The ITO, Ward-4(3), Baroda V. M/s. Sanitex Chemicals Ltd., Indore

ITA 357/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1269 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Cost of acquisition; Tangible material; Difference of opinion; Competent authority; Reason to believe; Change of opinion
• Section: 143(3); 115JB; 147; 148; 139

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.357/AHD/2013 / ASSTT. YEAR: 2005-2006 ITO, WARD - 4(3) BARODA. VS M/S.SANITEX CHEMICALS LTD. C/O. M/S.PANJON LTD. 01, PANJON FARM HOUSE HINDAGIRI JAIN TIRTH BIJASAN AIRPORT ROAD KORDIA BARDI INDORE 452 005. PAN : AACCS 5501 R ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI KAMLESH MAKWANA SR.DR ASSESSEE BY : SHRI DEEPAK SHAH, AR / DATE OF HEARING : 06/06/2016 / DATE OF PRONOUNCEMENT: 14/06/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)-III, BARODA DATED 15.11.2012 PASSED FOR T HE ASSTT.YEAR 2005- 06. ITA NO.357/AHD/2013 2 2. SOLITARY SUBSTANTIAL GROUND OF APPEAL RAISED BY THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN QUASHING REASSESSMENT OR DER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE AS SESSEE. THE LD.AO HAS PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3 ) OF THE ACT ON 31.12.2007. HE DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT NIL AND COMPUTED THE TAX LIABILITY OF THE ASSESSEE UNDER SE CTION 115JB OF THE INCOME TAX ACT. THE LD.AO THEREAFTER RECORDED REA SONS AND ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. TH E REASONS RECORDED BY THE AO ARE REPRODUCED BY THE LD.CIT(A) AT PAGE N OS.3 AND 4 OF THE IMPUGNED ORDER. IN ORDER TO APPRECIATE THE CONTROVE RSY IN RIGHT PERSPECTIVE, IT IS IMPERATIVE UPON US TO TAKE NOTE OF THESE REASONS. THEY READ AS UNDER: 3.1 THE REASONS RECORDED FOR REOPENING OF THIS ASSESSMENT ARE AS FOLLOWS:- 'ON VERIFICATION OF CASE RECORD FOR ASSESSMENT YEAR 2005-06 OF THE ASSESSEE COMPANY I.E., SANITEX CHEMICALS LIMITED, I T IS NOTICED THAT THE COMPANY HAS PLOT AREA ADMEASURING AT 59,38 8 SQ. MTS. IT WAS DECIDED BY THE COMPANY TO SELL THE SAME BY MAKI NG PLOTS. OUT OF TOTAL AREA I.E. 59,388 SQ. MTS., THE COMPANY HAS RETAINED WITH IT PLOT ADMEASURING 12,043 SQ. MTS. FOR FACTORY PREMIS ES AND IT HAS SOLD 10,461 SQ. MTS. IN THE PRECEDING ASSESSMENT YE ARS. FURTHER IT HAS ALLOTTED 9357.96 SQ. MTS. FOR ROAD AND 3012.83 FOR COMMON AREA. THE BREAK UP OR THE TREATMENT GIVEN OF/TO TOT AL PLOT AREA ADMEASURING 59.388 SQ. MTS. IS AS UNDER:- ITA NO.357/AHD/2013 3 TOTAL PLOT AREA. : 59,388 SQ. MTS. LESS : AREA RETAINED FOR FACTORY. : 12,0 43 SQ. MTS. 47,345 SQ. MTS. LESS : LAND ALREADY SOLD 10,461 SQ. RNTS. 36,884 SQ. MTS. LESS : LAND FOR ROAD 9337.96 SQ.MTS, LAND FOR COMMON AREA. 3012.83 SQ. MT S . AVAILABLE LAND TO SALE 24513.21 SQ. MTS. THE ASSESSEE HAS DECIDED TO SALE WHOLE LAND I.E. 36 .556.21 (24513.21 SQ. MTS. AND LAND ADMEASURING AT 12043 SQ . MTS RETAINED FOR FACTORY PREMISES). OUT OF SAID LAND, T HE ASSESSEE HAS SOLD LAND AT 34974.21 SQ. MTS. TO KRISHNA ENTERPRIS E. THE LAND 1582 SQ. MTS. LEFT WITH THE COMPANY AND THE SAME HA S NOT BEEN REFLECTED IN THE BALANCE SHEET. FURTHER IT IS NOTED THAT THE LAND WAS PURCHASED BEF ORE 1981. THE SAID LAND WAS VALUED AT RS. 80 BY THE REGISTERED VA LUER ON 24.11.1983. AT THE RATE OF RS. 80 PER SQ. MTS. THE ACQUISITION COST OF SALEABLE LAND OF 34974.21 SQ. MTS. TO KRISHNA EN TERPRISES COMES TO RS, 27,97,937/- WHEREAS THE ASSESSEE HAS WORKED OUT COST OF LAND AT RS. 135,84 PER SQ. MTS IN THE COMPUTATION E NCLOSED WITH THE RETURN OF INCOME. THE RATES APPLIED BY THE ASSESSEE ARE INCORRECT. THE COST OF PURCHASED LAND CANNOT BE VARIED AT DIFF ERENT STAGES. THEREFORE, THE INDEXED COST OF SALEABLE LAND IS WOR KED OUT AS UNDER:- RS. 27,97,9377-X 4807 100 = 1,34,30,0977- THANKING INTO CONSIDERATION THE ABOVE WORKING LONG TERM CAPITAL GAIN FOR THE YEAR UNDER CONSIDERATION IS WO RKED OUT AS UNDER:-; SALE CONSIDERATION RS, 2,36,75,712/- LESS COMMISSION RS. 11,43,577/- ITA NO.357/AHD/2013 4 RS. 2,25,32,134/- LESS INDEX COST. RS. 1,34,30,097/- CAPITAL GAIN. RS. 1,11,76,884/- INSTEAD OF OFFERING CAPITAL GAIN OF RS, 1, 11,76, 8 84/-, THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS OF RS. 15,80,642 /- BY INFLATING COST OF PURCHASE APPLYING RATES OF RS. 135.84 PER S Q. MTS. INSTEAD OF RS. 80/- PER SQ.MTS. AS PER VALUER REPORT 24.11. 83. THE ASSESSEE HAS PAID COMMISSION OF RS. 11,43,577/- TO M/S. KRISHNA ENTERPRISE. ON VERIFICATION OF RECORD IT IS OBSERVED THAT THE KRISHNA ENTERPRISE IS THE CONFIRMING PARTY IN T HE SALE OF LAND. IT IS MENTION THAT THE KRISHNA ENTERPRISE HAS PURCH ASED LAND 34974.21 SQ. MTS. FOR RS. 1.98 CRORES. WHEN A PERSO N WHO PURCHASES THE LAND HOW CAN HE BE ENTITLED FOR RECEI VING COMMISSION. NO EFFORTS ARE FOUND TO HAVE BEEN MADE BY KRISHNA ENTERPRISE FOR SALE OF SAID PLOT OF LAND TO THE PUR CHASER ITSELF. THEREFORE, ISSUE OF COMMISSION PAID IS TO BE VERIFI ED. FURTHER, THE ASSESSEE IS LEFT WITH LAND OF 1582 SQ. MTS. AND THE SAME HAS NOT BEEN REFLECTED IN THE BALANCE SHEET. T HE VALUE OF LAND RS. 1,26,560/- (1582 SQ. MTS. X RS. 80) IS LEFT TO BE SHOWN IN THE BALANCE SHEET. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT LONG TERM CAPITAL GAIN TO THE EXTENT OF RS. 1,11,76,884/- AND COST OF LAND RS. 1,26,560/- ESCAPED ASSESSMENT. NECESSARY APPROVAL FOR ISSUE OF NOTICE U7S, 148 MAY BE ACCORDED.' 4. THE LD.CIT(A) ON ANALYSIS OF THE RECORD FOUND TH AT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE LD.AO HAS CONFRONTED TH E ASSESSEE WITH THIS ISSUE. THE ASSESSEE HAS FILED A REPLY DATED 24.12. 2007 AND IT GAVE A NOTE ON THE ISSUE OF LONG TERM CAPITAL GAIN. THE ASSESS EE HAS DISCLOSED ALL THESE FACTS IN THIS NOTE. THE LD.CIT(A) HAS REPROD UCED THIS NOTE ON PAGE NO.15 OF THE IMPUGNED ORDER. IT READS AS UNDER: ITA NO.357/AHD/2013 5 'RE: NOTE ON LONG TERM CAPITAL GAIN COMPANY HAVE TOTAL LAND ADMEASURING 59,388 SQ. MT. TO SELL THE LAND, COMPANY HAVE PLOTTED THE LAND WITH PERMISSION OF THE COMPETENT AUTHORITY, IN SMALLER SEGMENT SO AS TO SE LL THE LAND TO VARIOUS PERSON. DUE TO PLOTTING OF LAND, LAND ADMEA SURING 15,506 SQ. MT WAS NOT SELLABLE LAND DUE TO PROVISION OF RO AD AND COMMON PLOT AREA. THEREFORE, NET LAND ADMEASURING 43,882 S Q. MT. (593883 - 15506 ) OFFERED FOR SALE. OUT OF THIS, TOTAL LAND ADMEASURING 7039 WAS SOLD DURING PAST TWO FINANCIAL YEARS TO VARIOUS PERSONS. THEREFORE REMAINING 36843 SQ. MT. LAND WAS SOLD DUR ING FINANCIAL YEAR 2004-05 (ASSESSMENT YEAR 2005-06) AT TOTAL CON SIDERATION OF RS. 22532134/- TO VARIOUS PERTSON BY REGISTERING 14 SALE DOCUMENTS. THUS AVERAGE PRICE OF RS. 612 PER SQ. MT . (RS. 57/- PER SQ. FT) WAS REALIZED BY THE COMPANY ON ACCOUNT. SAL E OF LAND. CONSIDERING COST OF LAND OF RS. 135.84 SQ. MT. TOTA L COST OF LAND SOLD DURING THE FINANCIAL YEAR 2004-05 COMES TO RS. 5004810 (LAND 36843 @ RS. 135.84), AND ON INDEXATION AT 100 : 480 (FINANCIAL YEAR 2004-05), THE INDEXED COST OF LAND SOLD COMES TO RS. 24023089 (5004810 X 480 / 100). THUS COMPANY HAS LOOSE A SUM OF RS. 1490955 (225321 34 - 24023089) AND TREATED THE SAME AS LONG TERM CAPITAL LOSS ON ACCOUNT OF SALE OF LAND. NOW COMPANY HAS NO LAND IN ITS ASSET AS ON 31.03.2005.' 5. THE LD.CIT(A), THEREAFTER, OBSERVED THAT THE ASS ESSEE WAS NOT FAILED IN DISCLOSING ALL THE MATERIAL FACTS FULLY A ND TRULY IN RESPECT OF ASSESSMENT OF ITS INCOME IN THIS ASSESSMENT YEAR. THEREFORE, REOPENING OF THE ASSESSMENT IS BAD IN LAW. 6. BEFORE US, THE LD.DR CONTENDED THAT THE ASSESSEE DID NOT CHALLENGE REOPENING OF THE ASSESSMENT ORDER BEFORE THE AO. T HEREFORE, IT IS PRECLUDED TO TAKE ANY SUCH GROUNDS IN APPEAL BEFORE THE LD.CIT(A). ITA NO.357/AHD/2013 6 7. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE HAS RELIED UPON THE ORDER OF THE LD.CIT(A). HE FURTHER RELIED UPON THE FOLLOWING JUDGMENT OF THE HONBLE GUJARAT HIGH COURT: I) GUJARAT LEASE FINANCING LTD. VS. DCIT, 36 TAXMANN.C OM 359 (GUJ); II) PATEL ALLOY STEEL P.LTD. VS. ACIT, 35 TAXMANN.COM 3 53 (GUJARAT) 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. WE FIND THAT ON THE STRENGTH OF AUTHORITATIVE PRONOUNCEMENT AT THE END OF THE HONBLE HIGH COURTS AS WELL AS OF THE HONBLE SUPREME COURT, THE ITAT IN THE CASE OF NEPT UNE TEXTILE MILLS PVT. LTD. VS. ACIT PASSED IN ITA NO.2195/AHD/2009 HAD MADE A LUCID ENUNCIATION OF THE SCOPE OF SECTION 147. WE CANNOT DO BETTER THAN EXTRACTING THE DISCUSSION MADE BY THE TRIBUNAL IN THIS REGARD. IT READS AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE REOP ENING OF THE ASSESSMENT IS BAD IN LAW. FOR THE SAKE OF CONVENIEN CE WE REPRODUCE SECTION 147 AND PROVISO THERETO:- 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 O F SECTIONS 148 TO 153 ASSESS OR RE-ASSESS 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 RECOMPUTED THE L OSS 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 RELEV ANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT ITA NO.357/AHD/2013 7 YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SEC TION 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 M ATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR; [PROVIDED FURTHER THAT THE AO MAY ASSESS OR REASSES S SUCH INCOME OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE T HE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT]. THE REQUIREMENTS OF THE SECTION ARE AS UNDER :- (1) THE AO HAS REASON TO BELIEVE; (2) THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT; (3) IF FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASST. YEAR THEN SUCH ESCAPEMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE- (I) TO FILE A RETURN U/S 139; (II) TO FILE A RETURN IN RESPONSE TO NOTICE U/S 142 (1) OR SECTION 148; (III) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT S NECESSARY FOR THE ASSESSMENT. ALL THESE ASPECTS MUST COME IN THE REASONINGS RECOR DED BY THE AO. THE REASONS RECORDED BY THE AO SHOULD REFLECT (I) ASSESSEE IN RESPECT OF WHOM ASSESSMENT IS SOUGHT TO BE REOPENED; (II) ASSESSMENT YEAR AS SOUGHT TO BE REOPENED; (III) AMOUNT OF INCOME WHICH HAS ESCAPED ASSESSMENT; (IV) HOW THE ORIGINAL ASSESSMENT HAS BEEN DONE WHETHER U /S 143(1) OR U/S 143(3) OR SEC.147/148; (V) WHAT IS THE REASON OF ESCAPEMENT OF ASSESSMENT; (VI) WHETHER THERE IS ANY FAILURE AS MENTIONED IN THE PR OVISO IF ASSESSMENT IS SOUGHT TO BE REOPENED AFTER FOUR Y EARS FROM THE END OF THE RELEVANT ASST. YEAR; (VII) IN PARTICULAR, WHETHER THERE IS ANY THE FAILURE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YE AR. (VIII) IF ASSESSMENT IS DONE U/S 143(1), THEN WHETHER THE PROVISION OF SECTION 149 ARE APPLICABLE. 8. IF REASONS RECORDED DID NOT REFLECT THESE INGRE DIENTS THEN REOPENING CANNOT BE SUSTAINED. ON THE ASPECT OF NEC ESSITY TO ITA NO.357/AHD/2013 8 MENTION THE FAILURE OF THE ASSESSEE TO DISCLOSE TRU LY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT HON. ALLAHA BAD HIGH COURT IN CIT VS. PRADESHIYA INDUSTRIAL AND INVESTME NT CORPORATION OF UTTAR PRADESH LTD (2011) 332 ITR 324(ALL) HAS OB SERVED AS UNDER :- ADMITTEDLY, NOTICE UNDER SECTION 148 OF THE ACT WA S ISSUED AFTER THE EXPIRY OF FOUR YEARS. THE NOTICE UNDER THE PROV ISO OF SECTION 147 OF THE ACT CAN BE ISSUED AFTER THE EXPIRY OF FO UR YEARS ONLY IN CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT BY REASON OF THE FAILURE ON THE PAR! OF THE ASSESSES 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 DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT ASSESSMENT YEAR. FROM THE PERUSAL OF THE REASON REC ORDED IT IS APPARENT THAT NO CASE HAS BEEN MADE OUT THAT THE AS SESSES HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR HIS ASSESSMENT AND NO OBSERVATION HAS BEEN MADE IN THIS REGARD, ON THE BASIS OF THE SAME MATERIAL WHICH WAS AVAILABLE ON RECORD, THE ASSESSING AUTHORITY WAS OF THE VIEW THAT THE DEDUCT ION HAD BEEN WRONGLY ALLOWED UNDER SECTION 36(1)(VIII) OF THE AC T. THE TRIBUNAL OBSERVED THAT THE ASSESSEE HAD FURNISHED THE REQUIS ITE DETAILS IN RESPECT OF LEASING INCOME AND UPFRONT FEE AS RECEIV ED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME WA S DULY DISCLOSED IN THE AUDITED PROFIT AND LOSS ACCOUNT, A S IS EVIDENT FROM PAGES 4 AND 5 OF THE PAPER BOOK READ WITH PAGE 23 O F THE PAPER BOOK AND ALSO COMPUTATION OF INCOME FILED ALONG WIT H RETURN, A COPY OF WHICH IS PLACED AT PAGES 33 TO 35 OF THE PA PER BOOK. THIS FINDING OF THE TRIBUNAL HAS NOT BEEN DISPUTED BY RA ISING ANY QUESTION AND DURING THE COURSE OF THE ARGUMENT BY T HE LEARNED COUNSEL FOR THE APPELLANT. THEREFORE, WE ARE OF THE VIEW THAT ON THE FACTS AND CIRCUMSTANCES, NO SUBSTANTIAL QUESTIO N OF LAW ARISES FOR CONSIDERATION BY THIS COURT. LEARNED COUNSEL FOR THE APPELLANT CITED A DECISION OF THE BOMBAY HIGH COURT IN THE EASE OF DR. AMIN'S PATHOLOGY LABO RATORY V. P. M. PROSAD, JOINT CIT [2001] 252 ITR 673 ; [2002] 172 C TR 696. WE HAVE GONE THROUGH THE DECISION OF THE BOMBAY HIGH C OURT. WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT APPLI CABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID CASE, THE BOMBAY H IGH COURT HAS HELD THAT THE ASSESSING AUTHORITY HAS OVERLOOKED TH E DISPUTED ITEM WHICH HE HAS NOTICED SUBSEQUENTLY AND AT THE T IME OF PASSING THE ORIGINAL ORDER OF ASSESSMENT, HE COULD NOT BE SAID TO HAVE OPINED ON THE ABOVE ITEM. THEREFORE, THERE WAS NO CHANGE OF OPINION. WHILE IN THE PRESENT CASE, COMPLETE DET AILS WERE FURNISHED ALONG WITH THE RETURN AND DURING THE COUR SE OF THE ITA NO.357/AHD/2013 9 ASSESSMENT PROCEEDINGS AND AFTER AN APPLICATION OF MIND, THE DEDUCTION UNDER SECTION 36(1)(VIII) OF THE ACT WAS ALLOWED. IN THE REASON RECORDED NO CASE HAS BEEN MADE OUT THAT THER E WAS FAILURE TO DISCLOSE ANY MATERIAL PARTICULAR ON THE PART OF THE ASSESSEE. THEREFORE, LIMITATION BEYOND THE PERIOD OF FOUR YEA RS WAS NOT AVAILABLE TO THE ASSESSING AUTHORITY. ADMITTEDLY, T HE NOTICE WAS ISSUED AFTER FOUR YEARS, THEREFORE, THE PROCEEDING WAS BARRED BY TIME AND THE TRIBUNAL HAS RIGHTLY HELD SO. FOR THE REASONS STATED ABOVE, THE APPEAL FAILS AND IS DISMISSED. HON. BOMBAY HIGH COURT, IN THE CASE OF BHAVESH DEVE LOPERS VS. A.O. & OTHERS (2010) 329 ITR 249 (BOM), NOTED THAT THE RECORDED REASONS DID NOT SHOW FINDING THAT THERE WAS A FAILU RE TO DISCLOSE NECESSARY FACTS. IN THAT CASE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) FOR RS.3.85 CRORES WHICH WAS ALLOWED BY TH E AO VIDE ORDER U/S 143(3) AND ASSESSMENT WAS SOUGHT TO BE RE OPENED AFTER EXPIRY OF FOUR YEARS ON THE GROUND THAT THE C LAIM OF DEDUCTION U/S 80IB(10) INCLUDED INELIGIBLE ITEMS OF OTHER INCOME SUCH AS SOCIETY DEPOSITS, STREET PARKING CHARGES, S UNDRY BALANCES, ETC. HON. BOMBAY HIGH COURT IN THE CASE OF BHAVESH DEVELOPERS VS. A.O. & OTHERS (SUPRA) OBSERVED AS UNDER :- HELD, ALLOWING THE PETITION, THAT EX FACIE, THE RE ASONS WHICH HAD BEEN DISCLOSED TO THE ASSESSEE WOULD SHOW THAT THE INFERENCE THAT THE INCOME HAD ESCAPED ASSESSMENT WAS BASED ON THE DISCLOSURE MADE BY THE ASSESSEE ITSELF. THE REASONS SHOWED THA T THE FINDING WAS BASED ON THE DETAILS FILED BY THE ASSESSEE AND FROM THE PROFITS AND LOSS ACCOUNT. THEREFORE, IT WAS IMPOSSI BLE FOR THE ASSESSING OFFICER TO EVEN DRAW THE INFERENCE THAT T HERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR ASS ESSMENT YEAR 2002-03. SIGNIFICANTLY, THE REASONS THAT HAD BEEN D ISCLOSED TO THE ASSESSEE DID NOT CONTAIN A FINDING TO THE EFFECT TH AT THERE WAS A FAILURE TO FULLY AND TRULY DISCLOSE ALL NECESSARY F ACTS, NECESSARY FOR THE PURPOSE OF ASSESSMENT. IN THESE CIRCUMSTANCES, THE CONDITION PRECEDENT TO A VALID EXERCISE OF THE POWER TO REOPE N THE ASSESSMENT, AFTER A LAPSE OF FOUR YEARS FROM THE RE LEVANT ASSESSMENT YEAR, WAS ABSENT IN THE PRESENT CASE. TH E NOTICE WAS NOT VALID AND WAS LIABLE TO BE QUASHED. HON. SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) HELD THAT WHERE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER EXPIRY OF FOUR YEARS REASONS FOR BELIEF MUST SHOW LIVE LINK BETWEEN THE MATERIAL AND BELIEF. THE RE SHOULD BE A RATIONAL CONNECTION OR RELEVANT BEARING ON THE FORM ATION OF THE ITA NO.357/AHD/2013 10 BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE M UST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO T HE NOTICE OF THE ITO AND THE FORMATION OF THE BELIEF THAT THERE IS A N ESCAPEMENT OF INCOME OF THE ASSESSEE FOR THAT PARTICULAR YEAR BEC AUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS. EVEN THOUGH COURT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON T HE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING OF THE ASSESSMENT, BUT AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE AND FAR FETCHED, WHICH WOULD WARRAN T THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF T HE INCOME OF THE ASSESSEE FROM ASSESSMENT. HON. SUPREME COURT IN THE CASE OF CIT VS. KELVINATO R INDIA LTD. (2010) 320 ITR 561(SC), WHILE DISMISSING THE LEGISL ATION OF SECTION 147, HELD THAT EXPRESSION REASONS TO BELIE VE NEEDS TO BE GIVEN SCHEMATIC INTERPRETATION IN ORDER TO ENSURE A GAINST AN ARBITRARY EXERCISE OF POWER BY THE AO. THE POWER TO REOPEN THE ASSESSMENT IS NOT AKIN TO POWER TO REVIEW THE ASSES SMENT AND MERE CHANGE OF OPINION WOULD NOT JUSTIFY THE COURSE OF ACTION U/S 147. UNLESS THE AO HAS TANGIBLE MATERIAL FACT TO RE OPEN THE ASSESSMENT, POWER U/S 147 CANNOT BE VALIDLY EXERCIS ED. 9. IN THE PRESENT CASE THERE IS A CLEAR CASE OF CHA NGE OF OPINION. EVEN THOUGH RELIANCE HAS BEEN PLACED ON THE DECISIO N OF HON. SUPREME COURT IN BALLIMAL NAVALKISHORE AND OTHERS V S. CIT (SUPRA), THAT JUDGMENT EXISTED AT THE TIME WHEN THE AO TOOK THE DECISION U/S 143(3) AND HELD THE EXPENDITURE AS CUR RENT REPAIRS ALLOWABLE IN THE PROFIT AND LOSS ACCOUNT UNDER SECT ION 143(3). WITHOUT THERE BEING MATERIAL ON RECORD AND AN ALLEG ATION OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIA L WHICH COULD HAVE MADE THE AO TO BELIEVE THAT EXPENDITURE SO INC URRED WAS CAPITAL IN NATURE, NEW VIEW SO TAKEN FOR REOPENING OF ASSESSMENT WOULD BE ONLY A CHANGE OF OPINION. EARLIER SAME EXP ENDITURE WAS HELD AS REVENUE IN NATURE AND NOW CONSIDERED AS CAP ITAL WOULD BE AKIN TO REVIEWING HIS OWN DECISION ON THE SUBJECT. HON. BOMBAY HIGH COURT IN THE CASE OF ICICI PRUDENCIAL LIFE INS URANCE CO. LTD. VS. ACIT (2010) 325 ITR 471 (BOM) ALSO HELD THAT WH EN THERE IS NO MATERIAL ON RECORD AND WITHOUT THERE BEING ANY A LLEGATION OF FAILURE OF THE ASSESSEE TO DISCLOSE SUCH MATERIAL F ACT, ASSESSMENT CANNOT BE REOPENED AFTER FOUR YEARS. HON. GUJARAT H IGH COURT IN INDUCTO ISPAT ALLOYS LTD. VS. ACIT (2010) 320 ITR 4 58 (GUJ) AND NIKHIL K. KOTAK VS. MAHESH KUMAR (2009) 319 ITR 445 (GUJ) ALSO HELD THAT WHERE THE PERIOD OF FOUR YEARS HAS EXPIRE D FROM THE END OF RELEVANT ASST. YEAR THE PROVISO TO SECTION 147 W OULD COME INTO ITA NO.357/AHD/2013 11 PLAY. IT STIPULATES THREE CONDITIONS AND ONE OF THO SE CONDITIONS IS SHOWING OMISSION OR FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. WHEN WE GO THROUGH THE REASONS RECORDED AND AS MENT IONED ABOVE WE DO NOT FIND ANY REFERENCE TO SUCH FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT NECESSAR Y FOR ASSESSMENT AND IN FACT NARRATION GIVEN IN THE REASO NS DO NOT SHOW ANY SUCH FAILURE WHICH COULD BE INFERRED EVEN IF NO T SO MENTIONED SPECIFICALLY IN THE REASONS. IN OUR CONSIDERED VIEW WHEN NEITHER THERE IS ANY ALLEGATION OF FAILURE NOR THE AO HAS B ROUGHT ANY MATERIAL ON RECORD TO SUGGEST ESCAPEMENT OF INCOME THEN IT IS ONLY A CHANGE OF OPINION AND THEREFORE ASSESSMENT C ANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. 9. A BARE PERUSAL OF THE REASONS RECORDED BY THE AO FOR REOPENING OF THE ASSESSMENT WOULD REVEAL THAT HE HAS JUST RE-APP RECIATED THE FIGURES DISCLOSED BY THE ASSESSEE IN THE ORIGINAL ASSESSMEN T PROCEEDINGS. THE AO HAS MENTIONED AREA OF LAND, RATE APPLIED BY THE ASSESSEE FOR CALCULATING CAPITAL GAIN FROM THE DETAILS SUBMITTED BY THE ASSESSEE. HE HAS NOT LAID HIS HAND ON THIS INFORMATION FROM SOME OUTSIDE SOURCES AFTER THE ASSESSMENT. IT IS ALSO PERTINENT TO OBSERVE TH AT NOTICE UNDER SECTION 148 WAS ISSUED UPON THE ASSESSEE AFTER THE EXPIRY O F FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. THE PROVISO APPENDED T O SECTION 147 OF THE INCOME TAX PUTS AN EMBARGO UPON THE POWER OF THE AO TO ISSUE NOTICE UNDER SECTION 148 IN THE CASES, WHERE, SCRUTINY ASS ESSMENT WAS MADE AND FOUR YEARS HAVE EXPIRED AFTER THE END OF THE RELEVA NT ASSESSMENT YEAR. HE CANNOT ISSUE NOTICE IN SUCH CASES UNLESS IT IS ESTA BLISHED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. A PER USAL OF THE REASONS WOULD NOWHERE SHOW THAT THE AO HAS MADE OUT HIS CASE EXHI BITING THE FACT THAT THE ASSESSEE HAS FAILED TO DISCLOSE ANY MATERIAL PA RTICULARS FULLY AND TRULY REGARDING ASSESSMENT OF ITS INCOME. THE LD.CIT(A) HAS MADE A DETAILED ITA NO.357/AHD/2013 12 ANALYSIS OF THE FACTS ALREADY DISCLOSED BY THE ASSE SSEE, AND THEREAFTER, RECORDED A FINDING THAT THE AO HAS SOUGHT TO REOPEN THE ASSESSMENT ON THE BASIS OF CHANGE OF OPINION. AFTER GOING THROUG H THE WELL REASONED ORDER OF THE LD.CIT(A), IN THE LIGHT OF VARIOUS AUT HORITATIVE PRONOUNCEMENTS, WE ARE OF THE VIEW THAT NO INTERFER ENCE IS CALLED IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 14 TH JUNE, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER