M/s. Sahyagiri Constructions, Pune V. Assistant Commissioner of Income-tax ,

ITA 789/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0759 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Audit objection; Principle of natural justice; Tangible material; Difference of opinion; Commercial expediency; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 148

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.738/PN/2014 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE. . APPELLANT VS. M/S SAHYAGIRI CONSTRUCTIONS, 21, MATE HOUSE, SINDH HOUSING SOCIETY, BANER ROAD, PUNE 411 028. PAN : AAGFS8361N . RESPONDENT ITA NO.789/PN/2014 ASSESSMENT YEAR : 2004-05 M/S SAHYAGIRI CONSTRUCTIONS, 21, MATE HOUSE, SINDH HOUSING SOCIETY, BANER ROAD, PUNE 411 028. PAN : AAGFS8361N . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE. . RESPONDENT DEPARTMENT BY : SHRI P. S. NAIK ASSESSEE BY : SHRI PRAMOD SHINGTE / DATE OF HEARING : 09.12.2015 / DATE OF PRONOUNCEMENT: 17.12.2015 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSE SSEE ARE AGAINST THE ORDER OF CIT(A)-II, PUNE, DATED 31.12.2013 RELATING TO ASSESSMENT YEAR 2004-05 PASSED UNDER SECTION 143(3) R.W.S. 147 OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO.738/PN/2014 ITA NO.789/PN/2014 2. THE CROSS APPEALS FILED BY THE REVENUE AND THE A SSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.738/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN DELETING THE DISALLOWANCE OF INTEREST EXPENDITURE TO THE EXTENT OF THE INTEREST FREE ADVANCES OF RS.1,20,59,896/- GIVEN BY THE ASSESSEE TO M/S MATE CONSTRUCTIONS AND HEAVY MACHINERIES. 2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE TO M/S MATE CONSTRUCTION AND HEAVY MACHINERIES FULFILLED THE TEST OF COMMERCIAL EXPEDI ENCY. 3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF INTEREST EXPENDITURE CORRESPONDING TO THE INTEREST FREE ADVANCES WITHOUT APPRECIATING THAT THE FACT THAT THE ASSESSE E HAS INCURRED INTEREST EXPENDITURE OF RS.40,29,671/-. 4) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS OF APPEAL. 4. THE ASSESSEE IN ITA NO.789/PN/2014 HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN INITIATING THE REASS ESSMENT PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 FOR ISSUES WHICH ARE SETTLED I N THE ASSESSMENT AND ALL THE INFORMATION WERE AVAILABLE ON RECORD. THEREFORE INI TIATIONS OF PROCEEDINGS U/S 147 ARE BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN THE PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 ON THE BASIS OF AUDIT OBJECTIONS BY DISREGARDING TH E ASSESSEE'S CONTENTION IN THIS REGARD. THEREFORE SUCH INITIATIONS OF PROCEEDINGS A RE BAD IN LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT PASSING SPEAKING ORDER DEALING WITH ASSESSEE'S SPECIFIC OBJECTIONS. THEREFORE THE ACTION OF LEARNE D ASSESSING OFFICER OF PASSING THE FINAL ORDER IS BAD IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING DISALLOWANCE ON ACCOUNT OF INTEREST ON ADVANCES GIVEN TO SISTER CONCERN BY DISREGARDING AS SESSEE'S SUBMISSION IN THIS REGARD AND YOUR APPELLANT SEEKS COMPLETE RELIEF ON ACCOUNT OF THESE ADDITIONS. 3 ITA NO.738/PN/2014 ITA NO.789/PN/2014 THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODI FY, DELETE ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING, IN THE INTEREST O F NATURAL JUSTICE. 5. SINCE, THE ASSESSEE HAS RAISED THE JURISDICTIONA L ISSUE IN ITS APPEAL, WHICH GOES TO THE ROOT OF THE MATTER, WE SHALL FIRST TAKE -UP APPEAL OF THE ASSESSEE IN ITA NO.789/PN/2014. 6. BRIEFLY STATED, THE ASSESSEE IS A PARTNERSHIP FI RM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND UNDERTAKING GOVERNMENT CO NTRACTS. THE RETURN OF INCOME, FOR THE YEAR UNDER CONSIDERATION, WAS FILED ON 28.10.2004 DECLARING TOTAL INCOME OF RS.15,68,430/-. THE CASE WAS SELEC TED UNDER SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 13.11.2006 DETERMINING THE TOTAL INCOME AT RS.16,43,430/-. TH EREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUE OF NOTICE DATED 30.0 3.2011 UNDER SECTION 148 OF THE ACT WHICH WAS DULY SERVED ON THE ASSESSEE ON 31.03.2011. 7. THE CASE WAS REOPENED AFTER RECORDING SATISFACTI ON FOR ESCAPEMENT OF INCOME. THE RELEVANT REASONS RECORDED UNDER SECTIO N 148(2) OF THE ACT AS SUPPLIED TO THE ASSESSEE IS REPRODUCED AS UNDER :- THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2 004-05 DECLARING TOTAL INCOME AT RS.15,68,430/-. ASSESSMENT U/S 143(3) WAS COMPLETE D ON 13/11/2006 COMPUTING TOTAL INCOME AT RS.16,43,430/-. 02. ON VERIFICATION, IT HAS BEEN OBSERVED THAT THE ASSESSEE HAS PAID RS.40,29,671/- TOWARDS INTEREST TO SUVARNA SAHAKARI BANK ON BORROWING OF RS.2,09,56,433/-. FURTHER, IT WAS OBSERVED THAT TH E ASSESSEE HAD ADVANCED INTEREST FREE LOANS TO THE FOLLOWING CONCERNS:- A) MATE CONSTRUCTIONS & HEAVY MACHINERIES - RS.1,2 0,59,896.83/- B) R. R. MATE - RS. 14,62,640.83/- C) PRAKASH S MATE - RS. 8,05,135.00/- D) R. S. MATE (HUF) - RS. 3,93,904.00/- E) A. R. MATE - RS. 8,32,035.11/- F) PRABHAKAR MATE - RS. 4,32,937.00/- G) MRS. V. S. PATIL - RS. 33,97,982.28/- - RS.1,97,84,531.05/- 3. IT IS APPARENT THAT THE INTEREST RECEIVABLE ON T HE AMOUNT OF RS.1,97,84,931.05/- WAS NOT DISALLOWED AND DEDUCTED FROM THE INTEREST PAYMENT OF RS.40,29,671/-. THE ASSESSEE HAS FAILED TO BRING O N RECORD ANY DOCUMENT WHICH WOULD PROVE THAT THERE IS ANY COMMERCIAL EXPEDIENCY TO ADVANCE INTEREST FREE LOANS TO CONCERNS MENTIONED ABOVE. THIS IS A FAILURE ON PART OF THE ASSESSEE WHICH RESULTED IN UNDER ASSESSMENT OF RS.35,61,216/-. 4 ITA NO.738/PN/2014 ITA NO.789/PN/2014 4. I HAVE, THEREFORE, REASON TO BELIEVE THAT THE IN COME TO THE EXTENT OF RS.35,61,216/- HAS ESCAPED ASSESSMENT WITHIN THE ME ANING OF SECTION 147(A) OF THE IT ACT, 1961. THEREFORE, NOTICE U/S 148 OF THE ACT IS REQUIRED TO BE ISSUED AND FRESH ASSESSMENT IS TO BE MADE U/S 143(3) R.W.S. 147 OF T HE I.T. ACT, 1961. 8. IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE A CT, THE ASSESSEE FILED RETURN OF INCOME VIDE LETTER DATED 06.04.2011. THE ASSESSEE ALSO FILED WRITTEN SUBMISSION GIVING OBJECTIONS FOR INITIATION OF PROC EEDINGS UNDER SECTION 148 OF THE ACT. HOWEVER, IT APPEARS THAT NO COMMUNICATION HAS BEEN MADE BY THE ASSESSING OFFICER TO THE ASSESSEE TOWARDS DISPOSAL OF THE OBJECTIONS ADVANCED. HOWEVER, REFERENCE TO THE OBJECTIONS RAISED WERE GI VEN IN THE RE-ASSESSMENT ORDER DATED 24.11.2011 AND CURSORY DISPOSAL OF THE SAME WAS MADE BY SIMPLY STATING THAT THE SATISFACTION WAS DULY RECORDED FOR ESCAPEMENT OF INCOME. NO OTHER AVERMENTS WERE MADE IN RESPONSE TO THE OBJECT IONS OF THE ASSESSEE. ON MERITS, THE ASSESSING OFFICER HELD THAT INTEREST-FR EE LOANS WERE GIVEN TO THE RELATED PARTIES WHICH WERE OUTSIDE THE SCOPE OF NOR MAL BUSINESS RELATION. THE ADVANCES SO GIVEN TO THE RELATED PARTIES AS NOTED I N THE RECORDED REASONS ARE LACKING COMMERCIAL EXPEDIENCY. THE ASSESSING OFFIC ER OBSERVED THAT ASSESSEE HAD PAID INTEREST OF RS.40,29,671/- TOWARDS INTERES T BEARING LOANS BORROWED FROM SUVARNA SAHAKARI BANK OF RS.2,09,56,433/-. TH E TOTAL OUTSTANDING INTEREST-FREE ADVANCES AS ON 31.03.2004 TOWARDS VAR IOUS RELATED PARTIES IS RS.1,97,84,531/-. THEREFORE, THE INTEREST BEARING LOANS BORROWED CANNOT BE REGARDED AS UTILIZED FOR THE BUSINESS OF THE ASSESS EE. ACCORDINGLY, HE DISALLOWED INTEREST TO THE EXTENT OF RS.35,61,216/- CORRESPONDING TO IMPUGNED INTEREST-FREE ADVANCES AND ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. 9. IN FIRST APPEAL, THE CIT(A) REJECTED THE LEGAL O BJECTION THAT THE ASSESSING OFFICER WAS NOT EMPOWERED TO INVOKE SECTION 147/148 OF THE ACT AND ASSUMED JURISDICTION. THE CIT(A) OBSERVED THAT THE ASSESSE E HAD MERELY SHOWN THE ADVANCES GIVEN BUT NOT DISCLOSED THE FACT OF INTERE ST NOT BEING CHARGED ON THESE ADVANCES. THUS, IT WAS NOT A FULL AND TRUE DISCLOS URE OF THE MATERIAL FACTS. THE RELEVANT PARAS OF THE CIT(A) ORDER CONCERNING THE I SSUE IS REPRODUCED AS UNDER :- 5 ITA NO.738/PN/2014 ITA NO.789/PN/2014 3.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE APPELLANT HAS RAISED FOUR GROUNDS OF APPEAL AND IN THE GROUNDS OF APPEAL NO. 1, 2 AND 3 HAS RAISED THE CON TENTION REGARDING INITIATION OF PROCEEDING U/S 147 ON THE BASIS OF AUDIT OBJECTIONS BY DISREGARDING THE APPELLANT'S CONTENTION, WHICH WERE BAD AB-INITIO AND BAD IN LAW . IT IS FURTHER CONTENDED THAT THE AO. HAD ERRED IN NOT PASSING SPEAKING ORDER DEALING WITH THE ASSESSEE'S SPECIFIC OBJECTIONS, THEREFORE, THE ACTION OF THE A.O. IN PA SSING THE FINAL ORDER WAS BAD IN LAW. THE ASSESSEE FILED THE RETURN OF INCOME FOR A. Y. 2004-05 ON 28.10.2004 DECLARING TOTAL INCOME OF RS. 15,68,430/- AND THE A SSESSMENT U/S 143(3) WAS COMPLETED ON 13.11.2006 AT A TOTAL INCOME OF RS. 16 ,43,430/-. THE ASSESSING OFFICER ISSUED THE NOTICE U/S 148 DATED 30.03.2011 AND THE SAME WAS DULY SERVED ON 31.03.2011. THE ASSESSING OFFICER RESORTED TO THE R EOPENING OF THE ASSESSMENT AFTER RECORDING THE SATISFACTION FOR ESCAPEMENT OF INCOME WHICH HAS ALSO BEEN REPRODUCED IN PARA 1 OF THE ORDER. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD PAID INTEREST AMOUNTING RS. 40,29,671/- TOWARDS THE BORR OWING OF RS. 2,09,56,433/- FROM SUVARNA SAHAKARI BANK, HOWEVER, A TOTAL AMOUNT OF R S. 1,97,84,531/- WAS ADVANCED INTEREST-FREE TO VARIOUS RELATED CONCERNS. THE ASSE SSING OFFICER THUS HELD THAT THE INTEREST RECEIVABLE ON THE AFORESAID AMOUNT OUGHT T O HAVE BEEN DEDUCTED FROM THE INTEREST PAYMENT CLAIMED BY THE ASSESSEE AND AS THE ASSESSEE HAD FAILED TO BRING ON RECORD ANY SUCH DOCUMENT TO PROVE THAT COMMERCIAL E XPEDIENCY TO ADVANCE INTEREST- FREE LOANS, THERE WAS FAILURE ON THE PART OF THE AS SESSEE WHICH RESULTED IN UNDERASSESSMENT OF RS. 35,61,216/-. IN RESPONSE TO THE NOTICE U/S 148 THE APPELLANT FILED THE RETURN OF INCOME VIDE LETTER DATED 06.04. 2011. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE DATED 21.09.2011 SEEKING THE EXPLANATION OF THE APPELLANT REGARDING DISALLOWANCE OF INTEREST ON MON EY ADVANCED INTEREST-FREE TO RELATED PERSONS. THE APPELLANT OBJECTED TO THE INIT IATION OF PROCEEDINGS U/S 148 VIDE LETTER DATED 03.10.2011. THE ASSESSING OFFICER BEFO RE PASSING THE ORDER AND TAKING UP THE MATTER ON MERITS OF THE CASE FIRSTLY PROVIDE D THE APPELLANT WITH THE COPIES OF THE REASONS RECORDED AND ALSO DEALT WITH THE OBJECT IONS RAISED BY THE APPELLANT. THUS, ONCE REASSESSMENT PROCEEDINGS ARE VALIDLY STA RTED ALL THE STEPS THAT ARE NECESSARY FOR COMPLETION OF ASSESSMENT WOULD BE APP LICABLE AND WHICH HAS BEEN FOLLOWED BY THE ASSESSING OFFICER. THE APPELLANT'S CONTENTION THUS IN THIS REGARD IS NOT FOUND TO BE TENABLE. 3.3 THE APPELLANT DURING THE APPELLATE PROCEEDINGS HAS CONTENDED THAT THE PROVISO TO SECTION 147 CATEGORICALLY MENTIONS THE S ITUATION THAT ACTION UNDER THIS SECTION CANNOT BE TAKEN AFTER THE EXPIRY OF 4 YEARS UNLESS THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE APPELLANT HAS FURTHER STATED THAT T HE COMPLETE DETAILS OF FINANCIAL STATEMENTS INCLUDING THE BALANCES OF OUTSTANDING LO ANS ADVANCED TO SISTER CONCERNS, INTEREST CHARGED TO THE PROFIT & LOSS ACCOUNT WERE REFLECTED IN THE SAID STATEMENTS. THE APPELLANT FURTHER ADDS THAT DURING THE COURSE O F REGULAR SCRUTINY ASSESSMENT FROM THE DETAILS FURNISHED NO NEGATIVE INFERENCE HA S BEEN TAKEN AND AS THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE FOR NOT DISCLOS ING FULLY AND TRULY ALL MATERIAL FACTS RATHER ALL THE FACTS WERE AVAILABLE ON RECORD THE R EOPENING IS NOT VALID. THE APPELLANT HAS ALSO SUBMITTED THAT THE NOTICE U/S 14 8 WAS ISSUED ON THE BASIS OF AUDIT OBJECTION RAISED BY THE AUDIT PARTY AND THE ISSUE T AKEN UPON BY THEM WAS HIGHLY DEBATABLE CONSIDERING THE FACTS OF THE CASE AND SUC H A DEBATABLE ISSUE CANNOT BE TERMED AS INCOME ESCAPING ASSESSMENT, AT THE MOST I T CAN BE CALLED AS CHANGE OF OPINION MERELY BECAUSE THE SAID VIEW BENEFITS THE R EVENUE AND THE SAME CANNOT BE THE BASIS OF REOPENING OF THE ASSESSMENT. THE APPEL LANT HAS PLACED RELIANCE ON THE DECISION OF THE SUPREME COURT IN THE CASE OF INDIAN & EASTERN NEWSPAPER SOCIETY VS CIT (1979) 119 ITR 996 (SC) AND ALSO ON CIT VS K ELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC). THE APPELLANT HAS ALSO SUBMITTED THAT NONE OF THE ADVANCES GIVEN IS A LOAN TO SISTER CONCERN RATHER MOST OF THEM ARE OLD BALANCES ARISING EITHER AS BUSINESS ADVANCE OR RETIRED PARTNER'S CAPITAL ACCOU NT BALANCES AND WITH RESPECT TO THE ISSUE OF CHARGING INTEREST TO SISTER CONCERNS H AS PLACED RELIANCE ON THE DECISION 6 ITA NO.738/PN/2014 ITA NO.789/PN/2014 OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELI ANCE UTILITIES AND POWER LTD., 313 ITR 340 (BOM). IT HAS THUS BEEN CONTENDED THAT THE ACTION OF THE ASSESSING OFFICER TO REOPEN THE CASE MERELY ON CHANGE OF OPIN ION THAT TOO BASED ON OBJECTIONS BY AUDIT PARTY IS BAD IN LAW. 3.4 THE APPELLANT IN THE PRESENT CASE HAD NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS SO AS TO ATTRACT THE PROVISO TO SECTION 147. THE APPELLANT HAD ONLY SHOWN THE AMOUNT OF ADVANCES GIVEN BUT NOT DIS CLOSED THE FACT OF INTEREST NOT BEING CHARGED ON SUCH ADVANCES. THUS, IT WAS NO T A FULL AND TRUE DISCLOSURE OF MATERIAL FACTS. THE TERM FAILURE ON THE PART OF THE APPELLANT IS NOT RESTRICTED ONLY TO THE RETURN OR TAX AUDIT REPORT BUT ALSO COV ERS THE STAGE OF ASSESSMENT PROCEEDINGS AND THE OMISSION TO DISCLOSE MATERIAL F ACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONFERS JURISDICTION ON THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT AS HELD IN HONDA SIEL POWER PRODUCTS LTD . VS DCIT (2012) 340 ITR 53 (DEL) ALSO UPHELD BY THE SUPREME COURT IN 340 ITR 6 4 (SC). IN THE CASE OF I P PATEL & CO VS DCIT, 54 DTR 291 (GUJ) IT WAS HELD THAT THE RE IS NO REQUIREMENT IN LAW THAT IN THE REASONS, FAILURE OF THE ASSESSEE SHOULD BE EXPRESSLY STATED IN VIEW OF THE PROVISO TO SECTION 147. IF ON A READING OF THE REAS ONS, IT IS POSSIBLE TO INFER OR DRAW A LOGICAL INFERENCE THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT, THE REQUIREMENT OF THE PRO VISIONS STANDS SATISFIED. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INDIAN HUM E PIPE CO. LTD VS ACIT, 65 DTR 26 (BOM) HELD THAT THE ASSESSEE MUST ACT WITH C ANDOR AND THE DISCLOSURE MUST BE FULL AND TRUE. A FULL DISCLOSURE IS A DISCLOSURE OF ALL MATERIAL FACTS WHICH DOES NOT CONTAIN ANY HIDDEN MATERIAL OR SUPPRESSION OF FACT. THUS IN VIEW OF THE AFORESAID DECISION SOME VITAL INFORMATION IN THE FOOTNOTES OF THE LENGTHY ANNEXURE OF THE TAX AUDIT REPORT/ANNUAL REPORT OF THE COMPANY CANNOT BE REGARDED AS THE TRUE AND FULL DISCLOSURE BY THE APPELLANT COMPANY. THE FACTS BRO UGHT ON RECORD BY THE ASSESSING OFFICER DO NOT INDICATE THE APPELLANT TO HAVE MADE FULL AND TRUE DISCLOSURE AND, THEREFORE, THE REOPENING OF THE ASSESSMENT IS FOUND TO BE VALID AND THE CONTENTION RAISED BY THE APPELLANT IN THIS REGARD IS NOT TENAB LE ON FACTS AND UNDER LAW. 3.4.1 IT IS TRITE LAW THAT FOR DECIDING THE ISSUE RELATIN G TO REOPENING U/S 147, WHAT IS TO BE SEEN IS EXISTENCE OF REASONS GIV ING RISE TO ESCAPEMENT OF INCOME AND THEIR SUFFICIENCY. IN THIS CONNECTION IT IS PERTINENT TO MENTION THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF R AYMOND WOOLLEN MILLS LTD. VS ITO & OTHERS (1999) 236 ITR 34 (SC) IN WHICH IT WAS HELD THAT SUFFICIENCY OR CORRECTNESS OF MATERIAL FOR RECORDIN G OF REASONS FOR REOPENING OF ASSESSMENT CANNOT BE CONSIDERED AT THE STAGE OF REO PENING OF ASSESSMENT SINCE QUESTION OF FACTS AND LAW WERE LEFT OPENED TO BE INVESTIGATED AND DECIDED BY THE APPELLATE AUTHORITY. IN THIS CASE, FROM THE MAT ERIAL ON RECORD IT IS CLEAR THAT THERE WAS SUFFICIENT MATERIAL ON WHICH A REASONABLE BELIE F COULD BE FORMED REGARDING ESCAPEMENT OF ASSESSMENT. HOWEVER, AT THE TIME OF I SSUE OF NOTICE U/S 148, THE A.O. HAD REASONS TO BELIEVE FOR ISSUANCE OF NOTICE IN TH E LIGHT OF THE FACTS BROUGHT TO LIGHT BY THE AUDIT PARTY. 3.5 FURTHER, THE APPELLANT HAS CONTENDED THAT THE R EOPENING OF ASSESSMENT ON THE GROUND THAT IT HAS BEEN DONE MERELY ON CHANGE OF OP INION AND THAT THE MATTER HAS BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT PROCEEDI NGS AND AFTER DUE APPLICATION OF MIND THE CLAIM OF DEDUCTION U/S 801B(10) HAD BEEN A LLOWED. HOWEVER, ON PERUSAL OF THE ASSESSMENT ORDERS COMPLETED U/S 143(3) IT IS NO TICED THAT THE SAME DO NOT INDICATE THAT THE ISSUES RAISED IN THE REASONS RECO RDED HAD EVER BEEN EXAMINED BY THE ASSESSING OFFICER. 3.5.1 IT IS ALSO NOTICED FROM THE EARLIER ASSESSMEN T ORDER THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY SUC H MATERIAL WHICH COULD INDICATE THAT THE ENQUIRIES HAVE AT ALL CARRIED OUT WITH RESPECT TO INTEREST FREE ADVANCES RATHER THE ASSESSMENT APPEARS TO HAVE BEEN COMPLETED IN A ROUTINE MANNER AS IS EVIDENT FROM THE COPY OF THE SAID ORDER PROVI DED BY THE APPELLANT. CHANGE OF OPINION COMES TO THE RESCUE OF THE ASSESSEE ONLY WH EN ASSESSING OFFICER HAS TAKEN 7 ITA NO.738/PN/2014 ITA NO.789/PN/2014 ONE OF PERMISSIBLE VIEWS AT THE TIME OF ORIGINAL PR OCEEDINGS, WHICH IS NOT THE CASE IN THE PRESENT CASE. 3.6 THE RATIO OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MULTISCREEN MEDIA PVT. LTD. VS. UOI & OTHER S (2010) 324 ITR 54 (BOM) IS RELEVANT TO BE CONSIDERED HERE. THE HON'BLE JURISDI CTIONAL HIGH COURT AFTER APPLYING THE PRINCIPLE OF 'TANGIBLE MATERIAL' NOTICED SUBSEQ UENTLY, UPHELD THE ISSUE OF NOTICE U/S 148 FOR A.Y. 2004-05 ON THE BASIS OF FINDINGS REACH ED IN THE ASSESSMENT PROCEEDINGS FOR A.Y. 2005-06. THUS THE BASIS OF REO PENING I.E. THE SOURCE OF INFORMATION MAY BE FROM DIFFERENT SOURCES IN THE PR ESENT CASE BEING THE AUDIT. IN THE CASE CITED ABOVE OF THE HON'BLE BOMBAY HIGH COURT T HE INFORMATION WAS FROM THE PROCEEDINGS OF OTHER YEAR. IN THIS JUDGMENT THE HON 'BLE HIGH COURT HAD ALSO CONSIDERED THE JUDGMENT OF THE HON'BLE SUPREME COUR T IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC), W HICH HAS BEEN RELIED UPON BY THE APPELLANT IN THE SUBMISSION BEFORE ME. THE HIGH COU RT HAS CITED THE FOLLOWING PARA FROM THE JUDGEMENT OF THE SUPREME COURT: ' ... ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMEN TS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON T O REOPEN . WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWE R TO REVIEW AND POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FU LFILLMENT OF CERTAIN PRE- CONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION ' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF R EOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS A INBUILT TEST TO CHECK ABUSE OF POWER BY THE ASSES SING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REO PEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE LINK WITH THE FORMATION OF THE BELIEF. ... ' AFTER ANALYSING THE ABOVE PARA AND THE ENTIRE JUDGE MENT OF THE APEX COURT, THE JURISDICTIONAL HIGH COURT IN THE JUDGEMENT OF MULTI SCREEN MEDIA PVT. LTD. HAS OBSERVED AS UNDER: THE SUPREME COURT IN THE CASE OF KELVINATOR (SUPRA ) OBSERVED THAT TANGIBLE MATERIAL AND NOT MERELY A CHANGE OF OPINIO N CAN ENTITLE THE ASSESSING OFFICER TO TAKE RECOURSE TO THE POWER TO REOPEN ASSESSMENT. THE EMPHASIS IS ON MERE IN THE PHRASE MERE CHANGE OF OPINION. A MERE CHANGE OF OPINION IS NOT ENOUGH. A CHANGE OF OPINION, IN OTHER WORDS, IS PERMISSIBLE, PROVIDED IT IS GROUNDED ON ADDITION AL OR TANGIBLE MATERIAL. IN THE ABSENCE OF ANY OTHER FRESH MATERIAL, A CHANG E OF OPINION WOULD AMOUNT TO AN EXERCISE OF A POWER AKIN TO A RE VIEW OR RE-APPRECIATION AND WOULD BE NO MORE THAT WHAT IS DESCRIBED AS A ME RE CHANGE OF OPINION.' 3.7 FURTHER THE FACTS BROUGHT ON RECORD INDICATE TH AT THE ORIGINAL ASSESSMENT U/S 143(3) WAS COMPLETED ON 13.11.2006 DURING THE COURS E OF WHICH IT IS SEEN THAT THE ISSUE RELATING TO THE INTEREST AND INTEREST-FREE AD VANCES WERE NEVER RAISED AND THE ASSESSMENT HAD BEEN COMPLETED IN A ROUTINE MATTER A FTER MAKING CERTAIN DISALLOWANCES OUT OF THE EXPENSES ROUTINELY OF RS. 75,000/- UNDER SIX DIFFERENT HEADS OF EXPENSES SUCH AS POSTAGE & TELEPHONE, TRAVELLING, REPAIRS, PETROL & DIESEL AND SPARES. THE FACTS ON RECORD PRIMA FACIE CLEARLY IND ICATED THAT THE APPELLANT HAD ADVANCED HUGE SUMS TO THE SISTER CONCERNS INTEREST- FREE AND HAD CLAIMED INTEREST ON THE LOAN TAKEN FROM THE BANK. IN A TAXING ACT ONE H AS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. IF THE PERSON SOUGHT TO BE TAXED COMES WITHIN THE L ETTER OF LAW HE MUST BE TAXED, HOWEVER, THE GREAT HARDSHIP MAY APPEAR TO THE JUDIC IAL MIND TO BE. 8 ITA NO.738/PN/2014 ITA NO.789/PN/2014 3.7.1 THE MUMBAI ITAT IN THE CASE OF SATISH D DHAWA LE VS ITO (2009) 315 ITR (AT) 125(MUM) HELD THAT IN ORDER THAT THERE COULD BE CHANGE OF OPINION, THERE SHOULD HAVE BEEN AN OPINION FORMED IN ORIGINA L ASSESSMENT AND AS THE SAME WAS NOT FORMED THE REASSESSMENT NOTICE CANNOT BE TR EATED AS PROMPTED BY CHANGE OF OPINION AS IT WAS INFERENCE ON FACT. THE JURISDICTI ON WAS, THEREFORE, HELD JUSTIFIED BY THE ITAT. IT IS ESTABLISHED LAW THAT A MERE CHANGE OF OPINION CANNOT JUSTIFY REASSESSMENT, WHERE THE ORIGINAL ASSESSMENT HAS BEE N MADE U/S 143(3). BUT THEN WHERE AN ISSUE HAD NOT BEEN CONSIDERED AT ALL, THER E WAS NO APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER AT ANY STAGE IN T HE ORIGINAL ASSESSMENT, THERE COULD HAVE BEEN NO OPINION FORMED IN THE ORIGINAL ASSESSM ENT SO AS TO JUSTIFY THE INFERENCE OF ANY CHANGE IN OPINION AS TO DISCREDIT REASSESSMENT JURISDICTION. IN THE CASE OF YUVRAJ VS UOI (2009) 315 ITR 84 (BOM) (1990 ) WHEREIN THE ASSESSEE HAD RECEIVED RS.12 LACS FOR ASSIGNING THE RIGHT UNDER T HE AGREEMENT FOR SALE, THE HON'BLE COURT HELD THAT THERE WAS NO ENQUIRY AS TO WHETHER IT IS TAXABLE OR NOT. A REASSESSMENT NOTICE IN SUCH A CASE WAS HELD TO BE N OT WITHOUT JURISDICTION IN THE LIGHT OF THE FACT THAT SUCH AMOUNT IS TAXABLE AS IN CIT VS VIJAY FLEXIBLE CONTAINERS (1990) 186 ITR 693 (BOM). IT WAS IN THIS CONTEXT TH AT THE ASSESSEE'S APPEAL WAS DISMISSED BY THE BOMBAY HIGH COURT. 3.7.2 SO FAR AS THE CONTENTION RAISED BY THE APPELLANT RE GARDING THE ISSUE OF THE ASSESSMENT BEING REOPENED BASED ON THE OBJECTION RA ISED BY THE AUDIT PARTY IS CONCERNED, WHEN THERE IS NO DISCUSSION ON THE ISSUE IN THE ASSESSMENT ORDER AND NO DETAILS WERE CALLED FOR BY THE ASSESSING OFFICER OR FILED BY THE ASSESSEE ON THE ISSUE, NO FINDING EITHER POSITIVE OR NEGATIVE WAS ARRIVED AT DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS HENCE THERE IS NO Q UESTION OF CHANGE OF OPINION. IT WAS SO HELD IN ESS ESS KAY ENGINEERING (2001) 247 I TR 818 (SC), A.L.A. FIRM VS CIT, 102 ITR 622(MAD). THE APPELLANT'S CONTENTION O F CHANGE OF OPINION DOES NOT HOLD ANY GROUND BECAUSE IN THE EARLIER ASSESSMENT O RDER THERE IS NOT MUCH OF ANY DISCUSSION ON THE ISSUE AND NO SPECIFIC FINDING BAS ED ON ANY MATERIAL RECORDED WHICH COULD LEAD TO AN INFERENCE SUBSEQUENTLY OF CH ANGE OF OPINION. 3.8 IN THE CASE OF CIT VS FIRST LEASING CO. OF INDIA LT D., 241 ITR 248 (MAD, THE MADRAS HIGH COURT WHILE UPHOLDING THE ISS UE OF NOTICE U/S 148 TO BE VALID HELD THAT THE AUDIT REPORT BROUGHT TO THE ATT ENTION OF THE ASSESSING OFFICER THE RELEVANT PROVISION OF THE LAW BUT HAS NOT INTERPRET ED THE SAID PROVISIONS AND AUDIT REPORT SHOULD BE REGARDED AS A COMMUNICATION OF LAW AND NOT INTERPRETATION OF LAW INVOLVED. THE COURT DISTINGUISHED THE DECISION OF T HE APEX COURT IN INDIAN & EASTERN NEWSPAPER SOCIETY VS CIT (CITED SUPRA). THE SUPREME COURT IN THE CASE OF CIT VS P.V.S. BEEDIES (P) LTD., 237 ITR 13 (SC), HE LD THAT REOPENING OF ASSESSMENT ON THAT BASIS OF A FACTUAL ERROR POINTED OUT BY THE AUDIT PARTY IS VALID. 3.9 IN VIEW OF THE DISCUSSION MADE ABOVE, THE APPEL LANTS OBJECTIONS AGAINST REOPENING OF ASSESSMENT ARE HELD TO BE DEVOID OF ME RIT AND, THEREFORE, THE REOPENING U/S 147 IS HELD TO BE JUSTIFIED ON FACTS AND IN ACCORDANCE WITH LAW. IN VIEW OF THE ABOVE FACTS, THE GROUNDS OF APPEAL NO.1 & 2 RAISED BY THE APPELLANT ARE DISMISSED FOR BOTH THE YEARS UNDER CONSIDERATION. ON MERITS ALSO, THE CIT(A) DECIDED ADVERSE TO THE A SSESSEE. 10. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US. 9 ITA NO.738/PN/2014 ITA NO.789/PN/2014 11. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE, AT THE OUTSET, ADVERTED OUR ATTENTION TO THE REASONS RECORDED UNDE R SECTION 148(2) OF THE ACT WHICH IS THE PREMISE FOR ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT AS NOTED ABOVE. HE SUBMITTED THAT FROM THE BAR E READING OF THE REASONS RECORDED, IT CAN BE SEEN THAT THE GROUND FOR TAKING THE IMPUGNED ACTION IS THE VERIFICATION OF EXISTING RECORDS ALREADY PLACED BEF ORE THE ASSESSING OFFICER BY WAY OF FILING THE RETURN AND DOCUMENTS FILED SUBSEQ UENTLY IN THE COURSE OF ORIGINAL ASSESSMENT. NO FRESH TANGIBLE MATERIAL IS AVAILABLE BEFORE THE ASSESSING OFFICER TO HOLD REASON TO BELIEVE THAT CHARGEABLE INCOME HAS ESCAPED ASSESSMENT. THE INFORMATION RECORDED IN TH E REASONS FOR INITIATING ACTION HAVE BEEN PICKED-UP FROM THE BALANCE-SHEET, PROFIT & LOSS ACCOUNT AND OTHER DOCUMENTS FILED AT THE TIME OF THE ORIGIN AL ASSESSMENT WHICH WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. HE, THE REAFTER, SUBMITTED THAT THE IMPUGNED ACTION OF INVOKING SECTION 147 OF THE ACT IS PRIMARILY ON ACCOUNT OF SOME AUDIT OBJECTIONS TAKEN BY THE AUDIT PARTY WITH OUT APPLICATION OF HIS INDEPENDENT MIND FOR FORMATION OF BELIEF. HE NEXT SUBMITTED THAT THE NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED ON 30. 03.2011 I.E. AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2004-05. AS THE ASSESSMENT HAS BEEN EARLIER COMPLETED UNDER SECTION 143(3) OF THE ACT, THE CASE OF THE ASSESSEE IS COVERED BY EMBARGO PROVIDED UNDER FIRST PROVISO TO SECTION 147 OF THE ACT. HE CONTENDED THAT IN VIEW OF THE FURTHER LIMITATION PROVIDED UNDER FIRST PROVISO, THE ASSESSING OFFICER IS NOT ENTITLED TO REOPEN A COMPLETED ASSESSMENT AFTER EXPIRY OF 4 YEARS FROM T HE END OF ASSESSMENT YEAR UNLESS THERE IS A FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT WHI CH HAS RESULTED IN ESCAPEMENT OF INCOME CHARGEABLE TO INCOME-TAX. HE SUBMITTED THAT NO SUCH FAILURE IS CONCEIVABLE FROM THE REASONS RECORDED. HIS NEXT PLANK OF CONTENTION ABOUT THE INVALIDITY OF PROCEEDINGS UNDER SECTION 1 47 OF THE ACT IS THAT THE ASSESSING OFFICER HAS FAILED TO PASS ANY SPEAKING O RDER DEALING WITH THE SPECIFIC OBJECTION OF THE ASSESSEE RAISED IN PURSUA NT OF NOTICE UNDER SECTION 147 OF THE ACT. HE SUBMITTED THAT IT IS OBLIGATORY ON THE PART OF THE ASSESSING OFFICER TO DISPOSE OF THE OBJECTION WHEN RAISED BY THE ASSESSEE BY WAY OF A SPEAKING ORDER BEFORE COMMENCING REASSESSMENT PROCE EDINGS. FOR THIS 10 ITA NO.738/PN/2014 ITA NO.789/PN/2014 PROPOSITION, HE RELIED UPON THE DECISION RENDERED B Y HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO, 2 59 ITR 19 (SC) AND ALSO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF BHARAT JAYANTILAL PATEL VS. UNION OF INDIA, (2015) 59 TAXM ANN.COM 333 (BOM). 12. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE REFERRED TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF ASIAN PAINTS LTD. VS. DCIT, (2009) 308 ITR 195 (BOM), WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER CANNOT TAKE RECOURSE TO THE PROVISIONS OF S ECTION 147 OF THE ACT FOR HIS OWN FAILURE TO APPLY HIS MIND TO THE MATERIAL WHICH , ACCORDING TO HIM, IS RELEVANT AND WHICH ARE AVAILABLE ON RECORD. IN THE ABSENCE OF NEW MATERIAL/INFORMATION WHICH COMES ON RECORD, IT IS M ERELY A FRESH APPLICATION OF MIND BY THE SAME AUTHORITY TO THE SAME FACTS OF THE CASE AND THE REASON GIVEN IS ON THE BASIS OF THE SAME MATERIAL WHICH WERE AVA ILABLE ON RECORD WHILE THE ASSESSMENT ORDER WAS MADE. THIS IS IMPERMISSIBLE I N LAW. 13. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE, ON THE OTHER HAND, EXTENSIVELY RELIED UPON THE ORDER OF THE CIT( A) AND SUBMITTED THAT THE ASSESSING OFFICER HAS ASSUMED THE JURISDICTION UNDE R SECTION 147 OF THE ACT IN ACCORDANCE WITH LAW. HE CONTENDED THAT AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FAILED TO BRING ON RE CORD ANY DOCUMENT WHICH WOULD PROVE THAT THERE IS ANY COMMERCIAL EXPEDIENCY TO ADVANCE INTEREST-FREE LOANS TO SISTER CONCERN. THUS, THERE IS A FAILURE ON THE PART OF THE ASSESSEE, WHICH HAS RESULTED IN UNDERASSESSMENT OF INCOME OF RS.35,61,216/-. 14. THE LD. AR FOR ASSESSEE ALSO ADVANCED EXTENSIVE ARGUMENTS ON MERITS AND SUBMITTED THAT ON FACTS ALSO THE ADVANCES HAVE BEEN MADE TO EACH CONCERN ON THE CONSIDERATION OF COMMERCIAL EXPEDIENCY. SIN CE, THE ASSESSEE HAS RAISED THE GROUNDS OF LACK OF JURISDICTION UNDER SECTION 1 47 OF THE ACT ITSELF, WE CONSIDER IT EXPEDIENT TO ADJUDICATE THE JURISDICTIO NAL ISSUE FIRST. 15. IN THE LIGHT OF FACTS NOTED ABOVE, WE SHALL EXA MINE THE ISSUE THE ISSUE PERTAINING TO LEGALITY OF ASSUMPTION OF JURISDICTIO N UNDER S. 147 ARE AS UNDER : 11 ITA NO.738/PN/2014 ITA NO.789/PN/2014 16. ON A BARE PERUSAL OF RECORDED REASONS, IT IS AP PARENT THAT THE REOPENING OF THE COMPLETED ASSESSMENT HAS BEEN CARRIED ON THE BASIS OF EXISTING RECORDS AND DOCUMENTS ONLY. IT IS ALSO EVIDENT THAT NO NEW FACTS OR CIRCUMSTANCES HAVE COME AT THE COMMAND OF THE ASSESSING OFFICER AFTER THE COMPLETION OF THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT EARLIER. NO SUCH NEW FACTS HAVE BEEN CONFRONTED TO THE ASSESSEE IN THE COURSE OF RE ASSESSMENT PROCEEDINGS EITHER. IT IS CLEAR FROM THE PHRASEOLOGY IN PARA 2 OF THE RECORDED REASONS THAT IT IS ON VERIFICATION THE ASSESSING OFFICER OBSERVED THAT CERTAIN PARTIES AS NOTED THEREIN WERE EXTENDED INTEREST FREE LOANS BY THE AS SESSEE. CLEARLY, IT IS VERIFICATION OF EXISTING RECORDS. THEREAFTER, IN PA RA 3 OF THE RECORDED REASONS, IT WAS STATED BY THE ASSESSING OFFICER THAT IT IS APP ARENT THAT CERTAIN DISALLOWANCES TOWARDS INTEREST HAS NOT BEEN CARRIED OUT. AS A COROLLARY, THE FACTS AVAILABLE WERE SUFFICIENT TO COME TO SUCH AP PARENT CONCLUSION. THUS, THESE AVERMENTS WOULD CLEARLY INDICATE THAT IT IS M ERE RE-APPRECIATION OF EXISTING FACTS AND THE ASSESSING OFFICER MERELY SEE KS TO REVIEW HIS EARLIER DECISION AGAIN. IT IS TRITE THAT REOPENING OF ASSES SMENT ON REVIEW OF EXISTING FACTS TO ARRIVE AT DIFFERENT CONCLUSION IS NOT PERM ISSIBLE IN LAW. 17. PERTINENT HERE TO OBSERVE THAT THE CONCLUSION A RRIVED AT ABOUT THE ALLEGED ESCAPEMENT IS BASED ON EXISTING RECORD WHICH NATURA LLY IS ADEQUATE TO COME TO SUCH CONCLUSION AS ALLEGED. IN THE ABSENCE OF ADEQU ACY OF MATERIAL ON RECORD, THE ALLEGATION IN THE RECORDED REASON OF APPARENT ESCAPEMENT WOULD BE DEEMED TO BE MADE ONLY FOR THE PURPOSE OF ROVING EN QUIRY IN TO THE FACT AS TO WHETHER THERE IS ANY COMMERCIAL EXPEDIENCY INVOLVED IN MAKING INTEREST FREE ADVANCES. SUCH COURSE IS ALSO NOT PERMISSIBLE IN LA W. THEREFORE, THE PROPOSITION OF THE ASSESSEE THAT THERE IS NO NEW OR FRESH TANGIBLE MATERIAL IN THE PRESENT CASE TO ENABLE THE AO TO INVOKE PROVISI ONS OF S. 147/148 HAS CONSIDERABLE FORCE. 18. THE PROPOSITION MADE ON BEHALF OF THE ASSESSEE THAT IN THE ABSENCE OF NEW TANGIBLE/FRESH TANGIBLE MATERIAL, THE JURISDICT ION UNDER SECTION 147 OF THE ACT CANNOT BE INVOKED IS ALSO SUPPORTED BY THE HON BLE BOMBAY HIGH COURT IN 12 ITA NO.738/PN/2014 ITA NO.789/PN/2014 THE CASE OF CIT VS. AMITABH BACHCHAN, 251 CTR 250 ( BOM.) RELIED UPON BY THE ASSESSEE. 19. ANOTHER SUBSTANTIVE PROPOSITION MADE BY THE ASS ESSEE IS THAT THE ASSESSMENT HAS BEEN REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ORIGINAL ASSESSMEN T WAS MADE UNDER SECTION 143(3) OF THE ACT AND THEREFORE THE PRESCRIPTION OF FIRST PROVISO TO SECTION 147 APPLIES. 20. BY VIRTUE OF FIRST PROVISO TO SECTION 147 OF TH E ACT, AN ASSESSMENT, WHICH HAS BEEN CONCLUDED UNDER S. 143(3) OF THE ACT , THAT IS , THE RETURN FILED BY THE ASSESSEE WAS SCRUTINIZED AND VERIFIED BY THE ASSESSING OFFICER CANNOT BE REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR UNLESS THE CONDITIONS AS SPECIFIED UNDER THE P ROVISO ARE MET ; THAT IS, THE INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT ON ACC OUNT OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN, EITHER UNDER S. 1 39(1) OF THE ACT OR PURSUANT TO A NOTICE UNDER S. 142(1) OF THE ACT, OR IS OCCAS IONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 21. THUS, IN TERMS OF THE FIRST PROVISO TO SECTION 147 OF THE ACT, THE ASSESSING OFFICER IS REQUIRED TO MAKE OUT A CASE IN THE REASONS RECORDED AS TO WHETHER THERE IS A FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSUMPTION. THE A SSESSING OFFICER HAS ALLEGED THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE W HICH RESULTED IN UNDERASSESSMENT OF INCOME OF RS.35,61,216/-. FOR M AKING SUCH ALLEGATIONS, THE ASSESSING OFFICER HAS MADE AN AVERMENT IN THE R ECORDED REASONS THAT THE ASSESSEE HAS FAILED TO BRING ON RECORD ANY DOCUMENT WHICH WOULD PROVE THAT THERE IS ANY COMMERCIAL EXPEDIENCY WHICH PROPELLED ASSESSEE TO ADVANCE INTEREST-FREE LOANS TO SISTER CONCERN NOTED IN PARA 2 THEREIN. IT IS SEEN FROM THE RECORD THAT THE ASSESSMENT OF THE RETURN OF THE ASS ESSEE WAS EARLIER COMPLETED UNDER SECTION 143(3) OF THE ACT FOR THE RELEVANT AS SESSMENT YEAR 2004-05. THE COMPLETED ASSESSMENT HAS BEEN REOPENED AFTER THE EX PIRY OF FOUR YEARS FROM 13 ITA NO.738/PN/2014 ITA NO.789/PN/2014 THE END OF THE ASSESSMENT YEAR BY ISSUING NOTICE UN DER S. 148(2) DATED 30.03.2011. THEREFORE, THE CASE OF THE ASSESSEE IS COVERED BY THE FIRST PROVISO TO SECTION 147 OF THE ACT WHICH PLACES ADDITIONAL F ETTERS ON THE POWERS OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS, INTER-ALIA , ENTITLED TO TAKE ACTION UNDER SECTION 147 OF THE ACT TO REOPEN THE COMPLETE D ASSESSMENT ONLY WHEN THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE MATERIAL FACTS FULLY AND TRULY AS PER THE FIRST PROVISO THERETO. IT IS WELL SETTLED THAT THE EXPRESSION MATERIAL FACTS POSTULATES PRIMARY FACTS ONLY AND NOT INFERENTIAL FACTS. THEREFORE, ONCE THE FACTS CONCERNING THE ISSUE ARE DISCLOSED AND NO FURTHER ASSISTANCE IS REQUIRED BY DISCLOSURE, THE DUTY OF T HE ASSESSEE COMES TO AN END. IT IS CLEAR FROM THE REASONS RECORDED THAT FOR THE PURPOSES OF MAKING ALLEGATION FOR ESCAPEMENT, ALL THE FACTS NOTED GOVERNING THE I SSUE HAS BEEN PICKED-UP FROM THE EXISTING RECORDS AND THEREFORE ALL THE PRI MARY FACTS CAN BE STATED TO HAVE BEEN DISCLOSED. THE QUESTION WHETHER THE IMPUG NED ADVANCES MADE TO SISTER CONCERN IS DEVOID OF COMMERCIAL EXPEDIENCY O R OTHERWISE, IN OUR OPINION, IS A MATTER OF INFERENCE TO BE DERIVED FRO M THE PRIMARY FACTS. THERE IS NO POSITIVE MATERIAL ON RECORD AT THE TIME OF FORMA TION OF BELIEF TO SAY THAT THE TRANSACTION IS DEVOID OF COMMERCIAL EXPEDIENCY. THE ALLEGATION IS IN THE REALM OF SUSPICION. IF THERE IS A FAILURE AS ALLEGED, IT IS THE FAILURE ON THE PART OF THE ASSESSING OFFICER AT THE TIME OF THE ORIGINAL ASSES SMENT AND ASSESSEE CANNOT BE IMPUTED FOR SUCH FAILURE. IN THE LIGHT OF THE AFOR ESAID DISCUSSION, WE FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE JUDICIAL PRECEDENTS IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR, 268 I TR 332 (BOM) RELIED UPON BY THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT HEL D THEREIN THAT THE ASSESSING OFFICER MUST DISCLOSE IN THE REASONS AS T O WHAT FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECES SARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR SO AS TO ESTABLISH VITAL LINK BETWE EN THE REASONS AND EVIDENCE. WE DO NOT FIND REFERENCE ANY SUCH FACT OR MATERIAL NOT DISCLOSED BY THE ASSESSEE AS NOTED ABOVE. THE CASE OF THE ASSESSEE IS ALSO COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF BHARAT JAYANTILAL PATEL VS. UNION OF INDIA, 59 TAXMANN.COM 333 (BOM), WHERE IT WAS HELD THAT WHEN THE RELEVANT MATERIAL FACTS WERE PLACED AT THE TIME OF ORIGINAL ASSESSMENT, THE CASE CANNOT BE REOPENED MERELY ON THE BASIS OF CHANGE OF OPINION IN THE 14 ITA NO.738/PN/2014 ITA NO.789/PN/2014 ABSENCE OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS LTD. VS. DCIT, 308 ITR 195 (BOM), OBSERVED THAT WHEN THE RELEVANT MATERIAL WAS AVAILABLE ON RECORD BUT THE ASSESSING OFFICER FAILED TO APPLY HI S MIND TO THAT MATERIAL IN MAKING THE ASSESSMENT ORDER, HE CANNOT TAKE RECOURS E TO THE PROVISIONS OF SECTION 147 OF THE ACT FOR HIS OWN FAILURE TO APPLY HIS MIND TO THE MATERIAL FACTS AND WHICH WERE AVAILABLE ON RECORD. IN THAT CASE, IT WAS OBSERVED THAT NOTHING NEW HAD HAPPENED. NO NEW MATERIAL HAD COME ON RECORD, NO NEW INFORMATION HAD BEEN RECEIVED. IN THAT CASE, IT WA S MERELY A FRESH APPLICATION OF MIND BY THE SAME ASSESSING OFFICER TO THE SAME S ET OF FACTS AND REASONS GIVEN AROSE FROM BY THE SAME MATERIAL WHICH WAS AVA ILABLE ON RECORD WHILE THE ASSESSMENT ORDER WAS MADE. WE FIND THAT THE CIRCUM STANCES OF THE PRESENT CASE ARE SIMILAR TO THE CIRCUMSTANCES EXISTING IN T HAT CASE. 22. THE CASE OF THE ASSESSEE IS COVERED BY ANOTHER DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BETTS INDIA (P) LT D. VS. DCIT, 62 TAXMANN.COM 129 (BOM), WHERE THE HONBLE HIGH COURT OBSERVED THAT SINCE INFORMATION REGARDING ENHANCED DEPRECIATION WAS AVA ILABLE WITH THE ASSESSING OFFICER AT THE TIME WHEN HE PASSED ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT, REOPENING NOTICES ISSUED BEYOND PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WERE WITHOUT JURISDICT ION. IN THE PRESENT CASE ALSO, WE NOTICE THAT THE ADVANCES MADE TO SISTER CO NCERN REFLECTED IN THE FINANCIAL STATEMENT AND OTHER DETAILS PLACED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. IT WAS THE DUTY OF TH E ASSESSING OFFICER TO WEIGH THE COMMERCIAL EXPEDIENCY IN MAKING SUCH ADVANCES A T THE TIME OF THE ORIGINAL ASSESSMENT. THE ASSESSEE IS NOT LIABLE TO SUFFER A ND UNDERGO REASSESSMENT PROCEEDINGS OWNING TO SUCH FAILURE ON THE PART OF T HE ASSESSING OFFICER. IT IS THE CASE OF REMISSNESS ON THE PART OF THE ASSESSING OFFICER. THEREFORE, IN OUR CONSIDERED VIEW, THE CONDITIONS EMBODIED IN FIRST P ROVISO TO S. 147 IS NOT SATISFIED. 23. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE HAS ALSO TAKEN THE GROUND THAT THE REOPENING HAS BEEN CARRIED ON THE B ASIS OF SOME AUDIT OBJECTION 15 ITA NO.738/PN/2014 ITA NO.789/PN/2014 ALONE. HOWEVER, WE DO NOT FIND ANY BASIS FOR SUCH AVERMENT. IT IS NO BAR TO PROCEED ON THE BASIS OF COMMENTS RECEIVED FROM AUDI T PARTY SO LONG AS THE ASSESSING OFFICER EXERCISES DUE DILIGENCE AND APPLI ES HIS MIND TO THE COMMENTS OF THE AUDIT TEAM AND COMES TO HIS OWN IND EPENDENT CONCLUSION ABOUT THE ESCAPEMENT OF INCOME. HOWEVER, WE ARE NO T INCLINED TO ADJUDICATE ON THE AFORESAID PROPOSITION IN THE ABSENCE OF REQU ISITE FACTS. 24. THE NEXT PROPOSITION ADVANCED ON BEHALF OF THE ASSESSEE IS THAT THE OBJECTIONS RAISED BY ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN SIDE STEPPED AND NOT DISPOSED OF BY THE AS SESSING OFFICER BEFORE EMBARKING UPON THE REASSESSMENT EXERCISE. AS WE HA VE HELD THAT THE ISSUE OF NOTICE UNDER SECTION 147 OF THE ACT IS TIME BARRED IN VIEW OF EMBARGO PLACED UNDER FIRST PROVISO TO SECTION 147 OF THE ACT AND A LSO HELD THAT REOPENING NOTICE IS NOT VALID IN THE ABSENCE OF ANY FRESH TANGIBLE M ATERIAL, WE DO NOT CONSIDER IT NECESSARY TO DWELL INTO THIS ASPECT. 25. IN THE LIGHT OF AFORESAID DISCUSSION, WE FIND T HAT THE NOTICE ISSUED UNDER SECTION 147 OF THE ACT DATED 30.03.2011 DO NOT CONF IRM TO THE CONDITIONS FOR ASSUMPTION OF JURISDICTION AND SUFFERS FROM THE VIC E OF ILLEGALITY AND HENCE REQUIRES TO BE CANCELLED AND QUASHED. 26. IN THE RESULT, THE ASSESSEE SUCCEEDS ON THE ISS UE THAT THE ASSESSING OFFICER HAS WRONGFULLY USURPED JURISDICTION UNDER S ECTION 147 OF THE ACT AND THEREFORE THE ASSESSMENT ORDER FRAMED PURSUANT THER EOF DATED 31.12.2013 IS ALSO QUASHED. 27. SINCE, THE GROUNDS PERTAINING TO REOPENING ITSE LF HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, WE ARE NOT INCLINED TO DEAL WITH THE MERITS OF THE CASE. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.738/PN/2014 IS ALLOWED. 16 ITA NO.738/PN/2014 ITA NO.789/PN/2014 29. AS THE REOPENING NOTICE UNDER SECTION 147 OF TH E ACT AND CONSEQUENTLY REASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT HAS BEEN ANNULLED AND CANCELLED, THE GROUNDS RAISED BY THE REVENUE CHALLE NGING THE ORDER OF THE CIT(A) ON MERITS ARE ALSO AUTOMATICALLY RENDERED IN FRUCTUOUS AND DOES NOT CALL FOR ADJUDICATION. 30. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.789/PN/2014 IS DISMISSED. 31. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLO WED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 17 TH DAY OF DECEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 17 TH DECEMBER, 2015. & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE