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TMI Blog2009 (8) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... e two appeals filed against separate orders dt. 26th Nov., 2002 and 28th Nov., 2002 of the learned CIT(A)-IV, Surat, in the case of Shri C.D. Singh and M/s C.D. Singh & Sons, respectively, raise the following summarized grounds submitted during the course of hearing of these appeals: ITA No. 4049/Ahd/2002: "1. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in not treating notice issued under s. 148 as invalid and illegal which was issued beyond 4 years in violation of proviso to s. 147 of the Act. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming Rs. 2,60,000 as unexplained investment when only investment of Rs. 1,75,000 pertains to relevant assessment year. Remaining investments in FDRs are either pertaining prior to 1st April, 1988 or after 31st March, 1989. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming Rs. 56,200 as unexplained cash deposits when only deposit of Rs. 46,000 pertains to relevant assessment year. Remaining investments in deposits are either per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her bank account. She further admitted that though the account was in her name, she had no sources of income and all the above investments were made by her husband from his undisclosed income. Subsequently, the assessee submitted revised return on 27th Feb., 1992, declaring income of Rs. 5,60,204 and the assessment was completed under s. 143(3) of the Act vide order dt. 26th March, 1992 on an income of Rs. 5,62,560. In the said assessment order share income from the firms M/s C.D. Singh & Sons, M/s Bhavani Constructions (old) and M/s Bhavani Constructions (new) was assessed. 3. Similarly, in the case of M/s C.D. Singh & Sons (firm), return filed on 31st Aug., 1989 declaring income of Rs. 1,02,341 after the search was revised to income of Rs. 5,77,341. During the course of search, certain loose papers were found, revealing unaccounted expenditure relating to earth carting expenses. Later, assessment was completed under s. 143(3) of the Act vide order dt. 26th March, 1992 on an income of Rs. 5,86,341. 4. Subsequently, the AO recorded the following reasons (as reproduced in the assessment orders) for reopening of the aforesaid assessments under s. 147 of the Act: Shri C.D. Singh " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seized. On verification of the said lose papers it is noticed that during the accounting year under consideration, the assessee has issued vouchers to various persons amounting to Rs. 2,05,040 in respect of earth carting expenses. Here it is pertinent to mention on verification of the trial balance for the accounting year ending on 31st March, 1989 furnished along with the original return it was noticed that the assessee has debited an amount of Rs. 6,80,040 on account of earth carting expenses. In this context, reference is invited to the statement recorded on oath under s. 132(4) of the IT Act of Shri C.D. Singh, one of the partners of the firm wherein answer to question Nos. 54 and 55 he has admitted that out of these expenses, expenses to the extent of Rs. 4,75,000 are bogus. Thus, while filing the revised return the assessee by disallowing the said expenditure of Rs. 4,75,000 revised the total income to the extent of Rs. 6,77,341. Thus, while finalizing the assessment the assessee's revised return was considered and the total income was assessed to Rs. 5,86,341 vide order, under s. 143(3) dt. 26th March, 1992. Subsequently, on verification of the details it is noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant's wife admitted in their separate statements about investments made out of undisclosed sources Off the appellant himself. (2) Several notices were issued after issue of notice under s. 148, the chronology of which is indicated in the assessment order in para 3 but there was no compliance. On 15th Feb., 2002 only appellant made an application and for obtaining a copy of reason recorded for reopening the assessment which was supplied to him on the same day. Subsequently, on date of hearing on 11th March, 2002 no one attended. (3) Instead of appellant requested vide letter in the dispatch section to provide seized material copies, account books etc. since he claimed all this papers were washed away in floods. (4) The AO wrote back stating that copies of seized material, books of account and assessment details had already been furnished on 23rd Feb., 2002. (5) The appellant was unable to give any reliable proof and letter from Kosamba Gram Panchayat about the floods filed is dated June, 1997 where as appellant claimed the same was in August, 1997. (6) Even when final show cause was given appellant has not attended before the AO. (7) No proof of any correspondence with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the issue is squarely covered by the decision of the Hon'ble jurisdictional High Court in the case of Priyanka Carbon & Chemical Industries (P) Ltd. On the other hand, the learned Departmental Representative, supported the findings of the learned CIT(A). 9. We have heard both the parties and gone through the facts of the case as also the decisions relied upon. As is apparent from the reasons mentioned in para 4 above, no omission and/or failure on the part of these assessees has been attributed in relation to disclosure of material facts, fully and truly, relating to these assessments. All the necessary details, forming the basis for recording reasons, were available with the AO even at the time of finalizing the initial assessments completed under s. 143(3) of the Act on 26th March, 1992. In fact, reasons have been recorded only on the basis of seized material in possession of the AO. On the basis of same material, if the AO takes a different view subsequently and that too after expiry of 4 years from the end of the assessment year, that would not confer any jurisdiction on the AO to issue notice under s. 148 of the Act. The scope and effect of s. 147 as substituted w.e.f. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Gujarat High Court held in Shree Tharad Jain Yuvak Mandal vs. ITO (2000) 162 CTR (Guj) 462 : (2000) 242 ITR 612 (Guj) as under: "A perusal of the aforesaid provision goes to show that under the proviso to s. 147, the foundation of conferring jurisdiction on the AO to assess or reassess the income for any assessment year beyond the end of four years from the end of relevant assessment year must be omission or failure on the part of an assessee to make a return under s. 139 for any assessment year or to disclose fully and truly all material facts necessary for his assessment for that year and that the ITO has reason to believe that the income chargeable to tax has escaped assessment for that year. In the absence of any such omission or failure on the part of the assessee, taking action for assessment or reassessment is not permissible for any year after the expiry of four years from the relevant assessment year. The scope of the assessee's duty to disclose fully and truly all material facts necessary for assessment in the context of the provisions of s. 34 of the Indian IT Act, 1922, has been succinctly stated by the Supreme Court by their Lordships in Calcutta Discount Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is sought to be reopened beyond four years from the end of relevant assessment year, the Revenue must establish that there was failure on the part of the assessee to disclose fully and truly all material facts relevant for the purposes of the assessment. 9.3 In the case of Mercury Travels Ltd. vs. Dy. CIT (2003) 179 CTR (Cal) 314 : (2002) 258 ITR 533 (Cal), Hon'ble High Court in the light of facts of the case concluded that no income chargeable to tax had escaped assessment for those assessment years due to failure of the assessee to disclose fully and truly all material facts necessary for its assessment. 9.4 In the case of Anand Samrat & Co. vs. ITO, facts were that an assessment order was passed determining the taxable income as Rs. 20.55 lakhs on the basis of the material recovered in the course of search. The appeal filed by the petitioner against the assessment was partly allowed by the CIT(A) on 27th March, 1986. Thereafter, a second appeal was filed by the assessee seeking further relief. The Tribunal partly allowed the appeal by ordering reduction in the estimate and also allowing deductions under s. 80G, etc. On 19th Feb., 1988, the AO passed an order determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 148 of the Act, having been issued after four years, the reopening the assessment was not valid. 9.8 In CIT vs. Foramer France, Hon'ble apex Court upheld the order of the Hon'ble Delhi High Court in concluding that there was admittedly no failure on the part of the assessee to make a return and disclose fully and truly all material facts necessary for the assessment, proviso to the new s. 147 of the Act squarely applied, and the impugned notices were barred by limitation mentioned in the proviso. 10. In view of the foregoing, especially in the light of aforesaid decisions of Hon'ble jurisdictional High Court and considering the facts and circumstance of the case, we are of the opinion that there is nothing to suggest that all the primary facts were not disclosed by the assessee nor any failure on the part of the assessee to disclose fully and truly all the material facts has been, ascribed in the reasons recorded by the AO or the facts narrated before us. It cannot be said that these assessees suppressed any material facts. It is well-settled that notice under s. 148 of the Act has been issued without the jurisdictional, foundation under s. 147 of the Act being available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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