Smt. Sujata Grover, Chandigarh v. ACIT, Chandigarh

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI N. BARATHVAJA SANKAR VICE PRESIDENT AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.1093/CHD/2010 ASSESSMENT YEAR: 2006-07 DR. ROHIT GROVER VS. THE ACIT CHANDIGARH CHANDIGARH PAN NO. AAWPG6855D & ITA NO.1094/CHD/2010 ASSESSMENT YEAR: 2006-07 SMT. SUJATA GROVER VS. THE ACIT CHANDIGARH CHANDIGARH PAN NO. AAAPG6836G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GUPTA & SH AMITOZ SINGH RESPONDENT BY: SMT. SARITA KUMARI ORDER PER SUSHMA CHOWLA JM BOTH THE APPEALS BY THE DIFFERENT ASSESSEES ARE AG AINST THE SEPARATE ORDERS OF CIT(A)-I LUDHIANA BOTH DATED 1.6.2010 RE LATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 147 OF THE I.T. ACT 1961. 2. BOTH THE APPEALS HAVING IDENTICAL GROUNDS WERE H EARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FO R THE SAKE OF CONVENIENCE. 2 3. THE COMMON GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEES IN BOTH THE APPEALS IS AS UNDER:- 1. THE LD. CIT(A) IS WRONG IN CONFIRMING THE VALIDITY OF NOTICE ISSUE U/S 148 BECAUSE THE REASONS RECORDED B Y LD. ASSESSING OFFICER THERE WAS NO TANGIBLE MATERIAL FR OM WHICH HE COULD FORM HIS REASONABLE BELIEF THAT CERT AIN INCOME HAS ESCAPED ASSESSMENT. 1.1 WITHOUT PREJUDICE TO ABOVE LD. CIT(A) IS FURTHER WRONG IN CONFIRMING THE VALIDITY OF NOTICE ISSUED U /S 148 DATED 24.3.2008 ON THE GROUNDS THAT NO RETURN WAS FILED WHILE IGNORING THE FACT THAT THE LD. ASSESSING OFFICER HIMSELF HAD ISSUED NOTICE U/S 143(2) DATED 20.3.2008 ON THE BASIS OF RETURN ALREADY FILED WITH THE ACIT CIRCLE-4 CHANDIGARH. 4. THE FIRST ISSUE RAISED VIDE GROUND NOS.1 AND 1.1 IS AGAINST THE JURISDICTION OF THE ASSESSING OFFICER IN INITIATING THE RE-ASSESSMENT PROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER CENTRAL CIRCLE CHANDIGARH NOTED THE ASSESSEE NOT TO HAVE FILED THE RETURN OF INCOME WITHIN PRESCRIBED TIME PROVIDED UNDER THE AC T WITH THE OFFICE OF THE ACIT / DCIT CENTRAL CIRCLE CHANDIGARH WITH WH OM THE JURISDICTION OF THE ASSESSEE LIES. ON VERIFICATION OF RECORD NOTICE U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE AND SERVED ON THE AS SESSEE ON 2.1.2007 DIRECTING THE ASSESSEE TO FURNISH THE RETURN OF INC OME FOR ASSESSMENT YEAR 2006-07 TO WHICH NO COMPLIANCE WAS MADE NOR ANY R ETURN WAS FILED BY 3 THE ASSESSEE. THE NOTICE U/S 148 OF THE INCOME TAX ACT WAS ISSUED ON 24.3.2008. NOTICE U/S 148 OF THE INCOME TAX ACT WA S SERVED UPON THE ASSESSEE ON IST MAY 2008 TO WHICH NO COMPLIANCE WA S MADE AS NOTED AT PAGE 3 IN PARA (IV) OF THE ASSESSMENT ORDER. THE A SSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTED THE ASSESSEE TO HA VE FILED HIS RETURN OF INCOME WITH I.T.O. WARD 4(4) CHANDIGARH AND ONLY WHEN THE CASE WAS SELECTED FOR SCRUTINY BY ITO WARD 4(4) CHANDIGARH THE ASSESSEE TOOK A PLEA VIDE LETTER DATED 24.8.2007 THAT RETURN WAS IN ADVERTENTLY FILED WITH ACIT CIRCLE 4(1) CHANDIGARH AND REQUESTED THE SAM E TO BE TRANSFERRED TO ACIT CENTRAL CIRCLE CHANDIGARH. THE ASSESSMENT F OR THE PAST SEVERAL YEARS OF THE ASSESSEE WERE COMPLETED U/S 143(3) OF THE ACT BY ACIT / DCIT CENTRAL CIRCLE CHANDIGARH PURSUANT TO SEARCH OPERATION CONDUCTED AT THE PREMISES OF THE ASSESSEE U/S 132 OF THE ACT AND CENTRALIZATION OF HIS CASE WITH ACIT / DCIT CENTRAL CIRCLE. CHANDIGARH. THE ASSESSING OFFICER FURTHER OBSERVES THAT THE RETURN OF INCOME FILED BY THE ASSESSEE WAS RECEIVED ON TRANSFER OF ASSESSMENT RECORDS FROM THE OFFICE OF THE ACIT CIRCLE 4(1) CHANDIGARH AND QUESTIONNAIRE WAS ISSUED FOR COMPLIANCE. THE ASSESSING OFFICER HAS COMMENTED UP ON THE NON COOPERATIVE ATTITUDE OF THE ASSESSEE DURING THE ASS ESSMENT PROCEEDINGS AT PAGES 4 & 5 OF THE ASSESSMENT ORDER. THE OBSERVATI ON OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAD WILLFULLY AND INT ENTIONALLY AVOIDED THE ASSESSMENT PROCEEDINGS AND HAD NOT PRODUCED THE BOO KS OF ACCOUNT. THE ASSESSMENT WAS ACCORDINGLY COMPLETED ON THE BASIS O F MATERIAL AVAILABLE ON RECORD. 6. IN APPELLATE PROCEEDINGS BEFORE THE CIT(A) THE PLEA OF THE ASSESSEE WAS 4 A) THE ASSESSING OFFICER WAS WRONG IN ISSUING A NOTICE U/S 148 OF THE ACT IN THE ABSENCE OF A REASON TO BELIEVE TH AT THE ASSESSEE BEING A RENOWNED DOCTOR AND HAVING RENTAL INCOME HAS NOT FILED THE RETURN OF INCOME FOR THE YEAR BY THE DUE DATE. THE CONTENTION OF THE ASSESSEE IN THIS REGAR D WAS THAT THERE WAS NO SPECIFIC MATERIAL OR RELEVANT INFORMAT ION WITH THE ASSESSING OFFICER TO FORM THE SAID BELIEF AND H E HAD ACTED ON SUSPICIONS AND IN THE ABSENCE OF ANY EVIDE NCE THE REASONS WERE INVALID. B) THE EXPLANATION 2(A) OF SECTION 147 OF THE ACT WAS CLAIMED TO BE APPLICABLE ONLY WHEN THE BASIC CONDITIONS OF SECTION 147 OF THE ACT AND THE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE EXCEEDED THE MAXIMUM AMOUNT CHARGEABLE TO TAX AND IN THE ABSENCE OF RETURN OF INCOME FILED BY THE ASSESSEE THE PROVISIONS OF EXPLANATION COME INTO P LAY. FURTHER PLEA OF THE ASSESSEE IN THIS REGARD WAS THA T WITHOUT MENTIONING THE ITEMS OF INCOME HAVING ESCAPED ASSES SMENT OR WITHOUT QUANTIFYING THEM THE ASSESSING OFFICER COULD NOT HAVE REASON TO BELIEVE THAT THE INCOME HAD ESCA PED ASSESSMENT. C) ASSESSING OFFICER HAD IGNORED THE FACT THAT THE ASS ESSEE HAD ALREADY FILED ITS RETURN OF INCOME FOR THE RELEVANT YEAR ON 30.10.2006 WHICH WAS WITHIN THE TIME LIMIT LAID DO WN U/S 139(1) OF THE ACT. IN THIS REGARD IT WAS ARGUED TH AT THE ASSESSEE VIDE HIS LETTER DATED 24.8.2007 HAD ALREAD Y REQUESTED FOR THE TRANSFER OF THE CASE TO CENTRAL C IRCLE CHANDIGARH BUT NO ACTION WAS TAKEN IN THE CASE. D) IT WAS ALSO ARGUED BY THE LD. AR FOR THE ASSESSEE T HAT THE ASSESSING OFFICER VIDE LETTER DATED 20.3.2008 HAD I SSUED A NOTICE U/S 143(2)(II) OF THE ACT TO THE ASSESSEE. THEREAFTER THE REASONS WERE RECORDED FOR 24.3.2008 AND NOTICE U/S 148 WAS ISSUED. THE CONTENTION OF THE ASSESSEE IN THIS REGARD BEFORE THE CIT(A) WAS THAT ONCE NOTICE U/S 143(2) CALLING FOR INFORMATION ON THE BASIS OF RETURN OF INCOME WA S FILED 5 HAD BEEN ISSUED THERE WAS NO BASIS FOR THE ASSESS ING OFFICER TO RECORD THE REASONS THAT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME. ACCORDINGLY IT WAS PLEADED B Y THE LD. AR FOR THE ASSESSEE THAT THE ASSESSMENT PROCEEDINGS INITIATED U/S 147/148 WERE INVALID. 7. THE CIT(A) UPHELD THE REOPENING OF ASSESSMENT U/ S 147/148 OF THE ACT. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF CIT (A) AND HENCE THE GROUND NOS. 1 & 1.1 RAISED BY THE ASSESSEE. 8. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE NOTICE ISSUED U/S 148 OF THE INCOME TAX ACT BY THE ASSESSING OFFICER WAS WITHOUT JURISDICTION. OUR ATTENTION WAS DRAWN TO THE COPY OF REASONS RECORDED FOR THE ISSUE OF NOTICE U/S 148 OF THE ACT PLACED AT PA GE 1 OF THE PAPER BOOK WHERE THE ONLY REASON FOR REOPENING OF THE CASE WAS THE NON FURNISHING OF RETURN OF INCOME FOR THE YEAR UNDER APPEAL. THE LD . AR FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO REASONS WITH THE ASSESS ING OFFICER TO FORMULATE SUCH A BELIEF AND AS THE RETURN OF INCOME WAS FILED FOR THE YEAR UNDER APPEAL WITHIN STIPULATED TIME THE ASSESSMENT COMPLETED PURSUANT TO THE REOPENING WAS INVALID. RELIANCE WAS PLACED ON VARIOUS CASE LAWS FOR THE ABOVE SAID PROPOSITION. IT WAS FURTHER P OINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED WITH ACIT RANGE IV CHANDIGARH ON 31.3.2 007. HOWEVER A LETTER OF TRANSFER OF THE SAID RETURN OF INCOME WAS MOVED ON 24.8.2007. IT WAS FURTHER POINTED OUT BY THE LD. AR THAT THE ASS ESSING OFFICER CENTRAL CIRCLE CHANDIGARH HAD ISSUED A NOTICE U/S 143(2) OF THE ACT DATED 20.3.2008 IMPLYING THEREBY THAT PRIOR TO RECORDING OF REASONS ON 24.3.2008 THE ASSESSING OFFICER WAS AWARE THAT THE ASSESSEE HAD ALREADY 6 FILED ITS RETURN OF INCOME. THE COPY OF THE SAID NO TICE ISSUE U/S 143(2) IS PLACED AT PAGE 2 OF THE PAPER BOOK. IT WAS FURTHER POINTED OUT THAT THE NOTICE U/S 148 WAS RECEIVED ON 1.5.2008. 9. THE LD. DR FOR THE REVENUE PLACING RELIANCE ON T HE ORDER OF THE ASSESSING OFFICER POINTED OUT THAT A NOTICE U/S 142 (1) OF THE ACT WAS ISSUED FOR FILING THE RETURN OF INCOME ON 13.12.200 6 BY ACIT CENTRAL CIRCLE CHANDIGARH TO WHICH THERE WAS NO COMPLIANCE BY THE ASSESSEE. FURTHER VIDE WRITTEN SUBMISSIONS FORWARDED TO THE D R (ITAT) DATED 1.10.2010 THE DCIT CENTRAL CIRCLE-1 CHANDIGARH S UBMITTED THAT AS THERE WERE INSTRUCTIONS TO TAKE UP ALL THE CASES COMPULSO RILY FOR SCRUTINY U/S 143(3) OF THE ACT IN A ROUTINE MANNER NOTICE U/S 143(2) WERE PREPARED IN RELEVANT CASE INCLUDING THE CASE OF THE ASSESSEE. IT WAS FURTHER STATED THE EXAMINATION OF THE ASSESSMENT FOLDER AND THE DISPAT CH REGISTER REVEALS THE SAID NOTICE WAS NOT SENT TO THE ASSESSEE. FURTHER IN RESPECT OF NOTICE ISSUED U/S 143(2) OF THE ACT DATED 20.3.2008 IT WA S POINTED OUT THAT THERE WAS NO ENDORSEMENT ON THE SAID NOTICE EITHER BY NO TICE SERVER OR BY THE INSPECTOR IN THE SAID COMMUNICATION DATED 1.10.201 0. A COPY OF THE DISPATCH REGISTER FOR THE RELEVANT PERIOD WAS ALSO FURNISHED ALONG WITH IT. THE LD. DR FURTHER PLEADED THAT THE CASE LAWS RELIE D UPON BY THE ASSESSEE HAVE BEEN ADJUDICATED UPON BY THE CIT(A) AND RELIAN CE WAS PLACED ON THE ORDER OF CIT(A) IN THIS REGARD. THE LD. AR FOR THE ASSESSEE IN REJOINDER PRODUCED THE ORIGINAL NOTICE ISSUED U/S 143(2) OF T HE ACT RECEIVED BY THE ASSESSEE AND ALSO ORIGINAL ENVELOPE EVIDENCING THE SERVICE OF NOTICE UPON THE ASSESSEE. 7 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE FIRST ISSUE ARISING BEFORE US IS WITH REGARD TO THE JURISDICTION OF THE ASSESSING OFFICER IN INITIATING THE PROCEEDINGS U/S 147 / 148 OF THE ACT AND COMPLETING THE ASSESSMENT PROCEEDINGS THEREAFTE R. THE CLAIM OF THE ASSESSEE IN THIS REGARD IS THAT HE FILED ITS RETURN OF INCOME ON 31.3.2007 WITH RANGE-4 CHANDIGARH. THE TAX AUDIT REPORT REL ATING TO THE YEAR WAS FURNISHED ON 31.10.2006 ALSO WITH RANGE-4 CHANDIGA RH. THE ASSESSEE WAS SEARCHED U/S 132 OF THE ACT IN 1998 AND THEREAF TER THE JURISDICTION OF THE ASSESSEE WAS TRANSFERRED TO CENTRAL CIRCLE CHA NDIGARH AND FOR THE PAST SEVERAL YEARS THE ASSESSEE WAS FURNISHING THE RETU RN OF INCOME IN THE SAME JURISDICTION. THE ASSESSMENTS WERE BEING COMP LETED U/S 143(3) OF THE ACT. HOWEVER FOR THE YEAR UNDER APPEAL THE RE TURN OF INCOME WAS FILED WITH RANGE-4 CHANDIGARH ADMITTEDLY WHICH W AS NOT THE JURISDICTION OF THE ASSESSEE. THE ASSESSEE FURTHER CLAIMS TO HAVE FILED A COMMUNICATION DATED 24.8.2007 FOR TRANSFERRING THE RETURN OF INCOME FILED BY HIM FROM RANGE-4 CHANDIGARH TO CENTRAL CIRCLE CHANDIGARH 11. NOW COMING TO THE SEQUENCE OF THE EVENTS IN THE OFFICE OF ACIT CENTRAL CIRCLE CHANDIGARH FROM THE PERUSAL OF THE EVIDENCE FURNISHED BY THE ASSESSEE AND THE REVENUE AND THE ASSESSMENT ORD ER A NOTICE U/S 142(1) WAS SERVED UPON THE ASSESSEE ON 2.1.2007 DIR ECTING THE ASSESSEE TO FURNISH THE RETURN OF INCOME TO WHICH NO COMPLIANC E BY ASSESSEE IS BROUGHT ON RECORD. THE ASSESSING OFFICER ALSO OBSE RVES NO COMPLIANCE TO SAME. FURTHER A NOTICE U/S 143(2) OF THE ACT DATE D 20.3.2008 WAS ISSUED TO THE ASSESSEE UNDER WHICH THE ASSESSEE WAS CALLE D UPON TO ATTEND THE OFFICE ON 31.3.2008. THE COPY OF THE SAID NOTICE IS PLACED AT PAGE 2 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE ASSESSEE HAS ALSO FILED ON RECORD THE COPY OF ENVELOPE WITH POSTAL STAMPS. THE CASE OF THE REVENUE 8 IS THAT THOUGH THE NOTICE WAS PREPARED IN THE CASE OF THE ASSESSEE BUT WAS NOT ISSUED OR SERVED UPON THE ASSESSEE. HOWEVER T HE ASSESSEE HAS PRODUCED THE ORIGINAL OF THE AFORESAID NOTICE RECEI VED BY HIM AND ORIGINAL ENVELOPE WITH POSTAL STAMPS BEFORE US CLAIMING SERV ICE OF NOTICE UPON THE ASSESSEE. THE REASONS WERE RECORDED BY THE ASSESSI NG OFFICER ON 24.3.3008 FOR INITIATING PROCEEDINGS U/S 147/148 OF THE ACT. AS PER THE REASONS RECORDED THE BELIEF OF THE ASSESSING OFFIC ER WAS THAT AS THE ASSESSEE BEING A RENOWNED DOCTOR AND DERIVING INCOM E FROM HOUSE PROPERTY AND NO RETURN OF INCOME BEING FURNISHED B Y THE ASSESSEE INCOME CHARGEABLE TO TAX WAS BELIEVED TO HAVE ESCAPED ASSE SSMENT. THE COPY OF THE SAID REASONS FOR REOPENING THE ASSESSMENT ARE P LACED AT PAGE 1 OF THE PAPER BOOK. THEREAFTER NOTICE U/S 148 OF THE IN COME TAX ACT WAS ISSUED TO THE ASSESSEE ON 24.3.3008 WHICH WAS SERV ED UPON THE ASSESSEE ON 1.5.2008 AS MENTIONED IN THE ASSESSMENT ORDER. AS PER THE ASSESSING OFFICER THE RETURN OF INCOME WAS TRANSFERRED FROM R ANGE IV CHANDIGARH TO CENTRAL CIRCLE CHANDIGARH AND THEREAFTER QUESTI ONNAIRE WAS ISSUED TO THE ASSESSEE FOR COMPLIANCE ON 3.12.2008. IN THE FACTS OF THE PRESENT CASE THE ASSESSING OFFICER CENTRAL CIRCLE CHANDI GARH HAD REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAD ESCAP ED ASSESSMENT IN VIEW OF THE NON AVAILABILITY OF ANY RETURN OF INCOME DUE FOR THE CAPTIONED YEAR. IN VIEW OF EXPLANATION 2(A) OF SECTION 147 OF THE A CT THE SAID REASON TO BELIEVE LED TO THE ISSUE OF NOTICE U/S 148 OF THE I NCOME TAX ACT. THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE WILLFULLY AND INTENTIONALLY IGNORED THE COMPLIANCE OF THE NOTICE US/ 148 AND DID NOT FILE ANY RETURN OF INCOME FOR THE SAID YEAR BEFORE HIM. THE PLEA OF THE ASSESSEE IS THAT A REPLY WAS FURNISHED TO TREAT THE RETURN OF INCOME ALREADY FILED BEING AS FILED U/S 148 OF THE ACT. HOWEVER THE ASSESSEE HAS NOT FURNISHED ON RECORD ANY EVIDENCE TO PROVE ITS STAND . FURTHER THE 9 PLEADINGS OF THE LD. AR OF THE ASSESSEE ARE THAT TH E RETURN OF INCOME ALREADY FILED BEFORE ASSESSING OFFICER WITH RANGE-4 CHANDIGARH WAS AVAILABLE WITH THE ASSESSING OFFICER CENTRAL CIRCL E CHANDIGARH ON 24.3.2008 I.E. THE DATE ON WHICH THE REASONS FOR RE OPENING THE ASSESSMENT WERE RECORDED BY THE ASSESSING OFFICER U/S 147 OF T HE INCOME TAX ACT. THE CASE OF THE REVENUE IS THAT THE RETURN OF INCOM E WAS RECEIVED ON TRANSFER OF ASSESSMENT RECORDS FROM THE OFFICE OF A CIT CIRCLE IV(1) CHANDIGARH LATER AND CONSEQUENTLY NOTICE U/S 142(1 ) 143(2) AND DETAILED QUESTIONNAIRE WAS SERVED UPON THE ASSESSEE ON 26.9. 2008 FIXING THE HEARING OF THE CASE ON 6.10.2008. 12. ON THE APPRAISAL OF THE FACTS OF THE PRESENT CA SE WE FIND THE ASSESSEE TO HAVE FILED ITS RETURN OF INCOME BEFORE RANGE 4 CHANDIGARH THOUGH THE JURISDICTION OF THE CASE WAS WITH ASSES SING OFFICER CENTRAL CIRCLE CHANDIGARH. THOUGH AN APPLICATION WAS CLAI MED TO BE FILED ON 24.8.2007 FOR TRANSFER OF RECORDS FROM WARD 4 CHAN DIGARH TO CENTRAL CIRCLE CHANDIGARH BUT NO EVIDENCE HAS BEEN BOUGHT ON RECORD TO PROVE THE SAID TRANSFER. THE ASSESSING OFFICER CENTRAL CIRCLE CHANDIGARH HAVING JURISDICTION OVER THE ASSESSEE ISSUED THE NO TICE U/S 148 OF THE INCOME TAX ACT AS NO RETURN OF INCOME WAS EITHER FI LED OR AVAILABLE WITH HIM IN THE ABSENCE OF THE SAME THE ASSESSING OFFI CER HAD REASONS TO BELIEVE THAT BECAUSE OF FAILURE OF THE ASSESSEE TO FURNISH THE RETURN THE INCOME HAD ESCAPED ASSESSMENT FOR THE CAPTIONED YE AR. 13. THE REQUIREMENT OF SECTION 147 OF THE ACT IS TH E REASON TO BELIEVE OF ESCAPEMENT OF INCOME FROM ASSESSMENT. THE COURT S HAVE UPHELD THE INVOKING THE JURISDICTION BY ASSESSING OFFICER U/S 147 OF THE ACT WHERE THERE IS REASON TO BELIEVE OF ESCAPEMENT OF INCOME ON THE BASIS OF SOME 10 EVIDENCE. THE SAID EVIDENCE SHOULD HAVE A DIRECT L INK TO THE FORMATION OF BELIEF BY THE ASSESSING OFFICER WHILE RECORDING TH E REASONS FOR REOPENING THE ASSESSMENT. EXPLANATION 2 UNDER SECTION 147 OF THE ACT ENLISTS THE CASE WHERE IT WOULD BE DEEMED THAT INCOME HAD ESCAP ED ASSESSMENT. UNDER CLAUSE (A) TO EXPLANATION 2 TO SECTION 147 OF THE ACT NON FURNISHING OF A RETURN BY ASSESSEE WHOSE INCOME IS CHARGEABLE TO TAX IS ONE OF THE CASES OF ESCAPEMENT OF INCOME. IN THE F ACTS OF THE CASE BEFORE US AS ENUMERATED HEREINABOVE WE FIND THAT NO RETU RN OF INCOME WAS AVAILABLE WITH THE ASSESSING OFFICER HAVING JURISDI CTION OVER THE ASSESSEE AND HENCE THE REASONS TO BELIEVE OF ESCAPEMENT O F INCOME. WE UPHOLD THE REOPENING OF THE ASSESSMENT U/S 147 OF T HE ACT THAT IN THE ABSENCE OF ANY RETURN OF INCOME THE ASSESSING OFFI CER WAS UNDER A BONAFIDE REASON TO BELIEVE THAT THE INCOME IN THE H ANDS OF THE ASSESSEE HAD ESCAPED ASSESSMENT. ACCORDINGLY THE PROVISION S OF EXPLANATION TO SECTION 2(A) TO SECTION 147 HAVE BEEN CORRECTLY INV OKED BY THE ASSESSING OFFICER IN RECORDING THE REASONS FOR REOPENING THE ASSESSMENT AND ISSUING THE NOTICE U/S 148 OF THE INCOME TAX ACT. THE ISSU E OF NOTICE U/S 143(2) DATED 20.3.2008 DOES NOT ESTABLISH THE AVERMENT OF THE ASSESSEE THAT THE BASIS OF THE SAID NOTICE WAS THE RETURN ALREADY FIL ED WITH ACIT CIRCLE-4 CHANDIGARH AS BEING AVAILABLE WITH THE ASSESSING OF FICER CENTRAL CIRCLE CHANDIGARH PRIOR TO RECORDING OF REASONS U/S 147 O F THE ACT. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE SUP REME COURT IN CIT VS. M/S KELVINATOR OF INDIA LTD 320 ITR 561 (SC). THE APEX COURT HAD HELD AS UNDER:- ON GOING THROUGH THE CHANGES QUOTED ABOVE MADE T O SECTION 147 OF THE ACT WE FIND THAT PRIOR TO THE DIRECT TAX LAWS (AMENDMENT) ACT 1987 REOPENING COULD BE DON E UNDER THE ABOVE TWO CONDITIONS AND FULFILMENT OF T HE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSE SSING OFFICER TO MAKE A BACK ASSESSMENT BUT IN SECTION 147 OF THE 11 ACT (WITH EFFECT FROM 1ST APRIL 1989) THEY ARE G IVEN A GO-BY AND ONLY ONE CONDITION HAS REMAINED VIZ. THAT WH ERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THEREFORE POST-1ST APRIL 1989 POWER TO REOPEN IS MUCH WIDER. HOWEVER ONE NEEDS TO GIVE A SCHEMA TIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FA ILING WHICH WE ARE AFRAID SECTION 147 WOULD GIVE ARBITR ARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSME NTS ON THE BASIS OF 'MERE CHANGE OF OPINION' WHICH CANNO T BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND P OWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REV IEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE C ONCEPT OF 'CHANGE OF OPINION' IS REMOVED AS CONTENDED ON BEH ALF OF THE DEPARTMENT THEN IN THE GARB OF REOPENING THE ASSESSMENT REVIEW WOULD TAKE PLACE. ONE MUST TREA T THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE AF TER 1ST APRIL 1989 THE ASSESSING OFFICER HAS POWER TO RE OPEN PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO TH E CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHAN GES MADE TO SECTION 147 OF THE ACT AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT 1987 PARLIAMENT N OT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSE RTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAI NST OMISSION OF THE WORDS 'REASON TO BELIEVE' PARLIAME NT REINTRODUCED THE SAID EXPRESSION AND DELETED THE WO RD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRA RY POWERS IN THE ASSESSING OFFICER. 14. UPHOLDING THE VESTING OF JURISDICTION IN THE AS SESSING OFFICER U/S 147/148 OF THE ACT WE DISMISS THE GROUND NOS.1 AND 1.1 RAISED BY THE ASSESSEE 15. THE GROUND NO.2 RAISED BY THE ASSESSEE IS CONNE CTION WITH THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 54F OF THE IN COME TAX ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION CLAIME D TO HAVE SET OFF THE INCOME FROM LONG TERM CAPITAL GAIN (LTCG) AGAINST P URCHASE OF 30% SHARE IN FIRST FLOOR AND SECOND FLOOR OF H.NO. 140 SECTO R 35-A CHANDIGARH 12 WHICH WAS IN THE NAME OF ASSESSEES BROTHER. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS UNABLE TO F URNISH THE DOCUMENTARY EVIDENCE OF HAVING PURCHASED THE SAID S HARES AND ACCORDINGLY THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER. HOWEVER BEFORE THE CIT(A) AN APPLICATIO N FOR ADMISSION OF ADDITIONAL EVIDENCE WAS FURNISHED BY THE ASSESSEE. THOUGH THE SAME WAS NOT ADMITTED AS ADDITIONAL EVIDENCE BUT IT WAS CONS IDERED FOR THE SAKE OF DECIDING THE ISSUE AT HAND. WE FIND NO MERIT IN TH E ORDER OF CIT(A) IN THIS REGARD. THE CIT(A) HAS DISMISSED THE GROUND NO.2 RAISED BY THE ASSESSEE BY DECIDING THE ISSUE ON THE MERITS OF CLA IM. HOWEVER WHILE CONCLUDING IN PARA 4.2 THE CIT(A) OBSERVES:- THOUGH I HAVE NOT ADMITTED THE ADDITIONAL EVIDENCE BUT I HAVE TAKEN TOKEN OF THE AGREEMENT TO SELL FILED BEF ORE MISCELLANEOUS EXPENSES FOR THE SAKE OF DECIDING TH E ISSUE AT HAND. THEREFORE I HOLD THAT THERE IS NO MERIT IN T HE GROUND OF APPEAL AND SAME IS DISMISSED. 16. WE FIND THE OBSERVATIONS OF THE CIT(A) TO BE IN CONSISTENT. THOUGH THE CIT(A) HAD NOT ADMITTED THE ADDITIONAL EVIDENCE BUT HAVE DISMISSED THE GROUND OF APPEAL RAISED BY THE ASSESSEE ON MERI TS BY TAKING COGNIZANCE OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. UNDER THE PROVISIONS OF THE SECTION 250 OF THE INCOME TAX ACT WHILE DECIDING THE APPEAL CIT(A) IS EMPOWERED TO CONSIDER ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IN CASE THE ASSESSEE IS ABLE TO SATISFACTO RILY EXPLAIN THE NON FURNISHING OF THE SAID ADDITIONAL EVIDENCE BEFORE T HE ASSESSING OFFICER. FURTHER UNDER RULE 46A OF THE INCOME TAX RULES IT IS PROVIDED THAT THE CIT(A) SHALL CONFRONT THE SAID ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER AND THEREAFTER DECIDE THE MERITS AND DEMER ITS OF THE BOTH 13 ADMISSION OF THE ADDITIONAL EVIDENCE AND THEREAFTER ITS RELEVANCE TO THE ISSUE IN HAND. IN THE FACTS OF THE PRESENT CASE W E FIND THE ASSESSEE TO HAVE MOVED AN APPLICATION FOR ADMISSION OF ADDITION AL EVIDENCE BEFORE THE CIT(A) WITH THE PLEA THAT THE NECESSARY EVIDENCE OF INVESTMENT IN THE PROPERTY COULD NOT BE FURNISHED BEFORE THE ASSESSIN G OFFICER AS NO SUFFICIENT OPPORTUNITY WAS ALLOWED BY THE ASSESSEE. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER U/S 54F OF THE ACT AS NO PURCHASE DEED FOR THE PURCHASE OF NEW ASSET WAS FUR NISHED BY THE ASSESSEE. IT WAS EXPLAINED BY THE ASSESSEE THAT T HE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT IN A HURRIED MANNER ON 31. 12.2008 UNDER THE BELIEF THAT IT WAS GETTING TIME BARRED ON 31.12.200 8 THOUGH LIMITATION EXPIRE ON 31.12.2009 AND HENCE THE PLEA OF NON ALLO WABILITY OF PROPER OPPORTUNITY OF HEARING IN THE MATTER. WE FIND MERI T IN THE PLEA RAISED BY THE ASSESSEE IN THIS REGARD. THE CIT(A) IS DIRECTE D TO CONSIDER THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. IN THE INTEREST OF JUSTICE WE RESTORE THE ISSUE BACK TO THE FILE OF THE CIT(A) T O DISPOSE THE APPLICATION MOVED BY THE ASSESSEE REGARDING THE ADMISSION OF AD DITIONAL EVIDENCE AND AFTER CONFRONTING THE ASSESSING OFFICER WITH THE AD DITIONAL EVIDENCE FILED BY ASSESSEE TO DECIDE THE ISSUE ON MERITS AND IN AC CORDANCE WITH LAW. A REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE BY CIT(A). THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS ALLOWED FOR STATISTICAL PURPOSES. 17. THE ASSESSEE IN ITA NO. 1094/CHD/2010 IS ALSO A GGRIEVED BY SIMILAR ORDER PASSED BY THE AUTHORITIES BELOW. TH E ONLY POINT OF DISTINCTION POINTED OUT BY LD. AR FOR THE ASSESSEE THAT PRIOR TO THE RECORDING OF REASONS FOR REOPENING U/S 147 OF THE A CT NO NOTICE WAS ISSUED U/S 143(2) OF THE ACT. THE FACTS OF THE CASE BEING IDENTICAL TO THE 14 FACTS IN ITA NO. 1093/CHANDI/2010 UPHOLDING THE RE OPENING OF ASSESSMENT U/S 147 / 148 OF THE ACT WE DISMISS T HE GROUND NO. 1 RAISED BY THE ASSESSEE. 18. THE ISSUE ON MERITS IS RAISED BY THE ASSESSEE IN RESPECT OF GIFTS RECEIVED FROM HER MOTHER AND SISTER IN SUPPORT OF WHICH CERTAIN ADDITIONAL EVIDENCE WAS FURNISHED BEFORE THE CIT(A) WHICH HAS NOT BEEN ADMITTED BY THE CIT(A) AND THE ADDITION HAS BEEN CO NFIRMED. IN VIEW OF OUR OBSERVATIONS HEREINABOVE WE FIND NO MERIT IN T HE ORDER OF THE CIT(A) IN REJECTING THE ADDITIONAL EVIDENCE PRODUCED BY TH E ASSESSEE. WE HEREBY REMIT THE ISSUE BACK TO THE FILE OF CIT(A) TO ADMIT THE ADDITIONAL EVIDENCE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER CONFRONTING THE SAME TO THE ASSESSING OFFICER. A REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE. THE GROUND OF APPEAL RAI SED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY 2011. SD/- SD/- (N.BARATHVAJA SANKAR) (SUSHMA CHOWLA) VICE PRESIDENT JUDICIAL MEMBER DATED : 23 RD FEBRUARY 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 15