V2 Retail Ltd., Kolkata V. DCIT, Circle - 10(2), Kolkata , Kolkata

ITA 611/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8958 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R P AGARWAL; NIRAV SHETH
• Keywords: Bogus purchase; Depreciation; Tangible material; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion
• Section: 143(3); 143(1); 250; 274; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA [BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER] I.T.A. NO. 611/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD........................................................................................... APPELLANT [PAN: AABCV 5632 P] VS. DCIT, CIRCLE-10(2), KOLKATA..........................................................................................RESPONDENT I.T.A. NO. 723/KOL/2018 ASSESSMENT YEAR: 2008-09 DCIT, CIRCLE-10(2), KOLKATA..............................................................................................APPELLANT VS. M/S. V2 RETAIL LTD....................................................................................... RESPONDENT [PAN: AABCV 5632 P] APPEARANCES BY: SH. R.P. AGARWAL, SR. ADV. & SH. NIRAV SHETH, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SH. VIJAY SHANKAR, CIT(DR), APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JANUARY 2 ND , 2020 DATE OF PRONOUNCING THE ORDER : JANUARY 15 TH , 2020 ORDER PER J. SUDHAKAR REDDY, AM : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA [CIT(A) FOR SHORT] DATED 25.01.2018 U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) FOR AY 2008- 09. 2. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE-OPENING OF THE ASSESSMENT U/S 147 OF THE ACT. 2 I.T.A. NO. 611, 723/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD. 3. WE HAVE HEARD BOTH THE PARTIES AT LENGTH. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE AY 2008-09 ON 04.06.2009 DISCLOSING TOTAL INCOME OF 52,08,98,320/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 12.05.2010 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT 53,02,64,479/-. THEREAFTER THE ASSESSMENT WAS RE-OPENED U/S 147 OF THE ACT AND AN ASSESSMENT ORDER WAS PASSED U/S 147 R.W.S. 143(3) OF THE ACT ON 21.01.2014 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT 54,69,61,226/-. THE ASSESSEE HAD CARRIED THE MATTER IN APPEAL AND WAS GRANTED PART RELIEF. 4. THE AO RE-OPENED ASSESSMENT U/S 147 OF THE ACT FOR THE SECOND TIME BY RECORDING FOLLOWING REASONS: THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE I.T. ACT, 1961 ON 12.05.2010 AT A TOTAL INCOME OF RS.53,02,64,480/-. SUBSEQUENTLY INFORMATION HAS BEEN RECEIVED FROM THE I.T.O., WARD-2(1), GHAZIABAD VIDE A LETTER DATED 21.04.2014 THAT THE COMPANY M/S. V2 RETAIL LIMITED HAD TAKEN ACCOMMODATION ENTRIES IN FORM OF BOGUS PURCHASES FOR RS.25,65,05,225/- F.Y. 2007-08 (PERTAINING TO A.Y.2008-09) FROM VARIOUS PERSONS NAMELY SHRI NIRBHAY SHANKAR GUPTA, SHRI SHYAM SHANKAR GUPTA, SHRI RAJEEV KUMAR GUPTA AND SHRI MADAN GUPTA OF DELHI. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.25,65,05,225/ - HAS ESCAPED ASSESSMENT. 5. THE ISSUE IS WHETHER THE RE-OPENING CAN BE HELD TO BE IN ACCORDANCE WITH LAW UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. SH. NIRAV SHETH, LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY CONTENDED THAT THERE IS NO WHISPER IN THE REASONS THAT THE ASSESSEE HAS FAILED TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND UNDER THOSE CIRCUMSTANCES THE PROVISO TO SECTION 147 OF THE ACT COMES IN PLAY AS THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND AS FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2008-09. HE RELIED ON A NUMBER OF CASE LAWS INCLUDING I. D.C.I.T, CIRCLE - 11(1) VS. HALDIA PETROCHEMICALS LTD. ITANO. 2291/KOL/2016 HONBLE ITAT, KOLKATA. II. AMIYA SALES & INDUSTRIES VS A.C.I.T 274 ITR 25, HONBLE HIGH COURT OF KOLKATA. III. HARYANA ACRYLIC MANUFACTURING CO. VS C.I.T 308 ITR38, HONBLE HIGH COURT OF DELHI. IV. DSC LTD. VS. DC IT, CENTRAL CIRCLE - 15 ITANO. 146/DEL/2015 HONBLE ITAT, DELHI. V. A.C.I.T, CIRCLE - 5(2), KOLKATA VS. EAST INDIA BEARING CO. PVT. LTD. ITA NO. 842/KOL/2018 HONBLE HAT, KOLKATA. 3 I.T.A. NO. 611, 723/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD. VI. PREMIER VYAPAAR PVT. LTD. VS. ITO, WARD - 15(2), KOLKATA ITA NO. 1953/KOL/2017 AND ITA NO. 1010/KOL/2018 HONBLE ITAT, KOLKATA. 7. THE LD. CIT(DR), MR. VIJAY SHANKAR SUBMITTED A WRITTEN SUBMISSION AND RELIED ON THE DECISION OF THE JUDGMENT OF A.G. HOLDINGS (P.) LTD. VS. INCOME-TAX OFFICER, [2012] 21 TAXMANN.COM 34 (DELHI) AND ARGUED THAT SUBSEQUENT DECISION HOLDS IN THESE CASES THAT RELEVANT MATERIALS WERE AVAILABLE WITH THE AO BASED ON WHICH HE FORMED AN OPINION AND RE-OPENED THE ASSESSMENT AND WHAT WAS EXPECTED WAS TO FORM A PRIMA FACIE AND TENTATIVE BELIEF AT THE TIME OF RECORDING REASONS. 8. THE PROVISO TO SECTION 147 READS AS FOLLOWS. 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 OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN 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 HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. 9. THIS BENCH OF THE TRIBUNAL HAS ON SIMILAR ISSUE IN THE CASE OF M/S. BEEKAY STEEL INDUSTRIES LTD. VS. DCIT CC-XXX, KOLKATA, IN I.T.A. NO. 105/KOL/2015, ORDER DTD. 31/05/2017 HELD AS FOLLOWS: 4.4. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TAO PUBLISHING (P) LTD. V. DY.CIT REPORTED IN (2015) 370 ITR 135 (BOM.), HAS HELD AS FOLLOWS:- 10. AS STATED ABOVE, THE REASONS SUPPLIED TO THE PETITIONER DO NOT DISCLOSE THAT THERE WAS ANY FAILURE ON THE PART OF THE PETITIONER TO PROVIDE ALL THE MATERIAL FACTS. THAT BEING THE POSITION, THIS GROUND COULD NOT HAVE BEEN TAKEN UP AGAINST THE PETITIONER AT THE TIME OF DISPOSING OF THE OBJECTIONS. ONCE THIS WAS NOT THE BASIS FOR ISSUANCE OF NOTICE FOR REASSESSMENT, IT CANNOT BE HELD AGAINST THE PETITIONER THAT THE PETITIONER HAD FAILED TO MAKE A TRUE AND FULL DISCLOSURE. IT WILL HAVE TO BE HELD THAT THE PETITIONER DID NOT FAIL TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. THE JURISDICTIONAL 4 I.T.A. NO. 611, 723/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD. REQUIREMENT FOR CARRYING OUT THE REASSESSMENT, AFTER THE EXPIRY OF PERIOD OF FOUR YEARS, IS NOT FULFILLED IN THE PRESENT CASE. 4.5. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SOUND CASTING (P) LTD. V. DY. CIT REPORTED IN 250 CTR 119 (BOM.) (HC), HAS HELD THAT THERE IS NO ALLEGATION IN THE REASONS WHICH HAVE BEEN DISCLOSED TO THE ASSESSEE THAT THERE WAS ANY FAILURE ON HIS PART TO FULLY AND TRULY DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THEREFORE REOPENING BEYOND FOUR YEARS WAS NOT VALID. (A.Y. 2005-06). 4.6. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD. REPORTED IN [2013] 354 ITR 356 (DEL.)(HC) HAS HELD AS FOLLOWS: THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CASE DO CONFIRM OUR APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS REASON TO BELIEVE VIS--VIS AN INTIMATION ISSUED UNDER SECTION 143(1) CAN CAUSE TO THE TAX REGIME. THERE IS NO WHISPER IN THE REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED UNDER SECTION 147. 4.7. THE HONBLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. V. COMMISSIONER OF INCOME-TAX AND ANOR. REPORTED IN [2009] 308 ITR 38 (DELHI) HAS HELD AS FOLLOWS: 26. VIEWED IN THIS LIGHT, THE PROVISO TO SECTION 147 OF THE SAID ACT, CARVES OUT AN EXCEPTION FROM THE MAIN PROVISIONS OF SECTION 147. IF A CASE WERE TO FALL WITHIN THE PROVISO, WHETHER OR NOT IT WAS COVERED UNDER THE MAIN PROVISIONS OF SECTION 147 OF THE SAID ACT WOULD NOT BE MATERIAL. ONCE THE EXCEPTION CARVED OUT BY THE PROVISO CAME INTO PLAY, THE CASE WOULD FALL OUTSIDE THE AMBIT OF SECTION 147. 27. EXAMINING THE PROVISO [SET OUT ABOVE], WE FIND THAT NO ACTION CAN BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IF THE FOLLOWING CONDITIONS ARE SATISFIED: (A) AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR; AND (B) UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE: (I) TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148; OR (II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. CONDITION (A) IS ADMITTEDLY SATISFIED INASMUCH AS THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE SAID ACT. CONDITION (B) DEALS WITH A SPECIAL KIND OF ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THE ESCAPEMENT MUST ARISE OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148. THIS IS CLEARLY NOT THE CASE HERE BECAUSE THE PETITIONER DID FILE THE RETURN. SINCE THERE WAS NO FAILURE TO MAKE THE RETURN, THE ESCAPEMENT OF INCOME CANNOT BE ATTRIBUTED TO SUCH FAILURE. THIS LEAVES US WITH THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX WHICH ARISES OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF IT IS ALSO FOUND THAT THE PETITIONER HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, THEN NO ACTION UNDER SECTION 147 COULD HAVE BEEN TAKEN AFTER THE FOUR YEAR PERIOD INDICATED ABOVE. SO, THE KEY QUESTION IS WHETHER OR NOT THE PETITIONER HAD MADE A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS? 29. IN THE REASONS SUPPLIED TO THE PETITIONER, THERE IS NO WHISPER, WHAT TO SPEAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE 5 I.T.A. NO. 611, 723/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD. FOUR YEAR PERIOD INDICATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, FULLY AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THAT THE REASONS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECISION IN WELINTERTRADE PRIVATE LTD (SUPRA) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA (SUPRA) THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEW-POINT, WE HOLD THAT THE NOTICE DATED 29.03.2004 UNDER SECTION 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 02.03.2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN BEYOND THE FOUR YEAR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE. 4.8. APPLYING THE PROPOSITIONS LAID DOWN IN THE ABOVE CASE LAW TO THE FACTS TO THIS CASE, WE HAVE TO NECESSARILY HOLD THAT THE RE-OPENING OF THE ASSESSMENT PROCEEDINGS IS NOT VALID THAT THERE IS NOT EVEN A WHISPER IN THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE NECESSARY MATERIAL FACTS REQUIRED FOR ASSESSMENT IN VIEW OF THE 1ST PROVISO TO SECTION 147 OF THE ACT. IN THIS CASE NO TANGIBLE MATERIALS HAVE COME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ASSESSMENT ORDER U/S 143(3). RE-OPENING IS DONE BASED ON THE SAME MATERIAL AND RECORD AND HENCE IT IS BAD IN LAW. AS FAR AS THE CONTENTION, THAT THERE IS A CHANGE IN OPINION IS CONCERNED, WE ARE UNABLE TO AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE AS THERE WAS NEITHER A QUERY ON THIS ISSUE BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, NOR THERE WAS A REPLY BY THE ASSESSEE. HENCE THERE WAS NO OPINION FORMED. THUS, THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. 4.9. IN ANY EVENT, AS WE HAVE HELD THAT THE RE-OPENING IS BAD IN LAW AS IT DOES NOT FULFIL THE REQUIREMENT OF THE PROVISO TO SECTION 147 OF THE ACT, AND AS NO TANGIBLE MATERIAL HAS COME TO THE POSSESSION OF THE ASSESSING OFFICER, WE QUASH THE ASSESSMENT AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 10. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF AMIYA SALES & INDUSTRIES VS. ASSTT. COMMISSIONER OF INCOME-TAX, [2005] 274 ITR 25 (CAL.) HELD AS FOLLOWS: IN A CASE WHERE ASSESSMENT IS MADE UNDER SECTION 143(3) AND IS SOUGHT TO BE REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IN ORDER TO ASSUME JURISDICTION UNDER SECTION 147, ONE OF THE CONDITIONS PRECEDENT IS THAT THE RECORDED REASONS SHOULD POINT OUT THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. ONCE THE ASSESSING OFFICER COMES TO A FINDING THAT THERE WAS FAILURE OR THERE WAS NO IMPROPER DISCLOSURE ON THE PART OF THE ASSESSEE, HE FORMS THE BELIEF WHICH IS RECORDED AND ASSUMES JURISDICTION UNDER SECTION 147. IN THE INSTANT CASE, THE ASSESSMENTS FOR BOTH THE ASSESSMENT YEARS WERE MADE UNDER SECTION 143(3). THERE WAS NO DISPUTE THAT THE NOTICES UNDER SECTION 147 WERE ISSUED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS. THUS, IN ORDER TO INITIATE ACTION UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEARS, THERE SHOULD HAVE BEEN EITHER FAILURE OR NON-DISCLOSURE ON THE PART OF THE ASSESSEE. FROM THE RECORDED REASONS IT WAS FOUND THAT THE ASSESSING OFFICER WAS SEEKING TO REOPEN THE ASSESSMENTS SINCE THERE WAS AN INCORRECT INTERPRETATION OF ACCOUNTS BY THE ASSESSING OFFICER AND FOR THAT 'THE ASSESSEE GOT THE 6 I.T.A. NO. 611, 723/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD. BENEFIT OF LOSS FOR THE ASSESSMENT YEAR 1992-93 WHICH WAS CARRIED FORWARD TO THE SUBSEQUENT YEARS. IN THE INSTANT CASE, IT HAD NOWHERE BEEN RECORDED THAT THERE WAS FAILURE OR IMPROPER DISCLOSURE ON THE PART OF THE ASSESSEE HOWEVER, THE ASSESSING OFFICER SOUGHT TO REOPEN THE ASSESSMENTS AS THERE WAS INCORRECT INTERPRETATION OF ACCOUNT BY THE ASSESSING OFFICER. THE RECORDED REASONS DID NOT SPEAK OF ANY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE. THUS, ADMITTEDLY THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN THE ASSESSMENT. INCORRECT INTERPRETATION OF ACCOUNTS BY THE ASSESSING OFFICER COULD NOT CONFER JURISDICTION ON THE ASSESSING OFFICER TO ISSUE NOTICES UNDER SECTION 148 FOR REOPENING THE ASSESSMENTS AS SOUGHT TO BE MADE IN THE INSTANT CASE. IF THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSURE FULLY AND TRULY THE MATERIAL FACTS, WRONG INTERPRETATION OF ACCOUNTS BY THE ASSESSING OFFICER LEADING TO EXCESSIVE RELIEF CANNOT BE A GROUND FOR REOPENING AND THUS CANNOT CONFER JURISDICTION ON THE ASSESSING OFFICER. EXPLANATION 2 CANNOT BE READ IN ISOLATION OF SECTION 147. IT SHOULD BE READ IN CONJUNCTION WITH THE PROVISIONS IN THE SECTION. THE WORDS FOR THE PURPOSE OF THIS SECTION APPEARING IN EXPLANATION 2 SHOW THAT THE CONDITIONS PRECEDENT FOR REOPENING ASSESSMENT AS LAID DOWN IN SECTION 147 HAVE TO BE COMPLIED WITH. IN INSTANT CASE, SINCE THE CONDITIONS FOR ASSUMING OF JURISDICTION UNDER SECTION 147 WERE NOT FULFILLED, THE NOTICES UNDER SECTION 148 WERE UNCALLED FOR AND WARRANTED INTERFERENCE BY APPEARING ORDERS. IF AN AUTHORITY ASSUMES JURISDICTION ILLEGALLY WHICH IS NOT VESTED UNDER THE LAW IT WOULD BE FIT AND PROPER FOR THE WRIT COURT TO INTERVENE. IN THE INSTANT CASE, AS THERE WAS NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS IN THE RETURN, AS THE ASSESSING OFFICER SOUGHT TO REOPEN THE ASSESSMENTS DUE TO WRONG INTERPRETATION OF ACCOUNTS BY THE ASSESSING OFFICER WHICH WAS NOT PERMISSIBLE UNDER SECTION 147 TO ASSUME JURISDICTION, THE ASSESSEE WAS JUSTIFIED IN INVOKING THE WRIT PETITION. THUS, THE INSTANT PETITION WAS TO BE ALLOWED AND, CONSEQUENTLY IMPUGNED NOTICES UNDER SECTION 147/148 WERE TO BE QUASHED. 11. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT ON THIS ISSUE AND APPLYING THE PROPOSITIONS OF LAW CITED IN THE CASE LAW REFERRED ABOVE WE HOLD THAT THE RE-OPENING IS BAD IN LAW AS IT IS NOWHERE RECORDED IN THE REASONS FOR RE-OPENING THAT THERE WAS THE FAILURE ON THE PART OF THE ASSESSEE TRULY AND FULLY DISCLOSE MATERIAL FACTS REQUIRED FOR THE ASSESSMENT. THE LD. DR RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF A.G. HOLDINGS PVT. LTD. (SUPRA). THIS CASE IS NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE ON HAND. IN THE CASE OF A.G. HOLDINGS PVT. LTD. (SUPRA) THE PROVISO TO SECTION 147 WAS NOT THE SUBJECT MATTER AS THE ORIGINAL ASSESSMENT WAS NOT DONE U/S 143(3) OF THE ACT. THE ORIGINAL RETURN OF INCOME IN THAT CASE WAS PROCESSED U/S 143(1) OF THE ACT. THE APPLICABILITY OF THE PROVISO TO SECTION 147 OF THE ACT WAS NOT THE SUBJECT MATTER OF ADJUDICATION. HENCE THIS CASE LAW DOES NOT HELP THE REVENUE. 12. HENCE, IN VIEW OF THE ABOVE SUBMISSIONS THE RE-ASSESSMENT IS QUASHED AS BAD IN LAW AND APPEAL IS ALLOWED. 7 I.T.A. NO. 611, 723/KOL/2018 ASSESSMENT YEAR: 2008-09 M/S. V2 RETAIL LTD. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 15 TH JANUARY, 2020. SD/- SD/- [S.S. GODARA] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15.01.2020 BIDHAN COPY OF THE ORDER FORWARDED TO: 1. M/S. V2 RETAIL LTD., CHHAPARIA & ASSOCIATES, CHARTERED ACCOUNTANTS, 8, CAMAC STREET, SHANTINIKETAN BUILDING, 5 TH FLOOR, ROOM NO. 2, KOLKATA-700 017. 2. DCIT, CIRCLE-10(2), KOLKATA. 3. CIT(A)-4, KOLKATA. (SENT THROUGH E-MAIL) 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES