M/s Jindal Aluminium Ltd., Bangalore V. DCIT, Bangalore

ITA 919/BANG/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7538 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARINDER KUMAR CITA
• Keywords: Reopening of assessment; Capital asset; Depreciation; Cost of acquisition; Tangible material; Fair market value; Difference of opinion; Valuation report; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.919/BANG/2014 ASSESSMENT YEAR : 2005-06 M/S. JINDAL ALUMINIUM LTD., JINDAL NAGAR, TUMKUR ROAD, BANGALORE 560 073. PAN: AAACJ 4324M VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(5), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. PARTHASARATHI, ADVOCATE RESPONDENT BY : SHRI HARINDER KUMAR, CIT(A)-3 DATE OF HEARING : 26.07.2017 DATE OF PRONOUNCEMENT : 28.09.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE CONDITION PRECEDENT FOR RE-OPENING BEING A BSENT, THE RE-OPENING OF THE ASSESSMENT U/S.147 OF THE ACT AS CONFIRMED BY THE LEARNED CIT (APPEALS) IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT THE ASS ESSING OFFICER HAD REASON TO BELIEVE TO JUSTIFY THE REOPENING AND ACCORDINGLY ERRED IN UPHOLDING THE REASSESSMENT AS DONE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THAT THERE WAS NO INCO ME ESCAPED ASSESSMENT UNDER THE HEAD 'CAPITAL GAINS' AS ALLEGE D AND THE ITA NO.919/BANG/2014 PAGE 2 OF 19 TRANSACTIONS BETWEEN THE APPELLANT AND THE GOVERNME NT AND THE APPELLANT WITH 3RD PARTIES WERE TRANSPARENT AND THE RE WAS NO MATERIAL TO SUGGEST THAT THE APPELLANT HAD RECEIVED MORE THAN WHAT WAS DECLARED OVER AND ABOVE THE REGISTERED SAL E PRICE. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THERE WAS NO OBLIGATION ON THE PART OF THE APPELLAN T TO DECLARE THE TRANSACTION IN THE RETURN OF INCOME WHEN THE TRANSA CTION DID NOT RESULT IN ANY INCOME/LOSS AND ACCORDINGLY HE OUGHT TO HAVE REFRAINED FROM UPHOLDING REOPENING OF THE ASSESSMEN T AS MADE BY THE ASSESSING OFFICER. 4. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSMENT WAS ORIGINALLY REOPENED ON ACCOUNT O F THE CLAIM MADE FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT A ND THEREAFTER AFTER THE CONCLUSION OF THE SAID ASSESSMENT, THE SA ME WAS ONCE AGAIN REOPENED FOR THE ALLEGED OMISSION OF CAPITAL GAIN WHICH WAS WITHOUT ANY MATERIAL AND WAS ONLY ON SURMISE AN D AS SUCH THE REASSESSMENT PROCEEDINGS WERE INVALID AND THE L EARNED CIT (APPEALS) HAS ERRED IN UPHOLDING SUCH REASSESSMENT. 5. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT TRANSFER OF LAND HAS BEEN DULY REFLECTED IN THE FIX ED ASSETS SCHEDULE AND THE ASSESSMENT ORIGINALLY STOOD CONCLU DED UNDER SECTION 143(3) OF THE ACT AND CONSEQUENTLY BY APPLY ING THE PROVISIONS OF SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT WAS BARRED BY TIME AND ACCORDINGLY THE LEARNED CIT (APPEALS) OUGHT TO HAVE CANCELLED THE REASSESSMENT AS DONE BY THE ASSESSING OFFICER AS BARRED BY TIME. 6. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THERE WAS NO MATERIAL TO SUGGEST THAT THE APPELLANT HAD RECEIVED MORE THAN WHAT WAS DECLARED AND ACCORDINGLY THE EST IMATION OF SALE CONSIDERATION FOR COMPUTATION OF CAPITAL GAIN AS MADE BY THE ASSESSING OFFICER WAS WITHOUT JURISDICTION AND UPHO LDING OF THE SAME BY THE LEARNED CIT (APPEALS) WAS INVALID AND L IABLE TO BE CANCELLED. 7. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE PROVISIONS OF SECTION 142A OF THE ACT HAVE NO A PPLICATION IN THE CASE OF THE APPELLANT. 8. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT ESTIMATION OF VALUE OF THE PROPERTY WAS NOT CONCLUS IVE FOR ITA NO.919/BANG/2014 PAGE 3 OF 19 REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT AS HELD BY THE HON'BLE SUPREME COURT AND CONSEQUENTLY THE REAS SESSMENT BASED UPON SUCH VALUE WAS OPPOSED TO LAW AND ACCORD INGLY HE OUGHT TO HAVE CANCELLED THE REASSESSMENT. 9. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE CAPITAL GAIN AS COMPUTED BY THE ASSESSING OFFIC ER WAS WITHOUT JURISDICTION AND THERE BEING NO MATERIAL TO SUGGEST THAT THE APPELLANT HAD RECEIVED CONSIDERATION MORE THAN WHAT WAS RECORDED AND THE COMPUTATION OF CAPITAL GAIN AS MAD E WAS OPPOSED TO LAW AND THE CAPITAL GAIN AS COMPUTED AND AS ASSESSED IS LIABLE TO BE DELETED. 10. THE LEARNED CIT (APPEALS) ERRED IN RELYING UPON VA RIOUS CASE LAW TO UPHOLD THE REASSESSMENT AS DONE BY THE ASSESSING OFFICER, AS ALL THE CASE LAW RELIED UPON WERE DISTI NGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE CASE OF THE APPE LLANT. 11. WITHOUT PREJUDICE, THE ADDITIONS AS CONFIRMED BY T HE LEARNED CIT (APPEALS) IS ARBITRARY, EXCESSIVE AND U NREASONABLE AND OUGHT TO BE DELETED IN FULL. 12. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT T HE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS T HAT THE APPEAL MAY BE ALLOWED. 2. THROUGH VARIOUS GROUNDS, THE ASSESSEE HAS ASSAI LED THE VALIDITY OF REOPENING OF ASSESSMENT. NO GROUND ON MERITS HAS B EEN RAISED. THEREFORE, WE ARE CONFINED TO EXAMINE THE ISSUE OF VALIDITY OF REOPENING OF ASSESSMENT AND IN THIS REGARD THE FACTS BORNE OUT F ROM THE RECORD ARE THAT ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE MANUFACTURE AND SALE OF ALUMINIUM PRODUCTS AND FILED ITS RETURN OF INCOM E FOR THE AY 2005-06 ON 28.10.2005 DECLARING TOTAL INCOME AT RS.8,70,55,300 . THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT, 19 61 [THE ACT]. ITA NO.919/BANG/2014 PAGE 4 OF 19 THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND A SSESSMENT ORDER U/S. 143(3) WAS PASSED ON 28.12.2007 ACCEPTING THE RETUR NED INCOME. 3. ACCORDING TO THE AO, THERE WAS FAILURE ON THE PA RT OF ASSESSEE TO DISCLOSE THE CORRECT SALE CONSIDERATION IN RESPECT OF PROPERTY AT DELHI, AS A RESULT OF WHICH ACTION FOR REOPENING THE CASE U/S. 147 WAS TAKEN BY ISSUING A NOTICE U/S. 148 OF THE ACT ON 30.03.2012. IN RE SPONSE THERETO, THE ASSESSEE REQUESTED THE AO TO TREAT THE RETURN FILED ON 28.10.2005 AS FILED IN COMPLIANCE OF THE NOTICE U/S. 148 OF THE ACT. A CCORDINGLY, REASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 OF THE ACT VIDE O RDER DATED 25.03.2013 DETERMINING TOTAL INCOME AT RS.32,38,19,999 DUE TO ADDITION OF RS.23,67,63,798 CONSIDERING THE UNACCOUNTED SALE CO NSIDERATION RELATING TO SALE OF PROPERTY AT DELHI. 4. BEFORE REOPENING THE ASSESSMENT, THE AO WAS IN P OSSESSION OF INFORMATION THAT IN THE ASSESSMENT CONCLUDED IN THE CASE OF PURCHASER OF IMMOVABLE PROPERTY SOLD BY THE ASSESSEE DURING THE YEAR ENDED 31.3.2005, THE SHORT TERM CAPITAL GAIN ARISING FROM THE SALE O F IMMOVABLE PROPERTY HAD NOT BEEN SHOWN BY THE ASSESSEE IN ITS RETURN OF INC OME FOR THE AY 2005-06. THEREFORE, THE AO INITIATED THE PROCEEDINGS U/S. 14 7 OF THE ACT BY ISSUING NOTICE U/S. 148 OF THE ACT. ON THE BASIS OF INFO RMATION RECEIVED, THE AO HAS RECORDED THE REASONS FOR REOPENING OF THE ASSES SMENT AND IN THE REASONS HE HAS MENTIONED THAT IN PROFIT & LOSS ACCO UNT OF THE ASSESSEE, NO REFERENCE WAS MADE WITH REGARD TO SALE OF IMMOVABLE PROPERTY AND THE ITA NO.919/BANG/2014 PAGE 5 OF 19 PROFITS EARNED BY THE ASSESSEE ON THE SALE AND TRAN SFER OF LAND DURING THE IMPUGNED ASSESSMENT YEAR. HE HAS ALSO OBSERVED THAT IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE DID NOT MENTION ANY S UCH TRANSACTION OF THE TRANSFER HAVING TAKEN PLACE IN THE RELEVANT PREVIOU S YEAR OR ABOUT ANY CAPITAL GAINS ARISING FROM SUCH TRANSACTIONS. THE SALE DEED WAS ENTERED AND LANDS WERE TRANSFERRED BY THE ASSESSEE THROUGH SHRI ANIL KUMAR GUPTA AND SHRI SUSHEEL KUMAR GUPTA ON 19.05.2004 AS APPEA RING FROM THE REGISTERED SALE DEED. ON THE BASIS OF THESE OBSERV ATIONS, THE AO HAS RECORDED THAT THERE IS REASON TO BELIEVE THAT INCOM E CHARGEABLE TO TAX FOR AY 2005-06 HAS ESCAPED ASSESSMENT BY THE REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR AY 2005-06. 5. REOPENING OF THE ASSESSMENT WAS QUESTIONED BY T HE ASSESSEE BEFORE THE CIT(APPEALS), BUT THE CIT(APPEALS) REJEC TED THE SAME. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNA L AND QUESTIONED THE VALIDITY OF REOPENING OF THE ASSESSMENT. 6. THE LD. COUNSEL FOR THE ASSESSEE RAISED ARGUMENT S QUESTIONING THE VALIDITY OF REOPENING OF THE ASSESSMENT AS RAISED B EFORE THE CIT(APPEALS). THE CIT(APPEALS) HAS RECORDED THE SUBMISSIONS RAISE D BY THE ASSESSEE IN HIS ORDER. ON THE OTHER HAND, THE LD. DR PLACED HE AVY RELIANCE UPON THE ORDER OF CIT(APPEALS). ITA NO.919/BANG/2014 PAGE 6 OF 19 7. HAVING CAREFULLY EXAMINED THE ARGUMENTS RAISED A ND THE ORDERS OF AUTHORITIES BELOW, WE FIND THAT THE CIT(APPEALS) HA S RECORDED THE SUBMISSIONS RAISED BY THE ASSESSEE IN HIS ORDER IN PARA 3.2 AND WHILE ADJUDICATING THE ISSUE, HE HAS RECORDED THE REASONS FOR REOPENING OF THE ASSESSMENT. FOR THE SAKE OF REFERENCE, WE EXTRACT THE SAME AS UNDER:- FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE COMP ANY FILED THE RETURN OF INCOME ON 28.10.2005 DECLARING A TOTAL IN COME OF RS.8,70,55,300/- AFTER CLAIMING A DEDUCTION OF RS.4,51,83,841/- U/S. 80IA OF THE ACT. THE CASE WAS PROCESSED U/S 143(1) ON 09.01.2007. FURTHER THE CASE WAS SELECTED FOR SCRUT INY AND THE ORDER U/S 143(3) WAS PASSED ON 28.12.2007 BY ACCEPT ING THE RETURN INCOME. 2. SUBSEQUENTLY, IT WAS NOTICED THAT CERTAIN INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN AS MUCH AS THE ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 80IA OF RS. 4,51,83,841/- WAS WRONG AND THE ASSESSEE HAS CLAIME D EXCESSIVE RELIEF BY WAY OF DEDUCTION. THE REASONS WERE: A. ASSESSEE HAD FOUR UNITS OF WINDMILL OUT OF WHICH TH REE WERE PROFIT MAKING AND ONE WAS INCURRING LOSSES. B. AS PER SECTION 80IA(5), THE QUANTUM OF DEDUCTION IS TO BE COMPUTED BY TREATING THE ELIGIBLE BUSINESS AS THE O NLY SOURCE OF INCOME AND THE DEDUCTION IS FOR THE TOTAL PROFIT OF THE ELIGIBLE BUSINESS. THUS, AFTER CALCULATING THE TOTA L PROFITS AND LOSSES OF ALL THE UNITS, THE PROFIT OF THE ELIGIBLE BUSINESS WORKS OUT TO LOSS OF RS. 3.4 CRORES. 3. APPROVAL OF THE ADDL. CIT, RANGE 11, BANGALORE WAS TAKEN AND A NOTICE U/S. 148 OF THE ACT DATED 23.03.2010 WAS ISSUED. THE ORDER U/S. 143(3) R,W.S. 147 OF THE ACT WAS PASSED ON 30.12.2010 BY ASSESSING THE INCOME AT RS.13,22,39,/ 42/- AFTER DISALLOWING THE DEDUCTION OF THE ASSESSEE U/S. 801A. 4. IT HAS NOW BEEN NOTICED THAT CERTAIN INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT DUE TO ASSESSEE'S FAILUR E TO DISCLOSE ITA NO.919/BANG/2014 PAGE 7 OF 19 FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT FOR A Y 2005-06. THE DETAILS ARE AS UNDER: 5. DURING THE FY 2004-05, AN AREA OF 694 SQ. METER S OF THE PROPERTY LOCATED AT 21/31-A, MALL ROAD, DELHI HAS BEEN SOLD BY M/S. JINDAL ALUMINIUM LTD. AND M/S JINDAL PIPES LTD TO SHRI ANIL KUMAR GUPTA (PAN NO. AAHPG2966J) AND HIS WIFE WITH ADDRESS AT- 21/4672, ANSARI ROAD, DARYAGANJ , DELHI . BY THE SALE DEED DATED 19.05.2004, IT HAS BEEN SEEN THAT THE TO TAL COST OF THIS TRANSACTION IS RS. 1 CRORE OUT OF WHICH M/S. JINDAL ALUMINIUM LTD HAS RECEIVED RS. 50 LAKH (RS.10 LAKHS IN FY 2003-04 AND RS.40 LAKHS IN FY 2004-05) AND M/S. JINDAL PIPES LTD. HAS RECEIVED RS. 50 LAKH. 5.1 IN A SIMILAR TRANSACTION, THE ASSESSEE COMPANY AND M/ S. JINDAL PIPES LTD HAD SOLD AN AREA OF ABOUT 690 SQ. METERS OF THE PROPERTY AT 21/ 31-A, MALL ROAD, DELHI TO AN INDIVI DUAL BY NAME SHRI SUSHI! KUMAR GUPTA (PAN NO. AAGPG2698L) AND HI S WIFE WITH ADDRESS AT- 21/4672, ANSARI ROAD, DARYAGANJ, D ELHI FOR VALUE OF RS. 1 CRORE. SALE PROCEEDS TO THE EXTENT O F RS. 40 LAKHS WERE RECEIVED DURING F Y 2004-05 AND RS. 10 LAKHS W ERE RECEIVED DURING F Y 2003-04. 6. ON A PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE COMPANY, IT IS SEEN THAT THE ASSESSEE HAS SHOWN INC OME UNDER THE FOLLOWING HEADS FOR AY 2005-06: A) NET SALES-RS.339,02,40,217 B) OTHER INCOME-RSA,79,00,338; THE SUBCONSTITUENTS BEI NG; INTEREST INCOME OF RS.3.55 CRORES AND MISCELLANEOUS INCOME OF RS.1.23 CRORES. C) INCREASE IN STOCK-RS.3,31 ,38,497, 7. THERE IS NO MENTION OF THE SALES PROCEEDS AND A BOUT THE PROFITS EARNED BY THE ASSESSEE ON THE SALE AND TRAN SFER OF THE LAND DURING THE PREVIOUS YEAR RELEVANT TO A Y 2005-06 IN THE PROFIT AND LOSS ACCOUNT AND THE RETURNS OF INCOME FURNISHE D. FURTHER, THE COMPUTATION OF TOTAL INCOME DOES NOT MENTION AB OUT ANY SUCH TRANSACTION OF TRANSFER HAVING TAKEN PLACE DURING T HE RELEVANT PREVIOUS YEAR OR ABOUT ANY CAPITAL GAINS ARISING FR OM SUCH A TRANSACTION. THE SALE DEEDS WERE ENTERED INTO AND T HE LANDS WERE TRANSFERRED BY THE ASSESSEE TO SHRI ANIL KUMAR GUPT A AND SHRI ITA NO.919/BANG/2014 PAGE 8 OF 19 SUSHEEL KUMAR GUPTA ON 19 TH MAY, 2004, AS IS EVIDENT FROM THE REGISTERED SALE DEEDS. 7.1 AS PER THE PROVISIONS OF SECTION 45(1) OF THE- INCOME TAX ACT, THE PROFITS OR GAINS ARISING TO THE ASSESSEE F ROM A TRANSFER OF CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL B E CHARGEABLE TO INCOME TAX UNDER THE HEAD 'CAPITAL GAINS', AND SHAL L BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. CONSIDERING THE FACTS OF THE CASE, THE ASSES SEE WAS BOUND TO DISCLOSE THE TRANSACTIONS OF TRANSFER AND THE PR OFITS ARISING FROM SUCH TRANSFERS IN AY 2005-06, AS THE TRANSFERS HAD TAKEN PLACE IN FY 2004-05. BUT THE ASSESSEE HAS FAILED TO DISCLOSE THE SAME EITHER IN THE RETURN OF INCOME OR DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS ALSO NOT D ISCLOSED THE INFORMATION DURING THE COURSE OF PROCEEDINGS U/S 14 7 WHICH HAD TAKEN PLACE LATER. THEREFORE THE SALES CONSIDERATIO N RECEIVED BY THE IT WOULD NOT BE OUT OF PLACE TO PUT ON RECORD, WHETHER IT IS MATERIAL OR NOT FOR THE PURPOSE OF MAKING THE REASS ESSMENT U/S 147 OF THE ACT, THAT THE ASSESSMENTS U/S 153A(1)(B) HAVE BEEN MADE IN THE HANDS OF THE PURCHASERS/TRANSFEREES, WH EREIN THERE IS A DISPUTE BETWEEN THE A. 0. AND THE ASSESSEE REGARD ING THE FAIR MARKET VALUE OF THE UNDERLYING ASSETS AS ON THE DAT E OF THE TRANSFER. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE DISCUS SED ABOVE, I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE T O TAX FOR A Y 2005-06 HAS ESCAPED ASSESSMENT BY REASON OF THE FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL ,FACTS NECESSARY FOR HIS ASSESSMENT FOR A.Y. 2005-06.' 8. UNDOUBTEDLY, THE ASSESSMENT U/S. 143(3) WAS COMP LETED ON 28.12.2007 AND REOPENING WAS DONE AFTER FOUR YEARS. THEREFORE, FOR REOPENING THE ASSESSMENT, THE AO IS REQUIRED TO EST ABLISH THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT ON FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT. THE AO HAS CATEGORICALLY MADE OUT A CASE IN THE REA SONS RECORDED THAT IN ITA NO.919/BANG/2014 PAGE 9 OF 19 THE RETURN OF INCOME OR COMPUTATION OF INCOME, THE ASSESSEE HAS NOT DISCLOSED ANY SALE PROCEEDS OR THE PROFITS EARNED B Y THE ASSESSEE ON THE SALE AND TRANSFER OF THE LAND DURING THE PREVIOUS Y EAR RELEVANT TO AY 2005- 06. ON RECEIPT OF THIS INFORMATION WITH REGARD TO SALE, THE AO HAS VERIFIED THE RECORDS AND HE HAS NOTICED THAT THE ASSESSEE HA S NOT DISCLOSED THESE FACTS EITHER IN THE RETURN OF INCOME OR IN THE COMP UTATION OF INCOME. HE FORMED A BELIEF THAT ON ACCOUNT OF NON-FURNISHING O F THIS INFORMATION, THE INCOME HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT FOR THE AY 2005-06. 9. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE COULD NOT ESTABLISH THAT HE HAS FURNISHED THIS INFORMATIO N EITHER IN THE RETURN OF INCOME OR IN THE COMPUTATION OF INCOME. SINCE THE INCOME ESCAPED ASSESSMENT ON ACCOUNT OF NON-FURNISHING OF THE COMP LETE INFORMATION, THE REOPENING OF THE ASSESSMENT IS VALID AND WE FIND NO INFIRMITY THEREIN. THE CIT(APPEALS) HAS EXAMINED THE SUBMISSIONS OF THE AS SESSEE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS BEFORE HOLDING THE REOPENING TO BE VALID AND WE FIND NO INFIRMITY THEREIN. WE, HOWEVER, FOR THE SAKE OF READY REFERENCE EXTRACT THE RELEVANT OBSERVATIONS OF THE CIT(APPEALS) AS UNDER:- 3.4 A PERUSAL OF THE REASONS RECORDED REVEALS TH AT DURING THE - FINANCIAL YEAR 2004-05 M/S JINDAL ALUMINIUM LTD (TH E APPELLANT) AND M/S JINDAL PIPES LTD HAVE SOLD A PROPERTY LOCATED A T 21/31A, MALL ROAD, DELHI ADMEASURING 694 SQ.METERS TO SHRI ANIL KUMAR GUPTA AND HIS WIFE BY A SALE DEED DATED 19/05/2004 AT A T OTAL CONSIDERATION OF RS. 1 CRORE. OUT OF WHICH, THE APPELLANT COMPANY RECEIVED RS.10 ITA NO.919/BANG/2014 PAGE 10 OF 19 LAKHS IN THE FINANCIAL YEAR 2003-04 AND RS.40 LAKHS DURING THE FINANCIAL YEAR 2004-05 AND M/S JINDAL PIPES LTD HAS RECEIVED RS.50 LAKHS. 3.5 SIMILAR TRANSACTION ENTERED INTO BY THE APPEL LANT COMPANY AND M/S JINDAL PIPES LTD WITH SHRI. SUSHIL KUMAR GU PTA AND HIS WIFE FOR THE PROPERTY AT 21/31A MALL ROAD, DELHI ADMEASU RING 690 SQ.METERS FOR A CONSIDERATION OF RS.L CRORES AND AP PELLANT RECEIVED ITS SHARES OF SALE PROCEEDS OF RS.10 LAKHS DURING THE F INANCIAL YEAR 2003- 04 AND RS.40 LAKHS DURING THE FINANCIAL YEAR 2004-0 5. AS THE PROPERTY AT 21/31A WAS TRANSFERRED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06, HOWEVER IN THE PROFIT AND LOSS ACCOUNT AND COMPUTATION FOR THE ASSESSMENT YEAR 2005-06, THE PR OFIT EARNED ON SALE OF AFORESAID PROPERTY WAS NOT DISCLOSED IN THE RETURN OF INCOME. IN VIEW OF THE ABOVE, THE APPELLANT HAS OMITTED TO DISCLOSE THESE TRANSACTION AND PROFIT ARISING ON TRANSFER OF THE P ROPERTY WAS NOT OFFERED FOR TAXATION. THUS THERE WAS FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND HENCE THE AO HAVING SUFFICIENT MATERIAL TO FORM A BELIEF THAT ESCAPEMENT OF INCOME CHARGEABLE TO TAX. 3.6 IN THIS CONNECTION IT IS RELEVANT TO QUOTE CE RTAIN CASE LAWS WHICH STRENGTHEN THE ABOVE FINDINGS - I) KALYANJI MAVJI & CO VS CIT (1976) 102 ITR 287 (S C) SECTION 34(1) CONTEMPLATES TWO CATEGORIES OF CASES FOR REOPENING THE PREVIOUS ASSESSMENT: (1) WHERE THERE HAS BEEN AN OM ISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OF HIS INCOME UNDER SECTION 22 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR HIS ASSESSMENT; AND (2) WHERE THERE HAS BEEN NO SUCH OMISSION ON THE PART OF THE ASSESSEE BUT THE ITO ON THE BASIS O F INFORMATION IN HIS POSSESSION FINDS THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY YEAR. IT IS, THEREFORE, MANIFEST THAT THE FIRST CATEGORY DEALS WITH CASES WHERE AN ASSESSEE IS HIMS ELF IN DEFAULT AND THE SECOND CATEGORY DEALS WITH CASES WHERE THERE IS NO FAULT ON THE PART OF AN ASSESSEE BUT WHERE THE INCOME CHARGEABLE TO TAX HAS ACTUALLY ESCAPED ASSESSMENT FOR ONE REASON OR THE O THER AND THE ITO COMES TO KNOW ABOUT THE SAME. THE FOLLOWING TESTS AND PRINCIPLES WOULD APPLY TO D ETERMINE THE APPLICABILITY OF SECTION 34(1)(B) TO THE FOLLOWING CATEGORIES OF CASES: ITA NO.919/BANG/2014 PAGE 11 OF 19 (1)WHERE THE INFORMATION IS AS TO THE TRUE AND CORR ECT STATE OF THE LAW DERIVED FROM RELEVANT JUDICIAL DECISIONS; (2)WHERE IN THE ORIGINAL ASSESSMENT THE INCOME LIAB LE TO TAX HAS ESCAPED ASSESSMENT DUE TO OVERSIGHT, INADVERTENCE O R A MISTAKE COMMITTED BY THE ITO. THIS IS OBVIOUSLY BASED ON TH E PRINCIPLE THAT THE TAXPAYER WOULD NOT BE ALLOWED TO TAKE ADVANTAGE OF AN OVERSIGHT OR MISTAKE COMMITTED BY THE TAXING AUTHORITY; (3)WHERE THE INFORMATION IS DERIVED FROM AN EXTERNA L SOURCE OF ANY KIND. SUCH EXTERNAL SOURCE WOULD INCLUDE DISCOVERY OF NEW AND IMPORTANT MATTERS OR KNOWLEDGE OF FRESH FACTS WHICH WERE NOT PRESENT AT THE TIME OF THE ORIGINAL ASSESSMENT; (4)WHERE THE INFORMATION MAY BE OBTAINED EVEN FROM THE RECORD OF THE ORIGINAL ASSESSMENT FROM AN INVESTIGATION OF THE MA TERIALS ON THE RECORD, OR THE FACTS DISCLOSED THEREBY OR FROM OTHE R ENQUIRY OR RESEARCH INTO FACTS OR LAW. IF THESE CONDITIONS ARE SATISFIED THEN THE ITO WOULD HAVE COMPLETE JURISDICTION TO REOPEN THE ORIGINAL ASSESSMENT. IT IS OBVIOUS THAT WHERE THE ITO GETS NO SUBSEQUENT INFORMATION, BUT MERELY PROCEEDS TO REOPEN THE ORIG INAL ASSESSMENT WITHOUT ANY FRESH FACTS OR MATERIALS OR WITHOUT ANY ENQUIRY INTO THE MATERIALS WHICH FORM PART OF THE ORIGINAL ASSESSMEN T, SECTION 34(1)(B) WOULD HAVE NO APPLICATION. II) SOHAN SINGH VS CIT (1986) 158 ITR 174(DELHI) IN THE INSTANT CASE, THE ASSESSEE HAD NOT DISCLOSED TO THE ITO HIS CONNECTION WITH THE BUSINESS OF THE FIRM. IN THE LI GHT OF THE INFORMATION RECEIVED BY HIM, THE ITO HAD REASON TO BELIEVE THAT THIS BUSINESS BELONGED TO THE ASSESSEE AND AS SUCH HE HA D ALSO REASON TO BELIEVE THAT THE INCOME THEREFROM HAD ESCAPED ASSES SMENT IN THE HANDS OF THE ASSESSEE BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FACTS RELATING TO BUSIN ESS IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE EVENTUAL CONCLUSION ARR IVED AT BY THE TRIBUNAL THAT THE IMPUGNED INCOME EARNED PURPORTEDL Y BY THE FIRM WAS REALLY THE INCOME OF THE ASSESSEE, WHICH HAD BE COME FINAL, ALSO SUPPORTED THE INFERENCE THAT THERE HAD BEEN A FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE PRIMARY FACTS NECESSARY FO R HIS ASSESSMENTS. THEREFORE, IT WAS CLEAR THAT THE PROVISIONS OF SECT ION 147(A) WERE ATTRACTED TO THE INSTANT CASE AND THE ASSESSMENTS W ERE APPROPRIATELY REOPENED BY RECOURSE TO SECTION 147(A). ITA NO.919/BANG/2014 PAGE 12 OF 19 III) SMT. SHASHI JAIN VS ITO (1997) 228 ITR 68 2(A11) NO NOTICE WAS REQUIRED TO BE GIVEN BEFORE THE ISSUA NCE OF NOTICE UNDER SECTION 148. IT COULD NOT BE ACCEPTED THAT THE IMPUGNED NOTICES HAD, BEEN ISSUED BY THE ASSESSING OFFICER WITHOUT T HERE BEING ANY REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED THE ASSESSMENT. HOWEVER, THE PETITIONER WOULD HAVE OPPO RTUNITY TO CONTEST THE CORRECTNESS' OF THE VALUER'S REPORT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS IN PURSUANCE OF THE NOTICES UNDER SECTION 148. IV) ESS ESS KAY ENGG CO (P) LTD VS CIT (2001) 247 ITR 818(SC) THERE WAS MATERIAL ON THE BASIS OF WHICH THE ITO CO ULD PROCEED TO REOPEN THE CASE, IT WAS NOT A CASE OF MERE CHANGE O F OPINION. THE SUPREME COURT WAS NOT INCLINED TO INTERFERE WITH TH E DECISION OF THE HIGH COURT MERELY BECAUSE THE CASE OF THE ASSESSEE HAD BEEN ACCEPTED AS CORRECT IN THE ORIGINAL ASSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION. IT DOES NOT PRECLUDE THE ITO TO REOPEN THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF HIS F INDINGS OF FACT MADE ON THE BASIS OF FRESH MATERIALS IN THE COURSE OF AS SESSMENT OF THE NEXT ASSESSMENT YEAR. THEREFORE, THE APPEAL WAS TO BE DI SMISSED V) ITO VS GURINDER KAUR (2006) 102 ITD 189 (ITAT-DELHI ) ANOTHER WING OF THE, INCOME-TAX DEPARTMENT, WHICH W AS ENTRUSTED WITH THE TASK-OF-COLLECTING INFORMATION RELEVANT TO THE DETECTION OF TAX EVASION. THE ASSESSING OFFICER COULD NOT BE SAID TO HAVE MERELY SUSPECTED THAT INCOME HAD ESCAPED ASSESSMENT. HE WA S BOUND TO GIVE PRIMA FACIE CREDENCE TO THE INFORMATION COMING FROM HIS OWN DEPARTMENT, THOUGH FROM ANOTHER WING. HE COULD NOT BRUSH IT ASIDE OR IGNORE IT ON THE GROUND THAT IT WAS A MERE ALLEGATI ON. THE LETTER CONSTITUTED MATERIAL ON THE BASIS OF WHICH THE ASSE SSING OFFICER COULD HOLD THE REQUISITE 'BELIEF IT HAD A RATIONAL CONNEC TION OR LIVE LINK WITH THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. IT WAS NOT A MERE PRETENCE NOR WAS IT BASED ON MERE GOSSIP OR RUMOUR. IT WAS A BELIEF BONA FIDE HELD NO DOUBT, THE DY. COMMISSIONER OF THE CONCERNE D RANGE HAD ASKED THE ASSESSING OFFICER TO EXAMINE THE ISSUE AN D DISCUSS IT WITH HIM FOR FURTHER INVESTIGATION, BUT SIMPLY BECAUSE T HE ASSESSING OFFICER CHOSE TO ISSUE THE NOTICE UNDER SECTION 148 WITHOUT ADHERING TO THE DIRECTIONS OF THE DY. COMMISSIONER, IT COULD NOT BE SAID THAT THE ASSESSING OFFICER HAD PROCEEDED TO ADOPT A SHOR T-CUT WITHOUT ITA NO.919/BANG/2014 PAGE 13 OF 19 FORMING THE REQUISITE BELIEF. IT IS THE SATISFACTIO N OF THE ASSESSING OFFICER, WHO IS EMPOWERED TO ISSUE THE NOTICE UNDER SECTION 148, THAT IS RELEVANT AND IN ARRIVING AT THE SAME, HE IS NOT BOUND BY THE DIRECTIONS OF THE SUPERIORS. IT HAS TO BE REMEMBERE D THAT AT THE STAGE OF RECORDING REASONS AND ISSUING NOTICE UNDER SECTI ON 148, IT IS ONLY EXPECTED OF THE AO TO REACH A PRIMA FACIE CONCLUSIO N THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. AT THAT S TAGE, HE IS NOT EXPECTED TO BUILD A FOOL-PROOF OR CAST-IRON CASE AG AINST THE ASSESSEE BEFORE PROCEEDING TO ISSUE THE NOTICE. HE IS NOT EX PECTED TO MAKE A COMPLETE INVESTIGATION BEFORE ISSUING THE NOTICE. T HEREFORE, THERE WAS NO FORCE IN THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSING OFFICER HAD NOT HELD ANY ENQUIRY INTO THE VERACITY OF THE L ETTER RECEIVED FROM THE CIB OR HAD NOT CONDUCTED AN INVESTIGATION TO CH ECK THE ALLEGATION IN THE LETTER BEFORE 'ISSUING THE NOTICE. [PARA 191 VI) JAGJIT PAL SINGH ANAND VS CIT (2010) 320 ITR 10 6 (DELHI) IN RAYMONDS WOOLLEN MILLS LTD V. /TO [1999) 236 ITR 34 , THE SUPREME COURT HAS HELD THAT IN DETERMINING WHETHER THE COMMENCEMENT OF THE REASSESSMENT PROCEEDINGS WAS VA LID, IT WAS ONLY TO BE SEEN THAT THERE WAS A PRIMA FACIE SOME M ATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE . THE SUFFICIENCY AND CORRECTNESS OF THE MATERIAL IS NOT A THING TO B E CONSIDERED AT THIS STAGE. IN THE INSTANT CASE, THERE WAS A MATERIAL ON RECORD ON THE BASIS OF WHICH THE ASSESSING OFFICER HAD FORMED OPINION T HAT THERE WAS ESCAPEMENT OF INCOME IN THE CASE OF THE ASSESSEE FO R THE YEAR UNDER CONSIDERATION. THEREFORE, THE TRIBUNAL WAS JUSTIFIE D IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING JURISDI CTION BY INITIATING PROCEEDINGS UNDER SECTION 147 [PARA 12]. VII) CIT VS MEDICAL TRUST HOSPITAL (1010) 325 I TR 191 (KER) ASSESSING OFFICER IS FREE TO REFER BUILDING FOR VAL UATION AND VALUATION REPORT IS CERTAINLY A SPECIALIZED INFORMATION WHIC H CAN CONSTITUTE BASIS FOR REOPENING WHEN INVESTMENT VALUED BY APPRO VED VALUER IS OVER AND ABOVE COST DECLARED BY ASSESSEE; HENCE, SA ME CONSTITUTES BASIS FOR REOPENING. VIII) CIT VS RINKU CHAKRABORTHY (2011) 242 CTR 425 (KAR) FROM THE AFORESAID JUDGMENTS IT IS CLEAR THAT, THOU GH THE WORD 'OPINION' IS DELETED AND IS NOW SUBSTITUTED BY THE WORDS 'REASON TO BELIEVE', THE CONCEPT OF CHANGE OF OPINION IS NOT O BLITERATED W.E.F. 1 ST APRIL, 1989 AFTER SUBSTITUTION OF S. 147 OF THE IT ACT, 1961 BY THE ITA NO.919/BANG/2014 PAGE 14 OF 19 DIRECT TAX LAWS (AMENDMENT) ACT, 1987. HOWEVER, WHE RE IN THE ORIGINAL ASSESSMENT THE INCOME LIABLE TO TAX HAS ES CAPED ASSESSMENT DUE TO OVERSIGHT AND IN ADVANCE OR A MISTAKE COMMIT TED BY THE ITO, THE [TO HAS THE JURISDICTION TO REOPEN THE ORIGINAL ASSESSMENT. IT IS NOT NECESSARY THAT FOR SUCH REOPENING OF SUCH ASSES SMENT THE INFORMATION IS TO BE DERIVED FROM EXTERNAL SOURCE O F ANY KIND OR DISCLOSURE OF NEW AND IMPORTANT MATTERS SUBSEQUENT TO THE ORIGINAL ASSESSMENT. EVEN IF THE INFORMATION IS OBTAINED FRO M THE RECORD OF THE ORIGINAL ASSESSMENT AFTER A PROPER INVESTIGATION FR OM THE MATERIALS ON RECORD OR THE FACTS DISCLOSED THEREBY OR FROM ANY E NQUIRY OR RESEARCH INTO FACTS OR LAW, REASSESSMENT IS PERMISSIBLE. INC OME MAY ESCAPE ASSESSMENT AS A RESULT OF LACK OF VIGILANCE OF THE ITO OR DUE TO PERFUNCTORY PERFORMANCE OF HIS DUTIES WITHOUT DUE C ARE AND CAUTION. EVEN IN A CASE WHERE A RETURN HAS BEEN SUBMITTED TO THE ITO WHO ERRONEOUSLY FAILS TO TAX A PART OF THE ASSESSABLE I NCOME, IT IS A CASE OF THE SAID PART OF THE INCOME AS HAVING ESCAPED ASSES SMENT AND THE AO HAS JURISDICTION UNDER S. 147 TO REOPEN THE ASSESSM ENT AND BRING TO TAX THE INCOME THAT HAS ESCAPED ASSESSMENT. A TAXPA YER CANNOT BE ALLOWED TO TAKE ADVANTAGE OF ANY OF THOSE LAPSES, A S ULTIMATELY IF SUCH A ADVANTAGE IS ALLOWED, IT WOULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND PUBLIC INTEREST. IX) YESH RAJ FILMS. (P) LTD (2012) 204 TAXMAN 306 (DELH I) THE REOPENING OF THE ASSESSMENT IN THE INSTANT CASE IS ADMITTEDLY WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE R ELEVANT ASSESSMENT YEARS. WHEN THE REOPENING TAKES PLACE WITHIN A PERI OD OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, THE POWERS OF TH E ASSESSING OFFICER ARE SUBSTANTIALLY WIDER THAN WHEN A REOPENI NG IS BEYOND A PERIOD OF FOUR YEARS. NONETHELESS, THE POWER TO REO PEN AN ASSESSMENT CANNOT BE EXERCISED ARBITRARILY EVEN WITHIN A PERIO D OF FOUR YEARS, FOR THE ACT DOES NOT CONFER UPON THE ASSESSING OFFICER A POWER TO REVIEW AN ASSESSMENT ONCE MADE. A MERE CHANGE OF OPINION C ANNOT JUSTIFY REOPENING OF ASSESSMENT, BUT WHERE THE ASSESSING OF FICER CAN DEMONSTRATE THAT THERE WAS TANGIBLE MATERIAL ON THE BASIS OF WHICH HE HAD FORMED THE BELIEF THAT INCOME HAD ESCAPED ASSES SMENT, THAT WOULD FURNISH JURISDICTION TO HIM TO REOPEN ASSESSM ENT. IN THE INSTANT CASE, THE ASSESSING OFFICER HAD TANG IBLE MATERIAL ON THE BASIS OF WHICH HE HAS FORMED A REASON TO BELIEVE TH AT INCOME HAS ESCAPED ASSESSMENT. THE TANGIBLE MATERIAL CONSISTS OF MATERIAL THAT CAME INTO THE POSSESSION OF THE DEPARTMENT FOLLOWIN G A SURVEY OPERATION WHICH TOOK PLACE UNDER SECTION 133A. DURI NG THE COURSE OF ITA NO.919/BANG/2014 PAGE 15 OF 19 THE SURVEY, CERTAIN DOCUMENTS CAME TO BE IMPOUNDED. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF THE PROCEED INGS FOR THE ASSESSMENT YEAR 2007-08 EXTRACTS, OF THE BOOKS OF A CCOUNT WHICH WERE FOUND IN AN IMPOUNDED CD. WERE TAKEN FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEARS TO WHICH THESE PROCEEDINGS RELATE. THESE WERE VERIFIED WITH THE FINANCIAL STATEMENTS FILED WITH T HE RETURN OF INCOME. DISCREPANCIES HAVE BEEN REVEALED IN RESPECT OF THRE E HEADS IN PARTICULAR.' (I) DIFFERENCE IN INTEREST INCOME; (II ) DIFFERENCE IN MISCELLANEOUS RECEIPTS; AND (ILI) CASH PAYMENTS DIS ALLOWABLE UNDER SECTION 40A(3), BEING PAYMENTS IN EXCESS OF RS. 20, 000. X) AG HOLDINGS (P) LTD ITO (2012) 21 TAXMANN.COM 34(DELHI) BE THAT AS IT MAY, EVEN IF IT IS ASSUMED FOR THE SA KE OF ARGUMENT THAT THOSE PARTICULARS WERE FURNISHED ALONG WITH THE ORI GINAL RETURN OF INCOME FILED ON 23-3-2005, THEY CANNOT BE SAID TO B E FULL AND TRUE, HAVING REGARD TO THE REPORT OF THE INVESTIGATION WI NG ON THE BASIS OF WHICH THE ASSESSMENT HAS BEEN REOPENED. IN THE REPO RT THERE IS SPECIFIC INFORMATION THAT THE ASSESSEE-COMPANY HAD RECEIVED AN AMOUNT FROM 'Q' THE REPORT ALSO MENTIONS THAT THIS IS AN ACCOMMODATION ENTRY GIVEN BY THE SAID COMPANY TO TH E ASSESSEE- COMPANY. THE RELEVANT BANK ACCOUNT PARTICULARS, INS TRUMENT NUMBER, ETC., HAVE ALL BEEN REPORTED. IN THE LIGHT OF THESE PARTICULARS, IT IS NOT POSSIBLE TO ACCEPT THE CLAIM THAT THE PARTICULARS A LLEGEDLY FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME ARE FULL A ND TRUE: THE INVESTIGATION REPORT IS A POINTER AND COSTS GRAVE D OUBTS ON BASIS OF EVIDENCE/MATERIAL ON THE GENUINENESS OF THE SHARE C ONTRIBUTION. FOR THE PURPOSE OF ENABLING THE REVENUE TO REACH A PRIM A FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, TH E DETAILS GIVEN IN THE INVESTIGATION REPORT ARE RELEVANT. NO DOUBT, THERE IS DISTINCTION BETWEEN THE RELEVANCY AND THE SUFFICIENCY OF THE MA TERIALS ON THE BASIS OF WHICH REASONS ARE RECORDED OR REOPENING TH E ASSESSMENT. IT IS SETTLED LEGAL POSITION THAT WHEREAS THE RELEVANC Y OF THE MATERIALS LEADING TO THE BELIEF ARE JUSTICIABLE, THE SUFFICIE NCY OF THOSE MATERIAL IS NOT. EVEN ON AN OBJECTIVE ANALYSIS, IT CANNOT BE SAID THAT THE MATERIALS ON THE BASIS OF WHICH THE REVENUE FORMED THE BELIEF WERE IRRELEVANT. AT THE TIME OF ISSUING THE NOTICE TO RE OPEN THE ASSESSMENT, THE ASSESSING OFFICER IS ONLY EXPECTED TO FORM A PR IMA FACIE OR TENTATIVE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. WHETHER THE ADDITION HAS TO BE MADE OR NOT IS A MA TTER TO BE DECIDED ON MERITS IN THE COURSE OF THE REASSESSMENT PROCEED INGS. THE COURT IS ITA NO.919/BANG/2014 PAGE 16 OF 19 ONLY CONCERNED WITH THE PRELIMINARY STAGE OF RECORD ING REASONS AND ISSUING NOTICE TO REOPEN THE ASSESSMENT. THE MATERI ALS AVAILABLE BEFORE THE ASSESSING OFFICER WERE WHOLLY RELEVANT F OR THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPE D ASSESSMENT ON ACCOUNT OF THE FAILURE OF THE ASSESSEE-COMPANY TO F URNISH FULL AND TRUE PARTICULARS REGARDING THE RECEIPT OF SHARE CAPITAL FROM 'Q'. XI) INDIAN HOME PIPE CO. LTD VS ACIT (2012) 348 ITR 439(BORN) FULL AND TRUE DISCLOSURES MUST MEAN WHAT THE STATUT E SAYS. THESE DISCLOSURES CANNOT BE GARBLED OR HIDDEN IN THE CREV ICES OF THE DOCUMENTARY MATERIAL WHICH HAS BEEN FILED BY THE AS SESSEE WITH THE ASSESSING OFFICER. THE ASSESSEE MUST ACT WITH CANDO UR AND THE DISCLOSURE MUST BE FULL AND TRUE. A FULL DISCLOSURE IS A DISCLOSURE OF ALL MATERIAL FACTS WHICH DOES NOT CONTAIN ANY HIDDEN MA TERIAL OR SUPPRESSION OF FACT. A TRUE DISCLOSURE IS A DISCLOS URE WHICH IS TRUTHFUL IN ALL RESPECTS. JUST AS THE POWER OF THE REVENUE T O REOPEN AN ASSESSMENT BEYOND A PERIOD OF FOUR YEARS IS RESTRIC TED BY THE CONDITIONS PRECEDENT SPELT OUT IN THE PROVISO TO SE CTION 147, EQUALLY AN ASSESSEE WHO SEEKS THE BENEFIT OF THE PROVISO TO SECTION 147 MUST MAKE A FULL AND TRUE DISCLOSURE OF ALL PRIMARY FACT S. THE ASSESSEE IN THE INSTANT CASE DID REFER TO THE FACT THAT THE CAP ITAL GAINS HAD RESULTED FROM THE TRANSFER OF A CAPITAL ASSET AND I N THE COURSE OF THE COMPUTATION DID PROVIDE FOR THE COST OF ACQUISITION NOTIONALLY AS OF 1- 4-1981. AN EXEMPTION WAS CLAIMED U/S 54EC. ALL THE NECESSARY FACTS ON THE BASIS OF WHICH THE CLAIM TO AN EXEMPTION ARE FOUNDED MUST BE DISCLOSED. AS THE ASSESSEE FAILED TO DO SO, THE REV ENUE IN THE INSTANT CASE WOULD BE JUSTIFIED IN REOPENING THE ASSESSMENT ON THE GROUND THAT INCOME HAS ESCAPED ASSESSMENT. CLAUSE (C) OF E XPLANATION 2 TO SECTION 147 PROVIDES FOR CASES WHERE INCOME CHARGEA BLE TO TAX IS DEEMED TO HAVE ESCAPED ASSESSMENT. AMONG THOSE CASE S ARE CASES WHERE AN ASSESSMENT HAS BEEN MADE BUT (I) INCOME CH ARGEABLE TO TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BE EN ASSESSED TO A LOWER RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THE ACT; OR (IV) AN EXCESSIV E LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THE ACT HAS BEEN COMPUTED. THE ASSESSING OFFICER IN THE INSTANT CASE HAS NOT EXCEEDED HIS JURISDICTION IN REOPENING THE ASSESSME NT. THE WRIT PETITION IS, ACCORDINGLY, DISMISSED. ITA NO.919/BANG/2014 PAGE 17 OF 19 XII) EXPORT CREDIT GUARANTEE CORPORATION OF INDIA L TD (2013) 30 TAXAMANN.COM 211(BOM) THAT THE ASSESSING OFFICER MUST BE DEEMED TO HAVE A CCEPTED WHAT HE HAS PLAINLY OVERLOOKED OR IGNORED IN THE ASSESSMENT ORDER WOULD BE TO STRETCH THE INTERPRETATION OF SECTION 147 TO A P OINT WHERE THE PROVISION WOULD CEASE TO HAVE MEANING AND CONTENT. SUCH AN EXERCISE OF EXCISION BY JUDICIAL INTERPRETATION IS IMPERMISS IBLE. WHEN AN ASSESSMENT IS SOUGHT TO BE REOPENED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE T EST TO BE APPLIED IS WHETHER THERE IS TANGIBLE MATERIAL TO DO SO. WHAT I S TANGIBLE IS SOMETHING WHICH IS NOT ILLUSORY, HYPOTHETICAL OR A MATTER OF CONJECTURE. SOMETHING WHICH IS TANGIBLE NEED NOT BE SOMETHING WHICH IS NEW. AN ASSESSING OFFICER WHO HAS PLAINLY IGNORE D RELEVANT MATERIAL IN ARRIVING AT AN ASSESSMENT, ACTS CONTRAR Y TO LAW. IF THERE IS AN ESCAPEMENT OF INCOME IN CONSEQUENCE, THE JURISDI CTIONAL REQUIREMENT OF SECTION 147 WOULD BE FULFILLED ON TH E FORMATION OF A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T. THE REOPENING OF THE ASSESSMENT WITHIN A PERIOD OF FOUR YEARS IS, IN THESE CIRCUMSTANCES, WITHIN JURISDICTION. AT THIS STAGE, THE. TEST TO BE APPLIED IS WHETHER T HERE WAS REASON. TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND WHET HER THE ASSESSING OFFICER HAD TANGIBLE MATERIAL BEFORE HIM FOR THE FORMATION OF THAT BELIEF A REASON TO BELIEVE IS WHAT IS RELEV ANT, NOT AN ESTABLISHED FACT OF THE ESCAPEMENT OF INCOME. 3.7 IN A NUT SHELL, THE SUB AND SUBSTANCE OF THE CASE LAWS CITED ABOVE ARE THAT FOR THE PURPOSE OF ENABLING THE AO T O REACH A PRIMA FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT, NO DOUBT THERE IS DISTINCTION BETWEEN THE RELEVANCY AN D THE SUFFICIENCY OF THE MATERIAL ON THE BASIS OF WHICH REASONS ARE RECO RDED FOR REOPENING OF THE ASSESSMENT. IT IS SETTLED POSITION THAT WHE REAS THE RELEVANCY OF THE MATERIAL LEADING TO THE BELIEF ARE JUSTIFIABLE, THE SUFFICIENCY OF THOSE MATERIAL IS NOT. EVEN ON AN OB JECTIVE ANALYSIS, IT CANNOT BE SAID THAT THE MATERIALS ON THE BASIS OF W HICH THE AO FORMED THE BELIEF WERE IRRELEVANT. AT THE TIME OF ISSUING NOTICE TO RE-OPEN THE ASSESSMENT, THE AO IS ONLY EXPECTED TO FORM A PRIMA FACIE OR TENTATIVE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED AS SESSMENT. WHETHER THE ADDITION HAS TO BE MADE OR NOT IS A MATTER TO B E DECIDED ON MERIT IN THE COURSE OF THE RE-ASSESSMENT PROCEEDINGS. AT THE TIME OF ISSUING OF NOTICE U/S 148 HE IS NOT EXPECTED TO BUILD A FUL L PROOF OR CAST-IRON CASE AGAINST THE APPELLANT BEFORE PROCEEDING TO USE THE NOTICE. HE IS ITA NO.919/BANG/2014 PAGE 18 OF 19 NOT EXPECTED TO MAKE A COMPLETE INVESTIGATION BEFOR E ISSUING THE NOTICE. THEREFORE, THERE WAS NO FORCE IN THE SUBMIS SION OF THE APPELLANT THAT MERE DVO'S REPORT CANNOT CONSTITUTE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 3.8 IT IS ALSO RELEVANT TO MENTION THAT THE BU YERS OF THE PARCEL OF THE LAND AT 21/31A, MALL ROAD, DELHI SHRI A.K.GUPTA AND SHRI S.K. GUPTA WERE ASSESSED TO TAX AT CENTRAL CIRCLE-11, FA RIDABAD. DURING THE ASSESSMENT PROCEEDINGS, THE ASSISTANT COMMISSIO NER OF INCOME- TAX, CENTRAL CIRCLE-II FARIDABAD REFERRED THE TRANS ACTION TO THE DVO AND VIDE REPORT DATED 22/12/2010, THE DVO ARRIVED A T THE VALUE OF THE SOLD LAND AT RS.77,777/- PER SQ. METER AND ACCORDIN GLY INCOME WAS ASSESSED IN THE HANDS OF THE BUYERS. AFTER THE COMP LETION OF ASSESSMENT, THE ACIT, CENTRAL CIRCLE-II, FARIDABAD FORWARDED THE INFORMATION TO THE DCIT, CIRCLE-11(5), BANGALORE (T HE AO). THIS IS DEFINITE INFORMATION COMING TO THE POSSESSION OF TH E AO FROM ANOTHER AO OF THE DEPARTMENT. THE AO CANNOT BE SAID TO HAVE MERELY SUSPECTED THAT INCOME HAD ESCAPED ASSESSMENT. HE IS BOUND TO GIVE PRIMA FACIE EVIDENCE TO THE INFORMATION COMING FROM THE DEPARTMENT THOUGH FROM ANOTHER AO. HE CANNOT BRUSH IT ASIDE OR IGNORE IT ON THE GROUND THAT IT IS A MERE ALLEGATION. THE INFORMATIO N RECEIVED FROM THE ACIT, CENTRAL CIRCLE-II, FARIDABAD CONSTITUTE MATER IAL ON THE BASIS OF WHICH THE AO CAN HOLD THE REQUISITE 'BELIEF'. IT HA S A RATIONAL CONNECTION OR LIVE LINK WITH THE FORMATION OF THE B ELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE HAN DS OF THE APPELLANT. IT IS NOT A MERE PRETENCE NOR IS IT BASE D ON MERE GOSSIP OR RUMOUR. IT IS A BONAFIDE FACT, THE AO HAD RELIED ON THE SALE DEED DATED 19/05/2004 AND THE INFORMATION RECEIVED FROM THE AC IT, CENTRAL CIRCLE-. II, FARIDABAD WHICH CONTAINED A CLEAR TRAN SACTIONS IN REGARD TO THE SALE OF PROPERTY TO THIRD PARTIES AND UNDERSTAT EMENT OF SALE CONSIDERATION AS PER DVO'S 'REPORT. THESE INFORMATI ON IN MY VIEW CONSTITUTES RELEVANT MATERIAL (TANGIBLE MATERI AL) FOR THE FORMATION OF THE BELIEF NOT MERE SUSPICION THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE APPELLANT'S CASE. THUS THE AO WAS JUSTIFIED IN ISSUING NOTICE U/S 148 OF THE ACT. THE REFORE, THIS GROUND OF APPEAL IS REJECTED. 10. SINCE WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) HOLDING THE REOPENING TO BE VALID, NO INTERFERENCE IN HIS O RDER IS CALLED FOR. ITA NO.919/BANG/2014 PAGE 19 OF 19 11. WITH REGARD TO THE ADDITIONS CONFIRMED BY THE C IT(APPEALS), WE FIND NO JUSTIFICATION TO EXAMINE THE VERACITY OF THE ADD ITIONS, AS NO GROUNDS OF APPEAL ARE RAISED BEFORE US. ACCORDINGLY, THE APPE AL OF THE ASSESSEE STANDS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( JASON P. BOAZ ) ( SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH SEPTEMBER, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.