DCIT, Agra v. Shri Rohit Bansal, Agra

ITA 430/AGR/2009 | 2001-2002
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 43020314 RSA 2009
Assessee PAN AARPB3049H
Bench Agra
Appeal Number ITA 430/AGR/2009
Duration Of Justice 1 year(s) 5 month(s) 8 day(s)
Appellant DCIT, Agra
Respondent Shri Rohit Bansal, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-03-2011
Date Of Final Hearing 28-03-2011
Next Hearing Date 28-03-2011
Assessment Year 2001-2002
Appeal Filed On 22-10-2009
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. 430/AGR/2009 ASST. YEAR: 2001-02 DY. COMMISSIONER OF INCOME TAX 4(1) VS. SHRI ROHI T BANSAL AGRA. C/O. SAHITYA BHAWAN PUBLICATION HOSPITAL ROAD AGRA. (PAN : AARPB 3049 H). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD KUMAR JR. D.R. RESPONDENT BY : SHRI PRAKASH NARAIN ADVOCATE SHRI S.N. BANSAL ADVOCATE & SHRI S.K. DASS ADVOCATE ORDER PER H.S. SIDHU J.M. : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 27.07.2009 PASSED BY THE LD. CIT(A)-II AGRA ON THE FOLLOWING GROUNDS :- 1. THAT THE LD. CIT(A)-II AGRA HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF ` 47 LACS ALONG WITH THE INTEREST AMOUNT OF ` 2 03 093/- IGNORING THE FACT THAT ASSESSEE HAS TAKE N FICTITIOUS ENTRIES OF LOAN BY ROTATING HIS UNEXPLAINED CASH. 2. WHETHER LD. CIT(A) WAS CORRECT IN LAW AND ON FAC T IN DELETING THE ADDITION MADE U/S 68 OF I.T. ACT IGNORING THE F ACT THAT THE ALLEGED CREDITORS HAVE NO CAPACITY TO PAY THE LOANS AS REVE ALED FROM THE 2 TRANSACTIONS IN THEIR BANK ACCOUNT THAT BEFORE ISSU ANCE OF CHEQUE OF LOAN TO THE ASSESSEE EQUAL AMOUNT HAD BEEN DEPOSIT ED IN THE BANK ACCOUNT. 3. THE LD. CIT(A) HAS ALSO ERRED IN HOLDING THAT TH E SOURCE OF CREDIT IN RESPECT OF BANK ACCOUNT OF THE CREDITORS IS BEYOND THE SCOPE OF SECTION 68 OF THE I.T. ACT. 4. THE ORDER OF THE LD. CIT(A) DESERVES TO BE VACA TED AND THAT OF THE ASSESSING OFFICER S BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR DELETE OR ALTER OR MODIFY ANY ONE OF MORE GROUND(S) OF APPEAL DURING T HE APPEAL PROCEEDINGS. 2. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE RAISED A PRELIMINARY OBJECTION THAT THE LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER DATED 27.07.2009 HAS QUASHED THE NOTICE DATED 31.03.2008 ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT 1961 (THE ACT HEREINAFTER) O N THE BASIS OF THE SAME THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT IN D ISPUTE UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 28.11.2008. TH E DEPARTMENT HAS NOT RAISED ANY GROUND CHALLENGING THE QUASHING OF NOTICE DATE D 31.03.2008 BY THE LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER. HE STAT ED THAT THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY QUASHED THE IMPUGNED NOTICE D ATED 31.03.2008 ISSUED UNDER SECTION 148 OF THE ACT DECLARING THIS NOTICE AS ILL EGAL AND WITHOUT AUTHORITY OF LAW 3 AND THE ASSESSMENT ORDER FRAMED IN PURSUANCE OF AN ILLEGAL NOTICE HE HAS ALSO QUASHED THE SAME. 3. THE LD. D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND WAS UNABLE TO REPLY THE PRELIMINARY OBJECTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE. THIS BENCH HAS ALSO PUT A QUESTION TO THE LD. D.R. ABOUT THE PRELIMINARY OBJECTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE BUT THE LD. D.R. HAS NOT GIVEN ANY ANSWER TO THE SAME AND SIMPLY RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US ESPECIALLY THE IMPUGNED ORDER DATED 27.07. 2009 PASSED BY THE LD. FIRST APPELLATE AUTHORITY. WE FOUND THAT THE LD. FIRST A PPELLATE AUTHORITY HAS DEALT THE LEGAL ISSUE REGARDING VALIDITY LEGALITY AND JURISD ICTION OF THE ASSESSING OFFICER OF THE NOTICE UNDER SECTION 148 OF THE ACT ISSUED BY T HE ASSESSING OFFICER IN PARAGRAPH NOS.2.1 TO 12 AT PAGE NOS.4 TO 9 OF HIS O RDER. THE LD. FIRST APPELLATE AUTHORITY FINALLY QUASHED THE NOTICE DATED 31.03.20 08 BY SUPPORTING HIS VIEW WITH THE VARIOUS DECISIONS RENDERED BY THE HONBLE HIGH COURTS AS WELL AS THE JURISDICTIONAL TRIBUNAL. FOR THE SAKE OF CONVENIEN CE THE RELEVANT PORTION OF THE IMPUGNED ORDER FROM PARAGRAPH NOS.2.1 TO 12 AT PAGE NOS.4 TO 9 ARE REPRODUCED AS UNDER :- 4 2.1 GROUNDS OF APPEAL NO. 1.1 TO 1.9 ARE DIRECTED AGAINST THE ACTION OF THE ASSESSING OFFICER IN ISSUING NOTICE U NDER SECTION 148 OF THE ACT. APPELLANT WHILE CHALLENGING THE VA LIDITY LEGALITY AND JURISDICTION OF THE ASSESSING OFFICER VIDE HIS WRITTEN SUBMISSION DATED 06~04-2009 SUBMITTED:- (A) AS A MATTER OF FACT THERE IS NO VALID MATERIAL AND EVIDENCE ON RECORD TO ASSUME JURISDICTION U/SS 147 AND 148. THE REASONS GIVEN FOR INITIATING REASSESSMENT PROCEEDI NGS ARE NOT PROPER VALID AND JUSTIFIED. NO REQUISITE REA SONS FOR INITIATING REASSESSMENT PROCEEDINGS HAVE BEEN RECOR DED BY THE LD. A.O. THE PROVISIONS OF SEC. 147/148 ARE NOT APPLICABLE AND THE PROCEEDINGS U/SS 147/148 ARE NOT VALID. NO INCOME HAS ESCAPED ASSESSMENT AND THERE IS NO EVIDENCE OF ANY OUTSIDE INCOME. NOTHING AGAINST TH E APPELLANT CAN BE MADE OUT FROM THE SEARCH AND SEIZU RE OPERATIONS IN CASE OF GANGA RAM GROUP AND THERE IS NO EVIDENCE MATERIAL AND CONFESSION ON RECORD AGAINST THE APPELLANT. THE ID. A.O. IS WRONG TO ASSUME THAT LO ANS DURING THE YEAR FROM M/S KRISHNA TRADERS M/S NAVEE N KUMAR AGARWAL & CO. M/S NITIN & CO. M/S DEVI SAHA I VINOD KUMAR M/S SHRI RAM AGARWAL & CO. M/S DEVI SAHAI SHREE RAM M/S DEVI SAHAI BRIJ NATH AND M/S AMIT AGARWAL & CO. PRIMA FACIE UNEXPLAINED AND THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WH ICH HAS NOT BEEN FULLY AND TRULY DISCLOSED BY THE ASSES SEE BEFORE THE DEPARTMENT SO AS TO TAKE ACTION U/S 147 . THE CREDITORS HAVE NOWHERE AND NEVER ADMITTED THAT THE LOANS IN QUESTION WERE NOT GIVEN TO THE APPELLANT OR GIVE N IN LIEU OF CASH. THE OBSERVATIONS MADE BY THE INVESTIG ATION WING ARE OF GENERAL NATURE AND NOT SPECIFIC BESIDES BEING HAVING NO NEXUS WITH THE APPELLANT'S CASE FOR THE ASSESSMENT YEAR 2001-02. THERE IS NO OBJECTIVE MATE RIAL ON RECORD FROM WHICH THE LD. A.O. COULD FORM HIS SUBJECTIVE OPINION. IN THE APPELLANT'S CASE THERE IS NO MATERIAL WHICH CAN BE SAID TO BE SPECIFIC RELEVANT AND RELIABLE. THE APPELLANT RELIED ON THE JUDGMENT OF I.T.O. V. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC). 5 (C) IN SIMILAR CASE RELATED TO GANGA RAM GROUP OF CASES THE HON'BLE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA IN I.T.A. NO. 134/AG/06 FOR THE ASSESSMENT YEAR 1997-98 IN THE CASE OF M/S AGRA CHEMICALS AGRA VS. A.C.I.T-.2 AGRA VIDE ORDER DATED 30.9.2008 QUASHED THE RE-ASSESSMENT PROCEEDINGS. (D) RELIANCE IS ALSO PLACED ON MURLIDHAR BHAGWANDA S AND CO. VS CIT REPORTED IN 181 ITR 319 WHEREIN IT HAS B EEN HELD THAT MERE FACT THAT CREDITS IN THE ASSESSEE'S BOOKS ARE IN THE NAMES OF BANKERS WHO ARE WELL-KNOWN FOR PASS ING HAWALA ENTRIES WOULD NOT BE ENOUGH TO JUSTIFY SUCH ACTION. 3. WRITTEN SUBMISSION OF THE APPELLANT WAS FORWARDE D TO THE ASSESSING OFFICER VIDE THIS OFFICE LATTER DATED 06. 04.09. REPORT OF THE ASSESSING OFFICER DATED 05.05.09 WAS RECEIVE D IN THIS OFFICE ON 12.05.09. COPY OF THE SAME WAS PROVIDED TO THE APPELLANT FOR FILING REJOINDER IF ANY. IN THE REM AND REPORT THE ASSESSING OFFICER SUBMITTED THAT THERE WAS DEFINITE INFORMATION IN POSSESSION AND ON THE BASIS OF TRUE CORRECT AND DEFINITE INFORMATION THE CASE WAS RE-OPENED. THE ASSESSING OFFICER FURTHER SUBMITTED THAT INVESTIGATION WING SHOULD NO T BE VIEWED AS THE OUTSIDE AGENCIES ON THE CONTRARY IT IS THE PART AND PARCEL OF THE INCOME TAX DEPARTMENT AND THE INFORMATION PA SSED ON BY THE INVESTIGATION WING IS SUFFICIENT FOR INVOKIN G SECTION 148. FOR THIS VIEW ASSESSING OFFICER REFERRED TO THE FOL LOWING DECISIONS:- (A) SHRI BRIJ MOHAN AGARWAL VS. ACIT (2004) 268 ITR 400 (ALL.) (B) KAPOOR BROTHERS VS. UOI (2001) 248 ITR 324 (PAT .) (C) SHRI PAL JAIN VS. ITO (2004) 267 ITR 540 (P&M) (D) JINDAL PHOTO FILMS LTD. VS. DCIT (1998) 234 ITR 170 (DEL.) (E) RENUSAGAR POWER CO. LTD. VS. ITO (1979) 117 ITR 719 (ALL.) (F) SHRI KRISHNA (P) LTD. VS. ITO (1996) 221 ITR 53 8 (CAL.) (G) PHOOL CHAND BAJRANG LAL VS. ITO (1993) 203 ITR 456 (S.C.) 6 4. IN ITS REJOINDER DATED 19.05.09 A.R. OF THE APP ELLANT SUBMITTED THAT :- THE DIFFERENT JUDGMENTS CITED BY THE LD. A.0. ARE NOT APPLICABLE IN THE CIRCUMSTANCES OF THE CASE ON THE POINT OF LE GALITY AND VALIDITY OF ACTION U/S 147/148 OF THE I.T. ACT 196 1. ON THE OTHER HAND THE JUDGMENT OF HON'BLE SUPREME COURT I N THE CASE OF I.T.O. VS LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) FULLY APPLIES TO THE FACTS OF THE APPELLANT'S CASE. THIS HAS BEEN MENTIONED BY THE APPELLANT AT PARA 3(B) OF PAGE 2 O F THE WRITTEN SUBMISSIONS DATED 6.4.2009. FURTHER THE HON. ITAT AGRA IN GANGA RAM GROUP CASE OF M/S AGRA CHEMICALS AGRA VS . A.C.I. T.-2 AGRA BY ORDER DATED 30.9.2008 HAS SPEC IFICALLY HELD RE-ASSESSMENT PROCEEDINGS NULL AND VOID ON THE BASI S OF ABOVE REASONS. BOTH THE ABOVE CASES ARE IN THE PAPER BOO K. IT IS RESPECTFULLY SUBMITTED THAT THE FACTS OF OUR CASE ARE IDENTICAL TO THE FACTS OF THE ABOVE CASE OF M/S AGR A CHEMICALS AGRA. 5. I HAVE CONSIDERED THE FACTS OF THE CASE CONTENT S OF THE REASONS RECORDED SUBMISSION MADE BY THE A.R. VIEW OF THE ASSESSING OFFICER AND THE POSITION OF LAW. BEFORE ADJUDICATIN G THE GROUND I AM OF THE OPINION THAT THE 'REASONS RECORDED' NEE DS TO BE REPRODUCED HERE. REASONS AS SUPPLIED TO THE APPELL ANT BY THE ACIT 4(1) AGRA READS AS UNDER: 'INFORMATION IN POSSESSION RECEIVED FROM INVESTIGAT ION WING REVEALS THAT THE FOLLOWING AMOUNT CREDITED IN THE B OOKS OF ACCOUNT OF THE ASSESSEE FOR ASSTT. YEAR 2001-02 IS PRIMA-FACIE UNEXPLAINED. THE CREDITOR BELONGING TO ASSOCIATES OF M/S GANGA RAM GROUP OF CASES OF AGRA:- SI. DATE AMOUNT ENTRY PROVIDER NO. 1 27.01.2001 5 00 000/ - KRISHNA TRADERS 2 24.01.2001 5 00 000/ - NAVEEN KUMAR AGARWAL & CO. 3 29.01.2001 5 00 000/ - NITIN & CO. 4 02.02.2001 5 00 000/ - DEVI SAHAI VINOD KUMAR 5 OP. BAL. 01.04.2001 11 00 000/ - SHRI RAM AGARWAL & CO. 7 6 29.01.2001 5 00.000/ - -------- DO ------- 7 07.02.2001 6 00.000/ - -------- DO ------- 8 28.02.2001 . 6 00 000/ - DEVI SAHAI SHREE KUMAR 9 05.01.2001 5 00 000/ - DEVI SAHAI BRIJ NATH 10 03.02.2001 5 00.000/ - AMIT AGARWAL & CO. 58 00 000/ - I HAVE GONE THROUGH THE INFORMATION AND HAVE REASON S TO BELIEVE THAT THE INCOME AMOUNTING TO ` 58 00 000/- CHARGEABLE TO TAX FOR ASSTT. YEAR 2001-02 HAS ESCAPED ASSESSMENT WHIC H HAS NOT BEEN FULLY AND TRULY DISCLOSED BY THE ASSESSEE BEFO RE THE DEPARTMENT. ISSUE NOTICE UNDER SECTION 148 OF THE I.T. ACT 19 61. ASSTT. COMMISSIONER OF INCOME-TAX-4(1) AGRA 6 I HAVE GIVEN CAREFUL THOUGHT TO THE REASONS REC ORDED IN THE LIGHT OF SUBMISSION MADE BY THE APPELLANT VIEW OF THE ASSESSING OFFICER AND JUDICIAL PRONOUNCEMENTS DISCUSSED HEREI NABOVE. ASSESSING OFFICER HAS JUSTIFIED HIS ACTION ON THE S TRENGTH OF INFORMATION RECEIVED FROM THE INVESTIGATION WING. IN VIEW OF THE CHALLENGE MADE BY THE APPELLANT THAT THERE EXIS T NO MATERIAL WITH THE ASSESSING OFFICER TO HAVE ISSUED NOTICE UN DER SECTION 148 AND THE NOTICE AS ISSUED TO HIM LACKS JURISDIC TION IT BECOMES IMPERATIVE FOR THE ASSESSING OFFICER TO HAV E ATLEAST REFERRED TO MATERIAL PART OF THE 'INFORMATION' EITH ER IN THE REASON RECORDED OR IN THE ASSESSMENT ORDER. THOUGH IT IS THE SOLE SATISFACTION OF THE ASSESSING OFFICER TO INITI ATE RE- ASSESSMENT PROCEEDINGS BUT THAT SATISFACTION OF THE ASSESSING OFFICER IS OPEN TO JUDICIAL SCRUTINY. HON'BLE MADRA S HIGH COURT IN THE CASE OF ASA JOHN DEVINATHAN 8R. ORS VS. ADDL. CIT (1980) 126 ITR 270 (MAD) WHERE IN THE HON'BLE HIGH COURT OBSERVED THAT 'THE FINDING OF THE ITO ON JURISDICTIONAL FACTS CANNOT BE TAKEN AS SACROSANCT. IT WAS FURTHER OBSERVED BY HONBLE COURT THAT THE ASSUMPTION OF JURISDICTION ON THE PART OF THE ITO HAS TO BE ESTABLISHED ON THE FACTS AND I F THERE ARE NO RELEVANT FACTS THE REVENUE CANNOT SEEK TO GET A WAY WITH THE PLEA THAT THE MATTER OF JURISDICTION IS DEPENDE NT ON THE 8 FACTS AND THE FACTS ARE BEYOND THE JURISDICTION OF THE COURT. IT WAS FURTHER OBSERVED BY THE HON'BLE HIGH COURT THAT THOUGH SUFFICIENCY OF THE GROUNDS IS BEYOND THE SCRUTINY O F THE COURTS THE RATIONAL CONNECTION BETWEEN THE MATERIALS AND T HE REOPENING OF THE ASSESSMENT IS JUSTIFIABLE. THERE I S NO IMMUNITY FROM SCRUTINY BY COURTS OR APPELLATE AUTHORITIES FO R THE REASONS RECORDED BY THE ITO FOR REOPENING THE ASSESSMENT. THERE IS NO DISABILITY ON THE PART OF THE ASSESSEE FROM GOING I NTO THE QUESTION OF THE RELEVANCE OF THE MATERIAL THAT WAS AVAILABLE TO THE ITO AT THE TIME WHEN HE SOUGHT TO REOPEN THE AS SESSMENT. IT IS NECESSARY TO BEAR IN MIND THE FACT THAT IN OR DER TO CONSIDER THE VALIDITY OF THE JURISDICTION ON THE GROUND OF R ELEVANCE OF THE MATERIALS AVAILABLE TO THE ITO AT THE TIME OF INITI ATION OF THE PROCEEDINGS IT IS ONLY THOSE MATERIALS THAT WERE AV AILABLE TO HIM THAT WOULD HAVE TO BE LOOKED INTO AND NOT ANY FURTHER MATERIAL THAT CAME TO LIGHT IN THE COURSE OF REASSE SSMENT PROCEEDINGS THEMSELVES. 7. THE TERM REASON TO BELIEVE STOOD JUDICIALLY IN TERPRETED BY VARIOUS COURTS. THE HONBLE COURTS HAVE HELD THAT T HE EXPRESSION REASONS TO BELIEVE PREDICATES THAT ONE HOLDS THE BELIEF INDUCED BY THE EXITING REASONS. IT CONTEMPL ATES EXISTENCE OF REASONS ON WHICH BELIEF IS FOUNDED AND NOT MEREL Y A BELIEF IN EXISTENCE OF REASONS INDUCING THE BELIEF. FURTHER THE FORMATION OF THE REQUIRED BELIEF BY THE ASSESSING O FFICER IS A CONDITION PRECEDENT. WITHOUT SUCH BELIEF THE ASSESS ING OFFICER WILL HAVE NO JURISDICTION TO INITIATE PROCEEDINGS U NDER SECTION 147. THE FULFILLMENT OF THIS CONDITION IS NOT A ME RE FORMALITY BUT IT IS MANDATORY. ANY FAILURE TO FULFILL THAT C ONDITION WOULD VITIATE THE ENTIRE PROCEEDINGS AS HELD BY THE APEX COURT IN THE CASE OF JOHRI LAL (HUF) VS. CIT(1973) 88 ITR 439 (SC) AND SHEO NATH SINGH VS. AAC (1971) 82 ITR 147 (SC). IN THE CASE OF GANGA SARAN & SONS (P) LTD. VS. ITO (1981) 130 ITR 1 (S.C.) IT WAS ALSO HELD THAT THE IMPORTANT WORDS UNDER SECTION 147 ARE HAS REASON TO BELIEVE AND THESE WORDS ARE STRONGER THAN THE WORDS IS SATISFIED. THE BELIEF ENTERTAI NED BY THE AUTHORITY MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BASED ON RE ASONS WHICH ARE RELEVANT AND MATERIAL. IF THERE IS NO RATIONAL OR INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF SO THAT ON SUCH 9 REASONS NO ONE PROPERLY INSTRUCTED IN FACTS AND LA W COULD REASONABLY ENTERTAIN THE BELIEF THE CONCLUSION WOU LD BE INESCAPABLE THAT THE OFFICER COULD NOT HAVE REASON TO BELIEVE THAT ANY PART OF INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) THE HON'BLE SUPREME COURT OBSERVED THAT THERE MUST BE SOME DIRECT NEXUS BETWEEN THE C ONCLUSIONS OF FACT ARRIVED AT BY THE AUTHORITY CONCERNED AND P RIMARY FACTS UPON WHICH THE CONCLUSION IS BASED. THE USE OF EXT RANEOUS OR IRRELEVANT MATERIAL IN ARRIVING AT THE CONCLUSION W OULD VITIATE THE CONCLUSION OF FACTS BECAUSE IT IS DIFFICULT TO PREDICATE AS TO WHAT EXTENT THE EXTRANEOUS OR IRRELEVANT MATERIAL H AS INFLUENCED THE AUTHORITY IN ARRIVING AT THE CONCLUS ION OF FACT. 8. COMING BACK TO THE RECORDED REASONS IT CAN BE CONCLUDED THAT THE REASONS AS RECORDED BY THE ASSESSING OFFIC ER IN THE CASE IN HAND ARE VIRTUALLY BARREN AND BALD IN NATUR E. THE ASSESSING OFFICER INSTEAD OF RECORDING REASONS FO R ESCAPEMENT OF INCOME HAS REFERRED TO THE INFORMATI ON RECEIVED FORM THE INVESTIGATION WING. IN THE CASE OF STATE BANK OF SAURASHTRA VS. ITO (1988) 24 ITD 97 (AHD.) IT WAS HELD THAT THE ITO HAS TO RECORD THE REASONS AND N OT MERELY STATE THE WORD INFORMATION IN PLACE OF REASONS. THE BENCH HELD THAT IT IS NECESSARILY BECAUSE UNLESS THE REAS ONS ARE RECORDED IT CANNOT BE FOUND THAT THERE IS NEXUS BET WEEN THE REASONS AND REASONABLE BELIEF REGARDING ESCAPEMENT . HON'BLE ITAT CALCUTTA BENCH IN THE CASE OF DUDHNATH PRASAD GUPTA VS. ITO REPORTED IN (1977) 3 TTJ (CAL.) 309 HAS HELD THAT IT IS NOT ENOUGH THAT THE INCOME TAX OFFICER HAS SOME MAT ERIAL IN HIS POSSESSION FOR REOPENING THE ASSESSMENT. IT IS ABSOLUTELY NECESSARY THAT HE MUST BRING SOME OF THOSE MATERIAL S INTO THE REPORT AS A RESULT OF WHICH THE BELIEF THAT THE REQ UIREMENTS OF SECTION 147(A) ARE SATISFIED CAN BE SUSTAINED. IF THE REASONS GIVEN BY THE INCOME TAX OFFICER ARE HIS CONCLUSIONS THEMSELVES AND ARE ABSOLUTELY BARREN AND BALD IN NATURE ONE C ANNOT SAY THAT ANY PRIMA FACIE REASONS CAN BE SPELT OUT FOR H OLDING THE BELIEF THAT THE CONDITION IN SECTION 147(A) WERE SA TISFIED. 9. IN THE FACTS OF THE PRESENT CASE THE AFOREMENTIO NED DECISION ARE FULLY APPLICABLE. APART FROM VAGUELY MENTIONING HAV ING 10 INFORMATION THE ASSESSING OFFICER HAS NOT BEEN AB LE TO SPELL OUT EITHER THE INFORMATION OR THE NATURE OF ENQUI RY UNDERTAKEN LEADING TO FORMATION OF REQUISITE BELIEF OF ESCAPEMENT OF INCOME. IN THE REASONS RECORDED ASSE SSING OFFICER HAS MENTIONED THAT FOLLOWING AMOUNT CREDITE D IN THE BOOKS OF THE APPELLANT FOR A.Y. 2001-02 IS PRIMA-FA CIE UNEXPLAINED. THE CREDITORS BELONGING TO ASSOCIATES OF M/S GANGA RAM GROUP OF CASES OF AGRA IT IS NOT UNDERST OOD THAT ON WHAT BASIS THE ASSESSING OFFICER HAS HELD SO THERE IS NO MATERIAL REFERRED IN THE REASONS RECORDED FOR HOLDI NG SUCH A VIEW. THE REASONS RECORDED THUS ARE BASED ON MATER IAL AVAILABLE ON RECORD AND ARE BASED ON SUSPICION AND SURMISES. 10. APPELLANT HAS REFERRED AND RELIED UPON THE CASE OF AGRA CHEMICALS VS ACIT IN ITA NO. 134/AGR/06/ A.Y. 1997- 98 . I HAVE GONE THROUGH THE REFERRED ORDER PASSED BY THE JURISDICTIONAL ITAT UNDER SIMILAR SET OF FACTS AND CIRCUMSTANCES. THE BENCH THROUGH ITS DETAILED JUDG MENT HELD AS UNDER : A LIST OF PERSONS WHO DEALT WITH GRG WITHOUT ANY SUPPORTING MATERIAL THEREIN WAS RECEIVED BY THE A.O . ON WHICH THE ABOVE EXTRACTED REASON IS BASED. THE A.O . HAS NOT APPLIED HIS MIND AT ALL TO THE INFORMATION SO R ECEIVED. THE CREDITORS HAVE DULY ACCEPTED HAVING MADE ADVANC E TO THIS ASSESSEE. THE ALLEGATION MADE BY ADIT (INV .) ARE ALSO GENERAL IN NATURE AND ARE NOT SPECIFIC. THE OBSERVATION OF THE ADIT IS BASED ON THE MATERIAL FO UND IN THE YEAR 2002 WHEREAS THE ASSESSEES CASE IS FOR A.Y. 1997-98. THUS THERE IS NO SPECIFIC RELEVANT RELI ABLE AND DEFINITE MATERIAL DIRECTLY RELATED TO THE ASSESSEE AND ALSO FOR PARTICULAR ASSESSMENT YEAR. THE SATISFACTION O F THE A.O. CAN BE SUBJECTIVE BUT IT HAS TO BE BASED ON OB JECTIVE MATERIALS. THE CASE BEING OF EARLIER ASSESSMENT YE AR THE A.O. WAS REQUIRED TO APPLY HIS MIND TO THE FACTS OF THAT ASSESSEE AS DISCLOSED BEFORE HIM BUT HE HAS NOT DON E SO. THE BANK ACCOUNT FROM WHICH LOAN WAS GIVEN HAS BEEN DULY ACCEPTED BY THE CREDITOR. THERE WAS NO MATERI AL BEFORE HIM EXCEPT TO SUSPECT ON THE BASIS OF VAGUE AND 11 GENERAL INFORMATION BUT NO MATERIAL TO ESTABLISH TH E TRANSACTION OF TAKING OF LOAN WAS BOGUS. IN VIEW OF THE OUR FOREGOING DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT THE REASON RECORDED FOR TAK ING ACTION U/S 147 READ WITH S. 148 ARE NOT VALID AND H ENCE THE ENTIRE RE-ASSESSMENT PROCEEDING BECOMES INVALID LEADING TO QUASHING OF THE ENTIRE RE-ASSESSMENT. W E ORDERED ACCORDINGLY AND QUASH THE RE-ASSESSMENT ORD ER IN THIS YEAR BY HOLDING THE NOTICE ISSUED U/S 148 ON T HE BASIS OF INVALID REASONS AS NULL & VOID-AB-INITIO. 11. HON'BLE ALLAHABAD HIGH COURT BEING THE JURISDI CTIONAL HIGH COURT IN THE CASE OF K.N. AGARWAL VS. CIT REPORTED IN 189 ITR 769 HAS OBSERVED : INDEED THE ORDERS OF THE TRIBUNAL AND THE HIGH CO URT ARE BINDING UPON THE ASSESSING OFFICER AND SINCE HE ACTS IN A QUASI-JUDICIAL CAPACITY THE DISCIPLINE OF SUC H FUNCTIONING DEMANDS THAT HE SHOULD FOLLOW THE DECIS ION OF THE TRIBUNAL OR THE HIGH COURT AS THE CASE MAY BE. HE CANNOT IGNORE IT MERELY ON THE GROUND THAT THE TRIBUNAL'S ORDER IS THE SUBJECT MATTER OF REVISION IN THE HIGH COURT OR THAT THE HIGH COURT'S DECISION IS UND ER APPEAL BEFORE THE SUPREME COURT. PERMITTING HIM TO TAKE SUCH A VIEW WOULD INTRODUCE JUDICIAL INDISCIPLINE WHICH IS NOT CALLED FOR EVEN IN SUCH CASES. IT WOULD LEA D TO A CHAOTIC SITUATION. TRUE IT IS THAT THE DILEMMA OF THE REVENUE IS ALSO REAL AND SUBSTANTIAL IN SUCH CASES BUT SUCH A SITUATION CANNOT BE PROVIDED FOR BY JUDICIAL INTERPRETATION BY COURTS BUT ONLY BY AN APPROPRIAT E AGENCY. 12. GUIDED BY THE PRINCIPLES OF LAW AS LAID DOWN BY THE HON'BLE ALLAHABAD HIGH COURT AND IN VIEW OF THE DECISION OF HONBLE ITAT AGRA BENCH IN THE CASE OF AGRA CHEMICALS (SUP RA) I HEREBY HOLD THAT NOTICE DATED 31-03-2008 ISSUED UND ER SECTION 148 WAS ILLEGAL WITHOUT AUTHORITY OF LAW ASSESSME NT ORDER FRAMED IN PURSUANCE OF AN ILLEGAL NOTICE THEREFORE CANNOT BE SUSTAINED IS DIRECTED TO BE QUASHED. 12 5. KEEPING IN VIEW OF THE IMPUGNED ORDER ESPECIALL Y THE AFORESAID PORTION OF THE IMPUGNED ORDER WE ARE OF THE CONSIDERED OPINIO N THAT THE DEPARTMENT HAS NOT CHALLENGED THE LEGAL ISSUE IN THE PRESENT APPEAL AN D ONLY CHALLENGED THE DECISION TAKEN BY THE LD. FIRST APPELLATE AUTHORITY ON MERIT . IT MEANS THE DEPARTMENT HAS ACCEPTED THE IMPUGNED ORDER OF THE LD. FIRST APPELL ATE AUTHORITY ON LEGAL ISSUE BUT FILED THE PRESENT APPEAL CHALLENGING THE DELETION O F ADDITION ON MERIT WHICH IS NOT POSSIBLE FOR US TO DEAL WITH THE SAME. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF THE CONSIDERED OPINION THAT THE DEPARTMENT HAS FILED THE PRESENT APPEAL WITHOUT THOROUGHLY GOING THROUGH THE IMPUGNED ORDERS AND HAS NOT CHALLENGED THE LEGAL ISSUE DECIDED AGAINST THE DEPA RTMENT QUASHING THE NOTICE DATED 31.03.2008 ON THE BASIS OF THE SAME THE ASS ESSING OFFICER HAS COMPLETED THE ASSESSMENT ORDER DATED 28.11.2008 PASSED U/S. 1 43(3) READ WITH SECTION 147 OF THE ACT. WE CONFIRM THE IMPUGNED ORDER BY DISMISSI NG THE APPEAL FILED BY THE DEPARTMENT. 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2011). SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 31 ST MARCH 2011 PBN/* 13 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRI BUNAL AGRA TRUE COPY