M/s. Agrawal Indotex Ltd., Indore V. The ACIT Circle 2(1), Indore

ITA 693/IND/2013

• Counselvise Citation: 69322714 RSA 2013
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE; G B AGRAWAL CAS
• Keywords: Depreciation; Transfer pricing; Business expenditure; International transaction; Proportionate interest; Tangible material; Difference of opinion; Commercial expediency; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 37; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER PAN NO.AABCA6944P ITA NO. 693/IND/2013 A.Y. : 2010-11. AGRAWAL INDOTEX LIMITED, AGRAWAL NAGAR, KHANDWA VS. ACIT, CIRCLE 2(1), INDORE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.S.DESHPANDE AND SHRI G. B. AGRAWAL, CAS REVENUE BY : SHRI R. A. VERMA, SR. DR / // / DATE OF HEARING : 08.09.2014 /DATE OF PRONOUNCEMENT: 19.09.2014 / O R D E R PER P.K.BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 16.09.2013, FOR THE ASSESSMENT YEA R 2010-11 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL :- 1. AS REGARDS RE-OPENING/REASSESSMENT PROCEEDINGS 1.1 THE CIT(A) ERRED IN CONFIRMING THE INITIATION O F REOPENING/REASSESSMENT PROCEEDINGS WITHOUT APPRECIA TING THE FACT THAT THE ASSESSING OFFICER HAD NO FRESH IN FORMATION & HAD INITIATED THE REOPENING/REASSESSMENT PROCEEDING S MERELY ON THE BASIS OF RE CONSIDERATION OF THE INFO RMATION FURNISHED BY THE ASSESSEE IN THE RETURN FILED & THE REFORE THE REOPENING/REASSESSMENT PROCEEDINGS IS ARBITRARY, UN JUST, BAD IN LAW & DESERVES TO BE ANNULLED. 1.2 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ERRE D BOTH ON FACTS & IN LAW IN CONFIRMING INITIATION OF AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 2 REOPENING/REASSESSMENT PROCEEDINGS U/S 147/148 WITH OUT PROPERLY APPRECIATING THE SUBMISSIONS MADE BEFORE H IM DURING APPEAL/PROCEEDINGS. 1.3 WITHOUT PREJUDICE TO THE ABOVE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL PRONOUNCEMEN T S ON THE ISSUE THE REOPENING/REASSESSMENT PROCEEDINGS IS ARBITRARY & UNJUST. 2. AS REGARDS DISALLOWANCE OF INTEREST OF RS. 61,27,362/-: 2.1 THAT THE CIT(A) ERRED BOTH ON FACTS AND IN LA W IN CONFIRMING THE AFORESAID DISALLOWANCE OF INTERES T. 2.2 WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE H AS EXPLAINED IN FULL ABOUT THE CORPORATE GUARANTEE FOR BANK FINANCE OF AGRAWAL POLYFIL PVT.LTD. (APPL) AND ITS OBLIGATION TO EXTEND THE LOAN. 2.3 WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE H AS EXPLAINED THAT THE AMOUNT OF SHARE CAPITAL & INTERE ST FREE CAPITAL/DEPOSITS/LOANS WERE SUFFICIENT TO SUPP ORT THE LOAN TO APPL. 2.4 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ERR ED IN CONFIRMING THE AFORESAID ADDITION WITHOUT PROPERLY CONSIDERING & APPRECIATING THE SUBMISSIONS MADE AND LEGAL ISSUES RAISED BEFORE HIM DURING APPEAL PROCEEDINGS. 2. FACTS OF THE CASE REGARDING GROUND NO. 1 ARE THAT I N THIS CASE ONLY PROCESSING U/S 143(1) WAS DONE AND NO SC RUTINY ASSESSMENT U/S 143(3) WAS FRAMED. LATER ON THE ASSE SSING OFFICER NOTED THAT ASSESSEES CLAIM OF INTEREST EXP ENSE OF RS. 5,25,07,952/- ON BORROWED FUNDS OF RS. 47,79,55,602 /- WAS HUGELY DISPROPORTIONATE TO THE INTEREST INCOME OF O NLY RS. 9,53,696/- ON LOANS AND ADVANCES GIVEN BY ASSESSEE OF RS. 12,18,66,811/-. THE PAYMENT OF INTEREST WAS FULLY C LAIMED IN ACCOUNTS ON BORROWED FUNDS, INTEREST INCOME WAS NOT FULLY AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 3 CHARGED ON LOANS AND ADVANCES GIVEN BY ASSESSEE. TH EREFORE, PROCEEDINGS U/S 147 BY RECORDING REASONS U/S 148 WE RE INITIATED. THE COPY OF THE REASONS AS DESIRED BY THE ASSESSEE WAS GIVEN TO HIM. THE ASSESSEE WENT IN APPEAL AND CHALLENGED INI TIATION OF PROCEEDINGS AND THE VALIDITY OF REASSESSMENT. THE C IT(A) CONFIRMED THE VALIDITY OF INITIATION OF PROCEEDING U/S 147. 3. LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSE SSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010 -11 INTER ALIA SHOWING THE FOLLOWING :- (I) LOANS & ADVANCES GIVEN OF RS. 12,18,66,811/- (II) LOANS & ADVANCES TAKEN OF RS.47,79,55,602/- (III) INTEREST EXPENSES CLAIMED OF RS.5,25,07,952 /- (IV) INTEREST INCOME OF RS. 9,53,696/-. THE LD.COUNSEL FURTHER CONTENDED THAT NO NOTICE FO R ASSESSMENT WAS ISSUED U/S 143(2) FOR THE ABOVE REFERRED ASSESS MENT YEAR TILL 11.03.2012. NOTICE U/S 148 DATED 09.03.2012 WAS SER VED ON 12.03.2012. THE LD. ASSESSING OFFICER STARTED THE R EASSESSMENT PROCEEDINGS WITHOUT HAVING ANY FRESH INFORMATION IN HIS POSSESSION AND MERELY ON THE BASIS OF RECONSIDERATI ON OF THE INFORMATION FURNISHED BY THE ASSESSEE IN THE RETURN FILED AND, THEREFORE, THE REASSESSMENT PROCEEDINGS IS ARBITRAR Y, UNJUST, BAD AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 4 IN LAW AND DESERVES TO BE ANNULLED. DETAILED WRITT EN SUBMISSIONS WERE FILED FROM 4.7.2012 TO 13.8.2012 REQUESTING TO DROP DOWN REASSESSMENT PROCEEDINGS. IN RESPONSE TO NOTICE U/S 148, INITIALLY A LETTER WAS FILED ON 11.4.2012 REQUESTING THE ASSE SSING OFFICER TO TREAT THE RETURN FILED ON 31.3.2012. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT UNDER THE FACTS AND CIRCUMS TANCES MENTIONED ABOVE, THE LD. ASSESSING OFFICER ERRED IN TOTALLY IGNORING THE REVISED RETURN FILED ON 31.3.2012, LET TER DATED 11.4.2012 AND DUPLICATE RETURN FILED ON 5.9.2012 AN D COMPLETED THE ASSESSMENT ON THE BASIS OF ORIGINAL RETURN WHIC H IS ARBITRARY, UNJUST AND BAD IN LAW AND, THEREFORE, DESERVES TO B E QUASHED. 4. THE LD. SENIOR DR, ON THE OTHER HAND, CONTENDED THA T THE INFORMATION DISCLOSED BY THE ASSESSEE CONSISTS OF O NLY INTEREST CLAIM AND INTEREST INCOME. THE ASSESSEE HAS NOT DIS CLOSED WHETHER ANY INTEREST HAS BEEN RECEIVED FROM ITS SUB SIDIARY COMPANY WHETHER ANY LOAN HAS BEEN GIVEN TO ITS SUBS IDIARY COMPANY. THEREFORE, IT WAS NOT A PROPER DISCLOSURE AND IT IS NOT A CASE OF MERELY RECONSIDERATION OR REVIEW OF THE ASS ESSMENT ALREADY COMPLETED. AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 5 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THE PROCEEDINGS U/S 147 HAS BEEN INITIATED BY THE ASSESSING OFFICER BY RECO RDING THE FOLLOWING REASONS TO BELIEVE:- ON PERUSAL OF RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2010-11, IT IS OBSERVED THAT THE ASSESSEE HAS GIVEN LOANS & ADVANCES TO THE TUNE OF RS. 12,18,66,811/- AND HAS RECEIVED LOAN TO THE TUNE OF RS. 47,79,55, 602/- . IT IS ALSO SEEN THAT THE ASSESSEE HAS CLAIMED INT EREST EXPENSES OF RS. 5,25,07,952/- WHEREAS INTEREST INCO ME IS SHOWN AT RS. 9,53,696/- ONLY. THEREFORE I HAVE REASON TO BELIEVE THAT THE ASSES SEE HAS MADE INTEREST FREE ADVANCES OUT OF BORROWED FUNDS WHICH HAS RESULTED IN UNDER ASSESSMENT OF INCOME. IN ORDER TO BRING THE INCOME ESCAPING ASSESSMENT I SSUE NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961. 6. ORIGINALLY, THE ASSESSEE HAS SUBMITTED THE RETURN, WHICH WAS PROCESSED U/S 143(1). THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE BEFORE US IS THAT THE ASSESSEE HAD MADE THE FULL DISCLOSURE IN THE ORIGINAL RETURN IN RESPECT OF THE FUNDS ADVANCED TO THE SUBSIDIARY COMPANY AND NO INTEREST HAS BEEN CHARGED FROM THE SUBSIDIARY COMPANY AND, THEREFORE, THE ASS ESSING OFFICER WAS NOT HAVING ANY FRESH INFORMATION, THERE FORE, THE REOPENING WAS NOT VALID IN LAW. THE RELIANCE WAS P LACED IN THIS REGARD ON THE DECISION OF DELHI HIGH COURT IN THE C ASE OF CIT VS. ORIENT CRAFT LIMITED, 354 ITR 536(DELHI). WE HAVE G ONE THROUGH THE CASE LAWS AS HAS BEEN RELIED ON BEFORE US FROM BOTH THE SIDES. BEFORE DECIDING THE ISSUE INVOLVED, IT IS EXPEDIENT TO DISCUSS THE AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 6 RELEVANT PROVISIONS. THE RELEVANT PROVISIONS OF SE C. 147 ARE REPRODUCED AS UNDER : 147 . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PRO VISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, O R RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SE CTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A R ETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT 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 ASSES SMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVI NG MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL , AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 7 REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT T O DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED B Y THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE I S ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH H E WAS SO REQUIRED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT ; OR AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 8 (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR A NY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INCL UDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFI CER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDE R SUB- SECTION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS A MENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 7. FROM READING OF THIS SECTION, IT IS APPARENT THA T THIS SECTION EMPOWERS THE AO TO ASSESS OR RE-ASSESS INCOME CHARG EABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY A SSESSMENT YEAR HAS ESCAPED ASSESSMENT. THIS SECTION AUTHORIZES TH E AO NOT ONLY TO RE-ASSESS BUT ALSO TO ASSESS THE ASSESSEE I N RESPECT OF AN INCOME WHICH ESCAPED ASSESSMENT. FOR INITIATING TH E PROCEEDINGS UNDER THIS SECTION, NO DOUBT THERE MUST BE REASON TO BELIEVE. REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUP POSE THAT INCOME HAS ESCAPED ASSESSMENT, IT CAN BE SAID THAT ASSESSING OFFICER HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 9 RAJESH JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 (SC) HAS CATEGORICALLY HELD THAT PROCESSING OF THE RETURN U/ S 143(1) BY WAY OF INTIMATION IS NOT AN ASSESSMENT. INITIATING ACT ION U/S 147 IN RESPECT OF INCOME ESCAPING ASSESSMENT WHERE AN INTI MATION U/S 143(1) IS ISSUED, IS COVERED BY THE MAIN PROVISION OF SEC. 147 AS SUBSTITUTED W.E.F. 1.4.1989 AND NOT BY THE PROVISO THERETO. THE ONLY CONDITION TO CLOTHE WITH THE JURISDICTION U/S 147 IN SUCH CASE IS THAT THERE MUST BE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE REA SON TO BELIEVE MEANS WHERE THERE IS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE B ELIEF. THE MATERIAL NEED NOT CONCLUSIVELY PROVE ESCAPEMENT OF INCOME AT THE STAGE OF THE REASON TO BELIEVE. THE PRINCIPLE OF CHANGE OF OPINION FOR REASON TO BELIEVE IS NOT APPLICABLE AS THE AO HAS NOT TO APPLY HIS MIND WHILE PROCESSING RETURN U/S 143(1). RATHE R AO IS BOUND TO ACCEPT IT IF IT IS OTHERWISE A VALID RETUR N AND DOES NOT HAVE ANY DEFECT. NOW, AS PER THE SCHEME OF CBDT, T HE RETURN HAS TO BE PROCESSED BY THE COMPUTER AND NOT BY AO. IN THE CASE OF ASSESSEE RETURN HAS ONLY BEEN PROCESSED U/S 143( 1), THEREFORE, NO QUESTION OF APPLYING THE MIND BY AO ARISES WHILE DETERMINING THE TAXABLE INCOME IS CONCERNED. IN THE ABSENCE OF BONA FIDE REASONS, IT IS A SETTLED LAW THAT WITHOUT REASON T O BELIEVE, THE PROCEEDINGS U/S 147 CANNOT BE INITIATED. IT IS NOT THE CASE OF THE ASSESSEE THAT THERE IS NO REASON TO BELIEVE OR RE ASON TO BELIEVE ARE NOT BONAFIDE. THE SUFFICIENCY OF REASONS CANNOT BE ENTERTAINED BY THIS TRIBUNAL. WE HAVE ONLY TO SEE WHETHER THERE IS MATERIAL TO FORM THE REASON TO BELIEVE. AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 10 8. WE NOTED THAT THE WORDS INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT HAS BEEN DEFINED BY EXPLANATION 2 IN SEC. 147 AS SUBSTITUTED W.E.F. 1.4.1989. SUB-CLAUSE (B) OF THE EXPLANATION IS RELEVANT FOR US. THIS SUB-CLAUSE CL EARLY MANDATES THAT WHERE INCOME TAX RETURN HAS BEEN FILED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND THE AO NOTICES THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN, IT WILL BE DEEMED TO BE A CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN OUR OPINION, EXPLANATION 2(B) IS CL EARLY APPLICABLE IN THE CASE OF THE ASSESSEE IN VIEW OF THE PROPOSIT ION OF LAW AS PRONOUNCED BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) AS THE ASSESSEE HAS DULY FURNISHED THE RETURN BUT NO A SSESSMENT U/S 143(3) HAS BEEN FRAMED BY THE ASSESSING OFFICER . IN THE CASE OF THE ASSESSEE, WE NOTED THAT THE RETURN FOR THE I MPUGNED ASSESSMENT HAS BEEN PROCESSED U/S 143(1) AND ISSUED THE INTIMATION. NO DECISION WAS BROUGHT TO OUR KNOWLED GE BY THE LD. ADVOCATE HOW THE EXPLANATION 2(B) WILL NOT APPLY IN THE CASE OF ASSESSEE. 9. NO DOUBT IN THE CASE OF CIT V/S ORIENT CRAFT LTD ., 354 ITR 536 (DEL.) THE HON'BLE DELHI HIGH COURT UNDER PARA 17 WHILE DEALING WITH THE SPECIFIC ARGUMENT OF THE REVENUE T HAT AN INTIMATION CANNOT BE EQUATED TO AN ASSESSMENT, TOOK THE VIEW THAT THE SUBMISSION OF THE LD. DR ACTED TO BE SELF- DEFEATING BECAUSE IF AN INTIMATION IS NOT AN ASSESSMENT, THEN , IT CAN NEVER BE SUBJECTED TO SEC. 147 PROCEEDINGS AS THE SECTION COVERS ONLY AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 11 AN ASSESSMENT AND WE WONDER IF THE REVENUE WOULD BE PREPARED TO CONCEDE THAT POSITION. IN OUR OPINION, SEC. 147 AUTHORISES THE AO NOT ONLY TO RE-ASSESS BUT TO ASSESS ANY INCOME C HARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE WORD CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS DEFINED UNDER EXPLANATION 2 UNDER SUB-CLAUSE (B). SUB-CLAUSE (B) CLEARLY STATES THAT WHERE RETURN HAS BEEN FILED BUT NO ASSESSMENT HAS BEEN MADE AND THE AO NOTICES THAT THE ASSESSEE HAS UNDER STATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, AL LOWANCE OR RELIEF IN THE RETURN, IT SHALL BE DEEMED TO BE A CA SE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. WE DO NO T FIND THAT THE EXPLANATION 2(B) HAS BEEN CONSIDERED BY THE HON 'BLE HIGH COURT IN THIS DECISION WHILE THE HON'BLE SUPREME CO URT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) HAS DULY REPRODUCED AT PG. 506 EXPLANATION 2(B) A ND HAS OBSERVED THAT W.E.F. 1.4.1989 THE PROVISIONS OF SEC. 147 UNDERWENT SUBSTANTIAL AND MATERIAL CHANGE. THE TER M INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WAS DEFIN ED U/S 147 PRIOR TO 1.4.1989 UNDER EXPLANATION 1 TO SEC. 147 B UT THAT DEFINITION WAS ENTIRELY DIFFERENT. NO SUCH CLAUSE AS CLAUSE (B) UNDER EXPLANATION 2 WAS THERE IN THE DEEMING PROVIS ION GIVEN UNDER EXPLANATION 1 IN RESPECT OF INCOME ESCAPING A SSESSMENT UNDER THE OLD SECTION 147. WE DO NOT AGREE THAT SE C. 147 PROCEEDINGS COULD COVER ONLY THE REASSESSMENT. THE RELEVANT PROVISIONS OF EXPLANATION 1 TO SEC. 147 AS IT STOOD PRIOR TO 1.4.1989 READS AS UNDER : AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 12 EXPLANATION 1. - FOR THE PURPOSES OF THIS SECTIO N, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY:- (A) WHERE INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED; OR (B) WHERE SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE; OR (C) WHERE SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT OR UNDER THE INDIAN INCOME- TAX ACT, 1922 (11 OF 1922); OR (D) WHERE EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN COMPUTED. 10. WE, THEREFORE, DO NOT AGREE WITH THE SUBMISSION OF THE LD. ADVOCATE ON THIS ISSUE AND REJECT THE PLEA ADVANCED IN THIS REGARD. 11. NOW, COMING TO THE SECOND SUBMISSION OF THE LD. SR. ADVOCATE THAT IN VIEW OF THE DECISION OF THE HON'BL E DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD., 354 ITR 536 (DEL.) ( SUPRA ) AS GIVEN IN PARA 18, THERE MUST BE FRESH TANGIBLE MATERIAL WHICH SHOULD HAVE COME IN THE POSSESSION OF THE AO SUBSEQUENT TO THE ISSUE OF THE INTIMATION, WE NOTED THIS OBSER VATION OF THE HON'BLE HIGH COURT IN THAT CASE. WE ALSO NOTED THA T THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVER I STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) NOWHERE TOOK THE VIEW THAT SOME FRESH TANGIBLE MATERIAL SHOULD COME SUBSEQUENT LY IN THE POSSESSION OF THE AO WHILE TAKING ACTION U/S 147 AF TER THE RETURN IS PROCESSED U/S 143(1). THE HON'BLE SUPREME COURT WHILE COMPARING THE OLD PROVISIONS OF SEC. 147 AND THE PR OVISIONS AS HAS BEEN SUBSTITUTED W.E.F. 1.4.1989 HAS CLEARLY LA ID DOWN UNDER PARA 17 OF ITS DECISION THAT UNDER THE SUBSTITUTED SEC. 147 EXISTENCE OF ONLY THE FIRST CONDITION IS SUFFICIENT . IF THE AO, FOR AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 13 WHATEVER REASONS, HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, IT CONFERS JURISDICTION TO RE-OPEN THE ASSESSMENT. IT IS FURTHER STATED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF PROVISO TO SEC. 147. NO DOUBT THE INGREDIENTS OF SEC. 147 ARE TO BE FULFILLED. THE I NGREDIENTS OF SEC. 147 NOWHERE REQUIRES THAT IN CASE A RETURN IS PROCE SSED U/S 143(1), THERE MUST BE TANGIBLE MATERIAL WHICH SHOUL D COME TO THE POSSESSION OF THE AO SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IN OUR OPINION, THE MATERIAL WHICH IS AVAILABLE WIT H THE AO EVEN ALONGWITH THE RETURN AT THE TIME OF THE PROCESSING OF THE RETURN CAN BE THE BASIS FOR REASON TO BELIEVE AS IN VIEW OF CLAUSE (B) OF EXPLANATION 2 IT CAN BE DEEMED THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT. CLAUSE (B) OF EXPLANATION 2 DO ES NOT REQUIRE THAT THE ASSESSMENT MUST PRECEDE BEFORE TAKING ANY ACTION U/S 147. 12. WE NOTED THAT THERE IS DECISION OF FULL BENCH O F THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA INTERN ATIONAL LTD, 348 ITR 485 (DELHI) (FB) WHICH HAS TAKEN A VIEW CON TRARY TO THE DECISION OF ORIENT CRAFT LTD. ( SUPRA ), 354 ITR 536 (DEL.). EVEN THIS DECISION OF FULL BENCH HAS NOT BEEN REFERRED T O IN THE CASE OF ORIENT CRAFT LTD. ( SUPRA ). 13. WE NOTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOLLEN MILLS LTD VS. ITO, 236 ITR 34 WHEN A SIMILAR QUESTION HAD COME BEFORE THE HON'BLE SUPREME COURT DID NOT DECIDE THE ISSUE WHETHER ANY NEW FACT CAME TO THE K NOWLEDGE OF THE ITO AFTER COMPLETING THE ASSESSMENT PROCEEDINGS . BUT THAT AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 14 WAS NOT A CASE OF PROCESSING THE RETURN U/S 143(1). WE NOTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF RAJES H JHAVERI ( SUPRA ) HAS DISCUSSED THE PROVISIONS OF SEC. 143(1) AND 1 47 IN DETAIL AS WELL AS THE TERM REASON TO BELIEVE AND HAS CATEGORICALLY HELD THAT WHERE THE RETURN IS PROCESSED U/S 143(1) THERE IS NO ASSESSMENT. 14. SEC. 147 HAS USED BOTH THE WORDS ASSESS OR R EASSESS. THIS IMPLIES THAT THE AO HAS THE POWER EVEN TO MAKE AN ASSESSMENT WHERE EARLIER NO ASSESSMENT HAS BEEN MAD E BY THE AO AND THERE IS ESCAPEMENT OF ASSESSMENT. WE CANNO T READ THE PROVISIONS OF SEC. 147 IN A MANNER THAT IT CAN BE A PPLIED ONLY IN A CASE WHERE THE ASSESSMENT HAS ALREADY BEEN MADE. IN OUR VIEW, THE CASE OF THE ASSESSEE IS COVERED BY THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJES H JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) AS IN THAT CASE, THE AO HAD NOT MADE ANY ASSESSMENT AND HAD NOT FORMED A NY OPINION. THEREFORE, ON THE BASIS OF THE MATERIAL W HICH IS AVAILABLE IN THE RETURN OR ALONGWITH THE RETURN WIT H THE AO, THE AO, IN OUR OPINION, IN VIEW OF EXPLANATION 2(B) CAN TAKE ACTION U/S 147 IN A CASE WHERE THE RETURN HAS BEEN PROCESS ED U/S 143(1). WE ARE BOUND TO FOLLOW THE DECISION OF THE HON'BLE SUPREME COURT. EVEN WE NOTED THAT THE DECISION OF THE HON'BLE DELHI HIGH COURT IS NOT BINDING PRECEDENTS ON US IN VIEW OF THE DECISION OF THE FULL BENCH OF HON'BLE DELHI HIGH CO URT IN CIT VS. USHA INTERNATIONAL LTD, 348 ITR 485 (DELHI) (FB) ( SUPRA ). AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 15 15. ALTHOUGH, WE ARE OF THE OPINION THAT THE ISSUE IS DULY COVERED BY THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) BUT STILL WE DECIDED TO GO THROUGH THE RELEVANT P ROVISIONS FROM WHICH THE WORD TANGIBLE MATERIAL OR INFORMATI ON HAS BEEN INTERPRETED BY THE COURTS WHILE INTERPRETING THE PR OVISIONS OF SEC. 147. 16. WE NOTED THAT INITIALLY THE PROVISIONS FOR INCO ME ESCAPING ASSESSMENT WERE BROUGHT INTO THE STATUTE BY WAY OF SEC. 34 INCORPORATED UNDER THE INCOME TAX ACT, 1922. THIS SECTION READS AS UNDER : 34. INCOME ESCAPING ASSESSMENT (1) IF - (A) THE INCOME-TAX OFFICER HAS REASON TO BELIEVE TH AT BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN OF HIS INCOME UNDER SECTI ON 22 FOR ANY YEAR OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T YEAR, INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME -TAX HAVE ESCAPED ASSESSMENT FOR THAT YEAR, OR HAVE BEEN UNDER-ASSESSED OR ASSESSED AT TOO LOW A RATE, OR HA VE BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THE ACT, OR EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEE N COMPUTED, OR (B) NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTIONED IN CLAUSE (A) ON THE PART OF T HE ASSESSEE, THE INCOME-TAX OFFICER HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THA T INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME-TAX H AVE ESCAPED ASSESSMENT FOR ANY YEAR, OR HAVE BEEN UNDER - ASSESSED, OR ASSESSED AT TOO LOW A RATE, OR HAVE BE EN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT , OR THAT EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS B EEN COMPUTED, AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 16 HE MAY IN CASES FALLING UNDER CLAUSE (A) AT ANY TI ME 2 [* * *) AND IN CASES FALLING UNDER CLAUSE (B) AT ANY TIME W ITHIN FOUR YEARS OF THE END OF THAT YEAR, SERVE ON THE ASSESSE E, OR, IF THE ASSESSEE IS A COMPANY, ON THE PRINCIPAL OFFICER THE REOF, A NOTICE CONTAINING ALL OR ANY OF THE REQUIREMENTS WH ICH MAY BE INCLUDED IN A NOTICE UNDER SUB-SECTION (2) OF SECTI ON 22 AND MAY PROCEED TO ASSESS OR REASSESS SUCH INCOME, PROF ITS OR GAINS OR RECOMPUTE THE LOSS OR DEPRECIATION ALLOWAN CE; AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF THE NOTICE WERE A NOTICE ISSUED U NDER THAT SUB-SECTION: 17. WE NOTED THAT SEC. 34 AUTHORISES THE AO TO TAKE ACTION FOR RE-ASSESSMENT UNDER TWO SITUATIONS; THE FIRST SITUA TION IS GIVEN IN SEC. 34(1)(A) AND SECOND IS GIVEN IN SEC. 34(1)(B). SEC. 34(1)(A) EMPOWERS THE AO TO ASSESS OR RE-ASSESS THE ESCAPED INCOME, WHERE THE AO HAS REASON TO BELIEVE, DUE TO THE OMIS SION OR FAILURE OF THE ASSESSEE TO MAKE A RETURN OF HIS INCOME U/S 22 OR TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NEC ESSARY FOR HIS ASSESSMENT. U/S 34(1)(A) REASON TO BELIEVE IS QU ALIFIED BY THE WORDS OMISSION OR FAILURE. SUB-CLAUSE (B) APPLIE S TO A CASE WHERE THERE MAY BE NO OMISSION OR FAILURE BUT THE A O, IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS R EASON TO BELIEVE ABOUT THE ESCAPED INCOME. U/S 34(1)(B) THU S THE REASON TO BELIEVE FOR ESCAPEMENT OF THE INCOME MUST HAVE A RISEN IN CONSEQUENCE OF THE INFORMATION COMING IN THE POSSES SION OF THE AO. THE HON'BLE SUPREME COURT HAS ANALYSED THE WOR D INFORMATION AS USED IN SEC. 34(1)(B) IN THE CASE OF KALYANJI MAVJI AND CO. VS CIT, 102 ITR 287 (SC) AND HAS CATEGORICA LLY HELD IN THE FOLLOWING MANNER : AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 17 THE WORD INFORMATION IN SECTION 34(1)(B) IS OF THE WIDEST AMPLITUDE AND COMPREHENDS A VARIETY OF FACTO RS. NEVERTHELESS, THE POWER UNDER SECTION 34(1)(B), HOW EVER WIDE IT MAY BE, IS NOT PLENARY BECAUSE THE DISCRETI ON OF THE INCOME-TAX OFFICER IS CONTROLLED BY THE WORDS REAS ON TO BELIEVE. INFORMATION MAY COME FROM EXTERNAL SOURCES OR EVEN FROM THE MATERIALS ALREADY ON RECORD OR MAY BE DERIVED FROM THE DISCOVERY OF NEW AND IMPORTANT MAT TER OR FRESH FACTS. SECTION 34(1)(B) WOULD APPLY TO THE FOLLOWING CATE GORIES OF CASES : (1) WHERE THE INFORMATION IS AS TO THE TRUE AND CO RRECT STATE OF THE LAW DERIVED FROM RELEVANT JUDICIAL DEC ISIONS; (2) WHERE IN THE ORIGINAL ASSESSMENT THE INCOME LI ABLE TO TAX HAS ESCAPED ASSESSMENT DUE TO OVERSIGHT, INADVERTENCE OR A MISTAKE COMMITTED BY THE INCOME-T AX OFFICER; (3) WHERE THE INFORMATION IS DERIVED FROM AN EXTER NAL SOURCE OF ANY KIND: SUCH EXTERNAL SOURCE WOULD INCL UDE DISCOVERY OF NEW AND IMPORTANT MATTERS OR KNOWLEDGE OF FRESH FACTS WHICH WERE NOT PRESENT AT THE TIME OF O RIGINAL ASSESSMENT; AND (4) WHERE THE INFORMATION MAY BE OBTAINED EVEN FRO M THE RECORD OF THE ORIGINAL ASSESSMENT FROM AN INVES TIGATION OF THE MATERIALS ON THE RECORD OR THE FACTS DISCLOS ED THEREBY OR FROM OTHER ENQUIRY OR RESEARCH INTO FACTS OR LAW . WHERE, HOWEVER, THE INCOME-TAX OFFICER GETS NO SUBSEQUENT INFORMATION, BUT MERELY PROCEEDS TO REOP EN THE ASSESSMENT WITHOUT ANY FRESH FACTS OR MATERIALS OR WITHOUT ANY ENQUIRY INTO THE MATERIALS WHICH FORM PART OF T HE ORIGINAL ASSESSMENT, SECTION 34(1)(B) WOULD HAVE NO APPLICATION. 18. FROM THE AFORESAID JUDGEMENT, WE NOTED THAT THE HON'BLE SUPREME COURT HAS INTERPRETED THAT THE WORD SUBSEQ UENT AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 18 INFORMATION REQUIRES FRESH FACTS AND MATERIAL OR I F THERE ARE EXISTING FACTS, THEN, THERE MUST BE ENQUIRY INTO TH E MATERIALS AVAILABLE. THUS, WE NOTED THAT REQUIREMENT OF FRES H MATERIAL OR FACTS HAS BEEN INTERPRETED BY THE COURT BECAUSE SEC . 34(1)(B) STATES THAT THE AO HAS IN CONSEQUENCE OF INFORMATIO N IN HIS POSSESSION REASON TO BELIEVE. REASON TO BELIEVE SHOULD HAVE ARISEN IN CONSEQUENCE OF THE INFORMATION AND AS THE INFORMATION CANNOT BE BASED WITHOUT MATERIAL OR FACTS, THEREFOR E, IT HAS BEEN INTERPRETED BY THE COURT THAT THERE MUST BE FRESH F ACTS OR TANGIBLE MATERIAL WITH THE AO. 19. WE NOTED THAT IN SEC. 147, AS WAS IN EXISTENCE PRIOR TO 1.4.1989, UNDER SUB-CLAUSE (B) SIMILAR LANGUAGE HAS BEEN USED AS HAD BEEN USED IN SEC. 34(1)(B). FOR READY REFER ENCE THE SAID SECTION 147 AS WAS IN EXISTENCE PRIOR TO 1.4.1989 IS REPRODUCED AS UNDER :- 147. IF (A) THE INCOME-TAX OFFICER HAS REASON TO BELIEVE T HAT, BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR TO THE INCOME-TAX OFFICER OR TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR, OR (B) NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSIO N OR FAILURE AS MENTIONED IN CLAUSE (A) ON THE PART OF T HE ASSESSEE, THE INCOME-TAX OFFICER HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THA T INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME OR RECOMPUTE THE LOS S OR THE AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 19 DEPRECIATION ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN SECTIONS 14 8 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR). 20. IN THIS SECTION ALSO, FOR THE PURPOSE OF REASO N TO BELIEVE IT IS NECESSARY THAT THE REASON TO BELIEVE MUST HAVE AR ISEN IN CONSEQUENCE OF THE INFORMATION IN THE POSSESSION OF THE AO. THE INFORMATION MUST PRECEDE THE REASONS TO BELIEVE IF WE READ THE PROVISIONS OF SEC.147(B). WE NOTED THAT THE HON'BLE SUPREME COURT HAD OCCASION TO INTERPRET THE WORD INFORMATI ON AS USED IN SEC. 147(B) IN THE CASE OF CIT VS. A. RAMAN & CO., 67 ITR 011(SC) AS REPRODUCED BELOW :- THE EXPRESSION INFORMATION IN THE CONTEXT IN WHI CH IT OCCURS [IN SECTION 147(B) OF THE INCOME-TAX ACT, 19 61] MUST MEAN INSTRUCTION OR KNOWLEDGE DERIVED FROM AN EXTER NAL SOURCE CONCERNING FACTS OR PARTICULARS, OR AS TO LA W RELATING TO A MATTER BEARING ON THE ASSESSMENT. TO COMMENCE THE PROCEEDINGS FOR REASSESSMENT IT IS NOT NECESSARY THAT ON THE MATERIALS WHICH CAME TO THE N OTICE OF THE INCOME-TAX OFFICER, THE PREVIOUS ORDER OF ASSES SMENT WAS VITIATED BY SOME ERROR OF FACT OR LAW. THE HIGH COURT EXERCISING JURISDICTION UNDER ARTICL E 226 OF THE CONSTITUTION HAS POWER TO SET ASIDE A NOTICE IS SUED UNDER SECTION 147(B) OF THE INCOME-TAX ACT, 1961, I F THE CONDITION PRECEDENT TO THE EXERCISE OF THE JURISDIC TION DOES NOT EXIST. THE COURT MAY, IN EXERCISE OF ITS POWER S, ASCERTAIN WHETHER THE INCOME-TAX OFFICER HAD IN HIS POSSESSIO N ANY INFORMATION: THE COURT MAY ALSO DETERMINE WHETHER F ROM THE INFORMATION THE INCOME-TAX OFFICER MAY HAVE REASON TO BELIEVE THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. BUT THE JURISDICTION OF THE COURT EXTE NDS NO FURTHER. WHETHER ON THE INFORMATION IN HIS POSSESS ION, HE SHOULD COMMENCE PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT, MUST BE DECIDED BY THE INCOME-TAX OFF ICER AND NOT BY THE HIGH COURT. THE INCOME-TAX OFFICER ALONE IS AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 20 ENTRUSTED WITH THE POWER TO ADMINISTER THE ACT: IF HE HAS INFORMATION FROM WHICH IT MAY BE SAID, PRIMA FACIE, THAT HE HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, IT IS NOT OPEN TO THE HIGH COUR T EXERCISING POWERS UNDER ARTICLE 226 OF THE CONSTITU TION TO SET ASIDE OR VACATE THE NOTICE FOR REASSESSMENT ON A RE APPRAISAL OF THE EVIDENCE. IN A PETITION UNDER ARTICLE 226 OF THE CONSTITUTION , THE TAXPAYER MAY CHALLENGE THE VALIDITY OF A NOTICE UND ER SECTION 147 OF THE INCOME-TAX ACT, 1961, ON THE GROUND THAT EITHER OF THE CONDITIONS PRECEDENT DOES NOT EXIST, BUT AN INV ESTIGATION WHETHER THE INFERENCES RAISED BY THE INCOME-TAX OFF ICER ARE CORRECT OR PROPER CANNOT BE MADE. JURISDICTION OF THE INCOME-TAX OFFICER TO REASSESS INCOME ARISES IF HE HAS IN CONSEQUENCE OF INFORMATION IN H IS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THAT INFORMATION MUST, IT IS TRUE, HAVE COME INTO THE POSSESSION OF THE INCOME-TAX OFF ICE AFTER THE PREVIOUS ASSESSMENT, BUT EVEN IF THE INFORMATIO N BE SUCH THAT IT COULD HAVE BEEN OBTAINED DURING THE PREVIOU S ASSESSMENT FROM AN INVESTIGATION OF THE MATERIAL ON RECORD, OR THE FACTS DISCLOSED THEREBY, OR FROM OTHER ENQUI RY OR RESEARCH INTO FACTS OR LAW, BUT WAS NOT IN FACT OBT AINED, THE JURISDICTION OF THE INCOME-TAX OFFICER IS NOT AFFEC TED. 21. FROM THE PROVISIONS OF SEC. 34(1)(B) AND 147(B) WHICH WERE UNDER THE INCOME TAX ACT PRIOR TO 1.4.1989 IT IS AP PARENT THAT FOR ARRIVING AT REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT IT WAS NECESSARY THAT THE AO MUS T HAVE INFORMATION IN HIS POSSESSION PRIOR TO ARRIVING AT REASONS TO BELIEVE THAT INCOME ESCAPED ASSESSMENT. THIS INFORM ATION HAS BEEN INTERPRETED BY THE COURTS FROM TIME TO TIME IN THE FORM OF TANGIBLE FRESH MATERIAL OR FACTS BUT WHEN WE LOOKED INTO THE PROVISIONS OF SEC. 147 WHICH HAS BEEN SUBSTITUTED W .E.F. 1.4.1989, WE NOTED THAT THERE ARE DRASTIC CHANGES I N THIS SECTION. AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 21 NOW, THE ONLY CONDITION WHICH REQUIRES TO BE FULFIL LED IS THAT THE AO MUST HAVE REASON TO BELIEVE THAT ANY INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THIS SECTION DOES NOT TALK THAT REASON TO BELIEVE MUST BE BASED OR MUST HAVE BEEN IN CONSEQUENCE OF INFORMATION COMING INTO THE POSSESSI ON OF THE AO . THEREFORE, IN OUR OPINION, FOR TAKING ACTION U/S 147 THE REASON TO BELIEVE CAN BE BASED ON THE BASIS OF TH E MATERIAL AVAILABLE WITH THE AO ON THE BASIS OF THE RETURN FI LED BY THE ASSESSEE. REQUIREMENT OF NEW MATERIAL OR FRESH TAN GIBLE MATERIAL COMING IN THE POSSESSION OF THE AO AS A PRE-REQUISI TE CONDITION FOR RE-ASSESSMENT IS APPLICABLE ONLY WHERE HE HAD M ADE AN ASSESSMENT EARLIER. THIS WILL NOT BE APPLICABLE IF NO ASSESSMENT WAS ORIGINALLY MADE AND AO IS GOING TO PROCEED WITH ASSESSMENT U/S 147 FOR THE FIRST TIME. IT MAY ALSO BE NOTED T HAT SEC.147 DOES NOT DEAL ONLY WITH THE CASES OF RE-ASSESSMENT BUT A LSO WITH THE ASSESSMENT FOR THE FIRST TIME. THE COURTS HAVE FRO M TIME TO TIME INTERPRETED THE WORD REASON TO BELIEVE TO MEAN TH AT THE AO MUST HAVE CAUSE OR JUSTIFICATION. AT THE STAGE OF INITI ATION OF THE PROCEEDINGS IT IS NOT REQUIRED THAT THE AO MUST EST ABLISH THE ESCAPEMENT OF THE INCOME. THE ONLY QUESTION IS WHE THER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. THE SCOPE AND EFFECT OF SEC.147 AS SUBSTITUTED W.E.F. 1.4.1989 IS SUBSTANTIALLY DIFFER ENT FROM THE PROVISIONS AS STOOD PRIOR TO SUCH SUBSTITUTION. TH E COURT HAS INTERPRETED FROM TIME TO TIME THAT THERE MUST BE BONA FIDE REASON TO BELIEVE. WHERE THE AO HAS APPLIED HIS MIND TO T HE MATERIAL AVAILABLE WITH HIM, HE CANNOT BE PERMITTED TO REVIE W THE ASSESSMENT IN THE GARB OF REASON TO BELIEVE. THE HON'BLE AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 22 SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVER I STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) HAS CATEGORICALLY TAKEN THE VIEW AT PG. 509 THAT THE INTIMATION U/S 143(1) CANN OT BE TREATED TO BE AN ORDER OF ASSESSMENT. THE AO IS BOUND TO A CCEPT THE RETURN AS HAS BEEN FILED BY THE ASSESSEE AND PROCES S IT. SINCE THE AO IS BOUND TO PROCESS THE RETURN WITHOUT MAKIN G ANY ADDITION THEREON, NO QUESTION OF APPLICATION OF MIN D BY THE AO ARISES. THEREFORE, IT CANNOT BE SAID THAT THE AO H AS APPLIED HIS MIND AND IF THE AO IS TAKING ACTION U/S 147 ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD FOR ESCAPEMENT OF THE INCOME AS PER THE DEFINITION GIVEN UNDER EXPLANATION 2(B), IN OUR OPINION, IT CANNOT BE SAID THAT SUCH AN ACTION IS ILLEGAL AND W ITHOUT JURISDICTION. THE HON'BLE SUPREME COURT IN THE CAS E OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 ( SUPRA ) FURTHER HELD THAT THERE BEING NO ASSESSMENT U/S 143 (1) OF THE ACT, THE QUESTION OF CHANGE OF OPINION DOES NOT ARI SE. THE HON'BLE SUPREME COURT ALSO HELD THAT SEC. 147 PERMI TTED THE AO TO ASSESS OR RE-ASSESS THE INCOME CHARGEABLE TO TAX WHEN HE HAS REASON TO BELIEVE INCOME ESCAPING ASSESSMENT. THE MERE FAILURE TO TAKE STEPS U/S 143(3) WOULD NOT RENDER THE AO PO WERLESS TO INITIATE PROCEEDINGS U/S 147 OF THE ACT EVEN WHEN I NTIMATION U/S 143(1) HAD BEEN ISSUED. THUS, WITH THE AMENDMENT B ROUGHT TO SEC. 147 OF THE ACT ON AND FROM 1.4.1989 AND THE EL UCIDATION ON THE SCOPE OF THE AUTHORITY AND JURISDICTION OF THE OFFICER U/S 147 OF THE ACT, WE ARE OF THE FIRM VIEW THAT THE PROCEE DINGS INITIATED BY THE AO U/S 147 ARE VALID AND THE AO COULD HAVE T AKEN THE ACTION U/S 147 ON THE BASIS OF THE MATERIAL AVAILAB LE AND FILED ALONGWITH THE RETURN. THERE IS NO NEED OF ANY FRES H TANGIBLE AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 23 MATERIAL FOR COMING TO THE REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT IN VIEW OF EXPLANATION 2 CLAUSE (B) OF SEC. 147. IN VIEW OF THE AFORESAID DISCUSSION THE GROUND NO.1 STANDS DISMISSED. 22. GROUND NO.2 RELATES TO THE DISALLOWANCE OF INTEREST OF RS. 61,27,362/-. 23. THE FACTS RELATING TO THIS GROUND IS THAT THE ASSES SEE MADE THE ADVANCES TO ITS SUBSIDIARY CONCERN. THE AMOUNT HAS BEEN TAKEN OUT OF CASH CREDIT ACCOUNT OF THE ASSESSEE MA INTAINED BY STATE BANK OF INDIA, ANDHERI BRANCH, MUMBAI, WHICH HAS MIXED FUND. THE ASSESSEE HAS ALSO GIVEN THE CORPORATE GUA RANTEE TO THE BANK. THE ASSESSING OFFICER WAS OF THE VIEW THAT TH E ASSESSEE HAS GIVEN ADVANCES TO ITS SISTER CONCERNS M/S. AGRAWAL POLYFIL LIMITED OUT OF THE BORROWED FUNDS AND, THEREFORE, HE DISALL OWED INTEREST PAID BY THE ASSESSEE TO THE BANK CALCULATED ON THE BASIS OF PRODUCT METHOD WORKED OUT AT RS. 61,27,362/-. THE A SSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) CO NFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDE R :- 6.1 THE APPEAL FAILED TO CONTROVERT THE FINDING OF ASSESSING OFFICER THAT ADVANCES TO SISTER CONCERN W ERE GIVEN FROM CASH CREDIT ACCOUNT OF ASSESSEE MAINTAIN ED WITH SBI, ANDHERI BRANCH, MUMBAI. ASSESSEE HAS ALSO ADMITTED THIS FACT IN ITS SUBMISSION DATED 10.09.20 13 BEFORE THE CIT(A) STATING THAT THEY MADE PROVISIONA L AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 24 ADVANCE TO SISTER CONCERN AS PER DETAILED CORRESPONDENCE WITH BOI AND SBI AND ALSO GAVE CORPORATE GUARANTEE TO BANKS ON BEHALF OF SISTER CONCERN. HENCE, A DIRECT NEXUS IS ESTABLISHED BETWE EN BORROWALS BY ASSESSEE OF INTEREST BEARING FUNDS FRO M BANKS AND NON-INTEREST BEARING ADVANCES GIVEN TO SI STER CONCERN. IN SUCH CIRCUMSTANCES WHEN DIRECT NEXUS IS PROVED, DISALLOWANCE OF INTEREST EXPENSE IS UPHELD IN CASE OF MADHAV PRASAD JATIA ( S.C.) 118 ITR 200 AND ABHISHEK INDUSTRIES LIMITED, (P&H) 286 ITR 1. EVEN IN CASE OF S. A. BUILDERS LIMITED, ( S. C.) 288 ITR 1, IT WAS HELD THAT IF BORROWED FUNDS WERE DIVERTED TO SISTE R CONCERN, IT COULD BE DISALLOWED IF ASSESSEE FAILED TO ESTABLISH COMMERCIAL EXPEDIENCY AND ASSESSEE HAS FAILED TO PROVE THE SAME BEFORE UNDER SIGNED, ESPEC IALLY WHEN THE TWO HAD NO BUSINESS TRANSACTIONS. 6.2 SINCE THE SISTER CONCERN AGARWAL POLYFIL P.LT D. GOT REGISTERED WITH BIFR ONLY ON 09.12.2012, HENCE APPELLANTS ARGUMENT ON THIS COUNT ALSO FAILS THAT NO INTEREST COULD BE CLAIMED FROM A SICK UNIT, AS THE UNIT WAS NOT SICK IN THE YEAR UNDER CONSIDERATION, I.E. ASSESSMENT YEAR 2010-11. HENCE, RELIANCE OF APPELLA NT ON THE DECISION OF M. ETHURAJAN, (2009) 142 TAXMAN 708 (MAD.) WILL NOT HELP THEM, BECAUSE SISTER CONCERN W AS NOT SICK IN THIS YEAR. 6.3 IN VIEW OF THE AFORESAID DISCUSSION, SINCE INTEREST BEARING BANK LOAN WAS ADVANCED TO SISTER CONCERN AS INTEREST FREE ADVANCE, HENCE DISALLOWANC E OF PROPORTIONATE INTEREST OF RS. 61.27 LAKHS U/S 36(1 )(III) OF THE INCOME-TAX ACT, IS UPHELD. GROUND NO. (2) OF AP PEAL IS DISMISSED. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF TAX AU THORITIES BELOW. THE MAIN CRUX OF THE ARGUMENT OF THE ASSESSE E IS THAT THE LOAN WAS ADVANCED FOR BUSINESS CONSIDERATION. THE A SSESSEE AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 25 COMPANY HAS SUFFICIENT CAPITAL/DEPOSIT TO ADVANCE T HE LOAN. SO FAR AS THE CONTENTION THAT THE ASSESSEE COMPANY HAD SUFFICIENT CAPITAL/DEPOSIT ETC. TO ADVANCE THE LOAN, THE ONUS IS UPON THE ASSESSEE TO PROVE THAT IT HAD SUFFICIENT CAPITAL AN D FREE RESERVE TO ADVANCE THE LOAN TO THE SUBSIDIARY COMPANY. NO SUCH EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE EXCEPT THAT THE ADVANC E HAS BEEN GIVEN OUT OF THE CASH CREDIT ACCOUNT, WHICH HAS MIX ED FUND BOTH INTEREST BEARING AS WELL AS NON-INTEREST BEARING. W E, THEREFORE, DISMISS THIS CONTENTION OF THE LD. AUTHORIZED REPRE SENTATIVE. IN RESPECT OF THE OTHER CONTENTION, WE FIND FORCE AND WE NOTED THAT THE ASSESSEE HAS GIVEN THE CORPORATE GUARANTEE TO T HE BANK FOR THE DEBTS OF AGARWAL POLYFIL PRIVATE LIMITED AND TH E ASSESSEE HAS ADVANCED LOAN TO AGARWAL POLYFIL PRIVATE LIMITED TO CLEAR THE OVER DUES WITH STATE BANK OF INDIA IN WHICH THE ASSESSEE COMPANY HAD GIVEN THE CORPORATE GUARANTEE. IF THE ASSESSEE WOULD NOT HAVE GIVEN THE LOAN, BANKERS WOULD HAVE ENCASHED TH E CORPORATE GUARANTEE AND ASSESSEE MAY BE IN TROUBLE. THE BUSIN ESS EXPEDIENCY DUE TO THE CORPORATE GUARANTEE DEMANDS S UCH LOAN TO BE GIVEN TO THE SUBSIDIARY COMPANY, WHICH ULTIMATEL Y HAS BECOME SICK COMPANY. WE HAVE GONE THROUGH THE DECISION OF HON'BLE SUPREME COURT ON WHICH BOTH THE PARTIES HAVE RELIED . WE NOTED AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 26 THAT IN THIS DECISION HON'BLE SUPREME COURT HAS INT ERPRETED THE WORD FOR THE PURPOSE OF BUSINESS AS GIVEN U/S 37 OF THE INCOME- TAX ACT, 1961, AND TOOK THE VIEW THAT THE DECISION RELATING TO SECTION 37 WILL ALSO BE APPLICABLE TO SECTION 36(1) (III) BECAUSE IN SECTION 37 THE EXPRESSION USED IS FOR THE PURPOSE OF BUSINESS. IT HAS BEEN CONSISTENTLY HELD IN DECISIONS IN RESPECT OF SECTION 37 THAT THE EXPRESSION FOR THE PURPOSE OF BUSINESS INCLUDES EXPENDITURE INCURRED VOLUNTARILY DUE TO COMMERCIAL EXPEDIENCY AND IT IS IMMATERIAL IF A THIRD PARTY ALSO GET BENE FITED BY THIS. ULTIMATELY UNDER PARA 35 OF THE ORDER, THE HON'BLE SUPREME COURT HELD AS UNDER :- IT IS NOT IN EVERY CASE THAT INTEREST ON BORROWED LOAN HAS TO BE ALLOWED IF THE ASSESSEE ADVANCES IT TO, A SISTER CONCERN. IT ALL DEPENDS ON THE FACTS A ND CIRCUMSTANCES OF THE RESPECTIVE CASE. FOR INSTANCE, IF THE DIRECTORS OF THE SISTER CONCERN UTILIZE THE AMOUNT ADVANCED TO IT BY THE ASSESSEE FOR THEIR PERSONAL BENEFIT, OBVIOUSLY IT CANNOT BE SAID THAT SUCH MONEY WAS ADVANCED AS A MEASURE OF COMMERCIAL EXPEDIENCY. HOWEVER, MONEY CAN BE SAID TO BE ADVANCED TO A SISTER CONCERN FOR COMMERCIAL EXPEDIENCY IN MANY OTHER CIRCUMSTANCES. WHERE HOLDING COMPANY, HAS A DEEP INTEREST IN ITS SUBSIDIARY FOR SOME BUSINESS PURPOSES, THE HOLDING COMPANY WOULD ORDINARILY BE ENTITLED TO DEDUCTION OF INTEREST ON ITS BORROWE D LOANS. AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 27 25. IN OUR OPINION, THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT, BECAUSE M/S. AGARWAL POLYFIL PRIVATE LIMITED IS A SUBSIDIARY COM PANY OF THE ASSESSEE AND ASSESSEE HAS GIVEN CORPORATE GUARANTEE FOR THE DEBTS OF THE SUBSIDIARY COMPANY TO THE BANKERS DUE TO COMMERCIAL EXPEDIENCY. COMMERCIAL EXPEDIENCY IS AN EXPRESSION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A P RUDENT BUSINESSMAN INCURS FOR THE PURPOSES OF THE BUSINESS . THE EXPENDITURE WOULD HAVE BEEN INCURRED UNDER ANY LEGA L OBLIGATION BUT YET SUCH EXPENDITURE IS ALLOWABLE AS A BUSINESS EXPENDITURE IF IT WAS INCURRED ON THE GROUND OF COMMERCIAL EXPE DIENCY. THE FACTS OF THIS CASE, IN OUR OPINION, CLEARLY SUGGEST THAT THE DEBT LOANS HAS BEEN ADVANCED BY THE ASSESSEE DUE TO COMM ERCIAL EXPEDIENCY. THE ASSESSEE HAS GIVEN THE CORPORATE GU ARANTEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AN D DELETE THE DISALLOWANCE. THUS, THIS GROUND IS ALLOWED. 26. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. SD/- SD/- (MUKUL KR. SHRAWAT) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT M EMBER INDORE; DATED 19/09/2014 AGRAWAL INDOTEX LIMITED, KHANDWA I.T.A.NO.693/IND/2013 A.Y. 2010-11. 28 CPU*SPS / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $%$&' # # ( / CONCERNED CIT 4. # # ( ( ) / THE CIT(A), INDORE 5. +,# &' , # # &' , -.% / DR, ITAT, INDORE 6. ,/0 1 / GUARD FILE. / BY ORDER, -# $2 -# $2 -# $2 -# $2 (ASSTT.REGISTRAR) ITAT, I NDORE 1. DATE OF DICTATION- 11.09.2014 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.09.2014 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 26.09.2014 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER