S. KUMAR NATIONWIDE LTD, MUMBAI v. ITO 4(3)(4), MUMBAI

ITA 3069/MUM/2009 | 2001-2002
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 306919914 RSA 2009
Assessee PAN AAACS0767K
Bench Mumbai
Appeal Number ITA 3069/MUM/2009
Duration Of Justice 1 year(s) 10 month(s)
Appellant S. KUMAR NATIONWIDE LTD, MUMBAI
Respondent ITO 4(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 11-03-2011
Date Of Final Hearing 16-02-2011
Next Hearing Date 16-02-2011
Assessment Year 2001-2002
Appeal Filed On 11-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R.S.SYAL ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) S KUMAR NATIONWIDE LTD. 99 NIRANJAN GROUND FL. MARINE DRIVE MUMBAI-400021 PAN: AAACS0767K . APPELLANT VS INCOME TAX OFFICER 4(3)(4) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 RESPONDENT APPELLANT BY : SHRI K SHIVRAM RESPONDENT BY : SHRI D SONAGAT E. O R D E R PER VIJAY PAL RAO THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.2.2009 OF THE CIT(A) FOR THE ASSESSM ENT YEAR 2001-02. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL. ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 2 1. THE HON. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. AO ABOUT REOPENING OF THE ASSESSMENT BY ISSUING THE NOTICE U/S 147 OF THE INCOME TAX ACT 1961 INSPTIE OF THE FACT THAT THE SCRUTINY ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE IT ACT 1961 AND ALL THE CLAIM MADE IN THE RETURN HAVE BEEN DULY EXAMINED DURING THE ASSESSMENT PROCEEDINGS. IT IS THEREFORE SUBMITT ED THAT THE ASSESSMENT ORDER U/S 143(3) R.W.S 147 OF THE IT ACT 1961 SHOULD BE CANCELLED 2. WITHOUT PREJUDICE TO GROUNDNO.1 THE HON. CIT(A) HAS ERRED IN NOT ALLOWING REDUCTION OF REVALUATION RESERVE WHILE COMPUTING OF THE BOOK PROFIT U/S 115JB OF THE IT ACT 1961. THE HON. CIT(A) HAS FAILED TO CONSIDER THAT THE SAID REVALUA TION RESERVE HAS BEEN CREDITED TO PROFIT AND LOSS ACCOUN T FILE WITH RETURN OF INCOME. ACCORDINGLY IT IS PRA YED TO YOUR HONOUR TO DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW THE SAID REDUCTION REVOLUTION RESERVE FOR THE PURPOSE OF CALCULATION OF BOOK PROFITS FOR THE PURP OSE OF MAT 3. GROUNDS OF APPEAL NO 1 IS REGARDING THE VALIDITY OF THE REOPENING OF THE ASSESSMENT ORDER U/S 147 OF THE ACT. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGE D IN THE BUSINESS OF TEXTILE MANUFACTURING. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 16.3.2004 BY DETERMINING TH E TOTAL LOSS AT RS.21 84 99 970/- AS AGAINST THE RETURNED LOSS OF RS.16 62 08 789/- AND BOOK PROFIT AT RS.82 19 521/- AS SHOWN IN THE RETURN AT RS.82 19 521/-. SUBSEQUENTLY IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD INCORRECTLY REDUCE D THE REVALUATION RESERVE FROM THE BOOK PROFIT DISREGARD TO SECTION 115JB(1) OF IT ACT. AS PER THE PROVISIONS OF SECTIO N 115JB(1) ANY RESERVE CREATED ON OR AFTER 1.4.1997 AND CREDI TED TO THE ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 3 PROFIT AND LOSS ACCOUNT SHALL NOT BE REDUCED FROM T HE BOOK PROFIT. THEREFORE AO WAS OF THE VIEW THAT INCOM E CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND HENCE NOTICE U/S 148 DATED 22.11.2007 WAS ISSUED AND SERVED ON THE ASSES SEE. THEREAFTER ORDER U/S 143(3) R.W. S 147 WAS PASSED ON 29.7.2008 BY DETERMINING THE TOTAL INCOME U/S 115JB AT RS.3 69 04 241/- 4. THE ASSESSEE CHALLENGED THE VALIDITY OF THE REOP ENING IN APPEAL THE CIT(A) UPHELD THE VALIDITY OF THE REOP ENING . 5. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE ORIGINAL ASSESSMENT U/S 143(3) WAS PASS ED ON 16.3.2004. THE PERIOD OF FOUR YEARS FROM THE DATE O F END OF THE ASSESSMENT YEARS ENDED ON 31.3.2006. THEREAFTER TH E NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 22.11.2007. THE LEARNED AR OF THE ASESEEE HAS SUBMITTED THAT THE AS SESSEE HAS FILED ALL THE DETAILS BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE WAS NO NEW MATERIAL/EVIDENCE THAT HAS COME IN THE HANDS OF THE ASSESSEE. THE LD. AR SUBMITTED THAT THE RE-OPENING OF ASSESS MENT IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF T HE ASSESSMENT YEAR. HE SUBMITTED THAT THE THERE WAS NO LACUNA ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 4 ON THE PART OF THE ASSESSEE WHILE FILING RETURN U/S 139 OR IN RESPONSE TO THE NOTICE U/S 142(1) OR 148 TO DISCLO SE FULLY AND TRULY AND MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT FOR THAT ASSESSMENT YEAR. THE LD. AR OF THE ASSESSEE SUBMIT TED THAT THE REASONS RECORDED FOR REOPENING OF THE ASSESSMEN T DOES NOT ALLEGE ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS. HE SUBMITTED THAT THE PROVISO OF SECTION 147 IS APPLICABLE TO THE PRESENT CASE OF THE ASSESSEE AND HENCE THE ORDER OF RE-OPENING OF THE ASSESSMENT IS BAD IN LAW. 5.1 THE LD. AR SUBMITTED THAT THE REASONS THAT HAV E BEEN DISCLOSED TO THE ASSESSEE DO NOT CONTAIN A FINDING TO THE EFFECT THAT THERE WAS A FAILURE TO FULLY AND TRULY DISCLOS E ALL NECESSARY FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT. IN THESE CIRCUMSTANCES THE CONDITION PRECEDENT TO A VALID E XERCISE OF THE POWER TO REOPEN THE ASSESSMENT AFTER A LAPSE O F FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR IS ABSENT IN THE PRESENT CASE. HE SUBMITTED THAT THE REVENUE HAS POWER TO REOPEN THE ASSESSMENT AFTER FOUR YEARS IN EXCEPTIO NAL CASE. THE PROVISIONS OF LAW PRESCRIBED UNDER THIS SECTION HAS TO BE APPLIED IN VERY STRICT SENSE WITHOUT IT THE RE-OPEN ING OF THE ASSESSMENT AFTER FOUR YEARS ARE BAD IN LAW. THER EFORE THE LEARNED AR SUBMITTED THAT THE REOPENING OF THE ASSE SSMENT U/S 147 IS BAD IN LAW. THE REQUIREMENT OF THE STAT UTE FOR ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 5 REOPENING OF THE ASSESSMENT HAS NOT BEEN FULFILLED BY THE REVENUE. IN SUPPORT OF HIS CONTENTIONS HE HAS RELI ED UPON THE FOLLOWING CASE LAW: L. CIT V/S KELVINATOR OF INDIA LTD 320 ITR 561 (SC ) 2. BHAVESH DEVELOPERS V/S AO 329 ITR 249 (BOM) 3. JASHAN TEXTILE MILLS P LTD V/S DCIT -284 ITR 54 2 (BOM) 4. GERMAN REMEDIES LTD V/S DCIT 287 494 (BOM). 5.2. THE LEARNED AR HAS FURTHER CONTENDED THAT THE AO INVOKED THE PROVISIONS OF THE SECTION 154 BY ISSUI NG A NOTICE DATED 17.2.2005. THE ASSESSEE DULY REPLIED THE SAI D NOTICE VIDE LETTERS DATED 25.2.2005 23.3.06 AND 22.5.07. THE AO THEN DROPPED THE PROCEEDINGS U/S 154 AS NO SUCH ORDER WAS PASSED AND SUBSEQUENTLY ISSUED A NOTICE U/S 148 OF THE ACT ON 22.11.2007 WHICH IS BAD IN LAW. HE RELIED UPON TH E DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF WESTERN OUTDOOR INTERACTIVE (P) LTD REPORTED IN 286 ITR 620 (BOM) AS WELL AS THE DECISION OF THE HON MADRAS HIGH CO URT IN THE CASE OF CIT V/S EID PARRY LTD REPORTED IN 216 I TR 489 (MAD). 5.3 ON THE OTHER HAND THE LEARNED DR HAS SUBMITTE D THAT THE ASSESSEE HAS WRONGLY REDUCED THE REVALUATION RESERVE ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 6 FROM THE BOOK PROFIT WHICH IS AGAINST THE PROVISION S OF SECTION 115JB OF THE ACT AND SUBSEQUENTLY WHEN THE AO NOTI CED THIS HE REOPENED THE ASSESSMENT BY ISSUING THE SHOW CAUS E NOTICE U/S 148. HE HAS FURTHER SUBMITTED THAT THE NECES SARY APPROVAL WAS OBTAINED BY THE AO BEFORE REOPENING T HE ASSESSMENT. THUS REOPENING IS AS PER THE PROVISIO NS OF LAW. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORIT IES. THE LD. DR RELIED UPON THE DECISION OF THE HON. DELHI HIGH COURT IN THE WRIT PETITION (CIVIL) NO. 9036 OF 2007 DATE D 04.1.2011 IN THE CASE OF HONDA SIEL POWER PRODUCTS LIMITED V/S DCIT AND SUBMITTED THAT THE DELHI HIGH COURT HAS HELD THAT WHEN THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT THAT IRRESPECTIVE OF THE ORIGINAL ASSESSMENT PASSED UNDER SECTION 143(3) THE REOPENING BEYOND FOUR YEARS IS VALID. HE HAS FURT HER CONTENDED IN THE SAID CASE ALSO THE HON. DELHI H IGH COURT AFTER CONSIDERING THAT THE AO INITIALLY BY INVOKI NG THE PROVISIONS OF SECTION 154 BY ISSUING THE NOTICE AND SUBSEQUENTLY RESORTED TO SECTION 147 AND HELD THAT THE REOPENING IS VALID. 5.4. WE HAVE CONSIDERED THE RIVAL CONVENTIONS AND RELEVANT RECORD. IT IS UNDISPUTED FACT THAT THE AMOUNT OF R EVALUATION RESERVE HAS BEEN DULY SHOWN BY THE ASSESSEE IN THE PROFIT ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 7 AND LOSS ACCOUNT. THE AO HAS COMPLETED THE ORIGINA L ASSESSMENT ON 16.3.2004 U/S 143(3) OF THE ACT WHERE BY COMPUTED THE BOOK PROFIT U/S 115JB AFTER CONSIDERIN G THE RECORD AND EXPLANATION OF THE ASSESSEE. IN THE SAI D COMPUTATION THE AO HAS EXAMINED THE ISSUE OF COMPU TATION OF BOOK PROFIT. SUBSEQUENTLY THE AO HAS ISSUED NOTIC E UNDER SECTION 148 ON 26.1.2007 ON THE REASONS RECORDED IN THE ASSESSMENT ORDER WHICH ARE AS UNDER : IT IS SEEN FROM THE RECORDS THAT THE ASSESSEE HAS INCORRECTLY REDUCED THE REVALUATION RESERVE FROM TH E BOOK PROFIT WITH DISREGARD TO SECTION 115JB(1). AS PER THE PROVISIONS OF SECTION 115JB(1) ANY RESERVE CREATED ON OR AFTER 1.4.1997 AND CREDIT TO PROFIT AND LOSS ACCOUNT SHALL NOT BE REDUCED FROM 5.5 THUS IT IS CLEAR FROM THE REASONS RECORDED BY THE AO THAT NO NEW INFORMATION OR MATERIAL WAS FOUND BY TH E ASSESSING ON THE BASIS OF WHICH HE FORMED OPINION T HAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT BUT THE AO FROM THE RECORD NOTICED THAT THE ASSESSEE HAS INCOR RECTLY REDUCED THE REVALUATION RESERVE FROM THE BOOK PROFI T. THEREFORE IT IS NOT A CASE OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATER IAL RELEVANT AND NECESSARY FOR THE ASSESSMENT. SINCE THE ASSESS MENT HAS BEEN REOPENED AFTER THE EXPIRY OF THE FOUR YEARS FR OM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ORIGINAL AS SESSMENT ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 8 WAS COMPLETED U/S 143(3) THEN IN THE ABSENCE OF FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL THAT ARE NECESSARY FOR ASSESSMENT THE REOPENING I S BARRED AND HIT BY THE PROVISO TO SECTION 147. WE QUOTE TH E FIRST PROVISO TO SECTION 147 AS UNDER : [ INCOME ESCAPING ASSESSMENT. 147. IF THE 23 [ASSESSING] OFFICER 24 [HAS REASON TO BELIEVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR HE MAY SUBJECT TO THE PRO VISIONS OF SECTIONS 148 TO 153 ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION O R RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS THE CASE MAY BE FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT 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 THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A R ETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS 26 NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR: [ PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME OTHER THAN THE INCOME INVOLVI NG MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL REFERENCE OR REVISION WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT.] ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 9 EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT T O DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE U NDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM A MOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDE RSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS DEDUCTION ALLOWANCE OR RELIEF IN THE RETURN ; (C) WHERE AN ASSESSMENT HAS BEEN MADE BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSE D ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXC ESSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR A NY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.] EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION THE ASSESSING OFFI CER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE WHICH HAS ESCAPED ASSESSMENT AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 10 NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB -SECTION (2) OF SECTION 148 . ] 5.6 IN VIEW OF THE VARIOUS DECISIONS OF HIGH COURT S RELIED UPON BY THE ASSESSEE (SUPRA) THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AND LIABLE TO BE SET ASID E. ACCORDINGLY WE SET A SIDE THE REASSESSMENT AS BAD IN LAW. 6. SO FAR AS THE DECISION RELIED UPON BY THE LEARNE D DR IN THE CASE OF HONDA SIEL POWER PRODUCTS LIMITED V/S DCIT (SUPRA) IS CONCERNED THE HON. DELHI HIGH COURT H AS DECIDED THE CASE ON THE BASIS OF FACTS AS RECORDED IN 14-15 AND IN PARAGRAPHS 22 AS UNDER : 14. IN THE OBJECTION DATED 14TH NOVEMBER 2007 FIL ED BY THE PETITIONER BEFORE THE ASSESSING OFFICER ON F ACTS THE PETITIONER HAD PLEADED AS UNDER : IN THE CASE OF THE ASSESSEE THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. FURTHER IT WOULD BE EVI DENT FROM THE REASONS PROVIDED FOR REOPENING THE ASSESSMENT THAT THE REASSESSMENT HAS BEEN INITIATED ON APPRECIATION OF THE PAPERS/DOCUMENTS FURNISHED ALONGWITH THE RETURN OF INCOME. THE NOTICE UNDER TH E SECTION 148 OF THE ACT INITIATING THE REASSESSMENT PROCEEDINGS THEREFORE COULD VALIDLY BE ISSUED TIL L 31- 03-2005 IN TERMS OF THE PROVISO TO SECTION 147 OF T HE ACT. IN THE CASE OF THE ASSESSEE NONE OF THE REQUIREMENT OF THE PROVISO TO SECTION 147 OF THE AC T APPLY IN AS MUCH AS THERE WAS NO FAILURE TO FILE RE TURN OF INCOME NOR IS THERE ANY ALLEGATION AS TO FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT. 15. IT IS CLEAR FROM THE AFORESAID PARAGRAPH THE PETITIONER HAS ACCEPTED THAT MATERIAL PARTICULAR ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 11 REFERRED TO IN THE FIRST PROVISO NOT ONLY REFERS TO DETAILS IN THE RETURN BUT ALSO EXPLANATIONS AND DET AILS FURNISHED DURING THE COURSE OF ASSESSMENT. THE PETITIONER HAD NOT STATED ANYTHING OR GIVEN FACTUAL MATRIX TO JUSTIFY AND STATE THAT THE MATERIAL FACTS HAD BEEN FULLY AND TRULY DISCLOSED IN THE ASSESSMENT PROCEEDINGS AND THERE WAS NO OMISSION OR FAILURE ON THE PART OF THE PETITIONER. EXPLANATION TO SECTION 147 STIPULATES THAT MERE PRODUCTION OF BOOKS OF ACCOUNT S OR OTHER EVIDENCE IS NOT SUFFICIENT. (REFER PARAGRA PH 11 ABOVE WHEREIN JUDGMENT IN THE CONSOLIDATED PHOTO AND FINVEST LTD. (SUPRA) HAS BEEN QUOTED). THEREFORE MERELY BECAUSE MATERIAL LIES IMBEDDED IN MATERIAL OR EVIDENCE WHICH THE ASSESSING OFFICER COULD HAVE UNCOVERED BUT DID NOT UNCOVER IS NOT A GOOD GROUND TO DENY OR STRIKE DOWN A NOTICE FOR REASSESSMENT. WHETHER THE ASSESSING OFFICER COULD HAVE FOUND THE TRUTH BUT HE DID NOT DOES NOT PRECL UDE THE ASSESSING OFFICER FROM EXERCISING THE POWER OF RE- ASSESSMENT TO BRING TO TAX THE ESCAPED INCOME. 16.. 17 18. 19 20. 21 22. 22. IN THE PRESENT CASE THE ASSESSEE IN RESPON SE TO THE NOTICE UNDER SECTION 154 OF THE ACT HAD OBJECTED TO THE RECTIFICATION PROCEEDINGS. IT WAS SUBMITTED THAT RECTIFICATION PROCEEDINGS UNDER SECT ION 154 OF THE ACT WERE NOT JUSTIFIED AND WITHOUT JURISDICTION AS THERE WAS NO MISTAKE OR ERROR APPAR ENT FROM THE RECORD. WE HAVE EXAMINED THE SECOND GROUND. THE ASSESSING OFFICER COULD NOT HAVE RESORTED TO SECTION 154 PROCEEDINGS TO DISALLOW EXPENDITURE UNDER SECTION 14A OF THE ACT. THIS WAS NOT POSSIBLE IN 154 PROCEEDINGS AS IT WAS NOT AN ER ROR OR MISTAKE APPARENT FROM THE RECORD.THE WRIT PETITI ON STANDS ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS. ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 12 6.1 IT IS CLEAR THAT FROM FACTS IN THE ABOVE DEC ISION THAT THE SAME IS NOT APPLICABLE IN THE PRESENT CASE BECA USE THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISC LOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR FRA MING THE ASSESSMENT. SECONDLY THE PROCEEDINGS U/S 154 IN T HE THAT CASE WAS INITIATED IN RESPECT OF SOME OTHER ISSUES AND NOT IN RESPECT OF THE ISSUE WHICH WAS IN THE REASSESSMEN T. 7. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE HUMBLE VIEW THAT THE DECISION OF THE HON.DELHI HIGH COURT RELIED UPON BY THE DR IS NOT APPLICABLE TO THE PRESENT CASE. S INCE WE HAVE HELD THAT THE REOPENING IS INVALID THEREFOR E WE DO NOT PROPOSE TO GO INTO THE MERITS OF THE CASE. AS RAISE D IN THE GROUND NO.2 OF THE APPEAL. 8. IN THE RESULT THE APPEAL OF HE ASSESSEE IS PART LY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 11 MARCH 2011 SD SD (R.S.SYAL) (VIJ AY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ON THIS 11 TH DAY OF MARCH 2011 SRL:9311 ITA NO. 3069/MUM/2009 (ASSESSMENT YEAR 2001-02) 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI