE HON'BLE SUPREME COURT HAS FRAMED THREE QUESTIONS IN THIS CASE WHEREIN 13 ITA NOS.324 & 236/LKW/2020 QUESTION NO.(II) IS RELEVANT TO THE FACT OF THE PRESENT CASE AND WHICH FOR THE SAKE OF COMPLETENESS IS REPRODUCED BELOW: (II) WHETHER THE ASSESSEE DID NOT DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS DURING THE COURSE OF ORIGINAL ASSESSMENT WHICH LED TO THE FINALIZATION OF THE ASSESSMENT ORDER AND UNDISCLOSED INCOME ESCAPING DETECTION? 10. WHILE ANSWERING THIS QUESTION THE HON'BLE SUPREME COURT VIDE PARA 24 ONWARDS HELD AS UNDER: 24. COMING TO THE SECOND QUESTION AS TO WHETHER THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO MAKE A FULL AND TRUE DISCLOSURE OF ALL THE RELEVANT FACTS. THE CASE OF THE ASSESSEE IS THAT IT HAD DISCLOSED ALL FACTS WHICH WERE REQUIRED TO BE DISCLOSED. 25. THE REVENUE HAS PLACED RELIANCE ON CERTAIN COMPLAINTS MADE BY THE MINORITY SHAREHOLDERS AND IT IS ALLEGED THAT THOSE COMPLAINTS REVEAL THAT THE ASSESSEE WAS INDULGING IN ROUND TRIPPING OF ITS FUNDS. ACCORDING TO THE REVENUE THE MATERIAL DISCLOSED IN THESE COMPLAINTS CLEARLY SHOWS THAT THE ASSESSEE IS GUILTY OF CREATING A NETWORK OF SHELL COMPANIES WITH A VIEW TO TRANSFER ITS UNTAXED INCOME IN INDIA TO ENTITIES ABROAD AND THEN BRING IT BACK TO INDIA THEREBY AVOIDING TAXATION. WE MAKE IT CLEAR THAT WE ARE NOT GOING INTO THIS ASPECT OF THE MATTER BECAUSE THOSE COMPLAINTS HAVE NOT SEEN LIGHT OF THE DAY EITHER BEFORE THE HIGH COURT OR THIS COURT AND, THEREFORE, IT WOULD BE UNFAIR TO THE ASSESSEE IF WE RELY UPON SUCH MATERIAL WHICH THE ASSESSEE HAS NOT BEEN CONFRONTED WITH. 26. EVEN BEFORE THE ASSESSMENT ORDER WAS PASSED ON 03.08.2012, THE ASSESSING OFFICER WAS AWARE OF THE ENTITIES WHICH HAD SUBSCRIBED TO THE CONVERTIBLE BONDS. THIS IS APPARENT FROM THE COMMUNICATION DATED 08.04.2011. THE CASE OF THE REVENUE IS THAT THE ASSESSEE DID NOT DISCLOSE THE AMOUNT SUBSCRIBED BY EACH OF THE ENTITIES AND FURTHERMORE THE MANAGEMENT STRUCTURE OF THESE COMPANIES. WE ARE NOT IN AGREEMENT WITH THIS SUBMISSION OF THE REVENUE. IT IS APPARENT FROM THE RECORDS OF THE CASE THAT THE REVENUE WAS AWARE OF THE ENTITIES WHICH SUBSCRIBED TO THE CONVERTIBLE BONDS. IT HAS BEEN URGED THAT THESE ARE BOGUS COMPANIES, BUT WE ARE NOT CONCERNED WITH THAT AT THIS STAGE. THE ISSUE BEFORE US IS WHETHER THE REVENUE CAN TAKE THE BENEFIT OF THE 14 ITA NOS.324 & 236/LKW/2020 EXTENDED PERIOD OF LIMITATION OF 6 YEARS FOR INITIATING PROCEEDINGS UNDER THE FIRST PROVISO SECTION 147 OF THE ACT. THIS CAN ONLY BE DONE IF THE REVENUE CAN SHOW THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE ASSESSEE, IN OUR VIEW HAD DISCLOSED ALL THE FACTS IT WAS BOUND TO DISCLOSE. IF THE REVENUE WANTED TO INVESTIGATE THE MATTER FURTHER AT THAT STAGE IT COULD HAVE EASILY DIRECTED THE ASSESSEE TO FURNISH MORE FACTS. 27. THE HIGH COURT HELD THAT THERE WAS NO TRUE AND FAIR DISCLOSURE IN VIEW OF THE LAW LAID DOWN BY THIS COURT IN PHOOL CHANDS CASE (SUPRA), AND THE JUDGMENT OF THE DELHI HIGH COURT IN HONDA SIEL POWER PRODUCTS LIMITED VS. DEPUTY COMMISSIONER INCOME TAX AND ANOTHER. WE HAVE ALREADY REFERRED TO THE JUDGMENT IN PHOOL CHANDS CASE (SUPRA), WHEREIN IT WAS HELD THAT WHERE THE TRANSACTION OF A PARTICULAR ASSESSMENT YEAR IS FOUND TO BE A BOGUS TRANSACTION, THE DISCLOSURES MADE COULD NOT BE SAID TO BE ALL TRUE AND FULL. RELYING UPON THE SAID JUDGMENT THE HIGH COURT HELD THAT MERELY BECAUSE THE TRANSACTION OF CONVERTIBLE BONDS WAS DISCLOSED AT THE TIME OF ORIGINAL ASSESSMENT DOES NOT MEAN THAT THERE IS TRUE AND FULL DISCLOSURE OF FACTS. 28. WE ARE UNABLE TO AGREE WITH THIS REASONING GIVEN BY THE HIGH COURT. THE ASSESSEE AS MENTIONED ABOVE MADE A DISCLOSURE ABOUT HAVING AGREED TO STAND GUARANTEE FOR THE TRANSACTION BY NNPLC AND IT HAD ALSO DISCLOSED THE FACTUM OF THE ISSUANCE OF CONVERTIBLE BONDS AND THEIR REDEMPTION. THE INCOME, IF ANY, AROSE BECAUSE OF THE REDEMPTION AT A DISCOUNTED PRICE. THIS WAS AN EVENT WHICH TOOK PLACE SUBSEQUENT TO THE ASSESSMENT YEAR IN QUESTION THOUGH IT MAY BE INCOME FOR THE ASSESSMENT YEAR. AS WE HAVE OBSERVED ABOVE, ALL RELEVANT FACTS WERE DULY WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER KNEW WHO WERE THE ENTITIES WHO HAD SUBSCRIBED TO OTHER CONVERTIBLE BONDS AND IN OTHER PROCEEDINGS RELATING TO THE SUBSIDIARIES THE SAME ASSESSING OFFICER HAD KNOWLEDGE OF ADDRESSES AND THE CONSIDERATION PAID BY EACH OF THE BONDHOLDERS AS IS APPARENT FROM ASSESSMENT ORDERS DATED 03.08.2012 PASSED IN THE CASES OF M/S. NDTV LABS LTD. AND M/S. NDTV LIFESTYLE LTD. THEREFORE, IN OUR OPINION THERE WAS FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT BY THE ASSESSEE. 29. THE FACT THAT STEP UP COUPON BONDS FOR US$ 100 MILLION WERE ISSUED BY NNPLC WAS DISCLOSED; WHO WERE THE ENTITIES WHICH SUBSCRIBED TO THE BONDS WAS DISCLOSED; AND THE FACT THAT THE BONDS WERE DISCOUNTED AT A LOWER RATE WAS ALSO DISCLOSED 15 ITA NOS.324 & 236/LKW/2020 BEFORE THE ASSESSMENT WAS FINALISED. THIS TRANSACTION WAS ACCEPTED BY THE ASSESSING OFFICER AND IT WAS CLEARLY HELD THAT THE ASSESSEE WAS ONLY LIABLE TO RECEIVE A GUARANTEE FEES ON THE SAME WHICH WAS ADDED TO ITS INCOME. WITHOUT SAYING ANYTHING FURTHER ON MERITS OF THE TRANSACTION WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THE ASSESSEE HAD WITHHELD ANY MATERIAL INFORMATION FROM THE REVENUE. 30. ACCORDING TO THE REVENUE THE ASSESSEE TO AVOID DETECTION OF THE ACTUAL SOURCE OF FUNDS OF ITS SUBSIDIARIES DID NOT DISCLOSE THE DETAILS OF THE SUBSIDIARIES IN ITS FINAL ACCOUNTS, BALANCE SHEETS, AND PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PERIOD AS WAS MANDATORY UNDER THE PROVISIONS OF THE INDIAN COMPANIES ACT, 1956. IT IS NOT DISPUTED THAT THE ASSESSEE HAD OBTAINED AN EXEMPTION FROM THE COMPETENT AUTHORITY UNDER THE COMPANIES ACT, 1956 FROM PROVIDING SUCH DETAILS IN ITS FINAL ACCOUNTS, BALANCE SHEETS, ETC. AS SUCH IT CANNOT BE SAID THAT THE ASSESSEE WAS BOUND TO DISCLOSE THIS TO THE ASSESSING OFFICER. THE ASSESSING OFFICER BEFORE FINALISING THE ASSESSMENT OF 03.08.2012 HAD NEVER ASKED THE ASSESSEE TO FURNISH THE DETAILS. 31. THE REVENUE NOW HAS COME UP WITH THE PLEA THAT CERTAIN DOCUMENTS WERE NOT SUPPLIED BUT ACCORDING TO US ALL THESE DOCUMENTS CANNOT BE SAID TO BE DOCUMENTS WHICH THE ASSESSEE WAS BOUND TO DISCLOSE AT THE TIME OF ASSESSMENT. THE MAIN GROUND RAISED BY THE REVENUE IS THAT THE ASSESSEE DID NOT DISCLOSE AS TO WHO HAD SUBSCRIBED WHAT AMOUNT AND WHAT WAS ITS RELATIONSHIP WITH THE ASSESSEE. AS FAR AS THE FIRST PART IS CONCERNED IT DOES NOT APPEAR TO BE CORRECT. THERE IS MATERIAL ON RECORD TO SHOW THAT ON 08.04.2011 NNPLC HAD SENT A COMMUNICATION TO THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION), WHEREIN IT HAD NOT ONLY DISCLOSED THE NAMES OF ALL THE BOND HOLDERS BUT ALSO THEIR ADDRESSES; NUMBER OF BONDS ALONG WITH THE TOTAL CONSIDERATION RECEIVED. THIS CHART FORMS PART OF THE ASSESSMENT ORDERS DATED 03.08.2012 IN THE CASE OF M/S. NDTV LABS LTD. AND M/S. NDTV LIFESTYLE LTD. THE SAID TWO ASSESSMENT ORDERS WERE PASSED BY THE SAME OFFICER WHO HAD PASSED THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE ON THE SAME DATE ITSELF. THEREFORE, THE ENTIRE MATERIAL WAS AVAILABLE WITH THE REVENUE. 32. A NUMBER OF DECISIONS HAVE BEEN CITED AS TO WHAT IS MEANT BY TRUE AND FULL DISCLOSURE. IT IS NOT NECESSARY TO MULTIPLY DECISIONS, AS LAW IN THIS REGARD HAS BEEN SUCCINCTLY LAID DOWN BY A CONSTITUTION BENCH OF THIS COURT IN CALCUTTA DISCOUNT CO. LTD. VS. 16 ITA NOS.324 & 236/LKW/2020 INCOME TAX OFFICER, COMPANIES DISTRICT I, CALCUTTA AND ANOTHER5 , WHEREIN IT WAS HELD AS FOLLOWS : (8)THE WORDS USED ARE OMISSION OR FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. IT POSTULATES A DUTY ON EVERY ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. WHAT FACTS ARE MATERIAL, AND NECESSARY FOR ASSESSMENT WILL DIFFER FROM CASE TO CASE. IN EVERY ASSESSMENT PROCEEDING, THE ASSESSING AUTHORITY WILL, FOR THE PURPOSE OF COMPUTING OR DETERMINING THE PROPER TAX DUE FROM AN ASSESSEE, REQUIRE TO KNOW ALL THE FACTS WHICH HELP HIM IN COMING TO THE CORRECT CONCLUSION. FROM THE PRIMARY FACTS IN HIS POSSESSION, WHETHER ON DISCLOSURE BY THE ASSESSEE, OR DISCOVERED BY HIM ON THE BASIS OF THE FACTS DISCLOSED, OR OTHERWISE THE ASSESSING AUTHORITY HAS TO DRAW INFERENCES AS REGARDS CERTAIN OTHER FACTS; AND ULTIMATELY, FROM THE PRIMARY FACTS AND THE FURTHER FACTS INFERRED FROM THEM, THE AUTHORITY HAS TO DRAW THE PROPER LEGAL INFERENCES, AND ASCERTAIN ON A CORRECT INTERPRETATION OF THE TAXING ENACTMENT, THE PROPER TAX LEVIABLE. THUS, WHEN A QUESTION ARISES WHETHER CERTAIN INCOME RECEIVED BY AN ASSESSEE IS CAPITAL RECEIPT, OR REVENUE RECEIPT, THE ASSESSING AUTHORITY HAS TO FIND OUT WHAT PRIMARY FACTS HAVE BEEN PROVED, WHAT OTHER FACTS CAN BE INFERRED FROM THEM, AND TAKING ALL THESE TOGETHER, TO DECIDE WHAT THE LEGAL INFERENCE SHOULD BE. (9) THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING ALL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUESTION BEFORE THE ASSESSING AUTHORITY LIES ON THE ASSESSEE. TO MEET A POSSIBLE CONTENTION THAT WHEN SOME ACCOUNT BOOKS OR OTHER EVIDENCE HAS BEEN PRODUCED, THERE IS NO DUTY ON THE ASSESSEE TO DISCLOSE FURTHER FACTS, WHICH ON DUE DILIGENCE, THE INCOME TAX OFFICER MIGHT HAVE DISCOVERED, THE LEGISLATURE HAS PUT IN THE EXPLANATION, WHICH HAS BEEN SET OUT ABOVE. IN VIEW OF THE EXPLANATION, IT WILL NOT BE OPEN TO THE ASSESSEE TO SAY, FOR EXAMPLE I HAVE PRODUCED THE ACCOUNT BOOKS AND THE DOCUMENTS: YOU, THE ASSESSING OFFICER EXAMINE THEM, AND FIND OUT THE FACTS NECESSARY FOR YOUR PURPOSE: MY DUTY IS DONE WITH DISCLOSING THESE ACCOUNTBOOKS AND 17 ITA NOS.324 & 236/LKW/2020 THE DOCUMENTS. HIS OMISSION TO BRING TO THE ASSESSING AUTHORITYS ATTENTION THESE PARTICULAR ITEMS IN THE ACCOUNT BOOKS, OR THE PARTICULAR PORTIONS OF THE DOCUMENTS, WHICH ARE RELEVANT, WILL AMOUNT TO OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. NOR WILL HE BE ABLE TO CONTEND SUCCESSFULLY THAT BY DISCLOSING CERTAIN EVIDENCE, HE SHOULD BE DEEMED TO HAVE DISCLOSED OTHER EVIDENCE, WHICH MIGHT HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY IF HE HAD PURSUED INVESTIGATION ON THE BASIS OF WHAT HAS BEEN DISCLOSED. THE EXPLANATION TO THE SECTION, GIVES A QUIETUS TO ALL SUCH CONTENTIONS; AND THE POSITION REMAINS THAT SO FAR AS PRIMARY FACTS ARE CONCERNED, IT IS THE ASSESSEES DUTY TO DISCLOSE ALL OF THEM INCLUDING PARTICULAR ENTRIES IN ACCOUNT BOOKS, PARTICULAR PORTIONS OF DOCUMENTS AND DOCUMENTS, AND OTHER EVIDENCE, WHICH COULD HAVE BEEN DISCOVERED BY THE ASSESSING AUTHORITY, FROM THE DOCUMENTS AND OTHER EVIDENCE DISCLOSED. (10) 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. ONCE 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 ELSE FAR LESS THE ASSESSEE TO 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 INFERENCES WHETHER OF FACTS OR LAW HE WOULD DRAW FROM THE PRIMARY FACTS. (11) IF FROM PRIMARY FACTS MORE INFERENCES THAN ONE COULD BE DRAWN, IT WOULD NOT BE POSSIBLE TO SAY THAT THE ASSESSEE SHOULD HAVE DRAWN ANY PARTICULAR INFERENCE AND COMMUNICATED IT TO THE ASSESSING AUTHORITY. HOW COULD AN ASSESSEE BE CHARGED WITH FAILURE TO COMMUNICATE AN INFERENCE, WHICH HE MIGHT OR MIGHT NOT HAVE DRAWN? 18 ITA NOS.324 & 236/LKW/2020 A CAREFUL ANALYSIS OF THIS JUDGMENT INDICATES THAT THE CONSTITUTION BENCH HELD THAT IT IS THE DUTY OF THE ASSESSEE TO DISCLOSE FULL AND TRULY ALL MATERIAL FACTS WHICH IT TERMED AS PRIMARY FACTS. NON DISCLOSURE OF OTHER FACTS WHICH MAY BE TERMED AS SECONDARY FACTS IS NOT NECESSARY. IN LIGHT OF THE ABOVE LAW, WE SHALL DEAL WITH THE FACTS OF THE PRESENT CASE. 33. IN OUR VIEW THE ASSESSEE DISCLOSED ALL THE PRIMARY FACTS NECESSARY FOR ASSESSMENT OF ITS CASE TO THE ASSESSING OFFICER. WHAT THE REVENUE URGES IS THAT THE ASSESSEE DID NOT MAKE A FULL AND TRUE DISCLOSURE OF CERTAIN OTHER FACTS. WE ARE OF THE VIEW THAT THE ASSESSEE HAD DISCLOSED ALL PRIMARY FACTS BEFORE THE ASSESSING OFFICER AND IT WAS NOT REQUIRED TO GIVE ANY FURTHER ASSISTANCE TO THE ASSESSING OFFICER BY DISCLOSURE OF OTHER FACTS. IT WAS FOR THE ASSESSING OFFICER AT THIS STAGE TO DECIDE WHAT INFERENCE SHOULD BE DRAWN FROM THE FACTS OF THE CASE. IN THE PRESENT CASE THE ASSESSING OFFICER ON THE BASIS OF THE FACTS DISCLOSED TO HIM DID NOT DOUBT THE GENUINENESS OF THE TRANSACTION SET UP BY THE ASSESSEE. THIS THE ASSESSING OFFICER COULD HAVE DONE EVEN AT THAT STAGE ON THE BASIS OF THE FACTS WHICH HE ALREADY KNEW. THE OTHER FACTS RELIED UPON BY THE REVENUE ARE THE PROCEEDINGS BEFORE THE DRP AND FACTS SUBSEQUENT TO THE ASSESSMENT ORDER, AND WE HAVE ALREADY DEALT WITH THE SAME WHILE DECIDING ISSUE NO.1. HOWEVER, THAT CANNOT LEAD TO THE CONCLUSION THAT THERE IS NONDISCLOSURE OF TRUE AND MATERIAL FACTS BY THE ASSESSEE. 34. IT IS INTERESTING TO NOTE THAT WHEREAS BEFORE THIS COURT THE REVENUE IS STRENUOUSLY URGING THAT THE ASSESSEE IS GUILTY OF NON DISCLOSURE OF MATERIAL FACTS, BEFORE THE HIGH COURT THE CASE OF THE REVENUE WAS JUST OPPOSITE. WE MAY QUOTE A PORTION OF THE COUNTER AFFIDAVIT FILED BY THE REVENUE IN RESPONSE TO THE WRIT PETITION FILED BY THE ASSESSEE BEFORE THE HIGH COURT WHICH READS AS FOLLOWS: IT IS EVIDENT FROM THESE FACTS THAT SECOND PROVISO TO SECTION 147 IS CLEARLY ATTRACTED IN THIS CASE AND FIRST PROVISO TO SECTION 147 IS NOT APPLICABLE TO FACTS OF THIS CASE, I.E. IN THIS CASE, THE ONLY REQUIREMENT TO REOPEN ASSESSMENT U/S 147 WAS THAT THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE SECOND CONDITION THAT THE INCOME SHOULD HAVE ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL 19 ITA NOS.324 & 236/LKW/2020 FACTS NECESSARY FOR MAKING ASSESSMENT IS NOT RELEVANT TO DECIDE ISSUE BEFORE THE HONBLE COURT. THIS SUBMISSION HAS BEEN REPEATED A NUMBER OF TIMES IN THE COUNTER AFFIDAVIT. THEREFORE, IN OUR OPINION THE REVENUE CANNOT NOW TURN AROUND AND URGE THAT THE ASSESSEE IS GUILTY OF NON DISCLOSURE OF FACTS. WE ARE ALSO OF THE VIEW THAT THE REVENUE COULD NOT BE PERMITTED TO BLOW HOT AND COLD AT THE SAME TIME. 35. WE ARE CLEARLY OF THE VIEW THAT THE REVENUE IN VIEW OF ITS COUNTER AFFIDAVIT BEFORE THE HIGH COURT THAT IT WAS NOT RELYING UPON THE NONDISCLOSURE OF FACTS BY THE ASSESSEE COULD NOT HAVE BEEN PERMITTED TO ORALLY URGE THE SAME. EVEN OTHERWISE WE FIND THAT THE ASSESSEE HAD FULLY AND TRULY DISCLOSED ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT AND, THEREFORE, THE REVENUE CANNOT TAKE BENEFIT OF THE EXTENDED PERIOD OF LIMITATION OF 6 YEARS. WE ANSWER QUESTION NO.2 ACCORDINGLY. 11. IN THE ABOVE NOTED JUDGMENT THE HON'BLE SUPREME COURT HAS CLEARLY HELD THAT BENEFIT OF EXTENDED PERIOD OF LIMITATION CAN BE EXTENDED TO SIX YEARS UNDER THE FIRST PROVISO TO SECTION 147 OF THE ACT ONLY IF REVENUE CAN ESTABLISH THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL PRIMARY MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WE FIND THAT HON'BLE COURT HAS ALSO DEALT WITH THE EXPLANATION-1 TO THE SAID PROVISIONS OF SECTION 147 OF THE ACT WHEREIN IT HAS BEEN STATED THAT FILING OF DOCUMENTS AND PRODUCTION OF BOOKS OF ACCOUNT BEFORE ASSESSING OFFICER DOES NOT NECESSARILY AMOUNTS TO DISCLOSURE WITHIN THE MEANING OF SECTION. THE HON'BLE SUPREME COURT WHILE COMMENTING ON EXPLANATION-1 HAS HELD THAT THE DUTY OF THE ASSESSEE IS TO PROVIDE AND FILE PRIMARY INFORMATION AND NON DISCLOSURE OF ORTHER FACTS WHICH MAY BE TERMED AS SECONDARY FACTS IS NOT NECESSARY. 12. IN THE LIGHT OF THE ABOVE JUDGMENT LET US EXAMINE THE PRIMARY DOCUMENTS WHICH THE ASSESSEE HAD FILED BEFORE THE ASSESSING 20 ITA NOS.324 & 236/LKW/2020 OFFICER. AS ALREADY NOTED IN OUR ORDER IN THE EARLIER PART THE ASSESSEE HAD FILED DURING ORIGINAL ASSESSMENT PROCEEDINGS, COPY OF PAN CARD, COPY OF BANK ACCOUNTS OF INVESTORS, ACKNOWLEDGMENT OF RETURN OF INCOME OF INVESTORS, CONFIRMATION OF INVEST AND A COPY OF SUCH DOCUMENTS IS PLACED IN P.B. PAGES 222 TO 453. THESE ARE ALL PRIMARY EVIDENCES WHICH THE ASSESSEE HAD FILED AND THERE WAS NO FURTHER QUERY FROM ASSESSING OFFICER AND THEREFORE, THERE IS NO FAILURE ON THE PART OF ASSESSEE AS THE ASSESSEE HAD DISCLOSED ALL THE MATERIAL FACTS WHICH IT WAS BOUND TO DISCLOSE AND IF THE REVENUE WANTED TO FURTHER INVESTIGATE THE MATTER AT THAT STAGE IT COULD HAVE EASILY DIRECTED THE ASSESSEE TO FURNISH MORE FACTS. THE ABOVE DOCUMENTS FILED DURING ORIGINAL ASSESSMENT PROCEEDINGS CLEARLY CONTAINS THE NAMES, ADDRESSES, PAN NUMBERS AND COPY OF RETURNS AND COPY OF BANK ACCOUNT OF INVESTORS AND THE ASSESSING OFFICER COULD HAVE INVESTIGATED FURTHER TO EXAMINE AS TO WHETHER THESE ENTITIES WERE ENTRY PROVIDERS OR NOT. THESE DOCUMENTS ALSO CONTAIN THE FACT THAT NEW SHARES OF RS.10/- EACH WERE ISSUED TO NEW SHAREHOLDERS AT A PREMIUM OF RS.240/- EACH. THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS HAD FILED COPY OF BANK ACCOUNS OF INVESTORS ALSO AND ASSESSING OFFICER COULD HAVE EXAMINED BANK ACCOUNTS OF SUCH INVESTORS TO EXAMINE AS TO WHETHER ANY FUNDS WERE ROTATED TO MAKE AVAILABLE FUNDS IN THESE BANK ACCOUNTS FOR MAKING INVESTMENT IN THE ASSESSEES COMPANY. NOTHING HAS BEEN DONE BY ASSESSING OFFICER AND NOW IT CANNOT BE SAID THAT THERE WAS FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULL AND TRUE MATERIAL FACTS. IN THE JUDGMENT BY HON'BLE SUPREME COURT, THE HON'BLE SUPREME COURT HAS ALSO DISCUSSED ITS OWN DECISION IN THE CASE OF M/S. PHOOL CHAND BAJRANG LAL VS. INCOME-TAX OFFICER AND ANOTHER, (1993) 203 ITR 456 (SC) 21 ITA NOS.324 & 236/LKW/2020 WHICH HAS BEEN RELIED ON BY THE LD. CIT(A) AND IN PARA 28 HAS HELD THAT THEY WERE UNABLE TO AGREE WITH THIS REASONING GIVEN BY THE HIGH COURT BY PUTTING RELIANCE IN THE CASE OF PHOOL CHAND BAJRANG LAL. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES AND JUDICIAL PRECEDENTS GROUND NOS. 1 AND 2 OF THE APPEAL IS ALLOWED AND ASSESSMENTS ORDER IS QUASHED AS VOID AB INITIO AND CONSEQUENTIAL LD. CIT(A)S ORDER IS ALSO QUASHED. THE OTHER GROUNDS OF CROSS APPEAL WERE NOT ARGUED, THEREFORE, REST OF THE GROUNDS ARE DISMISSED AS NOT PRESSED. SINCE WE HAVE ALLOWED THE CROSS APPEAL OF THE ASSESSEE ON LEGAL ISSUE, THEREFORE, THE APPEAL FILED BY THE REVENUE HAS BECOME INFRUCTUOUS AND IS THEREFORE DISMISSED. 13. IN THE RESULT, CROSS APPEAL FILED BY ASSESSEE IN ITA NO.236/LKW/2020 IS PARTLY ALLOWED WHEREAS APPEAL FILED BY REVENUE IN ITA NO.324/LKW/2020 IS DISMISSED AS INFRUCTUOUS. (ORDER PRONOUNCED IN THE OPEN COURT ON 11/08/2021) SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) VICE PRESIDENT ACCOUNTANT MEMBER AKS DTD. 11/08/2021 COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR