SHRI JITENDRA KUMAR GUPTA, BHARATPUR V. INCOME TAX OFFICER, WARD-2, BHARATPUR

ITA 947/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2743 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 09-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANOOP SINGH ACIT
• Keywords: Reopening of assessment; Revision of order; Depreciation; Audit objection; Additional depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 40A(3); 143(3); 142(1); 12AA; 147; 148; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 946 & 947/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 & 2012-13 SHRI JITENDRA KUMAR GUPTA PROP. M/S J.K. ENTERPRISES CHOBURJA BAZAR, OLD HOSPITAL ROAD, BHARATPUR. CUKE VS. THE ITO, WARD-2, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AHBPG 8155 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJENDRA AGARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI ANOOP SINGH (ACIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 11/02/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 26/02/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF THE LD. CIT(A), ALWAR BOTH DATED 29.05.2018 FOR THE ASSESSMENT YEARS 2011-12 & 2012-13 RESPECTIVELY. TH E ASSESSEE HAS RAISED COMMON GROUNDS IN THESE APPEALS EXCEPT QUANT UM OF DISALLOWANCE MADE U/S 40A(3) OF THE IT ACT. THE GRO UNDS RAISED FOR THE ASSESSMENT YEAR 2011-12 ARE REPRODUCED AS UNDER:- ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED IN CONFIRMING:- 1. RE-OPENING OF THE ASSESSMENT 147; 2. ADDITION OF RS. 4,02,900/- U/S 40A(3) OF THE I.T . ACT, 1961. THE APPELLANT RESERVES HIS RIGHT TO AMEND, ADD, ALT ER, CHANGE OR DELETE ANY OF THE GROUNDS OF THE APPEAL, EITHER BEF ORE OR DURING THE COURSE OF HEARING. 2. GROUND NO. 1 IS REGARDING THE VALIDITY OF REOPEN ING OF THE ASSESSMENT. THE LD. AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ORIGINAL ASSESSMENT ORDER WAS COMPLETED U/S 143(3) OF THE AC T ON 20.02.2014. WHILE COMPLETING SCRUTINY ASSESSMENT, THE AO HAS EX AMINED THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS ETC. THE TRADING RE SULTS HAVE BEEN PERUSED AND FOUND THAT G.P. RATE OF THE ASSESSEES PROPRIETORSHIP CONCERN HAD GONE UP IN COMPARISON TO THE PRECEDING YEAR. THEREFORE, THE AO HAS NOT MADE ANY ADVERSE INFERENCE REGARDING G.P. RATE OF THE ASSESSEE. THE AO HAS ALSO PROPOSED TO MAKE CERTAIN DISALLOWANCES ON ACCOUNT OF VARIOUS EXPENSES, THEREFORE, AFTER COMPL ETING THE ASSESSMENT U/S 143(3) OF THE ACT THE REOPENING OF T HE ASSESSMENT ON THE BASIS OF AUDIT OBJECTION IS NOTHING BUT CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE ACT. TH E LD. AR HAS POINTED THAT THE AO HAS INITIATED THE PROCEEDINGS U/S 147/1 48 OF THE ACT IN PURSUANT OF THE AUDIT OBJECTION, THEREFORE, REOPENI NG IS NOT BASED ON ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 3 THE APPLICATION OF INDEPENDENT MIND OF THE AO. IN S UPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HON BLE DELHI HIGH COURT IN CASE OF CIT VS. KELVINATOR INDIA LTD. 320 ITR 561 AS WELL AS DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CA SE OF CIT VS. HINDUSTAN ZINC LTD. 393 ITR 264 AND SUBMITTED THAT REOPENING BASED ON CHANGE OF OPINION IS NOT PERMISSIBLE. THE LD. AR HAS ALSO RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUN AL DATED 12.04.2016 IN CASE OF SMT. RAMA GOYAL VS. ITO IN ITA NO. 465/J P/2016. HE HAS ALSO REFERRED TO A NUMBER OF DECISIONS ON THIS POIN T AND HAS SUBMITTED THAT REOPENING ON THE BASIS OF AUDIT OBJECTION IS N OT PERMISSIBLE WHEN THE ASSESSING OFFICER HAS DULY EXAMINED ALL THE REL EVANT RECORD INCLUDING BOOKS OF ACCOUNTS AS WELL AS VOUCHERS PER TAINING TO THE EXPENDITURE AT THE TIME OF ORIGINAL ASSESSMENT AND SUBSEQUENTLY PROPOSED TO DISALLOW WHILE REOPENING THE ASSESSMENT BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THOUGH THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, HOW EVER, THE ASSESSING OFFICER HAS NOT TAKEN A VIEW ON THE APPLI CABILITY OF SECTION 40A(3) OF THE ACT. ONLY WHEN THE AUDIT PARTY AS POI NTED OUT THAT SOME OF THE CASH PAYMENTS MADE BY THE ASSESSEE IS EXCEED ING RS. 20,000/- ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 4 AND CONSEQUENTLY THE PROVISIONS OF SECTION 40A(3) O F THE ACT ARE APPLICABLE. THUS, THE AUDIT OBJECTION HAS POINTED O UT SOME CRUCIAL FACTS WHICH WERE NOT EXAMINED BY THE AO AT THE TIME OF CO MPLETING THE ASSESSMENT AND, THEREFORE, IT IS NOT A CASE OF REOP ENING ON CHANGE OF OPINION BUT THE ASSESSING OFFICER HAS NOT EVEN EXAM INED THE ISSUE WHILE COMPLETING THE SCRUTINY ASSESSMENT. HE HAS RELIED U PON THE ORDER OF LD. CIT(A) IN PARA 4.3 AND SUBMITTED THAT THE LD. CIT(A ) HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF ACIT V S. RAJESH JHAVERI STOCK BROKERS (P.) LTD. 291 ITR 500 AS WELL AS DECI SION OF RAYMOND WOOLLEN MILLS LTD. VS. ITO 236 ITR 34. THEREFORE, S UFFICIENCY OR CORRECTNESS THE MATERIAL IS NOT A THING TO BE CONSI DERED AT THE STAGE OF REOPENING OF THE ASSESSMENT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE OR IGINAL ASSESSMENT WAS COMPLETED U/S 143(3) ON 20.02.2014 THEREAFTER THERE WAS AUDIT OBJECTION DATED 26.06.2015 WHEREIN IT WAS POINTED O UT THAT THE ASSESSEE HAS INCURRED EXPENDITURE OF DISH INSTALLAT ION CHARGES AND TAXI FARE PAYMENT IN CASH. THUS, IT WAS POINTED OUT THAT AS PER LEDGER DETAILS THE PAYMENTS MADE IN CASH TO VARIOUS PERSONS EXCEED S RS. 20,000/- ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 5 WHICH IS NOT ALLOWABILITY BY VIRTUE OF SECTION 40A( 3) OF THE ACT. PURSUANT TO THE SAID AUDIT OBJECTION THE AO REOPENED THE ASS ESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT ON 08.09.2015 BY RECORDIN G THE REASONS AS UNDER:- THE ASSESSEE WAS ENGAGED IN WHOLESALE AND RETAIL T RADING OF RECHARGE COUPONS AND MOBILE SETS IN THE PROPRIETARY CONCERN IN THE NAME AND STYLE OF M/S J K ENTERPRISE. ON PERUSAL OF RECORD OF THE ASSESSEE, IT IS OBSERVE D THAT ASSESSEE HAD INCURRED EXPENDITURE ON DISH INSTALLATION CHARG ES AND TAXI FARE DURING THE FINANCIAL YEAR 2010-11 RELEVANT TO THE ASSESSMENT YEAR 2011-12 AND PAYMENTS WERE MADE IN CASH. THE DE TAILS AVAILABLE ON RECORD OF THE ASSESSEE IN RESPECT OF P AYMENTS MADE IN CASH EXCEEDING TWENTY THOUSAND TO A PERSON IN A SINGLE DAY ARE AS UNDER:- TAXI FARE DISH INSTALLATION CHARGES S.NO. DATE AMOUNT S.NO. DATE AMOUNT 1 15.04.2010 RS. 22500 1 31.05.2010 RS. 28000 2 30.04.2010 RS. 22500 2 31.07.2010 RS. 28000 3 30.06.2010 RS. 22500 3 31.08.2010 RS. 36400 4 30.06.2010 RS. 22500 4 31.01.2001 RS. 40500 5 31.08.2010 RS. 22500 TOTAL RS. 132900 6 AUG - 10 RS. 22500 7 OCT - 10 RS. 45000 8 30.11.2010 RS. 4500 0 9 JAN - 11 RS. 45000 TOTAL RS. 270000 AS PER PROVISIONS OF SECTION 40A(3) OF THE ACT WHER E THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMEN T OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY OTHERWISE THAN B Y AN A/C PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE DRAFT, EXCE EDS TWENTY THOUSAND RUPEES NO DEDUCTION SHALL BE ALLOWED IN RE SPECT OF SUCH EXPENDITURE. IN THIS CASE, THE ASSESSEE HAS VIOLATE D PROVISIONS OF SECTION 40A(3) OF THE ACT. THE ASSESSEE HIMSELF DID NOT DISALLOW SUCH ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 6 EXPENDITURE AND ADDED TO THE TOTAL INCOME FOR THE Y EAR UNDER CONSIDERATION. I HAVE, THEREFORE, REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS. 4,02,900/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT, 1961 FOR THE ASSESSMENT YEAR 2011-12. THEREFORE, IT IS A FIT CASE TO ISSUE NOTIC E U/S 148 OF THE IT ACT, 1961. FROM THE REASONS RECORDED BY THE AO IT IS A CLEAR C ASE THAT THE ASSESSING OFFICER HAS CONSIDERED THE DETAILS OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN CASH WHICH EXCEEDS RS. 20,000/- IN EACH CASE. THEREFORE THE REOPENING IS BASED ON THE FACTS IN RE SPECT OF THE EXPENDITURE INCURRED IN CASH AND THE PAYMENTS MADE IN CASH WERE EXCEEDING RS. 20,000/- AND HENCE, IT IS NOT A CASE OF REOPENING BASED ON THE OPINION OF THE AUDIT PARTY. BUT THE AO HAS C ONSIDERED THE FACTS REGARDING THE VIOLATION OF PROVISIONS OF SECTION 40 A(3) OF THE ACT WHILE RECORDING REASONS FOR REOPENING. HENCE, WE FIND THA T IT IS NOT A CASE OF REOPENING PURELY BASED ON THE OPINION OF THE AUDIT PARTY BUT THE RELEVANT FACTS PERTAINING TO THE VIOLATION OF SECTI ON 40A(3) OF THE ACT WERE POINTED OUT BY THE AUDIT PARTY WHICH WAS CONSI DERED BY THE AO. IT IS ALSO NOT IN DISPUTE THE FACTS AS POINTED OUT BY THE AUDIT PARTY ARE NOT IN DISPUTE AND ARE PART OF THE BOOKS OF THE ASSESSE E BEING LEDGER ACCOUNT. THOUGH THE ASSESSING OFFICER HAS ALREADY C OMPLETED THE ASSESSMENT U/S 143(3) ON 20.02.2014 HOWEVER, WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT THE ASSESSING OFFI CER HAD TAKEN UP ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 7 VARIOUS ISSUE FOR SCRUTINY AND CONDUCTED ENQUIRY BU T HE HAS NOT TAKEN UP THE ISSUE OF ALLOWABILITY OF THE EXPENDITURE INC URRED BY THE ASSESSEE IN CASH AND PARTICULARLY THE ISSUE OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE AO EVEN NOT RAISED ANY QUER Y ON THIS ISSUE OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. THEREFORE, IT IS MANIFEST FROM THE RECORD THAT THE AO EVEN DID NOT T AKE UP THE SAID ISSUE FOR EXAMINATION HENCE, QUESTION OF TAKING A D ECISION OR EXPRESSING ANY OPINION ON THE SAID ISSUE DOES NOT ARISE. IT IS NOT A MATTER OF DISCRETION OF AO BUT IT IS A MANDATORY PROVISIONS O F LAW TO CONSIDER BY AO. HENCE, WHEN THE AO HAS NOT TAKEN UP THE SAID IS SUE IN THE ASSESSMENT PASSED U/S 143(3) OF THE ACT AND THE REO PENING IS PURELY BASED ON THE FACTS THEN, THOSE RELEVANT FACTS AS PO INTED OUT BY THE AUDIT PARTY CONSTITUTE A TANGIBLE MATERIAL FOR FORMING TH E OPINION THAT THE INCOME ASSESSABLE TO TAX, TO THE EXTENT OF ALLOWABI LITY CLAIM OF THE ASSESSEE WHICH IS IN VIOLATION OF PROVISIONS OF SEC TION 40A(3) OF THE ACT, HAS ESCAPED ASSESSMENT. THERE IS NO QUARREL THAT AT THE TIME OF REOPENING OF THE ASSESSMENT THE CORRECTNESS OF THE MATERIAL AND SUFFICIENCY OF THE REASONS TO BELIEVE THAT THE INCO ME ASSESSABLE TO TAX CANNOT BE REQUIRED TO BE ESTABLISHED BY THE AO. ACC ORDINGLY, WE FIND THAT WHEN THE REOPENING IS WITHIN 4 YEARS FROM THE END OF THE ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 8 ASSESSMENT YEAR UNDER CONSIDERATION THEN, THE PROVI SO TO SECTION 147 IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE. HENCE, W E DO NOT FIND ANY ERROR OR ILLEGALITY IN THE REOPENING OF THE ASSESSM ENT BY THE AO IN THE ASSESSMENT YEAR 2011-12. 5. GROUND NO. 2 IS REGARDING DISALLOWANCE MADE BY THE AO U/S 40A(3) OF THE ACT. THE LD. AR OF THE ASSESSEE HAS S UBMITTED THAT THE EXPENDITURE IN QUESTION WAS INCURRED FOR DISH INSTA LLATION AND TAXI FARE CHARGES WHICH RELATES TO THE BUSINESS ACTIVITY OF T HE ASSESSEE AND IN CONSONANCE TO THE INSTALLATION MADE BY THE ASSESSEE DURING THE PERIOD. THUS, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE GENUINENESS OF THE PAYMENT IS NOT IN DISPUTE AND FURTHER THE PAYME NT OF EACH DAY TO EACH PARTY IS NOT EXCEEDING RS. 20,000/-. THE AO HA S CONSIDERED THE AGGREGATE PAYMENT TO A PERSON DURING THE ENTIRE PER IOD FOR THE PURPOSE OF MAKING DISALLOWANCE U/S 40A(3) OF THE ACT. HE HA S FURTHER SUBMITTED THAT SINCE THESE PAYMENTS WERE MADE FOR INSTALLATIO N OF DISH IN THE REMOTE AREAS WHICH ARE MOSTLY RURAL AREAS AND THERE FORE, THE CASE OF THE ASSESSEE FALLS IN THE EXCEPTION AS PROVIDED UND ER RULE 6DD OF THE IT RULES, 1962. THE LD. AR HAS FURTHER CONTENDED THAT THE AO HAS NOT DOUBTED THE GENUINENESS OF THE PAYMENT AND RECIPIEN T OF THE PAYMENT THEN, THE PROVISIONS OF SECTION 40A(3) OF THE ACT C ANNOT BE APPLIED. IN ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 9 SUPPORT OF HIS CONTENTIONS, HE HAS RELIED UPON THE DECISION DATED 04.09.2018 IN CASE OF SHRI AYUB ALI VS. ACIT IN IT A NO. 1045/JP/2017 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT ONCE THE GENUINENESS OF THE EXPENDITURE IS NOT A QUESTION AND IT IS FREE FR OM VICE OF ANY DEVICE OF EVASION OF TAX THEN, THE PROVISIONS OF SECTION 4 0A(3) CANNOT BE INVOKED AS THE INTENT AND PURPOSE OF THE SAID PROVI SIONS IS TO CURB THE PRACTICE OF EVADING TAX BY MAKING THE PAYMENT IN CA SH NOT THROUGH BANKING CHANNEL. HENCE, THE LD. AR HAS SUBMITTED TH AT DISALLOWANCE MADE BY THE AO IS NOT JUSTIFIED AND MAY BE DELETED. 6. ON THE OTHER HAND, LD DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT DISPUTED THAT THE PAYMENT MADE TO EACH PARTY IS EXCEEDING RS. 20,000/-. HOWEVER, THE ASSESSEE HAS PLEADED BEFORE THE LD. CIT(A) THAT AGGREGATE PAYMENT IS COMPRISING OF NUMEROUS EXPENSE S BUT TO ONE PERSON. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS PLEADED THAT THE CASE FALLS IN THE EXCEPTION UNDER RULE 6DD OF T HE IT RULES. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO AS NOTED THAT THE ASSESS EE HAS PAID A TOTAL AMOUNT OF RS. 4,02,900/- IN CASH IN VIOLATION OF PR OVISIONS OF SECTION ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 10 40A(3) OF THE ACT. THE DETAILS OF THE SAID PAYMENT OF THE EXPENDITURE ARE AS UNDER:- TAXI FARE DISH INSTALLATION CHAR GES S.NO. DATE AMOUNT S.NO. DATE AMOUNT 1 15.04.2010 RS. 22500 1 31.05.2010 RS. 28000 2 30.04.2010 RS. 22500 2 31.07.2010 RS. 28000 3 30.06.2010 RS. 22500 3 31.08.2010 RS. 36400 4 30.06.2010 RS. 22500 4 31.01.2001 RS. 40500 5 31.08.2010 RS. 22500 TO TAL RS. 132900 6 AUG - 10 RS. 22500 7 OCT - 10 RS. 45000 8 30.11.2010 RS. 45000 9 JAN - 11 RS. 45000 TOTAL RS. 270000 AFTER CAREFUL PERUSAL OF THE RECORD, WE FIND THAT E ACH AMOUNT GIVEN IN THE TABLE ABOVE REPRESENT AN INDIVIDUAL BILL RAISED BY THE RECIPIENT. THEREFORE, THESE PAYMENTS ARE AGAINST EACH BILL AND NOT THE AGGREGATION OF VARIOUS BILLS PAID BY THE ASSESSEE. THESE ARE INDIVIDUAL TRANSACTIONS FOR WHICH SEPARATE BILLS WERE RAISED T HOUGH THE BILLS WERE RAISED FOR THE SERVICE RENDERED BY THE RECIPIENT FO R SPAN OF PERIOD AND NOT FOR SINGLE DAY. THEREFORE, THE PROVISIONS OF SE CTION 40A(3) OF THE ACT ARE ATTRACTED IN THESE PAYMENTS WHICH STIPULATE S THE EXPENDITURE INCURRED IN CASH AND AGGREGATE OF PAYMENT MADE BY T HE ASSESSEE IS EXCEEDING RS. 20,000/- OTHER THAN THROUGH ACCOUNT P AYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. THEREFORE, THE DETAILS RE CORDED BY THE AO ARE FACTUALLY CORRECT AS EACH PAYMENT REPRESENT EACH BI LL TO EACH PARTY. ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 11 HENCE, THE SAID EXPENDITURE IS NOT ALLOWABLE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 8. AS REGARDS THE DECISION RELIED UPON THE LD. AR O F THE ASSESSEE, WE FIND THAT THE TAXI FARE AND DISH INSTALLATION CHARG ES ARE NOT INEVITABLE OR ESSENTIAL EXPENDITURE IN RESPECT OF THE BUSINESS OF THE ASSESSEE AS THERE ARE VARIOUS MEANS OF TRANSPORT CONVEYANCE AND THERE FORE, IT IS ALWAYS A QUESTION OF GENUINENESS AND CORRECTNESS OF THE CLAI M. ONCE THE AO HAS INVOKED THE PROVISIONS OF SECTIONS 40A(3) OF THE AC T AND THE EXPENDITURE INCURRED BY THE ASSESSEE AND PAYMENT MA DE IN CASH IS OF SUCH NATURE THAT CANNOT BE REGARDED AS INEVITABLE O R ESSENTIAL TO THE BUSINESS ACTIVITY OF THE ASSESSEE THEN, THE DECISIO N OF THIS TRIBUNAL WILL NOT HELP THE CASE OF THE ASSESSEE. AS REGARD DISH I NSTALLATION CHARGES THOUGH THE ASSESSEE HAS CLAIMED THE SAID EXPENDITUR E AND THE ASSESSING OFFICER HAS NOT MADE ANY DISALLOWANCE ON ACCOUNT OF GENUINENESS OF THE EXPENDITURE HOWEVER, SINCE DISH INSTALLATION ARE NOT THE MAIN BUSINESS ACTIVITY OF THE ASSESSEE. AS THE ASSESSEE IS ONLY A DISTRIBUTOR OF MOBILE SIM CARD, THEREFORE, THE INST ALLATION OF DISH MAY BE AN ADDITIONAL ACTIVITY UNDERTAKEN BY THE ASSESSEE H OWEVER, ONCE THE SAID ACTIVITY IS NOT DIRECTLY GENERATING THE REVENU E THEN, THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF SUCH ACTIVIT Y CANNOT BE REGARDED ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 12 AS AN ESSENTIAL WHICH CANNOT BE DISPUTED. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW IN MAKING THE DISALLOWANCE U/S 40A(3) OF THE ACT. 9. FOR THE ASSESSMENT YEAR 2012-13, GROUND NO. 1 IS REGARDING VALIDITY OF REOPENING OF ASSESSMENT. THE LD. AR AS WELL AS LD. DR HAS REITERATED THEIR CONTENTIONS AS ADVANCE ON THIS ISS UE FOR THE ASSESSMENT YEAR 2011-12. FURTHER, THE LD. AR HAS POINTED OUT T HAT DURING THE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT THE AO HA S EXAMINED THE ISSUE OF ALLOWABILITY OF THE CLAIM OF THE EXPENDITU RE AND MADE A DISALLOWANCE OF 10% TOTAL EXPENSES CLAIMED IN THE P ROFIT AND LOSS ACCOUNT OF CONVEYANCE EXPENSES. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE REOPENING IS ON THE BASIS O F IDENTICAL FACTS AND REASONS RECORDED BY THE AO THOUGH THE TOTAL PAYMENT MADE DURING THIS YEAR IN CASH IS RS. 1,17,000/- REPRODUCED AS UNDER: - TAXI FARE S.NO. DATE AMOUNT 1 JUNE, 2011 RS. 39,000/- 2 JULY, 2011 RS. 39,000/- 3 AUGUST, 2011 RS. 39,000/- TOTAL RS. 1,17,000/- ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 13 ALL OTHER REASONS RECORDED BY THE AO IS IDENTICAL T O THE REASONS FOR THE ASSESSMENT YEAR 2011-12. WE FIND THAT WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) ON 13.02.2014. THE ASSESSING OFFIC ER HAS EXAMINED THE ISSUE OF ALLOWABILITY OF CONVEYANCE CHARGES IN PARA 3 OF THE ASSESSMENT ORDER AS UNDER:- 3. CONVEYANCE EXPENSES:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS ALSO NOTICED THAT THE ASSESSEE HA S DEBITED IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD OF CONVEYANCE AMOUNTING TO RS. 2,16,000/-. ON PERUSAL OF DETAILS REGARDING EXP ENSES UNDER THIS HEAD IT IS NOTICED THAT THE ASSESSEE HAS MADE CASH PAYMENT IN VARIOUS CASES. JUSTIFICATION OF THESE PAYMENTS A RE NOT VERIFIABLE AT THIS STAGE. ON THE FACTS AND CIRCUMSTANCES OF TH E CASE GENUINENESS OF THESE EXPENSES IS ALSO NOT VERIFIABL E IS ALSO NOT VERIFIABLE DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. PERSONAL USE OFTHESE EXPENSES IS ALSO CANNOT BE RULED OUT. T O COVER UP POSSIBLE LEAKAGE, I MAKE LIMP-SUM DISALLOWANCE OF R S. 21,600/- WHICH IS APPROXIMATELY 10% OF THE TOTAL EXPENSES CL AIMED IN THE PROFIT & LOSS ACCOUNT. THUS, IT IS CLEAR THAT THE AO HAS TAKEN UP THE ISSU E OF CONVEYANCE EXPENSES FOR SCRUTINY AND EXAMINED THE ALLOWABILITY OF THE CLAIM. THE AO HAS ALSO NOTICED THAT THE ASSESSEE HAS MADE CASH PAYMENT IN VARIOUS CASES. THEREFORE, THE ASSESSING OFFICER HAS DULY CONSIDERED THE FACTS OF CASH PAYMENT, HOWEVER, ONLY 10% OF THE TOT AL CONVEYANCE EXPENSES WERE DISALLOWED BY THE AO DUE TO NON COMPL IANCE BEING THE PAYMENT MADE IN CASH AND GENUINENESS OF THE EXPENSE S. APPARENTLY FOR ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 14 THE ASSESSMENT YEAR 2012-13 THE AO WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT HAS TAKEN A DECISION ON THIS ISSUE AND THEREFORE, SUBSEQUENT REOPENING OF THE ASSESSMENT WAS BASED ON CHANGE OF OPINION. THE LD. AR OF THE ASSESSEE HAS RELIED UPON THE VARIOUS DECISIONS ON THIS ISSUE INCLUDING THE DECISION OF T HIS TRIBUNAL DATED 29.01.2018 IN CASE OF EDUCATION AND RURAL DEVELOPME NT SOCIETY VS. ITO IN ITA NO. 1004/JP/2017 WHEREIN IT WAS HELD IN PARA 5 TO 5.2 AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE TRUST IS RUNNING AN EDUCATIONAL INSTITUTIONS AND THE OBJECTS AND ACTIVI TIES OF THE ASSESSEE TRUST WERE ACCEPTED AS CHARITABLE IN NATUR E WHILE GRANTED REGISTRATION U/S 12AA OF THE ACT VIDE ORDER DATED 04.11.2004. FOR THE YEAR UNDER CONSIDERATION THE AS SESSEE FILED RETURN OF INCOME ON 15.10.2010 AND DECLARED NIL INC OME AFTER CLAIMING THE BENEFIT OF SECTION 11 OF THE ACT. THE ASSESSING OFFICER WHILE COMPLETED THE ASSESSMENT U/S 143(3) V IDE ORDER DATED 18.03.2013 HAS ACCEPTED THE RETURN INCOME AS UNDER:- ASSESSMENT ORDER THE RETURN OR INCOME DECLARING TO TAL INCOME AT RS. NIL WAS FILED BY THE ASSESSEE ON 15.1 0.2010 WITH ITO, WARD-3, BHARATPUR. THE SAME WAS PROCESSED U/S 143(1). THE CASE WAS SELECTED FOR SCRUTINY. NOTICE U/S 143( 2) OF THE I.T. ACT WAS ISSUED ON 22.09.2011 BY ITO, WARD-3, BHARAT PUR AND WHICH WAS DULY SERVED UPON THE ASSESSEE. DUE TO CHA NGE OF JURISDICTION OF THE CASE, RECORD OF THE ASSESSEE RE CEIVED IN THIS CIRCLE ON TRANSFER FROM ITO, WARD-3, BHARATPUR AND CONSEQUENTLY NOTICE U/S 143(2) & 142(1) ALONGWITH QUESTIONNAIRES 30.05.2012. INCOMPLIANCE THERETO, SH. RAJENDRA AGARWAL, C.A. AN D A.R. OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND FURNISHED R EQUISITE ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 15 DETAILS/INFORMATION/BOOKS OF ACCOUNTS ETC. THE ASSE SSEE TRUST IS RUNNING EDUCATIONAL INSTITUTIONS NAMELY SIR CHHOTU RAM L.S.A. TRAINING INSTITUTE AND OTHER CHARITABLE ACTIVITIES AT BHARATPUR AND REGISTERED U/S 12AA OF THE I.T. ACT BY THE WORTHY C IT, ALWAR VIDE ORDER DATED 04.11.2004. THE TRUST IS WORKING AS PER ITS BY LAWS AND CARRIED OUT CHARITABLE ACTIVITIES. ALL THE INCO ME OF THE TRUST IS APPLIED FOR FULFILLMENT OF THE OBJECTS OF THE TRUST . THE EDUCATIONAL INSTITUTIONS ARE EXISTING SOLELY FOR EDUCATIONAL PU RPOSE AND NOT FOR PURPOSE OF PROFIT. THE TRUST HAS SHOWN AGGREGATE AN NUAL RECEIPTS OF RS. 36,05,243/- OUT OF WHICH AN AMOUNT OF RS. 32 ,99,012/- INCURRED UPON CHARITABLE ACTIVITIES DURING THE YEAR UNDER CONSIDERATION. THUS, AFTER GOING THROUGH ALL DETAILS/INFORMATION/BOOKS OF ACCOUNTS, BILL/VOUCHER S AND WRITTEN SUBMISSION, THE RETURNED INCOME DECLARED BY TRUST I S ACCEPTED. ASSESSED, ISSUE NECESSARY FORMS. 5.1 THUS, IT IS C LEAR THAT THE AO EXAMINED THE RELEVANT RECORD FURNISHED BY THE ASSES SEE AS WELL AS THE REQUISITE DETAILS AND FOUND THAT ALL INCOME OF THE TRUST IS APPLIED FOR FULFILLMENT OF OBJECTS OF THE TRUST. TH E AO HAS GIVEN THE DETAILS OF THE AGGREGATE ANNUAL RECEIPT OF RS. 36,05,243/- OUT OF WHICH AN AMOUNT OF RS. 32,99,012/- WAS FOUND TO BE INCURRED UPON CHARITABLE ACTIVITIES DURING THE YEAR UNDER CO NSIDERATION. SUBSEQUENTLY, THE AO PROPOSED TO REOPEN THE ASSESSM ENT BY ISSUING A NOTICE U/S 148 ON 16.03.2015. THE REASSES SMENT FRAMED U/S 143(3) READ WITH SECTION 147 OF THE ACT THE ASS ESSING OFFICER HAS STATED THE REASONS FOR REOPENING AS SURPLUS INC OME OF RS. 12,34,179/- PERTAINING TO OTHER INSTITUTIONS NAMELY SIR CHHOTU RAM TRAINING INSTITUTE, BHARATPUR. THE AO HAS NOT DISPUTED THE AGGREGATE TOTAL ANNUAL RECEIPT OF RS. 36,05,243/- A ND THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEA R OF RS. 32,99,012/-. HOWEVER, THE REOPENING IS BASED ON THE GROUND THAT THE ASSESSEE HAS NOT APPLIED INCOME TO THE EXTENT O F RS. 12,34,179/- PERTAINING TO SIR CHHOTU RAM TRAINING INSTITUTE IN RESPECT OF THE CHARITABLE ACTIVITIES OF THE SAID IN STITUTION. HOWEVER, THE ASSESSING OFFICER HAS NOT DISPUTED THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE OF RS. 32,99,0 12/-. ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 16 ACCORDINGLY, IT IS MANIFEST FROM THE RECORD THAT TH E REOPENING IS BASED ON REAPPRECIATION OF THE FACTS, MATERIALS AND DETAILS AVAILABLE ON THE RECORD AT THE TIME OF ASSESSMENT F RAMED U/S 143(3) AND THEREFORE THE AO HAS FORMED THE BELIEVE ONLY ON THE BASIS OF THE CHANGED OF OPINION BY RE-APPRECIATION OF THE MATERIAL ALREADY ON RECORD. IT IS ALSO NOT IN DISPUTE THAT A FTER COMPLETION OF ASSESSMENT U/S 143(3) NOTHING NEW HAS COME TO THE K NOWLEDGE OF THE ASSESSING OFFICER AND THEREFORE THE REASSESS MENT PROCEEDINGS INITIATED BY THE AO OR BASED ON MERE CH ANGED OF OPINION WHICH IS NOT SUSTAINABLE. THE HONBLE JURIS DICTIONAL HIGH COURT IN CASE OF CIT VS. HINDUSTAN ZINC LTD. (SUPRA ) WHILE CONSIDERING THE IDENTICAL ISSUE AS HOLD IN PARA 4 T O 13 AS UNDER:- 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE REVENUE AND PERUSED THE MATERIAL ON RECORD. 5. INDISPUTABLY, AS PER THE PROVISION OF SECTION 14 7 OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO INITIATE THE RE- ASSESSMENT PROCEEDINGS IF ANY INCOME OF THE ASSESSEE CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. BUT THE N, BEFORE INITIATING THE RE-ASSESSMENT PROCEEDINGS, THE AO HA S TO RECORD THE REASONS IN TERMS OF SUB-SECTION (2) OF SECTION 148, FOR FORMATION OF THE BELIEF THAT ANY INCOME OF THE ASSE SSEE CHARGEABLE TO TAX FOR THE RELEVANT ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. AS LAID DOWN BY THE HON'BLE SUPREME COU RT, THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER MUST NO T BE ARBITRARY OR IRRATIONAL, IT MUST BE REASONABLE AND BASED ON M ATERIAL ON RECORD. THE ASSUMPTION OF JURISDICTION BY THE ASSES SING OFFICER UNDER THE PROVISIONS OF THE ACT PRE-SUPPOSES DUE AP PLICATION OF MIND BY THE ASSESSING OFFICER ON THE MATERIAL ON RE CORD AND FORMATION OF THE BELIEF BY THE ASSESSING OFFICER TH AT THE INCOME HAS ESCAPED ASSESSMENT CANNOT BE BASED ON WHIMS AND FANCY, THERE MUST EXISTS RATIONAL AND INTELLIGIBLE NEXUS B ETWEEN THE REASONS AND THE BELIEF. ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 17 6. IN THE MATTER OF CALCUTTA DISCOUNT CO. LTD. V. I TO [1961] 41 ITR 191 (SC), THE HON'BLE SUPREME COURT WHILE DEALI NG WITH THE AMBIT AND SCOPE OF THE PROVISIONS OF SECTION 34 OF THE INDIAN INCOME TAX, 1922, WHICH WERE SIMILAR TO THE PROVISI ONS OF SECTION 147 OF THE ACT OF 1961 EXPLAINED THE PURPORTS OF SE CTION 34, AS UNDER: 'TO CONFER JURISDICTION UNDER THIS SECTION TO ISSUE NOTICE IN RESPECT OF ASSESSMENTS BEYOND THE PERIOD OF FOUR YEARS, BUT WITHIN A PERIOD OF EIGHT YEARS, FROM THE END OF THE RELEVANT YEAR TWO CONDITIONS HAVE THEREFORE TO BE SATISFIED. THE FIRST IS THAT THE INCOME-TAX OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME-TAX HAVE BEEN UNDER- ASSESSED. THE SECOND IS THAT HE MUST HAVE ALSO REAS ON TO BELIEVE THAT SUCH 'UNDER-ASSESSMENT', HAS OCCURRED BY REASO N OF EITHER (I) OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN OF HIS INCOME UNDER SECTION 22, OR (II) OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. BOTH TH ESE CONDITIONS ARE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE INCOME-TAX OFFICER COULD HAVE JURISDICTION TO ISSUE A NOTICE F OR THE ASSESSMENT OR REASSESSMENT BEYOND THE PERIOD OF FOU R YEARS, BUT WITHIN THE PERIOD OF EIGHT YEARS, FROM THE END OF T HE YEAR IN QUESTION.' THE HON'BLE SUPREME COURT FURTHER OBSERV ED THAT IT IS DUTY OF EVERY ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. BUT, HIS DUTY DOES NO T EXTEND BEYOND THIS. THE HON'BLE SUPREME COURT OPINED THAT ONCE ALL PRIMARY FACTS ARE BEFORE THE ASSESSING AUTHORITY, H E REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE . IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASONABLY DRAWN AN D WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. 7. IN THE MATTER OF S. NARAYANAPPA AND OTHERS V. CO MMISSIONER OF INCOME TAX, BANGALORE [1967] 63 ITR 219, THE HON 'BLE SUPREME COURT WHILE RELYING UPON THE DECISION IN TH E MATTER OF CALCUTTA DISCOUNT CO. LTD. (SUPRA), HAS OBSERVED AS UNDER : 'BUT THE LEGAL POSITION IS THAT IF THERE ARE IN FACT SOM E REASONABLE ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 18 GROUNDS FOR THE INCOME-TAX OFFICER TO BELIEVE THAT THERE HAD BEEN ANY NON-DISCLOSURE AS REGARDS ANY FACT, WHICH COULD HAVE A MATERIAL BARING ON THE QUESTION OF UNDER-ASSESSMENT , THAT WOULD BE SUFFICIENT TO GIVE JURISDICTION TO THE INCOME TA X OFFICER TO ISSUE THE NOTICE UNDER SECTION 34. WHETHER THESE GROUNDS ARE ADEQUATE OR NOT IS NOT A MATTER FOR THE COURT TO INVESTIGATE . IN OTHER WORDS, THE SUFFICIENCY OF THE GROUNDS WHICH INDUCED THE IN COME-TAX OFFICER TO ACT IS NOT A JUSTICIABLE ISSUE. IT IS OF COURSE OPEN FOR THE ASSESSEE TO CONTEND THAT THE INCOME-TAX OFFICER DID NOT HOLD THE BELIEF THAT THERE HAD BEEN SUCH NON-DISCLOSURE. IN OTHER WORDS, THE EXISTENCE OF THE BELIEF CAN BE CHALLENGED BY TH E ASSESSEE BUT NOT THE SUFFICIENCY OF THE REASONS FOR THE BELIEF. AGAIN THE EXPRESSION 'REASON TO BELIEVE' IN SECTION 34 DOES N OT MEAN A PURELY SUBJECTIVE SATISFACTION ON THE PART OF THE I NCOME-TAX OFFICER. THE BELIEF MUST BE HELD IN GOOD FAITH: IT CANNOT BE MERELY A PRETENCE. TO PUT IT DIFFERENTLY, IT IS OPEN TO TH E COURT TO EXAMINE WHETHER THE REASONS FOR THE BELIEF HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING TO THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT TO THE PURPOSE OF THE SECT ION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX OFFICE R IN STARTING PROCEEDINGS UNDER SECTION 34 OF THE ACT IS OPEN TO CHALLENGE IN A COURT OF LAW.' (EMPHASIS SUPPLIED) 8. IN THE MATTER OF ITO V. LAKHMANI MEWAL DAS[1976] 103 ITR 437, THE HON'BLE SUPREME COURT HAS OBSERVED AS UNDE R : 'PRODUCTION BEFORE THE INCOME-TAX OFFICER OF THE AC COUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COUL D WITH DUE DILIGENCE AMOUNT TO DISCLOSURE CONTEMPLATED BY LAW. THE DUTY OF THE ASSESSEE IN ANY CASE DOES NOT EXTEND BEYOND MAK ING A TRUE AND FULL DISCLOSURE OF PRIMARY FACTS. ONCE HE HAS D ONE THAT HIS DUTY ENDS. IT IS FOR THE INCOME-TAX OFFICER TO DRAW THE CORRECT INFERENCE FROM THE PRIMARY FACTS. IT IS NO RESPONSI BILITY OF THE ASSESSEE TO ADVICE THE INCOME-TAX OFFICER WITH REGA RD TO THE INFERENCE WHICH HE SHOULD DRAW FROM THE PRIMARY FAC TS. IF AN INCOME-TAX OFFICER DRAWS AN INFERENCE WHICH APPEARS ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 19 SUBSEQUENTLY TO BE ERRONEOUS, MERE CHANGE OF OPINIO N WITH REGARD TO THAT INFERENCE WOULD NOT JUSTIFY INITIATI ON OF ACTION FOR REOPENING ASSESSMENT. THE GROUNDS OR REASONS WHICH LEAD TO THE FORMATION OF THE BELIEF CONTEMPLATED BY SECTION 147 (A) OF THE ACT MUST HAVE A MATERIAL BEARING ON THE QUESTION OF ESC APEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT BECAUSE OF H IS FAILURE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. ONCE THERE EXIST REASONABLE GROUNDS FOR THE INCOME-TAX OFFICER TO FORM THE ABOVE BELIEF, THAT WOULD BE SUFFICIENT TO CLOTHE HI M WITH JURISDICTION TO ISSUE NOTICE. WHETHER THE GROUNDS A RE ADEQUATE OR NOT IS NOT A MATTER FOR THE COURT TO INVESTIGATE. T HE SUFFICIENCY OF THE GROUNDS WHICH INDUCE THE INCOME-TAX OFFICER TO ACT IS, THEREFORE, NOT A JUSTICIABLE ISSUE. IT IS, OF COURS E, OPEN TO THE ASSESSEE TO CONTEND THAT THE INCOME-TAX OFFICER DID NOT HOLD THE BELIEF THAT THERE HAD BEEN SUCH NON-DISCLOSURE. THE EXISTENCE OF THE BELIEF CAN BE CHALLENGED BY THE ASSESSEE BUT NO T THE SUFFICIENCY OF THE REASONS FOR THE BELIEF. THE EXPR ESSION 'REASON TO BELIEVE' DOES NOT MEAN A PURELY SUBJECTIVE SATIS FACTION ON THE PART OF THE INCOME TAX OFFICER. THE REASON MUST BE HELD IN GOOD FAITH. IT CANNOT BE MERELY A PRETENSE. IT IS OPEN T O THE COURT TO EXAMINE WHETHER THE REASONS FOR THE FORMATION OF TH E BELIEF HAVE A RATIONAL CONNECTION WITH OR A RELEVANT BEARING ON THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT FOR THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX OFFICER IN STARTING PROCEEDINGS IN RESPECT OF INCOM E ESCAPING ASSESSMENT IS OPEN TO CHALLENGE IN A COURT OF LAW.' THE HON'BLE SUPREME COURT FURTHER OBSERVED : 'AS STATED EARLIE R, THE REASONS FOR THE FORMATION OF THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATIO N OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE M UST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO T HE NOTICE OF THE INCOME -TAX OFFICER AND THE FORMATION OF HIS BE LIEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE F ROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FA ILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS.' (EMPHASIS SUPP LIED) ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 20 9. IN THE MATTER OF GANGA SARAN & SONS (P.) LTD. V. ITO [1981] 130 ITR 1/6 TAXMAN 14 (SC), THE HON'BLE SUPREME COU RT HELD AS UNDER: '6. IT IS WELL SETTLED AS A RESULT OF SEVER AL DECISIONS OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SAT ISFIED BEFORE THE INCOME TAX OFFICER CAN ASSUME JURISDICTION TO ISSUE NOTICE UNDER SECTION 147(A). FIRST, HE MUST HAVE REASON TO BELIE VE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND S ECONDLY, HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. IF EITHER OF THESE CONDITIONS IS NOT FULFILLED, THE NO TICE ISSUED BY THE INCOME TAX OFFICER WOULD BE WITHOUT JURISDICTION. T HE IMPORTANT WORDS UNDER SECTION 147 (A) ARE 'HAS REASON TO BELI EVE' AND THESE WORDS ARE STRONGER THAN THE WORDS ' IS SATISF IED'. THE BELIEF ENTERTAINED BY THE INCOME TAX OFFICER MUST NOT BE A RBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. T HE COURT, OF COURSE, CANNOT INVESTIGATE INTO THE ADEQUACY OR SUF FICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE INCOME TAX OFFI CER IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY E XAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BEL IEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147(A). IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELI EF, SO THAT, ON SUCH REASONS, NO ONE PROPERLY INSTRUCTED ON FACTS A ND LAW COULD REASONABLY ENTERTAIN THE BELIEF, THE CONCLUSION WOU LD BE INESCAPABLE THAT THE INCOME TAX OFFICER COULD NOT H AVE REASON TO BELIEVE THAT ANY SUCH ESCAPEMENT WAS BY REASON OF T HE ASSESSEE HAD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY R EASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE NOTICE I SSUED BY HIM WOULD BE LIABLE TO BE STRUCK DOWN AS INVALID.' (EMP HASIS SUPPLIED) ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 21 10. IN THE MATTER OF SRI KRISHNA (P.) LTD. V. ITO [ 1996] 221 ITR 538/87 TAXMAN 315, THE HON'BLE SUPREME COURT HAS OB SERVED AS UNDER : 'THE INCOME-TAX OFFICER CAN ISSUE NOTICE UN DER SECTION 148 OF THE INCOME-TAX ACT,1961, PROPOSING TO REOPEN AN ASSESSMENT ONLY WHERE HE HAS REASON TO BELIEVE THAT ON ACCOUNT OF EITHER THE OMISSION OR FAILURE ON THE PART OF TH E ASSESSEE TO FILE THE RETURN OR ON ACCOUNT OF THE OMISSION OR FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME HAS ESCAPE D ASSESSMENT. THE EXISTENCE OF THE REASON(S) TO BELIE VE IS INTENDED TO BE A CHECK, A LIMITATION, UPON HIS POWER TO REOP EN THE ASSESSMENT. SECTION 148(2) IMPOSES A FURTHER CHECK UPON THE SAID POWER, VIZ., THE REQUIREMENT OF RECORDING OF R EASONS FOR SUCH REOPENING BY THE INCOME-TAX OFFICER. SECTION 151 IM POSES YET ANOTHER CHECK UPON THE SAID POWER, VIZ., THE COMMIS SIONER OR THE BOARD, AS THE CASE MAY BE, HAS TO BE SATISFIED, ON THE BASIS OF THE REASONS RECORDED BY THE INCOME-TAX OFFICER, THA T IT IS A FIT CASE FOR ISSUANCE OF SUCH A NOTICE. THE POWER CONFE RRED UPON THE INCOME-TAX OFFICER BY SECTIONS 147 AND 148 IS THUS NOT AN UNBRIDLED ONE. IT IS HEDGED IN WITH SEVERAL SAFEGUA RDS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR ABUSE OF TH IS POWER BY THE ASSESSING OFFICERS. THE IDEA WAS TO SAVE THE ASSESS EES FROM HARASSMENT RESULTING FROM MECHANICAL REOPENING OF A SSESSMENTS BUT THIS PROTECTION AVAILS ONLY TO THOSE ASSESSEES WHO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY. EVERY DISCLOSURE IS NOT AND CANNOT BE TREATED TO BE TRUE AND FULL DISCLOSURE. A DISCLO SURE MAY BE A FALSE ONE OR A TRUE ONE. IT MAY BE A FULL DISCLOSUR E OR IT MAY NOT BE. A PARTIAL DISCLOSURE MAY VERY OFTEN BE A MISLEA DING ONE. WHAT IS REQUIRED IS A FULL AND TRUE DISCLOSURE OF ALL MA TERIAL FACTS NECESSARY FOR MAKING ASSESSMENT FOR THAT YEAR. ALL THE REQUIREMENTS STIPULATED BY SECTION 147 MUST BE GIVE N DUE AND EQUAL WEIGHT.' IT WAS FURTHER OBSERVED THAT : 'SINC E THE BELIEF IS THAT OF THE INCOME-TAX OFFICER, THE SUFFICIENCY OF REASONS FOR FORMING THE BELIEF IS NOT FOR THE COURT TO JUDGE BU T IT IS OPEN TO AN ASSESSEE TO ESTABLISH THAT, IN FACT THERE EXISTED N O BELIEF OR THAT ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 22 THE BELIEF WAS NOT AT ALL A BONA FIDE ONE OR WAS BA SED ON VAGUE, IRRELEVANT AND NON-SPECIFIC INFORMATION. TO THAT LI MITED EXTENT, THE COURT MAY LOOK INTO THE CONCLUSION ARRIVED AT BY TH E INCOME-TAX OFFICER AND EXAMINE WHETHER THERE WAS ANY MATERIAL AVAILABLE ON THE RECORD FROM WHICH THE REQUISITE BELIEF COULD BE FORMED BY THE INCOME-TAX OFFICER AND FURTHER WHETHER THAT MATERIA L HAD ANY RATIONAL CONNECTION OR A LIVE LINK FOR THE FORMATIO N OF THE REQUISITE BELIEF.' (EMPHASIS SUPPLIED) 11. IN THE MATTER OF C IT V. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561/187 TAXMAN 312 (SC ), THE HON'BLE SUPREME COURT HELD: 'HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BE LIEVE', FAILING WHICH SECTION 147 WOULD GIVE ARBITRARY POWERS TO TH E ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. ONE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWE R TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS, BUT THE REASS ESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED AS CONTEN DED ON BEHALF OF THE DEPARTMENT, THEN IN THE GARB OF REOPENING TH E ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF P OWER BY THE ASSESSING OFFICER. HENCE, AFTER 1-4-1989, THE ASSES SING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MA TERIAL' TO COME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FR OM ASSESSMENT. UNDER THE DIRECT TAX LAWS (AMENDMENT) A CT, 1987, THE PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON T O BELIEVE', THE PARLIAMENT REINTRODUCED THE SAID EXPRESSION AND DEL ETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRAR Y POWERS IN THE ASSESSING OFFICER.' (EMPHASIS SUPPLIED) 12. IN THE BACKDROP OF THE SETTLED POSITION OF LAW NOTICED HEREINABOVE ADVERTING TO THE FACTS OF THE PRESENT C ASE, IT IS TO BE NOTICED THAT THE ASSESSEE HAD MADE TRUE AND FULL DI SCLOSURE OF ALL RELEVANT FACTS RELATING TO THE CLAIM OF ADDITIONAL DEPRECIATION AND ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 23 ALSO IN RESPECT OF CLAIM FOR GRANT OF DEDUCTION UND ER SECTION 80 IA. A SEPARATE AUDIT REPORT IN THE PRESCRIBED FORM 10CCB IN SUPPORT OF THE CLAIM FOR DEDUCTION UNDER SECTION 80 IA/80IB WAS ALSO DULY SUBMITTED. THE ASSESSEE HAD ALSO SUBMITTE D REPLY PURSUANT TO ALL QUERIES MADE BY AO DURING THE ASSES SMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. IN THI S VIEW OF THE MATTER, THE CONTENTION SOUGHT TO BE RAISED BY THE R EVENUE ABOUT NON-DISCLOSURE ON THE BASIS OF THE FAILURE ON THE P ART OF THE ASSESSEE IN MENTIONED BIFURCATED AMOUNT OF ADDITION AL DEPRECIATION ALLOWABLE IN THE DEPRECIATION CHART IS ABSOLUTELY BASELESS. IT IS TO BE NOTICED THAT ALL THAT HAS BEE N SAID BY THE AO IS THAT AFTER SCRUTINY ASSESSMENT, IT WAS OBSERVED THAT ASSESSEE HAS MADE INCORRECT CLAIM OF ADDITIONAL DEPRECIATION ON CPP WHEREAS, THE CLAIM FOR ADDITIONAL DEPRECIATION ON C PP WAS ALLOWED BY THE AO WHILE FRAMING THE ASSESSMENT UNDE R SECTION 143(3) AFTER CONSCIOUS CONSIDERATION OF THE MATERIA L ON RECORD. IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE FORMAT ION OF THE BELIEF REGARDING THE ESCAPEMENT OF THE ASSESSMENT B Y THE AO IS BASED ON ANY NEW MATERIAL COMING ON RECORD. APPAREN TLY, THE FORMATION OF THE BELIEF BY THE AO REGARDING ESCAPEM ENT OF THE ASSESSMENT IS BASED ON REAPPRECIATION OF THE MATERI AL ALREADY AVAILABLE ON RECORD AT THE TIME OF SCRUTINY ASSESSM ENT WHICH AMOUNTS TO MERE CHANGE OF OPINION. OBVIOUSLY, IN TH E GARB OF PURPORTED EXERCISE OF THE POWER TO REASSESS, THE AO CANNOT BE PERMITTED TO REVIEW HIS OWN ORDER OR THE ORDER PASS ED BY HIS PREDECESSOR. THUS, THE FINDING ARRIVED AT BY THE IT AT THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO BY MER E CHANGE OF OPINION IS PATENTLY ILLEGAL, CANNOT BE FAULTED WITH . 13. THE ITAT HAVING ARRIVED AT THE CATEGORICAL FIND ING THAT RE- OPENING OF THE COMPLETED ASSESSMENT WITHOUT ANY FRE SH MATERIAL, MERELY ON THE BASIS OF CHANGE OF OPINION OF THE AO, IS WITHOUT JURISDICTION AND ERRONEOUS, THE APPEAL PREFERRED BY THE REVENUE HAS RIGHTLY BEEN DISMISSED AS HAVING BECOME INFRUCT UOUS. ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 24 5.2 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE WHEN THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT BY FO RMING THE BELIEVE AN RE-APPRECIATION OF MATERIAL ALREADY AVAI LABLE ON RECORD AS WELL AS IN VIEW OF THE DECISION OF HONBLE JURIS DICTIONAL HIGH COURT IN CASE OF CIT VS. HINDUSTAN ZINC (SUPRA), WE HOLD THAT REOPENING IS NOT VALID AS THE AO HAD NO JURISDICTIO N TO INVOKE THE PROVISION OF SECTION 148 OF THE ACT. WE MAY POINT O UT THAT THE PROVISIONS OF SECTION 148 CANNOT BE USED FOR REVIEW ING THE DECISION TAKEN BY THE AO U/S 143(3) OF THE ACT. THE RE IS A DEMARCATION AND SEPARATION OF JURISDICTION EVEN FOR REVISION FOR AN ORDER SUFFERING FROM ERROR AND THEREFORE THE REMEDY FOR SUCH ERRONEOUS ORDER IS PROVIDED U/S 263 OF THE ACT. HEN CE, THE REOPENING OF THE ASSESSMENT IS SET ASIDE. SINCE, WE HAVE SET ASIDE THE REOPENING OF THE ASSESSMENT; THEREFORE, T HE OTHER GROUNDS RAISED BY THE ASSESSEE BECOME INFRUCTUOUS. THEREFORE, THE TRIBUNAL AFTER CONSIDERING THE DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. HINDUS TAN ZINC LTD. (SUPRA) HAS HELD THAT THE ASSESSING OFFICER HAS REOPENING A SSESSMENT BY FORMING THE BELIEVE ON THE BASIS OF RE-APPRECIATION OF MATERIAL ALREADY CONSIDERED WHILE PASSING SCRUTINY ASSESSMENT WHICH IS NOT PERMISSIBLE. IN THE CASE IN HAND, THE AO HAS ALREADY CONSIDERED ALL THE DETAILS AND FACTS INCLUDING THE PAYMENT OF EXPENDITURE IN CASH THEREFORE, THE REOPENING OF THE ASSESSMENT WOULD AMOUNT TO REVIEWI NG ITS DECISION TAKEN WHILE PASSING U/S 143(3) OF THE ACT. ACCORDIN GLY, REOPENING IS NOT VALID AND LIABLE TO SET ASIDE, WE ORDER ACCORDINGLY . SINCE THOUGH WE HAVE ALREADY SET ASIDE THE REOPENING OF THE ASSESSM ENT THEREFORE, THE ITA NO. 946 &947/JP/2018 SHRI JITENDRA KUMAR GUPTA VS ITO 25 GROUND NO. 2 IS ALREADY DECIDED FOR THE ASSESSMENT YEAR 2011-12 BUT BECOME INFRUCTUOUS. IN THE RESULT, THE APPEALS FOR THE ASSESSMENT YEAR 2011-12 IS DISMISSED AND FOR THE ASSESSMENT YEAR 2012-13 IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/02/2019 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26/02/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI JITENDRA KUMAR GUPTA, BHARATPUR . 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-2, BHARATPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 946 & 947/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR