The ITO, Ward-8(4), Surat V. M/s. Rameshwar Plywood Centre, Surat

ITA 3894/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8682 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 19-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: R N VEPARI
• Keywords: Depreciation; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 133A; 148; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, B-BENCH, AHMEDABAD. BEFORE: SHRI T K SHARMA, JUDICIAL MEMBER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) THE INCOME TAX OFFICER WARD-8(4), ROOM NO.418, AAYAKAR BHAWAN, MAJURA GATE, SURAT. VERSUS M/S. RAMESHWAR PLYWOOD CENTRE, 1, ANAND MANGAL APARTMENT, KATARGAM ROAD, SURAT. (APPELLANT) (RESPONDENT) PAN: AADFR 1414 L FOR THE APPELLANT: SMT. NEETA SHAH, SR. DR FOR THE RESPONDENT SHRI. R.N. VEPARI ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER): THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN LAW, IN ANNULLING THE O RDER OF ASSESSMENT DTD 29.12.2006 PASSED BY THE AO U/S. 14 3(3) R.W.S. 147 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN LAW, IN DELETING THE AD DITION OF RS.26,29,144/- MADE ON ACCOUNT OF NON-GENUINE PURCH ASES CLAIMED TO HAVE BEEN MADE FROM M/S. JAYSHREE TIMBER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN LAW, IN DELETING THE AD DITION OF RS.19,356/- MADE ON ACCOUNT OF EXCESSIVE PURCHASE C LAIMED TO HAVE BEEN MADE FROM M/S. RAJ LAMINATES. 2. THE FACTS OF THE CASE ARE THAT SURVEY UNDER SECT ION 133A WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 23-0 2-2000 ALONGWITH SURVEY AT SISTER CONCERN OF THE ASSESSEE VIZ. M/S. RAMESHWAR HARDWARE MART. DURING THE COURSE OF SURVEY THE ASSESSEE MAD E A DISCLOSURE OF 2 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) RS.1,77,140/-. HE IS CARRYING ON THE BUSINESS OF P URCHASE AND SALE OF PLYWOOD IN THIS CONCERN. THE ORIGINAL RETURN OF IN COME FOR THE ASSESSMENT YEAR 2000-2001 WAS FILED ON 27-10-2000 O N AN INCOME OF RS.27,095/- WHICH WAS FOUND TO BE BELOW THE AMOUNT OF CONCEALED INCOME DISCLOSED IN THE SURVEY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 15-07-2002 ON AN INCOME OF RS.36, 795/-. SUBSEQUENTLY, ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT ON THE GROUND THAT AMOUNT DISCLOSED DURING THE COURSE OF SURVEY HAS NOT BEEN DECLARED IN THE RETURN OF INCOME. THE ASSESSI NG OFFICER DURING THE COURSE OF REASSESSMENT PROCEEDINGS FOUND THAT ON TO TAL SALES OF RS.43,02,351/- A GP OF RS.1,75,406/- HAS BEEN DECLA RED GIVING A GP RATE OF 4.07%. HE ENQUIRED INTO THE PURCHASES MADE BY T HE ASSESSEE AND NOTICED PURCHASES OF RS.26,29,144/- MADE FROM JAYSH REE TIMBER FAKIRCHAND MUKHI ESTATE, OPPOSITE BEHRAMPURA MUNICI PAL SCHOOL, AHMEDABAD. THE ASSESSEE WAS REQUIRED TO FURNISH CO PIES OF ACCOUNT, PERMANENT ACCOUNT NUMBER AND OTHER IDENTIFICATION F ROM M/S. JAYSHREE TIMBERS, BUT NO DETAILS OR INFORMATION WAS SUBMITTE D. HE ACCORDINGLY TREATED THE PURCHASES FROM THIS PARTY AS NOT GENUIN E AND ACCORDINGLY MADE THE ADDITION. THE ASSESSING OFFICER RELIED ON SEVERAL AUTHORITIES AS MENTIONED BY HIM ON PAGE 3 OF THE ASSESSMENT ORDER. 3. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) NOTI CED THAT M/S. JAYSHREE TIMBERS BELONGED TO ONE JAYSHREE TEA INDUS TRY LIMITED BUT THEY HAVE CLOSED THEIR OPERATION IN AHMEDABAD. THE ASSE SSEE COULD NOT, THEREFORE, OBTAINED CONFIRMATION FROM THAT PARTY. SUBSEQUENTLY, DURING THE APPELLATE PROCEEDINGS, COPY OF ACCOUNT OF THE A SSESSEE DULY CERTIFIED BY M/S. JAYSHREE TIMBERS WAS FILED BY THE ASSESSEE BEFORE ASSESSING OFFICER ON 18-01-2007. A COPY OF THE SAME WAS ALSO SUBMITTED BEFORE LD. COMMISSIONER OF INCOME TAX(APPEALS). THE LD. C OMMISSIONER OF INCOME TAX(APPEALS) CALLED FOR THE COMMENTS OF THE ASSESSING OFFICER. 3 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) THE ASSESSING OFFICER THEREAFTER CALLED FOR BANK ST ATEMENT AND COPY OF ACCOUNT FROM THE BOOKS OF M/S. JAYSHREE TIMBERS. A LL THESE ACCOUNTS WERE EXAMINED AND FOUND TALLIED WITH THE BANK STATE MENT OF THE ASSESSEE. THE ASSESSING OFFICER NOTICED THAT M/S. JAYSHREE TI MBERS DID NOT PROVIDE COPIES OF SALE INVOICE AND TRANSPORT BILLS. IT WAS EXPLAINED BY THE ASSESSEE THAT AS OPERATIONS AT AHMEDABAD HAVE BEEN CLOSED, IT IS DIFFICULT TO OBTAIN COPIES OF THE SALE BILLS/TRANSPORT BILLS FROM KOLKATA. BUT, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) RELYING ON THE DOCUMENT SUBMITTED BY THE ASSESSEE ACCEPTED THE PURCHASES MA DE FORM M/S. JAYSHREE TIMBERS AS GENUINE AND DELETED THE ADDITIO NS. THE DEPARTMENT IS IN APPEAL AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) IN ANNULLING THE ASSESSMENT ON THE GRO UND THAT REOPENING IS BAD IN LAW AND ALSO ON MERITS THAT PURCHASES HAVE B EEN ACCEPTED AS GENUINE. 4. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VI EW, THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LD. COMMISSION ER OF INCOME TAX(APPEALS). THE DEPARTMENT HAS PROVIDED COPIES O F REASONS RECORDED FOR REOPENING OF THIS ASSESSMENT WHICH WE HAVE GONE THROUGH. WE NOTICE THAT INFORMATION WHICH WAS RECORDED ON THE REASONS WAS AVAILABLE ON RECORD. THERE IS NO MATERIAL TO SUGGEST THAT ASSES SING OFFICER HAS NOT CONSIDERED THEM WHILE PASSING ORIGINAL ASSESSMENT O RDER UNDER SECTION 143(3) ON 15-07-2002. IN OUR CONSIDERED VIEW THERE SHOULD BE SOME FRESH MATERIAL ON RECORD WHICH WAS NOT AVAILABLE BEFORE T HE ASSESSING OFFICER WHEN HE PASSED ORDER UNDER SECTION 143(3) SUGGESTIN G THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF OMISSION OR FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSED ANY MATERIAL FACT NECESSARY F OR ASSESSMENT. IF AT ALL THERE WAS FAILURE OR OMISSION IT WAS OF THE ASSESSI NG OFFICER WHO IGNORED OR FORGOT TO CONSIDER THE DISCLOSURE MADE BY THE AS SESSEE DURING THE COURSE OF SURVEY NOTWITHSTANDING THE FACT THAT NO ADDITION ON THIS ACCOUNT HAS BEEN 4 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) MADE BY ASSESSING OFFICER IN THE REASSESSMENT ORDER . THEREFORE, REOPENING OF THE ASSESSMENT ON THE GROUND OF ALLEGE D ESCAPEMENT OF INCOME RESULTING FROM SURRENDER MADE DURING THE COU RSE OF SURVEY BECOMES UNSUSTAINABLE, PARTICULARLY WHEN REASSESSME NT ORDER DOES NOT SPEAK OF ANYTHING ABOUT DISCLOSURE MADE DURING THE COURSE OF SURVEY. IT WOULD HAVE BEEN DIFFERENT MATTER IF DISCLOSURE MADE DURING THE COURSE OF SURVEY WOULD HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER, ADJUSTED AGAINST SOMETHING OR FOUND EXPLAINED ON THE BASIS O F EXPLANATION/MATERIAL SUBMITTED BY THE ASSESSEE DURING REASSESSMENT PROCE EDINGS AND FINALLY NO ADDITION IS MADE ON THAT POINT. BUT, REOPENING OF THE ASSESSMENT ON A GROUND WITHOUT ABSOLUTELY DISCUSSING THE SAME IN TH E REASSESSMENT ORDER WOULD MAKE THE REASON OF REOPENING AS HAVING NO LIV E LINK WITH THE ESCAPEMENT OF INCOME AS BELIEVED AT THE TIME OF REC ORDING THE REASONS. 5. REOPENING OF THE ASSESSMENT CANNOT BE MADE BY ME RELY ON THE BASIS OF CHANGE OF OPINION EVEN IF ASSESSMENT IS RE OPENED WITHIN 4 YEARS. THIS ASSESSMENT IS SOUGHT TO BE REOPENED AFTER 4 YE ARS (NOTICE UNDER SECTION 148 ISSUED ON 28-03-2006 FOR THE ASSESSMENT YEAR 2000-2001). THEREFORE, IN VIEW OF THIS THERE IS APPARENTLY A CH ANGE OF OPINION AS THERE IS NO FRESH MATERIAL AVAILABLE ON RECORD SUGGESTING ANY ESCAPEMENT OF INCOME. SUCH REOPENING COULD NOT BE UPHELD IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CALVINATOR OF INDIA LIMITE D [2010] 1 TAXMANN.COM 27 (SC) WHEREIN HON'BLE SUPREME COURT HELD AS UNDER: A SHORT QUESTION WHICH ARISES FOR DETERMINATION IN THIS BATCH OF CIVIL APPEALS IS, WHETHER THE CONCEPT OF 'CHA NGE OF OPINION' STANDS OBLITERATED WITH EFFECT FROM 1 ST APRIL, 1989, I.E., AFTER SUBSTITUTION OF SECTION 147 OF THE INCOME TAX A CT, 1961 BY DIRECT TAX LAWS (AMENDMENT) ACT, 1987? TO ANSWER THE ABOVE QUESTION, WE NEED TO NOTE THE C HANGES UNDERGONE BY SECTION 147 OF THE INCOME TAX ACT, 1961 [FOR SHORT, 'THE ACT']. PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1987, SECTION 147 READS AS UNDER: INCOME ESCAPING ASSESSMENT. 5 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) 147. IF-- [A] THE INCOME-TAX OFFICER HAS REASON TO BELIEVE TH AT, BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR T O THE INCOME- TAX OFFICER OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR, OR [B] NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTIONED IN CLAUSE (A) ON THE PART OF THE ASSESSEE, THE INCOME- TAX OFF ICER HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME OR RECO MPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE, AS THE CASE MAY BE, F OR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN SECTIONS 1 48 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR).' AFTER ENACTMENT OF DIRECT TAX LAWS (AMENDMENT) ACT, 1987, I.E., PRIOR TO 1ST APRIL, 1989, SECTION 147 OF THE ACT, READS AS UNDER : '147. INCOME ESCAPING ASSESSMENT.-- IF THE ASSESSING O FFICER, FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OP INION THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS O F SECTIONS 148 TO153, ASSESS OR REASSESS SUCH INCOME AND ALSO AN Y OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMEN T AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE LOS S OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE C ASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASS ESSMENT YEAR).' AFTER THE AMENDING ACT, 1989, SECTION 147 READS AS UNDER: 'INCOME ESCAPING ASSESSMENT. IF THE ASSESSING OFFIC ER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT T O THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSES S SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WH ICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION , OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLO WANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (H EREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR).' ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO S ECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX LAW S (AMENDMENT) ACT, 1987, RE-OPENING COULD BE DONE UNDER A BOVE TWO CONDITIONS AND FULFILLMENT OF THE SAID CONDITIONS ALONE 6 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT [WITH EFFE CT FROM 1ST APRIL, 1989], THEY ARE GIVEN A GO BY AND ONLY ONE COND ITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO RE-OPEN THE ASSESSMENT. THEREFORE,POST-1 ST APRIL,1989, POWER TO RE-OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SC HEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAI LING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE-OPEN ASSESSMENTS ON THE BA SIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE-OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE B ETWEEN POWER TO REVIEW AND POWER TO RE-ASSESS. THE ASSESSIN G OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE-ASSE SS. BUT RE- ASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CON TENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE -OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT T HE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1-4-1989, ASSES SING OFFICER HAS POWER TO RE-OPEN, PROVIDED THERE IS 'TANG IBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT O F INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FO RMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT,1987, PARLIAMENT NOT ONLY DELE TED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RECE IPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT RE-INTRODUCED T HE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GRO UND THAT IT WOULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICE R. WE QUOTE HEREIN BELOW THE RELEVANT PORTION OF CIRCULAR NO.549 DATED 31ST OCTOBER, 1989, WHICH READS AS FOLLOWS: '7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION `REASON TO BELIEVE' IN S ECTION 147.A NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST TH E OMISSION OF THE WORDS `REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE `OPINION' OF THE ASSESSING OFFI CER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, `REA SON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOU LD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY TH ESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION `HAS REASON TO BELIEVE' IN PLACE OF THE WORDS `FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION'. OTHER PROVISIONS OF THE NEW SECTION 147, HO WEVER, REMAIN THE SAME.' 7 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) FOR THE AFORE-STATED REASONS, WE SEE NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT, HENCE, DISMISSED W ITH NO ORDER AS TO COSTS. 6. THIS JUDGMENT WAS FOLLOWED BY HON'BLE BOMBAY HIG H COURT IN PURITY TECHTEXTILE PVT. LTD. V. ACIT IN WRIT PETITION NO. 268 & 269 OF 2010, PRONOUNCED ON FEBRUARY 8, 2010, WHEREIN HON'B LE BOMBAY HIGH COURT HELD AS UNDER: 12. SECTION 147 PROVIDES THAT IF THE ASSESSI NG OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 163 AS SESS OR RE ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGE ABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. UNDER THE FIRST PROVISO, WHERE AN AS SESSMENT HAS BEEN MADE UNDER SECTION (3) OF SECTION 143 O R SECTION 147 FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION C AN BE INITIATED UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE I NCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE OF THE ASSESSEE INTER ALIA TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. THE JURISDICTIONAL CONDITION UNDER SECTI ON 147 IS THE FORMATION OF BELIEF BY THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE REASONS WHICH ARE RECORDED BY TH E ASSESSING OFFICER ARE CRUCIAL AND IT IS ON THE BASIS OF THOSE REASONS ALONE THAT THE VALIDITY OF THE ORDER REOPENIN G AN ASSESSMENT HAS TO BE DECIDED. WHERE AN ASSESSMENT HAS BEEN MADE UNDER SECTION 143(3), ACTION CAN BE INITIATED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IF THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T BECAUSE OF THE FAILURE OF THE ASSESSEE TO MAKE FULLY AN D TRULY A DISCLOSURE OF THE MATERIAL FACTS. THE PROVISIONS OF SEC TION 147 HAVE BEEN INTERPRETED IN A RECENT JUDGMENT OF THE SUPREME C OURT IN COMMISSIONER OF INCOME TAX V/S. KELVINATOR OF I NDIA LIMITED.1 THE SUPREME COURT NOTED THAT AFTER 1 ST APRIL 1989 THE POWER TO REOPEN IS MUCH WIDER THAN EARL IER SINCE THE SUBSTANTIVE PART OF SECTION 147 ONLY IMPOSES O NE CONDITION 8 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) NAMELY THAT THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE SUPREM E COURT HELD THAT NONETHELESS, A MERE CHANGE OF OPINION WOU LD NOT JUSTIFY THE EXERCISE OF THE POWER TO RE OPEN AN AS SESSMENT AND THERE MUST BE TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASS ESSMENT. THE SUPREME COURT HELD THUS : ......., ONE NEEDS TO GIVE A SCHEMATIC INTER PRETATION TO THE WORDS REASON TO BELIEVE FAILING WHICH, WE A RE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWER S TO THE ASSESSING OFFICER TO RE OPEN ASSESSMENTS ON T HE BASIS OF MERE CHANGE OF OPINION , WHICH CANNOT BE PER SE REASON TO RE OPEN. WE MUST ALSO KEEP IN MIND THE CONC EPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE AS SESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE ASSESS. BUT RE ASSESSMENT HAS TO BE B ASED ON FULFILLMENT OF CERTAIN PRE CONDITION AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE OPENING TH E ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN IN BUI LT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HE NCE, AFTER 1ST APRIL , 1989, ASSESSING OFFICER HAS POWER TO RE - OPEN, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK W ITH THE FORMATION OF THE BELIEF. 7. ACCORDINGLY, THERE BEING A CHANGE OF OPINION, T HE ASSESSMENT COULD NOT BE HELD TO BE VALIDLY REOPENED. THEREFOR E THIS GROUND OF THE REVENUE IS REJECTED. 8. ON MERIT WE UPHOLD THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) AS HE HAS RELIED UPON THE DOCUMENT SUB MITTED BY THE ASSESSEE IN THE FORM OF COPY OF ACCOUNT OF THE ASSE SSEE IN THE BOOKS OF M/S. JAYSHREE TIMBER AND ALSO THE BANK STATEMENT OF M/S. JAYSHREE TIMBER AND OF THE ASSESSEE, FROM WHERE THE TRANSACT IONS WERE VERIFIED. IT IS NOT VERY CRUCIAL THAT SALE BILLS ARE NOT PRODUCE D. THE NON PRODUCTION OF 9 ITA NO.3894/AHD/2007 (ASSESSMENT YEAR 2000-2001) SALE BILL WOULD IMPORTANT IF TRANSACTIONS WERE OTHE RWISE NOT VERIFIABLE WITH THE HELP OF BANK STATEMENTS AND BOOKS OF ACCOU NTS OF THE ASSESSEE. THEREFORE IT CANNOT BE HELD THAT PURCHASES MADE BY THE ASSESSEE FROM JAYSHREE TIMBER WERE NOT GENUINE. IN ADDITION TO THIS, WE ALSO UPHELD THE ARGUMENTS OF LEARNED AUTHORISED REPRESENTATIVE THAT ONCE QUANTITIES OF PURCHASE ARE INCLUDED IN SALES OR IN CLOSING STO CK AGAINST WHICH THERE IS NO DOUBT THEN ENTIRE PURCHASE AMOUNT CANNOT BE ADDE D. 9. NOTWITHSTANDING, WE UPHOLD THE ANNULLING THE REO PENING OF THE ASSESSMENT AND ACCORDINGLY, WE DISMISS THE APPEAL F ILED BY THE REVENUE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 26 TH MARCH, 2010. SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 26/03/2010 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.