LAXMINARAYAN AGARWAL (HUF), MUMBAI v. ITO 13(1)(2), MUMBAI

ITA 1161/MUM/2011 | 1993-1994
Pronouncement Date: 15-07-2011 | Result: Dismissed

Appeal Details

RSA Number 116119914 RSA 2011
Assessee PAN AADPS8398A
Bench Mumbai
Appeal Number ITA 1161/MUM/2011
Duration Of Justice 5 month(s) 6 day(s)
Appellant LAXMINARAYAN AGARWAL (HUF), MUMBAI
Respondent ITO 13(1)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Date Of Final Hearing 28-06-2011
Next Hearing Date 28-06-2011
Assessment Year 1993-1994
Appeal Filed On 08-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA. NO. 1161/MUM/2011 ASSESSMENT YEAR 1993-1994 SHRI LAXMINARAYAN AGARWAL (HUF) MUMBAI-400078. PAN AADPS8398A VS. INCOME TAX OFFICER 13(1)(2) MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI N.M. PORWAL FOR RESPONDENT : SHRI P.C.MOURYA ORDER PER D. MANMOHAN V.P. 1. THIS APPEAL BY THE ASSESSEE-HUF IS DIRECTED AGA INST THE ORDER DATED 15-12-2010 PASSED BY THE CIT(A)-XXIV MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 1993-94. UPON HEARI NG THE LEARNED A.R. AS WELL AS LEARNED D.R. WE ARE OF THE OPINION THAT BACKGROUND OF THE CASE NEEDS TO BE UNDERSTOOD IN DETAIL TO ANSWER THE ISSUE RAISED BEFORE US. ACCORDINGLY FACTS ARE SET OUT IN DETAIL. 2. THIS CASE HAS A CHEQUERED HISTORY. IN RESPECT O F THE ASSESSMENT YEAR 1993-94 ASSESSEE APPEARS TO HAVE FI LED RETURN OF INCOME ON 31-3-1996 DECLARING TOTAL INCOME OF RS.53 860/-. THIS RETURN OF INCOME WAS FILED BEYOND THE PERIOD STIPUL ATED UNDER THE ACT. ASSESSEE IN THE COMPUTATION OF INCOME SHOWED LOSS IN OWN BUSINESS TO THE TUNE OF RS.2 62 895/- AND LOSSES UNDER THE H EAD CAPITAL GAINS AT RS.3 53 775/- WHEREAS INCOME FROM OTHER SOURCES WAS DECLARED AT RS.3 16 827/-. 3. CONSEQUENT TO THE REOPENING OF ASSESSMENT BY I SSUING A NOTICE UNDER SECTION 148 OF THE ACT AN ASSESSMENT WAS MADE ON 27/3/2001 DETERMINING THE TOTAL INCOME OF RS.42 35 735/-. IT APPEARS THAT SIMILAR ISSUE WAS INVOLVED IN THE APPEALS OF T HE FAMILY MEMBERS ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 2 OF THE SAME HUF. AS COULD BE NOTICED FROM THE REASO NS RECORDED ON 19 TH MARCH 1999 THE ASSESSMENTS OF S/SHRI LAXMINARAYAN S.AGARWAL BABULAL AGARWAL KIRAN AGARWAL MUNISH AGARWAL KRI SHNA KUMAR AGARWAL MS. ANUPA AGARWAL WERE COMPLETED UNDER SEC TION 143 (3) OF THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION . IN THE AFOREMENTIONED CASES LOSSES UNDER THE HEAD CAPITAL GAINS AND BUSINESS WAS DISALLOWED. SINCE LAXMINARAYAN AGARWAL -HUF IS ALSO CONNECTED TO THE SAME GROUP HAVING SIMILAR SET OF FACTS THE ASSESSING OFFICER WAS OF THE OPINION THAT THE INCOM E OF THE ASSESSEE HAD ESCAPED ASSESSMENT. CONSEQUENT TO THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT ASSESSMENT WAS MADE IN THE CASE OF SHRI LAXMINARAYAN AGARWAL-HUF BY DISALLOWING THE CLAIM O F LOSS UNDER THE HEAD SHORT TERM CAPITAL GAINS AND UNDER THE HEAD BUSINESS. IT APPEARS THAT THE ASSESSING OFFICER VIDE LETTER DATE D 19/3/1999 REQUESTED THE JOINT COMMISSIONER OF INCOME TAX RAN GE-17 MUMBAI TO CONSIDER THE PROPOSAL FOR REOPENING OF ASSESSMEN T. IN OTHERWORDS PERMISSION WAS SOUGHT FOR ISSUING A NOTICE UNDER SE CTION 148 OF THE ACT. THEREAFTER A NOTICE UNDER SECTION 148 DATED 2 3/3/1999 WAS ISSUED AND SERVED ON THE ASSESSEE ON 24/3/99 WHEREI N IT WAS CLEARLY MENTIONED THAT THE NOTICE WAS BEING ISSUED AFTER OB TAINING THE NECESSARY SATISFACTION OF JCIT RANGE-17 MUMBAI. A SSESSEE APPEARS TO HAVE RESPONDED TO THE NOTICE AND FINALLY ASSESSM ENT WAS COMPLETED UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE ACT ON 27-3-2001 DETERMINING THE TOTAL INCOME AT RS.43 35 730/-. 4. IT WAS SUBMITTED BEFORE US THAT THE ASSESSMENT ORDER DATED 27-3-2001 WAS SET ASIDE BY THE ITAT WITH A DI RECTION TO RECONSIDER ALL THE ISSUES AND IN THE CONSEQUENTIAL ORDER PASSED BY ASSESSING OFFICER SANCTION OF JCIT FOR ISSUING A NO TICE U/S. 148 OF THE ACT COULD NOT BE PLACED ON RECORD BUT WRONGLY ASSUM ED THAT RE- ASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED AND T HIS ISSUE IS UNDER CHALLENGE IN THE SECOND ROUND OF LITIGATION. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 3 4.1. IT IS NECESSARY TO NOTICE HERE THAT NEITHER T HE ASSESSEE NOR THE DEPARTMENTAL REPRESENTATIVE FILED NECESSARY PAP ERS TO VERIFY THE DATES EVENTS SPECIFIC ISSUES URGED IN THE ORIGINA L ROUND OF LITIGATION AS WELL AS THE STATUS OF THE CONNECTED MATTERS I.E. THE CASE OF SHRI LAXMINARAYAN AGARWAL AND OTHERS WHO APPEAR TO BE ME MBERS OF THE HUF. COPY OF THE ORDER OF THE ITAT I BENCH MUMB AI WAS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE (SEE ITA. NO. 7827/MUM/2003 DATED 19 TH SEPTEMBER 2008 AND M.A.NO.670/MUM/2009 DATED 22 ND JANUARY 2010). HE SUBMITTED THAT REVENUE HAS NOT CARRIED THE MATTER IN APPEAL TO HIGH COURT. LEARNED D.R. EXPLAI NED THAT SINCE ASSESSEE HAS NOT OBTAINED ANY RELIEF BEFORE APPELLA TE TRIBUNAL REVENUE DID NOT PREFER A FURTHER APPEAL. LEARNED D. R. FILED COPIES OF ORDERS OF A.O. IN THE CASE OF SHRI LAXMINARAYAN AGA RWAL (INDIVIDUAL) FOR ASSESSMENT YEAR 1993-94 AND RELEVANT PAPERS OF HUF CONNECTED TO FIRST ROUND OF LITIGATION AS DIRECTED BY BENCH. 5. BE THAT AS IT MAY AGAINST THE ORDER DATED 27-3 -2001 THOUGH AN APPEAL WAS PREFERRED BEFORE THE CIT(A) NO NE APPEARED FOR ASSESSEE-HUF. LEARNED CIT(A) OBSERVED THAT THE ASS ESSEE-HUF HAS NO MATERIAL TO DISLODGE THE FINDINGS OF A.O. AND TH US AFFIRMED THE ACTION OF A.O. BY HIS ORDER DATED 25-2-2002. AS RE GARDS GENUINENESS OF LOSS HE OBSERVED THAT NUMBER OF TRANSACTIONS IN SHARES WERE CLAIMED TO HAVE BEEN CONDUCTED THROUGH A PERSON BY NAME ADOLF PINTO BUT HIS EXISTENCE COULD NOT BE PROVED. 6. ADMITTEDLY THE IMPUGNED ASSESSMENT WAS MADE IN 2001 BY ISSUING A NOTICE UNDER SECTION 148 OF THE ACT ON 23-3-1999 WHICH DATE FALLS BEYOND FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR. THEREFORE IN ORDER TO ISSUE NOTICE UNDER SEC TION 148 OF THE ACT TO BRING TO TAX ANY INCOME WHICH HAS ESCAPED ASSESS MENT APPROVAL OF THE JOINT COMMISSIONER HAS TO BE OBTAINED IN THE L IGHT OF PROVISIONS OF SECTION 151 (2) OF THE I.T. ACT. HOWEVER ASSESS EE APPEARS TO HAVE NOT CHALLENGED THE JURISDICTION OF THE ASSESSING OF FICER IN INITIATING RE- ASSESSMENT PROCEEDINGS EITHER DURING THE COURSE OF ASSESSMENT ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 4 PROCEEDINGS CARRIED OUT BASED ON THE ISSUANCE OF N OTICE UNDER SECTION 148 OR DURING THE COURSE OF FIRST APPELLATE PROCEE DINGS. 6.1. NO SUCH GROUND WAS RAISED EVEN BEFORE THE APP ELLATE TRIBUNAL WHEN AN APPEAL WAS PREFERRED IN 2003 WHICH IN ITSELF WAS BELATED. 7. IT DESERVES TO BE NOTICED THAT THERE WAS A DELA Y OF ONE YEAR EIGHT MONTHS IN FILING THE APPEAL. THE EXPLANA TION FOR THE DELAY WAS THAT THE ORDER OF THE CIT(A) WAS RECEIVED ON 1- 3-2002 AND APPEAL PAPERS WERE PREPARED BY THE ASSESSEES CHARTERED AC COUNTANT AND RECEIVED BACK ON 4-3-2002 AND ON ACCOUNT OF OVERSIG HT BY ONE MR. SHAILESH PAL FROM THE O/O. CHARTERED ACCOUNTANT THE FACTUM OF NOT FILING THE APPEAL HAS NOT COME TO THE FORE AND ONLY WHEN THE ASSESSEE VERIFIED THE FACTS DURING DECEMBER 2003 IT HAS COME TO THE KNOWLEDGE OF THE ASSESSEES CHARTERED ACCOUNTANT AND IMMEDIATELY THEREAFTER APPEAL WAS FILED. THIS EXPLA NATION WAS ACCEPTED BY THE ITAT I BENCH MUMBAI DESPITE AN OBJECTION RAISED BY THE LEARNED D.R. ON THE GROUND THAT THE ASSESSEE NEVER COOPERATED WITH THE DEPARTMENT AT ANY STAGE OF THE PROCEEDINGS AND IN FACT DID NOT APPEAR BEFORE THE CIT(A) WHICH RESULTED IN PASS ING AN EX-PARTE ORDER. LEARNED D.R. ALSO SUBMITTED THAT THE ASSESSE E HAS NOT EVEN FILED A CONDONATION PETITION BEFORE THE TRIBUNAL AL ONG WITH THE APPEAL PAPERS. 8. AS COULD BE NOTICED FROM THE RECORDS THOUGH TH E APPEAL WAS SET EX-PARTE ON ACCOUNT OF NON-APPEARANCE IT W AS RECALLED AT THE REQUEST OF THE ASSESSEE AND APPEAL WAS REFIXED FOR HEARING. AT THAT STAGE DELAY IN FILING THE APPEAL WAS CONDONED. THOU GH THE ASSESSMENT WAS COMPLETED BY DETERMINING INCOME AT RS.42 35 730 /- ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER ON TH E FOLLOWING ISSUES (A) DISALLOWANCE OF BUSINESS LOSS OF RS.2 62 893/- (B) DISALLOWANCE OF LONG TERM CAPITAL LOSS OF RS.6 49 850/- (C) SHORT T ERM CAPITAL LOSS OF RS.2 20 059/- (D) UNEXPLAINED CASH CREDIT OF RS.14 12 792/-. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 5 9. IT IS ALSO EQUALLY RELEVANT TO NOTICE THAT IN F ORM-36 COLUMN-9 IT WAS ORIGINALLY TYPED AS NOT KNOWN AND VERIFICATION WAS SIGNED ON 17 TH NOVEMBER 2003. BUT COLUMN-9 APPEARS TO HAVE BEEN CORRECTED BY MENTIONING THAT THE DATE OF COMMUNICAT ION OF THE ORDER WAS 24-6-2003; THE AFFIDAVIT STATES THAT EMPLOYEE O F PUROHIT & CO. C.AS RECEIVED THE DULY SINGED PAPERS FROM SHRI LAXM INARAN AGARWAL (HUF) ON 5-3-2002 WHEREAS FORM-36 FILED IN THE REG ISTRY SHOWS THAT VERIFICATION WAS SIGNED ON 17 TH DAY OF NOVEMBER 2003. THERE IS ONE MORE ASPECT WHICH REQUIRES TO BE NOTICED I.E. THE APPEAL PAPERS APPEARS TO HAVE BEEN RECEIVED ON 5-3-2002 BY THE O/ O. ASSESSEES CHARTERED ACCOUNTANT SHRI G.M. PUROHIT & CO. IN WHI CH EVENT ORDER OF THE LEARNED CIT(A) MUST HAVE BEEN RECEIVED BY TH E ASSESSEE PRIOR TO 5-3-2002 WHEREAS IN FORM-36 ASSESSEE APPEAR TO HAVE CLAIMED THAT HE WAS NOT AWARE OF THE DATE OF COMMUNICATION OF TH E ORDER. AS COULD BE NOTICED FROM FORM -36 EITHER ASSESSEE IS NOT AWARE OF DATE OF RECEIPT OF ORDER OF CIT(A) (SINCE IT WAS MENTIONED AS NOT KNOWN) OR IT WAS 24-6-2003 WHEREAS BOTH THE VERSIONS DO NO T TALLY WITH THE DATE MENTIONED IN THE AFFIDAVIT. THE ITAT I BENCH MUMBAI HOWEVER APPEARS TO HAVE CONDONED THE DELAY ON THE STRENGTH OF THE STATEMENT MADE IN THE AFFIDAVIT. IT IS ALSO NECESS ARY TO NOTICE THAT AFFIDAVIT STATES THAT ONLY IN DECEMBER 2003 SHRI L AXMINARAYAN AGARWAL ENQUIRED ABOUT THE HEARING OF THE APPEAL WH ICH CULMINATED IN REALISATION OF THE FACT THAT THE APPE AL WAS NOT FILED INADVERTENTLY. THE FACT HOWEVER REMAINS THAT VERIFI CATION WAS DATED 17 TH NOVEMBER 2003 (MUCH BEFORE THE SO-CALLED ENQUIRY BY THE ASSESSEE) AND THE INSTITUTION FEES WAS ALSO PAI D ON 19 TH NOVEMBER 2003 WHEREAS THERE WAS A FURTHER DELAY BY MORE THAN 20 DAYS IN FILING THE APPEAL; APPEAL PAPERS WERE FILED BY HAND ON 10-12-2003. THESE FACTS ARE NOTICED FROM MATERIAL P APERS FILED BY LEARNED D.R. AS WELL AS FROM THE OLD RECORDS OF THE TRIBUNAL. 9.1. IN OUR OPINION THE BACKGROUND OF THE CASE IS RELEVANT TO APPRECIATE THE BELATED CLAIM OF THE ASSESSEE AS REG ARDS THE PROCEDURE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 6 TO BE FOLLOWED BY ASSESSING OFFICER UNDER SECTION 1 51 (2) OF THE ACT AND NOT FOR THE PURPOSE OF RE-CONSIDERING THE VIEW TAKEN BY THE TRIBUNAL ON THE EARLIER OCCASION WHICH IS CERTAINL Y BEYOND THE SCOPE OF THE APPEAL BEFORE US. DETAILED LETTER DATED 15 TH FEBRUARY 2005 FILED BY MR. N.M. PORWAL COUNSEL OF THE ASSESSEE INDICAT ES THAT THERE IS A DELAY OF ONE YEAR EIGHT MONTHS IN FILING THE APPEAL . IT WAS STATED THEREIN THAT LAST DATE FOR FILING THE APPEAL WAS 1- 5-2002 WHEREAS THE APPEAL PAPERS WERE FILED ON 10-12-2003. ON 17 TH SEPTEMBER 2007 ASSESSEE FILED THE FOLLOWING ADDITIONAL GROUNDS : 1. THAT LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSING OFFICER FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 151(2) OF THE INCOME TAX ACT. NOTICE DATED 23 RD MARCH 1999 UNDER SECTION 148 HAS BEEN ISSUED BY THE INCOME TAX OFFICER WHEREAS SECTION 151 (2) REQUIRES THAT SUCH NOTICE OUGHT TO HAVE BEEN ISSUED BY THE DY.COMMISSIONER OF INCOME TAX AT THE RELEVANT TIME. 2. APPELLANT CRAVES LEAVE TO ADD TO AMEND ALTER OR VARY THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 9.2. THUS RECKONED FROM THE DATE OF ISSUANCE OF N OTICE THE ASSESSEE FOUND FAULT WITH THE JURISDICTION OF THE A SSESSING OFFICER AFTER A LAPSE OF MORE THAN 8 YEARS. 10. IN SO FAR AS THE GROUNDS RAISED ALONG WITH THE APPEAL MEMO ARE CONCERNED THE ITAT I BENCH MUMBAI IN ITS ORDER DATED 19/9/2008 OBSERVED THAT THE ASSESSMENT WAS COMPLET ED ON 27/3/2001 BECAUSE THE ASSESSMENT WAS GETTING BARRED BY LIMITATION BY 31-3-2001. IN THIS REGARD REFERENCE WAS MADE TO PARA 3 OF THE ASSESSMENT ORDER. FACTUM OF ISSUANCE OF NOTICE DATE D 23-3-1999 AND CALLING FOR THE INFORMATION FOR COMPLETION OF THE A SSESSMENT BY ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 7 ISSUING A NOTICE UNDER SECTION 142 (1) ON 6-4-2000 AND THEREAFTER MIGHT HAVE BEEN TAKEN INTO CONSIDERATION. BENCH OBS ERVED THAT THE LEARNED D.R. HAS NOT RAISED ANY OBJECTION FOR RESTO RATION OF THE MATTER TO THE FILE OF THE ASSESSING OFFICER. THEREFORE TH E ISSUE ON MERITS WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 11. IT IS EQUALLY NECESSARY TO NOTICE HERE THAT EV EN IN THE ORDER PASSED UNDER SECTION 143 (3) READ WITH SECTIO N 254 ASSESSEE DID NOT GET ANY FURTHER RELIEF AND THE ADDITIONS MADE I N THE ORIGINAL ASSESSMENT WAS REPEATED WHICH WAS ALSO CONFIRMED BY THE LEARNED CIT(A) AND THE ASSESSEE HAS NOT PREFERRED ANY FURTH ER APPEAL BEFORE US ON MERITS. 12. WITH REFERENCE TO THE ADDITIONAL GROUND URGED BEFORE THE TRIBUNAL THE ITAT I BENCH MUMBAI OBSERVED THAT THIS GROUND REQUIRES EXAMINATION OF FRESH FACTS WHICH ARE NOT O N RECORD AND HENCE ADDITIONAL GROUND CANNOT BE ADMITTED BUT AT THE SAME TIME THE BENCH REMARKED THAT ASSESSEE IS FREE TO RAISE THESE ISSUES BEFORE THE ASSESSING OFFICER AS THE ASSESSMENT IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO COMPLETE IT IN ACCORDANCE WITH LAW. ULTIMATELY IT WAS HELD THAT THE ADDITIONAL GROUND CANNOT BE ADMIT TED. 13. THIS BRINGS US TO THE SECOND ROUND OF LITIGATI ON. FOR THE PURPOSE OF PASSING AN ORDER UNDER SECTION 143 (3) R EAD WITH SECTION 254 OF THE ACT ASSESSING OFFICER ISSUED NOTICE UND ER SECTION 143 (2) / 142(1) OF THE ACT FROM TIME TO TIME. THOUGH FIRST N OTICE WAS SERVED UPON THE ASSESSEE FIXING THE CASE FOR HEARING ON 29 -1-2009 IN RESPONSE TO NOTICE DATED 26-11-2009 ASSESSEE FILED LETTER DATED 1/12/2009 STATING THAT THE CONDITIONS PRECEDENT REQ UIRED BY SECTION 151 (2) FOR ASSUMING JURISDICTION UNDER SECTION 147 READ WITH SECTION 148 WERE NOT COMPLIED WITH AND HENCE NOTICE ISSUED UNDER SECTION 148 OF THE I.T. ACT WAS WITHOUT JURISDICTION AND SH OULD BE QUASHED. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 8 14. IT DESERVES TO BE NOTICED THAT THE SAME ISSUE WAS RAISED BEFORE THE ITAT I BENCH MUMBAI FOR THE FIRST T IME AFTER A PERIOD OF 8 YEARS; RECKONED FROM THE DATE OF ISSUANCE OF NOTI CE UNDER SECTION 148 OF THE ACT. THE LIMITED POINT URGED BEFORE THE TRIBUNAL WAS REGARDING THE FULFILMENT OF CONDITIONS PRESCRIBED U NDER SECTION 151 (2) OF THE ACT WHICH IN TURN SPEAKS OF APPROVAL OF THE JOINT COMMISSIONER IN THE EVENT OF ISSUING NOTICE UNDER SECTION 148 OF THE ACT BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. IT WAS NOT THE CASE OF THE ASSESSEE THAT THE REASONS GIVEN BY THE ITO IN THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT ARE VAGU E OR INSUFFICIENT. IN THE CASE OF SHRI LAXMINARAYAN AGARWAL (INDIVIDUAL) ASSESSMENT WAS MADE ON 11-3-1999 WHEREIN THE SAME ASSESSING OFFICE R NOTICED THAT THE TRANSACTIONS STATED TO HAVE BEEN CARRIED OUT TH ROUGH ONE ADALF PINTO SHARE BROKER DO NOT REFLECT REAL STATE-OF-AF FAIRS. LOSS CLAIMED UNDER THE HEAD LONG TERM CAPITAL GAINS AND SHORT T ERM CAPITAL GAINS WERE REJECTED IN THE CASE OF SHRI LAXMINARAYAN AGAR WAL (INDIVIDUAL). THE ASSESSING OFFICER AS WELL AS THE KARTA OF HUF I .E. SHRI LAXMINARAYAN AGARWAL WERE AWARE OF THE FACTUAL MATR IX OF THE CASE AND PRESUMABLY BECAUSE OF THE SAID REASON THE ASSES SEE HAS NOT CHALLENGED THE SUFFICIENCY OF THE REASONS AT ANY ST AGE AND EVEN BEFORE THE TRIBUNAL. AT ANY RATE THE TRIBUNAL HAD NOT ENT ERTAINED THE ADDITIONAL GROUNDS FOR THE REASON THAT THE SAME REQ UIRES VERIFICATION OF FRESH FACTS. ASSESSEE FILED A M.A. BEFORE THE IT AT I BENCH MUMBAI WHICH WAS NUMBERED AS M.A.NO.670/MUM/2009 WHEREIN I T WAS CONTENDED THAT NO FRESH FACTS ARE NEEDED TO EXAMINE THE ISSUE AS TO WHETHER THE CONDITION STIPULATED UNDER SECTION 151 (2) OF THE ACT WAS SATISFIED OR NOT AND THUS REQUESTED FOR APPROPRIATE DIRECTION TO THE ASSESSING OFFICER BY ADMITTING THE ADDITIONAL GROUN DS. VIDE ORDER DATED 22 ND JANUARY 2010 THE TRIBUNAL REJECTED THE M.A. BY OB SERVING AS UNDER : 6. THE LETTER DATED 5 TH FEBRUARY 2008 REFERS TO THE FACT THAT THE SANCTION APPEARS TO BE NOT ON THE RECORD A S THERE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 9 WAS RESTRUCTURING OF THE DEPARTMENT AND THERE WERE CHANCES THAT THE PAPER MIGHT HAVE BEEN MISPLACED DU RING THE TRANSFER OF CASE RECORDS. FURTHER VIDE LETTER D ATED 19 TH MARCH 1999 PLACED IN THE RECORD ALSO INDICATE THAT THE LETTER ADDRESSED TO THE JOINT COMMISSIONER COMPRISE S TWO PAGES AND THE LAST 3 LINES OF THE LETTER READS AS U NDER : HENCE IF APPROVED NOTICE UNDER SECTION 148 MAY BE ALLOWED TO BE ISSUED IN THE CASE OF SHRI LAXMINARAYANAN S. AGARWAL HUF FOR ASSESSMENT YEAR 1993-94. NECESSARY SANCTION UNDER SECTION 151(2) OF THE I.T. ACT MAY BE ACCORDED. AS SEEN FROM THE ABOVE LETTER IT IS CLEAR THAT THE A.O. SOUGHT PERMISSION BEFORE ISSUANCE OF NOTICE UNDER SECTION 148 AND SUBSEQUENTLY THE NOTICE WAS ISSUED. THIS INDICATES THAT THE APPLICATION OF PROVISIONS OF SECTION 151(2) ARE WITHIN THE KNOWLED GE OF THE A.O. AS WELL AS THE JOINT COMMISSIONER AT TH AT POINT OF TIME. THE NECESSARY SANCTION LETTER WAS NOT MADE AVAILABLE TO THE ASSESSEE AND THE ASSESSEE HAS NEVER QUESTIONED THIS ASPECT EITHER BEFORE THE A.O. OR BEFORE THE CIT(A). IT HAS BEEN ARGUED FOR THE FIRST TIME AS ADDITIONAL GROUND BEFORE THE ITAT. SINCE THE ADMISS ION OF THE ADDITIONAL GROUND REQUIRE EXAMINATION OF FRESH FACTS WHETHER THE SANCTION WAS OBTAINED OR NOT AND SINCE THESE ASPECTS HAVE NOT BEEN EXAMINED EITHER BY THE A.O. O R BY THE CIT(A) AND FURTHER THE LETTERS PLACED ON RECOR D DO NOT INDICATE THAT THERE IS NO SANCTION THE ITAT CORREC TLY REFUSED TO ENTERTAIN THE ADDITIONAL GROUND. 15. IT COULD THUS BE SEEN THAT THE ONLY ISSUE URGE D BEFORE THE APPELLATE TRIBUNAL IN THE FIRST ROUND OF LITIGATIO N IS WITH REGARD TO APPLICATION OF PROVISIONS OF SECTION 151(2) OF THE ACT BUT THE SAME WAS NOT ADMITTED. HAVING HELD THAT THE ADDITIONAL GROUN D CANNOT BE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 10 ENTERTAINED THE BENCH MADE A CASUAL OBSERVATION ST ATING THAT THE ASSESSEE HAS AN OPTION TO CONTEST THIS ISSUE BEFORE THE ASSESSING OFFICER. IN OUR CONSIDERED OPINION IT CANNOT BE IM PLIED THAT THE APPELLATE TRIBUNAL HAS DIRECTED THE ASSESSING OFFIC ER TO CONSIDER THE ISSUE; RATHER THE BENCH WAS BROADLY OF THE OPINION THAT THE ASSESSEE HAS AN OPTION TO TAKE A CHANCE BEFORE THE ASSESSI NG OFFICER. 15.1. IT CANNOT BE SAID THAT THE ASSESSEE WHO IS ABLY BEING SUPPORTED BY CHARTERED ACCOUNTANTS AND ADVOCATES SP ECIALISED IN TAX FIELD WAS NOT AWARE OF THE STRENGTHS/WEAKNESSES OF ITS CASE. EVEN IN THE SECOND ROUND THE ASSESSEE MERELY CHOSE TO RAISE THE LIMITED ISSUE OF FULFILMENT OF CONDITION PRESCRIBED UNDER SECTION 151 (2) OF THE ACT WITHOUT EVER CHALLENGING THE SUFFICIENCY OF THE REA SONS RECORDED BY THE ASSESSING OFFICER. ON MERITS ASSESSEE COULD NOT FU RNISH ANY DETAILS. 16. UNDER THE CIRCUMSTANCES THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) READ WITH SECT ION 254 OF THE ACT BY DETERMINING TOTAL INCOME AT RS.42 26 210/-. 17. AS REGARDS THE APPROVAL OF THE JOINT COMMISSIO NER OF INCOME TAX UNDER SECTION 151(2) OF THE ACT THE AS SESSING OFFICER OBSERVED AS UNDER : HOWEVER ON PERUSAL OF THE RECORDS IT IS SEEN THA T THE ASSESSING OFFICER VIDE HIS LETTER DATED 19 TH MARCH 1999 ADDRESSED TO THE JOINT COMMISSIONER OF INCOME TAX RANGE-17 MUMBAI HAS RECORDED THE REASONS U/S. 147 OF THE I.T. ACT FOR REOPENING THE ASSESSMENT AND SOUGH T THE PERMISSION FOR ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT. SUBSEQUENTLY NOTICE U/S. 148 DATED 23-3-1999 WAS ISSUED AND SERVED UPON THE ASSESSEE WHEREIN IT IS CLEARLY STATED THAT THE NOTICE WAS BEING ISSUED AFT ER OBTAINING THE NECESSARY SATISFACTION OF THE JT. CIT RANGE- 17 MUMBAI. THEREFORE IT IS CLEAR THAT THE PROVISI ONS OF ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 11 SECTION 151(2) WERE DULY COMPLIED WITH. IN VIEW OF THE ABOVE IT IS EVIDENT THAT THE ASSESSEES CONTENTION IS MISCONCEIVED AND ERRONEOUS AND THEREFORE REJECTED. 18. AGGRIEVED ASSESSEE CONTENDED BEFORE THE CIT(A ) THAT THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS BAD I N LAW BECAUSE IT WAS NOT ISSUED AFTER OBTAINING NECESSARY SATISFACTI ON OF THE JCIT AS REQUIRED UNDER SECTION 151 (2) OF THE ACT. THE GROU NDS OF APPEAL AS WELL AS THE STATEMENT OF FACTS ARE MORE IN THE FORM OF WRITTEN SUBMISSIONS WHEREIN THE ASSESSEE MAINLY DISPUTED TH E PROCEDURE FOLLOWED BY ASSESSING OFFICER AS REGARDS THE SANCTI ON TO BE OBTAINED UNDER SECTION 151 (2) OF THE ACT AND DID NOT RAISE ANY SPECIFIC ISSUE AS TO WHETHER REASONS GIVEN BY THE ASSESSING OFFICER A RE SUFFICIENT FOR INITIATING A PROPOSAL UNDER SECTION 148 OF THE ACT. THOUGH GROUND NO.1 REFERS TO THE FACT THAT THE ASSESSMENT WAS COM PLETED ON A TOTAL INCOME OF RS.42 26 210/- IT DOES NOT INDICATE THA T THE ASSESSEE HAS CHALLENGED THE ACTION OF THE ASSESSING OFFICER IN M AKING THE DISALLOWANCE/ADDITIONS. RATHER THE ARGUMENTS ADVAN CED BEFORE THE CIT(A) AND ORDERS PASSED THEREON - AS WELL AS THE F ACTUM OF NOT RAISING A SPECIFIC ISSUE ON MERITS BEFORE THE APPELLATE TRI BUNAL - STANDS TESTIMONY TO THE FACT THAT THE ASSESSEE HAD NO GRIE VANCE WITH REGARD TO THE ADDITIONS/DISALLOWANCES MADE EXCEPT TO THE LIMI TED EXTENT THAT ADDITIONS WOULD NOT SURVIVE IN THE EVENT OF HOLDING THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW ON ACCOUNT OF NOT OBTAI NING SANCTION FROM THE JCIT UNDER SECTION 151 (2) OF THE ACT. 19. DURING THE COURSE OF HEARING IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE PROCEDURE PRESCRIBED UNDER SECTION 151 (2) OF THE ACT WAS NOT FOLLOWED. IT WAS FURTHER CONTENDED THAT THE REASONS RECORDED BY ASSESSING OFFICER FOR REOPENING THE ASSESSMENT A RE NOT BASED UPON ANY MATERIAL SO AS TO CONSTITUTE THE REASON TO BEL IEVE. IT WAS CLAIMED THAT NOTICE WAS ISSUED ON A MERE SUSPICION. THOUGH WE ARE NOT ABLE TO DECIPHER ANY SPECIFIC GROUND ON THIS ISSUE PARA 3 OF THE CIT(A) ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 12 ORDER STATES THAT THE LEARNED A.R. ARGUED ON THIS A SPECT AS THOUGH IT WAS A SECOND GROUND OF APPEAL. 20. LEARNED CIT(A) REJECTED THE PLEA OF THE ASSESS EE ON BOTH POINTS UPON ELABORATELY REFERRING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IN PARA 2.2 OF HIS ORDER LEARNED CIT(A) OBSERVED THAT LETTER DATED 19-3-1999 ADDRESSED BY ASSESSING OFFICER TO JCIT IS ON RECORD AND IN THAT LETTER IT WAS STATED THAT SIMILAR ISSUE IS INVOLVED IN CONNECTED CASES. NOTICE ISSUED UNDER SECTION 148 CL EARLY MENTIONS THAT SANCTION OF JCIT WAS OBTAINED WHICH RAISES A P RESUMPTION IN FAVOUR OF HOLDING THAT SANCTION WAS OBTAINED. AS PE R SECTION 114 (E) OF THE INDIAN EVIDENCE ACT ALL ACTS DONE BY A GOVERNM ENT OFFICIAL SHOULD BE ASSUMED TO HAVE BEEN DONE IN CONFORMITY WITH LAW . IN FACT NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS NOT A BALD NOTICE. IN THE CONNECTED CASE OF BABULAL AGARWAL (HUF) (ASSESSMENT YEAR 1993-94) APPROVAL WAS OBTAINED AND SUCH APPROVAL WAS AVAILAB LE ON RECORD. DATES OF APPROVAL IN BOTH CASES WAS SAME AND THUS IT HAS TO BE ASSUMED THAT THE JCIT WHO HAS APPROVED IN ONE CASE WOULD HAVE GIVEN HIS APPROVAL IN THE CASE OF ASSESSEE ALSO SIN CE FACTS ARE IDENTICAL. 21. IN PARA 3.2 LEARNED CIT(A) OBSERVED THAT REAS ONS FOR REOPENING OF ASSESSMENT IN THIS CASE AS WELL AS IN CONNECTED CASES ARE SAME AND HENCE IT CANNOT BE SAID THAT REASONS ARE V AGUE. 22. FURTHER AGGRIEVED ASSESSEE-HUF IS IN APPEAL B EFORE US. GROUNDS ANNEXED TO FORM-36 WERE MORE IN THE FORM OF WRITTEN SUBMISSIONS AND CONTRARY TO PROCEDURE INDICATED IN RULE 8 OF THE A.T. RULES. THEREAFTER REVISED CONCISE GROUNDS WERE FILED WHEREIN REFERENCE WAS MADE TO CERTAIN SUPREME COURT JUDGMEN TS. FINALLY ON 27 TH JUNE 2011 ASSESSEE FILED REVISED CONCISE GROUND S OF APPEAL ALONG WITH INDEPENDENT WRITTEN SUBMISSIONS. WE REPR ODUCE THE REVISED GROUNDS OF APPEAL FOR IMMEDIATE REFERENCE. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 13 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE REASONS R ECORDED DATED 19 TH MARCH 1999 COMPRISED OF 1 AND PAGE AND HAD THE COMMISSIONER ACCORDED SANCTION THE SAME WOULD HAVE APPEARED ON THE SECOND PAGE IN THE REMAINING PAGE WHICH WAS VIRTUALLY EMPTY. THIS MAKES THEORY OF RECONSTRU CTING AND MISPLACEMENT UNBELIEFABLE BOTH WITH RESPECT TO ITO S RECORDS AS WELL AS JT. CITS RECORDS. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT E VEN ASSUMING BUT NOT ADMITTING THAT THE SANCTION WAS ACCORDED ST ILL THE SANCTION WAS SUBJECT TO JUDICIAL SCRUTINY AS TO WHE THER IT WAS MECHANICALLY ACCORDED OR NOT. 3. THE LEARNED CIT(A) ERRED IN RELYING UPON THE THEORY OF PROBABILITY THAT THE SANCTION (PROPER OR IMPROPER) MAY HAVE BEE N OBTAINED. 4. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT I N THIS CASE THE LEARNED ASSESSING OFFICER HAD NOT EVEN COME TO A PR IMA FACIE CONCLUSION BASED ON THE MATERIAL AVAILABLE THAT INC OME HAS ESCAPED ASSESSMENT AND SUCH A CONCLUSION DID NOT FU LFIL THE REQUIREMENT OF SECTION 151(2). 5. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT O NLY THE MATERIAL AVAILABLE AT THE STAGE OF INITIATION OF RE ASSESSMENT PROCEEDINGS U/S. 148 IS RELEVANT AND THE ASSESSMENT ORDER DATED 27 TH MARCH 2001 PASSED AFTER ISSUANCE OF NOTICE U/S. 1 48 DATED 23 RD MARCH 1999 IN THE COURSE OF RE-ASSESSMENT PROCEEDINGS IS IRRELEVANT. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND ALTER OR VARY THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 23. LEARNED COUNSEL SUBMITTED THAT IN THE INSTANT CASE NOTICE WAS ISSUED AFTER LAPSE OF 4 YEARS 8 MONTHS AND IN A LL SUCH CASES A NOTICE UNDER SECTION 148 OF THE ACT CAN BE ISSUED S UBJECT TO OBTAINING ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 14 OF APPROVAL FROM THE JOINT COMMISSIONER OF INCOME T AX AS SPECIFIED IN SECTION 151 (2) OF THE ACT. IN THE INSTANT CASE ADMITTEDLY SUCH APPROVAL IS NOT AVAILABLE IN THE RECORDS OF THE REV ENUE. IT WAS ALSO STATED THAT ASSESSEE-HUF ADDRESSED A LETTER TO THE JCIT TO FIND THAT EVEN THOSE RECORDS WERE NOT TRACEABLE. UPON BASIC E NQUIRY ASSESSEE- HUF REALISED THAT NOTICE ISSUED BY THE ASSESSING OF FICER WAS CONTRARY TO THE MANDATE PRESCRIBED UNDER SECTION 151(2) OF T HE ACT AND HENCE AN ADDITIONAL GROUND WAS RAISED BEFORE THE APPELLAT E TRIBUNAL AND THE TRIBUNAL WAS PLEASED TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. EVEN IN THE SECOND ROUND THE ASSESSING OF FICER COULD NOT FURNISH EVIDENCE TO PROVE THAT HE HAS OBTAINED AN A PPROVAL FROM THE JCIT. HE ADVERTED OUR ATTENTION TO PAGE 5 OF THE PA PER BOOK TO SUBMIT THAT THE CIRCUMSTANCES MAY NOT INSPIRE A JUDICIAL M IND TO REACH A CONCLUSION THAT THE INCOME TAX OFFICER HAS ISSUED A NOTICE UPON OBTAINING APPROVAL FROM THE JCIT. IN THIS REGARD H E SUBMITTED THAT THE REASONS WERE RECORDED ON 19-3-1999 WHEREAS NOT ICE WAS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 OF THE A CT ON 23-3-1999 AND IN A GOVERNMENT OFFICE IT CANNOT BE EXPECTED TH AT THE LETTER WOULD TRAVEL TO THE JOINT COMMISSIONER WITHIN SUCH A SHOR T SPAN AND RETURN TO THE ASSESSING OFFICER SO AS TO ENABLE HIM TO ISS UE A NOTICE BY 23 RD MARCH 1999. IT COULD THUS SAFELY BE CONCLUDED THAT THE ASSESSING OFFICER HAS NOT SENT THE LETTER FOR APPROVAL OF THE JOINT COMMISSIONER OR SANCTION COULD NOT BE OBTAINED BEFORE 23 RD MARCH 1999 IN WHICH EVENT IT AMOUNTS TO FAILURE ON THE PART OF THE ASSE SSING OFFICER TO FOLLOW THE PROCEDURE PRESCRIBED UNDER SECTION 151 ( 2) OF THE ACT AND CONSEQUENTLY NOTICE ISSUED BY THE ASSESSING OFFICE R IS VOID ABINITIO. HE ALSO SUBMITTED THAT ORDINARILY SUPERIOR AUTHORIT Y PUTS HIS INITIAL SIGNIFYING HIS APPROVAL ON THE LETTER RECEIVED FRO M THE ASSESSING OFFICER. IN THE INSTANT CASE 2/3 RD OF THE PAGE (PAGE 2 OF LETTER DATED 19 TH MARCH 1999) WAS EMPTY BUT PAGE 6 OF THE PAPER BOO K DO NOT GIVE ANY INDICATION THAT THE JOINT COMMISSIONER HAS GIVE N HIS APPROVAL ON SUCH LETTER. IN THIS BACKDROP PARTICULARLY ON ACCO UNT OF THE FACT THAT THE SO-CALLED LETTER ADDRESSED BY THE JOINT COMMISS IONER OF INCOME ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 15 TAX IS MISSING FROM THE FILE OF THE ASSESSING OFFIC ER IT SHOULD BE ASSUMED THAT THE ASSESSING OFFICER HAS NOT OBTAINED APPROVAL OF THE JCIT BEFORE INITIATING RE-ASSESSMENT PROCEEDINGS. T HEREAFTER LEARNED COUNSEL CHALLENGED THE REASONS RECORDED BY THE ASSE SSING OFFICER ON THE STRENGTH OF SEVERAL CASE LAW. HE SUBMITTED THAT THE LETTER ADDRESSED TO THE JOINT COMMISSIONER USES THE EXPRES SION THERE IS REASON TO BELIEVE THAT ASSESSEE MIGHT NOT HAVE SHOW N HIS CORRECT INCOME WHICH IMPLIES THAT THE ASSESSING OFFICER WA S NOT SURE AS TO WHETHER ASSESSEE HAD SHOWN CORRECT INCOME OR NOT AN D THUS ON THE STRENGTH OF SUCH VAGUE REASONS PROCEEDINGS CANNOT BE INITIATED UNDER SECTION 148 OF THE ACT. 23.1. IT MAY BE NOTICED THAT THE LEARNED CIT(A) I N HIS ORDER DATED 15-12-2010 STATED THAT THE THREE REASONS MEN TIONED IN THE LETTER SEEKING APPROVAL OF THE JCIT CORRELATED WIT H THE DISALLOWANCES MADE IN THE ASSESSMENT ORDER WHICH IN ITSELF SHOWS THAT THE REOPENING WAS NOT FOR ANY VAGUE REASONS AND HE FURTHER OBSERV ED THAT THE ASSESSEE CHALLENGED SUFFICIENCY OF THE REASONS AND NOT ON RELEVANCY OF REASONS; SUFFICIENCY OF REASONS CANNOT BE CHALLENGE D. LEARNED COUNSEL SUBMITTED THAT SUFFICIENCY OF REASONS WAS NOT CHALL ENGED BEFORE THE CIT(A) AND THE MAIN PLEA OF THE ASSESSEE IS WITH RE GARD TO VAGUENESS OF THE REASONS AND IN THIS REGARD HE ADVERTED OUR ATTENTION TO PAGE 6 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT THE LEARN ED CIT(A) OUGHT TO HAVE APPRECIATED THE OBJECTION OF THE ASSESSEE WITH REFERENCE TO THE FACTS AS AVAILABLE AT THE TIME OF ISSUANCE OF NOTIC E AND SHOULD NOT HAVE TAKEN INTO CONSIDERATION THE FACTS OBTAINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ; REFERENCE TO ASSESSMENT ORDER DATED 27-3-2001 TO HOLD THAT THE R EASONS FOR REOPENING ARE NOT VAGUE IS NOT CORRECT SINCE ON 19- 3-1999 NOTICE WAS ISSUED ON A SUSPICION AS COULD BE SEEN FROM THE EXP RESSION ASSESSEE MIGHT NOT HAVE SHOWN HIS CORRECT INCOME. HE SUBMIT TED THAT IN THE ABSENCE OF RECORDS TO PROVE THAT THE JCIT HAS GIVEN A SANCTION UNDER SECTION 151 (2) OF THE ACT AN INFERENCE HAS TO BE DRAWN THAT THERE IS ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 16 NO SANCTION BY THE JCIT SINCE THE REVENUE ADMITS TH AT IT HAD MISPLACED THE RECORDS ON ACCOUNT OF RE-STRUCTURING OF THE DEPARTMENT. HE RELIED UPON THE WRITTEN SUBMISSIONS DATED 28 TH JUNE 2011. IT MAY BE RELEVANT TO OUTLINE THE FINDINGS OF VARIOUS COUR TS ON WHICH ASSESSEE PLACED STRONG RELIANCE. 24. IN THE CASE OF INDIA FINANCE & CONSTRUCTION CO . PVT. LTD. 200 ITR 710 (BOM.) THE HONBLE COURT OBSERVED THAT THE WORDS REASONS TO BELIEVE SUGGEST THAT THE BELIEF MUST B E THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUND S; THOUGH THE ITO CAN ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE R EASSESSMENT PROCEEDINGS CANNOT BE INITIATED ON MERE SUSPICION GOSSIP OR RUMOUR. 25. SIMILARLY IN THE CASE OF GERMAN REMEDIES LTD. VS. DCIT AND OTHERS (2006) 285 ITR 26 (BOM.) THE HONBLE BOM BAY HIGH COURT OBSERVED THAT ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF CONJECTURES AND SURMISES. 26. IN THE CASE OF SHEO NATH SINGH VS. APPELLATE A CIT (CENTRAL) CALCUTTA AND OTHERS (1971) 82 ITR 147 (S. C.) THE HONBLE APEX COURT OBSERVED THAT THE WORDS REASON TO BELIE VE SUGGEST THAT AN ASSESSING OFFICER CAN INITIATE PROCEEDINGS BASED ON AN HONEST BELIEF AND IN THIS REGARD HE MAY ACT ON DIRECT OR C IRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION. THEREAFTER THE COURT OBSERVED THAT SUFFICIENCY OF REASONS FOR THE BELIEF CANNOT B E INVESTIGATED BY THE COURT. 27. IN THE CASE OF CIT VS. GUPTA ABHUSHAN P. LTD. (2009) 312 ITR 166 (DEL.) THE HONBLE DELHI HIGH COURT OBSERVE D THAT A MERE REASON TO SUSPECT CANNOT BE EQUATED WITH A REASON T O BELIEVE; MERE SUSPICION THAT THERE WAS A LIKELIHOOD OF DISCREPANC Y OF THE STOCKS IN THE EARLIER YEARS - BASED ON THE FACT THAT THERE WA S A DISCREPANCY IN THE STOCK WHEN THE SURVEY WAS CONDUCTED ON 7 TH MARCH 2002 WAS ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 17 HELD TO BE NOT A SUFFICIENT REASON FOR REOPENING TH E ASSESSMENT SINCE REOPENING WAS BASED ON SUSPICION. 28. IN THE CASE OF ASOKE KUMAR SEN VS. ITO (1981) 132 ITR 707 (DEL.) THE HONBLE COURT OBSERVED THAT A CONVEN IENT ASSUMPTION OVERLOOKING KNOWN FACTS WOULD NOT BE SUFFICIENT TO REOPEN THE ASSESSMENT. IN THE SAID CASE THE ASSESSING OFFICER IN HIS AFFIDAVIT FILED BEFORE THE HONBLE COURT HAS MERELY STATED HIS BELI EF BUT HAS NOT SET OUT ANY MATERIAL ON THE BASIS OF WHICH HE FORMED SU CH BELIEF. IN FACT THERE WAS NOTHING IN THE AFFIDAVIT TO SUGGEST THAT THE ITO HAD ANY MATERIAL BEFORE HIM TO FORM AN OPINION THAT PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT BY REASON OF HIS FA ILURE TO MAKE A TRUE AND FULL DISCLOSURE OF THE MATERIAL FACTS. 29. IN THE CASE OF CIT VS. SMT. PARAMJIT KOUR (200 9) 311 ITR 38 (P & H) RE-ASSESSMENT PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM T HE SURVEY CIRCLE THAT THE ASSESSEE HAD GOT PREPARED A DEMAND DRAFT WHICH WAS NOT ACCOUNTED IN HIS BOOKS. HOWEVER THE ASSESSING OFFI CER HAD NOT EXAMINED AND CORROBORATED THE INFORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFACTION. UNDER THE CIRCUMSTANCES THE COURT OBSERVED THAT THE RE-ASSESSMENT PROCEEDIN GS ARE NOT VALID BECAUSE IT WAS BASED ON REASONS TO SUSPECT. 30. LEARNED COUNSEL HAS ALSO RELIED UPON THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF UNITED ELEC TRIC CO. PVT. LTD. VS. CIT 258 ITR 317 TO SUBMIT THAT A POWER VESTED I N A SUPERIOR AUTHORITY UNDER SECTION 151 OF THE ACT TO GRANT OR NOT TO GRANT APPROVAL TO THE ASSESSING OFFICER TO REOPEN AN ASSE SSMENT IS COUPLED WITH A DUTY AND AN AUTHORITY VESTED WITH SUCH JURIS DICTION IS REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT-UP TO HIM FO R APPROVAL IN THE LIGHT OF MATERIAL RELIED UPON BY THE ASSESSING OFFI CER. THAT POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNE R. ADVERTING OUR ATTENTION TO THE OBSERVATIONS OF THE HONBLE DELHI HIGH COURT LEARNED ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 18 COUNSEL SUBMITTED THAT POWER VESTED WITH THE JCIT UNDER SECTION 151 (2) OF THE ACT SHOULD NOT BE EXERCISED IN A RO UTINE MANNER IN WHICH EVENT THERE IS NO ROOM FOR A DEEMED APPROVAL AND IN ORDER TO PROVE THAT THERE WAS AN APPROVAL ON AN APPLICATION OF MIND A DUTY IS CAST UPON THE ASSESSING OFFICER TO PLACE NECESSARY APPROVAL ON RECORD AND IN THE ABSENCE OF RECORDED EVIDENCE THE PROCEED INGS INITIATED UNDER SECTION 148 OF THE ACT ARE LIABLE TO BE QUASH ED. IT MAY BE NOTICED HERE THAT THE HONBLE DELHI HIGH COURT MADE THE ABOVE OBSERVATIONS IN THE PECULIAR FACTS WHICH WERE PLACE D BEFORE THEIR LORDSHIPS. IN THAT CASE A MANUFACTURING COMPANY DE CLARED ITS INCOME AND FURNISHED VARIOUS DOCUMENTS AND ANNEXURES INCLU DING AUDIT REPORT IN SUPPORT OF RETURN OF INCOME. A LIST OF LO ANS WAS ALSO FURNISHED. THE RETURN OF INCOME APPEARS TO HAVE NOT BEEN ACTED UPON BY THE ASSESSING OFFICER WITHIN THE STATUTORY PERIO D OF 12 MONTHS. HOWEVER ON 5 TH MAY 2002 NOTICE WAS ISSUED BY THE ASSESSING OFFIC ER UNDER SECTION 148 OF THE ACT WHEREIN IT WAS STATED THAT V.K.JAIN DIRECTOR OF VISA FINCAP LTD. HAD STATED THAT COMPAN Y HAD RECEIVED CASH FROM THE PETITIONER AND DEPOSITED THE SAME INT O THE BANK AND THEREAFTER A CHEQUE OF EQUAL AMOUNT WAS GIVEN. THI S NOTICE WAS CHALLENGED BEFORE THE COURT WHEREIN IT WAS NOTICED THAT THE STATEMENT OF VKJ RECORDED BY THE ASSESSING OFFICER WAS TOO GE NERAL AND THE NAME OF THE ASSESSEE WAS MISSING IN THAT STATEMENT. UNDER THE CIRCUMSTANCES THE COURT OBSERVED THAT THERE WAS NO INFORMATION ON RECORD WHICH COULD PROVIDE FOUNDATION FOR THE ASSES SING OFFICERS BELIEF THAT THE ASSESSEES TRANSACTIONS WITH VFL WA S NOT GENUINE. THEREFORE PROCEEDINGS INITIATED UNDER SECTION 148 WERE HELD TO BE NOT SUSTAINABLE. 31. IN THE CASE OF UNION OF INDIA VS. RAI SINGH DE B SINGH BIST AND ANOTHER (1973) 88 ITR 200 (S.C.) THE APEX COURT OBSERVED THAT IN THE ABSENCE OF PRODUCTION OF RECORD AN ADVERSE INFE RENCE AGAINST THE DEPARTMENT HAS TO BE TAKEN AND IT HAS TO BE ASSUMED THAT THE ASSESSING OFFICER HAS NO REASON TO BELIEVE THAT INC OME HAD ESCAPED ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 19 ASSESSMENT; A VAGUE FEELING THAT THERE MIGHT BE SOM E ESCAPEMENT OF INCOME IS NOT SUFFICIENT. BRIEF FACTS OF THIS CASE ARE AS FOLLOWS. ASSESSEE-HUF FILED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEARS 1942 TO 1953-54. ASSESSEES ACCOUNT BOOKS SHOWED CONSIDE RABLE CASH CREDITS IN THE NAME OF THE BROTHER-IN-LAW OF THE KA RTHA OF THE HUF. THE ASSESSEE WAS A FOREST CONTRACTOR. THE ASSESSING OFFICER EXAMINED THE GENUINENESS OF THE CASH CREDITS. IT APPEARS THA T THE ASSESSING OFFICER DID NOT ACCEPT THE CREDITS BUT THE FIRST AP PELLATE AUTHORITY AS WELL AS THE APPELLATE TRIBUNAL SUBSTANTIALLY ACCEPT ED THE STAND OF THE ASSESSEE. FINAL ASSESSMENTS FOR THE ASSESSMENT YEAR S 1943-44 TO 1949-50 WERE MADE PURSUANT TO AN AGREEMENT WITH THE DDIT (INV.) ON 18 TH OCTOBER 1954. LONG AFTER THE ASSESSMENTS IN QUEST ION WERE FINALISED THE ITO ISSUED NOTICES TO THE APPELLANTS TO REOPEN THE ASSESSMENTS. ASSESSEE CHALLENGED THE JURISDICTION O F THE ASSESSING OFFICER TO REOPEN THE ASSESSMENTS. THE CASE OF THE ASSESSEE WAS THAT THERE WAS NO RELEVANT MATERIAL BEFORE THE ITO TO CO ME TO THE CONCLUSION THAT ANY INCOME HAD ESCAPED ASSESSMENT. ASSESSEE PRAYED BEFORE THE COURT THAT ASSESSING OFFICER BE CALLED U PON TO PRODUCE THE REPORT MADE BY HIM TO THE CENTRAL BOARD OF REVENUE (AS WAS THE PROCEDURE EXISTING AT THAT RELEVANT POINT OF TIME). IN RESPONSE TO THE WRIT PETITION AN AFFIDAVIT WAS FILED BY THE REVENU E STATING THAT THE RELEVANT RECORDS COULD NOT BE TRACED FROM THE FILE OF THE CENTRAL BOARD OF REVENUE. THE COURT OBSERVED THAT NO REASON WAS G IVEN FOR NOT PRODUCING THOSE RECORDS. HAVING REGARD TO THE CIRCU MSTANCES THE COURT OBSERVED AS FOLLOWS : NO REASON WAS GIVEN FOR NOT PRODUCING THOSE RECORDS. THESE CIRCUMSTANCES GIVE RISE TO AN ADVERSE INFERENCE AGAINST THE DEPARTMENT. WE ARE CONSTRAINED TO COME TO THE CONCLUSION THAT THE RECORDS IN QUESTION WERE NOT PRODUCED BECAUSE THEY DID NOT ASSIST THE DEPARTMENTS CASE. UNDER THESE CIRCUMSTANCES IT IS NOT POSSIBLE TO COME TO ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 20 THE CONCLUSION THAT THE FACTS NECESSARY TO CONFER JURISDICTION ON THE INCOME-TAX OFFICER TO PROCEED UNDER SECTION 34(1)(A) HAD BEEN ESTABLISHED. 32. IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (197 6) 103 ITR 437 (S.C.) THE HONBLE COURT OBSERVED THAT RATI ONAL CONNECTION SHOULD BE ESTABLISHED BETWEEN THE MATERIAL ON RECOR D AND FORMATION OF BELIEF. RATIONAL CONNECTION POSTULATES THAT THER E MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO T HE NOTICE OF THE ASSESSING OFFICER AND THE FORMATION OF BELIEF. NO D OUBT COURT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL OR SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON THE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING THE ASSESSMENT B UT IT HAS TO BE BORNE IN MIND THAT THE BELIEF MUST BE HELD IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE I.E. NOT BASED ON VAGUE/IND EFINITE INFORMATION. 33. IN THE CASE OF CIT VS. LADHARAM LAKHIMAL (2000 ) 245 ITR 340 (M.P. INDORE BENCH) THE HONBLE HIGH COURT OBSE RVED THAT THE ISSUE BEFORE THEM WAS FACTUAL IN NATURE; SO LONG AS THE REVENUE HAD FAILED TO SHOW THAT REQUISITE APPROVAL WAS GRANTED FOR ISSUANCE OF NOTICE UNDER SECTION 143 (2) OF THE ACT IT COULD N OT BE ASSUMED THAT SUCH APPROVAL WAS GRANTED AND WAS IN EXISTENCE. IN THAT CASE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1985-86 WA S PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 143(1) OF THE A CT ON 16 TH FEBRUARY 1987. HOWEVER IN OCTOBER 1987 ASSESSING OFFICER S ENT A PROPOSAL UNDER SECTION 143(2) (B) OF THE ACT TO THE RANGE DE PUTY COMMISSIONER FOR HIS APPROVAL WHICH WAS ALLEGEDLY GRANTED ON 16 TH OCTOBER 1987. ACCORDINGLY A NOTICE UNDER SECTION 143 (2) WAS ISS UED. ORDER OF THE HONBLE COURT IS SILENT ON THE ISSUE AS TO WHETHER THE NOTICE WAS CHALLENGED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR THEREAFTER. AS COULD BE N OTICED FROM THE FACTS STATED IN THE ORDER REVENUE HAD NOT PRODUCED ANY ORDER OF THE RANGE DEPUTY COMMISSIONER DESPITE OPPORTUNITIES GR ANTED TO SHOW ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 21 THAT REQUISITE APPROVAL WAS GRANTED FOR ISSUANCE OF NOTICE UNDER SECTION 143 (2) OF THE ACT AND HENCE THE APPELLATE TRIBUNAL QUASHED THE ASSESSMENT. SINCE FACTS WERE NOT DISPUTED THE HONBLE HIGH COURT UPHELD THE ACTION OF THE APPELLATE TRIBUNAL. 34. IN THE CASE OF DR.SHASHI KANT GARG VS. CIT AND OTHERS (2006) 285 ITR 158 (ALLAHABAD) THE HONBLE COURT OB SERVED THAT A NOTICE ISSUED BY THE ASSESSING OFFICER WITHOUT OBTA INING PRIOR SANCTION OF THE AUTHORITY MENTIONED IN SECTION 151 OF THE AC T WOULD RENDER THE REASSESSMENT PROCEEDINGS INVALID. ADMITTEDLY NOTICE DATED 12-9-2000 ISSUED BY ASSESSING OFFICER UNDER SECTION 148 OF TH E ACT WAS BEYOND THE PERIOD OF 4 YEARS LIMITATION PERIOD IN WHICH EV ENT PRIOR APPROVAL OF CHIEF COMMISSIONER OF INCOME TAX UNDER SECTION 151 (2) OF THE ACT IS MANDATORY WHEREAS ASSESSING OFFICER WAS OF THE OPIN ION THAT APPROVAL OF ADDL. CIT SATISFIES THE REQUIREMENT. IN THIS CON TEXT HONBLE COURT ANALYSED THE AMENDED PROVISIONS OF SECTION 151(1) AS APPLICABLE TO THE CASE ON HAND TO HOLD THAT APPROVAL OF CHIEF CO MMISSIONER IS MANDATORY TO INITIATE REASSESSMENT PROCEEDINGS. IN THAT CONNECTION THEIR LORDSHIPS OBSERVED THAT METHOD PRESCRIBED BY THE STATUTE HAS TO BE STRICTLY FOLLOWED. IT MAY NOT BE OUT OF PLACE TO NOTICE THAT IN THE CASE OF SHRI LAXMINARAYAN AGARWAL (HUF) SECTION 151 (2) IS APPLICABLE I.E. OBTAINING APPROVAL OF JCIT WAS THE ONLY MODE APPROVED BY STATUTE AND IT IS NOT THE CASE OF REVENUE THAT SUCH MANNER IS NOT FOLLOWED. 35. IN THE CASE OF CHHUGAMAL RAJPAL VS. S.P.CHALIH A AND OTHERS (1971) 79 ITR 603 (S.C.) THE COURT OBSERVED THAT REOPENING OF ASSESSMENT CANNOT BE BASED ON VAGUE REASONS AND DUT Y IS CAST UPON THE OFFICER EXERCISING JURISDICTION UNDER SECTION 1 51(2) OF THE ACT TO SATISFY HIMSELF WITH THE REASONS AND SHOULD NOT MER ELY AFFIX HIS SIGNATURE WITHOUT RECORDING SATISFACTION. IN THE AF OREMENTIONED CASE ASSESSMENT WAS ORIGINALLY COMPLETED FOR THE ASSESSM ENT YEAR 1960-61 AFTER THOROUGH SCRUTINY. THEREAFTER ASSESSING OFFI CER ISSUED NOTICE UNDER SECTION 148 OF THE ACT. ASSESSEE CHALLENGED V ALIDITY OF THAT NOTICE BY FILING A WRIT PETITION IN THE HIGH COURT . IT WAS CONTENDED ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 22 THAT THE REQUIREMENTS OF SECTION 151 (2) OF THE ACT WERE NOT COMPLIED WITH. CASE OF THE ASSESSING OFFICER WAS THAT CERTAI N COMMUNICATION WAS RECEIVED FROM THE COMMISSIONER STATING THAT THE CREDITORS IN THE INSTANT CASE WERE NAME LENDERS AND THE LOAN TRANSAC TIONS WERE BOGUS AND THAT PROPER INVESTIGATION REGARDING THE LOANS T AKEN BY THE ASSESSEE IS NECESSARY. HE HOWEVER DID NOT MENTION IN THE REPORT THE MATERIAL HE HAD BEFORE HIM AND HIS REASON FOR COMIN G TO THE CONCLUSION THAT THIS WAS A FIT CASE FOR ISSUING A N OTICE UNDER SECTION 148. THE COURT OBSERVED THAT THE ITO HAD NOT EVEN C OME TO A PRIMA FACIE CONCLUSION THAT THE LOAN TRANSACTIONS TO WHIC H HE REFERRED WERE NOT GENUINE; ITO APPEARS TO HAVE ONLY A VAGUE FEELI NG THAT THEY MIGHT BE BOGUS TRANSACTIONS. THE COMMISSIONER HAD MECHANI CALLY ACCORDED PERMISSION UNDER SECTION 151 (2) OF THE ACT WITHOUT NOTICING THAT THE ASSESSING OFFICER HAD NOT MADE ANY PRIMA FACIE INVE STIGATION BEFORE INITIATING PROCEEDINGS AND MERELY APPROVED THE VAGU E REASONS. 36. IN THE CASE OF SIMPLEX CONCRETE PILES (INDIA) LTD. VS. DCIT AND OTHERS (2003) 262 ITR 605 (CAL.) THE COURT OBSE RVED THAT SECTION 151 OF THE I.T. ACT IS NOT AN ENABLING PROVISION BU T IT PROHIBITS THE ASSESSING OFFICER FROM DOING SOMETHING UNLESS OTHER WISE PROPER APPROVAL IS OBTAINED. IN OTHERWORDS REVENUE HAS NO DISCRETION TO REOPEN THE ASSESSMENT PROCEEDINGS UNLESS PROCEDURE PRESCRIBED UNDER SECTION 151 (2) OF THE ACT IS FOLLOWED IN LET TER AND SPIRIT IN A CASE WHERE RE-ASSESSMENT PROCEEDINGS ARE INITIATED BEYOND THE PERIOD OF 4 YEARS. THE VIEW EXPRESSED HEREIN IS NOT DISPUT ED BY THE LEARNED D.R. BUT HE CONTENDS THAT THE PROCEDURE WAS FOLLOWE D IN THE INSTANT CASE BUT DUE TO LONG LAPSE OF TIME AND OTHER CIRCUM STANCES DIRECT EVIDENCE REGARDING APPROVAL OF JCIT WAS NOT TRACEAB LE. 37. IN THE CASE OF CIT VS. ANJUM M.H. GHASWALA AND OTHERS (2001) 252 ITR 1 THE APEX COURT OBSERVED THAT POWER VESTED IN AN AUTHORITY HAS TO BE EXERCISED IN A PARTICULAR MANNE R PRESCRIBED UNDER LAW AND DEVIATION IS NOT PERMISSIBLE. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 23 37.1. HE THEN REFERRED TO PAGES 28 TO 30 OF THE PA PER BOOK (UNREPORTED DECISION OF HONBLE BOMBAY HIGH COURT I N THE CASE OF SUMAN VAMAN CHOUDHARY) TO SUBMIT THAT PRIOR APPROVA L OF THE CONCERNED AUTHORITY UNDER SECTION 151 (2) OF THE AC T BEFORE ISSUANCE OF NOTICE UNDER SECTION 148 IS MANDATORY AND IN THE ABSENCE OF AN APPROVAL ASSESSMENT IS LIABLE TO BE QUASHED. IN TH E SAID CASE THE TRIBUNAL HAS RECORDED FINDING OF FACT THAT THE ITO HAS RECORDED REASONS ON 6-12-1989 AND ON THE SAME DATE NOTICE WA S ISSUED AND IT WAS ADMITTED THAT APPROVAL OF THE DY. COMMISSION ER WAS NOT OBTAINED BY THE ASSESSING OFFICER BEFORE ISSUANCE OF NOTICE. 38. IN THE CASE OF RAJA BAHADUR MOTILAL PVT. LTD. VS. ITO AND ANOTHER (1990) 183 ITR 80 (BOM.) THE HONBLE COURT OBSERVED WHILE ANALYSING THE EXPRESSION REASON TO BELIEVE THAT T HE CONCLUSIONS DRAWN BY THE ASSESSING OFFICER SHOULD BE CONNECTED TO THE INFORMATION IN POSSESSION. IN OTHERWORDS IT SHOULD BE SEEN AS TO WHETHER INFORMATION GATHERED HAD A DIRECT NEXUS OR LIVE LINK WITH THE FORMATION OF THE BELIEF THAT THE ASSESSEES INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. FACTS IN SHORT ARE THAT ASS ESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE AC T ON 16 TH SEPTEMBER 1982 AFTER TAKING INTO CONSIDERATION THE MATERIAL FOUND DURING THE COURSE OF SEARCH CONDUCTED IN ASSESSEES PREMISES. HOWEVER BY NOTICE DATED 20 TH SEPTMEBER 1984 THE ASSESSING OFFICER SOUGHT TO REOPEN THE ASSESSMENT IN RESPONSE TO WHIC H ASSESSEE REQUESTED THE ITO TO GIVE THE REASONS FOR HIS SEEKI NG TO REOPEN THE ASSESSMENT. THE ITO INFORMED THAT ASSESSMENT WAS RE OPENED UNDER SECTION 147(B) OF THE ACT ON THE REASON THAT ASSESS EE HAD DISCLOSED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS PURCHASE OF CLOTH MAINLY FROM VARDHAMAN TADING CO. AND BHAJARANG OVERSEAS AN D SALES WERE MAINLY TO CHARDIA INTERNATIONAL BUT THE PURCHASER A ND SELLERS WERE FOUND TO BE NOT GENUINE PARTIES AND WERE KNOWN TO H AVE INDULGED IN BOGUS HAWALA TRANSACTIONS. ASSESSEE CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER BY FILING A WRIT PETITION. CONTEN TION OF THE ASSESSEE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 24 WAS THAT THE ASSESSING OFFICER WHO MADE THE ASSESSM ENT ORIGINALLY WAS DIFFERENT FROM THE ASSESSING OFFICER WHO ISSUED NOTICE AND THE SUCCESSOR IN OFFICE WOULD NOT HAVE POSSIBLY KNOWN A S TO WHETHER THE INFORMATION SAID TO HAVE COME INTO HIS POSSESSION S UBSEQUENTLY WAS AVAILABLE EVEN AT THE TIME OF ORIGINAL ASSESSMENT P ROCEEDINGS. ACCORDING TO THE ASSESSEE PROPER INVESTIGATION WAS MADE AT THE TIME OF ASSESSMENT PROCEEDINGS AND A PIECE OF INFORMATIO N REGARDING BOGUS HAWALA TRANSACTIONS RECEIVED SUBSEQUENT TO THE COM PLETION OF THE ASSESSMENT CANNOT BE THE BASIS FOR REOPENING THE A SSESSMENT UNLESS SOME LIVE LINK IS ESTABLISHED. IN THIS REGARD THE COURT OBSERVED THAT THERE IS NO INDICATION AS TO WHETHER AND IN WHAT CO NTEXT THESE PARTIES WERE FOUND TO BE NOT GENUINE PARTIES AND HOW THEY W ERE KNOWN TO HAVE INDULGED IN BOGUS HAWALA TRANSACTIONS AND THUS THE SUBSEQUENT ASSESSING OFFICER COULD NOT HAVE REOPENED THE ASSES SMENT ON THE STRENGTH OF SOME VAGUE INFORMATION RECEIVED SUBSEQU ENT TO THE COMPLETION OF ASSESSMENT. 38.1. LEARNED COUNSEL STRONGLY SUBMITTED THAT IN T HE LIGHT OF AFORECITED DECISIONS THE PROCEEDINGS INITIATED UNDE R SECTION 148 OF THE ACT ARE LIABLE TO BE SET ASIDE SINCE ASSESSING OFFI CER SOUGHT TO INITIATE PROCEEDINGS UNDER SECTION 148 OF THE ACT ON VAGUE R EASONS AND APPROVAL OF THE JOINT COMMISSIONER WAS NOT OBTAINED UNDER SECTION 151 (2) OF THE ACT. HE HOWEVER ADMITTED THAT ASSESS EE DID NOT CHOOSE TO FILE ANY APPEAL WITH REGARD TO THE ADDITIONS MAD E BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). 39. ON THE OTHER HAND LEARNED D.R. SUBMITTED THAT THE CASE LAW RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS. HE ADMITTED THAT THE PRINCIPLES LAID DOWN IN THE AFORE CITED DECISIONS ARE NOT IN DISPUTE BUT THE FINDINGS IN THOSE CASES ARE INTRICATELY CONNECTED TO THOSE FACTS/SITUATIONS WHEREAS IN THE CASE BEFO RE US THE CIRCUMSTANCES WARRANT AN INFERENCE IN FAVOUR OF THE REVENUE. EXPLAINING FURTHER IT WAS CONTENDED THAT IN THE CAS E OF SUMAN RAMAN CHOUDHARY (SUPRA) THE HONBLE BOMBAY HIGH COURT WAS DEALING WITH A ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 25 CASE WHEREIN REASONS WERE RECORDED ON 6-12-1989 AND ON THE SAME DATE NOTICE WAS ISSUED AND IT WAS ALSO ADMITTED THA T PRIOR APPROVAL OF THE DY.COMMISSIONER WAS NOT OBTAINED. HOWEVER IN T HE CASE ON HAND THERE WAS A TIME GAP OF 4 DAYS. REASONS WERE RECORD ED ON 19-3-99 AND NOTICE WAS ISSUED ON 23-3-99 AND IT IS NOT THE CASE OF THE ASSESSEE THAT THE O/O. JCIT IS SITUATED IN A DIFFER ENT PLACE. IT IS THE USUAL PRACTICE THAT IN SUCH CASES THE CONCERNED ITO MAKES A VISIT TO THE O/O. JCIT AND OBTAINS APPROVAL. IT IS ALSO EQUA LLY RELEVANT TO NOTICE THAT IN MOST OF THE CASES CITED BY THE LEARN ED COUNSEL A NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 OR 143(2) OF THE ACT WAS CHALLENGED BY THE ASSESSEE IMMEDIATELY - E ITHER BY FILING A WRIT PETITION OR BY OBJECTING TO THE REOPENING OF A SSESSMENT BEFORE THE ASSESSING OFFICER WHEREAS IN THE INSTANT CASE THE ASSESSEE-HUF NEVER QUESTIONED THE BONAFIDES OF THE ITO IN REOPEN ING THE ASSESSMENT AND THE THEN ITO WAS NEVER CALLED UPON T O FURNISH PROOF WITH REGARD TO APPROVAL OBTAINED FROM THE JOINT COM MISSIONER OF INCOME TAX RANGE 17 MUMBAI. AT THAT POINT OF TIME THE CASE OF THE ASSESSEE WAS UNDER THE CHARGE OF ITO WARD 17 (2) MUMBAI AND THE OFFICER WHO IS EMPOWERED TO APPROVE THE RE-ASSESSME NT PROCEEDINGS UNDER SECTION 151(2) OF THE ACT WAS JOINT COMMISSIO NER RANGE-17 MUMBAI. IN FACT RE-ASSESSMENT PROCEEDINGS WERE COM PLETED ON 27/3/2001 BY THE SAME ITO I.E. ITO WARD 17 (2) M UMBAI. IF THE ASSESSEE HAD ANY DOUBT WITH REGARD TO THE SUFFICIEN CY OF REASONS RECORDED BY THE ASSESSING OFFICER OR THE FACTUM OF OBTAINING THE APPROVAL BY THE JCIT HE COULD HAVE CHALLENGED THE S AME BEFORE THE ASSESSING OFFICER AND AT THAT POINT OF TIME IT COUL D HAVE BEEN EASY FOR THE ASSESSING OFFICER TO FURNISH NECESSARY DETAILS. THERE WAS NO NEED FOR THE ASSESSEE TO WAIT FOR SUCH A LONG PERIOD I.E . FOR CADRE RESTRUCTURING AND TRANSFER OF RECORDS FROM THE ITO WARD 17(2) MUMBAI TO ITO 13(1)(2) MUMBAI. HE ALSO SUBMITTED T HAT THE KARTA OF THE HUF CANNOT BE SAID TO BE IGNORANT OF THE FACTS/ REASONS RECORDED BY THE ASSESSING OFFICER; IN THE CASE OF SHRI LAXMI NARAYAN AGARWAL (INDIVIDUAL) ASSESSMENT WAS ALREADY MADE BY DISALLO WING THE CLAIM OF ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 26 LONG TERM CAPITAL LOSS AND SHORT TERM CAPITAL LOSS ETC. ON SIMILAR SET OF FACTS I.E. BY DOUBTING THE BONAFIDES OF THE TRANSA CTIONS MADE THROUGH SHRI ADOLF PINTO. IN THE CASE OF LAXMINARAYAN AGARW AL (INDIVIDUAL) AND OTHERS ON SAME SET OF FACTS JCIT RANGE-17 MUMBAI HAS GIVEN HIS APPROVAL AND IN THE OFFICE NOTE BELOW THE ASSESSMEN T ORDERS IN THE AFOREMENTIONED CASES IT WAS CLEARLY MENTIONED AS U NDER : THIS CASE WAS DISCUSSED FROM TIME TO TIME WITH THE JOINT CIT RANGE-17 MUMBAI BEFORE FINALISATION OF THE ASSESSMENT. 40. IN THIS BACKDROP REASONS RECORDED BY THE ASSE SSING OFFICER HAVE TO BE LOOKED INTO. IN HIS LETTER DATED 19 TH MARCH 1999 ADDRESSED TO THE JCIT RANGE-17 MUMBAI DETAILS OF THE LONG TERM CAPITAL GAINS AND SHORT TERM CAPITAL GAINS WAS MENT IONED BY THE ASSESSING OFFICER AND HE HAS ALSO OBSERVED THAT IN THE RELATED CASES THIS ISSUE WAS CONSIDERED WHICH IMPLIES THAT SUFFIC IENT ENQUIRY WAS MADE BY THE ASSESSING OFFICER BEFORE EMBARKING UPON THE PROCESS OF COMMENCEMENT OF PROCEEDINGS UNDER SECTION 148 OF TH E ACT. THEREFORE MERELY BECAUSE HE HAS USED THE EXPRESSIO N ASSESSEE MIGHT NOT HAVE SHOWN HIS CORRECT INCOME SHOULD NOT BE IN TERPRETED IN A GRAMMATICAL SENSE BUT IT SHOULD BE UNDERSTOOD IN TH E CONTEXT AND SETTING IN WHICH IT WAS USED. SINCE ASSESSEE-HUF WA S AWARE OF THE FACTS IT HAS NEVER DISPUTED THE REASONS RECORDED BY THE ASSESSING OFFICER OR THE FACTUM OF OBTAINING THE APPROVAL FRO M THE JCIT AT AN APPROPRIATE STAGE. THEREFORE ASSESSEE-HUF SHOULD N OT BE ALLOWED TO AGITATE SUCH MATTERS AFTER A LONG LAPSE OF TIME MA INLY IN VIEW OF THE FACT THAT THE APPELLATE TRIBUNAL IN THE FIRST ROUN D OF LITIGATION HAS NOT ENTERTAINED SUCH ADDITIONAL GROUND. IN THIS BACKGRO UND MERE NON- AVAILABILITY OF THE LETTER OF THE JCIT GRANTING AP PROVAL UNDER SECTION 151(2) OF THE ACT - THOUGH OTHER CIRCUMSTANCES CLEA RLY PROVE THAT HE HAS GRANTED APPROVAL - SHOULD NOT BE CONSIDERED IN A RIGID MANNER. IN OTHERWORDS THE ASSESSING OFFICER CAN BE SAID TO HA VE COMPLIED WITH THE PROCEDURE STIPULATED UNDER SECTION 151(2) OF TH E ACT SO AS TO ISSUE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 27 NOTICE UNDER SECTION 148 OF THE ACT HAVING GIVEN V ALID REASONS FOR REOPENING THE ASSESSMENT ; SUFFICIENCY OF REASONS C ANNOT BE GONE INTO AS HELD BY THE APEX COURT IN VARIOUS DECISIONS. IN SHORT THE CASE OF THE REVENUE IS THAT MERE ABSENCE OF ONE LETTER SHOU LD NOT MAKE ANY DIFFERENCE TO THE STAND OF THE REVENUE AND IT IS A FIT CASE WHERE ILLUSTRATION (E) BELOW SECTION 114 OF THE EVIDENCE ACT SHOULD BE APPLIED HAVING REGARD TO THE SPIRIT OF THE EXPLANA TION PROVIDED THEREIN. 41. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE RECORD. IT IS NOT IN DISPUTE AS ON 11 TH MARCH 1999 RE- ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI LAXMINAR AYAN AGARWAL (INDIVIDUAL) WERE COMPLETED WHEREIN IT WAS SPECIFIC ALLY MENTIONED THAT THE FACTS OF THIS CASE WERE DISCUSSED FROM TIME TO TIME WITH THE JOINT CIT RANGE-17 MUMBAI. ITO WARD 17 (2) MUMBAI WAS THE PERSON INCHARGE OF THE CASE OF SHRI LAXMINARAYAN AGARWAL ( INDIVIDUAL) AS WELL AS SHRI LAXMINARAYAN S.AGARWAL-HUF. WE ARE CONCERNE D WITH THE CASE OF HUF (WHEREIN IDENTICAL TRANSACTIONS AS IN THE CASE OF THE KARTHA OF THE HUF IN HIS INDIVIDUAL CAPACITY HAVE BEEN EFFECTED). SHRI LAXMINARAYAN AGARWAL IS THE KARTHA OF THE HUF. IN H IS INDIVIDUAL CASE AS WELL AS IN HUFS CASE ALLEGED BROKER MR. AD OLF PINTO WAS INVOLVED AND BOTH THE ASSESSEES CLAIM TO HAVE SUFFE RED LOSSES UNDER THE HEAD SHORT TERM/LONG TERM CAPITAL GAINS. IN THE CASE OF MS. ANUPA AGARWAL AND OTHERS ALSO SIMILAR CLAIMS MADE BUT REJ ECTED BY ITO WARD 17 (2). UPON DETAILED ENQUIRY WITH THE CONSEN T OF THE JOINT COMMISSIONER ASSESSMENT OF SHRI LAXMINARAYAN AGARW AL (INDIVIDUAL) WAS COMPLETED ON 11-3-99 AND IMMEDIATELY THEREAFTE R THE SAME ASSESSING OFFICER SOUGHT TO REOPEN THE ASSESSMENT O F SHRI LAXMINARAYAN S. AGARWAL HUF AND IN THE LETTER DATE D 19 TH MARCH 1999 ADDRESSED TO THE JCIT RANGE-17 PARTICULARS OF THE INCOME/LOSS DECLARED ON SHARE DEALINGS WAS MENTIONED BY CLEARLY SPECIFYING THAT IN THE CASE OF SHRI LAXMINARAYAN S. AGARWAL (INDIVIDUA L) AND OTHERS ASSESSMENTS WERE MADE IN MARCH 1999 WHICH IS SUFFI CIENT TO PROVE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 28 THAT BOTH THE ASSESSING OFFICER AS WELL AS THE KART HA OF THE HUF WERE FULLY AWARE OF THE REASONS AS TO WHY THE NOTICE WAS SOUGHT TO BE ISSUED UNDER SECTION 148 OF THE ACT. THIS ASPECT WA S NEVER AGITATED BY THE ASSESSEE TILL THE COMPLETION OF THE ASSESSMENT BY THE ITO WARD 17 (2) OR TILL THE FILES WERE TRANSFERRED TO A NEW CHA RGE WHICH SHOWS THAT THE ASSESSEE WAS AWARE OF THE FACTUAL MATRIX AND HE NCE EXISTENCE OF REASONS WERE NEVER DISPUTED. HAD THE ASSESSEE RAISE D ANY DOUBT ABOUT THE EXISTENCE OF REASONS OR THE FACTUM OF SAN CTION BY THE JOINT COMMISSIONER OF INCOME TAX UNDER SECTION 151 (2) OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WOULD HAVE BEEN EASY FOR THE ITO WARD 17 (2) MUMBAI TO FURNISH THE RECORDS. IT IS DIFFICULT TO APPRECIATE AS TO WHY THE ASSESSEE HAD TO WAIT FOR M ORE THAN 8 YEARS TO RAISE THE ISSUE BEFORE DIFFERENT ASSESSING OFFICER I.E. AFTER THE FILES WERE TRANSFERRED ON ACCOUNT OF RE-ORGANISATION IN T HE DEPARTMENT. THE ITAT I BENCH MUMBAI HAS NOT ENTERTAINED THE ADD ITIONAL GROUND AND THUS IT CANNOT BE SAID THAT THE TRIBUNAL HAS SE T ASIDE THE ISSUE FOR RE-CONSIDERATION. LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE APPEARS TO BE UNDER THE IMPRESSION THAT T HE ASSESSING OFFICER IS DUTY BOUND TO CONSIDER THE ISSUE SINCE T HE TRIBUNAL HAS MADE AN OBSERVATION THAT THE ASSESSEE HAS STILL AN OPTION TO CONTEST THE ISSUE BEFORE THE ASSESSING OFFICER. PRINCIPLES OF STAREDECISIS HAS BEEN EXPLAINED BY THE COURTS STATING THAT DECISION ON A PRINCIPLE OF LAW BY A COMPETENT COURT IN A CASE IN WHICH IT IS D IRECTLY OR NECESSARILY INVOLVED HAS TO BE FOLLOWED IN THE SUBS EQUENT CASE WITH AN EXCEPTION THAT CASE IS ONLY AN AUTHORITY FOR WHAT I T ACTUALLY DECIDES I.E. WHEN THE RATIO DECIDENDI IN A PARTICULAR CASE IS ABSURD OR IF IT IS A CASUAL OBSERVATION WHICH IS NOT NECESSARY FOR THE D ISPOSAL OF THE APPEAL IT CAN ONLY BE CONSIDERED AS AN OBITER WHICH CANNOT BE TREATED AS A BINDING PRECEDENT. THE ITAT I BENCH MUMBAI WAS CALLED UPON TO CONSIDER THE ISSUE AS TO WHETHER ADDITIONAL GROU NDS CHALLENGING THE JURISDICTION OF THE ASSESSING OFFICER IN REOPENING THE ASSESSMENT CAN BE ENTERTAINED FOR THE FIRST TIME AND IN THIS REGAR D THE BENCH HAD TAKEN A CONCRETE DECISION THAT SUCH ADDITIONAL GROU NDS CANNOT BE ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 29 ADMITTED. UNDER THE CIRCUMSTANCES THE OBSERVATION THAT THE ASSESSEE HAD STILL AN OPTION TO CONTEST THE ISSUE BEFORE THE ASSESSING OFFICER IS NOT A BINDING DIRECTION TO THE AUTHORITIES BELOW AN D IT IS FOR THE ASSESSEE TO SUBSTANTIATE FROM ITS CONDUCT THAT THER E WAS JUSTIFIABLE REASONS FOR NOT RAISING THAT GROUND DURING THE COUR SE OF ASSESSMENT PROCEEDINGS OR WITHIN A REASONABLE TIME FRAME THERE AFTER. ON THE CONTRARY IF THE CASUAL OBSERVATION HAS TO BE TAKEN AS AN AUTHORITATIVE DIRECTION BY THE TRIBUNAL TO THE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL GROUNDS AS AN EXTENSION OF THE SAME LOG IC IT HAS TO BE INFERRED THAT THE ITAT HAS ALREADY CONSIDERED THE I SSUE ON MERITS BY HOLDING THAT THE ASSESSING OFFICER HAS SOUGHT PERMI SSION UNDER SECTION 151(2) OF THE ACT BEFORE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT (SEE PARA 14 AT PAGE 9 OF THIS ORDER H IGHLIGHTED IN BOLD LETTERS). 42. IT HAS TO BE BORNE IN MIND THAT EACH ASSESSING OFFICER IS FLOODED WITH THOUSANDS OF ASSESSMENT RECORDS PER AN NUM AND DESPITE THE CARE TAKEN BY THE REVENUE AUTHORITIES IT MAY B E DIFFICULT TO KEEP A WATCH ON THE OLD RECORDS MORE PARTICULARLY ON CERTA IN ISSUES LIKE THE ONE WHICH WAS RAISED HERE THAT TOO LONG AFTER THE C OMPLETION OF THE ASSESSMENT. IN THE CASE OF PARSURAM POTTERY CO. LTD . VS. ITO 106 ITR 1 AT PAGE 10 THE APEX COURT HAD AN OCCASION TO CONS IDER THE ISSUE FROM THE POINT OF EQUITY WHEN A STALE ISSUE IS SOUG HT TO BE RE-ACTIVATED AFTER LONG LAPSE OF TIME. IN THIS REGARD THE COURT OBSERVED AS UNDER : - - - - - WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS THAT STALE ISSUES SHOULD NOT BE RE-ACT IVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME M UST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 30 43. IN THE CASE OF SIBONARAYAN PATRO & BROS. VS. I TO 54 TTJ 644 (CTK.) THE ITAT CUTTACK BENCH (WHEREIN ONE OF US IS A PARTY) CONSIDERED THE PROVISIONS OF SECTION 275(1)(C) OF T HE ACT AND OBSERVED THAT EVEN IF NO TIME LIMIT IS PRESCRIBED UNDER THE ACT FOR INITIATION OF PENALTY PROCEEDINGS IT DOES NOT GIVE AN UN-CHARTERE D POWER TO THE ASSESSING OFFICER TO INITIATE PROCEEDINGS AT ANY PO INT OF TIME AND WHEREVER NO TIME LIMIT IS PROVIDED IT HAS TO BE ASS UMED THAT SUCH PROCEEDINGS ARE TO BE INITIATED WITHIN A REASONABLE PERIOD TAKING INTO CONSIDERATION NORMAL TIME LIMIT PRESCRIBED FOR LEVY OF PENALTY IN RESPECT OF OTHER DEFAULTS; THE TRIBUNAL HELD MAXIMU M TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE ASSESSM ENTS ARE COMPLETED CAN BE SAID TO BE A REASONABLE TIME WITHI N WHICH ASSESSING OFFICER COULD HAVE INITIATED THE PENALTY PROCEEDING S. STANDARDS OF EQUITY CAN BE NO DIFFERENT TO AN ASSESSEE - IT CAN AT BEST BE MORE FLEXIBLE. LEGISLATIVE INTENTION CAN BE CULLED OUT F ROM A PERUSAL OF SECTION 292BB OF THE ACT WHICH WAS INSERTED BY THE FINANCE ACT 2008 WHEREIN IT WAS CLARIFIED THAT WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO-OPERATED IN ANY ENQUIRY RELEVANT T O AN ASSESSMENT OR REASSESSMENT IT SHALL BE DEEMED THAT ANY NOTICE UN DER ANY PROVISIONS OF THIS ACT HAS BEEN DULY SERVED UPON HIM IN ACCORD ANCE WITH THE PROVISIONS OF THIS ACT. SIMILARLY IN THE CASE OF A CIT VS. DHL OPERATIONS 13 SOT 581 (MUM.) (SB) THE SPECIAL BENCH WAS CALLED UPON TO TAKE INTO CONSIDERATION A MODIFIED QUESTION AT THE APPELLATE STAGE AND IN THAT CONTEXT THE BENCH OBSERVED THAT A N UNDUE RELAXATION WOULD UPSET THE CONCEPT OF FINALITY OF A N ASSESSMENT. 44. IN THE CASE OF HASTIMAL VS. CIT 49 ITR 273 (MA D.) AN ISSUE AROSE AS TO WHETHER THE INITIAL BURDEN OF PROVING T HE CASH CREDIT IS UPON THE ASSESSEE OR NOT. THOUGH AS PER THE STATUT E INITIAL BURDEN IS UPON THE ASSESSEE THE COURT OBSERVED THAT AFTER TH E LAPSE OF 10 YEARS THE ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CALLED UPON THE ORIGIN AND EXPLAIN NOT MERELY SOURCE OF HIS CONTRIB UTION BUT THE ORIGIN OF ORIGIN AND THE SOURCE OF SOURCE AS WELL. ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 31 45. AS COULD BE NOTICED FROM THE AFORECITED DECISI ONS THOUGH DUTY IS CAST UPON THE ASSESSING OFFICER TO SHOW THA T HE HAS FOLLOWED THE PROCEDURE PRESCRIBED UNDER SECTION 148 READ WIT H SECTION 151 (2) OF THE ACT IN A GIVEN CASE THE ASSESSING OFFICER C ANNOT BE PUT ON THE RACK TO FURNISH THE ENTIRE RECORD OF THE ITO (WHO W AS EARLIER HAVING THE CHARGE UPON THE ASSESSEE) AND ALSO THE CONCERNE D JOINT COMMISSIONER THAT TOO AFTER A LONG LAPSE OF TIME I. E. AFTER MORE THAN 8 YEARS. IN THE INSTANT CASE THE ADDITIONAL GROUNDS RAISED BEFORE THE TRIBUNAL AFTER 8 YEARS RECKONED FROM THE DATE OF I SSUANCE OF NOTICE UNDER SECTION 148 WERE NOT ADMITTED AND THE ORDER OF THE TRIBUNAL ATTAINED FINALITY. IT IS NOT THE CASE OF THE ASSESS ING OFFICER THAT NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED WITHOUT OBT AINING PRIOR APPROVAL OF THE JCIT. ON THE CONTRARY THE NOTICE S ERVED UPON THE ASSESSEE INDICATES THAT THE THEN ITO OBTAINED APPRO VAL FROM THE JCIT RANGE 17 MUMBAI. ASSESSMENT WAS FINALLY COMPLETED ON 27-3-2001. WITHIN THIS TWO YEARS PERIOD THE ASSESSEE DID NOT C HOOSE TO RAISE THIS ISSUE BEFORE THE ASSESSING OFFICER. LONG AFTER THE FILE WAS TRANSFERRED FROM THE ITO WARD 17 (2) MUMBAI TO THE ITO WARD 13(1)(2) MUMBAI THE ASSESSEE-HUF SOUGHT TO RAISE THIS ISSUE BEFORE THE APPELLATE TRIBUNAL. AS POINTED OUT BY US EARLIER ASSESSEE-HU F WAS FULLY AWARE OF THE NON-GENUINENESS OF THE DEALINGS MADE THROUGH MR. ADOLF PINTO AND ASSESSMENT MADE IN THE HANDS OF THE KARTHA OF T HE HUF IN HIS INDIVIDUAL CAPACITY AS WELL AS OTHER ASSESSEES AFT ER THOROUGH INVESTIGATION CANNOT BE LOST SIGHT OF. THE SAME AS SESSING OFFICER AND IN CONSULTATION WITH THE SAME JCIT SOUGHT TO REOPEN THESE ASSESSMENTS ALSO. LEARNED CIT(A) NOTICED THAT IN TH E CASE OF BABULAL AGARWAL-HUF AN APPROVAL LETTER OF JCIT DATED 23-3-9 9 IS ON RECORD. FACTS BEING IDENTICAL CIRCUMSTANTIAL EVIDENCE LEAD S US TO CAME TO A CONCLUSION THAT THE ASSESSING OFFICER WOULD HAVE OB TAINED AN APPROVAL OF THE JCIT IN THE INSTANT CASE. SINCE SUF FICIENT ENQUIRY WAS MADE BY THE SAME ASSESSING OFFICER WITH REGARD TO T HE EXISTENCE OF MR. ADOLF PINTO IT CANNOT BE SAID TO BE A CASE OF ASSES SING OFFICER ACTING UPON OUTSIDE INFORMATION. ON THE CONTRARY A THOROU GH EXAMINATION ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 32 WAS MADE WITH REGARD TO THE ALLEGED LOSSES UNDER TH E HEAD CAPITAL GAINS AND THUS SUFFICIENCY OF REASONS CANNOT BE Q UESTIONED IN THIS CASE. IT IS WELL SETTLED THAT ONCE IT IS SHOWN THAT ASSESSING OFFICER HAD REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE M IGHT HAVE ESCAPED ASSESSMENT EVEN IN THE ULTIMATE ANALYSIS IF THE IN COME IS NOT ASSESSED THAT CANNOT BE A CRITERIA TO SHOW THAT THE REASONS ARE VAGUE. SO LONG AS A RATIONAL CONNECTION IS ESTABLISHED BET WEEN THE MATERIAL ON RECORD AND FORMATION OF BELIEF RE-ASSESSMENT PR OCEEDINGS CANNOT BE CHALLENGED BY NARROWLY INTERPRETING THE DICTIONA RY MEANING OF THE EXPRESSION MIGHT NOT HAVE SHOWN OVERLOOKING THE PURPORT OF THE DETAILED LETTER ADDRESSED BY THE ASSESSING OFFICER TO THE JCIT. IN THE PECULIAR CIRCUMSTANCES OF THE CASE ILLUSTRATION E TO SECTION 114 OF THE INDIAN EVIDENCE ACT SUPPORTS THE STAND OF THE R EVENUE AND IT IS FOR THE ASSESSEE TO DISLODGE THE REBUTTABLE PRESUMP TION BY PROVING THAT IN THE CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER WOULD NOT HAVE OBTAINED SANCTION FROM THE JOINT COMMISSIONER OF INCOME TAX BEFORE 23/3/1999. A CASUAL CLAIM OF THE ASSESSEE AF TER LONG LAPSE OF TIME SHOULD NOT BE TAKEN AS THE REBUTTAL OF PRESUMP TION. THE VERY FACT THAT THE ASSESSEE DID NOT CHOOSE TO MAKE SUCH CLAIM TILL THE FILE IS TRANSFERRED FROM THE ITO WARD 17 (2) WOULD CAST A DOUBT ON THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IT IS WEL L SETTLED PRINCIPLE THAT IF A PERSON IS IN THE HABIT OF MAKING FALSE/INCORRE CT CLAIMS HIS OTHER ACTIONS CAN ALSO BE LOOKED AT FROM THE SAME PERSPEC TIVE. THERE IS AN OLD LATIN MAXIM FALSUS IN UNO FALSUS IN OMNIBUS . IN THE PRESENT CASE THE ASSESSEE HAS NOT CHALLENGED THE LEGALITY OF THE PROCEEDINGS FOR MORE THAN 8 YEARS RECKONED FROM THE DATE OF ISS UANCE OF NOTICE AND IN FACT DID NOT PREFER AN APPEAL BEFORE THE TRI BUNAL WITHIN THE TIME PERMITTED UNDER LAW. EVEN FORM-36 IN THE FIRS T ROUND OF LITIGATION CONTAINS SEVERAL INCONSISTENT/FALSE DATE S. THE DATE OF COMMUNICATION OF THE ORDER OF THE CIT(A) WAS STATED TO BE NOT KNOWN BUT LATER ON FILLED IN INK AS 24-6-2003 AND VERIF ICATION WAS SIGNED ON 17 TH NOVEMBER 2003 BUT NONCHALANTLY FILED AN AFFIDAVI T OF THE EMPLOYEE OF M/S. PUROHIT & CO. C.A. STATING THAT TH E DULY FILLED IN ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 33 APPEAL PAPERS WERE GIVEN IN THE O/O. CHARTERED ACCO UNTANT ON 5/3/2002 ITSELF BUT UPON A REMINDER IN THE MONTH OF DECEMBER 2003 THE MATTER WAS RE-ACTIVATED AND AN APPEAL WAS FILED. WITH SO MANY INCONSISTENT DATES IN THE VERIFICATION AS WELL AS IN THE STATEMENT IT IS SEEN THAT THE ASSESSEE HAS NOT APPROACHED THE JUDICIAL FORUM WITH CLEAN HANDS. UNDER THE CIRCUMSTANCES ANY CLAI M MADE BY SUCH AN ASSESSEE AFTER LONG LAPSE OF TIME SHOULD NOT PUT THE OTHER PARTY IN A VULNERABLE POSITION AND COURTS SHOULD NOT PERMIT AN ASSESSEE TO RE- ACTIVATE A STALE ISSUE. NO DOUBT THE PROCEDURE PRES CRIBED UNDER THE LAW HAS TO BE FOLLOWED IN LETTER AND SPIRIT. IT IS NOT THE CASE OF THE DEPARTMENT THAT IT DID NOT FOLLOW THE PROCEDURE PRE SCRIBED UNDER THE ACT. THE CIRCUMSTANTIAL EVIDENCE ALSO INDICATE THAT THE ASSESSING OFFICER HAS PROPERLY FOLLOWED THE PROCEDURE. MERELY BECAUSE THE LETTER OF THE JCIT IS NOT AVAILABLE ON RECORD AN ADVERSE I NFERENCE CANNOT BE TAKEN TO HOLD THAT THE ASSESSING OFFICER HAS NOT OB TAINED THE SANCTION OF THE JCIT ; AS RIGHTLY OBSERVED BY THE LEARNED CI T(A) ILLUSTRATION E TO SECTION 114 OF THE EVIDENCE ACT COMES TO THE AID OF THE RESPONDENT. 46. CASE LAW RELIED UPON BY THE LEARNED COUNSEL A PPEARING ON BEHALF OF THE ASSESSEE ARE DISTINGUISHABLE ON F ACTS. IN MOST OF THE CASES ASSUMPTION OF JURISDICTION UNDER SECTION 148 OF THE ACT WAS CHALLENGED IMMEDIATELY AFTER RECEIPT OF THE NOTICE OR IN SOME CASES THE REVENUE HAD ACCEPTED THAT THERE WAS NO BASIS FOR RE OPENING THE ASSESSMENT OR AN APPROPRIATE SUPERIOR AUTHORITY WAS NOT APPROACHED FOR CLEARANCE UNDER SECTION 151 OF THE ACT. HOWEVER IN THE CASE ON HAND THERE WAS AMPLE EVIDENCE TO SHOW THAT THE ASS ESSING OFFICER HAD APPLIED HIS MIND RECORDED REASONS AND OBTAINED APPROVAL OF JCIT; NOTICE ITSELF INDICATES THAT THE ASSESSING OF FICER HAD OBTAINED AN APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX UN DER SECTION 151 (2) OF THE ACT. HAVING REGARD TO THE OVERALL CIRCUM STANCES OF THE CASE WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE TO A CCEPT THE PLEA OF THE ASSESSEE AND ACCORDINGLY DISMISS THE APPEAL FILED BY THE ASSESSEE. IN OTHERWORDS WE ARE OF THE OPINION THAT THE WELL REA SONED ORDER PASSED ITA.NO.1161/MUM/2011 SHRI LAXMINARAYAN AGARWAL (HUF) 34 BY THE LEARNED CIT(A) DO NOT CALL FOR ANY INTERFERE NCE. THEREFORE THE APPEAL FILED BY THE ASSESSEE-HUF IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 1 5 TH DAY OF JULY 2011. SD/- SD/- (R.K.PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 15 TH JULY 2011 VBP/- COPY TO 1. SHRI LAXMINARAYAN AGARWAL (HUF) C/O. G.M. PUROH IT & CO. 213 TAPO COMMERCIAL CENTRE RAM MANDIR ROAD GOREGA ON (WEST) MUMBAI-400078. PAN AADPS8398A 2. ITO 13 (1) (2) MUMBAI. 3. CIT(A)-24 MUMBAI 4. CIT-13 MUMBAI. 5. DR A BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.