J-Wp-735-2005.Odt v. A. Selvaraj

IN THE HIGH COURT OF JUDICATURE AT BOMBAY. ORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO.735 OF 2005 PETITIONER:Milton Plastics Limited,a company registered under theCompanies Act, 1956 and having itsregistered office at Asian Building, 4[th]Floor, R. Kamani Marg, Ballard Estate,Mumbai – 400 001.a company registered under theCompanies Act, 1956 and having itsregistered office at Asian Building, 4[th]Floor, R. Kamani Marg, Ballard Estate,Mumbai – 400 001. ..VERSUS.. RESPONDENTS [:]1. Mudit Nagpal,Deputy Commissioner of Income-tax,Circle 2(2), Mumbai, having his officeat 5th floor, Room No.545, AayakarBhavan, M. K. Road, Mumbai 400 020Deputy Commissioner of Income-tax,Circle 2(2), Mumbai, having his officeat 5th floor, Room No.545, AayakarBhavan, M. K. Road, Mumbai 400 020 2. A. Selvaraj, Commissioner of Income Tax, City II,Mumbai, having his office at AayakarBhavan, Maharshi Karve Marg,Mumbai-400 020.Mumbai, having his office at AayakarBhavan, Maharshi Karve Marg,Mumbai-400 020. 3. Union of India through the under Secretary, Ministryof Law Justice and Company Affairs,North Block, New Delhi- 110 101of Law Justice and Company Affairs,North Block, New Delhi- 110 101 ---------------------------------------------------------------------------------------- Mr Ajaykumar R. Singh, Advocate for the Petitioner.Mr Akhileshwar Sharma with Ms Shilpa Goel, Advocate for the Respondents. -------------------------------------------------------------------------------------------------------- CORAM:DHIRAJ SINGH THAKUR ANDVALMIKI SA MENEZES, JJ.th PRONOUNCED ON:13MARCH, 2023. JUDGMENT: (PER VALMIKI SA MENEZES, J.) .By this writ petition invoking our jurisdiction underArticle 226 of the Constitution of India, the Petitionerimpugns Notice dated 22.03.2004 issued by the RespondentNo.1 - Deputy Commissioner of Income Tax, Circle 2(2),Mumbai, under Section 148 of the Income Tax Act, 1961(hereinafter referred as “the Act”) alongwith order dated04.03.2005 dismissing the Petitioner’s objections to reopeningof assessment for the Assessment Year 1997-98. 2.Rule. By consent of the parties, Rule is madereturnable forthwith and the petition is heard finally. 3.The primary contentions raised in the writ petitionare stated as under : a)That the reopening of assessment, where it has beenmade under Section 143(3) of the Act, beyond a period of fouryears from the end of the relevant assessment year would beillegal, if the assessee had disclosed all material facts truly andfully during the previous assessment; that in the facts of thepresent case, the Assessing Officer had no jurisdiction to reopen the case of assessment for the Assessment Year 1997-98,there being no suppression of any material, all of which wasbefore the Assessing Officer, when previous orders ofassessment had been passed. b)In the light of the fact that all sale and lease backtransactions made during the Assessment Year 1996-97, by thePetitioner, and since similar transactions were entered intoleasing machinery to third parties during the Assessment Year1997-98, which were different from the ones transacted inAssessment Year 1996-97, the Assessing Officer had nojurisdiction to reopen the assessment after depreciationallowance claimed by the Petitioner for the relevant assessmentyear had been examined by the Assessing Officer and had beenaccepted after scrutiny. c)That in view of the issuance of notice under Section142(1) of the Act dated 21.09.1999 by the DeputyCommissioner of Income Tax, Central Circle-11, Mumbai,during Assessment Year 1997-98 and the order of the IncomeTax Appellate Tribunal, Mumbai (hereinafter referred as “theTribunal”) dated 26.03.2008, quashing the reopening notice c)That in view of the issuance of notice under Section142(1) of the Act dated 21.09.1999 by the DeputyCommissioner of Income Tax, Central Circle-11, Mumbai,during Assessment Year 1997-98 and the order of the IncomeTax Appellate Tribunal, Mumbai (hereinafter referred as “theTribunal”) dated 26.03.2008, quashing the reopening notice for the Assessment Year 1996-97, there was no jurisdictionvested in the Assessing Officer to proceed with reopening ofthe assessment for the very same period in the light of thespecific findings of the Tribunal thereinthat reopening wasinvalid as there was no failure on the part of the assessee todisclose true and full material facts; the Petitioner contends thatdismissal of his objections to the reopening of assessmentamounts to a change of opinion renders the reopening ofassessment invalid. 4.During the course of the hearing, we were of theview that production of communication dated 21.09.1999issued by the Deputy Commissioner of Income Tax, CentralCircle-11, Mumbai, issued to the Petitioner under Section142(1) of the Act, in connection with assessment proceedingsfor Assessment Year 1997-98 should be made part of therecord, to support the contention that in-fact the issue withregard to the claim of depreciation on the assets purchased fromtwo entities, namely M/s. Gremach CNC Limited and M/s.Technology Plastics Limited, had been enquired into by thethen Assessing Officer in a scrutiny proceedings for the assessment year, we directed the revenue to file an affidavit withregard to the authenticity and genuineness of thecommunications relied upon by the Petitioner, who had thenproduced the same across the bar to answer our query. Timewas granted to the Respondent to file its affidavit-in-reply till07.12.2022. On 06.12.2022, the Petitioner filed an affidavitsupporting the production of copies of the communicationdated 21.09.1999 of Deputy Commissioner of Income Tax,Central Circle 11, Mumbai, to the Petitioner calling forinformation under Section 142(1) of the Act for theAssessment Year 1997-98, which included requirements tofurnish copies of the bills for addition fixed assets during theyear under consideration alongwith the agreement for leasetransactions and hire purchase entered into parties. Under thesame affidavit, the Petitioner has also produced an order dated26.03.2008 of the Tribunal for the Assessment Year 1996-97to substantiate its contention that all disclosures for thatrelevant year had been made before the Assessing Officer,consequently, prompting the Tribunal to allow the Petitioner’s appeal and quash the reopening of assessment for that year. No counter affidavit denying this factual position has been filed by the revenue before us. We have proceededwith the hearing of the matter on the basis of theseuncontroverted facts. 5.We have heard Mr Ajaykumar R. Singh, learnedCounsel for the Petitioner and Mr Akhileshwar Sharma,learned Counsel for the Respondents. We have perused therecord of the petition and the additional affidavit of thePetitioner. 6.It is the Petitioner’s contention that it filed its returnof income for the previous year ended 31.03.1997 relevant tothe Assessment Year 1997-98 on 01.12.1997, in which itdisclosed two transactions with M/s. Gremach CNC Limitedand M/s. Technology Plastics Limited, being sale and lease backtransactions of machinery, on which it had claimed depreciation@ 100%, alongwith lease rental income on such assets fromthese two entities. It is further the case of the Petitioner thatafter the return was processed under Section 143(1)(a) of theAct, the case was taken up for scrutiny by the revenue by 6.It is the Petitioner’s contention that it filed its returnof income for the previous year ended 31.03.1997 relevant tothe Assessment Year 1997-98 on 01.12.1997, in which itdisclosed two transactions with M/s. Gremach CNC Limitedand M/s. Technology Plastics Limited, being sale and lease backtransactions of machinery, on which it had claimed depreciation@ 100%, alongwith lease rental income on such assets fromthese two entities. It is further the case of the Petitioner thatafter the return was processed under Section 143(1)(a) of theAct, the case was taken up for scrutiny by the revenue by issuing notice under Section 143(2) of the Act; That during thecourse of assessment, various information including details ofthe sale and lease back transactions of these two entities werecalled for by the revenue, which were furnished in the form ofcomplete information by producing the relevant documentsunder cover of letter dated 24.01.2000 and letter dated01.03.2000; That thereafter, the assessment for the year 1997-98 was completed in terms of Section 143(3) of the Act by anorder dated 31.03.2000 allowing the depreciation claimed bythe Petitioner on the assets purchased by it under the sale andlease back transactions. That thereafter on 22.03.2004, the revenue issued anotice under Section 148 of the Act, claiming that someincome of the Petitioner had escaped assessment and calledupon the Petitioner to file a return, which the Petitioner did on08.09.1998 without prejudice to its contention that reopeningof assessment was impermissible. It is the Petitioner’ssubmission that when the Respondent No.1 furnished reasonsfor issuing notice under Section 148 of the Act, under cover ofletter dated 25.08.2004, the reasons disclosed that the claim of 100% depreciation made in the Assessment Year 1997-98related to purchase of assets from the said M/s. Gremach CNCLimited and M/s. Technology Plastics Limited, and it wasalleged that for the Assessment Year 1996-97, the Petitionerhad entered into similar transactions, which were found to be apaper transactions, on which it claimed 100% depreciation. Therevenue claimed that such depreciation was disallowed underSection 143(3) read with Section 147 of the Act, and on thatcount, proposed to reopen assessment for the year 1997-98. 7.The Petitioner further submits that in view of thejudgment of the Hon’ble Supreme Court in GKN Driveshafts(India) Limited Vs. ITO, reported in (2003) 259 ITR 19 (SC),issuance of notice under Section 148 of the Act, for reopeningof assessment was untenable on the basis that the parties withwhom the sale and lease back transactions were entered into inthe year 1996-97 were different from the parties with whomsimilar transactions were entered into during the AssessmentYear 1997-98, and as such there was no ground for reopeningof assessment as the same was beyond the period of four yearsfrom the end of the relevant Assessment Year. It was further the Petitioner’s contention that the assessee had not failed todisclose all material facts in previous assessment years, where allmaterial and transactions were before the Assessing Officerdisclosed truly and fully, and as such, the reopening ofassessment after four years, was without any jurisdiction vestedin the Assessing Officer. All these contentions were raised inthe reply dated 22.09.2004 filed by the Petitioner to the noticefor reopening of assessment. Petitioner’s contention that the assessee had not failed todisclose all material facts in previous assessment years, where allmaterial and transactions were before the Assessing Officerdisclosed truly and fully, and as such, the reopening ofassessment after four years, was without any jurisdiction vestedin the Assessing Officer. All these contentions were raised inthe reply dated 22.09.2004 filed by the Petitioner to the noticefor reopening of assessment. 8.It is further the contention of the Petitioner as raisedin its additional affidavit dated 06.12.2022, that the revenuehad issued a notice under Section 142(1) of the Act, on21.09.1999 during original assessment proceedings forAssessment Year 1997-98, pursuant to which the Petitioner hadfiled submissions vide its letter dated 23.01.2000 and its letterdated 01.03.2000 submitting complete information about thesale and lease back transactions with M/s. Gremach CNCLimited and M/s. Technology Plastics Limited; Further that thereopening is now based on reassessment proceedings for theAssessment Year 1996-97, in which an order dated 30.03.2005passed by the Assessing Officer has been quashed by the Tribunal vide its order dated 26.03.2008, by holding the saleand lease back transactions for that year with M/s KrishnaVinyl Ltd. and M/s Krishna Organochem Ltd., had beenconsidered in past assessments and there was no room forreassessment proceedings for that year. As noted by us, this facthas not been controverted by the Respondent. 9.The Petitioner then submits that its objections dated22.09.2004 and 24.02.2005 to the impugned notice weredisposed of by the impugned order dated 04.03.2005 rejectingthe objections, which is impugned herein on the basis of abovesubmissions. It is the Petitioner’s submission that the impugnedorder is contrary to law and continuation of reassessmentproceedings against the Petitioner for Assessment Year 1997-98are completely without jurisdiction, void, non-est and illegal,and therefore, such action is arbitrary in violation of Article 14of the Constitution of India. 10.In support of its contentions, the Petitioner has citedthe judgments of this Court in Hindustan Lever Ltd. ..V/s.. R.-B. Wadkar, Assistant Commissioner of IncomeTax and others,reported in Vol. 268 ITR 332, Jainam Investments ..V/s.. Assistant Commissioner of Income Tax, (Writ PetitionNo.2760 of 2019 dated 24.08.2021),Ananta Landmark Pvt.-Ltd. ..V/s.. Deputy Commissioner of IncomeTax and others,reported in(2021) 439 ITR 168 (Bom) and Purity Techtextile-Private Limited ..V/s.. Assistant Commissioner of IncomeTaxand another, reported in (2010) 325 ITR 459 (Bom), tobuttress the argument that the expressions “reason to believe” inSection 147 of the Act, to mean that the Assessing Officerwould be required to mention enough details of tangiblematerial which is new and not already disclosed in earlierassessments, to enable the Assessing Officer to cross the bar laiddown in that provision. 11.On the other hand, Mr Akhileshwar Sharma, learnedCounsel appearing for the Respondents supports the impugnedorder and argues that the material relied upon by the AssessingOfficer to invoke Section 147 of the Act, was justified as thematerial relied upon had not been previously disclosed by thePetitioner in earlier assessments for the relevant years, andhence, reopening of assessment was justified. 12.This Court in Hindustan Lever Ltd. ..V/s.. R. B. -Wadkar, Assistant Commissioner of IncomeTax and others, dealt with the reasons recorded by the Assessing Officer. The relevant paras of the judgment are quoted as under : 11.On the other hand, Mr Akhileshwar Sharma, learnedCounsel appearing for the Respondents supports the impugnedorder and argues that the material relied upon by the AssessingOfficer to invoke Section 147 of the Act, was justified as thematerial relied upon had not been previously disclosed by thePetitioner in earlier assessments for the relevant years, andhence, reopening of assessment was justified. 12.This Court in Hindustan Lever Ltd. ..V/s.. R. B. -Wadkar, Assistant Commissioner of IncomeTax and others, dealt with the reasons recorded by the Assessing Officer. The relevant paras of the judgment are quoted as under : “20.In the case in hand it is not in dispute that theassessment year involved is 1996-97. The last date ofthe said assessment year was March 31, 1997, andfrom that date if four years are counted, the period offour years expired on March 1, 2001. The noticeissued is dated November 5, 2002, and received bythe assessee on November 7, 2002. Under thesecircumstances, the notice is clearly beyond the periodof four years. 21.The reasons recorded by the Assessing Officernowhere state that there was failure on the part of theassessee to disclose fully and truly all material factsnecessary for the assessment of that assessment year.It is needless to mention that the reasons are requiredto be read as they were recorded by the AssessingOfficer. No substitution or deletion is permissible.No additions can be made to those reasons. Noinference can be allowed to be drawn based onreasons not recorded. It is for the Assessing Officer todisclose and open his mind through reasons recordedby him. He has to speak through his reasons. It is forthe Assessing Officer to reach the conclusion as towhether there was failure on the part of the assesseeto disclose fully and truly all material facts necessaryfor his assessment for the concerned assessment year.It is for the Assessing Officer to form his opinion. Itis for him to put his opinion on record in black andwhite. The reasons recorded should be clear andunambiguous and should not suffer from anyvagueness. The reasons recorded must disclose hismind. The reasons are the manifestation of the mindof the Assessing Officer. The reasons recorded shouldbe self-explanatory and should not keep the assesseeguessing for the reasons. Reasons provide the linkbetween conclusion and evidence. The reasonsrecorded must be based on evidence. The AssessingOfficer, in the event of challenge to the reasons, must be able to justify the same based on material availableon record. He must disclose in the reasons as towhich fact or material was not disclosed by theassessee fully and truly necessary for assessment ofthat assessment year, so as to establish the vital linkbetween the reasons and evidence. That vital link isthe safeguard against arbitrary reopening of theconcluded assessment. The reasons recorded by theAssessing Officer cannot be supplemented by filingan affidavit or making an oral submission, otherwise,the reasons which were lacking in the materialparticulars would get supplemented, by the time thematter reaches the court, on the strength of theaffidavit or oral submissions advanced. 22. Having recorded our finding that theimpugned notice itself is beyond the period of fouryears from the end of the assessment year 1996-97and does not comply with the requirements of theproviso to Section 147 of the Act, the AssessingOfficer had no jurisdiction to reopen the assessmentproceedings which were concluded on the basis ofassessment under Section 143(3) of the Act. On thisshort count alone the impugned notice is liable to bequashed and set aside.” 13.InJainam Investments ..V/s.. Assistant Commissioner of Income Tax(supra), this Court hasextensively dealt with the expression “reason to believe” inSection 147 of the Act and the manner in which the AssessingOfficer is required to indicate with fair clarity the material that 22. Having recorded our finding that theimpugned notice itself is beyond the period of fouryears from the end of the assessment year 1996-97and does not comply with the requirements of theproviso to Section 147 of the Act, the AssessingOfficer had no jurisdiction to reopen the assessmentproceedings which were concluded on the basis ofassessment under Section 143(3) of the Act. On thisshort count alone the impugned notice is liable to bequashed and set aside.” 13.InJainam Investments ..V/s.. Assistant Commissioner of Income Tax(supra), this Court hasextensively dealt with the expression “reason to believe” inSection 147 of the Act and the manner in which the AssessingOfficer is required to indicate with fair clarity the material that he relies upon which forms the basis for proceeding withreopening of assessment. Para 16 of the judgment reads thus : “16 The Assessing Officer was aware of the factthat the script of Shreenath was allegedly a penny stock company as it is clear from the annualinformation report given by the Assessing Officerhimself to petitioner alongwith the first notice.Therefore, there is no question of any furtherinformation on the same issue being treated asinformation so as to justify the reopening of theassessment. The expression "reason to believe" inSection 147 of the Act has been held to mean acause or justification. It is also the position that atthe stage when the Assessing Officer reopens anassessment, it is not necessary that the materialbefore the Court should conclusively prove orestablish that income has escaped assessment. Butthat does not mean that the Assessing Officer willnot even mention enough details of tangiblematerial that he has received for him to reopen theassessment. A general and bald statement, as statedin the reasons for reopening that KolkataInvestigation Wing have analyzed the trade data ofidentified 84 penny stocks and there are 13 pennystocks in which petitioner is found to be involved,has been made, is not enough. The AssessingOfficer should have atleast indicated the details ofthe material that he had received and when hereceived.” 14.In Ananta Landmark Pvt. Ltd. ..V/s.. Deputy-Commissioner of IncomeTax and others (supra), this Courtdealt with jurisdiction of the Assessing Officer to issue a noticeunder Section 148 of the Act and in dealing with the provisionsof sub-section (1) of Section 142 and Section 147 of the Act,has held thus : “8.It is settled law that where the assessment issought to be reopened after the expiry of a period offour years from the end of the relevant year, theproviso to Section 147stipulates a requirement that there must be a failure onthe part of the assessee todisclose fully and truly all material facts necessary forhis assessment for that assessment year. Since in thecase at hand, the assessment is sought to be reopenedafter a period of four years, the proviso to Section 147is applicable. 14.In Ananta Landmark Pvt. Ltd. ..V/s.. Deputy-Commissioner of IncomeTax and others (supra), this Courtdealt with jurisdiction of the Assessing Officer to issue a noticeunder Section 148 of the Act and in dealing with the provisionsof sub-section (1) of Section 142 and Section 147 of the Act,has held thus : “8.It is settled law that where the assessment issought to be reopened after the expiry of a period offour years from the end of the relevant year, theproviso to Section 147stipulates a requirement that there must be a failure onthe part of the assessee todisclose fully and truly all material facts necessary forhis assessment for that assessment year. Since in thecase at hand, the assessment is sought to be reopenedafter a period of four years, the proviso to Section 147is applicable. It is also settled law that the Assessing Officerhas no power to review an assessment which has beenconcluded. If a period of four years has lapsed fromthe end of the relevant year, the Assessing Officer hasto mention what was the tangible material to come tothe conclusion that there is an escapement of incomefrom assessment and that there has been a failure tofully and truly disclose material fact. After a period offour years even if the Assessing Officer has sometangible material to come to the conclusion that thereis an escapement of income from assessment, hecannot exercise the power to reopen unless hediscloses what was the material fact which was nottruly and fully disclosed by the assessee. If weconsider the reasons for reopening, except stating inparagraph 3 that a sum of Rs.7,66,66,663/- whichwas chargeable to tax has escaped assessment byreason of failure on the part of the assessee to disclosefully and truly all material facts necessary, there isnothing else in the reasons. In an unreportedjudgment of this Court in First Source SolutionsLimited v. The Asst. CIT [2021] 438 ITR 139(Bom); (Writ Petition No.2762 of 2019 dated August31, 2021) relied upon by Mr. Pardiwalla, the Courtheld that a general statement that the escapement ofincome is by reason of the failure on the part of theassessee to disclose fully and truly all material factsnecessary for his assessment is not enough. TheAssessing Officer should indicate what was thematerial fact that was not truly and fully disclosed tohim. In the affidavit in reply, it is stated that thereassessment proceedings was based on auditobjections. In another unreported judgment of thisCourt in Jainam Investments v. Asst. CIT [2021] 439ITR 154 (Bom); Writ Petition No.2760 of 2019dated August 24, 2021 relied upon by Mr.Pardiwalla, it is held that the reasons for reopening anassessment should be that of the Assessing Officer alone who is issuing the notice and he cannot actmerely on the dictates of any another person inissuing the notice. In Indian and Eastern NewspaperSociety v. CIT [1979] 119 ITR 996 (SC), also reliedupon by Mr. Pardiwalla, the court held that in everycase, the Income-tax Officer must determine forhimself what is the effect and consequence of the lawmentioned in the audit note and whether inconsequence of the law which has come to his noticehe can reasonably believe that income had escapedassessment. The basis of his belief must be the law ofwhich he has now become aware. The opinionrendered by the audit party in regard to the lawcannot, for the purpose of such belief, add to orcolour the significance of such law. Therefore, thetrue evaluation of the law in its bearing on theassessment must be made directly and solely by theIncome-tax Officer. 12.As regards ground No. (iii) that the AssessingOfficer had not made any discussion in respect ofthose points on which assessment is reopened andhence, he has not formed any opinion and thus, thewindow of reopening of assessment will remain openfor Assessing Officer on those points, these are alsonot the grounds in the reason for reopening. Theentire case of respondent while issuing reasons forreopening is “failure to disclose truly and fullymaterial facts”.” 15. -Assistant Commissioner of IncomeTax and another(supra),this Court considered the jurisdictional conditions to befulfilled under Section 147 of the Act in the formation of thebelief by the Assessing Officer that income chargeable to taxhad escaped assessment. Whilst dealing with the question ofthe bar of limitation of four years, this Court has held as under : “12.Section 147 provides that if the AssessingOfficer has reason to believe that any incomechargeable to tax has escaped assessment for anyassessment year, he may, subject to the provisions ofSections 148 to 163 assess or reassess such income andalso any other income chargeable to tax which hasescaped assessment and which comes to his noticesubsequently in the course of the proceedings underthe section. Under the first proviso, where anassessment has been made under sub-section (3) ofsection 143 or section 147 for the relevant assessmentyear, no action can be initiated under section 147 afterthe expiry of four years from the end of the relevantassessment year unless the income chargeable to taxhas escaped assessment by reason of the failure of theassessee, inter alia, to disclose fully and truly allmaterial facts necessary for his assessment, for thatassessment year. The jurisdictional condition undersection 147 is the formation of belief by the AssessingOfficer that income chargeable to tax has escapedassessment for any assessment year. The reasons whichare recorded by the Assessing Officer are crucial and itis on the basis of those reasons alone that the validityof the order reopening an assessment has to bedecided. Where an assessment has been made undersection 143(3), action can be initiated after the expiryof four years from the end of the relevant assessmentyear if the income chargeable to tax has escapedassessment because of the failure of the assessee tomake fully and truly a disclosure of the material facts.The provisions of section 147 have been interpretedin a recent judgment of the Supreme Court in CIT v.Kelvinator of India Limited [2010] 320 ITR 561. TheSupreme Court noted that after April 1, 1989 thepower to reopen is much wider than earlier since thesubstantive part of section 147 only imposes onecondition, namely, that the Assessing Officer musthave reason to believe that income has escapedassessment. The Supreme Court held that none theless, a mere change of opinion would not justify theexercise of the power to reopen an assessment andthere must be tangible material before the AssessingOfficer to come to the conclusion that income hasescaped assessment. The Supreme Court held thus (page 564) : (page 564) : “. . . one needs to give a schematic interpretation tothe words 'reason to believe' failing which, we areafraid, section 147 would give arbitrary powers to theAssessing Officer to reopen assessments on the basisof 'mere change of opinion', which cannot be per sereason to reopen. We must also keep in mind theconceptual difference between power to review andpower to reassess. The Assessing Officer has no powerto review; he has the power to reassess. Butreassessment has to be based on fulfilment of certainprecondition and if the concept of 'change of opinion’is removed, as contended on behalf of theDepartment, then, in the garb of reopening theassessment, review would take place. One must treatthe concept of 'change of opinion' as an inbuilt test tocheck abuse of power by the Assessing Officer. Hence,after April 1, 1989, Assessing Officer has power toreopen, provided there is 'tangible material' to cometo the conclusion that there is escapement of incomefrom assessment. Reasons must have a live link withthe formation of the belief.” Purity Techtextile Private Limited ..V/s.. Assistant-Commissioner of IncomeTax and another(supra), whilstreferring to the judgment of the Hon’ble Supreme Courtrendered in CIT ..V/s.. Kelvinator of India Limited , reportedin [2010] 320 ITR 561, has held that it is only when theAssessing Officer records reasons which are based upon specificinformation, which constitutes the assessee’s failure to makefull and true disclosures of those material facts, that the revenuecan assume jurisdiction under Section 147 to reopen assessment. 16.Keeping these principles laid down by this Court inthe afore quoted judgments in mind, we proceed to examinethe legality of the impugned order. It is clear from the order in appeal passed by theTribunal for the Assessment year 1996-97, that the reopeningproceedings for that year had been set aside for reasons that thetwo transactions of sale and lease back with M/s Krishna VinylLtd. and M/s Krishna Organochem Ltd., had been in-factdisclosed with enough detail for that relevant Assessment Year.The Tribunal has further held that the reasons recorded by theAssessing Officer for issuing a reopening notice beinginformation received from the Deputy Commissioner ofIncome Tax, which revealed that the said two transactions werenot genuine would not be sustained as those two transactionsin-fact formed part of the earlier assessment orders anddepreciation had been claimed and allowed in the earlierassessment order. The Tribunal concluded that thereassessment proceedings are liable to quashed for theAssessment Year 1996-97. In their replies, the Petitioner has specifically raised the contention that for the Assessment Year1997-98, the assessee had entered into similar transactions withtwo other entities and that there was no allegation of nondisclosure of primary facts in the notice nor was there anyallegation that there was some new source of income, whichhad come to light to make the Assessing Officer believe thatthere was escapement of taxable income. In fact it is clear thatthe parties with whom the sale and lease back transactions wereentered into by the Petitioner for the year 1996-97, were clearlydifferent from the ones with whom similar transactions wereentered into for the Assessment Year 1997-98, in whichdepreciation allowance was granted after detailed scrutiny. ThePetitioner has produced before us the letter dated 21.09.1999 inreply to earlier notice under Section 142(1) of the Act, issuedfor reopening the Assessment Year 1997-98, wherein they werecalled upon to furnish the copies of bills for addition to fixedassets during that year and to furnish the copy of the agreementfor lease transactions and hire purchase entered into the parties,which were in-fact furnished to the revenue, which granted thedepreciation in the assessment order for that year. 17.From the above facts, we conclude that thePetitioner had disclosed all material facts for the AssessmentYear 1997-98 including the transactions now referred to in theimpugned notice under Section 148 of the Act. There was thusno foundational fact at all disclosed in the notice issued by theRespondent No.1 - Deputy Commissioner of Income Tax,Circle 2(2), Mumbaim to assume jurisdiction to reopen the caseof the Petitioner for Assessment Year 1997-98, more so to getover the bar of limitation of four years. The objections raised bythe Petitioner in its reply dated 22.09.2004, that the reasonscited in the notice dated 22.03.2004 issued by the RespondentNo.1 that the reopening was based upon a change of opinionwithout there being any sufficient cause for arriving at thatconclusion is justified and correct. The reasons cited forrejection of the objections in the impugned order dated04.03.2005, namely the reference to the specific transactions ofsale and lease back for the Assessment Years 1996-97 and1997-98 clearly do not constitute material to justify reopeningof the assessment. As held in the judgments of this Courtquoted above, the notice must stipulate that there was a failureon the part of the assessee to disclose fully and truly material facts necessary for its assessment and discovery of such newmaterial, details of which are required to set out in the noticecould be the only material to form the basis for assumingjurisdiction under Section 147 of the Act. In the present case,there is clearly a failure on the part of the Assessing Officer toset out such material that provided the basis for assumption ofjurisdiction under Sections 147 and 148 of the Act. Suchmaterial not being available in the notice, the impugned noticedated 22.03.2004 is clearly without jurisdiction and the same isunsustainable. Consequently, the order dated 04.03.2005rejecting the objections of the Petitioner is also unsustainable. 18.Accordingly, we proceed to quash and set aside theimpugned notice dated 22.03.2004 and order dated04.03.2005 impugned in the present case. 19.Rule is made absolute in terms of prayer Clauses (a)and (b). No costs. (VALMIKI SA MENEZES, J.) (DHIRAJ SINGH THAKUR, J.)