ACIT, New Delhi V. M/s Lear Seating Pvt. Ltd., New Delhi

ITA 3627/DEL/2011

• Counselvise Citation: 362720114 RSA 2011
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKARDR
• Assessee Lawyers: RAMA GUPTA; K M GUPTA ARS
• Keywords: Difference of opinion; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'D' BEFORE SHRI C.L.SETHI,JM & SHRI A N PAHUJA,AM ITA NO.3627/DEL/2011 (ASSESSMENT YEAR:-2004-05) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), ROOM NO. 407,4 TH FLOOR, CR BUILDING, NEW DELHI V/S M/S LEAR AUTOMOTIVE INDIA PVT. LTD..11A,1 ST FLOOR, SUCHETA BHAWAN (GATE NO.2),VISHNU DIGAMBAR MARG, NEW DELHI-110002 PAN: AAACL 1978K [APPELLANT] [RESPONDENT] ASSESSEE BY :- MS. RAMA GUPTA & SHRI K.M.GUPTA, ARS REVENUE BY:- MS. Y KAKKAR,DR DATE OF HEARING 22-09-2011 DATE OF PRONOUNCEMENT 22-09-2011 O R D E R A N PAHUJA: THIS APPEAL AGAINST AN ORDER DATED 2-05-2011 OF T HE LD. CIT(APPEALS)-VII, NEW DELHI, FOR THE ASSESSMEN T YEAR 2004- 05,RAISES THE FOLLOWING GROUNDS:- [1] THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONEOUS & CONTRARY TO FACTS AND LAW. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE PROCEEDINGS U/S 14 7/148 OF THE IT ACT. [2.1] THE ID CIT(A) HAS IGNORED THE FINDINGS REC ORDED BY THE AO AND THE FACT THAT THE CASE OF THE ASSESSEE WAS REOPENED BY THE AO AFTER FOLLOWING DUE PROCEDURE LAID DOWN BY LAW. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,4 8,24,200/- MADE ON ACCOUNT OF PROVISIONS FOR LIABILITIES WITHOUT GO ING IN TO THE MERITS OF THE ADDITION. [4] THE APPELLANT CRAVES LEAVE TO ADD, TO ALTE R, OR TO AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2 ITA NO. 3627/DEL/2011 2 2. ADVERTING FIRST TO GROUND NOS. 2 & 2.1 IN TH E APPEAL , FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLA RING INCOME OF RS.2,44,01,160/- WAS FILED ON 1-11-2006 BY ASSESSEE -COMPANY, ENGAGED IN THE BUSINESS OF DESIGN, DEVELOPMENT AND MANUFACTURING OF AUTOMOTIVE INTERIORS. SUBSEQUENTLY, ASSESSMENT U /S 143(3) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS TH E ACT], WAS FINALIZED ON 28-12-2006, DETERMINING TOTAL INCOME O F RS.6,44,02,160/- WITH THE DISALLOWANCE OF COMPENSAT ION OF RS. 4,00,00,000/- PAID TO L& T. LATER THE TOTAL INCOME WAS REVISED TO RS.2,44,02,160/- VIDE ORDER DATED 13.3.2006 ON GIVI NG EFFECT TO THE ORDER OF THE LD. CIT(A). THEREAFTER, THE ASSESSMENT WAS REOPENED WITH THE ISSUE OF A NOTICE U/S 148 OF THE ACT ON 8 -12-2009 AFTER RECORDING REASONS. IN RESPONSE, THE ASSESSEE-COMPAN Y SUBMITTED VIDE LETTER DATED 29.12.2009 THAT RETURN FILED ORIG INALLY BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. 2.1 THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BECAUSE THE ASSESSING OFFICER[AO IN SHORT] HAD REASON TO BELIEV E THAT INCOME OF RS.3,45,94,000/- HAVE ESCAPED ASSESSMENT. THE AO RE CORDED THE FOLLOWING REASONS BEFORE REOPENING THE ASSESSMENT : - ON EXAMINATION OF RECORDS IT IS REVEALED THAT:- (A) AS PER PROFIT AND LOSS ACCOUNT, THE INCOME WAS REDUCED BY RS.1,97,70,000/- ON ACCOUNT OF AMOUNTS COLLECTED TO WARDS TOOLS TRANSFERRED TO FIXED ASSETS. HOWEVER, THE FIX ED ASSETS CHART DOES NOT SHOW ANY SUCH TRANSFER OF TOOLS. THE MISTAKE RESULTED IN UNDERASSESSMENT OF INCOME AMOUNTING TO RS.1,97,70,000/- INVOLVING TAX EFFECT OF RS.94,33,0 09/-. (B) THE ASSESSEE HAD DEBITED OTHER PROVISIONS AMOUN TING TO RS. 1,48,24.000/- IN THE PROFIT AND LOSS ACCOUNT WHICH IS NOT ALLOWABLE UNDER THE PROVISIONS OF THE INCOME-TAX ACT, 1961. HENCE N EEDS TO BE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE M ISTAKE RESULTED IN UNDER ASSESSMENT OF INCOME AMOUNTING TO RS. 1,48,24 ,000/- INVOLVING THE TAX EFFECT OF RS. 70,73,086/-.' IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T INCOME OF RS. 3,45,94,000/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147/148. 3 ITA NO. 3627/DEL/2011 3 2.2 DURING THE COURSE OF REASSESSMENT PROCEEDING S ,THE AO NOTICED THAT THE ASSESSEE DEBITED OTHER PROVISIONS AMOUNTING TO RS.1,48,24,000/-.AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO DISALLOWED THE AMOUNT ON THE GROUND THAT THE LIABI LITY FOR THE AFORESAID AMOUNT WAS NOT ASCERTAINED. ACCORDINGLY , REASSESSMENT WAS COMPLETED WITH THE DISALLOWANCE OF RS. 1,48,24, 000/- ON ACCOUNT OTHER PROVISIONS. 3. ON APPEAL ,THE LEARNED CIT(A) QUASHED THE REASSE SSMENT ORDER IN THE FOLLOWING TERMS: 4.1 I HAVE CONSIDERED THE WRITTEN SUBMISSION ON BEHALF OF THE APPELLANT, THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE FACTS ON RECORD. I HAVE ALSO PERUSED THE CA SE LAWS CITED BY THE ASSESSING OFFICER AS WELL AS BY THE APPELLANT. IT I S ALSO OBSERVED THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 08-12-2009 WHICH IS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF T HE RELEVANT ASSESSMENT YEAR I.E. 2004-05. THEREFORE THE PROVISO TO SECTION 147 OF THE ACT WOULD BE APPLICABLE TO THE INSTANT CASE. HOWEVER, THE QUE STION WHICH STILL REMAINS TO BE SEEN IS WHETHER THE ASSESSEE MADE A F ULL AND TRUE DISCLOSURE OR NOT. IT IS WELL SETTLED THAT SUCH FAC TS WHICH COULD HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER BUT WERE NOT DI SCOVERED AT THE TIME OF ORIGINAL ASSESSMENT, WILL NOT CONSTITUTE A NEW I NFORMATION. WHERE NO NEW MATERIAL HAS COME ON RECORD NOR ANY NEW INFORMA TION HAS BEEN RECEIVED, IT WOULD MERELY BE A CASE OF FRESH APPLIC ATION OF MIND BY THE ASSESSING OFFICER TO THE SAME SET OF FACTS AND IN S UCH A SITUATION, IT WOULD BE A CASE OF MERE CHANGE OF OPINION WHICH DOE S NOT PROVIDE JUSTIFICATION TO THE ASSESSING OFFICER TO INITIATE PROCEEDINGS UNDER SECTION 147 OF THE ACT. IN THE LIGHT OF THESE PRINC IPLES, IT IS TO BE SEEN AS TO WHETHER IN THE PRESENT CASE, ANY NEW MATERIAL HA D COME ON RECORD AFTER COMPLETION OF ASSESSMENT PROCEEDINGS OR IT IS A CASE OF MERE CHANGE OF OPINION. FOR READY REFERENCE, THE RELEVAN T PORTION OF THE REASONS RECORDED BEFORE ISSUANCE OF NOTICE UNDER SE CTION 148 IS REPRODUCED BELOW:- '(B) THE ASSESSEE HAD DEBITED OTHER PROVISIONS AMOU NTING TO RS. 1,48,24.000/- IN THE PROFIT AND LOSS ACCOUNT WHICH I S NOT ALLOWABLE UNDER THE PROVISIONS OF THE INCOME-TAX ACT, 1961. HEN CE NEEDS TO BE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. THE MISTAKE RESULTED IN UNDER ASSESSMENT OF INCOME AMOUNTING TO RS. 1,48,24,000/- INVOLVING THE TAX EFFECT OF RS. 70,73, 086/-.' THE PERUSAL OF THE REASONS RECORDED BEFORE ISSUING NOTICE UNDER SECTION 148 ON 08-12- 2009 WOULD SHOW THAT UNDOUBTEDLY THE REASONS HAVE 4 ITA NO. 3627/DEL/2011 4 BEEN RECORDED ON THE BASIS OF PERUSAL OF THE PROFIT AND LOSS ACCOUNT WHICH WAS ENCLOSED ALONG WITH THE SAID RETURN OF IN COME. THUS, ADMITTEDLY IT IS A CASE WHERE NO FRESH MATERIAL HAS COME IN THE POSSESSION OF THE AO BEFORE RECORDING THE REASONS. IT HAS BEEN HELD IN A LARGE NUMBER OF DECISIONS OF THE APEX COURT AS WE LL AS OF THE HIGH COURTS, THAT WHEN THE PRIMARY FACTS NECESSARY FOR T HE ASSESSMENT ARE FULLY AND TRULY DISCLOSED TO THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER IS NO T ENTITLED TO COMMENCE PROCEEDINGS UNDER SECTION 147 OF THE ACT ON A CHANGE OF THE OPINION. IN THIS CONTEXT, RELIANCE IS PLACED ON THE DECISIONS OF HON'BLE DELHI HIGH COURT IN THE CASES OF SHIPRA SRI VASTAVA & ANR V. ACIT (2009)319 ITR 221(DEL): 30 DTR(DEL)25 , NORTHE RN STRIPS LTD. & ANR. VS. INCOME TAX OFFICER (2009) 31 DTR (DEL) 225 : (2010)186 TAXMAN 360, JSRS UDYOG LTD. VS. ITO (2009) 313 ITR 321 (DEL), JAL HOTELS CO. LTD. VS ACIT(2009) 24 DTR 37: 184 TAXMAN 1(DEL) & CIT VS. EICHCR LTD. (2011) 239 CTR (DEL) 65 AND OF BOMB AY HIGH COURT IN THE CASES OR GERMAN REMEDIES LTD. VS DCIT(2006) 285 ITR 26 AND ASTERIODS TRADING & INVESTMENT (P) LTD. VS DCIT (20 09) 308 ITR 190 (BOM.) WHEREIN IT HAS BEEN HELD THAT THERE BEING NO NEW MATERIAL IN THE HANDS OF REVENUE LEADING TO THE VIEW THAT THERE WAS REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF ASSESSMENT, THERE WAS MERE CHANGE OF OPINION AND HENCE NOTICE U/S 148 IS LIABLE TO BE QU ASHED. 4.2 RELIANCE IS ALSO PLACED ON THE DECISION OF HON 'B1E DELHI HIGH COURT IN THE CASE OF D.T. & T.D.C. LTD. VS. ACIT (2 010) 324 ITR 234 (DELHI), WHEREIN THE DECISION OF THE SUPREME COURT IN CIT VS KELVINATOR OF INDIA LTD. (2010) 228 CTR(SC)488:(2010)34 DTR(SC ) 49: (2010) 320 ITR 561 (SC) WAS ALSO REFERRED. IN D.T. & T.D.C. LT D. VS. ACIT (SUPRA) IT WAS HELD AS UNDER:- '10. THE POSITION THAT A MERE CHANGE OF OPINION WOUL D NOT ENTITLE AN ASSESSING OFFICER TO REOPEN A COMPLETED ASSESSME NT IS WELL SETTLED THE LATEST DECISION BEING OF THE SUPREME COURT IN C IVIL APPEAL NOS. 2009-2011 OF 2003 AND CIVIL APPEAL NO. 2520 OF 2008 D ECIDED ON JANUARY 18, 2010 (CIT V. KELVINATOR OF INDIA LTD. [20 IO) 320 ITR 561 (SC)) WHICH APPROVES THIS COURT'S FULL BENCH DECISIO N IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD [2002} 256 ITR 1 (DELHI). THE POWER OF REASSESSMENT IS DIFFERENT FROM THE POWER OF REVIEW. THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO REASSESS UNDER SECTION 147 UPON CERTAIN CONDITIONS BEING SATISFIED THE ASSESSING OF FICER DOES NOT HAVE THE POWER OF REVIEW. IF A CHANGE OF OPINION WERE TO BE PERMITTED AS A GROUND FOR REASSESSMENT THEN IT WOULD AMOUNT TO GRA NTING A LICENCE TO THE ASSESSING OFFICER TO 'REVIEW' HIS DECISIONS, WH ICH POWER HE DOES NOT HAVE. 4.3 THUS, IN VIEW OF THE AFOREMENTIONED JUDGMENTS AND AS WELL AS THE JUDGMENTS RELIED UPON BY THE APPELLANT, CLEAR POSIT ION OF LAW AND FACTS OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THERE WAS NO GROUND TO BELIEVE THAT THERE WAS ANY ESCAPEMENT OF INCOME. IT IS ALSO OBSERVED 5 ITA NO. 3627/DEL/2011 5 THAT THE ASSESSING OFFICER HAS NOT SHOWN ANYWHERE I N THE REASONS THAT HOW AND IN WHAT MANNER THE ASSESSEE COMPANY FAILED IN DISCLOSING ALL MATERIAL FACTS FULLY AND TRULY. THEREFORE, IT IS HE LD THAT THE RE-ASSESSMENT ORDER IS WITHOUT THE AUTHORITY OF LAW AND SAME IS H EREBY QUASHED. 5. AS THE RE-ASSESSMENT ORDER HAS BEEN QUASHED, AL L THE OTHER ISSUES RAISED IN THE APPEAL BY THE ASSESSEE HAVE BE COME INFRUCTUOUS. THEREFORE, I DO NOT ENTER INTO THE OTHER ISSUES RAI SED IN THE PRESENT APPEAL ON MERITS OF THE CASE. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LD. DR SUPPORTE D THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE R ELIED UPON THE FINDINGS OF THE LD. CIT(A) IN THE LIGHT OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN HARYANA ACRYLIC MANUFA CTURING CO. VS. CIT,308 ITR 38(DELHI) 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISION RELIED UPON ON BEHALF OF THE ASSESSEE. AS IS APPARENT FROM THE FACTS NARRATED IN THE IMPUG NED ORDERS AND THE REASONS RECORDED BY THE AO BEFORE REOPENING THE ASSESSMENT, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION HAS BEEN REOPENED AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMEN T YEAR WITH THE ISSUE OF A NOTICE U/S 148 OF THE ACT ON 8.12.2009. NO OMISSION AND/OR FAILURE ON THE PART OF THE ASSESSEE HAS BEEN ATTRIBUTED IN RELATION TO DISCLOSURE OF MATERIAL FACTS, FULLY AND TRULY, RELATING TO THE ASSESSMENT NOR THE LD. DR ASCRIBED ANY SUCH FAILUR E TO THE ASSESSEE. WE FIND THAT THE FACTS MENTIONED IN THE AFORESAID REASONS WERE AVAILABLE WITH THE AO EVEN AT THE TIME OF FINA LIZING THE INITIAL ASSESSMENT COMPLETED U/S 143(3) OF THE ACT ON 28.12 .2006. ON THE BASIS OF SAME MATERIAL, IF THE AO TAKES A DIFFERENT VIEW SUBSEQUENTLY, AFTER EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR, THAT WOULD NOT CONFER ANY JURISDIC TION ON THE AO TO ISSUE NOTICE U/S 148 OF THE ACT. THE SCOPE AND EFFE CT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS A LSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD 6 ITA NO. 3627/DEL/2011 6 PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISION S OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMST ANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSES SMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDIC TION UNDER SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE S ATISFIED- FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE T HAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCA PED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE TH AT SUCH ESCAPEMENT OCCURRED DUE TO REASON OF EITHER OMISS ION OR FAILURE ON THE PART OF THE TAXPAYER TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THE SE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE TH E ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UND ER SECTION 148 READ WITH SECTION 147(A).BUT UNDER THE SUBSTITUTED SECTI ON 147, EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORD S IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPE N THE ASSESSMENT. HOWEVER, BOTH THE CONDITIONS MUST BE FU LFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTI ON 147. SINCE IN THE CASE UNDER CONSIDERATION, NOTICE U/S 148 HAD BEEN I SSUED ONLY ON 8.12.2009 THAT IS AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, APPARENTLY, THE ISSUE THAT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THERE WAS ANY OMISSI ON OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS ? NO SUCH FAILURE IS EITHER EVIDENT FROM THE IMPUGNED ORDER NOR HAS BEEN POINTED OUT BEFORE US BY THE LD. DR. INDISPUTABLY, THE AO CHOSE TO REOPEN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT AFTER RE CORDING REASONS, WHEREIN NO SUCH FAILURE AS HAS BEEN ENVISAGED IN PROVISO TO SEC. 147 OF THE ACT, HAS BEEN ATTRIBUTED TO THE ASSESSEE . IN RAKESH AGGARWAL V. ASST. CIT [1997] 225 ITR 496, HONBLE D ELHI HIGH COURT HELD THAT IN VIEW OF THE PROVISO TO SECTION 147, NO TICE FOR REASSESSMENT UNDER SECTION 148 WOULD BE ILLEGAL IF ISSUED MORE THAN FOUR YEARS AFTER THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS 7 ITA NO. 3627/DEL/2011 7 FAILURE IS ASCRIBED TO THE ASSESSEE IN DISCLOSING F ULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. HONBL E GUJRAT HIGH COURT WHILE ADJUDICATING A SIMILAR ISSUE HELD IN S HREE THARAD JAIN YUVAK MANDAL V. ITO [2000] 242 ITR 612 AS UNDER: A PERUSAL OF THE AFORESAID PROVISION GOES TO SHOW T HAT UNDER THE PROVISO TO SECTION 147, THE FOUNDATION OF CONFERRIN G JURISDICTION ON THE ASSESSING OFFICER TO ASSESS OR REASSESS THE INC OME FOR ANY ASSESSMENT YEAR BEYOND THE END OF FOUR YEARS FROM T HE END OF RELEVANT ASSESSMENT YEAR MUST BE OMISSION OR FAILUR E ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR AND THAT THE INCOME-TAX OF FICER HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT FOR THAT YEAR. IN THE ABSENCE OF ANY SUC H OMISSION OR FAILURE ON THE PART OF THE ASSESSEE, TAKING ACTION FOR ASSESSMENT OR REASSESSMENT IS NOT PERMISSIBLE FOR ANY YEAR AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. THE SCOPE OF THE ASSESSEE'S DUTY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT IN THE CONT EXT OF THE PROVISIONS OF SECTION 34 OF THE INDIAN INCOME-TAX A CT, 1922, HAS BEEN SUCCINCTLY STATED BY THE SUPREME COURT BY THEI R LORDSHIPS IN CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 ITR 191 . THE COURT OBSERVED: 'THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING ALL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUEST ION BEFORE THE ASSESSING AUTHORITY LIES ON THE ASSESSEE.' THE COURT FURTHER SAID: 'DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS? IN OUR OPINION, TH E ANSWER TO THIS QUESTION MUST BE IN THE NEGATIVE. ONCE ALL THE PRIM ARY FACTS ARE BEFORE THE ASSESSING AUTHORITY, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE. IT IS FOR HIM TO D ECIDE WHAT INFERENCES OF FACTS CAN BE REASONABLY DRAWN AND WHA T LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT F OR SOMEBODY ELSE-FAR LESS THE ASSESSEE-TO TELL THE ASSESSING AU THORITY WHAT INFERENCES, WHETHER OF FACTS OR LAW, SHOULD BE DRAW N.' 5.1 AGAIN IN THE CASE OF PATIDAR OIL CAKE INDUSTR IES VS. DCIT, 270 ITR 347(GUJ), HONBLE GUJRAT HIGH COURT HELD IN THE LIGHT OF THE FACT THAT THE ASSESSMENTS H AVE BEEN SOUGHT TO BE REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE E ND OF EACH OF THE ASSESSMENT YEARS IN QUESTION, THE PROVISIONS OF SEC TION 147 OF THE ACT MANDATE THAT THE ASSESSING OFFICER SHALL BE VES TED WITH THE JURISDICTION TO INITIATE REASSESSMENT PROCEEDINGS O NLY IN CASE THERE 8 ITA NO. 3627/DEL/2011 8 IS ANY OMISSION OR FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND SUCH FAILURE SHOULD RE SULT IN INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. ON A PLAIN R EADING OF THE AFORESAID PROVISIONS AND THE REASONS RECORDED, IT B ECOMES CLEAR THAT THERE CANNOT BE ASCRIBED ANY FAILURE OR OMISSION TO THE PETITIONER SO AS TO VEST THE ASSESSING OFFICER WITH JURISDICTION TO REOPEN THE ASSESSMENTS WHICH WERE ALREADY FINALISED. IN THE CI RCUMSTANCES, FOR THE ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89 I N THE LIGHT OF THE FACT THAT THE INITIATION BY ISSUANCE OF IMPUGNE D NOTICES IS BEYOND THE PERIOD OF FOUR YEARS AND THE PREREQUISITE CONDI TIONS STIPULATED BY SECTION 147 OF THE ACT ARE NOT FULFILLED, THERE IS NO CASE MADE OUT FOR UPHOLDING THE PROPOSED REASSESSMENT. THE NOTICES FO R ALL THE FOUR YEARS ARE, THEREFORE, BAD IN LAW AND ARE QUASHED AN D SET ASIDE. 5.2 IN THE CASE OF DEVIDAYAL ROLLING MILLS & A NOTHER VS. Y.R.SAINI,ACIT,285 ITR 514,HONBLE BOMBAY HIGH COUR T HELD THAT WHERE AN ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT IS SOUGHT TO BE REOPENED BEYOND FOUR YEARS FROM THE END OF RELEV ANT ASSESSMENT YEAR, THE REVENUE MUST ESTABLISH THAT THERE WAS FAI LURE ON THE PART OF THE ASSSESSEE TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS RELEVANT FOR THE PURPOSES OF THE ASSESSMENT. 5.3 IN THE CASE OF MERCURY TRAVELS LTD. VS. DCIT & ANOTHER,258 ITR 533(CAL.), HONBLE HIGH COURT IN THE LIGHT OF FACTS OF THE CASE CONCLUDED THAT NO INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT FOR THOSE ASSESSMENT YEARS DUE TO FAILUR E OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ITS ASSESSMENT. 5.4 IN PRIYANKA CARBON & CHEMICAL INDUSTRIES ( P) LTD. VS. DCIT (2008) 15 DTR (GUJ.) 31, HONBLE HIGH COURT HELD T HAT WHEN FACTUAL DATA WAS AVAILABLE WITH THE AO AT THE TIME OF ASSES SMENT, ON THE SAME VERY MATERIAL, IF THE AO TAKES A DIFFERENT VIE W SUBSEQUENTLY AND THAT TOO AFTER EXPIRY OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR, THAT WOULD NOT CONFER ANY JURISDIC TION ON THE AO TO 9 ITA NO. 3627/DEL/2011 9 ISSUE NOTICE U/S 148 OF THE ACT. SIMILAR VIEW WAS T AKEN IN ACIT VS. JAGDISHBHAI NANUBHAI TEKRAWALA (2008) 12 DTR (GUJ) 270. 5.5 IN VARELI WEAVERS PVT. LTD. VS. DCIT (1999) 240 ITR 77 (GUJ) ALSO NOTICES UNDER SECTION 148 READ WITH SECTION 14 7 OF THE ACT WERE QUASHED BY THE HONBLE HIGH COURT, THERE BEING NO W HISPER IN THE REASONS RECORDED BY THE AO ABOUT FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS . 5.6 IN CIT VS. DCM LTD.,(2009) 24 DTR(DEL.) 72,H ONBLE JURISDICTIONAL HIGH COURT FOUND THAT THERE WAS NO ALLEGATION IN THE REASONS RECORDED BY THE AO THAT THE ASSESSEE HAD FA ILED TO FILE ITS RETURN OR THAT IT HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN ITS RETURN NOR WAS THERE ANY ALLEGATION BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN ITS RETURN OF INCOME NOR EVEN THERE WAS ANY ALLEGATION REGARDING ESCAPEMENT OF INCOME. IN THESE CIRCUMSTAN CES ,HONBLE HIGH COURT UPHELD THAT FINDINGS OF THE TRIBUNAL THA T NOTICE U/S 148 OF THE ACT ,HAVING BEEN ISSUED AFTER FOUR YEARS, THE R EOPENING OF THE ASSESSMENT WAS NOT VALID. 5.7 IN CIT & ANOTHER VS. FORAMER FRANCE, 264 ITR 566 (SC),HONBLE APEX COURT UPHELD THE ORDER OF THE HON BLE DELHI HIGH COURT IN CONCLUDING THAT WHEN THERE WAS ADMITTEDLY NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, TH E PROVISO TO THE NEW SECTION 147 OF THE ACT SQUARELY APPLIED, AND TH E IMPUGNED NOTICES WERE BARRED BY LIMITATION MENTIONED IN THE PROVISO. 5.8 IN SUPREME TRAVELS (P) LTD. VS. DCIT, 182 TAXMAN 216(BOM.), HONBLE BOMBAY HIGH COURT HELD THAT THE ASSESSING OFFICER CAN REOPEN THE ASSESSMENT ONLY IF THE INGRE DIENTS OF SECTION 147 ARE FULFILLED. 10 ITA NO. 3627/DEL/2011 10 5.9 IN GUJARAT CARBON AND INDUSTRIAL LTD. VS. JT. CIT [2008] 307 ITR 271 (GUJ),HONBLE HIGH COURT IN THE ABSENCE OF ANY FAILURE ON PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MAT ERIAL FACTS RELEVANT FOR THE ASSESSMENT OF THE ASSESSMENT YEAR IN QUESTION, CONC LUDED THAT THE IMPUGNED NOTICE UNDER S. 148 ISSUED BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IS REQUIRED TO BE QUASHED . 5.10 LIKEWISE IN GUJRAT FLUOROCHEMICALS LTD. VS . DCIT [2009] 319 ITR 282 (GUJ), HONBLE HIGH COURT CONCLUDED THAT THE ASSESSEE HAVING MADE FULL DISCLOSURE OF MATERIAL FACTS IN TH E RETURN WHICH WAS ACCOMPANIED BY SEVERAL ENCLOSURES, ASSESSMENT COULD NOT BE REOP ENED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR FOR TH E REASON THAT CERTAIN INCOME HAS BEEN WRONGLY ASSESSED UNDER THE HEAD CAPITAL G AINS INSTEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION. 5.11 IN NIKHIL K KOTAK VS. MAHESH KUMAR , AO [2009] 319 ITR 445 (GUJ) ALSO IT WAS HELD THAT IN THE ABSENCE OF ANY A VERMENT OF THE REVENUE THAT THERE WAS ANY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSES SMENT OF THE ASSESSMENT YEAR IN QUESTION, IMPUGNED NOTICE UNDER S. 148 ISSUED BEYON D A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS BAD IN LAW AND WITHOUT JURISDICTION. 5.12 IN CADILA HEALTHCARE LTD. VS. DY. CIT [2010] 41 DTR 145 (GUJ), HONBLE HIGH COURT CONCLUDED THAT IN THE AB SENCE OF ANY AVERMENT IN THE REASONS RECORDED BY THE AO FOR REOP ENING THE ASSESSMENT THAT THE PETITIONER HAS FAILED TO DISCLOSE FULLY AND TRU LY ANY MATERIAL FACT NECESSARY FOR ITS ASSESSMENT FOR THE YEAR UNDER CONSIDERATION OR ANY NEW MATERIAL OR FACTS COMING TO THE NOTICE OF THE AO LEADING TO THE CONCL USION THAT INCOME HAD ESCAPED ASSESSMENT, THE INGREDIENTS OF THE PROVISO TO S. 147 ARE NOT SATISFIED AND, THEREFORE, ENTIRE PROCEEDINGS UNDER S. 147 INI TIATED PURSUANT TO THE 11 ITA NO. 3627/DEL/2011 11 IMPUGNED NOTICE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WERE WITHOUT JURISDICTION AND CANNO T BE SUSTAINED. 5.13 IN MIHIR TEXTILES LTD. VS. JT. CIT [2010] 4 3 DTR 11 (GUJ),HONBLE HIGH COURT HELD THAT THE PETITIONER HAVING SUBMITTED AUDITED BOOKS OF ACCOUNTS, P&L A/C, AND BALANCE SHE ET ALONG WITH NOTES AND ALSO MADE A SPECIFIC DISCLOSURE IN THE FORM OF A NOTE RE GARDING TRANSFER OF ITS UNDERTAKING, IT CANNOT BE SAID THAT THE PETITIONER IS GUILTY OF NOT MAKING FULL AND TRUE DISCLOSURE AND, THEREFORE, NOTICE UNDER S. 148 ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS QUASHED AND SET ASIDE. 5.14 IN HARYANA ACRYLIC MANUFACTURING CO.(SUPRA), RELIED UPON BY THE LD. AR, HONBLE JURISDICTIONAL HIGH COURT, INTE R ALIA, CONCLUDED AS UNDER: 20. IN THE REASONS SUPPLIED TO THE PETITIONER , THERE IS NO WHISPER, WHAT TO SPEAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FA ILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BE CAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED A BOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY T HE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, FULLY AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROV ISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE A ND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THA T THE REASONS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION . CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST T AKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECI SION IN WEL INTERTRADE (P.) LTD.',308 ITR 33(DEL.) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHA NIA,269 ITR 192 THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED TH AT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEWPOINT, WE HOLD THAT THE NOTICE DATED 29-3- 2004 UNDER SECTION 148 BASED ON THE RECORDED REASON S AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 2- 3-2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN BEYON D THE FOUR YEAR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE . 6. IN THE INSTANT CASE, AS IS APPARENT FROM TH E FACTS NARRATED IN THE IMPUGNED ORDERS, THE AO REOPENED THE ASSESSMENT COMPLETED 12 ITA NO. 3627/DEL/2011 12 ON 28.12.2006 MERELY ON THE BASIS OF FACTS ALREAD Y AVAILABLE BEFORE HIM AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. NOT EVEN A WHISPER IS EVIDENT FROM THE REASONS RECORDED OR T HE FACTS NARRATED IN THE IMPUGNED ORDERS AS TO WHETHER OR NOT THERE W AS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TR ULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. WE ARE OF THE OPINION THAT ANY SUCH FAILURE AS IS ENVISAGED IN THE PROVISO TO SEC. 147 OF THE ACT, IS A MATTER OF FACT ALONE AND THERE CAN BE NO DEEMED FAILURE . IN THESE CIRCUMSTANCES, IN ABSENCE OF ANY FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSID ERATION, THE NOTICE UNDER SECTION 148 OF THE ACT HAVING BEEN ISS UED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF TH E RELEVANT ASSESSMENT YEAR, THE VERY INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT STANDS VITIATED AND AS SUCH CANNOT B E SUSTAINED, THE INGREDIENTS OF SECTION 147 HAVING NOT BEEN FULFILL ED. IN VIEW OF THE FOREGOING, ESPECIALLY IN THE LIGHT OF CONSISTENT VI EW TAKEN IN AFORESAID DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT AND OTHER COURTS, CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE ARE OF THE OPINION THAT THERE IS NOTHING TO SUG GEST THAT ALL THE PRIMARY FACTS WERE NOT DISCLOSED BY THE ASSESSEE AT THE TIME OF ORIGINAL ASSESSMENT NOR ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS HAS BEEN ASCRIBED IN THE CIRCUMSTANCES NARRATED BEFORE US. IT CANNOT BE SAID THAT THE ASSESSEE SUPPRESSED ANY MATERIAL FACTS. IT IS WEL L-SETTLED THAT IF A NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 OF THE ACT BEING AVAILABLE TO THE AO, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WILL BE WITHOUT JURISDICTION AND THUS, LIABLE TO BE STRUCK DOWN . I N VIEW THEREOF, WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A) IN QUASHING THE REASSESSMENT ORDER .CONSEQUENTLY, GRO UND NOS. 2 & 2.1 IN THE APPEAL ARE DISMISSED. AS A COROLLARY, T HE GROUND NO. 3 IN THE 13 ITA NO. 3627/DEL/2011 13 APPEAL OF THE REVENUE DOES NOT SURVIVE FOR OUR ADJ UDICATION AND IS , THEREFORE, TREATED AS INFRUCTUOUS. 7. GROUND NO.1 BEING GENERAL IN NATURE NOR ANY SUBMISSIONS HAVING BEEN MADE ON THIS GROUND ,DOES NOT REQUIRE A NY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.4 IN THE APPEAL, ACCORDINGLY , THESE GROUNDS ARE DISMISSED. 8. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (C.L.SETHI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO: 1. M/S LEAR AUTOMOTIVE INDIA PVT. LTD..11A,1 ST FLOOR, SUCHETA BHAWAN (GATE NO.2),VISHNU DIGAMBAR MARG, NEW DELHI- 110002 2. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-4(1 ), ROOM NO. 407,4 TH FLOOR,CR BUILDING,NEW DELHI 3. CIT CONCERNED 4. CIT(A)-VII,NEW DELHI 5. DR, ITAT, DELHI BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD