ABU-DHABI COMMERICAL BANK LTD, MUMBAI V. DDIT (IT) 1(1), MUMBAI

ITA 3441/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4069 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 16-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY SRI VASTAVA
• Assessee Lawyers: F V IRANI
• Keywords: Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 244A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI . . , , ! ' BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 3441 / / 2010 A.Y. 2003-04 ITA NO. : 3441/MUM/2010 (ASSESSMENT YEAR : 2003-04) ABU- DHABI COMMERCIAL BANK LTD. 75B, REHAMAT MANZIL, VEER NARIMA ROAD, MUMBAI-400 020 PAN: AAACA 4216 B VS DDIT (IT) SCANDIA HOUSE, NAROTTAM MORARJEE MARG, BALLARD ESTATE- MUMBAI-400 038 (APPLICANT) (RESPONDENT) APPLICANT BY MR. F.V. IRANI RESPONDENT BY MR. AJAY SRIVASTAVA DATE OF HEARING 16.07.2013 DATE OF PRONOUNCEMENT 19.07.2013 PER VIVEK VARMA, J.M. THE INSTANT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 10, MUMBAI, DATED 18.02.2010, WHEREIN, THE F OLLOWING GROUNDS HAVE BEEN TAKEN: 1) (A) THE COMMISSIONER OF INCOME-TAX (APPEALS)-10, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER (AO) OF RE-OPENING THE ASSESSMENT UNDER SECTION 147 R.W. S. 143(3) OF THE INCOME-TAX ACT. (B) THE CIT(A) OUGHT TO HAVE HELD THAT THE RE -OPENING OF THE ASSESSMENT WAS VOID, IN WANT OF AND / OR EXCESS OF JURISDICTION AN D OTHERWISE CONTRARY TO THE PROVISION OF THE INCOME-TAX ACT AND BAD IN LAW A ND CONSEQUENTLY THE CIT(A) OUGHT TO HAVE CANCELLED/QUASHED THE ORDER PA SSED BY THE AO. (C) THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE WAS NO INCOME WHICH HAD ESCAPED ASSESSMENT FOR THE YEAR UNDER APPEAL BY REA SON OF ANY FAILURE ON THE APPELLANTS PART TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 2(A) THE CIT(A) HAVING STATED IN THE BODY OF THE OR DER UNDER APPEAL THAT THE APPELLANTS CLAIM FOR HEAD OFFICE ADMINISTRATIVE AND SUPERVISION EXPENSES HE ALLOWED ONLY TO THE EXTENT OF LIMIT PRESCRIBED U NDER SECTION 44C OF THE ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 2 ACT, ERRED IN UPHOLDING THE ACTION OF THE AO, OF WITH DRAWING THE DEDUCTION ALLOWED UNDER SECTION 44C. (B) THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO ALL OW THE ENTIRE HEAD OFFICE EXPENSES OF RS 1,98,01,876 WITHOUT APPLYING PROVISIO NS OF SECTION 44C OF THE ACT. THE APPELLANT SUBMIT THAT THE ENTIRE AMO UNT ALLOCATED TO THE INDIAN BRANCHES IS ALLOWABLE AS DEDUCTION AS PER TH E PROVISIONS OF ARTICLE 7(3) OF THE CONVENTION BETWEEN THE GOVERNMENT OF U4 AND THE GOVERNMENT OF INDIA (HEREINAFTER REFERRED TO AS THE TAX TREATY). (C) WITHOUT PREJUDICE TO THE APPELLANTS CONTENTION THAT THE ENTIRE HEAD OFFICE ADMINISTRATIVE AND SUPERVISION BE ALLOWED, THE APPE LLANTS SUBMIT THAT THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO ALLOW TH E DEDUCTION UNDER SECTION 44C OF THE ACT IN RESPECT OF SUCH EXPENSES. 3(A) THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO RE COMPUTE INTEREST UNDER SECTION 244A AT RS.3,95,69.903 AS AGAINST RS.3,40,23,7 64 COMPUTED BY THE AO. (B) THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO GRAN T INTEREST UPTO DATE OF RECEIPT OF REFUND AS AGAINST UPTO DATE OF ISSUE OF REFUND VOUCHER. (C WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANTS S UBMIT THAT THE CIT(A) ERRED IN CONSIDERING THE DATE OF ISSUE OF REFUND VOUCHER AS 3L MARCH. 2009 AS AGAINST THE CORRECT DATE I.E. 29TH APRIL, 2009. 2. GROUND NO. 1& 2 PERTAIN TO THE INITIATION OF REA SSESSMENT PROCEEDINGS UNDER SECTION 148. 3. THE FACTS ARE THAT THE REGULAR ASSESSMENT UNDER SECTION 143(3) WAS FRAMED ON 24.02.2006. THE AO INITIATED ASSESSMENT P ROCEEDINGS, WHEREIN, THE AO RECORDED THE FOLLOWING REASONS: IN THIS CASE ASSESSMENT ORDER UNDER SECTION 143(3) WAS PASSED ON 24.02.2006. SUBSEQUENTLY, IT WAS OBSERVED THAT THE ASSESSEE WAS ALLOWED DEDUCTION OF RS. 34,91,912/- IN RESPECT OF HO EXPENS ES UNDER SECTION 44C OF THE ACT WITHOUT ITS AUTHENTICATION/IDENTIFICATION . THE DEDUCTION WAS ALLOWED ON THE BASIS OF A CA CERTIFICATE ONLY BUT WI THOUT ACTUAL VERIFICATION BY THE AO RESULTING IN IRREGULAR ALLOWANCE OF RS. 34, 91,912/- LEADING TO UNDER ASSESSMENT TO THIS EXTENT. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PARA (C) TO THE EX PLANATION 2 BELOW SECTION 147 OF THE ACT. HE, THEREAFTER, ISSUED NOTICE UNDER SECTION 148 ON 12.06.2008. THE ASSESSEE FILED A LETTER DATED 24.03.3009, WHEREIN, IT RAISED ITS OBJECTIONS AGAINST THE REOPENING. 4. THE ASSESSMENT UNDER SECTION 143(3)/148 WAS FRAM ED VIDE ORDER DATED 24.04.2009, WHEREIN CERTAIN ADDITIONS WERE AL SO MADE. AGGRIEVED, ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 3 ASSESSEE APPROACHED THE CIT(A), AGAINST THE REASSES SMENT PROCEEDINGS AND ALSO ON MERITS, WHO, IN THE APPELLATE ORDER, CO NFIRMED AND SUSTAINED THE ACTION OF THE AO FOR REOPENING OF THE REGULAR A SSESSMENT, BESIDES OTHER GROUNDS ON MERIT. 5. SINCE, THE CIT(A) ALSO SUSTAINED THE REASSESSMEN T PROCEEDINGS, AS WELL AS CERTAIN ADDITIONS ON MERIT, THE ASSESSEE IS NOW BEFORE THE ITAT. 6. BEFORE US, THE AR SUBMITTED THAT GROUNDS NO.1 & 2 PERTAIN TO REASSESSMENT PROCEEDINGS, WHICH HE SHALL TAKE UP FI RST. 7. THE AR POINTED OUT, THAT FOR THE INITIATION OF R EASSESSMENT PROCEEDINGS, THAT TOO AFTER FOUR YEARS, THERE HAS T O BE A POSITIVE GROUND WITH THE AO TO COME TO A CONCLUSION THAT SOME/CERTA IN INCOME HAS ESCAPED ASSESSMENT. THE AR INVITED OUR ATTENTION TO WARDS THE REASONS, WHEREIN THE AO, FOR RECORDING OF THE REASONS, HAS U SED THE WORD OBSERVED AND HAS FURTHER NOTED IN THE REASONS, THE DEDUCTION WAS ALLOWED ON THE BASIS OF CA CERTIFICATE ONLY BUT WIT HOUT ACTUAL VERIFICATION BY THE AO,, LEADING TO UNDER ASSESSMENT TO THIS EXTENT. 8. THIS, ACCORDING TO THE AR, DOES NOT LEAD TO THE CONCLUSION WITH REGARD TO THE ESCAPEMENT OF INCOME OR THAT ANY MATE RIAL FACT WAS LEFT TO BE DISCLOSED BY THE ASSESSEE IN THE ORIGINAL/REGULA R ASSESSMENT PROCEEDINGS. THE AR POINTED OUT THAT IN THE REGULAR ASSESSMENT PROCEEDINGS, THE AO ALLOWED THE DEDUCTION OF RS. 34 ,91,912/-, AFTER VERIFICATION OF ACCOUNTS, DETAILS AND CONSIDERING T HE CLAIM AS MADE IN THE COMPUTATION OF INCOME. 9. ACCORDING TO THE AR, THE AO PROCEEDED ON AN ENTI RELY ILLEGAL PREMISE TO INITIATE REASSESSMENT PROCEEDINGS. HE, T HEREFORE, PLACED ON RECORD THE DECISION OF HONBLE BOMBAY, HIGH COURT I N THE CASE OF ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 4 HINDUSTAN LEVER LTD. VS R B WADKAR, REPORTED IN 268 ITR 332, AT PAGE 337, THE HONBLE BOMBAY HIGH COURT OBSERVED, THE REASONS RECORDED BY THE ASSESSING OFFICER NOWHE RE STATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THAT ASSESSMENT YEAR. IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED T O BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION O R DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REAS ONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDE D. IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THRO UGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASON IT IS FO R THE ASSESSING OFFICER TO REACH THE CONCLUSION AS TO WHETHER THERE WAS FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. IT IS FOR THE ASSESSING OFFICER TO FORM HIS OPINION IT IS FOR HIM TO PUT HI S OPINION ON RECORD IN BLACK AND WHITE. THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS R ECORDED MUST DISCLOSE HIS MIND. THE REASONS ARE THE MANIFESTATION OF THE MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE SELF-EXPLAN ATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING THE REASONS. REASONS PROV IDE THE LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORD ED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICER, IN THE EVENT OF CHA LLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MA TERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSES SMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY THE AS SESSING OFFICER CANNOT BE SUPPLEMENTED BY FILING AN AFFIDAVIT OR MA KING AN ORAL SUBMISSION, OTHERWISE, THE REASONS WHICH WERE LACKI NG IN THE MATERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES THE COURT, ON THE STRENGTH OF THE AFFIDAVIT OR ORAL SUB MISSIONS ADVANCED. HAVING RECORDED OUR FINDING THAT THE IMPUGNED NOTIC E ITSELF IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 1996-97 AND DOES NOT COMPLY WITH THE REQUIREMENTS OF THE PROVIS O TO SECTION 147 OF THE ACT, THE ASSESSING OFFICER HAD NO JURISDICTION TO REO PEN THE ASSESSMENT PROCEEDING WHICH WERE CONCLUDED ON THE BASIS OF ASS ESSMENT UNDER SECTION 143(3) OF THE ACT. ON THIS SHORT COUNT ALONE THE IMPUGNED NOTICE IS LIABLE TO BE QUASHED AND SET ASIDE. 10. HE ALSO PLACED RELIANCE ON THE DECISION OF PRAS HANT JOSHI VS ITO REPORTED IN 324 ITR154, WHEREIN THE HONBLE BOMBAY HIGH COURT AT PAGE 159 OBSERVED, THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE TH AT SUCH IS THE CASE BEFORE HE PROCEEDS TO ISSUE A NOTICE UNDER SECTION 147. THE REASONS WHICH ARE RECORDED BY THE ASSESSING OFFICER FOR REOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN FORMATION OF THE BELIEF IS IMPUGNED. THE RECORDING OF REASONS DISTINGUISHES AN OBJECTIVE FROM A SUBJECTIVE EXERCISE OF POWER. THE REQUIREMENT OF RE CORDING REASONS IS A ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 5 CHECK AGAINST ARBITRARY EXERCISE OF POWER. FOR IT I S ON THE BASIS OF THE REASONS RECORDED AND ON THOSE REASONS ALONE THAT TH E VALIDITY OF THE ORDER REOPENING THE ASSESSMENT IS TO BE DECIDED. THE REAS ONS RECORDED WHILE REOPENING THE ASSESSMENT CANNOT BE ALLOWED TO GROW WITH AGE AND INGENUITY, BY DEVISING NEW GROUNDS. IN REPLIES AND AFFIDAVITS NOT ENVISAGED WHEN THE REASONS FOR REOPENING AN ASSESSM ENT WERE RECORDED. THE PRINCIPLE OF LAW, THEREFORE, IS WELL SETTLED TH AT THE QUESTION AS TO WHETHER THERE WAS REASON TO BELIEVE, WITHIN THE MEA NING OF SECTION 147 THAT INCOME HAS ESCAPED ASSESSMENT, MUST BE DETERMI NED WITH REFERENCE TO THE REASONS RECORDED BY THE ASSESSING OFFICER. 11. HE ALSO PLACED RELIANCE ON THE DECISION OF TITA NOR COMPONENTS LTD. VS ACIT, REPORTED IN 243 CTR 520, WHEREIN HONBLE B OMBAY HIGH COURT OBSERVED, NOWHERE HAS THE AO STATED THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. HAVING REGARD TO THE PURPOSE OF THE SEC TION, WE ARE OF THE VIEW THAT THE POWER CONFERRED BY S. 147 DOES NOT PR OVIDE A FRESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESS MENT MADE EARLIER UNLESS THE MISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF THE ASSESSMENT TO FULLY AND TRULY DISCLOSE ALL MATE RIAL FACTS NECESSARY FOR ASSESSMENT. 12. THE AR HAS PLACED A NUMBER OF DECISIONS, SINCE THE RATIO DECIDED IN ALL THE DECISIONS IS THAT THE AO HAS NOT STATED IN THE REASON, WITH REGARD TO FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, 13. FROM THE DOCUMENTS, AS PLACED FROM AND REGULAR ASSESSMENT, NOWHERE IT COULD BE INFERRED, THAT THE ORIGINAL ASS ESSMENT WAS FRAMED PURSUANT TO SOME WRONG OR INAPT FACTS. THE AR, THER EFORE, PRAYED TO QUASH THE REASSESSMENT PROCEEDINGS. 14. THE DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE REVENUE AUTHORITIES AND ALSO THE INITIATION OF THE REASSESS MENT PROCEEDINGS. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES. WHAT WE HAVE TO EXAMINE AT OUR END, IS TO SEE WHETHER AT ALL THERE WAS ANY PROOF, LEADING TO ESCAPEMENT OF INCOME OR PARTICULARS OF INCOME IN THE PERIOD BETWEEN ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 6 COMPLETION OF REGULAR ASSESSMENT AND RECORDING OF R EASONS TO INITIATE THE INSTANT REASSESSMENT PROCEEDINGS. THIS IS SO BECAUS E, AS THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LT D. (SUPRA) HAS OBSERVED, IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQ UIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUT ION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REAS ONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDE D. IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THRO UGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASON THE REAS ONS RECORDED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICER, IN THE EVE NT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. 16. IN THE INSTANT CASE, NOWHERE THE AO RECORDS THA T THERE IS AN ESCAPEMENT OF INCOME, WHAT HE SAYS IS THAT THE EXPE NSES UNDER SECTION 44C ARE AS PER CA CERTIFICATE, BUT THE SAME HAS NOT BEEN VERIFIED BY THE AO. THIS AGAIN, GOES AGAINST THE DEPARTMENT, BECAUS E IF THE AO INITIATING REASSESSMENT PROCEEDINGS TREAD ON THIS LINE, IT WOU LD AMOUNT TO CHANGE OF OPINION, AS, IN THE REGULAR ASSESSMENT PROCEEDIN GS, THE ERSTWHILE AO CONSIDERED THE CA CERTIFICATE TO COME TO SOME CONCLUSION. THIS ASPECT HAD BEEN TAKEN CARE BY THE HONBLE DELHI HIGH COURT (FB) IN THE CASE OF KELVINATOR OF INDIA, REPORTED IN 256 ITR 1, WHICH N OW HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT OF INDIA. 17. WE ARE ALSO AWARE OF THE DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF IOC VS ITO, REPORTED IN 159 ITR 956 AT PAGE 958 (HEAD NOTES), IT IS OBSERVED, THE FACTS, VIZ., WHAT WAS DONE, WHAT WAS BEING CLA IMED BY THE LONDON OFFICE AND THE DIFFICULTIES IN PRODUCING THE ACCOUN TS OR THE OPINION OF THE AUDITORS FOR WHICH THE INCOME TAX OFFICER HAD CALLE D THE ASSESSEE, WERE ALL KNOWN TO THE INCOME-TAX OFFICER AT THE TIME OF MAKI NG THE ORIGINAL ASSESSMENTS. IN SPITE OF THE SAME, THE INCOME-TAX O FFICER CHOSE TO ASSESS THE ASSESSEE BY ALLOWING THE AMOUNTS AS DEDUCTIONS. THE OPINION OF THE AUDITORS FOR THE ASSESSMENT YEAR 1963-64, THAT TEN PER CENT WOULD BE A REASONABLE CHARGE MIGHT BE GOOD INFORMATION FOR WHI CH THE ASSESSMENTS OF THE ASSESSEE COULD BE REOPENED UNDER CLAUSE (B) OF SECTION 147, BUT, ON THIS BASIS, ALONE IT COULD NOT BE SAID THAT THE ASS ESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL BASIC FACTS AT THE TIM E OF THE ORIGINAL ASSESSMENTS. THERE WAS NO EVIDENCE OR ALLEGATION TH AT SUCH AN OPINION ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 7 WAS AVAILABLE WITH THE ASSESSEE AT OR BEFORE THE TI ME OF THE ORIGINAL ASSESSMENTS. AU THE BASIC FACTS IN THIS CASE WERE DI SCLOSED: IT WAS, HOWEVER, NOT DISCLOSED AS TO WHAT WAS THE OF OPINIO N OF THE AUDITOR REGARDING WHAT WAS REASONABLE, ALLOCATION, HAVING R EGARD TO THE AMOUNT OF WORK DONE ON BEHALF OF THE ASSESSEE COMPANY, OF THE LONDON OFFICE EXPENSES. THERE WAS NO CONCLUSIVE EVIDENCE THAT AT THE RELEVANT TIME, I.E., AT THE TIME OF FILING OF THE RETURN BEFORE THE ASSE SSMENTS, SUCH AUDITORS OPINION ABOUT THE REASONABLENESS WAS THERE. SECONDL Y, WHAT WOULD BE REASONABLE-OR NOT WOULD BE AN INFERENCE OF THE AUDI TOR. THE AMOUNTS SPENT, THE NATURE OF THE WORK ALLEGED TO HAVE BEEN DONE BY BURMAH OIL CO. ON BEHALF OF THE ASSESSEE AND THE BASIS OF THE ALLO CATION HAD BEEN EXPLAINED IN REPLY TO THE QUERIES MADE BY THE INCOM E-TAX OFFICER BEFORE THE ASSESSMENT. THE INCOME-TAX OFFICER HAD ASKED AT ONE POINT OF TIME FOR THE AUDITORS OPINION. IT WAS STALED THAT SUCH OPINION COULD NOT BE SUPPLIED. IN SPITE OF THE SAME, THE INCOME-TAX OFFICER DID NOT C HOOSE TO MAKE A BEST JUDGMENT ASSESSMENT AND DID NOT DRAW ANY ADVERSE IN FERENCE AGAINST THE ASSESSEE. THERE FORE, IT COULD NOT BE HELD THAT THE RE WAS FAILURE TO DISCLOSE FULLY AND TRULY ALL BASIC FACTS. TO CONFER JURISDICTION UNDER CLAUSE (A) OF SECTION 147 TO REOPEN AN ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS BUT WITH IN A PERIOD OF EIGHT YEARS FROM THE END OF THE RELEVANT YEAR, TWO CONDIT IONS ARE REQUIRED TO BE FULFILLED: THE FIRST IS THAT THE INCOME-TAX OFFICER MUST HAVE REASON TO BELIEVE THAT THE INCOME, PROFITS OR GAINS CHARGEABLE TO TAX HAD BEEN UNDERASSESSED OR ESCAPED ASSESSMENT, THE SECOND IS THAT HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT OR UNDERASSE SSMENT WAS OCCASIONED BY REASON OF THE ASSESSEES FAILURE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS ARE CONDITIONS PRECEDENT TO BE SATISFIED . 18. ON GOING THROUGH THE EVIDENCE RELIED UPON BY TH E ASSESSEE AND THE REASONS RECORDED BY THE AO TO INITIATE THE INSTANT REASSESSMENT PROCEEDINGS AND THE VARIOUS JUDGMENTS, AS QUOTED AN D REPRODUCED HERE ABOVE, WE ARE OF THE OPINION THAT THE INITIATION OF REASSESSMENT PROCEEDINGS WAS NOT BASED ON ANY MATERIAL, WHICH WO ULD LEAD TO ESCAPEMENT OF INCOME AND ALSO THAT THERE WAS COMPLE TED DISCLOSURE OF FACTS BY THE ASSESSEE IN THE RETURN AND REGULAR ASS ESSMENT STAGE, AS PER THE DECISION OF HONBLE SUPREME COURT OF INDIA IN T HE CASE OF IOC (SUPRA), WHICH THE AO IN REGULAR ASSESSMENT CONSIDERED AND A LSO TOOK HIS OWN VIEW, WHICH, ACCORDING TO US WAS REASONABLE AND CAN NOT CALL FOR INITIATION OF REASSESSMENT PROCEEDINGS. 19. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING VARIOUS DECISIONS OF THE HONBLE BOMBAY HIGH COURT & HONBLE SUPREME COU RT OF INDIA, AS ITA 3441/MUM/10 ABU-DHABI COMMERCIAL BANK LTD. . 8 REFERRED TO BY US, WE QUASH THE INITIATION OF REASS ESSMENT PROCEEDINGS. AS A RESULT, PROCEEDINGS FROM THE RECORDING OF REAS ONS, ISSUANCE OF NOTICE UNDER SECTION 148 AND ALL CONSEQUENTIAL PROCEEDINGS ARE ANNULLED. 20. SINCE WE HAVE ANNULLED THE PROCEEDINGS, WE DO N OT SEE ANY REASON TO GO INTO THE MERITS, WHICH BECOME INFRUCTUOUS. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JULY, 2013. SD/- SD /- ( . . / R.S. SYAL ) ( /VIVEK VARMA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, / DATE: 19 TH JULY, 2013 COPY TO: 1. APPLICANT 2. RESPONDENT 3. THE CIT (A)-30, MUMBAI 4. THE CIT XIX, MUMBAI 5. DR B BENCH, ITAT, MUMBAI 6. GUARD FILE E // #$ / BY ORDER, // TRUE COPY / / / ! DY./ASST. REGISTRAR ' #!$ #% , / ITAT, MU MBAI * ASHISH KUMAR SINGH, PS * '(! )