Pr. Commissioner Of Income Tax, Alwar v. M/S. Supreme Cylinders Pvt. Ltd., A-146, Industrial Area,Bhiwadi, Alwar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 77/2018 Pr. Commissioner Of Income Tax, Alwar. ----Appellant Versus M/s. Supreme Cylinders Pvt. Ltd., A-146, Industrial Area,Bhiwadi, Alwar. ----Respondent For Appellant(s) : Ms. Parinitoo Jain with Ms. Shiva GoyalFor Respondent(s): HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 23/04/2018 Judgment By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department. Counsel for the appellant has framed following questions of law: “i) Whether the findings of the Tribunal are perversein upholding the findings of the CIT(A) of deletingthe addition of Rs. 1,12,58,527/- on account ofsuppressed scrap sales which was made on the basisof material found during the course of survey u/s133A and no evidence was given by the assessee toprove the market rate of that period. ii) Whether the findings of the Tribunal are perversein upholding the findings of the CIT(A) of deletingthe addition of Rs. 1,67,07,740/- made on accountinflated purchases specifically when such purchaseswere not entered in the material inward register andgoods receipt register?” The Tribunal has relied upon earlier decision which has beenconfirmed by us in case of CIT Alwar vs. M/s Supreme CylindersLtd. (DBITA No. 473/2011) decided on 25[th] April, 2017, wherein ithas been observed as under:- “3.However, in subsequent year for the sameassessee, this Court in the case of TheCommissioner of Income Tax, Alwar vs. M/sSupreme Cylinders Ltd. A-146, Industrial Area,Bhiwadi in Tax Appeal No. 67/2012 decided on14[th] September, 2016, has held as under:- “4. Counsel for the appellant has taken usthrough the provisions of Section 147 & 148which read as under:- “147. Income escaping assessment-if- (a) the Assessing Officer has reason to believethat , by reason of the omission or failure on thepart of an assessee to make a return underSection 139 for any assessment year to theAssessing Officer or to disclose fully and truly allmaterial facts necessary for his assessment forthat year, income chargeable to tax had escapedassessment for that year, or 148. Issue a notice, where income has escapedassessment-. (1)Beforemakingtheassessment,reassessment or recomputation under Section147, the Income Tax Officer shall serve on theassessee a notice containing all or any of therequirements which may be included in a noticeunder Sub-section (2) of Section 139; and theprovisions of this Act shall, so far as may be,apply accordingly as if the notice were a noticeissued under that Sub-section.” 5. She has relied upon the decision of theHon'ble Supreme Court in the case of M/s.Phool Chand Bajrang Lal and Anr. Vs.Income Tax Officer and Anr. reported in(1993) 203 ITR 456 (SC) and contended thatthe view taken by the tribunal is required to bereversed and on another judgment of Hon'bleSupreme Court in the case of AssistantCommissioner of Income-Tax vs. RajeshJhaveri Stock Brokers P. Ltd. reported in(2007) 291 ITR 500 (SC). 6.Counsel for the respondent contended thatthe Tribunal while considering the case of the assessee in paragraphs no. 31, 32 & 33observed as under:- 5. She has relied upon the decision of theHon'ble Supreme Court in the case of M/s.Phool Chand Bajrang Lal and Anr. Vs.Income Tax Officer and Anr. reported in(1993) 203 ITR 456 (SC) and contended thatthe view taken by the tribunal is required to bereversed and on another judgment of Hon'bleSupreme Court in the case of AssistantCommissioner of Income-Tax vs. RajeshJhaveri Stock Brokers P. Ltd. reported in(2007) 291 ITR 500 (SC). 6.Counsel for the respondent contended thatthe Tribunal while considering the case of the assessee in paragraphs no. 31, 32 & 33observed as under:- “31. Now the ld. Counsel of the assessee herebefore the Tribunal stated that reopening of theassessment is bad in law as the same isreopened after expiry of four years. It was alsosubmitted that there was no failure on the partof the assessee for concealing any particulars orsubmitting the details. Therefore, after fouryears reopening of assessment was not valid asearlier assessment was completed under Section143(3). Attention of the Bench was drawn oncopy of assessment order placed in the paperbook at pages 157 to 160. It was also submittedthat the assessment was completed on 28-3-2003 whereas reasons have been recorded on28-3-2008 which is undisputedly after four yearsof completion of assessment. 32. On the other hand, the ld. D/R stated thatthis issue may be disposed off on merit. Reliancewas placed on the order of id. CIT(A). 33. After considering the submissions andperusing the material on record, we find thatassessee deserves to scceed on the legal issueraised through cross objection. The copy ofreasons recorded on 28-3-2008 is placed atpages 165 to 167 of the paper book and it isseen that the AO has observed in last para ofreasons recorded that he has arisen to believethat assessee company concealed its incomewhich has escaped assessment by furnishingincomplete and inaccurate particulars within themeaning of section 147. No where it has beenmentioned in the reasons recorded that anyincome has escaped on account of failure of theassessee to disclose truly and fully all materialfacts. The assessment in this case wascompleted under Section 143(3) on 28-3-2003.The reasons have been recorded after expiry offour years which is not permissible as perprovisions of law and on account of variousjudgments pronounced by the Hon'ble ApexCourt as well as various High Courts. VariousHigh Courts have decided this issue thatreopening of the assessment after expiry of fouryears is bad in law where no income hasescaped assessment on account of failure of theassessee to disclose truly and fully all materialfacts. Various decisions decided by Hon'ble HighCourts are reported in case of Indian FarmersFertilizers Co-op. Ltd., 171 Taxman 379 (Del.),in case of Tanna Builders Pvt. Ltd. 283 ITR448(Bom.), in case of K.C.P. Ltd. 146 ITR284(AP), in case of Vareli Weavers Pvt. Ltd., 240 ITR 77 (Guj.) etc. therefore, without going intodetail further, we hold that reopening ofassessment was bad in law as the same wasreopened after expiry of four years as theoriginal assessment was completed undersection 143(3) of the Act, that too withoutbringing any material on record that any incomehas escaped assessment on account of failure ofthe assesee to disclose truly and fully allmaterial facts. Accordingly we quash theassessment by holding that the same was bad inlaw.” 7.We have heard the counsel for the appellantas well as counsel for the respondent. 8.Learned counsel for the appellantcontended that in view of the Explanation (3) ofSection 147, the order passed by the AssessingOfficer and CIT (A) deserves to be set asideaccording to the reasons which were reproducedby the Assessing Officer on page no.27, whichreads as under:- 7.We have heard the counsel for the appellantas well as counsel for the respondent. 8.Learned counsel for the appellantcontended that in view of the Explanation (3) ofSection 147, the order passed by the AssessingOfficer and CIT (A) deserves to be set asideaccording to the reasons which were reproducedby the Assessing Officer on page no.27, whichreads as under:- “In this case survey u/s 133A of the IT Act wascarried out at the business premises at Bhiwandiand Head Office at Delhi on 22-11-2004 by theInvestigation Wing,Jaipur. During the course ofsurvey proceedings certain loose papers, bills ofpurchases of goods were impounded. The bill of ofpurchases from the certain parties does notcontain builty of transportation/unloading. Apartfrom the following parties assessee madepurchase which are supported with builties oftransportation and weighment slip. Besides thislower quality HR sheet were purchased from otherparties which were also entered goods receiptregister and RG-23A part-1. These raw materialeither directly sent to job work got done throughthird party supported transportation/weighmentslops. On certain occasion the raw material for jobwork transported its place from the place of worksof the company which also bears thesedocuments. The purchase from the certain partiesnot find place BIS register and no chemicalanalysis were carried by the BIS official. The BISofficers release the HR shee/LPG under their codefor manufacturing LPG cylinders after carriedanalytical analysis of HR sheet/LPG and mark thecolour date of release. The produce of thecompany i.e. LPG cylinders are subject to Excisetherefore the release of raw material andproduction under strict supervision of both theauthorities. The purchase of LPG/sheet also notentered in the RG-23A Part 1 maintained forexcise department.” 9.We have heard and considered the materialon record. Taking into consideration the materialwhich has come on record pursuant to the surveywhich is carried out in February, 2004 whereasassessment was made much prior to the surveyconducted in 2004. In the language of Section147 & 148, it is very clear that the material whichis sought to be relied upon was not available attime, on 23.3.2003 and the observations made bythe tribunal are just and proper and inconsonance with the provisions of law. Provisionsunder Explanation (3) gives wide power but not inthe present case. 10. At this stage it would be relevant to quoteprovisions of Section 149 of the Act which readsas under: Time Limit for notice. “149.[(1) No notice under Section 148shall be issued forthe relevant assessment year,— [(a) if four years have elapsed from the end of the relevantassessment year, unless the case falls under clause (b)[orclause (c)]; (b) if four years, but not more than six years, have elapsedfrom the end of the relevant assessment year unless theincome chargeable to tax which has escaped assessmentamounts to or is likely to amount to one lakh rupees or morefor that year;][(c) if four years, but not more than sixteen years, haveelapsed from the end of the relevant assessment year unlessthe income in relation to any asset (including financialinterest in any entity) located outside India, chargeable totax, has escaped assessment.]” 11. Since there is no reasoning on the record by theAssessing Officer that he has invoked clauses (b) & (c)and in the second appeal two points are regardingclosing stock and the other material which is sought tobe relevant for survey is not permissible under the law.” Counsel for the appellant contended that the findingwhich has been arrived at by the Tribunal will not beconsidered. In our considered opinion, the Tribunal hasdecided the appeal in view of our earlier decision, hence,no such direction can be issued.” It appears that the department has preferred SLP against thejudgment, hence, subject to decision of SLP, the appeal standsdisposed of. (VIJAY KUMAR VYAS),J 11. Since there is no reasoning on the record by theAssessing Officer that he has invoked clauses (b) & (c)and in the second appeal two points are regardingclosing stock and the other material which is sought tobe relevant for survey is not permissible under the law.” Counsel for the appellant contended that the findingwhich has been arrived at by the Tribunal will not beconsidered. In our considered opinion, the Tribunal hasdecided the appeal in view of our earlier decision, hence,no such direction can be issued.” It appears that the department has preferred SLP against thejudgment, hence, subject to decision of SLP, the appeal standsdisposed of. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J A.Sharma/42