HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 349 / 2005 Smt Santosh Jawa ----Appellant Versus Astt Commissioner Of I T Jaipu ----Respondent Connected With D.B. Income Tax Appeal No. 99 / 2006 Smt Santosh Jawa ----Appellant Versus Dy Commissioner I T Jaipur ----Respondent For Appellant(s) : Mr. Siddarth Ranka For Respondent(s) : Mr. R.B. Mathur HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment 24/05/2017 In both these appeals, common questions of law and facts are involved and they relate to same assessee they are decided by this common judgment. 1. By way of these appeals, appellant has assailed judgment and order Tribunal whereby Tribunal has allowed appeals of department and reversed order of CIT(A). (2 of 18) [ ITA-349/2005] 2. This Court while admitting matters framed following questions of law:- In DBITA No. 349/2005 i) Whether on facts and in circumstances of case, Income Tax Appellate Tribunal was right in law in holding that notice for reassessment under Section 148 dated 28.3.2001 is justified and is not barred by limitation when original assessment was completed after detailed scrutiny under Section 143(3)? ii) Whether Income Tax Appellate Tribunal was right in law in reversing order of Commissioner of Income Tax (Appeals) in respect of genuineness of security/trade credit of Rs. 4,00,000/-. In DBITA No. 99/2006 i) Whether on facts and in circumstances of case, Income Tax Appellate Tribunal was right in law in sustaining addition for Security/trade deposit with interest amounting to Rs. 2,79,890/- from M/s Magadh Medicos and in holding it as bogus? 3. facts of case are that assessee is pharmaceutical manufacturer and assessed for year 1994-95 on 19 th October, 1995. Notice u/s 263 was issued on 31 st March, 1998 and order came to be passed on 29 th February, 2000. assessment order for year 1995-96 is done on 8th February, 2001 and reassessment for year 1994-95 was done on 28th March, 2001. 4. Counsel for appellant has mainly taken us to para 3 of assessment order which reads as under:- assessee vide her letter dated 11.2.2000 submitted that he had received letter from ACIT, Range-5, Patna wherein it is mentioned that M/s (3 of 18) [ ITA-349/2005] Medicana Agencies, Patna had deposited sum of Rs. 4 Lacs during FY 93-94 with assessee. letter ACIT, Cir.5, Patna, submitted by assessee was unclear Xerox copy. However to verify genuineness of same letter was written by this office on 13.2.2002 to ACIT, Cir.5, Patna enclosing his said letter and asking him to intimate whether M/s Medicana Medical Agency had advanced sum of Rs. 4 Lacs Mrs. Santosh Jawa, Prop. M/s Jawa Laboratories. ACIT, Cir. 5, Patna vide his letter dated 21.3.2002 has reported that assessment in case M/s Medicana Medical Agency for Ays 94-95 to 96-97 are pending at his end u/s 146. business of assessee is closed down and whereabouts of proprietor is not being ascertained. Therefore nothing has been heard from him. Under circumstances, genuineness of deposit is doubtful. Therefore, deposit of Rs. 4 Lacs and interest thereon of Rs. 28110 is treated as income of assessee u/s 68 of IT Act, 1961. Penalty Proceedings u/s 271(1)(c) are initiated separately for filing inaccurate particulars of income and concealment of income. 5. He further contended that CIT(A) while considering case of AO in para 6 & 12 observed as under: 6. issue has been carefully examined along with various precedents relied upon by counsel. Rajasthan High Court in case of CIT vs. A.R. Enterprises in 255 ITR 121 has observed that as far as clause(a) of section 147 is concerned, admittedly first part of clause is not attracted, as it is not case of omission or failure on part of assessee to make return under section 139. As far as second part of clause(a) of section 147 is concerned, it is now well settled that duty of assessee is only to disclose fully and truly all material facts necessary for his assessment for relevant year. expression material facts refers only to primary facts. There is no duty cast on assessee to indicate or draw attention of Assessing Officer to what factual or legal or other inferences can be drawn from primary facts. Relying on decision of Apex Court in Calcutta Discount Co. Ltd. s case (1961) 41 ITR 191, Apex Court in later decision, viz., Associated Stone Industries (Kotah) Ltd. s case (1997) 224 ITR 560, held that duty of assessee is only to fully and truly disclose all material facts. Explaining expression material facts as contained in section (4 of 18) [ ITA-349/2005] 34(1)(a) of IT Act, 1922, court observed that it refers only to primary facts and duty of assessee is to disclose such primary facts. court further observed that there is no duty cast on assessee to indicate or draw attention of Income Tax Officer to what factual or legal or other inferences can be drawn from primary facts disclosed. There is not word in order of assessment if respondent assessee omitted to disclose any material fact. 12. It has been contended by assessee that during course of original assessment proceedings assessee has duly filed confirmation from party with regard to trade deposit and said confirmation is lying in assessment record. M/s Medicana Medical Agencies from whom trade deposit of Rs. 4.00 lacs have been received have duly confirmed about deposit having been made by them. It is seen that this deposit was accepted by Assessing Officer while making original assessment made u/s 143(3) dated 19.10.1995. 6. Tribunal without considering reasoning adopted by CIT(A) has reversed its finding and appeals of department were allowed. 7. Counsel for appellant Mr. Ranka has relied upon following decisions of this Court in Tax Appeal No. 67/2012 & 69/2012 passed on 14th September, 2016 wherein in para 9 this Court held as under:- 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. (5 of 18) [ ITA-349/2005] 8. He has also relied upon decision of Delhi High Court in Writ Petition (C) No. 1841/2013 passed on 11th March, 2014, where Division Bench held as under:- 10. It is evident from above discussion that during assessment proceedings, and first reassessment proceeding (Pursuant to earlier reassessment notice of 03.03.2010) question of dealers commission as well as TDS on those amounts, had been gone into. attempt to revisit this issue third time, in given circumstances of case, is nothing but tax authorities effort to overreach law and resultantly sheer harassment of petitioner. impugned notice and all further proceedings conducted pursuant to it are, therefore, without jurisdiction and hereby quashed. writ petition is accordingly allowed but without any order on costs. 9. Thereafter, he has relied upon another decision of Delhi High Court in case of Wel Intertrade (P) Ltd. vs. Income Tax Officer, Ward 18(3) reported in [2009] 178 Taxman 27 (Delhi) wherein para 9 it has been held as under:- 9.We have considered these submissions and we are inclined to agree with submissions made by learned Counsel for petitioner. proviso to Section 147 reads as under: Provided that where assessment under Sub- section (3) of Section 143 or this section has been made for relevant assessment year, no action shall be taken under this section after expiry of four years from end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of failure on part of assessee to make return under Section 139 or in response to notice issued under Sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. plain reading of said proviso makes it more than clear that where provisions of Section 147 are being invoked after period of four years from (6 of 18) [ ITA-349/2005] end of relevant assessment year, in addition to Assessing Officer having reason to believe that any income chargeable to tax has escaped assessment, it must also be established as fact that such escapement of assessment has been occasioned by either assessee failing to make return under Section 139 etc. or by reason of failure on part of assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In present case, question of making of return is not in issue and only question is with regard to second portion of proviso, which relates to failure on part of assessee to disclose fully and truly all material facts necessary for assessment. Insofar as this pre- condition is concerned, there is not whisper of it in reasons recorded by Assessing Officer. In fact, as indicated above, Assessing Officer could not have made this ground because Assessing Officer had required petitioner to furnish details with regard to loss occasioned by foreign exchange fluctuation which petitioner did by virtue of reply dated 05.02.2002. Since petitioner had fully and truly disclosed all material facts necessary for assessment, pre-condition for invoking proviso to Section 147 of said Act had not been satisfied. 10. Another decision of Allahabad High Court in case of Commissioner of Income Tax-II, Kanpur vs. Mirza International Ltd. reported in [2015] 54 taxmann.com 217 (Allahabad) wherein para 3, 4 & 5 reads as under:- 3. We find that return of income was furnished by assessee on 31.10.2001 and assessment was framed by Assessing Officer under Section 143(3) of Income Tax Act on 18.03.2004. notice under Section 148 of Income Tax Act, was issued by Assessing Officer on 31.03.2007 after period of four years from end of relevant assessment year. In said notice, Assessing Officer nowhere disclosed that assessee had failed to disclose truly and fully all material facts necessary for his assessment. This is essential requirement as per decision of Hon'ble Supreme Court in Ganga Saran & Sons P. Ltd. Vs. Income-Tax Officer and others, 1981 Vol.130 ITR 1, Supreme Court held : (7 of 18) [ ITA-349/2005] "It is well settled as result of several decisions of this Court that two distinct conditions must be satisfied before Income Tax Officer can assume jurisdiction to issue notice under section 147 (a). First, he must have reason to believe that income of assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of omission or failure on part of assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, notice issued by Income Tax Officer would be without jurisdiction. important words under section 147 (a) are "has reason to believe" and these words are stronger than words "is satisfied". belief entertained by Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. Court, of course, cannot investigate into adequacy or sufficiency of reasons which have weighed with Income Tax Officer in coming to belief, but Court can certainly examine whether reasons are relevant and have bearing on matters in regard to which he is required to entertain belief before he can issue notice under section 147 (a). It there is no rational and intelligible nexus between reasons and belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain belief, conclusion would be inescapable that Income Tax Officer could not have reason to believe that any part of income of assessee had escaped assessment and such escapement was by reason of omission or failure on part of assessee to disclose fully and truly all material facts and notice issued by him would be liable to he struck down as invalid." 4. In Phool Chand Bajrang Lal and another Vs. Income Tax Officer and another, 203 ITR 456 Supreme Court held:- "From combined review of judgments of this Court, it follows that Income-tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of Income Tax 1961 only if on basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on part of assessee to make true ana full disclosure of all material facts necessary for his assessment during concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has (8 of 18) [ ITA-349/2005] escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to facts previously disclosed comes into his possession which tends to expose untruthfulness of those facts. In such situations, it is not case of mere change of opinion or drawing of different inference from same facts as were earlier available but acting on fresh information. Since, belief is that of Income-tax Officer, sufficiency of reasons for forming belief, is not for Court to judge but it is open to assessee to establish that there in fact existed no belief or that belief was not at all bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, Court may look into conclusion arrived at by Income-tax Officer and examine whether there was any material available on record from which requisite belief could be formed by Income-tax Officer and further whether that material had any rational connection or live link for formation of requisite belief. It would be immaterial whether Income-tax Officer at time of making original assessment could or, could not have found by further enquiry or investigation, whether transaction was genuine or not, if one basis of subsequent information, Income-tax Officer arrives at conclusion, after satisfying twin conditions prescribed in Section 147(a) of Act, that assessee had not made full and true disclosure of material facts at time of original assessment and therefore income chargeable to tax had escaped assessment." 5. In view of aforesaid, Tribunal was justified in holding that initiation of proceedings under Section 148 was barred by limitation. 11. He has also relied upon two decisions of Gujarat High Court in case of Shree Sidhnath Enterprise vs. Assistant Commissioner of Income Tax reported in [2016] 240 Taxman 631(Gujarat) wherein para 18, 19 & 20, it has been held as under:- 18. Thus, it is statutory duty of assessee to record all its transactions in books of account to explain source of payments made by it and to (9 of 18) [ ITA-349/2005] declare its true income in return of income filed by it from year to year. In present case, it is not case of respondent that petitioner had not recorded all transactions in books of account. It is case of respondent that petitioner in its cash book has not noted addresses and Permanent Account Numbers of parties who made cash deposits. In present case, as noted hereinabove, Assessing Officer reopened assessment by issuing notice under section 148 of Act on 31st March, 2008 in respect of cash deposits made by assessee in its ICICI bank account. During course of assessment proceedings, Assessing Officer had also called for details of all bank accounts and also had looked into cash transactions recorded in cash book. Thus, primary facts regarding transactions were before Assessing Officer. He should, at relevant time, have probed further before completing assessment if he was of view that material provided by petitioner was not sufficient for him to be satisfied that petitioner's contention was correct. However, Assessing Officer despite having all transactions as recorded in cash book before him, was satisfied with examining certain samples of transactions and upon being satisfied with genuineness of same, did not deem it fit to look into each and every transaction recorded in cash book. As held by Supreme Court in case of Income-Tax Officer, I Ward, Distt. VI. Calcutta and Others v. Lakhmani Mewal Das, MANU/SC/0241/1976MANU/SC/0241/1976 : (1976) 103 ITR 437 (SC), duty is cast upon assessee to make true and full disclosure of primary facts at time of original assessment. Production before Income Tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by Income Tax Officer will not necessarily amount to disclosure contemplated by law. duty of assessee in any case does not extend beyond making true and full disclosure of primary facts. Once he has done that, his duty ends. It is for Income Tax Officer to draw correct inference from primary facts. It is not responsibility of assessee to advise Income Tax Officer with regard to inference which he should draw from primary facts. If Income Tax Officer draws inference which appears subsequently to be erroneous, mere change of opinion with regard to (10 of 18) [ ITA-349/2005] that inference would not justify initiation of action for reopening assessment. In present case, Assessing Officer, at time of first reopening, examined cash transactions to extent he thought necessary and on basis of inference drawn by him, accepted return as filed by petitioner. However, successor Assessing Officer now finds inference drawn by Assessing Officer to be erroneous, which amounts to mere change of opinion and does not justify initiation of action under section 147 of Act. Moreover, Assessing Officer while recording reasons, does not appear to have applied her mind to information furnished by Investigation Wing, inasmuch as, if she had ascertained facts from record, she would have found that certain cash deposits have already been examined at time of assessment under section 143(3) read with section 147 of Act and had been accepted while framing assessment under section 143(3) read with section 147 of Act and would not have sought to reopen assessment in respect of total amount of cash deposits recorded in cash books. It is not case of respondent that cash deposits of Rs. 96,85,63,426/- in respect of which assessment is sought to be reopened are in addition to cash deposits of Rs. 4,70,11,830/- in respect of which assessment was reopened on earlier occasion and cash deposits which Assessing Officer had examined while framing assessment under section 143(3) read with section 147 of Act. 19. In opinion of this court, in present case on self same material, namely, entries made in cash book, Assessing Officer had formed belief that income to tune of Rs. 4,70,11,830/- had escaped assessment in earlier proceedings under section 147 of Act. In said proceedings, Assessing Officer called for details of all bank accounts and after lengthy discussion, ultimately accepted income as returned by assessee. Now on self same material, Investigation Wing is of opinion that cash deposits need to be verified and on basis of such information received from Investigation Wing, Assessing Officer has reopened assessment. Prior to recording reasons, it does not appear as if Assessing Officer has verified record of case, else he would have found that in relation to part of cash deposits, information had already been called (11 of 18) [ ITA-349/2005] for and that Assessing Officer had been satisfied about genuineness thereof. 20. Thus, it is apparent that at time when earlier assessment came to be framed under section 143(3) read with section 147 of Act, all primary facts were before Assessing Officer and he had thought it fit to examine certain transactions and on being satisfied about genuineness thereof, had accepted return as filed by petitioner. Now, on basis of very same set of facts, assessment is sought to be reopened merely by placing reliance upon survey carried out by Investigation Wing under section 133A of Act during course of which no fresh material has come to light, but on basis of very same transactions recorded in cash book, assessment is sought to be reopened. Under circumstances, it cannot be said that there is any failure on part of petitioner to disclose fully and truly all material facts necessary for its assessment for year under consideration. In absence of any failure on part of petitioner to disclose fully and truly all material facts necessary for its assessment, Assessing Officer lacks jurisdiction to reopen assessment beyond period of four years from end of relevant assessment year. impugned notice which has been issued beyond period of four years from end of relevant assessment year, without there being any basis for formation of requisite belief that income chargeable to tax has escaped assessment on account of any failure on part of petitioner to disclose fully and truly all material facts, therefore, cannot be sustained. 12. Another decision of Gujarat High Court in case of Commissioner of Income Tax vs. Ankit C. Maheshwari reported in [2014] 48 taxmann. com 147 (Gujarat) wherein it has been held as under:- 9. We have heard Mr. Sudhir Mehta, learned advocate appearing on behalf of appellant-Revenue and have gone through orders passed by learned Commissioner of Income-tax (Appeals) and learned Income-tax Appellate Tribunal. We have also gone through reasons recorded by Assessing Officer for reopening assessment under section (12 of 18) [ ITA-349/2005] 148 of Act, which are reproduced hereinabove. Considering above, it is required to be noted that, as such, in reasons recorded by Assessing Officer for reopening assessment under section 148 of Act, it was not contention of Assessing Officer that there was any failure on part of assessee to disclose material facts truly and correctly. At this stage, it is required to be noted that, as such, there are concurrent findings recorded by both authorities below that reassessment proceedings were initiated/assessment was reopened beyond period of four years. We are in complete agreement with view taken by learned Commissioner of Income-tax (Appeals) and Income-tax Appellate Tribunal that reassessment was opened after period of four years and if that be so, unless and until it was alleged or established that there was any failure on part of assessee to disclose material facts truly and correctly, it was not permissible to Assessing Officer to reopen assessment under section 148 of Act. Even in reasons recorded by Assessing Officer, it is not alleged that there was failure on part of assessee to disclose material facts truly and correctly, and hence, no error has been committed by learned Commissioner of Income-tax (Appeals) and Income-tax Appellate Tribunal in holding that reassessment proceedings were bad in law. 13. He has further relied upon decision of Madras High Court in case of Commissioner of Income Tax vs. A.V. Thomas Exports Ltd. [2007] 163 Taxman 718 (Madras) wherein it has been held as under:- 4. Heard counsel. original assessment was completed under Section 143(3) of Act. assessing officer applied, his mind and completed said original assessment. There is no finding by assessing officer that there is any failure on part of assessee resulting in escapement of income. assessing officer must give categorical finding for purpose of initiating reassessment under proviso to Section 147 of Act. In this case reassessment proceedings were initiated after 31-3-1995 and, hence proceedings initiated by issue of notice under Section 148 is ab initio barred by limitation. In this case, initiation of (13 of 18) [ ITA-349/2005] proceedings is after period of four years and finding given by Tribunal is that no income has escaped assessment by reason of failure on part of assessee. Hence, there is no jurisdiction to reopen assessment under provision of Section 147 of Act. scope of said provision has been considered by this Court in case of CIT v. Elgi Finance Ltd. : [2006]286ITR674(Mad), and same reads as follows: law relating to reassessment has undergone change from 1-4-1989. change was brought in by Direct Tax Laws (Amendment) Act, 1987. Two sets of provisions were available under Section 147 in Clause (a) and Clause (b). This distinction has now been taken away by Amendment Act. Previously, line of distinction was limitation period of four years and limitation period exceeding four years. assessing officer would reopen back assessment within period of four years as long as he had reason to believe in consequence of any information, that income has been under-assessed or income has escaped assessment. In case of limitation, providing for period exceeding four years, there should have been failure on part of assessee to disclose fully and truly all material facts leading to escapement of income. But as result of amendment brought with effect from 1- 4-1989, above distinction had been obliterated and assessing officer could reassess income as long as he had reason to believe that income chargeable had escaped assessment. new law has inserted proviso to Section 147 in following words: Provided that where assessment under Sub- section (3) of Section 143 or this section has been made for relevant assessment year, no action shall be taken under this section after expiry of four years from end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of failure on part of assessee to make return under Section 139 or in response to notice issued under Sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. In addition to time-limits provided for under Section 149, law has provided another limitation of four years under proviso to Section147. As far as above proviso to Section 147 is concerned, law prescribes period of four years to initiate (14 of 18) [ ITA-349/2005] reassessment proceedings, unless income alleged to have escaped assessment was made out as result of failure on part of assessee to disclose fully and truly all material facts necessary for assessment. (p. 678) 5. Tribunal has applied correct principle of law and held as follows: But whether recourse to Section 147 could be made beyond four years is real question in present appeal. Circumstances for extending limitation beyond four years do not exist in facts of present case. As such on ground of limitation assumption of jurisdiction under section 147 is bad. In case of CIT v. Foramer France : [2003]264ITR566(SC), it was held that if there is no failure to file return or to disclose fully and truly all material facts, issuance of notice beyond period of four years is barred by limitation. In case of CIT v. Annamalai Finance Ltd : [2005]273ITR451(Bom) it was held that Section 147 of Act does not postulate conferment of power upon assessing officer to initiate reassessment proceedings upon mere change of opinion. It is incumbent on assessing officer to prove that there was failure to disclose material facts necessary for assessment for issuance of notice beyond period of four years. 11. It is true that Apex Court does not make law from date it is pronounced but from ab initio. This theory is based on principle of ACTUS CURIAE NEMINEM GRAVABIT (An act of court shall prejudice no man). party ought not to be prejudiced by delay, but should be allowed to enter up his judgment retrospectively to meet ends of justice. When highest court of land declares principle of law, it should be assumed as if this was law for all time. But law is not antique to be abroad, dusted and put back on shelf. It is dynamic in nature. It is often difficult to describe with exactitude correct position of law at given point of time. Till time apex body determines correct position things go as per interpretation of law made by competent courts. At time there may arise cleavage of judicial opinion. But matter gets settled when Supreme Court adjudicates it. Inability to anticipate view to be taken by Apex Court cannot be termed as failure on part of assessee. Previous knowledge never becomes non-existent it goes on developing in lap of time. Human knowledge is always improving and progressing. world was assumed to be flat until it (15 of 18) [ ITA-349/2005] became known that world is found. That does not mean that gravitation did not exist before Newton's discovery of law of gravitation. Human knowledge is never static. Theory of evolution of Darwin does not make previous knowledge non-existent. Human knowledge, as we have mentioned, is always progressing. So relativity was always there but we became aware only after Einstein. This is basic difference between discovery and invention. information about law on basis of which Section 147 proceedings were initiated, was not there until Supreme Court say it to be so. Therefore, what Orissa High Court has held at that time was relevant judicial interpretation as to law. In circumstances it cannot be said that income escaped assessment by reason of failure on part of assessee. From reading of above, it is clear that Tribunal had given categorical finding by applying law enunciated by Supreme Court judgment in case of CIT v. Foramer France [2003]264ITR566(SC), as well as this Court judgment cited supra and come to correct conclusion. Hence we do not find any error or legal infirmity in order of Tribunal so as to warrant interference. Under these circumstances, no substantial question of law arises for consideration of this Court and accordingly tax case is dismissed. No costs. 14. Taking into consideration, he contended that initiation of third notice is not sustainable. 15. Mr. Mathur has taken us to order of CIT(A) and contended that view taken by Tribunal is just and proper more particularly, in view of judgment reported in case of Raunaq Finance Ltd. vs. Joint Commissioner of Income Tax reported in [2005] 272 ITR 210 (Raj) wherein in para 10, 11, 12, 13 & 14, it has been held as under:- 10. It is true that mere statements of Shri Manish Mehrotra, proprietor of Longman Industrial Traders cannot be basis for disbelieving transaction, but if it is corroborated and some other materials are available on record to support statements of Shri (16 of 18) [ ITA-349/2005] Manish Mehrotra, statement of Shri Manish Mehrotra, proprietor of Longman Industrial Traders cannot be brushed aside for considering genuineness of transaction. But, so far question of reopening of assessment is concerned, if person concerned, from whom material has been purchased, he himself states subsequently before authorities that transaction was not genuine and AO received this information, that can be ground for reopening of assessment as that is only stage of show-cause notice. If AO has any such material or information to take prima facie view that income has escaped, on basis of such information, show-cause notice for reopening of assessment can be issued at this stage. At notice stage no final finding of fact is necessary that transaction was not genuine. If, on material information, prima facie view can be taken regarding escapement of income, AO is well within his jurisdiction to issue show-cause notice for reopening of assessment. 11. In case of Rattan Gupta v. Union of India and Ors. : [1998]234ITR220(Delhi) , Delhi High Court has considered similar issue. Delhi High Court has occasioned that- what is condition precedent for reopening of assessment. Delhi High Court has taken view that letter and appraisal report constituted relevant material for formation of belief 'that assessee's income had escaped assessment and notice under Section 147 r/w Section 148 for reopening of assessment is valid. 12. In case of Phool Chand Bajiang Lal and Anr. v. ITO and Anr. : [1993]203ITR456(SC) , facts before their Lordships are that after completion of assessment, subsequent information has been received from AO that company's that its managing director had confessed that company had not advanced any loan to any person during period covering date of cash loan. At p. 477 their Lordships observed as under : "From combined review of judgments of this Court, it follows that ITO acquires jurisdiction to reopen assessment under Section 147(a) r/w Section 148 of IT Act, 1961, only if on basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission or failure on part of assessee to make true arid full disclosure of all material facts necessary for his assessment during concluded assessment proceedings, any part of his income, profits or gains (17 of 18) [ ITA-349/2005] chargeable to Income Tax has escaped assessment. He may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to facts previously disclosed comes into his possession which tends to expose untruthfulness of those facts." 13. Considering view taken by Delhi High Court and Hon'ble Supreme Court in aforesaid cases and also reasons recorded by AO for reopening of assessment, we see no infirmity in issue of show- cause notice under Section 147 r/w Section 148 for reopening of assessment. 14. Consequently, in our considered opinion, there is no infirmity in order of AO for reopening of assessment. 16. He has also placed reliance on another decision in case of Ess Ess Kay Engineering Co. P. Ltd. reported in 247 ITR 818 which reads as under:- This is case of reopening. We have perused documents. We find there was material on basis of which Income Tax Officer could proceed to reopen case, it is not case of mere change of opinion. We are not inclined to interfere with decision of High Court merely because case of assesseee was accepted as correct in original assessment for this assessment year. It does not preclude Income Tax Officer to reopen assessment of earlier year on bais of his findings of fact made on basis of fresh materials in course of assessment of next assessment year. appeal is dismissed. No order as to costs. 17. We have heard counsel for both sides. 18. Before proceeding with matter it will not be out of place to mention that second assessment order for year 94-95 was over on 29th February, 2000. (18 of 18) [ ITA-349/2005] 19. Taking into consideration that second reassessment order was between same parties, transactions were examined and reopened for third time after lapse of almost one year on 28th March, 2001. This is nothing but against fact that has been observed by Delhi High Court in para 10 referred hereinabove. It is nothing but harassment and in year 95-96 in Tax Appeal No. 99/2006 in para 8 which has been considered by CIT(A) is complete answer to issue. 20. In that view of matter, both issues are required to be answered in favour of assessee against department. 21. appeal stands allowed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. A.Sharma/120-121 Santosh Jawa v. Assistant Commissioner of Income-tax, Jaipur