HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 473 / 2011 C I T Alwar ----Appellant Versus M/S Supreme Cylinders Ltd ----Respondent For Appellant(s) : Ms. Parinitoo Jain For Respondent(s) : Mr. Gunjan Pathak HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 25/04/2017 1. By way of this appeal, appellant has assailed judgment and order of Tribunal whereby Tribunal has partly allowed appeal preferred by assessee. 2. Counsel for appellant has framed following substantial questions of law:- 1. Whether under facts and circumstances of case and in law order of Tribunal is perverse in deleting additions of Rs. 1,26,22,451/- made by Assessing Officer on account of bogus purchase? 2. Whether under facts and circumstances of case and in law, Tribunal has committed gross error of law by deleting addition of Rs. 28,76,870/- made by Assessing Officer on account of bogus commission? 3. Whether under facts and circumstances of case and in law, Tribunal has committed gross error of law by admitting fresh evidence without affording any opportunity to appellant (2 of 7) [ITA-473/2011] to explain or rebut same? 4. Whether under facts and circumstances of case and in law, Tribunal should ought to have hold that purchases from alleged three parties are ingenuine solely on basis that material shown to be purchased from such parties does not find place in registers kept specifically for this purpose by Central Excise Department for excise purpose i.e. in RG 23A Part I and also in register of Bureau of Indian Standards? 5. Whether order of Tribunal is perverse in holding that purchases made from three parties are genuine ignoring clinching evidence brought on record that such parties do not exist at given address and alleged purchases are not found recorded in RG 23A Part I and other relevant registers verified by Central Excise Authorities from time to time. 6. Whether under facts and circumstances of case and in law, Tribunal was justified in allowing credit of alleged unsubstantiated purchases from alleged three parties on theoretical platform ignoring fact that books of accounts of assessee were rejected u/s 145(3) and assessee has accepted discrepencies during survey operation u/s. 133A and has surrendered sum of Rs. 57,00,000/- in assessment year 2004-05 and Rs. 20,00,000/- in assessment year 2005-06? 7. Whether under facts and circumstances of case and in law, Tribunal was justified in deleting entire additions of Rs. 1,55,998/- made on account of bogus payment of commission of sale of scrap on basis of remand report even when Assessing Officer verified part payment of commission and balance amount remained unverifiable? 8. Whether under facts and circumstances of case and in law, Tribunal was justified in deleting addition of Rs.1,43,516/- made on account of alleged freight paid for transportation of scrap when assessee failed to adduce documents with regard to transportation of such scrap to buyer? 9. Whether on facts and in circumstances of case, ld. ITAT was justified in deleting addition of Rs. 36,65,948/- made on account of suppression of scrap sales ignoring multiple evidences and proved modus operandi of assessee? 10. Whether order of Tribunal is perverse in (3 of 7) [ITA-473/2011] confirming order of CIT(A) by giving no independent reasons in support of its affirmation and therefore order is perverse in view of Apex Court judgment in case of Manglore Ganesh Bidi, reported in 273 ITR 56? 3. However, in subsequent year for same assessee, this Court in case of Commissioner of Income Tax, Alwar vs. M/s Supreme Cylinders Ltd. A-146, Industrial Area, Bhiwadi in Tax Appeal No. 67/2012 decided on 14th September, 2016, has held as under:- 4. Counsel for appellant has taken us through provisions of Section 147 & 148 which read as under:- 147. Income escaping assessment-if- (a) Assessing Officer has reason to believe that , by reason of omission or failure on part of assessee to make return under Section 139 for any assessment year to Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax had escaped assessment for that year, or 148. Issue notice, where income has escaped assessment-. (1) Before making assessment, reassessment or recomputation under Section 147, Income Tax Officer shall serve on assessee notice containing all or any of requirements which may be included in notice under Sub-section (2) of Section 139; and provisions of this Act shall, so far as may be, apply accordingly as if notice were notice issued under that Sub-section. 5. She has relied upon decision of Hon'ble Supreme Court in 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 that view taken by tribunal is required to be (4 of 7) [ITA-473/2011] reversed and on another judgment of Hon'ble Supreme Court in case of Assistant Commissioner of Income-Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500 (SC). 6. Counsel for respondent contended that Tribunal while considering case of assessee in paragraphs no. 31, 32 & 33 observed as under:- 31. Now ld. Counsel of assessee here before Tribunal stated that reopening of assessment is bad in law as same is reopened after expiry of four years. It was also submitted that there was no failure on part of assessee for concealing any particulars or submitting details. Therefore, after four years reopening of assessment was not valid as earlier assessment was completed under Section 143(3). Attention of Bench was drawn on copy of assessment order placed in paper book at pages 157 to 160. It was also submitted that assessment was completed on 28-3-2003 whereas reasons have been recorded on 28-3-2008 which is undisputedly after four years of completion of assessment. 32. On other hand, ld. D/R stated that this issue may be disposed off on merit. Reliance was placed on order of id. CIT(A). 33. After considering submissions and perusing material on record, we find that assessee deserves to scceed on legal issue raised through cross objection. copy of reasons recorded on 28-3- 2008 is placed at pages 165 to 167 of paper book and it is seen that AO has observed in last para of reasons recorded that he has arisen to believe that assessee company concealed its income which has escaped assessment by furnishing incomplete and inaccurate particulars within meaning of section 147. No where it has been mentioned in reasons recorded that any income has escaped on account of failure of assessee to disclose truly and fully all material facts. assessment in this case was completed under Section 143(3) on 28-3-2003. reasons have been (5 of 7) [ITA-473/2011] recorded after expiry of four years which is not permissible as per provisions of law and on account of various judgments pronounced by Hon'ble Apex Court as well as various High Courts. Various High Courts have decided this issue that reopening of assessment after expiry of four years is bad in law where no income has escaped assessment on account of failure of assessee to disclose truly and fully all material facts. Various decisions decided by Hon'ble High Courts are reported in case of Indian Farmers Fertilizers Co-op. Ltd., 171 Taxman 379 (Del.), in case of Tanna Builders Pvt. Ltd. 283 ITR 448(Bom.), in case of K.C.P. Ltd. 146 ITR 284(AP), in case of Vareli Weavers Pvt. Ltd., 240 ITR 77 (Guj.) etc. therefore, without going into detail further, we hold that reopening of assessment was bad in law as same was reopened after expiry of four years as original assessment was completed under section 143(3) of Act, that too without bringing any material on record that any income has escaped assessment on account of failure of assesee to disclose truly and fully all material facts. Accordingly we quash assessment by holding that same was bad in law. 7. We have heard counsel for appellant as well as counsel for respondent. 8. Learned counsel for appellant contended that in view of Explanation (3) of Section 147, order passed by Assessing Officer and CIT (A) deserves to be set aside according to reasons which were reproduced by Assessing Officer on page no.27, which reads as under:- In this case survey u/s 133A of IT Act was carried out at business premises at Bhiwandi and Head Office at Delhi on 22-11-2004 by Investigation Wing,Jaipur. During course of survey proceedings certain loose papers, bills of purchases of goods were impounded. bill of of purchases from certain parties does not contain builty of transportation/unloading. Apart from following parties assessee made purchase which are supported with builties of transportation and weighment slip. Besides this lower quality HR sheet were purchased from other (6 of 7) [ITA-473/2011] parties which were also entered goods receipt register and RG-23A part-1. These raw material either directly sent to job work got done through third party supported transportation/weighment slops. On certain occasion raw material for job work transported its place from place of works of company which also bears these documents. purchase from certain parties not find place BIS register and no chemical analysis were carried by BIS official. BIS officers release HR shee/LPG under their code for manufacturing LPG cylinders after carried analytical analysis of HR sheet/LPG and mark colour date of release. produce of company i.e. LPG cylinders are subject to Excise therefore release of raw material and production under strict supervision of both authorities. purchase of LPG/sheet also not entered in RG-23A Part 1 maintained for excise department. 9. We have heard and considered material on record. Taking into consideration material which has come on record pursuant to survey which is carried out in February, 2004 whereas assessment was made much prior to survey conducted in 2004. In language of Section 147 & 148, it is very clear that material which is sought to be relied upon was not available at time, on 23.3.2003 and observations made by tribunal are just and proper and in consonance with provisions of law. Provisions under Explanation (3) gives wide power but not in present case. 10. At this stage it would be relevant to quote provisions of Section 149 of Act which reads as under: Time Limit for notice. 149. [(1) No notice under Section 148 shall be issued for relevant assessment year, [(a) if four years have elapsed from end of relevant assessment year, unless case falls under clause (b) [or clause (c)]; (b) if four years, but not more than six years, have elapsed from end of relevant assessment year unless income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;] (7 of 7) [ITA-473/2011] [(c) if four years, but not more than sixteen years, have elapsed from end of relevant assessment year unless income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.] 11. Since there is no reasoning on record by Assessing Officer that he has invoked clauses (b) & (c) and in second appeal two points are regarding closing stock and other material which is sought to be relevant for survey is not permissible under law. 4. In that view of matter, appeal being devoid of merit deserves to be dismissed. same is dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/157 CIT, Alwar v. Supreme Cylinders Ltd