ACIT, Circle - 5(2), Kolkata , Kolkata V. M/s. East India Bearing Company Pvt. Ltd., , Kolkata

ITA 842/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5860 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: S M SURANA
• Keywords: Reopening of assessment; Bogus purchase; Audit objection; Period of limitation; Question of law; Competent authority; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 142(1); 148; 139

Judgement Text

I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 1 OF 23 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) & SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 842/KOL/2018 ASSESSMENT YEAR: 2010-2011 ASSISTANT COMMISSIONER OF INCOME TAX,.............. ......................APPELLANT CIRCLE-5(2), KOLKATA, AAYAKAR BHAWAN, 8 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. EAST INDIA BEARING COMPANY PVT. LIMITED,...... ..................RESPONDENT 40, STRAND ROAD, MODEL HOUSE, 1 ST FLOOR, ROOM NO. 13, GPO NO. 249, KOLKATA-700 001 [PAN: AAACE5844K] & C.O. NO. 52/KOL/2018 (ARISING OUT OF I.T.A. NO. 842/KOL/2018) ASSESSMENT YEAR: 2010-2011 M/S. EAST INDIA BEARING COMPANY PVT. LIMITED,...... ..................CROSS OBJECTOR 40, STRAND ROAD, MODEL HOUSE, 1 ST FLOOR, ROOM NO. 13, GPO NO. 249, KOLKATA-700 001 [PAN: AAACE5844K] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ...........................RESPONDENT CIRCLE-5(2), KOLKATA, AAYAKAR BHAWAN, 8 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI A.K. NAYAK. CIT, D.R. , FOR THE DEPARTMENT SHRI S.M. SURANA, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JULY 02, 2019 DATE OF PRONOUNCING THE ORDER : AUGUST 09, 2019 I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 2 OF 23 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 07.02.2018 AND THE SAME IS BEING DISPOSED OF ALONG WITH THE CROSS OBJECTION FILED BY THE ASSESSEE BEING C.O. NO. 52/KOL/2018 . 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF TRADING OF BALL BEARINGS. THE RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS ORIGINALLY FILED BY IT ELEC TRONICALLY ON 12.10.2010 DECLARING TOTAL INCOME OF RS.1,30,45,430 /-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 17.01.2013, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESS ING OFFICER AT RS.1,38,92,878/-. THE SAID ASSESSMENT WAS SUBSEQUEN TLY REOPENED BY THE ASSESSING OFFICER AND ASSESSMENT UNDER SECTION 143( 3)/ 147 WAS COMPLETED BY HIM VIDE ORDER DATED 27.03.2015. THE S AID ASSESSMENT, HOWEVER, WAS CANCELLED BY THE LD. CIT(APPEALS) VIDE AN ORDER DATED 26.12.2016 BY TREATING THE SAME AS BAD-IN-LAW. THER EAFTER THE ASSESSMENT WAS AGAIN REOPENED BY THE ASSESSING OFFICER AND A N OTICE UNDER SECTION 148 WAS ISSUED BY HIM TO THE ASSESSEE ON 31.03.2017 AFTER RECORDING THE REASONS. ACCORDING TO THE ASSESSING OFFICER, THE AS SESSEE, HOWEVER, DID NOT FILE ANY RETURN IN RESPONSE TO THE SAID NOTICE ISSUED UNDER SECTION 148 ELECTRONICALLY UNDER DIGITAL SIGNATURE AS PRESCRIBE D IN RULE 12 OF THE INCOME TAX RULES, 1962. KEEPING IN VIEW THIS NON-CO MPLIANCE, THE REQUEST OF THE ASSESSEE TO PROVIDE THE REASONS RECORDED FOR REOPENING THE ASSESSMENT WAS NOT ACCEDED TO BY THE ASSESSING OFFI CER. THERE WAS ALSO NO COMPLIANCE ON THE PART OF THE ASSESSEE TO THE NO TICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 142(1) OF THE ACT. THE ASSESSING OFFICER, THEREFORE, PROCEEDED TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 3 OF 23 JUDGMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECO RD AND IN THE ASSESSMENT SO COMPLETED UNDER SECTION 144/147 VIDE AN ORDER DATED 26.09.2017, HE DETERMINED THE TOTAL INCOME OF THE A SSESSEE AT RS.12,79,82,550/- AFTER MAKING ADDITIONS OF RS.25,7 92/- AND RS.11,40,63,880/- ON ACCOUNT OF ALLEGED BOGUS PURCH ASES AND UNDER- VALUATION OF STOCK RESPECTIVELY. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 144/147, AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENT AS WELL AS DISPUTING THE ADDITIONS MADE THEREIN ON MERIT. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE O N RECORD, THE LD. CIT(APPEALS) FOUND MERIT IN THE CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 144/147 ON VARIOUS GROUNDS FO R THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- FROM PAGES 12 TO 14 :- I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSE SSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABL E ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE AO HAS STATED THAT THE APPELLATE COMPANY DID NO T FILE RETURN OF INCOME IN PRESCRIBED MANNER AS ASKED BY T HE AO AS PER LETTER DATED 20.04.2017. THE AR OF THE APPELLANT HAS SUBMITTED THAT THE ASSE SSMENT COMPLETED U/S 147/144/143(3) IS BAD IN LAW SINCE NO NOTICE U/S 143(2) WAS ISSUED IN SPITE OF THE FACT THAT THE RETURN OF INCOME WAS DULY FILED IN RESPONSE TO NOTICE U/S 147 BY FILING A LETTER TO TREAT THE RETURN ORIGINALLY, FILED AS RET URN IN RESPONSE TO NOTICE U/S. 147. THE ORDER OF THE AO PA SSED U/S 143(3)/147 ON 27.3.2015 WAS CANCELLED BY THE CIT(A) ON 26.12.2016 IN APPEAL NO. 924/CIT(A)-2/15-16 ON THE GROUND THAT NOTICE U/S. 143(2) WAS NOT ISSUED WITHIN THE T IME ALLOWED A FRESH NOTICE U/S. 148 WAS SERVED ON THE ASSESSEE BY THE AO ON 31.3.2017 THROUGH E-MAIL. THE ASSESSEE IMMEDIATE LY ON RECEIPT OF NOTICE ON 31.03.2017 ITSELF COMPLIED WIT H THE SAME AND FILED A LETTER REQUESTING THE AO TO TREAT THE O RIGINAL RETURN FILED U/S. 139 AS RETURN IN RESPONSE TO THE NOTICE U/S I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 4 OF 23 148 ISSUED ON 3L.L2.2017. THE AO HAVE BEEN INSISTIN G ON FILING OF THE FRESH E RETURN. HOWEVER, IT WAS DULY INFORME D TO THE AO THAT THE RUST RETURN AND EVEN THE SECOND RETURN WAS FILED IN THE PRESCRIBED FORMAT THROUGH EMAIL AS PER RULE 12 OF THE IT RULES. IT WAS ALSO INFORMED TO THE AO THAT THE ASSE SSEE'S LETTER TO TREAT THE ORIGINAL RETURN FILED U/S 139 AS RETUR N U/S 148 IS SUFFICIENT COMPLIANCE OF THE NOTICE U/S 148. SECTIO N 148 ITSELF PRESCRIBES THAT ALL THE PROVISIONS OF SECTION 139 S HALL APPLY AND ACCORDINGLY THE RETURN FILED ORIGINALLY U/S 139 WAS SPECIFICALLY REQUESTED TO BE TREATED AS RETURN FILE D IN RESPONSE TO NOTICE U/S 148. THE ISSUE UNDER CONSIDERATION IS THAT WHETHER THE L ETTER AS FILED BY THE APPELLATE IS SUFFICIENT COMPLIANCE OF NOTICE U/S 148 RELATING TO FILING THE RETURN OF INCOME. THE AO HAS RELIED ON RULE 12 OF THE IT RULES AND WH AT WAS REQUIRED WAS THAT THE RETURN WAS TO BE FILED ELECTR ONICALLY. IT WAS STATED TO THE AO IN ALL THE LETTERS FILED THAT THE ORIGINAL RETURN WAS FILED ELECTRONICALLY AND THE SAID RETURN SHOULD BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 148. TH E PROVISIONS OF SECTION 148 ALSO SAYS THAT ALL THE PROVISIONS O F SECTION 139 SHALL APPLY, THEREFORE, THE REQUIREMENT OF RULE 12 WAS FULFILLED. IT IS REITERATED THAT THE ORIGINAL RETUR N WAS ALSO FILED ELECTRONICALLY WHICH IS NOT IN DISPUTE. THE LETTER TO TREAT THE ORIGINAL RETURN AS RETURN I N RESPONSE TO THE NOTICE U/S 148 HAS TO BE TREATED AS COMPLIANCE OF THE NOTICE U/S. 148 AND HAS TO BE TREATED AS RETURN FIL ED IN RESPONSE TO NOTICE U/S. 148. IN THIS CONNECTION, TH E AR OF THE APPELLATE PLACED HIS RELIANCE ON THE JUDGEMENTS OF THE TIWARI KANHAIYA LAL & ORS 154 ITR 109 (RAJASTHAN HIGH COUR T), ANAND KUMAR SHARMA 198 ITR 121 (ALLAHABAD HIGH COUR T), KIRAN NAGJI 300 ITR (AT) 286 MUMBAI BENCH AND SHRI JAI SHIV SHANKAR TRADERS PVT. LTD. 383 ITR 448 DELHI. THEREF ORE, WHEN THE RETURN WAS FILED, THE AO SHOULD HAVE ISSUED NOT ICE U/S, 143(2) BEFORE 30TH SEPT, 2017. HOWEVER, NO SUCH NOT ICE WAS AT ALL ISSUED AS IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF. I AGREE WITH THE AA OF THE APPELLATE THAT THE, APPE LLATE IMMEDIATELY, ON RECEIPT OF NOTICE ON 31.03.2017 ITS ELF COMPLIED WITH THE SAME AND FILED A LETTER REQUESTIN G THE AO TO TREAT THE ORIGINAL RETURN FILED U/S 139 AS RETURN I N RESPONSE TO THE NOTICE U/S 148 ISSUED ON 31.03.2017. THE AO HAV E BEEN INSISTING ON FILING OF THE FRESH E-RETURN. HOWEVER, IT WAS DULY INFORMED TO THE AO THAT THE FIRST RETURN AND EVEN T HE SECOND RETURN IN RESPONSE TO THE EARLIER NOTICE U/S 148 WA S FILED IN THE PRESCRIBED FORMAT THOROUGH E MAIL AS PER RULE 1 2 OF THE IT RULES. IT WAS ALSO INFORMED TO THE AO THAT THE ASSE SSEE'S LETTER TO TREAT THE ORIGINAL RETURN FILED U/S 139 AS RETUR N U/S 148 IS I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 5 OF 23 SUFFICIENT COMPLIANCE OF THE NOTICE U/S 148. SECTIO N 148 ITSELF PRESCRIBES THAT ALL THE PROVISIONS OF SECTION 139 S HALL APPLY AND ACCORDINGLY THE RETURN FILED ORIGINALLY U/S 139 WAS SPECIFICALLY REQUESTED TO BE TREATED AS RETURN, FIL ED IN RESPONSE TO NOTICE U/S 148. THE JUDGEMENT AS REFERRED BY THE AR OF THE APPELLAT E ARE BEING DISCUSSED BELOW:- THE ALLAHABAD HIGH COURT IN THE CASE OF ANAND KUMAR SHARMA REPORTED UNDER 1992 TAX PUB(DT) 0608 (ALL. HC): (1992) 198 ITR 0121 HAS HELD THAT THE SOLD GRIEVANCE RAISED ON BEHALF OF THE PETITIONER IS THAT, AFTER SERVICE OF THE NOTICE UND ER SECTION 148 FOR THE ASST. YRS. 1986-87 AND 1987-88 AND THE PETITIONER INFORMING THE ASSESSING AUTHORITY THAT THE RETURN FILED ORIGINALLY MAY BE TREATED AS A RETURN FILED IN COMPLIANCE WITH THE NOTICE U/S 148 FOR THE SAID TWO ASSESSMENT YEARS AND THE ASSESSING AUTHORITY HAS REFUSED TO DISCLOSE THE REASONS FOR TAKING ACTION UNDER SECTION 148. THE ASSESSING AUTHORITY IS DIRECTED TO DISCLOSE THE REASONS FOR TAKING ACTION UNDER SECTION 148 FOR THE SAID ASSESSMENT YEARS TO THE PETITIONER WITHIN TWO WEEKS. THE DELHI HIGH COURT IN THE CASE OF JAI SHIV SHANKAR TRADERS PVT. LTD. 2015 TAX PUB (DT_ 4975 (DEL-HC): (2016) 067 (I) ITCL 0050: (20216) 383 ITR 0448: (2016) 282 CTR 0435: (2016) 129 DTR 0063 HAS HELD THAT....THE NARRATION OF FACTS AS NOT ED ABOVE BY THE COURT MAKES IT CLEAR THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE AFTER 16.12.2010, THE DATE ON WHICH THE ASSESSEE INFORMED THE AO THAT THE RETURN ORIGINALLY FILED SHOULD BE TREATED AS A RETURN FILED PURSUANT TO THE NOTICE UNDER SECTION 148. THE LEGAL POSITION REGARDING SECTION 292BB HAS ALREADY BEEN MADE EXPLICIT IN THE DECISIONS OF THE ALLAHABAD HIGH COURT. THAT PROVISION WOULD APPLY INSOFAR AS FAILUR E OF SERVICE OF NOTICE WAS CONCERNED AND NOT WITH REGARD TO FAILURE TO ISSUE NOTICE. IN OTHER WORDS, THE FAILURE OF THE AO IN REASSESSMENT PROCEEDINGS, TO ISSUE NOTICE UNDER SECTION 143(2), PRIOR TO FINALISING THE REASSESSMENT ORDER, COULD NOT BE CONDONED BY REFERRING TO SECTION 292BB. THE RESULTANT POSITION WAS THAT AS FAR AS THE PRESENT CASE WAS CONCERNED, THE FAILURE BY THE AO TO ISSUE A NOTICE TO THE ASSESSEE UNDER SECTION 143(2) SUBSEQUENT TO 16.12.2010 WHEN THE ASSESSEE MADE A I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 6 OF 23 STATEMENT BEFORE THE AO TO THE EFFECT THAT THE ORIGINAL RETURN FILED SHOULD BE TREATED AS A RETURN FILED PURSUANT TO A NOTICE UNDER SECTION 148 OF THE ACT, WAS FATAL TO THE ORDER OF REASSESSMENT. CONSEQUENTLY, THERE WAS NO LEGAL INFIRMITY IN THE IMPUGNED ORDER OF THE ITAT. NO SUBSTANTIAL QUESTION OF LAW AROSE. THE APPEAL WAS DISMISSED. IN THIS CASE THE ISSUE IN SO FAR AS THE FILING OF R ETURN IN RESPONSE TO NOTICE U/S 148 BY FILING OF LETTER HAVE BEEN ACCEPTED. AS FAR AS THE REQUIREMENT OF ISSUE OF NOT ICE WITHIN DUE TIME IS LATER DECIDED BY THE SUPREME COURT IN H OTEL BLUE MOON THAT NOTICE U/S 143(2) HAS TO BE ISSUED IN TIM E. THEREFORE, WHEN THE RETURN WAS FILED BY FILING THE LETTER TO TREAT THE ORIGINAL RETURN AS RETURN IN RESPONSE TO THE NOTICE U/S 148, THE AO SHOULD HAVE ISSUED NOTICE U/S. 143( 2) BEFORE 30TH SEPTEMBER, 2017. HOWEVER, NO SUCH NOTICE WAS A T ALL ISSUED AS IS EVIDENT FROM THE ASSESSMENT ORDER ITSE LF. IN THIS CONNECTION THE ORDER OF UNDERSIGNED PASSED IN THE E ARLIER REASSESSMENT PROCEEDINGS IS CITED WHEREIN UNDERSIGN ED HAS RELIED ON A NUMBER OF JUDGEMENTS TO CONCLUDE THAT I F NOTICE U/S 143(2) IS NOT ISSUED, THE ASSESSMENT IS BAD IN LAW. FROM PAGES 20 TO 23 : I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSE SSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABL E ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, THE AR OF THE APPELLATE HAS SUBMITTED THAT THE AO E RRED IN INITIATING PROCEEDINGS U/S. 148 WHEN SUCH PROCEEDIN GS U/S. 147 WERE INITIATED EARLIER, SAME ADDITIONS WERE MAD E IN THE ASSESSMENT WHICH WAS COMPLETED U/S 143(3)/147 BUT W AS QUASHED SINCE NOTICE U/S 143(2) WAS NOT ISSUED AND SERVED AS PER LAW AND THEREFORE, ACTION U/S 147 ON THE SAME A DDITIONS WAS BAD IN LAW TREATING THE ADDITIONS MADE AS INCOM E ESCAPED ASSESSMENT SINCE THE SAME VERY ADDITIONS WERE WERE THE SUBJECT MATTER OF THE EARLIER ASSESSMENT PROCEEDING S. THE ORIGINAL RETURN IN THIS CASE WAS FILED ON 12.10.201 0 AND THE FIRST ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDE R DATED 17.01.2013. THE AO REOPENED THE ASSESSMENT U/S 147 BY RECORDING THE REASONS AS MENTIONED EARLIER AND ISSU ED NOTICE U/S 148 AGAINST WHICH THE ASSESSEE FILED THE RETURN ON 07.11.2013. NO NOTICE U/S 143(2) WAS ISSUED WITHIN THE PRESCRIBED TIME AND THEREFORE THE RETURN FILED IN R ESPONSE TO NOTICE U/S 148 WAS LEGALLY ACCEPTED U/S 143(1). HOW EVER, THE AO ISSUED NOTICE U/S 143(2) AFTER MUCH DELAY ON 9.1 .2015. THE I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 7 OF 23 AO ALSO COMPLETED THE ASSESSMENT U/S 143(3) WHEREIN THE ADDITION ON ACCOUNT OF THE PURCHASE FROM DARSHAN SA LES CORPORATION AND VALUATION OF CLOSING STOCK WAS IN D ISPUTE. THE ASSESSEE DISPUTED BOTH THE ADDITION MADE BEFORE THE CIT(A) ON MERITS AS WELL AS ON THE ISSUE THAT THE RETURN FILE D U/S 148 WAS DULY ACCEPTED U/S 143( 1) SINCE NO NOTICE U/S 143(2 ) WAS ISSUED WITHIN THE TIME ALLOWED. THE ASSESSEE DISPUT ED BOTH THE ADDITIONS IS EVIDENT FROM THE ORDER OF CIT(A). THE CIT(A) QUASHED THE ASSESSMENT SINCE NO NOTICE U/S 143(2) W AS ISSUED WITHIN STATUTORY TIME. THE CIT (A) ALSO OBSERVED TH AT HE IS NOT DECIDING ON THE MERITS SINCE THE APPEAL WAS ALLOWED ON LEGAL GROUND. HOWEVER, THE WRITTEN SUBMISSIONS FILED BEFO RE THE AO CONTAINED FULL EXPLANATION THAT THE ADDITION WAS NO T MAINTAINABLE ON MERITS, WHICH IS APPARENT FROM THE WRITTEN SUBMISSIONS QUOTED IN THE APPELLATE ORDER. THE DEPA RTMENT DID NOT FILE ANY APPEAL BEFORE THE ITAT BUT THE AO ISSUED NOTICE U/S 147. THE REASONS FOR ISSUE OF NOTICE U/S 148 WERE NOT SUPPLIED TO THE ASSESSEE BUT THE SAME ARE QUOTE D IN THE ASSESSMENT ORDER AS UNDER: 'INFORMATION RECEIVED FTOM DDLT(LNV) MUMBAI REGARDI NG BOGUS PURCHASE MADE WITH MRS. DARSHAN SALES CORPN AMOUNTING TO RS.25,792/- TO HAWALA AND FURTHER REVE NUE AUDIT OBJECTION FOR THE SAME ASSESSMENT YEAR I.E. 1 011 WAS RAISED AGAINST THE ORDER U/S. 143(3) DATED 17.1. 20 13 WITH REGARD TO UNDER VALUATION OF STOCK SHOWN IN BOOKS O F ACCOUNTS OF THE ASSESSEE COMPANY FOR F,Y. 2009-10 RELATING T O A Y. 2010-11 AMOUNTING TO RS.11,40,63,880/-' IT IS APPARENT THAT THE ASSESSMENT WAS REOPENED ON THE SAME GROUNDS WHICH WERE THE SUBJECT MATTER OF THE EARLIE R ASSESSMENT ORDER WHICH WAS QUASHED BY THE CIT(A). T HE REOPENING OF THE ASSESSMENT ON THE SAME ISSUE WHICH WAS SUBJECT MATTER OF THE EARLIER ASSESSMENT WHICH WAS DISPUTED BEFORE THE CIT(A) AND WAS CANCELLED IN THE EARLIER APPEAL IS BAD IN LAW. WHEN THE SAID ASSESSMENT ORDER ON APPEA L WAS QUASHED AS NON-EST, THE RETURN WAS ACCEPTED U/S 143 (1), THE ISSUE WAS KNOWN TO THE AO AND FURTHER ANY DISPUTED FINDING IN THAT ORDER AND FOR THAT MATTER UNPROVED AND DISPUTE D FINDINGS CANNOT GIVE RISE TO THE REASONS THAT ANY INCOME HAS ESCAPED ASSESSMENT. THE AR OF THE APPELLATE ALSO PLACED HIS RELIANCE ON THE JUDGEMENTS OF SMT. ANCHI DEVI V. CIT (P&H-HC): (200 8) 218 CTR 0011: (2008) 005 DTR 0311, CIT VS,- AIR CRAFT RADIO CORPORATION (P&H HC): (2007) 292 ITR 0064, SANG FAS TNERS P. LTD. ITAT E BENCH, MUMBAI LIN ITA NO. 6871/MUM/20 08, ITA NO. 5639/MUM/2010 FOR A.Y. 2000-01 AND IN THE CASE OF MANOO LAL KEDARNATH VS. UNION OF INDIA 114 ITR 884 (ALL) AND CIT VS.- V.R. DURGAMBA 223 ITR 96 (MAD.). I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 8 OF 23 THE P&H HIGH COURT IN THE CASE OF AIR CRAFT RADIO C ORPORATION REPORTED 2007 TAX PUB (DT) 0909 (P&H-HC): (2007) 29 2 ITR 0064 HAS HELD THAT ON THE BASIS OF SOME COMPLAINTS OF TAX EVASION, AO ISSUED NOTICE UNDER SECTION 148 IN A VA GUE MANNER WITHOUT RECORDING HIS OWN SATISFACTION ONLY ON THE BASIS OF THOSE COMPLAINTS. AFTER DISSATISFIED WITH ASSESSEE S REPLY THE AO MADE REASSESSMENT ORDER ON 31.7.1976. THE FIRST APPELLATE AUTHORITY ALLOWED ASSESSEES APPEAL AND SET ASIDE ( ANNULLED) ORDER OF REASSESSMENT. THE AO ONCE AGAIN ON SET OF FACTS INITIATED REOPENING PROCEEDINGS AND COMPLETED REASS ESSMENT ORDER ASSESSING INCOME AT SAME FIGURE WHICH WAS DON E BY HIM IN HIS EARLIER ORDER DATED 31.07.1976. THE FIRST AP PELLATE AUTHORITY ONCE AGAIN ANNULLED THE REASSESSMENT ORDE R. THE TRIBUNAL CONFIRMED THE SAID ORDER. HELD: RIGHTLY SO . THE AO WAS HAVING NO JURISDICTION TO REASSESS THE INCOME O N SAME SET OF FACTS AND FIGURES IN HIS SECOND REASSESSMENT ORD ER ONCE AGAIN AFTER ANNULMENT OF FIRST REASSESSMENT ORDER B Y THE APPELLATE AUTHORITY. THE MADRAS HIGH COURT IN THE CASE OF V.R. DURGAMBA 1998 TAX PUB(DT) 0648 (MAD-HC_: (1998) 233 ITR 0096: (1998) 098 TAXMAN 0336 HAS HELD THAT ONCE A PROCEEDING IN RESP ECT OF AN ITEM OTHER THAN THE ONE MENTIONED IN THE NOTICE UND ER SECTION 148 OF THE INCOME TAX ACT AND HAD BEEN TAKEN INTO CONSIDERATION AND THE SAME IS SUBSEQUENTLY NOT UPHE LD IN APPEAL, THE PROCEEDING IN RESPECT OF THE SAME ITEM AFRESH UNDER SECTION 147(A) CANNOT BE RESORTED TO. THEREFO RE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE INCOME TAX O FFICER HAD NOT VALIDLY ASSUMED JURISDICTION UNDER SECTION 147( A) OF THE ACT. THE P&H HIGH COURT IN THE CASE OF SMT. ANCHI DEVI 2 008 TAX PUB(DT) 1828 (P&H-HC) : (1008) 218 CTR 0011 : (2008 ) 005 DTR 0311 HAS HELD THAT REASSESSMENT-VALIDITY-EARLIE R REASSESSMENT WAS HELD TO BE TIME-BARRED-FIRST ASSES SMENT COMPLETED UNDER SECTION 143 (3) READ WITH SECTION 1 47 WAS SET ASIDE BY THE TRIBUNAL AS TIME-BARRED UNDER SECTION 153(2). AO REOPENED THE ASSESSMENT PROCEEDINGS AGAIN BY SERVIN G A FRESH NOTICE UNDER SECTION 148. ON APPEAL BEFORE COMMISSI ONER (APPEALS), ASSESSEE SUBMITTED THAT THE ISSUANCE OF FRESH NOTICE UNDER SECTION 148 WAS NOT JUSTIFIED AS ON THE SAME ISSUE. ASSESSMENT HAD ALREADY BEEN REOPENED AND ASSESSMENT HAD BEEN COMPLETED UNDER SECTION 143(3). COMMISSIONER (APPEALS), HOWEVER, UPHELD THE REOPENING OF THE ASS ESSMENT. HELD: NOT JUSTIFIED AO COULD NOT BE ALLOWED TO INIT IATE FRESH PROCEEDINGS ON IDENTICAL FACTS AS THE FIRST ASSESSM ENT PROCEEDING HAD FAILED TO RESULT IN A VALID ASSESSME NT DUE TO LAPSE ON THE PART OF THE INCOME TAX AUTHORITY. I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 9 OF 23 THE AO HAD NO FRESH MATERIAL BEFORE HIM. A PERUSAL OF THE REASONS RECORDED BY HIM FOR REOPENING THE ASSESSMEN T PROCEEDINGS SHOWS THAT THE SAME REASONS HAVE BEEN R ECORDED WHICH WERE STATED IN THE EARLIER NOTICE SERVED UNDE R SECTION 148 ON THE BASIS OF WHICH THE ASSESSMENT WAS MADE O N 14-2- 2003 AND WHICH WAS QUASHED BEING BARRED BY LIMITATI ON. THUS, FROM THE FACTS ITSELF, IT IS CRYSTAL CLEAR THAT THO UGH THE PRESENT PROCEEDINGS WERE INITIATED BY THE AO WITHIN THE PRE SCRIBED PERIOD OF LIMITATION; YET, IT WAS CLEAR THAT THE SA ME WERE INITIATED ONLY TO CIRCUMVENT THE EARLIER ORDER OF T HE TRIBUNAL VIDE WHICH THE ASSESSMENT DATED 14-2-2003 WAS HELD TO BE TIME-BARRED. THUS, THE AO CANNOT BE ALLOWED TO INIT IATE FRESH PROCEEDINGS ON IDENTICAL FACTS AS THE FIRST ASSESSM ENT PROCEEDINGS HAD FAILED TO RESULT IN A VALID ASSESSM ENT DUE TO LAPSE ON THE PART OF THE INCOME TAX AUTHORITY [PARA 18). IT IS APPARENT FROM THE RECORD THAT THE ASSESSMENT WAS REOPENED ON THE SAME TWO GROUNDS WHICH WERE THE SUB JECT MATTER OF THE EARLIER ASSESSMENT ORDER WHICH WAS QU ASHED BY THE CIT(A). IN VIEW OF THE ABOVE JUDGMENTS, AND IN VIEW OF THE FACT THAT THE ASSESSMENT WAS AGAIN REOPENED ONLY FO R THOSE TWO ISSUES WHICH WERE THE SUBJECT MATTER OF EARLIER ASSESSMENT, THE REASSESSMENT NOW MADE IS LIABLE TO BE QUASHED. IN VIEW OF THE ABOVE JUDGMENTS, AND IN VIE W OF THE FACT THAT THE ASSESSMENT WAS AGAIN REOPENED ONLY FO R THOSE TWO ISSUES WHICH WERE THE SUBJECT MATTER OF EARLIER REASSESSMENT, THE FRESH REASSESSMENT ON THE SAME GR OUNDS NOW MADE IS LIABLE TO BE QUASHED. THIS GROUND OF AP PEAL IS ALLOWED. FROM PAGES 30 TO 39: I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSE SSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABL E ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE AR OF THE APPELLATE HAS SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROCEE DINGS U/S. 147 WERE NOT IN ACCORDANCE WITH LAW AND ACCORDINGLY THE ASSESSMENT IS VOID-AB-INITIO AN IS ILLEGAL TO BE DE CLARED AS NULL AND VOID. THE ASSESSMENT HAS BEEN REOPENED U/S 147 AFTER EXPIRY OF 4 YEARS. THE EARLIER TWO ASSESSMENTS WERE COMPLETED U/S 143(3). HOWEVER, IT APPEARS FROM THE ASSESSMENT ORDER NOW PASSED THAT NOWHERE IN THE REASONS RECORDED THE AO WAS SATISFIED THAT INCOME HAS ESCAPED ASSESSMENT FOR FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT IN FACT, THERE WAS N O FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE PURCHASE OF GOO DS FROM DARSHAN SALE CORPORATION WAS PART OF THE FIRST ASSE SSMENT ORDER SINCE THE SALE PRICE OF THE SAID. BEARINGS WA S DULY ADDED I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 10 OF 23 AS INCOME IS RECORDED. FURTHERMORE, IN THE LETTERS AND REPLIES FILED BY THE ASESSEE IN THE COURSE OF THESE REASSES SMENT PROCEEDINGS, IT WAS CATEGORICALLY STATED THAT IN TH E EARLIER PROCEEDINGS, THE FACTS OF WHICH WERE FULLY RECORDED IN THE ORDER OF CLT(A), IT WAS APPARENT FROM THE ORDER OF CIT(A) THAT THE ASSESSEE FILED THE DETAILS OF PURCHASE OF DHARS HAN SALES CORPN ALONG WITH THE COPY OF THE PURCHASE BILLS OF 8 PCS OF BEARING, THE COPY OF' BILLS AND THE COPY OF BANK ST ATEMENT SHOWING THE PAYMENT MADE THROUGH KOTAK MAHINDRA BAN K. THE ASSESSEE ALSO SUBMITTED THE CORRESPONDING DETAI LS OF SALES OF THE SAME VERY BEARING TO RELIANCE LNDUS AT RS. 3 2,381/- AND ALSO SUBMITTED THAT THE SALE OF THE SAID BEARINGS, WAS POSSIBLE ONLY BECAUSE THE ASSESSEE PURCHASE THE BILLS FROM D HARSHAN SALES CORPN, THEREFORE, ALL THE FACTS WERE EN RECOR D, THERE WAS NO ESCAPEMENT OF INCOME IN RESPECT OF PURCHASE FROM DARSHAN SALES CORPORATION. FURTHER, IT IS ALSO CLEAR FROM THE REASONS RECORDED THAT THE AO HAS SIMPLY RELIED ON THE INFORMATION FROM DGIT, INV . MUMBAI ONLY AND HAS NOT RECORDED FOR HIS OWN SATISFACTION SIMPLY RELYING ON THE INFORMATION FROM INV. WING WITHOUT E XAMINING THE ISSUE HIMSELF AND THEN REOPENED THE ASSESSMENT IS BAD IN LAW. THE AO HAS NOT APPLIED HIS MIND TO THE ISSUE. IF THE AO HAS SIMPLY RELIED ON THE INFORMATION FROM DGIT WITH OUT APPLYING HIS MIND REOPENING OF THE ASSESSMENT IS BA D IN LAW. IT WAS ON RECORD THAT THE PURCHASE FROM DARSHAN SAL ES CORPN WAS NOT BOGUS FOR WHICH EVIDENCE WAS AVAILABLE ON R ECORD AS WELL AS IN THE ORDER OF CIT(A) WHEREIN THE ENTIRE I SSUE WAS EXPLAINED WITH REGARD TO THE PURCHASE AND CORRESPON DING SALE AS ALSO THE ADDITION MADE IN THE ORIGINAL ASSESSMEN T U/S, 143(3) ON ACCOUNT OF SALES TO M.S RELIANCE INDUS OF THE SAME MATERIAL WHICH WAS PURCHASED FROM DARSHAN SALES COR PN THEREFORE, AS ON THE DATE LE. 31.3.2017 IF THERE WA S PROPER APPLICATION OF MIND ASSESSMENT COULD NOT HAVE BEEN REOPENED. SIMILARLY, AUDIT OBJECTION BY THE AUDIT PARTY CANNO T BE A GROUND FOR REOPENING OF THE ASSESSMENT U/S 148. IT IS APPARENT FROM THE ASSESSMENT ORDER ITSELF THAT IT WAS REVENU E AUDIT WHICH RAISE THE OBJECTION THAT THERE WAS UNDER VALU ATION OF CLOSING STOCK. NEITHER IN THE REASONS RECORDED NOR EVEN IN THE ASSESSMENT ORDER ANY FACTUAL MISTAKE HAVE BEEN RECO RDED OR POINTED OUT TO SHOW THAT THERE WAS IN FACT UNDER VA LUATION OF CLOSING STOCK. SIMPLY BECAUSE THERE WAS OPINION OF THE AUDIT PARTY, IT CANNOT BE A GROUND TO REOPEN THE ASSESSME NT U/S 147. THE BASIS FOR ALLEGED UNDER VALUATION HAVE NOT BEEN SPELT OUT ANYWHERE IN THE REASONS OR IN THE ORDER ITSELF. MOREOVER, THE INFORMATION FROM INVESTIGATION CANNOT ALONG BE THE REASON FOR REOPENING OF THE ASSESSMENT AND THE AO HAS TO APPLY HIS OWN MIND. NO SUCH APPLICAT4ION OF MIND IS I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 11 OF 23 VISIBLE IN THE REASONS RECORDED. THE AR PLACED HIS RELIANCE ON VARIOUS JUDGMENTS AS MENTIONED ABOVE IN HIS SUBMISS IONS. THE REOPENING OF THE ASSESSMENT AFTER FOUR YEARS FROM T HE END OF THE ASSESSMENT YEAR IS BAD IN LAW. I FIND THAT IT IS EVIDENT .FORM THE REASONS RECORDE D THAT THERE IS NO WHISPER THAT THE INCOME HAD ESCAPED ASSESSMEN T FOR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. WHEN T HERE IS NO CASE THAT THERE WAS FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMEN T WHICH IS NOT WHISPERED IN THE REASONS RECORDED AND FOR ARGUM ENTS SAKE EVEN IN THE REASSESSMENT ORDER THE PROCEEDINGS INIT IATED U/S 147 IS BAD IN LAW IN VIEW OF VARIOUS DECISIONS CITE D ABOVE. FURTHER, IT IS ALSO CLEAR FROM THE REASONS RECORDED THAT THE AO HAS SIMPLY RELIED ON THE INFORMATION FROM DGLT INV. MUMBAI ONLY AND HAS NOT. RECORDED FOR HIS OWN SATISFACTION . SIMPLY RELYING ON THE INFORMATION FROM INV. WING WITHOUT E XAMINING THE ISSUE HIMSELF AND THEN REOPENED THE ASSESSMENT IS BAD IN LAW. THE AO HAS NOT APPLIED HIS MIND TO THE ISSUE. IF THE AO HAS SIMPLY RELIED ON THE INFORMATION FROM DGIT WITH OUT APPLYING HIS MIND REOPENING OF THE ASSESSMENT IS BA D IN LAW. IT WAS ON RECORD THAT THE PURCHASE FROM DARSHAN SAL ES CORPN WAS NOT BOGUS FOR WHICH EVIDENCE WAS AVAILABLE ON R ECORD AS WELL AS IN THE ORDER OF CIT(A) WHEREIN THE ENTIRE I SSUE WAS EXPLAINED WITH REGARD TO THE PURCHASE AND CORRESPON DING SALE AS ALSO THE ADDITION MADE IN THE ORIGINAL ASSESSMEN T U/S 143(3) ON ACCOUNT OF SALES TO M/S. RELIANCE INDUS O F THE SAME MATERIAL WHICH WAS PURCHASED FROM DARSHAN SALES COR PN. THEREFORE AS ON THE DATE I.E, 31.3.2017 IF THERE WA S PROPER APPLICATION OF MIND ASSESSMENT COULD NOT HAVE BEEN REOPENED. SIMILARLY', AUDIT OBJECTION BY THE AUDIT PARTY CANN OT BE A GROUND FOR REOPENING OF THE ASSESSMENT U/S. 148. IT IS APPARENT FROM THE ASSESSMENT ORDER ITSELF THAT IT W AS REVENUE AUDIT WHICH RAISED THE OBJECTION THAT THERE WAS UND ER VALUATION OF CLOSING STOCK. NEITHER IN THE REASONS RECORDED NOR EVEN IN THE ASSESSMENT ORDER ANY FACTUAL MISTAKE HA VE BEEN RECORDED OR POINTED OUT TO SHOW THAT THERE WAS IN F ACT UNDER VALUATION OF CLOSING STOCK. SIMPLY BECAUSE THERE WA S OPINION OF THE AUDIT PARTY IT CANNOT BE A GROUND TO REOPEN THE ASSESSMENT U/S 148. THE BASIS FOR ALLEGED UNDER VAL UATION HAS NOT BEEN SPELT OUT ANYWHERE IN THE REASONS OR IN TH E ORDER ITSELF. MOREOVER THE INFORMATION FROM INVESTIGATION CANNOT ALONE BE THE REASON FOR REOPENING OF THE ASSESSMENT WITH REGARD TO THE FIRST ISSUE AND THE AO HAS TO APPLY H IS OWN MIND. NO SUCH APPLICATION OF MIND IS VISIBLE IN THE REASO NS RECORDED. THE FOLLOWING JUDGMENTS ARE CITED IN SUPPORT OF THE PROPOSITION:- I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 12 OF 23 THE ALLAHABAD HIGH COURT IN THE CASE OF PRADESHIYA INDUSTRIAL & INVESTMENT CORPN OF U.P. LTD. 2011 TAX PUB(DT) 0 086 (ALL.- HC): (2010) 034(I) ITCL 0160: (2011) 332 ITR 0324: (2010) 230 CTR 0167: (2010) 035 DTR 0267 HAS HELD THAT REASSESSMENT-FULL AND TRUE DISCLOSURES-NOTICE AFTER EXPIRY OF FOUR YEARS-WHERE THERE WAS FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS DURING THE ORIGINAL ASSESSMENT AND I N THE RETURN FILED BY ASSESSEE AND ON THE BASIS OF THOSE FACTS AND APPLICATION OF MIND BY THE AO, DEDUCTION UNDER SECT ION 36(1)(VIII) WAS ALLOWED. NOTICE FOR REOPENING ISSUE D AFTER FOUR YEARS QUESTIONING THE DEDUCTION AS WRONGLY ALLOWED. ON THE SAME FACTS WAS NOT VALID AS COMPLETE FRETS WERE ALR EADY SUBMITTED. THERE WAS NO FAILURE OF THE ASSESSEE TO DISCLOSE FULL AND TRUE FACTS FOR ALLOWABILITY OF DEDUCTION UNDER SECTION 36(1)(VIII). ADMITTEDLY, NOTICE UNDER SECTION 148 WAS ISSUED AFT ER THE EXPIRY OF FOUR YEARS. THE NOTICE UNDER THE PROVISO OF SECTION 147 CAN BE ISSUED AFTER THE EXPIRY OF FOUR YEARS ON LY IN CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN 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 NECESSA RY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. FROM THE PERUS AL OF THE REASON RECORDED IT IS APPARENT THAT NO CASE HAS BEE N MADE OUT THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY 'AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT AND NO OBSERVATION HAS BEEN MADE IN THIS REGARD. THE MADRAS HIGH COURT IN THE CASE OF FENNER (INDIA) LTD 2000 TAXPUB(DT) 0453 (MAD- HC) : (2000) 241 ITR 0672 : (1999)155 CTR 0165 : (1999) 107 TAXMAN 0,053 HAS HE LD THAT WHERE ASSESSMENT WAS REOPENED UNDER SECTION 147, AF TER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSES SMENT YEAR, ASSESSING OFFICER MUST PROVE THAT ASSESSEE HAS NOT DISCLOSED FULL MATERIAL FACTS IN RELATION TO ESCAPED INCOME S O AS TO GIVE LEGALITY TO THE NOTICE ISSUED UNDER SECTION 1.J8. T HE DUTY OF AN ASSESSEE IS LIMITED TO FULLY AND TRULY DISCLOSE ALL THE MATERIAL FACTS. IF THE DETAILS PLACED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS IN CONFORMITY WITH THE REQUIREMENTS OF ALL APPLICABLE LAWS AND KNOWN ACCOUNTING PRINCIPLES AND MATERIALS DETAILS HAD BEEN EXHIBITED BEFORE THE ASS ESSING OFFICER, IT IS FOR THE ASSESSING OFFICER TO REACH S UCH CONCLUSIONS AS HE CONSIDERED WAS WARRANTED FROM SUCH DATA AND A NY FAILURE ON HIS PART TO DO SO CANNOT BE REGARDED AS ASSESSEE'S FAILURE TO FURNISH THE MATERIAL FACTS TRULY AND FUL LY. ANY LACK OF COMPREHENSION ON THE PART OF THE ASSESSING OFFIC ER IN UNDERSTANDING THE DETAILS PLACED BEFORE HIM CANNOT CONFER A JUSTIFICATION FOR REOPENING THE ASSESSMENT, LONG AF TER THE I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 13 OF 23 PERIOD OF FOUR YEARS HAD EXPIRED. ON THE FACTS OF T HIS CASE, IT IS CLEAR THAT THE ESCAPEMENT OF INCOME IF ANY ON THIS ACCOUNT IS NOT ON ACCOUNT OF ANY FAILURE ON THE ASSESSEE'S PAR T TO DISCLOSE THE MATERIAL FACTS FULLY AND TRULY. THE NOTICE ISSU ED BY THE ASSESSING OFFICER IN EXERCISE OF HIS POWER UNDER SE CTION 147, THEREFORE, CANNOT BE SUSTAINED. THE GUJARAT HIGH IN THE CASE OF GARDEN SILK MILLS L TD. 1996 TAX PUB(DT) 1170 (GUPHC) : (1996) 222 IT~QQ27 : (19 96) 135 CTR 0409 : (1997) 092 TAXMAN 0022 HAS HELD THAT THE NOTICE WAS ISSUED AFTER FOUR YEARS WHEN THERE WAS NO FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NEC ESSARY FOR ASSESSMENT. THE NOTICE OF REASSESSMENT WAS NOT VALI D AND WAS LIABLE TO BE QUASHED. THE GUJARAT HIGH COURT IN THE CASE OF GARDEN SILK M ILLS LTD. 1996 TAX PUB(DT) 1170 (GUJ-HC): (1996) 222 ITR 0027 : (1996) 135 CTR 0409: (1997) 092 TAXMAN 0022 HAS HEL D THAT THE NOTICE WAS ISSUED AFTER FOUR YEARS WHEN THERE W AS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MAT ERIAL FACTS NECESSARY FOR ASSESSMENT. THE NOTICE OF REASSESSMEN T WAS NOT VALID AND WAS LIABLE TO BE QUASHED; WHERE AN ASSESS MENT UNDER SUB-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NOTICE U/S 148 ISSUED AFT ER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR QUASHED BECAUSE THERE WAS NO MATERIAL ON RECORD THA T INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT FOR SUCH ASSES SMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. THE DELHI HIGH COURT IN THE CASE OF GLOBAL SIGNAL C ABLES (INDIA) (P.) LTD 2014 TAX PUB(DT) 4178 (DEL-HC) : ( 2015) 061 (I) ITCL 0120 : (2014) 368 ITR 0609 HAS HELD THAT REASSESSMENT-FULL AND TRUE DISCLOSURE ABSENCE OF NE W MATERIAL ON INFORMATION=AT) REOPENED ASSESSMENT UND ER SECTION 148 ON THE GROUND THAT ASSESSEE HAD GRANTED INTEREST FREE LOAN, THEREFORE, PROPORTIONATE DISALLOWANCE ON ACCOUNT OF INTEREST AND FINANCIAL CHARGES OUT OF TOTAL INTERES T AND FINANCIAL CHARGES DEBITED IN PROFIT AND LOSS ACCOUN T SHOULD HAVE BEEN MADE RESULTING IN UNDER ASSESSMENT OF INC OME: ASSESSEE CHALLENGED REOPENING OF ASSESSMENT ON THE GROUND THAT REOPENING WAS INITIATED ON THE BASIS OF REVIEW OR RE- APPRECIATION OF THE SAME MATERIAL AND NO FRESH MATE RIAL OF ANY SORT HAD COME IN THE POSSESSION OF THE DEPARTME NT AS ALSO THERE HAD BEEN NO FAILURE ON THE PART OF THE ASSESS EE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS. HELD : THE FACTS OF THE PRESENT CASE WERE SQUARELY COVERED BY THE DECIS ION IN SWAROVSKI INDIA PVT. LTD. V. DY. CIT WP. (C) 190912 013 DECIDED 011 8-8-2014, WHEREIN THE NOTICE UNDER SECT ION 148 I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 14 OF 23 WAS QUASHED FOR BEING ISSUED AFTER THE EXPIRY OF 4 YEARS FROM THE RELEVANT ASSESSMENT YEAR WHEREIN THERE WAS NO S PECIFIC MENTION OF WHICH MATERIAL FACTS WERE NOT DISCLOSED BY THE ASSESSEE IN THE COURSE OF ITS ORIGINAL ASSESSMENT P ROCEEDINGS UNDER SECTION 143(3; IN THE PRESENT CASE A/SO, THERE EXIST NO GROUNDS FO R REOPENING THE ASSESSMENT AFTER THE EXPIRY OF 4 YEARS, FROM TH E RELEVANT ASSESSMENT YEARS AS THE NOTICE WAS BASED ON RE-APPR ECIATION OF THE SAME MATERIAL ON RECORD. REVENUE HAD NOT- SP ECIFICALLY INDICATED-AS-TO WHICH MATERIAL FACTS WERE NOT DISCL OSED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDING S UNDER THE SAID ACT. THE BOMBAY HIGH COURT IN THE CASE OF GRINDWELL NORT ON LTD.2004 TAXPUB(DT) 11 S.1 (BORN-HC) : (2004) 267 I TR 0673 : (2004) 186 CTR 0530 : (2004) 138 TAXMAN 0033 HAS HELD THAT NOWHERE IN THE REASONS RECORDED BY THE ASSESSI NG OFFICER, IT IS STATED THAT THERE IS FAILURE, ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS IN THE RETURN FILED BY THE ASSESSEE. IT IS NOT IN DISPUTE THAT IN THE PRESENT CASE, REOPENING OF THE ASSESSMENT IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEREFORE, NOTICE ISS UED UNDER SECTION 148 BEYOND FOUR YEARS RELEVANT ASSESSMENT Y EAR WAS BARRED BY LIMITATION. IN THE CASE IN HAND IT IS NOT IN DISPUTE THAT THE ASSESSMENT YEAR INVOLVED IS 1996-97. THE L AST DATE OF THE SAID ASSESSMENT YEAR WAS 31-3-1997 AND FROM THA T DATE IF FOUR YEARS ARE COUNTED, THE PERIOD OF FOUR YEARS EX PIRED ON 1.3.2001. THE NOTICE ISSUED ON DATED 5-11-2002 AND RECEIVED BY THE ASSESSEE ON 7.11.2012. UNDER THESE CIRCUMSTA NCES, THE NOTICE IS CLEARLY BEYOND THE PERIOD OF FOUR YEAR, B Y THE ASSESSING OFFICER NOWHERE STATE THAT THERE WAS FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THAT ASSESSME NT YEAR. IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRE D TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER . NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIO NS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO REACH TO THE CONCLUSION AS TO WHETHER TH ERE WAS FAILURE ON THE PART OF THE ASSESESE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. IT IS FOR THE ASSESSING OFFICER TO FROM HIS OPINION. IT IS FOR HIM TO PUT HIS OPINION ON RECORD IN BLACK AND WHITE. THE REASONS RECORDED SHOULD BE CLE AR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENES S. THE REASONS RECORDED MUST DISCLOSE HIS MIND. REASONS AR E THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE SELF EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROVIDE LLINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORD ED MUST I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 15 OF 23 BE BASED ON EVIDENCE. THE ASSESSING OFFICER. IN THE EVENT OF CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY T HE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISC LOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLO SED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT O F THAT 'ASSESSMENT YEAR, SO AS LA ESTABLISH VITAL LINK BET WEEN THE REASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGU ARD AGAINST ARBITRARY REOPENING OD THE CONCLUDED ASSESSMENT. TH E REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLEM ENTED BY FILING AFFIDAVIT OR MAKING ORAL SUBMISSION, OTHERWI SE, THE REASONS WHICH WERE LACKING IN THE MATERIAL PARTICUL ARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES TO THE COURT, ON THE STRENGTH OF AFFIDAVIT OR ORAL SUBMISS IONS ADVANCED. HAVING RECORDED FINDING THAT THE IMPUGNED NOTICE ITSELF IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 1996-97 AND DOES NOT COMPLY WITH TH E REQUIREMENTS OF PROVISO TO SECTION 147, THE ASSESSI NG OFFICER HAD NO JURISDICTION TO REOPEN THE ASSESSMENT PROCEE DINGS WHICH WERE CONCLUDED ON THE BASIS OF ASSESSMENT UND ER SECTION 143(3). ON THIS SHORT COUNT ALONE, THE IMPU GNED NOTICE IS LIABLE TO BE QUASHED AND SET ASIDE . THE CALCUTTA HIGH COURT IN THE CASE OF JAY SHREE TE A & INDUSTRIES LTD 2000 TAX PUB(DT) 0369 (CAL-HC) : (20 00) 245 ITR 0567 : (2001) 165 CTR 0193 : (1999) 106 T AXMAN 0508 HAS HELD THAT AFTER COMPLETION OF THE ASSESSMENT, T HE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 1 48 READ WITH SECTION 147, TO THE PETITIONER, ASKING THE PET ITIONER THAT ITS INCOME HAD ESCAPED AS DEDUCTION UNDER SECTION 3 2AB(5) ALLOWED MORE THAN THE AMOUNT PERMISSIBLE UNDER SECT ION 32AB OF THE ACT. THE PETITIONER HAS CHALLENGED THIS NOTI CE ON THE GROUND THAT THE NOTICE HAS BEEN ISSUED AFTER FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, BEFORE THE ISSUE OF NOTICE, THE INCOME TAX OFFICER SHOULD SATI SFY WHETHER ANY INCOME HAS ESCAPED AND THAT THE ASSESSEE HAS FA ILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT SUSTAINABLE. IN CIRCUMSTANCES OF CASE, T HERE IS HARDLY ANY CASE OF ESCAPEMENT OF INCOME AND SECONDL Y, DEPARTMENT HAS FAILED TO PROVE THAT ASSESSEE HAS FA ILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS REQUIRE D FOR ASSESSMENT OF ITS INCOME, THEREFORE, NOTICE ISSUED AFTER 4 YEARS FROM COMPLETION OF ASSESSMENT IS QUASHED. BEFORE ISSUE OF NOTICE UNDER SECTION 148, IF HE WAN TS TO ISSUE NOTICE AFTER 4 YEARS FROM THE ASSESSMENT YEARS, THE INCOME TAX OFFICER HAS TO SATISFY HIMSELF THAT THERE WAS A N ESCAPEMENT OF INCOME TO TAX IN THE ASSESSMENT ORDER AND SECONDLY, THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR ASSESSMENT OF HIS INCO ME. ADMITTEDLY, THE NOTICE UNDER SECTION 148 HAS BEEN I SSUED AFTER I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 16 OF 23 EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEARS. IF ONE LOOKS INTO THE ASSESSMENT ORDER AS WE LL AS THE CHART PRODUCED BY BOTH THE COUNSELS, THERE IS HARDL Y ANY CASE OF ESCAPEMENT OF INCOME. SECONDLY, THE DEPARTMENT H AS FAILED TO PROVE THAT THE ASSESSEE HAS FAILED TO DISCLOSE F ULLY AND TRULY ALL MATERIAL FACTS REQUIRED FOR ASSESSMENT OF ITS I NCOME. ASSUMING BUT NOT ACCEPTING THAT THERE IS SOME MISTA KE IN CALCULATION EITHER ON THE PART OF THE ASSESSEE OR O N THE PART OF THE INCOME TAX OFFICER THAT DOES NOT MEAN THAT THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY THE MATERIAL FACT S REGARDING HIS INCOME. IF SOME CALCULATION MISTAKE HAS BEEN CO MMITTED FOR THE PURPOSE OF DEDUCTION UNDER A PARTICULAR SEC TION THAT CAN BE RECTIFIED, UNDER SECTION 154 OF THE ACT, BUT ON THAT GROUND NO NOTICE UNDER SECTION 148 CAN BE ISSUED. W HEN THE NOTICE IT4SELF IS BAD IN LAW, THERE IS NO REASON TO CARRY ON WITH THE FUTILE EXERCISE OF COMPLETION OF REASSESSMENT P ROCEEDINGS. THEREFORE, ON BOTH THE COUNTS THERE IS NO CASE OR J USTIFICATION TO ISSUE THE NOTICE U/S 148, PARTICULARLY WHEN THE INCOME TAX OFFICER CANNOT ASSUME JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 AS PER THE PROVISIONS OF THE ACT AND TH E FACTS OF THIS CASE. WHILE THE PROCEEDINGS UNDER SECTION 143(2) HAD CULM INATED INTO AN ORDER UNDER SECTION 143(3), THE ISSUANCE OF THE NOTICE UNDER SECTION 148 AFTER A PERIOD OF JOUR YEARS REQU IRES THAT THERE OUGHT TO BE A FAILURE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS. THIS IS THE SETTLED PRINCIPLE AS HE LD IN ORACLE INDIA (SUPRA), BDR BUILDERS &: DEVELOPERS (P) LTD. V. ACIT 2017 SCC ONLINE DELHI 9425 (HEREAFTER BDR BUILDERS) , AND UNITECH LTD. V. DELHI 2017 SCCC ONLINE DELHI 9408 W HICH ARE ALL RECENT JUDGMENTS OF THIS COURT. THE AO IN THE ORDER ALSO HAS SIMPLY MENTIONED THAT THE ASSESSMENT WAS REOPENED SIMPLY ON THE BASIS OF INFO RMATION RECEIVED FROM INVESTING WING MUMBAI AND ON THE BASI S OF AUDIT OBJECTION AND HAS ALSO MADE ADDITION ONLY BEC AUSE A PARTICULAR FIGURE OF UNDERVALUATION WAS SUGGESTED B Y THE AUDIT PARTY. NO CALCULATION OR BASIS OF SUCH ADDITI ON OR ANY FACTUAL MISTAKE IS POINTED OUT. SIMPLY ON THE BASIS OF AUDIT OBJECTION WITHOUT ANY POSITIVE FINDING ASSESSMENT C ANNOT BE REOPENED. THE ISSUE OF BOGUS PURCHASE HAS ALREADY BEEN DISCUS SED BY THE AO WHILE PASSING THE FIRST ORDER DATED 11.01.2013 A ND ADDED BACK THE AMOUNT OF RS.136,197/- STATING THAT ON VER IFICATION OF ITS DETAILS IT HAS BEEN FOUND THAT THE ASSESSEE HAS RECEIVED SALE CONSIDERATION OF RS.136197/- FROM RELIANCE IND USTRIES LIMITED WHICH HAS NOT BEEN FOUND TO BE CREDITED IN THE P/L ACCOUNT AND MADE ADDITION ACCORDINGLY. THE CIT(A} 6 VIDE HIS ORDER DATED 30.08.2013 HAS CONFIRMED THE ADDITION S TATING I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 17 OF 23 THAT NO EXPLANATION HAS BEEN OFFERED IN RESPECT OF SALE CONSIDERATION OF RS.1,36,971/- AND ACCORDINGLY THE ADDITION OF RS.1,36,197/- IS CONFIRMED, THE AO WHILE FRAMING. T HE SECOND ASSESSMENT ORDER DATED 27.03.2015 HAS AGAIN MADE AN ADDITION OF RS. 25,192 ON ACCOUNT OF BOGUS PURCHASE FROM DARSHAN SALES CORPORATION. AS REGARDS TO PURCHASE MADE FROM DARSHAN SALES OF RS.25,792/- AND SALE TO RELIANCE INDUSTRIES FOR RS. 1,36,197/-, THE AR OF THE APPELLATE DURING THE SECOND APPELLATE PROCEEDINGS SUBMITTED AS UNDER WHICH IS VERY MUCH M ENTIONED IN THE SECOND APPELLATE ORDER DATED 3.1.2017. THE S AME IS REPRODUCED AS UNDER:- GROUND NO.3 ON MERITSW RELATES TO THE ADDITION OF R S.25,792/- AS BOGUS PURCHASE, IN ITS COURSE OF HEARING THE AO ASKED THE ASSESSEE TO EXPLAIN THE ISSUE OF PURCHASE OF THE BE ARINGS FROM DARSHAN SALES RECORDED IN THE REASONS FOR REOPENING OF THE ASSESSMENT. THE ASSESESE PRODUCED THE BOOKS AND STO CK REGISTER TO SHOW THAT THE ASSESSEE PURCHASED MATERI ALS FROM DARSHAN SALES CORPORATION, THE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE AND ALSO SALES TAX/VAT ON THE SAME WAS PAID BY THE ASSESSEE AS DEMANDED BY THE SALES TAX DEPARTMEN T. THE ASSESSEE ALSO PRODUCED THE STOCK REGISTER TO SHOW THAT THE PURCHASE WAS MADE ON 19.3.2010 WHICH PURCHASE WAS O F 8 PCS OF BEARING NO. NA 3070NRB FOR RS.25,792/- FROM THE SAID DARSHAN SALES CORPORATION. THIS PARTICULAR MATERIAL WAS IMMEDIATELY SOLD ON 22.3.2010 TO M/S. RELIANCE INDU S. LTD. THE PURCHASE AND SALE WERE BOTH DULY INCORPORATION IN THE BOOKS OF ACCOUNTS. THE SALE PRICE WAS RS.32,387/-. IT WAS ALSO SUBMITTED THAT THE TOTAL AMOUNT OF NET SALE TO M/S. RELIANCE INDUSTRIES WAS OF RS.1,36,197 INCLUSIVE OF THE SALE OF RS.32,387/- AND THE SOLD GROSS SALE AMOUNT WAS ALSO ADDED BY THE AO IN THE ORIGINAL ASSESSMENT AS UNDISCLOSED IN COME. THEREFORE, FIRSTLY THE PURCHASE WAS EVIDENCES BY CORRESPONDING SALES AND SECONDLY THE GROSS SALE ITS ELF OUT OF THE PURCHASE WAS ADDED AS INCOME IN THE ORIGINAL AS SESSMENT, THEREFORE THE ADDITION OF RS 25,792/- WAS NOT JUSTI FIED. THE AO, HOWEVER, WANTED THE ASSESSEE TO PRODUCE DARSHAN SALES AND IT WAS FOR THAT REASON THAT THE ASSESSEE EXPRES SED ITS INABILITY TO EXPLAIN THE TRANSACTIONS DUE TO UNAVOI DABLE CIRCUMSTANCES. (LETTER DATED 19.01.2015 ATTACHED). IT IS CLEAR FROM THE ABOVE THAT THESE FACTS ABOUT P URCHASE FROM DARSHAN SALE WERE VERY MUCH AVAILABLE ON RECOR DS AND CONSIDERED BY THE AO. THE SECOND APPELLATE ORDER AS MENTIONED ABOVE WAS ALSO AVAILABLE BEFORE THE AO AT THE TIME OF FRAMING THE THIRD ASSESSMENT ORDER. IT IS CLEAR FROM THE I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 18 OF 23 ABOVE, THERE IS NO NEW MATERIAL BEFORE THE AO FOR R EOPENING THE CASE FOR THIRD ASSESSMENT. AS REGARDS TO REASON FOR REOPENING OF THE CASE, THE AO IN HIS THIRD ASSESSMENT ORDER AT PAGE 4 OF THE ORDER HAS M ENTIONED AS UNDER:- INFORMATION RECEIVED FROM DGIT(INV.) MUMBAI REGARDING BOGUS PURCHASE MADE WITH M/S. DARSHAN SALES CORPORATION AMOUNTING TO RS.25,792/- THROUGH HOWALA AND FURTHER REVENUE AUDIT OBJECTION FOR SAME AY I.E. 2010-11 WAS RAISED AGAINST THE ORDER U/S 143(3) DATED 17.1.2013 WITH REGARD TO UNDER VALUATION OF STOCK SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY FOR FY 2009-10 RELATING TO AY 2010-11 AMOUNTING TO RS.11,40,63,880/-. AS REGARDS TO UNDER VALUATION OF STOCK, THE AO IN H IS THIRD ORDER HAS MENTIONED AT PAGE 4 OF THE ORDER AS UNDER : THE ASSESSEE AS NONCOMPLIANCE ON THE ABOVE SAID FACTS. ACCORDINGLY, THE TRANSACTION OF THE ASSESSEE WITH M/S. DARSHAN SALES CORPORATION AMOUNTING TO RS.25,792/- AND REVENUE AUDIT OBJECTION FOR THE SAME ASSESSMENT YEAR 2010-11 WAS RAISED AGAINST THE ORDER U/S 143(3) DATED 17.2.2013 WITH REGARDS TO UNDER VALUATION OF STOCK SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY FOR FY 2009-10 RELATING TO AY 2010-11 AMOUNTING TO RS.11,40,63,880/- IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. IT IS CLEAR FROM THE ABOVE THAT ONE OF THE REASONS FOR REOPENING OF THE CASE WAS ON THE BASIS OF REVENUE A UDIT OBJECTION. IN THIS REGARD, THE RELIANCE IS PLACED O N THE CASE OF THE SUPREME COURT OF INDIA IN THE CASE OF INDIAN & EASTERN NEWSPAPER SOCIETY 119 ITR 996 (SC) HAS HELD AS UNDE R: THE EXPRESSION INFORMATION IS AN INDISPENSABLE INGREDIENT WHICH MUST EXIST BEFORE INVOKING SECTION 147(B). THE INFORMATION MEANS INSTRUCTION OR KNOWLEDGE CONCERNING (A) FACTS OR PARTICULARS OR BY LAW. BY ITS INHERENT NATURE, A FACT HAS CONCRETE EXISTENCE. IT INFLUENCES THE DETERMINATION OF AN ISSUE BY THE MERE CIRCUMSTANCE OF ITS RELEVANCE. IT REQUIRES NO FURTHER AUTHORITY TO MAKE IT SIGNIFICANT ITS QUINTESSENTIAL VALUE LIES IN ITS DEFINITIVE VITALITY. THE CONTROVERSY CENTRES AROUND THE POINT WHETHER THE INSTRUCTION OR KNOWLEDGE AS TO LAW IS CIRCUMSCRIBED BY ANY LIMITATION. WHEN ONE SPEAKS OF LAW, ONE ORIGINALLY SPEAKS OF NORMS OR GUIDING PRINCIPLES HAVING LEGAL EFFECT AND LEGAL I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 19 OF 23 CONSEQUENCES. TO POSSESS LEGAL SIGNIFICANCE FOR THAT PURPOSE, IT MUST BE ENACTED OR DECLARED BY COMPETENT AUTHORITY. THE LEGAL SANCTION VIVIFYING ITS IMPARTS TO ITS FORCE AND VALIDITY AND BINDING NATURE. LAW MAY BE STATUTORY LAW OR JUDGE MADE LAW. IN EVERY CASE, THEREFORE, TO BE LAW IT MUST BE A CREATION BY A FORMAL SOURCE EITHER LEGISLATIVE OR JUDICIAL AUTHORITY. A STATEMENT BY A PERSON OR BODY NOT COMPETENT TO CREATE OR DEFINE THE LAW CANNOT BE REGARDED AS LAW, THE SUGGESTED INTERPRETATION OF ENACTED LEGISLATION AND THE ELABORATION OF LEGAL PRINCIPLES IN TEXT BOOKS AND JOURNALS DO NOT ENJOY THE STATUS OF LAW. THEY ARE MERELY OPINIONS AND, AT BEST, EVIDENCE IN REGARD TO THE STATE OF THE LAW AND IN THEMSELVES POSSESS NO BINDING EFFECT AS LAW. WHAT IS CONTEMPLATED UNDER SECTION 147(6) IS 'INFORMATION' AS TO THE LAW CREATED BY A FORMAL SOURCE TO IS LAW WHICH, BECAUSE IT ISSUES FROM A COMPETENT LEGISLATURE OR A COMPETENT JUDICIAL OR QUASI-JUDICIAL AUTHORITY, INFLUENCES THE COURSE OF THE ASSESSMENT AND DECIDES ANYONE OR MORE OF THESE MATTERS WHICH DETERMINE THE ASSESSEES TAX LIABILITY. 2. WHETHER IT IS THE INTERNAL AUDIT PARTY OF THE IN COME-TAX DEPARTMENT OR AN AUDIT PARTY OF THE COMPTROLLER AND AUDITOR GENERAL, THEY PERFORM ESSENTIALLY ADMINISTRATIVE OR EXECUTIVE FUNCTIONS AND CANNOT BE ATTRIBUTED THE POWER OF JUD ICIAL SUPERVISION OVER THE QUASI-JUDICIAL ACTS OF INCOME- TAX AUTHORITIES. THE INCOME-TAX ACT DOES NOT CONTEMPLAT E SUCH POWER IN ANY INTERNAL AUDIT ORGANISATION OF THE INC OME-TAX DEPARTMENT; IT RECOGNISES POWER IN THOSE AUTHORITIE S ONLY WHICH ARE SPECIFICALLY AUTHORISED TO EXERCISE ADJUD ICATORY JUNCTIONS THE COMPTROLLER AND AUDITOR-GENERAL'S (DU TIES, POWERS &CONDITION) ACT DOES NOT ALSO ENVISAGE SUCH A POWER. NEITHER STATUTE SUPPORTS THE CONCLUSION THAT AN AUD IT PARTY CAN PRONOUNCE ON THE LAW, AND THAT SUCH PRONOUNCEME NT AMOUNTS TO 'INFORMATION' WITHIN THE MEANING OF SECT ION 147(B), IN EVERY CASE, THE ITO MUST DETERMINE FOR H IMSELF WHAT IS THE EFFECT AND CONSEQUENT OF THE LAW MENTIO NED IN THE AUDIT NOTE AND WHETHER IN CONSEQUENCE OF THE LAW WH ICH HAS NOW COME TO HIS NOTICE, HE CAN REASONABLY BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT. THE BASIS OF HIS BELIEF MUS T BE THE LAW OF WHICH HE HAS NOW BECOME AWARE. THE OPINION R ENDERED BY THE AUDIT PARTY IN REGARD TO THE LAW CANNOT FOR THE PURPOSE OF SUCH BELIEF, ADD TO OR COLOUR THE SIGNIFICANCE O F SUCH LAW. THE TRUE EVALUATION OF THE LAW IN ITS BEARING ON TH E ASSESSMENT MUST BE MADE DIRECTLY AND SOLELY BY THE ITO. I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 20 OF 23 3. IN THE INSTANT CASE, THE ITO HAD, WHEN HE MADE T HE ORIGINAL ASSESSMENT, CONSIDERED THE PROVISIONS OF SECTIONS 9 AND 10, ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE A PPLICATION OF THOSE, PROVISIONS WOULD AMOUNT TO A CHANGE OF OP INION ON MATERIAL ALREADY CONSIDERED BY HIM. AN ERROR DISCOV ERED ON A RECONSIDERATION OF THE SAME MATERIAL DOES NOT EMPOW ER THE ITO TO REOPEN THE ASSESSMENT UNDER SECTION 147(B), PLAINLY, THE STATUTORY PROVISION ENVISAGES THAT THE ITO MUST HAVE INFORMATION IN HIS POSSESSION, AND THEN. IN CO NSEQUENCE OF SUCH INFORMATION, HE MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE REALISATION THAT INCOME HAS ESCAPED ASSESSMENT IS COVERED BY THE WORDS REAS ON TO BELIEVE, AND IT FOLLOWS FROM THE INFORMATION RECE IVED BY THE ITO. THE INFORMATION IS NOT THE REALISATION, THE IN FORMATION GIVES BIRTH TO THE REALISATION. 4. THEREFORE, WHETHER CONSIDERED ON THE BASIS THAT THE NATURE AND SCOPE OF THE FUNCTIONS OF THE INTERNAL A UDIT ORGANISATION OF THE INCOME TAX DEPARTMENT ARE CO-EX TENSIVE WITH THAT OF RECEIPT AUDIT OR ON THE BASIS OF THE P ROVISIONS SPECIFYING DETAILING ITS FUNCTIONS IN THE INTERNAL AUDIT MANUAL, THE OPINION OF AN INTERNAL AUDIT PARTY OF THE INCOM E TAX DEPARTMENT ON A POINT OF LAW CANNOT BE REGARDED AS INFORMATION WITHIN THE MEANING OF SECTION 147(B). IN VIEW OF THE ABOVE, IT IS CLEAR THAT THERE WAS N O NEW MATERIAL BEFORE THE AO FOR MAKING THIRD ASSESSMENT ORDER IN THE MATTER. THE BOTH THE REASONS ARE ALREADY AVAILA BLE BEFORE THE AO WHILE FRAMING THE SECOND ASSESSMENT ORDER WH ICH HAS ALREADY ANNULLED AS MENTIONED ABOVE. KEEPING IN VIE W OF THE ABOVE, THE REOPENING IS THEREFORE, BAD IN LAW AND C ANCELLED. THIS GROUND OF APPEAL IS ALLOWED. 4. FOR THE REASONS GIVEN ABOVE, THE LD. CIT(APPEALS ) HELD THE REOPENING OF ASSESSMENT BY THE ASSESSING OFFICER AS BAD-IN-LAW ON THREE SEPARATE COUNTS AND CANCELLED THE ASSESSMENT MADE B Y THE ASSESSING OFFICER UNDER SECTION 144/147 IN PURSUANCE THEREOF BY TREATING THE SAME AS INVALID. CONSEQUENT TO HIS DECISION ON THE PRELI MINARY ISSUE CANCELLING THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 144/147 BY HOLDING THE SAME TO BE INVALID, THE LD. CIT(APPEALS ) DID NOT DECIDE THE OTHER ISSUES RAISED BY THE ASSESSEE IN ITS APPEAL C HALLENGING THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE SAID ASSESSMEN T ON MERIT. AGGRIEVED I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 21 OF 23 BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE H AS FILED ITS APPEAL BEFORE THE TRIBUNAL WHILE THE ASSESSEE HAS ALSO FIL ED ITS CROSS OBJECTION RAISING THEIR RESPECTIVE GROUNDS AS UNDER:- GROUND IN REVENUES APPEAL:- LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE PROVIS ION OF RULE 12 OF THE I.T. RULES, AS PER WHICH IT IS MA NDATORY TO SUBMIT RETURN OF INCOME ELECTRONICALLY IN RESPON SE TO NOTICE UNDER SECTION 148. GROUNDS IN ASSESSEES CROSS OBJECTION : (1) FOR THAT THE LD. CIT(A) SHOULD HAVE CONSIDERED THE ENTIRE SET OF SUBMISSIONS MADE WITH REGARD TO THE INITIATION OF PROCEEDINGS U/S 147 WHICH WERE NOT INITIATED IN ACCORDANCE WITH LAW. (2) FOR THAT THE LD. CIT(A) SHOULD HAVE HELD THAT E VEN ON MERITS THE ADDITION WAS NOT CALLED FOR. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE VARIOUS RELEVANT MATERIALS AVAILABLE ON RECORD. THE ONLY CONTENTION RAISED BY THE LD. D.R. IN SUPPORT OF THE GROUND RAI SED BY THE REVENUE IN ITS APPEAL IS THAT THERE WAS NO COMPLIANCE ON THE P ART OF THE ASSESSEE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 148 ON 31.03.2017 AND THERE WAS NOT EVEN ANY REQUEST MADE BY THE ASSESSEE IN WRITING TO TREAT THE RETURN OF INCOME ORIGINALLY FI LED AS THE RETURN FILED IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148. HOWEVE R, AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE FROM PAGE NO. 1 OF THE ASSESSMENT ORDER, A PETITION DATED 01.04.2017 WAS FILED BY THE ASSESSEE , WHICH WAS RECEIVED BY THE OFFICE OF THE ASSESSING OFFICER THROUGH POST ON 05.04.2017 MAKING A REQUEST TO THE ASSESSING OFFICER TO TREAT THE RET URN ALREADY FILED UNDER SECTION 139 AS THE RETURN SUBMITTED IN RESPONSE TO NOTICE UNDER SECTION 148. THE NOTICE UNDER SECTION 148 DATED 31.03.2017 THUS WAS DULY COMPLIED WITH BY THE ASSESSEE AND THIS COMPLIANCE W AS IN ACCORDANCE WITH LAW AS HELD BY THE LD. CIT(APPEALS) AFTER DISC USSING ALL THE FACTS OF THE CASE AND THE RELEVANT PROVISIONS OF THE LAW. TH E LD. D.R. IN THIS REGARD HAS NOT RAISED ANY MATERIAL CONTENTION TO REBUT OR CONTROVERT THE FINDINGS I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 22 OF 23 OR REASONS GIVEN BY THE LD. CIT(APPEALS) TO DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. MOREOVER, IT IS OBSERVED THAT THE REO PENING OF ASSESSMENT BY THE ASSESSING OFFICER WAS HELD TO BE BAD-IN-LAW BY THE LD. CIT(APPEALS) ON AS MANY AS THREE SEPARATE COUNTS AND THE REVENUE HAVING CHALLENGED THE SAME ONLY ON ONE COUNT AND NOT ON OTHER TWO COU NTS, THIS APPEAL OF THE REVENUE HAS BECOME ONLY ACADEMIC. KEEPING IN VI EW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE AND DISMISS THE SAME. 6. AS A RESULT OF OUR DECISION RENDERED ABOVE DISMI SSING THE APPEAL OF THE REVENUE AND UPHOLDING THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CANCELLING THE ASSESSMENT MADE BY THE ASSESSING OFF ICER UNDER SECTION 144/148 BY TREATING THE SAME AS INVALID, THE ISSUES RAISED BY THE ASSESSEE-COMPANY IN ITS CROSS OBJECTION HAVE BECOME INFRUCTUOUS. WE ACCORDINGLY DISMISS THE CROSS OBJECTION FILED BY TH E ASSESSEE AS INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 09, 20 19. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT (KZ) KOLKATA, THE 9 TH DAY OF AUGUST, 2019 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5(2), KOLKATA, AAYAKAR BHAWAN, 8 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. EAST INDIA BEARING COMPANY PVT. LIMITED, 40, STRAND ROAD, MODEL HOUSE, 1 ST FLOOR, ROOM NO. 13, GPO NO. 249, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKA TA, I.T.A. NO 842/KOL/2018 ASSESS MENT YEAR: 2010-2011 & C.O . NO. 52/KOL/2018 (IN I TA NO. 842/KOL/2018) ASSES SMENT YEAR: 2010-2011 PAGE 23 OF 23 (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE 6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.