The I.T.O.-4(4), Agra v. Sh. Sanjay Kumar Agarwal,HUF., Agra

ITA 290/AGR/2010 | 2001-2002
Pronouncement Date: 15-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 29020314 RSA 2010
Assessee PAN AACHS3406A
Bench Agra
Appeal Number ITA 290/AGR/2010
Duration Of Justice 1 year(s) 28 day(s)
Appellant The I.T.O.-4(4), Agra
Respondent Sh. Sanjay Kumar Agarwal,HUF., Agra
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 15-07-2011
Date Of Final Hearing 28-06-2011
Next Hearing Date 28-06-2011
Assessment Year 2001-2002
Appeal Filed On 17-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO. 290/AGRA/2010 ASSTT. YEAR : 2001-02 D.C.I.T. 4(1) AGRA. VS. SHRI SANJAY KUMAR AGAR WAL HUF D-15 KAMLA NAGAR AGRA. (PAN : AACHS 3406 A) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VINOD KUMAR JR. D.R. FOR RESPONDENT : SHRI ANURAG SINHA ADVOCATE. ORDER PER P.K. BANSAL A.M. : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 18.03.2010 OF CIT(A) BY TAKING FOLLOWING EFFECTIVE GROUNDS : 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)- II AGRA HAS ERRED IN LAW AND ON FACTS I N QUASHING THE PROCEEDINGS INITIATED U/S. 147 OF THE ACT WITHOUT P ROPERLY APPRECIATING THE FACTS THAT SPECIFIC INFORMATION OF TAKING BOGUS ENTRIES WAS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) II AGRA HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8 39 212/- MADE BY THE AO U/S. 68 OF THE IT ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT ON RECEIPT OF THE INFORMATION FROM THE ADDITIONAL DIT AGRA THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTR IES IN RESPECT OF THE PURCHASE AND SALE OF SHARES THROUGH M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA FOR RS.8 39 212/- THE ASSESSING OFFICER INITIATED THE PROCEEDINGS U/S. 147 BY ISSUI NG NOTICE U/S. 148 DATED 28.03.2008 WHICH WAS DULY SERVED RECORDING FOLLOWING REASONS TO BELIEVE : 2 ON THE BASIS OF INFORMATION RECEIVED FROM ADDL. DI T (INV.) AGRA VIDE HIS LETTER DATED 20.03.2008 THROU GH ADDL. CIT RANGE-4 AGRAS LETTER F.NO. ADDL. CIT/R-4/AGRA/R- 4/AGRA/ACCOMMODATION ENTRIES /2007-08 DATED 24.03.2 008 THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES AND RECEIVED AN AMOUNT OF RS.8 39 212/- ON F.Y. 2000-2001 THROUGH C HEQUE NO./OTHER NO. 121983/111 BY ARRANGING/OBTAINING UNR ELIABLE DOCUMENT ETC. IN THE FORM OF SHARE APPLICATION MONE Y/CAPITAL GAINS/GIFTS ETC. DURING THE F.Y. 2000-01 FROM AAYYU SHI STOCK BROKER PVT. LTD. SANJAY PLACE AGRA AND THE SAME IS DEPOSITED IN HER BANK ACCOUNT OF ANZ GRINDLAYS BANK. ON THE BASIS OF INFORMATION RECEIVED FROM ADDL. DIT (INV.) AGRA VIDE HIS LETTER DATED 20.03.2008 I HAVE REASON TO BELIEVE THAT THE INCOME EARNED AS UNEXPLAINED ENTRY FOR RS.8 39 212/ - HAS ESCAPED ASSESSMENT AND LIABLE TO BE TAXED IN F.Y. 2000-2001 RELEVANT TO A.Y. 2001-2002. 3. IN THIS CASE THE ORIGINAL RETURN WAS FILED BY T HE ASSESSEE ON 30.07.2001 WHICH WAS PROCESSED U/S. 143(1). THE ASSESSEE DID NOT FILE AN Y RETURN IN RESPONSE TO NOTICE ISSUED U/S. 148. THE ASSESSING OFFICER ISSUED THE STATUTORY NOTICE U /S. 142(1) ALONGWITH THE QUESTIONNAIRE DATED 28.11.2008. SUMMONS U/S. 131 WERE ALSO ISSUED. IN C OMPLIANCE THE COUNSEL OF THE ASSESSEE ATTENDED FILED THE COPY OF THE RETURN AND OBJECTED THE INITIATION OF THE PROCEEDINGS. THE CASE WAS ADJOURNED FROM TIME TO TIME. THE ASSESSEE REPLIED T HE NOTICE U/S. 148 OF THE ACT VIDE LETTER DATED 16.04.2008 THAT THE ORIGINAL RETURN MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. THE NOTICE U/S. 143(2) WAS ISSUED ON 28.08.2008. T HE NOTICE ISSUED WAS WITHDRAWN BY AO AS THE ASSESSEE HAS NOT FILED THE RETURN IN COMPLIANCE WIT H THE NOTICE ISSUED U/S 148. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE BROKERS. THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE BROKERS. THE ASSESSING OFFICER COMPLETED THE AS SESSMENT U/S. 147/144. IN HIS OPINION THE ASSESSEE DID NOT CO-OPERATE WITH THE DEPARTMENT AND NOT SUBMITTED ANY RETURN IN REPLY TO NOTICE U/S. 148 AND ALSO FAILED TO COMPLY WITH THE NOTICE U/S. 142(1). THE ASSESSING OFFICER TREATED THE AMOUNT RECEIVED BY THE ASSESSEE FROM BROKERS AMOUNT ING TO RS.8 39 212/- CREDITED IN SAVING 3 BANK ACCOUNT WITH ANZ GRINDLAYS BANK AS UNEXPLAINED . THE ASSESSMENT WAS COMPLETED ON INCOME OF RS.9 44 168/-. THE ASSESSEE WENT IN APPEA L BEFORE THE CIT(A). THE CIT(A) TOOK THE VIEW THAT THE REASONS RECORDED CANNOT PROVIDE A VA LID GROUND FOR INITIATING ACTION U/S. EVEN ON MERIT ALSO THE ADDITION WAS DELETED. 4. THE LEARNED DR REFERRING TO GROUND NO. 1 CONTEN DED THAT ON THE FACTS THE CIT(A) WAS NOT CORRECT IN LAW IN QUASHING THE PROCEEDINGS U/S. 147. HE REFERRED TO PARA 27 OF THE ORDER ESPECIALLY THE FINDING OF THE CIT(A) THAT THE REASO NS RECORDED ARE NOT VALID AND CANNOT PROVIDE GROUND FOR ACTION U/S. 147. REFERRING TO THE REASON S TO BELIEVE IT WAS POINTED OUT THAT THE ASSESSING OFFICER HAS RECEIVED INFORMATION IN HIS P OSSESSION THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FROM THE BROKERS M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA. THE ASSESSEE HAS SHOWN SALE PROCEEDS OF SHARES AND CLAIMED LONG- TERM CAPITAL GAIN. IN THE REASONS THE AO HAS DULY RECORDED NAME OF THE BROKER NAME OF THE COMPA NY DATE OF SALE AND SALE AMOUNT. IT IS CLEARLY MENTIONED THAT THE ASSESSEE HAS TAKEN ENTRY IN F.Y. 2000-01 AND RECEIVED AN AMOUNT OF RS.8 39 212/- THROUGH CHEQUE NO.121983/111 FROM M/S . AAYUSHI STOCK BROKERS (P) LTD. AND THE SAME WAS DEPOSITED IN THE BANK ACCOUNT ANZ GRINDLA YS BANK. THIS INFORMATION SPECIFICALLY RELATES TO THE ASSESSEE AND CANNOT BE SAID TO BE VA GUE INFORMATION. THE ASSESSEE DID NOT DISPUTE THAT AMOUNT RECEIVED FROM THESE PARTIES AND DEPOSIT ED IN THE BANK ACCOUNT BELONGING TO THE ASSESSEE. THE REASONS SO RECORDED HAVE RATIONAL CO NNECTION TO THE FORMATION OF THE BELIEF. THERE IS NO ALLEGATION THAT THE INFORMATION CONTAINED IN THE REASONS TO BELIEVE DOES NOT BELONG TO THE ASSESSEE. THE ASSESSING OFFICER HAS INITIATED THE P ROCEEDINGS AFTER VERIFYING THE FACTS AND AFTER RECEIVING THE SPECIFIC INFORMATION FROM INVESTIGATI ON WING WHICH IS A VALID PIECE OF EVIDENCE FOR INITIATING PROCEEDINGS U/S. 147. THE REASONS THUS R ECORDED CANNOT BE SAID TO INVALID. SUFFICIENCY OF REASONS CANNOT BE LOOKED INTO BY THE COURT. THE SATISFACTION WAS A BONAFIDE SATISFACTION AND HAS BEEN EXERCISED IN A BONAFIDE MANNER RELATING TO A PRUDENT PERSON. THE INFORMATION RECEIVED 4 FROM THE INVESTIGATION WING IS SUFFICIENT FOR INVOK ING THE PROCEEDINGS U/S. 147 OF THE ACT. IT IS NOT THE CASE OF THE CHANGE OF OPINION. NO EARLIER A SSESSMENT HAS BEEN IN THE CASE OF THE ASSESSEE EVEN THOUGH THE RETURN WAS FILED BY THE ASSESSEE ON 30.07.2001. RELIANCE WAS PLACED IN THIS REGARD ON THE FOLLOWING CASE LAWS : (I). ITO VS. PURSHOTTAM DAS BANGUR & ANOTHER 224 ITR 362(SC). (II). RATTAN GUPTA VS. UNION OF INDIA 234 ITR 220 (DEL.) (III). MIDLAND FOOD & VEGETABLE PRODUCT (INDIA) PV T. LTD. VS. CIT 208 ITR 266 (IV) SHRI BRIJ MOHAN AGARWAL VS. ACIT 268 ITR 400 (ALL) 5. THE LEARNED AR ON THE OTHER HAND CONTENDED THAT THE ASSESSING OFFICER WAS NOT HAVING ANY AUTHENTIC INFORMATION FOR THE ISSUANCE OF NOTIC E U/S. 148 THAT THE TRANSACTION OF SALE OF SHARES THROUGH M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA AR E NON-GENUINE. THE NOTICE U/S. 148 WAS SENT ON SUSPICION AND SURMISES. THE BURDEN IS ON THE ASS ESSING OFFICER TO PROVE THAT THERE WAS ANY INCOME WHICH ESCAPED ASSESSMENT. RELIANCE WAS PLACE D ON THE DECISION OF TIN MANUFACTURING CO. VS. CIT 222 ITR 323 (ALL.) AND THAT OF DELHI H IGH COURT IN THE CASE OF CIT VS. PRADEEP KUMAR GUPTA 303 ITR (DEL.) 95. IT WAS INCUMBENT UP ON THE ASSESSING OFFICER TO REFER THE MATERIAL PART OF THE INFORMATION EITHER IN THE REAS ONS RECORDED OR IN THE ASSESSMENT ORDER. ALTHOUGH IT IS THE SOLE SATISFACTION OF THE ASSESSI NG OFFICER TO INITIATE PROCEEDINGS BUT THE SATISFACTION OF THE ASSESSING OFFICER IS OPEN TO JU DICIOUS SCRUTINY. IN THIS REGARD RELIANCE WAS PLACED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF ASA JOHN DEVINATHAN & ORS. VS. ADDL. CIT 126 ITR 270 (MAD.). IT WAS POINTED OUT T HAT REASON TO BELIEVE CONTEMPLATES EXISTENCE OF REASONS ON WHICH THE BELIEF IS FOUNDED AND NOT M ERELY A BELIEF IN EXISTENCE OF REASONS INDUCING THE BELIEF. WITHOUT SUCH BELIEF THE ASSES SING OFFICER WILL NOT HAVE ANY JURISDICTION TO INITIATE THE PROCEEDINGS U/S. 147. RELIANCE WAS PLA CED IN THIS REGARD ON THE DECISION OF THE APEX COURT IN THE CASE OF JOHRI LAL (HUF) VS. CIT 88 IT R 439 (SC) SHEO NATH SINGH VS. AAC 82 5 ITR 147 (SC) GANGA SARAN & SONS (P) LTD. VS. ITO 130 ITR 1 (SC) ITO VS. LAKHMANI MEWAL DAS 103 ITR 437(SC). IT WAS STATED THAT THE ASSESS ING OFFICER INITIATED THE PROCEEDINGS AFTER RECORDING THE REASONS FOR ESCAPEMENT OF INCOME AND REFERRED TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING. IN THIS REGARD RELIANCE WA S PLACED ON THE DECISION OF STATE BANK OF SAURASHTRA VS. ITO 24 ITD 97 (AHD.) AND THAT OF DU DHANATH PRASAD GUPTA VS. ITO 3 TTJ (CAL.) 309. IT WAS CONTENDED THAT THE REASONS RECORDED BY THE ASSESSING OFFICER SPEAKS OF THAT M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA AND M/S. AGARWA L & COMPANY DELHI HAVE PROVIDED THE ACCOMMODATION ENTRIES TO THE ASSESSEE. IT IS NOT ON WHAT BASIS THE ASSESSING OFFICER HELD SO. THERE IS NO MATERIAL REFERRED IN THE REASONS RECORD ED FOR HOLDING SUCH A VIEW. THUS THE REASONS RECORDED ARE BASED ON SUSPICION AND SURMISES. THE A SSESSEES REQUEST TO SUMMON THE BROKERS REMAINED UNATTENDED BY THE ASSESSING OFFICER. IN TH IS REGARD RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : (I). UNITED ELECTRICAL COMPANY (P) LTD. VS. CIT 25 8 ITR 317 (DEL.) (II). CIT VS. PRADEEP KUMAR GUPTA 303 ITR 95 (DEL. ) (III). CIT VS. GULATI INDUSTRIAL FABRICATION (P) LT D. 217 CTR (DEL.) 494. 6. IT WAS ALSO CONTENDED THAT FROM THE REASONS RECO RDED ONE CAN SAY THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND. HE HAD BORROWED S ATISFACTION. RELIANCE WAS PLACED IN THIS REGARD ON THE FOLLOWING CASES : (I). ARJUN SINGH VS. DIRECTOR OF INCOME TAX 246 IT R 363 (MP) (II). MRS. VINEETA JAIN VS. ITO 158 TAXMAN 167 (DEL )(MAG.) (III). CIT VS. ATUL JAIN 299 ITR 383 (DEL.). 7. IT WAS POINTED OUT THAT ON THE BASIS OF THE REPO RT OF THE INVESTIGATION WING THE HONBLE BENCH AT AGRA QUASHED THE RE-ASSESSMENT PROCEEDINGS IN THE FOLLOWING CASES : 6 (I). PRADEEP KUMAR GUPTA VS. ITO (II). SMT. JAYA BHATIA VS. ITO (III). SMT. POOJA CHAUHAN VS. ITO (IV) SMT. ANJU BANSAL VS. ITO (V) SMT. PUSHPA RANI MITTAL VS. ITO (VI) SMT. VISHNU KANTA CHAUDHARY VS. ITO (VII) SHRI RAMESH CHAND CHAUDHARY VS. ITO (VIII) SHRI PAL SINGH GULATI VS. ITO (IX) ACIT VS. KRISHNA MURARI LAL AGARWAL HE ALSO REFERRED TO THE DECISIONS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SMT. KIRAN GARG IN ITA NO. 161 OF 2005 IN WHICH VIDE ORDER DAT ED 31.03.10 THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL QUASHING THE NOTICE U/S. 148 UNDER THE IDENTICAL CIRCUMSTANCES. THE COPY OF THE ORDER WAS FILED BEFORE US. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS PERUSED THE MATERIAL ON RECORD ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. W E HAVE ALSO GONE THROUGH THE VARIOUS CASE LAWS CITED BEFORE US FROM BOTH THE SIDES. WE NOTED THAT IN THIS CASE THE ASSESSEE HAS SUBMITTED ORIGINAL RETURN FOR THE IMPUGNED ASSESSMENT YEAR ON 30.07.2001. NO ASSESSMENT U/S. 143(3) WAS MADE. SUBSEQUENTLY THE ASSESSING OFFICER AFTER REC ORDING THE FOLLOWING REASONS INITIATED PROCEEDINGS U/S. 147 : ON THE BASIS OF INFORMATION RECEIVED FROM ADDL. DI T (INV.) AGRA VIDE HIS LETTER DATED 20.03.2008 THROUGH ADDL. CIT RANGE-4 AGRAS LETTER F.NO. ADDL. CIT/R-4/AGRA/R-4/AGRA/ACC OMMODATION ENTRIES /2007-08 DATED 24.03.2008 THAT THE ASSESSE E HAS OBTAINED ACCOMMODATION ENTRIES AND RECEIVED AN AMOUNT OF RS. 8 39 212/- ON F.Y. 2000-2001 THROUGH CHEQUE NO./OTHER NO. 1219 83/111 BY ARRANGING/OBTAINING UNRELIABLE DOCUMENT ETC. IN THE FORM OF SHARE APPLICATION MONEY/CAPITAL GAINS/GIFTS ETC. DURING T HE F.Y. 2000-01 FROM AAYYUSHI STOCK BROKER PVT. LTD. SANJAY PLACE AGRA AND THE SAME IS DEPOSITED IN HER BANK ACCOUNT OF ANZ GRINDL AYS BANK. 7 ON THE BASIS OF INFORMATION RECEIVED FROM ADDL. DIT (INV.) AGRA VIDE HIS LETTER DATED 20.03.2008 I HAVE REASON TO BELIEVE THAT THE INCOME EARNED AS UNEXPLAINED ENTRY FOR RS.8 39 212/ - HAS ESCAPED ASSESSMENT AND LIABLE TO BE TAXED IN F.Y. 2000-2001 RELEVANT TO A.Y. 2001-2002. 9. THE NOTICE U/S. 148 DATED 28.03.2008 WAS DULY SE RVED ON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S. 147 READ WITH SECTION 144 TREATI NG THE SUM OF RS.8 39 212/- RECEIVED BY THE ASSESSEE ON THE SALE OF SHARES AS UNEXPLAINED MONEY DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE CIT(A) TREATED THE REASONS RECORDED T O BE INVA;OD AND ACCORDINGLY QUASHED THE NOTICE U/S. 148. WE HAVE GONE THROUGH THE PROVISION S OF SECTION 147. THIS SECTION GIVES JURISDICTION TO THE ASSESSING OFFICER TO ASSESS OR RE-ASSESS THE INCOME OF THE ASSESSEE. THIS SECTION STATES AS UNDER : 147. IF THE AO HAS REASON TO BELIEVE THAT ANY INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY A.Y. HE MAY SUBJEC T TO THE PROVISIONS OF SECTIONS 148 TO 153 ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THIS SECTION OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS T HE CASE MAY BE FOR THE A.Y. CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR). PROVIDED THAT WHERE AN ASSESSMENT UNDER SUBSECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTI CE ISSUED UNDER SUB SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YE AR. EXPLANATION 1.- PRODUCTION BEFORE THE ASSESSING OFF ICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DU E DILIGENCE HAVE BEEN DISCOVERED BY THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2- FOR THE PURPOSES OF THIS SECTION TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT NAMELY:- 8 (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DU RING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARG EABLE TO INCOME TAX. (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS DEDUCTION ALLOWANCE OR RELIEF IN THE RETURN. (C) WHERE AN ASSESSMENT HAS BEEN MADE BUT- (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED. THUS IN VIEW OF THE PROVISIONS OF SECTION 147 AND 1 48 ALL THE FOLLOWING CONDITIONS MUST BE SATISFIED FOR A VALID ACTION BEING TAKEN BY THE ASS ESSING OFFICER BEFORE PROCEEDING FOR MAKING THE ASSESSMENT/REASSESSMENT:- A-THE ASSESSING OFFICER MUST HAVE THE REASONS TO BE LIEVE THAT THE ASSESSEE HAS ESCAPED INCOME CHARGEABLE TO TAX. B- THE REASONS TO BELIEVE MUST BE RECORDED BY THE A SSESSING OFFICER PRIOR TO THE ISSUING OF ANY NOTICE TO THE ASSESSEE. C- BEFORE MAKING THE ASSESSMENT THE ASSESSING OFFI CER MUST SERVE NOTICE ON THE ASSESSEE REQUIRING HIM TO FURNISH THE RETURN IN ACC ORDANCE WITH THE PROVISIONS OF SECTION 148(1). 10. THUS FOR APPLICABILITY OF SECTION 147 THE A. O. MUST HAVE REASON TO BELIEVE. THIS IS THE FOUNDATION OF THE PROCEEDINGS TO BE INITIATED U/S 1 47. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICATION TO THINK OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT IT CAN BE SAID TO HAVE A REASON TO HAVE A REASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSE SSMENT. THE WORDS REASON TO BELIEVE 9 CANNOT MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTA INED THE FACTS BY LEGAL EVIDENCE. IT ONLY MEANS THAT THE AO FORMS A BELIEF FROM THE EXAMINATI ON HE MAKES AND INFORMATION THAT HE RECEIVES. IF HE DISCOVERS OR FINDS OR SATISFIES PR IMA-FACIE HIMSELF THAT THE TAXABLE INCOME HAS ESCAPED ASSESSMENT IT WOULD AMOUNT TO SAYING THAT HE HAS REASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. THE JUSTIFICATION FOR HIS BELIEF IS NOT TO BE JUDGED FROM THE STANDARDS OF PROOF REQUIRED FOR COMING TO A FINAL DECISION WHETH ER THE INCOME HAS ESCAPED ASSESSMENT OR NOT. HIS FORMATION OF THE BELIEF IS NOT A JUDICIAL DECIS ION BUT AN ADMINISTRATIVE DECISION. THE DECISION TO INITIATE THE PROCEEDINGS IS NOT TO BE PRECEDED B Y ANY JUDICIAL OR QUASI-JUDICIAL ENQUIRY. AT THIS STAGE HE IS NOT REQUIRED TO GIVE HEARING TO THE AS SESSEE OR TO PROVIDE THE MATERIAL OR INFORMATION IN HIS POSSESSION TO THE ASSESSEE FOR HIS REBUTTAL. REASON TO BELIEVE HAS BEEN THE MATTER OF JUDICIAL SCRUTINY BY THE APEX COURT IN SEVERAL CASE S. IN THE CASE OF CALCUTTA DISCOUNT CO LTD V. ITO 41 ITR 191 (SC) IT WAS OBSERVED THAT IT IS THE DUTY OF THE ASSESSEE TO DISCLOSE ALL THE PRIMARY FACTS WHICH HAVE A BEARING ON THE LIABILITY OF INCOME EARNED BY THE ASSESSEE BEING SUBJECTED TO TAX. IT IS FOR THE AO TO DRAW INFEREN CES FROM THE FACTS AND APPLY THE LAW DETERMINING THE LIABILITY OF THE ASSESSEE. THE ASSESSEE CANNOT DRAW THE CONCLUSIONS DRAWN BY THE AO AND ONCE THE CONCLUSION IS DRAWN AND THE ASSESSMENT ORD ER FRAMED THE AO CANNOT AT A LATER POINT OF TIME FORM A DIFFERENT OPINION BY GIVING A SECOND TH OUGHT TO THE FACTS DISCLOSED BY THE ASSESSEE HOLDING THAT HE COMMITTED AN ERROR IN COMPUTING TAX ABLE INCOME AND REOPEN THE ASSESSMENT U/S 147. DISCOVERY OF NEW AND IMPORTANT MATTERS OR KNO WLEDGE OF FRESH FACTS WHICH WERE NOT PRESENT AT THE TIME OF ORIGINAL ASSESSMENT WOULD CO NSTITUTE A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 1 47. OUR AFORESAID VIEW IS SUPPORTED BY THE FOLLOWING CASES DECIDED BY HONBLE APEX COURT : - I) PHOOL CHAND BAJRANG LAL V. ITO 203 ITR 456 477; II) ALA FIRM V. CIT 189 ITR 285 298; III) INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT 119 ITR 996 1004; AND 10 IV) ITO V. LAKHMANI MEWAL DASS 103 ITR 437 445 THUS REASON TO BELIEVE IS NECESSARY FOR REASSESSIN G OR ASSESSING THE ASSESSEE U/S 147 OF THE IT ACT. REASSESSMENT MEANS THAT THE ASSESSEE HAS ALRE ADY BEEN ASSESSED AND IS BEING ASSESSED AGAIN. ASSESSMENT SIMPLY MEANS THAT THE ASSESSEE H AS NOT ALREADY BEEN ASSESSED EARLIER AND ASSESSED FOR A.Y. FOR THE FIRST TIME. PROVISO TO THIS SECTION IS APPLICABLE IF THE ASSESSMENT HAS BEEN FRAMED U/S 143(3) OR U/S 147 AND ACTION IS TAK EN BY THE AO AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE THE FIRST REQUISITE FOR EXERCISING JURISDICTION UNDER SECTION 147 IS THAT THERE MUST BE THE REASONS TO BELIEVE IN THE CASE OF THE ASSESSEE. RECORDING OF THESE REASONS ARE ALSO NECESSARY BEFOR E ISSUING ANY NOTICE TO THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 148(2). 11. THIS IS A FACT THAT IN THIS CASE NO ASSESSMENT WAS COMPLETED U/S. 143(3). HONBLE APEX COURT IN THE CASE OF CIT VS. RAJESH JHAVERI STOCK B ROKERS 291 ITR 500 HAS SETTLED THE LAW THAT IF THE RETURN IS PROCESSED U/S. 143(1) THE ASSESSMENT CAN BE REOPENED U/S. 147 AND ONLY ONE CONDITION HAS TO BE SATISFIED AS STATED IN THE MAIN PROVISION OF SECTION 147. SINCE THE RETURN WAS PROCESSED U/S. 143(1) EVEN THOUGH THE ASSESSEE HAS SHOWN CAPITAL GAINS EARNED ON THE SALE OF SHARES BUT THE ASSESSING OFFICER HAS NOT EXAMINED THE NATURE OF INCOME. THEREFORE IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS DULY ACCEPTED T HE PROFITS SHOWN BY THE ASSESSEE ON THE SALE OF SHARES. THE TRANSACTION ENTERED INTO BY THE ASSESSE E FOR SALE OF SHARES WERE NOT ACCEPTED BY THE ASSESSING OFFICER AS HE HAS NOT FORMED ANY VIEW ON THESE TRANSACTIONS. THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BASIS THE REASONS AS REPRODUCED HEREINABOVE. IT IS APPARENT THAT THE REASONS TO BELIEVE ARE BASED ON THE INFORMATION AVAILABLE WITH AO THAT M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA PROVIDED ACCOMMODATION ENTRI ES TO THE ASSESSEE. THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.8 39 212/- M/S. AAYUSHI ST OCK BROKERS (P) LTD. AND DEPOSITED THE SAME AMOUNT IN HIS BANK ACCOUNT WITH ANZ GRINDLAYS BANK. ON THE BASIS OF THIS INFORMATION HE 11 WAS HAVING REASON TO BELIEVE THAT THE INCOME OF RS. 8 39 212/- ESCAPED THE ASSESSMENT. IT IS NOT DENIED THAT THE INFORMATION GIVEN IN THE REASON TO BELIEVE DOES NOT BELONG TO THE ASSESSEE. THE INFORMATION THAT THE ASSESSEE HAS RECEIVED THE CHEQ UES/DRAFT FROM M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA RELATE TO THE ASSESSEE. IT IS NOT THE CA SE THAT THE INFORMATION ON WHICH REASONS TO BELIEVE ARE BASED DOES NOT RELATE TO THE ASSESSEE. THE LAW ON THE PROVISIONS OF SECTION 147 IS VERY CLEAR. SECTION 147 AUTHORIZES THE ASSESSING OFFICER TO ASSESS OR RE-ASSESS THE INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT THE INCOME FOR ANY ASSESSMENT ORDER HAS ESCAPED ASSESSMENT AND HAS DULY RECORDED THESE REASONS. THE REASONS TO BELIEVE MUST BE BONA FIDE. THE ASSESSING OFFICER MUST HAVE RELEVANT MATERIAL ON WH ICH A REASONABLE PERSON COULD HAVE FORM THE REQUISITE BELIEF. WHETHER THE MATERIAL CONCLUSIVELY PROVING ESCAPEMENT OF INCOME CANNOT BE DECIDED AT THE STAGE OF FORMATION OF BELIEF. IF TH E MATERIAL DO NOT PROVE THE ESCAPEMENT OF INCOME AND THE ASSESSING OFFICER IS SATISFIED DURIN G THE COURSE OF HEARING THE PROCEEDINGS CAN BE DROPPED OR NO ADDITIONS BE MADE IN THE ASSESSMENT O RDER SO PASSED. THIS SECTION ALSO DOES NOT AUTHORIZE THE ASSESSING OFFICER TO REVIEW THE ASSE SSMENT IN THE GARB OF REOPENING. THE REASONS RECORDED BY THE ASSESSING OFFICER IN THIS CASE CLEA RLY STATE THAT THE ASSESSEE HAS RECEIVED CHEQUES FROM M/S. AYUSHI STOCK BROKERS (P) LTD. AGRA WHO P ROVIDED ACCOMMODATION ENTRIES. THE INVESTIGATION WING HAS CARRIED OUT ENQUIRIES IN MAS S CASES AND IT WAS NOTICED BY THEM THAT THE BROKERS HAVE PROVIDED ACCOMMODATION ENTRIES TO VARI OUS PARTIES. AT THE TIME OF FORMATION OF BELIEVE THE ASSESSING OFFICER IS NOT REQUIRED TO D ISCLOSE THE SOURCE OF THE INFORMATION. THE REASON SHOULD SHOW THE APPLICATION OF THE MIND BY T HE ASSESSING OFFICER. THE INFORMATION AS HAS BEEN POINTED OUT IN THE REASONS TO BELIEVE CANNOT BE REGARDED TO BE A VAGUE IRRATIONAL OR ARBITRARY IN OUR OPINION IN THIS CASE. THE COURT CA NNOT LOOK INTO THE SUFFICIENCY OF REASONS WHICH WEIGHED WITH THE ITO IN COMING TO THE BELIEF THAT T HE INCOME ESCAPED ASSESSMENT. THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE BEARING IN REGARD TO THE MATTER IN 12 WHICH HE IS REQUIRED TO ENTERTAIN A BELIEF BEFORE I SSUING NOTICE U/S. 148. THE EXPRESSION REASON TO BELIEVE DOES NOT MEAN A PURELY SUBJECTIVE SATISFAC TION ON THE PART OF THE ASSESSING OFFICER. THE BELIEF MUST BE HELD FOR GOOD FAITH. IT CANNOT MEREL Y BE A PRETENCE. THIS WAS SO HELD IN THE CASE OF S. NARAYANAPPA AND BROTHERS VS. CIT 63 ITR 219. TH E SUPREME COURT HAS ALSO SETTLED THE LAW IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITO 236 ITR 34 THAT IN DETERMINING WHETHER COMMENCEMENT OF THE RE-ASSESSMENT WAS VALID IT IS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPAR TMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF TIN MANUFACTURI NG CO.(SUPRA) IN OUR OPINION WILL ALSO NOT ASSIST THE ASSESSEE RATHER IT WILL SUPPORT THE CAS E OF THE REVENUE. IN THIS CASE THE CENTRAL EXCISE AUTHORITIES CONDUCTED A SEARCH AGAINST THE ASSESSEE AND WHEN THE INFORMATION WAS GIVEN TO THE INCOME-TAX AUTHORITIES NOTICES FOR RE-ASSESSMENT W ERE ISSUED. THE ASSESSEE WENT BEFORE THE CIT(A) FOR SETTING ASIDE THE REASSESSMENT PROCEEDIN GS WHICH WAS REJECTED. THE ASSESSEE THEN FILED A WRIT PETITION WHICH WAS DISMISSED HOLDING THAT IN THE RE-ASSESSMENT PROCEEDINGS THE BURDEN WAS ON THE REVENUE TO ESTABLISH THAT THERE W AS INCOME WHICH HAS ESCAPED ASSESSMENT. FOR THE PURPOSE OF ASSESSMENT BOTH THE SIDES HAVE RIGHT TO ADDUCE EVIDENCE. THE ASSESSEE HAD BEEN TRYING TO OBSTRUCT ASSESSMENT PROCEEDINGS WHIC H SHOULD BE DISCOURAGED. WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF SHEO NATH SINGH VS. AAC (SUPRA) AND ITO VS. LAKHMANI MEWAL DAS (SUPRA) AS HAVE BEEN VEHEMENTLY RELIED O N BY THE LD. AR. IN BOTH THE DECISIONS IT WAS HELD THAT THE REASONS TO BELIEVE MUST BE THAT O F HONEST AND REASONABLE PERSON BASED ON REASONABLE GROUND. THE ITO MAY ACT ON DIRECT OR CIR CUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION GOSSIP OR RUMOR. THE MATERIAL RELEVANT T O THE REASONS MUST EXIST. THIS IS A FACT THAT THE ASSESSEE HAS RECEIVED SALE CONSIDERATION ON THE SAL E OF THE SHARES FROM THESE BROKERS AS ARE REFERRED TO IN THE REASONS TO BELIEVE. THERE HAD BE EN INVESTIGATION CARRIED OUT IN THE PLACES OF THE 13 BROKERS WHO HAVE ACCEPTED THAT THEY HAVE PROVIDED A CCOMMODATION ENTRIES. THE ASSESSEE WAS ALSO ONE OF THE PERSONS WHO RECEIVED CHEQUES/DRAFTS . IT IS NOT DENIED THAT THE ASSESSEE HAS NOT RECEIVED THE DRAFTS FROM THESE BROKERS. THEREFORE THE REASONS IN OUR OPINION ARE THAT OF AN HONEST PERSON AND WERE RELEVANT TO THE TRANSACTIONS CARRIE D OUT BY THE ASSESSEE. THESE DECISIONS IN OUR OPINION WILL NOT ASSIST THE ASSESSEE BUT SUPPORT TH E CASE OF THE REVENUE. 12. IN THE CASE OF BAIJNATH AGARWAL VS. ACIT 129 T TJ (129)(TM)(AGRA) IT HAS NOWHERE BEEN MENTIONED THAT THE NOTICE U/S. 148 WAS QUASHED . THE HEAD NOTES STATE THAT THE THIRD MEMBER HELD THE TRANSACTIONS OF THE SHARES TO BE GE NUINE AND TOOK THE VIEW THAT THE INCOME DISCLOSED BY THE ASSESSEE IS CHARGEABLE TO TAX AS C APITAL GAIN AND CANNOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES. THIS DECISION IN OUR OPIN ION WILL NOT BE APPLICABLE. IN THE CASE OF ITO VS. SMT. BIBI RANI BANSAL 133 TTJ 394 (AGRA)(T.M.) ALSO WE NOTED THAT THE ISSUE BEFORE THE THIRD MEMBER AS APPEARING FROM THE HEAD NOTES DOES NOT RELATE TO THE VALIDITY OF REASONS TO BELIEVE. THE THIRD MEMBER HELD THAT THE SALE CONSID ERATION DECLARED BY THE ASSESSEE IS ASSESSABLE AS CAPITAL GAINS AND NOT AS INCOME FROM UNDISCLOSED SOURCES. THIS DECISION IN OUR OPINION WILL ALSO NOT ASSIST THE ASSESSEE ON THE LEGALITY OF THE PROCEEDINGS U/S. 147. IN THE CASE OF ASHA JOHN DEVINATHAN & ORS. VS. ADDL. CIT (SUPRA) THE HIGH COURT HAS ALSO ACCEPTED THAT THE ASSUMPTION OF THE JURISDICTION HAS TO BE ESTABLISHED ON THE RE LEVANT FACTS. THIS DECISION WILL ALSO NOT HELP THE ASSESSEE AS IN THE CASE BEFORE US THE ASSESSING O FFICER WAS HAVING THE PRIMA FACIE MATERIAL TO HAVE THE REASONS TO BELIEVE. THE DECISION OF APEX C OURT IN THE CASE OF JOHRI LAL (HUF) VS. CIT (SUPRA) SHEO NATH SINGH VS. AAC (SUPRA) AND AND GA NGA SARAN & SONS (P) LTD. VS. ITO (SUPRA) ALSO IN OUR OPINION WILL NOT ASSIST THE ASSESSEE AS IN THE CASE OF THE ASSESSEE THE ASSESSING OFFICER WHILE RECORDING THE REASONS HAS THE RELEVAN T MATERIAL TO FORM THE BELIEF FROM WHICH A PERSON OF ORDINARY PRUDENCE COULD FORM AS HELD BY U S IN EARLIER PARAGRAPH. IN THE CASE OF STATE 14 BANK OF SAURASHTRA VS. ITO (SUPRA) WE NOTED THAT T HE TRIBUNAL HAS HELD THAT THE ITO HAS TO RECORD THE REASONS AND NOT MERELY STATES THE WORD INFORMATION. IN THAT CASE THE REASONS RECORDED STATE AS UNDER : I HAVE INFORMATION IN MY POSSESSION THAT THE ASSES SEE COMPANY HAS NOT DISCLOSED FULL PARTICULARS REGARDIN G WRITING OFF BAD DEBTS AND HENCE THERE IS AN UNDER ASSESSMENT. I THEREFORE CONSIDER THIS CASE AS A FIT ONE TO REOPEN U/S. 47(B ). 13. IN THIS CASE THE TRIBUNAL HELD THE ASSESSMENT NOT TO BE JUSTIFIED AS THE ASSESSING OFFICER HAS NOT REFERRED TO THE INCOME WHICH IS GOING TO B E ESCAPED. THE REASONS RECORDED IN THE CASE BEFORE US CLEARLY SPEAK OF ESCAPEMENT OF INCOME I.E . THE AMOUNT RECEIVED FROM THE SHARE BROKERS AND ALSO MENTIONED THE NAME OF BROKERS FROM WHOM TH E ASSESSEE HAS RECEIVED THE CHEQUES. THIS DECISION HAS BEEN REFERRED OUT OF CONTEXT IN OUR OP INION. THE DECISION IN THE CASE OF DUDHANATH PRASAD GUPTA VS. ITO (SUPRA) WILL ALSO NOT ASSIST T HE ASSESSEE AS IN THE CASE OF ASSESSEE THE ASSESSING OFFICER IN OUR OPINION WAS HAVING THE R ELEVANT INFORMATION RELATING TO THE ASSESSEE. IN THE CASE OF UNITED ELECTRICAL COMPANY (P) LTD. VS. CIT(SUPRA) WE NOTED THAT THE HIGH COURT HELD THE ASSESSING OFFICER MUST HAVE TANGIBLE MATER IAL FOR THE FORMATION OF OPINION FOR INITIATION OF ACTION U/S. 147 OF THE ACT. THIS DECISION LAYS D OWN THAT THERE SHOULD BE RATIONAL NEXUS OR RELEVANT BEARING ON THE REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THIS DECISION IN OUR OPINION WILL NOT ASSIST THE ASSESSEE. IN THE CASE OF ASSESSEE THERE IS NO DISPUTE THAT THE ASSESSEE HAS RECEIVED CHEQUE ON THE SALE OF THE SHA RES FROM M/S. AAYUSHI STOCK BROKERS (P) LTD. AGRA BRANDED TO BE THE SALE OF THE SHARES. IT IS NO T A CASE WHETHER THE ASSESSEE HAS RECEIVED THE LOAN AND REFUNDED THE SAME. THE PROFIT ARISING ON T HE SALE OF SHARES REPRESENTS THE INCOME FOR ESCAPEMENT OF WHICH THE ASSESSING OFFICER HAS REASO N TO BELIEVE. IN THE CASE OF CIT VS. PRADEEP KUMAR GUPTA (SUPRA) THE HIGH COURT HAS CONFIRMED T HE ORDER OF TRIBUNAL HOLDING THE RE- ASSESSMENT TO BE INVALID. IN THIS CASE WE NOTED TH AT THE NOTICE FOR ESCAPEMENT OF INCOME WAS 15 ISSUED ON THE BASIS OF THE STATEMENT OF SHRI ANAND PRAKASH. THE ASSESSEE HAD ASKED FOR CROSS EXAMINATION OF SHRI ANAND PRAKASH WHICH THE REVENU E COULD NOT PRODUCE. IN THE CASE BEFORE US THE ASSESSING OFFICER HAS NOT RELIED ON THE REASONS RECORDED ON THE STATEMENT OF THE THIRD PARTY. UNDER THESE CIRCUMSTANCES IN OUR OPINION THIS DECI SION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. GULATI INDUSTRIAL FABRICATION (P) LTD. (SUPRA) ALSO IN OUR OPINION W ILL NOT ASSIST THE ASSESSEE. IN THIS CASE ALSO THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF THE ST ATEMENT OF ONE MR. R. ULTIMATELY THE COURT HELD NO SUBSTANTIAL QUESTION OF LAW ARISES. THE DEC ISION OF M.P. HIGH COURT IN THE CASE OF ARJUN SINGH VS. DIT (SUPRA) ALSO IN OUR OPINION WILL NO T ASSIST THE ASSESSEE AS IN THE CASE OF THE ASSESSEE THE REASONS NOWHERE SPEAKS OF BORROWED SA TISFACTION ON THE PART OF THE ASSESSING OFFICER. THE DECISION OF MRS. VINEETA JAIN VS. ITO (SUPRA) DELHI BENCH OF ITAT IS ALSO NOT APPLICABLE AS IN THAT CASE THE ASSESSING OFFICER M ENTIONED THAT THE DDIT BELIEVED THAT THE TRANSACTION OF CAPITAL GAIN IS BOGUS. THAT IS NOT T HE CASE OF THE ASSESSEE. EVEN THE TRIBUNAL HAS NOT CONSIDERED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PURSHOTTAM DASS BANGUR & ANOTHER 224 ITR 362 (SC). THE CASES AS HAVE BEEN R ELIED BY THE LD. AR WHICH RELATE TO AGRA BENCH MUST HAVE BEEN DECIDED ON THERE OWN FACTS. TH E COPY OF THOSE ORDERS OF APPEAL NUMBERS WERE NOT PROVIDED BY THE LD. AR SO AS TO ASCERTAIN HOW THE REASONS HAVE BEEN RECORDED BY THE ASSESSING OFFICER. IT IS ALSO NOT CLEAR WHETHER T HE NOTICE ISSUED WAS QUASHED OR PROCEEDINGS WERE QUASHED WHETHER THE REASONS TO BELIEVE WERE H ELD TO BE BONAFIDE OR NOT WHETHER THE ORIGINAL ASSESSMENT IN THOSE CASES WAS COMPLETED U/ S. 143(3) OR NOT. UNDER THESE FACTS THESE DECISIONS IN OUR OPINION CANNOT BE RELEVANT IN TH E CASE OF THE ASSESSEE. THE ASSESSMENT FRAMED IN RESPONSE TO PROCEEDINGS U/S 147 CAN BE QUASHED U NDER BOTH THE CIRCUMSTANCES A- WHEN THE INITIATION OF THE PROCEEDINGS ARE NOT VALID ; B- WH EN EVEN THOUGH THE INITIATION OF THE PROCEEDINGS ARE VALID BUT THERE IS NO ESCAPEMENT OF INCOME. WE HAVE ALSO GONE THROUGH THE DECISION OF ACIT 16 VS. KRISHNA MURARI LAL AGARWAL (SUPRA) ON WHICH THE LD. AR HAS HEAVILY RELIED AND CONTENDED THAT THIS DECISION IS BASED ON IDENTICAL FACTS AND THE TRIBUNAL HAS CONFIRMED THE ACTION OF THE CIT(A) QUASHING THE NOTICE ISSUED U/S. 147. IN THIS DECISION WE NOTED THAT THE REASONS RECORDED ARE DIFFERENTLY WORDED. THE REASONS REFERRED TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING. THE FACTS IN THE REASONS ARE ALSO NOT THE SAM E. EVEN THE PARTIES ARE ALSO DIFFERENT. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF I TO VS. PURSHOTTAM DAS BANGUR & ANOTHER 224 ITR 362(SC) AND THAT OF JURISDICTION HIGH COURT IN THE CASE OF BRIJ MOHAN AGARWAL VS. CIT 268 ITR 400(ALL) WERE NOT BROUGHT TO THE KNOWLEDGE OF THE TRIBUNAL. THE DECISION OF SUPREME COURT AND THAT OF JURISDICTION HIGH COURT ARE BINDI NG ON THIS BENCH OF TRIBUNAL. THUS THIS DECISION ALSO IN OUR OPINION WILL NOT HELP THE ASSESSEE. IN THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT LUCKNOW VS. SMT. KIRAN GARG IN INCO ME-TAX APPEAL NO.161 OF 2005 WE NOTED THAT THE HIGH COURT CONFIRMED THE ORDER OF THE TRIB UNAL. IN THIS CASE WE NOTED THAT THE HIGH COURT HAS OBSERVED THAT IT IS NOT THE CASE WHETHER THE REPORT OF THE ADI WAS NOT CONSIDERED BY THE TRIBUNAL. IN RESPECT OF THE REQUEST MADE BY THE AO THE ADI DID NOT ACT AND DID NOT CARRY THE CROSS EXAMINATION OF THE WITNESS. THEREFORE THE NO TICE U/S. 148 WAS HELD TO BE INVALID. THE REASONS RECORDED ARE NOT AVAILABLE IN THE ORDER SO AS TO ASCERTAIN WHETHER THE REASONS RECORDED WERE ON THE SIMILAR LINE AS HAS BEEN RECORDED IN TH E CASE OF THE ASSESSEE. 14. WE NOTED RECENTLY DELHI HIGH COURT IN THE CASE OF AGR INVESTMENT LTD. VS. ADDL. CIT 333 ITR 146 DEALT WITH THE SIMILAR ISSUE FOR WHICH THE LD. AR WAS DULY MADE AWARE OF DURING THE COURSE OF HEARING. IN THIS CASE WE NOTED THAT THE DELHI HIGH COURT HAS TAKEN THE VIEW THAT THE REASONS RECORDED BY THE ASSESSING OFFICER AMPLY DEM ONSTRATE THAT THE INCOME HAS ESCAPED ASSESSMENT AND THEY HELD THAT THERE WAS APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. 17 DELHI HIGH COURT DID NOT QUASH THE NOTICE ISSUED U/ S. 148. WHILE HOLDING SO THE DELHI HIGH COURT HAS DISCUSSED VARIOUS DECISIONS ON THIS ISSUE AS UNDER : THE QUESTIONS THAT EMERGE FOR CONSIDERATION ARE WH ETHER THERE HAS BEEN APPLICATION OF MIND OR CHANGE OF OPINION WHETHER THE OBJECTIONS H AVE BEEN PROPERLY DEALT WITH AND WHETHER THERE IS A MERE SUSPICION OR REASON TO BELIEVE. REG ARD BEING HAD TO THE AFORESAID ISSUES WE THINK IT APPROPRIATE TO REFER TO CERTAIN CITATIONS IN THE FIELD. IN RAYMOND WOOLLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) WHILE DEALING WITH THE VALIDITY OF COMMENCEMENT OF REASSESSMENT PROCEEDING S UNDER SECTION 147 OF THE ACT THE APEX COURT HAS HELD THAT THERE IS PRIMA FACIE SOME MATER IAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNE SS OF THE MATERIAL IS NOT A THING TO BE CON- SIDERED AT THAT STAGE. THE HIGH COURT OF GUJARAT IN PRAFUL CHUNILAL PATEL V. M. J. MAKWANA ASST. CIT [1999] 236L1R 832 HAS OPINED THAT IN TERMS OF THE P ROVISION CONTAINED IN SECTION 147 THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HA S A CAUSE OR JUSTIFICATION TO THINK OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT HE CAN BE SAID TO HAVE A REASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. THE WORDS 'REASON TO BELIEVE' CANNOT MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASC ERTAINED THE FACTS BY LEGAL EVIDENCE. THEY ONLY MEAN THAT HE FORMS A BELIEF FROM THE EXAM INATION HE MAKES AND IF HE LIKES FROM ANY INFORMATION THAT HE RECEIVES. IF HE DISCOVERS O R FINDS OR SATISFIES HIMSELF THAT THE TAXABLE INCOME HAS ESCAPED ASSESSMENT IT WOULD AMO UNT TO SAYING THAT HE HAD REASON TO BELIEVE THAT SUCH INCOME HAD ESCAPED ASSESSMENT. TH E JUSTIFICATION FOR HIS BELIEF IS NOT TO BE JUDGED FROM THE STANDARDS OF PROOF REQUIRED FOR COMING TO A FINAL DECISION. A BELIEF THOUGH JUSTIFIED FOR THE PURPOSE OF INITIATION OF T HE PROCEEDINGS UNDER SECTION 147 MAY ULTIMATELY STAND ALTERED AFTER THE HEARING AND WHIL E REACHING THE FINAL CONCLUSION ON THE BASIS OF THE INTERVENING ENQUIRY. AT THE STAGE WHER E HE FINDS A CAUSE OR JUSTIFICATION TO BELIEVE THAT SUCH INCOME HAS ESCAPED ASSESSMENT TH E ASSESSING OFFICER IS NOT REQUIRED TO BASE HIS BELIEF ON ANY FINAL ADJUDICATION OF THE MA TTER. IN GANGA SARAN AND SONS P. LTD. V. ITO [1981] 130 L1R 1 (SC) IT HAS BEEN HELD THUS (PAGE 11) : 'IT IS WELL SETTLED AS A RESULT OF SEVERAL DECISION S OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SATISFIED BEFORE THE INCOME-TAX OFFICER CAN ASSUME JURISDICTION TO ISSUE NOTICE UNDER SECTION 147(A). FIRST HE MUS T HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND SECONDLY HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IF EITHER OF THESE CONDITIONS IS NO T FULFILLED THE NOTICE ISSUED BY THE INCOME-TAX OFFICER WOULD BE WITHOUT JURISDICTION. T HE IMPORTANT WORDS UNDER SECTION 147(A) ARE 'HAS REASON TO BELIEVE' AND THES E WORDS ARE STRONGER THAN THE WORDS 'IS SATISFIED'. THE BELIEF ENTERTAINED BY THE INCOME-TAX OFFICER MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR I N OTHER WORDS IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. THE COU RT OF COURSE CANNOT 18 INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE INCOME-TAX OFFICER IN COMING TO THE BELIEF BUT THE COURT CAN CERTAINLY- EXAMINE WHETHER THE REASONS ARE RELEVANT AND 'HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BEL IEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147(A). IT THERE IS NO RATIONAL AND I NTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF SO THAT ON SUCH REASONS N O ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERTAIN THE BELIEF THE CONCLUSION WOULD BE INESCAPABLE THAT THE INCOME-TAX OFFICER COULD NOT H AVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSE SSMENT AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION OR FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE NOTICE I SSUED BY HIM WOULD BE LIABLE TO BE STRUCK DOWN AS INVALID.' IN BIRLA VXL LTD. VS. ASST. CIT (1996) 217 ITR 1 A DIVISION BENCH OF THE GUJARAT HIGH COURT HAS OPINED THUS (PAGE 3) : 'EXPLANATION 2 TO SECTION 147 OF THE ACT AS APPENDED TO THE NEW LY SUBSTITUTED SECTION 147 MAKES CERTAIN PROVISIONS WHERE IN CERTAIN CIR CUMSTANCES THE INCOME IS DEEMED TO HAVE ESCAPED ASSESSMENT GIVING JURISDICTION TO THE ASSESSING OFFICER TO ACT UNDER THE SAID PROVISION. ANOTHER REQUIREMENT WHICH IS NECESSARY F OR ASSUMING JURISDICTION IS THAT THE ASSESSING OFFICER SHALL RECORD HIS REASONS FOR ISSU ING NOTICE. THIS REQUIREMENT NECESSARILY POSTULATES THAT BEFORE THE ASSESSING OF FICER IS SATISFIED TO ACT UNDER THE AFORESAID PROVISIONS HE MUST PUT IN WRITING AS TO WHY IN HIS OPINION OR WHY HE HOLDS BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. 'WHY' FO R HOLDING SUCH BELIEF MUST BE REFLECTED FROM THE RECORD OF REASONS MADE BY THE AS SESSING OFFICER. IN A CASE WHERE THE ASSESSING OFFICER HOLDS THE OPINION THAT BECAUSE OF EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE INCOME HAS ESCAPED ASSESSMENT THE REASON S RECORDED BY THE ASSESSING OFFICER MUST DISCLOSE THAT BY WHAT PROCESS OF REASONING HE HOLDS SUCH A BELIEF THAT EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN COMPUTED IN THE ORIGINAL ASSESSMENT. MERELY SAYING THAT EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS B EEN COMPUTED WITHOUT DISCLOSING REASONS WHICH LED THE ASSESSING AUTHORITY TO HOLD S UCH BELIEF IN OUR OPINION DOES NOT CONFER JURISDICTION ON THE ASSESSING OFFICER TO TAK E ACTION UNDER SECTIONS 147 AND 148 OF THE ACT. WE ARE ALSO OF THE OPINION THAT HOWSOEVER WIDE THE SCOPE FOR TAKING ACTION UNDER SECTION 148 OF THE ACT BE IT DOES NOT CONFER JURISDICTION ON A CHANGE OF OPINION ON THE INTERPRETATION OF A PARTICULAR PROVISION FROM THAT EARLIER ADOPTED BY T HE ASSESSING AUTHORITY. FOR COMING TO THE CONCLUSION WHETHER THERE HAS BEEN EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR THERE HAS BEEN UNDER ASSESSMENT AT A LOWER RATE OR FOR APPLYI NG THE OTHER PROVISIONS OF EXPLANATION 2 THERE MUST BE MATERIAL THAT HAS NEXUS TO HOLD OP INION CONTRARY TO WHAT HAS BEEN EXPRESSED EARLIER. THE SCOPE OF SECTION 147 OF THE ACT IS NOT FOR REVIEWING ITS EARLIER ORDER S UO MOTU IRRESPECTIVE OF THERE BEING ANY MATERIAL TO CO ME TO A DIFFERENT CONCLUSION APART FROM JUST HAVING SECOND THOUGHTS ABOUT THE INFERENCES DRAWN E ARLIER. (EMPHASIS ADDED) IN SHEO NARAIN ]AISWAL V. ITO [1989J 176 I1R 352 (PATNA) IT WAS HELD THAT REASSE SSMENT PROCEEDINGS CAN BE INITIATED UNDER SECTION 147(A) O F THE ACT IF THE INCOME-TAX OFFICER HAS REASON TO BELIEVE THAT THERE HAS BEEN ESCAPEMENT OF INCOME AND THAT THE SAID INCOME ESCAPED ASSESSMENT BY REASON OF THE OMISSION OR FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT FOR THAT PERIOD OR YEAR. BOTH CONDITIONS ARE CONDITIONS PRECEDENT FOR THE ASSUMPTION OF JURISDICTION UNDER SECTION 148 OF THE ACT. 19 IN PHOOL CHAND BAJRANG LAL V. ITO [1993J 203 I1R 456 THE APEX COURT HAS HELD THUS (PAGE 477) : FROM A COMBINED REVIEW OF THE JUDGMENTS OF THIS CO URT IT FOLLOWS THAT AN INCOME-TAX OFFICER ACQUIRES JURISDICTION TO REOPEN AN ASSESSME NT UNDER SECTION 147(A) READ WITH SECTION 148 OF THE INCOME-TAX ACT 1961 ONLY IF ON THE BASIS OF SPECIFIC RELIABLE AND RELEVANT INFORMATION COMING TO HIS POSSESSION SUBSE QUENTLY HE HAS REASONS WHICH HE MUST RECORD TO BELIEVE THAT BY REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A TRUE AND FULL DISCLOSURE OF ALL MATERIAL FAC TS NECESSARY FOR HIS ASSESSMENT DURING THE CONCLUDED ASSESSMENT PROCEEDINGS ANY PART OF H IS INCOME PROFITS OR GAINS CHARGEABLE TO INCOME-TAX HAS ESCAPED ASSESSMENT. HE MAY START REASSESSMENT PROCEEDINGS EITHER BECAUSE SOME FRESH FACTS HAD COME TO LIGHT WHICH WE RE NOT PREVIOUSLY DISCLOSED OR SOME INFORMATION WITH REGARD TO THE FACTS PREVIOUSLY DIS CLOSED COMES INTO HIS POSSESSION WHICH TENDS TO EXPOSE THE UNTRUTHFULNESS OF THOSE FACTS. IN SUCH SITUATIONS IT IS NOT A CASE OF MERE CHANGE OF OPINION OR THE DRAWING OF A DIFFERENT INF ERENCE FROM THE SAME FACTS AS WERE EARLIER AVAILABLE BUT ACTING ON FRESH INFORMATION. SINCE THE BELIEF IS THAT OF THE INCOME-TAX OFFICER THE SUFFICIENCY OF REASONS FOR FORMING THE BELIEF IS NOT FOR THE COURT TO JUDGE BUT IT IS OPE N TO AN ASSESSEE TO ESTABLISH THAT THERE IN FACT EXISTED NO BELIEF I OR THAT THE BELIEF WAS NOT AT ALL A BONA FIDE ONE OR WAS BASED ON VAGUE IRRELEVANT AND NON- SPECIFIC INFORMATION. TO THAT LIMITED EXTENT THE COURT MAY LOOK INTO THE CONCLUSION ARRIVED AT BY THE INCOME-TAX OFFICER AND EXAMINED WHETHER THERE WAS ANY MATERIAL AVAILABLE ON THE REC ORD FROM WHICH THE REQUISITE BELIEF COULD BE FORMED BY THE INCOME-TAX OFFICER AND FURTH ER WHETHER THAT MATERIAL HAD ANY RATIONAL CONNECTION. OR A LIVE LINK FOR THE FORMATI ON OF THE REQUISITE BELIEF ... ( EMPHASISE SUPPLIED)) IN ANANT KUMAR SAHARIA V. CIT [1998] 232 ITR 533 (GAUHATI) IT WAS HELD AS FOLLOWS (PAGE :539) : 'THE BELIEF IS THAT OF THE ASSESSING OFFICER AND TH E RELIABILITY OR CREDIBILITY OR FOR THAT MATTER THE WEIGHT THAT WAS ATTACHED TO THE MATERIALS NATURALLY DEPENDS ON THE JUDGMENT OF THE ASSESSING OFFICER. THIS COURT IN EXERCISE OF POWER UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIALS. AFTER ALL THE ASSESSING OFFICER ALONE IS ENTRUSTED TO ADMINISTER THE IMPUGNED ACT AND IF THERE IS PRIMA FACIE MATERIAL A T THE DISPOSAL OF THE ASSESSING OFFICER THAT THE INCOME CHARGEABLE TO INC OME-TAX ESCAPED ASSESSMENT THIS COURT IN EXERCISE OF POWER UNDER AR TICLE 226 OF THE CONSTITUTION OF INDIA SHOULD REFRAIN FROM EXERCISIN G THE POWER. IN THE INSTANT ALSO THE CASE OF THE PETITIONER WAS FAIRLY CONSIDE RED AND THEREAFTER THE ABOVE DECISION IS TAKEN.' (UNDERLINING IS OURS) IN BOMBAYPHARMA PRODUCTS V. ITO (1999] 237 ITR 614 (MP) IT WAS HELD AS FOLLOWS (P AGE 616) : 'IT IS ALSO ESTABLISHED THAT THE NOTICE ISSUED UN DER SECTION 148 OF . ''. THE ACT SHOULD FOLLOW THE REASONS RECORDED BY THE INCOME-TAX OFFIC ER FOR REOPENING OF THE ASSESSMENT AND SUCH REASONS MUST HAVE A MATERIAL BEARING ON TH E QUESTION OF ESCAPEMENT OF INCOME BY THE ASSESSEE FROM ASSESSMENT BECAUSE OF HIS FAIL URE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. WHETHER SUCH REASONS ARE SUFFICIENT OR NOT IS NOT A MATTER TO BE DECIDED BY 20 THE COURT. BUT THE EXISTENCE OF THE BELIEF IS SUBJE CT TO SCRUTINY IF THE ASSESSEE SHOWS CIRCUMSTANCES THAT THERE WAS NO MATERIAL BEFORE THE INCOME-TAX OFFICER T O BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT.' (EMPHASIS ADDED) IN H. A. NANJI AND CO. V. ITO [1979] 120 ITR 593 (CAL) IT HAS BEEN HELD THAT AT THE TIME OF ISSUE OF NOTICE OF THE REASSESSMENT IT IS NOT INCUMBENT ON THE INCOME-TAX OFFICER TO COME TO A FINDING THAT INCOME HAS ESCAPED ASSESS MENT BY REASON OF THE OMISSION OR FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT HAS BEEN FURTHER HELD THAT THE BELIE F WHICH THE INCOME-TAX OFFICER ENTERTAINS AT THAT STAGE IS A TENTATIVE BELIEF ON T HE BASIS OF THE MATERIALS BEFORE HIM WHICH HAVE TO BE EXAMINED AND SCRUTINISED ON SUCH EVIDENC E AS MAY BE AVAILABLE IN THE PROCEEDINGS FOR REASSESSMENT. THE DIVISION BENCH HE LD THAT THERE MUST BE SOME GROUNDS FOR THE REASONABLE BELIEF THAT THERE HAS BEEN A NON DISCLOSURE OR OMISSION TO FILE A TRUE OR CORRECT RETURN BY THE ASSESSEE RESULTING IN ESCAPEM ENT OF ASSESSMENT OR IN UNDERASSESSMENT. SUCH BELIEF MUST BE IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE OR CHANGE OF OPINION ON INFERENTIAL FACTS OR FACTS EXT RANEOUS OR IRRELEVANT TO THE ISSUE AND THE MATERIAL ON WHICH THE BELIEF IS BASED MUST HAVE A RATIONAL CONNECTION OR LIVE LINK OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. IN N. D. BHATT LAC OF I. T. V. I. B. M. WORLD TRADE CORPORATION [1995] 216 ITR 811 (BORN) IT HAS BEEN HELD THUS (PAGE 823) : 'IT IS ALSO WELL-SETTLED THAT THE REASONS FOR REOPE NING ARE REQUIRED TO BE RECORDED BY THE ASSESSING AUTHORITY BEFORE ISSUING ANY NOTICE UNDER SECTION 148 BY VIRTUE OF THE PROVISIONS OF SECTION 148(2) AT THE RELEVANT TIME. ONLY THE REASON SO RECORDED CAN BE LOOKED AT FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED UNDER SECTION 148.' IN HINDUSTAN LEVER LTD. V. R. B. WADKAR ASST. CIT (NO.1) [2004] 268 ITR 332 (BORN) A DIVISION BENCH HAS OPINED THUS (PAGE 338) : ' ... THE REASONS ARE REQUIRED TO BE READ AS THEY W ERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE . NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DR AWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO DISCLO SE AND OPEN HIS MIND THROUGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HI S REASONS. IT IS FOR THE ASSESSING OFFICER TO REACH TO THE CONCLUSION AS TO WHETHER THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. I T IS FOR THE ASSESSING OFFICER TO FORM HIS OPINION. IT IS FOR HIM TO PUT HIS OPINI ON ON RECORD IN BLACK AND WHITE. THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOU S AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCL OSE HIS MIND. REASONS ARE THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND SHOULD NOT KEEP THE ASSESSE E GUESSING FOR THE REASONS. REASONS PROVIDE THE LINK BETWEEN CONCLUSION AND EVI DENCE. THE REASONS RECORDED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICER I N THE EVENT OF CHALLENGE TO THE REASONS MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY 21 THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSME NT OF THAT ASSESSMENT YEAR SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CO NCLUDED ASSESSMENT.' (UNDERLINING IS OURS) IN ASST. CIT V. RAJESH JHAVERI STOCK BROKERS P. LTD. [2007] 291 ITR 500 (SC) IT HAS BEEN RULED OUT(PAGE 511) : 'SECTION 147 AUTHORISES AND PERMITS THE ASSESSING O FFICER TO ASSESS OR RE- ASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WOR D REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATI ON. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT IT CAN BE SAID TO HAVE REASON TO BELIEV E THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ T O MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED- THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE 'ASSESSING OFFIC ER IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WI TH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. V. ITO [1991] 191 ITR 662 FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME ) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. A T THAT STAGE THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS AT THE INITIATION STAGE WHAT IS REQUIRED IS 'REASON TO BELIEVE' BUT NOT THE EST ABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FO RMED A REQUISITE BELIEF WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEME NT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BEL IEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION. (EM PHASIS SUPPLIED ) IN THIS CONTEXT WE MAY REFER WITH PROFIT TO A DIVI SION BENCH DECISION OF THIS COURT IN SFIL STOCK BROKING LTD. [2010] 325 ITR 285 WHEREIN THE BENCH WAS DEALING WITH THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE BENCH REPRODUCED THE INITIAL ISSUANCE OF NOTICE AND THEREAFTER REFERRED TO THE REASONS FOR ISSUE OF NOTICE UNDER SECTION 148 WHICH WAS PROVIDED TO THE ASSESSEE. THEREAFTER THE BENCH REFERRED TO THE DECISIONS IN CIT V. ATUL JAIN [2008] 299 ITR 383 (DELHI) ASST. CIT V. RAJESH JHAVERI STOCK BROK ERS P. LTD. [2007] 291 ITR 500 (SC) JAY BHARAT MARUTI LTD. VS. CIT [2010] 324 ITR 289; 223 CTR 269 (DEL) AND CIT V. BATRA BHATTA CO. [2010] 321 ITR 52 6; 174 TAXMAN 444(DELHI) AND EVENTUALLY HELD THUS (PAGE 290): IN THE PRESENT CASE WE FIND THAT THE FIRST SENTENC E OF THE SO-CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE I NFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATI ON). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SAME DEPU TY DIRECTOR OF INCOME- TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISES OF A DIRECTION BY THE ADDI TIONAL COMMISSIONER OF INCOME-TAX TO INITIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. THESE THREE SENTEN CES ARE FOLLOWED BY THE 22 FOLLOWING SENTENCE WHICH IS THE CONCLUDING PORTION OF THE SO-CALLED REASONS : THUS I HAVE SUFFICIENT INFORMATION IN MY POSSESSI ON TO ISSUE NOTICE UNDER SECTION 148 IN THE CASE OF M/S. SFIL STOCK BROKING LTD. ON THE BASIS OF REASONS RECORDED AS AB OVE. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSING OFFI CER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148. WE AR E AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PART OF TH E BEGINNING PARAGRAPH OF THE SO- CALLED REASONS ARE MERE DIRECTIONS. FROM THE SO-CAL LED REASONS IT IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF T HAT ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM INCOME HAD ESCAPED ASSESSM ENT. CONSEQUENTLY WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECTION ON FACTS . THE LAW IS WELL SETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR OUR CO NSIDERATION.(EMPHASIS IS OURS) AT THIS JUNCTURE IT IS PROFITABLE TO REFER TO THE AUTHORITY IN GKN DRIVE SHAFTS (INDIA) LTD. V. ITO [2003} 259 ITR 19 (SC) ; [2003] 179 ITR 11 (SC )WHEREIN THEIR LORDSHIPS OF THE APEX COURT HAVE HELD THUS (PAGE 20 ) ; 'WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER UNDER CHALLENGE. HOWEVER WE CLARIFY THAT WHEN A NOTICE UNDER SECTION 14 OF THE INCOME-TAX ACT IS ISSUED THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE A RETURN AND IF HE SO DESIRES TO SEEK REASONS FOR ISSUING N OTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASON ABLE TIME. ON RECEIPT OF REASONS THE NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND I DISPOSE OF THE SAM E BY PASSING A SPEAKING ORDER. IN THE INSTANT CASE AS THE REASONS HAVE BEE N DISCLOSED IN THESE PROCEEDINGS THE ASSESSING OFFICER HAS TO DISPOSE O F THE OBJECTIONS IF FILED BY PASSING A SPEAKING ORDER BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVE SAID FIVE ASSESSMENT YEARS. IN SARTHAK SECURITIES CO. P. LTD. VS. ITO (WRIT PE TITION NO.6087 OF 2010 DECIDED ON OCTOBER 18 2010)(2010) 329 ITR 110 (DELHI) A D IVISION BENCH OF THIS COURT AFTER REPRODUCING SECTION 147 OF THE ACT AND RELYING ON C ERTAIN DECISIONS IN THE FIELD EXPRESSED THE VIEW AS FOLLOWS (PAGE 122): THE OBTAINING FACTUAL MATRIX HAS TO BE TESTED ON T HE ANVIL OF THE AFORESAID PRONOUNCEMENT OF LAW. IN THE CASE AT HAND AS IS EV INCIBLE THE ASSESSING OFFICER WAS AWARE OF THE EXISTENCE OF FOUR COMPANIE S WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORD ERS CLEARLY EXPOSIT THAT THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATI ON BY THE INVESTIGATION WING AND THERE IS NO MENTION THAT THESE COMPANIES A RE FICTITIOUS COMPANIES. NEITHER THE REASONS IN THE NOTICE NOR T HE COMMUNICATION 23 PROVIDING REASONS REMOTELY INDICATE INDEPENDENT APP LICATION OF MIND. TRUE IT IS AT THAT STAGE IT IS NOT NECESSARY TO HA VE ESTABLISHED FACT OF ESCAPEMENT OF INCOME BUT WHAT IS NECESSARY IS THAT THERE IS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FO RMED THE REQUISITE BELIEF. TO ELABORATE THE CONCLUSIVE PROOF IS NOT GE RMANE AT THIS STAGE BUT THE FORMATION OF BELIEF MUST BE ON THE BASE OR FOUN DATION OR PLATFORM OF PRUDENCE WHICH A REASONABLE IS REQUIRED TO APPLY. AS IS MANIFEST FROM THE PERUSAL OF THE SUPPLY OF REASONS AND THE ORDER OF R EJECTION OF OBJECTION THE NAMES OF THE COMPANIES WERE AVAILABLE WITH THE AUTH ORITY. THEIR EXISTENCE IS NOT DISPUTED. WHAT IS MENTIONED IS THAT THESE CO MPANIES WERE USED AS CONDUITS. IN THAT VIEW OF THE MATTER THE PRINCIPLE LAID DOWN IN CIT V. LOVELY EXPORTS (P) LTD. (2009) 319 ITR (ST) 5 (SC) GETS SQUARELY ATTRACTED. THE SAME HAS NOT BEEN REFERRED TO WHILE PASSING THE ORDER OF REJECTION. THE ASSESSEE IN HIS OBJECTIONS HAD CLEARLY STATED T HAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSE E-COMPANY THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPANIES WAS NOT DISPUTED. UNDER THESE CIRCUMSTANCES IT WOULD NOT BE APPROPRIATE TO REQUIRE THE ASSESSEE TO GO THROUGH THE ENTIRE GAMUT OF PROCEEDINGS. IT IS T OTALLY UNWARRANTED. THE PRESENT FACTUAL CANVAS HAS TO BE SCRUTINIZED ON THE TOUCHSTONE OF THE AFORESAID ENUNCIATION OF LAW. IT IS WORTH NOTING TH AT THE LEARNED COUNSEL FOR THE PETITIONER HAS SUBMITTED WITH IMMENSE VEHEMENCE THAT THE PETIT IONER HAD ENTERED INTO CORRESPONDENCE TO HAVE THE DOCUMENTS BUT THE ASSESS ING OFFICER TREATED THEM AS OBJECTIONS AND MADE A COMMUNICATION. HOWEVER OFFIC ER TREATED THEM AS OBJECTIONS AND MADE A COMMUNICATION. HOWEVER ON A SCRUTINY OF THE ORDER IT IS PERCEIVABLE THAT THE AUTHORITY HAS PASSED THE ORDER DEALING WITH THE OBJ ECTIONS IN A VERY CAREFUL AND STUDIED MANNER. HE HAS TAKEN NOTE OF THE FACT THAT THE TRAN SACTIONS INVOLVING RS. 27LAKHS MEN- TIONED IN THE TABLE IN ANNEXURE P-2 CONSTITUTE FRES H INFORMATION IN RESPECT OF THE ASSESSEE AS A BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PRO VIDED TO IT AND REPRESENTS THE UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS REFER RED TO THE SUBSEQUENT INFORMATION AND ADVERTED TO THE CONCEPT OF TRUE AND FULL DISCLO SURE OF FACTS. IT IS ALSO NOTICEABLE THAT THERE WAS SPECIFIC INFORMATION RECEIVED FROM THE OF FICE OF THE DIRECTOR OF INCOME-TAX (INV-V) AS REGARDS THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE-COMPANY WITH A NUMBER OF CONCERNS WHICH HAD MADE ACCOMMODATION ENTRIES AN D THEY WERE NOT GENUINE TRANSACTIONS. AS WE PERCEIVE IT IS NEITHER A CHANG E OF OPINION NOR DOES IT CONVEY A PARTICULAR INTERPRETATION OF A SPECIFIC PROVISION W HICH WAS DONE IN A PARTICULAR MANNER IN THE ORIGINAL ASSESSMENT AND SOUGHT TO BE DONE IN A DIFFERENT MANNER IN THE PROCEEDING UNDER SECTION 147 OF THE ACT. THE REASON TO BELIEVE HAS BEEN APPROPRIATELY UNDERSTOOD BY THE ASSESSING OFFICER AND THERE IS MATERIAL ON THE BASIS OF WHICH THE NOTICE WAS ISSUED. AS HAS BEEN HELD IN PHOOL CHAND BAJRANG LAL [1993] 203 ITR 456 (SC) BOMBAY PHARMA PRODUCTS [1999] 237 ITR 614 (MP) AND ANANT KUMAR SAHARIA [1998] 232 ITR 533 (GAUHATI) THE COURT IN EXERCISE OF JURISDICTION U NDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PERTAINING TO SUFFICIENCY OF REASONS FOR FORM ATION OF THE BELIEF CANNOT INTERFERE. THE SAME IS NOT TO BE JUDGED AT THAT STAGE. IN SFIL STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI) THE BENCH HAS INTERFERED AS IT WAS NOT DIS CERNIBLE WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPEN DENTLY ARRIVED AT A BELIEF ON THE BASIS OF MATERIAL WHICH HE HAD BEFORE HIM THAT THE INCOME HAD ESCAPED ASSESSMENT. IN OUR CONSIDERED OPINION THE DECISION RENDERED THEREIN I S NOT APPLICABLE TO THE FACTUAL MATRIX 24 IN THE CASE AT HAND. IN THE CASE OF SARTHAK SECURITIES CO. PVT. LTD. [2010] 329 ITR LLE (DELHI) THE DIVISION BENCH HAD NOTED THAT CERTAIN COMPANIES WERE USED A~ CONDUITS BUT THE ASSESSEE HAD AT THE STAGE OF ORIGINAL ASSESSMENT FURNISHED THE NAMES OF THE COMPANIES WITH WHICH IT HAD ENTERED INTO TRANSACTIONS AND THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION AND FURTHER THE REASON RECORDED DOES NOT INDICATE APPLICATION OF MIND. THAT APART THE EXISTENCE OF THE COMPANIES WAS NOT DISPU TED AND THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE-COM PANY THROUGH THE BANKING CHANNEL. REGARD BEING HAD TO THE AFORESAID FACT SIT UATION THE COURT HAD INTERFERED. THUS THE SAID DECISION IS ALSO DISTINGUISHABLE ON THE FA CTUAL SCORE. 15. IN THE CASE OF BRIJ MOHAN AGARWAL VS. ACIT 26 8 ITR 400 (ALL.) AS RELIED ON BY LD. DR WE NOTED THAT HONBLE HIGH COURT HAS HELD AS UNDER: - ALL THAT IS REQUIRED AT THE STAGE OF ISSUING OF NO TICE UNDER SECTION 148 OF THE INCOME-TAX ACT 1961 IS THAT THE BELIEF OF THE INCOME-TAX OFFICER MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASO NABLE GROUNDS AND NOT ON MERE SUSPICION GOSSIP OR RUMOURS. THE ASSESSEE HAD PURCHASED SOME SHARES IN A COMPAN Y DURING THE FINANCIAL YEAR 1999 AND SHOWN THE PURCHASE IN ITS R ETURNS. DURING THE ASSESSMENT YEAR 2001-02 THE SHARES WERE SOLD. THE ASSESSEE CL AIMED THAT THE PROFITS MADE WERE LONG-TERM CAPITAL GAINS ASSESSABLE AT THE SPEC IFIED RATE OF 10 PER CENT. THE INCOME-TAX DEPARTMENT REVEALED THAT THE TRANSACTION S WERE NOT GENUINE. A NOTICE WAS ISSUED UNDER SECTION 148. ON A WRIT PETITION AG AINST THE NOTICE : HELD DISMISSING THE PETITION THAT THE BELIEF OF THE ASSESSING OFFICER WAS AN HONEST AND REASONABLE BELIEF ON THE MATERIAL WHI CH HE HAD RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. IMPORTANT MAT ERIAL HAD COME BEFORE THE INCOME TAX AUTHORITIES TO SHOW THAT THE PETITIONER WAS SUPPRESSING HIS INCOME BY INDULGING IN BOGUS TRANSACTIONS. THE NOTICE UNDER S ECTION 148 WAS VALID. 16. IN THE CASE OF ITO VS. PURUSHOTTAM DAS BANGUR A ND ANOTHER 224 ITR 362 (SC) AS RELIED HEAVILY BY LD. DR WE NOTED THAT THE APEX COURT HE LD AS UNDER:- HELD REVERSING THE DECISION OF THE HIGH COURT THA T THE LETTER OF THE DEPUTY DIRECTOR REFERRED TO THE STATEMENT CONTAININ G FINANCIAL INFORMATION REGARDING THE COMPANY IN QUESTION WHICH WAS ANNEXED TO THE LETTER. THE STATEMENT CONTAINED INFORMATION DERIVED FROM THE BOMBAY STOCK EXCHANGE DIRECTORY INDICATING THAT DURING THE PERIOD 1965 70 THE CO MPANY HAD PROSPERED THAT THE BOOK VALUE PER EQUITY SHARE HAD RISEN FROM RS.318.5 5 FOR THE YEAR ENDING DECEMBER 31 1965 TO RS.401 FOR THE YEAR ENDING DE CEMBER 31 1970 THE EARNING PER SHARE HAD RISEN FROM RS.8.37 PER TO RS. 44/- PER SHARE AND THAT THE DIVIDEND PERCENTAGE HAD ALSO RISEN FROM 2 PER CENT TO 10 PER CENT FOR THE SAME 25 PERIOD. ON THE BASIS OF THE INFORMATION CONTAINED I N THE LETTER OF THE DEPUTY DIRECTOR AND THE DOCUMENTS ANNEXED TO IT THE INCOM E-TAX OFFICER COULD HAVE HAD REASON TO BELIEVE THAT THE FAIR MARKET VALUE OF THE SHARES WAS FAR MORE THAN THE SALE PRICE AND THAT THE MARKET QUOTATIONS FROM THE CALCUTTA STOCK ASSOCIATION SHOWN BY THE RESPONDENT AT THE TIME OF ORIGINAL ASS ESSMENT WERE MANIPULATED ONES AND THAT AS A RESULT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IT COULD NOT BE SAID THAT THE INFORMATION THAT WAS CON TAINED IN THE LETTER WAS NOT DEFINITE INFORMATION AND COULD NOT BE ACTED UPON B Y THE INCOME-TAX OFFICER FOR TAKING ACTION UNDER SECTION 147(B) OF THE ACT. MERE LY BECAUSE THE NOTICE WAS SENT ON THE NEXT DAY AFTER RECEIPT OF THE LETTER THIS D ID NOT MEAN THAT THE INCOME-TAX OFFICER DID NOT APPLY HIS MIND TO THE INFORMATION C ONTAINED IN THE SAID LETTER. ON THE BASIS OF THE FACTS AND INFORMATION CONTAINED IN THE SAID LETTER THE INCOME-TAX OFFICER WITHOUT ANY FURTHER INVESTIGATION COULD H AVE FORMED THE OPINION THAT THERE WAS REASON TO BELIEVE THAT INCOME OF THE RESP ONDENT CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE NOTICE UNDER SECTION 147(B) WAS VALID. 17. IN THE CASE OF RATTAN GUPTA VS. UNION OF INDIA AND OTHERS 234 ITR 220 (DEL) HONBLE HIGH COURT HAS HELD AS UNDER : HELD DISMISSING THE WRIT PETITION THAT THE REASON S FOR THE INITIATION OF REASSESSMENT PROCEEDINGS WERE THE RECEIPT BY THE AS SESSING OFFICER OF LETTER DATED FEBRUARY 17 1993 FROM THE ASSISTANT COMMISSIONER OF INCOME-TAX INVESTIGATION CIRCLE 14(1) NEW DELHI STATING THAT THE ASSESSEE WAS EARNING INCOME IN BENAMI NAMES AND MONEY TOTALING RS.15 CRORES APPROXIMATELY IN THE FORM OF BANK DRAFTS PURCHASED IN SMALLER TOWNS OF THE COUNTRY BY FOUR S IKKIM COMPANIES FLOATED BY THE DALMIA GROUP WAS RECEIVED IN THE OFFICE OF THE ASSE SSEE AND FURTHER IN SEARCH AND SEIZURE OPERATIONS CONDUCTED ON MARCH 15 1990 CER TAIN CASH AND JEWELLERY WAS FOUND BUT IT WAS NOT SEIZED WHEREAS BOOKS OF ACCOUN T AND OTHER DOCUMENTS WERE SEIZED. A PERUSAL OF THE RECORD SHOWED THAT BEFORE ISSUE OF THE IMPUGNED NOTICE THE ASSESSING OFFICER HAD OBTAINED A COPY OF THE AP PRAISAL REPORT AND HAD PERUSED THE SAME. THE SUFFICIENCY OF THE MATERIAL C OULD NOT BE GONE INTO BY THE HIGH COURT IN EXERCISE OF WRIT JURISDICTION. THE LE TTER AND THE APPRAISAL REPORT CONSTITUTED RELEVANT MATERIAL FOR THE FORMATION OF BELIEF THAT THE ASSESSEES INCOME HAD ESCAPED ASSESSMENT. THE NOTICE FOR REASSESSMENT WAS VALID. 18. WE NOTED THAT THE APEX COURT IN THE CASE OF ITO VS. PURUSHOTTAM DAS BANGUR AND ANOTHER 224 ITR 362 (SC) HAS SETTLED THE LAW ON T HIS ISSUE THAT AT THE TIME OF INITIATION OF THE PROCEEDINGS U/S. 147 THE ASSESSING OFFICER SHOULD HAVE THE MATERIAL RELEVANT TO THE ASSESSEE. THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G IS ALSO MATERIAL IF IT CONTAINS THE INFORMATION REGARDING THE ASSESSEE. THE ASSESSING O FFICER AT THE TIME OF RECORDING OF THE 26 REASONS/FORMATION OF BELIEF IS NOT SUPPOSED TO COUN TER THE EVIDENCE OR MATERIAL COLLECTED BY HIM WITH THE ASSESSEE. EVEN THE SOURCE OF THE MATERIAL CANNOT BE ASKED BY THE ASSESSEE. IF THE MATERIAL OR THE INFORMATION BELONGS TO THE ASSESSEE IN OUR OPINION THE ASSESSING OFFICER HAS A BONA FIDE BELIEF TO RECORD THE REASONS. THE COURT CANNOT LOOK INTO THE SUFFICIENCY OF THE MATERIAL HELD BY THE ASSESSING OFFICER FOR THE FORMATION OF THE BELIEF. ONCE THE PROCEEDINGS ARE INITIATED THE ONUS IS ON THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEE HAS ESCAPED THE INCOME AND FOR THAT HE HAS TO GIVE THE HEARING TO THE ASSESSEE AND GIVE ALL THE M ATERIAL AND EVIDENCE COLLECTED BY HIM SO THAT THE ASSESSEE MAY CONTRADICT THE SAME. IF THE ASSESS ING OFFICER DOES NOT HAVE THE MATERIAL THE REASONS CANNOT BE REGARDED TO BE BONA FIDE AND THE INITIATION OF THE PROCEEDINGS CAN BE QUASHED. IF THE INITIATION IS VALID AND SUBSEQUENTLY THE AS SESSEE PROVES THAT THERE IS NO ESCAPEMENT OF INCOME THE ASSESSMENT SO FRAMED COULD BE QUASHED/C ANCELLED. WE NOTED THAT IN THE DECISIONS RELIED ON BY THE LEARNED AR THE DECISION OF THE HO NBLE SUPREME COURT REPORTED IN 224 ITR 362 (SC) WHICH HAS SETTLED THE POSITION OF LAW HAS NOT BEEN DISCUSSED. THE LAW PRONOUNCED BY THE SUPREME COURT IS THE LAW OF LAND AND IS BINDING ON ALL THE COURTS WHAT TO TALK OF THIS BENCH OF THE TRIBUNAL. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AS IN OUR OPINION THE ASSESSING OFFICER HAS BONA FIDE REASON TO BELIEVE T HAT THE INCOME HAS ESCAPED IN THE CASE OF THE ASSESSEE. 19. NOW COMING TO THE GROUND NO. 2 RELATING TO THE DELETION OF ADDITION OF RS.8 39 212/- ON MERITS WE NOTED THAT THE ISSUE ON MERITS IS COVERE D BY THE DECISION OF THIRD MEMBER DATED 09.02.2010 IN THE CASE OF SHRI BAIJNATH AGARWAL VS. ACIT 133 TTJ 129 (T.M.)(AGRA) WHEREBY SIMILAR ADDITION IN THE IDENTICAL FACTS AND CIRCUMS TANCES HAS BEEN DELETED OBSERVING AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW AS WELL AS THE ORDER OF MY LD. COLLEAGUE 27 MEMBERS. I HAVE GONE THROUGH THE DECISION OF SHRI ASHOK KUMAR LAVANIA IN ITA NO.112/AGR./2004 WHICH WAS DECIDED BY THE BENCH CON STITUTING OF SAME LD. J.M. AND LD. A.M. VIS--VIS THE FACTS OF THE CASE OF THE ASSESSEE. IN THAT CASE ALSO THE TRANSACTION OF SALES HAS NOT BEEN ACCEPTED BY THE A .O. AS HE DOUBTED THE SALE PRICES AND ALSO RELIED ON THE STATEMENT OF SHRI ASH OK GUPTA DIRECTOR OF M/S. JRD STOCK BROKERS PVT. LTD. WHO STATED THAT AS A MATTER OF FACT THERE WAS NO ACTUAL PURCHASE AND SALE OF SHARES AS WAS REFLECTED IN THE CONTRACT NOTES ISSUED BY M/S. JRD STOCK BROKERS PVT. LTD. TO THE BENEFICIARIES. IN THAT CASE THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN OF RS.25 14 770/- AN D CLAIMED EXEMPTION UNDER SECTION 54EA OF THE ACT. THE LTCG WAS SHOWN ON ACC OUNT OF SALE OF SHARES THROUGH THE BROKERS. THE ASSESSEE SUBMITTED THE CO PIES OF BILLS SHARE CERTIFICATES CONTRACT NOTES ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALONGWITH DETAILS OF DEMAND DRAFT THROUGH WHICH THE SALE PROCEEDS HAS BEEN RECEIVED. IT WAS ALSO POINTED OUT THAT THE PURCHASES WERE MADE THROUGH BR OKING CONCERN M/S. JRD STOCK BROKERS PVT. LTD. THE A.O. NOTICED THAT THE SHARES WERE PURCHASED @ RS.4/- PER SHARE AND SOLD @ RS.65/- TO RS.84/- PER SHARE. THE A.O. WAS OF THE VIEW THAT THE TRANSACTIONS WERE NOT GENUINE AND ARE ONLY ACCOMMODATION ENTRIES. THE BROKER POINTED OUT THAT HE WAS ENGAGED IN GIVIN G BOGUS ENTRIES FOR THE PURCHASE AND SALE OF THE SHARES ON COMMISSION BASIS . WHEN THE MATTER TRAVELED TO THE TRIBUNAL THE TRIBUNAL DELETED THE ADDITION BY OBSERVING AS UNDER :- (10) SO IN THE GIVEN CASE ALSO THE DEPARTMENT CANN OT TREAT THE LONG TERM CAPITAL GAINS AS ASSESSEES INCOME FROM OTHER SOURC ES. THERE IS NO DIRECT EVIDENCE. THE STATEMENTS OF THE BROKERS WERE RECOR DED AT THE BACK OF THE ASSESSEE. AN OPPORTUNITY OF CROSS-EXAMINATION MEAN S AND IMPLIES A CLEAR OPPORTUNITY AFTER PROVIDING COPIES OF SUCH ADVERSE STATEMENTS TO CROSS- EXAMINE. OTHERWISE ALSO THE STATEMENT OF SHRI ASHO K GUPTA IS TOO VAGUE TO BE OF ANY EVIDENTIARY VALUE. HE HAS NOWHERE STA TED THAT THE TRANSACTION OF THE ASSESSEE WAS BOGUS OR NOT GENUINE. HE HAS N O CORROBORATIVE EVIDENCE TO SHOW THAT THE CASH FOR DRAFTS WAS RECEI VED FROM THE ASSESSEE. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE HIS ST ATEMENT CANNOT BE ACCEPTED AS TRUE ON HIS MERE IPSE DIXIT. SHRI MANO J AGARWAL WAS NOT PRODUCED FOR CROSS-EXAMINATION. FROM HIS STATEMENT NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. SHRI MANOJ AGAR WAL HANDED OVER A LETTER TO D.D.I. (INV) IN WHICH HE STATED THAT OUT OF THE TOTAL TRANSACTIONS THE TRANSACTIONS AMOUNTING TO RS.100 CRORES WERE O NLY BOOK ENTRIES. SO IT FOLLOWS AS A NECESSARY COROLLARY THAT ENTIRE TRANSA CTIONS WERE NOT IN- GENUINE. HE HAS ALSO NOT NAMED THIS ASSESSEE. WIT H REGARD TO AGARWAL & COMPANY THERE ARE NO ADVERSE COMMENTS IN THE ASSES SMENT ORDER AGAINST THE ASSESSEE. THE A.O. HAS NOT SAID ANYTHI NG ABOUT THE TRANSACTIONS ENTERED THROUGH THIS BROKER. WHEREAS THE ASSESSEE HAS PRODUCED : I) COPIES OF SALES AND PURCHASE BILLS; II) SHARE CERTIFICATES AND TRANSFER LETTERS; III) CONTRACT NOTES; 28 IV) DULY TRANSFERRED SHARE CERTIFICATES RECEIVED FR OM THE COMPANIES; AND V) AFFIDAVIT. (11) THERE IS NO DOUBT IN SUCH CASES THE BROKERS BECOME THE WITNESSES OF THE DEPARTMENT. THE DEPARTMENT HAS GOT STATEMEN TS OF THESE BROKERS WHICH ARE USED AGAINST THE ASSESSEE. IRRESPECTIVE OF THE FACT THAT THE STATEMENTS WERE RECORDED AT THE BACK OF THE ASSESSE E AND THAT THE ASSESSEE WAS OR WAS NOT AFFORDED OPPORTUNITY FOR CROSS-EXAMI NATION WHEN OVERWHELMING DOCUMENTARY EVIDENCES ARE PRODUCED BY THE ASSESSEE THE BURDEN SHIFTS ON THE REVENUE TO EXPLAIN AWAY THEM. EVERY TIME THE STATEMENTS CANNOT HELP THE DEPARTMENT. HOW THE ABO VE MENTIONED EVIDENCES COULD BE IGNORED ? THE REVENUE HAS TO GI VE REASONS FOR REJECTING THEM. THESE ARE IMPORTANT DOCUMENTS SOM E OF THEM ARISE UNDER THE PROVISIONS OF THE COMPANIES ACT. THE BROKERS W ERE NEVER CONFRONTED WITH THE EVIDENCES PRODUCED BY THE ASSESSEE. THE A PPARENT HAS TO BE TREATED AS A REAL UNLESS PROVED OTHERWISE. LONG AG O HONBLE SUPREME COURT HAS LAID THIS LAW WHILE RENDERING THE CELEBRA TED DECISION IN THE CASE OF CIT VS. DAULAT RAM RAWATMAL (1964) 53 ITR 574 (S C). THE ASSESSEE HAS COUNTERED THE STATEMENTS OF BROKERS BY WAY OF H IS DULY SWORN-IN AFFIDAVIT. WE HAVE EXAMINED THE ENTIRE EVIDENCES P LACED IN THE PAPER BOOK OF THE ASSESSEE. (12) IN THE CASE OF ITO VS. SMT. KUSUMLATA REPORTED IN (2006) 105 TTJ (JD.) 265 COPY PLACED AT PAGE NO.4 OF ASSESSEES P APER BOOK (JUDGEMENTS RELIED) THE HONBLE JODHPUR BENCH HAS HELD AS UNDE R :- FOR MAKING ADDITION UNDER SECTION 69 THE DEPARTME NT IS REQUIRED TO PROVE TO THE HILT THAT THE IMPUGNED TRA NSACTIONS ARE BOGUS. THE BURDEN CAST ON THE DEPARTMENT IS VERY H IGH WHICH IS REQUIRED TO BE DISCHARGED CONCLUSIVELY IN THIS CASE ; THERE IS NO SUCH EVIDENCE. THE ASSESSEE HAS PURCHASED SHARES F ROM MS. THESE PURCHASES ARE EVIDENCED FROM THE CONTRACT NOT E. THE PAYMENT WAS MADE BY CHEQUE. THESE SHARES WERE TRAN SFERRED IN THE NAME OF THE ASSESSEE. THE ASSESSEE HELD THESE SHARES FOR MORE THAN ONE YEAR. SHE SOLD THESE SHARES TO J A MEMBE R OF STOCK EXCHANGE. J IN HIS LETTER HAS CONFIRMED THAT TRANS ACTION AND THE PAYMENT WAS MADE THROUGH CHEQUE. THE ASSESSEE HAS PROVIDED ALL THE REQUISITE EVIDENCES IN SUPPORT OF ALL TRANSACTI ONS. SIMPLY BECAUSE J COULD NOT PRODUCE HIS BOOKS OF ACCOUNT OR THE QUOTED RATE OF SHARES IN STOCK EXCHANGE BEING LESS OR THE TRANSACTIONS BEING NOT REPORTED BY J TO THE STOCK EXCHANGE WOUL D NOT MAKE A TRANSACTION BOGUS. THE STOCK EXCHANGE HAS INTIMATE D THE A.O. THAT THEY ARE ONLY HAVING INFORMATION OF THE TRANSACTION S BETWEEN TWO MEMBERS OF THE STOCK EXCHANGE AND NOT OTHERWISE. I N THE PRESENT CASE THE TRANSACTION WAS BETWEEN A MEMBER AND A NO N-MEMBER AND THEREFORE SUCH TRANSACTIONS WERE NOT REPORTED IN THE STOCK EXCHANGE. FURTHER THE CREDIT IN THE BANK ACCOUNT OF J IS BY 29 CLEARANCE. THEREFORE THE ALLEGATION OF THE A.O. T HAT THE AMOUNT WAS DEPOSITED IN CASH HAS NO BASIS. THE ASSESSEE H AS ACCEPTED HAVING INVESTED HER FUNDS ON THE ADVICE OF HER FATH ER-IN-LAW. THE BURDEN OF PROVING A TRANSACTION IS ALWAYS ON THE PE RSON ASSERTING IT TO BE BOGUS AND THIS BURDEN HAS TO BE STRICTLY D ISCHARGED BY ADDUCING LEGAL EVIDENCE OF A CHARACTER WHICH WOULD EITHER DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH C IRCUMSTANCES UNERRINGLY AND REASONABLY RAISING AN INFERENCE TO T HAT EFFECT. THE ASSESSEE MADE PAYMENT FOR THE PURCHASE FROM HER OWN SOURCES THROUGH BANKING CHANNEL. THE SHARES WERE TRANSFERR ED IN THE NAME OF THE ASSESSEE AND WERE HELD BY HER FOR MORE THAN ONE YEAR. THERE IS NO RELATIONSHIP BETWEEN THE PARTY FROM WHO M THE ASSESSEE PURCHASED THE SHARES AND THE PARTY TO WHOM THESE WE RE SOLD. THE SHARES WERE DELIVERED AFTER ITS SALE AND THE ASSESS EE DID NOT REMAIN IN POSSESSION OF THOSE SHARES. FROM THE ABOVE FACT S IT IS ESTABLISHED THAT THE ASSESSEE ACQUIRED THE SHARES T O EARN PROFIT. THERE IS NO EVIDENCE EXCEPT SPECULATION THAT THIS P ROFIT IS NOT FROM THE SALE OF SHARES. THE A.O. HAS FAILED TO ESTABLI SH HIS CASE AND TO DISCHARGE THE REQUISITE BURDEN CAST ON HIM. THE AU THORISED REPRESENTATIVE HAS FILED THE REQUISITE QUOTATION OF 18 TH JULY 1996 ALONG WITH THE REQUISITE PROOF OF TRANSACTIONS OF 9 000 SHARES ALONG WITH TRANSFER OF SHARE CERTIFICATE. THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS CORRECTLY COME TO THE CONCLUSION THAT THE ASSESSEE HAS DEALT IN THESE SHA RES AND THESE TRANSACTIONS CANNOT BE HELD BOGUS. THE DELETION OF ADDITION OF RS.4 99 062/- IS CONFIRMED. (13) THE ABOVE DECISION CLEARLY HELPS THE CASE OF T HE ASSESSEE. (14) CREDENCE CANNOT BE GIVEN TO THE STATEMENTS OF THE PERSONS WHO THEMSELVES ADMIT AND HAVE DUBIOUS DEALINGS AS AGAIN ST THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. (15) MOREOVER WHEN PURCHASES HAVE NOT BEEN DOUBTED OR DISPUTED BY THE REVENUE IN THIS CASE THE DECISION OF HONBLE P UNJAB & HARYANA COURT RELIED BY LEARNED A.R. IN THE CASE OF CIT VS. ANUPAM KAPOOR REPORTED IN (2008) 299 ITR 179 (P&H) IS VERY MUCH R ELEVANT. THE HELD PORTION OF THIS DECISION IS EXTRACTED HEREIN BELOW :- HELD DISMISSING THE APPEALS THAT THERE WAS NO MA TERIAL BEFORE THE ASSESSING OFFICER WHICH COULD HAVE LED T O A CONCLUSION THAT THE TRANSACTION WAS A DEVICE TO CAMOUFLAGE ACT IVITIES TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE ASSESSING OFFICER MERELY ON SURMISES AND CONJECTURE S. THE TRIBUNAL TOOK INTO CONSIDERATION THAT IT WAS ONLY O N THE BASIS OF A PRESUMPTION THAT THE ASSESSING OFFICER CONCLUDED TH AT THE ASSESSEE HAD PAID CASH AND PURCHASED THE CHEQUE. IN THE ABS ENCE OF ANY COGENT MATERIAL IN THIS REGARD HAVING BEEN PLACED ON RECORD THE 30 ASSESSING OFFICER COULD NOT HAVE REOPENED THE ASSES SMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY EVIDE NCE WHEREOF WAS WITH THE ASSESSING OFFICER. THEREFORE THE ASS ESSING OFFICER COULD NOT HAVE ADDED THE INCOME WHICH WAS RIGHTLY DELETED BY THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL (16) THUS THE SUM TOTAL OF THE FOREGOING DISCUSSIO NS GO TO CUMULATIVELY ESTABLISH THAT THE ASSESSEE HAS BEEN SUCCESSFUL IN PROVING THE LONG TERM CAPITAL GAIN EARNED BY HIM IN THIS CA SE. HE HAS ALSO ESTABLISHED THAT HE IS EXEMPT FROM TAX QUA LONG TER M CAPITAL GAINS AS HAS BEEN CLAIMED. 8. IN MY OPINION THIS CASE IS EQUALLY APPLICABLE I N THE CASE OF THE ASSESSEE. IN THE CASE OF THE ASSESSEE ALLOTMENT OF THE SHARE S HAS DULY BEEN PROVED AND THERE IS NO DISPUTE ON THE PURCHASE OF THE SHARES THROUGH ALLOTMENT TO THE ASSESSEE IN THE ASSESSMENT YEAR 1999-2000. THE SHARES WERE PUR CHASED IN EARLIER YEAR. THE SHARES WERE ALLOTTED IN THE NAME OF THE ASSESSEE. T HE ASSESSEE HAS SUBMITTED BEFORE THE A.O. COPIES OF THE CONTRACT NOTES COPI ES OF THE SALES BILLS STATEMENT OF ACCOUNT FROM THE BROKER ADDRESS OF THE BROKER. TH E IDENTITY OF THE BROKER IS PROVED. I ALSO NOTED THAT IN THE CASE OF ASHOK KUM AR LAVANIA ITA NO.112/AGR/2004 (SUPRA) THE SHARES HAVE BEEN SOLD B Y THE ASSESSEE THROUGH VARIOUS BROKERS. ONE OF THE BROKERS THROUGH WHOM T HE SHARES WERE SOLD WAS M/S. AGARWAL & CO 315 DSE BUILDING ASAF ALI ROAD DELH I. IN THE CASE OF THE ASSESSEE ALSO THE BROKER TO WHOM THE SHARES WERE SO LD IS THE SAME I.E. M/S. AGARWAL & CO. THE IDENTITY OF M/S. AGARWAL & CO. H AS NOT BEEN DISPUTED IN THAT CASE. IN THIS CASE THE REVENUE CANNOT BE PERMITTE D TO TAKE A DIFFERENT VIEW. THE DEMAND DRAFT FOR THE SALE CONSIDERATION WAS ISSUED FROM THE ACCOUNT OF M/S AGARWAL & CO BROKER. THE LD. A.M. HAS DISTINGUIS HED THE DECISION OF ASHOK KUMAR LAVANIA. ON THE BASIS OF THAT IN ASHOK KUMA R LAVANIAS CASE PURCHASE OF THE SHARES WAS NOT IN DISPUTE. WHILE IN FACT IN ASSESSEES CASE THE PURCHASE OF SHARES THROUGH DIRECT ALLOTMENT IS ALSO NOT IN DISP UTE. THE LD. A.M. WAS ALSO THE PARTY TO THAT DECISION. I NOTED THAT IN THIS CASE THE A.O. HAS DOUBTED THE SALE CONSIDERATION BECAUSE THE SHARE PRICE HAS INCREASED TREMENDOUSLY. I NOTED THAT IN THE CASE OF ASHOK KUMAR LAVANIA ALSO THE ASSESSE E HAS PURCHASED THE SHARE @ RS.4/- PER SHARE AND SOLD @ RS.65/- TO 84/- PER SHA RE. IN THAT CASE ALSO THE A.O. HAS NOT ACCEPTED THE TRANSACTION BUT ON THE BASIS O F THE EVIDENCE THE TRIBUNAL HAS ACCEPTED THE TRANSACTION TO BE GENUINE ONE AS THERE WAS NO CORROBORATIVE EVIDENCE TO SUPPORT THE STATEMENT OF THE BROKER. I N THIS CASE I NOTED THAT THE STATEMENT OF THE BROKER WAS NOT RECORDED. THE TRAN SACTION WAS TREATED AS NON GENUINE AS THE ASSESSEE COULD NOT PRODUCE THE BROKE R. IT IS ON RECORD IN THE ORDER OF THE CIT(A) THAT THE INSPECTOR WAS ABLE TO LOCATE THE BROKER AT HIS ADDRESS AT GHAZIABAD BUT HE DID NOT DENY THE TRANSACTION BUT R ATHER STATED TO GIVE THE STATEMENT AFTER HAVING THE CONSULTATION WITH HIS CA . THE ASSESSEE HAS SUBMITTED THE CONFIRMATION OF THE BROKER DATED 15.01.2004 WHI CH WAS REJECTED AS IT WAS NOT ON THE STAMP PAPER DULY SIGNED BY THE WITNESSES. TH E REVENUE ALSO OBSERVED THAT THE BROKER WAS AVOIDING THE DEPARTMENT. THIS IN MY OPINION CANNOT BE THE GROUND TO HOLD THE TRANSACTION TO BE A NON-GENUINE TRANSAC TION. THE ASSESSEE HAS GIVEN 31 THE ADDRESS OF THE BROKER AND PROVED THE IDENTITY O F THE BROKER EVEN THE BANK ACCOUNT OF THE BROKER IS ALSO ON RECORD OF THE DEPA RTMENT. THE TRANSACTION THROUGH THE SAME BROKER HAS BEEN ACCEPTED TO BE GEN UINE IN THE CASE OF ASHOK KUMAR LAVANIA. 9. UNDER THESE FACTS I AM OF THE OPINION THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DIVISION BENCH OF THIS TRIBUNAL IN T HE CASE OF ASHOK KUMAR LAVANIA IN ITA NO.112/AGR/2004 WHICH HAS BEEN DECI DED BY THE BENCH CONSTITUTING OF THE SAME VERY LEARNED MEMBERS. JUD ICIAL DISCIPLINE DEMANDS THAT ON THE SIMILAR FACTS THE BENCH IS BOUND TO FOLLOW I TS EARLIER DECISIONS. THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRES THAT THE ORDER OF THE CO-ORDINATE BENCH HAS TO BE FOLLOWED. 10. I ALSO NOTED FROM THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A) THAT WHILE SCRUTINIZING THE EVIDENCE FILED BY THE ASSESS EE AND FRAMING THE ORDER THEIR MINDS WERE INFLUENCED WITH THE OTHER CONSIDERATION THAT THE VALUE OF THE SHARES HAS TREMENDOUSLY INCREASED WHICH WAS ABNORMAL AND I NDICATES THAT THE ENTIRE TRANSACTION IS MANAGED ONE. IN MY OPINION THE SHA RE MARKET IS QUITE VOLATILE AND PRICES DO FLUCTUATE ABNORMALLY. I ALSO NOTED FROM THE CASE OF SMT. SEEMA GARGH VS. ITO IN ITA NO.252./AGR/2005 ON WHICH THE LD. A. R. HAS VEHEMENTLY RELIED THAT THE ASSESSEE HAS SOLD THE SHARES OF M/S. B.T. TECHN ET LIMITED. THE ASSESSEE BEFORE ME HAS ALSO SOLD THE SHARES BELONGING TO M/S . B.T. TECHNET LIMITED. IN THAT CASE I NOTED THAT THE ASSESSEE HAS SOLD 9500 SHARES OF M/S. B.T. TECHNET LIMITED ON 16.11.2000 @ RS.114/- PER SHARE. WHEN T HE MATTER TRAVELLED TO THE TRIBUNAL ABOUT THE NON-GENUINENESS OF THE PRICE AT WHICH THE SHARES WERE SOLD THE TRIBUNAL ACCEPTED THE SALE VALUE OF THE SHARES. IN THE CASE OF THE ASSESSEE THE ASSESSEE HAS SOLD THE SHARES @ RS.106/- PER SHARE O N 18.11.2000 I.E. NEARER TO THE DATE OF 16.11.2000. UNDER THESE FACTS THERE C ANNOT BE ANY REASON NOT TO ACCEPT THE VALUE OF THE SHARES SOLD @ RS.106/- PER SHARE. THE DECISION OF COORDINATE BENCH IS BINDING ON THIS TRIBUNAL. THE A SSESSEE IS ONLY A SMALL SHAREHOLDER OF THE COMPANY. HE IS NOT THE DIRECTOR OF THE COMPANY OR OF THE STOCK EXCHANGE. UNDER THESE CIRCUMSTANCES HOW HE CAN MAN IPULATE THE PRICES IS BEYOND ONES COMPREHENSION. IT IS PERTINENT THAT T HE ISSUE OF ABNORMAL INCREASE IN PRICES OF THE SHARES HAS COME UP FOR CONSIDERATI ON BEFORE THE ITAT AGRA BENCH IN THE CASES OF SMT. MEMO DEVI (ITA NO.396/AG /2004 REPORTED AS 7 DTR 158) WHEREIN THE CO-ORDINATE BENCH OBSERVED AS UNDE R :- THE ASSESSEE HAS NO RELATION WITH THE DIRECTORS OF THE COMPANY AND WAS IN NO WAY IN THE CAPACITY TO AFFECT THE MAR KET PRICE OF SHARES. THE INCREASE IN SHARE PRICES BY MORE THAN 25 TIMES TOO CANNOT BE THE BASIS TO ASSUME THAT THE TRANSACTION WAS BOGUS. ABNORMAL FLUCTUATION IN SHARE PRICES IS A NORMAL PHENOMENA THE LEARNED COUNSEL FOR THE ASSESSEE FILED A CHART SHOWING LOW AND HIGH PRICES OF SOME QUOTED SHARES DURING THE 52 WEEKS AS PER ECONOMIC TIMES DATED 27.02.2007 FROM W HICH IT CAN BE SEEN THAT SOME SHARES INCREASED EVEN BY MORE THAN 100 TI MES. 32 11. IN ALMOST SIMILAR CIRCUMSTANCES THE HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ANUPAM KAPOOR (299 ITR 179) HAS ALSO OBSERVED AS UNDER :- THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE THE INVESTMENT IN A COMPANY IN WHICH HE WA S NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET THE SHARES WERE LISTED AND THE TRANSACT ION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE W AS NO MATERIAL BEFORE THE AO WHICH COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITER A DEVICE TO CAMOUFLAGE ACTIVITIES TO DE FRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE AO MERELY O N SURMISES AND CONJECTURES. 12. THE REVENUE IS ALSO INFLUENCED THAT THE ASSESSE E COULD NOT PROVE THE NAME AND ADDRESS OF THE BUYER OF THE SHARES. IN THE STOC K EXCHANGE WHEN THE TRANSACTION IS ENTERED INTO THE ASSESSEE IS NOT AW ARE OF ABOUT THE BUYER OF THE SHARES. HE ENTERS INTO TRANSACTION ONLY THROUGH A SHARE BROKER. THEREFORE THE OBSERVATION OF THE A.O. THAT THE ASSESSEE COULD NOT IDENTIFY THE BUYER CANNOT BE THE BASIS OF REGARDING THE TRANSACTION TO BE NON-GE NUINE ONE. I ALSO NOTED THAT THE REVENUE HAS BEEN INFLUENCED WITH THE FACT THAT THE ASSESSEE HAS DELIVERED THE BLANK TRANSFER SHARE CERTIFICATES TO THE BROKER WHE N THE DELIVERY OF THE SHARES WERE GIVEN. SINCE THE DEAL HAS TO TAKE PLACE BETWE EN THE BROKERS THE ASSESSEE HAS TO GIVE ONLY BLANK TRANSFER SHARE CERTIFICATE T O THE BROKER WITHOUT MENTIONING THE NAME OF THE BUYER. THERE IS NOTHING WRONG IN M Y OPINION AND THIS IS A USUAL PRACTICE IN THE BUSINESS. FROM THE ENTIRE APPRECIA TION OF THE EVIDENCE I NOTED THAT THE ASSESSEE HAD ACQUIRED THE SHARES THE PURC HASE OF WHICH WAS DULY DECLARED BY THE ASSESSEE IN EARLIER YEARS WHICH STA ND ACCEPTED BY THE REVENUE. THAT ASSESSMENT HAS NOT BEEN REOPENED. THE SHARES W ERE SOLD THROUGH STOCK BROKERS WHO WERE REGISTERED WITH THE STOCK EXCHANGE . SHARES WERE SOLD AT THE PRICES QUOTED AT THE STOCK EXCHANGE AT THE RELEVANT TIME. THE PAYMENT OF SALE CONSIDERATION ALSO FLOWN FROM THE BANK ACCOUNT OF T HE BROKER BUT THE BROKER HAS DEPOSITED THE CASH IN HIS ACCOUNT AS PER THE REVENU E. I HAVE ALSO GONE THROUGH THE DECISION OF ASHOK KUMAR AGARWAL ITA NO.129/AGR /2004 ON WHICH THE LD. AR HAS VEHEMENTLY RELIED. IN THAT CASE I NOTED THAT THIS BENCH VIDE ORDER DATED 03.04.2006 IN RESPECT OF THE CASH DEPOSITED IN THE ACCOUNT OF THE BROKER HAS HELD AS UNDER :-_ AS REGARDS THE OBJECTIONS OF THE LD. CIT(A) WE AG REE WITH THE ARGUMENTS FORWARDED BY LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD MADE THE PURCHASES AND SALE OF SHARES THROUGH ACCOU NT PAYEE CHEQUE OR DRAFT. IF THE BROKER HAD SOLD THE SHARES IN CASH A ND DEPOSITED THE SAME IN HIS I.E. IN THE BANK ACCOUNT OF BROKER CONCERN IS BEYOND THE CONTROL OF THE ASSESSEE. ALSO AS REGARDS THE SECOND OBJECTION OF THE LD. CIT(A) THAT NO. OF PERSONS HAVE ALLEGEDLY DONE SUCH TRANSACTIONS DU RING THE SAME PERIOD. WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS NOT PROV IDED THE DETAILS OF SUCH NO. OF PERSONS AND ALSO HAVE NOT LINKED TRANSACTION S OF SUCH NO. OF PERSONS TO THE TRANSACTIONS OF THE ASSESSEE FROM WHICH IT C OULD BE PROVED THAT THE 33 TRANSACTIONS CARRIED OUT BY THE ASSESSEE ARE A SHAM TRANSACTION. THE LD. CIT(A) HAS REFERRED TO THE NAME OF ONE PERSON I.E. SHRI ASHOK KUMAR LAVANIA WHOSE APPEAL WAS PENDING BEFORE HIM WHICH DOES NOT PROVE THE TRANSACTION OF THE ASSESSEE AS BOGUS OR SHAM TRANSA CTION. AS REGARDS THE NEXT OBJECTION OF THE LD. CIT(A) THAT THE ASSESSEE AND HIS GROUP HAS SHOWN SUCH CAPITAL GAIN IN OTHER YEARS ALSO. THE LD. CIT (A) HAS NOT BROUGHT ON RECORD WHETHER SUCH CAPITAL GAIN WERE A SHAM TRANSA CTION AND HAVE NOT APPROVED ANY LINKAGE WITH THE TRANSACTION OF THE AS SESSEE WHICH COULD FURTHER APPROVE THAT THE ASSESSEES TRANSACTIONS WE RE BOGUS AND SHAM TRANSACTIONS. 13. THIS FINDING OF THE TRIBUNAL IS EQUALLY APPLICA BLE TO THE CASE OF THE ASSESSEE AND I CANNOT TAKE ANY ADVERSE VIEW ABOUT T HE GENUINENESS OF THE TRANSACTION ON THE BASIS THAT THE BROKER M/S. AGARW AL & CO HAS DEPOSITED THE CASH IN HIS BANK ACCOUNT BEFORE ISSUING THE DRAFT F OR THE SALE CONSIDERATION TO THE ASSESSEE. THERE IS NO EVIDENCE ON RECORD THAT BROK ER WAS A RELATIVE OR ASSOCIATE OF THE ASSESSEE. THE ASSESSEE IN MY OPINION DOES NOT HAVE ANY CONTROL ON THE BANK ACCOUNT OF THE BROKER. WHERE THE FUND CAME THR OUGH CLEARING NOT IN CASH. THE DECISION OF THE LOWER AUTHORITIES ARE INFLUENCE D BY THE GENERAL OBSERVATION OF THE INVESTIGATION WING THAT AROSE A SUSPICION TURNE D INTO CONCLUSIVE PROOF IN THE MINDS OF THE AUTHORITIES THAT EVERYBODY WHO HAS SOL D THE SHARES AT A HIGH PRICE HAS CONVERTED HIS UNACCOUNTED MONEY THROUGH ACCOMMO DATION ENTRIES. THIS APPROACH DOES NOT HAVE ANY LEG TO STAND. HONBLE S UPREME COURT IN THE CASE OF UMACHARAN SHAW & BROS VS. CIT 37 ITR 271 (SC) HAS CLEARLY LAID DOWN THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF PRO OF. FROM THE ENTIRE APPRECIATION OF EVIDENCE I NOTED THAT ASSESSING OF FICER HAS FAILED TO ESTABLISH THAT THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTE D MONEY IN THE SHAPE OF ALLEGED SALE PROCEEDS OF SHARES. HONBLE SUPREME C OURT IN THE CASE OF KISHAN CHAND CHELLARAM VS. CIT REPORTED IN 125 ITR 713 (SC ) HAS OBSERVED THAT THE AMOUNT CANNOT BE ASSESSED AS UNDISCLOSED INCOME OF ASSESSEE IN THE ABSENCE OF POSITIVE MATERIAL BROUGHT BY THE REVENUE TO PROVE T HAT THE AMOUNT IN FACT BELONGED TO ASSESSEE AS THE BURDEN LAY ON THE REVEN UE. 14. IN ALMOST SIMILAR CIRCUMSTANCES THE ITAT DELHI C BENCH IN THE CASE OF ITO VS. NAVEEN GUPTA (5 SOT 94) COPY OF WHICH IS P LACED BY LD. A.R. HAS OBSERVED AS UNDER :- NEVERTHELESS IT IS ALSO NOTEWORTHY THAT THE A.O. HAS FAILED TO ESTABLISH THAT IN LIEU OF THE AFORESAID SALE PROCEE DS THE ASSESSEE HAS SURREPTITIOUSLY INTRODUCED HIS UNACCOUNTED MONEY IN THE BANK ACCOUNT. AFTER HAVING PERUSED THE ENTIRE MATERIAL THAT IS AV AILABLE ON RECORD THERE IS NO AVERMENT MUCH LESS ANY EVIDENCE WITH THE RE VENUE IN THIS REGARD. WHILE THERE MAY BE ENOUGH GROUNDS WITH THE AO TO CA RRY OUT THE IMPUGNED VERIFICATION EXERCISE TO TEST THE EFFICACY OF THE TRANSACTIONS RESULTING IN LONG TERM MATERIAL GAINS IN THE HAND O F THE ASSESSEE BUT THERE 34 IS NO COGENT MATERIAL OR EVIDENCE TO INDICATE THAT THE IMPUGNED SALE PROCEEDS REFLECTED UNACCOUNTED INCOME OF THE ASSESS EE. 15. IT WAS THE DUTY OF THE A.O. TO BRING ON RECORD SUFFICIENT EVIDENCES AND MATERIAL TO PROVE THAT THE DOCUMENTS FILED BY THE A SSESSEE WERE BOGUS FALSE OR FABRICATED AND THE LONG TERM CAPITAL GAIN SHOWN BY HIM WAS ACTUALLY HIS INCOME FROM UNDISCLOSED SOURCES. THE ONLY MATERIAL TO SUP PORT SUCH CONCLUSION OF THE LOWER AUTHORITIES IS EITHER THE FINDINGS OF THE DDI IN GENERAL INVESTIGATIONS OR THE OBSERVATION THAT THE ASSESSEE COULD NOT PROVE THE T RANSACTION TO BE GENUINE ONE. THIS IS THE SETTLED LAW IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DAULAT RAM RAWATMULL 87 ITR 349 (SC) THAT T HE APPARENT IS REAL. ONUS IS ON THE PERSON WHO ALLEGES APPARENT IS NOT REAL. NONE OF THE JUDICIAL PRECEDENT SUPPORTS THE CASE OF THE REVENUE. WHILE MAKING ADD ITION AS INCOME FROM UNDISCLOSED SOURCES BURDEN ON THE DEPARTMENT IS VER Y HEAVY TO ESTABLISH THAT THE ALLEGED RECEIPT WAS ACTUALLY INCOME OF THE ASSESSEE FROM THE UNDISCLOSED SOURCES. JODHPUR BENCH OF THE ITAT IN THE CASE OF ITO VS. SM T. KUSUMLATA (REPORTED IN 105 TTJ 265) COPY OF WHICH IS PLACED IN THE COMPIL ATION OF THE ASSESSEE HELD AS UNDER :- 10. FOR MAKING ADDITION UNDER S.69 OF THE ACT THE DEPARTMENT IS REQUIRED TO PROVE TO THE HILT THAT THE IMPUGNED TRA NSACTIONS ARE BOGUS. THE BURDEN CAST ON THE DEPARTMENT UNDER S.69C (SIC- 69) OF THE ACT IS VERY HIGH WHICH IS REQUIRED TO BE DISCHARGED CONCLUSIVEL Y IN THIS CASE; THERE IS NO SUCH EVIDENCE. THE ASSESSEE HAS PURCHASED SHARE S FROM M/S MAHESHWARI SONS. THESE PURCHASES ARE EVIDENCED FRO M THE CONTRACT NOTE. THE PAYMENT WAS MADE BY CHEQUE. THESE SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE. THE ASSESSEE HELD THESE SHAR ES FOR MORE THAN ONE YEAR. SHE SOLD THESE SHARES TO THE MEMBER OF STOCK EXCHANGE SHRI J.K. JAIN. SHRI J.K. JAIN IN HIS LETTER DT. 22 ND DEC. 1999 HAS CONFIRMED THE TRANSACTION AND THE PAYMENT WAS MADE THROUGH CHEQUE . THE ASSESSEE HAS PROVIDED ALL THE REQUISITE EVIDENCES IN SUPPORT OF ALL TRANSACTIONS. SIMPLY BECAUSE SHRI J.K. JAIN COULD NOT PRODUCE HIS BOOKS OF ACCOUNT OR THE QUOTED RATE OF SHARES IN DELHI STOCK EXCHANGE BEING LESS OR THE TRANSACTIONS BEING NOT REPORTED BY SHRI J.K. JAIN T O THE STOCK EXCHANGE WOULD NOT MAKE A TRANSACTION BOGUS. THE JAIPUR STO CK EXCHANGE HAS INTIMATED THE AO THAT THEY ARE ONLY HAVING INFORMAT ION OF THE TRANSACTIONS BETWEEN TWO MEMBERS OF THE STOCK EXCHANGE AND NOT O THERWISE. IN THE PRESENT CASE THE TRANSACTION WAS BETWEEN A MEMBER AND A NON-MEMBER AND THEREFORE SUCH TRANSACTIONS WERE NOT REPORTED IN THE STOCK EXCHANGE. FURTHER THE CREDIT IN THE BANK ACCOUNT OF SHRI J.K . JAIN IS BY CLEARANCE. THEREFORE THE ALLEGATION OF THE AO THAT THE AMOUNT WAS DEPOSITED IN CASH HAS NO BASIS. THE ASSESSEE HAS ACCEPTED HAVING INV ESTED HER FUNDS ON THE ADVICE OF HER FATHER-IN-LAW. THE BURDEN OF PROVING A TRANSACTION IS ALWAYS ON THE PERSON ASSERTING IT TO BE BOGUS AND THIS BUR DEN HAS TO BE STRICTLY DISCHARGED BY ADDUCING LEGAL EVIDENCE OF A CHARACTE R WHICH WOULD EITHER DIRECTLY PROVE THE FACT OF BOGUSNESS OR ESTABLISH C IRCUMSTANCES UNERRINGLY AND REASONABLY RAISING AN INFERENCE TO THAT EFFECT. 35 16. I HAVE ALSO GONE THROUGH VARIOUS OTHER DECISION S ON SIMILAR ISSUE UNDER THE SIMILAR FACTS AND I NOTED THAT THIS TRIBUNAL HA D CONSISTENTLY ACCEPTED THE GENUINENESS OF THE SHARE TRANSACTION. THOSE CASES ARE AS UNDER :- ITO VS. SUNITA GUPTA - ITA NO.881/DEL/2004 (DELHI B ENCH SMC) DILIP GARGH VS. ITO ITA NO.470/AGR/2004 GOPAL PRASAD AGARWAL VS. ACIT ITA NO.128/AGR/2004 17. I ALSO NOTED THAT THE CASE OF THE ASSESSEE IS D ULY COVERED BY THE DECISION OF THE THIRD MEMBER IN THE CASE OF SMT. SUNITA OBEROI VS. ITO (AGRA) (TM) ITA NO.273/AGR/2004 A.Y. 1995-96 DATED 07.08.2009 30 D TR (AGRA) (TM) (TRIB.) 474 IN WHICH ON DIFFERENCE OF OPINION ON THE QUESTI ON UNDER THE SIMILAR CIRCUMSTANCES WHETHER THE ASSESSEE CAN BE SAID TO H AVE DISCHARGED HER BURDEN TO PROVE THE GENUINENESS OF THE TRANSACTION IN SHARES OF M/S. PRASIDH EXPORTS LIMITED AND M/S. K.L.P. FINANCE LIMITED OR THAT THE BURDEN HAD SHIFTED ON THE REVENUE THAT CAN BE HELD TO HAVE NOT DISCHARGED BY THEM THE DECISION TO UPHOLD ACCEPTING OF ALLEGED PROFIT ON ALLEGED SHARE OF M/S . PRASIDH EXPORTS LIMITED AND M/S. K.L.P. FINANCE LIMITED AS INCOME FROM OTHER SO URCES INSTEAD OF ASSESSEE HAS CLAIMED THE CAPITAL GAIN IS A CORRECT DECISION OR N OT. THE HONBLE THIRD MEMBER HAS HELD AS UNDER :- IN ANOTHER ORDER OF THE TRIBUNAL IN ITA NO.881/DEL /2004 DT. 28 TH MAY 2004 IN THE CASE OF SMT. SUNITA GUPTA WHICH HAS BEE N FOLLOWED IN SANJAY KUMAR BANSAL (SUPRA) THE TRIBUNAL HELD LIKEWISE. I T IS THEREFORE TO BE HELD THAT THE STATEMENT OF SHRI PRAVEEN MITTAL THE PERSON ON WHOSE REQUEST THE ASSOCIATES M/S HASEEJA & GULATI INTRODUCED SHRI MAHESHWARI TO PUNJAB NATIONAL BANK ON ACCOUNT NO.8627 WAS NOT A P ERSON WHO COULD COMMENT THAT 90 PER CENT OF THE TRANSACTIONS FROM T HE SAID BANK ACCOUNT PUNJAB NATIONAL BANK-8627 WERE BOGUS TRANSACTIONS. SHRI MITTAL CLAIMED TO KNOW SHRI MAHESHWARI ONLY AS HE VISITED ANOTHER FRIEND CONDUCTING BUSINESS FROM THE SAME PREMISES AND AS SUCH HE WAS NOT CAPABLE TO COMMENT UPON THE NATURE OF WORK DONE BY SHRI MAHESH WARI COULD HARDLY BE HAVING INTIMATE KNOWLEDGE OF SHRI PRAVEEN MITTAL PERSONALLY WHO COULD ONLY CLAIM KNOWLEDGE OF PUBLIC FACTS NAMELY T HAT SHRI MAHESHWARI WAS A BROKER REGISTERED WITH KANPUR STOCK EXCHANGE DEALING IN NEW PUBLIC ISSUES HAVING AN OFFICE AT ANTARIKSH BHAWAN NEW DELHI FOR WHICH PURPOSE SHRI MITTAL REQUESTED HIS FRIENDS HASEEJA A ND GULATI TO INTRODUCE SHRI MAHESHAWRI TO THEIR BANKERS FOR OPENING AN ACC OUNT. HOW HE BECAME AWARE OF THE CATEGORICAL INFORMATION TO ASSE RT THAT THE TRANSACTIONS DONE BY SHRI MAHESHWARIS ACCOUNT NO.8 627 WERE SHAM DOES NOT INSPIRE ANY CONFIDENCE. THE STATEMENTS HAVE BE EN RECORDED AT THE BACK OF THE ASSESSEE AND ALTHOUGH HAVE BEEN CONFRON TED HOWEVER HAVE BEEN RECORDED IN THE CASE OF DIFFERENT ASSESSEES. BUT IN THE PRESENT CASE THE CONCERNED PERSONS WHOSE STATEMENTS HAVE BEEN RE LIED UPON WERE NOT MADE AVAILABLE TO THE ASSESSEE FOR CROSS-EXAMINATIO N. THAT THESE FACTS ARE IDENTICAL TO THE PRESENT CASE IS NOT DISPUTED BY TH E REVENUE. THE EXPLANATION OF THE ASSESSEE REBUTTING THE STATEMENT S CONFRONTED TO THE 36 ASSESSEE IN THE FACTS OF THAT CASE ARE TO BE TAKEN INTO CONSIDERATION AND THEREFORE THE ACTION OF THE REVENUE CANNOT BE IN AC CORDANCE IF SEEN IN THE LIGHT OF THE SUPREME COURT DECISION IN THE CASE OF KISHINCHAND CHELLARAM (SUPRA). THE DISCREPANCY EXPLAINED IN THE AMOUNTS AS PER THE CONTRACT NOTES AND DRAFTS RECEIVED ON ACCOUNT OF THE DIFFERE NTIAL DUE TO DISPUTE WITHHELD BY THE BROKERS CANNOT BE DISCARDED WITHOUT ANY COGENT REASONS. THE EXPLANATION HAS CONSISTENTLY BEEN GIVEN BY THE ASSESSEE DESPITE THIS NOTHING HAS BEEN LED BY THE DEPARTMENT TO DISCARD I T. THE STATEMENTS OF THE WITNESS HEAVILY RELIED UPON THE DEPARTMENT HAVE ALREADY BEEN SEEN AS HAVING BEEN BASED ON NO EVIDENCE AND HAVE ALREADY B EEN DISCARDED BY CO-ORDINATE BENCHES AND EVEN THEY DO NOT DISPROVE T HE EXPLANATION OF THE ASSESSEE PERTAINING TO THE DISPUTE WITH THE BROKER. IN YET ANOTHER CASE OF ITO VS. RAJIV AGGARWALA (200 4) 89 TTJ (DEL) 1095 DELHI TRIBUNAL HELD IN THE CONTEXT OF S TATEMENTS GIVEN BY SHRI SHANKAR HARI MAHESHWARI AND SHRI PRAVEEN MITTAL CON SIDERED THE STATEMENTS RECORDED BY THE DY. DIRECTOR OF IT (INV. ) OF MR. SHANKLAR HARI MAHESHWARI AND MR. PRAVEEN MITTAL; THE ASSESSEE DID NOT FURNISH THE ADDRESS OF THE SAID COMPANY; THE FACT THAT THE ASSE SSEE COULD NOT ADDUCE EVIDENCE IN SUPPORT OF HIS CLAIM OF PURCHASE OF SHA RES; THAT THE ASSESSEE FAILED TO ADDUCE ANY EVIDENCE REGARDING TRANSFER OF SHARES IN HIS NAME; AND THAT THE ASSESSEE HAS FAILED TO EVEN FURNISH TH E NAME AND ADDRESS OF THE PERSON TO WHOM THE SHARES WERE SOLD. THE ONLY REASON TO MAKE THE ADDITION IS THAT CONFIR MATION FROM THE SHARE BROKERS COULD NOT BE FILED BY THE ASSESSEE AN D SUMMONS ISSUED TO THE SAID PERSONS WERE NOT SERVED AND RETURNED UNSER VED AND THE NAMES AND ADDRESSES OF THE BUYER TO WHOM THE ULTIMATELY S HARES WERE SOLD THROUGH THE BROKER WERE NOT KNOWN TO THE ASSESSEE. THE ASSESSEE WAS NOT IN A POSITION TO COMPEL THE SHARE BROKER FOR CONFIR MING THE TRANSACTION SHE BEING NEITHER A DIRECTOR NOR HAVING LARGE SCALE DEALINGS WITH THE BROKERS OVER THE YEARS SO AS TO SHOW THAT SHE WAS P ERSONALLY IN A POSITION TO COMPEL THEM ON ACCOUNT OF THE MAGNITUDE OF TRANS ACTION DONE THROUGH THEM. IT WAS HER FATHER WHO KNEW THE BROKERS AND S HE ACTED ON HIS ADVICE AND HAD NO CONTACT THEREAFTER. THE REASONING THAT SUMMONS ISSUED TO THE PARTIES CAME BACK UNSERVED CANNOT BY ITSELF BE HELD AGAINST THE ASSESSEE AS WHETHER THE SHARE BROKER CONTINUES THE BUSINESS OR DISCONTINUES THE SAME OR CHANGED THE ADDRESSES OR FOR THAT MATTER TH E COMPANIES WHOSE SHARES WERE PURCHASED AND SOLD CHANGED THEIR PREMIS ES OR NAMES AS CHANGED BY VIRTUE OF BEING ACQUIRED BY SOME OTHER C OMPANY THE ASSESSEE CANNOT BE HELD LIABLE TO STAY IN TOUCH FOR ALL TIME S TO COME. SIMILARLY NO REASONS ARE THERE TO SHOW THAT SHRI PRAVEEN MITTAL WAS EVER IN A POSITION TO DECLARE THE TRANSACTIONS OF AN ACQUAINTANCE BROK ER AS BOGUS TRANSACTIONS NEITHER ANY EVIDENCE HAS BEEN LED NOR REASONS ADVANCED TO SUPPORT HOW HE COULD BE CONSIDERED TO BE A RELIABLE PERSON SO AS TO IGNORE THE EVIDENCES AVAILABLE ON RECORD I.E. CONTRACT NOT ES OF SALE AND OF THE SPECIFIC SHARES OF SPECIFIC RATES ON SPECIFIC DATES . SHRI PRAVEEN MITTAL WAS THE WITNESS OF THE DEPARTMENT THE ONUS WAS THEREFO RE ON THE DEPARTMENT 37 TO PRODUCE HIM AND MAKE HIM AVAILABLE FOR CROSS-EXA MINATION BY THE ASSESSEE. SIMILARLY THE EVIDENCE THAT THE COMPANI ES WERE NOT IN EXISTENCE AT THE ADDRESS AVAILABLE WITH THE DEPARTMENT DOES N OT DETRACT FROM THE ASSESSEES CLAIM IN VIEW OF THE DOCUMENTS AVAILABLE ON RECORD. THE DISCREPANCY IN THE AMOUNTS TO THE EXPENDITURE OF RS .53 356 WAS BECAUSE OF CONSISTENT STATEMENT BY THE ASSESSEE THAT THE SH ARE BROKER MADE A SHORT PAYMENT AND DISPUTED THE REMAINING AMOUNT. THE DEP ARTMENT HAS THUS PROCEEDED ENTIRELY ON SUSPICION AND SURMISES IF SEE N IN THE LIGHT OF THE ORDERS OF THE TRIBUNAL. THE CLAIM OF THE ASSESSEE IN REGARD TO THE FIRST ISSUE IS TO BE ALLOWED. 18. THE JUDICIAL DISCIPLINE DEMANDS THAT THE DECISI ON OF THE LD. THIRD MEMBER SHOULD BE FOLLOWED BY ME. I ACCORDINGLY FOLLOWIN G THE DECISION OF THE LD. THIRD MEMBER AND IN VIEW OF AFORESAID DISCUSSION AGREE W ITH THE VIEW TAKEN BY THE LD. J.M. AND HOLD THAT THE CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW IN UPHOLDING THE ORDER OF THE A.O. TREATING THE INCOME UNDER THE HEAD L.T.C.G. AS SHAM AND BOGUS AND TAXING THE SAME UNDER THE HEAD INCOME FRO M OTHER SOURCES. THE INCOME DISCLOSED BY THE ASSESSEE IS CHARGEABLE TO T AX AS L.T.C.G. AND CANNOT BE TREATED AS INCOME FROM ANY UNDISCLOSED SOURCES. TH US THE QUESTION REFERRED TO ME IS DECIDED IN FAVOUR OF THE ASSESSEE. 20. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDIN ATE BENCH WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ACCOUNT. 21. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.07.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH JULY 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY