TaxTMI 
TaxTMI 
2011 (2) TMI 1522
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....eedings 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 assessee is an employee of U.P. Government and at the relevant time was posted as Assistant 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 Rs. 1,01,501/- on 13.7.2006. For the remaining years, the assessee stated 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, Lucknow and construction therein at Rs. 5,38,860/-; Rs. 2,30,712/-; Rs. 7,54,328 and Rs. 5,86,769/- for the period relevant to the assessment years 1999-2000, 2001-02, 2002-03 and 2003- 04 respectively. Besides those additions, certain other additions were also made on account of household expenses, unexplained ....
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....e case and have perused the submission of the ld. AR. I find no merit in the submission that the notice u/s. 148 of the I.T. Act, 1961 has been issued on mere presumptions keeping in mind the investment of Rs.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 proceedings u/s. 147 of the I.T. 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 convey the said reasons to the appellant. 4.1.1 I have also carefully perused the "reasons recorded". In this case, information was received by Addl. Director (Inv), Lucknow that the appellant has purchased a plot of land from ELDECO for Rs.5,38,860/- in the A.Y 1999-2000, the said intimation conveyed to the AO that the appellant could not give any specific clarification during the course of inquiry as regards the investment made. Thus, there existed relevant material and information which could prima-facie lead to formation of requisite "reason to believe" that income has escaped assessment to the ....
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....ssessing Officer is within the realm of subjective satisfaction (see ITO vs. Selected Dalurband Coal Co. (P) Ltd. (1996) 132 CTR (SC) 162 : (1996) 217 ITR 597 (SC); Raymond Woollen 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 different 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 assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction u/s. 147(a) two conditions were required to be satisfied: firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and secondly he must also have reason to believe that such escapement 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 Assessi....
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....afi 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 Officer had not applied his mind to the aforesaid information to derive independently at a belief that income has escaped assessment and that the notice u/s. 148 has been issued 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 285 (Delhi). 2. Sheo Nath Singh vs. Appellate Asstt. Commissioner, 82 ITR 147 (SC). 8. It was further submitted that the assessee furnished evidences to adduce that the installments were paid during the previous years relevant to the assessment years 1994- 95 to 1998-99. Therefore sustenance of addition of the sum of Rs. 5,38,860/- as unexplained investment to the total income of the assessment year 1999-2000 was not justified. The assessee furnished details of the payments as under:- SI.No. Date Amount (Rs.) Name of payee Mode of p....
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....ase of Brij Mohan Agarwal vs. ACIT and Another [2004] 268 ITR 400. 11. In his rejoinder, the ld. counsel for the assessee submitted that the facts of the case in Brij Mohan Agarwal vs. ACIT and Another (supra) relied by the ld. D.R. are different from the facts of the assessee's case because 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 findings of the Investigation Wing were based on the evidences and statements proving certificate regarding purchase and sale of shares based on bogus entries and consequently specific tax evasion and the Assessing Officer after applying his mind to the evidences gathered by the Investigation Wing issued notice u/s. 148 of the Act. The assessee, consequent to the action of the Assessing Officer, filed writ. However, in the assessee's case the issue relating to long term capital gain was not involved, neither any search took place nor any evidence was collect....
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.... 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 ADIT(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 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 assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :....
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....her the Assessing Officer had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. There was no substantial question of law 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 information received through letter No.Addl.DIT/Inv./TEP/x-120/04-05 dated 6.3.2006 sent by the Addl. Director of Incometax (Investigation) and second part 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 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....
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....wn interest at Rs. 500575/- as against 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. 2000-2001 and Rs. 66288442/- in A.Y. 1999-00. This shows that the assessee has shown short receipt of interest of approximately 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, issue 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 assessment for assessment year 2001-02 are as under : " From the perusal of records and information received from Dy. Director of Income Tax (Inv)-2, Kanpur vide his letter F.No. DDIT(lnv)- 2/KNP/gift/RCFSL/0708/1860 dated 24.03.08, it is transpired that the assessee has deposited cash deposits on different dates in Bank A/c NO.622-0-5046398 maintained with Standard Chartered Bank, Kanpur during the F.Y. 2000-01 ....
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....er:- "From the perusal of P/L Account, it is seen that the assessee has shown interest at Rs.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. Rs. 67163442/- in the year relevant to A.Y. 2000-2001 and Rs.66288442/- in A.Y. 1999-00. This shows that the assessee has shown short receipt of interest of approximately 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 interest than interest 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/loans were given or how much interest was received or could have received as per agreements, simply to doubt that interest received by the assessee in this year, being 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 ....
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....O 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 proceedings have been initiated on suspicion and for making roving enquiries and since it is trite law that proceedings under Section 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 view taken by the Tribunal in assessment year 2000-01. 6.4.(ii) Shri Praveen Kumar, ld.D.R. also relied on 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 the 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 n....