ACIT, Kanpur v. Mansukh Lal Kothari (HUF), Kanpur

ITA 788/LKW/2005 | 1996-1997
Pronouncement Date: 25-03-2011

Appeal Details

RSA Number 78823714 RSA 2005
Bench Lucknow
Appeal Number ITA 788/LKW/2005
Duration Of Justice 5 year(s) 4 month(s) 28 day(s)
Appellant ACIT, Kanpur
Respondent Mansukh Lal Kothari (HUF), Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Bench Allotted B
Date Of Final Hearing 23-03-2011
Next Hearing Date 23-03-2011
Assessment Year 1996-1997
Appeal Filed On 28-10-2005
Judgment Text
IN THE INCOME TAX APP IN THE INCOME TAX APP IN THE INCOME TAX APP IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B ELLATE TRIBUNAL LUCKNOW BENCH B ELLATE TRIBUNAL LUCKNOW BENCH B ELLATE TRIBUNAL LUCKNOW BENCH B LUCKNOW LUCKNOW LUCKNOW LUCKNOW BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA AND HONBLE SHRI N.K . SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI ITA NO.788/LKW/2005 ASSESSMENT YEAR:1996-97 ACIT CENTRAL CIRCLE V KANPUR V. SHRI MANSUKH LAL KOTHARI (HUF) 24/19 THE MALL KANPUR PAN:AAAHM7117E (APPELLANT) (RESPONDENT) CO NO.10/LKW/2006 ASSESSMENT YEAR:1996-97 SHRI MANSUKH LAL KOTHARI (HUF) 24/19 THE MALL KANPUR V. ACIT CENTRAL CIRCLE V KANPUR (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI P. K. BAJAJ D.R. ASSESSEE BY: SHRI AMIT SHUKLA ADVOCATE O R D E R PER H. L. KARWA: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT( A)-I KANPUR DATED 16.8.2005 RELATING TO ASSESSMENT YEAR 1996-97. IN THE APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1 (A) THE LD. CIT (A)-I KANPUR HAS ERRED IN LAW A ND ON FACTS IN ANNUALLING THE ASSESSMENT MADE U/S 143(3) READ WITH SECTION 148 OF THE I.T. ACT 1961 WITHOUT APPRECIATING THE FACTS OF TH E CASE AND MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 1(B) IN DOING SO THE LD. CIT(A)-I KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE INTEREST INCOME OF RS.11 53 972/- DERIVED BY THE ASSESSEE ON ACCOUNT OF THE PROCEEDS OF THE CAPITAL ISSUE PARKED WITH DESIGNATED BANK ACCOUNT WHICH WAS NOT OFFERED TO TA X BY THE ASSESSEE IN :-2-: ITS RETURN OF INCOME WAS CLEARLY TAXABLE AS PER TH E RATIO OF DECISION OF THE HON'BLE SUPREME COURT REPORTED IN 227 ITR 172 AND 2 48 ITR 449 AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN LA W IN HAVING THE RECOURSE TO PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT 1961 FOR TAXING THE SAID INCOME THAT HAD ESCAPED ASSESSMENT. 1(C) IN DOING SO THE LD. CIT (A)-I KANPUR HAS ERRE D IN LAW AND ON FACTS IN ANNULLING THE RE-ASSESSMENT ONLY ON TECHNICAL GR OUNDS WITHOUT APPRECIATING THAT THE SAID INTEREST INCOME OF RS.11 53 972/- WHICH WAS CLEARLY TAXABLE AS PER THE LAW LAID-DOWN BY THE HON 'BLE APEX COURT WAS NOT OFFERED TO TAX BY THE ASSESSEE IN ITS RETURN OF INC OME AND THEREFORE THE PROVISIONS OF THE SECTION 147 OF THE INCOME TAX ACT 1961 WERE CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE. 1(D) IN DOING SO THE LD. CIT (A)-I KANPUR HAS ERRE D IN LAW AND ON FACTS IN IGNORING THAT THE SAID ESCAPEMENT OF INCOME HAD TAKEN PLACE DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT IN AS MUCH AS THE PR IMARY FACTS REGARDING EARNING OF SAID INTEREST INCOME ON THE PROCEEDS OF THE CAPITAL ISSUE PARKED WITH THE DESIGNATED BANK ACCOUNT AND ALSO ABOUT NET TING OF THE SAID INTEREST INCOME FROM THE EXPENSES ON SHARE ISSUE WH ICH WERE CAPITAL IN NATURE WAS NOT DISCLOSED BY THE ASSESSEE IN ITS RET URN OF INCOME. 2. THE ORDER OF THE LD. CIT(A) I KANPUR BEING ER RONEOUS IN LAW AND ON FATS BE VACATED AND THE ORDER OF THE ASSESSING O FFICER BE RESTORED. 2. THE ABOVE GROUNDS RAISED BY THE REVENUE REVOLVE ARO UND ONE ISSUE AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN ANNULLING T HE ASSESSMENT U/S. 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT 1961 (IN SH ORT THE ACT). 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE WHICH IS AN HUF BY STATUS HAS FILED RETURN SHOWING CAPITAL GAIN AMO UNTING TO $ 9 53 80 689 AND THE SAME WAS CLAIMED AS EXEMPT ON THE GROUND THAT THE ENTIRE AMOUNT HAS BEEN DEPOSITED IN THE CAPITAL GAIN ACCOUNT WITH BANK OF INDIA. :-3-: 4. IN THIS CASE RETURN OF INCOME WAS FILED ON 1.7.1996 SHOWING THE TOTAL INCOME AT $ 95 75 440. THE ASSESSMENT WAS COMPLETED U/S. 143(3 ) OF THE ACT ON 26.10.1998 ON A TOTAL INCOME OF $ 95 75 440. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD 5 00 000 SHARE S OF M/S KOTHARI PRODUCTS LTD. AND CLAIMED EXPENSES OF $ 46 19 311 ON THE SAME. THE NET CONSIDERATION WAS SHOWN AT $ 9 53 80 689 (SHARES SOLD 5 00 000 @ $ 200 PER SHARE I.E. $ 10 00 00 000 MINUS EXPENSES CLAIMED $ 46 19 311) AND AN AMOUNT OF $ 9 53 81 000 WAS DEPOSITED IN THE CAPITAL GAIN SCHEM E FOR THE PURPOSE OF CLAIM EXEMPTION U/S. 54F OF THE ACT AND THE TOTAL CAPITAL GAIN WAS SHOWN AT NIL. THE ASSESSING OFFICER OBSERVED THAT ON THE APPLICATION MONEY RECEIVED FROM PURCHASERS OF SHARES ON BEHALF OF THE ASSESSEE AND THE OTHER OFFERERS A SUM OF $ 28 84 943 HAD BEEN RECEIVED AS INTEREST FROM BANK A ND DEDUCTED FROM OVERALL EXPENSES ON SALE OF SHARES. ACCORDING TO THE ASSES SING OFFICER THIS AMOUNT SHOULD HAVE BEEN OFFERED FOR TAX BY THE ASSESSEE IN THE PROPORTION OF SHARES HELD AND THE SHARES SOLD BY THE PROMOTERS UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER TOOK A VIEW THAT P ROPORTIONATE INTEREST CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE WORK S OUT TO $ 11 53 972. THE ASSESSING OFFICER FURTHER OBSERVED THAT VARIOUS EXP ENSES HAD BEEN REPORTEDLY INCURRED BY THE COMPANY M/S KOTHARI PRODUCTS LTD. IN WHICH THE ASSESSEE WAS A PROMOTER DIRECTOR AND WHOSE SHARES WERE SOLD AS PER DIRECTIONS OF SEBI. M/S KOTHARI PRODUCTS LTD. REPORTEDLY APPORTIONED THE TO TAL EXPENSES TO THE PERSONS WHO WERE THE HOLDER OF THE SHARES. ACCORDING TO TH E ASSESSING OFFICER M/S KOTHARI PRODUCTS LTD. PERFORMED THESE ENTIRE ACTS A S AN AGENT OF THE ASSESSEE WHO HAD GIVEN POWER OF ATTORNEY TO THE COMPANY FOR THIS EFFECT. THE ASSESSING OFFICER OPINED THAT THERE WERE SUFFICIENT REASON TO BELIEVE THAT THE INCOME OF $ 11 53 972 HAD ESCAPED ASSESSMENT. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE FAILED TO OFFER THIS INTEREST INCOME FOR T AX AS A RESULT OF WHICH THE INCOME HAS ESCAPED ASSESSMENT. ACCORDINGLY THE AS SESSMENT WAS REOPENED U/S. 147 OF THE ACT AND NOTICE U/S. 148 OF THE ACT WAS I SSUED ON 20.3.2003. THE ASSESSEE VIDE ITS LETTER DATED 8.4.2003 SUBMITTED T HAT THE PROCEEDINGS U/S. 148 HAVE NOT BEEN VALIDLY INITIATED. THEREAFTER THE AS SESSING OFFICER ISSUED NOTICE U/S. 143(2) OF THE ACT ON 10.9.2003 REQUIRING THE ASSESS EE TO EXPLAIN AS TO WHY :-4-: PROPORTIONATE INTEREST OF $ 11 53 972 BEING REVENUE RECEIPTS MAY NOT BE ASSESSE D TO TAX. THE ASSESSEE FILED REPLY ON 22.12.2003 WHI CH READS AS UNDER:- THIS ISSUED BY YOUR HONOUR IS NOT BASED UPON THE C ORRECT PRINCIPLES OF LAW AND THE CASES ON WHICH YOUR HONOU R RELIED UPON ARE NOT RELEVANT IN MY INSTANT CASE. YOUR HONOUR RELIED UPON THE CASE OF COMMISSIONER OF INCOME TAX VS. DR. V. P. GOPINATHAN REPORTED IN 248 ITR 44 9 IN WHICH HON 'BLE SUPREME COURT OF INDIA HELD THAT THE INTER EST WITH THE ASSESSEE RECEIVED FROM THE BANK ON FIXED DEPOSIT WA S INCOME IN HIS HANDS AND IT COULD NOT STAND DIMINISHED ONLY IF THERE WAS A PROVISION IN LAW PERMITTING SUCH DIMINUTION. THERE WAS NO SUCH PROVISION OF LAW AND THE INTEREST ON THE LOAN TAKEN FROM THE BANK DID NOT REDUCE IN HIS INCOME BY WAV OF INTERES T ON THE FIXED DEPOSIT. THE HON'BLE SUPREME COURT SAYS IN TH IS CASE THAT IF THE LOAN TAKEN AGAINST THE FIXED DEPOSIT THE INT EREST PAID ON SUCH LOAN CAN NOT BE ADJUSTED AGAINST INCOME EARNED ON FIXED DEPOSIT. IT IS VERY CORRECTLY HELD BECAUSE LOAN IS NOT TAKEN FOR THE PURPOSE OF EARNING THE INCOME. MY CASE IS ENTIR ELY DIFFERENT. IN MY CASE I HAVE SOLD THE SHARES OF COMPANY TO THE PUBLIC THROUGH A POWER OF ATTORNEY UNDER THE RULES AND REG ULATIONS FRAMED BY THE GOVT. OF INDIA BY THE STOCK EXCHANGE CONTROL BOARD OF INDIA. (SEBI). THERE IS SPECIFIC PROVISION IN THE LAW HOW THE SHARES CAN BE SOLD AND LISTED IN THE STOCK EXCH ANGE. AS PER GUIDELINES OF SEBI ALL THE PROFITS COME MUST BE DEP OSITED IN SEPARATE BANK ACCOUNT AND DISTRIBUTED TO THE SELLER ONLY AFTER CERTAIN FORMALITIES. I HAVE VOLUNTARILY DEPOSITED T HIS MONEY IN THE BANK TO EARN THE INTEREST. THE MONEY WAS DEPOSI TED IN THE BANK AS PER RULES AND REGULATIONS MADE BY SEBI IN THIS CONNECTION AND THE EXPENDITURE INCURRED ON THE SALE OF SHARES ARE ALSO AS PER THE RULES AND REGULATIONS OF THE SE BI. THEREFORE I HAVE VERY CORRECTLY COMPUTED THE INCOME AND YOUR HONOUR IS :-5-: VERY CORRECTLY ASSESSED MY INCOME AT THE TIME OF OR IGINAL ASSESSMENT. THESE PROVISIONS HAVE ALSO BEEN CONFIRM ED BY VARIOUS COURTS IN THE NUMBER OF JUDGEMENTS AND I HA VE RELIED UPON THEM AND FEEL THERE IS NO MISTAKE IN THE ORIGI NAL ASSESSMENT. THEREFORE I HAVE ALREADY REQUESTED YOU R HONOUR VIDE MY LETTER DATED 08.04.2003 IN YOUR HONOURS OF FICE ON 16.04.2003 THAT INITIATION OF PROCEEDINGS UNDER SEC TION 147/148 ARE BAD IN LAW. I TRUST THE AFORESAID LETTER WILL S ERVE YOUR HONOUR'S PURPOSE AND IF YOUR HONOUR STILL HAVE A DI FFERENT VIEW IN THE MATTER PLEASE LET ME KNOW SO THAT I WILL S UBMIT MY REPLY IN THE MATTER PLEASE LET ME KNOW SO THAT I WILL S UBMIT MY REPLY IN MORE DEPTH. 5. THE ASSESSING OFFICER DID NOT FIND ANY MERIT IN THE REPLY OF THE ASSESSEE AND CONCLUDED THAT IN THE CASE OF THE ASSESSEE AN E XPENDITURE OF $ 14433 221.73 HAD BEEN INCURRED FOR THE PURPOSES OF MAKING A PUBL IC ISSUE/OFFER FOR SALE OF SHARES HELD BY THE ASSESSEE AND HIS ASSOCIATES. AC CORDING TO THE ASSESSING OFFICER THIS WAS AN EXPENDITURE WHICH HAS BEEN WHO LLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER/SALE OF SHARES. THE A SSESSING OFFICER TOOK THE VIEW THAT GROSS AMOUNT THEREFORE WAS DEDUCTIBLE U/S. 4 8(I) OF THE ACT FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. THE ASSESSING OFFICER ALSO OBSERVED THAT THERE IS NO PROVISION IN THE STATUTE FOR REDUCING THE AMOUNT OF INTEREST RECEIVED IN THE COURSE OF SUCH PUBLIC ISSUE FROM THE EXPENSES INCURRED FOR THE PURPOSES OF TRANSFER. THE ASSESSING OFFICER TOOK THE VIEW THAT THE SAME WAS L IABLE TO BE TAXED SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES. A TOTA L OF 12 50 000 SHARES HAS BEEN OFFERED FOR SALE AGAINST WHICH THE APPLICATION MONEY WAS RECEIVED ON WHICH THIS INTEREST HAD BEEN EARNED THE ASSESSEE HAD OFF ERED FOR SALE 3 12 500 SHARES AND ACCORDINGLY HIS PROPORTIONATE SHARES IN THE TOT AL INTEREST CAME TO $ 11 53 972. CONSEQUENTLY THE ASSESSING OFFICER RECOMPUTED THE CAPITAL GAIN ON ACCOUNT OF SALE OF SHARES AS UNDER:- :-6-: EXPENSES INCURRED ON SALE OF SHARES $ 1 44 33 221 TOTAL NUMBER OF SHARES SOLD BY PROMOTERS 12 50 000 NUMBER OF SHARES SOLD BY ASSESSEE 5 00 000 PROPORTIONATE EXPENSES ON SALE OF SHARES HELD BY ASSESSEE 1 44 33 221 X 5 00 000 12 50 000 = 57 73 288 TOTAL SALE CONSIDERATION OF SHARES (5 00 000 X 200) $ 10 00 00 000 LESS: PROPORTIONATE EXPENSES AS DISCUSSED ABOVE (-) $57 73 288 CAPITAL GAIN $9 42 26 712 6. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE RAISED AS MANY AS 14 GROUNDS OF APPEAL. HOWEVER VIDE GRO UNDS NO 1 TO 4 OF THE APPEAL THE ASSESSEE CHALLENGED INITIATION OF PROCE EDINGS U/S. 147 OF THE ACT BY ISSUE OF NOTICE DATED 21.3.2003. THE ASSESSEE CONT ENDED BEFORE THE LD. CIT(A) THAT THE REASONS OR THE GROUNDS ON WHICH THE NOTICE U/S. 147 OF THE ACT HAS BEEN ISSUED ARE BASED ON A MERE CHANGE OF OPINION WHICH IS NOT PERMISSIBLE EVEN IN THE AMENDED LAW AS HAD COME ON THE STATUTE BOOK W.E .F. 1.4.1989. THE ASSESSEE ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT THE PROCE EDINGS U/S. 147 OF THE ACT HAVE BEEN INITIATED BY HOLDING THAT A TOTAL OF 12 50 00 0 SHARES HAVE BEEN OFFERED FOR SALE AGAINST WHICH THE APPLICATION MONEY WAS RECEIV ED ON WHICH INTEREST HAD BEEN EARNED. THE ASSESSEE HAD OFFERED FOR SALE 5 0 0 000 SHARES AND ACCORDINGLY HIS PROPORTIONATE SHARE IN THE TOTAL INCOME COMES T O $ 11 53 972 WHICH HAS ESCAPED ASSESSMENT. THE ASSESSEE FAILED TO OFFER T HIS INTEREST INCOME FOR TAX AS A RESULT OF WHICH THE INCOME HAS ESCAPED ASSESSMENT . ACCORDINGLY THE ASSESSMENT IS REQUIRED TO BE REOPENED U/S. 147 OF T HE ACT AND THESE :-7-: REASONS/GROUNDS DO NOT MEET THE REQUIREMENTS OF LAW AS LAID DOWN IN SECTION 147 READ WITH PROVISO. ACCORDINGLY THE ASSESSEE SUBMI TTED BEFORE THE LD. CIT(A) THAT INITIATION OF REASSESSMENT PROCEEDINGS ARE WHOLLY I LLEGAL AND WITHOUT JURISDICTION. 7. THE LD. CIT(A) ANNULLED THE ASSESSMENT ORDER DATED 22.1.2004 PASSED U/S. 143(3)/147/148 OF THE ACT OBSERVING AS UNDER:- 7. I HAVE CONSIDERED THE ARGUMENTS PLACED BEFORE M E AND THE FACTS OF THE CASE. IT HAS BEEN NOTICED THAT FACTS IN ISSU E RELATED TO THE INITIATION OF PROCEEDINGS U/S 147 ARE SIMILAR TO TH AT OF IN THE CASE OF SHRI DEEPAK KOTHARI HUF IN ASSTT. YEAR 1996-97 WH ERE IN APPEAL NO.CIT(A)-I/164/CC-V/KNP/03-04/55 DATED 11.7.2005 I T HAS BEEN HELD BY ME THAT 'IN THE INSTANT CASE THE REASONS R ECORDED BY THE ASSESSING OFFICER SHOW THAT THE SATISFACTION WAS ME RELY ABOUT ESCAPEMENT OF INCOME. THERE IS NOT AN ALLEGATION TH AT SUCH ESCAPEMENT HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT. IN ABSENCE OF SUCH FINDINGS WHICH A RE THE VERY BASIS FOR ASSUMING JURISDICTION U/S. 147 IN A CASE FALLIN G UNDER THE PROVISO THERETO MAKES THE ACTION TAKEN BY THE ASSESSING OF FICER WITHOUT JURISDICTION.' EVEN OTHERWISE ALSO THE ASSESSEE HAD FILED ALL MATERIAL FACTS DISCLOSING THEREIN THAT THE INTEREST RECEIVED FROM BANK HAS BEEN DEDUCTED FROM THE EXPENSES INCURRED ON THE SALE OF SHARES. VIDE ORDER SHEET ENTRY DATED 16.10.98 THE ASSESSEE WAS ASKED TO FILE DETAILS AND EVIDENCE REGARDING SALE O F SHARES. THE ORDER SHEET ENTRY DATED 16.10.98 IS REPRODUCED HER EUNDER:- '16.10.98 SHRI RAMJI MEHROTRA ATTENDED. CASE DISCU SSED. FOLLOWING PAPERS FILED. 1. DETAILS OF PUBLIC ISSUE EXP. 2. PRINTED COPY OF PROSPECTUS BY WHICH SHARES WERE SOL D. 3. PHOTO COPY OF BANK CERTIFICATE IN RESPECT OF DEPOSI TS FOR WHICH EXEMPTION U/S. 54F HAS BEEN CLAIMED. :-8-: CASE DISCUSSED. RECORD TO EVIDENCE OF EXPENSES OF RS.1 44 33 221.73. ALSO TO PRODUCE BANK PASS BOOK I N ORIGINAL. CASE ADJOURNED TO 26.10.98 ON HIS REQUES T.' 8. THIS QUERY WAS REPLIED UPON BY THE ASSESSEE ON 26.10.98 WHERE HE HAS CATEGORICALLY MENTIONED THAT- 1. I HAD SOLD MY SHARES IN KOTHARI PRODUCTS LTD. TH ROUGH 'OFFER BY SALE SCHEME' AS PRESCRIBED AND APPROVED B Y SEBI AND STOCK EXCHANGE OF INDIA. I HAD GIVEN POWER OF A TTORNEY TO THE KOTHARI PRODUCTS LTD. TO DO ALL NECESSARY FO RMALITIES IN THIS CONNECTION. A COPY OF PROSPECTUS HAS BEEN ALRE ADY FILED BY ME IN LAST HEARING. THUS ALL EXPENSES ON SALE O F SHARES WERE MADE BY KOTHARI PRODUCTS LTD. ON MY BEHALF. A COPY OF ALL THE EXPENSES IN THIS CONNECTION IS ENCLOSED HER EWITH AS DESIRED BY YOUR HONOUR. THE ORIGINAL BILLS/INVOICES ETC. FILES ARE ALSO PRODUCED HEREWITH. FINALLY THE KOTHARI PRO DUCTS LTD. APPORTIONED TOTAL EXPENDITURES TO PERSONS WHO SOLD THE SHARES IN RATIO OF SHARES SOLD BY THEM. A COPY OF T HE SAME WAS ALREADY FILED BY ME IN PREVIOUS HEARING. THERE WERE NO METHOD EXCEPT IT TO SELL SHARES IN THE INSTANT CASE . MY SALES PROCEEDS AND EXPENSES ON SALE OF SHARES AR E FULLY SUPPORTED BY EVIDENCES WHICH ARE PRODUCED ONCE AGA IN. 2. MY BANK PASS BOOKS ARE ALSO ONCE AGAIN PRODUCE D HEREWITH.' 9. AFTER THAT IN THE ORDER SHEET THE ASSESSING OFF ICER HAS NOTED AS UNDER:- '26.10.98 SHRI RAMJI MEHROTRA CA. ATTENDED. WRITT EN REPLY FILED. EXAMINED AND PLACED ON RECORD. EXEMPTION IN RESPECT OF SALE OF SHARES EXAMINED. BANK PASS BOOKS PRODUCED. CASE DISCUSSED.' :-9-: 10. FROM THE ABOVE DISCUSSION IT IS VERY MUCH EVID ENT THAT ON 26.10.98 SUCH DETAILS WERE MADE AVAILABLE TO THE A. O. WHO HAS FORMED AN OPINION DURING THE COURSE OF REGULAR ASSE SSMENT PROCEEDINGS. IN VIEW OF ABOVE DISCUSSION I AM OR T HE OPINION THAT THE ASSESSING OFFICER WAS NOT LEGALLY CORRECT IN TA KING ACTION U/S 148 AND IN MAKING REASSESSMENT U/S. 147 OF THE ACT. ACC ORDINGLY THE ASSESSMENT ORDER UNDER REFERENCE IS 'ANNULLED'. ACC ORDINGLY IN THE PRESENT CASE ALSO SINCE THE FACTS ARE SIMILAR THE ASSESSMENT ORDER UNDER REFERENCE IS ANNULLED. 8. NOW THE REVENUE IS IN APPEAL AGAINST THE ORDER OF T HE LD. CIT(A) BEFORE THIS TRIBUNAL. 9. BEFORE US SHRI P. K. BAJAJ LD. D.R. HAS FILED WRI TTEN SUBMISSIONS WHICH READ AS UNDER:- AS DESIRED COMPARATIVE STUDY OF THE ASSESSMENT OR DER OF SHRI MANSUKH LAL KOTHARI (HUF) SHRI VIKRAM KOTHARI (HUF ) AND SHRI DEEPAK KOTHARI(HUF) FOR A.Y. 1996-97 IS PRESENTED HEREWITH: 1. ALL THESE CASES BELONG TO ONE GROUP I.E. M/S KOT HARI PRODUCTS LTD. 24/19 THE MALL KANPUR. 2. THEY FILED THEIR I.T. RETURN FOR ASSTT. YEAR 199 6-97 ON FOLLOWING INCOME: I) SHRI MANSHUK LAL KOTHARI(HUF) RS.95 75 440/- II) SHRI VIKRAM KOTHARI (HUF) RS.1 80 570/- III) SHRI DEEPAK KOTHARI (HUF) RS.21 69 680/- 3. ASSTT. WAS COMPLETED U/S 143(3) OF L.T. ACT 19 61 IN ALL THESE CASES BY THE ASSESSING OFFICER ON THE FOLLOWING IN COME: I) SHRI MANSHUK LAL KOTHARI(HUF) RS.95 75 440/ :-10-: II) SHRI VIKRAM KOTHARI (HUF) RS.1 80 570/- III) SHRI DEEPAK KOTHARI (HUF) RS.21 69 680/- 4. IN THE FOLLOWING QUANTITY THE SHARES OF M/S KO THARI PRODUCTS LTD. WERE SOLD TO THE ABOVE DIRECTORS OF THE COMPA NY: I) SHRI MANSHUK LAL KOTHARI(HUF) 5 LACS SHARES II) SHRI VIKRAM KOTHARI (HUF) 75 000 SHARES III) SHRI DEEPAK KOTHARI (HUF) 3 12 500 SHARES 5. INCOME FROM CAPITAL GAIN WAS DECLARED BY ABOVE P ERSONS AS UNDER: MANSHUK LAL KOTHARI(HUF) (RS.) VIKRAM KOTHARI (HUF) (RS.) DEEPAK KOTHARI (HUF) (RS.) INCOME ON SALE OF SHARES LESS: EXPENSES BALANCE LESS(1) INVESTMENT MADE IN RESIDENTIAL HOUSE & CLAIMED DEDUCTION U/S 54F(2) BALANCE DEPOSITED IN CAPITAL GAIN A/C 10 00 00 000 (-) 46 19 311 9 53 80 689 NIL 9 53 82 000 1 50 00 000 (-) 6 92 897 1 43 07 103 (-) 1 44 63 525 NIL 6 25 00 000 (-) 28 87 000 5 96 12 930 5 96 16 000 6. IN ALL THE ABOVE CASES ASSTT. ORDERS U/S 143(3) OF THE I.T. ACT 1961 WERE PASSED BY ONE ASSESSING OFFICER I.E. ACIT CENTRAL CIRCLE- :-11-: IV KANPUR. LATER ON THE JURISDICTION OF SHRI MANSH UK LAL KOTHARI(HUF) AND SHRI DEEPAK KOTHARI (HUF) WAS DECE NTRALIZED TO AC-6 (NOW CC-2) KANPUR 7. AFTER RECORDING REASONS NOTICE U/S 148 OF THE I. T. ACT 1961 WAS ISSUED IN CASE OF SHRI MANSUKH LAL KOTHARI(HUF) AND SHRI DEEPAK KOTHARI(HUF)ON 20.03.2003 AND IN THE CASE OF SHRI V IKRAM KOTHARI(HUF) ON 28.03.2003 RESPECTIVELY. 8. SIMULTANEOUSLY. RE-ASSESSMENT ORDER WAS PASSED U /S. 143(3)/148 IN THE CASE OF SHRI MANSHUK LAL KOTHARI AND IN THE CASE OF SHRI DEEPAK KOTHARI(HUF) AT TOTAL INCOME OF RS.107.29 41 0/- AND RS.28.90.920/- RESPECTIVELY. WHILE IN THE CASE OF S HRI VIKRAM KOTHARI (HUF) BEFORE PASSING SUCH ORDER PROCEEDING U/S. 1 47 OF THE I.T. ACT 1961 WAS CHALLENGED BY THE ASSESSEE BEFORE HON 'BLE HIGH COURT JUDICATURE AT ALLAHABAD WHICH HAS BEEN QUASHED BY HON'BLE COURT VIDE ORDER DATED 14.09.2010. BUT IN OTHER TWO CASE S PROCEEDINGS WERE NOT CHALLENGED BY THE RESPECTIVE ASSESSEE BEFO RE HON'BLE HIGH COURT. 9. ASSTT. ORDERS PASSED U/S 143(3)/148 OF THE I.T. ACT 1961 IN BOTH THE CASES OF SHRI MANSUKH LAL KOTHARI(HUF) AND SHRI DEEPAK KOTHARI(HUF) WERE CHALLENGED BEFORE THE LD. CIT(APP EALS) KANPUR AND APPEALS WERE DECIDED IN FAVOUR OF BOTH THE ASSE SSEE. ON PERUSAL OF ABOVE FACTS AND CIRCUMSTANCES IT IS EVIDENT THAT CHARACTER OF THE APPEALS UNDER REFERENCE IS DISTING UISHABLE WITH THE CASE OF SHRI VIKRAM KOTHARI(HUF). MAIN FEATURES ARE RE-NARRATED AS UNDER: 10. IN THE CASE OF SHRI MANSUKH LA! KOTHARI(HUF) AN D SHRI DEEPAK KOTHARI(HUF) BOTH IN A. Y. 1996-97 AFTER RECORDIN G VALID REASONS PROCEEDINGS U/S 147 OF THE I.T. ACT 1961 WERE INIT IATED AND RE- ASSESSMENT ORDERS U/S. 143(3)/148 WERE PASSED ACCOR DINGLY. WHILE NO SUCH ORDER COULD BE PASSED IN THE CASE OF SHRI V IKRAM :-12-: KOTHARI(HUF). I1. PROCEEDINGS INITIATED U/S. 147 OF I.T. ACT 196 1 IN THE CASE OF SHRI MANSUKH LAL KOTHARI (HUF) AND SHRI DEEPAK KOTH ARI (HUF) WAS NOT CHALLENGED BY THE ASSESSEE BEFORE HON'BLE HIGH COURT ALLAHABAD WHILE IN THE CASE OF VIKRAM KOTHARI (HUF ) THE PROCEEDINGS WAS CHALLENGED BEFORE HON'BLE COURT. 12. THE ASSESSEE HAS CONTENDED THAT ALL THE PRIMARY FACTS REGARDING SHARE TRANSACTION/LONG TERM CAPITAL GAIN WAS DISCLO SED IN THE RETURN THEREFORE PROCEEDING U/S. 148 OF THE I.T. A CT 1961 HAS BEEN INITIATED BEYOND THE PERIOD OF 4 YEARS PERMISSIBLE IN THE SECTION 147 READ WITH PROVISO. FURTHER THE ASSESSEE HAS TAKEN PLEAS BEFORE THE LD. CIT(APPEALS) THAT IT IS A CHANGE OF OPINION OF THE ASSESSING OFFICER WHO HAS INITIATED PROCEEDINGS U/S 148 OF TH E LT. ACT 1961. HOWEVER SEVERAL JUDICIAL PRONOUNCEMENTS HAS LAID DO WN CERTAIN PRINCIPLES THE RATIO OF WHICH IS THAT IN THE ABSENC E OF ANY CLEAR CUT FINDINGS BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER IT MAY NOT BE CONSIDERED THAT ASSESSING OFFI CER HAS TAKEN CONCLUSIVE DECISION ON A PARTICULAR ISSUE. THEREFOR E IT WAS INCONSEQUENTIAL WHETHER OR NOT MATERIAL NECESSARY F OR TAKING DECISION WAS AVAILABLE TO THE ASSESSING OFFICER EIT HER GENERALLY OR IN THE FORM OF REPLY TO A QUESTIONNAIRE SERVED UPON TH E ASSESSEE. WHAT IS IMPORTANT WAS WHETHER THE ASSESSING OFFICER HAS GIVEN ANY EXPLICIT FINDING ON THE ISSUE. 9.1. SHRI P. K. BAJAJ LD. D.R. ALSO SUBMITTED THAT IN T HE SAME GROUP CASES OF SHRI DEEPAK KOTHARI (HUF) RELATING TO ASSESSMENT YE AR 1996-97 WHERE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THE INSTANT CASE THE ITAT HAS DISMISSED THE APPEAL OF THE ASSESSEE AND RESTORED THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE ON MERIT MEANING THEREBY THAT THE LEG AL/TECHNICAL ISSUE RAISED BY :-13-: THE ASSESSEE HAS BEEN DISMISSED. AGAIN THE ASSESSE E HAS RAISED THE SAME TECHNICAL ISSUE IN IDENTICAL SET OF FACTS WHICH DES ERVES TO BE REJECTED BY THE ITAT. THE RELEVANT PORTION OF THE ORDER DATED 21.9.2007 O F THE ITAT PASSED IN THE CASE OF SHRI DEEPAK KOTHARI (HUF) READS AS UNDER:- FURTHER IN THE SAME GROUP CASE OF SHRI DEEPAK KOTH ARI(HUF) A.Y. 1996-97 WHERE THE FACTS CIRCUMSTANCES OF THE CASE VIS-A-VIS INSTANT CASE ARE IDENTICAL THE ITAT HAS DISMISSED THE APP EAL OF THE ASSESSEE AND RESTORED THE MATTER BACK TO THE FILE TO THE CIT (APPEALS) TO ADJUDICATE ON MERIT. MEANING THEREBY THAT LEGAL/TEC HNICAL ISSUE RAISED BY THE ASSESSEE HAS BEEN DISMISSED. AGAIN THE ASSE SSEE HAS RAISED SAME TECHNICAL ISSUE AGAIN IN IDENTICAL SET OF FACT S WHICH DESERVE TO BE REJECTED BY ITAT. RELEVANT PORTION OF THE JUDGME NT OF THE ITAT IS REPRODUCED AS UNDER: 'ASSESSEE HAS FAILED TO DISCLOSE INTEREST RECEIVED FROM THE BANK AS THIS INCOME. WE ARE OF THE VIEW THAT ALL THESE FORA OF J UDGMENTS CITED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE WERE RENDERED ON FACTS MATRIX OF THEIR OWN AND ARE OF N O HELD TO THE ASSESSEE. ON FACTS WE HAVE GIVEN A FINDING THAT SA TISFACTION NOTE RECORDED BY THE ASSESSING OFFICER WAS PROPER AND AC CORDING TO THE LAW AND ASSESSEE HAD FAILED TO DISCLOSE INTEREST IN COME IN THE COMPUTATION OF INCOME AND OFFERED FOR TAXATION. ACCORDINGLY WE RESERVE THE ORDER OF THE LD. CIT(A) AND HOLD THAT HE WAS LEGALLY INCORRECT TO ANNUAL THE ASSESSMENT. AS A RESULT WE ALLOW THE APPEAL OF THE DEPARTMENT BUT SENT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE ISSUE ON MERIT AS HE HAS NOT DISCUSSED ANYTHING ON THE MERITS OF T HE CASE BECAUSE HE HAS ANNULLED THE ASSESSMENT. AS A RESULT REVENUE APPEAL IS ALLOWED PARTLY FOR S TATISTICAL PURPOSES. :-14-: 9.2. IN VIEW OF THE AFORESAID FACTS SHRI P. K. BAJAJ L D. D.R. SUBMITTED THAT THE APPEAL OF THE REVENUE MAY BE ALLOWED. 10. SHRI. AMIT SHUKLA ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT AS THE SALE IN QUESTION FORMED PART OF THE TRA NSACTION FOR SALE OF SHARES AS EFFECTED BY GROUP OF PERSONS NAMELY (I) M.M. KOTH ARI HUF (II) VIKRAM KOTHARI HUF (III) VIKRAM KOTHARI INDIVIDUAL (IV) DEEPAK KOTHARI HUF AND (V) DEEPAK KOTHARI INDIVIDUAL AS A WHOLE THE EXPENSES INCUR RED ON SUCH SALES WERE CLAIMED AS DEDUCTION ON PRO-RATA BASIS BY EACH PERSONS. THE STATEMENT GIVING HEAD- WISE DETAILS OF EXPENDITURE INCURRED ADJUSTMENT MA DE THEREFROM ON ACCOUNT OF RECEIPTS BY WAY OF INTEREST AND MANNER OF ALLOCATI ON OF AN EXPENDITURE AMONGST THE GROUP OF TRANSFERORS WERE ENCLOSED NOT ONLY WIT H THE STATEMENT SHOWING ON COMPUTATION OF INCOME AND TAXES FILED ALONG WITH T HE RETURN BUT WERE ALSO AVAILABLE BEFORE THE ASSESSING OFFICER IN THE ASSES SMENT PROCEEDINGS U/S. 143(3) OF THE ACT (COPIES ARE AVAILABLE AT PAGES 15 & 16 O F THE PAPER BOOK). 10.1. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE FURT HER SUBMITTED THAT IN FULL AWARENESS OF THE SAID DETAILS ACCOMPANYING THE RET URN ITSELF THE ASSESSING OFFICER INITIATED ENQUIRIES SIMULTANEOUSLY IN CASE OF ALL THE ABOVE NAMED PERSONS VIDE NOTICE DATED 05.08.1998 AND FINALLY AS PER TH E ORDER SHEET ENTRIES DATED 16.10.1998. THESE ASSESSEES FULLY RESPONDED TO THE SAID QUERIES AND REPLIED THROUGH A LETTER DATED 26.10.1998 WHICH WAS SIMILA R IN ALL THE CASES. IT WAS AFTER SUCH DETAILED ENQUIRIES THAT THE ASSESSING OFFICER PASSED THE REGULAR ASSESSMENT ORDER DATED 26.10.1998 UNDER SECTION 143(3) OF INCO ME TAX ACT 1961 IN CASE OF ALL THE ABOVE REFERRED PERSONS WHEREIN THE COMPUTA TION OF CAPITAL GAIN WHICH WORKED OUT AT 'NIL' AFTER CONSIDERING THE DEPOSIT M ADE IN 'CAPITAL GAIN ACCOUNT' WAS DULY ACCEPTED. THE FACT THAT THE ASSESSMENT ORD ER WAS PASSED ON THE SAME DATE ITSELF GOES TO SHOW THAT THE ASSESSEE'S 'RESPO NSE' WAS COMPLETE AND NO FURTHER ENQUIRIES WERE CONSIDERED NECESSARY TO BE M ADE OTHERWISE THE ASSESSING OFFICER HAS FULL FIVE MONTHS TO PASS THE ORDER UNDE R SECTION 143(3) THEREAFTER. 10.2. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT LATER ON THE BASIS OF SAID VERY INFORMATION PROCEEDINGS UNDE R SECTION 147 OF THE ACT WERE :-15-: INITIATED. THE FACT THAT THE PROCEEDINGS UNDER SECT ION 147 OF THE ACT HAD BEEN INITIATED ON THE BASIS OF INFORMATION ALREADY AVAI LABLE ON THE ASSESSMENT RECORDS IS AMPLY BORNE OUT FROM THE 'REASONS RECORDED'. IN THE SAID 'REASONS' THERE IS NO FINDING THAT THERE WAS ONLY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 10.3. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE IN T HE CASE OF OTHER 'PERSONS' ALSO NAMELY 'VIKRAM KOTHARI HUF' 'DEEP AK KOTHARI HUF' AND 'DEEPAK KOTHARI INDIVIDUAL' ON THE SAME PATTERN COMPUTATI ON OF CAPITAL GAIN WAS SHOWN AND SIMILAR REPLIES WERE FILED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND SAME ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 26.10.1998. IN ALL THESE CASES ACTION UNDER SECTION 147 OF THE ACT WA S TAKEN ON THE BASIS OF SAME 'REASONS RECORDED' EXCEPT FOR FIGURE OF INTEREST O N THE SAME DATE BY THE SAME ASSESSING OFFICER AND ACCORDINGLY NOTICES UNDER SEC TION 148 OF THE ACT WERE ISSUED. EVEN THE REASSESSMENT ORDER UNDER SECTION 143(3)/148 WAS PASSED ON THE SAME DATE I.E. 22.01.2004 IN ALL THE CASES. 10.4. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE AFORESAID ORDERS WERE CHALLENGED IN APPEAL BEFORE THE LD. CIT (A) KANPUR AND THE LD. CIT(A) ALLOWED THE APPEALS OF ALL THE RESPECTIVE ASSESSEES STATING THAT REOPENING OF THE CASES UNDER SECTION 147 OF THE ACT WERE NOT VALID FIRSTLY IT AMOUNT TO 'CHANGE OF OPINION' AND SECONDLY THERE WAS NO FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AS WERE NECESSAR Y FOR ASSESSMENT AS PER THE PROVISO TO SECTION 147 OF THE ACT. 10.5. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IN THE CASES OF DEEPAK KOTHARI HUF AND DEEPAK KOTHARI INDIVIDU AL THE ITAT LUCKNOW BENCH VIDE ORDER DATED 21.09.2007 HAD HOWEVER REVERSED TH E ORDER OF CIT (APPEALS) WITHOUT APPRECIATING THE FACTS MATERIAL ON RECORD AND THE PROVISIONS OF LAW. 10.6. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE POIN TED OUT THAT RECENTLY IN ANOTHER CASE NAMELY 'VIKRAM KOTHARI HUF' ONE OF THE 'PERSON' AS DISCUSSED ABOVE DIRECTLY APPROACHED BEFORE THE HON'BLE ALLAH ABAD HIGH COURT UNDER WRIT JURISDICTION AGAINST THE NOTICE UNDER SECTION 148 O F THE ACT CHALLENGING THE VERY JURISDICTION OF THE ASSESSING OFFICER UNDER SECTION 147 OF THE ACT AND THE VALIDITY OF :-16-: 'REASONS RECORDED' IN WRIT PETITION NO.899 OF 2003. THE HON'BLE HIGH COURT AFTER APPRECIATING THE FACTS AND 'REASONS RECORDED' HAS QUASHED THE NOTICE U/S. 148 OF THE ACT AND ALSO THE ACTION U/S. 147 OF THE ACT HOL DING THAT THE WAS BARRED BY LIMITATION AS PER THE PROVISO TO SECTION 147 OF THE ACT BEING TAKEN AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 1996-97. 10.7. TO HIGHLIGHT THE EXACT SIMILARITY BETWEEN THE ASSES SEE'S CASE AND THAT OF 'VIKRAM KOTHARI HUF (SUPRA)' SHRI AMIT SHUKLA LD . COUNSEL FOR THE ASSESSEE PLACED BEFORE US THE FOLLOWING COMPARATIVE ANALYSIS :- SRI MANSUKH LAL KOTHARI SRI VIKRAM KOTHARI 1) RETURN OF INCOME FOR A.Y. 1996-97 WAS FILED ON 1ST JULY 1996 SHOWING INCOME OF RS.5 96 12 930/- UNDER THE HEAD CAPITAL GAIN AS HAD ARISEN ON SALE OF 5 00 000 SHARES THAT IT HELD IN M/S KOTHARI PRODUCTS LTD. AS HIGHLIGHTED IN PARA 1 ABOVE OF THIS SUBMISSION. RETURN OF INCOME FOR A.Y. 1996- 97 WAS FILED ON 1ST JULY 1996 SHOWING TOTAL INCOME OF RS.1 80 570/- ON ACCOUNT OF CAPITAL GAIN AS HAS ARISEN ON SALE OF 75 000 OF SHARES THAT IT HELD IN M/S KOTHARI PRODUCTS LTD. AS HIGHLIGHTED IN PARA 1 ABOVE OF THIS SUBMISSION. 2) IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN SEPARATE DETAILS OF EXPENSES MADE FOR SALE OF SHARES WAS FILED WHICH IS APPLICABLE IN ALL CASES. IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN SEPARATE DETAILS OF EXPENSES MADE FOR SALE OF SHARES WAS FILED WHICH IS APPLICABLE IN ALL CASES. 3) DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS REPLY DATED 26.10.1998 WAS FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS REPLY DATED 26.10.1998 WAS FILED BEFORE THE ASSESSING OFFICER :-17-: WHEREIN THE COMPUTATION OF CAPITAL GAIN AS WELL AS CLAIM OF EXEMPTION UNDER SECTION 54F WAS ALLOWED. WHEREIN THE COMPUTATION OF CAPITAL GAIN AS WELL AS CLAIM OF EXEMPTION UNDER SECTION 54F WAS ALLOWED. 4) ORIGINAL ASSESSMENT ORDER DATED 26.10.1998 WAS PASSED ACCEPTING THE CLAIM ON THE BASIS OF REPLY AND INFORMATION AVAILABLE IN THE RETURN ITSELF AND PLACED ON RECORD. ORIGINAL ASSESSMENT ORDER DATED 26.10.1998 WAS PASSED ACCEPTING THE CLAIM ON THE BASIS OF REPLY AND INFORMATION AVAILABLE IN THE RETURN ITSELF AND PLACED ON RECORD. REASONS RECORDED REASONS RECORDED THE ASSESSEE HAD FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 1996-97 ON 1ST JULY 1996 SHOWING TOTAL INCOME AT RS.95 75 440/-. THE SAME WAS ASSESSED U/S 143(3) AT THE RETURNED INCOME ON 26.10.1998 ON TOTAL INCOME OF RS.96 75 440/-. A PERUSAL OF THE RETURN SHOWN THAT THE ASSESSEE HAD SOLD 5 00 000 SHARES OF M/S KOTHARI PRODUCTS LTD. DURING THE FINANCIAL YEAR 1995-96 AND CLAIMED EXPENSES OF RS.46 19 311/- ON THE SAME. THE NET CONSIDERATION WAS SHOWN AS RS.9 35 80 689/- (SHARES SOLD 5 00 000 @ RS.200/- PER SHARE THE ASSESSEE HAD FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 1996-97 ON 1ST JULY 1996 SHOWING TOTAL INCOME AT RS.1 80 570/-. THE SAME WAS ASSESSED U/S 143(3)' AT THE RETURNED INCOME ON 26. 10. 1998 ON TOTAL INCOME OF RS.1 80 750/-. THE ASSESSEE HAD SOLD 75 000 SHARES OF M/S KOTHARI PRODUCTS LTD. DURING THE FINANCIAL YEAR 1995-96 AND CLAIMED EXPENSES OF RS.6 92 687/- ON THE SAME. THE NET CONSIDERATION WAS SHOWN AS RS.1 43 07 103/- (SHARES SOLD 75 000 @ RS.200/- PER SHARE I.E. RS.1 50 00 000/- MINUS EXPENSES CLAIMED RS.6 92 897-) AND AN :-18-: I.E. RS.10 00 00 000/- MINUS EXPENSES CLAIMED RS.46 19 311/- ) AND AN AMOUNT OF RS.9 53 81 000/- WAS DEPOSITED IN CAPITAL GAIN SCHEME FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54E AND THE TOTAL CAPITAL GAINS WAS SHOWN AT NIL. THE VARIOUS EXPENSES HAD BEEN REPORTEDLY INCURRED BY COMPANY M/S KOTHARI PRODUCTS LTD. IN WHICH THE ASSESSEE WAS A PROMOTER DIRECTOR AND WHOSE SHARES WERE SOLD AS PER THE DIRECTION OF SEBI. M/S KOTHARI PRODUCTS LTD. REPORTEDLY APPORTIONED THE TOTAL EXPENSES TO THE PERSONS WHO WERE THE HOLDER OF THE SHARES. HOWEVER M/S KOTHARI PRODUCTS LTD. PERFORMED THESE ENTIRE ACTS AS AN AGENT OF THE ASSESSEE WHO HAD GIVEN A POWER OF ATTORNEY TO THAT COMPANY FOR THIS EFFECT. AMOUNT OF RS.1 44 63 525/- WAS INVESTED IN RESIDENTIAL HOUSE AT 7/23 TILAK NAGAR KANPUR AND CLAIMED EXEMPTION U/S 54F. NEITHER PARTICULARS OF THESE EXPENSES WERE FILED WITH THE RETURN OF INCOME OF THE ASSESSEE FOR A. Y. 1996-97 NOR WERE THEY SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE VARIOUS EXPENSES HAD BEEN REPORTEDLY INCURRED BY COMPANY M/S KOTHARI PRODUCTS LTD. IN WHICH THE ASSESSEE WAS A PROMOTER DIRECTOR AND WHOSE SHARES WERE SOLD AS PER THE DIRECTION OF SEBI. M/S KOTHARI PRODUCTS LTD. REPORTEDLY APPORTIONED THE TOTAL EXPENSES TO THE PERSONS WHO WERE THE HOLDER OF THE SHARES. HOWEVER M/S KOTHARI PRODUCTS LTD. PERFORMED THESE ENTIRE ACTS AS AN AGENT OF THE ASSESSEE WHO HAD GIVEN A POWER OF ATTORNEY TO THAT COMPANY FOR THIS EFFECT. IT IS OBSERVED THAT ON THE APPLICATION MONEY RECEIVED FROM PURCHASERS OF SHARES ON BEHALF OF THE ASSESSEE AND THE OTHER OFFERERS A SUM OF RS.28 84 943/- IT IS OBSERVED THAT ON THE APPLICATION MONEY RECEIVED FROM PURCHASERS OF SHARES ON BEHALF OF THE ASSESSEE AND THE OTHER OFFERERS A SUM OF RS.28 84 943/- :-19-: HAD BEEN RECEIVED AS INTEREST FROM THE BANK. THIS AMOUNT BEING IN THE NATURE OF A REVENUE RECEIPT SHOULD HAVE BEEN OFFERED FOR TAX BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES IN RESPECT OF HIS SHARES. BUT THE ASSESSEE HAS FAILED TO DO. HAD BEEN RECEIVED AS INTEREST FROM THE BANK DEDUCTED FROM OVERALL EXPENSES ON SALE OF SHARES. SINCE NO PARTICULARS OF EXPENSES INCURRED FOR SALE OF SHARES WERE FURNISHED BY THE ASSESSEE THE INCOME BY WAY OF INTEREST COULD NOT BE PUT TO TAX UNDER SECTION 56 OF THE INCOME TAX ACT 1961 THE ESCAPEMENT HAS BEEN ON ACCOUNT OF FAILURE OF THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIALS FACTS NECESSARY FOR HIS ASSESSMENT. THIS AMOUNT BEING IN THE NATURE OF A REVENUE RECEIPT SHOULD HAVE BEEN OFFERED FOR TAX BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES IN RESPECT OF HIS SHARES. BUT THE ASSESSEE HAS FAILED TO DO. THE HON'BLE SUPREME COURT IN 227 ITR 172 HAS HELD THAT INTEREST INCOME IS ALWAYS OF A REVENUE NATURE UNLESS IT IS RECEIVED BY WAY OF DAMAGE OF COMPENSATION. ON THIS REASONING IT HELD THAT THE INTEREST DERIVED BY THE ASSESSEE FROM THE BORROWED FUNDS WHICH WERE INVESTED IN SHORT TERM DEPOSIT THE HON'BLE SUPREME COURT IN 227 ITR 172 HAS HELD THAT INTEREST INCOME IS ALWAYS OF A REVENUE NATURE UNLESS IT IS RECEIVED BY WAY OF DAMAGE OF COMPENSATION. ON THIS REASONING IT HELD THAT THE INTEREST DERIVED BY THE ASSESSEE FROM THE BORROWED FUNDS WHICH WERE INVESTED IN SHORT TERM DEPOSIT :-20-: WITH BANK WOULD BE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. SAME WOULD NOT GO TO REDUCE THE INTEREST PAYABLE BY THE ASSESSEE ON THE LOANS SECURED BY IT (WHICH MAY BE CAPITALIZED AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION). SIMILARLY IN 248 ITR 449 THE SUPREME COURT HAS REAFFIRMED ITS VIEW IN THE CIT VS. V.P. GOPINATHAN THAT THE GROSS INTEREST RECEIVED ON ANY DEPOSIT IS LIABLE TO BE TAXED AS INCOME FROM OTHER SOURCES AND IT CAN NOT BE REDUCED BY THE AMOUNT OF INTEREST PAID ON THE LOAN TAKEN ON THE SECURITY OF SUCH DEPOSIT. WITH BANK WOULD BE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. SAME WOULD NOT GO TO REDUCE THE INTEREST PAYABLE BY THE ASSESSEE ON THE LOANS SECURED BY IT (WHICH MAY BE CAPITALIZED AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION). SIMILARLY IN 248 ITR 449 THE SUPREME COURT HAS REAFFIRMED ITS VIEW IN THE CIT VS. V.P. GOPINATHAN THAT THE GROSS INTEREST RECEIVED ON ANY DEPOSIT IS LIABLE TO BE TAXED AS INCOME FROM OTHER SOURCES AND IT CAN NOT BE REDUCED BY THE AMOUNT OF INTEREST PAID ON THE LOAN TAKEN ON THE SECURITY OF SUCH DEPOSIT. IT IS A WELL ACCEPTED FACT THAT THE SUPREME COURT ONLY INTERPRETS STATUES AS IT STANDS AND IT DOES NOT LAY DOWN THE LAW IT HAS BEEN CONSISTENTLY HELD THAT ANY INTEREST INCOME RECEIVED IS TAXABLE AS INCOME FROM OTHER SOURCES WHETHER IT ARISES OUT OF BORROWED FUNDS OR FROM ANY SOURCE. IT HAS ALSO BEEN CLEARLY HELD THAT FOR SUCH INTEREST WOULD NOT GO ON TO REDUCE ANY AMOUNT OF INTEREST OF OTHER EXPENDITURE THUS IT IS CLEAR THAT ANY INTEREST INCOME RECEIVED IS TAXABLE AS INCOME FROM OTHER SOURCES WHETHER IT ARISES OUT OF BORROWED FUNDS OR FROM ANY SOURCES. IT HAS ALSO BEEN CLEARLY HELD THAT FOR SUCH INTEREST WOULD NOT GO ON TO REDUCE ANY AMOUNT OF INTEREST OF OTHER EXPENDITURE DURING THE COURSE OF WHICH THIS INCOME HAS BEEN EARNED IRRESPECTIVE OF THE ACT WHETHER THE EXPENDITURE OR INTEREST SO INCURRED WAS A :-21-: DURING THE COURSE OF WHICH THIS INCOME HAS BEEN EARNED IRRESPECTIVE OF THE ACT WHETHER THE EXPENDITURE OR INTEREST SO INCURRED WAS A DEDUCTIBLE EXPENDITURE ARE NOT. IN THE CASE OF THE ASSESSEE AND EXPENDITURE OF RS.14433221.73 HAD BEEN INCURRED FOR THE PURPOSES OF MAKING A PUBLIC ISSUE/OFFER FOR SALE OF SHARES HELD BY THE ASSESSEE AND HIS ASSOCIATES. THIS WAS AN EXPENDITURE WHICH HAS BEEN WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER/SALE OF SHARES. THE GROSS AMOUNT THEREFORE WAS DEDUCTIBLE U/S 48(I) FOR THE PURPOSES OF COMPUTING CAPITAL GAINS. THERE IS HOWEVER NO PROVISION IN THE STATUTE FOR REDUCING THE AMOUNT OF INTEREST RECEIVED IN THE COURSE OF SUCH PUBLIC ISSUE FROM THE EXPENSES INCURRED FOR THE PURPOSES OF TRANSFER. THE SAME WAS LIABLE TO BE TAXED SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES. A TOTAL OF 12 50 000 SHARES HAD BEEN OFFERED FOR SALE AGAINST WHICH THE APPLICATION MONEY WAS RECEIVED ON WHICH THIS INTEREST HAD BEEN EARNED DEDUCTIBLE EXPENDITURE ARE NOT. IN THE CASE OF THE ASSESSEE AND EXPENDITURE OF RS.14433221. 73 HAD BEEN INCURRED FOR THE PURPOSES OF MAKING A PUBLIC ISSUE/OFFER FOR SALE OF SHARES HELD BY THE ASSESSEE AND HIS ASSOCIATES. THIS WAS AN EXPENDITURE WHICH HAS BEEN WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER/SALE OF SHARES. THE GROSS AMOUNT THEREFORE WAS DEDUCTIBLE U/S 48(I) FOR THE PURPOSES OF COMPUTING CAPITAL GAINS. THERE IS HOWEVER NO PROVISION IN THE STATUTE FOR REDUCING THE AMOUNT OF INTEREST RECEIVED IN THE COURSE OF SUCH PUBLIC ISSUE FROM THE EXPENSES INCURRED FOR THE PURPOSES OF TRANSFER. THE SAME WAS LIABLE TO BE TAXED SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES. A TOTAL OF 12 50 000 SHARES HAD BEEN OFFERED FOR SALE AGAINST WHICH THE APPLICATION MONEY WAS RECEIVED ON WHICH THIS INTEREST HAD BEEN EARNED THE ASSESSEE HAD OFFERED FOR SALE 75 000 SHARES AND ACCORDINGLY HIS PROPORTIONATE SHARES IN THE TOTAL INTEREST COMES :-22-: THE ASSESSEE HAD OFFERED FOR SALE 3 12 500 SHARES AND ACCORDINGLY HIS PROPORTIONATE SHARES IN THE TOTAL INTEREST COMES TO RS.11 53 972/- WHICH HAS ESCAPED ASSESSMENT. THE ASSESSEE FAILED TO OFFER THIS INTEREST INCOME FOR TAX AS A RESULT OF WHICH THE INCOME HAS ESCAPED ASSESSMENT. ACCORDINGLY THE ASSESSMENT IS REQUIRED TO BE REOPENED U/S 147 OF THE INCOME TAX ACT 1961.' TO RS.1 73 097/-. I HAVE THEREFORE REASON TO BELIEVE THAT INCOME FOR TAX AS A RESULT OF WHICH THE INCOME HAS ESCAPED ASSESSMENT. ACCORDINGLY THE ASSESSMENT IS REQUIRED TO BE REOPENED U/S 147 OF THE INCOME TAX ACT 1961. SINCE THE MATTER PERTAINS TO A.Y. 1996-97 APPROVAL OF LD. COMMISSIONER OF INCOME TAX (CENTRAL KANPUR IS REQUIRED BEFORE ISSUING NOTICE U/S 148.' 6) REASSESSMENT ORDER UNDER SECTION 147/143(3) WAS PASSED ON 22.01.2004 BY THE ACIT CENTRAL CIRCLE-5 (SAME ASSESSING OFFICER). REASSESSMENT ORDER UNDER SECTION 147/143(3) WAS PASSED ON 22.01.2004 BY THE ACIT CENTRAL CIRCLE-5 (SAME ASSESSING OFFICER). 10.8. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE HON'BLE HIGH COURT IN CASE OF 'VIKRAM KOTHARI HUF (SUPRA.)' AFTER CONSIDERING THE AFORESAID FACTS CAME TO THE CONCLUSION THAT THERE W AS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS RELATING TO SALE OF SHARES EXPENSE INCURRED INTEREST RECEIVED AND COMPUTATION OF CAPITAL GAINS AND AFTER CONSIDERING THE PROVISIONS OF SECTION 147 148 AND 149 AND VARIOUS LATEST JUDGMENT THEIR LORDSHIPS HAVE QUASHED THE INITIATIO N OF PROCEEDINGS UNDER SECTION 148 OF THE ACT. 10.9. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE CONC LUDED HIS SUBMISSION BY STATING THAT EVEN AT THE COST OF REPETITION IT IS H UMBLY SUBMITTED THAT IN THE CASES OF ALL THE PERSONS REFERRED TO ABOVE THE ISSUE PER TAINS TO THE SAME TRANSACTION OF :-23-: SALE OF SHARES ALLOCATION OF EXPENSES MADE FOR SAL E OF SHARES AND THE INTEREST RECEIVED FROM THE BANK WHICH WERE ALLOCATED TO DIFF ERENT PERSONS IN PROPORTION TO THE NUMBER OF SHARES SOLD. SHRI AMIT SHUKLA LD. CO UNSEL FOR THE ASSESSEE POINTED OUT THAT THE DETAILS OF EXPENSES AND DETAILS OF INT EREST AS APPEARING AT PAGES 16 AND 17 OF THE PAPER BOOK SAME PERTAINS TO ALL THE 'PERSONS' EVEN IN THE CASE OF 'DEEPAK KOTHARI HUF' AND 'DEEPAK KOTHARI INDIVIDU AL' WHEREIN THE HON'BLE ITAT LUCKNOW BENCH HAS TAKEN A DIFFERENT VIEW. SH RI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID ORDER OF T HE ITAT CAN NOT BE REFERRED AND RELIED UPON IN VIEW OF THE JUDGMENT OF HON'BLE HIGH COURT NOW AVAILABLE IN THE CASE OF ONE OF THE CONCERNED PERSON NAMELY 'VIK RAM KOTHARI (HUF)(SUPRA.)' THEREFORE THE PLEA TAKEN BY THE LD. SR. DR. FOR PLA CING RELIANCE ON THE ITAT ORDER IN THE CASE OF 'DEEPAK KOTHARI (HUF) (SUPRA.)' IS W HOLLY MISPLACED AND UNWARRANTED. 10.10. SHRI AMIT SHUKLA LD. COUNSEL FOR THE ASSESSEE PLAC ED RELIANCE ON THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIKRAM KOTHARI (HUF) V. STATE OF U.P. AND OTHERS IN CIVIL MISCELLA NEOUS WRIT PETITION NO.899 OF 2003 DATED 14.9.2010 AND ALSO IN THE CASE OF VISHWA NATH PRASAD ASHOK KUMAR SARRAF V. CIT [2010] 327 ITR 190 (ALL.). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO P ERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR VIEW THE ISSUE INVOL VED IN THE PRESENT APPEAL IS SUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF VIKRAM KOTHARI (HUF) V. STATE OF U.P. AND OTHERS IN CIVIL MISCELLA NEOUS WRIT PETITION NO.899 OF 2003 DATED 14.9.2010. THE RELEVANT OBSERVATIONS OF THE JURISDICTIONAL HIGH COURT ARE AS UNDER:- FROM THE PERUSAL OF THE RETURN THE DETAILS FURNIS HED THE ASSESSMENT ORDER AND AVERMENTS MADE IN THE COUNTER AFFIDAVIT REFERRED HEREINABOVE IT IS APPARENT THAT THE PETIT IONER HAD DISCLOSED ALL THE NECESSARY MATERIAL FACTS RELATING TO THE SALES OF THE SHARES. THE NUMBER OF SHARES SOLD SALE PROCEEDS AN D EXPENSES THE DETAILS OF THE EXPENSES THE INTEREST RECEIVED FROM THE BANK :-24-: THE SALE PROCEEDS INVESTED IN THE HOUSE ETC. UNDER SECTION 54-F OF THE ACT THE CLAIM OF EXEMPTION THEREOF AND CALCULA TION OF CAPITAL GAINS AS NIL HAVE BEEN FURNISHED. THE COMPLETE DET AILS HAVE BEEN FURNISHED ALONG WITH THE RETURN AND DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. MORE SO DURING THE COURSE OF ASSESSMENT PROCEEDINGS A NOTICE WAS ISSUED ON 07.08.1998 BY TH E ASSESSING AUTHORITY ASKING THE PETITIONER TO FURNISH THE DETA ILS OF SHARE INCOME AS SHOWN IN THE COMPUTATION OF INCOME AND TO FURNISH THE DETAILS OF THE NEW INVESTMENT MADE EITHER IN THE IM MOVEABLE OR IN THE MOVEABLE PROPERTY DURING THE YEAR APART FROM T HE OTHER QUERIES. IN PURSUANCE THEREOF THE PETITIONER HAD F URNISHED THE DETAILS OF THE SHARE INCOME AND THE DETAILS OF THE NEW INVESTMENT IN THE PROPERTY. THE ASSESSMENT ORDER HAS BEEN PASS ED AFTER THE PROPER ENQUIRY AND DUE CONSIDERATION OF THE RELEVAN T MATERIALS RELATING TO THE SALES OF THE SHARES. ON THESE FACTS WE ARE OF THE VIEW THAT THERE WAS NO FAILURE ON THE PART OF THE A SSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS RELAT ING TO SALES OF SHARES EXPENSES INCURRED INTEREST RECEIVED AND CO MPUTATION OF CAPITAL GAINS. NOW COMING TO THE SECOND QUESTION NAMELY WHETHER THE NOTICE IS BARRED BY LIMITATION. A NOTICE WAS ISSUED ON 29.03.2003 BEYOND THE PERIOD OF FOUR YEARS. THE ASSESSMENT YEA R INVOLVED IS 1996-97. THE FOUR YEARS EXPIRED ON 31.03.2001. WE H AVE ALREADY HELD ABOVE THAT IT IS NOT THE CASE OF THE FAILURE O N THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. WE DO NOT FIND ANY SUBSTANCE IN THE ARGUMENT OF LEA RNED STANDING COUNSEL THAT WHERE THE ESCAPED INCOME EXCE EDS RUPEES ONE LAC THE LIMITATION TO ISSUE NOTICE IS SIX YEAR S UNDER SECTION 149 OF THE ACT WHETHER THE CASE FALLS UNDER THE EXCEPT ION OF THE PROVISO TO SECTION 147 OR NOT. IN OUR VIEW BOTH SECTIONS 147 AND 149 OF THE ACT AR E TO BE :-25-: READ TOGETHER. THE PROVISO TO SECTION 147 OF THE AC T SPECIFICALLY PROVIDES THE LIMITATION FOR TAKING ACTION UNDER THE SAID SECTION WITHIN FOUR YEARS AND ONLY IN THE EXCEPTIONAL CASE MENTIONED THEREIN NAMELY WHERE THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT FOR THE ASSESSMENT YEAR THE PROCEEDING CAN BE INI TIATED BEYOND THE PERIOD OF FOUR YEARS. THE PROVISO TO SECTION 14 7 COMPLETELY PROHIBITS TO TAKE ACTION BEYOND FOUR YEARS UNLESS T HE CASE IS COVERED UNDER THE EXCEPTION MENTIONED IN THE PROVISO ITSELF . SECTION 149 PROVIDES LIMITATION FOR THE ISSUE OF NOTICE UNDER S ECTION 148. SECTION 149 (1)(A) PROVIDE GENERAL LIMITATION FOR ISSUE OF NOTICE FOUR YEARS. SECTION 149(B) IS A EXCEPTION TO SUB SECTION (A) OF SECTION 149 (1) OF THE ACT PROVIDES SIX YEARS LIMITATION FOR ISSUE OF NOTICE IN CASE ESCAPED INCOME EXCEEDS ONE LAC. SECTION 149 (L)(A) AND (B) READ WITH PROVISO TO SECTION 147 OF THE ACT CLEARLY PROV IDES THAT WHERE THE CASE FALLS UNDER THE EXCEPTION MENTIONED IN THE PROVISO TO SECTION 147 OF THE ACT THE PROCEEDING CAN BE TAKEN BEYOND THE PERIOD OF FOUR YEARS BUT WITHIN SIX YEARS IF THE E SCAPED INCOME EXCEEDS RUPEES ONE LAC AND IN FOR ALL OTHER CASES THE LIMITATION FOR ISSUE OF NOTICE REMAINS FOUR YEARS MEANING THEREBY THAT IF THE INCOME CHARGEABLE THE TAX WHICH HAS ESCAPED ASSESSM ENT IS LESS THAN RUPEES ONE LAC THE LIMITATION TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT IS ONLY FOUR YEARS EVEN IF CASE FALLS UN DER THE EXCEPTION MENTIONED IN PROVISO TO SECTION 147 AND SIX YEARS L IMITATION IS APPLICABLE ONLY IN CASE WHERE ESCAPED INCOME CHARGE ABLE TO TAX EXCEEDS RUPEES ONE LAC AND THE CASE FALLS UNDER EXC EPTION NAMELY THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY MATERIAL FACT. THEREFORE WHERE THERE IS A CA SE OF FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS ON THE PART OF THE ASSESSEE THE ACTION CAN BE TAKEN BEYOND THE PERIOD OF FOUR Y EARS BUT IF THE ESCAPED INCOME CHARGEABLE THE TAX IS LESS THAN RUPE ES ONE LAC THE PERIOD OF LIMITATION FOR THE ISSUE OF NOTICE IS ONL Y FOUR YEARS AND :-26-: WHERE THE ESCAPED INCOME EXCEEDS RUPEES ONE LAC THE LIMITATION TO ISSUE THE NOTICE UNDER SECTION 148 IS UP TO SIX YEA RS. THE OBJECT FIXING SUCH LIMITATION APPEARS TO BE THAT WHERE THE ESCAPED INCOME IS LESS THAN ONE LAC THE TAX INCIDENCE MAY BE SMAL L THE ACTION UNDER SECTION 147 SHOULD NOT BE TAKEN BEYOND THE PERIOD O F FOUR YEARS IN ANY CASE. THUS ON THE PLAIN READING OF SECTION 147 AND SEC TION 149 LEGAL POSITION IN RESPECT OF LIMITATION EMERGES AS FOLLOWS: (I) IN VIEW OF PROVISO TO SECTION 147 NO ACTION CAN BE TAKEN UNDER SECTION 147 BEYOND THE PERIOD OF FOUR YEARS I F THE CASE DOES NOT FALL WITHIN THE EXCEPTION OF THE PROVISO MENTIO NED IN THE PROVISO ITSELF NAMELY IF THERE IS NO CASE OF FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS WHICH ARE NECESSARY FOR ASSESSMENT FOR THE YEAR OF ASSESSMENT ETC. (II) IF THE CASE FALLS UNDER THE EXCEPTION MENTIONED IN THE PROVISO TO SECTION 147 NAMELY THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH A RE NECESSARY FOR ASSESSMENT FOR THE YEAR OF ASSESSMENT ETC. THEN AC TION CAN BE TAKEN BEYOND FOUR YEARS SUBJECT TO THE ISSUE OF NOT ICE UNDER SECTION 148 OF THE ACT WITHIN THE LIMITATION PROVIDED UNDER SECTION 149 OF THE ACT. (III) WHERE CASE FALLS UNDER THE EXCEPTION TO PROVISO TO SECTION 147 AND ESCAPED INCOME EXCEED RUPEES ONE LAC THE NO TICE UNDER SECTION 148 CAN BE ISSUED BEYOND THE PERIOD OF 4 YE ARS BUT WITHIN 6 YEARS UNDER SECTION 149 (1) (B). (IV) IN CASE WHEN THE ESCAPED INCOME IS LESS THAN RUPEES ONE LAC THE LIMITATION TO ISSUE THE NOTICE UNDER SECTION 14 8 IS ONLY FOUR YEARS EVEN IF THE CASE FALLS UNDER THE EXCEPTION O F PROVISO TO SECTION 147. IT MAY BE MENTIONED HERE THAT OUR ABOVE VIEW IS SUP PORTED :-27-: BY THE DECISION OF THE BOMBAY HIGH COURT IN THE CAS E OF ANIL RADHAKRISHNA WANI VS. INCOME-TAX OFFICER AND OTHERS REPORTED IN (2010) 323 ITR 564 (BORN) IN THE CASE OF MULTISCR EEN MEDIA P. LTD. VS. UNION OF INDIA AND ANOTHER (NO.1) REPORTED IN (2010) 324 ITR 48 (BORN) IN THE CASE OF IPCA LABORATORIES LTD. VS . GAJANAND MEENA DEPUTY COMMISSIONER OF INCOME-TAX AND OTHERS (NO.2) REPORTED IN (2001) 251 ITR 416 AND IN THE CASE OF SUPREME TREVES PVT. LTD. VS. DEPUTY' COMMISSIONER OF. INCOME-TAX A ND OTHERS REPORTED IN (2010) 323 ITR 323 (BORN) AND THE DECI SION OF THE . GUJRAT HIGH COURT IN THE CASE OF ARVIND MILLS LTD. VS. DEPUTY (2000) COMMISSIONER OF INCOME-TAX (ASSESSMENT) REPORTED I N (2000) 242 ITR 173 IN THE CASE OF GUJARAT FLUOROCHEMICALS LTD . VS. DEPUTY COMMISSIONER OF INCOME-TAX REPORTED IN (2009) 319 ITR 282 (GUJ.) AND IN THE CASE OF INDUCTO ISPAT ALLOYS LIMITED VS. ASSISTANT COMMISSIONER OF INCOME-TAX (OSD) REPORTED IN (2010) 320 ITR 458 (G UJ). IN VIEW OF THE ABOVE WE ARE OF THE VIEW THAT THE I MPUGNED NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS BARRE D BY LIMITATION BEING ISSUED BEYOND THE PERIOD OF LIMITATION INASMU CH AS NO CASE OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY MATERIAL FACT NECESSARY FOR ASSESSMENT FOR THE ASSESSMENT YE AR IS MADE OUT. THE WRIT PETITION IS ACCORDINGLY ALLOWED AND NOTIC E DATED 28.03.2003 ISSUED UNDER SECTION 148 OF THE ACT FOR THE ASSESSMENT YEAR 1996-97 IS HEREBY QUASHED. THERE SHALL BE NO O RDER AS TO COSTS. DT.14.09.2010 12. WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SIMI LAR TO THAT OF VIKRAM KOTHARI (HUF) V. STATE OF U.P. AND OTHERS (SUPRA) A ND EVEN THE REASONS RECORDED ARE ALSO SIMILAR. WE THEREFORE FOLLOW THE JUDGME NT OF THE JURISDICTIONAL HIGH :-28-: COURT IN THE CASE OF VIKRAM KOTHARI (HUF) V. STATE OF U.P. AND OTHERS (SUPRA) IN PREFERENCE TO THE DECISION OF THE TRIBUNAL PASSED I N THE CASE OF SHRI DEEPAK KOTHARI (HUF). 13. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERIT IN T HE APPEAL FILED BY THE REVENUE AND ACCORDINGLY WE DISMISS THE SAME. CO NO.10/LKW/2006: 14. SINCE WE HAVE CONFIRMED THE ORDER OF THE LD. CIT(A) IN ANNULLING THE REASSESSMENT ORDER THEREFORE NO OTHER RELIEF CAN BE GIVEN TO THE ASSESSEE IN THIS CASE. ACCORDINGLY WE DISMISS THE CROSS OBJECTION AS INFRUCTUOUS. 15. IN THE RESULT APPEAL OF THE REVENUE AND CROSS OBJE CTION OF THE ASSESSEE ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25.3.201 1. SD/- SD/- [ N. K. SAINI] [H. L. KARWA] ACCOUNTANT MEMBER VICE PRESIDENT DATED:25.3.2011 JJ:2303 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR