The ACIT, GNR-Circle, Ahmedabad V. Gujarat State Petroleum Corporation Ltd., Gandhinagar

ITA 547/AHD/2009

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9754 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-01-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 19-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Reopening of assessment; Depreciation; Question of law; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 148; 139

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.547/AHD/2009 /BLOCK ASSTT. YEAR: 2000-2001 ACIT, GANDHINAGAR GANDHINAGAR. VS GUJARAT STATE PETROLEUM CORPORATION LTD. GSPC BHAVAN, SECTOR NO.11 GANDHINAGAR. PAN : AABCG 4502 F %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : MS.VIBHA BHALLA, CIT - DR ASSESSEE BY : SHRI S.N. SOPARKAR WITH SHRI H.P. SINGH / DATE OF HEARING : 20/01/2016 / DATE OF PRONOUNCEMENT: 20/01/2016 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A), GANDHINAGAR DATED 18.11.2008 PASSED FOR THE ASSTT.Y EAR 2000-2001. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN QUASHING THE REASSESSMENT ORDER BY HOLDING THAT THE AO IS NOT JUSTIFIED IN REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE U NDER SECTION 148 OF THE INCOME TAX ACT. ITA NO.547/AHD/2009 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FIELD ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.8,91,38,253/-. THE AS SESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 27.3.2003 DETERM INING TOTAL INCOME AT RS.9,00,78,253/-. THE LD.AO HAD ISSUED A NOTICE UN DER SECTION 148 AFTER RECORDING THE FOLLOWING REASONS: 'THE ASSESSES COMPANY IS A CO. OWNED BY THE GOVERNM ENT OF GUJARAT ENGAGED IN THE BUSINESS OF EXTRACTION OF MINERAL OI LS HAVING BEEN ENTERED INTO AN AGREEMENT WITH NIKO RESOURCES LTD. AND HOEC LTD. FOR OIL EXPLORATION IN JOINT VENTURE. THE ASSESSMENT FOR THE A.Y. 2000-01 HAS BEEN FINALI ZED U/S. 143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS.9,00,78,253/ -. THE ASSESSES HAS BEEN ALLOWED AN ALLOWANCE OF RS. 24,23,00,497/- U/S . 42 OF THE I.T. ACT, 1961. ON PERUSAL OF THE STATEMENT OF INCOME ENCLOSED WITH THE RETURN FILED ON 29/11/2000, IT IS SEEN THAT THE ASSESSEE HAS CLAIME D DEDUCTION U/S. 42 OF THE I.T.ACT IN RESPECT OF INVESTMENT MADE DURING TH E YEAR FOR OIL EXPLORATION IN JOINT VENTURE WITH NIKO RESOURCES LT D. AND HOEC LTD. AMOUNTING TO RS. 42,23,00,497/-. AS STATED ABOVE, THE ASSESSEE HAS ALSO CLAIMED DEDU CTION U/S, 42 OF THE ACT AGAINST INCOME COMPUTED UNDER THE PROVISIONS OF SECTION 30 TO 43D (AS PER SECTION 29) OF THE I.T. ACT. IN THE STA TEMENT OF INCOME ENCLOSED WITH THE ORIGINAL RETURN, IT WAS CLAIMED A S UNDER:- LESS DEDUCTION U/S. 42 OF THE I.T. ACT IN RESPECT OF SHA RES OF INVESTMENT MADE DURING THE YEAR FOR OIL EXPLORATION IN JOINT V ENTURE WITH - NIKO RESOURCES LTD. 24,22,40,223/- HOEC LTD. 60,2747- 24,23,00,497/- THUS, THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF INVESTMENT MADE DURING THE YEAR, WHEREAS AS PER SECTION 42 OF THE ACT, DEDUCTION ITA NO.547/AHD/2009 3 IS ALLOWABLE IN RESPECT OF INFRUCTUOUS OR ABORTIVE EXPLORATION EXPENSES PRIOR TO COMMERCIAL PRODUCTION AS WELL AS DRILLING AND EXPLORATION EXPENSES OUT OF COMMERCIAL PRODUCTION WHICH ARE SPE CIFICALLY COVERED IN AGREEMENT AS ENVISAGED IN SECTION 42 OF THE ACT. ACCORDINGLY, ANY INVESTMENT MADE DURING THE YEAR IS NOT ALLOWABLE U/ S. 42 OF THE ACT IN VIEW OF THESE FACTS, AN ALLOWANCE U/S. 42 CLAIMED B Y THE ASSESSEE IS NOT IN ORDER, WHICH HAS RESULTED IN EXCESSIVE ALLOWANCE AND RELIEF TO THE ASSESSEE ENTAILING TO UNDER ASSESSMENT TO THAT EXTE NT. ACCORDINGLY, I HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSE SSEE HAS ESCAPED TO TAX FOR THE A.Y.2000-01 TO THE EXTENT OF RS.24,23,0 0,497/- 4. THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF INVESTMENT MADE DURING THE YEAR. WHEREA S, AS PER SECTION 42 OF THE INCOME TAX ACT, THE DEDUCTION IS ALLOWABLE IN R ESPECT OF INFRUCTUOUS OR ABORTIVE EXPLORATION EXPENSES PRIOR TO COMMERCIAL P RODUCTION AS WELL AS DRILLING AND EXPLORATION EXPENSES OUT OF COMMERCIAL PRODUCTION. THE AO WHILE RECORDING REASONS FOR THE PURPOSE OF REOPENIN G OF THE ASSESSMENT HARBOURED A BELIEF ON THE BASIS OF STATEMENT OF INC OME SUBMITTED BY THE ASSESSEE. HE PASSED RE-ASSESSMENT ORDER ON 17.12.2 007 UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT. THE LD.AO HAS DE TERMINED THE TAXABLE INCOME AT RS.33,89,88,080/-. HE MADE DISALLOWANCE OF RS.24,89,09,825/-. THE COMPUTATION MADE BY THE AO AT THE END OF THE RE ASSESSMENT ORDER READS AS UNDER: TOTAL INCOME AS PER ORDER U/S.250 DATED 11/06/03 RS.9,00,78,253/- ADD: DISALLOWANCE OF CLAIM U/S.42 AS DISCUSSED ABOVE RS.24,23,00,497/- MISC. EXPENSES RS.66,09,328/- RS.24,89,09,825/- TOTAL INCOME ASSESSED RS.33,89,88,078/- OR FOUNDED OFF TO RS.33,89,88,080/- ITA NO.547/AHD/2009 4 5. DISSATISFIED WITH THE REASSESSMENT ORDER, THE AS SESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSES SEE CONTENDED THAT NOTICE UNDER SECTION 148 OF THE INCOME TAX WAS ISSUED AFTE R EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. THE ASSESSEE HAS ALREADY DISCLOSED ALL THE MATERIAL FACTS FULLY AND TRULY. THE AO HAS NO WHERE MADE OUT A CASE IN THE REASONS RECORDED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL THE MATERIAL FACTS FULLY AND TRULY. THE LD.CIT(A) HAS APPRECIAT ED THIS ASPECT AND QUASHED THE ASSESSMENT ORDER. 6. THE LD.DR WHILE IMPUGNING THE ORDER OF THE LD.CI T(A) HAS CONTENDED THAT UNDER SIMILAR CIRCUMSTANCES, ASSESSMENT WAS RE OPENED IN THE ASSTT.YEAR 1998-99. THE REOPENING OF THE ASSESSMENT WAS UPHEL D BY THE LD.CIT(A). THE REVENUE WAS AGGRIEVED WITH THE ORDER OF THE CIT(A) ON OTHER ISSUES AND FILED APPEAL BEARING ITA NO.2460/AHD/2003. THIS APPEAL C AME UP FOR HEARING BEFORE THE TRIBUNAL, AND THE TRIBUNAL HAS TOOK AN O BJECTION THAT THOUGH THE REOPENING HAS BEEN UPHELD BY THE CIT(A), BUT IT WAS NOT IN ACCORDANCE WITH LAW, AND THEREFORE, THE ISSUE REGARDING REOPENING O UGHT TO BE TAKEN FIRST. THE TRIBUNAL DID NOT ALLOW THE ASSESSEE TO RAISE THIS O BJECTION IN THE APPEAL OF THE REVENUE ON THE GROUND THAT THE ASSESSEE HAS NOT FIL ED CO. THE LD.DR CONTENDED THAT THIS INDICATE THAT REOPENING HAS BEE N UPHELD BY THE TRIBUNAL. SHE FURTHER RELIED UPON THE ORDER OF THE ITAT IN AS STT.YEAR 1999-2000, WHEREIN IN ITA NO.2196/AHD/2003, THE ASSESSEE HAD CHALLENGED REOPENING, WHICH HAS BEEN REJECTED BY THE TRIBUNAL BY FOLLOWIN G ITS ORDER IN THE ASSTT.YEAR 1998-99. THE LD.DR TOOK US THROUGH BOTH THESE ORDERS. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE CONTENDED THAT IN THESE TWO YEARS, THE TRIBUNAL HAS NOT SPECIFICALLY DEALT WITH THE OBJECTION OF THE ASSESSEE. HE PLACED RELIANCE ON THE JUDGMENT O F THE HONBLE GUJARAT HIGH ITA NO.547/AHD/2009 5 COURT IN TAX APPEAL NO.954 OF 2015 RENDERED IN THE CASE OF ASSESSEE, WHEREIN THE HONBLE HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL IN THE ASSTT.YEAR 2001-02, WHERE THE REOPENING OF THE ASSE SSMENT HAS BEEN QUASHED. ON THE STRENGTH OF THESE ORDERS, THE LD.COUSNEL FOR THE ASSESSEE CONTENDED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, AND REOPENING IS NOT JUSTIFIABLE. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE TRIBUNAL IN THE CASE OF NEPTUNE TEX TILE MILLS P.LTD. VS. ACIT, IN ITA NO.2195/AHD/2009 HAD MADE DETAILED ANALYSIS ON THE STRENGTH OF VARIOUS AUTHORITATIVE PRONOUNCEMENTS, DEMONSTRATING THE FACT THAT INTERDICTION PROVIDED IN PROVISO APPENDED TO SECTION 147 PUTS AN EMBARGO UPON THE POWERS OF THE AO TO REOPEN ANY ASSESSMENT WHERE THE ORIGINAL ASSESSMENT WAS PASSED UNDER SECTION 143(3) AND FOUR YEARS HAVE BEEN EXPIRED. THE ASSESSMENT IN SUCH SITUATION CANNOT BE REOPENED UNL ESS IT IS DEMONSTRATED THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY A ND TRULY. THE DISCUSSION MADE BY THE TRIBUNAL READ AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE REOPENING OF THE ASSESSMENT IS BAD IN LAW. FOR THE SAKE OF CONVENIENCE WE REPRODUCE SECTION 147 AND PROVISO THERETO:- 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISIONS O F SECTIONS 148 TO 153 ASSESS OR RE-ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, O R RECOMPUTED THE LOSS OR THE DEPRECIATION ALLOWANCE O R ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SE CTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT Y EAR): ITA NO.547/AHD/2009 6 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A R ETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, FOR THAT ASSESSMENT YEAR; [PROVIDED FURTHER THAT THE AO MAY ASSESS OR REASSES S SUCH INCOME OTHER THAN THE INCOME INVOLVING MATTERS WHIC H ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REV ISION WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSME NT]. THE REQUIREMENTS OF THE SECTION ARE AS UNDER :- (1) THE AO HAS REASON TO BELIEVE; (2) THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT; (3) IF FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASST. YEAR THEN SUCH ESCAPEMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE- (I) TO FILE A RETURN U/S 139; (II) TO FILE A RETURN IN RESPONSE TO NOTICE U/S 142 (1) OR SECTION 148; (III) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT S NECESSARY FOR THE ASSESSMENT. ALL THESE ASPECTS MUST COME IN THE REASONINGS RECOR DED BY THE AO. THE REASONS RECORDED BY THE AO SHOULD REFLE CT (I) ASSESSEE IN RESPECT OF WHOM ASSESSMENT IS SOUGHT TO BE REOPENED; (II) ASSESSMENT YEAR AS SOUGHT TO BE REOPENED; (III) AMOUNT OF INCOME WHICH HAS ESCAPED ASSESSMENT; (IV) HOW THE ORIGINAL ASSESSMENT HAS BEEN DONE WHETHER U/S 143(1) OR U/S 143(3) OR SEC.147/148; (V) WHAT IS THE REASON OF ESCAPEMENT OF ASSESSMENT; (VI) WHETHER THERE IS ANY FAILURE AS MENTIONED IN THE PROVISO IF ASSESSMENT IS SOUGHT TO BE REOPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASST. YEAR; ITA NO.547/AHD/2009 7 (VII) IN PARTICULAR, WHETHER THERE IS ANY THE FAILURE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YEAR. (VIII) IF ASSESSMENT IS DONE U/S 143(1), THEN WHETHER THE PROVISION OF SECTION 149 ARE APPLICABLE. 8. IF REASONS RECORDED DID NOT REFLECT THESE INGRE DIENTS THEN REOPENING CANNOT BE SUSTAINED. ON THE ASPECT O F NECESSITY TO MENTION THE FAILURE OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT HON. ALLAHABAD HIGH COURT IN CIT VS. PRADESHIYA IND USTRIAL AND INVESTMENT CORPORATION OF UTTAR PRADESH LTD (20 11) 332 ITR 324(ALL) HAS OBSERVED AS UNDER :- ADMITTEDLY, NOTICE UNDER SECTION 148 OF THE ACT WA S ISSUED AFTER THE EXPIRY OF FOUR YEARS. THE NOTICE UNDER TH E PROVISO OF SECTION 147 OF THE ACT CAN BE ISSUED AFTER THE E XPIRY OF FOUR YEARS ONLY IN CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PAR! OF THE ASSESSES TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSM ENT YEAR. FROM THE PERUSAL OF THE REASON RECORDED IT IS APPARENT THAT NO CASE HAS BEEN MADE OUT THAT THE ASSESSES HA D FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT AND NO OBSERVATION HAS BEEN MADE IN THIS REGARD, ON THE BASIS OF THE SAME MATERIAL WHICH WAS AVAILABLE ON RECORD, THE ASSESSING AUTHORITY WAS OF THE VIEW THAT THE DEDUCTION HAD BEEN WRONGLY ALLOWED UNDER S ECTION 36(1)(VIII) OF THE ACT. THE TRIBUNAL OBSERVED THAT THE ASSESSEE HAD FURNISHED THE REQUISITE DETAILS IN RES PECT OF LEASING INCOME AND UPFRONT FEE AS RECEIVED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME WA S DULY DISCLOSED IN THE AUDITED PROFIT AND LOSS ACCOU NT, AS IS EVIDENT FROM PAGES 4 AND 5 OF THE PAPER BOOK READ W ITH PAGE 23 OF THE PAPER BOOK AND ALSO COMPUTATION OF I NCOME FILED ALONG WITH RETURN, A COPY OF WHICH IS PLACED AT PAGES 33 TO 35 OF THE PAPER BOOK. THIS FINDING OF THE TRI BUNAL HAS NOT BEEN DISPUTED BY RAISING ANY QUESTION AND DURIN G THE COURSE OF THE ARGUMENT BY THE LEARNED COUNSEL FOR T HE APPELLANT. THEREFORE, WE ARE OF THE VIEW THAT ON TH E FACTS AND CIRCUMSTANCES, NO SUBSTANTIAL QUESTION OF LAW A RISES FOR CONSIDERATION BY THIS COURT. ITA NO.547/AHD/2009 8 LEARNED COUNSEL FOR THE APPELLANT CITED A DECISION OF THE BOMBAY HIGH COURT IN THE EASE OF DR. AMIN'S PATHOLO GY LABORATORY V. P. M. PROSAD, JOINT CIT [2001] 252 IT R 673 ; [2002] 172 CTR 696. WE HAVE GONE THROUGH THE DECISI ON OF THE BOMBAY HIGH COURT. WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. IN THE SAID CASE, THE BOMBAY HIGH COURT HAS HELD THAT THE ASSESSING AUTHORITY HAS OVERLOOKED THE DISPUTED ITE M WHICH HE HAS NOTICED SUBSEQUENTLY AND AT THE TIME OF PASS ING THE ORIGINAL ORDER OF ASSESSMENT, HE COULD NOT BE SAID TO HAVE OPINED ON THE ABOVE ITEM. THEREFORE, THERE WAS NO C HANGE OF OPINION. WHILE IN THE PRESENT CASE, COMPLETE DET AILS WERE FURNISHED ALONG WITH THE RETURN AND DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS AND AFTER AN APPLICATION OF MIND, THE DEDUCTION UNDER SECTION 36(1)(VIII) OF THE ACT WAS ALLOWED. IN THE REASON RECORDED NO CASE HAS BEEN MA DE OUT THAT THERE WAS FAILURE TO DISCLOSE ANY MATERIAL PAR TICULAR ON THE PART OF THE ASSESSEE. THEREFORE, LIMITATION BEY OND THE PERIOD OF FOUR YEARS WAS NOT AVAILABLE TO THE ASSES SING AUTHORITY. ADMITTEDLY, THE NOTICE WAS ISSUED AFTER FOUR YEARS, THEREFORE, THE PROCEEDING WAS BARRED BY TIME AND THE TRIBUNAL HAS RIGHTLY HELD SO. FOR THE REASONS STATED ABOVE, THE APPEAL FAILS AND IS DISMISSED. HON. BOMBAY HIGH COURT, IN THE CASE OF BHAVESH DEVE LOPERS VS. A.O. & OTHERS (2010) 329 ITR 249 (BOM), NOTED T HAT THE RECORDED REASONS DID NOT SHOW FINDING THAT THER E WAS A FAILURE TO DISCLOSE NECESSARY FACTS. IN THAT CASE A SSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) FOR RS.3.85 CRORES W HICH WAS ALLOWED BY THE AO VIDE ORDER U/S 143(3) AND ASSESSMENT WAS SOUGHT TO BE REOPENED AFTER EXPIRY O F FOUR YEARS ON THE GROUND THAT THE CLAIM OF DEDUCTION U/S 80IB(10) INCLUDED INELIGIBLE ITEMS OF OTHER INCOME SUCH AS SOCIETY DEPOSITS, STREET PARKING CHARGES, SUNDRY BA LANCES, ETC. HON. BOMBAY HIGH COURT IN THE CASE OF BHAVESH DEVELOPERS VS. A.O. & OTHERS (SUPRA) OBSERVED AS UN DER :- HELD, ALLOWING THE PETITION, THAT EX FACIE, THE RE ASONS WHICH HAD BEEN DISCLOSED TO THE ASSESSEE WOULD SHOW THAT THE INFERENCE THAT THE INCOME HAD ESCAPED ASSESSMENT WA S BASED ON THE DISCLOSURE MADE BY THE ASSESSEE ITSELF . THE REASONS SHOWED THAT THE FINDING WAS BASED ON THE DE TAILS FILED BY THE ASSESSEE AND FROM THE PROFITS AND LOSS ACCOUNT. THEREFORE, IT WAS IMPOSSIBLE FOR THE ASSESSING OFFI CER TO EVEN DRAW THE INFERENCE THAT THERE WAS A FAILURE ON THE PART ITA NO.547/AHD/2009 9 OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR ASSESSMENT YEAR 20 02-03. SIGNIFICANTLY, THE REASONS THAT HAD BEEN DISCLOSED TO THE ASSESSEE DID NOT CONTAIN A FINDING TO THE EFFECT TH AT THERE WAS A FAILURE TO FULLY AND TRULY DISCLOSE ALL NECES SARY FACTS, NECESSARY FOR THE PURPOSE OF ASSESSMENT. IN THESE CIRCUMSTANCES, THE CONDITION PRECEDENT TO A VALID E XERCISE OF THE POWER TO REOPEN THE ASSESSMENT, AFTER A LAPSE O F FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, WAS ABSENT IN THE PRESENT CASE. THE NOTICE WAS NOT VALID AND WAS LIAB LE TO BE QUASHED. HON. SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) HELD THAT WHERE ASSESSM ENT IS SOUGHT TO BE REOPENED AFTER EXPIRY OF FOUR YEARS RE ASONS FOR BELIEF MUST SHOW LIVE LINK BETWEEN THE MATERIAL AND BELIEF. THERE SHOULD BE A RATIONAL CONNECTION OR RELEVANT B EARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION PO STULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETW EEN THE MATERIAL COMING TO THE NOTICE OF THE ITO AND THE FO RMATION OF THE BELIEF THAT THERE IS AN ESCAPEMENT OF INCOME OF THE ASSESSEE FOR THAT PARTICULAR YEAR BECAUSE OF HIS FA ILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. EVEN T HOUGH COURT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATER IAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON T HE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING OF THE ASSESSMENT, BUT AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER VA GUE AND INDEFINITE OR DISTANT, REMOTE AND FAR FETCHED, WHIC H WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESC APEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. HON. SUPREME COURT IN THE CASE OF CIT VS. KELVINATO R INDIA LTD. (2010) 320 ITR 561(SC), WHILE DISMISSING THE LEGISLATION OF SECTION 147, HELD THAT EXPRESSION R EASONS TO BELIEVE NEEDS TO BE GIVEN SCHEMATIC INTERPRETATION IN ORDER TO ENSURE AGAINST AN ARBITRARY EXERCISE OF POWER BY THE AO. THE POWER TO REOPEN THE ASSESSMENT IS NOT AKIN TO P OWER TO REVIEW THE ASSESSMENT AND MERE CHANGE OF OPINION WO ULD NOT JUSTIFY THE COURSE OF ACTION U/S 147. UNLESS TH E AO HAS TANGIBLE MATERIAL FACT TO REOPEN THE ASSESSMENT, PO WER U/S 147 CANNOT BE VALIDLY EXERCISED. 9. IN THE PRESENT CASE THERE IS A CLEAR CASE OF CHA NGE OF OPINION. EVEN THOUGH RELIANCE HAS BEEN PLACED ON TH E DECISION OF HON. SUPREME COURT IN BALLIMAL NAVALKIS HORE AND OTHERS VS. CIT (SUPRA), THAT JUDGMENT EXISTED A T THE ITA NO.547/AHD/2009 10 TIME WHEN THE AO TOOK THE DECISION U/S 143(3) AND H ELD THE EXPENDITURE AS CURRENT REPAIRS ALLOWABLE IN THE PRO FIT AND LOSS ACCOUNT UNDER SECTION 143(3). WITHOUT THERE BE ING MATERIAL ON RECORD AND AN ALLEGATION OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL WHICH COULD H AVE MADE THE AO TO BELIEVE THAT EXPENDITURE SO INCURRED WAS CAPITAL IN NATURE, NEW VIEW SO TAKEN FOR REOPENING OF ASSESSMENT WOULD BE ONLY A CHANGE OF OPINION. EARLI ER SAME EXPENDITURE WAS HELD AS REVENUE IN NATURE AND NOW CONSIDERED AS CAPITAL WOULD BE AKIN TO REVIEWING HI S OWN DECISION ON THE SUBJECT. HON. BOMBAY HIGH COURT IN THE CASE OF ICICI PRUDENCIAL LIFE INSURANCE CO. LTD. VS . ACIT (2010) 325 ITR 471 (BOM) ALSO HELD THAT WHEN THERE IS NO MATERIAL ON RECORD AND WITHOUT THERE BEING ANY ALLE GATION OF FAILURE OF THE ASSESSEE TO DISCLOSE SUCH MATERIAL F ACT, ASSESSMENT CANNOT BE REOPENED AFTER FOUR YEARS. HON . GUJARAT HIGH COURT IN INDUCTO ISPAT ALLOYS LTD. VS. ACIT (2010) 320 ITR 458 (GUJ) AND NIKHIL K. KOTAK VS. MA HESH KUMAR (2009) 319 ITR 445 (GUJ) ALSO HELD THAT WHERE THE PERIOD OF FOUR YEARS HAS EXPIRED FROM THE END OF RE LEVANT ASST. YEAR THE PROVISO TO SECTION 147 WOULD COME IN TO PLAY. IT STIPULATES THREE CONDITIONS AND ONE OF THOSE CON DITIONS IS SHOWING OMISSION OR FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT. WHEN WE GO THROUGH THE REASONS RECORDED AND AS MENTIONED ABOVE WE DO NOT FIND ANY REFERENCE TO SUCH FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT NECESSARY FOR ASSESSMENT AND IN FACT NARRATION GIVEN IN THE REASONS DO NOT SHOW ANY SUCH FAILURE WHICH COUL D BE INFERRED EVEN IF NOT SO MENTIONED SPECIFICALLY IN T HE REASONS. IN OUR CONSIDERED VIEW WHEN NEITHER THERE IS ANY AL LEGATION OF FAILURE NOR THE AO HAS BROUGHT ANY MATERIAL ON R ECORD TO SUGGEST ESCAPEMENT OF INCOME THEN IT IS ONLY A CHAN GE OF OPINION AND THEREFORE ASSESSMENT CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. 9. IN THE ASSESSMENT YEAR 2001-02, UNDER SIMILAR CI RCUMSTANCES, THE TRIBUNAL HAS QUASHED THE REOPENING OF THE ASSESSMEN T. THIS ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE GUJARAT HIG H COURT. THERE IS NO FAILURE AT THE END OF ASSESSEE TO DISCLOSE ALL MATE RIAL FACTS FULLY AND TRULY WITH RESPECT TO ASSESSMENT OF ITS INCOME. IN THE REASON S, THE LD.AO HAS NO WHERE MADE ALLEGATION TO THIS EFFECT NOR MADE REFERENCE T O ANY INFORMATION SHOWING ITA NO.547/AHD/2009 11 THE ESCAPEMENT OF INCOME FROM CHARGEABILITY OF TAX, ON ACCOUNT OF FAILURE OF ASSESSEE TO DISCLOSE ALL FACTS FULLY AND TRULY. TH EREFORE, RESPECTFULLY FOLLOWING THESE ORDERS, WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE LD.CIT(A). THE LD.CIT(A) HAS RIGHTLY QUASHED THE RE-ASSESSMENT. TH E APPEAL OF THE REVENUE IS DEVOID OF ANY MERIT, HENCE DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 20 TH JANUARY, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER