The case establishes the principle that reassessment proceedings under Section 147 read with Section 148 of the Income Tax Act are justified if the Assessee fails to make full and true disclosure of material facts necessary for assessment.

Suresh Kait, J.

1. In these appeals, though, various questions of law are proposed, it is accepted by learned Counsel for the Appellant that the main issue is about the reopening of the proceedings under Section 147 read with Section 148 of the Income Tax Act. The decision in respect of other issues raised would depend upon the outcome of the appeals. These appeals are accordingly admitted on the following substantial question of law.

1. Whether on the facts and law, the Tribunal was right in holding that the initiation of proceedings under Section 147 read with Section 148 of the Act in all the three years is justified?

2. With the consent of learned Counsel for the parties, we have heard the matter finally at this stage.

3. The issue raised by the Assessee had been adjudicated by the Tribunal wherein Accountant Member of the Tribunal disagreed with the order passed by the Judicial Member. Therefore, the matter was referred to third member. The Third Member of Tribunal has restored the issue relating to claim of the deduction, while concurring with the view taken by the Judicial Member on the following of aspects:

1) That initiation of proceedings under Section 147 read with Section 148 of the Act in all the three assessment years is justified.

2) That there is justification for disallowance of claim of depreciation of ` 25,36,136 in assessment year 1990-91, `14,18,926 in assessment year 1991-92 and ` 10,63,721 in assessment year 1992-93.

3) There is justification for disallowance of consultancy charges allegedly paid to M/s Esskay Financial Consultants.

4. The third member of the Tribunal has further added that the payment of consultancy charges allegedly paid by M/s Esskay Financial Consultancy is disallowed. As a consequence, the transaction of lease of computers having been held as not genuine. He has further held that even otherwise there is contradiction in the claim made by the Assessee regarding the services rendered by M/s M/s Esskay Financial Consultancy and the claim made by Sh.R.P. Goel.

5. The other points of difference are as under:

4. Whether on the facts and in law, the learned Judicial Member is justified to restore the matter back to the Assessing Officer with certain directions to consider utilization of withdrawal of ` 55 lacs from the deposit with IDBI and ` 8,15,000 made during the year under consideration and claimed under Section 32AB of the Act or the learned Accountant Member is justified in deleting the addition of ` 55 lacs and directing reconsideration of deposit of ` 8,15,000 by the Assessing Officer by appraising the facts afresh.

a The Judicial Member had restored the issue relating to the claim of deduction of ` 8.15 lacs and ` 55 lacs under Section 32AB to the file of the Assessing Officer for fresh consideration in the light of provisions of Section 32AB after holding that the utilization of withdrawal from IDBI account for purchase of equipment was not genuine. On the contrary, the Accountant Member having considered the purchase of computers as genuine held the Assessee was entitled to deduction under Section 32 AB.

The third member having agreed with the Judicial Member on the issue relating to the transactions of purchase and lease of computers has held that the issue was rightly been restored back by the Judicial Member. Accordingly, third member of the Tribunal held that the issue relating to utilization of withdrawal of ` 55 lacs from the deposits with IDBI is justified to be remanded back to the Assessing Officer for fresh consideration.

Vide order dated 15.07.2008 a formal order was passed by both members on the issue, which is impugned in the instant appeal. As noted at the outset, the main issue is about the reopening of proceeding under Section 147 read with Section 148 of the Income Tax Act. The decisions in respect of other issues raised would depend upon the outcome of this question. Accordingly, arguments were heard on the question of law framed in respect of this issue.

6. The det