M/s MD Waddar & Co (Dissolved), Bangalore V. The ACIT Cent Cir-I Belgaum, Belgaum

ITA 92/PAN/2014

• Counselvise Citation: 9224114 RSA 2014
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AHSA DESAI LD
• Assessee Lawyers: VENKETESHWAR
• Keywords: Unexplained cash credit; Tangible material; Wrong claim; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 40A(3); 143(3); 147; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO.92/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) M/S. M.D. WADDAR & CO., C/O. SRI NAGAPPA D. WADDAR CLASS 1 CONTRACT , FRIENDS COLONY, LINGSUGUR - 584122, RAICHUR DIST. KARNATAKA STATE. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, BELGAUM. (RESPONDENT) PAN:AACFM9563A (APPELLANT) ITA NO.181 /PNJ/2014 (ASSESSMENT YEAR 2008 - 09 ) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, BELGAUM. (APPELLANT) VS. M/S. M.D. WADDAR & CO., C/O. SRI NAGAPPA D. WADDAR CLASS - 1 CONTRACT, FRIENDS COLONY, LINGSUGUR - 584122,DIST: - RAICHUR, KARNATAKA STATE. PAN:AACFM9563A (RESPONDENT) APPELL ANT BY : SHRI VENKETESHWAR , CA. RESPONDEN T BY : SMT. AHSA DESAI , LD. DR. DATE OF HEARING : 11/08 /2014 DATE OF PRONOUNCEMENT : 30 /09 /2014 O R D E R PER: D.T. GARASIA THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORDER OF CIT(A) - BANGLORE DATED 24 TH FEBRUARY, 2014 FOR THE A.Y. 2008 - 09. 2. THE FOLLOWING GROUNDS RAISED BY THE ASSESSEE. 1. THE ORDER OF THE LEARNED CIT[A] IN SO FAR AS IT SUSTAINS ADDITIONS IMPUGNED IN THIS APPEAL AND ONLY ALLOWING THE APPEAL PARTLY INSTEAD OF TOTALLY IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. 2 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN HOLDING THAT THE RE - OPENING OF THE ASSESSMENT WAS PROPER WITHOUT APPRECIATING THAT THE SAME IS BAD IN LAW AND VOID - AB - INITIO FOR WAN T OF REQUISITE JURISDICTION ESPECIALLY, AS THE MANDATORY REQUIREMENTS TO ASSUME JURISDICTION U/S 148 OF THE ACT DID NOT EXIST AND HAVE NOT BEEN COMPLIED WITH AND CONSEQUENTLY, THE RE - ASSESSMENT REQUIRES TO BE CANCELLED. 2.1 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT[A] IS NOT JUSTIFIED IN HOLDING THAT THE ORDER OF ASSESSMENT PASSED BY THE LEARNED A.O. IS IN CONFORMITY WITH THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GKN DRVESHAET REPORTED IN 259 ITR 19, WITHOUT APPRECIATING THAT THE REOPENING OF THE ASSESSMENT IS BAD IN LAW SINCE, THE LEARNED A.O. HAS NOT DISPOSED OFF THE OBJECTIONS RAISED BY THE APPELLANT AND CONSEQUENTLY, THE ASSESSMENT ORDER PASSED REQUIRES TO BE CANCELLED HAVING REGARD TO THE RATIO OF THE FOLLOWING DECISIONS [1] TATA INTERNATIONAL LIMITED IN TA NOS. 3359 TO 3361 /MUM/2009 DATED 29/06/2012; [2] CIT V. VIDESH SANCHAR NIGAM LIMITED IN ITA NO.4235 OF 2010 DATED 20/07/2011 [BOMBAY] [3] M/ S. SYNOPSYS INTERNATIONAL LIMITED IN ITA NO.549IBANG/2011 DATED 10/12/2012 [4] K.V .VENKATASWAMY REDDY IN ITA NOS. 797, 807, 798 & 808/2009 DATED 21/05/2010 2.2 THE LEARNED CIT[A] IS NOT JUSTIFIED IN OBSERVING THAT RAISING OF THE OBJECTIONS AGAINST RE - OPENING BEFORE THE A.O. ON 25/03/2013 VERY NEAR THE TIME - BARRING DATE OF 31/03/2013 WAS SIMPLY A DILATORY TACTIC AND NOT A BONAFIDE OBJECTION AND THAT THEREFORE, THE A.O. WAS JUSTIFIED IN NOT CONSIDERING THE SAME UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. 3. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING A SUM OF RS .9,69,80,577/ - AS AGAINST THE ADDITION MADE OF RS.17,87,50,629/ - BY THE A.O. AS UNEXPLAINED CREDITORS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. 4. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF A SUM OF RS. 2,03,92 ,200/ - AS UNEXPLAINED CASH CREDITS IN THE BANK ACCOUNTS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE ESPECIALLY THAT THESE BANKS ACCOUNTS ARE REFLECTED IN THE BALANCE SHEET FILED WITH THE DEPARTMENT IN RESPECT OF WHICH A SCRUTINY ASSESS MENT WAS MADE. THE ADDITION MADE IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND THEREFORE, THE SAME REQUIRES TO BE DELETED. 5. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING A SUM OF RS.12,29,73,882/ - AS AGAINST THE ADDITION OF RS. 15,40,10,882/ - MADE BY THE A.O. U/S.40A[3] OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. THE ADDITION MADE IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND THEREFORE, THE SAME REQUIRES TO BE DELETED. 6. TH E LEARNED CIT(A) OUGHT TO HAVE TELESCOPED EACH ONE OF THE ABOVE ADDITIONS WITH THE OTHER ADDITIONS. 3 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) 7.1 WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HONBLE CCIT/DG, THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S. 234 - A AND 23 4 - B OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE DESERVES TO BE CANCELLED. 7.2 THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE ENTIRE INCOME AROSE OUT OF THE RECEIPT OF CONTRACT RECEIPTS IN RESPECT OF WHICH TDS WAS DEDUCTIBLE BY THE PAYERS AND CONSEQUENTLY, THERE WAS NO OBLIGATION TO FILE AN ESTIMATE AND PAY ADVANCE - TAX AND THEREFORE, EX - FACIE THE LEVY OF INTEREST CHARGED U/S.234B OF THE ACT IS ILLEGAL AND THE SAME REQUIRES TO BE CANCELLED. 8. FOR THE ABOVE AND OTHE R GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUT ION FEES AS PART OF THE COSTS. 2.1. WHEREIN THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS. 01. THE LD.CIT(A) ERRED IN GIVING RELIEF OF RS.8,17,70,052/ - ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS WHICH THE ASSESSING OFFICER HAD ADDED U/S 68 AS UNEXPLAINED ENTRIES SINCE THE ASSESSEE HAD FAILED TO PRODUCE THE REQUIRED CONFIRMATION. 02. THE LD. CIT(A) ERRED IN GRANTING RELIEF OF RS.15,40,1O,882/ - ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 40A(3) WHICH WAS MADE ON THE BASIS OF EVIDENCE IN THE FORM O F BANK STATEMENTS FOR WHICH THE ASSESSEE HAD NO EXP NATION TO OFFER. EVEN BOOKS OF ACCOUNT WERE NOT PRODU CED DURING ASSESSMENT PROCEEDINGS . 3 . GROUND NO.1: - THIS GROUND IS GENERAL IN NATURE, THEREFORE, IT IS NOT DECIDED. 4 . GROUND NO.2: - REGARDING REOPENING OF THE ASSESSMENT WAS BAD IN LAW AND VOID AB - INITIO FOR WANT OF REQUISITE JURISDICTION U/S. 148 OF THE ACT DID EXISTS AND REOPENING IS BAD. THE ASSESSING OFFICER HAS RECORDED THE REASONS FOR REOPENING OF THE ASSESSMENT ORDER. THE SEAR CH HAS ALREADY CARRIED IN THE CASE OF SRI MANAPPA WADDAR, PARTNERS OF THE FIRM AND THE ASSESSMENT IN CASE OF SRI NAGAPPA WADDAR, ANOTHER PARTNER IN PROPRIETOR CAPACITY AS SUCCESSOR OF ASSESSEE FIRM FOR A.Y. 2009 - 10. THE ASSESSEE HAS CLAIMED THE LIABILITIES OF RS.17,87,50,629/ - IN A.Y. 2009 - 10 IN HANDS OF SRI NAGAPPA WADDAR [SUCCESSOR ENTITY] , WHO WAS FOUND AS NOT EXPLAINED AS OUTSTANDING LIABILITIES BY THE ASSESSING OFFICER. A PART OF THE SUM (I.E. RS. 40,11,200/ - OUT OF CLOSING BALANCE 4 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) RS.8,17,700,52/ - ) FO R A.Y. 2009 - 10 WAS OFFERED TO TAX BY SRI NAGAPPA WADDAR HIMSEL F . AT THAT TIME, IT WAS ALSO CLAIMED THAT OPENING BALANCE WAS CARRIED FORWARD FROM THE FIRM M/S. M D WADDAR & CO AS ON 01.04.2008. UNDE R SUCH CIRCUMSTANCES, THE PRIMA FACIE BELIEF OF THE ASSESS ING OFFICER AT THE TIME OF RE - OPENING OF THE ASSESSMENT THAT THE CREDITS WERE GENUINE IS CLEARLY UNDER STOOD AND REGARDED AS BONAFIDE. MERELY BECAUSE THE ASSESSING OFFICER MADE THE ADDITION IN HANDS OF SUCCESSOR FIRM DOES NOT MEAN THAT PRIMA FACIE BELIEF WI TH REGARDS TO LIABILIT IES BROUGHT FORWARD FROM A.Y. 2008 - 09 IN HANDS OF THE APPELLANT FOR A.Y. 2008 - 09,. THIS CLAIM WAS NOT JUSTIFIED, THEREFORE, ASSESSING OFFICER TO KEEP ALIVE THE INTEREST OF THE DEPARTMENT IN RESPECT OF BOTH ENTITIES FOR THE ASSESSMENT YEAR IN QUESTION. THE ASSESSING OFFICER RECORDED THAT THE CREDIT BALANCE ALMOST MATCHED THE DEPOSITS IN BANK ACCOUNTS SHOWING THAT CREDIT REMAINS UNPAID. IT IS RECORDED THAT IN VIEW OF THE NATURE OF THE CLAIM OF CREDITS DETAILED IN SUBSEQUENT ASSESSMENT Y EAR, THE ASSESSING OFFICER HAD REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE ASSESSEES FIRM FOR THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER WAS OF THE VIEW THERE IS FAILURE ON PART OF THE APPELLANT IN DISCLOS ING CORRECT FACTS/ MATERIAL FOR ASSESSMENT YEAR. THE ASSESSMENT IS REOPENED ON PRIMA FACIE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. 4.1. THE ASSESSEE HAS CHALLENGED THIS REOPENING OF THE ASSESSMENT ON THE GROUND THAT DURING THE ORIGINAL ASSESSMENT PROCEEDING IN THE CASE OF SRI M.D. WADDAR & CO. (DISSOLVE) WHEREIN THE ORIGINAL ASSESSMENT PROCEEDING WAS COMPLETED U/S. 143(3). DURING THE COURS E OF ASSESSMENT PROCEEDING THE ASSESSEE HAS SUBMITTED ALL BOOKS OF ACCOUNT WITH AUDIT REPORT OF THE ASSESSEE ACCOUNT. THE ASSESSEE OFFICER HAS ISSUED THE NOTICE AND ASSESSMENT OF THE SRI M.D. WADDAR & COMPANY (DISSOLVE) WAS PROCESSED U/S 143(3). THE ASSES SING OFFICER HAS VERIFIED ALL THE BOOKS OF ACCOUNT ALONG WITH P&L ACCOUNT. IN THE P&L ACCOUNT THE ASSESSEE HAS SHOWN THE LIABILITY OF RS.17,87,50,629/ - IN HIS 5 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) P&L ACCOUNT. IN HIS P&L ACCOUNTS THE ASSESSEE HAS ALSO SHOWN THE ASSETS WHEREIN HE HAS SHOWN THE DEPOSITS LYING IN VARIOUS BANKS, IN HIS BANKS ACCOUNT THE AMOUNT WHICH WAS IN THE BANK DEPOSIT WAS MORE THAN THE LIABILITIES AT THE RELEVANT TIME CASH WAS RS. 7,00,000/ - . 5. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER THE THEN ASSESSING OFFICER HAS VERIFIED THE P&L ACCOUNT AND HE HAS ALSO TAKEN NOTE THAT HE HAS DEBITED A SUM OF RS. 4 , 24 , 10 ,000 / - , RS. 54,00,000/ - RS.59,22,880/ - AND RS. 50,36,0617 / - WHO WAS PURCHASED. ON RANDOM VERIFICATION THE VOUCHERS WERE NOT SIGNED AND SUM VOUCHERS ARE NOT MENTION ED THE DATE AND SUBJECT, THEREFORE HE HAS DISALLOWED THE EXPENDITURE TO THE EXTENT OF 6% WHICH COMES TO 62,45,609/ - MOREOVER, HE HAS ALSO ADDED THE INCOME OF RS. 9,26,499/ - . THE ASSESSMENT WAS COMPLETED U/S. 143(3). ALL THESE DOCUMENTS INCLUDING P&L ACCOUN T WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THE FIRM WAS DISSOLVED AND THE LIABILITIES OF THIS FIRM WAS TAKEN OVER BY SRI NAGAPPA WADDAR (SUCCESSOR ENTITY). IN THE CASE OF SRI NAGAPPA WADDAR (SUCCESSOR ENTITY) THE ASSESSING OFFICER HAS FOUND THAT THERE W AS A SEARCH IN THE CASE OF SRI NAGAPPA WADDAR (SUCCESSOR ENTITY) PARTNER OF THE FIRM ON THE STRENGTH OF THIS SEARCH THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LIABILITY OF RS. 17,87,50,629/ - SHOWN BY THE ASSESSEE IN HIS BALANCE SHEET WHICH IS OUT STAND ING LIABILITY IN THE HANDS OF SRI NAGAPPA WADDAR (SUCCESSOR ENTITY) BUT THIS LIABILITY IS NOT EXPLAINED. DURING THE COURSE OF SEARCH OUT OF CLOSING BALANCE OF RS.8,17,70,052 / - FOR A.Y. 2009 - 10. SRI NAGAPPA WADDAR (SUCCESSOR ENTITY) HAS OFFERED RS. 4 0 ,11,200 / - AS ADDITIONAL INCOME. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LIABILITY IS BOGUS AND THE BALANCE MATCH WITH THE BANK DEPOSIT IN THE ACCOUNT, THE CREDIT REMAINS UNPAID, THEREFORE, ASSESSING OFFICER WAS OF THE VIEW THAT THIS OUTSTANDING LIABILITY I S NOT EXPLAINED, THEREFORE, THIS ASSESSMENT WAS REOPENED. THE ASSESSEES CONTENTION THAT IN THE CASE OF ASSESSEE TH E ASSESSMENT WAS COMPLETED U/S. 143(3 ) WHEREIN THIS LIABILITY OF RS. 17,87,50,629/ - HAS BEEN 6 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) ACCEPTED BY THE ASSESSING OFFICER. DURING THE COURSE OF SEARCH NO MATERIAL OR NEW INFORMATION HAVE CAME IN POSSESSION OF ASSESSING OFFICER TO SHOW THAT THIS LIABIL ITY OF RS.17,87,50,629/ - IS UN EXPLAINED. THEREFORE, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ORDER WITHOUT ANY MATERIAL OR WITHOUT ANY INFORMATION OR WITHOUT ANY REASON, HE HAS REOPENED THE ASSESSMENT. THE ASSESSEE CHALLENGED THAT THE ASSESSING OFFICER HAS ONCE ACCEPTED THAT THE LIABIL ITY SHOWN IN BALANCE SHEET OF RS. 17,87,50,629/ - AND ACCEPTED BY THE ASSESSING OFFICER. ON THE SAME A CCOUNT NOW TH E ASSESSING OFFICER WANTED TO REOPEN THE ASSESSMENT OR DER IT AMOUNTS TO REVIEW THE ACCOUNT WHICH WAS ACCEPTED BY THE ASSESSING OFFICER, IT AMOUNTS TO THE REVIEW OF ACCOUNT WHICH IS NOT PERMISSIBLE IN LAW. THE ASSESSEE HAS CHALLENGED THIS REOP ENING ON THE DECISION OF CIT VS. KELVINATOR OF INDIA 256 ITR 1(DELHI) AND ASSESSEE WAS OF THE VIEW THAT THE REOPENING IS BAD IN LAW. 5 .1 . THE AR SUBMITTED THAT THE ASSESSEES LIABILITY WHICH WAS PRODUCED BEFORE AO. DURING THE ORIGINAL ASSESSMENT PROCEEDING THE ASSESSMENT WAS COMPLETED OF THE ASSESSEES FIRM UNDER SECTION 143(3) AND ALL THE EVIDENCE WHICH WAS SUBMITTED BEFORE AO THE THEN THE ASSESSING OFFICER HAS COMPUTED THE INCOME AS PER THE PROFIT & LOSS ACCOUNT SUBMITTED BY THE ASSESSEE. THIS LIABILITY OF RS. 17,87,50,629/ - WAS SHOWN IN THE HANDS OF THE ASSESSEE, THE ASSESSING OFFICER HAS VERIFIED ALL THE CLAIMS HE HAS ALSO VERIFIED THE BO OKS FILED ALONG WITH THE RETURN OF THE INCOME AND AFTER VERIFYING THE CLAIM OF THE ASSESSEE THE ASSESSING OFFICER HAS ESTIMATED THE INCOME AND ASSESSING OFFICER AFTER CONSIDERING ALL THE DOCUMENTS WHICH CAN BE VERIFIED FROM THE ASSESSMENT ORDER OF THE ASS ESSEES FIRM THAT ASSESSING OFFICER HAS VERIFIED ALL THE BOOKS OF ACCOUNTS IN RESPECT OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND TRADING ACCOUNT WHICH WAS VERIFIED. AFTER VERIFICATION OF THIS THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE TO THE E XTENT OF 6% WHICH WORKED OUT TO RS.62,45,609/ - THEREFORE, ASSESSEE HAS PRODUCED ALL THE EVIDENCE WHICH WAS REQUIRED FOR THE ASSESSMENT ORDER AND 7 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) ASSESSING OFFICER HAS VERIFIED THE SAME. THE ASSESSING OFFICER HAS ALSO VERIFIED THE SUB - WORK CONTRACT AND HE H AS ALSO VERIFIED THE BOOKS OF ACCOUNT IN SUPPORT OF THIS AND SUM OF RS.9,26,499/ - WAS ADDED TO THE RETURN OF INCOME AND ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER ON 29.12.2010. THE ASSESSING OFFICER HAS VERIFIED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ON THE SAME MATERIAL. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE GROUND THAT ASSESSEE HAS MADE WRONG CLAIM OF LIABILITY OF RS.17,87,50,629/ - IN A.Y.2009 - 10 IN HANDS OF SRI NAGAPPA WADDAR. THE LEARNED AR SUBMITTED THAT AS PER THE DECISIO N OF FULL BENCH OF DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA 256 ITR 1(DELHI) AND SUBMITTED THAT AFTER THE AMENDMENT IN TAX LAW 1987, AFTER 89 THE ONLY ONE CONDITION IS THAT THERE IS A REASON TO BELIEVE THE ESCAPEMENT OF INCOME SO THE H ONBLE DELHI HIGH COURT HAS INTERPRETED THE REASON TO BELIEVE THAT POWER TO REASSESS IS DIFFERENT FROM POWER TO REVIEW, WHICH IS NOT PERMISSIBLE. IT FOLLOWS THAT REVIEW CANNOT BE UNDERTAKEN IN THE GARB OF REASSESSMENT. THE BAR AGAINST CHANGE OF OPINION IS INBUILT REQUIREMENT TO CHECK ABUSE OF POWER. IT IS THEREFORE, FOLLOWS THAT THERE SHOULD BE TANGIBLE MATERIAL TO COME TO A CONCLUSION, THAT THERE IS A ESCAPEMENT OF INCOME. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON T HE SAME MATERIAL WHICH WAS PRODUCED BY THE ASSESSEE ALONG WITH RETURN OF INCOME THE ASSESSING OFFICER HAS NO ANY OTHER MATERIAL EXCEPT THE PROFIT AND LOSS ACCOUNT WHICH WAS SUBMITTED ALONG WITH RETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER UNDER SCRUT INY ASSESSMENT U/S. 143(3) HAS ALREADY TAKEN THIS PROFIT AND LOSS ACCOUNT. WHILE FRAMING THE ASSESSMENT ORDER AND HE HAS FRAMED THE ASSESSMENT ACCORDINGLY. NOW, THE ASSESSING OFFICER IN THIS CASE HAS REOPENED THE ASSESSMENT ON THE SAME MATERIAL AND HE HAS COME TO DIFFERENT CONCLUSION THAT AMOUNTS TO REVIEW THE PROFIT & LOSS ACCOUNT WHICH IS NOT PERMISSIBLE. 6. THE LEARNED DR RELIED UPON THE ORDER OF REVENUE AUTHORITIES. 8 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) 7 . WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES BEFORE PROCEEDING WITH THIS ISSUE , IT IS NECESSARY TO VERIFY THE FACTS AND ASSESSMENT ORDER PASSED IN THE CASE OF SRI M.D. WADDAR & CO. (DISSOLVE). THE ORIGINAL ASSESSMENT ORDER IN THE CASE OF SRI M.D. WADDAR & CO. (DISSOLVE) THE COPY OF ORDER IS PLACED ON PAGE 197 OF THE PAPER BOOK . THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 29.12.2010. ON PAGE 198 OF THE PAPER BOOK THE ASSESSING OFFICER HAS VERIFIED THE BOOKS OF ACCOUNT WHICH WAS SUBMITTED BEFORE THE ASSESSING OFFICER ALONG WITH P&L ACCOUNT WHICH WAS ENCLOSED ALONG WITH THIS ASSES SMENT ORDER WHICH S ON PAGE 17 OF THE PAPER BOOK. THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT WHICH READ AS UNDER: ON VERIFICATION OF P&L ACCOUNT, THE ASSESSEE HAS DEBITED A SUM OF RS. 4,24,10,000/ - , RS. 54,00,000/ - RS. 59,22,880/ - AND RS. 5,03,60,617/ - TOWARDS PURCHASE OF SAND, PURCHASE OF MURRAM, MACHINERY HIRE CHARGES AND VEHICLE MAINTENANCE RESPECTIVELY. ON RANDOM VERIFICATION OF VOUCHERS ARE NOT SIGNED AND SOME VOUCHERS ARE NOT MENTIONED THE DATE AND SUBJECT. IT IS DIFFICULT TO VERIFY E ACH AND EVERY VOUCHER. FOR THE NON PRODUCTION OF PROPER BILLS DURING SCRUTINY ASSESSMENT PROCEEDINGS, I FEEL IT IS REASONABLE TO DISALLOW THE EXPENDITURE TO EXTENT OF 6%, WHICH WORKS OUT TO RS. 62,45,609/ - ON VERIFICATION OF BOOKS OF ACCOUNTS, IT IS NOTIC ED THAT, THE ASSESSEE HAS SHOWN RS. 6,17,66,600/ - TOWARDS SUB - CONTRACT WORK. DURING SCRUTINY ASSESSMENT PROCEEDING, THE BOOKS OF ACCOUNT PRODUCED IN SUPPORT OF THE RETURN FILED ARE VERIFIED. NO DISCREPANCIES ARE NOTICED. HOWEVER, THE DETAILS REGARDING INCO ME ON SUB - CONTRACT WORK DISCUSSED. THE ASSESSEES AR CAME FORWARD AND OFFERED 1.5% AS NET INCOME ON SUB - CONTRACT WORK WHICH WORKS OUT TO RS. 9,26,499/ - . THE SAME IS ADDED TO THE RETURNED INCOME. AFTER DISCUSSION WITH THE ASSESSEES AR, THE TOTAL INCOME I S ASSESSED AS UNDER: TOTAL INCOME AS PER INTIMATION 143(1) RS. 2,80,03,960/ - ADD: 1. AS DISCUSSED IN PARA 3 RS. 62,45,609/ - 2. AS DISCUSSED IN PARA 4 RS. 9,26,499/ - RS. 71,72,108/ - TOTAL ASSESSED INCOME RS. 3,51,76,068/ - 9 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) ON PAGE 17 OF THE PAPER BOOK WHICH IS A PROFIT AND LOSS ACCOUNT WHICH READ AS UNDER: - LIABILITIES R S ASSETS R S PARTNERS CAPITAL ACCOUNT MANNAPA D WADDAR NAGGAPA D WADDAR SMT. MUDAKAMMA WADDAR SMT. AMARAMMA M WADDAR S MT. LAX MI N WADDAR LOANS & LIABILITIS L&T FIANCE - 6 TIPPER LOAN - KMATUSU PC 71 - CONCRETE MIXER LOAN - CONCRETE MIXER LOAN - MEKASTAR LOAN CURRENT LIABILITIES AUDIT FEES PAYABLE OUT STANDING LIABILITIES (AS PER ANNEXTURE) 10,272,738.13 11,010,529.25 3,497,836.78 3,529,307.16 3,529,307.16 3,751,810.56 3,297,036 . 28 2,268,115.72 2,268,115.72 984,732.56 5,000.00 178,750,629.00 FIXED ASSETS (AS PER ANNEXURE ) IN VT STMENTS F.S.D . & L . B . S OPENING BALANCE 5,980,224.00 ADDITIONS: - 15,243,026.00 F.D.R NS.C OPENING BAL ANC E 1,295,000.00 LESS: REALISED 700,000.00 CURRENT ASSEES L&T FINANCE REPAYMENT INCOME TAX T.D.S. - WORK IN PROGRESS E.P F PROVISION KARI APPA D. CHENNUR SECURITY DEPOSIT ACCRUED INTEREST ON N.S.C. OPENING BALANCE 975, 714.00 ADDITIONS :43,7400.0 0 LESS : - REALISED 700,000.00 CASH & BANK BALANCES S.B H SHAHAPUR (MD) SB. H SHAHAPUR (N.D) KARNATAKA BANK HUNASAGI (M.D) KARNATAKA BANK HUNASAGI (N.D) KARNATAKA BANK SHAHAPUR S.B I ATHANI KARNATAKA BANK ATHANI KARNATAKA BANK DEVANGERI S.B.M. DEVANGERI KARNATAKA BANK HNASAGI O/D A CASH IN HAND 22256,L72.00 21,223,250.00 3,525,916.00 5954000.00 5,000,000.00 13.701,910.00 212,500.00 74,923.00 11,742,943.00 19,840,000.0& 319,454.00 9,322.00W 77,650.00 1,662.55 473.61 5,090.00 1,148.63 3,274,605.50 20,449,303.50 1 3,276,614.00 87,224,402.00 352,818.53 TOTAL 223,165,158.32 TOTAL 223,165,158.32 WE FIND FROM THE ASSESSMENT ORDER THAT ASSESSING OFFICER HAS VERIFIED P&L ACCOUNT AND HAS VERIFIED THAT A SUM OF RS. 4,24,10,00/ - , 54,00,000/ - RS.59,22,880/ - AND RS. 5,03 , 60,617/ - WERE DEBITED TOWARDS THE PURCHASE ON SAND, 10 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) PURCHASE OF MURRAM, MACHINERY HIRE CHARGES AND VEHICLE MAINTENANCE RESPECTIVELY. THE ASSESSING OFFICER HAS VERIFIED SOME VOUCHERS AND HE WAS OF VIEW THAT THE TOTAL 6% OF THE EXPENDITURE RS. 62,45,609 / - WAS DISALLOWED. FROM THIS ASSESSMENT ORDER, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS FINALISED THE ASSESSMENT ORDER. THE ASSESS EE HAS PAID THE TAX ACCORDINGLY. THE ASSESSMENT WAS FINALISED. 7.1 . DURING THE CO URS E OF ASSESSMENT PROCEEDING THE AO HAS REOP ENED THE ASSESSMENT ON THE REASONS WHICH READ AS UNDER: - THE ASSESSEE FIRM MADE A DEPOSIT OF RS. 12,43,20,271/ - DURING THIS ASST. YEAR AS PER DETAILS RETRIEVED FROM AST. THE DEPOSIT IS MADE ALLEGEDLY OUT OF THE FUNDS OF THE FIRM. THE FIRM CEASED TO EXIST ON OR AFTER 31.03.2008. HOWEVER, THE THEN ASSESSING OFFI CER, ACIT, CIRCLE - 1, GULBARGA PASSED A SCRUTINY ASSESSMENT ORDER U/S.143(3) ON 29.12.2010. IN THE SAID ASSESSMENT ORDER, A SUM OF RS.62,45,609/ - BEING 6% OF THE PURCHASE EXPENSES HAVE BEEN DISALLOWED AND A FURTHER SUM OF RS.9,26,499/ - BEING THE DIFFERENCE BETWEEN THE INCOME ADMITTED AND INCOME ESTIMATED AT 1.5%. A XEROX COPY OF THE FORM NO.3CB ALONG WITH ITS ENCLOSURES FOR THE YEAR IS FOUND IN THE MISCELLANEOUS RECORD OF THE PARTNER SRI.NAGAPPA WADDAR. THE DETAILS OF DEPOSITS WITH DIFFERENT BANKS ARE ENUMER ATED. THERE IS A MATCHING CLAIM OF CREDIT IN THE SAID BALANCE - SHEET OF CURRENT LIABILITIES AMOUNTING TO RS.17,87,50,629/ - . DURING THE SUBSEQUENT ASSESSMENT YEAR I.E.A.Y.2009 - 10, THE CONTRACT BUSINESS HAS BEEN CARRIED ON BY SRI.NAGGAPPA WADDAR, ONE OF THE PARTNERS, IN HIS INDIVIDUAL CAPACITY. VIDE ENCLOSURES TO HIS LETTER DATED 22.06.2010 FURNISHED BEFORE THE DDIT, UNIT - II(1), BAN GALORE, SRI. NAGGAPPA GAVE DETAILS OF OUTSTANDING LIABILITIES AS ON 31.03.2009. THE DETAILS OF VARIOUS LIABILITIES ARE AS UNDER: METAL & STONE SUPPLIERS RS. 7,77,51,479 MURRUM SUPPLIERS RS. 10,44,314 SAND SUPPLIERS RS. 15,76,000 MACHINERY HIRE CHARGES RS. 8,13,040 STAFF SALARY RS. 1,98,000 LABOUR WAGES RS. 3,87,219 TOTAL RS. 8,17,70,052 OUT OF THE TO TAL CREDIT OF RS. 8.17 CRORES, THE ASSESSEE OFFERED A SUM OF RS.40,11,200/ - IN RESPECT OF SOME OF THE SUPPLIERS OF STONE AND SAND AND MURRAN SUPPLIERS STATING THAT HE WAS UNABLE TO FURNISH THE DETAILS OF FEW SUPPLIERS FORM WHOM MATERIALS WERE PURCHASED BEC AUSE MOST OF THESE SUPPLIERS ARE FROM RURAL AREAS AND THEY DO NOT GIVE ANY BILLS AND INVOICES SINCE HE WAS UNABLE TO SUBSTANTIATE THE CLAIM 11 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) IN RESPECT OF PARTIES MENTIONED IN ANNEXURE - 1 TO THAT LETTER. HE WAS WILLING TO DECLARE RS.40,11,200/ - AS UNDISCLOSE D INCOME FOR THE A.Y. 2009 - 10. THE TOTAL OUTSTANDING LIABILITIES N ACCOUNT OF METAL AND STONE SUPPLIERS ALONE AMOUNTED TO RS.7,77,51,549/ - . ON THE BASIS OF THE ADDRESS OF SUCH CREDITORS FURNISHED BY THE ASSESSEE THEREIN, SUMMONS WERE ISSUED TO ALL THE 65 CREDITORS, OUT OF WHICH ONLY 13 PERSONS RESPONDED. SOME OF TERN DENIED THE ASSESSEES LIABILITIES (MONIES DUE TO THEM). MOREOVER, A CAREFUL EXAMINATION OF THE BANK ACCOUNT REVEALS THAT INSTEAD OF UTILIZING THE BILLS REALIZED AND AMOUNTS RECEIVED TO SETTL E THE CREDITORS, THE ASSESSEE KEEPS DEPOSITS IN FIXED DEPOSITS. THUS, THOUGH THE SOURCES OF DEPOSITS ARE ATTEMPTED TO BE APPARENTLY EXPLAINED AS ARISING OUT OF LIABILITIES. THE ASSESSEE FALLS TO FURNISH PROOF OF GENUINENESS OF THE CREDITS, THE IDENTIFY OF THE CREDITORS ETC, IN THE SCRUTINY ORDER REFERRED TO ABOVE FOR THIS YEAR, THE GENUINENESS OF THE CREDIT WAS NOT EXAMINED. IN VIEW OF THE QUESTIONABLE NATURE OF THE CLAIM OF CREDITS IN THE SUBSEQUENT ASSESSMENT YEAR AS MENTIONED ABOVE, I HAVE REASON TO BE LIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THIS ASSESSMENT YEAR. FROM THE ABOVE READING OF THE REASONS TH E ASSESSING OFFICER CLAIMED THAT LIABLITY OF RS. 17,87,50,629/ - SHOWN IN THE A.Y. 2009 - 10 IN THE HANDS OF SRI NAGAPPA WADDAR (SUCCESSOR ENTITY) WAS FOUND AS UNEXPLAINED AS OUTSTANDING LIABILITY BY ASSESSING OFFICER. THE BUSINESS OF THE ASSESSEES FIRM WAS TAKEN OVER BY ONE OF THE PARTNER SRI NAGGAPA WADDAR(SUCCESSOR ENTITY) W.E.F. 1.4.2008. IN A.Y. 2008 - 09 THE ASSESSEES FIRM WAS IN EXISTENCE. T HE ASSESSMENT WAS COMPLETED U/S. 143(3) ON THE TOTAL INCOME OF RS. 3,57,670/ - SUBSEQUENTLY. ON THE BASIS OF ASSESSMENT IN THE CASE OF SRI NAGGAPA WADDAR(SUCCESSOR ENTITY) THE BUSINESS WAS CARRIED OUT IN THE NAME OF PARTNERS SRI NAGGAPA WADDAR(SUCCESSOR EN TITY)FOR A.Y. 2009 - 10. IN A.Y. 2009 - 10 SRI NAGGAPA WADDAR (SUCCESSOR ENTITY) HAS OFFERED RS. 40,11,200/ - OUT OF CLOSING BALANCE OF RS . 8,17,70,052 / - AS ADDITIONAL INCOME. THE ADDITIONAL INCOME WAS OFFERED BY SRI NAGGAPA WADDAR (SUCCESSOR ENTITY), THEREFORE , ASSESSING OFFICER WAS OF THE VIEW THAT THIS LIABILITY IS OF RS.17,87,50,629/ - IS NOT GENUINE AND IT IS NOT BONAFIDE. THE ASSESSING OFFICER ALSO WAS OF THE VIEW THAT CRED IT BALANCE ALMOST 12 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) MAKE THE DEPOSIT IN THE BANK ACCOUNT SHOWING WITH THE CREDIT REMAIN S UNPAID. THEREFORE, THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT SAME INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED FOR THE ASSESSEE FIRM FOR THE RELEVANT ASSESSMENT YEAR. FROM THIS OBSERVATION AND READING THE REASONS WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ORDER ON THE GROUND OF THE LIABILITIES WHICH IS SHOWN IN P&L ACCOUNT WHICH IS ON PAGE 17 OF THE PAPER BOOK. THE BASIS OF THE REOPENING OF THE ASSESSMENT ORDER IS OUTSTANDING LIABILITIES OF SRI M.D. WADDAR & CO. (DISSOLVE D ) OF RS. 17,87,50,629/ - IS NOT GENUINE. WE FIND THAT THE ASSESSING OFFICER HAS VERIFIED THEN P&L ACCOUNT AND HE HAS ACCEPTED THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE CASE OF SRI M.D. WADDAR & CO. (DISSOLVE). THE CASE WAS COMPLETED U/S. 143 (3) ON 29/12/2010. WE FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY NEW MATERIAL FOR DIS BELIEVE THIS OUTSTANDING OF RS. 17,87,50,629/ - . THE ASSESSING OFFICER HAS BROUGHT ANY EVIDENCE, NO NEW INFORMATION, NO NEW MATERIAL. THE ASSESSING OFFICER HAS REA SON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED ON THE BASIS THE LIABILITI ES SHOWN IN ORIGINAL BALANCE SHEET WHICH WAS SUBMITTED BY THE ASSESSEE ALONG WITH HIS RETURN. THE ASSESSING OFFICER HAS NOT BROUGHT ANY NEW INFORMATION EXCEPT THIS ACC OUNT AND BALANCE SHEET . WE FIND THAT THE ASSESSING OFFICER HAS SIMPLY RELIED U PON THE LIABILITIES SHOWN IN BALANCE SHEET ACCOUNT AND MOREOVER THE ASSESSING OFFICER HAS ALSO VERIFIED THE BANK ACCOUNTS WHICH WAS SHOWN IN BALANCE SHEET ACCOUNT AND HE HAS REA SON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED. IN OUR OPINION, THIS REASON TO BELIEVE OF THE ASSESSING OFFICER IS MERELY CHANGE OF OPINION . NO NEW MATERIAL WAS BROUGHT OUT BY THE ASSESSING OFFICER. THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS DURING THE ORIGINAL ASSESSMENT PROCEEDING. THE ASSESSING OFFICER FAILED TO BRING ANY EVIDENCE BEFORE US TO SHOW THAT HE HAS REOPENED THE ASSESSMENT ON S O M E REASONABLE BELIE F BUT HE HAS SIMPLY REOPEN ED ON THE LIABILITIES SHOWN IN P&L ACCOUNT 13 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE VIEW NOW THIS LIABILITY WAS NOT GENUINE, IT IS MERELY CHANGE OF OPINION . WE RELY UPON THE DECISION OF HONBLE DELHI HIGH COURT (FB) IN THE CASE OF CIT VS. KELVINATOR OF IND IA, 256 ITR I (DEL) WHICH WAS AFFIRMED BY THE SUPREME COUR T WHEREIN IT IS HELD THAT TO CONFIRM THE JURISDICTION U/S. 147 TWO CONDITIONS WERE REQUIRED TO BE SATISFIED (I) AO MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. (II) HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT OCCURRED BY THE REASON EITHER AN OMISSION OR FAILURE ON PART OF ASSESSEE TO MAKE A RETURN OF INCOME U/S. 139 OR OMISSION OR FAILURE ON PART OF ASSESSEE TO DISCLOSE FULLY A ND TRULY OF THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. THE AFORESAID REQUIREMENT OF LAW MUST BE HELD TO BE CONDITION PRECEDENT FOR INVOKING THE JURISDICTION OF THE AO TO REOPEN THE ASSESSMENT U/S.147. IT IS TANGIBLE BOTH CONDITIONS AFO RESAID MENTIONS ARE CUMULATIVE. IT IS WELL SETTLED PRINCIPLE OF LAW THAT BEFORE JURISDICTION UNDER 147 IS INVOKED BY AO, HE HAS TO RECORD HIS REASON FOR DOING SO OR BEFORE ISSUING ANY NOTICE U/S. 147. THEREFORE, FORMATION OF REASON TO BELIEVE AND RECORDI NG OF REASONS ARE IMPERATIVE BEFORE AO COULD REOPEN AND COMPLETE THE ASSESSMENT. SINCE THE ASSESSMENT HAS BEEN REOPENED ON 148 NOTICE DATED 20.02.2011 OF INCOME TAX ACT WERE COMMUNICATED TO THE ASSESSEE ON 12.09.2012, THEREFORE, W.E.F., 1 ST APRIL 1989 WOUL D APPLY AND WOULD CONSTITUTE REASONS TO BELIEVE IS NO LONGER RES INTEGRA HOWEVER, THE QUESTION REQUIRED CONSIDERATION WHETHER ANY CHANGE IN LAW HAS BEEN BROUGHT ON ACCOUNT OF AMENDMENT U/S. 147 W.E.F., 1 ST APRIL, 1989. A STATUTE CONFERRING AN ARBITRARY POWER MAY BE HELD TO BE ULTRA VIRES ARTICLE 14 OF CONSTITUTION OF INDIA IF TWO INTERPRETATIONS ARE POSSIBLE, THE INTERPRETATION WHICH HELPS CONSTITUTION SHOULD BE FAVOURED. 7.2. EVEN IT IS HELD THAT BY THE REASON TO SECTION 147 IF ITO EXERCISE D ITS JURISDICTION FOR INITIATING A PROCEEDING FOR REASSESSMENT ONLY UPON MERE CHANGE OF OPINION THE SAME MAY BE HELD TO BE UNCONSTITUTIONAL. THEREFORE, SECTION 147 14 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) DOES NOT POSTULATE CONFIRMATION OF POWER TO AO TO INI TIATE REASSESSMENT PROCEEDING UPON IS MERE CHANGE OF OPINION. HOWEVER IF THE REASON TO BELIEVE OF AO FOUND AN INFORMATION WHICH MIGHT HAVE BEEN RECEIVED BY AO AFTER COMPLETION OF THE ASSESSMENT, IT MAY BE SOUND FOUNDATION FOR EXERCISING THE POWER U/S. 14 7 R.W. SECTION 148. THE SUPREME COURT COMPARED THE PROVISIONS BEFORE AND AFTER THE AMENDED, THERE SHOULD BE ESCAPEMENT OF INCOME OF INCOME ARISING ON ACCOUNT OF NON - FILING OF RETURN OR NON - DISCLOSURE OF MATERIAL FACTS OR THE ASSESSING OFFICER SHOULD HAVE R EASON TO BELIEVE ESCAPEMENT IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION. AFTER THE AMENDMENT, THERE IS ONLY ONE CONDITION, THAT THERE IS REASON TO BELIEVE ESCAPEMENT OF INCOME, SO THAT THE POWER HAS BECOME MUCH WIDER. BUT THE, ONE HAS TO GIVE SCHEME INTERPRETATION OF THE WORDS REASON TO BELIEVE, SO THAT THE POWER UNDER SECTION 147 MAY NOT BE MISUNDERSTOOD AS CONFERRING ARBITRARY POWERS ON MERE CHANGE OF OPINION, WHICH CANNOT PER SE BE A REASON FOR JURISDICTION. POWER TO ASSESS IS DIFFERENT FROM PO WER TO REVIEW, WHICH IS NOT PERMISSIBLE. IT FOLLOWS THAT REVIEW CANNOT BE UNDERTAKEN IN THE GARB OF REASSESSMENT. THE BAR AGAINST CHANGE OF OPINION IS IN INBUILT REQUIREMENT TO CHECK ABUSE OF POWER. IT, THEREFORE, FOLLOWS, THAT THERE SHOULD BE TANGIBLE MAT ERIAL TO COME TO A CONCLUSION, THAT THERE IS ESCAPEMENT OF INCOME. 7.3. GOING BY THE HISTORY OF THE LEGISLATION, THE SUPREME COURT POINTED OUT THAT THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 HAD EARLIER OMITTED THE EXPRESSION REASON TO BELIEVE SUBSTITUTIN G IT BY THE WORD OPINION. ON REPRESENTATION, THE EXPRESSION REASON TO BELIEVE WAS REINTRODUCED SUBSTITUTING THE WORD OPINION BY THE DIRECT TAX LAWS AMENDMENT) ACT, 1989. THIS WAS ALSO EXPLAINED IN BOARD CIRCULAR NO.549 DATED OCTOBER 31, 1989 [1990] 1 82 ITR (ST.) 1,29. THE OBJECT OF THE AMENDMENT ITSELF WAS TO GO BY THE MEANING OF THE EXPRESSION REASON TO BELIEVE AS UNDERSTOOD IN A NUMBER OF COURT RULINGS AND NOT TO GO BY MERE CHANGE OF OPINION. IT IS IN THE LIGHT OF THE SAME, THE 15 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) SUPREME COURT ENDOR SED THE DECISION OF THE FULL BENCH OF THE DELHI HIGH COURT IN CIT KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI) [FBI] AND CITV. EICHER LTD. [2007) 294 FUR 310 (DELHI). AN EARLIER DECISION OF THE SUPREME COURT IN CIT V. SUN ENGINEERING WORKS P. LTD. [19 92] 198 ITR 297 (SC) HAD RULED OUT ANY ACTION OF REVISING, REOPENING OR RECONSIDERING THE WHOLE ASSESSMENT IN REASSESSMENT PROCEEDINGS. 7.4. NOW COMING TO THE FACTS OF THIS CASE, THE ASSESSEE IN HIS RETURN OF INCOME WHICH WAS FILED DURING THE COURSE OF ASS ESSMENT PROCEEDING ALONG WITH P &L ACCOUNT AND BALANCE SHEET AND AFTER VERIFYING BALANCE SHEET THE ASSESSING OFFICER HAS PASSED THE ORDER U/S. 143(3) ON 29.12.2012. WE FIND FROM THE RECORD AS STATED ABOVE THAT THE ASSESSING OFFICER HAS RELIED UPON THE ACCO UNTS WHICH WAS SUBMITTED BY THE ASSESSEE IN ORIGINAL ASSESSMENT ORDER WHICH READ AS UNDER: LIABILITIES R S ASSETS R S PARTNERS CAPITAL ACCOUNT MANNAPA D WADDAR NAGGAPA D WADDAR SMT. MUDAKAMMA WADDAR SMT. AMARAMMA M WADDAR S MT. LAX MI N WADDAR LOANS & LIABILITIS L&T FIANCE - 6 TIPPER LOAN - KMATUSU PC 71 - CONCRETE MIXER LOAN - CONCRETE MIXER LOAN - MEKASTAR LOAN CURRENT LIABILITIES AUDIT FEES PAYABLE OUT STANDING LIABILITIES (AS PER ANNEXTURE) 10,272,738.13 11,010,529.25 3,497,836.78 3,529,307.16 3,529,307.16 3,751,810.56 3,297,036 . 28 2,268,115.72 2,268,115.72 984,732.56 5,000.00 178,750,629.00 FIXED ASSETS (AS PER ANNEXURE ) IN VT STMENTS F.S.D . & L . B . S OPENING BALANCE 5,980,224.00 ADDITIONS: - 15,243,026.00 F.D.R NS.C OPENING BAL ANC E 1,295,000.00 LESS: REALISED 700,000.00 CURRENT ASSEES L&T FINANCE REPAYMENT INCOME TAX T.D.S. - WORK IN PROGRESS E.P F PROVISION KARI APPA D. CHENNUR SECURITY DEPOSIT ACCRUED INTEREST ON N.S.C. OPENING BALANCE 975, 714.00 ADDITIONS :43,7400.00 LESS : - REALISED 700,000.00 CASH & BANK BALANCES S.B H SHAHAPUR (MD) SB. H SHAHAPUR (N.D) 22256,L72.00 21,223,250.00 3,525,916.00 5954000.00 5,000,000.00 13.701,910.00 212,500.00 74,923.00 11,742,943.00 19,840,000.0& 319,454.00 9,322.00W 77,650.00 16 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) KARNATAKA BANK HUNASAGI (M.D) KARNATAKA BANK HUNASAGI (N.D) KARNATAKA BANK SHAHAPUR S.B I ATHANI KARNATAKA BANK ATHANI KARNATAKA BANK DEVANGERI S.B.M. DEVANGERI KARNATAKA BANK HNASAGI O/D A CASH IN HAND 1,662.55 473.61 5,090.00 1,148.63 3,274,605.50 20,449,303.50 1 3,276,614.00 87,224,402.00 352,818.53 TOTAL 223,165,158.32 TOTAL 223,165,158.32 AND THE ASSESSEE HAS SUBMITTED ALL THE MATERIALS WHICH WAS AVAILABLE WITH THE ASSESSEE AND ASSESSING OFFICER HAS VERIFIED AND FOUND TO BE GENUINE AND THE ASSESSMENT U/S. 143(3) WAS ACCEPTED BY THE ASSESSEE AND HE HAS PAID THE TAX THEREON. 7.5. NOW, THE ASSESSING OFFICER WANTED TO RELY UPON THE SAME MATERIAL, SAME P&L ACCOUNT AND HE WANTED TO REOPEN THE ASSESSMENT ON THE GROUND OF LIABILITY OF RS. 17,87,50,629/ - SHOWN IN HIS ORIGINAL RETURN AND ON THE SAME LIABILITIES THE AO HAS REOPENED THE ASSESSMEN T WHICH IS NOT PERMISSIBLE IN LAW. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS REOPENED THE A SSESSMENT ORDER BASED ON THE ACCOUNT WHICH WAS SUBMITTED DURING THE ORIGINAL ASSESSMENT ORDER AND NO NEW MATERIAL OR INFORMATION WAS FOUND BY THE ASSESSING OFFICER. THEREFORE, IN OUR OPINION, IT IS A MERE CHANGE OF OPINION WHICH IS NOT PERMITTED AS PER THE DECISION OF HONBLE DELHI HIGH COURT. THEREFORE, WE ALLOW THE GROUND NO. 2 OF THE ASSESSEE APPEAL AND WE ANNUL THE ASSESSMENT. 7.6. WE HAVE ANNULLED THE AS SESSMENT ORDER ON THE GROUND OF 147, THEREFORE, WE DO NOT FIND FIT TO GO ON MERITS OF THE CASE AND WE HAVE ALLOWED THE APPEAL ON THE TECHNICAL GROUND, THEREFORE, APPEAL IS ALLOWED. 17 . ITA NOS.92 & 181/PNJ/2014 (ASSESSMENT YEAR 2008 - 09) 4. IN THE RESUL T, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 .09.2014. SD/ - SD/ - ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 30 .09.2014 P.S. - *PK* COPY TO : ( 1 ) APP ELLANT ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY, BY ORDER