M/s. Ferro Concrete Con. India Pvt. Ltd., Indore V. THE DCIT Circle-1(1), Indore

ITA 359/IND/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3369 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-02-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Assessee Lawyers: C P RAWKA; VENUS RAWKA CAS
• Keywords: Reopening of assessment; Depreciation; Principle of natural justice; Earning of tax free income; Tangible material; Deemed dividend; Accommodation entries; Right to appeal; Reason to believe; Reassessment proceedings
• Section: 40A(3); 143(3); 142(1); 69A; 13; 22; 147; 148; 154; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA NO.359 & 284/IND/2017 & ITANO.819/IND/2018 ASSESSMENT YEAR 2009-10, 2012-13 & 2012-13 FERRO CONCRETE CON. INDIA PVT. LTD. 3/5/7-B, BHAGIRATHPURA, INDORE PAN :AAACF2726K : APPELLANT V/S DCIT-(CIRCLE)-1(1) INDORE : RESPONDENT ITANO.439/IND/2017 ASSESSMENT YEAR 2009-10 DCIT-(CIRCLE)-1(1) INDORE : APPELLANT V/S FERRO CONCRETE CON. INDIA PVT. LTD. 3/5/7-B, BHAGIRATHPURA, INDORE PAN : AAACF2726K : RESPONDENT FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 2 ASSESSEE BY SHRI C.P. RAWKA, & VENUS RAWKA, CAS REVENUE BY SHRI RAJIB JAIN, SR. DR DATE OF HEARING 0 5 .0 7 .2021 DATE OF PRONOUNCEMENT 13.10. 202 1 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE ASSESSEE AND CROSS APPEAL BY THE REVENUE FOR ASSES SMENT YEARS 2009-10 & 2012-13 ARE DIRECTED AGAINST THE ORDERS O F LD. COMMISSIONER OF INCOME TAX(APPEALS-II)/CIT (IN SHOR T LD. CIT(A)/CIT], INDORE DATED 01.03.2017, 20.3.2017, 31 .07.2018 & 01.03.2017, RESPECTIVELY, WHICH ARE ARISING OUT OF THE ASSESSMENT ORDERS U/S 143(3) OF THE INCOME TAX ACT 1961 (IN S HORT THE ACT) DATED 28.03.2015, 05.11.2014, 27.12.2017, 28.3.2015 , RESPECTIVELY, FRAMED BY THE CONCERNED ASSESSING OFF ICER(S). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.359/IND/2017: THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R UP TO AN EXTENT OF RS.71,12,000/- BY TREATING THE SAME AS COMMISSION EARNED BY THE ASSESSEE, IN SPITE OF THE FACT THAT SAID RECEIPTS WERE DULY ACCOUNTED FOR IN BOOKS OF A CCOUNTS FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 3 AND INCOME WAS ALREADY ASSESSEE ON SAID RECEIPTS. 2. THAT WITHOUT PREJUDICE TO GROUND NO.1 LD. CIT(A) FAILED TO CONSIDER ADDITION ALREADY MADE IN REGULAR ASSESSMEN T ON ACCOUNT OF NET PROFIT AT RS.37,25,962/- WHICH OUGHT TO HAVE BEEN DEDUCTED/REDUCED TO THE INCOME ESTIMATED ON TH E TRANSACTION. WHEREAS THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITANO.439/IND/2017: I. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE LD. CIT(A) HAS ERRED IN LAW BY RESTRICTING THE ADD ITION OF RS.7,12,00,000/- TO RS.71,12,000/- MADE BY THE ASSE SSING OFFICER ON ACCOUNT OF UNEXPLAINED MONEY IGNORING TH E FACTS OF THE CASE THAT THE ASSESSEE HAS CHANNELIZED ITS UNACCOUNTED CASH THROUGH ACCOMMODATION ENTRIES. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS ERRED IN LAW BY IGNORING T HE FACTS OF THE CASE AND RESTRICTING THE ADDITION OF RS.7,12,00 ,000/- TO RS.71,12,000/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNEXPLAINED MONEY U/S 69A OF THE IT ACT 1961. 3. FURTHER, THE ASSESSEE HAS ALSO FILED THE FOLLOWI NG APPLICATION FOR ADMISSION OF ADDITIONAL GROUND FOR THE ASSESSME NT YEAR 2009- 10: BEFORE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE IN THE MATTER OF M/S FERRO CONCRETE CONST. [INDIA] PVT. LTD. V/S DCIT 1[1], INDORE (M.P.) ASSESSMENT YEAR 2009-10 FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 4 PAN NO .- AAACF2726K THE APPELLANT COMPANY SUBMITTED RETURN OF INCOME DE CLARING INCOME OF RS. 1,48,83,190/- ON 28/09/2009 AND REGUL AR ASSESSMENT WAS COMPLETED ON A TOTAL INCOME AT RS. 1,81,09,152/ - VIDE ORDER DATED 19/12/2011 U/S 143(3) BY JCIT RANGE-(4), INDO RE. THAT THE NOTICE U/S 148 DATED 04/03/15 AND IN COMPL IANCE THEREOF, RETURN WAS SUBMITTED AND REASONS FOR REOPENING WAS REQUESTED TO DCIT CIRCLE-1(1), INDORE (M.P.). THE LD. AO SUPPLIED THE REASONS FOR REOPENING THE A SSESSMENT ON 27/05/2015 AND OBJECTIONS THEREOF WERE FILED ON 03/ 06/15 AND SAME WERE DISPOSED OFF BY ASSESSING OFFICER VIDE ORDER D ATED 21/12/15 AND SAME WERE AVAILABLE AT PAGE 9 TO 11 OF THE PAPE R BOOK. THE LD AO COMPLETED THE RE-ASSESSMENT BY ADDITIONS OF RS 7 ,12,00,000/- TO THE INCOME ORIGINALLY ASSESSED. THE ASSESSEE COMPANY SUBMITTED AN APPEAL BEFORE CIT (A)-II, INDORE AND LD. CIT(A) VIDE ORDER DATED 13/02/2017 A ND GRANTED THE PARTIAL RELIEF TO THE ASSESSEE. THAT WHILE FILING THE APPEAL, NO SPECIFIC GROUND WA S RAISED AGAINST RE-OPENING OF THE ASSESSMENT AND LEGALITY OF ASSESS MENT WAS QUESTIONED UNDER GROUND NO. 1& 2 BEFORE CIT(A)- II, INDORE. THAT DETAILED SUBMISSIONS WERE MADE ON THE LEGALITY OF RE-OPENED ASSESSMENT AND LD. CIT(A) WHILE DECIDING THE APPEAL , NO COMMENTS MADE. THE WRITTEN SUBMISSIONS MADE ARE AT PAGE NO. 2 TO 5 OF PAPER BOOK PART- II. THAT AGGRIEVED WITH THE ORDER ASSESSEE PREFERRED AN APPEAL BEFORE ITAT AND INADVERTENTLY THE GROUND SPECIFICALLY FOR RE-OPENING OF THE ASSESSMENT COULD NOT BE RAISED. IT IS THEREFORE MOST HUMBLY PRAYED THAT THE FOLLOWING ADDITIONAL GROUND BEING L EGAL GROUND ARISING OUT OF THE FACTS AVAILABLE ON RECORD MAY VE RY KINDLY BE ADMITTED. ADDITIONAL GROUND THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND UNDER LAW LD. AO ERRED IN RE-OPENING THE ASSESSMENT ALREADY COMPL ETED U/S 143(3) OF ACT. THE REOPENING OF ASSESSMENT COMPLETE D U/S 143(3) IS ILLEGAL AND BAD IN LAW AND SAME THEREFORE DESERVES TO BE QUASHED. FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 5 4. THROUGH THE ABOVE ADDL. GROUND, THE ASSESSEE HAS CHALLENGED THE REASSESSMENT PROCEEDING. IN SUPPORT OF THE ADMISSION OF ADDL. GROUND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDL. GROUND IS LEGAL IN NATURE AND THE SAME WAS ALSO RAISED BEFORE THE LD. CIT(A). FURTHER, REL IANCE WAS PLACED ON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1992) 229 ITR 383 , JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. EICHER MOTORS LTD. (2007) 293 ITR 464 AS WELL AS IN THE CASE OF DCIT VS. TURQUOISE INVESTMENT & FINANCE LTD. (2008) 299 ITR 143 (MP). ON THE OTHER HAND, THE LD. CIT-DR OPPOSED THE REQUE ST FOR ADMISSION OF ADDL. GROUND BUT COULD NOT CONTROVERT THE SUBMISSION OF THE ASSESSEE BY BRINGING ANY CONTRARY MATERIAL ON RECORD. 5. CONSIDERING THE ABOVE FACTS AND CONSIDERING THE DECISIONS OF HONBLE APEX COURT AND HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE ADMIT THE ADDL. GROUND FOR HEARING. SIN CE ADDL. GROUND IS LEGAL IN NATURE AND GOES TO THE ROOT OF T HE MATTER, WE SHALL DECIDE IT AT FIRST. 6. FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PVT. LTD. COMPANY DERIVING INCOME FROM CONTRACT WORK. IT FILED ITS RE TURN OF INCOME FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 6 FOR A.Y. 2009-10 ON 28.09.2009 DECLARING TOTAL INCO ME OF RS. 1,43,83,190/-. THE CASE WAS THEN SELECTED FOR SCRUT INY AND NOTICES WERE ISSUED WHICH WERE DULY COMPLIED. FINAL LY THE ASSESSMENT U/S 143(3) WAS COMPLETED VIDE ORDER DATE D 19.12.2011 THEREBY MAKING ADDITION OF RS. 37,25,962 /- ON ACCOUNT OF LOW NET PROFIT AND DEEMED DIVIDEND U/S 2 (22)(E) AND HENCE ASSESSING TOTAL INCOME AT RS. 1,81,09,150/-. THEREAFTER, AN ORDER U/S 154 WAS PASSED ON 26.12.2012 ON THE QUEST ION OF DEPRECIATION RESULTING INTO DETERMINATION OF TOTAL INCOME OF THE ASSESSEE AT RS. 1,86,21,994/-. THEREAFTER, ON 04.03 .2015, THE CASE WAS REOPENED BY ISSUING NOTICE U/S 148 AND VID E AOS LETTER DATED 27.05.2015, REASONS FOR REOPENING THE CASE WE RE PROVIDED TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED IT S OBJECTIONS ON 03.06.2015 WHICH WERE DISPOSED OF BY THE AO THROUGH AN ORDER DATED 21.12.2015. FURTHER A QUERY LETTER U/S 142(1) DATED 04.01.2016 WAS ISSUED TO THE ASSESSEE, AGAINST WHIC H, REPLY WAS SUBMITTED VIDE LETTER DATED 25.01.2016. THE ONLY BA SIS OF REOPENING WAS THE COPY OF ASSESSEES LEDGER ACCOUNT IN THE BOOKS OF ONE M/S KETTI CONSTRUCTION LTD. FOUND DURING SEA RCH AT THE LATTERS PREMISES. LD. AO OBSERVED THAT THERE WERE CASH PAYMENTS MADE BY THE ASSESSEE TO KETTI CONST. LTD. DURING A. Y. 2009-10 FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 7 AMOUNTING TO RS. 7,12,00,000/- IN TOTALITY. THEREFO RE, HE ADDED SAME U/S 69A. 7. BEING AGGRIEVED, IN APPELLATE PROCEEDINGS, THE A SSESSEE FILED DETAILED SUBMISSION CHALLENGING THE REOPENING U/S 1 47 BEFORE THE LD. CIT(A) AS ALSO REPRODUCED BY THE LD. CIT(A) IN IMPUGNED ORDER. STILL, THE LD. CIT(A) DID NOT COMMENT UPON THE SAME AND DID NOT DECIDE THE ISSUE OF REOPENING. NOW, THE ASSESSEE HA S CHALLENGED THE SAME BEFORE THIS TRIBUNAL THROUGH THIS ADDL. LE GAL GROUND. 8. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE REOPENING OF THE CASE BY THE LD. AO IS BAD IN L AW AS THE ASSESSEE HAD ALREADY GIVEN ALL THE DISCLOSURES AND INFORMATION DURING ORIGINAL ASSESSMENT PROCEEDINGS AND ASSESSIN G OFFICER DID NOT FIND ANYTHING WARRANTING REASSESSMENT. FURTHER, IT IS MANDATORY THAT THE OPINION SHOULD BE THAT OF THE AS SESSING OFFICER FOR FORMING BELIEF WHEREAS IN THE INSTANT C ASE, THE ASSESSING OFFICER HAS RELIED UPON THE INFORMATION R ECEIVED FROM THE DCIT-CENTRAL FOR WHICH HE HIMSELF WAS NOT SURE ON THE QUESTION OF AUTHENTICITY. LEARNED COUNSEL FOR THE A SSESSEE ALSO SUBMITTED THAT IN THE REASONS RECORDED BY LD. AO TH ERE WERE NOWHERE MENTIONED THE WORDS INCOME CHARGEABLE TO T AX WHICH ARE OF UTMOST IMPORTANCE SO FAR AS THE SECTION 147 IS CONCERNED. FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 8 FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE LD. AO HAS MENTIONED ABOUT SECTION 40A(3) IN THE RE ASONS OF REOPENING, HOWEVER, THE AO DEVIATED FROM HIS AFORES AID STAND WHICH HE BASICALLY TOOK WHILE REOPENING THE CASE AN D LATER ON WHILE FRAMING THE ASSESSMENT, HE ADDED THE SAID AMO UNT U/S 69A. THUS, THE ASSESSING OFFICER WAS NOT SURE SINCE BEGINNING THAT THE TRANSACTION INVOLVED IS OF WHAT NATURE, WH ICH SECTION IS ATTRACTED HERE AND WHAT KIND OF VIOLATION IS THERE. LD. AO HAS ABSOLUTELY CHANGED HIS VIEW WHICH WAS FORMED INITIA LLY AND WHICH WAS FORMED WHILE CONCLUDING THE ASSESSMENT. THEREFO RE, THE STATUTORY PROVISIONS PER REASONS AND CONTENTS IN ASSESSMENT ORDER ARE DISTINCT WHICH SHOWS THAT THE REASONS WE RE NOT ON ACCOUNT OF APPLICATION OF MIND ON THE PART OF AO. T HUS IT IS A CLEAR CASE OF LACK OF BASIC INGREDIENT OF SECTION 1 47 I.E. REASON TO BELIEVE, AS AO HIMSELF WAS NOT ABLE TO DECIDE ABOU T THE LEGAL PROVISIONS WHICH ARE BEING ATTRACTED IN THE GIVEN C ASE. PER CONTRA, LD. CIT-DR RELIED UPON THE ORDERS OF THE RE VENUE AUTHORITIES AND SUBMITTED THAT THE REOPENING WAS RI GHTLY INITIATED BY THE ASSESSING OFFICER AS THE COPY OF A SSESSEES LEDGER ACCOUNT IN THE BOOKS OF ONE M/S KETTI CONSTRUCTION LTD. WAS FOUND DURING SEARCH AT THE LATTERS PREMISES AND TH E LD. AO FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 9 OBSERVED THAT THERE WERE CASH PAYMENTS MADE BY THE ASSESSEE TO KETTI CONST. LTD. DURING A.Y. 2009-10 AMOUNTING TO RS. 7,12,00,000/- IN TOTALITY. THUS, THE ASSESSING OFFI CER HAD RIGHTLY REOPENED THE ASSESSMENT U/S 147 OF THE I.T. ACT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. WE FIND THAT THE ASSESSMENT U/S 143(3) WAS COMPLETED V IDE ORDER DATED 19.12.2011 THEREBY MAKING ADDITION OF RS. 37, 25,962/- ON ACCOUNT OF LOW NET PROFIT AND DEEMED DIVIDEND U/S 2 (22)(E) AND HENCE ASSESSING TOTAL INCOME AT RS. 1,81,09,150/-. THEREAFTER, AN ORDER U/S 154 WAS PASSED ON 26.12.2012 ON THE QUEST ION OF DEPRECIATION RESULTING INTO DETERMINATION OF TOTAL INCOME OF THE ASSESSEE AT RS. 1,86,21,994/-. THEREAFTER, ON 04.03 .2015, THE CASE WAS REOPENED BY ISSUING NOTICE U/S 148 AND REA SONS FOR REOPENING THE CASE WERE PROVIDED TO THE ASSESSEE. I N RESPONSE TO WHICH THE ASSESSEE FILED ITS OBJECTIONS ON 03.06.20 15 WHICH WERE DISPOSED OF BY THE AO THROUGH AN ORDER DATED 21.12. 2015. WE FIND THAT THE ASSESSING OFFICER HAS RECORDED THE FO LLOWING REASONS: AS PER INFORMATION RECEIVED FROM DY. CIT(CENTRAL), INDORE, IT APPEARS THAT PAYMENT TO THE TUNE OF RS.7,12,00,000/ - WAS GIVEN TO M/S. FERRO CONCRETE CONSTRUCTION (I) LTD. BY M/S. FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 10 KETI CONSTRUCTION LTD. BETWEEN 16.2.2009 TO 31.3.20 09. M/S. KETI CONSTRUCTION LTD. HAS RECEIVED SAME AMOUNT IN CASH FROM M/S. FERRO CONCRETE CONSTRUCTION (I) LTD. M/S. FERRO CONCRETE CONSTRUCTION (I) LTD. HAS BOOKED BOGUS EXP ENSES AGAINST CASH RETURN BACK TO KETI CONSTRUCTION LTD. FURTHER THE APPLICABILITY OF SECTION 40A(3) IS ALSO ATTRACT ED IN THE CASE OF M/S. FERRO CONCRETE CONSTRUCTION (I) LTD. TO THE EXTENT OF CASH PAYMENT OF M/S. KETI CONSTRUCTION LTD. I HAVE THEREFORE REASON TO BELIEVE THAT INCOME OF RS.7,12,00,000/- HAS ESCAPED THE ASSESSMENT AND THE ASSESSEE HAS FAILED TO DISCLOSE FULL AND TRUE MATER IAL FACTS FOR ASSESSMENT WITHIN THE MEANING OF SECTION 147. IN ORDER TO BRING THE ESCAPED ASSESSMENT UNDER THE TAX NET, ISSUED NOTICE U/S 148 OF I.T. ACT, 1961. THE NOTICE U/S 148 IS BEING ISSUED AFTER TAKING PRIOR APPROVAL FROM COMPE TENT AUTHORITY U/S 151. 10. WE FIND THAT THE ONLY BASIS OF REOPENING WAS TH E COPY OF ASSESSEES LEDGER ACCOUNT IN THE BOOKS OF ONE M/S K ETTI CONSTRUCTION LTD. FOUND DURING SEARCH AT THE LATTER S PREMISES AND THE LD. AO OBSERVED THAT THERE WERE CASH PAYMEN TS MADE BY THE ASSESSEE TO KETTI CONST. LTD. DURING A.Y. 2009- 10 AMOUNTING TO RS. 7,12,00,000/- IN TOTALITY, THUS, THE ASSESSI NG OFFICER ADDED THE SAME U/S 69A. WE FIND THAT THE FIRST PROVISO TO SECTION 147 OF THE INCOME TAX ACT, 1961 READS AS FOLLOWS:- PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB- SECTI ON (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 RELE VANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A R ETURN 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 ASSE SSMENT FOR THAT ASSESSMENT YEAR. FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 11 FROM THE ABOVE, WE FIND THAT THE REASSESSMENT CAN B E DONE ONLY WHERE AO HAS REASONS TO BELIEVE THAT ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THERE WAS A FAILURE ON THE PART OF ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE. HOWEV ER, IN THE INSTANT CASE, THE ASSESSEE HAD ALREADY GIVEN ALL TH E DISCLOSURES AND INFORMATION DURING ORIGINAL ASSESSMENT PROCEEDI NGS AND ASSESSING OFFICER DID NOT FIND ANYTHING WARRANTING REASSESSMENT. HE HAS SIMPLY RELIED UPON INFORMATION RECEIVED FROM DCIT- CENTRAL, INDORE. THEREFORE, THE AO HAS OVERLOOKED T HE FIRST PROVISO TO SECTION 147 AS AT NO POINT OF TIME HE HA S BROUGHT ON RECORD ANYTHING TO THE EFFECT THAT THERE IS ANY OMI SSION OR FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. WE FIND THAT IN THE REASONS, THE LD. ASSESSING OFFICER NOWHERE MENTIONED THE WORDS INCOME CHARGEABLE TO TAX WHICH ARE OF UTMOST IMPORTANCE A S IS EVIDENT FROM THE SECTION 147 WHICH SPEAKS THAT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, A SSESS OR REASSESS FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 12 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 RE-COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE O R ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED. THUS, THE WORDS INCOME CHARGEABLE TO TAX ARE OF PRIME IMPORTANCE TO THE SECTION 147. HOWEVER, IT CA N BE SEEN FROM THE REASONS AS REPRODUCED ABOVE THAT THE ASSES SING OFFICER DID NOT MENTION THE WORDS INCOME CHARGEABLE TO TAX IN THE REASONS WHICH IS UNJUSTIFIED RENDERING THE REOPENING WITHOUT JURISDICTION. THIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN CASE OF UNITECH LIMITE D VS. DEPUTY COMMISSIONER OF INCOME TAX, (2017) 99 CCH 01 41 DELHC : (2017) 397 ITR 0547 (DELHI) WHEREIN THE HON BLE HIGH COURT HELD AS UNDER: REASSESSMENTNON-DISCLOSURE OF MATERIAL FACTSISSU E OF NOTICE OF REASSESSMENTVALIDITYPETITIONER-ASSESSEE SOUGHT FOR QUASHING OF NOTICE OF REASSESSMENT ISSUED U/S 148P ETITIONER CLAIMED THAT, REASONS RECORDED BY AO DID NOT SATISF Y REQUIREMENT OF LAW IN TERMS OF SECTIONS 147/148 AND THERE WAS N O FAILURE BY PETITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND NEITHER WAS SUCH FAILURE RECORDE D IN REASONSHELD, THERE WAS FULL DISCLOSURE BY ASSESSEE OF ALL MATERIAL FACTS RELATING TO EXEMPT INCOMEIT COULD N OT BE SAID THAT CONDITION FOR REOPENING OF ASSESSMENT WAS SATISFIED ON THIS COUNTNATURE OF BUSINESS OF PETITIONER HAD ALWAYS B EEN KNOWN FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 13 TO REVENUE YEAR AFTER YEAREVEN IN THIS REASON THER E WAS NOT EVEN WHISPER OF FAILURE BY PETITIONER TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ASSE SSMENT IMPUGNED NOTICE DID NOT SATISFY RIGORS OF SECTIONS 147/148 OF THE ACT AS THERE HAD BEEN NO NON-DISCLOSURE OF MATERIAL FACTS BY PETITIONERIN FACT, EVEN REASONS ACCOMPANYING IMPUG NED NOTICE DID NOT EVEN SAY THAT THERE WAS ANY FAILURE BY PETI TIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTSIMPUGNE D NOTICE QUASHEDPETITION ALLOWED. CONCLUSION : WHERE CONTENTS OF THE NOTICE DO NOT EVEN SAY THAT T HERE WAS ANY FAILURE BY THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS, THE NOTICE DID NOT SATISFY THE RIGORS OF SEC TIONS 147/148 AND IS LIABLE TO BE QUASHED. 11. IN CASE OF HCL TECHNOLOGIES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ANR, (2017) 99 CCH 012 4 DELHC : (2017) 397 ITR 0469 (DELHI), THE HONBLE DE LHI HIGH COURT HELD AS UNDER: REASSESSMENTINCOME ESCAPING ASSESSMENTFAILURE TO MAKE FULL AND TRUE DISCLOSURE OF INCOME AND FACTSPETITI ONER-ASSESSEE CHALLENGED NOTICE ISSUED BY AO U/S 148 SEEKING TO R E-OPEN ASSESSMENT FOR ASSESSMENT YEAR (AY) 2003-04 AS WE LL AS ORDER PASSED BY AO DISMISSING OBJECTIONS FILED BY PETITIO NERAO PASSED REASSESSMENT ORDER ON GROUND THAT, ASSESSEE FAILED TO MAKE FULL AND TRUE DISCLOSURE OF INCOMEHELD, AO HA D NOT MADE EFFORT OF DISCLOSING, IN REASONS, WHAT ACCORDING TO HIM CONSTITUTED FAILURE BY ASSESSEE TO MAKE FULL AND TRUE DISCLOSUR EMERE REPRODUCTION OF LANGUAGE OF PROVISION WOULD NOT SUF FICEALSO, ALTHOUGH MAKING SUCH AVERMENT EITHER IN ORDER REJEC TING OBJECTIONS OF ASSESSEE OR SUBSEQUENTLY IN COUNTER-A FFIDAVIT IN ANSWER TO WRIT PETITION WOULD NOT SATISFY REQUIREME NT OF LAWFOR COMPLYING WITH JURISDICTIONAL REQUIREMENT UNDER FIR ST PROVISO TO SECTION 147, REASONS WOULD HAVE TO SHOW IN WHAT MAN NER ASSESSEE HAD FAILED TO MAKE FULL AND TRUE DISCLOSUR E OF ALL MATERIAL FACTS NECESSARY FOR ASSESSMENTBURDEN WAS STILL ON AO NOTWITHSTANDING EXPLANATION 1 TO FIRST PROVISO TO S ECTION 147 FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 14 THERE WAS NO INDICATION BY AO IN REASONS FOR RE-OPE NING ABOUT FAILURE, IF ANY, BY ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ANY MATERIAL FACTSREASON FOR RE-OPENING ALSO, THER EFORE, WAS BASED NOT ON ANY TANGIBLE MATERIAL BUT ON MERE CHAN GE OF OPINIONNO FAILURE BY ASSESSEE TO MAKE TRUE AND FUL L DISCLOSUREIMPUGNED NOTICE QUASHEDPETITION ALLOWED . HELD : THE AO HAS NOT MADE THE EFFORT OF DISCLOSING, IN TH E REASONS, WHAT ACCORDING TO HIM CONSTITUTED THE FAILURE BY THE ASS ESSEE TO MAKE A FULL AND TRUE DISCLOSURE. A MERE REPRODUCTION OF THE LANGUAGE OF THE PROVISION WILL NOT SUFFICE. ALSO, ALTHOUGH MAKI NG SUCH AN AVERMENT EITHER IN THE ORDER REJECTING THE OBJECTIO NS OF THE ASSESSEE OR SUBSEQUENTLY IN THE COUNTER-AFFIDAVIT I N THE ANSWER TO A WRIT PETITION WILL NOT SATISFY THE REQUIREMENT OF THE LAW. THE REASONS WILL HAVE TO SPEAK FOR THEMSELVES. FOR COMP LYING WITH THE JURISDICTIONAL REQUIREMENT UNDER THE FIRST PROVISO TO SECTION 147 OF THE ACT, THE REASONS WOULD HAVE TO SHOW IN WHAT MAN NER THE ASSESSEE HAD FAILED TO MAKE A FULL AND TRUE DISCLOS URE OF ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE FA ILURE TO DO SO WOULD NOT BE A MERE IRREGULARITY. IT WOULD RENDER T HE REOPENING OF THE ASSESSMENT AFTER FOUR YEARS VULNERABLE TO INVAL IDATION. CONCLUSION : WHERE THERE WAS NO INDICATION BY AO IN REASONS FOR RE-OPENING ABOUT FAILURE, IF ANY, BY ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ANY MATERIAL FACTS, REASSESSMENT ORDER COULD NOT BE SUSTAINED. 12. FURTHER, WE FIND THAT IT IS MANDATORY THAT THE OPINION SHOULD BE THAT OF ASSESSING OFFICER FOR FORMING BEL IEF WHEREAS IN THE INSTANT CASE, HE HAS RELIED UPON THE INFORMATIO N RECEIVED FROM THE DCIT-CENTRAL FOR WHICH HE HIMSELF WAS NOT SURE ON THE QUESTION OF AUTHENTICITY AS PERCEIVED FROM THE WORD IT APPEARS NOTED IN THE REASONS U/S 148(2) WHEREIN IN THE FIRS T LINE, THE AO WROTE THAT IT APPEARS THAT PAYMENTS TO THE TUNE OF RS. FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 15 7,12,00,000/- WAS GIVEN TO M/S FERRO CONCRETE CONST . (I) PVT. LTD. TO M/S KETI CONSTRUCTIONS LTD.. THUS, THESE W ORDS SHOW THAT AO WAS NOT HAVING REASON TO BELIEVE, RATHER HE HAS REOPENED THE CASE ON MERE SUSPICION. THIS VIEW IS SUPPORTED BY THE DECISION OF HON'BLE SUPREME COURT RENDERED IN C ASE OF ITO VS. LAKHMANI MEWAL DAS 1976 CTR (SC) 220 : (1976) 1 03 ITR 437 (SC) : TC51R.598 WHEREIN LAKHMANI MEWAL DAS VS. ITO (1975) 99 ITR 296 (CAL)(FB) : TC51R.606 WAS AFFIRME D. THE HON'BLE SUPREME COURT OBSERVED AS UNDER: 'THE POWERS OF THE ITO TO REOPEN ASSESSMENT, THOUGH WIDE, ARE NOT PLENARY. THE WORDS OF THE STATUTE ARE REASON T O BELIEVE' AND NOT REASON TO SUSPECT'. THE REOPENING OF THE ASSES SMENT AFTER THE LAPSE OF MANY YEARS IS A SERIOUS MATTER. THE ACT, N O DOUBT, CONTEMPLATES THE REOPENING OF THE ASSESSMENT IF GRO UNDS EXIST FOR BELIEVING THAT INCOME OF THE ASSESSEE HAS ESCAPED A SSESSMENT. THE UNDERLYING REASON FOR THAT IS THAT INSTANCES OF CONCEALED INCOME OR OTHER INCOME ESCAPING ASSESSMENT IN A LAR GE NUMBER OF CASES COME TO THE NOTICE OF THE INCOME-TAX AUTHORIT IES AFTER THE ASSESSMENT HAS BEEN COMPLETED. THE PROVISIONS OF TH E ACT IN THIS RESPECT DEPART FROM THE NORMAL RULE THAT THERE SHOU LD BE, SUBJECT TO RIGHT OF APPEAL AND REVISION, FINALITY ABOUT ORD ERS MADE IN JUDICIAL AND QUASI-JUDICIAL PROCEEDINGS. IT IS, THE REFORE, ESSENTIAL THAT BEFORE SUCH ACTION IS TAKEN, THE REQUIREMENTS OF THE LAW SHOULD BE SATISFIED. THE LIVE-LINK OR CLOSE NEXUS W HICH SHOULD BE THERE BETWEEN THE MATERIAL BEFORE THE ITO IN THE PR ESENT CASE AND THE BELIEF WHICH HE WAS TO FORM REGARDING THE ESCAP EMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT BECAUSE OF T HE LATTER'S FAILURE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WAS MISSING IN THE CASE. IN ANY EVENT, THE LINK WAS TOO TENUOUS TO PROVIDE A LEGALLY SOUND BASIS FOR REOPENING THE ASS ESSMENT.' FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 16 13. FROM ABOVE, WE ARE OF THE VIEW THAT THE MAIN CO MPONENT OF REASONS SHOULD BE AO HAVING REASON TO BELIEVE. THE WORDS 'HAS REASON TO BELIEVE' ARE STRONGER THAN THE WORDS 'IS SATISFIED'. THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER MUST NO T BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WO RDS IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. T HEREFORE, THE COURT CAN EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQ UIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UND ER SECTION 147(A). IF THERE IS NO RATIONAL AND INTELLIGIBLE NE XUS BETWEEN THE REASONS AND THE BELIEF, SO THAT, ON SUCH REASONS, N O ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERT AIN THE BELIEF, THE CONCLUSION WOULD BE INESCAPABLE THAT THE ASSESS ING OFFICER COULD NOT HAVE REASON TO BELIEVE THAT ANY PART OF T HE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND SUCH ESCAPE MENT WAS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE NOTICE ISSUED BY HIM WOULD BE LIABLE TO BE STRUCK DOWN AS INVALID. T HIS RATIO HAS BEEN LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF GANGA SARAN & SONS (P) LTD. VS. ITO & ORS. (1981) 2 2 CTR (SC) 112 : (1981) 130 ITR 1 (SC) : TC51R.639 REVERSING T HE DECISION OF FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 17 THE CALCUTTA HIGH COURT IN ITO VS. GANGA SARAN & SO NS (P) LTD. (1981) 22 CTR (SC) 112 : (1981) 130 ITR 1 (SC) : TC 51R.639]. THE HON'BLE SUPREME COURT OBSERVED THAT 'HAVING REASON TO BELIEVE' MEANS THAT NOT ONLY THERE IS A REASON FOR THE BELIE F BUT ALSO THAT THE BELIEF IS ENTERTAINED OR FORMED. HAVING REASON TO BELIEVE MEANS THAT THERE IS A REASON COUPLED WITH THE BELIE F. FURTHER, HONBLE DELHI HIGH COURT IN CASE OF SABHARWAL PROPE RTIES INDUSTRIES PVT. LTD. & ORS. VS. INCOME TAX OFFICER& ORS., (2016) 95 CCH 046 (DEL), OBSERVED THAT REASONS RECORDED FO R REOPENING ASSESSMENT SHOULD STATE THAT ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT IN RETURNS AS ORIGINALLY FILED AND REASONS RECORDED SH OULD PROVIDE LIVE LINK TO FORMATION OF BELIEF THAT INCOME HAS ES CAPED ASSESSMENT. THUS WHERE REASONS RECORDED BY AO 'LACK CLARITY AND IT WAS PRACTICALLY IMPOSSIBLE TO DERIVE MEANING OUT OF IT AND WAS INCAPABLE OF BEING UNDERSTOOD', REASSESSMENT NO TICE WAS LIABLE TO BE QUASHED. 14. WE ALSO FIND THAT THE LD. AO MENTIONED ABOUT SE CTION 40A(3) IN THE REASONS OF REOPENING AND OPINED THAT THE SAID TRANSACTION OF RS. 7.12 CRORES ATTRACTS THE VIOLATI ON OF SECTION FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 18 40A(3). HOWEVER, WE FIND THAT THE AO DEVIATED FROM HIS AFORESAID STAND WHICH HE BASICALLY TOOK WHILE REOPENING THE C ASE AND LATER ON WHILE FRAMING THE ASSESSMENT HE ADDED THE SAID A MOUNT U/S 69A. THUS, FROM THIS ACTION OF AO, IT IS CONCLUDED THAT HE WAS NOT SURE IN HIMSELF SINCE BEGINNING THAT THE TRANSACTIO N INVOLVED IS OF WHAT NATURE, WHICH SECTION IS ATTRACTED HERE AND WH AT KIND OF VIOLATION IS THERE. THEREFORE, THE LD. AO HAS ABSOL UTELY CHANGED HIS VIEW WHICH WAS FORMED INITIALLY AND WHICH WAS F ORMED WHILE CONCLUDING THE ASSESSMENT. THEREFORE, THE STATUTORY PROVISIONS PER REASONS AND CONTENTS IN ASSESSMENT ORDER AR E DISTINCT WHICH SHOWS THAT THE REASONS WERE NOT ON ACCOUNT OF APPLICATION OF MIND ON THE PART OF AO. THUS IT IS A CLEAR CASE OF LACK OF BASIC INGREDIENT OF SECTION 147 I.E. REASON TO BELIEVE, AS AO HIMSELF WAS NOT ABLE TO DECIDE ABOUT THE LEGAL PROVISIONS W HICH ARE BEING ATTRACTED IN THE GIVEN CASE. 15. ON CONSIDERATION OF ABOVE FACTS AND DISCUSSION THEREOF IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS (SUPRA), WE ARE OF THE VIEW THAT THE REASSESSMENT PROCEEDINGS WERE INITIAT ED UNDER SUSPICION AS NARRATED ABOVE, THEREFORE, THE PROCEED INGS U/S 147 IS BAD IN LAW FOR WANT OF JURISDICTION IN THE LIGHT OF FIRST PROVISO TO FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 19 SECTION 147 AND IN THE ABSENCE OF COGENT REASONS TO FORM BELIEF THAT THE ASSESSEES INCOME HAD ESCAPED ASSESSMENT A ND ALSO IN THE LIGHT OF THE FACT THAT THE AO DEVIATED FROM HIS STAND BY CHANGING HIS VIEW WHICH WAS FORMED INITIALLY AND WH ICH WAS FORMED WHILE CONCLUDING THE ASSESSMENT AS HE WAS NO T SURE IN HIMSELF SINCE BEGINNING THAT THE TRANSACTION INVOLV ED IS OF WHAT NATURE, WHICH SECTION IS ATTRACTED HERE AND WHAT KI ND OF VIOLATION IS THERE. THUS, THE REASSESSMENT PROCEEDINGS ARE BA D IN LAW AND ACCORDINGLY, WE QUASH THE PRESENT ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2009-10 BEING VOID AND INVALID. THU S, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED . CONSEQUENTLY, SINCE THE REASSESSMENT PROCEEDINGS IT SELF IS QUASHED, THE APPEAL FILED BY THE ASSESSEE FOR THE A SSESSMENT YEAR 2009-10 STANDS ALLOWED AND THAT OF REVENUE FOR THE ASSESSMENT YEAR 2009-10 STANDS DISMISSED. 16. SO FAR AS THE MERITS OF THE MATTER ARE CONCERNE D, WE ARE OF THE VIEW THAT SINCE THE REASSESSMENT PROCEEDINGS IT SELF HAS BEEN QUASHED AS ABOVE, WE ARE REFRAINING OURSELVES TO MA KE DETAILED DISCUSSION ON MERITS. ON CONSIDERATION OF MATERIAL AVAILABLE ON RECORD AND RIVAL SUBMISSIONS ON MERITS OF THE CASE, WE FIND THAT FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 20 THERE IS NO CASE OF ASSESSING THE INCOME AS THERE W AS NO MATERIAL EVIDENCING MOVEMENT OF CASH. FURTHER, PRINCIPAL OF NATURAL JUSTICE WAS BADLY IGNORED BY ACCEPTING VERSION OF TH IRD PARTY WITHOUT AFFORDING OPPORTUNITY FOR CROSS EXAMINE. WE ALSO FIND THAT SECTION 40A(3) APPLIES FOR PAYMENT OTHERWISE T HAN ACCOUNT PAYEE CHEQUE OR BANK DRAFT AGAINST EXPENSES AND IN THE INSTANT CASE, WE FIND THAT NO GOODS OR SERVICE WERE PROVIDE D BY M/S KETI CONSTRUCTION LTD. AGAINST WHICH PAYMENT WARRANTING ACTION UNDER SECTION 40A(3) WOULD BE REQUIRED. WE FIND THA T THE PRIMARY ONUS AS REGARD TO MOVEMENT OF CASH, AS ALLEGED WAS ON M/S KETI CONSTRUCTION LTD. THEREFORE, IT HAD BEARING IN THE ASSESSMENT IN THE CASE OF ABOVE NAMED PERSON. IT HAS NOT BEEN BRO UGHT ON RECORD EITHER IN THE REASONS UNDER SECTION 148(2) O R DURING THE ASSESSMENT PROCEEDINGS AT ANY STAGE AS TO WHAT ACTI ON HAS BEEN TAKEN IN THE CASE OF M/S KETI CONSTRUCTION LTD. WE FIND THAT ON THE STRENGTH OF INFORMATION RECEIVED FROM THE DCIT- CENTRAL INDORE; THE ASSESSING OFFICER ALLEGED THAT THE ASSE SSEE HAD RECEIVED A PAYMENT OF RS.7,12,00,000/- WHICH HAD BE EN PAID BACK IN CASH BY THE ASSESSEE TO M/S KETTI CONSTRUCT ION LTD. HOWEVER, WE FIND THAT DURING THE ORIGINAL ASSESSMEN T FRAMED U/S 143(3), THE BANK STATEMENT OF THE ASSESSEE WAS EXAM INED BY THE FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 21 AO VERY MINUTELY. IT CLEARLY REFLECTED RECEIPT FROM M/S KETTI CONSTRUCTION LTD. WHICH WAS ON ACCOUNT OF SUB CONTR ACT AWARDED BY M/S KETTI CONSTRUCTION LTD. TO THE ASSESSEE. THE CORRESPONDING RECEIPT WAS DULY RECORDED IN THE PROF IT AND LOSS ACCOUNT OF THE ASSESSEE, THUS THERE IS NO DENY ON T HE ISSUE OF PAYMENT RECEIVED. THE THEORY ADVANCED BY THE LD. AS SESSING OFFICER OF PAYMENT BACK TO M/S KETTI CONSTRUCTION L TD. BY CASH IS BASED ON SOME DOCUMENT RECOVERED FROM M/S KETTI CON STRUCTION LTD. THEREFORE, M/S KETTI CONSTRUCTION LTD. ALONE C OULD BE ANSWERABLE ON THE CONTENT OF THE SAID PAPER. EVEN I F THE LD. ASSESSING OFFICER RELIED UPON THE SAID DOCUMENT AND WISHED TO USE IT AGAINST THE ASSESSEE, HE WAS DUTY BOUND TO F OLLOW THE PRINCIPLE OF NATURAL JUSTICE AND ALLOW AN OPPORTUNIT Y TO THE ASSESSEE TO CROSS EXAMINE DIRECTORS OF THE M/S KETT I CONSTRUCTION LTD. FURTHER, WE FIND THAT SECTION 69A DEALS ON THE QUESTION OF MONEY ETC. FOUND TO BE IN THE OWNERSHIP OF THE ASSE SSEE AND SUCH MONEY IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. HOW EVER, IN THE INSTANT CASE, THERE IS NO EVIDENCE THAT THE ASSESSE E WAS FOUND TO BE THE OWNER OF ANY MONEY DURING THE SUBJECT YEAR. THERE IS NO OTHER TANGIBLE MATERIAL ON RECORDS WHICH SHOWS THAT ASSESSEE WAS ACTUALLY INDULGED INTO ANY SUCH TRANSACTION AND THE FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 22 AUTHENTICITY OF COPY OF LEDGER ACCOUNT OF ASSESSEE IN THE BOOKS OF KETI CONSTRUCTION LTD. WAS ALSO DOUBTED BY THE ASSE SSEE. WE ALSO FIND THAT THE AO HAS DISCUSSED ABOUT THE STATEMENT OF ONE SHRI KEDARMAL JAKHETIYA, DIRECTOR OF KETI CONSTRUCTIONS LTD. THE LD. ASSESSING OFFICER PLACED RELIANCE ON THE SAID STATE MENT WHERE MR. JAKHETIYA HAS SUBMITTED A LIST OF CERTAIN BOGUS PET TY CONTRACTORS IN WHICH ASSESSEES NAME WAS ALSO INCLUDED. HOWEVER , WE OBSERVE THAT DURING THE ENTIRE ASSESSMENT PROCEEDIN GS, NEITHER THE COPY OF THE STATEMENT WAS PROVIDED TO THE ASSES SEE NOR THE SAID PERSON WAS ALLOWED TO BE CONFRONTED BY THE ASS ESSEE. LD. AO WAS DUTY BOUND TO PROVIDE AN OPPORTUNITY TO ASSESSE E TO CONFRONT MR. JAKHETIYA REGARDING THE SAME. BUT AO DID NOT FO LLOW THE PRINCIPLE OF NATURAL JUSTICE. THUS IN SUCH A SITUATI ON, THE DISCUSSION MADE BY AO ABOUT THE STATEMENT OF DIRECT OR OF SAID COMPANY IS INVALID IN VIEW OF THE VIOLATION OF PRIN CIPLE OF NATURAL JUSTICE. THIS VIEW IS SUPPORTED BY THE RATIO LAID DO WN IN THE CASES OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. PARADIS E INLAND SHIPPING P. LTD (2017) 98 CCH 0438 MUMHC : ( 2018) 400 ITR 0439 (BOM), ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2015) 94 CCH 0187 ISCC : (2015) 281 CTR 0241 (SC) : (2015) 127 DTR 02 41 (SC). FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 23 FURTHER, WE FIND THAT THE LD. CIT(A) NOTED THAT THE ASSESSEE HAD RECEIVED THIS AMOUNT OF RS.7,12,00,000/- BY CHEQUE FROM M/S KETI CONSTRUCTION LTD. UNDER THE GARB OF SUB CONTRACT PAYMENTS AND IT WAS PAID BACK TO M/S KETI CONSTRUCTION LTD. BY CASH AND THE LD. CIT(A) DELETE D THE ADDITION TO THE TUNE OF RS.6,40,88,000/- ON THE GRO UND THAT THIS SUM OF RS.7,12,00,000/- HAS ALREADY BEEN OFFERED BY THE ASSESSEE FOR TAXATION AS SUB CONTRACT RECEIPTS AND CONFIRMED THE ADDITION OF RS. RS.71,12,000/- ON PRESUMPTION ESTIMATING THE COMMISSION @10%. HOWEVER, WE ARE OF THE VIEW THAT WHEN LD. CIT(A) HI MSELF NOTED THE FACT THAT THE SUM OF RS.7,12,00,000/- HAS ALREADY BEEN OFFERED BY THE ASSESSEE FOR TAXATION AS SUB CONTRACT RECEIPTS STILL LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE SAID RECEIPTS WERE DUL Y ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND INCOME WA S ALREADY ASSESSED ON SAID RECEIPTS. WE FIND THAT DUR ING REGULAR ASSESSMENT, THE ASSESSING OFFICER NOTED THA T THE TOTAL TURNOVER DURING THE ASSESSMENT YEAR 2009- 10 WAS RS.32,98,40,875/-. IT INCLUDES THE SUM OF RS.7,12,00,000/- IN QUESTION BEFORE US AND THE ASSESSING OFFICER APPLIED N.P. RATE OF 1% HIGHER T HAN DISCLOSED MAKING AN ADDITION OF RS.32,98,409/- ON ACCOUNT OF LOW NET PROFIT. THUS, THE ADDITION WAS FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 24 ALREADY INCLUDED IN REGULAR ASSESSMENT ON ACCOUNT O F LOW N.P. AT RS.32,98,409/-. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN CONFIRMING THE ADDITION ON ESTIMATION BASIS BY THE LD. CIT(A). THEREFORE, IN V IEW OF THE FACTS NARRATED ABOVE IN THE LIGHT OF THE JUDICI AL PRONOUNCEMENTS (SUPRA), WE ARE OF THE VIEW THAT THE ADDITION OF RS.71,12,000/- RESTRICTED BY THE LD. CI T(A) ALSO DESERVES TO BE DELETED. THEREFORE, EVEN ON MERITS OF THE CASE, THE REVENUE HAS NO CASE. ACCORDINGLY, ON MERI TS TOO, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2009-10 STANDS ALLOWED AND THAT OF REVENUE FOR THE ASSESSME NT YEAR 2009-10 IS DISMISSED. 17. SO FAR AS THE REMAINING APPEALS I.E. ITA NO.284/IND/2017 AND ITA NO.819/IND/2018 FOR THE ASSESSMENT YEAR 2012-13 ARE CONCERNED, THE LD. COUNS EL FOR THE ASSESSEE HAS FILED AN APPLICATION TO THE EF FECT THAT THE ASSESSEE HAS OPTED FOR VIVAD SE VISHWAS SCHEME AND THE REVENUE DEPARTMENT HAS ISSUED FORM NO.5, THEREFORE, THE ASSESSEE SEEKS PERMISSION TO WITHDRA W BOTH THESE APPEALS. ON THE OTHER HAND, LD. CIT-DR DID NOT OPPOSE THE REQUEST. IN VIEW OF THESE FACTS, WE DISM ISS BOTH FERRO CONCRETE CONSTRUCTION P. LTD. . ITA NO.439/IND/2017 & OTHE RS 25 THESE APPEALS AS WITHDRAWN ON ACCOUNT OF VIVAD SE VISHWAS SCHEME. 18. FINALLY, ASSESSEES APPEAL BEARING ITA NO.359/IND/2017 (A.Y. 2009-10) IS ALLOWED AND THAT OF REVENUE BEARING ITA NO.439/IND/2017 (A.Y. 2009-10) I S DISMISSED, WHEREAS ASSESSEES APPEALS BEARING ITA NO.284/IND/2017 AND ITA NO.819/IND/2018 FOR THE ASSESSMENT YEAR 2012-13 ARE DISMISSED AS WITHDRAWN O N ACCOUNT OF VIVAD SE VISHWAS SCHEME. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 13.10.2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNTANT ME MBER / DATED : 13.10.2021 !VYAS! COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE