JCIT (OSD), New Delhi v. M/s. SMCC Construction India Ltd., New Delhi

ITA 4789/DEL/2011 | 2003-2004
Pronouncement Date: 27-07-2012 | Result: Dismissed

Appeal Details

RSA Number 478920114 RSA 2011
Assessee PAN AAACM7822P
Bench Delhi
Appeal Number ITA 4789/DEL/2011
Duration Of Justice 8 month(s) 25 day(s)
Appellant JCIT (OSD), New Delhi
Respondent M/s. SMCC Construction India Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 27-07-2012
Date Of Final Hearing 04-07-2012
Next Hearing Date 04-07-2012
Assessment Year 2003-2004
Appeal Filed On 02-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG JUDICIAL MEMBER I.T.A.NO.4789/DEL/2011 ASSESSMENT YEAR : 2003-04 JCIT (OSD) VS SMCC CONSTRUCTION INDIA LTD. CIRCLE-9(1) 23 LOCAL SHOPPING CENTRE ROOM NO. 163 MADANGIR NEW DELHI-110062 C.R. BUILDING (PAN AAACM7822P) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. BANITA DEVI SR.DR RESPONDENT BY : SHRI G.C.SRIVASTAVA MS GUNJAN JAIN O R D E R PER CHANDRA MOHAN GARG JUDICIAL MEMBER PETITION FOR CONDONATION OF DELAY AT THE OUTSET IT WOULD BE APPROPRIATE TO DECIDE T HE APPLICATION FOR CONDONATION OF DELAY FILED BY THE REVENUE APPELLANT . PETITION FOR CONDONATION STATES THAT THE APPEAL IS BEING FILED O N 2.11.2011 AND THERE IS A DELAY OF 48 DAYS. THE MAIN CAUSE OF DELAY HAS BEEN SUBMITTED DESPITE THE FACT THAT THE COPY OF THE AUTHORIZATION MEANT FOR D CIT CIRCLE 9(1) WAS RECEIVED BY THE OFFICE OF ADDL.CIT RANGE 9 NEW DE LHI ON 17.8.2011 BUT THE SAME COULD NOT BE FORWARDED TO THE DCIT CIRCLE 9(1) FOR APPROPRIATE ACTION. FURTHER DURING THIS PERIOD THE THEN ADDL . CIT RANGE-9 NEW DELHI ITA NO.4789/DEL/2011 2 WAS ALSO TRANSFERRED AND HANDED OVER CHARGE TO PRES ENT ADDL. CIT RANGE-9 ON 19.9.2011. THE LD. ASSESSEES REPRESENTATIVE (F OR SHORT THE AR) RESISTED HIMSELF TO CONTROVERT ABOVE CAUSE OF DELAY IN FILIN G THIS APPEAL AND HE LEFT THIS ISSUE FOR ADJUDICATION BY THIS TRIBUNAL WITH A SUBMISSION THAT HE HAS NO OBJECTION IN CONDONATION OF DELAY IF THE TRIBUNAL F INDS IT JUST AND PROPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. AFTER CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF THE PARTIES AND PERUSAL OF RECORD WE OBSERVE THAT UNDISPUTEDLY THE RE IS A DELAY OF 48 DAYS IN FILING OF THIS APPEAL. AS PER UNCHALLENGED CAUSE A S OFFERED BY THE APPELLANT WE OBSERVE THAT THE REVENUE DEPARTMENT IS A DEPARTM ENT OF CENTRAL GOVERNMENT. THE INITIAL DECISION AND ACTION WAS TA KEN AT APPROPRIATE TIME AND A LETTER OF AUTHORIZATION WAS SENT TO ADDL. CIT CIRCLE 9 NEW DELHI FOR FURTHER COMMUNICATION TO THE DCIT CIRCLE 9(1) NEW DELHI AND IT WAS RECEIVED ON 17.8.2011. AFTER THIS OFFICIAL PROCEED ING THE COMMUNICATION WAS TO REACH THE DCIT CIRCLE 9(1) NEW DELHI FOR F ILING OF APPEAL BUT DUE TO TRANSFER AND HANDING OVER AND TAKING OVER CHARGE BY RESPECTIVE OFFICERS THIS COMMUNICATION WAS DELAYED AND FINALLY THIS APPEAL C OULD BE FILED ON 2.11.2011 WITH A DELAY OF 48 DAYS. 3. ON CAREFUL EXAMINATION OF CIRCUMSTANCES LEADING TO DELAY WE ARE OF THE VIEW THAT THERE IS NO MALAFIDE OR WILLFUL OMISS ION OF DUTY ON THE PART OF ITA NO.4789/DEL/2011 3 THE OFFICERS OF THE REVENUE AND THE CAUSE OFFERED F OR THE SAME SEEMS TO BE BONAFIDE AND ACCEPTABLE. ACCORDINGLY WE ARE INCLI NED TO ALLOW THE APPLICATION/PETITION AND CONSEQUENTLY THE 48 DAYS DELAY IN FILING OF THIS APPEAL IS HEREBY CONDONED. IN THE RESULT WE ADMIT THE APPEAL AND PROCEED TO DECIDE IT ON MERITS AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THE MAIN APPEAL 4. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER DATED 31.5.2011 OF THE CIT(A)-XII NEW DELHI FOR THE A.Y. 2003-04. THE ONLY GROUND TAKEN IN THIS APPEAL IS AS UNDER:- THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN QUASHING THE ASSESSMEN T PROCEEDINGS U/S 147/144 MADE BY THE AO. 5. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED RETURN ON 02.12.2003 DECLARING INCOME OF RS.2 26 60 740 AND T HE SAME WAS PROCESSED ON 31.3.2004 U/S 143(1) OF THE INCOME TAX ACT 1961 AND THE ASSESSMENT WAS COMPLETED ON 30.3.2006 U/S 143(3) OF THE ACT. LATER ON 23.3.2010 THE ASSESSEE WAS SERVED A NOTICE U/S 148 OF THE ACT ON THE GROUND THAT THERE WAS AN ESCAPEMENT OF INCOME AND THEREBY DIRECTING THE A SSESSEE TO FURNISH ITS RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF SE RVICE OF SAID NOTICE. THE ASSESSEE FILED RETURN AND IT WAS PROCESSED ON 21.4. 2010 U/S 148 OF THE ACT ITA NO.4789/DEL/2011 4 AND ALSO REQUESTED THE DEPARTMENT TO FURNISH THE RE ASONS RECORDED FOR ISSUING THE NOTICE U/S 148 OF THE ACT. 6. THE AO RECORDED FOLLOWING REASONS FOR ISSUING NO TICE U/S 148 OF THE ACT:- SECTION 37 OF THE INCOME TAX ACT 1961 PROVIDES THAT ANY EXPENDITURE NOT BEING EXPENDITURE OF CAPIT AL NATURE LAID OUT WHOLLY OR EXCLUSIVELY FOR THE PURPO SE OF BUSINESS IS ALLOWABLE AS DEDUCTION IN COMPUTATION O F INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF THE BUSINESS OR PROFESSION. THE SUPREME COURT HAD HELD (232 ITR) SOUTHERN SWITCHGEAR LTD. VS CIT AND ANOTHER 11 DECEMBER 1997) THAT GRANT OF TECHNICAL AID FEE FOR SETTING UP FACTORY AND RIGHT TO SELL THE PR ODUCTS AS PER COLLABORATION AGREEMENT IS NOT ALLOWABLE AS 100 % REVENUE EXPENDITURE AND WAS TO BE TREATED AS 25% CAPITAL EXPENDITURE. IN THE INSTANT CASE IT HAS BEEN NOTICED THAT THE ASSESSEE COMPANY HAD CLAIMED AND WAS ALLOWED AS AN EXPENDITURE OF RS.2 98 58 949/- TO PROFIT AND LOSS ACCOUNT ON ACCOUNT OF ROYALTY ON SALES PAID TO MITSUI CONSTRUCTION CO. LTD. JAPAN IN LIEU OF TECHNICAL INFORMATION AND RIGHTS OBTAINED BY THE ASSESSEE TO PROVIDE CONTRACT SERVICES IN INDIA. IN VIEW OF THE ABOVE MENTIONED PROVISIONS OF THE ACT AND JUDGMENT OF HON BLE SUPREME COURT 25% OF THE EXPENDITURE SHOULD HAVE B EEN TREATED AS CAPITAL EXPENDITURE AND WAS NOT ALLOWABL E AS REVENUE EXPENDITURE. IN VIEW OF THIS ABOVE I HAVE REASONS TO BELIEVE THAT AN AMOUNT OF RS.74 64 737/- HAS ESCAPED ASSESSMENT WITHIN MEANING OF SECTION 147 OF THE IT ACT 1961. THE ASSESSEE HAD DEBITED RS.16 159 537/- TO PROFIT AND LOSS ACCOUNT ON ACCOUNT OF TECHNICAL KNOW-HOW FEES AND OUT OF THIS RS.93 32 881/- BEING PRE PAID FEE WAS ADDED BACK IN THE COMPUTATION SHEET BY THE ASSESSEE ITA NO.4789/DEL/2011 5 ITSELF. IN THIS WAY RS.68 26 656/- WAS CLAIMED AN D ALLOWED FOR THE RELEVANT PREVIOUS YEAR ON ACCOUNT O F TECHNICAL KNOW-HOW FEE. AS THIS EXPENDITURE WAS INCURRED FOR OBTAINING TECHNICAL KNOW-HOW/INFORMATI ON PERTAINING TO THE BUSINESS OF THE ASSESSEE WHICH W OULD GIVE AN ENDURING BENEFIT TO THE ASSESSEE AND ALSO THE TECHNICAL KNOW-HOW BEING INTANGIBLE ASSET IT SHOU LD HAVE BEEN CAPITALIZED AND DEPRECIATION @25% SHOULD HAVE BEEN ALLOWED. HENCE OUT OF AMOUNT OF RS.68 26 656/- DEBITED UNDER THE SAID AN AMOUNT OF RS.17 06 664/- BEING 25% OF THE SAME WAS ALLOWABLE AND THE BALANCE OF RS.51 19.992/- WAS NOT ALLOWABLE. H ENCE AMOUNT OF RS.51 19 992/- WAS EXCESS CLAIMED BY THE ASSESSEE. IN VIEW OF THIS ABOVE I HAVE REASONS TO BELIEVE THAT AN AMOUNT OF RS.5119992/- HAD ESCAPED ASSESSME NT WITHIN THE MEANING OF THE SECTION 147 OF THE I.T.AC T 1961. 7. AFTER DUE CONSIDERATION OF THE SUBMISSIONS OF TH E ASSESSEE THE AO NOTED THAT THE FEE FOR TECHNICAL SERVICES PAID BY T HE ASSESSEE HAS BEEN DEPRECIATED FOR SEVEN YEARS AND NOT FOR ONE SINGLE YEAR. THEREFORE THE AO HELD THAT THE ASSESSEE HIMSELF HAS CONSIDERED THE A MOUNT PAID FOR FTS AS CAPITAL IN NATURE AND THE AMOUNT CLAIMED BY THE ASS ESSEE ON ACCOUNT OF FTS DURING THE YEAR AMOUNTING TO RS.68 32 000 BEING 1/7 TH OF THE TOTAL PAYMENT OF RS.4 78 24 000 DOES NOT CALL FOR ANY FURTHER DIS ALLOWANCE. THE REASSESSMENT WAS FINALIZED WITH NET DISALLOWANCE AM OUNTING TO RS.33 59 131 AND AFTER GIVING CREDIT OF PREPAID TAXES THE AO IS SUED DEMAND NOTICE AND CHALLANS AND ALSO ORDERED FOR CHARGE OF INTEREST U/ S 234B 234C AND 234D OF THE ACT AND WITHDRAWING THE INTEREST U/S 244A OF TH E ACT. ITA NO.4789/DEL/2011 6 8. THE ASSESSEE INVOKED THE CIT(A) WHO ALLOWED GROU ND NO.1 AND QUASHED THE PROCEEDINGS INITIATED BY THE AO U/S 147 /148 OF THE ACT. THE LD. CIT(A) NOTED THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE AO HAD SOUGHT DETAILS OF EXPENDITURE INCURRED BY THE A PPELLANT IN FOREIGN CURRENCY VIDE NOTICE DATED 03.03.2006 AND PRIOR PER IOD EXPENDITURE CONSISTING OF FEE FOR TECHNICAL SERVICES (FTS) OF R S.3 16 64 463 PAID TO SUMITOMO. THE LD. CIT(A) ALSO NOTED THAT THE APPEL LANT SUBMITTED THE COPY OF TECHNICAL COLLABORATION AGREEMENT WHICH PROVIDES FOR ROYALTY AND FTS PAYMENTS TO SUMITOMO AND ALL REQUISITE DETAILS WITH RESPECT TO THE SAID COLLABORATION AGREEMENT ALONG WITH CHALLANS OF TDS WITH ROYALTY AND FTS SHOWING THE DEPOSIT OF TDS TO THE DEPARTMENT. THE ASSESSEE ALSO SUBMITTED THE COPY OF THE APPROVALS RECEIVED FROM MINISTRY OF INDUSTRY FOR ROYALTY PAYMENT WITH THE AO. WE OBSERVE THAT BESIDES ALL O THER OBSERVATIONS AND DISCUSSION THE LD. CIT(A) QUASHED THE PROCEEDINGS U/S 148 OF THE ACT WITH THE FOLLOWING OBSERVATIONS:- THAT ASSESSING OFFICER HAS NOWHERE STATED THAT ASS ESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. FURTHER THE ASSESSEES C ASE IS SQUARELY COVERED BY MERCURY TRAVELS LTD. 133 TAXMAN 238 CALCUTTA HIGH COURT. IN THE REASONS FOR REOP ENING IT HAS NOT BEEN ALLEGED THAT THERE HAS BEEN AN OMIS SION OR A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE F ULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT A ND ALSO NOT NOTED IN RECORDED REASONS AS TO WHAT OTHER PRIM ARY FACTS WERE REQUIRED TO BE DISCLOSED BY THE ASSESSEE AND HAS ITA NO.4789/DEL/2011 7 NOT BEEN DISCLOSED BEFORE THE AO AT THE TIME OF ASS ESSMENT U/S 143(3) THEREFORE CONSIDERING THE FACTS STATED ABOVE THE PROCEEDINGS U/S 147/148 ARE QUASHED. 9. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE ENTIRE RECORD BEFORE US WITH ALL THE RE LEVANT CITATIONS. LD. DR SUBMITTED THAT THE CIT(A) QUASHED THE PROCEEDINGS U /S 147 & 148 OF THE ACT ON BASELESS REASONS AND GROUNDS AS THE ASSESSEE COM PANY HAD CLAIMED AND WAS ALLOWED AN EXPENDITURE OF RS.2 98 58 949 TO THE PROFIT AND LOSS ACCOUNT ON PAYMENT OF ROYALTY ON SALES PAID TO SUMITOMO MIT SUI CONSTRUCTION CO. LTD. JAPAN IN LIEU OF TECHNICAL INFORMATION AND RI GHTS OBTAINED BY THE ASSESSEE COMPANY TO PROVIDE CONTRACT SERVICES IN IN DIA. HE ALSO SUBMITTED THAT IN VIEW OF RELEVANT PROVISIONS OF THE ACT AND JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF SOUTHERN SWITCHGEAR LT D. VS CIT AND OTHERS REPORTED AS 232 ITR 359(SC) IT WAS HELD THAT THE GRANT OF TECHNICAL AID FEE FOR SETTING UP FACTORY AND RIGHT TO SELL T HE PRODUCT AS PER COLLABORATION AGREEMENT IS NOT ALLOWABLE AS 100% RE VENUE EXPENDITURE AND WAS TO BE TREATED AS 25% CAPITAL EXPENDITURE WHICH WAS NOT ALLOWABLE AS REVENUE EXPENDITURE. THE LD. DR CONCLUDED THAT THE AO HAS REASON TO BELIEVE THAT THE AMOUNT OF RS.74 64 737/- HAS ESCAP ED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. ITA NO.4789/DEL/2011 8 10. THE COUNSEL APPEARING FOR THE ASSESSEE SUPPORTE D THE IMPUGNED ORDER AND SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF WEL INTERTRADE (P) LTD. VS ITO REPORTED AS (2009) 178 TAXMAN 27 (DELHI) HELD THAT SINCE THE NOTICE U/S 148 OF THE ACT HA D BEEN ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR THE PROVISO TO SECTION 147 WOULD COME INTO PLAY. A PLA IN READING OF SAID PROVISO MAKES IT CLEAR THAT WHERE THE PROVISIONS OF SECTION 147 ARE BEING INVOKED AFTER THE PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IN ADDITION TO THE AO HAVING REASON TO BELIEV E THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IT MUST B E ESTABLISHED AS A FACT THAT SUCH ESCAPEMENT OF ASSESSMENT HAS BEEN OCCASIO NED BY EITHER THE ASSESSEE FAILING TO MAKE A RETURN U/S 139 OF THE AC T ETC. OR BY REASON OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE YEAR UNDER CON SIDERATION. HE SUBMITTED THAT IN THE INSTANT CASE THE RELEVANT AY IS 2003-0 4 AND THE PROCEEDINGS U/S 147 & 148 OF THE ACT WERE INITIATED WITH A SERVICE OF NOTICE DATED 23.3.2010 U/S 148 OF THE ACT. 11. THE COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THA T HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF J AL HOTELS CO. LTD. VS ADIT REPORTED AS (2009) 184 TAXMAN 1 (DELHI) HELD THAT INCOME ITA NO.4789/DEL/2011 9 ESCAPING ASSESSMENT ON ACCOUNT OF NON-DISCLOSURE OF PRIMARY FACTS ASSESSMENT WAS SOUGHT TO BE REOPENED U/S 147 AND 14 8 OF THE ACT. IN THIS CASE THE HONBLE HIGH COURT HELD THAT THERE WAS NO MATERIAL IN THE HANDS OF REVENUE LEADING TO THE VIEW THAT THERE WAS REASON T O BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT AND HONBLE HIGH COURT ALSO NOTED THAT THIS WAS THE CASE OF CLASSIC INSTANCE OF CHANGE OF OPINION ON TH E SAME MATERIAL WHICH WAS AVAILABLE BEFORE THE AO AT THE TIME OF ORIGINAL ASS ESSMENT. THE AR SUBMITTED THAT IN THE PRESENT CASE IN HAND THE AO HAS NO REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT AND HE WORKE D ON THE SAME MATERIAL AND FACTS WHICH WERE BEFORE HIM AT THE TIME OF ORIG INAL ASSESSMENT AND THERE WAS NO NEW MATERIAL OR FACTS AT THE TIME OF ORDERIN G FOR REOPENING OF ASSESSMENT U/S 147 AND 148 OF THE ACT. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL ARGUMENT S OF BOTH THE PARTIES IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD. ON B ARE READING OF THE ORDER OF LD. CIT(A) WE OBSERVE THAT THE LD. CIT(A) RELIED O N THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF SHIVNATH SINGH VS ACIT CALCUTTA REPORTED AS (1971) 82 ITR 147(SC) WHEREIN THEIR LORDSHIPS REVERSING THE JUDGEMENT OF KOLKATA HIGH COURT HELD THAT THE WORDS REASON TO BELIEVE SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST AND REASONABLE ITA NO.4789/DEL/2011 10 PERSON BASED UPON REASONABLE GROUNDS AND THAT THE I NCOME TAX OFFICER MAY ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION GOSSIP OR RUMOUR. THE ITO WOULD BE ACTING WITHOUT JURISDICTI ON IF THE REASON FOR HIS BELIEF THAT THE CONDITIONS ARE SATISFIED DOES NOT E XIST OR IS NOT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. TH E COURT CAN ALWAYS EXAMINE THIS ASPECT THROUGH THE DECLARATION OR SUFF ICIENCY OF THE REASONS FOR THE BELIEF CANNOT BE INVESTIGATED BY THE COURT. 13. FROM THE IMPUGNED ORDER WE OBSERVE THAT THE LD . CIT(A) ALSO TOOK THE JUDICIAL GUIDANCE FROM THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. VS ITO CIRCLE-I WARD A RAJKOT REPORTED AT (1977) 106 ITR 1(SC). THE RELEVANT OPE RATIVE PARA OF THIS JUDGEMENT OF HONBLE APEX COURT IS BEING REPRO DUCED BELOW FOR THE SAKE OF CLARITY IN THE FINDINGS:- IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION. IF SO IT IS ESSENTIAL TH AT THOSE WHO ARE ENTRUSTED WITH THE TASK OF CALCULATING AND REALIZING THAT PRICE SHOULD FAMILIARIZE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL-VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEIR PART C AN ONLY BE AT THE COST OF THE NATIONAL EXCHEQUER AND MUST NECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT THE POLICY IS LAW IS T HAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROC EEDINGS THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE ITA NO.4789/DEL/2011 11 REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICI AL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. SO FAR AS THE INCOME TAX ASSESSMENT ORDE RS ARE CONCERNED THEY CANNOT BE REOPENED ON THE SCORE OF INCOME ESCAPING ASSESSMENT UNDER SECTION 147 OF THE ACT OF 1961 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNLESS THERE BE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 14. WE ALSO OBSERVE THAT THE LD. CIT(A) ALSO RELIED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF FLUOROCHE MICALS LTD. VS DCIT REPORTED AS (2009) 319 ITR 282 (GUJ.) WHEREIN THEIR LORDSHIPS HELD THAT FOR REASSESSMENT U/S 147 AND 148 OF THE ACT N OTICE ISSUED TO THE ASSESSEE BEYOND FOUR YEARS IS NOT VALID. THE HONB LE GUJARAT HIGH COURT REITERATING THE JUDGMENT OF HONBLE APEX COURT IN T HE CASE OF PARASHURAM POTTERY WORKS CO. LTD. VS ITO (SUPRA) HELD THAT THE ASSESSMENT OF TAX UNDER THE WRONG HEAD BY THE AO CANNOT JUSTIFY THE IMPOSIT ION OF BURDEN OF TAX ON THE ASSESSEE BEYOND THE PRESCRIBED PERIOD OF LIMITA TION AS NONE OF THE CONDITIONS MENTIONED IN THE PROVISO TO SECTION 147 OF THE ACT EXIST. THEIR LORDSHIPS ALSO OBSERVED THAT THE ASSESSMENT FOR THE YEAR IN QUESTION CANNOT BE PERMITTED TO BE REOPENED IN THE ABSENCE OF FULFI LLMENT OF PRE-REQUISITE CONDITIONS AS CONTAINED IN THE PROVISO TO SECTION 1 47 OF THE ACT. ITA NO.4789/DEL/2011 12 15. IN THE CASE IN HAND IT IS EVIDENT FROM THE MAT ERIAL ON RECORD THAT THE AO REOPENED THE ASSESSMENT FOR THE AY 2003-04 BY IS SUING NOTICE DATED 23.03.2010 U/S 147 AND 148 OF THE ACT. THEREFORE THE PROVISO TO SECTION 147 OF THE ACT WOULD COME INTO PLAY AND THE SAID PR OVISO MAKES IT CLEAR THAT WHERE THE PROVISIONS OF SECTION 147 OF THE ACT ARE BEING INVOKED AFTER THE PERIOD OF FOUR YEARS FROM THE END OF RELEVANT A.Y. I.E. IN THE PRESENT AY 2003-04 THE REOPENING OF ASSESSMENT WOULD NOT BE V ALID. THE JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF PARASHURAM POTTER Y WORKS CO. LTD. VS ITO (SUPRA) IS RESPECTFULLY RELIED. 16. WE FINALLY OBSERVE THAT IN THE PRESENT CASE TH E AO INITIATED THE PROCEEDINGS OF REOPENING OF ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVA NT ASSESSMENT YEAR. THEREFORE THE INITIATION OF PROCEEDINGS WERE VOID AB INITIO WHICH CANNOT BE SUSTAINED ON LEGAL GROUNDS AND THE LD. CIT(A) RIGHT LY QUASHED THESE PROCEEDINGS BY THE IMPUGNED ORDER. 17. WE ALSO OBSERVE THAT THE REASONS RECORDED BY TH E AO FOR ISSUING NOTICE U/S 148 OF THE ACT ARE BASED ON THE MATERIAL WHICH WAS BEFORE HIM AT THE TIME OF ORIGINAL ASSESSMENT. WE ALSO OBSERVE T HAT THE REASON TO ITA NO.4789/DEL/2011 13 BELIEVE SHOULD COME INTO EXISTENCE ONLY WHEN SOME MATERIAL FACTS HAVE NOT BEEN DISCLOSED OR FURNISHED BY THE ASSESSEE AT THE TIME OF ASSESSMENT U/S 143(3) OF THE ACT AND WHICH CAME TO THE KNOWLEDGE O F THE AO SUBSEQUENT TO COMPLETION OF ORIGINAL ASSESSMENT. ONLY IN THESE C IRCUMSTANCES THE AO CAN ASSUME JURISDICTION TO INITIATE REASSESSMENT U/S 14 8 OF THE ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR . IN THE CASE OF GUJARAT FLUOROCHEMICALS LTD. VS DCIT REPORTED AS (2009) 319 ITR 282 (GUJ.) (SUPRA) THE HONBLE GUJARAT HIGH COURT HELD THAT T HE ASSESSEE HAVING MADE FULL DISCLOSURE OF MATERIAL FACTS IN THE RETURN ACC OMPANIED BY SEVERAL ANNEXURES AND ENCLOSURES THE ASSESSMENT COULD NOT BE REOPENED BEYOND FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR ONLY FOR THE REASON THAT CERTAIN INCOME HAS BEEN WRONGLY ASSESSED UNDER A WR ONG HEAD OF INCOME. WE ARE UNABLE TO SEE EXISTENCE OF ANY ADDITIONAL MA TERIAL OR OPINION SUBSEQUENT TO THE COMPLETION OF ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. THEREFORE ON MERITS THE ACTION OF THE AO FOR REOP ENING OF ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT AFTER SUBSTANTIAL LAPSE OF TIME AND AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSE SSMENT YEAR IS NOT JUSTIFIED. ACCORDINGLY WE ARE UNABLE TO SEE ANY I NFIRMITY OR PERVERSITY IN THE ORDER OF THE LD. CIT(A) QUASHING THE PROCEEDING S U/S 147 AND 148 OF THE ACT. ACCORDINGLY WE HAVE NO REASON OR OCCASION TO INTERFERE WITH THE ITA NO.4789/DEL/2011 14 IMPUGNED ORDER. FINALLY WE HOLD THAT THIS APPEAL I S DEVOID OF MERITS AND DESERVES TO BE DISMISSED AND WE DISMISS THE SAME. 18. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.7.2012. SD/- SD/- (S.V. MEHROTRA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 27TH JULY 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT.REGISTRAR