The Appollo Tyres Ltd, Ernakulam V. DCIT, Ernakulam

MA 91/COCH/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9680 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 30-10-2012
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: V SATHYANARAYANAN
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 80IB; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM M.P. NO. 91/COCH/2012 (ARSG. OUT OF I.T.A. NO. 299/COCH/2009) ASSESSMENT YEAR : 2003-04 M/S. APOLLO TYRES LTD., 6 TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI-31 [PAN:AAACA 6990Q] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), RANGE-1, ERNAKULAM. . (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI V.SATHYANARAYANAN REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 14/12/2012 DATE OF PRONOUNCEMENT 21/12/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS MOVED THIS MISCELLANEOUS APPLICAT ION SEEKING RECTIFICATION OF THE ORDER DATED 27-07-2012 PASSED BY THIS TRIBUNAL IN ITA NO.299/COCH/2009 RELATING TO THE ASSESSMENT YEAR 2003-04. 2. THE TRIBUNAL CONSIDERED THE ISSUE RELATING T O THE VALIDITY OF RE-OPENING OF THE ASSESSMENT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE. THE AO HAD REOPENED THE ASSESSMENT TO DISALLOW THE CLAIM OF DEDUCTION U/S 8 0IA OF THE ACT ON THE PROFIT DERIVED FROM DG POWER GENERATION UNIT. THE AO TOOK THE VIE W THAT THE POWER GENERATION UNIT CANNOT BE CONSIDERED AS A SEPARATE UNDERTAKING AN D ACCORDINGLY PROPOSED TO WITHDRAW THE DEDUCTION U/S 80IA, WHICH HAD BEEN ALL OWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING BEFORE LD CIT(A), BUT M.P. NO. 91/COCH/2012 2 COULD NOT SUCCEED. HENCE THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL, IN WHICH THE TRIBUNAL AGREED WITH THE VIEW TAKEN BY THE LD CIT(A ). IN EFFECT, THE THE RE-OPENING OF ASSESSMENT WAS HELD TO BE VALID BY THE TRIBUNAL. 3. THE ASSESSEE, IN THIS MISCELLANEOUS APPLICAT ION, HAS POINTED OUT THAT AN IDENTICAL ISSUE, I.E., THE ISSUE OF VALIDITY OF RE-OPENING OF ASSESSMENT OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, I.E., THE ASSESSMENT YEA R 2002-03, WAS CONSIDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL UNDER IDENTICAL S ET OF FACTS IN THE ASSESSEES OWN CASE IN ITA NO.298/COCH/2009 RELATING TO THE ASSESSMENT YEAR 2002-03 AND THE TRIBUNAL HAS DECIDED IN FAVOUR OF THE ASSESSEE. IT IS SUBMITTED THAT THE SAID DECISION WAS BROUGHT TO THE NOTICE OF THE BENCH, BUT THE TRIBUNAL HAS PASSE D THE ORDER WITHOUT MAKING ANY REFERENCE TO THE ORDER PASSED BY THE CO-ORDINATE BE NCH ON IDENTICAL ISSUE. 4. ON A CAREFUL PERUSAL OF THE IMPUGNED ORDER D ATED 27-07-2012 PASSED BY THIS BENCH OF THE TRIBUNAL, WE NOTICE THAT THE TRIBUNAL DID NOT CONSIDER THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE ASSESSEES OWN CASE IN ITA NO.298/COCH/2009 RELATING TO THE ASSESSMENT YEAR 20 02-03. IN THAT YEAR ALSO, THE AO HAD REOPENED THE ASSESSMENT TO WITHDRAW THE DEDUCTI ON ALLOWED U/S 80IA OF THE ACT ON THE INCOME DERIVED FROM DG POWER GENERATION UNIT. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.298/COCH/2009 (REFERRED SUPRA) H AD FOLLOWED THE DECISION RENDERED BY ANOTHER CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NO.297/COCH/2009. THUS, IT IS SEEN THAT THE IMPUGNED ISSUE IS A RECUR RING ISSUE AND THE TRIBUNAL HAS TAKEN THE VIEW CONSISTENTLY IN FAVOUR OF THE ASSESSEE, I. E., THE REOPENING HAS BEEN HELD TO BE INVALID. 5. THE HONBLE SUPREME COURT, IN THE CASE OF HO NDA SIEL POWER PRODUCTS LTD VS. CIT(2007)(295 ITR 466) HAS HELD THAT THE FAILURE ON THE PART OF THE TRIBUNAL TO CONSIDER THE DECISION OF THE CO-ORDINATE BENCH CITED BY THE ASSESSEE IS A MISTAKE APPARENT FROM RECORD. HENCE, WE FIND MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT VS. TRAVANCORE TITANIUM M.P. NO. 91/COCH/2012 3 PRODUCTS LTD (265 ITR 526) HAS HELD THAT THE CO-ORD INATE BENCH MUST FOLLOW THE EARLIER DECISION ON IDENTICAL ISSUES. 6. ACCORDINGLY, WE REPLACE THE PARAGRAPHS 5 AND 6 OF THE ORDER DATED 27.07.2012 WITH THE FOLLOWING PARAGRAPHS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE RECORD. WE NOTICE THAT THE AO HAD REOPENED THE ASSESSMENTS OF THE PRE CEDING YEARS ALSO ON THE IDENTICAL GROUND AND THE MATTER HAS BEEN TAKEN TO THE TRIBUNA L BY FILING APPEALS AND THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. T HE TRIBUNAL HAS DECIDED AN IDENTICAL ISSUE IN THE APPEAL FILED FOR THE ASSESSMENT YEAR 2 002-03 IN ITA NO.298/COCH/2009, IN WHICH IT FOLLOWED THE DECISION RENDERED IN THE ASSE SSEES OWN CASE IN ITA NO.297/COCH/2009. THE DECISION RENDERED BY THE T RIBUNAL IN ITA NO.297/COCH/2009, VIDE PARAS 28 TO 40 ARE EXTRACTED BELOW, FOR THE SA KE OF CONVENIENCE:- 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND F IND THAT THE ISSUE REGARDING DEDUCTION UNDER SECTION 80IA FOR POWER GE NERATION UNIT CAME BEFORE THE ASSESSING AUTHORITY FOR THE FIRST TIME IN THE A SSESSMENT YEAR 1999-2000 AND THE SAME WAS ADJUDICATED VIDE PARA 13 OF THE ASSESS MENT ORDER AND THE RELEVANT PORTION IS REPRODUCED BELOW:- DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMEN T YEAR 1999-2000, THE COMPANY STARTED A NEW INDUSTRIAL UNDERTAKING FOR THE GENERATION OF POWER FOR ITS FACTORY AT BARODA. ACCORDING TO THE PROVISIONS OF SECTION 80-IA AS WAS AMENDED W.E.F. 1.4.2000, HUNDRED PERCENT OF THE PRO FIT AND GAINS DERIVED FROM THE UNDERTAKING IS ELIGIBLE FOR DEDUCTION FROM A.Y . 2000-01 ONWARDS UNDER SUB SECTION (1) SUBJECT TO THE PROVISION OF SUB SECTION (3) AND (4) OF SECTION 80-IA. IT IS FOUND THAT ALL THE CONDITIONS PRESCRIBED ARE COM PLIED WITH AND AS SUCH THE DEDUCTION IS ADMISSIBLE. THE METHOD FOR COMPUTING THE PROFIT IS ALSO FOUND TO BE CORRECT. SUBJECT TO THE ADJUSTMENTS TO BE MADE AS DISCUSSED IN THE FOLLOWING SUB-PARAS, PROFIT OF THIS UNDERTAKING COMPUTED AS P ER RETURN IS ALLOWED AS DEDUCTION. EVEN THOUGH THE DEDUCTION IS FOR THE FI RST YEAR, THIS IS THE SECOND YEAR OF OPERATION OF THIS UNIT. IN REGARD TO THE L IMDA BIAS PLANT AT BARODA WHICH M.P. NO. 91/COCH/2012 4 WAS STARTED DURING THE PREVIOUS YEAR RELEVANT TO AS SESSMENT YEAR 1992-93, A SUM OF RS. 10,31,65,896/- HAS BEEN CLAIMED AS DEDUC TION U/S. 80IB (OLD PROVISION OF 80IA. FOR THE PURPOSE OF COMPUTING TH E ABOVE DEDUCTION, THE PROFITS OF THE ELIGIBLE BUSINESS WAS ARRIVED AT R. 34,38,86,321/-. IN ARRIVING AT THE ABOVE PROFIT, THE CONSOLIDATED PROFIT AS PER P& L ACCOUNT OF RS. 94.07 CRORES (BEFORE IT PROVISION) WAS FIRST ALLOCATED AMONG THE VARIOUS UNITS. 29. THUS, FROM THE ABOVE IT IS CLEAR THAT DEDUCTION UNDER SECTION 80IA WAS ALLOWED FOR DG POWER UNIT IN THE ASSESSMENT YEAR 19 99-2000, THOUGH THE SAME WAS RESTRICTED BECAUSE OF OTHER ISSUES LIKE EXCLUSI ON OF OTHER INCOME. FURTHER, IN THIS YEAR ALSO, DETAILS REGARDING COMPUTATION OF DE DUCTION HAS BEEN FILED BEFORE THE LOWER AUTHORITIES, COPIES OF WHICH ARE AVAILABL E AT PG. 11 TO 20 OF THE PAPER BOOK. FROM THE ABOVE, IT BECOMES CLEAR THAT THERE I S NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TRUE PARTICULARS WHIC H WERE NECESSARY FOR CLAIMING THIS DEDUCTION. THIS DEDUCTION HAS ALSO BEEN ALLOW ED BY THE AO FOR THE SAME DG POWER UNIT FOR THE ASSESSMENT YEAR 1999-2000. IN F ACT BEFORE US, THE LD. CIT-DR COULD NOT POINT OUT ANY MATERIAL FACT WHICH WAS NOT DISCLOSED TO THE DEPARTMENT. ONCE DEDUCTION HAS BEEN ALLOWED, THE SAME CANNOT BE WITHDRAWN IN THE LATER YEARS BY REOPENING OF THE ASSESSMENT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES L TD. (SUPRA) HAS CLEARLY HELD THAT AUTHORITIES WERE NOT JUSTIFIED IN REFUSING THE CLAIM OF TAX HOLIDAY FOR LATER YEARS ONCE DEDUCTION WAS GRANTED IN THE INITIAL YEA R. FOLLOWING THIS DECISION, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PA UL BROTHERS, 216 ITR 548 HAS HELD AS UNDER:- UNLESS DEDUCTIONS ALLOWED FOR THE ASSESSMENT YEAR 1980-81 ON THE SAME GROUND WERE WITHDRAWN, THEY COULD NOT BE DENIED IN THE SUBSEQUENT YEARS. EITHER IN SECTION 80HH OR IN SECTION 80J THERE IS NO PROVISION FOR WITHDRAWAL OF THE SAID DEDUCTION FOR BREACH OF THE CERTAIN CONDIT IONS. M.P. NO. 91/COCH/2012 5 30. NOW LET US EXAMINE THE ISSUE PURELY FROM RE-OPE NING ANGLE. THE PROVISO TO SECTION 147 READS AS UNDER:- PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB SECT ION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S. 139 OR IN RESPONSE T O A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR . 31. THE PLAIN READING OF THE ABOVE PROVISION MAKES IT VERY CLEAR, PARTICULARLY THE HIGHLIGHTED PORTION THAT AN ASSESSMENT WHICH HA S BEEN COMPLETED UNDER SECTION 143(3), THEN THE SAME CANNOT BE RE-OPENED A FTER FOUR YEARS UNLESS AND UNTIL THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT RELEVANT TO THE ASSESSMENT. AS WE HAVE OBSERVED ABO VE, THE MATERIAL FACTS WERE ALREADY DISCLOSED AND THE ASSESSMENT HAS BEEN REOPE NED MERELY ON THE BASIS OF ANNUAL REPORT AND COST AUDIT REPORT WHEREIN IT WAS STATED THAT THIS NEW DG POWER UNIT WAS MERELY INSTALLED AS AN ENERGY CONSER VATION MEASURE AND THE MATERIAL WAS ALREADY THERE WITH THE AUTHORITIES FOR THE EARLIER YEARS AND DESPITE OF THAT, DEDUCTION WAS ALLOWED FOR THE ASSESSMENT Y EAR 1999-2000 ITSELF WHICH IS CLEAR FROM PARA 13 OF THE ASSESSMENT ORDER QUOTED A BOVE. EVEN DURING THIS YEAR, THE ASSESSEE HAS FILED ALL THE NECESSARY PART ICULARS BEFORE THE AO. 32. WE FIND THAT IN THE CASE OF GEMINI LEATHER STOR ES VS. I.T.O. (SUPRA) THE ASSESSEE DID NOT DISCLOSE FACTS RELATING TO THE TRA NSACTION EVIDENCED BY CERTAIN DRAFTS. FURTHER, THE OFFICER HIMSELF DISCOVERED TH E FACTS RELEVANT THERETO BUT BY OVERSIGHT DID NOT BRING THE AMOUNTS REPRESENTED BY THE DRAFTS TO TAX AS INCOME OF THE ASSESSEE. SUBSEQUENTLY, NOTICE FOR THE REOP ENING OF THE ASSESSMENT WAS ISSUED AND WHEN THIS MATTER TRAVELLED TO THE HONBL E SUPREME COURT, IT WAS HELD AS UNDER:- M.P. NO. 91/COCH/2012 6 HELD, REVERSING THE DECISION OF THE HIGH COURT, T HAT AFTER DISCOVERY OF THE PRIMARY FACTS RELATING TO THE TRANSACTIONS EVIDENCE D BY THE DRAFTS IT WAS FOR THE OFFICER TO MAKE THE NECESSARY ENQUIRIES AND DRAW PR OPER INFERENCE AS TO WHETHER THE AMOUNTS REPRESENTED BY THE DRAFTS COULD BE TREA TED AS PART OF THE TOTAL INCOME OF THE APPELLANT. THIS THE OFFICER DID NOT DO. IT WAS PLAINLY A CASE OF OVERSIGHT AND IT COULD NOT BE SAID THAT INCOME CHAR GEABLE TO TAX HAD ESCAPED ASSESSMENT BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. HE CO ULD NOT, THEREAFTER, TAKE RECOURSE TO SECTION 147(A) TO REMEDY THE ERROR RESULTING FRO M HIS OWN OVERSIGHT. 33 . THUS, IT IS CLEAR THAT WHERE PRIMARY FACTS WERE NOT ED BY THE AUTHORITIES THEMSELVES, EVEN THEN IT CANNOT BE SAID THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE PARTICULAR FACTS TRULY AND FUL LY AND IN THIS CASE, DEDUCTION HAS ALREADY BEEN ALLOWED FOR A.Y. 1999-2000 AND FOR CURRENT YEAR, ALL THE RELEVANT FACTS HAVE BEEN GIVEN, AND EVEN DEDUCTION WAS ALLOWED BUT IN A TRUNCATED FASHION AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAD NOT DISCLOSED THE RELEVANT FACTS TRULY AND FULLY. 34. NOW LET US EXAMINE HOW THE VARIOUS COURTS HAVE DEALT WITH THE ISSUE. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FORAMER VS. CIT, 247 ITR 436 (ALL.) WHILE DEALING WITH THE ISSUE OF NOTICE U/S. 148 UND ER THE AMENDED PROVISION HELD AS UNDER:- THAT THE LAW PREVAILING ON THE DATE OF ISSUE OF TH E NOTICE U/S. 148, I.E, NOVEMBER 20, 1998, HAD TO BE TAKEN INTO ACCOUNT AND BY THAT DATE THE NEW SECTION 147 HAD COME INTO FORCE. THERE WAS ADMITTE DLY NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. HENCE, THE PROVISO T O THE NEW SECTION 147 APPLIED AND THE NOTICES WERE BARRED BY LIMITATION. SECTION 153 WHICH REMOVES THE BAR OF LIMITATION WAS NOT APPLICABLE TO A NOTIC E U/S. 148. MOREOVER, THE CASE M.P. NO. 91/COCH/2012 7 OF AN EXPATRIATE EMPLOYEE WAS TO BE DECIDED ON THE BASIS OF THE PROVISIONS OF ARTICLE XIV OF THE TREATY, WHEREAS CORPORATE INCOME WAS TO BE DECIDED ON THE BASIS OF EITHER ARTICLE III OR ARTICLE XIV OF THE T REATY OR SECTION 44BB. HENCE, THE OBSERVATIONS OF THE TRIBUNAL IN BOUDIER CHRISTIANS CASE WAS NOT A DIRECTION NECESSARY FOR THE DISPOSAL OF THE APPEAL RELATING T O THE PETITIONER. THE EXIGIBILITY OF INCOME OF THE PETITIONER FROM MANNING AND MANAGE MENT CONTRACTS WAS NEVER AN ISSUE DIRECTLY OR INDIRECTLY INVOLVED IN THE CAS E OF BOUDIER CHRISTIAN. MOREOVER, THE TRIBUNAL IN THE APPEAL RELATING TO TH E ASSESSMENT OF THE PETITIONER OWN CASE HAD CONSIDERED THE DECISION OF THE TRIBUNA L IN BOUDIER CHRISTIANS CASE. IT IS SETTLED LAW THAT AN APPEAL IS A CONTINUATION OF THE ORIGINAL PROCEEDINGS AND HENCE WHEN THE TRIBUNAL IN THE APPEAL RELATING TO T HE PETITIONER HAD CONSIDERED THE DECISION OF THE TRIBUNAL IN BOUDIER CHRISTIANS CASE THE NOTICE U/S. 147/148 WOULD OBVIOUSLY BE ON THE BASIS OF A MERE CHANGE OF OPINION BY THE INCOME TAX AUTHORITIES, WHICH WOULD NOT BE VALID. EVEN IF IT W ERE ASSUMED THAT THE LAW PRIOR TO THE INSERTION OF THE NEW SECTION 147 WOULD APPLY , IT WOULD MAKE NO DIFFERENCE SINCE EVEN UNDER THE ORIGINAL 147 NOTICE FOR REASSE SSMENT COULD NOT BE GIVEN ON A MERE CHANGE OF OPINION. HENCE, THE NOTICE U/S. 14 7/148 WAS ILLEGAL. 35. THIS DECISION OF THE HONBLE HIGH COURT WAS CON FIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. FORAMER FRANCE , 264 ITR 566 (SC). 36. THE LD. CIT(A) HAS MAINLY RELIED ON THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNNILAL PATEL VS . ACIT (SUPRA). HE HAS EXTRACTED THE FOLLOWING OBSERVATIONS OF THE COURT:- THE POWER TO MAKE ASSESSMENT OR REASSESSMENT WITHI N FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR WOULD BE ATTRACTED EVE N IN CASES WHERE THERE HAS BEEN A COMPLETE DISCLOSURE OF ALL RELEVANT FACTS UP ON WHICH A CORRECT ASSESSMENT MIGHT HAVE BEEN BASED IN THE FIRST INSTANCE, AND WH ETHER IT IS AN ERROR OF FACT OR LAW THAT HAS BEEN DISCOVERED OR FOUND OUT JUSTIFYING TH E BELIEF REQUIRED TO INITIATE THE PROCEEDINGS. THE WORDS ESCAPED ASSESSMENT WHER E THE RETURN IS M.P. NO. 91/COCH/2012 8 FILED, COVER THE CASE OF DISCOVERY OF A MISTAKE IN THE ASSESSMENT CAUSED BY EITHER AN ERRONEOUS CONSTRUCTION OF THE TRANSACTION OR DUE TO ITS NON- CONSIDERATION, OR CAUSED BY A MISTAKE OF LAW APPLIC ABLE TO SUCH TRANSFER OR TRANSACTION EVEN WHERE THERE HAS BEEN A COMPLETE DI SCLOSURE OF ALL RELEVANT FACTS UPON WHICH A CORRECT ASSESSMENT COULD HAVE BEEN BAS ED.IN CASES WHERE THE ASSESSING OFFICER HAD OVER-LOOKED SOMETHING AT THE FIRST ASSESSMENT, THERE CAN BE NO QUESTION OF ANY CHANGE OF OPINION WHEN THE IN COME WHICH WAS CHARGEABLE TO TAX IS ACTUALLY TAXED AS IT OUGHT TO HAVE BEEN UNDER THE LAW, BUT WAS NOT, DUE TO AN ERROR COMMITTED AT THE FIRST ASSESSM ENT. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUST IFICATION. IF THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICATION TO THINK OR SU PPOSE THAT INCOME HAD ESCAPED ASSESSMENT. THE WORDS REASON TO BELIEVE CANNOT ME AN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACTS B Y LEGAL EVIDENCE. UNLESS THE GROUND OR THE MATERIAL ON WHICH HIS BELIEF IS BASED , IS FOUND TO BE SO IRRATIONAL AS NOT TO BE WORTHY OF BEING CALLED A REASON BY ANY HO NEST MAN, HI CONCLUSION THAT IT CONSTITUTES A SUFFICIENT REASON, CANNOT BE OVERR IDDEN. IF THE ASSESSING OFFICER HONESTLY COMES TO A CONCLUSION THAT A MISTAKE HAS B EEN MADE, IT MATTERS NOTHING SO FAR AS HIS JURISDICTION TO INITIATE THE PROCEEDI NGS U/S. 147 IS CONCERNED, THAT HE MAY HAVE COME TO A CONCLUSION WHETHER ON LAW OR ON CONSTITUTION, EXAMINE THE SUFFICIENCY OF THE REASON WHICH LED THE ASSESSING O FFICER TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. 37 . BUT AS POINTED OUT BY THE LD. COUNSEL OF THE ASSESS EE, THIS POSITION WAS CONSIDERED BY THE FULL BENCH OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., 256 ITR 1. BEFORE DI SCUSSING ITS DECISION, THE HONBLE DELHI HIGH COURT HAS EXTRACTED THE FOLLOWIN G OBSERVATIONS OF HONBLE SUPREME COURT IN THE CASE OF CALCUTTA DISCOUNT CO. LTD., 41 ITR 191(SC) WHICH IS AS UNDER:- M.P. NO. 91/COCH/2012 9 IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS C AN BE REASONABLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT FOR SOMEBODY ELSE FAR LESS THE ASSESSEE TO TELL THE ASSESSING AUTHO RITY WHAT INFERENCES, WHETHER OF FACTS OR LAW, SHOULD BE DRAWN FROM GIVEN FACT , IT WILL BE MEANINGLESS TO DEMAND THAT THE ASSESSEE MUST DISCLOSE WHAT INFERENCES W HETHER OF FACTS OR LAW HE WOULD DRAW FROM THE PRIMARY FACTS. THE SCHEME OF THE LAW CLEARLY IS THAT WHERE THE IN COME-TAX OFFICER HAS REASON TO BELIEVE THAT AN UNDERASSESSMENT HAS RESULTED FRO M NON-DISCLOSURE HE SHALL HAVE JURISDICTION TO START PROCEEDINGS FOR REASSESS MENT WITHIN A PERIOD OF EIGHT YEARS; AND WHERE HE HAS REASON TO BELIEVE THAT AN U NDERASSESSMENT HAS RESULTED FROM OTHER CAUSES HE SHALL HAVE JURISDICTION TO STA RT PROCEEDINGS FOR REASSESSMENT WITHIN FOUR YEARS. BOTH THE CONDITION S, (I) THE INCOME-TAX OFFICER HAVING REASON TO BELIEVE THAT THERE HAS BEEN UNDERS TATEMENT AND (II) HIS HAVING REASON TO BELIEVE THAT SUCH UNDERASSESSMENT HAS RE SULTED FROM NON- DISCLOSURE OF MATERIAL FACTS, MUST CO-EXIST BEFORE THE INCOME-TAX OFFICER HAS JURISDICTION TO START PROCEEDINGS AFTER THE EXPIRY OF FOUR YEARS. THE ARGUMENT THAT THE COURT OUGHT NOT TO INVESTIGATE THE EXISTENCE OF ONE OF THESE CONDITIONS, VIZ., THAT THE INCOME-TAX OFFICER HAS REASON TO BELIEVE T HAT UNDERASSESSMENT HAS RESULTED FROM NON-DISCLOSURE OF MATERIAL FACTS, CAN NOT THEREFORE BE ACCEPTED. 38. WHILE DEALING WITH THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNNILAL PATEL (SUPRA), IT WAS OBS ERVED AT PG. 15 OF THE DECISION OF FULL BENCH OF THE HONBLE DELHI HIGH COURT IN TH E CASE OF KELVINATOR OF INDIA LTD. 256 ITR 1 AS UNDER:- WE ARE, WITH RESPECT, UNABLE TO SUBSCRIBE TO THE A BOVEMENTIONED VIEW. IF THE CONTENTION OF THE REVENUE IS ACCEPTED, THE SAME, IN OUR OPINION, WOULD CONFER M.P. NO. 91/COCH/2012 10 AN ARBITRARY POWER UPON THE ASSESSING OFFICER. THE ASSESSING OFFICER WHO HAD PASSED THE ORDER OF ASSESSMENT OR EVEN HIS SUCCESSO R OFFICER ONLY ON THE SLIGHTEST PRETEXT OR OTHERWISE WOULD BE ENTITLED TO REOPEN THE PROCEEDING. ASSESSMENT PROCEEDINGS MAY BE FURTHERMORE REOPENED MORE THAN ONCE. IT IS NOW TRITE THAT WHERE TWO INTERPRETATIONS ARE POSSIB LE, THAT WHICH FULFILS THE PURPOSE AND OBJECT OF THE ACT SHOULD BE PREFERRED. 39. FURTHER, THIS DECISION HAS BEEN RECENTLY CONFIR MED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC).. THE HEAD-NOTE OF THE DECISION IS AS UNDER:- THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AF TER THE SUBSTITUTION OF SECTION 147 OF THE INCOME-TAX ACT, 1961, BY THE DIR ECT TAX LAWS (AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSES SING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, BUT THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1,1989 , THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE I S TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMATION OF BELIE F. THUS, IT IS CLEAR THAT THE DECISION OF HONOURABLE G UJARAT HIGH COURT IN THE CASE OF PRAFUL CHEMICAL STANDS OVER RULED. 40. THOUGH THERE ARE VARIOUS AUTHORITIES AVAILABLE FROM VARIOUS HIGH COURTS LIKE CIT VS. ANNAMALAI FINANCE LTD., 275 ITR 451, C IT VS. EICHER LTD. 294 ITR 310, SEIMENS INFORMATION SYSTEM LTD. VS.ACIT, 295 I TR 332 BUT WE ARE OF THE VIEW THAT THERE IS NO NEED TO DISCUSS THEM IN DETAI L. THE SIMPLE FACT REMAINS THAT THE ASSESSMENT WAS RE-OPENED MAINLY ON THE BAS IS OF CHANGE OF OPINION. PARTICULARLY AFTER FOUR YEARS AND THAT TOO WHEN THE RE IS NO FAILURE ON THE PART OF M.P. NO. 91/COCH/2012 11 THE ASSESSEE TO DISCLOSE THE RELEVANT FACTS FULLY A ND TRULY. SINCE IN THIS CASE, THE ASSESSMENT HAS BEEN RE-OPENED AFTER FOUR YEARS, AND NO MATERIAL HAS BEEN BROUGHT TO OUR KNOWLEDGE SHOWING THAT THERE WAS FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE FACTS FULLY AND TRULY, WE ANNUL THE RE-OPENING PROCEEDINGS. IN THIS REGARD, WE SET ASIDE THE ORDER OF THE CIT(A). 6. CONSISTENT WITH THE VIEW TAKEN ABOVE, WE ALS O HOLD THAT THE RE-ASSESSMENT IS NOT VALID IN THE FACTS AND CIRCUMSTANCES OF THE CASE AN D ACCORDINGLY SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 21-12-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 21ST DECEMBER, 2012 GJ COPY TO: 1. M/S. APOLLO TYRES LTD.,6 TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI-31. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, (1), RANGE-1, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (A SSISTANT REGISTRAR) I.T.A.T. COCHIN