The Dycit Circle-9, Ahmedabad v. Shri Ganesh Chhababhai Vallabhbhai Patel Family Trust, Ahmedabad

ITA 296/AHD/2002 | 1995-1996
Pronouncement Date: 31-03-2010 | Result: Dismissed

Appeal Details

RSA Number 29620514 RSA 2002
Assessee PAN EMBER1995A
Bench Ahmedabad
Appeal Number ITA 296/AHD/2002
Duration Of Justice 8 year(s) 1 month(s) 18 day(s)
Appellant The Dycit Circle-9, Ahmedabad
Respondent Shri Ganesh Chhababhai Vallabhbhai Patel Family Trust, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-03-2010
Date Of Final Hearing 15-03-2010
Next Hearing Date 15-03-2010
Assessment Year 1995-1996
Appeal Filed On 11-02-2002
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE SHRI BHAVNESH SAINI J.M. AND SHRI D.C. AGRA WAL A.M. ITA NO.296/AHD/2002 (ASSESSMENT YEAR: 1995-96) DY. COMMISSIONER OF INCOME TAX CIRCLE-9 AHMEDABAD. V/S SHRI. GANESH CHHABHABHAI VALLABHAI PATEL FAMILY TRUST 2 ND FLOOR MUNICIPAL BLD. RELIEF ROAD ABAD. (APPELLANT) (RESPONDENT) FOR DEPARTMENT: SHELLEY JINDAL DR FOR ASSESSEE: SHRI DHIREN SHAH AR O R D E R PER SHRI BHAVNESH SAINI J.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XV AHMEDABAD DATED 25-10-2001 FOR ASSESSMENT YEAR 1995-1996 ON THE FOL LOWING EFFECTIVE GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE NOTICE ISSUED U/S. 148 OF THE I.T. ACT 1961 WA S INVALID AND THE REASSESSMENT PROCEEDINGS WERE ALSO INVALID. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.50 00 000/- MADE ON SUBSTANTIVE BASI S. 3. THE LD. CIT(A) HAS ALSO ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.3.88 CRORES MADE ON PROTECTIVE B ASIS. 2. WE HAVE HEARD LEARNED REPRESENTATIVE OF BOTH THE PARTIES PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY THE FACTS NOTED BY THE ASSESSING OFFICER ARE THAT ASSESSEE IS A PROPRIETOR OF M/S. GANESH HOUSING CORPORATION ENG AGED IN THE SALE AND PURCHASE OF PROPERTIES AND THEIR DEVELOPMENTS. THE RE WAS A SEARCH 2 UNDER SECTION 132 OF THE I.T. ACT ON 21-09-1995 IN THE CASE OF ONE SHRI SURESH A. PATEL. SHRI SURESH A. PATEL WAS A BROKER DEALING IN PURCHASE AND SALE OF LAND. FROM HIS PREMISES MANY INCRIMINA TING DOCUMENTS WERE FOUND. ONE OF THESE PAPERS INDICATED THE TRANSACTI ONS OF SILVER ARC PROPERTY THE DEVELOPMENT RIGHT OF WHICH WERE SOLD BY M/S. HARSH ENTERPRISES TO M/S. GANESH HOUSING CORPORATION AND THEN BY M/S. GANESH HOUSING CORPORATION TO ADANI MANAGEMENT AND CONSULTANCY SERVICES PRIVATE LIMITED. THE STATEMENT OF SHRI. S URESH A PATEL WAS RECORDED ON THESE PAPERS. HE ADMITTED THAT THERE W ERE CASH TRANSACTIONS OF RS. 3.88 CRORES UP TO THE DATE OF SEARCH BETWEEN ASSESSEE AND M/S. ADANI MANAGEMENT AND CONSULTANCY SERVICES PRIVATE L IMITED. THE DEVELOPMENT RIGHTS OF SILVER ARC PROPERTY WERE BOUG HT BY M/S. HARSH ENTERPRISES. THERE WAS A DISPUTE BETWEEN THE MEMBE RS OF THE SOCIETY AND HARSH ENTERPRISES WHICH WAS PENDING IN THE COUR T. M/S HARSH ENTERPRISES SIGNED AN AGREEMENT ON 15-08-1994 WITH M/S. GANESH HOUSING CORPORATION FOR ASSIGNMENT OF RIGHT OF DEVE LOPMENT. THE RIGHT OF DEVELOPMENT WERE FINALLY TRANSFERRED TO THE ASSESSE E MAINLY M/S. GANESH HOUSING CORPORATION BY AN AGREEMENT DATED 18-03-199 6. THE ADIT (INVESTIGATION) RECORDED THE STATEMENT OF MAIN PART NER SHRI. KASHYAP THAKORE OF M/S. HARSH ENTERPRISES ON 05-12-1995. I N THE STATEMENT SHRI KASHYAP THAKORE ADMITTED HAVING RECEIVED RS.50 LAKH S CASH OVER AND ABOVE THE CHEQUE AMOUNT OF APPROXIMATELY RS.89 LAKH S FOR THE DEVELOPMENT RIGHT OF THE SILVER ARC PROPERTY FROM M /S. GANESH HOUSING CORPORATION. THE ASSESSEE IN TURN SIGNED AN M.O.U. WITH ADANI MANAGEMENT AND CONSULTANCY SERVICES PRIVATE LIMITED ON 21-10-1994 FOR ASSIGNMENT OF RIGHT OF DEVELOPMENT IN FAVOUR OF ADANI MANAGEMENT AND CONSULTANCY SERVICES PRIVATE LIMITED. THE SUBJ ECT MATTER OF REASONS RECORDED WAS THAT THE AMOUNT OF RS. 50 LAKHS WHICH SHRI. KASHYAP THAKORE PARTNER OF M/S. HARSH ENTERPRISES HAS STAT ED TO HAVE RECEIVED FROM THE ASSESSEE FROM THE ASSIGNMENT OF RIGHT OF D EVELOPMENT OF SILVER ARC PROPERTY. SHRI. GOVIND C. PATEL IS ONE OF THE TRUSTEES OF THE ASSESSEE TRUST IN WHOSE CASE THE AMOUNT OF RS.3.88 CRORES RE CEIVED FROM ADANI 3 MANAGEMENT AND CONSULTANCY SERVICES PRIVATE LIMITED IN RESPECT OF SILVER ARC PROPERTY WAS ASSESSED IN THE BLOCK ASSES SMENT UNDER SECTION 158BD PASSED ON 28-09-1998. 3.1 IN THIS CASE ORIGINAL ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 30-03-1998. SUBSEQUENTLY ON THE BASI S OF THE REASONS RECORDED ON 06-11-1998 THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 ON 10-11-1998. THE REASONS FOR R EOPENING OF THE ASSESSMENT ARE; THE ASSESSEE IS AN AOP A SEARCH WAS CONDUCTED AT T HE PREMISES OF ONE SHRI SURESH A. PATEL ON 21.9.95/22.9.95. DU RING THE POST SEARCH ENQUIRIES OF THIS ASSESSEE STATEMENT OF ONE SHRI KASHYAP THAKORE PARTNER OF M/S. HARSH ENTERPRISES WAS RECO RDED. SHRI THAKORE STATED THAT THEY ACQUIRED THE DEVELOPMENT R IGHT AND INTEREST IN PROPERTY KNOWN AS SILVER ARC FROM ASSES SEE FOR WHICH A CASH PAYMENT OF RS.50 LACS WAS MADE TO THE ASSESSEE IN ADDITION TO THE CHEQUE AMOUNT. SUBSEQUENTLY M/S. HARSH ENTE RPRISES HAS ALSO FILED ITS RETURN OF INCOME FRO ASSESSMENT YEAR 1996-97 DECLARING RS. 50 LAKHS AS ITS UNEXPLAINED CASH PAYM ENT. AS 158 BD ORDER HAS ALSO BEEN PASSED IN THE CASE OF M/S. H ARSH ENTERPRISES WHEREIN RS.50 LACS HAS BEEN TAXED ON AC COUNT OF PAYMENT TO ASSESSEE FOR A.Y. 95-96 REJECTING THE CL AIM OF M/S. HARSH ENTERPRISES THAT IT PERTAINS TO A.Y. 96-97. IT IS SEEN FROM THE RECORD THAT THIS AMOUNT HAS NOT BEEN SHOWN BY THE A SSESSEE AS ITS INCOME. THE INCOME HAS THEREFORE ESCAPED ASSESSMEN T WITHIN THE MEANING OF SECTION 148. THEREFORE ISSUE NOTICE U/ S. 148 FOR A.Y.95-96 FOR BRINGING TO TAX THE CASH PAYMENT OF R S.50 LACS FROM M/S. HARSH ENTERPRISES. 3.2 THE ASSESSEE CHALLENGED VALIDITY OF THE NOTICE UNDER SECTION 148 OF THE I.T. ACT. IT WAS SUBMITTED THAT ASSESSING OFFI CER WAS HAVING THE COPIES OF THE SEIZED MATERIAL IN THE CASE OF SURESH A. PATEL AND STATEMENTS OF SHRI. SURESH A. PATEL DEEPAK MEHTA KASHYAP THAKORE AND RAJESH ADANI AT THE TIME OF THE ORIGINAL ASSESS MENT. THE RECORDS OF M/S. HARSH ENTERPRISES WERE ALSO AVAILABLE WITH THE ASSESSING OFFICER WHILE PASSING THE ORDER UNDER SECTION 143(3) OF THE I.T. ACT. SINCE ASSESSING OFFICER WAS HAVING ALL THE RELEVANT MATER IAL WITH HIM AT THE TIME OF PASSING THE ORIGINAL ASSESSMENT ORDER THEREFORE ON MERE CHANGE OF OPINION SUBSEQUENTLY ASSESSING OFFICER CANNOT REO PEN THE ASSESSMENT. 4 THE ASSESSING OFFICER CONDUCTED BLOCK ASSESSMENT PR OCEEDINGS IN THE CASE OF SHRI. GOVIND C. PATEL BY USING THE SAME MAT ERIAL BUT THE ASSESSING OFFICER DID NOT TAXED THE AMOUNT OF RS.50 LAKHS. THEREFORE PROCEEDING UNDER SECTION 148 ON THE SAME FACTS WOUL D BE INVALID. THE ASSESSING OFFICER HOWEVER REJECTED THE OBJECTIONS OF THE ASSESSEE CHALLENGING THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT THE ASSESSING OFFICER DID NOT ASK ANY QUESTION REGARDIN G SILVER ARC PROPERTY IN THE ORIGINAL ASSESSMENT AND THAT THERE IS A CHANGE IN LAW UNDER SECTION 147 WITH EFFECT FROM 01-04-1989. IT IS DUTY OF THE ASSESSEE TO DISCLOSE ALL THE MATERIAL FACTS IN THE RETURN OF INCOME. IN THE CASE OF THE ASSESSEE BLOCK ASSESSMENT PROCEEDINGS UNDER SECTION 158BD WE RE INITIATED WHICH WERE DROPPED BY THE ASSESSING OFFICER ON 30-0 9-1998. THE CASE LAW OF THE ASSESSEE WERE REJECTED. ASSESSING OFFIC ER THEREFORE NOTED THAT SINCE THE ASSESSEE HAS FAILED TO DISCLOSE ALL THE MATERIAL FACTS IN THE RETURN OF INCOME AND THAT ASSESSING OFFICER HAS NOT EXAMINED THE ABOVE MATERIAL AT THE TIME OF PASSING ORIGINAL ASSESSMENT THEREFORE IT IS NOT A CASE OF CHANGE OF OPINION. IT WAS FURTHER NOTED TH AT IN THE CASE OF GOVIND C.PATEL THE ORDER UNDER SECTION 158BD WAS PASSED IN WHICH ADDITION OF RS.3.88 CRORES WAS MADE PERTAINING TO ASSESSMENT YE AR 1995-1996. SINCE SHRI GOVIND C. PATEL IS ONE OF THE TRUSTEE OF THE ASSESSEE AND SUBSTANTIVE ASSESSMENT IS MADE IN HIS CASE THEREFO RE TO PROTECT THE INTEREST OF REVENUE ASSESSING OFFICER PROPOSED TO MAKE PROTECTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE OF THE SAME AMOUNT. THE ASSESSING OFFICER FURTHER NOTED THAT SINCE THE REAS ONS RECORDED FOR REOPENING THE ASSESSMENT WERE BASED ONLY ON THE STA TEMENT OF SHRI KASHYAP THAKORE DATED 05-12-1995 IN WHICH HE HAS A DMITTED TO HAVE RECEIVED RS.50 LAKHS FROM THE ASSESSEE THEREFORE O BJECTIONS OF THE ASSESSEE WERE REJECTED. ASSESSING OFFICER FURTHER NOTED THAT M/S. HARSH ENTERPRISES HAS DISCLOSED THE AMOUNT OF RS. 50 LAKH S RECEIVED IN CASH IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 1996-1997. THEREFORE CONSIDERING THE ENTIRE FACTS ON RECORD ASSESSING OFFICER MADE ADDITION OF RS.50 LAKHS ON SUBSTANTIVE BASIS IN THE HANDS OF THE 5 ASSESSEE. PROTECTIVE ADDITION OF RS.3.88 CRORES WA S ALSO MADE IN THE CASE OF THE ASSESSEE. 3.3 THE ASSESSEE CHALLENGED THE REOPENING OF THE AS SESSMENT BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). SAME SUBMISSIONS WERE REITERATED. IT WAS SUBMITTED THAT ALL THE MAT ERIAL FACTS AND INFORMATION AND SEIZED DOCUMENTS WERE BEFORE THE AS SESSING OFFICER AT THE TIME OF PASSING OF THE ORIGINAL ASSESSMENT ORDE R. THEREFORE ON MERE CHANGE OF OPINION ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT. IT WAS SUBMITTED THAT STATEMENT OF KASHYAP THAKORE DAT ED 05-12-1995 AND DETAILS IN THE CASE OF GOVIND C. PATEL WERE ALSO BE FORE THE ASSESSING OFFICER BECAUSE THE BLOCK ASSESSMENT PROCEEDINGS AN D THE REGULAR ASSESSMENT WERE SIMULTANEOUSLY CARRIED OUT BY THE A SSESSING OFFICER. ALL THE DETAILS OF SILVER ARC PROPERTY DEAL ALONGWI TH STATEMENT OF KASHYAP THAKORE WERE EXAMINED BY THE ASSESSING OFFICER. TH EREFORE FINDING OF THE ASSESSING OFFICER THAT ASSESSEE HAS NOT DISCLOS ED ALL THE RELEVANT MATERIAL FACTS AS REGARDS THE DEAL OF SILVER ARC PR OPERTY AT THE ORIGINAL ASSESSMENT STAGE IS NOT CORRECT. ALL INFORMATION W ERE ON THE RECORD OF THE ASSESSING OFFICER REGARDING THE ABOVE PROPERTY AND THE ASSESSING OFFICER ALSO INITIATED BLOCK ASSESSMENT PROCEEDINGS UNDER S ECTION 158BD AGAINST THE ASSESSEE ON THE BASIS OF THE SAME SEIZE D MATERIAL AND STATEMENT OF SHRI KASHYAP THAKORE DATED 05-12-1995 AND ULTIMATELY BLOCK ASSESSMENT PROCEEDINGS WERE DROPPED AGAINST T HE ASSESSEE WOULD SHOW THAT ASSESSING OFFICER EXAMINED ALL THE RELEVA NT MATERIAL ON RECORD BEFORE TAKING ANY DECISION IN THE MATTER. THE ASSE SSING OFFICER HAS NOT ADVERSELY COMMENTED AGAINST THE ASSESSEE ON THE SAM E MATERIAL. IT IS THEREFORE A CASE OF CHANGE OF OPINION. THEREFORE PROCEEDINGS UNDER SECTION 147/148 MAY BE QUASHED. THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MATERIAL ON RECORD HELD THAT PROCEEDINGS UNDER SECT ION 148 ARE INVALID AND ACCORDINGLY REASSESSMENT PROCEEDINGS ARE ALSO INVALID. THE 6 FINDINGS OF LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ARE REPRODUCED AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE REASONING OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE P APERS AND DOCUMENTS PLACED BY THE APPELLANT IN THE PAPER BOOK AS WELL AS APPELLANTS CONTENTION IN THE SYNOPSIS OF ARGUMENTS AND THE AUTHORISED REPRESENTATIVES ARGUMENTS IN THE APPEAL HEARING. FROM THE VERIFICATION OF THE DETAILS SUBMITTED BY THE AP PELLANT IN THE PAPER BOOK IT IS FOUND THAT THE MATERIAL INFORMATI ON THE SILVER ARC PROPERTY DEAL TRANSACTION WAS ALREADY AVAILABLE BEF ORE THE ASSESSING OFFICER FROM SHRI GOVIND C. PATEL VIDE HI S LETTER DATED 26/12/1995 WHICH WAS SUBMITTED TO THE ADIT (INVN.) DURING HIS INQUIRY AND RECORDING OF HIS STATEMENT DATED 26/12/ 1995 WHICH WAS ALSO AVAILABLE ON RECORD OF THE ASSESSING OFFICER I N THE YEAR 1997. IN THE 158BD PROCEEDINGS WHICH WERE SIMULTANEOUSLY CARRIED OUT IN APPELLANTS CASE AND SHRI GOVIND C. PATELS CASE IN 1997 THE ASSESSING OFFICER INITIALLY RELIED UPON THE STATEME NT OF SHRI KASHYAP A. THAKORE DATED 5/12/1995 AND THE STATEMEN T OF SHRI SURESH A. PATEL DATED 21/9/1995 AND 22/9/1995 AND O THER MATERIAL FACTS/INFORMATION OF SILVER ARC PROPERTY DEAL WHICH WERE ON THE RECORD OF THE A.O. FROM THE CASE OF SEARCH ASSESSEE S CASE SHRI. SURESH A PATEL AND CONSEQUENTIAL ENQUIRY OF SHRI. K ASHYAP A. THAKORE AND OF SHRI. GOVIND C. PATEL A BENEFICIARY OF THE APPELLANT TRUST. IN CASE OF THE APPELLANT THE REGULAR ASSES SMENT PROCEEDINGS WERE MAINLY CARRIED OUT IN THE MONTH OF FEBRUARY AN D MARCH 1998 AND AT THAT TIME ALL THE MATERIAL INFORMATION AS RE GARDS TO SILVER ARC PROPERTY DEAL TRANSACTION AND THE AGREEMENT OF UNDE RSTANDING BETWEEN THE APPELLANT AND M/S. HARSH ENTERPRISES FO R ASSIGNMENT OF RIGHT OF DEVELOPMENT OF SILVER ARC PROPERTY DATE D 15/8/1994 MEMORANDUM OF UNDERSTANDING WITH GANESH HOUSING COR PORATION AND ADANI MANAGEMENT & CONSULTANCY SERVICES PVT. LT D. DATED 21/10/1994 AND OTHER RELEVANT INFORMATION WERE ALRE ADY AVAILABLE BEFORE THE ASSESSING OFFICER. THE A.O. HAS NOT DRA WN ANY ADVERSE INFERENCE ON THE BASIS OF STATEMENT OF SHRI KASHYAP A. THAKORE AND ON THE BASIS OF STATEMENT OF SHRI SURESH A. PAT EL AS WELL AS ON THE BASIS OF THE OTHER MATERIAL INFORMATION WHICH W ERE AVAILABLE IN RESPECT OF SILVER ARC PROPERTY DEAL TRANSACTION IN THE REGULAR ASSESSMENT PROCEEDINGS OF THE APPELLANT. SUBSEQUEN TLY THE A.O. IN THE 158BD PROCEEDINGS WHICH WERE SIMULTANEOUSLY CARRIED OUT IN THE CASE OF APPELLANT AND SHRI. GOVIND C. PATEL ONCE AGAIN CONSIDERED THE STATEMENT OF SHRI. KASHYAP A. THAKOR E DATED 5/12/1995 AND THE STATEMENT OF SHRI. SURESH A. PATE L AND OTHER MATERIAL INFORMATION AVAILABLE ON THE RECORD OF THE A.O. AND ARRIVED AT THE CONCLUSION THAT NO ADVERSE INFERENCE IS TO B E DRAWN ON THE BASIS OF THE AFORESAID MATERIAL FACTS AVAILABLE ON RECORD AND STATEMENT OF SHRI. SURESH A. PATEL THE SEARCHED AS SESSEE AND ON 7 THE BASIS OF STATEMENT OF SHRI. KASHYAP A. THAKORE DATED 5/12/1995 IN THE CASE OF THE APPELLANT AND THE PROC EEDINGS U/S. 158BD WAS DROPPED. THEREFORE ON THE BASIS OF THE F ACTS AVAILABLE ON RECORD IT CANNOT BE SAID THAT THE MATERIAL FACT S AND INFORMATION AS REGARDS TO THE SILVER ARC PROPERTY DEAL TRANSACT ION WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER AT THE TIME OF REGULAR ASSESSMENT PROCEEDINGS. IN FACT THE MATERIAL FACT S AND INFORMATION AS REGARDS TO THE SILVER ARC PROPERTY D EAL TRANSACTION AND STATEMENT OF SHRI. KASHYAP A. THAKORE DATED 5/1 2/1995 AND THE STATEMENT OF SHRI. SURESH A. PATEL WAS ALREADY AVAILABLE BEFORE THE A.O. AT THE TIME OF REGULAR ASSESSMENT PROCEEDI NGS AND NO ADVERSE INFERENCES WERE DRAWN. SO THE REASONS REC ORDED FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT FOR REOPENI NG OF THE CASE OF THE APPELLANT IS MERELY A CHANGE OF OPINION OF THE ASSESSING OFFICER ON THE SAME SET OF FACTS WHICH WERE AVAILABLE BEFOR E THE ASSESSING OFFICER AT THE TIME OF REGULAR ASSESSMENT PROCEEDIN GS. IN THE APPELLANTS CASE THE REASON GIVEN FOR STARTING THE REASSESSMENT PROCEEDINGS WAS THE MATERIAL INFORMATION FROM THE C ASE OF SEARCHED ASSESSEE SHRI SURESH A. PATEL WHICH WAS AL READY AVAILABLE BEFORE THE A.O. DURING THE COURSE OF ORIG INAL ASSESSMENT PROCEEDINGS. THE SECOND REASON GIVEN WAS THE STATE MENT OF SHRI. KASHYAP A. THAKORE WHICH WAS ALSO AVAILABLE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THEREFORE ALL THESE ASPECT S HAD BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT PROCEEDINGS A ND AS THE A.O. HAS NOT DRAWN ANY ADVERSE INFERENCE SO THE REASONS RECORDED ARE NOTHING BUT A CHANGE OF OPINION. THE APPELLANTS C ASE IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. KESHRIMAL SAMARATHMAL VS. ITO (1995 ) 215 ITR 714 (GUJ.) THEREFORE IN VIEW OF THE FACTS AND IN V IEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS OF THE HONBLE SUPREME COUR T AND THE HONBLE GUJARAT HIGH COURT WHICH HAS BEEN RELIED UP ON BY THE APPELLANT I HOLD THAT NOTICE ISSUED U/S. 148 WAS I NVALID AND THE REASSESSMENT PROCEEDINGS WERE ALSO INVALID. 4. LD. DEPARTMENTAL REPRESENTATIVE CHALLENGING THE QUASHING OF THE REASSESSMENT PROCEEDINGS REFERRED TO GROUND NO.1 AN D RELIED UPON ORDER OF THE ASSESSING OFFICER. LD. DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT ASSESSING OFFICER WAS HAVING REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT AS REGARDS SILVER ARC PROPERTY THEREFOR E PROPER REASONS WERE RECORDED FOR REOPENING OF THE ASSESSMENT ON TH E BASIS OF STATEMENT OF SHRI. KASHYAP A. THAKORE DATED 05-12-1995 (PB-1 TO 9) PARTNER OF M/S. HARSH ENTERPRISES IN WHICH HE HAS ADMITTED RE CEIPT OF RS.50 LAKHS FROM ASSESSEE. THE SAME RECEIPT OF RS.50 LAKHS WAS SHOWN BY M/S. 8 HARSH ENTERPRISES IN THEIR RETURN OF INCOME FOR ASS ESSMENT YEAR 1996- 1997 BY MAKING PROPER ENTRIES IN THE BOOKS OF ACCOU NT ON 08-12-1995. HE HAS SUBMITTED THAT ASSESSING OFFICER DID NOT EXA MINE THE SEIZED MATERIAL AND STATEMENT OF SHRI. KASHYAP A. THAKORE AND OTHER MATERIAL ON RECORD AT THE TIME OF ORIGINAL ASSESSMENT STAGE. THEREFORE WHEN THE DOCUMENTS WERE NOT EXAMINED BY THE ASSESSING OFFICE R THERE CANNOT BE ANY CHANGE OF OPINION AS ARGUED BY THE ASSESSEE. H E HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT GONE INTO ANY DOCUMEN T AT ORIGINAL ASSESSMENT STAGE THERE IS NO QUESTION OF ANY CHANG E OF OPINION. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON DEC ISION OF GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL VS. ACIT. 236 ITR 832 IN WHICH IT WAS HELD THAT ON SUBSEQUENT DISCOVERY OF M ISTAKE IN ASSESSMENT REASSESSMENT WITHIN 4 YEARS PERMISSIBLE. HE HAS AL SO RELIED UPON DECISION OF GUJARAT HIGH COURT IN THE CASE OF INDUC TOTHERM (INDIA) PVT. LTD. VS. ACIT 294 ITR 341 IN WHICH IT WAS HELD WHE N FINDING IS GIVEN THAT ALLOWANCES WERE NOT PROPERLY COMPUTED - REASON TO B ELIEVE INCOME HAD ESCAPED ASSESSMENT REASSESSMENT PROCEEDINGS VALID . HE HAS RELIED UPON DECISION OF SUPREME COURT IN THE CASE OF RAJES H JHAVERI STOCK BROKERS 291 ITR 500 IN WHICH IT WAS HELD THAT ON ME RE PROCESSING OF RETURN UNDER SECTION 143(1) WOULD NOT GIVE RISE TO THE CHANGE OF OPINION BY THE ASSESSING OFFICER. HE HAS ALSO RELIED UPON ORDER OF THE TRIBUNAL IN THE CASE OF S.C. CHEMICALS 99 ITD 41 (AHM) AND DHAN JI BHOY STUD 82 ITD (TM) 18 (PUNE) IN WHICH IT WAS HELD THAT STATEM ENT WOULD BE RELEVANT IF THERE IS NO ALLEGATION OF COERCION ETC. LEARNED DEPARTMENTAL REPRESENTATIVE THEREFORE SUBMITTED THAT ASSESSING OFFICER WAS JUSTIFIED IN REOPENING THE ASSESSMENT BECAUSE OF ESCAPEMENT O F INCOME OF RS.50 LAKHS ON ACCOUNT OF SILVER ARC PROPERTY. 5. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE R EITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMI TTED THAT SEARCH WAS CONDUCTED IN SEPTEMBER 1995 AND ALL THE MATERIA L AND STATEMENTS OF CONCERNED PERSONS INCLUDING STATEMENT OF SHRI. KASH YAP A. THAKORE 9 DATED 05-12-1995 WERE AVAILABLE WITH THE ASSESSING OFFICER. THE ASSESSING OFFICER EXAMINED ALL THE ABOVE SEIZED MAT ERIAL AND STATEMENTS BY ISSUING NOTICES UNDER SECTION 158BD WHEN THE REG ULAR PROCEEDINGS FOR ASSESSMENT WERE GOING ON SIMULTANEOUSLY. ASSESSEE FURNISHED REPLY BEFORE THE ASSESSING OFFICER EXPLAINING THE ENTIRE ISSUE. COPIES OF SAME ARE FILED FROM PB-40 ONWARD. HE HAS SUBMITTED THAT BLOCK ASSESSMENT PROCEEDINGS WAS DROPPED AGAINST THE ASSESSEE ON 30- 09-1998. HE HAS THEREFORE SUBMITTED THAT ASSESSING OFFICER APPLIED HIS MIND TO ALL THE RELEVANT MATERIAL AND DID NOT TAKE ANY ADVERSE INFE RENCE AGAINST THE ASSESSEE WHILE PASSING THE ORIGINAL ASSESSMENT ORDE R. HE HAS SUBMITTED THAT THERE CANNOT BE DOUBLE ASSESSMENT I.E. ONE IN BLOCK ASSESSMENT AND ONE IN REGULAR ASSESSMENT. HE HAS RELIED UPON DECI SION OF GUJARAT HIGH COURT IN THE CASE OF N.R. PAPER AND BOARD LIMITED 2 34 ITR 733. HE HAS SUBMITTED THAT SINCE ENTIRE MATERIAL WAS EXAMINED A T THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND BLOCK ASSESSMENT PROCEED INGS THEREFORE THERE CANNOT BE REOPENING OF THE ASSESSMENT ON MERE CHANGE OF OPINION BY THE ASSESSING OFFICER. HE HAS RELIED UPON DECIS ION OF GUJARAT HIGH COURT IN THE CASE OF CARGO CLEARING AGENCY (GUJARAT ) VS. JCIT 12 DTR 50 IN WHICH IT WAS HELD ONCE ASSESSMENT HAS BEEN FR AMED UNDER SECTION 158BA IN RELATION TO UNDISCLOSED INCOME OF THE BLOC K PERIOD AS RESULT OF SEARCH ASSESSING OFFICER CANNOT ISSUE NOTICE UNDER SECTION 148 FOR REOPENING SUCH ASSESSMENT. IMPUGNED NOTICE UNDER S ECTION 148 QUASHED AND SET ASIDE. HE HAS RELIED UPON DECISION OF FULL BENCH OF DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. 256 ITR 1 IN WHICH IT WAS HELD THAT THERE CANNOT BE REASSESSMENT ON ME RE CHANGE OF OPINION. HE HAS RELIED UPON JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. EICHER LTD. 294 ITR 310 IN WHICH IT WAS HEL D THAT IF THE ENTIRE MATERIAL WAS PLACED BY THE ASSESSEE BEFORE ASSESSIN G OFFICER AT THE TIME OF ORIGINAL ASSESSMENT AND THE ASSESSING OFFICER HA S APPLIED HIS MIND TO THAT MATERIAL AND ACCEPTED THE VIEW CANVASSED BY TH E ASSESSEE THEN THE MERE FACT HE DID NOT EXPRESS THIS IN THE ASSESSMENT ORDER CANNOT BE A GROUND TO CONCLUDE THAT INCOME HAS ESCAPED ASSESSME NT. HE HAS RELIED 10 UPON ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF SWETA ORGANIZERS PVT. LTD. VS. ACIT 118 TTJ 426 IN WHICH IT WAS HELD SINCE THE FACTS WERE BEFORE ASSESSING OFFICER AT THE TIME OF FRAMING OF THE ORIGINAL ASSESSMENT DIFFERENT VIEW TAKEN BY HIM OR BY HIS S UCCESSOR ON THE SAME FACTS CLEARLY AMOUNTED TO CHANGE OF OPINION HENCE CONSEQUENT REOPENING OF ASSESSMENT WAS INVALID. HE HAS RELIED UPON DECISION OF BOMBAY HIGH COURT IN THE CASE OF ASTEROIDS TRADING AND INVESTMENT PVT. LTD. 223 CTR 144 IN WHICH IT WAS HELD NO NEW MATER IAL HAS COME ON RECORD AND NO NEW INFORMATION HAS BEEN RECEIVED BET WEEN THE DATE OF THE ORDER OF ASSESSMENT AND DATE OF FORMING OF OPIN ION BY ASSESSING OFFICER FOR ISSUE OF NOTICE UNDER SECTION 148- IT I S A CASE OF MERE CHANGE OF OPINION AND DOES NOT PROVIDE JURISDICTION TO INI TIATE PROCEEDINGS UNDER SECTION 148. HE HAS ALSO FILED COPIES OF OTHER DEC ISIONS IN THE PAPER BOOK ON THE SAME POINT THAT ON CHANGE OF OPINION RE OPENING IS INVALID. HE HAS ALSO REFERRED TO STATEMENT OF SHRI. KASHYAP A. THAKORE HIS CROSS EXAMINATION AND OTHER DOCUMENTS IN THE PAPER BOOK T O SHOW THAT HIS STATEMENT WAS NOT WORTH RELIANCE FOR THE PURPOSE OF REOPENING THE ASSESSMENT OR TO MAKE ADDITION ON MERIT OF RS.50 LA KHS. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L ON RECORD. HON'BLE FULL BENCH OF DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. 256 ITR 1 (DEL) BY FOLLOWING CIRCULAR NO.549 O F CBDT HELD THAT ON MERE CHANGE OF OPINION OF AO CANNOT BE A GROUND FOR RE-ASSESSMENT AND THAT AMENDMENT OF SEC. 147 W. E. F. 1.4.89 HAS NOT ALTERED THE POSITION. HON'BLE GUJARAT HIGH COURT IN THE CASE OF GARDEN SI LK MILLS PVT. LTD. 237 ITR 668 (GUJ) HELD THAT HOWEVER WIDE THE SCOPE OF TAKING ACTION U/S 148 OF IT ACT IT DOES NOT CONFIRM JURISDICTION ON CHAN GE OF INTERPRETATION OF A PARTICULAR PROVISION EARLIER ADOPTED BY THE ASSESSI NG AUTHORITY. FOR COMING TO THE CONCLUSION THAT THERE HAS BEEN EXCESS IVE LOSS OR DEPRECIATION ALLOWANCE OR THAT THERE HAS BEEN UNDER ASSESSMENT OR ASSESSMENT AT A LOWER RATE OR FOR APPLYING OTHER PR OVISIONS OF EXPLANATION 2 TO SEC. 147 IT MUST BE ON MATERIAL AND IT SHOULD HAVE NEXUS FOR HOLDING 11 SUCH OPINION CONTRARY TO WHAT HAS BEEN EXPRESSED EA RLIER. EVEN AFTER THE AMENDMENT OF SEC. 147 MERE CHANGE OF OPINION DOES NOT CONFIRM JURISDICTION ON THE ITO TO EXPLANATION 1 TO SECT. 1 47. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD. 245 ITR 648 (CAL) HELD WHEN ANY PARTICULAR ISSUE HAS BEEN CONSIDERED BY TH E ITO AND CIT(A) AND WHEN THERE IS NO FAILURE TO DISCLOSE THE FACTS THE REASSESSMENT PROCEEDINGS ARTE NOT VALID. HON'BLE SUPREME COURT I N THE CASE OF CIT VS. FORANER FRANCE 264 ITR 566 HELD REASSESSMENT NOT ON BASIS OF MERE CHANGE OF OPINION LAW SAME BEFORE AND AFTER AMEND MENT BY DIRECT TAX LAWS. HON'BLE SUPREME COURT IN THE CASE OF INDIAN O IL CORPORATION 159 ITR 956 HELD THAT NO CASE U/S 148 IS MADE OUT WHEN THE FACTS WERE KNOWN ALL ALONG WITH TO THE REVENUE WHILE MAKING TH E ORIGINAL ASSESSMENT. HON'BLE SUPREME COURT IN THE CASE OF AS SOCIATED STONE INDUSTRY LT. 224 ITR 560 HELD THAT THE ASSESSEE SH ALL HAVE TO DISCLOSE ONLY THE PRIMARY FACTS. CONSIDERING THE ABOVE LEGAL PROPOSITIONS DECIDED IN THE ABOVE CASES IT IS CLEAR THAT ASSESSING OFFI CER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT ON MERE CHANGE OF OPINION. THE ASSESSING OFFICER REFERRED TO STATEMENT OF SHRI KASHYAP THAKO RE DATED 5 TH DECEMBER 1995 IN THE REASONS RECORDED FOR REOPENIN G OF THE ASSESSMENT. THIS WAS THE SOLE BASIS FOR RECORDING T HE REASONS FOR REOPENING THE ASSESSMENT. HOWEVER WE FIND THAT SHR I KASHYAP THAKORE IN HIS STATEMENT HAS NOWHERE SPECIFICALLY MENTIONED TO HAVE RECEIVED THE AMOUNT OF RS.50 LACS FROM THE ASSESSEE. LEARNED DEP ARTMENTAL REPRESENTATIVE CONTENDED THAT SINCE THE ENTIRE TRAN SACTION WAS RELATING TO SILVER ARC PROPERTY THEREFORE IT SHOULD BE PRESUM ED THAT SHRI KASHYAP THAKORE RECEIVED RS.50 LACS ON BEHALF OF M/S. HARSH ENTERPRISES FROM THE ASSESSEE. HOWEVER SUCH A PRESUMPTION WOULD NOT ARI SE IN THIS CASE FOR REOPENING THE ASSESSMENT BECAUSE THERE SHOULD BE SO ME SOLID AND CONCRETE MATERIALS AVAILABLE ON RECORD OF THE ASSES SING OFFICER TO FORM HIS BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. THE OPINION OF T HE ASSESSING OFFICER AND THE REASONS T O BELIEVE THAT INCOME ESCAPED ASSESSMENT SHOULD NOT BE BASED UPON THE PRE SUMPTIONS AND 12 SURMISES AND CONJECTURES. SHRI KASHYAP THAKORE IN H IS STATEMENT STATED THAT HE WAS TO RECEIVE APPROXIMATELY RS. 50 LACS OV ER AND ABOVE THE WRITTEN AGREEMENT AND SUCH AMOUNT WAS NOT SHOWN IN THE BOOKS OF ACCOUNTS BECAUSE HIS FIRM WAS NOT MAINTAINING ANY B OOKS OF ACCOUNTS AT THAT TIME AND RECEIPT IS NOT RECORDED ANYWHERE. HE HAS STATED THAT THE AMOUNT WAS RECEIVED IN CASH ON 15-08-1994 ON THE DA TE OF SIGNING OF THE AGREEMENT BUT HE DOES NOT REMEMBER THE NAME OF THE PERSON WHO HAS BROUGHT THE CASH. HE HAS STATED THAT THE PERSON WHO BROUGHT THE CASH WAS A PEON. HE HAS ALSO STATED THAT MONEY WAS BROUG HT TO HIS RESIDENCE AND IT WAS DISTRIBUTED AMONGST THE PARTNERS. HOWEVE R IN HIS CROSS EXAMINATION ON BEHALF OF ASSESSEE (PB - 170) HE HA S STATED THAT CASH WAS NOT GIVEN AT THE TIME OF SIGNING OF THE AGREEME NT AND THE PARTNERS WERE NOT PRESENT WITH HIM AND NO AMOUNT WAS DISTRIB UTED AT THAT TIME. THEREFORE HE CANNOT PRODUCE ANY OF THE PARTNERS AN D ALSO CANNOT FILE THEIR CONFIRMATION FOR RECEIPT OF THE AMOUNT. THE A BOVE FACTS SHOW THAT HE DID NOT MAKE ANY INCRIMINATING STATEMENT AGAINST TH E ASSESSEE. HIS STATEMENT WAS CONTRADICTORY AND WAS NOT WORTH RELIA NCE. IT IS ADMITTED FACT THAT CASH WAS NOT SEIZED BY ADIT. M/S. HARSH E NTERPRISES ADMITTEDLY DID NOT MAKE ANY ENTRY IN ITS BOOKS OF ACCOUNTS FOR RECEIPT OF RS.50 LACS ON 15-08-1994 RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. HOWEVER M/S. HARSH ENTERPRISES MADE THE ENTRY IN THE BOOKS OF ACCOUNTS OF RECEIPT OF CASH BELATEDLY ON 08-12-1995 (PB-178). THE CASH WAS DEPOSITED ON DIFFERENT DATES IN THE BANK ACCOUNT FROM 15-12-1995 TO 21-12-1995 (PB- 179). THE LEARNED COUNSEL FOR THE ASSESSEE FILED CO PY OF THE AGREEMENT DATED 15-08-1994 ALONG WITH ITS TRANSLATION. THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) TOOK NOTE OF THE SAME AGREEMEN T AND NOTED THAT SILVER ARC PROPERTY WAS A DISPUTED PROPERTY UNDER T HE LITIGATION. EIGHTEEN MONTHS TIME WAS GIVEN TO THE ASSESSEE FOR COMPLETIN G TERMS OF THE AGREEMENT AND THAT THERE WAS NO CLAUSE FOR MAKING T HE PAYMENT ON 15-08-1994. THE ABOVE FINDINGS OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) ARE CLEARLY SUPPORTED BY THE TERMS OF THE AGREEMENT. IT WOULD MEAN THAT NO PAYMENT WAS TO BE MADE ON THE DA TE OF THE SIGNING 13 OF THE AGREEMENT I.E. ON 15-08-1994. THEREFORE STA TEMENT OF SHRI KASHYAP THAKORE WAS WITHOUT ANY BASIS AND WAS HIS U NILATERAL ACT WHICH CANNOT BIND THE ASSESSEE IN ANY MANNER. THE STATEME NT OF SHRI KASHYAP THAKORE IS THEREFORE CLEARLY FALSE AND AFTER THOU GHT AND NOT CORROBORATED BY ANY MATERIAL ON RECORD. AS NOTED ABOVE ACCORDIN G TO HIS STATEMENT CASH WAS GIVEN ON THE DATE OF SIGNING OF THE AGREEM ENT. THE AGREEMENT IS SIGNED BY THE AUTHORISED REPRESENTATIVE OF THE A SSESSEE WHOSE NAME IS MENTIONED IN THE AGREEMENT BUT HE HAS STATED IN HIS STATEMENT THAT CASH WAS GIVEN BY A PEON WHOSE NAME HE DOES NOT RE MEMBER. IT IS HIGHLY UNBELIEVABLE THAT THE ON MONEY WOULD BE PAID IN CASH OVER AND ABOVE THE AMOUNT MENTIONED IN THE AGREEMENT BY THIR D PERSON THAT TOO A PEON PARTICULARLY WHEN NO PAYMENT WAS TO BE MADE O N THE DATE OF SIGNING OF THE AGREEMENT. THE SUBSEQUENT ENTRY MADE IN THE BOOKS OF ACCOUNTS OF RECEIPT OF RS.50 LACS IS ALSO AFTER THO UGHT AND THE DEPOSIT IN THE BANK ON SEVERAL INSTALLMENTS ON DIFFERENT DATES WOULD ALSO SHOW THAT CASH OF RS.50 LACS WAS NOT AVAILABLE WITH M/S. HARS H ENTERPRISES ON 08-12-1995. THE AUDITOR OF M/S. HARSH ENTERPRISES A LSO NOTED IN THE AUDIT REPORT THAT INTEREST INCLUDED RECEIPT OF RS.50 LACS IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. THE ABOVE FACTS RECORDED IN T HE STATEMENT OF SHRI KASHYAP THAKORE CLEARLY SHOWS THAT THERE WAS NO REL IABLE EVIDENCE AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE PAID RS.50 LACS TO SHRI KASHYAP THAKORE OVER AND ABOVE THE AMOUNT MENTIONED IN THE AGREEMENT. THE ABOVE FACTS COMPLETELY DEMOLISH THE CASE OF THE REVENUE. THE CONCLUSION OF THE ASSESSING OFFICER FO R FORMING THE BELIEF THAT INCOME ESCAPED ASSESSMENT WAS MERELY BASED UPO N PRESUMPTIONS. IT IS ALSO CLEAR THAT ALL THE ABOVE MATERIALS FOUND DURING THE COURSE OF SEARCH IN THE CONNECTED CASES AND STATEMENT OF SHRI KASHYAP THAKORE WERE AVAILABLE ON THE RECORD OF THE ASSESSING OFFIC ER AT THE TIME OF FINALIZING THE ORIGINAL REGULAR ASSESSMENT PROCEEDI NGS U/S143(3) OF THE IT ACT. ALL THE ABOVE MATERIALS WERE ALSO AVAILABLE BE FORE THE ASSESSING OFFICER AT THE TIME OF CONSIDERATION OF THE PROCEED INGS AGAINST THE ASSESSEE FOR BLOCK PERIOD UNDER SECTION 158BD OF TH E IT ACT ON WHICH 14 ASSESSING OFFICER ADMITTEDLY DROPPED THE PROCEEDING S AGAINST THE ASSESSEE. ALL THE ENTIRE MATERIALS AS REGARDS SILVE R ARC PROPERTY WAS WITH THE ASSESSING OFFICER WHEN HE WAS SIMULTANEOUSLY CO NSIDERING THE REGULAR ASSESSMENT PROCEEDINGS U/S 143(3) AS WELL A S BLOCK ASSESSMENT PROCEEDINGS U/S 158BD OF THE IT ACT. THE ASSESSING OFFICER HAS NOT DRAWN ANY ADVERSE INFERENCE AGAINST THE ASSESSEE ON THE BASIS OF SAME SEIZED MATERIALS AND THE STATEMENT OF SHRI KASHYAP THAKORE. SINCE ENTIRE MATERIALS WERE WITH THE ASSESSING OFFICER AT THE TI ME OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER RE LIED UPON STATEMENT OF SHRI KASHYAP THAKORE FOR RECEIPT OF RS.50 LACS F ROM THE ASSESSEE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE NOT TO DISCLOSE ALL PRIMARY AND RELEVANT FACTS BEFORE THE ASSESSING OFFICER. 6.1 IT MAY ALSO BE ADDED HERE THAT THE FACTS RECORD ED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SHOWS THAT DEVELOPM ENT RIGHT IN SILVER ARC PROPERTY WAS SOLD BY M/S. HARSH ENTERPRISES TO M/S. GANESH HOUSING CORPORATION. SHRI KASHYAP THAKORE PARTNER OF M/S. HARSH ENTERPRISES IN HIS STATEMENT STATED THAT HE HAS RECEIVED RS.50 LAC S FROM THE ASSESSEE OVER AND ABOVE THE AMOUNT MENTIONED IN THE AGREEMEN T. THE ASSESSING OFFICER HOWEVER IN THE REASONS RECORDED FOR INITIA TION OF THE REASSESSMENT PROCEEDINGS NOTED THAT SHRI THAKORE IN HIS STATEMENT STATED THAT DEVELOPMENT RIGHT IN SILVER ARC PROPERT Y WAS ACQUIRED FROM THE ASSESSEE AND CASH PAYMENT OF RS.50 LACS WAS MAD E TO THE ASSESSEE. THE ASSESSING OFFICER IN THE REASONS ALSO RECORDED THAT THIS AMOUNT IS NOT SHOWN BY THE ASSESSEE AS ITS INCOME. IT WOULD SHOW THAT ASSESSING OFFICER HAS RECORDED INCORRECT FACTS IN T HE REASONS FOR REOPENING OF THE ASSESSMENT BECAUSE THE FACTS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ARE CONTRARY THAT A SSESSEE PAID RS.50 LACS TO SHRI KASHYAP THAKORE PARTNER OF M/S. HARSH ENTERPRISES FOR ACQUIRING DEVELOPMENT RIGHT OF SILVER ARC PROPERTY. IT WOULD PROVE THAT ASSESSING OFFICER RECORDED NON-EXISTING REASONS FOR REOPENING THE ASSESSMENT. HON'BLE BOMBAY HIGH COURT IN THE CASE O F SIEMENS 15 INFORMATION SYSTEM LTD. VS ACIT 293 ITR 548 (BOM) H ELD THAT REASSESSMENT NOTICE BASED ON NON-EXISTING REASONS AND PROVISIONS INAPPLICABLE AT THE RELEVANT TIME WOULD NOT CONSTIT UTE REASON TO BELIEVE NOTICE NOT VALID. ON THE ABOVE REASON ITSELF INIT IATION OF THE REASSESSMENT PROCEEDINGS IS INVALID IN LAW. 6.2 SINCE ASSESSING OFFICER HAD ALL INFORMATION AND MATERIAL ON RECORD ABOUT SILVER ARC PROPERTY AT THE TIME OF BLOCK ASSE SSMENT PROCEEDINGS AND REGULAR ASSESSMENT PROCEEDINGS WHICH ARE ALSO C ONSIDERED IN THE CASE OF GOVIND PATEL THEREFORE IT IS CLEAR THAT A LL THE ENTIRE MATERIAL WAS BEFORE ASSESSING OFFICER AT THE TIME OF ORIGINAL AS SESSMENT PROCEEDINGS AND THE ASSESSING OFFICER HAD APPLIED HIS MIND TO T HAT MATERIAL AND ACCEPTED THE EXPLANATION OF THE ASSESSEE THAN THE MERE FACT THAT ASSESSING OFFICER DID NOT EXPRESS THE SAME IN THE A SSESSMENT ORDER CANNOT BE A GROUND TO CONCLUDE THAT INCOME HAS ESCA PED ASSESSMENT. WE ARE FORTIFIED IN OUR VIEW BY THE JUDGMENT OF HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS EICHER LTD. (SUPRA). NO NEW MATE RIAL CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER AND NO NEW MATER IAL WAS BROUGHT ON RECORD THEREFORE MERE FRESH APPLICATION OF MIND B Y THE ASSESSING OFFICER TO THE SAME SET OF FACTS WOULD AMOUNT TO CHANGE OF OPINION AND REASSESSMENT WOULD BE INVALID. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS CHAKIAT AGENCIES PVT. LTD. 314 ITR 200 (M AD) HELD DISMISSING APPEAL (I) THAT THE REVENUE HAD STATED THAT NEW MATERIALS WERE RECEIVED BY THE ASSESSING OFFICER AND THE ASSE SSING OFFICER ON THE BASIS OF THE NEW MATERIALS BASED HIS OPINION THAT T HERE WAS ESCAPEMENT OF INCOME. THERE WAS NO MATERIAL PLACED ON RECORD T O SHOW THAT THE ASSESSEE HAD SUPPRESSED ANY MATERIAL FACT OR HAD FA ILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT. THE ASSESSING OFFICER HAD RECOURSE TO REOPENING OF THE ASSESSMENT ONLY DUE TO CHANGE OF HIS OPINION ABOUT THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80-O WHICH WAS ORIGINALLY ALLOWED BY THE ASSESSING OFFIC ER AFTER CONSIDERING THE MATERIALS PLACED BEFORE HIM. THE TRIBUNAL WAS R IGHT IN HOLDING THAT THE 16 REASSESSMENT PROCEEDINGS TO DENY THE BENEFIT OF SEC TION 80 O WERE ONLY ON A CHANGE OF OPINION OF THE ASSESSING OFFICE R. THE ASSESSEE ON THE BASIS OF THE ABOVE MATERIAL ON RECORD OF THE AS SESSING OFFICER AT THE TIME OF ORIGINAL PROCEEDINGS HAS BEEN ABLE TO PROVE THAT ALL RELEVANT AND PRIMARY FACTS WERE DISCLOSED BEFORE THE ASSESSING O FFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. ALL THE FACTS WERE KNOWN ALL ALONG WITH TO THE REVENUE WHILE MAKING THE ORIGINAL ASSESSMENT AND WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER AFTER EXAMINING REPLIES AND ENTIRE MATERIALS ON RECORD AN D AFTER EXAMINING THE SAME DID NOT TAKE ANY ADVERSE INFERENCE AGAINST THE ASSESSEE IN RESPECT OF THE SEIZED MATERIALS AND THE STATEMENT OF SHRI K ASHYAP THAKORE IN RESPECT OF SILVER ARC PROPERTY AT THE TIME OF CONCL UDING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE IT ACT. THUS THE ASSE SSING OFFICER FORMED THE OPINION ON THE BASIS OF FACTS AND MATERIAL AVAI LABLE ON RECORD BY ACCEPTING THE CLAIM OF THE ASSESSEE ON THE ABOVE IS SUE ON WHICH ASSESSMENT WAS REOPENED. 6.3 LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT ONCE ASSESSMENT HAS BEEN FRAMED IN RELATION TO UNDISCLOS ED INCOME OF THE BLOCK PERIOD AS A RESULT OF SEARCH ASSESSING OFFIC ER CANNOT ISSUE NOTICE U/S 148 OF THE IT ACT AND RELIED UPON DECISIONS IN SUPPORT OF THE SAME AS NOTED ABOVE. HOWEVER THE SAME ARE NOT APPLICABLE T O THE CASE OF THE ASSESSEE BECAUSE IN THIS CASE NO UNDISCLOSED INCOME HAS BEEN ASSESSED BY THE ASSESSING OFFICER AND NO BLOCK ASSE SSMENT IS FRAMED AS ULTIMATELY ASSESSING OFFICER DROPPED THE BLOCK ASSE SSMENT PROCEEDINGS AGAINST THE ASSESSEE. 6.4 CONSIDERING THE ABOVE DISCUSSION WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN QUASHING THE REASSESSMENT ORDER. WE CONFIRM HIS FIN DINGS AND DISMISS GROUND NO.1 OF THE APPEAL OF THE REVENUE. 17 7. ON GROUND NO.2 REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.50 LACS. SINCE WE HAVE CONFIRMED QUASHING OF THE REASSESSMENT PROCEEDINGS THEREFORE THERE IS NO NEED TO DECIDE THE REMAINING GROUND ON MERIT HOWEVER WE MAY BRIEFLY NOTE THAT THE AGR EEMENT DATED 15-08- 1994 WAS ONLY A PROPOSAL TO TRANSFER THE DEVELOPMEN T RIGHTS WITHIN EIGHTEEN MONTHS. NO AMOUNT WAS TO BE PAID ON THE DA TE OF THE AGREEMENT. THE SUBSEQUENT EVENT WITH ADANI MANAGEME NT CONSULTANCY SERVICES PVT. LTD. ALSO SUPPORT THAT NO SUCH PROPOS AL WAS MATERIALIZED. THERE WAS NO QUESTION OF MAKING ANY PAYMENT AS ON M ONEY OVER AND ABOVE THE AGREEMENT. THERE IS A CONTRADICTION IN TH E STATEMENT OF SHRI KASHYAP THAKORE AND HIS STATEMENT IS NOT CORROBORAT ED BY ANY MATERIAL ON RECORD. THE FINDING GIVEN ON GROUND NO.1 ALSO SU PPORTS THE FACT THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CORREC TLY DELETED THE ADDITION EVEN ON MERITS. AS REGARDS GROUND NO.3 RE GARDING DELETION OF ADDITION OF RS.3.88 CRORES MADE ON PROTECTIVE BASIS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION ON MERIT. IT IS NOW ADMITTED FACT THAT SUBSTANTIVE ADDITION WAS MAD E OF THE SAME AMOUNT IN THE CASE OF SHRI GOVIND C. PATEL IN THE B LOCK ASSESSMENT U/S 158 BD/ 158BC OF THE IT ACT. THE APPEAL OF SHRI GOV IND C. PATEL IN IT(SS) A NO.102/AHD/1998 HAS BEEN DECIDED BY THE TR IBUNAL VIDE ORDER DATED 27-07-2007 COPY OF WHICH IS FILED ON RECORD WHEREBY THE TRIBUNAL DELETED THE ENTIRE ADDITION OF RS.3.88 CRORES ON ME RIT. LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THIS FA CT. SINCE SUBSTANTIVE ADDITION IS DELETED ON MERIT IN BLOCK ASSESSMENT T HE PROTECTIVE ASSESSMENT IN THE CASE OF THE ASSESSEE U/S 148 OF T HE IT ACT WOULD NOT BE JUSTIFIED. THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) WAS THEREFORE JUSTIFIED IN DELETING THE ADDITION. BOTH THE GROUNDS OF APPEAL OF THE REVENUE ARE ALSO DISMISSED. 18 8. AS A RESULT APPEAL OF THE DEPARTMENT IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST MARCH 2 010. SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 31/03/2010 ANKIT/LAKSHMIKANT COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD.