Smt. Shobha Prajapati, Faizabad v. The ITO, Faizabad

ITA 294/LKW/2010 | 2001-2002
Pronouncement Date: 28-02-2011

Appeal Details

RSA Number 29423714 RSA 2010
Assessee PAN ALEEP1118D
Bench Lucknow
Appeal Number ITA 294/LKW/2010
Duration Of Justice 9 month(s) 29 day(s)
Appellant Smt. Shobha 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 2001-2002
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.294 TO 296/LUC/2010 ASSESSMENT YEARS: 2001-02 2002-03 AND 2003-04 SMT. SHOBHA PRAJAPATI 18 CIVIL LINES FAIZABAD V. INCOME-TAX OFFICER-II FAIZABAD PAN: ALEEP1118D (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 THREE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST ORDERS DATED 20.1.2010 22.10.2010 AND 22.2.2010 FOR ASSESSMENT YEARS 2001-02 2002-03 AND 2003-04 RESPECTIVELY OF THE CIT(A)-I LUCKNOW. SIN CE SOME OF THE GROUNDS RAISED IN THESE APPEALS ARE COMMON AND THE APPEALS WERE HEARD TOGETHER WE DISPOSE OF THESE APPEALS BY A COMMON ORDER FOR THE SAKE OF CONVENIEN CE. 2. FIRST TWO GROUNDS IN ALL THESE APPEALS RELATING TO VALIDITY OF RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE INCOME-TAX ACT 1961 AR E 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. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN FAILING TO OBSERVE THAT THE NOTICE U/S. 148 OF THE INCOME-TAX ACT 1961 DAT ED 22.3.2006 WAS ISSUED BY THE INCOME-TAX OFFICER-II FAIZABAD WITHOUT HAVING JUR ISDICTION AND THE LD. INCOME-TAX OFFICER-I FAIZABAD HAS ILLEGALLY PASSED THE IMPUGN ED ASSESSMENT ORDER U/S. 147/143(3) WITHOUT ISSUING NOTICE U/S. 148 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 INDIVIDUAL AND DERIVES INCOME FROM KNITTING EMBROIDERY AND INCOME FROM AG RICULTURE. THE ASSESSEE FILED HER :-2-: RETURNS OF INCOME ON 30.7.2002 FOR THE ASSESSMENT Y EARS 2001-02 AND 2002-03 AND FOR THE ASSESSMENT YEAR 2003-04 ON 28.6.2003. IN HER R EGULAR RETURNS OF INCOME THE ASSESSEE HAD SHOWN BUSINESS INCOME AT RS.54 000/- RS.60 000/- AND RS.80 000/- FOR THE ASSESSMENT YEARS 2001-02 2002-03 AND 2003-04 R ESPECTIVELY WHILE AGRICULTURAL INCOME WAS SHOWN AT RS.1 20 000/- FOR EACH OF THE A FORESAID YEARS. SUBSEQUENTLY ON RECEIPT OF INFORMATIONS FROM ADDITIONAL DIRECTOR (I NV.) REGARDING INVESTMENT IN THE PROPERTY SITUATED AT 160 ELDECO GREEN LUCKNOW THE A.O INI TIATED 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 VIDE HER REPLY DAT ED 26.2.2006 SUBMITTED THAT THE RETURNS ALREADY FILED ON 30.7.2002 FOR ASSESSMENT YEARS 200 1-02 AND 2002-03 AND ON 28.6.2003 FOR ASSESSMENT YEAR 2003-04 MAY BE TREATED AS RETUR NS FILED IN COMPLIANCE TO THE NOTICE DATED 22.3.2006. THE A.O. FRAMED ASSESSMENTS U/S. 147/143(3) OF THE ACT ON PROTECTIVE BASIS BY CONSIDERING THE RETURNED INCOME AS INCOME OF HER HUSBAND ON SUBSTANTIVE BASIS. BESIDES THIS ADDITION THE ASSESSING OFFICE R ALSO MADE ADDITION ON ACCOUNT OF GIFT AMOUNTING TO RS.2.80 LAKHS FOR ASSESSMENT YEAR 2002 -03 AND RS.2.75 LAKHS FOR ASSESSMENT YEAR 2003-04. 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 AND SUBMITTED THAT THE ASSESSEE HAD ALREADY FILED HER RETURN TIMELY WHERE SHE HAD NOT UNDERSTAT ED HER INCOME OR CLAIMED EXCESSIVE LOSS EXCESSIVE DEDUCTION ALLOWANCE OR RELIEF OR S HE HAD BEEN ASSESSED AT LOW RATE. THUS ASSESSMENT AS FRAMED U/S. 147/143(3) OF THE A CT WAS NOT VALID AND THAT TOO ON PROTECTIVE BASIS. IT WAS FURTHER SUBMITTED THAT TH E ASSESSING OFFICER HAD ERRED IN LAW AND ON FACTS IN INITIATING PROCEEDINGS U/S. 147 OF THE ACT FOR THE REASONS BASED ON MERE SUSPICION AND THAT THE NOTICE ISSUED U/S. 148 OF TH E ACT WAS ILLEGAL BECAUSE THE ASSESSING OFFICER SIMPLY BASED HIS REASONS ON THE F INDINGS OF THE ADIT (INVESTIGATION) LUCKNOW IN RESPECT OF SOURCE OF RS.1.70 LAKHS WHICH WAS INVESTED BY THE ASSESSEE IN CONSTRUCTION OF HER HUSBANDS HOUSE ON PLOT NO.160 ELDECO GREEN GOMTI NAGAR LUCKNOW. IT WAS CONTENDED THAT THE ASSESSEE HAD BE EN FILING VOLUNTARY RETURNS OF HER INCOME REGULARLY FOR THE LAST MANY YEARS AND THE RE TURN OF INCOME FOR ASSESSMENT YEAR 2001-02 TOO WAS FILED ON 30.7.2002 BUT THE ITO HAD NOT LOOKED INTO THE RECORDS OF THE OFFICE. IT WAS FURTHER STATED THAT THE REPORT SENT BY ADIT (INVESTIGATION) LUCKNOW CONTAINING BELIEF OF ANOTHER PERSON COULD NOT BE AD OPTED BY THE ASSESSING OFFICER AS HIS OWN REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT :-3-: WAS CONTENDED THAT EVEN AFTER MAKING LOT OF ENQUIRI ES THE ASSESSING OFFICER HAD NOT BEEN ABLE TO PROVE ESCAPEMENT OF ASSESSEES INCOME CHARGEABLE TO TAX AND HE HAD ULTIMATELY ASSESSED ASSESSEE ON THE DISCLOSED SUM O F BUSINESS INCOME PLUS AGRICULTURAL INCOME TREATING IT AS TAXABLE INCOME WHEREAS THE IN VESTMENT OF RS1.70 LAKHS (REFERRED TO IN THE REASON MENTIONED ABOVE) COULD NOT BE PROVED AS UNEXPLAINED AND UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS CONTENDED THAT THE ASSESSMENT AS SUCH HAS BEEN MADE ON THE TOTAL INCOME OF RS.1.66 LAKHS ON PROTECTIVE BASIS WHILE THE ITO-II FAIZABAD AS ABOVE HAD BEEN INFORMED TO ASSESS THE SUM OF RS.1.6 6 LAKHS ON SUBSTANTIVE BASIS. THE ASSESSEE FURTHER SUBMITTED TO THE LD. CIT(A) THAT T HE ASSESSING OFFICER HAD CLAIMED IN THE REASON RECORDED THAT KEEPING IN VIEW THE EXPLANATI ON 2(B) OF SECTION 147 THE NOTICE U/S. 148 FOR THE ASSESSMENT YEAR 2001-02 IS ISSUED YE T IT APPEARS THAT THE NOTICE U/S. 148 OF THE ACT HAS BEEN ISSUED BY HIM WITHOUT LOOKING INTO THE RETURN FILED BY THE ASSESSEE ON 30.7.2002 AND THEREFORE IN THE REASONS RECORDED BY THE ASSESSING OFFICER THERE WAS NO MENTION OF ANY SUCH UNDERSTATEMENT OF THE INCOME OR CLAIM OF EXCESSIVE LOSS DEDUCTION ALLOWANCE OR RELIEF AS CONTEMPLATED IN THE EXPLANAT ION 2(B) OF SECTION 147 OF THE ACT. THEREFORE INITIATION OF PROCEEDINGS U/S. 147/148 OF THE ACT WAS VOID AB INITIO AND THE ASSESSMENT ORDERS WERE LIABLE TO BE QUASHED. RELIA NCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH VS. APPELLATE ASSISTANT COMMISSIONER OF INCOME-TAX (CENTRAL) CALCUTTA AND OTHERS [1971] 82 ITR 147 WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER CAN ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION GOSSIP OR RUMOR. IT WAS CON TENDED THAT THE INVESTMENT OF RS.1.70 LAKHS IN CONSTRUCTION OF THE HOUSE DURING ASSESSMEN T YEAR 2001-02 DECLARED BY THE ASSESSEE HERSELF BEFORE THE ADIT (INVESTIGATION) CO ULD NOT BE TREATED AS JUSTIFIABLE AND VALID REASON TO BELIEVE THAT AN INCOME CHARGEABLE T O TAX HAD ESCAPED ASSESSMENT AND THAT AN ADMISSION OF INVESTMENT IN ITSELF WAS NOT A N EVIDENCE OF ESCAPEMENT OF INCOME CHARGEABLE TO TAX UNLESS THERE WAS CORROBORATIVE EV IDENCE INDICATING THAT THE INVESTMENT AS SUCH HAD NOT BEEN MADE OUT OF THE ASSESSEE-INVES TORS DISCLOSED/TAXED INCOME OR KNOWN SOURCES OF INCOME. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND MERIT IN THE SAID SUBMISSIONS BY OBSERVING AS UNDER:- 1.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE APPELLANT. I FIND NO MERIT IN THE SUBMISSION THAT THE NOTICE U/S. 148 OF THE INCOME-TAX ACT 1961 HAS :-4-: BEEN ISSUED ON MERE PRESUMPTIONS KEEPING IN MIND TH E INVESTMENT OF RS.1 70 000/- TOWARDS THE CONSTRUCTION OF HOUSE ON THE PLOT PURCHASED FROM THE ELDECO BY HER HUSBAND IN ASSESSMENT YEAR 1999-2000. IN THIS CONTEXT I AM OF THE VIEW THAT THE ASSESSING OFFICER HAS COMMITTED N O ERROR IN LAW OR ON FACTS IN INITIATING THE PROCEEDINGS U/S. 147 OF THE INCOME-T AX ACT 1961; HE HAS FOLLOWED THE DUE PROCESS OF LAW AND HAS RECORDED THE REASONS FOR ISSUE OF THE NOTICE U/S. 148; HE HAS ALSO MET THE REQUIREMENT OF LAW TO CONV EY THE SAID REASONS TO THE APPELLANT. 1.2.1 I HAVE ALSO CAREFULLY PERUSED THE REASONS RE CORDED. IN THIS CASE INFORMATION WAS RECEIVED BY ADDL. DIRECTOR (INV.) LUCKNOW THAT THE APPELLANT HAS INVESTED RS.1 70 000/- IN THE CONSTRUCTION OF THE H OUSE; THE SAID INTIMATION CONVEYED TO THE ASSESSING OFFICER THAT THE APPELLAN T 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. 1.2.2 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 VS. RAJES H JHAVERY 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 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 :-5-: 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 SUBSTITUTED 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. 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) :-6-: 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 AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE LD . CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THERE EXISTED RELEVANT MATERI AL WHICH COULD LEAD TO FORMATION OF REQUISITE REASON TO BELIEVE AND THE ASSESSING OFF ICER COMMITTED NO ERROR AS SUCH IN INITIATING THE PROCEEDINGS U/S. 147 OF THE ACT FOR THE REASONS BASED ON MERE SUSPICION AND THE ISSUING NOTICE U/S. 148 OF THE ACT. IT WAS POINTED OUT THAT THE INVESTMENT DURING THE YEAR UNDER CONSIDERATION OF RS.1.70 LAKHS WHICH HAD BEEN CONTRIBUTED BY THE ASSESSEE IN THE CONSTRUCTION OF THE HOUSE BY HER HU SBAND WAS DECLARED BY THE ASSESSEE HERSELF BEFORE THE ADIT (INVESTIGATION) LUCKNOW CO ULD NOT BE TREATED AS JUSTIFIABLE AND VALID REASON TO BELIEVE THAT ANY INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT AND THAT AN ADMISSION OF INVESTMENT IN ITSELF WAS NOT A N EVIDENCE OF ESCAPEMENT OF INCOME CHARGEABLE TO TAX UNLESS THERE WAS SOME EVIDENCE IN DICATING THAT INVESTMENT HAS NOT BEEN MADE OUT OF THE TAXED/DISCLOSED INCOME OF THE ASSESSEE-INVESTOR. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD NOTHING ON RECORD TO INDICATE THAT THE ASSESSEE HAD NO PLAUSIBLE EXPLANATION FOR THE SUM OF RS.1.70 LAKHS WHICH SHE CLAIMED BEFORE THE ADIT(INVESTIGATION) LUCKNOW TO HAVE INVESTED OUT O F HER SAVINGS FROM BUSINESS AND AGRICULTURAL INCOME FOR WHICH VOLUNTARY RETURNS OF INCOME HAVE BEEN FILED REGULARLY. IT WAS FURTHER CONTENDED THAT THE ADIT (INVESTIGATION) LUCKNOW FAILED TO APPRECIATE THAT THE ASSESSEE WAS A VILLAGER TO THE CORE OF HER HEAR T AND HER FAMILY IS TRADITIONALLY DERIVING INCOME FROM AGRICULTURE. IT WAS STATED THAT THE AS SESSEE HAS INHERITED THE VIRTUES OF HARD WORK AND THRIFT FROM HER PARENTS AND HAD BEEN RESTR ICTING HOUSEHOLD EXPENSES OF HER FAMILY TO THE BARE MINIMUM THOSE FACTS HAD ESCAPED THE NOTICE OF THE ADIT (INVESTIGATION) LUCKNOW WHOSE REPORT IN RESPECT OF INVESTMENT OF RS.1.70 LAKHS BEING UNEXPLAINED WAS BASED ON MERE PRESUMPTION AND THERE FORE NOT JUSTIFIABLE AT ALL AS SUCH THE ASSESSING OFFICER RELIED UPON THE BASELESS REPO RT OF THE ADIT (INVESTIGATION) LUCKNOW AND HAD NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IT WAS FURTHER STATED THAT THE LD. CIT (A) HAD NOT NOTICED THAT THE BELIEF OF THE ASSESSING OFFICER WHICH WAS BASED ON THE UNJUSTIFIE D BELIEF OF THE ADIT (INVESTIGATION) :-7-: LUCKNOW COULD NOT FORM THE REASON TO BELIEVE AS C ONTEMPLATED IN SECTION 147 OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW:- 1. CIT VS. ATUL JAIN [2008] 299 ITR 383 (DEL.) 2. CHHUGAMAL RAJPAL [1971] 79 ITR 603 (SC) 8. IT WAS SUBMITTED THAT INITIATION OF PROCEEDINGS U/S. 147 OF THE ACT WAS BASED ON MERE SUSPICION THE ISSUANCE OF NOTICE U/S. 148 OF THE ACT WAS THEREFORE ILLEGAL AND ASSESSMENT PROCEEDINGS WERE VOID AB INITIO. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAD MISLEAD HIMSELF IN RELYING ON THE DECISION OF T HE HON'BLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKER (P) LTD. [2007] 291 ITR 500 WHICH IS CLEARLY DISTINGUISHABLE ON FACTS BECAUSE 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 AND IT WAS HELD THAT SO LONG AS THE INGREDIENTS OF SECTION 147 ARE FULFILLE D THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDINGS U/S. 147 AND FAILURE TO TAKE STEPS U/S. 143(2) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDI NGS EVEN WHEN INTIMATION U/S. 143(1) HAD BEEN ISSUED. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS OF THE INSTANT CASE ARE TOTALLY DIFFERENT FROM THE FACTS IN THE CASE OF ACI T VS. RAJESH JHAVERI STOCK BROKER (P) LTD. (SUPRA) IN SO MUCH SO THAT THE ASSESSING OFFIC ER ISSUED NOTICE U/S. 148 OF THE ACT ON THE BASIS OF INFORMATION GIVEN BY THE ADIT (INVESTI GATION) LUCKNOW THAT RS.1.70 LAKHS CONTRIBUTED BY THE ASSESSEE TOWARDS INVESTMENT MADE IN CONSTRUCTION OF HOUSE DURING ASSESSMENT YEAR 2001-02 IS UNEXPLAINED AND UNDISCLO SED. IT WAS STATED THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND TO THE A FORESAID INFORMATION TO ARRIVE INDEPENDENTLY AT A BELIEF THAT INCOME HAS ESCAPED A SSESSMENT AND THAT THE NOTICE U/S. 148 OF THE ACT HAS BEEN ISSUED BY THE ASSESSING OFF ICER WITHOUT ASSUMING JURISDICTION :-8-: U/S. 147 OF THE ACT AND THEREFORE THE LD. CIT(A) HA D ERRED IN UPHOLDING THE IMPUGNED ASSESSMENT ORDERS. RELIANCE WAS PLACED ON THE JUDG MENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SFIL STOCK BROKING LTD. [201 0] 325 ITR 285. IT WAS FURTHER SUBMITTED THAT THE ASSESSMENT CANNOT BE REOPENED FO R MAKING PROTECTIVE ADDITION. RELIANCE WAS PLACED ON THE DECISION OF ITAT BANGALO RE BENCH B IN THE CASE OF DCIT CENTRAL CIRCLE 2(1) BANALORE VS. BULLION INVESTMEN TS & FINANCIAL SERVICES (P) LTD. [2010] 123 ITD 568. 10. IT WAS ACCORDINGLY SUBMITTED THAT THE NOTICE IS SUED U/S. 148 OF THE ACT WAS ILLEGAL AS SUCH IMPUGNED PROTECTIVE ASSESSMENT ORDER PASSED U/S. 147/143(3) MAY BE CANCELLED. IT WAS POINTED OUT THAT THE ITO-1 FAIZ ABAD ILLEGALLY PASSED THE IMPUGNED ASSESSMENT ORDER U/S. 147/143(3) OF THE ACT WITHOUT ISSUING NOTICE U/S. 148 OF THE ACT. IT WAS FURTHER POINTED OUT THAT ON RECEIPT OF INFORMAT ION FROM ADIT (INVESTIGATION) LUCKNOW VIDE LETTER F. NO. ADDL. CIT(INV.)/TEP/X-120/04-05 DATED 6.3.2006 THE INCOME-TAX OFFICER-II FAZIABAD MECHANICALLY ISSUED THE NOTICE DATED 22.3.2006 U/S. 148 OF THE ACT WITHOUT APPLYING HIS OWN MIND TO THE INFORMATION RE CEIVED AND WITHOUT OBSERVING THAT HE DID NOT HAVE JURISDICTION OVER THE CASE. SUBSEQUEN TLY INCOME-TAX OFFICER-II FAIZABAD FOUND THAT HE DID NOT HAVE JURISDICTION OVER ASSESS EES CASE WHICH FELL UNDER THE TERRITORIAL JURISDICTION OF THE INCOME-TAX OFFICER- I FAIZABAD AND THAT THE ASSESSEE HAS BEEN FILING VOLUNTARY RETURNS AND ACCORDINGLY SHE H AD FILED THE RETURN FOR THE ASSESSMENT YEAR 1999-2000 ON 17.6.1999 AND THE RETURN FOR ASSE SSMENT YEAR 2001-02 HAS ALSO BEEN FILED BY THE ASSESSEE ON 30.7.2002. THEREAFTER THE ITO-II FAIZABAD TRANSFERRED THE CASE RECORDS ON 9.10.2006 VIDE HIS LETTER F NO. TRANSFER OF CASE RECORDS/ITO-II/FZD/2006-07TO ITO-I FAIZABAD. HOWEVER INCOME-TAX OFFICER-I FA IZABAD DID NOT ISSUE NOTICE U/S. 148 OF THE ACT AND CONTINUED THE ASSESSMENT PROCEEDINGS INITIATED BY THE INCOME-TAX OFFICER- II FAIZABAD WITHOUT JURISDICTION. OUR ATTENTION W AS DRAWN TOWARDS PAGE NO.16 OF THE PAPER BOOK WHICH IS CERTIFIED COPY OF THE REASONS R ECORDED BY THE INCOME-TAX OFFICER-II FAZIABAD. IT WAS ACCORDINGLY SUBMITTED THAT THE AS SESSMENT ORDERS U/S. 147/143(3) OF THE ACT PASSED BY THE INCOME-TAX OFFICER-I FAIZABA D WERE THEREFORE VOID AB INITIO AND LIABLE TO BE CANCELLED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW:- 1. CIT VS. SMT. ANJALI DUA [2008] 174 TAXMAN 72 (DE LHII) 2. M.I. BUILDERS (P) LTD. VS. ITO-I(I) LUCKNOW [20 08] 115 ITD 419 (LUCK.) :-9-: 11. IT WAS CONTENDED THAT THE NOTICE DATED 22.3.200 6 U/S. 148 OF THE ACT WHICH WAS ISSUED BY THE INCOME-TAX OFFICER-II FAIZABAD WHO D ID NOT HAVE JURISDICTION WAS ILLEGAL. CONSEQUENTLY THE ASSESSMENT ORDERS WHICH HAD BEEN P ASSED BY THE INCOME-TAX OFFICER- I FAIZABAD WITHOUT ASSUMING JURISDICTION U/S. 147 OF THE ACT WITHOUT RECORDING HIS REASONS TO BELIEVE WITHOUT ISSUING NOTICE U/S. 1 48 OF THE ACT ARE ILLEGAL AND LIABLE TO BE CANCELLED. 12. IN HIS RIVAL SUBMISSIONS THE LD. D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THERE WAS NO DISCLOSURE OF THE INVESTMENT FOR ASSESSMENT YEAR 2001-02 AND EVEN FOR THE SUBSEQUENT ASSESSMENT YEARS NOTHING WAS STATED REGARDING INVESTMENT. THEREFORE THE ASSESS ING OFFICER WAS JUSTIFIED IN PRESUMING THAT THE INCOME OF THE ASSESSEE WHICH WAS UTILIZED FOR MAKING INVESTMENT IN THE HOUSE PROPERTY OF HER HUSBAND ESCAPED ASSESSMENT. RELIAN CE WAS PLACED ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF BRI J MOHAN AGARWAL VS. ACIT AND ANOTHER [2004] 268 ITR 400. 13. 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 CONSEQUENTLY SPEC IFIC TAX EVASION AND THAT 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 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 :-10-: ORDER DATED 29.9.2001. THE COPY OF THE SAID ORDER WAS FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE. 14. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. IT IS N OTICED THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE CASE OF SH RI CHUNNILAL PRAJAPATI 18 CIVIL LINES FAIZABAD VS. INCOME-TAX OFFICER-II FAIZABAD WHICH WE HAVE ADJUDICATED UPON VIDE ORDER OF EVEN DATE IN ITA NOS.290 TO 293/LUC/2010 FOR ASS ESSMENT YEARS:1999-2000 2001- 02 2002-03 AND 2003-04 AND THE FINDINGS GIVEN THER EIN READ AS UNDER:- 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 RE ASONS RECORDED 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 DIRECTOR OF INCOME-TAX (INVESTIGATION) LUCKNOW TH AT RS. 5 38 860/- HAS BEEN INVESTED IN PURCHASE OF LAND SITUATED AT 150 RAFI AHMAD KIDWAI NAGAR SCHEME (ELDECO GREEN) GOMTI NAGAR LUCKNOW IN THE ASSESSMENT YEAR 1999-2000 BY SHRI CHUNNI LAL ASSISTANT REGIO NAL TRANSPORT OFFICER 18 CIVIL LINES FAIZABAD. DURING THE COURSE OF IN VESTIGATION NO CLEAR DETAIL OF THE SAID INVESTMENT AMOUNTING TO RS. 5 38 860/- COULD BE TOLD. THEREFORE I HAVE SUFFICIENT REASON TO BELIEVE THAT THE SUM OF RS. 5 38 860/- INVESTED IN THE PURCHASE OF LAND BY SHRI CHUNNI LAL ASSISTANT REGIONAL TRANSPORT OFFICER 18 CIVIL LINES FAIZABA D IN ASSESSMENT YEAR 1999-2000 HAS ESCAPED INCOME-TAX ASSESSMENT. SINCE RETURN OF INCOME FOR THE SAID YEAR HAS NOT BEEN FILED BY' THE ASSESS EE. 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 :-11-: STATED THAT THE ASSESSEE INVESTED A SUM OF RS. 5 38 860/- IN PURCHASE OF LAND SITUATED IN 150 RAFI AHMAD KIDWAI NAGAR SCHEME (EL DECO GREEN) GOMTI NAGAR LUCKNOW. HOWEVER IT HAS NOT BEEN STATED THAT THE SAID INVESTMENT WAS OUT OF UNDISCLOSED INCOME OF THE ASSESSEE OR OUT OF INCOME WHICH ESCAPED ASSESSMENT. THE ASSESSING OFFICER ALSO HAD NOT MENTIONED IN THE AFORESAID REASONS THAT HE WAS SATISFIED THAT THE SAID SUM OF RS. 5 38 860/- ESCAPED INCOME-TAX ASSESSMENT. HE SIMPLY RELIED ON THE INFORMATION GIVEN BY THE AD IT(INVESTIGATION). IT IS WELL SETTLED THAT IN CASE OF INCOME ESCAPING ASSESSMENT THE ASSESSING OFFICER IS REQUIRED TO ISSUE NOTICE U/S. 148 OF THE ACT TO ASS ESS THE INCOME U/S. 147 OF THE ACT READ WITH SECTION 143(3) OF THE ACT. THE PROVI SIONS 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 1 53 ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION OR RE COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS T HE CASE MAY BE FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTIO N 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 ASSE SSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SEC TION 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 NECESSA RY FOR HIS ASSESSMENT FOR THAT 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 ESCAPED ASSESSMENT. HOWEVER IT CANNOT BE SAID THAT IF THERE IS ANY INV ESTMENT IT IS SUFFICIENT TO BELIEVE :-12-: THAT THE INCOME TO THAT EXTENT ESCAPED ASSESSMENT B ECAUSE THERE MAY BE SO MANY SOURCES FOR MAKING INVESTMENT AND IT IS NOT NE CESSARY THAT ONLY ON THE BASIS OF INVESTMENT IT CAN BE PRESUMED THAT THE INCOME TO THAT EXTENT ESCAPED ASSESSMENT. THERE SHOULD BE A CONCRETE FINDING BEF ORE COMING TO THE CONCLUSION THAT ANY INCOME HAS ESCAPED ASSESSMENT AND MERELY O N THE BASIS OF THE INFORMATION PROVIDED BY ANY ANOTHER WING OF THE INC OME-TAX DEPARTMENT THE ASSESSING OFFICER CANNOT BELIEVE THAT THERE WAS INC OME 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 UND ER:- THAT THE FIRST SENTENCE OF THE REASONS RECORDED BY THE ASSESSING OFFICER WAS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION). THE SECOND SENTENCE WAS A DIRECTI ON GIVEN BY THE SAME DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION) TO IS SUE A NOTICE U/S. 148 AND THE THIRD SENTENCE AGAIN COMPRISED A DIRECTION GIVE N BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX TO INITIATE PROCEEDINGS U/S. 148 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. THE ASSESSI NG OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS O N THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE U/S. 148. THESE COU LD NOT BE THE REASONS FOR PROCEEDING U/S. 147/148 OF THE ACT. AS THE FIR ST PART WAS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF T HE REASONS WERE MERE DIRECTIONS IT WAS NOT AT ALL DISCERNIBLE AS TO WHE THER 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 HIM INCOME HAD ESCAPED ASSESSMENT. THERE WAS NO SUBSTANTIAL Q UESTION OF LAW FOR CONSIDERATION. 15. IN THE PRESENT CASE ALSO THE ASSESSING OFFICE R 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 STAT ES ABOUT INFORMATION RECEIVED THROUGH LETTER NO.ADDL.DIT/INV./TEP/X-120/04-05 DAT ED 6.3.2006 SENT BY THE ADDL. DIRECTOR OF INCOME-TAX (INVESTIGATION) AND SECOND P ART STATES THAT THE ASSESSING OFFICER THEREFORE HAD SUFFICIENT REASON TO BELIEVE THAT THE SAID AMOUNT ESCAPED INCOME-TAX ASSESSMENT WHICH CLEARLY SHOWS THAT THE ASSESSING OFFICER SIMPLY ACTED UPON THE INFORMATION AND DID NOT APPLY HIS OW N MIND TO THE INFORMATION TO ARRIVE AT A BELIEF INDEPENDENTLY THAT ON THE BASIS OF MATERIAL WHICH HE HAD BEFORE :-13-: HIM THE INCOME HAD ESCAPED ASSESSMENT. WE ARE THE REFORE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTI ON 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 COULD JUSTIFY HIS CO NCLUSION THAT THE ASSESSEE HAD EARNED INCOME FOR MAKING INVESTMENT IN THE HOUSE PR OPERTY 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 & 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) WHICH 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 JUSTIF IED IN FOLLOWING THE ORDER OF THE I.T.A.T. LUCKNOW-B LUCKNOW DATED 18. 11.2009 PASSED IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2000-01. S HRI PRAVEEN KUMAR LD.D.R. POINTED OUT THAT WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2000-01 THE TRIBUNAL HAS IGNORED THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN BRIJ MOHAN AGARWAL VS .ACIT (2004) 268 ITR 400(ALL.) THE HON'BLE SUPREME COURT IN RAYMOND WOO LLEN MILLS LTD. VS. ITO (1999) 236 ITR 34(S.C.) AND THE HON'BLE KERALA HIGH COURT IN CIT VS. ABDUL KHADER AHAMED (2006) 285 ITR 57 (KER.). WE FI ND THAT IN THE ASSESSMENT YEAR 2000-01 IN THE ASSESSEES CASE THE TRIBUNAL HAS QUASHED THE RE-ASSESSMENT ORDER ON SIMILAR SET OF F ACTS AND THEREFORE THE DECISION RENDERED IN THE ASSESSEES CASE FOR ASSE SSMENT YEAR 2000-01 IS DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CA SE. WE FURTHER FIND THAT THE REASONS FOR RE-OPENING THE ASSESSMENT ARE ALMOST SI MILAR FOR BOTH THE YEARS. THE REASONS RECORDED FOR REOPENING OF THE AS SESSMENT FOR ASSESSMENT YEAR 2000-01 ARE AS UNDER: A PERUSAL OF RECORDS AND INFORMATION RECEIVED FROM ADDL. DIRECTOR OF INCOME TAX (INV.) KANPUR VIDE HIS LETT ER F.NO. ADDL. DIT (INV.)/ENQUIRY/RICH CAPITAL/06-07/1135 DA TED 22.03.2007 IT IS TRANSPIRED THAT THE ASSESSEE HAS DEPOSITED CASH ON DIFFERENT DATES IN BANK A/C NO. C.A.-2633 W ITH PUNJAB NATIONAL BANK SHASTRI NAGAR KANPUR DURING THE F.Y . 1999- :-14-: 2000 RELEVANT TO A.Y. 2000-01 TO THE TUNE OF RS. 12914000/-. AS SUCH THE SOURCE OF THESE CASH DEPOSITS AMOUNTING T O RS.12914000/- LEADS TO THE CONCLUSION THAT ALL THES E CASH DEPOSITS ARE UNEXPLAINED. FROM THE PERUSAL OF P/L ACCOUNT IT IS SEEN THAT T HE ASSESSEE HAS SHOWN INTEREST AT RS..500575/- AS AGAI NST THE INTEREST SHOWN AT RS.1573555/- IN THE A.Y. 1999-00. THE LOANS & ADVANCES SHOWN ARE MORE THAN THE PRECEDING YEAR I.E. RS.67163442/- IN THE YEAR RELEVANT TO A.Y. 200 0-2001 AND RS.66288442/- IN A.Y. 1999-00. THIS SHOWS THAT THE ASSESSEE HAS SHOWN SHORT RECEIPT OF INTEREST OF APPROXIMATEL Y RS.1100000/- IN THE A.Y. 2000-2001. IN VIEW OF THE ABOVE FACTS AND THE INFORMATION IN POSSESSION OF THE UNDERSIGNED I AM OF THE OPINION THAT THE ASSESSEE HAS CONCEALED THE INCOME TO THE EXTENT OF RS.14014000/- (12914000 + 1100000/-) CHARGEABLE TO TAX FOR A.Y. 2000-01 HAS ESCAPED ASSESSMENT. ACCORDINGLY I SSUE NOTICE U/S 148 OF THE 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 LET TER F.NO. DDIT(LNV)-2/KNP/GIFT/RCFSL/0708/1860 DATED 24.03.08 IT IS TRANSPIRED THAT THE ASSESSEE HAS DEPOSITED CASH DEP OSITS ON DIFFERENT DATES IN BANK A/C NO.622-0-5046398 MAINTA INED WITH STANDARD CHARTERED BANK KANPUR DURING THE F.Y. 200 0-01 RELEVANT TO A.Y. 2001-02 TO THE TUNE OF RS.42 38 300/- AS FO LLOWS: DATE OF DEPOSIT AMOUNT MODE OF DEPOSIT XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX THE DY. DIRECTOR OF INCOME TAX (INV.)-2 KANPUR IN H IS REPORT HAD :-15-: STATED THAT THE ASSESSEE HAD FAILED TO PROVE THE SO URCE OF CASH DEPOSITS IN THE ABOVE MENTIONED BANK ACCOUNTS. THUS THE SOURCE OF THESE CASH DEPOSITS AMOUNTING TO RS.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 RS.42 38 300. I THEREF ORE HAVE REASONS TO BELIEVE THAT INCOME OF RS.43 38 300 CHARGEABLE T O 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 T HE RE-ASSESSMENT 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 IS SUE WHEN HE SAYS SOURCE OF THESE CASH DEPOSITS LEAD TO THE CONCLUSI ON THAT THESE CREDITS WERE UNEXPLAINED AND THE ISSUE SO ARISES I S 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 BELIEV E MEANING THERE BY THAT EVEN IF THERE WAS SOME MATERIAL IN RESPECT OF SOURCE IT WAS NOT SUFFICIENT FOR ARRIVING AT THE CONCLUSION THAT THE DEPOSITS REPRESENTED UNEXPLAINED INCOME. IN OTHER WORDS THE AO HAD JUST SUSPICION IN HIS MIND AND SINCE IT IS TRITE LAW THA T AN ASSESSMENT CAN NOT BE REOPENED SOLELY ON THE BASIS OF SUSPICION T HE 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 TH E ACT SO FAR AS ALLEGATION OF ESCAPEMENT OF INCOME ON ACCOUNT OF UN EXPLAINED DEPOSITS IN BANK IS CONCERNED WAS ILLEGAL AND BAD IN LAW AND CAN NOT BE 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:- :-16-: FROM THE PERUSAL OF P/L ACCOUNT IT IS SEEN THAT T HE ASSESSEE HAS SHOWN INTEREST AT RS.500575/- AS AGAINST THE IN TEREST SHOWN AT RS.1573555/- IN THE A.Y. 1999-00. THE LOAN S & ADVANCES SHOWN ARE MORE THAN THE PRECEEDING YEAR I. E. RS. 67163442/- IN THE YEAR RELEVANT TO A.Y. 2000-2001 A ND RS.66288442/- IN A.Y. 1999-00. THIS SHOWS THAT THE ASSESSEE HAS SHOWN SHORT RECEIPT OF INTEREST OF APPROXIMATEL Y RS.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 JUSTIFY HIS CONCLUSION THAT ASSESSEE SHOULD HAVE EARNED MORE IN TEREST THAN INTEREST IN THE PREVIOUS YEAR THE INITIATION CAN NOT BE SAID TO BE VALID. WITHOUT THERE BEING ANY DETAIL AS TO THE PE RIOD FOR WHICH THE ADVANCES/LOANS WERE GIVEN OR HOW MUCH INTEREST WAS RECEIVED OR COULD HAVE RECEIVED AS PER AGREEMENTS SIMPLY TO D OUBT THAT INTEREST RECEIVED BY THE ASSESSEE IN THIS YEAR BEI NG LESS THAN THE INTEREST RECEIVED IN THE PREVIOUS YEAR AS RESULTED IN ESCAPEMENT OF INTEREST INCOME OF APPROXIMATELY 11 LAKHS 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 THE END OF PREVIOUS YEAR. HERE AGAIN WE ARE OF THE OPINION TH AT THE PROCEEDINGS HAVE BEEN INITIATED ON SUSPICION AND FO R MAKING ROVING ENQUIRIES AND SINCE IT IS TRITE LAW THAT PROCEEDING S U/S 147 OF THE ACT CAN NOT BE INITIATED EITHER ON THE BASIS OF MERE SU SPICION OR FOR MAKING FISHING OR ROVING ENQUIRIES THE INITIATION O F THE PROCEEDINGS U/S 147 OF THE ACT ON THIS GROUND WAS ALSO ILLEGAL AND BAD IN LAW. AFORESAID VIEW IS SUPPORTED BY THE DECISION IN FOLL OWING 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). :-17-: (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 T HE OPINION THAT INITIATION PROCEEDINGS U/S 147 OF THE ACT IN PRESEN T CASE AS WELL AS ISSUANCE OF NOTICE U/S 148 OF THE ACT WAS ILLEGAL A ND BAD IN LAW AND CONSEQUENTLY ALL SUBSEQUENT PROCEEDINGS INCLUDING REASSESSMENT FRAMED ON 20.12.2007 GOT VITIATED. THE REASSESSMEN T COMPLETED ON 20.12.2007 IS THEREFORE QUASHED BEING BAD IN LAW AN D 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-OPENIN G THE ASSESSMENT ARE ALMOST SIMILAR FOR BOTH THE YEARS THEREFORE THE L D.CIT(A) WAS FULLY 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 STAG E OF ISSUING OF NOTICE UNDER SECTION 148 OF THE ACT IT IS REQUIRED THAT T HE 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 THE ASSESSMENT YEAR 2000-01 THIS BENCH OF THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE RE-ASSESSMENT PROCEEDIN GS HAVE BEEN INITIATED ON SUSPICION AND FOR MAKING ROVING ENQUIRIES AND SI NCE IT IS TRITE LAW THAT PROCEEDINGS UNDER SECTION 147 CANNOT BE INITIATED E ITHER ON THE BASIS OF MERE SUSPICION OR MAKING FISHING OR ROVING ENQUIRIE S THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT ON THIS GR OUND WAS ALSO ILLEGAL AND BAD IN LAW. THUS THE ABOVE DECISION SUPPORTS T HE VIEW TAKEN BY THE TRIBUNAL IN ASSESSMENT YEAR 2000-01. :-18-: 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 WOOLLE N 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 ASSUMPTIO N 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 O FFICER AFTER COMPLETION OF ASSESSMENT PROCEEDINGS. WE ARE NOT EX PRESSING ANY OPINION ON THE MERITS OF THE CASE. THE QUESTIONS OF FACTS AND LAW ARE OPEN TO BE INVESTIGATED AND DECIDED BY THE ASSESSIN G AUTHORITY. THE APPELLANT WILL BE ENTITLED TO TAKE ALL THE POINTS B EFORE 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-O PENING. THE QUESTIONS OF FACT AND LAW WERE LEFT OPEN TO BE INVESTIGATED BY T HE ASSESSING AUTHORITY. HOWEVER IN THE INSTANT CASE THE ASSESSEE HAS CHAL LENGED THE VALIDITY OF REOPENING UNDER SECTION 147 OF THE ACT. WHILE DECID ING THE APPEAL FOR ASSESSMENT YEAR 2000-01 THE TRIBUNAL FOUND THAT TH E AO HAD NOT REFERRED TO ANY MATERIAL WHICH COULD JUSTIFY HIS CONCLUSION THAT THE ASSESSEE SHOULD HAVE EARNED MORE INTEREST THAN INTEREST IN THE PREV IOUS YEAR. THE TRIBUNAL CATEGORICALLY HELD THAT THE INITIATION COULD NOT BE SAID TO BE VALID. IN OUR OPINION THE DECISION OF THE HON'BLE SUPREME COURT 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 KHA DER AHAMED (SUPRA). THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS O F THE PRESENT CASE. IN THAT CASE THE AO INDEPENDENTLY APPLIED HIS MIND TO FACT S AND RECORDED PRIMA FACIE BELIEF AND REASONS BEFORE ISSUING NOTICE. THE HON'BLE HIGH COURT HELD THAT IT IS NOT A CASE OF ACTING UNDER DICTATES OF S UPERIOR OFFICER. THE HON'BLE :-19-: COURT FURTHER HELD THAT IT WAS CLEAR FROM THE REASO NS RECORDED BY THE DEPUTY COMMISSIONER THAT HE PRIMA FACIE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRULY T HE MATERIALS FACTS AND THAT AS A CONSEQUENCE INCOME HAD ESCAPED ASSESSMEN T. ON THESE FACTS THE HON'BLE HIGH COURT HELD THAT THE REASSESSMENT W AS VALID. THUS THE FACTS ARE ENTIRELY DIFFERENT AND THEREFORE THIS DE CISION 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 T HE ASSESSING OFFICER WITHOUT REFERRING TO ANY MATERIAL WHICH COULD JUSTIFY HIS C ONCLUSION THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT INSTANTIATED THE PROCE EDINGS U/S. 147 OF 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 ILLEG AL 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 THE OTHER G ROUNDS CONTESTED BY THE ASSESSEE ON MERITS. 17. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLO WED. 15. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF SHRI CHUNNILAL PRAJAP ATI 18 CIVIL LINES FAIZABAD VS. INCOME-TAX OFFICER-II FAIZABAD. THEREFORE RESPEC TFULLY BY FOLLOWING THE AFORESAID REFERRED TO ORDERS WE ARE OF THE VIEW THAT THE ASSE SSMENT FRAMED U/S. 147/143(3) OF THE ACT ARE LIABLE TO BE CANCELLED. WE ORDER ACCORDING LY. FURTHER MORE THE ASSESSING OFFICER FRAMED ASSESSMENT ON PROTECTIVE BASIS IN TH E HANDS OF THE ASSESSEE WHICH CLEARLY SHOWS THAT HE WAS NOT SURE AS TO WHETHER TH E ASSESSEE WAS HAVING INCOME WHICH ESCAPED ASSESSMENT. ON A SIMILAR ISSUE ITAT BANGAL ORE BENCH B IN THE CASE OF DCIT CENTRAL CIRCLE 2(1) BANALORE VS. BULLION INVESTMEN TS & FINANCIAL SERVICES (P) LTD. [2010] 123 ITD 568 (SUPRA) HAS HELD AS UNDER (HEAD NOTE):- THE FACT OF UNDISCLOSED INVESTMENT IN THE SHARE CA PITAL OF THE ASSESSEE-COMPANY WAS FOUND DURING THE COURSE OF SEARCH AND MATERIAL WAS COLLECTED DURING THE COURSE OF SEARCH THAT SUCH INVESTMENT BELONGED TO ' G. IF SUCH INCOME WAS TO BE ASSESSED IN THE HANDS. OF A PERSON OTHER THAN G; THEN THE REVENUE SHOULD HAVE :-20-: TAKEN RECOURSE UNDER SECTION 158BD. IF THE REVENUE WAS NOT SURE AS TO WHOSE HANDS THE ASSESSMENT WAS TO BE MADE THEN THE REVEN UE COULD HAVE INITIATED PROCEEDINGS AGAINST BOTH THE ASSESSEES. IN THE INST ANT CASE THE ASSESSMENT IN THE CASE OF 'G' WAS COMPLETED ON 31-7-1997. NOTICE UNDER SECTION 148 HAD BEEN ISSUED TO THE ASSESSEE-COMPANY ON 27-7-1998. ONCE T HE REVENUE HAD TAKEN ITS STAND THAT SUCH INVESTMENT IN THE SHARE CAPITAL BEL ONGED TO 'G' AND THE ASSESSMENT ORDER WAS PASSED THEN IT COULD NOT BE S AID THAT THE ASSESSING OFFICER WAS HAVING REASON TO BELIEVE THAT INCOME HAD ESCAPE D IN THE HANDS OF THE ASSESSEE. REASSESSMENT CANNOT BE MADE ON MERE SUSP ICION. THE ASSESSING OFFICER HAS TO FORM A BELIEF THAT INCOME HAS ESCAPE D ASSESSMENT IN THE HANDS OF THE ASSESSEE. ONCE IT HAD BEEN HELD THAT SUCH INVES TMENT BELONGED TO 'G THEN THERE WAS NO FURTHER MATERIAL TO COME TO THE CONCLU SION THAT SUCH ESCAPED INCOME BELONGED TO THE ASSESSEE. [PARA 2.5]. IN THE INSTANT CASE THE REVENUE HELD THAT SUCH UND ISCLOSED INCOME BELONGED TO 'G' AND THE ASSESSMENT WAS MADE IN THE HANDS OF 'G' ON SUBSTANTIVE BASIS. THE CASE OF THE ASSESSEE WAS NOT REOPENED DURING THE PE NDENCY OF PROCEEDINGS IN THE CASE OF 'G. HAD THE REVENUE MADE PROTECTIVE A SSESSMENT IN THE CASE OF 'G' THEN IT COULD HAVE TAKEN ACTION AGAINST THE ASSESSE E. THUS THE BASIC REQUIREMENT FOR REOPENING THE ASSESSMENT THAT THE ASSESSING OFF ICER SHOULD HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT WAS NOT SATISFIED IN THIS CASE. HENCE THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE ASSESSMENT COULD NOT BE REOPENED FOR MAKING PROTECTIVE ADDITIO N. [PARA 2.6] IN VIEW OF THE ABOVE DISCUSSION IT WAS TO BE HELD THAT THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN CANCELLING THE ASSESSMEN T IN THE HANDS OF THE ASSESSEE. [PARA 2.8] IN THE RESULT THE APPEAL FILED BY THE REVENUE WAS TO BE DISMISSED. 16. IN THE PRESENT CASE ALSO ASSESSMENT HAS BEEN MA DE IN THE HANDS OF THE HUSBAND OF THE ASSESSEE ON SUBSTANTIVE BASIS AND PROTECTIVE ASSESSMENT WAS MADE IN THE HANDS OF THE ASSESSEE. THEREFORE ASSESSMENT U/S. 147/143 (3) OF THE ACT DESERVES TO BE CANCELLED. FURTHER MORE WHILE PERUSING THE REASONS RECORDED COPY OF WHICH IS PLACED AT PAGE 16 OF ASSESSEES COMPILATION IT IS NOTICED TH AT THE INCOME-TAX OFFICER-II FAIZABAD RECORDED REASONS AS UNDER:- :-21-: 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 RS.1 70 000/- IS FOU ND TO BE UNEXPLAINED AND UNDISCLOSED OUT OF THE INVESTMENT MADE IN THE HOUSE PROPERTY SITUATED AT 160 RAFI AHMAD KIDWAI NAGAR SCHEME (ELDECO GREEN) GOMT I NAGAR LUCKNOW IN THE ASSESSMENT YEAR 2001 - 02 BY SMT. SHOBHA PRAJAPATI WIFE OF SHRI CHUNNI LAL. I HAVE SUFFICIENT REASON TO BELIEVE THAT THE SUM OF RS.1 70 000/- IN THE ASSESSMENT YEAR 2001-02 HAS ESCAPED INCOME-TAX ASS ESSMENT. THEREFORE KEEPING IN VIEW EXPLANATION 2(B) OF SECTION 147 OF THE INCOME-TAX ACT NOTICE UNDER SECTION 148 FOR ASSESSMENT YEAR 2001- 02 IS B EING ISSUED. 17. ON THE BASIS OF THE SAID REASONS INCOME-TAX OF FICER-II FAIZABAD ISSUED NOTICE DATED 22.3.2006 U/S. 148 OF THE ACT COPY OF WHICH IS PLACED AT PAGE 14 OF THE PAPER BOOK WHILE THE ASSESSMENT ORDER HAS BEEN PASSED BY THE INCOME-TAX OFFICER-I FAIZABAD WHO HAD NEITHER RECORDED THE REASONS NOR ISSUED ANY NOTICE U/S. 148 OF THE ACT. THEREFORE ASSESSMENT FRAMED BY THE INCOME-TAX OFFI CER-I FAIZABAD WITHOUT ISSUING NOTICE U/S. 148 OF THE ACT WAS NOT VALID. CONSIDER ING THE TOTALITY OF THE FACTS WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN C ONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR INITIATING PROCEEDINGS U/S. 147 OF THE ACT. IN THAT VIEW OF THE MATTER GROUNDS NO. 1 AND 2 RAISED BY THE ASSESSEE ARE ALLOWED AND THE ASSESSMENTS FRAMED U/S. 147/143(3) OF THE ACT ARE QUASHED. THEREFORE NO S EPARATE FINDINGS ARE BEING GIVEN ON ANOTHER GROUND RAISED BY THE ASSESSEE ON MERITS. 18. IN THE RESULT ALL THE THREE APPEALS ARE ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.2.2011) SD/- SD/- [H. L. KARWA] [ N. K. SAINI] VICE PRESIDENT ACCOUNTANT MEMBER DATED: 28 TH FEB 2011 JJ:14-2202 :-22-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR