Sh. Dharminder Sharma, Ludhiana V. DCIT, Ludhiana

ITA 775/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8332 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 21-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Reopening of assessment; Charitable institution; Audit objection; Tangible material; Wrong claim; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 133A; 80G; 147; 148; 139

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. 775/CHD/2015 ASSESSMENT YEAR: 2007-08 SHRI DHARMINDER SHARMA, VS THE DCIT, PROP. M/S GYPSY ADVERTISEMENT & CIRCLE-2, MARKETING COMPANY, LUDHIANA. ALFA TOWER, LAXMI CINEMA ROAD, LUDHIANA. PAN: AEBPS2044B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 21.03.2016 DATE OF PRONOUNCEMENT : 30.03.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 27.08.2015 FOR ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, ASSESSEE CHALLENGED THE ORDERS O F AUTHORITIES BELOW IN RE-OPENING THE ASSESSMENT UNDE R SECTION 147/148 OF THE INCOME TAX ACT AND DISALLOWI NG THE EXPENDITURE OF RS. 2,07,43,117/- UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER HAS OBSERVED THAT ASSESSMENT ORDER IN THE C ASE 2 OF THE ASSESSEE HAD BEEN PASSED UNDER SECTION 143(3 ) VIDE ORDER DATED 12.10.2009 ASSESSING THE INCOME AT RS. 11,34,280/-. THE SAID ASSESSMENT ORDER WAS REOPENE D ON THE GROUND THAT ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON EXPENDITURE OF RS. 2,07,43,177/-. THE ASSESSEE HAD OBJECTED BEFORE THE ASSESSING OFFICER THAT THE ISSUE OF ALLOWANCE OF EXPENDITURE OF RS. 2.07 C R HAD BEEN DISCUSSED IN THE ORIGINAL ASSESSMENT AT LENGTH AND THERE WAS NO FRESH INFORMATION TO WARRANT ISSUE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. TH E ASSESSING OFFICER, HOWEVER, PROCEEDED WITH THE RE- OPENING DIFFERING WITH THE ASSESSEE ON THE ISSUE AN D VIDE ASSESSMENT ORDER DATED 26.03.2013 MADE THE ADDITION OF RS.2.07 CR BY DISALLOWING THE AMOUNT OF RENT UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT. THE ASSESSEE CHALLENGED THE RE-OPENING OF THE ASSESSMEN T AS WELL AS ABOVE ADDITION BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER IN WHICH ASSESSEE BRIEFLY EXPLAINED THAT THE CASE WAS REOPENED MERELY ON THE BASIS OF AUDIT OBJECTION AGAINST WHICH ASSESSEE HAS ALSO FILED REP LY. THE ASSESSING OFFICER WAS HAVING NO NEW INFORMATION AVAILABLE WITH HIM TO REOPEN THE ASSESSMENT. THE ASSESSEE RELIED UPON SEVERAL DECISIONS BEFORE LD. CIT(APPEALS) ON THE POINT THAT ON MERE AUDIT OBJECT ION, RE-OPENING OF THE ASSESSMENT IS NOT JUSTIFIED. IT WAS ALSO EXPLAINED THAT ASSESSMENT WAS REOPENED ON MERE CHANGE OF OPINION. THE LD. CIT(APPEALS), HOWEVER, DID 3 NOT ACCEPT CONTENTION OF THE ASSESSEE BECAUSE ACCOR DING TO HIS FINDINGS, THE ISSUE OF DEDUCTION OF TDS WAS NEITHER RAISED BY THE ASSESSING OFFICER AT ANY STAG E NOR ASSESSEE HAS FILED ANY REPLY. THE DEPARTMENT COULD GET ANY INFORMATION FOR RE-OPENING OF THE ASSESSMENT AN D RELIED UPON DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF P.V.S. BEEDIES PVT. LTD. 237 ITR 13 AND HELD THAT RE-OPENING OF THE ASSESSMENT WAS JUSTIFIED IN THE MATTER. THE ASSESSEE ALSO CHALLENGED THE ADDITION ON MERIT AND IT WAS SUBMITTED THAT ASSESSEE IS INDIVID UAL CARRYING ON BUSINESS OF OUT-DOOR ADVERTISING. THE JOB OF THE ASSESSEE IS TO CHARGE FROM THEIR CLIENTS FOR ADVERTISING THEIR PRODUCTS OR PROJECTS THROUGH OUTD OOR MEDIA BY DISPLAYING THEIR PRODUCTS ON HOARDINGS. TH E ASSESSEE RECEIVED ADVERTISING CHARGES AND PAID THE RENT OF BOARD. IT WAS ALSO EXPLAINED THAT THE RENT PAID BY ASSESSEE WAS BELOW THE LIMIT PRESCRIBED UNDER SECTI ON 194I OF THE INCOME TAX ACT I.E. LESS THAN RS. 1,20, 000/- THEREFORE, NO TDS WAS LIABLE TO BE DEDUCTED. THE L D. CIT(APPEALS) DID NOT ACCEPT THE CONTENTION OF ASSES SEE FOR WANT OF EVIDENCE ON RECORD AND ACCORDINGLY CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND REFER RED TO REASONS OF RE-OPENING OF ASSESSMENT AND SUBMITTE D 4 THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSE ALL THE MATERIAL FACTS TRULY AND CORRECTLY . THE ASSESSING OFFICER EXAMINED THIS ISSUE AT ASSESSMENT STAGE WITH REGARD TO PAYMENT OF RENT OF BOARD. THE RE WERE NO NEW MATERIAL AVAILABLE ON RECORD AGAINST TH E ASSESSEE THEREFORE, RE-OPENING WAS DONE ON MERE CHA NGE OF OPINION AND ON AUDIT OBJECTION ONLY. THE ASSESS EE DISCLOSED ALL THE PRIMARY FACTS BEFORE THE ASSESSIN G OFFICER AT ORIGINAL ASSESSMENT STAGE AND ALSO EXPLA INED THAT THERE IS NO RENT PAID MORE THAN RS. 1,20,000/- TO EACH PARTY. THEREFORE, PROVISIONS OF SECTION 194I WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. HE HAS SUBM ITTED THAT SINCE THE DOCUMENTS WERE LOST, THEREFORE, ASSE SSING OFFICER VERIFIED THIS FACT FROM THE CONCERNED POLIC E STATION. THE LD. COUNSEL FOR THE ASSESSEE, IN SUPP ORT OF THE CONTENTION, RELIED UPON SEVERAL DECISIONS, COPI ES OF WHICH ARE FILED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO VARIOUS REPLIES FILED BEF ORE ASSESSING OFFICER AND DETAILS SUBMITTED IN THE PAPE R BOOK IN SUPPORT OF THE CONTENTION THAT RE-OPENING OF THE ASSESSMENT IS WHOLLY UNJUSTIFIED IN THE MATTER AND ADDITION ON MERIT IS ALSO UNJUSTIFIED. 4(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS O F THE AUTHORITIES BELOW AND SUBMITTED THAT VOUCHERS W ERE STATED TO HAVE LOST WHICH WERE NOT PRODUCED BEFORE ASSESSING OFFICER. THEREFORE, THERE IS A FAILURE O N THE PART OF THE ASSESSEE TO PRODUCE ALL FACTS AND MATER IAL 5 TRULY AND CORRECTLY AT ASSESSMENT STAGE. HE HAS SUBMITTED THAT ON AUDIT OBJECTION, RE-OPENING OF TH E ASSESSMENT IS JUSTIFIED AND RELIED UPON DECISIONS O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS P.V.S. BEEDIES P.LTD. 237 ITR 13. HE HAS SUBMITTED THAT S INCE ASSESSEE DID NOT PRODUCE THE DETAILS, THEREFORE, IT COULD NOT BE VERIFIED THAT THE RENT PAID OF BOARD WERE LE SS THAN RS. 1,20,000/-. HE SUBMITTED THAT THERE IS NO CHANGE OF OPINION IN THIS CASE AND ASSESSEE FAILED TO DEDUCT TDS ON RENT PAID, THEREFORE, ADDITION ON MER IT IS ALSO JUSTIFIED. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L ON RECORD. THE VALIDITY OF RE-OPENING OF THE ASSES SMENT SHALL HAVE TO BE TESTED ON THE BASIS OF THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT. THE COP Y OF REASONS RECORDED UNDER SECTION 147 OF THE INCOME TA X ACT DATED 28.02.2012 HAVE BEEN FILED AT PAGE 33 OF THE PAPER BOOK WHICH READS AS UNDER : SHRI DHARMINDER SHARMA, C/O M/S GYPSY ADV. CO., ALFA TOWER, LUDHIANA ASSTT. YEAR 2007-2008 PAN; AEBPS2044B REASONS U/S 147 OF THE INCOME TAX ACT IN THIS CASE ASSESSMENT FOR THE A.Y. 2007-08 WAS CO MPLETED U/S 143(3) ON 29.12.2007 AT TOTAL INCOME OF RS. 8,09,510/-. PERUS AL OF THE ASSESSMENT RECORD REVEALS THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 2,07,43,177/- IN P&L A/C ON ACCOUNT OF 'RENT OF BOARDS'. THE PAYMENT FAL LS IN THE PROVISO OF SECTION 194-1 OF THE INCOME TAX ACT, 1961 AND THE ASSESSEE WAS REQUIRED TO DEDUCT TDS ON THE SAME AND DEPOSIT INTO GOVT A/C. HOWEVER, HE HAS NOT DEDUCTED TAX 6 AT SOURCE AS REQUIRED. ACCORDINGLY, THE AMOUNT OF R S. 2,07,43,177/- WAS LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE INCOME TAX AC T, 1961. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER OMITTED TO EXAMIN E THE EXPENDITURE OF RS.2,07,43,177/- W.R.T. SECTION 194-I READ WITH SEC TION 40(A)(IA) OF THE INCOME TAX ACT, 1961, ON ACCOUNT OF RENT OF BOARDS WHICH OUGHT TO HAVE BEEN DISALLOWED AS NO TDS WAS DEDUCTED BY THE ASSESSEE, AS ABOVE. IN VIEW OF THE ABOVE DISCUSSED FACT, I HAVE REASO N TO BELIEF THAT THE INCOME OF RS.2,07,43,177/- AS DISCUSSED ABOVE, HAS ESCAPED ASSESSMENT. SD/- DCIT-II (H.S.DHILLON) DY. COMMISSIONER OF INCOME-TAX DATED : 28.02.2012 CIRCLE-II, LUDHIANA. 5(I) PB-26 IS THE ORIGINAL ASSESSMENT ORDER DATED 12.10.2009 UNDER SECTION 143(3) OF THE INCOME TAX A CT. THE ASSESSING OFFICER EXAMINED THE DETAILS PRODUCED BEFORE HIM. THE ASSESSING OFFICER ALSO NOTED IN TH E ASSESSMENT ORDER THAT ASSESSEE IS ENGAGED IN BUSINE SS OF ADVERTISING. OUT OF TOTAL RECEIPTS OF RS.2.32 C R, RENT OF BOARD HAS BEEN CLAIMED TO HAVE BEEN PAID AT RS. 2.07 CR. THE ASSESSEE WAS REQUIRED TO JUSTIFY THESE EXPENDITURES. THE ASSESSING OFFICER ALSO NOTED IN THE ASSESSMENT ORDER THAT ASSESSEE HAS BEEN MAINTAINING BOOKS OF ACCOUNT ON DAY-TODAY BASIS AND ACCORDINGLY , NO ADVERSE INFERENCE MAY BE DRAWN. THE ASSESSING OFFI CER, AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, NOTED THAT THE RECEIPTS OBTAINED ON ACCOUNT OF PAYMENT HA VE NOT BEEN PRODUCED BECAUSE SAME WERE LOST, THEREFORE , EXPENDITURE ON ACCOUNT OF RENT OF BOARD WAS DISALLO WED IN A SUM OF RS. 1 LAC. THE ASSESSING OFFICER ALSO 7 VERIFIED THIS FACT OF LOSS OF THE DOCUMENTS FROM TH E SHO CONCERNED BY WRITING A LETTER DATED 05.10.2009, COP Y OF WHICH IS FILED AT PAGE 24 OF THE PAPER BOOK. THE ASSESSING OFFICER, THEREFORE, CONSIDERED THE ISSUE OF EARNING OF RENT BY ASSESSEE AND RENT PAID OF BOARDS AT ORIGINAL ASSESSMENT STAGE. 5(II) PB-2 IS AUDIT REPORT IN WHICH ASSESSEE EXPLAI NED TO HAVE BEEN IN THE BUSINESS AND PROFESSION OF ADVERTISEMENT (HOARDINGS). PB-10 IS INCOME & EXPENDITURE ACCOUNT FOR YEAR UNDER CONSIDERATION SHOWING THE RENT RECEIVED AND RENT PAID OF BOARDS. PB-12 TO 16 ARE VARIOUS REPLIES FILED BEFORE ASSESS ING OFFICER AT ORIGINAL ASSESSMENT STAGE EXPLAINING THE SAME FACTS THAT SOURCE OF INCOME OF ASSESSEE IS ON ACCOU NT OF BUSINESS OF ADVERTISING AND MARKETING AND ASSESSEE CONFIRMED THAT HE HAS NOT MADE ANY SUCH PAYMENT EXCEEDING RS. 20,000/- IN EACH CASE WHICH COULD BE VERIFIED FROM THE BOOKS OF ACCOUNT. IT WAS ALSO EXPLAINED THAT EXPENDITURE IS NOT EXCESSIVE ON ACCO UNT OF RENT OF BOARD AS COMPARED TO EARLIER YEARS. IT WAS ALSO EXPLAINED THAT HOARDINGS WERE ARRANGED FOR VAR IOUS CLIENTS AT VARIOUS SITES AND HOARDINGS WERE ALLOTTE D TO THE CLIENTS ON AGREED CHARGES. THE ASSESSEE ALSO EXPLAINED THE MODUS-OPERANDI OF THE BUSINESS OF ADVERTISING AS TO HOW THE RENT IS RECEIVED AND RENT PAID FOR THE HOARDINGS. PB-17 TO 21 IS THE COMPLETE DET AILS IN THE LEDGER ACCOUNT OF ASSESSEE ON ACCOUNT OF REN T OF 8 BOARD ACCOUNT WHICH SHOWS THAT THE RENT PAID ON BOA RD TO EACH PARTY WAS LESS THAN RS. 1,20,000/-. THE LD . COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PB-22 TO SHOW THAT THE RENT PAID TO EACH PARTY WAS LESS THAN RS. 1,20,000/-. PB-29 IS THE AUDIT OBJECTION IN WHICH AUDIT PARTY HAS POINTED OUT TO THE ASSESSING OFFICER THAT ON THE PAYMENT OF RENT OF BOARD OF RS. 2,07 CR, ASSESS EE DID NOT DEDUCT TAX AT SOURCE, THEREFORE, SAME SHOUL D HAVE BEEN DISALLOWED UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT. PB-32 IS REPLY OF THE ASSESSEE TO THE AUDIT OBJECTION IN WHICH ASSESSEE SIMILARLY EXPLAIN ED THAT THIS POINT IS CONSIDERED BY THE ASSESSING OFFI CER AT ASSESSMENT STAGE AND SINGLE PAYMENT TO ANY INDIVIDU AL DOES NOT EXCEED RS.1,20,000/-. THEREFORE, SECTION 1 94I WOULD NOT APPLY IN THE CASE OF ASSESSEE. THE FIRST PROVISO TO SECTION 147 OF THE INCOME TAX ACT PROVID ES AS UNDER : 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 SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEAR 92 , UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECT ION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SE CTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATER IAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: 9 6. CONSIDERING THE FACTS OF THE CASE, IT IS CLEAR T HAT IN THIS CASE, ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3) HAS BEEN PASSED AND ACTION UNDER SECTION 148 HAVE BEEN TAKEN AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFF ICER, HOWEVER, IN THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT, HAS NOT MENTIONED THAT ESCAPEMENT OF CHARGEABLE INCOME FROM TAX WAS DUE TO FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. SECTI ON 194I OF THE INCOME TAX ACT ALSO PROVIDES THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION WHERE TH E AMOUNT OF SUCH INCOME OR AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FI NANCIAL YEAR BY THE AFORESAID PERSON TO THE ACCOUNT OF OR T O THE PAYEE DOES NOT EXCEED RS. ONE HUNDRED AND TWENTY THOUSAND RUPEES. THE ASSESSEE IN THIS CASE HAS EXPLAINED BEFORE ASSESSING OFFICER AT ASSESSMENT ST AGE THAT EACH PAYMENT DOES NOT EXCEED RS.1,20,000/- EAC H PARTY. THUS, THE ASSESSEE DISCLOSED ALL THE PRIMAR Y FACTS AT ASSESSMENT STAGE BEFORE ASSESSING OFFICER AND ASSESSING OFFICER AFTER EXAMINING THE SAME, WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THAT PROVISIONS OF SECTION 194I OF THE INCOME TAX ACT WO ULD NOT APPLY TO THE CASE OF THE ASSESSEE. IT IS WELL SETTLED LAW THAT MERE CHANGE OF OPINION OF THE ASSESSING OF FICER CANNOT BE A GROUND FOR RE-ASSESSMENT AND THAT 10 AMENDMENT OF SECTION 147 W.E.F. 01.04.1989 HAS NOT ALTERED THE POSITION. WE RELY UPON DECISION OF HON 'BLE FULL BENCH OF DELHI HIGH COURT IN THE CASE OF KELVI NATOR OF INDIA LTD. 256 ITR 1 WHICH IS CONFIRMED BY HON'B LE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA 32 0 ITR 561. WE ALSO RELY UPON DECISION OF THE GUJRAT HIGH COURT IN THE CASE OF GARDEN SILK MILLS PVT. LTD. 23 7 ITR 668. HON'BLE SUPREME COURT IN THE CASE OF INDIAN O IL CORPORATION 159 ITR 956 HELD THAT, NO CASE UNDER SECTION 148 IS MADE OUT WHEN THE FACTS WERE KNOWN A LL ALONG WITH TO THE REVENUE WHILE MAKING THE ORIGINAL ASSESSMENT. HON'BLE SUPREME COURT IN THE CASE OF ASSOCIATED STONE INDUSTRY LTD. 224 ITR 560 HELD THA T, ASSESSEE SHALL HAVE TO DISCLOSE ONLY THE PRIMARY F ACTS. 7. HON'BLE MADRAS HIGH COURT IN THE CASE OF SRI SAKTHI TEXTILES LTD. V JCIT 340 ITR 144 HELD AS UND ER : (III) THAT THE NOTICES IN RESPECT OF ASSESSMENT YE ARS 1991-92 AND 1992-93 WERE ISSUED AFTER FOUR YEARS. THERE WAS NO MENTION IN THE RECORDED REASONS THAT T HE ESCAPEMENT OF CHARGEABLE INCOME FROM TAX WAS DUE TO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. THE NOTICES IN RESPECT OF THE ASSESSME NT YEARS 1991-92 AND 1992-93 ISSUED UNDER SECTION 148 READ WITH SECTION 147 OF THE ACT WERE WHOLLY WITHOU T JURISDICTION AND, THEREFORE, THEY WERE LIABLE TO BE QUASHED. 11 7(I) HON'BLE BOMBAY HIGH COURT IN THE CASE OF TITAN OR COMPONENTS LTD. VS ACIT 343 ITR 183 HELD AS UNDER : WHERE A REASSESSMENT IS SOUGHT TO BE MADE AFTER FO UR YEARS THE POWER CONFERRED BY SECTION 147 OF THE INCOME-TAX ACT, 1961, DOES NOT PROVIDE AFRESH OPPORTUNITY TO THE ASSESSIN G OFFICER TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNLESS THE M ISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILUR E OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIALS FACTS NECESSARY FOR ASSESSMENT. THERE IS A DIFFERENCE BET WEEN A WRONG CLAIM MADE BY AN ASSESSEE AFTER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE AS SESSEE BY WITHHOLDING THE MATERIAL FACTS 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 OFFICER H AD NOT RECORDED THE FAILURE ON THE PART OF THE PETITIONER T O FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT YEAR 1997-98. WHAT WAS RECORDED WAS THAT THE PETITION ER HAD WRONGLY CLAIMED CERTAIN DEDUCTIONS WHICH HE WAS NOT ENTITLED TO. THE REASSESSMENT PROCEEDINGS INITIATED IN THE YEAR 2004 WERE NOT VALID. 7(II) HON'BLE CALCUTTA HIGH COURT IN THE CASE OF DEBASHIS MOULIK VS ACIT 370 ITR 660 HELD AS UNDER : HELD ACCORDINGLY, ALLOWING THE PETITION, (I) THAT DURI NG THE PROCEEDINGS FOR SECTION 143(3) ASSESSMENT, ALL INFO RMATION, DOCUMENTS AND OTHER RECORDS RELATING TO THE ASSESSE E FOR THE RELEVANT ASSESSMENT YEAR WERE BEFORE THE ASSESSING OFFICER. THE REASONS WHICH WERE ADVANCED SHOWED DISCOVERY OF NEW FACTS FROM THE EXISTING RECORDS. SO THE ASSESSING O FFICER WANTED TO CHANGE HIS OPINION REGARDING THE ASSESSME NT AND TO REOPEN IT. THEREFORE, IT COULD NOT BE SAID THAT THERE WAS 12 ESCAPEMENT OF INCOME OR THAT THERE WERE REASONS FOR BELIEVING THAT THERE WAS ESCAPEMENT OF INCOME. 7(III) HON'BLE DELHI HIGH COURT IN THE CASE OF TECH MAN BUILDWELL P. LTD. V ACIT 370 ITR 771 HELD AS UNDER : HELD, ALLOWING THE PETITION, THAT THE 'REASONS TO BELIEVE' NOWHERE HIGHLIGHTED WHAT, IF AT ALL, WAS THE MATERIA L WHICH THE ASSESSING OFFICER CAME UPON OR BECAME AWARE OF SUBSEQUENT TO THE ORIGINAL ASSESSMENT. IN OTHER WORDS , WHAT TRIGGERED THE ASSESSING OFFICER'S CURIOSITY TO IMPEL HIM TO RE- EXAMINE THE FILES AND DOCUMENTS PERTAINING TO A COMP LETED ASSESSMENT WAS UNKNOWN. NOR DID THE MATERIALS PLACED IN THE ASSESSMENT SHOW THAT THE ASSESSEE HAD UNJUSTIFIABLY SUPPRESSED VALID OR RELEVANT INFORMATION WHICH WAS OTHERWISE AVAILABLE. THE ADVERTENCE TO THE DISALLOWAN CE OF A PROVISION FOR EN UNASCERTAINED LIABILITY POINTS TO THE ASSESSING OFFICER INDULGING IN WHAT AMOUNTED TO NOTHING BUT A MASKED REVIEW. WHAT APPEARED TO HAVE EXCITED THE ASSESSING OFFICER'S MIND WAS THAT THE ORIGINAL ASSESS MENT ORDER WAS NOT FRAMED PROPERLY AS IT OVERLOOKED CERTAI N MATERIALS WHICH LED TO LOSS OF REVENUE. THE ASSESSIN G OFFICER IN THE FIRST INSTANCE DID NOT PERFORM HIS JOB PROPE RLY FOR WHICH THE ASSESSEE COULD NOT BE FAULTED. THE ASSESSING OF FICERS OMISSION WAS THE SOLE BASIS FOR ISSUING THE REASSESS MENT NOTICE AND, CONSEQUENTLY, PROCEEDING TO MAKE THE DEM AND. THEREFORE, THE NOTICE AND THE DEMANDS ARISING CONSEQU ENT TO THE NOTICE WERE QUASHED. 7(IV) HON'BLE DELHI HIGH COURT IN THE CASE OF ROSE SERVICED APARTMENTS PVT. LTD. VS DCIT 348 ITR 452 H ELD AS UNDER : HELD, ALLOWING THE PETITION, THAT IT WAS CLEAR FROM THE CORRESPONDENCE EXCHANGED, THE QUESTIONNAIRE RAISED A ND THE ANSWERS GIVEN BY THE ASSESSEE THAT THE QUESTION OF INTEREST 13 RECEIVED AS WELL AS THE CHARGE HAD BEEN SPECIFICALL Y EXAMINED BY THE ASSESSING OFFICER BEFORE PASSING OF THE ORIG INAL ASSESSMENT ORDER. THIS QUESTION HAD NOT ESCAPED THE NOTICE OF THE ASSESSING OFFICER. HE HAD RAISED THE ISSUE AND APPLIED HIS MIND. HE HAD ACCEPTED THE ASSESSEE'S CONTENTION. TH E COURT NEED NOT EXAMINE WHETHER THE ORIGINAL DECISION OF T HE ASSESSING OFFICER WAS CORRECT OR INCORRECT. AN INCOR RECT DECISION BY AN ASSESSING OFFICER DOES NOT CONFER JU RISDICTION TO REOPEN THE ASSESSMENT EVEN AFTER THE AMENDMENT OF S ECTION 147/148. FURTHER, THERE WAS ALSO NO ALLEGATION THAT THERE WAS FAULT OR FAILURE ON THE PART OF THE ASSESSEE TO DIS CLOSE TRUE AND FULL FACTS. THE NOTICE OF REASSESSMENT HAVING BEEN IS SUED AFTER THE END OF FOUR YEARS FROM THE END OF THE ASSESSMEN T YEAR THE FIRST PROVISO TO SECTION 147 APPLIED. THUS, THE REAS SESSMENT PROCEEDINGS COULD NOT BE INITIATED. THE ARGUMENT TH AT THE COURT OUGHT NOT TO INVESTIGATE THE EXISTENCE OF ONE OF TH ESE CONDITIONS, VIZ., THAT THE INCOME-TAX OFFICER HAS R EASON TO BELIEVE THAT UNDERASSESSMENT HAS RESULTED FROM NON- DISCLOSURE OF MATERIAL FACTS, COULD NOT, THEREFORE, BE ACCEPTED. THE COURT DID NOT EXAMINE THE CONTENTION RELATING T O THE AUDIT OBJECTION, EFFECT THEREOF AND THE NON-APPLICATION OF MIND BY THE ASSESSING OFFICER. THE QUESTION WAS LEFT OPEN. 7(V) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS ATUL UMAR S WAMI 362 ITR 693 HELD AS UNDER : A VALID REOPENING OF ASSESSMENT HAS TO BE BASE D ONLY ON TANGIBLE MATERIAL TO JUSTIFY THE CONCLUSION THAT TH ERE IS ESCAPEMENT OF INCOME. HELD ACCORDINGLY, DISMISSING THE APPEAL, THAT THE NOTE FORMING PART OF THE RETURN FILED FOR THE ASSESSMENT YEAR 1999- 2000 CLEARLY MENTIONED AND DESCRIBED THE NATURE OF T HE RECEIPT UNDER A NON-COMPETE AGREEMENT. THE REASONS/OR THE NO TICE UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961, NOWHERE ME NTIONED THAT THE REVENUE CAME UP WITH ANY OTHER FRESH MATER IAL WARRANT- 14 ING REOPENING OF ASSESSMENT. THEREFORE, MERE CONCLU SION OF THE PROCEEDINGS UNDER SECTION 143(1) IPSO FACTO DID NOT PERMIT INVOCATION OF POWERS FOR REOPENING THE ASSESSMENT . 7(VI) HON'BLE GUJRAT HIGH COURT IN THE CASE OF SHRE E RAM BUILDERS VS ACIT 377 ITR 631 HELD AS UNDER : REASSESSMENT PROCEEDINGS INITIATED MERELY AND SOLEL Y AT THE INSTANCE OF THE AUDIT PARTY ARE NOT VALID. HELD , THAT WHEN THE ASSESSING OFFICER TRIED TO JUSTIFY TH E ASSESSMENT ORDER AND REQUESTED THE AUDIT PARTY TO D ROP THE OBJECTIONS AND THERE WAS NO INDEPENDENT APPLICATION O F MIND BY THE ASSESSING OFFICER WITH RESPECT TO THE SUBJEC TIVE SATISFACTION FOR INITIATION OF THE REASSESSMENT PROCE EDINGS, THE REASSESSMENT PROCEEDINGS COULD NOT BE SUSTAINED 7(VII) HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS VARDHMAN INDUSTRIES 363 ITR 625 HELD AS UNDER : THE ESSENTIAL AND INVIOLABLE CONDITION PRECEDENT FO R REASSESSMENT IS THE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SUCH A REASON HAS TO BE ESSENTIALLY TRACEABLE TO DISCOVERIES AND SATISFACTI ON FROM NEW AND HITHERTO UNEXPLORED SOURCES AND MATERIALS AND N OT TO A VIEW OF THE ASSESSING OFFICER DIFFERENTIALLY ORIENTED ON THE BASIS OF THE SAME INPUTS, ONCE CONSIDERED AND APPLIED. HELD ACCORDINGLY , THAT A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER MADE IT ABUNDANTLY CLEAR THAT THE ASSESSING O FFICER HAD NOT ONLY REFERRED TO THE DOCUMENTS AND RECORDS FOUN D IN COURSE OF THE SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT, 1961, FROM THE BUSINESS AND OFFICE PREMISES OF THE ASSESS EE BUT ALSO THOSE WERE TEST CHECKED AND EVALUATED IN UNDERTAKIN G THAT EXERCISE. THE ENDEAVOUR ON THE PART OF THE ASSESSI NG OFFICER TO INITIATE A RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF THE ACT ON THE PURPORTED GROUND THAT THE SAME 15 RECORDS/DOCUMENTS DISCLOSED THAT THE AMOUNT OF RS. 33,72,583/- HAD ESCAPED AT WAS UNCONVINCING AND UNT ENABLE AS WELL. THE NOTICE OF RE-ASSESSMENT WAS NOT VALID AS IT WAS BASED ON MERE CHANGE OF OPINION OF THE ASSESSING OF FICER. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND MATERIAL ON RECORD, IT IS CLEAR THAT ALL M ATERIAL FACTS WITH REGARD TO RENT RECEIVED AND RENT PAID OF BOARD FOR ADVERTISEMENT BUSINESS WERE DISCLOSED BY ASSESS EE IN THE RETURN OF INCOME AS WELL AS AT ASSESSMENT ST AGE. THE ASSESSING OFFICER EXAMINED THE ISSUE AT ASSESSM ENT STAGE THUS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT MERELY ON CHANGE OF OPINION ON THE BASIS OF ALL THE FACTS AND MATERIAL ALREADY AVAILABLE ON REC ORD. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSING OFFICER MERELY ON AUDIT OBJECTION, REOPENED THE ASSESSMENT. THE ASSESSMENT IS REOPENED FOR MISTAKE/OMISSION OF THE ASSESSING OFFICER ALLEGED T O HAVE BEEN COMMITTED AT THE ORIGINAL ASSESSMENT STAG E WHICH WAS THE SOLE BASIS FOR RE-OPENING OF THE ASSESSMENT. THE MATERIAL ON RECORD CLEARLY SUPPORT THE SUBMISSION OF ASSESSEE THAT RENT PAID WAS BELOW RS.1,20,000/- THEREFORE, PROVISIONS OF SECTION 194I OF THE INCOME TAX ACT MAY NOT ATTRACT IN THE CASE OF T HE ASSESSEE. 16 9. THE LD. DR, HOWEVER, RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF P.V.S. BEEDIES PVT. LTD. (SUPRA) IN WHICH THE FACTS ARE CLEARLY DISTINGUISHABLE. IN THIS CASE, ASSESSING OFFICER G RANTED DEDUCTION UNDER SECTION 80G OF THE INCOME TAX ACT O N ACCOUNT OF DONATION TO CHARITABLE TRUST. IT WAS PO INTED OUT BY THE AUDIT PARTY THAT RECOGNITION WHICH HAD B EEN GRANTED TO CHARITABLE TRUST HAD ALREADY EXPIRED AND THEREFORE, ASSESSEE TRUST DID NOT QUALIFY FOR DEDUC TION UNDER SECTION 80G OF THE INCOME TAX ACT. ON SUCH BASIS, IT WAS FOUND THAT INTERNAL AUDIT PARTY HAD M ERELY POINTED OUT A FACT WHICH HAVE BEEN OVER-LOOKED BY T HE ITO. THIS DECISION WOULD NOT SUPPORT THE CASE OF T HE REVENUE. 10. CONSIDERING THE FACTS, CIRCUMSTANCES AND ABOVE DISCUSSION, WE ARE OF THE VIEW THAT RE-OPENING OF T HE ASSESSMENT IS DONE IN THIS CASE ON MERE CHANGE OF OPINION AND SOLELY ON AUDIT OBJECTION WITHOUT POINT ING OUT ANY FACT THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT. THEREFORE, NO FAULT COULD BE FOUND WITH THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFF ICER, WAS, THEREFORE, NOT JUSTIFIED IN RE-OPENING THE ASSESSMENT. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND QUASH THE RE-OPENIN G OF THE ASSESSMENT UNDER SECTION 147/148 OF THE INCOME TAX ACT. RESULTANTLY, ALL ADDITIONS MADE IN THE RE - 17 ASSESSMENT ORDER OF DISALLOWANCE OF THE EXPENDITURE OF RS. 2.07 CR WOULD STAND DELETED. IN VIEW OF THE AB OVE, THERE IS NO NEED TO DECIDE THE ISSUE ON MERIT BECAU SE IT IS LEFT WITH ACADEMIC DISCUSSION ONLY. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVN ESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH MARCH,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD