ACIT, New Delhi V. M/s R.T. Packaging Ltd., New Delhi

ITA 5040/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58567 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 31-01-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 16-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: JANPRIYA ROOPRAI ARS
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Audit objection; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 115JB; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, AM ITA NO.5040/DEL./2010 ASSESSMENT YEAR:2000-01 ASSISTANT COMMISSIONER OF INCOME-TAX,CIRCLE-15(1), CR BUILDING, IP ESTATE NEW DELHI V/S . M/S RT PACKAGING LTD., 407-408, DEEPALI BUILDING, 92, NEHRU PLACE, NEW DELHI. [PAN : AAACR0345J] (APPELLANT) (RESPONDENT) ASSESSEE BY SH. GAURAV JAIN & MS. JANPRIYA ROOPRAI, ARS REVENUE BY SMT. RENUKA JAIN GUPTA, DR DATE OF HEARING 31-01-2012 DATE OF PRONOUNCEMENT 03-02-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 16.11.2010 BY THE REVENUE AGAI NST AN ORDER DATED 31ST AUGUST, 2010 OF THE LEARNED CIT(A)-XVIII , NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE PROCEEDINGS U/S 14 7/148 OF THE IT ACT, 1961 BY NOT APPRECIATING THE FACT THAT AN INDEPENDE NT OPINION WAS FORMED BY THE AO WHILE REOPENING THE CASE AND WAS W ITHIN THE AMBIT OF THE FINDINGS OF THE APEX COURT IN THE CASE CIT VS. PVS BEEDIES REPORTED IN 237 ITR 13. IT HAS ALSO BEEN HELD IN T HE CASE OF GRUH FINANCE LTD. VS. JOINT CIT 243 ITR 482 (GUJ) THAT I F NO CONSCIOUS CONSIDERATION OF THE MATERIAL AVAILABLE ON RECORD I S MADE AND A MISTAKE HAS BEEN COMMITTED, IT WILL NOT PREVENT THE COMPETE NT OFFICER TO EXERCISE POWERS UNDER SECTION 147 OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 1,03,62,778/- ON ACCOUNT OF SHIFTING EXPENSES. THE LD. CIT(A) HAS NOT APPRE CIATED THE FACT THAT THE AO HAS RIGHTLY FOLLOWED THE JUDGMENT OF HONBLE APEX COURT IN THE ITA NO. 5040/DEL./2010 2 CASE OF SITALPUR SUGAR WORKS, 49 ITR 160 AND IT HAS ALSO BEEN HELD IN LAKE PLACE HOTELS & MOTELS P. LTD. VS. CIT (RAJ) 21 3 ITR 735 THAT DISMANTLING EXPENDITURE IS CAPITAL EXPENDITURE. 3. THE APPELLANT CRAVES TO BE ALLOWED TO ADD, DELETE OR AMEND ANY OTHER GROUNDS OF APPEAL. 2. ADVERTING FIRST TO GROUND NO. 1 RELATING TO VALI DITY OF THE REOPENING OF THE ASSESSMENT, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING LOSS OF ` 3,42,40,164/- FILED ON 30.11.2000 BY THE ASSESSEE, MANUFACTURING LAMINATES LIKE MULTILAYER FILM ETC., WAS SELECTED FOR SCRUTINY WIT H THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961[ HEREINAFTER REFERRED TO A S THE ACT]. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO I N SHORT) RAISED A QUERY RELATING TO SHIFTING EXPENSES OF ITS MANUFACTURING FACILITY FRO M FARIDABAD TO DHARUHERA. THE ASSESSMENT WAS FINALLY COMPLETED ON A LOSS OF ` . 3,17,87,695/- VIDE ORDER DATED 13.01.2003.INTER-ALIA, AN AMOUNT OF ` . 14,52,469/- ON ACCOUNT OF PURCHASE OF MACHINERY AND ` . 10 LAKHS ON ACCOUNT OF DEFERRED REVENUE EXPENDITU RE INCLUDED IN SHIFTING EXPENSES, WERE DISALLOWED. SUBSEQUENTLY, THE AO, AF TER RECORDING THE FOLLOWING REASONS, IN WRITING, REOPENED THE ASSESSMENT U/S 14 7 OF THE ACT WITH THE SERVICE OF A NOTICE U/S 148 OF THE ACT ON 30.03.2007: - THE ASSESSMENT OF R.T. PACKAGING LTD. FOR THE A.Y . 2000-01 WAS COMPLETED U/S 143(3) AT A LOSS OF RS. 317.88 LAKH O N 13.01.03. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS S HIFTED FROM MATHURA ROAD, FARIDABAD TO DHARUHERA. IN THE COURSE OF SHI FTING THE ASSESSEE COMPANY HAS INCURRED A SUM OF RS. 159.65 LAKHS IN S HIFTING THE FACTORY AND CHARGED IT TO PROFIT & LOSS ACCOUNT FOR THE YEAR 19 99-2000 RELEVANT TO THE A.Y. 2000-01. THE AO ADDED A SUM OF RS. 24.52 LAKH S THE INCOME OF THE ASSESSEE AND BALANCE OF RS. 135.12 LAKH WAS TREATED AS REVENUE AND SHOULD HAVE BEEN ADDED BACK TO THE INCOME OF THE AS SESSEE. SINCE TOTAL EXPENSES RELATED TO THE SHIFTING OF THE BUSINESS TH ESE WERE CAPITAL IN NATURE AND WAS WRONGLY ALLOWED AS REVENUE EXPENSES. THE ASSESSEE COMPANY INCURRED A SUM OF RS. 279443/ - ON SHARE ISSUE EXPENSES AND OTHER PRELIMINARY EXPENSES. THE EXPENSES WAS CLAIMED AND ALLOWED THOUGH THESE WERE NEITHER FOR EXTENSION OF INDL UNDERTAKING NOR IN CONNECTION WITH SETTING UP OF A NEW INDUSTRIAL U NDERTAKING. PROVISION FOR CONTINGENT LIABILITY OF RS. 10 LAKH DEBITED TO PROFIT AND LOSS ACCOUNT HAS BEEN ALLOWED AS SUCH THOUGH AS PER PROVISIONS OF THE I.T. ACT LIABILITY IS NOT ALLOWABLE AS DEDUCTION. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AND FOR THE REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT AND IN VIEW OF SUB CLAUSE (1) OF CLAUSE (C) EXPLANATION (2) BELOW SECT ION (147), I HAVE REASON TO BELIEVE THAT INCOME OF RS. 147.81 LAKHS CHARGEAB LE TO TAX IN A.Y. 2000-01 HAS ESCAPED ASSESSMENT. ITA NO. 5040/DEL./2010 3 SANCTION FOR ISSUE OF NOTICE U/S 148 AS PRESCRIBED U/S 151 TO REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO THE NOTIC E SUBSEQUENTLY DURING THE COURSE OF PROCEEDING MAY KINDLY BE ACCOR DED. 2.1. AFTER CONSIDERING THE REPLY OF THE ASSESSEE RE LATING TO SHIFTING EXPENSES OF ` 159.65 LACS, THE AO ADDED AN AMOUNT OF ` 1,03,62,778/-,COMPRISING DISMANTLING, TRANSPORTATION AND ERECTION EXPENSES- ` 33,91,931/-, STORES- ` 28,86,011/- AND THE RAW MATERIAL CONSUMED- ` 40,84,836/- VIDE HIS ORDER DATED 28 TH SEPTEMBER, 2007. ACCORDINGLY, LOSS WAS REASSESSED AT ` 2,14,24,917/- AND INCOME RETURNED IN TERMS OF PROVISIONS OF SECTION 115JB WAS ACCEPTED. 3.. ON APPEAL, THE LD. CIT(A) QUASHED THE REASSESSM ENT PROCEEDINGS IN THE FOLLOWING TERMS: - 4.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSION MADE BY THE LD. AR ON THE ABOVE ISSUE. AS PER THE FACTS OF THIS CASE, RETURN OF INCOME FOR THE YEAR UNDER CONS IDERATION HAD BEEN FILED BY THE APPELLANT COMPANY ON 30.11.2000 SHOWING LOSS OF ` 3,42,40,164/- .THE RETURN WAS PROCESSED U/S 143(1) ON 26.03.2002. SCRUTINY ASSESSMENT U/S 143(3) WAS COMPLETED ON 13.01.2003 D ETERMINING THE LOSS AT ` 3,17,87,695/- AFTER MAKING CERTAIN ADDITIONS/DISAL LOWANCES. THE CASE WAS SUBSEQUENTLY REOPENED BY ISSUE OF NOTICE U/S 14 8 DATED 30.03.2007. AS PER THE REASONS RECORDED BY THE AO, THE REOPENIN G WAS DONE ON THE ISSUE OF (I) SHIFTING EXPENSES OF ` . 135.12 LACS ALLOWED AS REVENUE EXPENDITURE IN THE ORIGINAL ASSESSMENT, (II) SHARE ISSUE EXPENSES AND OTHER PRELIMINARY EXPENSES OF ` 2,79,443/- INCURRED BY ASSESSEE WHICH NEEDS TO BE DISALLOWED AS THERE WAS NEITHER ANY EXT ENSION OF INDUSTRIAL UNDERTAKING NOR SETTING UP OF NEW INDUSTRIAL UNDERT AKING AND (III) PROVISION FOR CONTINGENT LIABILITY DEBITED TO P&L A/C AT ` . 10 LAKH WHICH HAS BEEN ALLOWED AS SUCH, WHICH NEEDS TO BE DISALLOWED. AS R EGARDS THE ISSUE AT SL. NO. (II), IN THE IMPUGNED REASSESSMENT ORDER, IT IS OBSERVED BY THE AO THAT AS EXPLAINED BY THE APPELLANT THE PUBLIC ISSUE EXPE NSES AND PRELIMINARY EXPENSES WERE NOT INCURRED DURING THE YEAR, INSTEAD IT HAS AUTHORIZED 1/10 TH OF THE ABOVE EXPENSES FROM F.Y. 1995-96 AND 1994-9 5 RESPECTIVELY AS ALLOWABLE U/S 35D OF THE ACT. AS REGARDS ISSUE A T SL. NO. (III), IN THE IMPUGNED REASSESSMENT ORDER, IT IS OBSERVED BY THE AO THAT AS EXPLAINED BY THE APPELLANT THE PROVISION OF CONTINGENT LIABIL ITY HAD NEITHER BEEN CLAIMED AS EXPENDITURE IN P&L A/C NOT REDUCED FROM INCOME IN THE COMPUTATION OF INCOME FILED BY THE ASSESSEE. THE A O HAS, ACCORDINGLY, ACCEPTED THE ASSESSEES CONTENTION ON THE ABOVE TWO ISSUES AND HAS NOT MADE ANY ADDITION IS THIS REGARD. IT IS ARGUED BY THE LD. AR THAT THE REOPENING MADE BY THE AO ON THE ABOVE TWO ISSUES AT SL. NO. (II) AND (III) IS ILLEGAL AS NO SUCH EXPENDITURE HAD BEEN INCURRED OR CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME AND AS SUCH THERE WAS NO ESCAPEMENT OF INCOME IN RESPECT OF THE ABOVE. AS REGARDS, THE IS SUE AT SL. NO. (I), IT IS ARGUED BY THE LD. AR THAT THE VERY SAME ISSUE HAD B EEN EXAMINED BY THE AO IN THE COURSE OF THE ORIGINAL ASSESSMENT U/S 143 (3) AND THE MATTER HAD ITA NO. 5040/DEL./2010 4 BEEN DISCLOSED IN THE RETURN OF INCOME, BALANCE SHE ET AND ALSO IN THE SUBMISSIONS FILED DURING THE ORIGINAL ASSESSMENT PR OCEEDING VIDE ASSESSEES LETTER DATED 13.03.2002 GIVING A DETAILE D NOTE ON SHIFTING EXPENSES IN RESPONSE TO SPECIFIC QUERY RAISED BY TH E AO IN THIS REGARD. IT IS ARGUED THAT ON EXAMINATION OF THE MATTER, THE AO IN THE ORIGINAL ASSESSMENT HAD DISALLOWED ` 14,52,469/- ON ACCOUNT OF MATERIAL USED IN INSTALLATION OF POLLARISH MACHINE AND RS. 10 LAKH O UT OF THE BALANCE SHIFTING EXPENSES BY HOLDING THE SAME AS CAPITAL IN NATURE A ND HAD ALLOWED THE REMAINING AMOUNT OUT OF THE TOTAL SHIFTING EXPENSES CLAIMED AT RS. 159.65 LACS AS REVENUE EXPENDITURE. IT IS ARGUED BY THE L D. AR THAT THE REOPENING U/S 147 MADE ON THE VERY SAME ISSUE AMOUNTS TO CHAN GE OF OPINION BY THE AO. IT IS ARGUED THAT THE REOPENING HAS BEEN D ONE WITHOUT ANY NEW INFORMATION OR MATERIAL COMING TO THE KNOWLEDGE OR POSSESSION OF THE AO AND ONLY ON THE BASIS OF REVIEW OF THE SAME FACTS W HICH HAD BEEN DISCLOSED IN THE RETURN OF INCOME AND CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT. IT IS, ACCORDINGLY, ARGUED THAT THE RE OPENING MADE AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT Y EAR ON THE BASIS OF CHANGE OF OPINION AND WITHOUT ANY FAILURE ON THE PA RT OF THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IS BAD IN LAW AND REQUIRES TO BE QUASHED. THE LD. AR HAS RELIED ON A PLETHORA OF CA SE LAWS INCLUDING THE DECISIONS IN THE CASE OF CIT VS. FORAMER FRANCE 264 ITR 567 (SC)/247 ITR 463 (ALLD.), CIT V. KELVINATOR OF INDIA LTD. 25 6 ITR 1 (DEL. F.B), KAIRA DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LTD. 220 ITR 194 (GUJ.), JINDAL PHOTOFILMS LTD. 234 ITR 170 (DEL.), BERGER PAINTS I NDIA LTD. 245 ITR 645 (CAL.), MERCURY TRAVELS LTD. 258 ITR 533 (DEL.), TE CHSPAN INDIA P. LTD. & ANOTHER, 283 ITR 212 (DEL.) AND KLM ROYAL DUCH AIRL INES 159 TAXMANN 191 (DEL.) IN SUPPORT OF HIS CLAIM. I FIND THAT TH E APPELLANT HAD ALSO OBJECTED TO THE REOPENING OF ASSESSMENT RIGHT AT TH E FIRST INSTANCE VIDE ITS LETTER DATED 09.07.2007 SUBMITTED TO THE AO. THE S AME WAS REJECTED BY THE AO VIDE AN ORDER DATED 21.8.2007 SUMMARILY WITH OUT GIVING MUCH JUSTIFICATION. UNDER THE FACTS AND CIRCUMSTANCES A S DISCUSSED ABOVE AND CONSIDERING THE CASE LAWS RELIED UPON BY THE LD. AR , THE APPELLANTS ABOVE GROUNDS OBJECTING TO THE LEGALITY OF REOPENING U/S 147/148 CANNOT BE REJECTED. THE AO HAS ALSO FAILED TO MAKE OUT A CAS E OF FAILURE OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT AFTER THE EXPIRY OF 4 YEARS AS PER THE F IRST PROVISO TO SECTION 147 OF THE ACT. THE ABOVE GROUNDS OF THE APPELLANT ARE, THEREFORE, ALLOWED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR WHILE CARRYING US THROU GH THE IMPUGNED ORDERS SUPPORTED THE FINDINGS OF THE AO WHILE RELYING UPON THE DECISIONS IN CIT VS. PVS BEEDIES PVT. LTD.,237 ITR 13(SC),GRUH FINANCE LTD. VS. JCIT, 243 ITR 482(GUJ) AND DALMIA BROTHERS P LTD. VS. CIT,16 TAXMANN.COM33 6(DELHI) ON THE OTHER HAND, LD. AR ON BEHALF OF THE ASSESSEE CONTENDED TH AT THE AO DID NOT POINT OUT ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSI NG THE PRIMARY FACTS DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, WHICH CO ULD WARRANT REOPENING OF THE ITA NO. 5040/DEL./2010 5 ASSESSMENT. THE ASSESSEE MADE DISCLOSURE OF SHIFTI NG EXPENSES IN ITS BALANCE SHEET ON PAGE 11 AND IN NOTE 9 TO THE ACCOUNTS FOR THE YEAR UNDER CONSIDERATION. BESIDE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD RAISED A SPECIFIC QUERY RELATING TO SHIFTING EXPENSES AND TH E ASSESSEE SUBMITTED A DETAILED NOTE DATED 13.3.2002 PLACED ON PAGE 26 TO 28 OF TH E PAPER BOOK. THE LD. AR FURTHER SUBMITTED THAT ASSESSMENT HAS BEEN REOPENED MERELY ON CHANGE OF OPINION AND IN THIS CONTEXT RELIED UPON THE ORDER OF HONBLE JURISDICTIONAL HIGH COURT IN KELVINATOR OF INDIA LTD. VS. CIT, 256 ITR 1 AFFIRMED BY THE HONBLE SUPREME COURT IN 320 ITR 561 (SC). AS REGARDS REOP ENING OF THE ASSESSMENT WITHOUT ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL THE MATERIAL FACTS, THE LD. AR RELIED UPON THE DECISION S IN CIT VS. SHRI TIRATH RAM AHUJA(HUF), 306 ITR 173 (DEL.);HARYANA ACRYLIC MANU FACTURING COMPANY VS. CIT, 308 ITR 38 (DEL.) BESIDES DECISION DATED 28.11.2011 IN CIT VS. PUROLATOR INDIA LIMITED IN ITA NO. 489/DEL./2011 AND DECISION DATED 1.12.2011 IN BLB LIMITED VS. ACIT IN WPC 6884/2010. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON BY BO TH THE SIDES. AS IS APPARENT FROM THE FACTS NARRATED IN THE IMPUGNED ORDERS AND THE REASONS RECORDED BY THE AO BEFORE REOPENING THE ASS ESSMENT, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION IN THIS CASE WAS INITIALLY COMPLETED ON 13.1.2003 U/S 143(3) OF THE ACT ON A LOSS OF ` 3,17,87,695/-.DURING THE COURSE OF ASSESSMENT PROCE EDINGS , THE AO RAISED A SPECIFIC QUERY WITH REGARD TO SHIFTING EXPENSES AND AFTER NECESSARY ENQUIRIES, ADDED ONLY AN AMOUNT OF ` 2 4,52,469/- . THEREAFTER, THE SAID ASSESSMENT HAS BEEN REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITH THE ISSUE OF A NOTICE U/S 148 OF THE ACT ON 30 .3.2007,INTER ALIA, ON THE GROUND THAT SHIFTING EXPENSE WERE CAPITAL IN NATURE AND WRONGLY ALLOWED AS REVENUE. NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE IN RELATION TO MATERIAL FACTS IN RESPE CT OF SHIFTING EXPENSES IN THE ASSESSMENT FOR THE YEAR UNDER CONS IDERATION HAS BEEN ATTRIBUTED IN THE AFORESAID REASONS RECORDED B Y THE AO NOR THE LD. DR ASCRIBED ANY SUCH FAILURE TO THE ASSESSEE, BEFORE US. THOUGH IN THE REASONS RECORDED IT IS MENTIONED THAT THE ASSESSEE ITA NO. 5040/DEL./2010 6 FAILED TO FULLY AND TRULY DISCLOSE THE FACTS, THE R EASONS DO NOT INDICATE WHY AND HOW THE ASSESSEE FAILED TO MAKE FU LL AND TRUE DISCLOSURE OF MATERIAL FACTS IN RELATION TO SHIFTIN G EXPENSES.THE ASSESSEE MADE DISCLOSURE OF SHIFTING EXPENSES IN I TS BALANCE SHEET ON PAGE 11 AND IN NOTE 9 TO THE ACCOUNTS FOR THE YEAR UNDER CO NSIDERATION. BESIDES, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD RAI SED A SPECIFIC QUERY RELATING TO SHIFTING EXPENSES AND INDISPUTABLY, TH E ASSESSEE SUBMITTED A DETAILED REPLY DATED 13.3.2002 PLACED ON PAGE 26 TO 28 OF THE PAPER BOOK. WE FIND THAT THE FACTS MENTIONED IN THE AFORESAID REAS ONS WERE AVAILABLE WITH THE AO EVEN AT THE TIME OF FINALIZIN G THE INITIAL ASSESSMENT COMPLETED U/S 143(3) OF THE ACT ON 13.1. 2003. 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 E FFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PRO VISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PRO VISIONS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIR CUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JU RISDICTION UNDER SECTION 147(A), TWO CONDITIONS WERE REQUIRED TO BE SATISFIED- FIRSTLY THE AO MUST HAVE REASON TO BELIEVE THAT INC OME, PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSM ENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT S UCH ESCAPEMENT OCCURRED DUE TO REASON OF EITHER OMISSION OR FAILU RE ON THE PART OF THE TAXPAYER TO DISCLOSE FULLY OR TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE AO COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 14 7(A).BUT UNDER THE SUBSTITUTED SECTION 147, EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER F OR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. HOWE VER, BOTH THE ITA NO. 5040/DEL./2010 7 CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITH IN THE AMBIT OF THE PROVISO TO SECTION 147. SINCE IN THE CASE UNDER CO NSIDERATION, NOTICE U/S 148 HAD BEEN ISSUED ONLY ON 30.3.2007 TH AT IS AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, APP ARENTLY, THE ISSUE THAT ARISES FOR OUR CONSIDERATION IS AS TO WH ETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS? NO SUCH FAILURE IS EITHER EVIDENT F ROM THE IMPUGNED ORDER OR THE REASONS RECORDED BY THE AO NOR HAS BE EN 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 ENVI SAGED IN PROVISO TO SEC. 147 OF THE ACT, HAS BEEN ATTRIBUTED TO THE ASSESSEE. IN RAKESH AGGARWAL V. ASST. CIT [1997] 225 ITR 496, HO NBLE DELHI HIGH COURT HELD THAT IN VIEW OF THE PROVISO TO SECT ION 147, NOTICE FOR REASSESSMENT UNDER SECTION 148 WOULD BE ILLEGAL IF ISSUED MORE THAN FOUR YEARS AFTER THE END OF THE RELEVANT ASSES SMENT YEAR UNLESS FAILURE IS ASCRIBED TO THE ASSESSEE IN DISCL OSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT. HONBLE GUJRAT HIGH COURT WHILE ADJUDICATING A SIMILAR ISSUE HELD IN SHREE THARAD JAIN YUVAK MANDAL V. ITO [2000] 242 ITR 612 AS UNDE R: A PERUSAL OF THE AFORESAID PROVISION GOES TO SHOW T HAT UNDER THE PROVISO TO SECTION 147, THE FOUNDATION OF CONFE RRING JURISDICTION ON THE ASSESSING OFFICER TO ASSESS OR REASSESS THE INCOME FOR ANY ASSESSMENT YEAR BEYOND THE END O F FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR MUST BE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO M AKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT YEAR AND THAT THE INCOME-TAX OF FICER HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR. IN THE ABSENCE OF ANY SUCH OMISSION OR FAILURE ON THE PART OF THE ASSESSE E, TAKING ACTION FOR ASSESSMENT OR REASSESSMENT IS NOT PERMIS SIBLE FOR ANY YEAR AFTER THE EXPIRY OF FOUR YEARS FROM THE RE LEVANT ASSESSMENT YEAR. THE SCOPE OF THE ASSESSEE'S DUTY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT IN THE CONTEXT OF THE PROVISIONS OF SECTION 34 OF THE INDIAN INCOME-T AX ACT, 1922, HAS BEEN SUCCINCTLY STATED BY THE SUPREME COU RT BY THEIR LORDSHIPS IN CALCUTTA DISCOUNT CO. LTD. V. IT O [1961] 41 ITR 191. THE COURT OBSERVED: ITA NO. 5040/DEL./2010 8 'THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING ALL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUESTION BEFO RE 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 FURT HER ASSISTANCE BY WAY OF DISCLOSURE. IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASONABLY DRAWN AND WHAT LEGAL INFERE NCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT FOR SOMEBODY ELSE -FAR LESS THE ASSESSEE-TO TELL THE ASSESSING AUTHORITY WHAT INFERENCES, WHETHER OF FACTS OR LAW, SHOULD BE DRAWN.' 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 END OF EACH OF THE ASSESSMENT YEARS IN QUESTION, TH E PROVISIONS OF SECTION 147 OF THE ACT MANDATE THAT T HE ASSESSING OFFICER SHALL BE VESTED WITH THE JURISDIC TION TO INITIATE REASSESSMENT PROCEEDINGS ONLY IN CASE THER E IS ANY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND SUCH FAILURE S HOULD RESULT IN INCOME CHARGEABLE TO TAX ESCAPING ASSESSM ENT. ON A PLAIN READING OF THE AFORESAID PROVISIONS AND THE REASONS RECORDED, IT BECOMES CLEAR THAT THERE CANNOT BE ASC RIBED ANY FAILURE OR OMISSION TO THE PETITIONER SO AS TO VEST THE ASSESSING OFFICER WITH JURISDICTION TO REOPEN THE A SSESSMENTS WHICH WERE ALREADY FINALISED. IN THE CIRCUMSTANCES, FOR THE ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89 IN TH E LIGHT OF THE FACT THAT THE INITIATION BY ISSUANCE OF IMPU GNED NOTICES IS BEYOND THE PERIOD OF FOUR YEARS AND THE PREREQUI SITE CONDITIONS STIPULATED BY SECTION 147 OF THE ACT ARE NOT FULFILLED, THERE IS NO CASE MADE OUT FOR UPHOLDING THE PROPOSED REASSESSMENT. THE NOTICES FOR ALL THE FOUR YEARS ARE, THEREFORE, BAD IN LAW AND ARE QUASHED AND 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 RE LEVANT ASSESSMENT YEAR, THE REVENUE MUST ESTABLISH THAT TH ERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS RELEVANT FOR THE PURPOSES OF THE ASSESSMENT. ITA NO. 5040/DEL./2010 9 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 ISSUE NOTICE U/S 148 OF THE ACT. SIMILAR VIEW WA S TAKEN 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 WHISPER IN THE REASONS RECORDED BY THE AO ABOUT FAILURE ON THE PART 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 B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAD FAILED TO DISCLOSE F ULLY AND TRULY ALL MATERIAL FACTS IN ITS RETURN OF INCOME NOR EVEN THE RE WAS ANY ALLEGATION REGARDING ESCAPEMENT OF INCOME. IN THESE CIRCUMSTANCES,HONBLE HIGH COURT UPHELD THAT FINDIN GS OF THE TRIBUNAL THAT NOTICE U/S 148 OF THE ACT ,HAVING BEE N ISSUED AFTER FOUR YEARS, THE REOPENING OF THE ASSESSMENT WAS NOT VALID. ITA NO. 5040/DEL./2010 10 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 DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT, THE PROVISO TO THE NEW SECTION 147 OF THE ACT SQUARELY APPLIED, AN D THE 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. 5.9 IN GUJARAT CARBON AND INDUSTRIAL LTD. VS. JT. CIT [2008] 307 ITR 271 (GUJ), HONBLE HIGH COURT IN THE ABSENCE O F ANY FAILURE ON PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE AL L MATERIAL 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 REOPENED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR FOR THE REASON THAT CERTAIN INCOME HAS BEEN WRONGLY ASSESSED UNDER THE HEAD CAPITAL GAINS INSTEAD OF PROFITS AND GAINS OF BUSINESS OR PROFE SSION. 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 ASSESSMENT OF THE ASSESSMENT YEAR IN QUESTION, IMPUGNED NOTICE UNDER S. 148 ISSU ED BEYOND A PERIOD OF FOUR ITA NO. 5040/DEL./2010 11 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 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 NO TE REGARDING 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 SIMILAR VIEW WAS TAKEN IN PUROLATOR INDIA LT D.(SUPRA); BLB LTD.(SUPRA) AND IN A RECENT DECISION DATED 11.11.20 11 IN ITA NO.87 /2010 IN ATMA RAM PROPERTIES PVT. LTD. VS. DCIT BY THE HONBLE JURISDICTIONAL HIGH COURT. 5.15 IN HARYANA ACRYLIC MANUFACTURING CO., 308 ITR 38 (DEL.),, HONBLE JURISDICTIONAL HIGH COURT, INTER ALIA, CONC LUDED 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 N OT 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 ITA NO. 5040/DEL./2010 12 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 DECISION 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 RECORDE D THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND T HE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIE WPOINT, WE HOLD THAT THE NOTICE DATED 29-3-2004 UNDER SECTION 148 BASED ON THE RECO RDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER D ATED 2-3-2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD B E TAKEN BEYOND THE FOUR YEAR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE . 5.16 NOW ADVERTING TO DECISIONS RELIED UPON BY T HE LD. DR, IN PVS BEEDIES PVT. LTD.(SUPRA) HONBLE APEX COURT HELD T HAT REOPENING OF THE CASE ON THE BASIS OF A FACTUAL ERROR POINTED OUT BY THE AUD IT PARTY IS PERMISSIBLE UNDER LAW. LIKEWISE IN ANOTHER DECISION IN DALMIA BROTHER S(P) LTD.(SUPRA)RELIED UPON BY THE LD. DR, HONBLE DELHI HIGH COURT ,FOLLOWING THE AFORESAID DECISION IN PVS BEEDIES (P) LTD.(SUPRA),HELD THAT THE INITIATION O F REASSESSMENT PROCEEDINGS ON THE BASIS OF FACTS FOUND IN AN AUDIT OBJECTION TO B E PROPER AND REVIEW PETITION OF THE ASSESSEE WAS DISMISSED. IN GRUH FINANCE LTD.(SU PRA) RELIED UPON BY THE LD. DR, .HONBLE GUJRAT HIGH COURT WHILE CONSIDERING THE ISSUE OF CHANGE OF OPINION OBSERVED THAT PRIMA FACIE UPON INFORMATION, THE DEPARTMENT NOTICE D THAT DEPRECIATION WAS CLAIMED AND APPROVED IN RESPECT OF A MACHINERY WHICH WAS NOT AT ALL IN EXISTENCE AND THAT ASPECT WAS NOT CONSCIO USLY CONSIDERED, AT THE TIME OF FIRST ASSESSMENT, AS OTHERWISE THERE WAS NO QUESTIO N OF GRANTING DEPRECIATION, THEREON, CLAIMED BY THE ASSESSEE. ACCORDINGLY, HON BLE HIGH COURT FOLLOWING THE VIEW TAKEN IN PRAFUL CHUNILAL PATEL'S CASE (1999) 236 ITR 832 UPHELD THE VALIDITY OF REOPENING THE ASSESSMENT WHILE HOLDING FURTHER T HAT OTHERWISE ALSO, THIS WAS NOT A FIT CASE FOR EXERCISE OF EXTRAORDINARY JURISD ICTION UNDER ARTICLE 226 OF THE CONSTITUTION, IN THE ABSENCE OF ANY JURISDICTIONAL ISSUE AND THE AUTHORITY HAD JURISDICTION THERE WAS NO SUCH ISSUE AS TO WHETHER OR NOT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT NOR PROVISO TO SEC. 14 7 OF THE ACT WAS APPLIED IN ITA NO. 5040/DEL./2010 13 THE AFORESAID DECISIONS. THE LD. DR DID NOT DEMONST RATE BEFORE US AS TO HOW THESE DECISIONS ARE APPLICABLE IN THE FACTS AND CI RCUMSTANCES OF THE CASE BEFORE US. AFTER PERUSING THESE DECISIONS AND WITH RESPECT, WE ARE OF THE OPINION THAT THE DECISIONS RELIED UPON BY THE LD. D R WERE RENDERED ON THE FACTS OF THEIR OWN AND RATIO LAID DOWN IN THESE DECISIONS IS NOT GERMANE TO THE ISSUE BEFORE US. THEREFORE, WE ARE OF THE OPINION THAT TH E RELIANCE BY THE LD. DR ON THESE DECISIONS IS TOTALLY MISPLACED.. 5.17 IN GRUH FINANCE LTD.(SUPRA) ,HONBLE HIGH CO URT OBSERVED,INTER ALIA, AS UNDER: IN SO FAR AS THE EXPRESSIONS 'REASON TO BELIEVE' A ND 'CHANGE OF OPINION' ARE CONCERNED, WE ARE OF THE VIEW THAT THO UGH THE MATERIAL WAS AVAILABLE ON RECORD, AT THE TIME OF FIRST ASSESSMEN T, WHEN NO CONSCIOUS CONSIDERATION OF THE MATERIAL IS MADE AND A MISTAKE HAS BEEN COMMITTED TAKE HAS BEEN COMMITTED, IT WOULD NOT, IN ANY CASE, CREATE AN EMBARGO OR A BAN ON THE COMPETENT OFFICER TO EXERCISE POWER S UNDER THE AMENDED SECTION 147 OF THE INCOME-TAX ACT, 1961, AS PRIMA F ACIE, THERE COULD NOT BE 'CHANGE OF OPINION' IN THAT FACTUAL SCENARIO. IT HAS ALSO NOT BEEN SHOWN TO US ON BEHALF OF AN ASSESSEE. IF CONSCIOUS APPLICATION OF MIND IS MADE TO THE RELEVANT FACTS AND MATERIAL AVAILABLE O R EXISTING AT THE RELEVANT POINT OF TIME WHILE MAKING ASSESSMENT AND AGAIN A DIFFERENT OR DIVERGENT VIEW IS SOUGHT, IT WOULD TANTAMOUNT TO 'C HANGE OF OPINION', WHEREAS, IN THE CASE OF EXISTING MATERIAL, NO CONSC IOUS ATTEMPT HAS BEEN MADE, IT WOULD TANTAMOUNT TO MISTAKE IN NOT CONSIDE RING THE RELEVANT POINT OR PROPOSITION AND IT WOULD NOT BE A 'CHANGE OF OPINION'. 5.18 AS REGARDS CHANGE OF OPINION, WE MAY REIT ERATE THAT THE ASSESSEE MADE DISCLOSURE OF SHIFTING EXPENSES IN I TS BALANCE SHEET ON PAGE 11 AND IN NOTE 9 TO THE ACCOUNTS FOR THE YEAR UNDER CO NSIDERATION. BESIDES, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO RAISED A SPECIFIC QUERY RELATING TO SHIFTING EXPENSES AND INDISPUTABLY, THE ASSESSEE SU BMITTED A DETAILED REPLY DATED 13.3.2002 PLACED ON PAGE 26 TO 28 OF THE PAPE R BOOK. THESE FACTS HAVE NOT BEEN DISPUTED BEFORE US. IN THIS CONTEXT , WE FIND THAT HONBLE APEX COURT WHILE AFFIRMING THE DECISION OF HONBLE DELHI HIGH COURT IN KELVINATOR OF INDIA LTD.(SUPRA) AND GOING THROUGH THE CHANGES MADE TO S ECTION 147 OF THE ACT OBSERVED AS UNDER: .., WE FIND THAT, PRIOR TO THE DIRECT TAX LAWS (A MENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER THE ABOVE TWO CONDITI ONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT (WIT H EFFECT FROM 1ST APRIL, 1989), THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS R EMAINED, VIZ., THAT WHERE ITA NO. 5040/DEL./2010 14 THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT IN COME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REOPEN THE ASSE SSMENT. THEREFORE, POST-1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER , ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BE LIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BU T REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAK E PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 198 9, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERI AL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIE W GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABO VE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DE LETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN S ECTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES A GAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SA ID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST AR BITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBELOW THE RELEVA NT PORTION OF CIRCULAR NO. 549 DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST.) 1 , 29), WHICH READS AS FOLLOWS :'7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION `REASON TO BELIEVE' IN SECTION 147.-A NUMBER OF RE PRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS `REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE `OPINION' OF THE ASSESSING OFFICER. IT WAS POI NTED OUT THAT THE MEANING OF THE EXPRESSION, `REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SEC TION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENT S ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAI N 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, HOWEVER, REMAIN THE SAME.' FOR THE AFORESTATED REASONS, WE SEE NO MERIT IN THE SE CIVIL APPEALS FILED BY THE DEPARTMENT ; HENCE, DISMISSED WITH NO ORDER AS TO C OSTS. 5.19 THE AFORESAID OBSERVATIONS OF THE HONBLE APEX COURT WHEN VIEWED IN THE LIGHT OF FACTS AND CIRCUMSTANCES IN T HE CASE BEFORE US, LEAD US TO AN INESCAPABLE CONCLUSION THAT THE AO RE OPENED THE ASSESSMENT IN RELATION TO SHIFTING EXPENSES MERELY ON THE BASIS OF CHANGE OF OPINION AND NO TANGIBLE MATERIAL WAS BR OUGHT ON RECORD BEFORE INITIATING ACTION U/S 147 OF THE ACT. ITA NO. 5040/DEL./2010 15 6.. TO SUM UP, IN THE INSTANT CASE, AS IS APP ARENT FROM THE FACTS NARRATED IN THE IMPUGNED ORDERS, THE AO REOPENED TH E ASSESSMENT COMPLETED ON 13.1.2003 U/S 143(3) OF THE ACT MERELY ON THE BASIS OF FACTS ALREADY AVAILABLE BEFORE HIM AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. NOT EVEN A WHISPER IS EVIDE NT FROM THE REASONS RECORDED OR THE FACTS NARRATED IN THE IMPUG NED ORDERS AS TO WHETHER OR NOT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECES SARY FOR HIS ASSESSMENT. THE REASONS DO NOT INDICATE WHY AND HOW THE ASSESSEE FAILED TO MAKE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS IN RELATION TO SHIFTING EXPENSES. WE ARE OF THE OPINIO N 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 F AILURE . IN THESE CIRCUMSTANCES, IN ABSENCE OF ANY FAILURE ON THE PAR T 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 COMPLETED U/S 143(3) OF THE ACT NOR ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL THE MATERIAL FACTS HAS BEEN ASCRIBED IN THE CIRCUMSTANC ES NARRATED BEFORE US. IT CANNOT BE SAID THAT THE ASSESSEE SUPP RESSED ANY MATERIAL FACTS. IT IS WELL-SETTLED THAT IF A NOTI CE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED WITHOUT THE JURISDICTION AL FOUNDATION U/S 147 OF THE ACT BEING AVAILABLE TO THE AO, THE NOTIC E AND THE SUBSEQUENT PROCEEDINGS WILL BE WITHOUT JURISDICTIO N AND THUS, LIABLE ITA NO. 5040/DEL./2010 16 TO BE STRUCK DOWN . IN VIEW THEREOF, WE HAVE NO HE SITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A) IN QUASH ING THE REASSESSMENT ORDER .CONSEQUENTLY, GROUND NO. 1 IN T HE APPEAL IS DISMISSED. AS A COROLLARY, THE GROUND NO. 2 IN TH E APPEAL OF THE REVENUE DOES NOT SURVIVE FOR OUR ADJUDICATION AND IS , THE REFORE, TREATED AS INFRUCTUOUS. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFOR E US IN TERMS OF RESIDUARY GROUND NO. 3 IN THE APPEAL, ACCORDINGLY, THIS GROUN D IS DISMISSED. 8. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 9. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (DIVA SINGH ) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KAVITA COPY OF THE ORDER FORWARDED TO :- 1. RT PACKAGING LTD.,407-408, DEEPALI BUIL DING,92, NEHRU PLACE, NEW DELHI. 2. ASSISTANT COMMISSIONER OF INCOME-TAX,CIRCL E-15(1), CR BUILDING, IP ESTATE NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-XVIII, NEW DELHI 5. DR, ITAT,F BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT