RADHEY SHYAM HEDA, Ajmer V. ITO, Ajmer

ITA 511/JPR/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4537 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Reopening of assessment; Search and seizure; Tangible material; Wrong claim; Accommodation entries; Penny stocks; Reason to believe; Reassessment proceedings
• Section: 143(3); 54F; 147; 148; 132; 2; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 511/JP/2016 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2005-06 RADHEY SHYAM HEDA, 1943-C-1, RAMBLE ROAD, AJMER. CUKE VS. INCOME TAX OFFICER, WARD-2(1), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACPH 8574 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANJEEV JAIN (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 29/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09/02/2016 OF LD. CIT(A), AJMER FOR THE A.Y. 2005-0 6. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON F ACTS OF THE CASE BY CONFIRMING INITIATION OF REASSESSMENT PROCEEDINGS B Y THE A.O. AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESS MENT YEAR. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS OF THE CASE BY CONFIRMING ADDITION MADE BY THE LD. A.O. BY TREATIN G INCOME OF RS. 5,11,026/- FROM SALE OF SHARES, HELD FOR INVESTMENT PURPOSES, AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM CA PITAL GAINS. 3. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS OF THE CASE BY CONFIRMING ADDITION MADE BY THE LD. A.O. BY DISALLO WING EXEMPTION ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 2 U/S 54EC OF THE I.T. ACT, 1961 ON INVESTMENT OF RS. 5,20,000/- IN R.E.C. BONDS, BEING ELIGIBLE BONDS. 4. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS OF THE CASE BY CONFIRMING ADDITION MADE BY THE LD. A.O. BY DISALLO WING EXEMPTION U/S 54F OF THE I.T. ACT, 1961 AMOUNTING TO RS. 1,22 ,790/-. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, D ELETE OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. GROUND NO. 1 OF THE APPEAL IS REGARDING VALIDITY OF REOPENING OF THE ASSESSMENT. THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31/10/2005 DECLARING TOTAL INCOME OF RS. 1,40,370/-, WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND SUBSEQUENTLY THE ASSESSMENT WAS COMPLET ED U/S 143(3) READ WITH SECTION 147 OF THE ACT ON 25/08/2009 ON TH E RETURNED INCOME. IN THE ORIGINAL RETURN FILED, THE ASSESSEE HAD DECL ARED LONG TERM CAPITAL GAIN ON SALE OF SHARES AT RS. 5,11,026/- AND CLAIME D EXEMPTION U/S 54EC OF THE ACT AS THE ASSESSEE INVESTED RS. 5,20,000/- IN REC BONDS. SUBSEQUENTLY, AS PER THE INFORMATION RECEIVED BY TH E ASSESSING OFFICER, IT WAS FOUND THAT THE ASSESSEE EARNED CAPITAL GAIN ON S ALE OF 7300 SHARES OF M/S TALENT INFOWAY LTD. THROUGH SHARE BROKER M/S M AHASAGAR SECURITIES PVT. LTD., MUMBAI AND AS PER THE OUTCOME OF THE INVESTIGATION CONDUCTED BY THE DEPARTMENT IN THE CASE OF M/S MUKE SH M. CHOKSI GROUP, IT WAS FOUND THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 3 DERIVING LONG TERM CAPITAL GAIN THROUGH THE SAID BR OKER WERE NOT REAL. ACCORDINGLY, THE ASSESSING OFFICER REOPENED THE ASS ESSMENT BY ISSUING A NOTICE U/S 148 OF THE ACT ON 19/03/2012 TO ASSESS T HE LONG TERM CAPITAL GAIN OF RS. 5,11,026/- AS INCOME FROM OTHER SOURCES . THE ASSESSING OFFICER COMPLETED THE REASSESSMENT ON 21/11/2012 WH EREBY THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AND EXEMPTION C LAIMED U/S 54EC OF THE ACT WAS DENIED AND THE SAME AMOUNT WERE ADDED TO THE INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOURCES BEING SHA M TRANSACTION. THE ASSESSING OFFICER HAS ALSO DENIED THE EXEMPTION U/S 54F OF THE ACT AGAINST THE LONG TERM CAPITAL GAIN ON SALE OF LAND. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND ALSO RAISED AN OBJECTION AGAINST THE VALIDITY OF REOPENING OF THE ASSESSMENT BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT INITIALLY THE ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 147 OF THE ACT AND THEREAFTER THE ASSESSING OFFICER HAS AGAIN REOP ENED THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSE SSMENT YEAR. THE LD AR HAS REFERRED TO THE REASONS RECORDED BY THE ASSESSI NG OFFICER A.O. AT PAGE 5 TO 7 OF THE PAPER BOOK AND SUBMITTED THAT ON CE THE ASSESSEE HAS MADE FULL DISCLOSURE OF ALL RELEVANT FACTS AND MATE RIAL IN RESPECT OF THE ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 4 TRANSACTION OF PURCHASE AND SALE OF SHARES THEN THE REOPENING AFTER FOUR YEARS IS NOT VALID AS THE SALE IS HIT BY PROVISO TO SECTION 147 OF THE ACT. THE LD AR HAS SUBMITTED THAT DURING THE ORIGINAL ASS ESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 147 OF THE ACT, THE ASS ESSING OFFICER VERIFIED THE SOURCE OF INVESTMENT IN THE SHARES OF NTPC AND TCS. DURING THE COURSE OF PROCEEDINGS, THE ASSESSEE DULY EXPLAI NED THE SOURCE OF INVESTMENT IN THE SHARES WHICH INCLUDES THE SALE PR OCEEDS OF RS. 5,19,611.22 ON ACCOUNT OF 7300 SHARES OF M/S TALENT INFOWAY LTD.. THUS, THE ASSESSING OFFICER DULY EXAMINED THE DETAILS FUR NISHED BY THE ASSESSEE WHILE PASSING THE REASSESSMENT ORDER DATED 25/8/2009 . THE LD AR HAS ASSERTED THAT THE ASSESSEE DISCLOSED FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT AT THE TIME OF ORIGINA L ASSESSMENT AND THEREFORE, THERE WAS NO FAILURE ON THE PART OF THE A SSESSEE IN DISCLOSING THE DETAILS OF SHARE TRANSACTION ENTERED INTO BY HI M. THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 19/3/2012, WHICH IS AFTER EX PIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, THEREFORE, THE REASSESSMENT PROCEEDINGS HAS BEEN INITIATED ON THE BASIS OF SHAR ES OF M/S TALENT INFOWAY LTD. TREATING IT AS BOGUS TRANSACTION WITHOUT MAKING OUT A CASE THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL RELEVANT MATERIAL NECESSARY FOR ASSESSMENT. HEN CE, THE LD AR HAS SUBMITTED THAT THE REOPENING IS NOT VALID AND WITHOU T JURISDICTION AS THE ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 5 CONDITION STIPULATED IN THE PROVISO TO SECTION 147 OF THE ACT WAS NOT SATISFIED THAT THE ASSESSING OFFICER WAS HAVING REAS ONS TO BELIEVE SUCH ESCAPEMENT HAS OCCURRED BY THE REASON OF EITHER OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL RELEVA NT MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IN SUPPORT OF HIS CON TENTION, HE HAS RELIED UPON THE DECISION OF THE HONBLE ALLAHABAD HIGH COU RT IN THE CASE OF J.P. BAJPAI (HUF) VS CIT (2004) 140 TAXMANN 34 (ALL) AND S UBMITTED THAT THE HON'BLE HIGH COURT HAS HELD THE ONCE THE ASSESSEE H AS DISCLOSED ALL PRIMARY FACTS I.E. THE END OF HIS DUTY. IT IS THEN FOR THE ASSESSING AUTHORITY TO DRAW THE PROPER CONCLUSIONS FROM THOSE FACTS. IF THE CONCLUSIONS DRAWN BY THE ASSESSING OFFICER FROM THE PRIMARY FACTS DISCLOSED BY THE ASSESSEE ARE ERRONEOUS, THE ASSESS ING AUTHORITY CANNOT REOPEN THE ASSESSMENT. THE LD AR HAS ALSO RELIED UP ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INFOTECH L TD. VS ACIT (2010) 329 ITR 257 (BOM) AS WELL AS DECISION IN THE CASE OF TITANOR COMPONENTS LIMITED VS ACIT 343 ITR 183 (BOM). HENCE, THE LD AR H AS SUBMITTED THAT BOTH THE CONDITIONS SET OUT IN THE PROVISO TO SECTI ON 147 SHOULD HAVE BEEN SATISFIED FOR INITIATING THE PROCEEDINGS FOR R EASSESSMENT. HOWEVER, NONE OF THE CONDITIONS ARE SATISFIED, THEREFORE, TH E REASSESSMENT PROCEEDINGS ARE VOID AB-INITIO AND LIABLE TO BE QUA SHED. ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 6 5. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT IN THE ORIGINAL ASSESSMENT, THE ISSUE OF INVESTMENT IN THE SHARES O F NTPC AND TCS WAS EXAMINED BY THE ASSESSING OFFICER AND THEREFORE, TH E ISSUE OF GENUINENESS OF THE TRANSACTION OF SALE OF SHARES OF M/S TALENT INFOWAY LTD. AS WELL AS LONG TERM CAPITAL GAIN WAS NOT EITHER THE SUBJECT MATTER OR THE MATTER OF ENQUIRY BY THE ASSESSING OFFICER, THE REFORE, ONCE THIS ISSUE WAS NOT CONSIDERED DURING THE ORIGINAL ASSESSMENT TH EN IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE LD DR HAS SUBMITTED THAT AFT ER THE ORIGINAL ASSESSMENT PASSED ON 25/8/2009 THERE WAS A SEARCH U /S 132 OF THE ACT IN THE MONTH OF NOVEMBER, 2009 WHEREIN THE NEW FACTS WERE DISCOVERED THAT THE BROKERS WHICH ARE GROUP COMPANIES OF M/S MU KESH M. CHOKSI WERE INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS LONG TERM CAPITAL GAINS IN RESPECT OF PENNY STOCKS INCLUDING THE SHARES OF M/S TALENT INFOWAY LTD.. THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE SHARES THROUGH THE BROKER M/S MAHASAGAR SECURITIES PVT. LTD., WHICH IS ONE OF THE GROUP COMPANIES OF M/S MUKESH M. CHOKSI, THEREFORE, ONCE THE FACT OF BOGUS ACCOMMODATION ENTRIES OF LONG TER M CAPITAL GAIN WAS DISCOVERED IN THE SEARCH AND INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING, THE ASSESSING OFFICER WAS HAVING A TANGIBLE MATERIAL TO FORM THE BELIEVE THAT THE INCOME ASSESSABLE TO T AX HAS ESCAPED ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 7 ASSESSMENT. HENCE, THE DR HAS SUBMITTED THAT THE ST ATEMENT OF MUKESH M. CHOKSI RECORDED DURING THE SEARCH ON 25/11/2009 IS A TANGIBLE MATERIAL FOR THE ASSESSING OFFICER TO FORM THE REAS ONS TO BELIEVE THAT THE INCOME CLAIMED AS LONG TERM CAPITAL GAIN IS ASSESSA BLE TO TAX BUT HAS ESCAPED ASSESSMENT. HE HAS RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THIS IS THE SECOND REOPENING OF THE ASSESSMENT AS THE FIRST REASSESSMENT WAS COMP LETED BY THE ASSESSING OFFICER VIDE ORDER DATED 25/8/2009 ON THE ISSUE OF SOURCE OF INVESTMENT IN THE SHARES OF NTPC AND TCS. IT IS ALSO NOT IN DISPUTE THAT THE SECOND REOPENING WAS INITIATED VIDE NOTICE DATED 19/3/2012 IS AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNDE R CONSIDERATION. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT SECON D TIME BY RECORDING THE REASONS AS UNDER: REASON FOR INITIATING PROCEEDINGS U/S 148 OF THE I . T. ACT. 1961 DATE 19.03.2012 AS PER INFORMATION RECEIVED IT IS NOTED THAT SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT WAS UNDERTAKEN IN THE CASE OF M/ S MAHASAGAR SECURITIES PRIVATE LIMITED ON 25.11.2009. DURING THE COURSE OF THE SEARCH IT WAS REVEALED THAT THE ABOVE GROUP IS RUN BY MUKESH CHOKSI AND WA S ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFIT/LOSS, ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 8 SHORT TERM/LONG TERM GAIN/LOSS. COMMODITY PROFIT/LO SS ON COMMODITY TRADING (THROUGH MCX) AND HAD BEEN CONTINUING THIS BUSINESS FOR MANY YEARS. ASSESSEE (BENEFICIARIES HAS TAKEN BENEFIT OF RS.5,1 9,780/- DURING THE ASSESSMENT YEAR 2005-06 BUT ASSESSEE HAS DECLARED L TCG OF RS 5,11,027/- AND SAME CLAIMED AS DEDUCTION 54EC OF I.T.ACT,1961. SIN CE THE ABOVE ASSESSEE HAS CLAIMED BENEFIT OF BOGUS SPECULATION PROFIT IN THE RETURN OF INCOME A.YR. 2005- 06 AND THE SAME HAS TO BE TAXED UNDER THE HEAD 'INC OME FROM OTHER SOURCE' AND THE BENEFIT OF SEC. 54EC OF I.T. ACT, 1961 IS N OT ALLOWABLE TO THE ASSESSEE. THEREFORE, I HAVE REASON TO BELIEVE THAT ASSESSEE H AS MADE AN ESCAPEMENT OF INCOME OF RS. 5,19,780/- DURING THE A.YR. 2005-06 A ND IT IS FIT CASE TO ISSUE NOTICE U/S 148 FOR THE ASSESSMENT YEAR 2005-06. IT IS EVIDENT FROM THE REASONS RECORDED BY THE ASSE SSING OFFICER FOR REOPENING OF THE ASSESSMENT THAT THE REOPENING IS B ASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, WH ICH WAS GATHERED DURING THE SEARCH AND SEIZURE ACTION IN CASE OF M/S MAHASAGAR SECURITIES PVT. LTD., WHICH IS A SHARE BROKER THROUGH WHOM THE A SSESSEE HAS PURCHASED AND SOLD THE SHARE OF M/S TALENT INFOWAY LT D.. THOUGH THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WAS SUBSEQUENT TO THE ORIGINAL ASSESSMENT PASSED U/S 143(3) READ WITH SECT ION 147 OF THE ACT ON 25/8/2009, HOWEVER, THE ASSESSING OFFICER HIMSELF HAS NOT ALLEGED IN THE REASONS RECORDED THAT THERE IS FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL RELEVANT MATERIAL FACT S NECESSARY FOR ASSESSMENT. THEREFORE, ONCE THE ASSESSING OFFICER HI MSELF HAS NOT STATED IN THE REASONS THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL RELEVANT FACTS NECESSA RY FOR ASSESSMENT THEN ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 9 THE REOPENING OF ASSESSMENT AFTER FOUR YEARS FROM T HE END OF THE ASSESSMENT YEAR IS NOT PERMITTED AS HIT BY PROVISO TO SECTION 147 OF THE ACT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TIT ANOR COMPONENTS LIMITED VS ACIT (SUPRA) WHILE DEALING WITH THE ISSUE OF VALIDITY OF REOPENING HAS OBSERVED AND HELD IN PARA 4 TO 6 AS U NDER: 4. ACCORDING TO THE LEARNED COUNSEL, THE REVENUE IS EN TITLED TO ISSUE SUCH A NOTICE IF THE AO HAS REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE (A) TO MAKE A RETURN UNDER S. 139 OR (B) IN RESPONSE TO A NOTICE ISSUED UNDER SUB-S. (1) OF S. 142 OR S. 148 OR (C) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THAT ASSESSMENT YEAR. SINCE THE FIRST TWO CONDITIONS ARE NOT PLEADED BY THE RESPONDENTS, IT IS THE SUBMISSION OF THE PETITIONER THAT THE NOT ICE IS WHOLLY UNWARRANTED AND INVALID SINCE THERE IS NO ALLEGATION WHATSOEVER THA T THE PETITIONER HAS FAILED TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMEN T. THIS SUBMISSION CAN BE CONSIDERED ONLY WITH REFERENCE TO THE REASONS PUT F ORTH BY THE RESPONDENTS FOR ISSUING THE NOTICE. THE LETTER DT. 27TH JAN., 2005, INTER ALIA , STATES THAT THE AO HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT BECAUSE THE PETITIONER HAS WRONGLY CLAIMED DEDUCTION UNDER S. 80-IA IN RESPECT OF INCOME WHICH WAS NOT DERIVED FROM THE INCOME OF THE PETITIONER'S UNIT OF KUNDAIM. FURTHER, THAT LONG- TERM CAPITAL GAINS HAVE BEEN WRONGLY CLAIMED BY THE ASSESSEE WHICH HAVE BEEN WRONGLY CONSIDERED FOR THE SET OFF OF THE UNIT OF K UNDAIM WHICH HAS RESULTED IN ESCAPEMENT OF INCOME. NOWHERE HAS THE AO STATED THA T THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR ASSESSMENT. HAVING REGARD TO THE PURPOSE OF THE SEC TION, WE ARE OF THE VIEW THAT THE POWER CONFERRED BY S. 147 DOES NOT PROVIDE A FR ESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNLESS THE MISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. INDEED, WH ERE THE ASSESSEE HAS FULLY DISCLOSED ALL THE MATERIAL FACTS, IT IS NOT OPEN FO R THE AO TO REOPEN THE ASSESSMENT ON THE GROUND THAT THERE IS A MISTAKE IN ASSESSMENT . MOREOVER, IT IS NECESSARY FOR THE AO TO FIRST OBSERVE WHETHER THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND HAVING OBSERVED THAT THERE IS SUCH A FAILURE TO PROCEED UNDER S. 147. IT MUST FOLLOW THA T WHERE THE AO DOES NOT RECORD SUCH A FAILURE HE WOULD NOT BE ENTITLED TO PROCEED UNDER S. 147. AS OBSERVED EARLIER, THE AO HAS NOT RECORDED THE FAILURE ON THE PART OF THE PETITIONER TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASST. YR. 1997-98. WHAT IS RECORDED IS THAT THE PETITIONER HAS WRONGLY CLAIMED CERTAIN DEDUCTIONS WHICH HE WAS NOT ENTITLED TO. THERE IS A WELL KNOWN DIFFEREN CE BETWEEN A WRONG CLAIM MADE BY AN ASSESSEE AFTER DISCLOSING ALL THE TRUE A ND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATER IAL FACTS FULLY AND TRULY. IT IS ONLY IN THE LATTER CASE THAT THE AO WOULD BE ENTITL ED TO PROCEED UNDER S. 147. WE ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 10 ARE SUPPORTED IN THIS VIEW BY A DECISION OF A DIVIS ION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. V. R.B. WADKAR, ASSTT. CIT [2004] 190 CTR (BOM) 166 : [2004] 268 ITR 332 (BOM) WHERE IN A SIMILAR CASE THE DIVISION BENCH HELD TH AT REASON THAT THERE WAS A FAILURE TO DISCLOSE FULLY A ND TRULY THAT ALL MATERIAL FACTS MUST BE READ AS RECORDED BY THE AO AND IT WOULD NOT BE PERMISSIBLE TO DELETE OR ADD TO THOSE REASONS AND THAT THE AO MUST BE ABLE T O JUSTIFY THE SAME BASED ON MATERIAL RECORD. THE DIVISION BENCH OBSERVED AS FOL LOWS : 'HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT O R MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE.' 5. WE FIND IN THE CIRCUMSTANCES THAT THE IMPUGNED NOT ICE IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED AND SET ASIDE. ACCORDINGLY, TH E WRIT PETITION IS ALLOWED IN TERMS OF PRAYER CLS. (A) AND (C). 6. RULE MADE ABSOLUTE IN TERMS OF PRAYER CLS. (A) AND (C) WHICH READ AS FOLLOWS : ( A ) THAT THIS HON'BLE COU RT MAY BE PLEASED TO ISSUE A WRIT OF CERTIORARI OR A WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION UNDER ART. 226 OF THE CONSTITUTION OF INDIA, CALLING FOR THE RECORDS OF ITS CASE INSOFAR AS THEY RELATE TO THE IMPUGNED NOTICE DT. 18TH MARCH, 2004, THE IMPUGNED SATISFACT ION OF RESPONDENT NO. 2 UNDER S. 151 OF THE ACT, IF ANY, AND THE IMPUGNED R EASSESSMENT PROCEEDINGS OF THE PETITIONER FOR ASST. YR. 1997- 98 AND AFTER GOING THROUGH THE SAME AND EXAMINING T HE LEGALITY AND VALIDITY THEREOF, TO QUASH AND CANCEL THE SAME. ( C ) THAT THIS HON'BLE COURT MAY BE PLEASED TO ISSUE A W RIT OF PROHIBITION OR A WRIT IN THE NATURE OF PROHIBITION OR ANY OTHER APPROPRIATE WRIT , ORDER OR DIRECTION UNDER ART. 226 OF THE CONSTITUTION OF INDIA, PERMANENTLY RESTRAINING AND PROHIBITING RESPONDENT NO. 1 FROM TAKING ANY ACTION IN FURTHERANCE, OR IN PURSUA NCE OF OR IN IMPLEMENTATION OF THE IMPUGNED NOTICE DT. 18TH MARCH, 2004, AND PERMANENT LY PROHIBITING AND RESTRAINING RESPONDENT NO. 1 FROM REASSESSING THE INCOME OF THE PETITIONER FOR ASST. YR. 1997-98. THEREFORE, ONCE THE ASSESSING OFFICER ITSELF HAS NOT RECORDED IN THE REASONS THAT THERE IS FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSME NT THEN THE ASSESSING OFFICER HAS NO JURISDICTION TO REOPEN THE ASSESSMEN T AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. ACCORDINGLY, THE RE OPENING OF THE ASSESSMENT IS NOT SUSTAINABLE IN LAW AND THE SAME IS QUASHED. ITA 511/JP/2016_ RADHEY SHYAM HEDA VS ITO 11 7. SINCE WE HAVE QUASHED THE REOPENING OF THE ASSESS MENT BEING INVALID, THEREFORE WE DO NOT PROPOSE TO GO INTO THE OTHER ISSUES RAISED BY THE ASSESSEE IN THIS APPEAL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29 TH OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RADHEY SHYAM HEDA, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-2(1),AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 511/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR