M/s New Era Control Devices Pvt. Ltd., Ludhiana V. ACIT, Ludhiana

ITA 760/CHANDI/2014

• Counselvise Citation: 76021514 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 01-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL VERMAN
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Reopening of assessment; Depreciation; Wrong claim; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 154; 2; 15; 139; 143(3); 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.760/CHD/2014 (ASSESSMENT YEAR : 2003-04) M/S NEW ERA CONTROL DEVICES PVT. LTD., VS. THE A.C.I.T., G.T. ROAD, DHANDHARI KALAN, CIRCLE-V, LUDHIANA. LUDHIANA. PAN: AAACN5472E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI SUSHIL VERMAN, CIT DR DATE OF HEARING : 08.10.2015 DATE OF PRONOUNCEMENT : 03 .12.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 23.7.2014 RELATING TO ASSESSMENT YEAR 2003-04. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME AS ON 1.12.2003 AT AN INCOME OF RS.37,49,110/- AFTER CLAIMING DEDUCTION U NDER SECTION 80HHC OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AMOUNTING TO RS.18,88,068/-, DEDUCTION UNDER SECTION 80HHE AMOUNTING TO RS.6,61,438/- AND DEDUCT ION 2 UNDER SECTION 80IB OF THE ACT AMOUNTING TO RS.8,76, 106/-. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED AT AN INCOME OF RS.38,20,629/- VIDE ORDER DATED 21.2.2006. A NOTICE UNDER SECTION 148 OF TH E ACT DATED 30.3.2010 WAS ISSUED TO THE ASSESSEE THEREAFT ER. THE MAIN REASONS FOR REOPENING WERE THAT ON PERUSAL OF THE ASSESSMENT RECORDS, IT WAS FOUND THAT THE ASSES SEE HAD PROFITS OF RS.70,87,571/- ELIGIBLE FOR DEDUCTIO N UNDER SECTION 80HHE OF THE ACT. THIS PROFIT ALSO INCLUDE D EXPORT INCENTIVES OF RS.33,81,114/-, WHICH WERE RELATED TO EXPORT OF GOODS OUT OF INDIA OTHER THAN THE EXPORT OF SOFT WARE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPO RT INCENTIVES OF RS.33,81,114/- WERE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT AND SHOUL D HAVE BEEN REDUCED FROM THE PROFITS ELIGIBLE FOR DED UCTION UNDER SECTION 80HHC OF THE ACT. THE ASSESSEE RAISE D OBJECTIONS AGAINST THE REOPENING BEFORE THE ASSESSI NG OFFICER AND ALSO MADE SUBMISSIONS ON THE MERITS OF THE CASE. AFTER CONSIDERING THE SAME, THE ASSESSING O FFICER HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIMIN G THE DEDUCTION UNDER SECTION 80HHC OF THE ACT ON THE EXP ORT INCENTIVES OF RS.33,81,114/- AND ACCORDINGLY, THE ASSESSING OFFICER RECOMPUTED THE TOTAL INCOME AT RS.44,26,459/-. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND SUBMITTED THAT REOPENING UNDER SE CTION 148 OF THE ACT IS BAD IN LAW AS ALL THE FACTS WERE ALREADY 3 AVAILABLE WITH THE ASSESSING OFFICER IN ORIGINAL ASSESSMENT. NO NEW FACTS HAVE COME INTO EXISTENCE TO ENABLE HIM TO REOPEN THE CASE UNDER SECTION 148 OF THE ACT. IN THE ASSESSMENT ALREADY COMPLETED UNDER SE CTION 143(3) OF THE ACT COMPLETE DETAILS WITH RESPECT TO DEDUCTIONS CLAIMED UNDER SECTIONS 80HHC AND 80HHE O F THE ACT WERE DULY FILED WITH THE ASSESSING OFFICER. THEREFORE, THE REOPENING OF THE CASE ON THE BASIS O F SAME FACTS AMOUNTS TO A CHANGE OF OPINION BY THE ASSESSI NG OFFICER, WHICH IS NOT PERMITTED UNDER THE LAW. FU RTHER, IT WAS ARGUED THAT REOPENING OF THE CASE HAS BEEN DONE ONLY ON THE BASIS OF AUDIT PARTY OBJECTION WITHOUT ANY INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OF FICER, WHICH IS NOT ALLOWED AS PER THE PROVISIONS OF THE A CT. THE CLAIM OF THE ASSESSEE WAS ON THE BASIS OF A REP ORT OF CHARTERED ACCOUNTANT CERTIFYING THE DEDUCTION UNDER SECTION 80HHE. THE ASSESSING OFFICER HAD ALREADY A PPLIED HIS MIND TO ALL THE DOCUMENTS AND EVIDENCES IN THE ORIGINAL ASSESSMENT AND THUS NOW REAPPRAISING THE S AME ISSUE AND RE-EXAMINING OF THE SAME UNDER SECTION 14 8 OF THE ACT AMOUNTS TO CHANGE OF OPINION. IT WAS FURTH ER SUBMITTED THAT THERE IS NO FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT AND THE ORIGINAL ASSES SMENT HAVING BEEN MADE UNDER SECTION 143(3) OF THE ACT, T HE ASSESSING OFFICER IS NOT PERMITTED TO REOPEN THE CA SE UNDER SECTION 148 OF THE ACT. RELIANCE WAS PLACED ON A NUMBER OF JUDGMENTS INCLUDING THAT OF THE HON'BLE 4 JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE C ASES OF DULI CHAND SINGHANIA VS. ACIT, 268 ITR 192, MA HAVIR SPINNING MILLS LTD. VS. CIT, 290 ITR 290 AND CIT VS . VEER OVERSEAS LIMITED, 38 DTR 246 (P&H). FURTHER, RELI ANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD., (2010) 320 ITR 561 (SC). THESE SUBMISSIONS OF THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER BY THE LEARNED C IT (APPEALS), WHO VIDE HIS REMAND REPORT DATED 4.7.201 4 SUBMITTED THAT THE ASSESSING OFFICER HAD A VALID RE ASON TO BELIEVE, BASED ON PROVISIONS OF THE INCOME TAX ACT THAT THE INCOME HAD ESCAPED ASSESSMENT. THEREFORE, THE RE IS NO CHANGE OF OPINION AS CONTENDED BY THE ASSESSEE. FURTHER, RELIANCE WAS PLACED BY THE ASSESSING OFFIC ER ON THE FOLLOWING JUDGMENTS : I) ALA FIRM VS. CIT (1976) 102 ITR 287 (MAD). II) ESS KAY ENGINEERING CO. P. LTD. VS. CIT , 247 ITR 818 (SC). III) SOM DUTT BUILDERS P. LTD. VS. DCIT, 98 ITD 78 4. THESE CASES WERE RELIED UPON FOR THE PROPOSITIO N THAT A WRONG APPLICATION OF LAW CANNOT BE HELD AS A PERMISSIBLE VIEW OF CHANGE OF OPINION WHICH CAN ALW AYS BE CHANGED FOR APPRECIATING THE LAW. THE ASSESSEE FILED REJOINDER TO THE REMAND REPORT AND REITERATED THE SUBMISSIONS ALREADY MADE BEFORE THE LEARNED CIT (APPEALS). IN ADDITION TO THAT, IT WAS ALSO SUBMI TTED THAT IT IS A CASE OF REOPENING BEYOND FOUR YEARS AND THE RE IS 5 NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE ONUS IS ON THE DEPARTMENT TO PROVE THAT THE ASSESSE E HAS NOT DISCLOSED FULL AND TRUE FACTS WHICH LED TO REOP ENING OF THE CASE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REMAND REPORT AND REJOINDER FILED BY THE ASSESSEE, THE LEARNED CIT (APPEALS) HELD THAT IT IS A FACT ON RECORD THAT THE ASSESSEE HAD SHOWN PROFITS OF RS.70,87,571/- ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHE OF THE ACT, WHICH ALSO INCLUDED EXPORT INCENT IVES OF RS.33,81,114/-, WHICH WAS RELATED TO THE EXPORT OF GOODS OUT OF INDIA OTHER THAN THE EXPORT OF SOFTWARE. A S EXPORT INCENTIVES OF RS.33,81,114/- WERE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT, THE SAID AMOUNT SHOULD HAVE BEEN REDUCED FROM THE PROFITS EL IGIBLE FOR DEDUCTION UNDER SECTION 80HHE OF THE ACT. THE REFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT TH E INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND AFTER DULY RECORDING REASONS FOR THE SAME, THE CASE WAS RIGHTLY REOPENED. THE LEARNED CIT (APPEALS) RELIE D UPON ON THE FOLLOWING DECISIONS : I) PHOOL CHAND BAJRANG LAL & ANR. VS. ITO, (1993) 203 ITR 456 (SC). II) EMA INDIA LTD. VS. ACIT (2009) 30 DTR 82 (ALL) III) CONSOLIDATED PHOTO & FIN VEST LTD. VS. ACIT, 281 ITR 394 (DEL). IV) A.L.A. FIRM VS. CIT (1991) 189 ITR 285 (SC). V) GURERA GAS CYLINDERS PVT. LTD. VS. CIT, 6 258 ITR 170 (P&H). VI) SWARAJ ENGINE LTD. VS. ACIT, 260 ITR 202 (P&H). VII) TILAK RAJ BEDI VS. JCIT, 319 ITR 385 (P&H). VIII) SEWAK RAM VS. ITO, 236 CTR 462 (P&H). 5. FURTHER, RELIANCE WAS PLACED ON AN ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF KING EXP ORTS VS. ACIT IN ITA NO.1005/CHD/2011 DATED 4.1.2012, WHEREBY IT WAS HELD THAT THE CLAIM OF THE ASSESSEE IS INCORRECT AND CONTRAVENES THE PROVISIONS OF SECTION 80IA OF THE ACT. THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT IS AS PER LAW. IN THIS WAY, THE LEARNED CI T (APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICE R IN REOPENING THE CASE UNDER SECTION 148 OF THE ACT. 6. AGGRIEVED BY THE SAID ACTION OF THE LEARNED CIT (APPEALS), THE ASSESSEE HAS COME UP IN APPEAL BEFOR E US. THE LEARNED COUNSEL FOR THE ASSESSEE FIRST DREW OUR ATTENTION TO VARIOUS PAGES OF THE PAPER BOOK TO SHO W THAT HOW THE ISSUE OF DEDUCTION UNDER SECTIONS 80HHC AND 80HHE OF THE ACT AND ALSO THAT 80IB WAS DEALT WITH IN PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. IT WA S SHOWN TO US AT PAPER BOOK PAGE-2 IN THE STATEMENT OF TAXA BLE INCOME, DEDUCTION UNDER SECTION 80HHC OF THE ACT WA S CLAIMED AT RS.6,61,438/- AS PER NOTE-3 APPENDED AT PAGE 3, WHEREBY IT HAS BEEN SPECIFICALLY MENTIONED THAT DEDUCTION UNDER SECTION 80HHE OF THE ACT HAS BEEN T AKEN AS PER CERTIFICATE OF AUDITORS IN FORM NO.10CCAF. PAPER BOOK PAGES 9 TO 11 IS THE CERTIFICATE FROM CHARTERE D 7 ACCOUNT WITH REGARD TO DEDUCTION UNDER SECTION 80IB OF THE ACT. PAPER BOOK PAGE NO.6 ONWARDS IS THE CERT IFICATE OF THE CHARTERED ACCOUNTANT WITH RESPECT TO DEDUCT ION UNDER SECTION 80HHE OF THE ACT. AT PAGE NO.15 OF THE PAPER BOOK THE COMPUTATION OF CLAIM OF DEDUCTION UN DER SECTION 80HHE OF THE ACT AT RS.6,61,438/- HAS BEEN GIVEN. IT WAS EXPLAINED THAT THESE PAPERS WERE APPENDED TO THE RETURN OF INCOME FILED BY THE ASSESSEE. FURTHER, OUR ATTENTION WAS DRAWN TO A QUESTIONNAIRE ISSUED BY TH E ASSESSING OFFICER PLACED AT PAPER BOOK PAGE 21, IN WHICH AT POINT NO.16, THEN BIFURCATION OF SALE PROCEEDS B ROUGHT TO INDIA WAS TO BE PROVIDED. AT PAGE 23 OF THE PA PER BOOK IS THE REPLY OF THE ASSESSEE DATED 3.12.2004, WHEREBY THE DETAILS OF EXPORT INCENTIVES RECEIVED B Y THE ASSESSEE ALONGWITH SUPPORTING DOCUMENTS WERE GIVEN. AT PAGE 25 OF THE PAPER BOOK, THERE IS ANOTHER LETTER DATED 10.3.2005, WHEREBY A DETAILED NOTE ON DEDUCTION UND ER SECTION 80HHC OF THE ACT WAS GIVEN AT POINT NO.2. AT PAGE 29 OF THE PAPER BOOK, ANOTHER LETTER FILED BEF ORE THE ASSESSING OFFICER AS ON 5.10.2005 WAS APPENDED. TH IS LETTER RUNS INTO FOUR PAGES WHICH DESCRIBES IN DETA IL THE CLAIM OF THE ASSESSEE UNDER SECTION 80HHE OF THE AC T. AFTER THIS, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS FRAMED AS ON 21.2.2006. THE LEARNED COUNSEL F OR THE ASSESSEE ALSO SHOWED US THAT EVEN AFTER THE COMPLET ION OF ASSESSMENT AS ON 27.6.2008, A NOTICE UNDER SECTION 154 OF 8 THE ACT WAS ISSUED TO THE ASSESSEE PROPOSING TO DEC REASE THE AMOUNT OF CLAIM UNDER SECTION 80HHE OF THE ACT. THE COPY OF THE NOTICE IS PLACED AT PAPER BOOK PAGES 33 . AT PAGE 34 ONWARDS IS THE REPLY OF THE ASSESSEE TO NOT ICE UNDER SECTION 154 OF THE ACT. ANOTHER REPLY DATED 8.4.2009 GIVING DETAILED WORKING OF THE CLAIM MADE BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 154 OF THE ACT WAS GIVEN. FURTHER, IT WAS SUBMITTED BEFORE US THAT NO ACTION UNDER SECTION 154 OF THE ACT WAS TAKEN AG AINST THE ASSESSEE AND THE CASE WAS REOPENED BY RECORDING REASONS DATED 29.3.2010, COPY OF WHICH IS PLACED AT PAPER BOOK PAGE 42. ALL THESE PAPERS WERE BROUGHT TO OU R NOTICE BY THE LEARNED COUNSEL OF THE ASSESSEE TO EM PHASIZE THE FACT THAT THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTIONS 80HHC AND 80HHE OF THE ACT WERE THERE BEFO RE THE ASSESSING OFFICER, WHEREBY HE HAD RAISED DETAIL ED QUERIES REGARDING THE SAME AND THE EXPLANATION IN T HIS REGARD WERE FILED BY THE ASSESSEE. THEREFORE, NOW WITHOUT THERE BEING ANY NEW MATERIAL COMING INTO HIS POSSES SION, THE REOPENING BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT IS MERE CHANGE OF OPINION. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA), W HICH WAS CONFIRMED BY THE HON'BLE SUPREME COURT, REPORTED IN 328 ITR 561. RELIANCE WAS PLACED ON THE JUDGMENT OF GU JARAT HIGH COURT IN THE CASE OF H.K.BUILDCON LTD. VS. ITO , 339 ITR 533 (GUJ) AND THAT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASES OF MAHAVIR SPINNING MILLS LTD. (SUPRA) 9 AND DULI CHAND SINGHANIA (SUPRA). A COPY OF LATES T ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF VI NOD MALHOTRA VS. ACIT IN ITA NO.L334/CHD/2014 WAS ALSO PLACED ON RECORD. ANOTHER SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT SINCE ON THE SAME ISSUE NOTICE UNDER SECTION 154 OF THE ACT WAS EARLIER ISSUED BY THE ASSESSING OFFICER AND NO ADVERSE INFE RENCE AGAINST THE ASSESSEE WAS TAKEN IN PROCEEDINGS UNDER SECTION 154 OF THE ACT, IN SUCH A SCENARIO, CASE CA NNOT BE REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF TH E ACT. WITH THIS, A PRAYER WAS MADE TO HOLD THE REOPENING AS BAD IN LAW. 7. THE LEARNED D.R. RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS), PARTICULARLY ON PARA 3.7, WH EREBY AFTER CONSIDERING NUMBER OF JUDGMENTS OF VARIOUS HO N'BLE HIGH COURTS AND THAT OF HON'BLE SUPREME COURT, THE LEARNED CIT (APPEALS) HAS HELD THAT REOPENING UNDER SAID CIRCUMSTANCES IS AS PER LAW. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. FIRST WE ARE DECIDING THE ISSUE OF ASSUMPTION OF JURISDICTION UNDER SECTION 148 OF THE ACT BY THE AS SESSING OFFICER TO REOPEN THE CASE. LENGTHY ARGUMENTS HAV E BEEN MADE BY BOTH THE PARTIES ON THE ISSUE WHETHER THE REOPENING HAS BEEN MADE ON THE BASIS OF CHANGE OF OPINION ONLY. HOWEVER, WE FIND THAT THERE IS A MO RE 10 GERMANE AND BASIC ISSUE TO BE DECIDED IN THIS CASE, WHICH IS RELEVANT FOR ASSUMPTION OF JURISDICTION. FROM THE CHRONOLOGY OF EVENTS, WE SEE THAT THE CASE PERTAINS TO ASSESSMENT YEAR 2003-04, ASSESSMENT HAS ALREADY BEE N COMPLETED UNDER SECTION 143(3) OF THE ACT AND THE N OTICE ISSUED UNDER SECTION 148 IS DATED 30.3.2010. THER E IS NO DISPUTE ABOUT THESE DATES. THEREFORE, IT IS QUITE CLEAR THAT THE CASE HAS BEEN OPENED AFTER A PERIOD OF FOU R YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN SUCH A SCENARIO, A CASE CAN BE REOPENED AFTER FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR ONLY IF THE ASS ESSEE FAILS TO FILE THE RETURN OR THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS RELEVANT FOR THE ASSESSMENT. FOR THIS, WE MAY REF ER TO THE PROVISION OF SECTION 147, SPECIFICALLY THE PROV ISO OF THE SAID SECTION, WHICH READS AS UNDER : 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO A NY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLO WANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNE D (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 15 3 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 THIS S ECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT 11 ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RE TURN 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, F OR THAT ASSESSMENT YEAR: 9. FROM THE PLAIN READING OF THE ABOVE, IT IS QUIT E CLEAR THAT FOR THE CASES WHICH HAVE ALREADY BEEN AS SESSED UNDER SECTION 143(3) OF THE ACT, THE LIMITATION PER IOD FOR REOPENING UNDER SECTION 148 OF THE ACT IS FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WITH AN EX CEPTION IN CASES WHERE THE ASSESSEE FAILS TO FILE THE RETUR N OF INCOME OR FAILS TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE, BEFORE GOING FURTHER, WE HAVE TO SEE WHETHER IN THE PRESENT CASE , THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS FULLY AND TRULY AS THIS IS NOT A CASE OF NON FILING OF RETURN. AS AL READY DISCUSSED IN THE SUBMISSIONS MADE BY THE LEARNED CO UNSEL FOR THE ASSESSEE, THE ISSUE OF DEDUCTION UNDER SECT IONS 80HHC AND 80HHE OF THE ACT WERE DULY DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME TOGETHER WITH THE AUDIT REPORT OF CHARTERED ACCOUNTANTS IN THIS REGARD. F URTHER, ON QUERIES RAISED BY THE ASSESSING OFFICER, DUE DISCLOSURES WERE MADE BY THE ASSESSEE. FROM THE RE CORD, IT IS NOT INFERRED FROM ANYWHERE THAT THE ASSESSEE HAS FAILED TO DISCLOSE ANY MATERIAL FACT RELATING TO TH E ISSUE IN QUESTION. THOUGH THERE ARE A NUMBER OF JUDGMENTS FOR THE PROPOSITION THAT IN SUCH A BACKGROUND THE ASSES SMENT 12 CANNOT BE REOPENED AFTER A PERIOD OF FOUR YEARS FRO M THE END OF RELEVANT ASSESSMENT YEAR, WE ARE NOT REFERRI NG TO ALL THOSE, AS WE ARE GUIDED BY THE ACT ITSELF FOR S AID PURPOSE AND WE HAVE ALREADY GIVEN A FINDING ON THE FACTS OF THE CASE THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS FOR THE PURPOSES OF ASSESSMENT. 10. NOW, THE OBVIOUS QUESTION ARISES IS WHETHER IN SUCH A CASE, EVEN ON THE ISSUE OF LAW WRONGLY APPL IED IN THE ORIGINAL ASSESSMENT, THE REOPENING CAN BE DONE. THOUGH WE REFRAIN OURSELVES TO GIVE ANY FINDING ON THE MERITS OF CASE AT THIS STAGE. HOWEVER, THIS ISSUE HAS TO BE DISCUSSED HERE, AS THE REASON FOR REOPENING WAS THA T THE ASSESSING OFFICER WAS CONVINCED THAT THE ASSESSEE W AS NOT ELIGIBLE FOR THE IMPUGNED DEDUCTION LEGALLY. THE POSITION AT THIS STAGE, WHAT EMERGES, IS THAT AS PER THE ASS ESSING OFFICER, THOUGH THE ASSESSEE MAY HAVE DISCLOSED FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THE CLAIM OF DEDUCTION MADE BY IT IS WRONG (NOT AS PER LAW). WE FIND THAT THE SITUATION HAS BEEN DISCUSSED IN VE RY APT WORDS IN THE CASE OF TITANOR COMPONENTS LTD. VS. AC IT, 343 ITR 183, BY THE BOMBAY HIGH COURT AS FOLLOWS : WHERE A REASSESSMENT IS SOUGHT TO BE MADE AFTER FO UR YEARS THE POWER CONFERRED BY SECTION 147 OF THE INCOME-TA X ACT, 1961, DOES NOT PROVIDE AFRESH OPPORTUNITY TO THE AS SESSING OFFICER TO CORRECT AN INCORRECT ASSESSMENT MADE EARL IER UNLESS THE MISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIALS FACTS NECESSARY FOR ASSESSMENT. THERE IS A 13 DIFFERENCE BETWEEN A WRONG CLAIM MADE BY AN ASSESSEE AFTER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WR ONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATERIAL FA CTS FULLY AND TRULY. IT IS ONLY IN THE LATTER CASE THAT THE ASSESSING OFFICER WOULD BE ENTITLED TO PROCEED UNDER SECTION 147. HELD, ALLOWING THE PETITION, THAT THE ASSESSING OFFICE R HAD NOT RECORDED THE FAILURE ON THE PART OF THE PETITIONER TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE A SSESSMENT YEAR 1997-98. WHAT WAS RECORDED WAS THAT THE PETITI ONER HAD WRONGLY CLAIMED CERTAIN DEDUCTIONS WHICH HE WAS NOT ENTITLED TO. THE REASSESSMENT PROCEEDINGS INITIATED I N THE YEAR 2004 WERE NOT VALID. 11. IN SUCH A SITUATION, WE ARE ALSO GUIDED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CALCUTTA DISCOUNT CO. LTD.. VS. ITO (1961) 41 ITR 1 91 (SC), WHERE AT PARA 7 OF THE JUDGMENT, THE HON'BLE COURT HAS NOT MINCED ANY WORDS TO DESCRIBE THE DUTIES OF ASSESSEE AND THAT OF THE REVENUE SUCH A SITUATION. THE PARA READS AS UNDER : DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS ? THE ANSW ER TO THIS QUESTION MUST BE IN THE NEGATIVE. ONCE ALL THE PRIMARY FACTS ARE BEFORE THE ASSESSING AUTHORITY, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE. I T IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASONA BLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO B E DRAWN. IT IS NOT FOR SOMEBODY ELSEFAR LESS THE ASSE SSEE TO TELL THE ASSESSING AUTHORITY WHAT INFERENCES, WHE THER OF FACTS OR LAW, SHOULD BE DRAWN. INDEED, WHEN IT IS REMEMBERED THAT PEOPLE OFTEN DIFFER AS REGARDS WHAT INFERENCES SHOULD BE DRAWN FROM GIVEN FACTS, IT WILL B E MEANINGLESS TO DEMAND THAT THE ASSESSEE MUST DISCLOSE WHAT INFERENCESWHETHER OF FACTS OR LAWHE WOULD DR AW 14 FROM THE PRIMARY FACTS. IF FROM PRIMARY FACTS MORE INFERENCES THAN ONE COULD BE DRAWN, IT WOULD NOT BE POSSIBLE TO SAY THAT THE ASSESSEE SHOULD HAVE DRAWN ANY PARTICULAR INFERENCE AND COMMUNICATED IT TO THE ASSE SSING AUTHORITY. HOW COULD AN ASSESSEE BE CHARGED WITH FA ILURE TO COMMUNICATE AN INFERENCE, WHICH HE MIGHT OR MIGHT NOT HAVE DRAWN? 12. THE PREPOSITION HAS BEEN RELIED ON IN A NUMBER OF JUDGMENTS OF VARIOUS HIGH COURTS. ONE OF THE LANDMARK JUDGMENT IS THAT OF CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD. & ORS. VS. JCIT & ORS. (2000) 245 ITR 645. 13. NOW, THE LAW WHICH EMERGES FROM THE ABOVE IS THAT THE DUTY OF THE ASSESSEE IS TO DISCLOSE ALL MA TERIAL FACTS FULLY AND TRULY AND THE DUTY ENDS AT THAT. ON THE BASIS OF THESE MATERIAL FACTS, THE DUTY IS THAT OF THE ASSESSING OFFICER TO APPLY THE LAW CORRECTLY. THE ASSESSEE IS NOT OBLIGED TO TEACH THE REVENUE AUTHORITIES THE CORRECT LAW TO BE APPLIED ON THE BASIS OF HIS DISCLOSURE. THE DUTY OF THE ASSESSEE DOES NOT EXTEND BEYOND THE FULL DIS CLOSURE OF MATERIAL FACTS. THE INABILITY OF THE ASSESSING OFFICER TO NOT APPLY THE LAW PROPERLY ON THE FULL AND TRUE DIS CLOSURE MADE BY THE ASSESSEE CANNOT BE COVERED UP IN THE GU ISE OF REOPENING OF ASSESSMENT, THAT TOO AFTER FOUR YEARS FROM THE END OF THE RELEVANT YEAR. IN VIEW OF THE ABOVE , WE FIND THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ASSESSING OFFICER HAD NO JURISDICTION TO REOPEN THE CASE UNDER SECTION 148 OF THE ACT, AS THE SAME IS BARRED BY 15 LIMITATION, HAVING BEEN OPENED AFTER FOUR YEARS FRO M THE END OF RELEVANT ASSESSMENT YEAR. 14. BEFORE PARTING, SINCE A LARGE NUMBER OF CASES HAVE BEEN REFERRED BY THE CIT (APPEALS) IN HIS ORDE R, WHICH HAVE ALSO BEEN RELIED UPON BY THE LEARNED D.R ., DURING THE COURSE OF HEARING, WE WOULD LIKE TO DEAL WITH THESE CASES: (I) PHOOL CHAND BAJRANG LAL & ANR.(203 ITR 456 (SC) : 15. THIS CASE DEALT WITH THE PRE-AMENDED PROVISION AND THE SITUATION HAS BEEN VERY APTLY EXPLAINED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACR YLIC MANUFACTURING COMPANY VS. CIT, 308 ITR 38 (DEL) IN LATER PART OF PARA 25 AS UNDER : WHEN A NOTICE ISSUED WITHIN THIS PERIOD WAS UNDER CONTEMPLATION, THEN DESPITE THERE BEING NO FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, THE INCOME-TAX OFFICER WOULD STILL HAVE HAD THE POWER TO INITIATE ACTION UNDER SECTI ON 147 IF HE HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO T AX HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR 'IN CONS EQUENCE OF INFORMATION IN HIS POSSESSION'. IT IS NECESSARY TO UN DERSTAND THE DECISION OF THE SUPREME COURT IN PHOOL CHAND BAJ RANG LAL'S CASE IN THE LIGHT OF THESE PROVISIONS. IN PHOOL CHAND BAJRANG LAL'S CASE, THE QUESTION OF INFORMATION OR SU BSEQUENT INFORMATION AND THE QUESTION OF FULL AND TRUE DISCLOS URE HAVE BEEN INTERMINGLED INASMUCH AS THE QUESTION OF LIMITATIO N WAS NOT AT ALL IN CONSIDERATION. CLAUSE (B) OF SECTION 147 WAS NON OBSTANTE THE REQUIREMENTS OF CLAUSE (A) THEREOF WHI CH IS TRIGGERED, INTER ALIA, BY FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR H IS ASSESSMENT. THEREFORE, WHEN THE NOTICE UNDER SECTION 148 IS 16 CONTEMPLATED WITHIN THE PERIOD OF FOUR YEARS, NOTWITHS TANDING THE NON-APPLICABILITY OF CLAUSE (A) OF SECTION 147, CL AUSE (B) COULD APPLY IF THE INCOME-TAX OFFICER HAS INFORMATION IN HIS POSSESSION LEADING TO GIVE HIM REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99. EXPLANATION I TO SECTION 147 ALSO MAKES IT CLEAR THAT MERE PRODUCTION BEFORE THE ASSESS ING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHI CH MATERIAL EVIDENCE COULD, WITH DUE DILIGENCE HAVE BEEN DISCOVER ED BY THE ASSESSING OFFICER, WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE SAID PROVISO. THI S EXPLANATION, HOWEVER, DOES NOT MEAN THAT PRODUCTION O F ACCOUNT BOOKS AND OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERE D BY THE ASSESSING OFFICER WILL NOT 'IN ANY EVENT' AMOUN T TO DISCLOSURE WITHIN THE MEANING OF THE SAID PROVISO. THE SAID EXPLANATION ONLY STIPULATES THAT SUCH EVIDENCE WILL NOT NECESSARILY 'AMOUNT TO DISCLOSURE' WITHIN THE MEANING OF THE SAID PROVISO. HOWEVER, WE NEED NOT LABOUR ON THIS ASP ECT ANY FURTHER INASMUCH AS WE FIND THAT IN THIS CASE, THE A SSESSING OFFICER HAD MADE SPECIFIC QUERIES, INTER ALIA, WITH REGAR D TO THE SHARE APPLICATION MONEY OF RS. 5 LAKHS RECEIVED FRO M HALLMARK HEALTHCARE LIMITED. THE PETITIONER HAD SUPPLIE D, IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS ALL THE RELEVANT DOCUMENTS SUCH AS THE SHARE APPLICATION MON EY FORM, CONFIRMATION FROM THE APPLICANT AND THE BANK S TATEMENT RELATING TO THE RECEIPT OF THE CHEQUE NO. 201845 DAT ED 17-10- 1997 FROM HALLMARK HEALTHCARE LIMITED. IT IS ONLY THER EAFTER THAT THE ASSESSMENT WAS COMPLETED BY THE ASSESSING O FFICER ON 7-3-2001. WE HAVE ALREADY NOTED ABOVE THAT IN THE ASSESSMENT ORDER ITSELF, THE ASSESSING OFFICER HAS RE CORDED THAT THE DETAILS AS REQUIRED WERE FILED AND VERIFIED. THIS IN ITSELF INDICATES THAT THE ASSESSING OFFICER HAD APPL IED HIS MIND TO THE ISSUE OF THE SHARE APPLICATION MONEY AN D HAD ACCEPTED THE ASSESSEE'S CLAIM AFTER DUE VERIFICATION . FURTHERMORE, IN THE IMPUGNED ORDER DATED 2-3-2005 ITSEL F, THE ASSESSING OFFICER HAS INDICATED THAT DURING THE COUR SE OF 17 ASSESSMENT PROCEEDINGS, THE PETITIONER HAD FILED DETAI LS IN RESPECT OF SHARE APPLICATION MONEY OF RS. 5 LAKHS IN THE NAME HALLMARKS HEALTHCARE LIMITED. HOWEVER, THE ASSESSING OFF ICER HAS NOW SOUGHT TO WRIGGLE OUT OF HIS REMARKS IN THE ASSESSMENT ORDER BY STATING THAT ONLY PHOTOCOPIES F OR THE APPLICATION FOR EQUITY SHARES WERE FILED AND THAT TH E COPY OF THE BANK ACCOUNT WITH THE INDIAN BANK WHICH WAS AVAI LABLE DID NOT INDICATE THAT VERIFICATION HAD BEEN DONE IN CORRECTLY AND THAT THE FACTS AS PRESENTED BY THE PETITIONER HA D BEEN ACCEPTED IN THE NORMAL COURSE OF ASSESSMENT PROCEEDI NGS. THE ASSESSING OFFICER CANNOT BE PERMITTED TO RETRACT FRO M THE POSITION THAT HE DID ASK FOR SPECIFIC INFORMATION A ND THAT THE INFORMATION WAS SUPPLIED BY THE PETITIONER. AND, MORE IMPORTANTLY, THAT THE ASSESSING OFFICER HAD EXAMINED AND VERIFIED THE INFORMATION BEFORE FINALIZING THE ASSESS MENT UNDER SECTION 143(3) OF THE SAID ACT. IN THIS BACKGROUND ALS O, WE FEEL THAT THE PETITIONER HAD NOT FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT IN RESPEC T OF THE ASSESSMENT YEAR 1998-99. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS NOT FAI LED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT. THE CASE OF PHOOL CHAND BAJRANG LAL & ANR. (SUPRA) IS TO BE READ AS DIRECTED BY THE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC (SUPRA). (II) EMA INDIA LTD. (30 DTR 82 (ALL) : 16. THIS CASE WAS DEALING A SITUATION WHERE MERE PRODUCTION OF BOOKS OF ACCOUNT WAS BEING CLAIMED AS FULL AND TRUE DISCLOSURE BY THE ASSESSEE, WHICH IS NOT T HE PRESENT CASE. HOWEVER, WE MAY ALSO MENTION THAT AN AMENDMENT TO THE EFFECT THAT MERE PRODUCTION OF BOO KS OF 18 ACCOUNT CANNOT BE CONSIDERED AS FULL AND TRUE DISCL OSURE HAS ALSO BEEN BROUGHT IN THE STATUTE LATER ON. (III) CONSOLIDATED PHOTO & FINVEST LTD. (281 ITR 39 4 (DEL) : 17. THIS CASE THOUGH SEEMS SUPPORTING THE CASE OF THE DEPARTMENT, HOWEVER, IN A LATER JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF KLM ROYAL DUTCH AIRLINES, 292 ITR 40 (DEL), AT PARA 12, A LARGER BE NCH OF THE DELHI HIGH COURT HAS HELD IN VERY CLEAR TERM TH AT THE LAW AS LAID DOWN ON BY THE CONSOLIDATED PHOTO FINVE STS CASE IS NOT A GOOD LAW. 18. OTHER CASES, VIZ, ALA FIRM, 189 ITR 215 (SC), GURERA GAS CYLINDERS PVT. LTD., 258 ITR 170 (P&H), SWARAJ ENGINE LTD., 260 ITR 202 (P&H), TILAK RAJ BEDI, 319 ITR 385 (P&H) AND SEWAK RAM, 236 CTR 462 (P&H), ALL DO NOT APPLY TO THE FACTS OF THE PRESENT CASE, AS IN ALL T HOSE CASES THE ISSUE WAS NOT OF LIMITATION AS PER THE PR OVISO TO SECTION 147 OF THE ACT, AND WERE RELATED TO VARIOUS OTHER ISSUES ON REOPENING. 19. ANOTHER CASE VERY HEAVILY RELIED UPON BY THE LEARNED CIT (APPEALS) IS THAT OF CHANDIGARH BENCH O F THE I.T.A.T. IN THE CASE OF KING EXPORT (SUPRA) IS ALS O DISTINGUISHABLE. THE LEARNED CIT (APPEALS) HAS RE LIED UPON IT AS THE ISSUE ON MERIT WAS SIMILAR AS THE QU ESTION INVOLVED WAS DEDUCTION UNDER SECTION 80IA OF THE AC T ONLY. 19 HOWEVER, FROM THE PERUSAL OF THIS ORDER ALSO, IT CA ME TO OUR NOTICE THAT IN THIS CASE ALSO THE ISSUE WAS NOT OF LIMITATION AS PER THE PROVISO TO SECTION 148 OF THE ACT. 20. IN ADDITION TO THE ABOVE, FROM THE APPRAISAL O F MATERIAL AND EVIDENCES ON RECORD AS WELL AS THE ENQ UIRIES CONDUCTED BY THE ASSESSING OFFICER DURING THE ORIGI NAL ASSESSMENT PROCEEDINGS, WE OBSERVE THAT THE ISSUE O F DEDUCTION UNDER CHAPTER VIA WAS QUITE OPEN TO THE ASSESSING OFFICER. HE HAS ALREADY APPLIED HIS MIND TO ALL THESE AND NOW REAPPRAISING THE SAME ISSUE AND REEXAMINING THE SAME UNDER SECTION 148 OF THE ACT AMOUNTS TO CHANGE OF OPINION, WHICH IS NOT PERMITTE D UNDER THE LAW, AS HELD BY VARIOUS JUDICIAL PRONOUNCEMENTS, REFERRED TO ELSEWHERE IN THIS ORDER . 21. IN VIEW OF THE ABOVE, WE HOLD THAT THE REOPENI NG OF ASSESSMENT IS WHOLLY UNJUSTIFIED AND THE ASSESSI NG OFFICER HAS NOT ASSUMED JURISDICTION IN ACCORDANCE WITH LAW. THEREFORE, WE SET ASIDE AND QUASH THE REOPENI NG OF THE ASSESSMENT UNDER APPEAL. 22. SINCE, WE HAVE ALREADY HELD THAT THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER IS NOT AS PER LAW, THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT READ WITH S ECTION 147 OF THE ACT BEING QUASHED, WE DO NOT FIND ANY NE ED TO 20 ADJUDICATE THE ISSUES ON MERIT. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF DECEMBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 3 RD DECEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 21