The ITO, Ward-5(2),, v. Prathana Construction (P) Ltd.,,

ITA 1160/AHD/2004 | 1994-1995
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 116020514 RSA 2004
Bench Ahmedabad
Appeal Number ITA 1160/AHD/2004
Duration Of Justice 6 year(s) 8 month(s) 29 day(s)
Appellant The ITO, Ward-5(2),,
Respondent Prathana Construction (P) Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-01-2011
Date Of Final Hearing 21-10-2010
Next Hearing Date 21-10-2010
Assessment Year 1994-1995
Appeal Filed On 08-04-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI MAHAVIR SINGH J.M. AND HON'BL E SHRI D.C. AGRAWAL A.M.) I.T.A. NO. 1061/AHD./2004 ASSESSMENT YEAR : 1994-1995 M/S. PRARTHANA CONSTRUCTION PVT. LTD. -VS.- INCOME TAX OFFICER WARD-5(2) AHMEDABAD AHMEDABAD (APPELLANT) (RESPONDENT) & I.T.A. NO. 1160/AHD/2004 ASSESSMENT YEAR : 1994-1995 INCOME TAX OFFICER WARD-5(2) -VS.- M/S. PRAR THANA CONSTRUCTION PVT. LTD. AHMEDABAD AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MEHUL K.PATEL DEPARTMENT BY : SHRI K. MADHUSUDAN S R. D.R. O R D E R PER SHRI D.C. AGRAWAL ACCOUNTANT MEMBER : THE APPEAL BEING ITA NO. 1061/AHD/2004 FILED BY TH E ASSESSEE IS AGAINST THE ORDER DATED 30.01.2004 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XI AHMEDABAD FOR THE ASSESSMENT YEAR 1994-95 ON THE FOLLOWING GROUNDS :- (1) THAT THE LEARNED ASSESSING OFFICER ERRED IN MA KING ADDITION OF RS.73 21 511/- AND RS.71 000/- BEING CASH CREDIT IN THE HANDS OF M/S. SAN FRANSISCO AND CEAZERS PLAZA AND LEARNED CIT ERRED I N CONFIRMING THE SAME THAT THE SAME BE DELETED OR REDUCE TO REASONA BLE LIMIT AND OR SET OFF OF SAME BE GIVEN FROM THE ADDITION OF GROSS PRO FIT. (2) THAT THE LEARNED ASSESSING OFFICER ERRED IN TAK ING 25% PROFIT ON CONTRIBUTION OF HASUNAGAR COOPERATIVE HOUSING SOCIE TY AND THE CIT(APPEALS) OUGHT TO HAVE TAKEN REASONABLE VIEW AN D OUGHT TO HAVE NOT REDUCE IT TO 18% BUT OUGHT TO HAVE REDUCE ACCORDING TO PROVISION OF SECTION 44AD. (3) YOUR APPELLANT CRAVES LEAVE TO ADD AMEND AND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL TILL THE FINAL HEARING OF THE SAME. IN ADDITION TO ABOVE THE ASSESSEE SOUGHT TO RAISE ADDITIONAL GROUNDS AS UNDER :- 2 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 (1) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN NOT HOLDING THAT THE REOPENING OF ASSESSMENT IS INVALID AND VOID AB-INITIO. (2) THAT ON THE FACTS AND IN LAW IT OUGHT TO HAVE BEEN HELD THAT SINCE ORIGINAL ASSESSMENT IS U/S. 143(3) REOPENING BEYON D FOUR YEARS FROM END OF RELEVANT A.Y. IS TIME-BARRED AND NOT PERMISS IBLE IN LAW. 2. IT WAS SUBMITTED BY THE LD. COUNSEL OF THE ASSES SEE THAT THE ADDITIONAL GROUNDS GO TO THE ROOT OF THE MATTER AND THEREFORE IF IT IS DECIDED IN FAVOUR OF THE ASSESSEE THEN FURTHER ISSUES ON MERIT MAY BECOME ACADEMIC. HE FURTHER SUBMITTED THAT ALL THE FACTS RELATING TO ADDITIONAL GROUNDS ARE ALREADY ON THE RECORD OF THE DEPARTMENT AS WELL AS BEFORE THE TRIBUNAL AND THEREFORE NO FURTHER INVESTIGATION IS REQUIRED AND IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN NATIONAL THERMAL POWER CO. LTD. V. COMMISSIONER OF INCOME- TAX(1998) 229 ITR 383 (SC) ADDITIONAL GROUNDS SHOULD BE ADMITTED. 3. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND SUBMITTED THAT IT IS TOO LATE STAGE FOR SUBMITTING THE ADDITIONAL GROUND AS IT IS NOT DISCUSSED AT ANY OF THE FORUM BELOW. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ADMI T THE ADDITIONAL GROUNDS BECAUSE CHALLENGE TO REOPENING OF THE ASSESSMENT GOES TO TH E ROOT OF THE CASE AND FURTHER NO INQUIRIES ARE NECESSARY TO COLLECT ANY FACT IN SUPPORT OR AGA INST THE GROUND. ACCORDINGLY FOLLOWING THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF N .T.P.C. (SUPRA) ADDITIONAL GROUND IS ADMITTED. 5. FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPANY IS DEALING IN CONSTRUCTION BUSINESS. IT HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT Y EAR 1994-95 ON 29.11.1994 DECLARING TOTAL INCOME OF RS.20 97 135/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1)(A) ON 03.03.1997 AFTER MAKING CERTAIN ADJUSTMENTS. THE ASSESSMENT WA S FURTHER COMPLETED UNDER SECTION 143(3) ON 26.03.1997 ASSESSING THE COMPANY ON A TOTAL INCO ME OF RS.31 67 150/-. THEREAFTER THE ASSESSING OFFICER RECORDED THE FOLLOWING REASONS FO R REOPENING THE ASSESSMENT :- WHILE PASSING THE ASSESSMENT ORDER IT WAS HELD THA T THE INCOME OF THE NTCS CREATED BY THE ASSESSEE COMPANY HAS TO BE DETE RMINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. NOW T HE ACIT CIRCLE 6(1) 3 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 AHMEDABAD HAS PASSED THE ORDERS U/S. 143(3) DETERMI NING THE INCOME OF THE NTCS. NAMELY CEASERS PLAZA APARTMENT OWNERS A SSOCIATION AT RS.71 000/- AND SANFRANSISCO ASSOCIATION AT RS.73 2 1 511/- ON PROTECTIVE BASIS WHICH IS REQUIRED TO BE ASSESSED I N THE ASSESSEES CASE SUBSTANTIVELY. THEREFORE I HAVE REASON TO BELIEVE THAT THE INCOME OF RS.73 92 511/- IS UNDER-ASSESSED WHICH REQUIRES TO BE TAXED BY REOPENING THE ASSESSMENT. THEREFORE NOTICE U/S. 14 8 IS TO BE ISSUED AFTER OBTAINING THE APPROVAL OF THE CIT GUJARAT-1 AHMED ABAD. ON THIS BASIS HE ISSUED NOTICE UNDER SECTION 148(1 ) ON 30.03.2001. IN RESPONSE TO WHICH THE ASSESSEE FILED A LETTER DATED 3.04.2001 REQUESTING TO TREAT THE RETURN FILED ORIGINALLY ON 29.11.1994. SUBSEQUENTLY THE ASSESSING OFFICER ISS UED NOTICES TO ASSESS THE COMPANY UNDER SECTION 147 /143(3). IN THIS RE-ASSESSMENT PROCEEDI NG THE ASSESSING OFFICER HELD THAT THE ASSESSEE-COMPANY HAS CREATED VARIOUS BENAMI ENTITIE S SUCH AS NTCS./ SOCIETIES WITH THE FOLLOWING NAMES :- (I) WORLD BUSINESS CENTER (SANFRANSISCO); (II) CEASERS PLAZA APARTMENT; (III) PRARTHANA VIHAR. ACCORDING TO THE ASSESSING OFFICER WORLD BUSINESS CENTER PROJECT WAS RUNNING UNDER THE BENAMI NAME OF SANFRANSISCO ASSOCIATION CEASERS PLAZA APARTMENT WAS RUNNING UNDER THE BENAMI NAME OF CEAZERS PLAZA APARTMENT AND PRARTHA NA VIHAR CONSTRUCTION PROJECT WERE RUNNING UNDER THE BENAMI NAME OF HASUNAGAR COOPERAT IVE HOUSING SOCIETY LIMITED. THE ASSESSING OFFICER FURTHER OBSERVED THAT SANFRANSISC O ASSOCIATION WAS ASSESSED IN THE STATUS OF AOP FOR THE ASSESSMENT YEAR 1994-95 ON 24.02.2001 O N PROTECTIVE BASIS WHERE AN ADDITION OF RS.73 21 511/- WAS MADE. A FINDING HAS BEEN GIVEN I N THAT ORDER THAT THIS ADDITION HAS TO BE MADE ON SUBSTANTIVE BASIS IN THE CASE OF THE ASSESS EE-COMPANY. SIMILARLY CEASERS PLAZA APARTMENT OWNERS ASSOCIATION WAS ALSO ASSESSED IN T HE STATUS OF AOP ON 24.02.2001 ON PROTECTIVE BASIS AND SUBSTANTIVE ADDITION OF THAT I NCOME WAS DIRECTED TO BE MADE IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER FURTHER OBSERVE D THAT WHILE PASSING THE ORDER OF ASSESSEE- COMPANY UNDER SECTION 143(3) ON 26.03.1997 OBSERVA TION HAS BEEN MADE THEREIN THAT THE ASSESSEE-COMPANY IS OWNER ON SUBSTANTIVE BASIS OF T HE INCOME TO BE WORKED OUT IN CASE OF THESE THREE ENTITIES NAMELY (I) WORLD BUSINESS CEN TER (SANFRANSISCO) (II) CEASERS PLAZA APARTMENT AND (III) PRARTHANA VIHAR CONSTRUCTION PR OJECT. SINCE THE ASSESSMENTS OF THESE ENTITIES HAVE BEEN COMPLETED IN THE MONTH OF FEBRUA RY 2001 INCOME THEREOF SHOULD BE NOW 4 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 ASSESSED ON SUBSTANTIVE BASIS IN THE HANDS OF ASSES SEE-COMPANY. THUS ON THE BASIS OF FINDING GIVEN BY THE ASSESSING OFFICERS ASSESSING THE THREE ENTITIES THE ASSESSING OFFICER OF THE PRESENT ASSESSEE-COMPANY HELD THAT INCOME EARNED BY THESE ENTITIES BELONGED TO THE ASSESSEE- COMPANY ON SUBSTANTIVE BASIS. THIS RESULTED IN ADDI TION OF RS.73 21 511/- BEING THE INCOME ASSESSED IN THE CASE OF SANFRANSISCO ASSOCIATION OF RS.71 000/- BEING THE INCOME ASSESSED IN THE CASE OF CEASERS PLAZA APARTMENT OWNERS ASSOCIA TION AND OF RS.84 53 500/- BEING THE INCOME ASSESSED IN THE CASE OF PRARTHANA VIHAR HASU NAGAR COOPERATIVE SOCIETY. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) PARTLY CONFIRMED THE ADDITION BY DELETING THE ADDITION IN RESPECT OF HASUNAGAR COOPE RATIVE HOUSING SOCIETY. 7. BEFORE US THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ARGUED IN RESPECT OF ADDITIONAL GROUNDS THAT RE-OPENING OF ASSESSMENT IS BAD IN LAW BECAUSE THE ISSUE OF CLUBBING OF INCOME OF THREE ENTITIES WAS ALREADY CONSIDERED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER UNDER SECTION 143(3) ON 26.03.1997. HE REFERR ED TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 26.03.1997 IN THE CASE OF THE ASSESSEE WHEREIN THE ISSUE REGARDING INCOME OF THREE SOCIETIES WAS DISCUSSED IN DETAILED . THIS DISCUSSION IS RUNNING FROM PAGES 7 TO 22 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICE R IN THAT ORDER HAD OBSERVED AS UNDER :- A. PARA 2E IN THE LIGHT OF THE ABOVE FACTS THE A SSESSMENT PROCEEDING IS BEING INITIATED AGAINST THE NTCS/ SOCIETY AFTER THE COMPLETING OF THE ASSESSMENT PROCEEDINGS. IN THE CASE OF THE NTCS TH E CREDIT AS DETERMINED SAME SHALL BE BROUGHT TO TAX SUBSTANTIALLY AS THE I NCOME OF THE ASSESSEE- COMPANY MODIFYING THE OTHER NTCS OF THE ACT AND TH E NTCS/SOCIETY SHALL BE HELD TO BE A BENAMIDAR AND A FRONT OF THE ASSESSEE COMPANY AND ON THIS ACCOUNT THE RETURNED AND THE ASSESSED INCOME IN TH E CASE OF THE NTCS./SOCIETY BEING BROUGHT TO TAX IN THAT CASE ONLY AS A PROTECT IVE MEASURE. IN ABSENCE OF THE RETURN OF INCOME IN THE CASE OF THE NTCS./SOCIE TY AND DETERMINATION OF INCOME IN THAT CASE THE ADDITION ON SUBSTANTIVE BA SIS IN THE CASE OF THE ASSESSEE COMPANY ON ACCOUNT OF INCOME OF THE FRONT NTCS./SOCIETY AT THIS STAGE SHALL BE AT NIL SUBJECT TO RECTIFICATION U/S . 154 OF THE ACT ON COMPLETION OF THE ASSESSMENT IN THE CASE OF THE SAID NTCS/SOCI ETY AND THE SAME INCOME CAN BE BROUGHT TO TAX AT THE HANDS OF THE SAID NTCS /SOCIETY ON PROTECTIVE BASIS. B. PARA 3E HOWEVER AGREEMENT OF THE ASSESSEE-COM PANY WITH HASUNAGAR COOPERATIVE HOUSING SOCIETY PROVIDE TERM AND CONDIT ION OF REMUNERATION TO THE ASSESSEE COMPANY IN VIEW OF THE SERVICES RENDER ED BY .. 5 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 (I) RS.7 00 000/- FOR THE SERVICES AND ACTUAL REIMBURSE MENT OF ALL EXPENSES AGREED TO BE RENDERED FOR THE PERIOD FROM THE DATE HEREOF TILL 31 ST MARCH 1993. (II) RS.25 00 000/- FOR THE SERVICES AND ACTUAL REIMBURS EMENT OF ALL EXPENSES TO BE RENDERED FOR THE PERIOD FROM 1 ST APRIL 1993 TILL 31 ST MARCH 1994. (III) RS.60 00 000/- FOR THE SERVICES AND ACTUAL REIMBURS EMENT OF ALL EXPENSES TO BE RENDERED FOR THE PERIOD FROM 1 ST APRIL 1994 TILL 31 ST MARCH 1995. (IV) RS.60 00 000/- FOR THE SERVICES AND ACTUAL REIMBURS EMENT OF ALL EXPENSES TO BE RENDERED FOR THE PERIOD FROM 1 ST APRIL 1995 TILL 31 ST MARCH 1996. C. PARA 3F IT IS PROVED FROM THE ABOVE DISCUSSION S THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE-COMPANY IS ENTITL ED TO RECEIVE REMUNERATION OF RS.25.00 LAKHS FROM PRARTHANA VIHAR PROJECT BUT AS SPECIFIC REMUNERATION IS PROVIDED FROM WORLD BUSINESS CENTRE. DURING THE YEA R UNDER CONSIDERATION THE ASSESSEE-COMPANY HAS DISCLOSED RECEIPT OF DEVELOPME NT CHARGES OF RS.25 LAKHS AND RS.7.00 LAKHS FROM PRARTHANA VIHAR SCHEME AND W ORLD BUSINESS CENTER RESPECTIVELY. THE DEVELOPMENT CHARGES FROM PRARTHAN A VIHAR HAVE BEEN RECEIVED AS PER AGREEMENT. THE ASSESSEE WAS ASKED T O GIVE THE BASIS OF RECEIPT OF DEVELOPMENT CHARGES AT RS.7.00 LAKHS FROM WORLD BUSINESS CENTRE WHICH WAS NOT PROVIDED IN AGREEMENT. AFTER REFERRING TO ABOVE OBSERVATIONS OF LD. A.O. THE LD. A.R. ARGUED THAT THE ASSESSEE HAD NOT ONLY SUBMITTED DETAILED REPLY TO THE ASSESSING OFFI CER ON THE QUESTION OF ALLEGED BENAMI NATURE OF THREE ENTITIES WHICH IS MENTIONED IN PAR A 3.2 OF HIS ORDER THE ASSESSING OFFICER WENT ON TO EXAMINE THE DEVELOPMENT AGREEMENT BETWEE N THE ASSESSEE-COMPANY AND DIFFERENT SOCIETIES/NTCS. AND CAME TO THE CONCLUSION THAT THE SE THREE SOCIETIES ARE BENAMIES OF THE ASSESSEE-COMPANY AND THEREFORE THE ASSESSMENT OF THOSE SOCIETIES SHOULD BE DONE ON PROTECTIVE BASIS WHEREAS SUBSTANTIVE ADDITION WAS TO MADE IN THE HANDS OF THE ASSESSEE- COMPANY. THEREAFTER THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE INCOME FROM THE THREE CONCERNS. FROM HASUNAGAR COOPERATIVE HOUSING SOCIET Y THE ASSESSING OFFICER COMPUTED INCOME AT RS.8.66 LAKHS. IN RESPECT OF OTHER TWO H E COMPUTED THE INCOME AT NIL MENTIONING FURTHER AS ABOVE THAT ADDITION ON ACCOUNT OF INCOME OF THE NTCS./SOCIETIES IS DONE ON SUBSTANTIVE BASIS AT NIL SUBJECT TO RECTIFICATION U NDER SECTION 154 OF THE ACT. THE ISSUE WAS AGITATED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHO VIDE PARA 7 OBSERVED AS UNDER :- 6 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 7. THE LAST GROUND IN THIS APPEAL IS DIRECTED AGAI NST THE ADDITION ON ACCOUNT OF INCOME OF NTC/SOCIETY ON SUBSTANTIVE BAS IS SUBJECT TO RECTIFICATION U/S. 154. THE A.O. VIDE PARA 2 PAGES 3 TO 13 OF THE ASSESSMENT ORDER HAS HELD THAT VARIOUS NON-TRADING CORPORATIONS AND COOPERATIVE SOCIETY HAVE ENTERED INTO CONTRACT WITH THE APPELLANT COMPANY AS SHAM ENTITIES. THE AUTHORIZED REPRESENTA TIVE OF THE APPELLANT HAS OBJECTED TO IT ON THE GROUND THAT BEN AMI TRANSACTIONS ARE DIFFERENT FROM SHAM TRANSACTIONS. THE AUTHORIZED RE PRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSING OFFICER SHOULD HAVE GI VEN A CLEAR FINDING THAT THE NTCS/SOCIETIES ARE EITHER IN ACTUAL EXISTE NCE AND RUN BY SOME ONE AS OR ARE NOT IN EXISTENCE AT ALL. 7.1 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANTS SUBMISSIONS CAREFULLY. SINCE NO ADDITION HAS BEEN MADE ON THIS GROUND NO INTERFERENCE IS REQUIRED AT THIS STAGE. ON THE BASIS OF ABOVE ORDERS OF ASSESSING OFFICER A ND CIT(A) THE LD. A.R. SUBMITTED THAT NO NEW FACTS HAD COME TO THE KNOWLEDGE OF THE ASSESSIN G OFFICER WHICH IS EVIDENT FROM THE RECORD. ON THE BASIS OF THE REASONS RECORDED BY HIM IT CANNOT BE INDEPENDENTLY OR ADDITIONALLY HELD THAT THE THREE SOCIETIES ARE BENAMIES OF ASSES SEE-COMPANY. FOR THE PURPOSE OF ISSUING NOTICE UNDER SECTION 148(1) READ WITH SECTION 147 THE ASSESSING OFFICER IS REQUIRED TO SHOW IN THE REASONS RECORDED THAT INCOME OF THE ASSESSEE HA S ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FA CTS NECESSARY FOR ASSESSMENT. ACCORDING TO THE LD. A.R. THIS ASSESSMENT HAS BEEN REOPENED BY ISSUING NOTICE ON 30.03.2001 AND HENCE IT IS BEYOND FOUR YEARS OF THE ASSESSMENT YEAR. RATHER IT HAS BEEN ISSUED AT THE FAG END OF 6 TH YEAR FROM THE ASSESSMENT YEAR I.E. 1994-95. FOR ISSUING NOTICE UNDER SECTION 148(1) BEYOND FOUR YEARS THE FIRST PROVISO TO SECTION 147 WOULD COME INTO PLAY AND ASSESSING OFFICER HAS TO SHOW THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSM ENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT. THERE IS NO ALLEGATION BY THE ASSESSING OFFICER THAT THE ASSESS EE HAS FAILED TO DISCLOSE ANY MATERIAL FACTS NECESSARY FOR ASSESSMENT. FURTHER THE LD. A.R. SUB MITTED THAT ALL THE FACTS WERE ALREADY ON THE RECORD OF THE ASSESSING OFFICER SO FAR AS THE ASSES SEE IS CONCERNED. THE ISSUE WAS DISCUSSED THREADBARE DURING ORIGINAL ASSESSMENT PROCEEDINGS A ND NO NEW FACTS HAVE EMERGED BEFORE THE ASSESSING OFFICER AND IN ANY CASE THERE IS NO FAIL URE ON WHICH CHARGE OF ESCAPEMENT CAN BE IMPOSED AGAINST THE ASSESSEE.THEREFORE REOPENING I S BAD IN LAW. THE LD. A.R. REFERRED TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF SADBHAV ENGINEERING LTD. VS.- 7 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 DCIT (2010) 45 DTR (GUJ.) 103 FOR THE PROPOSITION T HAT IF THERE IS NO FAILURE ALLEGED BY THE ASSESSING OFFICER IN THE REASONS RECORDED THE REOP ENING WOULD BE BAD-IN-LAW. THE LD. A.R. ALSO SUBMITTED THAT ON THESE FACTS THE ASSESSMENT COULD ONLY BE REOPENED WITHIN FOUR YEARS OR AT BEST ACTION UNDER SECTION 154 COULD BE TAKEN AS MENTIONED BY THE ASSESSING OFFICER IN THE ORIGINAL ORDER BUT THERE IS NO CASE FOR ISSUING NO TICE UNDER SECTION 148(1) AFTER EXPIRY OF FOUR YEARS. 8. AGAINST THIS THE LD. D.R. SUBMITTED THAT THE AS SESSEE IS THE REAL OWNER OF THE INCOME OF THREE ENTITIES WHICH HAS BEEN SO DISCUSSED IN DETA IL IN THE ORDERS OF THREE SOCIETIES. THE FUNDS HAVE FLOWN FROM THE ASSESSEE-SOCIETY AND FINAL PROF IT IS CONTROLLED AND ENJOYED BY THE ASSESSEE-COMPANY. SINCE THE ASSESSEE IS REAL OWNER AND IT HAS NOT DISCLOSED THE INCOME OF THREE SOCIETIES IN ITS OWN RETURN IT IS A FAILURE ON THE PART OF THE ASSESSEE. SUCH FAILURE SHOULD BE DISCERNED FROM THE REASONS RECORDED AND IT IS NO T NECESSARY THAT ASSESSING OFFICER SHOULD SPECIFICALLY MENTION THESE FACTS IN THE REASONS REC ORDED BY HIM FOR REOPENING THE ASSESSMENT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE MATERIAL PLACED ON RECORD. IN OUR CONSIDERED VIEW REOPENING OF THE AS SESSMENT CANNOT BE SUSTAINED. IT IS AN UNDISPUTED FACT THAT ASSESSMENT FOR THE ASSESSMENT YEAR 1994-95 WHICH IS BEFORE US HAS BEEN REOPENED ON 30.03.2001 WHICH IS BEYOND FOUR YEARS OF THE ASSESSMENT YEAR. FOR THE SAKE OF CONVENIENCE WE REPRODUCE RELEVANT PORTION OF SECTI ON 147 AS UNDER :- 147. INCOME ESCAPING ASSESSMENT.--IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 ASSESS OR REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED AS SESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS T HE CASE MAY BE FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THI S SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASS ESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER T HE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR 8 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T ASSESSMENT YEAR. SECTION 147 HAS BEEN EXPLAINED BY THE HON'BLE GUJAR AT HIGH COURT IN THE CASE SADBHAV ENGINEERING LTD. WHICH READS AS UNDER :- HELD : FOR THE PURPOSE OF INVOKING S. 147 AFTER TH E EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR THE INCOME CHARGEABLE TO TAX SHOULD HAVE ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE EITHER (I) TO M AKE A RETURN UNDER S. 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- S. (1) OF S. 142 OR S. 148 OR (II) TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IN THE FACTS OF THE PRESENT CAS E IT IS AN UNDISPUTED POSITION THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE INSO FAR AS THE FIRST CONDITION IS CONCERN ED. INSOFAR AS THE SECOND CONDITION VIZ. THE FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT IS CONCERNED ON A PLAIN READING OF THE REASONS RECORDED IT IS APPARENT THAT THE SAME ARE TOTALLY SILENT AS REGARDS ANY FAILURE ON THE PART OF THE PETITIONER TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE RELEVANT ASSESSMENT YEARS. 10. FROM THE REASONS RECORDED IT IS APPARENT THAT THE ASSESSMENT IS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME OF NTCS NAMELY CEASERS PLAZA APARTMENT OWNERS ASSOCIATION AND SANFRANSISCO ASSOCIATION HAVE BEEN ASSESSED ON PROTECTIVE BASIS WHICH IS REQUIRED TO BE ASSESSED SUBSTANTIVELY IN THE CASE OF THE ASSESSEE. IN ENTIRE REASONS RECORDED THERE IS NO CHARGE OF ANY FAILURE OF THE ASSESSEE IN DISCLOSING ANY MA TERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASONS THUS DO NOT IN ANY MANNER INDICATE THAT PRO CEEDINGS UNDER SECTION 147 ARE SOUGHT TO BE INITIATED BY REASON OF FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION. 11. FOR THE PURPOSE OF REOPENING OF ASSESSMENT UNDE R PROVISO TO SECTION 147 FIVE INGREDIENTS ARE REQUIRED TO BE SPECIFICALLY MENTION ED BY THE A.O. IN THE REASONS RECORDED ENABLING HIM TO ARRIVE AT THE SATISFACTION BEFORE I SSUANCE OF NOTICE UNDER SECTION 148(1). THEY ARE (I) NAME OF THE ASSESSEE (2) ASSESSMENT YEAR FOR WHICH ASSESSMENT IS SOUGHT TO BE REOPENED (3) AMOUNT OF INCOME ALLEGED TO HAVE ESCA PED ASSESSMENT (4) REASONS FOR SUCH 9 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 ESCAPEMENT AND (5) FAILURE OF THE ASSESSEE TO DISCL OSE MATERIAL FACTS SUCH MATERIAL FACTS ARE NECESSARY FOR THE ASSESSMENT AND WHAT ARE THOSE MAT ERIAL FACTS NEEDED TO BE SPECIFIED. WHERE ASSESSMENT IS SOUGHT TO BE REOPENED IN THE MAIN SEC TION THEN 5 TH INGREDIENT IS NOT NECESSARY. IT IS AN UNDISPUTED FACT THAT ORIGINAL ASSESSMENT ON 2 6.03.1997 WAS COMPLETED UNDER SECTION 143(3) AND ASSESSMENT IS SOUGHT TO BE REOPENED AFTE R EXPIRY OF FOUR YEARS. THEREFORE CLEARLY PROVISO TO SECTION 147 WOULD BE APPLICABLE AND THE REFORE ALL THE FIVE INGREDIENTS ARE NECESSARILY REQUIRED TO BE MENTIONED IN THE REASONS RECORDED BEFORE THE ASSESSING OFFICER COULD HAVE REASONS TO BELIEVE THAT INCOME HAS ESCAP ED ASSESSMENT. IN FACT IN THE REASONS FOR REOPENING THIS ASSESSMENT ASSESSING OFFICER HAS NO T EVEN CHARGED THAT INCOME HAS ESCAPED ASSESSMENT AND HE HAS ONLY MENTIONED THAT INCOME OF RS.73 92 511/- IS UNDER ASSESSED. SIMILAR VIEW HAS BEEN EXPRESSED BY VARIOUS OTHER CO URTS/ TRIBUNALS - (I) HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. B HABESH DEVELOPORS VS. CIT IN WRIT PETITION NO. 2508 OF 2009 OBSERVED AS UNDER : - 10. THE VIEW WHICH WE HAVE TAKEN IS IN CONSONANCE WITH THE LAW LAID DOWN BY THE SUPREME COURT AND BY THIS COURT. IN INCOME TAX OFFICER VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) THE SUPREME COURT HAD OCCASION TO INTERPRET THE ERSTWHILE PROVISIONS OF S ECTION 147 AND OBSERVED THUS : WE MAY ADD THAT THE DUTY WHICH IS CAST UPON THE AS SESSEE IS TO MAKE TRUE AND FULL DISCLOSURE OF THE PRIMARY FACTS AT THE TIM E OF ORIGINAL ASSESSMENT. PRODUCTION BEFORE THE ITO OF THE ACCOUNT BOOKS OR O THER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HA VE BEEN DISCOVERED BY THE ITO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE C ONTEMPLATED BY LAW. THE DUTY OF THE ASSESSEE IN ANY CASE DOES NOT EXTEND BE YOND MAKING A TRUE AND FULL DISCLOSURE OF PRIMARY FACTS. ONCE HE HAS DONE THAT HIS DUTY ENDS. IT IS FOR THE ITO TO DRAW THE CORRECT INFERENCE FROM THE PRIM ARY FACTS .IT IS NO RESPONSIBILITY OF THE ASSESSEE TO ADVISE THE ITO WI TH REGARD TO THE INFERENCE WHICH HE SHOULD DRAW FROM THE PRIMARY FACTS. IF AN ITO DRAWS AN INFERENCE WHICH APPEARS SUBSEQUENTLY TO BE ERRONEOUS MERE CH ANGE OF OPINION WITH REGARD TO THAT INFERENCE WOULD NOT JUSTIFY INITIAT ION OF ACTION FOR REOPENING ASSESSMENT. A SIMILAR VIEW WAS TAKEN IN A SUBSEQUENT JUDGMENT I N GANGA SARAN &SONS (P) LTD. VS. INCOME TAX OFFICER (1981) 130 ITR 1 WHERE THE SUPREME COURT HELD THU S: IT IS WELL SETTLED AS A RESULT OF SEVERAL DECISION S OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SATISFIED BEFORE THE IT O CAN ASSUME JURISDICTION 10 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 TO ISSUE NOTICE UNDER S.147(A). FIRST HE MUST HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND SECONDLY HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IF EITHER OF THESE CO NDITIONS IS NOT FULFILLED THE NOTICE ISSUED BY THE ITO WOULD BE WITHOUT JURISDICT ION. THE IMPORTANT WORDS UNDER S. 147(A) ARE HAS REASON TO BELIEVE AND THE SE WORDS ARE STRONGER THAN THE WORDS IS SATISFIED. THE BELIEF ENTERTAIN ED BY THE ITO MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR I N OTHER WORDS IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. T HE COURT OF COURSE CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE ITO IN COMING TO THE BELIEF BUT T HE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER S.147(A). IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF SO THAT ON SUCH REASON S NO ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERT AIN THE BELIEF THE CONCLUSION WOULD BE INESCAPABLE THAT THE ITO COULD NOT HAVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION O R FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS AND THE NOTICE ISSUED BY HIM WOULD BE LIABLE TO BE STRUCK DOWN AS INVALID . THE SAME VIEW HAS BEEN REITERATED IN A JUDGMENT OF A DIVISION BENCH OF THIS COURT IN IPCA LABORATORIES LTD. VS. GAJANAND MEENA (2001) 251 ITR 416 WHERE HONBLE MR. JUSTICE S.H. KAPADIA (AS THE LEARNED JUDGE THEN WAS) SPEAK ING FOR A DIVISION BENCH HELD THUS: THE POSITION OF LAW AFTER 1ST APRIL 1989 IS NOT IN DISPUTE. BY VIRTUE OF A PROVISO TO S.147 NO ACTION CAN BE TAKEN FOR REOPEN ING AFTER FOUR YEARS UNLESS THE AO HAS REASON TO BELIEVE THAT INCOME HAS ESCAPE D ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THE PRESENT CASE THE AFFIDAVIT AND THE REASONS DISCLOSED INDICATE THAT THE DEPARTMENT HAS PURPORTED TO REOPEN THE ASSESSMENT ONLY ON THE BASIS OF CHANGE OF OPINION. THIS POSITION IS IN FACT CONCEDED VIDE PARA 3 OF THE AFFIDAVIT IN REPLY DT. 13TH MARCH 2001. THE REASONS ALSO DO NOT SPELL OUT FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. ...WE ARE SATIS FIED ON THE FACTS OF THE PRESENT CASE THAT REOPENING IS SOUGHT ON THE BASIS OF CHANG E OF OPINION. FURTHER EVEN IN THE REASONS THERE IS NOTHING TO INDICATE THAT R EOPENING IS SOUGHT ON THE GROUND OF THE FAILURE ON THE PART OF THE PETITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. 11. FOR THE REASONS AFORESAID WE ARE OF THE VIEW THAT RECOURSE TO THE POWER UNDER SECTION 147 CANNOT BE SUSTAINED ON A MERE CHANGE OF OPINION THERE BEING NO FAILURE OF THE ASSESSEE TO 11 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESS ARY FOR ASSESSMENT. THE BASIC CONDITION PRESCRIBED BY THE STATUTE FOR THE EXERCISE OF THE P OWER HAS NOT BEEN FULFILLED. THE PETITION HAS TO BE ALLOWED. (II) IN CIT VS.- JAI MICA SUPPLY CO. PVT. LTD. (19 94) 205 ITR 387 (CAL.) THE HON'BLE CALCUTTA HIGH COURT HELD AS UNDER :- IT IS WELL-SETTLED THAT THE INCOME-TAX OFFICER MUS T MENTION IN THE REPORT THE MATERIALS HE HAD BEFORE HIM AND THE REASONS FOR COM ING TO THE CONCLUSION THAT IT WAS A FIT CASE FOR ISSUING A NOTICE UNDER SECTIO N 148 OF THE INCOME-TAX ACT 1961. THE COURT MAY NOT LOOK INTO THE SUFFICIENCY O F THE MATERIALS BUT THERE MUST BE SOME MATERIALS BEFORE THE INCOME-TAX OFFICE R WHICH SHOULD BE INCORPORATED INTO THE REPORT ON THE BASIS WHEREOF T HE BELIEF WAS ENTERTAINED BY THE INCOME-TAX OFFICER THAT THERE WAS OMISSION OR F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION. THE ASSESSEE HAD FURNISHED THE LIST OF CREDITORS AN D INTEREST PAID TO THEM IN THE ASSESSMENT PROCEEDINGS FOR 1962-63 AND 1964-65. THE ADDRESSES OF THE CREDITORS WERE ALSO SUPPLIED TO THE INCOME-TAX OFFI CER. ASSESSMENTS HAD BEEN MADE ACCEPTING THE ASSESSEE'S RETURNS. ONE OF THE C REDITORS OF THE ASSESSEE HAD SUBSEQUENTLY CONFESSED THAT HE WAS A NAME-LENDER AN D REASSESSMENT PROCEEDINGS WERE COMMENCED AGAINST THE ASSESSEE. TH E TRIBUNAL HELD THAT THE REASSESSMENT PROCEEDINGS WERE NOT VALID. ON A REFER ENCE: HELD _ THAT THE ASSESSMENTS IN THIS CASE HAD BEEN REOPEN ED ON THE BASIS OF THE CONFESSION OF ONE OF THE CREDITORS OF THE ASSESSEE BUT THE DETAILS OF SUCH CONFESSION HAD NOT BEEN INCORPORATED IN THE REPORT IN SOME MEA SURE SO AS TO FORM THE FACTUAL FOUNDATION FOR THE INCOME-TAX OFFICER'S BELIEF THAT IT WAS A FIT CASE FOR ISSUING NOTICE UNDER SECTION 148. THE NATURE AND CONTENT OF THE CONFESSION AND THE CREDENTIALS OF THE CREDITOR HAD NOT BEEN DISCUSSED IN THE REASONS RECORDED BY THE INCOME-TAX OFFICER. IN OTHER WORDS THERE WAS NO MA TERIAL TO SHOW THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE NOT VALID. (III) HON'BLE PATNA HIGH COURT IN THE CASE OF DHANR AJ & CO. VS.- CIT [1996] 218 ITR 312 (PAT.) ALSO ENDORSED THE ABOVE VIEW AS UNDER :- FOLLOWING CONDITIONS HAD TO BE SATISFIED FOR A PRO PER AND LEGAL ASSESSMENT UNDER THOSE PROVISIONS:--1. THE ASSESSING OFFICER HAS REA SON TO BELIEVE. 2(A) THAT BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR; OR (B) BY REAS ON OF THE OMISSION OR BY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. 3. INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR. 4. THE REASONS WHICH LED THE OFFICER TO ENTERTAIN THE RELIEF MUST BE RECORDED. 5. THE NOTICE OF REASSESSMENT PRO CEEDINGS MUST BE ISSUED WITHIN THE TIME LIMIT SPECIFIED IN SECTION 149 READ WITH S ECTION 151 OF THE ACT. SECTION 147 12 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 POSTULATED A DUTY ON EVERY ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE IN COME-TAX OFFICER AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEM ENT OF THE INCOME OF THE ASSESSEE. ALONG WITH THE RETURN THE AUDITED TRADING AND PROF IT AND LOSS ACCOUNT BALANCE- SHEET PARTNERS' CAPITAL ACCOUNT AND DETAILS OF THE LOAN ACCOUNTS DULY VERIFIED AND CONFIRMED BY THE CREDITORS GIVING ALSO THEIR INCOME -TAX FILE NUMBERS WERE FILED. THE INCOME-TAX OFFICER COMPLETED THE ASSESSMENT UND ER THE AMNESTY SCHEME ITSELF ACCEPTING THE RETURNED INCOME. DURING THE COURSE OF THE ASSESSMENT OF THE ASSESSEE FOR A SUBSEQUENT YEAR 1987-88 AN ENQUIRY WAS CARRIED OUT BY THE INVESTIGATION WING OF CALCUTTA AND IT WAS FOUND THA T THE SEVEN CREDITORS FROM WHOM THE ASSESSEE WAS SAID TO HAVE OBTAINED LOANS WERE NON-EXISTENT. HELD _ THAT IT WAS EVIDENT THAT FOR THE ASSESSMENT YEARS 1983-84 1984-85 AND 1985- 86 THE ASSESSEE HAD FILED THE RETURNS ALONG WITH T HE AUDITED TRADING AND PROFIT AND LOSS ACCOUNT BALANCE SHEET PARTNERS' CAPITAL ACCO UNT AND DETAILS OF THE LOAN ACCOUNTS DULY VERIFIED AND CONFIRMED BY THE CREDIT ORS GIVING ALSO THEIR INCOME-TAX FILE NUMBERS. THE LOAN S HAD BEEN OBTAINED BY ACCOUNT PAYEE DRAFTS INTERE ST WAS PAID FROM TIME TO TIME BY ACCOUNT PAYEE CHEQUES/DRAFTS AND THE PRINCIPAL AMOUNT ALSO REPAID BY ACCOUNT PAYEE DRAFTS. ALL THESE MATTERS W ERE CONFIRMED BY THE RESPECTIVE CREDITORS WHO WERE ASSESSEES AND HAD SHOWN THEIR IN COME-TAX FILE NUMBERS. THE PERSONS FROM WHOM LOAN S WERE OBTAINED HAD ALSO POSTED LETTERS OWNING UP T O THE TRANSACTIONS. ALL FACTS NECESSARY FOR THE PURPOSE O F THE ASSESSEE'S ASSESSMENTS FOR THOSE YEARS WERE BEFORE THE INCOME-TAX OFFICER. THE ASSESSEE HAD DISCLOSED ALL OF THEM WITH DETAILS. THE INCOME-TAX OFFICER MIGHT HAV E FAILED TO MAKE PROPER OR FURTHER INVESTIGATION BUT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL THE MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ITS ASSESSMENTS FOR THE CONCERNED ASSESSMENT YEARS. NO MATERIAL OR REASON WAS SHOWN T O EXIST FOR THE FORMATION OF THE 'BELIEF' ENVISAGED BY SECTION 147 OF THE ACT. THE R EASSESSMENT NOTICES WERE NOT VALID AND WERE LIABLE TO BE QUASHED. (IV) HON'BLE DELHI HIGH COURT IN THE CASE OF JSRS U DYOG LIMITED VS.- ITO[2009] 313 ITR 321 HELD THAT MERE REASONS TO BELIEVE THAT INCO ME HAS ESCAPED ASSESSMENT WAS NOT SUFFICIENT TO REOPEN THE ASSESSMENT BEYOND FOUR YEA RS PERIOD. THE HON'BLE COURT HELD AS UNDER :- THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS FRAMED UNDER SECTION 143(3) ON MARCH 5 2003. IN THE COURSE OF ASSESSMENT PROCEEDI NGS THE ASSESSEE HAD FURNISHED DETAILS OF SHARE APPLICATION MONEY RECEIV ED BY IT FROM S. IT WAS ALSO STATED THAT ALL THE SHARE APPLICATION MONEY HAD COM E FROM COMPANIES WHICH WERE DULY REGISTERED UNDER THE COMPANIES ACT 1956 AND THAT EACH ONE OF THEM WAS A LEGAL ENTITY. IT WAS ALSO STATED THAT THE APPLICANT S HAD CONFIRMED THEIR INVESTMENTS THROUGH DULY ATTESTED AFFIDAVITS. THE STATEMENTS WE RE ACCEPTED BUT SUBSEQUENTLY THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 ON MARCH 28 2008. IN THE REASONS RECORDED IN WRITING FOR REOPENING THE CASE UNDER SECTION 148 OF THE ACT 13 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 THERE WAS NO ALLEGATION THAT THE ASSESSEE DID NOT M AKE A FULL AND TRUE DISCLOSURE OF ALL THE MATERIAL FACTS. THE ASSESSEE OBJECTED TO TH E NOTICE BUT THE ASSESSING OFFICER REJECTED THE OBJECTION. ON A WRIT PETITION AGAINST THE ORDER : HELD - THAT THE ASSESSING OFFICER'S ORDER HAD NOT DEAL T WITH ANY OF THE OBJECTIONS RAISED BY THE ASSESSEE. SECONDLY THE ORDER WAS NOT HING BUT A REPETITION OF WHAT WAS GIVEN IN THE PURPORTED REASONS. THERE WAS NO INDICA TION OF ANY SPECIFIC INFORMATION WITH REGARD TO ANY ACCOMMODATION ENTRY BEING PROVID ED BY THE ASSESSEE. APART FROM MERELY SAYING THAT THE RECEIPTS OF THE SHARE APPLIC ATION MONEY WERE BOGUS AND SHAM TRANSACTIONS THERE WAS NOTHING INDICATED EITHER IN THE REASONS OR IN THE ORDER TO ARRIVE AT A CONCLUSION THAT THERE HAD BEEN FAILURE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD E SCAPED ASSESSMENT WAS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YE AR PERIOD. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY T HE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRUL Y. THE NOTICE AND THE ORDER OF THE ASSESSING OFFICER WERE NOT VALID. THEY WERE LIABLE TO BE QUASHED. (V) ARVIND MILLS LTD. VS. DEPUTY COMMISSIONER OF INCOME -TAX (ASSESSMENT) [2000] 242 ITR 0173-[GUJARAT HIGH COURT] THE CLEAR IMPORT OF THE PROVISO TO SECTION 147 OF T HE INCOME-TAX ACT 1961 IS THAT WHERE THERE IS NO DEFAULT ON THE PART OF THE ASSESS EE IN FILING THE RETURN AS REQUIRED UNDER THE ACT EITHER UNDER SECTION 139 OR IN PURSUANCE OF NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TH ERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION NOTW ITHSTANDING THE FACT THAT THE REASON FOR ESCAPE OF INCOME FROM ASSESSMENT EXISTS ACTION CANNOT BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR. HELD _ THAT IN THE INSTANT CASE THE REASONS RECOR DED BY THE ASSESSING OFFICER CLEARLY DISCLOSED THAT THE ASSESSING OFFICER DID NO T ENTERTAIN ANY BELIEF THAT INCOME HAD ESCAPED ASSESSMENT BECAUSE THERE HAD BEE N ANY FAILURE ON THE PART OF THE ASSESSEE TO FILE A RETURN. REGULAR ASSESSMENT H AD BEEN MADE UNDER SECTION 143. THE REASONS ALSO DISCLOSED THAT THE ASSESSING OFFICER BELIEVED THAT INCOME HAD ESCAPED ASSESSMENT IN THE ORIGINAL ASSESSMENT O N ACCOUNT OF NOT INCLUDING THE AMOUNT OF REFUND OF EXCISE DUTY DURING THE ASSESSME NT YEAR IN QUESTION BECAUSE THE ASSESSING OFFICER HAD ACCEPTED THE PLEA OF THE ASSESSEE THAT SINCE THE MATTER ABOUT REFUND WAS SUB JUDICE AND THE QUESTION OF REF UND HAD NOT BECOME FINAL LIABILITY TO PAY EXCISE DUTY HAD NOT COME TO AN END AS THE ASSESSEE WAS MAINTAINING ACCOUNTS ON MERCANTILE BASIS AND THE S AID AMOUNT COULD NOT BE BROUGHT TO TAX UNDER SECTION 41. HOWEVER SUBSEQUEN T TO THAT AS A RESULT OF THE ALLAHABAD HIGH COURT JUDGMENT IN SWARUP VEGETABLE P RODUCTS V. CIT [1991] 187 ITR 412 THE ASSESSING OFFICER THOUGHT THAT HIS EAR LIER DECISION HAD BEEN ERRONEOUS AS A RESULT OF WHICH THE INCOME HAD ESCAP ED ASSESSMENT. THE CASE WAS SQUARELY COVERED BY THE PROVISO TO SECTION 147 AND NOT SECTION 149. INITIATION OF PROCEEDINGS UNDER THE PROVISO BEING CLEARLY BARRED BY TIME THE ASSESSING OFFICER COULD NOT HAVE ASSUMED JURISDICTION BY ISSUING NOTI CE UNDER SECTION 148 IN MARCH 1993 IN RESPECT OF THE ASSESSMENT YEAR 1982-83. 14 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 (VI) SHREE THARAD JAIN YUVAK MANDAL VS. INCOME-TAX OFFICER [2000] 242 ITR 0612- [GUJARAT HIGH COURT] A PERUSAL OF THE PROVISO TO SECTION 147 OF THE INCO ME-TAX ACT 1961 SHOWS THAT THE FOUNDATION OF CONFERRING JURISDICTION ON THE AS SESSING OFFICER TO ASSESS OR REASSESS THE INCOME FOR ANY ASSESSMENT YEAR BEYOND THE END OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR MUST BE OMI SSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT YEAR AND THAT THE INCOME-TAX OFFICER HAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT Y EAR. IN THE ABSENCE OF ANY SUCH OMISSION OR FAILURE ON THE PART OF THE ASSESSE E TAKING ACTION FOR ASSESSMENT OR REASSESSMENT IS NOT PERMISSIBLE FOR ANY YEAR AFT ER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. 12. A CAREFUL STUDY OF ABOVE AUTHORITIES CLEARLY IN DICATES THE PARAMETERS REQUIRED TO BE SPECIFIED FOR REOPENING OF ASSESSMENT BEYOND FOUR Y EARS. IN THE PRESENT CASE ALL THE FACTS FOR HOLDING THE THREE ENTITIES AS BENAMI OF THE ASSESSE E WERE ALREADY ON THE RECORD WHEN ASSESSMENT UNDER SECTION 143(3) WAS MADE IN THIS CA SE ON 26.03.1997. IT IS NOT KNOWN WHAT WAS THE NEW MATERIAL COLLECTED BY THE ASSESSING AUT HORITIES OF THE THREE ENTITIES IN MARCH 2001 WHEN THEIR ASSESSMENT WAS COMPLETED. IT WAS NOT SPE CIFIED IN THE REASONS RECORDED AS TO WHAT WAS THE NEW MATERIAL THAT HAD COME INTO THE KNOWLED GE OF ASSESSING OFFICER OF THE ASSESSEE- COMPANY WHICH THE ASSESSEE-COMPANY WAS LEGALLY DUTY BOUND TO DISCLOSE THEM IN ITS RETURN FILED ON 29.11.1994. EVEN THE PRESENT ASSESSING OF FICER OF THE ASSESSEE COMPANY WHO ISSUED NOTICE UNDER SECTION 148(1) WAS NOT REALLY AWARE AS TO WHY THE OTHER COMPANIES/ENTITIES ARE BENAMI OF THE ASSESSEE COMPANY. HE HAS SIMPLY PICK ED UP THE ASSESSED INCOME FIGURE OF THE TWO OUT OF THREE ENTITIES AND RECORDED REASONS OF U NDER-ASSESSMENT OF INCOME OF THE ASSESSEE- COMPANY AND ISSUED NOTICE UNDER SECTION 148(1) WITH OUT LOOKING INTO THE PROVISO TO SECTION 147 AND WITHOUT CONSIDERING THE NECESSITY OF SATISF YING THE NECESSARY INGREDIENTS MENTIONED THEREIN IT SEEMS THAT THE PRESENT A.O. OF ASSESSEE CO. WAS GUIDED BY THE FINDING OF THE A.O. OF THOSE TWO ENTITIES TO MAKE A SUBSTANTIVE ASSESSMENT IN THE CASE OF THIS ASSESSEE. THERE WAS NO INDEPENDENT APPLICATION OF MIND BY HIM. THERE IS N O MATERIAL IN THE REASONS RECORDED TO SHOW THAT INVESTMENT IN THE TWO ENTITIES HAD FLOWN FROM THE ASSESSEE CO. THE USUFRUCT OF THE TWO ENTITIES WAS PASSED ON AND ENJOYED BY THE ASSESSEE CO. AND ALL THE CONTROL AND MANAGEMENT WAS EXERCISED BY THE ASSESSEE CO. AND THAT ALL SUCH MATERIAL HAD FOR THE FIRST TIME COME INTO THE 15 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 POSSESSION OF THE A.O. OF THE ASSESSEE CO. THERE I S NO INFORMATION AS TO WHY THE THIRD ENTITY HAS BEEN LEFT AND NOT CONSIDERED FOR CLUBBING. 13. IN OUR CONSIDERED VIEW THE REASONS RECORDED BY THE A.O. FOR REOPENING OF ASSESSMENT ARE SACROSANCT. THEY CANNOT BE SUPPLEMENTED AUGMENTED MODIFIED OR CURTAILED BY ANY EXTERNAL MATERIAL NOT CONTAINED IN THE REASONS ITSELF. REASO NS RECORDED BY THE A.O. REFLECT THE BELIEF HE HAS ARRIVED AT ON THE BASIS OF MATERIAL AVAILABLE B EFORE HIM. IT IS TRITE LAW THAT SUCH BELIEF HAS TO BE AN HONEST BELIEF AND SHOULD HAVE RATIONAL AND LIVE CONNECTION WITH THE MATERIAL CONSIDERED BEFORE FORMATION OF BELIEF. IF THERE IS SOME MATERIAL IN THE RECORD OF THE A.O. WHICH COULD OTHERWISE SUBSTANTIATE THE BELIEF BUT H AS NOT FORMED PART OF REASONS RECORDED OR DO NOT FIND A MENTION IN THE NOTE CALLED REASONS T O BELIEVE THEN IT CANNOT BE INFERRED THAT SUCH MATERIAL WAS A BASIS FOR FORMATION OF BELIEF. THE BELIEF OF THE A.O. IS NOT A RITUAL OR HYPOTHETICAL BUT MUST BE REFLECTED FROM CONTENTS OF THE NOTE ITSELF. IF ANY MATERIAL FIND MENTION IN THE NOTE THEN IT CAN BE INFERRED THAT IT HAS BEEN CONSIDERED BEFORE FORMING BELIEF BUT WHERE SUCH MATERIAL EVEN THOUGH MIGHT BE AVAILA BLE IN HIS RECORD BUT DOES NOT FIND MENTION IN THE NOTE THEN IT CANNOT BE INFERRED THAT SUCH MATERIAL HAD BEEN THE BASIS OF BELIEF ARRIVED AT BY THE A.O. LIVE CONNECTION MEANS THAT N OTE ITSELF SHOULD SPEAK ABOUT THE MATERIAL BEFORE IT CONCLUDES INTO BELIEF. PROVISION OF SECTI ON 147 CONFER JURISDICTION ON THE A.O. TO REOPEN THE ASSESSMENT. THEREFORE THEY SHOULD BE INT ERPRETED STRICTLY. HONBLE CALCUTTA HIGH COURT IN G.N. SHAW (WINE) PVT. LTD. VS. INCOME-TAX OFFICER (2003) 260 ITR 513 (CAL) IN THIS REGARD HELD AS UNDER: THE INCOME-TAX ACT 1961 IS A FISCAL STATUTE. IT I S TO BE INTERPRETED STRICTLY. WHEN A PARTICULAR ACTION HAS TO BE TAKEN IN A PARTI CULAR MANNER THE SAME HAS TO BE TAKEN IN THAT MANNER AND NOT OTHERWISE. SIMPL E ESCAPEMENT OF INCOME WILL NOT CONFER JURISDICTION TO REOPEN AN ASSESSMEN T FOUR YEARS AFTER THE END OF THE ASSESSMENT YEAR. THE PROVISO TO SECTION 147 OF THE INCOME-TAX ACT 1961 PRESCRIBES THAT EVEN AFTER THE EXPIRY OF FOUR YEARS AN ASSESSMENT CAN BE REOPENED ON TWO CONDITIONSTHAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO SUBMIT A RETURN EITHER UNDER SECTION 13 9 OR IN RESPONSE TO A NOTICE UNDER SECTION 142(1) OR SECTION 148. THE SECOND CON DITION IS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. WHEN IT IS APPARENT ON THE FACE OF THE MATERIALS TH AT THE ASSUMPTION OF JURISDICTION IS INVALID THEN THE COURT CANNOT BE SH Y OF EXERCISING ITS JURISDICTION NOR CAN IT ABROGATE ITSELF OF ITS POWER TO INVOKE T HE WRIT JURISDICTION . 16 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 IF WE APPLY ABOVE PRINCIPLES TO THE FACTS OF THE CA SE WE NOTICE THAT THE A.O. HAS NOT MENTIONED ANY THING IN THE NOTE AS REFERRED ABOVE ABOUT A NY NEW MATERIAL THE A.O.S OF THE TWO ENTITIES MIGHT HAVE DISCOVERED AND ABOUT WHICH LD. D.R. MENT IONS THAT FAILURE TO DISCLOSE MATERIAL CAN BE INFERRED FROM THE RECORD AND THE ASSESSMENT ORDE RS OF THE TWO ENTITIES AND IN RESPECT OF WHICH THE ASSESSEE WAS DUTY BOUND TO DISCLOSE. EVEN DURING THE COURSE OF HEARING BEFORE US NOTHING WAS POINTED OUT AS TO WHAT WAS NEW MATERIAL THE A.O.S OF TWO ENTITIES HAVE DISCOVERED WHICH COULD IMPUTE A CHARGE ON THE ASSES SEE OF FAILURE OF TRUE AND FULL DISCLOSURE. THEREFORE THE REASONS IN THE NOTE AS SUCH DO NOT SATISFY THE CONDITIONS LAID DOWN IN SECTION 147 AND PROVISO THEREOF. 14. FURTHER THERE IS CLEARLY A DISCUSSION IN DETAIL IN THE ORIGINAL ASSESSMENT ORDER DATED 26-03- 1997 AS REFERRED ABOVE ABOUT ALLEGED BENAMI CHARACT ER OF THREE ENTITIES THERE IS A CLEAR FINDING THAT ASSESSEE IS THE REAL OWNER OF THE THEM . BUT THE A.O. HAD ADDED NIL INCOME IN RESPECT OF THESE ENTITIES. THE MATTER HAS TRAVELLED TO LD. C.I .T.(A) WHO HAD ALSO CONSIDERED THIS ASPECT BUT AS NO ADDITION IN RESPECT OF THIS ISSUE HAS BE EN MADE HE DECIDED NOT TO ADJUDICATE THE ISSUE. ONCE THE ISSUE IS THRASHED OUT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS EXCEPT THE QUANTIFICATION OF THE INCOME WHICH WAS TO BE ADDED AND WHICH WAS CONSIDERED TO BE DONE UNDER SECTION 154 THEN IT CANNOT BE SAID THAT IT WA S A CASE OF ANY INCOMPLETE DISCLOSURE OR THERE WAS NO TRUE AND FULL DISCLOSURE. IN ADDITION TO QUANTUM OF INCOME ESCAPED ASSESSMENT THE A.O. HAS TO SHOW IN THE REASONS THAT HE IS IN P OSSESSION OF FRESH MATERIAL WHICH ASSESSEE WAS DUTY BOUND TO DISCLOSE AND WHICH HE HAS NOT DIS CLOSED IN THE ORIGINAL RETURN. IF INFERENCE IS ALREADY DRAWN IN THE ORIGINAL ASSESSMENT ABOUT B ENAMI NATURE AND IT WAS MERELY FOR QUANTIFICATION OF ALLEGED BENAMI INCOME FOR WHICH A SSESSMENT IS SOUGHT TO BE REOPENED THEN CONDITIONS LAID DOWN UNDER SECTION 147 AND SUPPORTE D BY VARIOUS AUTHORITIES AS REFERRED TO ABOVE CANNOT BE SAID TO BE FULFILLED. WE THEREFORE HOLD THAT REOPENING OF ASSESSMENT WAS NOT VALID IN THE EYES OF LAW. FURTHER WE FIND THAT TH E ASSESSEE HAD PLACED ALL THE PRIMARY FACTS BEFORE THE ITO DURING THE ORIGINAL ASSESSMENT PROCE EDINGS. ACCORDINGLY IT WAS FOR THE ITO TO MAKE THE NECESSARY ENQUIRIES AND DRAW PROPER INFERE NCES EVEN IN RESPECT OF QUANTIFICATION OF INCOME OF THREE ENTITIES. THE ITO HAVING FAILED TO DO SO IT COULD NOT BE SAID THAT THE ASSESSEE HAD NOT FULLY AND TRULY DISCLOSED THE MATERIAL FACT S NECESSARY FOR THE ASSESSMENTS IN QUESTION. AS A RESULT REOPENING OF THE ASSESSMENT IS QUASHED . SINCE REOPENING IS NOT UPHELD DISCUSSION 17 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 ON VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER BY CLUBBING THE INCOME OF THE TWO ENTITIES AS PER REASONS RECORDED IS MERELY ACADEMIC AND HENC E SUCH DISCUSSION IS NOT CARRIED OUT. 15. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 16. NOW WE COME TO THE DEPARTMENTAL APPEAL. THE APP EAL BEING ITA NO. 1160/AHD/2004 FILED BY THE REVENUE IS AGAINST THE ORDER DATED 30. 01.2004 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XI AHMEDABAD FOR THE ASSESSMEN T YEAR 1994-95 ON THE FOLLOWING GROUNDS :- (1) THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-XI AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN REDUCING THE GROSS PROFIT RATE ESTIMATED AT 25% TO 18%. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XI AHMEDABAD O UGHT TO HAVE UPHELD THE ESTIMATION MADE BY THE ASSESSING OFFICER AS THE ASSESSEE HIMSELF AS PER CIT(A.)S ORDER SHOWN THE PROFIT RA TE AT 25% IN THE SUBSEQUENT YEAR. 17. THE DEPARTMENTAL APPEAL ARISES OUT OF THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 30.01.2004 WHICH IS AGAINST TH E ORDER OF ASSESSING OFFICER DATED 28.03.2002 WHICH IS THE ASSESSMENT PASSED UNDER SE CTION 143(3)/ 147 BY ISSUING NOTICE UNDER SECTION 148(1) ON 30.03.2001. WE HAVE HELD IN ASSES SEES APPEAL ARISING FROM THE SAME ORDER OF LD. C.I.T.(A) THAT REOPENING OF THE ASSESSMENT I S BAD IN LAW. THEREFORE RE-ASSESSMENT DOES NOT SURVIVE AND IN THE RESULT DEPARTMENTAL GROUNDS ALSO DO NOT SURVIVE. ACCORDINGLY AS RE- ASSESSMENT IS NOT HELD VALID THE DEPARTMENTAL APPE AL IS DISMISSED. 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 07.01.2 011 SD/- SD/- (MAHAVIR SINGH) (D.C. AGR AWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07 / 01 / 2011 18 ITA NO. 1061-AHD-2004 & ITA-1160-AHD-2004 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTR AR ITAT AHMEDABAD LAHA/SR.P.S.