The Jalna District Co.op Bank Ltd.,, v. Assistant Commissioner of Income-tax,,

ITA 154/PUN/2014 | 2004-2005
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 15424514 RSA 2014
Assessee PAN AAAAT3208Q
Bench Pune
Appeal Number ITA 154/PUN/2014
Duration Of Justice 1 year(s) 3 month(s) 5 day(s)
Appellant The Jalna District Co.op Bank Ltd.,,
Respondent Assistant Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-04-2015
Assessment Year 2004-2005
Appeal Filed On 24-01-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NOS. 154 & 155/PN/2014 (ASSESSMENT YEARS : 2004-05 & 2005-06) THE JALNA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. SANTOSHI MATA ROAD JALNA 431 003 PAN NO.AAAAT3208Q .. APPELLANT VS. ACIT CIRCLE-1 AURANGABAD .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 16-04-2015 DATE OF PRONOUNCEMENT : 29-04-2015 ORDER PER R.K.PANDA AM : THE ABOVE 2 APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THE COMMON ORDER DATED 23-12-2013 OF THE CIT(A) AU RANGABAD RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06 RE SPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE ASSE SSEE IN BOTH THE APPEALS THEREFORE THESE WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP ITA NO.154/PN/2014 FOR A.Y. 200 4-05 AS THE LEAD CASE. FACTS OF THE CASE IN BRIEF ARE THAT T HE ASSESSEE IS A COOPERATIVE SOCIETY I.E. COOPERATIVE BANK AND DERI VES INCOME FROM BANKING BUSINESS AND HAS MAINTAINED THE BOOKS OF AC COUNT ON 2 MERCANTILE BASIS. IT FILED ITS RETURN OF INCOME FO R THE IMPUGNED ASSESSMENT YEAR ON 01-11-2004 DECLARING LOSS OF RS. 4 50 02 689/-. THE ASSESSMENT WAS COMPLETED U/S.143(3) ON 30-10-20 06 ASSESSING THE TOTAL LOSS AT RS.4 43 33 193/-. SIMILARLY RETU RN OF INCOME FOR A.Y. 2005-06 WAS FILED ON 20-10-2006 DECLARING TOTA L LOSS OF RS.2 94 51 736/- WHICH WAS REVISED ON 29-10-2006 DE CLARING TOTAL LOSS OF RS.3 02 27 201/-. THE AO COMPLETED THE ASS ESSMENT U/S. 143(3) ON 06-12-2007 DETERMINING THE LOSS AT RS.3 0 2 27 201/-. SUBSEQUENTLY THE AO REOPENED THE ASSESSMENT FOR A.Y . 2004-05 & 2005-06 BY RECORDING THE FOLLOWING REASONS WHICH HA S BEEN SUPPLIED TO THE ASSESSEE AND A COPY OF WHICH IS PLACED AT PA PER BOOK 3 AND 4 : A.Y. 2004-05 : 'ON VERIFICATION OF RECORDS IT IS OBSERVED THAT THE A SSESSEE HAS CLAIMED PROVISIONS FOR DOUBTFUL DEBTS U/S. 36(1)(VI IA) OF RS.7 96 324/-AND ON ACCOUNT OF 10% OF AGGREGATE AVERAGE ADVANCE OF R S.5 43 29 400/-. AS PER PROVISIONS OF SECTION 36(1)(VIIA) THE SAID DEDUCTIONS ARE ALLOWABLE ONLY TO SCHEDULED BANK AND NON SCHEDULED BANK FOR A.Y. 04-05. SINCE THE ASSESSEE IS A CO-OPERATIVE BANK THE ABOVE DEDUCTION CLAIMED ARE NOT ALLOWABLE. HENCE I HAVE REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.5 51 25 724/- IS AN ESCAPED INCOME AS PER EXPLANATION (2) CLAUSE (C) (HI) & (IV) OF SECTION 147 OF THE IT. AC T 1961.' A.Y. 2005-06 : 'ON VERIFICATION OF RECORDS IT IS OBSERVED THAT THE A SSESSEE HAS CLAIMED PROVISIONS FOR DOUBTFUL DEBTS U/S. 36(1)(VI IA) OF RS.23 42 797/- AND ON ACCOUNT OF 10% OF AGGREGATE AVERAGE ADVANCE OF RS.5 91 25 700/-. AS PER PROVISIONS OF SECTION 36(1)(VIIA) THE SAID DEDUCTIONS ARE ALLOWABLE ONLY TO SCHEDULED BANK AND NON SCHEDULED BANK FOR A .Y. 05-06. SINCE THE ASSESSEE IS A CO-OPERATIVE BANK THE ABOVE DEDUCTION CLAIMED ARE NOT ALLOWABLE. HENCE I HAVE REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.6 14 64 497/- IS AN ESCAPED INCOME AS PER EXPLAN ATION (2) CLAUSE (C) (HI) & (IV) OF SECTION 147 OF THE IT. ACT 1961.' 3. BEFORE THE AO THE ASSESSEE AFTER OBTAINING THE REASONS SO RECORDED FILED HIS OBJECTIONS CHALLENGING THE VALI DITY OF THE NOTICE ISSUED U/S.148. HOWEVER THE AO REJECTED SUCH CONT ENTIONS ON THE 3 GROUND THAT ASSESSEE HAS CLAIMED DEDUCTION U/S.36(1 )(VIIA) ON ACCOUNT OF BAD AND DOUBTFUL DEBTS WHICH WAS NOT ALL OWABLE TO COOPERATIVE BANKS. THE ASSESSEE HAS FAILED TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH WERE NECESSARY FOR COMPLET ION OF THE ASSESSMENT. THE NOTICE U/S.148 HAS BEEN ISSUED AFT ER GETTING PROPER APPROVAL FROM THE CIT U/S.151 OF THE I.T. ACT. REF ERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CALCUTTA DISCOUNT COMPANY REPORTED IN 41 ITR 191 THE AO NOT ED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT MERE PRODUCTION OF EVIDENCES BEFORE THE AO WAS NOT ENOUG H. THERE MAY BE OMISSION OR FAILURE TO MAKE TRUE AND FULL DISCLO SURE IF SOME MATERIAL FOR THE ASSESSMENT LAY EMBEDDED IN THE EVI DENCE WHICH THE REVENUE COULD HAVE UNCOVERED BUT DID NOT THEN IT I S THE DUTY OF THE ASSESSEE TO BRING IT TO THE NOTICE OF THE ASSESSING AUTHORITY. THE ASSESSEE KNOWS ALL THE MATERIAL AND RELEVANT FACTS WHICH THE ASSESSING OFFICER MIGHT NOT KNOW THEREFORE THE AO HELD THAT THE NOTICE ISSUED BY THE AO IS LEGALLY CORRECT AND HE H AS CORRECTLY RECORDED THE REASONS FOR REOPENING OF THE CASE. 4. SO FAR AS THE ALLOWABILITY OF DEDUCTION U/S.36(1 )(VIIA) OF THE ACT IS CONCERNED THE AO NOTED THAT THE SAID DEDUCT ION WAS NOT AVAILABLE TO COOPERATIVE BANKS PRIOR TO 01-04-2007 AS THE COOPERATIVE BANKS ARE ENJOYING THE BENEFIT U/S.80P OF THE ACT A ND AFTER AMENDMENT BY THE FINANCE ACT 2007 W.E.F. 01-04-200 7 THE DEDUCTION U/S.36(1)(VIIA) OF THE ACT WAS MADE AVAIL ABLE TO COOPERATIVE BANKS AND DEDUCTION U/S.80P WAS WITHDRA WN FROM COOPERATIVE BANKS. THEREFORE FOR THE IMPUGNED ASS ESSMENT YEAR THE 4 ASSESSEE HAS MADE A WRONG CLAIM OF DEDUCTION U/S.36 (1)(VIIA). THE AO ACCORDINGLY MADE ADDITION OF RS.5 51 25 724/- BY DISALLOWING THE CLAIM OF DEDUCTION WRONGLY MADE BY THE ASSESSEE U/S.36(1)(VIIA). 5. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDI TY OF THE REASSESSMENT PROCEEDINGS AS WELL AS THE DISALLOWANC E OF RS.5 51 25 724/- U/S.36(1)(VIIA). THE LD.CIT(A) DI STINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM UPHELD THE REOPE NING OF THE ASSESSMENT. WHILE DOING SO HE HELD THAT ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT. THEREFORE THE ASSESSMENT HAS RIGHTLY BEEN REOPENED BY ISSUING NOTICE U/S.148 BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR. SO FAR AS THE MERIT OF THE CASE IS CONCERNED HE HELD THAT THE COOPERATIVE BANK CANNOT BE REGARDED AS NON-SCHEDULE D BANK AS CLAIMED BY THE ASSESSEE. THEREFORE THE CLAIM OF T HE ASSESSEE BANK THAT IT IS A NON SCHEDULED BANK AND THEREFORE IS EL IGIBLE FOR DEDUCTION U/S.36(1)(VIIA) FOR THE YEAR UNDER CONSIDERATION IS NOT TRUE AND THE SAME IS FALSE. REFERRING TO THE PROVISIONS OF INCO ME-TAX BANKING REGULATION ACT AND COMPANIES ACT HE OBSERVED THAT THE PROVISIONS ARE VERY CLEAR AND UNAMBIGUOUS ACCORDING TO WHICH A COOPERATIVE BANK CANNOT BE RECORDED AS A NON-SCHEDULED BANK AS CLAIMED BY THE ASSESSEE. HE ACCORDINGLY UPHELD THE ACTION OF THE AO. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AURANGABAD HAS ERRED IN FACTS AND ON LAW BY CONFIRMIN G THE ACTIONS OF THE LD. ASSESSING OFFICER AND NOT TREATING THE NOTIC E U/S 148 OF THE 5 INCOME TAX ACT 1961 AS BAD IN LAW. WE APPEAL THAT T HE NOTICE ISSUED U/S 148 BY THE LD. ASSESSING OFFICER IS BAD IN LAW HENCE ORDER PASSED U/S 148 IS ITSELF NULL & VOID CONSEQUENTLY THE ORD ER DATED 23.12.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AURANGABAD IS VOID AND MAY BE CANCELLED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AURANGABAD ERRED IN FACTS AND ON LAW AND UPHELD THE ACTIONS OF THE LD. ASSESSING OFFICER BY CONFIRMING DISALLOWANCE OF RS.5 51 25 724/- U/S. 36(1)(VIIA). THEREFORE THE ADDITION OF RS.5 51 25 724/- MADE TO THE RETURNED INCOME OF THE ASSESSEE BANK AND UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE DELETED. 3. SUCH OTHER ORDERS BE PASSED AS MAY BE DEEMED FIT AND PROPER. 4. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER V ARY AND / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT GROUND OF APPEAL NO.2 IS DECIDED AGAINST THE ASSESS EE BY VARIOUS DECISIONS OF THE TRIBUNAL. IN VIEW OF THE ABOVE SU BMISSION OF THE LD. COUNSEL FOR THE ASSESSEE GROUND OF APPEAL NO.2 IS DISMISSED. IDENTICAL GROUND HAS BEEN TAKEN BY THE ASSESSEE IN A.Y. 2005-06. IN VIEW OF THE ABOVE REASONING THIS GROUND OF APPEAL N O.2 FOR A.Y. 2005-06 IS ALSO DISMISSED. 8. GROUNDS OF APPEAL NO.3 AND 4 BEING GENERAL IN NA TURE ARE DISMISSED. 9. SO FAR AS GROUND OF APPEAL NO.1 IS CONCERNED THE SAME IS REGARDING THE VALIDITY OF THE REASSESSMENT PROCEEDI NGS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOTICE U/S. 148 FOR A.Y. 2004- 05 IS DATED 23-03-2011 AND FOR A.Y. 2005-06 IS DATE D 15-03-2011. HE SUBMITTED THAT ORIGINAL RETURN FOR A.Y. 2004-05 WAS FILED ON 01- 11-2004 AND THE ASSESSMENT U/S.143(3) WAS COMPLETED ON 30-10- 2006. THE AO IN THE ASSESSMENT ORDER HAS MENTIONED THE STATUS OF THE ASSESSEE AS AOP (COOPERATIVE BANK). SIMILARLY FOR A.Y. 2005- 6 06 THE ASSESSEE HAS FILED RETURN OF INCOME ON 29-1 0-2006 AND THE ASSESSMENT U/S.143(3) WAS COMPLETED ON 06-12-2007. HERE ALSO THE STATUS OF THE ASSESSEE HAS BEEN MENTIONED BY THE AO AS COOPERATIVE SOCIETY. HE SUBMITTED THAT THE NOTICE U/S.148 FOR BOTH THE ASSESSMENT YEARS HAVE BEEN ISSUED AFTER A PERIOD OF 4 YEARS FR OM THE END OF THE RELEVANT ASSESSMENT YEAR. AGAIN REFERRING TO THE O RIGINAL ASSESSMENT ORDER FOR A.Y. 2004-05 HE DREW THE ATTENTION OF THE BENCH TO PARA 2 OF THE ASSESSMENT ORDER (PAPER BOOK PAGE NO. 6) WHI CH READS AS UNDER : 2. THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY AS PER THE CBDT'S INSTRUCTION NO.10/2004 DATED 20/09/2004. ACCOR DINGLY NOTICES U/S 143(2) 28/03/05. HOWEVER THE ASSESSEE VIDE LE TTER DATED 07/08/06 HAD SUBMITTED A REVISED COMPUTATION O F INCOME IN WHICH IT HAS ADDED BACK AN AMOUNT OF RS.6 83 675/- ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO THE P.F . AND REDUCED AN AMOUNT OF RS. 14 179/- ON ACCOUNT OF INCREASE IN D EDUCTION U/S 36(L)(VII)(A). THE NOTICE U/S 142(1) WAS ISSUED ON 16/ 10/2006 IN RESPONSE TO THE SAME SHRI ASHOK PATIL C.A. & A R ATTE NDED AND DISCUSSED THE CASE. THE CASE HAS BEEN DISCUSSED ACCORDINGLY . 9.1 REFERRING TO PARA 4 OF THE SAID ORDER THE LD. C OUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE COM PUTATION MADE BY THE AO WHICH READS AS UNDER : INCOME AS PER RETURN OF INCOME/LOSS : (-)RS.4 50 02 689/- ADD : I) ADDITION AS DISCUSSED IN PARA-3 ABOVE : RS.6 83 675/- TOTAL (-) RS.4 43 19 014/- LESS: INCREASE IN THE DEDUCTION U/S.36(1)(VII) : (-) RS. 14 179/- TOTAL INCOME : (-) RS.4 43 33 193/- TAX ON ABOVE INCOME OF RS.. . . . . . . : RS. NIL NET PAYABLE/REFUNDABLE : RS. NIL --------------------------- 7 9.2 SIMILARLY REFERRING TO THE ASSESSMENT ORDER FO R A.Y. 2005-06 THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PARA 3 OF THE ORDER (PAPER BOOK PAGE NO.9) WHICH RE ADS AS UNDER : 3. THE ASSESSEE IS A DISTRICT CO-OPERATIVE BANK HAVING OPERATIONS IN THE AREA OF JALNA DISTRICT. THE SAID BAN K HAS 64 BRANCHES ACROSS THE DISTRICT. DURING THE COURSE OF ASSESS MENT PROCEEDINGS THE ASSESSEE HAS CLAIMED RS.5 91 21 700/- AS 1 0% OF AGGREGATE AVERAGE ADVANCE U/S.36(1)(VIIA). THE FACT IS VERIFIED FROM THE RECORDS. THE ASSESSEE HAS PROVIDED FOR BAD AND DOUB TFUL DEBTS RS.3 16 17 000/-. BEFORE DEDUCTION U/S.36 THE ASSESSEE H AS TOTAL INCOME OF RS.3 12 37 296/-. THE FACTS REGARDING THE OPERATIONS OF THE BANK WITHIN THE LIMITATION OF THE DISTRICT OF JA LNA IS VERIFIED. SIMILARLY IT IS ALSO VERIFIED THAT THE ASSESSEE HAS NOT INVESTED EXCESS SLR INTO THE NON BANKING BUSINESS ACTIVITY. 9.3 HE SUBMITTED THAT FOR BOTH THE ASSESSMENT YEARS THE NOTICE U/S.148 HAS BEEN ISSUED AFTER A PERIOD OF 4 YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR. THERE IS NO ALLEGATION B Y THE AO IN THE NOTICE ISSUED U/S.148 THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. THEREFORE THE REASSESSMENT PROCEEDING S INITIATED BY THE AO ARE VOID AB-INITIO. 9.4 REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. VS. ACIT REP ORTED IN 343 ITR 183 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT P OWER CONFERRED BY S. 147 DOES NOT PROVIDE A FRESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESSMENT UNLESS THE MISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. WHERE THE AO DOES NOT REC ORD THAT THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY 8 FOR ASSESSMENT HE WOULD NOT BE ENTITLED TO PROCEED UNDER S. 147. THERE IS A WELL KNOWN DIFFERENCE BETWEEN A WRONG CL AIM MADE BY AN ASSESSEE AFTER DISCLOSING ALL THE TRUE AND MATER IAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING MAT ERIAL FACTS. AO WOULD BE ENTITLED TO PROCEED U/S.147 ONLY IN THE LATTER CASE. ACCORDINGLY THE NOTICES ISSUED U/S.148 WERE QUASHED . 9.5 REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BEDMUTHA INDUSTRIES LTD. BEDMUTHA W IRE CO. LTD. VS. DCIT & UNION OF INDIA REPORTED IN 87 DTR 305 HE SUB MITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HEL D THAT T HE JURISDICTION TO REOPEN ASSESSMENTS ALREADY COMPLETE D U/S 143(3) AFTER THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR CAN ONLY BE EXERCISED IF (A) THERE IS A REASON ABLE BELIEF ON THE PART OF THE OFFICER THAT INCOME HAS ESCAPED ASSESSM ENT; AND (B) THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. CORRECTING AN ERRONEOUS VIEW TAKEN ON THE SELF-SAME MATERIAL IS A REVIEW AN D NOT PERMISSIBLE U/S 147 OF THE SAID ACT. 9.6 REFERRING TO THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF QMAX TEST EQUIPMENTS PVT. LTD. VS. ACIT REPORTED IN 36 CCH 544 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THE REOPENING OF ASSESSMENT AFTER A L APSE OF 4 YEARS WITHOUT VALID REASONING AND THAT TOO BY ISSUING A D EFECTIVE NOTICE IS INVALID. 9 9.7 REFERRING TO THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF DCIT VS. PALA MARKETING COOPERATIVE SOC IETY LTD. & ANOTHER REPORTED IN 243 ITR 499 HE SUBMITTED THAT T HE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT THE ASSESS EE HAVING CLAIMED DEPRECIATION AT HIGHER RATE THAN THAT APPLICABLE TO IT AFTER FILING THE DEPRECIATION STATEMENT BEFORE THE AO INDICATING THE DETAILS OF PLANT AND MACHINERY WDV ADDITIONS DURING THE YEAR AND T HE DEPRECIATION CLAIMED REOPENING OF ASSESSMENT WAS NOT VALID ON T HE GROUND THAT THE ASSESSEE HAD NOT DISCLOSED MATERIAL FACTS FULLY AND TRULY. 9.8 REFERRING TO PARA 12 OF THE ORDER OF THE CIT(A) THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FINDING GIVEN BY THE CIT(A) THAT ASSESSEE HAD CLAIMED THE DEDUCTION U/S. 36(1)(VIIA) AS NON-SCHEDULED BANK AND HENCE ELIGIBLE FOR DEDUCTION U/S.36(1)(VIIA) IS INCORRECT SINCE THE ASSESSEE HAD NEVER CLAIMED T HAT IT IS A NON- SCHEDULED BANK. THE LD. COUNSEL FOR THE ASSESSEE A LSO DREW THE ATTENTION OF THE BENCH TO THE WRIT PETITION FILED B Y IT BEFORE THE HIGH COURT CHALLENGING THE VALIDITY OF THE NOTICE U/S.14 8 WHEREIN THE HONBLE HIGH COURT WHILE DISMISSING THE SAME HAS HE LD THAT IT IS OPEN TO THE ASSESSEE TO RAISE ALL THE GROUNDS AVAIL ABLE IN LAW BEFORE THE APPELLATE AUTHORITY INCLUDING THE QUESTION OF P ERMISSIBILITY TO REOPEN THE MATTER BY TAKING RECOURSE TO SECTION 148 OF THE I.T. ACT. 10. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT T HE AO HAS ALREADY CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSEE CH ALLENGING THE VALIDITY OF THE REOPENING. REFERRING TO THE DECISI ON OF THE HONBLE 10 BOMBAY HIGH COURT IN THE CASE OF INDIAN HUME PIPE C O. PVT. LTD. VS. ACIT REPORTED IN 348 ITR 439 THE LD. DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT THE HONBLE HIGH COUR T IN THE SAID DECISION HAS HELD THAT DISCLOSURE MUST BE FULL AND TRUE. THE ASSESSEE HAS TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CALCUTTA DISCOUNT COMPANY HE SUBMITTED THAT MERE PRODUCTION OF EVIDENCES BEFORE THE AO WAS NOT ENOUGH. THERE MAY BE OMISSIO N OR FAILURE TO MAKE TRUE AND FULL DISCLOSURE. IF SOME MATERIAL FO R THE ASSESSMENT LAY EMBEDDED IN THE EVIDENCE WHICH THE REVENUE COUL D HAVE UNCOVERED BUT DID NOT THEN IT IS THE DUTY OF THE A SSESSEE TO BRING IT TO THE NOTICE OF THE ASSESSING AUTHORITY. THE ASSESSE E KNOWS ALL THE MATERIAL AND RELEVANT FACTS WHICH THE ASSESSING AUT HORITY MIGHT NOT. IN RESPECT OF THE FAILURE TO DISCLOSE THE OMISSION TO DISCLOSE MAY BE DELIBERATE OR INADVERTENT THAT WAS IMMATERIAL BUT IF THERE IS OMISSION TO DISCLOSE MATERIAL FACTS THEN SUBJECT T O THE OTHER CONDITIONS JURISDICTION TO REOPEN IS ATTRACTED. I T IS ALSO HELD IN THE AFORESAID JUDGMENT THAT IF THERE ARE SOME PRIMARY F ACTS FROM WHICH THE REASONABLE BELIEF COULD NOT BE FORMED THAT THE RE WAS SOME NON- DISCLOSURE OR FAILURE TO DISCLOSE FULLY AND TRULY A LL THE MATERIAL FACTS THE ASSESSING OFFICER HAS JURISDICTION TO REOPEN TH E ASSESSMENT. 11. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF CALCUTTA DISCOUNT COMPANY (SUPRA) IS NOT APPLICABLE TO THE F ACTS OF THE PRESENT CASE. SO FAR AS THE DECISION OF THE HONBL E BOMBAY HIGH COURT IN THE CASE OF INDIAN HUME PIPE CO. PVT. LTD. (SUPRA) IS 11 CONCERNED THE SAME WAS DISMISSED AS WITHDRAWN VIDE SLP NO. 5195/2012 ORDER DATED 20-07-2012. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE TO BE DECIDED IN THE IMPUGNED APPEAL IS REGARDING THE VALIDITY OF THE NOTICE ISSUED U/S.148 AFTER A PERIOD OF 4 YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR WHERE ASSESSMENTS HAVE BEE N COMPLETED U/S.143(3). ADMITTEDLY THE ASSESSEE HAS FILED THE ORIGINAL RETURN OF INCOME FOR A.Y. 2004-05 ON 01-11-2004 AND THE ASSES SMENT U/S.143(3) HAS BEEN COMPLETED ON 30-10-2006. SIMIL ARLY FOR A.Y. 2005-06 THE ORIGINAL RETURN WAS FILED ON 29-10-2006 AND THE ASSESSMENT U/S.143(3) WAS COMPLETED ON 06-12-2007. THE NOTICE ISSUED U/S.148 FOR A.Y. 2004-05 IS DATED 23-03-2011 AND FOR A.Y. 2005-06 IS DATED 15-03-2011. IN BOTH THE ASSESSMEN T YEARS THE STATUS OF THE ASSESSEE HAS BEEN MENTIONED BY THE AO AS CO OPERATIVE SOCIETY. FURTHER IN BOTH THE ASSESSMENT YEARS THE CLAIM OF DEDUCTION U/S.36(1)(VIIA) HAS BEEN ALLOWED BY THE AO. WE FIN D FROM THE NOTICE ISSUED U/S.148 THAT THERE WAS NO ALLEGATION BY THE AO REGARDING ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE UNDER THE FACTS AND CIRCUMSTANCES THE QUESTION ARISES AS TO WHETHE R THE NOTICE U/S.148 AFTER EXPIRY OF 4 YEARS IS VALID WHEN THERE IS NO ALLEGATION BY THE AO THAT THERE IS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 12 13. AN IDENTICAL ISSUE HAD COME UP BEFORE THE HONB LE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD.(S UPRA). IN THAT CASE THE PETITIONER ASSESSEE FILED THE RETURN OF I NCOME FOR A.Y. 97-98 ALONG WITH AUDITED ACCOUNTS TAX AUDIT REPORT IN RE SPECT OF ITS INCOME FROM THE MANUFACTURING FABRICATION AND SERVICING O F COMPONENTS. THE INCOME OF THE PETITIONERS FOR THE SAID ASSESSME NT YEAR WAS ASSESSED BY AN ORDER U/S.143(3). SUBSEQUENTLY THE AO ISSUED NOTICE U/S.148 ON THE GROUND THAT INCOME HAS ESCAPED ASSES SMENT BECAUSE THE PETITIONER HAS WRONGLY CLAIMED DEDUCTION U/S.80 IA IN RESPECT OF INCOME WHICH WAS NOT DERIVED FROM THE INCOME OF THE PETITIONERS UNIT AT KUNDAIM. FURTHER THE LONG TERM CAPITAL GA INS HAVE BEEN WRONGLY CLAIMED BY THE ASSESSEE WHICH HAVE BEEN WRO NGLY CONSIDERED FOR THE SET OFF OF THE UNIT OF KUNDAIM W HICH HAS RESULTED IN ESCAPEMENT OF INCOME. NOWHERE HAS THE AO STATED THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. UNDER THE SE CIRCUMSTANCES THE HONBLE HIGH COURT HELD THE NOTICE ISSUED U/S.1 48 AFTER A PERIOD OF 4 YEARS WAS NOT SUSTAINABLE SINCE THERE WAS NO R ECORDING BY THE AO THAT THERE WAS ANY FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR CO MPLETION OF ASSESSMENT IN THE RELEVANT ASSESSMENT YEAR. THE OB SERVATION OF THE HONBLE HIGH COURT READS AS UNDER : 4. ACCORDING TO THE LEARNED COUNSEL THE REVENUE IS ENTITLED TO ISSUE SUCH A NOTICE IF THE AO HAS REASON TO BELIEVE THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE (A) TO MAKE A RETURN UNDER S. 139 OR (B) IN RESPONSE TO A NOTICE ISSUED UNDER SUB-S. (1) OF S. 142 OR S. 148 OR (C) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THAT ASSESSMENT YEAR. 13 SINCE THE FIRST TWO CONDITIONS ARE NOT PLEADED BY THE RESPONDENTS IT IS THE SUBMISSION OF THE PETITIONER THAT THE NOTICE IS W HOLLY UNWARRANTED AND INVALID SINCE THERE IS NO ALLEGATION WHATSOEVER THAT THE PETITIONER HAS FAILED TO DISCLOSE ALL MATERIAL FA CTS NECESSARY FOR ASSESSMENT. THIS SUBMISSION CAN BE CONSIDERED ONLY WITH REFE RENCE TO THE REASONS PUT FORTH BY THE RESPONDENTS FOR ISSUING THE NOTICE. THE LETTER DT. 27TH JAN. 2005 INTER ALIA STATES TH AT THE AO HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BECA USE THE PETITIONER HAS WRONGLY CLAIMED DEDUCTION UNDER S. 80- IA IN RESPECT OF INCOME WHICH WAS NOT DERIVED FROM THE INCOME OF T HE PETITIONER'S UNIT OF KUNDAIM. FURTHER THAT LONG-TERM CAPITAL GA INS HAVE BEEN WRONGLY CLAIMED BY THE ASSESSEE WHICH HAVE BEEN WRONGL Y CONSIDERED FOR THE SET OFF OF THE UNIT OF KUNDAIM WHI CH HAS RESULTED IN ESCAPEMENT OF INCOME. NOWHERE HAS THE AO STATED THA T THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HAVING REGARD TO THE PURPOSE OF THE SECTION WE ARE OF THE VIEW THAT THE P OWER CONFERRED BY S. 147 DOES NOT PROVIDE A FRESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNLESS THE MISTAKE I N THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESS MENT. INDEED WHERE THE ASSESSEE HAS FULLY DISCLOSED ALL THE MAT ERIAL FACTS IT IS NOT OPEN FOR THE AO TO REOPEN THE ASSESSMENT ON TH E GROUND THAT THERE IS A MISTAKE IN ASSESSMENT. MOREOVER IT IS NECESSAR Y FOR THE AO TO FIRST OBSERVE WHETHER THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND HAVING OB SERVED THAT THERE IS SUCH A FAILURE TO PROCEED UNDER S. 147. IT MU ST FOLLOW THAT WHERE THE AO DOES NOT RECORD SUCH A FAILURE HE WOULD NOT BE ENTITLED TO PROCEED UNDER S. 147. AS OBSERVED EARLIER THE AO H AS NOT RECORDED THE FAILURE ON THE PART OF THE PETITIONER TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASST. YR. 1 997-98. WHAT IS RECORDED IS THAT THE PETITIONER HAS WRONGLY CLAIMED C ERTAIN DEDUCTIONS WHICH HE WAS NOT ENTITLED TO. THERE IS A WE LL KNOWN DIFFERENCE BETWEEN A WRONG CLAIM MADE BY AN ASSESSEE AF TER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATERIAL FACTS FULLY AND TRULY. IT IS ONLY IN THE LATTER CASE THAT THE AO WOULD BE ENTITLE D TO PROCEED UNDER S. 147. WE ARE SUPPORTED IN THIS VIEW BY A DECISION OF A DIVISION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. VS. R.B. W ADKAR ASSTT. CIT (2004) 190 CTR (BOM) 166 : (2004) 268 ITR 332 ( BOM) WHERE IN A SIMILAR CASE THE DIVISION BENCH HELD THAT REASON THAT THERE WAS A FAILURE TO DISCLOSE FULLY AND TRULY THAT ALL MATERIAL FACTS MUST BE READ AS RECORDED BY THE AO AND IT WOULD NOT BE PERMISSIBLE TO DELETE OR ADD TO THOSE REASONS AND THAT THE AO MUST BE ABLE TO JU STIFY THE SAME BASED ON MATERIAL RECORD. THE DIVISION BENCH OBSERVED AS FOLLOWS : 'HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATE RIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR A SSESSMENT OF THAT ASSESSMENT YEAR SO AS TO ESTABLISH THE VITAL LINK BET WEEN THE REASONS AND EVIDENCE.' 5. WE FIND IN THE CIRCUMSTANCES THAT THE IMPUGNED NOT ICE IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED AND SET ASIDE. ACCORDINGLY THE WRIT PETITION IS ALLOWED IN TERMS OF PRAYER CLS. ( A) AND (C). 14 14. WE FIND IN THE CASE OF BEDMUTHA INDUSTRIES LTD. BEDMUTHA WIRE CO. LTD. (SUPRA) THE ASSESSMENT U/S.143(3) FOR A.Y. 2004-05 WAS COMPLETED ON 18-12-2006. A NOTICE U/S.148 WAS ISSUED ON 29- 11-2010 ON THE GROUND THAT THE ASSESSEE COMPANY HAD CLAIMED DEDUCTION OF DEPRECIATION OF RS.69 04 465/- WHICH I NCLUDED DEPRECIATION OF RS.9 12 412/- ON GOODWILL. GOODWILL IS AN INTANGIBLE ASSET WHICH HAS NOT BEEN SPECIFIED FOR ALLOWANCE OF DEPRECIATION NOR IT CAN BE HELD TO BE OF SIMILAR NATURE AS KNOWHOW PATENTS ETC. AND HENCE IS NOT A CAPITAL ASSET FOR WHICH DEPRECIATION IS ALLOWED. INCORRECT ALLOWANCE OF DEPRECIATION ON GOODWILL RES ULTED IN UNDER ASSESSMENT TO THE EXTENT OF RS.9 12 412/- FURTHER THERE IS EXCESS ALLOWANCE OF SET OFF OF LOSS TO THE EXTENT OF RS.7 45 451/-. THE ASSESSEE CHALLENGED THE NOTICE ISSUED U/S.148 BY A WRIT PETITION. THE HONBLE HIGH COURT FOLLOWING VARIOUS DECISIONS QUAS HED AND SET ASIDE THE NOTICE ISSUED U/S.148 BY OBSERVING AS UND ER : 7. IN THE PRESENT FACTS THE GROUNDS/REASONS SUPPLIED TO THE PETITIONER ON 5TH JANUARY 2011 FOR REOPENING THE ASSE SSMENT FOR ASSESSMENT YEAR 2004-05 UNDER SECTION 148 OF THE SAID AC T DO NOT INDICATE ANY FAILURE ON THE PART OF THE PETITIONER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. FURTHER NEITHER THE REASONS RECORDED FOR REOPENING THE ASSESSMENT NOR THE ORD ER DATED 4TH NOVEMBER 2011 INDICATE THAT RESPONDENT NO.1 IS R ELYING UPON ANY TANGIBLE MATERIAL WHICH WAS NOT DISCLOSED BY THE P ETITIONER TRULY AND FULLY AT THE TIME WHEN THE ASSESSMENT ORDER DATED 1 8TH DECEMBER 2006 WAS PASSED. THEREFORE THE JURISDICTIONA L REQUIREMENT TO REOPEN THE ASSESSMENT AFTER MORE THAN FO UR YEARS FROM THE END OF THE RELEVANT ASSESSMENT I.E. ASSESSMENT YEA R 2004- 05 IS NOT SATISFIED. IN FACT THIS COURT IN THE MATTER OF HINDUSTAN LIVER L TD. V. R. B. WADKAR REPORTED IN 268 ITR PAGE 332 OBSERVED AS UNDER : 'THE REASONS RECORDED BY THE ASSESSING OFFICER NOWHERE STA TE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF T HAT ASSESSMENT YEAR IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSI NG OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DR AWN BASED ON 15 REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO D ISCLOSE AND OPEN HIS MIND THROUGH REASONS RECORDED BY HIM. HE HAS T O SPEAK THROUGH HIS REASONS. IT IS FOR THE ASSESSING OFFICER TO RE ACH TO THE CONCLUSION AS TO WHETHER THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR HIS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. IT IS FOR T HE ASSESSING OFFICER TO FORM HIS OPINION. IT IS FOR HIM TO P UT HIS OPINION ON RECORD IN BLACK AND WHITE. THE REASONS RECORDED SH OULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENE SS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. REASONS ARE THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASO NS RECORDED SHOULD BE SELF EXPLANATORY AND SHOULD NOT KEEP THE ASSE SSEE GUESSING FOR THE REASONS. REASONS PROVIDED LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EV IDENCE. THE ASSESSING OFFICER IN THE EVENT OF CHALLENGE TO THE REA SONS MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE O N RECORD. HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSE SSMENT OF THAT ASSESSMENT YEAR SO AS TO ESTABLISH VITAL LINK BETWEEN THE REASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE RE ASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLEMENTE D BY FILING AFFIDAVIT OR MAKING ORAL SUBMISSION OTHERWISE THE RE ASONS WHICH WERE LACKING IN THE MATERIAL PARTICULARS WOULD GET SU PPLEMENTED BY THE TIME THE MATTER REACHES TO THE COURT ON THE STRE NGTH OF AFFIDAVIT OR ORAL SUBMISSIONS ADVANCED'. THEREFORE THE JURISDICTIONAL REQUIREMENT IS ITSELF NO T SATISFIED WHILE ISSUING A NOTICE UNDER SECTION 148 OF THE SAID ACT ON 29TH NOVEMBER 2010. 8. IN FACT THE GROUND FOR REOPENING OF THE ASSESSMENT IS ONLY THAT EARLIER ASSESSMENT ALLOWING DEPRECIATION ON GOODWILL AN D SET OFF OF UNABSORBED DEPRECIATION WAS ERRONEOUS. THIS WOULD AMOUN T TO A MERE CHANGE OF OPINION AND WOULD NOT GIVE JURISDICTI ON TO REOPEN THE CONCLUDED ASSESSMENT. CORRECTING AN ERRONEOUS VIEW T AKEN ON THE SELF SAME MATERIAL IS CERTAINLY A REVIEW AND NOT P ERMISSIBLE UNDER SECTION 147 OF THE SAID ACT. THE SUPREME COURT IN THE MATTER OF CIT V. KELVINATOR OF INDIA REPORTED IN 320 ITR 5 61 HAS HELD THAT THERE IS CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVI EW AND POWER TO REASSESS. THE POWER UNDER SECTION 147 OF THE SAID ACT IS THE POWER TO REASSESS AND NOT THE POWER TO REVIEW. 9. IT WAS SUBMITTED THAT THE ISSUE REGARDING DEPRECIAT ION ON GOODWILL AND SET OFF OF UNABSORBED DEPRECIATION WAS AN ISSUE CON SIDERED BY RESPONDENT NO.1 IN ORDER DATED 18TH DECEMBER 2006 A ND WAS NOT REVIEWED BY HIM. THE ONLY BASIS FOR THE ABOVE SUBMISSION IS THAT THE ORDER OF ASSESSMENT DOES NOT DISCUSS THE ISSUES RAISED FOR THE PURPOSES OF REASSESSMENT. 10. THIS VERY ISSUE AS RAISED BY THE COUNSEL FOR THE REVE NUE HAS BEEN CONSIDERED BY THIS COURT IN THE MATTER OF IDEA CELLUL AR LTD. V. DEPUTY COMMISSIONER OF INCOME TAX IN 301 ITR 407 WHEREIN IT HAS BEEN HELD AS FOLLOWS: 'IT WAS ALSO SOUGHT TO BE CONTENDED THAT SINCE THE ASSESSIN G OFFICER HAD NOT EXPRESSED ANY OPINION REGARDING THIS MATTER IN HIS ORIGINAL ASSESSMENT ORDER IT COULD NOT BE SAID THAT THERE WAS ANY CHANGE OF OPINION IN THIS CASE. IN OUR VIEW ONCE ALL THE MATER IAL WAS BEFORE THE 16 ASSESSING OFFICER AND HE CHOSE NOT TO DEAL WITH THE SEVER AL CONTENTIONS RAISED BY THE PETITIONER IN HIS FINAL ASSESSM ENT ORDER IT CANNOT BE SAID THAT HE HAD NOT APPLIED HIS MIND WHEN ALL THE MATERIAL WAS PLACED BEFORE HIM.' TO A SIMILAR EFFECT IS THE DECISION OF THE FULL BENCH OF DELHI HIGH COURT IN THE MATTER OF COMMISSIONER OF INCOME TAX V. KELVINATOR OF INDIA LTD. REPORTED IN 256 ITR 1 = (2003-TTI-19-HC- DEL-INTL-LB) AND THE DIVISION BENCH OF GUJARAT HIGH COURT IN THE MATTER OF CIT V. NIRMA CHEMICAL WORKS REPORTED IN 309 ITR 67. IN VIEW OF THE ABOVE THE SUBMISSION OF THE REVENUE THAT THE REOPENING IS NOT ON ACCOUNT OF CHANGE OF OPINION AS NO OPINION WAS EXPRESSED IN THE ORDER OF ASSESSMENT DATED 18TH. DECEMBER 2006 MUST BE NEGATIVED. 11. SO FAR AS THE ALTERNATIVE SUBMISSION OF THE REVENUE THAT THE MATTER BE REMANDED TO THE ASSESSING OFFICER TO APPROPRI ATELY DEAL WITH THE OBJECTION RAISED BY THE PETITIONER WITH REG ARD TO THE ISSUE OF SECTION 148 NOTICE IS CONCERNED WE FIND THAT THE RELIANCE UPON THE DECISION OF THIS COURT IN THE MATTER OF SKOL BREW ERIES LTD. (SUPRA) DOES NOT SUPPORT THE REVENUE. THIS IS FOR THE RE ASON THAT THE RESPONDENT NO.L IN HIS ORDER DATED 4TH NOVEMBER 201 1 HAS DEALT WITH THE OBJECTION OF THE PETITIONER AND CONCLUDED THAT REOPENING IS BEING DONE AS THE ASSESSMENT WAS ERRONEOUS. THEREFORE A FI NDING HAS BEEN GIVEN AND SENDING IT BACK TO THE ASSESSING OFF ICER WILL NOT SERVE ANY PURPOSE. MOREOVER THE ABOVE SUBMISSION IS NOT ACCEPTABLE AS THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ITSELF INDICATE COMPLETE ABSENCE OF JURISDICTION TO REOPEN THE ASSESSMEN T FOR THE ASSESSMENT YEAR 2004-05 AFTER MORE THAN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 12. IN VIEW OF THE ABOVE THE NOTICE ISSUED UNDER SEC TION 148 OF THE SAID ACT ON 29TH NOVEMBER 2010 AND THE ORDER DATED 4TH NOVEMBER 2011 ARE QUASHED AND SET ASIDE. RULE IS MADE ABSOLUTE IN THE ABOVE TERMS. THE PETITION IS DISPOSED OF IN THE ABOVE TERMS. NO ORD ER AS TO COSTS. 15. WE FIND THE HONBLE KERALA HIGH COURT IN THE CA SE OF PALA MARKETING COOPERATIVE SOCIETY LTD. AND ANOTHER (SUP RA) HAS HELD THAT ASSESSEE HAVING CLAIMED DEPRECIATION AT HIGHER RATE THAN THAT APPLICABLE TO IT AFTER FILING THE DEPRECIATION STAT EMENT BEFORE THE AO INDICATING THE DETAILS OF PLANT AND MACHINERY WDV ADDITIONS DURING THE YEAR AND THE DEPRECIATION CLAIMED REOPE NING OF ASSESSMENT WAS NOT VALID ON THE GROUND THAT ASSESSE E HAS NOT DISCLOSED MATERIAL FACTS FULLY AND TRULY. 17 16. WE FIND THE CHENNAI BENCH OF THE TRIBUNAL IN TH E CASE OF QMAX TEST EQUIPMENTS PVT. LTD. (SUPRA) HAD AN OCCAS ION TO DECIDE AN IDENTICAL ISSUE. FOLLOWING VARIOUS DECISIONS T HE TRIBUNAL SET ASIDE THE REOPENING OF ASSESSMENT U/S.147 WHERE THE NOTICE WAS ISSUED BEYOND PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE RELEVANT OBSERVATION OF THE T RIBUNAL READS AS UNDER : IN SO FAR AS THE FIRST CONDITION IS CONCERNED IN THE PRESENT CASE THERE IS NO DISPUTE WITH REGARD TO FILING OF RETURN OF INCOME BY THE ASSESSEE. IT IS THE SECOND CONDITION ON WHICH THE REVENU E HAS INITIATED RE-ASSESSMENT PROCEEDINGS AFTER FOUR YEARS. IT IS A WELL SETTLED LAW THAT THE ASSESSEE HAS TO MAKE A TRUE AND FUL L DISCLOSURE OF PRIMARY FACTS AT THE TIME OF ORIGINAL ASSESSMENT. PRODUC TION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEE N DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCL OSURE CONTEMPLATED BY LAW. THE DUTY OF THE ASSESSEE IN ANY CA SE DOES NOT EXTEND BEYOND MAKING OF TRUE AND FULL DISCLOSURE OF P RIMARY FACTS. ONCE THE ASSESSEE HAS DISCLOSE FULL AND TRUE FACTS HIS DU TY ENDS. IT IS FOR THE ASSESSING OFFICER TO DRAW CORRECT INFERENCE FRO M THE PRIMARY FACTS. IT IS NOT THE RESPONSIBILITY OF THE ASSESSEE TO DRAW INFERENCE FROM THE PRIMARY FACTS AND PLACE BEFORE ASSESSING OFFICE R. IF ANY WRONG INFERENCE OF FACT OR LAW IS DERIVED BY THE ASSESSI NG OFFICER FROM THE TRUE AND COMPLETE FACTS DISCLOSED BY THE ASSESSEE THE ASSESSEE CANNOT BE FAULTED. IF AN ASSESSING OFFICER DRAWS IN FERENCE WHICH SUBSEQUENTLY APPEARS TO BE ERRONEOUS MERE CHANGE OF OPINION WITH REGARD TO THAT INFERENCE WOULD NOT JUST IFY INITIATION OF PROCEEDINGS FOR RE-OPENING ASSESSMENT. THE GROUNDS OR REA SONS WHICH LEAD TO THE FORMATION OF THE OPINION AS CONTEM PLATED IN PROVISO TO SECTION 147 OF THE ACT MUST HAVE A MATERIA L BEARING ON THE QUESTION OF ESCAPEMENT OF INCOME OF THE ASSESSEE FROM THE ASSESSMENT BECAUSE OF HIS FAILURE OR OMISSION TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS. WHILE ISSUING NOTICE U/S. 148 THE ASSESSING OFFICER SHOULD RECORD REASONS FOR REOPENING THE ASSESSMENT SPECIFYING THAT THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS RE LEVANT FOR ITS ASSESSMENT. A PERUSAL OF THE NOTICE SHOWS THAT THE SAME IS SK ETCHY AND THERE IS NO MENTION THAT THE ASSESSEE HAS NOT DISCLOSE D FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER REFERENCE. 7. THE AR HAS PLACED ON RECORD A COPY OF THE REPORT U/S. 10A/10B OF THE ACT DATED 25-10-2004 WHICH WAS ANNEXED ALONG WIT H RETURN OF INCOME. IN ANNEXURE-A OF THE SAID REPORT AT SR. NO. 7 THE DATE OF COMMENCEMENT OF MANUFACTURE OR PRODUCTION HAS BEEN G IVEN AS 07- 05-1993 AND AT SR. NO. 8 NUMBER OF CONSECUTIVE YEARS FOR WHICH DEDUCTION IS CLAIMED IS MENTIONED AS 10TH YEAR. AS FAR AS FACTUAL INFORMATION IS CONCERNED WE FIND THE INFORMATION GI VEN IN ANNEXURE-A IS CORRECT VIS-A-VIS THE INFORMATION SOUGHT . THE ASSESSING OFFICER PROCEEDED TO RE-OPEN ASSESSMENT ON THE G ROUND 18 THAT WHILE MAKING THE ORIGINAL ASSESSMENT ORDER THE ASSE SSING OFFICER HAD NOT EXAMINED THE ISSUE OF ELIGIBILITY OF ASSESSEE TO CLAIM DEDUCTION AND HAS MERELY RELIED ON THIS CERTIFICATE I SSUED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE. THE OPINION FORME D BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME IS NOT B ASED UPON ANY NEW MATERIAL OR FACT HAVING COME TO HIS NOTICE SU BSEQUENTLY. IT IS APPARENT THAT RE- OPENING OF THE ASSESSMENT U/S. 147 HAS BEEN DONE ON THE SAME SET OF FACTS SOLELY ON THE BASIS OF CHANGE O F OPINION WHICH IS NOT PERMISSIBLE UNDER LAW. 8. IN OUR CONSIDERED OPINION THE REVENUE AUTHORITIE S HAVE FOLLOWED A WRONG PROCEDURE TO DIS-ALLOW DEDUCTION CLAIMED BY THE ASSESSEE U/S. 10B. THE LEGISLATURE IN ITS WISDOM HAS PROVIDED UND ER THE ACT SEVERAL REMEDIES TO BRING INTO TAX NET ANY INCOME WHI CH HAS ESCAPED ASSESSMENT BY VIRTUE OF AN ORDER PREJUDICIAL TO THE REV ENUE. HOWEVER THE REMEDIES OF RE-ASSESSMENT AND REVISION ENCO MPASSED UNDER THE ACT HAVE TO BE APPLIED APTLY DEPENDING UP ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THE PROCEDURES OF LAW HAVE TO BE FOLLOWED METICULOUSLY. APPLICATION OF INAPPROPRIATE PROVISIONS MAY RENDER THE REMEDY INEFFECTIVE. IN THE INSTANT CASE P ROVISIONS OF SECTION 147 HAVE BEEN INVOKED AFTER THE LAPSE OF FOU R YEARS WITHOUT VALID REASONING AND THAT TO BY ISSUING A DEFECTIVE NOT ICE. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF FENNER (INDIA) LTD. VS. DY. CIT REPORTED AS 241 ITR 672 (MAD) HAS HELD AS UNDER: 'WHENEVER A NOTICE IS ISSUED BY THE ASSESSING OFFICER BEY OND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR SUCH NOTICE BEING ISSUED WITHOUT RECORDING THE REASONS F OR HIS BELIEF THAT INCOME ESCAPED ASSESSMENT IT CANNOT BE PRESUMED IN LAW THAT THERE IS ALSO A FAILURE ON THE PART OF THE ASSESSEE TO FI LE THE RETURNS REFERRED TO IN THE PROVISO OR A FAILURE TO FULLY AND TRULY DISCLOSE THE MATERIAL FACTS. THE REASONS REFERRED TO IN THE MAIN PA RAGRAPH OF SECTION 147 WOULD IN CASES WHERE THE PROVISO IS ATTRAC TED INCLUDE REASONS REFERRED TO IN THE PROVISO AND IT IS NECESSARY FO R THE ASSESSING OFFICER TO RECORD THAT ANY ONE OR ALL THE CIR CUMSTANCES REFERRED TO IN THE PROVISO EXISTED BEFORE THE ISSUE OF NOTICE UNDER SECTION 147'. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIG H COURT IN THE CASE OF E.I. DUPONT INDIA PVT. LTD AND ANOTHER VS. DE PUTY COMMISSIONER OF INCOME TAX REPORTED AS 351 ITR 299 (DE L). THE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI SAKT HI TEXTILES LTD. V. JCIT (SUPRA) HAS HELD THAT WHERE THE NOTICE FOR RE-OP ENING THE ASSESSMENT AFTER FOUR YEARS IS ISSUED AND IN THE REASONS FOR RE- OPENING ASSESSMENT IT HAS NOT BEEN MENTIONED THAT ESCAPE MENT OF CHARGEABLE INCOME FOR TAX WAS DUE TO OMISSION OR FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT THE RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT ARE LIABLE TO BE QUASHED. 9. THE ID. DR IN ORDER TO SUPPORT HIS CONTENTIONS THAT WHERE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY AT MATERIAL FAC TS AT THE TIME OF FILING OF THE RETURN AND THEREAFTER AT THE TIME OF ASSESSMENT RE- OPENING PROCEEDINGS U/S. 147 OF THE ACT CAN BE INITIA TED EVEN AFTER FOUR YEARS HAS RELIED ON THE CERTAIN JUDGMENTS VIZ.: C IT VS. USHA INTERNATIONAL LTD. (SUPRA) HONDA SIEL POWER PRODUC TS LTD. VS. DCIT & ANR. (SUPRA) PHOOL CHAND BAJRANG LAL AND ANOTHER VS. ITO & ANR. (SUPRA) AND INDIAN HUME PIPE CO. LTD. VS. ACIT & ORS. (SUPRA). 19 IN ALL THE ABOVE MENTIONED CASES THE HON'BLE HIGH CO URTS HAVE HELD THAT REASSESSMENT PROCEEDINGS CAN BE INITIATED EVEN AFTE R FOUR YEARS WHERE THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. WE ARE IN FULL CONSONANCE WITH THE LAW LAID DO WN IN THE AFORESAID JUDGMENTS. HOWEVER IN THE PRESENT CASE THE REVENUE HAS FAILED TO SHOW AS TO HOW THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY MATERIAL FACTS FOR THE ASSESSMENT OF THE RELEVANT AY THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT AND HAD THE OCCASION TO EXAMINE ALL THE TRANSACTI ONS AND DEDUCTIONS CLAIMED BY THE ASSESSEE. THE FULL BENCH OF TH E HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. REPORTED AS 256 ITR 1 (DEL) HAS HELD THAT WHEN THE ASSE SSING OFFICER COMPLETES AN ASSESSMENT U/S. 143(3) OF THE ACT HE IS PRE SUMED TO HAVE ACCEPTED THE CONTENTIONS OF THE ASSESSEE EVEN IF TH ERE IS NO REFERENCE TO THEM IN THE ASSESSMENT ORDER: THE HON'BLE HIGH COURT FURTHER HELD THAT ASSESSMENT ORDER PASSED U/S. 143(3) OF T HE ACT MUST BE PRESUMED TO BE ONE PASSED AFTER FULL SCRUTINY A ND FORMATION OF OPINION ON THE POINTS RAISED IN RETURN IN THE COUR SE OF ASSESSMENT PROCEEDINGS. THUS PROCEEDINGS CANNOT BE VALIDLY RE-OP ENED U/S. 147 OF THE ACT IF AN ASSESSEE HAS FURNISHED FULL AND TRUE P ARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO INCOME AL LEGED TO HAVE ESCAPED ASSESSMENT IF THE ORIGINAL ASSESSMENT WAS MADE U/S. 14 3(3) OF THE ACT. 10. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE NOTICE ISSUED U/S. 147 IS INVA LID AND THE RE- ASSESSMENT PROCEEDINGS ARISING THERE FROM ARE BAD IN LAW. ACCORDINGLY THE IMPUGNED ORDER PASSED BY CIT(APPEALS) CONFIRMING ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 147 OF THE ACT IS SET ASIDE. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON THE ISSUE OF RE-OPENING THE OTHER GROUNDS RAISED IN THE APPEAL HAVE BECOME ACADEMIC AND ARE THEREFORE NOT TAKEN UP FOR ADJUDIC ATION. THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE AFORESAID T ERMS. 17. SINCE THE ASSESSMENT IN THE INSTANT CASE HAS BE EN REOPENED AFTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR AND SINCE THERE IS NO ALLEGATION IN THE NOTICE ISS UED U/S. 148 OF THE ACT THAT THERE WAS ANY FAILURE ON THE PART OF THE A SSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR CO MPLETION OF ASSESSMENT THEREFORE IN VIEW OF THE DECISIONS CIT ED ABOVE THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO IN OUR OPINION ARE VOID AB INITIO. 20 18. SO FAR AS THE VARIOUS DECISIONS RELIED ON BY T HE LD. DEPARTMENTAL REPRESENTATIVE ARE CONCERNED THEY ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . IN THE CASE OF INDIAN HUME PIPE CO. PVT. LTD. (SUPRA) THE CAPITAL GAINS WERE ASSESSED IN THE ORIGINAL ASSESSMENT GRANTING DEDUCT ION U/S. 54EC. IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE DI SCLOSED THE SALE AGREEMENTS AND FURNISHED A WORKING OF CAPITAL GAINS WHICH WAS IN TERMS OF WHAT WAS SUBMITTED WITH THE RETURN OF INCO ME. HOWEVER NEITHER IN THE RETURN OF INCOME NOR IN THE DISCLOSU RES THAT WERE MADE IN RESPONSE TO THE QUERY OF THE AO DID THE ASSESSEE MAKE ANY REFERENCE TO THE DATES ON WHICH AMOUNT WERE INVESTE D IN THE BONDS OF NHAI REC OF INDIA AND NHB. THE ASSESSEE DID ENCLO SE COPIES OF THE CERTIFICATES WHICH DID BEAR THE DATE OF ALLOTME NT. HOWEVER BOTH IN THE COMPUTATION OF TAXABLE LONG TERM CAPITAL GAI NS IN THE ORIGINAL RETURN OF INCOME AND IN THE COMPUTATION THAT WAS SU BMITTED IN RESPONSE TO QUERY OF THE AO THERE WAS A COMPLETE SI LENCE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVESTED. A CCORDINGLY IT WAS HELD THAT THERE WAS A FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. HOWEVER IN THE IN STANT CASE THERE IS NO SUCH FAILURE ON THE PART OF THE ASSESSEE. THE D EDUCTION U/S. 36 (1)(VIIA) HAS BEEN CLAIMED IN THE RETURN THE AO HA S DISCUSSED IN THE BODY OF THE ASSESSMENT ORDER AND HAS ALLOWED THE SA ME. THEREFORE THE SAID DECISION IS NOT APPLICABLE. 19. SO FAR AS IN THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF CALCUTTA DISCOUNT COMPANY (SUPRA) IS CONCER NED THE SAME RELATES TO THE PRE-AMENDED PROVISIONS OF SEC. 147 A ND RELATES TO THE 21 PROVISIONS OF INDIAN INCOME TAX ACT 1922. FURTHER THE FACTS ARE COMPLETELY DIFFERENT. THEREFORE THE SAME IN OUR OPINION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN TH IS VIEW OF THE MATTER AND IN VIEW OF THE REASONINGS IN THE PRECEDING PARA GRAPHS WE HOLD THAT THE REASSESSMENT PROCEEDINGS INITIATED FOR THE IMPUGNED ASSESSMENT YEAR IS ILLEGAL AND VOID AB INITIO. ACC ORDINGLY THE SAME IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED. 20. IDENTICAL GROUND HAS BEEN TAKEN BY THE ASSESSEE IN ITA NO. 155/PN/2014 FOR THE A.Y. 2005-06 CHALLENGING THE VA LIDITY OF THE REASSESSMENT PROCEEDINGS. IN VIEW OF OUR REASONING S GIVEN IN THE PRECEDING PARAGRAPHS THE NOTICE ISSUED U/S. 148 FOR THE IMPUGNED ASSESSMENT YEAR IS ALSO ILLEGAL AND VOID AB-INITIO. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ON THE ISSUE OF VALI DITY OF REOPENING FOR A.Y. 2005-06 ARE ALSO ALLOWED. 21. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29-04-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED: 29 TH APRIL 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) AURANGABAD 4. THE CIT AURANGABAD 5. THE D.R A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT PUNE BENCHES PUNE