ACIT, New Delhi V. M/s. Dabur India Ltd., New Delhi

ITA 6299/DEL/2012

• Counselvise Citation: 629920114 RSA 2012
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-09-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 20-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVI SHARAN SINGH
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 14A; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SMT. DIVA SINGH , JM AND SH. O.P.KANT , AM ITA NO.6299/DEL./2012 : ASSTT. YEAR : 2002 - 03 ACIT, CIRCLE - 10(1) NEW DELHI VS DABUR INDIA LTD., 8/3, ASAF ALI ROAD, NEW DELHI PAN:AAACD0474C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. DEVI SHARAN SINGH, SR. DR RESPONDENT BY : SH. M .P. RASTOGI, ADV DATE OF HEARING : 17.11.2015 DATE O F PRONOUNCEMENT : 20 . 11 .2015 ORDER PER O.P.KANT, A.M. THIS APPEAL OF THE R EVENUE IS DIRECTED AGAINST THE ORDER DATED 07.11.2012 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - V , NEW DELHI RAIS ING THE FOLLOWING SOLITARY GROUND OF APPEAL : - 1. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN QUASHING THE REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 WHEN JURISDICTIONAL HIGH COURT IN THE CASE OF BAWA ABHAI SINGH VS. CIT 9117 TAXMANN 12 AND RAKESH AGGARWAL VS. ACIT 87 TAXMAN 306 HAS ALSO HELD THAT UNDER THE AMENDED PROVISIONS OF SECTION 147 THE POWER TO REOPEN IS MUCH WIDER AND CAN BE EXERCISED EVEN AFTER THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS. 2. AT THE OUTSET, WE MAY LIKE TO MENTION THAT TH IS CASE WAS HEARD BY US ON 22.09.2205, BUT IT WAS FOUND FROM THE RECORD THAT THE CASE WAS ALSO PAGE 2 OF 15 ITA NO. 6299/DEL./2012 HEARD ON PREVIOUS OCCASION BY OTHER MEMBERS AND RELEASED, THEREFORE FOR SEEKING CLARIFICATION WHETHER ANY DECISION WAS PRONOUNCED IN THE OPEN COURT ON THAT OCCAS ION , THE CASE WAS RE - FIXED ON 17.11.15 AND HEARD ACCORDINGLY. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY , ENGAGED IN THE MANUFACTURING OF PHARMACEUTICALS, HERBAL AND COSMETICS PRODUCTS DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 - 10 - 2002 DECLARING AN INCOME OF RS. 6,28,29,629/ - THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE INCOME - TAX ACT (IN SHORT ACT ) WAS ISSUED AND SERVED UPON THE ASSESSEE . THE NOTICE U/S 142(1) OF THE ACT ASKING QUERIES RELATED TO THE ISSUES OF DEDUCTION UNDER SECTIONS 80 - O, 80IB ETC WAS ALSO ISSUED ON 13 - 8 - 2004. THEREAFTER, THE LEARNED ASSESSING OFFICER (IN SHORT AO ) PASSED THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 19 61 ON 07.03.2005 AT AN INCOME OF RS.19,97,82,650/ - AFTER MAKING VARIOUS ADDITIONS. THEREAFTER, BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR , THE LD. AO NOTICED THAT INCOME CHARGEABLE TO TAX ESCAPED THE ASSESSMENT AND THEREFORE HE , AFTER RECORDING THE REASON ON 30.03.2009, ISSUED NOTICE U/S 148 OF THE ACT. THE OBJECTIONS FILED BY THE ASSESSEE, AGAINST THE REOPENING OF THE ASSESSMENT WAS DISPOSED OFF BY THE LD. AO VIDE HIS LETTER DATED 10.11.2009. THEREAFTER THE ASSESSMENT U/S 143 (3)/ 147 OF THE ACT WAS COMPLETED ON - 31.12.2009 AT TOTAL INCOME OF RS.71,95,53,874/ - . PAGE 3 OF 15 ITA NO. 6299/DEL./2012 4 . AGGRIEVED , THE ASSESSEE FILED APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) (FOR SHORT LD CIT(A)) , WHEREIN T HE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ON MERITS OF THE ADDITIONS MADE BY THE LD. AO. THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE , ALLOWING THE GROUND OF THE APPEAL PERTAINING TO INITIATION OF REASSESSMENT P ROCEEDINGS ON CHANGE OF OPINION , HELD THE ACTION OF THE REOPENING OF THE ASSESSMENT AS INVALID . THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 3.1 THE ISSUE INVOLVED AND THE VERSION OF THE APPELLANT HAS BEEN CONSIDERED. FROM THE ASST. ORDER DATED 31.12.2009 PARA - 4, IT HAS BEEN SEEN THAT THE AO HAS HIMSELF RECORDED THAT ON GOING THROUGH THE RECORD IT WAS NOTICED THAT THE DEDUCTION CLAIMED BY THE ASSE SSEE COMPANY WAS WITHOUT FURNISHING DEATH CERTIFICATE IN FORM 10HA ALONGWITH THE RETURN WHICH WAS A MANDATORY REQUIREMENT. THE ASSESSEE IN ITS REPLY DATED 11.11.2009 SUBMITTED THAT DURING THE COURSE OF ORIGINAL PROCEEDINGS THE SAID CLAIMED WAS MADE AND ALL OWED BY THE AO AFTER CONSIDERING THE EVIDENCES PRODUCED BEFORE HIM . THIS RECORDING AS WELL AS THE REASONS RECORDED ON PAGE - 23 OF THE PAPER BOOK SHOW THAT IN THE SAME SET OF FACTS AND CIRCUMSTANCES WHICH WAS CONSIDERED BY THE AO IN THE ORIGINAL ASST. ORDER , THE AO HAS STARTED PROCEEDINGS U/S 147 OF THE ACT, THIS IS NOT PERMISSIBLE IN VIEW OF THE JUDGMENTS OF THE HON BLE HIGH COURT REFERRED ABOVE BY THE APPELLANT. NOW IT IS SETTLED LEGAL PROPOSITION THAT ON THE SAME FACTS ASSESSMENT COMPLETED EARLIER CANNOT BE REOPENED ON RE - APPRECIATION OF THE FACTS - THIS HAS BEEN HELD AS CHANGE OF OPINION AND NOT PERMISSIBLE FOR THE PURPOSE OF SECTION 147 OF THE IT ACT. THE RATIO OF JUDGMENTS IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC), CIT VS. CHAKIA T AGENCIES (P) LTD. 314 ITR 200 (MAD) AND LEGAO SYSTEMS INDIA (P) LTD. VS. DCIT 187 TAXMAN (DEL) 294 IS SQUARELY APPLICABLE IN THIS CASE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES. THEREFORE, THE PAGE 4 OF 15 ITA NO. 6299/DEL./2012 ASST. ORDER SUFFERS FROM JURISDICTIONAL ERROR. THE SAME IS HELD AS INVALID. THE GROUND OF APPEAL PERTAINING TO THE INITIATION OF PROCEEDINGS ON C HANGE OF OPINION IS ALLOWED. 5 . SINCE THE ASSESSMENT ORDER MADE BY THE LD. AO U/S 143(3)/147 OF THE ACT WAS HELD AS INVALID ON LEGAL ISSUE , THE LD. CIT (A) DID NOT ADJUDICATE OTHER GROUNDS OF APPEAL. AGGRIEVED , THE R EVENUE IS BEFORE US. 6 . THE LD SENIOR DEPARTMENTAL REPRESENTATIVE (FOR SHORT SR. DR ) RELIED ON THE ORDER OF THE LD. AO AND REITERATED THE GROUNDS OF APPEAL . ON THE OTHER HAND THE LD AUTHORIZED REPRESENTATIVE ( FOR SHORT AR ) OF THE ASSESSEE SUBMITTED THAT THE RELEVANT ASSESSMENT YEAR IN THE CASE IS 2002 - 03 AND NOTICE U/ S 148 OF THE ACT WAS ISSUED ON 30.03.2009, T HEREFORE , THE REOPENING OF THE ASSESSMENT COMP LETED U/S 143(3) OF THE ACT BEING BEYOND FOUR YEARS AND SINCE THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, THE ASSESSMENT CANNOT BE REOPENED. THE LD. AR PLACED HIS RELIANCE ON THE JUDGEMENT REPORTED IN TH E CASE OF ACRYLIC MANUFACTURING CO. V. CIT 308 ITR 38 (P&H) AND WEL INTER TRADE P. LTD. & ANR. VS. ITO 308 ITR 22 (DEL.). FURTHER, THE LD AR REFERRED TO THE REASONS RECORDED BY THE LD. AO , WHICH ARE PLACED AT PAGE 7 OF THE PAPER BOOK OF THE ASSESSEE AND SUBMITTED THAT THERE WAS NO NEW MATERIAL BEFORE THE AO FOR REOPENING OF ASSESSMENT . FURTHER , HE REFERRED TO THE QUERIES RAISED IN THE NOTICE U/S 142(1) OF THE ACT ISSUED BY THE AO , WHICH IS PLACED AT PAGE 8 OF THE ASSESSEE S PAPER BOOK AND STATED THAT QUERIES WERE ALREADY RAISED BY THE AO ON ALL THE PAGE 5 OF 15 ITA NO. 6299/DEL./2012 ISSUES , WHICH HE HAD PROPOSED TO REOPEN. HE FURTHER SUBMITTED THAT THE REASON RECORDED IN RESPECT OF DIVIDEND INCOME IS MERELY BASED ON THE CERTA IN SPECIFIC DECISION OF THE TRIBUNAL RECEIVED SUBSEQUENT THE FILING OF RETURN BY THE ASSESSEE . T HE LD . AR ALSO DISTINGUISHED THE FACTS AND CIRCUMSTANCES OF THE CASE S RELIED UPON BY THE REVENUE IN THEIR GROUNDS OF APPEAL STATING THAT IN THOSE CASES REOPENING OF THE ASSESSMENT WAS WITHIN FOUR YEARS. FURTHER , IN THE CASE OF BAWA ABHAI SINGH ( SUPRA) , HE SUBMITTED THAT THE REPORT OF THE DVO WAS RECEIVED SUBSEQUENT TO THE COMPLETION OF THE ASSESSMENT SO THERE WAS NEW MATERIAL, WHEREAS IN THE PRESENT CAS E NO NEW MATERIAL WAS BEFORE THE LD. AO AND THE ASSESSMENT IS REOPENED MERELY ON THE CHANGE OF OPINION. FURTHER , THE LD AR SUBMITTED THAT IN THE REASON RECORDED, THE LD. AO HAS NOWHERE MENTIONED THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS. 7 . WE HAVE HEARD THE RIVAL SUBMISSION S AND PERUSED THE MATERIAL ON RECORD. THE FACT THAT NOTICE FOR REOPENING OF THE ASSESSMENT HAS BEEN ISSUED AFTER FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, IS UNDISPUTED. THE PROVISO TO SE CTION 147 SPECIFICALLY MENTIONS THAT WHERE THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT , NO ACTION FOR REOPENING FOR THAT ASSESSMENT SHALL BE TAKEN AFTER EXPIRY OF THE FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS OTHERWISE THAN BY REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF ALL MATERIAL FACTS HAVE BEEN SUBMITTED BY THE ASSESSEE AND THERE IS NO PAGE 6 OF 15 ITA NO. 6299/DEL./2012 OMISSION OR FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS , ISSUE OF NOTICE U/S 148 OF THE ACT FOR REASSESSMENT PROCEEDINGS BEYOND A PERIOD OF FOUR YEARS IS NOT PERMISSIBLE AND SHALL BE WHOLLY WITHOUT JURISDICTION. IN VIEW OF CLEAR P ROVISIONS OF THE ACT, WE ARE REQUIRED TO EXAMINE WHETHER THE INITIATION OF REASSESSMENT PROCEEDINGS IN THE CASE WAS AS PER THE PROVISIONS OF LAW AND W HETHER THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS . FOR THIS PURPOSE, WE WOULD TO LIKE TO REPRODUCE THE REASONS RECORDED BY THE AO , WHICH ARE AS UNDER: - THE ASSESSEE FILED ITS RETURN OF INCOME AT RS.62829629/ - ON 30.10.2002. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 7.03.2005 AT AN INCOME OF RS 19,97,82,650/ - . DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE IT WAS NOTICED THAT : - 1 THE ASSESSEE HAS CLAIMED DEDUCTION OF RS 34,00,3657= WITHOUT FURNISHING THE CERTIFICATE IN FORM 10HA ALONGWITH THE RETURN AS IS NECESSARY AS PER SECTION 80 - 0. FURTHER AS PER COPY OF AGREEMENT PROVIDED BY THE ASSESSEE THE AGREEMENT WAS EFFECTIVE UPTO 31.3.2000 ONLY. HENCE, THE DEDUCTION CLAIMED BY THE ASSESSEE WAS ON WRONG FOOTING. 2 . THE ASSESSEE CLAIMED THE DEPRECIATION OF RS 23,36,137/ - ON FIXED ASSETS ON ACCOUNT OF FLUCTUATION IN THE RATE OF EXCHANGE WHICH WAS NOT SUPPORTED BY THE ACTUAL REMITTANCE. 3 THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80 IB AMOUNTING TO RS 53,75,07,827/ - ON ITS ALWAR UNIT AND BADDI UNITS. FURTHER THE ASSESSEE HAD CLAIMED DEPRECIAT I ON ON THE ASSETS OF RS . 6 , 27 ,570,731 / - OF BADDI UNITS FOR WHICH HE HAD CLAIMED / CHARGED DEPRECIATION IN THE EA RLIER YEARS AND THE ADDITIONS TO THE ASSETS DURING A.Y. 2002 - 03 INCLUDES THESE ASSETS AMOUNTING TO RS . 62,75,70,737 / - . THE ADDITIONS WERE MADE IN HAJMOLA, CHAVAN PRASH, ONCOLO GY, AMLAL ETRACT, SOFTGEL AND PUDING KARA UNITS OF PAGE 7 OF 15 ITA NO. 6299/DEL./2012 BADDI. AS THE DEPRECIATION ON THESE ASSETS PERTAINS TO PREVIOUS YEARS HENCE EARLIER Y EARS DEPRECIATION SHOULD NOT BE ALLOWED TO BE CLAIMED IN THE PRESENT A.Y. 2002 - 03. AS HAJMOLA AND PUDIN HARA OF BADDI UN ITS HAD BEEN DETERMINING 30% DEDUCTION U/S 80IB. ALLOWANCE OF EARLIER YEARS DEPRECIATION WILL REDUCE THE ELIGIBLE PROFIT FOR TAXATION. THEREFORE, DISALLOWANCE OF EARLIER YEARS DEPRECIATION WILL ENHANCE THE AMOUNT ELIGIBLE FOR DEDUCTION U/S 80 AND ULTIMATEL Y PROFIT ELIGIBLE FOR TAXATION. 4 LAST BUT NOT LEAST THE ASSESSEE HAS DECLARED DIVIDEND INCOME OF RS 2,09,44,6977= ON WHICH IT HAS TO BE CONSIDERED THAT WHETHER IN CONFORMITY OF PROVISIONS OF SECTION 14A OF I T ACT, 1961 OR NOT AS IN THE CASE OF DAGA CAPI TAL MANAGEMENT PRIVATE LTD A.Y.2001 - 02 IN ITA NO . 8057/MUM/2003 DECIDED BY ITAT SPECIAL BENCH MUMBAI. THE ASSESSEE HAS NOT DEDUCTED DISCLOSED FULLY AND TRULY AMOUN T OF EXPENDITURE INCURRED IN RELATION TO EARN INCOME FROM DIVIDEND. 8 . ON PERUSAL OF THE REA SON RECORDED, IT IS OBSERVED THAT THE LD. AO HAS RECORDED FOUR REASONS FOR INITIATION OF REASSESSMENT PROCEEDINGS. I N FIRST REASON RECORDED THERE ARE TWO PARTS. IN FIRST PART OF REASON RECORDED , THE LD. AO HAS STATED THAT DEDUCTION U/S 80 - O OF THE ACT WAS CLAIMED WITHOUT FILING CERTIFICATE IN FORM 10HA ALONG WITH THE RETURN. WITH REGARDS TO THIS REASON, WE FIND THAT I N THE ASSESSMENT ORDER, THE LD. AO HAS EXAMINED THIS ISSUE IN PARA - 4 AND RECORDED THAT THE REMITTANCE CERTIFICATE ISSUED BY THE AMERICAN E XPRESS BANK WAS THOUGH NOT IN FROM NO. 10 HA BUT THE LANGUAGE OF THE CERTIFICATE WAS ANALOGOUS TO PART A OF THE FORM, HOWEVER, THE PART B OF THE FORM WAS NOT BEEN FILED BY THE ASSESSEE. T HE LD AR , IN THIS RESPECT, HAS SUBMITTED THAT ALL THE EVIDENCES WER E A LREADY SUBMITTED BEFORE THE AO AND DEDUCTION WAS PAGE 8 OF 15 ITA NO. 6299/DEL./2012 ALLOWED AFTER APPLICATION OF MIND BY THE AO . THE L D. AR HAS REFERRED PAGE - 9 OF THE PAPER BOOK , WHEREIN THE ASSESSEE HAS SUBMITTED JUSTIFICATION OF CLAIM OF DEDUCTION U/S 80 - O OF THE ACT BEFORE THE AO. THUS, WE FIND THAT AO HAS APPLIED MIND WHILE ALLOWING DEDUCTION BASED ON THE EVIDENCE S AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING MATERIAL FACTS. THE OTHER PART OF FIRST REASON RECORDED IS THAT AS PER THE COPY OF AGREEMENT PROVIDED BY THE ASSESSEE, THE AGREEMENT WAS EFFECTIVE UPTO 31.3.2000 ONLY. WE FIND THAT I T IS EVIDENT FROM THE REASON RECORDED ITSELF THAT THE DOCUMENT WAS ALREADY BEFORE THE AO AND THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACT IN TH IS REGARDS. FURTHER, IN SECOND REASON RECORDED , THE LD. AO HAS STATED THAT DEPRECIATION ON FIXED ASSETS HAS BEEN CLAIMED BY THE ASSESSEE WITHOUT SUBMITTING FOREIGN EXCHANGE REMITTANCE CERTIFICATE. IN THIS REGARDS, THE LD AR HAS SUBMITTED THAT NO NEW TANGI BLE MATERIAL HAS COME UP BEFORE THE LD. AO TO FORM SUCH A OPINION AND THE AO HAS ALREADY APPLIED MIND ON THE ISSUE IN ORIGINAL ASSESSMENT AND THEN ONLY CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. WE AGREE WITH THE SUBMISSION OF THE LD. AR IN THIS REGARD. FURTH ER, IN THIRD REASON RECORDED, THE LD. AO HAS MENTIONED THAT WHILE ALLOWING DEDUCTION U/S 80IB OF THE ACT, THE DEPRECATION ALLOWED IN EARLIER YEARS SHOULD NOT HAVE BEEN ALLOWED. AGAIN THE AO HAS NOT POINTED OUT ANY FAILURE ON ACCOUNT OF THE ASSESSEE IN DISC LOSING THE FACTS. THE LD. AR HAS SUBMITTED THAT THERE IS NO NEW MATERIAL BEFORE THE AO TO FORM SUCH AN OPINION, THEREFORE, IT AMOUNTS TO CHANGE OF OPINION BASED ON THE DOCUMENTS ALREADY AVAILABLE BEFORE THE AO. SIMILARLY IN FOURTH PAGE 9 OF 15 ITA NO. 6299/DEL./2012 REASON RECORDED , THE AO HAS PROPOSED TO ASSESS THE EXPENDITURE IN RELATION TO DIVIDEND INCOME IN VIEW OF THE DECISION IN THE CASE OF DAGA CA PITAL AND MANAGEMENT PVT. LTD (SUPRA) . AGAIN, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING TRULY AND FULLY ALL MATERIAL FACTS IN RELATION TO THE DIVIDEND INCOME, AND IN SUCH CIRCUMSTANCES, THE AO CANNOT BE ALLOWED TO INVOKE REASSESSMENT PROCEEDINGS MERELY ON CHANGE OF OPINION . 9 . AN IDENTICAL Q UESTION WAS BEFORE THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF ACRYLIC MANUFACTURING CO. V. CIT WHERE IN IT HAS THAT: 20. 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 ESCA PEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE 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 S. 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER S. 1 47 COULD BE TAKEN. WE HAVE ALREADY MENTIONED ABOVE THAT THE REASONS SUPPLIED TO THE PAGE 10 OF 15 ITA NO. 6299/DEL./2012 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 RE MAINS UNFULFILLED. IN OUR RECENT DECISION IN WEL INTERTRADE (P) LTD. (SUPRA) WE HAD AGREED WITH THE VIEW TAKEN BY THE PUNJAB & 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 AO UNDER S. 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEW - POINT, WE HOLD THAT THE NOTICE DT. 29TH MARCH, 2004 UNDER S. 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DT. 2ND MARCH, 2005 ARE WITHOUT JURISDICTION AS NO ACTION UNDER S. 147 COULD BE TAKEN BEYOND THE FOUR YEAR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE. 10 . IN SIMILAR CIRCUMSTANCES, THE JURISDICTIONAL HIGH COURT IN THE CASE WEL INTER TRADE P. LTD. & ANR. VS. ITO HAS CLEARLY HELD THAT REOPENING OF THE ASSESSMENT WAS NOT JUSTIFIED . THE RELEVANT PARA OF THE JUDGEMENT IS REPRODU CED AS UNDER: 10. IN THIS CONNECTION, IT MAY BE RELEVANT TO NOTE ONE DECISION, ALTHOUGH THERE ARE SEVERAL OTHERS. THE SAID DECISION IS THAT OF T HE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA VS. ASSTT. CIT (2004) 188 CTR (P&H) 90 : (2004) 269 ITR 192 (P&H). IN THE SAID DECISION, THE HIGH COURT OF PUNJAB & PAGE 11 OF 15 ITA NO. 6299/DEL./2012 HARYANA WAS FACED WITH A SIMILAR SITUATION. THE COURT NOTED THAT THERE WA S NOT EVEN A WHISPER OF AN ALLEGATION THAT THE ESCAPEMENT IN 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. THE COURT OBSERVED THAT ABSENCE OF THIS FINDING, WHICH IS THE SINE QUA NON FOR ASSUMING JURISDICTION UNDER S. 147 OF THE ACT IN A CASE FALLING UNDER THE PROVISO THERETO, MAKES THE ACTION TAKEN BY THE AO WHOLLY WITHOUT JURISDICTION. WE AGREE WITH THESE OBSERVATIONS OF THE PUNJAB & HARYANA HIGH COURT AND A RE OF THE VIEW THAT IN THE PRESENT CASE ALSO, THE AO HAS ACTED WHOLLY WITHOUT JURISDICTION. THE INVOCATION OF S. 147, THE ISSUANCE OF THE NOTICE UNDER S. 148 AND THE SUBSEQUENT ORDER ON THE OBJECTIONS ARE ALL WITHOUT JURISDICTION. THE IMPUGNED NOTICE AS WE LL AS THE PROCEEDINGS PURSUANT THERETO ARE QUASHED. 11 . FURTHER, THE CASES RELIED UPON BY THE REVENUE HAVE BEEN EXAMINED AND IT IS FOUND IN THOSE CASES REOPENING OF THE ASSESSMENT WAS WITHIN FOUR YEARS OF THE END OF ASSESSMENT YEAR AND HENCE , THE RATIO OF THOSE CASES CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE. 1 2 . IN VIEW OF THE ABOVE ANALYSIS, WE ARE OF THE OPINION THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING TRULY AND FULLY ALL MATERIAL FACTS AND THE AO CANNOT BE AL LOWED TO TAKE A DIFFERENT VIEW ON THE SAME MATERIAL WITH HIM. SINCE NO NEW TANGIBLE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO FOR ISSUE OF NOTICE U/S 148 OF THE ACT AND INITIATION OF REASSESSMENT PROCEEDING MERELY ON THE CHANGE OF OPINION IS NOT JUSTIF IED IN VIEW OF THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR 322 ITR 561, WHERE IN IT IS HELD AS UNDER: 6. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO THE DIRECT TAX PAGE 12 OF 15 ITA NO. 6299/DEL./2012 LAWS (AMENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER THE ABOVE TWO CONDITIONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT (WITH EFFECT FROM 1ST APRIL, 1989), THEY ARE GIVEN A GO - BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THEREFORE, POST - 1ST APRIL, 1989, POWER TO RE OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS ' REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF ' MERE CHANGE O F OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF ' CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF ' CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS ' TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) PAGE 13 OF 15 ITA NO. 6299/DEL./2012 ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORD S ' REASON TO BELIEVE' BUT ALSO INSERTED THE WORD ' OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS ' REASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SAID EXPRESSION AND DELETED TH E WORD ' OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBELOW THE RELEVANT PORTION OF CIRCULAR NO. 549 DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST.) 1, 29), WHICH READS AS FOLLOWS : ' 7.2 AMENDMENT MADE B Y THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION ' REASON TO BELIEVE' IN SECTION 147. A NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS ' REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE ' OPINION' OF THE A SSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, ' REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OF FICER TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION ' HAS REASON TO BELIEVE' IN PLACE OF THE WORDS ' FOR REASONS TO BE RECORDED BY HIM IN WRIT ING, IS OF THE OPINION' . OTHER PROVISIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME.' PAGE 14 OF 15 ITA NO. 6299/DEL./2012 7. FOR THE AFORESTATED REASONS, WE SEE NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT ; HENCE, DISMISSED WITH NO ORDER AS TO COSTS 1 3 . RESPECTFULLY , FOLLOWING THE JUDGEMENTS OF THE HIGH COURT CITED ABOVE AND THE JUDGEMENT OF THE APEX C OURT IN THE CASE OF CIT VS. KELVINATOR (SUPRA) , WE FIND NO ERROR IN THE ORDER OF THE LD CIT(A) . ACCORDINGLY, THE GROUND OF THE R EVENUE IS DISMISSED . 11 . IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED. ORDE R PRONOUNCED IN THE COURT ON 2 0 / 11 /2015 . S D / - S D / - ( DIVA SINGH ) ( O.P.KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 0 / 11 /2015 *AJAY* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DELHI BENCHES, NEW DELHI