O.P.Yadav, New Delhi V. DCIT, Central Circ le-15, New Delhi

ITA 5523/DEL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6932 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2000-2001
• Appeal Filed On: 24-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Rectification of order; Period of limitation; Question of law; Tangible material; Accommodation entries; Block assessment; Revised return; Reason to believe; Reassessment proceedings; Borrowed satisfaction; Set aside; CHAPTER XIVB; CHAPTER IV
• Section: 143(3); 153A; 133(6); 139(5); 143(1); 191; 207; 158BC; 158B(a); 48; 13; 153; 119; 22; 131; 68; 148; 263; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: SMC-I, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.5523/DEL./2018 ASSESSMENT YEAR: 2000-01 SHRI O.P. YADAV, D-84, ANAND NIKETAN, NEW DELHI VS. DCIT, CENTRAL CIRCLE -15, NEW DELHI. PAN :AAAPY2870L (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 17/05/2018 PASSED BY THE LEARNED CIT(APPEALS)-42, N EW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 200 0-01 RAISING FOLLOWING GROUNDS: WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS.10,10,000/- MADE BY T HE LEARNED A.O. ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRIES. THE ASSESSEE RETAIN THE RIGHT TO ADD/DELETE/MODIFY ANY OF THE ABOVE GROUND(S) OF APPEAL. 2. THE ASSESSEE ALSO FILED FOLLOWING ADDITIONAL GROUN DS: APPELLANT BY SHRI KAPIL GOEL, ADV. RESPONDENT BY MS. RAKHI VIMAL, SR.DR DATE OF HEARING 02.09.2020 DATE OF PRONOUNCEMENT 10.09.2020 2 ITA NO.5523/DEL./2018 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ASSUMPTION OF JURI SDICTION U/S 147/148 OF THE ACT WHEN REASONS RECORDED IN PRESENT CASE AS EVIDENT FROM CURSORY LOOK TO THE SAME (ENCLOSED HER EWITH) ARE BASED ON NON INDEPENDENT APPLICATION OF MIND AND BA SED ON BORROWED SATISFACTION ONLY ERGO REOPENING PROCEEDIN GS, RESULTANT ASSESSMENT ORDER U/S 147/143(3) AND CIT-A ORDER MAY PLEASE BE QUASHED AS VOID AB INITIO. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ASSUMPTION OF JURI SDICTION U/S 147/148 OF THE ACT ON BASIS OF INVALID REASONS AS G LARING FROM JURISDICTIONAL ERROR MADE IN REASONS RECORDING THAT I) ALREADY FOR BLOCK PERIOD OF 01.04.1995 TO 07.03.2002 AN ASSESSM ENT IS ALREADY FRAMED U/S 158BC OF THE ACT VIDE ORDER DATE D 25/03/2004 INCLUDING SUBJECT PERIOD (ORDER ENCLOSED HEREWITH) WHICH ASPECT HAS BEEN ABORTED FROM REASONS RECORDED THUS VITIATING THE ENTIRE REOPENING EXERCISE , II) FURTH ER IN REASONS RECORDED NO DISCUSSION IS THERE ON NATURE OF ALLEGE D TRANSACTION AND SOMEWHERE IN REASONS IT IS WRONGLY MENTIONED TH AT ASSESSEE IS A COMPANY WHICH CONFIRMS OUR PLEA FOR INVALID RE OPENING AND III) FURTHER IN REASONS RECORDED NO EFFORT IS MADE TO THROW LIGHT ON ANY STATEMENT OF ANY PERSON AND ANY PRIOR ENQUIRY U /S 133(6) WHICH LED TO RECORDING OF WRONG REASONS ERGO REOPEN ING PROCEEDINGS, RESULTANT ASSESSMENT ORDER U/S 147/143 (3) AND CIT- A ORDER MAY PLEASE BE QUASHED AS VOID AB INITIO. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ASSUMPTION OF JURI SDICTION U/S 147/148 OF THE ACT WHEN FOR PASSING ORDER U/S 143(3 ) ADMITTEDLY NO RETURN U/S 148 WAS FILED (REFER PARA 6.5 OF CIT- A ORDER) THEN ASSESSMENT COULD HAVE BEEN FRAMED U/S 144 AND NOT U /S WHICH IS A FATAL ERROR ERGO REOPENING PROCEEDINGS, RESULT ANT ASSESSMENT OTDER U/S 147/143(3) AND CIT-A ORDER MAY PLEASE BE QUASHED AS VOID AB INITIO. TO SUPPORT ADMISSION OF OUR LEGAL & JURISDICTIONAL GROUND, WE RELY ON FOLLOWING CASE LAWS:- I. RECENT APEX COURT DECISION IN SINGHAD TECHNICAL SOCIETY (ORDER DATED 29/08/2017) 397 ITR 344 II. HONBLE DELHI HIGH COURT DECISION IN CASE OF F AST BOOKING (I) PVT. LTD., ORDER DATED 02.09.2015 (ITA NO. 334/2015) (37 8 ITR 693) III. HONBLE DELHI HIGH COURT DECISION IN CASE OF SILVER LINE, ORDER DATED 04.11.2015 (ITA NO. 578/2015) (383 ITR 455) IV. HONBLE PUNJAB AND HARYANA HIGH COURT DECISION IN CASE OF M/S VMT SPINNING CO. LTD., ORDER DATED 16.09.2016 (ITA NO. 445/2015) (389 ITR 326) 3 ITA NO.5523/DEL./2018 V. HONBLE GUJARAT HIGH COURT IN CASE OF JOLLY FAN TASY WORLD LTD 373 ITR 530 VI. DECISION OF THE HON'BLE BOMBAY HIGH COURT IN C IT VS. LALITKUMAR BARDIA (2017) 84 TAXMANN.COM 213 (BOM), OUR PLEA THAT REOPENING IS INVALID IS SUPPORTED BY FOLLOWING HIGH COURT/APEX COURT DECISIONS CONSIDERED IN DECISIONS ENLISTED BELOW. I) DELHI HIGH COURT DECISION IN CASE OF RMG POLYVIN YL 396 ITR 5; II) HIGH COURT OF DELHI IN THE CASE OF PCIT VS. MEE NAKSHI OVERSEAS P. LTD. 395 ITR 677 (DEL); III) HIGH COURT OF DELHI IN THE CASE OF PCIT VS. G &G PHARMA INDIA LTD. REPORTED IN 384 ITR 147 (DEL); ON BASIS OF ABOVE DISCUSSION WE MAKE A HUMBLE PRAYE R FOR I) ADMISSION OF OUR LEGAL AND JURISDICTIONAL ADDITIONAL GROUND A ND II) ALLOWING OUR APPEAL BY ACCEPTING OUR ADDITIONAL GROUND IN TOTO A ND III) QUASH THE ORDERS PASSED BY LD AO AND LD CIT-A. 3. IN THE ADDITIONAL GROUNDS, THE ASSESSEE HAS CHALL ENGED REASSESSMENT PROCEEDING ON THE GROUND OF NON-APPLIC ATION OF THE MIND BY THE ASSESSING OFFICER, WHILE REOPENING OF T HE ASSESSMENT AND ALSO ON THE GROUND OF THE SATISFACTION BORROWED FROM THE REPORT OF THE INVESTIGATION WING. 3.1 THE ADDITIONAL GROUNDS, BEING LEGAL IN THE NATURE AND NOT REQUIRING INVESTIGATION OF NEW FACTS, SAME WERE ADM ITTED IN VIEW OF THE SETTLED LAW AS HELD IN THE CASE OF M/S. NTPC VS. CIT REPORTED IN 229 ITR 383. 3.2 BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE AN INDIVIDUAL, IS PROPRIETOR OF A CONCERN, NAMELY, M/S YADAV & COMPANY, WHICH WAS ENGAGED IN SHARE TRADING BROKERA GE. THE ASSESSEE FILED ITS REGULAR RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30/10/2000 DECLARING INCOME OF 12,413/- AND AGRICULTURE INCOME OF 2,91,334/-. IN THE CASE OF THE ASSESSEE, A SEARCH UNDER SECTION 132 OF THE INCOME-TAX ACT, 196 1 (IN SHORT THE ACT) WAS CARRIED OUT AT HIS RESIDENCE ON 07/0 3/2000 AND 4 ITA NO.5523/DEL./2018 UNDISCLOSED INCOME UNEARTHED THEREIN, WAS SUBJECTED TO BLOCK ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE A CT FOR THE BLOCK PERIOD FROM 01/04/1995 TO 07/03/2000. THE BLO CK ASSESSMENT ORDER WAS PASSED ON 25/03/2004. 3.3 SUBSEQUENT TO THE BLOCK ASSESSMENT, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING TH AT M/S YADAV AND COMPANY I.E. THE PROPRIETARY CONCERN OF THE ASS ESSEE, HAD OBTAINED CERTAIN BOGUS/ACCOMMODATION ENTRIES OF 10,10,000/- FROM M/S R.K. AGRAWAL & COMPANY. THE ASSESSING OFFI CER RECORDED REASONS TO BELIEVE THAT INCOME OF RS.10,10 ,000/- ESCAPED TO TAX AND AFTER OBTAINING APPROVAL OF SUPE RIOR AUTHORITIES AS REQUIRED UNDER LAW, HE ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 26/03/2007. 3.4 DURING ASSESSMENT PROCEEDING, THE ASSESSEE CONTEND ED THAT THE BANK ACCOUNT IN WHICH THE ALLEGED BOGUS /ACCOMM ODATION ENTRIES WERE CREDITED, HAD ALREADY BEEN DISCUSSED I N THE BLOCK ASSESSMENT ORDER AND INCOME ON COMMISSION BASIS FOR ACCOMMODATION ENTRIES HAD BEEN ADDED TO THE UNDISCL OSED INCOME OF THE ASSESSEE. THIS CONTENTION WAS REJECTE D BY THE ASSESSING OFFICER HOLDING THAT ACCOMMODATION ENTRIE S RECEIVED FROM M/S RK AGARWAL AND COMPANY WERE NOT DISCUSSED IN THE BLOCK ASSESSMENT ORDER AND THIS WAS A SEPARATE ISSU E PERTAINING TO THE YEAR UNDER CONSIDERATION. THE REASSESSMENT W AS COMPLETED ON 13/12/2007 AFTER MAKING ADDITION OF 10,10,000/-. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFI CER BEFORE THE LD. CIT(A) ON LEGAL GROUNDS AS WELL AS ON MERIT. TH E LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BOTH ON THE LEGAL GROUND AS WELL AS ON THE MERIT. 5 ITA NO.5523/DEL./2018 4. BEFORE US, BOTH THE PARTIES APPEARED THROUGH VIDEOCONFERENCING FACILITY. THE LEARNED COUNSEL OF THE ASSESSEE FILED A PAPER-BOOK AND OTHER DOCUMENTS ELECTRONICAL LY. 5. THE LEARNED COUNSEL OF THE ASSESSEE BEFORE US PRES SED ADDITIONAL GROUND NOS. 1 AND 2 ONLY. HE REFERRED TO THE COPY OF THE REASONS RECORDED AND SUBMITTED THAT THE ASSESSI NG OFFICER HAS NOT APPLIED HIS MIND WHILE RECORDING THE REASON S. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE REASONS HAVE BEEN RECORDED ON BORROWED SATISFACTION OF THE INVESTIGAT ION WING AND NO INDEPENDENT INQUIRIES HAVE BEEN MADE BY THE ASSE SSING OFFICER. THE LEARNED COUNSEL ALSO SUBMITTED THAT NO REASSESSMENT PROCEEDING UNDER SECTION 148 CAN BE INVOKED AFTER C OMPLETION OF BLOCK ASSESSMENT PROCEEDING UNDER SECTION 158BC OF THE ACT. THE LEARNED COUNSEL REFERRED TO VARIOUS DECISIONS OF TH E COURTS IN SUPPORT OF HIS CONTENTIONS. ON THE MERIT OF THE ISS UE, HE SUBMITTED THAT IN BLOCK ASSESSMENT PROCEEDING, COMM ISSION INCOME AT THE RATE OF 1.5% OF THE RS.10134 LAKHS HA S ALREADY BEEN ASSESSED AND THUS NO SEPARATE ADDITION SHOULD BE MADE IN RESPECT OF THE ALLEGED ACCOMMODATION ENTRIES FROM M/S RK AGARWAL AND COMPANY AND THE BENEFIT OF THE TELESCOP ING SHOULD BE GIVEN TO THE ASSESSEE. 6. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE CONTEN TION OF THE NON-APPLICATION OF THE MIND AND BORROWED SATISFACTI ON ARE NOT GETTING ESTABLISHED IN THE FACTS OF THE CASE. ON TH E MERIT ALSO, SHE SUBMITTED THAT THE ASSESSEE FAILED TO SHOW THAT THO SE VERY ENTRIES OF ACCOMMODATION HAVE ALREADY BEEN ASSESSED IN THE BLOCK 6 ITA NO.5523/DEL./2018 PERIOD, AND THEREFORE THE ASSESSING OFFICER IS JUST IFIED IN MAKING THE IMPUGNED ADDITION. 7. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIA L RELIED UPON BY THE PARTIES. IN THE ADDITIONAL GROUNDS RAISED, THE LEARNED COUNSEL OF THE ASSESSEE HAS CHALLENGED VALIDITY OF THE REAS ONS RECORDED; THEREFORE, IT IS RELEVANT TO REPRODUCE THE SAME FOR READY REFERENCE: ENQUIRIES WERE MADE BY THE DIRECTORATE OF INVESTIG ATION ON THE VARIOUS PERSONS WHO WERE INDULGED- IN PROVIDING ACC OMMODATION ENTRIES/BOGUS SHARES APPLICATION MONEY/BOGUS CAPITA L GAIN IN THE COURSE OF ENQUIRIES BEFORE INVESTIGATION WING THESE PERSONS HAD PROVIDED THE DETAILS OF VARIOUS PERSONS TO WHOM SUC H ACCOMMODATION/BOGUS ENTRIES WERE PROVIDED. BASED ON THE ENQUIRIES MADE, THE DIRECTORATE OF INVESTIGATION HAS PROVIDED THE DETAILS OF PERSONS WHO WERE BENEFICIARIES OF SUCH ACCOMMODATIO N/BOGUS ENTRIES IN DELHI IN THE LAST 5-6 YEARS. FROM THE REPORT OF INVESTIGATION WING, IT IS NOTICE D THAT M/S. YADAV & CO WAS ALSO BENEFICIARIES OF SUCH BOGUS/ACCOMMODA TION ENTRIES DURING THE PERIOD 1.4.2000 TO 31.3.2001. THE DETAIL S OF SUCH ACCOMMODATION/BOGUS ENTRIES ARE AS UNDER: SL. NO NAME OF THE ENTRY PROVIDER QUANTUM OF ENTRY DATE OF TRANSACTION DETAILS OF BANK FROM WHICH ENTRY GIVEN A/C. NO. INSTRUMENT /CHEQUE 1 R.K. AGARWAL AND CO. 3,10,000 31 ST AUGUST, 1999 CORPORATION BANK. KAROL BAGH 3097 355383 2 R.K. AGARWAL AND CO. 200000 27 TH JULY, 1999 CORPORATION BANK 3097 -355379 3 R.K. AGARWAL AND CO. 200000 3 RD AUGUST, 1999 CORPORATION BANK 3097 355381 4 R.K. AGARWAL AND CO. 300000 23 RD JULY, 1999 CORPORATION BANK 3097 355378 ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR THE A.Y. 2000- 01 ON 31.10.2000 DECLARING AN INCOME OF RS. 12413/- AND AGRICULTURAL INCOME OF RS. 291334/-. SUBSEQUENTLY, THE CASE WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. AS PER THE REPORT OF THE INVESTIGATION WING, THE MO DUS OPERANDI ADOPTED IN THAT PERSON DESIROUS OF INTRODUCING HIS UNACCOUNTED MONEY IN ITS BOOKS OF ACCOUNTS, HANDED OVER THE CASH PLUS COMMISSION TO THE ENTRY OPERATOR, WHO IN TURN ISSUES CHEQUES TO THE B ENEFICIARY, AFTER DEPOSITING THE CASH IN HIS ACCOUNTS. 7 ITA NO.5523/DEL./2018 AS PER THE REPORT OF THE INVESTIGATION WING, M/S. R .K.. AGARWAL AND CO. IS ONE OF THE ENTRY OPERATORS PROVIDING BOG US/ACCOMMODATION ENTIRES. THE ASSESSEE COMPANY HAD RECEIVED RS. 10,10,000/- O N VARIOUS DATES DURING THE PERIOD RELEVANT TO A.Y. 2001-02 FR OM M/S. R.K. AGARWAL AND CO. WHICH IS NOTHING BUT THE UNACCOUNTE D MONEY OF THE ASSESSEE I.E. M/S. YADAV & CO., INTRODUCED IN THE B OOKS OF ACCOUNTS UNDER THE GARB OF ENTRIES RECEIVED FROM M/S. R.K.. AGGARWAL & CO. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME AT LEAST, THE EXTENT OF RS. 10,10,000/- FOR THE A.Y. 2001-02 HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF THE PROVISIONS OF SECTION 147. TO BRING TO TAX THE INCOME WHICH HAS ESCAPED ASSESSMEN T, I PROPOSE TO ISSUE NOTICE UNDER SECTION 148 OF THE INCOME TAX AC T, 1961. SINCE THIS CASE HAS NOT BEEN TAKEN IN THE SCRUTINY U/S 143(3) FOR THE ABOVE MENTIONED ASSESSMENT YEAR THE PROPOSAL IS BEI NG SUBMITTED TO THE ADDITIONAL COMMISSIONER OF INCOME TAX, CENTRAL RANGE-31, NEW DELHI WITHIN THE MEANING OF SECTION 147 AND ACCORDI NGLY PROCEEDINGS U/S. 148 IS TO BE INITIATED FOR THE A.Y. 2000 &-01 . 7.1 THE LEARNED COUNSEL OF THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE REASONS RECORDED, FIRSTLY, ON THE G ROUND OF THE NON- APPLICATION OF THE MIND BY THE ASSESSING OFFICER. H E HAS POINTED OUT TWO ALLEGED INCORRECTNESS OF THE FACTS RECORDED BY THE ASSESSING OFFICER. HE HAS REFERRED THAT IN PARA 3 O F THE REASONS RECORDED THE ASSESSEE HAS BEEN REFERRED AS COMPANY, WHEREAS THE ASSESSEE IS AN INDIVIDUAL. IN OUR OPINION, THIS CON TENTION OF THE LEARNED COUNSEL IS NOT CORRECT. THE ASSESSING OFFIC ER HAS REFERRED THE PROPRIETARY CONCERN, NAMELY, M/S YADAV AND COMP ANY AS COMPANY. IN THE IMMEDIATE PRECEDING PARA, THE ASSES SING OFFICER HAS REPRODUCED THE TRANSACTION OF M/S YADAV AND COM PANY WITH M/S RK AGARWAL & CO AND THUS THE REFERENCE OF THE C OMPANY IS TOWARDS M/S YADAV AND COMPANY AND THE ASSESSING OFF ICER NOWHERE MENTIONING THE STATUS OF THE ASSESSEE AS CO MPANY. 8 ITA NO.5523/DEL./2018 ANOTHER ALLEGED INCORRECTNESS OF THE FACT HAS BEEN RAISED BY THE LEARNED COUNSEL IN LAST PARA OF THE REASONS RECORDE D. HE SUBMITTED THAT MENTION OF THE FACT THAT CASE HAS NO T BEEN TAKEN IN THE SCRUTINY UNDER SECTION 143(3) OF THE ACT IS RECORDED INCORRECTLY. HE SUBMITTED THAT BLOCK ASSESSMENT IN THE CASE OF THE ASSESSEE HAS BEEN COMPLETED PRIOR TO RECORDING OF T HE REASONS. IN OUR OPINION, THIS CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE IS ALSO NOT CORRECT. IN THE CASE OF THE AS SESSEE THE REGULAR RETURN OF INCOME FILED WAS ONLY PROCESSED A ND NO REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COM PLETED. THE BLOCK ASSESSMENT UNDER SECTION 158BC HAS BEEN COMPL ETED IN RESPECT OF THE UNDISCLOSED INCOME UNEARTHED DURING THE COURSE OF THE SEARCH CARRIED OUT AT THE PREMISES OF THE ASSES SEE. UNDER THE BLOCK ASSESSMENT ONLY INCRIMINATING MATERIAL FOUN D DURING THE COURSE OF THE SEARCH CAN BE BASIS FOR THE BLOCK ASS ESSMENT AND IT IS DISTINCT FROM THE REGULAR ASSESSMENT. THE ASSE SSING OFFICER HAS PUT THE FACTS THAT NO SCRUTINY ASSESSMENT U/S 1 43(3) OF THE ACT I.E. REGULAR ASSESSMENT WAS CARRIED IN CASE OF THE RELEVANT ASSESSMENT YEAR. IN OUR CONSIDERED OPINION, THERE I S NO INCORRECTNESS OF THE FACT ON THE PART OF THE ASSESS ING OFFICER. THE LEARNED COUNSEL TO SUPPORT THE NON-APPLICATION OF T HE MIND HAS RELIED ON THE DECISION OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF VANITA SANJEEV ANAND VS ITO IN WP(C) 12359/2018 AND CM APPL 47876/2018 . IN THE SAID DECISION IN THE REASONS RECORDED, THE ASSESSING OFFICER RECORDED THAT NO RETURN OF IN COME WAS FILED BY THE ASSESSEE, WHEREAS THE ASSESSEE INDEED FILED RETURN OF INCOME ON 15/07/2011. THE REVENUE BEFORE THE HONBL E HIGH COURT ARGUED THAT THIS WAS A MISTAKE IN THE NATURE OF THE CLERICAL 9 ITA NO.5523/DEL./2018 ONE. THE HONBLE HIGH COURT OBSERVED THAT IN THE RE CORDED REASON THERE WAS NO REFERENCE OR DISCUSSION WITH RESPECT T O THE RETURN OF INCOME FILED BY THE ASSESSEE AND IT DID NOT SEEM TO BE AN UNINTENTIONAL ERROR. ACCORDING TO THE HONBLE HIGH COURT, IN VIEW OF THE INCORRECT RECORDING OF THE FACTS, THE ENTIRE BASIS OF THE REOPENING GETS VITIATED. BUT IN THE INSTANT CASE BE FORE US, THERE BEING NO INCORRECTNESS OF THE FACTS IN THE REASONS RECORDED, THE RATIO OF THE ABOVE DECISION CITED BY THE LEARNED CO UNSEL IS NOT APPLICABLE OVER THE FACTS OF THE INSTANT CASE. 7.2 ANOTHER CONTENTION TO ASSAIL THE REASONS RECORDED, RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE IS THAT THE SAT ISFACTION OF THE ASSESSING OFFICER IS BORROWED. HE SUBMITTED THAT TH E ASSESSING OFFICER HAS MERELY RELIED ON THE REPORT OF THE INVE STIGATION WING TO FORM BASIS OF HIS REASONS TO BELIEVE AND NO INDEPEN DENT VERIFICATION HAS BEEN DONE INVOKING SECTION 133(6) OF THE ACT. THE LEARNED COUNSEL RELIED ON THE DECISION IN THE CASE OF PCIT VS MEENAKSHI OVERSEAS P LTD 395 ITR 677, WHEREIN HON BLE DELHI HIGH COURT HAS OBSERVED AS UNDER: 23. THUS, THE CRUCIAL LINK BETWEEN THE INFORMATION MADE AVAILABLE TO THE AO AND THE FORMATION OF BELIEF IS ABSENT. TH E REASONS MUST BE SELF EVIDENT, THEY MUST SPEAK FOR THEMSELVES. THE T ANGIBLE MATERIAL WHICH FORMS THE BASIS FOR THE BELIEF THAT INCOME HA S ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE RE ASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. HOWEVER, SOMET HING THEREIN WHICH IS CRITICAL TO THE FORMATION OF THE BELIEF MU ST BE REFERRED TO. OTHERWISE THE LINK GOES MISSING. 7.3 IN THE PRESENT CASE, THE LEARNED ASSESSING OFFICER HAS ANALYSED REPORT OF THE INVESTIGATION WING AND FORME D BASIS OF THE REASONS AFTER SPECIFIC REFERENCE OF THE ENTRIES OBT AINED FROM M/S RK AGRAWAL AND CO. THE ASSESSING OFFICER HAS REPROD UCED ALL THE FOUR ENTRIES WITH DETAILS OF THE AMOUNT, DATE OF TR ANSACTION, BANK 10 ITA NO.5523/DEL./2018 ACCOUNT FROM WHICH ENTRY WAS GIVEN, INSTRUMENT NUMB ER ETC. THE ASSESSING OFFICER HAS ALSO MENTIONED THAT NO SCRUTI NY ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED IN TH E CASE OF THE ASSESSEE AND THEREFORE NO INFORMATION RELATING TO T HE TRANSACTION WAS AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS P LTD 291 ITR 50 0 HELD THAT AT THE INITIATION STAGE, WHAT IS REQUIRED IS REASON TO BELIEVE ON THE ESTABLISHED FACT OF ESCAPEMENT OF I NCOME. AT THIS STAGE OF ISSUE OF THE NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COUL D HAVE REQUISITE BELIEF. WHETHER THE MATERIAL SHOULD CONCL USIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THIS STAGE. RELEVANT FINDING OF THE HONBLE COURT IS REPRODUCED AS UNDER: 16. SEC. 147 AUTHORISES AND PERMITS THE AO TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEV E THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WOR D 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUP POSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REAS ON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSI ON CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERT AINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE A O IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUE R WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE D ELHI HIGH COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. VS. ITO (1 991) 98 CTR (SC) 161 : (1991) 191 ITR 662 (SC), FOR INITIATION OF ACTION UNDER S. 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME ) FULFILMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIA L. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BE LIEVE', BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE ST AGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELE VANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUI SITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE T HE FORMATION OF BELIEF BY THE AO IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION [SEE ITO VS. SELECTED DALURBAND COAL CO. (P) LTD. (1996) 132 CTR (SC) 11 ITA NO.5523/DEL./2018 162 : (1996) 217 ITR 597 (SC); RAYMOND WOOLLEN MILL S LTD. VS. ITO (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34 (SC)]. 17. THE SCOPE AND EFFECT OF S. 147 AS SUBSTITUTED WITH EFFECT FROM 1ST APRIL, 1989, AS ALSO SS. 148 TO 152 ARE SUBSTAN TIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUB STITUTION. UNDER THE OLD PROVISIONS OF S. 147, SEPARATE CLS. (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMEN T FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESS ED. TO CONFER JURISDICTION UNDER S. 147(A) TWO CONDITIONS WERE RE QUIRED TO BE SATISFIED FIRSTLY THE AO MUST HAVE REASON TO BELIEV E THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME-TAX HAVE ESCA PED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE TH AT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER (I) OMI SSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TR ULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THE SE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE TH E AO COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER S. 148 R/W S. 14 7(A). BUT UNDER THE SUBSTITUTED S. 147 EXISTENCE OF ONLY THE FIRST COND ITION SUFFICES. IN OTHER WORDS IF THE AO FOR WHATEVER REASON HAS REASO N TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTI ON TO REOPEN THE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO S. 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION A ND NOT THE PROVISO. 18. SO LONG AS THE INGREDIENTS OF S. 147 ARE FULFILLED, THE AO IS FREE TO INITIATE PROCEEDING UNDER S. 147 AND FAILURE TO TAK E STEPS UNDER S. 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION UNDER S. 143(1) HA D BEEN ISSUED. 7.3.1 WE ALSO NOTE THAT HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. PARAMOUNT COMMUNICATION PVT. LTD. (2017), 3 92 ITR 444 (DELHI.) HAS HELD THAT INFORMATION REGARDING BO GUS PURCHASE BY THE ASSESSEE, RECEIVED BY THE DRI FROM CCE, WHIC H WAS PASSED ON TO THE REVENUE AUTHORITIES WAS TANGIBLE MATERIAL OUTSIDE THE RECORD TO INITIATE VALID RE-ASSESSMENT PROCEEDINGS. THE RELEVANT FINDING OF THE HONBLE HIGH COURT IS REPRODUCED AS UNDER: _ 9. HAVING REGARD TO THE CONTENTS OF THE NOTICE FOR AY 2003-04, THE COURT IS UNABLE TO AGREE WITH THE FINDINGS OF THE I TAT. IT CONSTITUTES REFERENCE TO TANGIBLE MATERIAL 'OUTSIDE' THE RECORD , I.E. INFORMATION BASED UPON THE INVESTIGATION OF THE COMMISSIONER OF CENTRAL EXCISE 12 ITA NO.5523/DEL./2018 WITH RESPECT TO THE PURCHASES MADE BY THE ASSESSES. HOWEVER, AS FAR AS THE SECOND ISSUE IS CONCERNED, THE COURT IS OF THE OPINION THAT EVEN THE RECTIFIED ORDER DOES NOT ADDRESS THE ISSUE S SQUARELY. THUS, ARGUENDO SUCH ARGUMENTS COULD BE VALIDLY RAISED. AT THE SAME TIME, THE COURT NOTICES THAT FOR BOTH AYS 2004-05 AND 200 5-06, THE NOTE DISCLOSES THE SOURCE OF THE INFORMATION, I.E. DRI L OCAL UNIT AT JAIPUR, SENDING INFORMATION BASED UPON THE COMMISSIONER OF CENTRAL EXCISE'S INVESTIGATIONS. TO REQUIRE THE REVENUE TO DISCLOSE FURTHER DETAILS REGARDING THE NATURE OF DOCUMENTS OR CONTEN TS THEREOF WOULD BE VIRTUALLY REWRITING THE CONDITIONS IN SECTION 14 7. AFTER ALL, SECTION 147 MERELY AUTHORISES THE ISSUANCE OF NOTICE TO REO PEN WITH CONDITIONS. IF THE COURT WERE TO DICTATE THE MANNER AND CONTENTS OF WHAT IS TO BE WRITTEN, THE STATUTORY CONDITIONS WOU LD BE ADDED AS IT WERE. IN THIS CONTEXT, IT NEEDS TO BE EMPHASIZED TH AT THE COURT WOULD INTERPRET THE STATUTE AS THEY STAND IN THEIR OWN TE RMS, BUT AT THE SAME TIME BEING CONSCIOUS OF THE RIGHTS OF THE CITI ZENS. SO VIEWED, KELVINATOR OF INDIA (SUPRA) STRIKES JUST BALANCE. T O ADD FURTHER CONDITIONS TO THE NATURE OF DISCUSSION/REASONS THAT THE OFFICER AUTHORISING THE NOTICE WOULD HAVE TO DISCUSS IN THE NOTE OR DECISION WOULD BE BEYOND THE PURVIEW OF THE COURTS AND WOULD NOT BE JUSTIFIED. FOR THE ABOVE REASONS, THIS COURT IS OF THE OPINION THAT THE IMPUGNED ORDER - AND THE CONSEQUENTIAL ORDER OF 05. 01.17 CANNOT BE SUSTAINED. THEY ARE ACCORDINGLY SET ASIDE. THE QUES TION OF LAW URGED BY THE REVENUE IS ANSWERED IN ITS FAVOUR. THE PARTIES ARE DIRECTED TO BE PRESENT BEFORE THE ITAT ON 06.03.201 7. THE ITAT SHALL PROCEED TO HEAR THE REVENUE'S APPEALS ON ITS MERITS AND RENDER DECISION IN ACCORDANCE WITH LAW. ALL RIGHTS AND CON TENTIONS OF THE PARTIES WITH RESPECT TO THE MERITS ARE RESERVED. 7.3.2 THE SLP FILED BY THE ASSESSEE AGAINST THE ABOVE DEC ISION OF THE HONBLE DELHI HIGH COURT HAS BEEN REJECTED BY T HE HONBLE SUPREME COURT IN (2017) TIOL-253-SC-IT. FURTHER, HO NBLE GUJARAT HIGH COURT IN THE CASE OF PUSHPAK BULLION (P) LTD. VS. DCIT (2017) 85 TAXMANN.COM 84 (GUJ.) HAS HELD THAT WHERE INVESTIGATION WING OF THE DEPARTMENT HAD DURING THE COURSE OF INVESTIGATION IN A CASE OF A THIRD PARTY FOUND THAT HE WAS INDULGED IN PROVIDING ACCOMMODATION ENTRIES AND BOGUS BILLS, AND THE ASSESSEE HAD MADE SIZEABLE PURCHASES FROM HIM, REOP ENING NOTICE AGAINST THE ASSESSEE WAS JUSTIFIED. RELEVANT PARA OF THE DECISION IS REPRODUCED AS UNDER: 13 ITA NO.5523/DEL./2018 6. AT THE STAGE WHEN WE ARE EXAMINING THE VALIDITY OF A NOTICE OF REOPENING OF THE ASSESSMENT, THE COURT WOULD NOT GO INTO SUFFICIENCY OF REASONS RECORDED BY THE ASSESSING OFFICER AND IF IT IS FOUND THAT THE ASSESSING OFFICER HAD TANGIBLE MATERIALS AT HIS COMMAND TO FORM A BONA FIDE BELIEF OF INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THERE WOULD BE NO INTERFERENCE WITH THE ASSESSING OFFICER PROCEEDING FURTHER WITH THE REASSESSMENT. I N CASE OF ASSTT. CIT VS. RAJESH JHAVERI STOCK BROKERS(P.) LTD. [2007 ] 291 ITR/161 TAXMAN 316 (SC), THE SUPREME COURT OBSERVED THAT EX PRESSION REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATI ON. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNO W OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, HE CAN BE SAID TO HA VE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE EXP RESSION CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD H AVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSIO N. WHAT IS REQUIRED IS REASON TO BELIEVE BUT NOT THE ESTABLISH ED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUANCE OF N OTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE B ELIEF. WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMENT OF INC OME WAS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMA TION OF THE BELIEF IS WITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER. AT THIS STAGE THEREFORE, WHAT WE HAVE ON R ECORD AND EMERGING FROM THE REASONS RECORDED IS THAT THERE IS STRONG PRIMA FACIE MATERIAL TO SUGGEST THAT THE PURCHASES SHOWN TO HAVE BEEN MADE BY THE ASSESSEE FROM M/S. SHIYON ENTERPRISES W ERE BOGUS. THE INVESTIGATION WING OF THE DEPARTMENT HAD DURING THE COURSE OF INVESTIGATION IN CASE OF SHRI CHANDRAKANT PATEL FOU ND MATERIALS SUGGESTING THAT HE HAD INDULGED IN PROVIDING ACCOMM ODATION ENTRIES AND BOGUS BILLS. THIS WAS FURTHER SUPPLEMENTED BY T HE FACT THAT IN THE CURRENT ACCOUNT OF M/S. SHIYON ENTERPRISES MAIN TAINED AT JHAVERI BAZAR BRANCH OF UNION BANK OF INDIA, CHEQUE S ISSUED WERE PRECEDED BY SUBSTANTIAL CASH DEPOSITS IN THE ACCOUN T. THE ASSESSEE HAD ALSO MAINTAINED BANK ACCOUNT IN THE SAME BRANCH OF THE SAME BANK. THE ASSESSEE HAD CLAIMED SIZEABLE PURCHASES F ROM SUCH ENTITY DURING THE YEAR UNDER CONSIDERATION. 7.3.3 SIMILAR FINDINGS HAVE BEEN GIVEN BY THE HONBLE GUJ ARAT HIGH COURT IN THE CASE OF ANKIT FINANCIAL SERVICES VS. DCIT (2017) 78 TAXMANN.COM 58 (GUJ.). THE HONBLE SUPREM E COURT IN THE CASE OF S. GANGA SARAN & SONS (P.) LTD. VS. ITO (1981) 3 SCC 143 ON THE ISSUE OF ADEQUACY OR SUFFICIENCY OF REAS ONS, HAS HELD AS UNDER: 14 ITA NO.5523/DEL./2018 '6. IT IS WELL SETTLED AS A RESULT OF SEVERAL DECI SIONS OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SATISFIED BEFORE TH E INCOME TAX OFFICER CAN ASSUME JURISDICTION TO ISSUE NOTICE UND ER SECTION 147(A). FIRST, HE MUST HAVE REASON TO BELIEVE THAT THE INCO ME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND SECONDLY, HE MUST HAVE R EASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OM ISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IF EITHER OF TH ESE CONDITIONS IS NOT FULFILLED, THE NOTICE ISSUED BY THE INCOME TAX OFFICER WOULD BE WITHOUT JURISDICTION. THE IMPORTANT WORDS UNDER SEC TION 147(A) ARE 'HAS REASON TO BELIEVE' AND THESE WORDS ARE STRONGE R THAN THE WORDS ' IS SATISFIED'. THE BELIEF ENTERTAINED BY THE INCO ME TAX OFFICER MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONAB LE OR IN OTHER WORDS IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. THE COURT, OF COURSE, CANNOT INVESTIGATE INTO THE ADEQU ACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE INCOME T AX OFFICER IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY E XAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATT ERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147(A). IF THERE IS NO RATIONAL AND I NTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF, SO THAT, ON SUC H REASONS, NO ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONAB LY ENTERTAIN THE BELIEF, THE CONCLUSION WOULD BE INESCAPABLE THAT TH E INCOME TAX OFFICER COULD NOT HAVE REASON TO BELIEVE THAT ANY S UCH ESCAPEMENT WAS BY REASON OF THE ASSESSEE HAD ESCAPED ASSESSMEN T AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS AND THE NOTICE ISSUED BY HIM WOULD BE LIABLE TO BE STRUCK D OWN AS INVALID.' (EMPHASIS SUPPLIED) 7.3.4 THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF ANKIT AGROCHEM (P.) LTD. VS. JOINT CIT, RANGE -1, BIKANER (2018) 89 TAXMANN.COM 45 (RAJ.) AFTER CONSIDERING THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKERS (P) LTD. (SUPRA) HELD AS UNDER: 15. IN OUR CONSIDERED OPINION, IN THE INSTANT CASE WHERE THE RETURN FILED BY THE ASSESSEE WAS NOT SUBJECTED TO SCRUTINY ASSESSMENT, THE BELIEF FORMED BY THE AO AFTER DUE EXAMINATION OF TH E MATERIAL ON RECORD THAT THE INCOME OF THE ASSESSEE CHARGEABLE T O TAX DURING THE RELEVANT ASSESSMENT YEAR HAS ESCAPED ASSESSMENT CAN NOT BE SAID TO BE ARBITRARY OR IRRATIONAL OR THERE EXISTS NO RA TIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF. 16. IT IS TRUE THAT THE REASONS RECORDED OR THE MATERIAL AVAILABLE ON RECOR D MUST HAVE NEXUS TO THE SUBJECTIVE OPINION FORMED BY THE AO RE GARDING THE 15 ITA NO.5523/DEL./2018 ESCAPEMENT OF THE INCOME BUT THEN, WHILE RECORDING THE REASONS FOR BELIEF FORMED, THE AO IS NOT REQUIRED TO FINALLY AS CERTAIN THE FACTUM OF ESCAPEMENT OF THE TAX AND IT IS SUFFICIENT THAT THE AO HAD CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ES CAPED ASSESSMENT [VIDE RAJESH JHAVERI STOCK BROCKERS (P.) LTD.'S CASE (SUPRA)]. IT IS ALSO WELL SETTLED THE SUFFICIENCY A ND ADEQUACY OF THE REASONS WHICH HAVE LED TO FORMATION OF A BELIEF BY THE ASSESSING OFFICER THAT THE INCOME HAS ESCAPED THE ASSESSMENT CANNOT BE EXAMINED BY THE COURT. 7.3.5 THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF ARADHANA ESTATE (P) LTD. VS. DCIT (2018) 91 TAXMANNN .COM 119 (GUJARAT) ON THE ISSUE OF RECORDING OF REASONS TO BELIEVE FOR REOPENING OF ASSESSMENT HELD AS UNDER: 8. SECTION 147 OF THE ACT PROVIDES INTER-ALIA THAT IF THE ASSESSING OFFICER HAS THE REASON TO BELIEVE THAT ANY INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE MAY SUBJECT TO THE PROVI SIONS OF SECTION 148 TO 153 OF THE ACT, ASSESS OR REASSESS SUCH INCO ME. PROVISO TO SECTION 147 OF-COURSE REQUIRES THAT WHERE THE ASSES SMENT UNDER SUB-SECTION (3) OF SECTION 143 OF THE ACT HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF THE FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO MAKE RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR 148 OR TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T ASSESSMENT YEAR. IN THIS CONTEXT, IT IS WELL SETTLED THAT THE REQUIREMENT OF FULL AND TRUE DISCLOSURE ON PART OF THE ASSESSEE IS NOT CONF INED TO FILING OF RETURN ALONE BUT WOULD CONTINUE ALL THROUGHOUT DURI NG THE ASSESSMENT PROCEEDINGS ALSO. IN THIS CONTEXT, THE M ATERIALS ON RECORD WOULD SUGGEST THAT THE ASSESSING OFFICER HAD RECEIV ED FRESH INFORMATION AFTER THE ASSESSMENT WAS OVER PRIMA FAC IE SUGGESTING THAT SIZEABLE AMOUNT OF INCOME CHARGEABLE TO TAX IN CASE OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND THAT SUCH ESCAP EMENT WAS ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO DI SCLOSE TRULY AND FULLY ALL MATERIAL FACTS. THE ASSESSING OFFICER FOR MED SUCH A BELIEF ON THE BASIS OF SUCH MATERIALS PLACED BEFORE HIM AND U PON PERUSAL OF SUCH MATERIAL. THIS IS NOT A CASE WHERE THE ASSESSI NG OFFICER WAS REEXAMINING THE MATERIALS AND THE DOCUMENTS ALREADY ON RECORD FILED BY THE ASSESSEE ALONG WITH THE RETURN OR SUBS EQUENTLY, BROUGHT ON RECORD DURING THE ASSESSMENT PROCEEDINGS. IT IS A CASE WHERE ENTIRELY NEW SET OF DOCUMENTS AND MATERIALS WAS PLA CED FOR HIS CONSIDERATION COMPILED IN THE FORM OF REPORT RECEIV ED FROM THE INVESTIGATION WING. SUCH MATERIAL WAS PERUSED BY TH E ASSESSING 16 ITA NO.5523/DEL./2018 OFFICER AND UPON EXAMINATION THEREOF, HE FORMED A B ELIEF THAT THE PETITIONER COMPANY HAD RECEIVED SHARE APPLICATION A ND SHARE PREMIUM MONEY FROM AS MANY AS 20 DIFFERENT INVESTOR COMPANIES WHO WERE FOUND TO BE SHELL COMPANIES AND INDULGING IN GIVING ACCOMMODATION ENTRIES. FROM OUR VIEW POINT, THE ASS ESSING OFFICER HAD SUFFICIENT MATERIAL AT HIS COMMAND TO FORM SUCH A BELIEF. SUCH MATERIALS DID NOT FORM PART OF THE ORIGINAL ASSESSM ENT PROCEEDINGS AND WAS PLACED BEFORE THE ASSESSING OFFICER ONLY AF TER THE ASSESSMENT WAS COMPLETED. SINCE ON THE BASIS OF SUC H MATERIALS, ASSESSING OFFICER, AS WE HAVE RECORDED, CAME TO A R EASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T, MERELY BECAUSE THESE TRANSACTIONS WERE SCRUTINISED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT ALSO WOULD N OT PRECLUDE HIM FROM REOPENING THE ASSESSMENT. HIS SCRUTINY DURING THE ASSESSMENT WILL NECESSARILY BE ON THE BASIS OF THE DISCLOSURES MADE BY THE ASSESSEE. 7.3.6 THE HONBLE HIGH COURT RELYING THE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKER (P) LTD. (SUPRA ) HELD THAT AT THE STAGE OF REOPENING SUFFICIENCY OF SUCH REASONS IS NOT TO BE GONE. THE RELEVANT FINDING OF THE HONBLE COURT IS REPRODUCED AS UNDER: 13. THE NEXT CONTENTION THAT THE ASSESSING OFFICER DID NOT DEMONSTRATE ANY MATERIAL ENABLING HIM TO FORM A BEL IEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS FALLACI OUS. THE ASSESSING OFFICER RECORDED DETAILED REASONS POINTIN G OUT THE MATERIAL AVAILABLE WHICH HAD A LIVE LINK WITH FORMA TION OF BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT . AT THIS STAGE, AS IS OFTEN REPEATED, WE WOULD NOT GO INTO S UFFICIENCY OF SUCH REASONS. IN THIS CONTEXT, REFERENCE CAN BE MADE TO DECISION OF SUPREME COURT IN CASE OF RAYMOND WOOLEN MILLS LTD. (SUPRA). IN CASE OF ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC), IT WAS OBSERVED AS UNDER : 'THE EXPRESSION REASON TO BELIEVE IN SECTION 147 WO ULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HA S CAUSE OR IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPE D ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN T HAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED T HE FACT BY LEGAL EVIDENCE OR CONCLUSION. WHAT IS REQUIRED IS R EASON TO BELIEVE BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. 17 ITA NO.5523/DEL./2018 AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE P ERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE M ATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BEL IEF IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION OF THE ASSESSI NG OFFICER.' 7.3.7 IN THE CASE OF PARAMOUNT INTERCONTINENTAL (P) LTD. VS. ITO IN ITA NO. 348 OF 2016, THE HONBLE DELHI HIGH COUR T HELD AS UNDER: '5. THE REASONS TO BELIEVE' EXTRACTED BY THIS COUR T IN THE PREVIOUS PART OF THIS JUDGMENT CLEARLY SHOWS THAT S PECIFIC INFORMATION WITH RESPECT TO THE NATURE OF THE CREDI TS RECEIVED BY THE ASSESSEE FROM KNOWN ENTRY OPERATORS HAD BEEN SHOWN TO THE AO WHILE RECORDING HIS SATISFACTION IN THE ISSUANCE OF NOTICE UNDER SECTIONS 147/148. IN THESE CIRCUMSTANCES, THE REASS ESSMENT NOTICE COULD NOT HAVE BEEN QUESTIONED. AS TO THE MERITS, W E NOTICE THAT IN THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS UNAB LE TO SATISFACTORILY EXPLAIN THE CORRECTNESS OF THE ENTRI ES IN QUESTION. THE SHARE APPLICANTS APPEARED TO BE NOT IN EXISTENCE AN D DID NOT ANSWER SUMMONS ISSUED UNDER SECTION 131 OF THE ACT. FURTHE RMORE, GIVEN THAT THE FINDINGS ARE CONCURRENT BY THREE LOWER AUT HORITIES AND RELATE TO QUESTIONS OF FACT, THIS COURT IS OF THE OPINION THAT NO QUESTION OF LAW ARISES. THE APPEAL IS ACCORDING DISMISSED. 7.3.8 IN THE CASE OF SKY LIGHT HOSPITALITY LLP VS. ACIT W P(C) 10870/2017 AND CM NO. 44503/2017, ON THE SUFFICIENC Y OF REASON TO BELIEVE, THE HONBLE DELHI HIGH COURT H ELD AS UNDER: 9. AFTER GOING THROUGH THE REASONS, WE ARE SATISFI ED THAT THE REASONS TO BELIEVE SHOW AND ESTABLISH A LIVE LINK AND CONNECT WITH THE INFERENCE DRAWN THAT INCOME HAD ESCAPED ASSESSM ENT, WHICH IS REQUIRED FOR ISSUANCE OF NOTICE UNDER SECTION 147/1 48 OF THE ACT. REASONS TO BELIEVE REFER TO SEVERAL FACTS AND INFOR MATION THAT HAD COME TO KNOWLEDGE AND WAS AVAILABLE WITH THE ASSESS ING OFFICER. AT THIS STAGE, WHEN NOTICE IS ISSUED UNDER SECTION 147 /148 OF THE ACT, FIRM AND CONCLUSIVE FINDINGS ARE NOT REQUIRED FOR M ERITS WOULD BE EXAMINED AND THEREAFTER FINAL FINDING RECORDED IN T HE ASSESSMENT ORDER. AS LONG AS, THERE IS HONEST AND REASONABLE O PINION FORMED BY THE ASSESSING OFFICER AND THE REASONS TO BELIEVE ARE NOT MERE REASONS TO SUSPECT, THE COURTS SHOULD NOT INTERJE CT TO STOP THE ADJUDICATION PROCESS AND SCRUTINY ON MERITS. ABSOLU TE CERTAINTY IS NOT REQUIRED AT THE TIME OF ISSUE OF NOTICE AND AT THE SAME TIME, REASONS TO BELIEVE MUST NOT BE BASED ON MERE SUSP ICION, GOSSIP OR 18 ITA NO.5523/DEL./2018 RUMOUR. THE SAID TEST AND CRITERIA, WE HAVE NO HESI TATION IN HOLDING, IS SATISFIED IN THE PRESENT CASE. THERE IS EVIDENCE AND MATERIAL ON RECORD TO JUSTIFY ISSUE OF NOTICE UNDER SECTION 147 /148 OF THE ACT. 7.4 RELYING ON THE DECISION OF THE HONBLE SUPREME COU RT AND HONBLE HIGH COURT REFERRED ABOVE WE ARE OF THE OPI NION THAT THE LEARNED ASSESSING OFFICER HAS FORMED HIS BELIEF ON THE ANALYSIS OF CREDIBLE INFORMATION RECEIVED FROM THE INVESTIGATIO N WING AND SATISFACTION RECORDED ON SAID INFORMATION, CANNOT B E SAID AS BORROWED SATISFACTION. WE MAY ALSO LIKE TO POINT OU T HERE THAT THE ASSESSING OFFICER CAN ISSUE NOTICE UNDER SECTION 13 3(6) OF THE ACT DURING PENDENCY OF THE ASSESSMENT PROCEEDING AND NO T AUTHORISED TO CARRY OUT ENQUIRY INVOKING SECTION 13 3(6) OF THE ACT PRIOR TO RECORDING OF REASONS AND REOPENING OF THE ASSESSMENT. 7.5 IN VIEW OF OUR DISCUSSION ABOVE, WE REJECT THE CON TENTION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT ASSESSING OFFICER HAS NOT APPLIED MIND WHILE RECORDING THE REASONS AND HE RECORDED THE REASONS ON THE BASIS OF THE BORROWED SATISFACTION. 7.6 FURTHER, THE LEARNED COUNSEL OF THE ASSESSEE ADVAN CED ANOTHER ARGUMENT THAT NO NOTICE UNDER SECTION 148 O F THE ACT CAN BE ISSUE AFTER COMPLETION OF THE BLOCK ASSESSMENT P ROCEEDINGS. IN SUPPORT OF HIS CONTENTION, HE RELIED ON THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CLEARING CARGO AG ENCY VS JCIT 307 ITR 1 AND THE DECISION OF HONBLE CHATTISHGARH HIGH COURT IN THE CASE OF ACIT VS SUNIL KUMAR JAIN, REPORTED IN 36 7 ITR 370. HE ALSO RELIED ON THE LATEST DECISION OF THE TRIBUN AL IN THE CASE OF ISHWAR CHAND MITTAL IN ITA NO. 8706/DEL/2019 FOR AS SESSMENT YEAR 2011-12, WHEREIN THE TRIBUNAL HAS FOLLOWED ABO VE DECISIONS OF THE HONBLE HIGH COURTS. WE FIND THAT IN THE CAS E OF CLEARING 19 ITA NO.5523/DEL./2018 CARGO AGENCY (SUPRA), THE ISSUE OF REOPENING OF THE BLOCK ASSESSMENT WAS INVOLVED. THE HONBLE HIGH COURT IN THE SAID CASE HELD THAT ONCE ASSESSMENT HAS BEEN CLAIMED UNDER SE CTION 158BA OF THE ACT IN RELATION TO THE UNDISCLOSED INC OME FOR THE BLOCK PERIOD AS A RESULT OF SEARCH, THERE IS NO QUE STION OF THE ASSESSING OFFICER ISSUING NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING OF SUCH ASSESSMENTS AS THE SAID CONCEPT I S REPUGNANT TO THE SPECIAL SCHEME OF THE ASSESSMENT OF THE UNDI SCLOSED INCOME OF THE BLOCK PERIOD. THE RELEVANT FINDING OF THE HONBLE HIGH COURT IS REPRODUCED AS UNDER: 18. UNDER S. 158B OF THE ACT 'BLOCK PERIOD' AND 'UNDIS CLOSED INCOME' HAVE BEEN DEFINED. SEC. 158BA OF THE ACT OP ENS WITH NON OBSTANTE CLAUSE AND PROVIDES THAT IN A CASE OF SEAR CH INITIATED AFTER 30TH JUNE, 1995 THE AO SHALL PROCEED TO ASSESS THE UNDISCLOSED INCOME IN ACCORDANCE WITH PROVISIONS OF CHAPTER XIV -B OF THE ACT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISIONS OF THE ACT. THEREFORE, PROVISIONS OF S. 158BA(1) OF THE AC T HAVE TO BE READ IN CONJUNCTION WITH S. 158BH OF THE ACT. THE LEGISLATU RE HAS PROVIDED A SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES AN D ASSESSMENT HAS TO BE FRAMED IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XIV-B OF THE ACT. ON A HARMONIOUS READING OF BOTH S. 158B A AND S. 158BH OF THE ACT IT BECOMES CLEAR THAT ONLY WHERE A PROVI SION IS NOT MADE IN CHAPTER XIV-B OF THE ACT PROVIDING FOR A SPECIAL PR OCEDURE FOR ASSESSMENT WILL OTHER PROVISIONS OF THE ACT BE MADE APPLICABLE. 19. SEC. 158BB OF THE ACT PROVIDES FOR MODALITY OF COM PUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. SUCH UNDISC LOSED INCOME OF THE BLOCK PERIOD HAS TO BE THE AGGREGATE OF THE TOT AL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD. IF THE DIFFERENT AGGREGATES WHICH ARE PROVIDED FOR IN CLS. '(A) TO '(F) ARE SEEN, IT BECOMES CLEAR THAT THE COMPUTATION OF UNDISCLOSED I NCOME IS FIRST MADE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, THEREAFTER REDUCTION OR INCREASE AS IS PROVIDED IN DIFFERENT C LAUSES HAS TO BE MADE, AND THE EXPLANATION INDICATES THE EXCEPTIONS. CLAUSE (F) UNDER SUB-S. (1) OF S. 158BB OF THE ACT PROVIDES FOR REDU CING THE AGGREGATE TOTAL INCOME COMPUTED FOR THE BLOCK PERIOD BY THE A GGREGATE OF THE TOTAL INCOME, IN CASE WHERE ASSESSMENT FOR UNDISCLO SED INCOME HAD BEEN MADE EARLIER UNDER CL. (C) OF S. 158BC, ON THE BASIS OF SUCH ASSESSMENT. IN OTHER WORDS, IT ONLY MEANS THAT WHER E PREVIOUS ASSESSMENT HAS BEEN FRAMED UNDER CHAPTER XIV-B OF T HE ACT THE 20 ITA NO.5523/DEL./2018 AGGREGATE OF SUCH TOTAL INCOME ASSESSED FOR THE BLO CK PERIOD IN CASE OF A SEARCH WHERE BLOCK PERIOD IS A DIFFERENT BLOCK PERIOD FROM THE EARLIER BLOCK PERIOD, WHILE ASSESSING FOR A SUBSEQU ENT BLOCK PERIOD, SUCH EARLIER AGGREGATE HAS TO BE DEDUCTED. WHEN THI S PROVISION IS READ IN CONTEXT OF S. 158BC, MORE PARTICULARLY THE FIRST PROVISO THEREUNDER, IT BECOMES CLEAR THAT THE LEGISLATURE D OES NOT INTEND TO REOPEN A BLOCK ASSESSMENT. ANY SUCH INTERPRETATION WOULD RUN COUNTER TO THE LEGISLATIVE INTENT AS NOTED HEREINBE FORE FROM THE CONTEMPORANEOUS EXPOSITION THROUGH THE MEMORANDUM E XPLAINING THE FINANCE BILL AS WELL AS VARIOUS CIRCULARS ISSUE D BY CBDT EXPLAINING DIFFERENT AMENDMENTS. 20. SEC. 158BC OF THE ACT ITSELF INDICATES THAT WHERE LEGISLATURE WANTED TO INCORPORATE OTHER PROVISIONS OF THE ACT A SPECIFIC MENTION HAS BEEN MADE WHEN A PROVISION HAS BEEN MADE FOR AD OPTING SS. 142, 143, 144 AND 145 OF THE ACT. CONTRA, WHERE LEG ISLATURE DOES NOT WANT A PROVISION, NOT FALLING WITHIN CHAPTER XIV-B OF THE ACT, TO BE RESORTED TO, THE TWO PROVISOS UNDER CL. (A) OF S. 1 58BC OF THE ACT HAVE SPECIFICALLY MADE THIS CLEAR. THE FIRST PROVISO STI PULATES THAT NO NOTICE UNDER S. 148 IS REQUIRED TO BE ISSUED FOR TH E PURPOSE OF PROCEEDING UNDER CHAPTER XIV-B OF THE ACT. THE SECO ND PROVISO STIPULATES THAT NO PERSON, WHO HAS ALREADY FURNISHE D A RETURN UNDER S. 158BC(A) OF THE ACT, SHALL BE ENTITLED TO FILE A REVISED RETURN AS PROVIDED FOR IN S. 139(5) OF THE ACT. THUS, THESE P ROVISIONS ARE INHERENT INDICATORS IN THE SPECIAL PROCEDURE SCHEME TO SHOW THAT S. 158BH OF THE ACT HAS LIMITED APPLICATION. 21. TIME-LIMIT FOR COMPLETION OF BLOCK ASSESSMENT HAS BEEN PROVIDED IN S. 158BE OF THE ACT. IT INDICATES THAT THE SAME HAS TO BE WITHIN ONE YEAR/TWO YEARS FROM THE END OF THE MONTH IN WHI CH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER S. 132 OF THE A CT WAS EXECUTED ETC. FOR THE PRESENT, IT IS NOT NECESSARY TO REFER TO THE OTHER PROVISIONS OF THE SAID SECTION. HOWEVER, EXPLN. 2 A S APPEARING IN S. 158BE OF THE ACT GIVES AN INDICATION AS TO WHAT WOU LD BE THE DATE ON WHICH AN AUTHORIZATION SHALL BE DEEMED TO HAVE B EEN EXECUTED. UNDER CLS. (A) AND (B) OF EXPLN. 2 DIFFERENT POINTS OF TIME HAVE BEEN SPECIFIED. BUT IN NO CASE, CAN ONE ENVISAGE THE APP LICABILITY OF PERIOD OF LIMITATION PRESCRIBED UNDER S. 153 OF THE ACT FO R COMPLETION OF ASSESSMENTS AND REASSESSMENTS. THE REVENUE CANNOT C ONTEND THAT FOR THE PURPOSE OF REASSESSING THE SO-CALLED ESCAPE D UNDISCLOSED INCOME REVENUE WILL RESORT TO THE LIMITATION UNDER S. 153 OF THE ACT, BECAUSE UNDISCLOSED INCOME HAS TO BE ASSESSED IN TH E MANNER PROVIDED AND BY ADOPTING THE PROCEDURE PROVIDED IN CHAPTER XIV-B OF THE ACT. NOR IS IT POSSIBLE TO RESORT TO LIMITAT ION UNDER S. 158BE OF THE ACT BECAUSE THE SAID PERIOD OF LIMITATION HAS A LREADY EXPIRED. AT THE COST OF REPETITION IN THIS CONTEXT ONE HAS TO R EFER TO THE LANGUAGE EMPLOYED IN S. 158BA OF THE ACT WHERE THERE IS A PO SITIVE MANDATE TO THE AO TO ASSESS THE UNDISCLOSED INCOME IN ACCOR DANCE WITH THE 21 ITA NO.5523/DEL./2018 PROVISIONS OF CHAPTER XIV-B OF THE ACT, NOTWITHSTAN DING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THE ACT. AS AG AINST THAT S. 158BH STATES THAT EXCEPT AS OTHERWISE PROVIDED IN C HAPTER XIV-B OF THE ACT, ALL OTHER PROVISIONS OF THE ACT SHALL APPL Y TO ASSESSMENT MADE UNDER CHAPTER. THEREFORE, ONCE PERIOD OF LIMIT ATION HAS BEEN PRESCRIBED UNDER S. 158BE OF THE ACT THE TIME-LIMIT FOR COMPLETION OF ASSESSMENT OF UNDISCLOSED INCOME HAS TO BE AS PROVI DED UNDER THE SAID SECTION. IF THE CONTENTION OF REVENUE IS ACCEP TED S. 158BE BECOMES UNWORKABLE. THE LIMITATION PRESCRIBED FROM THE DATE OF LAST OF THE AUTHORIZATIONS, OR IN CASE OF REQUISITION UN DER S. 132A OF THE ACT, HAS ALREADY EXPIRED. THIS IS ONE MORE INHERENT POINTER WHICH FLOWS ON A CONJOINT READING OF THE PROVISIONS OF CH APTER XIV-B OF THE ACT TO INDICATE THAT LEGISLATURE DOES NOT INTEND TO REOPEN ASSESSMENTS COMPLETED UNDER CHAPTER XIV-B OF THE AC T ASSESSING THE UNDISCLOSED INCOME BY ADOPTING THE SPECIAL PROC EDURE PROVIDED IN THE SAID CHAPTER. 22. THERE IS ONE MORE ASPECT OF THE MATTER. ENTIRE CHA PTER XIV-B OF THE ACT RELATES TO ASSESSMENT OF SEARCH CASES, VIZ. , UNDISCLOSED INCOME FOUND AS A RESULT OF SEARCH. ONE CANNOT ENVI SAGE ESCAPEMENT OF UNDISCLOSED INCOME ONCE A SEARCH HAS TAKEN PLACE AND MATERIAL RECOVERED, ON PROCESSING OF WHICH UNDI SCLOSED INCOME IS BROUGHT TO TAX. SEC. 147 OF THE ACT ITSELF INDIC ATES THAT THE SAME IS IN RELATION TO INCOME ESCAPING ASSESSMENT AND APPLI ES IN A CASE WHERE EITHER INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT BY VIRTUE OF EITHER NON-DISCLOSURE BY WAY OF NON-FILIN G OF RETURN, OR NON- DISCLOSURE BY WAY OF OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR THE PURPOSE OF ASSESSMENT, OR PROCESSING OF MATERIAL ALREADY AVAILABLE ON RECORD, IF THE SAME IS WITHIN STIPULATED PERIOD OF LIMITATION. THEREFORE, TO CONTEND THAT UNDISCLOS ED INCOME HAS ESCAPED ASSESSMENT DESPITE AN ASSESSMENT HAVING BEE N FRAMED UNDER CHAPTER XIV-B OF THE ACT BY ADOPTING THE SPEC IAL PROCEDURE PRESCRIBED BY THE SAID CHAPTER IS TO CONTEND WHAT I S INHERENTLY NOT POSSIBLE. IT CANNOT BE A CASE OF NON-FILING OF RETU RN CONSIDERING THE PROVISIONS OF S. 158BC OF THE ACT. IT CANNOT BE A C ASE OF NON- DISCLOSURE OF MATERIAL FACTS CONSIDERING THE FACT T HAT EVERYTHING WHICH WAS UNDISCLOSED HAS ALREADY BEEN UNEARTHED AT THE TIME OF SEARCH AND THE DEFINITION OF 'UNDISCLOSED INCOME' I TSELF INDICATES THAT NOT ONLY WHAT HAS BEEN SEIZED OR RECOVERED, BUT EVE N INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THE ACT HAS BEEN ROPED IN. FURTHERMO RE, S. 158BB OF THE ACT ALSO PROVIDES NOT ONLY FOR REQUISITION OF B OOKS OF ACCOUNTS OR OTHER DOCUMENTS, BUT ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AND SUCH OTHER MATERIALS OR INFORMATION AS A RE AVAILABLE WITH THE AO, UNDISCLOSED INCOME OF THE BLOCK PERIOD SHAL L BE COMPUTED. THEREFORE, EVEN IF, ASSUMING FOR THE SAKE OF ARGUME NT, SOME INCOME HAS NOT BEEN DISCLOSED IN THE RETURN FURNISHED UNDE R S. 158BC OF THE ACT, THE AO IS BOUND TO ASSESS ALL UNDISCLOSED INCO ME AFTER 22 ITA NO.5523/DEL./2018 PROCESSING THE ENTIRE MATERIAL AVAILABLE WITH AO. T HE AO CANNOT BE HEARD TO STATE THAT UNDISCLOSED INCOME HAS ESCAPED ASSESSMENT BECAUSE THE OFFICER FAILED TO APPLY HIS MIND TO THE MATERIAL AVAILABLE ON RECORD, THERE BEING NO LACK OF DISCLOSURE. 23. THE LAST OF THE AMENDMENTS MADE BY FINANCE ACT, 20 02 AS EXPLAINED IN CBDT CIRCULAR NO. 8 OF 2002, DT. 27TH AUG., 2002 FURTHER GOES TO SUPPORT THE STAND OF THE PETITIONER S. THE LEGISLATURE HAS PROVIDED THAT THE BLOCK ASSESSMENT OF UNDISCLOS ED INCOME IS TO BE BASED NOT ONLY ON THE EVIDENCE FOUND AT THE TIME OF SEARCH, BUT ALSO ON THE BASIS OF MATERIAL AND INFORMATION GATHE RED DURING THE INQUIRIES MADE AFTER THE SEARCH PROCEEDINGS. HOWEVE R, ON THE BASIS OF EVIDENCE FOUND DURING THE SEARCH PROCEEDINGS CER TAIN FURTHER INQUIRIES ARE UNDERTAKEN BY THE AO RESULTING IN COL LECTION OF MATERIAL OR INFORMATION GATHERED DURING SUCH INQUIRIES. THE ASSESSMENT FOR THE BLOCK PERIOD SHALL ALSO INCLUDE COMPUTATION OF SUCH INCOME AS A CONSEQUENCE OF SUCH INQUIRIES. THUS, THERE WOULD BE NO SCOPE FOR ANY INCOME ESCAPING OR REMAINING UNDISCLOSED WHEN T HE SPECIAL PROCEDURE LAID DOWN BY CHAPTER XIV-B OF THE ACT IS RESORTED TO. THE CONTENTION, ON BEHALF OF THE REVENUE, THAT THERE MI GHT BE INCOME WHICH MIGHT HAVE YET ESCAPED ASSESSMENT FROM THE BL OCK ASSESSMENT CANNOT BE ACCEPTED BECAUSE THE SCHEME IT SELF PROVIDES FOR BRINGING TO TAX ALL UNDISCLOSED INCOME, WHETHER RECOVERED DURING THE COURSE OF SEARCH PROCEEDINGS OR RECOVERED IN TH E COURSE OF POST- SEARCH INQUIRIES MADE ON THE BASIS OF MATERIAL COLL ECTED DURING SEARCH. HENCE, THE LEGISLATIVE INTENT IS CLEAR. ONC E A BLOCK ASSESSMENT IS FRAMED THE SAME IS FINAL UNLESS AND U NTIL DISTURBED IN AN APPROPRIATE PROCEEDING TAKEN BEFORE THE HIGHER F ORUM. 24. THE PROVISIONS OF CHAPTER XIV-B OF THE ACT, MORE P ARTICULARLY S. 158BG OF THE ACT PROVIDE FOR A SITUATION WHERE NO O RDER OF ASSESSMENT FOR THE BLOCK PERIOD SHALL BE PASSED WIT HOUT THE PREVIOUS APPROVAL OF EITHER THE CIT OR DIRECTOR (AS THE CASE MAY BE) IN RESPECT OF SEARCH CASES. IN OTHER WORDS, NOT ONL Y THE AO CANNOT BE AN OFFICER BELOW THE RANK OF AN ASSTT. CIT, ETC., B UT THE ORDER OF ASSESSMENT FRAMED IS SCRUTINISED BY THE HIGHEST OFF ICER IN THE HIERARCHY TO ENSURE THAT : (1) NO UNDISCLOSED INCOM E ESCAPES ASSESSMENT, AND (2) THERE IS NO HIGH PITCHED ASSESS MENT, ONLY FOR THE SAKE OF MAKING AN ASSESSMENT. IT WOULD NOT BE O PEN TO REVENUE TO CONTEND THAT DESPITE MATERIAL BEING AVAILABLE ON RECORD THE SAME ESCAPED SCRUTINY AT THE HANDS OF TWO OFFICERS, ONE OF THEM BEING A SUPERIOR OFFICER IN THE HIERARCHY. 25. AS ALREADY NOTED HEREINBEFORE, THE ENTIRE SCHEME F OR BRINGING TO TAX INCOME WHICH HAS ESCAPED ASSESSMENT UNDER SS. 1 47 TO 153 OF THE ACT SPECIFICALLY RELATES TO A SPECIFIC ASSESSME NT YEAR AND DIFFERENT TIME-LIMITS ARE PROVIDED AT DIFFERENT STA GES WHICH ARE ALL INTER-LINKED AND COMMENCE FROM THE END OF THE RELEV ANT ASSESSMENT 23 ITA NO.5523/DEL./2018 YEAR. THE DEFINITION OF 'ASSESSMENT YEAR' AS PROVID ED IN SS. 2(9) OF THE ACT MEANS THE PERIOD OF 12 MONTHS COMMENCING ON THE FIRST DAY OF APRIL EVERY YEAR. THIS DEFINITION CANNOT BY ANY STRETCH OF IMAGINATION BE MADE APPLICABLE TO THE TERM 'BLOCK P ERIOD' WHICH HAS BEEN DEFINED BY S. 158B(A) OF THE ACT. ON A PLAIN R EADING THE CONCEPT OF BLOCK PERIOD CANNOT TAKE WITHIN ITS FOLD THE MEA NING OF AN ASSESSMENT YEAR. SIMILARLY, THE TERM 'ASSESSMENT YE AR' BY ITS VERY DEFINITION, CANNOT BE READ TO MEAN 'BLOCK PERIOD'. 26. IN LIGHT OF THIS SPECIFIC DISTINCTION IN THE STATU TORY SCHEME BROUGHT ABOUT BY SPECIFIC DEFINITIONS OF THE TWO TE RMS, 'ASSESSMENT YEAR' AND 'BLOCK PERIOD', THE SUBMISSION ON BEHALF OF REVENUE THAT THE TERM 'ASSESSMENT YEAR', WHERESOEVER IT APPEARS IN THE GROUP OF SS. 147 TO 153 OF THE ACT, BE SUBSTITUTED BY THE TE RM 'BLOCK PERIOD' CANNOT BE ACCEPTED, BECAUSE ON A PLAIN READING OF T HE SAID PROVISIONS, VIZ., S. 147 TO S. 153 OF THE ACT, THE ENTIRE SCHEME BECOMES UNWORKABLE. THE PRINCIPLES OF INTERPRETATIO N ALSO DO NOT PERMIT SUCH AN EXERCISE. 27. IT IS WELL-SETTLED THAT A COURT IS NOT EMPOWERED T O EITHER ADD WORDS TO A STATUTE OR SUBSTITUTE WORDS WHILE INTERP RETING A PROVISION. THE COURT CAN ONLY READ AND INTERPRET THE LANGUAGE EMPLOYED BY THE STATUTE. ONLY IN THE EVENT OF A PROVISION NOT CONVE YING THE INTENDED MEANING, IN OTHER WORDS, A PLAIN READING RESULTING IN ABSURD SITUATION, CAN THE COURT IMPORT WORDS TO MAKE SENSE OUT OF THE PROVISION. HOWEVER, AT THE SAME TIME, EVEN A PURPOS IVE INTERPRETATION DOES NOT PERMIT THE COURT TO SUBSTIT UTE THE STATUTORY LANGUAGE UNLESS AND UNTIL THE PROVISION AS IT STAND S WOULD NOT RESULT IN THE PROVISION BEING WORKABLE. IF THE LANGUAGE OF THE STATUTE IS CAPABLE OF A PLAIN MEANING WITHOUT DOING VIOLENCE T O THE LANGUAGE, IT IS NOT OPEN TO ADD ANY WORDS THEREIN SO AS TO GIVE MEANING WHICH ONE OR THE OTHER SIDE THINKS TO BE MORE APPROPRIATE . 28. IN THE PRESENT CASE NONE OF THE EXCEPTIONAL CONTIN GENCIES EXIST. AS ALREADY NOTICED, ON A PLAIN READING IT BECOMES D ISCERNIBLE THAT THERE ARE TWO SEPARATE STREAMS OF PROCEDURE PROVIDE D BY THE LEGISLATURE : (1) UNDER CHAPTER XIV OF THE ACT WHIC H PROVIDES FOR 'PROCEDURE FOR ASSESSMENT', AND (2) UNDER CHAPTER X IV-B OF THE ACT WHICH PROVIDES FOR 'A SPECIAL PROCEDURE FOR ASSESSM ENT OF SEARCH CASES'. ONLY IN THE EVENT THE SPECIAL PROCEDURE FOR ASSESSMENT HAS NOT PROVIDED FOR SOME PROCEDURE FOR ASSESSMENT CAN ONE REFER TO THE PROCEDURE UNDER CHAPTER XIV OF THE ACT. THEREFORE, THE INTERPRETATION SOUGHT TO BE PLACED BY REVENUE ON THE PROVISIONS OF THE ACT SO AS TO READ IN THE TERM 'BLOCK PERIOD' FOR THE PURPOSE OF INVOKING AND APPLYING SS. 147 TO 153 OF THE ACT CANNOT BE COUNTE NANCED. NEITHER DOES A PLAIN READING OF THE PROVISIONS PERMIT SUCH AN EXERCISE, NOR IS THERE ANY LACUNA IN THE PROVISIONS WHICH IS REQUIRE D TO BE FILLED UP. 24 ITA NO.5523/DEL./2018 29. IN CHAPTER XIV-B OF THE ACT THE ONLY PLACE WHERE O NE FINDS THE USE OF THE TERM 'ASSESSMENT YEAR IS IN THE DEFINIT ION OF THE TERM 'BLOCK PERIOD. THIS ITSELF INDICATES THAT IF THE ' BLOCK PERIOD WAS EQUIVALENT TO 'ASSESSMENT YEAR THE DEFINITION OF B LOCK PERIOD WOULD NOT HAVE PROVIDED THAT 'BLOCK PERIOD MEANS PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO 10/6 ASSESSMENT YEARS. T O PUT IT DIFFERENTLY, REFERENCE TO THE NUMBER OF ASSESSMENT YEARS IS ONLY A MEANS, A MEASURE TO INDICATE AND SPECIFY THE PERIOD OF PREVIOUS YEARS WHICH WOULD COMPRISE BLOCK PERIOD. REVENUE, T HEREFORE, CANNOT CONTEND SUCCESSFULLY THAT WHEREVER THE TERM 'ASSESSMENT YEAR IS USED IN THE GROUP OF SECTIONS FROM SS. 147 TO 153 OF THE ACT THE SAID TERM HAS TO BE REPLACED BY THE TERM 'BLOCK PERIOD. FURTHERMORE, THE AMENDMENT WHICH IS RETROSPECTIVELY MADE IN THE DEFINITION OF THE BLOCK PERIOD BY THE FINANCE (NO. 2) ACT, 1996, ITSELF INDICATES THAT ORIGINALLY THE TERM BLOCK PERIOD MEA NT AS CONSISTING OF 10 PREVIOUS YEARS PRIOR TO THE PREVIOUS YEAR IN WHI CH THE SEARCH WAS CONDUCTED AND ALSO THE PERIOD OF CURRENT PREVIOUS Y EAR UPTO THE DATE OF SEARCH, BUT, BEFORE ADOPTION OF UNIFORM PREVIOUS YEAR, IN CASE OF DIFFERENT ASSESSEES, 'BLOCK PERIOD WOULD BE DIFFER ENT DEPENDING ON THE ACCOUNTING PERIOD ADOPTED IN TERMS OF S. 3 OF T HE ACT. TO OBVIATE THIS SITUATION THE DEFINITION OF BLOCK PERIOD WAS A MENDED. THIS BECOMES CLEAR FROM CIRCULAR NO. 762, DT. 18TH FEB., 1998 ISSUED BY CBDT EXTRACTED HEREINBEFORE. 30. THE APEX COURT DECISION ON WHICH GREAT EMPHASIS HA S BEEN PLACED ON BEHALF OF REVENUE IN FACT GOES TO SUPPORT THE VIEW ADOPTED IN THE PRESENT CASE. THE CONTROVERSY BEFORE THE APE X COURT WAS IN RELATION TO THE RATE OF TAX WHICH WAS TO BE APPLIED TO THE UNDISCLOSED INCOME ASSESSED IN TERMS OF CHAPTER XIV-B OF THE AC T. THE APEX COURT ITSELF HAS OBSERVED, AS CAN BE SEEN FROM THE PORTION WHEREIN EMPHASIS IS SUPPLIED BY THIS COURT, THAT THE SUPREM E COURT WAS CONCERNED MAINLY WITH COMPUTATION OF UNDISCLOSED IN COME UNDER S. 158BB(1) OF THE ACT. THIS COURT HAS ALREADY NOTICED THAT S. 158BH OF THE ACT PROVIDES FOR INVOKING OTHER MACHINERY PROVI SIONS TO AN ASSESSMENT MADE UNDER CHAPTER XIV-B OF THE ACT AND DOES NOT REQUIRE OTHER PROVISIONS OF THE ACT TO BE APPLIED T O A BLOCK ASSESSMENT TO BE MADE UNDER CHAPTER XIV-B OF THE AC T. 31. THE APEX COURT DECISION ALSO PROVIDES FOR A HARMON IOUS CONSTRUCTION ON THE BASIS OF READING OF THE MODE OF COMPUTATION PROVIDED IN CHAPTER IV OF THE ACT AND PROVIDED UNDE R CHAPTER XIV-B OF THE ACT BY STATING THAT S. 158BH INTER ALIA PROV IDES THAT OTHER PROVISIONS OF THE ACT SHALL APPLY IF THERE IS NO CO NFLICT BETWEEN THE PROVISIONS OF CHAPTER XIV-B OF THE ACT AND OTHER PR OVISIONS OF THE ACT. THIS BECOMES CLEAR FROM THE EXTRACTED PORTION WHEREIN EMPHASIS HAS BEEN SUPPLIED. TO PUT IT DIFFERENTLY, IN A SITU ATION WHERE THERE IS A CONFLICT BETWEEN THE PROVISIONS OF BLOCK ASSESSME NT PROCEDURE PRESCRIBED UNDER CHAPTER XIV-B OF THE ACT AND OTHER PROVISIONS OF 25 ITA NO.5523/DEL./2018 THE ACT, IT WILL BE THE SPECIAL PROCEDURE PRESCRIBE D UNDER CHAPTER XIV-B OF THE ACT WHICH HAS TO PREVAIL. 32. AS ALREADY NOTICED HEREINBEFORE, THE ENTIRE SCHEME UNDER CHAPTER XIV OF THE ACT, MORE PARTICULARLY FROM SS. 147 TO 153 OF THE ACT PERTAINING TO REASSESSMENT, AND THE SPECIAL PRO CEDURE FOR ASSESSING THE UNDISCLOSED INCOME OF THE BLOCK PERIO D UNDER CHAPTER XIV-B OF THE ACT ARE NOT ONLY SEPARATE AND DISTINCT FROM EACH OTHER, BUT IF AN EFFORT IS MADE TO INCORPORATE THE SCHEME UNDER CHAPTER XIV OF THE ACT FOR THE PURPOSE OF ASSESSMENT OF THE BLO CK PERIOD THERE IS A CONFLICT BETWEEN THE PROVISIONS WHICH BECOMES APP ARENT ON A PLAIN READING. IN THE CIRCUMSTANCES, AS PER ESTABLISHED R ULES OF INTERPRETATION, UNLESS AND UNTIL A PLAIN READING OF THE TWO STREAMS OF ASSESSMENT PROCEDURE DOES NOT RESULT IN THE PROCEDU RES BEING INDEPENDENTLY WORKABLE, ONLY THEN THE QUESTION OF R ESOLVING THE CONFLICT WOULD ARISE. BUT TO THE CONTRARY, IN THE P RESENT CASE, IN LIGHT OF PROVISIONS OF S. 158BH OF THE ACT, ONCE THERE IS A CONFLICT BETWEEN THE TWO STREAMS OF PROCEDURE, AS LAID DOWN BY THE A PEX COURT, PROVISIONS OF CHAPTER XIV-B OF THE ACT SHALL PREVAI L AND HAVE PRIMACY. 33. THUS, VIEWED FROM ANY ANGLE, THE STAND OF REVENUE DOES NOT MERIT ACCEPTANCE. ONCE ASSESSMENT HAS BEEN FRAMED U NDER S. 158BA OF THE ACT IN RELATION TO UNDISCLOSED INCOME FOR THE BLOCK PERIOD AS A RESULT OF SEARCH THERE IS NO QUESTION O F THE AO ISSUING NOTICE UNDER S. 148 OF THE ACT FOR REOPENING SUCH A SSESSMENT AS THE SAID CONCEPT IS ABHORRENT TO THE SPECIAL SCHEME OF ASSESSMENT OF UNDISCLOSED INCOME FOR BLOCK PERIOD. AT THE COST OF REPETITION IT IS REQUIRED TO BE STATED AND EMPHASIZED THAT THE FIRST PROVISO UNDER S. 158BC(A) OF THE ACT SPECIFICALLY PROVIDES THAT NO N OTICE UNDER S. 148 OF THE ACT IS REQUIRED TO BE ISSUED FOR THE PURPOSE OF PROCEEDING UNDER CHAPTER XIV-B OF THE ACT. 7.7 AS REGARD TO THE DECISION IN THE CASE OF SUNIL KUM AR JAIN (SUPRA), THE CITATION OF ITR STATED BY THE LEARNED COUNSEL WAS NOT FOUND TO BE CORRECT AND IT WAS FOUND REPORTED AT 26 6 CTR 0354. IN THE CASE OF SUNIL KUMAR JAIN (SUPRA) THE HONBLE CHATTISGARH HIGH COURT OBSERVED AS UNDER: 20. THE SURESH-GUPTA CASE IS RELATED TO THE BLOCK ASSESSMENT BUT THE QUESTION WHETHER SECTIONS 147/ 148 OF THE ACT W ERE APPLICABLE IN THE BLOCK ASSESSMENT OR NOT, WAS NOT INVOLVED TH EREIN. HOWEVER, 26 ITA NO.5523/DEL./2018 IN PEERCHAND CASE, THIS VERY QUESTION WAS INVOLVED AND WAS ANSWERED IN FAVOUR OF THE DEPARTMENT. SECTIONS 147/148 SHOULD BE STRICTLY CONSTRUED 21. KANGIA, PALKHIVALA AND VYAS ON THE LAW AND PRAC TICE OF INCOMETAX, VOLUME-II, NINTH EDITION, PAGE 1826 EXPL AINS THE SCOPE OF THE SECTION 147 OF THE ACT AS FOLLOWS: THIS SECTION IMPOSES NO CHARGE ON THE SUBJECT BUT D EALS MERELY WITH THE MACHINERY OF ASSESSMENT, BHIMRAJ V CIT 32 ITR 2 89, AFFIRMED IN 41 ITR 221 (SC); RADHAKANT V. JOHRI 39 ITR 182; CHH AGANLAL V ITO 46 ITR 351, 357; DALMIA V CIT 194 ITR 700, AFFIRMED IN 236 ITR 480 (SC) ON ANOTHER ISSUE; CIT V SARAF 207 ITR 217; SAR DAR HARVINDER V ACIT 227 ITR 512; AND IN INTERPRETING PROVISIONS OF THIS KIND THE RULE IS THAT THAT CONSTRUCTION SHOULD BE PREFERRED WHICH MAKES THE MACHINERY WORKABLE.CIT V MAHALIRAM 8 ITR 442, 448 ( PC); CIT V SUN ENGG. WORKS 198 ITR 297 (SC); AND S.1 UNDER INTERPR ETATION OF THE INCOME TAX ACT; THIS, HOWEVER, DOES NOT MEAN THATTH E SECTION IS TO BE LIBERALLY CONSTRUED; SINCE THE REOPENING OF AN A SSESSMENT IS A POWER OF AN EXTRAORDINARY NATURE, THE SECTION SHOUL D BE STRICTLY CONSTRUED., NEW KAISER-I-HIND V CIT 107 ITR 760, 76 4; ITO V MEWALALDWARKAPRASAD 176 ITR 529 (SC). IT IS IN THIS LIGHT THAT SECTIONS 147/148 ARE TO BE CONSTRUED IE THEY ARE TO BE CONSTRUED STRICTLY. 22. SECTION 147 OF THE ACT IS TITLED AS 'INCOME ESC APING ASSESSMENT'. IT PROVIDES THAT IF THE ASSESSING OFFICER HAS REASO N TO BELIEVE THAT ANY INCOME CHARGEABLE TO THE TAX HAS ESCAPED IN ANY ASSESSMENT YEAR, HE COULD RE-ASSESS THE INCOME SUBJECT TO FULF ILLING OTHER CONDITIONS MENTIONED IN THAT SECTION. 23. SECTION 148 IS TITLED AS 'ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT'. IT PROVIDES ISSUANCE OF NOTICE BEFORE MAKING THE ASSESSMENT, RE-ASSESSMENT OR RE-COMPUTATION UND ER SECTION 147 OF THE ACT. 24. SECTION 147 OF THE ACT USES THE WORDS 'IN ANY A SSESSMENT YEAR 1 ; IT DOES NOT USE THE WORDS 'IN ANY ASSESSMENT YEAR O R FOR ANY BLOCK PERIOD'. HAD IT USED THE WORDS 'IN ANY ASSESSMENT Y EAR OR FOR ANY BLOCK PERIOD' THE MATTER WOULD HAVE BEEN DIFFERENT BUT IN ABSENCE OF THESE WORDS, CAN WE READ THESE WORDS IN THE SECTION WHEN THEY ARE NOT THERE. IF WE DO SO, THEN WIFI IT BE NOT STRETCH ING THE WORDS TOO FAR? 25. OFTEN THE BLOCK ASSESSMENT IS IN RESPECT OF THE YEARS FOR WHICH THE ASSESSMENT HAS ALREADY BEEN DONE UNDER THE ACT. THE BLOCK ASSESSMENT IS A KIND OF RE-ASSESSMENT, ON THE BASIS OF MATERIAL 27 ITA NO.5523/DEL./2018 FOUND IN THE SEARCH. THIS IS ALSO INDICATED BY FIRS T PROVISO TO SECTION 158J3C (A) OF THE ACT. 26. SECTION 158BC IS TITLED AS 'PROCEDURE FOR BLOCK ASSESSMENT'. THE FIRST PROVISO (SEE BELOW), THE RELEVANT PORTION OF THE PROVISO IS AS FOLLOWSTO SECTION 158BC(A) OF THE ACT PROVIDES THAT FOR THE PURPOSE OF PROCEEDINGS UNDER CHAPTER XIVB OF THE ACT, NO NOTIC E UNDER SECTION 148 OF THE ACT IS REQUIRED TO BE ISSUED. 27. IN CASE SECTIONS 147/ 148 OF THE ACT ARE APPLIC ABLE TO THE BLOCK ASSESSMENT, IT WILL AMOUNT TO REASSESSMENT OF THE R EASSESSMENT PROCEEDING. 28. SECTION 147 OF THE ACT HAS NOT USED THE WORD 'T HE BLOCK PERIOD'. THE REASON SEEMS TO BE SIMPLE THAT THE BLOCK ASSESS MENT ITSELF IS THE RE-ASSESSMENT PROCEEDINGS. THERE WAS NO NECESSI TY FOR PROVIDING REASSESSMENT OF THE REASSESSMENT PROCEEDI NGS. 29. THE GUJARAT HIGH COURT HAS CONSIDERED THIS QUES TION IN DETAIL IN CARGO CLEARING AGENCY (GUJARAT) V. JOINT COMMISSION ER OF INCOME TAX {(2008) 218 CTR (GUJ) 541} (THE CARGO-CLEARING CASE) AND HAS HELD THAT SECTIONS 147/ 148 OF THE ACT ARE NOT APPL ICABLE TO THE ASSESSMENT UNDER CHAPTER XIVB OF THE ACT. WE AGREE WITH THE SAME AND ARE UNABLE TO SUBSCRIBE TO THE VIEW TAKEN BY TH E GAUHATI HIGH COURT IN THE PEERCHAND CASE. 30. THE MATERIAL FOR NOTICE FOR REASSESSMENT UNDER SECTION 148 OF THE ACT IS THE SAME AS WAS FOR PASSING ORDER UNDER SECT ION 263 OF THE ACT. THE ORDER UNDER SECTION 263 OF THE ACT HAS BEE N SET ASIDE BY THE TRIBUNAL ON THE GROUND THAT THE INITIAL ORDER P ASSED BY THE AO WAS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. 31. IN VIEW OF ABOVE, THE CIT-A HAS HELD THAT ONCE THE ORDER UNDER SECTION 263 HAS BEEN SET ASIDE, THE SAME MATERIAL C ANNOT BE USED FOR NOTICE UNDER SECTION 148 OF THE ACT. HOWEVER, N EITHER THE TRIBUNAL HAS GONE INTO THIS QUESTION NOR THIS CASE HAS BEEN ADMITTED ON THE SAME. THUS, WE REFRAIN FROM EXPRESSING OUR VIEW ON THIS POINT OR ANY OTHER FINDINGS RECORDED IN FAVOUR OF THE ASSESSEE B Y THE CIT-A. 'PROVIDED THAT NO NOTICE SECTION 148 IS REQUIRED TO BE ISSUED FOR THE PURPOSE OF PROCEEDING UNDER THIS CHAPTER:' CONCLUSIONS 32. OUR CONCLUSION IS, THAT SECTIONS 147/148 OF THE ACT FOR REASSESSMENT ARE NOT APPLICABLE TO THE ASSESSMENT U NDER CHAPTER XIVB OF THE ACT. 28 ITA NO.5523/DEL./2018 7.8 WE DO AGREE WITH THE RATIO OF THE HONBLE HIGH COU RTS IN ABOVE CASES, HOWEVER IN THE INSTANT CASE, THE ASSES SING OFFICER HAS REOPENED REGULAR ASSESSMENT AND NOT BLOCK ASSES SMENT. THE REGULAR ASSESSMENT AND BLOCK ASSESSMENT ARE BOTH SE PARATE PROCEEDINGS AND EVEN CAN RUN PARALLEL. THEREFORE, T HE RATIO OF THE ABOVE CASES DO NOT APPLY ON THE INSTANT CASE. 7.9 FURTHER, IN THE CASE OF ISHWAR CHAND MITTAL (SUPRA ) THE ISSUE WAS THAT IN THE GARB OF THE REASSESSMENT PRECEDING THE ASSESSING OFFICER SOUGHT TO VERIFY THE SAME DETAILS WHICH WER E ALREADY AVAILABLE ON RECORD AND DULY CONSIDERED VERIFIED IN THE COURSE OF PROCEEDING UNDER SECTION 153A OF THE ACT. BUT IN TH E INSTANT CASE, BEFORE US, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THAT RELEVANT ACCOMMODATION ENTRY TRANSACTIONS WERE ALREADY CONSIDERED IN THE BLOCK A SSESSMENT PROCEEDINGS. 7.10 IN VIEW OF THE ABOVE DISCUSSION, WE ALSO REJECT T HE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE T HAT NO NOTICE UNDER 148 OF THE ACT CAN BE ISSUED IN THE CASE OF T HE ASSESSEE IN VIEW OF THE BLOCK ASSESSMENT COMPLETED PRIOR TO ISS UE OF NOTICE U/S 148 OF THE ACT. 7.11 THE ADDITIONAL GROUNDS NO. 1 & 2 OF THE APPEAL RAI SED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. THE THIRD GROUN D WAS NOT PRESSED; ACCORDINGLY SAME IS DISMISSED AS NOT PRESS ED. 8. AS FAR AS MERIT OF THE CASE IS CONCERNED, THE LEAR NED COUNSEL OF THE ASSESSEE REFERRED TO THE ORDER OF THE BLOCK ASSESSMENT AND SUBMITTED THAT IN THE BLOCK ASSESSMENT, COMMISSION INCOME AT THE RATE OF 1.5% HAS BEEN ASSESSED ON THE TRANSACTI ON OF RUPEES 10134 LAKHS. ACCORDING TO HIM, THE TRANSACTION IN Q UESTION IN THE 29 ITA NO.5523/DEL./2018 PRESENT PROCEEDING ALSO COVERED IN THOSE TRANSACTIO NS. HE ALSO SUBMITTED THAT ONCE COMMISSION INCOME HAS BEEN ASSE SSED IN CASE OF THE ACCOMMODATION ENTRIES IN THE BLOCK ASSE SSMENT ORDER, ADDITION FOR THE ENTIRE AMOUNT OF ACCOMMODATION ENT RIES CANNOT MADE IN THE PRESENT PROCEEDINGS UNDER SECTION 147 O F THE ACT. ON BEING SPECIFICALLY ASKED BY THE BENCH, TO DEMONSTRA TE, AS HOW AND WHERE THE ACCOMMODATION ENTRIES RECEIVED FROM M /S RK AGRWAL & CO HAVE ALREADY BEEN INCLUDED IN THE AMOUN T OF RUPEES 10134 OF ACCOMMODATION ENTRIES CONSIDERED IN THE BL OCK ASSESSMENT ORDER. BUT THE LEARNED COUNSEL NEITHER C OULD CLEARLY STATE THAT THE ENTRIES OF RK AGRWAL AND COMPANY S TANDS ALREADY APPEAR IN THE ENTRIES CONSIDERED IN THE BLOCK ASSES SMENT ORDER, NOR HE COULD FILE ANY DOCUMENTARY EVIDENCE TO SUPPO RT HIS CLAIM. FURTHER THE CONTENTION THAT ONLY COMMISSION INCOME SHOULD BE ASSESSED IN CASE OF THE ACCOMMODATION ENTRIES FROM M/S RK AGRWAL & CO WAS ALSO NOT CONVINCING AS POSSIBILITY OF ENTIRE AMOUNT OF ACCOMMODATION ENTRIES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 CANNOT BE DENIED, IN ADDITION TO T HE COMMISSION EARNED ON ACCOMMODATION ENTRIES OF 10134 LAKHS. THE ONUS IS ON THE ASSESSEE TO DISCHARGE THE RESPONSIBILITY OF SUBSTANTIATING THAT IN CASE OF RK AGRWAL AND COMPANY ONLY COMMISSI ON INCOME WAS EARNED. THE ASSESSEE HAS NEITHER PRODUCED THOSE PARTIES FOR STATEMENT ALONGWITH DOCUMENTARY EVIDENCES TO SUPPOR T THAT ONLY COMMISSION INCOME WAS EARNED. IN VIEW OF THE FAILUR E ON THE PART OF THE ASSESSEE TO DISCHARGE HIS ONUS, THE ADDITION MADE BY THE ASSESSING OFFICER IS SUSTAINED AND WE REJECT THE CO NTENTION OF LEARNED COUNSEL OF THE ASSESSEE SEEKING TELESCOPING OF THE ADDITION WITH THE INCOME ALREADY ASSESSED IN THE BL ACK 30 ITA NO.5523/DEL./2018 ASSESSMENT ORDER. THE GROUND OF THE APPEAL OF THE A SSESSEE IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2020. SD/- SD/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH SEPTEMBER, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI