TaxTMI 
TaxTMI 
2010 (1) TMI 943
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....iled on 11th Sept., 2003 for the asst. yr. 2000-01 may be treated as return filed in response to notice issued under s. 148. The AO completed the assessment under s. 143(3) r/w s. 147 of the IT Act after making addition of Rs. 7,33,231 on the reason that the assessee has introduced fictitious sundry debtors and the realization that of and failed to explain the source of investment and that is nothing but investment made by the assessee from the undisclosed source of income and the opening capital balance shown by the assessee having no basis and the same has been treated as income of the assessee. 4. On appeal, the CIT(A) deleted Rs. 30,000 out of this on the reason that it includes the cost of agricultural land of Rs. 30,000 being brought forward from earlier years. The CIT(A) sustained addition of Rs. 7,03,231. Against this the assessee is in appeal before us. 5.1 The Authorised Representative of the assessee submitted that for reopening of assessment there is no material in the hands of the AO. Filing of belated return of income that itself cannot be the reason for reopening the assessment since it is not a material to reopen the assessment. The assessee has given n....
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....pose of treating the income from the crushers unit there was no addition on this count and as such the reopening itself is invalid. He submitted that the AO was not justified in acting on the belated return of the assessee though the assessee stated that it was filed in response to notice under s. 148 that the belated return filed on 11th Sept., 2003 may be treated as a return filed in response to notice under s. 148. He submitted that AO must have asked for fresh return of income and should not have acted on belated return of income. He submitted that AO has not recorded the proper reason" for reopening of the assessment and 'notes' prepared by the AO or 'note' in the order sheet cannot be constituted as reasons recorded for reopening of assessment. He submitted that recording of reasons is statutory requirement for reopening of assessment as such in the present case, there is no valid reason recorded for reopening of the assessment. Therefore, the reassessment is invalid. For this purpose he relied on the judgment in the case of Vijayalakshmi Oil Industries vs. ITO (1985) 47 CTR (Kar) 255 : (1985) 155 ITR 748 (Kar). He submitted that the assessment was framed on 31st March, 2006.....
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.... income'. 5.8 He further submitted that all the debtors were brought forward as on 1st April, 1996 were realized during the period April, 1999 to December, 1999. Out ,of the realized amount, the assessee constructed sheds and others at a cost of Rs. 50,000 in November, 1999 and acquired second hand machinery at a cost of Rs. 5,20,000 in December, 1999. Thus, he submitted that the amounts lent by the assessee way before 1st April, 1996 were realized in the year under appeal was sufficient for investment in construction of shed and in purchase of second hand machinery for crusher unit. 6. On the other hand, the Departmental Representative submitted that the assessee has requested the AO vide its letter dt. 31st March, 2005 that the return filed on 11th Sept., 2003 for the asst. yr. 2000-01 may be treated as return filed in response to notice under s. 148 and now the assessee cannot say that the AO was not justified in treating the belated return. The AO has not acted upon the belated return, he used the information in the belated return for the purpose of completing the assessment under s. 143(3) r/w s. 148 and the same was considered as per the request of the AO,....
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....irst reason mentioned that the return of income filed for asst. yrs. 2000-01 is a belated return. Second reason mentioned in the note sheet is that the assessee has not shown income from crushers. 6.4 He further submitted that as per provisions of s. 147 if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment years he may subject to provisions of ss. 148 to 153, assess or reassess such income. In the present case, the total income of the assessee for the year under appeal was Rs. 92,190 which was more than the minimum limit prescribed for non-filing of the return of income and thereby, the said income was chargeable to tax and accordingly, it was escaped assessment by meaning of provisions of s. 147 of the IT Act. 6.5 He further submitted that the AO had properly recorded reasons before issue of notice under s. 148. The recording of reasons may be in the note sheet or it can be in separate paper/page which is part of the assessment record and the said proceeding was submitted within the prescribed period before the Addl. CIT for obtaining approval as per the provisions of s. 151 of the Act. 6.6 He fur....
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....rticulars as disclosed in the belated return on 11th Sept., 2003. Thus, the assessment made under s. 143(3) r/w s. 147 was on the valid return filed in response to notice under s. 148 and the assessment was accordingly, completed in accordance to the provisions of IT Act, 1961. 6.10 He further submitted that keeping in view the above facts and circumstances, the ground of appeal of the assessee in respect of recording of reason, issue of reasons to the assessee processing of return of income under s. 143(1), violation of natural justice and making assessment on non-valid returns are to be rejected. 7. On merit he submitted that the assessee has not furnished the details of creditors from whom the amount was realized as such the addition to be made and to be treated as unexplained income. He relied on the assessment order as well as CIT(A) order. 8. We have heard both the parties and perused the material on record. We have carefully gone through the paper book filed by the learned counsel for the assessee containing 1-106 pages. The main contention of the assessee's counsel is that the AO has not properly recorded the reasons for reopening the assessmen....
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....e of notice under s. 148 were not recorded the assessment in pursuance of the impugned notice under s. 148 would be void and non est Sec. 148(2) is mandatory in nature and failure of the AO, to produce reasons and communicate the same to the assessee was sufficient reasons to annul reassessment proceedings. In the present case, the AO not having compiled (sic-complied) with the mandatory requirement of recording the reasons before issue of notice under s. 148 as such the reassessment is invalid. Generally, note/notes prepared by subordinate or even by the very same officer an aide memoire are to help memoire or enable a superior officer to examine the same and pass his orders thereon. A 'note' even when the same is prepared by the very same officer or even placing the most chargeable construction on the same cannot be elevated to or treated as the AO recording his reasons under s. 148 which is a statutory requirement. On any legal principles, one cannot treat the notes prepared by the AO as one recording his reasons required by under s. 148. Requirement of recording reasons would not be satisfied if the assessing authority simply writes that he has reason to believe that income has....