Greater Mohali Area Development Authority, Mohali V. DCIT, Mohali

ITA 410/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6505 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 03-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Keywords: Depreciation; Application of stay; Extension of stay; Tangible material; Difference of opinion; Competent authority; Assessment record; Capital receipt; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.410/CHD/2013 (ASSESSMENT YEAR : 2008-09) GREATER MOHALI AREA VS. THE D.C.I.T, DEVELOPMENT AUTHORITY, CIRCLE 6(1), MOHALI. MOHALI. PAN: AAALG0872G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : DR. GULSHAN RAJ, ADDL.CIT DR DATE OF HEARING : 03.10.2017 DATE OF PRONOUNCEMENT : 28.12.2017 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL FILED BY THE ASSESSEE HAS BEEN PREFERRE D AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-2, CHANDIGARH DATED 30.1.2017 RELATING TO ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS ALSO FIL ED AN APPLICATION FOR EXTENSION OF STAY ALONGWITH THE MAI N APPEAL.SINCE WE HAVE HEARD THE APPEAL ,WE INTEND TO ADJUDICATE THE SAME FIRST. 2. BRIEFLY STATED REASSESSMENT PROCEEDINGS WERE INI TIATED U/S 148 OF THE INCOME TAX ACT,1961 IN THE CASE OF T HE ASSESSEE AND ADDITION MADE TO THE INCOME OF THE ASS ESSEE ON ACCOUNT OF EXTERNAL DEVELOPMENT CHARGES (HEREINA FTER REFERRED TO AS EDC CHARGES) RECEIVED DURING THE YEA R AMOUNTING TO RS. 1,59,61,85,128/-, HOLDING THE SAME TO BE ATTRIBUTABLE TO THE REGULAR BUSINESS OF THE ASSESSE E, BEING 2 REGULAR AND RECURRING RECEIPTS AND, THEREFORE REVE NUE IN NATURE, AS OPPOSED TO BEING REFLECTED AS A LIABILIT Y BY THE ASSESSEE IN ITS BALANCE SHEET. 3. BEFORE THE LD.CIT(APPEALS) THE ASSESSEE CHALLENG ED THE ORDER OF THE ASSESSING OFFICER, RAISING BOTH LEGAL CONTENTIONS AGAINST THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER TO FRAME ASSESSMENT U/S 147 OF TH E ACT AND ALSO ON THE MERITS OF THE CASE, BOTH OF WHICH W ERE DISMISSED BY THE LD.CIT(APPEALS). 4. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING EFFECTIVE G ROUNDS: 2. (A). THAT THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING ORDER U/S 143(3) R.W.S. 147 OF INCO ME TAX AS ALL THE FACTS RELATING TO EXTERNAL DEVELOPMEN T CHARGES OF RS.159,61,85,128.00 WERE FULLY & TRULY DISCLOSED & DISCUSSED AT THE TIME OF SCRUTINY ASSESSMENT U/S 143(3) OF INCOME TAX. (B). NOT WITH STANDING OF GROUND NO.1 THAT THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE ADDITION OF RS.159,61,85,128.00 ON ACCOUNT OF EXTERNAL DEVELOPMENT CHARGES AS IT IS NEITHER INCOME N OR CAPITAL RECEIPT OF THE ASSESSEE BUT IS A DEPOSIT ON BEH ALF OF PUNJAB GOVT. HENCE ADDITION MADE IS LIABLE TO BE DELETED. 5. GROUND NO.2(A) IS A LEGAL GROUND RAISED BY THE ASSESSEE, ASSAILING THE ACTION OF THE LD.CIT(APPEAL S) IN UPHOLDING THE VALIDITY OF THE ORDER PASSED U/S 148 OF THE ACT. 6. AS STATED ABOVE, THE IMPUGNED ORDER HAS BEEN PAS SED U/S 147 OF THE ACT. REASONS FOR REOPENING THE CASE WERE DULY RECORDED AND PROVIDED TO THE ASSESSEE, OBJECTI ONS TO 3 THE SAME WERE FILED BY THE ASSESSEE WHICH WERE DIS POSED OFF BY WAY OF A SPEAKING ORDER. 7. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE CONTEND ED THAT THE RE-ASSESSMENT PROCEEDINGS WERE BAD SINCE R EQUISITE CONDITIONS FOR THE ASSUMPTION OF JURISDICTION IN TH E PRESENT CASE HAD NOT BEEN FULFILLED. IT WAS POINTED OUT TH AT NOTICE U/S 148 IN THE PRESENT CASE HAD BEEN ISSUED AFTER T HE END OF FOUR ASSESSMENT YEARS FROM THE RELEVANT ASSESSME NT YEAR AND INITIALLY ASSESSMENT U/S 143(3) HAD BEEN FRAMED IN THE CASE OF THE ASSESSEE AND THAT THEREFORE AS PER THE FIRST PROVISO TO SECTION 147 OF THE ACT, THE RE-ASSESSMEN T IN SUCH CASE COULD BE RESORTED TO ONLY IF THE INCOME CHARGE ABLE TO TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF ANY OF THE FOLLOWING FAILURES: A) MAKING RETURN U/S 139 OR IN RESPONSE TO NOTICE U/S 142 OR NOTICE U/S 148. B) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 8. THEREAFTER IT WAS POINTED OUT THAT THE ASSESSEE HAD FILED RETURN U/S 139 OF THE ACT WITHIN THE PRESCRIB ED TIME AND NO NOTICE U/S 142 OR 148 OF THE ACT WAS ISSUED TO IT AND FURTHER DURING ASSESSMENT PROCEEDINGS ALL MATER IAL FACTS RELATING TO EDC CHARGES HAD BEEN DISCLOSED BY THE ASSESSEE BY WAY OF CLEARLY DISCLOSING THE SAME IN I TS BALANCE SHEET AND ALSO BY WAY OF DETAIL OF OTHER L IABILITY SUBMITTED DURING ASSESSMENT PROCEEDINGS. IT WAS FU RTHER CONTENDED THAT THERE WAS NO NEW MATERIAL IN THE POS SESSION 4 OF THE ASSESSING OFFICER AND THE REOPENING WAS ONLY ON ACCOUNT OF CHANGE OF OPINION ON THE SAME SET OF FAC TS WHICH WAS NOT WARRANTED AS PER LAW. 9. THE LD.CIT(APPEALS) REJECTED THE CONTENTION OF T HE ASSESSEE STATING THAT THE REPLY FILED BY THE ASSESS EE DURING ASSESSMENT PROCEEDINGS GIVING BREAK-UP OF THE OTHER LIABILITIES WHICH INCLUDED EDC CHARGES AND ON WHICH NO FURTHER QUESTIONS WAS ASKED BY THE ASSESSING OFFICE R, NOR ANY FURTHER SUBMISSIONS MADE WITH REGARD TO THE NAT URE OF THESE RECEIPTS, COULD NOT BE SAID TO BE DISCLOSURE OF ALL MATERIAL FACTS RELATING TO THE EDC CHARGES BY THE A SSESSEE. THE CIT(APPEALS), THEREFORE, HELD THAT THE ASSESSIN G OFFICER HAD RIGHTLY INVOKED THE PROVISIONS OF SECTION 147 O F THE ACT SINCE NO VIEW WAS MADE AT THE TIME OF ASSESSMENT PROCEEDINGS ON THIS ISSUE AND THE ASSESSEE HAD FAIL ED TO DISCLOSE MATERIAL FACTS PERTAINING TO THE ISSUE. T HE RELEVANT FINDINGS OF THE LD.CIT(APPEALS) AT PARAS 5.3 AND 5. 3.1 OF THE ORDER ARE AS UNDER: 5.3 SUBMISSION OF THE APPELLANT, ARGUMENTS OF ASSE SSING OFFICER AND THE MATERIAL ON RECORD HAVE BEEN CAREFUL LY CONSIDERED. IN THIS CASE IT IS SEEN THAT AT TIME OF SC RUTINY ASSESSMENT U/S 143(3), ASSESSING OFFICER ISSUED A GEN ERAL QUESTIONNAIRE DATED 23.08.2010 ASKING FOR THE DETAI LS OF 'OTHER LIABILITIES' AMOUNTING TO RS. 449.29 CRORES. THIS WAS A GENERAL QUESTIONER CONSISTING OF 20 QUESTIONS TO THE APPELLAN T. ASSESSING OFFICER SUBMITTED THE BREAKUP OF THESE LI ABILITIES IN WHICH EXTERNAL DEVELOPMENT CHARGES OF RS 225.13 CRORES IS ONE OF THE ITEMS AND THE OTHERS BEING CHANGE OF LAN D USE AND LICENSE FEES. NO FURTHER QUESTION WAS ASKED BY THE ASSESSING OFFICER ON EXTERNAL DEVELOPMENT CHARGES NO R ANY SUBMISSIONS WITH REGARD TO THE NATURE OF THESE RECEIP TS WERE FILED BY THE ASSESSEE AND THE ASSESSING OFFICER PAS SED THE ORDER U/S 143(3) WITHOUT MAKING ANY VIEW ON THE EXT ERNAL CHARGES AND NO DISCUSSION WAS MADE IN THE ASSESSMEN T ORDER. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS DISC LOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR 5 THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER HAS THEREFORE, RIGHTLY INVOKED THE PROVISIONS OF SECTION 147 IN THIS CASE AS NO PERMISSIBLE VIEW WAS MADE AT THE T IME OF ASSESSMENT PROCEEDINGS ON THIS ISSUE. IT CANNOT BE SAID A CHANGE OF OPINION. SUPPORT IS DRAWN FROM THE JUDGEM ENT OF HON'BLE ITAT KOLKATA BENCH IN THE CASE OF SOM DUTT BU ILDERS (P) LTD. 98 ITD 78. THE ASSESSEE IN THIS CASE HAS ONL Y PRODUCED THE BOOKS OF ACCOUNTS AND FOR THAT MATTER THE BALANCE SHEET AND P&L ACCOUNT WHICH WILL NOT NECESSA RILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF PROVISO TO SEC. 147. HON'BLE BOMBAY HIGH COURT IN THE CASE OF DR. AMIN'S PATHOLOGY LABORATORY (2001) 252 ITR 673 HAVE HELD THAT ' UNDER EXPLANATION I TO SECTION 147 MERE PRODUCTION OF ACCOU NT BOOKS FROM WHICH MATERIAL EVIDENCE COULD HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITH IN THE MEANING OF THE PROVISO TO SECTION 147. I N THAT VIEW OF THE MATTER MERE PRODUCTION OF THE BALANCE SHEET PROFIT AND LOSS ACCOUNT OR ACCOUNT BOOKS WILL NOT NECESSARILY AM OUNT TO DISCLOSURE WITHIN THE MEANING OF THE SAID PROVISO'. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY HON'BLE BOMBAY HIGH COURT IN THE CASE CITY BANK NA (2002) 257 ITR 661 WHICH WAS CONFIRMED BY HON'BLE SUPREME COURT. IN THIS CASE IT HAD BEEN HELD AS UNDER:- ' AS CONTEMPLATED IN EXPLANATION 1 TO SECTION 147 M ERE PRODUCTION OF EVIDENCE BEFORE THE OFFICER IS NOT EN OUGH. THERE MAY BE OMISSION OR FAILURE TO MAKE A TRUE AND FULL DISCLOSURE IF SOME MATERIAL FOR THE ASSESSMENT LAY EMBEDDED IN THE EVIDENCE WHICH THE REVENUE COULD HAV E UNCOVERED BUT DID NOT THEN IT IS THE DUTY OF THE AS SESSEE TO BRING IT TO THE NOTICE OF THE ASSESSING AUTHORITY . IF THERE ARE SOME PRIMARY FACTS FROM, WHICH A REASONABLE BELIEF COULD BE FORMED THAT THERE WAS SOME NON DISCLOSURE OR FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS THE OFFICER HAS JURISDICTION TO REOPEN THE ASSESSMENT'. 5.3.1 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT A SSESSEE DOES NOT DISCLOSE FULLY AND TRULY ALL MATERIAL NECESSARY F OR ASSESSMENT FOR THE RELEVANT YEAR AND THEREFORE REASS ESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY I SSUE OF NOTICE U/S 148 IS AS PER THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT 1961 AND THE REOPENING IS UPHELD. GROUNDS O F APPEAL NO. 1 IS DISMISSED. 10. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REITERA TED THE CONTENTIONS MADE BEFORE THE LD.CIT(APPEALS) CONTEND ING THAT THE ASSUMPTION OF JURISDICTION BY THE ASSESSIN G OFFICER TO FRAME ASSESSMENT U/S 147 WAS BAD SINCE THE BASIC CONDITIONS FOR ASSUMING JURISDICTION HAD NOT BEEN F ULFILLED IN THE PRESENT CASE ON ACCOUNT OF THE FOLLOWING: 6 A) ALL FACTS REGARDING EDC WERE ALREADY AVAILABLE WITH THE ASSESSING OFFICER IN THE FORM OF BALANCE S HEET AND VARIOUS ANNEXURES DEPICTING EDC CHARGES, AS ALS O DETAIL FILED DURING ASSESSMENT PROCEEDINGS OF OTHE R LIABILITIES DISCLOSING SO. NO NEW INFORMATION HAD COME IN THE POSSESSION OF THE ASSESSING OFFICER THEREFOR E, THE RE-OPENING TANTAMOUNTED TO CHANGE OF OPINION ON THE SAME SET OF FACTS. B) THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACTS PERTAINING TO THE EDC C HARGES WHICH IS AN ESSENTIAL PRE-REQUISITE FOR ASSUMING JURISDICTION TO REOPEN THE CASE BEYOND FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR WHEN ORIGIN ALLY ASSESSMENT U/S 143(3) HAS BEEN FRAMED. THE ASSESSE E FILED A BRIEF SYNOPSIS OF ITS ARGUMENTS BY AS UNDER : 1. AT THE OUTSET IT IS SUBMITTED THAT THE RE-OPENING OF TH E CASE U/S 148 IS BAD IN LAW DUE TO THE FOLLOWING FACTS: CHANGE OF OPINION BY SUCCESSOR AO ON SAME FACTS. ALL FACTS REGARDING THE EXTERNAL DEVELOPMENT CHARGES WE RE ALREADY AVAILABLE WITH THE DEPARTMENT AT THE TIME OF F RAMING THE ASSESSMENT U/SEC 143(3) OF THE ACT AND THE BALAN CE SHEET AND VARIOUS ANNEXURES DEPICTED SUCH EDC . COMPLETE DETAILS WERE FILED DURING THE ORIGINAL ASSESSM ENT PROCEEDINGS. THERE IS NO FAILURE ON THE PART OF THE ASSESSEE. 2. THE DETAILS WHICH WERE FILED DURING THE COURSE OF ORIGINAL ASSESSMENT ARE AS FOLLOWS: A. COPY OF BALANCE SHEET OF THE ASSESSEE, WHEREIN TH E EXTERNAL DEVELOPMENT CHARGES TO THE TUNE OF RS. 225,13,21,378/- WE RE CLEARLY REFLECTED. (PB AT PAGE- 1) B. QUESTIONNAIRE DATED 17.08.2010, WHEREIN THE AO HAS SPECIFICALLY ASKED TO PROVIDE THE DETAILS FOR EACH ACC OUNT 7 AMOUNTING TO RS. 4624742028.73/- UNDER THE HEAD OTHER LIABILITIES. (PB PG-2-5, SPECIFIC REFERENCE PG-3) C. REPLY DATED 12.10.2010 (ENCLOSED AT PAGE-6-13 OF PB) WHEREIN DETAILS WITH RESPECT TO BREAKUP OF THE CURRE NT LIABILITIES AMOUNTING TO RS. 449.29CRF HAS BEEN ENUMER ATED. (SPECIFIC REFERENCE PAGE 9). IT IS CLEARLY MENTIONED THAT THE EDC CHARGES ARE TO THE TUNE OF RS. 225.13CR, CHANGE O F LAND USE CHARGES- RS. 98.49CR AND LICENSE FEES ARE TO THE TUNE OF RS.125.67CR. 3. ASSESSMENT ORDER U/SEC 143(3) AT PAGE 14-36, RELEVANT PAGE IS PAGE 15 WHEREIN THE AO HAS SPECIFICALLY MENTIONED AS FOLLOWS: FROM THE DETAILS FILED BY THE ASSESSEE AND THE RECOR D AVAILABLE, CERTAIN ISSUES EMERGED. SOME OF THEM WERE RESOLVED DURING HEARING AND BY FURNISHING REQUISITE INFORMATION AND DETAILS BY THE ASSESSEE. SOME OF THEM WHICH WERE NOT FOUND IN COHERENCE WITH THE RETURN O F INCOME FILED BY THE ASSESSEE AND FURTHER SUBMISSIONS ARE DISCUSSED HERE ALONG WITH THE TREATMENT GIVEN TO THOS E ISSUES. 4. COPY OF REASONS FOR THE RE-OPENING OF THE CASE AR E PLACED IN THE PB AT PAGE- 39-40 . FROM THE REASONS AS RECORDED BY THE AO, IT IS CLEAR THAT THE ONLY REASON FOR THE RE-OPENING OF THE CASE IS WITH REGARD TO TREATMENT OF EDC IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 5. THE ASSESSEE DURING THE COURSE OF RE-ASSESSMENT P ROCEEDINGS HAD ALSO FILED HIS OBJECTIONS (PB AT PAGE-41-63) FOR THE RE- OPENING OF THE CASE AND THE LD. AO REJECTED SUCH OBJECTIONS. 6. FROM A BARE PERUSAL OF THE REASONS, IT IS VERY CLEAR THAT THERE IS NO FRESH MATERIAL WITH THE ASSESSING OFFICER TO JU STIFY THE REOPENING OF THE ASSESSMENT AND WHICH IS EVIDENT FR OM THE COPY OF THE REASONS AND FOLLOWING FEW SALIENT POINTS NEED Y OUR KIND CONSIDERATION:- A). IN THE REASONS AT PAGE 39, IT HAS BEEN MENTIONED IN IST PARAGRAPH ( DURING PERUSAL OF RECORDS IN THIS CASE ), MEANING THEREBY THAT NO NEW MATERIAL OR INFORMATION HAS BEEN RECEIVED BUT IT IS REAPPRAISAL FROM THE INFORMAT ION ALREADY IN THE FILE. B). IN PARA-2, THERE IS DETAIL WITH REGARD TO EDC AND HOW, THEY ARE COLLECTED, WHICH WAS IN THE KNOWLEDGE OF THE EARLIER AS SESSING OFFICER ALSO, HAVE BEEN MENTIONED AND, AS SUCH, EVERYTH ING IS BORNE OUT FROM THE RECORDS. C). THEN AGAIN CERTAIN OBSERVATIONS HAVE BEEN MADE THAT HOW THAT LIABILITY OF EDC HAS BEEN REFLECTED IN THE BALANCE SH EET AND, THUS, EVERYTHING IS BORNE OUT FROM THE RECORDS. D). THEN AT PAGE 40, IT HAS BEEN MENTIONED THAT AFT ER INDEPENDENT VERIFICATION OF RECORDS WITH RESPECT TO THE 8 ABOVE MENTIONED FACTS, I HAVE REASONS TO BELIEF THAT AN INCOME OF RS. 1,59,61,85,128/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. THUS, THIS REMARK SHOWS THAT IT IS MERELY A CHANGE OF OPIN ION AND FROM THE APPRAISAL OF THE SAME RECORD, A DIFFERENT CO NCLUSION HAS BEEN SOUGHT TO BE DRAWN AND WHICH IS NOT PERMISSIBLE. E). IT HAS BEEN MENTIONED IN THE LAST PARA THAT T HERE IS FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL THE MATERIAL FACTS RELATING TO ITS INCOME. IT IS SUBMITTED TH AT THERE IS NO FAILURE ON THE PARTY OF THE ASSESSEE AND EACH AND EVERYTHING IS BORNE OUT FROM THE BALANCE SHEET, QUE STIONNAIRE AND DETAILED SUBMISSIONS AND THIS FINDING IS ALSO NOT A CORRECT FINDING. 7. FROM THE ABOVE FACTS IN THE CASE OF THE ASSESSEE , IT IS VERY MUCH CLEAR THAT THE RE-OPENING OF THE CASE IS MERE TH E CHANGE OF OPINION ON THE PART OF THE AO AS THE MATTER HAS ALREADY BEEN CONSIDERED DURING THE COURSE OF ORIGINAL ASSESS MENT PROCEEDINGS. 8. THE CASE OF THE ASSESSEE HAS BEEN RE-OPENED AFTE R FOUR YEARS AND IT HAS BEEN CLEARLY LAID DOWN IN THE ACT ITSELF T HAT THE CASE CANNOT BE RE-OPENED BEYOND FOUR YEARS, UNLESS THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE. 9. IN THE CASE OF THE ASSESSEE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE AS THE ASSESSEE HAS DULY FIELD THE COMP LETE DETAILS WITH REGARD TO EDC AND IT WAS ONLY AFTER THE AO BEING CONVINCED THAT NO ADVERSE REMARK WAS MADE BY THE AO DURING THE 143(3) PROCEEDINGS. 10.WE RELY ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS WHERE IN IT HAS BEEN CLEARLY HELD THAT THE RE-OPENING ON THE BASIS OF CHANGE OF OPINION IS BAD IN LAW SPECIALLY WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE (BEYOND 4 YEARS). A) BBF INDUSTRIES VS JCIT OF INCOME TAX (OSD) IN I TA NO. 1162/CHD/2012 CHANDIGARH BENCH. (PAGES 1-51, RELEVANT PAGE 12-13 OF JUDGMENT SET) B) GUJARAT LEASE FINANCING LTD. V/S DEPUTY COMMISSIO NER OF INCOME TAX 360 ITR 496 GUJ-HC (PAGES 52-57, RELEVANT PAGE 53 OF JUDGMENT SET) C) GENERAL MOTORS INDIA PVT. LTD. V/S DEPUTY COMMISSIO NER OF INCOME TAX 360 ITR 527 GUJ-HC (PAGES 58-62, RELEVANT PAG E 59 OF JUDGMENT SET) D) JASHAN TEXTILE MILLS (P) LTD. V/S DEPUTY COMMISSIONER OF INCOME TAX 284 ITR 542 BOM-HC (PAGES 63-67, RELEVANT PAGE 64 OF JUDGMENT SET) E) G N SHAW (WINE) (P) LTD V/S INCOME TAX OFFICER 260 ITR 513 CAL-HC (PAGES 68-71, RELEVANT PAGES 68-69 OF JUDGMENT SET) 9 F) HARYANA ACRYLIC MANUFACTURING CO. V/S COMMISSIONE R OF INCOME TAX 308 ITR 38 DEL-HC (PAGES 72-78, RELEVANT PAGE S 72,75 & 76 OF JUDGMENT SET) G) SUN PHARMACEUTICAL INDUSTRIES LTD. V/S DY COMMISSIONER O F INCOME TAX 381 ITR 387 DEL-HC (PAGES 79-82, RELEVANT PAGES 79, 80 & 81 OF JUDGMENT SET) H) MAHAVIR SPINNING MILLS LTD. V/S COMMISSIONER OF INC OME TAX 270 ITR 290 P&H-HC (PAGES 83-87, RELEVANT PAGE 83 & 84 OF JUDGMENT SET) 11. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE FINDINGS OF THE LD.CIT(APPEALS) AND CONTENDED THAT THE ASSESSEE HAD FAILED TO DISCLOSE MATERIAL FACTS PERT AINING TO THE EDC CHARGES SINCE ONLY PRELIMINARY QUESTIONS WE RE ASKED DURING ASSESSMENT PROCEEDINGS ON WHICH NO VIE W COULD HAVE BEEN FORMED BY THE ASSESSING OFFICER AND , THEREFORE, ASSUMPTION OF JURISDICTION HAD BEEN RIGH TLY UPHELD BY THE LD.CIT(APPEALS). 12. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ALS O THE RELEVANT DOCUMENTS TO WHICH OUR ATTENTION WAS DRAWN DURING THE COURSE OF HEARING. SINCE THE ISSUE BEFORE US IS THE VALIDITY OF THE ASSESSMENT FRAMED U/S 147 OF THE ACT, CERTAIN FACTS WHICH ARE UNDISPUTED NEED TO BE OUTLINED BEFORE PROCEEDIN G WITH THE ISSUE: A) THE IMPUGNED ASSESSMENT YEAR IS ASSESSMENT YEAR 2008-09. B) ASSESSMENT U/S 143(3) FOR THE SAID YEAR HAD BEEN MADE VIDE ORDER DATED 28.12.2010. C) NOTICE U/S 148 WAS ISSUED ON 25.3.2015. 10 13. IT IS EVIDENT FROM THE ABOVE THAT RE-ASSESSMEN T PROCEEDINGS WERE INITIATED AFTER FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR AND ASSESSMENT U/S 143 (3) HAD ALREADY BEEN FRAMED ON THE ASSESSEE. IN SUCH F ACTUAL CIRCUMSTANCES, IT IS ONLY IN THE CONDITIONS STIPULA TED IN THE 1 ST PROVISO TO SECTION 147 THAT THE RE-ASSESSMENT PROCEEDINGS CAN BE RESORTED, WHICH AS PER THE REVEN UE IN THE PRESENT CASE IS THE FAILURE TO DISCLOSE MATERIA L FACTS RELATING TO EDC CHARGES. 14. WE ARE NOT IN AGREEMENT WITH THIS CONTENTION OF THE REVENUE. UNDISPUTEDLY EDC CHARGES HAD BEEN DISCLOS ED IN THE BALANCE SHEET OF THE ASSESSEE FOR THE IMPUGNED YEAR AND WHICH FORMED PART OF THE DOCUMENTS FILED WITH T HE RETURN OF INCOME. ALSO IT IS NOT DISPUTED THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSEE HAD DISCLOSED E DC CHARGES RECEIVED DURING THE YEAR IN THE DETAIL OF OTHER LIABILITIES FILED IN RESPONSE TO QUESTIONNAIRE ISS UED BY THE ASSESSING OFFICER. FURTHER, A PERUSAL OF THE REASON S RECORDED FOR REOPENING REVEAL THAT THE INFORMATION PROVIDED BY THE ASSESSEE ITSELF, AS POINTED OUT ABOVE, FORME D THE BASIS OF REOPENING. THE COPY OF REASONS PLACED AT PAPER BOOK PAGES 39 AND 40 READ AS UNDER: DURING PERUSAL OF RECORDS IN THIS CASE, IT. WAS SE EN THAT THE ASSESSES HAD RECEIVED EXTERNAL DEVELOPMENT CHARGES (EDC) FROM LAND DEVELOPERS/COLONIZERS/REAL ESTATE BUILDERS/PROMOTERS DURING THE F.Y. 2007-08. THE SAI D EXTERNAL DEVELOPMENT CHARGES WERE NOT BROUGHT TO THE AMBIT OF TAX BY THE ASSESSEE BUT WERE INSTEAD SHOWN AS A LIABILITY IN ITS BALANCE SHEET UNDER THE HEAD 'OTHER LIABILITIES'. 11 IT IS PERTINENT TO MENTION HERE THAT EXTERNAL DEVELOPMENT CHARGES ARE RECEIVED FROM THE LAND DEVELOPERS/COLONIZERS/REAL ESTATE BUILDERS/PROMOTERS WHO SEEK APPROVAL FROM THE ASSESSEE (I.E. GREATERMOHALI AREA DEVELOPMENT AUTHORITY) OR OTHER COMPETENT AUTHORITY TO DEVELOP A RESIDENTIAL OR COMMERCIAL OR INSTITUTIONAL ZONE ON THEIR PIECE/CHUNK OF LAND. THE SAID AMOUNT RECEIVED UNDER THE NOMENCLATURE 'EXTERNAL DEVELOPMENT CHARGES' IS SUPPOSED BE USED BY THE ASSESSEE FOR CARRYING ON OF EXTERNAL- DEVELOPMENT WORKS AND OTHER RELATED JOBS OUTSIDE THE LAND OF THE LAND DEVELOPER/ COLONIZER /REAL ESTATE BUILDER/PROMOTER WHO HAS PAID THE .EXTERNAL DEVELOPMENT CHARGES (EDC). THUS, IT IS SEEN THAT THE RECEIPT OF EXTERNAL DEVELOPMENT CHARGES BY THE ASSESSEE IS ATTRIBUTABLE TO ITS REGULAR BUSINESS. FURTHER, THE RECEIPT AND EXPENDITURE OF THE SAID AMOUNT IS A REGULAR, ROUTINE AND RE-OCCURRING PHENOMENON AS EXTERNAL DEVELOPMENT CHARGES ARE BEING REGULARLY RECEIVED BY THE ASSESSEE FROM LAND DEVELOPERS/ COLONIZERS/REAL ESTATE BUILDERS; PROMOTERS IN EVERY YEAR AND SIMILARLY THESE ARE BEING REGULARLY EXPEND ED /UTILIZED/ SPENT FOR THE PURPOSE OF CARRYING OUT EXTERNAL DEVELOPMENT WORKS AND OTHER RELATED JOBS. IN LIGHT OF THE ABOVE, IT IS OBSERVED THAT BOTH THE RECEIPTS AS WELL AS THE EXPENDITURE RELATED TO EXTERNAL DEVELOPMENT CHARGES (EDC) ARE CLEARLY REVENUE IN NATURE AS THEY ARE ATTRIBUTABLE TO THE REGULAR BUSINESS OF THE ASSESSEE AND ARE ALSO A ROUTINE, REGULAR AND RE-OCCURRING PHENOMENON. ACCORDINGLY, THE ASSESSEE WAS REQUIRED TO CREDIT THE RECEIPTS OF EXTERNAL DEVELOPMENT CHARGES TO ITS P'&L ACCOUNT AND DEBIT THE EXPENSES INCURRED ON ACCOUNT OF THE SAME. SINCE, THE ASSESSEE IS FOLLOWI NG CASH SYSTEM OF ACCOUNTING, THEREFORE, THE NET AMOUNT RECEIVED BY THE ASSESSEE DURING THE YEAR AS EXTERNAL DEVELOPMENT CHARGES WAS REQUIRED TO BE BROUGHT TO THE AMBIT OF TAX BY CREDITING THE RECEIPTS EARNED DURING THE YEAR AND DEBITING THE EXPENSES INCURRED ON ACCOUNT OF EXTERNAL DEVELOPMENT WORK & OTHER RELATED JOBS. HOWEVER, THE ASSESSEE ------------------ HAS RATHER SHOWN TH E EXTERNAL DEVELOPMENT CHARGES EDC RECEIVED AS LIABILITY IN ITS BALANCE SHEET. THE SAID FAILURE ON THE PART OF THE ASSESSEE HAS LED TO ESCAPEMENT OF TAXABLE INCOME AS THE NET INCOME EARNED ON ACCOUNT OF THE EXTERNAL DEVELOPMENT CHARGES HAS ESCAPED THE AMBIT OF TAXATION. THUS AFTER INDEPENDENT VERIFICATION OF RECORDS WITH RESPECT TO THE ABOVE MENTIONED FACTS, I HAVE 12 REASONS TO BELIEVE THAT AN INCOME OF RS.1,59,61,85,128/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. A CALCULATION OF THE SAME IS AS UNDER: I. OPENING BALANCE OF EXTERNAL DEVELOPMENT CHARGES (EDC) AS ON 01.04.2007 RS.65,51,36,250/- II. CLOSING BALANCE OF EXTERNAL DEVELOPMENT CHARGES (EDC) AS ON 31.03.2008 RS.2,25,13,21,378/- III. NET AMOUNT RECEIVED DURING THE YEAR ON ACCOUNT OF EXTERNAL DEVELOPMENT CHARGES (I.E. (II) (I) RS.1,59,61,85,128/- THIS ESCAPEMENT OF INCOME IS DUE TO FAILURE OF THE ASSESSEE TO FULLY AND. TRULY DISCLOSE ALL THE MATER IAL FACTS RELATING TO ITS INCOME AND DUE TO DEFAULT ON ITS PA RT BY NOT TREATING THE AMOUNT RECEIVED ON ACCOUNT OF EXTERNAL DEVELOPMENT CHARGES (EDC) AS REVENUE RECEIPT. ISSUE NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE FOR THE A.Y. 2008-09. 15. A PERUSAL OF THE ABOVE REVEALS THAT, IN THE FIR ST PARA OF THE REASON, THE ASSESSING OFFICER RECORDS DURING PERUSAL OF RECORDS IN THIS CASE, IT WAS SEEN THAT EDC CHARGES WERE RECEIVED BY THE ASSESSEE. (EMPHASIS SUPPLIED) THER EAFTER THE REASONS ONLY STATE THE NATURE OF THE EDC CHARGE S, WHICH IS GENERAL AND PUBLICLY KNOWN INFORMATION, AND FURT HER ON INFERENCE AND CONCLUSION HAS BEEN DRAWN THEREFROM T HAT IT IS IN THE NATURE OF REVENUE RECEIPT OF THE ASSESSEE AND HENCE CHARGEABLE TO TAX. THE ASSESSING OFFICER THER EAFTER STATES THAT SINCE THE ASSESSEE FAILED TO INCLUDE IT IN ITS INCOME, THE SAME HAS ESCAPED ASSESSMENT. AND LASTLY THE ASSESSING OFFICER MENTIONS THAT AFTER INDEPENDENT 13 VERIFICATION OF RECORDS WITH RESPECT TO THE ABOVE M ENTIONED FACTS, I HAVE REASON TO BELIEVE THAT INCOME HAS E SCAPED ASSESSMENT. 16. IT IS AMPLY EVIDENT FROM THE ABOVE THAT IT WAS ON THE BASIS OF ALREADY AVAILABLE INFORMATION AND NOT ANY NEW INFORMATION PERTAINING TO EDC CHARGES THAT CAME IN THE POSSESSION OF THE ASSESSING OFFICER THEREAFTER THAT LED TO THE FORMATION OF BELIEF THAT THE EDC CHARGES WERE I N THE NATURE OF REVENUE RECEIPT OF THE ASSESSEE AND HAD T HUS ESCAPED ASSESSMENT. THEREFORE WHEN THE REOPENING WA S RESORTED TO ON THE BASIS OF MATERIAL ALREADY ON THE FILE, THE SAME HAVING BEEN PROVIDED BY THE ASSESSEE ONLY DURI NG ASSESSMENT PROCEEDINGS, AND NOTHING ELSE, WE FAIL T O UNDERSTAND HOW THE ASSESSEE COULD BE CHARGED WITH F AILURE TO DISCLOSE MATERIAL FACTS RELATING TO THE SAID REC EIPT. 17. MOREOVER THE SECTION EMPOWERS THAT ASSESSING OF FICER TO ASSUME JURISDICTION TO REOPEN THE CASE WHEN THE ESCAPEMENT OF INCOME IS ON ACCOUNT OF FAILURE OF TH E ASSESSEE TO DISCLOSE MATERIAL FACTS RELATING TO THE INCOME, MEANING THEREBY THAT ONLY IMPORTANT AND PRIMARY FA CTS PERTAINING TO THE INCOME HAVE TO BE DISCLOSED AND N OT THE REASONING OR LOGIC WHICH LEAD TO THE CONCLUSION OF THE NATURE OF THE RECEIPT. IN THE PRESENT CASE, VIS-- VIS EDC CHARGES, THE NECESSARY FACTS WERE NATURE OF THE INC OME AND THE QUANTUM OF THE INCOME. THE ASSESSEE HAVING DISC LOSED THAT IT HAD OUTSTANDING EDC CHARGES RECEIVED AMOUNT ING TO RS.252 CRORES AS AT THE END OF THE YEAR, THE NATURE AND THE 14 QUANTUM OF THE RECEIPT WAS DULY DISCLOSED BY THE AS SESSEE. IT IS NOT THE CASE OF THE REVENUE THAT THE NATURE O F THE RECEIPT IS SOMETHING OTHER THAN EDC CHARGES OR THAT THE QUANTUM IS NOT AS DISCLOSED BY THE ASSESSEE. THERE FORE, FAILURE TO DISCLOSE ANY MATERIAL FACT CANNOT BE ATT RIBUTED TO THE ASSESSEE. EVEN THE REASONS RECORDED FOR FORMA TION OF BELIEF ARE ON THE SAME SET OF FACTS, WHICH H AVING ALREADY BEEN DISCLOSED BY THE ASSESSEE, NO FAILURE TO DISCLOSE ANY MATERIAL FACT CAN THEREFORE BE ATTRIBU TED TO THE ASSESSEE. THE REASONS DO NOT STATE AS TO WHAT OTHE R MATERIAL FACT WAS NOT DISCLOSED BY THE ASSESSEE PER TAINING TO THE EDC CHARGES AND WHICH CAME IN THE POSSESSION OF THE ASSESSING OFFICER THEREAFTER WHICH LED TO THE BELIE F OF ESCAPEMENT OF INCOME. WHAT IS DERIVED FROM THE REAS ONS IS THAT THE INFORMATION RELATING TO EDC CHARGES WAS TH E SAME AS PROVIDED BY THE ASSESSEE DURING ASSESSMENT PROCE EDINGS, AND IT IS ONLY THAT INFERENCE FROM THE SAID INFORMA TION, THAT IT IS IN THE NATURE OF REVENUE RECEIPTS, HAS NOW BE EN DERIVED BY THE AO. IN CALCUTTA DISCOUNT CO. LTD. VS ITO 41 ITR 191 THE HONBLE SUPREME COURT HELD THAT THE EXPRESSION MATERIAL FACTS REFERS ONLY TO PRIMARY FACTS, THE DUTY OF THE ASSESSEE IS ONLY TO DISCLOSE PRIMARY FACTS AND HE D OES NOT ALSO HAVE TO INDICATE WHAT FACTUAL OR LEGAL INFEREN CES SHOULD PROPERLY BE DRAWN FROM THE PRIMARY FACTS. CLEARLY T HEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAD FAILED TO D ISCLOSE ANY MATERIAL FACTS DURING ASSESSMENT. 15 18. THE RELIANCE PLACED BY THE LD.COUNSEL FOR THE A SSESSEE IN THIS REGARD ON THE DECISION OF THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF MICRO INKS P. LTD. VS ASSISTAN T COMMISSIONER OF INCOME TAX (2017) 393 ITR 366 (GUJ) IS APT WHEREIN REOPENING, BEYOND FOUR YEARS AND WHERE ASSESSMENT HAD BEEN FRAMED EARLIER, ON THE BASIS OF MATERIAL ALREADY ON RECORD WAS HELD NOT TO FULFILL THE CONDITION OF FAILURE ON THE PART OF ASSESSEE TO DIS CLOSE MATERIAL FACTS . THE FINDINGS OF THE HONBLE HIGH C OURT ARE AS UNDER: AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT IN TH E PRESENT CASE, THE ASSESSING OFFICER HAS SOUGHT TO REOPEN THE ASSESSMENT FOR A.Y 2009-2010 BEYOND THE PERIOD OF FOU R YEARS. THEREFORE, UNLESS AND UNTIL THE CONDITION PRECED ENT TO REOPEN THE ASSESSMENT BEYOND THE PERIOD OF FOUR YEAR S AS MENTIONED IN PROVISO TO SECTION 147 OF THE I.T ACT A RE SATISFIED, THE ASSESSING OFFICER IS NOT JUSTIFIED IN INITIATING THE RE- ASSESSMENT PROCEEDINGS. AS PER THE PROVISO TO SECTION 147 OF THE ACT, IF IT IS FOUND THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSING IN NOT DISCLOSING THE TRUE AND CORRECT FACTS, WHICH HAS RESULTED INTO ESCAPEMENT OF THE INCOME, TH E ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE A SSESSMENT. 7.1 CONSIDERING THE REASONS RECORDED, THERE IS NO ALLEG ATION THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESS EE IN NOT DISCLOSING THE TRUE AND CORRECT FACTS DUE TO WHICH, T HERE IS ESCAPEMENT OF INCOME FROM THE ASSESSMENT. 7.2 MOREOVER, FROM THE REASONS RECORDED, IT APPEARS TH AT ACCORDING TO THE ASSESSING OFFICER, THE EXPENDITURE WAS INCURRED TO ESTABLISH A SUBSIDIARY IN USA, AND THEREF ORE, SUCH EXPENDITURE WAS COVERED UNDER SECTION 35D [1] (II) OF THE I.T ACT, AND THEREFORE, ONLY 1/5TH OF THE EXPENDITURE I.E., 47,23,722/- WAS REQUIRED TO BE ALLOWED. INSTEAD, THE ENTIR E AMOUNT CLAIMED BY THE ASSESSEE I.E., 2,36,18,612/- IS ALLOWED TO BE DEBITED. THEREFORE, ACCORDING TO THE ASSE SSING OFFICER, HIS PREDECESSOR HAS WRONGLY ALLOWED THE ENTIR E AMOUNT OF 2,36,18,612/- TO BE DEBITED UNDER THE HEAD INTEREST AND FINANCE CHARGES. IN THE REASONS RECOR DED, IT IS SPECIFICALLY OBSERVED BY THE ASSESSING OFFICER THAT, ..ON OBSERVATION OF THE ASSESSMENT RECORDS, . .. MEANING THEREBY, WHILE ISSUING NOTICE, THE SUBSEQUENT ASSESSIN G OFFICER DID CONSIDER THE MATERIAL WHICH WAS ALREADY O N THE RECORD, WHICH WAS CONSIDERED BY THE ASSESSING OFFICE R, WHILE FRAMING THE SCRUTINY ASSESSMENT UNDER SECTION 143 OF THE A CT. 16 8. AS OBSERVED HEREINABOVE, EVEN THERE IS NO ALLEGATION I N THE REASONS RECORDED THAT THERE WAS ANY FAILURE ON THE P ART OF THE ASSESSEE IN NOT DISCLOSING TRUE AND CORRECT FACTS N ECESSARY FOR THE ASSESSMENT. UNDER THE CIRCUMSTANCES, THE ASSESSIN G OFFICER HAS MATERIALLY ERRED IN ASSUMING THE JURISDICT ION TO REOPEN THE ASSESSMENT FOR ASSESSMENT YEAR 2009-2010 AND THAT TOO BEYOND THE PERIOD OF FOUR YEARS, AS THE CON DITION PRECEDENT TO ASSUME THE JURISDICTION TO REOPEN THE ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS IS NOT SATISFIED. 9. ON THE AFORESAID GROUND ALONE, THE IMPUGNED NOTICE DA TED 31ST MARCH 2016 UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 AND RE-ASSESSMENT PROCEEDINGS DESERVES TO BE QUASHED AND SET-ASIDE. THE HONBLE DELHI HIGH COURT IN THE CASE OF AVTEC LTD. VS DCIT (2017) 395 ITR 434 REITERATED THE SAME HOLDING AS UNDER: IN THE PRESENT CASE, THE TANGIBLE MATERIAL THAT THE AO CAME ACROSS FOR THE AYS IN QUESTION THAT WARRANTED THE R EOPENING OF THE ASSESSMENTS IS NOT CLEAR FROM THE 'REASONS TO BE LIEVE' RECORDED BY THE AO. THE REASONS MERELY RECORD THE F ACT THAT HML HAD BORNE THE COSTS AND EXPENSES INCLUDING PROFE SSIONAL FEE AND, THEREFORE, THE CAPITALISATION OF THOSE EXPENS ES TO THE VARIOUS BLOCK OF ASSETS WAS NOT ALLOWABLE UNDER SECTION 43(1) OF THE ACT. AFTER RECORDING THE ABOVE STATEMENT, THE AO ADDS: I HAVE REASON TO BELIEVE THAT DUE TO FAILURE ON THE PART OF THE ASSESSE TO DISCLOSE ALL THE MATERIAL FACTS TRULY OR FULLY , INCOME OF 7,16,299 HAVE ESCAPED ASSESSMENT. THIS DOES NOT SATIS FY THE REQUIREMENT OF LAW THAT THE REASONS TO BELIEVE SHOULD, WHERE THE REOPENING IS AFTER THE EXPIRY OF FOUR YEA RS FROM THE END OF THE FY, SPECIFICALLY STATE IN WHAT MANNER THER E WAS A FAILURE BY THE ASSESSEE TO MAKE A FULL AND TRUE DISCLOS URE OF MATERIAL FACTS. THAT, AGAIN, WILL HAVE TO BE PRECEDED BY SPELLING OUT THE TANGIBLE FRESH MATERIAL THAT LED THE AO TO COME TO THAT CONCLUSION. NONE OF THIS IS FOUND IN THE REAS ONS TO BELIEVE RECORDED BY THE AO IN THE CASE ON HAND. THE NECESSITY FOR TANGIBLE MATERIAL TO BE PRESENT TO TRIGGER THE RE OPENING WAS EMPHASISED IN COMMISSIONER OF INCOME TAX V. ORIENT CRAFT LT D . (SUPRA). 24. THE REPEATED ASSERTION BY MR. MANCHANDA THAT THE CLAIM FOR DEPRECIATION FOR AYS 2006-07 AND 2007-08 WAS DISALLOWED BY THE AO IS NOT ENTIRELY CORRECT. IT OVERLOOKS THE HIST ORY OF THE LITIGATION AROUND THE CLAIMS FOR THOSE AYS WITH BOTH ENDING IN THE ASSESSEE ULTIMATELY SUCCEEDING ON THE POINT AFTE R THE REMAND TO THE AO BY THE ITAT FOR AY 2006-07 AND THE LEVEL OF THE CIT (A) FOR AY 2007-08 . MR. MANCHANDA HAS ALSO NOT BEEN ABLE TO COUNTER THE SUBMISSION THAT FOR AYS 2011-12 A ND 2012-13 THE SAME CLAIM FOR DEPRECIATION HAS BEEN ALLOWED. 25. FOR ALL OF THE AFOREMENTIONED REASONS, THE WRIT PETIT IONS ARE ALLOWED AND THE NOTICES DATED 31ST MARCH, 2015 AND THE 17 CONSEQUENTIAL ORDERS DATED 11 TH JANUARY, 2016 PASSED BY THE AO DISPOSING OF THE PETITIONERS OBJECTIONS ARE HEREBY SET ASIDE. NO ORDER AS TO COSTS. 19. FURTHER WE DO NOT FIND ANY MERIT IN THE CONTENT ION OF THE LD.DR THAT MERE PRODUCTION OF ACCOUNT BOOKS AND BALANCE SHEET AND PROFIT AND LOSS ACCOUNT WILL NOT TANTAMOUNT TO DISCLOSURE. THE LD.DR HAS BORROWED FR OM EXPLANATION-1 TO SECTION 147 OF THE ACT TO SO CONTE ND. THE SAID EXPLANATION READS AS UNDER: EXPLANATION 1-PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FORGOING PROVISO. 20. THIS EXPLANATION ONLY DEALS WITH ACCOUNT BOOKS OR OTHER EVIDENCES WHICH ARE PRODUCED BEFORE THE ASS ESSING OFFICER. NOW THE WORD PRODUCED WOULD NOT INCLUDE BALANCE SHEET AND PROFIT & LOSS ACCOUNT WHICH THE ASSESSEE IS OBLIGED TO FILE ALONGWITH RETURN AND, THEREFORE, TH IS EXPLANATION CANNOT BE INVOKED WHERE THE ASSESSING O FFICER FAILS TO NOTICE AN ENTRY OR STATEMENT IN THE BALANC E SHEET OR THE PROFIT & LOSS ACCOUNT. THE HON'BLE GUJARAT HIG H COURT IN THE CASE OF GUJARAT GINNING & MANUFACTURING COMP ANY VS. CIT REPORTED IN 108 ITR 674, FOUND THAT THE PR OFIT & LOSS ACCOUNT WAS THERE BEFORE THE ASSESSING OFFICER DURING THE ORIGINAL PROCEEDINGS DISCLOSING THE AMOUNTS OF MUNICIPAL TAXES RECOVERED FROM THE TENANTS OF THE A SSESSEE COMPANY WHICH THE ASSESSING OFFICER BELIEVED HAD ES CAPED ASSESSMENT. IT WAS FOUND THAT THE ONLY GRIEVANCE O F THE ASSESSING OFFICER WAS THAT THE SAID AMOUNTS HAD NOT BEEN 18 SHOWN IN THE STATEMENT FILED ALONGWITH RETURN OF COMPUTATION OF INCOME. THE QUESTION BEFORE THE HON 'BLE HIGH COURT WAS WHETHER IN SUCH CASE IT COULD BE HEL D THAT THE PRIMARY FACTS NECESSARY FOR ASCERTAINING THE IN COME HAD BEEN DISCLOSED TO THE ASSESSING OFFICER AND THE DIS CLOSURE SO MADE IN THE PROFIT & LOSS ACCOUNT WAS SUFFICIENT IN THE EYES OF LAW. THE HON'BLE HIGH COURT HELD THAT THE DISCLOSURE IN THE PROFIT & LOSS ACCOUNT WAS SUFFICI ENT AND SINCE THE PROFIT & LOSS ACCOUNT WAS SUBMITTED ALONG WITH THE RETURN OF INCOME DISCLOSING AFORESAID RECOVERIE S, IT COULD NOT BE BROUGHT WITHIN THE PURVIEW OF PRODUCT ION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OT HER EVIDENCES. THE RELEVANT FINDINGS OF THE HON'BLE HI GH COURT ARE AS UNDER: WE ARE UNABLE TO ACCEPT MR. KAJI'S CONTENTION THAT T HIS CASE OF THE SUPREME COURT AND THE OBSERVATIONS OF THE BOMBA Y HIGH COURT APPLY TO THE PRESENT CASE. IN THE INSTANT CASE THE ASSESSEE HAS NOT SUPPRESSED MATERIAL FACTS AS WAS THE CASE IN JAI HIND PRINTING PRESS'S CASE (SUPRA). HE HAS NO T FAILED TO DISCLOSE IN THE DOCUMENTS SUBMITTED TO THE ITO THE AM OUNTS OF THE RECOVERIES OF MUNICIPAL TAXES FROM THE TENANTS. A CTUALLY, IN THE PROFIT AND LOSS ACCOUNT ONE FINDS THAT IN EACH O F THOSE TWO ASSESSMENT YEARS, THE TOTAL AMOUNT OF RATES AND TAXES WERE FIRST SHOWN AND THE RECOVERIES WERE SHOWN AS DEDUCT IONS FROM THOSE AMOUNTS OF RATES AND TAXES. THEREFORE, TO ANY PERSON READING THE PROFIT AND LOSS ACCOUNT IT WOULD BE OBVIOUS THAT THESE RECOVERIES, NAMELY, RS. 27,098 IN ONE CASE AND RS. 26,477 IN THE OTHER CASE, WERE RECOVERIES OF TAXES FO R WHICH THE ASSESSEE-COMPANY BEFORE US WAS NOT CLAIMING ANY DEDUCTIONS. THUS, THE PRIMARY FACT THAT THESE RECOVERI ES WERE MADE WAS BEFORE THE ITO AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS. AS THE SUPREME COURT HAS POIN TED OUT IN CIT VS. BURLOP DEALERS LTD. (SUPRA), IT WAS FOR THE ITO TO RAISE THE POSSIBLE INFERENCES. THE ASSESSEE-COMPANY WAS UNDER NO OBLIGATION TO INFORM THE ITO ABOUT THE POS SIBLE INFERENCES WHICH COULD BE RAISED AGAINST HIM. IF THE ITO DID NOT RAISE THE APPROPRIATE INFERENCE ON THE PRIMARY F ACTS DISCLOSED BEFORE HIM THE INCOME WHICH HAS ESCAPED ASSESSMENT CANNOT BE BROUGHT TO TAX UNDER S. 147(A) OF THE ACT OF 1961. THE DUTY WHICH HAS BEEN CAST UPON THE A SSESSEE 19 IS TO DISCLOSE ALL THE PRIMARY FACTS NECESSARY TO ENABLE THE ITO TO ARRIVE AT THE PROPER FIGURE OF THE TOTAL INCOME A ND TO ASSESS THE TAX ACCORDINGLY. BEYOND DISCLOSURE OF THE PRIMARY FA CTS, NO OTHER DUTY IS CAST ON THE ASSESSEE. HERE IS NOT A CA SE OF BOOKS OF ACCOUNT OR OTHER EVIDENCE PRODUCED BY THE ASSESS EE AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THE PROFI T AND LOSS ACCOUNT OF THE ASSESSEE-COMPANY WAS SUBMITTED AND IT DID DISCLOSE THE RECOVERIES IN EACH OF THESE TWO YEA R . IN THE REASSESSMENT PROCEEDINGS IT HAS BEEN POINTED OUT THA T AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS THOSE PROF IT AND LOSS ACCOUNTS OF THE TWO YEARS WERE BEFORE THE ITO A ND THOSE PROFIT AND LOSS ACCOUNTS DID MENTION THESE TWO AMOUN TS OF RS. 27,098 AND RS. 26,477 AS RECOVERIES OF MUNICIPAL TAXES. IF THE ITO DID NOT DRAW THE NECESSARY INFERENCES FROM THES E PRIMARY FACTS, THE ASSESSEE CANNOT BE BLAMED AND IT CANNOT B E SAID THAT THE TAX HAD ESCAPED ASSESSMENT BECAUSE OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AN D TRULY ALL MATERIAL FACTS. THE MATERIAL FACTS WHICH WERE THE PRIMAR Y FACTS WERE DISCLOSED AND THE ASSESSEE WAS NOT BOUND TO POINT TO THE POSSIBLE INFERENCES WHICH SHOULD BE RAISED FRO M THESE PRIMARY FACTS. BECAUSE OF THE FAILURE ON THE PART OF T HE ITO TO RAISE THE NECESSARY INFERENCES AT THE TIME OF THE OR IGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE CANNOT BE BLAMED NOR CAN THE CASE BE BROUGHT UNDER S. 147(A) OF THE IT A CT, 1961, BECAUSE OF SUCH FAILURE OF THE ITO AT THE TIME OF TH E ORIGINAL ASSESSMENT PROCEEDINGS. 21. THE CASE LAWS RELIED UPON BY THE LD. DR RELATIN G TO EXPLANATION-1 TO SECTION 147 OF THE ACT ARE, THEREF ORE, NOT APPLICABLE IN THE PRESENT CASE. 22. MOREOVER, AS STATED ABOVE AND AS IS EVIDENT FRO M THE FACTS ON RECORD, NO NEW MATERIAL HAS COME IN POSSES SION OF THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT AND THE AO IS ONLY ATTEMPTING TO REVIEW HIS EARLIER ORDER T HROUGH THE REASSESSMENT PROCEEDINGS WHICH IS NEITHER VALID NOR JUSTIFIED AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA(2010) 320 ITR 561. THE A SSESSEE WAS ASKED TO FURNISH DETAILS IN RELATION TO OTHER LIABILITIES REFLECTED IN THE BALANCE SHEET, WHICH WAS DULY FILE D DISCLOSING EDC CHARGES PAYABLE OF RS.225.13 CR. ADM ITTEDLY NO FURTHER QUESTIONS WERE ASKED DURING ASSESSMENT 20 PROCEEDINGS. IT IS REASONABLE THEREFORE TO PRESUME THAT THE ASSESSING OFFICER HAD FORMED A VIEW ON EDC CHARGES WHILE GOING THROUGH THE DETAIL FURNISHED TO HIM ON HIS BE HEST. THE REOPENING NOW ON THE SAME SET OF INFORMATION IS NOTHING BUT BASED ON CHANGE OF OPINION. THE CONTENT ION OF THE LD.DR THAT THERE WAS NO CHANGE OF OPINION SINCE NO VIEW HAD BEEN FORMED BY THE ASSESSING OFFICER DURIN G ASSESSMENT AS INFORMATION REGARDING RECEIPT OF EDC HAD BEEN FURNISHED IN RESPONSE TO A GENERAL QUESTIONNAI RE ISSUED TO THE ASSESSEE ASKING FOR BREAK UP OF OTHER LIABILITIES AND NO FURTHER QUESTIONS WERE ASKED THE REAFTER, IS NOT ACCEPTABLE. IF A QUERY IS RAISED DURING ASSESSM ENT PROCEEDINGS AND ANSWERED BY THE ASSESSEE, UNDOUBTED LY THE ATTENTION OF THE ASSESSING OFFICER IS DRAWN TO THE SAME AND IT IS REASONABLE TO PRESUME THAT HE HAS CONSIDERED THE SAME AND FORMED A VIEW ALSO. THE HON'BLE DELHI HIGH COUR T HELD SO IN THE CASE OF CIT VS USHA INTERNATIONAL LTD.(20 12) 348 ITR 485 (DEL) WHICH HAS BEEN RELIED UPON BY THE HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PR. CIT VS ANIL NAGPAL (2017) 291 CTR 272(P&H) WHICH HAS BEEN RELIE D UPON BY THE LD.COUNSEL FOR THE ASSESSEE. MOREOVER, THE REOPENING IN THIS CASE, AS DISCUSSED ABOVE, IS HIT BY THE FIRST PROVISO TO SECTION 147 OF THE ACT. 23. CONSIDERING THE ABOVE DISCUSSION WE DO NOT FIND ANY JUSTIFICATION FOR THE AUTHORITIES BELOW TO JUSTIFY THE REOPENING OF THE ASSESSMENT. THE REOPENING IS THUS CLEARLY BAD IN LAW AND LIABLE TO BE QUASHED. WE ACCORDINGLY SET 21 ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT. GROUND OF APPEAL NO.2(A), THEREFORE, STANDS ALLO WED. 24. SINCE WE HAVE SET ASIDE THE ASSESSMENT ORDER ON THE LEGAL GROUND RAISED BEFORE US, WE DO NOT FIND ANY N EED TO ADJUDICATE THE ISSUE RAISED BEFORE US BY THE ASSESS EE ON THE MERITS OF THE CASE IN GROUND 2(B) SINCE IT WOULD B E A PURELY ACADEMIC EXERCISE. FURTHER SINCE WE HAVE ADJUDICATED THE MAIN APPEAL I N ABOVE TERMS, THE STAY APPLICATION IS ALSO DISPOSED OFF ACCORDINGLY. 25. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH DECEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)S 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH