Sri Chunni Lal Prajapati, Faizabad v. The ITO, Faizabad

ITA 290/LKW/2010 | 1999-2000
Pronouncement Date: 28-02-2011

Appeal Details

RSA Number 29023714 RSA 2010
Bench Lucknow
Appeal Number ITA 290/LKW/2010
Duration Of Justice 9 month(s) 29 day(s)
Appellant Sri Chunni Lal Prajapati, Faizabad
Respondent The ITO, Faizabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 28-02-2011
Date Of Final Hearing 07-02-2011
Next Hearing Date 07-02-2011
Assessment Year 1999-2000
Appeal Filed On 29-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B LUCKNOW BEFORE HONBLE SHRI H.L. KARWA AND HONBLE SHRI N.K . SAINI ITA NOS.290 TO 293/LUC/2010 ASSESSMENT YEARS:1999-2000 2001-02 2002-03 AND 20 03-04 SHRI CHUNNILAL PRAJAPATI 18 CIVIL LINES FAIZABAD V. INCOME-TAX OFFICER-II FAIZABAD (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI M.P. MISHRA ADVOCATE RESPONDENT BY: SHRI. P. K. BAJAJ D.R. O R D E R PER N.K. SAINI: THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST SEPARATE ORDERS EACH DATED 20.1.2010 FOR ASSESSMENT YEARS 1999-2000 200 1-02 2002-03 AND 2003-04 OF THE CIT(A)-I LUCKNOW. SINCE SOME OF THE GROUNDS R AISED IN THESE APPEALS ARE COMMON AND THE APPEALS WERE HEARD TOGETHER WE DISPOSE OF THESE APPEALS BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST GROUND IN ALL THESE APPEALS RELATING TO VA LIDITY OF RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE INCOME-TAX ACT 1961 IS COMMON AND READS AS UNDER:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AS WEL L AS ON FACTS IN HOLDING THAT THERE EXISTED RELEVANT MATERIAL WHICH COULD LEAD TO FORMATION OF REQUISITE REASON TO BELIEVE AND THE A.O. COMMITTED NO ERROR AS SUCH IN INITIATING THE PROCEEDINGS U/S. 147 OF THE INCOME-TAX ACT 1961. 3. BOTH THE PARTIES ARGUED THIS ISSUE AT THE FIRST INSTANCE. THE FACTS RELATING TO THE ISSUE UNDER CONSIDERATION IN BRIEF ARE THAT THE ASS ESSEE IS AN EMPLOYEE OF U.P. GOVERNMENT AND AT THE RELEVANT TIME WAS POSTED AS A SSISTANT COMMISSIONER ROAD SAFETY AT FAIZABAD. THE A.O INITIATED PROCEEDINGS U/S. 147 OF THE ACT AND CONSEQUENTLY ISSUED NOTICE U/S. 148 OF THE ACT ON 22.3.2006. IN COMPLIANCE TO THE SAID NOTICE THE ASSESSEE FILED RETURN OF INCOME FOR A.Y. 1999-2000 SHOWING INCOME OF $ 1 01 501/- ON 13.7.2006. FOR THE REMAINING YEARS THE ASSESSEE S TATED THAT THE RETURNS ALREADY FILED BE TREATED AS RETURNS IN COMPLIANCE OF NOTICE U/S. 148 OF THE ACT. THE A.O. FRAMED THE ASSESSMENTS BY MAKING CERTAIN ADDITIONS. THE MAIN ADDITIONS WERE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF PLOT NO.160 ELDECO GREEN GOMTI NAGAR :-2-: LUCKNOW AND CONSTRUCTION THEREIN AT $ 5 38 860/-; $ 2 30 712/-; $ 7 54 328 AND $ 5 86 769/- FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEARS 199 9-2000 2001-02 2002-03 AND 2003- 04 RESPECTIVELY. BESIDES THOSE ADDITIONS CERTAIN OTHER ADDITIONS WERE ALSO MADE ON ACCOUNT OF HOUSEHOLD EXPENSES UNEXPLAINED CASH ET C. 4. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A ) AND CHALLENGED THE VALIDITY OF INITIATION OF PROCEEDINGS U/S. 148 OF THE ACT BY ST ATING AS UNDER FOR ASSESSMENT YEAR 1999-2000:- IT HAS BEEN SUBMITTED THAT THE NOTICE U/S. 148 OF THE I.T. ACT 1961 HAS BEEN ISSUED ON PRESUMPTIONS BASIS KEEPING IN MIND THAT THE TOTAL INVESTMENT TOWARDS THE PURCHASE OF PLOT FROM ELDECO HOUSING AND INDUST RIES LTD. HAS BEEN MADE IN THE FINANCIAL YEAR 1998-99 RELEVANT TO THE A.Y. 199 9-2000 AND TOTAL PAYMENTS HAVE BEEN MADE IN THIS YEAR ONLY. IN THIS CONTEXT IT IS SUBMITTED THAT THE LEARNED A.O. HAS ERRED IN LAW AND ON FACTS IN INITIATING TH E PROCEEDINGS U/S. 147 OF THE I.T. ACT 1961 FOR THE REASONS BASED ON MERE SUSPICION A ND THE NOTICE ISSUED U/S. 148 IS ILLEGAL AS SUCH. RELIANCE IN THIS REGARD IS PLA CED ON THE RATIO DECIDENDI OF THE DECISION OF THE HONBLE SUPREME COURT IN SHEO NATH SINGH V. APPELLATE ASSISTANT COMMISSIONER OF INCOME-TAX (CENTRAL) CALCUTTA AND OTHERS (1971) 82 ITR 147 (SC). IN THE AFOREMENTIONED CASE THE HONBLE APEX COURT HAS HELD THAT THE A.O CAN ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NO T ON MERE SUSPICION GOSSIP OR RUMOUR. IT IS SUBMITTED THAT INVESTMENT IN ISOLATI ON CANNOT BE TREATED AS AN EVIDENCE OF INCOME ESCAPING ASSESSMENT AND THE LEAR NED A.O HAD NO REASON TO BELIEVE THAT INCOME FROM UNDISCLOSED SOURCES HAS BE EN INVESTED IN THE PURCHASE OF PLOT DURING THE YEAR UNDER CONSIDERATION. THE I NITIATION OF PROCEEDINGS U/S. 147 OF THE I.T. ACT 1961 ON THE BASIS OF ERRONEOUS REA SON AND THE ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT 1961 IS ILLEGAL. IN THIS CONT EXT ATTENTION IS ALSO INVITED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT VS. (1) ATUL JAIN (2) ANITA JAIN [2008] 299 ITR 383 WHEREIN IT IS HELD THAT THE ACT ION OF THE AO FALLS FOUL OF THE LAW LAID DOWN BY THE SUPREME COURT IN CHHUGAMAL RAJPAL [1971] 79 ITR 603 BECAUSE THERE WERE NO DETAILS AND THE INFORMATION SUPPLIED WAS EXTREMELY SCANTY AND VAGUE THE A.O DID NOT VERIFY THE CORRECTNESS OF TH E INFORMATION RECEIVED BY HIM AND MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMAT ION IN MECHANICAL MANNER. :-3-: 5. SIMILAR SUBMISSIONS WERE ALSO MADE FOR THE REMAI NING YEARS. HOWEVER THE LD. CIT(A) DID NOT FIND MERIT IN THE AFORESAID SUBMISSI ONS OF THE ASSESSEE AND DISMISSED THIS GROUND BY OBSERVING AS UNDER:- 4.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND HAVE PERUSED THE SUBMISSION OF THE LD. AR. I FIND NO MERIT IN THE S UBMISSION THAT THE NOTICE U/S. 148 OF THE I.T. ACT 1961 HAS BEEN ISSUED ON MERE PRESU MPTIONS KEEPING IN MIND THE INVESTMENT OF $ 5 38 860/- TOWARDS THE PURCHASE OF PLOT FROM ELDECO HOUSING AND INDUSTRIES LTD. IN THIS CONTEXT I AM OF THE VIEW THAT THE A.O. HAS COMMITTED NO ERROR IN LAW OR ON FACTS IN INITIATING THE PROCEEDI NGS U/S. 147 OF THE I.T. ACT 1961 HE HAS FOLLOWED THE DUE PROCESS OF LAW AND HAS RECO RDED THE REASONS FOR ISSUE OF THE NOTICE U/S. 148 HE HAS ALSO MET THE REQUIREMEN T OF LAW TO CONVEY THE SAID REASONS TO THE APPELLANT. 4.1.1 I HAVE ALSO CAREFULLY PERUSED THE REASONS RE CORDED. IN THIS CASE INFORMATION WAS RECEIVED BY ADDL. DIRECTOR (INV) L UCKNOW THAT THE APPELLANT HAS PURCHASED A PLOT OF LAND FROM ELDECO FOR $ 5 38 860/- IN THE A.Y 1999-2000 THE SAID INTIMATION CONVEYED TO THE AO THAT THE APPELLA NT COULD NOT GIVE ANY SPECIFIC CLARIFICATION DURING THE COURSE OF INQUIRY AS REGAR DS THE INVESTMENT MADE. THUS THERE EXISTED RELEVANT MATERIAL AND INFORMATION WHI CH COULD PRIMA-FACIE LEAD TO FORMATION OF REQUISITE REASON TO BELIEVE THAT INC OME HAS ESCAPED ASSESSMENT TO THE EXTENT OF PURCHASE PRICE PAID BY THE APPELLANT. 4.1.2 AT THE INITIATION STAGE WHAT IS REQUIRED TO BE LOOKED INTO IS WHETHER THERE WAS ANY RELEVANT MATERIAL ON WHICH A REASONABLE PER SON CAN FORM THE REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY P ROVE THE ESCAPEMENT OF INCOME IS NOT A CONCERN AT THE STAGE OF ISSUANCE OF NOTICE U/S.148. THE ASSESSING OFFICER IS NOT REQUIRED TO HAVE FINALLY ASCERTAINED THE FAC T OR REACHED A FINAL CONCLUSION OF ESCAPEMENT OF INCOME. THIS VIEW IS FULLY SUPPORTED NOW BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKER (P) LTD. REPORTED IN (2007) 291 ITR 500 (SC) WHEREIN AF TER DEALING WITH THE LAW RELATED TO REOPENING OF ASSESSMENT AS STANDS AMEND ED WITH EFFECT FROM 1.4.1989 THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER:- SEC. 147 AUTHORISES AND PERMITS THE ASSESSING OFFI CER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. TH E WORD REASON IN :-4-: THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNO W OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT IT CAN BE SAID TO HAVE REAS ON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANN OT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCE RTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE ASSESS ING OFFICER IS TO ADMINISTER THE STATUE WITH SOLICITUDE FOR THE PUBLI C EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE DELHI HIGH COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. VS. ITO (1 991) 98 CTR (SC) 161 : (1991) 191 ITR 662 (SC) FOR INITIATION OF ACT ION U/S. 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT O F THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT ST AGE 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 ESTABL ISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE THE ON LY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE P ERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS W OULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. T HIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WIT HIN THE REALM OF SUBJECTIVE SATISFACTION (SEE ITO VS. SELECTED DALURBAND COAL C O. (P) LTD. (1996) 132 CTR (SC) 162 : (1996) 217 ITR 597 (SC); RAYMOND WOO LLEN MILLS LTD. VS. ITO (1999) 152 CTR (SC) 418: (1999) 236 ITR 34 (SC) ] THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTE D WITH EFFECT FROM APRIL 1 1989 AS ALSO SECTION 148 TO 152 ARE SUBSTANTIALLY D IFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION . UNDER THE OLD PROVISIONS OF SECTION 147 SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMEN T FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION U/S. 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATI SFIED: FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME-TAX HAVE ESCAPED ASSESSMENT A ND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEME NT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. :-5-: BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE U/S. 148 READ WITH SECTION 147(A). (PAGE 511/512) 4.1.3. IN THE PRESENT CASE THE INFORMATION REFERRE D TO IN THE REASONS RECORDED CONSTITUTES THE RELEVANT MATERIAL AND THE SUBMISS IONS TO THE CONTRARY AS MADE BY THE LD. COUNSEL FOR THE APPELLANT ARE NOT ACCEPTABL E. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUN AL. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND FURTHER SUBMITTED THAT NOTICE U/S. 148 O F THE ACT HAS BEEN ISSUED ON PRESUMPTION BASIS KEEPING IN MIND THAT THE TOTAL IN VESTMENT TOWARDS PURCHASE OF PLOT THROUGH ELDECO HOUSING AND INDUSTRIES LTD. HAS BEEN MADE IN THE FINANCIAL YEAR 1998-99 AND TOTAL PAYMENTS HAD BEEN MADE IN THAT YEAR ONLY. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R AND WRONGLY MISPLACED THE LINES OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CA SE OF ACIT VS. RAJESH JHAVERI STOCK BROKER (P) LTD. [2007] 291 ITR 500 (SC) WHICH IS CL EARLY DISTINGUISHABLE ON FACTS. IT WAS POINTED OUT THAT IN THE SAID CASE THE ISSUE BEFORE THE HON'BLE APEX COURT WAS AS TO WHETHER IN A CASE WHERE RETURN IS FILED AND THE ASS ESSING OFFICER DOES NOT INITIATE PROCEEDINGS U/S. 143(2) BUT SUBSEQUENTLY ISSUES NOT ICE U/S. 148 OF THE ACT THE PROCEEDINGS ARE VITIATED BY THE PRINCIPLES RELATING TO REASON TO BELIEVE BEING BASED ON CHANGE OF OPINION AND IT HAS BEEN HELD THAT AFTER T HE SUBSTITUTION OF SECTION 143(1) W.E.F. 1.6.1999 THE ACKNOWLEDGEMENT OF THE RETURN IS DEEM ED TO BE INTIMATION BUT IT CANNOT BE INFERRED THAT THE ACKNOWLEDGEMENT AS SUCH OR INTIMA TION IN RESPECT OF DEMAND/REFUND ARISING OUT OF SUCH RETURN IS EQUIVALENT TO ASSESSM ENT ORDER. HENCE THE PRINCIPLE OF CHANGE OF OPINION WOULD NOT VITIATE THE ACTION U/S. 147/148 OF THE ACT IN A CASE WHERE NO ASSESSMENT HAS BEEN MADE U/S. 143(3) OR 144 OR 147 OF THE ACT. IT WAS SUBMITTED THAT THE FACTS OF THE PRESENT CASE ARE BASICALLY DIFFERE NT FROM THE FACTS OF THE AFORESAID CASE RELIED UPON BY THE LD. CIT(A) IN SO MUCH SO THAT TH E A.O ISSUED NOTICE U/S. 148 OF THE ACT ON THE BASIS OF INFORMATION GIVEN BY THE ADIT (INVE STIGATION) THAT SHRI CHUNNI LAL ASSTT. REGIONAL TRANSPORT OFFICER 18 CIVIL LINES FAIZAB AD HAS INVESTED $ 5 38 860/- IN PURCHASE OF LAND SITUATED IN 150 RAFI AHMAD KIDWAI NAGAR SCHEME (ELDECO GREEN) GOMTI NAGAR LUCKNOW FOR WHICH HE HAS NOT FURNISHED THE DETAILS OF THE AMOUNT SO INVESTED. IT WAS CONTENDED THAT THE ASSESSING OFF ICER HAD NOT APPLIED HIS MIND TO THE :-6-: AFORESAID INFORMATION TO DERIVE INDEPENDENTLY AT A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AND THAT THE NOTICE U/S. 148 HAS BEEN IS SUED BY THE ASSESSING OFFICER WITHOUT ASSUMING JURISDICTION U/S. 147 OF THE ACT. THEREFORE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS ILLEGAL AND LIABLE TO BE CANCELLED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW:- 1. CIT VS. SFIL STOCK BROKING LTD. [2010] 325 ITR 2 85 (DELHI). 2. SHEO NATH SINGH VS. APPELLATE ASSTT. COMMISSIONE R 82 ITR 147 (SC). 8. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE FURNI SHED EVIDENCES TO ADDUCE THAT THE INSTALLMENTS WERE PAID DURING THE PREVIOUS YEARS RE LEVANT TO THE ASSESSMENT YEARS 1994- 95 TO 1998-99. THEREFORE SUSTENANCE OF ADDITION OF THE SUM OF $ 5 38 860/- AS UNEXPLAINED INVESTMENT TO THE TOTAL INCOME OF THE A SSESSMENT YEAR 1999-2000 WAS NOT JUSTIFIED. THE ASSESSEE FURNISHED DETAILS OF THE P AYMENTS AS UNDER:- SL.NO. DATE AMOUNT (RS.) NAME OF PAYEE MODE OF PAYMENT 1 23.08.93 55 000 ELDICO HOUSING & INDUSTRIES LTD. CHEQUE/DRAFT NO.295712 & 295713 DATED 23.8.93 2 07.02.94 45 000 ELDICOS CITY RETAIL CENTRE CASH 3 17.03.94 50 000 -DO- CASH 4 07.06.94 50 000 -DO- CASH 5 24.08.94 50 000 -DO- CASH 6 24.11.94 1 00 000 -DO- CASH 7 28.02.95 50 000 -DO- CASH 8 10.10.96 1 16 645 ELDICO HOUSING & INDUSTRIES LTD. CASH 9 18.11.96 2 710 -DO- CASH 10 21.08.98 7 590 -DO- CASH 11 23.10.98 23 745 -DO- CASH 9. IT WAS FURTHER SUBMITTED THAT IN THE REASONS REC ORDED FOR TAKING ACTION U/S. 147 OF THE ACT THE ASSESSING OFFICER SIMPLY RELIED THE LE TTER OF THE ADIT (INVESTIGATION) DATED :-7-: 6.3.2006 AND DID NOT APPLY HIS MIND TO COME TO THE CONCLUSION THAT ANY INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IT WAS FURTHER SU BMITTED THAT EXPLANATION 2(B) OF SECTION 147 OF THE ACT TALKS ABOUT PRESUMPTION FOR ESCAPED INCOME AND NOT FOR INVESTMENT. IT WAS POINTED OUT THAT THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 1999-2000 WAS BELOW TAXABLE LIMIT THEREFORE RETUR N OF INCOME WAS NOT FILED. HOWEVER FOR THE REMAINING YEARS RETURNS OF INCOME WERE FILE D WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT AND NEITHER THE ASSESSING OFFICER NOR TH E DIRECTOR OF INVESTIGATION INCOME- TAX ASKED THE ASSESSEE ABOUT THE SOURCES OF INVESTM ENT AS THERE WAS NO APPLICATION OF MIND AND THE CASES WERE REOPENED WITHOUT APPLYING T HE MIND BUT ONLY ON THIS BASIS THAT INVESTMENT HAS BEEN MADE BUT THE VITAL FACT THAT T HE ASSESSEE MADE INVESTMENTS IN EARLIER YEARS FROM HIS OWN SOURCES HAS BEEN IGNORED . ACCORDINGLY IT WAS SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. 10. IN HIS RIVAL SUBMISSIONS THE LD. D.R. STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT FILED RETURN AS SUCH THERE WAS NO DISCLOSURE OF THE INVESTMENT FOR ASSESSMENT YEAR 1999-2000 AND EVEN FOR THE SUBSEQUENT ASSESSMENT YEARS NOTHING WA S STATED REGARDING INVESTMENT. THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN P RESUMING THAT THE INCOME OF THE ASSESSEE WHICH WAS UTILSIED FOR MAKING INVESTMENT I N THE HOUSE PROPERTY ESCAPED ASSESSMENT. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF BRIJ MOHAN AGARWAL VS. ACIT AND ANOT HER [2004] 268 ITR 400. 11. IN HIS REJOINDER THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE FACTS OF THE CASE IN BRIJ MOHAN AGARWAL VS. ACIT AND ANOTHER (SU PRA) RELIED BY THE LD. D.R. ARE DIFFERENT FROM THE FACTS OF THE ASSESSEES CASE BEC AUSE IN THE SAID CASE THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN ON SALE OF SHARES ASSESSABLE AT THE SPECIFIED RATE OF 10% IN THE RETURN OF INCOME WHICH WAS ACCEPTED U/S. 143(1) OF THE ACT AND SUBSEQUENTLY THERE WAS A SEARCH BY THE INVESTIGATION WING IN THE CASE OF SHARE BROKERS REVEALING THAT PURCHASE AND SALE OF SHARES WERE BOGUS AND THE FIND INGS OF THE INVESTIGATION WING WERE BASED ON THE EVIDENCES AND STATEMENTS PROVING CERTI FICATE REGARDING PURCHASE AND SALE OF SHARES BASED ON BOGUS ENTRIES AND CONSEQUENTLY S PECIFIC TAX EVASION AND THE ASSESSING OFFICER AFTER APPLYING HIS MIND TO THE EV IDENCES GATHERED BY THE INVESTIGATION WING ISSUED NOTICE U/S. 148 OF THE ACT. THE ASSESS EE CONSEQUENT TO THE ACTION OF THE ASSESSING OFFICER FILED WRIT. HOWEVER IN THE ASS ESSEES CASE THE ISSUE RELATING TO LONG TERM CAPITAL GAIN WAS NOT INVOLVED NEITHER ANY SEA RCH TOOK PLACE NOR ANY EVIDENCE WAS COLLECTED OR RECEIVED BY THE ASSESSING OFFICER AND EVEN THERE WAS NO APPLICATION OF MIND :-8-: BEFORE ISSUING NOTICE U/S. 148 OF THE ACT AS SUCH T HE FACTS OF THE ASSESSEES CASE ARE DISTINGUISHABLE FROM THE FACTS INVOLVED IN THE CASE OF BRIJ MOHAN AGARWAL VS. ACIT AND ANOTHER (SUPRA) RELIED BY THE LD. D.R. RELIANCE WA S PLACED ON THE DECISION OF ITAT A BENCH LUCKNOW IN THE CASE OF THE ITO WARD 6(2) K ANPUR VS. M/S RICH CAPITAL & FINANCIAL SERVICES LTD. KANPUR IN ITA NO. 508/LUC/ 2010 FOR ASSESSMENT YEAR 2001-02 ORDER DATED 29.9.2001. THE COPY OF THE SAID ORDER WAS FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE P RESENT CASE IT IS NOTICED THAT THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM ADIT(INVESTIGATION) LUCKNOW. THE REASONS REC ORDED BY THE A.O. READS AS UNDER:- THIS FACT CAME TO KNOWLEDGE THROUGH LETTER NO. ADD L. DIT/INV./TEP/X 120/04-05 DATED 06.03.2006 SENT BY THE ADDITIONAL D IRECTOR OF INCOME-TAX (INVESTIGATION) LUCKNOW THAT $ 5 38 860/- HAS BEEN INVESTED IN PURCHASE OF LAND SITUATED AT 150 RAFI AHMAD KIDWAI NAGAR SCHEME (EL DECO GREEN) GOMTI NAGAR LUCKNOW IN THE ASSESSMENT YEAR 1999-2000 BY SHRI CHUNNI LAL ASSISTANT REGIONAL TRANSPORT OFFICER 18 CIVIL LINES FAIZAB AD. DURING THE COURSE OF INVESTIGATION NO CLEAR DETAIL OF THE SAID INVESTMEN T AMOUNTING TO $ 5 38 860/- COULD BE TOLD. THEREFORE I HAVE SUFFICIENT REASON TO BELIEVE THAT THE SUM OF $ 5 38 860/- INVESTED IN THE PURCHASE OF LAND BY SHRI CHUNNI LAL ASSISTANT REGIONAL TRANSPORT OFFICER 18 CIVIL LINES FAIZABAD IN ASSESSMENT YEA R 1999-2000 HAS ESCAPED INCOME-TAX ASSESSMENT. SINCE RETURN OF INCOME FOR T HE SAID YEAR HAS NOT BEEN FILED BY' THE ASSESSEE. THEREFORE KEEPING IN VIEW EXPLANATION 2(A) OF SECTION 147 OF THE INCOME-TAX ACT NOTICE UNDER SECTION 148 IS BEING ISSUED. 13. FROM THE ABOVE IT IS CRYSTAL CLEAR THAT THE AS SESSING OFFICER ACTED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING. IN THE SAID INFORMATION IT WAS STATED THAT THE ASSESSEE INVESTED A SUM OF $ 5 38 860/- IN PURCHASE OF LAND SITUATED IN 150 RAF I AHMAD KIDWAI NAGAR SCHEME (ELDECO GREEN) GOMTI NAG AR LUCKNOW. HOWEVER IT HAS NOT BEEN STATED THAT THE SAID INVESTMENT WAS OUT OF UNDISCLOSED INCOME OF THE ASSESSEE :-9-: OR OUT OF INCOME WHICH ESCAPED ASSESSMENT. THE ASS ESSING OFFICER ALSO HAD NOT MENTIONED IN THE AFORESAID REASONS THAT HE WAS SATI SFIED THAT THE SAID SUM OF $ 5 38 860/- ESCAPED INCOME-TAX ASSESSMENT. HE SIMPLY RELIED ON THE INFORMATION GIVEN BY THE ADIT(INVESTIGATION). IT IS WELL SETTLED THAT IN CA SE OF INCOME ESCAPING ASSESSMENT THE ASSESSING OFFICER IS REQUIRED TO ISSUE NOTICE U/S. 148 OF THE ACT TO ASSESS THE INCOME U/S. 147 OF THE ACT READ WITH SECTION 143(3) OF THE ACT. THE PROVISIONS CONTAINED IN SECTION 147 OF THE ACT READ AS UNDER:- 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BELIEVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 A SSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION OR RECOMPUTE THE LOSS OR THE DEPRECIA TION ALLOWANCE OR ANY OTHER ALLOWANCE AS THE CASE MAY BE FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF S ECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS F ROM 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 O N THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUBSECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR TH AT ASSESSMENT YEAR: 14. FROM THE ABOVE PROVISIONS IT IS CLEAR THAT THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT. HOWEVER IT CANNOT BE SAID THAT IF THERE IS ANY INVESTMENT IT I S SUFFICIENT TO BELIEVE THAT THE INCOME TO THAT EXTENT ESCAPED ASSESSMENT BECAUSE THERE MAY BE SO MANY SOURCES FOR MAKING INVESTMENT AND IT IS NOT NECESSARY THAT ONLY ON THE BASIS OF INVESTMENT IT CAN BE PRESUMED THAT THE INCOME TO THAT EXTENT ESCAPED ASS ESSMENT. THERE SHOULD BE A CONCRETE FINDING BEFORE COMING TO THE CONCLUSION TH AT ANY INCOME HAS ESCAPED ASSESSMENT AND MERELY ON THE BASIS OF THE INFORMATI ON PROVIDED BY ANY ANOTHER WING OF :-10-: THE INCOME-TAX DEPARTMENT THE ASSESSING OFFICER CA NNOT BELIEVE THAT THERE WAS INCOME WHICH HAS ESCAPED ASSESSMENT. ON A SIMILAR ISSUE THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SFIL STOCK BROKING LTD. (SUPRA) HAS HELD AS UNDER:- THAT THE FIRST SENTENCE OF THE REASONS RECORDED BY THE ASSESSING OFFICER WAS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF IN COME-TAX (INVESTIGATION). THE SECOND SENTENCE WAS A DIRECTION GIVEN BY THE SAME D EPUTY DIRECTOR OF INCOME- TAX (INVESTIGATION) TO ISSUE A NOTICE U/S. 148 AND THE THIRD SENTENCE AGAIN COMPRISED A DIRECTION GIVEN BY THE ADDITIONAL COMMI SSIONER OF INCOME-TAX TO INITIATE PROCEEDINGS U/S. 148 IN RESPECT OF CASES P ERTAINING TO THE RELEVANT WARD. THE ASSESSING OFFICER REFERRED TO THE INFORMATION A ND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE U/S. 148. THESE COULD NOT BE THE REASONS FOR PROCEEDING U/S. 147/14 8 OF THE ACT. AS THE FIRST PART WAS ONLY AN INFORMATION AND THE SECOND AND THE THIR D PARTS OF THE REASONS WERE MERE DIRECTIONS IT WAS NOT AT ALL DISCERNIBLE AS T O WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPEN DENTLY ARRIVED AT A BELIEF THAT ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HI M INCOME HAD ESCAPED ASSESSMENT. THERE WAS NO SUBSTANTIAL QUESTION OF L AW FOR CONSIDERATION. 15. IN THE PRESENT CASE ALSO THE ASSESSING OFFICER SIMPLY ACTED UPON THE INFORMATION OF THE ADIT (INVESTIGATION). THE FIRST PART OF THE REASONS RECORDED U/S. 147 OF THE ACT BY THE ASSESSING OFFICER SIMPLY STATES ABOUT INFORMATI ON RECEIVED THROUGH LETTER NO.ADDL.DIT/INV./TEP/X-120/04-05 DATED 6.3.2006 SEN T BY THE ADDL. DIRECTOR OF INCOME- TAX (INVESTIGATION) AND SECOND PART STATES THAT THE ASSESSING OFFICER THEREFORE HAD SUFFICIENT REASON TO BELIEVE THAT THE SAID AMOUNT E SCAPED INCOME-TAX ASSESSMENT WHICH CLEARLY SHOWS THAT THE ASSESSING OFFICER SIMPLY ACT ED UPON THE INFORMATION AND DID NOT APPLY HIS OWN MIND TO THE INFORMATION TO ARRIVE AT A BELIEF INDEPENDENTLY THAT ON THE BASIS OF MATERIAL WHICH HE HAD BEFORE HIM THE INCOME HAD ESCAPED ASSESSMENT. WE ARE THEREFORE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. SINCE FROM THE REASONS RECORDED BY THE ASSESSING OFFICER IT IS CLEAR THAT HE HAD NOT REFERRED TO ANY MATERIAL WHICH COUL D JUSTIFY HIS CONCLUSION THAT THE ASSESSEE HAD EARNED INCOME FOR MAKING INVESTMENT IN THE HOUSE PROPERTY IN QUESTION. THEREFORE INITIATION OF PROCEEDINGS U/S. 147 OF TH E ACT CANNOT SAID TO BE A VALID PROCEEDING. FOR THE AFORESAID VIEW WE ARE ALSO FO RTIFIED BY THE DECISION OF ITAT LUCKNOW A BENCH LUCKNOW IN THE CASE OF ITO WARD 6(2) KANPUR VS. M/S RICH CAPITAL :-11-: & FINANCIAL SERVICES LTD. KANPUR (SUPRA). WE DEEM IT PROPER TO REPRODUCE THE FINDINGS GIVEN IN THE SAID ORDER VIDE PARAS 6 TO 6.4(III) WH ICH READ AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI PRAVE EN KUMAR LD. CIT(DR) SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN FOLLOWING THE ORDER OF THE I.T.A.T. LUCKNOW-B LUCKNOW DATED 18.11.2009 PASSED IN ASSES SEES CASE FOR THE ASSESSMENT YEAR 2000-01. SHRI PRAVEEN KUMAR LD.D. R. POINTED OUT THAT WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2000-01 TH E TRIBUNAL HAS IGNORED THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN BRIJ MOHAN AGARWAL VS.ACIT (2004) 268 ITR 400(ALL.) THE HON'BLE SUPREME COURT IN RAYMOND WOOLLEN MILLS LTD. VS. ITO (1999) 236 ITR 34(S.C.) AND THE HON'B LE KERALA HIGH COURT IN CIT VS. ABDUL KHADER AHAMED (2006) 285 ITR 57 (KER.). W E FIND THAT IN THE ASSESSMENT YEAR 2000-01 IN THE ASSESSEES CASE THE TRIBUNAL HAS QUASHED THE RE-ASSESSMENT ORDER ON SIMILAR SET OF FACTS AND THE REFORE THE DECISION RENDERED IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 2000-01 I S DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE FURTHER FIND THAT THE REASONS FOR RE-OPENING THE ASSESSMENT ARE ALMOST SIMILAR FOR BOTH THE YEARS. T HE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT FOR ASSESSMENT YEAR 200 0-01 ARE AS UNDER: A PERUSAL OF RECORDS AND INFORMATION RECEIVED FROM ADDL. DIRECTOR OF INCOME TAX (INV.) KANPUR VIDE HIS LETTER F.NO. ADD L. DIT (INV.)/ENQUIRY/RICH CAPITAL/06-07/1135 DATED 22.03. 2007 IT IS TRANSPIRED THAT THE ASSESSEE HAS DEPOSITED CASH ON DIFFERENT DATES IN BANK A/C NO. C.A.-2633 WITH PUNJAB NATIONAL BANK S HASTRI NAGAR KANPUR DURING THE F.Y. 1999-2000 RELEVANT TO A.Y. 2 000-01 TO THE TUNE OF $ 12914000/-. AS SUCH THE SOURCE OF THESE CASH DEPOS ITS AMOUNTING TO $ 12914000/- LEADS TO THE CONCLUSION THAT ALL THESE C ASH DEPOSITS ARE UNEXPLAINED. FROM THE PERUSAL OF P/L ACCOUNT IT IS SEEN THAT T HE ASSESSEE HAS SHOWN INTEREST AT $ .500575/- AS AGAINST THE INTEREST SHOWN AT $ 1573555/- IN THE A.Y. 1999-00. THE LOANS & ADVANCES SHOWN ARE MORE THAN THE PRECEDING YEAR I.E. $ .67163442/- IN THE YEAR RELEVANT TO A.Y. 2000-2001 AND RS.66288442/- IN A.Y. 1999-00. T HIS SHOWS THAT THE ASSESSEE HAS SHOWN SHORT RECEIPT OF INTEREST OF APPROXIMATELY $ 1100000/- IN THE A.Y. 2000-2001. :-12-: IN VIEW OF THE ABOVE FACTS AND THE INFORMATION IN POSSESSION OF THE UNDERSIGNED I AM OF THE OPINION THAT THE ASSES SEE HAS CONCEALED THE INCOME TO THE EXTENT OF $ 14014000/- (12914000 + 1100000/-) CHARGEABLE TO TAX FOR A.Y. 2000-01 HAS E SCAPED ASSESSMENT. ACCORDINGLY ISSUE NOTICE U/S 148 OF TH E INCOME TAX ACT 1961 FOR THE A.Y. 2000-2001. 6.1 THE REASONS RECORDED FOR RE-OPENING THE ASSESSM ENT FOR ASSESSMENT YEAR 2001-02 ARE AS UNDER : FROM THE PERUSAL OF RECORDS AND INFORMATION RECEI VED FROM DY. DIRECTOR OF INCOME TAX (INV)-2 KANPUR VIDE HIS LETTER F.NO. DD IT(LNV)- 2/KNP/GIFT/RCFSL/0708/1860 DATED 24.03.08 IT IS TR ANSPIRED THAT THE ASSESSEE HAS DEPOSITED CASH DEPOSITS ON DIFFERENT D ATES IN BANK A/C NO.622-0-5046398 MAINTAINED WITH STANDARD CHARTERED BANK KANPUR DURING THE F.Y. 2000-01 RELEVANT TO A.Y. 2001-02 TO THE TUNE OF $ 42 38 300/- AS FOLLOWS: DATE OF DEPOSIT AMOUNT MODE OF DEPOSIT XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX THE DY. DIRECTOR OF INCOME TAX (INV.)-2 KANPUR IN H IS REPORT HAD STATED THAT THE ASSESSEE HAD FAILED TO PROVE THE SOURCE OF CAS H DEPOSITS IN THE ABOVE MENTIONED BANK ACCOUNTS. THUS THE SOURCE OF THESE CASH DEPOSITS AMOUNTING TO $ .42 38 300/- STANDS UNEXPLAINED. IN VIEW OF THE ABOVE FACTS AND INFORMATION IN POSSE SSION OF THE UNDERSIGNED I AM OF THE OPINION THAT THE ASSESSEE HAS CONCEALED THE INCOME TO THE EXTENT OF $ .42 38 300. I THEREFORE HAVE REASONS TO BELIEVE THAT INCOME OF $ .43 38 300 CHARGEABLE TO TAX FOR A.Y. 2002-03 HAS ESCAPED ASSESSMENT. 6.2 FROM THE ABOVE IT IS CLEAR THAT EXCEPT THE AMO UNTS REASONS ARE ALMOST SIMILAR FOR BOTH THE YEARS. WHILE QUASHING THE RE-A SSESSMENT FOR ASSESSMENT YEAR 2000-01 THE TRIBUNAL HELD AS UNDER: 18. THIS NOTING THOUGH IT WAS NOT COMPLETE VERSIO N OF REPORT RECEIVED FROM ADDL. DIT YET RAISES AN IMPORTANT ISSUE WHEN HE SAYS SOURCE OF :-13-: THESE CASH DEPOSITS LEAD TO THE CONCLUSION THAT THE SE CREDITS WERE UNEXPLAINED AND THE ISSUE SO ARISES IS AS WHAT WAS THE MATERIAL WITH RESPECT TO SOURCE WITH THE AO (IF AT ALL THERE WAS ANY). IT WAS ONLY DOUBT BUT NOT TO HAVE REASONS TO BELIEVE MEANING THERE B Y THAT EVEN IF THERE WAS SOME MATERIAL IN RESPECT OF SOURCE IT WAS NOT SUFF ICIENT FOR ARRIVING AT THE CONCLUSION THAT THE DEPOSITS REPRESENTED UNEXPLAINE D INCOME. IN OTHER WORDS THE AO HAD JUST SUSPICION IN HIS MIND AND SIN CE IT IS TRITE LAW THAT AN ASSESSMENT CAN NOT BE REOPENED SOLELY ON THE BASIS OF SUSPICION THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT ON THE BASIS OF THIS ASPECT ALSO WAS NOT VALID IN THE EYES OF LAW. 19. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE ARE OF THE OPINION THAT INITIATION OF PROCEEDINGS U/S147 OF THE ACT S O FAR AS ALLEGATION OF ESCAPEMENT OF INCOME ON ACCOUNT OF UNEXPLAINED DEPO SITS IN BANK IS CONCERNED WAS ILLEGAL AND BAD IN LAW AND CAN NOT B E SUSTAINED. 19.1 FROM THE ABOVE NOTING IT IS CLEAR THAT THERE W AS NO APPLICATION OF MIND BY ASSESSING OFFICER. 20. SO FAR AS SECOND REASONS FOR INITIATING PROCEED INGS U/S 147 IS CONCERNED THE SAME AS NOTED FOR REASONS RECORDED IS AS UNDER:- FROM THE PERUSAL OF P/L ACCOUNT IT IS SEEN THAT T HE ASSESSEE HAS SHOWN INTEREST AT $ 500575/- AS AGAINST THE INTEREST SHOWN AT RS. 1573555/- IN THE A.Y. 1999-00. THE LOANS & ADVANCES SHOWN ARE MORE THAN THE PRECEEDING YEAR I.E. $ 67163442/- IN THE YEAR RELEVANT TO A.Y. 2000-2001 AND $ 66288442/- IN A.Y. 1999-00. THIS SHOWS THAT THE ASSESSEE HAS SHOWN SHORT RECEIPT OF INTEREST OF APPROXIMATELY $ 1100000/- IN THE A.Y. 2000-2001. 21. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS FACTS AND CIRCUMSTANCES OF THE CASE HERE AGAIN WE ARE OF THE OPINION THAT THE AO HAVING NOT REFERRED TO ANY MATERIAL WHICH COULD JUS TIFY HIS CONCLUSION THAT ASSESSEE SHOULD HAVE EARNED MORE INTEREST THAN INTE REST IN THE PREVIOUS YEAR THE INITIATION CAN NOT BE SAID TO BE VALID. WITHOUT THERE BEING ANY DETAIL AS TO THE PERIOD FOR WHICH THE ADVANCES/LOA NS WERE GIVEN OR HOW MUCH INTEREST WAS RECEIVED OR COULD HAVE RECEIVED AS PER AGREEMENTS SIMPLY TO DOUBT THAT INTEREST RECEIVED BY THE ASSE SSEE IN THIS YEAR BEING :-14-: LESS THAN THE INTEREST RECEIVED IN THE PREVIOUS YEA R AS RESULTED IN ESCAPEMENT OF INTEREST INCOME OF APPROXIMATELY 11 L AKHS AND THAT TOO ONLY BECAUSE TOTAL AMOUNT OF ALLOWANCE AND ADVANCES AT THE END OF THIS YEAR WAS A LITTLE MORE THAN THE AMOUNT OUTSTANDING AT T HE END OF PREVIOUS YEAR. HERE AGAIN WE ARE OF THE OPINION THAT THE PROCEEDI NGS HAVE BEEN INITIATED ON SUSPICION AND FOR MAKING ROVING ENQUIRIES AND SI NCE IT IS TRITE LAW THAT PROCEEDINGS U/S 147 OF THE ACT CAN NOT BE INITIATED EITHER ON THE BASIS OF MERE SUSPICION OR FOR MAKING FISHING OR ROVING ENQU IRIES THE INITIATION OF THE PROCEEDINGS U/S 147 OF THE ACT ON THIS GROUND WAS A LSO ILLEGAL AND BAD IN LAW. AFORESAID VIEW IS SUPPORTED BY THE DECISION IN FOLLOWING CASES. (I) CCST V. MODI INDUSTRIES LTD. (1987) 67 STC 34 1 (ALL) (II) GENERAL ELECTRIC COMPANY OF INDIA LTD. V STO (1974) 33 STC 108 (ALL) (III) M.L. SHUKLA V. STO (1981) UPTC 396 (ALL)} (IV) KANHAIYALAL DMODAR DAS V. CST (1989) 73 STC 40 4 406 (ALL). (V) {SMT. KANTAMANI VENKATA SATYAVATHI V. ITO (196 7)64 ITR 516 521 (AP); (VI) MADHYA PRADESH INDUSTRIES LTD. V. ITO (1965) 5 7 ITR 637(SC) (VII) BHIMRAJ PANNA LAL V. CIT (1957) 32 ITR 289 ( PAT) AFFIRMED (1961) 41 ITR 221(SC) (VIII) M. VARADARAJULU V. ITO (1974) 97 ITR 476 ( MAD) (IX) SIESTA STEEL CONSTRUCTION PVT. LTD. V. K.K. S HUKARE (1985) 154 ITR 547 (BOM); (X) CHUNNILAL SURAJMAL V. CIT (1986) 160 ITR 141 ( PAT)}. 22. IN VIEW OF THE AFORESAID DISCUSSION FACTS AND C IRCUMSTANCES OF THE CASE AND DECISIONS REFERRED THEREIN WE ARE OF THE O PINION THAT INITIATION PROCEEDINGS U/S 147 OF THE ACT IN PRESENT CASE AS W ELL AS ISSUANCE OF NOTICE U/S 148 OF THE ACT WAS ILLEGAL AND BAD IN LA W AND CONSEQUENTLY ALL SUBSEQUENT PROCEEDINGS INCLUDING REASSESSMENT FRAM ED ON 20.12.2007 GOT VITIATED. THE REASSESSMENT COMPLETED ON 20.12.2 007 IS THEREFORE QUASHED BEING BAD IN LAW AND VOID AB INITIO. 6.3 AS WE HAVE ALREADY HELD THAT THE FACTS AND CIRC UMSTANCES OF THE PRESENT CASE AND THE REASONS RECORDED FOR RE-OPENING THE AS SESSMENT ARE ALMOST SIMILAR FOR BOTH THE YEARS THEREFORE THE LD.CIT(A) WAS F ULLY JUSTIFIED IN FOLLOWING THE DECISION OF THE TRIBUNAL REFERRED TO ABOVE. 6.4 NOW WE WILL DISCUSS THE DECISIONS RELIED UPON BY THE LD.D.R. 6.4 (I) IN THE CASE OF BRIJ MOHAN AGARWAL (SUPRA) T HE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT AT THE STAGE OF ISSUING O F NOTICE UNDER SECTION 148 OF THE :-15-: ACT IT IS REQUIRED THAT THE BELIEF OF THE AO MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUND AND NOT ON MERE SUSPICION GOSSIP OR RUMOURS. WHILE DECIDING THE APPEAL FOR TH E ASSESSMENT YEAR 2000-01 THIS BENCH OF THE TRIBUNAL HAS CATEGORICALLY HELD T HAT THE RE-ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED ON SUSPICION AND FO R MAKING ROVING ENQUIRIES AND SINCE IT IS TRITE LAW THAT PROCEEDINGS UNDER SECTIO N 147 CANNOT BE INITIATED EITHER ON THE BASIS OF MERE SUSPICION OR MAKING FISHING OR ROVING ENQUIRIES THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT ON THIS GROUND WAS ALSO ILLEGAL AND BAD IN LAW. THUS THE ABOVE DECISION SUPPORTS THE V IEW TAKEN BY THE TRIBUNAL IN ASSESSMENT YEAR 2000-01. 6.4.(II) SHRI PRAVEEN KUMAR LD.D.R. ALSO RELIED O N THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITO (SUPRA) WHEREIN THE HON'BLE SUPREME COURT HELD THAT THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. WE ARE OF THE VIEW THAT T HE COURT CANNOT STRIKE DOWN THE REOPENING OF THE CASE IN THE FACTS OF THIS CASE. IT WILL BE OPEN TO THE ASSESSEE TO PROVE THAT THE ASSUMPTION OF FACTS MADE IN THE NOTICE WAS ERRONEOUS. THE ASSESSEE MAY ALSO PROVE THAT NO NEW FACTS CAME TO THE KNOWLEDGE OF THE INCOME-TAX OFFICER AFTER COMPLETIO N OF ASSESSMENT PROCEEDINGS. WE ARE NOT EXPRESSING ANY OPINION ON T HE MERITS OF THE CASE. THE QUESTIONS OF FACTS AND LAW ARE OPEN TO BE INVES TIGATED AND DECIDED BY THE ASSESSING AUTHORITY. THE APPELLANT WILL BE ENTI TLED TO TAKE ALL THE POINTS BEFORE THE ASSESSING AUTHORITY. IN THIS CASE THE HON'BLE SUPREME COURT HAS HELD TH AT THE COMMENCEMENT OF RE-ASSESSMENT PROCEEDINGS WAS VALID. HOWEVER NO DECISION WAS GIVEN ON THE ISSUE OF VALIDITY OF RE-OPENING. THE QUESTIONS OF F ACT AND LAW WERE LEFT OPEN TO BE INVESTIGATED BY THE ASSESSING AUTHORITY. HOWEVER I N THE INSTANT CASE THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U NDER SECTION 147 OF THE ACT. WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2000- 01 THE TRIBUNAL FOUND THAT THE AO HAD NOT REFERRED TO ANY MATERIAL WHICH COULD JUSTIFY HIS CONCLUSION THAT THE ASSESSEE SHOULD HAVE EARNED MORE INTEREST THAN INTE REST IN THE PREVIOUS YEAR. THE TRIBUNAL CATEGORICALLY HELD THAT THE INITIATION COULD NOT BE SAID TO BE VALID. IN :-16-: OUR OPINION THE DECISION OF THE HON'BLE SUPREME CO URT RENDERED IN THE CASE OF RAYMOND WOOLLEN MILLS (SUPRA) IS OF NO HELP TO THE REVENUE. 6.4(III) SHRI PRAVEEN KUMAR LD.D.R. ALSO RELIED ON THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF ABDUL KHADER AHAM ED (SUPRA). THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CAS E. IN THAT CASE THE AO INDEPENDENTLY APPLIED HIS MIND TO FACTS AND RECORDE D PRIMA FACIE BELIEF AND REASONS BEFORE ISSUING NOTICE. THE HON'BLE HIGH COU RT HELD THAT IT IS NOT A CASE OF ACTING UNDER DICTATES OF SUPERIOR OFFICER. THE HON'BLE COURT FURTHER HELD THAT IT WAS CLEAR FROM THE REASONS RECORDED BY THE DEPUTY C OMMISSIONER THAT HE PRIMA FACIE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD O MITTED TO DISCLOSE FULLY AND TRULY THE MATERIALS FACTS AND THAT AS A CONSEQUEN CE INCOME HAD ESCAPED ASSESSMENT. ON THESE FACTS THE HON'BLE HIGH COURT HELD THAT THE REASSESSMENT WAS VALID. THUS THE FACTS ARE ENTIRELY DIFFERENT A ND THEREFORE THIS DECISION IS ALSO OF NO HELP TO REVENUES CASE. 16. CONSIDERING THE TOTALITY OF THE FACTS AS DISCUS SED HEREINABOVE WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE A SSESSING OFFICER WITHOUT REFERRING TO ANY MATERIAL WHICH COULD JUSTIFY HIS CONCLUSION THA T THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT INSTANTIATED THE PROCEEDINGS U/S. 147 O F THE ACT THE SAID ACTION WAS NOT JUSTIFIED BECAUSE THE SAID ACTION APPEARS TO BE ON SUSPICION AND FOR MAKING ROVING ENQUIRIES. IN THAT VIEW OF THE MATTER ASSESSMENTS FRAMED ON THE BASIS OF NOTICES DATED 22.3.2006 ISSUED U/S. 148 OF THE ACT ARE SET ASIDE CONSIDERING THE SAME AS ILLEGAL AND BAD IN LAW HENCE VITIATED. SINCE WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE THEREFORE NO FINDING HAS BEEN GIVEN ON T HE OTHER GROUNDS CONTESTED BY THE ASSESSEE ON MERITS. 17. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLO WED. (ORDER PRONOUNCED IN THE OPENING COURT ON 28.2.2011 ) SD/- SD/- [H. L. KARWA] [ N. K. SAINI] VICE PRESIDENT ACCOUNTANT MEMBER DATED:28.2.2011 JJ:14-2502 :-17-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR